Note 4 – Fair Value Measurements

Financial assets and liabilities are to be measured using inputs from three levels of the fair value hierarchy in accordance with ASC Topic 820, “Fair Value Measurements.” Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into the following three broad levels:

Level 1: Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. In addition, the Company considers counterparty credit risk in the assessment of fair value.

Financial assets and liabilities carried at fair value as of October 3, 2015, are classified below (in thousands):


	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts (1)	$	2,024	$	1,807	$	0	$	3,831
Money market investments related to the deferred compensation plan		8,065		0		0		8,065

Total Assets at fair value	$	10,089	$	1,807	$	0	$	11,896

Liabilities:
Forward interest rate swap (2)	$	0	$	31,901	$	0	$	31,901
Liabilities related to the deferred compensation plan		8,065		0		0		8,065

Total Liabilities at fair value	$	8,065	$	31,901	$	0	$	39,966

Financial assets and liabilities carried at fair value as of December 31, 2014, are classified below (in thousands):


	Level 1		Level 2		Level 3		Total
Assets:
U.S. government and agency securities	$	10,720	$	0	$	0	$	10,720
Obligations of government-sponsored enterprises (3)		0		705		0		705
State and municipal bonds		0		5,179		0		5,179
Corporate securities		0		7,781		0		7,781

Investments subtotal		10,720		13,665		0		24,385
Forward contracts (1)		2,039		7,279		0		9,318
Money market investments related to the deferred compensation plan		6,008		0		0		6,008

Total Assets at fair value	$	18,767	$	20,944	$	0	$	39,711

Liabilities:
Forward interest rate swap (2)	$	0	$	16,718	$	0	$	16,718
Liabilities related to the deferred compensation plan		6,008		0		0		6,008

Total Liabilities at fair value	$	6,008	$	16,718	$	0	$	22,726

(1)	The fair value of forward contracts is calculated as follows:

Fair value of a collar or put option contract associated with forecasted sales hedges is calculated using bid and ask rates for similar contracts.

Fair value of regular forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points.

Fair value of hedges against net assets is calculated at the period end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at period end. If this is the case, the fair value is calculated at the rate at which the hedge is being settled.

(2)	The fair value of forward interest rate swap is based upon a valuation model that uses relevant observable market inputs at the quoted intervals, such as forward yield curves, and is adjusted for the Company’s own credit risk and the interest rate swap terms.

(3)	Includes investments in notes issued by the Federal Home Loan Mortgage Corporation and the Federal Home Loan Bank.

The following is a summary of investments (in thousands):


	As of December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government and agency securities	$	10,720	$	0	$	0		$	10,720
Obligations of government-sponsored enterprises		705		0		0			705
State and municipal bonds		5,156		27		(4	)		5,179
Corporate securities		7,779		12		(10	)		7,781

Total investments	$	24,360	$	39	$	(14	)	$	24,385

The carrying value for the Company’s financial instruments are classified as current assets (other than short-term investments) and current liabilities’ approximate fair value due to their short maturities.