Note 18 - Fair Value Measurements

12 Months Ended

May 28, 2023

Notes to Financial Statements

Fair Value Disclosures [Text Block]

18. FAIR VALUE MEASUREMENTS

Financial Accounting Standards Board 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 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 contracts.

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 28, 2023:

	Level 1		Level 2		Level 3		Total
Assets:
Derivative assets	$	9.4	$	0.6	$	—	$	10.0
Deferred compensation assets		7.1		—		—		7.1
Available-for-sale debt securities		—		—		4.0		4.0
Total assets	$	16.5	$	0.6	$	4.0	$	21.1
Liabilities:
Derivative liabilities	$	—	$	3.6	$	—	$	3.6
Deferred compensation liabilities		67.0		—		—		67.0
Total liabilities	$	67.0	$	3.6	$	—	$	70.6

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, 2022:

	Level 1		Level 2		Level 3		Total
Assets:
Derivative assets	$	5.7	$	1.3	$	—	$	7.0
Deferred compensation assets		7.5		—		—		7.5
Available-for-sale debt securities		—		—		7.6		7.6
Total assets	$	13.2	$	1.3	$	7.6	$	22.1
Liabilities:
Derivative liabilities	$	—	$	2.2	$	—	$	2.2
Deferred compensation liabilities		72.6		—		—		72.6
Total liabilities	$	72.6	$	2.2	$	—	$	74.8

Certain assets and liabilities, including long-lived assets, goodwill, asset retirement obligations, and equity investments are measured at fair value on a nonrecurring basis using Level 3 inputs.

During fiscal 2023, we recognized a credit loss of $3.9 million within SG&A expenses related to our convertible note receivable.  The loss was measured using the best estimate of the present value of cash flows expected to be collected.

We recognized charges for the impairment of certain indefinite-lived brands. The fair values of these brands were estimated using the "relief from royalty" method (see Note 7). Impairments in our Grocery & Snacks segment totaled $78.9 million, $90.7 million, and $13.0 million for fiscal 2023, 2022, and 2021, respectively. Impairments in our Refrigerated & Frozen segment totaled $496.6 million, $103.9 million, and $76.9 million for fiscal 2023, 2022, and 2021, respectively. Impairments in our International segment totaled $13.7 million, $14.4 million, and $1.0 million for fiscal 2023, 2022, and 2021, respectively.

During fiscal 2023, goodwill impairment charges totaling $141.7 million were recognized within our Refrigerated & Frozen segment.  The impairments were measured using a discounted cash flow valuation model specific to the Sides, Components and Enhancers reporting unit (see Note 7).

During fiscal 2023, we recognized impairment charges totaling $0.5 million in our Grocery & Snacks segment, $5.7 million in our Refrigerated & Frozen segment, and $20.5 million in our Foodservice segment. During fiscal 2022, we recognized impairment charges totaling $26.3 million in our Grocery & Snacks segment, $28.9 million in our Refrigerated & Frozen segment, and $14.9 million in our Foodservice segment. The impairments were measured based upon the estimated sales price of a disposal group that no longer met the held for sale criteria as of the second quarter of fiscal 2023 (see Note 5).

We recognized charges for the impairment of certain long-lived assets measured based upon the estimated sales price of the assets. Impairments totaled $3.0 million in our Grocery & Snacks segment in fiscal 2021.

The carrying amount of long-term debt (including current installments) was $8.60 billion as of May 28, 2023 and $8.80 billion as of May 29, 2022. Based on current market rates, the fair value of this debt (level 2 liabilities) at  May 28, 2023 and May 29, 2022 was estimated at $8.31 billion and $8.85 billion, respectively.