XML 62 R18.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Fair Value Measurements | 3 Months Ended
--- | ---
Sep. 01, 2018
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements The company's financial instruments consist of cash equivalents, marketable securities, accounts and notes receivable, deferred compensation plan, accounts payable, debt, redeemable noncontrolling interests, interest rate swaps and foreign currency exchange contracts. The company's financial instruments, other than long-term debt, are recorded at fair value. The carrying value and fair value of the company's long-term debt, including current maturities, is as follows for the periods indicated:
(In millions) | September 1, 2018 |  | June 2, 2018
Carrying value | $ | 285.6 |  |  | $ | 285.8 |
Fair value | $ | 288.9 |  |  | $ | 288.6 |
The following describes the methods the company uses to estimate the fair value of financial assets and liabilities, which have not significantly changed in the current period: Cash and cash equivalents — The company invests excess cash in short term investments in the form of commercial paper and money market funds. Commercial paper is valued at amortized costs while money market funds are valued using net asset value. Equity securities — The company's equity securities primarily include equity mutual funds. The equity mutual fund investments are recorded at fair value using quoted prices for similar securities. Available-for-sale securities — The company's available-for-sale marketable securities primarily include fixed income mutual funds and government obligations. These investments are recorded at fair value using quoted prices for similar securities. Foreign currency exchange contracts — The company's foreign currency exchange contracts are valued using an approach based on foreign currency exchange rates obtained from active markets. The estimated fair value of forward currency exchange contracts is based on month-end spot rates as adjusted by market-based current activity. These forward contracts are not designated as hedging instruments. Interest rate swap agreements — The value of the company's interest rate swap agreements is determined using a market approach based on rates obtained from active markets. The interest rate swap agreements are designated as cash flow hedging instruments. Deferred compensation plan — The company's deferred compensation plan primarily includes various domestic and international mutual funds that are recorded at fair value using quoted prices for similar securities. Other — The company's contingent consideration liabilities and redeemable noncontrolling interests are deemed to be nonrecurring level 3 fair value measurement. Refer to Note 14 for further information regarding redeemable noncontrolling interests. The following table sets forth financial assets and liabilities measured at fair value through net income and the respective pricing levels to which the fair value measurements are classified within the fair value hierarchy as of September 1, 2018 and June 2, 2018.
(In millions) | September 1, 2018 |  | June 2, 2018
Financial Assets | Quoted Prices with Other Observable Inputs (Level 2) |  | Management Estimate (Level 3) |  | Quoted Prices with Other Observable Inputs (Level 2) |  | Management Estimate (Level 3)
Cash equivalents: |  |  |  |  |  |  |
Money market funds | $ | 25.8 |  |  | $ | — |  |  | $ | 121.0 |  |  | $ | — |
Mutual funds - equity | 0.9 |  |  | — |  |  | 0.9 |  |  | — |
Foreign currency forward contracts | 0.3 |  |  | — |  |  | 0.4 |  |  | — |
Deferred compensation plan | 16.1 |  |  | — |  |  | 15.1 |  |  | — |
Total | $ | 43.1 |  |  | $ | — |  |  | $ | 137.4 |  |  | $ | — |
Financial Liabilities |  |  |  |  |  |  |
Foreign currency forward contracts | $ | 0.4 |  |  | $ | — |  |  | $ | 0.3 |  |  | $ | — |
Contingent consideration | — |  |  | 0.4 |  |  | — |  |  | 0.5 |
Total | $ | 0.4 |  |  | $ | 0.4 |  |  | $ | 0.3 |  |  | $ | 0.5 |
The following table sets forth financial assets measured at fair value through other comprehensive income and the respective pricing levels to which the fair value measurements are classified within the fair value hierarchy as of September 1, 2018 and June 2, 2018.
(In millions) | September 1, 2018 |  | June 2, 2018
Financial Assets | Quoted Prices with Other Observable Inputs (Level 2) |  | Management Estimate (Level 3) |  | Quoted Prices with Other Observable Inputs (Level 2) |  | Management Estimate (Level 3)
Mutual funds - fixed income | 7.6 |  |  | — |  |  | 7.7 |  |  | — |
Interest rate swap agreement | 14.4 |  |  | — |  |  | 15.0 |  |  | — |
Total | $ | 22.0 |  |  | $ | — |  |  | $ | 22.7 |  |  | $ | — |
The table below presents a reconciliation for liabilities measured at fair value using significant unobservable inputs (Level 3) for the three months ended (in millions).
Contingent Consideration | September 1, 2018 |  | September 2, 2017
Beginning balance | $ | 0.5 |  |  | $ | 0.5 |
Payments | (0.1 | ) |  | — |
Ending balance | $ | 0.4 |  |  | $ | 0.5 |
The contingent consideration liabilities represent future payment obligations that relate to business and product line acquisitions. These payments are based on the future performance of the acquired businesses or product line. The contingent consideration liabilities are valued using estimates based on discount rates that reflect the risk involved and the projected sales and earnings of the acquired businesses. The estimates are updated and the liabilities are adjusted to fair value on a quarterly basis. The following is a summary of the carrying and market values of the company's fixed income mutual funds and equity mutual funds as of the respective dates:
| September 1, 2018 |  | June 2, 2018
(In millions) | Cost |  | Unrealized Gain/(loss) |  | Market Value |  | Cost |  | Unrealized Gain/(Loss) |  | Market Value
Mutual funds - fixed income | $ | 7.7 |  |  | $ | (0.1 | ) |  | $ | 7.6 |  |  | $ | 7.8 |  |  | $ | (0.1 | ) |  | $ | 7.7 |
Mutual funds - equity | 0.7 |  |  | 0.2 |  |  | 0.9 |  |  | 0.7 |  |  | 0.2 |  |  | 0.9 |
Total | $ | 8.4 |  |  | $ | 0.1 |  |  | $ | 8.5 |  |  | $ | 8.5 |  |  | $ | 0.1 |  |  | $ | 8.6 |
Adjustments to the fair value of fixed income mutual funds are recorded as increases or decreases, net of income taxes, within Accumulated Other Comprehensive Loss in stockholders’ equity. These adjustments are also included within the caption Unrealized holding gain within the Condensed Consolidated Statements of Comprehensive Income. Unrealized losses recognized in the company's Condensed Consolidated Statement of Comprehensive Income related to fixed income mutual funds were $0.1 million for the three month periods ended September 1, 2018 and September 2, 2017. Adjustments to the fair value of equity mutual funds are recorded as increases or decreases, net of income taxes, in the Condensed Consolidated Statements of Comprehensive Income within "Other, net". Unrealized gains recognized in the company's Condensed Consolidated Statement of Comprehensive Income related to equity mutual funds were $0.1 million for the three month periods ended September 1, 2018 and September 2, 2017. The cost of securities sold is based on the specific identification method; realized gains and losses resulting from such sales are included in the Condensed Consolidated Statements of Comprehensive Income within "Other, net". The company reviews its investment portfolio for any unrealized losses that would be deemed other-than-temporary and require the recognition of an impairment loss in earnings. If the cost of an investment exceeds its fair value, the company evaluates, among other factors, general market conditions, the duration and extent to which the fair value is less than its cost, the company's intent to hold the investment, and whether it is more likely than not that the company will be required to sell the investment before recovery of the cost basis. The company also considers the type of security, related industry and sector performance, and published investment ratings. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis in the investment is established. If conditions within individual markets, industry segments, or macro-economic environments deteriorate, the company could incur future impairments. The company views its equity and fixed income mutual funds as available for use in its current operations. Accordingly, the investments are recorded within Current Assets within the Condensed Consolidated Balance Sheets. On June 3, 2018, as a result of the adoption of ASU 2016-01 - Financial Instruments, the company reclassified net gains on mutual fund equity securities, that were formerly classified as available for sale securities before the adoption of the new standard, from Accumulated Other Comprehensive Loss to Retained earnings. The impact of adoption was not material to the company's financial statements. Derivative Instruments and Hedging Activities Foreign Currency Forward Contracts The company transacts business in various foreign currencies and has established a program that primarily utilizes foreign currency forward contracts to reduce the risks associated with the effects of certain foreign currency exposures. Under this program, the company's strategy is to have increases or decreases in our foreign currency exposures offset by gains or losses on the foreign currency forward contracts to mitigate the risks and volatility associated with foreign currency transaction gains or losses. Foreign currency exposures typically arise from net liability or asset exposures in non-functional currencies on the balance sheets of our foreign subsidiaries. Foreign currency forward contracts generally settle within 30 days and are not used for trading purposes. These forward contracts are not designated as hedging instruments. Accordingly, we record the fair value of these contracts as of the end of the reporting period in the Consolidated Balance Sheets with changes in fair value recorded within the Consolidated Statements of Comprehensive Income. The balance sheet classification for the fair values of these forward contracts is to Other current assets for unrealized gains and to Other accrued liabilities for unrealized losses. The Consolidated Statements of Comprehensive Income classification for the fair values of these forward contracts is to Other expenses (income): Other, net, for both realized and unrealized gains and losses. The realized gain on foreign currency forward contracts for the three months ended September 1, 2018 and September 2, 2017, was $0.4 million and zero, respectively. Interest Rate Swaps The company enters into interest rate swap agreements to manage its exposure to interest rate changes and its overall cost of borrowing. The company's interest rate swap agreements were entered into to exchange variable rate interest payments for fixed rate payments over the life of the agreement without the exchange of the underlying notional amounts. The notional amount of the interest rate swap agreements is used to measure interest to be paid or received and does not represent the amount of exposure to credit loss. The differential paid or received on the interest rate swap agreements is recognized as an adjustment to interest expense. The interest rate swaps were designated cash flow hedges at inception and remain an effective accounting hedge as of September 1, 2018. Since a designated derivative meets hedge accounting criteria, the fair value of the hedge is recorded in the Consolidated Statement of Stockholders’ Equity as a component of Accumulated other comprehensive loss, net of tax. The ineffective portion of the change in fair value of the derivatives is immediately recognized in earnings. The interest rate swap agreements are assessed for hedge effectiveness on a quarterly basis. In September 2016, the company entered into an interest rate swap agreement. The interest rate swap is for an aggregate notional amount of $150.0 million with a forward start date of January 3, 2018 and a termination date of January 3, 2028. As a result of the transaction, the company effectively converted indebtedness anticipated to be borrowed on the company’s revolving line of credit up to the notional amount from a LIBOR-based floating interest rate plus applicable margin to a 1.949 percent fixed interest rate plus applicable margin under the agreement as of the forward start date. On June 12, 2017, the company entered into an interest rate swap agreement. The interest rate swap is for an aggregate notional amount of $75.0 million with a forward start date of January 3, 2018 and a termination date of January 3, 2028. As a result of the transaction, the company effectively converted the company’s revolving line of credit up to the notional amount from a LIBOR-based floating interest rate plus applicable margin to a 2.387 percent fixed interest rate plus applicable margin under the agreement as of the forward start date. As of September 1, 2018, the fair value of the company’s two outstanding interest rate swap agreements, which are designated cash flow hedges, was an asset of $14.4 million. The asset fair value was recorded within Other noncurrent assets within the Condensed Consolidated Balance Sheets. The net unrealized gain recorded within Other comprehensive loss, net of tax, for the effective portion of the company's designated cash flow hedges was $0.5 million and $1.6 million for the three months ended September 1, 2018 and September 2, 2017, respectively. There were no gains or losses recognized against earnings for hedge ineffectiveness and there were no gains or losses reclassified from Accumulated other comprehensive loss into earnings for three month periods ended September 1, 2018 and September 2, 2017, respectively.

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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration