FAIR VALUE MEASUREMENTS

3 Months Ended

Aug. 25, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

16. 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 contracts 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 August 25, 2019:

	Level 1		Level 2		Level 3		Net Value
Assets:
Derivative assets	$	1.9	$	0.7	$	—	$	2.6
Marketable securities		16.3		—		—		16.3
Deferred compensation assets		10.5		—		—		10.5
Total assets	$	28.7	$	0.7	$	—	$	29.4
Liabilities:
Derivative liabilities	$	—	$	1.2	$	—	$	1.2
Deferred compensation liabilities		73.3		—		—		73.3
Total liabilities	$	73.3	$	1.2	$	—	$	74.5

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, 2019:

	Level 1		Level 2		Level 3		Net Value
Assets:
Derivative assets	$	3.0	$	2.9	$	—	$	5.9
Marketable securities		15.7		—		—		15.7
Deferred compensation assets		10.7		—		—		10.7
Total assets	$	29.4	$	2.9	$	—	$	32.3
Liabilities:
Derivative liabilities	$	—	$	1.4	$	—	$	1.4
Deferred compensation liabilities		70.4		—		—		70.4
Total liabilities	$	70.4	$	1.4	$	—	$	71.8

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 using Level 3 inputs.

In the first quarter of fiscal 2020, 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 6). Impairments in our Grocery & Snacks and Refrigerated & Frozen segments totaled $3.5 million and $15.8 million, respectively.

In the first quarter of fiscal 2020, we recognized charges of $43.3 million in the Grocery & Snacks segment for the impairment of certain long-lived assets. The impairment was measured based upon the estimated sales price of the assets held for sale.

The carrying amount of long-term debt (including current installments) was $10.47 billion and $10.68 billion as of August 25, 2019 and May 26, 2019, respectively. Based on current market rates, the fair value of this debt (level 2 liabilities) at August 25, 2019 and May 26, 2019, was estimated at $11.66 billion and $11.24 billion, respectively.