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<div style="font-family: 'Times New Roman',Times,serif">  <div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b> </div> <div align="left"> </div> <div align="center" style="font-size: 10pt"><b></b></div> <div align="center" style="font-size: 10pt"><b></b></div> <div align="center" style="font-size: 10pt"><b></b></div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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 May 31, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The results of operations for any quarter or a partial fiscal year period are not necessarily indicative of the results to be expected for other periods or the full fiscal year. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Basis of Consolidation </i></b> – 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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Investments in Unconsolidated Affiliates </i></b> – 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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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. Management’s 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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Cash and Cash Equivalents </i></b> – 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 agency and corporate obligations, are classified as cash and cash equivalents. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Shipping and Handling </i></b> – Amounts billed to customers related to shipping and handling are included in net sales. Shipping and handling costs are included in cost of goods sold. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Comprehensive Income </i></b> – Comprehensive income includes net income, currency translation adjustments, certain derivative-related activity, changes in the value of available-for-sale investments, and changes in prior service cost and net actuarial gains (losses) from pension and postretirement health care plans. We generally deem our foreign investments to be essentially permanent in nature and we do not provide for taxes on currency translation adjustments arising from converting the investment in a foreign currency to U.S. dollars. When we determine that a foreign investment, as well as undistributed earnings, are no longer permanent in nature, estimated taxes are provided for the related deferred tax liability (asset), if any, resulting from currency translation adjustments. We reclassified $2.0 million of foreign currency translation net losses to net income due to the disposal or substantial liquidation of foreign subsidiaries in the first quarter of fiscal 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following details the income tax expense (benefit) on components of other comprehensive income: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="92%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Thirteen weeks ended</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>August 30,</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>August 24,</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Unrealized losses on available-for-sale securities </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(0.1 </td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(0.2 </td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Pension and postretirement healthcare liabilities </div></td> <td> </td> <td> </td> <td align="right">0.2</td> <td> </td> <td> </td> <td> </td> <td align="right">2.9</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="left">$</td> <td align="right">0.1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2.7</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="margin-top: 0pt; font-size: 10pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"> <b><i>Accounting Changes </i></b> – In December 2007, the FASB issued SFAS No. 160, <i>Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51</i>(“SFAS No. 160”). This statement amends ARB No. 51 to establish accounting and reporting standards for the noncontrolling interest (minority interest) in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 requires that noncontrolling interests in subsidiaries be reported as a component of stockholders’ equity in the condensed consolidated balance sheets. However, pursuant to EITF Topic D-98, securities of an issuer that are redeemable at the option of the holder continue to be classified outside stockholders’ equity. The noncontrolling interest holder in the potato processing venture, Lamb Weston BSW, LLC (“Lamb Weston BSW” or the “venture”), has the contractual right to put its equity interest to us at a future date. Accordingly, the noncontrolling interest in this venture is classified within other noncurrent liabilities in our condensed consolidated balance sheets. SFAS No. 160 also requires that earnings or losses attributed to the noncontrolling interests be reported as part of consolidated earnings and not as a separate component of income or expense and requires disclosure of the attribution of consolidated earnings to the controlling and noncontrolling interests on the face of the condensed consolidated statement of earnings. We adopted the provisions of this standard on a prospective basis, except for the presentation and disclosure requirements, as of the beginning of our fiscal 2010. We adopted the presentation and disclosure requirements of this standard retrospectively in the first quarter of fiscal 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In December 2007, the FASB issued SFAS No. 141 (revised 2007), <i>Business Combinations </i>(“SFAS No. 141(R)”). SFAS No. 141(R) establishes principles and requirements for how an acquirer in a business combination recognizes and measures the assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree. The provisions of SFAS No. 141(R) are effective for our business combinations occurring on or after June 1, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In February 2008, the FASB issued FASB Staff Position (“FSP”) 157-2, <i>Effective Date of FASB Statement No. 157 </i>(“FSP 157-2”), which delayed the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We adopted the provisions of FSP 157-2 related to nonfinancial assets and liabilities effective in the first quarter of our fiscal 2010. The adoption of the provisions of SFAS 157 related to nonfinancial assets and nonfinancial liabilities did not have a material impact on our condensed consolidated financial statements. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In June 2008, the FASB issued FSP EITF 03-6-1, <i>Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities </i>(“FSP EITF 03-6-1”). FSP EITF 03-6-1 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and must be included in the computation of earnings per share under the two-class method. FSP EITF 03-6-1 was effective as of the beginning of our fiscal 2010. The adoption of this FSP did not have a material impact on our financial statements. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Recently Issued Accounting Pronouncements </i></b> – In June 2009, the FASB issued SFAS No. 167, <i>Amendments to FASB Interpretation No. 46(R) </i>(“SFAS No. 167”). This statement amends FASB Interpretation No. 46(R) to require an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics: the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance, and the obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. The provisions of this statement are effective as of the beginning of our fiscal 2011. Earlier application is prohibited. We are currently evaluating the impact of adopting SFAS No. 167. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Use of Estimates </i></b> – Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect reported amounts of assets, liabilities, revenues, and expenses as reflected in the condensed consolidated financial statements. Actual results could differ from these estimates. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Reclassifications </i></b> – Certain prior year amounts have been reclassified to conform with current year presentation. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Subsequent Events </i></b> – We have performed an evaluation of subsequent events through October 7, 2009, the date we issued these financial statements. Based on our evaluation, no material events have occurred requiring disclosure. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="margin-top: 0pt; font-size: 10pt"> <b> </b> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>2.      DISCONTINUED OPERATIONS AND DIVESTITURES</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Fernando’s</i><sup style="font-size: 85%; vertical-align: text-top">®</sup> <i>Operations</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of fiscal 2010, we completed the divestiture of the <i>Fernando’s</i><sup style="font-size: 85%; vertical-align: text-top">®</sup> foodservice brand for proceeds of approximately $6.4 million. Based on our estimate of proceeds from the sale of this business, we recognized impairment charges totaling $8.9 million in the fourth quarter of fiscal 2009. No further significant gain or loss resulted from the completion of the divestiture in the first quarter of fiscal 2010. We reflected the results of these operations as discontinued operations for all periods presented. The assets and liabilities of the divested <i>Fernando’s</i><sup style="font-size: 85%; vertical-align: text-top">®</sup> business have been reclassified as assets and liabilities held for sale within our consolidated balance sheets for all periods prior to the divestiture. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Trading and Merchandising Operations</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On March 27, 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 June 2008, the sale of the trading and merchandising operations was completed for before-tax proceeds of: 1) approximately $2.2 billion in cash; net of transaction costs (including incentive compensation amounts due to employees due to accelerated vesting), 2) $550 million (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 $479 million; 3) a short-term receivable of $37 million 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 $1.8 million. We recognized an after-tax gain on the disposition of approximately $299 million in the first quarter of fiscal 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During fiscal 2009, we collected the $37 million short-term receivable due from the purchaser. See Note 4 for further discussion on the Notes. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We reflected the results of the divested trading and merchandising operations as discontinued operations for all periods presented. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Summary of Operational Results</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The summary comparative financial results of the discontinued operations were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="70%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Thirteen weeks ended</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>August 30,</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>August 24,</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net sales </div></td> <td> </td> <td align="left">$</td> <td align="right">1.3</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">213.5</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Operating results from discontinued operations before income taxes </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(2.1</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">57.5</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Gain from disposal of businesses </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">488.0</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Income (loss) before income taxes </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(2.1</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">545.5</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Income tax benefit (expense) </div></td> <td> </td> <td> </td> <td align="right">0.8</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(210.7</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Income (loss) from discontinued operations, net of tax </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(1.3</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">334.8</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The assets and liabilities classified as held for sale as of May 31, 2009 and August 24, 2008 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="92%">  <tr valign="bottom"> <td width="68%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>May 31,</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>August 24,</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Inventories </div></td> <td> </td> <td align="left">$</td> <td align="right">4.9</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">6.0</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Current assets held for sale </div></td> <td> </td> <td align="left">$</td> <td align="right">4.9</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">6.0</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Property, plant and equipment, net </div></td> <td> </td> <td align="left">$</td> <td align="right">1.6</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7.4</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Goodwill and other intangibles </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">3.2</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Noncurrent assets held for sale </div></td> <td> </td> <td align="left">$</td> <td align="right">1.6</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">10.6</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Other Divestitures</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In July 2008, we completed the sale of our <i>Pemmican</i><sup style="font-size: 85%; vertical-align: text-top">®</sup> beef jerky business for proceeds of approximately $29.4 million, resulting in a pre-tax gain of approximately $19.4 million ($10.6 million, after-tax), reflected in selling, general and administrative expenses. Due to our continuing involvement with the <i>Pemmican</i><sup style="font-size: 85%; vertical-align: text-top">®</sup> business through providing sales and distribution services, the results of operations of the <i>Pemmican</i><sup style="font-size: 85%; vertical-align: text-top">®</sup> business have not been reclassified as discontinued operations. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="margin-top: 0pt; font-size: 10pt"> <b> </b> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>3.      ACQUISITIONS</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On September 22, 2008, we acquired a 49.99% interest in Lamb Weston BSW, a potato processing venture with Ochoa Ag Unlimited Foods, Inc. (“Ochoa”), for approximately $46 million in cash. Lamb Weston BSW subsequently distributed $20 million 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 $19 million 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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On August 1, 2008, we acquired Saroni Sugar & Rice, Inc., a distribution company included in the Commercial Foods segment, for approximately $9 million in cash plus assumed liabilities. Approximately $5 million of the purchase price was allocated to brands, trademarks and other identifiable intangibles. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>4.      PAYMENT-IN-KIND NOTES RECEIVABLE</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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 $479 million. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Notes were issued in three tranches: $99,990,000 original principal amount of 10.5% notes due June 19, 2010; $200,035,000 original principal amount of 10.75% notes due June 19, 2011; and $249,975,000 original principal amount of 11.0% notes due June 19, 2012. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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 issuer’s 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, their co-investors, or their affiliates. In the third quarter of fiscal 2009, we received a cash interest payment on the Notes of $30 million from the purchaser. The Note due June 19, 2010, which is classified within prepaid expenses and other current assets, had a carrying value of $104 million at August 30, 2009. The Notes due June 19, 2011 and June 19, 2012, which are classified as other assets, had a total carrying value of $438 million at August 30, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Based on market interest rates of comparable instruments provided by investment bankers, we estimated the fair market value of the Notes was $548 million at August 30, 2009. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>5.      VARIABLE INTEREST ENTITIES</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">As discussed in Note 3, in September 2008, we entered into a potato processing venture, Lamb Weston BSW. We provide all sales and marketing services to the venture. Commencing on June 1, 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 July 30, 2011, or on an earlier date under certain circumstances, we are subject to a contractual obligation to purchase all of Ochoa’s 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 Ochoa’s 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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In the first quarter of fiscal 2010, we established a line of credit with Lamb Weston BSW, under which we will lend up to $1.5 million to Lamb Weston BSW, due on August 24, 2010. Borrowings under the line of credit, which are subordinate to Lamb Weston BSW’s borrowings from a syndicate of banks, bear interest at a rate of LIBOR plus 3%. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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 on behalf of 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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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 December 2011 and October 2012). The total amount of the residual value guarantees for these aircraft at the end of the respective lease terms is $38.4 million. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="margin-top: 0pt; font-size: 10pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Due to the consolidation of these variable interest entities, we reflected in our balance sheets: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 30,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>May 31,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 24,</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cash </div></td> <td> </td> <td align="left">$</td> <td align="right">1.9</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1.2</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Receivables, net </div></td> <td> </td> <td> </td> <td align="right">11.9</td> <td> </td> <td> </td> <td> </td> <td align="right">12.6</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Inventories </div></td> <td> </td> <td> </td> <td align="right">1.3</td> <td> </td> <td> </td> <td> </td> <td align="right">3.1</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Prepaid expenses and other current assets </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">0.1</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Property, plant and equipment, net </div></td> <td> </td> <td> </td> <td align="right">99.4</td> <td> </td> <td> </td> <td> </td> <td align="right">100.5</td> <td> </td> <td> </td> <td> </td> <td align="right">51.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Goodwill </div></td> <td> </td> <td> </td> <td align="right">18.6</td> <td> </td> <td> </td> <td> </td> <td align="right">18.6</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Brands, trademarks and other identifiable intangibles, net </div></td> <td> </td> <td> </td> <td align="right">10.4</td> <td> </td> <td> </td> <td> </td> <td align="right">10.6</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total assets </div></td> <td> </td> <td align="left">$</td> <td align="right">143.5</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">146.7</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">51.0</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Current installments of long-term debt </div></td> <td> </td> <td align="left">$</td> <td align="right">6.3</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">6.1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3.4</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Accounts payable </div></td> <td> </td> <td> </td> <td align="right">3.8</td> <td> </td> <td> </td> <td> </td> <td align="right">4.3</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Accrued payroll </div></td> <td> </td> <td> </td> <td align="right">0.5</td> <td> </td> <td> </td> <td> </td> <td align="right">0.2</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Other accrued liabilities </div></td> <td> </td> <td> </td> <td align="right">0.8</td> <td> </td> <td> </td> <td> </td> <td align="right">0.7</td> <td> </td> <td> </td> <td> </td> <td align="right">0.6</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Senior long-term debt, excluding current installments </div></td> <td> </td> <td> </td> <td align="right">81.7</td> <td> </td> <td> </td> <td> </td> <td align="right">83.3</td> <td> </td> <td> </td> <td> </td> <td align="right">50.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Other noncurrent liabilities (noncontrolling interest) </div></td> <td> </td> <td> </td> <td align="right">26.6</td> <td> </td> <td> </td> <td> </td> <td align="right">27.3</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total liabilities </div></td> <td> </td> <td align="left">$</td> <td align="right">119.7</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">121.9</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">54.0</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The liabilities recognized as a result of consolidating these entities do not represent additional claims on our general assets. The creditors of these entities have claims only on the assets of the specific variable interest entities to which they have advanced credit. The assets recognized as a result of consolidating Lamb Weston BSW are the property of the venture and are not available to us for any other purpose. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>6.</b>     <b>GARNER, NORTH CAROLINA ACCIDENT</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On June 9, 2009, an accidental explosion occurred at our manufacturing facility in Garner, North Carolina. This facility was the primary production facility for our <i>Slim Jim</i><sup style="font-size: 85%; vertical-align: text-top">®</sup> branded meat snacks, and the packaging area of the plant is expected to be out of service for the foreseeable future. On June 13, 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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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 currently foreseeable losses arising from this accident. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The costs incurred and insurance recoveries recognized, to date, are reflected in our condensed consolidated financial statements, as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="87%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>Thirteen Weeks Ended August 30, 2009</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Consumer</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Foods</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Corporate</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Total</b></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Cost of Goods Sold:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Inventory write-downs and related costs </div></td> <td> </td> <td align="left">$</td> <td align="right">6.2</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">6.2</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Selling, general and administrative expenses:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Fixed asset impairments, clean-up costs, etc. </div></td> <td> </td> <td align="left">$</td> <td align="right">29.9</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">0.5</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">30.4</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Insurance recoveries recognized </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(33.7</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(33.7</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total selling, general and administrative expenses </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(3.8 </td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">0.5</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(3.3</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net Loss </div></td> <td> </td> <td align="left">$</td> <td align="right">2.4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">0.5</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2.9</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We are currently unable to 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 $12 million, is impaired. We may be required to recognize further impairment charges for some, or all, of this amount when we are able to access the site and ascertain the status of the equipment. We expect to be able to ascertain the status of the equipment in the second half 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. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="margin-top: 0pt; font-size: 10pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">At August 30, 2009, we reflected approximately $34 million of expected insurance recoveries within accounts receivable in our condensed consolidated balance sheet. Subsequent to our first quarter of fiscal 2010, we received payment advances from the insurers of approximately $39 million for our initial insurance claims for this matter. Based on management’s current assessment of production options, the expected level of insurance proceeds, and the estimated potential amount of losses and impact on the <i>Slim Jim</i><sup style="font-size: 85%; vertical-align: text-top">®</sup> brand, we do not believe that the accident will have a material adverse effect on our results of operations, financial condition, or liquidity. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>7.</b>     <b>GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The change in the carrying amount of goodwill for the first quarter of fiscal 2010 was as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="87%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">  <b>Consumer</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Commercial</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">  <b>Foods</b>  </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">  <b>Foods</b>  </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">  <b>Total</b>  </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance as of May 31, 2009 </div></td> <td> </td> <td align="left">$</td> <td align="right">3,354.3</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">137.0</td> <td> </td> <td> </td> <td align="left">$  </td> <td align="right">3,491.3</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Translation and other </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(0.1</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">0.1</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance as of August 30, 2009 </div></td> <td> </td> <td align="left">$</td> <td align="right">3,354.2</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">137.1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3,491.3</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Other identifiable intangible assets were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="28%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>August 30, 2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>May 31, 2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>August 24, 2008</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Gross</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Gross</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Gross</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Carrying</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Accumulated</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Carrying</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Accumulated</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Carrying</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Accumulated</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amount</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amortization</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amount</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amortization</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amount</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amortization</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Non-amortizing intangible assets </div></td> <td> </td> <td align="left">$</td> <td align="right">778.2</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">778.2</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">778.3</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Amortizing intangible assets </div></td> <td> </td> <td> </td> <td align="right">83.5</td> <td> </td> <td> </td> <td> </td> <td align="right">25.2</td> <td> </td> <td> </td> <td> </td> <td align="right">80.5</td> <td> </td> <td> </td> <td> </td> <td align="right">23.4</td> <td> </td> <td> </td> <td> </td> <td align="right">60.7</td> <td> </td> <td> </td> <td> </td> <td align="right">18.4</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="left">$</td> <td align="right">861.7</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">25.2</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">858.7</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">23.4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">839.0</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">18.4</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Non-amortizing intangible assets are comprised of brands and trademarks. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Amortizing intangible assets, carrying a weighted average life of approximately 14 years, are principally composed of licensing arrangements and customer relationships. Based on amortizing assets recognized in our balance sheet as of August 30, 2009, amortization expense is estimated to be approximately $6.2 million for each of the next five years. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>8.</b>     <b>DERIVATIVE FINANCIAL INSTRUMENTS</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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 36 months. We may enter into longer-term economic hedges on particular commodities if deemed appropriate. As of August 30, 2009, we had economically hedged certain portions of our anticipated consumption of commodity inputs using derivative instruments with expiration dates through December 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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 August 30, 2009, we had economically hedged certain portions of our foreign currency risk in anticipated transactions using derivative instruments with expiration dates through November 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In prior periods, we have designated certain commodity-based and foreign currency derivatives as cash flow hedges qualifying for hedge accounting treatment. We discontinued designating such derivatives as cash flow hedges during the first quarter of fiscal 2008. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><u>Economic Hedges of Forecasted Cash Flows </u> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Many of our derivatives do not qualify for, and, as noted above, 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. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><u>Other Derivative Activity (Primarily in the Milling Operations) </u> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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-to-market with changes in market value recognized immediately in operating results. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">For commodity derivative trading activities within our milling operations that are not intended to mitigate commodity input cost risk, the derivative instrument is marked-to-market each period with gains and losses included in net sales of the Commercial Foods segment. There were no material gains or losses from derivative trading activities during the periods being reported. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">All derivative instruments are recognized on the balance sheet at fair value. The fair value of derivative assets is recognized within prepaid expenses and other current assets, while the fair value of derivative liabilities is recognized within other accrued liabilities. In accordance with FASB Interpretation No. (“FIN”) 39, <i>Offsetting of Amounts Related to Certain Contracts</i>, as amended, we offset certain derivative asset and liability balances, as well as certain amounts representing rights to reclaim cash collateral and obligations to return cash collateral, where legal right of setoff exists. At August 30, 2009, amounts representing a right to reclaim cash collateral of $21.9 million were included in prepaid expenses and other current assets in our balance sheet. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Derivative assets and liabilities and amounts representing a right to reclaim cash collateral were reflected in our balance sheets as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="92%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 30,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>May 31,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 24,</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Prepaid expenses and other current assets </div></td> <td> </td> <td align="left">$</td> <td align="right">83.1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">52.1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">126.1</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Other accrued liabilities </div></td> <td> </td> <td> </td> <td align="right">16.0</td> <td> </td> <td> </td> <td> </td> <td align="right">30.8</td> <td> </td> <td> </td> <td> </td> <td align="right">35.1</td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table presents our derivative assets and liabilities, on a gross basis, prior to the offsetting of amounts where legal right of setoff existed at August 30, 2009: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="25%"> </td> <td width="5%"> </td> <td width="20%"> </td> <td width="1%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="1%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="1%"> </td> <td width="18%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="1%"> </td> <td width="2%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Derivative Assets</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Derivative Liabilities</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Balance Sheet Location</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Balance Sheet Location</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td> <td> </td> </tr>   <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Commodity contracts </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="left">Prepaid expenses and other current assets</td> <td> </td> <td align="left">$</td> <td align="right">81.7</td> <td> </td> <td> </td> <td colspan="3" align="left">Other accrued liabilities</td> <td> </td> <td align="left">$</td> <td align="right">36.5</td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The location and amount of gains and losses from derivatives reported in our consolidated statements of earnings were as follows: </div> <div align="right"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="93%">  <tr valign="bottom"> <td width="36%"> </td> <td width="25%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>For the Thirteen Weeks Ended August 30, 2009</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Location in Condensed</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Amount of Gain/(Loss) Recognized</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Consolidated Statement of</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>on Derivatives in Condensed</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="center"><b>Derivatives Not Designated as Hedging</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Earnings of Gain/(Loss) Recognized </b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Consolidated Statement of</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>Instruments Under SFAS No. 133</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>on Derivatives</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b> Earnings</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Commodity contracts </div></td> <td> </td> <td colspan="3" align="center">Cost of goods sold</td> <td> </td> <td align="left">$</td> <td align="right">65.9</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td colspan="3" align="center">Cost of goods sold</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1.7</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 0px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total derivative gain </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">64.2</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 0px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>9.      SHARE-BASED PAYMENTS</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">For the thirteen weeks ended August 30, 2009, we recognized total stock-based compensation expense (including stock options, restricted stock units, performance shares, and restricted cash) of $12.0 million. For the thirteen weeks ended August 24, 2008, we recognized total stock-based compensation expense of $12.6 million. During the first quarter of fiscal 2010, we granted 1.0 million restricted stock units at a weighted average grant date price of $19.05, 7.5 million stock options at a weighted average exercise price of $19.05, and 0.5 million performance shares at a weighted average grant date price of $19.04. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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 (“EBIT”) and our return on average invested capital (“ROAIC”) 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 plan, any shares earned will be distributed at the end of the three-year 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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The weighted average Black-Scholes assumptions for stock options granted during the first quarter of fiscal 2010 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="87%">  <tr valign="bottom"> <td width="88%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expected volatility (%) </div></td> <td> </td> <td> </td> <td align="right">22.96</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Dividend yield (%) </div></td> <td> </td> <td> </td> <td align="right">3.76</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Risk-free interest rate (%) </div></td> <td> </td> <td> </td> <td align="right">2.29</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Expected life of stock option (years) </div></td> <td> </td> <td> </td> <td align="right">4.66</td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The weighted average value of stock options granted during the first quarter of fiscal 2010 was $2.70 per option, based upon a Black-Scholes methodology. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>10.</b> <b>EARNINGS PER SHARE</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table reconciles the income and average share amounts used to compute both basic and diluted earnings per share: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Thirteen weeks ended</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 30,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 24,</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Net income available to ConAgra Foods, Inc. common stockholders:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Income from continuing operations attributable to ConAgra Foods, Inc. common stockholders </div></td> <td> </td> <td align="left">$</td> <td align="right">167.2</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">107.6</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Income (loss) from discontinued operations, net of tax, attributable to ConAgra Foods, Inc. common stockholders </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1.3</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">334.8</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:45px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Net income attributable to ConAgra Foods, Inc. common stockholders </div></td> <td> </td> <td align="left">$</td> <td align="right">165.9</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">442.4</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated </div></td> <td> </td> <td> </td> <td align="right">0.3</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:45px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Net income available to ConAgra Foods, Inc. common stockholders </div></td> <td> </td> <td align="left">$</td> <td align="right">165.6</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">442.4</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Weighted average shares outstanding:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Basic weighted average shares outstanding </div></td> <td> </td> <td> </td> <td align="right">443.2</td> <td> </td> <td> </td> <td> </td> <td align="right">467.1</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Add: Dilutive effect of stock options, restricted stock awards, and other dilutive securities </div></td> <td> </td> <td> </td> <td align="right">2.4</td> <td> </td> <td> </td> <td> </td> <td align="right">2.5</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:45px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Diluted weighted average shares outstanding </div></td> <td> </td> <td> </td> <td align="right">445.6</td> <td> </td> <td> </td> <td> </td> <td align="right">469.6</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">For the first quarter of fiscal 2010, there were 35.7 million stock options outstanding 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 first quarter of fiscal 2009, there were 30.2 million stock options excluded from the calculation. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>11.</b>     <b>INVENTORIES</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The major classes of inventories were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="92%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 30,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>May 31,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 24,</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Raw materials and packaging </div></td> <td> </td> <td align="left">$</td> <td align="right">557.1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">636.3</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">609.1</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Work in process </div></td> <td> </td> <td> </td> <td align="right">98.5</td> <td> </td> <td> </td> <td> </td> <td align="right">104.9</td> <td> </td> <td> </td> <td> </td> <td align="right">101.2</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Finished goods </div></td> <td> </td> <td> </td> <td align="right">1,273.4</td> <td> </td> <td> </td> <td> </td> <td align="right">1,202.2</td> <td> </td> <td> </td> <td> </td> <td align="right">1,251.8</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Supplies and other </div></td> <td> </td> <td> </td> <td align="right">84.3</td> <td> </td> <td> </td> <td> </td> <td align="right">81.7</td> <td> </td> <td> </td> <td> </td> <td align="right">78.0</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="left">$</td> <td align="right">2,013.3</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,025.1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,040.1</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="margin-top: 0pt; font-size: 10pt"> <b> </b> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>12.</b>     <b>RESTRUCTURING</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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 our 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 $36.4 million, of which $0.1 million and $8.2 million were recorded during the first quarter of fiscal 2010 and 2009, respectively. We have recorded expenses associated with this restructuring plan, including but not limited to, inventory write-downs, severance and related costs, and plan implementation costs (e.g., consulting, employee relocation, etc.). Approximately $1.9 million, $2.7 million, and $13.0 million of liabilities related to this plan remained outstanding at August 30, 2009, May 31, 2009, and August 24, 2008, respectively. Included in the above costs are $26.5 million of charges which have resulted in cash outflows and $9.9 million of non-cash charges. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During fiscal 2008, we reassessed certain aspects of our plan to rationalize our supply chain. We determined that we would continue to operate three production facilities that we had previously planned to close. As a result of this determination, previously established reserves, primarily for related severance costs and pension costs, were reversed in fiscal 2008. We are currently evaluating the best use of a new production facility, the construction of which is in progress, in connection with our restructuring plans. We believe, based on our current assessment of likely scenarios, the carrying value of this facility ($40.4 million at August 30, 2009) 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. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>13.      INCOME TAXES</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Our income tax expense from continuing operations for the first quarter of fiscal 2010 and 2009 was $91.0 million and $66.0 million, 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 35% and 38% for the first quarter of fiscal 2010 and 2009, respectively. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits, was $79.0 million as of August 30, 2009, $74.6 million as of May 31, 2009, and $65.9 million as of August 24, 2008. The net amount of unrecognized tax benefits at August 30, 2009, May 31, 2009, and August 24, 2008 that, if recognized, would impact the Company’s effective tax rate was $50.5 million, $51.0 million, and $45.2 million, respectively. Recognition of these tax benefits would have a favorable impact on the Company’s effective tax rate. The gross unrecognized tax benefits exclude related liabilities for gross interest and penalties of $15.9 million, $14.5 million, and $13.4 million as of August 30, 2009, May 31, 2009, and August 24, 2008, respectively. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We estimate that it is reasonably possible that the amount of gross unrecognized tax benefits will decrease by $8 million to $12 million over the next twelve months due to various federal, state, and foreign audit settlements and the expiration of statutes of limitations. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>14.      CONTINGENCIES</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The environmental proceedings include litigation and administrative proceedings involving Beatrice’s 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 cleanup, the known volumetric contribution of Beatrice and other potentially responsible parties, and its experience in remediating sites. The reserves for Beatrice environmental matters totaled $87.6 million as of August 30, 2009, a majority of which relates to the Superfund and state-equivalent sites referenced above. We expect expenditures for Beatrice environmental matters to continue for up to 20 years. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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 agreements. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We guarantee certain leases and other commercial obligations resulting from our fresh beef and pork divestiture. The remaining terms of these arrangements do not exceed six years and the maximum amount of future payments we have guaranteed was approximately $17.8 million as of August 30, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We have also guaranteed the performance of the divested fresh beef and pork business with respect to a hog purchase contract. The hog purchase contract requires the fresh beef and pork business to purchase a minimum of approximately 1.2 million hogs annually through 2014. The contract stipulates minimum price commitments, based in part on market prices, and, in certain circumstances, also includes price adjustments based on certain inputs. We have not established a liability for any of the fresh beef and pork divestiture-related guarantees, as we have determined that the likelihood of our required performance under the guarantees is remote. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We are a party to various potato supply agreements. Under the terms of certain such potato supply agreements, we have guaranteed repayment of short-term bank loans of the potato suppliers, under certain conditions. At August 30, 2009, the amount of supplier loans we have effectively guaranteed was approximately $64.3 million. We have not established a liability for these guarantees, as we have determined that the likelihood of our required performance under the guarantees is remote. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We are a party to a supply agreement with an onion processing company. We have guaranteed repayment of a loan of this supplier, under certain conditions. At August 30, 2009, the amount of this loan was $25.0 million. In the event of default on this loan by the supplier, we have the contractual right to purchase the loan from the lender, thereby giving us the rights to the underlying collateral. We have not established a liability in connection with this guarantee, as we believe the likelihood of financial exposure to us under this agreement is remote. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We are a party to a number of lawsuits and claims arising out of the operation of our business, including lawsuits and claims related to the February 2007 recall of our peanut butter products and litigation we initiated against an insurance carrier to recover our settlement expenditures and defense costs. We recognized a charge of $25.3 million during the second half of fiscal 2009 in connection with the disputed coverage with this insurance carrier. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">An investigation by the Division of Enforcement of the U.S. Commodity Futures Trading Commission (“CFTC”) of certain commodity futures transactions of a former Company subsidiary has led to an investigation by the CFTC of the Company itself. The investigation may result in litigation by the CFTC against the Company. The former subsidiary was sold on June 23, 2008, as part of the divestiture of our trading and merchandising operations. The CFTC’s Division of Enforcement has advised the Company that it questions whether certain trading activities of the former subsidiary violated the Commodity Exchange Act and that the CFTC has been evaluating whether we should be implicated in the matter based on the existence of the parent-subsidiary relationship between the two entities at the time of the trades. Based on information we have learned to date, the Company believes that both it and the former subsidiary have meritorious defenses. We have submitted a statement to the Division of Enforcement contesting any purported liability. We also believe the sale contract with the purchaser of the business provides us indemnification rights. Accordingly, we do not believe any decision by the CFTC to pursue this matter will have a material adverse effect on the Company. If litigation ensues, the Company intends to defend itself vigorously. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In June 2009, an accidental explosion occurred at our manufacturing facility in Garner, North Carolina. See Note 6 for information related to this matter. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">After taking into account liabilities recognized for all of the foregoing matters, management believes the ultimate resolution of such matters should not have a material adverse effect on our financial condition, results of operations, or liquidity. It is reasonably possible that a change in one of the estimates of the foregoing matters may occur in the future. Costs of legal services are recognized in earnings as services are provided. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="margin-top: 0pt; font-size: 10pt"> <b> </b> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>15.      PENSION AND POSTRETIREMENT BENEFITS</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Components of pension benefit and other postretirement benefit costs included: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6"><b>Pension Benefits</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6"><b>Postretirement Benefits</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Thirteen weeks ended</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Thirteen weeks ended</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 30,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 24,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 30,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 24,</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Service cost </div></td> <td> </td> <td align="left">$</td> <td align="right">12.5</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">12.9</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">0.1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">0.2</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Interest cost </div></td> <td> </td> <td> </td> <td align="right">37.0</td> <td> </td> <td> </td> <td> </td> <td align="right">35.3</td> <td> </td> <td> </td> <td> </td> <td align="right">4.5</td> <td> </td> <td> </td> <td> </td> <td align="right">5.7</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expected return on plan assets </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(40.3</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(39.6</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(0.1</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization of prior service cost (gain) </div></td> <td> </td> <td> </td> <td align="right">0.8</td> <td> </td> <td> </td> <td> </td> <td align="right">0.8</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(2.4</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(2.8</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Recognized net actuarial loss </div></td> <td> </td> <td> </td> <td align="right">0.9</td> <td> </td> <td> </td> <td> </td> <td align="right">0.5</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">2.5</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Benefit cost - Company plans </div></td> <td> </td> <td> </td> <td align="right">10.9</td> <td> </td> <td> </td> <td> </td> <td align="right">9.9</td> <td> </td> <td> </td> <td> </td> <td align="right">2.1</td> <td> </td> <td> </td> <td> </td> <td align="right">5.6</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Pension benefit cost - multi-employer plans </div></td> <td> </td> <td> </td> <td align="right">2.5</td> <td> </td> <td> </td> <td> </td> <td align="right">2.3</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total benefit cost </div></td> <td> </td> <td align="left">$</td> <td align="right">13.4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">12.2</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2.1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">5.6</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="3" align="right" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of fiscal 2010, we contributed $2.7 million to our pension plans and contributed $8.8 million 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 $23.1 million to our pension plans for the remainder of fiscal 2010. We anticipate making further contributions of $26.2 million 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. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>16.      LONG-TERM DEBT</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">As of May 31, 2009 and August 24, 2008, $9.2 million and $300.0 million, respectively, of senior debt due August 2027 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 June 1, 2009 to July 1, 2009. As part of our debt refinancing 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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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 September 2018. 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 $40.0 million of variable (30-day LIBOR+1.85%) interest rate debt due in June 2018. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>17.      ACCELERATED SHARE REPURCHASE PROGRAM</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We initiated an accelerated share repurchase program during the first quarter of fiscal 2009. We paid $900 million and received 38.4 million shares in the first quarter of fiscal 2009 and an additional 5.6 million shares in the fourth quarter of fiscal 2009 under this program. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>18.      FAIR VALUE MEASUREMENTS</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The provisions of SFAS No. 157, <i>Fair Value Measurements </i>(“SFAS No. 157”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements, were 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 SFAS No. 157 as it relates 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 quarter of fiscal 2010, there were no required fair value measurements for assets and liabilities measured at fair value on a non-recurring basis. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">SFAS No. 157 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: </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities, </div>    </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div>  <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">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 </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Level 3 – Unobservable inputs reflecting our own assumptions and best estimate of what inputs market participants would use in pricing the asset or liability. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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 August 30, 2009: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="50%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Level 1</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Level 2</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Level 3</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Assets: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Derivative assets </div></td> <td> </td> <td align="left">$</td> <td align="right">10.0</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">73.1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">83.1</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Available for sale securities </div></td> <td> </td> <td> </td> <td align="right">1.6</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">1.6</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Deferred compensation assets </div></td> <td> </td> <td> </td> <td align="right">6.5</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">6.5</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Total assets </div></td> <td> </td> <td align="left">$</td> <td align="right">18.1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">73.1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">91.2</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Liabilities: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Derivative liabilities </div></td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">16.0</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">16.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Deferred and share-based compensation liabilities </div></td> <td> </td> <td> </td> <td align="right">21.2</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">21.2</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Total liabilities </div></td> <td> </td> <td align="left">$</td> <td align="right">21.2</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">16.0</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">37.2</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The carrying amount of long-term debt (including current installments) was $3.5 billion as of August 30, 2009. Based on current market rates provided primarily by outside investment bankers, the fair value of this debt at August 30, 2009 was estimated at $3.9 billion. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>19.      RELATED PARTY TRANSACTIONS</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Sales to affiliates (equity method investees) of $0.7 million and $0.5 million for the first quarter of fiscal 2010 and 2009, respectively, are included in net sales. We received management fees from affiliates of $4.8 million and $4.3 million in the first quarter of fiscal 2010 and 2009, respectively. Accounts receivable from affiliates totaled $0.8 million, $2.7 million, and $2.6 million at August 30, 2009, May 31, 2009, and August 24, 2008, respectively. Accounts payable to affiliates totaled $17.1 million, $14.3 million, and $13.8 million at August 30, 2009, May 31, 2009, and August 24, 2008, respectively. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>20.      BUSINESS SEGMENTS AND RELATED INFORMATION</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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 segment’s 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 <i>Lamb Weston</i><sup style="font-size: 85%; vertical-align: text-top">®</sup>, <i>ConAgra Mills</i><sup style="font-size: 85%; vertical-align: text-top">®</sup>, <i>Gilroy Foods & Flavors</i><sup style="font-size: 85%; vertical-align: text-top">TM</sup>, and <i>Spicetec</i><sup style="font-size: 85%; vertical-align: text-top">®</sup>. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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 recently appointed Consumer Foods President position. In conjunction with this organizational change, beginning in the first quarter of fiscal 2010 we have 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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of fiscal 2010, we transferred the management of the <i>Alexia</i><sup style="font-size: 85%; vertical-align: text-top">®</sup> frozen food operations from the Consumer Foods segment to the Commercial Foods segment. Segment results have been recast to reflect this change. </div> <div align="center" style="font-size: 10pt; margin-top: 18pt">**** </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="margin-top: 0pt; font-size: 10pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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. </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Thirteen weeks ended</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 30,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 24,</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net sales: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Consumer Foods </div></td> <td> </td> <td align="left">$</td> <td align="right">1,860.1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,849.3</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Commercial Foods </div></td> <td> </td> <td> </td> <td align="right">1,101.3</td> <td> </td> <td> </td> <td> </td> <td align="right">1,207.2</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:45px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Total net sales </div></td> <td> </td> <td align="left">$</td> <td align="right">2,961.4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3,056.5</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:45px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Operating profit: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Consumer Foods </div></td> <td> </td> <td align="left">$</td> <td align="right">249.9</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">186.3</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Commercial Foods </div></td> <td> </td> <td> </td> <td align="right">140.8</td> <td> </td> <td> </td> <td> </td> <td align="right">133.9</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:45px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Total operating profit </div></td> <td> </td> <td align="left">$</td> <td align="right">390.7</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">320.2</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Equity method investment earnings (loss): </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Consumer Foods </div></td> <td> </td> <td align="left">$</td> <td align="right">0.2</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1.3</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Commercial Foods </div></td> <td> </td> <td> </td> <td align="right">8.7</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(0.4</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total equity method investment earnings </div></td> <td> </td> <td align="left">$</td> <td align="right">8.9</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">0.9</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Operating profit plus equity method investment earnings: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Consumer Foods </div></td> <td> </td> <td align="left">$</td> <td align="right">250.1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">187.6</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Commercial Foods </div></td> <td> </td> <td> </td> <td align="right">149.5</td> <td> </td> <td> </td> <td> </td> <td align="right">133.5</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total operating profit plus equity method investment earnings </div></td> <td> </td> <td align="left">$</td> <td align="right">399.6</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">321.1</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">General corporate expenses </div></td> <td> </td> <td> </td> <td align="right">100.6</td> <td> </td> <td> </td> <td> </td> <td align="right">97.4</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Interest expense, net </div></td> <td> </td> <td> </td> <td align="right">41.5</td> <td> </td> <td> </td> <td> </td> <td align="right">50.1</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Income tax expense </div></td> <td> </td> <td> </td> <td align="right">91.0</td> <td> </td> <td> </td> <td> </td> <td align="right">66.0</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Income from continuing operations </div></td> <td> </td> <td align="left">$</td> <td align="right">166.5</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">107.6</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Less: Income (loss) attributable to noncontrolling interests </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(0.7</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Income from continuing operations attributable to ConAgra Foods, Inc. </div></td> <td> </td> <td align="left">$</td> <td align="right">167.2</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">107.6</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="font-size: 10pt"> <b> </b> </div> <div align="center" style="margin-top: 0pt; font-size: 10pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Net sales by product type within each segment were: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Thirteen weeks ended</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 30,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 24,</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net sales: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Consumer Foods: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:75px; text-indent:-15px">Convenient Meals </div></td> <td> </td> <td align="left">$</td> <td align="right">642.4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">616.8</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:75px; text-indent:-15px">Snacks </div></td> <td> </td> <td> </td> <td align="right">295.9</td> <td> </td> <td> </td> <td> </td> <td align="right">308.4</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:75px; text-indent:-15px">Meal Enhancers </div></td> <td> </td> <td> </td> <td align="right">245.2</td> <td> </td> <td> </td> <td> </td> <td align="right">230.7</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:75px; text-indent:-15px">Specialty Foods </div></td> <td> </td> <td> </td> <td align="right">676.6</td> <td> </td> <td> </td> <td> </td> <td align="right">693.4</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:75px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Total Consumer Foods </div></td> <td> </td> <td align="left">$</td> <td align="right">1,860.1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,849.3</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:75px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Commercial Foods: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:75px; text-indent:-15px">Specialty Potatoes </div></td> <td> </td> <td align="left">$</td> <td align="right">564.0</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">549.5</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:75px; text-indent:-15px">Milled Products </div></td> <td> </td> <td> </td> <td align="right">368.4</td> <td> </td> <td> </td> <td> </td> <td align="right">483.7</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:75px; text-indent:-15px">Seasonings, Blends and Flavors </div></td> <td> </td> <td> </td> <td align="right">95.0</td> <td> </td> <td> </td> <td> </td> <td align="right">100.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:75px; text-indent:-15px">Other </div></td> <td> </td> <td> </td> <td align="right">73.9</td> <td> </td> <td> </td> <td> </td> <td align="right">74.0</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:45px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Total Commercial Foods </div></td> <td> </td> <td align="left">$</td> <td align="right">1,101.3</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,207.2</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:45px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Total Net Sales </div></td> <td> </td> <td align="left">$</td> <td align="right">2,961.4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3,056.5</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:45px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In fiscal 2009, following the sale of our trading and merchandising operations and related organizational changes, we transferred the management of commodity hedging activities (except for those related to our milling operations) to a centralized procurement group. Beginning in the first quarter of fiscal 2009, we began to reflect realized and unrealized gains and losses from derivatives (except for those related to our milling operations) used to hedge anticipated commodity consumption in earnings immediately within general corporate expenses. The gains and losses are reclassified to segment operating results in the period in which the underlying item being hedged is recognized in cost of goods sold. Prior to the first quarter of fiscal 2009, these derivative gains and losses were recorded immediately in our segment results as a component of cost of goods sold regardless of when the item being hedged impacted earnings. We believe this change results in better segment management focus on key operational initiatives and improved transparency to derivative gains and losses. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Foreign currency derivatives used to manage foreign currency risk are not designated for hedge accounting treatment. We believe that these derivatives provide economic hedges of the foreign currency risk of certain forecasted transactions. As such, these derivatives are recognized at fair market value with realized and unrealized gains and losses recognized in general corporate expenses. The gains and losses are subsequently recognized in the operating results of the reporting segments in the period in which the underlying transaction being economically hedged is included in earnings. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table presents the net derivative gains (losses) from economic hedges of forecasted commodity consumption and currency risk of our foreign operations for the first quarter of fiscal 2010 and 2009, under this methodology: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="84%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Thirteen weeks ended</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 30,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>August 24,</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net derivative losses incurred </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(17.1</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(33.5</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Less: Net derivative losses allocated to reporting segments </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(9.5</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(0.5</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Net derivative losses recognized in general corporate expenses </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(7.6</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(33.0</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 3px double #000000"> </td> </tr> <tr> <td align="left" valign="top"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net derivative losses allocated to Consumer Foods </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(5.8</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(0.9</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net derivative gains (losses) allocated to Commercial Foods </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(3.7</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">0.4</td> <td> </td> </tr> <tr style="font-size: 1px" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Net derivative losses included in segment operating profit </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(9.5</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(0.5</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 3px double #000000"> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Based on our forecasts of the timing of recognition of the underlying hedged items, we expect to reclassify losses of $9.3 million and $3.6 million to segment operating results in fiscal 2010 and 2011, respectively. Amounts allocated, or to be allocated, to segment operating results during fiscal 2010 and 2011 include $5.3 million of losses incurred during fiscal 2009, which have not been allocated to segment operating results. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">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-to-market with changes in market value recognized immediately in operating results. For commodity derivative trading activities within our milling operations that are not intended to mitigate commodity input cost risk, the derivative instrument is marked-to-market each period with gains and losses included in net sales of the Commercial Foods segment. In the first quarters of fiscal 2010 and 2009, there were no material gains or losses from derivative trading activities. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 18% and 16% of consolidated net sales in the first quarter of fiscal 2010 and fiscal 2009, respectively. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Wal-Mart Stores, Inc. and its affiliates accounted for approximately 14%, 15%, and 15% of consolidated net receivables as of August 30, 2009, May 31, 2009, and August 24, 2008, respectively, primarily in the Consumer Foods segment. </div> </div>

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