DISCONTINUED OPERATIONS AND OTHER DIVESTITURES

Lamb Weston Spinoff

On November 9, 2016, we completed the Spinoff of our Lamb Weston business. As of such date, we did not beneficially own any equity interest in Lamb Weston and no longer consolidated Lamb Weston into our financial results. We reflected the results of this business as discontinued operations for all periods presented. The assets and liabilities of the Lamb Weston business have been reclassified as assets and liabilities of discontinued operations within our Consolidated Balance Sheets for the period presented prior to the Spinoff.

The summary comparative financial results of the Lamb Weston business through the date of the Spinoff, included within discontinued operations, were as follows:



	2017		2016		2015
Net sales	$	1,407.9	$	2,975.0	$	2,899.0
Income from discontinued operations before income taxes and equity method investment earnings	$	172.3	$	474.8	$	415.6
Income before income taxes and equity method investment earnings	172.3		474.8		415.6
Income tax expense	87.5		178.9		149.3
Equity method investment earnings	15.9		71.7		42.7
Income from discontinued operations, net of tax	100.7		367.6		309.0
Less: Net income attributable to noncontrolling interests	6.8		9.2		9.3
Net income from discontinued operations attributable to Conagra Brands, Inc.	$	93.9	$	358.4	$	299.7

During fiscal 2017, we incurred $74.8 million of expenses in connection with the Spinoff primarily related to professional fees and contract services associated with preparation of regulatory filings and separation activities. These expenses are reflected in income from discontinued operations.

The assets and liabilities classified as assets and liabilities of discontinued operations in our Consolidated Balance Sheets related to the Lamb Weston business were as follows:



	May 29, 2016
Cash and cash equivalents	$	36.4
Receivables, less allowance for doubtful accounts of $0.5	186.5
Inventories	498.9
Prepaid expenses and other current assets	57.9
Total current assets of discontinued operations	$	779.7
Property, plant and equipment, net	$	1,004.1
Goodwill	133.9
Brands, trademarks and other intangibles, net	39.6
Other assets	161.7
Total noncurrent assets of discontinued operations	$	1,339.3
Notes payable	$	24.9
Current installments of long-term debt	12.0
Accounts payable	238.7
Accrued payroll	50.3
Other accrued liabilities	83.3
Total current liabilities of discontinued operations	$	409.2
Senior long-term debt, excluding current installments	$	36.4
Other noncurrent liabilities	268.4
Total noncurrent liabilities of discontinued operations	$	304.8

In connection with the Spinoff, total assets of $2.28 billion and total liabilities of $2.98 billion (including debt of $2.46 billion) were transferred to Lamb Weston. As part of the consideration for the Spinoff, the Company received a cash payment from Lamb Weston in the amount of $823.5 million. See Note 4 for discussion of the debt-for-debt exchange related to the Spinoff.

Private Brands Operations

On February 1, 2016, pursuant to the Stock Purchase Agreement, dated as of November 1, 2015, we completed the disposition of our Private Brands operations to TreeHouse Foods, Inc. ("Treehouse") for $2.6 billion in cash on a debt-free basis.

As a result of the disposition, we recognized a pre-tax charge of $1.92 billion ($1.44 billion after-tax) in fiscal 2016 to write-down the goodwill and long-lived assets to the final sales price, less costs to sell, and to recognize the final loss of the Private Brands business. We reflected the results of this business as discontinued operations for all periods presented. The assets and liabilities of the discontinued business have been reclassified as assets and liabilities held for sale within our Consolidated Balance Sheets for all periods presented prior to the divestiture.

In fiscal 2016, we repaid senior notes issued by Ralcorp in an aggregate principal amount of $33.9 million, consisting of 4.95% senior notes due August 15, 2020 in an aggregate principal amount of $17.2 million (with an effective interest rate of 2.83%) and 6.625% senior notes due August 15, 2039 in total an aggregate principal amount of $16.7 million (with an effective interest rate of 4.82%), in each case, prior to maturity, resulting in a loss $5.4 million as a cost of early retirement of debt, which is reflected in discontinued operations.

In connection with classifying the Private Brands operations as assets held for sale, we recognized, in fiscal 2016, a deferred tax asset of $1.54 billion on the capital loss of our investment in this business. A partial valuation allowance is recorded as we have not met the accounting requirements for recognition of a benefit at this time. In fiscal 2016, we recognized an income tax benefit of $20.7 million, resulting primarily from prior period capital gains. In addition, we released $147.3 million of the valuation allowance in the fourth quarter of fiscal 2016 due to the Spicetec and JM Swank dispositions, $150.4 million of the valuation allowance in the second quarter of fiscal 2017 due to the Spinoff of our Lamb Weston business, and $91.3 million of the valuation allowance in the fourth quarter of fiscal 2017 due to the impending sale of our Wesson^® oil business.

In fiscal 2015, we recorded a $1.51 billion impairment of goodwill and $57.6 million of impairment charges to write-down various brands and fixed assets, which are reflected in discontinued operations.

The summary comparative financial results of the Private Brands business, included within discontinued operations, were as follows:



	2017			2016			2015
Net sales	$	—		$	2,490.6		$	3,895.4
Loss on sale of business	$	(1.6	)	$	—		$	—
Long-lived asset impairment charges	—			(1,923.0		)	(1,564.6		)
Income from operations of discontinued operations before income taxes	3.9			168.0			68.8
Income (loss) before income taxes and equity method investment earnings	2.3			(1,755.0		)	(1,495.8		)
Income tax benefit	(0.3		)	(593.1		)	(128.1		)
Income (loss) from discontinued operations, net of tax	$	2.6		$	(1,161.9	)	$	(1,367.7	)

ConAgra Mills Operations

On May 29, 2014, the Company, Cargill, Incorporated ("Cargill"), and CHS, Inc. ("CHS") completed the formation of Ardent Mills. In connection with the formation, we contributed all of the assets of ConAgra Mills, our milling operations. For further details about the joint venture, see Note 7. We reflected the results of the ConAgra Mills operations as discontinued operations for all periods presented. Our equity in the earnings of Ardent Mills is reflected in our continuing operations.

The summary comparative financial results of the ConAgra Mills operations, included within discontinued operations, were as follows:



	2015
Net sales	$	16.2
Loss from operations of discontinued operations before income taxes	(9.2		)
Net gain on sale of businesses	627.3
Income before income taxes and equity method investment earnings	618.1
Income tax expense	251.1
Income from discontinued operations, net of tax	$	367.0

In fiscal 2017, we adjusted a multi-employer pension withdrawal liability related to our former milling operations by $2.0 million ($1.3 million after-tax), this expense was recognized within discontinued operations.

Other Divestitures

During the fourth quarter of fiscal 2017, we announced the agreement to sell our Wesson^® oil business, which is part of our Grocery & Snacks segment. The sale remains subject to customary closing conditions, including receipt of regulatory approvals. We expect to realize net proceeds from the sale in early fiscal 2018 of approximately $285 million. The assets of this business have been reclassified as assets held for sale within our Consolidated Balance Sheets for all periods presented.

In connection with the pending sale of the Wesson^® oil business, we recognized an impairment charge of $27.6 million within selling, general and administrative expenses in fiscal 2017, as a production facility will not be included in the assets to be sold, and we do not expect to recover the carrying value of this facility through future associated cash flows.

The assets classified as held for sale reflected in our Consolidated Balance Sheets related to the Wesson^® oil business were as follows:



	May 28, 2017		May 29, 2016
Current assets	$	35.5	$	39.1
Noncurrent assets (including goodwill of $77.3 million)	94.7		95.0

During the first quarter of fiscal 2017, we completed the sales of our Spicetec Flavors & Seasonings business ("Spicetec") and our JM Swank business, each of which was part of our Commercial segment, for $329.7 million and $159.3 million, respectively, in cash, net of cash included in the dispositions. We recognized pre-tax gains from the sales of $144.8 million and $52.6 million, respectively. The assets and liabilities of these businesses have been reclassified as assets and liabilities held for sale within our Consolidated Balance Sheets for the period presented prior to the divestiture.

The assets and liabilities classified as held for sale reflected in our Consolidated Balance Sheets related to the Spicetec and JM Swank businesses were as follows:



	May 29, 2016
Spicetec:
Current assets	$	43.3
Noncurrent assets (including goodwill of $104.7 million)	148.3
Current liabilities	10.3
Noncurrent liabilities	1.2
JM Swank:
Current assets	$	73.7
Noncurrent assets (including goodwill of $53.8 million)	74.3
Current liabilities	44.3
Noncurrent liabilities	0.4

In addition, we are actively marketing certain other long-lived assets. These assets have been reclassified as assets held for sale within our Consolidated Balance Sheets for all periods presented. The balance of these noncurrent assets classified as held for sale was $1.7 million in our Corporate segment at May 28, 2017 and $6.8 million and $4.7 million in our Corporate and Grocery & Snacks segments, respectively, at May 29, 2016.