We are exposed to market risks, such as changes in foreign currency exchange rates and interest rates. To manage the volatility related to these exposures, from time to time, we enter into various derivative transactions. We use various types of derivative instruments including forward contracts and swaps. We formally assess, designate and document, as a hedge of an underlying exposure, each qualifying derivative instrument that will be accounted for as an accounting hedge at inception. Additionally, we assess, both at inception and at least quarterly thereafter, whether the financial instruments used in the hedging transaction are effective at offsetting changes in either the fair values or cash flows of the underlying exposures.

In October 2017, as a means of mitigating the impact of currency fluctuations on our Euro investments in foreign entities, we executed a fair value hedge and two cross currency swaps, in which we paid variable rate interest in Euros and received fixed rate interest in U.S. Dollars with a combined notional amount of approximately €85.25 million ($100 million U.S. Dollar equivalent), and which had a maturity date of November 2022. This effectively converted a portion of our U.S. Dollar denominated fixed-rate debt to Euro denominated variable rate debt. The fair value hedge was recognized at fair value in our Consolidated Balance Sheets, while changes in the fair value of the hedge were recognized in interest expense in our Consolidated Statements of Income. We designated the swaps as net investment hedges of our net investment in our European operations under ASU 2017-12 and applied the spot method to these hedges. In February 2020, the fair value hedge and two cross-currency swaps agreements were terminated, and we received cash in the amount of $9.3 million, representing the fair value of the swap and interest accrued through the date of termination. Accordingly, hedge accounting was discontinued and a hedge accounting adjustment to our Senior Notes of $1.5 million was recorded and is being amortized to interest expense in the Consolidated Statements of Income through the termination of the 3.450% Notes in November 2022. Changes in the fair value of the cross-currency swaps due to spot foreign exchange rates are recorded as cumulative translation adjustment within accumulated other comprehensive income ("AOCI") and will remain in AOCI until either the sale or substantially complete liquidation of the hedged subsidiaries.

Separately, in February 2020, as a means of mitigating the impact of currency fluctuations on our Euro investments in foreign entities, we executed a cash flow hedge and two cross currency swaps, in which we will pay fixed rate interest in Euros and receive variable rate interest in U.S. Dollars with a combined notional amount of approximately €277.73 million ($300 million U.S. Dollar equivalent), and which have a maturity date of February 2023. This effectively converts our U.S. Dollar denominated variable rate debt to Euro denominated fixed rate debt. The cash flow hedge is recognized at fair value in our Consolidated Balance Sheets, while changes in the fair value of the hedge will be recognized in AOCI when the hedged items affect earnings. Amounts recognized in AOCI will be recognized in earnings in interest expense when the hedged interest payment is accrued. We designated the swaps as net investment hedges of our net investment in our European operations under ASU 2017-12 and applied the spot method to these hedges. The changes in fair value of the derivative instruments that are designated and qualify as hedges of net investments in foreign operations are recognized in AOCI to offset the changes in the values of the net investments being hedged. In addition, in February 2020, as a means of mitigating the variability of the functional-currency-equivalent cash flows associated with the U.S. Dollar denominated term loan facility (referred to as Foreign Borrower’s Term Loan), we executed a cash flow hedge, in which we will pay fixed rate interest in Euros and receive variable rate interest in U.S. Dollars with a notional amount of approximately €92.52 million ($100 million U.S. Dollar equivalent), and which have a maturity date of February 2023. This effectively converts our U.S. Dollar denominated variable rate debt to Euro denominated fixed rate debt. The cash flow hedge is recognized at fair value in our Consolidated Balance Sheets, while changes in the fair value of the hedge will be recognized in AOCI when the hedged items affect earnings. Amounts recorded in AOCI will be recognized in earnings in interest expense when the hedged interest payment is accrued. In addition, since this currency swap is a hedge of variability of the functional currency equivalent cash flows of a recognized liability to be remeasured at spot exchange rates under ASC 830, an amount that will offset the gain or loss arising from the remeasurement of the hedged liability will be reclassified each period from AOCI to earnings as foreign exchange gain/(loss), which is a component of SG&A expenses.

The following table summarizes the location and effects of our derivatives instruments on the Consolidated Statements of Comprehensive Income and Consolidated Statements of Income for gains or losses initially recognized in AOCI in the Consolidated Balance Sheet:


	Pretax gain/(loss) recognized in AOCI						Pretax gain/(loss) reclassified from AOCI into income
	Three Months Ended						Three Months Ended
(In thousands) Derivatives in hedging relationships	November 30, 2021		November 30, 2020			Income statement location	November 30, 2021			November 30, 2020
Interest rate swap (cash flow)	$	868	$	(149	)	Interest (expense) income	$	(930	)	$	(846	)
Cross currency swap (cash flow)		4,157		51		Interest (expense) income		138			160
Cross currency swap (cash flow)		-		-		Foreign exchange gain (loss)		4,013			75
Cross currency swap (net investment)		11,440		(957	)	Gain or (loss) on sale of subsidiary		-			-
Total	$	16,465	$	(1,055	)		$	3,221		$	(611	)

	Pretax gain/(loss) recognized in AOCI						Pretax gain/(loss) reclassified from AOCI into income
(In thousands)	Six Months Ended						Six Months Ended
Derivatives in hedging relationships	November 30, 2021		November 30, 2020			Income Statement Location	November 30, 2021			November 30, 2020
Interest rate swap (cash flow)	$	832	$	(747	)	Interest (expense) income	$	(1,860	)	$	(1,613	)
Cross currency swap (cash flow)		7,604		(7,304	)	Interest (expense) income		276			351
Cross currency swap (cash flow)		-		-		Foreign exchange gain (loss)		7,420			(7,380	)
Cross currency swap (net investment)		21,743		(24,090	)	Gain or (loss) on sale of subsidiary		-			-
Total	$	30,179	$	(32,141	)		$	5,836		$	(8,642	)

At November 30, 2021, and May 31, 2021, we held one foreign currency forward contract at each period end designed to reduce our exposure to changes in the cash flows of intercompany foreign-currency-denominated loans related to changes in foreign currency exchange rates by fixing the functional currency cash flows. These contracts have not been designated as hedges; therefore, the changes in fair value of the contracts are recognized in earnings as a component of SG&A expenses. Amounts recognized in earnings did not have a material impact on our Consolidated Financial Statements for any period presented. As of November 30, 2021, and May 31, 2021, the notional amounts of the forward contract held to purchase foreign currencies was $230.7 million and $191.7 million, respectively.

All of our derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy. We determine the fair value of our derivatives based on valuation methods, which project future cash flows and discount the future amounts to present value using market based observable inputs, including interest rate curves, foreign currency rates, as well as future and basis point spreads, as applicable.

The fair values of qualifying and non-qualifying instruments used in hedging transactions as of November 30, 2021 and May 31, 2021 are as follows:


(In thousands)		Fair Value
Derivatives Designated as Hedging Instruments	Balance Sheet Location	November 30, 2021		May 31, 2021
Assets:
Cross Currency Swap (Net Investment)	Other Current Assets	$	5,916	$	6,233
Cross Currency Swap (Cash Flow)	Other Current Assets		767		516
Liabilities:
Interest Rate Swap (Cash Flow)	Other Accrued Liabilities	$	2,913	$	3,547
Cross Currency Swap (Net Investment)	Other Accrued Liabilities		839		1,321
Cross Currency Swap (Net Investment)	Other Long-Term Liabilities		17,343		39,228
Cross Currency Swap (Cash Flow)	Other Long-Term Liabilities		5,889		13,786
Interest Rate Swap (Cash Flow)	Other Long-Term Liabilities		410		2,467


(In thousands)		Fair Value
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	November 30, 2021		May 31, 2021
Assets:
Foreign Currency Exchange	Other Current Assets	$	94	$	212