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Fair Value Measurements | 6 Months Ended
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Jul. 02, 2016
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements Financial assets and liabilities are to be measured using inputs from 3 levels of the fair value hierarchy in accordance with ASC Topic 820, “Fair Value Measurements.” 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. It establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into the following 3 broad levels: Level 1: Quoted prices in active markets that are accessible at the measurement date for identical 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, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. In addition, the Company considers counterparty credit risk in the assessment of fair value. Financial assets and liabilities carried at fair value as of July 2, 2016, are classified below (in millions):
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets: |  |  |  |  |  |  |
Derivative contracts-foreign currency (1) | $ | 2 |  |  | $ | — |  |  | $ | — |  |  | $ | 2 |
Investments related to the deferred compensation plan | 10 |  |  | — |  |  | — |  |  | 10 |
Total Assets at fair value | $ | 12 |  |  | $ | — |  |  | $ | — |  |  | $ | 12 |
Liabilities: |  |  |  |  |  |  |
Forward interest rate swap contracts (2) | $ | — |  |  | $ | 40 |  |  | $ | — |  |  | $ | 40 |
Derivative contracts-foreign currency (1) | — |  |  | 4 |  |  | — |  |  | 4 |
Liabilities related to the deferred compensation plan | 10 |  |  | — |  |  | — |  |  | 10 |
Total Liabilities at fair value | $ | 10 |  |  | $ | 44 |  |  | $ | — |  |  | $ | 54 |
Financial assets and liabilities carried at fair value as of December 31, 2015, are classified below (in millions):
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets: |  |  |  |  |  |  |
Derivative contracts-foreign currency (1) | $ | 6 |  |  | $ | 1 |  |  | $ | — |  |  | $ | 7 |
Investments related to the deferred compensation plan | 9 |  |  | — |  |  | — |  |  | 9 |
Total Assets at fair value | $ | 15 |  |  | $ | 1 |  |  | $ | — |  |  | $ | 16 |
Liabilities: |  |  |  |  |  |  |
Forward interest rate swap contracts (2) | $ | — |  |  | $ | 26 |  |  | $ | — |  |  | $ | 26 |
Liabilities related to the deferred compensation plan | 9 |  |  | — |  |  | — |  |  | 9 |
Total Liabilities at fair value | $ | 9 |  |  | $ | 26 |  |  | $ | — |  |  | $ | 35 |
(1) The fair value of the derivative contracts is calculated as follows: a. Fair value of a put option contract associated with forecasted sales hedges is calculated using bid and ask rates for similar contracts. b. Fair value of regular forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points. c. Fair value of hedges against net assets is calculated at the period-end exchange rate adjusted for current forward points (Level 2). If the hedge has been traded but not settled at period-end, the fair value is calculated at the rate at which the hedge is being settled (Level 1). As a result, transfers from Level 2 to Level 1 of the fair value hierarchy totaled $2 million and $6 million as of July 2, 2016 and December 31, 2015, respectively. (2) The fair value of forward interest rate swaps is based upon a valuation model that uses relevant observable market inputs at the quoted intervals, such as forward yield curves, and is adjusted for the Company’s credit risk and the interest rate swap terms. See gross balance reporting in Note 8 Derivative Instruments. The estimated fair value of the Company’s long-term debt approximated $3.0 billion and $3.1 billion at July 2, 2016 and December 31, 2015, respectively. These fair value amounts represent the estimated value at which the Company’s lenders could trade its debt within the financial markets and does not represent the settlement value of these long-term debt liabilities to the Company. The fair value of the long-term debt will continue to vary each period based on fluctuations in market interest rates, as well as changes to the Company’s credit ratings. This methodology resulted in a Level 2 classification in the fair value hierarchy.

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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 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 Reference 3: 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 + Details
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