FAIR VALUE

The Company has certain assets, liabilities and redeemable noncontrolling interest recorded at fair value, which have been classified as Level 1, 2, or 3 within the fair value hierarchy:


•	Level 1 - Fair values are determined utilizing quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.


•	Level 2 - Fair values are determined by utilizing quoted prices for identical or similar assets and liabilities in active markets or other market observable inputs such as interest rates, yield curves and foreign currency spot rates.


•	Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

The fair value hierarchy level is determined by asset, liability and redeemable noncontrolling interest class based on the lowest level of significant input. The observability of inputs may change for certain assets or liabilities. This condition could cause an asset or liability to be reclassified between levels. The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. During the three months ended March 26, 2016 and March 28, 2015, there were no transfers between levels.

Valuation methodologies used for assets, liabilities and the redeemable noncontrolling interest measured or disclosed at fair value are as follows:


•	Cash equivalents - Valued at quoted market prices determined through third-party pricing services.


•	Mutual funds - Valued at the unadjusted quoted net asset value of shares held by the Company.


•	Foreign currency forward contracts - Valued using market observable inputs, such as forward foreign exchange points and foreign exchanges rates.


•	Life insurance policies - Valued at cash surrender value based on the fair value of underlying investments.


•	Contingent consideration - Valued based on a probability weighting of the future cash flows associated with the potential outcomes.


•	Redeemable noncontrolling interest - Valued using the income approach based on estimated future cash flows of the underlying business discounted by a weighted average cost of capital.

Assets, liabilities and redeemable noncontrolling interest measured at fair value on a recurring basis are summarized below:



	March 26, 2016
	Level 1		Level 2		Level 3		Total
	(in thousands)
Cash equivalents	$	—	$	221	$	—	$	221
Other current assets:
Mutual funds	4,552		—		—		4,552
Other assets:
Life insurance policies	—		19,889		—		19,889
Total assets measured at fair value	$	4,552	$	20,110	$	—	$	24,662

Other current liabilities:
Contingent consideration	$	—	$	—	$	1,114	$	1,114
Foreign currency forward contracts	—		25		—		25
Other long-term liabilities:
Contingent consideration	—		—		200		200
Redeemable noncontrolling interest	—		—		28,744		28,744
Total liabilities and redeemable noncontrolling interest measured at fair value	$	—	$	25	$	30,058	$	30,083



	December 26, 2015
	Level 1		Level 2		Level 3		Total
	(in thousands)
Cash equivalents	$	—	$	190	$	—	$	190
Other current assets:
Mutual funds	4,509		—		—		4,509
Foreign currency forward contracts	—		15		—		15
Other assets:
Life insurance policies	—		20,364		—		20,364
Total assets measured at fair value	$	4,509	$	20,569	$	—	$	25,078

Other current liabilities:
Contingent consideration	$	—	$	—	$	1,172	$	1,172
Other long-term liabilities:
Contingent consideration	—		—		198		198
Redeemable noncontrolling interest	—		—		28,008		28,008
Total liabilities and redeemable noncontrolling interest measured at fair value	$	—	$	—	$	29,378	$	29,378

Redeemable Noncontrolling Interest

The Company’s redeemable noncontrolling interest resulted from the acquisition of a 75% ownership interest in Vital River. Concurrent with the acquisition, the Company entered into an agreement with the noncontrolling interest holders that provides the Company with the right to purchase the remaining 25% of the entity for cash at its then appraised value beginning in January 2016. Additionally, the noncontrolling interest holders were granted the right to require the Company to purchase the remaining 25% of the entity at its then appraised value beginning in January 2016 for cash. These rights are accelerated if certain conditions are met. As the noncontrolling interest holders can require the Company to purchase the remaining 25% interest, the noncontrolling interest is classified in the mezzanine section of the condensed consolidated balance sheet, which is above the equity section and below liabilities.

The following table provides a rollforward of the fair value of the Company’s redeemable noncontrolling interest related to the acquisition of Vital River.



	Three Months Ended
	March 26, 2016			March 28, 2015
	(in thousands)
Beginning balance	$	28,008		$	28,419
Additions	—			—
Total gains or losses (realized/unrealized):
Net income attributable to noncontrolling interest	198			(130		)
Foreign currency translation	(186		)	78
Change in fair value, included in additional paid-in capital	724			1,086
Ending balance	$	28,744		$	29,453

As of March 26, 2016, the significant unobservable inputs used in the fair value measurement of the Company’s redeemable noncontrolling interest are the estimated future cash flows based on projected financial data and a discount rate of 18.0%. Significant changes in the timing or amounts of the estimated future cash flows would result in a significantly higher or lower fair value measurement. Significant increases or decreases in the discount rate would result in a significantly lower or higher fair value measurement, respectively. A 1% increase in the discount rate used would result in a $1.7 million decrease in the fair value of the redeemable noncontrolling interest.

Contingent Consideration

The following table provides a rollforward of the contingent consideration related to the business acquisitions.



	Three Months Ended
	March 26, 2016			March 28, 2015
	(in thousands)
Beginning balance	$	1,370		$	2,828
Additions	600			675
Payments	(674		)	—
Total gains or losses (realized/unrealized):
Reversal of previously recorded contingent liability and change in fair value	18			(717		)
Ending balance	$	1,314		$	2,786

The significant unobservable inputs used in the fair value measurement of the Company’s contingent consideration are the probabilities of successful achievement of certain financial targets and a discount rate. Significant increases or decreases in any of the probabilities of success would result in a significantly higher or lower fair value measurement, respectively. Significant increases or decreases in the discount rate would result in a significantly lower or higher fair value measurement, respectively.

Debt Instruments

The book value of the Company’s term and revolving loans, which are variable rate loans carried at amortized cost, approximates the fair value based on current market pricing of similar debt. As the fair value is based on significant other observable inputs, including current interest and foreign currency exchange rates, it is deemed to be Level 2.