Note 13 - Fair Value Measurements

12 Months Ended

Nov. 28, 2015

Note

: Fair Value Measurements

Overview

Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

	●	Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
	●	Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
	●	Level 3: Unobservable inputs that reflect management’s assumptions, and include situations where there is little, if any, market activity for the asset or liability.

Balances Measured at Fair Value on a Recurring Basis

The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of November 28, 2015 and November 29, 2014, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

			Fair Value Measurements Using:
	November 28,
Description	2015		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	1,698	$	1,698	$	-	$	-
Derivative assets		15,185		-		15,185		-
Interest rate swaps		3,395		-		3,395		-
Cash-flow hedges		5,384		-		5,384		-

Liabilities:
Derivative liabilities	$	4,744	$	-	$	4,744	$	-
Contingent consideration liabilities, continuing operations		10,854		-		-		10,854

			Fair Value Measurements Using:
	November 29,
Description	2014		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	748	$	748	$	-	$	-
Derivative assets		1,007		-		1,007		-
Interest rate swaps		4,726		-		4,726		-
Cash-flow hedges		5,408		-		5,408		-

Liabilities:
Derivative liabilities	$	433	$	-	$	433	$	-
Contingent consideration liabilities, continuing operations		196		-		-		196
Contingent consideration liabilities, discontinued operations		5,000		-		-		5,000

We use the income approach in calculating the fair value of our contingent consideration liabilities using a discounted cash flow model and Level 3 inputs. The expected cash flows are affected by various significant judgments and assumptions, including revenue growth rates, profit margin percentages and discount rate

, which are sensitive to change. Estimates of fair value are inherently uncertain and represent only management’s reasonable expectation regarding future developments. These estimates and the judgments and assumptions upon which the estimates are based will, in all likelihood, differ in some respects from actual future results.

The valuation of our contingent consideration related to the acquisition of Tonsan Adhesive, Inc. as of November 28, 2015 resulted in a fair value of $10,704 and a $3,191 adjustment recorded to SG&A in the Statement of Income as of November 28, 2015.

Contingent consideration liabilities, continuing operations
Level 3 balance at beginning of year	$	196
Initial valuation of Tonsan contingent consideration		7,714
Mark to market adjustment		3,145
Foreign currency translation adjustment		(201	)
Level 3 balance at end of year	$	10,854

Balances

Measured at Fair Value on a Nonr

ecurring Basis

We measure certain assets and liabilities at fair value on a nonrecurring basis. These assets include tangible and intangible assets acquired and liabilities assumed in an acquisition, and cost basis investments that are written down to fair value when they are determined to be impaired.

Proper

ty, plant and equipment related to

acq

uisitions

–

Property, plant and equipment acquired in connection with our acquisitions during 2015 were measured using unobservable (Level 3) inputs, using the cost approach. The cost approach computes the cost to replace the asset, less accrued depreciation resulting from physical deterioration, functional obsolescence and external obsolescence.

ntangible assets related to

acq

uisitions

– The identified intangible assets acquired in connection with our acquisitions during 2015 were measured using unobservable (Level 3) inputs. The fair value of the intangible assets was calculated using either the income approach or a discounted market-based methodology approach. Significant inputs include estimated revenue growth rates, gross margins, operating expenses, estimated attrition rate, and a discount rate.

See Note 2 for further discussion regarding our acquisitions.

- 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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