Note 11 - Fair Value Measurements

6 Months Ended

May 28, 2022

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 28, 2022 and November 27, 2021, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

	May 28,		Fair Value Measurements Using:
Description	2022		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	3,247	$	3,247	$	-	$	-
Foreign exchange contract assets		9,143		-		9,143		-
Cross-currency cash flow hedge assets		24,932		-		24,932		-
Liabilities:
Foreign exchange contract liabilities	$	4,053	$	-	$	4,053	$	-
Interest rate swaps, cash flow hedge liabilities		460		-		460		-
Interest rate swaps, fair value hedge liabilities		33,901		-		33,901		-
Contingent consideration liability		500		-		-		500

	November 27,		Fair Value Measurements Using:
Description	2021		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	2,079	$	2,079	$	-	$	-
Foreign exchange contract assets		5,725		-		5,725		-
Cross-currency cash flow hedge assets		14,496		-		14,496		-
Liabilities:
Foreign exchange contract liabilities	$	6,082	$	-	$	6,082	$	-
Interest rate swaps, cash flow hedge liabilities		12,366		-		12,366
Interest rate swaps, fair value hedge liabilities		10,539		-		10,539		-
Contingent consideration liability		8,100		-		-		8,100

Adjustments to the fair value of contingent consideration are recorded to selling, general and administrative expenses in the Statement of Income. 

The valuation of our contingent consideration liability related to the acquisition of TissueSeal resulted in a fair value of $500 as of  May 28, 2022. As of November 27, 2021, the agreement provisions for the D.H.M contingent consideration were met, and as a result, $8,100 was paid during the period ended February 26, 2022. See Note 2 for further discussion regarding our acquisitions.  The following table provides details of the contingent consideration liabilities: 

	Amounts
Balance at November 27, 2021	$	8,100
Acquisition		500
Payment of contingent consideration		(8,122	)
Mark to market adjustment		22
Balance at May 28, 2022	$	500

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 intangible assets acquired in an acquisition.  The identified intangible assets of customer relationships, technology and tradenames acquired in connection with our acquisitions were measured using unobservable (Level 3) inputs.  The fair value of the intangible assets was calculated using either the income or cost approach. Significant inputs include estimated revenue growth rates, gross margins, operating expenses, attrition rate, royalty rate and discount rate.  

See Note 2 for further discussion regarding our acquisitions.

Balances Disclosed at Fair Value

Long-term debt had an estimated fair value of $1,819,598 and $1,618,291 as of May 28, 2022 and November 27, 2021, 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.