Fair Value Measurements

12 Months Ended

May 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Fair value measurements are principally applied to (1) financial assets and liabilities such as marketable equity securities and debt securities, (2) investments in equity and other securities, and (3) derivative instruments consisting of interest rate swaps. These items are marked-to-market at each reporting period to fair value. The information in the following paragraphs and tables primarily addresses matters relative to these financial assets and liabilities.

• Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities. The Company’s Level 1 assets include money market investments and marketable equity securities.

• Level 2 – Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. The Company’s Level 2 assets and liabilities primarily include Greek bonds, time deposits, interest rate swaps, pension plan assets (equity securities, debt securities and other) and foreign currency exchange contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.

• Level 3 – Inputs are unobservable for the asset or liability. The Company’s Level 3 assets include other equity investments. See the section below titled Level 3 Valuation Techniques for further discussion of how the Company determines fair value for investments classified as Level 3.

The following table provides information by level for assets and liabilities that are measured at fair value on a recurring basis at May 31, 2013 and 2012:

	Fair Value at		Fair Value Measurement Using Inputs Considered as
(in millions)	May 31, 2013		Level 1		Level 2		Level 3
Assets:
Money market funds	$	93.1	$	93.1	$	—	$	—
Time deposits	31.5		—		31.5		—
Greek bonds	5.6		—		5.6		—
Pension plan assets	137.6		—		137.6		—
Foreign currency exchange contracts	0.5		—		0.5		—
Equity securities	1.4		1.3		—		0.1
Total assets	$	269.7	$	94.4	$	175.2	$	0.1
Liabilities:
Interest rate swaps	$	54.1	$	—	$	54.1	$	—
Foreign currency exchange contracts	0.6		—		0.6		—
Total liabilities	$	54.7	$	—	$	54.7	$	—

	Fair Value at		Fair Value Measurement Using Inputs Considered as
(in millions)	May 31, 2012		Level 1		Level 2		Level 3
Assets:
Money market funds	$	303.1	$	303.1	$	—	$	—
Time deposit	36.3		—		36.3		—
Greek bonds	6.3		—		6.3		—
Pension plan assets	108.7		—		108.7		—
Foreign currency exchange contracts	0.2		—		0.2		—
Other	0.2		—		—		0.2
Total assets	$	454.8	$	303.1	$	151.5	$	0.2
Liabilities:
Interest rate swaps	$	76.2	$	—	$	76.2	$	—
Foreign currency exchange contracts	0.2		—		0.2		—
Total liabilities	$	76.4	$	—	$	76.4	$	—

Level 3 Valuation Techniques

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. Level 3 financial assets also include certain investment securities for which there is limited market activity where the determination of fair value requires significant judgment or estimation. Level 3 investment securities primarily include other equity investments for which there was a decrease in the observation of market pricing. As of May 31, 2013 and 2012, these securities were valued primarily using internal cash flow valuation that incorporates transaction details such as contractual terms, maturity, timing and amount of future cash flows, as well as assumptions about liquidity and credit valuation adjustments of marketplace participants.

The estimated fair value of the Company’s long-term debt, including the current portion, at May 31, 2013 and 2012 was $6,090.4 million and $5,978.4 million, respectively, compared to carrying values of $5,966.4 million. and $5,827.8 million, respectively. The fair value of the Company’s traded debt was estimated using quoted market prices for the same or similar instruments. The fair value of the Company’s variable rate term debt was estimated using Bloomberg composite quotes. In determining the fair values and carrying values, the Company considers the terms of the related debt and excludes the impacts of debt discounts and interest rate swaps.

Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

During the years ended May 31, 2013, 2012 and 2011, the Company measured nonfinancial long-lived assets and liabilities at fair value in conjunction with the impairments of the spine & bone healing, dental and Europe reporting units. The Company used the income approach to measure the fair value of the reporting unit and related intangible assets. See Note 6 for a full description of key assumptions. The inputs used in the impairment fair value analysis fall within Level 3 due to the significant unobservable inputs used to determine fair value.

The Company is exposed to certain market risks relating to its ongoing business operations, including foreign currency risk, interest rate risk and commodity price risk. The Company currently manages foreign currency risk and interest rate risk through the use of derivatives.