FAIR VALUE MEASUREMENTS

12 Months Ended

May 28, 2017

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

11.   FAIR VALUE MEASUREMENTS

FASB guidance establishes a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The three levels of inputs used to measure fair value are as follows:

Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities,

Level 2—Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets, and

Level 3—Unobservable inputs reflecting our own assumptions and best estimate of what inputs market participants would use in pricing the asset or liability.

The following table presents our financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of May 28, 2017 and May 29, 2016 (dollars in millions):

	As of May 28, 2017
	Level 1		Level 2		Level 3		Total
Assets:
Pension plan assets	$	4.5	$	—	$	—	$	4.5
Deferred compensation assets		0.6		—		—		0.6
Total assets		5.1		—		—		5.1
Liabilities:
Derivative liabilities (a)		—		2.4		—		2.4
Deferred compensation liabilities (b)		—		8.8		—		8.8
Total liabilities	$	—	$	11.2	$	—	$	11.2

	As of May 29, 2016
	Level 1		Level 2		Level 3		Total
Assets:
Derivative assets (a)	$	1.4	$	0.6	$	—	$	2.0
Deferred compensation assets		0.7		—		—		0.7
Total assets		2.1		0.6		—		2.7
Liabilities:
Derivative liabilities (a)		—		0.1		—		0.1
Deferred compensation liabilities (b)		—		6.5		—		6.5
Total liabilities	$	—	$	6.6	$	—	$	6.6

(a) The fair values of our Level 2 derivative instruments were determined using valuation models that use market observable inputs including interest rate curves and both forward and spot prices for currencies and commodities. Derivative assets and liabilities included in Level 2 primarily represent commodity swap and forward purchase contracts.

(b) The fair values of our Level 2 deferred compensation liabilities were valued using third-party valuations, which are based on the net asset values of mutual funds in our retirement plans. While the underlying assets are actively traded on an exchange, the funds are not.

Certain assets and liabilities, including long-lived assets, goodwill, asset retirement obligations, and cost and equity investments are measured at fair value on a non-recurring basis.

At May 28, 2017, we had $1,688.7 million of fixed-rate and $695.4 million of variable-rate debt outstanding. Based on current market rates, the fair value of our fixed-rate debt at May 28, 2017 was estimated to be $1,724.1 million. Any differences between the book value and fair value are due to the difference between the period-end market interest rate and the stated rate of our fixed-rate debt. We estimated the fair value of our fixed-rate debt using quoted market prices (Level 2 inputs) within the fair value hierarchy that is described above. The fair value of our variable-rate term debt approximates the carrying amount as our cost of borrowing is variable and approximates current market prices.