Fair Value of Financial Instruments (Tables)

12 Months Ended

Jan. 02, 2016

Fair Value of Financial Instruments

Financial assets and liabilities measured at fair value on a recurring basis

        The following summarizes the valuation of the Company's financial instruments (in thousands).

	Fair Value Measurements at January 2, 2016 Using
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash Equivalents:
Money market funds	$	37,721	$	—	$	—	$	37,721
Commercial paper		—		11,272		—		11,272
Certificates of deposit		—		2,845		—		2,845
U.S. government agency		—		1,599		—		1,599
Municipal bonds		—		1,577		—		1,577
Total cash equivalents	$	37,721	$	17,293	$	—	$	55,014
Short-term Investments:
Municipal bonds	$	—	$	93,516	$	—	$	93,516
Commercial paper		—		11,176		—		11,176
Variable-rate demand notes		—		8,995		—		8,995
Certificates of deposit		—		8,000		—		8,000
U.S. government agency		—		3,998		—		3,998
International government bonds		—		2,220		—		2,220
Corporate bonds		—		996		—		996
Total short-term investments	$	—	$	128,901	$	—	$	128,901
Long-term Investments:
Auction rate securities	$	—	$	—	$	7,126	$	7,126
Total long-term investments	$	—	$	—	$	7,126	$	7,126
Other assets, net:
Derivative instruments	$	—	$	92	$	—	$	92
Total	$	—	$	92	$	—	$	92
Total	$	37,721	$	146,286	$	7,126	$	191,133
Liabilities:
Accrued expenses:
Contingent consideration	$	—	$	—	$	4,749	$	4,749
Other non-current liabilities:
Contingent consideration	$	—	$	—	$	9,324	$	9,324
Total	$	—	$	—	$	14,073	$	14,073

	Fair Value Measurements at January 3, 2015 Using
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash Equivalents:
Money market funds	$	71,415	$	—	$	—	$	71,415
Certificates of deposit		—		7,739		—		7,739
Commercial paper		—		5,348		—		5,348
Municipal bonds		—		1,757		—		1,757
U.S. government agency		—		1,202		—		1,202
Corporate bonds		—		1,101		—		1,101
U.S. government bonds		1,000		—		—		1,000
Total cash equivalents	$	72,415	$	17,147	$	—	$	89,562
Short-term Investments:
Municipal bonds	$	—	$	129,152	$	—	$	129,152
Corporate bonds		—		33,033		—		33,033
Variable-rate demand notes		—		12,915		—		12,915
Commercial paper		—		8,995		—		8,995
Asset-backed securities		—		5,377		—		5,377
International government bonds		—		2,516		—		2,516
U.S. government bond		650		—		—		650
U.S. government agency		—		601		—		601
Certificates of deposit		—		250		—		250
Total short-term investments	$	650	$	192,839	$	—	$	193,489
Long-term Investments:
Auction rate securities	$	—	$	—	$	7,419	$	7,419
Total long-term investments	$	—	$	—	$	7,419	$	7,419
Other assets, net:
Derivative instruments	$	—	$	331	$	—	$	331
Total	$	—	$	331	$	—	$	331
Total	$	73,065	$	210,317	$	7,419	$	290,801
Liabilities:
Accrued expenses:
Contingent consideration	$	—	$	—	$	4,288	$	4,288
Other non-current liabilities:
Contingent consideration	$	—	$	—	$	14,150	$	14,150
Total	$	—	$	—	$	18,438	$	18,438

Summary of quantitative information about level 3 asset fair value measurements

Fair Value at January 2, 2016 (000s)	Valuation Technique	Unobservable Input	Weighted Average
$7,126	Discounted cash flow	Estimated yield	1.06%
		Expected holding period	10 years
		Estimated discount rate	3.69%

Summary of quantitative information about level 3 liability fair value measurements

Fair Value at January 2, 2016 (000s)	Valuation Technique	Unobservable Input	Range
$14,073	Monte Carlo simulation	Expected revenue growth rate	29.8% - 55.8%
		Expected revenue volatility	20.0%
		Expected term	0.0 years - 3.0 years
		Estimated discount rate	0.34% - 0.98%

Summary of activity in Level 3 financial instruments

        The following summarizes the activity in Level 3 financial instruments for the years ended January 2, 2016 and January 3, 2015 (in thousands):

Assets

	Year Ended
Auction Rate Securities	January 2, 2016			January 3, 2015
Beginning balance	$	7,419		$	10,632
Settlements		—			(4,425	)
Gain (loss) included in other comprehensive income (loss)		(293	)		1,212
Ending balance	$	7,126		$	7,419

Liabilities

	Year Ended
Contingent Consideration (1)	January 2, 2016			January 3, 2015
Beginning balance	$	18,438		$	12,919
Settlements		(4,464	)		—
Loss recognized in earnings (2)		99			5,519
Ending balance	$	14,073		$	18,438
Net loss for the period included in earnings attributable to contingent consideration held at the end of the period:	$	(99	)	$	(5,519	)

(1)

In connection with the acquisition of Energy Micro, the Company recorded contingent consideration based upon the expected achievement of certain milestone goals. Changes to the fair value of contingent consideration due to changes in assumptions used in preparing the valuation model are recorded in selling, general and administrative expenses in the Consolidated Statement of Income.

(2)

Changes to the estimated fair value of contingent consideration were primarily due to revisions to the Company's expectations of earn-out achievement.