FAIR VALUE MEASUREMENTS

9 Months Ended

Feb. 23, 2014

Fair Value, Assets, Liabilities and Stockholders' Equity Measured on Recurring Basis [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

FASB guidance establishes a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The three levels of inputs used to measure fair value are as follows:

Level 1  — Unadjusted quoted prices in active markets for identical assets or liabilities,

Level 2  — Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets, and

Level 3  — Unobservable inputs reflecting our own assumptions and best estimate of what inputs market participants would use in pricing the asset or liability.

The fair values of our Level 2 derivative instruments were determined using valuation models that use market observable inputs including interest rate curves and both forward and spot prices for currencies and commodities. Derivative assets and liabilities included in Level 2 primarily represent commodity and foreign currency option and forward contacts, interest rate swaps, and cross-currency swaps.

The following table presents our financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of February 23, 2014:

	Level 1		Level 2		Level 3		Net Value
Assets:
Derivative assets	$	13.7	$	73.3	$	—	$	87.0
Available-for-sale securities	2.2		—		—		2.2
Deferred compensation assets	5.7		—		—		5.7
Total assets	$	21.6	$	73.3	$	—	$	94.9
Liabilities:
Derivative liabilities	$	—	$	35.1	$	—	$	35.1
Deferred compensation liabilities	42.1		—		—		42.1
Total liabilities	$	42.1	$	35.1	$	—	$	77.2

The following table presents our financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of May 26, 2013:

	Level 1		Level 2		Level 3		Net Value
Assets:
Derivative assets	$	13.9	$	64.7	$	—	$	78.6
Available-for-sale securities	6.1		—		—		6.1
Deferred compensation assets	6.9		—		—		6.9
Total assets	$	26.9	$	64.7	$	—	$	91.6
Liabilities:
Derivative liabilities	$	—	$	137.9	$	—	$	137.9
Deferred compensation liabilities	35.9		—		—		35.9
Total liabilities	$	35.9	$	137.9	$	—	$	173.8

Certain assets and liabilities, including long-lived assets, goodwill, asset retirement obligations, and cost and equity investments are measured at fair value on a nonrecurring basis.

During the second quarter of fiscal 2014, the $19.7 million carrying amount of the processing facility (level 3 asset) acquired from an onion supplier was written-down to its fair value of $10.8 million, resulting in an impairment charge of $8.9 million, which is included in selling, general and administrative expenses in the Commercial Foods segment (see Note 13). The fair value measurement used to determine the impairment was based upon expected sales price.

During the third quarter of fiscal 2014, the carrying amount of a potato processing and storage facility (level 3 asset) with a carrying value of $20.3 million was written down to its fair value of $3.8 million, resulting in an impairment charge of $16.5 million in the Commercial Foods segment. The fair value measurement used to determine the impairment was based upon the expected sales price.

During the third quarter of fiscal 2014, assets held for sale (level 3 assets) of the discontinued operations of the PB Snacks business, with a carrying amount of $68.9 million, were written-down to their fair value of $43.5 million. The resulting impairment charge of $25.4 million is included in discontinued operations. The fair value measurement used to determine the impairment was based upon the expected business sales price.

The carrying amount of long-term debt (including current installments) was $9.3 billion as of February 23, 2014 and $9.4 billion as of May 26, 2013. Based on current market rates, the fair value of this debt (level 2 liabilities) at February 23, 2014 and May 26, 2013, was estimated at $9.8 billion and $10.2 billion, respectively. Included in the February 23, 2014 long-term debt carrying amount, and excluded from the above fair value table, is $0.5 billion of hedged debt that, along with the related hedge instruments, is adjusted for changes in fair value based solely on the change in the related benchmark interest rate (see Note 8).