Quarterly report pursuant to Section 13 or 15(d)

Fair Value Of Financial Instruments

 v2.3.0.11
Fair Value Of Financial Instruments
 6 Months Ended
Jul. 02, 2011
Fair Value Of Financial Instruments  
Fair Value Of Financial Instruments

NOTE A — FAIR VALUE OF FINANCIAL INSTRUMENTS

     The Company reports term deposits in accordance with established authoritative guidance, which requires a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.

The three levels are defined as follows:

  • Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.
  • Level 2 inputs are from other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.
  • Level 3 inputs are unobservable and are used to measure fair value in situations where there is little, if any, market activity for the asset or liability at the measurement date.

     The fair values of term deposits placed with banks are determined based on the pervasive interest rates in the market, which are also the interest rates as stated in the contracts with the banks. The Company classifies the valuation techniques that use the pervasive interest rates input as Level 2. The carrying values of these term deposits approximate their fair values due to their short-term maturities. As of July 2, 2011, the fair value of term deposits in the consolidated balance sheet totaled $1,856, consisting of $309, classified in cash and cash equivalents, and $1,547 in prepaid expenses and other current assets.