Helios Technologies Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Fair Value of Financial Instruments

Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2016

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following tables provide information regarding the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2016, and January 2, 2016. The fair value of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses and other liabilities approximates their carrying value, due to their short-term nature.

	December 31, 2016
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value
Assets
Level 1:
Equity securities	$	—	$	31	$	—		$	31
Mutual funds		1,483		—		(159	)		1,324
Subtotal		1,483		31		(159	)		1,355
Level 2:
Corporate fixed income		4,288		9		(408	)		3,889
Municipal bonds		1,675		—		(94	)		1,581
Subtotal		5,963		9		(502	)		5,470
Total	$	7,446	$	40	$	(661	)	$	6,825
Liabilities
Level 1:
Phantom stock units	$	10	$	—	$	—		$	10
Total	$	10	$	—	$	—		$	10

	January 2, 2016
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value
Assets
Level 1:
Equity securities	$	1,318	$	28	$	(36	)	$	1,310
Mutual funds		2,611		1		(238	)		2,374
Subtotal		3,929		29		(274	)		3,684
Level 2:
Corporate fixed income		35,936		8		(1,682	)		34,262
Municipal bonds		2,897		—		(94	)		2,803
Certificates of deposit and time deposits		2,947		—		—			2,947
Asset backed securities		498		—		(20	)		478
Subtotal		42,278		8		(1,796	)		40,490
Total	$	46,207	$	37	$	(2,070	)	$	44,174
Liabilities
Level 1:
Phantom stock units	$	17	$	—	$	—		$	17
Total	$	17	$	—	$	—		$	17

The Company recognized a net realized loss on investments during the twelve months ended December 31, 2016 of $395 and a net realized loss of $1,102 during the twelve months ended January 2, 2016. As of December 31, 2016, 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 twelve months ended December 31, 2016 and January 2, 2016, the Company recognized impairment charges of $276 and $875, respectively, which are included in the net realized loss for the periods. This resulted from the deterioration of the financial condition of a corporate bond security issuer and the fair market value of equity securities.

Maturities of investments at December 31, 2016 are as follows:

	Adjusted Cost		Fair Value
Due in less than one year	$	1,056	$	1,033
Due after one year but within five years		3,201		2,857
Due after five years but within ten years		1,228		1,153
Due after ten years		478		427
Total	$	5,963	$	5,470

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 $10 and $17, for the periods ended December 31, 2016, and January 2, 2016, respectively. Phantom stock units vest over a period of three years.

The Company allocated the purchase price for the Enovation Controls acquisition to the assets acquired and liabilities assumed based on their estimated fair values, see Note 3 for additional discussion. The Company did not have any other fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the period ended December 31, 2016.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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