In January 2013, we acquired Ralcorp Holdings, Inc. ("Ralcorp"), a manufacturer of private branded food. Since the acquisition of Ralcorp, we focused on addressing executional shortfalls and customer service issues intended to improve operating performance for theour Private Brands business. However, after further review of the Private Brands business, we announced a change tochanged our strategic direction on June 30, 2015. In pursuit of our underlying objective of creating and maximizing long-term shareholder value, we announced our intent to divestdivested the Private Brands business for greater focus onin the best opportunities for growth in our branded and Commercial Foods businesses. We also plan to aggressively pursue cost reductions through our selling, general and administrative functions and productivity improvements to drive margin expansion, and to maintain our balanced capital allocation philosophy.

We compete throughout the food industry and focus on adding value for our customers who operate in the retail food foodservice, and ingredientsfoodservice channels.

Our operations, including our reporting segments, are described below. Our locations, including manufacturing facilities, within each reporting segment, are described in Item 2, Properties.

On May 12, 2015,June 26, 2018, subsequent to the end of fiscal 2018, we entered into a definitive merger agreement with Pinnacle Foods Inc. ("Pinnacle") under which we plan to acquire all outstanding shares of Pinnacle common stock in a cash and stock transaction valued at approximately $10.9 billion, including Pinnacle's outstanding net debt. Under the terms of the merger agreement, Pinnacle shareholders will receive $43.11 per share in cash and 0.6494 shares of our common stock for each share of Pinnacle common stock held. The implied price of $68.00 per Pinnacle share is based on the volume-weighted average price of our stock for the five days ended June 21, 2018. The planned acquisition is expected to close by the end of calendar 2018 and remains subject to the approval of Pinnacle shareholders, the receipt of regulatory approvals, and other customary closing conditions.

On November 9, 2016, we completed the saleSpinoff of a small snack business, Medallion Foods.our Lamb Weston business. As of such date, we did not beneficially own any equity interest in Lamb Weston and no longer consolidated Lamb Weston into our financial results. We previously reflected the results of this business within the Private Brands segment. We reflected the results of these operations as discontinued operations for all periods presented.

The following comments pertain to all of our reporting segments.

ConAgra FoodsConagra Brands is a branded consumer packaged goods food company that operates in many sectors of the food industry, with a significant focus on the sale of branded, private branded, and value-added consumer food, as well as foodservice items and ingredients. We use many different raw materials, the bulk of which are commodities. The prices paid for raw materials used in making our food generally reflect factors such as weather, commodity market fluctuations, currency fluctuations, tariffs, and the effects of governmental agricultural programs. Although the prices of raw materials can be expected to fluctuate as a result of these factors, we believe such raw materials to be in adequate supply and generally available from numerous sources. From time to time, we have faced increased costs for many of our significant raw materials, packaging, and energy inputs. We seek to mitigate higher input costs through productivity and pricing initiatives, and through the use of derivative instruments used to economically hedge a portion of forecasted future consumption.

We experience intense competition for sales of our food items in our major markets. Our food items compete with widely advertised, well-known, branded food, as well as private branded and customized food items. Some of our competitors are larger and have greater resources than we have. We compete primarily on the basis of quality, value, customer service, brand recognition, and brand loyalty.

Demand for certain of our food items may be influenced by holidays, changes in seasons, or other annual events.

We manufacture primarily for stock and fill our customer orders from finished goods inventories. While at any given time there may be some backlog of orders, such backlog is not material in respect to annual net sales, and the changes of backlog orders from time to time are not significant.

Our trademarks are of material importance to our business and are protected by registration or other means in the United States and most other markets where the related food items are sold. Some of our food items are sold under brands that have been licensed from others. We also actively develop and maintain a portfolio of patents, although no single patent is considered material to the business as a whole. We have proprietary trade secrets, technology, know-how, processes, and other intellectual property rights that are not registered.

Many of our facilities and products we make are subject to various laws and regulations administered by the United States Department of Agriculture, the Federal Food and Drug Administration, the Occupational Safety and Health Administration, and other federal, state, local, and foreign governmental agencies relating to the food safety and quality, sanitation, safety and health matters, and environmental control. We believe that we comply with such laws and regulations in all material respects

Our largest customer, Wal-Mart Stores,Walmart, Inc. and its affiliates, accounted for approximately 18%, 19%,24% of consolidated net sales for both fiscal 2018 and 20%2017 and 23% of consolidated net sales for fiscal 2015, 2014, and 2013, respectively.2016.

We employ processes at our principal manufacturing locations that emphasize applied research and technical services directed at product improvement and quality control. In addition, we conduct research activities related to the development of new products. Research and development expense was $90.4$47.3 million, $101.8$44.6 million, and $91.1$59.6 million in fiscal 2015, 2014,2018, 2017, and 2013,2016, respectively.

Sean M. Connolly has served as our President and Chief Executive Officer and a member of ourthe Board since April 6, 2015. Previously,Prior to that, he wasserved as President and Chief Executive Officer and a director of The Hillshire Brands Company (brand name(a branded food products company) from June 2012 to August 2014;2014, Executive Vice President of Sara Lee Corporation (the former name ofpredecessor to Hillshire), and Chief Executive Officer, Sara Lee North American Retail and Foodservice, from January 2012 to June 2012. Prior to joining Hillshire, Mr. Connolly served as President of Campbell North America, the largest division of Campbell Soup Company (branded(a branded convenience food products)products company), from October 2010 to December 2011;2011, President, Campbell USA from 2008 to 2010;2010, and President, North American Foodservice for Campbell from 2007 to 2008. Before joining Campbell in 2002, he served in various marketing and brand management roles at The Procter & Gamble (brandedCompany (a consumer product goods)goods company).

John F. GehringDavid S. Marberger has served as Executive Vice President and Chief Financial Officer since January 2009.August 2016. Prior to joining Conagra Brands, he served as Chief Financial Officer of Prestige Brands Holdings, Inc. (a provider of over-the-counter healthcare products) from October 2015 until July 2016. Prior to that, Mr. Gehring joined ConAgra FoodsMarberger served as Vice President of Internal Audit in 2002, becamethe Senior Vice President in 2003, and most recentlyChief Financial Officer of Godiva Chocolatier, Inc. (a global manufacturer and supplier of premium chocolates) from 2008 until October 2015. Prior to that, Mr. Marberger served Tasty Baking Company as Executive Vice President and Chief Financial Officer from 2006 to 2008 and as Senior Vice President and Corporate Controller from July 2004 to January 2009. He served as ConAgra Foods' interim Chief Financial Officer from October 20062003 to November 2006. Prior to joining ConAgra Foods, Mr. Gehring was a partnerFrom 1993 until 2003, he served in various roles at Ernst & Young LLP (an accounting firm) from 1997 to 2001.Campbell Soup Company, where he last held the position of Vice President, Finance, Food and Beverage Division.

Colleen R. Batcheler has served as Executive Vice President, General Counsel and Corporate Secretary since September 2009 and served as Senior Vice President, General Counsel and Corporate Secretary from February 2008 until September 2009. Ms. Batcheler joined ConAgra FoodsConagra Brands in June 2006 as Vice President, Chief Securities Counsel and Assistant Corporate Secretary. In September 2006, she was named Corporate Secretary. From 2003 until joining ConAgra Foods,Conagra Brands, Ms. Batcheler was

Albert D. Bolles, Ph.D., was named Executive Vice President, Chief Technical and Operations Officer in May 2014. Dr. Bolles joined ConAgra Foods in 2006David B. Biegger has served as Executive Vice President Research, Quality & Innovation.and Chief Supply Chain Officer since October 2015. Prior to joining ConAgra Foods,Conagra Brands, Mr. Biegger spent nearly 11 years at the Campbell Soup Company, where he led Worldwide Research and Development for PepsiCo Beverages and Foods. From 1993 to 2002, he wasserved as Senior Vice President, Global TechnologySupply Chain from February 2014 until October 2015 and Qualitywas responsible for Tropicana Products Incorporatedthe global supply chain of that company, including manufacturing, quality, safety, engineering, procurement, logistics, environmental sustainability and customer service. Prior to joining Campbell Soup Company, he spent 24 years in supply chain roles at Procter & Gamble Co. (a beverage company)consumer goods corporation). Dr. Bolles

Charisse Brock has served as a memberExecutive Vice President and Chief Human Resources Officer since November 2015 and as Senior Vice President and Interim Chief Human Resources Officer from August 2015 until November 2015. Prior to serving in these roles, Ms. Brock served as Vice President of Human Resources for the BoardConsumer Foods segment of DirectorsConagra Brands from September 2010 until August 2015. Ms. Brock joined Conagra Brands in 2004 as Director of Landec Corporation (food products technologies and biomedical materials manufacturer) since May 2014.Human Resources, supporting the Refrigerated Foods Group. Prior to joining Conagra Brands, she served for 15 years at The Quaker Oats Company (which was acquired by PepsiCo during her tenure) in its Consumer Foods Division.

Robert G. Wise has served as Senior Vice President, Corporate Controller since December 2012. Mr. Wise joined ConAgra FoodsConagra Brands in March 2003 and has held various positions of increasing responsibility with ConAgra Foods,Conagra Brands, including Vice President, Assistant Corporate Controller from March 2006 until January 2012 and most recently served as Vice President, Corporate Controller from January 2012 until December 2012. Prior to joining ConAgra Foods,Conagra Brands, Mr. Wise served in various roles at KPMG LLP (an accounting firm) from October 1995 tountil March 2003.

We make available, free of charge through the “Investors—"Investors—Financial Reports & Filings”Filings" link on our Internet website at http://www.conagrafoods.com,www.conagrabrands.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission.Commission ("SEC"). We use our Internet website, through the “Investors”"Investors" link, as a channel for routine distribution of important information, including news releases, analyst presentations, and financial information. The information on our website is not, and will not be deemed to be, a part of this annual report on Form 10-K or incorporated into any of our other filings with the SEC.

We have also posted on our website our (1) Corporate Governance Principles, (2) Code of Conduct, (3) Code of Ethics for Senior Corporate Officers, and (4) Charters for the Audit/Finance Committee, Nominating, Governance and Public Affairs Committee, and Human Resources Committee. Shareholders may also obtain copies of these items at no charge by writing to: Corporate Secretary, ConAgra Foods,Conagra Brands, Inc., One ConAgra Drive, Omaha, NE, 68102-5001.222 Merchandise Mart Plaza, Suite 1300, Chicago, IL, 60654.

Our business and results of operations may be adversely affected by changes in national or global economic conditions, including inflation, interest rates, availability of capital markets, consumer spending rates, energy availability and costs (including fuel surcharges), and the effects of governmental initiatives to manage economic conditions.

Volatility in financial markets and deterioration of national and global economic conditions could impact our business and operations in a variety of ways, including as follows:

The food industry is highly competitive, and further consolidation in the industry would likely increase competition. Our principal competitors have substantial financial, marketing, and other resources. Increased competition can reduce our sales due to loss of market share or the need to reduce prices to respond to competitive and customer pressures. Competitive pressures also may restrict our ability to increase prices, including in response to commodity and other cost increases. We sell branded, private brand, and customized food products, as well as commercially branded foods and ingredients.foods. Our branded products have an advantage over private brand products primarily due to advertising and name recognition, although private brand products typically sell at a discount to those of branded competitors. In addition, when branded competitors focus on price and promotion, the environment for private brand producers becomes more challenging because the price difference between private brand products and branded products may become less significant. In most product categories, we compete not only with other widely advertised branded products, but also with other private label and store brand products that are generally sold at lower prices. A strong competitive response from one or more of our competitors to our marketplace efforts, or a consumer shift towards more generic, lower-priced, or other value offerings, could result in us reducing pricing, increasing marketing or other expenditures, or losing market share. Our margins and profits could decrease if a reduction in prices or increased costs are not counterbalanced with increased sales volume.

We utilize derivatives to manage price risk for some of our principal ingredients and energy costs, including grains (wheat, corn, and oats), oils, beef, pork, poultry, and energy. Changes in the values of these derivatives are generally recorded in earnings currently, resulting in fewer customers onvolatility in both gross margin and net earnings. These gains and losses are reported in cost of goods sold in our Consolidated Statements of Operations and in unallocated general corporate expenses in our segment operating results until we utilize the underlying input in our manufacturing process, at which we can rely for business. These consolidationstime the gains and the growth of supercenters have produced large, sophisticated customers with increased buying power and negotiating strength wholosses are more capable of resisting price increases and can demand lower pricing, increased promotional programs, or specialty tailored products. In addition, larger retailers have the scalereclassified to develop supply chains that permit them to operate with reduced inventories or to develop and market their own retailer brands. These customerssegment operating profit. We may also in the future use more of their shelf space, currently used for our products, for their store brand products. We continue to implement initiatives to counteract these pressures. However, if the larger sizeexperience volatile earnings as a result of these customers results in additional negotiating strength and/or increased private label or store brand competition, our profitability could decline.

Our future success and earnings growth depend in part on our ability to achieve the appropriate cost structure and operate efficiently in the highly competitive food industry, particularly in an environment of volatile input costs. We continue to implement profit-enhancing initiatives that impact our supply chain and general and administrative functions. These initiatives are focused on cost-saving opportunities in procurement, manufacturing, logistics, and customer service, as well as general and administrative overhead levels. Gaining additional efficiencies may become more difficult over time. Our failure to reduce costs through productivity gains or by eliminating redundant costs resulting from acquisitions could adversely affect our profitability and weaken our competitive position. If we do not continue to effectively manage costs and achieve additional efficiencies, our competitiveness and our profitability could decrease.

We sell food products for human consumption, which involves risks such as product contamination or spoilage, product tampering, other adulteration of food products, mislabeling, and misbranding. We may be subject to liability if the consumption of any of our products causes injury, illness, or death. In addition, we will voluntarily recall products in the event of contamination or damage. We have issued recalls and have from time to time been and currently are involved in lawsuits relating to our food products. A significant product liability judgment or a widespread product recall may negatively impact our sales and profitability for a period of time depending on the costs of the recall, the destruction of product inventory, product availability, competitive reaction, customer reaction, and consumer attitudes. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential customers and our corporate and brand image.

Additionally, as a manufacturer and marketer of food products, we are subject to extensive regulation by the U.S. Food and Drug Administration and other national,federal, state, and local government agencies. The Food, Drug & Cosmetic Act, or the FDCA,(the "FDCA"), and the Food Safety Modernization Act and their respective regulations govern, among other things, the manufacturing, composition and ingredients, packaging, and safety of food products. Some aspects of these laws use a strict liability standard for imposing sanctions on corporate behavior; meaning that no intent is required to be established. If we fail to comply with applicable laws and regulations, we may be subject to civil remedies, including fines, injunctions, recalls, or seizures, as well as criminal sanctions, any of which could have a material adverse effect on our business, financial condition, or results of operations. As previously disclosed, among

Consumer preferences evolve over time and the matters outstanding duringsuccess of our food products depends on our ability to identify the tastes and dietary habits of consumers and to offer products that appeal to their preferences, including concerns of consumers regarding health and wellness, obesity, product attributes, and ingredients. Introduction of new products and product extensions requires significant development and marketing investment. If our products fail to meet consumer preferences, or we fail to introduce new and improved products on a timely basis, then the return on that investment will be less than anticipated and our strategy to grow sales and profits with investments in acquisitions, marketing, and innovation will be less successful. Similarly, demand for our products could be affected by consumer concerns or perceptions regarding the health effects of ingredients such as sodium, trans fats, sugar, processed wheat, or other product ingredients or attributes.

During fiscal 20152018, our largest customer, Walmart, Inc. and its affiliates, accounted for approximately 24% of our consolidated net sales. There can be no assurance that Walmart, Inc. and other significant customers will continue to purchase our products in the same quantities or on the same terms as in the past, particularly as increasingly powerful retailers continue to demand lower pricing. The loss of a significant customer or a material reduction in sales to a significant customer could materially and adversely affect our product sales, financial condition, and results of operations.

From time to time, we evaluate acquisition candidates that may strategically fit our business objectives. If we are unable to complete acquisitions or to successfully integrate and develop acquired businesses, our financial results could be materially and adversely affected. Moreover, we may incur asset impairment charges related to acquisitions that reduce our profitability.

Our acquisition activities may present financial, managerial, and operational risks. Those risks include diversion of management attention from existing businesses, difficulties integrating personnel and financial and other systems, effective and immediate implementation of control environment processes across our employee population, adverse effects on existing business relationships with suppliers and customers, inaccurate estimates of fair value made in the Company's 2007 peanut butter recall, was an investigation byaccounting for acquisitions and amortization of acquired intangible assets which would reduce future reported earnings, potential loss of customers or key employees of acquired businesses, and indemnities and potential disputes with the U.S. Attorney's officesellers. Any of these factors could affect our product sales, financial condition, and results of operations.

Maintaining a good reputation globally is critical to selling our products. Product contamination or tampering, the failure to maintain high standards for product quality, safety, and integrity, including with respect to raw materials and ingredients obtained from suppliers, or allegations of product quality issues, mislabeling, or contamination, even if untrue, may reduce demand for our products or cause production and delivery disruptions. Our reputation could also be adversely impacted by any of the following, or by adverse publicity (whether or not valid) relating thereto: the failure to maintain high ethical, social, and environmental standards for all of our operations and activities; the failure to achieve ourany stated goals with respect to sodium or saturated fat;the nutritional profile of our products; our research and development efforts; or our environmental impact, including use of agricultural materials, packaging, energy use, and waste management. Moreover, the growing use of social and digital media by consumers has greatly increased the speed and extent that information or misinformation and opinions can be shared. Failure to comply with local laws and regulations, to maintain an effective system of internal controls or to provide accurate and timely financial information could also hurt our reputation. Damage to our reputation or loss of consumer confidence in our products for any of these or other reasons could result in decreased demand for our products and could have a material adverse effect on our business, financial condition, and results of operations, as well as require additional resources to rebuild our reputation.

Our business is subject to a variety of governmental laws and regulations, including food and drug laws, environmental laws, laws related to advertising and marketing practices, accounting standards, taxation requirements, competition laws, employment laws, data privacy laws, and anti-corruption laws, among others, in and outside of the United States. Our facilities and products are subject to many laws and regulations administered by the United States Department of Agriculture, the Federal Food and Drug Administration, the Occupational Safety and Health Administration, and other federal, state, local, and foreign governmental agencies relating to the processing, packaging, storage, distribution, advertising, labeling, quality, and safety of food products, the health and safety of our employees, and the protection of the environment. Our failure to comply with applicable laws and regulations could subject us to lawsuits, administrative penalties, and civil remedies, including fines, injunctions, and recalls of our products. Our operations are also subject to extensive and increasingly stringent regulations administered by the Environmental Protection Agency, which pertain to the discharge of materials into the environment and the handling and disposition of wastes. Failure to comply with these regulations can have serious consequences, including civil and administrative penalties and negative publicity. Changes in applicable laws or regulations or evolving interpretations thereof, including increased government regulations to limit carbon dioxide and other greenhouse gas emissions as a result of concern over climate change, may result in increased compliance costs, capital expenditures, and other financial obligations for us, which could affect our profitability or impede the production or distribution of our products, which could affect our net operating revenues.

Fiscal 2018 performance compared to fiscal 2017 reflected improving net sales trends, due to innovation and renovation of some of our largest brands along with food soldand enhanced marketing methods. Higher gross profits in the International and Foodservice segments were offset by ConAgra Foods under private brand labels,slightly lower gross profits in grocery, convenience, mass merchandise, club,the Grocery & Snacks and drug stores. Additionally, ConAgra Foods supplies frozen and sweet potato products as well as other vegetable, spice, bakery, and grain products to commercial and foodservice customers.

On December 22, 2017, the 2017 U.S. Tax Cuts and Jobs Act (the "Tax Act") was signed into law. The Tax Act reduces tax rates and modifies certain policies, credits, and deductions and has certain international tax consequences. The Tax Act reduces the federal corporate tax rate from a maximum of 35% to a flat 21% rate. The Tax Act's corporate rate reduction became effective January 1, 2018, in the middle of our third quarter. Given our off-calendar fiscal year-end, our fiscal 2018 federal statutory tax rate was a blended rate. Our federal statutory rate will reduce to 21% in fiscal 2019. As a result, we were required to revalue our deferred tax assets and liabilities to account for the future impact of lower corporate tax rates and other projects. It also focuses on growing our Consumer Foodsprovisions of the Tax Act. These changes resulted in a one-time estimated income tax benefit of $233.3 million for fiscal 2018. This amount may be adjusted in the future as further information and Commercial Foods segments, as well as balanced capital allocation.interpretations become available.

Segment presentation of gains and losses from derivatives used for economic hedging of anticipated commodity input costs and economic hedging of foreign currency exchange rate risks of anticipated transactions is discussed in the segment review below.

charges of $1.59 billion ($1.46 billion after-tax) relatedAs noted above, on June 26, 2018, subsequent to the impairmentend of fiscal 2018, we entered into the Merger Agreement with Pinnacle under which we will acquire all outstanding shares of Pinnacle common stock in a cash and stock transaction valued at approximately $10.9 billion, including Pinnacle's outstanding net debt. Under the terms of the Merger Agreement, Pinnacle shareholders will receive $43.11 per share in cash and 0.6494 shares of our common stock for each share of Pinnacle common stock held. The planned acquisition is expected to close by the end of calendar 2018 and remains subject to the approval of Pinnacle shareholders, the receipt of regulatory approvals, and other customary closing conditions.

In July 2014,the first quarter of fiscal 2017, we acquired TaiMei Potato Industry Limited, a Chinese potato processor,completed the sales of our Spicetec Flavors & Seasonings business ("Spicetec") and our JM Swank business for $92.2 million, consistingcombined proceeds of $74.9 million in cash, net$489.0 million. The results of cash acquired, plus assumed liabilities. The purchase included propertyoperations of Spicetec and equipment associated with making frozen potato products. This business isJM Swank are included in the Commercial Foods segment.

The Consumer FoodsGrocery & Snacks reporting segment principally includes branded, shelf stable food products sold in various retail channels primarily in North America. Ourthe United States.

The Refrigerated & Frozen reporting segment principally includes branded, temperature controlled food products are sold in a variety of categories (meals, entrees, condiments, sides, snacks, and desserts) in various retail channels across frozen, refrigerated,in the United States.

The International reporting segment principally includes branded food products, in various temperature states, sold in various retail and shelf-stable temperature classes.foodservice channels outside of the United States.

Derivatives used to manage commodity price risk and foreign currency risk are not designated for hedge accounting treatment. We believe these derivatives provide economic hedges of certain forecasted transactions. As such, these derivatives are generally recognized at fair market value with realized and unrealized gains and losses recognized in general corporate expenses. The gains and losses are subsequently recognized in the operating results of the reporting segments in the period in which the underlying transaction being economically hedged is included in earnings. In the event that management determines a particular derivative entered into as an economic hedge of a forecasted commodity purchase has ceased to function as an economic hedge, we cease recognizing further gains and losses on such derivatives in corporate expense and begin recognizing such gains and losses within segment operating results, immediately.

Overall, our net sales were $15.83$7.94 billion in fiscal 2015, essentially2018, an increase of 1% compared to fiscal 2017.

Consumer FoodsInternational net sales for fiscal 20152018 were $7.30 billion, a decrease of $11.3$843.5 million, compared to fiscal 2014. Results reflected a volume benefit of approximately 1% in fiscal 2015 due to the inclusion of an additional week of results, offset by 1% decrease due to the impact of foreign exchange rates. In addition, we increased prices in fiscal 2015 for some categories to cover commodity costs.

Foodservice net sales for fiscal 20152018 were $1.05 billion, a decrease of $23.5 million, or 2%, compared to fiscal 2017. Results for fiscal 2018 reflected weakan 11% decrease in volume, partially offset by a 9% increase in price/mix compared to fiscal 2017. The decrease in volumes resulting from an intense bidding environmentcompared to the prior-year period primarily reflected the impact of exiting a non-core business, the planned discontinuation of certain lower-performing businesses, and executional challenges, more than offsettingsoftness in certain categories. The increase in price/mix for fiscal 2018 reflected favorable product and customer mix, the benefitimpact of inflation-driven increases in pricing, and the execution of the inclusionsegment's value over volume strategy.

In the first quarter of an additional weekfiscal 2017, we divested our Spicetec and JM Swank businesses. These businesses comprise the entire Commercial segment following the presentation of resultsLamb Weston as discontinued operations. Accordingly, there were no net sales in the Commercial segment after the first quarter of fiscal 2017. These businesses had net sales of $71.1 million in fiscal 2015.2017 prior to the completion of the divestitures.

SG&A expenses totaled $3.47$1.32 billion for fiscal 2015, an increase2018, a decrease of $700.9$99.1 million compared to fiscal 2014. We estimate that the inclusion of an extra week in the fiscal 2015 results increased SG&A expenses by approximately $30 million.

International operating profit for fiscal 2014 also included a charge2018 was $86.5 million, compared to an operating loss of $16.5$168.9 million for fiscal 2017. The operating loss in connection with the impairment of a small production facility, as well as a charge of $8.9fiscal 2017 includes charges totaling $235.9 million for the impairment of goodwill and an intangible brand asset in our Canadian and Mexican operations. Gross profits were $18.6 million higher in fiscal 2018 than in fiscal 2017, as a result of improved price/mix, the favorable impact of foreign exchange, and the planned discontinuations of certain nonoperating assetslower-performing products. Operating profit of the International segment was impacted by charges of $1.5 million and a $5.1$0.9 million gain from the sale of land, both related to assets received in connection with the bankruptcy of an onion products supplier.our restructuring plans, in fiscal 2018 and 2017, respectively.

Private BrandsFoodservice operating lossprofit for fiscal 2015 and 20142018 was $1.46 billion and $373.4$121.8 million, respectively.an increase of $16.7 million, or 16%, compared to fiscal 2017. Gross profits were $114.2$13.9 million lowerhigher in fiscal 20152018 than in fiscal 2014. Gross profits2017, primarily reflecting the impact of inflation-driven increases in pricing and supply chain realized productivity, partially offset by lower sales volumes and increased input costs. Operating profit of the Foodservice segment was impacted by charges of $1.8 million in fiscal 2015 included $5.2 million of net derivative losses2017 in connection with certain derivatives that ceased to function as economic hedges. In fiscal 2015 and 2014, we recognized charges of $1.59 billion and $605.4 million, respectively, in connection with the impairment of goodwill, other intangible assets, and fixed assets within the Private Brands segment. Additional decreases were driven by the impact of lower net sales, discussed above, and higher commodity costs (particularly for durum wheat and tree nuts). Private Brandsour restructuring plans.

Commercial operating profit was $202.6 million in fiscal 2015 and 2014 also included $36.1 million and $35.9 million, respectively, of charges related to the execution of our restructuring plans.2017. The Company is working to improve executionsold the Spicetec and JM Swank businesses in its Private Brandsthe first quarter of fiscal 2017, recognizing pre-tax gains totaling $197.4 million. The Spicetec and JM Swank businesses comprise the entire Commercial segment including increasing speedfollowing the presentation of responsiveness to customers and commercialization of new products, improving fill rates and on-time deliveries, and better commodity cost management. Subsequent to fiscal 2015, on June 30, 2015, we announced our plan to exitLamb Weston as discontinued operations. There are no further operations in the Private Brands operations.Commercial segment.

Our income tax expense was $220.1$174.6 million and $361.9$254.7 million in fiscal 20142018 and 2013,2017, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income from continuing operations, inclusive of equity method investment earnings) was 56%approximately 18% and 32% for fiscal 20142018 and 34%2017, respectively.

The effective tax rate forin fiscal 20142018 reflects the incurrencefollowing:

The effective tax rate forin fiscal 20132017 reflects the incurrence of variousfollowing:

We expect our effective tax rate also included favorablein fiscal 2019, exclusive of any unusual transactions or tax adjustments resulting from the implementation of the 2012 American Taxpayer Relief Act during fiscal 2013.events, to be approximately 23%-24%.

We include our share of the earnings of certain affiliates based on our economic ownership interest in the affiliates. Significant affiliates produce and market potato products for retail and foodservice customers.Our most significant affiliate is the Ardent Mills joint venture. Our share of earnings from our equity method investmentsinvestment earnings were $97.3 million and $71.2 million for fiscal 2018 and 2017, respectively. A benefit of $4.3 million was $32.5included in the earnings of fiscal 2018 in connection with a gain on the substantial liquidation of an international joint venture. In addition, Ardent Mills earnings were higher than they were in the prior-year periods due to more favorable market conditions and continued improvement in operating effectiveness.

Our discontinued operations generated after-tax income of $14.3 million ($29.7and $102.0 million in fiscal 2018 and 2017, respectively. During fiscal 2018, a $14.5 million income tax benefit was recorded due to an adjustment of the estimated deductibility of the costs incurred associated with effecting the Spinoff of Lamb Weston. The prior-year period results reflected the operations of Lamb Weston through the date of its Spinoff in November 2016. We incurred significant costs associated with effecting the Spinoff of Lamb Weston. These costs are included in results of discontinued operations.

In the first quarter of fiscal 2017, we divested our Spicetec and JM Swank businesses. These businesses comprise the entire Commercial segment following the presentation of Lamb Weston as discontinued operations. Accordingly, there were no net sales in the Commercial Foods segment and $2.8after the first quarter of fiscal 2017. These businesses had net sales of $71.1 million in fiscal 2017 prior to the Consumer Foods segment) and $37.5 million ($35.7 millioncompletion of the divestitures. Net sales in the Commercial Foods segment and $1.8were $468.1 million in fiscal 2016.

SG&A expenses totaled $1.42 billion for fiscal 2017, a decrease of $607.5 million compared to fiscal 2016. SG&A expenses for fiscal 2017 reflected the Consumer Foods segment)following:

We include our share of the earnings of certain affiliates based on our economic ownership interest in the affiliates. Our most significant affiliate is the Ardent Mills joint venture. Our share of earnings from our equity method investment earnings were $71.2 million and $66.1 million for fiscal 2017 and 2016, respectively. The increases are reflective of higher profits from the Ardent Mills joint venture due to more favorable wheat market conditions as well as improved operational effectiveness.

Our discontinued operations generated after-tax income of $141.4 million and $87.7$102.0 million in fiscal 20142017 and 2013, respectively.

OurThe primary objective of our financing objectivestrategy is to maintain a prudent capital structure that provides us flexibility to pursue our growth objectives. If necessary, we use short-term debt principally to finance ongoing operations, including our seasonal requirements for working capital (accounts receivable, prepaid expenses and other current assets, and inventories, less accounts payable, accrued payroll, and other accrued liabilities), and a combination of equity and long-term debt to finance both our base working capital needs and our non-current assets. We are committed to maintaining an investment grade credit rating.

As of the end of fiscal 2015,2018, our senior long-term debt ratings were all investment grade. A significant downgrade in our credit ratings would not affect our ability to borrow amounts under the revolving credit facility,Facility, although borrowing costs would increase. A downgrade of our short-term credit ratings would impact our ability to borrow under our commercial paper program by negatively impacting borrowing costs and causing shorter durations, as well as making access to commercial paper more difficult.

On April 20, 2018, the Board of Directors authorized a quarterly dividend payment of $0.2125 per share, which was paid on May 31, 2018 to stockholders of record as of the close of business on April 30, 2018. Subject to market and other conditions and the approval of our Board of Directors, we intend to maintain our quarterly dividend at the current annual rate of $0.85 per share during fiscal 2019. In fiscal 2015, the Company completed its multi-year debt reduction goalfuture, we expect modest dividend increases while we focus on deleveraging, subject to the approval of repaying $2.1 billion betweenour Board of Directors.

We have access to the $1.25 billion Facility, our commercial paper program, and the end of fiscal 2015, exceedingcapital markets. We believe we also have access to additional bank loan facilities, if needed.

We expect to maintain or have access to sufficient liquidity to finance the goal of $2.0 billion of debt repayment in that time period. Despite the progress in debt reduction, the Company continues to have a substantial amount of debt outstanding. Given weaker-than-planned operating performance, the Company’s leverage ratios are still higher than targeted, so debt reduction is expected to remain a component of capital allocation in the foreseeable future.

Cash used in China and an organic frozen food business in the United States totaling $95.7 million. Capital expenditures in fiscal 2015 were lower than fiscal 2014 as a result of fewer significant plant expansions and improvements. In fiscal 2014, we purchased certain frozen dessert production assets for $39.9 million million. The fiscal 2015 investments were offset by $391.4 million in cash received from Ardent Mills in connection with the formation of that joint venture. Cash generated from investing activities of discontinued operations in fiscal 2015 totaled $114.0 million resulting from receipt of $163.0 million cash associated with the sale of three flour milling facilities at the end of fiscal 2014, partially offset by $49.0 million cash contributed to Ardent Mills upon the formation of the joint venture. Investing activities of discontinued operations generated $58.2 million in fiscal 20142017 resulted primarily from the sale of assets of the Lightlife and Medallion Foods businesses offset by capital expenditures in our former milling operations.expenditures.

Cash used for financing activities of continuing operations totaled $1.43$506.9 million in fiscal 2018 compared to $2.41 billion in fiscal 2015 compared to $1.03 billion in2017. Financing activities of continuing operations for fiscal 2014. In fiscal 2015, we repaid $1.50 billion2018 consisted primarily of common stock repurchases of $967.3 million, net proceeds from the issuance of long-term debt partially financed by the issuance of $550.0$797.0 million, aggregate principal amountcash dividend payments of floating rate notes. We also reduced short term$342.3 million, long-term debt primarily commercial paper, by $150.0 million. In fiscal 2014, we decreased our total debt by $612.4 million, including the repayment of $500.0 million aggregate principal amount of our 5.875% senior notes upon maturity in April 2014. During fiscal 2015 and 2014, we paid dividends of $425.2repayments totaling $242.3 million, and $420.9 million, respectively. Innet short-term borrowings of $249.1 million. Cash used in financing activities of continuing operations in fiscal 2015 and 2014, we repurchased $50.0 million and $100.0 million, respectively,2017 reflected debt repayments of our$1.06 billion, common stock as partrepurchases totaling $1.0 billion, and dividends paid of our share repurchase program. Amounts generated from proceeds of$415.0 million, partially offset by employee stock option exercises and the issuance of other stock awards of $73.8 million.

Cash provided by financing activities of discontinued operations principally comprises borrowings by Lamb Weston which were $153.8 million and $103.7 milliontransferred in fiscal 2015 and 2014, respectively.connection with the Spinoff.

Our preliminary estimate of capital expenditures for fiscal 20162019 is approximately $575 million. This includes$350 million, excluding any incremental amounts attributable toresulting from the Private Brands operations we intend to divest.pending acquisition of Pinnacle.

Management believes that existingthe Company's sources of liquidity will be adequate finance the cash balances, cash flows from operations, existing credit facilities, and accessportion of the merger consideration, to capital markets will provide sufficient liquidity to meet oursatisfy working capital needs, repurchase shares of our common stock from time to time, make payments of anticipated quarterly dividends, complete planned capital expenditures, and payment of anticipated quarterly dividendsmake any required debt repayments, including by retiring or refinancing senior debt upon maturity (as market conditions warrant), for at least the next twelve months.foreseeable future.

We have variable interests in certain entities that we have determined to be variable interest entities, but for which we are not the primary beneficiary. We do not consolidate the financial statements of these entities.

As of May 27, 2018, there was one remaining leased building subject to a lease put option for which the put option price exceeded the estimated fair value of the property by $8.2 million, of which we had accrued $1.2 million. We are amortizing the difference between the put price and the estimated fair value (without a lease agreement in place) of the property over the remaining lease term within SG&A expenses. This lease is accounted for as an operating leases,lease, and accordingly, there are no material assets orand liabilities, other than the accrued portion of the put price, associated with these entitiesthis entity included in ourthe Consolidated Balance Sheets. We have no material exposure to loss from our variable interests in these entities. We have determined that we do not have the power to direct the activities that most significantly impact the economic performance of these entities.this entity. In making this determination, we have considered, among other items, the terms of the lease agreements,agreement, the expected remaining useful liveslife of the assetsasset leased, and the capital structure of the lessor entities.entity.