Fair Value

3 Months Ended

Dec. 29, 2012

Fair Value Disclosures [Abstract]

Fair Value

Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate fair value. The definition of the fair value hierarchy is as follows:

Level 1 – Quoted prices in active markets for identical assets and liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for similar assets and liabilities.

Level 3 – Inputs for which significant valuation assumptions are unobservable in a market and therefore value is based on the best available data, some of which is internally developed and considers risk premiums that a market participant would require.

Our derivatives are valued using various pricing models or discounted cash flow analyses that incorporate observable market data, such as interest rate yield curves and currency rates, and are classified as Level 2 within the valuation hierarchy. Our Level 3 fair value liabilities represent contingent consideration recorded for acquisitions to be paid if various financial targets are met. The amounts recorded were calculated for each payment scenario in each period using an estimate of the probability of the future cash outflows. The varying contingent payments were then discounted to the present value at the weighted average cost of capital. Fair value is assessed on a quarterly basis, or whenever events or circumstances change that indicates an adjustment is required. The assessment includes an evaluation of the performance of the acquired business compared to previous expectations, changes to future projections and the probability of achieving the earn out targets.

The following table presents the fair values and classification of our financial assets and liabilities measured on a recurring basis as of December 29, 2012:

	Classification	Level 1		Level 2		Level 3		Total
Foreign currency forwards	Other current assets	$	—	$	2,093	$	—	$	2,093
Foreign currency forwards	Other assets	—		58		—		58
	Total assets	$	—	$	2,151	$	—	$	2,151
Foreign currency forwards	Other accrued liabilities	$	—	$	1,173	$	—	$	1,173
Foreign currency forwards	Other long-term liabilities	—		6		—		6
Acquisition contingent consideration	Other accrued liabilities	—		—		3,275		3,275
Acquisition contingent consideration	Other long-term liabilities	—		—		1,211		1,211
	Total liabilities	$	—	$	1,179	$	4,486	$	5,665

The changes in financial liabilities classified as Level 3 within the fair value hierarchy are as follows:

	Three Months Ended
	December 29, 2012			December 31, 2011
Balance at beginning of period	$	6,422		$	1,990
Increase in discounted future cash flows recorded as interest expense	97			44
Decrease in earn out provisions recorded as other income	(2,033		)	(44		)
Balance at end of period	$	4,486		$	1,990

Our only financial instrument for which the carrying value differs from its fair value is long-term debt. At December 29, 2012, the fair value of long-term debt was $691,215 compared to its carrying value of $681,636. The fair value of long-term debt is classified as Level 2 within the fair value hierarchy and was estimated based on quoted market prices.