Fair Value Measurements And Financial Instruments

9 Months Ended

Oct. 01, 2011

Fair Value Measurements And Financial Instruments [Abstract]

Fair Value Measurements And Financial Instruments

NOTE 12 – FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

The fair value measurement accounting standard, codified in ASC Topic 820, Fair Value Measurement (ASC Topic 820), provides a framework for measuring fair value and defines fair value as the price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. The standard establishes a valuation hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on independent market data sources. Unobservable inputs are inputs that reflect the Company's assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available. The valuation hierarchy is composed of three categories. The categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The categories within the valuation hierarchy are described as follows:

• Level 1 – Inputs to the fair value measurement are quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs to the fair value measurement include quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.

• Level 3 – Inputs to the fair value measurement are unobservable inputs or valuation techniques.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

The fair value measurement standard applies to certain financial assets and liabilities that are measured at fair value on a recurring basis (each reporting period). These financial assets and liabilities include money-market securities, trading marketable securities, available-for-sale marketable securities and derivative instruments. The Company continues to record these items at fair value on a recurring basis and the fair value measurements are applied using ASC Topic 820. The Company does not have any material nonfinancial assets or liabilities that are measured at fair value on a recurring basis. A summary of the valuation methodologies used for the respective financial assets and liabilities measured at fair value on a recurring basis is as follows:

Money-market securities: The Company's money-market securities include funds that are traded in active markets and are recorded at fair value based upon the quoted market prices. The Company classifies these securities as level 1.

Trading securities: The Company's trading securities include publicly-traded mutual funds that are traded in active markets and are recorded at fair value based upon quoted market prices of the net asset values of the funds. The Company classifies these securities as level 1.

Available-for-sale securities: The Company's available-for-sale securities include publicly-traded equity securities that are traded in active markets and are recorded at fair value based upon the closing stock prices. The Company classifies these securities as level 1. The following table summarizes the components of the balance of the Company's available-for-sale securities at October 1, 2011 and January 1, 2011 (in thousands):

	October 1, 2011			January 1, 2011
Adjusted cost	$	9,327		$	9,116
Gross unrealized gains		29,342			24,988
Gross unrealized losses		(196	)		(359	)
Fair value	$	38,473		$	33,745

Derivative instruments: The Company's derivative instruments consist of foreign currency exchange contracts and interest rate swap contracts. The Company classifies these instruments as level 2 as the fair value is determined using inputs other than observable quoted market prices. These inputs include spot and forward foreign currency exchange rates and interest rates that the Company obtains from standard market data providers. The fair value of the Company's outstanding foreign currency exchange contracts was not material at October 1, 2011 or January 1, 2011.

A summary of financial assets measured at fair value on a recurring basis at October 1, 2011 and January 1, 2011 is as follows (in thousands):

	Balance Sheet Classification	October 1, 2011		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money-market securities	Cash and cash equivalents	$	727,331	$	727,331	$	—	$	—
Available-for-sale marketable securities	Other current assets		38,473		38,473		—		—
Trading marketable securities	Other assets		207,864		207,864		—		—
Interest rate swap	Other assets		17,906		—		17,906		—
Total assets		$	991,574	$	973,668	$	17,906	$	—

	Balance Sheet Classification	January 1, 2011		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money-market securities	Cash and cash equivalents	$	364,418	$	364,418	$	—	$	—
Trading marketable securities	Other assets		190,438		190,438		—		—
Available-for-sale marketable securities	Other current assets		33,745		33,745		—		—
Total assets		$	588,601	$	588,601	$	—	$	—
Liabilities
Interest rate swap	Other liabilities	$	10,046	$	—	$	10,046	$	—
Total liabilities		$	10,046	$	—	$	10,046	$	—

Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

The fair value measurement standard also applies to certain nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis. For example, certain long-lived assets such as goodwill, intangible assets and property, plant and equipment are measured at fair value in connection with business combinations or when an impairment is recognized and the related assets are written down to fair value. The Company did not make any material business combinations during the first nine months of 2011.

The following table provides information by level for assets and liabilities that were measured at fair value on a nonrecurring basis during 2010 for business combinations closed during the first nine months of 2010. The table provides the fair value of net identifiable tangible and intangible assets and liabilities (excluding goodwill). The Company used inputs other than quoted prices that are observable, such as interest rates, cost of capital and market comparable royalty rates, which are applied to income and market valuation approaches. A summary of the nonfinancial assets and liabilities measured at fair value in conjunction with our business combinations during the first nine months of 2010 is as follows (in thousands):

	Fair Value		Quoted Prices In Active Markets (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description
Business Combination	$	52,238		$	—	$	52,238		$	—

During the first nine months of 2011, the Company initiated restructuring actions resulting in the planned future closure of its CRM manufacturing facility in Sweden, resulting in the recognition of a $12.0 million impairment charge to write-down the facility to its estimated fair value. Additionally, $7.4 million of other asset write-downs and/or impairments were recorded during the first nine months of 2011. Refer to Note 7 for further detail. No material impairments of the Company's long-lived assets were recognized during the first nine months of 2010.

The Company also holds investments in equity securities that are accounted for as cost method investments, which are classified as other assets and measured at fair value on a nonrecurring basis. The carrying value of these investments approximated $128 million at October 1, 2011 and $124 million at January 1, 2011. The fair value of the Company's cost method investments is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of these investments. When measured on a nonrecurring basis, the Company's cost method investments are generally considered Level 3 in the fair value hierarchy, due to the use of unobservable inputs to measure fair value.

Fair Value Measurements of Other Financial Instruments

The aggregate fair value of the Company's fixed-rate debt obligations at October 1, 2011 (measured using quoted prices in active markets) was $2,534.9 million compared to the aggregate carrying value of $2,447.1 million (inclusive of unamortized debt discounts and interest rate swap fair value adjustments). The fair value of the Company's variable-rate debt obligations at October 1, 2011 approximated the aggregate $554.9 million carrying value due to the short-term, variable rate interest rate structure of these instruments.