At February 28, 2014, our financial assets and liabilities measured at fair value on a recurring basis were as follows:


(in thousands)	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Totals
Assets
Derivative contracts (1)	$	-	$	1,839	$	-	$	1,839

Total assets	$	-	$	1,839	$	-	$	1,839

Liabilities
Derivative contracts (1)	$	-	$	4,654	$	-	$	4,654
Contingent consideration obligation (2)		-		-		310		310

Total liabilities	$	-	$	4,654	$	310	$	4,964

At May 31, 2013, our financial assets and liabilities measured at fair value on a recurring basis were as follows:


(in thousands)	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Totals
Assets
Derivative contracts (1)	$	-	$	761	$	-	$	761

Total assets	$	-	$	761	$	-	$	761

Liabilities
Derivative contracts (1)	$	-	$	9,774	$	-	$	9,774

Total liabilities	$	-	$	9,774	$	-	$	9,774

(1)

The fair value of our derivative contracts is based on the present value of the expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Market observable, Level 2 inputs are used to determine the present value of the expected future cash flows. Refer to “NOTE O – Derivative Instruments and Hedging Activities” for additional information regarding our use of derivative instruments.

(2)

The fair value of the contingent consideration obligation is determined using a Monte Carlo simulation model based on management’s projections of future EBITDA levels. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. At each reporting date, we will revalue the contingent consideration obligation to estimated fair value and record changes in fair value as income or expense in our consolidated statement of earnings.