SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The unaudited financial information reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position, and cash flows for the periods presented. The adjustments are of a normal recurring nature, except as otherwise noted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the ConAgra Foods, Inc. (the "Company", "we", "us", or "our") Annual Report on Form 10-K for the fiscal year ended May 31, 2015.

The results of operations for any quarter or a partial fiscal year period are not necessarily indicative of the results to be expected for other periods or the full fiscal year.

Basis of Consolidation — The condensed 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 condensed consolidated financial statements from the date such determination is made. All significant intercompany investments, accounts, and transactions have been eliminated.

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 (for amounts not in excess of the 10% corridor) and post-retirement health care plans. We generally deem our foreign investments to be essentially permanent in nature and we do not provide for taxes on currency translation adjustments arising from converting the investment denominated 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 tax liability (asset), if any, resulting from currency translation adjustments.

The following tables summarize the reclassifications from accumulated other comprehensive loss into operations:



	Thirteen weeks ended						Affected Line Item in the Condensed Consolidated Statement of Operations¹
	February 28, 2016			February 22, 2015
Net derivative adjustment, net of tax:
Cash flow hedges	$	(2.1	)	$	—		Interest expense, net
	(2.1		)	—			Total before tax
	0.8			—			Income tax expense
	$	(1.3	)	$	—		Net of tax
Amortization of pension and other postretirement benefits:
Net prior service benefit	$	(1.2	)	$	(1.1	)	Selling, general and administrative expenses
Divestiture of Private Brands	(4.3		)	—			Income (loss) from discontinued operations, net of tax
Pension settlement of equity method investment	(5.4		)	—			Equity method investment earnings
Net actuarial loss	—			0.9			Selling, general and administrative expenses
	(10.9		)	(0.2		)	Total before tax
	3.4			0.1			Income tax expense
	$	(7.5	)	$	(0.1	)	Net of tax
Currency translation losses	$	73.4		$	—		Income (loss) from discontinued operations, net of tax
	73.4			—			Total before tax
	—			—			Income tax expense
	$	73.4		$	—		Net of tax



	Thirty-nine weeks ended						Affected Line Item in the Condensed Consolidated Statement of Operations¹
	February 28, 2016			February 22, 2015
Net derivative adjustment, net of tax:
Cash flow hedges	$	(2.1	)	$	(0.5	)	Interest expense, net
	(2.1		)	(0.5		)	Total before tax
	0.8			0.2			Income tax expense
	$	(1.3	)	$	(0.3	)	Net of tax
Amortization of pension and postretirement liabilities:
Net prior service benefit	$	(3.8	)	$	(3.2	)	Selling, general and administrative expenses
Divestiture of Private Brands	(4.3		)	—			Income (loss) from discontinued operations, net of tax
Pension settlement of equity method investment	(5.4		)	—			Equity method investment earnings
Net actuarial loss	—			2.6			Selling, general and administrative expenses
	(13.5		)	(0.6		)	Total before tax
	4.4			0.2			Income tax expense
	$	(9.1	)	$	(0.4	)	Net of tax
Currency translation losses	$	73.4		$	—		Income (loss) from discontinued operations, net of tax
	73.4			—			Total before tax
	—			—			Income tax expense
	$	73.4		$	—		Net of tax

¹ Amounts in parentheses indicate income recognized in the Condensed Consolidated Statement of Operations.

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

Use of Estimates — Preparation of financial statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") requires management to make estimates and assumptions. These estimates and assumptions affect reported amounts of assets, liabilities, revenues, and expenses as reflected in the condensed consolidated financial statements. Actual results could differ from these estimates.

Recently Issued Accounting Standards — In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP. On July 9, 2015, the FASB deferred the effective date of the new revenue recognition standard by one year. Based on the FASB’s ASU, we will apply the new revenue standard in our fiscal year 2019. Early adoption in our fiscal year 2018 is permitted. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. The standard permits the use of either the retrospective or cumulative effect transition method.

In July 2015, the FASB issued ASU 2015-11, Inventory, which requires an entity to measure inventory within the scope at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The effective date for the standard is for fiscal years beginning after December 15, 2016. Early adoption is permitted. We do not expect ASU 2015-11 to have a material impact to our financial statements. The standard is to be applied prospectively.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which will require entities to present deferred tax assets ("DTAs") and deferred tax liabilities ("DTLs") as noncurrent in a classified balance sheet. The ASU simplifies the current guidance, which requires entities to separately present DTAs and DTLs as current and noncurrent in a classified balance sheet. The effective date for the standard is for fiscal years beginning after December 15, 2016. Early adoption is permitted. The standard is to be applied prospectively or retrospectively. We do not expect ASU 2015-17 to have a material impact to our financial statements.

In February 2016, the FASB issued its final lease accounting standard, FASB Accounting Standard Codification ("ASC") Topic 842, Leases, which requires lessees to reflect most leases on their balance sheet as assets and obligations. The effective date for the standard is for fiscal years beginning after December 15, 2018. Early adoption is permitted. We are evaluating the effect that ASC 842 will have on our consolidated financial statements and related disclosures. The standard is to be applied under the modified retrospective method, with elective reliefs, which requires application of the new guidance for all periods presented.