FAIR VALUE MEASUREMENTS

3 Months Ended

Aug. 30, 2020

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

14. 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 30, 2020:

	Level 1		Level 2		Level 3		Net Value
Assets:
Derivative assets	$	1.4	$	1.2	$	—	$	2.6
Marketable securities		6.1		—		—		6.1
Deferred compensation assets		8.7		—		—		8.7
Total assets	$	16.2	$	1.2	$	—	$	17.4
Liabilities:
Derivative liabilities	$	—	$	2.4	$	—	$	2.4
Deferred compensation liabilities		77.2		—		—		77.2
Total liabilities	$	77.2	$	2.4	$	—	$	79.6

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 31, 2020:

	Level 1		Level 2		Level 3		Net Value
Assets:
Derivative assets	$	2.8	$	5.2	$	—	$	8.0
Marketable securities		8.1		—		—		8.1
Deferred compensation assets		8.6		—		—		8.6
Total assets	$	19.5	$	5.2	$	—	$	24.7
Liabilities:
Derivative liabilities	$	—	$	0.4	$	—	$	0.4
Deferred compensation liabilities		68.0		—		—		68.0
Total liabilities	$	68.0	$	0.4	$	—	$	68.4

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 2021, we recognized charges totaling $3.0 million in our Grocery & Snacks segment for the impairment of certain long-lived assets. The impairment was measured based upon the estimated sales price of the assets.

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 5). 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 totaling $43.3 million in our Grocery & Snacks segment for impairments of certain long-lived assets. The impairments were measured based upon the estimated sales price of the disposal groups (See Note 2).

The carrying amount of long-term debt (including current installments) was $9.62 billion and $9.75 billion as of August 30, 2020 and May 31, 2020, respectively. Based on current market rates, the fair value of this debt (level 2 liabilities) at August 30, 2020 and May 31, 2020, was estimated at $11.38 billion and $11.35 billion, respectively.