FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We are required to consider and reflect the assumptions of market participants in fair value calculations. These factors include nonperformance risk (the risk that an obligation will not be fulfilled) and credit risk, both of the reporting entity (for liabilities) and of the counterparty (for assets).

We use, as appropriate, a market approach (generally, data from market transactions), an income approach (generally, present value techniques), and/or a cost approach (generally, replacement cost) to measure the fair value of an asset or liability. These valuation approaches incorporate inputs such as observable, independent market data that we believe are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk.

The FASB has established a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The fair value hierarchy gives the highest priority to quoted market prices (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of inputs used to measure fair value are as follows:


▪	Level 1—quoted prices in active markets for identical assets or liabilities accessible by the reporting entity.


▪	Level 2—observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.


▪	Level 3—unobservable for an asset or liability. Unobservable inputs should only be used to the extent observable inputs are not available.

We have classified assets and liabilities measured at fair value based on the lowest level of input that is significant to the fair value measurement. For the periods presented, we had no transfers of assets or liabilities between levels within the fair value hierarchy. The timing of any such transfers would be determined at the end of each reporting period.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables set forth, by level within the fair value hierarchy, our financial assets and liabilities, including assets held in a rabbi trust used to fund the Supplemental Plan, that were measured at fair value on a recurring basis as of December 28, 2014 and December 29, 2013:



	December 28, 2014								December 29, 2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)								(in millions)
Assets
Derivatives:
Commodity contracts	$	57.8	$	0.1	$	—	$	57.9	$	0.2	$	4.9	$	—	$	5.1
Foreign exchange contracts	—		0.4		—		0.4		—		1.2		—		1.2
Bond securities	15.9		—		—		15.9		19.8		—		—		19.8
Insurance contracts	—		70.0		—		70.0		—		65.8		—		65.8
Total	$	73.7	$	70.5	$	—	$	144.2	$	20.0	$	71.9	$	—	$	91.9

Liabilities
Derivatives:
Commodity contracts	18.0		19.4		—		37.4		15.1		5.4		—		20.5
Interest rate swaps	—		0.1		—		0.1		—		—		—		—
Foreign exchange contracts	—		—		—		—		—		0.2		—		0.2
Total	$	18.0	$	19.5	$	—	$	37.5	$	15.1	$	5.6	$	—	$	20.7

The following are descriptions of the valuation methodologies and key inputs used to measure financial assets and liabilities recorded at fair value on a recurring basis:

▪

Derivatives—Derivatives classified within Level 1 are valued using quoted market prices. In some cases where quoted market prices are not available, we value the derivatives using market based pricing models that utilize the net present value of estimated future cash flows to calculate fair value, in which case the measurements are classified within Level 2. These valuation models make use of market-based observable inputs, including exchange traded prices and rates, yield curves, credit curves, and measures of volatility.


▪	Bond securities—Bond securities are valued at quoted market prices and are classified within Level 1.


▪	Insurance contracts—Insurance contracts are valued at their cash surrender value using the daily asset unit value (AUV) which is based on the quoted market price of the underlying securities and classified within Level 2.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis after initial recognition; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, for example, when there is evidence of impairment. We had no significant assets or liabilities that were measured and recorded at fair value on a nonrecurring basis during 2014 or the Transition Period, except for the preliminary allocation of the total purchase consideration to the estimated fair values of our assets acquired and liabilities assumed by WH Group as part of the Merger. We finalized the allocation in the third quarter of 2014 with no material adjustments. See Note 2—Merger and Acquisitions for further information on the Merger.

Pension Plan Assets

The following table summarizes our qualified pension plan assets measured at fair value on a recurring basis (at least annually) as of December 28, 2014 and December 29, 2013:



	December 28, 2014								December 29, 2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)								(in millions)
Cash and cash equivalents	$	95.0	$	—	$	—	$	95.0	$	53.2	$	—	$	—	$	53.2

Equity securities:
U.S. common stock:
Health care	30.7		—		—		30.7		28.2		—		—		28.2
Financial services	44.5		—		—		44.5		33.4		—		—		33.4
Retail and consumer products	36.5		—		—		36.5		40.0		—		—		40.0
Energy	9.4		—		—		9.4		15.0		—		—		15.0
Information technology	75.3		—		—		75.3		42.7		—		—		42.7
Manufacturing and industrials	26.0		—		—		26.0		20.5		—		—		20.5
Telecommunications	4.7		—		—		4.7		6.5		—		—		6.5
International common stock	131.8		—		—		131.8		139.3		—		—		139.3
Mutual funds:
International	—		75.0		—		75.0		—		95.9		—		95.9
Domestic small cap	—		25.5		—		25.5		—		34.2		—		34.2

Commingled funds:
Mutual funds	—		14.0		—		14.0		—		18.1		—		18.1
Asset-backed securities	—		17.4		—		17.4		—		15.7		—		15.7
Emerging markets securities	—		22.6		—		22.6		—		23.5		—		23.5
Corporate debt securities	—		297.2		—		297.2		—		343.1		—		343.1
Government debt securities	—		204.2		—		204.2		—		112.0		—		112.0

Alternative investments:
Diversified investment funds	—		59.5		—		59.5		—		55.8		—		55.8

Limited partnerships	—		—		36.4		36.4		—		—		37.8		37.8

Insurance contracts	—		—		0.9		0.9		—		—		1.1		1.1

Total fair value	$	453.9	$	715.4	$	37.3	1,206.6		$	378.8	$	698.3	$	38.9	1,116.0
Unsettled transactions, net							8.1								6.8
Total plan assets							$	1,214.7							$	1,122.8

The following are descriptions of the valuation methodologies and key inputs used to measure pension plan assets recorded at fair value:

▪

Cash and cash equivalents—Cash equivalents include highly liquid investments with original maturities of three months or less. Due to their short-term nature, the carrying amount of these instruments approximates the estimated fair value. Actively traded money market funds are measured at their NAV, which approximates fair value, and classified as Level 1. The fair value of certain money market funds for which quoted prices are available but traded less frequently have been classified as Level 2.


▪	Equity securities—When available, the fair value of equity securities are based on quoted prices in active markets and classified as Level 1. Level 1 financial instruments include highly liquid instruments with quoted prices, such as equities and mutual funds traded in active markets.

If quoted prices are not available, fair values are obtained from pricing services, broker quotes or other model-based valuation techniques with observable inputs and classified as Level 2. The nature of these equity securities include securities for which quoted prices are available but traded less frequently, securities whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data and securities that are valued using other financial instruments, the parameters of which can be directly observed. Level 2 equity securities include preferred stock and mutual funds not actively traded.

▪

Fixed income—The fair values of fixed income instruments are obtained from pricing services, broker quotes or other model-based valuation techniques with observable inputs and classified as Level 2. The nature of these fixed income instruments include instruments for which quoted prices are available but traded less frequently, instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data and securities that are valued using other financial instruments, the parameters of which can be directly observed. Level 2 fixed income instruments include mutual funds, asset-backed securities, corporate debt securities, emerging market securities and government debt securities.

•

Alternative Investments—The fair values of alternative investments are obtained from pricing services, broker quotes or other model-based valuation techniques with observable inputs and classified as Level 2. The nature of these alternative investments include instruments for which quoted prices are available but traded less frequently, instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data and securities that are valued using other financial instruments, the parameters of which can be directly observed. Level 2 alternative investments include diversified investment funds, domestic options contracts and futures contracts.

▪

Limited partnerships—The valuation of limited partnership investments requires the use of significant unobservable inputs due to the absence of quoted market prices, inherent lack of liquidity and long-term nature of such assets and are classified as Level 3. These investments are initially valued at cost with quarterly valuations performed utilizing available market data to determine the fair value of these investments. Such market data consists primarily of the observations of trading multiples of public companies considered comparable to the investments with adjustments for investment-specific issues, the lack of liquidity and other items.


▪	Insurance contracts—The valuation of these guaranteed annuity insurance contracts is primarily based on quoted prices in active markets with adjustments for unobservable inputs caused by the unique nature of applying investment earnings as part of the participation guarantee. Due to these unobservable inputs and the long-term nature of these investments, the contracts are classified as Level 3.

The following table summarizes the changes in our Level 3 pension plan assets for the twelve months ended December 28, 2014 and the eight months ended December 29, 2013:



	Insurance Contracts			Limited Partnerships
	(in millions)
Balance, April 28, 2013	$	1.2		$	40.1
Actual return on plan assets:
Related to assets held at the reporting date	—			(10.4		)
Related to assets sold during the period	—			4.0
Purchases, sales and settlements, net	(0.1		)	4.1
Balance, December 29, 2013	1.1			37.8
Actual return on plan assets:
Related to assets held at the reporting date	—			(10.3		)
Related to assets sold during the period	—			6.0
Purchases, sales and settlements, net	(0.2		)	2.9
Balance, December 28, 2014	$	0.9		$	36.4

Other Financial Instruments

We determine the fair value of public debt using Level 2 inputs based on quoted market prices. The carrying amount of all other debt approximates fair value as those instruments are based on variable interest rates. The following table presents the fair value and carrying value of long-term debt, including the current portion of long-term debt as of December 28, 2014 and December 29, 2013:



	December 28, 2014				December 29, 2013
	Fair Value		Carrying Value		Fair Value		Carrying Value
	(in millions)
Debt	$	2,782.0	$	2,717.8	$	3,120.2	$	3,020.1

The carrying amounts of cash and cash equivalents, accounts receivable, notes payable and accounts payable approximate their fair values because of the relatively short-term maturity of these instruments.