Fair Value Measurements

3 Months Ended

Mar. 30, 2013

Fair Value Measurements

Fair Value Measurements

Note 4 — Fair Value Measurements

Current accounting guidance defines fair value as the price that would be received in the sale of an asset, or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Guidance requires disclosure of the extent to which fair value is used to measure financial assets and liabilities, the inputs utilized in calculating valuation measurements, and the effect of the measurement of significant unobservable inputs on earnings, or changes in net assets, as of the measurement date. Guidance establishes a three-level valuation hierarchy based upon the transparency of inputs utilized in the measurement and valuation of financial assets or liabilities as of the measurement date. Level 1 inputs include quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability. The use of observable and unobservable inputs is reflected in the hierarchy assessment disclosed in the table below.

As of March 30, 2013, December 31, 2012 and March 31, 2012, the Company held certain financial assets that are required to be measured at fair value on a recurring basis. These included derivative hedging instruments related to the purchase of certain raw materials and foreign currencies, investments in trading securities and available for sale securities, including an auction rate security. The Company’s available-for-sale and trading securities principally consist of municipal bonds and mutual funds that are publicly traded.

The following table presents information about the Company’s financial assets and liabilities measured at fair value as of March 30, 2013, December 31, 2012 and March 31, 2012, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

	Estimated Fair Value March 30, 2013
	Total			Input Levels Used
	Fair Value			Level 1			Level 2			Level 3
Cash and cash equivalents	$	50,887		$	50,887		$	—		$	—
Auction rate security	8,808			—			—			8,808
Available-for-sale securities excluding the auction rate security	116,771			—			116,771			—
Foreign currency forward contracts	(247		)	—			(247		)	—
Commodity futures contracts	(449		)	(449		)	—			—
Trading securities	54,377			54,377			—			—
Total assets measured at fair value	$	230,147		$	104,815		$	116,524		$	8,808

	Estimated Fair Value December 31, 2012
	Total			Input Levels Used
	Fair Value			Level 1			Level 2		Level 3
Cash and cash equivalents	$	63,862		$	63,862		$	—	$	—
Auction rate security	9,485			—			—		9,485
Available-for-sale securities excluding the auction rate security	84,568			—			84,568		—
Commodity futures contracts, net	(112		)	(112		)	—		—
Trading securities	49,378			49,378			—		—
Total assets measured at fair value	$	207,181		$	113,128		$	84,568	$	9,485

	Estimated Fair Value March 31, 2012
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	79,909	$	79,909	$	—	$	—
Auction rate security	6,775		—		—		6,775
Available-for-sale securities excluding the auction rate security	59,054		—		59,054		—
Foreign currency forward contracts	308		—		308		—
Commodity futures contracts	440		440		—		—
Commodity options contracts	33		33		—		—
Trading securities	47,031		47,031		—		—
Total assets measured at fair value	$	193,550	$	127,413	$	59,362	$	6,775

As of March 30, 2013, the Company’s long-term investments include $8,808 ($13,550 original cost) of Jefferson County Alabama Sewer Revenue Refunding Warrants, originally purchased with an insurance-backed AAA rating.  This is an auction rate security that is classified as an available-for-sale security.  Due to adverse events related to Jefferson County and its bond insurance carrier, Financial Guaranty Insurance Company (FGIC), as well as events in the credit markets, the auctions for this auction rate security have failed since 2008.  As such, the Company continues to estimate the fair value of this auction rate security utilizing a valuation model with Level 3 inputs, as defined by guidance.  This valuation model considered, among others items, a limited number of market trades, the credit risk of the collateral underlying the auction rate security, the credit risk of the bond insurer, interest rates, and the amount and timing of expected future cash flows including assumptions about the market expectation of the next successful auction or possible negotiated settlement between the County and debt holders.  The trading range of these inputs was between 64.4% and 76.0% of the original par value. Both Jefferson County and FGIC are in bankruptcy. Rulings by the bankruptcy courts could have adverse effects to the holders of warrants and other debt, and further reduce the market value of this auction rate security resulting in an additional other-than-temporary impairments and charges to net earnings. The Company is not currently able to determine the outcome of this bankruptcy, or the amount and timing of the ultimate net proceeds that it may recover. See also the Company’s consolidated financial statements and related notes and Management and Discussion and Analysis included in the Company’s 2012 Form 10-K and annual report.

The following table presents additional information about the Company’s financial instruments (an auction rate security) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at March 30, 2013 and March 31,2012:

	2013			2012
Balance at January 1	$	9,485		$	7,453
Unrealized loss in other comprehensive earnings	(677		)	(678		)
Balance at March 30 and March 31, respectively	$	8,808		$	6,775

The fair value of the Company’s industrial revenue development bonds at March 30, 2013 and March 31, 2012 were valued using Level 2 inputs which approximates the carrying value of $7,500 for both periods. Interest rates on these bonds reset weekly based on current market conditions.