FAIR VALUE MEASUREMENTS

12 Months Ended

May 26, 2024

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

19. FAIR VALUE MEASUREMENTS

Financial Accounting Standards Board 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 fair values of our Level 2 derivative instruments were determined using valuation models that use market observable inputs including both forward and spot prices for currencies and commodities. Derivative assets and liabilities included in Level 2 primarily represent commodity and foreign currency option and forward contracts.

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 26, 2024:

	Level 1		Level 2		Level 3		Total
Assets:
Derivative assets	$	2.3	$	0.7	$	—	$	3.0
Deferred compensation assets		6.3		—		—		6.3
Available-for-sale debt securities		—		—		2.9		2.9
Total assets	$	8.6	$	0.7	$	2.9	$	12.2
Liabilities:
Derivative liabilities	$	—	$	3.6	$	—	$	3.6
Deferred compensation liabilities		70.4		—		—		70.4
Total liabilities	$	70.4	$	3.6	$	—	$	74.0

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, 2023:

	Level 1		Level 2		Level 3		Total
Assets:
Derivative assets	$	9.4	$	0.6	$	—	$	10.0
Deferred compensation assets		7.1		—		—		7.1
Available-for-sale debt securities		—		—		4.0		4.0
Total assets	$	16.5	$	0.6	$	4.0	$	21.1
Liabilities:
Derivative liabilities	$	—	$	3.6	$	—	$	3.6
Deferred compensation liabilities		67.0		—		—		67.0
Total liabilities	$	67.0	$	3.6	$	—	$	70.6

Nonrecurring Fair Value Measurements

Certain assets and liabilities, including long-lived assets, goodwill, asset retirement obligations, and equity investments are measured at fair value on a nonrecurring basis using Level 3 inputs.

Impairment of Assets Held for Sale

In fiscal 2024, we recognized impairment charges totaling $36.4 million in our International segment. The impairment was measured based upon the estimated sales price of the disposal group (see Note 6).

During fiscal 2023, we recognized impairment charges totaling $0.5 million in our Grocery & Snacks segment, $5.7 million in our Refrigerated & Frozen segment, and $20.5 million in our Foodservice segment. During fiscal 2022, we recognized impairment charges totaling $26.3 million in our Grocery & Snacks segment, $28.9 million in our Refrigerated & Frozen segment, and $14.9 million in our Foodservice segment. The impairments were measured based upon the estimated sales price of a disposal group that no longer met the held for sale criteria as of fiscal 2023.

Impairment of Goodwill and Intangible Assets

We recognized charges for the impairment of certain indefinite-lived brands in fiscal 2024, 2023, and 2022. The fair values of these brands were estimated using the “relief from royalty” method (see Note 8). Impairments in our Grocery & Snacks segment totaled $77.6 million, $78.9 million, and $90.7 million for fiscal 2024, 2023, and 2022, respectively. Impairments in our Refrigerated & Frozen segment totaled $352.6 million, $496.6 million, and $103.9 million for fiscal 2024, 2023, and 2022, respectively. Impairments in our International segment totaled $13.7 million and $14.4 million for fiscal 2023 and 2022, respectively.

During fiscal 2024 and 2023, goodwill impairment charges totaling $526.5 million and $141.7 million, respectively, were recognized within our Refrigerated & Frozen segment. The fair value of the goodwill was measured using a guideline public company method and discounted cash flow valuation method specific to the Sides, Components, Enhancers reporting unit (see Note 8).

Other Asset Impairments

In fiscal 2024, we recognized charges for the impairment of certain long-lived assets based upon a discounted cash flow valuation model and included in restructuring activities (see Note 2). Impairments totaled $0.6 million in our Grocery & Snacks segment, $17.7 million in our Refrigerated & Frozen segment, and $14.1 million in our International segment. The majority of these impairment charges were based upon management’s decision to exit certain manufacturing facilities in fiscal 2024, which reduced the future expected cash flows to be generated at these facilities.

Long-Term Debt Fair Value

The carrying amount of long-term debt (including current installments) was $7.51 billion as of May 26, 2024 and $8.60 billion as of May 28, 2023. Based on current market rates, the fair value of this debt (Level 2 liabilities) at May 26, 2024 and May 28, 2023 was estimated at $7.26 billion and $8.31 billion, respectively.