FAIR VALUE AND MARKETABLE SECURITIES

9 Months Ended

Sep. 29, 2012

FAIR VALUE AND MARKETABLE SECURITIES [Abstract]

FAIR VALUE AND MARKETABLE SECURITIES

4.  FAIR VALUE AND MARKETABLE SECURITIES

FAIR VALUE OF FINANCIAL INSTRUMENTS

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 (exit price). Inputs used to measure fair value are classified in the following hierarchy:

Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2	Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability
Level 3	Unobservable inputs for the asset or liability

    The Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table presents a summary of fair value information for available-for-sale securities as at December 31, 2011 and September 29, 2012:

					Fair Value Measurements at Reporting Date Using
Security Type	Amortized Cost Basis (1)		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fixed Income Securities (2)	$	32,574	$	32,532	$	-	$	32,532	$	-
U.S. Government Agency debt securities (2)		19,573		19,556		19,556		-		-
Former-auction corporate debt security (3)		1,681		2,834		-		2,834		-
Auction Rate Securities
Corporate Debt (3)		762		1,215		-		-		1,215
Preferred Equity		2,404		3,031		-		2,403		628
State and Municipal Debt (3)		1,434		1,715		-		1,715		-
Total at December 31, 2011	$	58,428	$	60,883	$	19,556	$	39,484	$	1,843
Fixed Income Securities (2)	$	20,892	$	20,905	$	-	$	20,905	$	-
U.S. Government Agency debt securities (2)		21,516		21,519		21,519		-		-
Municipal Notes (2)		1,082		1,082		-		1,082		-
Former-auction corporate debt security (3)		1,725		2,786		-		2,786		-
Auction Rate Securities
Preferred Equity		2,404		3,904		-		2,373		1,531
State and Municipal Debt (3)		1,381		1,658		-		1,658		-
Total at September 29, 2012	$	49,000	$	51,854	$	21,519	$	28,804	$	1,531

(1) Difference between amortized cost basis and fair value represents gross unrealized gain or loss.

(2) Available for sale debt securities with contractual maturities of 2 years or less.

(3) Available for sale debt securities with contractual maturities in excess of 10 years.

The fair value of each of the following instruments approximates their carrying value because of the short maturity of these instruments: cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities.

Interest income of $90 and $136 was recognized to accrete the amortized cost basis of the Company's existing and former-auction debt securities during the nine month periods ended September 29, 2012 and October 1, 2011, respectively.

AUCTION RATE SECURITIES AND FORMER-AUCTION CORPORATE DEBT SECURITY

Auction rate securities (ARS) were a short-term cash management instrument used by the market and the Company prior to 2008.  The instruments used a monthly Dutch auction process to provide liquidity on long-term financial instruments that reset the applicable interest rate and through the reset, allowed existing investors to rollover or liquidate their holdings at par value.  During 2007 and early 2008, ARS failed to auction due to sell orders exceeding buy orders and trading continues to be constrained. The funds associated with the failed auctions will not be accessible until a successful auction occurs, a suitable buyer is found outside of the auction process or an issuer redeems its security. The Company considers it more likely than not that it will sell their marketable debt securities prior to a recovery in valuation.

At September 29, 2012, certain ARS market information was insufficient to determine the fair value of the Company's investments in ARS resulting in Level 3 valuations. Given the complexity of ARS investments, the Company obtained the assistance of an independent valuation firm to assist management in assessing the fair value of its ARS portfolio. The third party valuations developed to estimate the ARS fair value were determined using a combination of two calculations (1) a discounted cash flow (DCF) model, where the expected cash flows of the ARS are discounted to the present using a yield that incorporates compensation for illiquidity, and (2) a market comparables (MC) method, where the ARS are valued based on indications, from the secondary market, of what discounts buyers demand when purchasing similar ARS. The valuations include numerous assumptions such as assessments of the underlying structure of each security, expected cash flows, discount rates, credit ratings, workout periods, and overall capital market liquidity.

For the three and nine months ended September 29, 2012, the table below provides a reconciliation of the beginning and ending balances for each type of security valued using a Level 3 valuation.

($ in 000's)	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Nine months ended September 29, 2012
	Corporate Debt Security (a)			Preferred Equity Securities (b)			Total
Balance at January 1, 2012	$	1,215		$	628		$	1,843
Total gains or losses realized/unrealized
Included in earnings (loss)
- quarter ended March 31, 2012		1,250			-			1,250
- quarter ended June 30, 2012		-			-			-
- quarter ended September 29, 2012		-			-			-
Included in other comprehensive income(loss)
- quarter ended March 31, 2012		(452	)		795			343
- quarter ended June 30, 2012		-			108			108
- quarter ended September 29, 2012		-			-			-
Purchases, redemptions, and settlements:
Purchases		-			-			-
Redemptions
- quarter ended March 31, 2012		(2,013	)		-			(2,013	)
- quarter ended June 30, 2012		-			-			-
- quarter ended September 29, 2012		-			-			-
Settlements		-			-			-
Transfers in and/or out of Level 3		-			-			-
Balance at September 29, 2012	$	-		$	1,531		$	1,531
Amount of total gains or losses for the period included in earnings(loss) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date		-			-			-
Securities held at September 29, 2012:
Face value	$	-		$	3,125		$	3,125
Financial ratings				A2 to NR
Weighted average interest rate (*)					1.9	%		1.9	%
Maturity date					N/A

* The interest rate is based on a premium to one month LIBOR.

 (a) Security issued by a publicly-held insurance company trust, which holds investments in U.S. Government obligations, highly rated commercial paper and money market funds and other investments approved by two credit rating agencies. The $2,500 face value security was redeemed by the issuer at a discount in the first quarter of 2012 for $2,013, resulting in a gain over its amortized cost basis of $1,250.

 (b) Preferred securities issued by subsidiaries of two publicly-held debt default insurers. For one security, the DCF model uses a 5% discount rate and the MC method observed secondary markets for similar securities trading at a 25% discount to face value. For the second security, the DCF model discount rate and the secondary market discount were 47% and 86%, respectively. On a weighted average basis, the DCF discount rate and the secondary market discount were 20% and 47%, respectively.

For the three and nine months period ended October 1, 2011, the table below provides a reconciliation of the beginning and ending balances for each type of security valued using a Level 3 valuation.

($ in 000's)	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Nine months ended October 1, 2011
	State & Municipal Security (a)			Corporate Debt Security (b)			Preferred Equity Securities (c)			Total
Balance at January 1, 2011	$	1,695		$	1,199		$	3,110		$	6,004
Total gains or losses realized/unrealized
Included in earnings (loss)
- quarter ended April 2, 2011		53			9			-			62
- quarter ended July 2, 2011		22			9			-			31
- quarter ended October 1, 2011		-			9			-			9
Included in other comprehensive income(loss)
- quarter ended April 2, 2011		(22	)		84			97			159
- quarter ended July 2, 2011		54			187			216			457
- quarter ended October 1, 2011		-			(188	)		(95	)		(283	)
Purchases, redemptions, and settlements:
Purchases		-			-			-			-
Redemptions
- quarter ended April 2, 2011		(100	)		-			-			(100	)
- quarter ended July 2, 2011		-			-			-			-
- quarter ended October 1, 2011		-			-			-			-
Settlements		-			-			-			-
Transfers in and/or out of Level 3
- quarter ended April 2, 2011		-			-			-			-
- quarter ended July 2, 2011		(1,702	)		-			(2,565	)		(4,267	)
- quarter ended October 1, 2011		-			-			-			-
Balance at October 1, 2011	$	-		$	1,309		$	763		$	2,072

* Interest rates are reset every one to three months based on a premium to AA Commercial Paper, LIBOR or Treasury Bill rates.

 (a) Security represents an interest in pooled student loans that are guaranteed by the Federal Family Education Loan Program.  In the second quarter of 2011, the Company transferred its state and municipal debt security from Level 3 to Level 2 after having assessed external valuations and observing sustained trading in similar securities.

 (b) Security issued by a publicly-held insurance company trust, which holds investments in U.S. Government obligations, highly rated commercial paper and money market funds and other investments approved by two credit rating agencies. The trust is funded by life insurance residuals.

 (c) Preferred securities issued by i) a diversified closed-end management investment company and ii) subsidiaries of two publicly-held debt default insurers.  The investment company is governed by the Investment Company Act of 1940 with regard to operating standards, antifraud rules, diversification requirements and an asset coverage requirement for asset backing of 200% of the par value of the preferred stock issued. In the second quarter of 2011, the Company transferred its closed-end preferred security from Level 3 to Level 2 after having assessed external valuations and observing sustained trading in similar securities.