FAIR VALUE OF FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

6 Months Ended

Apr. 29, 2018

FAIR VALUE OF FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, restricted cash, trade accounts receivable, accounts payable and notes payable approximate fair value as of April 29, 2018 and October 29, 2017, respectively, because of their relatively short maturities. The carrying amount of revolving loans outstanding under the asset-based lending facilities approximates fair value as the interest rates are variable and reflective of market rates. The fair values of the remaining financial instruments not currently recognized at fair value on our consolidated balance sheets at the respective fiscal period ends were (in thousands):



	April 29, 2018				October 29, 2017
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Term Loan Credit Facility, due February 2025	$	415,000	$	415,519	$	—	$	—
Credit Agreement, due June 2022	—		—		144,147		144,147
8.25% senior notes, due January 2023	—		—		250,000		267,500

The fair values of the Term Loan Credit Facility, Credit Agreement and the Notes were based on recent trading activities of comparable market instruments, which are level 2 inputs.

Fair Value Measurements

ASC Subtopic 820-10, Fair Value Measurements and Disclosures, requires us to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.

Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroborated inputs.

Level 3: Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants would price the assets or liabilities.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value. There have been no changes in the methodologies used as of April 29, 2018 and October 29, 2017.

Money market: Money market funds have original maturities of three months or less. The original cost of these assets approximates fair value due to their short-term maturity.

Mutual funds: Mutual funds are valued at the closing price reported in the active market in which the mutual fund is traded.

Assets held for sale: Assets held for sale are valued based on current market conditions, prices of similar assets in similar condition and expected proceeds from the sale of the assets, representative of Level 3 inputs.

Deferred compensation plan liability: Deferred compensation plan liability is comprised of phantom investments in the deferred compensation plan and is valued at the closing price reported in the active markets in which the money market and mutual funds are traded.

The following tables summarize information regarding our financial assets and liabilities that are measured at fair value on a recurring basis as of April 29, 2018 and October 29, 2017, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):



	April 29, 2018
	Level 1		Level 2		Level 3		Total
Assets:
Short-term investments in deferred compensation plan:⁽¹⁾
Money market	$	790	$	—	$	—	$	790
Mutual funds – Growth	1,057		—		—		1,057
Mutual funds – Blend	2,018		—		—		2,018
Mutual funds – Foreign blend	946		—		—		946
Mutual funds – Fixed income	—		1,521		—		1,521
Total short-term investments in deferred compensation plan	4,811		1,521		—		6,332
Total assets	$	4,811	$	1,521	$	—	$	6,332

Liabilities:
Deferred compensation plan liability	$	—	$	5,310	$	—	$	5,310
Total liabilities	$	—	$	5,310	$	—	$	5,310



	October 29, 2017
	Level 1		Level 2		Level 3		Total
Assets:
Short-term investments in deferred compensation plan:⁽¹⁾
Money market	$	1,114	$	—	$	—	$	1,114
Mutual funds – Growth	958		—		—		958
Mutual funds – Blend	1,948		—		—		1,948
Mutual funds – Foreign blend	915		—		—		915
Mutual funds – Fixed income	—		1,546		—		1,546
Total short-term investments in deferred compensation plan	4,935		1,546		—		6,481
Total assets	$	4,935	$	1,546	$	—	$	6,481

Liabilities:
Deferred compensation plan liability	$	—	$	4,923	$	—	$	4,923
Total liabilities	$	—	$	4,923	$	—	$	4,923

(1)

Unrealized holding gain (loss) for the three months ended April 29, 2018 and April 30, 2017 was $(0.2) million and $0.2 million, respectively. Unrealized holding gain (loss) for the six months ended April 29, 2018 and April 30, 2017 was $0.1 million and $(0.3) million, respectively. These unrealized holding gains (losses) were substantially offset by changes in the deferred compensation plan liability.

- 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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