What changed in this filing

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Item 1. Financial Statements

2024-10-02 compared with 2024-04-04 · 166 added, 554 removed, 398 unchanged (64% of the section changed)

5 unchanged sentences

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

February 25, 2024

February 26, 2023

February 25, 2024

February 26, 2023

$ 3,032.9 $ 3,086.5 $ 9,145.0 $ 9,303.7

August 25, 2024

August 27, 2023

Costs and expenses:

Cost of goods sold

2,174.1 2,247.7 6,616.5 6,822.3

Selling, general and administrative expenses

387.4 348.8 1,119.6 1,463.1

Pension and postretirement non-service expense (income)

1.4 ( 6.0 ) 2.1 ( 18.2 )

Pension and postretirement non-service income (expense)

Interest expense, net

106.5 104.2 325.8 301.6

Income before income taxes and equity method investment earnings

363.5 391.8 1,081.0 734.9

Income tax expense

95.9 100.1 297.1 237.0

Equity method investment earnings

41.2 50.5 131.0 149.0

$ 308.8 $ 342.2 $ 914.9 $ 646.9

Income before income taxes

Income tax expense (benefit)

Net income attributable to noncontrolling interests

0.2 0.5 0.4 0.8

Net income attributable to Conagra Brands, Inc.

$ 308.6 $ 341.7 $ 914.5 $ 646.1

Earnings per share — basic

1 unchanged sentence

common stockholders

$ 0.64 $ 0.72 $ 1.91 $ 1.35

Earnings per share — diluted

1 unchanged sentence

common stockholders

$ 0.64 $ 0.71 $ 1.91 $ 1.34

See Notes to the Unaudited Condensed Consolidated Financial Statements.

4 unchanged sentences

Thirteen Weeks Ended

February 25, 2024

February 26, 2023

Pre-Tax Amount

Tax (Expense) Benefit

After- Tax Amount

Pre-Tax Amount

Tax (Expense) Benefit

After- Tax Amount

$ 404.7 $ ( 95.9 ) $ 308.8 $ 442.3 $ ( 100.1 ) $ 342.2

Other comprehensive income:

Derivative adjustments:

Unrealized derivative adjustments

( 3.3 ) 0.8 ( 2.5 ) ( 3.5 ) 0.8 ( 2.7 )

Reclassification for derivative adjustments included in net income

( 2.1 ) 0.5 ( 1.6 ) ( 1.6 ) 0.4 ( 1.2 )

Unrealized currency translation gains

4.8 — 4.8 4.3 — 4.3

Pension and postretirement benefit obligations:

Unrealized pension and postretirement benefit obligations

( 7.3 ) 1.8 ( 5.5 ) — — —

Reclassification for pension and postretirement benefit obligations included in net income

( 0.1 ) — ( 0.1 ) ( 1.1 ) 0.3 ( 0.8 )

Comprehensive income

396.7 ( 92.8 ) 303.9 440.4 ( 98.6 ) 341.8

Comprehensive income (loss) attributable to noncontrolling interests

0.5 ( 0.1 ) 0.4 ( 0.8 ) ( 0.2 ) ( 1.0 )

Comprehensive income attributable to Conagra Brands, Inc.

$ 396.2 $ ( 92.7 ) $ 303.5 $ 441.2 $ ( 98.4 ) $ 342.8

Thirty-Nine Weeks Ended

February 25, 2024

February 26, 2023

Pre-Tax Amount

Tax (Expense) Benefit

After- Tax Amount

Pre-Tax Amount

Tax (Expense) Benefit

After- Tax Amount

$ 1,212.0 $ ( 297.1 ) $ 914.9 $ 883.9 $ ( 237.0 ) $ 646.9

August 25, 2024

August 27, 2023

Other comprehensive income:

1 unchanged sentence

Unrealized derivative adjustments

4.0 ( 1.0 ) 3.0 3.9 ( 1.0 ) 2.9

Reclassification for derivative adjustments included in net income

( 6.2 ) 1.5 ( 4.7 ) ( 3.2 ) 0.9 ( 2.3 )

Currency translation adjustments:

Unrealized currency translation gains (losses)

9.1 — 9.1 ( 17.5 ) — ( 17.5 )

Reclassification for currency translation losses in connection with the sale of Agro Tech Foods Limited (see Note 3)

Pension and postretirement benefit obligations:

Unrealized pension and postretirement benefit obligations

( 7.2 ) 1.7 ( 5.5 ) 1.6 — 1.6

Reclassification for pension and postretirement benefit obligations included in net income

( 2.5 ) 0.6 ( 1.9 ) ( 3.4 ) 1.0 ( 2.4 )

Comprehensive income

1,209.2 ( 294.3 ) 914.9 865.3 ( 236.1 ) 629.2

Comprehensive loss attributable to noncontrolling interests

— ( 0.2 ) ( 0.2 ) ( 4.3 ) ( 0.3 ) ( 4.6 )

Comprehensive income attributable to noncontrolling interests (see Note 3)

Comprehensive income attributable to Conagra Brands, Inc.

$ 1,209.2 $ ( 294.1 ) $ 915.1 $ 869.6 $ ( 235.8 ) $ 633.8

See Notes to the Unaudited Condensed Consolidated Financial Statements.

3 unchanged sentences

(in millions except share data)

February 25, 2024

August 25, 2024

Current assets

Cash and cash equivalents

$ 78.5 $ 93.3

Receivables, less allowance for doubtful accounts of $ 2.2 and $ 3.0

2,143.4 2,212.2

Prepaid expenses and other current assets

1 unchanged sentence

Total current assets

3,285.8 3,385.0

Property, plant and equipment

6,470.6 6,134.8

Less accumulated depreciation

( 3,593.9 ) ( 3,398.4 )

Property, plant and equipment, net

2,876.7 2,736.4

11,109.9 11,109.4

Brands, trademarks and other intangibles, net

3,152.1 3,192.3

1,404.8 1,506.2

Noncurrent assets held for sale

$ 21,919.9 $ 22,052.6

LIABILITIES AND STOCKHOLDERS' EQUITY

1 unchanged sentence

Notes payable

$ 166.3 $ 636.3

Current installments of long-term debt

1,019.2 1,516.0

Accounts and other payables

1,418.0 1,525.5

Accrued payroll

2 unchanged sentences

Total current liabilities

3,470.9 4,440.7

Senior long-term debt, excluding current installments

7,491.8 7,081.3

Other noncurrent liabilities

1,729.4 1,718.0

Noncurrent liabilities held for sale

Total liabilities

12,694.4 13,245.3

Common stockholders' equity

1 unchanged sentence

issued 584,219,229

2,921.2 2,921.2

Additional paid-in capital

2,353.7 2,376.9

Retained earnings

7,011.7 6,599.4

Accumulated other comprehensive loss

( 43.8 ) ( 44.4 )

Less treasury stock, at cost, 106,946,223 and 106,050,133 common shares

( 3,087.9 ) ( 3,116.3 )

Total Conagra Brands, Inc.

common stockholders' equity

9,154.9 8,736.8

Noncontrolling interests

Total stockholders' equity

9,225.5 8,807.3

$ 21,919.9 $ 22,052.6

See Notes to the Unaudited Condensed Consolidated Financial Statements.

3 unchanged sentences

(in millions)

Thirty-Nine Weeks Ended

February 25, 2024

February 26, 2023

Thirteen Weeks Ended

August 25, 2024

August 27, 2023

Cash flows from operating activities:

$ 914.9 $ 646.9

Adjustments to reconcile net income to net cash flows from operating activities:

1 unchanged sentence

Asset impairment charges

Equity method investment earnings less than (in excess of) distributions

69.5 ( 69.8 )

Stock-settled share-based payments expense

Equity method investment earnings in excess of distributions

Stock-settled share-based payments expense (benefit)

Contributions to pension plans

( 9.2 ) ( 9.6 )

Pension expense (benefit)

Change in operating assets and liabilities:

25.5 ( 96.7 )

73.3 ( 340.4 )

Change in operating assets and liabilities excluding effects of business acquisitions and dispositions:

Deferred income taxes and income taxes payable, net

43.1 ( 58.8 )

Prepaid expenses and other current assets

Accounts and other payables

( 36.5 ) ( 157.9 )

Accrued payroll

1 unchanged sentence

Litigation accruals

16.7 ( 18.6 )

Deferred employer payroll taxes

Net cash flows from operating activities

1,531.3 703.4

Cash flows from investing activities:

Additions to property, plant and equipment

( 309.6 ) ( 267.4 )

Sale of property, plant and equipment

Purchase of marketable securities

( 8.2 ) ( 3.4 )

Sale of marketable securities

Proceeds from insurance recoveries

Purchase of business, net of cash acquired

Proceeds from divestitures, net of cash divested

Net cash flows from investing activities

( 295.6 ) ( 260.2 )

Cash flows from financing activities:

1 unchanged sentence

Repayment of short-term borrowings, maturities greater than 90 days

( 146.6 ) ( 259.8 )

Net (repayment) issuance of other short-term borrowings, maturities less than or equal to 90 days

( 461.7 ) 388.2

Net issuance (repayment) of other short-term borrowings, maturities less than or equal to 90 days

Issuance of long-term debt

Repayment of long-term debt

( 766.8 ) ( 708.0 )

Debt issuance costs

( 3.3 ) ( 4.1 )

Repurchase of Conagra Brands, Inc.

1 unchanged sentence

Cash dividends paid

( 492.0 ) ( 466.4 )

Exercise of stock options and issuance of other stock awards, including tax withholdings

Net cash flows from financing activities

( 1,250.3 ) ( 454.5 )

Effect of exchange rate changes on cash and cash equivalents

Net change in cash and cash equivalents, including cash balances classified as assets held for sale

( 14.6 ) ( 12.1 )

Net change in cash balances classified as assets held for sale

Net change in cash and cash equivalents

( 14.8 ) ( 12.1 )

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

$ 78.5 $ 70.1

See Notes to the Unaudited Condensed Consolidated Financial Statements.

10 unchanged sentences

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.

During the second quarter of fiscal 2024, we determined that certain assets and liabilities were held for sale.

We have reclassified these assets and liabilities within our Condensed Consolidated Balance Sheets for all periods presented (see Note 2 ).

During the first quarter of fiscal 2025, we determined that certain assets were held for sale.

We have reclassified these assets within our Condensed Consolidated Balance Sheets for all periods presented (see Note 3).

All other adjustments are of a normal recurring nature.

2 unchanged sentences

There were no significant changes to our accounting policies from those disclosed in Note 1, “Summary of Significant Accounting Policies” , to the Consolidated Financial Statements in that Form 10-K.

Recently Adopted Accounting Pronouncements

In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022 - 04, Supplier Finance Programs (Topic 405 - 50 ) - Disclosure of Supplier Finance Program Obligations , to add disclosure requirements related to supplier financing programs under Accounting Standards Codification 405, Liabilities.

The guidance requires entities that maintain supplier financing programs to provide information in their financial statements about their use of supplier finance programs and their effect on the entity's working capital, liquidity, and cash flows.

Specifically, the amendment requires entities to disclose the key terms of their programs, amounts outstanding, balance sheet presentation, and a roll-forward of amounts outstanding during the annual period.

Only the amount outstanding at the end of the period is required to be disclosed in interim periods.

We adopted this ASU when it became effective in the first quarter of fiscal 2024, except for the roll-forward requirement, which will be effective in fiscal 2025.

The adoption of this ASU did not have a significant impact on our financial statements and related disclosures.

Recently Issued Accounting Pronouncements and Disclosure Rules

5 unchanged sentences

We are in the process of analyzing the impact of the ASU on our related disclosures.

We will adopt this guidance in the fourth quarter of fiscal 2025, when it becomes effective.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures , to provide more detailed income tax disclosure requirements.

6 unchanged sentences

Additionally, the rules require disclosure in the notes to the financial statements of the effects of severe weather events and other natural conditions, subject to certain materiality thresholds.

The disclosure requirements will begin phasing in for reports and registration statements including financial information with respect to annual periods beginning in calendar year 2025 (the Company's fiscal year 2026 ).

We are in the process of analyzing the impact of the rules on our related disclosures.

ASSETS HELD FOR SALE

During the second quarter of fiscal 2024, we initiated a plan to sell our ownership stake in Agro Tech Foods Limited, which is a majority-owned subsidiary that is consolidated within our International segment.

On February 29, 2024, subsequent to the end of the third quarter of fiscal 2024, we entered into a definitive agreement to sell this business.

The closing of the transaction is subject to certain closing conditions, including the receipt of any applicable regulatory approvals in addition to a mandatory tender offer to minority shareholders, and is expected to be completed by the end of calendar year 2024.

We expect to realize proceeds of approximately $ 78 million from the sale, which will be paid in the local currency (Indian Rupee).

The assets and liabilities have been reclassified as assets and liabilities held for sale within our Condensed Consolidated Balance Sheets for all periods presented.

In connection with this activity, we recognized an impairment charge of $ 34.2 million within selling, general and administrative ("SG&A") expenses in the second quarter of fiscal 2024.

The assets and liabilities classified as held for sale reflected in our Condensed Consolidated Balance Sheets were as follows:

February 25, 2024

In April 2024, the SEC stayed its implementation of this rule pending the outcome of legal challenges.

However, we continue to monitor developments and analyze the potential impact of the new rules on our related disclosures.

In July 2024, we acquired the manufacturing operations of an existing co-manufacturer of our cooking spray products, for a cash purchase price of $ 50.2 million, subject to certain working capital adjustments.

Approximately $ 44.7 million of the purchase price has been classified as goodwill, which is deductible for income tax purposes.

The settlement of certain pre-existing contractual agreements between Conagra and the co-manufacturer as part of the transaction resulted in a net gain of $ 2.9 million within selling, general and administrative (“SG&A”) expenses in the first quarter of fiscal 2025.

In August 2024, we acquired the outstanding equity of Sweetwood Smoke & Co., maker of FATTY ® smoked meat sticks, for a cash purchase price of $ 180.2 million, net of cash acquired and subject to certain working capital adjustments.

Approximately $ 129.9 million of the purchase price has been classified as goodwill, which is deductible for income tax purposes.

Approximately $ 55.8 million and $ 5.5 million of the purchase price has been allocated to non-amortizing and amortizing intangible assets, respectively.

For each of these acquisitions, the amounts allocated to goodwill were primarily attributable to anticipated synergies, future growth opportunities, and other intangibles that do not qualify for separate recognition such as an assembled workforce.

The results of each of these acquisitions, subsequent to the acquisitions closings, are primarily included in the Grocery & Snacks segment and through August 25, 2024, were not material to our Condensed Consolidated Statements of Earnings.

Under the acquisition method of accounting, the assets acquired and liabilities assumed in these acquisitions were recorded at their respective estimated fair values at the date of acquisition.

DIVESTITURES AND ASSETS HELD FOR SALE

During the first quarter of fiscal 2025, we completed the sale of our 51.8 % ownership stake in Agro Tech Foods Limited (“ATFL”) for net proceeds of $ 76.8 million.

Prior to the transaction, our majority ownership of ATFL was consolidated within our International segment.

We recognized a loss of $ 2.3 million on the sale within SG&A expenses in the first quarter of fiscal 2025.

In connection with this divestiture, we also released $ 41.8 million and $ 38.0 million of currency translation losses from accumulated other comprehensive loss and noncontrolling interests, respectively.

The assets and liabilities related to ATFL have been reclassified as assets and liabilities held for sale within our Condensed Consolidated Balance Sheet for the period presented prior to the divestiture.

The assets and liabilities classified as held for sale reflected in our Condensed Consolidated Balance Sheet were as follows:

Current assets

$ 30.2 $ 34.3

Noncurrent assets (including goodwill of $ 47.6 million and $ 68.8 million, respectively)

Noncurrent assets (including goodwill of $ 46.4 million)

Current liabilities

Noncurrent liabilities

Other Assets Held for Sale

As a result of management’s decision to exit a certain manufacturing facility and related warehouse in our Refrigerated & Frozen segment in fiscal 2024, we began to actively market these assets during the first quarter of fiscal 2025.

We anticipate entering into a definitive agreement to sell these assets in the next twelve months.

Accordingly, these assets have been reclassified as assets held for sale within our Condensed Consolidated Balance Sheets for all periods presented.

In addition, we actively market certain other assets from time to time.

These assets have also been reclassified as assets held for sale within our Condensed Consolidated Balance Sheets for periods prior to the disposal of the individual asset groups.

The related assets classified as held for sale reflected in our Condensed Consolidated Balance Sheets were $ 21.2 million and $ 21.4 million as of August 25, 2024 and May 26, 2024, respectively.

RESTRUCTURING ACTIVITIES

1 unchanged sentence

Conagra Restructuring Plan

In fiscal 2019, senior management initiated a restructuring plan for costs incurred in connection with actions taken to improve SG&A expense effectiveness and efficiencies and to optimize our supply chain network (the "Conagra Restructuring Plan").

As of February 25, 2024 , we had approved the incurrence of $ 228.8 million ($ 69.5 million of cash charges and $ 159.3 million of non-cash charges) for several projects associated with the Conagra Restructuring Plan.

In the third quarter and first three quarters of fiscal 2024 , we recognized charges of $ 1.5 million and $ 28.9 million, respectively, in connection with the Conagra Restructuring Plan.

In the third quarter and first three quarters of fiscal 2023 , we recognized charges of $ 1.6 million and $ 7.5 million, respectively, in connection with the Conagra Restructuring Plan.

We have recognized cumulative charges of $ 181.8 million since the inception of this plan through February 25, 2024 .

We expect to incur costs related to the Conagra Restructuring Plan over a multi-year period.

During the first three quarters of fiscal 2024 , we recognized the following pre-tax expenses for the Conagra Restructuring Plan:

Grocery & Snacks

Refrigerated & Frozen

From fiscal 2019 through August 25, 2024, we have approved $ 256.2 million ($ 81.7 million of cash charges and $ 174.5 million of non-cash charges) and recognized cumulative charges of $ 223.8 million as part of a restructuring plan to improve SG&A expense effectiveness and efficiencies and to optimize our supply chain network (the “Conagra Restructuring Plan”).

In the first quarter of fiscal 2025 and 2024, we recognized charges of $ 4.3 million and $ 23.8 million, respectively, in connection with the Conagra Restructuring Plan.

We incur costs related to the Conagra Restructuring Plan over a multi-year period.

During the first quarter of fiscal 2025, we recognized the following pre-tax expenses for the Conagra Restructuring Plan:

International

Accelerated depreciation

$ 6.0 $ 0.2 $ — $ — $ 6.2

Other cost of goods sold

— — 1.8 — 1.8

Total cost of goods sold

6.0 0.2 1.8 — 8.0

Severance and related costs

0.7 — 4.3 — 5.0

Asset impairment

0.6 — 14.1 — 14.7

Consulting/professional fees

0.2 0.1 — — 0.3

— 0.8 — 0.1 0.9

1.5 0.9 18.4 0.1 20.9

$ 7.5 $ 1.1 $ 20.2 $ 0.1 $ 28.9

Contract/lease termination

Included in the above results are $ 2.6 million of charges that have resulted or will result in cash outflows and $ 1.7 million in non-cash charges.

Liabilities recorded for the Conagra Restructuring Plan and changes therein for the first three quarters of fiscal 2024 were as follows:

Balance at May 28, 2023

Costs Incurred and Charged to Expense

Costs Paid or Otherwise Settled

Changes in Estimates

Balance at February 25, 2024

Liabilities recorded for the Conagra Restructuring Plan and changes therein for the first quarter of fiscal 2025 were as follows:

Costs Paid or

Otherwise Settled

August 25, 2024

Severance and related costs

$ 1.7 $ 4.9 $ ( 1.8 ) $ 0.1 $ 4.9

Consulting/professional fees

0.2 0.3 ( 0.5 ) — —

— 0.9 ( 0.9 ) — —

$ 1.9 $ 6.1 $ ( 3.2 ) $ 0.1 $ 4.9

Contract/lease termination

DEBT AND REVOLVING CREDIT FACILITY

During the fourth quarter of fiscal 2024, we repaid the entire outstanding $ 1.0 billion aggregate principal amount of our 4.30 % senior notes on their maturity date of May 1, 2024.

The repayment was funded by an unsecured term loan described below, along with the issuance of commercial paper and operating cash flows.

During the first quarter of fiscal 2024, we repaid the entire outstanding $ 500.0 million aggregate principal amount of our 0.50 % senior notes on their maturity date of August 11, 2023.

The repayment was primarily funded using the net proceeds from the issuance of $ 500.0 million aggregate principal amount of 5.30 % senior notes due October 1, 2026.

During the third quarter of fiscal 2023, we repaid the remaining outstanding $ 437.0 million aggregate principal amount of our 3.20 % senior notes on their maturity date of January 25, 2023.

During the second quarter of fiscal 2023, we repaid the entire outstanding $ 250.0 million aggregate principal amount of our 3.25 % senior notes on their maturity date of September 15, 2022.

During the fourth quarter of fiscal 2024, we entered into an unsecured Term Loan Agreement with a financial institution and borrowed the full principal amount, $ 300.0 million, available thereunder (the “2024 Term Loan”).

The 2024 Term Loan matures on April 29, 2025.

During the second quarter of fiscal 2023, we borrowed the full $ 500.0 million aggregate principal amount available under our unsecured term loan (the “Term Loan”) from a syndicate of financial institutions.

2 unchanged sentences

Revolving Credit Facility

At February 25, 2024 , we had a revolving credit facility (the "Revolving Credit Facility") with a syndicate of financial institutions providing for a maximum aggregate principal amount outstanding at any one time of $ 2.0 billion (subject to increase to a maximum aggregate principal amount of $ 2.5 billion with consent of the lenders).

At August 25, 2024, we had a revolving credit facility (the “Revolving Credit Facility”) with a syndicate of financial institutions providing for a maximum aggregate principal amount outstanding at any one time of $ 2.0 billion (subject to increase to a maximum aggregate principal amount of $ 2.5 billion with consent of the lenders).

The Revolving Credit Facility matures on August 26, 2027 and is unsecured.

The Company may request the term of the Revolving Credit Facility be extended for additional one-year or two-year periods from the then-applicable maturity date on an annual basis.

As of February 25, 2024 , there were no outstanding borrowings under the Revolving Credit Facility.

As of August 25, 2024, there were no outstanding borrowings under the Revolving Credit Facility.

Debt Covenants

The Revolving Credit Facility generally requires our ratio of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to interest expense to be not less than 3.0 to 1.0 and our ratio of funded net 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 February 25, 2024 , we were in compliance with all financial covenants under the Revolving Credit Facility.

As of August 25, 2024, we were in compliance with all financial covenants under the Revolving Credit Facility.

Commercial Paper

As of February 25, 2024 and May 28, 2023 , we had $ 116.0 million and $ 576.0 million, respectively, outstanding under our commercial paper program.

As of August 25, 2024 and May 26, 2024, we had $ 926.0 million and $ 586.0 million, respectively, outstanding under our commercial paper program.

Interest Expense

1 unchanged sentence

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

February 25, 2024

February 26, 2023

February 25, 2024

February 26, 2023

August 25, 2024

August 27, 2023

Long-term debt

$ 103.9 $ 101.2 $ 314.7 $ 299.3

Short-term debt

6.1 6.0 21.6 10.0

Interest income

( 1.4 ) ( 1.1 ) ( 3.3 ) ( 2.6 )

Interest capitalized

( 2.1 ) ( 1.9 ) ( 7.2 ) ( 5.1 )

$ 106.5 $ 104.2 $ 325.8 $ 301.6

FINANCING ARRANGEMENTS

4 unchanged sentences

Our current payment terms with these suppliers, which we deem to be commercially reasonable, range up to 120 days .

We have no direct financial relationship with the financial institutions, and we have pledged no assets in connection with our accounts payable programs.

We have no direct financial relationship with the financial institutions utilized by the third parties, and we have pledged no assets in connection with our accounts payable programs.

All amounts due to participating suppliers are paid to the third party on the original invoice due dates, regardless of whether a particular invoice was sold.

Supplier participation in these agreements is voluntary.

As of February 25, 2024 and May 28, 2023 , $ 321.3 million and $ 355.1 million, respectively, of our total accounts and other payables were payable to suppliers who utilized these third -party services.

As of August 25, 2024 and May 26, 2024, $ 308.9 million and $ 334.1 million, respectively, of our total accounts and other payables were payable to suppliers who utilized these third-party services.

The associated payments are included in net cash flows from operating activities within our Condensed Consolidated Statements of Cash Flows.

1 unchanged sentence

The proceeds and payments associated with short-term borrowings are reflected as financing activities within our Condensed Consolidated Statements of Cash Flows.

As of February 25, 2024 and May 28, 2023 , we had approximately $ 50.3 million and $ 62.5 million, respectively, of short-term borrowings related to these arrangements.

Non-cash Lease Arrangements

In the first quarter of fiscal 2024 , we took control of a third -party distribution facility that was assessed to be a finance lease.

At lease commencement, the term of the lease was 20 years with a discount rate of 5.42 %.

As a result, we recorded a $ 165.3 million finance lease right-of-use asset reflected in property, plant and equipment along with a corresponding finance lease obligation reflected in long-term debt (including current installments) within our Condensed Consolidated Balance Sheets.

As of August 25, 2024 and May 26, 2024, we had approximately $ 42.9 million and $ 43.2 million, respectively, of short-term borrowings related to these arrangements.

GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

The change in the carrying amount of goodwill for the first three quarters of fiscal 2024 , excluding amounts classified as held for sale (see Note 2 ), was as follows:

Grocery & Snacks

Refrigerated & Frozen

The change in the carrying amount of goodwill for the first quarter of fiscal 2025 was as follows:

International

Balance as of May 26, 2024

$ 4,692.4 $ 5,469.5 $ 214.7 $ 732.8 $ 11,109.4

Currency translation

— — 0.5 — 0.5

Balance as of February 25, 2024

$ 4,692.4 $ 5,469.5 $ 215.2 $ 732.8 $ 11,109.9

Other identifiable intangible assets, excluding amounts classified as held for sale, were as follows:

February 25, 2024

Gross Carrying Amount

Accumulated Amortization

Gross Carrying Amount

Accumulated Amortization

Balance as of August 25, 2024

Other identifiable intangible assets were as follows:

August 25, 2024

Non-amortizing intangible assets

Brands and trademarks

$ 2,457.0 $ — $ 2,457.0 $ —

Amortizing intangible assets

Customer relationships and intellectual property

1,232.2 537.1 1,232.0 496.7

$ 3,689.2 $ 537.1 $ 3,689.0 $ 496.7

During the first quarter of fiscal 2023, management reorganized its reporting structure for certain brands within two reporting units in our Refrigerated & Frozen segment.

The change in management reporting required us to reassign assets and liabilities, including goodwill, between the reporting units, complete a goodwill impairment test both prior to and subsequent to the change, and evaluate other assets in the reporting units for impairment, including indefinite-lived intangibles (brand names and trademarks).

The fair value of our indefinite-lived intangibles was determined using the "relief from royalty" methodology.

As a result of our impairment tests, we recognized goodwill impairment charges within SG&A expenses of $ 141.7 million within our Sides, Components, Enhancers reporting unit in the first quarter of fiscal 2023.

In addition, we recognized an impairment charge within SG&A expenses of $ 244.0 million related to our Birds Eye ® brand name in the first quarter of fiscal 2023.

Amortizing intangible assets carry a remaining weighted average life of approximately 17 years .

Amortization expense was $ 13.4 million and $ 40.2 million for the third quarter and first three quarters of fiscal 2024 , respectively, and $ 13.8 million and $ 43.3 million for the third quarter and first three quarters of fiscal 2023 , respectively.

Based on amortizing assets recognized in our Condensed Consolidated Balance Sheet as of February 25, 2024 , amortization expense is estimated to average $ 44.8 million for each of the next five years.

Amortization expense was $ 13.4 million and $ 13.5 million for the first quarter of fiscal 2025 and 2024, respectively.

Based on amortizing assets recognized in our Condensed Consolidated Balance Sheet as of August 25, 2024, amortization expense is estimated to average $ 44.0 million for each of the next five years.

DERIVATIVE FINANCIAL INSTRUMENTS

3 unchanged sentences

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 February 25, 2024 was $ 28.8 million.

The unamortized amount at August 25, 2024 was $ 27.4 million.

Economic Hedges of Forecasted Cash Flows

5 unchanged sentences

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

February 25, 2024

February 26, 2023

February 25, 2024

February 26, 2023

August 25, 2024

August 27, 2023

Gross derivative gains (losses) incurred

$ ( 8.3 ) $ ( 16.8 ) $ 1.2 $ ( 2.1 )

Net derivative gains (losses) allocated to reporting segments

( 1.5 ) 5.9 ( 8.4 ) 22.5

Net derivative losses allocated to reporting segments

Net derivative gains (losses) recognized in general corporate expenses

$ ( 6.8 ) $ ( 22.7 ) $ 9.6 $ ( 24.6 )

Net derivative gains (losses) allocated to Grocery & Snacks

$ ( 0.6 ) $ 1.0 $ ( 3.8 ) $ 8.5

Net derivative gains (losses) allocated to Refrigerated & Frozen

( 0.2 ) 3.0 ( 0.4 ) 10.6

Net derivative gains (losses) allocated to International

( 0.7 ) 1.5 ( 4.3 ) 2.2

Net derivative gains allocated to Foodservice

— 0.4 0.1 1.2

Net derivative gains (losses) included in segment operating profit

$ ( 1.5 ) $ 5.9 $ ( 8.4 ) $ 22.5

The fair values of our derivative positions were not material as of February 25, 2024 and were Level 1 or Level 2 assets or liabilities in the fair value hierarchy (see Note 15 for further information).

Net derivative losses allocated to Grocery & Snacks

Net derivative losses allocated to Refrigerated & Frozen

Net derivative losses allocated to International

Net derivative losses allocated to Foodservice

Net derivative losses included in segment operating profit

The fair values of our derivative positions were not material as of August 25, 2024 and were Level 1 or Level 2 assets or liabilities in the fair value hierarchy (see Note 16 for further information).

We have not significantly changed our valuation techniques from prior periods.

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

February 25, 2024

February 26, 2023

Commodity contracts

Cost of goods sold

$ ( 6.6 ) $ ( 15.7 )

Foreign exchange contracts

Cost of goods sold

( 1.7 ) ( 1.0 )

Total gains (losses) from derivative instruments not designated as hedging instruments

$ ( 8.3 ) $ ( 16.7 )

Gains (Losses) Recognized on

Derivatives in Condensed Consolidated

Location in Condensed Consolidated

Gains (Losses) Recognized on Derivatives in Condensed Consolidated Statements of Earnings for the Thirty-Nine Weeks Ended

Statements of Earnings for the

Statements of Earnings of Gains (Losses)

Thirteen Weeks Ended

Derivatives Not Designated as Hedging Instruments

Statements of Earnings of Gains (Losses) Recognized on Derivatives

February 25, 2024

February 26, 2023

Recognized on Derivatives

August 25, 2024

August 27, 2023

Commodity contracts

Cost of goods sold

$ 5.0 $ ( 5.8 )

Foreign exchange contracts

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Total gains (losses) from derivative instruments not designated as hedging instruments

$ 1.2 $ ( 2.1 )

As of February 25, 2024 , our open commodity contracts had a notional value (defined as notional quantity times market value per notional quantity unit) of $ 85.5 million for purchase contracts and $ 0.7 for sales contracts.

As of May 28, 2023 , our open commodity contracts had a notional value of $ 134.6 million for purchase contracts.

The notional amount of our foreign currency forward contracts as of February 25, 2024 and May 28, 2023 was $ 92.2 million and $ 87.3 million, respectively.

As of August 25, 2024, our open commodity contracts had a notional value (defined as notional quantity times market value per notional quantity unit) of $ 106.7 million for purchase contracts and $ 1.4 million for sales contracts.

As of May 26, 2024, our open commodity contracts had a notional value of $ 88.2 million for purchase contracts and $ 11.0 million for sales contracts.

The notional amount of our foreign currency forward contracts as of August 25, 2024 and May 26, 2024 was $ 104.6 million and $ 101.5 million, respectively.

SHARE-BASED PAYMENTS

For the third quarter and first three quarters of fiscal 2024, we recognized total stock-based compensation expense (including restricted stock units and performance shares) of $ 15.2 million and $ 18.7 million, respectively.

F or the third quarter and first three quarters of fiscal 2023, we recognized total stock-based compensation expense of $ 9.8 million and $ 68.8 million, respectively.

In the first three quarters of fiscal 2024, we granted 1.9 million restricted stock units at a weighted average grant date price of $ 32.53 per share unit and 0.9 million performance shares at a weighted average grant date price of $ 32.57 per share.

For the first quarter of fiscal 2025 and 2024, we recognized total stock-based compensation expense (including restricted stock units and performance shares) of $ 20.6 million and income of $ 2.7 million, respectively.

In the first quarter of fiscal 2025, we granted 2.2 million restricted stock units at a weighted average grant date price of $ 29.85 per share unit and 0.7 million performance shares at a weighted average grant date price of $ 29.86 per share.

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 the three -year performance period ending in fiscal 2024 (the "2024 performance period") is based on our diluted earnings per share ("EPS") compound annual growth rate ("CAGR"), subject to certain adjustments, measured over the defined performance period.

The performance goals for the three -year performance periods ending in fiscal 2025 (the "2025 performance period") and 2026 (the "2026 performance period") are based on our net sales and diluted EPS growth, subject to certain adjustments, measured over the defined performance period, with each year of the performance period weighted one -third.

The performance goals for the three -year performance periods ending in fiscal 2025 (the “2025 performance period”) and 2026 (the “2026 performance period”) are based on our net sales and diluted earnings per share (“EPS”) growth, subject to certain adjustments, measured over the defined performance period, with each year of the performance period weighted one-third.

The performance goals for the three -year performance period ending in fiscal 2027 (the “2027 performance period”) is based on our net sales and diluted EPS on a three-year cumulative basis, subject to certain adjustments, measured over the defined performance period.

For each of the 2025 performance period, 2026 performance period, and 2027 performance period, the awards actually earned will range from zero to two hundred percent of the targeted number of performance shares for such performance period.

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Thirteen Weeks Ended

Thirty-Nine Weeks Ended

February 25, 2024

February 26, 2023

February 25, 2024

February 26, 2023

August 25, 2024

August 27, 2023

Net income attributable to Conagra Brands, Inc.

common stockholders:

$ 308.6 $ 341.7 $ 914.5 $ 646.1

Weighted average shares outstanding:

Basic weighted average shares outstanding

478.8 477.5 478.5 479.3

Dilutive effect of stock options, restricted stock unit awards, and other dilutive securities

1.2 1.9 1.4 1.7

Diluted weighted average shares outstanding

480.0 479.4 479.9 481.0

For the third quarter and first three quarters of fiscal 2024 , there were 1.3 million and 1.1 million stock options outstanding, respectively, that were excluded from the computation of diluted weighted average shares because the effect was antidilutive.

For the third quarter and first three quarters of fiscal 2023 , there were 0.2 million and 0.6 million stock options outstanding, respectively, that were excluded from the computation.

For the first quarter of fiscal 2025 and 2024, there were 1.3 million and 0.6 million stock options outstanding, respectively, that were excluded from the computation of diluted weighted average shares because the effect was antidilutive.

The major classes of inventories were as follows:

February 25, 2024

August 25, 2024

Raw materials and packaging

$ 337.1 $ 368.2

Work in process

Finished goods

1,387.2 1,517.7

Supplies and other

$ 2,143.4 $ 2,212.2

In the third quarter of fiscal 2024 and 2023 , we recognized income tax expense of $ 95.9 million and $ 100.1 million, respectively.

The effective tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was 23.7 % and 22.6 % for the third quarter of fiscal 2024 and 2023 , respectively.

In the first three quarters of fiscal 2024 and 2023 , we recognized income tax expense of $ 297.1 million and $ 237.0 million, respectively.

The effective tax rate was 24.5 % and 26.8 % for the first three quarters of fiscal 2024 and 2023 , respectively.

The effective tax rate in the third quarter of fiscal 2024 reflected a tax benefit related to certain changes in estimates upon completing our fiscal 2023 federal tax return.

The effective tax rate in the first three quarters of fiscal 2024 reflected the above cited item, as well as the impact of an impairment of goodwill that is non-deductible for tax purposes, and tax expense associated with no longer asserting permanent reinvestment of a foreign subsidiary when we reclassified certain assets and liabilities to held for sale.

During the first three quarters of fiscal 2024, goodwill impairment charges totaling $ 20.7 million were recognized with no associated tax benefit.

The effective tax rate in the third quarter of fiscal 2023 reflected a tax benefit from statute lapses on state tax issues that were previously reserved and a benefit related to certain changes in estimates.

The effective tax rate in the first three quarters of fiscal 2023 reflected the above-cited items, as well as additional tax expense from disallowed deductions related to incentive compensation plans resulting from an increased level of estimated achievement on performance targets and stock price, a benefit from the adjustment of certain foreign taxes that were previously accrued, and the impact of an impairment of goodwill that was largely non-deductible for tax purposes.

During the first three quarters of fiscal 2023, goodwill impairment charges totaling $ 141.7 million were recognized with an associated tax benefit of $ 2.7 million.

The amount of gross unrecognized tax benefits for uncertain tax positions was $ 25.4 million as of February 25, 2024 and $ 23.7 million as of May 28, 2023 .

These amounts include the issue of certain elections made in connection with our fiscal 2021 federal tax return which remains under review with the U.S.

Internal Revenue Service.

The gross unrecognized tax benefits excluded related liabilities for gross interest and penalties of $ 6.4 million and $ 5.6 million as of February 25, 2024 and May 28, 2023 , respectively.

The net amount of unrecognized tax benefits at February 25, 2024 and May 28, 2023 that, if recognized, would favorably impact the Company's effective tax rate was $ 22.7 million and $ 21.3 million, respectively.

We estimate that it is reasonably possible that the amount of gross unrecognized tax benefits will decrease by up to $ 13.4 million over the next twelve months due to various audit settlements and the expiration of statutes of limitations.

In the first quarter of fiscal 2025 and 2024, we recognized an income tax benefit of $ 138.9 million and income tax expense of $ 98.3 million, respectively.

The effective tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was ( 42.4 )% and 23.5 % for the first quarter of fiscal 2025 and 2024, respectively.

The effective tax rate in the first quarter of fiscal 2025 reflected a $ 210.4 million deferred tax benefit related to the release of valuation allowances booked against certain deferred tax assets.

Recent interactions with the U.S.

Internal Revenue Service (IRS) regarding certain elections that had previously been under IRS review make the realization of certain deferred tax assets likely.

The realization of these deferred tax assets allows for both current and future tax deductions through 2036.

The effective tax rate in the first quarter of fiscal 2024 was in line with our expected effective tax rate of approximately 24 %.

We have previously made the assessment that the current earnings of certain foreign subsidiaries were not indefinitely reinvested or that we could not remit to the U.S.

parent in a tax-neutral transaction.

Accordingly, we had recorded a deferred tax liability of $ 16.2 million on approximately $ 324.6 million of cumulative earnings at February 25, 2024 .

Accordingly, we have recorded a deferred tax liability of $ 1.6 million on approximately $ 33.7 million of cumulative earnings as of August 25, 2024.

The deferred tax liability relates to local withholding taxes that will be owed when this cash is distributed.

The undistributed historic earnings in our foreign subsidiaries through May 30, 2021 are considered to be indefinitely reinvested or can be remitted in a tax-neutral transaction.

Accordingly, we have not recorded a deferred tax liability related to these undistributed historic earnings.

On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law.

We have determined that we are not subject to the corporate alternative minimum tax at this time.

In the first quarter of fiscal 2025, we paid $ 16.9 million of withholding taxes previously accrued in connection with the restructuring of our ownership interest in Ardent Mills.

CONTINGENCIES

Litigation Matters

We are a party to certain litigation matters as a result of our acquisition of Beatrice Company ("Beatrice") in fiscal 1991, including litigation proceedings related to lead-based paint and pigment businesses divested by Beatrice prior to our acquisition.

We are a party to certain litigation matters as a result of our acquisition of Beatrice Company (“Beatrice”) in fiscal 1991, including litigation proceedings related to lead-based pigment businesses divested by Beatrice prior to our acquisition.

These lawsuits have generally sought damages for personal injury, property damage, economic loss, and governmental expenditures allegedly caused by the use of lead-based paint.

We have denied liability, both on the merits of the claims and on the basis that we do not believe we are the successor to any such liability.

In one such action in California, we agreed to pay $ 101.7 million, in seven annual installments from fiscal 2020 through fiscal 2026 (of which $ 73.0 million had been paid as of February 25, 2024), pursuant to a 2019 settlement, which settlement also included a default guarantee for up to $ 15.0 million in payments to be made by co-defendant, NL Industries, Inc.

We had accrued $ 28.8 million ($ 11.7 million within other accrued liabilities and $ 17.1 million within other noncurrent liabilities) as of February 25, 2024 and $ 40.7 million ($ 11.8 million within other accrued liabilities and $ 28.9 million within other noncurrent liabilities) as of May 28, 2023 for this matter.

We are a 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.

On October 31, 2023, a jury entered a verdict against the Company for $ 3.1 million in compensatory damages and $ 4.0 million in punitive damages in one of these lawsuits, captioned Reese v.

In one such action, we agreed to pay $ 101.7 million, in seven annual installments from fiscal 2020 through fiscal 2026 (of which $ 73.0 million had been paid as of August 25, 2024), as part of a 2019 settlement, which also included a guarantee of up to $ 15.0 million in payments to be made in the event of default by a co-defendant, NL Industries, Inc.

We had accrued $ 28.7 million ($ 12.0 million within other accrued liabilities and $ 16.7 million within other noncurrent liabilities) as of August 25, 2024 and $ 28.9 million ($ 11.8 million within other accrued liabilities and $ 17.1 million within other noncurrent liabilities) as of May 26, 2024.

We are party to a number of matters asserting product liability claims against the Company related to certain Pam ® and other cooking spray products.

For example, during fiscal 2024, a jury entered a verdict against the Company for $ 3.1 million in compensatory damages and $ 4.0 million in punitive damages in one of these lawsuits captioned Reese v.

Conagra Brands, Inc., et al.

We have appealed the judgment in the Reese lawsuit.

We have put the Company's insurance carriers on notice of these matters regarding our cooking spray products.

While we cannot predict with certainty the results of these or any other legal proceedings, the Company believes adequate provision has been made in its Condensed Consolidated Financial Statements for all probable and reasonably estimable losses for the litigation related to the cooking spray products based on information available to us at the time of our evaluation.

We are a party to various other lawsuits such as putative class action lawsuits challenging various product claims made in the Company's product labeling and matters challenging the Company's wage and hour practices.

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.

Our accrual for all litigation matters, including those matters described above that are probable and estimable, was

$ 68.0 million (

$ 25.0 million within other accrued liabilities and

$ 43.0 million within other noncurrent liabilities) as of

February 25, 2024 and

$ 51.3 million (

$ 22.4 million within other accrued liabilities and

$ 28.9 million within other noncurrent liabilities) as of

May 28, 2023 .

These lawsuits generally seek damages for personal injuries allegedly caused by defects in the design, manufacture, or safety warnings of our cooking spray products and we have denied liability, however, we cannot predict with certainty the results of these proceedings.

The Company believes adequate provision has been made in its Condensed Consolidated Financial Statements for all probable and reasonably estimable losses for the litigation related to the cooking spray products based on information available to us at the time of our evaluation.

Additionally, we have put the applicable insurance carriers on notice of these cooking spray matters and had recognized a related insurance receivable of $ 9.7 million ($ 4.7 million within receivables and $ 5.0 million within other assets) as of August 25, 2024 and $ 14.7 million ($ 7.1 million within receivables and $ 7.6 million within other assets) as of May 26, 2024 in connection with a settlement agreement with one of these insurance carriers.

We are party to various other lawsuits such as putative class action lawsuits challenging various product claims made in the Company’s product labeling and matters challenging the Company’s wage and hour practices.

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.

Our accrual for all litigation matters, including those matters described above that are probable and estimable, was $ 68.6 million ($ 32.5 million within other accrued liabilities and $ 36.1 million within other noncurrent liabilities) as of August 25, 2024 and $ 76.3 million ($ 30.4 million within other accrued liabilities and $ 45.9 million within other noncurrent liabilities) as of May 26, 2024.

Environmental Matters

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.

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.

2 unchanged sentences

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 $ 38.4 million ($ 1.5 million within other accrued liabilities and $ 36.9 million within other noncurrent liabilities) as of February 25, 2024 and $ 40.1 million ($ 1.5 million within other accrued liabilities and $ 38.6 million within other noncurrent liabilities) as of May 28, 2023, a majority of which relates to the Superfund and state-equivalent sites referenced above.

Guarantees and Other Contingencies

In certain limited situations, we will guarantee an obligation of an unconsolidated entity.

As of February 25, 2024, we continued to guarantee an obligation of the Lamb Weston business pursuant to a guarantee arrangement that existed prior to the spinoff of the Lamb Weston business (the "Spinoff"), remained in place following completion of the Spinoff, and will remain in place until such guarantee obligation is substituted for guarantees issued by Lamb Weston.

Pursuant to the separation and distribution agreement, dated as of November 8, 2016 ( the "Separation Agreement"), between us and Lamb Weston, this guarantee arrangement is deemed a liability of Lamb Weston that was transferred to Lamb Weston as part of the Spinoff.

Accordingly, under the Separation Agreement, in the event that we are required to make any payments as a result of this guarantee arrangement, Lamb Weston is obligated to indemnify us for any such liability, reduced by any insurance proceeds received by us.

Lamb Weston is a party to an agricultural sublease agreement with a third party for certain farmland through 2025 (subject, at Lamb Weston's option, to extension for one additional five -year period).

Under the terms of the sublease agreement, Lamb Weston is required to make certain rental payments to the sublessor.

We have guaranteed to the sublessor Lamb Weston's performance and the payment of all amounts (including indemnification obligations) owed by Lamb Weston under the sublease agreement, up to a maximum of $ 75.0 million.

We believe the farmland associated with this sublease agreement is readily marketable for lease to other area farming operators.

As such, we believe that any financial exposure to the Company, in the event that we were required to perform under the guarantee, would be largely mitigated.

We also guarantee a lease resulting from an exited facility.

As of February 25, 2024 , the remaining term of this arrangement did not exceed three years and the maximum amount of guaranteed future payments was $ 6.7 million.

The accrual for Beatrice-related environmental matters totaled $ 39.0 million ($ 3.2 million within other accrued liabilities and $ 35.8 million within other noncurrent liabilities ) as of August 25, 2024 and $ 39.3 million ($ 3.3 million within other accrued liabilities and $ 36.0 million within other noncurrent liabilities ) as of May 26, 2024, a majority of which relates to the Superfund and state-equivalent sites referenced above.

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;

5 unchanged sentences

We also sponsor postretirement plans which provide certain medical and dental benefits to qualifying U.S.

During the second quarter of fiscal 2024 , the Company provided a voluntary lump-sum settlement offer to certain vested participants in the salaried and hourly pension plans in order to reduce a portion of the pension obligation.

During the third quarter of fiscal 2024 , approximately $ 135 million was distributed from the pension plan assets in connection with this offer.

The lump-sum settlement did exceed our service and interest cost for our hourly pension plans, which required a remeasurement in the third quarter of fiscal 2024.

In connection with the remeasurement, we updated the effective discount rate assumption for the impacted pension plan obligations from 5.52 % to 5.20 %, as of December 31, 2023.

The settlement and related remeasurement resulted in the recognition of an immaterial settlement loss, reflected in pension and postretirement non-service expense (income), as well as a loss in other comprehensive income (loss) totaling $ 6.8 million in the third quarter of fiscal 2024.

Components of pension and postretirement plan costs (benefits) are:

1 unchanged sentence

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

February 25, 2024

February 26, 2023

February 25, 2024

February 26, 2023

$ 1.5 $ 1.6 $ 4.4 $ 4.9

August 25, 2024

August 27, 2023

Interest cost

36.1 31.0 109.5 93.0

Expected return on plan assets

( 35.3 ) ( 36.5 ) ( 106.9 ) ( 109.4 )

Amortization of prior service cost

0.4 0.4 1.2 1.1

Settlement loss

Pension cost (benefit) — Company plans

3.8 ( 3.5 ) 9.3 ( 10.4 )

Pension cost (benefit) — multi-employer plans

2.1 2.0 6.9 7.0

Total pension cost (benefit)

$ 5.9 $ ( 1.5 ) $ 16.2 $ ( 3.4 )

Postretirement Plans

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

February 25, 2024

February 26, 2023

February 25, 2024

February 26, 2023

$ — $ — $ 0.1 $ 0.1

August 25, 2024

August 27, 2023

Interest cost

0.7 0.6 2.0 1.7

Amortization of prior service cost (benefit)

( 0.4 ) ( 0.4 ) ( 1.2 ) ( 1.3 )

Recognized net actuarial gain

( 1.2 ) ( 1.1 ) ( 3.6 ) ( 3.3 )

Total postretirement cost (benefit)

$ ( 0.9 ) $ ( 0.9 ) $ ( 2.7 ) $ ( 2.8 )

The Company uses a split discount rate (spot-rate approach) for the U.S.

1 unchanged sentence

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 cost as of May 29, 2023 were 5.64 % and 5.44 %, respectively.

The weighted-average discount rates for service and interest costs subsequent to December 31, 2023 were 5.60 % and 5.41 %, respectively.

During the third quarter and first three quarters of fiscal 2024, we contributed $ 3.2 million and $ 9.2 million, respectively, to our pension plans and contributed $ 1.7 million and $ 4.7 million, respectively, to our postretirement plans.

The weighted-average discount rates for service and interest costs under the spot-rate approach used for pension cost in fiscal 2025 were 5.72 % and 5.51 %, respectively.

During the first quarter of fiscal 2025, we contributed $ 2.9 million to our pension plans and contributed $ 1.9 million to our postretirement plans.

Based upon the current funded status of the plans and the current interest rate environment, we anticipate making further contributions of approximately $ 8.8 million to our pension plans during the remainder of fiscal 2025.

2 unchanged sentences

STOCKHOLDERS’ EQUITY

The following table presents a reconciliation of our stockholders' equity accounts for the thirty-nine weeks ended February 25, 2024 :

The following table presents a reconciliation of our stockholders’ equity accounts for the thirteen weeks ended August 25, 2024:

Conagra Brands, Inc.

Stockholders' Equity

Common Shares

Additional Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Treasury Stock

Noncontrolling Interests

Comprehensive

Noncontrolling

Balance at May 26, 2024

584.2 $ 2,921.2 $ 2,376.9 $ 6,599.4 $ (44.4 ) $ (3,116.3 ) $ 70.5 $ 8,807.3

Stock option and incentive plans

( 42.9 ) 1.1 25.6 ( 16.2 )

Currency translation adjustments

10.7 ( 0.1 ) 10.6

Repurchase of common shares

Derivative adjustments

1 unchanged sentence

Pension and postretirement healthcare benefits

( 0.8 ) ( 0.8 )

Dividends declared on common stock;

$ 0.35 per share

( 167.3 ) ( 167.3 )

Net income attributable to Conagra Brands, Inc.

Balance at August 25, 2024

584.2 $ 2,921.2 $ 2,334.0 $ 6,752.9 $ ( 32.9 ) $ ( 3,090.7 ) $ 70.6 $ 8,955.1

Stock option and incentive plans

5.6 ( 0.4 ) 1.1 0.3 6.6

Currency translation adjustments

( 5.6 ) ( 0.7 ) ( 6.3 )

Derivative adjustments

Pension and postretirement healthcare benefits

( 1.0 ) ( 1.0 )

Dividends declared on common stock;

$ 0.35 per share

( 167.2 ) ( 167.2 )

Net income attributable to Conagra Brands, Inc.

Balance at November 26, 2023

584.2 $ 2,921.2 $ 2,339.6 $ 6,871.5 $ ( 38.7 ) $ ( 3,089.6 ) $ 70.2 $ 9,074.2

Stock option and incentive plans

14.1 ( 1.0 ) 1.7 14.8

Currency translation adjustments

Derivative adjustments

( 4.1 ) ( 4.1 )

Activities of noncontrolling interests

Pension and postretirement healthcare benefits

( 5.6 ) ( 5.6 )

Dividends declared on common stock;

$ 0.35 per share

(167.4 ) ( 167.4 )

Net income attributable to Conagra Brands, Inc.

Balance at February 25, 2024

584.2 $ 2,921.2 $ 2,353.7 $ 7,011.7 $ (43.8 ) $ (3,087.9 ) $ 70.6 $ 9,225.5

The following table presents a reconciliation of our stockholders' equity accounts for the thirty-nine weeks ended February 26, 2023 :

The following table presents a reconciliation of our stockholders’ equity accounts for the thirteen weeks ended August 27, 2023:

Conagra Brands, Inc.

Stockholders' Equity

Common Shares

Additional Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Treasury Stock

Noncontrolling Interests

Comprehensive

Noncontrolling

Balance at May 28, 2023

584.2 $ 2,921.2 $ 2,324.6 $ 6,550.7 $ ( 11.2 ) $ ( 2,997.6 ) $ 74.5 $ 8,862.2

Stock option and incentive plans

( 1.6 ) 0.2 16.3 14.9

Currency translation adjustments

( 11.5 ) ( 2.1 ) ( 13.6 )

Repurchase of common shares

( 50.0 ) ( 50.0 )

Derivative adjustments

( 2.1 ) ( 2.1 )

Pension and postretirement healthcare benefits

Dividends declared on common stock;

$ 0.33 per share

( 158.6 ) ( 158.6 )

Net loss attributable to Conagra Brands, Inc.

( 77.5 ) ( 77.5 )

Balance at August 28, 2022

584.2 $ 2,921.2 $ 2,323.0 $ 6,314.8 $ ( 23.4 ) $ ( 3,031.3 ) $ 72.4 $ 8,576.7

Stock option and incentive plans

37.9 ( 2.4 ) 3.6 0.5 39.6

Currency translation adjustments

( 6.5 ) ( 1.7 ) ( 8.2 )

Repurchase of common shares

( 100.0 ) ( 100.0 )

Derivative adjustments

Activities of noncontrolling interests

Pension and postretirement healthcare benefits

( 1.3 ) (0.1 ) ( 1.4 )

Dividends declared on common stock;

$ 0.35 per share

( 157.8 ) ( 157.8 )

Net income attributable to Conagra Brands, Inc.

Balance at November 27, 2022

584.2 $ 2,921.2 $ 2,360.9 $ 6,536.5 $ ( 24.6 ) $ ( 3,127.7 ) $ 71.4 $ 8,737.7

Stock option and incentive plans

7.3 ( 0.8 ) 8.2 1.5 16.2

Currency translation adjustments

5.8 ( 1.5 ) 4.3

Derivative adjustments

( 3.9 ) ( 3.9 )

Activities of noncontrolling interests

Pension and postretirement healthcare benefits

( 0.8 ) ( 0.8 )

Dividends declared on common stock;

$ 0.33 per share

( 157.4 ) ( 157.4 )

Net income attributable to Conagra Brands, Inc.

Balance at February 26, 2023

584.2 $ 2,921.2 $ 2,368.2 $ 6,720.0 $ ( 23.5 ) $ ( 3,119.5 ) $ 71.9 $ 8,938.3

Balance at August 27, 2023

The following table details the accumulated balances for each component of other comprehensive loss, net of tax:

February 25, 2024

August 25, 2024

Currency translation losses, net of reclassification adjustments

$ ( 90.0 ) $ ( 99.7 )

Derivative adjustments, net of reclassification adjustments

1 unchanged sentence

Accumulated other comprehensive loss

$ ( 43.8 ) $ ( 44.4 )

The following tables summarize the reclassifications from accumulated other comprehensive income (loss) into income:

Affected Line Item in the Condensed Consolidated Statement of

Thirteen Weeks Ended

Affected Line Item in the Condensed Consolidated Statement of Earnings 1

February 25, 2024

February 26, 2023

August 25, 2024

August 27, 2023

Net derivative adjustments:

5 unchanged sentences

Income tax expense

$ ( 1.6 ) $ ( 1.2 ) Net of tax

Pension and postretirement liabilities:

Pension settlement

$ 1.1 $ — Pension and postretirement non-service income

Net actuarial gain

2 unchanged sentences

Income tax expense

$ ( 0.1 ) $ ( 0.8 ) Net of tax

Thirty-Nine Weeks Ended

Affected Line Item in the Condensed Consolidated Statement of Earnings 1

February 25, 2024

February 26, 2023

Net derivative adjustments:

Cash flow hedges

$ ( 2.7 ) $ ( 2.5 ) Interest expense, net

Cash flow hedges

( 3.5 ) ( 0.7 ) Equity method investment earnings

( 6.2 ) ( 3.2 ) Total before tax

1.5 0.9 Income tax expense

$ ( 4.7 ) $ ( 2.3 ) Net of tax

Pension and postretirement liabilities:

Net prior service cost

$ — $ ( 0.1 ) Pension and postretirement non-service income

Pension settlement

1.1 — Pension and postretirement non-service income

Net actuarial gain

( 3.6 ) ( 3.3 ) Pension and postretirement non-service income

Currency translation losses

Selling, general and administrative expenses 2

Total before tax

Income tax expense

$ ( 1.9 ) $ ( 2.4 ) Net of tax

1 Amounts in parentheses indicate income recognized in the Condensed Consolidated Statements of Earnings.

2 Amount represents the reclassification for currency translation losses in connection with the sale of ATFL (see Note 3).

FAIR VALUE MEASUREMENTS

6 unchanged sentences

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 February 25, 2024 :

Derivative assets

$ 4.1 $ — $ — $ 4.1

Deferred compensation assets

Available-for-sale debt securities

$ 10.2 $ — $ 3.5 $ 13.7

Derivative liabilities

$ — $ 1.1 $ — $ 1.1

Deferred compensation liabilities

68.2 — — 68.2

Total liabilities

$ 68.2 $ 1.1 $ — $ 69.3

Derivative assets

$ 9.4 $ 0.6 $ — $ 10.0

Deferred compensation assets

Available-for-sale debt securities

$ 16.5 $ 0.6 $ 4.0 $ 21.1

Derivative liabilities

$ — $ 3.6 $ — $ 3.6

Deferred compensation liabilities

67.0 — — 67.0

Total liabilities

$ 67.0 $ 3.6 $ — $ 70.6

Nonrecurring Fair Value Measurements

Certain assets and liabilities, including long-lived assets, goodwill, asset retirement obligations, and equity investments are measured at fair value on a nonrecurring basis using Level 3 inputs.

In the second quarter of fiscal 2024, we recognized an impairment charge totaling $ 34.2 million in our International segment.

The impairment was measured based upon the estimated sales price of the disposal group (see Note 2 ).

In the first quarter of fiscal 2024, we recognized charges for the impairment of certain long-lived assets based upon a discounted cash flow valuation model and included in restructuring activities (see Note 3 ).

Other Asset Impairments

In the first quarter of fiscal 2024, we recognized charges for the impairment of certain long-lived assets based upon a discounted cash flow valuation model and included in restructuring activities.

Impairments totaled $ 0.6 million in our Grocery & Snacks segment and $ 14.1 million in our International segment.

In the third quarter of fiscal 2023, we recognized a charge of $ 3.9 million within SG&A expenses related to the reduction in fair value of a convertible note receivable.

The fair value was measured using the best estimate of the present value of cash flows expected to be collected.

In the first quarter of fiscal 2023, we recognized a charge for the impairment of an indefinite-lived brand of $ 244.0 million in our Refrigerated & Frozen segment.

The fair value of this brand was estimated using the "relief from royalty" method (see Note 6 ).

During the first quarter of fiscal 2023, goodwill impairment charges totaling $ 141.7 million were recognized within our Refrigerated & Frozen segment.

The fair value of the goodwill was measured using a discounted cash flow valuation model specific to the Sides, Components and Enhancers reporting unit (see Note 6 ).

In the first quarter of fiscal 2023, we recognized impairment charges totaling $ 0.5 million in our Grocery & Snacks segment, $ 5.7 million in our Refrigerated & Frozen segment, and $ 20.5 million in our Foodservice segment.

The fair value was measured based upon the estimated sales price of a disposal group that no longer met the held for sale criteria as of the second quarter of fiscal 2023.

The carrying amount of long-term debt (including current installments) was $ 8.51 billion and $ 8.60 billion as of February 25, 2024 and May 28, 2023 , respectively.

Based on current market rates, the fair value of this debt (level 2 liabilities) at February 25, 2024 and May 28, 2023 was estimated at $ 8.29 billion and $ 8.31 billion, respectively.

The majority of these impairment charges were based upon management’s decision to exit certain manufacturing facilities in fiscal 2024, which reduced the future expected cash flows to be generated at these facilities.

Long-Term Debt Fair Value

The carrying amount of long-term debt (including current installments) was $ 7.51 billion and $ 7.51 billion as of August 25, 2024 and May 26, 2024, respectively.

Based on current market rates, the fair value of this debt (level 2 liabilities) at August 25, 2024 and May 26, 2024 was estimated at $ 7.52 billion and $ 7.26 billion, respectively.

BUSINESS SEGMENTS AND RELATED INFORMATION

8 unchanged sentences

General corporate expense;

pension and postretirement non-service expense (income);

pension and postretirement non-service income (expense);

interest expense, net;

2 unchanged sentences

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

February 25, 2024

February 26, 2023

February 25, 2024

February 26, 2023

August 25, 2024

August 27, 2023

Grocery & Snacks

$ 1,286.0 $ 1,243.7 $ 3,784.0 $ 3,781.9

Refrigerated & Frozen

1,202.4 1,307.7 3,692.5 3,936.8

International

271.7 259.7 811.5 751.9

272.8 275.4 857.0 833.1

Total net sales

$ 3,032.9 $ 3,086.5 $ 9,145.0 $ 9,303.7

Operating profit

Grocery & Snacks

$ 299.3 $ 256.4 $ 837.2 $ 847.2

Refrigerated & Frozen

201.5 263.6 620.9 297.6

International

42.2 37.1 71.8 100.9

35.4 23.8 117.5 53.5

Total operating profit

$ 578.4 $ 580.9 $ 1,647.4 $ 1,299.2

Equity method investment earnings

41.2 50.5 131.0 149.0

General corporate expense

107.0 90.9 238.5 280.9

Pension and postretirement non-service expense (income)

1.4 ( 6.0 ) 2.1 ( 18.2 )

Pension and postretirement non-service income (expense)

Interest expense, net

106.5 104.2 325.8 301.6

Income tax expense

95.9 100.1 297.1 237.0

$ 308.8 $ 342.2 $ 914.9 $ 646.9

Income tax expense (benefit)

Net income attributable to noncontrolling interests

0.2 0.5 0.4 0.8

Net income attributable to Conagra Brands, Inc.

$ 308.6 $ 341.7 $ 914.5 $ 646.1

The following table presents further disaggregation of our net sales:

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

February 25, 2024

February 26, 2023

February 25, 2024

February 26, 2023

$ 1,021.8 $ 1,101.2 $ 3,076.3 $ 3,267.1

August 25, 2024

August 27, 2023

Other shelf-stable

750.1 719.2 2,174.9 2,167.7

180.6 206.5 616.2 669.7

535.9 524.5 1,609.1 1,614.2

272.8 275.4 857.0 833.1

International

271.7 259.7 811.5 751.9

Total net sales

$ 3,032.9 $ 3,086.5 $ 9,145.0 $ 9,303.7

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.

6 unchanged sentences

Therefore, it is impracticable to allocate those assets to the reporting segments, as well as disclose total assets by segment.

Total depreciation expense was $ 82.4 million and $ 251.5 million for the third quarter and first three quarters of fiscal 2024, respectively.

Total depreciation expense was $ 77.7 million and $ 233.7 million for the third quarter and first three quarters of fiscal 2023, respectively.

Total depreciation expense was $ 85.7 million and $ 83.1 million for the first quarter of fiscal 2025 and 2024, respectively.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements