Fair Value Measurements

9 Months Ended

Oct. 01, 2011

Fair Value Measurements

Fair Value Measurements

Note 4 — Fair Value Measurements

Current accounting guidance defines fair value as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Guidance requires disclosure of the extent to which fair value is used to measure financial assets and liabilities, the inputs utilized in calculating valuation measurements, and the effect of the measurement of significant unobservable inputs on earnings, or changes in net assets, as of the measurement date.  Guidance establishes a three-level valuation hierarchy based upon the transparency of inputs utilized in the measurement and valuation of financial assets or liabilities as of the measurement date.  Level 1 inputs include quoted prices for identical instruments and are the most observable.  Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves.  Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability.  The use of observable and unobservable inputs is reflected in the hierarchy assessment disclosed in the table below.

As of October 1, 2011, December 31, 2010 and October 2, 2010, the Company held certain financial assets that are required to be measured at fair value on a recurring basis.  These included derivative hedging instruments related to the purchase of certain raw materials, investments in trading securities and available for sale securities, including auction rate securities (ARS).  The Company’s available for sale and trading securities principally consist of municipal bonds and mutual funds that are publicly traded.

The following table presents information about the Company’s financial assets and liabilities measured at fair value as of October 1, 2011, December 31, 2010 and October 2, 2010, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

	Estimated Fair Value October 1, 2011
	Total			Input Levels Used
	Fair Value			Level 1		Level 2			Level 3
Cash and cash equivalents	$	25,690		$	25,690	$	—		$	—
ARS	8,130			—		—			8,130
Available-for-sale securities excluding ARS	60,802			—		60,802			—
Foreign currency forward contracts	(108		)	—		(108		)	—
Commodity futures contracts	345			345		—			—
Commodity options contracts	—			—		—			—
Trading securities	39,031			39,031		—			—
Total assets measured at fair value	$	133,890		$	65,066	$	60,694		$	8,130

	Estimated Fair Value December 31, 2010
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	115,976	$	115,976	$	—	$	—
ARS	6,775		—		—		6,775
Available-for-sale securities excluding ARS	27,178		—		27,178		—
Foreign currency forward contracts	942		—		942		—
Commodity futures contracts	2,310		2,310		—		—
Commodity options contracts	5,369		5,369		—		—
Trading securities	38,504		38,504		—		—
Total assets measured at fair value	$	197,054	$	162,159	$	28,120	$	6,775
	Estimated Fair Value October 2, 2010
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	58,862	$	58,862	$	—	$	—
ARS	5,960		—		—		5,960
Available-for-sale securities excluding ARS	27,203		—		27,203		—
Foreign currency forward contracts	820		—		820		—
Commodity futures contracts	647		647		—		—
Commodity options contracts	1,486		1,486		—		—
Trading securities	36,158		36,158		—		—
Total assets measured at fair value	$	131,136	$	97,153	$	28,023	$	5,960

As of October 1, 2011, the Company’s long term investments included an ARS, Jefferson County Alabama Sewer Revenue Refunding Warrants, reported at a fair value of $8,130 after reflecting a $5,140 other than temporary impairment and a $280 temporary decline in market value against its $13,550 par value.  In 2008, this ARS was determined to be other than temporarily impaired due to the duration and severity of the decline in fair value.  The Company estimated the fair value of this ARS utilizing a valuation model with Level 3 inputs.  This valuation model considered, among other items, a limited number of market trades, the credit risk of the collateral underlying the ARS, the credit risk of the bond insurer, interest rates and the amount and timing of expected future cash flows including the Company’s assumption about the market expectation of the next successful auction.  See Management’s Discussion and Analysis of Financial Condition and Results of Operations regarding Jefferson County ARS.  The Company classified this ARS as non-current and has included it in long term investments on the Condensed Consolidated Statements of Financial Position at October 1, 2011, December 31, 2010 and October 2, 2010 because the Company believes that the current condition of the ARS market may take more than twelve months to improve.

The following table presents additional information about the Company’s financial instruments (all ARS) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at October 1, 2011 and October 2, 2010:

	2011		2010
Balance at January 1	$	6,775	$	7,710
Unrealized gain (loss) in other comprehensive loss	1,355		(1,750		)
Balance at October 1 and October 2, respectively	$	8,130	$	5,960

The $7,500 carrying amount of the Company’s industrial revenue development bonds at October 1, 2011 and October 2, 2010 approximates its estimated fair value as the bonds have a floating interest rate.