BUSINESS SEGMENTS AND RELATED INFORMATION

As a result of the Ralcorp acquisition, we implemented organizational changes during the second quarter of fiscal 2014 that resulted in new reporting segments. We began reporting our operations in three reporting segments: Consumer Foods, Commercial Foods, and Private Brands. We believe this recent operating structure will enhance our focus on profitability, coordinated business execution, and resource allocation across our business. Prior periods have been reclassified to conform to the revised segment presentation. Prior to this change in organizational structure, we had four operating and reportable segments.

The Consumer Foods reporting segment includes branded food sold in various retail channels primarily in North America. Our food products are found in a variety of categories (meals, entrees, condiments, sides, snacks, and desserts) throughout grocery and convenience stores across frozen, refrigerated, and shelf-stable temperature classes. The Consumer Foods reporting segment no longer includes results for store brands (store brands are now part of the recently created Private Brands segment) or foodservice results (the foodservice business is now part of the Commercial Foods segment). The Consumer Foods reporting segment now includes additional international sales which were previously part of the Ralcorp Food Group segment.

The Commercial Foods reporting segment includes commercially branded and private branded food and ingredients, which are sold primarily to commercial, foodservice, food manufacturing, and industrial customers. The segment's primary food items include: frozen potato and sweet potato items and a variety of vegetable, spice and frozen bakery goods which are sold under brands such as Lamb Weston^® and Spicetec Flavors & Seasonings^®. The Commercial Foods reporting segment now includes foodservice results which were previously part of the Consumer Foods segment, as well as frozen bakery foodservice results, which were previously part of the Ralcorp Frozen Bakery Products segment. Our milling business was included in the Commercial Foods segment for the periods covered by this report but was contributed to Ardent Mills shortly after the end of fiscal 2014.

The Private Brands reporting segment includes private branded and customized food items sold in various retail channels, primarily in North America. Our Private Brands are sold in a variety of categories in grocery and convenience stores including: hot and ready-to-eat cereal; snacks; condiments; bars and coordinated categories; pasta; and retail bakery goods. The recently created Private Brands reporting segment includes a significant portion of results from the former Ralcorp businesses and the store brands results which were previously part of the Consumer Foods segment.

We do not aggregate operating segments when determining our reporting segments.

Intersegment sales have been recorded at amounts approximating market. Operating profit for each of the 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.



	2014		2013		2012
Net sales
Consumer Foods	$	7,315.5	$	7,551.4	$	6,945.8
Commercial Foods	6,191.2		6,067.0		5,747.0
Private Brands	4,195.9		1,808.2		638.3
Total net sales	$	17,702.6	$	15,426.6	$	13,331.1



Operating profit (loss)
Consumer Foods	$	899.4		$	1,000.2	$	878.2
Commercial Foods	774.6			731.3		615.7
Private Brands	(375.0		)	123.1		95.2
Total operating profit	$	1,299.0		$	1,854.6	$	1,589.1
Equity method investment earnings
Consumer Foods	$	2.8		$	1.8	$	4.9
Commercial Foods	30.0			35.7		40.0
Total equity method investment earnings	$	32.8		$	37.5	$	44.9
Operating profit (loss) plus equity method investment earnings
Consumer Foods	$	902.2		$	1,002.0	$	883.1
Commercial Foods	804.6			767.0		655.7
Private Brands	(375.0		)	123.1		95.2
Total operating profit plus equity method investment earnings	$	1,331.8		$	1,892.1	$	1,634.0
General corporate expenses	$	343.6		$	429.0	$	770.4
Interest expense, net	379.0			275.6		204.0
Income tax expense	298.2			400.7		191.7
Income from continuing operations	$	311.0		$	786.8	$	467.9
Less: Net income attributable to noncontrolling interests	12.0			12.2		6.5
Income from continuing operations attributable to ConAgra Foods, Inc.	$	299.0		$	774.6	$	461.4
Identifiable assets
Consumer Foods	$	7,666.1		$	7,845.5	$	7,205.4
Commercial Foods	3,904.8			3,619.8		2,801.0
Private Brands	6,912.4			7,676.5		544.7
Corporate	872.2			1,054.6		794.8
Held for Sale	10.9			208.9		96.0
Total identifiable assets	$	19,366.4		$	20,405.3	$	11,441.9
Additions to property, plant and equipment
Consumer Foods	$	183.5		$	187.9	$	150.3
Commercial Foods	230.8			148.8		99.2
Private Brands	125.2			57.0		16.2
Corporate	62.9			60.0		70.0
Total additions to property, plant and equipment	$	602.4		$	453.7	$	335.7
Depreciation and amortization
Consumer Foods	$	201.0		$	183.1	$	172.1
Commercial Foods	115.0			106.9		96.7
Private Brands	205.2			79.9		18.5
Corporate	81.7			73.5		83.6
Total depreciation and amortization	$	602.9		$	443.4	$	370.9

Net sales by product type within each segment were:



	2014		2013		2012
Net sales
Consumer Foods:
Grocery	$	2,829.7	$	2,980.3	$	2,967.0
Frozen	2,241.9		2,295.5		1,929.8
Snacks	1,067.3		1,113.1		1,126.1
International	1,061.2		1,073.7		839.3
Other Brands	115.4		88.8		83.6
Total Consumer Foods	$	7,315.5	$	7,551.4	$	6,945.8
Commercial Foods:
Specialty Potatoes	$	2,792.7	$	2,753.1	$	2,631.0
Milled Products	1,859.0		1,957.3		1,910.2
Foodservice and Flavors	876.7		891.4		842.3
Frozen Bakery and Ingredient Distribution	662.8		465.2		363.5
Total Commercial Foods	$	6,191.2	$	6,067.0	$	5,747.0
Private Brands:
Snacks	$	1,373.0	$	542.0	$	91.4
Retail Bakery	772.5		234.6		—
Bars and Coordinated	679.5		535.2		513.5
Pasta	564.3		192.9		—
Cereal	497.1		191.6		33.4
Condiments	309.5		111.9		—
Total Private Brands	$	4,195.9	$	1,808.2	$	638.3
Total net sales	$	17,702.6	$	15,426.6	$	13,331.1

Presentation of Derivative Gains (Losses) for Economic Hedges of Forecasted Cash Flows in Segment Results

Derivatives used to manage commodity price risk and foreign currency risk are not designated for hedge accounting treatment. We believe these derivatives provide economic hedges of certain forecasted transactions. As such, these derivatives (except those related to our milling operations, see Note 17 to our consolidated financial statements) 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.

The following table presents the net derivative gains (losses) from economic hedges of forecasted commodity consumption and the foreign currency risk of certain forecasted transactions, under this methodology:



	2014			2013			2012
Net derivative gains (losses) incurred	$	25.7		$	74.8		$	(66.8	)
Less: Net derivative gains (losses) allocated to reporting segments	(10.3		)	25.0			24.4
Net derivative gains (losses) recognized in general corporate expenses	$	36.0		$	49.8		$	(91.2	)
Net derivative gains (losses) allocated to Consumer Foods	$	(5.9	)	$	26.7		$	25.3
Net derivative gains (losses) allocated to Commercial Foods	6.4			(2.7		)	(0.5		)
Net derivative gains (losses) allocated to Private Brands	(10.8		)	1.0			(0.4		)
Net derivative gains (losses) included in segment operating profit	$	(10.3	)	$	25.0		$	24.4

As of May 25, 2014, the cumulative amount of net derivative gains from economic hedges that had been recognized in general corporate expenses and not yet allocated to reporting segments was $26.9 million. This amount reflected net gains of $25.7 million incurred during the fiscal year ended May 25, 2014, as well as net gains of $1.2 million incurred prior to fiscal 2014. Based on our forecasts of the timing of recognition of the underlying hedged items, we expect to reclassify to segment operating results gains of $26.5 million and $0.4 million to segment operating results in fiscal 2015 and 2016 and thereafter, respectively.

Other Information

At May 25, 2014, ConAgra Foods and its subsidiaries had approximately 32,800 employees, primarily in the United States. Approximately 41% of our employees are parties to collective bargaining agreements. Of the employees subject to collective bargaining agreements, approximately 16% are parties to collective bargaining agreements scheduled to expire during fiscal 2015.

Our operations are principally in the United States. With respect to operations outside of the United States, no single foreign country or geographic region was significant with respect to consolidated operations for fiscal 2014, 2013, and 2012. Foreign net sales, including sales by domestic segments to customers located outside of the United States, were approximately $2.2 billion, $1.9 billion, and $1.6 billion in fiscal 2014, 2013, and 2012, respectively. Our long-lived assets located outside of the United States are not significant.

Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 17% of consolidated net sales for each of fiscal 2014, 2013, and 2012, significantly impacting the Consumer Foods and Private Brands segments.

Wal-Mart Stores, Inc. and its affiliates accounted for approximately 14% and 15% of consolidated net receivables as of May 25, 2014 and May 26, 2013, respectively, significantly impacting the Consumer Foods and Private Brands segments.