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Fair Value Measurements | 9 Months Ended
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Jun. 28, 2014
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements Assets/Liabilities Measured and Recorded at Fair Value on a Recurring Basis The Company has an equity investment in a publicly-traded company and mutual funds, both of which are valued using quoted market prices, representing Level 1 assets. The Company has a payment obligation to the participants under its Nonqualified Deferred Compensation Plan (“DCP”). This liability is recorded at fair value based on the underlying value of certain hypothetical investments under the DCP as designated by each participant for their benefit. Since the value of the DCP obligation is based on market prices, the liability is classified within Level 1. In addition, in fiscal 2013, the Company had contingent consideration liabilities related to its acquisitions that were recorded at fair value and were based on Level 3 inputs (see Note 5(a)). Assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following at June 28, 2014:
|  |  | Fair Value at Reporting Date Using
| Balance as of June 28, 2014 |  | Quoted Prices in Active Market for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Assets: |  |  |  |  |  |  |
Marketable securities: |  |  |  |  |  |  |
Equity security | $ | 20.0 |  |  | $ | 20.0 |  |  | $ | — |  |  | $ | — |
Mutual funds | 18.3 |  |  | 18.3 |  |  | — |  |  | — |
Total | $ | 38.3 |  |  | $ | 38.3 |  |  | $ | — |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |
Deferred compensation liabilities | $ | 36.0 |  |  | $ | 36.0 |  |  | $ | — |  |  | $ | — |
Contingent consideration | 3.1 |  |  | — |  |  | — |  |  | 3.1 |
Total | $ | 39.1 |  |  | $ | 36.0 |  |  | $ | — |  |  | $ | 3.1 |
Changes in the fair value of recurring fair value measurements using significant unobservable inputs (Level 3), which solely consisted of contingent consideration liabilities, were as follows:
| Three Months Ended |  | Nine Months Ended
| June 28, 2014 |  | June 29, 2013 |  | June 28, 2014 |  | June 29, 2013
Balance at beginning of period | $ | 3.4 |  |  | $ | 3.6 |  |  | $ | 3.8 |  |  | $ | 86.4 |
Contingent consideration recorded at acquisition | — |  |  | 0.5 |  |  | — |  |  | 0.5 |
Fair value adjustments | — |  |  | 0.5 |  |  | — |  |  | 11.3 |
Payments | (0.3 | ) |  | (0.1 | ) |  | (0.7 | ) |  | (93.7 | )
Balance at end of period | $ | 3.1 |  |  | $ | 4.5 |  |  | $ | 3.1 |  |  | $ | 4.5 |
The contingent consideration liability at June 28, 2014 is related to the Company’s acquisition of Interlace Medical, Inc. (“Interlace”) and represents the remaining amounts withheld from payments made to the former stockholders of Interlace for legal indemnification provisions. As of the end of the second quarter of fiscal 2013, the Interlace contingent liability was no longer being remeasured as the final measurement period lapsed. The withheld amount is being used to pay qualifying legal expenses in connection with the Company's litigation with Smith & Nephew, Inc. (“Smith & Nephew”) (see Note 5(b)). Assets Measured and Recorded at Fair Value on a Nonrecurring Basis The Company remeasures the fair value of certain assets and liabilities upon the occurrence of certain events. Such assets are comprised of cost-method equity investments and long-lived assets, including property, plant and equipment, intangible assets and goodwill. In the second quarter of fiscal 2014, the Company evaluated its MRI breast coils product line asset group, which is within its Breast Health segment, for impairment due to the Company’s expectation that it will be sold or disposed of significantly before the end of its previously estimated useful life. The undiscounted cash flows expected to be generated by this asset group over its estimated remaining useful life were not sufficient to recover its carrying value. The Company estimated the fair value of the asset group using market participant assumptions, which were based on underlying cash flow estimates, resulting in an impairment charge of $28.6 million. Pursuant to ASC 360, Property, Plant, and Equipment-Other, subtopic 10-35-28, the impairment charge was allocated to the long-lived assets, with $27.1 million to intangible assets and $1.5 million to property and equipment. The property and equipment charge was recorded to cost of product revenues and general and administrative expenses in the amounts of $0.3 million and $1.2 million, respectively. The estimated fair value of this asset group is subject to change and additional charges may be recorded in the future. The Company believes this adjustment falls within Level 3 of the fair value hierarchy. In the first quarter of fiscal 2014, the Company recorded a $3.1 million impairment charge to record certain of its buildings at fair value related to the shutdown of the Hitec organic photoconductor manufacturing line (see Note 3). The Company believes this adjustment falls within Level 3 of the fair value hierarchy. The Company holds certain cost-method equity investments in non-publicly traded securities aggregating $5.2 million and $12.6 million at June 28, 2014 and September 28, 2013, respectively, which are included in other long-term assets on the Company’s Consolidated Balance Sheets. These investments are generally carried at cost, less any write-downs for other-than-temporary impairment charges. To determine the fair value of these investments, the Company uses all available financial information related to the entities, including information based on recent or pending third-party equity investments in these entities. In certain instances, a cost method investment’s fair value is not estimated as there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment and to do so would be impractical. For the three and nine month periods ended June 28, 2014, the Company recorded other-than-temporary impairment charges of $3.2 million and $6.9 million, respectively, related to its cost-method equity investments. For the three and nine months ended June 29, 2013, the Company recorded other-than-temporary impairment charges of $4.7 million and $6.4 million, respectively, related to these investments. The following chart depicts the level of inputs within the fair value hierarchy used to estimate the fair value of assets measured on a nonrecurring basis for which the Company has recorded impairment charges to date in fiscal 2014:
|  |  | Fair Value Measurements Using |  |
| Fair Value |  | Quoted Prices in Active Market for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total Losses
Fiscal 2014: |  |  |  |  |  |  |  |  |
Intangible assets | $ | 18.3 |  |  | — |  |  | — |  |  | $ | 18.3 |  |  | $ | (27.1 | )
Property and equipment | 1.0 |  |  | — |  |  | — |  |  | 1.0 |  |  | (1.5 | )
Buildings | 1.4 |  |  | — |  |  | — |  |  | 1.4 |  |  | (3.1 | )
Cost-method equity investments | 0.8 |  |  | — |  |  | — |  |  | 0.8 |  |  | (6.9 | )
|  |  |  |  |  |  |  |  | $ | (38.6 | )
Refer to Note 4 for disclosure of the nonrecurring fair value measurement related to the debt extinguishment losses recorded in the second quarter of each of fiscal 2014 and 2013. Refer to Note 13 for the disclosure of the nonrecurring fair value measurement related to the intangible asset impairment charge recorded in the third quarter of fiscal 2013. Disclosure of Fair Value of Financial Instruments The Company’s financial instruments mainly consist of cash and cash equivalents, accounts receivable, marketable securities, cost-method equity investments, insurance contracts, DCP liability, accounts payable and debt obligations. The carrying amounts of the Company’s cash equivalents, accounts receivable and accounts payable approximate their fair value due to the short-term nature of these instruments. The Company’s marketable securities are recorded at fair value. The carrying amount of the insurance contracts are recorded at the cash surrender value, as required by U.S. GAAP, which approximates fair value, and the related DCP liability is recorded at fair value. The Company believes the carrying amounts of its cost-method equity investments approximate fair value. Amounts outstanding under the Company’s Credit Agreement of $2.06 billion aggregate principal are subject to variable rates of interest based on current market rates, and as such, the Company believes the carrying amount of these obligations approximates fair value. The Company’s Senior Notes had a fair value of approximately $1.06 billion as of June 28, 2014 based on their trading price, representing a Level 1 measurement. The fair value of the Company’s Convertible Notes is based on the trading prices of the respective notes and represents a Level 1 measurement. Refer to Note 4 for the carrying amounts of the various components of the Company’s debt. The estimated fair values of the Company’s Convertible Notes at June 28, 2014 were as follows:
2010 Notes | $ | 566.4 |
2012 Notes | 548.6 |
2013 Notes | 408.9 |
| $ | 1,523.9 |

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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=25499696&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=25499696&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=25499696&loc=d3e19207-110258 + Details
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