FAIR VALUE OF FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

6 Months Ended

May 03, 2015

NOTE 15 — 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 and accounts payable approximate fair value as of May 3, 2015 and November 2, 2014 because of the relatively short maturity of these instruments. 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):

	May 3, 2015				November 2, 2014
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
Credit Agreement, due June 2019	$	214,149	$	213,613	$	235,387	$	230,091
8.25% senior notes, due January 2023		250,000		265,625		—		—

The fair value of the 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 at May 3, 2015 and November 2, 2014.

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.

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 market in which the money market, mutual fund or NCI stock phantom investments are traded.

The following table summarizes information regarding our financial assets and liabilities that are measured at fair value on a recurring basis as of May 3, 2015, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):

	Level 1		Level 2		Level 3		Total
Assets:
Short-term investments in deferred compensation plan⁽¹⁾:
Money market	$	736	$	—	$	—	$	736
Mutual funds – Growth		808		—		—		808
Mutual funds – Blend		2,895		—		—		2,895
Mutual funds – Foreign blend		776		—		—		776
Mutual funds – Fixed income		—		571		—		571
Total short-term investments in deferred compensation plan		5,215		571		—		5,786
Total assets	$	5,215	$	571	$	—	$	5,786
Liabilities:
Deferred compensation plan liability	$	—	$	(5,637)	$	—	$	(5,637)
Total liabilities	$	—	$	(5,637)	$	—	$	(5,637)

(1)

Unrealized holding gains (losses) for the three months ended May 3, 2015 and May 4, 2014 were $0.3 million and $0.1 million, respectively. Unrealized holding gains (losses) for the six months ended May 3, 2015 and May 4, 2014 were $0.1 million and $0.2 million, respectively. These unrealized holding gains (losses) are primarily offset by changes in the deferred compensation plan liability.

The following table summarizes information regarding our financial assets that are measured at fair value on a nonrecurring basis as of May 3, 2015, segregated by level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):

	Level 1		Level 2		Level 3		Total
Assets:
Assets held for sale⁽²⁾	$	—	$	—	$	2,280	$	2,280
Total assets	$	—	$	—	$	2,280	$	2,280

(2)

Certain assets held for sale are valued at fair value and are measured at fair value on a nonrecurring basis. Assets held for sale are reported at fair value, if, on an individual basis, the fair value of the asset is less than cost. The fair value of assets held for sale is estimated using level 3 inputs, such as broker quotes for like-kind assets or other market indications of a potential selling value which approximates fair value.

The following table summarizes information regarding our financial assets and liabilities that are measured at fair value on a recurring basis as of November 2, 2014, segregated by level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):

	Level 1		Level 2		Level 3		Total
Assets:
Short-term investments in deferred compensation plan⁽¹⁾:
Money market	$	731	$	—	$	—	$	731
Mutual funds – Growth		791		—		—		791
Mutual funds – Blend		2,743		—		—		2,743
Mutual funds – Foreign blend		723		—		—		723
Mutual funds – Fixed income		—		561		—		561
Total short-term investments in deferred compensation plan	$	4,988	$	561	$	—	$	5,549
Total assets	$	4,988	$	561	$	—	$	5,549
Liabilities:
Deferred compensation plan liability	$	—	$	(6,093)	$	—	$	(6,093)
Total liabilities	$	—	$	(6,093)	$	—	$	(6,093)

The following table summarizes information regarding our financial assets that are measured at fair value on a nonrecurring basis as of November 2, 2014, segregated by level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):

	Level 1		Level 2		Level 3		Total
Assets:
Assets held for sale⁽³⁾	$	—	$	—	$	2,280	$	2,280
Total assets	$	—	$	—	$	2,280	$	2,280

(3)

- 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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