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Fair Value Measurements
 9 Months Ended
Feb. 26, 2022
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, a deferred compensation plan, accounts payable, debt, interest rate swaps, foreign currency exchange contracts, redeemable noncontrolling interests, indefinite-lived intangible assets, and right-of-use assets. 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)February 26, 2022May 29, 2021
Carrying value$1,434.0 $277.1 
Fair value$1,308.5 $284.8 
The following describes the methods the Company uses to estimate the fair value of financial assets and liabilities recorded in net earnings, 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 money market funds, which are valued using net asset value ("NAV").
Mutual Funds-equity — 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.
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.
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.
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 February 26, 2022 and May 29, 2021.
(In millions)February 26, 2022May 29, 2021
Financial AssetsNAVQuoted Prices with Other
Observable Inputs (Level 2)		NAVQuoted Prices with Other
Observable Inputs (Level 2)
Cash equivalents:
Money market funds$28.0 $— $162.2 $— 
Mutual funds - equity— — — 0.8 
Foreign currency forward contracts— 0.5 — 1.6 
Deferred compensation plan— 16.2 — 16.1 
Total$28.0 $16.7 $162.2 $18.5 
Financial Liabilities
Foreign currency forward contracts$— $0.4 $— $0.1 
Total$— $0.4 $— $0.1 
In connection with the acquisition of Knoll, the Company acquired a contingent obligation related to Knoll's acquisition of Fully. During the period ended February 26, 2022 the Company paid the $10.0 million obligation in full.
The following describes the methods the Company uses to estimate the fair value of financial assets and liabilities recorded in other comprehensive income, the estimates have not significantly changed in the current period:
Mutual funds-fixed income — The Company's fixed-income securities primarily include fixed income mutual funds and government obligations. These investments are recorded at fair value using quoted prices for similar securities.
Interest rate swap agreements — The value of the Company's interest rate swap agreements are determined using a market approach based on rates obtained from active markets. The interest rate swap agreements are designated as cash flow hedging instruments.
The following table sets forth financial assets and liabilities measured at fair value through other comprehensive income and the respective balance sheet locations and pricing levels to which the fair value measurements are classified within the fair value hierarchy as of February 26, 2022 and May 29, 2021.
(In millions)February 26, 2022May 29, 2021
Financial AssetsBalance Sheet LocationQuoted Prices with Other Observable Inputs (Level 2)Quoted Prices with Other Observable Inputs (Level 2)
Mutual funds - fixed incomeShort-term investments$— $6.9 
Interest rate swap agreementOther noncurrent assets5.3— 
Total$5.3 $6.9 
Financial Liabilities
Interest rate swap agreementOther liabilities$2.3 $14.4 
Total$2.3 $14.4 
The following is a summary of the carrying and market values of the Company's fixed income mutual funds and equity mutual funds as of the dates indicated:
February 26, 2022May 29, 2021
(In millions)CostUnrealized
Gain/(Loss)		Market
Value		CostUnrealized
Gain/(Loss)		Market
Value
Mutual funds - fixed income$— $— $— $6.9 $— $6.9 
Mutual funds - equity— — — 0.5 0.3 0.8 
Total$— $— $— $7.4 $0.3 $7.7 
During the third Quarter, the fixed income mutual funds and equity mutual funds were dissolved and converted to cash. 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 (income) expense, net". 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.
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 (income) expense, net", for both realized and unrealized gains and losses.
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 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. The differential paid or received on the interest rate swap agreements is recognized as an adjustment to interest expense.
In January, 2022, the company entered into a third interest rate swap agreement. The interest rate swap is for an aggregate notional amount of $575 million with a forward start date of January 31, 2022 and a maturity date of January 29, 2027. The interest rate swap locked in the Company’s interest rate on the forecasted outstanding borrowings of $575 million at 1.689 percent exclusive of the credit spread on the variable rate debt. The company effectively will convert indebtedness anticipated to be borrowed on the company’s revolving line of credit from a LIBOR-based floating interest rate plus applicable margin to a 1.689 percent fixed interest rate plus applicable margin under the agreement as of the forward start date.
The interest rate swaps were designated as cash flow hedges at inception and the facts and circumstances of the hedged relationships remain consistent with the initial quantitative effectiveness assessment in that the hedged instruments remain an effective accounting hedge as of February 26, 2022. Since a designated derivative meets hedge accounting criteria, the fair value of the hedge is recorded in the Consolidated Statements 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
As of February 26, 2022, the Company had the following three outstanding interest rate swap agreements:
(In millions)Notional AmountForward Start DateTermination DateEffective Fixed Interest Rate
September 2016 Interest Rate Swap$150.0 January 3, 2018January 3, 20281.949 %
June 2017 Interest Rate Swap$75.0 January 3, 2018January 3, 20282.387 %
January 2022 Interest Rates Swap$575.0 January 31, 2022January 29, 20271.689 %
The swaps above effectively converted indebtedness anticipated to be borrowed on the Company's revolving line of credit up to the notional amounts from a LIBOR-based floating interest rate plus applicable margin to an effective fixed interest rate plus applicable margin under the agreements as of the forward start date.
The following table summarizes the effects of the interest rate swap agreements for the three and nine months ended:
Three Months EndedNine Months Ended
(In millions)February 26, 2022February 27, 2021February 26, 2022February 27, 2021
Gain recognized in Other comprehensive loss (effective portion)$10.2 $6.7 $13.2 $7.8 
(Loss) reclassified from Accumulated other comprehensive loss into earnings$(1.1)$(1.1)$(3.1)$(3.3)
There were no gains or losses recognized in earnings for hedge ineffectiveness for the three and nine month periods ended February 26, 2022 and February 27, 2021. The amount of loss expected to be reclassified from Accumulated other comprehensive loss into earnings during the next twelve months is $2.7 million, and net of tax is $2.0 million.
Redeemable Noncontrolling Interests
Changes in the Company's redeemable noncontrolling interest in HAY for the nine months ended February 26, 2022 and February 27, 2021 are as follows:
(In millions)February 26, 2022February 27, 2021
Beginning Balance$77.0 $50.4 
Net income attributable to redeemable noncontrolling interests5.7 3.8 
Distributions to redeemable noncontrolling interests(6.6)(2.7)
Cumulative translation adjustments attributable to redeemable noncontrolling interests(2.0)3.1 
Foreign currency translation adjustments(6.0)4.5 
Ending Balance$68.1 $59.1