UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ | |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
☐ | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
F
or the transition period from toCommission File Number: 1-7275
CONAGRA BRANDS, INC.
(Exact name of registrant as specified in its charter)
Delaware | 47-0248710 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
222 W. Merchandise Mart Plaza, Suite 1300 Chicago, Illinois | 60654 | |
(Address of principal executive offices) | (Zip Code) |
(312) 549-5000
(Registrant’sRegistrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, $5.00 par value | CAG | New York Stock Exchange |
I
ndicate 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. YesIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405(§ 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
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Number of shares outstanding of issuer’sissuer's common stock as of November 26, 2017,August 29, 2021 was 400,660,848.
Table of Contents
1 | ||||||
Item 1 | 1 | |||||
1 | ||||||
2 | ||||||
3 | ||||||
4 | ||||||
Notes to Unaudited Condensed Consolidated Financial Statements | 5 | |||||
Item 2 | Management's Discussion and Analysis of Financial Condition and Results of Operations | 22 | ||||
Item 3 | 30 | |||||
Item 4 | 31 | |||||
32 | ||||||
Item | 32 | |||||
Item 1A | 32 | |||||
Item 2 | 32 | |||||
Item 6 | 33 | |||||
34 | ||||||
Exhibit 101 Exhibit 104 |
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Conagra Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
(in millions except per share amounts)
(unaudited)
|
| Thirteen weeks ended |
| |||||
|
| August 29, 2021 |
|
| August 30, 2020 |
| ||
Net sales |
| $ | 2,653.3 |
|
| $ | 2,678.9 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Cost of goods sold |
|
| 1,979.9 |
|
|
| 1,868.7 |
|
Selling, general and administrative expenses |
|
| 310.1 |
|
|
| 300.3 |
|
Pension and postretirement non-service income |
|
| (16.1 | ) |
|
| (13.8 | ) |
Interest expense, net |
|
| 94.2 |
|
|
| 113.7 |
|
Income before income taxes and equity method investment earnings |
|
| 285.2 |
|
|
| 410.0 |
|
Income tax expense |
|
| 69.7 |
|
|
| 86.7 |
|
Equity method investment earnings |
|
| 20.2 |
|
|
| 6.5 |
|
Net income |
| $ | 235.7 |
|
| $ | 329.8 |
|
Less: Net income attributable to noncontrolling interests |
|
| 0.3 |
|
|
| 0.8 |
|
Net income attributable to Conagra Brands, Inc. |
| $ | 235.4 |
|
| $ | 329.0 |
|
Earnings per share — basic |
|
|
|
|
|
|
|
|
Net income attributable to Conagra Brands, Inc. common stockholders |
| $ | 0.49 |
|
| $ | 0.67 |
|
Earnings per share — diluted |
|
|
|
|
|
|
|
|
Net income attributable to Conagra Brands, Inc. common stockholders |
| $ | 0.49 |
|
| $ | 0.67 |
|
Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
November 26, 2017 | November 27, 2016 | November 26, 2017 | November 27, 2016 | ||||||||||||
Net sales | $ | 2,173.4 | $ | 2,088.4 | $ | 3,977.6 | $ | 3,984.0 | |||||||
Costs and expenses: | |||||||||||||||
Cost of goods sold | 1,515.1 | 1,440.9 | 2,800.3 | 2,791.9 | |||||||||||
Selling, general and administrative expenses | 307.3 | 417.9 | 546.3 | 649.6 | |||||||||||
Interest expense, net | 38.0 | 54.1 | 74.4 | 112.3 | |||||||||||
Income from continuing operations before income taxes and equity method investment earnings | 313.0 | 175.5 | 556.6 | 430.2 | |||||||||||
Income tax expense | 109.5 | 78.4 | 229.5 | 247.6 | |||||||||||
Equity method investment earnings | 20.6 | 17.2 | 50.6 | 30.3 | |||||||||||
Income from continuing operations | 224.1 | 114.3 | 377.7 | 212.9 | |||||||||||
Income from discontinued operations, net of tax | 0.4 | 11.6 | 0.1 | 103.0 | |||||||||||
Net income | $ | 224.5 | $ | 125.9 | $ | 377.8 | $ | 315.9 | |||||||
Less: Net income attributable to noncontrolling interests | 1.0 | 3.8 | 1.8 | 7.6 | |||||||||||
Net income attributable to Conagra Brands, Inc. | $ | 223.5 | $ | 122.1 | $ | 376.0 | $ | 308.3 | |||||||
Earnings per share — basic | |||||||||||||||
Income from continuing operations attributable to Conagra Brands, Inc. common stockholders | $ | 0.55 | $ | 0.26 | $ | 0.91 | $ | 0.48 | |||||||
Income from discontinued operations attributable to Conagra Brands, Inc. common stockholders | — | 0.02 | — | 0.22 | |||||||||||
Net income attributable to Conagra Brands, Inc. common stockholders | $ | 0.55 | $ | 0.28 | $ | 0.91 | $ | 0.70 | |||||||
Earnings per share — diluted | |||||||||||||||
Income from continuing operations attributable to Conagra Brands, Inc. common stockholders | $ | 0.54 | $ | 0.26 | $ | 0.91 | $ | 0.48 | |||||||
Income from discontinued operations attributable to Conagra Brands, Inc. common stockholders | — | 0.02 | — | 0.22 | |||||||||||
Net income attributable to Conagra Brands, Inc. common stockholders | $ | 0.54 | $ | 0.28 | $ | 0.91 | $ | 0.70 | |||||||
Cash dividends declared per common share | $ | 0.2125 | $ | 0.25 | $ | 0.425 | $ | 0.50 |
See Notes to the Condensed Consolidated Financial Statements.
Conagra Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(in millions)
(unaudited)
|
| Thirteen weeks ended |
| |||||||||||||||||||||
|
| August 29, 2021 |
|
| August 30, 2020 |
| ||||||||||||||||||
|
| Pre-Tax Amount |
|
| Tax (Expense) Benefit |
|
| After- Tax Amount |
|
| Pre-Tax Amount |
|
| Tax (Expense) Benefit |
|
| After- Tax Amount |
| ||||||
Net income |
| $ | 305.4 |
|
| $ | (69.7 | ) |
| $ | 235.7 |
|
| $ | 416.5 |
|
| $ | (86.7 | ) |
| $ | 329.8 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized derivative adjustments |
|
| (2.5 | ) |
|
| 0.6 |
|
|
| (1.9 | ) |
|
| (0.6 | ) |
|
| 0.1 |
|
|
| (0.5 | ) |
Reclassification for derivative adjustments included in net income |
|
| (0.3 | ) |
|
| 0.1 |
|
|
| (0.2 | ) |
|
| (0.9 | ) |
|
| 0.2 |
|
|
| (0.7 | ) |
Unrealized currency translation gains (losses) |
|
| (15.7 | ) |
|
| 0 |
|
|
| (15.7 | ) |
|
| 18.0 |
|
|
| (0.5 | ) |
|
| 17.5 |
|
Pension and post-employment benefit obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized pension and post-employment benefit obligations |
|
| 2.1 |
|
|
| (0.2 | ) |
|
| 1.9 |
|
|
| 0.4 |
|
|
| (0.1 | ) |
|
| 0.3 |
|
Reclassification for pension and post-employment benefit obligations included in net income |
|
| (0.8 | ) |
|
| 0.2 |
|
|
| (0.6 | ) |
|
| (0.8 | ) |
|
| 0.2 |
|
|
| (0.6 | ) |
Comprehensive income |
|
| 288.2 |
|
|
| (69.0 | ) |
|
| 219.2 |
|
|
| 432.6 |
|
|
| (86.8 | ) |
|
| 345.8 |
|
Comprehensive income (loss) attributable to noncontrolling interests |
|
| (0.9 | ) |
|
| (0.1 | ) |
|
| (1.0 | ) |
|
| 3.3 |
|
|
| (0.3 | ) |
|
| 3.0 |
|
Comprehensive income attributable to Conagra Brands, Inc. |
| $ | 289.1 |
|
| $ | (68.9 | ) |
| $ | 220.2 |
|
| $ | 429.3 |
|
| $ | (86.5 | ) |
| $ | 342.8 |
|
Thirteen weeks ended | |||||||||||||||||||
November 26, 2017 | November 27, 2016 | ||||||||||||||||||
Pre-Tax Amount | Tax (Expense) Benefit | After-Tax Amount | Pre-Tax Amount | Tax (Expense) Benefit | After-Tax Amount | ||||||||||||||
Net income | $ | 334.0 | $ | (109.5 | ) | $ | 224.5 | $ | 243.2 | $ | (117.3 | ) | $ | 125.9 | |||||
Other comprehensive income: | |||||||||||||||||||
Derivative adjustments: | |||||||||||||||||||
Unrealized derivative adjustments | 1.0 | (0.4 | ) | 0.6 | 2.2 | (0.9 | ) | 1.3 | |||||||||||
Reclassification for derivative adjustments included in net income | 0.1 | — | 0.1 | — | — | — | |||||||||||||
Unrealized gains on available-for-sale securities | 0.4 | (0.2 | ) | 0.2 | 0.2 | — | 0.2 | ||||||||||||
Unrealized currency translation losses | (12.7 | ) | 0.1 | (12.6 | ) | (14.1 | ) | — | (14.1 | ) | |||||||||
Pension and post-employment benefit obligations: | |||||||||||||||||||
Unrealized pension and post-employment benefit obligations | 43.4 | (16.6 | ) | 26.8 | 66.8 | (25.6 | ) | 41.2 | |||||||||||
Reclassification for pension and post-employment benefit obligations included in net income | (0.2 | ) | 0.1 | (0.1 | ) | (0.9 | ) | 0.4 | (0.5 | ) | |||||||||
Comprehensive income | 366.0 | (126.5 | ) | 239.5 | 297.4 | (143.4 | ) | 154.0 | |||||||||||
Comprehensive income attributable to noncontrolling interests | 0.4 | (0.4 | ) | — | 2.2 | (0.1 | ) | 2.1 | |||||||||||
Comprehensive income attributable to Conagra Brands, Inc. | $ | 365.6 | $ | (126.1 | ) | $ | 239.5 | $ | 295.2 | $ | (143.3 | ) | $ | 151.9 |
Twenty-six weeks ended | |||||||||||||||||||
November 26, 2017 | November 27, 2016 | ||||||||||||||||||
Pre-Tax Amount | Tax (Expense) Benefit | After-Tax Amount | Pre-Tax Amount | Tax (Expense) Benefit | After-Tax Amount | ||||||||||||||
Net income | $ | 607.4 | $ | (229.6 | ) | $ | 377.8 | $ | 651.2 | $ | (335.3 | ) | $ | 315.9 | |||||
Other comprehensive income: | |||||||||||||||||||
Derivative adjustments: | |||||||||||||||||||
Unrealized derivative adjustments | 1.0 | (0.4 | ) | 0.6 | (5.8 | ) | 2.2 | (3.6 | ) | ||||||||||
Reclassification for derivative adjustments included in net income | 0.1 | — | 0.1 | — | — | — | |||||||||||||
Unrealized gains on available-for-sale securities | 0.7 | (0.3 | ) | 0.4 | 0.4 | (0.1 | ) | 0.3 | |||||||||||
Unrealized currency translation gains (losses) | 19.9 | — | 19.9 | (26.0 | ) | 0.2 | (25.8 | ) | |||||||||||
Pension and post-employment benefit obligations: | |||||||||||||||||||
Unrealized pension and post-employment benefit obligations | 43.5 | (16.6 | ) | 26.9 | 64.7 | (25.5 | ) | 39.2 | |||||||||||
Reclassification for pension and post-employment benefit obligations included in net income | (0.3 | ) | 0.1 | (0.2 | ) | (1.8 | ) | 0.7 | (1.1 | ) | |||||||||
Comprehensive income | 672.3 | (246.8 | ) | 425.5 | 682.7 | (357.8 | ) | 324.9 | |||||||||||
Comprehensive income attributable to noncontrolling interests | 2.4 | (0.6 | ) | 1.8 | 6.0 | (0.2 | ) | 5.8 | |||||||||||
Comprehensive income attributable to Conagra Brands, Inc. | $ | 669.9 | $ | (246.2 | ) | $ | 423.7 | $ | 676.7 | $ | (357.6 | ) | $ | 319.1 |
See Notes to the Condensed Consolidated Financial Statements.
Conagra Brands, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in millions except share data)
(unaudited)
|
| August 29, 2021 |
|
| May 30, 2021 |
| ||
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 67.0 |
|
| $ | 79.2 |
|
Receivables, less allowance for doubtful accounts of $3.2 |
|
| 834.4 |
|
|
| 793.9 |
|
Inventories |
|
| 1,954.6 |
|
|
| 1,734.0 |
|
Prepaid expenses and other current assets |
|
| 116.2 |
|
|
| 95.0 |
|
Total current assets |
|
| 2,972.2 |
|
|
| 2,702.1 |
|
Property, plant and equipment |
|
| 5,707.9 |
|
|
| 5,624.7 |
|
Less accumulated depreciation |
|
| (3,061.7 | ) |
|
| (3,016.2 | ) |
Property, plant and equipment, net |
|
| 2,646.2 |
|
|
| 2,608.5 |
|
Goodwill |
|
| 11,369.2 |
|
|
| 11,373.5 |
|
Brands, trademarks and other intangibles, net |
|
| 4,140.7 |
|
|
| 4,157.6 |
|
Other assets |
|
| 1,407.0 |
|
|
| 1,349.3 |
|
Noncurrent assets held for sale |
|
| 4.6 |
|
|
| 4.6 |
|
|
| $ | 22,539.9 |
|
| $ | 22,195.6 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Notes payable |
| $ | 458.6 |
|
| $ | 707.4 |
|
Current installments of long-term debt |
|
| 21.9 |
|
|
| 23.1 |
|
Accounts payable |
|
| 1,674.4 |
|
|
| 1,655.9 |
|
Accrued payroll |
|
| 105.6 |
|
|
| 175.2 |
|
Other accrued liabilities |
|
| 829.8 |
|
|
| 744.6 |
|
Total current liabilities |
|
| 3,090.3 |
|
|
| 3,306.2 |
|
Senior long-term debt, excluding current installments |
|
| 8,779.6 |
|
|
| 8,275.2 |
|
Other noncurrent liabilities |
|
| 2,034.1 |
|
|
| 1,982.8 |
|
Total liabilities |
|
| 13,904.0 |
|
|
| 13,564.2 |
|
Common stockholders' equity |
|
|
|
|
|
|
|
|
Common stock of $5 par value, authorized 1,200,000,000 shares; issued 584,219,229 |
|
| 2,921.2 |
|
|
| 2,921.2 |
|
Additional paid-in capital |
|
| 2,305.0 |
|
|
| 2,342.1 |
|
Retained earnings |
|
| 6,348.3 |
|
|
| 6,262.6 |
|
Accumulated other comprehensive income (loss) |
|
| (9.4 | ) |
|
| 5.8 |
|
Less treasury stock, at cost, 104,529,448 and 103,934,839 common shares |
|
| (3,008.1 | ) |
|
| (2,979.9 | ) |
Total Conagra Brands, Inc. common stockholders' equity |
|
| 8,557.0 |
|
|
| 8,551.8 |
|
Noncontrolling interests |
|
| 78.9 |
|
|
| 79.6 |
|
Total stockholders' equity |
|
| 8,635.9 |
|
|
| 8,631.4 |
|
|
| $ | 22,539.9 |
|
| $ | 22,195.6 |
|
November 26, 2017 | May 28, 2017 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 84.0 | $ | 251.4 | |||
Receivables, less allowance for doubtful accounts of $3.4 and $3.1 | 683.8 | 563.4 | |||||
Inventories | 1,059.2 | 934.2 | |||||
Prepaid expenses and other current assets | 183.5 | 228.7 | |||||
Current assets held for sale | 45.8 | 35.5 | |||||
Total current assets | 2,056.3 | 2,013.2 | |||||
Property, plant and equipment | 4,236.8 | 4,261.9 | |||||
Less accumulated depreciation | (2,594.8 | ) | (2,606.9 | ) | |||
Property, plant and equipment, net | 1,642.0 | 1,655.0 | |||||
Goodwill | 4,457.0 | 4,301.1 | |||||
Brands, trademarks and other intangibles, net | 1,298.2 | 1,229.3 | |||||
Other assets | 846.1 | 790.6 | |||||
Noncurrent assets held for sale | 100.5 | 107.1 | |||||
$ | 10,400.1 | $ | 10,096.3 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities | |||||||
Notes payable | $ | 67.1 | $ | 28.2 | |||
Current installments of long-term debt | 198.8 | 199.0 | |||||
Accounts payable | 886.7 | 773.1 | |||||
Accrued payroll | 131.9 | 167.6 | |||||
Other accrued liabilities | 565.8 | 552.6 | |||||
Total current liabilities | 1,850.3 | 1,720.5 | |||||
Senior long-term debt, excluding current installments | 3,065.9 | 2,573.3 | |||||
Subordinated debt | 195.9 | 195.9 | |||||
Other noncurrent liabilities | 1,501.5 | 1,528.8 | |||||
Total liabilities | 6,613.6 | 6,018.5 | |||||
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 | 1,166.8 | 1,171.9 | |||||
Retained earnings | 4,464.3 | 4,247.0 | |||||
Accumulated other comprehensive loss | (165.2 | ) | (212.9 | ) | |||
Less treasury stock, at cost, 167,246,324 and 151,387,209 common shares | (4,607.9 | ) | (4,054.9 | ) | |||
Total Conagra Brands, Inc. common stockholders' equity | 3,697.7 | 3,990.8 | |||||
Noncontrolling interests | 88.8 | 87.0 | |||||
Total stockholders' equity | 3,786.5 | 4,077.8 | |||||
$ | 10,400.1 | $ | 10,096.3 |
See Notes to the Condensed Consolidated Financial Statements.
Conagra Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
|
| Thirteen weeks ended |
| |||||
|
| August 29, 2021 |
|
| August 30, 2020 |
| ||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
| $ | 235.7 |
|
| $ | 329.8 |
|
Adjustments to reconcile net income to net cash flows from operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 96.5 |
|
|
| 95.2 |
|
Asset impairment charges |
|
| 0.7 |
|
|
| 3.4 |
|
Equity method investment earnings less than (in excess of) distributions |
|
| (7.4 | ) |
|
| 4.0 |
|
Stock-settled share-based payments expense |
|
| 2.6 |
|
|
| 16.5 |
|
Contributions to pension plans |
|
| (2.9 | ) |
|
| (5.9 | ) |
Pension benefit |
|
| (12.4 | ) |
|
| (9.6 | ) |
Other items |
|
| 1.4 |
|
|
| 24.3 |
|
Change in operating assets and liabilities excluding effects of business acquisitions and dispositions: |
|
|
|
|
|
|
|
|
Receivables |
|
| (40.5 | ) |
|
| 52.4 |
|
Inventories |
|
| (220.7 | ) |
|
| (202.8 | ) |
Deferred income taxes and income taxes payable, net |
|
| 57.6 |
|
|
| 15.6 |
|
Prepaid expenses and other current assets |
|
| (19.8 | ) |
|
| (16.7 | ) |
Accounts payable |
|
| 64.8 |
|
|
| 20.8 |
|
Accrued payroll |
|
| (69.5 | ) |
|
| (79.1 | ) |
Other accrued liabilities |
|
| 53.7 |
|
|
| 36.6 |
|
Net cash flows from operating activities |
|
| 139.8 |
|
|
| 284.5 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
| (154.9 | ) |
|
| (145.5 | ) |
Sale of property, plant and equipment |
|
| 1.9 |
|
|
| 0.6 |
|
Purchase of marketable securities |
|
| (1.9 | ) |
|
| (1.5 | ) |
Sale of marketable securities |
|
| 0 |
|
|
| 3.4 |
|
Other items |
|
| 0 |
|
|
| 0.1 |
|
Net cash flows from investing activities |
|
| (154.9 | ) |
|
| (142.9 | ) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Issuances of commercial paper, maturities greater than 90 days |
|
| 249.8 |
|
|
| 0 |
|
Net repayments of other short-term borrowings |
|
| (498.6 | ) |
|
| (0.5 | ) |
Issuance of long-term debt |
|
| 499.1 |
|
|
| 0 |
|
Repayment of long-term debt |
|
| (23.7 | ) |
|
| (133.4 | ) |
Debt issuance costs |
|
| (1.9 | ) |
|
| 0 |
|
Repurchase of Conagra Brands, Inc. common shares |
|
| (50.0 | ) |
|
| 0 |
|
Payment of intangible asset financing arrangement |
|
| (12.6 | ) |
|
| (12.9 | ) |
Cash dividends paid |
|
| (132.1 | ) |
|
| (103.5 | ) |
Exercise of stock options and issuance of other stock awards, including tax withholdings |
|
| (17.6 | ) |
|
| (9.3 | ) |
Other items |
|
| (6.9 | ) |
|
| 0 |
|
Net cash flows from financing activities |
|
| 5.5 |
|
|
| (259.6 | ) |
Effect of exchange rate changes on cash and cash equivalents and restricted cash |
|
| (2.6 | ) |
|
| 2.9 |
|
Net change in cash and cash equivalents and restricted cash |
|
| (12.2 | ) |
|
| (115.1 | ) |
Cash and cash equivalents and restricted cash at beginning of period |
|
| 80.2 |
|
|
| 554.3 |
|
Cash and cash equivalents and restricted cash at end of period |
| $ | 68.0 |
|
| $ | 439.2 |
|
Twenty-six weeks ended | |||||||
November 26, 2017 | November 27, 2016 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 377.8 | $ | 315.9 | |||
Income from discontinued operations | 0.1 | 103.0 | |||||
Income from continuing operations | 377.7 | 212.9 | |||||
Adjustments to reconcile income from continuing operations to net cash flows from operating activities: | |||||||
Depreciation and amortization | 129.0 | 133.5 | |||||
Asset impairment charges | 8.8 | 211.9 | |||||
Gain on divestitures | — | (197.5 | ) | ||||
Loss on extinguishment of debt | — | 60.6 | |||||
Earnings of affiliates in excess of distributions | (50.6 | ) | (23.4 | ) | |||
Stock-settled share-based payments expense | 17.7 | 18.3 | |||||
Contributions to pension plans | (6.1 | ) | (5.9 | ) | |||
Pension benefit | (21.5 | ) | (20.6 | ) | |||
Other items | 3.8 | 23.9 | |||||
Change in operating assets and liabilities excluding effects of business acquisitions and dispositions: | |||||||
Receivables | (109.8 | ) | (49.2 | ) | |||
Inventories | (130.5 | ) | (32.2 | ) | |||
Deferred income taxes and income taxes payable, net | 95.3 | 183.5 | |||||
Prepaid expenses and other current assets | 0.1 | 0.2 | |||||
Accounts payable | 132.3 | 71.7 | |||||
Accrued payroll | (39.7 | ) | (95.5 | ) | |||
Other accrued liabilities | (1.8 | ) | (31.6 | ) | |||
Net cash flows from operating activities — continuing operations | 404.7 | 460.6 | |||||
Net cash flows from operating activities — discontinued operations | 16.0 | 81.6 | |||||
Net cash flows from operating activities | 420.7 | 542.2 | |||||
Cash flows from investing activities: | |||||||
Additions to property, plant and equipment | (123.4 | ) | (118.3 | ) | |||
Sale of property, plant and equipment | 6.9 | 11.3 | |||||
Proceeds from divestitures | — | 489.1 | |||||
Purchase of businesses | (249.6 | ) | (108.2 | ) | |||
Net cash flows from investing activities — continuing operations | (366.1 | ) | 273.9 | ||||
Net cash flows from investing activities — discontinued operations | — | (123.7 | ) | ||||
Net cash flows from investing activities | (366.1 | ) | 150.2 | ||||
Cash flows from financing activities: | |||||||
Net short-term borrowings | 38.9 | (7.2 | ) | ||||
Issuance of long-term debt, net of debt issuance costs | 497.4 | — | |||||
Repayment of long-term debt | (4.8 | ) | (555.8 | ) | |||
Payment of intangible asset financing arrangement | (14.4 | ) | (14.9 | ) | |||
Repurchase of Conagra Brands, Inc. common shares | (580.0 | ) | (170.1 | ) | |||
Cash dividends paid | (171.6 | ) | (219.4 | ) | |||
Exercise of stock options and issuance of other stock awards, including tax withholdings | 4.0 | 47.4 | |||||
Net cash flows from financing activities — continuing operations | (230.5 | ) | (920.0 | ) | |||
Net cash flows from financing activities — discontinued operations | — | 839.1 | |||||
Net cash flows from financing activities | (230.5 | ) | (80.9 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 8.5 | (3.5 | ) | ||||
Net change in cash and cash equivalents | (167.4 | ) | 608.0 | ||||
Add: Cash balance included in assets held for sale and discontinued operations at beginning of period | — | 36.4 | |||||
Less: Cash balance included in assets held for sale and discontinued operations at end of period | — | — | |||||
Cash and cash equivalents at beginning of period | 251.4 | 798.1 | |||||
Cash and cash equivalents at end of period | $ | 84.0 | $ | 1,442.5 |
See Notes to the Condensed Consolidated Financial Statements.
Conagra Brands, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(columnar dollars in millions except per share amounts)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The unaudited financial information reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position, and cash flows for the periods presented. The adjustments are of a normal recurring nature, except as otherwise noted. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related notes included in the Conagra Brands, Inc. (formerly ConAgra Foods, Inc.(the "Company", the "Company""Conagra Brands", "we", "us", or "our") Annual Report on Form 10-K for the fiscal year ended
The results of operations for any quarter or a partial fiscal year period are not necessarily indicative of the results to be expected for other periods or the full fiscal year.
Basis of Consolidation
— The Condensed Consolidated Financial Statements include the accounts of Conagra BrandsRevenue Recognition — Our revenues primarily consist of the Company's interest in Lamb Westonsale of food products that are sold to holdersretailers and foodservice customers through direct sales forces, broker, and distributor arrangements. These revenue contracts generally have single performance obligations. Revenue, which includes shipping and handling charges billed to the customer, is reported net of sharesconsideration payable to our customers, including applicable discounts, returns, allowances, trade promotion, consumer coupon redemption, unsaleable product, and other costs. Amounts billed and due from our customers are classified as receivables and require payment on a short-term basis and, therefore, we do not have any significant financing components.
We recognize revenue when (or as) performance obligations are satisfied by transferring control of the Company's common stock as of November 1, 2016 (the "Spinoff"). In accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), the results of operationsgoods to customers. Control is transferred upon delivery of the Lamb Weston operationsgoods to the customer. Shipping and/or handling costs that occur before the customer obtains control of the goods are presenteddeemed to be fulfillment activities and are accounted for as discontinued operationsfulfillment costs. We assess the goods and services promised in our customers' purchase orders and identify a performance obligation for each promise to transfer a good or service (or bundle of goods or services) that is distinct.
We offer various forms of trade promotions and the methodologies for determining these provisions are dependent on local customer pricing and promotional practices, which range from contractually fixed percentage price reductions to provisions based on actual occurrence or performance. Our promotional activities are conducted either through the retail trade or directly with consumers and include activities such as such, have been excluded from continuing operationsin-store displays and segment results for all periods presented (see Note 3 for additional discussion).
Comprehensive Income
— Comprehensive income includes net income, currency translation adjustments, certain derivative-related activity,The following table details the accumulated balances for each component of other comprehensive income (loss), net of tax:
November 26, 2017 | May 28, 2017 | ||||||
Currency translation losses, net of reclassification adjustments | $ | (78.7 | ) | $ | (98.6 | ) | |
Derivative adjustments, net of reclassification adjustments | (0.4 | ) | (1.1 | ) | |||
Unrealized gains (losses) on available-for-sale securities | 0.1 | (0.3 | ) | ||||
Pension and post-employment benefit obligations, net of reclassification adjustments | (86.2 | ) | (112.9 | ) | |||
Accumulated other comprehensive loss | $ | (165.2 | ) | $ | (212.9 | ) |
|
| August 29, 2021 |
|
| May 30, 2021 |
| ||
Currency translation losses, net of reclassification adjustments |
| $ | (91.5 | ) |
| $ | (77.1 | ) |
Derivative adjustments, net of reclassification adjustments |
|
| 22.2 |
|
|
| 24.3 |
|
Pension and postretirement benefit obligations, net of reclassification adjustments |
|
| 59.9 |
|
|
| 58.6 |
|
Accumulated other comprehensive income (loss) |
| $ | (9.4 | ) |
| $ | 5.8 |
|
The following table summarizes the reclassifications from accumulated other comprehensive income (loss) into operations:income:
|
| Thirteen weeks ended |
|
| Affected Line Item in the Condensed Consolidated Statement of Earnings1 | |||||
|
| August 29, 2021 |
|
| August 30, 2020 |
|
|
| ||
Net derivative adjustments: |
|
|
|
|
|
|
|
|
|
|
Cash flow hedges |
| $ | (0.8 | ) |
| $ | (0.9 | ) |
| Interest expense, net |
Cash flow hedges |
|
| 0.5 |
|
|
| 0 |
|
| Equity method investment earnings |
|
|
| (0.3 | ) |
|
| (0.9 | ) |
| Total before tax |
|
|
| 0.1 |
|
|
| 0.2 |
|
| Income tax expense |
|
| $ | (0.2 | ) |
| $ | (0.7 | ) |
| Net of tax |
Pension and postretirement liabilities: |
|
|
|
|
|
|
|
|
|
|
Net prior service cost |
| $ | 0 |
|
| $ | 0.1 |
|
| Pension and postretirement non-service income |
Net actuarial gain |
|
| (0.8 | ) |
|
| (0.9 | ) |
| Pension and postretirement non-service income |
|
|
| (0.8 | ) |
|
| (0.8 | ) |
| Total before tax |
|
|
| 0.2 |
|
|
| 0.2 |
|
| Income tax expense |
|
| $ | (0.6 | ) |
| $ | (0.6 | ) |
| Net of tax |
Thirteen weeks ended | Affected Line Item in the Condensed Consolidated Statement of Earnings1 | |||||||||
November 26, 2017 | November 27, 2016 | |||||||||
Net derivative adjustment, net of tax: | ||||||||||
Cash flow hedges | $ | 0.1 | $ | — | Interest expense, net | |||||
0.1 | — | Total before tax | ||||||||
— | — | Income tax expense | ||||||||
$ | 0.1 | $ | — | Net of tax | ||||||
Pension and postretirement liabilities: | ||||||||||
Net prior service benefit | $ | (0.2 | ) | $ | (0.9 | ) | Selling, general and administrative expenses | |||
(0.2 | ) | (0.9 | ) | Total before tax | ||||||
0.1 | 0.4 | Income tax expense | ||||||||
$ | (0.1 | ) | $ | (0.5 | ) | Net of tax |
Twenty-six weeks ended | Affected Line Item in the Condensed Consolidated Statement of Earnings1 | |||||||||
November 26, 2017 | November 27, 2016 | |||||||||
Net derivative adjustment, net of tax: | ||||||||||
Cash flow hedges | $ | 0.1 | $ | — | Interest expense, net | |||||
0.1 | — | Total before tax | ||||||||
— | — | Income tax expense | ||||||||
$ | 0.1 | $ | — | Net of tax | ||||||
Pension and postretirement liabilities: | ||||||||||
Net prior service benefit | $ | (0.3 | ) | $ | (1.8 | ) | Selling, general and administrative expenses | |||
(0.3 | ) | (1.8 | ) | Total before tax | ||||||
0.1 | 0.7 | Income tax expense | ||||||||
$ | (0.2 | ) | $ | (1.1 | ) | Net of tax |
1
Amounts in parentheses indicate income recognized in the Condensed Consolidated Statements of Earnings.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.Reclassifications and other changes
— Certain prior year amounts have been reclassified to conform with current year presentation.Use of Estimates
— Preparation of financial statements in conformity with U.S.2. DIVESTITURES AND ASSETS HELD FOR SALE
Divestitures
During the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-11,
During the Grocery & Snacks segment.
During the second quarter of fiscal 2018, 2021, we entered into a definitive agreement to acquirecompleted the
Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
November 26, 2017 | November 27, 2016 | November 26, 2017 | November 27, 2016 | ||||||||||||
Net sales | $ | — | $ | 636.0 | $ | — | $ | 1,407.9 | |||||||
Income (loss) from discontinued operations before income taxes and equity method investment earnings | $ | — | $ | 46.3 | $ | (0.3 | ) | $ | 175.1 | ||||||
Income (loss) before income taxes and equity method investment earnings | — | 46.3 | (0.3 | ) | 175.1 | ||||||||||
Income tax expense (benefit) | — | 39.1 | (0.1 | ) | 88.6 | ||||||||||
Equity method investment earnings | — | 5.3 | — | 15.9 | |||||||||||
Income (loss) from discontinued operations, net of tax | — | 12.5 | (0.2 | ) | 102.4 | ||||||||||
Less: Net income attributable to noncontrolling interests | — | 3.2 | — | 6.8 | |||||||||||
Net income (loss) from discontinued operations attributable to Conagra Brands, Inc. | $ | — | $ | 9.3 | $ | (0.2 | ) | $ | 95.6 |
Other Assets Held for Sale
From time to time, we actively market certain customary closing conditions, including the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). Onother assets. Balances totaling $4.6 million at both August 28, 2017, Smucker29, 2021 and the Company each received a request for additional information under the HSR Act (a "second request") from the U.S. Federal Trade Commission ("FTC") in connection with the FTC's review of the transaction. The agreement for the sale of the
3. RESTRUCTURING ACTIVITIES
Pinnacle Integration Restructuring Plan
In December2018, our Condensed Consolidated Balance SheetsBoard of Directors (the "Board") approved a restructuring and integration plan related to the
incur material charges for exit and disposal activities under U.S. GAAP. We expect to incur approximately $357.0 million of charges ($283.2 million of cash charges and $73.8 million of non-cash charges) for actions identified to date under the Pinnacle Integration Restructuring Plan. The Board and/or our senior management have authorized incurrence of these charges. In the first quarter of fiscal 2022 and 2021, we recognized charges of $7.3 million and $8.6 million, respectively, in connection with the Pinnacle Integration Restructuring Plan. We expect to incur costs related to the Pinnacle Integration Restructuring Plan over a multi-year period.
We anticipate that we will recognize the following pre-tax expenses in association with the Pinnacle Integration Restructuring Plan (amounts include charges recognized from plan inception through the first quarter of fiscal 2022):
|
| Grocery & Snacks |
|
| Refrigerated & Frozen |
|
| International |
|
| Corporate |
|
| Total |
| |||||
Accelerated depreciation |
| $ | 7.6 |
|
| $ | 4.6 |
|
| $ | — |
|
| $ | — |
|
| $ | 12.2 |
|
Other cost of goods sold |
|
| 3.8 |
|
|
| 7.1 |
|
|
| 0.7 |
|
|
| — |
|
|
| 11.6 |
|
Total cost of goods sold |
|
| 11.4 |
|
|
| 11.7 |
|
|
| 0.7 |
|
|
| — |
|
|
| 23.8 |
|
Severance and related costs |
|
| — |
|
|
| 3.5 |
|
|
| 1.5 |
|
|
| 112.2 |
|
|
| 117.2 |
|
Asset impairment (net of gains on disposal) |
|
| 30.3 |
|
|
| 4.0 |
|
|
| — |
|
|
| 2.6 |
|
|
| 36.9 |
|
Accelerated depreciation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 7.4 |
|
|
| 7.4 |
|
Contract/lease termination |
|
| 7.7 |
|
|
| 8.2 |
|
|
| 0.8 |
|
|
| 16.1 |
|
|
| 32.8 |
|
Consulting/professional fees |
|
| 1.0 |
|
|
| — |
|
|
| 0.8 |
|
|
| 105.7 |
|
|
| 107.5 |
|
Other selling, general and administrative expenses |
|
| 5.9 |
|
|
| 4.5 |
|
|
| 0.3 |
|
|
| 20.7 |
|
|
| 31.4 |
|
Total selling, general and administrative expenses |
|
| 44.9 |
|
|
| 20.2 |
|
|
| 3.4 |
|
|
| 264.7 |
|
|
| 333.2 |
|
Consolidated total |
| $ | 56.3 |
|
| $ | 31.9 |
|
| $ | 4.1 |
|
| $ | 264.7 |
|
| $ | 357.0 |
|
November 26, 2017 | May 28, 2017 | ||||||
Current assets | $ | 45.8 | $ | 35.5 | |||
Noncurrent assets (including goodwill of $74.5 million) | 95.5 | 95.5 |
During the first quarter of fiscal 2017,2022, we completedrecognized the salesfollowing pre-tax expenses for the Pinnacle Integration Restructuring Plan:
|
| Grocery & Snacks |
|
| Refrigerated & Frozen |
|
| Corporate |
|
| Total |
| ||||
Other cost of goods sold |
| $ | — |
|
| $ | 0.1 |
|
| $ | — |
|
| $ | 0.1 |
|
Total cost of goods sold |
|
| — |
|
|
| 0.1 |
|
|
| — |
|
|
| 0.1 |
|
Severance and related costs |
|
| — |
|
|
| — |
|
|
| (0.2 | ) |
|
| (0.2 | ) |
Contract/lease termination |
|
| — |
|
|
| — |
|
|
| 0.2 |
|
|
| 0.2 |
|
Consulting/professional fees |
|
| 0.1 |
|
|
| — |
|
|
| 5.7 |
|
|
| 5.8 |
|
Other selling, general and administrative expenses |
|
| 0.1 |
|
|
| 0.8 |
|
|
| 0.5 |
|
|
| 1.4 |
|
Total selling, general and administrative expenses |
|
| 0.2 |
|
|
| 0.8 |
|
|
| 6.2 |
|
|
| 7.2 |
|
Consolidated total |
| $ | 0.2 |
|
| $ | 0.9 |
|
| $ | 6.2 |
|
| $ | 7.3 |
|
All of these charges have resulted or will result in cash outflows.
We recognized the following cumulative (plan inception to August 29, 2021) pre-tax expenses for the Pinnacle Integration Restructuring Plan in our Spicetec Flavors & Seasonings business ("Spicetec")Condensed Consolidated Statement of Earnings:
|
| Grocery & Snacks |
|
| Refrigerated & Frozen |
|
| International |
|
| Corporate |
|
| Total |
| |||||
Accelerated depreciation |
| $ | 0.6 |
|
| $ | 4.6 |
|
| $ | — |
|
| $ | — |
|
| $ | 5.2 |
|
Other cost of goods sold |
|
| 2.3 |
|
|
| 3.0 |
|
|
| 0.7 |
|
|
| — |
|
|
| 6.0 |
|
Total cost of goods sold |
|
| 2.9 |
|
|
| 7.6 |
|
|
| 0.7 |
|
|
| — |
|
|
| 11.2 |
|
Severance and related costs |
|
| — |
|
|
| 3.4 |
|
|
| 1.5 |
|
|
| 112.2 |
|
|
| 117.1 |
|
Asset impairment (net of gains on disposal) |
|
| 0.3 |
|
|
| 4.0 |
|
|
| — |
|
|
| 2.6 |
|
|
| 6.9 |
|
Accelerated depreciation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 7.4 |
|
|
| 7.4 |
|
Contract/lease termination |
|
| 1.8 |
|
|
| — |
|
|
| 0.8 |
|
|
| 16.1 |
|
|
| 18.7 |
|
Consulting/professional fees |
|
| 0.8 |
|
|
| — |
|
|
| 0.8 |
|
|
| 95.2 |
|
|
| 96.8 |
|
Other selling, general and administrative expenses |
|
| 2.9 |
|
|
| 1.9 |
|
|
| 0.3 |
|
|
| 17.8 |
|
|
| 22.9 |
|
Total selling, general and administrative expenses |
|
| 5.8 |
|
|
| 9.3 |
|
|
| 3.4 |
|
|
| 251.3 |
|
|
| 269.8 |
|
Consolidated total |
| $ | 8.7 |
|
| $ | 16.9 |
|
| $ | 4.1 |
|
| $ | 251.3 |
|
| $ | 281.0 |
|
Included in the above results are $248.2 million of charges that have resulted or will result in cash outflows and our JM Swank business, each of which was part of our Commercial segment. Through$32.8 million in non-cash charges.
Liabilities recorded for the secondPinnacle Integration Restructuring Plan and changes therein for the first quarter of fiscal 2017, we received $329.8 million and $159.3 million, respectively, in cash, net of cash included in the dispositions. We recognized pre-tax gains from the sales of $144.8 million and $52.9 million, respectively, in the first half of2022 were as follows:
|
| Balance at May 30, 2021 |
|
| Costs Incurred and Charged to Expense |
|
| Costs Paid or Otherwise Settled |
|
| Changes in Estimates |
|
| Balance at August 29, 2021 |
| |||||
Severance and related costs |
| $ | 5.1 |
|
| $ | — |
|
| $ | (0.9 | ) |
| $ | (0.2 | ) |
| $ | 4.0 |
|
Contract/lease termination |
|
| — |
|
|
| 0.2 |
|
|
| (0.2 | ) |
|
| — |
|
|
| — |
|
Consulting/professional fees |
|
| 3.9 |
|
|
| 5.8 |
|
|
| (5.3 | ) |
|
| — |
|
|
| 4.4 |
|
Other costs |
|
| — |
|
|
| 1.5 |
|
|
| (1.5 | ) |
|
| — |
|
|
| — |
|
Total |
| $ | 9.0 |
|
| $ | 7.5 |
|
| $ | (7.9 | ) |
| $ | (0.2 | ) |
| $ | 8.4 |
|
Conagra Restructuring Plan
In fiscal 2017. We entered into transition services agreements2019, senior management initiated a restructuring plan (the "Conagra Restructuring Plan") for costs incurred in connection with the sales of these businesses and recognized $0.2 million of income during the first half of fiscal 2018 and $1.0 million during the second quarter and first half of fiscal 2017, classified withinactions taken to improve selling, general and administrative expenses.
We anticipate that we will recognize the following pre-tax expenses in association with the SCAEConagra Restructuring Plan related to our continuing operations (amounts include charges recognized from plan inception through the first half of fiscal 2018):
Grocery & Snacks | Refrigerated & Frozen | International | Foodservice | Corporate | Total | ||||||||||||||||||
Pension costs | $ | 32.9 | $ | 1.5 | $ | — | $ | — | $ | — | $ | 34.4 | |||||||||||
Accelerated depreciation | 32.2 | 18.6 | — | — | 1.2 | 52.0 | |||||||||||||||||
Other cost of goods sold | 10.0 | 2.1 | — | — | — | 12.1 | |||||||||||||||||
Total cost of goods sold | 75.1 | 22.2 | — | — | 1.2 | 98.5 | |||||||||||||||||
Severance and related costs, net | 26.0 | 10.3 | 3.4 | 7.9 | 103.4 | 151.0 | |||||||||||||||||
Fixed asset impairment (net of gains on disposal) | 5.9 | 6.9 | — | — | 11.2 | 24.0 | |||||||||||||||||
Accelerated depreciation | — | — | — | — | 4.7 | 4.7 | |||||||||||||||||
Contract/lease cancellation expenses | 0.9 | 0.6 | 0.6 | — | 86.2 | 88.3 | |||||||||||||||||
Consulting/professional fees | 1.1 | 0.4 | 0.1 | — | 54.1 | 55.7 | |||||||||||||||||
Other selling, general and administrative expenses | 16.1 | 3.2 | — | — | 23.3 | 42.6 | |||||||||||||||||
Total selling, general and administrative expenses | 50.0 | 21.4 | 4.1 | 7.9 | 282.9 | 366.3 | |||||||||||||||||
Consolidated total | $ | 125.1 | $ | 43.6 | $ | 4.1 | $ | 7.9 | $ | 284.1 | $ | 464.8 |
|
| Grocery & Snacks |
|
| Refrigerated & Frozen |
|
| International |
|
| Foodservice |
|
| Corporate |
|
| Total |
| ||||||
Accelerated depreciation |
| $ | 34.7 |
|
| $ | 39.1 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 73.8 |
|
Other cost of goods sold |
|
| 8.9 |
|
|
| 1.3 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 10.2 |
|
Total cost of goods sold |
|
| 43.6 |
|
|
| 40.4 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 84.0 |
|
Severance and related costs | �� |
| 12.6 |
|
|
| 1.1 |
|
|
| 1.1 |
|
|
| 0.3 |
|
|
| 2.6 |
|
|
| 17.7 |
|
Asset impairment (net of gains on disposal) |
|
| 26.9 |
|
|
| 0.3 |
|
|
| 0.1 |
|
|
| — |
|
|
| — |
|
|
| 27.3 |
|
Contract/lease termination |
|
| 0.1 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.2 |
|
|
| 0.3 |
|
Consulting/professional fees |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.9 |
|
|
| 0.9 |
|
Other selling, general and administrative expenses |
|
| 11.1 |
|
|
| 2.6 |
|
|
| — |
|
|
| — |
|
|
| 0.2 |
|
|
| 13.9 |
|
Total selling, general and administrative expenses |
|
| 50.7 |
|
|
| 4.0 |
|
|
| 1.2 |
|
|
| 0.3 |
|
|
| 3.9 |
|
|
| 60.1 |
|
Total |
| $ | 94.3 |
|
| $ | 44.4 |
|
| $ | 1.2 |
|
| $ | 0.3 |
|
| $ | 3.9 |
|
| $ | 144.1 |
|
Pension and postretirement non-service income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0.6 |
|
Consolidated total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 144.7 |
|
During the first quarter of fiscal 2022, we recognized the following pre-tax expenses for the SCAE Plan related to our continuing operations:Conagra Restructuring Plan:
|
| Grocery & Snacks |
|
| Refrigerated & Frozen |
|
| Foodservice |
|
| Corporate |
|
| Total |
| |||||
Accelerated depreciation |
| $ | 1.0 |
|
| $ | 5.3 |
|
| $ | — |
|
| $ | — |
|
| $ | 6.3 |
|
Total cost of goods sold |
|
| 1.0 |
|
|
| 5.3 |
|
|
| — |
|
|
| — |
|
|
| 6.3 |
|
Severance and related costs |
|
| 1.7 |
|
|
| (1.2 | ) |
|
| 0.3 |
|
|
| 0.2 |
|
|
| 1.0 |
|
Asset impairment (net of gains on disposal) |
|
| (0.2 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.2 | ) |
Other selling, general and administrative expenses |
|
| 1.4 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1.4 |
|
Total selling, general and administrative expenses |
|
| 2.9 |
|
|
| (1.2 | ) |
|
| 0.3 |
|
|
| 0.2 |
|
|
| 2.2 |
|
Total |
| $ | 3.9 |
|
| $ | 4.1 |
|
| $ | 0.3 |
|
| $ | 0.2 |
|
| $ | 8.5 |
|
Grocery & Snacks | International | Corporate | Total | ||||||||||||
Pension costs | $ | 2.1 | $ | — | $ | — | $ | 2.1 | |||||||
Other cost of goods sold | 1.3 | — | — | 1.3 | |||||||||||
Total cost of goods sold | 3.4 | — | — | 3.4 | |||||||||||
Severance and related costs, net | (0.2 | ) | 0.9 | 0.6 | 1.3 | ||||||||||
Fixed asset impairment (net of gains on disposal) | (1.5 | ) | — | — | (1.5 | ) | |||||||||
Accelerated depreciation | — | — | 0.7 | 0.7 | |||||||||||
Contract/lease cancellation expenses | 0.1 | — | (0.1 | ) | — | ||||||||||
Consulting/professional fees | 0.1 | — | 0.4 | 0.5 | |||||||||||
Other selling, general and administrative expenses | 2.1 | — | 0.6 | 2.7 | |||||||||||
Total selling, general and administrative expenses | 0.6 | 0.9 | 2.2 | 3.7 | |||||||||||
Consolidated total | $ | 4.0 | $ | 0.9 | $ | 2.2 | $ | 7.1 |
Included in the above tableresults are $7.7$2.4 million in charges that have resulted or will result in cash outflows and $6.1 million in non-cash charges.
We recognized the following cumulative (plan inception to August 29, 2021) pre-tax expenses for the Conagra Restructuring Plan in our Condensed Consolidated Statement of Earnings:
|
| Grocery & Snacks |
|
| Refrigerated & Frozen |
|
| International |
|
| Foodservice |
|
| Corporate |
|
| Total |
| ||||||
Accelerated depreciation |
| $ | 33.0 |
|
| $ | 32.0 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 65.0 |
|
Other cost of goods sold |
|
| 4.8 |
|
|
| 0.2 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 5.0 |
|
Total cost of goods sold |
|
| 37.8 |
|
|
| 32.2 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 70.0 |
|
Severance and related costs |
|
| 12.1 |
|
|
| 0.6 |
|
|
| 1.1 |
|
|
| 0.3 |
|
|
| 2.3 |
|
|
| 16.4 |
|
Asset impairment (net of gains on disposal) |
|
| 26.9 |
|
|
| 0.3 |
|
|
| 0.1 |
|
|
| — |
|
|
| — |
|
|
| 27.3 |
|
Contract/lease termination |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.1 |
|
|
| 0.1 |
|
Other selling, general and administrative expenses |
|
| 6.4 |
|
|
| 0.3 |
|
|
| — |
|
|
| — |
|
|
| 0.2 |
|
|
| 6.9 |
|
Total selling, general and administrative expenses |
|
| 45.4 |
|
|
| 1.2 |
|
|
| 1.2 |
|
|
| 0.3 |
|
|
| 2.6 |
|
|
| 50.7 |
|
Total |
| $ | 83.2 |
|
| $ | 33.4 |
|
| $ | 1.2 |
|
| $ | 0.3 |
|
| $ | 2.6 |
|
| $ | 120.7 |
|
Pension and postretirement non-service income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0.6 |
|
Consolidated total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 121.3 |
|
Included in the above results are $26.5 million of charges that have resulted or will result in cash outflows and net non-cash gains of $0.6 million.
Grocery & Snacks | International | Corporate | Total | ||||||||||||
Pension costs | $ | 2.1 | $ | — | $ | — | $ | 2.1 | |||||||
Accelerated depreciation | 1.2 | — | — | 1.2 | |||||||||||
Other cost of goods sold | 2.4 | — | — | 2.4 | |||||||||||
Total cost of goods sold | 5.7 | — | — | 5.7 | |||||||||||
Severance and related costs, net | 1.8 | 0.9 | 0.6 | 3.3 | |||||||||||
Fixed asset impairment (net of gains on disposal) | (1.4 | ) | — | 4.4 | 3.0 | ||||||||||
Accelerated depreciation | — | — | 1.3 | 1.3 | |||||||||||
Contract/lease cancellation expenses | 0.1 | — | (0.1 | ) | — | ||||||||||
Consulting/professional fees | 0.1 | — | 0.6 | 0.7 | |||||||||||
Other selling, general and administrative expenses | 3.9 | — | 0.6 | 4.5 | |||||||||||
Total selling, general and administrative expenses | 4.5 | 0.9 | 7.4 | 12.8 | |||||||||||
Consolidated total | $ | 10.2 | $ | 0.9 | $ | 7.4 | $ | 18.5 |
Grocery & Snacks | Refrigerated & Frozen | International | Foodservice | Corporate | Total | ||||||||||||||||||
Pension costs | $ | 35.0 | $ | 1.5 | $ | — | $ | — | $ | — | $ | 36.5 | |||||||||||
Accelerated depreciation | 32.2 | 18.6 | — | — | 1.2 | 52.0 | |||||||||||||||||
Other cost of goods sold | 7.4 | 2.1 | — | — | — | 9.5 | |||||||||||||||||
Total cost of goods sold | 74.6 | 22.2 | — | — | 1.2 | 98.0 | |||||||||||||||||
Severance and related costs, net | 25.7 | 10.3 | 3.4 | 7.9 | 102.1 | 149.4 | |||||||||||||||||
Fixed asset impairment (net of gains on disposal) | 5.9 | 6.9 | — | — | 11.2 | 24.0 | |||||||||||||||||
Accelerated depreciation | — | — | — | — | 3.9 | 3.9 | |||||||||||||||||
Contract/lease cancellation expenses | 0.9 | 0.6 | 0.6 | — | 71.2 | 73.3 | |||||||||||||||||
Consulting/professional fees | 1.0 | 0.4 | 0.1 | — | 51.8 | 53.3 | |||||||||||||||||
Other selling, general and administrative expenses | 15.1 | 3.2 | — | — | 20.6 | 38.9 | |||||||||||||||||
Total selling, general and administrative expenses | 48.6 | 21.4 | 4.1 | 7.9 | 260.8 | 342.8 | |||||||||||||||||
Consolidated total | $ | 123.2 | $ | 43.6 | $ | 4.1 | $ | 7.9 | $ | 262.0 | $ | 440.8 |
Liabilities recorded for the SCAEConagra Restructuring Plan related to our continuing operations and changes therein for the first halfquarter of fiscal 20182022 were as follows:
|
| Balance at May 30, 2021 |
| �� | Costs Incurred and Charged to Expense |
|
| Costs Paid or Otherwise Settled |
|
| Changes in Estimates |
|
| Balance at August 29, 2021 |
| |||||
Severance and related costs |
| $ | 9.7 |
|
| $ | 2.3 |
|
| $ | (0.7 | ) |
| $ | (1.3 | ) |
| $ | 10.0 |
|
Other costs |
|
| — |
|
|
| 1.4 |
|
|
| (1.4 | ) |
|
| — |
|
|
| — |
|
Total |
| $ | 9.7 |
|
| $ | 3.7 |
|
| $ | (2.1 | ) |
| $ | (1.3 | ) |
| $ | 10.0 |
|
Balance at May 28, 2017 | Costs Incurred and Charged to Expense | Costs Paid or Otherwise Settled | Changes in Estimates | Balance at November 26, 2017 | |||||||||||||||
Pension costs | $ | 31.8 | $ | — | $ | — | $ | 2.1 | $ | 33.9 | |||||||||
Severance and related costs | 13.8 | 4.0 | (7.9 | ) | (0.7 | ) | 9.2 | ||||||||||||
Consulting/professional fees | 0.6 | 0.7 | (1.1 | ) | — | 0.2 | |||||||||||||
Contract/lease cancellation | 11.6 | 0.3 | (3.6 | ) | (0.3 | ) | 8.0 | ||||||||||||
Other costs | 1.9 | 6.5 | (6.9 | ) | — | 1.5 | |||||||||||||
Total | $ | 59.7 | $ | 11.5 | $ | (19.5 | ) | $ | 1.1 | $ | 52.8 |
4. LONG-TERM DEBT AND REVOLVING CREDIT FACILITY
During the first quarter of fiscal 2022, we issued $500.0 million aggregate principal amount of 0.500% senior notes due August 11, 2023.
During the fourth quarter of fiscal 2021, we repaid the remaining outstanding $195.9 million aggregate principal amount of our 9.75% subordinated notes on their maturity date of March 1, 2021.
During the third quarter of fiscal 2021, we redeemed $400.0 million aggregate principal amount of our 3.20% senior notes prior to their maturity date of January 25, 2023.
During the second quarter of fiscal 2021, we issued $1.0 billion aggregate principal amount of 1.375% senior notes due November 1, 2027 (the "2027 Senior Notes"). We also redeemed the entire outstanding $1.20 billion aggregate principal amount of our 3.80% senior notes prior to their maturity date of October 22, 2021. This redemption was primarily funded using the net proceeds from the issuance of the 2027 Senior Notes.
During the second quarter of fiscal 2021, we also repaid the entire outstanding $500.0 million aggregate principal amount of our floating rate notes on their maturity date of October 9, 2020.
During the first quarter of fiscal 2021, we repaid the remaining outstanding $126.6 million aggregate principal amount of our 4.95% senior notes on their maturity date of August 15, 2020.
At November 26, 2017,August 29, 2021, we had a revolving credit facility (the "Facility""Revolving Credit Facility") with a syndicate of financial institutions that providesproviding for a maximum aggregate principal amount outstanding at any one time of $1.25$1.6 billion (subject to increase to a maximum aggregate principal amount of $1.75$2.1 billion with the consent of the lenders). The Revolving Credit Facility matures on July 11, 2024
and is unsecured. The term of the Revolving Credit Facility may be extended for additional one-year or two-year periods from the then-applicable maturity date on an annual basis. As of November 26, 2017,August 29, 2021, there were 0 outstanding borrowings under the Revolving Credit Facility.
In the first quarter of fiscal 2022, we entered into an amendment to the Revolving Credit Facility (the "Amended Revolving Credit Facility"). The Amended Revolving Credit Facility generally requires our ratio of earnings before interest, taxes, depreciation and amortization ("EBITDA") to interest expense not to be less than 3.0 to 1.0 and our ratio of funded debt to EBITDA not to exceed 4.5 to 1.0, with each ratio to be calculated on a rolling four-quarter basis. As of August 29, 2021, we were in compliance with all financial covenants under the Amended Revolving Credit Facility.
Net interest expense from continuing operations consists of:
|
| Thirteen weeks ended |
| |||||
|
| August 29, 2021 |
|
| August 30, 2020 |
| ||
Long-term debt |
| $ | 96.9 |
|
| $ | 117.0 |
|
Short-term debt |
|
| 0.6 |
|
|
| — |
|
Interest income |
|
| (0.3 | ) |
|
| (0.8 | ) |
Interest capitalized |
|
| (3.0 | ) |
|
| (2.5 | ) |
|
| $ | 94.2 |
|
| $ | 113.7 |
|
Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
November 26, 2017 | November 27, 2016 | November 26, 2017 | November 27, 2016 | ||||||||||||
Long-term debt | $ | 39.4 | $ | 56.6 | $ | 77.5 | $ | 117.5 | |||||||
Short-term debt | 0.7 | 0.2 | 1.1 | 0.4 | |||||||||||
Interest income | (1.1 | ) | (0.8 | ) | (2.0 | ) | (1.5 | ) | |||||||
Interest capitalized | (1.0 | ) | (1.9 | ) | (2.2 | ) | (4.1 | ) | |||||||
$ | 38.0 | $ | 54.1 | $ | 74.4 | $ | 112.3 |
5. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS
The change in the carrying amount of goodwill for the first halfquarter of fiscal
|
| Grocery & Snacks |
|
| Refrigerated & Frozen |
|
| International |
|
| Foodservice |
|
| Total |
| |||||
Balance as of May 30, 2021 |
| $ | 4,698.2 |
|
| $ | 5,625.1 |
|
| $ | 302.5 |
|
| $ | 747.7 |
|
| $ | 11,373.5 |
|
Currency translation |
|
| 0 |
|
|
| 0 |
|
|
| (4.3 | ) |
|
| 0 |
|
|
| (4.3 | ) |
Balance as of August 29, 2021 |
| $ | 4,698.2 |
|
| $ | 5,625.1 |
|
| $ | 298.2 |
|
| $ | 747.7 |
|
| $ | 11,369.2 |
|
Grocery & Snacks | Refrigerated & Frozen | International | Foodservice | Total | |||||||||||||||
Balance as of May 28, 2017 | $ | 2,439.1 | $ | 1,037.3 | $ | 253.6 | $ | 571.1 | $ | 4,301.1 | |||||||||
Acquisitions | 156.5 | — | — | — | 156.5 | ||||||||||||||
Purchase accounting adjustments | (1.5 | ) | — | — | — | (1.5 | ) | ||||||||||||
Currency translation | — | 0.9 | — | — | 0.9 | ||||||||||||||
Balance as of November 26, 2017 | $ | 2,594.1 | $ | 1,038.2 | $ | 253.6 | $ | 571.1 | $ | 4,457.0 |
Other identifiable intangible assets were as follows:
|
| August 29, 2021 |
|
| May 30, 2021 |
| ||||||||||
|
| Gross Carrying Amount |
|
| Accumulated Amortization |
|
| Gross Carrying Amount |
|
| Accumulated Amortization |
| ||||
Non-amortizing intangible assets |
| $ | 3,300.0 |
|
| $ | — |
|
| $ | 3,301.2 |
|
| $ | — |
|
Amortizing intangible assets |
|
| 1,234.1 |
|
|
| 393.4 |
|
|
| 1,235.3 |
|
|
| 378.9 |
|
|
| $ | 4,534.1 |
|
| $ | 393.4 |
|
| $ | 4,536.5 |
|
| $ | 378.9 |
|
November 26, 2017 | May 28, 2017 | ||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||
Non-amortizing intangible assets | $ | 908.8 | $ | — | $ | 834.1 | $ | — | |||||||
Amortizing intangible assets | 587.3 | 197.9 | 575.4 | 180.2 | |||||||||||
$ | 1,496.1 | $ | 197.9 | $ | 1,409.5 | $ | 180.2 |
Non-amortizing intangible assets are comprisedcomposed of brands and trademarks.
Amortizing intangible assets, carrying a remaining weighted average life of approximately 1419 years, are principally composed of customer relationships licensing arrangements, and acquired intellectual property. Amortization expense was $8.7 million and $17.3$14.9 million for the secondfirst quarter of both fiscal 2022 and first half of fiscal 2018, respectively, and $8.1 million and $16.5 million for the second quarter and first half of fiscal 2017, respectively.2021. Based on amortizing assets recognized in our Condensed Consolidated Balance Sheet as of
6. DERIVATIVE FINANCIAL INSTRUMENTS
Our operations are exposed to market risks from adverse changes in commodity prices affecting the cost of raw materials and energy, foreign currency exchange rates, and interest rates. In the normal course of business, these risks are managed through a variety of strategies, including the use of derivatives.
Commodity and commodity index futures and option contracts are used from time to time to economically hedge commodity input prices on items such as natural gas, vegetable oils, proteins, packaging materials, dairy, grains, and electricity. Generally, we economically hedge a portion of our anticipated consumption of commodity inputs for periods of up to
36 months. We may enter into longer-term economic hedges on particular commodities, if deemed appropriate. As ofIn order to reduce exposures related to changes in foreign currency exchange rates, we enter into forward exchange, option, or swap contracts from time to time 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. As of
From time to time, we may use derivative instruments, including interest rate swaps, to reduce risk related to changes in interest rates. This includes, but is not limited to, hedging against increasing interest rates prior to the issuance of long-term debt and hedging the fair value of our senior long-term debt.
Derivatives Designated as Cash Flow Hedges
During the first quarter of fiscal 2019, we entered into deal-contingent forward starting interest rate swap contracts to hedge a portion of the interest rate risk related to our issuance of long-term debt to help finance the acquisition of Pinnacle. We settled these contracts during the second quarter of fiscal 2019 and deferred a $47.5 million gain in accumulated other comprehensive income that is being amortized as a reduction of interest expense over the lives of the related debt instruments. The unamortized amount at August 29, 2021, was $37.4 million.
Economic Hedges of Forecasted Cash Flows
Many of our derivatives do not qualify for, and we do not currently designate certain commodity or foreign currency derivatives to achieve, hedge accounting treatment. We reflect realized and unrealized gains and losses from derivatives used to economically hedge anticipated commodity consumption and to mitigate foreign currency cash flow risk in earnings immediately within general corporate expense (within cost of goods sold). The gains and losses are reclassified to segment operating results in the period in which the underlying item being economically hedged is recognized in cost of goods sold. 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.
Economic Hedges of Fair Values — Foreign Currency Exchange Rate Risk
We may use options and cross currency swaps to economically hedge the fair value of certain monetary assets and liabilities (including intercompany balances) denominated in a currency other than the functional currency. These derivatives are marked-to-market with gains and losses immediately recognized in selling, general and administrativeSG&A expenses. These substantially offset the foreign currency transaction gains or losses recognized as values of the monetary assets or liabilities being economically hedged change.
All derivative instruments are recognized on our balance sheets at fair value (refer to Note 1614 for additional information related to fair value measurements). 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. In accordance with U.S. GAAP, we offset certain derivative asset and liability balances, as well as certain amounts representing rights to reclaim cash collateral and obligations to return cash collateral, where master netting agreements provide for legal right of setoff. At November 26, 2017August 29, 2021 and May 28, 2017, $0.9 million30, 2021, amounts representing a rightan obligation to reclaimreturn cash collateral wasof $1.6 million and $2.0 million, respectively, were included in prepaid expenses and other current assets in our Condensed Consolidated Balance Sheets.
Derivative assets and liabilities and amounts representing a right to reclaim cash collateral or an obligation to return cash collateral were reflected in our Condensed Consolidated Balance Sheets as follows:
|
| August 29, 2021 |
|
| May 30, 2021 |
| ||
Prepaid expenses and other current assets |
| $ | 12.3 |
|
| $ | 15.5 |
|
Other accrued liabilities |
|
| 0.7 |
|
|
| 6.9 |
|
November 26, 2017 | May 28, 2017 | ||||||
Prepaid expenses and other current assets | $ | 4.2 | $ | 2.3 | |||
Other accrued liabilities | 2.0 | 1.3 |
The following table presents our derivative assets and liabilities, at November 26, 2017,August 29, 2021, on a gross basis, prior to the setoff of $0.1$4.0 million to total derivative assets and $1.0$2.4 million to total derivative liabilities where legal right of setoff existed:
|
| Derivative Assets |
|
| Derivative Liabilities |
| ||||||
|
| Balance Sheet Location |
| Fair Value |
|
| Balance Sheet Location |
| Fair Value |
| ||
Commodity contracts |
| Prepaid expenses and other current assets |
| $ | 14.9 |
|
| Other accrued liabilities |
| $ | 2.4 |
|
Foreign exchange contracts |
| Prepaid expenses and other current assets |
|
| 1.4 |
|
| Other accrued liabilities |
|
| 0.7 |
|
Total derivatives not designated as hedging instruments |
| $ | 16.3 |
|
|
|
| $ | 3.1 |
|
Derivative Assets | Derivative Liabilities | ||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
Commodity contracts | Prepaid expenses and other current assets | $ | 3.5 | Other accrued liabilities | $ | 1.0 | |||||
Foreign exchange contracts | Prepaid expenses and other current assets | 0.8 | Other accrued liabilities | 1.9 | |||||||
Other | Prepaid expenses and other current assets | — | Other accrued liabilities | 0.1 | |||||||
Total derivatives not designated as hedging instruments | $ | 4.3 | $ | 3.0 |
The following table presents our derivative assets and liabilities at
May
|
| Derivative Assets |
|
| Derivative Liabilities |
| ||||||
|
| Balance Sheet Location |
| Fair Value |
|
| Balance Sheet Location |
| Fair Value |
| ||
Commodity contracts |
| Prepaid expenses and other current assets |
| $ | 22.9 |
|
| Other accrued liabilities |
| $ | 5.4 |
|
Foreign exchange contracts |
| Prepaid expenses and other current assets |
|
| — |
|
| Other accrued liabilities |
|
| 6.9 |
|
Total derivatives not designated as hedging instruments |
| $ | 22.9 |
|
|
|
| $ | 12.3 |
|
Derivative Assets | Derivative Liabilities | ||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
Commodity contracts | Prepaid expenses and other current assets | $ | 2.6 | Other accrued liabilities | $ | 1.4 | |||||
Foreign exchange contracts | Prepaid expenses and other current assets | 0.2 | Other accrued liabilities | 1.1 | |||||||
Other | Prepaid expenses and other current assets | — | Other accrued liabilities | 0.2 | |||||||
Total derivatives not designated as hedging instruments | $ | 2.8 | $ | 2.7 |
The location and amount of gains (losses) from derivatives not designated as hedging instruments in our Condensed Consolidated Statements of Earnings were as follows:
|
| Location in Condensed Consolidated |
| Gains (Losses) Recognized on Derivatives in Condensed Consolidated Statements of Earnings for the Thirteen Weeks Ended |
| |||||
Derivatives Not Designated as Hedging Instruments |
| Statements of Earnings of Gains (Losses) Recognized on Derivatives |
| August 29, 2021 |
|
| August 30, 2020 |
| ||
Commodity contracts |
| Cost of goods sold |
| $ | 4.2 |
|
| $ | 1.2 |
|
Foreign exchange contracts |
| Cost of goods sold |
|
| 6.0 |
|
|
| (5.2 | ) |
Total gains (losses) from derivative instruments not designated as hedging instruments |
| $ | 10.2 |
|
| $ | (4.0 | ) |
Derivatives Not Designated as Hedging Instruments | Location in Condensed Consolidated Statement of Earnings of Gains Recognized on Derivatives | Gains Recognized on Derivatives in Condensed Consolidated Statement of Earnings for the Thirteen Weeks Ended | ||||||||
November 26, 2017 | November 27, 2016 | |||||||||
Commodity contracts | Cost of goods sold | $ | 0.8 | $ | 1.6 | |||||
Foreign exchange contracts | Cost of goods sold | 2.2 | 1.4 | |||||||
Foreign exchange contracts | Selling, general and administrative expense | — | 2.5 | |||||||
Total gains from derivative instruments not designated as hedging instruments | $ | 3.0 | $ | 5.5 |
Derivatives Not Designated as Hedging Instruments | Location in Condensed Consolidated Statement of Earnings of Gains (Losses) Recognized on Derivatives | Gains (Losses) Recognized on Derivatives in Condensed Consolidated Statement of Earnings for the Twenty-six Weeks Ended | ||||||||
November 26, 2017 | November 27, 2016 | |||||||||
Commodity contracts | Cost of goods sold | $ | 1.4 | $ | 1.2 | |||||
Foreign exchange contracts | Cost of goods sold | (5.8 | ) | 1.5 | ||||||
Foreign exchange contracts | Selling, general and administrative expense | 0.3 | 1.3 | |||||||
Total gains (losses) from derivative instruments not designated as hedging instruments | $ | (4.1 | ) | $ | 4.0 |
As of November 26, 2017,August 29, 2021, our open commodity contracts had a notional value (defined as notional quantity times market value per notional quantity unit) of $81.6$117.8 million and $34.2$127.2 million for purchase and sales contracts, respectively. As of May 28, 2017,30, 2021, our open commodity contracts had a notional value of $76.8$148.8 million and $73.4$159.4 million for purchase and sales contracts, respectively. The notional amount of our foreign currency forward contracts as of November 26, 2017August 29, 2021 and May 28, 201730, 2021 was $72.8$102.1 million and $81.9$111.4 million, respectively.
We enter into certain commodity, interest rate, and foreign exchange derivatives with a diversified group of counterparties. We continually monitor our positions and the credit ratings of the counterparties involved and limit the amount of credit exposure to any one party. These transactions may expose us to potential losses due to the risk of nonperformance by these counterparties. We have not incurred a material loss due to nonperformance in any period presented and do not expect to incur any such material loss. We also enter into futures and options transactions through various regulated exchanges.
At
7. SHARE-BASED PAYMENTS
For the
Performance shares are granted to selected executives and other key employees with vesting contingent upon meeting various Company-wide performance goals. The performance goal for one-third of the target number of performance sharesgoals for the three-year performance periodperiods ending in fiscal 20182022 (the "2018"2022 performance period") isand fiscal 2024 (the "2024 performance period") are based on our fiscal 2016 earnings before interest, taxes, depreciation, and amortization ("EBITDA") return on capital. Another one-third of the target number of performance shares granted for the 2018 performance period is based on our fiscal 2017 EBITDA return on capital. The fiscal 2017 EBITDA return on capital target,
Awards, if earned, will be paid in shares of our common stock. Subject to limited exceptions set forth in theour performance share plan, any shares earned will be distributed after the end of the performance period, and generally only if the participant continues to be employed with the Company through the date of distribution. For awards where performance against the performance target has not been certified, the value of the performance shares is adjusted based upon the market price of our common stock and current forecasted performance against the performance targets at the end of each reporting period and amortized as compensation expense over the vesting period.
8. EARNINGS PER SHARE
Basic earnings per share is calculated on the basis of weighted average outstanding shares of common stock. Diluted earnings per share is computed on the basis of basic weighted average outstanding shares of common stock adjusted for the dilutive effect of stock options, restricted stock unit awards, and other dilutive securities.
The following table reconciles the income and average share amounts used to compute both basic and diluted earnings per share:
|
| Thirteen weeks ended |
| |||||
|
| August 29, 2021 |
|
| August 30, 2020 |
| ||
Net income attributable to Conagra Brands, Inc. common stockholders: |
| $ | 235.4 |
|
| $ | 329.0 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding |
|
| 480.4 |
|
|
| 488.2 |
|
Add: Dilutive effect of stock options, restricted stock unit awards, and other dilutive securities |
|
| 1.9 |
|
|
| 1.7 |
|
Diluted weighted average shares outstanding |
|
| 482.3 |
|
|
| 489.9 |
|
Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
November 26, 2017 | November 27, 2016 | November 26, 2017 | November 27, 2016 | ||||||||||||
Net income available to Conagra Brands, Inc. common stockholders: | |||||||||||||||
Income from continuing operations attributable to Conagra Brands, Inc. common stockholders | $ | 223.1 | $ | 113.7 | $ | 375.9 | $ | 212.1 | |||||||
Income from discontinued operations, net of tax, attributable to Conagra Brands, Inc. common stockholders | 0.4 | 8.4 | 0.1 | 96.2 | |||||||||||
Net income attributable to Conagra Brands, Inc. common stockholders | $ | 223.5 | $ | 122.1 | $ | 376.0 | $ | 308.3 | |||||||
Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated | — | 0.3 | — | 0.8 | |||||||||||
Net income available to Conagra Brands, Inc. common stockholders | $ | 223.5 | $ | 121.8 | $ | 376.0 | $ | 307.5 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic weighted average shares outstanding | 406.5 | 437.7 | 411.1 | 438.4 | |||||||||||
Add: Dilutive effect of stock options, restricted stock unit awards, and other dilutive securities | 3.9 | 3.6 | 4.0 | 3.7 | |||||||||||
Diluted weighted average shares outstanding | 410.4 | 441.3 | 415.1 | 442.1 |
For both the
9. INVENTORIES
The major classes of inventories were as follows:
|
| August 29, 2021 |
|
| May 30, 2021 |
| ||
Raw materials and packaging |
| $ | 307.8 |
|
| $ | 290.7 |
|
Work in process |
|
| 169.0 |
|
|
| 125.1 |
|
Finished goods |
|
| 1,395.1 |
|
|
| 1,238.1 |
|
Supplies and other |
|
| 82.7 |
|
|
| 80.1 |
|
Total |
| $ | 1,954.6 |
|
| $ | 1,734.0 |
|
November 26, 2017 | May 28, 2017 | ||||||
Raw materials and packaging | $ | 204.2 | $ | 182.1 | |||
Work in process | 124.9 | 91.9 | |||||
Finished goods | 682.2 | 612.9 | |||||
Supplies and other | 47.9 | 47.3 | |||||
Total | $ | 1,059.2 | $ | 934.2 |
10. INCOME TAXES
In the secondfirst quarter of fiscal 20182022 and 2017 was $109.52021, we recognized income tax expense of $69.7 million and $78.4 million, respectively. Income tax expense from continuing operations for the first half of fiscal 2018 and 2017 was $229.5 million and $247.6$86.7 million, 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) from continuing operations was 32.8%22.8% and 40.7%20.8% for the secondfirst quarter of fiscal 20182022 and 2017,2021, respectively. The effective tax rate from continuing operations was 37.8% and 53.8% for the first half of fiscal 2018 and 2017, respectively.
The effective tax rate in the secondfirst quarter of fiscal 2018 reflects2022 reflected a benefit of $3.6 million from the following:
The effective tax rate for the first half of fiscal 2018 reflects the above-cited items, as well as additional expense related to the repatriation of cash from foreign subsidiaries and the tax expense related to undistributed foreign earnings for which the indefinite reinvestment assertion is no longer made.
The amount of gross unrecognized tax benefits for uncertain tax positions was $34.0$26.0 million as of November 26, 2017August 29, 2021 and $39.3$33.0 million as of May 28, 2017. There were no balances included as of either November 26, 2017 or May 28, 2017,30, 2021. Included in both amounts was $0.8 million for tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The gross unrecognized tax benefits excluded related liabilities for gross interest and penalties of $7.1$7.8 million and $6.0$8.8 million as of November 26, 2017August 29, 2021 and May 28, 2017,30, 2021, respectively.
The net amount of unrecognized tax benefits at November 26, 2017August 29, 2021 and May 28, 201730, 2021 that, if recognized, would impact the Company's effective tax rate was $25.7$21.3 million and $31.6$28.2 million, respectively. Included in those amounts is $6.6 million and $15.6 million, respectively, that would be reported in discontinued operations. Recognition of these tax benefits would have a favorable impact on the Company's effective tax rate.
We estimate that it is reasonably possible that the amount of gross unrecognized tax benefits will decrease by up to $9.4$7.9 million over the next twelve months due to various federal, state and foreign audit settlements and the expiration of statutes of limitations.
In fiscal 2021, we completed a restructuring of November 26, 2017 and May 28, 2017, we hadour ownership interest in the Ardent Mills joint venture, a deferred tax assetmilling business, that utilized a portion of $1.09 billion and $1.08 billion, respectively, that was generated from theour capital loss realized oncarryforward prior to its expiration. Also in fiscal 2021, we completed several other transactions related to retained assets in conjunction with the saledivestitures of the Private Brands operations with corresponding valuation allowances of $995.1 millionPeter Pan® peanut butter and $990.9 million, respectively, to reflect the uncertainty regarding the ultimate realizationEgg Beaters® businesses that we believe will utilize a portion of the remaining capital loss carryforward. These transactions are subject to certain elections and are currently under review by the Internal Revenue Service. We believe they may result in increases to the tax asset. During the first half of fiscal 2018, the balance of the deferredbasis in those assets and if successful would result in tax asset was adjusted for the impact of state law changes, realization of certain tax attributes, and the settlement of certain tax indemnity claims under the contract terms of the Private Brands sale.
We have not provided U.S.any deferred taxes on the cumulative undistributed earnings of our foreign subsidiaries. During the first quarter of fiscal 2018, we decided to repatriate certain cash balances then held in Italy, Canada, Mexico, the Netherlands, and Luxembourg due to the timing of cash flows in connection with certain business acquisition and divestiture activity, as well as forecasted levels of short-term borrowings. We repatriated $151.3 million during the second quarter of fiscal 2018. The cash repatriation resulted in the repatriation of $115.0 million in previously undistributedDeferred taxes will be provided for earnings of our foreign subsidiaries. As a result of the repatriation,non-U.S. affiliates and associated companies when we have recognized $11.8 million of income tax expense in the first half of fiscal 2018.
11. CONTINGENCIES
Litigation Matters
We are a party to various environmental proceedings andcertain litigation primarily relatedmatters relating to our acquisition in fiscal 1991 of Beatrice Company ("Beatrice"). As a result of the acquisition of Beatrice and the significant pre-acquisition contingencies of the Beatrice businesses and its former subsidiaries, our condensed consolidated post-acquisition financial statements reflect liabilities associated with the estimated resolution of these contingencies. Such liabilities include various in fiscal 1991, including litigation and environmental proceedings related to businesses divested by Beatrice prior to our acquisition of Beatrice. The litigationthe company. These proceedings includehave included suits against a number of lead paint and pigment manufacturers, including ConAgra Grocery Products Company, LLC, a wholly owned subsidiary of the Company ("ConAgra Grocery Products"), and the Company as alleged successorssuccessor to W. P. Fuller & Co., a lead paint and pigment manufacturer owned and operated by a predecessor to Beatrice from 1962 until 1967. Although decisionsThese lawsuits generally seek damages for personal injury, property damage, economic loss, and governmental expenditures allegedly caused by the use of lead-based paint, and/or injunctive relief for inspection and abatement. When such lawsuits have been brought, ConAgra Grocery Products has denied liability, both on the merits of the claims and on the basis that we do not believe it to be the successor to any liability attributable to W. P. Fuller & Co. Decisions favorable to us have beenwere rendered in Rhode Island, New Jersey, Wisconsin, and Ohio, weOhio. ConAgra Grocery Products was held liable for the abatement of a public nuisance in California, and the case was dismissed pursuant to settlement in July 2019 as discussed in the following paragraph. We remain a defendant in 1 active suitssuit in Illinois and California.Illinois. The Illinois suit seeks class-wide relief for reimbursement of costs associated with the testing of lead levels in blood. We do not believe it is probable that we have incurred any liability with respect to the Illinois case, nor is it possible to estimate any potential exposure.
In California, a number of cities and counties joined in a consolidated action seeking abatement of thean alleged public nuisance.nuisance in the form of lead-based paint potentially present on the interior of residences, regardless of its condition. 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 two2 other defendants ordering the creation of a California abatement fund in the amount of $1.15 billion. Liability iswas joint and several. The Company appealed the Judgment, and on November 14, 2017 the California Court of Appeal for the Sixth Appellate District reversed in part, holding that the defendants were not liable to pay for abatement of homes built after 1950, but affirmed the Judgment as to homes built before 1951 and1951. The Court of Appeal remanded the case to the trial court with directions to recalculate the sumamount of the abatement fund estimated to be paid intonecessary to cover the abatement fund. The Company hascost of remediating pre-1951 homes, and to hold an evidentiary hearing regarding appointment of a suitable receiver. ConAgra Grocery Products and the other defendants petitioned the California Supreme Court for further review of the decision, which the Company believeswe believe to be an unprecedented expansion of current California law. In lightOn February 14, 2018, the California Supreme Court denied the petition and declined to review the merits of the unsettled nature of California public nuisance lawcase, and the ongoing appeal, a loss is considered neither probable nor estimable,case was remanded to the trial court for further proceedings. ConAgra Grocery Products and the Company has accordingly not accrued any loss relatedother defendants sought further review of certain issues from the Supreme Court of the United States, but on
October 15, 2018, the Supreme Court declined to thisreview the case. In addition, it is not possibleOn September 4, 2018, the trial court recalculated its estimate of the amount needed to estimate exposureremediate pre-1951 homes in the remaining caseplaintiff jurisdictions to be $409.0 million. As of July 10, 2019, the parties reached an agreement in Illinois,principle to resolve this matter, which is basedagreement was approved by the trial court on different legal theories. If ultimately necessary,July 24, 2019, and the Companyaction against ConAgra Grocery Products was dismissed with prejudice. Pursuant to the settlement, ConAgra Grocery Products will lookpay a total of $101.7 million in 7 installments to be paid annually from fiscal 2020 through fiscal 2026. As part of the settlement, ConAgra Grocery Products has provided a guarantee of up to $15.0 million in the event co-defendant, NL Industries, Inc., defaults on its insurance policiespayment obligations.
We have accrued $11.9 million and $51.9 million, within other accrued liabilities and other noncurrent liabilities, respectively, for coverage; its carriers are on notice. However, thethis matter as of August 29, 2021. The extent of insurance coverage is uncertain and the Company cannot assure that the final resolutionCompany's carriers are on notice; however, any possible insurance recovery has not been considered for purposes of these matters will not have a material adverse effect on its financial condition, results of operations, or liquidity.
We are party to a number of putative class action lawsuits challenging various product claims made in the Company's product labeling. These matters include Briseno v. ConAgra Foods, Inc., in which it is alleged that the labeling for
We are party to a number of matters challenging the Company's wage and hour practices. These matters include a number of putative class actions consolidated under the caption Negrete v. ConAgra Foods, Inc., et al,al., pending in the U.S. District Court for the Central District of California, in which the plaintiffs allege a pattern of violations of California and/or federal law at several current and former Company manufacturing facilities across the State of California. On June 21, 2021, the trial court granted preliminary approval of a settlement in this matter. If final approval is obtained, the settlement will require a payment by the Company of $9.0 million, which we have accrued within other accrued liabilities. While we cannot predict with certainty the results of this or any other legal proceeding, we do not expect this matter to have a material adverse effect on our financial condition, results of operations, or business.
We are party to a number of matters asserting product liability claims against the Company related to certain Pam® and other cooking spray products. These lawsuits generally seek damages for personal injuries allegedly caused by defects in the design, manufacture, or safety warnings of the cooking spray products. We have put the Company's insurance carriers on notice. While we cannot predict with certainty the results of these or any other legal proceedings, we do not expect these matters to have a material adverse effect on our financial condition, results of operations, or business.
The Company, its directors, and several of its executive officers are defendants in several class actions alleging violations of federal securities laws. The lawsuits assert that the Company's officers made material misstatements and omissions that caused the market to have an unrealistically positive assessment of the Company's financial prospects in light of the acquisition of Pinnacle, thus causing the Company's securities to be overvalued prior to the release of the Company's consolidated financial results on December 20, 2018 for the second quarter of fiscal year 2019. The first of these lawsuits, captioned West Palm Beach Firefighters' Pension Fund v. Conagra Brands, Inc., et al., with which subsequent lawsuits alleging similar facts have been consolidated, was filed on February 22, 2019 in the U.S. District Court for the Northern District of Illinois. That consolidated lawsuit was dismissed with prejudice on December 23, 2020 for failure to state a claim. On January 22, 2021, the plaintiff filed a notice of appeal of the trial court's decision to the U.S. Court of Appeals for the Seventh Circuit. In addition, on May 9, 2019, a stockholder filed a derivative action on behalf of the Company against the Company's directors captioned Klein v. Arora, et al. in the U.S. District Court for the Northern District of Illinois asserting harm to the Company due to alleged breaches of fiduciary duty and mismanagement in connection with the Pinnacle acquisition. On July 9, 2019, September 20, 2019, and March 10, 2020, the Company received three separate demands from stockholders under Delaware law to inspect the Company's books and records related to the Board of Directors' review of the Pinnacle business, acquisition, and the Company's public statements related to them. On July 22, 2019 and August 6, 2019, respectively, two additional stockholder derivative lawsuits captioned Opperman v. Connolly, et al. and Dahl v. Connolly, et al. were filed in the U.S. District Court for the Northern District of Illinois asserting similar facts and claims as the Klein v. Arora, et al. matter. On October 21, 2019, the Company received an additional demand from a stockholder under Delaware law to appoint a special committee to investigate the conduct of certain officers and directors in connection with the Pinnacle acquisition and the Company's public statements. All remaining stockholder lawsuits and demands are currently stayed by agreement pending the final outcome of the West Palm Beach Firefighters' Pension Fund matter. We have put the Company's insurance carriers on notice of each of these securities
and stockholder matters. While we cannot predict with certainty the results of these or any other legal proceedings, we do not expect these matters to have a material adverse effect on our financial condition, results of operations, or business.
Environmental Matters
Securities and Exchange Commission (the "SEC") regulations require us to disclose certain information about environmental proceedings if a governmental authority is a party to such proceedings and such proceedings involve potential monetary sanctions that we reasonably believe will exceed a stated threshold. Pursuant to the SEC regulations, the Company uses a threshold of $1.0 million for purposes of determining whether disclosure of any such proceedings is required.
In October 2019, the Minnesota Pollution Control Agency ("MPCA") initiated an odor complaint investigation at our Waseca, Minnesota vegetable processing facility. As a result of the investigation, the MPCA required implementation of a continuous monitoring system running from May 1 – October 31 to monitor hydrogen sulfide emissions at the wastewater treatment facility. As a result of the monitoring data findings, the MPCA has alleged violations of Minnesota Ambient Air Quality Standards based on our hydrogen sulfide emissions during calendar years 2020 and 2021. The MPCA proposed a penalty of $2.2 million for 2020, and we are awaiting a proposed additional penalty for 2021 until after the monitoring season is complete. We are currently in settlement negotiations with the MPCA related to these allegations.
We are a party to certain environmental proceedings relating to our acquisition of Beatrice in fiscal 1991. Such proceedings include proceedings related to businesses divested by Beatrice prior to our acquisition of Beatrice. The current environmental proceedings associated with Beatrice include litigation and administrative proceedings involving Beatrice's possible status as a potentially responsible party at approximately 40 Superfund, proposed Superfund, or state-equivalent sites (the "Beatrice sites"). These sites involve locations previously owned or operated by predecessors of Beatrice that used or produced petroleum, pesticides, fertilizers, dyes, inks, solvents, polychlorinated biphenyls, acids, lead, sulfur, tannery wastes, and/or other contaminants. Reserves for these Beatrice environmental proceedings 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 accrual for Beatrice-related environmental matters totaled $55.0 million ($2.4 million within other accrued liabilities and $52.6 million within other noncurrent liabilities) as of August 29, 2021, a majority of which relates to the Superfund and state-equivalent sites referenced above. During the third quarter of fiscal 2017, a final Remedial Investigation/Feasibility Study was submitted for the Southwest Properties portion ("Operating Unit 4") of the Wells G&H Superfund site, which is one of the Beatrice sites. The U.S. Environmental Protection Agency ("EPA") issued a Record of Decision ("ROD") for the Southwest Properties portion of the site on September 29, 2017 and entered into negotiations with potentially responsible parties to determine final responsibility for implementing the ROD. On September 14, 2020, the district court entered a consent decree among EPA and the settling defendants, including the Company.
Guarantees and Other Contingencies
In certain limited situations, we will guarantee obligationsan obligation of an unconsolidated entity. We guarantee an obligation of the Lamb Weston business pursuant to a guarantee arrangementsarrangement that existed prior to the Spinoff andspinoff of the Lamb Weston business (the "Spinoff"). The guarantee remained in place following completion of the Spinoff and it will remain in place until such guarantee obligations areobligation is substituted for guarantees issued by Lamb Weston. Such guarantee arrangements are described below. Pursuant to the Separationseparation and Distribution Agreement,distribution agreement, dated as of November 8, 2016 (the "Separation Agreement"), between us and Lamb Weston, thesethis guarantee arrangements arearrangement is deemed liabilitiesa liability of Lamb Weston that werewas transferred to Lamb Weston as part of the Spinoff. Accordingly, in the event that we are required to make any payments as a result of thesethis guarantee arrangements,arrangement, Lamb Weston is obligated to indemnify us for any such liability, reduced by any insurance proceeds received by us, in accordance with the terms of the indemnification provisions under the Separation Agreement.
We also guarantee a lease certain office buildingsresulting from entities thatan exited facility. As of August 29, 2021, the remaining term of this arrangement did not exceed six years and the maximum amount of future payments we have determined to be variable interest entities. The lease agreements contain put options exercisable now and remain exercisable until generally 30 days after the end of the respective lease agreements, 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 in place. We have financial exposure with respect to these entities in the event we are required to purchase the leased buildings for a price in excess of the then current fair value under the applicable lease purchase options. We are amortizing the difference between the 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 November 26, 2017 and May 28, 2017, the estimated amount by which the put prices exceeded the fair values of the related propertiesguaranteed was $50.7 million, of which we had accrued $10.2 million and $8.4 million, respectively. In December 2017, subsequent to the second quarter of fiscal 2018, we purchased a building that had been subject to a put option. We will recognize a net loss of approximately $13 million for the early termination of the associated lease in our third quarter of fiscal 2018. Also in December 2017, we made an offer to purchase another property subject to a put option. We have not entered into a binding legal contract in connection with this offer. However, if our offer is accepted, we may recognize an estimated loss of $30 million to $40 million, upon closing of the transaction, for the early exit of an unfavorable lease contract. If this transaction is completed, we would have one remaining leased building subject to a put option for which the put option price exceeds the estimated fair value by $8.2 million, of which we had accrued $1.0 million, as of November 26, 2017.
General
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. Itliquidity; however, it is reasonably possible that a change of the estimates of any of the foregoing matters may occur in the future and, as noted, while unlikely, the lead paint matterwhich could result inhave a material final judgment. adverse effect on our financial condition, results of operations, or liquidity.
Costs of legal services associated with the foregoing matters are recognized in earnings as services are provided.
12. PENSION AND POSTRETIREMENT BENEFITS
We have defined benefit retirement plans ("pension plans") for eligible salaried and hourly employees. Benefits are based on years of credited service and average compensation or stated amounts for each year of service. We also sponsor postretirement plans which provide certain medical and dental benefits ("other postretirement benefits") to qualifying U.S. employees.
Components of pension benefit and other postretirement benefitplan costs are (includes amounts related to discontinued operations):(benefits) are:
|
| Pension Plans |
| |||||
|
| Thirteen weeks ended |
| |||||
|
| August 29, 2021 |
|
| August 30, 2020 |
| ||
Service cost |
| $ | 2.7 |
|
| $ | 3.1 |
|
Interest cost |
|
| 20.8 |
|
|
| 21.7 |
|
Expected return on plan assets |
|
| (36.4 | ) |
|
| (35.0 | ) |
Amortization of prior service cost |
|
| 0.5 |
|
|
| 0.6 |
|
Pension cost (benefit) — Company plans |
|
| (12.4 | ) |
|
| (9.6 | ) |
Pension cost (benefit) — multi-employer plans |
|
| 1.9 |
|
|
| 1.8 |
|
Total pension cost (benefit) |
| $ | (10.5 | ) |
| $ | (7.8 | ) |
|
| Postretirement Plans |
| |||||
|
| Thirteen weeks ended |
| |||||
|
| August 29, 2021 |
|
| August 30, 2020 |
| ||
Service cost |
| $ | 0 |
|
| $ | 0.1 |
|
Interest cost |
|
| 0.3 |
|
|
| 0.3 |
|
Amortization of prior service cost (benefit) |
|
| (0.5 | ) |
|
| (0.5 | ) |
Recognized net actuarial gain |
|
| (0.8 | ) |
|
| (0.9 | ) |
Total postretirement cost (benefit) |
| $ | (1.0 | ) |
| $ | (1.0 | ) |
Pension Benefits | |||||||||||||||
Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
November 26, 2017 | November 27, 2016 | November 26, 2017 | November 27, 2016 | ||||||||||||
Service cost | $ | 13.2 | $ | 15.9 | $ | 25.9 | $ | 32.6 | |||||||
Interest cost | 27.7 | 29.9 | 55.9 | 59.9 | |||||||||||
Expected return on plan assets | (54.6 | ) | (53.9 | ) | (108.8 | ) | (107.7 | ) | |||||||
Amortization of prior service cost | 0.7 | 0.7 | 1.4 | 1.3 | |||||||||||
Recognized net actuarial loss | 3.4 | — | 3.4 | — | |||||||||||
Special termination benefits | — | 1.5 | — | 1.5 | |||||||||||
Curtailment loss | 0.7 | — | 0.7 | — | |||||||||||
Benefit cost (benefit) — Company plans | (8.9 | ) | (5.9 | ) | (21.5 | ) | (12.4 | ) | |||||||
Pension benefit cost — multi-employer plans | 4.2 | 2.8 | 5.7 | 5.1 | |||||||||||
Total benefit cost (benefit) | $ | (4.7 | ) | $ | (3.1 | ) | $ | (15.8 | ) | $ | (7.3 | ) |
Postretirement Benefits | |||||||||||||||
Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
November 26, 2017 | November 27, 2016 | November 26, 2017 | November 27, 2016 | ||||||||||||
Service cost | $ | — | $ | 0.1 | $ | — | $ | 0.1 | |||||||
Interest cost | 0.9 | 1.0 | 1.8 | 2.1 | |||||||||||
Amortization of prior service benefit | (0.8 | ) | (1.6 | ) | (1.6 | ) | (3.3 | ) | |||||||
Recognized net actuarial loss | — | 0.1 | — | 0.2 | |||||||||||
Total cost (benefit) | $ | 0.1 | $ | (0.4 | ) | $ | 0.2 | $ | (0.9 | ) |
The Company uses a split discount rate (spot-rate approach) for the U.S. plans and certain foreign plans. The spot-rate approach applies separate discount rates for each projected benefit payment in the calculation of pension service and interest cost.
The weighted-average discount rates for service and interest costs under the spot-rate approach used for pension benefit cost from May 29, 2017 through September 30, 2017,in fiscal 2022 were 4.19%3.50% and 3.26%2.29%, respectively. The weighted-average discount rates for service and interest costs subsequent to September 30, 2017 are 4.04% and 3.24%, respectively.
During the secondfirst quarter and first half of fiscal 2018,2022, we contributed $2.3$2.9 million and $6.1 million, respectively, to our pension plans and contributed $3.0$2.1 million and $6.9 million, respectively, to our other postretirement plans. Based upon the current funded status of the plans and the current interest rate environment, we anticipate making further contributions of approximately
13. STOCKHOLDERS' EQUITY
The following table presents a reconciliation of our stockholders' equity accounts for the
|
| Conagra Brands, Inc. Stockholders' Equity |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
| Common Shares |
|
| Common Stock |
|
| Additional Paid-in Capital |
|
| Retained Earnings |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Treasury Stock |
|
| Noncontrolling Interests |
|
| Total Equity |
| ||||||||
Balance at May 30, 2021 |
|
| 584.2 |
|
| $ | 2,921.2 |
|
| $ | 2,342.1 |
|
| $ | 6,262.6 |
|
| $ | 5.8 |
|
| $ | (2,979.9 | ) |
| $ | 79.6 |
|
| $ | 8,631.4 |
|
Stock option and incentive plans |
|
|
|
|
|
|
|
|
|
| (37.1 | ) |
|
| 0.2 |
|
|
|
|
|
|
| 21.8 |
|
|
| 0.3 |
|
|
| (14.8 | ) |
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (14.4 | ) |
|
|
|
|
|
| (1.3 | ) |
|
| (15.7 | ) |
Repurchase of common shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (50.0 | ) |
|
|
|
|
|
| (50.0 | ) |
Derivative adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (2.1 | ) |
|
|
|
|
|
|
|
|
|
| (2.1 | ) |
Activities of noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0.3 |
|
|
| 0.3 |
|
Pension and postretirement healthcare benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1.3 |
|
|
|
|
|
|
|
|
|
|
| 1.3 |
|
Dividends declared on common stock; $0.3125 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (149.9 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (149.9 | ) |
Net income attributable to Conagra Brands, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 235.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 235.4 |
|
Balance at August 29, 2021 |
|
| 584.2 |
|
| $ | 2,921.2 |
|
| $ | 2,305.0 |
|
| $ | 6,348.3 |
|
| $ | (9.4 | ) |
| $ | (3,008.1 | ) |
| $ | 78.9 |
|
| $ | 8,635.9 |
|
Conagra Brands, Inc. Stockholders' Equity | ||||||||||||||||||||||||||||||
Common Shares | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||
Balance at May 28, 2017 | 567.9 | $ | 2,839.7 | $ | 1,171.9 | $ | 4,247.0 | $ | (212.9 | ) | $ | (4,054.9 | ) | $ | 87.0 | $ | 4,077.8 | |||||||||||||
Stock option and incentive plans | (5.1 | ) | 0.2 | 27.0 | 22.1 | |||||||||||||||||||||||||
Spinoff of Lamb Weston | 15.5 | 15.5 | ||||||||||||||||||||||||||||
Currency translation adjustment, net | 19.9 | 19.9 | ||||||||||||||||||||||||||||
Repurchase of common shares | (580.0 | ) | (580.0 | ) | ||||||||||||||||||||||||||
Unrealized gain on securities | 0.4 | 0.4 | ||||||||||||||||||||||||||||
Derivative adjustment, net | 0.7 | 0.7 | ||||||||||||||||||||||||||||
Activities of noncontrolling interests | 1.8 | 1.8 | ||||||||||||||||||||||||||||
Pension and postretirement healthcare benefits | 26.7 | 26.7 | ||||||||||||||||||||||||||||
Dividends declared on common stock; $0.425 per share | (174.4 | ) | (174.4 | ) | ||||||||||||||||||||||||||
Net income attributable to Conagra Brands, Inc. | 376.0 | 376.0 | ||||||||||||||||||||||||||||
Balance at November 26, 2017 | 567.9 | $ | 2,839.7 | $ | 1,166.8 | $ | 4,464.3 | $ | (165.2 | ) | $ | (4,607.9 | ) | $ | 88.8 | $ | 3,786.5 |
The following table presents a reconciliation of our stockholders' equity accounts for the Spinoff of the Lamb Weston business. During the first half of fiscal 2018, the income tax basis of certain Lamb Weston assets and liabilities were finalized. The adjustment to Retained Earnings was recorded to reflect the adjustment to deferred income taxes.thirteen weeks ended August 30, 2020:
|
| Conagra Brands, Inc. Stockholders' Equity |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
| Common Shares |
|
| Common Stock |
|
| Additional Paid-in Capital |
|
| Retained Earnings |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Treasury Stock |
|
| Noncontrolling Interests |
|
| Total Equity |
| ||||||||
Balance at May 31, 2020 |
|
| 584.2 |
|
| $ | 2,921.2 |
|
| $ | 2,323.2 |
|
| $ | 5,471.2 |
|
| $ | (109.6 | ) |
| $ | (2,729.9 | ) |
| $ | 74.6 |
|
| $ | 7,950.7 |
|
Stock option and incentive plans |
|
|
|
|
|
|
|
|
|
| (25.4 | ) |
|
| (0.7 | ) |
|
|
|
|
|
| 33.5 |
|
|
|
|
|
|
| 7.4 |
|
Adoption of ASU 2016-13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1.1 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1.1 | ) |
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 15.3 |
|
|
|
|
|
|
| 2.2 |
|
|
| 17.5 |
|
Derivative adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1.2 | ) |
|
|
|
|
|
|
|
|
|
| (1.2 | ) |
Activities of noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0.8 |
|
|
| 0.8 |
|
Pension and postretirement healthcare benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (0.3 | ) |
|
|
|
|
|
|
|
|
|
| (0.3 | ) |
Dividends declared on common stock; $0.2125 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (103.8 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (103.8 | ) |
Net income attributable to Conagra Brands, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 329.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 329.0 |
|
Balance at August 30, 2020 |
|
| 584.2 |
|
| $ | 2,921.2 |
|
| $ | 2,297.8 |
|
| $ | 5,694.6 |
|
| $ | (95.8 | ) |
| $ | (2,696.4 | ) |
| $ | 77.6 |
|
| $ | 8,199.0 |
|
14. FAIR VALUE MEASUREMENTS
Financial Accounting Standards Board guidance establishes a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The three levels of inputs used to measure fair value are as follows:
Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities,
Level 2 — Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets, and
Level 3 — Unobservable inputs reflecting our own assumptions and best estimate of what inputs market participants would use in pricing the asset or liability.
The fair values of our Level 2 derivative instruments were determined using valuation models that use market observable inputs including interest rate curves and both forward and spot prices for currencies and commodities. Derivative assets and liabilities included in Level 2 primarily represent commodity and foreign currency option and forward contracts.
The following table presents our financial assets and liabilities measured at fair value on a recurring basis, based upon the level within the fair value hierarchy in which the fair value measurements fall, as of
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Net Value |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets |
| $ | 9.5 |
|
| $ | 2.8 |
|
| $ | 0 |
|
| $ | 12.3 |
|
Marketable securities |
|
| 7.9 |
|
|
| 0 |
|
|
| 0 |
|
|
| 7.9 |
|
Deferred compensation assets |
|
| 8.9 |
|
|
| 0 |
|
|
| 0 |
|
|
| 8.9 |
|
Total assets |
| $ | 26.3 |
|
| $ | 2.8 |
|
| $ | 0 |
|
| $ | 29.1 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities |
| $ | 0 |
|
| $ | 0.7 |
|
| $ | 0 |
|
| $ | 0.7 |
|
Deferred compensation liabilities |
|
| 86.1 |
|
|
| 0 |
|
|
| 0 |
|
|
| 86.1 |
|
Total liabilities |
| $ | 86.1 |
|
| $ | 0.7 |
|
| $ | 0 |
|
| $ | 86.8 |
|
Level 1 | Level 2 | Level 3 | Net Value | ||||||||||||
Assets: | |||||||||||||||
Derivative assets | $ | 3.3 | $ | 0.9 | $ | — | $ | 4.2 | |||||||
Available-for-sale securities | 4.3 | — | — | 4.3 | |||||||||||
Total assets | $ | 7.6 | $ | 0.9 | $ | — | $ | 8.5 | |||||||
Liabilities: | |||||||||||||||
Derivative liabilities | $ | — | $ | 2.0 | $ | — | $ | 2.0 | |||||||
Deferred compensation liabilities | 53.7 | — | — | 53.7 | |||||||||||
Total liabilities | $ | 53.7 | $ | 2.0 | $ | — | $ | 55.7 |
The following table presents our financial assets and liabilities measured at fair value on a recurring basis, based upon the level within the fair value hierarchy in which the fair value measurements fall, as of
May
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Net Value |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets |
| $ | 13.0 |
|
| $ | 2.5 |
|
| $ | 0 |
|
| $ | 15.5 |
|
Marketable securities |
|
| 6.6 |
|
|
| 0 |
|
|
| 0 |
|
|
| 6.6 |
|
Deferred compensation assets |
|
| 8.8 |
|
|
| 0 |
|
|
| 0 |
|
|
| 8.8 |
|
Total assets |
| $ | 28.4 |
|
| $ | 2.5 |
|
| $ | 0 |
|
| $ | 30.9 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities |
| $ | 0 |
|
| $ | 6.9 |
|
| $ | 0 |
|
| $ | 6.9 |
|
Deferred compensation liabilities |
|
| 81.0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 81.0 |
|
Total liabilities |
| $ | 81.0 |
|
| $ | 6.9 |
|
| $ | 0 |
|
| $ | 87.9 |
|
Level 1 | Level 2 | Level 3 | Net Value | ||||||||||||
Assets: | |||||||||||||||
Derivative assets | $ | 2.0 | $ | 0.3 | $ | — | $ | 2.3 | |||||||
Available-for-sale securities | 3.5 | — | — | 3.5 | |||||||||||
Total assets | $ | 5.5 | $ | 0.3 | $ | — | $ | 5.8 | |||||||
Liabilities: | |||||||||||||||
Derivative liabilities | $ | — | $ | 1.3 | $ | — | $ | 1.3 | |||||||
Deferred compensation liabilities | 47.2 | — | — | 47.2 | |||||||||||
Total liabilities | $ | 47.2 | $ | 1.3 | $ | — | $ | 48.5 |
Certain assets and liabilities, including long-lived assets, goodwill, and costasset retirement obligations, and equity investments are measured at fair value on a nonrecurring basis.
In the first quarter of fiscal 2018, a charge of $4.72021, we recognized charges totaling $3.0 million was recognized in the Corporateour Grocery & Snacks segment for the impairment of certain long-lived assets. The impairment was measured based upon the estimated sales price of the assets.
The carrying amount of long-term debt (including current installments) was $3.46$8.80 billion and $8.30 billion as of
15. BUSINESS SEGMENTS AND RELATED INFORMATION
We reflect our results of operations in five4 reporting segments: Grocery & Snacks, Refrigerated & Frozen, International, Foodservice, and Commercial.
The Grocery & Snacks reporting segment principally includes branded, shelf-stable food products sold in various retail channels in the United States.
The Refrigerated & Frozen reporting segment principally includes branded, temperature controlledtemperature-controlled food products sold in various retail channels in the United States.
The International reporting segment principally includes branded food products, in various temperature states, sold in various retail and foodservice channels outside of the United States.
The Foodservice reporting segment includes branded and customized food products, including meals, entrees, sauces and a variety of custom-manufactured culinary products packaged for sale to restaurants and other foodservice establishments primarily in the United States.
We do not aggregate operating segments when determining our reporting segments.
Operating profit for each of the segments is based on net sales less all identifiable operating expenses. General corporate expense, netpension and postretirement non-service income, interest expense, andnet, income taxes, and equity method investment earnings have been excluded from segment operations.
|
| Thirteen weeks ended |
| |||||
|
| August 29, 2021 |
|
| August 30, 2020 |
| ||
Net sales |
|
|
|
|
|
|
|
|
Grocery & Snacks |
| $ | 1,075.1 |
|
| $ | 1,131.0 |
|
Refrigerated & Frozen |
|
| 1,101.8 |
|
|
| 1,130.6 |
|
International |
|
| 236.6 |
|
|
| 219.0 |
|
Foodservice |
|
| 239.8 |
|
|
| 198.3 |
|
Total net sales |
| $ | 2,653.3 |
|
| $ | 2,678.9 |
|
Operating profit |
|
|
|
|
|
|
|
|
Grocery & Snacks |
| $ | 215.9 |
|
| $ | 283.1 |
|
Refrigerated & Frozen |
|
| 157.6 |
|
|
| 240.1 |
|
International |
|
| 34.1 |
|
|
| 38.5 |
|
Foodservice |
|
| 20.3 |
|
|
| 25.4 |
|
Total operating profit |
| $ | 427.9 |
|
| $ | 587.1 |
|
Equity method investment earnings |
|
| 20.2 |
|
|
| 6.5 |
|
General corporate expense |
|
| 64.6 |
|
|
| 77.2 |
|
Pension and postretirement non-service income |
|
| (16.1 | ) |
|
| (13.8 | ) |
Interest expense, net |
|
| 94.2 |
|
|
| 113.7 |
|
Income tax expense |
|
| 69.7 |
|
|
| 86.7 |
|
Net income |
| $ | 235.7 |
|
| $ | 329.8 |
|
Less: Net income attributable to noncontrolling interests |
|
| 0.3 |
|
|
| 0.8 |
|
Net income attributable to Conagra Brands, Inc. |
| $ | 235.4 |
|
| $ | 329.0 |
|
The following table presents further disaggregation of our net sales:
|
| Thirteen weeks ended |
| |||||
|
| August 29, 2021 |
|
| August 30, 2020 |
| ||
Frozen |
| $ | 920.4 |
|
| $ | 918.4 |
|
Staples |
|
|
|
|
|
|
|
|
Other shelf-stable |
|
| 641.6 |
|
|
| 713.9 |
|
Refrigerated |
|
| 181.4 |
|
|
| 212.2 |
|
Snacks |
|
| 433.5 |
|
|
| 417.1 |
|
Foodservice |
|
| 239.8 |
|
|
| 198.3 |
|
International |
|
| 236.6 |
|
|
| 219.0 |
|
Total net sales |
| $ | 2,653.3 |
|
| $ | 2,678.9 |
|
Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
November 26, 2017 | November 27, 2016 | November 26, 2017 | November 27, 2016 | ||||||||||||
Net sales | |||||||||||||||
Grocery & Snacks | $ | 900.4 | $ | 853.2 | $ | 1,646.2 | $ | 1,610.4 | |||||||
Refrigerated & Frozen | 758.1 | 740.7 | 1,373.8 | 1,345.3 | |||||||||||
International | 220.3 | 211.4 | 411.2 | 406.1 | |||||||||||
Foodservice | 294.6 | 283.1 | 546.4 | 551.1 | |||||||||||
Commercial | — | — | — | 71.1 | |||||||||||
Total net sales | $ | 2,173.4 | $ | 2,088.4 | $ | 3,977.6 | $ | 3,984.0 | |||||||
Operating profit | |||||||||||||||
Grocery & Snacks | $ | 199.8 | $ | 220.2 | $ | 376.0 | $ | 400.7 | |||||||
Refrigerated & Frozen | 128.5 | 118.0 | 230.4 | 210.2 | |||||||||||
International | 20.2 | (26.7 | ) | 39.1 | (175.9 | ) | |||||||||
Foodservice | 47.4 | 31.9 | 70.6 | 53.6 | |||||||||||
Commercial | — | (0.5 | ) | — | 202.8 | ||||||||||
Total operating profit | $ | 395.9 | $ | 342.9 | $ | 716.1 | $ | 691.4 | |||||||
Equity method investment earnings | 20.6 | 17.2 | 50.6 | 30.3 | |||||||||||
General corporate expense | 44.9 | 113.3 | 85.1 | 148.9 | |||||||||||
Interest expense, net | 38.0 | 54.1 | 74.4 | 112.3 | |||||||||||
Income tax expense | 109.5 | 78.4 | 229.5 | 247.6 | |||||||||||
Income from continuing operations | $ | 224.1 | $ | 114.3 | $ | 377.7 | $ | 212.9 | |||||||
Less: Net income attributable to noncontrolling interests of continuing operations | 1.0 | 0.6 | 1.8 | 0.8 | |||||||||||
Income from continuing operations attributable to Conagra Brands, Inc. | $ | 223.1 | $ | 113.7 | $ | 375.9 | $ | 212.1 |
To be consistent with the manner in which we present certain disaggregated net sales information to investors, we have categorized certain net sales of our segments as "Staples", which includes all of our U.S. domestic retail refrigerated products and other shelf-stable grocery products. Management continues to regularly review financial results and make decisions about allocating resources based upon the four reporting segments outlined above.
Presentation of Derivative Gains (Losses) forfrom 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 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, under this methodology:
|
| Thirteen weeks ended |
| |||||
|
| August 29, 2021 |
|
| August 30, 2020 |
| ||
Gross derivative gains (losses) incurred |
| $ | 10.2 |
|
| $ | (4.0 | ) |
Less: Net derivative gains (losses) allocated to reporting segments |
|
| 5.0 |
|
|
| (1.5 | ) |
Net derivative gains (losses) recognized in general corporate expenses |
| $ | 5.2 |
|
| $ | (2.5 | ) |
Net derivative gains (losses) allocated to Grocery & Snacks |
| $ | 3.2 |
|
| $ | (1.8 | ) |
Net derivative gains (losses) allocated to Refrigerated & Frozen |
|
| 4.7 |
|
|
| (1.1 | ) |
Net derivative gains (losses) allocated to International |
|
| (3.2 | ) |
|
| 1.6 |
|
Net derivative gains (losses) allocated to Foodservice |
|
| 0.3 |
|
|
| (0.2 | ) |
Net derivative gains (losses) included in segment operating profit |
| $ | 5.0 |
|
| $ | (1.5 | ) |
Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
November 26, 2017 | November 27, 2016 | November 26, 2017 | November 27, 2016 | ||||||||||||
Net derivative gains (losses) incurred | $ | 3.0 | $ | 3.0 | $ | (4.4 | ) | $ | 2.7 | ||||||
Less: Net derivative gains (losses) allocated to reporting segments | (4.1 | ) | 3.8 | (5.5 | ) | 2.8 | |||||||||
Net derivative gains (losses) recognized in general corporate expenses | $ | 7.1 | $ | (0.8 | ) | $ | 1.1 | $ | (0.1 | ) | |||||
Net derivative gains (losses) allocated to Grocery & Snacks | $ | (0.4 | ) | $ | 2.4 | $ | (1.0 | ) | $ | 2.0 | |||||
Net derivative gains allocated to Refrigerated & Frozen | 0.1 | 0.7 | 0.1 | 0.5 | |||||||||||
Net derivative gains (losses) allocated to International | (3.7 | ) | 0.2 | (4.4 | ) | 0.2 | |||||||||
Net derivative gains (losses) allocated to Foodservice | (0.1 | ) | 0.5 | (0.2 | ) | 0.2 | |||||||||
Net derivative losses allocated to Commercial | — | — | — | (0.1 | ) | ||||||||||
Net derivative gains (losses) included in segment operating profit | $ | (4.1 | ) | $ | 3.8 | $ | (5.5 | ) | $ | 2.8 |
As of November 26, 2017,August 29, 2021, the cumulative amount of net derivative lossesgains from economic hedges that had been recognized in general corporate expenses and not yet allocated to reporting segments was $1.9$16.7 million. This amount reflected net lossesgains of $0.6$10.2 million incurred during the twenty-sixthirteen weeks ended November 26, 2017, as well asAugust 29, 2021 and net lossesgains of $1.3$6.5 million incurred prior to fiscal 2018.2022. Based on our forecasts of the timing of recognition of the underlying hedged items, we expect to reclassify to segment operating results lossesgains of $1.8$15.1 million in fiscal 20182022 and lossesgains of $0.1$1.6 million in fiscal 20192023 and thereafter.
Assets by Segment
The majority of our manufacturing assets are shared across multiple reporting segments. Output from these facilities used by each reporting segment can change over time. Also, working capital balances are not tracked by reporting segment. Therefore, it is impracticable to allocate those assets to the reporting segments, as well as disclose total assets by segment. Total depreciation expense was $55.6$81.6 million and $111.7$80.3 million for the secondfirst quarter and first half of fiscal 2018, respectively,2022 and $58.22021, respectively.
Other Information
Our operations are principally in the United States. With respect to operations outside of the United States, no single foreign country or geographic region was significant with respect to consolidated operations for the first quarter of fiscal 2022 and 2021. Foreign net sales, including sales by domestic segments to customers located outside of the United States, were approximately $243.3 million and $117.0$224.7 million forin the secondfirst quarter and first half of fiscal 2017,2022 and 2021, respectively.
Our largest customer, Wal-Mart Stores,Walmart, Inc. and its affiliates, accounted for approximately 24%26% and 25% of consolidated net sales in each of the secondfirst quarter and first half of fiscal 20182022 and 2017, primarily in the Grocery & Snacks and Refrigerated & Frozen segments.
Walmart, Inc. and its affiliates accounted for approximately 32% and 31% of consolidated net receivables as of August 29, 2021 and May 30, 2021, respectively. The third party service also allows suppliers to finance advances on our scheduled payments at the sole discretionKroger Co. and its affiliates accounted for approximately 10% and 11% of the supplierconsolidated net receivables as of August 29, 2021 and the third party. We have no economic interest in these financing arrangements and no direct relationship with the suppliers, the third party, or any financial institutions concerning this service. All of our accounts payable remain as obligations to our suppliers as stated in our supplier agreements. As of November 26, 2017, $68.7 million of our total accounts payable is payable to suppliers who utilize this third-party service.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
The information contained in this report includes forward-looking statements within the meaning of the federal securities laws. Examples of forward-looking statements include statements regarding our expected future financial performance or position, results of operations, business strategy, plans and objectives of management for future operations, and other statements that are not historical facts. You can identify forward-looking statements by their use of forward-looking words, such as "may", "will", "anticipate", "expect", "believe", "estimate", "intend", "plan", "should", "seek", or comparable terms.
Readers of this report should understand that these forward-looking statements are not guarantees of performance or results. Forward-looking statements provide our current expectations and beliefs concerning future events and are subject to risks, uncertainties, and factors relating to our business and operations, all of which are difficult to predict and could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements. SuchThese risks, uncertainties, and factors include, among other things: changes in federalthe risk that the cost savings and state tax laws, includingany other synergies from the recently enacted U.S. tax reform legislation;
The discussion that follows should be read together with the unaudited Condensed Consolidated Financial Statements and related notes contained in this report and with the financial statements, related notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended May 28, 201730, 2021 and subsequent filings with the SEC. Results for the secondfirst quarter of fiscal 20182022 are not necessarily indicative of results that may be attained in the future.
EXECUTIVE OVERVIEW
Conagra Brands, Inc. (the "Company", "Conagra Brands", "we", "us", or "our"), headquartered in Chicago, is one of North America's leading branded food companies. Guided by an entrepreneurial spirit, the Company combines a rich heritage of making great food with a sharpened focus on innovation. The Company's portfolio is evolving to satisfy people's changing food preferences. Its iconic brands such as
Birds Eye®, Marie Callender's®,Fiscal 2022 First Quarter Results
In the first quarter of fiscal 2017, we completed2022, results reflected a decrease in net sales, with organic (excludes the salesimpacts of foreign exchange and divested businesses) decreases in our Spicetec FlavorsGrocery & Seasonings business ("Spicetec")Snacks and our JM Swank business for combined proceeds of $489.1 million. The results of operations of Spicetec and JM Swank are included in the Commercial segment.
increases in our International and Foodservice segments, in each case compared to the secondfirst quarter of fiscal 2018, earnings reflected2021. Overall gross profit decreased due to decreased net sales, input cost inflation, higher transportation costs, and lost profits from divested businesses, which were partially offset by supply chain realized productivity, cost synergies associated with the impact of increased sales volumes, primarily the result of hurricane-related sales,Pinnacle acquisition, and a gross margin increase in the Foodservicelower COVID-19 pandemic-related expenses. Overall segment as well as higher operating profit decreased in all of our operating segments. Corporate expenses were lower primarily in the Refrigerated & Frozendue to items impacting comparability, as discussed below. There were increased selling, general and Foodservice segments. The improved operating performance also reflected an increase inadministrative ("SG&A") expenses primarily due to higher advertising and promotion expenses offset by lower stock-based compensation expense. We recognized higher equity method investment earnings, lower interest expense, and lower interestincome tax expense, in each case compared to the secondfirst quarter of fiscal 2017. Overall operating performance2021. Excluding items impacting comparability, our effective tax rate was impacted by higher-than-anticipated inflation, hurricane-related costs, and increased investmentsslightly higher compared to drive distribution and consumer trial.
Diluted earnings per share in the secondfirst quarter of fiscal 20182022 were $0.54.$0.49. Diluted earnings per share in the secondfirst quarter of fiscal 20172021 were $0.28,$0.67. Diluted earnings per share were affected by lower net income in the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021.
In the first quarter of fiscal 2022, we experienced higher than expected input cost inflation, including earningshigher transportation and supply chain costs, that negatively impacted gross margins. We expect input cost inflation to remain elevated throughout the rest of $0.26 per diluted share from continuing operationsfiscal 2022. Supply chain realized productivity and $0.02 per diluted share from discontinued operations. Several significant items affectpricing actions are expected to mitigate some of the comparabilityinflationary pressures, but we do not expect such benefits to occur in time to fully offset the higher costs in fiscal 2022. As our estimates of year-over-year results of continuing operations (see
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"Segment Review" below.
Items of note impacting comparability for the first halfquarter of fiscal 20182022 included the following:
• | charges totaling $15.8 million ($11.9 million after-tax) in connection with our restructuring plans and |
• | an income tax benefit of $3.6 million related to the settlement of a tax matter that was previously reserved. |
Items of note impacting comparability for the first half of fiscal 2017 included the following:
• | charges totaling $25.9 million ($19.5 million after-tax) in connection with our restructuring plans and |
• | an income tax benefit of $7.6 million related to certain final tax regulations on prior year federal tax matters. |
Divestitures
During the fourth quarter of fiscal 2021, we entered into a definitive agreementcompleted the sale of our Egg Beaters® business for net proceeds of $50.6 million, subject to acquire the
During the third quarter of fiscal 2021, we completed the sale of our Peter Pan® peanut butter business for net proceeds of $101.5 million, including working capital adjustments but subject to customary closing conditions, includingfinal adjustments for certain tax benefits. The results of operations of the receipt of any applicable regulatory approvals.
Restructuring Plans
In December2018, our Board of Directors (the "Board") approved a restructuring and integration plan related to the ongoing integration of the operations of Pinnacle Foods, Inc., which we acquired in October 2018 (the "Pinnacle Integration Restructuring Plan"), for the purpose of achieving significant cost synergies between the companies, as a result of which we expect to incur material charges for exit and disposal activities under U.S. generally accepted accounting principles. We expect to incur approximately $357.0 million of charges ($283.2 million of cash charges and $73.8 million of non-cash charges) for actions identified to date under the Hart-Scott-Rodino Antitrust Improvements ActPinnacle Integration Restructuring Plan. The Board and/or our senior management have authorized incurrence of 1976 (the "HSR Act"). On August 28, 2017, Smucker and the Company each received a request for additional information under the HSR Act (a "second request") from the U.S. Federal Trade Commission ("FTC") in connection with the FTC's review of the transaction. The agreement for the sale of the
In fiscal 2019, senior management initiated a restructuring plan (the "Conagra Restructuring Plan") and JM Swank business for combined proceeds of $489.1 million. The results of operations of Spicetec and JM Swank are includedcosts incurred in the Commercial segment.
COVID–19 Pandemic
We continue to monitor the impact of the COVID-19 pandemic on all aspects of our business. During the first quarter of fiscal 2022, we continued to experience elevated demand for our products in the retail segments, but net sales were lower compared to the first quarter of fiscal 2021 as we began to lap the initial surge in demand at the beginning of the pandemic. We experienced higher demand for our foodservice products across all of our major markets during the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021 as consumer traffic in away-from-home food outlets increased from the initial months of the pandemic. During the first quarter of fiscal 2022, we incurred $25.4 million of supply chain costs associated with the COVID-19 pandemic, which was a decrease in comparison to the first quarter of fiscal 2021.
As we progress through fiscal 2022, we generally expect retail demand levels to remain elevated versus pre-pandemic levels and we continue to expect foodservice demand levels to return to more historical norms. However, uncertainty still remains with the pandemic and such trends ultimately depend on the length and severity of the pandemic, inclusive of the introduction of new strains and variants of the virus; infection rates in the markets where we do business; the federal, state, and local government actions taken in response; continued vaccine availability and effectiveness; and the macroeconomic environment. In fiscal 2022, we continue to expect to see inflationary headwinds but anticipate that they will be partially mitigated by supply chain realized productivity and price increases that have either taken effect or are expected to take effect in the remaining part of the fiscal year. We also continue to expect a decrease in costs related to the COVID-19 pandemic and a decrease in supply chain costs as we continue to recover our supply and service levels. We will continue to evaluate the extent to which the COVID-19 pandemic will impact our business, consolidated results of operations, and financial condition.
Beginning in February 2020 and over the course of the COVID-19 pandemic, we created COVID-19 pandemic, Return to Office, and Vaccine Preparedness teams, in order to review and assess the evolving COVID-19 pandemic, and to recommend risk mitigation actions for the health and safety of our employees. In order to enhance the safety of our employees during the COVID-19 pandemic, these teams have recommended and implemented various measures, including the installation of physical barriers between employees in production facilities, cleaning and sanitation protocols for both production and office spaces, execution of a phased return to office approach to enable in-person work for corporate personnel, implementation of work-from-home initiatives for certain office personnel, and increased access to vaccines for employees at our production facilities and corporate locations. The implementation of such safety measures has not resulted in any meaningful change to our financial control environment.
We have experienced some challenges in connection with the COVID-19 pandemic, including with respect to the supply of our ingredients, packaging, or other sourced materials. Despite these challenges, all of our production facilities remain open. We cannot predict the ultimate COVID-19 impact on our suppliers, distributors, and manufacturers.
SEGMENT REVIEW
We reflect our results of operations in fivefour reporting segments: Grocery & Snacks, Refrigerated & Frozen, Foodservice, International, and Commercial.
Grocery & Snacks
The Grocery & Snacks reporting segment principally includes branded, shelf stableshelf-stable food products sold in various retail channels in the United States.
Refrigerated & Frozen
The Refrigerated & Frozen reporting segment principally includes branded, temperature controlledtemperature-controlled food products sold in various retail channels in the United States.
International
The International reporting segment principally includes branded food products, in various temperature states, sold in various retail and foodservice channels outside of the United States.
Foodservice
The Foodservice reporting segment includes branded and customized food products, including meals, entrees, sauces, and a variety of custom-manufactured culinary products that are packaged for sale to restaurants and other foodservice establishments primarily in the United States.
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 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.
Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
($ in millions) | November 26, 2017 | November 27, 2016 | November 26, 2017 | November 27, 2016 | |||||||||||
Net derivative gains (losses) incurred | $ | 3.0 | $ | 3.0 | $ | (4.4 | ) | $ | 2.7 | ||||||
Less: Net derivative gains (losses) allocated to reporting segments | (4.1 | ) | 3.8 | (5.5 | ) | 2.8 | |||||||||
Net derivative gains (losses) recognized in general corporate expenses | $ | 7.1 | $ | (0.8 | ) | $ | 1.1 | $ | (0.1 | ) | |||||
Net derivative gains (losses) allocated to Grocery & Snacks | $ | (0.4 | ) | $ | 2.4 | $ | (1.0 | ) | $ | 2.0 | |||||
Net derivative gains allocated to Refrigerated & Frozen | 0.1 | 0.7 | 0.1 | 0.5 | |||||||||||
Net derivative gains (losses) allocated to International | (3.7 | ) | 0.2 | (4.4 | ) | 0.2 | |||||||||
Net derivative gains (losses) allocated to Foodservice | (0.1 | ) | 0.5 | (0.2 | ) | 0.2 | |||||||||
Net derivative losses allocated to Commercial | — | — | — | (0.1 | ) | ||||||||||
Net derivative gains (losses) included in segment operating profit | $ | (4.1 | ) | $ | 3.8 | $ | (5.5 | ) | $ | 2.8 |
Net Sales
|
| Net Sales |
| |||||||||
($ in millions) |
| Thirteen weeks ended |
| |||||||||
Reporting Segment |
| August 29, 2021 |
|
| August 30, 2020 |
|
| % Inc (Dec) |
| |||
Grocery & Snacks |
| $ | 1,075.1 |
|
| $ | 1,131.0 |
|
|
| (5 | )% |
Refrigerated & Frozen |
|
| 1,101.8 |
|
|
| 1,130.6 |
|
|
| (3 | )% |
International |
|
| 236.6 |
|
|
| 219.0 |
|
|
| 8 | % |
Foodservice |
|
| 239.8 |
|
|
| 198.3 |
|
|
| 21 | % |
Total |
| $ | 2,653.3 |
|
| $ | 2,678.9 |
|
|
| (1 | )% |
Net Sales | |||||||||||||||||||||
($ in millions) | Thirteen weeks ended | Twenty-six weeks ended | |||||||||||||||||||
Reporting Segment | November 26, 2017 | November 27, 2016 | % Inc (Dec) | November 26, 2017 | November 27, 2016 | % Inc (Dec) | |||||||||||||||
Grocery & Snacks | $ | 900.4 | $ | 853.2 | 6 | % | $ | 1,646.2 | $ | 1,610.4 | 2 | % | |||||||||
Refrigerated & Frozen | 758.1 | 740.7 | 2 | % | 1,373.8 | 1,345.3 | 2 | % | |||||||||||||
International | 220.3 | 211.4 | 4 | % | 411.2 | 406.1 | 1 | % | |||||||||||||
Foodservice | 294.6 | 283.1 | 4 | % | 546.4 | 551.1 | (1 | )% | |||||||||||||
Commercial | — | — | — | % | — | 71.1 | (100 | )% | |||||||||||||
Total | $ | 2,173.4 | $ | 2,088.4 | 4 | % | $ | 3,977.6 | $ | 3,984.0 | — | % |
Net sales for the first halfquarter of fiscal 2018 were $3.98 billion, a decrease of $6.4 million, or flat, from the first half of fiscal 2017.
Net sales for the thirdfirst quarter of fiscal 2018. Price/mix decreased by 1%2022 in the second quarter of fiscal 2018, compared to the second quarter of fiscal 2017, as a result of investing in higher quality merchandising events intended to drive increased brand saliency with consumers. Results for the first half of fiscal 2018our Refrigerated & Frozen segment reflected a 1% decrease in volumes of 4%, excluding the impact of acquisitions, reflecting the prior quarter reduction in promotional intensity and planned discontinuation of certain lower-performing products. The acquisitions of Thanasi Foods LLC, BIGS LLC, and Angie's Artisan Treats, LLC contributed $26.4 million and $47.4 million to Grocery & Snacks net sales for the second quarter and first half of fiscal 2018, respectively. The acquisition of Frontera Foods, Inc. and Red Fork LLC contributed $2.1 million and $8.6 million for the second quarter and first half of fiscal 2018, respectively, through the one-year anniversary of the acquisition, which occurred in September 2016.
Net sales for the first half of fiscal 2018 were $411.2 million, an increase of $5.1 million, or 1%, compared to the first half of fiscal 2017. Results for the second quarter of fiscal 2018 reflected a 2% decrease2022 in volume, a 2% increase in price/mix, and a 4% increase from foreign exchange rates, in each case compared to the prior-year period. Results for the first half of fiscal 2018our International segment reflected a 5% decrease in volume, a 3%6% increase due to favorable foreign exchange rates, and a 7% increase in price/mix, and a 3% increase from foreign exchange rates,excluding the impact of divestitures, in each case compared to the prior-year period. The volume decrease in volumes was driven by the second quarter and first half of fiscal 2018 reflected strategic decisions to eliminate lower margin products and a reductionprior year's surge in promotional intensity.demand from the COVID-19 pandemic. The increase in price/mix for the second quarter and first half of fiscal 2018 was driven by improvements inprimarily due to inflation-justified pricing and favorable product mix offset by a benefit in the prior year of $2.8 million related to a change in estimate associated with our fiscal 2020 fourth quarter trade productivity.accrual.
Net sales for the first half of fiscal 2018 were $546.4 million, a decrease of $4.7 million, or 1%, compared to the first half of fiscal 2017. Results for the second quarter of fiscal 20182022 in our Foodservice segment reflected a 7% decrease20% increase in volume, and a
SG&A Expenses (includes general corporate expenses)
SG&A expenses totaled $310.1 million for the first quarter of fiscal 2017. These businesses had net sales2022, an increase of $71.1 million for the first half of fiscal 2017, prior to the completion of the divestitures.
Items impacting comparability of earnings
• | expenses of $9.4 million in connection with our restructuring plans and |
• | expenses of $1.0 million associated with costs incurred for planned divestitures. |
Other changes in expenses compared to the secondfirst quarter of fiscal 20172021
• | an increase in advertising and promotion expense of $16.3 million driven primarily by higher eCommerce investments, |
• | a decrease in share-based payment and deferred compensation expense of $17.3 million, due to a decrease in our share price, market declines, and a reduction of estimated level of achievement of certain performance targets, |
• | an increase of $5.2 million in foreign currency transaction losses, primarily due to remeasuring certain intercompany notes payable, |
• | an increase in information technology-related expenses of $3.8 million, |
• | an increase in salary, wage, and fringe benefit expense of $3.2 million, and |
• | an increase in professional fees of $2.9 million. |
SG&A expenses for the secondfirst quarter of fiscal 20172021 included the following items impacting the comparability of earnings:
• | expenses of $15.5 million in connection with our restructuring plans, |
• | expenses of $2.7 million associated with costs incurred for planned divestitures, |
• | a benefit of $2.0 million related to a previous legal matter, and |
• | expenses of $1.5 million associated with consulting fees for certain tax matters. |
Segment Operating Profit (Earnings before general corporate expenses, pension and postretirement non-service income, interest expense, net, income taxes, and equity method investment earnings)
|
| Operating Profit |
| |||||||||
($ in millions) |
| Thirteen weeks ended |
| |||||||||
Reporting Segment |
| August 29, 2021 |
|
| August 30, 2020 |
|
| % Inc (Dec) |
| |||
Grocery & Snacks |
| $ | 215.9 |
|
| $ | 283.1 |
|
|
| (24 | )% |
Refrigerated & Frozen |
|
| 157.6 |
|
|
| 240.1 |
|
|
| (34 | )% |
International |
|
| 34.1 |
|
|
| 38.5 |
|
|
| (11 | )% |
Foodservice |
|
| 20.3 |
|
|
| 25.4 |
|
|
| (20 | )% |
Operating Profit | |||||||||||||||||||||
($ in millions) | Thirteen weeks ended | Twenty-six weeks ended | |||||||||||||||||||
Reporting Segment | November 26, 2017 | November 27, 2016 | % Inc (Dec) | November 26, 2017 | November 27, 2016 | % Inc (Dec) | |||||||||||||||
Grocery & Snacks | $ | 199.8 | $ | 220.2 | (9 | )% | $ | 376.0 | $ | 400.7 | (6 | )% | |||||||||
Refrigerated & Frozen | 128.5 | 118.0 | 9 | % | 230.4 | 210.2 | 10 | % | |||||||||||||
International | 20.2 | (26.7 | ) | N/A | 39.1 | (175.9 | ) | N/A | |||||||||||||
Foodservice | 47.4 | 31.9 | 48 | % | 70.6 | 53.6 | 32 | % | |||||||||||||
Commercial | — | (0.5 | ) | (100 | )% | — | 202.8 | (100 | )% |
Operating profit in our Grocery & Snacks operating profitsegment for the secondfirst quarter of fiscal 2018 was $199.8 million,2022 reflected a decrease in gross profits of $20.4$67.4 million or 9%, compared to the secondfirst quarter of fiscal 2017. Gross profits were $12.0 million lower in the second quarter of fiscal 2018 than in the second quarter of fiscal 2017.2021. The lower gross profit was driven by the previously mentioned merchandising investments as well asnet sales decline discussed above, the impacts of higher input costscost inflation, fixed cost leverage, and transportation and warehousing costsa reduction in profit associated with the recent hurricanes. The acquisitionsdivestitures of Thanasi Foods LLC, BIGS LLC,our H.K. Anderson® and Angie's Artisan Treats, LLC contributed $9.3 millionPeter Pan® peanut butter businesses, partially offset by the benefits of supply chain realized productivity, cost synergies associated with the Pinnacle acquisition, and a decrease in COVID-19 pandemic-related costs. Pandemic-related costs included investments in employee safety protocols, bonuses paid to Grocery & Snacks gross profit for the second quartersupply chain employees, and costs necessary to meet elevated levels of fiscal 2018. The acquisition of Frontera Foods, Inc. and Red Fork LLC contributed $0.6 million in gross profit for the second quarter of fiscal 2018, through the one-year anniversary of the acquisition that occurred in September 2016. Advertising and promotion expenses for the second quarter of fiscal 2018 decreased by $3.9 million compared to the second quarter of fiscal 2017.demand. Operating profit of the Grocery & Snacks segment was impacted by chargesexpense of $4.0$4.1 million and $1.4$13.9 million in connection withrelated to our restructuring plans in the secondfirst quarter of fiscal 20182022 and 2017,2021, respectively. In addition, the second quarter of fiscal 2018 included $7.8 million in charges related to acquisitions and planned divestitures.
Operating profit of the Grocery & Snacks segment was impacted by charges of $10.2 million and $6.3 million in connection with our restructuring plans in the first half of fiscal 2018 and 2017, respectively. In addition, the first half of fiscal 2018 included $8.6 million in charges related to acquisitions and planned divestitures.
Operating profit in our Mexican operations. Gross profits were $3.2 million higher in the second quarter of fiscal 2018 than in the second quarter of fiscal 2017, as a result of the value over volume strategy through reductions in promotional intensity, improvements in pricing, and trade productivity, and planned discontinuations of certain lower-performing products.
Operating profit in our Foodservice segment following the presentation of Lamb Weston as discontinued operations. There are no further operations in the Commercial segment.
Pension and Postretirement Non-service Income
In the Spinoff of Lamb Weston during the second quarter of 2017. This was partially offset by the issuance of $500.0 million aggregate principal amount of floating rate notes due 2020 during the secondfirst quarter of fiscal 2018.
Interest Expense, Net
Net interest expense was $94.2 million and $113.7 million for the first quarter of fiscal 2022 and 2021, respectively. The decrease was driven by an overall reduction of our debt balances. See Note 4 "Long-Term Debt and Revolving Credit Facility", to the Condensed Consolidated Financial Statements contained in this report for further discussion.
Income Taxes
In the first quarter of fiscal 2022 and 2021, we recognized income tax expense from continuing operations was $109.5of $69.7 million and $78.4 million, respectively. Income tax expense from continuing operations for the first half of fiscal 2018 and 2017 was $229.5 million and $247.6$86.7 million, 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 33%22.8% and 41%20.8% for the second quarter of fiscal 2018 and 2017, respectively. The effective tax rate in the first half of fiscal 2018 and 2017 was 38% and 54%, respectively.
In fiscal 2021, we completed a restructuring of our ownership interest in the Ardent Mills joint venture, a milling business ("Ardent Mills"), that utilized a portion of our capital loss carryforward prior to its expiration. Also in fiscal 2021, we completed several other transactions related to retained assets in conjunction with the divestitures of the Peter Pan® peanut butter and Egg Beaters® businesses that we believe will utilize a portion of the remaining capital loss carryforward. These transactions are subject to certain elections and are currently under review by the Internal Revenue Service. We believe they may result in increases to the tax basis in those assets and if successful would result in tax benefits being realized in future periods.
Equity Method Investment Earnings
Equity method investment earnings were $20.6$20.2 million and $17.2 million for the second quarter of fiscal 2018 and 2017, respectively. Equity method investment earnings were $50.6 million and $30.3$6.5 million for the first halfquarter of fiscal 20182022 and 2017,2021, respectively. Ardent Mills earnings were higher than they were in the prior-year periods due to more favorable market conditions and continued improvement in operating effectiveness.
Earnings Per Share
Diluted earnings per share in the first halfquarter of fiscal 20182022 and 2021 were $0.91. Diluted$0.49 and $0.67, respectively. The decrease in diluted earnings per share in the first half of fiscal 2017 were $0.70, including earnings of $0.48 per diluted share from continuing operations and $0.22 per diluted share from discontinued operations.
LIQUIDITY AND CAPITAL RESOURCES
Sources of Liquidity and Capital
The primary objective of our financing objectivestrategy is to maintain a prudent capital structure that provides us flexibility to pursue our growth objectives. If necessary, weWe use a combination of equity and short- and long-term debt. We use short-term debt principally to finance
ongoing operations, including our seasonal requirements for working capital (accounts receivable, prepaid expenses and other current assets, and inventories, less accounts payable, accrued payroll, and other accrued liabilities), 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 ansolid investment grade credit rating.
Management believes that existing cash balances, cash flows from operations, existing credit facilities, our commercial paper program and access to capital markets will provide sufficient liquidity to meet our debt obligations, including any repayment of debt or refinancing of debt, working capital needs, planned capital expenditures, and payment of anticipated quarterly dividends for at least the next twelve months.
Borrowing Facilities and Long-Term Debt
At November 26, 2017,August 29, 2021, we had a revolving credit facility (the "Facility""Revolving Credit Facility") with a syndicate of financial institutions that providesproviding for a maximum aggregate principal amount outstanding at any one time of $1.25$1.6 billion (subject to increase to a maximum aggregate principal amount of $1.75$2.1 billion with the consent of the lenders). The Revolving Credit Facility matures on July 11, 2024 and is unsecured. The term of the Revolving Credit Facility may be extended for additional one-year or two-year periods from the then-applicable maturity date on an annual basis. In the first quarter of fiscal 2022, we entered into an amendment to the Revolving Credit Facility, which modified the ratio of funded debt to earnings before interest, taxes, depreciation, and amortization ("EBITDA") financial covenant to require a ratio of not greater than 4.5 to 1.0 on a rolling four-quarter basis. We have historically used a credit facility principally as a back-up for our
As of November 26, 2017, we were in compliance with all financial covenants in the Facility.
During the secondfirst quarter of fiscal 2018,2022, we issued $500.0 million aggregate principal amount of floating rate0.500% senior notes due October 9, 2020.August 11, 2023. The notes bearproceeds were primarily used to refinance commercial paper borrowings.
For additional information about our long-term debt balances, refer to Note 4, " Long-Term Debt and Revolving Credit Facility", to the Condensed Consolidated Financial Statements contained in this report and Note 4, "Long-Term Debt", to the Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended May 30, 2021. The weighted average coupon interest rate of long-term debt obligations outstanding as of August 29, 2021, was approximately 4.4%.
We expect to maintain or have access to sufficient liquidity to retire or refinance long-term debt upon maturity, from operating cash flows, our commercial paper program, access to the capital markets, and our Revolving Credit Facility. We continuously evaluate opportunities to refinance our debt; however, any refinancing is subject to market conditions and other factors, including financing options that may be available to us from time to time, and there can be no assurance that we will be able to successfully refinance any debt on commercially acceptable terms at a rate equal to three-month LIBOR plus 0.50% per annum.
As of the end of the secondfirst quarter of fiscal 2018,2022, 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,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.
Our most restrictive debt agreement (the Revolving Credit Facility) generally requires our ratio of EBITDA to interest expense be not less than 3.0 to 1.0 and our ratio of funded debt to EBITDA not to exceed 4.5 to 1.0, with each ratio to be calculated on a rolling four-quarter basis. As of August 29, 2021, we were in compliance with these financial covenants.
Equity and Dividends
We repurchase shares of our common stock from time to time after considering market conditions and in accordance with repurchase limits authorized by our Board of Directors.Board. 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 share repurchase authorization has no expiration date. During the first halfquarter of fiscal 2018,2022, we repurchased 16.91.5 million shares of our common stock under this authorization for an aggregate of $580.0$50.0 million. The Company's total remaining share repurchase authorization as of November 26, 2017August 29, 2021, was $802.0 million.$1.07 billion.
On December 12, 2017,September 2, 2021, the Board of Directors announcedCompany paid a quarterly cash dividend paymenton shares of $0.2125its common stock of $0.3125 per share which will be paid on March 1, 2018 to stockholders of record as of the close of business on January 30, 2018.
Contractual Obligations
As part of our ongoing operations, we enter into contractual arrangements that obligate us to make future cash payments. These obligations impact our liquidity and capital resource needs. In addition to principal and interest payments on our outstanding long-term debt and notes payable balances, discussed above, our contractual obligations primarily consist of leases payments, income taxes, pension and postretirement benefits, and unconditional purchase obligations.
As of August 29, 2021, our finance and operating lease liabilities reported in our Condensed Consolidated Balance Sheet totaled $143.7 million and $260.8 million, respectively. For additional information, refer to Note 15, "Leases", to the fourth quarter of fiscal 2017, we signed an agreement to sell our
The liability for gross unrecognized tax benefits related to March 31, 2018 because HSR approval has not been receiveduncertain tax positions was $26.0 million as of such date, then either party may terminate the agreement. The parties are cooperating fully with the FTC as it conducts its review of the transaction. The purchase price under the agreement is $285 million.
As of determiningMay 30, 2021, we had an aggregate funded pension asset of $109.6 million and an aggregate unfunded postretirement benefit obligation totaling $78.2 million. We expect to make payments totaling approximately $12.3 million and $9.0 million in fiscal 2022 to fund our pension and postretirement plans, respectively. See Note 12 "Pension and Postretirement Benefits", to the amount of that tax and expects to record an initial estimate of the impact on our Condensed Consolidated Financial Statements contained in this report and Note 18, "Pension and Postretirement Benefits", to the Consolidated Financial Statements and "Critical Accounting Estimates – Employment-Related Benefits" contained in the third quarterCompany's Annual Report on Form 10-K for the fiscal year ended May 30, 2021, for further discussion of fiscal 2018.
As of November 26, 2017 and May 28, 2017, the estimated amount by which the put prices exceeded the fair values of the related properties was $50.7 million, of which we had accrued $10.2 million and $8.4 million, respectively. In December 2017, subsequent to the second quarter of fiscal 2018, we purchased a building that had been subject to a put option. We will recognize a net loss of approximately $13 million for the early termination of the associated lease inAugust 29, 2021, our third quarter of fiscal 2018. Also in December 2017, we made an offer to purchase another property subject to a put option. We have not entered into a binding legal contract in connection with this offer. However, if our offer is accepted, we may recognize an estimated loss of $30 million to $40 million, upon closing of the transaction, for the early exit of an unfavorable lease contract. If this transaction is completed, we would have one remaining leased building subject to a put option for which the put option price exceeds the estimated fair value by $8.2 million, of which we had accrued $1.0 million, as of November 26, 2017. These leases, with the exception of one, are accounted for as operating leases. A capital lease asset and related lease obligation of $25.3 million and $28.9 million, respectively, were included in the Condensed Consolidated Balance Sheets as of November 26, 2017. 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.
Payments Due by Period (in millions) | |||||||||||||||||||
Contractual Obligations | Total | Less than 1 Year | 1-3 Years | 3-5 Years | After 5 Years | ||||||||||||||
Long-term debt | $ | 3,321.3 | $ | 189.7 | $ | 626.7 | $ | 445.9 | $ | 2,059.0 | |||||||||
Capital lease obligations | 127.0 | 9.1 | 16.8 | 17.6 | 83.5 | ||||||||||||||
Operating lease obligations | 216.5 | 39.9 | 50.0 | 34.0 | 92.6 | ||||||||||||||
Purchase obligations1 and other contracts | 1,038.2 | 856.9 | 114.3 | 65.3 | 1.7 | ||||||||||||||
Notes payable | 67.1 | 67.1 | — | — | — | ||||||||||||||
Total | $ | 4,770.1 | $ | 1,162.7 | $ | 807.8 | $ | 562.8 | $ | 2,236.8 |
Capital Expenditures
We continue to make investments in the ordinary courseour business and operating facilities. Our estimate of business in less than one year.
Supplier Arrangements
We areoffer certain suppliers access to a third-party service that allows them to view our scheduled payments online. The third-party service also contractually obligatedallows suppliers to pay interestfinance advances on our long-term debt and capital lease obligations. The weighted average coupon interest ratescheduled payments at the sole discretion of the long-term debt obligations outstanding as of
The program commenced at about the same time that we began an initiative to negotiate extended payment terms with our suppliers. Although difficult to predict, we generally expect the incremental cash flow benefits associated with equity method investments, asthese extended payment terms to increase at a slower rate in the future. A number of November 26, 2017factors may impact our future payment terms, including our relative creditworthiness, overall market liquidity, and changes in interest rates and other general economic conditions.
Cash Flows
During the first quarter of fiscal 2022, we used $12.2 million of cash, which was as follows:
Amount of Commitment Expiration Per Period (in millions) | |||||||||||||||||||
Other Commercial Commitments | Total | Less than 1 Year | 1-3 Years | 3-5 Years | After 5 Years | ||||||||||||||
Standby repurchase obligations | $ | 0.9 | $ | 0.6 | $ | 0.3 | $ | — | $ | — | |||||||||
Other commitments | 6.9 | 3.5 | 3.4 | — | — | ||||||||||||||
Total | $ | 7.8 | $ | 4.1 | $ | 3.7 | $ | — | $ | — |
Cash generated from operating activities totaled $139.8 million and $284.5 million in the first quarter of fiscal 2017. As2022 and 2021, respectively. The decrease in operating cash flows for the first quarter of November 26, 2017,fiscal 2022 compared to the remaining termsfirst quarter of these arrangementsfiscal 2021 reflected the impact of realized input cost inflation. Comparative changes in working capital balances were also negatively impacted by the timing of accounts receivable receipts. This was partially offset by decreased tax and interest payments for the first quarter of fiscal 2022 compared to fiscal 2021. Tax payments for the first quarter of fiscal 2021 included approximately $47.0 million of fourth quarter fiscal 2020 tax payments, which were deferred due to the extension of the deadline for certain federal cash tax payments. Operating cash flows in the first quarter of fiscal 2021 benefited from the deferral of approximately $15 million of employer payroll taxes under the Coronavirus Aid, Relief, and Economic Security Act. Payments totaling 50% of such amounts will occur in the third quarter of both fiscal 2022 and 2023.
Cash used in investing activities totaled $154.9 million and $142.9 million in the first quarter of fiscal 2022 and 2021, respectively. Net cash outflows from investing activities in the first quarter of fiscal 2022 and 2021 consisted primarily of capital expenditures totaling $154.9 million and $145.5 million, respectively.
Cash generated from financing activities totaled $5.5 million in the first quarter of fiscal 2022, compared to cash used of $259.6 million in the first quarter of fiscal 2021. Financing activities in the first quarter of fiscal 2022 principally reflect net proceeds of $499.1 million from the issuance of $500.0 million aggregate principal amount of long-term debt, net short-term borrowing repayments of $248.8 million, cash dividends paid of $132.1 million, and common stock repurchases of $50.0 million. Financing activities in the first quarter of fiscal 2021 consisted primarily of the repayment of long-term debt totaling $133.4 million and cash dividends paid of $103.5 million.
Cash Held by International Subsidiaries
The Company had cash and cash equivalents of $67.0 million at August 29, 2021 and $79.2 million at May 30, 2021, of which $57.5 million at August 29, 2021, and $72.4 million at May 30, 2021, was held in foreign countries. We believe that our foreign subsidiaries have invested or will invest any undistributed earnings indefinitely, or that any undistributed earnings will be remitted in a tax-neutral transaction, and, therefore, do not exceed six years and the maximum amount of future payments we have guaranteed was $3.4 million.
CRITICAL ACCOUNTING ESTIMATES
For further discussion of our critical accounting estimates, can be found inplease refer to the "Management's"Management's Discussion and Analysis of Financial Condition and Results of Operations" section in Part I,II, Item 7, of our Annual Report on Form 10-K for the fiscal year ended
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The principal market risks affecting us are exposures to price fluctuations of commodity and energy inputs, interest rates, and foreign currencies.
Other than the changes noted below, there have been no material changes in our market risk during the
Commodity Market Risk
We purchase commodity inputs such as wheat, corn, oats, soybean meal, soybean oil, meat, dairy products, nuts, 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.
The carrying amount of long-term debt (including current installments) was $3.46$8.80 billion as of
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 dayone-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, and foreign exchange positions (including discontinued operations) during the twenty-sixthirteen weeks ended November 26, 2017August 29, 2021 and November 27, 2016.August 30, 2020.
|
| Fair Value Impact |
| |||||
In Millions |
| Average During Thirteen Weeks Ended August 29, 2021 |
|
| Average During Thirteen Weeks Ended August 30, 2020 |
| ||
Energy commodities |
| $ | 0.6 |
|
| $ | 0.5 |
|
Agriculture commodities |
|
| 1.9 |
|
|
| 0.2 |
|
Foreign exchange |
|
| 0.9 |
|
|
| 1.2 |
|
Fair Value Impact | |||||||
In Millions | Average During Twenty-six Weeks Ended November 26, 2017 | Average During Twenty-six Weeks Ended November 27, 2016 | |||||
Energy commodities | $ | 0.4 | $ | 0.4 | |||
Agriculture commodities | 0.4 | 0.7 | |||||
Foreign exchange | 0.6 | 0.3 |
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company's management carried out an evaluation, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of
Internal Control Over Financial Reporting
The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, evaluated any change in the Company's internal control over financial reporting that occurred during the quarter covered by this report and determined that there was no change in our internal control over financial reporting during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Part II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For additional information on legal proceedings, please refer to Part I, Item 3 "Legal Proceedings" and Note 17 "Contingencies"16 "Contingencies," to the financial statements in each case contained in our Annual Report on Form 10-K for the year ended May 28, 2017, and Part II, Item 1 "Legal Proceedings"30, 2021 and Note 13 "Contingencies"11 "Contingencies," to the Condensed Consolidated Financial Statements in each case contained in our subsequentthis Quarterly ReportsReport on Form 10-Q.
ITEM 1A. RISK FACTORS
A discussion of our risk factors can be found in Item 1A "Risk Factors,Factors" in our Annual Report on Form 10-K for the fiscal year ended May 28, 2017, our Quarterly Report on Form 10-Q for the period ended August 27, 2017,30, 2021 and in our other filings with the SEC. During the secondfirst quarter of fiscal 2018,2022, there were no material changes to our previously disclosed risk factors.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table presents the total number of shares of common stock purchased during the secondfirst quarter of fiscal 2018,2022, the average price paid per share, the number of shares that were purchased as part of a publicly announced repurchase program, and the approximate dollar value of the maximum number of shares that may yet be purchased under the share repurchase program:
Period |
| Total Number of Shares Purchased |
|
| Average Price Paid per Share |
|
| Total Number of Shares Purchased as Part of Publicly Announced Program 1 |
|
| Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program 1 |
| ||||
May 31, 2021 through June 27, 2021 |
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | 1,116,576,000 |
|
June 28, 2021 through July 25, 2021 |
|
| 1,184,311 |
|
| $ | 34.13 |
|
|
| 1,184,311 |
|
| $ | 1,076,151,000 |
|
July 26, 2021 through August 29, 2021 |
|
| 278,630 |
|
| $ | 34.36 |
|
|
| 278,630 |
|
| $ | 1,066,577,000 |
|
Total Fiscal 2022 First Quarter Activity |
|
| 1,462,941 |
|
| $ | 34.18 |
|
|
| 1,462,941 |
|
| $ | 1,066,577,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period | Total Number of Shares (or units) Purchased | Average Price Paid per Share (or unit) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Approximate Dollar Value of Maximum Number of Shares that may yet be Purchased under the Program (1) | |||||||||
August 28 through September 24, 2017 | — | $ | — | — | $ | 1,081,967,000 | |||||||
September 25 through October 22, 2017 | 2,278,142 | $ | 34.16 | 2,278,142 | $ | 1,004,155,000 | |||||||
October 23 through November 26, 2017 | 5,904,526 | $ | 34.24 | 5,904,526 | $ | 801,968,000 | |||||||
Total Fiscal 2018 Second Quarter Activity | 8,182,668 | $ | 34.22 | 8,182,668 | $ | 801,968,000 |
1The Board approved a share repurchase program authorizing the Company to purchase shares of its common stock in December 2003, which share repurchase authorization has been subsequently increased from time to time. On June 27, 2018, we announced that the Board increased the amount of the share repurchase authorization by $1.0 billion. As of August 29, 2021, approximately $1.07 billion of our common stock remained available for purchase under this authorization, which has no expiration. 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.
ITEM 6. EXHIBITS
All documents referenced below were filed pursuant to the Securities Exchange Act of 1934, as amended, by Conagra Brands, Inc. (file number 001-07275), unless otherwise noted.
EXHIBIT | DESCRIPTION | |
3.1 | ||
3.2 | ||
4.1 | ||
4.2 | ||
10.1 | ||
31.1 | ||
31.2 | ||
32 | ||
101 | The following materials from Conagra Brands' Quarterly Report on Form 10-Q for the quarter ended | |
104 | ||
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CONAGRA BRANDS, INC. | |||
By: | /s/ DAVID S. MARBERGER | ||
David S. Marberger | |||
Executive Vice President and Chief Financial Officer | |||
By: | /s/ ROBERT G. WISE | ||
Robert G. Wise | |||
Senior Vice President and Corporate Controller |
Dated this 4th7th day of January, 2018.
34