Fair Value Measurements

12 Months Ended

Dec. 29, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

NOTE 4. FAIR VALUE MEASUREMENTS

ASC Topic 820 specifies a hierarchy of valuation techniques which requires an entity to maximize the use of observable inputs that may be used to measure fair value:

Level 1—Quoted prices in active markets are available for identical assets and liabilities. The Company’s Level 1 assets include cash equivalents, short-term investments, and long-term investment securities, which are generally acquired or sold at par value and are actively traded.

Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Company’s Level 2 liabilities include forward currency contracts whose value is determined using a pricing model with inputs that are observable in the market or corroborated with observable market data. Level 2 observable inputs were used in estimating interest rates used to determine the fair value (on a non-recurring basis) of the debt component the Company’s senior convertible notes. See Note 1. Summary of Significant Accounting Policies and Note 10. Senior Convertible Notes.

Level 3—Pricing inputs include significant inputs that are generally not observable in the marketplace. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. At each balance sheet date, the Company performs an analysis of all applicable instruments and would include in Level 3 all of those whose fair value is based on significant unobservable inputs. Level 3 inputs are used on a recurring basis to measure the fair value of the liability for contingent consideration. See Note 11. Commitments and Contingencies. Level 3 inputs are used on a non-recurring basis to measure the fair value of non-financial assets, including intangible assets, and property and equipment. See Note 1. Summary of Significant Accounting policies.

The Company’s valuation techniques used to measure the fair value of money market funds were derived from quoted prices in active markets for identical assets. The valuation techniques used to measure the fair value of all other financial instruments were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data.

Assets/Liabilities Measured and Recorded at Fair Value on a Recurring Basis

Financial assets measured on a recurring basis as of December 29, 2012 and December 31, 2011, are summarized below:

	Fair value,
	December 29, 2012
(in thousands)	Level 1		Level 2
Assets:
Corporate bonds and notes (1)	$	63,565	$	-
Money market funds (1)		50,528		-
United States (“US”) treasury and government agency notes (1)		33,854		-
Foreign government and agency notes (1)		4,044		-
US state and municipal securities (1)		1,746		-
Forward currency contracts (2)		-		392
Total assets	$	153,737	$	392

(1)	Included in cash and cash equivalents, short-term investments, and long-term investment securities (see Note 7. Investment Securities).
(2)	Included in Prepaid expenses and other current assets.

	Fair value,
	December 31, 2011
(in thousands)	Level 1
Assets:
Corporate bonds and notes (1)	$	254,522
Money market funds (1)		54,588
US treasury and government agency notes (1)		62,350
Foreign government and agency notes (1)		12,389
US state and municipal securities (1)		1,749
Total assets	$	385,598

Financial liabilities measured on a recurring basis are summarized below:

	Fair value,
	December 29, 2012
(in thousands)	Level 2
Current liabilities:
Forward currency contracts (1)	$	-

	Fair value,
	December 31, 2011
(in thousands)	Level 2
Current liabilities:
Forward currency contracts (1)	$	1,780

(1) Included in Accrued liabilities.

The tables below present reconciliations for all assets and liabilities measured and recorded at fair value on a recurring basis using significant unobservable inputs (Level 3) for 2011.  There were no level 3 asset or liabilities measured and recorded during 2012.

		Fair Value Measured and
		Recorded Using Significant Unobservable Inputs
		(Level 3)
				Liability for
		Money		contingent		Total Gains
(In thousands)		Market Funds		consideration		(losses)
Balance as of December 27, 2010		$	22,444	$	28,194
	Partial distribution from the Reserve Funds		(22,444)		-	$	-
	Accretion of liability for contingent consideration				1,182		(1,182)
	Fair value adjustment of liability for contingent consideration (See Note 11. Commitments and Contingencies)		-		(29,376)	$	29,376
Balance as of December 31, 2011		$	-	$	-

The accretion of liability for contingent consideration of $1.2 million was included Interest expense, net, and the fair value adjustment of liability for contingent consideration of $29.4 million, within Other (expense) income in the Consolidated Statement of Operations.

Assets/Liabilities Measured and Recorded at Fair Value on a Non-Recurring Basis

Our non-financial assets, such as prepaid expenses and other current assets, property and equipment, and intangible assets are recorded at fair value only if an impairment charge is recognized.  The following table presents the non-financial assets that were remeasured and recorded at fair value on a non-recurring basis during 2011 and 2012 on those assets:

									Total
									Losses for
	Net Carrying Value		Fair Value Measured and Recorded Using						Year Ended
(In thousands)	As of December 29, 2012		Level 1		Level 2		Level 3		December 29, 2012
Prepaid expenses and other current assets	$	-	$	-	$	-	$	-	$	(979)
Property and equipment, net		-		-		-		-		(520)
Intangible assets		-		-		-		-		(260)
Total losses for assets held as of December 29, 2012										(1,759)
Total losses for recorded non-recurring measurement									$	(1,759)

									Total
									Losses for
	Net Carrying Value		Fair Value Measured and Recorded Using						Year Ended
(In thousands)	As of December 31, 2011		Level 1		Level 2		Level 3		December 31, 2011
Intangible assets	$	-	$	-	$	-	$	-	$	(3,589)
Total losses for assets held as of December 31, 2011									$	(3,589)
Total losses for recorded non-recurring measurement									$	(3,589)

The losses recorded during 2012 and 2011, were mainly included in Research and Development expenses in the Consolidated Statements of Operations.  See Note 1. Summary of Significant Accounting Policies for details on the asset impairments.

The following liabilities have been measured at fair value on a non-recurring basis, as follows:

	Fair value,
	December 29, 2012
(in thousands)	Level 2
Current liabilities:
2.25% senior convertible notes due October 15, 2025, net (see Note 10.  Senior Convertible Notes)	$	-

	Fair value,
	December 31, 2011
(in thousands)	Level 2
Current liabilities:
2.25% senior convertible notes due October 15, 2025, net (see Note 10.  Senior Convertible Notes)	$	65,122