Fair Value Measurements

12 Months Ended

May 29, 2011

Fair Value Measurements [Abstract]

FAIR VALUE MEASUREMENTS

21.  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 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 29, 2011:

	Level 1		Level 2		Level 3		Total
Assets:
Derivative assets	$	16.3	$	55.2	$	—	$	71.5
Available-for-sale securities		1.7		—		—		1.7
Deferred compensation assets		7.4		—		—		7.4
Total assets	$	25.4	$	55.2	$	—	$	80.6
Liabilities:
Derivative liabilities	$	—	$	92.2	$	—	$	92.2
Deferred and share-based compensation liabilities		29.1		—		—		29.1
Total liabilities	$	29.1	$	92.2	$	—	$	121.3

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 30, 2010:

	Level 1		Level 2		Level 3		Total
Assets:
Derivative assets	$	5.7	$	56.1	$	—	$	61.8
Available-for-sale securities		1.8		—		—		1.8
Deferred compensation assets		7.1		—		—		7.1
Total assets	$	14.6	$	56.1	$	—	$	70.7
Liabilities:
Derivative liabilities	$	0.3	$	9.8	$	—	$	10.1
Deferred and share-based compensation liabilities		22.1		—		—		22.1
Total liabilities	$	22.4	$	9.8	$	—	$	32.2

The following table presents our assets measured at fair value on a nonrecurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of May 30, 2010:

	Balance at
	May 30,								Total Losses
	2010		Level 1		Level 2		Level 3		Recognized
Assets measured at fair value:
Property, plant, and equipment	$	35.0	$	—	$	—	$	35.0	$	49.8
Noncurrent assets held for sale		30.4		—		—		30.4		58.3
			$	—	$	—	$	65.4	$	108.1

During fiscal 2010, a partially completed production facility with a carrying amount of $39.3 million was written-down to its fair value of $6.0 million, resulting in an impairment charge of $33.3 million, which is included in selling, general and administrative expenses in the Consumer Foods segment (see Note 6). The fair value measurement used to determine this impairment was based on the market approach and reflected anticipated sales proceeds for these assets. This production facility was sold in fiscal 2011, resulting in no material gain or loss.

During fiscal 2010, we decided to close our meat snack production facility in Garner, North Carolina (see Note 6). We recognized an impairment charge of $16.5 million to write-down the associated property, plant and equipment with a carrying amount of $45.5 million to its fair value of $29.0 million. The fair value measurement used to determine this impairment was based on the income approach, which utilized cash flow projections consistent with the most recent Slim Jim^® business plan, a terminal value, and a discount rate equivalent to a market participant’s weighted-average cost of capital.

During fiscal 2010, noncurrent assets held for sale from our discontinued Gilroy Foods & Flavors^TM business with a carrying amount of $88.7 million were written-down to their fair value of $30.4 million, resulting in an impairment charge of $58.3 million ($39.3 million after-tax), which is included in results of discontinued operations (see Note 2). The fair value measurement used to determine this impairment was based on the market approach and reflected anticipated sales proceeds for these assets.

The carrying amount of long-term debt (including current installments) was $3.2 billion as of May 29, 2011 and $3.5 billion as of May 30, 2010. Based on current market rates provided primarily by outside investment bankers, the fair value of this debt at May 29, 2011 and May 30, 2010 was estimated at $3.6 billion and $4.1 billion, respectively.