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 (exit price). The inputs used to measure fair value are classified into the following hierarchy:



Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2	Unadjusted quoted prices in active markets for similar assets or liabilities, or
	Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or
	Inputs other than quoted prices that are observable for the asset or liability
Level 3	Unobservable inputs for the asset or liability

The Company uses the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table sets forth the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of January 3, 2015 and December 28, 2013, respectively (in millions):



	January 3, 2015		December 28, 2013
	January 3, 2015		December 28, 2013		Classification
Assets:
Prepaid expenses and other current assets:
Derivative currency contracts	$	1.6	$	8.4	Level 2
Derivative commodity contracts	2.3		4.7		Level 2
Other noncurrent assets:
Assets Held in Rabbi Trust	5.2		5.1		Level 1
Derivative currency contracts	—		0.7		Level 2
Liabilities:
Other accrued expenses:
Deferred contingent purchase price	—		8.3		Level 3
Hedging obligations current:
Interest rate swap	—		5.7		Level 2
Derivative currency contracts	17.5		3.1		Level 2
Derivative commodity contracts	12.2		2.5		Level 2
Hedging obligations:
Interest rate swap	11.9		16.1		Level 2
Derivative currency contracts	10.5		0.7		Level 2
Derivative commodity contracts	0.1		—		Level 2
Other noncurrent liabilities:
Deferred contingent purchase price	—		1.4		Level 3

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 participants at the measurement date.

Level 1 fair value measurements are unadjusted quoted prices.

Level 2 fair value measurements for derivative assets and liabilities are measured using quoted prices in active markets for similar assets and liabilities. Interest rate swaps are valued based on the discounted cash flows for the LIBOR forward yield curve for a a swap with similar contractual terms. Foreign currency forwards are valued based on exchange rates quoted by domestic and foreign banks for similar instruments. Fair value of debt was estimated based on rates for instruments with comparable maturities and credit quality. The carrying value of debt includes adjustments related to fair value hedges (see Note 7 of Notes to the Consolidated Financial Statements for the fair value estimate of debt).

Level 3 liabilities are comprised entirely of the deferred contingent purchase price of the Company's acquisitions. The fair value was determined using valuation techniques based on risk and probability adjusted discounted cash flows.

The Company did not change its valuation techniques during fiscal 2014.

The table below sets forth a summary of changes in fair value of the Company's liabilities for deferred contingent purchase price from the Company's acquisitions as of January 3, 2015 and December 28, 2013, respectively (in millions):



	Year Ended
	January 3, 2015			December 28, 2013
	January 3, 2015			December 28, 2013
Beginning balance	$	9.7		$	21.1
Expense	—			1.1
Fair value adjustment	(1.1		)	(12.3		)
Payments	(8.6		)	(0.2		)
Ending balance	$	—		$	9.7

During 2013, the Commercial and Industrial Systems segment reporting unit with slower than expected adoption of switched reluctance motor technology had a deferred contingent purchase price liability that was adjusted as a result of changes in future performance expectations that reduced discounted cash flows and increased risk and probability adjustments. This resulted in a $12.3 million decrease in the deferred contingent purchase price liability in 2013.