Note 13 - Fair Value Measurements

12 Months Ended

Nov. 28, 2020

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note 13: 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, 2020 and November 30, 2019, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

			Fair Value Measurements Using:
	November 28,
Description	2020		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	22,560	$	22,560	$	-	$	-
Foreign exchange contract assets		2,320		-		2,320		-
Cross-currency cash flow hedge assets		2,823		-		2,823		-
Liabilities:
Foreign exchange contract liabilities	$	5,251	$	-	$	5,251	$	-
Cross-currency cash flow hedge liabilities		280		-		280		-
Interest rate swaps, cash flow hedge liabilities		33,256		-		33,256		-
Contingent consideration liability		5,800		-		-		5,800

			Fair Value Measurements Using:
	November 30,
Description	2019		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	19,430	$	19,430	$	-	$	-
Foreign exchange contract assets		1,227		-		1,227		-
Interest rate swaps, cash flow hedges		5,741		-		5,741		-
Cross-currency cash flow hedges		26,896		-		26,896		-
Liabilities:
Foreign exchange contract liabilities	$	1,800	$	-	$	1,800	$	-
Interest rate swaps, fair value hedges		17,637		-		17,637		-

See Note 7 for discussion regarding the fair value of debt.

We use the income approach in calculating the fair value of our contingent consideration liability using a real option model with Level 3 inputs. The expected cash flows are affected by various significant judgments and assumptions, including revenue growth rates, 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 valuation of our contingent consideration liability related to the acquisition of D.H.M. resulted in a fair value of $5,800 with an adjustment recorded to selling, general and administrative expenses in the Statement of Income as of November 28, 2020.

Contingent consideration liability	2020
Level 3 balance at beginning of year	$	-
Acquisition		5,000
Mark to market adjustment		800
Level 3 balance at end of year	$	5,800

See Note 2 for further discussion regarding our acquisitions.