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Note 12 - Fair Value Measurements
 6 Months Ended
Jun. 01, 2024
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

Note 12: 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:

 

 

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

 

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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.

 

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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 June 1, 2024 and December 2, 2023, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

 

  

June 1,

  

Fair Value Measurements Using:

 

Description

 

2024

  

Level 1

  

Level 2

  

Level 3

 

Assets:

                

Marketable securities

 $3,228  $3,228  $-  $- 

Foreign exchange contract assets

  4,289   -   4,289   - 

Interest rate swaps, cash flow hedge assets

  16,149   -   16,149   - 
                 

Liabilities:

                

Foreign exchange contract liabilities

 $4,026  $-   4,026  $- 

Interest rate swaps, fair value hedge liabilities

  42,374   -   42,374   - 

Net investment hedge liabilities

  67,411   -   67,411   - 

Contingent consideration liability

  500   -   -   500 

 

  

December 2,

  

Fair Value Measurements Using:

 

Description

 

2023

  

Level 1

  

Level 2

  

Level 3

 

Assets:

                

Marketable securities

 $19,314  $19,314  $-  $- 

Foreign exchange contract assets

  13,501   -   13,501   - 

Interest rate swaps, cash flow hedge assets

  3,632   -   3,632   - 
                 

Liabilities:

                

Foreign exchange contract liabilities

 $5,004  $-  $5,004  $- 

Interest rate swaps, cash flow hedge liabilities

  63   -   63     

Interest rate swaps, fair value hedge liabilities

  41,532   -   41,532    

Net investment hedge liabilities

  72,589   -   72,589   - 

Contingent consideration liabilities

  1,370   -   -   1,370 

 

The valuation of our contingent consideration liability related to the acquisition of TissueSeal and was $500 as of  June 1, 2024. The contingent consideration of $870 related to the acquisition of GSSI was paid in the first quarter of 2024. Adjustments to the fair value of contingent consideration are recorded to selling, general and administrative expenses in the Statement of Income. See Note 2 for further discussion regarding our acquisitions. The following table provides details of the contingent consideration liabilities: 

 

  

Amounts

 

Balance at December 2, 2023

 $1,370 

Contingent consideration payment

  (870)

Balance at June 1, 2024

 $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 $2,008,768 and $1,785,199 as of June 1, 2024 and December 2, 2023, 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.