Fair Value Measurements

6 Months Ended

Nov. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

All financial instruments that are measured at fair value on a recurring basis (at least annually) have been classified within the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the consolidated condensed balance sheet date. These financial instruments measured at fair value on a recurring basis are summarized below: 

	As of November 30, 2020
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Cash and cash equivalents	$	703,175	$	—	$	—	$	703,175
Other assets, net:
Interest rate lock agreements	—		9,834		—		9,834
Total assets at fair value	$	703,175	$	9,834	$	—	$	713,009
Long-term accrued liabilities:
Interest rate lock agreements	$	—	$	138,118	$	—	$	138,118
Total liabilities at fair value	$	—	$	138,118	$	—	$	138,118

	As of May 31, 2020
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Cash and cash equivalents	$	145,402	$	—	$	—	$	145,402
Other assets, net:
Interest rate lock agreements	—		1,546		—		1,546
Total assets at fair value	$	145,402	$	1,546	$	—	$	146,948
Long-term accrued liabilities:
Interest rate lock agreements	$	—	$	165,686	$	—	$	165,686
Total liabilities at fair value	$	—	$	165,686	$	—	$	165,686

Cintas’ cash and cash equivalents are generally classified within Level 1 or Level 2 of the fair value hierarchy. Financial instruments classified as Level 1 are based on quoted market prices in active markets, and financial instruments classified as Level 2 are based on quoted market prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. The types of financial instruments Cintas classifies within Level 1 include most bank deposits and money market securities. Cintas does not adjust the quoted market price for such financial instruments.

The fair values of outstanding interest rate lock agreements are included in other assets, net and long-term accrued liabilities at both November 30, 2020 and May 31, 2020. The fair values of Cintas' interest rate lock agreements are based on similar exchange traded derivatives (market approach) and are, therefore, included within Level 2 of the fair value hierarchy. The fair value was determined by comparing the locked rates against the benchmarked treasury rate. No other amounts included in other assets, net or long-term accrued liabilities are recorded at fair value on a recurring basis.

The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while Cintas believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the consolidated condensed balance sheet dates.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, Cintas records assets and liabilities at fair value on a nonrecurring basis as required under U.S. GAAP. The assets and liabilities measured at fair value on a nonrecurring basis primarily relate to assets and liabilities acquired in a business acquisition, which were not material for the three and six months ended November 30, 2020 and 2019.