Business Radar | Conagra Brands, Inc.

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ConAgra Foods Annual Report 2016

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Fellow Shareholders Fiscal 2016 was a year of transformation and positive results for ConAgra Foods. We are building a higher-margin, more contemporary and higher-performing company for the long-term, and doing so has required us to make fundamental changes to the way we operate. The ConAgra Foods team took aggressive steps to implement changes in fiscal 2016 that are enabling us to become a more focused food company, with the discipline and performance orientation we need to succeed. We have much more to do to fully optimize our business, and we are hard at work to unlock shareholder value. I’m pleased to share some of the highlights from the last twelve months. We made bold changes to our portfolio, including the sale of the private label business to TreeHouse Foods and agreements to divest two smaller, non-core businesses, Spicetec Flavors & Seasonings and JM Swank. We also announced our plans to separate ConAgra Foods into two publicly traded, pure-play companies, one comprising our robust consumer portfolio of diverse and leading brands and the other comprising our market–leading foodservic portfolio of innovative frozen potato products. The collective impact of these transactions will be sharpened focus, the ability to better concentrate our resources, and greater flexibility for these businesses to capitalize on their unique growth opportunities. We are implementing a major cost-reduction program designed to realize at least $300 million of efficiency benefits fiscal 2018. This will be done through a combination of reductions in SG&A and enhancements to trade spend processes and tools. In addition, we launched our new Growth Center of Excellence, which encompasses our insights, research and development, and marketing teams. Our new innovation processes are taking hold and we are continuing to build a pipeline of exciting new offerings. Recently, we launched many on-trend products, including a range of Healthy Choice® Café Steamers organic entrees, three new USDA-certified organic tomato offerings from the Hunt’s® brand, and Peter Pan® Simply Ground™. We also announced that all currently in-market offerings in our Alexia® branded line of products will be non-GMO by the end of 2016. We’ve also taken bold steps to transform our culture this past year, including moving into our new headquarters in Chicago’s iconic Merchandise Mart. Our new space was selected specifically to enable greater collaboration across our teams while enhancing our ability to attract and retain top talent. Some things, however, have constant. ConAgra Foods has continued our commitment to corporate citizenship. During fiscal 2016, we were named to the prestigious Dow Jones Sustainability Index for the fifth consecutive year. But with all of the change underway at ConAgra Foods during fiscal 2016, we never lost sight of our financial commitments Financial Highlights: • Diluted comparable EPS1 for fiscal 2016 was $2.08, compared to $1.93 in fiscal 2015, which included an extra week. On a GAAP basis, diluted EPS from continuing operations was $1.09, compared with $1.73 in the prior year. • We generated more than $1 billion in cash flows from • Total operating profit for our segments was $1.7 billion this year versus last year’s $1.6 billion, a 5.3% increase. • We repaid approximately $2.5 billion of debt. 1 Reflects diluted earnings per share from continuing non-GAAP (Generally Accepted Accounting Principles) report and should be viewed in addition to, and not Our Consumer Foods team was focused on three imperatives in fiscal 2016: expanding margins, improving brand health and delivering more consistent performance. The team aggressively executed against these imperatives during the year, and delivered margin expansion and profit growth. The team’s success was enabled by smarter resource allocation, driven by portfolio segmentation and a focus on building a higher quality investment- grade volume base, as well as favorable commodity input costs. This focus meant walking away from less profitable volume during the year, and accepting an overall segment sales decline. However, this was both expected and planned. Importantly, the work completed in fiscal 2016 has strengthened the health of our business. Our volume base is improved and we have begun strategically supporting those brands that are ready for increased advertising and promotion activity. In addition, our supply chain efficiency has grown, and we have become more effective in pricing, mix management and trade promotion productivity. e We made tremendous progress in reigniting our operating performance during fiscal 2016. For the full fiscal year, comparable operating margin1 for Consumer Foods grew to just under 17%, almost a 200 basis point improvement over last year, and comparable operating profit grew1 7% to $1.2 billion. Overall, this was a very strong performance by the team. by the end of Every business in our Commercial Foods segment performed for shareholders in fiscal 2016. Overall net sales in the segment were approximately $4.4 billion, up slightly from the prior year, and the segment’s operating profit was approximately $630 million, up nearly 12%. The largest component of the segment, Lamb Weston, had a terrific year. We continue to see significant opportunities to drive growth across the Lamb Weston business, supported by food- away-from home trends in the U.S. and growing demand for frozen potato products in emerging markets. As a result, we announced an important investment in our Richland, Washington potato processing facility, expanding our production capacity available for both domestic and export markets. We also announced an exciting investment in Russia by our Lamb Weston Meijer joint venture. I’m confident that these investments will enhance our ability to capitalize on the increasing consumer demand for value-added frozen potato products domestically and abroad. remained In close, I want to acknowledge the dedication and passion of our talented team as we work to transform ConAgra Foods into a stronger, more consistent company. I’m proud of the way our people have embraced the changes needed to drive value and serve our customers and shareholders. to shareholders. Thank you for your continued support of ConAgra Foods. Sincerely, operations. Sean M. Connolly President and Chief Executive Officer operations, Consumer segment operating profit and Consumer segment operating margin, each as adjusted for items impacting comparability. These financial measures are reconciled to the most directly comparable measures, as reported in accordance with GAAP on page 107 of this annual in place of, the company’s financial measures, as calculated in accordance with GAAP.

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended May 29, 2016 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 1-7275 _________________________________________________ CONAGRA FOODS, INC. (Exact name of registrant as specified in its charter) __________________________________________________ Delaware 47-0248710 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 222 W. Merchandise Mart Plaza, Suite 1300 Chicago, Illinois 60654 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code (312) 549-5000 ___________________________________________________ Securities registered pursuant to section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, $5.00 par value New York Stock Exchange Securities registered pursuant to section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No The aggregate market value of the voting common stock of ConAgra Foods, Inc. held by non-affiliates on November 29, 2015 (the last business day of the Registrant’s most recently completed second fiscal quarter) was approximately $18,081,494,300 based upon the closing sale price on the New York Stock Exchange on such date. At June 26, 2016, 438,720,098 common shares were outstanding. Documents Incorporated by Reference Portions of the Registrant’s definitive Proxy Statement for the Registrant’s 2016 Annual Meeting of Stockholders (the “2016 Proxy Statement”) are incorporated by reference into Part III.

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Table of Contents PART I 1 Item 1 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Item 1A Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Item 1B Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Item 2 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Item 3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Item 4 Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 PART II 16 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases Item 5 of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Item 6 Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations . . . 18 Item 7A Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Item 8 Financial Statements and Supplementary Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Consolidated Statements of Operations for the Fiscal Years Ended May 2016, 2015, and 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Consolidated Statements of Comprehensive Income (Loss) for the Fiscal Years Ended May 2016, . . 2015, . . . . . and . . . .2014 ............................................................. 41 . . . . . . . . Balance Consolidated . . . . . . . Sheets . . . . . . as . . of . . May . . . . .29, . . .2016 . . . . and . . . May . . . . .31, . . .2015 ........................ 42 Consolidated Statements of Common Stockholders' Equity for the Fiscal Years Ended May . . 2015, 2016, . . . . . and . . . .2014 ............................................................. 43 Consolidated Statements of Cash Flows for the Fiscal Years Ended May 2016, 2015, and 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . 92 Item 9A Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Item 9B Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Part III 94 Item 10 Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Item 11 Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Item 12 Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Item 13 Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . 95 Item 14 Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Part IV 96 Item 15 Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Schedule II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

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PART I This annual report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results, performance or achievements could differ materially from those projected in the forward-looking statements as a result of a number of risks, uncertainties, and other factors. For a discussion of important factors that could cause our results, performance, or achievements to differ materially from any future results, performance, or achievements expressed or implied by our forward- looking statements, please refer to Item 1A, Risk Factors and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations below. ITEM 1. BUSINESS General Development of Business ConAgra Foods, Inc., a Delaware corporation, together with its consolidated subsidiaries (collectively, the "Company," "we," "our" or us"), is one of North America's leading packaged food companies with recognized brands such as Marie Callender's®, Healthy Choice®, Slim Jim®, Hebrew National®, Orville Redenbacher's®, Peter Pan®, Reddi-wip®, PAM®, Snack Pack®, Banquet®, Chef Boyardee®, Egg Beaters®, Hunt's®, and many other ConAgra Foods brands found in grocery, convenience, mass merchandise, and club stores. We also have a strong business-to-business presence, supplying frozen potato and sweet potato products as well as other vegetable, spice, and grain products to a variety of well-known restaurants, foodservice operators, and commercial customers. We began as a Midwestern flour-milling company and entered other commodity-based businesses throughout our history. We were initially incorporated as a Nebraska corporation in 1919 and were reincorporated as a Delaware corporation in December 1975. Over time, through various acquisitions and divestitures, we changed the make-up of our company and focused on growing our branded food businesses to become the leading food company we are today. Making this shift involved acquiring a number of consumer food brands such as Banquet®, Chef Boyardee®, Marie Callender’s®, and Alexia®. We have divested our Private Brands business, milling business, dehydrated and fresh vegetable operations, a trading and merchandising business, packaged meat and cheese operations, and poultry, beef, and pork businesses, among others. Growing our food businesses has also been fueled by innovation, organic growth of our brands, and expansion into adjacent categories. We are focused on delivering sustainable, profitable growth with strong and improving returns on our invested capital. In January 2013, we acquired Ralcorp Holdings, Inc. ("Ralcorp"), a manufacturer of private branded food. Since the acquisition of Ralcorp, we focused on addressing executional shortfalls and customer service issues intended to improve operating performance for the Private Brands business. However, after further review of the Private Brands business, we changed our strategic direction and divested the Private Brands business in the third quarter of fiscal 2016. 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, Inc. in the fall of calendar 2016, is expected to be tax free to the Company and its shareholders. During late fiscal 2016 and early fiscal 2017, we announced that we had entered into separate agreements to separately sell our Spicetec Flavors & Seasonings business and JM Swank businesses. Each of the transactions is subject to the satisfaction of customary closing conditions and is expected to be completed in the first quarter of fiscal 2017. All of these businesses are part of the Commercial Foods segment. In fiscal 2016, we also announced the relocation of our corporate headquarters to Chicago, Illinois beginning in the summer of calendar year 2016. We completed the relocation in the first quarter of fiscal 2017. Our efficiency and effectiveness initiatives continue to be implemented with a high degree of customer focus, food safety and quality, and commitment to our people. Financial Information about Reporting Segments We report our operations in two reporting segments: Consumer Foods and Commercial Foods. The contributions of each reporting segment to net sales, operating profit, and identifiable assets are set forth in Note 21 “Business Segments and Related Information” to the consolidated financial statements. 1

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Narrative Description of Business We compete throughout the food industry and focus on adding value for our customers who operate in the retail food, foodservice, and ingredients channels. Our operations, including our reporting segments, are described below. Our locations, including manufacturing facilities, within each reporting segment, are described in Item 2, Properties. Consumer Foods 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. Major brands include: ACT II®, Banquet®, Blue Bonnet®, Chef Boyardee®, DAVID®, Egg Beaters®, Healthy Choice®, Hebrew National®, Hunt’s®, Marie Callender’s®, Orville Redenbacher’s®, PAM®, Peter Pan®, Reddi-wip®, Slim Jim®, Snack Pack®, Swiss Miss®, Van Camp’s®, and Wesson®. Commercial Foods 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®. Unconsolidated Equity Investments We have a number of unconsolidated equity investments. Our significant equity method investments include a milling business (see "Formation of Ardent Mills" below) and other domestic and international investments that produce and market potato products for retail and foodservice customers. Acquisitions In May 2015, we acquired Blake's All Natural Foods, a family-owned company specializing in all natural and organic frozen meals, including pot pies, casseroles, pasta dishes and other entrees. This business is included in the Consumer Foods segment. In July 2014, we acquired TaiMei Potato Industry Limited, a potato processor in China. The purchase included property and equipment associated with making frozen potato products. This business is included in the Commercial Foods segment. Discontinued Operations On February 1, 2016, pursuant to a Stock Purchase Agreement, dated as of November 1, 2015, we completed the disposition of our Private Brands operations to TreeHouse Foods, Inc. ("Treehouse"). The Private Brands assets and liabilities have been reclassified as held for sale for all periods presented prior to the divestiture and the results of operations have been classified as discontinued operations for all periods presented. Formation of Ardent Mills On May 29, 2014, the Company, Cargill, Incorporated ("Cargill"), and CHS Inc. ("CHS"), completed the formation of Ardent Mills, which combined the North American flour milling operations and related businesses operated through the ConAgra Mills division of ConAgra Foods and the Horizon Milling joint venture of Cargill and CHS. We reflected the operating results of our legacy milling business as discontinued operations for all periods presented. Our equity in the earnings of Ardent Mills is reflected in our continuing operations. 2

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General The following comments pertain to all of our reporting segments. ConAgra Foods is a food company that operates in many sectors of the food industry, with a significant focus on the sale of branded, private branded, and value-added consumer food, as well as foodservice items and ingredients. We use many different raw materials, the bulk of which are commodities. The prices paid for raw materials used in making our food generally reflect factors such as weather, commodity market fluctuations, currency fluctuations, tariffs, and the effects of governmental agricultural programs. Although the prices of raw materials can be expected to fluctuate as a result of these factors, we believe such raw materials to be in adequate supply and generally available from numerous sources. From time to time, we have faced increased costs for many of our significant raw materials, packaging, and energy inputs. We seek to mitigate higher input costs through productivity and pricing initiatives, and the use of derivative instruments used to economically hedge a portion of forecasted future consumption. We experience intense competition for sales of our food items in our major markets. Our food items compete with widely advertised, well-known, branded food, as well as private branded and customized food items. Some of our competitors are larger and have greater resources than we have. We compete primarily on the basis of quality, value, customer service, brand recognition, and brand loyalty. Demand for certain of our food items may be influenced by holidays, changes in seasons, or other annual events. We manufacture primarily for stock and fill our customer orders from finished goods inventories. While at any given time there may be some backlog of orders, such backlog is not material in respect to annual net sales, and the changes of backlog orders from time to time are not significant. Our trademarks are of material importance to our business and are protected by registration or other means in the United States and most other markets where the related food items are sold. Some of our food items are sold under brands that have been licensed from others. We also actively develop and maintain a portfolio of patents, although no single patent is considered material to the business as a whole. We have proprietary trade secrets, technology, know-how, processes, and other intellectual property rights that are not registered. Many of our facilities and products we make are subject to various laws and regulations administered by the United States Department of Agriculture, the Federal Food and Drug Administration, the Occupational Safety and Health Administration, and other federal, state, local, and foreign governmental agencies relating to the food safety and quality, sanitation, safety and health matters, and environmental control. We believe that we comply with such laws and regulations in all material respects and that continued compliance with such regulations will not have a material effect upon capital expenditures, earnings, or our competitive position. Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 16%, 16%, and 17% of consolidated net sales for fiscal 2016, 2015, and 2014, respectively. At May 29, 2016, ConAgra Foods and its subsidiaries had approximately 20,900 employees, primarily in the United States. Approximately 36% of our employees are parties to collective bargaining agreements. Of the employees subject to collective bargaining agreements, approximately 31% are parties to collective bargaining agreements scheduled to expire during fiscal 2017. We believe our relationships with employees and their representative organizations are good. Research and Development We employ processes at our principal manufacturing locations that emphasize applied research and technical services directed at product improvement and quality control. In addition, we conduct research activities related to the development of new products. Research and development expense was $66.7 million, $70.4 million, and $86.0 million in fiscal 2016, 2015, and 2014, respectively. 3

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EXECUTIVE OFFICERS OF THE REGISTRANT AS OF JULY 15, 2016 Year First Appointed an Executive Name Title & Capacity Age Officer Sean M. Connolly . . . . . . President and Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . 51 2015 John F. Gehring . . . . . . . . Executive Vice President, Chief Financial Officer. . . . . . . . . . . . . . . . . 55 2004 Colleen R. Batcheler . . . . Executive Vice President, General Counsel and Corporate Secretary . . 42 2008 David B. Biegger . . . . . . . Executive Vice President, Chief Supply Chain Officer . . . . . . . . . . . . . 57 2015 Thomas M. McGough . . . President, Consumer Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 2013 Charisse Brock . . . . . . . . . Executive Vice President, Chief Human Resources Officer. . . . . . . . . . 54 2015 Andrew G. Ross . . . . . . . . Executive Vice President and Chief Strategy Officer. . . . . . . . . . . . . . . 48 2011 Darren C. Serrao . . . . . . . Chief Growth Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 2015 Thomas P. Werner . . . . . . President, Commercial Foods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 2015 Robert G. Wise. . . . . . . . . Senior Vice President, Corporate Controller . . . . . . . . . . . . . . . . . . . . . 48 2012 Sean M. Connolly has served as our Chief Executive Officer and a member of our Board since April 6, 2015. Previously, he was President and Chief Executive Officer and a director of The Hillshire Brands Company (brand name food products company) from June 2012 to August 2014; Executive Vice President of Sara Lee Corporation (the former name of Hillshire) and Chief Executive Officer, Sara Lee North American Retail and Foodservice, from January 2012 to June 2012. Prior to joining Hillshire, Mr. Connolly served as President of Campbell North America, the largest division of Campbell Soup Company (branded convenience food products), from October 2010 to December 2011; President, Campbell USA from 2008 to 2010; and President, North American Foodservice from 2007 to 2008. Before joining Campbell in 2002, he served in various marketing and brand management roles at Procter & Gamble (branded consumer product goods). John F. Gehring has served as Executive Vice President, Chief Financial Officer since January 2009. Mr. Gehring joined ConAgra Foods as Vice President of Internal Audit in 2002, became Senior Vice President in 2003, and most recently served as Senior Vice President and Corporate Controller from July 2004 to January 2009. He served as ConAgra Foods' interim Chief Financial Officer from October 2006 to November 2006. Prior to joining ConAgra Foods, Mr. Gehring was a partner at Ernst & Young LLP (an accounting firm) from 1997 to 2001. Prior to the end of fiscal 2016, Mr. Gehring announced his retirement. Mr. Gehring will remain in his current role until a successor is in place and will assist with an orderly transition. Colleen R. Batcheler has served as Executive Vice President, General Counsel and Corporate Secretary since September 2009 and Senior Vice President, General Counsel and Corporate Secretary from February 2008 until September 2009. Ms. Batcheler joined ConAgra Foods in June 2006 as Vice President, Chief Securities Counsel and Assistant Corporate Secretary. In September 2006, she was named Corporate Secretary. From 2003 until joining ConAgra Foods, Ms. Batcheler was Vice President and Corporate Secretary of Albertson's, Inc. (a retail food and drug chain). Previously, she was Associate Counsel with The Cleveland Clinic Foundation and an associate with Jones Day, LLP (a law firm). David B. Biegger has served as Executive Vice President and Chief Supply Chain Officer since October 2015. Prior to joining ConAgra Foods, Mr. Biegger served as Senior Vice President, Global Supply Chain from February 2014 until October 2015 and was responsible for Campbell Soup Company's Global Supply Chain, including manufacturing, quality, safety, engineering, procurement, logistics, environmental sustainability and customer service. Prior to joining Campbell Soup Company, he spent 24 years in supply chain roles at Procter & Gamble Co. Charisse Brock has served as Executive Vice President and Chief Human Resources Officer since November 2015 and Senior Vice President and Interim Chief Human Resources Officer since August 2015. Prior to serving in these roles, Ms. Brock served as Vice President of Human Resources for the Consumer Foods segment from September 2010 until August 2015. Ms. Brock joined ConAgra Foods in 2004 as Director of Human Resources supporting the Refrigerated Foods Group. Prior to joining ConAgra, she worked for 15 years at The Quaker Oats Company/PepsiCo in its Consumer Foods Division. Thomas M. McGough has served as President of the Consumer Foods segment since May 2013. Mr. McGough joined ConAgra Foods in 2007 as Vice President in the Consumer Foods organization and has provided leadership for many brand teams within ConAgra Foods, including Banquet®, Hunt's®, and Reddi-wip®. He most recently served as President, Grocery 4

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Products from 2011 until May 2013, leading the largest business within the Consumer Foods segment. Mr. McGough has over 20 of experience in the branded packaged foods industry and began his career at H.J. Heinz in 1990. Darren C. Serrao has served as ConAgra Foods' Chief Growth Officer since August 2015. As head of the Growth Center of Excellence, Mr. Serrao leads efforts to bring together insights, innovation, research and development and marketing teams to improve connectivity and boost speed-to-market; ensuring strong insights lead to relevant and timely products with the right marketing support. Prior to joining the Company, Mr. Serrao served as senior vice president, chief marketing and commercial officer at Campbell Soup Company where he led the U.S. consumer business, Campbell's largest line of business. Prior to that, he served as vice president of innovation and business development for Campbell North America. Mr. Serrao has also held several profit and loss and marketing positions during his career, including roles with PepsiCo and Unilever. Andrew G. Ross joined ConAgra Foods as Executive Vice President and Chief Strategy Officer in November 2011. Prior to joining ConAgra Foods, Mr. Ross was a principal at McKinsey & Company, Inc. (a consulting firm) from May 2002 until November 2011, where he led the firm's global consumer, retail, and marketing practices. Prior to that, he worked for William Grant & Sons, Ltd. Thomas P. Werner was named President of Commercial Foods in May 2015. Prior to that, Mr. Werner served as Senior Vice President of Finance for our Private Brands and Commercial Foods operating segments from June 2013 to April 2015, Senior Vice President of Finance for the Lamb Weston operations within our Commercial Foods segment from May 2011 until June 2013, and Vice President of Supply Chain from December 2009 until May 2011. Mr. Werner originally joined ConAgra Foods in 1999 and has been in finance roles of increasing responsibility throughout his career across both of ConAgra Foods' operating segments. Robert G. Wise has served as Senior Vice President, Corporate Controller since December 2012. Mr. Wise joined ConAgra Foods in March 2003 and has held various positions of increasing responsibility with ConAgra Foods, including Vice President, Assistant Corporate Controller from March 2006 until January 2012 and as Vice President, Corporate Controller from January 2012 until December 2012. Prior to joining ConAgra Foods, Mr. Wise served in various roles at KPMG LLP (an accounting firm) from October 1995 to March 2003. OTHER SENIOR OFFICERS OF THE REGISTRANT AS OF JULY 15, 2016 Name Title & Capacity Age Jonathan J. Harris. . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President, Chief Communications Officer. . . . . . . . 47 Brendy J. Sealock. . . . . . . . . . . . . . . . . . . . . . . . . Vice President, Internal Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Jonathan J. Harris joined ConAgra Foods in August 2015 as Senior Vice President and Chief Communications Officer. Mr. Harris is the former chief communications officer and senior vice president at Hillshire Brands where he oversaw all aspects of integrated communications. Prior to joining ConAgra Foods, Mr. Harris served as Senior Vice President, Global Communications for Sara Lee Corporation. Prior to that, Mr. Harris held leadership positions at Bally Total Fitness Corporation, PepsiCo, Ketchum Public Relations and Medicus Public Relations. Brendy J. Sealock joined ConAgra Foods in 2006. Ms. Sealock was named to her current position in May 2016. She previously served the Company as Sr. Director Finance for the Canadian business from 2013 to 2016, as Director of Spicetec Flavors and Seasonings from 2010 to 2013, and various roles of increased responsibility in Internal Audit from 2006 to 2010. Prior to joining ConAgra Foods, she worked in public accounting for 11 years primarily at Deloitte LLP (an accounting firm) in the Auditing practice. Ms. Sealock is a CPA. Foreign Operations Foreign operations information is set forth in Note 21 “Business Segments and Related Information” to the consolidated financial statements. 5

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Available Information We make available, free of charge through the “Investors—Financial Reports & Filings” link on our Internet website at http://www.conagrafoods.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8- K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission ("SEC"). We use our Internet website, through the “Investors” link, as a channel for routine distribution of important information, including news releases, analyst presentations, and financial information. The information on our website is not, and will not be deemed to be, a part of this annual report on Form 10-K or incorporated into any of our other filings with the SEC. We have also posted on our website our (1) Corporate Governance Principles, (2) Code of Conduct, (3) Code of Ethics for Senior Corporate Officers, and (4) Charters for the Audit/Finance Committee, Nominating, Governance and Public Affairs Committee, and Human Resources Committee. Shareholders may also obtain copies of these items at no charge by writing to: Corporate Secretary, ConAgra Foods, Inc., 222 W. Merchandise Mart Plaza, Suite 1300, Chicago, IL, 60654. ITEM 1A. RISK FACTORS Our business is subject to various risks and uncertainties. Any of the risks and uncertainties described below could materially adversely affect our business, financial condition, and results of operations and should be considered in evaluating us. While we believe we have identified and discussed below the key risk factors affecting our business, there may be additional risks and uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect our business, performance, or financial condition in the future. Risks Relating to our Business Deterioration of general economic conditions could harm our business and results of operations. Our business and results of operations may be adversely affected by changes in national or global economic conditions, including inflation, interest rates, availability of capital markets, consumer spending rates, energy availability and costs (including fuel surcharges), and the effects of governmental initiatives to manage economic conditions. Volatility in financial markets and deterioration of national and global economic conditions could impact our business and operations in a variety of ways, including as follows: consumers may shift purchases to more generic, lower-priced, or other value offerings, or may forego certain purchases altogether during economic downturns, which could result in a reduction in sales of higher margin products or a shift in our product mix to lower margin offerings adversely affecting the results of our Consumer Foods operations; decreased demand in the restaurant business, particularly casual and fine dining, which may adversely affect our Commercial Foods operations; volatility in commodity and other input costs could substantially impact our result of operations; volatility in the equity markets or interest rates could substantially impact our pension costs and required pension contributions; and it may become more costly or difficult to obtain debt or equity financing to fund operations or investment opportunities, or to refinance our debt in the future, in each case on terms and within a time period acceptable to us. Our existing and future debt may limit cash flow available to invest in the ongoing needs of our business and could prevent us from fulfilling our debt obligations. As of May 29, 2016, we had a substantial amount of debt. We have the ability under our existing revolving credit facility to incur substantial additional debt. Our level of debt could have important consequences. For example, it could: make it more difficult for us to make payments on our debt; 6

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require us to dedicate a substantial portion of our cash flow from operations to the payment of debt service, reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, and other general corporate purposes; increase our vulnerability to adverse economic or industry conditions; limit our ability to obtain additional financing in the future to enable us to react to changes in our business; or place us at a competitive disadvantage compared to businesses in our industry that have less debt. Additionally, any failure to meet required payments on our debt, or failure to comply with any covenants in the instruments governing our debt, could result in an event of default under the terms of those instruments and a downgrade to our credit ratings. A downgrade in our credit ratings would increase our borrowing costs and could affect our ability to issue commercial paper. In the event of a default, the holders of our debt could elect to declare all the amounts outstanding under such instruments to be due and payable. Any default under the agreements governing our debt and the remedies sought by the holders of such debt could render us unable to pay principal and interest on our debt. We may not realize the benefits that we expect from our Supply Chain and Administrative Efficiency Plan, or SCAE Plan. During fiscal 2014, we announced our Supply Chain and Administrative Efficiency Plan, or SCAE Plan, which was an expansion of the scope of the plan to integrate Ralcorp. The SCAE Plan includes steps to optimize the entire organization’s supply chain network and to improve selling, general and administrative effectiveness and efficiencies. Although the divestiture of the Private Brands business was completed in the third quarter of fiscal 2016, we will continue to implement portions of the SCAE Plan, including work related to optimizing our supply chain network and pursue cost reductions through our selling, general and administrative functions and productivity improvements. The successful design and implementation of the SCAE Plan presents significant organizational design and infrastructure challenges and in many cases will require successful negotiations with third parties, including labor organizations, suppliers, business partners, and other stakeholders. In addition, the SCAE Plan may not advance our business strategy as expected. Events and circumstances, such as financial or strategic difficulties, delays and unexpected costs may occur that could result in our not realizing all or any of the anticipated benefits or our not realizing the anticipated benefits on our expected timetable. If we are unable to realize the anticipated savings of the SCAE Plan, our ability to fund other initiatives may be adversely affected. Any failure to implement the SCAE Plan in accordance with our expectations could adversely affect our financial condition, results of operations and cash flows. In addition, the complexity of the SCAE Plan will require a substantial amount of management and operational resources. Our management team must successfully implement administrative and operational changes necessary to achieve the anticipated benefits of the SCAE Plan. These and related demands on our resources may divert the organization’s attention from existing core businesses, integrating financial or other systems, have adverse effects on existing business relationships with suppliers and customers, and impact employee morale. As a result, our financial condition, results of operations or cash flows may be adversely affected. Increases in commodity costs may have a negative impact on profits. We use many different commodities such as wheat, corn, oats, soybeans, beef, pork, poultry, and energy. Commodities are subject to price volatility caused by commodity market fluctuations, supply and demand, currency fluctuations, external conditions such as weather, and changes in governmental agricultural and energy policies and regulations. Commodity price increases will result in increases in raw material, packaging, and energy costs and operating costs. We may not be able to increase our product prices and achieve cost savings that fully offset these increased costs; and increasing prices may result in reduced sales volume, reduced margins, and profitability. We have experience in hedging against commodity price increases; however, these practices and experience reduce, but do not eliminate, the risk of negative profit impacts from commodity price increases. We do not fully hedge against changes in commodity prices, and the risk management procedures that we use may not always work as we intend. Volatility in the market value of derivatives we use to manage exposures to fluctuations in commodity prices will cause volatility in our gross margins and net earnings. We utilize derivatives to manage price risk for some of our principal ingredients and energy costs, including grains (wheat, corn, and oats), oils, beef, pork, poultry, and energy. Changes in the values of these derivatives are generally recorded in earnings currently, resulting in volatility in both gross margin and net earnings. These gains and losses are reported in cost of sales in our Consolidated Statements of Operations and in unallocated corporate items in our segment operating results until 7

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we utilize the underlying input in our manufacturing process, at which time the gains and losses are reclassified to segment operating profit. We may experience volatile earnings as a result of these accounting treatments. Increased competition may result in reduced sales or profits. The food industry is highly competitive, and further consolidation in the industry would likely increase competition. Our principal competitors have substantial financial, marketing, and other resources. Increased competition can reduce our sales due to loss of market share or the need to reduce prices to respond to competitive and customer pressures. Competitive pressures also may restrict our ability to increase prices, including in response to commodity and other cost increases. We sell branded, private brand, and customized food products, as well as commercially branded foods and ingredients. Our branded products have an advantage over private brand products primarily due to advertising and name recognition, although private brand products typically sell at a discount to those of branded competitors. In addition, when branded competitors focus on price and promotion, the environment for private brand producers becomes more challenging because the price difference between private brand products and branded products may become less significant. In most product categories, we compete not only with other widely advertised branded products, but also with other private label and store brand products that are generally sold at lower prices. A strong competitive response from one or more of our competitors to our marketplace efforts, or a consumer shift towards more generic, lower-priced, or other value offerings, could result in us reducing pricing, increasing marketing or other expenditures, or losing market share. Our profits could decrease if a reduction in prices or increased costs are not counterbalanced with increased sales volume. Changes in our relationships with significant customers or suppliers could adversely affect us. During fiscal 2016, our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 16% of our net revenues. There can be no assurance that Wal-Mart Stores, Inc. and other significant customers will continue to purchase our products in the same quantities or on the same terms as in the past, particularly as increasingly powerful retailers continue to demand lower pricing. The loss of a significant customer or a material reduction in sales to a significant customer could materially and adversely affect our product sales, financial condition, and results of operations. Disruption of our supply chain could have an adverse impact on our business, financial condition, and results of operations. Our ability to make, move, and sell our products is critical to our success. Damage or disruption to our supply chain, including third-party manufacturing or transportation and distribution capabilities, due to weather, including any potential effects of climate change, natural disaster, fire or explosion, terrorism, pandemics, strikes, government action, or other reasons beyond our control or the control of our suppliers and business partners, could impair our ability to manufacture or sell our products. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, particularly when a product is sourced from a single supplier or location, could adversely affect our business or financial results. In addition, disputes with significant suppliers, including disputes regarding pricing or performance, could adversely affect our ability to supply products to our customers and could materially and adversely affect our product sales, financial condition, and results of operations. The sophistication and buying power of our customers could have a negative impact on profits. Our customers, such as supermarkets, warehouse clubs, and food distributors, have continued to consolidate, resulting in fewer customers on which we can rely for business. These consolidations and the growth of supercenters have produced large, sophisticated customers with increased buying power and negotiating strength who are more capable of resisting price increases and can demand lower pricing, increased promotional programs, or specialty tailored products. In addition, larger retailers have the scale to develop supply chains that permit them to operate with reduced inventories or to develop and market their own retailer brands. These customers may also in the future use more of their shelf space, currently used for our products, for their store brand products. We continue to implement initiatives to counteract these pressures. However, if the larger size of these customers results in additional negotiating strength and/or increased private label or store brand competition, our profitability could decline. Consolidation also increases the risk that adverse changes in our customers' business operations or financial performance will have a corresponding material adverse effect on us. For example, if our customers cannot access sufficient funds or financing, then they may delay, decrease, or cancel purchases of our products, or delay or fail to pay us for previous purchases. 8

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We must identify changing consumer preferences and develop and offer food products to meet their preferences. Consumer preferences evolve over time and the success of our food products depends on our ability to identify the tastes and dietary habits of consumers and to offer products that appeal to their preferences, including concerns of consumers regarding health and wellness, obesity, product attributes, and ingredients. Introduction of new products and product extensions requires significant development and marketing investment. If our products fail to meet consumer preferences, or we fail to introduce new and improved products on a timely basis, then the return on that investment will be less than anticipated and our strategy to grow sales and profits with investments in acquisitions, marketing, and innovation will be less successful. Similarly, demand for our products could be affected by consumer concerns or perceptions regarding the health effects of ingredients such as sodium, trans fats, sugar, processed wheat, or other product ingredients or attributes. If we do not achieve the appropriate cost structure in the highly competitive food industry, our profitability could decrease. Our future success and earnings growth depend in part on our ability to achieve the appropriate cost structure and operate efficiently in the highly competitive food industry, particularly in an environment of volatile input costs. We continue to implement profit-enhancing initiatives that impact our supply chain and general and administrative functions. These initiatives are focused on cost-saving opportunities in procurement, manufacturing, logistics, and customer service, as well as general and administrative overhead levels. Gaining additional efficiencies may become more difficult over time. Our failure to reduce costs through productivity gains or by eliminating redundant costs resulting from acquisitions could adversely affect our profitability and weaken our competitive position. If we do not continue to effectively manage costs and achieve additional efficiencies, our competitiveness and our profitability could decrease. We may be subject to product liability claims and product recalls, which could negatively impact our profitability. We sell food products for human consumption, which involves risks such as product contamination or spoilage, product tampering, other adulteration of food products, mislabeling, and misbranding. We may be subject to liability if the consumption of any of our products causes injury, illness, or death. In addition, we will voluntarily recall products in the event of contamination or damage. We have issued recalls and have from time to time been and currently are involved in lawsuits relating to our food products. A significant product liability judgment or a widespread product recall may negatively impact our sales and profitability for a period of time depending on the costs of the recall, the destruction of product inventory, product availability, competitive reaction, customer reaction and consumer attitudes. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential customers and our corporate and brand image. Additionally, as a manufacturer and marketer of food products, we are subject to extensive regulation by the U.S. Food and Drug Administration and other national, state, and local government agencies. The Food, Drug & Cosmetic Act, or the FDCA, and the Food Safety Modernization Act and their respective regulations govern, among other things, the manufacturing, composition and ingredients, packaging, and safety of food products. Some aspects of these laws use a strict liability standard for imposing sanctions on corporate behavior; meaning that no intent is required to be established. If we fail to comply with applicable laws and regulations, we may be subject to civil remedies, including fines, injunctions, recalls, or seizures, as well as criminal sanctions, any of which could have a material adverse effect on our business, financial condition, or results of operations. As previously disclosed, among the matters outstanding during fiscal 2016 related to the Company's 2007 peanut butter recall, was an investigation by the U.S. Attorney's office in Georgia and the Consumer Protection Branch of the Department of Justice. We cooperated with the U.S. Attorney’s office and the Department of Justice in regard to the investigation, and in May 2015, our subsidiary, ConAgra Grocery Products, entered into a plea agreement with the government, pursuant to which it agreed to plead guilty to a single misdemeanor under the Food, Drug & Cosmetics Act. The plea agreement is subject to the approval of the U.S. District Court for the Middle District of Georgia. Any damage to our reputation could have a material adverse effect on our business, financial condition, and results of operations. Maintaining a good reputation globally is critical to selling our products. Product contamination or tampering, the failure to maintain high standards for product quality, safety, and integrity, including with respect to raw materials and ingredients obtained from suppliers, or allegations of product quality issues, mislabeling or contamination, even if untrue, may reduce demand for our products or cause production and delivery disruptions. Our reputation could also be adversely impacted by any of the following, or by adverse publicity (whether or not valid) relating thereto: the failure to maintain high ethical, social, and environmental standards for all of our operations and activities; the failure to achieve our goals with respect to sodium or saturated fat; our research and development efforts; or our environmental impact, including use of agricultural materials, 9

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packaging, energy use, and waste management. Failure to comply with local laws and regulations, to maintain an effective system of internal controls or to provide accurate and timely financial information could also hurt our reputation. Damage to our reputation or loss of consumer confidence in our products for any of these or other reasons could result in decreased demand for our products and could have a material adverse effect on our business, financial condition, and results of operations, as well as require additional resources to rebuild our reputation. Our results could be adversely impacted as a result of increased pension, labor, and people-related expenses. Inflationary pressures and any shortages in the labor market could increase labor costs, which could have a material adverse effect on our operating results or financial condition. Our labor costs include the cost of providing employee benefits in the U.S. and foreign jurisdictions, including pension, health and welfare, and severance benefits. Changes in interest rates, mortality rates, health care costs, early retirement rates, investment returns, and the market value of plan assets can affect the funded status of our defined benefit plans and cause volatility in the future funding requirements of the plans. A significant increase in our obligations or future funding requirements could have a negative impact on our results of operations and cash flows from operations. Additionally, the annual costs of benefits vary with increased costs of health care and the outcome of collectively-bargained wage and benefit agreements. If we fail to comply with the many laws applicable to our business, we may face lawsuits or incur significant fines and penalties. Our facilities and products are subject to many laws and regulations administered by the United States Department of Agriculture, the Federal Food and Drug Administration, the Occupational Safety and Health Administration, and other federal, state, local, and foreign governmental agencies relating to the processing, packaging, storage, distribution, advertising, labeling, quality, and safety of food products, the health and safety of our employees, and the protection of the environment. Our failure to comply with applicable laws and regulations could subject us to lawsuits, administrative penalties, and civil remedies, including fines, injunctions, and recalls of our products. Our operations are also subject to extensive and increasingly stringent regulations administered by the Environmental Protection Agency, which pertain to the discharge of materials into the environment and the handling and disposition of wastes. Failure to comply with these regulations can have serious consequences, including civil and administrative penalties and negative publicity. Changes in applicable laws or regulations or evolving interpretations thereof, including increased government regulations to limit carbon dioxide and other greenhouse gas emissions as a result of concern over climate change, may result in increased compliance costs, capital expenditures, and other financial obligations for us, which could affect our profitability or impede the production or distribution of our products, which could affect our net operating revenues. Climate change, or legal, regulatory, or market measures to address climate change, may negatively affect our business and operations. There is growing concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters. In the event that such climate change has a negative effect on agricultural productivity, we may be subject to decreased availability or less favorable pricing for certain commodities that are necessary for our products, such as corn, wheat, and potatoes. We may also be subjected to decreased availability or less favorable pricing for water as a result of such change, which could impact our manufacturing and distribution operations. In addition, natural disasters and extreme weather conditions may disrupt the productivity of our facilities or the operation of our supply chain. The increasing concern over climate change also may result in more regional, federal, and/or global legal and regulatory requirements to reduce or mitigate the effects of greenhouse gases. In the event that such regulation is enacted and is more aggressive than the sustainability measures that we are currently undertaking to monitor our emissions and improve our energy efficiency, we may experience significant increases in our costs of operation and delivery. In particular, increasing regulation of fuel emissions could substantially increase the distribution and supply chain costs associated with our products. As a result, climate change could negatively affect our business and operations. We are increasingly dependent on information technology, and potential disruption, cyber attacks, security problems, and expanding social media vehicles present new risks. We are increasingly dependent on information technology networks and systems, including the Internet, to process, transmit, and store electronic and financial information, to manage and support a variety of business processes and activities, and to comply with regulatory, legal, and tax requirements. If we do not allocate and effectively manage the resources necessary to 10

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build and sustain the proper technology infrastructure and to maintain and protect the related automated and manual control processes, we could be subject to billing and collection errors, business disruptions, or damage resulting from security breaches. If any of our significant information technology systems suffer severe damage, disruption, or shutdown, and our business continuity plans do not effectively resolve the issues in a timely manner, our product sales, financial condition, and results of operations may be materially and adversely affected, and we could experience delays in reporting our financial results. In addition, there is a risk of business interruption, litigation risks, and reputational damage from leakage of confidential information. The inappropriate use of certain media vehicles could cause brand damage or information leakage. Negative posts or comments about the Company on any social networking web site could seriously damage its reputation. In addition, the disclosure of non-public company sensitive information through external media channels could lead to information loss. Identifying new points of entry as social media continues to expand presents new challenges. Any business interruptions or damage to our reputation could negatively impact our financial condition, results of operations, and the market price of our common stock. Impairment in the carrying value of goodwill or other intangibles could result in the incurrence of impairment charges and negatively impact our net worth. As of May 29, 2016, we had goodwill of $4.53 billion and other intangibles of $1.28 billion. The net carrying value of goodwill represents the fair value of acquired businesses in excess of identifiable assets and liabilities as of the acquisition date (or subsequent impairment date, if applicable). The net carrying value of other intangibles represents the fair value of trademarks, customer relationships, and other acquired intangibles as of the acquisition date (or subsequent impairment date, if applicable), net of accumulated amortization. Goodwill and other acquired intangibles expected to contribute indefinitely to our cash flows are not amortized, but must be evaluated by management at least annually for impairment. Amortized intangible assets are evaluated for impairment whenever events or changes in circumstance indicate that the carrying amounts of these assets may not be recoverable. Impairments to goodwill and other intangible assets may be caused by factors outside our control, such as the inability to quickly replace lost co-manufacturing business, increasing competitive pricing pressures, lower than expected revenue and profit growth rates, changes in industry EBITDA multiples, changes in discount rates based on changes in cost of capital (interest rates, etc.), or the bankruptcy of a significant customer and could result in the incurrence of impairment charges and negatively impact our net worth. The termination or expiration of current co-manufacturing arrangements could reduce our sales volume and adversely affect our results of operations. Our businesses periodically enter into co-manufacturing arrangements with manufacturers of products. The terms of these agreements vary but are generally for relatively short periods of time. Volumes produced under each of these agreements can fluctuate significantly based upon the product's life cycle, product promotions, alternative production capacity, and other factors, none of which are under our direct control. Our future ability to enter into co-manufacturing arrangements is not guaranteed, and a decrease in current co-manufacturing levels could have a significant negative impact on sales volume. Ardent Mills may not achieve the benefits that are anticipated from the joint venture. The benefits that are expected to result from our Ardent Mills joint venture will depend, in part, on our ability to realize the anticipated cost synergies in the transaction, Ardent Mills' ability to successfully integrate the ConAgra Mills and Horizon Milling businesses and its ability to successfully manage the joint venture on a going-forward basis. It is not certain that we will realize these benefits at all, and if we do, it is not certain how long it will take to achieve these benefits. If, for example, we are unable to achieve the anticipated cost savings, or if there are unforeseen integration costs, or if Ardent Mills is unable to operate the joint venture smoothly in the future, the financial performance of the joint venture may be negatively affected. If we are unable to complete proposed acquisitions or integrate acquired businesses, our financial results could be materially and adversely affected. From time to time, we evaluate acquisition candidates that may strategically fit our business objectives. If we are unable to complete acquisitions or to successfully integrate and develop acquired businesses, our financial results could be materially and adversely affected. Moreover, we may incur asset impairment charges related to acquisitions that reduce our profitability. Our acquisition activities may present financial, managerial, and operational risks. Those risks include diversion of management attention from existing businesses, difficulties integrating personnel and financial and other systems, effective 11

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and immediate implementation of control environment processes across our employee population, adverse effects on existing business relationships with suppliers and customers, inaccurate estimates of fair value made in the accounting for acquisitions and amortization of acquired intangible assets which would reduce future reported earnings, potential loss of customers or key employees of acquired businesses, and indemnities and potential disputes with the sellers. Any of these factors could affect our product sales, financial condition, and results of operations. If we are unable to complete our proposed divestitures, our financial results could be materially and adversely affected. From time to time, we may divest businesses that do not meet our strategic objectives or do not meet our growth or profitability targets. We may not be able to complete desired or proposed divestitures on terms favorable to us. Gains or losses on the sales of, or lost operating income from, those businesses may affect our profitability. Moreover, we may incur asset impairment charges related to divestitures that reduce our profitability. Our divestiture activities may present financial, managerial, and operational risks. Those risks include diversion of management attention from existing businesses, difficulties separating personnel and financial and other systems, adverse effects on existing business relationships with suppliers and customers and indemnities and potential disputes with the buyers. Any of these factors could adversely affect our product sales, financial condition, and results of operations. Actions of activist stockholders could cause us to incur substantial costs, divert management’s attention and resources, and have an adverse effect on our business. From time to time, we may be subject to proposals by stockholders urging us to take certain corporate actions. If activist stockholder activities ensue, our business could be adversely affected because responding to proxy contests and reacting to other actions by activist stockholders can be costly and time-consuming, disrupt our operations and divert the attention of management and our employees. For example, we may be required to retain the services of various professionals to advise us on activist stockholder matters, including legal, financial and communications advisors, the costs of which may negatively impact our future financial results. In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist stockholder initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, customers, employee, and joint venture partners, and cause our stock price to experience periods of volatility or stagnation. The results of the United Kingdom’s referendum on withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and our business. In June 2016, a majority of voters in the United Kingdom elected to withdraw from the European Union in a national referendum. The referendum was advisory, and the terms of any withdrawal are subject to a negotiation period that could last at least two years after the government of the United Kingdom formally initiates a withdrawal process. Nevertheless, the referendum has created significant uncertainty about the future relationship between the United Kingdom and the European Union, including with respect to the laws and regulations that will apply as the United Kingdom determines which European Union laws to replace or replicate in the event of a withdrawal. The referendum has also given rise to calls for the governments of other European Union member states to consider withdrawal. These developments, or the perception that any of them could occur, have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Any of these factors could depress economic activity and restrict our access to capital, which could have a material adverse effect on our business, financial condition and results of operations. Risks Relating to our Proposed Spinoff of our Lamb Weston Business The proposed spinoff of our Lamb Weston business is contingent upon the satisfaction of a number of conditions, may require significant time and attention of our management and may have an adverse effect on us if not completed. On November 18, 2015, we announced plans to pursue the separation of 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, Inc. in the fall of calendar 2016, is expected to be tax free to the Company and its shareholders. The proposed spinoff is subject to various conditions and may be affected by unanticipated developments or changes in market conditions that could delay, prevent, or otherwise adversely affect the spinoff. Completion of the spinoff will be contingent upon several factors, including, but not limited to, authorization and approval of our board of directors, 12

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receipt of governmental and regulatory approvals of the transactions contemplated by the spinoff, receipt of a tax opinion regarding the tax-free status of the spinoff, execution of intercompany agreements, and the effectiveness of a registration statement with the SEC. For these and other reasons, the spinoff may not be completed as expected during 2016, if at all. In pursuing the proposed spinoff, our ongoing businesses may be adversely affected, and we may be subject to certain risks and consequences, including, but not limited to, the following: execution of the proposed spinoff will require significant time and attention from management, which may postpone the execution of other initiatives that may have been beneficial to us; completion of the spinoff will require strategic, structural and process realignment and restructuring actions within our operations, which could lead to a disruption of our operations, loss of, or inability to recruit key personnel needed to operate and grow our businesses and to complete the proposed spinoff; completion of the spinoff may require certain management and procedural redundancies as we prepare for the separation of the Lamb Weston business from Conagra Brands, which may result in operating inefficiencies; and we will be required to pay certain costs and expenses relating to the spinoff, such as legal, accounting, and other professional fees, whether or not it is completed. If the spinoff is not completed, we may experience negative reactions from the financial markets if we fail to complete the spinoff. Any of these factors could have a material adverse effect on our financial condition, results of operations, cash flows, and the price of our common stock. We may be unable to achieve some or all of the benefits that we expect to achieve from the spinoff. Although we believe that separating our Lamb Weston business from Conagra Brands will provide financial, operational, managerial, and other benefits to us and our stockholders, the spinoff may not provide such results on the scope or scale we anticipate, and we may not realize the intended benefits of the spinoff. In addition, we will incur one-time costs in connection with the spinoff that may exceed our estimates and negate some of the benefits we expect to achieve. If we do not realize these assumed benefits, we could suffer a material adverse effect on our financial condition. Further, if the proposed spinoff is completed, our operational and financial profile will change upon the separation of the Lamb Weston business from Conagra Brands. As a result, our diversification of revenue sources will diminish, and our results of operations, cash flows, working capital, and financing requirements may be subject to increased volatility. If the proposed spinoff of our Lamb Weston business is completed, the trading price of our common stock will decline. We expect the trading price of our common stock immediately following the spinoff to be lower than immediately preceding the spinoff, as the trading price of our common stock will no longer reflect the value of our Lamb Weston business. Following the spinoff, the value of your common stock in: (a) the Company and (b) the Lamb Weston business may collectively trade at an aggregate price less than what the Company's common stock might trade at had the spinoff not occurred. The common stock of: (a) the Company and (b) the Lamb Weston business that you may hold following the spinoff may collectively trade at a value less than the price at which the Company’s common stock might have traded at had the spinoff not occurred. Reasons for this potential difference include the future performance of either the Company or the Lamb Weston business as separate, independent companies, and the future stockholder base and market for the Company’s common stock and those of the Lamb Weston business and the prices at which these shares individually trade. 13

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The spinoff could result in substantial tax liability. The spinoff is conditioned on our receipt of an opinion from our tax advisors, in form and substance satisfactory to us, that the distribution of shares of our Lamb Weston business in the spinoff will qualify as tax-free to the Lamb Weston business, the Company, and our stockholders for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) and related provisions of the U.S. Internal Revenue Code of 1986, as amended, which we refer to as the Code, and other members of our consolidated tax reporting group. The opinion will rely on, among other things, various assumptions and representations as to factual matters made by the Company and the Lamb Weston business which, if inaccurate or incomplete in any material respect, could jeopardize the conclusions reached by such advisor in its opinion. The opinion will not be binding on the Internal Revenue Service, or IRS, or the courts, and there can be no assurance that the IRS or the courts will not challenge the qualification of the spinoff as a transaction under Sections 355 and 368(a) of the Code or that any such challenge would not prevail. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES Our headquarters are located in Chicago, Illinois. Certain shared service centers are located in Omaha, Nebraska, including a product development facility, enterprise business services center, and an information technology center. The general offices and location of principal operations are set forth in the following summary of our properties. We also lease a number of sales offices mainly in the United States. We maintain a number of stand-alone distribution facilities. In addition, there are warehouses at most of our manufacturing facilities. Utilization of manufacturing capacity varies by manufacturing plant based upon the type of products assigned and the level of demand for those products. Management believes that our manufacturing and processing plants are well maintained and are generally adequate to support the current operations of the business. We own most of the manufacturing facilities. However, a limited number of plants and parcels of land with the related manufacturing equipment are leased. Substantially all of our transportation equipment and forward-positioned distribution centers containing finished goods are leased or operated by third parties. Information about the properties supporting our two reporting segments follows. Consumer Foods Reporting Segment Domestic general offices supporting the Consumer Foods segment are located in Chicago, Illinois and Omaha, Nebraska. We also have international general offices in Canada, China, Columbia, Mexico, and Panama. As of July 15, 2016, we have twenty-seven domestic manufacturing facilities located in Arkansas, California, Georgia, Indiana, Illinois, Iowa, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, Ohio, Pennsylvania, Tennessee, and Wisconsin. We also have international manufacturing facilities in Argentina, Canada, Italy, and Mexico and interests in ownership of international manufacturing facilities in India, Mexico, and the Philippines. Commercial Foods Reporting Segment Domestic general offices supporting the Commercial Foods segment are located in Omaha, Nebraska, Eagle, Idaho, North Liberty, Iowa, and Tri-Cities, Washington. We also have international general offices in China, Japan, the Netherlands, and Singapore. As of July 15, 2016, we have nineteen domestic manufacturing facilities located in Idaho, Illinois, Kentucky, Louisiana, New Jersey, Oregon, Tennessee, and Washington. We also have international manufacturing facilities in Canada and China; interests in ownership of domestic manufacturing facilities located in Minnesota and Washington; and interests in ownership of international manufacturing facilities located in Austria, the Netherlands, and the United Kingdom. 14

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ITEM 3. LEGAL PROCEEDINGS We are a party to various environmental proceedings and litigation, primarily related to our acquisition of Beatrice Company (“Beatrice”) in fiscal 1991. As a result of the acquisition of Beatrice and the significant pre-acquisition contingencies of the Beatrice business and its former subsidiaries, our consolidated post-acquisition financial statements reflect liabilities associated with the estimated resolution of these contingencies. These include various litigation and environmental proceedings related to businesses divested by Beatrice prior to its acquisition by us. The litigation includes suits against a number of lead paint and pigment manufacturers, including ConAgra Grocery Products Company, a wholly owned subsidiary of the Company (“ConAgra Grocery Products”), and the Company as alleged successors to W. P. Fuller Co., a lead paint and pigment manufacturer owned and operated by Beatrice until 1967. Although decisions favorable to us have been rendered in Rhode Island, New Jersey, Wisconsin, and Ohio, we remain a defendant in active suits in Illinois and California. The Illinois suit seeks class-wide relief in the form of medical monitoring for elevated levels of lead in blood. In California, a number of cities and counties have joined in a consolidated action seeking abatement of the alleged public nuisance. On September 23, 2013, a trial of the California case concluded in the Superior Court of California for the County of Santa Clara, and on January 27, 2014, the court entered a judgment (the "Judgment") against ConAgra Grocery Products and two other defendants, which orders the creation of a California abatement fund in the amount of $1.15 billion. Liability is joint and several. The Company believes ConAgra Grocery Products did not inherit any liabilities of W. P. Fuller Co. The Company will continue to vigorously defend itself in this case and has appealed the Judgment to the Court of Appeal of the State of California Sixth Appellate District. The Company expects the appeal process will last several years. The absence of any linkage between ConAgra Grocery Products and W. P. Fuller Co. is a critical issue that the Company will continue to advance throughout the appeals process. It is not possible to estimate exposure in this case or the remaining case in Illinois (which is based on different legal theories). If ultimately necessary, the Company will look to its insurance policies for coverage; its carriers are on notice. However, the extent of the insurance coverage is uncertain, and the Company cannot absolutely assure that the final resolution of these matters will not a have a material adverse effect on its financial condition, results of operations, or liquidity. The environmental proceedings associated with Beatrice include litigation and administrative proceedings involving Beatrice's status as a potentially responsible party at 37 Superfund, proposed Superfund, or state-equivalent sites. These sites involve locations previously owned or operated by predecessors of Beatrice that used or produced petroleum, pesticides, fertilizers, dyes, inks, solvents, PCBs, acids, lead, sulfur, tannery wastes, and/or other contaminants. Beatrice has paid or is in the process of paying its liability share at 33 of these sites. Reserves for these matters have been established based on our best estimate of the undiscounted remediation liabilities, which estimates include evaluation of investigatory studies, extent of required clean-up, the known volumetric contribution of Beatrice and other potentially responsible parties, and its experience in remediating sites. The reserves for Beatrice-related environmental matters totaled $54.0 million as of May 29, 2016, a majority of which relates to the Superfund and state-equivalent sites referenced above. We expect expenditures for Beatrice- related environmental matters to continue for up to 18 years. We are also a party to a number of lawsuits and claims arising out of our ongoing business operations. Among these, there are lawsuits, claims, and matters related to the February 2007 recall of our peanut butter products. Among the matters outstanding during fiscal 2016 related to the peanut butter recall was an investigation by the U.S. Attorney's office in Georgia and the Consumer Protection Branch of the Department of Justice into the 2007 recall. Just prior to the end of fiscal 2015, we negotiated a resolution of this matter, which resulted in an executed plea agreement pursuant to which ConAgra Grocery Products will plead guilty to a single misdemeanor violation of the Food, Drug & Cosmetics Act. The plea agreement is subject to court approval. If the plea is accepted by the U.S. District Court for the Middle District of Georgia, the government’s investigation into the 2007 recall will conclude and ConAgra Grocery Products will make payments totaling $11.2 million to the federal government. In June 2009, an accidental explosion occurred at our manufacturing facility in Garner, North Carolina. This facility was the primary production facility for our Slim Jim® branded meat snacks. In June 2009, the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives announced its determination that the explosion was the result of an accidental natural gas release, and not a deliberate act. During the fourth quarter of fiscal 2011, we settled our property and business interruption claims related to the Garner accident with our insurance providers. During the fourth quarter of fiscal 2011, Jacobs Engineering Group Inc., our engineer and project manager at the site, filed a declaratory judgment action against us seeking indemnity for personal injury claims brought against it as a result of the accident. In the first quarter of fiscal 2012, our motion for summary judgment was granted and the suit was dismissed without prejudice on the basis that the suit was filed prematurely. In the third quarter of fiscal 2014, Jacobs Engineering Group Inc. refiled its action for indemnity. On March 25, 2016, a Douglas County jury in Nebraska rendered a verdict in favor of Jacobs and against us in the amount of $108.9 million. The case will be appealed. We will continue to defend this action vigorously. Although our insurance carriers have provided customary 15

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notices of reservation of their rights under the policies of insurance, we expect any ultimate exposure in this case to be limited to the applicable insurance deductible. On October 21, 2015, we received a notice of violation from the Louisville Metro Air Pollution Control District (the District) alleging certain deficiencies in the risk management plan (the RMP) of a manufacturing facility in Louisville, Kentucky, which we acquired in connection with our fiscal 2013 purchase of Ralcorp Holdings, Inc. The notice alleged that the facility failed to implement and maintain an RMP sufficient to comply with environmental regulations governing facilities that manufacture, use or otherwise handle certain quantities of specified regulated substances. We are in active discussions with the District regarding the allegations. The District is seeking a monetary penalty to resolve the allegations, which monetary penalty could be in excess of $100,000. After taking into account liabilities recognized for all of the foregoing matters, management believes the ultimate resolution of such matters should not have a material adverse effect on our financial condition, results of operations, or liquidity. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange where it trades under the ticker symbol: CAG. At June 26, 2016, there were approximately 18,743 shareholders of record. Quarterly sales price and dividend information is set forth in Note 22 “Quarterly Financial Data (Unaudited)” to the consolidated financial statements and incorporated herein by reference. Purchases of Equity Securities by the Issuer and Affiliated Purchasers No shares of common stock were purchased during the fourth quarter of fiscal 2016. 16

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ITEM 6. SELECTED FINANCIAL DATA For the Fiscal Years Ended May 2016 2015 2014 2013 2012 Dollars in millions, except per share amounts Net sales (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,642.9 $ 11,937.0 $ 11,838.2 $ 11,843.7 $ 11,420.9 Income from continuing operations (1) . . . . . . . . . . $ 496.0 $ 760.3 $ 625.2 $ 674.3 $ 396.8 Net income (loss) attributable to ConAgra Foods, Inc. (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (677.0) $ (252.6) $ 303.1 $ 773.9 $ 467.9 Basic earnings per share: . . . . . . . . . . . . . . . . . . . . Income from continuing operations attributable to ConAgra Foods, Inc. common stockholders (1) . . . . . . . . . . . . . . . . $ 1.11 $ 1.75 $ 1.45 $ 1.61 $ 0.94 Net income (loss) attributable to ConAgra Foods, Inc. common stockholders (2). . . . . . . $ (1.57) $ (0.60) $ 0.72 $ 1.88 $ 1.13 Diluted earnings per share: . . . . . . . . . . . . . . . . . . . Income from continuing operations attributable to ConAgra Foods, Inc. common stockholders (1) . . . . . . . . . . . . . . . . $ 1.09 $ 1.73 $ 1.43 $ 1.58 $ 0.93 Net income (loss) attributable to ConAgra Foods, Inc. common stockholders (2). . . . . . . $ (1.56) $ (0.59) $ 0.70 $ 1.85 $ 1.12 Cash dividends declared per share of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 0.99 $ 0.95 At Year-End. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,390.6 $ 17,437.8 $ 19,241.5 $ 20,171.9 $ 11,325.4 Senior long-term debt (noncurrent) . . . . . . . . . . . . $ 4,721.9 $ 6,692.9 $ 8,524.5 $ 8,635.2 $ 2,652.2 Subordinated long-term debt (noncurrent) . . . . . . . $ 195.9 $ 195.9 $ 195.9 $ 195.9 $ 195.9 (1) Amounts exclude the impact of discontinued operations of the Lightlife® operations, the Medallion Foods operations, the ConAgra Mills operations, and the Private Brands operations. (2) Amounts include aggregate pre-tax goodwill and certain long-lived asset impairment charges in discontinued operations of $1.92 billion, $1.56 billion, and $596.2 million for fiscal 2016, 2015, and 2014, respectively. 17

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is intended to provide a summary of significant factors relevant to our financial performance and condition. The discussion and analysis should be read together with our consolidated financial statements and related notes in Item 8, Financial Statements and Supplementary Data. Results for the fiscal year ended May 29, 2016 are not necessarily indicative of results that may be attained in the future. EXECUTIVE OVERVIEW ConAgra Foods, Inc., together with its consolidated subsidiaries (collectively, the "Company," "we," "our" or us"), is one of North America's leading packaged food companies with recognized brands such as Marie Callender's®, Healthy Choice®, Slim Jim®, Hebrew National®, Orville Redenbacher's®, Peter Pan®, Reddi-wip®, PAM®, Snack Pack®, Banquet®, Chef Boyardee®, Egg Beaters®, Hunt's®, and many other ConAgra Foods brands found in grocery, convenience, mass merchandise, and club stores. ConAgra Foods also has a strong business-to-business presence, supplying frozen potato and sweet potato products as well as other vegetable, spice, and grain products to a variety of well-known restaurants, foodservice operators, and commercial customers. Fiscal 2016 performance reflected increased margins in the Consumer Foods and Commercial Foods segments. We divested the Private Brands operations and repaid $2.53 billion of debt during fiscal 2016. In fiscal 2016, 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. We also recently announced our plans to sell our Spicetec and JM Swank businesses and entered into separate agreements for their sale. Both transactions are expected to be complete in early fiscal 2017, subject to the satisfaction of customary closing conditions. All of these businesses are part of the Commercial Foods segment. Prior to the end of fiscal 2016, John Gehring, Chief Financial Officer of ConAgra Foods, Inc., announced his retirement. Mr. Gehring will remain in his current role until a successor is in place and will assist with an orderly transition. In fiscal 2016, we also announced the relocation of our corporate headquarters to Chicago, Illinois beginning in the summer of calendar year 2016. We completed the relocation in the first quarter of fiscal 2017. Diluted loss per share in fiscal 2016 was $1.56, including earnings of $1.09 per diluted share from continuing operations and a loss of $2.65 per diluted share from discontinued operations. Diluted loss per share in fiscal 2015 was $0.59, including earnings of $1.73 per diluted share from continuing operations and a loss of $2.32 per diluted share from discontinued operations. Several significant items affect the comparability of year-over-year results of continuing operations (see “Items Impacting Comparability” below). Items Impacting Comparability Segment presentation of gains and losses from derivatives used for economic hedging of anticipated commodity input costs and economic hedging of foreign currency exchange rate risks of anticipated transactions is discussed in the segment review below. Items of note impacting comparability of results from continuing operations for fiscal 2016 included the following: a charge of $348.5 million ($215.1 million after-tax) reflecting the year-end write-off of actuarial losses in excess of 10% of our pension liability, charges totaling $281.8 million ($178.4 million after-tax) in connection with our Supply Chain and Administrative Efficiency Plan (the "SCAE Plan"), a charge of $50.1 million ($31.6 million after-tax) related to the impairment of the Chef Boyardee brand, charges of $23.9 million ($15.4 million after-tax) related to the repurchase of certain senior notes, 18

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a gain of $17.7 million ($13.3 million after-tax) related to the settlement of a pension plan of an international potato venture, classified within equity method investment earnings, expenses of $5.3 million ($3.4 million after-tax) in connection with the Lamb Weston spinoff transaction, a charge of $5.0 million ($3.1 million after-tax) in connection with a legacy legal matter, a benefit of $4.9 million ($3.1 million after-tax) related to the sale of a facility in our Commercial segment, and income tax expense of $8.3 million related to legal entity changes for a business retained from Private Brands and a $2.7 million charge for the prior year implementation of a new tax position offset by the benefit of normal, recurring, income tax credits and deductions combined with a lower pre-tax level of earnings (due in large part to the impact of the write-off of $348.5 million of actuarial losses under our method of accounting for pension benefits). Items of note impacting comparability of results from continuing operations for fiscal 2015 included the following: charges of $25.7 million ($23.1 million after-tax) related to the impairment of goodwill and other intangibles impacting reporting units within our Consumer Foods segment, charges of $47.9 million ($30.2 million after-tax) in connection with our SCAE Plan, charges of $24.6 million ($15.1 million after-tax) related to early extinguishment of debt as a result of the payoff of our term loan facility and the repurchase of certain senior notes, charges of $5.0 million ($3.1 million after-tax) in support of our integration of the former Ralcorp Holdings, Inc. ("Ralcorp") business, a benefit of $7.0 million ($7.0 million after-tax) related to the reduction of the legal accrual for matters associated with the 2007 peanut butter recall, a charge of $6.9 million ($4.2 million after-tax) reflecting the write-off of actuarial losses in excess of 10% of our pension liability, and income tax benefits of $5.2 million from the implementation of a new tax position for federal tax credits and generation of state tax credits, relating to prior tax years. In addition, fiscal 2015 income per share benefited by approximately $.04 as a result of the fiscal year including 53 weeks. Acquisitions In May 2015, we acquired Blake's All Natural Foods, a family-owned company specializing in all natural and organic frozen meals, including pot pies, casseroles, pasta dishes, and other entrees, for $20.7 million in cash, net of cash acquired. The purchase included property and equipment associated with making frozen meals. This business is included in the Consumer Foods segment. In July 2014, we acquired TaiMei Potato Industry Limited, a Chinese potato processor, for $92.2 million, consisting of $74.9 million in cash, net of cash acquired, plus assumed liabilities. The purchase included property and equipment associated with making frozen potato products. This business is included in the Commercial Foods segment. Discontinued Operations On February 1, 2016, pursuant to a 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. The Private Brands assets and liabilities have been reclassified as held for sale for all periods presented prior to the divestiture and the results of operations have been classified as discontinued operations for all periods presented. 19

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Formation of Ardent Mills 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, 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 ($379.6 million after-tax) 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. Restructuring Plans In May 2013, we announced a plan for the integration and restructuring of the operations of the former Ralcorp business, optimization of the entire Company's supply chain network, manufacturing assets, and dry distribution and mixing centers, and improvement of selling, general and administrative effectiveness and efficiencies, which we refer to as the SCAE Plan. Although the divestiture of the Private Brands business was completed in the third quarter of fiscal 2016, we will plan to continue to implement portions of the SCAE Plan, including work related to optimizing our supply chain network, and pursue cost reductions through our selling, general and administrative functions and productivity improvements. The SCAE Plan also includes plans announced in the second quarter of fiscal 2016 to realize efficiency benefits through a combination of reductions in selling, general and administrative expenses and enhancements to trade spend processes and tools. Although we remain unable to make good faith estimates relating to the entire SCAE Plan, we are reporting on actions initiated through the end of fiscal 2016, including the estimated amounts or range of amounts for each major type of costs expected to be incurred, and the charges that have resulted or will result in cash outflows. As of May 29, 2016, our Board of Directors has approved the incurrence of up to $739.0 million of expenses in connection with the SCAE Plan. We have incurred or expect to incur approximately $443.9 million of charges ($315.5 million of cash charges and $128.4 million of non-cash charges) for actions identified to date under the SCAE plan. In fiscal 2016 and fiscal 2015, we recognized charges in continuing operations of $281.8 million and $47.7 million, respectively, in relation to the SCAE Plan. We expect to incur costs related to the SCAE Plan over a multi-year period. SEGMENT REVIEW We report our operations in two reporting segments: Consumer Foods and Commercial Foods. In the third quarter of fiscal 2016, we completed the divestiture of substantially all of the operations that were previously reported within the Private Brands segment. The Private Brands assets and liabilities have been reclassified as held for sale for all periods presented prior to the divestiture 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 these were included with the sale of the Private Brands operations. Consumer Foods 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. 20

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Commercial Foods The Commercial Foods reporting segment includes commercially branded and private label food and ingredients, which are sold primarily to commercial, restaurant, foodservice, 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®. Presentation of Derivative Gains (Losses) from 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 generally 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 associated with continuing operations, under this methodology: Fiscal Years Ended May 29, May 31, ($ in millions) 2016 2015 Net derivative losses incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (12.1) $ (79.3) Less: Net derivative losses allocated to reporting segments. . . . . . . . . . . . . . . . . . . . . . . . . (30.2) (46.6) Net derivative gains (losses) recognized in general corporate expenses . . . . . . . . . . . . $ 18.1 $ (32.7) Net derivative losses allocated to Consumer Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (21.1) $ (41.9) Net derivative losses allocated to Commercial Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9.1) (4.7) Net derivative losses included in segment operating profit . . . . . . . . . . . . . . . . . . . . . . $ (30.2) $ (46.6) As of May 29, 2016, the cumulative amount of net derivative gains from economic hedges that had been recognized in general corporate expenses and not yet allocated to reporting segments was $3.2 million. This amount reflected net gains of $3.6 million incurred during the fiscal year ended May 29, 2016, as well as net losses of $0.4 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 gains of $2.4 million in fiscal 2017 and gains of $0.8 million in fiscal 2018 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 $18.9 million and $1.4 million of net derivative losses during fiscal 2015 within the operating results of the Consumer Foods and Commercial Foods segments, respectively, in connection with these derivatives. Management effectively exited these derivative positions in the third quarter of fiscal 2015. Fiscal 2016 compared to Fiscal 2015 Net Sales ($ in millions) Fiscal 2016 Fiscal 2015 % Inc Reporting Segment Net Sales Net Sales (Dec) Consumer Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,225.1 $ 7,565.3 (5)% Commercial Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,417.8 4,371.7 1% Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,642.9 $ 11,937.0 (2)% Overall, our net sales were $11.64 billion in fiscal 2016, a decrease of 2% compared to fiscal 2015. 21

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Consumer Foods net sales for fiscal 2016 were $7.23 billion, a decrease of $340.2 million, or 5%, compared to fiscal 2015. Results reflected a decrease in volumes of approximately 5% in fiscal 2016, primarily due to the exclusion of an additional week of results that occurred in 2015, as well as the negative impact on volume from pricing actions. In addition, there was a 1% improvement in price/mix that was offset by a decrease of 1% due to the impact of foreign exchange rates. We implemented changes to improve the efficiency of trade spending, increased prices on Banquet® and other brands in connection with product improvements, and have focused on improving mix. Sales of products associated with some of our most significant brands, including Blue Bonnet®, Egg Beaters®, Marie Callender's®, Peter Pan®, Reddi-wip®, and Slim Jim®, grew in fiscal 2016 as compared to fiscal 2015. Significant brands whose products experienced sales declines in fiscal 2016 include Banquet®, Chef Boyardee®, Healthy Choice®, Hebrew National®, Hunt's®, Orville Redenbacher's®, Rosarita®, Snack Pack®, and Wesson®. Commercial Foods net sales were $4.42 billion in fiscal 2016, an increase of $46.1 million, or 1%, compared to fiscal 2015. Increased net sales for fiscal 2016 in the Lamb Weston specialty potato products business reflected a 4% increase in volumes, despite the additional week in fiscal 2015, due to strong international sales, partly due to the lapping of the West Coast port labor dispute in the prior year, as well as strong volume performance in North America, offset by a 1% decrease in price/mix. Net sales in our Foodservice business decreased, primarily driven by the impact of the exclusion of the additional week in fiscal 2015 and volume softness in select customers. Selling, General and Administrative ("SG&A") Expenses (Includes general corporate expenses) SG&A expenses totaled $2.21 billion for fiscal 2016, an increase of $664.1 million compared to fiscal 2015. We estimate that the inclusion of an extra week in the fiscal 2015 resulted in additional SG&A expenses in fiscal 2015 of approximately $30 million. SG&A expenses for fiscal 2016 reflected the following: a charge of $348.5 million reflecting the year-end write-off of actuarial losses in excess of 10% of our pension liability, charges totaling $232.8 million in connection with our SCAE Plan, a charge of $50.1 million related to the impairment of the Chef Boyardee® brand intangible, an increase in advertising and promotion spending of $41.4 million, a decrease in salaries and wages of $29.2 million, in connection with our cost savings initiatives, an increase in incentive compensation expense of $90.5 million, charges of $23.9 million related to the repurchase of certain senior notes, expenses of $5.3 million in connection with the Lamb Weston spin-off transaction, a charge of $5.0 million in connection with a legal matter, and a benefit of $4.9 million related to the sale of a facility in our Commercial Foods segment. SG&A expenses for fiscal 2015 included: charges of $25.7 million related to goodwill and intangible asset impairments in our Consumer Foods segment, charges totaling $25.3 million in connection with our SCAE Plan, charges of $24.6 million related to early extinguishment of debt as a result of the payoff of our term loan facility and the repurchase of certain senior notes, a benefit of $7.0 million related to the reduction of the legal accrual for pending matters associated with the 2007 peanut butter recall, a charge of $6.9 million reflecting the year-end write-off of actuarial losses in excess of 10% of our pension liability, and 22

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charges of $5.0 million in support of our integration of the former Ralcorp business. Operating Profit (Earnings before general corporate expenses, interest expense, net, income taxes, and equity method investment earnings) Fiscal 2016 Fiscal 2015 ($ in millions) Operating Operating % Inc Reporting Segment Profit Profit (Dec) Consumer Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,087.6 $ 1,068.0 2% Commercial Foods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633.2 566.2 12% Consumer Foods operating profit for fiscal 2016 was $1.09 billion, an increase of $19.6 million, or 2%, compared to fiscal 2015. Gross profits in Consumer Foods were $83.7 million higher in fiscal 2016 compared to fiscal 2015. The higher gross profit was driven by improved plant productivity and lower commodity input costs, partially offset by lower sales volumes, due in part to pricing actions on certain products. Gross profits in fiscal 2015 included $18.9 million of net derivative losses in connection with derivatives that ceased to function as economic hedges. Operating profit was negatively impacted by the increase in advertising and promotion expenses of $35.8 million and higher incentive compensation. Consumer Foods operating profit in fiscal 2016 included a charge of $50.1 million related to impairment of the Chef Boyardee® brand intangible asset. Operating profit for the Consumer Foods segment for fiscal 2016 also includes $43.0 million of negative impact from changes in foreign exchange rates. Charges totaling $74.1 million related to our SCAE Plan also impacted Consumer Foods results in fiscal 2016, compared to $36.5 million in fiscal 2015. Consumer Foods operating profit in fiscal 2015 included a charge of $20.9 million related to the impairment of goodwill and $4.8 million related to impairment of the Poppycock® brand intangible asset. Operating profit for the Commercial Foods segment was $633.2 million in fiscal 2016, an increase of $67.0 million, or 12%, compared to fiscal 2015. Gross profits in the Commercial Foods segment were $80.8 million higher in fiscal 2016 compared to fiscal 2015. Gross profits in fiscal 2015 included $1.4 million of net derivative losses in connection with derivatives that ceased to function as economic hedges. The increase in operating profit at Lamb Weston reflected North America and international sales growth combined with lower potato and commodity input costs, slightly offset by increases in labor expense in fiscal 2016. Strong international volume growth was partly due to lapping of the West Coast port labor dispute in the year ago period. Foodservice operating profit increased slightly due to favorability in cost of goods sold slightly offset by softness in volumes. Commercial Foods operating profit also included charges of $3.2 million in fiscal 2015 related to the execution of our SCAE Plan. Interest Expense, Net In fiscal 2016, net interest expense was $297.8 million, a decrease of $32.2 million, or 10%, from fiscal 2015. The decrease reflects the repayment of debt. Interest expense in fiscal 2016 and 2015 reflected a net benefit of $2.9 million and $8.1 million, respectively, primarily resulting from interest rate swaps used to effectively convert the interest rates of certain outstanding debt instruments from fixed rate to floating rate. Income Taxes Our income tax expense was $225.4 million and $362.1 million in fiscal 2016 and 2015, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income from continuing operations, inclusive of equity method investment earnings) was approximately 31% and 32% for fiscal 2016 and 2015, respectively. Income tax expense for fiscal 2016 included $8.3 million of expense related to legal entity changes for a business retained from Private Brands and a $2.7 million charge for the prior year implementation of a new tax position, offset by the benefit of normal, recurring, income tax credits and deductions combined with a lower pre-tax level of earnings (due in large part to the impact of the write-off of $348.5 million of actuarial losses under our method of accounting for pension benefits). In fiscal 2015, we implemented a new position and took a tax credit that applied to prior year tax returns which resulted in an income tax benefit of $5.2 million. We expect our effective tax rate in fiscal 2017, exclusive of any unusual transactions or tax events, to be approximately 33%-34%. 23

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Equity Method Investment Earnings We include our share of the earnings of certain affiliates based on our economic ownership interest in the affiliates. Significant affiliates include the Ardent Mills joint venture and affiliates that produce and market potato products for retail and foodservice customers. Our share of earnings from our equity method investments was $137.8 million ($134.6 million in the Commercial Foods segment and $3.2 million in the Consumer Foods segment) and $122.1 million ($119.1 million in the Commercial Foods segment and $3.0 million in the Consumer Foods segment) in fiscal 2016 and 2015, respectively. The increase in fiscal 2016 compared to fiscal 2015 reflects higher profits for our international potato joint ventures as well as a gain related to the settlement of a pension plan, partially offset by decreased profits for the Ardent Mills joint venture. Fiscal 2016 reflects a full year of earnings from the Ardent Mills joint venture, compared to the 11 months in fiscal 2015. We recognize earnings on a one-month lag for the Ardent Mills joint venture, due to differences in fiscal year periods. Results of Discontinued Operations Our discontinued operations generated after-tax losses of $1.16 billion and $1.0 billion in fiscal 2016 and 2015, respectively. As a result of the disposition of the Private Brands business, 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. The results of discontinued operations for fiscal 2015 include a $1.51 billion impairment of goodwill and $57.6 million of impairment charges to write-down various brands and fixed assets recognized on the Private Brands business divestiture. The results of discontinued operations for fiscal 2015 also include a pre-tax gain of $625.6 million ($379.6 million after- tax) recognized on the transactions related to the formation of Ardent Mills (see Note 6 "Discontinued Operations" in the consolidated financial statements). Earnings (Loss) Per Share Diluted loss per share in fiscal 2016 was $1.56, including earnings of $1.09 per diluted share from continuing operations and a loss of $2.65 per diluted share from discontinued operations. Diluted loss per share in fiscal 2015 was $0.59, including earnings of $1.73 per diluted share from continuing operations and a loss of $2.32 per diluted share from discontinued operations. See “Items Impacting Comparability” above as several significant items affected the comparability of year-over- year results of operations. Fiscal 2015 compared to Fiscal 2014 Net Sales ($ in millions) Fiscal 2015 Fiscal 2014 % Inc Reporting Segment Net Sales Net Sales (Dec) Consumer Foods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,565.3 $ 7,596.3 —% Commercial Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,371.7 4,241.9 3% Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,937.0 $ 11,838.2 1% Overall, our net sales were $11.94 billion in fiscal 2015, an increase of 1% compared to fiscal 2014. Consumer Foods net sales for fiscal 2015 were $7.57 billion, a decrease of $31.0 million, compared to fiscal 2014. Results reflected a volume benefit of approximately 1% in fiscal 2015 due to the inclusion of an additional week of results, offset by 1% decrease due to the impact of foreign exchange rates. In addition, we increased prices in fiscal 2015 for some categories to cover commodity costs. Sales of products associated with some of our most significant brands, including ACT II®, Chef Boyardee®, Hebrew National®, Hunt's®, Marie Callender's®, Odom's®, Pam®, Reddi-wip®, Ro*Tel®, and Slim Jim®, grew in fiscal 2015 as compared to fiscal 2014. Significant brands whose products experienced sales declines in fiscal 2015 include Bertolli®, Blue Bonnet®, Healthy Choice®, Libby's®, Orville Redenbacher's®, Peter Pan®, Snack Pack®, Swiss Miss®, and Wesson®. Commercial Foods net sales were $4.37 billion in fiscal 2015, an increase of $129.8 million, or 3%, compared to fiscal 2014. Results for fiscal 2015 reflected increased volumes in the Lamb Weston specialty potato products business and 24

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Foodservice businesses due to the inclusion of an additional week of results. Lamb Weston results also reflected good domestic performance, more than offsetting the negative impact of the West Coast labor dispute on international sales and challenges facing quick service restaurant customers. Selling, General and Administrative ("SG&A") Expenses (Includes general corporate expenses) SG&A expenses totaled $1.55 billion for fiscal 2015, a decrease of $233.6 million compared to fiscal 2014. We estimate that the inclusion of an extra week in the fiscal 2015 results increased SG&A expenses in fiscal 2015 by approximately $30 million. SG&A expenses for fiscal 2015 reflected: a decrease in advertising and promotion spending of $65.7 million, charges of $25.7 million related to goodwill and intangible asset impairments in our Consumer Foods segment, charges totaling $25.3 million in connection with our SCAE Plan, charges of $24.6 million related to early extinguishment of debt as a result of the payoff of our term loan facility and the repurchase of certain senior notes, a benefit of $7.0 million related to the reduction of the legal accrual for pending matters associated with the 2007 peanut butter recall, a charge of $6.9 million reflecting the year-end write-off of actuarial losses in excess of 10% of our pension liability, and charges of $5.0 million in support of our integration of the former Ralcorp business. SG&A expenses for fiscal 2014 included: expenses of $40.7 million in connection with our restructuring plans, charges of $84.9 million related to goodwill and intangible asset impairments, primarily the Chef Boyardee® brand in our Consumer Foods segment, expenses of $34.7 million in support of our integration of the former Ralcorp business, a charge of $16.5 million in connection with the impairment of a small production facility, a benefit of $10.2 million related legal matters associated with the 2007 peanut butter recall, including a reduction of the legal accrual for matters associated with the recall and the reimbursement of settlement and defense costs from an insurer, a charge of $8.9 million in connection with the impairment of certain assets received in connection with the bankruptcy of an onion products supplier, transaction-related costs of $2.2 million, and a benefit of $5.1 million in connection with the sale of land received in connection with the bankruptcy of an onion products supplier. 25

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Operating Profit (Earnings before general corporate expenses, interest expense, net, income taxes, and equity method investment earnings) Fiscal 2015 Fiscal 2014 ($ in millions) Operating Operating % Inc Reporting Segment Profit Profit (Dec) Consumer Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,068.0 $ 900.5 19% Commercial Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 566.2 533.5 6% Consumer Foods operating profit for fiscal 2015 was $1.07 billion, an increase of $167.5 million, or 19%, compared to fiscal 2014. Gross profits in Consumer Foods were flat compared to fiscal 2014, driven by the impact of comparable net sales, discussed above, favorable product mix and improved plant productivity, offset by $18.9 million of net derivative losses in connection with certain derivatives that ceased to function as economic hedges and higher commodity costs. Operating profit was favorably impacted by the decrease in advertising and promotion expenses of $63.0 million and lower salaries expense. The decrease in advertising expense reflected a continually increasing focus on prioritization, efficiency, and return on investment. Consumer Foods operating profit in fiscal 2015 included a charge of $20.9 million related to the impairment of goodwill and a charge of $4.8 million related to impairment of the Poppycock® brand intangible asset. Operating profit for the Consumer Foods segment for fiscal 2015 also includes $31.7 million of estimated negative impact from changes in foreign exchange rates. Charges totaling $36.5 million related to our restructuring plans also impacted Consumer Foods results in fiscal 2015, compared to $21.0 million in fiscal 2014. In fiscal 2014, Consumer Foods operating profit included a charge of $9.0 million related to the impairment of goodwill and charges of $72.7 million related to impairment of intangible assets, principally the Chef Boyardee® brand. Charges of $1.8 million for transaction-related expenses also impacted fiscal 2014 Consumer Foods operating profit. Operating profit for the Commercial Foods segment was $566.2 million in fiscal 2014, an increase of $32.7 million, or 6%, compared to fiscal 2014. Gross profits in the Commercial Foods segment were flat compared to fiscal 2014. Commercial Foods recognized $1.4 million of net derivative losses in connection with certain derivatives that ceased to function as economic hedges. The increases in operating profits reflected good domestic performance (discussed above), a better quality raw potato crop, and good operating efficiencies; collectively, these more than offset lower profits from international sales. International sales and profits were weak, resulting from challenges facing quick-serve restaurant customers in key Asian markets and the impact of the slowdown from the West Coast port labor dispute. The West Coast port labor dispute was resolved toward the end of the third quarter of fiscal 2015. Commercial Foods operating profit also included charges of $3.2 million and $4.8 million in fiscal 2015 and 2014, respectively, related to the execution of our restructuring plans. Commercial Foods operating profit for fiscal 2014 also included a charge of $16.5 million in connection with the impairment of a small production facility, as well as a charge of $8.9 million for the impairment of certain non-operating assets and a $5.1 million gain from the sale of land, both related to assets received in connection with the bankruptcy of an onion products supplier. Interest Expense, Net In fiscal 2015, net interest expense was $330.0 million, a decrease of $47.5 million, or 13%, from fiscal 2014. The decrease reflects the repayment of debt and other debt financing actions. Interest expense in fiscal 2015 and 2014 reflected a net benefit of $8.1 million and $12.1 million, respectively, primarily resulting from interest rate swaps used to effectively convert the interest rates of certain outstanding debt instruments from fixed rate to floating rate. Income Taxes Our income tax expense was $362.1 million and $178.3 million in fiscal 2015 and 2014, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income from continuing operations, inclusive of equity method investment earnings) was 32% for fiscal 2015 and 22% for fiscal 2014. In fiscal 2015, we implemented a new position and took a tax credit that applied to prior year tax returns and resulted in an income tax benefit of $5.2 million. The fiscal 2014 effective tax rate included a change in estimate related to tax methods used for certain international sales, favorable tax adjustments resulting from changes in legal structure and state tax filing positions, resolution of foreign tax matters that were previously reserved, the effect of a law change in Mexico requiring deconsolidation for tax reporting purposes, and the resolution of certain income tax matters related to dispositions of foreign operations in prior years. 26

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Equity Method Investment Earnings We include our share of the earnings of certain affiliates based on our economic ownership interest in the affiliates. Significant affiliates include the Ardent Mills joint venture and affiliates that produce and market potato products for retail and foodservice customers. Our share of earnings from our equity method investments was $122.1 million ($119.1 million in the Commercial Foods segment and $3.0 million in the Consumer Foods segment) and $32.5 million ($29.7 million in the Commercial Foods segment and $2.8 million in the Consumer Foods segment) in fiscal 2015 and 2014, respectively. The increase in fiscal 2015 compared to fiscal 2014 reflects the earnings from the Ardent Mills joint venture as well as higher profits for an international potato joint venture. The earnings from the Ardent Mills joint venture reflect results for 11 months of operations, as we recognize earnings on a one-month lag, due to differences in fiscal year periods. In fiscal 2014, earnings also reflected a $3.4 million charge reflecting the year-end write-off of actuarial losses in excess of 10% of the pension liability for an international potato venture. Results of Discontinued Operations Our discontinued operations generated an after-tax loss of $1.0 billion and $310.1 million in fiscal 2015 and 2014, respectively. The results of discontinued operations for fiscal 2015 include a $1.51 billion impairment of goodwill and $57.6 million of impairment charges to write-down various brands and fixed assets recognized on the Private Brands business divestiture. In fiscal 2014, we recorded a $593.2 million impairment of goodwill and $3.0 million of impairment charges to write-down a small brand in Private Brands that are included in discontinued operations. The results of discontinued operations for fiscal 2015 include a pre-tax gain of $625.6 million ($379.6 million after-tax) recognized on the formation of the Ardent Mills joint venture. The results for fiscal 2014 reflect a pre-tax gain of $90.0 million ($55.7 million after-tax) related to the disposition of three flour milling facilities as part of the Ardent Mills formation. In fiscal 2014, we also completed the sale of a small snack business, Medallion Foods, for $32.0 million in cash. We recognized an after-tax loss of $3.5 million on the sale of this business in fiscal 2014. In fiscal 2014, we recognized an impairment charge related to allocated amounts of goodwill and intangible assets, totaling $15.2 million after-tax, in anticipation of this divestiture. We also completed the sale of the assets of the Lightlife® business for $54.7 million in cash. We recognized an after-tax gain of $19.8 million on the sale of this business in fiscal 2014. Earnings (Loss) Per Share Diluted loss per share in fiscal 2015 was $0.59, including earnings of $1.73 per diluted share from continuing operations and a loss of $2.32 per diluted share from discontinued operations. Diluted earnings per share in fiscal 2014 were $0.70, including earnings of $1.43 per diluted share from continuing operations and a loss of $0.73 per diluted share from discontinued operations. LIQUIDITY AND CAPITAL RESOURCES Sources of Liquidity and Capital Our primary financing objective is to maintain a prudent capital structure that provides us flexibility to pursue our growth objectives. If necessary, we use short-term debt principally to finance ongoing operations, including our seasonal requirements for working capital and a combination of equity and long-term debt to finance both our base working capital needs and our non-current assets. We are committed to maintaining an investment grade credit rating. At May 29, 2016, we had a $1.5 billion revolving credit facility. The facility is scheduled to mature in September 2018. The facility has historically been used principally as a back-up facility for our commercial paper program. As of May 29, 2016, there were no outstanding borrowings under the facility. The facility requires that our consolidated funded debt not exceed 65% of our consolidated capital base and that our fixed charges coverage ratio be greater than 1.75 to 1.0. On September 21, 2015, the Company entered into an amendment to the facility to exclude certain non-cash impairments from the calculation of the fixed charge coverage ratio. As of May 29, 2016, we were in compliance with these financial covenants. As of May 29, 2016 and May 31, 2015, we had no amounts outstanding under our commercial paper program. The highest level of borrowings during fiscal 2016 was $401.3 million, in part attributable to the use of commercial paper borrowings to fund the payment of the $250.0 million of 1.35% senior debt, which became due in September 2015. 27

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As of the end of fiscal 2016, our senior long-term debt ratings were all investment grade. A significant downgrade in our credit ratings would not affect our ability to borrow amounts under the revolving credit facility, although borrowing costs would increase. A downgrade of our short-term credit ratings would impact our ability to borrow under our commercial paper program by negatively impacting borrowing costs and causing shorter durations, as well as making access to commercial paper more difficult. We repurchase our shares of common stock from time to time after considering market conditions and in accordance with repurchase limits authorized by our Board of Directors. In December 2011, the Company's Board of Directors approved a $750.0 million increase to our share repurchase authorization. Under the share repurchase authorization, we may repurchase our shares periodically over several years, depending on market conditions and other factors, and may do so in open market purchases or privately negotiated transactions. The authorization has no time limit and may be suspended or discontinued at any time. We repurchased 1.4 million shares of our common stock for an aggregate of $50.0 million under this program in fiscal 2015. The Company's total remaining share repurchase authorization as of May 29, 2016 was $131.9 million. We have access to the $1.5 billion revolving credit facility, our commercial paper program, and the capital markets in addition to cash and cash equivalents totaling $834.5 million as of May 29, 2016. We believe we also have access to additional bank loan facilities, if needed. We have recently signed separate agreements to sell the Spicetec Flavors & Seasonings and JM Swank businesses and expect to complete these sales in early fiscal 2017, subject to customary closing conditions. We expect to realize net proceeds from the sales in early fiscal 2017 of $316.5 million and $162.4 million, respectively. In fiscal 2016, we announced our plans to separate ConAgra Foods, Inc. into two public companies, Conagra Brands and Lamb Weston. Although we have not finalized plans for our future capital structure, management believes the aforementioned sources of liquidity will be adequate to meet required debt repayments, planned capital expenditures, working capital needs, and payment of anticipated quarterly dividends for the foreseeable future. Although a significant amount of our senior debt will mature over the next several years, including $550.0 million aggregate principal amount of our floating rate senior notes due in July 2016, we expect to maintain or have access to sufficient liquidity to either retire or refinance such debt, as market conditions warrant, from operating cash flows, our commercial paper program, proceeds from any divestitures and other disposition transactions, access to capital markets, and our revolving credit facility. Cash Flows In fiscal 2016, we generated $651.4 million of cash, which was the net result of $1.21 billion generated from operating activities, $2.13 billion provided by investing activities, $2.68 billion used in financing activities, and a decrease of $2.0 million in cash due to the effect of changes in foreign currency exchange rates. Cash generated from operating activities of continuing operations totaled $1.05 billion in fiscal 2016, as compared to $1.22 billion generated in fiscal 2015. The decrease was mainly driven by a $158.6 million increase in income tax payments for fiscal 2016 compared to those made in fiscal 2015 from continuing operations. Cash flows from changes in working capital for continuing operations for 2016 were comparable to those of 2015. Increases in receivables, partially attributable to payment term concessions granted to major customers, were offset by lower inventory levels due to favorable commodity prices and supply decreases, and further reduced by increases in accrued expenses related to incentives and restructuring activities in connection with the SCAE Plan. Also, annual incentive compensation payments were approximately $22.0 million more in fiscal 2016 (earned in fiscal 2015) than in fiscal 2015 (earned in fiscal 2014) and approximately $43.2 million of cash was used to settle certain share-based incentive awards in fiscal 2016. Cash generated from operating activities of discontinued operations was $162.1 million and $265.2 million in fiscal 2016 and fiscal 2015, respectively. The contribution of cash from operating activities of discontinued operations reflects the activities of the Private Brands business for a full year in fiscal 2015 and three quarters in fiscal 2016 and the limited results of the milling business which were included in the first quarter of fiscal 2015. Investing activities of continuing operations used $397.5 million in fiscal 2016 compared to $37.2 million in fiscal 2015. Investing activities of continuing operations in fiscal 2016 consisted primarily of capital expenditures of $429.8 million, which included several significant plant expansions and improvements. Investing activities of continuing operations in fiscal 2015 consisted primarily of $391.4 million received from Ardent Mills in connection with the formation of that joint venture, 28

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partially offset by capital expenditures of $351.2 million and the purchases of a potato manufacturer in China and an organic frozen food business in the United States, totaling $95.7 million, net of cash acquired. Cash provided by investing activities of discontinued operations in fiscal 2016 of $2.52 billion resulted primarily from the proceeds of the divestiture of our Private Brands operations totaling $2.60 billion, net of cash transferred and closing costs. This was offset by capital expenditures totaling $95.3 million. Cash used in investing activities of discontinued operations in fiscal 2015 totaled $4.4 million resulting from the receipt of $163.0 million cash associated with the sale of three flour milling facilities at the end of fiscal 2014, partially offset by $49.0 million of cash contributed to Ardent Mills upon the formation of the joint venture and capital expenditures of $120.5 million associated with the Private Brands operations. Cash used for financing activities of continuing operations totaled $2.64 billion in fiscal 2016 compared to $1.43 billion in fiscal 2015. Financing activities of continuing operations for fiscal 2016 consisted primarily of long-term debt repayments totaling $2.53 billion principally financed from the proceeds of the divestiture of our Private Brands operations. In fiscal 2015, we repaid $1.49 billion of long-term debt, partially financed by the issuance of $550.0 million aggregate principal amount of floating rate notes and we also reduced short term debt, primarily commercial paper, by $150.0 million. During fiscal 2016 and 2015, we paid dividends of $432.5 million and $425.2 million, respectively. In fiscal 2015, we repurchased $50.0 million of our common stock as part of our share repurchase program. Amounts generated from proceeds of employee stock option exercises and issuance of other stock awards were $260.2 million and $153.8 million in fiscal 2016 and 2015, respectively. The Company had cash and cash equivalents of $834.5 million at May 29, 2016 and $164.7 million at May 31, 2015, of which $138.9 million at May 29, 2016 and $79.0 million at May 31, 2015 was held in foreign countries. As of May 31, 2015, certain of the Company's foreign subsidiaries had extended short-term loans to domestic entities totaling $36.4 million. Domestic entities repaid these amounts early in the first quarter of fiscal 2016. The Company makes an assertion regarding the amount of earnings intended for permanent reinvestment outside the United States, with the balance available to be repatriated to the United States. The cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries' operational activities and future foreign investments. No related tax liability has been accrued as of May 29, 2016. At May 29, 2016, management does not intend to permanently repatriate additional foreign cash. Any future decision to repatriate foreign cash could result in an adjustment to the deferred tax liability after considering available foreign tax credits and other tax attributes. It is not practicable to determine the amount of any such deferred tax liability at this time. Our preliminary estimate of capital expenditures for fiscal 2017 is approximately $585 million. This includes amounts attributable to the Lamb Weston business. Management believes that existing cash balances, cash flows from operations, existing credit facilities, and access to capital markets will provide sufficient liquidity to meet our working capital needs, planned capital expenditures, and payment of anticipated quarterly dividends for at least the next twelve months. OFF-BALANCE SHEET ARRANGEMENTS We use off-balance sheet arrangements (e.g., leases accounted for as operating leases) where sound business principles warrant their use. We also periodically enter into guarantees and other similar arrangements as part of transactions in the ordinary course of business. These are described further in “Obligations and Commitments,” below. Variable Interest Entities Not Consolidated We have variable interests in certain entities that we have determined to be variable interest entities, but for which we are not the primary beneficiary. We do not consolidate the financial statements of these entities. We hold a 50.0% interest in Lamb Weston RDO, a potato processing venture. We provide all sales and marketing services to Lamb Weston RDO. We receive a fee for these services based on a percentage of the net sales of the venture. We reflect the value of our ownership interest in this venture in other assets in our Consolidated Balance Sheets, based upon the equity method of accounting. The balance of our investment was $16.9 million and $14.6 million at May 29, 2016 and May 31, 2015, respectively, representing our maximum exposure to loss as a result of our involvement with this venture. The capital structure of Lamb Weston RDO includes owners' equity of $33.9 million and term borrowings from banks of $41.1 million as of May 29, 2016. We have determined that we do not have the power to direct the activities that most significantly impact the economic performance of this venture. 29

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We lease certain office buildings from entities that we have determined to be variable interest entities. The lease agreements with these entities include fixed-price purchase options for the assets being leased. The lease agreements also contain contingent put options (the “lease put options”) that allow the lessors to require us to purchase the buildings at the greater of original construction cost, or fair market value, without a lease agreement in place (the “put price”) in certain limited circumstances. As a result of substantial impairment charges related to our Private Brands operations, these lease put options are exercisable now and remain exercisable until generally 30 days after the end of the respective lease agreements. We are amortizing the difference between the estimated put price and the estimated fair value (without a lease agreement in place) of each respective property over the remaining respective lease term within selling, general and administrative expenses. As of May 29, 2016, the estimated amount by which the put prices exceeded the fair values of the related properties was $58.5 million, of which we have accrued $9.3 million. As these buildings are worth considerably more when under lease agreements than when vacant, we may be able to mitigate some, or all of the financial exposure created by the put options by maintaining active lease agreements and/or by subleasing the buildings to credit worthy tenants. We do not expect to ultimately incur material financial losses as a result of the potential exercise of the lease put options by the lessors. These leases are accounted for as operating leases, and accordingly, there are no material assets or liabilities, other than the accrued portion of the put price, associated with these entities included in our Consolidated Balance Sheets. We have determined that we do not have the power to direct the activities that most significantly impact the economic performance of these entities. In making this determination, we have considered, among other items, the terms of the lease agreements, the expected remaining useful lives of the assets leased, and the capital structure of the lessor entities. OBLIGATIONS AND COMMITMENTS As part of our ongoing operations, we enter into arrangements that obligate us to make future payments under contracts such as lease agreements, debt agreements, and unconditional purchase obligations (i.e., obligations to transfer funds in the future for fixed or minimum quantities of goods or services at fixed or minimum prices, such as "take-or-pay" contracts). The unconditional purchase obligation arrangements are entered into in our normal course of business in order to ensure adequate levels of sourced product are available. Of these items, debt, notes payable, capital lease obligations, and other contracts, which totaled $5.6 billion as of May 29, 2016, were recognized as liabilities in our Consolidated Balance Sheets. Operating lease obligations and unconditional purchase obligations, which totaled $1.7 billion as of May 29, 2016, were not recognized as liabilities in our Consolidated Balance Sheets, in accordance with generally accepted accounting principles. A summary of our contractual obligations as of May 29, 2016 was as follows: Payments Due by Period (in millions) Less than After 5 Contractual Obligations Total 1 Year 1-3 Years 3-5 Years Years Long-term debt . . . . . . . . . . . . . . . . . $ 5,328.0 $ 560.6 $ 2,038.3 $ 397.1 $ 2,332.0 Capital lease obligations . . . . . . . . . . 149.2 11.1 20.1 17.2 100.8 Operating lease obligations . . . . . . . . 337.8 64.8 102.0 51.1 119.9 Purchase obligations1 and other contracts 1,479.3 1,013.5 129.0 80.5 256.3 Notes payable . . . . . . . . . . . . . . . . . . 38.8 38.8 — — — Total. . . . . . . . . . . . . . . . . . . . . . . . $ 7,333.1 $ 1,688.8 $ 2,289.4 $ 545.9 $ 2,809.0 1 Amount includes open purchase orders and agreements, some of which are not legally binding and/or may be cancellable. Such agreements are generally settleable in the ordinary course of business in less than one year. Excludes purchase commitments under potato supply agreements due to uncertainty of pricing and quantity. We are also contractually obligated to pay interest on our long-term debt and capital lease obligations. The weighted average coupon interest rate of the long-term debt obligations outstanding as of May 29, 2016 was approximately 4.3%. We own a 49.99% interest in Lamb Weston BSW, LLC ("Lamb Weston BSW"), a potato processing venture with Ochoa Ag Unlimited Foods, Inc. ("Ochoa"). We provide all sales and marketing services to Lamb Weston BSW. Under certain circumstances, we could be required to compensate Ochoa for lost profits resulting from significant production shortfalls ("production shortfalls"). Commencing on June 1, 2018, or on an earlier date under certain circumstances, we have a contractual right to purchase the remaining equity interest in Lamb Weston BSW from Ochoa (the "call option"). We are currently subject to a contractual obligation to purchase all of Ochoa's equity investment in Lamb Weston BSW at the option of Ochoa (the 30

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"put option"). The purchase prices under the call option and the put option (the "options") are based on the book value of Ochoa's equity interest at the date of exercise, as modified by an agreed-upon rate of return for the holding period of the investment balance. The agreed-upon rate of return varies depending on the circumstances under which any of the options are exercised. As of May 29, 2016, the price at which Ochoa had the right to put its equity interest to us was $47.4 million. This amount, which is presented within other noncurrent liabilities in our Consolidated Balance Sheets, is not included in the "Contractual Obligations" table above as the payment is contingent upon the exercise of the put option by Ochoa, and the eventual occurrence and timing of such exercise is uncertain. As of May 29, 2016, we had aggregate unfunded pension obligations totaling $943.6 million. This amount is not included in the table above, as the unfunded pension obligation is marked-to-market each fiscal year and we do not expect to be required to make payments to fund these amounts in the next few years. Based on current statutory requirements, we are not obligated to fund any amount to our qualified pension plans during the next twelve months. We estimate that we will make payments of approximately $10.2 million over the next twelve months to fund current benefits of nonqualified pension plans. See Note 19, "Pension and Postretirement Benefits" to the consolidated financial statements and "Critical Accounting Estimates - Employment Related Benefits" for further discussion of our pension obligations and factors that could affect estimates of this liability. As part of our ongoing operations, we also enter into arrangements that obligate us to make future cash payments only upon the occurrence of a future event (e.g., guarantees of debt or lease payments of a third party should the third party be unable to perform). In accordance with generally accepted accounting principles, the following commercial commitments are not recognized as liabilities in our Consolidated Balance Sheets. A summary of our commitments, including commitments associated with equity method investments, as of May 29, 2016, was as follows: Amount of Commitment Expiration Per Period (in millions) Less than After 5 Other Commercial Commitments Total 1 Year 1-3 Years 3-5 Years Years Guarantees. . . . . . . . . . . . . . . . . . . . . $ 67.2 $ 43.2 $ 5.4 $ 8.4 $ 10.2 Standby repurchase obligations . . . . 2.0 0.5 0.5 0.5 0.5 Other commitments. . . . . . . . . . . . . . 2.5 2.4 0.1 — — Total. . . . . . . . . . . . . . . . . . . . . . . . $ 71.7 $ 46.1 $ 6.0 $ 8.9 $ 10.7 We are a party to various potato supply agreements. Under the terms of certain such potato supply agreements, we have guaranteed repayment of short-term bank loans of the potato suppliers, under certain conditions. At May 29, 2016, the amount of supplier loans effectively guaranteed by us was $40.5 million, included in the table above. We have not established a liability for these guarantees, as we have determined that the likelihood of our required performance under the guarantees is remote. Federal income tax credits were generated related to our sweet potato production facility in Delhi, Louisiana. Third parties invested in these income tax credits. We have guaranteed these third parties the face value of these income tax credits over their statutory lives, through fiscal 2017, in the event that the income tax credits are recaptured or reduced. The face value of the income tax credits was $26.7 million, included in the table above, as of May 29, 2016. We believe the likelihood of the recapture or reduction of the income tax credits is remote, and therefore we have not established a liability in connection with this guarantee. We hold a 50% ownership interest in Lamb-Weston/Meijer, V.O.F. (“Lamb Weston Meijer”), a Netherlands joint venture, headquartered in the Netherlands, that manufactures and sells frozen potato products principally in Europe. We and our partner are jointly and severally liable for all legal liabilities of Lamb Weston Meijer. As of May 29, 2016 and May 31, 2015, the total liabilities of Lamb Weston Meijer were $203.7 million and $129.1 million, respectively. Lamb Weston Meijer is well capitalized, with partners’ equity of $284.5 million and $255.9 million as of May 29, 2016 and May 31, 2015, respectively. We have not established a liability on our balance sheets for the obligations of Lamb Weston Meijer, as we have determined the likelihood of any required payment by us to settle such liabilities of Lamb Weston Meijer is remote. The obligations and commitments tables above do not include any reserves for uncertainties in income taxes, as we are unable to reasonably estimate the ultimate amount or timing of settlement of our reserves for income taxes. The liability for gross unrecognized tax benefits at May 29, 2016 was $38.4 million. The net amount of unrecognized tax benefits at May 29, 2016, that, if recognized, would impact our effective tax rate was $21.3 million. Recognition of these tax benefits would have a favorable impact on our effective tax rate. 31

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CRITICAL ACCOUNTING ESTIMATES The process of preparing financial statements requires the use of estimates on the part of management. The estimates used by management are based on our historical experiences combined with management’s understanding of current facts and circumstances. Certain of our accounting estimates are considered critical as they are both important to the portrayal of our financial condition and results and require significant or complex judgment on the part of management. The following is a summary of certain accounting estimates considered critical by management. Our Audit/Finance Committee has reviewed management’s development, selection, and disclosure of the critical accounting estimates. Marketing Costs—We incur certain costs to promote our products through marketing programs, which include advertising, customer incentives, and consumer incentives. We recognize the cost of each of these types of marketing activities as incurred in accordance with generally accepted accounting principles. The judgment required in determining marketing costs can be significant. For volume-based incentives provided to customers, management must continually assess the likelihood of the customer achieving the specified targets. Similarly, for consumer coupons, management must estimate the level at which coupons will be redeemed by consumers in the future. Estimates made by management in accounting for marketing costs are based primarily on our historical experience with marketing programs with consideration given to current circumstances and industry trends. As these factors change, management’s estimates could change and we could recognize different amounts of marketing costs over different periods of time. We have recognized reserves of $150.7 million for these marketing costs as of May 29, 2016. Changes in the assumptions used in estimating the cost of any individual customer marketing program (including amounts classified as a revenue reduction) would not result in a material change in our results of operations or cash flows. Advertising and promotion expenses totaled $371.4 million, $330.0 million, and $395.7 million in fiscal 2016, 2015, and 2014, respectively. Income Taxes—Our income tax expense is based on our income, statutory tax rates, and tax planning opportunities available in the various jurisdictions in which we operate. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining our income tax expense and in evaluating our tax positions, including evaluating uncertainties. Management reviews tax positions at least quarterly and adjusts the balances as new information becomes available. Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the tax bases of assets and liabilities and their carrying amounts in our balance sheets, as well as from net operating loss and tax credit carryforwards. Management evaluates the recoverability of these future tax deductions by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings, and available tax planning strategies. These estimates of future taxable income inherently require significant judgment. Management uses historical experience and short and long-range business forecasts to develop such estimates. Further, we employ various prudent and feasible tax planning strategies to facilitate the recoverability of future deductions. To the extent management does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established. Further information on income taxes is provided in Note 15 “Pre-tax Income and Income Taxes” to the consolidated financial statements. Environmental Liabilities—Environmental liabilities are accrued when it is probable that obligations have been incurred and the associated amounts can be reasonably estimated. Management works with independent third-party specialists in order to effectively assess our environmental liabilities. Management estimates our environmental liabilities based on evaluation of investigatory studies, extent of required clean-up, our known volumetric contribution, other potentially responsible parties, and our experience in remediating sites. Environmental liability estimates may be affected by changing governmental or other external determinations of what constitutes an environmental liability or an acceptable level of clean-up. Management’s estimate as to our potential liability is independent of any potential recovery of insurance proceeds or indemnification arrangements. Insurance companies and other indemnitors are notified of any potential claims and periodically updated as to the general status of known claims. We do not discount our environmental liabilities as the timing of the anticipated cash payments is not fixed or readily determinable. To the extent that there are changes in the evaluation factors identified above, management’s estimate of environmental liabilities may also change. 32

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We have recognized a reserve of approximately $55.8 million for environmental liabilities as of May 29, 2016. The reserve for each site is determined based on an assessment of the most likely required remedy and a related estimate of the costs required to effect such remedy. Employment-Related Benefits—We incur certain employment-related expenses associated with pensions, postretirement health care benefits, and workers’ compensation. In order to measure the annual expense associated with these employment- related benefits, management must make a variety of estimates including, but not limited to, discount rates used to measure the present value of certain liabilities, assumed rates of return on assets set aside to fund these expenses, compensation increases, employee turnover rates, anticipated mortality rates, anticipated health care costs, and employee accidents incurred but not yet reported to us. The estimates used by management are based on our historical experience as well as current facts and circumstances. We use third-party specialists to assist management in appropriately measuring the expense associated with these employment-related benefits. Different estimates used by management could result in us recognizing different amounts of expense over different periods of time. As of May 29, 2016, the Company has elected to use a split discount rate (spot-rate approach) for the U.S. plans and certain foreign plans. Historically, the weighted-average discount rate was used in the calculation of service and interest costs, both of which are components of pension expense. We plan to utilize a spot rate approach in the calculation of pension interest and service cost for fiscal 2017 and beyond. The spot rate approach applies separate discount rates for each projected benefit payment in the calculation of pension interest and service cost. This calculation change is considered a change in accounting estimate and will be applied prospectively in fiscal 2017. We have recognized a pension liability of $946.6 million and $573.7 million, a postretirement liability of $201.6 million and $235.3 million, and a workers’ compensation liability of $62.2 million and $100.1 million, as of the end of fiscal 2016 and 2015, respectively. We also have recognized a pension asset of $3.0 million and $20.5 million as of the end of fiscal 2016 and 2015, respectively, as certain individual plans of the Company had a positive funded status. We recognize cumulative changes in the fair value of pension plan assets and net actuarial gains or losses in excess of 10% of the greater of the fair value of plan assets or the plan’s projected benefit obligation (“the corridor”) in current period expense annually as of our measurement date, which is our fiscal year-end, or when measurement is required otherwise under generally accepted accounting principles. We recognized pension expense (benefit) from Company plans of $370.8 million, $0.9 million, and $(5.9) million in fiscal 2016, 2015, and 2014, respectively. Such amounts reflect the year-end write-off of actuarial losses in excess of 10% of our pension liability of $348.5 million, $6.9 million, and $2.7 million in fiscal 2016, 2015, and 2014, respectively. This also reflected expected returns on plan assets of $259.9 million, $267.9 million, and $252.9 million in fiscal 2016, 2015, and 2014, respectively. We contributed $11.5 million, $12.7 million, and $18.3 million to the pension plans of our continuing operations in fiscal 2016, 2015, and 2014, respectively. We anticipate contributing approximately $12.5 million to our pension plans in fiscal 2017. One significant assumption for pension plan accounting is the discount rate. Historically, we have selected a discount rate each year (as of our fiscal year-end measurement date) for our plans based upon a high-quality corporate bond yield curve for which the cash flows from coupons and maturities match the year-by-year projected benefit cash flows for our pension plans. The corporate bond yield curve is comprised of high-quality fixed income debt instruments (usually Moody’s Aa) available at the measurement date. At May 29, 2016, the Company changed to use a spot-rate approach, discussed above. This alternative approach focuses on measuring the service cost and interest cost components of net periodic benefit cost by using individual spot rates derived from a high-quality corporate bond yield curve and matched with separate cash flows for each future year instead of a single weighted-average discount rate approach. Based on this information, the discount rate selected by us for determination of pension expense was 4.10% for fiscal 2016, 4.15% for fiscal 2015, and 4.05% for fiscal 2014. We selected a weighted-average discount rate of 4.14% and 3.15% for determination of service and interest expense, respectively, for fiscal 2017. A 25 basis point increase in our discount rate assumption as of the end of fiscal 2016 would have resulted in a decrease of $109.7 million in our pension expense for fiscal 2016. A 25 basis point decrease in our discount rate assumption as of the end of fiscal 2016 would have resulted in an increase of $115.7 million in our pension expense for fiscal 2016. For our year-end pension obligation determination, we selected discount rates of 3.83% and 4.10% for fiscal years 2016 and 2015, respectively. Another significant assumption used to account for our pension plans is the expected long-term rate of return on plan assets. In developing the assumed long-term rate of return on plan assets for determining pension expense, we consider long- term historical returns (arithmetic average) of the plan’s investments, the asset allocation among types of investments, estimated 33

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long-term returns by investment type from external sources, and the current economic environment. Based on this information, we selected 7.75% for the long-term rate of return on plan assets for determining our fiscal 2016 pension expense. A 25 basis point increase/decrease in our expected long-term rate of return assumption as of the beginning of fiscal 2016 would decrease/ increase annual pension expense for our pension plans by $8.7 million. We selected an expected rate of return on plan assets of 7.50% to be used to determine our pension expense for fiscal 2017. A 25 basis point increase/decrease in our expected long- term rate of return assumption as of the beginning of fiscal 2017 would decrease/increase annual pension expense for our pension plans by $7.2 million. The rate of compensation increase is another significant assumption used in the development of accounting information for pension plans. We determine this assumption based on our long-term plans for compensation increases and current economic conditions. Based on this information, we selected 3.66% and 3.70% for fiscal years 2016 and 2015, respectively, as the rate of compensation increase for determining our year-end pension obligation. We selected 3.70% for the rate of compensation increase for determination of pension expense for fiscal year 2016, 4.25% for fiscal 2015, and 4.25% fiscal 2014, respectively. A 25 basis point increase in our rate of compensation increase assumption as of the beginning of fiscal 2016 would increase pension expense for our pension plans by $1.1 million for the year. A 25 basis point decrease in our rate of compensation increase assumption as of the beginning of fiscal 2016 would decrease pension expense for our pension plans by $1.6 million for the year. We selected a rate of 3.66% for the rate of compensation increase to be used to determine our pension expense for fiscal 2017. A 25 basis point increase in our rate of compensation increase assumption as of the beginning of fiscal 2017 would increase pension expense for our pension plans by $0.7 million for the year. A 25 basis point decrease in our rate of compensation increase assumption as of the beginning of fiscal 2017 would decrease pension expense for our pension plans by $0.7 million for the year. In October 2014, The Society of Actuaries' Retirement Plan Experience Committee published new mortality tables and recommended their use for the measurement of U.S. pension plan obligations. With the assistance of our third-party actuary, in measuring our pension obligations as of May 31, 2015, we incorporated revised assumptions that generally reflect the mortality improvement inherent in these new tables, as adjusted for experience specific to our industry. We also provide certain postretirement health care benefits. We recognized postretirement benefit expense of $0.2 million, $6.1 million, and $9.9 million in fiscal 2016, 2015, and 2014, respectively. We reflected liabilities of $201.6 million and $235.3 million in our balance sheets as of May 29, 2016 and May 31, 2015, respectively. We anticipate contributing approximately $22.1 million to our postretirement health care plans in fiscal 2017. The postretirement benefit expense and obligation are also dependent on our assumptions used for the actuarially determined amounts. These assumptions include discount rates (discussed above), health care cost trend rates, inflation rates, retirement rates, mortality rates (also discussed above), and other factors. The health care cost trend assumptions are developed based on historical cost data, the near-term outlook, and an assessment of likely long-term trends. Assumed inflation rates are based on an evaluation of external market indicators. Retirement and mortality rates are based primarily on actual plan experience. The discount rate we selected for determination of postretirement expense was 3.50% for fiscal 2016, 3.65% for fiscal 2015, and 3.35% for fiscal 2014. We have selected a weighted-average discount rate of 3.18% for determination of postretirement expense for fiscal 2017. A 25 basis point increase/decrease in our discount rate assumption as of the beginning of fiscal 2016 would not have resulted in a material change to postretirement expense for our plans. We have assumed the initial year increase in cost of health care to be 9.0%, with the trend rate decreasing to 4.5% by 2024. A one percentage point change in the assumed health care cost trend rate would have the following effects: One Percent One Percent ($ in millions) Increase Decrease Effect on total service and interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.4 $ (0.4) Effect on postretirement benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3 (10.1) We provide workers’ compensation benefits to our employees. The measurement of the liability for our cost of providing these benefits is largely based upon actuarial analysis of costs. One significant assumption we make is the discount rate used to calculate the present value of our obligation. The weighted-average discount rate used at May 29, 2016 was 2.57%. A 25 basis point increase/decrease in the discount rate assumption would not have a material impact on workers’ compensation expense. Business Combinations, Impairment of Long-Lived Assets (including property, plant and equipment), Identifiable Intangible Assets, and Goodwill—We use the acquisition method in accounting for acquired businesses. Under the acquisition method, our financial statements reflect the operations of an acquired business starting from the closing of the acquisition. 34

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The assets acquired and liabilities assumed are recorded at their respective estimated fair values at the date of the acquisition. Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. Significant judgment is often required in estimating the fair value of assets acquired, particularly intangible assets. As a result, in the case of significant acquisitions we normally obtain the assistance of a third-party valuation specialist in estimating fair values of tangible and intangible assets. The fair value estimates are based on available historical information and on expectations and assumptions about the future, considering the perspective of marketplace participants. While management believes those expectations and assumptions are reasonable, they are inherently uncertain. Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions. We reduce the carrying amounts of long-lived assets (including property, plant and equipment) to their fair values when their carrying amount is determined to not be recoverable. We generally compare undiscounted estimated future cash flows of an asset or asset group to the carrying values of the asset or asset group. If the undiscounted estimated future cash flows exceed the carrying values of the asset or asset group, no impairment is recognized. If the undiscounted estimated future cash flows are less than the carrying values of the asset or asset group, we write-down the asset or assets to their estimated fair values. The estimates of fair value are generally in the form of appraisal, or by discounting estimated future cash flows of the asset or asset group. Determining the useful lives of intangible assets also requires management judgment. Certain brand intangibles are expected to have indefinite lives based on their history and our plans to continue to support and build the acquired brands, while other acquired intangible assets (e.g., customer relationships) are expected to have determinable useful lives. Our estimates of the useful lives of definite-lived intangible assets are primarily based upon historical experience, the competitive and macroeconomic environment, and our operating plans. The costs of definite-lived intangibles are amortized to expense over their estimated life. We reduce the carrying amounts of indefinite-lived intangible assets, and goodwill to their fair values when the fair value of such assets is determined to be less than their carrying amounts (i.e., assets are deemed to be impaired). Fair value is typically estimated using a discounted cash flow analysis, which requires us to estimate the future cash flows anticipated to be generated by the particular asset being tested for impairment as well as to select a discount rate to measure the present value of the anticipated cash flows. When determining future cash flow estimates, we consider historical results adjusted to reflect current and anticipated operating conditions. Estimating future cash flows requires significant judgment by management in such areas as future economic conditions, industry-specific conditions, product pricing, and necessary capital expenditures. The use of different assumptions or estimates for future cash flows could produce different impairment amounts (or none at all) for long-lived assets and identifiable intangible assets. In assessing other intangible assets not subject to amortization for impairment, we have the option to perform a qualitative assessment to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of such an intangible asset is less than its carrying amount. If we determine that it is not more likely than not that the fair value of such an intangible asset is less than its carrying amount, then we are not required to perform any additional tests for assessing intangible assets for impairment. However, if we conclude otherwise or elect not to perform the qualitative assessment, then we are required to perform a quantitative impairment test that involves a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. If we perform a quantitative impairment test in evaluating impairment of our indefinite lived brands/trademarks, we utilize a “relief from royalty” methodology. The methodology determines the fair value of each brand through use of a discounted cash flow model that incorporates an estimated “royalty rate” we would be able to charge a third party for the use of the particular brand. When determining the future cash flow estimates, we must estimate future net sales and a fair market royalty rate for each applicable brand and an appropriate discount rate to measure the present value of the anticipated cash flows. Estimating future net sales requires significant judgment by management in such areas as future economic conditions, product pricing, and consumer trends. In determining an appropriate discount rate to apply to the estimated future cash flows, we consider the current interest rate environment and our estimated cost of capital. In fiscal 2016, we elected to perform a quantitative impairment test for indefinite lived intangibles. During fiscal 2016, we recognized impairment charges of $50.1 million in our Consumer Foods segment for our Chef Boyardee® brand. In fiscal 2015, we elected to perform a quantitative impairment test for indefinite lived intangibles. During fiscal 2015, we recognized impairment charges of $4.8 million in our Consumer Foods segment for our Poppycock® brand. 35

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In fiscal 2014, we elected to perform a quantitative impairment test for indefinite lived intangibles. We recognized impairment charges of $72.7 million in our Consumer Foods segment, primarily for our Chef Boyardee® brand. We also recognized a $3.2 million impairment charge for an amortizable technology license in our Corporate expenses in fiscal 2014. Goodwill is tested annually for impairment of value and whenever events or changes in circumstances indicate the carrying amount of the asset may be impaired. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include deterioration in general economic conditions, adverse changes in the markets in which an entity operates, increases in input costs that have negative effects on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others. The fair value that could be realized in an actual transaction may differ from that used to evaluate the impairment of goodwill. In testing goodwill for impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (more than 50%) that the estimated fair value of a reporting unit is less than its carrying amount. If we elect to perform a qualitative assessment and determine that an impairment is more likely than not, we are then required to perform a quantitative impairment test, otherwise no further analysis is required. We also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test. Under the qualitative assessment, various events and circumstances that would affect the estimated fair value of a reporting unit are identified (similar to impairment indicators above). Furthermore, management considers the results of the most recent two-step quantitative impairment test completed for a reporting unit and compares the weighted average cost of capital between the current and prior years for each reporting unit. Under the two-step quantitative impairment test, the first step of the evaluation involves comparing the current fair value of each reporting unit to its carrying value, including goodwill. Fair value is typically estimated using a discounted cash flow analysis, which requires us to estimate the future cash flows anticipated to be generated by the reporting unit being tested for impairment as well as to select a risk-adjusted discount rate to measure the present value of the anticipated cash flows. When determining future cash flow estimates, we consider historical results adjusted to reflect current and anticipated operating conditions. We estimate cash flows for the reporting unit over a discrete period (typically four or five years) and the terminal period (considering expected long term growth rates and trends). Estimating future cash flows requires significant judgment by management in such areas as future economic conditions, industry-specific conditions, product pricing, and necessary capital expenditures. The use of different assumptions or estimates for future cash flows or significant changes in risk-adjusted discounts rates due to changes in market conditions could produce substantially different estimates of the fair value of the reporting unit. If the fair value of a reporting unit determined in the first step of the evaluation is lower than its carrying value, we proceed to the second step, which compares the carrying value of goodwill to its implied fair value. In estimating the implied fair value of goodwill for a reporting unit, we must assign the fair value of the reporting unit (as determined in the first step) to the assets and liabilities associated with the reporting unit as if the reporting unit had been acquired in a business combination (i.e., we estimate the fair value of each asset and liability held in the reporting unit). The various assets and liabilities within the reporting unit are generally not adjusted to their new, estimated fair values (unless impairments of any individual assets are indicated). The implied goodwill is equal to the residual of the estimated fair value of the reporting unit over the estimated fair values of each identifiable asset and liability within the reporting unit. Any excess of the carrying value of goodwill of the reporting unit over its implied fair value is recorded as impairment. In the fourth quarter of fiscal 2016, in conjunction with our annual review for impairment, we performed a qualitative analysis of goodwill for the reporting units in our Consumer Foods and Commercial Foods segments. Because forecasted sales and profits for the International reporting unit in our Consumer Foods segment continued to fall below our expectations relative to our previous projections throughout fiscal 2016, largely as a result of foreign exchange rates, we performed quantitative analyses of goodwill on this segment reporting unit in fiscal 2016. Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans and future industry and economic conditions. We estimated the future cash flows of the International reporting unit and calculated the net present value of those estimated cash flows using a risk adjusted discount rate, in order to estimate the fair value of each reporting unit from the perspective of a market participant. We used discount rates and terminal growth rates of 7.5% and 3%, respectively, to calculate the present value of estimated future cash flows. We then compared the estimated fair value of the reporting unit to the respective historical carrying value (including allocated assets and liabilities of certain shared and Corporate functions), and determined that the fair value of the reporting unit was greater than the carrying value in fiscal 2016. With the assistance of a third-party valuation 36

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specialist, we estimated the fair value of this reporting unit and determined that we had 12% cushion over the carrying value. As such, the results of the quantitative analysis did not result in an impairment of the International reporting unit. Because forecasted sales and profits for a reporting unit in our divested Private Brands business continued to fall below our expectations relative to our previous projections throughout fiscal 2015, we performed quantitative analyses of goodwill on this Private Brands segment reporting unit in fiscal 2015. Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans and future industry and economic conditions. We estimated the future cash flows of each reporting unit within the Private Brands segment and calculated the net present value of those estimated cash flows using a risk adjusted discount rate, in order to estimate the fair value of each reporting unit from the perspective of a market participant. We used discount rates and terminal growth rates of 8% and 3%, respectively, to calculate the present value of estimated future cash flows. We then compared the estimated fair value of the reporting unit to the respective historical carrying value (including allocated assets and liabilities of certain shared and Corporate functions), and determined that the fair value of the reporting unit was less than the carrying value in fiscal 2015. With the assistance of a third-party valuation specialist, we estimated the fair value of the assets and liabilities of each of this reporting unit in order to determine the implied fair value of goodwill of each reporting unit. We recognized an impairment charge for the difference between the implied fair value of goodwill and the carrying value of goodwill at the respective measurement dates. Accordingly, during fiscal 2015, we recorded charges totaling $20.9 million for the impairment of goodwill in the portion of the business we retained from the Private Brands segment that is now included in the Grocery reporting unit of the Consumer Foods segment. During fiscal 2014, we recorded a $9.0 million charge for the impairment of goodwill in the portion of the business we retained from the Private Brands segment that is now included in our Grocery reporting unit of the Consumer Foods segment. We completed the divestiture of our Private Brands operations in the third quarter of fiscal 2016. In fiscal 2016, we recognized charges of $1.92 billion ($1.44 billion after-tax) to write-down the goodwill and long-lived assets of the Private Brands business. During fiscal 2015, we recognized impairment charges of $1.51 billion and $43.9 million for goodwill and indefinite- lived intangibles, respectively, in our Private Brands business. During fiscal 2015, we also recognized a charge of $13.7 million in our Private Brands business for the impairment of certain long-lived assets. The impairment was measured based upon an estimated disposal value for the related production facility. These impairment charges are included in discontinued operations. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS 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 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. 37

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In March 2016, the FASB issued 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 plan to early adopt ASU 2016-09 in the first quarter of fiscal 2017 with an effective date of May 30, 2016. We are evaluating the effect that ASU 2016-09 will have on our consolidated financial statements. FORWARD-LOOKING STATEMENTS This report, including Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. We undertake no responsibility for updating these statements. Readers of this report should understand that these statements are not guarantees of performance or results. Many factors could affect our actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements, including those set forth in this report. These risks and uncertainties include, among other things: general economic and industry conditions; our ability to successfully execute our long-term value creation strategy; our ability to successfully complete the spin-off of our Lamb Weston business on a tax-free basis, within the expected time frame or at all, and achieve the intended benefits of the spin-off; our ability to access capital; our ability to execute our operating and restructuring plans and achieve our targeted operating efficiencies, cost-saving initiatives, and trade optimization programs; the effectiveness of our hedging activities, including volatility in commodities that could negatively impact our derivative positions and, in turn, our earnings; the competitive environment and related market conditions; our ability to respond to changing consumer preferences and the success of our innovation and marketing investments; the ultimate impact of any product recalls and litigation, including litigation related to the lead paint and pigment matters; actions of governments and regulatory factors affecting our businesses, including the Patient Protection and Affordable Care Act; the availability and prices of raw materials, including any negative effects caused by inflation or weather conditions; risks and uncertainties associated with intangible assets, including any future goodwill or intangible assets impairment charges; our ability to realize the synergies and benefits contemplated by the Ardent Mills joint venture; the costs, disruption, and diversion of management's attention associated with campaigns commenced by activist investors; and other risks described in our reports filed with the Securities and Exchange Commission. We caution readers not to place undue reliance on any forward-looking statements included in this report, which speak only as of the date of this report. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The principal market risks affecting us during fiscal 2016 and 2015 were exposures to price fluctuations of commodity and energy inputs, interest rates, and foreign currencies. These fluctuations impacted all reporting segments. Commodity Market Risk We purchase commodity inputs such as wheat, corn, oats, soybean meal, soybean oil, meat, dairy products, sugar, natural gas, electricity, and packaging materials to be used in our operations. These commodities are subject to price fluctuations that may create price risk. We enter into commodity hedges to manage this price risk using physical forward contracts or derivative instruments. We have policies governing the hedging instruments our businesses may use. These policies include limiting the dollar risk exposure for each of our businesses. We also monitor the amount of associated counter-party credit risk for all non- exchange-traded transactions. Interest Rate Risk We may use interest rate swaps to manage the effect of interest rate changes on the fair value of our existing debt as well as the forecasted interest payments for the anticipated issuance of debt. As of May 29, 2016 and May 31, 2015, the fair value of our long term debt (including current installments) was estimated at $5.9 billion and $8.2 billion, respectively, based on current market rates provided primarily by outside investment advisors. As of May 29, 2016 and May 31, 2015, a 1% increase in interest rates would decrease the fair value of our long-term debt by approximately $249.5 million and $428.6 million, respectively, while a 1% decrease in interest rates would increase the fair value of our long-term debt by approximately $275.0 million and $479.5 million, respectively. 38

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Foreign Currency Risk In order to reduce exposures for our processing activities related to changes in foreign currency exchange rates, we may enter into forward exchange or option contracts for transactions denominated in a currency other than the functional currency for certain of our operations. This activity primarily relates to economically hedging against foreign currency risk in purchasing inventory and capital equipment, sales of finished goods, and future settlement of foreign denominated assets and liabilities. Value-at-Risk (VaR) We employ various tools to monitor our derivative risk, including value-at-risk ("VaR") models. We perform simulations using historical data to estimate potential losses in the fair value of current derivative positions. We use price and volatility information for the prior 90 days in the calculation of VaR that is used to monitor our daily risk. The purpose of this measurement is to provide a single view of the potential risk of loss associated with derivative positions at a given point in time based on recent changes in market prices. Our model uses a 95% confidence level. Accordingly, in any given one day time period, losses greater than the amounts included in the table below are expected to occur only 5% of the time. We include commodity swaps, futures, and options and foreign exchange forwards, swaps, and options in this calculation. The following table provides an overview of our average daily VaR for our energy, agriculture, foreign exchange, and other commodities (including discontinued operations) for fiscal 2016 and 2015. Other commodities below consist primarily of forward and option contracts for a commodities index which includes items such as agricultural commodities, energy commodities, and metals. The other commodities category below may also include items such as packaging and/or livestock. Fair Value Impact Average Average During the Fiscal Year During the Fiscal Year In Millions Ended May 29, 2016 Ended May 31, 2015 Processing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Energy commodities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.6 $ 1.2 Agriculture commodities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 2.7 Other commodities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1.4 Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 0.1 39

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ConAgra Foods, Inc. and Subsidiaries Consolidated Statements of Operations (in millions, except per share amounts) For the Fiscal Years Ended May 2016 2015 2014 Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,642.9 $ 11,937.0 $ 11,838.2 Costs and expenses: Cost of goods sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,552.1 9,061.4 8,910.8 Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . 2,209.4 1,545.3 1,778.9 Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297.8 330.0 377.5 Income from continuing operations before income taxes and equity method investment earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583.6 1,000.3 771.0 Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225.4 362.1 178.3 Equity method investment earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137.8 122.1 32.5 Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496.0 760.3 625.2 Loss from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . (1,161.9) (1,001.1) (310.1) Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (665.9) $ (240.8) $ 315.1 Less: Net income attributable to noncontrolling interests . . . . . . . . . . . . 11.1 11.8 12.0 Net income (loss) attributable to ConAgra Foods, Inc. . . . . . . . . . . . $ (677.0) $ (252.6) $ 303.1 Earnings (loss) per share — basic Income from continuing operations attributable to ConAgra Foods, Inc. common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.11 $ 1.75 $ 1.45 Loss from discontinued operations attributable to ConAgra Foods, Inc. common stockholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.68) (2.35) (0.73) Net income (loss) attributable to ConAgra Foods, Inc. common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1.57) $ (0.60) $ 0.72 Earnings (loss) per share — diluted Income from continuing operations attributable to ConAgra Foods, Inc. common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.09 $ 1.73 $ 1.43 Loss from discontinued operations attributable to ConAgra Foods, Inc. common stockholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.65) (2.32) (0.73) Net income (loss) attributable to ConAgra Foods, Inc. common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1.56) $ (0.59) $ 0.70 The accompanying Notes are an integral part of the consolidated financial statements. 40

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ConAgra Foods, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income (Loss) (in millions) For the Fiscal Years Ended May 2016 2015 2014 Tax After- Tax After- Tax After- Pre-Tax (Expense) Tax Pre-Tax (Expense) Tax Pre-Tax (Expense) Tax Amount Benefit Amount Amount Benefit Amount Amount Benefit Amount Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $(1,033.6) $ 367.7 $ (665.9) $ 244.0 $ (484.8) $ (240.8) $ 617.9 $ (302.8) $ 315.1 Other comprehensive income (loss): Derivative adjustments: . . . . . . . . . . . . . . . . Unrealized derivative adjustments. . — — — — — — 49.6 (18.3) 31.3 Reclassification for derivative adjustments included in net income. (2.1) 0.8 (1.3) (0.5) 0.2 (0.3) 55.0 (20.6) 34.4 Unrealized gains on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 — 0.1 0.7 (0.3) 0.4 0.2 (0.1) 0.1 Currency translation losses: . . . . . . . . . . . . . Unrealized currency translation losses . . . . . . . . . . . . . . . . . . . . . . . . (58.9) — (58.9) (145.2) — (145.2) (25.7) — (25.7) Reclassification for currency translation losses included in net income . . . . . . . . . . . . . . . . . . . . . . . 73.4 — 73.4 — — — — — — Pension and post-employment benefit obligations:. . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized pension and post- employment benefit obligations. . . . (37.7) 14.8 (22.9) (94.9) 36.7 (58.2) 23.8 (8.2) 15.6 Reclassification for pension and post-employment benefit obligations included in net income . (14.5) 4.9 (9.6) 0.8 (0.3) 0.5 3.3 (1.2) 2.1 Comprehensive income (loss) . . . . . . . . . . . . . . . . . (1,073.3) 388.2 (685.1) 4.9 (448.5) (443.6) 724.1 (351.2) 372.9 Comprehensive income attributable to noncontrolling interests. . . . . . . . . . . . . . . . . . 7.8 (0.9) 6.9 4.6 (0.4) 4.2 8.9 (0.9) 8.0 Comprehensive income (loss) attributable to ConAgra Foods, Inc. . . . . . . . . . . . . . . . . . . . . . . . . $(1,081.1) $ 389.1 $ (692.0) $ 0.3 $ (448.1) $ (447.8) $ 715.2 $ (350.3) $ 364.9 The accompanying Notes are an integral part of the consolidated financial statements. 41

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ConAgra Foods, Inc. and Subsidiaries Consolidated Balance Sheets (in millions, except share data) May 29, May 31, 2016 2015 ASSETS Current assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 834.5 $ 164.7 Receivables, less allowance for doubtful accounts of $3.7 and $3.8 . . . . . . . . . . . . . . . . . . . . . 836.6 739.0 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,582.1 1,642.6 Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206.5 168.2 Current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117.0 848.8 Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,576.7 3,563.3 Property, plant and equipment Land and land improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208.1 194.2 Buildings, machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,993.0 4,822.3 Furniture, fixtures, office equipment and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 801.8 807.4 Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206.3 244.3 6,209.2 6,068.2 Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,498.9) (3,423.6) Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,710.3 2,644.6 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,533.8 4,544.6 Brands, trademarks and other intangibles, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,276.8 1,272.5 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,067.2 926.8 Noncurrent assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225.8 4,486.0 $ 13,390.6 $ 17,437.8 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38.8 $ 7.9 Current installments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 571.4 1,007.8 Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 945.4 1,080.0 Accrued payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271.1 206.3 Other accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651.0 647.1 Current liabilities held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.7 361.0 Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,532.4 3,310.1 Senior long-term debt, excluding current installments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,721.9 6,692.9 Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195.9 195.9 Other noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,144.1 1,915.9 Noncurrent liabilities held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 713.0 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,595.8 12,827.8 Commitments and contingencies (Note 17) Common stockholders' equity Common stock of $5 par value, authorized 1,200,000,000 shares; issued 567,907,172. . . . . . . 2,839.7 2,839.7 Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,136.3 1,049.4 Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,218.3 4,331.1 Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (344.5) (329.5) Less treasury stock, at cost, 129,842,206 and 139,702,605 common shares. . . . . . . . . . . . . . . . (3,136.2) (3,364.7) Total ConAgra Foods, Inc. common stockholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . 3,713.6 4,526.0 Noncontrolling interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81.2 84.0 Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,794.8 4,610.0 $ 13,390.6 $ 17,437.8 The accompanying Notes are an integral part of the consolidated financial statements. 42

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ConAgra Foods, Inc. and Subsidiaries Consolidated Statements of Common Stockholders' Equity (in millions, except share data) ConAgra Foods, Inc. Stockholders’ Equity Accumulated Additional Other Common Common Paid-in Retained Comprehensive Treasury Noncontrolling Total Shares Stock Capital Earnings Income (Loss) Stock Interests Equity Balance at May 26, 2013 . . . . 567.9 $ 2,839.7 $ 1,006.2 5,129.5 $ (196.1) $ (3,514.9) $ 98.6 $ 5,363.0 Stock option and incentive plans . . . . . . . . . . . . . . . . . . . . . 32.4 (0.8) 120.5 152.1 Currency translation adjustment . . . . . . . . . . . . . . . . (21.7) (4.0) (25.7) Repurchase of common shares. (100.0) (100.0) Unrealized gain on securities . . 0.1 0.1 Derivative adjustment, net of reclassification adjustment. . . . 65.7 65.7 Activities of noncontrolling interests . . . . . . . . . . . . . . . . . . (1.7) 2.1 0.4 Pension and postretirement healthcare benefits . . . . . . . . . . 17.7 17.7 Dividends declared on common stock; $1.00 per share . . . . . . . . . . . . . . . . . . . . . (421.2) (421.2) Net income attributable to ConAgra Foods, Inc. . . . . . . . . 303.1 303.1 Balance at May 25, 2014 . . . . 567.9 2,839.7 1,036.9 5,010.6 (134.3) (3,494.4) 96.7 5,355.2 Stock option and incentive plans . . . . . . . . . . . . . . . . . . . . . 14.2 (0.4) 179.7 193.5 Currency translation adjustment . . . . . . . . . . . . . . . . (137.6) (7.6) (145.2) Repurchase of common shares. (50.0) (50.0) Unrealized gain on securities . . 0.4 0.4 Derivative adjustment, net of reclassification adjustment. . . . (0.3) (0.3) Activities of noncontrolling interests . . . . . . . . . . . . . . . . . . (1.7) (5.1) (6.8) Pension and postretirement healthcare benefits . . . . . . . . . . (57.7) (57.7) Dividends declared on common stock; $1.00 per share . . . . . . . . . . . . . . . . . . . . . (426.5) (426.5) Net loss attributable to ConAgra Foods, Inc. . . . . . . . . (252.6) (252.6) Balance at May 31, 2015 . . . . 567.9 2,839.7 1,049.4 4,331.1 (329.5) (3,364.7) 84.0 4,610.0 Stock option and incentive plans . . . . . . . . . . . . . . . . . . . . . 91.7 (1.2) 228.5 319.0 Currency translation adjustment . . . . . . . . . . . . . . . . 18.7 (4.2) 14.5 Repurchase of common shares. — Unrealized gain on securities . . 0.1 0.1 Derivative adjustment, net of reclassification adjustment. . . . (1.3) (1.3) Activities of noncontrolling interests . . . . . . . . . . . . . . . . . . (4.8) 1.4 (3.4) Pension and postretirement healthcare benefits . . . . . . . . . . (32.5) (32.5) Dividends declared on common stock; $1.00 per share . . . . . . . . . . . . . . . . . . . . . (434.6) (434.6) Net loss attributable to ConAgra Foods, Inc. . . . . . . . . (677.0) (677.0) Balance at May 29, 2016 . . . . 567.9 $ 2,839.7 $ 1,136.3 $ 3,218.3 $ (344.5) $ (3,136.2) $ 81.2 $ 3,794.8 The accompanying Notes are an integral part of the consolidated financial statements. 43

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ConAgra Foods, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in millions) For the Fiscal Years Ended May 2016 2015 2014 Cash flows from operating activities: Net income (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (665.9) $ (240.8) $ 315.1 Loss from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,161.9) (1,001.1) (310.1) Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496.0 760.3 625.2 Adjustments to reconcile income from continuing operations to net cash flows from operating activities: Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373.9 380.4 354.6 Asset impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.6 36.0 118.9 Lease cancellation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55.6 — — (Gain) loss on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.9 24.6 (4.0) Loss on sale of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 7.5 1.2 Earnings of affiliates less than (in excess of) distributions . . . . . . . . . . . . . . . . . . . . (59.5) (30.8) 13.6 Stock-settled share-based payments expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.1 35.8 44.8 Contributions to pension plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11.5) (12.7) (18.3) Pension expense (benefits) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374.4 (0.8) (0.9) Other items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.9 11.4 (19.5) Change in operating assets and liabilities excluding effects of business acquisitions and dispositions: Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (171.9) 77.3 50.4 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55.4 (112.1) 7.3 Deferred income taxes and income taxes payable, net . . . . . . . . . . . . . . . . . (290.6) 47.1 75.2 Prepaid expenses and other current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 14.3 (11.4) 0.5 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (111.0) (11.6) (3.2) Accrued payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88.8 70.8 (93.8) Other accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.6 (56.4) (31.8) Net cash flows from operating activities - continuing operations. . . . . . . . . 1,045.3 1,215.4 1,120.2 Net cash flows from operating activities - discontinued operations . . . . . . . 162.1 265.2 448.4 Net cash flows from operating activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,207.4 1,480.6 1,568.6 Cash flows from investing activities: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions to property, plant and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (429.8) (351.2) (461.1) Sale of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.4 18.3 40.0 Purchase of businesses, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (95.7) (39.9) Purchase of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10.4) — — Return of investment in equity method investee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 391.4 — Other items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 — — Net cash flows from investing activities - continuing operations . . . . . . . . . (397.5) (37.2) (461.0) Net cash flows from investing activities - discontinued operations . . . . . . . 2,524.9 (4.4) (70.5) Net cash flows from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,127.4 (41.6) (531.5) Cash flows from financing activities: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.9 (150.0) (43.2) Issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.0 550.0 — Repayment of long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,525.0) (1,493.5) (569.1) Repurchase of ConAgra Foods, Inc. common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (50.0) (100.0) Sale of ConAgra Foods, Inc. common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 — — Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (432.5) (425.2) (420.9) Exercise of stock options and issuance of other stock awards . . . . . . . . . . . . . . . . . . . . . . 260.2 153.8 103.7 Other items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8.4) (13.6) (4.5) Net cash flows from financing activities - continuing operations. . . . . . . . . (2,636.2) (1,428.5) (1,034.0) Net cash flows from financing activities - discontinued operations . . . . . . . (45.2) (1.7) (0.1) Net cash flows from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,681.4) (1,430.2) (1,034.1) Effect of exchange rate changes on cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . (2.0) (8.8) (3.8) Net change in cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651.4 — (0.8) Add: Cash balance included in assets held for sale at beginning of period . . . . . . . . . . . . 18.4 64.9 58.4 Less: Cash balance included in assets held for sale at end of period . . . . . . . . . . . . . . . . . — 18.4 64.9 Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164.7 118.2 125.5 Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 834.5 $ 164.7 $ 118.2 The accompanying Notes are an integral part of the consolidated financial statements. 44

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Notes to Consolidated Financial Statements Fiscal Years Ended May 29, 2016, May 31, 2015, and May 25, 2014 (columnar dollars in millions, except per share amounts) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Fiscal Year — The fiscal year of ConAgra Foods, Inc. (“ConAgra Foods”, “Company”, “we”, “us”, or “our”) ends the last Sunday in May. The fiscal years for the consolidated financial statements presented consist of a 52-week period for fiscal year 2016, a 53-week period for fiscal 2015, and a 52-week period for fiscal year 2014. Basis of Consolidation — The 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 consolidated financial statements from the date such determination is made. All significant intercompany investments, accounts, and transactions have been eliminated. Investments in Unconsolidated Affiliates — The investments in, and the operating results of, 50%-or-less-owned entities not required to be consolidated are included in the consolidated financial statements on the basis of the equity method of accounting or the cost method of accounting, depending on specific facts and circumstances. We review our investments in unconsolidated affiliates for impairment whenever events or changes in business circumstances indicate that the carrying amount of the investments may not be fully recoverable. Evidence of a loss in value that is other than temporary includes, but is not limited to, the absence of an ability to recover the carrying amount of the investment, the inability of the investee to sustain an earnings capacity which would justify the carrying amount of the investment, or, where applicable, estimated sales proceeds which are insufficient to recover the carrying amount of the investment. Management’s assessment as to whether any decline in value is other than temporary is based on our ability and intent to hold the investment and whether evidence indicating the carrying value of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. Management generally considers our investments in equity method investees to be strategic long-term investments. Therefore, management completes its assessments with a long-term viewpoint. If the fair value of the investment is determined to be less than the carrying value and the decline in value is considered to be other than temporary, an appropriate write-down is recorded based on the excess of the carrying value over the best estimate of fair value of the investment. 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. Inventories — We use the lower of cost (determined using the first-in, first-out method) or market for valuing inventories. Property, Plant and Equipment — Property, plant and equipment are carried at cost. Depreciation has been calculated using the straight-line method over the estimated useful lives of the respective classes of assets as follows: Land improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 40 years Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 - 40 years Machinery and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 - 20 years Furniture, fixtures, office equipment and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 - 15 years We review property, plant and equipment for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Recoverability of an asset considered “held-and-used” is determined by comparing the carrying amount of the asset to the undiscounted net cash flows expected to be generated from the use of the asset. If the carrying amount is greater than the undiscounted net cash flows expected to be generated by the asset, the asset’s carrying amount is reduced to its estimated fair value. An asset considered “held-for-sale” is reported at the lower of the asset’s carrying amount or fair value. Goodwill and Other Identifiable Intangible Assets — Goodwill and other identifiable intangible assets with indefinite lives (e.g., brands or trademarks) are not amortized and are tested annually for impairment of value and whenever events or 45

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Notes to Consolidated Financial Statements - (Continued) Fiscal Years Ended May 29, 2016, May 31, 2015, and May 25, 2014 (columnar dollars in millions except per share amounts) changes in circumstances indicate the carrying amount of the asset may be impaired. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include deterioration in general economic conditions, adverse changes in the markets in which an entity operates, increases in input costs that have negative effects on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others. The fair value that could be realized in an actual transaction may differ from that used to evaluate the impairment of goodwill and other intangible assets. In testing goodwill for impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (more than 50%) that the estimated fair value of a reporting unit is less than its carrying amount. If we elect to perform a qualitative assessment and determine that an impairment is more likely than not, we are then required to perform a quantitative impairment test, otherwise no further analysis is required. We also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test. Under the goodwill qualitative assessment, various events and circumstances that would affect the estimated fair value of a reporting unit are identified (similar to impairment indicators above). Furthermore, management considers the results of the most recent two-step quantitative impairment test completed for a reporting unit and compares the weighted average cost of capital between the current and prior years for each reporting unit. Under the goodwill two-step quantitative impairment test, the evaluation of impairment involves comparing the current fair value of each reporting unit to its carrying value, including goodwill. The first step of the test compares the carrying value of a reporting unit, including goodwill, with its fair value. We estimate the fair value using level 3 inputs as defined by the fair value hierarchy. Refer to Note 20 for the definition of the levels in the fair value hierarchy. The inputs used to calculate the fair value include a number of subjective factors, such as estimates of future cash flows, estimates of our future cost structure, discount rates for our estimated cash flows, required level of working capital, assumed terminal value, and time horizon of cash flow forecasts. If the carrying value of a reporting unit exceeds its fair value, we complete the second step of the test to determine the amount of goodwill impairment loss, if any, to be recognized. In the second step, we estimate an implied fair value of the reporting unit’s goodwill by allocating the fair value of the reporting unit to all of the assets and liabilities other than goodwill (including any unrecognized intangible assets). The impairment loss is equal to the excess of the carrying value of the goodwill over the implied fair value of that goodwill. In the fourth quarter of fiscal 2016, in conjunction with our annual review for impairment, we performed a qualitative analysis of goodwill for the reporting units in our Consumer Foods and Commercial Foods segments. Because sales and profits for our International reporting unit were below our expectations throughout fiscal 2016, largely as a result of foreign exchange rates, we performed a quantitative analysis of goodwill on the International reporting unit in the fourth quarter of fiscal 2016. Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans, industry and economic conditions. No impairment charges were recorded in fiscal 2016. In assessing other intangible assets not subject to amortization for impairment, we have the option to perform a qualitative assessment to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of such an intangible asset is less than its carrying amount. If we determine that it is not more likely than not that the fair value of such an intangible asset is less than its carrying amount, then we are not required to perform any additional tests for assessing intangible assets for impairment. However, if we conclude otherwise or elect not to perform the qualitative assessment, then we are required to perform a quantitative impairment test that involves a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. In fiscal 2016, we elected to perform a quantitative impairment test for other intangible assets not subject to amortization. The estimates of fair value of intangible assets not subject to amortization are determined using a “relief from royalty” methodology, which is used in estimating the fair value of our brands/trademarks. Discount rate assumptions are based on an assessment of the risk inherent in the projected future cash flows generated by the respective intangible assets. Also subject to judgment are assumptions about royalty rates. Refer to Note 9 for the details of the impairment charge in fiscal 2016. Identifiable intangible assets with definite lives (e.g., licensing arrangements with contractual lives or customer relationships) are amortized over their estimated useful lives and tested for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may be impaired. Identifiable intangible assets with definite lives are 46

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