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Fair Value of Financial Instruments | 6 Months Ended
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Aug. 31, 2023
Fair Value Disclosures [Abstract] |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS Authoritative guidance establishes a framework for measuring fair value, including a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy includes three levels: •Level 1 inputs are quoted prices in active markets for identical assets or liabilities; •Level 2 inputs include data points that are observable such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) such as volatility, interest rates, and yield curves that are observable for the asset or liability, either directly or indirectly; and •Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. Fair value methodology The following methods and assumptions are used to estimate the fair value of our financial instruments: Foreign currency and commodity derivative contracts The fair value is estimated using market-based inputs, obtained from independent pricing services, entered into valuation models. These valuation models require various inputs, including contractual terms, market foreign exchange prices, market commodity prices, interest-rate yield curves, and currency volatilities, as applicable (Level 2 fair value measurement). Interest rate swap and Pre-issuance hedge contracts The fair value is estimated based on quoted market prices from respective counterparties. Quotes are corroborated by using discounted cash flow calculations based upon forward interest-rate yield curves, which are obtained from independent pricing services (Level 2 fair value measurement). Canopy investment In April 2023, we extended the maturity of the remaining C$100.0 million principal amount of our Canopy Debt Securities by exchanging them for the 2023 Canopy Promissory Note. As such, our investment in Canopy is comprised of the (i) Canopy Equity Method Investment, (ii) November 2018 Canopy Warrants, and (iii) 2023 Canopy Promissory Note. The November 2018 Canopy Warrants and the 2023 Canopy Promissory Note are measured at fair value. Effective as of May 31, 2023, we determined that neither of these instruments had future economic value given Canopy’s stock price relative to the exercise price of the warrants and the substantial doubt about Canopy’s ability to continue as a going concern, as disclosed by Canopy, prior to the maturity of the note. Accordingly, the fair value of the remaining balances for these instruments were determined to be zero. This reduction in fair value is included in income (loss) from unconsolidated investments within our consolidated results of operations for the six months ended August 31, 2023. If the Canopy Amendment is authorized by Canopy’s shareholders, we intend to negotiate an exchange of the 2023 Canopy Promissory Note for Exchangeable Shares, although neither we nor Canopy has any binding obligation to do so, and we also intend to surrender the November 2018 Canopy Warrants for cancellation upon completion of the Canopy Transaction and if we elect to convert our Canopy common shares into Exchangeable Shares. Short-term borrowings Our short-term borrowings consist of our commercial paper program and the revolving credit facility under our senior credit facility. The revolving credit facility is a variable interest rate bearing note with a fixed margin, adjustable based upon our debt rating (as defined in our senior credit facility). For these short-term borrowings, the carrying value approximates the fair value. Long-term debt The fair value of our fixed interest rate long-term debt is estimated by discounting cash flows using interest rates currently available for debt with similar terms and maturities (Level 2 fair value measurement). As of August 31, 2023, the carrying amount of long-term debt, including the current portion, was $11,239.1 million, compared with an estimated fair value of $10,311.8 million. As of February 28, 2023, the carrying amount of long-term debt, including the current portion, was $11,296.0 million, compared with an estimated fair value of $10,236.0 million. The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, approximate fair value as of August 31, 2023, and February 28, 2023, due to the relatively short maturity of these instruments. Recurring basis measurements The following table presents our financial assets and liabilities measured at estimated fair value on a recurring basis:
| Fair Value Measurements Using |  |
| Quoted Prices in Active Markets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
(in millions) |  |  |  |  |  |  |
August 31, 2023 |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |
Foreign currency contracts | $ | — |  |  | $ | 334.8 |  |  | $ | — |  |  | $ | 334.8 |
Commodity derivative contracts | $ | — |  |  | $ | 17.9 |  |  | $ | — |  |  | $ | 17.9 |
Liabilities: |  |  |  |  |  |  |
Foreign currency contracts | $ | — |  |  | $ | 12.3 |  |  | $ | — |  |  | $ | 12.3 |
Commodity derivative contracts | $ | — |  |  | $ | 28.4 |  |  | $ | — |  |  | $ | 28.4 |
| Fair Value Measurements Using |  |
| Quoted Prices in Active Markets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
(in millions) |  |  |  |  |  |  |
February 28, 2023 |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |
Foreign currency contracts | $ | — |  |  | $ | 249.5 |  |  | $ | — |  |  | $ | 249.5 |
Commodity derivative contracts | $ | — |  |  | $ | 25.8 |  |  | $ | — |  |  | $ | 25.8 |
November 2018 Canopy Warrants | $ | — |  |  | $ | 0.2 |  |  | $ | — |  |  | $ | 0.2 |
Canopy Debt Securities | $ | — |  |  | $ | 69.6 |  |  | $ | — |  |  | $ | 69.6 |
Liabilities: |  |  |  |  |  |  |
Foreign currency contracts | $ | — |  |  | $ | 17.2 |  |  | $ | — |  |  | $ | 17.2 |
Commodity derivative contracts | $ | — |  |  | $ | 27.8 |  |  | $ | — |  |  | $ | 27.8 |
Nonrecurring basis measurements The following table presents our assets and liabilities measured at estimated fair value on a nonrecurring basis for which an impairment assessment was performed for the periods presented:
| Fair Value Measurements Using |  |  |  |
| Quoted Prices in Active Markets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total Losses |  |
(in millions) |  |  |  |  |  |  |  |  |
For the Six Months Ended August 31, 2023 |  |  |  |  |  |  |  |  |
Equity method investments (1) | $ | 97.8 |  |  | $ | 2.6 |  |  | $ | — |  |  | $ | 135.8 |  |  |
For the Six Months Ended August 31, 2022 |  |  |  |  |  |  |  |  |
Equity method investments | $ | 634.8 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,060.3 |  |  |
(1)As of August 31, 2023, the carrying value of the Canopy Equity Method Investment exceeded the fair value (Level 1 fair value measurement). We evaluated and determined there was not an other-than-temporary impairment. Our conclusion was based primarily on the period of time for which the fair value had been less than the carrying value, including Canopy’s stock price recovery above our carrying value following quarter-end. We will continue to evaluate the Canopy Equity Method Investment for an other-than-temporary impairment. Equity method investments As of August 31, 2023, we evaluated certain equity method investments, made through our corporate venture capital function, and determined there were other-than-temporary impairments due to business underperformance. Investments with a carrying value of $14.9 million were written down to an estimated fair value of $2.6 million, resulting in an impairment of $12.3 million. These investments are part of the Corporate Operations and Other segment. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for the six months and three months ended August 31, 2023. The estimated fair value was based largely on observable prices for similar assets. We evaluated the Canopy Equity Method Investment as of May 31, 2023, and determined there was an other-than-temporary impairment. Our conclusion was based on several contributing factors, including: (i) the fair value being less than the carrying value and the uncertainty surrounding Canopy’s stock price recovering in the near-term, (ii) Canopy recorded significant costs in its fourth quarter of fiscal 2023 results designed to align its Canadian cannabis operations and resources in response to continued unfavorable market trends, (iii) the substantial doubt about Canopy’s ability to continue as a going concern, as disclosed by Canopy, and (iv) C anopy’s identification of material misstatements in certain of its previously reported financial results related to sales in its BioSteel reporting unit that were accounted for incorrectly, including the recording of a goodwill impairment during its restated second quarter of fiscal 2023. As a result, the Canopy Equity Method Investment with a carrying value of $266.2 million was written down to its estimated fair value of $142.7 million, resulting in an impairment of $123.5 million. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for the six months ended August 31, 2023. The estimated fair value was determined based on the closing price of the underlying equity security as of May 31, 2023. We evaluated the Canopy Equity Method Investment as of August 31, 2022, and determined there was an other-than-temporary impairment based on several contributing factors, including: (i) the period of time for which the fair value had been less than the carrying value and the uncertainty surrounding Canopy’s stock price recovering in the near-term, (ii) Canopy recording a significant impairment of goodwill related to its cannabis operations during its three months ended June 30, 2022, and (iii) the uncertainty of U.S. federal cannabis permissibility. As a result, the Canopy Equity Method Investment with a carrying value of $1,695.1 million was written down to its estimated fair value of $634.8 million, resulting in an impairment of $1,060.3 million. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for the six months and three months ended August 31, 2022. The estimated fair value was determined based on the closing price of the underlying equity security as of August 31, 2022.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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