Conagra Brands (CAG) 10-Q 2 Apr 10 2010 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information (USD $)
	9 Months Ended Feb. 28, 2010	Mar. 28, 2010	Nov. 21, 2008
Document and Entity Information [Abstract]
Entity Registrant Name	CONAGRA FOODS INC /DE/
Entity Central Index Key	0000023217
Document Type	10-Q
Document Period End Date	2010-02-28
Amendment Flag	false
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--05-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$6,505,175,563
Entity Common Stock, Shares Outstanding		445,558,448

Condensed Consolidated Statemen

Condensed Consolidated Statements of Earnings (Unaudited) (USD $)
In Millions, except Per Share data	3 Months Ended Feb. 28, 2010	3 Months Ended Feb. 22, 2009	9 Months Ended Feb. 28, 2010	9 Months Ended Feb. 22, 2009
Condensed Consolidated Statements of Earnings (Unaudited) [Abstract]
Net sales	3096.8	$3,125	9230.8	9433.2
Costs and expenses:
Cost of goods sold	2308.5	2385.6	6870.7	7415.8
Selling, general and administrative expenses	421.9	424.7	1308.3	1182.4
Interest expense, net	39.9	42	122	134.8
Income from continuing operations before income taxes and equity method investment earnings	326.5	272.7	929.8	700.2
Income tax expense	104.8	92	313.2	242.6
Equity method investment earnings	2.9	11.1	17.7	13.9
Income from continuing operations	224.6	191.8	634.3	471.5
Income (loss) from discontinued operations, net of tax	4.1	1.4	-1.2	332.6
Net income	228.7	193.2	633.1	804.1
Less: Net income (loss) attributable to noncontrolling interests	-0.9		-2.1	0.4
Net income attributable to ConAgra Foods, Inc.	229.6	193.2	635.2	803.7
Earnings per share - basic
Income from continuing operations attributable to ConAgra Foods, Inc. common stockholders	0.51	0.43	1.43	1.03
Income from discontinued operations attributable to ConAgra Foods, Inc. common stockholders	0.01			0.74
Net income attributable to ConAgra Foods, Inc. common stockholders	0.52	0.43	1.43	1.77
Earnings per share - diluted
Income from continuing operations attributable to ConAgra Foods, Inc. common stockholders	0.5	0.43	1.42	1.03
Income from discontinued operations attributable to ConAgra Foods, Inc. common stockholders	0.01			0.73
Net income attributable to ConAgra Foods, Inc. common stockholders	0.51	0.43	1.42	1.76

1_Condensed Consolidated Statem

Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Millions	3 Months Ended Feb. 28, 2010	3 Months Ended Feb. 22, 2009	9 Months Ended Feb. 28, 2010	9 Months Ended Feb. 22, 2009
Condensed Consolidated Statements of Comprehensive Income (Unaudited) [Abstract]
Net income	228.7	193.2	633.1	804.1
Other comprehensive income (loss):
Net derivative adjustment, net of tax			0.1
Unrealized gains and losses on available-for-sale securities, net of tax:
Unrealized holding losses arising during the period	-0.1		-0.1	-0.9
Reclassification adjustment for losses included in net income				0.3
Currency translation adjustment:
Unrealized translation gains (losses) arising during the period	-6.8	-3.2	8.3	-123.7
Reclassification adjustment for net losses included in net income				2
Pension and postretirement healthcare liabilities, net of tax	-0.3	0.3	-0.9	(2)
Comprehensive income	221.5	190.3	640.5	679.8
Comprehensive income (loss) attributable to noncontrolling interests	-0.9		-2.1	0.4
Comprehensive income attributable to ConAgra Foods, Inc.	222.4	190.3	642.6	679.4

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Millions	3 Months Ended Feb. 28, 2010	9 Months Ended Feb. 22, 2009	12 Months Ended May. 31, 2009
Current assets
Cash and cash equivalents	785.6	88.2	243.2
Receivables, less allowance for doubtful accounts of $9.8, $13.9, and $14.2	877.3	889	781.4
Inventories	2021.2	2149.3	2025.1
Prepaid expenses and other current assets	311.2	326.9	282
Current assets held for sale	0	5	4.9
Total current assets	3995.3	3458.4	3336.6
Property, plant and equipment	5555.2	5172.7	5301.5
Less accumulated depreciation	-2821.2	-2608.5	-2661.1
Property, plant and equipment, net	2,734	2564.2	2640.4
Goodwill	3494.4	3478.9	3491.3
Brands, trademarks and other intangibles, net	828.7	834.4	835.3
Other assets	694.1	1049.6	768.1
Noncurrent assets held for sale	0	10.7	1.6
Total Assets	11746.5	11396.2	11073.3
Current liabilities
Notes payable	0.6	185.8	3.7
Current installments of long-term debt	261	318.3	24.7
Accounts payable	883.9	807.8	823.8
Accrued payroll	236.8	148.7	166.9
Other accrued liabilities	614.4	693.2	555.6
Total current liabilities	1996.7	2153.8	1574.7
Senior long-term debt, excluding current installments	3029.3	2876.5	3265.4
Subordinated debt	195.9	195.9	195.9
Other noncurrent liabilities	1361.3	1281.7	1316.4
Total liabilities	6583.2	6507.9	6352.4
Commitments and contingencies (Note 14)
Common stockholders' equity
Common stock of $5 par value, authorized 1,200,000,000 shares; issued 567,907,172, 567,154,823, and 567,130,430	2839.7	2835.8	2835.9
Additional paid-in capital	889.7	794.6	884.4
Retained earnings	4415.3	3,953	4042.5
Accumulated other comprehensive income (loss)	-96.3	162.2	-103.7
Less treasury stock, at cost, 123,350,206, 125,497,708, and 119,922,094 common shares	-2885.1	-2857.3	-2938.2
Total common stockholders' equity	5163.3	4888.3	4720.9
Total liabilities and stockholders' equity	11746.5	11396.2	11073.3

2_Condensed Consolidated Balanc

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Millions, except Share data	Feb. 28, 2010	May. 31, 2009	Feb. 22, 2009
Current assets
Allowance for doubtful accounts	9.8	13.9	14.2
Common stockholders' equity
Common stock, par value	5	5	5
Common stock, authorized	1,200,000,000	1,200,000,000	1,200,000,000
Common stock, issued	567,907,172	567,154,823	567,130,430
Treasury stock, common shares	123,350,206	125,497,708	119,922,094

3_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Millions	9 Months Ended Feb. 28, 2010	9 Months Ended Feb. 22, 2009
Cash flows from operating activities:
Net income	633.1	804.1
Income (loss) from discontinued operations	-1.2	332.6
Income from continuing operations	634.3	471.5
Adjustments to reconcile income from continuing operations to net cash flows from operating activities:
Depreciation and amortization	249.5	236.7
Impairment charges related to Garner accident	19.6
Insurance recoveries recognized related to Garner accident	(45)
Advances from insurance carriers related to Garner accident	37.7
(Gain) loss on sale of property, plant and equipment	2.9	-2.3
Gain on sale of businesses, intangibles and other assets	-14.3	-19.7
Distributions from affiliates greater (less) than current earnings	8.7	-0.1
Share-based payments expense	42	33.3
Non-cash interest income on payment-in-kind notes	-60.9	-18.8
Other items	28.8	-17.4
Change in operating assets and liabilities before effects of business acquisitions and dispositions:
Accounts receivable	-93.8	-28.8
Inventory	-5.7	-213.8
Prepaid expenses and other current assets	52.5	124.8
Accounts payable	72.4	36.5
Accrued payroll	69.9	-79.2
Other accrued liabilities	105	-90.5
Net cash flows from operating activities - continuing operations	1103.6	432.2
Net cash flows from operating activities - discontinued operations	2.9	-808.5
Net cash flows from operating activities	1106.5	-376.3
Cash flows from investing activities:
Additions to property, plant and equipment	-363.3	-321.1
Advances from insurance carriers related to Garner accident	17.3
Sale of property, plant and equipment	4.4	19.1
Sale of businesses, intangibles and other assets	21.7	29.7
Purchase of businesses and intangible assets	(3)	-80.3
Notes receivable and other items		1.2
Net cash flows from investing activities - continuing operations	-322.9	-351.4
Net cash flows from investing activities - discontinued operations	6.4	2258.6
Net cash flows from investing activities	-316.5	1907.2
Cash flows from financing activities:
Net short-term borrowings		-396.8
Issuance of long-term debt by variable interest entity, net of repayments		40
Repayment of long-term debt	-12.9	-61.1
Repurchase of ConAgra Foods common shares		(900)
Cash dividends paid	-257.9	-263.2
Exercise of stock options and issuance of other stock awards	18.7	6.1
Return of cash to minority interest holder		(20)
Other items	2.2	1.6
Net cash flows from financing activities - continuing operations	-249.9	-1593.4
Net cash flows from financing activities - discontinued operations
Net cash flows from financing activities	-249.9	-1593.4
Effect of exchange rate changes on cash and cash equivalents	2.3	(21)
Net change in cash and cash equivalents	542.4	-83.5
Discontinued operations cash activity included above:
Add: Cash balance included in assets held for sale at beginning of period		30.8
Cash and cash equivalents at beginning of period	243.2	140.9
Cash and cash equivalents at end of period	785.6	88.2

Summary of Significant Accounti

Summary of Significant Accounting Policies
	3 Months Ended Feb. 28, 2010
Summary of Significant Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The unaudited financial information reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position, and cash flows for the periods presented. The adjustments are of a normal recurring nature, except as otherwise noted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the ConAgra Foods, Inc. (the Company, we, us, or our) annual report on Form 10-K for the fiscal year ended May31, 2009. The results of operations for any quarter or partial fiscal year period are not necessarily indicative of the results to be expected for other periods or the full fiscal year. Basis of Consolidation The condensed consolidated financial statements include the accounts of ConAgra Foods, Inc. and all majority-owned subsidiaries. In addition, the accounts of all variable interest entities for which we have been determined to be the primary beneficiary are included in our condensed consolidated financial statements from the date such determination is made. All significant intercompany investments, accounts, and transactions have been eliminated. Investments in Unconsolidated Affiliates The investments in and the operating results of 50%-or-less-owned entities not required to be consolidated are included in the condensed consolidated financial statements on the basis of the equity method of accounting or the cost method of accounting, depending on specific facts and circumstances. We review our investments in unconsolidated affiliates for impairment whenever events or changes in business circumstances indicate that the carrying amount of the investments may not be fully recoverable. Evidence of a loss in value that is other than temporary might include the absence of an ability to recover the carrying amount of the investment, the inability of the investee to sustain an earnings capacity which would justify the carrying amount of the investment, or, where applicable, estimated sales proceeds which are insufficient to recover the carrying amount of the investment. Managements assessment as to whether any decline in value is other than temporary is based on our ability and intent to hold the investment and whether evidence indicating the carrying value of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. Management generally considers our investments in equity method investees to be strategic long-term investments. Therefore, management completes its assessments with a long-term viewpoint. If the fair value of the investment is determined to be less than the carrying value and the decline in value is considered to be other than temporary, an appropriate write-down is recorded based on the excess of the carrying value over the best estimate of fair value of the investment. Cash and Cash Equivalents Cash and all highly liquid investments with an original maturity of three months or less at the date of acquisition, including short-term time deposits and government a

Discontinued Operations and Div

Discontinued Operations and Divestitures
	3 Months Ended Feb. 28, 2010
Discontinued Operations and Divestitures [Abstract]
DISCONTINUED OPERATIONS AND DIVESTITURES	2. DISCONTINUED OPERATIONS AND DIVESTITURES Fernandos Operations During the first quarter of fiscal 2010, we completed the divestiture of the Fernandos foodservice business for proceeds of approximately $6.4million. Based on our estimate of proceeds from the sale of this business, we recognized impairment charges totaling $8.9million in the fourth quarter of fiscal 2009. We reflected the results of these operations as discontinued operations for all periods presented. The assets and liabilities of the divested Fernandos business have been reclassified as assets and liabilities held for sale within our consolidated balance sheets for all periods prior to the divestiture. Trading and Merchandising Operations On March27, 2008, we entered into an agreement with affiliates of Ospraie Special Opportunities Fund to sell our commodity trading and merchandising operations conducted by ConAgra Trade Group (previously principally reported as the Trading and Merchandising segment). The operations included the domestic and international grain merchandising, fertilizer distribution, agricultural and energy commodities trading and services, and grain, animal, and oil seed byproducts merchandising and distribution business. In June2008, the sale of the trading and merchandising operations was completed for before-tax proceeds of: 1) approximately $2.2billion in cash; net of transaction costs (including incentive compensation amounts due to employees due to accelerated vesting); 2) $550million (original principal amount) of payment-in-kind debt securities issued by the purchaser (the Notes) that were recorded at an initial estimated fair value of $479million; 3) a short-term receivable of $37million due from the purchaser; and 4) a four-year warrant to acquire approximately 5% of the issued common equity of the parent company of the divested operations, which has been recorded at an estimated fair value of $1.8million. We recognized an after-tax gain on the disposition of approximately $296million in the first three quarters of fiscal 2009. During fiscal 2009, we collected the $37million short-term receivable due from the purchaser. See Note 4 for further discussion on the Notes. We reflected the results of the divested trading and merchandising operations as discontinued operations for all periods presented. Summary of Operational Results The summary comparative financial results of the discontinued operations were as follows: Thirteen weeks ended Thirty-nine weeks ended February 28, February 22, February 28, February 22, 2010 2009 2010 2009 Net sales $ $ 9.6 $ 1.4 $ 235.9 Operating results from discontinued operations before income taxes 0.5 (9.6 ) 59.9 Gain from disposal of businesses 490.0 Income (loss)before income taxes 0.5 (9.6 ) 549.9 Income tax benefit (expense) 4.1 0.9 8.4 (217.3 ) Income (loss)from discontinued operations, net of tax $ 4.1 $ 1.4 $

Acquisitions

Acquisitions
	3 Months Ended Feb. 28, 2010
Acquisitions [Abstract]
ACQUISITIONS	3. ACQUISITIONS On September22, 2008, we acquired a 49.99% interest in Lamb Weston BSW, a potato processing venture with Ochoa Ag Unlimited Foods, Inc. (Ochoa), for approximately $46million in cash. Lamb Weston BSW subsequently distributed $20million of our initial investment to us. This venture is considered a variable interest entity and is consolidated in our financial statements (see Note 5). Approximately $19million of the purchase price was allocated to goodwill and approximately $11 million was allocated to brands, trademarks and other identifiable intangibles. This business is included in the Commercial Foods segment. On August1, 2008, we acquired Saroni Sugar Rice, Inc., a distribution company included in the Commercial Foods segment, for approximately $9million in cash plus assumed liabilities. Approximately $5million of the purchase price was allocated to brands, trademarks and other identifiable intangibles.

Payment in Kind Notes Receivabl

Payment in Kind Notes Receivable
	3 Months Ended Feb. 28, 2010
Payment-in Kind Notes Receivable [Abstract]
PAYMENT-IN-KIND NOTES RECEIVABLE	4. PAYMENT-IN-KIND NOTES RECEIVABLE In connection with the divestiture of the trading and merchandising operations, we received the Notes described in Note 2 that were recorded at an initial estimated fair value of $479million. The Notes were issued in three tranches: $99,990,000 original principal amount of 10.5% notes due June19, 2010; $200,035,000 original principal amount of 10.75% notes due June19, 2011; and $249,975,000 original principal amount of 11.0% notes due June19, 2012. The Notes permit payment of interest in cash or additional notes. The Notes may be redeemed in whole or in part prior to maturity at the option of the issuer of the Notes. Redemption is at par plus accrued interest. The Notes contain certain covenants that govern the issuers ability to make restricted payments and enter into certain affiliate transactions. The Notes also provide for the making of mandatory offers to repurchase upon certain change of control events involving the purchaser of the divested trading and merchandising operations, their co-investors, or their affiliates. In the third quarter of fiscal 2009, we received a cash interest payment on the Notes of $30million from the purchaser. All subsequent interest payments have been made in-kind. The Note due June19, 2010, which is classified within prepaid expenses and other current assets, had a carrying value of $111million at February28, 2010. The Notes due June19, 2011 and June19, 2012, which are classified as other assets, had a total carrying value of $472million at February28, 2010. Based on market interest rates of comparable instruments provided by third-party advisors, we estimated the fair market value of the Notes was $606million at February28, 2010.

Variable Interest Entities

Variable Interest Entities
	3 Months Ended Feb. 28, 2010
Variable Interest Entities [Abstract]
VARIABLE INTEREST ENTITIES	5. VARIABLE INTEREST ENTITIES As discussed in Note 3, in September2008, we entered into a potato processing venture, Lamb Weston BSW. We provide all sales and marketing services to the venture. Commencing on June1, 2018, or on an earlier date under certain circumstances, we have a contractual right to purchase the remaining equity interest in Lamb Weston BSW from Ochoa (the call option). Commencing on July30, 2011, or on an earlier date under certain circumstances, we are subject to a contractual obligation to purchase all of Ochoas equity investment in Lamb Weston BSW at the option of Ochoa (the put option). The purchase prices under the call option and the put option (the options) are based on the book value of Ochoas equity interest at the date of exercise, as modified by an agreed-upon rate of return for the holding period of the investment balance. The agreed-upon rate of return varies depending on the circumstances under which any of the options are exercised. We have determined that the venture is a variable interest entity and that we are the primary beneficiary of the entity. Accordingly, we consolidate the financial statements of the venture. In the first quarter of fiscal 2010, we established a line of credit with Lamb Weston BSW, under which we will lend up to $1.5million to Lamb Weston BSW, due on August24, 2010. Borrowings under the line of credit, which are subordinate to Lamb Weston BSWs borrowings from a syndicate of banks, bear interest at a rate of LIBOR plus 3%. Our variable interests in this venture include an equity investment in the venture, the options, and the line of credit advanced to Lamb Weston BSW. Other than our equity investment in the venture, the line of credit extended to the venture, and our sales and marketing services provided to the venture, we have not provided financial support to this entity. Our maximum exposure to loss as a result of our involvement with this venture is equal to our equity investment in the venture and advances under the line of credit extended to the venture. We also consolidate the assets and liabilities of several entities from which we lease corporate aircraft. Each of these entities has been determined to be a variable interest entity and we have been determined to be the primary beneficiary of each of these entities. Under the terms of the aircraft leases, we provide guarantees to the owners of these entities of a minimum residual value of the aircraft at the end of the lease term. We also have fixed price purchase options on the aircraft leased from these entities. Our maximum exposure to loss from our involvement with these entities is limited to the difference between the fair value of the leased aircraft and the amount of the residual value guarantees at the time we terminate the leases (the leases expire between December2011 and October2012). The total amount of the residual value guarantees for these aircraft at the end of the respective lease terms is $38.4million. Due to the consolidation of these variable interest entities, we reflected in our balance sheets: February 28, May 31, February 22, 2010 2009

Garner, North Carolina Accident

Garner, North Carolina Accident
	3 Months Ended Feb. 28, 2010
Garner, North Carolina Accident [Abstract]
GARNER, NORTH CAROLINA ACCIDENT	6. GARNER, NORTH CAROLINA ACCIDENT On June9, 2009, an accidental explosion occurred at our manufacturing facility in Garner, North Carolina. This facility was the primary production facility for our Slim Jim branded meat snacks. On June13, 2009, the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives announced its determination that the explosion was the result of an accidental natural gas release, and not a deliberate act. We maintain comprehensive property (including business interruption), workers compensation, and general liability insurance policies with very significant loss limits that we believe will provide substantial and broad coverage for the anticipated losses arising from this accident. The costs incurred and insurance recoveries recognized, to date, are reflected in our condensed consolidated financial statements, as follows: Thirteen weeks ended February 28, 2010 Thirty-nine weeks ended February 28, 2010 Consumer Consumer Foods Corporate Total Foods Corporate Total Cost of goods sold: Inventory write-downs and other costs $ 0.9 $ $ 0.9 $ 11.5 $ $ 11.5 Selling, general and administrative expenses: Fixed asset impairments, clean-up costs, etc. $ 2.3 $ 0.9 $ 3.2 $ 35.1 $ 2.2 $ 37.3 Insurance recoveries recognized (4.0 ) (4.0 ) (45.0 ) (45.0 ) Total selling, general and administrative expenses $ (1.7 ) $ 0.9 $ (0.8 ) $ (9.9 ) $ 2.2 $ (7.7 ) Net loss (gain) $ (0.8 ) $ 0.9 $ 0.1 $ 1.6 $ 2.2 $ 3.8 The amounts in the table, above, exclude lost profits due to the interruption of the business. We are currently unable to fully access the portion of the facility that was damaged in the explosion. As a result, we are unable to ascertain whether or not certain equipment located in the facility, with a book value of approximately $12million, is impaired. We may be required to recognize further impairment charges for some, or all, of this amount when we are able to fully access the site and ascertain the status of the equipment. We expect to be able to ascertain the status of the equipment in the fourth quarter of fiscal 2010. We expect to be reimbursed by our insurers for the cost of replacing these assets in the event that they are determined to be impaired. At February28, 2010, we reflected approximately $2million of expected insurance recoveries within accounts receivable in our condensed consolidated balance sheet. Through February28, 2010, we had received payment advances from the insurers of approximately $55million for our initial insurance claims for this matter. As of April2, 2010, we have received payment advances in excess of $75 million from insurers. Based on managements current assessment of

Goodwill and Other Identifiable

Goodwill and Other Identifiable Intangible Assets
	3 Months Ended Feb. 28, 2010
Goodwill and Other Identifiable Intangible Assets [Abstract]
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS	7. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS The change in the carrying amount of goodwill for the first three quarters of fiscal 2010 was as follows: Consumer Commercial Foods Foods Total Balance as of May31, 2009 $ 3,354.3 $ 137.0 $ 3,491.3 Translation and other 3.1 3.1 Balance as of February28, 2010 $ 3,357.4 $ 137.0 $ 3,494.4 Other identifiable intangible assets were as follows: February 28, 2010 May 31, 2009 February 22, 2009 Gross Gross Gross Carrying Accumulated Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization Amount Amortization Non-amortizing intangible assets $ 774.0 $ $ 778.2 $ $ 778.3 $ Amortizing intangible assets 83.5 28.8 80.5 23.4 77.6 21.5 $ 857.5 $ 28.8 $ 858.7 $ 23.4 $ 855.9 $ 21.5 Non-amortizing intangible assets are composed of brands and trademarks. Amortizing intangible assets, carrying a weighted average life of approximately 13years, are principally composed of licensing arrangements and customer relationships. Based on amortizing assets recognized in our balance sheet as of February28, 2010, amortization expense is estimated to be approximately $6.1million for each of the next five years.

Derivative Financial Instrument

Derivative Financial Instruments
	3 Months Ended Feb. 28, 2010
Derivative Financial Instruments [Abstract]
DERIVATIVE FINANCIAL INSTRUMENTS	8. DERIVATIVE FINANCIAL INSTRUMENTS Our operations are exposed to market risks from adverse changes in commodity prices affecting the cost of raw materials and energy, foreign currency exchange rates, and interest rates. In the normal course of business, these risks are managed through a variety of strategies, including the use of derivatives. Commodity futures and options contracts are used from time to time to economically hedge commodity input prices on items such as natural gas, vegetable oils, proteins, dairy, grains, and electricity. Generally, we economically hedge a portion of our anticipated consumption of commodity inputs for periods of up to 36months. We may enter into longer-term economic hedges on particular commodities if deemed appropriate. As of February28, 2010, we had economically hedged certain portions of our anticipated consumption of commodity inputs using derivative instruments with expiration dates through July2011. In order to reduce exposures related to changes in foreign currency exchange rates, when deemed prudent, we enter into forward exchange or options contracts for transactions denominated in a currency other than the applicable functional currency. This includes, but is not limited to, hedging against foreign currency risk in purchasing inventory and capital equipment, sales of finished goods, and future settlement of foreign-denominated assets and liabilities. As of February 28, 2010, we had economically hedged certain portions of our foreign currency risk in anticipated transactions using derivative instruments with expiration dates through December2012. From time to time, we may use derivative instruments, including interest rate swaps, to reduce exposures related to changes in interest rates. No interest rate derivatives were outstanding during the periods presented. In prior periods, we have designated certain commodity-based derivatives, foreign currency derivatives, and interest rate derivatives as cash flow hedges qualifying for hedge accounting treatment. Economic Hedges of Forecasted Cash Flows Many of our derivatives do not qualify for, and we are not currently designating any 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. Other Derivative Activity (Primarily in the Milling Operations) We also use derivative instruments within our milling operations, which are part of the Commercial Foods segment. Derivative instruments used to economically hedge commodity inventories and forward purchase and sales contracts are marked-to-market such that realized and unrealized gains and losses are immediately included in operating results. The underlying inventory and forward contracts being hedged are also marked

Share-Based Payments

Share-Based Payments
	3 Months Ended Feb. 28, 2010
Share-Based Payments [Abstract]
SHARE-BASED PAYMENTS	9. SHARE-BASED PAYMENTS For the thirteen and thirty-nine weeks ended February28, 2010, we recognized total stock-based compensation expense (including stock options, restricted stock units, performance shares, and restricted cash) of $15.3million and $42.0million, respectively. For the thirteen and thirty-nine weeks ended February22, 2009, we recognized total stock-based compensation expense of $10.5 million and $33.3million, respectively. During the first three quarters of fiscal 2010, we granted 1.1million restricted stock units at a weighted average grant date price of $19.22, 7.9million stock options at a weighted average exercise price of $19.17, and 0.5million performance shares at a weighted average grant date price of $19.22. The performance shares are granted to selected executives and other key employees with vesting contingent upon meeting various Company-wide performance goals. The performance goals are based upon our earnings before interest and taxes and our return on average invested capital measured over a defined performance period. The awards actually earned will range from zero to three hundred percent of the targeted number of performance shares and will be paid in shares of common stock. Subject to limited exceptions set forth in the performance share plan, any shares earned will be distributed at the end of the performance period. The value of the performance shares granted in fiscal 2009 and 2010 is adjusted based upon the market price of our stock at the end of each reporting period and amortized as compensation expense over the vesting period. The weighted average Black-Scholes assumptions for stock options granted during the first three quarters of fiscal 2010 were as follows: Expected volatility (%) 22.94 Dividend yield (%) 3.77 Risk-free interest rate (%) 2.31 Expected life of stock option (years) 4.75 The weighted average value of stock options granted during the first three quarters of fiscal 2010 was $2.73 per option, based upon a Black-Scholes methodology.

Earnings Per Share

Earnings Per Share
	3 Months Ended Feb. 28, 2010
Earnings Per Share [Abstract]
EARNINGS PER SHARE	10. EARNINGS PER SHARE Basic earnings per share is calculated on the basis of weighted average outstanding common shares. Diluted earnings per share is computed on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, restricted stock awards, and other dilutive securities. The following table reconciles the income and average share amounts used to compute both basic and diluted earnings per share: Thirteen weeks ended Thirty-nine weeks ended February 28, February 22, February 28, February 22, 2010 2009 2010 2009 Net income available to ConAgra Foods, Inc. common stockholders: Income from continuing operations attributable to ConAgra Foods, Inc. common stockholders $ 225.5 $ 191.8 $ 636.4 $ 471.1 Income (loss)from discontinued operations, net of tax, attributable to ConAgra Foods, Inc. common stockholders 4.1 1.4 (1.2 ) 332.6 Net income attributable to ConAgra Foods, Inc. common stockholders $ 229.6 $ 193.2 $ 635.2 $ 803.7 Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated (0.8 ) (1.4 ) Net income available to ConAgra Foods, Inc. common stockholders $ 228.8 $ 193.2 $ 633.8 $ 803.7 Weighted average shares outstanding: Basic weighted average shares outstanding 444.0 447.1 443.5 455.1 Add: Dilutive effect of stock options, restricted stock awards, and other dilutive securities 4.3 2.6 2.9 2.5 Diluted weighted average shares outstanding 448.3 449.7 446.4 457.6 For the third quarter and first three quarters of fiscal 2010, there were 13.1million and 29.5 million stock options outstanding, respectively, that were excluded from the computation of shares contingently issuable upon exercise of the stock options because exercise prices exceeded the average market value of our common stock during the period. For the third quarter and first three quarters of fiscal 2009, there were 32.9million and 33.5million stock options, respectively, excluded from the calculation.

Inventories

Inventories
	3 Months Ended Feb. 28, 2010
Inventories [Abstract]
INVENTORIES	11. INVENTORIES The major classes of inventories were as follows: February 28, May 31, February 22, 2010 2009 2009 Raw materials and packaging $ 577.0 $ 636.3 $ 730.6 Work in process 187.9 105.0 110.2 Finished goods 1,171.5 1,202.1 1,232.0 Supplies and other 84.8 81.7 76.5 $ 2,021.2 $ 2,025.1 $ 2,149.3

Restructuring

Restructuring
	3 Months Ended Feb. 28, 2010
Restructuring [Abstract]
RESTRUCTURING	12. RESTRUCTURING 2008-2009 Plan During fiscal 2008, our board of directors approved a plan (2008-2009 plan) recommended by executive management to improve the efficiency of our Consumer Foods operations and related functional organizations and to streamline our international operations to reduce manufacturing and selling, general, and administrative costs. The 2008-2009 plan, which was substantially completed by the end of fiscal 2009, included the reorganization of the Consumer Foods operations, the integration of the international headquarters functions into our domestic business, and exiting a number of international markets. The total cost of this plan was $36.4million, of which $0.1 million and $9.3million were recorded during the first three quarters of fiscal 2010 and 2009, respectively. No significant expenses were recorded in the third quarter of fiscal 2010 or fiscal 2009. Expenses associated with this restructuring plan included, but were not limited to, inventory write-downs, severance and related costs, and plan implementation costs (e.g., consulting and employee relocation, etc.). Approximately $0.1million, $2.7million, and $5.1million of liabilities related to this plan remained outstanding at February28, 2010, May31, 2009, and February22, 2009, respectively. Included in the above costs are $26.5million of charges which have resulted in cash outflows and $9.9million of non-cash charges. 2006-2008 Plan As part of the 2006-2008 restructuring plan, we began construction of a new production facility in fiscal 2008. We are currently evaluating the best use of this facility, the construction of which is partially complete. We believe, based on our current assessment of likely scenarios, the carrying value of this facility ($39.3million at February28, 2010) is recoverable. In the event we determine that the future use of the new facility will not result in recovery of the recorded value of the asset, an impairment charge would be required.

Income Taxes

Income Taxes
	3 Months Ended Feb. 28, 2010
Income Taxes [Abstract]
INCOME TAXES	13. INCOME TAXES Income tax expense from continuing operations for the third quarter of fiscal 2010 and 2009 was $104.8million and $92.0million, respectively. Income tax expense from continuing operations for the first three quarters of fiscal 2010 and 2009 was $313.2million and $242.6million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income from continuing operations, inclusive of equity method investment earnings) from continuing operations was approximately 32% and 33% for the third quarter and first three quarters of fiscal 2010, respectively, and 32% and 34% for the third quarter and first three quarters of fiscal 2009, respectively. The effective tax rate for the third quarter of fiscal 2010 reflected the benefit of favorable audit settlements and changes in estimates. The effective tax rate for the first three quarters of fiscal 2010 reflected a benefit of approximately 1% from certain income tax credits and deductions identified in the current period related to prior periods. The amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits, was $76.4million as of February28, 2010, $74.6million as of May31, 2009, and $68.9million as of February22, 2009. The net amount of unrecognized tax benefits at February28, 2010, May31, 2009, and February22, 2009 that, if recognized, would impact the Companys effective tax rate was $49.2million, $51.0million, and $45.9million, respectively. Recognition of these tax benefits would have a favorable impact on the Companys effective tax rate. The gross unrecognized tax benefits exclude related liabilities for gross interest and penalties of $16.5million, $14.5million, and $13.3million as of February28, 2010, May31, 2009, and February22, 2009, respectively. We estimate that it is reasonably possible that the amount of gross unrecognized tax benefits will decrease by $8million to $12million over the next twelve months due to various federal, state, and foreign audit settlements and the expiration of statutes of limitations.

Contingencies

Contingencies
	3 Months Ended Feb. 28, 2010
Contingencies [Abstract]
CONTINGENCIES	14. CONTINGENCIES In fiscal 1991, we acquired Beatrice Company (Beatrice). As a result of the acquisition and the significant pre-acquisition contingencies of the Beatrice businesses and its former subsidiaries, our consolidated post-acquisition financial statements reflect liabilities associated with the estimated resolution of these contingencies. These include various litigation and environmental proceedings related to businesses divested by Beatrice prior to its acquisition by the Company. The litigation includes several public nuisance and personal injury suits against a number of lead paint and pigment manufacturers, including ConAgra Grocery Products and the Company as alleged successors to W. P. Fuller Co., a lead paint and pigment manufacturer owned and operated by Beatrice until 1967. Although decisions favorable to us have been rendered in Rhode Island, New Jersey, Wisconsin, and Ohio, we remain a defendant in active suits in Illinois and California. The Illinois suit seeks class-wide relief in the form of medical monitoring for elevated levels of lead in blood. In California, a number of cities and counties have joined in a consolidated action seeking abatement of the alleged public nuisance. The environmental proceedings include litigation and administrative proceedings involving Beatrices status as a potentially responsible party at 35 Superfund, proposed Superfund, or state-equivalent sites; these sites involve locations previously owned or operated by predecessors of Beatrice that used or produced petroleum, pesticides, fertilizers, dyes, inks, solvents, PCBs, acids, lead, sulfur, tannery wastes, and/or other contaminants. Beatrice has paid or is in the process of paying its liability share at 32 of these sites. Reserves for these matters have been established based on our best estimate of the undiscounted remediation liabilities, which estimates include evaluation of investigatory studies, extent of required clean-up, the known volumetric contribution of Beatrice and other potentially responsible parties, and our experience in remediating sites. The reserves for Beatrice environmental matters totaled $71.0million as of February28, 2010, a majority of which relates to the Superfund and state-equivalent sites referenced above. The reserve for Beatrice environmental matters reflects a reduction in pre-tax expense of approximately $15.0million made in the third quarter of fiscal 2010 due to favorable regulatory developments at one of the sites. We expect expenditures for Beatrice environmental matters to continue for up to 20years. In limited situations, we will guarantee an obligation of an unconsolidated entity. At the time in which we initially provide such a guarantee, we assess the risk of financial exposure to us under these agreements. We consider the credit-worthiness of the guaranteed party, the value of any collateral pledged against the related obligation, and any other factors that may mitigate our risk (e.g., letters of credit from a financial institution). We periodically monitor market and entity-specific conditions that may result in a change of our assessment of its risk of loss under these agreemen

Pension and Postretirement Bene

Pension and Postretirement Benefits
	3 Months Ended Feb. 28, 2010
Pension and Postretirement Benefits [Abstract]
PENSION AND POSTRETIREMENT BENEFITS	15. PENSION AND POSTRETIREMENT BENEFITS We have defined benefit retirement plans (plans) for eligible salaried and hourly employees. Benefits are based on years of credited service and average compensation or stated amounts for each year of service. We also sponsor postretirement plans which provide certain medical and dental benefits (other postretirement benefits) to qualifying U.S. employees. Components of pension benefit and other postretirement benefit costs included: Pension Benefits Thirteen weeks ended Thirty-nine weeks ended February 28, February 22, February 28, February 22, 2010 2009 2010 2009 Service cost $ 12.5 $ 12.7 $ 37.5 $ 38.3 Interest cost 37.0 35.3 111.0 105.9 Expected return on plan assets (40.3 ) (39.7 ) (120.9 ) (118.9 ) Amortization of prior service cost 0.8 0.7 2.4 2.3 Settlement cost 1.9 Recognized net actuarial loss 1.0 0.6 2.9 1.6 Benefit cost - Company plans 11.0 9.6 34.8 29.2 Pension benefit cost - multi-employer plans 2.0 1.7 7.6 6.5 Total benefit cost $ 13.0 $ 11.3 $ 42.4 $ 35.7 Postretirement Benefits Thirteen weeks ended Thirty-nine weeks ended February 28, February 22, February 28, February 22, 2010 2009 2010 2009 Service cost $ 0.1 $ 0.2 $ 0.3 $ 0.6 Interest cost 4.5 5.7 13.5 17.2 Expected return on plan assets (0.1 ) (0.1 ) (0.3 ) (0.2 ) Amortization of prior service cost (2.4 ) (2.8 ) (7.1 ) (8.4 ) Recognized net actuarial loss 2.5 7.4 Total cost - Company plans $ 2.1 $ 5.5 $ 6.4 $ 16.6 During the third quarter and first three quarters of fiscal 2010, we contributed $2.6million and $19.7million, respectively, to our pension plans and contributed $7.8million and $23.0million, respectively, to our other postretirement plans. Based upon the current funded status of the plans and the current interest rate environment, we anticipate making further contributions of approximately $3.0million to our pension plans for the remainder of fiscal 2010. We anticipate making further contributions of $10.0million to our other postretirement plans during the remainder of fiscal 2010. These estimates are based on current tax laws, plan asset performance, and liability assumptions, which are subject to change.

Long-Term Debt

Long-Term Debt
	3 Months Ended Feb. 28, 2010
Long-Term Debt [Abstract]
LONG-TERM DEBT	16. LONG-TERM DEBT As of May31, 2009 and February22, 2009, $9.2million and $300.0million, respectively, of senior debt due August2027 was included in current installments of long-term debt due to the existence of a put option that was exercisable by the holders of this senior debt from June1, 2009 to July1, 2009. As part of debt refinancing activities in the fourth quarter of fiscal 2009, we repaid $290.8 million of this senior debt. We reclassified the amount not put by the holders to senior long-term debt in the first quarter of fiscal 2010, when the put option expired. We consolidate the financial statements of Lamb Weston BSW. During the second quarter of fiscal 2009, Lamb Weston BSW entered into a term loan agreement with a bank under which it borrowed $20.0 million of senior debt at an annual interest rate of 4.34% due September2018. During the third quarter of fiscal 2009, Lamb Weston BSW restructured and repaid this debt and entered into a term loan agreement with a bank under which it borrowed $40.0million of variable interest rate debt due in June2018.

Share Repurchase Programs

Share Repurchase Programs
	3 Months Ended Feb. 28, 2010
Share Repurchase Programs [Abstract]
SHARE REPURCHASE PROGRAMS	17. SHARE REPURCHASE PROGRAMS During the third quarter of fiscal 2010, the Board of Directors approved a $500million share repurchase program with no expiration date. We had not repurchased any shares under this program as of February28, 2010. We completed an accelerated share repurchase program during fiscal 2009. We paid $900million and received 38.4million shares in the first quarter of fiscal 2009 when the program was initiated, and an additional 5.6million shares in the fourth quarter of fiscal 2009 under this program.

Fair Value Measurements

Fair Value Measurements
	3 Months Ended Feb. 28, 2010
Fair Value Measurements [Abstract]
FAIR VALUE MEASUREMENTS	18. FAIR VALUE MEASUREMENTS FASB guidance on fair value measurements, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements, was effective as of the beginning of our fiscal 2009 for our financial assets and liabilities, as well as for other assets and liabilities that are carried at fair value on a recurring basis in our consolidated financial statements. As of the beginning of fiscal 2010, we adopted additional new guidance relating to nonrecurring fair value measurement requirements for nonfinancial assets and liabilities. These include long-lived assets, goodwill, asset retirement obligations, and certain investments. These items are recognized at fair value when they are considered to be other than temporarily impaired. In the first three quarters of fiscal 2010, no material adjustments were made to assets and liabilities measured at fair value on a nonrecurring basis. FASB 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 following table presents our financial assets and liabilities measured at fair value based upon the level within the fair value hierarchy in which the fair value measurements fall, as of February 28, 2010: Level 1 Level 2 Level 3 Total Assets: Derivative assets $ 6.4 $ 39.0 $ $ 45.4 Available for sale securities 1.7 1.7 Deferred compensation assets 6.6 6.6 Total assets $ 14.7 $ 39.0 $ $ 53.7 Liabilities: Derivative liabilities $ 0.2 $ 11.7 $ $ 11.9 Deferred and share-based compensation liabilities 22.1 22.1 Total liabilities $ 22.3 $ 11.7 $ $ 34.0 The carrying amount of long-term debt (including current installments) was $3.5billion as of February28, 2010. Based on current market rates provided primarily by outside investment bankers, the fair value of this debt at February28, 2010 was estimated at $3.9billion.

Business Segments and Related I

Business Segments and Related Information
	3 Months Ended Feb. 28, 2010
Business Segments and Related Information [Abstract]
BUSINESS SEGMENTS AND RELATED INFORMATION	19. BUSINESS SEGMENTS AND RELATED INFORMATION We report our operations in two reporting segments: Consumer Foods and Commercial Foods. The Consumer Foods reporting segment includes branded, private label, and customized food products, which are sold in various retail and foodservice channels, principally in North America. The products include a variety of categories (meals, entrees, condiments, sides, snacks, and desserts) across frozen, refrigerated, and shelf-stable temperature classes. The Commercial Foods reporting segment includes commercially branded foods and ingredients, which are sold principally to foodservice, food manufacturing, and industrial customers. The Commercial Foods segments primary products include: specialty potato products, milled grain ingredients, a variety of vegetable products, seasonings, blends, and flavors which are sold under brands such as Lamb Weston, ConAgra Mills, Gilroy Foods Flavors, and Spicetec. During the first quarter of fiscal 2010, we completed the transition of the direct management of the Consumer Foods reporting segment from the Chief Executive Officer to the Consumer Foods President position. In conjunction with this organizational change, beginning in the first quarter of fiscal 2010, we aligned our segment reporting to be consistent with the manner in which our operating results are presented to, and reviewed by, our Chief Executive Officer. All prior periods have been recast to reflect these changes. During the first quarter of fiscal 2010, we transferred the management of the Alexia frozen food operations from the Consumer Foods segment to the Commercial Foods segment. Segment results have been recast to reflect this change. **** Intersegment sales have been recorded at amounts approximating market. Operating profit for each of the primary segments is based on net sales less all identifiable operating expenses. General corporate expense, net interest expense, and income taxes have been excluded from segment operations. Thirteen weeks ended Thirty-nine weeks ended February 28, February 22, February 28, February 22, 2010 2009 2010 2009 Net sales Consumer Foods $ 2,034.4 $ 1,990.8 $ 5,972.6 $ 5,857.1 Commercial Foods 1,062.4 1,134.2 3,258.2 3,576.1 Total net sales $ 3,096.8 $ 3,125.0 $ 9,230.8 $ 9,433.2 Operating profit Consumer Foods $ 306.3 $ 244.6 $ 886.2 $ 682.1 Commercial Foods 148.9 141.1 449.4 432.7 Total operating profit $ 455.2 $ 385.7 $ 1,335.6 $ 1,114.8 Equity method investment earnings Consumer Foods $ 1.0 $ 0.3 $ 2.2 $ 2.4 Commercial Foods 1.9 10.8 15.5 11.5 Total equity method investment earnings $ 2.9 $ 11.1 $ 17.7 $ 13.9 Operating profit plus equity method investment earnings