Fair Value Measurements

12 Months Ended

Dec. 29, 2023

Fair Value of Financial Instruments

Our derivative assets or liabilities include foreign exchange and interest rate derivatives that are measured at fair value using observable market inputs such as forward rates, interest rates, and our own credit risk as well as an evaluation of our counterparties’ credit risks. We use an income approach to value our outstanding foreign currency and interest rate hedges, which consists of a discounted cash flow model that takes into account the present value of future cash flows under the terms of the contracts using current market information as of the measurement date such as foreign currency spot rate, forward rates and interest rates. Additionally, we include an element of default risk based on observable inputs into the fair value calculation. Based on these inputs, the derivative assets or liabilities are classified within Level 2 of the valuation hierarchy.

The following table provides a summary of the fair values of our derivative financial instruments measured on a recurring basis (U.S. dollars in millions):


	Fair Value Measurements
	Foreign currency forward contracts, net liability				Interest rate contracts, net asset
	December 29, 2023		December 30, 2022			December 29, 2023		December 30, 2022
Quoted prices in active markets for identical assets (Level 1)	$	—	$	—		$	—	$	—
Significant other observable inputs (Level 2)	(0.3)		(6.7)			7.9		15.8
Significant unobservable inputs (Level 3)	—		—			—		—

Refer to Note 14, “Retirement and Other Employee Benefits” for further fair value disclosures related to pension assets.

In estimating our fair value disclosures for financial instruments, we use the following methods and assumptions:

Cash and cash equivalents: The carrying amount reported in the Consolidated Balance Sheets for these items approximates fair value due to their liquid nature and are classified as Level 1.

Trade accounts receivable and other accounts receivable, net: The carrying value reported in the Consolidated Balance Sheets for these items is net of allowances, which includes a degree of counterparty non-performance risk and are classified as Level 2.

Accounts payable and other current liabilities: The carrying value reported in the Consolidated Balance Sheets for these items approximates their fair value, which is the likely amount for which the liability with short settlement periods would be transferred to a market participant with a similar credit standing as ours and are classified as Level 2.

Long-term debt: The carrying value of our long-term debt reported in the Consolidated Balance Sheets approximates their fair value since they bear interest at variable rates which contain an element of default risk. The fair value of our long-term debt is estimated using Level 2 inputs based on quoted prices for those or similar instruments. Refer to Note 11, “Debt.”

Fair Value of Non-Financial Assets

Our non-financial assets, including property, plant and equipment, goodwill, and other intangible assets are measured at fair value on a non-recurring basis and are subject to fair value adjustment in certain circumstances. During the fourth quarter of 2023, we recorded an impairment charge of $21.6 million related to goodwill in our prepared foods reporting unit. The fair value of the prepared foods reporting unit was estimated based on an analysis of the present value of future discounted cash flows. The significant estimates used in the discounted cash flows model included our weighted average cost of capital, projected cash flows, and long-term rate of growth. The fair value measurements were primarily based on significant inputs that are not observable in the market and thus represent a Level 3 measurement.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. The estimated fair value of the long-lived assets is based on discounted future cash flows of the asset or asset group using a discount rate commensurate with the risk. During the year ended December 29, 2023, long-lived assets with an aggregate carrying value of $202.6 million were written down to their fair value of $93.0 million, resulting in an asset impairment charge of $109.6 million. The fair value of the long-lived assets was estimated based on an analysis of the present value of future discounted cash flows and third-party asset appraisals. Significant estimates used in the discounted cash flows model included our weighted average cost of capital, projected cash flows, and long-term rate of growth. The fair value measurements used in the discounted cash flows model were primarily based on significant inputs that are not observable in the market and thus represent a Level 3 measurement.

As of December 29, 2023, we had $4.5 million in property, plant and equipment meeting the criteria of assets held for sale:$2.9 million related to a packaging plant in South America, and the remaining $1.6 million related to facilities and farm land in Central America. These assets are recognized at the lower of cost or fair value less cost to sell. During 2023, we received proceeds of $119.4 million and recorded a gain on disposal of property, plant and equipment, net of $40.9 million from the sale of assets previously held for sale. Included in these proceeds are $23.0 million of net proceeds we received related to the sale of an idle production facility in North America during 2023, resulting in a gain on disposal of property, plant and equipment, net of $6.8 million. Contemporaneously with the execution of the sale and purchase agreement, we entered into an operating lease agreement in which we leased back a portion of the facility for a term of 21 months.

We recorded additional asset impairment and other charges during the years ended December 29, 2023 and December 30, 2022, that do not fall under the scope of fair value measurement. Refer to Note 3, “Asset Impairment and Other (Credit) Charges, Net”.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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