Fair Value of Financial Instruments

9 Months Ended

Mar. 29, 2014

At March 29, 2014, as part of its cash management and investment program, the Company maintained a portfolio of $15,551 in short-term investments, comprised of $6,325 of marketable investment securities and $9,226 in other short-term investments. The marketable investment securities are classified as available-for-sale and consist of variable rate demand notes with a cost basis and aggregate fair value of $6,325. The interest rates on these variable rate demand notes reset weekly and can be called or put within seven days.

The other short-term investments are classified as held-to-maturity securities and consisted of commercial paper and bonds, which have individual maturity dates ranging from May 2014 to September 2014. Held-to-maturity debt securities are debt securities, which the Company has the ability and intent to hold until maturity and are recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts.

In addition, at March 29, 2014, the Company held a derivative instrument in the form of an interest rate contract that served as a cash flow hedge on interest rate change exposure on a portion of its borrowings under a floating-rate term-loan facility entered into by the Company in March 2011. See “Note 9—Derivative Instruments and Hedging Activities” below.

Financial Accounting Standards Board Accounting Standard Codification (“FASB ASC”) 820-10 (the overall Subtopic of topic 820 on fair value measurements and disclosures) provides guidance on fair value measurements of financial assets and financial liabilities and for fair value measurements of non-financial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. This accounting standard provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:


•	Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.


•	Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.


•	Level 3 inputs are unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which a fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

Cash, cash equivalents, short-term investments, accounts receivable, accounts payable, accrued expenses, and short-term notes payable, as reported in the condensed consolidated financial statements, approximate their respective fair values because of the short-term nature of those instruments. The fair value of the Company’s long-term debt is based on the present value of expected cash flows, considering expected maturities and using current interest rates available to the Company for borrowings with similar terms. The carrying amount of the Company’s long-term debt approximates its fair value.

The following table presents assets and liabilities that were measured at fair value on a recurring basis (including items that were required to be measured at fair value) at March 29, 2014:



			Fair Value Measurements at Reporting Date Using:
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Available-for-sale securities	$	6,325	—	$	6,325	—
Total	$	6,325	—	$	6,325	—
Liabilities:
Interest rate contract	$	209	—	$	209	—
Total	$	209	—	$	209	—

The following table presents assets and liabilities that were measured at fair value on a recurring basis (including items that were required to be measured at fair value) at June 29, 2013:



			Fair Value Measurements at Reporting Date Using:
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Available-for-sale securities	$	11,705	—	$	11,705	—
Total	$	11,705	—	$	11,705	—
Liabilities:
Interest rate contract	$	301	—	$	301	—
Total	$	301	—	$	301	—

For the financial assets and liabilities included in Level 2 of the fair value hierarchy as summarized above, the following describes the Company’s valuation approach. Available-for-sale securities consist of variable rate demand notes and other short term investments; the valuation of these investments, at the end of each respective reporting period, was based on the underlying interest rate curve in the market and credit standing of the respective investee companies associated with these investments. Valuation for these assets was based on commercial banker quotes using a market approach, which utilized these factors in their valuation of the investments at the end of each such reporting period. Liabilities consisted of interest rate contracts, which were valued at the end of each respective reporting period using an income approach based on the interest rate contract provisions, the credit standing of the Company and respective investee companies and the current underlying interest rate curve in the market as of the end of each respective reporting period.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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