FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES

6 Months Ended

Sep. 27, 2013

FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES

FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES

10. FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES

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 or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability. The accounting guidance for fair value establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure 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. The fair value hierarchy is as follows:

Level 1 - Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

The Company has deferred compensation plans for its officers and certain other employees.  Deferred amounts under the plans are invested in hypothetical investments selected by the participant or the participant’s investment manager.  The Company’s deferred compensation plan assets are for the most part included in other noncurrent assets on the condensed consolidated balance sheets and primarily include investments in equity securities that are valued using active market prices.

Level 2 - Applies to assets or liabilities for which there are inputs other than quoted prices included within level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets) such as cash and cash equivalents and money market funds; or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

The Company values foreign exchange forward contracts using level 2 observable inputs which primarily consist of an income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount.

The Company’s cash equivalents are comprised of bank deposits and money market funds, which are valued using level 2 inputs, such as interest rates and maturity periods. Due to their short-term nature, their carrying amount approximates fair value.

The Company’s deferred compensation plan assets also include money market funds, mutual funds, corporate and government bonds and certain convertible securities that are valued using prices obtained from various pricing sources.  These sources price these investments using certain market indices and the performance of these investments in relation to these indices.  As a result, the Company has classified these investments as level 2 in the fair value hierarchy.

Level 3 - Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company has accrued for certain contingent consideration in connection with its business acquisitions, which is measured at fair value based on internal models and inputs primarily consisting of revenue and certain operating results targets. Changes to these inputs will result in insignificant increases in the fair value of these contingent considerations, or reducing the fair value to zero. The following table summarizes the activities related to contingent consideration:

	Three-Month Periods Ended						Six-Month Periods Ended
	September 27, 2013			September 28, 2012			September 27, 2013			September 28, 2012
	(In thousands)
Beginning balance	$	19,000		$	5,944		$	25,000		$	1,151
Additions to accrual	—			5,000			—			10,000
Payments	—			(188		)	—			(395		)
Fair value adjustments	(3,000		)	(325		)	(9,000		)	(325		)
Ending balance	$	16,000		$	10,431		$	16,000		$	10,431

The Company values deferred purchase price receivables relating to its asset-backed securitization program based on a discounted cash flow analysis using unobservable inputs (i.e., level 3 inputs), which are primarily risk free interest rates adjusted for the credit quality of the underlying creditor and due to its high credit quality and short term maturity their fair value approximates carrying value.  Significant increases in either of the significant unobservable inputs (credit spread, risk free interest rate) in isolation would result in lower fair value estimates, but is insignificant. The interrelationship between these inputs is also insignificant.  Refer to note 9 to the condensed consolidated financial statements for a reconciliation of the change in the deferred purchase price receivable during the three-month and six-month periods ended September 27, 2013 and September 28, 2012.

There were no transfers between levels in the fair value hierarchy during the three-month and six-month periods ended September 27, 2013 and September 28, 2012.

Financial Instruments Measured at Fair Value on a Recurring Basis

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis:

	Fair Value Measurements as of September 27, 2013
	Level 1		Level 2			Level 3			Total
	(In thousands)
Assets:
Money market funds and time deposits (included in cash and cash equivalents of the condensed consolidated balance sheet)	$	—	$	499,719		$	—		$	499,719
Deferred purchase price receivable (Note 9)	—		—			558,311			558,311
Foreign exchange forward contracts (Note 7)	—		24,427			—			24,427
Deferred compensation plan assets:
Mutual funds, money market accounts and equity securities	8,953		41,461			—			50,414
Liabilities:
Foreign exchange forward contracts (Note 7)	$	—	$	(14,663	)	$	—		$	(14,663	)
Contingent consideration in connection with business acquisitions	—		—			(16,000		)	(16,000		)

	Fair Value Measurements as of March 31, 2013
	Level 1		Level 2			Level 3			Total
	(In thousands)
Assets:
Money market funds and time deposits (included in cash and cash equivalents of the condensed consolidated balance sheet)	$	—	$	497,390		$	—		$	497,390
Deferred purchase price receivable (Note 9)	—		—			412,357			412,357
Foreign exchange forward contracts (Note 7)	—		27,563			—			27,563
Warrants to purchase common shares	—		—			74,437			74,437
Deferred compensation plan assets:
Mutual funds, money market accounts and equity securities	6,931		40,972			—			47,903
Liabilities:
Foreign exchange forward contracts (Note 7)	$	—	$	(15,290	)	$	—		$	(15,290	)
Contingent consideration in connection with business acquisitions	—		—			(25,000		)	(25,000		)

Assets Measured at Fair Value on a Nonrecurring Basis

The Company has certain long-lived assets that are measured at fair value on a nonrecurring basis, and are as follows:

	Fair Value Measurements as of September 27, 2013
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Assets held for sale	$	—	$	25,306	$	—	$	25,306

	Fair Value Measurements as of March 31, 2013
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Assets held for sale	$	—	$	11,089	$	—	$	11,089
Property and equipment	—		25,331		—		25,331

Assets held for sale

Assets held for sale are recorded at the lesser of the carrying value or fair value, which is based on comparable sales from prevailing market data (level 2 inputs).  During the six-month period ended September 27, 2013, the Company recognized an impairment charge of $3.6 million in fair value adjustments and sold $1.8 million of assets held for sale. Of the $3.6 million impaired, $1.9 million was recognized during the quarter ended June 28, 2013 for fair value adjustments to machinery and equipment previously impaired in its restructuring activities during fiscal year 2013 and classified these assets as held for sale as of September 27, 2013. The assets held for sale as of September 27, 2013 primarily represent manufacturing facilities that have been closed as part of the Company’s facility consolidations and the related manufacturing assets.

Property and equipment

Property and equipment includes the carrying value of certain assets that were impaired during the fiscal year ended March 31, 2013 as a result of the Company’s restructuring activities as further discussed in note 11 to the condensed consolidated financial statements.

There were no transfers between levels in the fair value hierarchy for these long-lived assets during the three-month and six-month periods ended September 27, 2013 and September 28, 2012.

Other financial instruments

The following table presents the Company’s debt not carried at fair value:

	As of September 27, 2013				As of March 31, 2013
	Carrying		Fair		Carrying		Fair		Fair Value
	Amount		Value		Amount		Value		Hierarchy
	(In thousands)
Term loan dated October 1, 2007	$	—	$	—	$	170,340	$	170,496	Level 1
Term loan dated October 19, 2011	452,065		449,524		517,500		518,794		Level 1
4.625% Notes dated February 20, 2013 (due 2020)	500,000		497,500		500,000		507,190		Level 1
5.000% Notes dated February 20, 2013 (due 2023)	500,000		480,000		500,000		500,000		Level 1
Term loan dated August 30, 2013 (due 2018)	600,000		585,378		—		—		Level 1
Asia term loans	—		—		375,000		375,343		Level 2
Total	$	2,052,065	$	2,012,402	$	2,062,840	$	2,071,823

The term loans and Notes are valued based on broker trading prices in active markets.

The Company’s Asia Term Loans were not traded publicly; however, as the pricing, maturity and other pertinent terms of these loans closely approximated those of the Term Loan Agreements dated October 1, 2007, and October 19, 2011, management estimated the respective trading prices would be approximately the same.