BUSINESS SEGMENTS AND RELATED INFORMATION

9 Months Ended

Feb. 28, 2016

Segment Reporting [Abstract]

BUSINESS SEGMENTS AND RELATED INFORMATION

BUSINESS SEGMENTS AND RELATED INFORMATION

We report our operations in two reporting segments: Consumer Foods and Commercial Foods. In the third quarter of fiscal 2016, we completed the sale of substantially all of the operations that were previously reported within the Private Brands segment. The Private Brands operations we sold are classified as held for sale for periods prior to the sale and the results of operations have been classified as discontinued operations for all periods presented. Minor portions of the former Private Brands segment were retained and have been included in the Consumer Foods and Commercial Foods segments for all periods presented. Minor portions of the Consumer Foods and Commercial Foods segments have been classified as discontinued operations as they were included with the sale of the Private Brands operations.

The Consumer Foods reporting segment principally includes branded food sold in various retail channels primarily in North America. Our food products are sold in a variety of categories (meals, entrees, condiments, pasta, sides, snacks, and desserts) in various retail channels across frozen, refrigerated, and shelf-stable temperature classes.

The Commercial Foods reporting segment includes commercially branded and private label food and ingredients, which are sold primarily to commercial, foodservice, restaurant, food manufacturing, and industrial customers. The segment's primary food items include: frozen potato and sweet potato items and a variety of vegetable, spice, and frozen bakery goods, which are sold under brands such as Lamb Weston^® and Spicetec Flavors & Seasonings^®.

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.

	Thirteen weeks ended				Thirty-nine weeks ended
	February 28, 2016		February 22, 2015		February 28, 2016		February 22, 2015
Net sales
Consumer Foods	$	1,854.8	$	1,899.7	$	5,531.6	$	5,642.0
Commercial Foods	1,069.3		1,007.6		3,283.8		3,169.5
Total net sales	$	2,924.1	$	2,907.3	$	8,815.4	$	8,811.5
Operating profit
Consumer Foods	$	291.3	$	266.0	$	857.8	$	758.9
Commercial Foods	175.0		144.5		477.7		412.2
Total operating profit	$	466.3	$	410.5	$	1,335.5	$	1,171.1
Equity method investment earnings
Consumer Foods	$	1.1	$	1.3	$	2.5	$	2.4
Commercial Foods	43.6		31.7		104.5		90.2
Total equity method investment earnings	$	44.7	$	33.0	$	107.0	$	92.6
Operating profit plus equity method investment earnings
Consumer Foods	$	292.4	$	267.3	$	860.3	$	761.3
Commercial Foods	218.6		176.2		582.2		502.4
Total operating profit plus equity method investment earnings	$	511.0	$	443.5	$	1,442.5	$	1,263.7
General corporate expense	$	155.5	$	50.8	$	425.3	$	248.2
Interest expense, net	76.9		79.8		236.8		241.8
Income tax expense	91.0		100.6		259.3		247.9
Income from continuing operations	$	187.6	$	212.3	$	521.1	$	525.8
Less: Net income attributable to noncontrolling interests	1.7		1.4		7.8		9.5
Income from continuing operations attributable to ConAgra Foods, Inc.	$	185.9	$	210.9	$	513.3	$	516.3

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 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. In the event that management determines a particular derivative entered into as an economic hedge of a forecasted commodity purchase has ceased to function as an economic hedge, we cease recognizing further gains and losses on such derivatives in corporate expense and begin recognizing such gains and losses within segment operating results, immediately.

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 28, 2016			February 22, 2015			February 28, 2016			February 22, 2015
Net derivative losses incurred	$	(5.1	)	$	(31.5	)	$	(20.1	)	$	(76.3	)
Less: Net derivative losses allocated to reporting segments	(7.6		)	(35.7		)	(18.7		)	(25.5		)
Net derivative gains (losses) recognized in general corporate expenses	$	2.5		$	4.2		$	(1.4	)	$	(50.8	)
Net derivative losses allocated to Consumer Foods	$	(4.6	)	$	(30.9	)	$	(12.9	)	$	(26.7	)
Net derivative gains (losses) allocated to Commercial Foods	(3.0		)	(4.8		)	(5.8		)	1.2
Net derivative losses included in segment operating profit	$	(7.6	)	$	(35.7	)	$	(18.7	)	$	(25.5	)

As of February 28, 2016, the cumulative amount of net derivative losses from economic hedges that had been recognized in general corporate expenses and not yet allocated to reporting segments was $16.2 million. This amount reflected net losses of $14.5 million incurred during the thirty-nine weeks endedFebruary 28, 2016, as well as net losses of $1.7 million incurred prior to fiscal 2016. Based on our forecasts of the timing of recognition of the underlying hedged items, we expect to reclassify to segment operating results losses of $10.6 million in fiscal 2016 and $5.6 million in fiscal 2017 and thereafter.

In the second quarter of fiscal 2015, management determined that certain derivatives that had been previously entered into as an economic hedge of forecasted commodity purchases had ceased to function as economic hedges. We recognized $20.9 million and $1.6 million of net derivative losses in the third quarter of fiscal 2015 within the operating results of the Consumer Foods and Commercial Foods segments, respectively, in connection with these derivatives. In the first three quarters of fiscal 2015, we recognized $18.6 million and $1.4 million of net derivative losses within the operating results of the Consumer Foods and Commercial Foods segments, respectively, in connection with these derivatives. Management effectively exited these derivative positions in the third quarter of fiscal 2015.

Other Information

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 2016 and 19% of consolidated net sales in both the third quarter and first three quarters of fiscal 2015, primarily in the Consumer Foods segment.

Wal-Mart Stores, Inc. and its affiliates accounted for approximately 17% and 16% of consolidated net receivables as of February 28, 2016 and May 31, 2015, respectively, primarily in the Consumer Foods segment.

In the third quarter of fiscal 2016, we recognized a gain of $17.7 million for the settlement of a pension plan of an international potato venture. This gain is reflected in equity method investment earnings.

Spinoff of the Lamb Weston Business

On November 18, 2015, we announced our plans to separate ConAgra Foods, Inc. into two public companies, Conagra Brands and Lamb Weston. The transaction, expected to be structured as a spinoff of the Lamb Weston business to the shareholders of ConAgra Foods in the fall of calendar 2016, is expected to be tax free to the Company and its shareholders.