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Fair Value and Derivatives | 12 Months Ended
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May 31, 2023
Fair Value and Derivatives [Abstract] |
Fair Value and Derivatives | 9. Fair Value and Derivatives Fair Value of Financial Instruments Fair value measurements are determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs. The Company utilizes a fair value hierarchy based upon the observability of inputs used in valuation techniques as follows:
Level 1: | Observable inputs such as quoted prices in active markets;
Level 2: | Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: | Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The carrying amounts of the Company’s financial instruments other than cash equivalents and marketable securities, which include accounts receivable and accounts payable, approximate fair value based on either their short maturity or current terms for similar instruments. Items Measured at Fair Value on a Recurring Basis We forecast our net exposure in various receivables and payables to fluctuations in the value of various currencies, and have entered into a number of foreign currency forward contracts each month to mitigate that exposure. These contracts are recorded net at fair value on our consolidated balance sheets, classified as Level 2 in the fair value hierarchy. Gains and losses from these foreign currency forward contracts are recognized in other income in our consolidated statements of income (loss). The notional amount of forward contracts in place was $15,500 and $4,424 as of May 31, 2023 and 2022, respectively, and consisted of hedges of transactions up to June 2023.
Fair Value of Derivatives Not Designated as Hedging Instruments |  | Balance Sheet Location |  | May 31, 2023 |  |  | May 31, 2022 |
Foreign currency forward contracts, net |  | Other receivable (Other accruals) |  | $ | 140 |  |  | $ | (78 | )
We record the fair value of our interest rate swaps on a recurring basis using Level 2 observable market inputs for similar assets or liabilities in active markets.
Fair Value of Derivatives Designated as Hedging Instruments |  | Balance Sheet Location |  | May 31, 2023 |  |  | May 31, 2022 |
Interest rate swaps – current |  | Other current assets |  | $ | 2,087 |  |  | $ | - |
Interest rate swaps – non-current |  | Other non-current liabilities |  |  | (4,770 | ) |  |  | - |
Items Measured at Fair Value on a Nonrecurring Basis In addition to items that are measured at fair value on a recurring basis, the Company measures certain assets and liabilities at fair value on a nonrecurring basis, which are not included in the table above. As these nonrecurring fair value measurements are generally determined using unobservable inputs, these fair value measurements are classified within Level 3 of the fair value hierarchy. For further information see Note 2 "Goodwill and Other Intangible Assets" and Note 3 “Business Combinations”. Items Not Carried at Fair Value Fair values of the Company’s Term Loan and Senior Notes were as follows:
|  | May 31, 2023 |
Aggregate fair value |  | $ | 927,720 |
Aggregate carrying value (1) |  |  | 900,000 |
(1) Excludes unamortized debt issuance costs. Fair values were based on available market information and other observable data and are classified within Level 2 of the fair value hierarchy. Derivatives Derivatives Not Designated as Hedging Instruments The location and amount of gains from derivatives not designated as hedging instruments in our consolidated statements of income (loss) were as follows:
|  | Location in statements |  | Year Ended May 31 |
Derivatives Not Designated as Hedging Instruments |  | of (loss) income |  | May 31, 2023 |  |  | May 31, 2022 |  |  | May 31, 2021 |
Foreign currency forward contracts |  | Other (expense) income |  | $ | (10,092 | ) |  | $ | 1,218 |  |  | $ | 2,651 |
Derivatives Designated as Hedging Instruments In November 2022, we entered into a receive-variable, pay-fixed interest rate swap agreement with an initial $250,000 notional value, which is designated as a cash flow hedge. This agreement fixed a portion of the variable interest due on our term loan facility, with an effective date of December 2, 2022 and a maturity date of June 30, 2027. Under the terms of the agreement, we pay a fixed interest rate of 4.215% plus an applicable margin ranging between 150 to 225 basis points and receive a variable rate of interest based on term SOFR from the counterparty, which is reset according to the duration of the SOFR term. The fair value of the interest rate swap as of May 31, 2023 was a net liability of $2,683. The Company expects to reclassify a $2,087 gain of accumulated other comprehensive income into earnings in the next 12 months. The following table summarizes the other comprehensive income (loss) before reclassifications of derivative gains and losses:
|  | Other Comprehensive Income (Loss) Before Reclassifications During |
|  | Year Ended May 31 |
Derivatives Designated as Hedging Instruments |  | 2023 |  |  | 2022 |  |  | 2021 |
Interest rate swaps |  | $ | (1,599 | ) |  | $ | — |  |  | $ | — |
The following table summarizes the reclassification of derivative gains and losses into net income from accumulated other comprehensive income (loss):
|  |  |  | Gain (Loss) Reclassified During |
|  | Location of Gain (Loss) |  | Year Ended May 31 |
Derivatives Designated as Hedging Instruments |  | Reclassified |  | 2023 |  |  | 2022 |  |  | 2021 |
Interest rate swaps |  | Interest expense |  | $ | 440 |  |  | $ | — |  |  | $ | — |

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- Definition Fair value and derivatives. + References No definition available. + Details
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- Definition The entire disclosure for derivatives and fair value of assets and liabilities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI https://asc.fasb.org/topic&trid=2155941 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI https://asc.fasb.org/topic&trid=2229140 + Details
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