Fair Value Measurements

6 Months Ended

Jul. 01, 2012

Fair Value Measurements

8. Fair Value Measurements

Certain assets and liabilities are recorded at fair value in the financial statements; some of these are measured on a recurring basis while others are measured on a non-recurring basis. Assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. In determining fair value of assets and liabilities, the Company uses various valuation techniques. The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment.

The Company assesses the inputs used to measure fair value using a three-tier hierarchy. The hierarchy indicates the extent to which inputs used in measuring fair value are observable in the market. Level 1 inputs include quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. The Company uses the market approach to derive the fair value for its level 2 fair value measurements. Foreign currency exchange contracts are valued using publicly quoted spot and forward prices; commodity contracts are valued using publicly quoted prices, where available, or dealer quotes; interest rate swaps are valued using publicized swap curves; and investments in marketable debt and equity securities are valued using publicly quoted prices.

Level 3 inputs are not observable in the market and include management’s judgments about the assumptions market participants would use in pricing the asset or liability. The use of observable and unobservable inputs is reflected in the hierarchy assessment disclosed in the following tables.

Recurring Fair Value Measurements

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis (in thousands):

	July 1, 2012
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Balance as of		Identical Assets		Inputs		Inputs
	July 1, 2012		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	764,147	$	764,147	$	—	$	—
Marketable securities		135,848		—		135,848		—
Derivatives		8,879		—		8,879		—
	$	908,874	$	764,147	$	144,727	$	—
Liabilities:
Derivatives	$	2,042	$	—	$	2,042	$	—

	December 31, 2011
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Balance as of		Identical Assets		Inputs		Inputs
	December 31, 2011		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	1,302,367	$	1,302,367	$	—	$	—
Marketable securities		153,380		—		153,380		—
Derivatives		16,443		—		16,443		—
	$	1,472,190	$	1,302,367	$	169,823	$	—
Liabilities:
Derivatives	$	5,136	$	—	$	5,136	$	—
	June 26, 2011
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Balance as of		Identical Assets		Inputs		Inputs
	June 26, 2011		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	582,808	$	582,808	$	—	$	—
Marketable securities		244,555		49,999		194,556		—
Derivatives		—		—		—		—
	$	827,363	$	632,807	$	194,556	$	—
Liabilities:
Derivatives	$	14,933	$	—	$	14,933	$	—