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Summary of Significant Accounting Policies (Policies)
 12 Months Ended
May 29, 2022
Summary of Significant Accounting Policies [Abstract]  
Cash and Cash Equivalents
Cash and Cash Equivalents
 
We consider all investments
 
purchased with an original maturity of three months or less to be cash equivalents.
Inventories
Inventories
 
All
 
inventories
 
in
 
the
 
United
 
States
 
other
 
than
 
grain
 
are
 
valued
 
at
 
the
 
lower
 
of
 
cost,
 
using
 
the
 
last-in,
 
first-out
 
(LIFO)
 
method,
 
or
market. Grain inventories are
 
valued at net realizable
 
value, and all related cash
 
contracts and derivatives are valued
 
at fair value, with
all net changes in value recorded in earnings currently.
Inventories
 
outside
 
of the
 
United
 
States are
 
generally
 
valued
 
at
 
the lower
 
of
 
cost, using
 
the
 
first-in,
 
first-out
 
(FIFO) method,
 
or net
realizable value.
Shipping
 
costs associated
 
with the
 
distribution of
 
finished product
 
to our
 
customers are
 
recorded as
 
cost of
 
sales and
 
are recognized
when the related finished product is shipped to and accepted by the customer.
Land, Buildings, Equipment, and Depreciation
Land, Buildings, Equipment, and Depreciation
 
Land is recorded at historical cost.
 
Buildings and equipment, including
 
capitalized interest and internal engineering
 
costs, are recorded
at
 
cost
 
and
 
depreciated
 
over
 
estimated
 
useful
 
lives,
 
primarily
 
using
 
the
 
straight-line
 
method.
 
Ordinary
 
maintenance
 
and
 
repairs
 
are
charged
 
to
 
cost
 
of
 
sales.
 
Buildings
 
are
 
usually
 
depreciated
 
over
40
 
years,
 
and
 
equipment,
 
furniture,
 
and
 
software
 
are
 
usually
depreciated over
3
 
to
10
 
years. Fully depreciated assets are retained
 
in buildings and equipment until disposal.
 
When an item is sold or
retired,
 
the
 
accounts
 
are
 
relieved
 
of
 
its
 
cost
 
and
 
related
 
accumulated
 
depreciation
 
and
 
the
 
resulting
 
gains
 
and
 
losses,
 
if
 
any,
 
are
recognized in earnings.
 
Long-lived assets
 
are reviewed
 
for impairment
 
whenever events
 
or changes
 
in circumstances
 
indicate that
 
the carrying
 
amount of
 
an
asset
 
(or
 
asset
 
group)
 
may
 
not
 
be
 
recoverable.
 
An
 
impairment
 
loss
 
would
 
be
 
recognized
 
when
 
estimated
 
undiscounted
 
future
 
cash
flows from
 
the operation
 
and disposition
 
of the
 
asset group
 
are less
 
than the
 
carrying amount
 
of the
 
asset group.
 
Asset groups
 
have
identifiable cash
 
flows and
 
are largely
 
independent of
 
other asset groups.
 
Measurement of
 
an impairment
 
loss would
 
be based
 
on the
excess
 
of
 
the
 
carrying
 
amount of
 
the
 
asset group
 
over
 
its fair
 
value.
 
Fair
 
value
 
is measured
 
using
 
a discounted
 
cash
 
flow model
 
or
independent appraisals, as appropriate.
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets
 
Goodwill
 
is
 
not
 
subject
 
to
 
amortization
 
and
 
is
 
tested
 
for
 
impairment
 
annually
 
and
 
whenever
 
events
 
or
 
changes
 
in
 
circumstances
indicate that impairment may have
 
occurred. We
 
perform our annual goodwill and
 
indefinite-lived intangible assets impairment
 
test as
of the
 
first day
 
of the
 
second quarter
 
of the
 
fiscal year.
 
Impairment testing
 
is performed
 
for each
 
of our
 
reporting units.
 
We
 
compare
the
 
carrying
 
value
 
of
 
a
 
reporting
 
unit,
 
including
 
goodwill,
 
to
 
the
 
fair
 
value
 
of
 
the
 
unit.
 
Carrying
 
value
 
is
 
based
 
on
 
the
 
assets
 
and
liabilities
 
associated
 
with
 
the
 
operations
 
of
 
that
 
reporting
 
unit,
 
which
 
often
 
requires
 
allocation
 
of
 
shared
 
or
 
corporate
 
items
 
among
reporting
 
units.
 
If
 
the
 
carrying
 
amount
 
of
 
a
 
reporting
 
unit
 
exceeds
 
its
 
fair
 
value,
 
impairment
 
has
 
occurred.
 
We
 
recognize
 
an
impairment charge
 
for the
 
amount by
 
which the carrying
 
amount of
 
the reporting
 
unit exceeds
 
its fair
 
value up
 
to the
 
total amount
 
of
goodwill allocated
 
to the
 
reporting unit.
 
Our estimates
 
of fair
 
value are
 
determined based
 
on a
 
discounted
 
cash flow
 
model. Growth
rates for sales and profits are determined using inputs from our long-range
 
planning process. We also make
 
estimates of discount rates,
perpetuity growth assumptions, market comparables, and other factors.
 
We evaluate the
 
useful lives of our other intangible assets, mainly brands,
 
to determine if they are finite or indefinite-lived.
 
Reaching a
determination
 
on
 
useful
 
life
 
requires
 
significant
 
judgments
 
and
 
assumptions
 
regarding
 
the
 
future
 
effects
 
of
 
obsolescence,
 
demand,
competition, other economic
 
factors (such as the
 
stability of the industry,
 
known technological advances,
 
legislative action that
 
results
in an uncertain or
 
changing regulatory environment,
 
and expected changes in
 
distribution channels), the level
 
of required maintenance
expenditures,
 
and
 
the
 
expected
 
lives
 
of
 
other
 
related
 
groups
 
of
 
assets.
 
Intangible
 
assets
 
that
 
are
 
deemed
 
to
 
have
 
finite
 
lives
 
are
amortized on a straight-line basis, over their useful lives, generally ranging
 
from
4
 
to
30
 
years.
Our indefinite-lived
 
intangible assets,
 
mainly intangible
 
assets primarily
 
associated with
 
the
Blue Buffalo
,
 
Pillsbury
,
Totino’s
,
Old El
Paso
,
Progresso
,
 
Annie’s
,
Häagen-Dazs
, and
 
Yoki
 
brands, are also
 
tested for impairment
 
annually and whenever
 
events or changes
 
in
circumstances
 
indicate
 
that
 
their
 
carrying
 
value
 
may
 
not
 
be
 
recoverable.
 
Our
 
estimate
 
of
 
the
 
fair
 
value
 
of
 
the
 
brands
 
is
 
based
 
on
 
a
discounted
 
cash
 
flow
 
model
 
using
 
inputs
 
which
 
included
 
projected
 
revenues
 
from
 
our
 
long-range
 
plan,
 
assumed
 
royalty
 
rates
 
that
could be payable if we did not own the brands, and a discount rate.
 
Our
 
finite-lived
 
intangible
 
assets,
 
primarily
 
acquired
 
franchise agreements
 
and
 
customer
 
relationships,
 
are
 
reviewed
 
for
 
impairment
whenever
 
events or
 
changes
 
in circumstances
 
indicate
 
that the
 
carrying
 
amount of
 
an asset
 
may
 
not be
 
recoverable.
 
An impairment
loss would be
 
recognized when
 
estimated undiscounted
 
future cash flows
 
from the operation
 
and disposition of
 
the asset are
 
less than
the
 
carrying
 
amount
 
of
 
the
 
asset.
 
Assets
 
generally
 
have
 
identifiable
 
cash
 
flows
 
and
 
are
 
largely
 
independent
 
of
 
other
 
assets.
Measurement of an
 
impairment loss would
 
be based on
 
the excess of
 
the carrying amount
 
of the asset over
 
its fair value.
 
Fair value is
measured using a discounted cash flow model or other similar valuation model,
 
as appropriate.
Leases
Leases
We
 
determine whether
 
an arrangement
 
is a lease
 
at inception.
 
When our
 
lease arrangements
 
include lease and
 
non-lease components,
we account for lease and non-lease components (e.g. common area maintenance)
 
separately based on their relative standalone prices.
 
Any
 
lease
 
arrangements
 
with
 
an
 
initial
 
term
 
of
 
12
 
months
 
or
 
less
 
are
 
not
 
recorded
 
on
 
our
 
Consolidated
 
Balance
 
Sheet,
 
and
 
we
recognize lease costs for these
 
lease arrangements on a straight-line
 
basis over the lease term. Many
 
of our lease arrangements provide
us with
 
options to
 
exercise one
 
or more
 
renewal terms
 
or to
 
terminate the
 
lease arrangement.
 
We
 
include these
 
options when
 
we are
reasonably certain
 
to exercise them
 
in the lease
 
term used to
 
establish our
 
right of use
 
assets and lease
 
liabilities. Generally,
 
our lease
agreements do not include an option to purchase the leased asset, residual value guarantees,
 
or material restrictive covenants.
We
 
have
 
certain
 
lease
 
arrangements
 
with
 
variable
 
rental
 
payments.
 
Our
 
lease
 
arrangements
 
for
 
our
 
Häagen-Dazs
 
retail
 
shops
 
often
include rental payments
 
that are based
 
on a percentage
 
of retail sales. We
 
have other lease
 
arrangements that are
 
adjusted periodically
based on
 
an inflation
 
index or rate.
 
The future
 
variability of these
 
payments and
 
adjustments are
 
unknown, and
 
therefore they are
 
not
included
 
as
 
minimum
 
lease
 
payments
 
used
 
to
 
determine
 
our
 
right
 
of
 
use
 
assets
 
and
 
lease
 
liabilities.
 
Variable
 
rental
 
payments
 
are
recognized in the period in which the obligation is incurred.
 
As
 
most
 
of
 
our
 
lease
 
arrangements
 
do
 
not
 
provide
 
an
 
implicit
 
interest
 
rate,
 
we
 
apply
 
an
 
incremental
 
borrowing
 
rate
 
based
 
on
 
the
information available at the commencement date of the lease arrangement
 
to determine the present value of lease payments.
Investments in Unconsolidated Joint Ventures
Investments in Unconsolidated Joint Ventures
 
Our
 
investments
 
in
 
companies
 
over
 
which
 
we
 
have
 
the
 
ability
 
to
 
exercise
 
significant
 
influence
 
are
 
stated
 
at
 
cost
 
plus
 
our
 
share
 
of
undistributed
 
earnings
 
or
 
losses.
 
We
 
receive
 
royalty
 
income
 
from
 
certain
 
joint
 
ventures,
 
incur
 
various
 
expenses
 
(primarily
 
research
and
 
development),
 
and
 
record
 
the
 
tax
 
impact
 
of
 
certain
 
joint
 
venture
 
operations
 
that
 
are
 
structured
 
as
 
partnerships.
 
In
 
addition,
 
we
make
 
advances
 
to
 
our
 
joint
 
ventures
 
in
 
the
 
form
 
of
 
loans
 
or
 
capital
 
investments.
 
We
 
also
 
sell
 
certain
 
raw
 
materials,
 
semi-finished
goods, and finished goods to the joint ventures, generally at market prices.
In addition,
 
we assess our
 
investments in our
 
joint ventures if
 
we have reason
 
to believe an
 
impairment may have
 
occurred including,
but not
 
limited to,
 
as a
 
result of
 
ongoing operating
 
losses, projected
 
decreases in
 
earnings, increases
 
in the
 
weighted-average
 
cost of
capital,
 
or
 
significant
 
business
 
disruptions.
 
The
 
significant
 
assumptions
 
used
 
to
 
estimate
 
fair
 
value
 
include
 
revenue
 
growth
 
and
profitability,
 
royalty
 
rates,
 
capital
 
spending,
 
depreciation
 
and
 
taxes,
 
foreign
 
currency
 
exchange
 
rates,
 
and
 
a
 
discount
 
rate.
 
By
 
their
nature, these projections
 
and assumptions are uncertain.
 
If we were to
 
determine the current
 
fair value of our
 
investment was less than
the carrying value of
 
the investment, then we
 
would assess if the
 
shortfall was of a temporary
 
or permanent nature and
 
write down the
investment to its fair value if we concluded the impairment is other than
 
temporary.
Revenue Recognition
Revenue Recognition
 
Our revenues primarily result
 
from contracts with customers,
 
which are generally short-term
 
and have a single performance
 
obligation
– the
 
delivery of
 
product. We
 
recognize revenue
 
for the
 
sale of packaged
 
foods at the
 
point in
 
time when our
 
performance obligation
has been satisfied and control of the
 
product has transferred to our customer,
 
which generally occurs when the shipment
 
is accepted by
our customer.
 
Sales include
 
shipping and
 
handling charges
 
billed to
 
the customer
 
and are
 
reported
 
net of
 
variable consideration
 
and
consideration
 
payable
 
to
 
our
 
customers,
 
including
 
trade
 
promotion,
 
consumer
 
coupon
 
redemption
 
and
 
other
 
reductions
 
to
 
the
transaction
 
price,
 
including
 
estimated allowances
 
for
 
returns, unsalable
 
product,
 
and
 
prompt
 
pay
 
discounts.
 
Sales, use,
 
value-added,
and
 
other
 
excise
 
taxes
 
are
 
not
 
included
 
in
 
revenue.
 
Trade
 
promotions
 
are
 
recorded
 
using
 
significant
 
judgment
 
of
 
estimated
participation and
 
performance levels
 
for offered
 
programs at
 
the time
 
of sale.
 
Differences between
 
estimated and
 
actual reductions
 
to
the
 
transaction
 
price
 
are
 
recognized
 
as
 
a
 
change
 
in
 
estimate
 
in
 
a
 
subsequent
 
period.
 
We
 
generally
 
do
 
not
 
allow
 
a
 
right
 
of
 
return.
However,
 
on a
 
limited case-by-case
 
basis with
 
prior
 
approval, we
 
may
 
allow customers
 
to return
 
product. In
 
limited circumstances,
product
 
returned
 
in
 
saleable
 
condition
 
is
 
resold
 
to
 
other
 
customers
 
or
 
outlets.
 
Receivables
 
from
 
customers
 
generally
 
do
 
not
 
bear
interest. Payment terms and
 
collection patterns vary around
 
the world and by
 
channel, and are short-term,
 
and as such, we do
 
not have
any significant financing components.
 
Our allowance for doubtful
 
accounts represents our estimate of
 
expected credit losses related
 
to
our
 
trade
 
receivables.
 
We
 
pool
 
our
 
trade
 
receivables
 
based
 
on
 
similar
 
risk
 
characteristics,
 
such
 
as
 
geographic
 
location,
 
business
channel, and other
 
account data. To
 
estimate our allowance
 
for doubtful
 
accounts, we leverage
 
information on historical
 
losses, asset-
specific
 
risk
 
characteristics,
 
current
 
conditions,
 
and reasonable
 
and
 
supportable
 
forecasts of
 
future
 
conditions.
 
Account
 
balances
 
are
written off
 
against the
 
allowance when
 
we deem
 
the amount
 
is uncollectible.
 
Please see
 
Note 17
 
for a
 
disaggregation of
 
our revenue
into
 
categories
 
that
 
depict
 
how
 
the
 
nature,
 
amount,
 
timing,
 
and
 
uncertainty
 
of
 
revenue
 
and
 
cash
 
flows
 
are
 
affected
 
by
 
economic
factors. We do
 
not have material contract assets or liabilities arising from our contracts with customers.
Environmental costs
Environmental Costs
 
Environmental costs
 
relating to
 
existing conditions
 
caused by
 
past operations
 
that do
 
not contribute
 
to current
 
or future
 
revenues are
expensed. Liabilities
 
for anticipated
 
remediation costs
 
are recorded
 
on an
 
undiscounted basis
 
when they
 
are probable
 
and reasonably
estimable, generally no later than the completion of feasibility studies or our
 
commitment to a plan of action.
Advertising Production Costs
Advertising Production Costs
 
We expense the
 
production costs of advertising the first time that the advertising takes place.
Research and Development
Research and Development
 
All expenditures for research and development
 
(R&D) are charged against earnings in the period
 
incurred. R&D includes expenditures
for
 
new
 
product
 
and
 
manufacturing
 
process
 
innovation,
 
and
 
the
 
annual
 
expenditures
 
are
 
comprised
 
primarily
 
of
 
internal
 
salaries,
wages, consulting, and supplies
 
attributable to R&D activities.
 
Other costs include depreciation
 
and maintenance of research
 
facilities,
including assets at facilities that are engaged in pilot plant activities.
Foreign Currency Translation
Foreign Currency Translation
 
For
 
all
 
significant
 
foreign
 
operations,
 
the
 
functional
 
currency
 
is
 
the
 
local
 
currency.
 
Assets
 
and
 
liabilities
 
of
 
these
 
operations
 
are
translated
 
at
 
the
 
period-end
 
exchange
 
rates.
 
Income
 
statement
 
accounts
 
are
 
translated
 
using
 
the
 
average
 
exchange
 
rates
 
prevailing
during the period. Translation
 
adjustments are reflected within
 
accumulated other comprehensive
 
loss (AOCI) in stockholders’
 
equity.
Gains
 
and
 
losses
 
from
 
foreign
 
currency
 
transactions
 
are
 
included
 
in
 
net
 
earnings
 
for
 
the
 
period,
 
except
 
for
 
gains
 
and
 
losses
 
on
investments
 
in
 
subsidiaries
 
for
 
which
 
settlement
 
is not
 
planned
 
for
 
the foreseeable
 
future and
 
foreign
 
exchange
 
gains and
 
losses on
instruments designated as net investment hedges. These gains and losses are recorded
 
in AOCI.
Derivative Instruments
Derivative Instruments
 
All derivatives are recognized
 
on our Consolidated
 
Balance Sheets at fair
 
value based on quoted
 
market prices or our
 
estimate of their
fair value,
 
and are
 
recorded in
 
either current
 
or noncurrent
 
assets or
 
liabilities based
 
on their
 
maturity.
 
Changes in
 
the fair
 
values of
derivatives are
 
recorded in
 
net earnings
 
or other
 
comprehensive income,
 
based on
 
whether the
 
instrument is
 
designated and
 
effective
as
 
a
 
hedge
 
transaction
 
and,
 
if
 
so,
 
the
 
type
 
of
 
hedge
 
transaction.
 
Gains
 
or
 
losses
 
on
 
derivative
 
instruments
 
reported
 
in
 
AOCI
 
are
reclassified
 
to
 
earnings
 
in
 
the
 
period
 
the
 
hedged
 
item
 
affects
 
earnings.
 
If
 
the
 
underlying
 
hedged
 
transaction
 
ceases
 
to
 
exist,
 
any
associated amounts reported in AOCI are reclassified to earnings at that time.
Stock-based Compensation
Stock-based Compensation
 
We generally
 
measure compensation expense for grants of restricted stock
 
units and performance share units using the value of
 
a share
of
 
our
 
stock
 
on
 
the
 
date
 
of
 
grant.
 
We
 
estimate
 
the
 
value
 
of
 
stock
 
option
 
grants
 
using
 
a
 
Black-Scholes
 
valuation
 
model.
 
Generally,
stock-based
 
compensation
 
is recognized
 
straight
 
line over
 
the
 
vesting
 
period.
 
Our stock-based
 
compensation
 
expense is
 
recorded
 
in
selling, general
 
and
 
administrative
 
(SG&A)
 
expenses
 
and
 
cost of
 
sales in
 
our
 
Consolidated
 
Statements of
 
Earnings
 
and
 
allocated
 
to
each reportable segment in our segment results.
Certain equity-based compensation plans contain provisions
 
that accelerate vesting of awards upon retirement, termination,
 
or death of
eligible
 
employees
 
and
 
directors.
 
We
 
consider
 
a
 
stock-based
 
award
 
to
 
be vested
 
when
 
the employee’s
 
or
 
director’s
 
retention
 
of
 
the
award
 
is no
 
longer
 
contingent
 
on
 
providing
 
subsequent
 
service.
 
Accordingly,
 
the
 
related
 
compensation
 
cost
 
is generally
 
recognized
immediately
 
for
 
awards
 
granted
 
to
 
retirement-eligible
 
individuals
 
or
 
over
 
the
 
period
 
from
 
the
 
grant
 
date
 
to
 
the
 
date
 
retirement
eligibility is achieved, if less than the stated vesting period.
We report the
 
benefits of tax deductions in excess of recognized compensation cost as an operating
 
cash flow.
Defined Benefit Pension, Other Postretirement Benefit, and Postemployment
 
Benefit Plans
 
We
 
sponsor
 
several domestic
 
and foreign
 
defined
 
benefit plans
 
to provide
 
pension, health
 
care, and
 
other welfare
 
benefits to
 
retired
employees. Under
 
certain circumstances,
 
we also
 
provide accruable
 
benefits, primarily
 
severance, to
 
former or
 
inactive employees
 
in
the
 
United
 
States,
 
Canada,
 
and
 
Mexico.
 
We
 
recognize
 
an
 
obligation
 
for
 
any
 
of
 
these
 
benefits
 
that
 
vest
 
or
 
accumulate
 
with
 
service.
Postemployment benefits
 
that do not
 
vest or
 
accumulate with
 
service (such
 
as severance
 
based solely
 
on annual pay
 
rather than
 
years
of service) are charged to expense when incurred. Our postemployment
 
benefit plans are unfunded.
We
 
recognize the underfunded
 
or overfunded status
 
of a defined
 
benefit pension plan
 
as an asset
 
or liability and
 
recognize changes
 
in
the funded status in the year in which the changes occur through AOCI.
Use of Estimates
 
Preparing
 
our
 
Consolidated
 
Financial
 
Statements
 
in
 
conformity
 
with
 
accounting
 
principles
 
generally
 
accepted
 
in
 
the
 
United
 
States
requires
 
us to
 
make estimates
 
and assumptions
 
that affect
 
reported amounts
 
of assets
 
and
 
liabilities, disclosures
 
of contingent
 
assets
and liabilities
 
at the
 
date of
 
the financial
 
statements, and
 
the reported
 
amounts of
 
revenues and
 
expenses during
 
the reporting
 
period.
These
 
estimates
 
include
 
our
 
accounting
 
for
 
revenue
 
recognition,
 
valuation
 
of
 
long-lived
 
assets,
 
intangible
 
assets,
 
stock-based
compensation,
 
income
 
taxes,
 
and
 
defined
 
benefit
 
pension,
 
other
 
postretirement
 
benefit
 
and
 
postemployment
 
benefit
 
plans.
 
Actual
results could differ from our estimates.
New Accounting Standards
 
In the
 
first quarter
 
of fiscal
 
2021,
we adopted
 
new accounting
 
requirements
 
related
 
to the
 
measurement
 
of credit
 
losses on
 
financial
instruments, including
 
trade receivables.
 
The new
 
standard and
 
subsequent
 
amendments replace
 
the incurred
 
loss impairment
 
model
with a
 
forward-looking
 
expected credit
 
loss model,
 
which will
 
generally
 
result in
 
earlier recognition
 
of credit
 
losses. Our
 
allowance
for doubtful
 
accounts represents
 
our estimate
 
of expected
 
credit losses related
 
to our trade
 
receivables. We
 
pool our trade
 
receivables
based on similar risk characteristics,
 
such as geographic location,
 
business channel, and other
 
account data. To
 
estimate our allowance
for
 
doubtful
 
accounts,
 
we
 
leverage
 
information
 
on
 
historical
 
losses,
 
asset-specific
 
risk
 
characteristics,
 
current
 
conditions,
 
and
reasonable and
 
supportable forecasts
 
of future
 
conditions. Account
 
balances are
 
written off
 
against the
 
allowance when
 
we deem
 
the
amount
 
is
 
uncollectible.
 
We
 
adopted
 
the
 
requirements
 
of
 
the
 
new
 
standard
 
and
 
subsequent
 
amendments
 
using
 
the
 
modified
retrospective transition approach, and recorded a decrease to retained
 
earnings of $
5.7
 
million after-tax.
In the fourth quarter of
 
fiscal 2020, we adopted new
 
accounting requirements related to
 
the annual disclosure requirements for
 
defined
benefit pension
 
and other
 
postretirement benefit
 
plans. The
 
standard modifies
 
specific disclosures
 
to improve
 
usefulness to
 
financial
statement users.
 
We
 
adopted the
 
requirements of
 
the new
 
standard using
 
a retrospective
 
approach. The
 
adoption of
 
this guidance
 
did
not impact our results of operations or financial position.
 
In
 
the
 
first
 
quarter
 
of
 
fiscal
 
2020,
 
we
 
adopted
 
new
 
accounting
 
requirements
 
for
 
hedge
 
accounting.
 
The
 
standard
 
amends
 
the
 
hedge
accounting
 
recognition
 
and
 
presentation
 
requirements
 
to
 
better
 
align
 
an
 
entity’s
 
risk
 
management
 
activities
 
and
 
financial
 
reporting.
The new
 
standard also
 
simplifies the
 
application
 
of hedge
 
accounting guidance.
 
The adoption
 
did not
 
have a
 
material impact
 
on our
results of operations or financial position.
In
 
the
 
first
 
quarter
 
of
 
fiscal
 
2020,
 
we
 
adopted
 
new
 
requirements
 
for
 
the
 
accounting,
 
presentation,
 
and
 
classification
 
of
 
leases.
 
This
results in certain leases being
 
capitalized as a right of
 
use asset with a related liability
 
on our Consolidated Balance
 
Sheet. We
 
adopted
this guidance utilizing the cumulative
 
effect adjustment approach, which
 
required application of the guidance
 
at the adoption date, and
elected
 
certain
 
practical
 
expedients
 
permitted
 
under
 
the
 
transition
 
guidance,
 
including
 
not
 
reassessing
 
whether
 
existing
 
contracts
contain leases and
 
carrying forward the
 
historical classification of
 
those leases. In addition,
 
we elected not
 
to recognize leases with
 
an
initial term of
 
12 months or
 
less on our
 
Consolidated Balance Sheet
 
and to continue
 
our historical treatment
 
of land easements,
 
under
permitted elections.
 
This guidance
 
did not
 
have a
 
material impact
 
on retained
 
earnings, our
 
Consolidated
 
Statements of
 
Earnings, or
our Consolidated Statements of Cash Flows.
Defined Benefit Pension, Other Postretirement Benefit, and Postemployment Benefit Plans
Defined Benefit Pension, Other Postretirement Benefit, and Postemployment
 
Benefit Plans
 
We
 
sponsor
 
several domestic
 
and foreign
 
defined
 
benefit plans
 
to provide
 
pension, health
 
care, and
 
other welfare
 
benefits to
 
retired
employees. Under
 
certain circumstances,
 
we also
 
provide accruable
 
benefits, primarily
 
severance, to
 
former or
 
inactive employees
 
in
the
 
United
 
States,
 
Canada,
 
and
 
Mexico.
 
We
 
recognize
 
an
 
obligation
 
for
 
any
 
of
 
these
 
benefits
 
that
 
vest
 
or
 
accumulate
 
with
 
service.
Postemployment benefits
 
that do not
 
vest or
 
accumulate with
 
service (such
 
as severance
 
based solely
 
on annual pay
 
rather than
 
years
of service) are charged to expense when incurred. Our postemployment
 
benefit plans are unfunded.
We
 
recognize the underfunded
 
or overfunded status
 
of a defined
 
benefit pension plan
 
as an asset
 
or liability and
 
recognize changes
 
in
the funded status in the year in which the changes occur through AOCI.
Use of Estimates
Use of Estimates
 
Preparing
 
our
 
Consolidated
 
Financial
 
Statements
 
in
 
conformity
 
with
 
accounting
 
principles
 
generally
 
accepted
 
in
 
the
 
United
 
States
requires
 
us to
 
make estimates
 
and assumptions
 
that affect
 
reported amounts
 
of assets
 
and
 
liabilities, disclosures
 
of contingent
 
assets
and liabilities
 
at the
 
date of
 
the financial
 
statements, and
 
the reported
 
amounts of
 
revenues and
 
expenses during
 
the reporting
 
period.
These
 
estimates
 
include
 
our
 
accounting
 
for
 
revenue
 
recognition,
 
valuation
 
of
 
long-lived
 
assets,
 
intangible
 
assets,
 
stock-based
compensation,
 
income
 
taxes,
 
and
 
defined
 
benefit
 
pension,
 
other
 
postretirement
 
benefit
 
and
 
postemployment
 
benefit
 
plans.
 
Actual
results could differ from our estimates.
New Accounting Standards
New Accounting Standards
 
In the
 
first quarter
 
of fiscal
 
2021,
we adopted
 
new accounting
 
requirements
 
related
 
to the
 
measurement
 
of credit
 
losses on
 
financial
instruments, including
 
trade receivables.
 
The new
 
standard and
 
subsequent
 
amendments replace
 
the incurred
 
loss impairment
 
model
with a
 
forward-looking
 
expected credit
 
loss model,
 
which will
 
generally
 
result in
 
earlier recognition
 
of credit
 
losses. Our
 
allowance
for doubtful
 
accounts represents
 
our estimate
 
of expected
 
credit losses related
 
to our trade
 
receivables. We
 
pool our trade
 
receivables
based on similar risk characteristics,
 
such as geographic location,
 
business channel, and other
 
account data. To
 
estimate our allowance
for
 
doubtful
 
accounts,
 
we
 
leverage
 
information
 
on
 
historical
 
losses,
 
asset-specific
 
risk
 
characteristics,
 
current
 
conditions,
 
and
reasonable and
 
supportable forecasts
 
of future
 
conditions. Account
 
balances are
 
written off
 
against the
 
allowance when
 
we deem
 
the
amount
 
is
 
uncollectible.
 
We
 
adopted
 
the
 
requirements
 
of
 
the
 
new
 
standard
 
and
 
subsequent
 
amendments
 
using
 
the
 
modified
retrospective transition approach, and recorded a decrease to retained
 
earnings of $
5.7
 
million after-tax.
In the fourth quarter of
 
fiscal 2020, we adopted new
 
accounting requirements related to
 
the annual disclosure requirements for
 
defined
benefit pension
 
and other
 
postretirement benefit
 
plans. The
 
standard modifies
 
specific disclosures
 
to improve
 
usefulness to
 
financial
statement users.
 
We
 
adopted the
 
requirements of
 
the new
 
standard using
 
a retrospective
 
approach. The
 
adoption of
 
this guidance
 
did
not impact our results of operations or financial position.
 
In
 
the
 
first
 
quarter
 
of
 
fiscal
 
2020,
 
we
 
adopted
 
new
 
accounting
 
requirements
 
for
 
hedge
 
accounting.
 
The
 
standard
 
amends
 
the
 
hedge
accounting
 
recognition
 
and
 
presentation
 
requirements
 
to
 
better
 
align
 
an
 
entity’s
 
risk
 
management
 
activities
 
and
 
financial
 
reporting.
The new
 
standard also
 
simplifies the
 
application
 
of hedge
 
accounting guidance.
 
The adoption
 
did not
 
have a
 
material impact
 
on our
results of operations or financial position.
In
 
the
 
first
 
quarter
 
of
 
fiscal
 
2020,
 
we
 
adopted
 
new
 
requirements
 
for
 
the
 
accounting,
 
presentation,
 
and
 
classification
 
of
 
leases.
 
This
results in certain leases being
 
capitalized as a right of
 
use asset with a related liability
 
on our Consolidated Balance
 
Sheet. We
 
adopted
this guidance utilizing the cumulative
 
effect adjustment approach, which
 
required application of the guidance
 
at the adoption date, and
elected
 
certain
 
practical
 
expedients
 
permitted
 
under
 
the
 
transition
 
guidance,
 
including
 
not
 
reassessing
 
whether
 
existing
 
contracts
contain leases and
 
carrying forward the
 
historical classification of
 
those leases. In addition,
 
we elected not
 
to recognize leases with
 
an
initial term of
 
12 months or
 
less on our
 
Consolidated Balance Sheet
 
and to continue
 
our historical treatment
 
of land easements,
 
under
permitted elections.
 
This guidance
 
did not
 
have a
 
material impact
 
on retained
 
earnings, our
 
Consolidated
 
Statements of
 
Earnings, or
our Consolidated Statements of Cash Flows.