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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended
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Feb. 26, 2017
Accounting Policies [Abstract] |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 Brands, Inc. (formerly ConAgra Foods, Inc., the “Company”, “we”, “us”, or “our”) Annual Report on Form 10-K for the fiscal year ended May 29, 2016. 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 Brands, 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. On November 9, 2016, the Company completed the previously announced spinoff (the "Spinoff") of Lamb Weston Holdings, Inc. (“Lamb Weston”) through a distribution of 100% of the Company’s interest in Lamb Weston to holders of shares of the Company’s common stock as of November 1, 2016. In accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), the financial position and results of operations of the Lamb Weston operations are presented as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented (see Note 3 for additional discussion). 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 will be provided for the related deferred tax liability (asset), if any, resulting from currency translation adjustments. The following table summarizes the reclassifications from accumulated other comprehensive income (loss) into operations:
|  | Thirteen weeks ended |  | Affected Line Item in the Condensed Consolidated Statement of Operations
|  | February 26, 2017 |  | February 28, 2016 |  |
Net derivative adjustment, net of tax: |  |  |  |  |  |
Cash flow hedges |  | $ | (0.2 | ) |  | $ | (2.1 | ) |  | Interest expense, net
|  | (0.2 | ) |  | (2.1 | ) |  | Total before tax
|  | 0.1 |  |  | 0.8 |  |  | Income tax expense
|  | $ | (0.1 | ) |  | $ | (1.3 | ) |  | Net of tax
Pension and postretirement liabilities: |  |  |  |  |  |
Net prior service benefit |  | $ | (0.9 | ) |  | $ | (1.2 | ) |  | 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
Pension settlement |  | 13.8 |  |  | — |  |  | Selling, general and administrative expenses
Net actuarial loss |  | 0.1 |  |  | — |  |  | Selling, general and administrative expenses
|  | 13.0 |  |  | (10.9 | ) |  | Total before tax
|  | (5.0 | ) |  | 3.4 |  |  | Income tax expense
|  | $ | 8.0 |  |  | $ | (7.5 | ) |  | 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 Operations
|  | February 26, 2017 |  | February 28, 2016 |  |
Net derivative adjustment, net of tax: |  |  |  |  |  |
Cash flow hedges |  | $ | (0.2 | ) |  | $ | (2.1 | ) |  | Interest expense, net
|  | (0.2 | ) |  | (2.1 | ) |  | Total before tax
|  | 0.1 |  |  | 0.8 |  |  | Income tax expense
|  | $ | (0.1 | ) |  | $ | (1.3 | ) |  | Net of tax
Pension and postretirement liabilities: |  |  |  |  |  |
Net prior service benefit |  | $ | (2.9 | ) |  | $ | (3.8 | ) |  | 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
Pension settlement |  | 13.8 |  |  | — |  |  | Selling, general and administrative expenses
Net actuarial loss |  | 0.3 |  |  | — |  |  | Selling, general and administrative expenses
|  | 11.2 |  |  | (13.5 | ) |  | Total before tax
|  | (4.3 | ) |  | 4.4 |  |  | Income tax expense
|  | $ | 6.9 |  |  | $ | (9.1 | ) |  | 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
Cash and cash equivalents — Cash and all highly liquid investments with an original maturity of three months or less at the date of acquisition, including short-term time deposits and government agency and corporate obligations, are classified as cash and cash equivalents. As part of the consideration for the Spinoff, we received a cash payment from Lamb Weston in the amount of $823.5 million. In order to maintain the tax-free nature of the Spinoff, we were required to use the cash within twelve months of receiving the payment and to only use it in one or more of the following ways: to pay dividends on shares of our common stock, to repay debt incurred prior to July 8, 2016, and to repurchase shares of our common stock. As of February 26, 2017, all such cash proceeds had been deployed to repay debt and repurchase shares of our common stock. 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. 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. Accounting Changes — In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplifies the accounting for income taxes, among other changes, related to stock-based compensation. We elected to early adopt this ASU as of the beginning of fiscal 2017. Starting in the first quarter of fiscal 2017, we recognized all excess tax benefits and tax deficiencies as income tax expense or benefit as a discrete event. An income tax benefit of approximately $3.5 million and $17.5 million was recognized in the third quarter and first three quarters of fiscal 2017, respectively, as a result of the adoption of ASU 2016-09. The treatment of forfeitures has changed as we have elected to discontinue our past process of estimating the number of forfeitures and now account for forfeitures as they occur. As such, this had a cumulative effect on retained earnings of $3.9 million, net of tax. We have elected to present the cash flow statement on a retrospective transition method and prior periods have been adjusted to present the excess tax benefits as part of cash flows from operating activities. This resulted in an increase in cash flows from operating activities and a decrease in cash flows from financing activities of $43.5 million in the first three quarters of fiscal 2016. Recently Issued Accounting Standards — In May 2014, the FASB issued 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. The standard is to be applied prospectively. We do not expect ASU 2015-11 to have a material impact to our consolidated financial statements. In January 2016, the FASB issued 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The effective date for this standard is for fiscal years beginning after December 31, 2017. Early adoption is not permitted except for certain provisions. We do not expect ASU 2016-01 to have a material impact to our consolidated 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. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. The effective date for the standard is for fiscal years beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact of our pending adoption of this standard on our consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash, which provides amendments to current guidance to address the classifications and presentation of changes in restricted cash in the statement of cash flows. The effective date for the standard is for fiscal years beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact of our pending adoption of this standard on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under the amendments in ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The updated guidance required a prospective adoption. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact of our pending adoption of this standard on our consolidated financial statements.

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