Fair Value Measurements |
FAIR VALUE MEASUREMENTS Accounting guidance on fair value measurements requires that financial assets and liabilities be classified and disclosed in one of the following categories of the fair value hierarchy: | | Level 1 – Based on unadjusted quoted prices for identical assets or liabilities in an active market. | Level 2 – Based on observable market-based inputs or unobservable inputs that are corroborated by market data. | Level 3 – Based on unobservable inputs that reflect the entity's own assumptions about the assumptions that a market participant would use in pricing the asset or liability. |
We did not have any level 3 financial assets or liabilities, nor were there any transfers between levels during the periods presented. The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of October 1, 2017 and December 31, 2016: | | | | | | | | | | | | | | | | | | | | Level 1 | | Level 2 | | Level 3 | | Total | October 1, 2017: | | | | | | | | | Derivative Instruments: | | | | | | | | | Assets: | | | | | | | | | Foreign exchange contracts (1) | | $ | — |
| | $ | 435 |
| | $ | — |
| | $ | 435 |
| Interest rate swap agreements (2) | | — |
| | 4,571 |
| | — |
| | 4,571 |
| Deferred compensation derivatives (3) | | — |
| | 994 |
| | — |
| | 994 |
| Commodities futures and options (4) | | 6,222 |
| | — |
| | — |
| | 6,222 |
| Liabilities: | | | | | | | | | Foreign exchange contracts (1) | | — |
| | 4,216 |
| | — |
| | 4,216 |
| Commodities futures and options (4) | | 295 |
| | — |
| | — |
| | 295 |
| December 31, 2016: | | | | | | | | | Assets: | | | | | | | | | Foreign exchange contracts (1) | | $ | — |
| | $ | 2,229 |
| | $ | — |
| | $ | 2,229 |
| Interest rate swap agreements (2) | | — |
| | 1,768 |
| | — |
| | 1,768 |
| Deferred compensation derivatives (3) | | — |
| | 717 |
| | — |
| | 717 |
| Commodities futures and options (4) | | 2,348 |
| | — |
| | — |
| | 2,348 |
| Liabilities: | | | | | | | | | Foreign exchange contracts (1) | | — |
| | 825 |
| | — |
| | 825 |
| Commodities futures and options (4) | | 10,000 |
| | — |
| | — |
| | 10,000 |
|
| | (1) | The fair value of foreign currency forward exchange contracts is the difference between the contract and current market foreign currency exchange rates at the end of the period. We estimate the fair value of foreign currency forward exchange contracts on a quarterly basis by obtaining market quotes of spot and forward rates for contracts with similar terms, adjusted where necessary for maturity differences. |
| | (2) | The fair value of interest rate swap agreements represents the difference in the present value of cash flows calculated at the contracted interest rates and at current market interest rates at the end of the period. We calculate the fair value of interest rate swap agreements quarterly based on the quoted market price for the same or similar financial instruments. |
| | (3) | The fair value of deferred compensation derivatives is based on quoted prices for market interest rates and a broad market equity index. |
| | (4) | The fair value of commodities futures and options contracts is based on quoted market prices. |
Other Financial Instruments The carrying amounts of cash and cash equivalents, short-term investments, accounts receivable, accounts payable and short-term debt approximated fair values as of October 1, 2017 and October 2, 2016 because of the relatively short maturity of these instruments. The estimated fair value of our long-term debt is based on quoted market prices for similar debt issues and is, therefore, classified as Level 2 within the valuation hierarchy. The fair values and carrying values of long-term debt, including the current portion, were as follows: | | | | | | | | | | | | | | | | | | | | Fair Value | | Carrying Value | | | October 1, 2017 | | December 31, 2016 | | October 1, 2017 | | December 31, 2016 | Current portion of long-term debt | | $ | 300,348 |
| | $ | 243 |
| | $ | 300,096 |
| | $ | 243 |
| Long-term debt | | 2,114,276 |
| | 2,379,054 |
| | 2,054,132 |
| | 2,347,455 |
| Total | | $ | 2,414,624 |
| | $ | 2,379,297 |
| | $ | 2,354,228 |
| | $ | 2,347,698 |
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Other Fair Value Measurements In addition to assets and liabilities that are recorded at fair value on a recurring basis, GAAP requires that, under certain circumstances, we also record assets and liabilities at fair value on a nonrecurring basis. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. During the first quarter of 2017, as discussed in Note 7, we recorded impairment charges totaling $105,992 to write-down distributor relationship and trademark intangible assets that had been recognized in connection with the 2014 SGM acquisition and wrote-down property, plant and equipment by $102,720. These charges were determined by comparing the fair value of the assets to their carrying value. The fair value of the assets were derived using a combination of an estimated market liquidation approach and discounted cash flow analyses based on Level 3 inputs.
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