Fair Value Measurements

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments, marketable securities and accounts receivable. The Company believes it had no significant concentrations of credit risk as of June 30, 2013.

The Company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during the six months ended June 30, 2013. The Company’s financial assets and liabilities carried at fair value are primarily comprised of marketable securities, derivative contracts used to hedge the Company’s currency risk, and acquisition-related contingent consideration. The Company has not elected to measure any additional financial instruments or other items at fair value.

Valuation Hierarchy: The following summarizes the three levels of inputs required to measure fair value. For Level 1 inputs, the Company utilizes quoted market prices as these instruments have active markets. For Level 2 inputs, the Company utilizes quoted market prices in markets that are not active, broker or dealer quotations, or utilizes alternative pricing sources with reasonable levels of price transparency. For Level 3 inputs, the Company utilizes unobservable inputs based on the best information available, including estimates by management primarily based on information provided by third-party fund managers, independent brokerage firms and insurance companies. A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible.

The following tables show the assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2013 and December 30, 2012 classified in one of the three classifications described above:

	Fair Value Measurements at June 30, 2013 Using:
	Total Carrying Value at June 30, 2013			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(In thousands)
Marketable securities	$	1,139		$	1,139	$	—		$	—
Foreign exchange derivative assets	483			—		483			—
Foreign exchange derivative liabilities	(84		)	—		(84		)	—
Contingent consideration	(3,715		)	—		—			(3,715		)

	Fair Value Measurements at December 30, 2012 Using:
	Total Carrying Value at December 30, 2012			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable  Inputs (Level 3)
	(In thousands)
Marketable securities	$	1,149		$	1,149	$	—		$	—
Foreign exchange derivative assets	274			—		274			—
Foreign exchange derivative liabilities	(294		)	—		(294		)	—
Contingent consideration	(3,017		)	—		—			(3,017		)

Valuation Techniques: The Company’s Level 1 and Level 2 assets and liabilities are comprised of investments in equity and fixed-income securities as well as derivative contracts. For financial assets and liabilities that utilize Level 1 and Level 2 inputs, the Company utilizes both direct and indirect observable price quotes, including common stock price quotes, foreign exchange forward prices and bank price quotes. Below is a summary of valuation techniques for Level 1 and Level 2 financial assets and liabilities.

Marketable securities:    Include equity and fixed-income securities measured at fair value using the quoted market prices at the reporting date.

Foreign exchange derivative assets and liabilities:    Include foreign exchange derivative contracts that are valued using quoted forward foreign exchange prices at the reporting date.

The Company has classified its net liabilities for contingent consideration relating to its acquisitions of ID Biological Systems, Inc., Dexela Limited, Haoyuan and Tetra Teknolojik Sistemler Limited Sirketi within Level 3 of the fair value hierarchy because the fair value is determined using significant unobservable inputs, which included probability weighted cash flows. A description of the significant acquisitions is included within Note 2 to the Company's audited consolidated financial statements filed with the 2012 Form 10-K. Contingent consideration is measured at fair value at the acquisition date, based on the probability that revenue thresholds or product development milestones will be achieved during the earnout period. Increases or decreases in the fair value of contingent consideration liabilities primarily result from changes in the estimated probabilities of achieving revenue thresholds or product development milestones during the earnout period. The Company may have to pay contingent consideration, related to all acquisitions with open contingency periods, of up to $36.8 million as of June 30, 2013. As of June 30, 2013, the Company has recorded contingent consideration obligations relating to these acquisitions, with an estimated fair value of $3.7 million at June 30, 2013. The earnout periods for each of these acquisitions do not exceed three years from the acquisition date.

A reconciliation of the beginning and ending Level 3 net liabilities is as follows:

	Three Months Ended						Six Months Ended
	June 30, 2013			July 1, 2012			June 30, 2013			July 1, 2012
	(In thousands)
Balance beginning of period	$	(2,727	)	$	(20,636	)	$	(3,017	)	$	(20,298	)
Additions	(1,100		)	—			(1,100		)	—
Amounts paid and foreign currency translation	—			13,646			64			13,646
Change in fair value (included within selling, general and administrative expenses)	112			(325		)	338			(663		)
Balance end of period	$	(3,715	)	$	(7,315	)	$	(3,715	)	$	(7,315	)

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term maturities of these assets and liabilities. If measured at fair value, cash and cash equivalents would be classified as Level 1.

The Company’s senior unsecured revolving credit facility, with a $700.0 million available limit, had amounts outstanding of $316.0 million and $258.0 million as of June 30, 2013 and December 30, 2012, respectively. The interest rate on the Company’s senior unsecured revolving credit facility is reset at least monthly to correspond to variable rates that reflect currently available terms and conditions for similar debt. The Company had no change in credit standing during the first six months of fiscal year 2013. Consequently, the carrying value of the current year and prior year credit facilities approximate fair value and would be classified as Level 2. 

The Company’s 2015 Notes, with a face value of $150.0 million, had an aggregate carrying value of $150.0 million and a fair value of $160.9 million as of June 30, 2013. The 2015 Notes had an aggregate carrying value of $150.0 million and a fair value of $165.4 million as of December 30, 2012. The Company's 2021 Notes, with a face value of $500.0 million, had an aggregate carrying value of $497.3 million, net of $2.7 million of unamortized original issue discount, and a fair value of $533.1 million as of June 30, 2013. The 2021 Notes had an aggregate carrying value of $497.2 million, net of $2.8 million of unamortized original issue discount, and a fair value of $558.3 million as of December 30, 2012. The fair values of the 2015 Notes and the 2021 Notes are estimated using market quotes from brokers, or are based on current rates offered for similar debt. The Company's financing lease obligations had an aggregate carrying value of $40.8 million as of June 30, 2013 and approximated the fair value given the timing of the recognition of these obligations to the balance sheet date. As of June 30, 2013, the 2015 Notes, 2021 Notes and financing lease obligations were classified as Level 2.

As of June 30, 2013, there has not been any significant impact to the fair value of the Company’s derivative liabilities due to credit risk. Similarly, there has not been any significant adverse impact to the Company’s derivative assets based on the evaluation of its counterparties’ credit risks.