Fair Value Measurements

9 Months Ended

Jul. 01, 2016

13Fair 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 their fair values at July 1, 2016, October 2, 2015 and July 3, 2015 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 their fair value.

Valuation Techniques

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 measured at fair value as of July 1, 2016:

		Level 1		Level 2		Level 3		Total
Assets:
Rabbi trust assets	$	12,004	$	-	$	-	$	12,004

The following table summarizes the Company's financial assets measured at fair value as of October 2, 2015:

		Level 1		Level 2		Level 3		Total
Assets:
Rabbi trust assets	$	11,441	$	-	$	-	$	11,441

The following table summarizes the Company's financial assets measured at fair value as of July 3, 2015:

		Level 1		Level 2		Level 3		Total
Assets:
Rabbi trust assets	$	12,060	$	-	$	-	$	12,060



The effect of changes in the fair value of financial instruments on the Condensed Consolidated Statements
of Operations for the three months ended July 1, 2016 and July 3, 2015 was:

	Location of (income) loss	Three Months Ended
	recognized in Statement of	July 1		July 3
	Operations	2016		2015
Rabbi trust assets	Other (income) expense, net	$	(259)	$	40

The effect of changes in the fair value of financial instruments on the Condensed Consolidated Statements
of Operations for the nine month periods ended July 1, 2016 and July 3, 2015 was:

	Location of (income) loss	Nine Months Ended
	recognized in Statement of	July 1		July 3
	Operations	2016		2015
Rabbi trust assets	Other (income) expense, net	$	(204)	$	(409)

Certain assets and liabilities are measured at fair value on a non-recurring basis in periods subsequent to their initial recognition. During the third fiscal quarter of 2016, the Company recorded an impairment charge of $6,197 in “Goodwill and other intangible assets impairment” on goodwill held by the Diving reporting unit, reducing its fair value to $0. The following table summarizes the Company’s assets measured at fair value on a non-recurring basis as of July 1, 2016 and the losses recognized as a result of this measurement in the three and nine month periods then ended:



		Level 1		Level 2		Level 3		Losses incurred

Goodwill	$	-	$	-	$	6,197	$	6,197

There were no assets or liabilities measured at fair value on a non-recurring basis in periods subsequent to their initial recognition for either of the three or nine month periods ended July 3, 2015.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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