Fair Value Measurements

9 Months Ended

Sep. 27, 2013

FAIR VALUE MEASUREMENTS

The applicable accounting guidance establishes a framework for measuring fair value and requires disclosure about the fair value measurements of assets and liabilities. This guidance requires the Company to classify and disclose assets and liabilities measured at fair value on a recurring basis, as well as fair value measurements of assets and liabilities measured on a nonrecurring basis in periods subsequent to initial measurement, in a three-tier fair value hierarchy as described below.

The guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The guidance describes three levels of inputs that may be used to measure fair value:


•	Level 1 — Observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

•

Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, 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 primarily uses broker quotes for valuation of its short-term investments. The forward exchange contracts are classified as Level 2 because they are valued using quoted market prices and other observable data for similar instruments in an active market.


•	Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company uses the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. During the nine months ended September 27, 2013, there were no nonrecurring fair value measurements of assets and liabilities subsequent to initial recognition.

The following table sets forth the fair value of the Company’s financial assets and liabilities measured at fair value based on the three-tier fair value hierarchy (in thousands):



	Level 1		Level 2		Level 3		Total
As of September 27, 2013
Cash equivalents
Money market funds	$	58,220	$	—	$	—	$	58,220
Short-term investments
State, municipal and local government agencies bonds	—		36,233		—		36,233
Corporate bonds	—		32,381		—		32,381
Commercial paper	—		3,348		—		3,348
U.S. federal government bonds	4,004		—		—		4,004
Prepaids and other current assets
Foreign exchange forward contracts	—		5		—		5
Total assets measured and recorded at fair value	$	62,224	$	71,967	$	—	$	134,191
Accrued liabilities
Foreign exchange forward contracts	$	—	$	381	$	—	$	381
Total liabilities measured and recorded at fair value	$	—	$	381	$	—	$	381
	Level 1		Level 2		Level 3		Total
As of December 31, 2012
Cash equivalents
Money market funds	$	54,923	$	—	$	—	$	54,923
Corporate bonds with maturity less than 90 days	—		3,614		—		3,614
U.S. federal government bonds with maturity less than 90 days	3,005		—		—		3,005
Short-term investments
Certificates of deposit	—		1,603		—		1,603
State, municipal and local government agencies bonds	—		59,050		—		59,050
Corporate bonds	—		31,562		—		31,562
Commercial paper	—		10,288		—		10,288
U.S. federal government bonds	2,003		—		—		2,003
Prepaids and other current assets
Foreign exchange forward contracts	—		344		—		344
Total assets measured and recorded at fair value	$	59,931	$	106,461	$	—	$	166,392
Accrued liabilities
Foreign exchange forward contracts	$	—	$	143	$	—	$	143
Total liabilities measured and recorded at fair value	$	—	$	143	$	—	$	143

- 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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