Fair Value of Financial Instruments (Tables)

6 Months Ended

Jul. 02, 2016

Fair Value of Financial Instruments

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

	Fair Value Measurements at July 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	$	31,620	$	—	$	—	$	31,620
Certificates of deposit	—		2,537		—		2,537
Municipal bonds	—		471		—		471
Total cash equivalents	$	31,620	$	3,008	$	—	$	34,628
Short-term investments:
Municipal bonds	$	—	$	88,030	$	—	$	88,030
Variable-rate demand notes	—		18,930		—		18,930
Corporate bonds	—		14,060		—		14,060
U.S. government bonds	10,102		—		—		10,102
Asset-backed securities	—		8,988		—		8,988
International government bonds	—		2,216		—		2,216
Total short-term investments	$	10,102	$	132,224	$	—	$	142,326
Long-term investments:
Auction rate securities	$	—	$	—	$	6,921	$	6,921
Total long-term investments	$	—	$	—	$	6,921	$	6,921
Total	$	41,722	$	135,232	$	6,921	$	183,875
Liabilities:
Other non-current liabilities:
Derivative instruments	$	—	$	193	$	—	$	193
Total	$	—	$	193	$	—	$	193

	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

Summarization of contractual underlying maturities of available-for-sale investments

The following summarizes the contractual underlying maturities of the Company’s available-for-sale investments at July 2, 2016 (in thousands):

	Cost		Fair Value
Due in one year or less	$	104,001	$	104,037
Due after one year through ten years	55,269		55,387
Due after ten years	25,530		24,451
	$	184,800	$	183,875

Schedule of available-for-sale investments in continuous unrealized loss position by length of time

The available-for-sale investments that were in a continuous unrealized loss position, aggregated by length of time that individual securities have been in a continuous loss position, were as follows (in thousands):

	Less Than 12 Months					12 Months or Greater					Total
As of July 2, 2016	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Municipal bonds	$	11,276	$	(4	)	$	1,505	$	(1	)	$	12,781	$	(5	)
Auction rate securities	—		—			6,921		(1,079		)	6,921		(1,079		)
Corporate bonds	5,059		(6		)	—		—			5,059		(6		)
	$	16,335	$	(10	)	$	8,426	$	(1,080	)	$	24,761	$	(1,090	)

	Less Than 12 Months					12 Months or Greater					Total
As of January 2, 2016	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Municipal bonds	$	29,271	$	(30	)	$	1,198	$	(2	)	$	30,469	$	(32	)
Auction rate securities	—		—			7,126		(874		)	7,126		(874		)
International government bonds	2,220		(7		)	—		—			2,220		(7		)
Corporate bonds	996		(3		)	—		—			996		(3		)
	$	32,487	$	(40	)	$	8,324	$	(876	)	$	40,811	$	(916	)

Summary of quantitative information about level 3 asset fair value measurements

Auction rate securities

Fair Value at July 2, 2016 (000s)		Valuation Technique	Unobservable Input	Weighted Average
$	6,921	Discounted cash flow	Estimated yield	1.02%
			Expected holding period	10 years
			Estimated discount rate	2.89%

Summary of activity in Level 3 financial instruments

The following summarizes the activity in Level 3 financial instruments for the three and six months ended July 2, 2016 (in thousands):

Assets

Auction Rate Securities	Three Months Ended		Six Months Ended
Beginning balance	$	6,845	$	7,126
Gain (loss) included in other comprehensive income (loss)	76		(205		)
Balance at July 2, 2016	$	6,921	$	6,921

Liabilities

Contingent Consideration (1)	Six Months Ended
Beginning balance	$	14,073
Settlements (2)	(11,375		)
Gain recognized in earnings (3)	(2,698		)
Balance at July 2, 2016	$	—

(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 were recorded in selling, general and administrative expenses in the Consolidated Statement of Income.

(2) On March 11, 2016, the Company entered into an agreement which settled the total amount of contingent consideration related to the Energy Micro acquisition (including all amounts for fiscal 2015 through 2018). See Note 6, Acquisitions, for additional information.

(3) The gain recognized in earnings was due to the settlement of the Energy Micro contingent consideration. This gain was offset in part by a charge of approximately $2.7 million recorded in the six months ended July 2, 2016 for a portion of the contingent consideration accounted for as post-combination compensation expense.