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Fair Value Measurements
 9 Months Ended
Oct. 01, 2016
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements

Fair value measurement is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

•
Level 1—Quoted prices in active markets for identical assets or liabilities.
•
Level 2—Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.
•
Level 3—Unobservable inputs based on the Company's own assumptions.

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis:
 
 
Fair Value as of October 1, 2016
(In thousands)
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
 
Money market funds and time deposits
 
$
7,464

 
$
—

 
$
—

 
$
7,464

Forward currency-exchange contracts
 
$
—

 
$
17

 
$
—

 
$
17

Banker's acceptance drafts (a)
 
$
—

 
$
6,181

 
$
—

 
$
6,181

 
 
 
 
 
 
 
 
 
Liabilities:
 
 

 
 

 
 

 
 

Forward currency-exchange contracts
 
$
—

 
$
199

 
$
—

 
$
199

Interest rate swap agreement
 
$
—

 
$
147

 
$
—

 
$
147

 
 
Fair Value as of January 2, 2016
(In thousands)
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
 
Money market funds and time deposits
 
$
9,767

 
$
—

 
$
—

 
$
9,767

Forward currency-exchange contracts
 
$
—

 
$
2,536

 
$
—

 
$
2,536

Interest rate swap agreement
 
$
—

 
$
38

 
$
—

 
$
38

Banker's acceptance drafts (a)
 
$
—

 
$
8,314

 
$
—

 
$
8,314

 
 
 
 
 
 
 
 
 
Liabilities:
 
 

 
 

 
 

 
 

Forward currency-exchange contracts
 
$
—

 
$
101

 
$
—

 
$
101

Interest rate swap agreement
 
$
—

 
$
91

 
$
—

 
$
91

Contingent consideration (b)
 
$
—

 
$
—

 
$
1,091

 
$
1,091


(a)
Included in accounts receivable in the accompanying condensed consolidated balance sheet.
(b)
Included in other current liabilities in the accompanying condensed consolidated balance sheet.

The Company uses the market approach technique to value its financial assets and liabilities, and there were no changes in valuation techniques during the first nine months of 2016. The Company's financial assets and liabilities carried at fair value are comprised of cash equivalents, banker's acceptance drafts, and derivative instruments used to hedge the Company's foreign currency and interest rate risks. The Company's cash equivalents are comprised of money market funds and bank deposits which are highly liquid and readily tradable. These investments are valued using inputs observable in active markets for identical securities. The carrying value of banker's acceptance drafts approximates their fair value due to the short-term nature of the negotiable instrument. The fair values of the Company's interest rate swap agreements are based on LIBOR yield curves at the reporting date. The fair values of the Company's forward currency-exchange contracts are based on quoted forward foreign exchange rates at the reporting date. The forward currency-exchange contracts and interest rate swap agreements are hedges of either recorded assets or liabilities or anticipated transactions. Changes in values of the underlying hedged assets and liabilities or anticipated transactions are not reflected in the table above. The Company recorded contingent consideration as part of its acquisition of a European manufacturer on December 30, 2013. The fair value of the contingent consideration was based on the present value of the estimated future cash flows. Changes to the fair value of contingent consideration were recorded in SG&A expenses in the accompanying condensed consolidated statement of income. This contingent consideration was paid during the first quarter of 2016.

The following table provides a rollforward of the fair value, as determined by Level 3 inputs, of the contingent consideration:
 
 
Nine Months Ended 
 October 1, 2016
(In thousands)
 
Balance at January 2, 2016
 
$
1,091

   Payment
 
(1,091
)
Balance at October 1, 2016
 
$
—



The carrying value and fair value of the Company's debt obligations are as follows:
 
 
October 1, 2016
 
January 2, 2016
 
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Obligations
 
$
63,517

 
$
63,517

 
$
31,250

 
$
31,250



The carrying value of the Company's debt obligations approximates fair value as the obligations bear variable rates of interest, which adjust quarterly based on prevailing market rates.