FAIR VALUE MEASUREMENTS

12 Months Ended

May 31, 2020

12. FAIR VALUE MEASUREMENTS

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 31, 2020 and May 26, 2019 (dollars in millions):


	As of May 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Pension plan assets	$	19.2	$	8.0	$	—	$	27.2
Deferred compensation assets		0.1		—		—		0.1
Total assets	$	19.3	$	8.0	$	—	$	27.3
Liabilities:
Derivative liabilities (a)	$	—	$	4.7	$	—	$	4.7
Deferred compensation liabilities (b)		—		18.0		—		18.0
Total liabilities	$	—	$	22.7	$	—	$	22.7


	As of May 26, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Pension plan assets	$	11.8	$	5.3	$	—	$	17.1
Deferred compensation assets		0.5		—		—		0.5
Derivative assets (a)		—		0.4		—		0.4
Total assets	$	12.3	$	5.7	$	—	$	18.0
Liabilities:
Derivative liabilities (a)	$	—	$	3.8	$	—	$	3.8
Deferred compensation liabilities (b)		—		15.1		—		15.1
Total liabilities	$	—	$	18.9	$	—	$	18.9

(a)

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

Non-financial assets such as property, plant and equipment, and intangible assets are recorded at fair value only if an impairment is recognized. Cost and equity investments are measured at fair value on a non-recurring basis.

At May 31, 2020, we had $2,166.0 million of fixed-rate and $1,389.0 million of variable-rate debt outstanding. Based on current market rates, the fair value of our fixed-rate debt at May 31, 2020 was estimated to be $2,263.8 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.

- 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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