What changed in this filing

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Item 1. Financial Statements

2022-01-06 compared with 2021-10-07 · 235 added, 96 removed, 647 unchanged (34% of the section changed)

5 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Costs and expenses:

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Thirteen Weeks Ended

August 29, 2021

August 30, 2020

November 28, 2021

November 29, 2020

Other comprehensive income:

4 unchanged sentences

Pension and post-employment benefit obligations:

Reclassification for pension and post-employment benefit obligations included in net income

Comprehensive income

Comprehensive loss attributable to noncontrolling interests

Comprehensive income attributable to Conagra Brands, Inc.

Twenty-Six Weeks Ended

November 28, 2021

November 29, 2020

Other comprehensive income:

Derivative adjustments:

Unrealized derivative adjustments

Reclassification for derivative adjustments included in net income

Unrealized currency translation gains (losses)

Pension and post-employment benefit obligations:

Unrealized pension and post-employment benefit obligations

10 unchanged sentences

Cash and cash equivalents

Receivables, less allowance for doubtful accounts of $ 3.2

Receivables, less allowance for doubtful accounts of $ 3.0 and $ 3.2

Prepaid expenses and other current assets

Current assets held for sale

Total current assets

11 unchanged sentences

Other accrued liabilities

Current liabilities held for sale

Total current liabilities

1 unchanged sentence

Other noncurrent liabilities

Noncurrent liabilities held for sale

Total liabilities

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(in millions)

Thirteen weeks ended

Twenty-Six Weeks Ended

Cash flows from operating activities:

2 unchanged sentences

Asset impairment charges

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

Loss on extinguishment of debt

Gain on divestiture

Equity method investment earnings in excess of distributions

Stock-settled share-based payments expense

7 unchanged sentences

Other accrued liabilities

Deferred employer payroll taxes

Net cash flows from operating activities

4 unchanged sentences

Sale of marketable securities

Proceeds from divestitures

Net cash flows from investing activities

Cash flows from financing activities:

Issuances of commercial paper, maturities greater than 90 days

Net repayments of other short-term borrowings

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

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

Net issuance (repayment) of other short-term borrowings

Issuance of long-term debt

50 unchanged sentences

Statement of Earnings 1

August 29, 2021

August 30, 2020

November 28, 2021

November 29, 2020

Net derivative adjustments:

2 unchanged sentences

Cash flow hedges

Selling, general and administrative expenses

Cash flow hedges

Equity method investment earnings

8 unchanged sentences

Income tax expense

Twenty-Six Weeks Ended

Affected Line Item in the Condensed Consolidated

Statement of Earnings 1

November 28, 2021

November 29, 2020

Net derivative adjustment, net of tax:

Cash flow hedges

Interest expense, net

Cash flow hedges

Selling, general and administrative expenses

Cash flow hedges

Equity method investment earnings

Total before tax

Income tax expense

Pension and postretirement liabilities:

Net prior service cost

Pension and postretirement non-service income

Net actuarial gain

Pension and postretirement non-service income

Total before tax

Income tax expense

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.

Inventories — We use the lower of cost (determined using the first-in, first-out method) or net realizable value for valuing inventories.

Reclassifications and other changes — Certain prior year amounts have been reclassified to conform with current year presentation.

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DIVESTITURES AND ASSETS HELD FOR SALE

During the fourth quarter of fiscal 2021, we completed the sale of our Egg Beaters ® business for net proceeds of $ 50.6 million , subject to final working capital adjustments.

During the fourth quarter of fiscal 2021, we completed the sale of our Egg Beaters ® business for net proceeds of $ 50.7 million , including working capital adjustments.

The business results were previously reported primarily within our Refrigerated & Frozen segment, and to a lesser extent within our International and Foodservice segments .

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 final adjustments for certain tax benefits .

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 .

The business results were previously reported primarily within our Grocery & Snacks segment, and to a lesser extent within our International and Foodservice segments .

During the second quarter of fiscal 2021, we completed the sale of our H.K.

Anderson ® business for net proceeds of $ 8.7 million , including working capital adjustments.

Anderson ® business for net proceeds of $ 8.7 million , including working capital adjustments and recognized a gain on the sale of $ 5.3 million, included within selling, general and administrative ("SG&A") expenses .

The business results were previously reported primarily within our Grocery & Snacks segment, and to a lesser extent within our Foodservice segment .

Other Assets Held for Sale

From time to time, we actively market certain other assets.

Balances totaling $ 4.6 million at both August 29, 2021 and May 30, 2021 have been reclassified as noncurrent assets held for sale within our Condensed Consolidated Balance Sheets.

During the second quarter of fiscal 2022, we initiated a plan to sell businesses with operating results included within our Grocery & Snacks, Refrigerated & Frozen, and Foodservice segments.

The assets and liabilities have been reclassified as assets and liabilities held for sale within our Condensed Consolidated Balance Sheets for all periods presented and are expected to be sold in the next twelve months.

In connection with this planned divestiture, we recognized an impairment charge of $ 39.2 million within SG&A expenses in the second quarter of fiscal 2022.

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

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

November 28, 2021

Current assets

Noncurrent assets (including goodwill of $23.6 million and $34.6 million, respectively)

Current liabilities

Noncurrent liabilities

RESTRUCTURING ACTIVITIES

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In December 2018, our Board of Directors (the "Board") approved a restructuring and integration plan related to the ongoing integration of the operations of Pinnacle Foods, Inc.

("Pinnacle"), 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.

(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.

We expect to incur approximately $ 346.5 million of charges ($ 278.0 million of cash charges and $ 68.5 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.

In the second quarter and first half of fiscal 2022, we recognized charges of $ 5.8 million and $ 13.1 million, respectively, in connection with the Pinnacle Integration Restructuring Plan.

In the second quarter and first half of fiscal 2021, we recognized charges of $ 10.2 million and $ 18.8 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

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Consolidated total

During the first quarter of fiscal 2022, we recognized the following pre-tax expenses for the Pinnacle Integration Restructuring Plan:

During the second quarter of fiscal 2022, we recognized the following pre-tax expenses for the Pinnacle Integration Restructuring Plan:

Grocery & Snacks

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Severance and related costs

Asset impairment (net of gains on disposal)

Consulting/professional fees

Other selling, general and administrative expenses

Total selling, general and administrative expenses

Consolidated total

Included in the above results are $ 4.6 million of charges that have resulted or will result in cash outflows and $ 1.2 million in non-cash charges.

During the first half of fiscal 2022, we recognized the following pre-tax expenses for the Pinnacle Integration Restructuring Plan:

Grocery & Snacks

Refrigerated & Frozen

Other cost of goods sold

Total cost of goods sold

Severance and related costs

Asset impairment (net of gains on disposal)

Contract/lease termination

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Consolidated total

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 Condensed Consolidated Statement of Earnings:

Included in the above results are $ 11.9 million of charges that have resulted or will result in cash outflows and $ 1.2 million in non-cash charges.

We recognized the following cumulative (plan inception to November 28, 2021) pre-tax expenses for the Pinnacle Integration Restructuring Plan in our Condensed Consolidated Statement of Earnings:

Grocery & Snacks

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Included in the above results are $ 252.8 million of charges that have resulted or will result in cash outflows and $ 34.0 million in non-cash charges.

Liabilities recorded for the Pinnacle Integration Restructuring Plan and changes therein for the first quarter of fiscal 2022 were as follows:

Liabilities recorded for the Pinnacle Integration Restructuring Plan and changes therein for the first half of fiscal 2022 were as follows:

Costs Incurred

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Conagra Restructuring Plan

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

Although we remain unable to make good faith estimates relating to the entire Conagra Restructuring Plan, we are reporting on actions initiated through the end of the first quarter of fiscal 2022, including the estimated amounts or range of amounts for each major type of costs expected to be incurred, and the charges that have resulted or will result in cash outflows.

As of August 29, 2021, we have approved the incurrence of $ 172.6 million ($ 45.8 million of cash charges and $ 126.8 million of non-cash charges) for several projects associated with the Conagra Restructuring Plan.

We have incurred or expect to incur $ 144.7 million of charges ($ 36.0 million of cash charges and $ 108.7 million of non-cash charges) for actions identified to date under the Conagra Restructuring Plan.

In the first quarter of fiscal 2022 and 2021, we recognized charges of $ 8.5 million and $ 17.3 million, respectively, in connection with the 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").

Although we remain unable to make good faith estimates relating to the entire Conagra Restructuring Plan, we are reporting on actions initiated through the end of the second quarter of fiscal 2022, including the estimated amounts or range of amounts for each major type of costs expected to be incurred, and the charges that have resulted or will result in cash outflows.

As of November 28, 2021, we have approved the incurrence of $ 172.6 million ($ 45.8 million of cash charges and $ 126.8 million of non-cash charges) for several projects associated with the Conagra Restructuring Plan.

As of November 28, 2021, we have incurred or expect to incur $ 143.4 million of charges ($ 40.2 million of cash charges and $ 103.2 million of non-cash charges) for actions identified to date under the Conagra Restructuring Plan.

In the second quarter and first half of fiscal 2022, we recognized charges of $ 6.6 million and $ 15.1 million, respectively, in connection with the Conagra Restructuring Plan.

In the second quarter and first half of fiscal 2021, we recognized charges of $ 10.5 million and $ 27.8 million, respectively, in connection with the Conagra Restructuring Plan.

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

We anticipate that we will recognize the following pre-tax expenses in association with the Conagra Restructuring Plan (amounts include charges recognized from plan inception through the first quarter of fiscal 2022):

Grocery & Snacks

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Consolidated total

During the first quarter of fiscal 2022, we recognized the following pre-tax expenses for the Conagra Restructuring Plan:

During the second quarter of fiscal 2022, we recognized the following pre-tax expenses for the Conagra Restructuring Plan:

Grocery & Snacks

1 unchanged sentence

Accelerated depreciation

Other cost of goods sold

Total cost of goods sold

1 unchanged sentence

Asset impairment (net of gains on disposal)

Contract/lease termination

Other selling, general and administrative expenses

1 unchanged sentence

Included in the above results are $ 2.2 million in charges that have resulted or will result in cash outflows and $ 4.4 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:

During the first half of fiscal 2022, we recognized the following pre-tax expenses for the Conagra Restructuring Plan:

Grocery & Snacks

Refrigerated & Frozen

Accelerated depreciation

Other cost of goods sold

Total cost of goods sold

Severance and related costs

Asset impairment (net of gains on disposal)

Contract/lease termination

Other selling, general and administrative expenses

Total selling, general and administrative expenses

Included in the above results are $4.6 million in charges that have resulted or will result in cash outflows and $10.5 million in non-cash charges.

We recognized the following cumulative (plan inception to November 28, 2021) pre-tax expenses for the Conagra Restructuring Plan in our Condensed Consolidated Statement of Earnings:

Grocery & Snacks

Refrigerated & Frozen

International

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Included in the above results are $ 28.7 million of charges that have resulted or will result in cash outflows and $ 99.2 million in non-cash charges.

Liabilities recorded for the Conagra Restructuring Plan and changes therein for the first quarter of fiscal 2022 were as follows:

Liabilities recorded for the Conagra Restructuring Plan and changes therein for the first half of fiscal 2022 were as follows:

Costs Incurred

Severance and related costs

Contract/lease termination

LONG-TERM DEBT AND REVOLVING CREDIT FACILITY

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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.

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, resulting in a net loss of $ 44.3 million within SG&A expenses as a cost of early extinguishment of debt.

This redemption was primarily funded using the net proceeds from the issuance of the 2027 Senior Notes.

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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 August 29, 2021, 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 $ 1.6 billion (subject to increase to a maximum aggregate principal amount of $ 2.1 billion with the consent of the lenders).

The Revolving Credit Facility matures on July 11, 2024

and is unsecured.

At November 28, 2021, 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 $ 1.6 billion (subject to increase to a maximum aggregate principal amount of $ 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 August 29, 2021 , there were no outstanding borrowings under the Revolving Credit Facility.

As of November 28, 2021, there were no 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.

As of November 28, 2021, we were in compliance with all financial covenants under the Amended Revolving Credit Facility.

Net interest expense consists of:

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Long-term debt

3 unchanged sentences

GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

The change in the carrying amount of goodwill for the first quarter of fiscal 2022 was as follows:

The change in the carrying amount of goodwill for the first half of fiscal 2022, excluding amounts classified as held for sale (see Note 2), was as follows:

International

1 unchanged sentence

Currency translation

Balance as of August 29, 2021

Other identifiable intangible assets were as follows:

August 29, 2021

Balance as of November 28, 2021

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

November 28, 2021

Non-amortizing intangible assets

Brands and trademarks

Amortizing intangible assets

Non-amortizing intangible assets are composed of brands and trademarks.

Amortizing intangible assets, carrying a remaining weighted average life of approximately 19 years, are principally composed of customer relationships and acquired intellectual property.

Amortization expense was $ 14.9 million for the first quarter of both fiscal 2022 and 2021.

Based on amortizing assets recognized in our Condensed Consolidated Balance Sheet as of August 29, 2021, amortization expense is estimated to average $ 52.8 million for each of the next five years.

Customer relationships and intellectual property

Amortizing intangible assets carry a remaining weighted average life of approximately 19 years.

Amortization expense was $ 14.8 million and $ 29.7 million for the second quarter and first half of fiscal 2022, respectively, and $ 15.0 million and $ 29.9 million for the second quarter and first half of fiscal 2021, respectively.

Based on amortizing assets recognized in our Condensed Consolidated Balance Sheet as of November 28, 2021, amortization expense is estimated to average $ 51.8 million for each of the next five years.

DERIVATIVE FINANCIAL INSTRUMENTS

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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.

Commodity 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, diesel fuel 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 of August 29, 2021, we had economically hedged certain portions of our anticipated consumption of commodity inputs using derivative instruments with expiration dates through October 2022.

As of November 28, 2021, we had economically hedged certain portions of our anticipated consumption of commodity inputs using derivative instruments with expiration dates through October 2022.

In 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 August 29, 2021, we had economically hedged certain portions of our foreign currency risk in anticipated transactions using derivative instruments with expiration dates through May 2022.

As of November 28, 2021, we had economically hedged certain portions of our foreign currency risk in anticipated transactions using derivative instruments with expiration dates through August 2022.

From time to time, we may use derivative instruments, including interest rate swaps, to reduce risk related to changes in interest rates.

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 August 29, 2021, was $ 37.4 million.

The unamortized amount at November 28, 2021, was $ 36.6 million.

Economic Hedges of Forecasted Cash Flows

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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 August 29, 2021 and May 30, 2021, amounts representing an obligation to return cash collateral of $ 1.6 million and $ 2.0 million, respectively, were included in prepaid expenses and other current assets in our Condensed Consolidated Balance Sheets.

At November 28, 2021 and May 30, 2021, amounts representing an obligation to return cash collateral of $ 2.8 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:

1 unchanged sentence

Other accrued liabilities

The following table presents our derivative assets and liabilities, at August 29, 2021, on a gross basis, prior to the setoff of $ 4.0 million to total derivative assets and $ 2.4 million to total derivative liabilities where legal right of setoff existed:

The following table presents our derivative assets and liabilities, at November 28, 2021, on a gross basis, prior to the setoff of $ 6.0 million to total derivative assets and $ 3.2 million to total derivative liabilities where legal right of setoff existed:

Derivative Assets

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Cost of goods sold

Total gains from derivative instruments not designated as hedging instruments

Location in Condensed Consolidated

Gains (Losses) Recognized on Derivatives in Condensed Consolidated Statements of Earnings for the

Twenty-six Weeks Ended

Derivatives Not Designated as Hedging Instruments

Statements of Earnings of Gains (Losses)

Recognized on Derivatives

Commodity contracts

Cost of goods sold

Foreign exchange contracts

Cost of goods sold

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

As of August 29, 2021, our open commodity contracts had a notional value (defined as notional quantity times market value per notional quantity unit) of $ 117.8 million and $ 127.2 million for purchase and sales contracts, respectively.

As of November 28, 2021, our open commodity contracts had a notional value (defined as notional quantity times market value per notional quantity unit) of $ 90.4 million and $ 100.0 million for purchase and sales contracts, respectively.

As of May 30, 2021, our open commodity contracts had a notional value of $ 148.8 million and $ 159.4 million for purchase and sales contracts, respectively.

The notional amount of our foreign currency forward contracts as of August 29, 2021 and May 30, 2021 was $ 102.1 million and $ 111.4 million, respectively.

The notional amount of our foreign currency forward contracts as of November 28, 2021 and May 30, 2021 was $ 89.1 million and $ 111.4 million, respectively.

We enter into certain commodity, interest rate, and foreign exchange derivatives with a diversified group of counterparties.

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We also enter into futures and options transactions through various regulated exchanges.

At August 29, 2021, the maximum amount of loss due to the credit risk of the counterparties, had the counterparties failed to perform according to the terms of the contract, was $ 2.8 million.

At November 28, 2021, the maximum amount of loss due to the credit risk of the counterparties, had the counterparties failed to perform according to the terms of the contract, was $ 3.2 million.

SHARE-BASED PAYMENTS

For the first quarter of fiscal 2022 and 2021, we recognized total stock-based compensation expense (including restricted stock units, cash-settled restricted stock units, performance shares, and performance-based restricted stock units) of $ 2.6 million and $ 17.4 million, respectively.

In the first quarter of fiscal 2022, we granted 1.0 million restricted stock units at a weighted average grant date price of $ 34.34 and 0.5 million performance shares at a weighted average grant date price of $ 34.13 .

For the second quarter and first half of fiscal 2022, we recognized total stock-based compensation expense (including restricted stock units, performance shares, and performance-based restricted stock units) of $ 11.7 million and $ 14.3 million, respectively.

For the second quarter and first half of fiscal 2021, we recognized total stock-based compensation expense of $ 14.6 million and $ 32.0 million, respectively.

In the first half of fiscal 2022, we granted 1.0 million restricted stock units at a weighted average grant date price of $ 34.33 and 0.5 million performance shares at a weighted average grant date price of $ 34.13 .

Performance shares are granted to selected executives and other key employees with vesting contingent upon meeting various Company-wide performance goals.

13 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Net income attributable to Conagra Brands, Inc.

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Diluted weighted average shares outstanding

For the first quarter of fiscal 2022 and 2021, there were 0.5 million and 1.0 million stock options outstanding, respectively, that were excluded from the computation of diluted weighted average shares because the effect was antidilutive.

For the second quarter and first half of fiscal 2022, there were 1.0 million and 0.7 million stock options outstanding, respectively, that were excluded from the computation of diluted weighted average shares because the effect was antidilutive.

For the second quarter of fiscal 2021, there were no stock options outstanding with an antidilutive effect.

For the first half of fiscal 2021, there were 0.6 million stock options outstanding that were excluded from the calculation.

The major classes of inventories were as follows:

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Supplies and other

In the first quarter of fiscal 2022 and 2021, we recognized income tax expense of $ 69.7 million and $ 86.7 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 22.8 % and 20.8 % for the first quarter of fiscal 2022 and 2021, respectively.

The effective tax rate in the first quarter of fiscal 2022 reflected a benefit of $ 3.6 million from the settlement of tax issues that were previously reserved.

The effective tax rate for the first quarter of fiscal 2021 reflected a benefit of $ 7.6 million resulting from the regulations issued by the U.S.

In the second quarter of fiscal 2022 and 2021, we recognized income tax expense of $ 84.2 million and $ 80.7 million, respectively.

In the first half of fiscal 2022 and 2021, we recognized income tax expense of $ 153.9 million and $ 167.4 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 23.4 % and 17.6 % for the second quarter of fiscal 2022 and 2021, respectively.

The effective tax rate for the first half of fiscal 2022 and 2021 was 23.1 % and 19.1 %, respectively.

The effective tax rate in the second quarter of fiscal 2022 reflected additional tax expense associated with non-deductible goodwill related to assets held for sale for which an impairment charge was recognized, a tax benefit resulting from state law changes, and a benefit from statute lapses on state tax issues that were previously reserved.

The effective tax rate in the first half of fiscal 2022 reflected the above-cited items, as well as a benefit of $ 3.6 million from the settlement of tax issues that were previously reserved.

The effective tax rate for the second quarter of fiscal 2021 reflected a benefit of $ 25.3 million resulting from the release of valuation allowance associated with the expected capital gains from the planned divestiture of the Peter Pan ® peanut butter business and a benefit from statute lapses on tax issues that were previously reserved.

The effective tax rate for the first half of fiscal 2021 reflected the above-cited items, as well as a benefit of $ 7.6 million resulting from the regulations issued by the U.S.

Treasury and Internal Revenue Service on certain provisions of the 2017 Tax Cuts and Jobs Act.

The amount of gross unrecognized tax benefits for uncertain tax positions was $ 26.0 million as of August 29, 2021 and $ 33.0 million as of May 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 $ 7.8 million and $ 8.8 million as of August 29, 2021 and May 30, 2021, respectively.

The net amount of unrecognized tax benefits at August 29, 2021 and May 30, 2021 that, if recognized, would impact the Company's effective tax rate was $ 21.3 million and $ 28.2 million, respectively.

The amount of gross unrecognized tax benefits for uncertain tax positions was $ 25.3 million as of November 28, 2021 and $ 33.0 million as of May 30, 2021.

Included in these amounts were $ 0.2 million and $ 0.8 million, respectively, 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 $ 7.3 million and $ 8.8 million as of November 28, 2021 and May 30, 2021, respectively.

The net amount of unrecognized tax benefits at November 28, 2021 and May 30, 2021 that, if recognized, would favorably impact the Company's effective tax rate was $ 21.0 million and $ 28.2 million, respectively.

We estimate that it is reasonably possible that the amount of gross unrecognized tax benefits will decrease by up to $ 5.1 million over the next twelve months due to various state audit settlements and the expiration of statutes of limitations.

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On February 14, 2018, the California Supreme Court denied the petition and declined to review the merits of the case, and the case was remanded to the trial court for further proceedings.

ConAgra Grocery Products and the other 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 review the case.

ConAgra Grocery Products and the other 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 review the case.

On September 4, 2018, the trial court recalculated its estimate of the amount needed to remediate pre-1951 homes in the plaintiff jurisdictions to be $ 409.0 million.

1 unchanged sentence

Pursuant to the settlement, ConAgra Grocery Products will pay a total of $ 101.7 million in seven installments to be paid annually from fiscal 2020 through fiscal 2026.

As part of the settlement, ConAgra Grocery Products has provide d a guarantee of up to $ 15.0 million in the event co-defendant, NL Industries, Inc., defaults on its payment obligations.

We have accrued $ 11.9 million and $ 51.9 million, within other accrued liabilities and other noncurrent liabilities, respectively, for this matter as of August 29, 2021.

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 payment obligations.

We have accrued $ 11.2 million and $ 40.7 million, within other accrued liabilities and other noncurrent liabilities, respectively, for this matter as of November 28, 2021.

The extent of insurance coverage is uncertain and the Company's carriers are on notice;

18 unchanged sentences

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.

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.

24 unchanged sentences

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 stock holder matters.

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.

12 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 $ 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.

The accrual for Beatrice-related environmental matters totaled $ 54.5 million ($ 2.4 million within other accrued liabilities and $ 52.1 million within other noncurrent liabilities) as of November 28, 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.

13 unchanged sentences

We also guarantee a lease resulting from an 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 guaranteed was $ 13.2 million.

As of November 28, 2021, the remaining term of this arrangement did not exceed five years and the maximum amount of future payments we have guaranteed was $ 12.6 million.

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;

8 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Interest cost

6 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Interest cost

6 unchanged sentences

The weighted-average discount rates for service and interest costs under the spot-rate approach used for pension cost in fiscal 2022 were 3.50 % and 2.29 %, respectively.

During the first quarter of fiscal 2022, we contributed $ 2.9 million to our pension plans and $ 2.1 million to our postretirement plans.

During the second quarter and first half of fiscal 2022, we contributed $ 2.0 million and $ 4.9 million, respectively, to our pension plans and contributed $ 1.7 million and $ 3.8 million, respectively, 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 $ 7.4 million to our pension plans during the remainder of fiscal 2022.

2 unchanged sentences

STOCKHOLDERS' EQUITY

The following table presents a reconciliation of our stockholders' equity accounts for the thirteen weeks ended August 29, 2021:

The following table presents a reconciliation of our stockholders' equity accounts for the twenty-six weeks ended November 28, 2021:

Conagra Brands, Inc.

14 unchanged sentences

Balance at August 29, 2021

The following table presents a reconciliation of our stockholders' equity accounts for the thirteen weeks ended August 30, 2020:

Stock option and incentive plans

Currency translation adjustments

Derivative adjustments

Activities of noncontrolling interests

Pension and postretirement healthcare benefits

Dividends declared on common stock;

$ 0.3125 per share

Net income attributable to Conagra Brands, Inc.

Balance at November 28, 2021

The following table presents a reconciliation of our stockholders' equity accounts for the twenty-six weeks ended November 29, 2020:

Conagra Brands, Inc.

14 unchanged sentences

Balance at August 30, 2020

Stock option and incentive plans

Currency translation adjustments

Derivative adjustments

Activities of noncontrolling interests

Pension and postretirement healthcare benefits

Dividends declared on common stock;

$ 0.275 per share

Net income attributable to Conagra Brands, Inc.

Balance at November 29, 2020

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 August 29, 2021:

Our Level 3 available-for-sale debt securities consist of a convertible note receivable acquired in the second quarter of fiscal 2022.

The convertible note receivable is not traded in active markets and the fair value was determined using a discounted cash flow valuation model.

The following table presents our financial instruments measured at fair value on a recurring basis for which, based upon the level within the fair value hierarchy in which the fair value measurements fall, as of November 28, 2021:

Derivative assets

1 unchanged sentence

Deferred compensation assets

Derivative liabilities

Available-for-sale debt securities

Deferred compensation liabilities

8 unchanged sentences

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 2022, we recognized impairment charges totaling $ 22.4 million in our Grocery & Snacks segment, $ 12.0 million in our Refrigerated & Frozen segment, and $ 4.8 million in our Foodservice segment.

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

In the first quarter of fiscal 2021, we recognized charges totaling $ 3.0 million in our Grocery & Snacks segment for the impairment of certain long-lived assets.

The impairment was measured based upon the estimated sales price of the assets and has been included in restructuring activities.

The carrying amount of long-term debt (including current installments) was $ 8.80 billion and $ 8.30 billion as of August 29, 2021 and May 30, 2021, respectively.

Based on current market rates, the fair value of this debt (level 2 liabilities) at August 29, 2021 and May 30, 2021, was estimated at $ 10.32 billion and $ 9.76 billion, respectively.

The carrying amount of long-term debt (including current installments) was $ 8.80 billion and $ 8.30 billion as of November 28, 2021 and May 30, 2021, respectively.

Based on current market rates, the fair value of this debt (level 2 liabilities) at November 28, 2021 and May 30, 2021, was estimated at $ 10.19 billion and $ 9.76 billion, respectively.

BUSINESS SEGMENTS AND RELATED INFORMATION

9 unchanged sentences

Thirteen Weeks Ended

August 29, 2021

August 30, 2020

Twenty-Six Weeks Ended

November 28, 2021

November 29, 2020

November 28, 2021

November 29, 2020

Grocery & Snacks

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Thirteen Weeks Ended

August 29, 2021

August 30, 2020

Twenty-Six Weeks Ended

November 28, 2021

November 29, 2020

November 28, 2021

November 29, 2020

Other shelf-stable

8 unchanged sentences

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.

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.

1 unchanged sentence

Thirteen Weeks Ended

August 29, 2021

August 30, 2020

Twenty-Six Weeks Ended

November 28, 2021

November 29, 2020

November 28, 2021

November 29, 2020

Gross derivative gains (losses) incurred

6 unchanged sentences

Net derivative gains (losses) included in segment operating profit

As of August 29, 2021, the cumulative amount of net derivative gains from economic hedges that had been recognized in general corporate expenses and not yet allocated to reporting segments was $ 16.7 million.

This amount reflected net gains of $ 10.2 million incurred during the thirteen weeks ended August 29, 2021 and net gains of $ 6.5 million incurred prior to fiscal 2022.

As of November 28, 2021, the cumulative amount of net derivative gains from economic hedges that had been recognized in general corporate expenses and not yet allocated to reporting segments was $ 14.9 million.

This amount reflected net gains of $ 14.0 million incurred during the twenty-six weeks ended November 28, 2021 and net gains of $ 0.9 million incurred prior to fiscal 2022.

Based on our forecasts of the timing of recognition of the underlying hedged items, we expect to reclassify to segment operating results gains of $ 10.7 million in fiscal 2022 and gains of $ 4.2 million in fiscal 2023 and thereafter.

4 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 $ 81.6 million and $ 80.3 million for the first quarter of fiscal 2022 and 2021, respectively.

Total depreciation expense was $ 82.2 million and $ 163.8 million for the second quarter and first half of fiscal 2022, respectively.

Total depreciation expense was $ 82.8 million and $ 163.1 million for the second quarter and first half of fiscal 2021, 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 $ 224.7 million in the first quarter of fiscal 2022 and 2021, respectively.

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 second quarter and first half of fiscal 2022 and 2021.

Foreign net sales, including sales by domestic segments to customers located outside of the United States, were approximately $ 263.1 million and $ 506.4 million in the second quarter and first half of fiscal 2022, respectively.

Our foreign net sales during the second quarter and first half of fiscal 2021 were approximately $ 252.6 million and $ 477.3 million, respectively.

Our long-lived assets located outside of the United States are not significant.

Our largest customer, Walmart, Inc.

and its affiliates, accounted for approximately 26 % and 25 % of consolidated net sales in the first quarter of fiscal 2022 and 2021, respectively, primarily in the Grocery & Snacks and Refrigerated & Frozen segments.

and its affiliates, accounted for approximately 27 % and 26 % of consolidated net sales in the second quarter and first half of fiscal 2022, respectively, and 25 % in both the second quarter and first half of 2021, 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.

and its affiliates accounted for approximately 31 % of consolidated net receivables as of both November 28, 2021 and May 30, 2021.

The Kroger Co.

and its affiliates accounted for approximately 10 % and 11 % of consolidated net receivables as of August 29, 2021 and May 30, 2021, respectively.

and its affiliates accounted for approximately 13 % and 11 % of consolidated net receivables as of November 28, 2021 and May 30, 2021, 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