Fair Value Measurement

3 Months Ended

Jan. 30, 2015

NOTE 6 – FAIR VALUE MEASUREMENT

We measure certain assets and liabilities at fair value and disclose the fair value of certain assets and liabilities recorded at cost in the Condensed Consolidated Financial Statements on both a recurring and non-recurring basis. Fair value is defined as an exit price, or the amount 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. The fair value accounting rules establish a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs must be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability based upon the best information available. Assets and liabilities measured at fair value are to be categorized into one of the three hierarchy levels based on the inputs used in the valuation. We classify assets and liabilities in their entirety based on the lowest level of input significant to the fair value measurement. Transfers of instruments between levels are recorded based on end of period values. There were no transfers between levels for all periods presented. The three levels are defined as follows:


•	Level 1: Observable inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities.


•	Level 2: Observable inputs based on quoted prices for similar assets and liabilities in active markets, or quoted prices for identical assets and liabilities in inactive markets.


•	Level 3: Unobservable inputs that reflect an entity’s own assumptions about what inputs a market participant would use in pricing the asset or liability based on the best information available in the circumstances.

In the second quarter of fiscal year 2014, we adopted a non-qualified deferred compensation plan under which certain directors and key employees can elect to defer receipt of a portion of their compensation until certain selected future dates or events. In the first quarter of fiscal year 2015, we made the first contributions to the deferred compensation plan based on participants' deferral elections. Although the plan is considered to be unfunded, assets corresponding to participant deferrals are contributed to a rabbi trust and are recorded at fair value. Investments held in the rabbi trust primarily consist of publicly-traded mutual funds. Rabbi trust assets are considered irrevocable, and may only be used to pay participant benefits under the plan. The only exception is the event of bankruptcy, in which case the assets in the rabbi trust would be subject to the claims of creditors of the corporation. Payments under this plan are made based on the participant's distribution election and we remain liable to the participants for the value of their deferrals and any accumulated earnings on the deferrals until disbursements occur. Rabbi trust assets of $5,957 are included in Other Assets and the deferred compensation liability of $5,957 is included in Other Long-term Liabilities in the Condensed Consolidated Balance Sheets. We record changes in the value of the rabbi trust asset and deferred compensation liability in earnings.

Recurring Fair Value Measurements

The following tables provide information by level for assets and liabilities that are recorded at fair value on a recurring basis:



	Fair Value at January 30, 2015		Fair Value Measurements Using Inputs Considered as
	Fair Value at January 30, 2015		Level 1		Level 2		Level 3
Assets
Cash equivalents	$	66,091	$	66,091	$	—	$	—
Restricted cash¹	2,720		2,720		—		—
Foreign currency contracts²	1,026		—		1,026		—
Investments held in rabbi trust	5,957		5,957		—		—
Total Assets	$	75,794	$	74,768	$	1,026	$	—

	Fair Value at October 31, 2014		Fair Value Measurements Using Inputs Considered as
	Fair Value at October 31, 2014		Level 1		Level 2		Level 3
Assets
Cash equivalents	$	48,198	$	48,198	$	—	$	—
Restricted cash¹	2,868		2,868		—		—
Foreign currency contracts²	455		—		455		—
Total Assets	$	51,521	$	51,066	$	455	$	—



	Fair Value at January 24, 2014		Fair Value Measurements Using Inputs Considered as
	Fair Value at January 24, 2014		Level 1		Level 2		Level 3
Assets
Cash equivalents	$	62,238	$	62,238	$	—	$	—
Restricted cash¹	3,241		3,241		—		—
Total Assets	$	65,479	$	65,479	$	—	$	—
Liabilities
Foreign currency contracts²	$	398	$	—	$	398	$	—
Total Liabilities	$	398	$	—	$	398	$	—

¹Restricted cash represents cash that is restricted from withdrawal for contractual or legal reasons.

²In the Condensed Consolidated Balance Sheets, foreign currency contracts are included in prepaid expenses and other when in an asset position and other accrued liabilities when in a liability position. The fair market value was estimated using observable market data for similar financial instruments. See Note 7 for additional information on derivative financial instruments.

The following tables provide information regarding the estimated fair value of our outstanding debt, which is recorded at carrying value in the Condensed Consolidated Balance Sheets:



	Fair Value at January 30, 2015		Fair Value Measurements Using Inputs Considered as
	Fair Value at January 30, 2015		Level 1		Level 2		Level 3
Debt³
Publicly traded debt	$	1,598,229	$	1,598,229	$	—	$	—
Non-publicly traded debt	186,068		—		186,068		—
Other⁴	20,003		—		20,003		—
Total Debt	$	1,804,300	$	1,598,229	$	206,071	$	—



	Fair Value at October 31, 2014		Fair Value Measurements Using Inputs Considered as
	Fair Value at October 31, 2014		Level 1		Level 2		Level 3
Debt³
Publicly traded debt	$	1,099,695	$	1,099,695	$	—	$	—
Non-publicly traded debt	532,397		—		532,397		—
Other⁴	23,838		—		23,838		—
Total Debt	$	1,655,930	$	1,099,695	$	556,235	$	—



	Fair Value at January 24, 2014		Fair Value Measurements Using Inputs Considered as
	Fair Value at January 24, 2014		Level 1		Level 2		Level 3
Debt³
Publicly traded debt	$	1,090,795	$	1,090,795	$	—	$	—
Non-publicly traded debt	552,197		—		552,197		—
Total Debt	$	1,642,992	$	1,090,795	$	552,197	$	—

³Debt is recorded at carrying value of $1,706,285, $1,556,391 and $1,552,516 on the Condensed Consolidated Balance Sheet as of January 30, 2015, October 31, 2014 and January 24, 2014, respectively. The fair value of our publicly traded debt is based on quoted prices (unadjusted) in active markets. The fair value of our non-publicly traded debt was estimated using a discounted cash flow analysis based on our current borrowing costs for debt with similar maturities. In addition, the carrying values of our commercial paper included in non-publicly traded debt approximate the financial instrument’s fair value as the maturities are less than three months. See Note 8 for additional information on debt.

⁴Other consists of bankers' acceptance drafts and commercial acceptance drafts from our customers that have been sold with recourse to financial institutions but have not yet matured. Refer to Note 8 for additional information.

Nonrecurring Fair Value Measurements

We measure certain assets at fair value on a nonrecurring basis. These assets primarily include assets acquired and liabilities assumed as part of a business acquisition, as well as property, plant and equipment when the planned use of the asset changes. See Note 15 for additional information on restructuring.

- 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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