Discontinued Operations and Divestitures

12 Months Ended

May 29, 2011

Discontinued Operations and Divestitures [Abstract]

DISCONTINUED OPERATIONS AND DIVESTITURES

2.  DISCONTINUED OPERATIONS AND DIVESTITURES

Frozen Handhelds Operations

In May 2011, we completed the sale of substantially all of the assets of our frozen handhelds operations for $9.5 million in cash, subject to final working capital adjustments. We recognized impairment and related charges totaling $21.7 million ($14.2 million after-tax) in fiscal 2011. We reflected the results of these operations as discontinued operations for all periods presented. The assets of the discontinued frozen handhelds operations have been reclassified as assets held for sale within our consolidated balance sheets for all periods presented prior to divestiture.

Gilroy Foods & Flavors^tm Operations

During the first quarter of fiscal 2011, we completed the sale of substantially all of the assets of Gilroy Foods & Flavors^tm dehydrated garlic, onion, capsicum and Controlled Moisture^tm, GardenFrost^®, Redi-Made^tm, and fresh vegetable operations for $245.7 million in cash. Based on our estimate of proceeds from the sale of this business, we recognized impairment and related charges totaling $59.2 million ($39.9 million after-tax) in the fourth quarter of fiscal 2010. We reflected the results of these operations as discontinued operations for all periods presented. The assets and liabilities of the discontinued Gilroy Foods & Flavors^tm dehydrated vegetable business have been reclassified as assets and liabilities held for sale within our consolidated balance sheets for the period prior to divestiture.

In connection with the sale of this business, we entered into agreements to purchase certain ingredients from the divested business for a period of five years. The continuing cash flows related to these agreements are not significant, and accordingly, are not deemed to be direct cash flows of the divested business.

Fernando’s^® Operations

In June 2009, we completed the divestiture of the Fernando’s^® foodservice brand for proceeds of approximately $6.4 million in cash. 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. We reflected the results of these operations as discontinued operations for all periods presented.

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) $550.0 million (face value) of payment-in-kind debt securities issued by the purchaser (the “Notes”) which were recorded at an initial estimated fair value of $479.4 million, 3) a short-term receivable of $37.2 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 was recorded at an estimated fair value of $1.8 million. We recognized an after-tax gain on the disposition of approximately $301.2 million in fiscal 2009.

During fiscal 2009, we collected the $37.2 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.

The results of the aforementioned businesses which have been divested are included within discontinued operations. The summary comparative financial results of discontinued operations were as follows:

	2011			2010			2009
Net sales	$	92.4		$	355.2		$	632.3
Long-lived asset impairment charge		(21.7	)		(58.3	)		(8.9	)
Income (loss) from operations of discontinued operations before income taxes		(18.6	)		(38.9	)		105.9
Net gain from disposal of businesses		—			—			490.0
Income (loss) before income taxes		(18.6	)		(38.9	)		595.9
Income tax (expense) benefit		7.1			19.6			(232.1	)
Income (loss) from discontinued operations, net of tax	$	(11.5	)	$	(19.3	)	$	363.8

The effective tax rate for discontinued operations varies significantly from the statutory rate in certain years due to the non-deductibility of a portion of the goodwill of divested businesses and changes in estimates of income taxes.

Other Assets Held for Sale

The assets and liabilities classified as held for sale as of May 30, 2010 were as follows:

	2010
Receivables, less allowance for doubtful accounts	$	29.0
Inventories		221.9
Prepaid expenses and other current assets		1.2
Current assets held for sale	$	252.1
Property, plant and equipment, net	$	53.0
Goodwill		2.2
Noncurrent assets held for sale	$	55.2
Current installments of long-term debt	$	0.9
Accounts payable		9.1
Accrued payroll		0.9
Other accrued liabilities		2.5
Current liabilities held for sale	$	13.4
Senior long-term debt, excluding current installments	$	5.2
Noncurrent liabilities held for sale	$	5.2

Other Divestitures

In February 2010, we completed the sale of our Luck’s^® brand for proceeds of approximately $22.0 million, resulting in a pre-tax gain of approximately $14.3 million ($9.0 million after-tax), reflected in selling, general and administrative expenses.

In July 2008, we completed the sale of our Pemmican^® beef jerky business for proceeds of approximately $29.4 million in cash, 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 business, the results of operations of the Pemmican^® business have not been reclassified as discontinued operations.