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
	Quoted Prices in Active Markets for Identical Instruments		Significant Other Observable Inputs			Significant Unobservable Inputs		Total
Type of Instruments	(Level 1)		(Level 2)			(Level 3)		Balance
(In millions)
Assets at December 29, 2017:
Available-for-sale securities:
DRTC securities	$	—	$	8.0		$	—	$	8.0
APTC securities	—		6.0			—		6.0
GPTC securities	—		4.5			—		4.5
Total assets measured at fair value	$	—	$	18.5		$	—	$	18.5

Liabilities at December 29, 2017:
Derivative liabilities:	$	—	$	(0.4	)	$	—	$	(0.4	)
Total liabilities measured at fair value	$	—	$	(0.4	)	$	—	$	(0.4	)

Assets at September 29, 2017:
Available-for-sale securities:
Original CPTC loans	$	—	$	—		$	47.4	$	47.4
DRTC securities	—		8.0			—		8.0
GPTC securities	—		4.4			—		4.4
Total assets measured at fair value	$	—	$	12.4		$	47.4	$	59.8

The Company's Level 2 available-for-sale securities consist of bonds for DRTC, APTC and GPTC. The observable inputs for these securities are comparable bond issues, broker/dealer quotations for the same or similar investments in active markets and other observable inputs such as yields, credit risks, default rates, and volatility. As of December 29, 2017 and September 29, 2017, the carrying amount of the Level 2 available-for-sale securities approximated their fair value. See Note 15, "VPT Loans and Securities" for further information about these bonds.

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. See Note 8, "Derivative Instruments and Hedging Activities" for more information about the Company's derivative instruments.

In December 2017, the Original CPTC loans were modified and partially satisfied resulting in a Term Loan of $53.5 million, as defined in Note 15, "VPT Loans and Securities" for further information. One of the modifications was that the loan agent no longer has the option to purchase these loans from the Company, therefore, the Original CPTC loans are no longer classified as an available-for-sale security. The Company had no unrealized gains or unrealized losses associated with the Original CPTC loans recorded in its other comprehensive income. The modification to the Original CPTC Loans had no impact on the Company's Condensed Consolidated Statements of Earnings for the three months ended December 29, 2017. As of September 29, 2017, the Company classified the Original CPTC loans as available-for-sale securities, the fair value of which was 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 as well as underlying cash flow assumptions. However, the Company did not increase the fair value of the Original CPTC loans above their par values as ORIX Capital Markets, LLC (“ORIX”), the loan agent, had the option to purchase these loans from the Company under the original terms and conditions at par value.

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)	Available-for-sale Securities
Balance at September 29, 2017	$	47.4
Reclassification of Original CPTC Loans to Term Loan	(47.4		)
Balance at December 29, 2017	$	—

There were no transfers of assets or liabilities between fair value measurement levels during either the three months ended December 29, 2017, or the three months ended December 30, 2016. 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 and cash equivalents, trade and unbilled receivables, net of allowance for doubtful accounts, short-term notes receivable, revolving loan to CPTC, senior secured debt, accounts payable, and short-term borrowings approximate their carrying amounts due to their short maturities.

As of December 29, 2017, the fair value of the Term Loan with CPTC approximated its carrying value of $44.0 million. See Note 15, "VPT Loans and Securities" for further information. The carrying value is based on the present value of expected future cash payments discounted at a rate reflecting the nature and duration of the loans, risks involved with CPTC, and its industry. As a result, the Term Loan is categorized as Level 3 in the fair value hierarchy.

The fair value of the outstanding long-term notes receivable approximated their carrying value of $56.0 million and $86.7 million at December 29, 2017 and September 29, 2017, respectively, because they are based on terms of recent comparable transactions and are categorized as Level 3 in the fair value hierarchy. The fair value 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 as well as underlying cash flow assumptions. See, Note 5, "Receivables" for information on the long-term notes receivable.