e10vq

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TBhC/paWvdRWbZqfR1z2MysO/aCiohI/vfzEY8/pG3QeR0s/pTZMZTpDhSnNtAs4 7mg91np7ubgqwJnlvC2JoQ== 0000950123-09-048892.txt : 20091007 0000950123-09-048892.hdr.sgml : 20091007 20091007123657 ACCESSION NUMBER: 0000950123-09-048892 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 44 CONFORMED PERIOD OF REPORT: 20090830 FILED AS OF DATE: 20091007 DATE AS OF CHANGE: 20091007 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONAGRA FOODS INC /DE/ CENTRAL INDEX KEY: 0000023217 STANDARD INDUSTRIAL CLASSIFICATION: FOOD & KINDRED PRODUCTS [2000] IRS NUMBER: 470248710 STATE OF INCORPORATION: DE FISCAL YEAR END: 0508 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07275 FILM NUMBER: 091109699 BUSINESS ADDRESS: STREET 1: ONE CONAGRA DR CITY: OMAHA STATE: NE ZIP: 68102 BUSINESS PHONE: 4025954000 MAIL ADDRESS: STREET 1: ONE CONAGRA DRIVE CITY: OMAHA STATE: NE ZIP: 68102 FORMER COMPANY: FORMER CONFORMED NAME: CONAGRA INC /DE/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: NEBRASKA CONSOLIDATED MILLS CO DATE OF NAME CHANGE: 19721201 10-Q 1 c53860e10vq.htm FORM 10-Q e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 30, 2009


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-7275

CONAGRA FOODS, INC.

(Exact name of registrant as specified in charter)


Delaware		47-0248710
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

One ConAgra Drive, Omaha, Nebraska		68102-5001
(Address of principal executive offices)		(Zip Code)

(402) 240-4000
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Number of shares outstanding of issuer’s common stock, as of September 27, 2009, was 442,928,922.

Table of Contents


Part I. FINANCIAL INFORMATION		3

Item 1	Financial Statements	3

	Unaudited Condensed Consolidated Statements of Earnings for the Thirteen Weeks ended August 30, 2009 and August 24, 2008	3

	Unaudited Condensed Consolidated Statements of Comprehensive Income for the Thirteen Weeks ended August 30, 2009 and August 24, 2008	4

	Unaudited Condensed Consolidated Balance Sheets as of August 30, 2009, May 31, 2009, and August 24, 2008	5

	Unaudited Condensed Consolidated Statements of Cash Flows for the Thirteen Weeks ended August 30, 2009 and August 24, 2008	6

	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4	Controls and Procedures	32

Part II. OTHER INFORMATION		33

Item 1	Legal Proceedings	33

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 4	Submission of Matters to a Vote of Security Holders	35

Item 6	Exhibits	36

Signatures		37

Exhibit Index		38

Exhibit 10.1

Exhibit 10.2

Exhibit 10.3		39

Exhibit 10.4		45

Exhibit 10.5		50

Exhibit 10.6		55

Exhibit 12		61

Exhibit 31.1		62

Exhibit 31.2		63

Exhibit 32.1		64

Exhibit 101.1

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ConAgra Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings

(in millions except per share amounts)

(unaudited)


	Thirteen weeks ended
	August 30,			August 24,
	2009			2008
Net sales	$	2,961.4		$	3,056.5
Costs and expenses:
Cost of goods sold		2,244.9			2,465.0
Selling, general and administrative expenses		426.4			368.7
Interest expense, net		41.5			50.1

Income from continuing operations before income taxes and equity method investment earnings		248.6			172.7
Income tax expense		91.0			66.0
Equity method investment earnings		8.9			0.9

Income from continuing operations		166.5			107.6
Income (loss) from discontinued operations, net of tax		(1.3	)		334.8

Net income	$	165.2		$	442.4

Less: Net loss attributable to noncontrolling interests		(0.7	)		—

Net income attributable to ConAgra Foods, Inc.	$	165.9		$	442.4

Earnings per share - basic
Income from continuing operations attributable to ConAgra Foods, Inc. common stockholders	$	0.38		$	0.23
Income (loss) from discontinued operations attributable to ConAgra Foods, Inc. common stockholders		(0.01	)		0.72

Net income attributable to ConAgra Foods, Inc. common stockholders	$	0.37		$	0.95

Earnings per share - diluted
Income from continuing operations attributable to ConAgra Foods, Inc. common stockholders	$	0.37		$	0.23
Income from discontinued operations attributable to ConAgra Foods, Inc. common stockholders		—			0.71

Net income attributable to ConAgra Foods, Inc. common stockholders	$	0.37		$	0.94

See notes to the condensed consolidated financial statements.

ConAgra Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(in millions)

(unaudited)


	Thirteen weeks ended
	August 30,			August 24,
	2009			2008
Net income	$	165.2		$	442.4
Other comprehensive income (loss):
Unrealized gains and losses on available-for-sale securities, net of tax:
Unrealized holding losses arising during the period		(0.1	)		(0.3	)
Currency translation adjustment:
Unrealized translation gains (losses) arising during the period		1.2			(24.4	)
Reclassification adjustment for net losses included in net income		—			2.0
Pension and postretirement healthcare liabilities, net of tax		(0.8	)		(2.4	)

Comprehensive income		165.5			417.3
Comprehensive loss attributable to noncontrolling interests		(0.7	)		—

Comprehensive income attributable to ConAgra Foods, Inc.	$	166.2		$	417.3

See notes to the condensed consolidated financial statements.

ConAgra Foods, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in millions except share data)

(unaudited)


	August 30,			May 31,			August 24,
	2009			2009			2008
ASSETS
Current assets
Cash and cash equivalents	$	289.7		$	243.2		$	296.4
Receivables, less allowance for doubtful accounts of $11.5, $13.9, and $14.4		886.1			781.4			961.3
Inventories		2,013.3			2,025.1			2,040.1
Prepaid expenses and other current assets		373.6			282.0			353.9
Current assets held for sale		—			4.9			6.0

Total current assets		3,562.7			3,336.6			3,657.7

Property, plant and equipment		5,365.3			5,301.5			5,043.5
Less accumulated depreciation		(2,702.1	)		(2,661.1	)		(2,558.2	)

Property, plant and equipment, net		2,663.2			2,640.4			2,485.3

Goodwill		3,491.3			3,491.3			3,477.3
Brands, trademarks and other intangibles, net		836.5			835.3			820.6
Other assets		676.7			768.1			1,074.8
Noncurrent assets held for sale		—			1.6			10.6

	$	11,230.4		$	11,073.3		$	11,526.3

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes payable	$	2.7		$	3.7		$	25.2
Current installments of long-term debt		15.8			24.7			314.8
Accounts payable		875.0			823.8			942.2
Accrued payroll		148.7			166.9			147.8
Other accrued liabilities		608.8			555.6			1,023.3

Total current liabilities		1,651.0			1,574.7			2,453.3

Senior long-term debt, excluding current installments		3,274.7			3,265.4			2,848.7
Subordinated debt		195.9			195.9			200.0
Other noncurrent liabilities		1,309.0			1,316.4			1,250.4

Total liabilities		6,430.6			6,352.4			6,752.4

Commitments and contingencies (Note 14)
Common stockholders’ equity
Common stock of $5 par value, authorized 1,200,000,000 shares; issued 567,882,375, 567,154,823, and 567,071,713		2,839.5			2,835.9			2,835.5
Additional paid-in capital		863.7			884.4			776.3
Retained earnings		4,123.9			4,042.5			3,761.5
Accumulated other comprehensive income (loss)		(103.3	)		(103.7	)		261.4
Less treasury stock, at cost, 125,016,605, 125,497,708, and 120,053,780 common shares		(2,924.0	)		(2,938.2	)		(2,860.8	)

Total common stockholders’ equity		4,799.8			4,720.9			4,773.9

	$	11,230.4		$	11,073.3		$	11,526.3

See notes to the condensed consolidated financial statements.

ConAgra Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)


	Thirteen weeks ended
	August 30,			August 24,
	2009			2008
Cash flows from operating activities:
Net income	$	165.2		$	442.4
Income (loss) from discontinued operations		(1.3	)		334.8

Income from continuing operations		166.5			107.6
Adjustments to reconcile income from continuing operations to net cash flows from operating activities:
Depreciation and amortization		81.7			76.2
(Gain) loss on sale of fixed assets		1.3			(5.0	)
Gain on sale of businesses		—			(19.4	)
Distributions from affiliates greater than current earnings		1.8			3.7
Share-based payments expense		12.0			12.6
Non-cash interest income on payment-in-kind notes		(19.8	)		(12.6	)
Other items		30.0			(12.7	)
Change in operating assets and liabilities before effects of business acquisitions and dispositions:
Accounts receivable		(116.0	)		(100.8	)
Inventory		11.8			(116.0	)
Prepaid expenses and other current assets		(15.4	)		97.7
Accounts payable		(26.7	)		171.0
Accrued payroll		(18.2	)		(108.6	)
Other accrued liabilities		155.2			104.5

Net cash flows from operating activities – continuing operations		264.2			198.2
Net cash flows from operating activities – discontinued operations		(1.6	)		(635.7	)

Net cash flows from operating activities		262.6			(437.5	)

Cash flows from investing activities:
Additions to property, plant and equipment		(118.9	)		(106.3	)
Sale of property, plant and equipment		1.4			12.8
Sale of businesses		—			29.4
Purchase of businesses and intangible assets		(3.0	)		(30.4	)
Notes receivable and other items		—			0.9

Net cash flows from investing activities – continuing operations		(120.5	)		(93.6	)
Net cash flows from investing activities – discontinued operations		6.4			2,253.2

Net cash flows from investing activities	$	(114.1	)	$	2,159.6

ConAgra Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (continued)
(in millions)
(unaudited)


	Thirteen weeks ended
	August 30,			August 24,
	2009			2008
Cash flows from financing activities:
Net short-term borrowings (payments)	$	—		$	(565.3	)
Repayment of long-term debt		(2.9	)		(41.8	)
Repurchase of ConAgra Foods common shares		—			(900.0	)
Cash dividends paid		(85.0	)		(92.1	)
Exercise of stock options and issuance of other stock awards		(14.1	)		5.8
Other items		(0.8	)		(0.1	)

Net cash flows from financing activities – continuing operations		(102.8	)		(1,593.5	)
Net cash flows from financing activities – discontinued operations		—			—

Net cash flows from financing activities		(102.8	)		(1,593.5	)


Effect of exchange rate changes on cash and cash equivalents		0.8			(3.9	)

Net change in cash and cash equivalents		46.5			124.7
Discontinued operations cash activity included above:
Add: Cash balance included in assets held for sale at beginning of period		—			30.8
Cash and cash equivalents at beginning of period		243.2			140.9

Cash and cash equivalents at end of period	$	289.7		$	296.4

See notes to the condensed consolidated financial statements.

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 30, 2009 and August 24, 2008

(columnar dollars in millions except per share amounts)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The unaudited financial information reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position, and cash flows for the periods presented. The adjustments are of a normal recurring nature, except as otherwise noted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the ConAgra Foods, Inc. (the “Company,” “we,” “us,” or “our”) annual report on Form 10-K for the fiscal year ended May 31, 2009.

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.

Basis of Consolidation – The condensed consolidated financial statements include the accounts of ConAgra Foods, Inc. and all majority-owned subsidiaries. In addition, the accounts of all variable interest entities for which we have been determined to be the primary beneficiary are included in our condensed consolidated financial statements from the date such determination is made. All significant intercompany investments, accounts, and transactions have been eliminated.

Investments in Unconsolidated Affiliates – The investments in and the operating results of 50%-or-less-owned entities not required to be consolidated are included in the condensed consolidated financial statements on the basis of the equity method of accounting or the cost method of accounting, depending on specific facts and circumstances.

We review our investments in unconsolidated affiliates for impairment whenever events or changes in business circumstances indicate that the carrying amount of the investments may not be fully recoverable. Evidence of a loss in value that is other than temporary might include the absence of an ability to recover the carrying amount of the investment, the inability of the investee to sustain an earnings capacity which would justify the carrying amount of the investment, or, where applicable, estimated sales proceeds which are insufficient to recover the carrying amount of the investment. 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.

Cash and Cash Equivalents – Cash and all highly liquid investments with an original maturity of three months or less at the date of acquisition, including short-term time deposits and government agency and corporate obligations, are classified as cash and cash equivalents.

Shipping and Handling – 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.

Comprehensive Income – 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.

The following details the income tax expense (benefit) on components of other comprehensive income:


	Thirteen weeks ended
	August 30,			August 24,
	2009			2008
Unrealized losses on available-for-sale securities	$	(0.1	)	$	(0.2	)
Pension and postretirement healthcare liabilities		0.2			2.9

	$	0.1		$	2.7

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 30, 2009 and August 24, 2008

(columnar dollars in millions except per share amounts)

Accounting Changes – In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51(“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.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“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.

In February 2008, the FASB issued FASB Staff Position (“FSP”) 157-2, Effective Date of FASB Statement No. 157 (“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.

In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities (“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.

Recently Issued Accounting Pronouncements – In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (“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.

Use of Estimates – 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.

Reclassifications – Certain prior year amounts have been reclassified to conform with current year presentation.

Subsequent Events – 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.

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 30, 2009 and August 24, 2008

(columnar dollars in millions except per share amounts)

2. DISCONTINUED OPERATIONS AND DIVESTITURES

Fernando’s^® Operations

During the first quarter of fiscal 2010, we completed the divestiture of the Fernando’s^® 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 Fernando’s^® business have been reclassified as assets and liabilities held for sale within our consolidated balance sheets for all periods prior to the divestiture.

Trading and Merchandising Operations

On 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.

During fiscal 2009, we collected the $37 million short-term receivable due from the purchaser. See Note 4 for further discussion on the Notes.

We reflected the results of the divested trading and merchandising operations as discontinued operations for all periods presented.

Summary of Operational Results

The summary comparative financial results of the discontinued operations were as follows:


	Thirteen weeks ended
	August 30,			August 24,
	2009			2008
Net sales	$	1.3		$	213.5

Operating results from discontinued operations before income taxes	$	(2.1	)	$	57.5
Gain from disposal of businesses		—			488.0

Income (loss) before income taxes		(2.1	)		545.5
Income tax benefit (expense)		0.8			(210.7	)

Income (loss) from discontinued operations, net of tax	$	(1.3	)	$	334.8

The assets and liabilities classified as held for sale as of May 31, 2009 and August 24, 2008 were as follows:


	May 31,		August 24,
	2009		2008
Inventories	$	4.9	$	6.0

Current assets held for sale	$	4.9	$	6.0

Property, plant and equipment, net	$	1.6	$	7.4
Goodwill and other intangibles		—		3.2

Noncurrent assets held for sale	$	1.6	$	10.6

Other Divestitures

In July 2008, we completed the sale of our Pemmican^® 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 Pemmican^® business through providing sales and distribution services, the results of operations of the Pemmican^® business have not been reclassified as discontinued operations.

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 30, 2009 and August 24, 2008

(columnar dollars in millions except per share amounts)

3. ACQUISITIONS

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.

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.

4. PAYMENT-IN-KIND NOTES RECEIVABLE

In connection with the divestiture of the trading and merchandising operations, we received the Notes described in Note 2 that were recorded at an initial estimated fair value of $479 million.

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.

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.

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.

5. VARIABLE INTEREST ENTITIES

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.

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%.

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.

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.

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 30, 2009 and August 24, 2008

(columnar dollars in millions except per share amounts)

Due to the consolidation of these variable interest entities, we reflected in our balance sheets:


	August 30,		May 31,		August 24,
	2009		2009		2008
Cash	$	1.9	$	1.2	$	—
Receivables, net		11.9		12.6		—
Inventories		1.3		3.1		—
Prepaid expenses and other current assets		—		0.1		—
Property, plant and equipment, net		99.4		100.5		51.0
Goodwill		18.6		18.6		—
Brands, trademarks and other identifiable intangibles, net		10.4		10.6		—

Total assets	$	143.5	$	146.7	$	51.0

Current installments of long-term debt	$	6.3	$	6.1	$	3.4
Accounts payable		3.8		4.3		—
Accrued payroll		0.5		0.2		—
Other accrued liabilities		0.8		0.7		0.6
Senior long-term debt, excluding current installments		81.7		83.3		50.0
Other noncurrent liabilities (noncontrolling interest)		26.6		27.3		—

Total liabilities	$	119.7	$	121.9	$	54.0

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.

6. GARNER, NORTH CAROLINA ACCIDENT

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 Slim Jim^® 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.

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.

The costs incurred and insurance recoveries recognized, to date, are reflected in our condensed consolidated financial statements, as follows:


	Thirteen Weeks Ended August 30, 2009
	Consumer
	Foods			Corporate		Total
Cost of Goods Sold:
Inventory write-downs and related costs	$	6.2		$	—	$	6.2

Selling, general and administrative expenses:
Fixed asset impairments, clean-up costs, etc.	$	29.9		$	0.5	$	30.4
Insurance recoveries recognized		(33.7	)		—		(33.7	)

Total selling, general and administrative expenses	$	(3.8	)	$	0.5	$	(3.3	)


Net Loss	$	2.4		$	0.5	$	2.9

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.

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 30, 2009 and August 24, 2008

(columnar dollars in millions except per share amounts)

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 Slim Jim^® brand, we do not believe that the accident will have a material adverse effect on our results of operations, financial condition, or liquidity.

7. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

The change in the carrying amount of goodwill for the first quarter of fiscal 2010 was as follows:


	Consumer			Commercial
	Foods			Foods		Total
Balance as of May 31, 2009	$	3,354.3		$	137.0	$	3,491.3
Translation and other		(0.1	)		0.1		—

Balance as of August 30, 2009	$	3,354.2		$	137.1	$	3,491.3

Other identifiable intangible assets were as follows:


	August 30, 2009				May 31, 2009				August 24, 2008
	Gross				Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization		Amount		Amortization
Non-amortizing intangible assets	$	778.2	$	—	$	778.2	$	—	$	778.3	$	—
Amortizing intangible assets		83.5		25.2		80.5		23.4		60.7		18.4

	$	861.7	$	25.2	$	858.7	$	23.4	$	839.0	$	18.4

Non-amortizing intangible assets are comprised of brands and trademarks.

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.

8. DERIVATIVE FINANCIAL INSTRUMENTS

Our operations are exposed to market risks from adverse changes in commodity prices affecting the cost of raw materials and energy, foreign currency exchange rates, and interest rates. In the normal course of business, these risks are managed through a variety of strategies, including the use of derivatives.

Commodity futures and options contracts are used from time to time to economically hedge commodity input prices on items such as natural gas, vegetable oils, proteins, dairy, grains, and electricity. Generally, we economically hedge a portion of our anticipated consumption of commodity inputs for periods of up to 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.

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.

From time to time, we may use derivative instruments, including interest rate swaps, to reduce exposures related to changes in interest rates. No interest rate derivatives were outstanding during the periods presented.

In prior periods, we have designated certain commodity-based 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.

Economic Hedges of Forecasted Cash Flows

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

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 30, 2009 and August 24, 2008

(columnar dollars in millions except per share amounts)

economically hedge anticipated commodity consumption and to mitigate foreign currency cash flow risk in earnings immediately within general corporate expense (within cost of goods sold). The gains and losses are reclassified to segment operating results in the period in which the underlying item being economically hedged is recognized in cost of goods sold.

Other Derivative Activity (Primarily in the Milling Operations)

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.

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, Offsetting of Amounts Related to Certain Contracts, 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.

Derivative assets and liabilities and amounts representing a right to reclaim cash collateral were reflected in our balance sheets as follows:


	August 30,		May 31,		August 24,
	2009		2009		2008
Prepaid expenses and other current assets	$	83.1	$	52.1	$	126.1
Other accrued liabilities		16.0		30.8		35.1

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:

Derivative Assets

Derivative Liabilities

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Commodity contracts

Prepaid expenses and other current assets

81.7

Other accrued liabilities

36.5

The location and amount of gains and losses from derivatives reported in our consolidated statements of earnings were as follows:


	For the Thirteen Weeks Ended August 30, 2009
	Location in Condensed	Amount of Gain/(Loss) Recognized
	Consolidated Statement of	on Derivatives in Condensed
Derivatives Not Designated as Hedging	Earnings of Gain/(Loss) Recognized	Consolidated Statement of
Instruments Under SFAS No. 133	on Derivatives	Earnings
Commodity contracts	Cost of goods sold	$	65.9
Foreign exchange contracts	Cost of goods sold		(1.7	)


Total derivative gain		$	64.2

9. SHARE-BASED PAYMENTS

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.

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

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 30, 2009 and August 24, 2008

(columnar dollars in millions except per share amounts)

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.

The weighted average Black-Scholes assumptions for stock options granted during the first quarter of fiscal 2010 were as follows:


Expected volatility (%)			22.96
Dividend yield (%)			3.76
Risk-free interest rate (%)			2.29
Expected life of stock option (years)			4.66

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.

10. EARNINGS PER SHARE

Basic earnings per share is calculated on the basis of weighted average outstanding common shares. Diluted earnings per share is computed on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, restricted stock awards, and other dilutive securities.

The following table reconciles the income and average share amounts used to compute both basic and diluted earnings per share:


	Thirteen weeks ended
	August 30,			August 24,
	2009			2008
Net income available to ConAgra Foods, Inc. common stockholders:
Income from continuing operations attributable to ConAgra Foods, Inc. common stockholders	$	167.2		$	107.6
Income (loss) from discontinued operations, net of tax, attributable to ConAgra Foods, Inc. common stockholders		(1.3	)		334.8

Net income attributable to ConAgra Foods, Inc. common stockholders	$	165.9		$	442.4
Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated		0.3			—

Net income available to ConAgra Foods, Inc. common stockholders	$	165.6		$	442.4

Weighted average shares outstanding:
Basic weighted average shares outstanding		443.2			467.1
Add: Dilutive effect of stock options, restricted stock awards, and other dilutive securities		2.4			2.5

Diluted weighted average shares outstanding		445.6			469.6

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.

11. INVENTORIES

The major classes of inventories were as follows:


	August 30,		May 31,		August 24,
	2009		2009		2008
Raw materials and packaging	$	557.1	$	636.3	$	609.1
Work in process		98.5		104.9		101.2
Finished goods		1,273.4		1,202.2		1,251.8
Supplies and other		84.3		81.7		78.0

	$	2,013.3	$	2,025.1	$	2,040.1

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 30, 2009 and August 24, 2008

(columnar dollars in millions except per share amounts)

12. RESTRUCTURING

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.

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.

13. INCOME TAXES

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.

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.

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.

14. CONTINGENCIES

In fiscal 1991, we acquired Beatrice Company (“Beatrice”). As a result of the acquisition and the significant pre-acquisition contingencies of the Beatrice businesses and its former subsidiaries, our consolidated post-acquisition financial statements reflect liabilities associated with the estimated resolution of these contingencies. These include various litigation and environmental proceedings related to businesses divested by Beatrice prior to its acquisition by the Company. The litigation includes several public nuisance and personal injury suits against a number of lead paint and pigment manufacturers, including ConAgra Grocery Products and the Company as alleged successors to W. P. Fuller Co., a lead paint and pigment manufacturer owned and operated by Beatrice until 1967. Although decisions favorable to us have been rendered in Rhode Island, New Jersey, Wisconsin, and Ohio, we remain a defendant in active suits in Illinois and California. The Illinois suit seeks class-wide relief in the form of medical monitoring for elevated levels of lead in blood. In California, a number of cities and counties have joined in a consolidated action seeking abatement of the alleged public nuisance.

The environmental proceedings include litigation and administrative proceedings involving 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

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 30, 2009 and August 24, 2008

(columnar dollars in millions except per share amounts)

$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.

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.

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.

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.

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.

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.

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.

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.

In June 2009, an accidental explosion occurred at our manufacturing facility in Garner, North Carolina. See Note 6 for information related to this matter.

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.

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 30, 2009 and August 24, 2008

(columnar dollars in millions except per share amounts)

15. PENSION AND POSTRETIREMENT BENEFITS

We have defined benefit retirement plans (“plans”) for eligible salaried and hourly employees. Benefits are based on years of credited service and average compensation or stated amounts for each year of service. We also sponsor postretirement plans which provide certain medical and dental benefits (“other postretirement benefits”) to qualifying U.S. employees.

Components of pension benefit and other postretirement benefit costs included:


	Pension Benefits						Postretirement Benefits
	Thirteen weeks ended						Thirteen weeks ended
	August 30,			August 24,			August 30,			August 24,
	2009			2008			2009			2008
Service cost	$	12.5		$	12.9		$	0.1		$	0.2
Interest cost		37.0			35.3			4.5			5.7
Expected return on plan assets		(40.3	)		(39.6	)		(0.1	)		—
Amortization of prior service cost (gain)		0.8			0.8			(2.4	)		(2.8	)
Recognized net actuarial loss		0.9			0.5			—			2.5

Benefit cost - - Company plans		10.9			9.9			2.1			5.6
Pension benefit cost - multi-employer plans		2.5			2.3			—			—

Total benefit cost	$	13.4		$	12.2		$	2.1		$	5.6

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.

16. LONG-TERM DEBT

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.

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.

17. ACCELERATED SHARE REPURCHASE PROGRAM

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.

18. FAIR VALUE MEASUREMENTS

The provisions of SFAS No. 157, Fair Value Measurements (“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.

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:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities,

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 30, 2009 and August 24, 2008

(columnar dollars in millions except per share amounts)

Level 2 – Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets, and

Level 3 – Unobservable inputs reflecting our own assumptions and best estimate of what inputs market participants would use in pricing the asset or liability.

The following table presents our financial assets and liabilities measured at fair value based upon the level within the fair value hierarchy in which the fair value measurements fall, as of August 30, 2009:


	Level 1		Level 2		Level 3		Total
Assets:
Derivative assets	$	10.0	$	73.1	$	—	$	83.1
Available for sale securities		1.6		—		—		1.6
Deferred compensation assets		6.5		—		—		6.5

Total assets	$	18.1	$	73.1	$	—	$	91.2


Liabilities:
Derivative liabilities	$	—	$	16.0	$	—	$	16.0
Deferred and share-based compensation liabilities		21.2		—		—		21.2

Total liabilities	$	21.2	$	16.0	$	—	$	37.2

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.

19. RELATED PARTY TRANSACTIONS

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.

20. BUSINESS SEGMENTS AND RELATED INFORMATION

We report our operations in two reporting segments: Consumer Foods and Commercial Foods. The Consumer Foods reporting segment includes branded, private label, and customized food products, which are sold in various retail and foodservice channels, principally in North America. The products include a variety of categories (meals, entrees, condiments, sides, snacks, and desserts) across frozen, refrigerated, and shelf-stable temperature classes. The Commercial Foods reporting segment includes commercially branded foods and ingredients, which are sold principally to foodservice, food manufacturing, and industrial customers. The Commercial Foods 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 Lamb Weston^®, ConAgra Mills^®, Gilroy Foods & Flavors^TM, and Spicetec^®.

During the first quarter of fiscal 2010, we completed the transition of the direct management of the Consumer Foods reporting segment from the Chief Executive Officer to the 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.

During the first quarter of fiscal 2010, we transferred the management of the Alexia^® frozen food operations from the Consumer Foods segment to the Commercial Foods segment. Segment results have been recast to reflect this change.

****

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 30, 2009 and August 24, 2008

(columnar dollars in millions except per share amounts)

Intersegment sales have been recorded at amounts approximating market. Operating profit for each of the primary segments is based on net sales less all identifiable operating expenses. General corporate expense, net interest expense, and income taxes have been excluded from segment operations.


	Thirteen weeks ended
	August 30,			August 24,
	2009			2008
Net sales:
Consumer Foods	$	1,860.1		$	1,849.3
Commercial Foods		1,101.3			1,207.2

Total net sales	$	2,961.4		$	3,056.5

Operating profit:
Consumer Foods	$	249.9		$	186.3
Commercial Foods		140.8			133.9

Total operating profit	$	390.7		$	320.2

Equity method investment earnings (loss):
Consumer Foods	$	0.2		$	1.3
Commercial Foods		8.7			(0.4	)

Total equity method investment earnings	$	8.9		$	0.9

Operating profit plus equity method investment earnings:
Consumer Foods	$	250.1		$	187.6
Commercial Foods		149.5			133.5

Total operating profit plus equity method investment earnings	$	399.6		$	321.1

General corporate expenses		100.6			97.4
Interest expense, net		41.5			50.1
Income tax expense		91.0			66.0

Income from continuing operations	$	166.5		$	107.6
Less: Income (loss) attributable to noncontrolling interests		(0.7	)		—

Income from continuing operations attributable to ConAgra Foods, Inc.	$	167.2		$	107.6

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 30, 2009 and August 24, 2008

(columnar dollars in millions except per share amounts)

Net sales by product type within each segment were:


	Thirteen weeks ended
	August 30,		August 24,
	2009		2008
Net sales:
Consumer Foods:
Convenient Meals	$	642.4	$	616.8
Snacks		295.9		308.4
Meal Enhancers		245.2		230.7
Specialty Foods		676.6		693.4

Total Consumer Foods	$	1,860.1	$	1,849.3

Commercial Foods:
Specialty Potatoes	$	564.0	$	549.5
Milled Products		368.4		483.7
Seasonings, Blends and Flavors		95.0		100.0
Other		73.9		74.0

Total Commercial Foods	$	1,101.3	$	1,207.2

Total Net Sales	$	2,961.4	$	3,056.5

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.

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 30, 2009 and August 24, 2008

(columnar dollars in millions except per share amounts)

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 currency risk of our foreign operations for the first quarter of fiscal 2010 and 2009, under this methodology:


	Thirteen weeks ended
	August 30,			August 24,
	2009			2008
Net derivative losses incurred	$	(17.1	)	$	(33.5	)
Less: Net derivative losses allocated to reporting segments		(9.5	)		(0.5	)

Net derivative losses recognized in general corporate expenses	$	(7.6	)	$	(33.0	)


Net derivative losses allocated to Consumer Foods	$	(5.8	)	$	(0.9	)
Net derivative gains (losses) allocated to Commercial Foods		(3.7	)		0.4

Net derivative losses included in segment operating profit	$	(9.5	)	$	(0.5	)

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.

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.

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.

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.

ConAgra Foods, Inc. and Subsidiaries
Part I - Financial Information

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This report, including Management’s Discussion & Analysis, contains forward-looking statements. These statements are based on management’s current views and assumptions of future events and financial performance and are subject to uncertainty and changes in circumstances. Readers of this report should understand that these statements are not guarantees of performance or results. Many factors could affect our actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements, including those set forth in this report. These factors include, among other things: availability and prices of raw materials; the impact of the accident at the Garner manufacturing facility, including the ultimate costs incurred and the amounts received under insurance policies; product pricing; future economic circumstances; industry conditions; our ability to execute our operating plans; the success of our innovation, marketing, and cost savings initiatives; competitive environment and related market conditions; operating efficiencies; the ultimate impact of recalls; access to capital; actions of governments and regulatory factors affecting our businesses; and other risks described in our reports filed with the Securities and Exchange Commission. We caution readers not to place undue reliance on any forward-looking statements included in this report which speak only as of the date of this report.

The following discussion should be read together with our financial statements and related notes contained in this report and with the financial statements, related notes, and Management’s Discussion & Analysis in our annual report on Form 10-K for the fiscal year ended May 31, 2009. Results for the thirteen week period ended August 30, 2009 are not necessarily indicative of results that may be attained in the future.

Fiscal 2010 First Quarter Executive Overview

ConAgra Foods, Inc. (NYSE: CAG) is one of North America’s leading food companies, with brands in 97% of America’s households. Consumers find Banquet^®, Chef Boyardee^®, Egg Beaters^®, Healthy Choice^®, Hebrew National^®, Hunt’s^®, Marie Callender’s^®, Orville Redenbacher’s^®, PAM^®, Peter Pan^®, Reddi-wip^®, and many other ConAgra Foods brands in grocery, convenience, mass merchandise, and club stores. We also have a strong business-to-business presence, supplying potato, as well as other vegetable, spice, and grain products to a variety of well-known restaurants, foodservice operators, and commercial customers.

Diluted earnings per share were $0.37 in the first quarter of fiscal 2010. Diluted earnings per share were $0.94 in the first quarter of fiscal 2009, including $0.23 per diluted share from continuing operations and $0.71 per diluted share from discontinued operations. Several significant items affect the comparability of year-over-year results of continuing operations (see “Items Impacting Comparability” below).

Items Impacting Comparability

Segment presentation of gains and losses from derivatives used for hedging of anticipated commodity input costs and hedging of foreign currency exchange rate risks is discussed in the segment review below.

Items of note impacting comparability for the first quarter of fiscal 2009 included the following:

Reported within Continuing Operations

	•		a gain of $19 million ($11 million after-tax) on the sale of the Pemmican^® business and

	•		charges totaling $9 million ($8 million after-tax) for costs under our restructuring plans.

Reported within Discontinued Operations

•

a gain of $488 million ($299 million after-tax) on the sale of the trading and merchandising business.

Garner, North Carolina Accident

The costs incurred and insurance recoveries recognized, to date, are reflected in our condensed consolidated financial statements, as follows:


	Consumer
Thirteen Weeks Ended August 30, 2009	Foods			Corporate		Total
Cost of Goods Sold:
Inventory write-downs and related costs	$	6.2		$	0.0	$	6.2

Selling, general and administrative expenses:
Fixed asset impairments, clean-up costs, etc.	$	29.9		$	0.5	$	30.4
Insurance recoveries recognized		(33.7	)		0.0		(33.7	)

Total selling, general and administrative expenses	$	(3.8	)	$	0.5	$	(3.3	)


Net Loss	$	2.4		$	0.5	$	2.9

Sweet Potato Investment

In August 2009, we announced plans to build a new, state-of-the-art, environmentally friendly processing plant near Delhi, Louisiana, designed primarily to process high-quality sweet potatoes from the region into fries and related products. The new plant is scheduled to open in November 2010.

Segment Review

We report our operations in two reporting segments: Consumer Foods and Commercial Foods.

Consumer Foods

The Consumer Foods reporting segment includes branded and private label food products that 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.

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 with 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.

In June 2009, we completed the divestiture of the Fernando’s^® foodservice brand for proceeds of approximately $6.4 million. We reflect the results of these operations as discontinued operations for all periods presented. The assets and liabilities of the divested Fernando’s^® business have been reclassified as assets and liabilities held for sale within our consolidated balance sheets for all periods presented.

Commercial Foods

The Commercial Foods reporting segment includes commercially branded foods and ingredients, which are sold principally to foodservice, food manufacturing, and industrial customers. The 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 ConAgra Mills^®, Lamb Weston^®, Gilroy Foods & Flavors^TM, and Spicetec^®.

Presentation of Derivative Gains (Losses) in Segment Results

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.


	Thirteen weeks ended
	August 30,			August 24,
	2009			2008
Net derivative losses incurred	$	(17.1	)	$	(33.5	)
Less: Net derivative losses allocated to reporting segments		(9.5	)		(0.5	)

Net derivative losses recognized in general corporate expenses	$	(7.6	)	$	(33.0	)


Net derivative losses allocated to Consumer Foods	$	(5.8	)	$	(0.9	)
Net derivative gains (losses) allocated to Commercial Foods		(3.7	)		0.4

Net derivative losses included in segment operating profit	$	(9.5	)	$	(0.5	)

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 had not been allocated to segment operating results.

Net Sales



($ in millions)	Net Sales
*Reporting Segment*	Thirteen weeks ended
	August 30,		August 24,		% Inc /
	2009		2008		(Dec)
Consumer Foods	$	1,860	$	1,849		1	%
Commercial Foods		1,101		1,207		(9	)%

Total	$	2,961	$	3,056		(3	)%

Net sales for the first quarter of fiscal 2010 were $2.96 billion, a decrease of $95 million, or 3%, from the first quarter of fiscal 2009. The decrease in net sales for the first quarter of fiscal 2010 was largely due to lower sales in the flour milling business in our Commercial Foods segment. This was largely driven by decreases in wheat costs.

Consumer Foods net sales for the first quarter of fiscal 2010 were $1.86 billion, an increase of 1%, compared to the first quarter of fiscal 2009. Results reflected net pricing and mix improvement of 3%, partially offset by a decline in volume of approximately 1%. The decline in volume reflects an approximately 2% negative impact due to the inability to supply certain Slim Jim^{^®} products following the June 9, 2009 Garner, North Carolina plant accident. Volume declines also reflect an approximately 1% negative impact due to our elimination of certain low-margin SKUs and our decision to reduce our presence in certain low-margin channels and

geographic markets. The strengthening of the U.S. dollar relative to foreign currencies resulted in a reduction of net sales of approximately 1% as compared to the first quarter of fiscal 2009.

Sales of Healthy Choice^{^®} and Marie Callender’s^{^®} frozen meals increased by 26% and 15%, respectively, in the first quarter of fiscal 2010, as compared to the first quarter of fiscal 2009, driven by the introduction of new products and related marketing programs. Sales of products associated with some of our other most significant brands, including Hebrew National^{^®}, Hunt’s^{^®}, Orville Redenbachers^{^®}, Reddi-wip^{^®}, Snack Pak^{^®}, and Wesson^{^®}, grew in the first quarter of fiscal 2010. Sales of Slim Jim^{^®} meat snack products declined by 58% in the first quarter of fiscal 2010, as compared to the first quarter of fiscal 2009, due to the accident at our Garner production facility. Sales of Banquet^{^®} frozen meals declined by 6% in the first quarter of fiscal 2010, as compared to the first quarter of fiscal 2009, as volume declines more than offset increased pricing. Other significant brands whose products experienced sales declines in the first quarter of fiscal 2010 include ACT II^{^®}, Chef Boyardee^{^®}, Egg Beaters^{^®}, Libby’s^{^®}, PAM^{^®}, and Peter Pan^{^®}.

Commercial Foods net sales were $1.10 billion for the first quarter of fiscal 2010, a decrease of $106 million, or 9%, compared to the first quarter of fiscal 2009. Results for the first quarter of fiscal 2010 reflected the pass-through of lower wheat prices by the segment’s flour milling operations, resulting in a reduction of net sales of $115 million. Results also reflect higher selling prices in our Lamb Weston^{^®} specialty potato products business, partially offset by reduced volume in the specialty potato and foods and flavors businesses, reflecting the difficult economic environment in the foodservice channel. Net sales from Lamb Weston BSW, a business acquired in the second quarter of fiscal 2009, were $18 million in the first quarter of fiscal 2010.

Selling, General and Administrative Expenses (Includes general corporate expenses)

Selling, general and administrative expenses totaled $426 million for the first quarter of fiscal 2010, an increase of $58 million, or 16%, as compared to the same period of the prior year. Selling, general and administrative expenses for the first quarter of fiscal 2010 included the following:

	•		an increase in incentive compensation expense of $25 million,

	•		an increase in health insurance costs of $6 million,

	•		an increase in advertising and promotion expenses of $5 million, and

	•		a net benefit of $3 million, representing costs associated with the accidental explosion at our Garner, North Carolina facility, more than offset by insurance recoveries.

Selling, general and administrative expenses in the first quarter of fiscal 2009 included:

	•		a $19 million gain on the disposition of the Pemmican^® business,

	•		charges of approximately $9 million related to the execution of our restructuring plans, and

	•		a gain of $5 million on the sale of a facility in our Commercial Foods segment.

Operating Profit (Earnings before general corporate expenses, interest expense, net, income taxes, and equity method investment earnings)


($ in millions)	Operating Profit
*Reporting Segment*	Thirteen weeks ended
	August 30,		August 24,		% Inc
	2009		2008		(Dec)
Consumer Foods	$	250	$	186		34	%
Commercial Foods		141		134		5	%

Consumer Foods operating profit for the first quarter of fiscal 2010 was $250 million, an increase of $64 million, or 34%, compared to the first quarter of fiscal 2009. Gross profits were $81 million higher for the first quarter of fiscal 2010 than for the first quarter of fiscal 2009, driven by the impact of higher net sales, discussed above, lower commodity input costs (particularly in our edible oils business), and the benefit of supply chain cost savings initiatives. Consumer Foods selling, general and administrative expenses were higher in the first quarter of fiscal 2010 than in the first quarter of fiscal 2009 due, in part, to a $6 million increase in incentive compensation expenses and a $4 million increase in advertising and promotion expenses. The Consumer Foods segment recognized a $19 million gain on the sale of the Pemmican^® brand and incurred costs of $8 million in connection with our restructuring plans in the first quarter of fiscal 2009. The accident at the Garner, North Carolina production facility in the first quarter of fiscal 2010 resulted in charges totaling $37 million for the impairment of property, plant and equipment, inventory write-offs, workers’ compensation, site clean-up, and other related costs. The impact of these charges was offset by insurance recoveries of $34 million for the involuntary conversion of assets. Gross profits from Slim Jim^{^®} branded products were $2 million and $13 million in the first quarter of fiscal 2010 and 2009, respectively, reflecting the impact of the accident. The strengthening of the U.S. dollar relative to foreign currencies resulted in a reduction of operating profit of approximately $15 million as compared to the first quarter of fiscal 2009.

For the first quarter of fiscal 2010, operating profit for the Commercial Foods segment was $141 million, an increase of $7 million, or 5%, from the first quarter of fiscal 2009. Gross profits in the Commercial Foods segment were $18 million higher for the first quarter

of fiscal 2010 than for the first quarter of fiscal 2009, largely driven by improved margins in the flour milling business. Improved gross profits in the specialty potato products business were offset by reduced gross profits in the specialty vegetables and flavorings business. Commercial Foods operating profit in the first quarter of fiscal 2009 included a gain of $5 million from the sale of a production facility.

Interest Expense, Net

Net interest expense was $42 million and $50 million for the first quarter of fiscal 2010 and 2009, respectively. The decrease reflected $20 million and $14 million of interest income in the first quarter of fiscal 2010 and 2009, respectively, principally from the payment-in-kind notes received in connection with the disposition of the trading and merchandising business on June 23, 2008.

Income Taxes

In the first quarter of fiscal 2010 and 2009, our income tax expense was $91 million and $66 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) was approximately 35% and 38% for the first quarter of fiscal 2010 and 2009, respectively. Income tax expense for the first quarter of fiscal 2009 reflected the impact of divestitures of international subsidiaries, a change in deferred tax items related to the divestiture of the trading and merchandising business, and a reduction in income tax contingency reserves.

Equity Method Investment Earnings

Equity method investment earnings were $9 million and $1 million for the first quarter of fiscal 2010 and 2009, respectively. Increased equity method investment earnings were the result of more profitable operations of potato processing ventures.

Discontinued Operations

Our discontinued operations generated an after-tax loss of $1 million and after-tax earnings of $335 million in the first quarter of fiscal 2010 and 2009, respectively.

In June 2008, we completed the sale of the trading and merchandising operations and recognized an after-tax gain on the disposition of approximately $299 million in the first quarter of fiscal 2009.

The trading and merchandising operations generated after-tax earnings of $36 million during the first quarter of fiscal 2009, prior to the divestiture.

Earnings Per Share

Our diluted earnings per share in the first quarter of fiscal 2010 were $0.37. Our diluted earnings per share in the first quarter of fiscal 2009 were $0.94, including $0.23 per diluted share from continuing operations and $0.71 per diluted share from discontinued operations. See “Items Impacting Comparability” above as several other significant items affected the comparability of year-over-year results of operations.

Liquidity and Capital Resources

Sources of Liquidity and Capital

Our primary financing objective is to maintain a prudent capital structure that provides us flexibility to pursue our growth objectives. We currently use short-term debt principally to finance ongoing operations, including our seasonal requirements for working capital (accounts receivable, prepaid expenses and other current assets, and inventories, less accounts payable, accrued payroll, and other accrued liabilities) and a combination of equity and long-term debt to finance both our base working capital needs and our noncurrent assets.

Commercial paper borrowings (usually less than 30 days maturity) are reflected in our consolidated balance sheets within notes payable. At August 30, 2009, we had a $1.5 billion multi-year revolving credit facility with a syndicate of financial institutions that matures in December 2011. The multi-year facility has historically been used solely as a back-up facility for our commercial paper program. As of August 30, 2009, there were no outstanding borrowings under the credit facility. Borrowings under the multi-year facility bear interest at or below prime rate and may be prepaid without penalty. The multi-year revolving credit facility requires us to repay borrowings if our consolidated funded debt exceeds 65% of the consolidated capital base, or if fixed charges coverage, each as defined in the applicable agreements, is less than 1.75 to 1.0. As of the end of the first quarter of fiscal 2010, we were in compliance with the credit agreement’s financial covenants.

As of the end of the first quarter of fiscal 2010, our senior long-term debt ratings were all investment grade. A significant downgrade in our credit ratings would not affect our ability to borrow amounts under the revolving credit facilities, although borrowing costs would increase. A downgrade of our short-term credit ratings would impact our ability to borrow under our commercial paper program by negatively impacting borrowing costs and causing shorter durations, as well as making access to commercial paper more difficult.

We have repurchased our shares of common stock from time to time after considering market conditions and in accordance with repurchase limits authorized by our Board of Directors. During the first quarter of fiscal 2009, we executed an accelerated share repurchase program, which resulted in the repurchase of approximately 38.4 million shares of our stock for $900 million. We received an additional 5.6 million shares in the fourth quarter of fiscal 2009 at no additional cost to us. At August 30, 2009, our current share repurchase authorization was essentially exhausted. During the first quarter of fiscal 2009, we sold our trading and merchandising operations for proceeds of: 1) approximately $2.2 billion in cash, net of transaction costs, 2) $550 million (original principal amount) of payment-in-kind debt securities issued by the purchaser which was recorded at an initial estimated fair value of $479 million, 3) a short-term receivable of $37 million due from the purchaser (which was subsequently collected), 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. The Notes, which are classified as other assets, had a carrying value of $542 million at August 30, 2009. The short term receivable was paid in full in December 2008.

On September 25, 2009, our board of directors approved an increase in our quarterly dividend to $0.20 per share from the previous level of $0.19 per share.

Cash Flows

During the first quarter of fiscal 2010, we generated $47 million of cash, which was the net impact of $263 million generated from operating activities, $114 million used in investing activities, and $103 million used in financing activities.

Cash generated from operating activities of continuing operations totaled approximately $264 million in the first quarter of fiscal 2010, as compared to $198 million generated in the first quarter of fiscal 2009, largely due to the increase in income from continuing operations. Cash used in operating activities of discontinued operations was approximately $2 million in the first quarter of fiscal 2010, as compared to $636 million in the first quarter of fiscal 2009, as we used a significant amount of cash to fund working capital needs in the trading and merchandising business immediately prior to its divestiture.

Cash used in investing activities from continuing operations totaled $121 million in the first quarter of fiscal 2010, versus cash used in investing activities of $94 million in the first quarter of fiscal 2009. Investing activities of continuing operations in the first quarter of fiscal 2010 consisted primarily of capital expenditures of $119 million. Investing activities of continuing operations in the first quarter of fiscal 2009 consisted of capital expenditures of $106 million and investments of $30 million for the purchase of businesses and intangible assets, partially offset by $29 million from the sale of a business. We generated $2.25 billion of cash from investing activities of discontinued operations in the first quarter of fiscal 2009 from the disposition of the trading and merchandising business.

Cash used in financing activities totaled $103 million and $1.59 billion in the first quarter of fiscal 2010 and 2009, respectively. During the first quarter of fiscal 2010 and 2009, we paid dividends of $85 million and $92 million, respectively. In the first quarter of fiscal 2009, we repurchased $900 million of our common stock as part of our share repurchase program. During the first quarter of fiscal 2009, we decreased our debt by approximately $607 million, reflecting repayment of $1.1 billion of commercial paper balances (including approximately $531 million drawn in the first quarter to support the working capital requirements of the trading and merchandising operations) and approximately $40 million of long-term debt, largely with proceeds from the disposition of the trading and merchandising business.

We estimate our capital expenditures in fiscal 2010 will be approximately $600 million. This amount reflects an estimated $90 million of capital expenditures for the construction of a sweet potato processing facility in Delhi, Louisiana, as well as approximately $35 million of expected capital expenditures related to the recovery of the Slim Jim^® operations.

With respect to the sweet potato facility, we have secured approximately $34 million of cash incentives in working with Louisiana authorities and continue to work towards securing additional federal tax incentives for this project. We also expect significant insurance recoveries related to the Garner, North Carolina accident and have received $39 million from insurance carriers subsequent to the first quarter of fiscal 2010.

Management believes that existing cash balances, cash flows from operations (including insurance recoveries), existing credit facilities, and access to capital markets will provide sufficient liquidity to meet our working capital needs, planned capital expenditures, and payment of anticipated quarterly dividends for at least the next twelve months.

Off-Balance Sheet Arrangements

We use off-balance sheet arrangements (e.g., operating leases) where the economics and sound business principles warrant their use. We periodically enter into guarantees and other similar arrangements as part of transactions in the ordinary course of business. These are described further in “Obligations and Commitments,” below.

In September 2008, we formed a potato processing venture, Lamb Weston BSW, with Ochoa Ag Unlimited Foods, Inc. We provide all sales and marketing services to the venture. We have determined that Lamb Weston BSW is a variable interest entity and that we are the primary beneficiary of the entity. Accordingly, we consolidate the financial statements of Lamb Weston BSW. 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.

Due to the consolidation of these variable interest entities, we reflected in our balance sheets:


	August 30,		May 31,		August 24,
	2009		2009		2008
Cash	$	1.9	$	1.2	$	—
Receivables, net		11.9		12.6		—
Inventories		1.3		3.1		—
Prepaid expenses and other current assets		—		0.1		—
Property, plant and equipment, net		99.4		100.5		51.0
Goodwill		18.6		18.6		—
Brands, trademarks and other intangibles, net		10.4		10.6		—

Total assets	$	143.5	$	146.7	$	51.0


Current installments of long-term debt	$	6.3	$	6.1	$	3.4
Accounts payable		3.8		4.3		—
Accrued payroll		0.5		0.2		—
Other accrued liabilities		0.8		0.7		0.6
Senior long-term debt, excluding current installments		81.7		83.3		50.0
Other noncurrent liabilities (minority interest)		26.6		27.3		—

Total liabilities	$	119.7	$	121.9	$	54.0

Obligations and Commitments

As part of our ongoing operations, we enter into arrangements that obligate us to make future payments under contracts such as lease agreements, debt agreements, and unconditional purchase obligations (i.e., obligations to transfer funds in the future for fixed or minimum quantities of goods or services at fixed or minimum prices, such as “take-or-pay” contracts). The unconditional purchase obligation arrangements are entered into in our normal course of business in order to ensure adequate levels of sourced product are available. Of these items, debt and capital lease obligations, which totaled $3.6 billion as of August 30, 2009, were recognized as liabilities in our consolidated balance sheet. Operating lease obligations and unconditional purchase obligations, which totaled $881 million as of August 30, 2009, in accordance with generally accepted accounting principles, were not recognized as liabilities in our consolidated balance sheet.

A summary of our contractual obligations as of August 30, 2009 was as follows (including obligations of discontinued operations):


	Payments Due by Period
	(in millions)
			Less than						After 5
Contractual Obligations	Total		1 Year		1-3 Years		3-5 Years		Years
Long-term debt	$	3,538.9	$	10.6	$	630.0	$	599.9	$	2,298.4
Capital lease obligations		64.6		5.2		7.8		5.7		45.9
Operating lease obligations		353.2		62.3		109.7		71.0		110.2
Purchase obligations		527.3		458.4		53.0		7.6		8.3

Total	$	4,484.0	$	536.5	$	800.5	$	684.2	$	2,462.8

We are also contractually obligated to pay interest on our long-term debt and capital lease obligations. The weighted average interest rate of the long-term debt obligations outstanding as of August 30, 2009 was approximately 7.0%.

We consolidate the assets and liabilities of certain entities that have been determined to be variable interest entities and for which we have been determined to be the primary beneficiary of these entities. The amounts reflected in contractual obligations of long-term debt, in the table above, include $88 million of liabilities of these variable interest entities to the creditors of such entities. The long-term debt recognized as a result of consolidating these entities does 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.

The purchase obligations noted in the table above do not reflect approximately $501 million of open purchase orders, some of which are not legally binding. These purchase orders are settleable in the ordinary course of business in less than one year.

As part of our ongoing operations, we also enter into arrangements that obligate us to make future cash payments only upon the occurrence of a future event (e.g., guarantees of debt or lease payments of a third party should the third party be unable to perform). In accordance with generally accepted accounting principles, the following commercial commitments are not recognized as liabilities in our consolidated balance sheet. A summary of our commitments, including commitments associated with equity method investments, as of August 30, 2009 was as follows:


	Amount of Commitment Expiration Per Period
	(in millions)
			Less than						After 5
Other Commercial Commitments	Total		1 Year		1-3 Years		3-5 Years		Years
Guarantees	$	110.6	$	69.6	$	5.8	$	5.4	$	29.8
Other commitments		0.5		0.5		—		—		—

Total	$	111.1	$	70.1	$	5.8	$	5.4	$	29.8

In certain limited situations, we will guarantee an obligation of an unconsolidated entity. 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 $18 million as of August 30, 2009. 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 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 effectively guaranteed by us was approximately $64 million, included in the table above. 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.

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 million, included in the table above. 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 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.

The obligations and commitments tables above do not include any reserves for income taxes under FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (as amended), as we are unable to reasonably estimate the ultimate amount or timing of settlement of our reserves for income taxes. The liability for gross unrecognized tax benefits at August 30, 2009 was $79 million. The net amount of unrecognized tax benefits at August 30, 2009, that, if recognized, would impact our effective tax rate was $51 million. Recognition of this tax benefit would have a favorable impact on our effective tax rate.

Critical Accounting Estimates

A discussion of our critical accounting estimates can be found in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our annual report on Form 10-K for the fiscal year ended May 31, 2009.

Recently Issued Accounting Pronouncements

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (“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.

Related Party Transactions

From time to time, we have used the services of a firm whose chief executive officer serves on our Board of Directors. Payments to this firm for environmental and agricultural engineering services performed and structures acquired totaled $0.2 million in the first quarter of fiscal 2010 and $0.1 million in the first quarter of fiscal 2009.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The principal market risks affecting us are exposures to price fluctuations of commodity and energy inputs, interest rates, and foreign currencies.

Other than the changes noted below, there have been no material changes in our market risk during the thirteen weeks ended August 30, 2009. For additional information, refer to the “Quantitative and Qualitative Disclosures about Market Risk” in Item 7A of our annual report on Form 10-K for the fiscal year ended May 31, 2009.

Commodity Market Risk

We purchase commodity inputs such as wheat, corn, oats, soybean meal, soybean oil, meat, dairy products, sugar, natural gas, electricity, and packaging materials to be used in our operations. These commodities are subject to price fluctuations that may create price risk. We enter into commodity hedges to manage this price risk using physical forward contracts or derivative instruments. We have policies governing the hedging instruments our businesses may use. These policies include limiting the dollar risk exposure for each of our businesses. We also monitor the amount of associated counter-party credit risk for all non-exchange-traded transactions.

The following table presents one measure of market risk exposure using sensitivity analysis. Sensitivity analysis is the measurement of potential loss of fair value of a derivative instrument resulting from a hypothetical change of 10% in market prices. Actual changes in market prices may differ from hypothetical changes. In practice, as markets move, we actively manage our risk and adjust hedging strategies as appropriate.

Fair value was determined using quoted market prices and was based on our net derivative position by commodity.

The market risk exposure analysis excludes the underlying commodity positions that are being hedged. The values of commodities hedged have a high inverse correlation to price changes of the derivative commodity instrument.

Effect of a 10% change in market price:

Processing Activities


($ in millions)
Grains/Foods	$	9
Energy		6
Other		1

Foreign Currency Risk

In order to reduce exposures related to changes in foreign currency exchange rates, we may enter into forward exchange or option contracts for transactions denominated in a currency other than the functional currency for certain of our operations. This activity primarily relates to economically hedging against foreign currency risk in purchasing inventory and capital equipment, sales of finished goods, and future settlement of foreign denominated assets and liabilities.

One measure of market risk exposure can be determined using sensitivity analysis. Sensitivity analysis is the measurement of potential loss of fair value resulting from a hypothetical change of 10% in exchange rates. Actual changes in exchange rates may differ from

hypothetical changes. This sensitivity analysis excludes the underlying foreign denominated transactions that are being hedged, which have a high inverse correlation to price changes of the derivative hedging instrument.

Based on our net foreign currency derivative positions at the end of the first quarter of fiscal 2010, the maximum potential loss of fair value resulting from a hypothetical change of 10% in exchange rates was $5 million.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s management carried out an evaluation, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of August 30, 2009. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective.

Internal Control Over Financial Reporting

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated any change in the Company’s internal control over financial reporting that occurred during the quarter covered by this report and determined that there was no change in the Company’s internal control over financial reporting during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

ConAgra Foods, Inc. and Subsidiaries

Part II - Other Information

ITEM 1. LEGAL PROCEEDINGS

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.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table presents the total number of shares of common stock purchased during the first quarter of fiscal 2010, the average price paid per share, the number of shares that were purchased as part of a publicly announced repurchase program, and the approximate dollar value of the maximum number of shares that may yet be purchased under the share repurchase program:


								Maximum Number (or
	Total Number			Average		Total Number of Shares		Approximate Dollar
	of Shares (or			Price Paid		Purchased as Part of		Value) of Shares that
	Units)			per Share (or		Publicly Announced		may yet be Purchased
Period	Purchased			Unit)		Plans or Programs (1)		under the Program (1)
June 1 through June 28, 2009		—			—		—	$	62,000
June 29 through July 26, 2009		15,073	⁽²⁾	$	19.67		—	$	62,000
July 27 through August 30, 2009		—			—		—	$	62,000

Total Fiscal 2010 First Quarter Activity		15,073		$	19.67		—	$	62,000


(1)		Pursuant to publicly announced share repurchase programs from December 2003, we have repurchased approximately 106.5 million shares at a cost of $2.5 billion through August 30, 2009. The current program has no expiration date.

(2)		The total number of shares purchased consists of shares of mature common stock tendered by employees to the Company to satisfy employees’ tax withholding obligations in excess of the statutory minimum in connection with the vesting of equity awards.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company’s annual meeting of stockholders was held on September 25, 2009 (following the end of the period covered by this report). The vote for each matter voted upon at the meeting is set forth below:

Election of Directors:


	FOR		WITHHELD
Mogens C. Bay		361,907,826		17,100,441
Stephen G. Butler		374,004,067		5,004,200
Steven F. Goldstone		370,788,818		8,219,449
Joie A. Gregor		371,283,880		7,724,387
Rajive Johri		373,518,891		5,489,376
W.G. Jurgensen		373,990,648		5,017,619
Richard H. Lenny		373,861,831		5,146,436
Ruth Ann Marshall		371,135,004		7,873,263
Gary M. Rodkin		373,965,064		5,043,203
Andrew J. Schindler		373,793,525		5,214,742
Kenneth E. Stinson		368,651,979		10,356,288

Approval of the ConAgra Foods 2009 Stock Plan:


FOR:			229,800,586
AGAINST:			85,407,285
ABSTAIN:			2,173,480
BROKER NON-VOTES:			61,626,916

Approval of the ConAgra Foods Executive Incentive Plan, as amended and restated:


FOR:			273,976,811
AGAINST:			41,003,699
ABSTAIN:			2,400,841
BROKER NON-VOTES:			61,626,916

Ratification of the appointment of KPMG LLP as independent auditors for fiscal year 2010:


FOR:			373,981,231
AGAINST:			3,947,399
ABSTAIN:			1,079,637
BROKER NON-VOTES:			0

ITEM 6. EXHIBITS

All exhibits as set forth on the Exhibit Index, which is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	CONAGRA FOODS, INC.
	By:	/s/ JOHN F. GEHRING
		John F. Gehring
		Executive Vice President and Chief Financial Officer

	By:	/s/ PATRICK D. LINEHAN
		Patrick D. Linehan
		Senior Vice President and Corporate Controller

Dated this 7th day of October, 2009.

EXHIBIT INDEX


NUMBER	DESCRIPTION	PAGE

10.1*	ConAgra Foods 2009 Stock Plan, incorporated herein by reference to Exhibit 10.1 of ConAgra Foods’ current report on Form 8-K dated September 28, 2009

10.2*	ConAgra Foods Executive Incentive Plan, as amended and restated, incorporated herein by reference to Exhibit 10.2 of ConAgra Foods’ current report on Form 8-K dated September 28, 2009

10.3*	Form of Restricted Stock Unit Agreement under the ConAgra Foods 2009 Stock Plan		39

10.4*	Form of Stock Option Agreement under the ConAgra Foods 2009 Stock Plan		45

10.5*	Form of Stock Option Agreement for Non-Employee Directors under the ConAgra Foods 2009 Stock Plan		50

10.6*	Form of Stock Option Agreement for certain named executive officers under the ConAgra Foods 2009 Stock Plan		55

12	Statement regarding computation of ratio of earnings to fixed charges		61

31.1	Section 302 Certificate of Chief Executive Officer		62

31.2	Section 302 Certificate of Chief Financial Officer		63

32.1	Section 906 Certificates		64

101.1	The following materials from ConAgra Foods’ Quarterly Report on Form 10-Q for the quarter ended August 30, 2009, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text, and (vi) document and entity information.


*		Management contract or compensatory plan.

EX-10.3 2 c53860exv10w3.htm EXHIBIT 10.3 exv10w3

Exhibit 10.3

FORM OF
RESTRICTED STOCK UNIT AGREEMENT
CONAGRA FOODS 2009 STOCK PLAN

This Restricted Stock Unit Agreement, hereinafter referred to as the “Agreement” is made on the day of , 20 between ConAgra Foods, Inc., a Delaware corporation (“ConAgra Foods”), and the undersigned [as applicable: employee/consultant] of the Company (“Participant”).

Award Grant. ConAgra Foods hereby grants Restricted Stock Units (“RSUs”, and each such unit an “RSU”) to the Participant under the ConAgra Foods 2009 Stock Plan (the “Plan”), as follows:


Participant:


Employee ID:


Number of RSUs:


Date of Grant:


Vesting Date:		(“Settlement Date”)

	The Settlement Date is subject to modification for early settlement upon termination as provided in Paragraph 3.

Dividends: Dividend equivalents on the RSU will [as applicable: be paid to the Participant when regular, cash dividends are declared and paid on the Stock/ be accumulated for the benefit of the Participant and paid to the Participant upon settlement of an RSU as regular, cash dividends are declared and paid on the Stock / not be paid or accumulated.]

IN WITNESS WHEREOF, ConAgra Foods and the Participant have caused this Agreement to be executed effective as of the date first written above. ConAgra Foods and the Participant acknowledge that this Agreement includes six pages including this first page. The Participant acknowledges reading and agreeing to all six pages and that in the event of any conflict between the terms of this Agreement and the terms of the Plan, the Plan shall control.


CONAGRA FOODS, INC.						PARTICIPANT

By:

Date						Date

2. Definitions. Capitalized terms used herein without definition have the meaning set forth in the Plan. The following terms shall have the respective meanings set forth below:

(a) “Continuous Employment” shall mean the absence of any interruption or termination of employment with the Company and the performance of substantial services. Except as set forth in Section 3(c), Continuous Employment shall not be considered interrupted in the case of sick leave, long term disability, military leave or any other leave of absence approved by the Company.

(b) “Early Retirement” means terminating employment with the Company when the Participant is (i) at least age 55, and (ii) has at least ten years of vesting or credited service with the Company.

(c) “Normal Retirement” shall mean a Separation from Service with the Company on or after attaining age [applicable age, 65 or 62 to be inserted].

(d) “Separation from Service” means the date that the Participant “separates from service” within the meaning of Section 409A of the Code. Generally, a Participant separates from service if and only if the Participant dies, retires, or otherwise has a termination of employment with the Company, determined in accordance with the following:

	(i)		Leaves of Absence. The employment relationship is treated as continuing intact while the Participant is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or, if longer, so long as the Participant retains a right to reemployment with the Company under an applicable statute or by contract. A leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Company. If the period of leave exceeds six months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Participant to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, a twenty nine month period of absence shall be substituted for such six month period.

	(ii)		Dual Status. Generally, if a Participant performs services both as an employee and an independent contractor, such Participant must separate from service both as an employee, and as an independent contractor pursuant to standards set forth in Treasury Regulations, to be treated as having a separation from service. However, if a Participant provides services to the Company as an employee and as a member of the Board, and if any plan in which such person participates as a Board member is not aggregated with this Agreement pursuant to Treasury Regulation Section 1.409A-1(c)(2)(ii), then the services provided as a director are not taken into account in determining whether the Participant has a separation from service as an employee for purposes of this Agreement.

	(iii)		Termination of Employment. Whether a termination of employment has occurred is determined based on whether the facts and circumstances indicate that the Company and the Participant reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Participant would perform after such date (whether as an employee or as an independent contractor except as provided in (ii) above) would permanently decrease to no more than twenty (20) percent of the average level of bona fide services performed (whether as an employee or an independent contractor, except as provided in (ii) above) over the immediately preceding thirty-six month period (or the full period of services to the Company if the Participant has been providing services to the Company less than thirty-six months). For periods during which a Participant is on a paid bona fide leave of absence and has not otherwise terminated employment as described above, for purposes of this paragraph (iii) the Participant is treated as providing bona fide services at a level equal to the level of services that the Participant would have been required to perform to receive the compensation paid with respect to such leave of absence. Periods during which a Participant is on an unpaid bona fide leave of absence and has not otherwise terminated

employment are disregarded for purposes of this paragraph (iii) (including for purposes of determining the applicable thirty-six month (or shorter) period).

As used in connection with the definition of “Separation from Service,” Company includes ConAgra Foods and any other entity that with ConAgra Foods constitutes a controlled group of corporations (as defined in section 414(b) of the Code), or a group of trades or businesses (whether or not incorporated) under common control (as defined in section 414(c) of the Code), substituting 25% for the 80% ownership level for purposes of both 414(b) and (c).

(e) “Specified Employee” is as defined under Section 409A of the Code and Treasury Regulation Section 1.409A-1(i).

(f) “Successors” shall mean the beneficiaries, executors, administrators, heirs, successors and assigns of a person.

3. RSU Settlement.

(a) Continuous Employment. Subject to the Plan and this Agreement, if the Participant has been in Continuous Employment through a Settlement Date (as set forth on Page1 or as modified by the schedule set forth in Section 3(b)(iii)), then the Company will issue to Participant one share of Stock on the Settlement Date for each RSU subject to such Settlement Date.

(b) Termination of Employment. If the Participant’s employment with the Company shall terminate by reason of:

	(i)		Death or Normal Retirement: all RSUs granted pursuant to this Agreement shall become 100% vested and the Settlement Date shall be a date not later than thirty days after the death or Normal Retirement, subject to any deferral on payment required by Section 409A of the Code or other applicable law.

	(ii)		Not for Cause: all RSU’s for which a Settlement Date has not occurred shall immediately be forfeited without further consideration to the Participant, except in the case of involuntarily termination as set forth in (iii) below.

	(iii)		Early Retirement or Involuntary Termination Due to Disability [*as applicable: , Position Elimination or Reduction in Force]. Notwithstanding the foregoing, if the Participant’s Continuous Employment should be terminated due to Early Retirement or involuntarily terminated due to disability [as applicable*: , position elimination or reduction in force] ([each] as defined in the Company’s sole discretion) after a Vesting Date (as set forth below), but prior to the related Settlement Date (as set forth below), the Company will issue shares of Stock following such termination of employment in settlement of the RSUs that have vested as of the date of termination of employment, and such date of termination of employment shall be the Settlement Date for all purposes hereunder. All RSU’s for which a Settlement Date has not occurred on the date of such termination of employment shall immediately be forfeited without further consideration to the Participant.


% Vested	Vesting Date	Settlement Date

%


%


%

(iv)

For Cause prior to the Settlement Date: all RSUs, whether vested or unvested prior to the Settlement Date, shall be immediately forfeited without further consideration to the Participant.

(c) Participant Representation. As a condition to settlement of any RSUs, the Company may require the Participant to make any representation and warranty to the Company as may be required by any applicable law or regulation. All RSUs shall be settled no later than thirty (30) days after the occurrence of the payment event set forth herein, subject to any deferral on payment required by Section 409A of the Code or other applicable law.

(d) Payment of Taxes Upon Settlement. As a condition of the issuance of shares of Stock upon settlement of RSUs hereunder, the Participant agrees to remit to the Company at the time of settlement any taxes required to be withheld by the Company under Federal, State or local law as a result of the settlement of the RSUs. As a condition of the issuance of shares of Stock upon settlement of RSUs hereunder, the Participant agrees that the Company will deduct from the total shares vested a sufficient number of shares to satisfy the minimum statutory withholding amount permissible. In addition, the Participant may deliver previously acquired shares of Stock held by the Participant for at least six months in order to satisfy additional tax withholding above the minimum statutory tax withholding amount permissible, provided, however, the Participant shall not be entitled to deliver such additional shares if it would cause adverse accounting consequences for the Company.

(e) Specified Employee. Notwithstanding anything (including any provision of the Agreement or Plan) to the contrary, if a Participant is a Specified Employee, payment to the Participant on account of a Separation from Service shall, in accordance with Treasury Regulation Section 1.409A-3(i)(2), be made to the Participant on the earlier of (a) the Participant’s death or (b) the first business day (or within 30 days after such first business day) that is more than six months after the date of Separation from Service. In the Company’s sole and absolute discretion, interest may be paid due to such delay. Further, any interest will be calculated in the manner determined by the Company in its sole and absolute discretion. Dividend equivalents will not be paid with respect to any dividends that would have been paid during the delay if the Stock had been issued.

4. Non-Transferability of RSUs. The RSUs may not be assigned, transferred, pledged or hypothecated in any manner (otherwise than by will or the laws of descent or distribution) nor may the Participant enter into any transaction for the purpose of, or which has the effect of, reducing the market risk of holding the RSUs by using puts, calls or similar financial techniques. The RSUs subject to this Agreement may be settled during the lifetime of the Participant only with the Participant. The terms of this Agreement, shall be binding upon the Successors of the Participant.

5. Stock Subject to the RSUs. The Company will not be required to issue or deliver any certificate or certificates for shares to be issued hereunder until such shares have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange on which outstanding shares of the same class are then listed and until the Company has taken such steps as may, in the opinion of counsel for the Company, be required by law and applicable regulations, including the rules and regulations of the Securities and Exchange Commission, and state securities laws and regulations, in connection with the issuance of such shares, and the listing of such shares on each such exchange. The Company will use its best efforts to comply with any such requirements.

6. Rights as Stockholder. The Participant or his/her Successors shall have no rights as stockholder with respect to any shares covered by this Agreement until the Participant or his/her Successors shall have become the beneficial owner of such shares, and, except as provided in Section 7 of this Agreement, no adjustment shall be made for dividends or distributions or other rights in respect of such shares for which the record date is prior to the date on which the Participant or his/her Successors shall have become the beneficial owner thereof.

the number and type of shares subject to this Agreement, provided, however, that no fractional share shall be issued upon subsequent settlement of the RSUs. No adjustment shall be made if such adjustment is prohibited by Section 5.4 of the Plan (relating to Section 409A of the Code). In the event of a “Change of Control” (as defined in the Plan) all of the RSUs shall become immediately vested as provided pursuant to Section 11.5 of the Plan, and the date of the Change of Control shall be a Settlement Date.

“Change of Control” shall occur upon any of the following dates:

(a) The date individuals who constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least fifty percent (50%) of the members of the Board, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board;

(b) The date of consummation of a reorganization, merger or consolidation, in each case, with respect to which persons who were the stockholders of ConAgra Foods immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company’s then outstanding voting securities;

(d) The date that any one person, or more than one person acting as a group who is not related to the Company within the meaning of Treasury Regulation Section 1.409A-3(i)((vii)(B), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 80 percent of the total gross fair market value of all of the assets of the corporation immediately before such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

For purposes of this Section, “more than one person acting as a group” is determined under Treasury regulation Section 1.409A-3(i)(5)(v)(B). If a person owns stock in both entities that enter into a merger, consolidation, purchase or acquisition of stock, such shareholder is considered to be acting as a group with other shareholders in a corporation only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. In no event shall a change of control occur under circumstances that would not constitute a “change in the ownership of a corporation,” a “change in effective control of a corporation,” or a “change in the ownership of a substantial portion of a corporation’s assets,” as those terms are defined in regulations and other applicable guidance issued under section 409A of the Code.

8. Notices. Each notice relating to this Agreement shall be deemed to have been given on the date it is received. Each notice to the Company shall be addressed to its principal Office in Omaha, Nebraska, Attention: Compensation. Each notice to the Participant or any other person or persons entitled to shares issuable upon settlement of the RSUs shall be addressed to the Participant’s address and may be in written or electronic form. Anyone to whom a notice may be given under this Agreement may designate a new address by giving notice to the effect.

9. Benefits of Agreement, This Agreement shall inure to the benefit of and be binding upon each successor of the Company. All obligations imposed upon the Participant and all rights granted to the Company under this Agreement shall be binding upon the Participant’s Successors. This Agreement shall be the sole and exclusive source of any and all rights which the Participant or his/her Successors may have in respect to the Plan or this Agreement.

10. Resolution of Disputes. Any dispute or disagreement which should arise under or as a result of or in any

way related to the interpretation, construction or application of this Agreement will be determined by the Committee. Any determination made hereunder shall be final, binding and conclusive for all purposes. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the state of Delaware.

11. Section 409A Compliance. This Agreement is intended to comply with Section 409A of the Code and any regulations or notices provided thereunder. The Company reserves the unilateral right to amend this Agreement on written notice to the Participant in order to comply with such section. It is intended that all compensation and benefits payable or provided to Participant under this Agreement shall, to the extent required to comply with Section 409A of the Code, fully comply with the provisions of Section 409A of the Code and the Treasury Regulations relating thereto so as not to subject Participants to the additional tax, interest or penalties which may be imposed under Section 409A of the Code. None of the Company, its contractors, agents and employees, the Board and each member of the Board shall be liable for any consequences of any failure to follow the requirements of Section 409A of the Code or any guidance or regulations thereunder, unless such failure was the direct result of an action or failure to act that was undertaken by the Company in bad faith.

12. Amendment. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall adversely affect the rights of the Participant under this Agreement without the Participant’s consent.

EX-10.4 3 c53860exv10w4.htm EXHIBIT 10.4 exv10w4

Exhibit 10.4

FORM OF
STOCK OPTION AGREEMENT FOR EMPLOYEES
CONAGRA FOODS 2009 STOCK PLAN

This Stock Option Agreement, hereinafter referred to as the “Option” or the “Agreement” is made on the day of , 20 , between ConAgra Foods, Inc., a Delaware Corporation (“ConAgra Foods”), and the Optionee.

1. Grant of Option. ConAgra Foods hereby grants an Option on shares of ConAgra Foods’ common stock (the “Common Stock”) to the Optionee under the ConAgra Foods 2009 Stock Plan (the “Plan”), as follows:


		Optionee:

		Employee ID:

		Number of Shares:

		Exercise Price Per Share:

		Date of Grant:

		Type of Option:		Non-qualified

		Termination Date:

The options will vest and become exercisable as follows:


# Shares	% Vested	Vest Date	Expiration Date

IN WITNESS WHEREOF, ConAgra Foods and the Optionee have caused this Agreement to be executed effective as of the date first written above. ConAgra Foods and the Optionee acknowledge that this Agreement includes five pages including this first page. The Optionee acknowledges reading and agreeing to all five pages and that in the event of any conflict between the terms of this Agreement and the terms of the Plan, the Plan shall control. Capitalized terms used herein without definition have the meaning set forth in the Plan.


CONAGRA FOODS, INC.						OPTIONEE

By:

Date						Date

2. Definitions. Capitalized terms used herein without definition have the meaning set forth in the Plan. The following terms shall have the respective meanings set forth below:

a. “Continuous Employment” means the absence of any interruption or termination of employment by the Company. Continuous Employment shall not be considered interrupted in the case of sick leave, long term disability, military leave or any other leave of absence approved by the Company.

b. “Early Retirement” means terminating employment with the Company when the Optionee is (i) at least age 55, and (ii) has at least ten years of vesting or credited service with the Company.

c. “Normal Retirement” means terminating employment with the Company on or after attaining age [applicable age, 65 or 62 to be inserted].

3. Exercise of Option.

a. Vesting. This Option shall be vested and exercisable in installments as set forth in the schedule on the first page of this Agreement. Each vested portion of this Option shall be exercisable from the applicable Vest Date and ending on the applicable Expiration Date, all in accordance with the terms of this Agreement and Plan. If the Optionee shall die while employed by the Company or if the Optionee terminates employment with the Company upon Normal Retirement, this Option shall become 100% vested and exercisable.

b. Right to Exercise. This Option shall be exercisable until and through the Expiration Date of the Option, by the Optionee (provided that in no event shall any provision of this Section 3(b) extend the term of the option beyond the Expiration Date set forth on the first page):

(i) while the Optionee is in Continuous Employment;

(ii) for a period ending 90 days after the Optionee’s Continuous Employment terminates for any reason other than Early Retirement, Normal Retirement, death or involuntary termination due to disability. The Option may be exercised as to the portion of the Option that is vested at the time termination of employment occurs;

(iii) for a period ending three (3) years after the Optionee’s Early Retirement or involuntary termination due to disability (as defined in the Company’s sole discretion); however, the Company, at the sole and absolute discretion of the Committee, may shorten or eliminate such period. The Option may be exercised as to the portion of the Option that is vested at the time Early Retirement or involuntary termination due to disability, as applicable, occurs;

(iv) for a period ending three (3) years after the Optionee’s Normal Retirement; and

(v) for a period of three (3) years after date of death (by the estate of the Optionee) if the Optionee should die while in Continuous Employment.

c. Method of Exercise. This Option shall be exercisable by a notice which shall state the election to exercise the Option, identify the portion of the Option being exercised and be accompanied by such additional information

and documents as the Company in its discretion may prescribe. The purchase price of any shares with respect to which the Option is being exercised shall be paid by one or any combination of the following:

i. cash,

ii. check,

iii. wire transfer,

iv. certified or cashier’s check,

v. subject to the provisions of any Insider Trading Agreement, by delivering previously owned shares of Common Stock held by the Optionee for at least six months valued at Fair Market Value in accordance with Section 6.4 of the Plan, or

vi. subject to the provisions of any Insider Trading Agreement, by irrevocably authorizing a third party to sell shares of Common Stock (or a sufficient portion thereof) acquired upon exercise of the Option and remitting to ConAgra Foods a sufficient portion of the sale proceeds to pay both the entire exercise price and amounts owed under Section 3(e) of this Agreement.

d. Restrictions on Exercise. As a condition to exercise of this Option, the Company may require the person exercising this Option to make any representation and warranty to the Company as may be required by any applicable law or regulation.

e. Payment of Taxes Upon Exercise. As a condition of the issuance of shares of Common Stock upon exercise hereunder, the Optionee agrees to remit to the Company at the time of exercise of this Option any taxes required to be withheld by the Company under Federal, state or local law as a result of the exercise. The minimum statutory tax withholding amount may be paid by one or any combination of the following:

i. cash,

ii. check,

iii. wire transfer,

iv. certified or cashier’s check,

In addition, the Optionee may deliver previously acquired shares of Common Stock held by the Optionee for at least six months in order to satisfy additional tax withholding above the minimum statutory tax withholding amount permissible, provided, however, the Optionee shall not be entitled to deliver such additional shares if it would cause adverse accounting consequences for ConAgra Foods.

f. Cancellation of Option. Except as set forth in Section 3(a), upon the Optionee’s termination of employment, any unvested portion of the Option shall immediately cancel and any vested portion of the Option not exercised during the exercise period set forth in Section 3(b) shall be cancelled at the end of the exercise period.

4. Non-Transferability of Option. This Option may not be assigned, transferred, pledged or hypothecated in any manner (otherwise than by will or the laws of descent or distribution) nor may the Optionee enter into any transaction for the purpose of, or which has the effect of, reducing the market risk of holding the Option by using puts, calls or similar financial techniques. This Option may be exercised during the lifetime of the Optionee only by the Optionee. The terms of this Option shall be binding upon the beneficiaries, executors, administrators, heirs, successors and assigns (“Successors”) of the Optionee.

5. Stock Subject to the Option. The Company will not be required to issue or deliver any certificate or certificates for shares to be issued hereunder until such shares have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange on which outstanding shares of the same class are then listed and until the Company has taken such steps as may, in the opinion of counsel for the Company, be required by law and applicable regulations, including the rules and regulations of the Securities and Exchange Commission, and state securities laws and regulations, in connection with the issuance or sale of such shares, and the listing of such shares on each such exchange. The Company will use its best efforts to comply with any such requirements.

6. Rights as Stockholder. The Optionee or his/her Successors shall have no rights as a stockholder with respect to any shares covered by this Option until the Optionee or his/her Successors shall have become the beneficial owner of such shares, and, except as provided in Section 7 of this Agreement, no adjustment shall be made for dividends or distributions or other rights in respect of such shares for which the record date is prior to the date on which the Optionee or his/her Successors shall have become the beneficial owner thereof.

7. Adjustments Upon Changes in Capitalization; Change in Control. In the event of any change in corporate capitalization, corporate transaction, sale or disposition of assets or similar corporate transaction or event involving ConAgra Foods as described in Section 5.4 of the Plan, the Committee shall make equitable adjustment in the number and type of shares subject to this Option and adjustment in the per share Option Price, provided, however, that no fractional share shall be issued upon subsequent exercise of the Option and the aggregate price paid shall be appropriately reduced on account of any fractional share not issued. No adjustment shall be made if such adjustment is prohibited by Section 5.4 of the Plan (relating to Section 409A of the Code). The provisions of Section 11.5 of the Plan related to any “Change of Control” (as defined in the Plan) are applicable to this Agreement.

8. Notices. Each notice relating to this Agreement shall be deemed to have been given on the date it is received. Each notice to the Company shall be addressed to its principal office in Omaha, Nebraska, Attention: Compensation. Each notice to the Optionee or any other person or persons entitled to exercise the Option shall be addressed to the Optionee’s address and may be in written or electronic form. Anyone to whom a notice may be given under this Agreement may designate a new address by notice to the effect.

9. Benefits of Agreement. This Agreement shall inure to the benefit of and be binding upon each successor of the Company. All obligations imposed upon the Optionee and all rights granted to the Company under this Agreement shall be binding upon the Optionee’s Successors. This Agreement shall be the sole and exclusive source of any and all rights which the Optionee or his/her Successors may have in respect to the Plan or this Agreement.

10. Resolution of Disputes. Any dispute or disagreement which should arise under or as a result of or in any way related to the interpretation, construction or application of this Agreement will be determined by the Committee. Any determination made hereunder shall be final, binding and conclusive for all purposes. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the state of Delaware.

11. Amendment. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall adversely affect the rights of the Optionee under this Agreement without the Optionee’s consent.

EX-10.5 4 c53860exv10w5.htm EXHIBIT 10.5 exv10w5

Exhibit 10.5

FORM OF
STOCK OPTION AGREEMENT FOR NON-EMPLOYEE DIRECTORS
CONAGRA FOODS 2009 STOCK PLAN

1. Grant of Option. ConAgra Foods hereby grants an Option on shares of ConAgra Foods’s common stock (“Common Stock”) to the Optionee, as follows:


		Optionee:

		Number of Shares:

		Exercise Price per Share: $

		Date of Grant:

		Plan Name: ConAgra Foods 2009 Stock Plan (the “Plan”)

		Type of Option: Non-qualified

IN WITNESS WHEREOF, ConAgra Foods and the Optionee have caused this Agreement to be executed effective as of the date first written above. ConAgra Foods and the Optionee acknowledge that this Agreement includes six pages including this first page. The Optionee acknowledges reading and agreeing to all six pages and that in the event of any conflict between the terms of this Agreement and the terms of the Plan, the Plan shall control. Capitalized terms used herein without definition have the meaning set forth in the Plan.


CONAGRA FOODS, INC.		OPTIONEE


Gary M. Rodkin		Name
Date		Date

2. Exercise of Option. Subject to the provisions of any insider trading agreement that may be in place between Optionee and ConAgra Foods (an “Insider Trading Agreement”), this Option shall be exercisable beginning six months after the date of this Agreement, and ending on the day preceding the tenth anniversary of the date of this Agreement, all in accordance with the terms of this Agreement and the Plan. If the Optionee should die prior to the end of the ten year term of this Option, within such ten year term this Option may be exercised by (i) any beneficiary designated by Optionee or, (ii) in the absence of such a designation, the surviving spouse of Optionee, if any, or otherwise by the estate of the Optionee.

(a) Method of Exercise.

This Option shall be exercisable by a written notice which shall state the election to exercise the Option, identify the portion of the Option being exercised and be accompanied by such additional information and documents as ConAgra Foods in its discretion may prescribe. The purchase price of any shares with respect to which the Option is being exercised shall be paid by one or any combination of the following:

i. cash,

ii. check,

iii. wire transfer,

iv. certified or cashier’s check,

vi. subject to the provisions of any Insider Trading Agreement, by irrevocably authorizing a third party to sell shares of Common Stock (or a sufficient portion thereof) acquired upon exercise

of the Option and remitting to ConAgra Foods a sufficient portion of the sale proceeds to pay both the entire exercise price and amounts owed under Section 2(c) of this Agreement.

(b) Restrictions on Exercise. As a condition to his/her exercise of this Option, ConAgra Foods may require the person exercising this Option to make any representation and warranty to ConAgra Foods as may be required by any applicable law or regulation.

(c) Payment of Taxes Upon Exercise. As a condition of the issuance of shares of Common Stock upon exercise hereunder, the Optionee agrees to remit to the Company at the time of exercise of this Option any taxes required to be withheld by the Company under Federal, state or local law as a result of the exercise. The minimum statutory tax withholding amount may be paid by one or any combination of the following:

i. cash,

ii. check,

iii. wire transfer,

iv. certified or cashier’s check,

3. Non-Transferability of Option. This Option may not be assigned, transferred, pledged or hypothecated in any manner (otherwise than by will or the laws of descent or distribution), nor may the Optionee enter into any transaction for the purpose of, or which has the effect of, reducing the market risk of holding the Option by using puts, calls or similar financial techniques. This Option may be exercised during the lifetime of the Optionee only by the Optionee. The terms of this Option shall be binding upon the beneficiaries, executors, administrators, heirs, successors and assigns (“Successors”) of the Optionee.

4. Stock Subject to the Option. ConAgra Foods will not be required to issue or deliver any certificate or certificates for shares to be issued hereunder until such shares have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange on which outstanding shares of the same class are then listed and until ConAgra Foods has taken such steps as may, in the opinion of counsel for ConAgra Foods, be required by law and applicable regulations, including the rules and regulations of the Securities and Exchange Commission, and State Securities Laws and Regulations, in connection with the issuance or sale of such shares, and the listing of such shares on each such exchange. ConAgra Foods will use its best efforts to comply with any such requirements.

5. Rights as Stockholder. The Optionee or his/her Successors shall have no rights as a stockholder with respect to any shares covered by this Option until the Optionee or his/her Successors shall have become the beneficial owner of such shares, and, except as provided in Section 6 of this Agreement, no adjustment shall be made for dividends or distributions or other rights in respect of such shares for which the record date is prior to the date on which the Optionee or his/her Successors shall have become the beneficial owner thereof.

6. Adjustments Upon Changes in Capitalization; Change in Control. In the event of any change in corporate capitalization, corporate transaction, sale or disposition of assets or similar corporate transaction or event involving ConAgra Foods as described in Section 5.4 of the Plan, the Committee shall make equitable adjustment in the number and type of shares subject to this Option and

adjustment in the per share Option Price, provided, however, that no fractional share shall be issued upon subsequent exercise of the Option and the aggregate price paid shall be appropriately reduced on account of any fractional share not issued. No adjustment shall be made if such adjustment is prohibited by Section 5.4 of the Plan (relating to Section 409A of the Code). The provisions of Section 11.5 of the Plan related to any “Change of Control” (as defined in the Plan) are applicable to this Agreement.

7. Notices. Each notice relating to this Agreement shall be deemed to have been given on the date it is received. Each notice to ConAgra Foods shall be addressed to its principal office in Omaha, Nebraska, attention: Compensation. Each notice to the Optionee or any other person or persons entitled to exercise the Option shall be addressed to the Optionee’s address. Anyone to whom a notice may be given under this Agreement may designate a new address by notice to the effect.

8. Benefits of Agreement. This Agreement shall inure to the benefit of and be binding upon each successor of ConAgra Foods. All obligations imposed upon the Optionee and all rights granted to ConAgra Foods under this Agreement shall be binding upon the Optionee’s Successors. This Agreement and the Plan shall be the sole and exclusive source of any and all rights which the Optionee and his/her Successors may have in respect to the Plan or this Agreement.

9. Resolution of Disputes. Any dispute or disagreement which should arise under or as a result of or in any way relate to the interpretation, construction or application of this Agreement will be determined by the Committee. Any determination made hereafter shall be final, binding and conclusive for all purposes. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the state of Delaware.

10. Amendment. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall adversely affect the rights of the Optionee under this Agreement without the Optionee’s consent.

EX-10.6 5 c53860exv10w6.htm EXHIBIT 10.6 exv10w6

Exhibit 10.6

FORM OF

STOCK OPTION AGREEMENT

CONAGRA FOODS, INC.

Stock Option Agreement, hereinafter referred to as the “Option” or the “Agreement”, is made on the ___day of , 20___, between ConAgra Foods, Inc., a Delaware Corporation (“ConAgra Foods”) and the Optionee.

1. Grant of Option. ConAgra Foods hereby grants an Option on shares of ConAgra Foods’ common stock (the “Common Stock”) to the Optionee, as follows:


		Optionee: [*as applicable*: CEO or EVP, External Affairs and President, Commercial Foods]

		Number of Shares:

		Exercise Price per Share:

		Date of Grant:

		Plan Name: The ConAgra 2009 Stock Plan (the “Plan”)

		Type of Option: Non-qualified

		Expiration Date:

		Term of Option:


CONAGRA FOODS, INC.		OPTIONEE

By:
		[*as applicable*: CEO or EVP, External Affairs and President, Commercial Foods]
Date:		Date:

2. Definitions: Terms not otherwise defined herein shall have the meanings ascribed to them in an Employment Agreement between ConAgra Foods and the Optionee dated effective as of [insert applicable date: August 31, 2005 or December 1, 2005] (as amended, the “Employment Agreement”). The following terms shall have the respective meanings set forth below:

a. “Change of Control” means:

(i) the acquisition (other than from ConAgra Foods) by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”), (excluding, for this purpose, the Company, or any employee benefit plan of the Company which acquires beneficial ownership of voting securities of ConAgra Foods) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either the then outstanding shares of common stock or the combined voting power of ConAgra Foods’ then outstanding voting securities entitled to vote generally in the election of directors; or

(ii) individuals who, as of the date hereof, constitute the Board (as of the date hereof the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for the election by ConAgra Foods’ shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or

(iii) consummation of a reorganization, merger or consolidation, in each case, with respect to which persons who were the stockholders of ConAgra Foods immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company’s then outstanding voting securities, or a liquidation or dissolution of ConAgra Foods or of the sale of all or substantially all of the assets of ConAgra Foods.

b. “Company” means ConAgra Foods (and any successor thereto) and its Subsidiaries.

c. “Continuous Employment” means the absence of any interruption or termination of employment by the Company. Continuous Employment shall not be considered interrupted in the case of sick leave, Long Term Disability, military leave or any other leave of absence approved by the Company.

d. “Retiree Eligible” means terminating employment with the Company following [insert applicable date: August 31, 2010 or December 1, 2010], or, if earlier, due to death or disability, or involuntary termination without Cause or resignation for Good Reason, each as defined in the Employment Agreement.

e. “Subsidiaries” means any corporation, partnership, joint venture or other entity in which ConAgra Foods owns, directly or indirectly, 25% or more of the voting power or of the capital interest or profits interest (within the meaning of Internal Revenue Code Section 414(c)) of such entity.

3. Vesting and Exercise of Option. This Option shall be vested and exercisable with respect to forty percent (40%) of such options on ; an additional thirty percent (30%) of such options on ; and the balance of such options on . Unless otherwise provided in this Agreement, all such installments shall vest and be exercisable from the commencement date thereof and ending seven years after the date of this Agreement, all in accordance with the terms of this Agreement.

a. Change of Control. In the event of Change of Control, the Option granted pursuant to this Agreement shall become immediately exercisable with respect to the full number of shares subject to this Option.

b. Termination of employment; Early Vesting; Cancellation.

(i) In the event Optionee becomes Retiree Eligible, this Option shall become fully vested.

(ii) In the event the Company terminates the employment of the Optionee with Cause, this Option shall terminate and all unexercised options shall lapse.

(iii) In the event the Optionee’s Continuous Employment terminates for any reason except as provided in Section 2(b)(i) or (ii), unvested options shall immediately cancel and any vested options not exercised during the exercise period set forth in Section 3(c) shall be cancelled at the end of the applicable exercise period.

c. Right to Exercise. This Option shall be exercisable during the term of the Option, by the Optionee:

(i) while the Optionee is in Continuous Employment;

(ii) for a period ending 90 days after the Optionee’s Continuous Employment terminates for any reason except as provided in Section 2(b)(i) or (ii). The options that may be exercised are those that are vested (and not previously exercised) at the time such termination of employment occurs;

(iii) for the remaining the term of the Option in the event the Optionee becomes Retiree Eligible.

d. Method of Exercise. This Option shall be exercisable by a written notice which shall:

(i) state the election to exercise the Option, the number of shares in respect of which it is being exercised, the person in whose name the stock certificate or certificates for such shares of Common Stock is to be registered, his/her address and social security number;

(ii) be signed by the person or persons entitled to exercise the Option and, if the Option is being exercised by any person or persons other than the Optionee, be accompanied by proof satisfactory to counsel for ConAgra Foods of the right of such person or persons to exercise the Option. Payment of the purchase price of any shares with respect to which the Option is being exercised shall accompany the written notice of exercise and shall be by one or any combination of the following:

	i.		cash,

	ii.		check,

	iii.		wire transfer,

	iv.		certified or cashier’s check,

	v.		subject to the provisions of any Insider Trading Agreement, by delivering previously owned shares of Common Stock held by the Optionee for at least six months valued at Fair Market Value in accordance with Section 6.4 of the Plan, or

	vi.		subject to the provisions of any Insider Trading Agreement, by irrevocably authorizing a third party to sell shares of Common Stock (or a sufficient portion thereof) acquired upon exercise of the Option and remitting to ConAgra Foods a sufficient portion of the sale proceeds to pay both the entire exercise price and amounts owed under Section 3(e) of this Agreement.

e. Restrictions on Exercise. As a condition to exercise of this Option, ConAgra Foods may require the person exercising this Option to make any representation and warranty to ConAgra Foods as may be required by any applicable law or regulation.

f. Payment of Taxes Upon Exercise. As a condition of the issuance of shares of Common Stock upon exercise hereunder, the Optionee agrees to remit to the Company at the time of exercise of this Option any taxes required to be withheld by the Company under Federal, state or local law as a result of the exercise. The minimum statutory tax withholding amount may be paid by one or any combination of the following:

i. cash,

ii. check,

iii. wire transfer,

iv. certified or cashier’s check,

4. Non-Transferability of Option. Except as may otherwise be permitted by the Human Resources Committee of the Board of Directors, this Option may not be assigned, transferred, pledged or hypothecated in any manner (otherwise than by will or the laws of descent or distribution) nor may the Optionee enter into any transaction for the purpose of, or which as the effect of, reducing the market risk of holding the Option by using puts, calls or similar financial techniques. This Option may be exercised during the lifetime of the Optionee only by the Optionee. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns (the “Successors”) of the Optionee.

5. Stock Subject to the Option. The Company will not be required to issue or deliver any certificate or certificates for shares to be issued hereunder until such shares have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange on which outstanding shares of the same class are then listed and until the Company has taken such steps as may, in the opinion of counsel for the Company, be required by law and applicable regulations, including the rules and regulations of the Securities and Exchange Commission, and State Securities laws and regulations, in connection with the issuance or sale of such shares, and the listing of such shares on each such exchange. The Company will use its best efforts to comply with any such requirements.

6. Adjustments Upon Changes in Capitalization. If all or any portion of the Option is exercised subsequent to any stock dividend, upon subdivision, split-up, combination or reclassification of the Common Stock or a merger or consolidation involving ConAgra Foods, the Human Resources Committee of the Board of Directors shall make equitable adjustment in the number and type of shares subject to this Option and adjustment in the per share Option Price, provided, however, that no fractional share shall be issued upon subsequent exercise of the Option and the aggregate price paid shall be appropriately reduced on account of any fractional share not issued. No adjustment shall be made if such adjustment is prohibited by Section 5.4 of the Plan (relating to Section 409A of the Code).

7. Notices. Each notice relating to this Agreement shall be in writing. Each notice shall be deemed to have been given on the date it is received. Each notice to the Company shall be addressed to its principal office in Omaha, Nebraska, Attention: Compensation. Each notice to the Optionee or any other person or persons entitled to exercise the Option shall be addressed to the Optionee’s address as shown on the Company’s records. Anyone to whom a notice may be given under this Agreement may designate a new address by notice to the effect.

8. Benefits of Agreement. This Agreement shall inure to the benefit of and be binding upon each successor of ConAgra Foods. All obligations imposed upon the Optionee and all rights granted to the Company under this Agreement shall

be binding upon the Optionee’s Successors. This Agreement shall be the sole and exclusive source of any and all rights which the Optionee or his Successors may have in respect to the Plan or any Options or Common Stock granted or issued thereunder whether to himself or to any other person.

9. Resolution of Disputes. Any dispute or disagreement which should arise under or as a result of or in any way related to the interpretation, construction or application of this Agreement will be determined by the Human Resources Committee of the Board of Directors. Any determination made hereunder shall be final, binding and conclusive for all purposes. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the state of Nebraska.

EX-12 6 c53860exv12.htm EXHIBIT 12 exv12

Exhibit 12

ConAgra Foods Inc. and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
($ in millions)


	Thirteen
	weeks ended
	August 30, 2009
Earnings:
Income from continuing operations before income taxes and equity method investment earnings	$	248.6
Add (deduct):
Fixed charges		76.3
Distributed income of equity method investees		10.7
Capitalized interest		(2.9	)

Earnings available for fixed charges (a)	$	332.7

Fixed charges:
Interest expense	$	61.8
Capitalized interest		2.9
One third of rental expense ⁽¹⁾		11.6

Total fixed charges (b)	$	76.3

Ratio of earnings to fixed charges (a/b)		4.4


⁽¹⁾		Considered to be representative of interest factor in rental expense.

EX-31.1 7 c53860exv31w1.htm EXHIBIT 31.1 exv31w1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

I, Gary M. Rodkin, certify that:

	1.		I have reviewed this quarterly report on Form 10-Q for the quarter ended August 30, 2009 of ConAgra Foods, Inc.;

	2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

	3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

	4.		The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: October 7, 2009

/s/ GARY M. RODKIN Gary M. Rodkin
Chief Executive Officer

EX-31.2 8 c53860exv31w2.htm EXHIBIT 31.2 exv31w2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

I, John F. Gehring, certify that:

	1.		I have reviewed this quarterly report on Form 10-Q for the quarter ended August 30, 2009 of ConAgra Foods, Inc.;

	2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

	3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

	4.		The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: October 7, 2009

/s/ JOHN F. GEHRING
John F. Gehring
Executive Vice President and Chief Financial Officer

EX-32.1 9 c53860exv32w1.htm EXHIBIT 32.1 exv32w1

Exhibit 32.1

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Gary M. Rodkin, Chief Executive Officer of ConAgra Foods, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge that ConAgra Foods, Inc.’s Quarterly Report on Form 10-Q for the quarter ended August 30, 2009 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and that the information contained in such Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of ConAgra Foods, Inc. as of and for the periods presented.


October 7, 2009

/s/ GARY M. RODKIN Gary M. Rodkin
Chief Executive Officer

I, John F. Gehring, Executive Vice President and Chief Financial Officer of ConAgra Foods, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge that ConAgra Foods, Inc.’s Quarterly Report on Form 10-Q for the quarter ended August 30, 2009 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and that the information contained in such Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of ConAgra Foods, Inc. as of and for the periods presented.


October 7, 2009

/s/ JOHN F. GEHRING
John F. Gehring
Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to ConAgra Foods, Inc. and will be retained by ConAgra Foods, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-101.INS 10 cag-20090830.xml EX-101 INSTANCE DOCUMENT 0000023217 2008-05-26 2009-05-31 0000023217 2008-05-26 2008-08-24 0000023217 2009-08-30 0000023217 2008-08-24 0000023217 2008-11-21 0000023217 2009-09-27 0000023217 2009-05-31 0000023217 2008-05-25 0000023217 2009-06-01 2009-08-30 iso4217:USD xbrli:shares xbrli:shares iso4217:USD

<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>

30800000 0 false --05-31 2009-08-30 10-Q 0000023217 442928922 Yes Large Accelerated Filer 6505175563 CONAGRA FOODS INC /DE/ No Yes

942200000

823800000

875000000

2558200000

2661100000

2702100000

261400000

-103700000

-103300000

776300000

884400000

863700000

14400000

13900000

11500000

11526300000

11073300000

11230400000

3657700000

3336600000

3562700000

6000000

4900000

10600000

1600000

140900000

296400000

243200000

289700000

124700000

46500000

2253200000

6400000

-635700000

-1600000

1200000000

567071713

567154823

567882375

2835500000

2835900000

2839500000

417300000

166200000

-700000

417300000

165500000

2465000000

2244900000

76200000

81700000

-19400000

0.95

0.37

0.94

0.37

-3900000

800000

147800000

166900000

148700000

3700000

1800000

-5000000

1300000

3477300000

3491300000

172700000

248600000

107600000

166500000

0.23

0.38

0.23

0.37

334800000

-1300000

0.72

-0.01

0.71

900000

8900000

66000000

91000000

171000000

-26700000

-100800000

-116000000

-108600000

-18200000

-116000000

11800000

104500000

155200000

97700000

-15400000

820600000

835300000

836500000

50100000

41500000

2040100000

2025100000

2013300000

6752400000

6352400000

6430600000

11526300000

11073300000

11230400000

2453300000

1574700000

1651000000

314800000

24700000

15800000

-1593500000

-102800000

-1593500000

-102800000

2159600000

-114100000

-93600000

-120500000

-437500000

262600000

198200000

264200000

442400000

165900000

-700000

25200000

3700000

2700000

1023300000

555600000

608800000

353900000

282000000

373600000

1074800000

768100000

676700000

-2400000

-800000

-24400000

1200000

-2000000

-300000

-100000

1250400000

1316400000

1309000000

-12700000

30000000

-12600000

-19800000

-900000

900000000

92100000

85000000

30400000

3000000

106300000

118900000

29400000

-100000

-800000

-565300000

12800000

1400000

5800000

-14100000

442400000

165200000

5043500000

5301500000

5365300000

2485300000

2640400000

2663200000

961300000

781400000

886100000

41800000

2900000

3761500000

4042500000

4123900000

3056500000

2961400000

368700000

426400000

2848700000

3265400000

3274700000

12600000

12000000

4773900000

4720900000

4799800000

200000000

195900000

120053780

125497708

125016605

2860800000

2938200000

2924000000

EX-101.SCH 11 cag-20090830.xsd EX-101 SCHEMA DOCUMENT 0604 - Disclosure - Payment In Kind Notes Receivable link:presentationLink link:calculationLink link:definitionLink 0606 - Disclosure - Garner, North Carolina Accident link:presentationLink link:calculationLink link:definitionLink 04 - Statement - Condensed Consolidated Statements of Cash Flows link:presentationLink link:calculationLink link:definitionLink 031 - Statement - Condensed Consolidated Balance Sheets (Parenthetical) link:presentationLink link:calculationLink link:definitionLink 03 - Statement - Condensed Consolidated Balance Sheets link:presentationLink link:calculationLink link:definitionLink 02 - Statement - Condensed Consolidated Statements of Comprehensive Income link:presentationLink link:calculationLink link:definitionLink 01 - Statement - Condensed Consolidated Statements of Earnings link:presentationLink link:calculationLink link:definitionLink 00 - Document - Document and Company Information link:presentationLink link:calculationLink link:definitionLink 0620 - Disclosure - Business Segments And Related Information link:presentationLink link:calculationLink link:definitionLink 0619 - Disclosure - Related Party Transactions link:presentationLink link:calculationLink link:definitionLink 0618 - Disclosure - Fair Value Measurements link:presentationLink link:calculationLink link:definitionLink 0617 - Disclosure - Accelerated Share Repurchase Program link:presentationLink link:calculationLink link:definitionLink 0616 - Disclosure - Long-Term Debt link:presentationLink link:calculationLink link:definitionLink 0615 - Disclosure - Pension And Postretirement Benefits link:presentationLink link:calculationLink link:definitionLink 0614 - Disclosure - Contingencies link:presentationLink link:calculationLink link:definitionLink 0613 - Disclosure - Income Taxes link:presentationLink link:calculationLink link:definitionLink 0612 - Disclosure - Restructuring link:presentationLink link:calculationLink link:definitionLink 0611 - Disclosure - Inventories link:presentationLink link:calculationLink link:definitionLink 0610 - Disclosure - Earnings Per Share link:presentationLink link:calculationLink link:definitionLink 0609 - Disclosure - Share-Based Payments link:presentationLink link:calculationLink link:definitionLink 0608 - Disclosure - Derivative Financial Instruments link:presentationLink link:calculationLink link:definitionLink 0607 - Disclosure - Goodwill And Other Identifiable Intangible Assets link:presentationLink link:calculationLink link:definitionLink 0605 - Disclosure - Variable Interest Entities link:presentationLink link:calculationLink link:definitionLink 0603 - Disclosure - Acquisitions link:presentationLink link:calculationLink link:definitionLink 0602 - Disclosure - Discontinued Operations And Divestitures link:presentationLink link:calculationLink link:definitionLink 0601 - Disclosure - Summary Of Significant Accounting Policies link:presentationLink link:calculationLink link:definitionLink EX-101.CAL 12 cag-20090830_cal.xml EX-101 CALCULATION LINKBASE DOCUMENT EX-101.LAB 13 cag-20090830_lab.xml EX-101 LABELS LINKBASE DOCUMENT Cash and cash equivalents Receivables, less allowance for doubtful accounts of $14.2, $17.6, and $16.3 Allowance for doubtful accounts Inventories Current assets held for sale Total current assets Property, plant and equipment, net Property, plant and equipment Less accumulated depreciation Goodwill Brands, trademarks and other identifiable intangibles, net Other assets Noncurrent assets held for sale Total Assets Notes payable Total current liabilities Subordinated debt Other noncurrent liabilities Total liabilities Common stock of $5 par value, authorized 1,200,000,000 shares; issued 567,882,375, 567,154,823, and 567,071,713 Total common stockholders' equity Accumulated other comprehensive income (loss) Less treasury stock, at cost, 125,016,605, 125,497,708, and 120,053,780 common shares Retained earnings Total liabilities and stockholders' equity Common stock, par value Common stock, authorized Common stock, issued Treasury stock, common shares Cost of goods sold Selling, general and administrative expenses Interest expense, net Income tax expense Income from continuing operations before income taxes and equity method investment earnings Equity method investment earnings Income (loss) from discontinued operations, net of tax Net income attributable to ConAgra Foods, Inc. Income from continuing operations, basic Income from discontinued operations, basic Net income attributable to ConAgra Foods, Inc. common stockholders Income from continuing operations, diluted Income from discontinued operations, diluted Net income attributable to ConAgra Foods, Inc. common stockholders Net income Depreciation and amortization (Gain) loss on sale of fixed assets Undistributed earnings of affiliates Share-based payments expense Non-cash interest income on payment-in-kind notes Accounts receivable Inventory Prepaid expenses and other current assets Accounts payable Other accrued liabilities Net cash flows from operating activities - continuing operations Net cash flows from operating activities - discontinued operations Net cash flows from operating activities Additions to property, plant and equipment Sale of property, plant and equipment Sale of businesses Net cash flows from investing activities - continuing operations Net cash flows from investing activities - discontinued operations Net cash flows from investing activities Repayment of long-term debt Repurchase of ConAgra Foods common shares Cash dividends paid Proceeds from exercise of employee stock options Other items Net cash flows from financing activities - continuing operations Net cash flows from financing activities Cash and cash equivalents at beginning of period Unrealized holding gains (losses) arising during the period Pension and postretirement healthcare liabilities, net of tax Reclassification adjustment for net losses included in net income Unrealized translation gains (losses) arising during the period Comprehensive income attributable to ConAgra Foods, Inc. Cash balance included in assets held for sale Add: Cash balance included in assets held for sale at beginning of period Add: Cash balance included in assets held for sale at beginning of period Less: Cash balance included in assets held for sale at end of period Restructuring Restructuring [Abstract] Fair Value Measurements Fair Value Measurements [Abstract] Related Party Transactions Related Party Transactions [Abstract] Business Segments And Related Information Business Segments And Related Information [Abstract] Current installments of long-term debt Senior long-term debt, excluding current installments Net sales Gain on sale of businesses Accrued payroll Purchase of businesses and intangible assets Net short-term borrowings (payments) Summary Of Significant Accounting Policies Discontinued Operations And Divestitures Acquisitions Goodwill And Other Identifiable Intangible Assets Derivative Financial Instruments Share-Based Payments Earnings Per Share Inventories Restructuring Income Taxes Contingencies Pension And Postretirement Benefits Long-Term Debt Fair Value Measurements Related Party Transactions Business Segments And Related Information Effect of exchange rate changes on cash and cash equivalents Net cash flows from financing activities - discontinued operations Cash and cash equivalents at end of period Net change in cash and cash equivalents Costs and expenses: Earnings per share - basic Earnings per share - diluted Other comprehensive income (loss): Unrealized gains and losses on available-for-sale securities, net of tax: Currency translation adjustment: ASSETS Current assets LIABILITIES AND STOCKHOLDERS' EQUITY Common stockholders' equity Current liabilities Cash flows from operating activities: Change in operating assets and liabilities before effects of business acquisitions and dispositions: Cash flows from investing activities: Cash flows from financing activities: Document And Company Information [Abstract] Document And Company Information [Abstract] Document And Company Information. Costs and expenses: Earnings per share - diluted Earnings per share - basic Accounts payable Accounts Payable, Current, Total Accounts Payable, Current Other noncurrent liabilities Other noncurrent liabilities Accrued payroll Employee-related Liabilities, Current, Total Employee-related Liabilities, Current Other items Other Noncash Expense Adjustments to reconcile income from continuing operations to net cash flows from operating activities: Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract] Change in operating assets and liabilities before effects of business acquisitions and dispositions: Net income Net income Net Income (Loss), Including Portion Attributable to Noncontrolling Interest Less: Net loss attributable to noncontrolling interests Less: Net loss attributable to noncontrolling interests Net Income (Loss) Attributable to Noncontrolling Interest Equity method investment earnings Equity method investment earnings Income tax expense Income Tax Expense (Benefit) Income from continuing operations before income taxes and equity method investment earnings Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Cumulative Effects of Changes in Accounting Principles, Noncontrolling Interest Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest Selling, general and administrative expenses Selling, General and Administrative Expense Cost of goods sold Cost of Goods Sold Net sales Sales Revenue, Goods, Net Income from continuing operations Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest, Total Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest Comprehensive loss attributable to noncontrolling interests Comprehensive Income, Net of Tax, Attributable to Noncontrolling Interest Comprehensive income attributable to ConAgra Foods, Inc. Comprehensive Income, Net of Tax, Attributable to Parent Comprehensive income Comprehensive Income, Net of Tax, Including Portion Attributable to Noncontrolling Interest Comprehensive income Gain (Loss) on Sale of Property Plant Equipment (Gain) loss on sale of fixed assets Distributions from affiliates greater than current earnings Payment-In-Kind Notes Receivable Loans, Notes, Trade and Other Receivables Disclosure [Text Block] Summary Of Significant Accounting Policies Discontinued Operations And Divestitures Acquisitions Restructuring Income Taxes Goodwill And Other Identifiable Intangible Assets Derivative Financial Instruments Share-Based Payments Earnings Per Share Inventories Contingencies Pension And Postretirement Benefits Long-Term Debt Fair Value Measurements Related Party Transactions Business Segments And Related Information Income from continuing operations attributable to ConAgra Foods, Inc. common stockholders. Income (Loss) from Continuing Operations, Per Outstanding Share, Total Income (loss) from discontinued operations attributable to ConAgra Foods, Inc. common stockholders Income (loss) from discontinued operations attributable to ConAgra Foods, Inc. common stockholders Earnings Per Share, Basic Income from continuing operations attributable to ConAgra Foods, Inc. common stockholders Income from discontinued operations attributable to ConAgra Foods, Inc. common stockholders Earnings Per Share, Diluted Common stock of $5 par value, authorized 1,200,000,000 shares; issued 567,882,375, 567,154,823, and 567,071,713 Common Stock, Value, Issued, Total Common Stock, Value, Issued, Beginning Balance Common Stock, Value, Issued, Ending Balance Accumulated other comprehensive income (loss) Accumulated Other Comprehensive Income (Loss), Net of Tax, Beginning Balance Accumulated Other Comprehensive Income (Loss), Net of Tax, Ending Balance Accumulated Other Comprehensive Income (Loss), Net of Tax Less treasury stock, at cost, 125,016,605, 125,497,708, and 120,053,780 common shares Treasury Stock, Value, Beginning Balance Treasury Stock, Value, Ending Balance Income (loss) from discontinued operations Depreciation and amortization Depreciation, Depletion and Amortization, Nonproduction Other accrued liabilities Inventory Increase (Decrease) in Inventories Prepaid expenses and other current assets Increase (Decrease) in Prepaid, Deferred Expense and Other Assets Discontinued operations cash activity included above: Net Cash Provided by (Used in) Discontinued Operations [Abstract] Net cash flows from financing activities - discontinued operations Net cash flows from financing activities - continuing operations Net Cash Provided by (Used in) Financing Activities, Continuing Operations Net cash flows from operating activities - discontinued operations Net cash flows from operating activities - discontinued operations Net cash flows from operating activities - continuing operations Net Cash Provided by (Used in) Operating Activities, Continuing Operations Accrued payroll Increase (Decrease) in Employee Related Liabilities Share-based payments expense Share-based Compensation Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment, Total Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment, Beginning Balance Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment, Ending Balance Less accumulated depreciation Less treasury stock, at cost, 125,016,605, 125,497,708, and 120,053,780 common shares Cash dividends paid Cash dividends paid Payments of Dividends Repurchase of ConAgra Foods common shares Repurchase of ConAgra Foods common shares Repayments of Long-term Debt Repayment of long-term debt Repayments of Long-term Debt Net short-term borrowings (payments) Proceeds from (Repayments of) Short-term Debt Purchase of businesses and intangible assets Purchase of businesses and intangible assets Sale of property, plant and equipment Proceeds from Sale of Property, Plant, and Equipment Additions to property, plant and equipment Payments to Acquire Property, Plant, and Equipment Additions to property, plant and equipment Income (loss) from discontinued operations, net of tax Comprehensive loss attributable to noncontrolling interests Comprehensive loss attributable to noncontrolling interests Reclassification adjustment for net losses included in net income Reclassification adjustment for net losses included in net income Unrealized holding losses arising during the period Unrealized translation gains (losses) arising during the period Currency translation adjustment: Unrealized gains and losses on available-for-sale securities, net of tax: Other comprehensive income (loss): ASSETS Current assets Cash and cash equivalents Cash and Cash Equivalents, at Carrying Value Receivables, less allowance for doubtful accounts of $11.5, $13.9, and $14.4 Receivables, Net, Current Inventories Inventory, Net Current assets held for sale Assets Held-for-sale, Current Property, plant and equipment Property, Plant and Equipment, Gross, Beginning Balance Property, Plant and Equipment, Gross, Ending Balance Property, Plant and Equipment, Gross Less accumulated depreciation Goodwill Goodwill, Beginning Balance Goodwill, Ending Balance Brands, trademarks and other intangibles, net Intangible Assets, Net (Excluding Goodwill) Other assets Other Assets, Noncurrent, Total LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Notes payable Notes Payable, Current Current installments of long-term debt Long-term Debt and Capital Lease Obligations, Current Common stockholders' equity Commitments and Contingencies Commitments and Contingencies Retained earnings Retained Earnings (Accumulated Deficit), Beginning Balance Retained Earnings (Accumulated Deficit), Ending Balance Retained Earnings (Accumulated Deficit) Less treasury stock, at cost, 125,016,605, 125,497,708, and 120,053,780 common shares Allowance for doubtful accounts Allowance for Doubtful Accounts Receivable, Current, Beginning Balance Allowance for Doubtful Accounts Receivable, Current, Ending Balance Garner, North Carolina Accident Schedule of Business Insurance Recoveries [Text Block] Variable Interest Entities Schedule of Variable Interest Entities [Text Block] Other accrued liabilities Other Accrued Liabilities, Current Additional paid-in capital Additional Paid in Capital, Common Stock, Beginning Balance Additional Paid in Capital, Common Stock, Ending Balance Additional Paid in Capital, Common Stock Other accrued liabilities Net cash flows from investing activities - continuing operations Net Cash Provided by (Used in) Investing Activities, Continuing Operations Income (loss) from discontinued operations Income (loss) from discontinued operations Senior long-term debt, excluding current installments Subordinated debt Common stock, par value Common stock, authorized Common stock, issued Common Stock, Shares, Issued, Total Treasury stock, common shares Treasury Stock, Shares, Beginning Balance Treasury Stock, Shares, Ending Balance Cash flows from operating activities: Gain on sale of businesses Non-cash interest income on payment-in-kind notes Accounts receivable Accounts payable Cash flows from investing activities: Sale of businesses Net cash flows from investing activities - discontinued operations Cash flows from financing activities: Exercise of stock options and issuance of other stock awards Other items Net cash flows from investing activities - discontinued operations Other items Effect of exchange rate changes on cash and cash equivalents Effect of Exchange Rate on Cash and Cash Equivalents Net change in cash and cash equivalents Cash and Cash Equivalents, Period Increase (Decrease) Assets Prepaid expenses and other current assets Other Assets, Current Accelerated Share Repurchase Program Accelerated Share Repurchases [Text Block] Interest expense, net Interest Expense Notes receivable and other items Payments for (Proceeds from) Other Investing Activities Notes receivable and other items Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Current Fiscal Year End Date Entity Well-known Seasoned Issuer Entity Voluntary Filers Entity Current Reporting Status Entity Filer Category Entity Public Float Entity Common Stock, Shares Outstanding Statement [Line Items] Statement [Table] Other Comprehensive Income, Defined Benefit Plans Adjustment, Net of Tax Assets, Current Property, Plant and Equipment, Net Assets Held-for-sale, Long Lived Liabilities, Current Liabilities Stockholders' Equity Attributable to Parent Liabilities and Stockholders' Equity Net Cash Provided by (Used in) Operating Activities Net Cash Provided by (Used in) Investing Activities Net Cash Provided by (Used in) Financing Activities Cash Balance Included In Assets Held For Sale Summary Of Significant Accounting Policies[Abstract] Summary Of Significant Accounting Policies [Abstract] Discontinued Operations And Divestitures [Abstract Discontinued Operations And Divestitures [Abstract] Acquisitions [Abstract] Acquisitions [Abstract] Payment In Kind Notes Receivable Payment In Kind Notes Receivable [Abstract] Variable Interest Entities [Abstract] Variable Interest Entities [Abstract] Garner, North Carolina Accident[Abstract] Garner, North Carolina Accident [Abstract] Goodwill And Other Identifiable Intangible Assets [Abstract] Goodwill And Other Identifiable Intangible Assets [Abstract] Derivative Financial Instruments [Abstract] Derivative Financial Instruments [Abstract] Share-Based Payments [Abstract] Share-Based Payments [Abstract] Earnings Per Share [Abstract] Earnings Per Share [Abstract] Inventories [Abstract] Inventories [Abstract] Income Taxes [Abstract] Income Taxes [Abstract] Contingencies [Abstract] Contingencies [Abstract] Pension And Postretirement Benefits [Abstract] Pension And Postretirement Benefits [Abstract] Long-Term Debt [Abstract] Long-Term Debt [Abstract] Balance Sheet [Abstract] Balance Sheet [Abstract] EX-101.PRE 14 cag-20090830_pre.xml EX-101 PRESENTATION LINKBASE DOCUMENT EX-101.DEF 15 cag-20090830_def.xml EX-101 DEFINITION LINKBASE DOCUMENT XML 16 R19.xml IDEA: Income Taxes 1.0.0.3 false Income Taxes false 1 $ false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 2 Income Taxes [Abstract] 0 us-gaap_ComponentsOfIncomeTaxExpenseBenefitContinuingOperationsAbstract us-gaap true na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false No definition available. false 3 Income Taxes 1 us-gaap_IncomeTaxDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0   <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>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>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>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>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>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>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>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>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>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>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>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>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>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 $26.2 million to our other postretirement plans during the remainder of fiscal 2010. These estimates are based on current tax laws, plan asset performance, and liability assumptions, which are subject to change. </div> </div>    <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>7.</b>     <b>GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The change in the carrying amount of goodwill for the first quarter of fiscal 2010 was as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="87%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">  <b>Consumer</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Commercial</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">  <b>Foods</b>  </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">  <b>Foods</b>  </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">  <b>Total</b>  </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance as of May 31, 2009 </div></td> <td> </td> <td align="left">$</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>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>    <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="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>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>  <!-- Begin Block Tagged Note false false No definition available. No authoritative reference available. false false 1 2 false UnKnown UnKnown UnKnown false true -----END PRIVACY-ENHANCED MESSAGE-----