Business Segments and Related Information

12 Months Ended

May 27, 2012

Business Segments and Related Information [Abstract]

BUSINESS SEGMENTS AND RELATED INFORMATION

22.  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 ^®, and Spicetec Flavors & Seasonings ^TM. We do not aggregate operating segments when determining our reporting segments.

Intersegment sales have been recorded at amounts approximating market. Operating profit for each of the segments is based on net sales less all identifiable operating expenses. General corporate expense, net interest expense, and income taxes have been excluded from segment operations. In the first quarter of fiscal 2012, we changed the manner in which the expenses associated with certain administrative functions are recognized in segment results. In 2012, we also changed our accounting method for pension. Accordingly, segment results of the prior periods have been reclassified to reflect these changes.

	2012			2011			2010
Net sales
Consumer Foods	$	8,376.8		$	8,002.0		$	7,939.7
Commercial Foods		4,885.8			4,301.1			4,075.2
Total net sales	$	13,262.6		$	12,303.1		$	12,014.9
Operating profit
Consumer Foods	$	1,053.3		$	1,126.4		$	1,061.8
Commercial Foods		546.3			509.5			543.3
Total operating profit	$	1,599.6		$	1,635.9		$	1,605.1
Equity method investment earnings
Consumer Foods	$	4.9		$	5.7		$	5.2
Commercial Foods		40.0			20.7			16.9
Total equity method investment earnings	$	44.9		$	26.4		$	22.1
Operating profit plus equity method investment earnings
Consumer Foods	$	1,058.2		$	1,132.1		$	1,067.0
Commercial Foods		586.3			530.2			560.2
Total operating profit plus equity method investment earnings	$	1,644.5		$	1,662.3		$	1,627.2
General corporate expenses	$	(770.4	)	$	(232.3	)	$	(544.2	)
Interest expense, net		(204.0	)		(177.5	)		(160.4	)
Income tax expense		(195.8	)		(421.6	)		(292.3	)
Income from continuing operations		474.3			830.9			630.3
Less: Income (loss) attributable to noncontrolling interests		6.5			1.8			(2.5	)
Income from continuing operations attributable to ConAgra Foods, Inc.	$	467.8		$	829.1		$	632.8

	2012		2011		2010
Identifiable assets
Consumer Foods	$	8,220.9	$	7,277.3	$	7,065.0
Commercial Foods		2,384.9		2,466.8		2,230.7
Corporate		836.1		1,664.6		2,135.0
Held for sale		—		—		307.3
Total	$	11,441.9	$	11,408.7	$	11,738.0
Additions to property, plant and equipment
Consumer Foods	$	169.3	$	208.7	$	277.4
Commercial Foods		97.4		187.0		158.6
Corporate		70.0		70.5		46.3
Total	$	336.7	$	466.2	$	482.3
Depreciation and amortization
Consumer Foods	$	193.6	$	180.3	$	148.6
Commercial Foods		94.6		87.6		78.4
Corporate		83.6		93.0		97.1
Total	$	371.8	$	360.9	$	324.1

Net sales by product type within each segment were:

	2012		2011		2010
Net sales
Consumer Foods:
Grocery	$	3,358.0	$	3,258.7	$	3,381.8
Frozen		1,990.6		1,965.2		1,846.7
Snacks		1,237.6		1,209.8		1,229.3
International		841.5		714.2		659.4
Store Brands		631.9		528.8		454.7
Other Brands		317.2		325.3		367.8
Total Consumer Foods	$	8,376.8	$	8,002.0	$	7,939.7
Commercial Foods:
Specialty Potatoes	$	2,631.0	$	2,375.3	$	2,277.6
Milled Products		1,804.9		1,520.5		1,413.3
Seasonings, Blends, and Flavors		449.9		405.3		384.3
Total Commercial Foods	$	4,885.8	$	4,301.1	$	4,075.2
Total net sales	$	13,262.6	$	12,303.1	$	12,014.9

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

Derivatives used to manage commodity price risk and foreign currency risk are not designated for hedge accounting treatment. We believe these derivatives provide economic hedges of certain forecasted transactions. As such, these derivatives (except those related to our milling operations, see Note 19) are recognized at fair market value with realized and unrealized gains and losses recognized in general corporate expenses. The gains and losses are subsequently recognized in the operating results of the reporting segments in the period in which the underlying transaction being economically hedged is included in earnings.

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

	Fiscal Year Ended
	May 27, 2012		May 29, 2011
Net derivative gains (losses) incurred	$	(66.8)	$	35.1
Less: Net derivative gains allocated to reporting segments		24.4		0.6
Net derivative gains (losses) recognized in general corporate expenses	$	(91.2)	$	34.5
Net derivative gains allocated to Consumer Foods	$	24.9	$	3.6
Net derivative losses allocated to Commercial Foods		(0.5)		(3.0)
Net derivative gains included in segment operating profit	$	24.4	$	0.6

Based on our forecasts of the timing of recognition of the underlying hedged items, we expect to reclassify losses of $46.6 million and $12.3 million to segment operating results in fiscal 2013 and 2014 and thereafter, respectively. Amounts allocated, or to be allocated, to segment operating results during fiscal 2012 and thereafter include $32.3 million of net gains recognized prior to fiscal 2012.

At May 27, 2012, ConAgra Foods and its subsidiaries had approximately 26,100 employees, primarily in the United States. Approximately 42% of our employees are parties to collective bargaining agreements. Of the employees subject to collective bargaining agreements, approximately 43% are parties to collective bargaining agreements that are scheduled to expire during fiscal 2013.

Our operations are principally in the United States. With respect to operations outside of the United States, no single foreign country or geographic region was significant with respect to consolidated operations for fiscal 2012, 2011, and 2010. Foreign net sales, including sales by domestic segments to customers located outside of the United States, were approximately $1.6 billion, $1.3 billion, and $1.2 billion in fiscal 2012, 2011, and 2010, respectively. Our long-lived assets located outside of the United States are not significant.

Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 17%, 18%, and 18% of consolidated net sales for fiscal 2012, 2011, and 2010, respectively, primarily in the Consumer Foods segment.

Wal-Mart Stores, Inc. and its affiliates accounted for approximately 15% of consolidated net receivables as of both May 27, 2012 and May 29, 2011, primarily in the Consumer Foods segment.