FAIR VALUE MEASUREMENTS

Fair value can be measured using 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). Accounting standards utilize 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 own assumptions.

Our population of assets and liabilities subject to fair value measurements on a recurring basis are as follows:



			Fair value measurements using fair value hierarchy as of November 30, 2017
(millions)	Fair value		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	186.8	$	186.8	$	—	$	—
Insurance contracts	119.5		—		119.5		—
Bonds and other long-term investments	7.5		7.5		—		—
Foreign currency derivatives	12.7		—		12.7		—
Total	$	326.5	$	194.3	$	132.2	$	—
Liabilities
Interest rate derivatives	$	2.5	$	—	$	2.5	$	—
Foreign currency derivatives	4.7		—		4.7		—
Total	$	7.2	$	—	$	7.2	$	—



			Fair value measurements using fair value hierarchy as of November 30, 2016
(millions)	Fair value		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	118.4	$	118.4	$	—	$	—
Insurance contracts	106.0		—		106.0		—
Bonds and other long-term investments	10.2		10.2		—		—
Foreign currency derivatives	4.9		—		4.9		—
Total	$	239.5	$	128.6	$	110.9	$	—
Liabilities
Interest rate derivatives	$	1.2	$	—	$	1.2	$	—
Foreign currency derivatives	5.4		—		5.4		—
Contingent consideration related to acquisition	28.9		—		—		28.9
Total	$	35.5	$	—	$	6.6	$	28.9

The fair values of insurance contracts are based upon the underlying values of the securities in which they are invested and are from quoted market prices from various stock and bond exchanges for similar type assets. The fair values of bonds and other long-term investments are based on quoted market prices from various stock and bond exchanges. The fair values for interest rate and foreign currency derivatives are based on values for similar instruments using models with market based inputs.

The acquisition-date fair value of the liability for contingent consideration related to our acquisition of Drogheria & Alimentari (D&A) in May 2015 was approximately $27.7 million (€25.2 million). The fair value of the liability both at acquisition and as of each reporting period prior to our agreement to settle the obligation in the second quarter of 2017, was estimated using a discounted cash flow technique applied to the expected payout with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in the FASB's Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures. The significant inputs in the Level 3 measurement not supported by market activity included our probability assessments of expected future cash flows related to our acquisition of D&A during the calendar 2017 earn-out period, adjusted for expectations of the amounts and ultimate resolution of likely disputes to be raised by the seller and by us as provided in the purchase agreement, discounted considering the uncertainties associated with the obligation, and calculated in accordance with the terms of the purchase agreement. Changes in the fair value of the liability for contingent consideration, excluding the impact of foreign currency, have been recognized in income on a quarterly basis as of each reporting period prior to our agreement to settle the obligation in the second quarter of 2017. We reached agreement with the sellers to settle the contingent consideration liability prior to its contractual term for approximately $29.3 million (€26.1 million), with $19.7 million (€17.6 million) paid during 2017. We previously prepaid €5.0 million at the date of acquisition. The balance of the liability is expected to be paid in the first quarter of 2018. Accordingly, during 2017, we recognized a $1.6 million gain on settlement in selling, general and administrative expense in our consolidated income statement.

The change in fair value of our Level 3 liabilities, which relates solely to the contingent consideration related to our acquisition of D&A, for 2017 and 2016 is summarized as follows (in millions):



	Beginning of year		Changes in fair value including accretion		Impact of foreign currency		Effect of agreed upon settlement			Balance as of end of year
Year ended November 30, 2017	28.9		0.3		1.7		(30.9		)	—
Year ended November 30, 2016	$	27.1	$	1.8	$	—	$	—		$	28.9