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Fair Value Measurements
 6 Months Ended
Mar. 30, 2012
Fair Value Measurements [Abstract]  
Fair Value Measurements

15     Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy has been established based on three levels of inputs, of which the first two are considered observable and the last unobservable. 

  • Level 1 - Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets or liabilities.

 

  • Level 2 - Inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. These are typically obtained from readily-available pricing sources for comparable instruments.

 

  • Level 3 - Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own assumptions of the data that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.

 

The carrying amounts of cash, cash equivalents, accounts receivable, and accounts payable approximated fair value at March 30, 2012, September 30, 2011 and April 1, 2011 due to the short term maturities of these instruments. When indicators of impairment are present, the Company may be required to value certain long-lived assets such as property, plant, and equipment, and other intangibles at fair value.

 

Valuation Techniques

 

Over the Counter Derivative Contracts

The value of over the counter derivative contracts, such as interest rate swaps and foreign currency forward contracts, are derived using pricing models, which take into account the contract terms, as well as other inputs, including, where applicable, the notional values of the contracts, payment terms, maturity dates, credit risk, interest rate yield curves, and contractual and market currency exchange rates.  The fair value of the foreign exchange forward contracts reported below was measured using the market value approach based on foreign currency exchange rates and the notional amount of the forward contract.  All foreign currency forward contracts held by the Company as of March 30, 2012 mature within twelve months.  The mark-to-market adjustments are recorded in “Other (income) expense, net” in the Company’s accompanying Condensed Consolidated Statements of Operations.

 

Rabbi Trust Assets

Rabbi trust assets are classified as trading securities and are comprised of marketable debt and equity securities that are marked to fair value based on unadjusted quoted prices in active markets.  The rabbi trust assets are used to fund amounts the Company owes to certain officers and other employees under the Company’s non-qualified deferred compensation plan.  The mark to market adjustments are recorded in “Other (income) expense, net” in the accompanying Condensed Consolidated Statements of Operations.

 

Goodwill and Other Intangible Assets

In assessing the recoverability of the Company’s goodwill and other indefinite lived intangible assets, the Company estimates the future discounted cash flows of the businesses to which the goodwill relates.  When estimated future discounted cash flows are less than the carrying value of the net assets and related goodwill, an impairment test is performed to measure and recognize the amount of the impairment loss, if any.  In determining estimated future cash flows, the Company makes assumptions regarding anticipated financial position, future earnings, and other factors to determine the fair value of the respective assets.  This calculation is highly sensitive to changes in key assumptions and could result in a future impairment charge.  The Company will continue to evaluate whether circumstances and events have changed to the extent that they require the Company to conduct an interim test of goodwill.  In particular if the Company’s business units do not achieve short term revenue and gross margin goals, an interim impairment test may be triggered which could result in a goodwill impairment charge in future periods.   

 

The following table summarizes the Company’s financial assets and liabilities recorded on its balance sheet at fair value on a recurring basis as of March 30, 2012:

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

Assets:

 

 

 

 

 

 

 

 

     Rabbi trust assets

$

 6,948

$

 

$

 

$

 6,948

     Foreign currency forward contracts

 

 

 

 45

 

 

 

 45

 

 

The following table summarizes the Company’s financial assets and liabilities recorded on its balance sheet at fair value on a recurring basis as of September 30, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

Assets:

 

 

 

 

 

 

 

 

     Rabbi trust assets

$

 5,385

$

 -

$

 -

$

 5,385

Liabilities:

 

 

 

 

 

 

 

 

     Foreign currency forward contracts

 

 -

 

 128

 

 -

 

 128

 

 

The following table summarizes the Company’s financial assets and liabilities recorded on its balance sheet at fair value on a recurring basis as of April 1, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

Assets:

 

 

 

 

 

 

 

 

     Rabbi trust assets

$

 6,198

$

 -

$

 -

$

 6,198

     Foreign currency forward contracts

 

 -

 

 82

 

 -

 

 82

 

 

The following tables summarize the amount of total income or loss attributable to the changes in fair value of the instruments noted above:

 

 

 

 

 

 

 

 

Location of (income) loss

Three Months Ended

 

recognized in Statement of

March 30

April 1

 

Operations

2012

2011

 

 

 

 

 

 

Rabbi trust assets

Other (income) expense, net

$

 (688)

$

 (287)

Foreign currency forward contracts

Other (income) expense, net

 

 (213)

 

 173

 

 

 

 

 

 

 

 

 

 

Location of (income) loss

Six Months Ended

 

recognized in Statement of

March 30

April 1

 

Operations

2012

2011

 

 

 

 

 

 

Rabbi trust assets

Other (income) expense, net

$

 (1,082)

$

 (197)

Foreign currency forward contracts

Other (income) expense, net

 

 12

 

 549

 

 

There were no assets and liabilities measured at fair value on a non-recurring basis in periods subsequent to their initial recognition for the three or six month periods ended March 30, 2012 and April 1, 2011.