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 x☒ No ¨

☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T ~~(232.405~~(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x☒ 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. ~~(Check one):~~

Large accelerated filer x☒ Accelerated filer ¨ ☐Non-accelerated filer ¨ ~~(Do not check if a smaller reporting company)~~

☐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 x

☒

Number of shares outstanding of ~~issuer’s~~issuer's common stock, as of ~~November 26, 2017,~~February 23, 2020, was ~~400,660,848.~~

487,076,305.

Table of Contents



Part I. FINANCIAL INFORMATION			1
~~Item 1~~			~~Financial Statements~~	1
Item 1		Financial Statements		1

		Unaudited Condensed Consolidated Statements of Earnings for the Thirteen and ~~Twenty-six~~Thirty-nine Weeks ended ~~November 26, 2017~~February 23, 2020 and ~~November 27, 2016~~February 24, 2019		1

		Unaudited Condensed Consolidated Statements of Comprehensive Income for the Thirteen and ~~Twenty-six~~Thirty-nine Weeks ended ~~November 26, 2017~~February 23, 2020 and ~~November 27, 2016~~February 24, 2019		2

		Unaudited Condensed Consolidated Balance Sheets as of ~~November 26, 2017~~February 23, 2020 and May ~~28, 2017~~26, 2019		3

		Unaudited Condensed Consolidated Statements of Cash Flows for the ~~Twenty-six~~Thirty-nine Weeks ended ~~November 26, 2017~~February 23, 2020 and ~~November 27, 2016~~February 24, 2019		4

		Notes to Unaudited Condensed Consolidated Financial Statements		5

Item 2		Management's Discussion and Analysis of Financial Condition and Results of Operations	27	34

Item 3		Quantitative and Qualitative Disclosures About Market Risk	40	47

Item 4		Controls and Procedures	41	48

Part II. OTHER INFORMATION			42	49
~~Item 1~~			~~Legal Proceedings~~	42
Item 1A1	~~Risk Factors~~	42Legal Proceedings		49
~~Item 2~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	43
Item 61A	~~Exhibits~~	44Risk Factors		49
~~Signatures~~	45
~~Exhibit 10.2.4~~ Item 6		Exhibits		51
~~Exhibit 10.4.8~~
~~Exhibit 10.31.1~~Signatures				52
~~Exhibit 12~~
Exhibit 31.1
Exhibit 31.2
Exhibit ~~32.1~~32
Exhibit 101 Exhibit 104

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Conagra Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings

(in millions except per share amounts)

(unaudited)

	Thirteen weeks ended						Thirty-nine weeks ended
	February 23, 2020			February 24, 2019			February 23, 2020			February 24, 2019
Net sales	$	2,555.0		$	2,707.1		$	7,766.5		$	6,925.2
Costs and expenses:
Cost of goods sold		1,870.6			1,954.8			5,619.7			4,980.2
Selling, general and administrative expenses		319.9			334.1			1,090.5			1,078.7
Pension and postretirement non-service income		(16.4	)		(9.8	)		(37.2	)		(29.7	)
Interest expense, net		117.7			130.9			361.8			260.5
Income from continuing operations before income taxes and equity method investment earnings		263.2			297.1			731.7			635.5
Income tax expense		68.9			67.2			141.5			147.0
Equity method investment earnings		10.4			12.7			50.3			66.6
Income from continuing operations		204.7			242.6			640.5			555.1
Loss from discontinued operations, net of tax		—			—			—			(1.9	)
Net income	$	204.7		$	242.6		$	640.5		$	553.2
Less: Net income attributable to noncontrolling interests		0.3			0.6			1.8			1.4
Net income attributable to Conagra Brands, Inc.	$	204.4		$	242.0		$	638.7		$	551.8
Earnings per share — basic
Income from continuing operations attributable to Conagra Brands, Inc. common stockholders	$	0.42		$	0.50		$	1.31		$	1.28
Income from discontinued operations attributable to Conagra Brands, Inc. common stockholders		—			—			—			—
Net income attributable to Conagra Brands, Inc. common stockholders	$	0.42		$	0.50		$	1.31		$	1.28
Earnings per share — diluted
Income from continuing operations attributable to Conagra Brands, Inc. common stockholders	$	0.42		$	0.50		$	1.31		$	1.28
Loss from discontinued operations attributable to Conagra Brands, Inc. common stockholders		—			—			—			(0.01	)
Net income attributable to Conagra Brands, Inc. common stockholders	$	0.42		$	0.50		$	1.31		$	1.27

~~(unaudited)~~

Thirteen weeks ended Twenty-six weeks ended
November 26,
2017 November 27,
2016 November 26,
2017 November 27,
2016
Net sales $ 2,173.4
$ 2,088.4
$ 3,977.6
$ 3,984.0
Costs and expenses:
Cost of goods sold 1,515.1
1,440.9
2,800.3
2,791.9
Selling, general and administrative expenses 307.3
417.9
546.3
649.6
Interest expense, net 38.0
54.1
74.4
112.3
Income from continuing operations before income taxes and equity method investment earnings 313.0
175.5
556.6
430.2
Income tax expense 109.5
78.4
229.5
247.6
Equity method investment earnings 20.6
17.2
50.6
30.3
Income from continuing operations 224.1
114.3
377.7
212.9
Income from discontinued operations, net of tax 0.4
11.6
0.1
103.0
Net income $ 224.5
$ 125.9
$ 377.8
$ 315.9
Less: Net income attributable to noncontrolling interests 1.0
3.8
1.8
7.6
Net income attributable to Conagra Brands, Inc. $ 223.5
$ 122.1
$ 376.0
$ 308.3
Earnings per share — basic
Income from continuing operations attributable to Conagra Brands, Inc. common stockholders $ 0.55
$ 0.26
$ 0.91
$ 0.48
Income from discontinued operations attributable to Conagra Brands, Inc. common stockholders —
0.02
—
0.22
Net income attributable to Conagra Brands, Inc. common stockholders $ 0.55
$ 0.28
$ 0.91
$ 0.70
Earnings per share — diluted
Income from continuing operations attributable to Conagra Brands, Inc. common stockholders $ 0.54
$ 0.26
$ 0.91
$ 0.48
Income from discontinued operations attributable to Conagra Brands, Inc. common stockholders —
0.02
—
0.22
Net income attributable to Conagra Brands, Inc. common stockholders $ 0.54
$ 0.28
$ 0.91
$ 0.70
Cash dividends declared per common share $ 0.2125
$ 0.25
$ 0.425
$ 0.50

See Notes to the Condensed Consolidated Financial Statements.

Conagra Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(in millions)

(unaudited)

	Thirteen weeks ended
	February 23, 2020									February 24, 2019
	Pre-Tax Amount			Tax (Expense) Benefit			After- Tax Amount			Pre-Tax Amount			Tax (Expense) Benefit			After- Tax Amount
Net income	$	273.6		$	(68.9	)	$	204.7		$	309.8		$	(67.2	)	$	242.6
Other comprehensive income:
Derivative adjustments:
Unrealized derivative adjustments		(0.3	)		0.1			(0.2	)		(1.8	)		0.4			(1.4	)
Reclassification for derivative adjustments included in net income		(0.9	)		0.2			(0.7	)		(0.9	)		0.3			(0.6	)
Unrealized currency translation gains		3.7			0.1			3.8			7.4			—			7.4
Pension and post-employment benefit obligations:
Unrealized pension and post-employment benefit obligations		77.6			(19.4	)		58.2			—			—			—
Reclassification for pension and post-employment benefit obligations included in net income		(2.8	)		0.6			(2.2	)		(0.1	)		—			(0.1	)
Comprehensive income		350.9			(87.3	)		263.6			314.4			(66.5	)		247.9
Comprehensive income attributable to noncontrolling interests		0.4			(0.2	)		0.2			0.4			(0.3	)		0.1
Comprehensive income attributable to Conagra Brands, Inc.	$	350.5		$	(87.1	)	$	263.4		$	314.0		$	(66.2	)	$	247.8

~~(unaudited)~~

	Thirty-nine weeks ended
	February 23, 2020									February 24, 2019
	Pre-Tax Amount			Tax (Expense) Benefit			After- Tax Amount			Pre-Tax Amount			Tax (Expense) Benefit			After- Tax Amount
Net income	$	782.0		$	(141.5	)	$	640.5		$	703.0		$	(149.8	)	$	553.2
Other comprehensive income:
Derivative adjustments:
Unrealized derivative adjustments		(3.0	)		0.8			(2.2	)		46.2			(11.6	)		34.6
Reclassification for derivative adjustments included in net income		(2.5	)		0.6			(1.9	)		(1.1	)		0.3			(0.8	)
Unrealized currency translation losses		(5.0	)		0.7			(4.3	)		(11.3	)		—			(11.3	)
Pension and post-employment benefit obligations:
Unrealized pension and post-employment benefit obligations		62.8			(15.7	)		47.1			(0.4	)		—			(0.4	)
Reclassification for pension and post-employment benefit obligations included in net income		(4.2	)		1.0			(3.2	)		(0.5	)		0.1			(0.4	)
Comprehensive income		830.1			(154.1	)		676.0			735.9			(161.0	)		574.9
Comprehensive loss attributable to noncontrolling interests		(0.7	)		(0.3	)		(1.0	)		(1.4	)		(0.9	)		(2.3	)
Comprehensive income attributable to Conagra Brands, Inc.	$	830.8		$	(153.8	)	$	677.0		$	737.3		$	(160.1	)	$	577.2

Thirteen weeks ended
November 26, 2017 November 27, 2016
Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount
Net income $ 334.0
$ (109.5 ) $ 224.5
$ 243.2
$ (117.3 ) $ 125.9
Other comprehensive income:

Derivative adjustments:
Unrealized derivative adjustments 1.0
(0.4 ) 0.6
2.2
(0.9 ) 1.3
Reclassification for derivative adjustments included in net income 0.1
—
0.1
—
—
—
Unrealized gains on available-for-sale securities 0.4
(0.2 ) 0.2
0.2
—
0.2
Unrealized currency translation losses (12.7 ) 0.1
(12.6 ) (14.1 ) —
(14.1 )
Pension and post-employment benefit obligations:

Unrealized pension and post-employment benefit obligations 43.4
(16.6 ) 26.8
66.8
(25.6 ) 41.2
Reclassification for pension and post-employment benefit obligations included in net income (0.2 ) 0.1
(0.1 ) (0.9 ) 0.4
(0.5 )
Comprehensive income 366.0
(126.5 ) 239.5
297.4
(143.4 ) 154.0
Comprehensive income attributable to noncontrolling interests 0.4
(0.4 ) —
2.2
(0.1 ) 2.1
Comprehensive income attributable to Conagra Brands, Inc. $ 365.6
$ (126.1 ) $ 239.5
$ 295.2
$ (143.3 ) $ 151.9

Twenty-six weeks ended
November 26, 2017 November 27, 2016
Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount
Net income $ 607.4
$ (229.6 ) $ 377.8
$ 651.2
$ (335.3 ) $ 315.9
Other comprehensive income:
Derivative adjustments:
Unrealized derivative adjustments 1.0
(0.4 ) 0.6
(5.8 ) 2.2
(3.6 )
Reclassification for derivative adjustments included in net income 0.1
—
0.1
—
—
—
Unrealized gains on available-for-sale securities 0.7
(0.3 ) 0.4
0.4
(0.1 ) 0.3
Unrealized currency translation gains (losses) 19.9
—
19.9
(26.0 ) 0.2
(25.8 )
Pension and post-employment benefit obligations:
Unrealized pension and post-employment benefit obligations 43.5
(16.6 ) 26.9
64.7
(25.5 ) 39.2
Reclassification for pension and post-employment benefit obligations included in net income (0.3 ) 0.1
(0.2 ) (1.8 ) 0.7
(1.1 )
Comprehensive income 672.3
(246.8 ) 425.5
682.7
(357.8 ) 324.9
Comprehensive income attributable to noncontrolling interests 2.4
(0.6 ) 1.8
6.0
(0.2 ) 5.8
Comprehensive income attributable to Conagra Brands, Inc. $ 669.9
$ (246.2 ) $ 423.7
$ 676.7
$ (357.6 ) $ 319.1

See Notes to the Condensed Consolidated Financial Statements.

Conagra Brands, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in millions except share data)

(unaudited)

	February 23, 2020			May 26, 2019
ASSETS
Current assets
Cash and cash equivalents	$	99.0		$	236.6
Receivables, less allowance for doubtful accounts of $2.0 and $2.2		854.2			818.2
Inventories		1,646.5			1,548.9
Prepaid expenses and other current assets		105.0			93.4
Current assets held for sale		4.7			36.7
Total current assets		2,709.4			2,733.8
Property, plant and equipment		5,078.7			4,906.3
Less accumulated depreciation		(2,760.9	)		(2,578.9	)
Property, plant and equipment, net		2,317.8			2,327.4
Goodwill		11,443.1			11,435.4
Brands, trademarks and other intangibles, net		4,479.4			4,539.3
Other assets		1,249.3			915.5
Noncurrent assets held for sale		3.1			262.4
	$	22,202.1		$	22,213.8
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable	$	0.8		$	1.0
Current installments of long-term debt		923.8			20.6
Accounts payable		1,357.4			1,252.1
Accrued payroll		133.6			173.2
Other accrued liabilities		711.5			690.6
Current liabilities held for sale		—			5.1
Total current liabilities		3,127.1			2,142.6
Senior long-term debt, excluding current installments		8,897.8			10,459.8
Subordinated debt		195.9			195.9
Other noncurrent liabilities		2,117.4			1,951.8
Total liabilities		14,338.2			14,750.1
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		2,293.0			2,286.0
Retained earnings		5,375.2			5,047.9
Accumulated other comprehensive loss		(72.0	)		(110.3	)
Less treasury stock, at cost, 97,142,924 and 98,133,747 common shares		(2,732.4	)		(2,760.2	)
Total Conagra Brands, Inc. common stockholders' equity		7,785.0			7,384.6
Noncontrolling interests		78.9			79.1
Total stockholders' equity		7,863.9			7,463.7
	$	22,202.1		$	22,213.8

~~(unaudited)~~

November 26,
2017 May 28,
2017
ASSETS
Current assets
Cash and cash equivalents $ 84.0
$ 251.4
Receivables, less allowance for doubtful accounts of $3.4 and $3.1 683.8
563.4
Inventories 1,059.2
934.2
Prepaid expenses and other current assets 183.5
228.7
Current assets held for sale 45.8
35.5
Total current assets 2,056.3
2,013.2
Property, plant and equipment 4,236.8
4,261.9
Less accumulated depreciation (2,594.8 ) (2,606.9 )
Property, plant and equipment, net 1,642.0
1,655.0
Goodwill 4,457.0
4,301.1
Brands, trademarks and other intangibles, net 1,298.2
1,229.3
Other assets 846.1
790.6
Noncurrent assets held for sale 100.5
107.1
$ 10,400.1
$ 10,096.3
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ 67.1
$ 28.2
Current installments of long-term debt 198.8
199.0
Accounts payable 886.7
773.1
Accrued payroll 131.9
167.6
Other accrued liabilities 565.8

552.6
Total current liabilities 1,850.3
1,720.5
Senior long-term debt, excluding current installments 3,065.9
2,573.3
Subordinated debt 195.9
195.9
Other noncurrent liabilities 1,501.5

1,528.8
Total liabilities 6,613.6
6,018.5
Common stockholders' equity
Common stock of $5 par value, authorized 1,200,000,000 shares; issued 567,907,172 2,839.7
2,839.7
Additional paid-in capital 1,166.8
1,171.9
Retained earnings 4,464.3
4,247.0
Accumulated other comprehensive loss (165.2 ) (212.9 )
Less treasury stock, at cost, 167,246,324 and 151,387,209 common shares (4,607.9 ) (4,054.9 )
Total Conagra Brands, Inc. common stockholders' equity 3,697.7
3,990.8
Noncontrolling interests 88.8
87.0
Total stockholders' equity 3,786.5
4,077.8
$ 10,400.1
$ 10,096.3

See Notes to the Condensed Consolidated Financial Statements.

Conagra Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)

	Thirty-nine weeks ended
	February 23, 2020			February 24, 2019
Cash flows from operating activities:
Net income	$	640.5		$	553.2
Loss from discontinued operations		—			(1.9	)
Income from continuing operations		640.5			555.1
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization		292.5			232.6
Asset impairment charges		113.5			3.0
Loss (gain) on divestiture		2.2			(13.2	)
Earnings of affiliates in excess of distributions		(15.8	)		(23.4	)
Stock-settled share-based payments expense		29.0			22.5
Contributions to pension plans		(11.0	)		(11.5	)
Pension benefit		(25.8	)		(21.0	)
Proceeds from settlement of interest rate swaps		—			47.5
Novation of a legacy guarantee		—			(27.3	)
Other items		12.1			25.4
Change in operating assets and liabilities excluding effects of business acquisitions and dispositions:
Receivables		(37.2	)		(108.4	)
Inventories		(104.6	)		13.0
Deferred income taxes and income taxes payable, net		(33.3	)		39.3
Prepaid expenses and other current assets		(14.6	)		(20.0	)
Accounts payable		116.4			(15.6	)
Accrued payroll		(40.0	)		(9.0	)
Other accrued liabilities		(17.4	)		56.1
Net cash flows from operating activities — continuing operations		906.5			745.1
Net cash flows from operating activities — discontinued operations		—			11.2
Net cash flows from operating activities		906.5			756.3
Cash flows from investing activities:
Additions to property, plant and equipment		(265.3	)		(236.1	)
Sale of property, plant and equipment		8.7			18.7
Purchase of marketable securities		(37.9	)		—
Sale of marketable securities		43.1			—
Purchase of businesses, net of cash acquired		—			(5,119.2	)
Proceeds from divestitures, net of cash divested		191.4			32.2
Other items		0.1			0.1
Net cash flows from investing activities		(59.9	)		(5,304.3	)
Cash flows from financing activities:
Net short-term borrowings		(0.1	)		(278.3	)
Issuance of long-term debt		—			8,310.5
Repayment of long-term debt		(665.9	)		(3,517.1	)
Debt issuance costs and bridge financing fees		—			(95.2	)
Payment of intangible asset financing arrangement		(13.6	)		(14.0	)
Issuance of Conagra Brands, Inc. common shares, net		—			555.7
Cash dividends paid		(310.1	)		(253.0	)
Exercise of stock options and issuance of other stock awards, including tax withholdings		4.3			(4.1	)
Other items		0.8			0.9
Net cash flows from financing activities		(984.6	)		4,705.4
Effect of exchange rate changes on cash and cash equivalents and restricted cash		0.4			(3.2	)
Net change in cash and cash equivalents and restricted cash		(137.6	)		154.2
Cash and cash equivalents and restricted cash at beginning of period		237.6			129.0
Cash and cash equivalents and restricted cash at end of period	$	100.0		$	283.2

~~(unaudited)~~

Twenty-six weeks ended
November 26,
2017 November 27,
2016
Cash flows from operating activities:
Net income $ 377.8
$ 315.9
Income from discontinued operations 0.1
103.0
Income from continuing operations 377.7
212.9
Adjustments to reconcile income from continuing operations to net cash flows from operating activities:
Depreciation and amortization 129.0
133.5
Asset impairment charges 8.8
211.9
Gain on divestitures —
(197.5 )
Loss on extinguishment of debt —
60.6
Earnings of affiliates in excess of distributions (50.6 ) (23.4 )
Stock-settled share-based payments expense 17.7
18.3
Contributions to pension plans (6.1 ) (5.9 )
Pension benefit (21.5 ) (20.6 )
Other items 3.8
23.9
Change in operating assets and liabilities excluding effects of business acquisitions and dispositions:
Receivables (109.8 ) (49.2 )
Inventories (130.5 ) (32.2 )
Deferred income taxes and income taxes payable, net 95.3
183.5
Prepaid expenses and other current assets 0.1
0.2
Accounts payable 132.3
71.7
Accrued payroll (39.7 ) (95.5 )
Other accrued liabilities (1.8 ) (31.6 )
Net cash flows from operating activities — continuing operations 404.7
460.6
Net cash flows from operating activities — discontinued operations 16.0
81.6
Net cash flows from operating activities 420.7
542.2
Cash flows from investing activities:
Additions to property, plant and equipment (123.4 ) (118.3 )
Sale of property, plant and equipment 6.9
11.3
Proceeds from divestitures —
489.1
Purchase of businesses (249.6 ) (108.2 )
Net cash flows from investing activities — continuing operations (366.1 ) 273.9
Net cash flows from investing activities — discontinued operations —
(123.7 )
Net cash flows from investing activities (366.1 ) 150.2
Cash flows from financing activities:
Net short-term borrowings 38.9
(7.2 )
Issuance of long-term debt, net of debt issuance costs

497.4
—
Repayment of long-term debt (4.8 ) (555.8 )
Payment of intangible asset financing arrangement (14.4 ) (14.9 )
Repurchase of Conagra Brands, Inc. common shares (580.0 ) (170.1 )
Cash dividends paid (171.6 ) (219.4 )
Exercise of stock options and issuance of other stock awards, including tax withholdings 4.0
47.4
Net cash flows from financing activities — continuing operations (230.5 ) (920.0 )
Net cash flows from financing activities — discontinued operations —
839.1
Net cash flows from financing activities (230.5 ) (80.9 )
Effect of exchange rate changes on cash and cash equivalents 8.5
(3.5 )
Net change in cash and cash equivalents (167.4 ) 608.0
Add: Cash balance included in assets held for sale and discontinued operations at beginning of period —
36.4
Less: Cash balance included in assets held for sale and discontinued operations at end of period —
—
Cash and cash equivalents at beginning of period 251.4
798.1
Cash and cash equivalents at end of period $ 84.0
$ 1,442.5

See Notes to the Condensed Consolidated Financial Statements.

Conagra Brands, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~For the Twenty-six weeks ended November 26, 2017 and November 27, 2016~~

(columnar dollars in millions except per share amounts)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The unaudited financial information reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position, and cash flows for the periods presented. The adjustments are of a normal recurring nature, except as otherwise noted. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related notes included in the Conagra Brands, Inc. ~~(formerly ConAgra Foods, Inc.~~(the "Company", ~~the "Company"~~"Conagra Brands", "we", "us", or "our") Annual Report on Form 10-K for the fiscal year ended May ~~28, 2017~~.

26, 2019.

The results of operations for any quarter or a partial fiscal year period are not necessarily indicative of the results to be expected for other periods or the full fiscal year.

Basis of Consolidation — The Condensed Consolidated Financial Statements include the accounts of Conagra Brands ~~Inc.~~ and all majority-owned subsidiaries. In addition, the accounts of all variable interest entities for which we have been determined to be the primary beneficiary are included in our Condensed Consolidated Financial Statements from the date such determination is made. All significant intercompany investments, accounts, and transactions have been eliminated.

~~On November 9, 2016, the Company completed the spinoff of Lamb Weston Holdings, Inc. ("Lamb Weston") through a distribution of 100%~~

Revenue Recognition — Our revenues primarily consist of the ~~Company's interest in Lamb Weston~~sale of food products which are sold to ~~holders~~retailers and foodservice customers through direct sales forces, broker, and distributor arrangements. These revenue contracts generally have single performance obligations. Revenue, which includes shipping and handling charges billed to the customer, is reported net of ~~shares~~variable consideration and consideration payable to our customers, including applicable discounts, returns, allowances, trade promotion, consumer coupon redemption, unsaleable product, and other costs. Amounts billed and due from our customers are classified as receivables and require payment on a short-term basis and, therefore, we do not have any significant financing components.

We recognize revenue when (or as) performance obligations are satisfied by transferring control of the ~~Company's common stock as of November 1, 2016 (the "Spinoff"). In accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), the results of operations~~goods to customers. Control is transferred upon delivery of the ~~Lamb Weston operations~~goods to the customer. Shipping and/or handling costs that occur before the customer obtains control of the goods are ~~presented~~deemed to be fulfillment activities and are accounted for as ~~discontinued operations~~fulfillment costs. We assess the goods and services promised in our customers' purchase orders and identify a performance obligation for each promise to transfer a good or service (or bundle of goods or services) that is distinct.

We offer various forms of trade promotions and the methodologies for determining these provisions are dependent on local customer pricing and promotional practices, which range from contractually fixed percentage price reductions to provisions based on actual occurrence or performance. Our promotional activities are conducted either through the retail trade or directly with consumers and include activities such as ~~such, have been excluded from continuing operations~~in-store displays and ~~segment results for all periods presented (see Note 3 for additional discussion).~~

events, feature price discounts, consumer coupons, and loyalty programs. The costs of these activities are recognized at the time the related revenue is recorded, which normally precedes the actual cash expenditure. The recognition of these costs therefore requires management judgment regarding the volume of promotional offers that will be redeemed by either the retail trade or consumer. These estimates are made using various techniques including historical data on performance of similar promotional programs. Differences between estimated expense and actual redemptions are recognized as a change in management estimate in a subsequent period.

Comprehensive Income — Comprehensive income includes net income, currency translation adjustments, certain derivative-related activity, ~~changes in the value of available-for-sale investments,~~ and changes in prior service cost and net actuarial gains (losses) from pension (for amounts not in excess of the 10% corridor) and post-retirement health care plans. OnFor foreign investments we deem to be essentially permanent in nature, we do not provide for taxes on currency translation adjustments arising from converting an investment denominated in a foreign currency to U.S. dollars. When we determine that a foreign investment, as well as undistributed earnings, are no longer permanent in nature, estimated taxes will be provided for the related deferred tax liability (asset), if any, resulting from currency translation adjustments.

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


	November 26, 2017			May 28, 2017			February 23, 2020			May 26, 2019
Currency translation losses, net of reclassification adjustments	$	(78.7	)	$	(98.6	)	$	(92.4	)	$	(90.9	)
Derivative adjustments, net of reclassification adjustments	(0.4		)	(1.1		)		29.9			34.0
Unrealized gains (losses) on available-for-sale securities	0.1			(0.3		)
Pension and post-employment benefit obligations, net of reclassification adjustments	(86.2		)	(112.9		)		(9.5	)		(53.4	)
Accumulated other comprehensive loss	$	(165.2	)	$	(212.9	)	$	(72.0	)	$	(110.3	)

The following table summarizes the reclassifications from accumulated other comprehensive ~~income (loss)~~loss into ~~operations:~~income:

	Thirteen weeks ended						Affected Line Item in the Condensed Consolidated Statement of Earnings¹
	February 23, 2020			February 24, 2019
Net derivative adjustment, net of tax:
Cash flow hedges	$	(0.9	)	$	(0.9	)	Interest expense, net
		(0.9	)		(0.9	)	Total before tax
		0.2			0.3		Income tax expense
	$	(0.7	)	$	(0.6	)	Net of tax
Pension and postretirement liabilities:
Net prior service cost	$	0.2		$	0.2		Pension and postretirement non-service income
Net actuarial gain		(1.1	)		(0.3	)	Pension and postretirement non-service income
Curtailment		0.2			—		Pension and postretirement non-service income
Settlement		(2.1	)		—		Pension and postretirement non-service income
		(2.8	)		(0.1	)	Total before tax
		0.6			—		Income tax expense
	$	(2.2	)	$	(0.1	)	Net of tax

	Thirty-nine weeks ended						Affected Line Item in the Condensed Consolidated Statement of Earnings¹
	February 23, 2020			February 24, 2019
Net derivative adjustment, net of tax:
Cash flow hedges	$	(2.5	)	$	(1.1	)	Interest expense, net
		(2.5	)		(1.1	)	Total before tax
		0.6			0.3		Income tax expense
	$	(1.9	)	$	(0.8	)	Net of tax
Pension and postretirement liabilities:
Net prior service cost	$	0.5		$	0.6		Pension and postretirement non-service income
Net actuarial gain		(3.4	)		(1.1	)	Pension and postretirement non-service income
Curtailment		0.8			—		Pension and postretirement non-service income
Settlement		(2.1	)		—		Pension and postretirement non-service income
		(4.2	)		(0.5	)	Total before tax
		1.0			0.1		Income tax expense
	$	(3.2	)	$	(0.4	)	Net of tax

Thirteen weeks ended
Affected Line Item in the Condensed Consolidated Statement of Earnings¹
November 26, 2017 November 27, 2016
Net derivative adjustment, net of tax:
Cash flow hedges $ 0.1
$ —
Interest expense, net
0.1
—
Total before tax
—
—
Income tax expense
$ 0.1
$ —
Net of tax
Pension and postretirement liabilities:

Net prior service benefit $ (0.2 ) $ (0.9 ) Selling, general and administrative expenses
(0.2 ) (0.9 ) Total before tax
0.1
0.4
Income tax expense
$ (0.1 ) $ (0.5 ) Net of tax

Twenty-six weeks ended
Affected Line Item in the Condensed Consolidated Statement of Earnings¹
November 26, 2017 November 27, 2016
Net derivative adjustment, net of tax:
Cash flow hedges $ 0.1
$ —
Interest expense, net
0.1
—
Total before tax
—
—
Income tax expense
$ 0.1
$ —
Net of tax
Pension and postretirement liabilities:
Net prior service benefit $ (0.3 ) $ (1.8 ) Selling, general and administrative expenses
(0.3 ) (1.8 ) Total before tax
0.1
0.7
Income tax expense
$ (0.2 ) $ (1.1 ) Net of tax

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

Cash and cash equivalents — Cash and all highly liquid investments with an original maturity of three months or less at the date of acquisition, including short-term time deposits and government agency and corporate obligations, are classified as cash and cash equivalents.

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

Use of Estimates — Preparation of financial statements in conformity with U.S. ~~GAAP~~generally accepted accounting principles ("U.S. GAAP") requires management to make certain estimates and assumptions. These estimates and assumptions affect reported amounts of assets, liabilities, revenues, and expenses as reflected in the Condensed Consolidated Financial Statements. Actual results could differ from these estimates.

Accounting Changes — In ~~July 2015,~~February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2015-11,~~ ~~Inventory~~2016-02, Leases, which requires an entity to measure inventory within the scope at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We adopted this ASU prospectively in fiscal 2018. The adoption of this guidance did not have a material impact to our financial statements.

~~Recently Issued Accounting Standards~~ ~~— In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP. On July 9, 2015, the FASB deferred the effective date of the new revenue recognition standard by one year. Based on the FASB's ASU, we will apply the new revenue standard in our fiscal year 2019. Early adoption in our fiscal year 2018 is permitted. We are in the process of documenting the impact of the guidance on our current accounting policies and practices in order to identify material differences, if any, that would result from applying the new requirements to our revenue contracts. We continue to make progress on our revenue recognition review and are also in the

process of evaluating the impact, if any, on changes to our business processes, systems, and controls to support recognition and disclosure requirements under the new guidance. We continue to evaluate the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. The standard permits the use of either the retrospective or cumulative effect transition method.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities~~, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The effective date for this standard is for fiscal years beginning after December 31, 2017. Early adoption is not permitted except for certain provisions. We do not expect ASU 2016-01 to have a material impact to our consolidated financial statements.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~, Topic 842, which requires lessees to reflect most leases on their balance sheet as assets and obligations. We adopted this ASU in the first quarter of fiscal 2020 using the optional transition method provided under ASU 2018-11, Leases, Topic 842: Targeted Improvement, issued in July 2018, allowing for application of the standard at adoption date, with recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We also elected certain practical expedients permitted under the transition guidance, including not reassessing whether existing contracts contain leases and carrying forward the historical classification of leases. The most significant impact of adoption on our Condensed Consolidated Financial Statements was the recognition of right-of-use ("ROU") assets and lease liabilities for operating leases. Our

accounting for finance leases remained substantially unchanged. Upon adoption, we had total lease assets of $238.4 million and total lease liabilities of $267.0 million. The difference is primarily due to prepaid and deferred rent balances that were reclassified to the ROU asset value. The adoption of this ASU did not result in a cumulative-effect adjustment to the opening balance of retained earnings and did not impact our Condensed Consolidated Statements of Earnings or our Condensed Consolidated Statements of Cash Flows. See Note 12 for additional information related to our lease arrangements.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The effective date for the standard is for fiscal years beginning after December 15, ~~2018. Early~~2019 and interim periods within those fiscal years. We elected to early adopt this ASU in fiscal 2020. The adoption ~~is permitted. We are evaluating the effect that~~of this ~~standard will~~guidance did not have ona material impact to our consolidated financial statements and related disclosures. ~~The standard is to be applied under the modified retrospective method, with elective reliefs, which requires application of the new guidance for all periods presented.~~

In ~~August 2016,~~December 2019, the FASB issued ASU ~~2016-15,~~ ~~Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments~~2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which ~~clarifies how companies present and classify~~removes certain ~~cash receipts and cash payments in~~exceptions to the ~~statement~~general principles of ~~cash flows.~~ASC 740 as part of an overall simplification initiative. The effective date for the standard is for fiscal years beginning after December 15, ~~2017. Early~~2020 and interim periods within those fiscal years. We elected to early adopt this ASU in fiscal 2020. The adoption ~~is permitted. We do~~of this guidance did not ~~expect ASU 2016-15 to~~ have a material impact to our consolidated financial ~~statements.~~

statements and related disclosures.

Recently Issued Accounting Standards — In ~~November~~June 2016, the FASB issued ASU ~~2016-18,~~ ~~Statement~~2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of ~~Cash Flows: Restricted Cash~~Credit Losses on Financial Instruments ("ASU 2016-13"), ~~which provides amendments~~ to update the methodology used to measure current expected credit losses ("CECL"). This ASU applies to financial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investments in leases, and trade accounts receivable as well as certain off-balance sheet credit exposures, such as loan commitments. This ASU replaces the current incurred loss impairment methodology with a methodology to reflect CECL and requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates. The guidance must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to ~~address the classifications and presentation of changes in restricted cash~~retained earnings in the ~~statement~~period of ~~cash flows.~~adoption. The effective date for the standard is for fiscal years beginning after December 15, ~~2017.~~2019 and interim periods within those fiscal years. Early adoption is permitted. We do not expect ASU ~~2016-18~~2016-13 to have a material impact to our consolidated financial ~~statements.~~

statements and related disclosures.

2. ACQUISITIONS

On October 26, 2018, we acquired Pinnacle Foods Inc. ("Pinnacle"), a branded packaged foods company specializing in shelf-stable and frozen foods. Pursuant to the Agreement and Plan of Merger, dated as of June 26, 2018 (the "Merger Agreement"), among the Company, Pinnacle, and Patriot Merger Sub Inc., a wholly-owned subsidiary of the Company that ceased to exist at the effective time of the merger, each outstanding share of Pinnacle common stock was converted into the right to receive $43.11 per share in cash and 0.6494 shares of common stock, par value $5.00 per share, of the Company ("Company Shares") (together, the "Merger Consideration"), with cash payable in lieu of fractional Company Shares. The total amount of consideration paid in connection with the acquisition was approximately $8.03 billion and consisted of: (1) cash of $5.17 billion ($5.12 billion net of cash acquired); (2) 77.5 million Company Shares, with an approximate value of $2.82 billion, issued out of the Company's treasury; and (3) replacement awards issued to former Pinnacle employees representing the fair value attributable to pre-combination service (see Note 8) of $51.1 million.

In ~~January 2017,~~connection with the ~~FASB~~acquisition, we issued ~~ASU 2017-01,~~ ~~Business Combinations: Clarifying the Definition~~long-term debt of ~~a Business, which provides~~$8.33 billion (see Note 5) (which included funding under a new ~~framework for determining whether transactions should be accounted for as acquisitions (or disposals)~~term loan agreement) and received cash proceeds of assets or businesses. The effective date for the standard is for fiscal years beginning after December 15, 2017. Early adoption is permitted. We do not expect ASU 2017-01 to have a material impact to our consolidated financial statements.

~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~, which requires companies to present the service cost component of net benefit cost in the same line items in which they report compensation cost. Companies will present all other components of net benefit cost outside operating income, if this subtotal is presented. The effective date for the standard is for fiscal years beginning after December 15, 2017. Early adoption is permitted. We do not expect ASU 2017-07 to have a material impact to our consolidated financial statements.

~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities~~, which improves the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements and make certain targeted improvements to simplify the application of the hedge accounting guidance in current U.S. GAAP. The amendments in this update better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and presentation of hedge results. The effective date for the standard is for fiscal years beginning after December 15, 2018. Early adoption is permitted. We are currently evaluating the impact of our pending adoption of this standard on our consolidated financial statements.

~~2. ACQUISITIONS~~

~~In October 2017, we acquired Angie's Artisan Treats, LLC, maker of~~ ~~Angie's~~^®~~BOOMCHICKAPOP~~^® ~~ready-to-eat popcorn, for a cash purchase price of $249.6~~$575.0 million ($555.7 million net of related fees) from the issuance of common stock in an underwritten public offering. We used such proceeds for the payment of the cash portion of the Merger Consideration, the repayment of Pinnacle debt acquired, the refinancing of certain Conagra Brands debt, and the payment of related fees and expenses.

The following table summarizes our final allocation of the total purchase consideration to the fair values of the assets acquired and ~~subject~~liabilities assumed at the acquisition date.

	October 26, 2018
Cash and cash equivalents	$	47.0
Receivables		202.8
Inventories		649.3
Prepaid expenses and other current assets		15.0
Property, plant and equipment		719.5
Goodwill		7,026.0
Brands, trademarks and other intangibles		3,519.5
Other assets		25.4
Current liabilities		(607.6	)
Senior long-term debt, excluding current installments		(2,671.3	)
Noncurrent deferred tax liabilities		(810.0	)
Other noncurrent liabilities		(81.6	)
Total assets acquired and liabilities assumed	$	8,034.0

During the first half of fiscal 2020, we made adjustments to ~~working capital adjustments. Approximately $156.5 million has been classified as~~our initial allocations, which resulted in an increase to goodwill of ~~which $95.4~~$10.1 million ~~is deductible for~~primarily as the result of changes in the values of certain inventory, deferred income ~~tax purposes. Approximately $73.8 million~~taxes, and ~~$10.3 million~~other noncurrent liabilities as we refined our fair value estimates. These changes did not have a significant impact on our net income.

Goodwill represents the excess of the ~~purchase price has been allocated~~consideration transferred over the fair values of the assets acquired and liabilities assumed and is primarily attributable to ~~non-amortizing~~synergies and ~~amortizing~~ intangible assets ~~respectively. The business is included in~~such as assembled workforce, which are not separately recognizable. Of the ~~Grocery & Snacks segment.~~

~~In April 2017, we acquired protein-based snacking businesses Thanasi Foods LLC, maker of~~ ~~Duke's~~^® ~~meat snacks, and BIGS LLC, maker of~~ ~~BIGS~~^® ~~seeds, for $217.6~~total goodwill, $236.7 million in cash, net of cash acquired, including working capital adjustments. Approximately $133.3 million has been classified as goodwill, of which $70.9 million is deductible for income tax purposes. Approximately $65.1 million and $16.1 million of the purchase price has been allocated to non-amortizing and amortizing intangible assets, respectively. These businesses are included in the Grocery & Snacks segment.

~~In September 2016, we acquired the operating assets of Frontera Foods, Inc. and Red Fork LLC, including the~~ ~~Frontera~~^®, ~~Red Fork~~^®~~, and~~ ~~Salpica~~^® ~~brands. These businesses make authentic, gourmet Mexican food products and contemporary American cooking sauces.~~

We acquired the businesses for a cash purchase price of $108.2 million, net of cash acquired, including working capital adjustments. Approximately $39.5 million has been classified as goodwill and $47.1 million and $19.6 million has been classified as non-amortizing and amortizing intangible assets, respectively. The amount allocated to goodwill is deductible for tax purposes. Amortizable brands, trademarks and other intangibles totaled $668.7 million and have a weighted average estimated useful life of 25 years.

The following unaudited pro forma financial information presents the combined results of operations as if the acquisition of Pinnacle had occurred on May 29, 2017, the beginning of fiscal year 2018. These ~~businesses~~unaudited pro forma results may not necessarily reflect the actual results of operations that would have been achieved, nor are ~~reflected principally within~~they necessarily indicative of future results of operations.

	Thirteen weeks ended		Thirty-nine weeks ended
	February 24, 2019		February 24, 2019
Pro forma net sales	$	2,707.1	$	8,174.9
Pro forma net income attributable to Conagra Brands, Inc.	$	263.1	$	675.4

The pro forma results include adjustments for amortization of acquired intangible assets, depreciation, and interest expense on debt issued to finance the ~~Grocery~~acquisition, as well as the related income taxes. The pro forma results also include the following material nonrecurring adjustments, along with the related income tax effect of the adjustments:

•

Acquisition related costs incurred by the Company of $1.2 million and $62.1 million for the third quarter and first three quarters of fiscal 2019, respectively, were excluded from the pro forma results. Acquisition related costs incurred by Pinnacle of $66.8 million for the first three quarters of fiscal 2019 were excluded from the pro forma results.

•

Non-recurring expense of $26.9 million and $51.3 million for the third quarter and first three quarters of fiscal 2019, respectively, related to the fair value adjustment to acquisition-date inventory estimated to have been sold was excluded from the pro forma results.

•

Non-recurring expense of $45.7 million for the first three quarters of fiscal 2019 related to securing bridge financing for the acquisition was excluded from the pro forma results.

3. DIVESTITURES AND ASSETS HELD FOR SALE

Lender's^® Bagel Business

During the third quarter of fiscal 2020, we completed the sale of our Lender's^® bagel business for net proceeds of $33.2 million, subject to final working capital adjustments. The business results were previously reported primarily in our Refrigerated & ~~Snacks~~Frozen segment, and to a lesser extent within ~~the Refrigerated & Frozen and International segments.~~

These acquisitions collectively contributed $37.4 million and $68.4 million to net sales during the second quarter and first half of fiscal 2018, respectively, and $6.4 million for each of the second quarter and first half of fiscal 2017.

For each of these acquisitions, the amounts allocated to goodwill were primarily attributable to anticipated synergies, product portfolios, and other intangibles that do not qualify for separate recognition.

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

~~Subsequent to the end of the second quarter of fiscal 2018, we entered into a definitive agreement to acquire the~~ ~~Sandwich Bros. of Wisconsin~~^® business, maker of frozen breakfast and entree flatbread pocket sandwiches, for a cash purchase price of $87 million, net of cash acquired and subject to working capital adjustments. The business will be primarily included in the Refrigerated & Frozen segment. The transaction is expected to close in early calendar year 2018, subject to customary closing conditions, including the receipt of any applicable regulatory approvals.

~~3. DISCONTINUED OPERATIONS AND OTHER DIVESTITURES~~

~~Lamb Weston Spinoff~~

~~On November 9, 2016, we completed the Spinoff of~~ 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. The business results were previously reported in the Commercial segment. We reflected the results of this business as discontinued operations for all periods presented.

~~The summary comparative financial results of the Lamb Weston business through the date of the Spinoff, included within discontinued operations, were as follows:~~

Thirteen weeks ended Twenty-six weeks ended
November 26, 2017 November 27, 2016 November 26, 2017 November 27, 2016
Net sales $ —
$ 636.0
$ —
$ 1,407.9
Income (loss) from discontinued operations before income taxes and equity method investment earnings $ —
$ 46.3
$ (0.3 ) $ 175.1
Income (loss) before income taxes and equity method investment earnings —
46.3
(0.3 ) 175.1
Income tax expense (benefit) —
39.1
(0.1 ) 88.6
Equity method investment earnings —
5.3
—
15.9
Income (loss) from discontinued operations, net of tax —
12.5
(0.2 ) 102.4
Less: Net income attributable to noncontrolling interests —
3.2
—
6.8
Net income (loss) from discontinued operations attributable to Conagra Brands, Inc. $ —
$ 9.3
$ (0.2 ) $ 95.6

For the second quarter and first half of fiscal 2017, we incurred $62.2 million and $72.0 million, respectively, of expenses in connection with the Spinoff primarily related to professional fees and contract services associated with preparation of regulatory filings and separation activities. These expenses are reflected in income from discontinued operations.

Foodservice segment.

In connection with the ~~Spinoff, total assets~~pending sale of ~~$2.28 billion and total liabilities~~our Lender's^® bagel business, we recognized an impairment charge of $2.98 billion (including debt of $2.46 billion) were transferred to Lamb Weston. As part of the consideration for the Spinoff, the Company received a cash payment from Lamb Weston in the amount of $823.5 million. See Note 5 for discussion of the debt-for-debt exchange related to the Spinoff.

~~We entered into a transition services agreement in connection with the Lamb Weston Spinoff and recognized $0.8~~$27.6 million ~~and $2.1 million of income for the performance of services during the second quarter and first half of fiscal 2018, respectively, classified~~ within selling, general and administrative ("SG&A") ~~expenses.~~

~~Private Brands Operations~~

~~On February 1, 2016, pursuant to the Stock Purchase Agreement, dated as of November 1, 2015, we completed the disposition of our Private Brands operations to TreeHouse Foods, Inc. for $2.6 billion~~expenses in ~~cash on a debt-free basis. Results of operations for the Private Brands business were immaterial for all periods presented.~~

~~We entered into a transition services agreement with TreeHouse Foods, Inc. and recognized $0.5 million and $5.4 million of income for the performance of services during~~ the second quarter of fiscal 2018 and 2017, respectively, classified within selling, general and administrative expenses. We recognized $2.2 million and $11.5 million of transition services agreement income in the first half of fiscal 2018 and 2017, respectively.

~~Other Divestitures~~

~~During the fourth quarter of fiscal 2017, we signed an agreement to sell our~~ ~~Wesson~~^® oil business, which is part of our Grocery & Snacks segment, to The J.M. Smucker Company ("Smucker"). The transaction is subject to certain customary closing conditions, including the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). On August 28, 2017, Smucker and the Company each received a request for additional information under the HSR Act (a "second request") from the U.S. Federal Trade Commission ("FTC") in connection with the FTC's review of the transaction. The agreement for the sale of the ~~Wesson~~^® oil business provides that, unless otherwise agreed upon by the Company and Smucker, if the closing of the transaction has not occurred on or prior to March 31, 2018 because HSR approval has not been received as of such date, then either party may terminate the agreement. The parties are cooperating fully with the FTC as it conducts its review of the transaction. The purchase price under the agreement is $285 million. 2020.

The assets ~~of this business have been reclassified as assets held for sale within our Condensed Consolidated Balance Sheets for all periods presented.~~

~~The assets~~and liabilities classified as held for sale reflected in our Condensed Consolidated Balance Sheets related to the ~~Wesson~~Lender's^® ~~oil~~ bagel business were as follows:

	May 26, 2019
Current assets	$	5.4
Noncurrent assets (including goodwill of $19.3 million)		62.3
Current liabilities		0.5

DSD Snacks Business

During the second quarter of fiscal 2020, we completed the sale of our Direct Store Delivery ("DSD") Snacks business for net proceeds of $139.0 million, subject to final working capital adjustments. The business results were previously reported in our Grocery & Snacks segment.

In connection with the pending sale of our DSD Snacks business, we recognized an impairment charge of $31.4 million within SG&A expenses in the first quarter of fiscal 2020.

The assets and liabilities classified as held for sale reflected in our Condensed Consolidated Balance Sheet related to the DSD Snacks business were as follows:

	May 26, 2019
Current assets	$	21.4
Noncurrent assets (including goodwill of $34.6 million)		156.2
Current liabilities		4.6

November 26, 2017 May 28, 2017
Current assets $ 45.8
$ 35.5
Noncurrent assets (including goodwill of $74.5 million) 95.5
95.5

Other Divestitures

During the fourth quarter of fiscal 2019, we completed the sale of our Italian-based frozen pasta business, Gelit, for proceeds net of cash divested of $80.1 million, including working capital adjustments. The business results were previously reported in our Refrigerated & Frozen segment.

During the fourth quarter of fiscal 2019, we completed the sale of our Wesson^® oil business for net proceeds of $168.3 million, including working capital adjustments. The business results were previously reported primarily in our Grocery & Snacks segment, and to a lesser extent within our Foodservice and International segments.

During the first quarter of fiscal ~~2017,~~2019, we completed the ~~sales~~sale of our ~~Spicetec Flavors & Seasonings~~Del Monte^®processedfruit and vegetable business ~~("Spicetec") and~~in Canada, which was previously reported in our ~~JM Swank business, each~~International segment, for combined proceeds of ~~which~~$32.2 million. We recognized a gain on the sale of $13.2 million, included within SG&A expenses.

Other Assets Held for Sale

During the third quarter of fiscal 2020, we completed the sale of our peanut butter manufacturing facility in Streator, Illinois. The sale was part of a broader initiative to optimize the Company's peanut butter business, which also included the decision to exit the manufacture and sale of private label peanut butter. The business results were previously reported primarily in our ~~Commercial~~Grocery & Snacks segment, and to a lesser extent within our Foodservice segment. ~~Through~~We received net proceeds of $20.1 million, with additional expected proceeds of approximately $4.7 million by the ~~second quarter~~end of fiscal 2017, we received $329.8 million and $159.3 million, respectively, in cash, net of cash included in the dispositions. We recognized pre-tax gains from the sales of $144.8 million and $52.9 million, respectively, in the first half of fiscal 2017. We entered into transition services agreements in connection with the sales of these businesses and recognized $0.2 million of income during the first half of fiscal 2018 and $1.0 million during the second quarter and first half of fiscal 2017, classified within selling, general and administrative expenses.

~~In addition, we are actively marketing certain other long-lived assets.~~2020, subject to final working capital adjustments. These assets have been reclassified as assets held for sale within our Condensed Consolidated Balance Sheets for all periods presented. ~~The balance~~

In connection with this planned divestiture, we recognized impairment charges of $23.0 million within SG&A expenses in the first half of fiscal 2020. These charges have been included in restructuring activities.

In addition, we are actively marketing certain other assets. These assets have been reclassified as assets held for sale within our Condensed Consolidated Balance Sheets for periods prior to the disposal of these ~~noncurrent~~individual asset groups.

The assets classified as held for sale ~~was $5.0 million and $11.6 million within~~reflected in our ~~Corporate segment at November 26, 2017 and May 28, 2017, respectively.~~Condensed Consolidated Balance Sheets were as follows:

	February 23, 2020		May 26, 2019
Current assets	$	4.7	$	9.9
Noncurrent assets (including goodwill of $10.3 million at May 26, 2019)		3.1		43.9

4. RESTRUCTURING ACTIVITIES

~~Supply Chain~~

Pinnacle Integration Restructuring Plan

In December2018, our Board of Directors (the "Board") approved a restructuring and ~~Administrative Efficiency Plan~~

~~In May 2013, we announced~~integration plan related to the ~~Supply Chain and Administrative Efficiency Plan (the "SCAE Plan"), our plan to integrate and restructure~~ongoing integration of the recently acquired operations of ~~our Private Brands business, improve SG&A effectiveness~~Pinnacle for the purpose of achieving significant cost synergies between the companies (the "Pinnacle Integration Restructuring Plan"). We expect to incur material charges for exit and efficiencies, and optimize our supply chain network, manufacturing assets, dry distribution centers, and mixing centers. In the second quarter of fiscal 2016, we announced plans to realize efficiency benefits by reducing SG&A expenses and enhancing trade spend processes and tools, which plans were included as part of the SCAE Plan. Although we divested the Private Brands business, we have continued to implement the SCAE Plan, including by working to optimize our supply chain network, pursue cost reductions through our SG&A functions, enhance trade spend processes and tools, and improve productivity.

disposal activities under U.S. GAAP. Although we remain unable to make good faith estimates relating to the entire ~~SCAE~~Pinnacle Integration Restructuring Plan, we are reporting on actions initiated through the end of the ~~second~~third quarter of fiscal ~~2018,~~2020, including the estimated amounts or range of amounts for each major type of costs expected to be incurred, and the charges that have resulted or will result in cash outflows. We have approved the incurrence of up to $360.0 million ($255.0 million of cash charges and $105.0 million of non-cash charges) in relation to operational expenditures under the Pinnacle Integration Restructuring Plan. We have incurred or expect to incur approximately $363.8 million of charges ($257.8 million of cash charges and $106.0 million of non-cash charges) for actions identified to date under the Pinnacle Integration Restructuring Plan. In the third quarter and first three quarters of fiscal 2020, we recognized charges of $19.6 million and $63.5 million, respectively, in association with the Pinnacle Integration Restructuring Plan. In the third quarter and first three quarters of fiscal 2019, we recognized charges of $36.9 million and $139.5 million, respectively, in association with the Pinnacle Integration Restructuring Plan. We expect to incur costs related to the Pinnacle Integration Restructuring Plan through fiscal 2022.

We anticipate that we will recognize the following pre-tax expenses in association with the Pinnacle Integration Restructuring Plan (amounts include charges recognized from plan inception through the third quarter of fiscal 2020):

	Grocery & Snacks		Refrigerated & Frozen		International		Corporate		Total
Accelerated depreciation	$	0.7	$	5.5	$	—	$	—	$	6.2
Other cost of goods sold		17.9		9.3		0.7		—		27.9
Total cost of goods sold		18.6		14.8		0.7		—		34.1
Severance and related costs		—		4.3		1.5		114.8		120.6
Asset impairment (net of gains on disposal)		54.6		8.3		—		2.9		65.8
Accelerated depreciation		—		—		—		7.4		7.4
Contract/lease termination		1.4		0.2		0.8		17.6		20.0
Consulting/professional fees		—		—		0.8		82.3		83.1
Other selling, general and administrative expenses		1.0		1.0		0.1		30.7		32.8
Total selling, general and administrative expenses		57.0		13.8		3.2		255.7		329.7
Consolidated total	$	75.6	$	28.6	$	3.9	$	255.7	$	363.8

During the third quarter of fiscal 2020, we recognized the following pre-tax expenses for the Pinnacle Integration Restructuring Plan:

	Grocery & Snacks		Refrigerated & Frozen		Corporate			Total
Accelerated depreciation	$	0.5	$	0.9	$	—		$	1.4
Total cost of goods sold		0.5		0.9		—			1.4
Severance and related costs		—		4.3		(0.4	)		3.9
Asset impairment (net of gains on disposal)		—		3.8		—			3.8
Accelerated depreciation		—		—		0.3			0.3
Contract/lease termination		—		—		2.9			2.9
Consulting/professional fees		—		—		6.3			6.3
Other selling, general and administrative expenses		—		—		1.0			1.0
Total selling, general and administrative expenses		—		8.1		10.1			18.2
Consolidated total	$	0.5	$	9.0	$	10.1		$	19.6

Included in the above results are $12.7 million of charges that have resulted or will result in cash outflows and $6.9 million in non-cash charges.

During the first three quarters of fiscal 2020, we recognized the following pre-tax expenses for the Pinnacle Integration Restructuring Plan:

	Grocery & Snacks		Refrigerated & Frozen		International		Corporate		Total
Accelerated depreciation	$	0.5	$	1.4	$	—	$	—	$	1.9
Other cost of goods sold		0.1		—		—		—		0.1
Total cost of goods sold		0.6		1.4		—		—		2.0
Severance and related costs		—		4.3		0.2		4.0		8.5
Asset impairment (net of gains on disposal)		0.2		3.8		—		2.9		6.9
Accelerated depreciation		—		—		—		2.7		2.7
Contract/lease termination		—		—		—		14.7		14.7
Consulting/professional fees		—		—		0.6		21.6		22.2
Other selling, general and administrative expenses		—		—		—		6.5		6.5
Total selling, general and administrative expenses		0.2		8.1		0.8		52.4		61.5
Consolidated total	$	0.8	$	9.5	$	0.8	$	52.4	$	63.5

Included in the above results are $41.8 million of charges that have resulted or will result in cash outflows and $21.7 million in non-cash charges.

We recognized the following cumulative (plan inception to February 23, 2020) pre-tax expenses for the Pinnacle Integration Restructuring Plan related to our continuing operations in our Condensed Consolidated Statement of Operations:

	Grocery & Snacks		Refrigerated & Frozen		International		Corporate		Total
Accelerated depreciation	$	0.5	$	1.4	$	—	$	—	$	1.9
Other cost of goods sold		1.6		1.5		0.7		—		3.8
Total cost of goods sold		2.1		2.9		0.7		—		5.7
Severance and related costs		—		4.3		1.5		114.8		120.6
Asset impairment (net of gains on disposal)		0.2		3.8		—		2.9		6.9
Accelerated depreciation		—		—		—		7.4		7.4
Contract/lease termination		—		—		0.8		15.0		15.8
Consulting/professional fees		—		—		0.8		59.7		60.5
Other selling, general and administrative expenses		—		—		0.1		14.7		14.8
Total selling, general and administrative expenses		0.2		8.1		3.2		214.5		226.0
Consolidated total	$	2.3	$	11.0	$	3.9	$	214.5	$	231.7

Included in the above results are $203.0 million of charges that have resulted or will result in cash outflows and $28.7 million in non-cash charges.

Liabilities recorded for the Pinnacle Integration Restructuring Plan and changes therein for the first three quarters of fiscal 2020 were as follows:

	Balance at May 26, 2019		Costs Incurred and Charged to Expense		Costs Paid or Otherwise Settled			Changes in Estimates			Balance at February 23, 2020
Severance and related costs	$	76.9	$	10.4	$	(52.6	)	$	(1.9	)	$	32.8
Contract termination		1.0		4.6		(3.9	)		—			1.7
Consulting/professional fees		18.4		22.2		(34.6	)		—			6.0
Other costs		1.2		6.5		(7.7	)		—			—
Total	$	97.5	$	43.7	$	(98.8	)	$	(1.9	)	$	40.5

Conagra Restructuring Plan

In the third quarter of fiscal 2019, we initiated a new restructuring plan for costs incurred in connection with actions taken to improve SG&A expense effectiveness and efficiencies and to optimize our supply chain network (the "Conagra Restructuring Plan"). Although we remain unable to make good faith estimates relating to the entire Conagra Restructuring Plan, we are reporting on actions initiated through the end of the third quarter of fiscal 2020, including the estimated amounts or range of amounts for each major type of costs expected to be incurred, and the charges that have resulted or will result in cash outflows. As of ~~November 26, 2017, our Board of Directors has~~February 23, 2020, we have approved the incurrence of ~~up to $900.9~~$129.8million ($36.9 million of ~~expenses in connection~~cash charges and $92.9 million of non-cash charges) for several projects associated with the ~~SCAE Plan, including expenses allocated for the Private Brands and Lamb Weston operations.~~Conagra Restructuring Plan. We have incurred or expect to incur ~~approximately $464.8~~$126.7 million of charges ($~~320.7~~35.2 million of cash charges and ~~$144.1~~$91.5 million of non-cash charges) for actions identified to date under the ~~SCAE Plan related to our continuing operations.~~Conagra Restructuring Plan. In the ~~second~~third quarter and first ~~half~~three quarters of fiscal ~~2018,~~2020, we recognized charges of ~~$7.1~~$11.9 million and ~~$18.5~~$52.6 million, respectively, in association with the ~~SCAE Plan related to our continuing operations.~~Conagra Restructuring Plan. In the ~~second~~third quarter and first ~~half~~three quarters of fiscal ~~2017,~~2019, we recognized ~~$19.8~~charges of $1.0 million ~~and $33.9 million, respectively,~~ in association with the ~~SCAE Plan related to our continuing operations.~~Conagra Restructuring Plan. We expect to incur costs related to the ~~SCAE~~Conagra Restructuring Plan over a multi-year period.

We anticipate that we will recognize the following pre-tax expenses in association with the ~~SCAE~~Conagra Restructuring Plan ~~related to our continuing operations~~ (amounts include charges recognized from plan inception through the ~~first half of fiscal 2018):~~

Grocery & Snacks Refrigerated & Frozen International Foodservice Corporate Total
Pension costs $ 32.9
$ 1.5
$ —
$ —
$ —
$ 34.4
Accelerated depreciation 32.2
18.6
—
—
1.2
52.0
Other cost of goods sold 10.0
2.1
—
—
—
12.1
    Total cost of goods sold 75.1
22.2
—
—
1.2
98.5
Severance and related costs, net 26.0
10.3
3.4
7.9
103.4
151.0
Fixed asset impairment (net of gains on disposal) 5.9
6.9
—
—
11.2
24.0
Accelerated depreciation —
—
—
—
4.7
4.7
Contract/lease cancellation expenses 0.9
0.6
0.6
—
86.2
88.3
Consulting/professional fees 1.1
0.4
0.1
—
54.1
55.7
Other selling, general and administrative expenses 16.1
3.2
—
—
23.3
42.6
    Total selling, general and administrative expenses 50.0
21.4
4.1
7.9
282.9
366.3
        Consolidated total $ 125.1
$ 43.6
$ 4.1
$ 7.9
$ 284.1
$ 464.8

~~During the second~~third quarter of fiscal ~~2018,~~2020):

	Grocery & Snacks		Refrigerated & Frozen		International		Corporate		Total
Accelerated depreciation	$	40.2	$	20.1	$	—	$	—	$	60.3
Other cost of goods sold		9.0		1.0		—		—		10.0
Total cost of goods sold		49.2		21.1		—		—		70.3
Severance and related costs		11.1		3.5		1.2		0.2		16.0
Asset impairment (net of gains on disposal)		25.0		0.2		0.1		—		25.3
Contract/lease termination		0.2		—		—		0.1		0.3
Other selling, general and administrative expenses		12.0		1.9		0.3		—		14.2
Total selling, general and administrative expenses		48.3		5.6		1.6		0.3		55.8
Total	$	97.5	$	26.7	$	1.6	$	0.3	$	126.1
Pension and postretirement non-service income										0.6
Consolidated total									$	126.7

During the third quarter of fiscal 2020, we recognized the following pre-tax expenses for the ~~SCAE Plan related to our continuing operations:~~Conagra Restructuring Plan:

	Grocery & Snacks		Refrigerated & Frozen		Total
Accelerated depreciation	$	8.3	$	—	$	8.3
Other cost of goods sold		1.2		—		1.2
Total cost of goods sold		9.5		—		9.5
Severance and related costs		0.3		1.2		1.5
Asset impairment (net of gains on disposal)		0.5		0.2		0.7
Other selling, general and administrative expenses		0.1		0.1		0.2
Total selling, general and administrative expenses		0.9		1.5		2.4
Total	$	10.4	$	1.5	$	11.9

Grocery & Snacks International Corporate Total
Pension costs $ 2.1
$ —
$ —
$ 2.1
Other cost of goods sold 1.3
—
—
1.3
    Total cost of goods sold 3.4
—
—
3.4
Severance and related costs, net (0.2 ) 0.9
0.6
1.3
Fixed asset impairment (net of gains on disposal) (1.5 ) —
—
(1.5 )
Accelerated depreciation —
—
0.7
0.7
Contract/lease cancellation expenses 0.1
—
(0.1 ) —
Consulting/professional fees 0.1
—
0.4
0.5
Other selling, general and administrative expenses 2.1
—
0.6
2.7
    Total selling, general and administrative expenses 0.6
0.9
2.2
3.7
        Consolidated total $ 4.0
$ 0.9
$ 2.2
$ 7.1

Included in the above ~~table~~results are ~~$7.7~~$2.8 million in charges that have resulted or will result in cash outflows and $9.1 million in non-cash charges.

During the first three quarters of fiscal 2020, we recognized the following pre-tax expenses for the Conagra Restructuring Plan:

	Grocery & Snacks		Refrigerated & Frozen		International		Corporate		Total
Accelerated depreciation	$	18.7	$	0.9	$	—	$	—	$	19.6
Other cost of goods sold		1.2		0.2		—		—		1.4
Total cost of goods sold		19.9		1.1		—		—		21.0
Severance and related costs		3.3		1.3		0.5		—		5.1
Asset impairment (net of gains on disposal)		25.0		0.2		0.1		—		25.3
Contract/lease termination		—		—		—		0.1		0.1
Other selling, general and administrative expenses		0.3		0.2		—		—		0.5
Total selling, general and administrative expenses		28.6		1.7		0.6		0.1		31.0
Total	$	48.5	$	2.8	$	0.6	$	0.1	$	52.0
Pension and postretirement non-service income										0.6
Consolidated total									$	52.6

Included in the above results are $7.5 million of charges that have resulted or will result in cash outflows and ~~net~~$45.1 million in non-cash ~~gains of $0.6 million.~~

~~During the first half of fiscal 2018, we~~charges.

We recognized the following cumulative (plan inception to February 23, 2020) pre-tax expenses for the ~~SCAE~~Conagra Restructuring Plan related to our continuing ~~operations:~~operations in our Condensed Consolidated Statement of Operations:

	Grocery & Snacks		Refrigerated & Frozen		International		Corporate		Total
Accelerated depreciation	$	18.7	$	1.7	$	—	$	—	$	20.4
Other cost of goods sold		1.2		0.2		—		—		1.4
Total cost of goods sold		19.9		1.9		—		—		21.8
Severance and related costs		3.3		1.8		1.2		0.2		6.5
Asset impairment (net of gains on disposal)		25.0		0.2		0.1		—		25.3
Contract/lease termination		—		—		—		0.1		0.1
Other selling, general and administrative expenses		0.3		0.2		—		—		0.5
Total selling, general and administrative expenses		28.6		2.2		1.3		0.3		32.4
Total	$	48.5	$	4.1	$	1.3	$	0.3	$	54.2
Pension and postretirement non-service income										0.6
Consolidated total									$	54.8

Grocery & Snacks International Corporate Total
Pension costs $ 2.1
$ —
$ —
$ 2.1
Accelerated depreciation 1.2
—
—
1.2
Other cost of goods sold 2.4
—
—
2.4
    Total cost of goods sold 5.7
—
—
5.7
Severance and related costs, net 1.8
0.9
0.6
3.3
Fixed asset impairment (net of gains on disposal) (1.4 ) —
4.4
3.0
Accelerated depreciation —
—
1.3
1.3
Contract/lease cancellation expenses 0.1
—
(0.1 ) —
Consulting/professional fees 0.1
—
0.6
0.7
Other selling, general and administrative expenses 3.9
—
0.6
4.5
    Total selling, general and administrative expenses 4.5
0.9
7.4
12.8
        Consolidated total $ 10.2
$ 0.9
$ 7.4
$ 18.5

Included in the above ~~table~~results are ~~$12.5~~$8.9 million of charges that have resulted or will result in cash outflows and ~~$6.0~~$45.9 million in non-cash charges.

Liabilities recorded for the Conagra Restructuring Plan and changes therein for the first three quarters of fiscal 2020 were as follows:

	Balance at May 26, 2019		Costs Incurred and Charged to Expense		Costs Paid or Otherwise Settled			Changes in Estimates			Balance at February 23, 2020
Severance and related costs	$	1.2	$	5.6	$	(1.5	)	$	(0.5	)	$	4.8
Contract termination		—		0.1		(0.1	)		—			—
Other costs		—		1.7		(1.7	)		—			—
Total	$	1.2	$	7.4	$	(3.3	)	$	(0.5	)	$	4.8

Supply Chain and Administrative Efficiency Plan

As of February 23, 2020, we had substantially completed our restructuring activities related to our Supply Chain and Administrative Efficiency Plan (the "SCAE Plan"). In the third quarter and first three quarters of fiscal 2020, we recognized charges of

$0.3 million and $1.0 million, respectively, in connection with the SCAE Plan. In the third quarter and first three quarters of fiscal 2019, we recognized charges of $3.5 million and $8.6 million, respectively, in connection with the SCAE Plan.

We have recognized ~~the following cumulative (plan inception to November 26, 2017)~~$470.9 million in pre-tax expenses ~~related to~~($103.3 million in cost of goods sold, $365.3 million in SG&A expenses, and $2.3 million in pension and postretirement non-service income) from the inception of the SCAE Plan through February 23, 2020, related to our continuing ~~operations in our Condensed Consolidated Statements of Earnings:~~

Grocery & Snacks Refrigerated & Frozen International Foodservice Corporate Total
Pension costs $ 35.0
$ 1.5
$ —
$ —
$ —
$ 36.5
Accelerated depreciation 32.2
18.6
—
—
1.2
52.0
Other cost of goods sold 7.4
2.1
—
—
—
9.5
    Total cost of goods sold 74.6
22.2
—
—
1.2
98.0
Severance and related costs, net 25.7
10.3
3.4
7.9
102.1
149.4
Fixed asset impairment (net of gains on disposal) 5.9
6.9
—
—
11.2
24.0
Accelerated depreciation —
—
—
—
3.9
3.9
Contract/lease cancellation expenses 0.9
0.6
0.6
—
71.2
73.3
Consulting/professional fees 1.0
0.4
0.1
—
51.8
53.3
Other selling, general and administrative expenses 15.1
3.2
—
—
20.6
38.9
    Total selling, general and administrative expenses 48.6
21.4
4.1
7.9
260.8
342.8
        Consolidated total $ 123.2
$ 43.6
$ 4.1
$ 7.9
$ 262.0
$ 440.8

operations. Included in ~~the above~~these results ~~are $298.0 million of charges that have resulted or will result in cash outflows and $142.8 million in non-cash charges. Not included in the above results are $130.2 million of pre-tax expenses ($84.5~~were $321.7 million of cash charges and ~~$45.7~~$149.2 million of non-cash ~~charges) related to the Private Brands operations, which we sold in the third quarter of fiscal 2016, and $2.1 million of~~charges. Our total pre-tax expenses ~~(all resulting in cash charges) related to Lamb Weston.~~

~~Liabilities recorded~~ for the SCAE Plan related to our continuing operations are expected to be $471.2 million ($322.0 million of cash charges and ~~changes therein for the first half~~$149.2 million of ~~fiscal 2018 were as follows:~~

Balance at May 28, 2017
Costs Incurred
and Charged
to Expense

Costs Paid
or Otherwise Settled
Changes in Estimates Balance at November 26, 2017
Pension costs $ 31.8
$ —
$ —
$ 2.1
$ 33.9
Severance and related costs 13.8
4.0
(7.9 ) (0.7 ) 9.2
Consulting/professional fees 0.6
0.7
(1.1 ) —
0.2
Contract/lease cancellation 11.6
0.3
(3.6 ) (0.3 ) 8.0
Other costs 1.9
6.5
(6.9 ) —
1.5
Total $ 59.7
$ 11.5
$ (19.5 ) $ 1.1
$ 52.8

non-cash charges).

5. LONG-TERM DEBT AND REVOLVING CREDIT FACILITY

Revolving Credit Facility

At ~~November 26, 2017,~~February 23, 2020, we had a revolving credit facility (the ~~"Facility"~~"Revolving Credit Facility") with a syndicate of financial institutions ~~that provides~~providing for a maximum aggregate principal amount outstanding at any one time of ~~$1.25~~$1.6 billion (subject to increase to a maximum aggregate principal amount of ~~$1.75~~$2.1 billion with the consent of the lenders). The Revolving Credit Facility matures on July 11, 2024 and is unsecured. The term of the Revolving Credit Facility may be extended for additional one-year or two-year periods from the then-applicable maturity date on an annual basis. As of February 23, 2020, there were 0 outstanding borrowings under the Revolving Credit Facility.

Pinnacle Acquisition Financing

In the first quarter of fiscal 2019, in connection with the announcement of the Pinnacle acquisition, we secured $9.0 billion in fully committed bridge financing. Prior to the acquisition, we capitalized financing costs related to the bridge financing of $45.7 million to be amortized over the commitment period. Our net interest expense included $11.9 million in the first half of fiscal 2019 as a result of this amortization. The bridge facility was terminated in connection with the Pinnacle acquisition, and we recognized $33.8 million of expense within SG&A expenses in the second quarter of fiscal 2019 for the remaining unamortized financing costs.

During the second quarter of fiscal 2019, to finance a portion of our acquisition of Pinnacle, we issued senior unsecured notes in an aggregate principal amount of $7.025 billion. We issued the notes in seven tranches: floating rate notes due October 22, 2020 in an aggregate principal amount of $525.0 million with interest equal to three-month LIBOR plus 0.75%, 3.8% senior notes due October 22, 2021 in an aggregate principal amount of $1.20 billion; 4.3% senior notes due May 1, 2024 in an aggregate principal amount of $1.0 billion; 4.6% senior notes due November 1, 2025 in an aggregate principal amount of $1.0 billion; 4.85% senior notes due November 1, 2028 in an aggregate principal amount of $1.30 billion; 5.3% senior notes due November 1, 2038 in an aggregate principal amount of $1.0 billion; and 5.4% senior notes due November 1, 2048 in an aggregate principal amount of $1.0 billion.

During the second quarter of fiscal 2019, to finance a portion of our acquisition of Pinnacle, we also borrowed $1.30 billion under a term loan agreement (the "Term Loan Agreement") with a syndicate of financial institutions providing for term loans to the Company in an aggregate principal amount of up to $1.30 billion. Our borrowings under the Term Loan Agreement consisted of a $650.0 million tranche of three-year term loans maturing on October 26, ~~2017,~~2021 and a $650.0 million tranche of five-year term loans maturing on October 26, 2023.

In connection with our acquisition of Pinnacle, we prepaid in full $2.40 billion of obligations and liabilities of Pinnacle under or in respect of Pinnacle's credit agreement and other debt agreements. We also redeemed $350.0 million in aggregate principal amount of Pinnacle's outstanding 5.875% senior notes due January 15, 2024 and recognized a charge of $3.9 million in the second quarter of fiscal 2019 as a cost of early retirement of debt.

During the first quarter of fiscal 2020, we repaid $200.0 million of our borrowings under the Term Loan Agreement, which repayment consisted of $100.0 million of the three-year tranche loans and $100.0 million of the five-year tranche loans. During the third quarter of fiscal 2020, we repaid the remaining borrowings under the Term Loan Agreement of $200.0 million, which repayment consisted of $100.0 million of the three-year tranche loans and $100.0 million of the five-year tranche loans. The Term Loan Agreement was terminated after these repayments.

During the third quarter of fiscal 2020, we also redeemed $250.0 million in aggregate principal amount of our floating rate notes due October 22, 2020. This did not result in a significant gain or loss.

In the first quarter of fiscal 2019, we entered into deal-contingent forward starting interest rate swap contracts (see Note 7) to hedge a portion of the interest rate risk related to our anticipated issuance of long-term debt to help finance the Pinnacle acquisition. During the second quarter of fiscal 2019, we terminated the interest rate swap contracts and received proceeds of $47.5 million. This

gain was deferred in accumulated other comprehensive income and is being amortized as a reduction of interest expense over the lives of the related debt instruments. Our net interest expense was reduced by $0.9 million and $2.6 million during the third quarter and first three quarters of fiscal 2020, respectively, and $1.0 million and $1.2 million for the third quarter and first three quarters of fiscal 2019, respectively, due to the impact of these interest rate swap contracts.

General

The Revolving Credit Facility generally requires our ratio of earnings before interest, taxes, depreciation and amortization ("EBITDA") to interest expense not to be less than 3.0 to 1.0 and our ratio of funded debt to EBITDA not to exceed certain decreasing specified levels, ranging from 5.25 through the first quarter of fiscal 2021 to 3.75 from the second quarter of fiscal 2023 and thereafter, with each ratio to be calculated on a rolling four-quarter basis. As of February 23, 2020, we were in compliance with all financial covenants under the Revolving Credit Facility.

During the second quarter of fiscal 2018, we issued $500.0 million aggregate principal amount of floating rate notes due October 9, 2020. The notes bear interest at a rate equal to three-month LIBOR plus 0.50% per annum.

During the third quarter of fiscal 2017, we repaid the remaining principal balance of $224.8 million of our 5.819% senior notes due 2017 and $248.2 million principal amount of our 7.0% senior notes due 2019, in each case prior to maturity, resulting in a net loss on early retirement of debt of $32.7 million.

In connection with the Spinoff (see Note 3), Lamb Weston issued to us $1.54 billion aggregate principal amount of senior notes (the "Lamb Weston notes"). On November 9, 2016, we exchanged the Lamb Weston notes for $250.2 million aggregate principal amount of our 5.819% senior notes due 2017, $880.4 million aggregate principal amount of our 1.9% senior notes due 2018, $154.9 million aggregate principal amount of our 2.1% senior notes due 2018, $86.9 million aggregate principal amount of our 7.0% senior notes due 2019, and $71.1 million aggregate principal amount of our 4.95% senior notes due 2020 (collectively, the "Conagra notes"), which had been purchased in the open market by certain investment banks prior to the Spinoff. Following the exchange, we canceled the Conagra notes. These actions resulted in a net loss of $60.6 million as a cost of early retirement of debt.

Net interest expense ~~from continuing operations~~ consists of:

	Thirteen weeks ended						Thirty-nine weeks ended
	February 23, 2020			February 24, 2019			February 23, 2020			February 24, 2019
Long-term debt	$	120.6		$	133.4		$	368.1		$	252.5
Short-term debt		—			—			0.9			15.0
Interest income		(1.3	)		(1.9	)		(2.3	)		(5.0	)
Interest capitalized		(1.6	)		(0.6	)		(4.9	)		(2.0	)
	$	117.7		$	130.9		$	361.8		$	260.5

Thirteen weeks ended Twenty-six weeks ended
November 26,
2017 November 27,
2016 November 26,
2017 November 27,
2016
Long-term debt $ 39.4
$ 56.6
$ 77.5
$ 117.5
Short-term debt 0.7
0.2
1.1
0.4
Interest income (1.1 ) (0.8 ) (2.0 ) (1.5 )
Interest capitalized (1.0 ) (1.9 ) (2.2 ) (4.1 )
$ 38.0
$ 54.1
$ 74.4
$ 112.3

~~6. VARIABLE INTEREST ENTITIES~~

~~Variable Interest Entities Not Consolidated~~

~~We have variable interests in certain entities that we have determined to be variable~~

Our accrued interest ~~entities, but for which we are not the primary beneficiary. We do not consolidate the financial statements of these entities.~~

We lease certain office buildings from entities that we have determined to be variable interest entities. The lease agreements with these entities include fixed-price purchase options for the assets being leased. The lease agreements also contain contingent put options (the "lease put options") that allow the lessors to require us to purchase the buildings at the greater of original construction cost, or fair market value, without a lease agreement in place (the "put price") in certain limited circumstances. As a result of substantial impairment

charges related to our divested Private Brands operations, these lease put options are exercisable now and remain exercisable until generally 30 days after the end of the respective lease agreements. We are amortizing the difference between the put price and the estimated fair value (without a lease agreement in place) of each respective property over the remaining respective lease term within selling, general and administrative expenses. As of November 26, 2017 and May 28, 2017, the estimated amount by which the put prices exceeded the fair values of the related properties was ~~$50.7 million, of which we had accrued $10.2~~$142.9 million and $8.4 million, respectively. In December 2017, subsequent to the second quarter of fiscal 2018, we purchased a building that had been subject to a put option. We will recognize a net loss of approximately $13 million for the early termination of the associated lease in our third quarter of fiscal 2018. Also in December 2017, we made an offer to purchase another property subject to a put option. We have not entered into a binding legal contract in connection with this offer. However, if our offer is accepted, we may recognize an estimated loss of $30 million to $40 million, upon closing of the transaction, for the early exit of an unfavorable lease contract. If this transaction is completed, we would have one remaining leased building subject to a put option for which the put option price exceeds the estimated fair value by $8.2 million, of which we had accrued $1.0$61.3 million as of ~~November~~February 23, 2020 and May 26, 2017. These leases, with the exception of one, are accounted for as operating leases. A capital lease asset and related lease obligation of $25.3 million and $28.9 million, respectively, were included in the Condensed Consolidated Balance Sheets as of November 26, 2017. We have determined that we do not have the power to direct the activities that most significantly impact the economic performance of these entities. In making this determination, we have considered, among other items, the terms of the lease agreements, the expected remaining useful lives of the assets leased, and the capital structure of the lessor entities.

7.2019, respectively.

6. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

The change in the carrying amount of goodwill for the first ~~half~~three quarters of fiscal ~~2018~~2020 was as follows:

	Grocery & Snacks		Refrigerated & Frozen		International			Foodservice		Total
Balance as of May 26, 2019	$	4,741.3	$	5,642.4	$	299.0		$	752.7	$	11,435.4
Purchase accounting adjustments		3.5		5.9		0.7			—		10.1
Currency translation		—		—		(2.4	)		—		(2.4	)
Balance as of February 23, 2020	$	4,744.8	$	5,648.3	$	297.3		$	752.7	$	11,443.1

Grocery & Snacks Refrigerated & Frozen International Foodservice Total
Balance as of May 28, 2017 $ 2,439.1
$ 1,037.3
$ 253.6
$ 571.1
$ 4,301.1
Acquisitions 156.5
—
—
—
156.5
Purchase accounting adjustments (1.5 ) —
—
—
(1.5 )
Currency translation —
0.9
—
—
0.9
Balance as of November 26, 2017 $ 2,594.1
$ 1,038.2
$ 253.6
$ 571.1
$ 4,457.0

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

	February 23, 2020				May 26, 2019
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Non-amortizing intangible assets	$	3,544.1	$	—	$	3,559.6	$	—
Amortizing intangible assets		1,240.4		305.1		1,239.9		260.2
	$	4,784.5	$	305.1	$	4,799.5	$	260.2

November 26, 2017 May 28, 2017

Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
Amortization
Non-amortizing intangible assets $ 908.8
$ —
$ 834.1
$ —
Amortizing intangible assets 587.3
197.9
575.4
180.2
$ 1,496.1
$ 197.9
$ 1,409.5
$ 180.2

In the first quarter of fiscal ~~2017, in anticipation~~2020, we reorganized our reporting segments to incorporate the Pinnacle business into our legacy reporting segments, to reflect how the business is now being managed. Accordingly, we reassigned goodwill from the legacy Pinnacle segment to the applicable reporting units of the ~~Spinoff,~~legacy Conagra segments, consistent with the Company's new management structure. The allocation of goodwill to Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice was $2.19 billion, $4.58 billion, $58.5 million, and $181.6 million, respectively. We tested goodwill for impairment both prior to and subsequent to the reallocation of Pinnacle goodwill and there were 0 impairments of goodwill. Such impairment tests are performed by estimating the fair value of each reporting unit and comparing that to the carrying amount of the net assets of the applicable reporting unit. If the estimated fair value of a reporting unit is less than its carrying value, such deficit is recognized as an impairment of goodwill.

Fair value is typically estimated using a discounted cash flow analysis which requires us to estimate the future cash flows as well as to select a risk-adjusted discount rate to measure the present value of the anticipated cash flows. When determining future cash flow estimates, we ~~changed~~consider historical results adjusted to reflect current and anticipated operating conditions. We estimate cash flows

for a reporting unit over a discrete period (typically five years) and a terminal period (considering expected long-term growth rates and trends). With the assistance of a third-party valuation specialist, we used a discount rate for our ~~reporting segments. In accordance with applicable accounting guidance, we were required to determine new~~domestic reporting units ~~at a lower level (at the operating segment or~~of 7% and rates ranging from 8% to 11% for our International reporting units. We used terminal growth rates between 1% and 2% for all reporting units (excluding one ~~level lower, as applicable). When such a determination was made, we were required to perform a goodwill impairment analysis for each of the new reporting units.~~

~~We performed an assessment of impairment of goodwill for the new Canadian~~international reporting unit ~~within the new International reporting segment.~~with a 3% terminal growth rate). Estimating the fair value of individual reporting units requires us to make assumptions and estimates ~~regarding our~~in such areas as future ~~plans~~economic conditions, industry-specific conditions, product pricing, and ~~future industry and economic conditions. We estimated the~~necessary capital expenditures. The use of different assumptions or estimates for future cash flows, of the Canadian reporting unit and calculated the net present value of those estimated cash flows using a risk adjusted discount rate, in order to estimate the fair value of each reporting unit from the perspective of a market participant. We used discount rates, ~~and~~or terminal growth rates could produce substantially different estimates of 7.5% and 2%, respectively, to calculate the present value of estimated future cash flows. We then compared the estimated fair value of the reporting unit to the historical carrying value (including allocated assets and liabilities of certain shared and Corporate functions), and determined that the fair value of the reporting ~~unit was less than~~units.

Several of our reporting units have an estimated fair value substantially in excess of the carrying value. Three of our reporting units with aggregate goodwill of $3.5 billion have an estimated fair value that exceeds the respective carrying value as of our most recent testing date as follows:

	Carrying Value of Goodwill		Excess Fair Value as of Fiscal 2020 Test Date
Sides, Components, Enhancers (part of Refrigerated & Frozen segment)	$	2,636.6		18.1	%
Foodservice		752.7		36.7	%
Canada (part of International segment)		96.2		32.0	%

If our future cash flow projections and other fair value assumptions for these reporting units change, we may be subject to potential impairment in subsequent quarters.

For our non-amortizing intangible assets, which are comprised of brands and trademarks, we use a "relief from royalty" methodology in estimating fair value. During the first quarter of fiscal 2017. With the assistance of a third-party valuation specialist, we estimated the fair value of the assets and liabilities of this reporting unit in order to determine the implied fair value of goodwill. We recognized an impairment charge for the difference between the implied fair value of goodwill and the carrying value of goodwill. Accordingly, during the first quarter of fiscal 2017,2020, we recorded impairment charges totaling ~~$139.2~~$19.3 million within our Refrigerated & Frozen segment and Grocery & Snacks segment for ~~the impairment of goodwill.~~

~~As part of the assessment of the fair value of each asset~~certain brands for which management changed its business strategy and ~~liability within the Canadian reporting unit, with the assistance of the third-party valuation specialist, we estimated the fair value of our Canadian~~ ~~Del Monte~~^® ~~brand~~that continued to ~~be less~~have lower than ~~its carrying value. In~~

~~accordance with applicable accounting guidance, we recognized an impairment charge of $24.4 million to write-down the intangible asset to its estimated fair value.~~

We also performed an assessment of impairment of goodwill for the new Mexican reporting unit within the International reporting segment using similar methods to those described above. We used discount rates and terminal growth rates of 8.5% and 3%, respectively, to calculate the present value of estimated future cash flows. We determined that the estimated fair value of this reporting unit exceeded the carrying value of its net assets by approximately 5%. Accordingly, we did not recognize an impairment of the goodwill in the Mexican reporting unit.

~~During the second quarter of fiscal 2017, as a result of further deterioration in forecasted~~expected sales and ~~profits primarily due to foreign exchange rates, we performed an additional assessment of~~profit margins. This impairment of goodwill for the new Mexican reporting unit. We used discount rates and terminal growth rates of 8.5% and 3%, respectively, to calculate the present value of estimated future cash flows. We then compared the estimated fair value of the reporting unit to the historical carrying value (including allocated assets and liabilities of certain shared and Corporate functions), and determined that the fair value of the reporting unit was less than the carrying value in the second quarter of fiscal 2017. With the assistance of a third-party valuation specialist, we estimated the fair value of the assets and liabilities of this reporting unit in order to determine the implied fair value of goodwill. We recognized an impairment charge for the difference between the implied fair value of goodwill and the carrying value of goodwill. Accordingly, during the second quarter of fiscal 2017, we recorded charges totaling $43.9 million for the impairment of goodwill.

~~Non-amortizing intangible assets are comprised of brands and trademarks.~~

included within SG&A expenses.

Amortizing intangible assets, carrying a remaining weighted average life of approximately 1420 years, are principally composed of customer relationships ~~licensing arrangements,~~ and acquired intellectual property. Amortization expense was ~~$8.7~~$14.9 million and ~~$17.3~~$44.9 million for the ~~second~~third quarter and first ~~half~~three quarters of fiscal ~~2018,~~2020, respectively, and ~~$8.1~~$14.9 million and ~~$16.5~~$34.0 million for the ~~second~~third quarter and first ~~half~~three quarters of fiscal ~~2017,~~2019, respectively. Based on amortizing assets recognized in our Condensed Consolidated Balance Sheet as of ~~November 26, 2017~~,February 23, 2020, amortization expense is estimated to average ~~$34.0~~$57.3 million for each of the next five years.

7. DERIVATIVE FINANCIAL INSTRUMENTS

Our operations are exposed to market risks from adverse changes in commodity prices affecting the cost of raw materials and energy, foreign currency exchange rates, and interest rates. In the normal course of business, these risks are managed through a variety of strategies, including the use of derivatives.

Commodity and commodity index futures and option contracts are used from time to time to economically hedge commodity input prices on items such as natural gas, vegetable oils, proteins, packaging materials, dairy, grains, and electricity. Generally, we economically hedge a portion of our anticipated consumption of commodity inputs for periods of up to 36 months. We may enter into longer-term economic hedges on particular commodities, if deemed appropriate. As of ~~November 26, 2017~~,February 23, 2020, we had economically hedged certain portions of our anticipated consumption of commodity inputs using derivative instruments with expiration dates through December ~~2018.~~

2020.

In order to reduce exposures related to changes in foreign currency exchange rates, we enter into forward exchange, option, or swap contracts from time to time for transactions denominated in a currency other than the applicable functional currency. This includes, but is not limited to, hedging against foreign currency risk in purchasing inventory and capital equipment, sales of finished goods, and future settlement of foreign-denominated assets and liabilities. As of ~~November 26, 2017~~,February 23, 2020, we had economically hedged certain portions of our foreign currency risk in anticipated transactions using derivative instruments with expiration dates through ~~August 2018.~~

November 2020.

From time to time, we may use derivative instruments, including interest rate swaps, to reduce risk related to changes in interest rates. This includes, but is not limited to, hedging against increasing interest rates prior to the issuance of long-term debt and hedging the fair value of our senior long-term debt.

Derivatives Designated as Cash Flow Hedges

During the first quarter of fiscal 2019, we entered into deal-contingent forward starting interest rate swap contracts to hedge a portion of the interest rate risk related to our issuance of long-term debt to help finance the acquisition of Pinnacle. We settled these contracts during the second quarter of fiscal 2019 and deferred a $47.5 million gain in accumulated other comprehensive income. This gain will be amortized as a reduction of interest expense over the lives of the related debt instruments. The unamortized amount at February 23, 2020 was $42.9 million.

Economic Hedges of Forecasted Cash Flows

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

Economic Hedges of Fair Values — Foreign Currency Exchange Rate Risk

We may use options and cross currency swaps to economically hedge the fair value of certain monetary assets and liabilities (including intercompany balances) denominated in a currency other than the functional currency. These derivatives are marked-to-market with gains and losses immediately recognized in ~~selling, general and administrative~~SG&A expenses. These substantially offset the foreign currency transaction gains or losses recognized as values of the monetary assets or liabilities being economically hedged change.

All derivative instruments are recognized on our balance sheets at fair value (refer to Note 16 for additional information related to fair value measurements). The fair value of derivative assets is recognized within prepaid expenses and other current assets, while the fair value of derivative liabilities is recognized within other accrued liabilities. In accordance with U.S. GAAP, we offset certain derivative asset and liability balances, as well as certain amounts representing rights to reclaim cash collateral and obligations to return cash collateral, where master netting agreements provide for legal right of setoff. At ~~November 26, 2017~~February 23, 2020 and May ~~28, 2017, $0.9~~26, 2019, $4.0 million, representing a right to reclaim cash collateral, ~~was~~and $0.1 million, representing an obligation to return cash collateral, respectively, were included in prepaid expenses and other current assets in our Condensed Consolidated Balance Sheets.

Derivative assets and liabilities and amounts representing a right to reclaim cash collateral or an obligation to return cash collateral were reflected in our Condensed Consolidated Balance Sheets as follows:

February 23,

2020

May 26,

2019

Prepaid expenses and other current assets

2.5

5.9

Other accrued liabilities

1.9

1.4

November 26,
2017 May 28,
2017
Prepaid expenses and other current assets $ 4.2
$ 2.3
Other accrued liabilities 2.0
1.3

The following table presents our derivative assets and liabilities, at ~~November 26, 2017,~~February 23, 2020, on a gross basis, prior to the setoff of ~~$0.1~~$1.0 million to total derivative assets and ~~$1.0~~$3.0 million to total derivative liabilities where legal right of setoff existed:

	Derivative Assets			Derivative Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity contracts	Prepaid expenses and other current assets	$	1.5	Other accrued liabilities	$	3.1
Foreign exchange contracts	Prepaid expenses and other current assets		—	Other accrued liabilities		1.8
Total derivatives not designated as hedging instruments		$	1.5		$	4.9

Derivative Assets Derivative Liabilities

Balance Sheet
Location
Fair Value
Balance Sheet
Location
Fair Value
Commodity contracts Prepaid expenses and other current assets $ 3.5
Other accrued liabilities $ 1.0
Foreign exchange contracts Prepaid expenses and other current assets 0.8
Other accrued liabilities 1.9
Other Prepaid expenses and other current assets —
Other accrued liabilities 0.1
Total derivatives not designated as hedging instruments $ 4.3
$ 3.0

The following table presents our derivative assets and liabilities at May ~~28, 2017~~,26, 2019, on a gross basis, prior to the setoff of ~~$0.5~~$0.5 million to total derivative assets and ~~$1.4~~$0.4 million to total derivative liabilities where legal right of setoff existed:

	Derivative Assets			Derivative Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity contracts	Prepaid expenses and other current assets	$	4.9	Other accrued liabilities	$	0.9
Foreign exchange contracts	Prepaid expenses and other current assets		1.4	Other accrued liabilities		0.9
Other	Prepaid expenses and other current assets		0.1	Other accrued liabilities		—
Total derivatives not designated as hedging instruments		$	6.4		$	1.8

Derivative Assets Derivative Liabilities

Balance Sheet
Location
Fair Value
Balance Sheet
Location
Fair Value
Commodity contracts Prepaid expenses and other current assets $ 2.6
Other accrued liabilities $ 1.4
Foreign exchange contracts Prepaid expenses and other current assets 0.2
Other accrued liabilities 1.1
Other Prepaid expenses and other current assets —
Other accrued liabilities 0.2
Total derivatives not designated as hedging instruments $ 2.8
$ 2.7

The location and amount of gains (losses) from derivatives not designated as hedging instruments in our Condensed Consolidated Statements of Earnings were as follows:

	Location in Condensed Consolidated	Gains (Losses) Recognized on Derivatives in Condensed Consolidated Statements of Earnings for the Thirteen Weeks Ended
Derivatives Not Designated as Hedging Instruments	Statements of Earnings of Gains (Losses) Recognized on Derivatives	February 23, 2020			February 24, 2019
Commodity contracts	Cost of goods sold	$	(3.5	)	$	3.3
Foreign exchange contracts	Cost of goods sold		(2.2	)		(2.5	)
Total gains (losses) from derivative instruments not designated as hedging instruments		$	(5.7	)	$	0.8

	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 23, 2020			February 24, 2019
Commodity contracts	Cost of goods sold	$	(8.0	)	$	(3.3	)
Foreign exchange contracts	Cost of goods sold		(4.5	)		(0.1	)
Total losses from derivative instruments not designated as hedging instruments		$	(12.5	)	$	(3.4	)

Derivatives Not Designated as Hedging Instruments Location in Condensed Consolidated Statement of Earnings of Gains Recognized on Derivatives Gains Recognized on Derivatives in Condensed Consolidated Statement of Earnings for the Thirteen Weeks Ended
November 26, 2017 November 27, 2016
Commodity contracts Cost of goods sold $ 0.8
$ 1.6
Foreign exchange contracts Cost of goods sold 2.2
1.4
Foreign exchange contracts Selling, general and administrative expense —
2.5
Total gains from derivative instruments not designated as hedging instruments $ 3.0
$ 5.5

Derivatives Not Designated as Hedging Instruments Location in Condensed Consolidated Statement of Earnings of Gains (Losses) Recognized on Derivatives Gains (Losses) Recognized on Derivatives in Condensed Consolidated Statement of Earnings for
the Twenty-six Weeks Ended
November 26, 2017 November 27, 2016
Commodity contracts Cost of goods sold $ 1.4
$ 1.2
Foreign exchange contracts Cost of goods sold (5.8 ) 1.5
Foreign exchange contracts Selling, general and administrative expense 0.3
1.3
Total gains (losses) from derivative instruments not designated as hedging instruments $ (4.1 ) $ 4.0

As of ~~November 26, 2017,~~February 23, 2020, our open commodity contracts had a notional value (defined as notional quantity times market value per notional quantity unit) of ~~$81.6~~$91.3 million and ~~$34.2~~$62.0 million for purchase and sales contracts, respectively. As of May ~~28, 2017,~~26, 2019, our open commodity contracts had a notional value of ~~$76.8~~$140.1 million and ~~$73.4~~$18.5 million for purchase and sales contracts, respectively. The notional amount of our foreign currency forward contracts as of ~~November 26, 2017~~February 23, 2020 and May ~~28, 2017~~26, 2019 was ~~$72.8~~$97.6 million and ~~$81.9~~$88.2 million, respectively.

We enter into certain commodity, interest rate, and foreign exchange derivatives with a diversified group of counterparties. We continually monitor our positions and the credit ratings of the counterparties involved and limit the amount of credit exposure to any one party. These transactions may expose us to potential losses due to the risk of nonperformance by these counterparties. We have not incurred a material loss due to nonperformance in any period presented and do not expect to incur any such material loss. We also enter into futures and options transactions through various regulated exchanges.

At ~~November 26, 2017, the maximum amount of loss due to the credit risk of the counterparties, had the counterparties failed to perform according to the terms of the contracts, was $0.9 million.~~

8. SHARE-BASED PAYMENTS

For the ~~second~~third quarter and first ~~half~~three quarters of fiscal ~~2018,~~2020, we recognized total stock-based compensation expense (including stock options, restricted stock units, cash-settled restricted stock units, performance shares, performance-based restricted stock units, and ~~performance shares)~~cash-settled stock appreciation rights) of ~~$12.3~~$9.3 million and ~~$18.7~~$33.8 million, respectively. For the second quarter and first half of fiscal 2017, we recognized total stock-based compensation expense of $17.9 million and $32.7 million, respectively. These amounts are inclusive of discontinued operations. Included in the total stock-based compensation ~~expense~~ for the ~~second~~third quarter and first ~~half~~three quarters of fiscal ~~2018 was~~2020 is expense of ~~$0.1~~$0.3 million and ~~$0.4~~$1.0 million, respectively, for accelerated vesting of awards related to ~~stock options granted by a subsidiary in~~Pinnacle integration restructuring activities. For the ~~subsidiary's shares to the subsidiary's employees. The expense for these stock options for the second~~third quarter and first ~~half~~three quarters of fiscal ~~2017 was $0.3~~2019, we recognized total stock-based compensation income of $18.6 million and ~~$0.2~~expense of $16.6 million, respectively. ~~For~~Included in the total stock-based compensation for the third quarter and first three quarters of fiscal 2019 is income of $3.5 million and expense of $16.7 million, respectively, for accelerated vesting of awards related to Pinnacle integration restructuring activities, net of the impact of marking-to-market these awards based on a lower market price of Conagra common shares. In the first ~~half~~three quarters of

fiscal ~~2018,~~2020, we granted ~~0.8~~1.2 million restricted stock units at a weighted average grant date price of ~~$34.09~~$28.21 and ~~0.5~~0.6 million performance shares at a weighted average grant date price of ~~$33.82.~~

$28.41.

During the second quarter of fiscal 2019, in connection with the completion of the Pinnacle acquisition, we granted the following awards to Pinnacle employees in replacement of their unvested equity awards that were outstanding as of the closing date: (1) 2.0 million cash-settled share unit awards at a grant date fair value of $36.37 per share unit and (2) 2.3 million cash-settled stock appreciation rights with a fair value estimated at closing date using a Black-Scholes option-pricing model and a grant date price of $36.37 per share. Approximately $51.1 million of the fair value of the replacement awards granted to Pinnacle employees was attributable to pre-combination service and was included in the purchase price and established as a liability. As of February 23, 2020, the liability of the replacement awards was $5.7 million, which includes post-combination service expense, the mark-to-market of the liability, and the impact of payouts since the acquisition. Post-combination expense of approximately $1.0 million, based on the market price of shares of Conagra Brands common stock as of February 23, 2020, is expected to be recognized related to the replacement awards over the remaining post-combination service period of approximately one year.

Performance shares are granted to selected executives and other key employees with vesting contingent upon meeting various Company-wide performance goals. The performance ~~goal for one-third of the target number of performance shares~~goals for the three-year performance ~~period~~periods ending in fiscal ~~2018~~2020 (the ~~"2018~~"2020 performance period") is, fiscal 2021 (the "2021 performance period"), and fiscal 2022 (the "2022 performance period") are based on our fiscal 2016 earnings before interest, taxes, depreciation, and amortization ("EBITDA") return on capital. Another one-third of the target number of performance shares granted for the 2018 performance period is based on our fiscal 2017 EBITDA return on capital. The fiscal 2017 EBITDA return on capital target,

when set, excluded the results of Lamb Weston. The performance goal for the last one-third of the target number of performance shares granted for the 2018 performance period is based on our fiscal 2018 diluted earnings per share ("EPS") compound annual growth rate, ~~("CAGR"). In addition, for certain participants, all performance shares for the 2018 performance period are~~ subject to ~~an overarching EPS goal that must be met in each fiscal year of the 2018 performance period before any pay out can be made to such participants on the performance shares.~~

The performance goal for one-third of the target number of performance shares for the three-year performance period ending in fiscal 2019 (the "2019 performance period") is based on our fiscal 2017 EBITDA return on capital. The fiscal 2017 EBITDA return on capital target, when set, excluded the results of Lamb Weston. The performance goal for the final two-thirds of the target number of performance shares granted for the 2019 performance period is based on our diluted EPS CAGR, measured over the two-year period ending in fiscal 2019. In addition, for certain participants, all performance shares for the 2019 performance period are subject to an overarching EPS goal that must be met in each fiscal year of the 2019 performance period before any pay out can be made to such participants on the performance shares.

~~The performance goal for the three-year performance period ending in fiscal 2020 is based on our diluted EPS CAGR,~~adjustments, measured over the defined performance ~~period.~~periods. In addition, for certain participants, all performance shares for the 2020 performance period are subject to an overarching EPS goal that must be met in each fiscal year of the 2020 performance period before any pay out can be made to such participants on the performance shares.

For each of the 2020 performance period, 2021 performance period, and 2022 performance period, the awards actually earned will range from 0 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 ~~the~~our performance share plan, any shares earned will be distributed after the end of the performance period, and 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.

~~10.~~ 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. During the second quarter of fiscal 2019, we issued 77.5 million shares of our common stock out of treasury to the former shareholders of Pinnacle pursuant to the terms of the Merger Agreement. In addition, we issued 16.3 million shares of our common stock, par value $5.00 per share, in an underwritten public offering in connection with the financing of the Pinnacle acquisition, with net proceeds of $555.7 million (see Note 2).

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 23, 2020		February 24, 2019		February 23, 2020		February 24, 2019
Net income attributable to Conagra Brands, Inc. common stockholders:
Income from continuing operations attributable to Conagra Brands, Inc. common stockholders	$	204.4	$	242.0	$	638.7	$	553.7
Loss from discontinued operations, net of tax, attributable to Conagra Brands, Inc. common stockholders		—		—		—		(1.9	)
Net income attributable to Conagra Brands, Inc. common stockholders	$	204.4	$	242.0	$	638.7	$	551.8
Weighted average shares outstanding:
Basic weighted average shares outstanding		487.4		486.2		487.1		431.3
Add: Dilutive effect of stock options, restricted stock unit awards, and other dilutive securities		1.4		1.2		1.3		1.8
Diluted weighted average shares outstanding		488.8		487.4		488.4		433.1

Thirteen weeks ended Twenty-six weeks ended
November 26,
2017 November 27,
2016 November 26,
2017 November 27,
2016
Net income available to Conagra Brands, Inc. common stockholders:
Income from continuing operations attributable to Conagra Brands, Inc. common stockholders $ 223.1
$ 113.7
$ 375.9
$ 212.1
Income from discontinued operations, net of tax, attributable to Conagra Brands, Inc. common stockholders 0.4
8.4
0.1
96.2
Net income attributable to Conagra Brands, Inc. common stockholders $ 223.5
$ 122.1
$ 376.0
$ 308.3
Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated —
0.3
—
0.8
Net income available to Conagra Brands, Inc. common stockholders $ 223.5
$ 121.8
$ 376.0
$ 307.5
Weighted average shares outstanding:
Basic weighted average shares outstanding 406.5
437.7
411.1
438.4
Add: Dilutive effect of stock options, restricted stock unit awards, and other dilutive securities 3.9
3.6
4.0
3.7
Diluted weighted average shares outstanding 410.4
441.3
415.1
442.1

For ~~both~~ the ~~second~~third quarter and first ~~half~~three quarters of fiscal ~~2018,~~2020, there were ~~1.4~~1.7 million and 1.9 million stock options outstanding, respectively, that were excluded from the computation of diluted weighted average shares because the effect was antidilutive. For the ~~second~~third quarter and first ~~half~~three quarters of fiscal ~~2017,~~2019, there were ~~1.5~~3.5 million and ~~1.1~~1.8 million stock options outstanding, respectively, that were excluded from the calculation.

~~11.~~

10. INVENTORIES

The major classes of inventories were as follows:

	February 23, 2020		May 26, 2019
Raw materials and packaging	$	274.9	$	272.9
Work in process		175.5		126.9
Finished goods		1,124.4		1,083.1
Supplies and other		71.7		66.0
Total	$	1,646.5	$	1,548.9

November 26,
2017 May 28,
2017
Raw materials and packaging $ 204.2
$ 182.1
Work in process 124.9
91.9
Finished goods 682.2
612.9
Supplies and other 47.9
47.3
Total $ 1,059.2
$ 934.2

~~12.~~

11. INCOME TAXES

Income tax expense ~~from continuing operations~~ for the ~~second~~third quarter of fiscal ~~2018~~2020 and ~~2017~~2019 was ~~$109.5~~$68.9 million and ~~$78.4~~$67.2 million, respectively. Income tax expense ~~from continuing operations~~ for the first ~~half~~three quarters of fiscal ~~2018~~2020 and ~~2017~~2019 was ~~$229.5~~$141.5 million and ~~$247.6~~$147.0 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income, ~~from continuing operations,~~ inclusive of equity method investment earnings) ~~from continuing operations~~ was ~~32.8%~~25.2% and ~~40.7%~~21.7% for the ~~second~~third quarter of fiscal ~~2018~~2020 and ~~2017,~~2019, respectively. ~~The effective tax rate from continuing operations was 37.8% and 53.8% for the first half of fiscal 2018 and 2017, respectively.~~

~~The effective tax rate in the second quarter of fiscal 2018 reflects the following:~~

an income tax benefit allowed upon the vesting/exercise of employee stock compensation awards by our employees, beyond that which is attributable to the original fair value of the awards upon the date of grant,

~~additional income tax expense related to state taxes, and~~

~~an income tax benefit related to a change in estimate of the income tax effect of undistributed foreign earnings for which the indefinite reinvestment assertion is no longer made.~~

The effective tax rate for the first ~~half~~three quarters of fiscal ~~2018~~2020 and 2019 was 18.1% and 20.9%, respectively.

The effective tax rate in the third quarter of fiscal 2020 reflects the following:

•

additional state income tax expense related to uncertain tax positions and

•

an adjustment of valuation allowance associated with the Wesson^® oil business.

The effective tax rate for the first three quarters of fiscal 2020 reflects the above-cited items, as well as the impact of benefits from the settlement of tax issues that were previously reserved, a change in deferred state tax rates due to the integration of Pinnacle activity for tax purposes, a tax planning strategy that will allow utilization of certain state attributes, state tax law changes, additional tax expense associated with non-deductible goodwill related to assets for which an impairment charge was recognized, a benefit from statute lapses on tax issues that were previously reserved, and an income tax benefit associated with a deduction of a prior year federal income tax matter.

The effective tax rate in the ~~repatriation~~third quarter of ~~cash from~~fiscal 2019 reflects the following:

•

a benefit recognized due to the non-taxability of the novation of a legacy guarantee,

•

a benefit recognized due to a reduction in the fair value of equity awards subject to limitations on deductibility that were issued to Pinnacle executives as replacement awards at the time of the acquisition, and

•

an increase to the deemed repatriation tax liability.

The effective tax rate for the first three quarters of fiscal 2019 reflects the above-cited items, as well as the impact of foreign ~~subsidiaries and the tax expense~~restructuring resulting in a benefit related to undistributed foreign earnings for which the indefinite reinvestment assertion is no longer ~~made.~~

~~The effective tax rate in the second quarter of fiscal 2017 reflects the following:~~

made, additional tax expense on the repatriation of foreign earnings, an adjustment of valuation allowance associated with ~~a change in estimate regarding~~ the ~~tax basis~~expected capital gains from the divestiture of the ~~Spicetec~~Wesson^® oil business, ~~that was sold in the first quarter of fiscal 2017, and~~

additional tax expense on non-deductible facilitative costs associated with ~~non-deductible goodwill in our Mexican business, for which an impairment charge was recognized.~~

~~The effective tax rate for~~ the ~~first half~~acquisition of ~~fiscal 2017 reflects the above-cited items, as well as the following:~~

Pinnacle, and additional income tax expense ~~associated with non-deductible goodwill sold in connection with the dispositions of the Spicetec and JM Swank businesses,~~

~~additional tax expense associated with non-deductible goodwill in our Canadian business, for which an impairment charge was recognized,~~

~~an income tax benefit for excess tax benefits allowed upon the vesting/exercise of employee stock compensation awards by our employees, beyond that which is attributable~~related to ~~the original fair value of the awards upon the date of grant, and~~

~~an income tax benefit associated with a tax planning strategy that allowed us to utilize certain~~ state ~~tax attributes.~~

taxes.

The amount of gross unrecognized tax benefits for uncertain tax positions was ~~$34.0~~$46.2 million as of ~~November 26, 2017~~February 23, 2020 and ~~$39.3~~$44.1 million as of May ~~28, 2017. There were no balances included as of either November~~ 26, ~~2017 or May 28, 2017,~~2019. Included in those amounts was $8.5 million and $1.0 million, respectively, for tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The gross unrecognized tax benefits excluded related liabilities for gross interest and penalties of ~~$7.1~~$8.1 million and ~~$6.0~~$11.7 million as of ~~November 26, 2017~~February 23, 2020 and May ~~28, 2017,~~26, 2019, respectively.

The net amount of unrecognized tax benefits at ~~November 26, 2017~~February 23, 2020 and May ~~28, 2017~~26, 2019 that, if recognized, would impact the Company's effective tax rate was ~~$25.7~~$32.4 million and ~~$31.6~~$37.3 million, respectively. Included in those amounts is ~~$6.6~~$6.7 million ~~and $15.6 million, respectively,~~ that would be reported in discontinued operations. Recognition of these tax benefits would have a favorable impact on the Company's effective tax rate.

We estimate that it is reasonably possible that the amount of gross unrecognized tax benefits will decrease by up to ~~$9.4~~$20.9 million over the next twelve months due to various federal, state, and foreign audit settlements and the expiration of statutes of limitations.

As of ~~November 26, 2017~~February 23, 2020 and May ~~28, 2017,~~26, 2019, we had a deferred tax asset of ~~$1.09 billion~~$688.9 million and ~~$1.08 billion,~~$687.1 million, respectively, that was generated from the capital loss realized on the sale of the Private Brands operations with corresponding valuation allowances of ~~$995.1~~$688.9 million and ~~$990.9~~$687.1 million, respectively, to reflect the uncertainty regarding the ultimate realization of the tax asset. During the first half of fiscal 2018, the balance of the deferred tax asset was adjusted for the impact of state law changes, realization of certain tax attributes, and the settlement of certain tax indemnity claims under the contract terms ofFederal capital loss carryforwards related to the Private Brands ~~sale.~~

~~Historically, we~~divestiture will expire in fiscal 2021.

We have not provided ~~U.S.~~any deferred taxes on ~~the cumulative~~ undistributed earnings of our foreign subsidiaries. During the first quarter of fiscal 2018, we decided to repatriate certain cash balances then held in Italy, Canada, Mexico, the Netherlands, and Luxembourg due to the timing of cash flows in connection with certain business acquisition and divestiture activity, as well as forecasted levels of short-term borrowings. We repatriated $151.3 million during the second quarter of fiscal 2018. The cash repatriation resulted in the repatriation of $115.0 million in previously undistributedDeferred taxes will be provided for earnings of ~~our foreign subsidiaries. As a result of the repatriation,~~non-U.S. affiliates and associated companies when we ~~have recognized $11.8 million of income tax expense in the first half of fiscal 2018.~~

~~In conjunction with this repatriation, we have determined~~determine that ~~additional previously undistributed~~such earnings ~~of certain foreign subsidiaries~~are no longer ~~meet the requirements for indefinite reinvestment under applicable accounting guidance and, therefore, recognized an additional $6.8 million of income tax expense in the first half of fiscal 2018.~~

An additional $2.5 million and $6.8 million of income tax expense was recognized in the second quarter and first half of fiscal 2018, respectively, primarily related to a valuation allowance on foreign tax credits generated in the current year and prior periods.

~~We continue to believe the remaining undistributed earnings of our foreign subsidiaries, after taking into account the above transactions, are~~ indefinitely reinvested and ~~therefore have not provided any additional U.S. deferred taxes.~~

~~On December 22, 2017,~~will result in a tax liability upon distribution.

In response to the ~~Tax Cuts and Jobs Act was signed into law. We~~COVID-19 outbreak, legislation concerning taxes has been passed in March 2020. While we are ~~in the process of evaluating~~still assessing the impact of the ~~recently enacted law~~legislation, we do not expect there to be a material impact to our consolidated financial statements at this time.

12. LEASES

We have operating and finance leases of certain warehouses, plants, land, office space, production and distribution equipment, automobiles, and office equipment. We determine whether an agreement is or contains a lease at lease inception. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

As most of our leases do not provide an implicit interest rate, we calculate the lease liability at lease commencement as the present value of unpaid lease payments using our estimated incremental borrowing rate. The incremental borrowing rate represents the

rate of interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease.

We have elected not to separate lease and non-lease components of an agreement for all underlying asset classes prospectively from the ASC 842 adoption date.

Any lease arrangements with an initial term of 12 months or less are not recorded on our Condensed Consolidated ~~Financial Statements. The impact is expected~~Balance Sheet. We recognize lease cost for these lease arrangements on a straight-line basis over the lease term.

Our lease terms may include options to beextend or terminate the lease. We consider these options in determining the lease term used to establish our ROU asset and lease liabilities. A limited number of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material ~~to the~~residual value guarantees or material restrictive covenants.

Leases reported in our Condensed Consolidated ~~Financial Statements.~~Balance Sheet as of February 23, 2020 were as follows:

	Operating Leases
	Balance Sheet Location	February 23, 2020
ROU assets, net	Other assets	$	221.4
Lease liabilities (current)	Other accrued liabilities		47.5
Lease liabilities (noncurrent)	Other noncurrent liabilities		217.7

	Finance Leases
	Balance Sheet Location	February 23, 2020
ROU assets, at cost	Property, plant and equipment	$	213.8
Less accumulated depreciation	Less accumulated depreciation		(51.5	)
ROU assets, net	Property, plant and equipment, net		162.3
Lease liabilities (current)	Current installments of long-term debt		20.8
Lease liabilities (noncurrent)	Senior long-term debt, excluding current installments		131.6

The components of total lease cost for the third quarter and first three quarters of fiscal 2020 were as follows:

Lease cost	Thirteen weeks ended February 23, 2020		Thirty-nine weeks ended February 23, 2020
Operating lease cost	$	14.3	$	51.1
Finance lease cost
Depreciation of leased assets		3.9		11.6
Interest on lease liabilities		2.2		6.7
Short-term lease cost		1.4		2.8
Total lease cost	$	21.8	$	72.2

We recognized accelerated operating lease cost of $9.9 million and impairments of ROU assets of $2.9 million within SG&A expenses in the first three quarters of fiscal 2020. These charges are included in the Pinnacle Integration Restructuring Plan.

The weighted-average remaining lease terms and weighted-average discount rate for our leases as of February 23, 2020 were as follows:

	Operating Leases			Finance Leases
Weighted-average remaining lease term (in years)		8.5			8.2
Weighted-average discount rate		3.62	%		5.41	%

Cash flows arising from lease transactions for the first three quarters of fiscal 2020 were as follows:

	Thirty-Nine Weeks Ended February 23, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	41.8
Operating cash outflows from finance leases		6.9
Financing cash outflows from finance leases		15.8
ROU assets obtained in exchange for new lease liabilities:
Operating leases		40.1
Finance leases		2.8

Maturities of lease liabilities by fiscal year as of February 23, 2020 were as follows:

	Operating Leases			Finance Leases			Total
2020 (remaining year)	$	14.8		$	7.1		$	21.9
2021		55.2			28.6			83.8
2022		42.0			27.2			69.2
2023		36.2			22.1			58.3
2024		27.8			17.9			45.7
Later years		138.1			90.7			228.8
Total lease payments		314.1			193.6			507.7
Less: Imputed interest		(48.9	)		(41.2	)		(90.1	)
Total lease liabilities	$	265.2		$	152.4		$	417.6

We have entered into lease agreements for certain facilities and equipment with payments totaling $9.1 million that have not yet commenced as of February 23, 2020.

A summary of non-cancelable operating lease commitments as of May 26, 2019 is as follows:

2020	$	52.1
2021		48.4
2022		38.0
2023		34.1
2024		25.6
Later years		114.4
	$	312.6

Rent expense under all operating leases was $83.5 million in fiscal 2019. This amount is inclusive of certain charges recognized at the cease use date for remaining lease payments associated with exited properties.

13. CONTINGENCIES

Litigation Matters

We are a party to ~~various environmental proceedings and~~certain litigation ~~primarily related~~matters relating to our acquisition ~~in fiscal 1991~~ of Beatrice Company ("Beatrice"). As a result of the acquisition of Beatrice and the significant pre-acquisition contingencies of the Beatrice businesses and its former subsidiaries, our condensed consolidated post-acquisition financial statements reflect liabilities associated with the estimated resolution of these contingencies. Such liabilities include various in fiscal 1991, including litigation ~~and environmental~~ proceedings related to businesses divested by Beatrice prior to our acquisition of ~~Beatrice. The litigation~~the company. These proceedings ~~include~~have included suits against a number of lead paint and pigment manufacturers, including ConAgra Grocery Products Company, LLC, a wholly owned subsidiary of the Company ("ConAgra Grocery Products")~~, and the Company~~ as alleged ~~successors~~successor to W. P. Fuller & Co., a lead paint and pigment manufacturer owned and operated by a predecessor to Beatrice from 1962 until 1967. ~~Although decisions~~These lawsuits generally seek damages for personal injury, property damage, economic loss, and governmental expenditures allegedly caused by the use of lead-based paint, and/or injunctive relief for inspection and abatement. When such lawsuits have been brought, ConAgra Grocery Products has denied liability, both on the merits of the claims and on the basis that we do not believe it to be the successor to any liability attributable to W. P. Fuller & Co. Decisions favorable to us ~~have been~~were rendered in Rhode Island, New Jersey, Wisconsin, and ~~Ohio, we~~Ohio. ConAgra Grocery Products was held liable for the abatement of a public nuisance in California, and the case was dismissed pursuant to settlement in July 2019 as discussed in the following paragraph. We remain a defendant in 1 active ~~suits~~suit in ~~Illinois and California.~~Illinois. The Illinois suit seeks ~~class-wide~~class-

wide relief for reimbursement of costs associated with the testing of lead levels in blood. We do not believe it is probable that we have incurred any liability with respect to the Illinois case, nor is it possible to estimate any potential exposure.

In California, a number of cities and counties joined in a consolidated action seeking abatement of ~~the~~an alleged public ~~nuisance.~~nuisance in the form of lead-based paint potentially present on the interior of residences, regardless of its condition. On September 23, 2013, a trial of the California case concluded in the Superior Court of California for the County of Santa Clara, and on January 27, 2014, the court entered a judgment (the "Judgment") against ConAgra Grocery Products and ~~two~~2 other defendants ordering the creation of a California abatement fund in the amount of $1.15 billion. Liability iswas joint and several. The Company appealed the Judgment, and on November 14, 2017 the California Court of Appeal for the Sixth Appellate District reversed in part, holding that the defendants were not liable to pay for abatement of homes built after 1950, but affirmed the Judgment as to homes built before ~~1951 and~~1951. The Court of Appeal remanded the case to the trial court with directions to recalculate the ~~sum~~amount of the abatement fund estimated to be ~~paid into~~necessary to cover the ~~abatement fund. The Company has~~cost of remediating pre-1951 homes, and to hold an evidentiary hearing regarding appointment of a suitable receiver. ConAgra Grocery Products and the other defendants petitioned the California Supreme Court for ~~further~~ review of the decision, which ~~the Company believes~~we believe to be an unprecedented expansion of current California law. ~~In light~~On February 14, 2018, the California Supreme Court denied the petition and declined to review the merits of the ~~unsettled nature of California public nuisance law~~case, and the ~~ongoing appeal, a loss is considered neither probable nor estimable,~~case was remanded to the trial court for further proceedings. ConAgra Grocery Products and the ~~Company has accordingly not accrued any loss related~~other defendants sought further review of certain issues from the Supreme Court of the United States, but on October 15, 2018, the Supreme Court declined to ~~this~~review the case. ~~In addition, it is not possible~~On September 4, 2018, the trial court recalculated its estimate of the amount needed to ~~estimate exposure~~remediate pre-1951 homes in the ~~remaining case~~plaintiff jurisdictions to be $409.0 million. As of July 10, 2019, the parties reached an agreement in ~~Illinois,~~principle to resolve this matter, which ~~is based~~agreement was approved by the trial court on ~~different legal theories. If ultimately necessary,~~July 24, 2019, and the ~~Company~~action against ConAgra Grocery Products was dismissed with prejudice. Pursuant to the settlement, ConAgra Grocery Products will ~~look~~pay a total of $101.7 million in 7 installments to be paid annually from fiscal 2020 through fiscal 2026. As part of the settlement, ConAgra Grocery Products has provided a guarantee of up to $15.0 million in the event co-defendant, NL Industries, Inc., defaults on its ~~insurance policies~~payment obligations.

We have accrued $11.2 million and $63.2 million, within other accrued liabilities and other noncurrent liabilities, respectively, for ~~coverage; its carriers are on notice. However, the~~this matter as of February 23, 2020. The extent of insurance coverage is uncertain and the ~~Company~~Company's carriers are on notice; however, any possible insurance recovery has not been considered for purposes of determining our liability. We cannot assure that the final resolution of ~~these~~the lead paint and pigment matters will not have a material adverse effect on ~~its~~our financial condition, results of operations, or liquidity.

The current environmental proceedings associated with Beatrice include litigation and administrative proceedings involving Beatrice's possible status as a potentially responsible party at approximately 40 Superfund, proposed Superfund, or state-equivalent sites (the "Beatrice sites"). These sites involve locations previously owned or operated by predecessors of Beatrice that used or produced petroleum, pesticides, fertilizers, dyes, inks, solvents, PCBs, acids, lead, sulfur, tannery wastes, and/or other contaminants. In the past five years, Beatrice has paid or is in the process of paying its liability share at 31 of these sites. 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 $52.8 million as of November 26, 2017, a majority of which relates to the Superfund and state-equivalent sites referenced above. During the third quarter of fiscal 2017, a final Remedial Investigation/Feasibility Study was submitted for the Southwest Properties portion of the Wells G&H Superfund site, which is one of the Beatrice sites. The U.S. Environmental Protection Agency (the "EPA") issued a Record of Decision (the "ROD") for the Southwest Properties portion of the site on September 29, 2017, and will subsequently enter into negotiations with potentially responsible parties to determine final responsibility for implementing the ROD.

~~In June 2009, an accidental explosion occurred at our manufacturing facility in Garner, North Carolina. This facility was the primary production facility for our~~ ~~Slim Jim~~^® branded meat snacks. In June 2009, the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives announced its determination that the explosion was the result of an accidental natural gas release and not a deliberate act. During the fourth quarter of fiscal 2011, we settled our property and business interruption claims related to the Garner accident with our insurance providers. During the fourth quarter of fiscal 2011, Jacobs Engineering Group Inc. ("Jacobs"), our engineer and project manager at the site, filed a declaratory judgment action against us seeking indemnity for personal injury claims brought against it as a result of the accident. During the first quarter of fiscal 2012, our motion for summary judgment was granted and the suit was dismissed without prejudice on the basis that the suit was filed prematurely. In the third quarter of fiscal 2014, Jacobs refiled its action seeking indemnity. On March 25, 2016, a Douglas County jury in Nebraska rendered a verdict in favor of Jacobs and against us in the amount of $108.9 million plus post-judgment interest. We filed our Notice of Appeal in September 2016, and the case is awaiting decision by the Nebraska Supreme Court. The appeal will be decided directly by the Nebraska Supreme Court. Although our insurance carriers have provided customary notices of reservation of their rights under the policies of insurance, we expect any ultimate exposure in this case to be limited to the applicable insurance deductible.

We are party to a number of putative class action lawsuits challenging various product claims made in the Company's product labeling. These matters include Briseno v. ConAgra Foods, Inc., in which it is alleged that the labeling for Wesson^® oils as 100% natural is false and misleading because the oils contain genetically modified plants and organisms. In February 2015, the U.S. District Court for the Central District of California granted class certification to permit plaintiffs to pursue state law claims. The Company appealed to the United States Court of Appeals for the Ninth Circuit, which affirmed class certification in January 2017. The Supreme Court of the United States ~~Supreme Court~~ declined to review the decision and the case ~~has been~~was remanded to the trial court for further proceedings. ~~While we cannot predict with certainty~~On April 4, 2019, the ~~results~~trial court granted preliminary approval of a settlement in this ~~or any other legal proceeding, we do~~matter. In the second quarter of fiscal 2020, a single objecting class member appealed the court's decision approving the settlement to the United States Court of Appeals for the Ninth Circuit. The settlement will not ~~expect this matter to have a material adverse effect on our financial condition, results of operations, or business.~~

be final until the appeal has been resolved.

We are party to ~~a number of~~ matters challenging the Company's wage and hour practices. These matters include a number of ~~putative~~ class actions consolidated under the caption Negrete v. ConAgra Foods, Inc., et al, pending in the U.S. District Court for the Central District of California, in which the plaintiffs allege a pattern of violations of California and/or federal law at several current and former Company manufacturing facilities across the State of California. While we cannot predict with certainty the results of this or any other legal proceeding, we do not expect this matter to have a material adverse effect on our financial condition, results of operations, or business.

We are party to a number of matters asserting product liability claims against the Company related to certain Pam^® and other cooking spray products. These lawsuits generally seek damages for personal injuries allegedly caused by defects in the design, manufacture, or safety warnings of the cooking spray products. We have put the Company's insurance carriers on notice. While we cannot predict with certainty the results of these or any other legal proceedings, we do not expect these matters to have a material adverse effect on our financial condition, results of operations, or business.

The Company, its directors, and several of its executive officers are defendants in several class actions alleging violations of federal securities laws. The lawsuits assert that the Company's officers made material misstatements and omissions that caused the market to have an unrealistically positive assessment of the Company's financial prospects in light of the acquisition of Pinnacle, thus causing the Company's securities to be overvalued prior to the release of the Company's consolidated financial results on December 20, 2018 for the second quarter of fiscal year 2019. The first of these lawsuits, captioned West Palm Beach Firefighters' Pension Fund v. Conagra Brands, Inc., et al., with which subsequent lawsuits alleging similar facts have been consolidated, was filed on February 22, 2019 in the U.S. District Court for the Northern District of Illinois. In addition, on May 9, 2019, a shareholder filed a derivative

action on behalf of the Company against the Company's directors captioned Klein v. Arora, et al. in the U.S. District Court for the Northern District of Illinois asserting harm to the Company due to alleged breaches of fiduciary duty and mismanagement in connection with the Pinnacle acquisition. On July 9, 2019, September 20, 2019, and March 10, 2020, the Company received three separate demands from stockholders under Delaware law to inspect the Company's books and records related to the Board of Directors' review of the Pinnacle business, acquisition, and the Company's public statements related to them. On July 22, 2019 and August 6, 2019, respectively, two additional shareholder derivative lawsuits captioned Opperman v. Connolly, et al. and Dahl v. Connolly, et al. were filed in the U.S. District Court for the Northern District of Illinois asserting similar facts and claims as the Klein v. Arora, et al. matter. On October 21, 2019, the Company received an additional demand from a stockholder under Delaware law to appoint a special committee to investigate the conduct of certain ~~limited situations,~~officers and directors in connection with the Pinnacle acquisition and the Company's public statements. We have put the Company's insurance carriers on notice of each of these securities and shareholder matters. While we cannot predict with certainty the results of these or any other legal proceedings, we do not expect these matters to have a material adverse effect on our financial condition, results of operations, or business.

Environmental Matters

We are a party to certain environmental proceedings relating to our acquisition of Beatrice in fiscal 1991. Such proceedings include proceedings related to businesses divested by Beatrice prior to our acquisition of Beatrice. The current environmental proceedings associated with Beatrice include litigation and administrative proceedings involving Beatrice's possible status as a potentially responsible party at approximately 40 Superfund, proposed Superfund, or state-equivalent sites (the "Beatrice sites"). These sites involve locations previously owned or operated by predecessors of Beatrice that used or produced petroleum, pesticides, fertilizers, dyes, inks, solvents, polycholorinated 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 $58.2 million as of February 23, 2020, a majority of which relates to the Superfund and state-equivalent sites referenced above. During the third quarter of fiscal 2017, a final Remedial Investigation/Feasibility Study was submitted for the Southwest Properties portion ("Operating Unit 4") of the Wells G&H Superfund site, which is one of the Beatrice sites. The U.S. Environmental Protection Agency ("EPA") issued a Record of Decision ("ROD") for the Southwest Properties portion of the site on September 29, 2017 and has entered into negotiations with potentially responsible parties to determine final responsibility for implementing the ROD. Additionally, in conjunction with the conclusion of the fifth Five-Year Review period for Operating Unit 1 of the Wells G&H site, which spanned from October 1, 2014 to September 30, 2019, we are negotiating with the EPA to allow us to begin testing different environmental remediation methods to improve the efficiency and effectiveness of our current cleanup efforts affecting both Operating Units 1 and 2. As a result, in the second quarter of fiscal 2020, we increased our environmental reserves by $6.6 million associated with these expected cleanup efforts.

Guarantees and Other Contingencies

We guarantee ~~obligations~~an obligation of the Lamb Weston business pursuant to a guarantee ~~arrangements~~arrangement that existed prior to the ~~Spinoff and~~spinoff of the Lamb Weston business (the "Spinoff"). The guarantee remained in place following completion of the Spinoff and it will remain in place until such guarantee ~~obligations are~~obligation is substituted for guarantees issued by Lamb Weston. ~~Such guarantee arrangements are described below.~~ Pursuant to the ~~Separation~~separation and ~~Distribution Agreement,~~distribution agreement, dated as of November 8, 2016 (the "Separation Agreement"), between us and Lamb Weston, ~~these~~this guarantee ~~arrangements are~~arrangement is deemed ~~liabilities~~a liability of Lamb Weston that ~~were~~was transferred to Lamb Weston as part of the Spinoff. Accordingly, in the event that we are required to make any payments as a result of ~~these~~this guarantee ~~arrangements,~~arrangement, Lamb Weston is obligated to indemnify us for any such liability, reduced by any insurance proceeds received by us, in accordance with the terms of the indemnification provisions under the Separation Agreement.

Lamb Weston is a party to a warehouse services agreement with a third-party warehouse provider through July 2035. Under this agreement, Lamb Weston is required to make payments for warehouse services based on the quantity of goods stored and other service factors. We have guaranteed the warehouse provider that we will make the payments required under the agreement in the event that Lamb Weston fails to perform. Minimum payments of $1.5 million per month are required under this agreement. It is not possible to determine the maximum amount of the payment obligations under this agreement. Upon completion of the Spinoff, we recognized a liability for the estimated fair value of this guarantee. As of November 26, 2017, the amount of this guarantee, recorded in other noncurrent liabilities, was $28.9 million.

Lamb Weston is a party to an agricultural sublease agreement with a third party for certain farmland through 2020 (subject, at Lamb Weston's option, to extension for ~~two~~2 additional five-year periods). Under the terms of the sublease agreement, Lamb Weston is required to make certain rental payments to the sublessor. We have guaranteed 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,~~Company, in the event that we were required to perform under the ~~guaranty,~~guarantee, would be largely mitigated.

In certain limited situations, we will guarantee an obligation of an unconsolidated entity. We ~~lease~~guarantee certain ~~office buildings~~leases resulting from ~~entities that we have determined to be variable interest entities. The lease agreements contain put options exercisable now and remain exercisable until generally 30 days after~~ the ~~end~~divestiture of the respective lease agreements, that allow the lessors to require us to purchase the buildings at the greater of original construction cost, or fair market value, without a lease in place. We have financial exposure with respect to these entitiesJM Swank business completed in the event we are required to purchase the leased buildings for a price in excess of the then current fair value under the applicable lease purchase options. We are amortizing the difference between the put price and the estimated fair value (without a lease agreement in place) of each respective property over the remaining respective lease term within selling, general and administrative expenses. As of November 26, 2017 and May 28, 2017, the estimated amount by which the put prices exceeded the fair values of the related properties was $50.7 million, of which we had accrued $10.2 million and $8.4 million, respectively. In December 2017, subsequent to the secondfirst quarter of fiscal ~~2018,~~2017. As of February 23, 2020, the remaining terms of these arrangements did not exceed three years and the maximum amount of future payments we ~~purchased~~have guaranteed was $0.7 million. In addition, we guarantee a ~~building that had been subject to a put option. We will recognize a net loss~~lease resulting from an exited facility. As of ~~approximately $13 million for~~February 23, 2020, the ~~early termination~~remaining term of this arrangement did not exceed seven years and the ~~associated lease in our third quarter~~maximum amount of ~~fiscal 2018. Also in December 2017,~~future payments we ~~made an offer to purchase another property subject to a put option. We~~ have not entered into a binding legal contract in connection with this offer. However, if our offer is accepted, we may recognize an estimated loss of $30 million to $40 million, upon closing of the transaction, for the early exit of an unfavorable lease contract. If this transaction is completed, we would have one remaining leased building subject to a put option for which the put option price exceeds the estimated fair value by $8.2 million, of which we had accrued $1.0 million, as of November 26, 2017.guaranteed was $17.1 million.

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. It~~liquidity; however, it is reasonably possible that a change of the estimates of any of the foregoing matters may occur in the future ~~and, as noted, while unlikely, the lead paint matter~~which could ~~result in~~have a material ~~final judgment.~~ adverse effect on our financial condition, results of operations, or liquidity.

Costs of legal services associated with the foregoing matters are recognized in earnings as services are provided.

14. PENSION AND POSTRETIREMENT BENEFITS

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

~~During~~

In connection with the ~~second quarter~~acquisition of ~~fiscal 2018,~~Pinnacle, we ~~approved~~now include the ~~amendment~~components of ~~our salaried~~pension and ~~non-qualified~~postretirement expense associated with the Pinnacle pension plans ~~effective as~~and post-employment benefit plan in our Condensed Consolidated Statements of ~~December 31, 2017. The amendment will freeze~~Earnings from the ~~compensation and service periods used to calculate pension benefits for active employees who participate in~~date of the ~~plans. Beginning January 1, 2018, impacted employees will not accrue additional benefit~~completion of the acquisition. These plans are frozen for future ~~service and eligible compensation received under these~~benefits. The tabular disclosures presented below are inclusive of the Pinnacle plans.

As a result of the ~~amendment,~~anticipated exit of certain facilities, during the first quarter of fiscal 2020, we ~~were required to remeasure our~~remeasured the Company's hourly pension plan ~~liability~~ as of ~~September 30, 2017.~~August 25, 2019 and recorded a pension curtailment loss of $0.6 million previously within other comprehensive income (loss). In connection with the remeasurement, we updated the effective discount rate assumption for the impacted pension plan obligation from 3.90% to ~~3.78%~~3.13%. The curtailment loss and related remeasurement ~~resulted in a net decrease to~~increased the underfunded status of the pension ~~plans~~plan by ~~$43.5~~$12.3 million with a corresponding ~~benefit~~loss within other comprehensive income (loss) ~~for~~.

During the second quarter of fiscal ~~2018. In addition,~~2020, the Company provided a voluntary lump-sum settlement offer to certain terminated vested participants in the salaried pension plan in order to reduce a portion of the pension obligation. During the third quarter of fiscal 2020, lump-sum settlement payments totaling $154.6 million were distributed from pension plan assets to such participants. As a result of the settlement, we ~~recorded charges of $3.4 million and $0.7 million reflecting the write-off of actuarial losses in excess of 10% of~~were required to remeasure our pension plan liability. In connection with the remeasurement, we updated the effective discount rate assumption for the impacted pension plan obligation from 3.89% to 3.37%, as of December 31, 2019. The settlement and related remeasurement resulted in the recognition of a settlement gain of $2.1 million, reflected in pension and postretirement non-service income, as well as a benefit to other comprehensive income (loss) totaling $79.8 million in the third quarter of fiscal 2020.

During the third quarter of fiscal 2020, we amended a certain hourly pension plan that will freeze future compensation and service periods. As a result, we remeasured the Company’s hourly pension plan liability as of January 31, 2020 and recorded a pension curtailment ~~charge, respectively.~~

loss of $0.2 million previously within other comprehensive income (loss). In connection with the remeasurement, we updated the effective discount rate assumption for the impacted pension plan from 3.86% to 2.96%. The remeasurement increased the underfunded status of the pension plan by $4.3 million with a corresponding loss within other comprehensive income (loss).

Components of pension benefit and other postretirement benefit costs ~~are (includes amounts related to discontinued operations):~~are:

	Pension Benefits
	Thirteen weeks ended						Thirty-nine weeks ended
	February 23, 2020			February 24, 2019			February 23, 2020			February 24, 2019
Service cost	$	2.8		$	2.8		$	8.4		$	8.3
Interest cost		27.8			34.0			89.8			98.7
Expected return on plan assets		(42.0	)		(44.6	)		(124.7	)		(130.1	)
Amortization of prior service cost		0.7			0.7			2.0			2.1
Curtailment loss		0.2			—			0.8			—
Settlement gain		(2.1	)		—			(2.1	)		—
Benefit cost (benefit) — Company plans		(12.6	)		(7.1	)		(25.8	)		(21.0	)
Pension benefit cost — multi-employer plans		1.5			1.4			5.0			4.9
Total benefit cost (benefit)	$	(11.1	)	$	(5.7	)	$	(20.8	)	$	(16.1	)

	Postretirement Benefits
	Thirteen weeks ended						Thirty-nine weeks ended
	February 23, 2020			February 24, 2019			February 23, 2020			February 24, 2019
Service cost	$	—		$	—		$	0.1		$	0.1
Interest cost		0.6			1.0			1.9			2.9
Amortization of prior service benefit		(0.5	)		(0.5	)		(1.5	)		(1.5	)
Recognized net actuarial gain		(1.1	)		(0.4	)		(3.4	)		(1.2	)
Curtailment gain		—			—			—			(0.6	)
Total cost (benefit)	$	(1.0	)	$	0.1		$	(2.9	)	$	(0.3	)

Pension Benefits
Thirteen weeks ended Twenty-six weeks ended
November 26,
2017 November 27,
2016 November 26,
2017 November 27,
2016
Service cost $ 13.2
$ 15.9
$ 25.9
$ 32.6
Interest cost 27.7
29.9
55.9
59.9
Expected return on plan assets (54.6 ) (53.9 ) (108.8 ) (107.7 )
Amortization of prior service cost 0.7
0.7
1.4
1.3
Recognized net actuarial loss 3.4
—
3.4
—
Special termination benefits —
1.5
—
1.5
Curtailment loss 0.7
—
0.7
—
Benefit cost (benefit) — Company plans (8.9 ) (5.9 ) (21.5 ) (12.4 )
Pension benefit cost — multi-employer plans 4.2
2.8
5.7
5.1
Total benefit cost (benefit) $ (4.7 ) $ (3.1 ) $ (15.8 ) $ (7.3 )

Postretirement Benefits
Thirteen weeks ended Twenty-six weeks ended
November 26,
2017 November 27,
2016 November 26,
2017 November 27,
2016
Service cost $ —
$ 0.1
$ —
$ 0.1
Interest cost 0.9
1.0
1.8
2.1
Amortization of prior service benefit (0.8 ) (1.6 ) (1.6 ) (3.3 )
Recognized net actuarial loss —
0.1
—
0.2
Total cost (benefit) $ 0.1
$ (0.4 ) $ 0.2
$ (0.9 )

The Company uses a split discount rate (spot-rate approach) for the U.S. plans and certain foreign plans. The spot-rate approach applies separate discount rates for each projected benefit payment in the calculation of pension service and interest cost.

The weighted-average discount rates for service and interest costs under the spot-rate approach used for pension benefit cost ~~from~~as of May ~~29, 2017 through September 30, 2017,~~27, 2019 were ~~4.19%~~4.04% and ~~3.26%~~3.51%, respectively. The weighted-average discount rates for service and interest costs subsequent to ~~September 30, 2017 are 4.04%~~January 31, 2020 were 3.74% and ~~3.24%~~3.26%, respectively.

During the ~~second~~third quarter and first ~~half~~three quarters of fiscal ~~2018,~~2020, we contributed ~~$2.3~~$3.6 million and ~~$6.1~~$11.0 million, respectively, to our pension plans and contributed ~~$3.0~~$2.2 million and ~~$6.9~~$4.2 million, respectively, to our other postretirement plans. Based upon the current funded status of the plans and the current interest rate environment, we anticipate making further contributions of approximately ~~$6.8~~$3.2 million to our pension plans for the remainder of fiscal ~~2018.~~2020. We anticipate making further contributions of approximately ~~$11.8~~$6.6 million to our other postretirement plans during the remainder of fiscal ~~2018.~~2020. These estimates are based on ERISA guidelines, current tax laws, plan asset performance, and liability assumptions, which are subject to change.

During the second quarter of fiscal 2018, we recorded an expense of $2.1 million related to our expected incurrence of certain multi-employer pension plan withdrawal costs. This expense has been included in restructuring activities.

15. STOCKHOLDERS' EQUITY

The following table presents a reconciliation of our stockholders' equity accounts for the ~~twenty-six~~thirty-nine weeks ended~~November 26, 2017~~:

February 23, 2020:

Conagra Brands, Inc. Stockholders' Equity

Common
Shares

Common
Stock

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Treasury
Stock

Noncontrolling
Interests

Total
Equity
Balance at May 28, 2017 567.9
$ 2,839.7
$ 1,171.9
$ 4,247.0
$ (212.9 ) $ (4,054.9 ) $ 87.0
$ 4,077.8
Stock option and incentive plans (5.1 ) 0.2
27.0
22.1
Spinoff of Lamb Weston 15.5
15.5
Currency translation adjustment, net 19.9

19.9
Repurchase of common shares (580.0 ) (580.0 )
Unrealized gain on securities 0.4
0.4
Derivative adjustment, net 0.7
0.7
Activities of noncontrolling interests 1.8
1.8
Pension and postretirement healthcare benefits 26.7
26.7
Dividends declared on common stock; $0.425 per share (174.4 ) (174.4 )
Net income attributable to Conagra Brands, Inc. 376.0
376.0
Balance at November 26, 2017 567.9
$ 2,839.7
$ 1,166.8
$ 4,464.3
$ (165.2 ) $ (4,607.9 ) $ 88.8
$ 3,786.5

On November 9, 2016, we completed the Spinoff of the Lamb Weston business. During the first half of fiscal 2018, the income tax basis of certain Lamb Weston assets and liabilities were finalized. The adjustment to Retained Earnings was recorded to reflect the adjustment to deferred income taxes.

	Conagra Brands, Inc. Stockholders' Equity
	Common Shares		Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Noncontrolling Interests			Total Equity
Balance at May 26, 2019		584.2	$	2,921.2	$	2,286.0		$	5,047.9		$	(110.3	)	$	(2,760.2	)	$	79.1		$	7,463.7
Stock option and incentive plans						(8.5	)		(0.3	)					16.0			(0.2	)		7.0
Currency translation adjustment, net												(8.9	)					(2.7	)		(11.6	)
Derivative adjustment, net												(1.8	)								(1.8	)
Activities of noncontrolling interests																	0.5				0.5
Pension and postretirement healthcare benefits												(11.4	)								(11.4	)
Dividends declared on common stock; $0.2125 per share									(103.4	)											(103.4	)
Net income attributable to Conagra Brands, Inc.								173.8													173.8
Balance at August 25, 2019		584.2	$	2,921.2	$	2,277.5		$	5,118.0		$	(132.4	)	$	(2,744.2	)	$	76.7		$	7,516.8
Stock option and incentive plans						9.4			(0.4	)					4.5						13.5
Currency translation adjustment, net												3.5									3.5
Derivative adjustment, net												(1.4	)								(1.4	)
Activities of noncontrolling interests																		1.8			1.8
Pension and postretirement healthcare benefits												(0.7	)								(0.7	)
Dividends declared on common stock; $0.2125 per share									(103.4	)											(103.4	)
Net income attributable to Conagra Brands, Inc.									260.5												260.5
Balance at November 24, 2019		584.2	$	2,921.2	$	2,286.9		$	5,274.7		$	(131.0	)	$	(2,739.7	)	$	78.5		$	7,690.6
Stock option and incentive plans						6.1			(0.3	)					7.3		0.2				13.3
Currency translation adjustment, net												3.9						(0.1	)		3.8
Derivative adjustment, net												(0.9	)								(0.9	)
Activities of noncontrolling interests																		0.3			0.3
Pension and postretirement healthcare benefits												56.0									56.0
Dividends declared on common stock; $0.2125 per share									(103.6	)											(103.6	)
Net income attributable to Conagra Brands, Inc.									204.4												204.4
Balance at February 23, 2020		584.2	$	2,921.2	$	2,293.0		$	5,375.2		$	(72.0	)	$	(2,732.4	)	$	78.9		$	7,863.9

The following table presents a reconciliation of our stockholders' equity accounts for the thirty-nine weeks ended February 24, 2019:

	Conagra Brands, Inc. Stockholders' Equity
	Common Shares		Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Noncontrolling Interests			Total Equity
Balance at May 27, 2018		567.9	$	2,839.7	$	1,180.0		$	4,744.9		$	(110.5	)	$	(4,977.9	)	$	80.4		$	3,756.6
Stock option and incentive plans						(14.1	)		0.5						23.3			0.1			9.8
Adoption of ASU 2016-01									0.6			(0.6	)								—
Adoption of ASU 2014-09									0.5												0.5
Currency translation adjustment, net												(0.7	)					(2.3	)		(3.0	)
Derivative adjustment, net												(43.4	)								(43.4	)
Activities of noncontrolling interests						(0.3	)											0.3			—
Pension and postretirement healthcare benefits												(0.5	)								(0.5	)
Dividends declared on common stock; $0.2125 per share									(83.2	)											(83.2	)
Net income attributable to Conagra Brands, Inc.									178.2												178.2
Balance at August 26, 2018		567.9	$	2,839.7	$	1,165.6		$	4,841.5		$	(155.7	)	$	(4,954.6	)	$	78.5		$	3,815.0
Stock option and incentive plans						2.2			0.1						3.7						6.0
Currency translation adjustment, net												(14.8	)					(0.9	)		(15.7	)
Issuance of treasury shares						638.2									2,178.1						2,816.3
Issuance of common stock		16.3		81.5		474.2															555.7
Derivative adjustment, net												79.2									79.2
Activities of noncontrolling interests						0.6												1.6			2.2
Pension and postretirement healthcare benefits												(0.2	)								(0.2	)
Dividends declared on common stock; $0.2125 per share									(86.8	)											(86.8	)
Net income attributable to Conagra Brands, Inc.									131.6												131.6
Balance at November 25, 2018		584.2	$	2,921.2	$	2,280.8		$	4,886.4		$	(91.5	)	$	(2,772.8	)	$	79.2		$	7,303.3
Stock option and incentive plans						(3.9	)		0.1						7.8						4.0
Currency translation adjustment, net												7.9						(0.5	)		7.4
Derivative adjustment, net												(2.0	)								(2.0	)
Activities of noncontrolling interests						0.3												(0.2	)		0.1
Pension and postretirement healthcare benefits												(0.1	)								(0.1	)
Dividends declared on common stock; $0.2125 per share									(103.2	)											(103.2	)
Net income attributable to Conagra Brands, Inc.									242.0												242.0
Balance at February 24, 2019		584.2	$	2,921.2	$	2,277.2		$	5,025.3		$	(85.7	)	$	(2,765.0	)	$	78.5		$	7,451.5

16. FAIR VALUE MEASUREMENTS

FASB guidance establishes a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The three levels of inputs used to measure fair value are as follows:

Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities,

Level 2 — Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets, and

Level 3 — Unobservable inputs reflecting our own assumptions and best estimate of what inputs market participants would use in pricing the asset or liability.

The fair values of our Level 2 derivative instruments were determined using valuation models that use market observable inputs including interest rate curves and both forward and spot prices for currencies and commodities. Derivative assets and liabilities included in Level 2 primarily represent commodity and foreign currency option and forward ~~contracts.~~

contracts and cross-currency swaps.

The following table presents our financial assets and liabilities measured at fair value on a recurring basis, based upon the level within the fair value hierarchy in which the fair value measurements fall, as of ~~November 26, 2017~~:February 23, 2020:

	Level 1		Level 2		Level 3		Net Value
Assets:
Derivative assets	$	2.5	$	—	$	—	$	2.5
Marketable securities		10.9		—		—		10.9
Deferred compensation assets		9.2		—		—		9.2
Total assets	$	22.6	$	—	$	—	$	22.6
Liabilities:
Derivative liabilities	$	—	$	1.9	$	—	$	1.9
Deferred compensation liabilities		71.6		—		—		71.6
Total liabilities	$	71.6	$	1.9	$	—	$	73.5

Level 1 Level 2 Level 3 Net Value
Assets:
Derivative assets $ 3.3
$ 0.9
$ —
$ 4.2
Available-for-sale securities 4.3
—
—
4.3
Total assets $ 7.6
$ 0.9
$ —
$ 8.5
Liabilities:
Derivative liabilities $ —
$ 2.0
$ —
$ 2.0
Deferred compensation liabilities 53.7
—
—
53.7
Total liabilities $ 53.7
$ 2.0
$ —
$ 55.7

	Level 1		Level 2		Level 3		Net Value
Assets:
Derivative assets	$	3.0	$	2.9	$	—	$	5.9
Marketable securities		15.7		—		—		15.7
Deferred compensation assets		10.7		—		—		10.7
Total assets	$	29.4	$	2.9	$	—	$	32.3
Liabilities:
Derivative liabilities	$	—	$	1.4	$	—	$	1.4
Deferred compensation liabilities		70.4		—		—		70.4
Total liabilities	$	70.4	$	1.4	$	—	$	71.8

Level 1 Level 2 Level 3 Net Value
Assets:
Derivative assets $ 2.0
$ 0.3
$ —
$ 2.3
Available-for-sale securities 3.5
—
—
3.5
Total assets $ 5.5
$ 0.3
$ —
$ 5.8
Liabilities:
Derivative liabilities $ —
$ 1.3
$ —
$ 1.3
Deferred compensation liabilities 47.2
—
—
47.2
Total liabilities $ 47.2
$ 1.3
$ —
$ 48.5

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

basis using Level 3 inputs.

In the ~~first~~third quarter of fiscal ~~2018, a charge~~2020, we recognized charges of ~~$4.7~~$3.8 million ~~was recognized~~ in the ~~Corporate~~Refrigerated & Frozen segment for the impairment of certain long-lived assets. The impairment was measured based upon the estimated sales price of the assets.

In the ~~second quarter and~~ first half of fiscal ~~2017,~~2020, we recognized ~~goodwill impairment~~ charges ~~in the International segment~~ of ~~$43.9~~$54.4 million and ~~$183.1 million, respectively. See Note 7 for discussion of the methodology employed to measure this impairment. We also recognized an impairment of an indefinite-lived brand totaling $24.4~~$27.6 million in the ~~International segment~~Grocery & Snacks and Refrigerated & Frozen segments, respectively, for the impairment of certain long-lived assets. The impairments were measured based upon the estimated sales price of the assets held for sale.

In the first half of fiscal 2020, we recognized charges of $2.9 million in general corporate expenses related to the impairments of ROU assets. The impairments were measured based upon a discounted cash flow approach.

In the first quarter of fiscal ~~2017.~~2020, we recognized charges for the impairment of certain indefinite-lived brands. The fair ~~value~~values of ~~the brand was~~these brands were estimated using the ~~"Relief From Royalty" method.~~"relief from royalty" method (See Note 6). Impairments in our Grocery & Snacks and Refrigerated & Frozen segments totaled $3.5 million and $15.8 million, respectively.

In the third quarter and first three quarters of fiscal 2019, we recognized charges of $0.3 million and $1.6 million, respectively, in general corporate expenses for the impairment of certain long-lived assets. The impairments were measured based upon the estimated sales price of the assets.

The carrying amount of long-term debt (including current installments) was ~~$3.46~~$10.02 billion and $10.68 billion as of ~~November~~February 23, 2020 and May 26, ~~2017~~ ~~and $2.97 billion as of~~ ~~May 28, 2017~~.2019, respectively. Based on current market rates, the fair value of this debt (level 2 liabilities) at ~~November~~February 23, 2020 and May 26, ~~2017~~ ~~and~~ ~~May 28, 2017~~,2019, was estimated at ~~$3.80~~$11.39 billion and ~~$3.32~~$11.24 billion, respectively.

17. BUSINESS SEGMENTS AND RELATED INFORMATION

In the first quarter of fiscal 2020, we reorganized our reporting segments to incorporate the Pinnacle business into our legacy reporting segments in order to better reflect how the business is now being managed. We now reflect our results of operations in ~~five~~4 reporting segments: Grocery & Snacks, Refrigerated & Frozen, International, ~~Foodservice,~~ and ~~Commercial.~~

Foodservice. Prior periods have been reclassified to conform to the revised segment presentation.

The Grocery & Snacks reporting segment principally includes branded, shelf-stable food products sold in various retail channels in the United States.

The Refrigerated & Frozen reporting segment includes branded, ~~temperature controlled~~temperature-controlled food products sold in various retail channels in the United States.

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

The Foodservice reporting segment includes branded and customized food products, including meals, entrees, sauces and a variety of custom-manufactured culinary products packaged for sale to restaurants and other foodservice establishments primarily in the United States.

The Commercial reporting segment included commercially branded and private label food and ingredients, which were sold primarily to commercial, restaurant, foodservice, food manufacturing, and industrial customers. The segment's primary food items included a variety of vegetable, spice, and frozen bakery goods, which were sold under brands such as ~~Spicetec Flavors & Seasonings~~^®~~. The Spicetec and JM Swank businesses were sold in the first quarter of fiscal 2017.~~

We do not aggregate operating segments when determining our reporting segments.

~~Intersegment sales have been recorded at amounts approximating market.~~

Operating profit for each of the segments is based on net sales less all identifiable operating expenses. General corporate expense, net interest expense, and income taxes have been excluded from segment operations.

	Thirteen weeks ended						Thirty-nine weeks ended
	February 23, 2020			February 24, 2019			February 23, 2020			February 24, 2019
Net sales
Grocery & Snacks	$	1,022.9		$	1,129.8		$	3,143.0		$	2,901.0
Refrigerated & Frozen		1,076.8			1,094.3			3,204.2			2,636.2
International		220.9			228.3			659.6			640.4
Foodservice		234.4			254.7			759.7			747.6
Total net sales	$	2,555.0		$	2,707.1		$	7,766.5		$	6,925.2
Operating profit
Grocery & Snacks	$	199.4		$	225.0		$	614.8		$	623.2
Refrigerated & Frozen		190.7			189.1			533.7			441.4
International		22.3			29.9			73.5			89.7
Foodservice		27.2			36.8			96.6			98.8
Total operating profit	$	439.6		$	480.8		$	1,318.6		$	1,253.1
Equity method investment earnings		10.4			12.7			50.3			66.6
General corporate expense		75.1			62.6			262.3			386.8
Pension and postretirement non-service income		(16.4	)		(9.8	)		(37.2	)		(29.7	)
Interest expense, net		117.7			130.9			361.8			260.5
Income tax expense		68.9			67.2			141.5			147.0
Income from continuing operations	$	204.7		$	242.6		$	640.5		$	555.1
Less: Net income attributable to noncontrolling interests		0.3			0.6			1.8			1.4
Income from continuing operations attributable to Conagra Brands, Inc.	$	204.4		$	242.0		$	638.7		$	553.7

The following table presents further disaggregation of our net sales:

	Thirteen weeks ended				Thirty-nine weeks ended
	February 23, 2020		February 24, 2019		February 23, 2020		February 24, 2019
Frozen		910.3		899.0		2,600.6		2,053.4
Other shelf-stable		639.1		723.5		1,921.0		1,810.6
Snacks		383.8		406.3		1,222.0		1,090.4
Foodservice		234.4		254.7		759.7		747.6
International		220.9		228.3		659.6		640.4
Refrigerated		166.5		195.3		603.6		582.8
Total net sales	$	2,555.0	$	2,707.1	$	7,766.5	$	6,925.2

Thirteen weeks ended Twenty-six weeks ended
November 26,
2017 November 27,
2016 November 26,
2017 November 27,
2016
Net sales
Grocery & Snacks $ 900.4
$ 853.2
$ 1,646.2
$ 1,610.4
Refrigerated & Frozen 758.1
740.7
1,373.8
1,345.3
International 220.3
211.4
411.2
406.1
Foodservice 294.6
283.1
546.4
551.1
Commercial —
—
—
71.1
Total net sales $ 2,173.4
$ 2,088.4
$ 3,977.6
$ 3,984.0
Operating profit
Grocery & Snacks $ 199.8
$ 220.2
$ 376.0
$ 400.7
Refrigerated & Frozen 128.5
118.0
230.4
210.2
International 20.2
(26.7 ) 39.1
(175.9 )
Foodservice 47.4
31.9
70.6
53.6
Commercial —
(0.5 ) —
202.8
Total operating profit $ 395.9
$ 342.9
$ 716.1
$ 691.4
Equity method investment earnings 20.6
17.2
50.6
30.3
General corporate expense 44.9
113.3
85.1
148.9
Interest expense, net 38.0
54.1
74.4
112.3
Income tax expense 109.5
78.4
229.5
247.6
Income from continuing operations $ 224.1
$ 114.3
$ 377.7
$ 212.9
Less: Net income attributable to noncontrolling interests of continuing operations 1.0
0.6
1.8
0.8
Income from continuing operations attributable to Conagra Brands, Inc. $ 223.1
$ 113.7
$ 375.9
$ 212.1

Presentation of Derivative Gains (Losses) for Economic Hedges of Forecasted Cash Flows in Segment Results

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

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

	Thirteen weeks ended						Thirty-nine weeks ended
	February 23, 2020			February 24, 2019			February 23, 2020			February 24, 2019
Gross derivative gains (losses) incurred	$	(5.7	)	$	0.8		$	(12.5	)	$	(3.4	)
Less: Net derivative gains (losses) allocated to reporting segments		(1.9	)		1.0			(3.3	)		0.4
Net derivative losses recognized in general corporate expenses	$	(3.8	)	$	(0.2	)	$	(9.2	)	$	(3.8	)
Net derivative losses allocated to Grocery & Snacks	$	(0.9	)	$	—		$	(1.5	)	$	(1.0	)
Net derivative losses allocated to Refrigerated & Frozen		—			(0.2	)		(0.7	)		(0.7	)
Net derivative gains (losses) allocated to International		(0.8	)		1.3			(1.1	)		2.4
Net derivative losses allocated to Foodservice		(0.2	)		(0.1	)		—			(0.3	)
Net derivative gains (losses) included in segment operating profit	$	(1.9	)	$	1.0		$	(3.3	)	$	0.4

Thirteen weeks ended Twenty-six weeks ended
November 26,
2017 November 27,
2016 November 26,
2017 November 27,
2016
Net derivative gains (losses) incurred $ 3.0
$ 3.0
$ (4.4 ) $ 2.7
Less: Net derivative gains (losses) allocated to reporting segments (4.1 ) 3.8
(5.5 ) 2.8
Net derivative gains (losses) recognized in general corporate expenses $ 7.1
$ (0.8 ) $ 1.1
$ (0.1 )
Net derivative gains (losses) allocated to Grocery & Snacks $ (0.4 ) $ 2.4
$ (1.0 ) $ 2.0
Net derivative gains allocated to Refrigerated & Frozen 0.1
0.7
0.1
0.5
Net derivative gains (losses) allocated to International (3.7 ) 0.2
(4.4 ) 0.2
Net derivative gains (losses) allocated to Foodservice (0.1 ) 0.5
(0.2 ) 0.2
Net derivative losses allocated to Commercial —
—
—
(0.1 )
Net derivative gains (losses) included in segment operating profit $ (4.1 ) $ 3.8
$ (5.5 ) $ 2.8

As of ~~November 26, 2017,~~February 23, 2020, the cumulative amount of net derivative losses from economic hedges that had been recognized in general corporate expenses and not yet allocated to reporting segments was ~~$1.9~~$7.8 million. This amount reflected net losses of ~~$0.6~~$8.0 million incurred during the ~~twenty-six~~thirty-nine weeks ended ~~November 26, 2017, as well as~~February 23, 2020 and net ~~losses~~gains of ~~$1.3~~$0.2 million incurred prior to fiscal ~~2018.~~2020. Based on our forecasts of the timing of recognition of the underlying hedged items, we expect to reclassify to segment operating results losses of ~~$1.8~~$3.9 million in fiscal ~~2018~~2020 and losses of ~~$0.1~~$3.9 million in fiscal ~~2019~~2021 and thereafter.

Assets by Segment

The majority of our manufacturing assets are shared across multiple reporting segments. Output from these facilities used by each reporting segment can change over time. Also, working capital balances are not tracked by reporting segment. Therefore, it is impracticable to allocate those assets to the reporting segments, as well as disclose total assets by segment. Total depreciation expense was ~~$55.6~~$84.2 million and ~~$111.7~~$247.6 million for the ~~second~~third quarter and first ~~half~~three quarters of fiscal ~~2018,~~2020, respectively, and ~~$58.2~~$77.4 million and ~~$117.0~~$198.6 million for the ~~second~~third quarter and first ~~half~~three quarters of fiscal ~~2017,~~and 2019, respectively.

Other Information

Our operations are principally in the United States. With respect to operations outside of the United States, no single foreign country or geographic region was significant with respect to consolidated operations for the third quarter and first three quarters of fiscal 2020 and 2019. Foreign net sales, including sales by domestic segments to customers located outside of the United States, were

approximately $228.0 million and $237.5 million in the third quarter of fiscal 2020 and 2019, respectively. Our foreign net sales during the first three quarters of fiscal 2020 and 2019 were approximately $675.9 million and $683.1 million, respectively. Our long-lived assets located outside of the United States are not significant.

Our largest customer, ~~Wal-Mart Stores,~~Walmart, Inc. and its affiliates, accounted for approximately ~~24%~~27% of consolidated net sales in ~~each~~the third quarter of both fiscal 2020 and 2019 and approximately 26% in the ~~second quarter~~first three quarters of both fiscal 2020 and ~~first half of fiscal 2018 and 2017,~~2019, primarily in the Grocery & Snacks and Refrigerated & Frozen segments.

~~Wal-Mart Stores,~~

Walmart, Inc. and its affiliates accounted for approximately ~~28% and 26%~~33% of consolidated net receivables as of ~~November~~February 23, 2020 and approximately 30% as of May 26, ~~2017 and May 28, 2017, respectively, primarily in the Grocery & Snacks and Refrigerated & Frozen segments.~~

2019.

We offer certain suppliers access to a third-party service that allows them to view our scheduled payments online. The ~~third party~~third-party service also allows suppliers to finance advances on our scheduled payments at the sole discretion of the supplier and the third party. We have no economic interest in these financing arrangements and no direct relationship with the suppliers, the third party, or any financial institutions concerning this service. All of our accounts payable remain as obligations to our suppliers as stated in our supplier agreements. As of ~~November 26, 2017, $68.7~~February 23, 2020, $223.9 million of our total accounts payable is payable to suppliers who utilize this third-party service.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

The information contained in this report includes forward-looking statements within the meaning of the federal securities laws. Examples of forward-looking statements include statements regarding our expected future financial performance or position, results of operations, business strategy, plans and objectives of management for future operations, and other statements that are not historical facts. You can identify forward-looking statements by their use of forward-looking words, such as "may", "will", "anticipate", "expect", "believe", "estimate", "intend", "plan", "should", "seek", or comparable terms.

Readers of this report should understand that these forward-looking statements are not guarantees of performance or results. Forward-looking statements provide our current expectations and beliefs concerning future events and are subject to risks, uncertainties, and factors relating to our business and operations, all of which are difficult to predict and could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements. ~~Such~~These risks, uncertainties, and factors include, among other things: ~~changes in federal~~the risk that the cost savings and ~~state tax laws, including~~any other synergies from the ~~recently enacted U.S. tax reform legislation;~~acquisition of Pinnacle Foods Inc. (the "Pinnacle acquisition") may not be fully realized or may take longer to realize than expected; the risk that the Pinnacle acquisition may not be accretive within the expected timeframe or to the extent anticipated; the risks that the Pinnacle acquisition and related integration will create disruption to the Company and its management and impede the achievement of business plans; the risk that the Pinnacle acquisition will negatively impact the ability to retain and ~~timing~~hire key personnel and maintain relationships with customers, suppliers, and other third parties; risks related to ~~obtain required regulatory approvals and satisfy other closing conditions for the pending~~ ~~Wesson~~^® ~~oil divestiture and the pending acquisition of the~~ ~~Sandwich Bros. of Wisconsin~~^® ~~business;~~our ability to successfully address Pinnacle's business challenges; risks related to our ability to achieve the intended benefits of other recent acquisitions and ~~divestitures, including the recent Spinoff (as defined below) of our Lamb Weston business, the recent acquisition of Angie’s Artisan Treats, LLC, the proposed divestiture of the~~ ~~Wesson~~^® ~~oil business, and the proposed acquisition of the~~ ~~Sandwich Bros. of Wisconsin~~^® ~~business;~~divestitures; risks associated with general economic and industry conditions; risks associated with our ability to successfully execute our long-term value creation ~~strategy;~~strategies, including those in place for specific brands at Pinnacle before the Pinnacle acquisition; risks related to our ability to deleverage on currently anticipated timelines, and to continue to access ~~capital;~~capital on acceptable terms or at all; risks related to our ability to execute ~~our~~ operating and restructuring plans and achieve ~~our~~ targeted operating efficiencies from cost-saving initiatives, related to the Pinnacle acquisition and otherwise, and to benefit from trade optimization ~~programs;~~programs, related to the Pinnacle acquisition and otherwise; risks related to the effectiveness of our hedging activities and ~~our~~ ability to respond to volatility in commodities; risks related to the Company's competitive environment and related market conditions; risks related to our ability to respond to changing consumer preferences and the success of ~~our~~its innovation and marketing investments; risks related to the ultimate impact of any product recalls and litigation, including litigation related to the lead paint and pigment ~~matters;~~matters, as well as any securities litigation, including securities class action lawsuits; risk associated with actions of governments and regulatory ~~factors affecting~~bodies that affect our ~~businesses;~~businesses, including the ultimate impact of new or revised regulations or interpretations; risks related to the impact of the recent coronavirus (COVID-19) outbreak on our business, suppliers, consumers, customers and employees; risks related to the availability and prices of raw materials, including any negative effects caused by inflation, weather conditions, or ~~weather conditions;~~health pandemics; disruptions or inefficiencies in our supply chain and/or operations, including from the recent COVID-19 outbreak; risks and uncertainties associated with intangible assets, including any future goodwill or intangible assets impairment ~~charges;~~charges, related to the Pinnacle acquisition or otherwise; the costs, disruption, and diversion of management's attention ~~associated with campaigns commenced by activist investors;~~due to the integration of the Pinnacle acquisition; and other risks described in our ~~Annual Report on Form 10-K and other~~ reports ~~we file~~filed from time to time with the Securities and Exchange Commission (the "SEC"). We caution readers not to place undue reliance on ~~these~~any forward-looking statements included in this report, which speak only as of the date of this report. We undertake no responsibility to update these ~~statements.~~

statements, except as required by law.

The discussion that follows should be read together with the unaudited Condensed Consolidated Financial Statements and related notes contained in this report and with the financial statements, related notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended May ~~28, 2017~~26, 2019 and subsequent filings with the SEC. Results for the ~~second~~third quarter of fiscal ~~2018~~2020 are not necessarily indicative of results that may be attained in the future.

~~Fiscal 2018 Second Quarter Executive Overview~~

EXECUTIVE OVERVIEW

Conagra Brands, Inc. (the "Company", "Conagra Brands", "we", "us", or "our"), headquartered in Chicago, is one of North America's leading branded food companies. Guided by an entrepreneurial spirit, the Company combines a rich heritage of making great food with a sharpened focus on innovation. The Company's portfolio is evolving to satisfy people's changing food preferences. Its iconic brands such as Birds Eye^®, Marie Callender's^®, ~~Reddi-wip~~Banquet^®, ~~Hunt's~~Healthy Choice^®, ~~Healthy Choice~~Slim Jim^®, ~~Slim Jim~~Reddi-wip^®, and ~~Orville Redenbacher's~~Vlasic^®, as well as emerging brands, including ~~Alexia~~Angie's^®, ~~Angie's~~ BOOMCHICKAPOP^®~~BOOMCHICKAPOP~~, Duke's^®, ~~Blake's~~Earth Balance^®, ~~Duke's~~Gardein^®,and Frontera^®, offer choices for every occasion.

Fiscal 2019 Pinnacle Acquisition

On ~~November 9, 2016,~~October 26, 2018, we completed our acquisition of Pinnacle Foods Inc ("Pinnacle"), a branded packaged foods company specializing in shelf-stable and frozen foods. The total amount of consideration paid in connection with the ~~spinoff~~acquisition was approximately $8.03 billion, consisting of ~~Lamb Weston Holdings, Inc. ("Lamb Weston") through a distribution of 100% of our interest in Lamb Weston to holders, as of November 1, 2016, of outstanding~~cash and shares of our stock, as described in more detail in the section entitled "Acquisitions" below.

In connection with the Pinnacle acquisition, we issued approximately $8.33 billion of long-term debt and received cash proceeds of $575.0 million ($555.7 million net of related fees) from the issuance of common stock ~~(the "Spinoff"). The transaction effecting this change was structured as a tax-free spinoff.~~

~~The results of operations~~in an underwritten public offering. We used such proceeds for the ~~Lamb Weston business have been reclassified~~payment of the cash portion of the Merger Consideration (as defined below), the repayment of Pinnacle debt acquired, the refinancing of certain Conagra Brands debt, and the payment of related fees and expenses.

The integration of Pinnacle is continuing and on-track. We expect to ~~results~~achieve cost synergies of ~~discontinued operations for all periods prior to~~$305 million per year when the ~~Spinoff.~~

integration is concluded.

In the first quarter of fiscal ~~2017,~~2020, we ~~completed~~reorganized our reporting segments to incorporate the ~~sales of~~Pinnacle operations into our ~~Spicetec Flavors & Seasonings~~legacy reporting segments in order to better reflect how the business ~~("Spicetec") and our JM Swank business for combined proceeds of $489.1 million. The results of operations of Spicetec and JM Swank are included in~~is now being managed. Prior periods have been reclassified to conform to the ~~Commercial segment.~~

revised segment presentation.

Fiscal 2020 Third Quarter Results

In the ~~second~~third quarter of fiscal ~~2018, earnings~~2020, results reflected a decrease in net sales, including the impact of ~~increased sales volumes, primarily~~recent acquisitions, with organic (excludes the ~~result~~impacts of ~~hurricane-related sales,~~foreign exchange and ~~a gross margin increase in the Foodservice segment,~~divested businesses, as well as ~~higher~~acquisitions until the anniversary date of the acquisition) decreases in each of our operating ~~profit primarily~~segments with the exception of a slight increase in ~~the~~our Refrigerated & Frozen segment, in each case compared to the third quarter of fiscal 2019. Overall gross profit decreased due to higher input costs, higher brand building investments with retailers, lower sales volumes, higher inventory write-offs, and ~~Foodservice segments. The improved~~lost profits due to divested businesses, which were partially offset by supply chain realized productivity and cost synergies. Overall segment operating ~~performance also reflected an increase~~profit decreased in each operating segment with the exception of our Refrigerated & Frozen segment. Corporate expenses were higher primarily due to items impacting comparability, as discussed below. There were decreased selling, general and administrative ("SG&A") expenses as a result of cost synergies and removal of costs associated with the divested businesses, offset by increased stock compensation expense. We recognized lower equity method investment earnings, ~~and~~ lower interest expense, and higher income tax expense, in each case compared to the ~~second~~third quarter of fiscal ~~2017. Overall operating performance~~2019. Excluding items impacting comparability, our effective tax rate was ~~impacted by higher-than-anticipated inflation, hurricane-related costs, and increased investments~~slightly higher to ~~drive distribution and consumer trial.~~

the third quarter of fiscal 2019.

Diluted earnings per share in the ~~second~~third quarter of fiscal ~~2018~~2020 were ~~$0.54.~~$0.42. Diluted earnings per share in the ~~second~~third quarter of fiscal ~~2017~~2019 were ~~$0.28, including~~$0.50. Diluted earnings per share were affected by lower net income, more shares outstanding in the third quarter of ~~$0.26 per diluted share from continuing operations and $0.02 per diluted share from discontinued operations. Several~~fiscal 2020 compared to the third quarter of fiscal 2019, as well as several significant items ~~affect~~affecting the comparability of year-over-year results ~~of continuing operations~~ (see "Items Impacting Comparability" below).

Items Impacting Comparability

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

Items of note impacting comparability for the ~~second~~third quarter of fiscal ~~2018~~2020 included the following:

•

charges totaling $31.8 million ($23.9 million after-tax) in connection with our restructuring plans.

~~charges totaling $7.1 million ($4.6 million after-tax) in connection with our SCAE Plan (as defined below),~~

~~charges totaling $7.8 million ($5.0 million after-tax) associated with costs incurred for acquisitions and planned divestitures,~~

~~charges totaling $4.1 million ($2.5 million after-tax) related to a remeasurement of our salaried and non-qualified pension plan liability, and~~

an income tax benefit of $5.3 million related to an adjustment to the estimated tax expense resulting from the repatriation of cash during the second quarter from foreign subsidiaries and the tax expense related to the earnings of foreign subsidiaries previously deemed to be permanently invested.

Items of note impacting comparability for the ~~second~~third quarter of fiscal ~~2017~~2019 included the following:

•

charges totaling $38.4 million ($28.7 million after-tax) in connection with our restructuring plans,

~~charges totaling $60.6 million ($39.2 million after-tax) related to the early retirement of debt,~~

•

incremental cost of goods sold of $26.9 million ($20.0 million after-tax) due to the fair value adjustment to inventory resulting from acquisition accounting for Pinnacle,

~~charges totaling $43.9 million ($40.7 million after-tax) related to the impairment of goodwill in our International segment,~~

•

a gain of $27.3 million ($27.3 million after-tax) related to the novation of a legacy guarantee,

~~charges totaling $19.8 million ($12.9~~

•

a gain of $18.6 million ($17.5 million after-tax) related to the fair value adjustment of cash settleable equity awards issued in connection with, ~~our SCAE Plan,~~ and included in the acquisition consideration of the Pinnacle acquisition, and

~~an income tax expense of $7.4 million associated with a change in a valuation allowance on a deferred tax asset due to a change in the estimated capital gain on the Spicetec divestiture.~~

•

an income tax charge of $2.5 million primarily associated with the reduction of the deemed repatriation liability.

Items of note impacting comparability for the first ~~half~~three quarters of fiscal ~~2018~~2020 included the following:

•

charges totaling $117.1 million ($90.0 million after-tax) in connection with our restructuring plans,

~~charges totaling $18.5 million ($12.0 million after-tax) in connection with our SCAE Plan,~~

•

charges totaling $59.0 million ($55.0 million after-tax) related to the impairment of businesses held for sale,

~~charges totaling $8.6 million ($5.5 million after-tax) associated with costs incurred for acquisitions and planned divestitures,~~

•

charges totaling $19.3 million ($14.8 million after-tax) related to the impairment of certain brand intangible assets,

~~charges totaling $4.1 million ($2.5 million after-tax) related to the pension remeasurement, and~~

•

a gain of $11.9 million ($8.9 million after-tax) related to a contract settlement,

an income tax charge of $22.5 million associated with the repatriation of cash during the second quarter from foreign subsidiaries and the tax expense related to the earnings of foreign subsidiaries previously deemed to be permanently invested.

•

charges totaling $6.6 million ($5.0 million after-tax) related to a legacy environmental matter, and

•

an income tax benefit of $52.5 million primarily related to the reorganization of various legacy Pinnacle legal entities and state tax planning strategies.

Items of note impacting comparability for the first ~~half~~three quarters of fiscal ~~2017~~2019 included the following:

•

charges totaling $149.9 million ($115.7 million after-tax) in connection with our restructuring plans,

~~charges totaling $207.5 million ($190.2~~

•

charges totaling $115.8 million ($92.9 million after-tax) associated with costs incurred for acquisitions and planned divestitures,

•

incremental cost of goods sold of $51.3 million ($38.2 million after-tax) due to the fair value adjustment to inventory resulting from acquisition accounting for Pinnacle,

•

charges totaling $8.9 million ($6.6 million after-tax) associated with costs incurred for integration activities related to the acquisition of Pinnacle,

•

a gain of $27.3 million ($27.3 million after-tax) related to the novation of a legacy guarantee,

•

a gain of $18.6 million ($17.5 million after-tax) related to the fair value adjustment of cash settleable equity awards issued in connection with, and included in the acquisition consideration of the Pinnacle acquisition,

•

a gain of $15.1 million ($11.6 million after-tax) related to the gain on the sale of an asset within the Ardent Mills joint venture,

•

a gain of $13.2 million ($9.6 million after-tax) from the sale of the Del Monte^® Canada business,

•

an income tax benefit of $24.3 million related to a tax adjustment of valuation allowance associated with the planned divestiture of the Wesson^® oil business.

Acquisitions

On October 26, 2018, we completed the Pinnacle acquisition. Pursuant to the ~~impairment~~Agreement and Plan of ~~goodwill~~Merger, dated as of June 26, 2018 (the "Merger Agreement"), among the Company, Pinnacle, and ~~other intangible assets in our International segment,~~

~~gains totaling $197.7 million ($67.6 million after-tax) from the divestiture~~Patriot Merger Sub Inc., a wholly-owned subsidiary of the ~~Spicetec~~Company that ceased to exist at the effective time of the merger, each outstanding share of Pinnacle common stock was converted into the right to receive $43.11 per share in cash and ~~JM Swank businesses,~~

~~charges totaling $60.6 million ($39.2 million after-tax) related to~~0.6494 shares of common stock, par value $5.00 per share, of the ~~early retirement~~Company ("Company Shares") (together, the "Merger Consideration"), with cash payable in lieu of ~~debt,~~

~~charges totaling $33.9 million ($22.0 million after-tax)~~fractional shares of Company Shares. The total amount of consideration paid in connection with the acquisition was approximately $8.03 billion and consisted of: (1) cash of $5.17 billion ($5.12 billion, net of cash acquired); (2) 77.5 million Company Shares, with an approximate value of $2.82 billion, issued out of the Company's treasury to former holders of Pinnacle stock; and (3) replacement awards issued to former Pinnacle employees representing the fair value attributable to pre-combination service of $51.1 million. Approximately $7.03 billion of the purchase price has been allocated to goodwill and approximately $3.52 billion has been allocated to brands, trademarks and other intangibles. Of the total goodwill, $236.7 million is deductible for tax purposes. Amortizable brands, trademarks and other intangibles totaled $668.7 million. Indefinite lived brands, trademarks and other intangibles totaled $2.85 billion.

Divestitures

During the third quarter of fiscal 2020, we completed the sale of our ~~SCAE Plan,~~Lender's^® bagel business for net proceeds of $33.2 million, subject to final working capital adjustments. The results of operations of the divested Lender's^® bagel business are primarily included in our Refrigerated & Frozen segment, and

~~an income tax benefit~~ to a lesser extent within our Foodservice segment, for the periods preceding the completion of ~~$7.5 million associated with a tax planning strategy that allowed us to utilize certain state tax attributes.~~

the transaction.

~~Acquisitions~~

~~Subsequent to the end of~~

During the second quarter of fiscal ~~2018,~~2020, we ~~entered into a definitive agreement~~completed the sale of our Direct Store Delivery ("DSD") Snacks business for net proceeds of $139.0 million, subject to ~~acquire the~~ ~~Sandwich Bros. of Wisconsin~~^®~~business, maker of frozen breakfast and entree flatbread pocket sandwiches, for a cash purchase price of $87 million, net of cash acquired and subject to~~final working capital adjustments. The results of operations of the divested DSD Snacks business ~~will be primarily~~are included in our Grocery & Snacks segment for the ~~Refrigerated & Frozen segment. The transaction is expected to close in early calendar year 2018, subject to customary closing conditions, including~~periods preceding the ~~receipt~~completion of ~~any applicable regulatory approvals.~~

~~In October 2017,~~the transaction.

During the fourth quarter of fiscal 2019, we ~~acquired Angie's Artisan Treats, LLC, maker~~completed the sale of ~~Angie's~~^®~~BOOMCHICKAPOP~~^® ~~ready-to-eat popcorn,~~our Italian-based frozen pasta business, Gelit, for ~~a cash purchase price of $249.6 million,~~proceeds net of cash ~~acquired and subject to~~divested of $80.1 million, including working capital adjustments. The results of operations of the divested Gelit business isare primarily included in our Refrigerated & Frozen segment for the ~~Grocery & Snacks segment.~~

~~In April 2017,~~periods preceding the completion of the transaction.

During the fourth quarter of fiscal 2019, we ~~acquired protein-based snacking businesses Thanasi Foods LLC, maker~~also completed the sale of ~~Duke's~~our Wesson^® ~~meat snacks, and BIGS LLC, maker~~ oil business for net proceeds of ~~BIGS~~$168.3 million, including working capital adjustments. The results of operations of the divested Wesson^® ~~seeds, for $217.6 million in cash, net of cash acquired. These businesses~~ oil business are primarily included in ~~the Grocery & Snacks segment.~~

~~In September 2016, we acquired the operating assets of Frontera Foods, Inc. and Red Fork LLC, including the~~ ~~Frontera~~^®, ~~Red Fork~~^®~~, and~~ ~~Salpica~~^® brands. These businesses make authentic, gourmet Mexican food products and contemporary American cooking sauces. We acquired the businesses for $108.2 million in cash, net of cash acquired. These businesses are included principally in theour Grocery & Snacks segment, and to a lesser extent within the ~~Refrigerated & Frozen~~Foodservice and International ~~segments.~~

~~Divestitures~~

segments, for the periods preceding the completion of the transaction.

During the ~~fourth~~first quarter of fiscal ~~2017,~~2019, we ~~signed an agreement to sell our~~ ~~Wesson~~^® oil business, which is part of our Grocery & Snacks segment, to The J.M. Smucker Company ("Smucker"). The transaction is subject to certain customary closing conditions, including the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). On August 28, 2017, Smucker and the Company each received a request for additional information under the HSR Act (a "second request") from the U.S. Federal Trade Commission ("FTC") in connection with the FTC's review of the transaction. The agreement forcompleted the sale of ~~the~~ ~~Wesson~~our Del Monte^® ~~oil~~ processed fruit and vegetable business ~~provides that, unless otherwise agreed upon by the Company and Smucker, if the closing~~in Canada for combined proceeds of the transaction has not occurred on or prior to March 31, 2018 because HSR approval has not been received as of such date, then either party may terminate the agreement. The parties are cooperating fully with the FTC as it conducts its review of the transaction.

~~On November 9, 2016, we completed the Spinoff of Lamb Weston.~~$32.2 million. The results of operations of the ~~Lamb Weston~~divested Del Monte^® business ~~have been reclassified to discontinued operations for all periods presented.~~

In the first quarter of fiscal 2017, we completed the sales of our Spicetec and Flavors & Seasonings business ("Spicetec") and JM Swank business for combined proceeds of $489.1 million. The results of operations of Spicetec and JM Swank are included in our International segment for the ~~Commercial segment.~~

periods preceding the completion of the transaction.

Restructuring Plans

In ~~May 2013, we announced~~December2018, our Board of Directors (the "Board") approved a restructuring and integration plan related to the ~~Supply Chain and Administrative Efficiency Plan~~ongoing integration of the recently acquired operations of Pinnacle for the purpose of achieving significant cost synergies between the companies (the ~~"SCAE~~"Pinnacle Integration Restructuring Plan"), ~~our plan~~as a result of which we expect to ~~integrate~~incur material charges for exit and ~~restructure~~disposal activities under U.S. generally accepted accounting principles. We have approved the ~~operations~~incurrence of ~~our Private Brands business, improve selling, general~~up to $360.0 million ($255.0 million of cash charges and administrative ("SG&A") effectiveness and efficiencies, and optimize our supply chain network, manufacturing assets, dry distribution centers, and mixing centers. In fiscal 2016, we announced plans to realize efficiency benefits by reducing SG&A expenses and enhancing trade spend processes and tools, which plans were included as part$105.0 million of non-cash charges) in connection with operational expenditures under the ~~SCAE~~Pinnacle Integration Restructuring Plan. Although we divested the Private Brands business, we have continued to implement the SCAE Plan, including by working to optimize our supply chain network, pursue cost reductions through our SG&A functions, enhance trade spend processes and tools, and improve productivity.

Although we remain unable to make good faith estimates relating to the entire ~~SCAE~~Pinnacle Integration Restructuring Plan, we are reporting on actions initiated through the end of the ~~second~~third quarter of fiscal ~~2018,~~2020, including the estimated amounts or range of amounts for each major type of cost expected to be incurred, and the charges that have resulted or will result in cash outflows. We have incurred or expect to incur approximately $363.8 million of charges ($257.8 million of cash charges and $106.0 million of non-cash charges) for actions identified to date under the Pinnacle Integration Restructuring Plan. In the third quarter and first three quarters of fiscal 2020, we recognized charges of $19.6 million and $63.5 million, respectively, in association with the Pinnacle Integration Restructuring Plan. In the third quarter and first three quarters of fiscal 2019, we recognized charges of $36.9 million and $139.5 million, respectively, in association with the Pinnacle Integration Restructuring Plan.

In the third quarter of fiscal 2019, we initiated a new restructuring plan for costs in connection with actions taken to improve SG&A expense effectiveness and efficiencies and to optimize our supply chain network (the "Conagra Restructuring Plan"). Although we remain unable to make good faith estimates relating to the entire Conagra Restructuring Plan, we are reporting on actions initiated through the end of the third quarter of fiscal 2020, including the estimated amounts or range of amounts for each major type of costs expected to be incurred, and the charges that have resulted or will result in cash outflows. As of ~~November 26, 2017, the Board of Directors of the Company has~~February 23, 2020, we have approved the incurrence of ~~up to $900.9~~$129.8 million ($36.9 million of ~~expenses in connection~~cash charges and $92.9 million of non-cash charges) for several projects associated with the ~~SCAE Plan, including expenses allocated for the Private Brands and Lamb Weston operations.~~Conagra Restructuring Plan. We have incurred or expect to incur ~~approximately $464.8~~$126.7 million of charges ($~~320.7~~35.2 million of cash charges and ~~$144.1~~$91.5 million of non-cash charges) for actions identified to date under the ~~SCAE Plan related to our continuing operations.~~Conagra Restructuring Plan. In the ~~second~~third quarter and first ~~half~~three quarters of fiscal ~~2018,~~2020, we recognized charges of ~~$7.1~~$11.9 million and ~~$18.5~~$52.6 million, respectively, in connection with the Conagra Restructuring Plan. In the third quarter and first three quarters of fiscal 2019, we recognized charges of $1.0 million in connection with the Conagra Restructuring Plan.

As of February 23, 2020, we have substantially completed our restructuring activities related to the Supply Chain and Administrative Efficiency Plan (the "SCAE Plan"). In the third quarter and first three quarters of fiscal 2020, we recognized charges of $0.3 million and $1.0 million, respectively, in association with the SCAE ~~Plan related to our continuing operations.~~Plan. In the ~~second~~third quarter and first ~~half~~three quarters of ~~fiscal 2017,~~2019, we recognized charges of ~~$19.8~~$3.5 million and ~~33.9~~$8.6 million, respectively, in association with the SCAE Plan. Our total pre-tax expenses for the SCAE Plan related to our continuing ~~operations.~~operations are expected to be $471.2 million ($322.0 million of cash charges and $149.2 million of non-cash charges).

COVID – 19

The impact that the recent novel coronavirus (COVID-19) pandemic will have on our consolidated results of operations is uncertain. We expect a decrease in consumer traffic in away-from-home food outlets as a result of COVID-19 across all of our major

markets which will negatively impact our net sales to ~~incur costs related~~customers in our Foodservice segment for at least the remainder of fiscal 2020. We have seen increased orders from retail customers in North America subsequent to the ~~SCAE Plan over a multi-year period.~~

end of the third quarter of fiscal 2020 in response to increased consumer demand for food at home. The increased consumer demand may reverse in the coming months as consumer purchasing behavior changes. We are unable to predict the nature and timing of when that impact may occur. We will continue to evaluate the nature and extent of the impact to our business, consolidated results of operations, financial condition, and liquidity.

SEGMENT REVIEW

In the first quarter of fiscal 2020, we reorganized our reporting segments to incorporate the Pinnacle business into our legacy reporting segments in order to better reflect how the business is now being managed. We now reflect our results of operations in ~~five~~four reporting segments: Grocery & Snacks, Refrigerated & Frozen, ~~Foodservice,~~ International, and ~~Commercial.~~

Foodservice. Prior periods have been reclassified to conform to the revised segment presentation.

Grocery & Snacks

The Grocery & Snacks reporting segment principally includes branded, shelf stable food products sold in various retail channels in the United States.

Refrigerated & Frozen

The Refrigerated & Frozen reporting segment principally includes branded, ~~temperature controlled~~temperature-controlled food products sold in various retail channels in the United States.

International

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

Foodservice

~~Commercial~~

Presentation of Derivative Gains (Losses) from Economic Hedges of Forecasted Cash Flows in Segment Results

Thirteen weeks ended Twenty-six weeks ended
($ in millions) November 26,
2017 November 27,
2016 November 26,
2017 November 27,
2016
Net derivative gains (losses) incurred $ 3.0
$ 3.0
$ (4.4 ) $ 2.7
Less: Net derivative gains (losses) allocated to reporting segments (4.1 ) 3.8
(5.5 ) 2.8
Net derivative gains (losses) recognized in general corporate expenses $ 7.1
$ (0.8 ) $ 1.1
$ (0.1 )
Net derivative gains (losses) allocated to Grocery & Snacks $ (0.4 ) $ 2.4
$ (1.0 ) $ 2.0
Net derivative gains allocated to Refrigerated & Frozen 0.1
0.7
0.1
0.5
Net derivative gains (losses) allocated to International (3.7 ) 0.2
(4.4 ) 0.2
Net derivative gains (losses) allocated to Foodservice (0.1 ) 0.5
(0.2 ) 0.2
Net derivative losses allocated to Commercial —
—
—
(0.1 )
Net derivative gains (losses) included in segment operating profit $ (4.1 ) $ 3.8
$ (5.5 ) $ 2.8

	Thirteen weeks ended						Thirty-nine weeks ended
($ in millions)	February 23, 2020			February 24, 2019			February 23, 2020			February 24, 2019
Gross derivative gains (losses) incurred	$	(5.7	)	$	0.8		$	(12.5	)	$	(3.4	)
Less: Net derivative gains (losses) allocated to reporting segments		(1.9	)		1.0			(3.3	)		0.4
Net derivative losses recognized in general corporate expenses	$	(3.8	)	$	(0.2	)	$	(9.2	)	$	(3.8	)
Net derivative losses allocated to Grocery & Snacks	$	(0.9	)	$	—		$	(1.5	)	$	(1.0	)
Net derivative losses allocated to Refrigerated & Frozen		—			(0.2	)		(0.7	)		(0.7	)
Net derivative gains (losses) allocated to International		(0.8	)		1.3			(1.1	)		2.4
Net derivative losses allocated to Foodservice		(0.2	)		(0.1	)		—			(0.3	)
Net derivative gains (losses) included in segment operating profit	$	(1.9	)	$	1.0		$	(3.3	)	$	0.4

Net Sales

	Net Sales
($ in millions)	Thirteen weeks ended							Thirty-nine weeks ended
Reporting Segment	February 23, 2020		February 24, 2019		% Inc (Dec)			February 23, 2020		February 24, 2019		% Inc (Dec)
Grocery & Snacks	$	1,022.9	$	1,129.8		(9	)%	$	3,143.0	$	2,901.0		8	%
Refrigerated & Frozen		1,076.8		1,094.3		(2	)%		3,204.2		2,636.2		22	%
International		220.9		228.3		(3	)%		659.6		640.4		3	%
Foodservice		234.4		254.7		(8	)%		759.7		747.6		2	%
Total	$	2,555.0	$	2,707.1		(6	)%	$	7,766.5	$	6,925.2		12	%

Net Sales
($ in millions) Thirteen weeks ended Twenty-six weeks ended
Reporting Segment November 26,
2017 November 27,
2016
% Inc
(Dec)
November 26,
2017 November 27,
2016
% Inc
(Dec)
Grocery & Snacks $ 900.4
$ 853.2
6 % $ 1,646.2
$ 1,610.4
2 %
Refrigerated & Frozen 758.1
740.7
2 % 1,373.8
1,345.3
2 %
International 220.3
211.4
4 % 411.2
406.1
1 %
Foodservice 294.6
283.1
4 % 546.4
551.1
(1 )%
Commercial —
—
— % —
71.1
(100 )%
Total $ 2,173.4
$ 2,088.4
4 % $ 3,977.6
$ 3,984.0
— %

Net sales for the ~~second~~third quarter of fiscal ~~2018~~2020 were ~~$2.17~~$2.56 billion, ~~an increase~~a decrease of ~~$85.0~~$152.1 million, or 4%6%, from the ~~second~~third quarter of fiscal ~~2017.~~2019. Net sales for the first ~~half~~three quarters of fiscal ~~2018~~2020 were ~~$3.98~~$7.77 billion, ~~a decrease~~an increase of ~~$6.4~~$841.3 million, or ~~flat,~~12%, from the first ~~half~~three quarters of fiscal ~~2017.~~

2019. The divestiture of certain businesses noted below contributed 4% to the decrease in sales during the third quarter of fiscal 2020 when compared to the prior-year period. The increased net sales during the first three quarters are principally due to the acquisition of Pinnacle on October 26, 2018.

Grocery & Snacks net sales for the ~~second~~third quarter of fiscal ~~2018~~2020 were ~~$900.4 million, an increase~~$1.02 billion, a decrease of ~~$47.2~~$106.9 million, or 6%9%, compared to the ~~second~~third quarter of fiscal ~~2017.~~2019. Grocery & Snacks net sales for the first ~~half~~three quarters of fiscal ~~2018~~2020 were ~~$1.65~~$3.14 billion, an increase of ~~$35.8~~$242.0 million, or 8%, compared to the first three quarters of fiscal 2019. Results for the third quarter and first three quarters of fiscal 2020 reflected a decrease in volumes of 2% and 1%, respectively, excluding the impact of acquisitions and divestitures, compared to the prior-year periods. The decrease in volumes reflected lower in market performance in our Hunt's^® brand and lower consumption across multiple categories in the current quarter due to a warmer than normal winter compared to higher consumption in the prior-year period due to winter storms. Price/mix decreased by 2% for the third quarter of fiscal 2020 and 1% for the first three quarters of fiscal 2020, excluding the impact of acquisitions and divestitures, when compared to the prior-year period due to incremental trade and strategic investments with certain customers and brands. The acquisition of Pinnacle in the second quarter of fiscal 2019 contributed $406.3 million, or 14%, to Grocery & Snacks net sales during the first three quarters of fiscal 2020, through the one-year anniversary of the acquisition. The third quarter and first three quarters of fiscal 2020 included $4.4 million and $22.8 million, respectively, of net sales related to our private label peanut butter business, which we exited in the third quarter of fiscal 2020. The third quarter and first three quarters of fiscal 2019 included $9.5 million and $28.4 million, respectively, of net sales related to this business. The first three quarters of fiscal 2020 included $46.1 million of net sales related to our DSD Snacks business, which was sold in the second quarter of fiscal 2020. The third quarter and first three quarters of fiscal 2019 included $26.2 million and $32.8 million, respectively, of net sales related to this business. The third quarter and first three quarters of fiscal 2019 also included $37.9 million and $115.9 million, respectively, of net sales related to our divested Wesson^® oil business.

Refrigerated & Frozen net sales for the third quarter of fiscal 2020 were $1.08 billion, a decrease of $17.5 million, or 2%, compared to the first half of fiscal 2017. Results for the second quarter of fiscal 2018 reflected a 3% increase in volumes, excluding the impact of acquisitions. The increase in sales volumes was driven by the recent hurricanes through inventory builds in both customer warehouses and consumer pantries in the second quarter of fiscal 2018, which are expected to negatively impact the third quarter of fiscal 2018. Price/mix decreased by 1% in the second quarter of fiscal 2018, compared to the second quarter of fiscal 2017, as a result of investing in higher quality merchandising events intended to drive increased brand saliency with consumers. Results for the first half of fiscal 2018 reflected a 1% decrease in volumes, excluding the impact of acquisitions, reflecting the prior quarter reduction in promotional intensity and planned discontinuation of certain lower-performing products. The acquisitions of Thanasi Foods LLC, BIGS LLC, and Angie's Artisan Treats, LLC contributed $26.4 million and $47.4 million to Grocery & Snacks net sales for the second quarter and first half of fiscal 2018, respectively. The acquisition of Frontera Foods, Inc. and Red Fork LLC contributed $2.1 million and $8.6 million for the second quarter and first half of fiscal 2018, respectively, through the one-year anniversary of the acquisition, which occurred in September 2016.

~~Refrigerated & Frozen net sales for the second quarter of fiscal 2018 were $758.1 million, an increase of $17.4 million, or 2%, compared to the second quarter of fiscal 2017.~~2019. Refrigerated & Frozen net sales for the first ~~half~~three quarters of fiscal ~~2018~~2020 were ~~$1.37~~$3.20 billion, an increase of ~~$28.5~~$568.0 million, or 2%22%, compared to the first ~~half~~three quarters of fiscal ~~2017. Results for~~2019. Volume and price/mix, excluding the ~~second~~impacts of acquisitions and divestitures, was flat and increased by 1%, respectively, in both the third quarter and first ~~half~~three quarters of fiscal 2018 reflected a 4% and 3% increase in volumes, respectively, excluding the impact of acquisitions. The increase in sales volumes was a result of core business improvements and innovation launches. Price/mix decreased by 2% and 1% in the second quarter and first half of fiscal 2018, respectively, in each case2020 compared to the prior-year ~~period, primarily~~periods, due to ~~investments to drive distribution~~improved performance across multiple brands and ~~trial.~~new innovation during the current fiscal year. The acquisition of ~~Frontera Foods, Inc. and Red Fork LLC, and subsequent innovation in those brands,~~Pinnacle contributed ~~$1.0~~$567.6 million, ~~and $4.4 million~~or 22%, to Refrigerated & Frozen net sales for the ~~second quarter and~~ first ~~half~~three quarters of fiscal ~~2018, respectively,~~2020, through the one-year anniversary of the ~~acquisition,~~acquisition. The third quarter and first three quarters of fiscal 2020 included $3.8 million and $23.2 million, respectively, of net sales related to our Lender's^® bagel business, which ~~occurred~~was sold in ~~September 2016.~~

the third quarter of fiscal 2020. The third quarter and first three quarters of fiscal 2019 included $10.6 million and $14.3 million, respectively, of net sales related to this business. The third quarter and first three quarters of fiscal 2019 also included $14.3 million and $43.0 million, respectively, of net sales related to our Italian-based frozen pasta business, Gelit, which was sold in the fourth quarter of fiscal 2019.

International net sales for the ~~second~~third quarter of fiscal ~~2018~~2020 were ~~$220.3~~$220.9 million, ~~an increase~~a decrease of ~~$8.9~~$7.4 million, or 4%3%, compared to the ~~second~~third quarter of fiscal ~~2017.~~2019. International net sales for the first ~~half~~three quarters of fiscal ~~2018~~2020 were ~~$411.2~~$659.6 million, an increase of ~~$5.1~~

$19.2 million, or 1%3%, compared to the first ~~half~~three quarters of fiscal ~~2017.~~2019. Results for the ~~second~~third quarter of fiscal ~~2018~~2020, excluding the impact of divestitures, reflected a 2%1% decrease in volume, a 2%1% increase ~~in price/mix, and a 4% increase from~~due to favorable foreign exchange rates, ~~in each case compared to the prior-year period. Results for the first half of fiscal 2018 reflected a 5% decrease in volume, a 3% increase in price/mix,~~ and a ~~3% increase from foreign exchange rates, in each case compared to the prior-year period. The volume~~1% decrease in the second quarter and first half of fiscal 2018 reflected strategic decisions to eliminate lower margin products and a reduction in promotional intensity. The increase in price/mix for the second quarter and first half of fiscal 2018 was driven by improvements in pricing and trade productivity.

Foodservice net sales for the second quarter of fiscal 2018 were $294.6 million, an increase of $11.5 million, or 4%, compared to the second quarter of fiscal 2017. Foodservice net sales for the first half of fiscal 2018 were $546.4 million, a decrease of $4.7 million, or 1%, compared to the first half of fiscal 2017. Results for the second quarter of fiscal 2018 reflected a 7% decrease in volume and a

~~11% increase~~ in price/mix, in each case compared to the prior-year period. The decrease in volumes and price/mix was driven by economic challenges primarily in our Mexico operations, increased retailer investments, and planned value-over-volume action, which more than offset strong consumption in the Canadian snacks and frozen businesses and improvement in our Indian operations. Results for the first ~~half~~three quarters of fiscal ~~2018~~2020, excluding the impact of acquisitions and divestitures, reflected a ~~12%~~1% decrease in ~~volumes~~volume and ~~a 11% increase in~~flat price/mix, both compared to the prior-year period. The ~~decrease in volumes primarily reflected~~acquisition of Pinnacle contributed $46.0 million, or 7%, to International net sales for the ~~impact~~first three quarters of ~~exiting a non-core business, offset by a benefit in~~fiscal 2020, through the ~~current~~one-year anniversary of the acquisition. The third quarter and first three quarters of fiscal 2019 included $6.3 million and $17.1 million, respectively, of net sales related to ~~the recent hurricanes.~~our divested Wesson^® oil business. The ~~increase~~first three quarters of fiscal 2019 also included $4.1 million of net sales related to our Del Monte^® processed fruit and vegetable business in ~~price/mix reflected favorable product and customer mix, the impact of inflation-driven increases in pricing, and the execution of the segment's value over volume strategy.~~

~~Our Spicetec and JM Swank businesses were~~Canada, which was sold in the first quarter of fiscal ~~2017. These businesses comprise the entire Commercial segment following the presentation of Lamb Weston as discontinued operations. Accordingly, there were no~~2019.

Foodservice net sales infor the ~~Commercial segment after the first~~third quarter of fiscal ~~2017. These businesses had~~2020 were $234.4 million, a decrease of $20.3 million, or 8%, compared to the third quarter of fiscal 2019. Foodservice net sales for the first three quarters of fiscal 2020 were $759.7 million, an increase of $12.1 million, or 2%, compared to the first three quarters of fiscal 2019. Results for both the third quarter and first three quarters of fiscal 2020 reflected a 5% decrease in volume, excluding the impact of acquisitions and divestitures, compared to the prior-year periods. The decline in volume reflected soft restaurant industry trends early in the current quarter and continued execution of the segment's value-over-volume strategy. Price/mix, excluding the impact of acquisitions and divestitures, increased by 2% and 3% in the third quarter and first three quarters of fiscal 2020, respectively, compared to the prior-year periods, reflecting inflation-related pricing and the value-over-volume strategy. The acquisition of Pinnacle contributed $57.7 million, or 8%, for the first three quarters of fiscal 2020, through the one-year anniversary of the acquisition. The third quarter and first three quarters of fiscal 2020 included $0.9 million and $6.6 million, respectively, of net sales related to our Lender's^® bagel business, which was sold in the third quarter of fiscal 2020. The third quarter and first three quarters of fiscal 2019 included $2.7 million and $3.6 million, respectively, of net sales related to this business. The first three quarters of fiscal 2020 included $4.6 million of net sales related to our private label peanut butter business, which we exited in the third quarter of fiscal 2020. The third quarter and first three quarters of fiscal 2019 included $2.0 million and $6.3 million, respectively, of net sales related to this business. The third quarter and first three quarters of fiscal 2019 included $11.2 million and $34.2 million, respectively, of net sales related to our divested Wesson^® oil business. The first three quarters of fiscal 2019 also included net sales of ~~$71.1~~$2.0 million ~~for the first half of fiscal 2017, prior~~related to ~~the completion of the divestitures.~~

~~SG&A Expenses (Includes general corporate expenses)~~

~~SG&A expenses totaled $307.3 million for~~our Trenton, Missouri production facility, which was sold in the second quarter of fiscal ~~2018,~~2019.

SG&A Expenses (includes general corporate expenses)

SG&A expenses totaled $319.9 million for the third quarter of fiscal 2020, a decrease of ~~$110.6~~$14.2 million, as compared to the ~~second~~third quarter of fiscal ~~2017.~~2019. SG&A expenses for the ~~second~~third quarter of fiscal ~~2018~~2020 reflected the following:

Items impacting comparability of earnings

•

expenses of $20.9 million in connection with our restructuring plans.

~~a charge of $7.8 million associated with costs incurred for acquisitions and planned divestitures,~~

~~a charge of $4.1 million related to a remeasurement of our salaried and non-qualified pension plan liability, and~~

~~expenses of $3.7 million in connection with our SCAE Plan.~~

Other changes in expenses compared to the ~~second~~third quarter of fiscal ~~2017~~2019

•

a decrease in salary, wage, and fringe benefit expense of $17.4 million, largely due to achieved synergies from the Pinnacle acquisition,

~~a decrease in advertising and promotion spending of $11.4 million and~~

•

a decrease of $6.5 million related to commission expense,

~~an increase in self-insured worker's compensation and product liability expense of $9.0 million.~~

•

an increase in share-based payment and deferred compensation expense of $5.6 million due to higher share price,

•

a decrease of $4.8 million related to short-term incentives,

•

a decrease in royalty expense of $3.8 million,

•

a decrease in depreciation expense of $2.6 million,

•

a decrease in franchise tax expense of $2.0,

•

a decrease of $2.0 related to travel and entertainment expenses, and

•

a decrease in advertising and promotion spending of $1.9 million.

SG&A expenses for the ~~second~~third quarter of fiscal ~~2017~~2019 included the following items impacting the comparability of earnings:

•

expenses of $36.5 million in connection with our restructuring plans,

~~charges totaling $60.6 million related to the early retirement of debt,~~

~~charges totaling $43.9 million related to the impairment of goodwill within our International segment, and~~

•

a benefit of $27.3 million related to the novation of a legacy guarantee,

~~expenses of $18.0 million in connection with our SCAE plan.~~

•

a benefit of $18.6 million related to the fair value adjustment of cash settleable equity awards issued in connection with, and included in the acquisition consideration of the Pinnacle acquisition, and

•

expenses of $2.4 million associated with costs incurred for acquisitions and planned divestitures.

SG&A expenses totaled ~~$546.3 million~~$1.09 billion for the first ~~half~~three quarters of fiscal ~~2018, a decrease~~2020, an increase of ~~$103.3~~$11.8 million, as compared to the first ~~half~~three quarters of fiscal ~~2017.~~2019. SG&A expenses for the first ~~half~~three quarters of fiscal ~~2018~~2020 reflected the following:

Items impacting comparability of earnings

•

expenses of $93.5 million in connection with our restructuring plans,

~~expenses of $12.8 million in connection with our SCAE Plan,~~

•

expense of $59.0 million related to the impairment of businesses held for sale,

~~a charge of $8.6 million associated with costs incurred for acquisitions and planned divestitures, and~~

•

charges totaling $19.3 million related to the impairment of certain brand intangible assets,

~~a charge of $4.1 million related to the remeasurement of our salaried and non-qualified pension plan liability.~~

•

a benefit of $11.9 million related to a contract settlement gain,

•

charges totaling $6.6 million related to a legacy environmental matter,

•

expenses of $3.6 million associated with costs incurred for acquisitions and planned divestitures,

•

a net loss of $1.7 million related to divestitures of businesses, and

•

a benefit of $1.5 million related to a legacy legal matter.

Other changes in expenses compared to the first ~~half~~three quarters of fiscal ~~2017~~2019

The increases in SG&A expenses below include the addition of expenses attributable to the Pinnacle business, partially offset by integration synergies:

•

an increase in salary, wage, and fringe benefit expense of $21.5 million,

~~a decrease in advertising and promotion spending of $21.2~~

•

an increase in share-based payment and deferred compensation expense of $19.9 million due to higher share price and market increases,

~~a decrease in share-based payment expense of $9.4 million, and~~

•

an increase of $10.9 million of amortization of definite lived intangible assets,

~~an increase in self-insured worker's compensation and product liability expense of $8.0 million.~~

•

a decrease in advertising and promotion spending of $8.0 million,

•

a decrease in self-insured workers' compensation and product liability expense of $7.9 million,

•

an increase of $7.8 million in computer-related expenses,

•

a decrease in royalty expense of $5.5 million,

•

an increase of $3.4 million related to transition services agreement income, and

•

a decrease of $3.3 million related to professional fees.

SG&A expenses for the first ~~half~~three quarters of fiscal ~~2017~~2019 included the following items impacting the comparability of earnings:

•

expenses of $140.7 million in connection with our restructuring plans,

~~charges totaling $207.5 million related to the impairment of goodwill and other intangible assets within our International segment,~~

•

expenses of $103.9 million associated with costs incurred for acquisitions and planned divestitures,

~~gains totaling $197.7 million from the divestiture of the Spicetec and JM Swank businesses,~~

•

a benefit of $27.3 million related to the novation of a legacy guarantee,

~~charges totaling $60.6 million related to the early retirement of debt,~~

•

a benefit of $18.6 million related to the fair value adjustment of cash settleable equity awards issued in connection with, and included in the acquisition consideration of the Pinnacle acquisition,

~~expenses of $26.9 million in connection with our SCAE plan.~~

•

a gain of $13.2 million related to the sale of our Del Monte^® Canadian business, and

•

expenses of $8.9 million related to costs associated with the integration of Pinnacle.

Operating Profit (Earnings before general corporate expenses, pension and postretirement non-service income, interest expense, net, income taxes, and equity method investment earnings)

	Operating Profit
($ in millions)	Thirteen weeks ended							Thirty-nine weeks ended
Reporting Segment	February 23, 2020		February 24, 2019		% Inc (Dec)			February 23, 2020		February 24, 2019		% Inc (Dec)
Grocery & Snacks	$	199.4	$	225.0		(11	)%	$	614.8	$	623.2		(1	)%
Refrigerated & Frozen		190.7		189.1		1	%		533.7		441.4		21	%
International		22.3		29.9		(25	)%		73.5		89.7		(18	)%
Foodservice		27.2		36.8		(26	)%		96.6		98.8		(2	)%

Operating Profit
($ in millions) Thirteen weeks ended Twenty-six weeks ended
Reporting Segment November 26,
2017 November 27,
2016
% Inc
(Dec)
November 26,
2017 November 27,
2016
% Inc
(Dec)
Grocery & Snacks $ 199.8
$ 220.2
(9 )% $ 376.0
$ 400.7
(6 )%
Refrigerated & Frozen 128.5
118.0
9 % 230.4
210.2
10 %
International 20.2
(26.7 ) N/A
39.1
(175.9 ) N/A
Foodservice 47.4
31.9
48 % 70.6
53.6
32 %
Commercial —
(0.5 ) (100 )% —
202.8
(100 )%

Grocery & Snacks operating profit for the ~~second~~third quarter of fiscal ~~2018~~2020 was ~~$199.8~~$199.4 million, a decrease of ~~$20.4~~$25.6 million, or 9%11%, compared to the ~~second~~third quarter of fiscal ~~2017.~~2019. Gross profits were ~~$12.0~~$36.1 million lower in the ~~second~~third quarter of fiscal ~~2018~~2020 than in the ~~second~~third quarter of fiscal ~~2017.~~2019. The lower gross profit was driven by ~~the previously mentioned merchandising investments as well as the impacts of higher~~ input ~~costs and transportation and warehousing costs~~cost inflation, a reduction in profit associated with the ~~recent hurricanes. The acquisitions~~divestiture of ~~Thanasi Foods LLC, BIGS LLC,~~our DSD Snacks and ~~Angie's Artisan Treats, LLC contributed $9.3 million to Grocery & Snacks gross profit for~~Wesson^® oil businesses, the ~~second quarter~~exit of ~~fiscal 2018. The acquisition~~our private label peanut butter business, and lower volume, excluding the impact of ~~Frontera Foods, Inc. and Red Fork LLC contributed $0.6 million in gross profit for~~divestitures, partially offset by the ~~second quarter~~benefits of fiscal 2018, through the one-year anniversary of the acquisition that occurred in September 2016. Advertising and promotion expenses for the second quarter of fiscal 2018 decreased by $3.9 million compared to the second quarter of fiscal 2017.supply chain realized productivity. Operating profit of the Grocery & Snacks segment was impacted by ~~charges~~expense of ~~$4.0~~$10.9 million and ~~$1.4~~$3.0 million ~~in connection with~~related to our restructuring plans in the ~~second~~third quarter of fiscal ~~2018~~2020 and ~~2017,~~2019, respectively. ~~In addition, the second~~The third quarter of fiscal ~~2018~~2019 included ~~$7.8~~$17.8 million ~~in charges related~~of incremental cost of goods sold due to ~~acquisitions~~the impact of writing Pinnacle inventory to fair value as part of our acquisition accounting and ~~planned divestitures.~~

the subsequent sale of that inventory.

Grocery & Snacks operating profit for the first ~~half~~three quarters of fiscal ~~2018~~2020 was ~~$376.0~~$614.8 million, a decrease of ~~$24.7~~$8.4 million, or 6%1%, compared to the first ~~half~~three quarters of fiscal ~~2017.~~2019. Gross profits were ~~$17.3~~$62.8 million ~~lower~~higher in the first ~~half~~three quarters of fiscal ~~2018~~2020 than in the first ~~half~~three quarters of fiscal ~~2017.~~2019. The ~~lower~~higher gross profit was driven by ~~merchandising investments as well as~~the addition of Pinnacle and the benefits of supply chain realized productivity, partially offset by the impacts of higher input costs, ~~and transportation and warehousing costs~~a reduction in profit associated with the ~~recent hurricanes, offset by improved plant productivity. The acquisitions~~divestiture of ~~Thanasi Foods LLC, BIGS LLC,~~our DSD Snacks and ~~Angie's Artisan Treats, LLC contributed $15.8 million to Grocery & Snacks gross profit for~~Wesson^® oil businesses, and the ~~first half~~exit of fiscal 2018. The acquisition of Frontera Foods, Inc. and Red Fork LLC contributed $2.1 million in gross profit for the first half of fiscal 2018, through the one-year anniversary of the acquisition that occurred in September 2016. Advertising and promotion expenses for the first half of fiscal 2018 decreased by $6.5 million compared to the first half of fiscal 2017.our private label peanut butter business. Operating profit of the Grocery & Snacks segment was impacted by ~~charges~~expense of ~~$10.2~~$49.2 million and ~~$6.3~~$5.2 million ~~in connection with~~related to our restructuring plans in the first ~~half~~three quarters of fiscal ~~2018~~2020 and ~~2017,~~2019, respectively. In addition, the first ~~half~~three quarters of fiscal ~~2018~~2020 included ~~$8.6~~charges of $31.4 million inrelated to the impairment of a business held for sale, a benefit of $11.9 million related to a contract settlement, charges of $3.5 million related to the impairment of certain brand intangible assets, and costs of $3.0 million related to acquisitions and planned divestitures.

The first three quarters of fiscal 2019 included $29.7 million of incremental cost of goods sold due to the impact of writing Pinnacle inventory to fair value as part of our acquisition accounting and the subsequent sale of that inventory.

Refrigerated & Frozen operating profit for the ~~second~~third quarter of fiscal ~~2018~~2020 was ~~$128.5~~$190.7 million, an increase of ~~$10.5~~$1.6 million, or 9%1%, compared to the ~~second~~third quarter of fiscal ~~2017.~~2019. Gross profits were ~~$3.7~~$6.1 million lower in the ~~second~~third quarter of fiscal ~~2018~~2020 than in the ~~second~~third quarter of fiscal ~~2017,~~2019, driven by ~~inflation~~increased input costs and ~~investments to drive distribution, enhanced shelf presence,~~lost profit associated with the divestitures of our Gelit and ~~trial,~~Lender's^® bagel business, partially offset by ~~increased sales volumes and~~ supply chain realized productivity. ~~Advertising and promotion expenses for~~Operating profit of the ~~second~~Refrigerated & Frozen segment was impacted by expense of $10.5 million related to our restructuring plans in the third quarter of fiscal ~~2018 decreased by $7.6~~2020. The third quarter of fiscal 2019 included $10.8 million of incremental cost of goods sold due to the impact of writing Pinnacle inventory to fair value as part of our acquisition accounting and the subsequent sale of that inventory and expense of $2.1 million related to our restructuring plans.

Refrigerated & Frozen operating profit for the first three quarters of fiscal 2020 was $533.7 million, an increase of $92.3 million, or 21%, compared to the ~~second quarter~~first three quarters of fiscal ~~2017.~~2019. Gross profits were $152.2 million higher in the first three quarters of fiscal 2020 than in the first three quarters of fiscal 2019, due to the addition of Pinnacle and the drivers mentioned above. Operating profit of the Refrigerated & Frozen segment was impacted by charges of ~~$2.2~~$27.6 million ~~in connection with our restructuring plans in the second quarter of fiscal 2017.~~

~~Refrigerated & Frozen operating profit for the first half of fiscal 2018 was $230.4 million, an increase of $20.2 million, or 10%, compared~~related to the ~~first half~~impairment of ~~fiscal 2017. Gross profits were $5.2 million lower~~a business held for sale in the first ~~half~~three quarters of fiscal 2018 than in the first half of fiscal 2017, driven by inflation, absorption, and investments to drive distribution, enhanced shelf presence, and trial, partially offset by increased sales volumes and supply chain realized productivity. Advertising and promotion expenses for the first half of fiscal 2018 decreased by $12.7 million compared to the first half of fiscal 2017. Operating2020. In addition, operating profit of the Refrigerated & Frozen segment in the first three quarters of fiscal 2020 was impacted by charges of ~~$7.2 million in connection with our restructuring plans, as well as $7.7~~$15.8 million related to ~~a product recall in~~ the impairment of certain brand intangible assets and expense of $12.3 million related to our restructuring plans. The first ~~half~~three quarters of fiscal ~~2017.~~

2019 included $20.7 million of incremental cost of goods sold due to the impact of writing Pinnacle inventory to fair value as part of our acquisition accounting and the subsequent sale of that inventory and expense of $2.2 million related to our restructuring plans.

International operating profit for the ~~second~~third quarter of fiscal ~~2018~~2020 was ~~$20.2~~$22.3 million, a decrease of $7.6 million, or 25%, compared to ~~an operating loss of $26.7 million in~~ the ~~second~~third quarter of fiscal ~~2017. The operating loss~~2019. Gross profits were $13.8 million lower in the ~~second~~third quarter of fiscal ~~2017 included charges totaling $43.9 million for~~2020 when compared to the ~~impairment of goodwill in our Mexican operations. Gross profits were $3.2 million higher in the second~~third quarter of fiscal ~~2018 than in~~2019, due to higher input costs, increased retailer investments, and the ~~second quarter~~sale of fiscal 2017, as a result of the value over volume strategy through reductions in promotional intensity, improvements in pricing, and trade productivity, and planned discontinuations of certain lower-performing products.

our Wesson^® oil business, partially offset by realized productivity.

International operating profit for the first ~~half~~three quarters of fiscal ~~2018~~2020 was ~~$39.1~~$73.5 million, a decrease of $16.2 million, or 18%, compared to ~~an operating loss~~the first three quarters of ~~$175.9~~fiscal 2019. Gross profits were $12.3 million lower in the first ~~half~~three quarters of fiscal ~~2017. The operating loss~~2020

when compared to the first three quarters of fiscal 2019, due to higher input costs, increased retailer investments, and the sales of our Del Monte^® Canadian and Wesson^® oil businesses, partially offset by the addition of Pinnacle and realized productivity. International gross profits also reflected a decrease of $4.5 million due to foreign exchange rates compared to the prior-year period. Operating profit of the International segment was impacted by expense of $1.4 million and $3.9 million related to our restructuring plans in the first ~~half~~three quarters of fiscal ~~2017~~2020 and 2019, respectively. In addition, the first three quarters of fiscal 2019 included ~~charges totaling $207.5~~a gain of $13.2 million related to the sale of our Del Monte^® Canadian business and expense of $2.9 million related to costs incurred for acquisitions and planned divestitures.

Foodservice operating profit for the ~~impairment~~

third quarter of ~~goodwill and an intangible brand asset in our Canadian and Mexican operations.~~fiscal 2020 was $27.2 million, a decrease of $9.6 million, or 26%, compared to the third quarter of fiscal 2019. Gross profits were ~~$3.9~~$8.3 million lower in the third quarter of fiscal 2020 than in the third quarter of fiscal 2019. The lower gross profit primarily reflected higher input costs, the sale of our Wesson^® oil and Lender's^® bagel businesses, the exit of our private label peanut butter business, and lower volume, excluding the impact of divestitures, partially offset by supply chain realized productivity.

Foodservice operating profit for the first three quarters of fiscal 2020 was $96.6 million, a decrease of $2.2 million, or 2%, compared to the first three quarters of fiscal 2019. Gross profits were $4.5 million higher in the first ~~half~~three quarters of fiscal ~~2018~~2020 than in the first ~~half~~three quarters of fiscal ~~2017, as a result of the value over volume strategy and planned discontinuations of certain lower-performing products.~~

Foodservice operating profit for the second quarter of fiscal 2018 was $47.4 million, an increase of $15.5 million, or 48%, compared to the second quarter of fiscal 2017. Gross profits were $15.2 million higher in the second quarter of fiscal 2018 than in the second quarter of fiscal 2017.2019. The higher gross profit primarily reflected the ~~increase in net~~addition of Pinnacle, improved price/mix, and supply chain realized productivity, partially offset by higher input costs and the sales ~~as a result~~ of our Wesson^® oil and Lender's^® bagel businesses, the ~~recent hurricanes, favorable product~~exit of our private label peanut butter business, and ~~customer mix, as well as~~ the ~~impact~~sale or our and Trenton facility.

Interest Expense, Net

Net interest expense was $117.7 million and $130.9 million for the third quarter of ~~inflation-driven increases in pricing.~~

~~Foodservice operating profit~~fiscal 2020 and 2019, respectively. Net interest expense was $361.8 million and $260.5 million for the first ~~half~~three quarters of fiscal ~~2018 was $70.6~~2020 and 2019, respectively. The increase reflected the issuance of $7.025 billion aggregate principal amount of unsecured senior notes and borrowings of $1.30 billion under our new unsecured term loan agreement with a syndicate of financial institutions providing for a $650.0 million ~~an increase~~tranche of ~~$17.0~~three-year term loans and a $650.0 million ~~or 32%, compared~~tranche of five-year term loans to the ~~first half of fiscal 2017. Gross profits were $13.2 million higher~~Company (the "Term Loan Agreement"), in the first half of fiscal 2018 than in the first half of fiscal 2017. The higher gross profit primarily reflected the increase in net sales as a result of the recent hurricanes, favorable product and customer mix, as well as the impact of inflation-driven increases in pricing, offset by the impact of exiting a non-core business. Operating profit of the Foodservice segment was impacted by charges of $1.8 million in the first half of fiscal 2017each case in connection with ~~our restructuring plans.~~

~~Commercial operating loss for~~the acquisition of Pinnacle in the second quarter of fiscal ~~2017 was $0.5 million. Commercial operating profit for~~2019. As of February 23, 2020, we have repaid all of our borrowings under the Term Loan Agreement.

In addition, the first ~~half~~three quarters of fiscal ~~2017 was $202.8 million. The company sold the Spicetec and JM Swank businesses in the first quarter~~2019 included $11.9 million of fiscal 2017, recognizing pre-tax gains totaling $197.7 million. These businesses comprise the entire Commercial segment following the presentation of Lamb Weston as discontinued operations. There are no further operations in the Commercial segment.

~~Interest Expense, Net~~

~~Net~~ interest expense related to the amortization of costs incurred to secure fully committed bridge financing in connection with the then-pending Pinnacle acquisition. The bridge financing was ~~$38.0 million~~subsequently terminated in connection with our incurrence of permanent financing to fund the Pinnacle acquisition, and ~~$54.1 million for~~we recognized the second quarter of fiscal 2018 and 2017, respectively. Net interest expense was $74.4 million and $112.3 million for the first half of fiscal 2018 and 2017, respectively. The decrease reflects the repayment of $550.0 million aggregate principal amount of outstanding notes in the first quarter of fiscal 2017 and $473.0 million aggregate principal amount of outstanding notes inremaining unamortized financing costs within SG&A expenses.

Income Taxes

In the third quarter of fiscal 2017, as well as the exchange of $1.44 billion of debt in connection with the Spinoff of Lamb Weston during the second quarter of 2017. This was partially offset by the issuance of $500.0 million aggregate principal amount of floating rate notes due 2020 ~~during the second quarter of fiscal 2018.~~

~~Income Taxes~~

~~In the second quarter of fiscal 2018~~ and ~~2017, our~~2019, we recognized income tax expense ~~from continuing operations was $109.5~~of $68.9 million and ~~$78.4~~$67.2 million, respectively. Income tax expense ~~from continuing operations~~ for the first ~~half~~three quarters of fiscal ~~2018~~2020 and ~~2017~~2019 was ~~$229.5~~$141.5 million and ~~$247.6~~$147.0 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income, ~~from continuing operations,~~ inclusive of equity method investment earnings) was approximately ~~33%~~25.2% and ~~41%~~21.7% for the ~~second~~third quarter of fiscal ~~2018~~2020 and ~~2017,~~2019, respectively. The effective tax rate was approximately 18.1% and 20.9% for the first three quarters of fiscal 2020 and 2019, respectively.

The effective tax rate in the ~~first half of fiscal 2018 and 2017 was 38% and 54%, respectively.~~

~~The effective tax rate in the second~~third quarter of fiscal ~~2018 reflects~~2020 reflected the following:

•

additional state income tax expense related to uncertain tax positions and

•

an adjustment of valuation allowance associated with the Wesson^® oil business.

~~additional income tax expense related to state taxes, and~~

~~an income tax benefit related to a change in estimate of the income tax effect of undistributed foreign earnings for which the indefinite reinvestment assertion is no longer made.~~

The effective tax rate for the first ~~half~~three quarters of fiscal ~~2018 reflects~~2020 reflected the above-cited items, as well as the impact of benefits from the settlement of tax issues that were previously reserved, a change in deferred state tax rates due to the integration of Pinnacle activity for tax purposes, a tax planning strategy that will allow utilization of certain state attributes, state tax law changes, additional tax expense associated with non-deductible goodwill related to assets for which an impairment charge was recognized, a benefit from statute lapses on tax issues that were previously reserved, and an income tax benefit associated with a deduction of a prior year federal income tax matter.

The effective tax rate in the ~~repatriation~~third quarter of ~~cash from~~fiscal 2019 reflected the following:

•

a benefit recognized due to the non-taxability of the novation of a legacy guarantee,

•

an increase to the deemed repatriation tax liability.

The effective tax rate for the first three quarters of fiscal 2019 reflected the above-cited items, as well as the impact of foreign ~~subsidiaries and the tax expense~~restructuring resulting in a benefit related to undistributed foreign earnings for which the indefinite reinvestment assertion is no longer ~~made.~~

~~The effective tax rate in the second quarter of fiscal 2017 reflects the following:~~

made, additional tax expense on the repatriation of foreign earnings, an adjustment of valuation allowance associated with ~~a change in estimate regarding~~ the ~~tax basis~~expected capital gains from the planned divestiture of the ~~Spicetec~~Wesson^® oil business, ~~that was sold in the first quarter of fiscal 2017, and~~

additional tax expense on non-deductible facilitative costs associated with ~~non-deductible goodwill in our Mexican business, for which an impairment charge was recognized.~~

~~The effective tax rate for~~ the ~~first half~~acquisition of ~~fiscal 2017 reflects the above-cited items, as well as the following:~~

Pinnacle, and additional income tax expense ~~associated with non-deductible goodwill sold in connection with the dispositions of the Spicetec and JM Swank businesses,~~

~~additional tax expense associated with non-deductible goodwill in our Canadian business, for which an impairment charge was recognized,~~

~~an income tax benefit associated with a tax planning strategy that allowed us to utilize certain~~ state ~~tax attributes.~~

On December 22, 2017, the Tax Cuts and Jobs Act was signed into law. We are in the process of evaluating the impact of the recently enacted law to our Condensed Consolidated Financial Statements. The impact is expected to be material to the Condensed Consolidated Financial Statements.

taxes.

Equity Method Investment Earnings

Equity method investment earnings were ~~$20.6~~$10.4 million and ~~$17.2~~$12.7 million for the ~~second~~third quarter of fiscal ~~2018~~2020 and ~~2017,~~2019, respectively. Equity method investment earnings were ~~$50.6~~$50.3 million and ~~$30.3~~$66.6 million for the first ~~half~~three quarters of fiscal ~~2018~~2020 and ~~2017,~~2019, respectively. Results for the third quarter and first three quarters of fiscal 2020 included a charge of $0.6 million and a gain of $4.2 million, respectively, related to the sale of an asset by the Ardent Mills joint venture. Results for the first three quarters of fiscal 2019 included a gain of $15.1 million from the sale of an asset by the Ardent Mills joint venture. 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.~~

~~Results of Discontinued Operations~~

~~Our discontinued operations generated an after-tax gain of $0.4 million and $11.6 million~~ for the ~~second~~third quarter of fiscal ~~2018 and 2017, respectively. Our discontinued operations generated an after-tax gain of $0.1 million and $103.0 million~~2020 reflected unfavorable market conditions after adjusting for the first half of fiscal 2018 and 2017, respectively. The prior-year period results reflected the operations of Lamb Weston. We incurred significant costs associated with effecting the Spinoff of Lamb Weston. These costs are included in results of discontinued operations.

items mentioned above.

Earnings Per Share

Diluted earnings per share in the ~~second~~third quarter of fiscal ~~2018~~2020 and 2019 were ~~$0.54.~~$0.42 and $0.50, respectively. Diluted earnings per share in the ~~second quarter~~first three quarters of fiscal ~~2017~~2020 were ~~$0.28,~~$1.31. Diluted earnings per share in the first three quarters of fiscal 2019 were $1.27, including earnings of ~~$0.26~~$1.28 per diluted share from continuing operations and ~~$0.02~~a loss of $0.01 per diluted share from discontinued operations.

~~Diluted earnings per share in~~ See "Items Impacting Comparability" above as several significant items affected the ~~first half~~comparability of ~~fiscal 2018 were $0.91. Diluted earnings per share in the first half~~year-over-year results of ~~fiscal 2017 were $0.70, including earnings of $0.48 per diluted share from continuing operations and $0.22 per diluted share from discontinued~~ operations.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity and Capital

Our primary financing objective 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.

commercial paper program. As of ~~November 26, 2017,~~February 23, 2020, there were no outstanding borrowings under the Revolving Credit Facility.

The Revolving Credit Facility ~~contains customary affirmative and negative covenants for unsecured investment grade credit facilities of this type. It~~ generally requires that our ratio of ~~EBITDA (earnings~~earnings before interest, taxes, depreciation, and ~~amortization)~~amortization ("EBITDA") to interest expense to be not less than 3.0 to 1.0 and our ratio of funded debt to EBITDA not to ~~be not greater than~~exceed certain decreasing specified levels, ranging from 5.25 through the first quarter of fiscal 2021 to 3.75 ~~to 1.0 (provided that such~~from the second quarter of fiscal 2023 and thereafter. Each ratio ~~may be increased at the option of the Company in connection with a material transaction), with each ratio~~is to be calculated on a rolling four-quarter basis. As of ~~November 26, 2017,~~February 23, 2020, we were in compliance with ~~all~~these financial ~~covenants in the Facility.~~

~~As of November 26, 2017, we~~covenants.

We had ~~$67.0 million~~no amounts outstanding under our commercial paper ~~program.~~program as of February 23, 2020 and May 26, 2019. The highest level of borrowings during the first ~~half~~three quarters of fiscal ~~2018~~2020 was ~~$419.9~~$145.0 million. A~~s of May 28, 2017,~~

During fiscal 2020 we ~~had $26.2~~prepaid the remaining $400.0 million outstanding principal balance of our borrowings under our ~~commercial paper program.~~

$1.30 billion Term Loan Agreement. Payments totaling $200.0 million each were made in the first and third quarters of fiscal 2020. The Term Loan Agreement was terminated after these repayments.

During the ~~second~~third quarter of fiscal ~~2018,~~2020, we ~~issued $500.0~~also redeemed $250.0 million in aggregate principal amount of our floating rate notes due October 9,22, 2020. ~~The notes bear interest at a rate equal to three-month LIBOR plus 0.50% per annum.~~

As of the end of the ~~second~~third quarter of fiscal ~~2018,~~2020, our senior long-term debt ratings were all investment grade. A significant downgrade in our credit ratings would not affect our ability to borrow amounts under the ~~revolving credit facility,~~Revolving Credit Facility, although borrowing costs would increase. A downgrade of our short-term credit ratings would impact our ability to borrow under our commercial paper program by negatively impacting borrowing costs and causing shorter durations, as well as making access to commercial paper more ~~difficult.~~

difficult, or impossible.

We repurchase shares of our common stock from time to time after considering market conditions and in accordance with repurchase limits authorized by our ~~Board of Directors.~~Board. Under the share repurchase authorization, we may repurchase our shares periodically over several years, depending on market conditions and other factors, and may do so in open market purchases or privately negotiated transactions. The share repurchase authorization has no expiration date. ~~During~~We plan to repurchase shares under our authorized program only at times and in amounts as are consistent with the ~~first half~~prioritization of ~~fiscal 2018, we repurchased 16.9 million shares of~~achieving our ~~common stock under this authorization for an aggregate of $580.0 million.~~leverage targets. The Company's total remaining share repurchase authorization as of ~~November 26, 2017~~February 23, 2020 was ~~$802.0 million.~~

$1.41 billion.

On December ~~12, 2017,~~10, 2019, the Board ~~of Directors~~ announced a quarterly dividend payment of $0.2125 per share, ~~which will~~to be paid on March ~~1, 2018~~3, 2020, to stockholders of record as of the close of business on January ~~30, 2018.~~

31, 2020. Subject to market and other conditions and the approval of our Board, we intend to maintain our quarterly dividend at the current annual rate of $0.85 per share during fiscal 2020.

During the third quarter of fiscal 2020, we completed the sale of our Lender's^® bagel business for net proceeds of $33.2 million, subject to final working capital adjustments.

During the second quarter of fiscal 2020, we completed the sale of our DSD Snacks business for net proceeds of $139.0 million, subject to final working capital adjustments.

In addition to our cash flow from operations, which have been sufficient to fund our short-term liquidity needs thus far in the fourth quarter of fiscal ~~2017,~~2020, we ~~signed an agreement to sell our~~ ~~Wesson~~^® oil business to Smucker. The transaction is subject to certain customary closing conditions, including the termination or expiration of the waiting period under the HSR Act. On August 28, 2017, Smucker and the Company each received a second request from the FTC in connection with the FTC's review of the transaction. The agreement for the sale of the ~~Wesson~~^® oil business provides that, unless otherwise agreed upon by the Company and Smucker, if the closing of the transaction has not occurred on or prior to March 31, 2018 because HSR approval has not been received as of such date, then either party may terminate the agreement. The parties are cooperating fully with the FTC as it conducts its review of the transaction. The purchase price under the agreement is $285 million.

~~In December 2017, we entered into a definitive agreement to acquire the~~ ~~Sandwich Bros. of Wisconsin~~^® business, maker of frozen breakfast and entree flatbread pocket sandwiches, for a cash purchase price of $87 million, net of cash acquired and subject to working capital adjustments. The transaction is expected to close in early calendar year 2018, subject to customary closing conditions, including the receipt of any applicable regulatory approvals.

We have access to ~~the $1.25 billion revolving credit facility,~~our undrawn Revolving Credit Facility, our commercial paper program, and the capital markets. Although we have not attempted or needed to access the commercial paper market in recent weeks, we are aware that the impacts of the COVID-19 outbreak have reduced the availability and attractiveness of commercial paper borrowings. We ~~believe we also~~expect that until commercial paper market conditions improve, accessing this source of short-term financing could be challenging or at elevated costs.

We have ~~access to additional bank loan facilities, if needed.~~

approximately $900 million of debt maturing in the next 12 months. We expect to ~~utilize~~pay this debt, in part, from operating cash flows, ~~from operations~~ and ~~commercial paper issuances to finance the repayment of senior note principal maturities totaling $189.7 million due in the second half of fiscal 2018.~~

Management believes that the Company's sources of liquidity will be adequate to meet required debt repayments, planned capital expenditures, acquisitions, working capital needs, and payment of anticipated quarterly dividends for the foreseeable future.

~~We expect~~ to maintain or have access to sufficient liquidity to ~~either~~ retire or refinance ~~senior~~the remainder of the debt upon maturity, as market conditions warrant, from ~~operating cash flows,~~ our commercial paper program, proceeds from any divestitures and other disposition transactions, access to capital markets, and our ~~revolving credit facility.~~

Revolving Credit Facility.

Cash Flows

During the first ~~half~~three quarters of fiscal ~~2018,~~2020, we used ~~$167.4~~$137.6 million of cash, which was the net result of ~~$420.7~~$906.5 million generated from operating activities, ~~$366.1~~$59.9 million used in investing activities, ~~$230.5~~$984.6 million used in financing activities, and an increase of ~~$8.5~~$0.4 million due to the effects of changes in foreign currency exchange rates.

Cash generated from operating activities of continuing operations totaled ~~$404.7~~$906.5 million in the first ~~half~~three quarters of fiscal ~~2018,~~2020, as compared to ~~$460.6~~$745.1 million generated in the first ~~half~~three quarters of fiscal ~~2017.~~2019. The ~~decrease~~increase in operating cash flows for the first three quarters of fiscal 2020 compared to the first three quarters of fiscal 2019 was largely due to the ~~result~~inclusion of ~~higher income tax payments attributable to continuing operations and changes in working capital primarily driven by increases in accounts receivable and inventory.~~the additional operating results from the acquisition of Pinnacle. This was partially offset by ~~decreases in~~increased interest and tax payments ~~due to significant debt repayments during fiscal 2017,~~ and ~~lower payments related to incentive compensation and our restructuring plans.~~

~~The operating activities~~the comparative impact of ~~discontinued operations generated $16.0~~cash proceeds of $47.5 million ~~and $81.6 million~~received upon the settlement of interest rate swaps in the first ~~half~~three quarters of fiscal ~~2018~~2019. Increased seasonal inventory builds in the first three quarters of fiscal 2020 reflect incremental amounts resulting from the Pinnacle acquisition and ~~2017, respectively.~~the launch of new innovation items. This ~~reflects~~was more than offset by a corresponding increase in accounts payable, including the ~~activities~~effects of extended payment terms with certain large suppliers, and the ~~Lamb Weston business that was spun off on November 9, 2016 and other divested businesses.~~

timing of accounts receivable cash collections.

Cash used in investing activities ~~of continuing operations~~ totaled ~~$366.1~~$59.9 million and $5.30 billion in the first ~~half~~three quarters of fiscal ~~2018, compared to cash provided of $273.9 million~~2020 and 2019, respectively. Investing activities in the first ~~half~~three quarters of fiscal ~~2017. Investing activities of continuing operations in the first half of fiscal 2018~~2020 consisted primarily of capital expenditures totaling ~~$123.4~~$265.3 million and the net proceeds from divestitures totaling $191.4 million, including the sales of our DSD Snacks and Lender's^® bagel businesses. Investing activities in the first three quarters of fiscal 2019 consisted mainly of the purchase of ~~Angie's Artisan Treats, LLC~~Pinnacle for ~~$249.6 million,~~$5.12 billion, net of cash ~~acquired. Investing activities of continuing operations in~~acquired, capital expenditures totaling $236.1 million, and the ~~first half of fiscal 2017 included~~ proceeds from the ~~sales~~sale of ~~the Spicetec~~our Del Monte^® processed fruit and ~~JM Swank businesses~~vegetable business in Canada totaling $489.1 million, partially offset by capital expenditures of $118.3 million and the purchase of the operating assets of Frontera Foods, Inc. and Red Fork LLC totaling $108.2 million, net of cash acquired.$32.2 million.

~~Cash used in investing activities of discontinued operations in the first half of fiscal 2017 resulted mainly from capital expenditures.~~

Cash used in financing activities ~~of continuing operations~~ totaled ~~$230.5~~$984.6 million in the first ~~half~~three quarters of fiscal 2018 and $920.0 million in the first half of fiscal 2017. Financing activities of continuing operations in the first half of fiscal 2018 consisted principally of common stock repurchases totaling $580.0 million, net proceeds from the issuance of long-term debt totaling $497.4 million,2020, compared to cash dividends paid of $171.6 million, and net short-term borrowings of $38.9 million, mainly under our commercial paper program. Cash used in financing activities of continuing operations in the first half of fiscal 2017 reflected long-term debt repayments of $555.8 million, cash dividends paid of $219.4 million, and common stock repurchases totaling $170.1 million, partially offset by net proceeds from employee stock option exercises and the issuance of other stock awards of $47.4 million.

~~Cash~~ provided by financing activities of ~~discontinued operations~~$4.71 billion in the first ~~half~~three quarters of fiscal ~~2017~~2019. Financing activities in the first three quarters of fiscal 2020 consisted principally ~~comprises borrowings by Lamb Weston, which were transferred~~of the repayment of long-term debt totaling $665.9 million and cash dividends paid of $310.1 million. In the first three quarters of fiscal 2019, in connection with the ~~Spinoff.~~

Pinnacle acquisition, we issued long-term debt that generated $8.31 billion in gross proceeds and issued common stock for net proceeds of $555.7 million. This was reduced by debt issuance costs and bridge financing fees totaling $95.2 million. We repaid $3.52 billion of long-term debt, reduced our short-term borrowings under our commercial paper program by $278.3 million, and paid cash dividends of $253.0 million.

The Company had cash and cash equivalents of ~~$84.0~~$99.0 million at ~~November 26, 2017~~February 23, 2020 and ~~$251.4~~$236.6 million at May ~~28, 2017,~~26, 2019, of which ~~$76.8~~$47.3 million at ~~November 26, 2017~~February 23, 2020 and ~~$244.9~~$144.8 million at May ~~28, 2017~~26, 2019 was held in foreign countries. ~~During the second quarter of fiscal 2018, the Company repatriated $151.3 million of cash balances previously deemed to~~We believe that our foreign subsidiaries have invested or will invest any undistributed earnings indefinitely, or that any undistributed earnings will be ~~permanently reinvested outside the U.S. Refer to Note 12 to the Condensed Consolidated Financial Statements contained~~remitted in ~~this report for more information related to this repatriation of cash~~a tax-neutral transaction, and, ~~related adjustments to~~therefore, do not provide deferred ~~tax liability. The Tax Cuts and Jobs Act, signed into law on December 22, 2017, will require the Company to pay tax~~taxes on the ~~unremitted~~cumulative undistributed earnings of ~~its~~our foreign subsidiaries. The Company is in the process of determining the amount of that tax and expects to record an initial estimate of the impact on our Condensed Consolidated Financial Statements in the third quarter of fiscal 2018.

Our estimate of capital expenditures for fiscal ~~2018~~2020 is approximately ~~$300~~$370 million. ~~For the first half of fiscal 2018, we have funded $123.4 million of capital expenditures.~~

Management believes that existing cash balances, cash flows from operations, existing credit facilities, and access to capital markets will provide sufficient liquidity to meet our repayment of debt, including any repayment of debt or refinancing of debt, working capital needs, planned capital expenditures, ~~planned share repurchases,~~ and payment of anticipated quarterly dividends for at least the next twelve months.

~~OFF-BALANCE SHEET ARRANGEMENTS~~

We use off-balance sheet arrangements (e.g., leases accounted for as operating leases) where sound business principles warrant their use. We also periodically enter into guarantees and other similar arrangements as part of transactions in the ordinary course of business. These are described further in ~~"Obligations and Commitments"~~ ~~below.~~

~~Variable Interest Entities Not Consolidated~~

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.

charges related to our divested Private Brands operations, these lease put options are exercisable now and remain exercisable until generally 30 days after the end of the respective lease agreements. We are amortizing the difference between the put price and the estimated fair value (without a lease agreement in place) of each respective property over the remaining respective lease term within selling, general and administrative expenses. As of November 26, 2017 and May 28, 2017, the estimated amount by which the put prices exceeded the fair values of the related properties was $50.7 million, of which we had accrued $10.2 million and $8.4 million, respectively. In December 2017, subsequent to the second quarter of fiscal 2018, we purchased a building that had been subject to a put option. We will recognize a net loss of approximately $13 million for the early termination of the associated lease in our third quarter of fiscal 2018. Also in December 2017, we made an offer to purchase another property subject to a put option. We have not entered into a binding legal contract in connection with this offer. However, if our offer is accepted, we may recognize an estimated loss of $30 million to $40 million, upon closing of the transaction, for the early exit of an unfavorable lease contract. If this transaction is completed, we would have one remaining leased building subject to a put option for which the put option price exceeds the estimated fair value by $8.2 million, of which we had accrued $1.0 million, as of November 26, 2017. These leases, with the exception of one, are accounted for as operating leases. A capital lease asset and related lease obligation of $25.3 million and $28.9 million, respectively, were included in the Condensed Consolidated Balance Sheets as of November 26, 2017. We have determined that we do not have the power to direct the activities that most significantly impact the economic performance of these entities. In making this determination, we have considered, among other items, the terms of the lease agreements, the expected remaining useful lives of the assets leased, and the capital structure of the lessor entities.

OBLIGATIONS AND COMMITMENTS

As part of our ongoing operations, we enter into arrangements that obligate us to make future payments under contracts such as lease agreements, debt agreements, and unconditional purchase obligations (i.e., obligations to transfer funds in the future for fixed or minimum quantities of goods or services at fixed or minimum prices, such as "take-or-pay" contracts). The unconditional purchase obligation arrangements are entered into in our normal course of business in order to ensure adequate levels of sourced product are available. Of these items, debt, notes payable, ~~and capital~~finance lease obligations, ~~which totaled $3.5 billion as of~~ ~~November 26, 2017~~,and operating lease obligations were recognized as liabilities in the Condensed Consolidated Balance Sheets contained in this ~~report. Operating lease obligations and unconditional purchase obligations, which totaled $1.2 billion~~report as of ~~November 26, 2017, were not recognized as liabilities in the Condensed Consolidated Balance Sheets contained in this report, in accordance with generally accepted accounting principles.~~

February 23, 2020.

A summary of our contractual obligations as of ~~November 26, 2017~~February 23, 2020 was as follows:

	Payments Due by Period (in millions)
Contractual Obligations	Total		Less than 1 Year		1-3 Years		3-5 Years		After 5 Years
Long-term debt	$	9,906.6	$	901.7	$	2,482.9	$	1,000.1	$	5,521.9
Finance lease obligations		152.4		20.7		39.0		26.0		66.7
Operating lease obligations		314.1		56.3		83.2		52.4		122.2
Purchase obligations¹ and other contracts		1,393.5		1,143.9		130.8		59.6		59.2
Notes payable		0.8		0.8		—		—		—
Total	$	11,767.4	$	2,123.4	$	2,735.9	$	1,138.1	$	5,770.0

Payments Due by Period
(in millions)
Contractual Obligations Total
Less than
1 Year
1-3 Years 3-5 Years
After 5
Years
Long-term debt $ 3,321.3
$ 189.7
$ 626.7
$ 445.9
$ 2,059.0
Capital lease obligations 127.0
9.1
16.8
17.6
83.5
Operating lease obligations 216.5
39.9
50.0
34.0
92.6
Purchase obligations¹and other contracts
1,038.2
856.9
114.3
65.3
1.7
Notes payable 67.1
67.1
—
—
—
Total $ 4,770.1
$ 1,162.7
$ 807.8
$ 562.8
$ 2,236.8

¹ ~~Amount includes~~Amounts include open purchase orders and agreements, some of which are not legally binding and/or may be cancellable. Such agreements are generally settleable in the ordinary course of business in less than one year.

Purchase obligations and other contracts, which totaled $1.36 billion as of February 23, 2020, were not recognized as liabilities in the Condensed Consolidated Balance Sheets contained in this report, in accordance with generally accepted accounting principles.

We are also contractually obligated to pay interest on our long-term debt and ~~capital~~finance lease obligations. The weighted average coupon interest rate of the long-term debt obligations outstanding as of ~~November 26, 2017~~,February 23, 2020 was approximately ~~4.8%~~4.7%.

The operating lease obligations noted in the table above have not been reduced by non-cancellable sublease rentals of ~~$0.9~~$5.9 million.

As of May ~~28, 2017,~~26, 2019, we had aggregate unfunded pension and postretirement obligations totaling ~~$565.1 million. This amount is~~$131.7 million and $87.8 million, respectively. As of February 23, 2020, primarily as a result of several interim pension remeasurements, we had aggregate unfunded pension and postretirement obligations totaling $31.1 million and $85.7 million, respectively. These amounts are not included in the table above as the unfunded obligations are remeasured each fiscal year, thereby resulting in our inability to accurately predict the ultimate amount and ~~we do not expect~~timing of any future required contributions to ~~be required to make payments to fund these amounts in the foreseeable future.~~such plans. Based on current statutory requirements, we are not obligated to fund any amount to our qualified pension plans during the next twelve months. We estimate that we will make payments of approximately ~~$15.2~~$14.2 million and $10.8 million over the next twelve months to fund our pension ~~plans.~~and postretirement plans, respectively. See Note 14, Pension and Postretirement Benefits, to the Condensed Consolidated Financial Statements contained in this

report and Note 19, Pension and Postretirement Benefits, to the Consolidated Financial Statements and Critical Accounting Estimates – Employment-Related Benefits contained in the Company's Annual Report on Form 10-K for the year ended May ~~28, 2017, Critical Accounting Estimates - Employment Related Benefits,~~26, 2019 for further discussion of our pension obligations and factors that could affect estimates of this liability.

As part of our ongoing operations, we also enter into arrangements that obligate us to make future cash payments only upon the occurrence of a future event (e.g., guarantees of debt or lease payments of a third party should the third party be unable to perform). In accordance with generally accepted accounting principles, ~~the following~~such commercial commitments are not recognized as liabilities in our Condensed Consolidated Balance Sheets. As of February 23, 2020, we had other commercial commitments totaling $1.7 million, which will expire in less than one year.

In addition to the other commercial commitments mentioned above, as of February 23, 2020, we had $52.0 million of standby letters of credit issued on our behalf. These standby letters of credit are primarily related to our self-insured workers compensation programs and are not reflected in the Condensed Consolidated Balance Sheets contained in this report. ~~A summary of our commitments, including commitments associated with equity method investments, as of November 26, 2017 was as follows:~~

Amount of Commitment Expiration Per Period
(in millions)
Other Commercial Commitments Total
Less than
1 Year
1-3 Years 3-5 Years
After 5
Years
Standby repurchase obligations $ 0.9
$ 0.6
$ 0.3
$ —
$ —
Other commitments 6.9
3.5
3.4
—
—
Total $ 7.8
$ 4.1
$ 3.7
$ —
$ —

In certain limited situations, we will guarantee an obligation of an unconsolidated entity. We guarantee certain leases resulting from the divestiture of the JM Swank business completed in the first quarter of fiscal 2017. As of ~~November 26, 2017,~~February 23, 2020, the remaining terms of these arrangements dodid not exceed ~~six~~three years and the maximum amount of future payments we have guaranteed was ~~$3.4~~$0.7 million.

In addition, we guarantee a certain ~~limited situations,~~lease resulting from an exited facility. As of February 23, 2020, the remaining term of this arrangement did not exceed seven years and the maximum amount of future payments we have guaranteed was $17.1 million.

We also guarantee ~~obligations~~an obligation of the Lamb Weston business pursuant to a guarantee ~~arrangements~~arrangement that existed prior to the ~~Spinoff~~spinoff of the Lamb Weston business (the "Spinoff") and remained in place following completion of the Spinoff until such guarantee ~~obligations are~~obligation is substituted for guarantees issued by Lamb Weston. ~~Such guarantee arrangements are described below.~~ Pursuant to the Separation and Distribution Agreement, dated as of November 8, 2016 (the "Separation Agreement"), between us and Lamb Weston, ~~these~~this guarantee ~~arrangements are~~arrangement is deemed ~~liabilities~~a liability of Lamb Weston that ~~were~~was transferred to Lamb Weston as part of the Spinoff. Accordingly, in the event that we are required to make any payments as a result of these guarantee ~~arrangements,~~arrangement, Lamb Weston is obligated to indemnify us for any such liability, reduced by any insurance proceeds received by us, in accordance with the terms of the indemnification provisions under the Separation Agreement.

Lamb Weston is a party to an agricultural sublease agreement with a third party for certain farmland through 2020 (subject, at Lamb Weston’s option, to extension for two additional five-year periods). Under the terms of the sublease agreement, Lamb Weston is required to make certain rental payments to the sublessor. We have guaranteed the sublessor Lamb ~~Weston’s~~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,~~Company, in the event that we were required to perform under the ~~guaranty,~~guarantee, would be largely mitigated.

The obligations and commitments ~~tables~~disclosed above do not include any reserves for uncertainties in income taxes, as we are unable to reasonably estimate the ultimate amount or timing of settlement of our reserves for income taxes. The liability for gross unrecognized tax benefits at ~~November 26, 2017~~February 23, 2020 was ~~$34.0~~$46.2 million. The net amount of unrecognized tax benefits at ~~November 26, 2017,~~February 23, 2020, that, if recognized, would impact our effective tax rate was ~~$25.7~~$32.4 million. Recognition of these tax benefits would have a favorable impact on our effective tax rate.

CRITICAL ACCOUNTING ESTIMATES

A discussion of our critical accounting estimates can be found in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section in Part I,II, Item 7, of our Annual Report on Form 10-K for the fiscal year ended May ~~28, 2017~~.

26, 2019.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The principal market risks affecting us are exposures to price fluctuations of commodity and energy inputs, interest rates, and foreign currencies.

Other than the changes noted below, there have been no material changes in our market risk during the ~~twenty-six~~thirty-nine weeks ended~~November 26, 2017~~. February 23, 2020. For additional information, refer to the "Quantitative and Qualitative Disclosures about Market Risk" section in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended May ~~28, 2017.~~

26, 2019.

Commodity Market Risk

We purchase commodity inputs such as wheat, corn, oats, soybean meal, soybean oil, meat, dairy products, nuts, sugar, natural gas, electricity, and packaging materials to be used in our operations. These commodities are subject to price fluctuations that may

create price risk. We enter into commodity hedges to manage this price risk using physical forward contracts or derivative instruments. We have policies governing the hedging instruments our businesses may use. These policies include limiting the dollar risk exposure for each of our businesses. We also monitor the amount of associated counter-party credit risk for all non-exchange-traded transactions.

Interest Rate Risk

We may use interest rate swaps to manage the effect of interest rate changes on the fair value of our existing debt as well as the forecasted interest payments for the anticipated issuance of debt.

The carrying amount of long-term debt (including current installments) was ~~$3.46~~$10.02 billion as of ~~November 26, 2017~~.February 23, 2020. Based on current market rates, the fair value of this debt at ~~November 26, 2017~~February 23, 2020 was estimated at ~~$3.80~~$11.39 billion. As of ~~November 26, 2017~~,February 23, 2020, a 1% increase in the interest rates would decrease the fair value of our fixed rate debt by approximately ~~$188.4~~$694.1 million, while a 1% decrease in interest rates would increase the fair value of our fixed rate debt by approximately ~~$208.9~~$795.5 million.

Foreign Currency Risk

In order to reduce exposures for our processing activities related to changes in foreign currency exchange rates, we may enter into forward exchange or option contracts for transactions denominated in a currency other than the functional currency for certain of our operations. This activity primarily relates to economically hedging against foreign currency risk in purchasing inventory and capital equipment, sales of finished goods, and future settlement of foreign denominated assets and liabilities.

Value-at-Risk (VaR)

We employ various tools to monitor our derivative risk, including value-at-risk ("VaR") models. We perform simulations using historical data to estimate potential losses in the fair value of current derivative positions. We use price and volatility information for the prior 90 days in the calculation of VaR that is used to monitor our daily risk. The purpose of this measurement is to provide a single view of the potential risk of loss associated with derivative positions at a given point in time based on recent changes in market prices. Our model uses a 95% confidence level. Accordingly, in any given ~~one day~~one-day time period, losses greater than the amounts included in the table below are expected to occur only 5% of the time. We include commodity swaps, futures, and options and foreign exchange forwards, swaps, and options in this calculation. The following table provides an overview of our average daily VaR for our energy, agriculture, and foreign exchange positions ~~(including discontinued operations)~~ during the ~~twenty-six~~thirty-nine weeks ended ~~November 26, 2017~~February 23, 2020 and ~~November 27, 2016.~~February 24, 2019.

	Fair Value Impact
In Millions	Average During Thirty-nine Weeks Ended February 23, 2020		Average During Thirty-nine Weeks Ended February 24, 2019
Energy commodities	$	0.4	$	0.4
Agriculture commodities		0.4		0.4
Other commodities		0.1		0.1
Foreign exchange		0.6		0.7

Fair Value Impact
In Millions
Average
During Twenty-six Weeks
Ended November 26, 2017

Average
During Twenty-six Weeks
Ended November 27, 2016
Energy commodities $ 0.4
$ 0.4
Agriculture commodities 0.4
0.7
Foreign exchange 0.6
0.3

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company's management carried out an evaluation, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of ~~November 26, 2017~~.February 23, 2020. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures are effective.

Internal Control Over Financial Reporting

The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, evaluated any change in the Company's internal control over financial reporting that occurred during the quarter covered by this report and determined that there was no change in our internal control over financial reporting during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company, its directors, and several of its executive officers are ~~a party~~defendants in several class actions alleging violations of federal securities laws. The lawsuits assert that the Company's officers made material misstatements and omissions that caused the market to ~~various environmental proceedings and litigation, primarily related to our acquisition~~have an unrealistically positive assessment of the Company's financial prospects in ~~fiscal 1991 of Beatrice Company ("Beatrice"). As a result~~light of the acquisition of ~~Beatrice and~~Pinnacle, thus causing the ~~significant pre-acquisition contingencies~~Company's securities to be overvalued prior to the release of the ~~Beatrice businesses and its former subsidiaries, our condensed~~Company's consolidated ~~post-acquisition~~ financial statements reflect liabilities associated with the estimated resolution of these contingencies. Such liabilities include various litigation and environmental proceedings related to businesses divested by Beatrice prior to our acquisition of Beatrice. The litigation proceedings include suits against a number of lead paint and pigment manufacturers, including ConAgra Grocery Products Company, LLC, a wholly owned subsidiary of the Company ("ConAgra Grocery Products"), and the Company as alleged successors to W. P. Fuller Co., a lead paint and pigment manufacturer owned and operated by a predecessor to Beatrice from 1962 until 1967. Although decisions favorable to us have been rendered in Rhode Island, New Jersey, Wisconsin, and Ohio, we remain a defendant in active suits in Illinois and California. The Illinois suit seeks class-wide relief for reimbursement of costs associated with the testing of lead levels in blood. In California, a number of cities and counties joined in a consolidated action seeking abatement of the alleged public nuisance. On September 23, 2013, a trial of the California case concluded in the Superior Court of Californiaresults on December 20, 2018 for the County of Santa Clara, and on January 27, 2014, the court entered a judgment (the "Judgment") against ConAgra Grocery Products and two other defendants ordering the creation of a California abatement fund in the amount of $1.15 billion. Liability is joint and several. The Company appealed the Judgment, and on November 14, 2017 the California Court of Appeal for the Sixth Appellate District reversed in part, holding that the defendants were not liable to pay for abatement of homes built after 1950, but affirmed the Judgment as to homes built before 1951 and remanded to the trial court with directions to recalculate the sum to be paid into the abatement fund. The Company has petitioned the California Supreme Court for further review of the decision, which the Company believes to be an unprecedented expansion of current California law. In light of the unsettled nature of California public nuisance law and the ongoing appeal, a loss is considered neither probable nor estimable, and the Company has accordingly not accrued any loss related to this case. In addition, it is not possible to estimate exposure in the remaining case in Illinois, which is based on different legal theories. If ultimately necessary, the Company will look to its insurance policies for coverage; its carriers are on notice. However, the extent of insurance coverage is uncertain, and the Company cannot assure that the final resolution of these matters will not have a material adverse effect on its financial condition, results of operations, or liquidity.

The current environmental proceedings associated with Beatrice include litigation and administrative proceedings involving Beatrice's possible status as a potentially responsible party at approximately 40 Superfund, proposed Superfund, or state-equivalent sites (the "Beatrice sites"). These sites involve locations previously owned or operated by predecessors of Beatrice that used or produced petroleum, pesticides, fertilizers, dyes, inks, solvents, PCBs, acids, lead, sulfur, tannery wastes, and/or other contaminants. In the past five years, Beatrice has paid or is in the process of paying its liability share at 31 of these sites. 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 $52.8 million as of November 26, 2017, a majority of which relates to the Superfund and state-equivalent sites referenced above. During the thirdsecond quarter of fiscal ~~2017, a final Remedial Investigation/Feasibility Study~~year 2019. The first of these lawsuits, captioned West Palm Beach Firefighters' Pension Fund v. Conagra Brands, Inc., et al., with which subsequent lawsuits alleging similar facts have been consolidated, was submitted for the Southwest Properties portion of the Wells G&H Superfund site, which is one of the Beatrice sites. The U.S. Environmental Protection Agency (the "EPA") issued a Record of Decision (the “ROD”) for the Southwest Properties portion of the sitefiled on ~~September 29, 2017, and will subsequently enter into negotiations with potentially responsible parties to determine final responsibility for implementing the ROD.~~

~~We are party to a number of putative class action lawsuits challenging various product claims made~~February 22, 2019 in ~~the Company's product labeling. These matters include Briseno v. ConAgra Foods, Inc., in which it is alleged that the labeling for~~ ~~Wesson~~^® ~~oils as 100% natural is false and misleading because the oils contain genetically modified plants and organisms. In February 2015,~~ the U.S. District Court for the ~~Central~~Northern District of ~~California granted class certification to permit plaintiffs to pursue state law claims. The~~Illinois. In addition, on May 9, 2019, a shareholder filed a derivative action on behalf of the Company ~~appealed~~against the Company's directors captioned Klein v. Arora, et al. in the U.S. District Court for the Northern District of Illinois asserting harm to the ~~United States~~Company due to alleged breaches of fiduciary duty and mismanagement in connection with the Pinnacle acquisition. On July 9, 2019 and September 20, 2019, and March 10, 2020, the Company received three separate demands from stockholders under Delaware law to inspect the Company's books and records related to the Board of Directors' review of the Pinnacle business, acquisition, and the Company's public statements related to them. On July 22, 2019 and August 6, 2019, respectively, two additional shareholder derivative lawsuits captioned Opperman v. Connolly, et al. and Dahl v. Connolly, et al. were filed in the U.S. District Court ~~of Appeals~~ for the ~~Ninth Circuit, which affirmed class certification~~Northern District of Illinois asserting similar facts and claims as the Klein v. Arora, et al. matter. On October 21, 2019, the Company received an additional demand from a stockholder under Delaware law to appoint a special committee to investigate the conduct of certain officers and directors in ~~January 2017. The United States Supreme Court declined to review~~connection with the ~~decision~~Pinnacle acquisition and the ~~case has been remanded to~~Company's public statements. We have put the ~~trial court for further proceedings.~~Company's insurance carriers on notice of each of these securities and shareholder matters. While we cannot predict with certainty the results of ~~this~~these or any other legal ~~proceeding,~~proceedings, we do not expect ~~this matter~~these matters to have a material adverse effect on our financial condition, results of operations, or business.

For additional information on legal proceedings, please refer to Part I, Item 3 "Legal Proceedings" and Note 17, "Contingencies" to the financial statements, in each case contained in our Annual Report on Form 10-K for the year ended May ~~28, 2017, and Part II, Item 1 "Legal Proceedings"~~26, 2019, and Note 13, "Contingencies" to the Condensed Consolidated Financial Statements ~~in each case~~ contained in ~~our subsequent~~this Quarterly ~~Reports~~Report on Form 10-Q.

ITEM 1A. RISK FACTORS

~~A discussion of our~~

The disclosure below modifies the risk factors ~~can be found in Item 1A, Risk Factors,~~previously disclosed in our Annual Report on Form 10-K for the fiscal year ended May ~~28, 2017,~~26, 2019. These risks and uncertainties, along with those previously disclosed, could materially adversely affect our ~~Quarterly Report~~business or financial results.

Risks Relating to our Business

Deterioration of general economic conditions could harm our business and results of operations.

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), the negative impacts caused by pandemics and public health crises (including the COVID-19 outbreak), 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:

•

consumers may shift purchases to more generic, lower-priced, or other value offerings, or may forego certain purchases altogether during economic downturns, which could result in a reduction in sales of higher margin products or a shift in our product mix to lower margin offerings adversely affecting the results of our operations;

•

restrictions on public gatherings or interactions may limit the opportunity for our customers and consumers to purchase our products;

•

if a significant percentage of our workforce is unable to work, including because of illness or travel or government restrictions in connection with COVID-19, our operations may be negatively impacted;

•

a shutdown of one or multiple of our manufacturing facilities due to government restrictions or illness in connection with COVID-19;

•

decreased demand in the restaurant business (including due to COVID-19), particularly casual and fine dining, may adversely affect our Foodservice operations;

•

decreased demand for our products due to significant unemployment as a result of COVID-19;

•

volatility in commodity and other input costs could substantially impact our result of operations;

•

volatility in the equity markets or interest rates could substantially impact our pension costs and required pension contributions; and

•

it may become more costly or difficult to obtain debt or equity financing to fund operations or investment opportunities, or to refinance our debt in the future, in each case on terms and within a time period acceptable to us.

Disruption of our supply chain could have an adverse impact on ~~Form 10-Q for~~our business, financial condition, and results of operations.

Our ability to make, move, and sell our products is critical to our success. Damage or disruption to our supply chain, including third-party manufacturing or transportation and distribution capabilities, due to weather, including any potential effects of climate change, natural disaster, fire or explosion, terrorism, pandemics (such as the ~~period ended August 27, 2017,~~coronavirus (COVID-19) outbreak), strikes, government action, or other reasons beyond our control or the control of our suppliers and business partners, could impair our ability to manufacture or sell our products. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, particularly when a product is sourced from a single supplier or location, could adversely affect our business or financial results. In addition, disputes with significant suppliers, including disputes regarding pricing or performance, could adversely affect our ability to supply products to our customers and could materially and adversely affect our product sales, financial condition, and results of operations.

In particular, we are actively monitoring the recent COVID-19 outbreak and its potential impact on our supply chain and our ~~other filings with~~consolidated results of operations. Although our products are manufactured in North America and we source the ~~SEC. During~~significant majority of our ingredients and raw materials from North America, due to restrictions resulting from the ~~second quarter~~outbreak, global supply may become constrained, which may cause the price of ~~fiscal 2018, there were no material changes~~certain ingredients and raw materials used in our products to increase and/or we may experience disruptions to our ~~previously disclosed risk factors.~~

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

~~The following table presents~~operations. While we do not expect that the ~~total~~COVID-19 outbreak will have a material adverse effect on our business, financial condition, or results of operations at this time, we are unable to accurately predict the impact that COVID-19 will have due to various uncertainties, including the ultimate geographic spread of the virus, the severity of the virus, the duration of the outbreak, and actions that may be taken by governmental authorities.

We rely on our management team and other key personnel.

We depend on the skills, working relationships, and continued services of key personnel, including our experienced management team. In addition, our ability to achieve our operating goals depends on our ability to identify, hire, train, and retain qualified individuals. We compete with other companies both within and outside of our industry for talented personnel, and we may lose key personnel or fail to attract, train, and retain other talented personnel. Any such loss or failure could adversely affect our product sales, financial condition, and operating results.

In particular, our continued success will depend in part on our ability to retain the talents and dedication of key employees. If key employees terminate their employment, become ill as a result of the COVID-19 pandemic, or if an insufficient number of ~~shares~~employees is retained to maintain effective operations, our business activities may be adversely affected and our management team's attention may be diverted. In addition, we may not be able to locate suitable replacements for any key employees who leave, or offer employment to potential replacements on reasonable terms, all of ~~common stock purchased during the second quarter of fiscal 2018, the average price paid per share, the number of shares that were purchased as part of a publicly announced repurchase program,~~which could adversely affect our product sales, financial condition, and ~~the approximate dollar value of the maximum number of shares that may yet be purchased under the share repurchase program:~~

Period
Total Number
of Shares (or
units)
Purchased

Average
Price Paid
per Share
(or unit)

Total Number of
Shares
Purchased as Part of
Publicly Announced
Plans or Programs
(1)

Approximate Dollar
Value of Maximum
Number of Shares that
may yet be Purchased
under the Program (1)
August 28 through September 24, 2017 —
$ —
—
$ 1,081,967,000
September 25 through October 22, 2017 2,278,142
$ 34.16
2,278,142
$ 1,004,155,000
October 23 through November 26, 2017 5,904,526
$ 34.24
5,904,526
$ 801,968,000
Total Fiscal 2018 Second Quarter Activity 8,182,668
$ 34.22
8,182,668
$ 801,968,000

~~________________~~

~~(1)~~

Pursuant to publicly announced share repurchase programs from December 2003, we have repurchased approximately 210.1 million shares at a cost of $5.75 billion through November 26, 2017. On October 11, 2016, we announced that our Board of Directors approved an increase of $1.25 billion to the share repurchase program. On June 29, 2017, we announced that in the fourth quarter of fiscal 2017, our Board of Directors approved a further increase of $1.0 billion to the share repurchase program. The share repurchase program is effective and has no expiration date.

operating results.

ITEM 6. EXHIBITS

All documents referenced below were filed pursuant to the Securities Exchange Act of 1934 by Conagra Brands, Inc. (file number 001-07275), unless otherwise noted.

EXHIBIT		DESCRIPTION

~~EXHIBIT~~ 3.1		~~DESCRIPTION~~

~~3.1~~		Amended and Restated Certificate of Incorporation of Conagra Brands, Inc., incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on November 10, 2016

3.2		Amended and Restated ~~By-Laws~~Bylaws of Conagra Brands, Inc., incorporated herein by reference to Exhibit ~~3.1 of the Company’s Current Report on Form 8-K filed with the SEC on May 23, 2017~~

~~4.2~~		~~Indenture, dated October 12, 2017, by and between the Company and Wells Fargo Bank, National Association as Trustee, incorporated herein by reference~~3.2 to ~~Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on October 12, 2017~~

~~4.3~~		First Supplemental Indenture, dated October 12, 2017, by and between the Company and Wells Fargo Bank, National Association as Trustee (including Form of Note), incorporated herein by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the SEC on October 12, 2017

*10.2.4		~~Amendment Four to Conagra Brands, Inc. Nonqualified Pension Plan (January 1, 2009 Restatement), dated December 19, 2017~~

*10.4.7		Conagra Brands, Inc. Voluntary Deferred Compensation Plan (Restated Effective January 1, 2017), dated October 2, 2017, incorporated herein by reference to Exhibit 10.4.7 of the Company’s Quarterly Report on Form 10-Q for the quarter ended August 27, 2017

*10.4.8		~~First Amendment to Conagra Brands, Inc. Voluntary Deferred Compensation Plan (Restated Effective January 1, 2017), dated December 21, 2017~~

*10.7.7		~~First Amendment to ConAgra Foods, Inc. 2014 Stock Plan, dated December 15, 2017, incorporated herein by reference to Exhibit 10.1 of~~ the Company’s Current Report on Form 8-K filed with the SEC on December ~~15, 2017~~13, 2019

~~10.31.1~~ 31.1		~~Extension of Transition Services Agreement, dated as of October 9, 2017, by and between the Company and Lamb Weston Holdings, Inc.~~

12		~~Statement regarding computation of ratio of earnings to fixed charges~~

~~31.1~~		Section 302 Certificate of Chief Executive Officer

31.2		Section 302 Certificate of Chief Financial Officer

~~32.1~~ 32		Section 906 Certificates

101		The following materials from Conagra Brands' Quarterly Report on Form 10-Q for the quarter ended ~~November 26, 2017,~~February 23, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) Notes to Condensed Consolidated Financial Statements, and (vi) document and entity information.

* Management contract or compensatory plan. 104

Pursuant to Item 601(b)(4) of Regulation S-K, certain instruments with respect to long-term debt of Conagra Brands, Inc. are not filed with this Quarterly Report on Form 10-Q. The Company will furnish a copy of any such long-term debt agreement to Cover Page Interactive Data File (embedded within the ~~SEC upon request.~~ Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	CONAGRA BRANDS, INC.

	By:	/s/ DAVID S. MARBERGER
		David S. Marberger
		Executive Vice President and Chief Financial Officer

	By:	/s/ ROBERT G. WISE
		Robert G. Wise
		Senior Vice President and Corporate Controller

Dated this ~~4th~~31st day of ~~January, 2018.~~

March, 2020.

Delaware		47-0248710

~~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)


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


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



	Thirteen weeks ended				Twenty-six weeks ended
	November 26, 2017		November 27, 2016		November 26, 2017		November 27, 2016
Net sales	$	2,173.4	$	2,088.4	$	3,977.6	$	3,984.0
Costs and expenses:
Cost of goods sold	1,515.1		1,440.9		2,800.3		2,791.9
Selling, general and administrative expenses	307.3		417.9		546.3		649.6
Interest expense, net	38.0		54.1		74.4		112.3
Income from continuing operations before income taxes and equity method investment earnings	313.0		175.5		556.6		430.2
Income tax expense	109.5		78.4		229.5		247.6
Equity method investment earnings	20.6		17.2		50.6		30.3
Income from continuing operations	224.1		114.3		377.7		212.9
Income from discontinued operations, net of tax	0.4		11.6		0.1		103.0
Net income	$	224.5	$	125.9	$	377.8	$	315.9
Less: Net income attributable to noncontrolling interests	1.0		3.8		1.8		7.6
Net income attributable to Conagra Brands, Inc.	$	223.5	$	122.1	$	376.0	$	308.3
Earnings per share — basic
Income from continuing operations attributable to Conagra Brands, Inc. common stockholders	$	0.55	$	0.26	$	0.91	$	0.48
Income from discontinued operations attributable to Conagra Brands, Inc. common stockholders	—		0.02		—		0.22
Net income attributable to Conagra Brands, Inc. common stockholders	$	0.55	$	0.28	$	0.91	$	0.70
Earnings per share — diluted
Income from continuing operations attributable to Conagra Brands, Inc. common stockholders	$	0.54	$	0.26	$	0.91	$	0.48
Income from discontinued operations attributable to Conagra Brands, Inc. common stockholders	—		0.02		—		0.22
Net income attributable to Conagra Brands, Inc. common stockholders	$	0.54	$	0.28	$	0.91	$	0.70
Cash dividends declared per common share	$	0.2125	$	0.25	$	0.425	$	0.50



	Thirteen weeks ended
	November 26, 2017									November 27, 2016
	Pre-Tax Amount			Tax (Expense) Benefit			After-Tax Amount			Pre-Tax Amount			Tax (Expense) Benefit			After-Tax Amount
Net income	$	334.0		$	(109.5	)	$	224.5		$	243.2		$	(117.3	)	$	125.9
Other comprehensive income:
Derivative adjustments:
Unrealized derivative adjustments	1.0			(0.4		)	0.6			2.2			(0.9		)	1.3
Reclassification for derivative adjustments included in net income	0.1			—			0.1			—			—			—
Unrealized gains on available-for-sale securities	0.4			(0.2		)	0.2			0.2			—			0.2
Unrealized currency translation losses	(12.7		)	0.1			(12.6		)	(14.1		)	—			(14.1		)
Pension and post-employment benefit obligations:
Unrealized pension and post-employment benefit obligations	43.4			(16.6		)	26.8			66.8			(25.6		)	41.2
Reclassification for pension and post-employment benefit obligations included in net income	(0.2		)	0.1			(0.1		)	(0.9		)	0.4			(0.5		)
Comprehensive income	366.0			(126.5		)	239.5			297.4			(143.4		)	154.0
Comprehensive income attributable to noncontrolling interests	0.4			(0.4		)	—			2.2			(0.1		)	2.1
Comprehensive income attributable to Conagra Brands, Inc.	$	365.6		$	(126.1	)	$	239.5		$	295.2		$	(143.3	)	$	151.9



	November 26, 2017			May 28, 2017
ASSETS
Current assets
Cash and cash equivalents	$	84.0		$	251.4
Receivables, less allowance for doubtful accounts of $3.4 and $3.1	683.8			563.4
Inventories	1,059.2			934.2
Prepaid expenses and other current assets	183.5			228.7
Current assets held for sale	45.8			35.5
Total current assets	2,056.3			2,013.2
Property, plant and equipment	4,236.8			4,261.9
Less accumulated depreciation	(2,594.8		)	(2,606.9		)
Property, plant and equipment, net	1,642.0			1,655.0
Goodwill	4,457.0			4,301.1
Brands, trademarks and other intangibles, net	1,298.2			1,229.3
Other assets	846.1			790.6
Noncurrent assets held for sale	100.5			107.1
	$	10,400.1		$	10,096.3
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable	$	67.1		$	28.2
Current installments of long-term debt	198.8			199.0
Accounts payable	886.7			773.1
Accrued payroll	131.9			167.6
Other accrued liabilities	565.8			552.6
Total current liabilities	1,850.3			1,720.5
Senior long-term debt, excluding current installments	3,065.9			2,573.3
Subordinated debt	195.9			195.9
Other noncurrent liabilities	1,501.5			1,528.8
Total liabilities	6,613.6			6,018.5
Common stockholders' equity
Common stock of $5 par value, authorized 1,200,000,000 shares; issued 567,907,172	2,839.7			2,839.7
Additional paid-in capital	1,166.8			1,171.9
Retained earnings	4,464.3			4,247.0
Accumulated other comprehensive loss	(165.2		)	(212.9		)
Less treasury stock, at cost, 167,246,324 and 151,387,209 common shares	(4,607.9		)	(4,054.9		)
Total Conagra Brands, Inc. common stockholders' equity	3,697.7			3,990.8
Noncontrolling interests	88.8			87.0
Total stockholders' equity	3,786.5			4,077.8
	$	10,400.1		$	10,096.3



	Balance at May 28, 2017		Costs Incurred and Charged to Expense		Costs Paid or Otherwise Settled			Changes in Estimates			Balance at November 26, 2017
Pension costs	$	31.8	$	—	$	—		$	2.1		$	33.9
Severance and related costs	13.8		4.0		(7.9		)	(0.7		)	9.2
Consulting/professional fees	0.6		0.7		(1.1		)	—			0.2
Contract/lease cancellation	11.6		0.3		(3.6		)	(0.3		)	8.0
Other costs	1.9		6.5		(6.9		)	—			1.5
Total	$	59.7	$	11.5	$	(19.5	)	$	1.1		$	52.8



Derivatives Not Designated as Hedging Instruments	Location in Condensed Consolidated Statement of Earnings of Gains Recognized on Derivatives	Gains Recognized on Derivatives in Condensed Consolidated Statement of Earnings for the Thirteen Weeks Ended
Derivatives Not Designated as Hedging Instruments		November 26, 2017		November 27, 2016
Commodity contracts	Cost of goods sold	$	0.8	$	1.6
Foreign exchange contracts	Cost of goods sold	2.2		1.4
Foreign exchange contracts	Selling, general and administrative expense	—		2.5
Total gains from derivative instruments not designated as hedging instruments		$	3.0	$	5.5



	Amount of Commitment Expiration Per Period (in millions)
Other Commercial Commitments	Total		Less than 1 Year		1-3 Years		3-5 Years		After 5 Years
Standby repurchase obligations	$	0.9	$	0.6	$	0.3	$	—	$	—
Other commitments	6.9		3.5		3.4		—		—
Total	$	7.8	$	4.1	$	3.7	$	—	$	—



	Fair Value Impact
In Millions	Average During Twenty-six Weeks Ended November 26, 2017		Average During Twenty-six Weeks Ended November 27, 2016
Energy commodities	$	0.4	$	0.4
Agriculture commodities	0.4		0.7
Foreign exchange	0.6		0.3



Period	Total Number of Shares (or units) Purchased	Average Price Paid per Share (or unit)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Maximum Number of Shares that may yet be Purchased under the Program (1)
August 28 through September 24, 2017	—	$	—	—	$	1,081,967,000
September 25 through October 22, 2017	2,278,142	$	34.16	2,278,142	$	1,004,155,000
October 23 through November 26, 2017	5,904,526	$	34.24	5,904,526	$	801,968,000
Total Fiscal 2018 Second Quarter Activity	8,182,668	$	34.22	8,182,668	$	801,968,000