Fair Value Measurements

9 Months Ended

Jul. 02, 2011

Fair Value Measurements

Fair Value Measurements

7. Fair Value Measurements

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. Generally accepted accounting principles prescribe a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs that may be used to measure fair value:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities 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; or

• 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.

Our significant financial assets and liabilities measured at fair value on a recurring basis as of July 2, 2011 and September 30, 2010 were as follows:

	July 2, 2011			September 30, 2010
	(in thousands)
Financial assets
Cash equivalents—Level 1 (1)	$	89,182		$	86,826
Financial liabilities
Forward contracts—Level 2 (2)	$	(9,020	)	$	(1,974	)

(1) Money market funds and time deposits.

(2) Includes a liability associated with forward contracts entered into in connection with our acquisition of MKS described in Note 8.