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Fair Value Measurements
 9 Months Ended
Apr. 28, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements
We categorize financial assets and liabilities based on the following fair value hierarchy:
•
Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
•
Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with observable market data.
•
Level 3: Unobservable inputs, which are valued based on our estimates of assumptions that market participants would use in pricing the asset or liability.
Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. When available, we use unadjusted quoted market prices to measure the fair value and classify such items as Level 1. If quoted market prices are not available, we base fair value upon internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates. Included in the fair value of derivative instruments is an adjustment for credit and nonperformance risk.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents our financial assets and liabilities that are measured at fair value on a recurring basis as of April 28, 2019, and July 29, 2018, consistent with the fair value hierarchy:
 
Fair Value
as of
April 28,
2019
 
Fair Value Measurements at
April 28, 2019 Using
Fair Value Hierarchy
 
Fair Value
as of
July 29,
2018
 
Fair Value Measurements at
July 29, 2018 Using
Fair Value Hierarchy
 
Level 1
 
Level 2
 
Level 3
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forward contracts(1)
$
4

 
$
—

 
$
4

 
$
—

 
$
4

 
$
—

 
$
4

 
$
—

Commodity derivative contracts(2)
6

 
4

 
2

 
—

 
5

 
5

 
—

 
—

Deferred compensation derivative contracts(3)
1

 
—

 
1

 
—

 
1

 
—

 
1

 
—

Deferred compensation investments(4)
4

 
4

 
—

 
—

 
6

 
6

 
—

 
—

Fair value option investments(5)
78

 
—

 
—

 
78

 
77

 
—

 
—

 
77

Total assets at fair value
$
93

 
$
8

 
$
7

 
$
78

 
$
93

 
$
11

 
$
5

 
$
77

 
Fair Value
as of
April 28,
2019
 
Fair Value Measurements at
April 28, 2019 Using
Fair Value Hierarchy
 
Fair Value
as of
July 29,
2018
 
Fair Value Measurements at
July 29, 2018 Using
Fair Value Hierarchy
 
 
Level 1
 
Level 2
 
Level 3
 
 
Level 1
 
Level 2
 
Level 3
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forward contracts(1)
$
2

 
$
—

 
$
2

 
$
—

 
$
2

 
$
—

 
$
2

 
$
—

Commodity derivative contracts(2)
11

 
9

 
2

 
—

 
4

 
3

 
1

 
—

Deferred compensation obligation(4)
93

 
93

 
—

 
—

 
108

 
108

 
—

 
—

Total liabilities at fair value
$
106

 
$
102

 
$
4

 
$
—

 
$
114

 
$
111

 
$
3

 
$
—

___________________________________ 
(1) 
Based on observable market transactions of spot currency rates and forward rates.
(2) 
Based on quoted futures exchanges and on observable prices of transactions in the marketplace.
(3) 
Based on LIBOR and equity index swap rates.
(4) 
Based on the fair value of the participants’ investments.
(5) 
Primarily represents investments in equity securities that are not readily marketable and are accounted for under the fair value option. The investments were funded by Acre. See Note 13 for additional information. Fair value is based on analyzing recent transactions and transactions of comparable companies, and the discounted cash flow method. In addition, allocation methods, including the option pricing method, are used in distributing fair value among various equity holders according to rights and preferences.
The following table summarizes the changes in fair value of Level 3 investments for the nine-month periods ended April 28, 2019 and April 29, 2018:
 
 
Nine Months Ended
 
 
April 28,
2019
 
April 29,
2018
Fair value at beginning of year
 
$
77

 
$
49

Gains
 
1

 
8

Purchases
 
—

 
12

Fair value at end of quarter
 
$
78

 
$
69


Items Measured at Fair Value on a Nonrecurring Basis
In addition to assets and liabilities that are measured at fair value on a recurring basis, we are also required to measure certain items at fair value on a nonrecurring basis.
In 2019, we recognized impairment charges on trademarks, plant assets, customer relationships and technology in connection with interim assessments of fair value on intangible and tangible assets in Campbell Fresh. See also Note 3 for additional information on the impairment charges, which are included in Loss from discontinued operations.
In the fourth quarter of 2018, as part of our annual review of intangible assets, we recognized an impairment charge of $54 on the Plum trademark, which reduced the carrying value to fair value of $61.
Fair value was determined based on unobservable Level 3 inputs. The fair value of plant assets was determined based on cash flows associated with the asset group that include significant management assumptions, including expected proceeds. The fair values of trademarks, customer relationships and technology were determined based on discounted cash flow analyses that include significant management assumptions such as revenue growth rates, weighted average cost of capital, assumed royalty rates and attrition.
The following table presents 2019 fair value measurements:
 
 
Impairment Charges
 
Fair Value
January 27, 2019
 
Plant Assets
 
Trademarks
 
Customer Relationships
 
Technology
 
Plant Assets
 
Trademarks
 
Customer Relationships
 
Technology
Bolthouse Farms carrot and carrot ingredients
 
$
104

 
$
18

 
$
40

 
$
15

 
$
102

 
$
30

 
$
15

 
$
10

Bolthouse Farms refrigerated beverages and salad dressings
 
$
9

 
$
74

 
$
22

 
 
 
$
100

 
$
76

 
$
12

 
 
Garden Fresh Gourmet
 
$
2

 
$
23

 
$
39

 
 
 
$
25

 
$
—

 
$
—

 
 
October 28, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Refrigerated soup
 
$
14

 
 
 
 
 
 
 
$
38

 
 
 
 
 
 

Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings, excluding the current portion of long-term debt, approximate fair value.
Cash equivalents of $19 at April 28, 2019, and $14 at July 29, 2018, represent fair value as these highly liquid investments have an original maturity of three months or less. Fair value of cash equivalents is based on Level 2 inputs.
The fair value of long-term debt, including the current portion of long-term debt in Short-term borrowings, was $7,985 at April 28, 2019, and $8,347 at July 29, 2018. The carrying value was $8,028 at April 28, 2019, and $8,595 at July 29, 2018. The fair value of long-term debt is principally estimated using Level 2 inputs based on quoted market prices or pricing models using current market rates.