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DISCONTINUED OPERATIONS AND THE FORMATION OF ARDENT MILLS | 9 Months Ended
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Feb. 28, 2016
Discontinued Operations and Disposal Groups [Abstract] |
DISCONTINUED OPERATIONS AND THE FORMATION OF ARDENT MILLS | DISCONTINUED OPERATIONS AND THE FORMATION OF ARDENT MILLS 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, subject to working capital and other adjustments. As a result of the disposition, we recognized a pre-tax charge of $22.5 million ($22.1 million after-tax) and $1.92 billion ($1.44 billion after-tax) in the third quarter and first three quarters of fiscal 2016, respectively, 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 Condensed Consolidated Balance Sheets for all periods presented prior to the divestiture. In the third quarter of 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 the first three quarters of fiscal 2016, a deferred tax asset of $1.62 billion on the capital loss of our investment in this business. A valuation allowance was recorded, as we have not met the accounting requirements for recognition of a benefit at this time. In the first three quarters of fiscal 2016, we recognized an income tax benefit of $20.7 million due to a reduction of the valuation allowance, resulting from prior period capital gains. In the third quarter of fiscal 2015, we recorded a $1.27 billion impairment of goodwill and $13.7 million of impairment charges to write-down five small brands, which are reflected in discontinued operations. In the first three quarters of fiscal 2015, we recorded a $1.48 billion impairment of goodwill and $43.7 million of impairment charges to write-down various brands, which are reflected in discontinued operations. Milling Operations On May 29, 2014, the Company, Cargill, Incorporated, and CHS, Inc. completed the formation of the Ardent Mills joint venture ("Ardent Mills"). In connection with the formation, we contributed all of the assets of ConAgra Mills, our milling operations, including $49.0 million of cash, to Ardent Mills, we received a 44% ownership interest in Ardent Mills, and Ardent Mills distributed $391.4 million in cash to us as a return of capital. The contribution of the assets of ConAgra Mills in exchange for a non-controlling interest in the joint venture was required to be accounted for at fair value, and accordingly, we recognized a gain of $625.6 million ($375.9 million after-tax) in the first half of fiscal 2015 in income from discontinued operations to reflect the excess of the fair value of our interest over its carrying value at the time of the transfer. As part of the formation of Ardent Mills, in the fourth quarter of fiscal 2014, pursuant to an agreement with the U.S. Department of Justice, we sold three flour milling facilities to Miller Milling Company LLC for $163.0 million. We received the cash proceeds from the sale of these flour milling facilities in the first quarter of fiscal 2015. In the first quarter of fiscal 2015, we used the net cash proceeds from the Ardent Mills transaction to repay debt. The operating results of our legacy milling business, including the disposition of three mills aforementioned, are included as discontinued operations within our Condensed Consolidated Statements of Operations. We recognized the 44% ownership interest in Ardent Mills at fair value, as of the date of the formation of the joint venture. We now recognize our proportionate share of the earnings of Ardent Mills under the equity method of accounting within results of continuing operations. Due to differences in fiscal reporting periods, we recognized the equity method earnings on a lag of approximately one month; and as a result, we recognized only five months of earnings from Ardent Mills during the first half of fiscal 2015. At February 28, 2016, the carrying value of our equity method investment in Ardent Mills was $717.7 million, which is included in Other Assets. We entered into transition services agreements in connection with our contribution to Ardent Mills and recognized $2.6 million and $8.4 million, respectively, of income for the performance of transition services during the third quarter and first three quarters of fiscal 2016 and $3.5 million and $10.8 million, respectively, during the third quarter and first three quarters of fiscal 2015, classified within selling, general and administrative expenses. The summary comparative financial results of discontinued operations were as follows:
| Thirteen weeks ended |  | Thirty-nine weeks ended
| February 28, 2016 |  | February 22, 2015 |  | February 28, 2016 |  | February 22, 2015
Net sales | $ | 634.0 |  |  | $ | 969.5 |  |  | $ | 2,484.7 |  |  | $ | 2,932.5 |
Net gain on sale of businesses | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 627.3 |
Goodwill and long-lived asset impairment charges | (22.5 | ) |  | (1,284.1 | ) |  | (1,921.1 | ) |  | (1,524.8 | )
Income from operations of discontinued operations before income taxes and equity method investment earnings | 62.1 |  |  | 21.9 |  |  | 167.6 |  |  | 55.7 |
Income (loss) before income taxes | 39.6 |  |  | (1,262.2 | ) |  | (1,753.5 | ) |  | (841.8 | )
Income tax expense (benefit) | 20.9 |  |  | (97.2 | ) |  | (445.6 | ) |  | 136.3 |
Income (loss) from discontinued operations, net of tax | $ | 18.7 |  |  | $ | (1,165.0 | ) |  | $ | (1,307.9 | ) |  | $ | (978.1 | )
Assets and Liabilities Held for Sale The assets and liabilities classified as held for sale reflected in our Condensed Consolidated Balance Sheets were as follows:
|  | February 28, 2016 |  | May 31, 2015
Cash and cash equivalents |  | $ | — |  |  | $ | 18.4 |
Receivables, less allowance for doubtful accounts of $0.0 and $0.5 |  | — |  |  | 199.3 |
Inventories |  | 4.2 |  |  | 489.3 |
Prepaid expenses and other current assets |  | — |  |  | 37.3 |
Current assets held for sale |  | $ | 4.2 |  |  | $ | 744.3 |
Property, plant and equipment, net |  | $ | — |  |  | $ | 920.4 |
Goodwill |  | — |  |  | 1,600.8 |
Brands, trademarks and other intangibles, net |  | — |  |  | 1,716.6 |
Other assets |  | — |  |  | 9.1 |
Noncurrent assets held for sale |  | $ | — |  |  | $ | 4,246.9 |
Accounts payable |  | $ | — |  |  | $ | 219.5 |
Accrued payroll |  | — |  |  | 7.1 |
Other accrued liabilities |  | — |  |  | 67.4 |
Current liabilities held for sale |  | $ | — |  |  | $ | 294.0 |
Other noncurrent liabilities |  | $ | 0.6 |  |  | $ | 711.0 |
Noncurrent liabilities held for sale |  | $ | 0.6 |  |  | $ | 711.0 |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=51716988&loc=SL51721533-107759 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721665-107760 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5C -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721675-107760 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3A -URI http://asc.fasb.org/extlink&oid=51719941&loc=SL51724579-110230 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721663-107760 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=51719941&loc=d3e2941-110230 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=51717284&loc=d3e1361-107760 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5B -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721673-107760 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3A -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721659-107760 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5A -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721671-107760 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5D -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721677-107760 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=51717284&loc=d3e1474-107760 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721683-107760 + Details
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