FAIR VALUE MEASUREMENTS

12 Months Ended

May. 31, 2015

Fair Value, Assets, Liabilities and Stockholders' Equity Measured on Recurring Basis [Abstract]

FAIR VALUE MEASUREMENTS

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, interest rate swaps, 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 May 31, 2015:

	Level 1		Level 2		Level 3		Total
Assets:
Derivative assets	$	13.6	$	18.6	$	—	$	32.2
Available-for-sale securities	2.8		—		—		2.8
Deferred compensation assets	2.6		—		—		2.6
Total assets	$	19.0	$	18.6	$	—	$	37.6
Liabilities:
Derivative liabilities	$	—	$	14.2	$	—	$	14.2
Deferred compensation liabilities	44.6		—		—		44.6
Total liabilities	$	44.6	$	14.2	$	—	$	58.8

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 25, 2014:

	Level 1		Level 2		Level 3		Total
Assets:
Derivative assets	$	8.5	$	30.3	$	—	$	38.8
Available-for-sale securities	2.1		—		—		2.1
Deferred compensation assets	5.6		—		—		5.6
Total assets	$	16.2	$	30.3	$	—	$	46.5
Liabilities:
Derivative liabilities	$	—	$	10.4	$	—	$	10.4
Deferred compensation liabilities	43.7		—		—		43.7
Total liabilities	$	43.7	$	10.4	$	—	$	54.1

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.

During fiscal 2015 and 2014, goodwill impairment charges of $1.53 billion and $602.2 million, respectively, were recognized within the Private Brands segment. See Note 9 for a discussion of the methodology employed to measure these impairments.

During fiscal 2015 and 2014, impairments of certain indefinite-lived brands were recognized in the amounts of $48.8 million and $75.7 million, respectively. The impairment charges totaled $4.8 million in the Consumer Foods segment, $0.3 million in the Commercial Foods segment, and $43.7 million in the Private Brands segment for fiscal 2015, and $72.5 million in the Consumer Foods and $3.2 million in the Private Brands segments for fiscal 2014. The fair values of these brands were estimated using the “relief from royalty” method (see Note 9).

During fiscal 2015, a charge of $13.7 million was recognized in the Private Brands segment for the impairment of certain long-lived assets. The impairment was measured based upon an estimated disposal value for the related production facility.

During fiscal 2014, the $20.3 million carrying amount of a potato processing and storage facility (level 3 asset) was written down to its fair value of $3.8 million, resulting in an impairment charge of $16.5 million to selling, general and administrative expenses in the Commercial Foods segment. The fair value measurement used to determine the impairment was based upon the expected sales price.

During fiscal 2014, the $19.7 million carrying amount of a processing facility acquired from an onion supplier (level 3 asset) was written-down to its fair value of $10.8 million, resulting in an impairment charge of $8.9 million. The fair value measurement used to determine the impairment was based upon the expected sales price. The impairment charge is included in selling, general and administrative expenses in the Commercial Foods segment (see Note 17).

During fiscal 2014, the $68.9 million carrying amount of assets held for sale (level 3 assets, which were disposed of in the fourth quarter of fiscal 2014) of the discontinued operations of Medallion Foods within the Private Brands segment were written-down to their fair value of $43.5 million. The resulting impairment charge of $25.4 million is included in discontinued operations. The fair value measurement used to determine the impairment was based upon the expected business sales price (see Note 6).

During fiscal 2014, an impairment charge of $3.2 million was recognized in corporate expenses, as the company determined an amortizing technology license was no longer expected to produce future economic benefit.  Accordingly, the carrying value of the asset was entirely written off.

The carrying amount of long-term debt (including current installments) was $7.9 billion as of May 31, 2015 and $8.9 billion as of May 25, 2014. Based on current market rates, the fair value of this debt (level 2 liabilities) at May 31, 2015 and May 25, 2014 was estimated at $8.3 billion and $9.5 billion, respectively. Included in the May 25, 2014 long-term debt carrying amount, and excluded from the above fair value table, is $0.5 billion of hedged debt that, along with the related hedge instruments, was adjusted for changes in fair value based solely on the change in the related benchmark interest rate. The hedging instruments were terminated in the third quarter of fiscal 2015 (see Notes 4 and 18).