Quarterly report pursuant to Section 13 or 15(d)

Fair Value of Financial Instruments

v2.4.0.6
Fair Value of Financial Instruments
 3 Months Ended
Mar. 30, 2013
Fair Value of Financial Instruments [Abstract]  
FAIR VALUE OF FINANCIAL INSTRUMENTS
11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company applies fair value accounting guidelines for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Under these guidelines, fair value is defined as the price that would be received for the sale of an asset or paid to transfer a liability (i.e. an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

 

Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3 - Unobservable inputs that are supported by little, infrequent, or no market activity and reflect the Company’s own assumptions about inputs used in pricing the asset or liability.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company’s valuation techniques used to measure the fair value of marketable equity securities, mutual funds, and phantom stock units were derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of all other financial instruments were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data.

The Company’s marketable securities have been classified and accounted for as available-for-sale. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the designation at each balance sheet date. The Company may or may not hold securities with stated maturities greater than 12 months until maturity. As management views these securities as available to support current operations, the Company classifies securities with maturities beyond 12 months as current assets under the caption marketable securities in the accompanying Consolidated Balance Sheets. The Company’s marketable securities are carried at fair value, with the unrealized gains and losses reported as a component of shareholder’s equity. Realized gains and losses on sales of marketable securities are generally determined using the specific identification method, and are included in miscellaneous (income) expense in the Consolidated Statements of Operations.

The following tables provide information regarding the Company’s assets and liabilities measured at fair value on a recurring basis at March 30, 2013, and December 29, 2012.

 

                                 
    March 30, 2013  
    Adjusted Cost     Unrealized Gains     Unrealized Losses     Fair Value  

Assets

                                

Level 1:

                                

Equity securities

     727       27       (92 )      662  

Mutual funds

     2,077       10       (1 )      2,086  
   

 

 

    

 

 

    

 

 

    

 

 

  

Subtotal

     2,804       37       (93 )      2,748  
   

 

 

    

 

 

    

 

 

    

 

 

  

Level 2:

                                

Corporate fixed income

     17,379       113       (49 )      17,443  

Government securities

     192       18       —         210  

Municipal bonds

     3,393       4       (9 )      3,388  

Certificates of deposit

     10,335       2       —         10,337  

Asset backed securities

     1,240       2       (1 )      1,241  
   

 

 

    

 

 

    

 

 

    

 

 

  

Subtotal

     32,539       139       (59 )      32,619  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

     35,343       176       (152 )      35,367  
   

 

 

    

 

 

    

 

 

    

 

 

  
         

Liabilities

                                

Level 1:

                                

Phantom stock units

     50       —         —         50  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

     50       —         —         50  
   

 

 

    

 

 

    

 

 

    

 

 

  

 

                                 
    December 29, 2012  
    Adjusted Cost     Unrealized Gains     Unrealized Losses     Fair Value  

Assets

                                

Level 1:

                                

Equity securities

     602       6       (86 )      522  

Mutual funds

     1,936       —         (28 )      1,908  
   

 

 

    

 

 

    

 

 

    

 

 

  

Subtotal

     2,538       6       (114 )      2,430  
   

 

 

    

 

 

    

 

 

    

 

 

  

Level 2:

                                

Corporate fixed income

     18,270       48       (105 )      18,213  

Government securities

     195       14       —         209  

Municipal bonds

     4,525       4       (15 )      4,514  

Certificates of deposit

     10,891       1       —         10,892  

Asset backed securities

     1,447       —         (5 )      1,442  
   

 

 

    

 

 

    

 

 

    

 

 

  

Subtotal

     35,328       67       (125 )      35,270  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

     37,866       73       (239 )      37,700  
   

 

 

    

 

 

    

 

 

    

 

 

  
         

Liabilities

                                

Level 1:

                                

Deferred director stock units

     263       —         —         263  

Phantom stock units

     30       —         —         30  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

     293       —         —         293  
   

 

 

    

 

 

    

 

 

    

 

 

  

The net realized loss on marketable securities recognized by the Company during the three months ended March 30, 2013, and March 31, 2012, was $52 and $2, respectively. As of March 30, 2013, gross unrealized losses related to individual securities that had been in a continuous loss position for 12 months or longer were not significant. The Company considers these unrealized losses in market value of its marketable securities to be temporary in nature. When evaluating an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, and the Company’s intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investment’s cost basis. During the three months ended March 30, 2013, the Company recognized an impairment charge of $61, which is included in the net realized loss for the period. This resulted from the deterioration of the financial condition of an issuer of a corporate bond security.

Maturities of marketable securities at March 30, 2013 are as follows:

 

                 
    Adjusted Cost     Fair Value  

Due in less than one year

   $ 17,217     $ 17,260  

Due after one year but within five years

     12,615       12,631  

Due after five years but within ten years

     1,214       1,221  

Due after ten years

     1,493       1,507  

Equity securities

     727       662  

Mutual Funds

     2,077       2,086  
   

 

 

    

 

 

  

Total

   $ 35,343     $ 35,367  
   

 

 

    

 

 

  

The Company reports deferred director stock units and phantom stock units as a liability. All remaining deferred stock units were issued in 2013. The Company recognized expense relating to these liabilities of $20 and $142, for the periods ended March 30, 2013, and March 31, 2012. Phantom stock units vest over a period of three years.

The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the period ended March 30, 2013.