Note 11 - Fair Value Measurements

6 Months Ended

May 29, 2021

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note 11: 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 May 29, 2021 and November 28, 2020, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

	May 29,		Fair Value Measurements Using:
Description	2021		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	2,770	$	-	$	2,770	$	-
Foreign exchange contract assets		3,293		-		3,293		-
Liabilities:
Foreign exchange contract liabilities	$	2,889	$	-	$	2,889	$	-
Cross-currency cash flow hedge liabilities		7,464		-		7,464		-
Interest rate swaps, cash flow hedge liabilities		22,997		-		22,997		-
Interest rate swaps, fair value hedge liabilities		4,242		-		4,242		-
Contingent consideration liabilities		8,700		-		-		8,700

	November 28,		Fair Value Measurements Using:
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

We use the income approach in calculating the fair value of our contingent consideration liability related to the D.H.M. acquisition 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 liabilities related to the acquisitions of D.H.M. and STR resulted in a fair value of $7,000 and $1,700, respectively, as of May 29, 2021. See Note 2 for further discussion regarding our acquisitions.

	Amounts
Balance at November 28, 2020	$	5,800
Acquisition		1,700
Mark to market adjustment		1,200
Balance at May 29, 2021	$	8,700

Long-term debt had an estimated fair value of $1,715,934 and $1,811,562 as of May 29, 2021 and November 28, 2020, 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.