Fair Value | 6 Months Ended |
Jun. 28, 2014 |
Fair Value Disclosures [Abstract] | ' |
Fair Value | ' |
FAIR VALUE |
Valuation methodologies used for assets and liabilities measured or disclosed at fair value are as follows: |
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• | Time deposits—Valued at their carrying amount, which approximates fair value, as reported by the financial institutions that hold the Company's securities. | | | | | | | | | | | | | | |
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• | Investments in life insurance policies—Valued at cash surrender value based on fair value of underlying investments. | | | | | | | | | | | | | | |
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• | Redeemable noncontrolling interest—Valued primarily using the income approach based on estimated future cash flows of the underlying business based on the Company's projected financial data discounted by a weighted average cost of capital. Significant assumptions include a discount rate of 17.5% and a long-term pretax operating margin of 32%. | | | | | | | | | | | | | | |
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• | Contingent consideration—Valued based on a probability-weighting of the future cash flows associated with the potential outcomes. | | | | | | | | | | | | | | |
The fair value hierarchy level is determined by asset and liability class based on the lowest level of significant input. The observability of inputs may change for certain assets or liabilities. This condition could cause an asset or liability to be reclassified between levels. During the periods ended June 28, 2014, there were no transfers between levels. |
Assets and liabilities measured at fair value on a recurring basis are summarized below: |
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| Fair Value Measurements at June 28, 2014 |
| Quoted Prices in Active Markets for Identical Assets Level 1 | | Significant Other Observable Inputs Level 2 | | Significant Unobservable Inputs Level 3 | | Assets and Liabilities at Fair Value |
Time deposits | $ | — | | | $ | 11,855 | | | $ | — | | | $ | 11,855 | |
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Life insurance policies | — | | | 20,351 | | | — | | | 20,351 | |
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Total assets measured at fair value | $ | — | | | $ | 32,206 | | | $ | — | | | $ | 32,206 | |
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Redeemable noncontrolling interest | — | | | — | | | 23,483 | | | 23,483 | |
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Contingent consideration | — | | | — | | | 2,420 | | | 2,420 | |
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Total liabilities measured at fair value | $ | — | | | $ | — | | | $ | 25,903 | | | $ | 25,903 | |
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| Fair Value Measurements at December 28, 2013 |
| Quoted Prices in Active Markets for Identical Assets Level 1 | | Significant Other Observable Inputs Level 2 | | Significant Unobservable Inputs Level 3 | | Assets and Liabilities at Fair Value |
Time deposits | $ | — | | | $ | 11,158 | | | $ | — | | | $ | 11,158 | |
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Life insurance policies | — | | | 19,534 | | | — | | | 19,534 | |
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Total assets measured at fair value | $ | — | | | $ | 30,692 | | | $ | — | | | $ | 30,692 | |
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Redeemable noncontrolling interest | — | | | — | | | 20,581 | | | 20,581 | |
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Total liabilities measured at fair value | $ | — | | | $ | — | | | $ | 20,581 | | | $ | 20,581 | |
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The book value of the Company's term and revolving loans, which are variable rate loans carried at amortized cost, and approximates fair value based on current market pricing of similar debt. As the fair value is based on significant other observable inputs, including current interest and foreign currency exchange rates, it is deemed to be Level 2. |
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Concurrent with the acquisition of Vital River in 2013, the Company entered into a joint venture agreement with the noncontrolling interest holders that provide it with the right to purchase the remaining 25% of the entity for cash at its then appraised value beginning in January 2016. Additionally, the noncontrolling interest holders were granted the right to require the Company to purchase the remaining 25% of the entity at its then appraised value beginning in January 2016 for cash. These rights are accelerated in certain events. As the noncontrolling interest holders can require the Company to purchase for cash the remaining 25% interest, the Company classifies the carrying amount of the noncontrolling interest above the equity section and below liabilities on the consolidated balance sheet and adjust the carrying amount to fair value each quarter end. Adjustments to fair value, which is deemed to be Level 3 as the fair value is based on unobservable inputs, are recorded through additional paid-in capital. |
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| Fair Value Measurements | | | | | | | | |
Using Significant | | | | | | | | |
Unobservable Inputs | | | | | | | | |
(Level 3) | | | | | | | | |
| Six Months Ended | | | | | | | | |
Redeemable Noncontrolling Interest (Liability) | June 28, 2014 | | June 29, 2013 | | | | | | | | |
Beginning balance | $ | 20,581 | | | $ | — | | | | | | | | | |
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Additions | — | | | 8,963 | | | | | | | | | |
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Total gains or losses (realized/unrealized): | | | | | | | | | | | |
Included in other income (expense) | 372 | | | 299 | | | | | | | | | |
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Change in balance due to foreign currency translation | (462 | ) | | 139 | | | | | | | | | |
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Included in additional paid-in capital | 2,992 | | | 2,275 | | | | | | | | | |
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Ending balance | $ | 23,483 | | | $ | 11,676 | | | | | | | | | |
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As part of the Company's acquisitions of the Early Discovery businesses and VivoPath assets, it agreed to make cash payments upon the satisfaction of certain future financial measures. The carrying amount of these obligations is adjusted to fair value each quarter end. As the fair value is based on unobservable inputs, it is deemed to be Level 3. |
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| Fair Value Measurements | | | | | | | | |
Using Significant | | | | | | | | |
Unobservable Inputs | | | | | | | | |
(Level 3) | | | | | | | | |
| Six Months Ended | | | | | | | | |
Contingent Consideration (Liability) | 28-Jun-14 | | 29-Jun-13 | | | | | | | | |
Beginning balance | $ | — | | | $ | — | | | | | | | | | |
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Additions | 2,428 | | | — | | | | | | | | | |
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Total gains or losses (realized/unrealized): | | | | | | | | | | | |
Change in balance due to foreign currency translation | (8 | ) | | — | | | | | | | | | |
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Ending balance | $ | 2,420 | | | $ | — | | | | | | | | | |
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The significant unobservable inputs used in the fair value measurement of the Company's contingent consideration are the probabilities of successful achievement of certain revenue targets and a discount rate. Significant increases or decreases in any of the probabilities of success would result in a significantly higher or lower fair value measurement, respectively. Significant increases or decreases in the discount rate would result in a significantly lower or higher fair value measurement, respectively. |
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The Company enters into derivative instruments to hedge foreign currency exchange risk to reduce the impact of changes to foreign currency rates on its financial statements. During the three months and the six months ended June 28, 2014, the Company recognized $(499) and $76 of net hedge (gains) losses associated with forward currency contracts, respectively. As of June 28, 2014, there were no open forward currency contracts. |