Fair Value Measurements

9 Months Ended

Jul. 01, 2011

Fair Value Measurements

Fair Value Measurements

14      Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy has been established based on three levels of inputs, of which the first two are considered observable and the last unobservable.

Level 1 - Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets or liabilities.

Level 2 - Inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. These are typically obtained from readily-available pricing sources for comparable instruments.

Level 3 - Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity's own assumptions of the data that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.

The carrying amounts of cash, cash equivalents, accounts receivable, and accounts payable approximated fair value at July 1, 2011, October 1, 2010 and July 2, 2010 due to the short maturities of these instruments. When indicators of impairment are present, the Company may be required to value certain long-lived assets such as property, plant, and equipment, and other intangibles at fair value.

Valuation Techniques

Over the Counter Derivative Contracts

The value of over the counter derivative contracts, such as interest rate swaps and foreign currency forward contracts, are derived using pricing models, which take into account the contract terms, as well as other inputs, including, where applicable, the notional values of the contracts, payment terms, maturity dates, credit risk, interest rate yield curves, and contractual and market currency exchange rates.

Rabbi Trust Assets

Rabbi trust assets are classified as trading securities and are comprised of marketable debt and equity securities that are marked to fair value based on unadjusted quoted prices in active markets.
 

The following table summarizes the Company's financial assets and liabilities recorded on its balance sheet at fair value on a recurring basis as of July 1, 2011:

	Level 1		Level 2		Level 3		Total
Assets:
Rabbi trust assets	$	6,368	$	-	$	-	$	6,368
Liabilities:
Foreign currency forward contracts	$	-	$	143	$	-	$	143

The following table summarizes the Company's financial assets and liabilities recorded on its balance sheet at fair value on a recurring basis as of July 2, 2010:

	Level 1		Level 2		Level 3		Total
Assets:
Rabbi trust assets	$	4,700	$	-	$	-	$	4,700
Foreign currency forward contracts	$	-	$	146	$	-	$	146

Rabbi trust assets are classified as trading securities and are comprised of marketable debt and equity securities that are marked to fair value based on unadjusted quoted prices in active markets.  The mark-to-market adjustments are recorded in "Other expense (income) net" in the Company's accompanying condensed consolidated statements of operations.

The fair value of the foreign exchange forward contracts reported above was measured using the market value approach based on foreign currency exchange rates and the notional amount of the forward contract.  All foreign currency forward contracts held by the Company as of July 1, 2011 mature within twelve months.  The mark-to-market adjustments are recorded in "Other expense (income) net" in the Company's accompanying condensed consolidated statements of operations.

The following tables summarize the amount of total income or loss attributable to the changes in fair value of the instruments noted above:

		Three Months Ended July 1, 2011			Nine Months Ended July 1, 2011
	Location of (income) loss recognized in statement of operations	Amount of (income) loss recognized			Amount of (income) loss recognized
Rabbi trust assets	Other expense (income), net	$	(19	)	$	(703	)
Foreign currency forward contracts	Other expense (income), net	$	(387	)	$	(719	)

		Three Months Ended July 2, 2010		Nine Months Ended July 2, 2010
	Location of (income) loss recognized in statement of operations	Amount of (income) loss recognized		Amount of (income) loss recognized
Rabbi trust assets	Other expense (income), net	$	481	$	(90	)
Foreign currency forward contracts	Other expense (income), net	$	323	$	1,018

Certain assets and liabilities are measured at fair value on a non-recurring basis in periods subsequent to their initial recognition.

During the three month period ended July 1, 2011, the Company recognized impairment of $293 on part of its manufacturing facility in Ferndale, Washington in order to write the asset down to its estimated fair value of $1,300.  The impairment charge was included in "Other expense (income), net" in the Company's accompanying condensed consolidated statements of operations in the Watercraft segment.  This portion of the facility is anticipated to be sold within the next twelve months.  

During the nine months ended July 2, 2010, the Company recognized impairment on a warehouse facility in Casarza – Ligure, Italy of $114 to write the asset down to its fair value of $656.  The impairment charge was included in the "Administrative management, finance and information systems" expense in the Company's accompanying condensed consolidated statements of operations in the Diving segment.  This facility was sold in March 2010 for $634.