BUSINESS SEGMENTS AND RELATED INFORMATION

9 Months Ended

Feb. 24, 2013

Segment Reporting [Abstract]

BUSINESS SEGMENTS AND RELATED INFORMATION

BUSINESS SEGMENTS AND RELATED INFORMATION

We report our operations in four reporting segments: Consumer Foods, Commercial Foods, Ralcorp Food Group, and Ralcorp Frozen Bakery Products. The Consumer Foods reporting segment includes branded, private brand, 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^®. The Ralcorp Food Group reporting segment principally includes private brand food products that are sold in various retail and foodservice channels, primarily in North America. The products include a variety of categories including cereal products; snacks, sauces, and spreads; and pasta. The Ralcorp Frozen Bakery Products reporting segment principally includes private brand frozen bakery products that are sold in various retail and foodservice channels, primarily in North America. The segment's primary products include: frozen griddle products, including pancakes, waffles, and French toast; frozen biscuits and other frozen pre-baked products such as breads and rolls; and frozen and refrigerated dough products. 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 2013, we revised the manner in which sales of grain within our Commercial Foods segment are recognized. As a result, net sales and cost of goods sold for the third quarter and first three quarters of fiscal 2012 have each been increased by $22.9 million and $84.0 million, respectively.

	Thirteen weeks ended				Thirty-nine weeks ended
	February 24, 2013		February 26, 2012		February 24, 2013		February 26, 2012
Net sales
Consumer Foods	$	2,303.2	$	2,157.2	$	6,768.9	$	6,227.1
Commercial Foods	1,255.5		1,238.8		3,837.2		3,705.9
Ralcorp Food Group	212.5		—		212.5		—
Ralcorp Frozen Bakery Products	79.3		—		79.3		—
Total net sales	$	3,850.5	$	3,396.0	$	10,897.9	$	9,933.0
Operating profit
Consumer Foods	$	284.4	$	331.3	$	805.7	$	783.8
Commercial Foods	166.6		150.0		475.5		408.3
Ralcorp Food Group	3.6		—		3.6		—
Ralcorp Frozen Bakery Products	1.4		—		1.4		—
Total operating profit	$	456.0	$	481.3	$	1,286.2	$	1,192.1
Equity method investment earnings
Consumer Foods	$	0.7	$	1.1	$	1.3	$	4.0
Commercial Foods	11.3		11.5		31.1		26.3
Total equity method investment earnings	$	12.0	$	12.6	$	32.4	$	30.3
Operating profit plus equity method investment earnings
Consumer Foods	$	285.1	$	332.4	$	807.0	$	787.8
Commercial Foods	177.9		161.5		506.6		434.6
Ralcorp Food Group	3.6		$	—	$	3.6	$	—
Ralcorp Frozen Bakery Products	1.4		$	—	$	1.4	$	—
Total operating profit plus equity method investment earnings	$	468.0	$	493.9	$	1,318.6	$	1,222.4
General corporate expenses	$	196.0	$	51.4	$	242.6	$	257.7
Interest expense, net	70.6		49.7		173.3		153.2
Income tax expense	78.0		112.1		310.6		253.7
Income from continuing operations	$	123.4	$	280.7	$	592.1	$	557.8
Less: Net income attributable to noncontrolling interests	3.4		0.6		10.4		3.8
Income from continuing operations attributable to ConAgra Foods, Inc.	$	120.0	$	280.1	$	581.7	$	554.0

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 5 to our condensed consolidated financial statements) 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:

	Thirteen weeks ended						Thirty-nine weeks ended
	February 24, 2013			February 26, 2012			February 24, 2013			February 26, 2012
Net derivative gains (losses) incurred	$	(12.2	)	$	22.9		$	96.0		$	(9.7	)
Less: Net derivative gains allocated to reporting segments	14.7			0.9			8.8			29.0
Net derivative gains (losses) recognized in general corporate expenses	$	(26.9	)	$	22.0		$	87.2		$	(38.7	)
Net derivative gains allocated to Consumer Foods	$	14.0		$	2.7		$	16.3		$	27.5
Net derivative gains (losses) allocated to Commercial Foods	0.7			(1.8		)	(7.5		)	1.5
Net derivative gains included in segment operating profit	$	14.7		$	0.9		$	8.8		$	29.0

As of February 24, 2013, the cumulative amount of net derivative gains from economic hedges that had been recognized in Corporate and not yet allocated to reporting segments was $28.3 million. This amount reflected net gains of $87.2 million incurred during the thirty-nine weeks endedFebruary 24, 2013, as well as net losses of $58.9 million incurred prior to fiscal 2013. Based on our forecasts of the timing of recognition of the underlying hedged items, we expect to reclassify gains of $16.0 million and $12.3 million to segment operating results in fiscal 2013 and 2014 and thereafter, respectively.

Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for 18% of consolidated net sales in both the third quarter and first three quarters of fiscal 2013, and 17% and 18% of consolidated net sales in the third quarter and first three quarters of fiscal 2012, 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 February 24, 2013 and May 27, 2012, primarily in the Consumer Foods segment.