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Fair Value Measurements
 9 Months Ended
Jun. 28, 2013
Fair Value Measurements [Abstract]  
Fair Value Measurements

15Fair 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 June 28, 2013,  September 28, 2012 and June 29, 2012 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 currency 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 June 28, 2013 mature within twelve months.  The mark-to-market adjustments are recorded in “Other expense (income), 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 expense (income), 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 such goodwill and intangibles relate.  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 measured at fair value as of June 28, 2013:

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

Assets:

 

 

 

 

 

 

 

 

    Rabbi trust assets

$
8,263 

$

 -

$

 -

$
8,263 

Liabilities:

 

 

 

 

 

 

 

 

    Foreign currency forward contracts

 

 -

 
79 

 

 -

 
79 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table summarizes the Company's financial assets measured at fair value as of September 28, 2012:

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

Assets:

 

 

 

 

 

 

 

 

    Rabbi trust assets

$
7,289 

$

 -

$

 -

$
7,289 

    Foreign currency forward contracts

 

 -

 
173 

 

 -

 
173 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table summarizes the Company's financial assets and liabilities measured at fair value as of June 29, 2012:

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

Assets:

 

 

 

 

 

 

 

 

    Rabbi trust assets

$
6,796 

$

 -

$

 -

$
6,796 

Liabilities:

 

 

 

 

 

 

 

 

    Foreign currency forward contracts

 

 -

 
39 

 

 -

 
39 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The effect of changes in the fair value of financial instruments on the Condensed Consolidated Statements

of Operations for the three months ended June 28, 2013 and June 29, 2012 was:

 

 

 

 

 

 

 

Location of (income) loss

Three Months Ended

 

recognized in Statement of

June 28

June 29

 

Operations

2013

2012

 

 

 

 

 

 

Rabbi trust assets

Other expense (income), net

$
(31)

$
286 

Foreign currency forward contracts

Other expense (income), net

 
(10)

 
304 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The effect of changes in the fair value of financial instruments on the Condensed Consolidated Statements

of Operations for the nine months ended June 28, 2013 and June 29, 2012 was:

 

 

 

 

 

 

 

Location of (income) loss

Nine Months Ended

 

recognized in Statement of

June 28

June 29

 

Operations

2013

2012

 

 

 

 

 

 

Rabbi trust assets

Other expense (income), net

$
(469)

$
(796)

Foreign currency forward contracts

Other expense (income), net

 
59 

 
316 

 

 

 

 

 

 

 

 

 

The Company recorded impairment on a trademark held by the Marine Electronics business, reducing its fair value to $0.  A $609 pre-tax impairment charge was included in “Administrative management, finance and information systems” expenses in the Marine Electronics segment related to this impairment during the three and nine month periods ended June 29, 2012.  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 and nine month periods ended June 28, 2013.