FAIR VALUE

Assets/Liabilities Measured at Fair Value on a Recurring Basis

In the tables below, the Company has segregated all assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.



	Fair Value Measurement Using
Type of Instruments	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total Balance
(In millions)
Assets at September 30, 2016:
Available-for-sale securities:
Corporate debt securities	$	—	$	—	$	95.3		$	95.3
Total assets measured at fair value	$	—	$	—	$	95.3		$	95.3

Liabilities at September 30, 2016:
Contingent consideration	$	—	$	—	$	(1.3	)	$	(1.3	)
Total liabilities measured at fair value	$	—	$	—	$	(1.3	)	$	(1.3	)

Assets at October 2, 2015:
Available-for-sale securities:
Corporate debt securities	$	—	$	8.4	$	83.9		$	92.3
Non-U.S. government security	—		0.7		—			0.7
Total assets measured at fair value	$	—	$	9.1	$	83.9		$	93.0

Liabilities at October 2, 2015:
Contingent consideration	$	—	$	—	$	(4.1	)	$	(4.1	)
Total liabilities measured at fair value	$	—	$	—	$	(4.1	)	$	(4.1	)

At September 30, 2016, and October 2, 2015, the fair value of the Company's derivative instruments were immaterial. The Company's Level 3 corporate debt securities, the CPTC loans, were included in short-term investments at September 30, 2016, and other assets at October 2, 2015 on the Consolidated Balance Sheets. The Company's Level 2 corporate debt securities and the non-U.S. government security were included in other assets at October 2, 2015 on the Consolidated Balance Sheets. The Company's contingent consideration was included in accrued liabilities at September 30, 2016 and accrued liabilities and other long-term liabilities at October 2, 2015 on the Consolidated Balance Sheets.

The fair value of the Company's Level 2 other corporate debt securities and non-U.S. government security was priced using quoted market prices for similar instruments or non-binding market prices that are corroborated by observable market data. The Company has elected to use the income approach to value its derivative instruments using standard valuation techniques and Level 2 inputs, such as currency spot rates, forward points and credit default swap spreads. The Company’s derivative instruments are generally short-term in nature, typically one month to thirteen months in duration.

The fair value of the Company’s Level 3 corporate debt securities, the CPTC loans, is based on the income approach by using the discounted cash flow model with key assumptions that include discount rates corresponding to the terms and risks associated with the loans to CPTC. If the estimated discount rates used were to increase or decrease, the fair value of the debt securities would decrease or increase, respectively. However, the Company does not increase the fair value of these securities above their par values as ORIX Capital Markets, LLC (“ORIX”), the loan agent, has the option to purchase these loans from the Company under the original terms and conditions at par value.

The Company measures the fair value of its Level 3 contingent consideration liabilities based on the income approach by using a discounted cash flow model with key assumptions that include estimated sales units or revenues of the acquired business or completion of certain milestone targets during the earn-out period, volatility, and estimated discount rates corresponding to the periods of expected payments. If the estimated sales units, revenues or probability of completing certain milestones were to increase or decrease during the respective earn-out period, the fair value of the contingent consideration would increase or decrease, respectively. If the estimated discount rates were to increase or decrease, the fair value of contingent consideration would decrease or increase, respectively. Changes in volatility may result in an increase or decrease in the fair value of contingent consideration.

The following table presents the reconciliation for all assets and liabilities measured and recorded at fair value on a recurring basis using significant unobservable inputs (Level 3):



(In millions)	CPTC Loans		Contingent Consideration
Balance at September 26, 2014	$	75.6	$	(7.5	)
Additions ⁽¹⁾	8.3		—
Settlements ⁽²⁾	—		3.3
Change in fair value recognized in earnings	—		0.1
Balance at October 2, 2015	83.9		(4.1		)
Additions ⁽¹⁾	11.4		—
Settlements ⁽²⁾	—		3.5
Change in fair value recognized in earnings	—		(0.7		)
Balance at September 30, 2016	$	95.3	$	(1.3	)


⁽¹⁾	Amounts reported under CPTC loans represents draw downs and accrued interest.


⁽²⁾	Amounts reported under Contingent Consideration represent cash payments to settle contingent consideration liabilities.

There were no transfers of assets or liabilities between fair value measurement levels during fiscal years 2016, 2015 and 2014. Transfers between fair value measurement levels are recognized at the end of the reporting period.

Fair Value of Other Financial Instruments

The fair values of certain of the Company’s financial instruments, including bank deposits included in cash equivalents, accounts receivable, net of allowance for doubtful accounts, short-term notes receivable, accounts payable, and short-term borrowings approximate their carrying amounts due to their short maturities.

As of both September 30, 2016 and October 2, 2015, the fair value of current maturities of the long-term debt approximated its carrying value of $50.0 million due to its short-term maturity. The fair value of the long-term debt, payable in installments through fiscal year 2018, approximated its carrying value of $287.5 million and $337.5 million at September 30, 2016 and October 2, 2015, respectively, because it is carried at a market observable interest rate that resets periodically and is categorized as Level 2 in the fair value hierarchy.

The fair value of the outstanding long-term notes receivable approximated their carrying value of $59.2 million and $30.9 million at September 30, 2016 and October 2, 2015, respectively, because it is based on terms of recent comparable transactions and is categorized as Level 3 in the fair value hierarchy.