XML 23 R12.htm IDEA: XBRL DOCUMENT
v3.20.1

Fair Value Measurements | 3 Months Ended
--- | ---
Apr. 26, 2020
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements The following fair value hierarchy is applied for disclosure of the inputs used to measure fair value and prioritizes the inputs into three levels as follows: Level 1—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 and liabilities in active markets or other inputs that are observable for the assets or liabilities, either directly or indirectly; Level 3—Unobservable inputs based on the Company’s own assumptions, requiring significant management judgment or estimation. Instruments Measured at Fair Value on a Recurring Basis Financial assets and liabilities measured and recorded at fair value on a recurring basis were presented in the Balance Sheets as follows:
| Fair Value as of April 26, 2020 |  | Fair Value as of January 26, 2020
(in thousands) | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3)
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Convertible debt | $ | 9,481 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,481 |  |  | $ | 10,700 |  |  | $ | — |  |  | $ | — |  |  | $ | 10,700 |
Total financial assets | $ | 9,481 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,481 |  |  | $ | 10,700 |  |  | $ | — |  |  | $ | — |  |  | $ | 10,700 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cycleo Earn-out | $ | 1,958 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,958 |  |  | $ | 2,108 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,108 |
Foreign currency forward contracts | 148 |  |  | — |  |  | 148 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Interest rate swap agreement | 1,687 |  |  | — |  |  | 1,687 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total financial liabilities | $ | 3,793 |  |  | $ | — |  |  | $ | 1,835 |  |  | $ | 1,958 |  |  | $ | 2,108 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,108 |
During the three months ended April 26, 2020, the Company had no transfers of financial assets or liabilities between Level 1, Level 2 or Level 3. As of April 26, 2020 and January 26, 2020, the Company had not elected the fair value option for any financial assets and liabilities for which such an election would have been permitted. The convertible debt investments are valued utilizing a combination of estimates that are based on the estimated discounted cash flows associated with the debt and the fair value of the equity into which the debt may be converted, all of which are Level 3 inputs. The following table presents a reconciliation of the changes in the convertible debt investments in the three months ended April 26, 2020:
(in thousands) |
Balance at January 26, 2020 | $ | 10,700 |
Additions | 550 |
Increase in credit loss reserve | (2,022 | )
Interest accrued | 253 |
Balance at April 26, 2020 | $ | 9,481 |
The foreign currency forward contracts are valued using readily available foreign currency forward and interest rate curves (Level 2 inputs). The fair value of each contract is determined by comparing the contract rate to the forward rate and discounting to the present value. Contracts in a gain position are recorded in "Other current assets" in the Balance Sheets and the value of contracts in a loss position are recorded in "Accrued liabilities" in the Balance Sheets. See Note 15 for further discussion of the Company’s derivative instruments. The interest rate swap agreement is valued using readily available interest rate curves (Level 2 inputs). The fair value of the agreement is determined by comparing, for each settlement, the contract rate to the forward rate and discounting to the present value. Contracts in a gain position are recorded in "Other current assets" and "Other assets" in the Balance Sheets and the value of contracts in a loss position are recorded in "Accrued liabilities" and "Other long term liabilities" in the Balance Sheets. See Note 15 for further discussion of the Company’s derivative instruments. The Cycleo Earn-out liability (see Note 11) is valued utilizing estimates of annual sales and operating income (Level 3 inputs) through April 2020. These estimates represent inputs for which market data is not available and are developed using the best information available about the assumptions that market participants would use when pricing the liability. The Company measures contingent earn-out liabilities at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy. The significant unobservable inputs used in the fair value measurements are sales projections over the earn-out period, and the probability outcome percentages assigned to each scenario. Significant increases or decreases to either of these inputs in isolation would result in a significantly higher or lower liability, with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liabilities will be equivalent to the amount paid, and the difference between the fair value estimate and amount paid will be recorded in earnings. For the Cycleo Earn-out, Cycleo SAS has a business profile comparable to a start-up company. Accordingly, its sales projections are subject to significant revisions. This characteristic can result in volatile changes to the measurement of fair value for a given earn-out. The Company reviews and re-assesses the estimated fair value of earn-out obligations on a recurring basis, and the updated fair value could differ materially from the previous estimates. Adjustments to the estimated fair values related to contingent consideration are reported in changes in fair value of contingent earn-out obligations, while changes in all other unobservable inputs are reported in operating income. The following table presents a reconciliation of the changes in the earn-out liability in the three months ended April 26, 2020:
(in thousands) |
Balance at January 26, 2020 | $ | 2,108 |
Changes in the fair value of contingent earn-out obligations | (33 | )
Changes in the fair value of non-contingent earn-out obligations | (117 | )
Balance at April 26, 2020 | $ | 1,958 |
Instruments Not Recorded at Fair Value on a Recurring Basis Some of the Company’s financial instruments are not measured at fair value on a recurring basis, but are recorded at amounts that approximate fair value due to their liquid or short-term nature. Such financial assets and financial liabilities include: cash and cash equivalents including money market deposits, net receivables, certain other assets, accounts payable, accrued expenses, accrued personnel costs, and other current liabilities. The Company’s long-term debt is recorded at cost, which approximates fair value as the long-term debt bears interest at a floating rate. Assets and Liabilities Recorded at Fair Value on a Non-Recurring Basis The Company reduces the carrying amounts of its goodwill, intangible assets, long-lived assets and non-marketable equity securities to fair value when held for sale or determined to be impaired. Investment Impairments and Credit Loss Reserves Upon the adoption of ASU 2016-13, the Company recorded expected credit loss reserves of $0.4 million related to its held-to-maturity debt securities. During the first quarter of fiscal year 2021, the Company increased its expected credit loss reserves by $2.0 million and $0.4 million for its available-for-sale debt securities and its held-to-maturity debt securities, respectively. These increases were, in-part, due to the impact of the COVID-19 pandemic on early-stage development companies. The total credit loss reserve for the Company's available-for-sale debt securities and held-to-maturity securities was $2.8 million as of April 26, 2020. In addition, during the first quarter of fiscal year 2021, the Company recorded $1.2 million of impairments on its non-marketable equity securities. During the first quarter of fiscal year 2020, there were no impairments on the Company's non-marketable equity securities, held-to-maturity debt investments, or available-for-sale debt securities.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration