Financial Instruments

6 Months Ended

Jul. 03, 2011

8. FINANCIAL INSTRUMENTS

The Company is required to measure certain of its financial instruments at fair value on a recurring basis. The Company defines fair value 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 (“exit price”). The Company classifies and discloses its fair value measurements in one of the following categories: Level 1-unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2-quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3- prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The Company recognizes transfers between Levels 1, 2 and 3 as of the actual date of the event or change in circumstances that cause the transfer.

All of the Company’s interest rate swap derivatives were in the Company’s favor as of July 3, 2011 and are presented as assets in the table below and in the accompanying balance sheet. The following tables provide a summary of the Company’s significant financial assets and liabilities carried at fair value and measured on a recurring basis as of July 3, 2011 and January 2, 2011 (in thousands):


			Fair Value Measurements at July 3, 2011
	Total Carrying		Quoted Prices in		Significant Other		Significant
	Value at		Active Markets		Observable Inputs		Unobservable
	July 3, 2011		(Level 1)		(Level 2)		Inputs (Level 3)
Assets:
Interest rate swap derivative assets	$	5,665	$	—	$	5,665	$	—
Investments other than derivatives		7,662		—		7,662		—


			Fair Value Measurements at January 2, 2011
	Total Carrying		Quoted Prices in		Significant Other		Significant
	Value at		Active Markets		Observable Inputs		Unobservable
	January 2, 2011		(Level 1)		(Level 2)		Inputs (Level 3)
Assets:
Interest rate swap derivative assets	$	5,131	$	—	$	5,131	$	—
Investments other than derivatives		7,533		—		7,533		—

The financial investments included in the Company’s Level 2 fair value measurements as of July 3, 2011 and January 2, 2011 consist of an interest rate swap asset held by our Australian subsidiary, other interest rate swap assets of the Company, an investment in Canadian dollar denominated fixed income securities and a guaranteed investment contract which is a restricted investment related to CSC of Tacoma LLC. The Australian subsidiary’s interest rate swap asset is valued using a discounted cash flow model based on projected Australian borrowing rates. The Company’s other interest rate swap assets and liabilities are based on pricing models which consider prevailing interest rates, credit risk and similar instruments. The Canadian dollar denominated securities, not actively traded, are valued using quoted rates for these and similar securities. The restricted investment in the guaranteed investment contract is valued using quoted rates for these and similar securities.