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Derivatives, Investments, and Fair Value Measurements | 9 Months Ended
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May 30, 2020
Fair Value Disclosures [Abstract] |
Derivatives, Investments, and Fair Value Measurements | Derivatives, Investments, and Fair Value Measurements Assets and Liabilities that are Measured at Fair Value on a Recurring Basis The Company accounts for fair value measurements in accordance with Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measurement, and expands disclosure about fair value measurement. The fair value hierarchy requires the use of observable market data when available. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels as follows: Level 1 - Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date. Level 2 - Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including: •Quoted prices for similar assets or liabilities in active markets; •Quoted prices for identical or similar assets in nonactive markets; •Inputs other than quoted prices that are observable for the asset or liability; and •Inputs that are derived principally from or corroborated by other observable market data. Level 3 - Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. The following tables set forth by level within the fair value hierarchy the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis at May 30, 2020 and August 31, 2019 according to the valuation techniques the Company used to determine their fair values:
| Fair Value at |  | Fair Value Hierarchy |  |  |  |
(in thousands) | May 30, 2020 |  | Level 1 |  | Level 2 |  | Level 3
Assets that fund deferred compensation: |  |  |  |  |  |  |
Domestic equity funds | $ | 378 |  |  | $ | 293 |  |  | $ | 85 |  |  | $ | — |
International equity funds | 93 |  |  | 30 |  |  | 63 |  |  | — |
Fixed income funds | 163 |  |  | 50 |  |  | 113 |  |  | — |
Interest rate swap contracts | (573) |  |  | — |  |  | (573) |  |  | — |
Total assets at fair value | $ | 61 |  |  | $ | 373 |  |  | $ | (312) |  |  | $ | — |
| Fair Value at |  | Fair Value Hierarchy |  |  |  |
(in thousands) | August 31, 2019 |  | Level 1 |  | Level 2 |  | Level 3
Assets that fund deferred compensation: |  |  |  |  |  |  |
Domestic equity funds | $ | 373 |  |  | $ | 288 |  |  | $ | 85 |  |  | $ | — |
International equity funds | 101 |  |  | 45 |  |  | 56 |  |  | — |
Fixed income funds | 155 |  |  | 54 |  |  | 101 |  |  | — |
Interest rate swap contracts | 90 |  |  | — |  |  | 90 |  |  | — |
Total assets at fair value | $ | 719 |  |  | $ | 387 |  |  | $ | 332 |  |  | $ | — |
The following methods and assumptions were used to estimate the fair value of each class of financial instrument: Assets that fund deferred compensation The Company's assets that fund deferred compensation are marketable equity securities measured at fair value using quoted market prices and primarily consist of equity-based mutual funds. These securities are primarily classified as Level 1 as they are traded in an active market for which closing stock prices are readily available. These securities fund the Executive Share Option Plan and the Executive Deferred Compensation Plan. Refer to Note 10, Employee and Retiree Benefits, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended August 31, 2019 for additional information regarding these plans. The proportion of the assets that will fund options which expire within a year are included in Prepaid expenses and other assets in the accompanying Condensed Consolidated Balance Sheets. The remaining assets are classified as non-current and are included in Other assets. Interest Rate Swap Contract On March 6, 2020, the Company entered into an interest rate swap agreement for an incremental notional amount of $25 million to exchange floating for fixed rate interest payments for our LIBOR-based borrowings. The interest rate swap had a fair value of zero at inception, is effective March 10, 2020 and has been designated as a cash flow hedge. The interest rate swap agreement, with a maturity date of March 4, 2025, converts the Company's interest rate payments on $25 million of variable-rate, 1-month LIBOR-based debt to a fixed interest rate of 1.265%. On March 2, 2020, the Company entered into an interest rate swap agreement for an incremental notional amount of $25 million to exchange floating for fixed rate interest payments for our LIBOR-based borrowings. The interest rate swap had a fair value of zero at inception, is effective March 4, 2020 and has been designated as a cash flow hedge. The interest rate swap agreement, with a maturity date of March 4, 2025, converts the Company's interest rate payments on $25 million of variable-rate, 1-month LIBOR-based debt to a fixed interest rate of 1.364%. On January 23, 2017, the Company entered into an interest rate swap contract, which effectively fixed the interest rate on the $300.0 million term loan agreement ("Term Loan") for a notional amount that reduced each December during the swap contract. As of August 31, 2019, the Company had $120.0 million of the Term Loan fixed at an interest rate of 5.32%. In the first quarter of Fiscal 2020, the Company exited the swap contract prior to its expiration on December 8, 2020. The fair value of the interest rate swap is classified as Level 2 as it is determined based on observable market data. The asset is included in Other assets and the liability is included in Other non-current liabilities on the Condensed Consolidated Balance Sheets. The change in value is recorded to Accumulated other comprehensive loss on the Condensed Consolidated Balance Sheets since the interest rate swap is designated for hedge accounting. These circumstances were similar for the swap that was exited during the first quarter of Fiscal 2020. Assets and Liabilities that are measured at Fair Value on a Nonrecurring Basis The Company's non-financial assets, which include goodwill, intangible assets, and property, plant and equipment, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur, or if an annual impairment test is required, the Company must evaluate the non-financial asset for impairment. If an impairment has occurred, the asset is required to be recorded at the estimated fair value. No impairments were recorded for non-financial assets in the third quarter of Fiscal 2020 or the third quarter of Fiscal 2019. Fair Value of Financial Instruments The Company's financial instruments, other than those presented in the disclosures above, include cash, receivables, accounts payable, other payables, and long-term debt. The fair values of cash, receivables, accounts payable, and other payables approximated carrying values because of the short-term nature of these instruments. If these instruments were measured at fair value in the financial statements, they would be classified as Level 1 in the fair value hierarchy. See Note 9, Long-Term Debt, for information about the fair value of our long-term debt.

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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 http://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 http://asc.fasb.org/topic&trid=2229140 + Details
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