Fair Value Measurements

6 Months Ended

Jun. 30, 2013

6. FAIR VALUE MEASUREMENTS

The Financial Accounting Standards Board (“FASB”) guidance defines fair value as the exit price associated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date. Under this guidance, valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. In addition, this guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

Ÿ Level 1 — Quoted prices in active markets for identical assets or liabilities.

Ÿ Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Company’s short-term and long-term investments in certificates of deposit are classified as Level 2 investments, which are valued with observable market parameters available from the financial institution that manages these securities.

Ÿ Level 3 — Unobservable inputs (i.e. projections, estimates, interpretations, etc.) that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

As of June 30, 2013, the Company held cash equivalents as investments in money market funds totaling $1.3 million, short-term and long-term investments in certificates of deposit totaling $2.0 million and available-for-sale securities in highly-rated U.S. Treasury, Corporate and Agency bonds and equity securities of $10.5 million in accounts held by major financial institutions. A portion of the available-for-sale securities related to equity securities held in Rabbi Trusts totaling $0.8 million and a portion of the certificates of deposit totaling $0.5 million are classified as long-term assets under the caption “Other long-term assets” in the unaudited Condensed Consolidated Balance Sheets.

While the Company believes its valuation methods used to assess the classification of financial assets within the hierarchy are appropriate, the use of different methodologies or assumptions could result in a change in a financial assets fair value tier from period to period. In such instances, a transfer would be reported at the beginning of the reporting period. There were no transfers between levels for both the three and six months ended June 30, 2013 and July 1, 2012.

The following tables present the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012:


			Fair Value
(In thousands)	Carrying Amount		Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2013
Cash equivalents	$	1,267	$	1,267	$	—	$	—
Certificates of Deposit		2,000		—		2,000		—
Available-for-sale securities
Short-term debt securities		9,695		9,695		—		—
Long-term equity securities held in a Rabbi Trust		772		772		—		—


	Fair Value
(In thousands)	Carrying Amount		Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2012
Cash equivalents	$	1,000	$	1,000	$	—	$	—

- 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.

+ References+ Details