10-Q 1 cag20240125_10q.htm FORM 10-Q cag20240125_10q.htm
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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended February 25, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                 to

 

Commission File Number: 1-7275


CONAGRA BRANDS, INC.

(Exact name of registrant as specified in its charter)


Delaware

 

47-0248710

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

   

222 W. Merchandise Mart Plaza, Suite 1300

Chicago, Illinois

 

60654

(Address of principal executive offices)

 

(Zip Code)

 

(312) 549-5000

(Registrant's telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $5.00 par value

 

CAG

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒     No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ☒Accelerated filer  ☐Non-accelerated filer    Smaller reporting company   Emerging growth company    

                

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ☒

 

Number of shares outstanding of issuer's common stock as of February 25, 2024 was 478,062,749.

 


  

 

Table of Contents

 

PART I. FINANCIAL INFORMATION

1

   

Item 1

Financial Statements

1

     
 

Unaudited Condensed Consolidated Statements of Earnings for the Thirteen and Thirty-Nine Weeks Ended February 25, 2024 and February 26, 2023

1
     
 

Unaudited Condensed Consolidated Statements of Comprehensive Income for the Thirteen and Thirty-Nine Weeks Ended February 25, 2024 and February 26, 2023

2

     
 

Unaudited Condensed Consolidated Balance Sheets as of February 25, 2024 and May 28, 2023

3

     
 

Unaudited Condensed Consolidated Statements of Cash Flows for the Thirty-Nine Weeks Ended February 25, 2024 and February 26, 2023

4

     
 

Notes to Unaudited Condensed Consolidated Financial Statements

5

     

Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

18

     

Item 3

Quantitative and Qualitative Disclosures About Market Risk

25

     

Item 4

Controls and Procedures

25
     

PART II. OTHER INFORMATION

26

   

Item 1

Legal Proceedings

26

     

Item 1A

Risk Factors

26

     
Item 5 Other Information 26
     

Item 6

Exhibits

27

     

Signatures

 

28

     

 

  

 
 

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Conagra Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings

(in millions except per share amounts)

(unaudited)

 

  

Thirteen Weeks Ended

  

Thirty-Nine Weeks Ended

 
  

February 25, 2024

  

February 26, 2023

  

February 25, 2024

  

February 26, 2023

 

Net sales

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

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)

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 

Net income

 $308.8  $342.2  $914.9  $646.9 

Less: 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

                

Net income attributable to Conagra Brands, Inc. common stockholders

 $0.64  $0.72  $1.91  $1.35 

Earnings per share — diluted

                

Net income attributable to Conagra Brands, Inc. common stockholders

 $0.64  $0.71  $1.91  $1.34 

 

See Notes to the Unaudited Condensed Consolidated Financial Statements.

 

 

 

Conagra Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(in millions)

(unaudited)

 

  

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

 

Net income

 $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

 

Net income

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

Other comprehensive income:

                        

Derivative adjustments:

                        

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)

Unrealized currency translation gains (losses)

  9.1      9.1   (17.5)     (17.5)

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 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.

 

 

Conagra Brands, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in millions except share data)

(unaudited)

 

  

February 25, 2024

  

May 28, 2023

 

ASSETS

        

Current assets

        

Cash and cash equivalents

 $78.5  $93.3 

Receivables, less allowance for doubtful accounts of $2.8 and $2.7

  916.5   952.8 

Inventories

  2,143.4   2,212.2 

Prepaid expenses and other current assets

  117.2   92.4 

Current assets held for sale

  30.2   34.3 

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 

Goodwill

  11,109.9   11,109.4 

Brands, trademarks and other intangibles, net

  3,152.1   3,192.3 

Other assets

  1,404.8   1,506.2 

Noncurrent assets held for sale

  90.6   123.3 
  $21,919.9  $22,052.6 

LIABILITIES AND STOCKHOLDERS' EQUITY

        

Current liabilities

        

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

  168.3   163.5 

Other accrued liabilities

  686.2   583.3 

Current liabilities held for sale

  12.9   16.1 

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

  2.3   5.3 

Total liabilities

  12,694.4   13,245.3 

Common stockholders' equity

        

Common stock of $5 par value, authorized 1,200,000,000 shares; issued 584,219,229

  2,921.2   2,921.2 

Additional paid-in capital

  2,353.7   2,376.9 

Retained earnings

  7,011.7   6,599.4 

Accumulated other comprehensive loss

  (43.8)  (44.4)

Less treasury stock, at cost, 106,156,480 and 107,196,446 common shares

  (3,087.9)  (3,116.3)

Total Conagra Brands, Inc. common stockholders' equity

  9,154.9   8,736.8 

Noncontrolling interests

  70.6   70.5 

Total stockholders' equity

  9,225.5   8,807.3 
  $21,919.9  $22,052.6 

 

See Notes to the Unaudited Condensed Consolidated Financial Statements.

 

 

Conagra Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)

 

  

Thirty-Nine Weeks Ended

 
  

February 25, 2024

  

February 26, 2023

 

Cash flows from operating activities:

        

Net income

 $914.9  $646.9 

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

        

Depreciation and amortization

  291.7   277.0 

Asset impairment charges

  50.9   417.7 

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

  69.5   (69.8)

Stock-settled share-based payments expense

  18.7   68.8 

Contributions to pension plans

  (9.2)  (9.6)

Pension expense (benefit)

  9.3   (10.4)

Other items

  13.9   (0.9)

Change in operating assets and liabilities:

        

Receivables

  25.5   (96.7)

Inventories

  73.3   (340.4)

Deferred income taxes and income taxes payable, net

  43.1   (58.8)

Prepaid expenses and other current assets

  (31.3)  2.4 

Accounts and other payables

  (36.5)  (157.9)

Accrued payroll

  4.6   7.4 

Other accrued liabilities

 

76.2

   71.8 

Litigation accruals

  16.7   (18.6)

Deferred employer payroll taxes

     (25.5)

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

  0.6   3.1 

Purchase of marketable securities

  (8.2)  (3.4)

Sale of marketable securities

  8.2   3.4 

Proceeds from insurance recoveries

  11.9    

Other items

  1.5   4.1 

Net cash flows from investing activities

  (295.6)  (260.2)

Cash flows from financing activities:

        

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

  134.5   239.5 

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 

Issuance of long-term debt

  500.0   500.0 

Repayment of long-term debt

  (766.8)  (708.0)

Debt issuance costs

  (3.3)  (4.1)

Repurchase of Conagra Brands, Inc. common shares

     (150.0)

Cash dividends paid

  (492.0)  (466.4)

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

  (13.8)  0.9 

Other items

  (0.6)  5.2 

Net cash flows from financing activities

  (1,250.3)  (454.5)

Effect of exchange rate changes on cash and cash equivalents

     (0.8)

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

  (14.6)  (12.1)

Less: Net change in cash balances classified as assets held for sale

  0.2    

Net change in cash and cash equivalents

  (14.8)  (12.1)

Cash and cash equivalents at beginning of period

  93.3   82.2 

Cash and cash equivalents at end of period

 $78.5  $70.1 

 

See Notes to the Unaudited Condensed Consolidated Financial Statements.

 

 

Conagra Brands, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(columnar dollars in millions except per share amounts)

 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The accompanying Condensed Consolidated Financial Statements of Conagra Brands, Inc. (the "Company", "Conagra Brands", "we", "us", or "our") have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not include certain information and disclosures required for comprehensive financial statements. 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). All other adjustments are of a normal recurring nature. The results of operations for any quarter or a partial fiscal year period are not necessarily indicative of the results to be expected for other periods or the full fiscal year. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended May 28, 2023. 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

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The disclosure requirements must be applied retrospectively to all prior periods presented in the financial statements. The effective date for the standard is for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We are in the process of analyzing the impact of the ASU on our related disclosures.

 

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, to provide more detailed income tax disclosure requirements. The guidance requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as information on income taxes paid. The disclosure requirements will be applied on a prospective basis, with the option to apply it retrospectively. The effective date for the standard is for fiscal years beginning after December 15, 2024. Early adoption is permitted. We are in the process of analyzing the impact of the ASU on our related disclosures.

 

In March 2024, the Securities and Exchange Commission ("SEC") issued final climate-related disclosure rules that will require disclosure of material climate-related risks and material direct greenhouse gas emissions from operations owned or controlled (Scope 1) and/or material indirect greenhouse gas emissions from purchased energy consumed in owned or controlled operations (Scope 2). 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.

 

2. 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

  

May 28, 2023

 

Current assets

 $30.2  $34.3 

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

  90.6   123.3 

Current liabilities

  12.9   16.1 

Noncurrent liabilities

  2.3   5.3 

 

5

 
 

3. RESTRUCTURING ACTIVITIES

 

See our Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended  May 28, 2023 for additional information on our restructuring activities. 

 

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

  

International

  

Corporate

  

Total

 

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 

Other SG&A

     0.8      0.1   0.9 

Total SG&A

  1.5   0.9   18.4   0.1   20.9 

Total

 $7.5  $1.1  $20.2  $0.1  $28.9 

 

Included in the above results are $6.2 million of charges that have resulted or will result in cash outflows and $22.7 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

 

Severance and related costs

 $1.7  $4.9  $(1.8) $0.1  $4.9 

Consulting/professional fees

  0.2   0.3   (0.5)      

Other costs

     0.9   (0.9)      

Total

 $1.9  $6.1  $(3.2) $0.1  $4.9 

 

 

4. DEBT AND REVOLVING CREDIT FACILITY

 

Senior Notes

 

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.

 

Term Loan

 

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. During the second quarter of fiscal 2024, we prepaid $250.0 million of the aggregate principal amount outstanding under the Term Loan. The remaining balance matures on August 26, 2025.

 

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). 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.

 

6

 

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.

 

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.

 

Interest Expense

 

Net interest expense consisted of:

 

  

Thirteen Weeks Ended

  

Thirty-Nine Weeks Ended

 
  

February 25, 2024

  

February 26, 2023

  

February 25, 2024

  

February 26, 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 

 

 

5. FINANCING ARRANGEMENTS

 

Supplier Financing Arrangements

 

In order to manage our cash flow and related liquidity, we work with our suppliers to optimize our terms and conditions, which include the extension of payment terms. A number of factors may impact our future payment terms, including our relative creditworthiness, overall market liquidity, and changes in interest rates and other general economic conditions. Certain suppliers have access to third-party services that allow them to view our scheduled payments online and finance advances on our scheduled payments at the sole discretion of the supplier and the third-party. 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. 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. The associated payments are included in net cash flows from operating activities within our Condensed Consolidated Statements of Cash Flows. 

 

We have also concluded that certain obligations to our suppliers, including amounts due and scheduled payment terms, are impacted by these third-party service programs and these arrangements are classified as notes payable within our Condensed Consolidated Balance Sheets. 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.

 

6. 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

  

International

  

Foodservice

  

Total

 

Balance as of May 28, 2023

 $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

  

May 28, 2023

 
  

Gross Carrying Amount

  

Accumulated Amortization

  

Gross Carrying Amount

  

Accumulated Amortization

 

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 

 

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 18 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.

 

 

7. DERIVATIVE FINANCIAL INSTRUMENTS

 

See our Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended May 28, 2023, for additional information on our derivative activities.

 

Derivatives Designated as Cash Flow Hedges

 

During the first quarter of fiscal 2019, we entered into deal-contingent forward starting interest rate swap contracts to hedge a portion of the interest rate risk related to our issuance of long-term debt to help finance the acquisition of Pinnacle Foods Inc. 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.

 

Economic Hedges of Forecasted Cash Flows

 

Many of our derivatives do not qualify for, and we do not currently designate certain commodity or foreign currency derivatives to achieve, hedge accounting treatment. We reflect realized and unrealized gains and losses from derivatives used to economically hedge anticipated commodity consumption and to mitigate foreign currency cash flow risk in earnings immediately within general corporate expense (within cost of goods sold). The gains and losses are reclassified to segment operating results in the period in which the underlying item being economically hedged is recognized in cost of goods sold. In the event that management determines a particular derivative entered into as an economic hedge of a forecasted commodity purchase has ceased to function as an economic hedge, we cease recognizing further gains and losses on such derivatives in corporate expense and begin recognizing such gains and losses within segment operating results immediately.

 

The following table presents the net derivative gains (losses) from economic hedges of forecasted commodity consumption and the foreign currency risk of certain forecasted transactions, under this methodology:

 

  

Thirteen Weeks Ended

  

Thirty-Nine Weeks Ended

 
  

February 25, 2024

  

February 26, 2023

  

February 25, 2024

  

February 26, 2023

 

Gross derivative gains (losses) incurred

 $(8.3) $(16.8) $1.2  $(2.1)

Less: Net derivative gains (losses) allocated to reporting segments

  (1.5)  5.9   (8.4)  22.5 

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). 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)

 

 

Location in Condensed Consolidated

 

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

 $5.0  $(5.8)

Foreign exchange contracts

Cost of goods sold

  (3.8)  3.7 

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

 $1.2  $(2.1)

 

8

 

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.

 

8. 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. For 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.

 

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. For each of the 2024 performance period, 2025 performance period, and 2026 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. Dividend equivalents are paid on the portion of performance shares actually earned at our regular dividend rate in additional shares of common stock.

 

Awards, if earned, will be paid in shares of our common stock. Subject to limited exceptions set forth in our performance share plan, any shares earned will be distributed after the end of the performance period, and generally only if the participant continues to be employed with the Company through the date of distribution. For awards where performance against the performance target has not been certified, the value of the performance shares is adjusted based upon the market price of our common stock and current forecasted performance against the performance targets at the end of each reporting period and amortized as compensation expense over the vesting period. Forfeitures are accounted for as they occur.

 

 

9. EARNINGS PER SHARE

 

Basic earnings per share is calculated on the basis of weighted average outstanding shares of common stock. Diluted earnings per share is computed on the basis of basic weighted average outstanding shares of common stock adjusted for the dilutive effect of stock options, restricted stock unit awards, and other dilutive securities.

 

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

 

  

Thirteen Weeks Ended

  

Thirty-Nine Weeks Ended

 
  

February 25, 2024

  

February 26, 2023

  

February 25, 2024

  

February 26, 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 

Add: 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.

 

10. INVENTORIES

 

The major classes of inventories were as follows:

 

  

February 25, 2024

  

May 28, 2023

 

Raw materials and packaging

 $337.1  $368.2 

Work in process

  311.0   224.5 

Finished goods

  1,387.2   1,517.7 

Supplies and other

  108.1   101.8 

Total

 $2,143.4  $2,212.2 

 

9

 
 

11. INCOME TAXES

 

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.

 

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. 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.

 

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12. 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. 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. Conagra Brands, Inc., et al. (“Reese”). 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.
 

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. 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.

 

We are a party to certain environmental proceedings relating to businesses divested by Beatrice prior to our acquisition in fiscal 1991, including litigation and administrative proceedings involving Beatrice's possible status as a potentially responsible party at approximately 35 Superfund, proposed Superfund, or state-equivalent sites (the "Beatrice sites"). The Beatrice sites consist of locations previously owned or operated by predecessors of Beatrice that used or produced petroleum, pesticides, fertilizers, dyes, inks, solvents, polychlorinated biphenyls, acids, lead, sulfur, tannery wastes, and/or other contaminants. Reserves for these Beatrice environmental proceedings have been established based on our best estimate of the undiscounted remediation liabilities, which estimates include evaluation of investigatory studies, extent of required clean-up, the known volumetric contribution of Beatrice and other potentially responsible parties, and its experience in remediating sites. The accrual for Beatrice-related environmental matters totaled $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.

 

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General

 

After taking into account liabilities recognized for all of the foregoing matters, management believes the ultimate resolution of such matters should not have a material adverse effect on our financial condition, results of operations, or liquidity; however, it is reasonably possible that a change of the estimates of any of the foregoing matters may occur in the future that could have a material adverse effect on our financial condition, results of operations, or liquidity.

 

Costs of legal services associated with the foregoing matters are recognized within SG&A expenses as services are provided. 

 

 

13. PENSION AND POSTRETIREMENT BENEFITS

 

We have defined benefit retirement plans ("pension plans") for eligible salaried and hourly employees. Benefits are based on years of credited service and average compensation or stated amounts for each year of service. We also sponsor postretirement plans which provide certain medical and dental benefits to qualifying U.S. employees.

 

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:

 

  

Pension Plans

 
  

Thirteen Weeks Ended

  

Thirty-Nine Weeks Ended

 
  

February 25, 2024

  

February 26, 2023

  

February 25, 2024

  

February 26, 2023

 

Service cost

 $1.5  $1.6  $4.4  $4.9 

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

  1.1      1.1    

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

 

Service cost

 $  $  $0.1  $0.1 

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. plans and certain foreign plans. The spot-rate approach applies separate discount rates for each projected benefit payment in the calculation of pension service and interest cost.

 

The weighted-average discount rates for service and interest costs under the spot-rate approach used for pension 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. Based upon the current funded status of the plans and the current interest rate environment, we anticipate making further contributions of approximately $2.9 million to our pension plans during the remainder of fiscal 2024. We anticipate making further contributions of approximately $2.5 million to our postretirement plans during the remainder of fiscal 2024. These estimates are based on ERISA guidelines, current tax laws, plan asset performance, and liability assumptions, which are subject to change.

 

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14. STOCKHOLDERS' EQUITY

 

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

 

  

Conagra Brands, Inc. Stockholders' Equity

         
  

Common Shares

  

Common Stock

  

Additional Paid-in Capital

  

Retained Earnings

  

Accumulated Other Comprehensive Loss

  

Treasury Stock

  

Noncontrolling Interests

  

Total Equity

 

Balance at May 28, 2023

  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 

Derivative adjustments

                  1.6           1.6 

Activities of noncontrolling interests

                          0.2   0.2 

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.

              319.7               319.7 

Balance at August 27, 2023

  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)