Pension and Postretirement Benefits

12 Months Ended

May 27, 2012

Pension and Postretirement Benefits [Abstract]

PENSION AND POSTRETIREMENT BENEFITS

20. PENSION AND POSTRETIREMENT BENEFITS

The Company and its subsidiaries have defined benefit pension 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 benefits”) to qualifying U.S. employees.

We recognize the funded status of our plans and other benefits in the consolidated balance sheets. For our plans, we also recognize as a component of accumulated other comprehensive loss, the net of tax results of the actuarial gains or losses within the corridor and prior service costs or credits that arise during the period but are not recognized in net periodic benefit cost. For our other benefits, we also recognize as a component of accumulated other comprehensive income (loss), the net of tax results of the gains or losses and prior service costs or credits that arise during the period but are not recognized in net periodic benefit cost. These amounts will be adjusted out of accumulated other comprehensive income (loss) as they are subsequently recognized as components of net periodic benefit cost.

During the second quarter of fiscal 2012, we amended certain of our postretirement benefit plans to incorporate design changes. As a result of the plan amendments, we remeasured our postretirement obligation at September 8, 2011. The discount rate used to measure the other postretirement benefits obligation at September 8, 2011 was 4.3% compared to the May 29, 2011 discount rate of 4.9%. All other significant assumptions remained unchanged from the May 29, 2011 measurement date. Calculated gains of $27.6 million as a result of the remeasurement, primarily due to favorable plan amendments, were recognized as a credit to other comprehensive loss. As a result of these plan amendments, our net expense related to these plans was reduced by approximately $5.2 million during fiscal 2012.

The changes in benefit obligations and plan assets at May 27, 2012 and May 29, 2011 are presented in the following table.

	Pension Benefits						Other Benefits
	2012			2011			2012			2011
Change in Benefit Obligation
Benefit obligation at beginning of year	$	2,881.4		$	2,614.1		$	322.6		$	324.9
Service cost		68.7			59.7			0.6			0.6
Interest cost		149.2			147.5			13.2			16.3
Plan participants’ contributions		—			—			6.7			6.9
Amendments		5.3			1.5			(40.6	)		(9.0	)
Actuarial loss		337.5			190.9			11.6			19.4
Special termination benefits		—			1.3			—			—
Benefits paid		(138.8	)		(133.6	)		(36.0	)		(36.5	)
Business combinations		25.0			—			4.6			—
Benefit obligation at end of year	$	3,328.3		$	2,881.4		$	282.7		$	322.6
Change in Plan Assets
Fair value of plan assets at beginning of year	$	2,543.9		$	2,144.6		$	0.1		$	4.0
Actual return on plan assets		24.8			418.3			—			—
Employer contributions		326.4			129.4			29.3			25.7
Plan participants’ contributions		—			—			6.7			6.9
Investment and administrative expenses		(14.2	)		(14.8	)		—			—
Benefits paid		(138.8	)		(133.6	)		(36.0	)		(36.5	)
Business combinations		24.5			—			—			—
Fair value of plan assets at end of year	$	2,766.6		$	2,543.9		$	0.1		$	0.1

The funded status and amounts recognized in our consolidated balance sheets at May 27, 2012 and May 29, 2011 were:

	Pension Benefits						Other Benefits
	2012			2011			2012			2011
Funded status	$	(561.7	)	$	(337.5	)	$	(282.6	)	$	(322.5	)
Amounts Recognized in Consolidated Balance Sheets
Other assets	$	3.9		$	14.7		$	—		$	—
Other accrued liabilities		(8.8	)		(8.7	)		(26.8	)		(27.5	)
Other noncurrent liabilities		(556.8	)		(343.5	)		(255.8	)		(295.0	)
Net amount recognized	$	(561.7	)	$	(337.5	)	$	(282.6	)	$	(322.5	)
Amounts Recognized in Accumulated Other Comprehensive (Income) Loss (Pre-tax)
Actuarial net loss	$	332.0		$	205.9		$	80.5		$	75.6
Net prior service cost (benefit)		17.9			15.7			(39.3	)		(12.2	)
Total	$	349.9		$	221.6		$	41.2		$	63.4
Weighted-Average Actuarial Assumptions Used to Determine Benefit Obligations At May 27, 2012 and May 29, 2011
Discount rate		4.50	%		5.30	%		3.90	%		4.90	%
Long-term rate of compensation increase		4.25	%		4.25	%		N/A			N/A

The accumulated benefit obligation for all defined benefit pension plans was $3.2 billion and $2.8 billion at May 27, 2012 and May 29, 2011, respectively.

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets at May 27, 2012 and May 29, 2011 were:

	2012		2011
Projected benefit obligation	$	3,159.7	$	2,505.6
Accumulated benefit obligation		3,057.2		2,436.1
Fair value of plan assets		2,594.1		2,153.4

Components of pension benefit and other postretirement benefit costs were:

	Pension Benefits									Other Benefits
	2012			2011			2010			2012			2011			2010
Service cost	$	68.7		$	59.7		$	49.8		$	0.6		$	0.6		$	0.5
Interest cost		149.2			147.5			148.1			13.2			16.3			18.3
Expected return on plan assets		(196.0	)		(168.0	)		(142.3	)		—			(0.1	)		(0.3	)
Amortization of prior service cost (benefit)		3.0			3.2			3.2			(13.6	)		(9.6	)		(9.4	)
Settlement loss		—			—			1.9			—			—			—
Special termination benefits		—			1.3			—			—			—			—
Recognized net actuarial (gain) loss		396.9			10.3			165.8			7.6			4.6			(0.1	)
Curtailment loss		—			—			0.9			—			—			—
Benefit cost—Company plans		421.8			54.0			227.4			7.8			11.8			9.0
Pension benefit cost—multiemployer plans		8.5			9.2			9.7			—			—			—
Total benefit cost	$	430.3		$	63.2		$	237.1		$	7.8		$	11.8		$	9.0

Other changes in plan assets and benefit obligations recognized in other comprehensive (income) loss were:

	Pension Benefits						Other Benefits
	2012			2011			2012			2011
Net actuarial (gain) loss	$	521.4		$	(44.5	)	$	12.4		$	18.9
Prior service cost (benefit)		5.3			1.5			(40.6	)		(9.1	)
Amortization of prior service (cost) benefit		(3.0	)		(3.2	)		13.6			9.6
Recognized net actuarial loss		(396.9	)		(10.3	)		(7.6	)		(4.6	)
Net amount recognized	$	126.8		$	(56.5	)	$	(22.2	)	$	14.8

Weighted-Average Actuarial Assumptions

Used to Determine Net Expense

	Pension Benefits									Other Benefits
	2012			2011			2010			2012			2011			2010
Discount rate		5.30	%		5.80	%		6.90	%		4.30	%		5.40	%		6.60	%
Long-term rate of return on plan assets		7.75	%		7.75	%		7.75	%		N/A			3.50	%		4.50	%
Long-term rate of compensation increase		4.25	%		4.25	%		4.25	%		N/A			N/A			N/A

We amortize prior service cost for our pension plans and postretirement plans, as well as amortizable gains and losses for our postretirement plans, in equal annual amounts over the average expected future period of vested service. For plans with no active participants, average life expectancy is used instead of average expected useful service.

The amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net expense during the next year are as follows:

	Pension Benefits	Other Benefits
Prior service cost (benefit)	$                3.5	$              (8.2)
Net actuarial loss	NA	7.8

Plan Assets

The fair value of plan assets, summarized by level within the fair value hierarchy described in Note 21, as of May 27, 2012, were as follows:

	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	1.8	$	319.8	$	—	$	321.6
Equity securities:
U.S. equity securities		616.2		7.3		—		623.5
International equity securities		395.1		126.7		—		521.8
Fixed income securities:
Government bonds		99.9		160.6		—		260.5
Corporate bonds		9.5		199.1		—		208.6
Mortgage-backed bonds		82.4		70.3		—		152.7
Real estate funds		5.7		—		83.2		88.9
Multi-strategy hedge funds		—		—		379.1		379.1
Private equity funds		—		—		64.2		64.2
Master limited partnerships		137.5		—		—		137.5
Private energy funds		—		—		1.6		1.6
Net receivables for unsettled transactions		6.6		—		—		6.6
Total assets	$	1,354.7	$	883.8	$	528.1	$	2,766.6

The fair value of plan assets, summarized by level within the fair value hierarchy described in Note 21, as of May 29, 2011, were as follows:

	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	2.7	$	121.5	$	—	$	124.2
Equity securities:
U.S. equity securities		625.7		7.7		—		633.4
International equity securities		473.1		131.5		—		604.6
Fixed income securities:
Government bonds		53.4		155.1		—		208.5
Corporate bonds		103.5		169.5		—		273.0
Mortgage-backed bonds		31.5		58.9		—		90.4
Real estate funds		7.8		—		70.3		78.1
Multi-strategy hedge funds		—		—		346.0		346.0
Private equity funds		—		—		56.0		56.0
Master limited partnerships		125.2		—		—		125.2
Net receivables for unsettled transactions		4.5		—		—		4.5
Total assets	$	1,427.4	$	644.2	$	472.3	$	2,543.9

Level 1 assets are valued based on quoted prices in active markets for identical securities. The majority of the Level 1 assets listed above include the common stock of both U.S. and international companies, mutual funds, master limited partnership units, and real estate investment trusts, all of which are actively traded and priced in the market. Level 2 assets are valued based on other significant observable inputs including quoted prices for similar securities, yield curves, indices, etc. The Level 2 assets listed above consist primarily of commingled equity investments where values are based on the net asset value of the underlying investments held, individual fixed income securities where values are based on quoted prices of similar securities and observable market data, and commingled fixed income investments where values are based on the net asset value of the underlying investments held. Level 3 assets are those where the fair value is determined based on unobservable inputs. The Level 3 assets listed above consist of alternative investments where active market pricing is not readily available and, as such, we use net asset values as an estimate of fair value as a practical expedient. For real estate funds, the value is based on the net asset value provided by the investment manager who uses market data and independent third party appraisals to determine fair market value. For the multi-strategy hedge funds, the value is based on the net asset values provided by a third party administrator. For private equity and private energy funds, the investment manager provides the valuation using, among other things, comparable transactions, comparable public company data, discounted cash flow analysis, and market conditions.

Level 3 investments are generally considered long-term in nature with varying redemption availability. Certain of our Level 3 investments, with a fair value of approximately $462.0 million as of May 27, 2012, have the ability to impose customary redemption gates which may further restrict or limit the redemption of invested funds therein. As of May 27, 2012, Level 3 investments with a fair value of $4.5 million have imposed such gates.

As of May 27, 2012, we have unfunded commitments for additional investments of $23 million in the private equity funds, $23 million in the private energy funds, and $5 million in real estate funds. We expect unfunded commitments to be funded from plan assets rather than the general assets of the Company.

To develop the expected long-term rate of return on plan assets assumption for the pension plans, we consider the current asset allocation strategy, the historical investment performance, and the expectations for future returns of each asset class.

Our pension plan weighted-average asset allocations and our target asset allocations at May 27, 2012 and May 29, 2011, by asset category were as follows:

	May 27,      2012			May 29,      2011			Target Allocation
Equity securities		41	%		49	%		38	%
Debt securities		23	%		22	%		22	%
Real estate funds		3	%		3	%		6	%
Multi-strategy hedge funds		14	%		14	%		15	%
Private equity		2	%		2	%		7	%
Other		17	%		10	%		12	%
Total		100	%		100	%		100	%

The Company’s investment strategy reflects the expectation that equity securities will outperform debt securities over the long term. Assets are invested in a prudent manner to maintain the security of funds while maximizing returns within the Company’s Investment Policy guidelines. The strategy is implemented utilizing indexed and actively managed assets from the categories listed.

The investment goals are to provide a total return that, over the long term, increases the ratio of plan assets to liabilities subject to an acceptable level of risk. This is accomplished through diversification of assets in accordance with the Investment Policy guidelines. Investment risk is mitigated by periodic rebalancing between asset classes as necessitated by changes in market conditions within the Investment Policy guidelines.

Other investments are primarily made up of cash and master limited partnerships.

Level 3 Gains and Losses

The change in the fair value of the Plan’s Level 3 assets is summarized as follows:

	Fair Value May 29, 2011		Net Realized and  Unrealized Gains (Losses)			Net, Purchases and Sales			Fair Value May  27, 2012
Real estate funds	$	70.3	$	2.4		$	10.6		$	83.2
Multi-strategy hedge funds		346.0		38.2			(5.1	)		379.1
Private equity		56.0		2.5			5.7			64.2
Private energy		—		(0.5	)		2.0			1.6
Total	$	472.3	$	42.6		$	13.2		$	528.1

	Fair Value May  30, 2010		Net Realized and  Unrealized Gains (Losses)			Net, Purchases and Sales			Fair Value May  29, 2011
Real estate funds	$	61.4	$	7.5		$	1.4		$	70.3
Multi-strategy hedge funds		22.1		34.1			289.8			346.0
Private equity		39.1		8.1			8.8			56.0
Contracts with insurance companies		31.2		(2.4	)		(28.8	)		—
Total	$	153.8	$	47.3		$	271.2		$	472.3

Assumed health care cost trend rates have a significant effect on the benefit obligation of the postretirement plans.

Assumed Health Care Cost Trend Rates at:	May 27, 2012			May 29, 2011
Initial health care cost trend rate		7.5	%		7.5	%
Ultimate health care cost trend rate		5.0	%		5.0	%
Year that the rate reaches the ultimate trend rate		2016			2016

A one percentage point change in assumed health care cost rates would have the following effect:

	One  Percent Increase		One  Percent Decrease
Effect on total service and interest cost	$	0.6	$	(0.5	)
Effect on postretirement benefit obligation		14.8		(13.3	)

We currently anticipate making contributions of approximately $19.7 million to our company-sponsored pension plans in fiscal 2013. This estimate is based on current tax laws, plan asset performance, and liability assumptions, which are subject to change. We anticipate making contributions of $30.9 million to the postretirement plans in fiscal 2013.

The following table presents estimated future gross benefit payments and Medicare Part D subsidy receipts for our plans:

	Pension Benefits		Health Care and Life Insurance
			Benefit Payments		Subsidy Receipts
2013	$	154.2	$	31.1	$	(3.8	)
2014		158.4		28.6		(3.2	)
2015		163.2		28.1		(3.2	)
2016		168.4		27.5		(3.2	)
2017		174.2		26.6		(3.1	)
Succeeding 5 years		966.1		115.9		(13.0	)

Multiemployer Pension Plans

The Company contributes to several multiemployer defined benefit pension plans under collective bargaining agreements that cover certain of its union-represented employees. The risks of participating in such plans are different from the risks of single-employer plans, in the following respects:

a) Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

b) If a participating employer ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

c) If the Company ceases to have an obligation to contribute to a multiemployer plan in which it had been a contributing employer, it may be required to pay to the plan an amount based on the underfunded status of the plan and on the history of the Company’s participation in the plan prior to the cessation of its obligation to contribute. The amount that an employer that has ceased to have an obligation to contribute to a multiemployer plan is required to pay to the plan is referred to as a withdrawal liability.

The Company’s participation in multiemployer plans for the fiscal year ended May 27, 2012 is outlined in the table below. For each plan that is individually significant to the Company the following information is provided:

• The “EIN / PN” column provides the Employer Identification Number and the three-digit plan number assigned to a plan by the Internal Revenue Service.

• The most recent Pension Protection Act Zone Status available for 2011 and 2010 is for plan years that ended in calendar years 2011 and 2010, respectively. The zone status is based on information provided to the Company by each plan. A plan in the “red” zone has been determined to be in “critical status”, based on criteria established under the Internal Revenue Code (“Code”), and is generally less than 65% funded. A plan in the “yellow” zone has been determined to be in “endangered status”, based on criteria established under the Code, and is generally less than 80% funded. A plan in the “green” zone has been determined to be neither in “critical status” nor in “endangered status”, and is generally at least 80% funded.

• The “FIP/RP Status Pending/Implemented” column indicates whether a Funding Improvement Plan, as required under the Code to be adopted by plans in the “yellow” zone, or a Rehabilitation Plan, as required under the Code to be adopted by plans in the “red” zone, is pending or has been implemented by the plan as of the end of the plan year that ended in calendar year 2011.

• Contributions by the Company are the amounts contributed in the Company’s fiscal periods ending in the specified year.

• The “Surcharge Imposed” column indicates whether the Company contribution rate for its fiscal year that ended on May 27, 2012 included an amount in addition to the contribution rate specified in the applicable collective bargaining agreement, as imposed by a plan in “critical status”, in accordance with the requirements of the Code.

• The last column lists the expiration dates of the collective bargaining agreements pursuant to which the Company contributes to the plans.

For plans that are not individually significant to ConAgra Foods the total amount of contributions is presented in the aggregate.

		Pension Protection Act Zone Status		FIP / RP Status Pending / Implemented	Contributions by the Company (millions)				Expiration Dates of Collective Bargaining Agreements
Pension Fund	EIN / PN	2011	2010		FY12	FY11	FY10	Surcharge Imposed
Bakery and Confectionary Union and Industry International Pension Plan	52-6118572 / 001	Green 12/31/2011- went to RED status 3/30/2012	Green 12/31/2010	No	$1.3	$1.1	$1.0	No	8/14/2011 to 2/28/2013
Central States, Southeast and Southwest Areas Pension Fund	36-6044243 / 001	Red 12/31/2011	Red 12/31/2010	Implemented	1.2	1.8	1.7	No	6/1/2014
Western Conference of Teamsters Pension Plan	91-6145047 / 001	Green 12/31/2011	Green 12/31/2010	N/A	5.2	5.4	6.2	No	07/01/2012 to 05/31/2013
Other Plans					0.8	0.9	0.8
Total Contributions					$8.5	$9.2	$9.7

On January 11, 2012, a significant contributor to the Bakery and Confectionary Union and Industry International Pension Fund (“Fund”), announced that it had filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. It is also stated it plans to modify its labor agreements in order to emerge from Chapter 11 with a new cost structure. It is not yet clear what impact these actions will have on the amount of its Fund withdrawal liability. As such, the effect of the bankruptcy on our future contributions or withdrawal liability is not yet known and cannot be reasonably estimated as of May 27, 2012.

The Company was not listed in the Forms 5500 filed by any of the plans to which it contributes as providing more than 5% of the plan’s total contributions for plan years ending in calendar years 2010 or 2009. At the date our financial statements were issued, Forms 5500 were not available for plan years ending in calendar year 2011.

Certain of our employees are covered under defined contribution plans. The expense related to these plans was $24.2 million, $21.2 million, and $22.8 million in fiscal 2012, 2011, and 2010, respectively.