Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate fair value. The definition of the fair value hierarchy is as follows:
Level 1 – Quoted prices in active markets for identical assets and liabilities.
Level 2 – Observable inputs other than quoted prices in active markets for similar assets and liabilities.
Level 3 – Inputs for which significant valuation assumptions are unobservable in a market and therefore value is based on the best available data, some of which is internally developed and considers risk premiums that a market participant would require.
Our derivatives are valued using various pricing models or discounted cash flow analyses that incorporate observable market data, such as interest rate yield curves and currency rates, and are classified as Level 2 within the valuation hierarchy.
The following table presents the fair values and classification of our financial assets and liabilities measured on a recurring basis, all of which are classified as Level 2, except for the acquisition contingent consideration, which is classified as Level 3:
| | | | | | | | | | | | | | | | | |
| Balance Sheets location | | September 27, 2025 | | September 28, 2024 |
| Foreign currency contracts | Other current assets | | $ | 250 | | | $ | 648 | |
| Foreign currency contracts | Other assets | | 39 | | | — | |
| | | | | |
| | | | | |
| Total assets | | $ | 289 | | | $ | 648 | |
| Foreign currency contracts | Accrued liabilities and other | | $ | 1,502 | | | $ | 28 | |
| Foreign currency contracts | Other long-term liabilities | | 8 | | | — | |
| | | | | |
| | | | | |
| Acquisition contingent consideration | Accrued liabilities and other | | 473 | | | 2,839 | |
| | | | | |
| Total liabilities | | $ | 1,983 | | | $ | 2,867 | |
The changes in financial liabilities classified as Level 3 within the fair value hierarchy are as follows:
| | | | | | | | | | | | | | | | | |
| Statements of Earnings location | | September 27, 2025 | | September 28, 2024 |
| Balance at beginning of period | | | $ | 2,839 | | | $ | 3,089 | |
| | | | | |
| Increase in discounted future cash flows | Interest expense | | — | | | 237 | |
| Increase (decrease) in earn out provisions | Other | | 76 | | | (487) | |
| Settlements paid in cash | | | (2,442) | | | — | |
| Balance at end of period | | | $ | 473 | | | $ | 2,839 | |
Our only financial instrument for which the carrying value differs from its fair value is long-term debt. At September 27, 2025, the fair value of long-term debt was $932,570 compared to its carrying value of $946,000. The fair value of long-term debt is classified as Level 2 within the fair value hierarchy and was estimated based on quoted market prices.