Note

14:

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

June 2, 2018

and

December 2, 2017,

and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

	June 2,		Fair Value Measurements Using:
Description	2018		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	7,611	$	7,611	$	-	$	-
Foreign exchange contract assets		6,517		-		6,517		-
Interest rate swaps, cash flow hedges		29,940		-		29,940		-

Liabilities:
Foreign exchange contract liabilities	$	1,266	$	-	$	1,266	$	-
Interest rate swaps, cash flow hedges		-		-		-		-
Interest rate swaps, fair value hedges		8,829		-		8,829		-
Cross currency cash-flow hedges		15,825		-		15,825		-
Contingent consideration liability		209		-		-		209

	December 2,		Fair Value Measurements Using:
Description	2017		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	7,528	$	7,528	$	-	$	-
Foreign exchange contract assets		600		-		600		-
Interest rate swaps, cash flow hedges		3,104		-		3,104		-

Liabilities:
Foreign exchange contract liabilities	$	4,397	$	-	$	4,397	$	-
Interest rate swaps, fair value hedges		2,121		-		2,121		-
Cross-currency cash flow hedges		20,136		-		20,136		-
Contingent consideration liability		496		-		-		496

Long-term debt had an estimated fair value of

$2,356,385

and

$2,452,034

as of

June 2, 2018

and

December 2, 2017,

respectively. The fair value of long-term debt is based on quoted market prices for the same or similar issues or on the current rates offered for debt of similar maturities. The estimated fair value of these long-term obligations is

not

necessarily indicative of the amount that would be realized in a current market exchange.

We use the income approach in calculating the fair value of our contingent consideration liability using a real option model with Level

inputs. The expected cash flows are affected by various significant judgments and assumptions, including revenue growth rates, profit margin percentages, volatility 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 contingent consideration liability activity for the

six

months ended

June 2, 2018

is presented below:

	Amount
Balance at December 2, 2017	$	496
Mark to market adjustment		(241	)
Foreign currency translation adjustment		(46	)
Balance at June 2, 2018	$	209

Balances Measured at Fair Value on a Nonrecurring 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.

Property, plant and equipment related to acquisitions –

Property, plant and equipment acquired in connection with our acquisitions were measured using unobservable (Level

) 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.

Intangible assets related to acquisitions

– The identified intangible assets acquired in connection with our acquisitions during were measured using unobservable (Level

) 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, attrition rate, royalty rate and discount rate.

See Note

for further discussion regarding our acquisitions.