Summary of Significant Accounting Policies

12 Months Ended

May 27, 2012

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year—The fiscal year of ConAgra Foods, Inc. (“ConAgra Foods”, “Company”, “we”, “us”, or “our”) ends the last Sunday in May. The fiscal years for the consolidated financial statements presented consist of 52-week periods for fiscal years 2012, 2011, and 2010.

Basis of Consolidation—The 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 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 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 include, but are not limited to, 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.

Inventories—We principally use the lower of cost (determined using the first-in, first-out method) or market for valuing inventories other than merchandisable agricultural commodities. Grain and flour inventories are principally stated at market value.

Property, Plant and Equipment—Property, plant and equipment are carried at cost. Depreciation has been calculated using the straight-line method over the estimated useful lives of the respective classes of assets as follows:

Land improvements	1 - 40 years
Buildings	15 - 40 years
Machinery and equipment	3 - 20 years
Furniture, fixtures, office equipment and other	5 - 15 years

We review property, plant and equipment for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Recoverability of an asset considered “held-and-used” is determined by comparing the carrying amount of the asset to the undiscounted net cash flows expected to be generated from the use of the asset. If the carrying amount is greater than the undiscounted net cash flows expected to be generated by the asset, the asset’s carrying amount is reduced to its estimated fair value. An asset considered “held-for-sale” is reported at the lower of the asset’s carrying amount or fair value.

Goodwill and Other Identifiable Intangible Assets—Goodwill and other identifiable intangible assets with indefinite lives (e.g., brands or trademarks) are not amortized and are tested annually for impairment of value and whenever events or changes in circumstances indicate the carrying amount of the asset may be impaired. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include deterioration in general economic conditions, adverse changes in the markets in which an entity operates, increases in input costs that have negative effects on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others. The fair value that could be realized in an actual transaction may differ from that used to evaluate the impairment of goodwill and other intangible assets.

In September 2011, new accounting guidance was issued for testing goodwill for impairment. The guidance provides an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (more than 50%) that the estimated fair value of a reporting unit is less than its carrying amount. If an entity elects to perform a qualitative assessment and determines that an impairment is more likely than not, the entity is then required to perform the existing two-step quantitative impairment test, otherwise no further analysis is required. An entity also may elect not to perform the qualitative assessment and, instead, proceed directly to the two-step quantitative impairment test.

In the third quarter of fiscal 2012, in conjunction with management’s annual review of goodwill, we early adopted the new guidance. Under the qualitative assessment, various events and circumstances that would affect the estimated fair value of a reporting unit are identified (similar to impairment indicators above). Furthermore, management considers the results of the most recent two-step quantitative impairment test completed for a reporting unit (this would be fiscal 2011 in which the estimated fair values of all reporting units were substantially in excess of their carrying values) and compares the weighted average cost of capital (WACC) between the current and prior years for each reporting unit.

Under the two-step quantitative impairment test, the evaluation of impairment involves comparing the current fair value of each reporting unit to its carrying value, including goodwill. The first step of the test compares the carrying value of a reporting unit, including goodwill, with its fair value. We estimate the fair value using level 3 inputs as defined by the fair value hierarchy. Refer to Note 21 for the definition of the levels in the fair value hierarchy. The inputs used to calculate the fair value include a number of subjective factors, such as estimates of future cash flows, estimates of our future cost structure, discount rates for our estimated cash flows, required level of working capital, assumed terminal value, and time horizon of cash flow forecasts. If the carrying value of a reporting unit exceeds its fair value, we complete the second step of the test to determine the amount of goodwill impairment loss to be recognized. In the second step, we estimate an implied fair value of the reporting unit’s goodwill by allocating the fair value of the reporting unit to all of the assets and liabilities other than goodwill (including any unrecognized intangible assets). The impairment loss is equal to the excess of the carrying value of the goodwill over the implied fair value of that goodwill.

During the fiscal 2012 annual review of goodwill, management performed the qualitative assessment for all reporting units and concluded that it was more likely than not that their estimated fair values exceeded their carrying values. As such, no further analysis was required.

Identifiable intangible assets with definite lives (e.g., licensing arrangements with contractual lives or customer relationships) are amortized over their estimated useful lives and tested for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may be impaired. Identifiable intangible assets with definite lives are evaluated for impairment using a process similar to that used in evaluating elements of property, plant and equipment. If impaired, the asset is written down to its fair value.

Fair Values of Financial Instruments—Unless otherwise specified, we believe the carrying value of financial instruments approximates their fair value.

Environmental Liabilities—Environmental liabilities are accrued when it is probable that obligations have been incurred and the associated amounts can be reasonably estimated. We use third-party specialists to assist management in appropriately measuring the obligations associated with environmental liabilities. Such liabilities are adjusted as new information develops or circumstances change. We do not discount our environmental liabilities as the timing of the anticipated cash payments is not fixed or readily determinable. Management’s estimate of our potential liability is independent of any potential recovery of insurance proceeds or indemnification arrangements. We do not reduce our environmental liabilities for potential insurance recoveries.

Employment-Related Benefits—Employment-related benefits associated with pensions, postretirement health care benefits, and workers’ compensation are expensed as such obligations are incurred. The recognition of expense is impacted by estimates made by management, such as discount rates used to value these liabilities, future health care costs, and employee accidents incurred but not yet reported. We use third-party specialists to assist management in appropriately measuring the obligations associated with employment-related benefits.

In May 2012, we elected to change our method of accounting for pension benefits. Historically, we have recognized actuarial gains and losses in accumulated other comprehensive income (loss) in the consolidated balance sheets upon each plan remeasurement, amortizing them into operating results over the average future service period of active employees in these plans, to the extent such gains and losses were in excess of 10% of the greater of the market-related value of plan assets or the plan’s projected benefit obligation (“the corridor”). We have elected to immediately recognize actuarial gains and losses in our operating results in the year in which they occur, to the extent they exceed the corridor, eliminating the amortization. Actuarial gains and losses outside the corridor, to the extent they occur, will be recognized annually as of our measurement date, which is our fiscal year-end, or when measurement is required otherwise under generally accepted accounting principles. Additionally, for purposes of calculating the expected return on plan assets, we will no longer use the market-related value of plan assets, an averaging technique permitted under generally accepted accounting principles, but instead will use the fair value of plan assets. These changes are intended to improve the transparency of our operating results by more quickly recognizing the effects of changes in plan asset values and the impact of current interest rates on plan obligations.

These changes have been reported through retrospective application of the new policies to all periods presented, by recalculating all actuarial gains and losses under the new method back to a reasonable period of time when actuarial gains and losses recognized were immaterial. The Company also considered the impact of the revised pension expense on cost of goods sold in its assessment of the impact of all adjustments in application of the new policy. The impacts of all adjustments made to the financial statements are summarized below:

Consolidated Statement of Operations

	Fiscal Year Ended May 29, 2011							Fiscal Year Ended May 30, 2010
	Previously Reported		Revised		Effect of Change			Previously Reported		Revised		Effect of Change
Selling, general and administrative expenses	$	1,511.1	$	1,509.9	$	(1.2	)	$	1,819.4	$	1,987.7	$	168.3
Cost of goods sold		9,389.6		9,389.6		—			8,953.7		8,966.3		12.6
Income tax expense		421.0		421.6		0.6			360.9		292.3		(68.6	)
Income from continuing operations		830.3		830.9		0.6			742.6		630.3		(112.3	)
Net income		818.8		819.4		0.6			723.3		611.0		(112.3	)
Net income attributable to ConAgra Foods, Inc.		817.0		817.6		0.6			725.8		613.5		(112.3	)
Earnings per share from continuing operations-basic	$	1.92	$	1.92	$	—		$	1.68	$	1.43	$	(0.25	)
Earnings per share attributable to ConAgra Foods-basic	$	1.90	$	1.90	$	—		$	1.63	$	1.38	$	(0.25	)
Earnings per share from continuing operations-diluted	$	1.90	$	1.90	$	—		$	1.66	$	1.41	$	(0.25	)
Earnings per share attributable to ConAgra Foods-diluted	$	1.88	$	1.88	$	—		$	1.62	$	1.37	$	(0.25	)

Consolidated Balance Sheet

	May 29, 2011
	Previously Reported*			Revised			Effect of Change
Retained earnings	$	4,821.8		$	4,690.3		$	(131.5	)
Accumulated other comprehensive loss		(222.7	)		(91.2	)		131.5

Consolidated Statement of Cash Flows

	Fiscal Year Ended May 29, 2011							Fiscal Year Ended May 30, 2010
	Previously Reported		Revised		Effect of Change			Previously Reported		Revised			Effect of Change
Cash flows from operating activities:
Net income	$	818.8	$	819.4	$	0.6		$	723.3	$	611.0		$	(112.3	)
Income from continuing operations		830.3		830.9		0.6			742.6		630.3			(112.3	)
Pension expense		—		54.0		54.0			—		227.4			227.4
Other items		267.5		212.9		(54.6	)		89.7		(25.4	)		(115.1	)
Net cash flows from operating activities		1,352.3		1,352.3		—			1,472.7		1,472.7			—

Consolidated Statement of Common Stockholders’ Equity

	Fiscal Year Ended May 29, 2011									Fiscal Year Ended May 30, 2010
	Previously Reported*			Revised			Effect of Change			Previously Reported*			Revised			Effect of Change
Retained earnings:
Beginning balance	$	4,385.3		$	4,253.2		$	(132.1	)	$	4,010.7		$	3,990.9		$	(19.8	)
Net income		817.0			817.6			0.6			725.8			613.5			(112.3	)
Ending balance		4,821.8			4,690.3			(131.5	)		4,385.3			4,253.2			(132.1	)
Accumulated other comprehensive loss:
Beginning balance		(285.3	)		(153.2	)		132.1			(103.7	)		(83.9	)		19.8
Pensions and postretirement healthcare benefits		24.2			23.6			(0.6	)		(178.1	)		(65.8	)		112.3
Ending balance		(222.7	)		(91.2	)		131.5			(285.3	)		(153.2	)		132.1
Total equity		4,676.7			4,676.7			—			4,897.1			4,897.1			—

Consolidated Statement of Comprehensive Income

	Fiscal Year Ended May 29, 2011							Fiscal Year Ended May 30, 2010
	Previously Reported		Revised		Effect of Change			Previously Reported			Revised			Effect of Change
Net income	$	818.8	$	819.4	$	0.6		$	723.3		$	611.0		$	(112.3	)
Pension and postretirement healthcare liabilities, net of tax		24.2		23.6		(0.6	)		(178.1	)		(65.8	)		112.3

* Retained earnings also reflects the impact of the change related to income taxes as discussed in Note 16.

Revenue Recognition—Revenue is recognized when title and risk of loss are transferred to customers upon delivery based on terms of sale and collectability is reasonably assured. Revenue is recognized as the net amount to be received after deducting estimated amounts for discounts, trade allowances, and returns of damaged and out-of-date products. Changes in the market value of inventories of merchandisable agricultural commodities, and the fair values of forward cash purchase and sales contracts, and exchange-traded futures and options contracts are recognized in earnings immediately.

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.

Marketing Costs—We promote our products with advertising, consumer incentives, and trade promotions. Such programs include, but are not limited to, discounts, coupons, rebates, and volume-based incentives. Advertising costs are expensed as incurred. Consumer incentives and trade promotion activities are recorded as a reduction of revenue or as a component of cost of goods sold based on amounts estimated as being due to customers and consumers at the end of the period, based principally on historical utilization and redemption rates. Advertising and promotion expenses totaled $364.5 million, $371.9 million, and $409.1 million in fiscal 2012, 2011, and 2010, respectively, and are included in selling, general and administrative expenses.

Research and Development—We incurred expenses of $86.0 million, $81.4 million, and $77.9 million for research and development activities in fiscal 2012, 2011, and 2010, respectively.

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 (only amounts within the corridor) and postretirement health care plans. We generally deem our foreign investments to be essentially permanent in nature and, as such, 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 taxes, if any, resulting from currency translation adjustments. We reclassified $6.0 million of foreign currency translation net losses to net income in fiscal 2012 due to our acquisition of a majority interest in Agro Tech Foods Limited in India (“ATFL”) and the related remeasurement of our previously held noncontrolling equity interest in ATFL to fair value (see Note 3). We reclassified $1.6 million of foreign currency translation net gains to net income due to the disposal or substantial liquidation of foreign subsidiaries in fiscal 2011.

The following is a rollforward of the balances in accumulated other comprehensive income (loss), net of tax (except for currency translation adjustment):

	Currency Translation Adjustment, Net of Reclassification Adjustments			Net Derivative Adjustment, Net of  Reclassification Adjustments			Unrealized Loss on Available- For-Sale Securities, Net of Reclassification Adjustments			Pension and Postretirement Adjustments			Accumulated Other Comprehensive Income (Loss)
Balance at May 31, 2009	$	52.6		$	(1.2	)	$	(1.2	)	$	(134.1	)	$	(83.9	)
Current-period change		(3.7	)		0.2			—			(65.8	)		(69.3	)
Balance at May 30, 2010		48.9			(1.0	)		(1.2	)		(199.9	)		(153.2	)
Current-period change		45.7			(7.2	)		(0.1	)		23.6			62.0
Balance at May 29, 2011		94.6			(8.2	)		(1.3	)		(176.3	)		(91.2	)
Current-period change		(52.0	)		(89.1	)		(0.1	)		(66.7	)		(207.9	)
Balance at May 27, 2012	$	42.6		$	(97.3	)	$	(1.4	)	$	(243.0	)	$	(299.1	)

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

	2012			2011			2010
Net derivative adjustment	$	(52.7	)	$	(4.2	)	$	0.1
Unrealized losses on available-for-sale securities		(0.1	)		(0.1	)		—
Pension and postretirement healthcare liabilities		(35.4	)		15.8			(40.0	)

Foreign Currency Transaction Gains and Losses—We recognized net foreign currency transaction gains (losses) from continuing operations of $(3.9) million, $3.9 million, and $(6.2) million in fiscal 2012, 2011, and 2010, respectively, in selling, general and administrative expenses.

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 consolidated financial statements. Actual results could differ from these estimates.

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