Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

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Fair Value Measurements
6 Months Ended
Jul. 02, 2011
Fair Value Measurements  
Fair Value Measurements
Note M — Fair Value Measurements
Fair value is the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market in an orderly transaction between market participants. In determining fair value, the accounting standards distinguish between (i) market data obtained or developed from independent sources (i.e., observable data inputs) and (ii) a reporting entity's own data and assumptions that market participants would use in pricing an asset or liability (i.e., unobservable data inputs). Financial assets and financial liabilities measured and reported at fair value are classified in a three level hierarchy that prioritizes the inputs used in the valuation process. The hierarchy is based on the observability and objectivity of the pricing inputs, as follows:
•   Level 1 — Quoted prices in active markets for identical assets or liabilities.
•   Level 2 — Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data.
•   Level 3 — Prices or valuation techniques that require significant unobservable data inputs. Inputs would normally be a reporting entity's own data and judgments about assumptions that market participants would use in pricing the asset or liability.
The fair value measurement level for an asset or liability is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs.
The following table summarizes the classes of financial assets and financial liabilities measured and recorded at fair value on a recurring basis:
                                 
In thousands           Fair Value Measurement Using:
            Quoted Prices   Significant    
            in Active   Other   Significant
    Total   Markets for   Observable   Unobservable
    Fair   Identical Assets   Inputs   Inputs
    Value   (Level 1)   (Level 2)   (Level 3)
June 2011
                               
Financial assets:
                               
Cash equivalents:
                               
Money market funds
  $ 275,206     $ 275,206     $     $  
Time deposits
    116,220       116,220              
Derivative instruments
    23,839             23,839        
Investment securities
    187,511       156,100       31,411        
Other marketable securities
    8,991       8,991              
 
                               
Financial liabilities:
                               
Derivative instruments
    63,906             63,906        
Deferred compensation
    221,981             221,981        
 
                               
December 2010
                               
Financial assets:
                               
Cash equivalents:
                               
Money market funds
  $ 437,229     $ 437,229     $     $  
Time deposits
    93,254       93,254              
Derivative instruments
    18,568             18,568        
Investment securities
    182,673       147,380       35,293        
Other marketable securities
    12,388       12,388              
 
                               
Financial liabilities:
                               
Derivative instruments
    28,815             28,815        
Deferred compensation
    212,011             212,011        
All other financial assets and financial liabilities are carried at cost, which may differ from fair value. At June 2011 and December 2010, the carrying values of VF's cash held as demand deposits, accounts receivable, life insurance contracts, short-term borrowings, accounts payable and accrued liabilities approximated their fair values. At June 2011 and December 2010, the carrying value of VF's long-term debt, including the current portion, was $937.3 million and $938.6 million, respectively, compared with fair value of $1,037.8 million and $1,025.1 million at those dates. Fair value for long-term debt was estimated based on quoted market prices or values of comparable borrowings.