XML 39 R22.htm IDEA: XBRL DOCUMENT v3.21.1
Note 14 - Fair Value Measurement
 12 Months Ended
May 01, 2021
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

Note 14. Fair Value Measurement

 

ASC 820, Fair Value Measurement, defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. It also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy within ASC 820 distinguishes between the following three Levels of inputs which may be utilized when measuring fair value:

 

Level 1 - Quoted prices in active markets for identical assets or liabilities.

 

Level 2 - Observable inputs other than quoted prices included within Level 1 for the assets or liabilities, either directly or indirectly (for example, quoted market prices for similar assets and liabilities in active markets or quoted market prices for identical assets or liabilities in markets not considered to be active, inputs other than quoted prices that are observable for the asset or liability, or market-corroborated input).

 

Level 3 - Unobservable inputs supported by little or no market activity based on our own assumptions used to measure assets and liabilities.

 

The fair values for fixed-rate long-term receivables are estimated using a discounted cash flow analysis based on interest rates currently being offered for contracts with similar terms to customers with similar credit quality. The carrying amounts reported in our consolidated balance sheets for long-term receivables approximate fair value and have been categorized as a Level 2 fair value measurement. Fair values for fixed-rate long-term marketing obligations are estimated using a discounted cash flow calculation applying interest rates currently being offered for debt with similar terms and underlying collateral. The total carrying value of long-term marketing obligations as reported in our consolidated balance sheets within other long-term obligations approximates fair value and has been categorized as a Level 2 fair value measurement.

 

The following table sets forth by Level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis at May 1, 2021 and May 2, 2020 according to the valuation techniques we used to determine their fair values. There have been no transfers of assets or liabilities among the fair value hierarchies presented.

 

  

Fair Value Measurements

 
  

Level 1

  

Level 2

  

Level 3

  

Total

 

Balance as of May 1, 2021:

                

Cash and cash equivalents

 $77,590  $—  $—  $77,590 

Restricted cash

  2,812   —   —   2,812 

Derivatives - asset position

  —   4   —   4 

Derivatives - liability position

  —   (261)  —   (261)

Acquisition-related contingent consideration

  —   —   (363)  (363)
  $80,402  $(257) $(363) $79,782 

Balance as of May 2, 2020:

                

Cash and cash equivalents

 $40,398  $—  $—  $40,398 

Restricted cash

  14   —   —   14 

Available-for-sale securities:

                

Certificates of deposit

  —   1,230   —   1,230 

Derivatives - asset position

  —   261   —   261 

Derivatives - liability position

  —   (17)  —   (17)

Acquisition-related contingent consideration

  —   —   (761)  (761)
  $40,412  $1,474  $(761) $41,125 

 

A roll forward of the Level 3 contingent liabilities, both short- and long-term, for the fiscal year ended May 1, 2021 is as follows:

 

Acquisition-related contingent consideration as of May 2, 2020

 $761 

Additions

  183 

Settlements

  (600)

Interest

  19 

Acquisition-related contingent consideration as of May 1, 2021

 $363 

 

The following methods and assumptions were used to estimate the fair value of each class of financial instrument. There have been no changes in the valuation techniques used by us to value our financial instruments.

 

Cash and cash equivalents: Consists of cash on hand in bank deposits and highly liquid investments, primarily money market accounts. The fair value was measured using quoted market prices in active markets. The carrying amount approximates fair value.

 

Restricted cash: Consists of cash and cash equivalents held in bank deposit accounts to secure issuances of foreign bank guarantees. The fair value of restricted cash was measured using quoted market prices in active markets. The carrying amount approximates fair value.

 

Certificates of deposit: Consists of time deposit accounts with original maturities of less than three years and various yields. The fair value of these securities was measured based on valuations observed in less active markets than Level 1 investments from a third-party financial institution. The carrying amount approximates fair value.

 

Derivatives – currency forward contracts: Consists of currency forward contracts trading with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis. The fair value of these securities was measured based on a valuation from a third-party bank. See "Note 15. Derivative Financial Instruments" for more information regarding our derivatives.

 

Contingent liabilities: Consists of the fair value of liabilities measured on expected future payments relating to business acquisitions if conditions are met. The contingent liabilities were calculated by estimating the discounted present value of expected future payments as of the acquisition date and subsequently at the end of each reporting period. The fair value measurement is based on significant unobservable inputs as of May 1, 2021 and May 2, 2020. The contingent liabilities are presented in the "Accrued expenses" line items in our consolidated balance sheets.

 

Non-recurring measurements: The fair value measurement standard also applies to certain non-financial assets and liabilities measured at fair value on a nonrecurring basis. Certain long-lived assets such as goodwill, intangible assets and property and equipment are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.

 

Other measurements using fair value: Some of our financial instruments, such as accounts receivable, long-term receivables, prepaid expense and other assets, contract assets and liabilities, accounts payable, warranty obligations, and other long-term obligations are reflected in the consolidated balance sheets at carrying value, which approximates fair value due to their short-term nature.