Fair Value Measurements and Fair Value of Financial Instruments

9 Months Ended

Sep. 28, 2019

Fair Value Measurements and Fair Value of Financial Instruments

Fair value measurement is defined as the price that would be received to sell 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 at the measurement date. A fair value hierarchy is established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:


•	Level 1—Quoted prices in active markets for identical assets or liabilities.


•	Level 2—Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.


•	Level 3—Unobservable inputs based on the Company's own assumptions.

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis:



(In thousands)	Level 1		Level 2		Level 3		Total
September 28, 2019
Assets:
Money market funds and time deposits	$	5,657	$	—	$	—	$	5,657
Banker's acceptance drafts (a)	$	—	$	5,824	$	—	$	5,824
2015 Swap Agreement	$	—	$	26	$	—	$	26

Liabilities:
2018 Swap Agreement	$	—	$	894	$	—	$	894
Forward currency-exchange contracts	$	—	$	121	$	—	$	121



December 29, 2018
Assets:
Money market funds and time deposits	$	6,902	$	—	$	—	$	6,902
Banker's acceptance drafts (a)	$	—	$	7,976	$	—	$	7,976
2015 Swap Agreement	$	—	$	148	$	—	$	148
Forward currency-exchange contracts	$	—	$	20	$	—	$	20

Liabilities:
2018 Swap Agreement	$	—	$	352	$	—	$	352
Forward currency-exchange contracts	$	—	$	81	$	—	$	81


(a)	Included in accounts receivable in the accompanying condensed consolidated balance sheet.

The Company uses the market approach technique to value its financial assets and liabilities, and there were no changes in valuation techniques during the first nine months of 2019. The Company's banker's acceptance drafts are carried at face value which approximates their fair value due to the short-term nature of the negotiable instrument. The fair values of the Company's forward currency-exchange contracts are based on quoted forward foreign exchange rates at the reporting date. The fair values of the Company's interest rate swap agreements are based on LIBOR yield curves at the reporting date. The forward currency-exchange contracts and interest rate swap agreements are hedges of either recorded assets or liabilities or anticipated transactions and represent the estimated amount the Company would receive or pay upon liquidation of the contracts. Changes in values of the underlying hedged assets and liabilities or anticipated transactions are not reflected in the table above.

The carrying value and fair value of the Company's debt obligations, excluding lease obligations and other borrowings, are as follows:



	September 28, 2019				December 29, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value
(In thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Debt Obligations:
Revolving credit facility	$	280,960	$	280,960	$	141,106	$	141,106
Commercial real estate loan	19,688		21,055		20,475		20,575
Senior promissory notes	10,000		10,928		10,000		10,120
	$	310,648	$	312,943	$	171,581	$	171,801

The carrying value of the Company's revolving credit facility approximates the fair value as the obligation bears variable rates of interest, which adjust frequently, based on prevailing market rates. The fair values of the commercial real estate loan and senior promissory notes are primarily calculated based on quoted market rates plus an applicable margin available to the Company at the respective period ends, which represent Level 2 measurements.

- 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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