Fair Value Measurements

12 Months Ended

Jan. 02, 2015

FAIR VALUE MEASUREMENTS

The guidance on fair value measurements and disclosures defines fair value, establishes a framework for measuring fair value, and requires enhanced disclosures about assets and liabilities measured at fair value. Fair value is defined as the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity.

Assets and liabilities recorded at fair value on a recurring basis in the Consolidated Balance Sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, defined by the guidance on fair value measurements are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, and are as follows:

Level I—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level II—Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level III—Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are categorized in the tables below based upon the lowest level of significant input to the valuations.



	Fair Values at the end of Fiscal 2014
(In thousands)	Level I		Level II		Level III		Total
Assets
Deferred compensation plan assets (2)	$	19,239	$	—	$	—	$	19,239
Derivative assets (3)	—		2,913		—		2,913
Contingent consideration assets (4)	—		—		8,280		8,280
Total	$	19,239	$	2,913	$	8,280	$	30,432
Liabilities
Deferred compensation plan liabilities (2)	$	19,239	$	—	$	—	$	19,239
Derivative liabilities (3)	—		1,385		—		1,385
Contingent consideration liability (5)	—		—		3,692		3,692
Total	$	19,239	$	1,385	$	3,692	$	24,316



	Fair Values at the end of Fiscal 2013
(In thousands)	Level I		Level II		Level III		Total
Assets
Money market funds (1)	$	2	$	—	$	—	$	2
Deferred compensation plan assets (2)	16,545		—		—		16,545
Derivative assets (3)	—		196		—		196
Total	$	16,547	$	196	$	—	$	16,743
Liabilities
Deferred compensation plan liabilities (2)	$	16,545	$	—	$	—	$	16,545
Derivative liabilities (3)	—		635		—		635
Contingent consideration liability (5)	—		—		2,401		2,401
Total	$	16,545	$	635	$	2,401	$	19,581


(1)	The money market funds are highly liquid investments. The fair values are determined using observable quoted prices in active markets. Money market funds are included in Cash and cash equivalents on the Company’s Consolidated Balance Sheets.

(2)

The Company maintains a self-directed, non-qualified deferred compensation plan for certain executives and other highly compensated employees. The plan assets and liabilities are invested in actively traded mutual funds and individual stocks valued using observable quoted prices in active markets. Deferred compensation plan assets and liabilities are included in Other non-current assets and Other non-current liabilities on the Company's Consolidated Balance Sheets.

(3)

Derivative assets and liabilities primarily represent forward currency exchange contracts. The Company typically enters into these contracts to minimize the short-term impact of foreign currency exchange rates on certain trade and inter-company receivables and payables. Derivative assets and liabilities are included in Other current assets and Other current liabilities on the Company's Consolidated Balance Sheets.

(4)

Contingent consideration assets represents arrangements for buyers to pay the Company for certain businesses that it has divested. The fair value is determined based on the Company's expectations of future receipts. The minimum amount to be received under these arrangements is $4.2 million. Contingent consideration assets are included in Other receivables and Other non-current assets on the Company's Consolidated Balance Sheets.

(5)

Contingent consideration liability represents arrangements to pay the former owners of certain companies that Trimble acquired. The undiscounted maximum payment under the arrangements is $12.1 million at the end of fiscal 2014, based on future revenues or gross margins. Contingent consideration liability is included on Other current liabilities and Other non-current liabilities on the Company's Consolidated Balance Sheets.

Additional Fair Value Information

The following table provides additional fair value information relating to the Company’s financial instruments outstanding:



	Carrying Amount		Fair Value		Carrying Amount		Fair Value
At the End of Fiscal Year	2014				2013
(In thousands)
Assets:
Cash and cash equivalents	$	148,000	$	148,000	$	147,227	$	147,227
Liabilities:
Notes	$	400,000	$	396,856	$	—	$	—
Credit facility	277,000		277,000		687,000		687,000
Uncommitted facilities	57,000		57,000		63,000		63,000
Promissory notes and other debt	7,590		7,590		8,458		8,458

The fair value of cash and cash equivalents is based on quoted prices in active markets for identical assets or liabilities, and is categorized as Level I in the fair value hierarchy. The fair value of the Notes was determined based on observable market prices of identical instruments in less active markets and is categorized accordingly as Level II in the fair value hierarchy. The fair value of the bank borrowings and promissory notes has been calculated using an estimate of the interest rate the Company would have had to pay on the issuance of notes with a similar maturity and discounting the cash flows at that rate, and is categorized as Level II in the fair value hierarchy. The fair values do not give an indication of the amount that the Company would currently have to pay to extinguish any of this debt.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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