Fair Value Measurements

9 Months Ended

Aug. 04, 2017

The company categorizes its assets and liabilities into one of three levels based on the assumptions (inputs) used in valuing the asset or liability. Estimates of fair value for financial assets and financial 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 flows), 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. Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs reflecting management’s assumptions about the inputs used in pricing the asset or liability.

Cash and cash equivalents balances are valued at their carrying amounts in the Condensed Consolidated Balance Sheets, which are reasonable estimates of their fair value due to their short-term nature. Forward currency contracts are valued based on observable market transactions of forward currency prices and spot currency rates as of the reporting date. The unfunded deferred compensation liability is primarily subject to changes in fixed-income investment contracts based on current yields.

Assets and liabilities measured at fair value on a recurring basis, as of August 4, 2017, July 29, 2016, and October 31, 2016 are summarized below:



(Dollars in thousands)			Fair Value Measurements Using Inputs Considered as:
August 4, 2017	Fair Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	335,026	$	335,026	$	—	$	—
Forward currency contracts	2,164		—		2,164		—
Total assets	$	337,190	$	335,026	$	2,164	$	—
Liabilities:
Forward currency contracts	$	6,654	$	—	$	6,654	$	—
Deferred compensation liabilities	760		—		760		—
Total liabilities	$	7,414	$	—	$	7,414	$	—



(Dollars in thousands)			Fair Value Measurements Using Inputs Considered as:
July 29, 2016	Fair Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	277,243	$	277,243	$	—	$	—
Forward currency contracts	646		—		646		—
Total assets	$	277,889	$	277,243	$	646	$	—
Liabilities:
Forward currency contracts	$	2,472	$	—	$	2,472	$	—
Deferred compensation liabilities	1,275		—		1,275		—
Total liabilities	$	3,747	$	—	$	3,747	$	—



(Dollars in thousands)			Fair Value Measurements Using Inputs Considered as:
October 31, 2016	Fair Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	273,555	$	273,555	$	—	$	—
Forward currency contracts	1,967		—		1,967		—
Total assets	$	275,522	$	273,555	$	1,967	$	—
Liabilities:
Forward currency contracts	$	1,765	$	—	$	1,765	$	—
Deferred compensation liabilities	1,149		—		1,149		—
Total liabilities	$	2,914	$	—	$	2,914	$	—

The company measures certain assets and liabilities at fair value on a non-recurring basis. Assets acquired and liabilities assumed as part of acquisitions are measured at fair value. There were no transfers between Level 1 and Level 2 during the three and nine months ended August 4, 2017 and July 29, 2016, or the twelve months ended October 31, 2016.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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