Quarterly report pursuant to Section 13 or 15(d)

Fair Value of Financial Instruments

v2.4.0.8
Fair Value of Financial Instruments
 6 Months Ended
Jun. 29, 2013
Fair Value Disclosures [Abstract]  
FAIR VALUE OF FINANCIAL INSTRUMENTS
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 investments 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 short-term investments in the accompanying Consolidated Balance Sheets. These investments 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 investments 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 June 29, 2013, and December 29, 2012. 
 
June 29, 2013
 
Adjusted Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
Assets

 

 

 

Level 1:

 

 

 

Equity securities
788

 
25

 
(143
)
 
670

Mutual funds
2,039

 
1

 
(23
)
 
2,017

Subtotal
2,827

 
26

 
(166
)
 
2,687

Level 2:

 

 

 

Corporate fixed income
18,792

 
66

 
(272
)
 
18,586

Municipal bonds
4,357

 
3

 
(16
)
 
4,344

Certificates of deposit and time deposits
10,111

 
1

 
—

 
10,112

Asset backed securities
1,118

 
—

 
(32
)
 
1,086

Subtotal
34,378

 
70

 
(320
)
 
34,128

Total
37,205

 
96

 
(486
)
 
36,815

Liabilities

 

 

 

Level 1:

 

 

 

Phantom stock units
59

 
—

 
—

 
59

Total
59

 
—

 
—

 
59


 
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 and time deposits
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 Company recognized a net realized loss on investments during the six months ended June 29, 2013 of $5 and a net realized gain of $14 during the six months ended June 30, 2012. As of June 29, 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 investments 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 six months ended June 29, 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 investments at June 29, 2013 are as follows:
 
Adjusted Cost

Fair Value
Due in less than one year
$
20,604


$
20,598

Due after one year but within five years
9,701


9,528

Due after five years but within ten years
304


304

Due after ten years
3,769


3,698

Equity securities
788


670

Mutual Funds
2,039


2,017

Total
$
37,205


$
36,815


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 $29 and $35, for the periods ended June 29, 2013, and June 30, 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 June 29, 2013.