XML 72 R19.htm IDEA: XBRL DOCUMENT v3.7.0.1
Other Financial Instruments and Fair Value Measurements
 12 Months Ended
Apr. 30, 2017
Fair Value Disclosures [Abstract]  
Other Financial Instruments and Fair Value Measurements
 NOTE 11
 
 OTHER FINANCIAL INSTRUMENTS AND FAIR VALUE
 MEASUREMENTS
Financial instruments, other than derivatives, that potentially subject us to significant concentrations of credit risk consist principally of cash investments, short-term borrowings, and trade receivables. The carrying value of these financial instruments approximates fair value. Our other financial instruments, with the exception of long-term debt, are recognized at estimated fair value in the Consolidated
Balance Sheets.
The following table provides information on the carrying amounts and fair values of our financial instruments.
  
April 30, 2017
 
April 30, 2016
  
Carrying
Amount


Fair Value
 
 
Carrying
Amount

Fair Value     
 
Marketable securities and other investments
$
47.3

 
$
47.3

 
$
48.8

 
$
48.8

Derivative financial instruments – net
(12.9
)
 
(12.9
)
 
(1.8
)
 
(1.8
)
Long-term debt
(4,944.5
)
 
(5,023.8
)
 
(5,146.0
)
 
(5,319.9
)

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. Valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions.
The following tables summarize the fair values and the levels within the fair value hierarchy in which the fair value measurements fall for our financial instruments.
 
Quoted Prices in 
Active Markets 
for Identical 
Assets (Level 1)
 
Significant 
Observable 
Inputs 
(Level 2)
 
Significant 
Unobservable 
Inputs 
(Level 3)
 
Fair Value at     
April 30, 2017     
 
Marketable securities and other investments: (A)
 
 
 
 
 
 
 
 
Equity mutual funds
 
$
1.1

 
$
—

 
$
—

 
$
1.1

Municipal obligations
 
—

 
34.7

 
—

 
34.7

Money market funds
 
11.5

 
—

 
—

 
11.5

Derivative financial instruments: (B)
 
 
 
 
 
 
 
 
Commodity contracts – net
 
(15.8
)
 
(0.2
)
 
—

 
(16.0
)
Foreign currency exchange contracts – net
 
0.3

 
2.8

 
—

 
3.1

Long-term debt (C)
 
(4,473.2
)
 
(550.6
)
 
—

 
(5,023.8
)
Total financial instruments measured at fair value
 
$
(4,476.1
)
 
$
(513.3
)
 
$
—

 
$
(4,989.4
)
 
Quoted Prices in 
Active Markets 
for Identical 
Assets (Level 1)
 
Significant 
Observable 
Inputs 
(Level 2)
 
Significant 
Unobservable 
Inputs 
(Level 3)
 
Fair Value at     
April 30, 2016     
 
Marketable securities and other investments: (A)
 
 
 
 
 
 
 
 
Equity mutual funds
 
$
9.8

 
$
—

 
$
—

 
$
9.8

Municipal obligations
 
—

 
37.6

 
—

 
37.6

Money market funds
 
1.4

 
—

 
—

 
1.4

Derivative financial instruments: (B)
 
 
 
 
 
 
 
 
Commodity contracts – net
 
15.0

 
(8.0
)
 
—

 
7.0

Foreign currency exchange contracts – net
 
(1.7
)
 
(7.1
)
 
—

 
(8.8
)
Long-term debt (C)
 
(4,569.0
)
 
(750.9
)
 
—

 
(5,319.9
)
Total financial instruments measured at fair value
 
$
(4,544.5
)
 
$
(728.4
)
 
$
—

 
$
(5,272.9
)
 
(A)
Marketable securities and other investments consist of funds maintained for the payment of benefits associated with nonqualified retirement plans. The funds include equity securities listed in active markets, municipal obligations valued by a third party using valuation techniques that utilize inputs that are derived principally from or corroborated by observable market data, and money market funds with maturities of three months or less. Based on the short-term nature of these money market funds, carrying value approximates fair value. As of April 30, 2017, our municipal obligations are scheduled to mature as follows: $1.4 in 2018, $2.3 in 2019, $2.2 in 2020, $5.1 in 2021, and the remaining $23.7 in 2022 and beyond. For additional information, see Marketable Securities and Other Investments in Note 1: Accounting Policies.
(B)
Level 1 commodity and foreign currency exchange derivatives are valued using quoted market prices for identical instruments in active markets. Level 2 commodity and foreign currency exchange derivatives are valued using quoted prices for similar assets or liabilities in active markets.
(C)
Long-term debt is comprised of public Senior Notes classified as Level 1 and the Term Loan classified as Level 2. The public Senior Notes are traded in an active secondary market and valued using quoted prices. The value of the Term Loan is based on the net present value of each interest and principal payment calculated, utilizing an interest rate derived from an estimated yield curve obtained from independent pricing sources for similar types of term loan borrowing arrangements. For additional information, see Note 8: Debt and Financing Arrangements.
Furthermore, we recognized nonrecurring fair value adjustments of $133.2 during 2017, which were primarily related to the impairment of certain indefinite-lived trademarks in the U.S. Retail Pet Foods segment, and were included as a noncash charge in our Statement of Consolidated Income. We utilized Level 3 inputs based on management’s best estimates and assumptions to estimate the fair value of these indefinite-lived trademarks, which include estimates of future cash flows; allocations of certain assets, liabilities, and cash flows among reporting units; future growth rates; terminal value amounts; and the applicable weighted-average cost of capital used to discount those estimated cash flows. For additional information, see Goodwill and Other Intangible Assets in Note 1: Accounting Policies, and Note 7: Goodwill and Other Intangible Assets.