Fair Value of Financial Instruments

3 Months Ended

Oct. 01, 2011

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

2. Fair Value of Financial Instruments

At October 1, 2011, as part of its cash management and investment program, the Company maintained a short-term marketable investment securities portfolio of $2,860 consisting of variable rate demand notes. The marketable investment securities are classified as available-for-sale and are carried at cost, which approximates fair value.

In addition, at October 1, 2011, the Company held a derivative instrument in the form of an interest rate contract that served as a cash flow hedge on interest rate change exposure on a portion of its borrowings under a floating-rate term-loan facility entered into by the Company on March 1, 2011. See “Note 8—Derivative Instruments and Hedging Activities” below.

Financial Accounting Standards Board Accounting Standard Codification (“FASB ASC”) 820-10 (the overall Subtopic of topic 820 on fair value measurements and disclosures) provides guidance on fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. This accounting standard provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

• Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 inputs are unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which a fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

Cash, cash equivalents, short-term investments, accounts receivable, short-term notes payable, accounts payable and accrued expenses, as reported in the condensed consolidated financial statements, approximate their respective fair values because of the short-term maturity of those instruments. The fair value of the Company’s long-term debt is based on the present value of expected cash flows, considering expected maturity and using current interest rates available to the Company for borrowings with similar terms. The carrying amount of the Company’s long-term debt approximates its fair value.

The following table presents assets and liabilities that are measured at fair value on a recurring basis (including items that are required to be measured at fair value) at October 1, 2011:

			Fair Value Measurements at Reporting Date Using:
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)
Assets:
Available-for-sale securities	$	2,860		—	$	2,860		—
Total	$	2,860		—	$	2,860		—
Liabilities:
Interest rate contract	$	499		—	$	499		—
Total	$	499		—	$	499		—

The following table presents assets and liabilities that are measured at fair value on a recurring basis (including items that are required to be measured at fair value) at July 2, 2011:

			Fair Value Measurements at Reporting Date Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)
Assets:
Available-for-sale securities	$	12,073		—	$	12,073		—
Total	$	12,073		—	$	12,073		—
Liabilities:
Interest rate contract	$	268		—	$	268		—
Total	$	268		—	$	268		—

Fair value for available for sale securities was based on market observable inputs and the fair value of the interest rate contract was determined based on models utilizing market observable inputs and credit risk.

The Company had no assets or liabilities measured at fair value on a non-recurring basis during the first quarter of fiscal 2012 or the first quarter of fiscal 2011.