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Fair Value Measurements | 9 Months Ended
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Sep. 27, 2014
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Note 2 – Fair Value Measurements Financial assets and liabilities are to be measured using inputs from three levels of the fair value hierarchy. Fair value is based on 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. Zebra uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in the assessment of fair value. Included in our investment portfolio at September 27, 2014, is an auction rate security which is classified as available for sale and is reflected at fair value. Due to events in credit markets, however, the auction event for the instrument held by Zebra is failed. Therefore, the fair value of this security is estimated utilizing broker quotations, discounted cash flow analysis and other types of valuation adjustment methodologies at September 27, 2014. These analyses consider, among other items, the collateral underlying the security instruments, the creditworthiness of the counterparty, the timing of expected future cash flows, estimates of the next time the security is expected to have a successful auction, and Zebra’s intent and ability to hold such securities until credit markets improve. The security was also compared, when possible, to other securities with similar characteristics. On October 1, 2011, Zebra deemed the auction rate security discussed above to be temporarily impaired and recorded the estimated value decline of $412,000 in other comprehensive income. As of September 27, 2014 Zebra decided to dispose of the security during the fourth quarter of 2014 and has deemed the investment to be permanently impaired and recorded a loss of $600,000. Financial assets and liabilities carried at fair value as of September 27, 2014, are classified below (in thousands):
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government and agency securities |  | $ | 182,470 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 182,470 |
Obligations of government-sponsored enterprises (1) |  |  | 0 |  |  |  | 40,631 |  |  |  | 0 |  |  |  | 40,631 |
State and municipal bonds |  |  | 0 |  |  |  | 49,022 |  |  |  | 0 |  |  |  | 49,022 |
Corporate securities |  |  | 0 |  |  |  | 183,418 |  |  |  | 2,400 |  |  |  | 185,818 |
Other investments |  |  | 0 |  |  |  | 23,765 |  |  |  | 0 |  |  |  | 23,765 |
Investments subtotal |  |  | 182,470 |  |  |  | 296,836 |  |  |  | 2,400 |  |  |  | 481,706 |
Forward contracts (2) |  | $ | 3,416 |  |  | $ | 6,206 |  |  | $ | 0 |  |  | $ | 9,622 |
Money market investments related to the deferred compensation plan |  |  | 5,698 |  |  |  | 0 |  |  |  | 0 |  |  |  | 5,698 |
Total assets at fair value |  | $ | 191,584 |  |  | $ | 303,042 |  |  | $ | 2,400 |  |  | $ | 497,026 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward interest rate swap contracts (3) |  | $ | 0 |  |  | $ | 3,472 |  |  | $ | 0 |  |  | $ | 3,472 |
Liabilities related to the deferred compensation plan |  |  | 5,698 |  |  |  | 0 |  |  |  | 0 |  |  |  | 5,698 |
Total liabilities at fair value |  | $ | 5,698 |  |  | $ | 3,472 |  |  | $ | 0 |  |  | $ | 9,170 |
Financial assets and liabilities carried at fair value as of December 31, 2013, are classified below (in thousands):
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government and agency securities |  | $ | 89,626 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 89,626 |
Obligations of government-sponsored enterprises (1) |  |  | 0 |  |  |  | 33,510 |  |  |  | 0 |  |  |  | 33,510 |
State and municipal bonds |  |  | 0 |  |  |  | 51,627 |  |  |  | 0 |  |  |  | 51,627 |
Corporate securities |  |  | 0 |  |  |  | 163,832 |  |  |  | 2,588 |  |  |  | 166,420 |
Other investments |  |  | 0 |  |  |  | 11,785 |  |  |  | 0 |  |  |  | 11,785 |
Investments subtotal |  |  | 89,626 |  |  |  | 260,754 |  |  |  | 2,588 |  |  |  | 352,968 |
Money market investments related to the deferred compensation plan |  |  | 4,827 |  |  |  | 0 |  |  |  | 0 |  |  |  | 4,827 |
Total assets at fair value |  | $ | 94,453 |  |  | $ | 260,754 |  |  | $ | 2,588 |  |  | $ | 357,795 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward contracts (2) |  | $ | 1,165 |  |  | $ | 1,578 |  |  | $ | 0 |  |  | $ | 2,743 |
Liabilities related to the deferred compensation plan |  |  | 4,827 |  |  |  | 0 |  |  |  | 0 |  |  |  | 4,827 |
Total liabilities at fair value |  | $ | 5,992 |  |  | $ | 1,578 |  |  | $ | 0 |  |  | $ | 7,570 |
1) | Includes investments in notes issued by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Federal Farm Credit Banks and the Federal Home Loan Bank.
2) | The fair value of forward contracts are calculated as follows:
| a. | Fair value of a collar or put option contract associated with forecasted sales hedges are calculated using bid and ask rates for similar contracts.
| b. | Fair value of regular forward contracts associated with forecasted sales hedges are calculated using the period-end exchange rate adjusted for current forward points.
| c. | Fair value of balance sheet hedges are calculated at the period end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at period end. If this is the case, the fair value is calculated at the rate at which the hedge is being settled.
3) | The fair value of forward interest rate swap contracts is based upon a valuation model that uses relevant observable market inputs at quoted intervals, such as forward yield curves, and is adjusted for Zebra’s own credit risk and the interest rate swap terms.
The following table presents Zebra’s activity for assets measured at fair value on a recurring basis using significant unobservable inputs, Level 3, for the following periods (in thousands):
|  | Nine Months Ended |
|  | September 27, 2014 |  |  | September 28, 2013 |
Balance at beginning of the year |  | $ | 2,588 |  |  | $ | 2,588 |
Transfers to Level 3 |  |  | 0 |  |  |  | 0 |
Total losses (realized or unrealized): |  |  |  |  |  |  |  |
Included in earnings |  |  | (600 | ) |  |  | 0 |
Included in other comprehensive income (loss) |  |  | 412 |  |  |  | 0 |
Purchases and settlements (net) |  |  | 0 |  |  |  | 0 |
Balance at end of period |  | $ | 2,400 |  |  | $ | 2,588 |
Total gains and (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets still held at end of period |  | $ | (412 | ) |  | $ | 0 |
The following is a summary of short-term and long-term investments (in thousands):
|  | As of September 27, 2014 |
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |
U.S. government and agency securities |  | $ | 182,354 |  |  | $ | 123 |  |  | $ | (7 | ) |  | $ | 182,470 |
Obligations of government-sponsored enterprises |  |  | 40,632 |  |  |  | 2 |  |  |  | (3 | ) |  |  | 40,631 |
State and municipal bonds |  |  | 48,914 |  |  |  | 113 |  |  |  | (5 | ) |  |  | 49,022 |
Corporate securities |  |  | 185,145 |  |  |  | 756 |  |  |  | (83 | ) |  |  | 185,818 |
Other investments |  |  | 23,762 |  |  |  | 15 |  |  |  | (12 | ) |  |  | 23,765 |
Total investments |  | $ | 480,807 |  |  | $ | 1,009 |  |  | $ | (110 | ) |  | $ | 481,706 |
|  | As of December 31, 2013 |
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |
U.S. government and agency securities |  | $ | 89,617 |  |  | $ | 27 |  |  | $ | (18 | ) |  | $ | 89,626 |
Obligations of government-sponsored enterprises |  |  | 33,506 |  |  |  | 5 |  |  |  | (1 | ) |  |  | 33,510 |
State and municipal bonds |  |  | 51,573 |  |  |  | 82 |  |  |  | (28 | ) |  |  | 51,627 |
Corporate securities |  |  | 166,642 |  |  |  | 453 |  |  |  | (675 | ) |  |  | 166,420 |
Other investments |  |  | 11,771 |  |  |  | 15 |  |  |  | (1 | ) |  |  | 11,785 |
Total investments |  | $ | 353,109 |  |  | $ | 582 |  |  | $ | (723 | ) |  | $ | 352,968 |
The maturity dates of investments are as follows (in thousands):
|  | As of September 27, 2014 |
|  | Amortized Cost |  |  | Estimated Fair Value |
Less than 1 year |  | $ | 135,482 |  |  | $ | 135,603 |
1 to 5 years |  |  | 342,925 |  |  |  | 343,703 |
6 to 10 years |  |  | 2,400 |  |  |  | 2,400 |
Thereafter |  |  | 0 |  |  |  | 0 |
Total |  | $ | 480,807 |  |  | $ | 481,706 |
The carrying value for Zebra’s financial instruments classified as current assets (other than short-term investments) and current liabilities approximate fair value due to their short maturities.

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- Definition The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19279-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19190-110258 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 + Details
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