Note 14 - Fair Value Measurements

3 Months Ended

Aug. 27, 2023

Notes to Financial Statements

Fair Value Disclosures [Text Block]

14. 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 August 27, 2023:

	Level 1		Level 2		Level 3		Net Value
Assets:
Derivative assets	$	7.8	$	0.2	$	—	$	8.0
Deferred compensation assets		6.8		—		—		6.8
Available-for-sale debt securities		—		—		4.0		4.0
Total assets	$	14.6	$	0.2	$	4.0	$	18.8
Liabilities:
Derivative liabilities	$	—	$	2.6	$	—	$	2.6
Deferred compensation liabilities		69.6		—		—		69.6
Total liabilities	$	69.6	$	2.6	$	—	$	72.2

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 28, 2023:

	Level 1		Level 2		Level 3		Net Value
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

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.

In the first quarter of fiscal 2024, we recognized charges for the impairment of certain long-lived assets based upon a discounted cash flow valuation model and included in restructuring activities (see Note 2). Impairments totaled $0.6 million in our Grocery & Snacks segment and $14.1 million in our International segment.

In the first quarter of fiscal 2023, we recognized a charge for the impairment of an indefinite-lived brand of $244.0 million in our Refrigerated & Frozen segment. The fair value of this brand was estimated using the "relief from royalty" method (see Note 5).

During the first quarter of fiscal 2023, goodwill impairment charges totaling $141.7 million were recognized within our Refrigerated & Frozen segment. The fair value of the goodwill was measured using a discounted cash flow valuation model specific to the Sides, Components and Enhancers reporting unit (see Note 5).

In the first quarter of 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. The fair value was 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.

The carrying amount of long-term debt (including current installments) was $8.76 billion and $8.60 billion as of August 27, 2023 and May 28, 2023, respectively. Based on current market rates, the fair value of this debt (level 2 liabilities) at August 27, 2023 and May 28, 2023, was estimated at $8.37 billion and $8.31 billion, respectively.