FAIR VALUE MEASUREMENTS

3 Months Ended

Aug. 25, 2024

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

16. 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 August 25, 2024:

	Level 1		Level 2		Level 3		Net Value
Assets:
Derivative assets	$	5.3	$	2.6	$	—	$	7.9
Deferred compensation assets		6.4		—		—		6.4
Available-for-sale debt securities		—		—		2.9		2.9
Total assets	$	11.7	$	2.6	$	2.9	$	17.2
Liabilities:
Derivative liabilities	$	—	$	3.0	$	—	$	3.0
Deferred compensation liabilities		75.1		—		—		75.1
Total liabilities	$	75.1	$	3.0	$	—	$	78.1

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		Net Value
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

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.

Other Asset Impairments

In the first quarter of 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. Impairments totaled $0.6 million in our Grocery & Snacks 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 and $7.51 billion as of August 25, 2024 and May 26, 2024, respectively. Based on current market rates, the fair value of this debt (level 2 liabilities) at August 25, 2024 and May 26, 2024 was estimated at $7.52 billion and $7.26 billion, respectively.