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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

Commission File Number 1-7275

CONAGRA FOODS, INC.
(Exact name of registrant, as specified in charter)

(402) 595-4000
(Registrant's telephone number, including area code)

        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  ý      No  o

        Number of shares outstanding of issuer's common stock, as of December 22, 2002, was 536,964,736.

Part I—Financial Information

Item 1. Condensed Consolidated Financial Statements

ConAgra Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
(in millions)
(unaudited)

See notes to the condensed consolidated financial statements.

2

ConAgra Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(in millions)
(unaudited)

See notes to the condensed consolidated financial statements.

3

ConAgra Foods, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in millions except per share amounts)
(unaudited)

See notes to the condensed consolidated financial statements.

4

ConAgra Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)

See notes to the condensed consolidated financial statements.

5

ConAgra Foods, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
For the Twenty-six Weeks ended November 24, 2002
(columnar dollars in millions except per share amounts)

1.    Accounting Policies

        The unaudited financial information reflects normal adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position, and cash flows for the periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the ConAgra Foods, Inc. (the "company") fiscal 2002 annual report on Form 10-K.

        The results of operations for any quarter or a partial fiscal year period are not necessarily indicative of the results to be expected for other periods or the full fiscal year. Certain prior year amounts have been reclassified in order to conform with current year classifications.

        Reclassifications—On September 19, 2002, the company sold a controlling interest in its fresh beef and pork operations to a joint venture led by outside investors (see Note 2 to the condensed consolidated financial statements). As a result of this transaction, the company will report its share of the earnings associated with its minority ownership of the joint venture as equity method investment earnings. Historically, equity method investment earnings were included in the Selling, General and Administrative ("SG&A") Expenses income statement line item. During the thirteen weeks ended November 24, 2002, the company changed the income statement classification of equity method investment earnings. Subsequent to the reclassification, equity method investment earnings are presented net of tax below the "Income Taxes" line item and are no longer included in the company's determination of reporting segment "Operating Profit". All periods presented have been reclassified to reflect this change. See Note 9 to the condensed consolidated financial statements.

        Accounting Changes—The company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets, as of the beginning of the current fiscal year. SFAS No. 142 provides that goodwill and other intangible assets with indefinite lives shall not be amortized and shall be tested for impairment of value on an annual basis. SFAS No. 142 also provides that "negative" goodwill shall be written off as part of the adoption of the new standard. Negative goodwill results from a purchase business combination where the purchase price is less than the fair value of the net assets acquired. For further discussion of the company's adoption of SFAS No. 142, see Note 3 to the condensed consolidated financial statements.

        The company adopted SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, as of the beginning of the current fiscal year. SFAS No. 144 develops an accounting model, based upon the framework established in previous accounting literature, for long-lived assets to be disposed of. The accounting model applies to all long-lived assets, including discontinued operations. SFAS No. 144 requires long-lived assets to be measured at the lower of carrying amount or fair value less costs to sell, whether reported in continuing operations or in discontinued operations. The adoption of SFAS No. 144 had no impact to the company.

        In fiscal 2002, the company adopted SFAS No. 133, Accounting for Derivative Financial Instruments and Hedging Activities, and its related amendment, SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities ("SFAS No. 133"). The adoption of SFAS No. 133 resulted in a cumulative effect of an accounting change that reduced net income by $2.0 million, and decreased accumulated other comprehensive income by $24.6 million, net of tax, in the first quarter of fiscal 2002.

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        Recently Issued Accounting Pronouncements—In August 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 143, Accounting for Asset Retirement Obligations. This statement requires the company to recognize the fair value of a liability associated with the cost the company would be obligated to incur in order to retire an asset at some point in the future. The liability would be recognized in the period in which it is incurred and can be reasonably estimated. The standard is effective for fiscal years beginning after June 15, 2002. The company expects to adopt this standard at the beginning of its fiscal 2004. The company has not yet completed its assessment of the anticipated adoption impact, if any, of SFAS No. 143.

        In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 requires companies to recognize the costs associated with exit or disposal activities when they are incurred. Currently these types of costs are recognized at the time management commits the company to the exit/disposal plan in accordance with Emerging Issues Task Force ("EITF") Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS No. 146 is effective for exit or disposal activities that are initiated subsequent to December 31, 2002. Accordingly, the company will apply the provisions of SFAS No. 146 prospectively to exit or disposal activities initiated subsequent to December 31, 2002.

        In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. FIN No. 45 clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing certain guarantees. FIN No. 45 also elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. The recognition provisions of FIN No. 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements of FIN No. 45 are effective for financial statements of interim or annual periods ending after December 15, 2002 (i.e., the company's fiscal 2003 third quarter). The company will apply the recognition provisions of FIN No. 45 prospectively to guarantees issued or modified after December 31, 2002, and will include all disclosures required by FIN No. 45 in its fiscal 2003 third quarter Form 10-Q.

        In November 2002, the FASB's EITF reached a consensus on EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables. EITF Issue No. 00-21 provides guidance for revenue arrangements that involve the delivery or performance of multiple products or services where performance may occur at different points or over different periods of time. EITF Issue No. 00-21 is effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003 (i.e., the company's fiscal 2005). The company has not yet completed its assessment of the anticipated adoption impact, if any, of EITF Issue No. 00-21.

2.    Acquisitions and Divestitures

        On September 19, 2002, the company completed a strategic transaction in which it sold a controlling interest in its fresh beef and pork operations to a joint venture led by Hicks, Muse, Tate & Furst Incorporated (the "fresh beef and pork divestiture"). Outside investors own 55% of the joint venture, and the company owns the remaining 45%. The fresh beef and pork operations were sold to the joint venture at book value. The company incurred expenses which reduced its diluted earnings per share for the second quarter of fiscal 2003 by $.03 for costs associated with the fresh beef and pork divestiture.

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        As part of the transaction, the company received:

•

$768 million in cash;



•

a 45% equity interest in the joint venture valued at approximately $147 million;



•

a $150 million subordinated promissory note receivable from a subsidiary of the joint venture maturing in seven and one-half years, with paid-in-kind interest accruing at 8% for the first five years, 9% in the sixth year and 10% thereafter;



•

a $30 million 8% secured promissory note issued by the joint venture's cattle feeding business, and;



•

a $262 million note receivable (pursuant to a secured line of credit totaling $350 million) from the joint venture's cattle feeding business carrying an interest rate of LIBOR plus 3.5%.

        In addition, the company purchased $150 million of 12.5% senior subordinated notes issued by a subsidiary of the joint venture, which effectively reduced the amount of cash received.

        The fresh beef operations sold to the joint venture include a beef processing business as well as a cattle feeding business. The purchase price associated with the cattle feeding business was financed entirely by the company with the cattle feeding-related notes cited above. Total cattle feeding-related notes receivable were approximately $350 million as of November 24, 2002, due to the joint venture's additional borrowings under the $350 million secured line of credit and the $30 million 8% secured promissory note issued by the joint venture. The cattle feeding-related notes receivable, which are collateralized by the cattle, feedlots and other assets of the cattle feeding business, mature in September 2004, and can be extended by the company for a period of at least 18 months under certain circumstances.

        Due to the purchase price of the cattle feeding business being entirely financed by the company, the legal divestiture of the cattle feeding operation has not been recognized as a divestiture for accounting purposes. In accordance with Securities and Exchange Commission ("SEC") Staff Accounting Bulletin ("SAB") Topic 5E, Accounting for Divestiture of a Subsidiary or Other Business Operation, the company has segregated the assets and liabilities associated with the cattle feeding operation on its balance sheet (after elimination of the joint venture's cattle feeding notes payable against the company's cattle feeding notes receivable). The cattle feeding operation assets have been aggregated and are presented in the company's balance sheet within "Other Assets", while its liabilities have been aggregated and are presented within "Other Noncurrent Liabilities". In accordance with SAB Topic 5E, this accounting treatment will be continued by the company until circumstances have changed sufficiently that it becomes appropriate to recognize the transaction as a divestiture for accounting purposes.

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        The company's unaudited pro forma results of operations for the twenty-six weeks ended November 24, 2002 and November 25, 2001, assuming the sale of its fresh beef and pork operations to the joint venture occurred as of the beginning of the periods presented, are as follows:

3.    Changes in Accounting Policy

        The company adopted SFAS No. 142, Goodwill and Other Intangible Assets, at the beginning of its current fiscal year. In accordance with SFAS No. 142, the company has completed its initial impairment testing of goodwill and identifiable intangible assets with indefinite lives. The company's adoption of SFAS No. 142 resulted in a cumulative effect of an accounting change that increased net income by $3.9 million, or $.01 per diluted share for the first half of fiscal 2003. The increase to net income was a result of the company recognizing its proportionate share of one of its equity investments initial goodwill impairment charge, which was offset by the company writing-off negative goodwill associated with one of its equity investments. The adoption of SFAS No. 142 increased net income for the second quarter of fiscal 2003 by approximately $30 million, or approximately $.06 per diluted share, due to the company not amortizing goodwill and identifiable intangible assets with indefinite lives. For the first half of fiscal 2003, the adoption of SFAS No. 142 increased income before cumulative effect of changes in accounting by approximately $59 million, or approximately $.11 per diluted share.

        The following is certain unaudited pro forma information assuming SFAS No. 142 had been in effect for the thirteen and twenty-six weeks ended November 25, 2001:

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4.    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. Impairment occurs when the fair value of the asset is less than its carrying amount. If impaired, the asset is written down to its fair value.

        Identifiable intangible assets with definite lives (e.g., licensing arrangements with contractual lives or customer lists) 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. Impairment occurs when the fair value of the asset is less than its carrying amount. If impaired, the asset is written down to its fair value.

        As of November 24, 2002, goodwill by reporting segment was as follows:

        As a result of the fresh beef and pork divestiture (see Note 2 above), goodwill associated with the fresh beef and pork operations (and included in the Meat Processing reporting segment) was reduced by $66.1 million. Other than the impact of the fresh beef and pork divestiture, there were no material changes in the carrying amount of goodwill during the thirteen and twenty-six weeks ended November 24, 2002.

        Other identifiable intangible assets as of November 24, 2002, were as follows:

        Non-amortizing intangible assets are primarily comprised of the company's brands/trademarks. Amortizing intangible assets, carrying a weighted average life of approximately 13 years, are principally comprised of licensing arrangements and customer lists. For the thirteen and twenty-six week periods ended November 24, 2002, the company recognized $2.2 million and $5.0 million, respectively, of amortization expense. Based on amortizing assets recognized in the company's balance sheet as of November 24, 2002, amortization expense for each of the next three years is estimated to approximate $5 million and approximately $3 million each of the following two years.

5.    Derivative Financial Instruments

        The company is exposed to market risk, such as changes in commodity prices, foreign currency exchange rates and interest rates. To manage volatility associated with these exposures, the company may enter into various derivative transactions (e.g., futures and options) pursuant to established company policies.

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        Commodity Price Management—The company is subject to raw material price fluctuations caused by supply conditions, weather, economic conditions and other factors. Generally, the company utilizes commodity futures and options contracts to reduce the volatility of commodity input prices on items such as grains, vegetable oils, livestock and energy.

        Futures and options contracts qualifying for hedge accounting and used to hedge anticipated transactions are designated as cash flow hedges with gains and losses deferred in accumulated other comprehensive income, to the extent the hedge is effective. These amounts are recognized within cost of goods sold in the period during which the hedged transaction affects earnings. Any hedge gain or loss deemed ineffective, as well as gains or losses on contracts for which the company does not qualify, or elects not to qualify, for hedge accounting, are immediately recognized within sales or cost of goods sold.

        Foreign Currency Management—In order to reduce exposures related to changes in foreign currency exchange rates, the company may enter into forward exchange or option contracts for transactions denominated in a currency other than the applicable functional currency. This includes, but is not limited to, hedging against foreign currency risk in purchasing inventory and capital equipment, sales of finished goods, and future settlement of foreign-denominated assets and liabilities.

        Hedges of anticipated foreign currency-denominated transactions are designated as cash flow hedges. The gains and losses associated with these hedges are deferred in accumulated other comprehensive income until the forecasted transaction impacts earnings. Forward exchange and option contracts are also used to hedge firm commitment transactions denominated in a currency other than the applicable functional currency. The firm commitments and foreign currency hedges are both recognized at fair value within prepaid expenses and other current assets. Gains and losses associated with firm commitment and anticipated foreign currency hedges are recognized within net sales or cost of goods sold depending on the nature of the transaction. Foreign currency derivatives for which the company has elected not to account for under hedge accounting are recorded immediately in earnings within sales, cost of goods sold or selling, general and administrative expenses, depending on the nature of the transaction.

        Interest Rate Management—In order to reduce exposures related to changes in interest rates, the company may use derivative instruments, including interest rate swaps. As of November 24, 2002, the company had interest rate swap agreements outstanding with the notional amount of these interest rate swaps totaling $2.5 billion. Of the total, $2 billion of the interest rate swaps were used to effectively convert certain of the company's fixed rate debt into floating rate debt. These interest rate swaps are accounted for as fair value hedges and result in no ineffectiveness being recognized in the income statement as the interest rate swaps' provisions match the applicable provisions of the hedged debt. The remaining $500 million of the company's interest rate swaps were used to hedge certain of the company's forecasted floating rate debt for the period of 2005 through 2011. These interest rate swaps are accounted for as cash flow hedges and any ineffectiveness associated with the interest rate swaps is immediately recognized in earnings within interest expense.

        Additional Derivative Information—The fair value of derivative assets is recognized within prepaid expenses and other current assets, while the fair value of derivative liabilities is recognized within other accrued liabilities. As of November 24, 2002, and November 25, 2001, the fair value of derivatives recognized within prepaid expenses and other current assets was

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$208.1 million and $80.6 million, respectively, while the amount recognized within other accrued liabilities was $30.7 million and $52.8 million, respectively.

        For the thirteen and twenty-six weeks ended November 24, 2002, the ineffectiveness associated with derivatives designated as both cash flow and fair value hedges was a gain of $2.6 million and $5.8 million, respectively. The ineffectiveness for the thirteen and twenty-six week periods ended November 25, 2001, was not significant. Hedge ineffectiveness is recognized within net sales, cost of goods sold or interest expense, depending on the nature of the hedge. The company does not exclude any components of the hedging instrument's gain or loss when assessing effectiveness.

        Generally, the company hedges a portion of its anticipated consumption of commodity inputs for periods of up to 12 months. The company may enter into longer-term hedges on particular commodities if deemed appropriate. As of November 24, 2002, the company had hedged certain portions of its anticipated consumption of commodity inputs through March 2005.

        As of November 24, 2002, the net deferred loss recognized in accumulated other comprehensive income was $5.1 million, net of tax. The company anticipates a gain of $6.0 million, net of tax, will be transferred out of accumulated other comprehensive income and recognized within earnings over the next 12 months. The company anticipates a loss of $11.1 million, net of tax, will be transferred out of accumulated other comprehensive income and recognized within earnings subsequent to the next 12 months. For the thirteen and twenty-six weeks ended November 24, 2002, a net of tax $5.5 million and $8.5 million loss, respectively, was transferred from accumulated other comprehensive income into earnings while for the same periods in the prior year, a net of tax $5.4 million and a $2.3 million loss was transferred from accumulated other comprehensive income into earnings, respectively.

        For the thirteen and twenty-six week periods ended November 24, 2002, the company did not discontinue any significant fair value hedges, but recognized a total of $4.5 million gain within sales and cost of goods sold related to discontinued cash flow hedges that were no longer probable of occurring as a result of the fresh beef and pork divestiture. The company did not discontinue any cash flow hedges or firm commitments for the thirteen and twenty-six week periods ended November 25, 2001.

6.    Earnings Per Share

        The following table reconciles the income and average share amounts used to compute both basic and diluted earnings per share: