Fair Value Measurements

6 Months Ended

Oct. 26, 2011

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy consists of three levels to prioritize the inputs used in valuations, as defined below:

Level 1:  Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2:  Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3:  Unobservable inputs for the asset or liability.

As of October 26, 2011 and April 27, 2011, the fair values of the Company’s assets and liabilities measured on a recurring basis are categorized as follows:

	October 26, 2011								April 27, 2011
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(Thousands of Dollars)
Assets:
Derivatives(a)	$	—	$	102,575	$	—	$	102,575	$	—	$	115,705	$	—	$	115,705
Short-term investments(b)	$	40,065	$	—	$	—	$	40,065	$	60,125	$	—	$	—	$	60,125
Total assets at fair value	$	40,065	$	102,575	$	—	$	142,640	$	60,125	$	115,705	$	—	$	175,830
Liabilities:
Derivatives(a)	$	—	$	18,950	$	—	$	18,950	$	—	$	43,007	$	—	$	43,007
Earn-out(c)	$	—	$	—	$	46,103	$	46,103	$	—	$	—	$	45,325	$	45,325
Total liabilities at fair value	$	—	$	18,950	$	46,103	$	65,053	$	—	$	43,007	$	45,325	$	88,332

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(a) Foreign currency derivative contracts are valued based on observable market spot and forward rates and classified within Level 2 of the fair value hierarchy. Interest rate swaps are valued based on observable market swap rates and classified within Level 2 of the fair value hierarchy. Cross-currency interest rate swaps are valued based on observable market spot and swap rates and classified within Level 2 of the fair value hierarchy.

(b) The Company acquired Coniexpress in Brazil in Fiscal 2011. The acquisition included short-term investments that are valued based on observable market rates and classified within Level 1 of the fair value hierarchy.

(c) The Company acquired Foodstar Holding Pte (“Foodstar”) in China in Fiscal 2011. Consideration for this acquisition included a potential earn-out payment in Fiscal 2014 contingent upon certain net sales and EBITDA (earnings before interest, taxes, depreciation and amortization) targets during Fiscals 2013 and 2014. The fair value of the earn-out was estimated using a discounted cash flow model and is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Key assumptions in determining the fair value of the earn-out include the discount rate, and revenue and EBITDA projections for Fiscals 2013 and 2014. As of October 26, 2011 there were no significant changes to the fair value of the earn-out recorded for Foodstar at the acquisition date. A change in fair value of the earn-out could have a material impact on the Company's earnings.

There have been no transfers between Levels 1 and 2 in Fiscals 2012 and 2011.

The Company recognized $11.8 million and $28.6 million of non-cash asset write-offs during the second quarter and six months endedOctober 26, 2011 related to five factory closures. These factory closures are directly linked to the Company's Fiscal 2012 productivity initiatives (see Note 3). These charges reduced the Company's carrying value in the assets to estimated fair value, which is not material.

As of October 26, 2011 and April 27, 2011, the aggregate fair value of the Company’s debt obligations, based on market quotes, approximated the recorded value, with the exception of the 7.125% notes issued as part of the dealer remarketable securities exchange transaction. The book value of these notes has been reduced as a result of the cash payments made in connection with the exchange, which occurred in Fiscal 2010.