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Note 6 - Derivative Financial Instruments | 3 Months Ended
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Aug. 27, 2023
Notes to Financial Statements |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | 6. DERIVATIVE FINANCIAL INSTRUMENTS See our consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended May 28, 2023, for additional information on our derivative activities. Derivatives Designated as Cash Flow Hedges During the first quarter of fiscal 2019, we entered into deal-contingent forward starting interest rate swap contracts to hedge a portion of the interest rate risk related to our issuance of long-term debt to help finance the acquisition of Pinnacle Foods, Inc. We settled these contracts during the second quarter of fiscal 2019 and deferred a $47.5 million gain in accumulated other comprehensive income that is being amortized as a reduction of interest expense over the lives of the related debt instruments. The unamortized amount at August 27, 2023, was $30.6 million. Economic Hedges of Forecasted Cash Flows Many of our derivatives do not qualify for, and we do not currently designate certain commodity or foreign currency derivatives to achieve, hedge accounting treatment. We reflect realized and unrealized gains and losses from derivatives used to economically hedge anticipated commodity consumption and to mitigate foreign currency cash flow risk in earnings immediately within general corporate expense (within cost of goods sold). The gains and losses are reclassified to segment operating results in the period in which the underlying item being economically hedged is recognized in cost of goods sold. In the event that management determines a particular derivative entered into as an economic hedge of a forecasted commodity purchase has ceased to function as an economic hedge, we cease recognizing further gains and losses on such derivatives in corporate expense and begin recognizing such gains and losses within segment operating results immediately. The following table presents the net derivative gains (losses) from economic hedges of forecasted commodity consumption and the foreign currency risk of certain forecasted transactions, under this methodology:
|  | Thirteen Weeks Ended |
|  | August 27, 2023 |  |  | August 28, 2022 |
Gross derivative gains incurred |  | $ | 19.5 |  |  | $ | 9.5 |
Less: Net derivative gains (losses) allocated to reporting segments |  |  | (8.1 | ) |  |  | 9.0 |
Net derivative gains recognized in general corporate expenses |  | $ | 27.6 |  |  | $ | 0.5 |
Net derivative gains (losses) allocated to Grocery & Snacks |  | $ | (3.9 | ) |  | $ | 5.0 |
Net derivative gains (losses) allocated to Refrigerated & Frozen |  |  | (2.3 | ) |  |  | 3.3 |
Net derivative gains (losses) allocated to International |  |  | (1.6 | ) |  |  | 0.1 |
Net derivative gains (losses) allocated to Foodservice |  |  | (0.3 | ) |  |  | 0.6 |
Net derivative gains (losses) included in segment operating profit |  | $ | (8.1 | ) |  | $ | 9.0 |
The fair values of our derivative positions were not material as of August 27, 2023 and were Level 1 or Level 2 assets or liabilities in the fair value hierarchy (see Note 14 for further information). We have not significantly changed our valuation techniques from prior periods. The location and amount of gains from derivatives not designated as hedging instruments in our Condensed Consolidated Statements of Operations were as follows:
| Location in Condensed Consolidated |  | Gains (Losses) Recognized on Derivatives in Condensed Consolidated Statements of Operations for the Thirteen Weeks Ended |
Derivatives Not Designated as Hedging Instruments | Statements of Operations of Gains (Losses) Recognized on Derivatives |  | August 27, 2023 |  |  | August 28, 2022 |
Commodity contracts | Cost of goods sold |  | $ | 22.5 |  |  | $ | 6.3 |
Foreign exchange contracts | Cost of goods sold |  |  | (3.0 | ) |  |  | 3.2 |
Total gains from derivative instruments not designated as hedging instruments |  | $ | 19.5 |  |  | $ | 9.5 |
As of August 27, 2023, our open commodity contracts had a notional value (defined as notional quantity times market value per notional quantity unit) of $94.3 million for purchase contracts. As of May 28, 2023, our open commodity contracts had a notional value of $134.6 million for purchase contracts. The notional amount of our foreign currency forward contracts as of August 27, 2023 and May 28, 2023 was $94.5 million and $87.3 million, respectively.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
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