Fair Value

3 Months Ended

Oct. 01, 2011

Fair Value [Abstract]

FAIR VALUE

NOTE 3. FAIR VALUE

We define fair value as the estimated price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value measurements for assets and liabilities which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk. We apply the following fair value hierarchy, which ranks the quality and reliability of the information used to determine fair values:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices of identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets), or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Our cash equivalents and non-current marketable securities are generally classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The types of instruments valued based on quoted market prices in active markets include most marketable securities and money market securities. Such instruments are generally classified within Level 1 of the fair value hierarchy. The types of instruments valued based on other observable inputs are foreign currency forward exchange contracts. Such instruments are generally classified within Level 2 of the fair value hierarchy.

During the three months ended October 1, 2011, we have classified the earnout obligations arising from our acquisition of Mintera Corporation (Mintera) within Level 3 of the fair value hierarchy because their values were primarily derived from management estimates of future operating results. See Note 4, Business Combination, for additional details regarding these earnout obligations.

We have a defined benefit pension plan in Switzerland whose assets are classified within Level 1 of the fair value hierarchy for plan assets of cash, equity investments and fixed income investments, and Level 3 of the fair value hierarchy for plan assets of real estate and alternative investments. These pension plan assets are not reflected in the accompanying condensed consolidated balance sheets, and are thus not included in the following table.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are shown in the table below by their corresponding balance sheet caption and consisted of the following types of instruments at October 1, 2011:

	Fair Value Measurement at Reporting Date Using
	Quoted Prices		Significant
	in Active		Other			Significant
	Markets for		Observable			Unobservable
	Identical Assets		Inputs			Inputs
	(Level 1)		(Level 2)			(Level 3)		Total
	(Thousands)
Assets:
Cash and cash equivalents:
Money market funds	$	19,734	$	—		$	—	$	19,734
Prepaid expenses and other current assets:
Unrealized loss on currency instruments designated as cash flow hedges		—		(25	)		—		(25	)
Other non-current assets:
Marketable securities		158		—			—		158
Total assets measured at fair value	$	19,892	$	(25	)	$	—	$	19,867
Liabilities:
Accrued expenses and other liabilities:
Earnout obligations for Mintera acquisition	$	—	$	—		$	12,351	$	12,351
Total liabilities measured at fair value	$	—	$	—		$	12,351	$	12,351

The following table provides details regarding the changes in assets and liabilities classified within Level 3 from July 2, 2011 to October 1, 2011:

	Accrued Expenses
	and Other Liabilities
	(Thousands)
Balance at July 2, 2011	$	16,140
Fair value adjustment to Mintera earnout obligations		(3,789	)
Balance at October 1, 2011	$	12,351

Derivative Financial Instruments

At the end of each accounting period, we mark-to-market all foreign currency forward exchange contracts that have been designated as cash flow hedges and changes in fair value are recorded in accumulated other comprehensive income until the underlying cash flow is settled and the contract is recognized in other income (expense) in our condensed consolidated statements of operations. As of October 1, 2011, we held 14 outstanding foreign currency forward exchange contracts to sell U.S. dollars and buy U.K. pounds sterling. All of these contracts have been designated as cash flow hedges. These contracts had an aggregate notional value of approximately $11.5 million of put and call options which expire, or expired, at various dates ranging from October 2011 through September 2012. To date, we have not entered into any such contracts for longer than 12 months and, accordingly, all amounts included in accumulated other comprehensive income as of October 1, 2011 will generally be reclassified into other income (expense) within the next 12 months. As of October 1, 2011, each of the 14 designated cash flow hedges was determined to be fully effective; therefore, we recorded an unrealized loss of $25,000 to accumulated other comprehensive income related to recording the fair value of these foreign currency forward exchange contracts for accounting purposes.