Filed by Conagra Brands, Inc.
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Pinnacle Foods Inc.
Commission File No.: 001-35844
June 27, 2018
Conagra Brands Acquisition of Pinnacle Foods and FY18 Q4 Earnings Presentation
June 27, 2018
Today’s Presenters
Brian Kearney
Investor Relations
Sean Connolly
President and Chief Executive Officer
Dave Marberger
Chief Financial Officer
2
Forward-Looking Statements
Note on Forward-looking Statements
This document contains forward-looking
statements within the meaning of the federal securities laws. These forward-looking statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Readers of this document should
understand that these statements are not guarantees of performance or results. Many factors could affect our actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements, including
those set forth in this document. These risks and uncertainties include, among other things: the failure to obtain Pinnacle Foods shareholder approval of the proposed transaction; the possibility that the closing conditions to the proposed
transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant a necessary regulatory approval and any conditions imposed on the combined entity in connection with consummation of the proposed
transaction; delay in closing the proposed transaction or the possibility of non-consummation of the proposed transaction; the risk that the cost savings and any other synergies from the proposed transaction
may not be fully realized or may take longer to realize than expected, including that the proposed transaction may not be accretive within the expected timeframe or to the extent anticipated; the occurrence of any event that could give rise to
termination of the merger agreement; the risk that shareholder litigation in connection with the proposed transaction may affect the timing or occurrence of the proposed transaction or result in significant costs of defense, indemnification and
liability; risks related to the disruption of the proposed transaction to us and our management; the effect of the announcement of the proposed transaction on our ability to retain and hire key personnel and maintain relationships with customers,
suppliers and other third parties; the ability and timing to obtain required regulatory approvals and satisfy other closing conditions for the pending divestiture of our Del Monte processed fruit and vegetable business in Canada; our ability to
achieve the intended benefits of recent and pending acquisitions and divestitures, including the recent spin-off of our Lamb Weston business; the continued evaluation of the role of our Wesson oil business;
general economic and industry conditions; our ability to successfully execute our long-term value creation strategy; our ability to access capital on acceptable terms or at all; our ability to execute our operating and restructuring plans and
achieve our targeted operating efficiencies from cost-saving initiatives and to benefit from trade optimization programs; the effectiveness of our hedging activities and our ability to respond to volatility in commodities; the competitive
environment and related market conditions; our ability to respond to changing consumer preferences and the success of our innovation and marketing investments; the ultimate impact of any product recalls and litigation, including litigation related
to the lead paint and pigment matters; actions of governments and regulatory factors affecting our businesses, including the ultimate impact of recently enacted U.S tax legislation and related regulations or interpretations; the availability and
prices of raw materials, including any negative effects caused by inflation or weather conditions; risks and uncertainties associated with intangible assets, including any future goodwill or intangible assets impairment charges; the costs,
disruption, and diversion of management’s attention associated with campaigns commenced by activist investors; and other risks described in our reports filed from time to time with the Securities and Exchange Commission. We caution readers not
to place undue reliance on any forward-looking statements included in this document, which speak only as of the date of this document. We undertake no responsibility to update these statements, except as required by law.
3
3
Non-GAAP Financial Measures; Additional Information and Where to Find
It; Participants in Solicitation
Note on Non-GAAP Financial Measures
This document includes certain non-GAAP financial measures, including adjusted diluted EPS from continuing operations, organic net sales,
adjusted gross profit, adjusted operating profit, adjusted gross margin, and adjusted operating margin. Management considers GAAP financial measures as well as such non-GAAP financial information in its
evaluation of the Company’s financial statements and believes these non-GAAP measures provide useful supplemental information to assess the Company’s operating performance and financial position.
These measures should be viewed in addition to, and not in lieu of, the Company’s diluted earnings per share, operating performance and financial measures as calculated in accordance with GAAP.
Certain of these non-GAAP measures, such as organic net sales, adjusted operating margin, and adjusted diluted EPS from continuing
operations, are forward-looking. Historically, the Company has excluded the impact of certain items impacting comparability, such as, but not limited to, restructuring expenses, the impact of the extinguishment of debt, the impact of foreign
exchange, the impact of acquisitions and divestitures, hedging gains and losses, impairment charges, the impact of legacy legal contingencies, and the impact of unusual tax items, from the non-GAAP financial
measures it presents. Reconciliations of these forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures are not provided because the Company is unable to provide such
reconciliations without unreasonable effort, due to the uncertainty and inherent difficulty of predicting the occurrence and the financial impact of such items impacting comparability and the periods in which such items may be recognized. For the
same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.
Hedge gains and
losses are generally aggregated, and net amounts are reclassified from unallocated corporate expense to the operating segments when the underlying commodity or foreign currency being hedged is expensed in segment cost of goods sold. The Company
identifies these amounts as items that impact comparability within the discussion of unallocated Corporate results.
Additional Information and Where to Find It
In connection with the proposed transaction, Conagra Brands will file a registration statement on Form S-4 with the SEC.
INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The final proxy statement/prospectus will be mailed to stockholders of Pinnacle Foods. Investors and security holders will be able to obtain the documents
free of charge at the SEC’s website, www.sec.gov, from Pinnacle Foods at its website, www.pinnaclefoods.com, or by contacting the Pinnacle Foods Investor Relations department at 1-973-541-8629, or from Conagra Brands at its website, www.conagrabrands.com, or by contacting the Conagra Brands Investor Relations department at 1-312-549-5002.
Participants in Solicitation
Conagra Brands and Pinnacle Foods and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed
transaction. Information concerning Conagra Brands’ participants is set forth in the proxy statement, filed August 11, 2017, for Conagra Brands’ 2017 annual meeting of stockholders as filed with the SEC on Schedule 14A. Information
concerning Pinnacle Foods’ participants is set forth in the proxy statement, filed April 20, 2018, for Pinnacle Foods’ 2018 annual meeting of stockholders as filed with the SEC on Schedule 14A. Additional information regarding the
interests of such participants in the solicitation of proxies in respect of the proposed transaction will be included in the registration statement and proxy statement/prospectus and other relevant materials to be filed with the SEC when they become
available.
4
4
Sean Connolly
President
and Chief Executive Officer
What We Want You to Take Away From Today
1 We have made tremendous progress over the past three years
Executed comprehensive
transformation
Significant margin expansion, bent the topline trend and upgraded the revenue base
Built industry-leading innovation capabilities
Completely overhauled the culture
Unlocked significant value through Lamb Weston spin
Delivered very strong Q4 to wrap up FY18
2 Acquisition of Pinnacle is a catalyst to accelerate value creation for shareholders
Combines two portfolios with industry-leading growth
Enhances our scale overall and in frozen
food categories
Complements our current portfolio of brands and assets
Unites
complementary cultures
Delivers attractive financial returns
3 We have the
leadership team, capabilities, and balance sheet to successfully execute and integrate this transaction and deliver shareholder value6
Three Years Ago, We Developed a Five
Year Plan
FY16/17 FY18FY19/20
Reset top-line Improve top-line Accelerate growth
Expand margins Expand margins Expand margins
7
6
We Delivered On Our Investor Day Commitments As We Closed FY18
Build a Winning Increase Margins Improve Top Line
Company
Progress
8
Significant Margin Expansion
Adj. Gross Margin Adj. Operating Margin1
+380 +460
29.7%
bps bps 16.1%
25.9%
11.5%
FY15 FY18 FY15FY18
Note: “Adjusted” financial measures are non-GAAP. See the end of this presentation for a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure. 9
1. Adjusted Operating Margin excludes
equity method investment earnings
Bent the Topline Trend
Organic Net Sales Growth1
(% Change vs Year
Ago)
+2.0%
+0.1%
(3.0)%
(5.5)%
FY17 Q1 FY18 Q2 + Q3 FY18Q4 FY18
Note: Organic net sales growth is non-GAAP. See the end of this presentation for a reconciliation of this measure to the most directly comparable GAAP measure. 10
1. Organic net sales excludes the impact of foreign exchange and divested businesses, as well as acquisitions (until the anniversary date of the
acquisitions).
UpgradedRevenue Base
Domestic Retail Scanner Data
Avg. Weekly TPDs Base
Sales Velocity Base Dollar Sales
(% Change vs Year Ago) (% Change vs Year Ago) (% Change vs Year Ago)
+5% +5%+3% +3%
+3%+4%
+3%
+2%
(0)% +1%
(1)%
(2)% (1)%
(3)%
(5)% (5)% (4)% (4)%
Q3 Q4
Q1Q2Q3Q4Q3Q4Q1Q2Q3Q4Q3Q4Q1Q2Q3Q4
FY17 FY17 FY18 FY18 FY18 FY18 FY17 FY17 FY18 FY18 FY18 FY18 FY17 FY17 FY18 FY18 FY18 FY18
Source: IRI Market Advantage, Conagra Consumer Foods (excl. Frontera and Sandwich Bros. of Wisconsin Syndicated), TTL US MULO, Quarterly data through May 27,
2018 11
Note: Base Sales Velocity = Base Dollars / Avg. Weekly TPDs
Built World-Class Innovation Capabilities
FY18 Innovation FY19 Innovation
12
Note: Innovation referenced may not be exhaustive nor final.
Completely Overhauled the Culture
Fewer layers and Differentiating Right sized –
broader spans
of capabilities – lean, self-Silo-free,
control – agility, growth and service, andcollaborative and
speed, and margin strategicfun
empowerment expansion outsourcing
13
Delivered Significant Shareholder Value
Total Shareholder Return
103.8%
52.5%
S&P 500 Index CAG
(Total Return) (incl. LW)
Note 1: Measurements represent period from
August 8, 2014 to May 25, 2018. “CAG (incl. LW)” calculated as Conagra Brands Share Price + (Lamb Weston Share Price / 3) to account
for the 3:1 distribution ratio.
Note 2: Total shareholder return
represents share price return plus dividends paid. 14
Source: Factset, company websites, and S&P Dow Jones
Indices
Pinnacle is a Compelling Acquisition
Creates an $11 billion company by net sales with iconic brands and leading positions in frozen, snacking, refrigerated, and grocery categories
Combines two portfolios with industry-leading growth
Enhances our scale overall and in frozen
food categories
Complements our current portfolio with additional focus in existing domains with strong, category-leading brands
Unites complementary cultures, both of which are focused on brand building and innovation while maintaining a lean cost structure and results orientation
Attractive expected financial impact including IRR > WACC and EPS accretion in first full fiscal year following close
15
Note: IRR is internal rate of return; WACC stands for Weighted Average Cost of Capital
Transaction Summary
Structure and Consideration
~$10.9 billion transaction, including
Pinnacle’s outstanding net debt1
Pinnacle shareholders receive an implied price of $68 per share in a combination of cash and stock
15.8x adjusted EBITDA2 before synergies and 12.1x adjusted EBITDA2 including run-rate cost synergies
Expected Financial Benefits
Low single digit percentage accretion to EPS3 in FY20; high single
digit percentage accretion to EPS3 in FY22
$215 million of run-rate cost synergies by FY22
Maintaining commitment to solid investment grade rating
IRR expected to be greater than WACC
Timing and Approvals
Expected close by end of calendar year 2018
Subject to Pinnacle shareholder approval, regulatory approvals, and other customary closing conditions
1. Based on volume weighted average price per share of Conagra Brands’ stock for the five days ending June 21, 2018
2. Based on Pinnacle Foods estimated fiscal year 2018 results
3. Adjusted diluted earnings per
share from continuing operations 16 Note: IRR is internal rate of return; WACC stands for Weighted Average Cost of Capital
Pinnacle at a Glance
Net Sales Composition Top Brands
Specialty Frozen
11% 41%
Boulder Brands
13%
$3.1 Billion
Net Sales
Grocery
35%
17
The New Conagra Brands Portfolio
Iconic Brands in Strong Categories
³ $1
Billion Brands
³ $450
Million Brands
³ $100
Million Brands
18
Source: IRI MA POS data, Syndicated TSV database, TUS-MULO+C, 52 weeks ending May 27, 2018, Dollar Sales
Combining Two of the Fastest-Growing
Portfolios in the Industry
Domestic Retail Scanner
Data
(Retail Sales; % Change vs Year Ago; Last 13 weeks ending May 27, 2018)
Peer 1 +3%
+3%
Peer 2 +2%
+1%
Peer 3 +1%
Peer 4 +1%
Peer 5 +1%
Peer 6 +0%
Peer 7 +0%
Peer 8 +0%
Peer 9 (0)%
Peer 10 (0)%
Peer 11 (0)%
Peer 12 (1)%
Peer 13 (1)%
Peer 14 (1)%
Peer 15 (3)%
Note: Peers’ data includes recent
acquisitions 19
Source: IRI MA POS data, Syndicated Categories, TUS-MULO+C, data through 13 weeks
ending May 27, 2018, Dollar Sales
Improved Scale in Total Retail and
Frozen Foods
Dollars in billions
Total Retail Sales
$37.3
$21.5 $18.3
$12.3$12.2$9.9$9.1$8.6$8.2$
7.5$7.2$5.6$5.4$5.3$4.6$4.1$2.6$1.8
1 2 3456789101112131415
Peer Peer Peer Peer CombinedPeerPeer Peer Peer Peer Peer Peer Peer Peer Peer Peer
Frozen Foods Retail Sales
(excluding Ice-Cream,
Novelties, Beverages)
$5.1 $4.9
$3.9
$2.8
$2.1$1.9
$1.3$1.2
$0.7$0.5$0.2$0.2$0.1$0.0$0.0$0.0$0.0$0.0
1 23456789101112131415
Peer Combined PeerPeer
Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer
Note: Peers sales include recent acquisitions 20
Source: IRI MA POS data, Syndicated Categories, TUS-MULO+C, 52 weeks ending May 27, 2018, Dollar Sales
Portfolios Are Complementary Within Domains
Frozen & Snacks & Shelf-Stable
Condiments &
Enhancers
Refrigerated Meals Sweet Treats Meals & Sides
Percentage of portfolio’s retail sales
Conagra: 39% 23%23%15%
Pinnacle: 54% 11%24%11%
Combined: 44% 19%23%13%
flects the percent of Domestic
Retail sales. Numbers may not add to 100% due to rounding. 21
a, Syndicated Categories, TUS-MULO+C,
52 weeks ending May 27, 2018, Dollar Sales
Combining Two Strong Cultures
Lean AND Innovative
22
Strong Strategic Rationale
Leading Brands Complementary StrengthensEnhancesInnovation
Businesses Scale Frozen PositionPlatform
23
Meaningful Value Creation from
Transaction
Attractive Strong Capital
Synergies IRR > WACC Accretion
Top-Line Structure
Note: IRR is internal rate of return; WACC is weighted average
cost of capital 24
Dave Marberger
Chief
Financial Officer
Transaction Financial Summary
Implied price of $68 per Pinnacle share
$43.11 in cash and $24.89 in Conagra shares (0.6494
shares at $38.321)
Purchase Price ~$10.9 billion aggregate value ($8.2 billion of equity; $2.7 billion of assumed debt)
15.8x adjusted EBITDA2 before synergies and 12.1x adjusted EBITDA2 including run-rate cost
synergies
Committed bridge facility until permanent financing is raised; Goldman Sachs has
provided
committed financing
~$10.9 billion purchase price financed by:
Financing $3.0 billion of Conagra Brands equity issued to Pinnacle shareholders
Structure $7.9 billion in cash consideration funded with $7.3 billion of long-term debt and $600 million
of incremental cash proceeds from public equity issuance and/or divestitures
At closing, pro
forma debt-to-EBITDA of 5.0x and targeted debt-to-EBITDA of 3.5x
Low single digit percentage accretion to EPS3 in FY20; high single digit percentage accretion
to EPS3 in FY22
Expected $215 million run-rate cost synergies by FY22 (~55% SG&A, ~45% COGS)
Financial Impact
$355 million cash cost to achieve (~60% Operating Expenditures; ~40% Capital Expenditures)
~$55 million incremental non-cash amortization from transaction-related purchase accounting
1. Based on volume weighted average price per share of Conagra Brands’ stock for the five days ending June 21, 2018
2. Based on Pinnacle Foods estimated fiscal year 2018 results 26
3.
Adjusted diluted earnings per share from continuing operations
Capital Allocation Policy Overview
Committed to solid investment grade credit rating
Debt Reduction
Leverage target of 3.5x
Invest in the Support
continued organic growth
Business Support seamless integration of Pinnacle
Intend to maintain quarterly dividend at current annual rate of $0.85 per
Dividends & share during FY19
Share Modest dividend increases expected over time, subject to approval by
Repurchases Board of Directors
Share repurchases only as consistent
with prioritization of leverage targets
M&A Tax asset would allow us to divest assets in an efficient manner
27
Q4 and FY18 Results
Performance Summary
$ in millions, except per share data
Increase/(Decrease) Q4 FY18 vs YAFY18vs YA
Net
Sales $1,966 +5.6%$7,938+1.4%
Organic Net Sales1 +2.0%(0.2)%
Adj. Gross Profit 573 +6.1%2,354(0.5)%
Adj. Gross
Margin 29.2% +12 bps29.7%(57) bps
A&P 59 (21.2)% 279(15.1)%
A&P as % of NS 3.0% (103) bps3.5%(68) bps
Adj.
SG&A 218 +3.4%798(0.7)%
Adj. SG&A as % of NS 11.1% (23) bps10.1%(21) bps
Adj. Op. Profit2 295 +16.4%1,277+3.5%
Adj. Op.
Margin2 15.0% +139 bps16.1%+33 bps
Adj. Diluted EPS from cont. ops. $ 0.50 +35.1%$ 2.11+21.3%
Note: “Adjusted” financial measures and organic net sales are non-GAAP. See the end of this presentation for a reconciliation of
these measures to the most directly comparable GAAP measures.
1. Organic net sales excludes the impact of foreign exchange and divested businesses, as well as
acquisitions (until the anniversary date of the acquisitions). 29
2. Adjusted operating profit and adjusted operating margin exclude equity
method investment earnings.
Q4 and FY18 Net Sales Bridge vs Year Ago
Q4 Drivers of Net Sales Change FY18 Drivers of Net Sales Change
(%
Change vs Year Ago) (% Change vs Year Ago)
Organic Organic
Net Sales1 Net Sales1
+2.0% (0.2)%
5.6%
3.3%
2.1% 1.3%1.2%1.4%
0.4%
0.3%
(0.1)%
Volume Price/Mix Foreign Acquisitions Net Sales
Exchange
(1.5)%
VolumePrice/Mix Foreign AcquisitionsNet Sales
Exchange&
Divestitures
Note: Organic net sales is non-GAAP. See the end of this presentation for a reconciliation of this measure to the most directly comparable
GAAP measure. 30
Organic net sales excludes the impact of foreign exchange and divested businesses, as well as acquisitions (until the
anniversary date of the acquisitions).
Able to Offset Inflation in FY18
FY18 Adj. Gross Margin
0.0%
Inflation at 3.8% Realized Productivity Retailer
(incl. op. offsets),
Marketing
Price/Mix, Other
Note
1: “Adjusted” financial measures are non-GAAP. See the end of this presentation for a reconciliation of these measures to the most directly comparable GAAP measures.
Note 2: Numbers may not add due to rounding. 31
Q4 Financial Summary by Segment
$ in millions Net Sales Adj. Op. Profit1 Adj. Op. Margin1
Increase/(Decrease)
Reported Organic2
Q4 FY18 Q4 FY18vs YAQ4 FY18vs YA
vs YAvs YA
Grocery & Snacks $803 7.1%1.1%$18113.7%22.6%+121 bps
Refrigerated & Frozen 691 7.9%5.2%12314.9%17.8%+109 bps
International 209 2.0%(0.6)% 196.4%9.1%+47 bps
Foodservice 264 (1.2)% (1.2)%2714.6%10.3%+142 bps
Corporate Expense - --(55)1.5%--
Total $1,966 +5.6%+2.0%$295+16.4%15.0%+139 bps
Note 1:
“Adjusted” financial measures and organic net sales are non-GAAP. See the end of this presentation for a reconciliation of these measures to the most directly comparable GAAP measures.
Note 2: Numbers may not add due to rounding.
1. Adjusted operating profit and adjusted operating margin exclude equity method investment earnings.
2. Organic net sales excludes the impact of foreign exchange and divested businesses, as well as acquisitions (until the anniversary date of the
acquisitions). 32
FY18 Financial Summary by Segment
$ in millions Net Sales Adj. Op. Profit 1 Adj. Op. Margin 1
Increase/(Decrease)
Reported Organic 2
FY18 FY18 vs YAFY18vs YA
vs YAvs YA
Grocery & Snacks $3,287 2.4%(2.0)% $754(3.1)%22.9%(132) bps
Refrigerated & Frozen 2,753 3.8%2.8%4806.2%17.4%+41 bps
International 844 3.4%(0.1)% 8930.6%10.5%+219 bps
Foodservice 1,055 (2.2)% (2.2)%12213.9%11.5%+163 bps
Corporate Expense - --(168)(5.3)% --
Total $7,938 +1.4%(0.2)% $1,277+3.5%16.1%+33 bps
Note
1: “Adjusted” financial measures and organic net sales are non-GAAP. See the end of this presentation for a reconciliation of these measures to the most directly comparable GAAP measures.
Note 2: Numbers may not add due to rounding.
1. Adjusted operating profit and adjusted operating margin exclude equity method investment earnings. 33
2. Organic net sales excludes the impact of foreign exchange and divested businesses, as well as acquisitions (until the anniversary date of the
acquisitions).
Q4 Adjusted EPS Bridge
Q4
FY18 Drivers of Adjusted Diluted EPS from Cont. Ops. vs YA
Note: “Adjusted” financial measures and organic net sales are
non-GAAP. See the end of this presentation for a reconciliation of these measures to the most directly comparable GAAP measures. 34
FY18 Adjusted EPS Bridge
FY18 Drivers of Adjusted Diluted EPS from Cont. Ops. vs YA
35
Note: “Adjusted” financial measures and organic net sales are non-GAAP. See the end of this presentation for a
reconciliation of these measures to the most directly comparable GAAP measures.
Key Balance Sheet & Cash Flow Metrics
For the fiscal year ending May May
(dollars in
millions) 27, 2018 28, 2017
Net Cash Flow from Operating Activities $920a $1,141b
– cont. ops.
Capital Expenditures 252 242
Dividends Paid 342 415
Share
Repurchases $967 $1,000
May May
(dollars in
millions) 27, 2018 28, 2017
Debt $3,816 $2,996
Cash 128 251
Ending Net Debtc $3,688 $2,745
a) Includes $300 million of pension contribution in FY18
b) Includes $150 million of pension contribution in FY17 36
c) Debt is the sum of notes payable, current installments of long-term debt, senior long-term debt, and subordinated debt. Net Debt is Debt
less Cash.
New Pension Accounting Changes Optics of
Historical Income Statement
FY18
$ in millions, except per share data Prior Standard Change New Standard
Net Sales $7,938 -$7,938
Adj. Op
Profit 1,277 (86)1,191
Adj. Op Margin1 16.1% (110) bps15.0%
Adj. Pension and Postretirement - +8686
Non-Service Income
Adj. Diluted EPS from Cont. Ops. $2.11 -$2.11
Note:
“Adjusted” financial measures and organic net sales are non-GAAP. See the end of this presentation for a reconciliation of these measures to the most directly comparable GAAP measures. 37
1. Adjusted operating margin excludes equity method investment earnings.
Pension Reinvestment and Risk Mitigation
Affect Income Statement Prospectively
Change vs
FY18
% of Asset in
Fixed
Income Securities
% of Asset in
Equity + Other Securities
Pension
Risk
P&L Impact
(Pension
and Postretirement ~$(46) million
Non-Service Income)
38
Standalone FY19 Outlook 1, 2
Key Financial Metrics FY19 Guidance
Reported Net Sales
Growth +0.5% to +1.5%
Organic Net Sales Growth 3 +1.0% to +2.0%
(excl. Trenton impact)
Adj. Gross Margin 29.7%
to 30.0%
Inflation Rate (% of COGS) 3.0% to 3.2%
Adj.
Op Margin 4 15.0% to 15.3%
(compared to recast 15.0% in FY18)
Pension and Postretirement Non-Service ~$40 million
Income (compared to $86 million in FY18)
Effective Tax
Rate 23% to 24%
Note: Standalone FY19 Guidance excludes the impact of the pending acquisition of Pinnacle Foods.
1. The inability to predict the amount and timing of future items makes a detailed reconciliation of these forward-looking financial measures
impracticable.
2. “Adjusted” financial measures and organic net sales are non-GAAP
financial measures. The FY19 Outlook includes the Wesson oil business for the full fiscal year and excludes the
Canadian Del Monte
processed fruit and vegetable business for the full fiscal year.
3. Organic net sales excludes the impact of foreign exchange and divested
businesses, as well as acquisitions (until the anniversary date of the acquisitions).
4. Adjusted operating margin excludes equity method
investment earnings. 39
Standalone Q1 FY19 Outlook 1, 2
Key Financial Metrics Q1 FY19 Guidance
Reported Net Sales
Growth +2.0% to +2.5%
Adj. Op Margin 3 14.1% to 14.4%
(compared to recast 15.4% in FY18)
Adj. Diluted EPS from Cont.
Ops. $0.46 to $0.49
Note: Standalone FY19 Guidance excludes the impact of the pending acquisition of Pinnacle Foods.
1. The inability to predict the amount and timing of future items makes a detailed reconciliation of these forward-looking financial measures
impracticable.
2. “Adjusted” financial measures and organic net sales are non-GAAP
financial measures. The FY19 Outlook includes the Wesson oil business for the full fiscal year and excludes the
Canadian Del Monte
processed fruit and vegetable business for the full fiscal year. 40
3. Adjusted operating margin excludes equity method investment
earnings.
Underlying Business On Track for
Standalone FY17-20 Algorithm1,2
Strategic New Pension
Key Financial Metrics Original
Changes toTrued-Up
Shift from SubtotalAccounting &
Incr / (Decr) (Oct 2016) OutlookTargets
A&P to Trade Tax Reform
Organic Net Sales +0.5% to
+1% to
+2% (0.5)% -+0.5%+1% to +2%
CAGR 3 +1.5%
Adj. Gross Margin ~32.0% (1.5)% ~30.5%--~30.5%
Adj. SG&A, excl
A&P 10.8% -10.8%+1.0%-11.8%
(% of net sales) (pension accounting)
A&P (% of net sales) 4.7% (1.5)% 3.2%--3.2%
Adj. Op Margin
4 ~16.5% -~16.5%(1.0)% -~15.5%
Note: Standalone FY17-FY20 Guidance excludes the impact of the pending acquisition of Pinnacle
Foods.
1. The inability to predict the amount and timing of future items makes a detailed reconciliation of these forward-looking financial
measures impracticable.
2. “Adjusted” financial measures and organic net sales are
non-GAAP financial measures. The FY19 Outlook includes the Wesson oil business for the full fiscal year and excludes the
Canadian Del Monte processed fruit and vegetable business for the full fiscal year.
3. Organic net sales excludes the impact of foreign exchange and divested businesses, as well as acquisitions (until the anniversary date of the
acquisitions). 41
4. Adjusted operating margin excludes equity method investment earnings.
Transaction Enhances Algorithm
Key Financial Metrics Impact of Transaction
Organic Net Sales Growth
1
Adj. Gross Margin
Adj. Op
Margin 2
Adj. Diluted EPS from Cont. Ops.
Will Provide More Detail at an Investor Day Post-Close
1. Organic net
sales excludes the impact of foreign exchange and divested businesses, as well as acquisitions (until the anniversary date of the acquisitions).
2. Adjusted operating margin excludes equity method investment earnings. 42
What We Want You to Take Away From Today
1 We have made tremendous progress over the past three years
Executed comprehensive
transformation
Significant margin expansion, bent the topline trend and upgraded the revenue base
Built industry-leading innovation capabilities
Completely overhauled the culture
Unlocked significant value through Lamb Weston spin
Delivered very strong Q4 to wrap up FY18
2 Acquisition of Pinnacle is a catalyst to accelerate value creation for shareholders
Combines two portfolios with industry-leading growth
Enhances our scale overall and in frozen
food categories
Complements our current portfolio of brands and assets
Unites
complementary cultures
Delivers attractive financial returns
3 We have the
leadership team, capabilities, and balance sheet to successfully execute
and integrate this transaction and deliver shareholder value
43
Q&A
Reconciliation of Non-GAAP
Financial Measures to Reported
Financial Measures
Reconciliation of Non-GAAP Financial
Measures to Reported Financial Measures
(dollars in
millions)
Grocery Total
& Refrigerated Conagra
Q4
FY18 Snacks & FrozenInternationalFoodserviceCommercialBrands
Net Sales $ 802.5
$690.7$208.9$264.1—$1,966.2
Impact of foreign exchange — —(5.3)——(5.3)
Net sales from acquired businesses (44.5) (17.3)(0.1)——(61.9)
Organic Net Sales $ 758.0 $673.4$203.5$264.1—$1,899.0
Year-over-year change—Net Sales 7.1 % 7.9%2.0 %(1.2)% —%5.6 %
Impact of foreign exchange (pp) — —(2.6)——(0.3)
Net
sales from acquired businesses (pp) (6.0) (2.7)———(3.3)
Organic Net Sales Growth 1.1 % 5.2%(0.6)%
(1.2)%—%2.0 %
Volume (Organic) (0.3)% 2.9 %(2.5 )%(5.4 )%(0.1)%
Price/Mix 1.4 % 2.3 %1.9 %4.2 %2.1 %
Grocery Total
& Refrigerated Conagra
Q4
FY17 Snacks & FrozenInternationalFoodserviceCommercialBrands
Net Sales $ 749.4
$640.2$204.7$267.4—$1,861.7
Net sales from divested businesses — —————
Organic Net Sales $ 749.4 $640.2$204.7$267.4—$1,861.7
46
Reconciliation of Non-GAAP Financial
Measures to Reported Financial Measures
(dollars in
millions)
Total
Grocery Refrigerated Conagra
FY18 & Snacks & FrozenInternationalFoodserviceCommercialBrands
Net Sales $3,287.0 $2,753.0$843.5$ 1,054.8—$7,938.3
Impact of
foreign exchange — —(27.9)——(27.9)
Net sales from acquired businesses (143.2)
(25.8)(0.1)——(169.1)
Organic Net Sales $3,143.8 $2,727.2$815.5$ 1,054.8—$7,741.3
Year-over-year change—Net Sales 2.4 % 3.8%3.4 %(2.2)% (100.0)%1.4 %
Impact of foreign exchange (pp) — —(3.4)——(0.4)
Net
sales from acquired businesses (pp) (4.4) (1.0)(0.1)——(2.1)
Net sales from divested businesses (pp) —
———(100.0)0.9
Organic Net Sales Growth (2.0)% 2.8%(0.1)%(2.2)%— %(0.2)%
Volume (Organic) (1.6 )% 2.6 %(2.8 )%(10.9 )%N/A(1.5 )%
Price/Mix (0.4 )% 0.2 %2.7 %8.7 %N/A1.3 %
Total
Grocery Refrigerated Conagra
FY17 & Snacks & FrozenInternationalFoodserviceCommercialBrands
Net Sales $3,208.8 $2,652.7$816.0$ 1,078.371.1$7,826.9
Net sales from
divested businesses — ———(71.1)(71.1)
Organic Net Sales $3,208.8 $2,652.7$816.0$
1,078.3—$7,755.8
47
Reconciliation of Non-GAAP Financial
Measures to Reported Financial Measures
(dollars in
millions)
Total
Grocery Refrigerated Corporate Conagra
Q4
FY18 & Snacks & FrozenInternationalFoodserviceExpenseBrands
Operating Profit $173.2
$122.9$17.9$27.2$(207.3) $133.9
Restructuring plans 3.5—0.4—0.94.8
Intangible impairment charges 4.0—0.8——4.8
Acquisitions
and divestitures 0.4———3.64.0
Pension settlement ————1.31.3
Legal matters ————151.0151.0
Corporate hedging
derivative losses (gains) ————(4.3)(4.3)
Adjusted Operating Profit $181.1
$122.9$19.1$27.2$(54.8) $295.5
Operating Profit Margin 21.6%17.8%8.6%10.3%6.8%
Adjusted Operating Profit Margin 22.6%17.8%9.1%10.3%15.0%
Year-over-year % change—Operating Profit 240.5%15.0%N/A14.6%250.0%20.4%
Year-over year % change—Adjusted
Operating
Profit 13.7%14.9%6.4 %14.6%1.5%16.4%
Year-over-year bps change—Adjusted
Operating Profit 121 bps109 bps47 bps142 bps139 bps
Total
Grocery Refrigerated Corporate Conagra
Q4
FY17 & Snacks & FrozenInternationalFoodserviceExpenseBrands
Operating Profit $50.9
$106.9$(11.1)$23.7$(59.2) $111.2
Restructuring plans 9.90.10.6—5.416.0
Goodwill and intangible impairment charges 67.1—28.4——95.5
Acquisitions and divestitures 31.4————31.4
Legal
matters ————(5.7)(5.7)
Corporate hedging derivative losses (gains)
————5.55.5
Adjusted Operating Profit $159.3 $107.0$17.9$23.7$(54.0) $253.9
Operating Profit Margin 6.8%16.7%(5.4)% 8.9%6.0%
Adjusted Operating
Profit Margin 21.3%16.7%8.7 %8.9%13.6%48
Reconciliation of Non-GAAP Financial
Measures to Reported Financial Measures
(dollars in
millions)
Grocery Total
&
RefrigeratedCorporateConagra
FY18 Snacks & FrozenInternationalFoodserviceCommercialExpenseBrands
Operating Profit $724.8 $479.4$ 86.5$121.8$—$ (379.0)$1,033.5
Restructuring plans 14.10.11.5——22.338.0
Intangible impairment charges 4.0—0.8———4.8
Acquisitions and divestitures 11.40.7———3.615.7
Pension
settlement and valuation —————5.45.4
Legal matters
—————151.0151.0
Corporate hedging derivative losses (gains) —————(6.2)(6.2)
Early exit of an unfavorable lease contract
by purchasing the
building —————34.934.9
Adjusted Operating Profit $754.3 $480.2$ 88.8$121.8$—$
(168.0)$1,277.1
Operating Profit Margin 22.1%17.4%10.3%11.5%13.0%
Adjusted Operating Profit Margin 22.9%17.4%10.5%11.5%16.1%
Year-over-year % change—Operating Profit 10.9 %7.5 %N/A15.8%(100.0)% 21.0%11.7%
Year-over year % change—Adjusted
Operating
Profit (3.1)% 6.2%30.6 %13.9%(100.0)%(5.3)%3.5%
Year-over-year bps change—Adjusted
Operating Profit (132) bps 41 bps219 bps163 bps33 bps
49
Reconciliation of Non-GAAP Financial
Measures to Reported Financial Measures
(dollars in
millions)
Grocery Total
& RefrigeratedCorporateConagra
FY17 Snacks & FrozenInternationalFoodserviceCommercialExpenseBrands
Operating Profit $ 653.7 $445.8$ (168.9)$105.1$202.6$ (313.3)$925.0
Gain on sale of Spicetec and J.M. Swank
businesses — ———(197.4)—(197.4)
Restructuring plans 25.3 6.20.91.8—29.463.6
Goodwill and intangible impairment 68.3 —235.9———304.2
Acquisitions and divestitures 31.4 —————31.4
Early extinguishment of debt — ————93.393.3
Salaried pension plan lump sum settlement — ————13.813.8
Legal matters — ————(5.7)(5.7)
Corporate
hedging derivative losses (gains) — ————5.15.1
Adjusted Operating Profit $ 778.7 $452.0$
67.9$106.9$5.2$ (177.4)$1,233.3
Operating Profit Margin 20.4 %16.8%(20.7)% 9.7%11.8%
Adjusted Operating Profit Margin 24.3 %17.0%8.3 %9.9%15.8%
50
Reconciliation of Non-GAAP Financial Measures to Reported Financial
Measures (dollars in millions) Diluted EPS from income Income from from continuing continuing operations operations before income Net income attributable to Selling, taxes and equity Income attributable Conagra general and method tax Income to
Conagra Brands, Inc Gross administrative Operating investment expense tax Brands, common Q4 FY18 profit expenses profit 1 earnings (benefit) rate Inc. stockholders Reported $ 575.4 $ 441.5 $ 133.9 $ 89.4 $ 36.5 34.1 % $ 69.6 0.18 % of Net Sales
29.3% 22.5% 6.8% Restructuring plans 2.2 2.6 4.8 4.8 0.6 4.2 0.01 Acquisitions and divestitures — 4.0 4.0 4.0 0.7 3.3 0.01 Corporate hedging losses (gains) (4.3) — (4.3) (4.3) (1.0) (3.3) (0.01) Pension settlement — 1.3 1.3 1.3 0.1
1.2 — Intangible impairment charges — 4.8 4.8 4.8 1.1 3.7 0.01 Advertising and promotion expenses 2 — 59.5 — — — — — Legal matters — 151.0 151.0 151.0 37.7 113.3 0.29 Tax reform adjustments — —
— — (3.4) 3.4 0.01 Unusual tax items — — — — (0.2) 0.2 — Loss from discontinued operations, net of noncontrolling interests — — — — — 0.3 — Adjusted $ 573.3 $ 218.3 $ 295.5 $ 251.0 $
72.1 26.8 % $ 195.9 0.50 % of Net Sales 29.2% 11.1% 15.0% Year-over-year % of net sales change – reported 85 bps 1 bps 84 bps Year-over-year % of net sales change – adjusted 12 bps (23) bps 139 bps Year-over-year change—reported
8.8% 5.7% 20.4% 21.3% N/A (54.0)% (50.0)% Year-over-year change—adjusted 6.1% 3.4% 16.4% 16.0% (7.2)% 24.6 % 35.1 % 1. Operating profit is derived from taking Income from continuing operations before income taxes and equity method
investment earnings and adding back Interest expense, net. 2. Advertising and promotion expense (A&P) has been removed from adjusted selling, general and administrative expense because this metric is used in reporting to management, and
management believes this adjusted measure provides useful supplemental information to assess the Company’s operating performance. Please note that A&P is not removed from adjusted 51
profit measures.
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (dollars in millions) Diluted EPS from income Income from from continuing continuing operations operations before income Net income attributable to Selling, taxes and equity Income attributable Conagra general and method tax Income to Conagra Brands, Inc Gross administrative Operating investment expense tax Brands, common Q4 FY17 profit expenses profit 1 earnings (benefit) rate Inc. stockholders Reported $ 529.0 $ 417.8 $ 111.2 $ 73.7 $ (60.8) (65.5)% $ 151.3 $ 0.36 % of Net Sales 28.4% 22.4% 6.0% Adjustment to the gain on sale of Spicetec and J.M. Swank businesses 1.0 (1.0) Restructuring plans 5.5 10.5 16.0 16.0 5.5 10.5 0.02 Acquisitions and divestitures 0.5 30.9 31.4 31.4 11.8 19.6 0.05 Corporate hedging losses (gains) 5.5 5.5 5.5 2.1 3.4 0.01 Goodwill and intangible impairment charges 95.5 95.5 95.5 28.8 66.7 0.16 Advertising and promotion expenses 2 75.5 Legal matters (5.7) (5.7) (5.7) (2.0) (3.7) (0.01) Tax adjustment of valuation allowance 91.3 (91.3) (0.21) Loss from discontinued operations, net of noncontrolling interests 1.7 Rounding (0.01) Adjusted $ 540.5 $ 211.1 $ 253.9 $ 216.4 $ 77.7 33.0 % $ 157.2 $ 0.37 % of Net Sales 29.0% 11.3% 13.6% 1. Operating profit is derived from taking Income from continuing operations before income taxes and equity method investment earnings and adding back Interest expense, net. 2. Advertising and promotion expense (A&P) has been removed from adjusted selling, general and administrative expense because this metric is used in reporting to management, and management believes this adjusted measure provides useful supplemental information to assess the Company’s operating performance. Please note that A&P is not removed from adjusted 52 profit measures.
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (dollars in millions) Diluted EPS from income Income from from continuing continuing operations operations before income Net income attributable to Selling, taxes and equity Income attributable Conagra general and method tax Income to Conagra Brands, Inc Gross administrative Operating investment expense tax Brands, common FY18 profit expenses profit 1 earnings (benefit) rate Inc. stockholders Reported $ 2,351.5 $ 1,318.0 $ 1,033.5 $ 874.8 $ 174.6 18.0% $ 808.4 $ 1.95 % of Net Sales 29.6 % 16.6 % 13.0% Restructuring plans 7.8 30.2 38.0 38.0 11.0 27.0 0.07 Acquisitions and divestitures 0.6 15.1 15.7 15.7 4.8 10.9 0.03 Corporate hedging losses (gains) (6.2) (6.2) (6.2) (1.6) (4.6) (0.01) Pension settlement and valuation adjustment 5.4 5.4 5.4 1.7 3.7 0.01 Intangible impairment charges 4.8 4.8 4.8 1.1 3.7 0.01 Early exit of an unfavorable lease contract by purchasing the building 34.9 34.9 34.9 9.3 25.6 0.06 Gain on substantial liquidation of an international joint venture (1.4) (2.9) (0.01) Advertising and promotion expenses 2 278.6 Legal matters 151.0 151.0 151.0 37.7 113.3 0.28 Wesson valuation allowance adjustment (78.6) 78.6 0.19 Tax reform adjustments 233.3 (233.3) (0.57) Unusual tax items (42.1) 42.1 0.10 Income from discontinued operations, net of noncontrolling interests (14.3) Adjusted $ 2,353.7 $ 798.0 $ 1,277.1 $ 1,118.4 $ 349.8 28.9% $ 858.2 $ 2.11 % of Net Sales 29.7 % 10.1 % 16.1% Year-over-year % of net sales change reported (30) bps (150) bps 120 bps Year-over-year % of net sales change adjusted (57) bps (21) bps 33 bps Year-over-year change - reported 0.4 % (7.0)% 11.7% 19.9% (31.5)% 26.4% 56.0% Year-over-year change - adjusted (0.5)% (0.7)% 3.5% 7.7% (0.2)% 13.4% 21.3% 1. Operating profit is derived from taking Income from continuing operations before income taxes and equity method investment earnings and adding back Interest expense, net. 2. Advertising and promotion expense (A&P) has been removed from adjusted selling, general and administrative expense because this metric is used in reporting to management, and management believes this adjusted measure provides useful supplemental information to assess the Company’s operating performance. Please note that A&P is not removed from adjusted 53 profit measures.
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (dollars in millions) Diluted EPS from income Income from from continuing continuing operations operations before income Net income attributable to Selling, taxes and equity Income attributable Conagra general and method tax Income to Conagra Brands, Inc Gross administrative Operating investment expense tax Brands, common FY17 profit expenses profit 1 earnings (benefit) rate Inc. stockholders Reported $ 2,342.1 $ 1,417.1 $ 925.0 $ 729.5 $ 254.7 31.8% $ 639.3 $ 1.25 % of Net Sales 29.9 % 18.1 % 11.8% Gain on sale of Spicetec and J.M. Swank businesses (197.4) (197.4) (197.4) (129.0) (68.4) (0.16) Restructuring plans 17.2 46.4 63.6 63.6 22.2 41.4 0.09 Acquisitions and divestitures 0.5 30.9 31.4 31.4 11.8 19.6 0.05 Corporate hedging losses (gains) 5.1 5.1 5.1 1.9 3.2 0.01 Goodwill and intangible impairment charges 304.2 304.2 304.2 46.5 257.7 0.59 Early extinguishment of debt 93.3 93.3 93.3 33.1 60.2 0.14 Salaried pension plan lump sum settlement 13.8 13.8 13.8 5.3 8.5 0.02 Advertising and promotion expenses 2 328.3 Legal matters (5.7) (5.7) (5.7) (2.0) (3.7) (0.01) Tax adjustment of valuation allowance 91.3 (91.3) (0.21) Unusual tax items 14.6 (14.6) (0.03) Income from discontinued operations, net of noncontrolling interests (95.2) Adjusted $ 2,364.9 $ 803.3 $ 1,233.3 $ 1,037.8 $ 350.4 31.6% $ 756.7 $ 1.74 % of Net Sales 30.2 % 10.3 % 15.8% 1. Operating profit is derived from taking Income from continuing operations before income taxes and equity method investment earnings and adding back Interest expense, net. 2. Advertising and promotion expense (A&P) has been removed from adjusted selling, general and administrative expense because this metric is used in reporting to management, and management believes this adjusted measure provides useful supplemental information to assess the Company’s operating performance. Please note that A&P is not removed from adjusted 54 profit measures.
Reconciliation of Non-GAAP Financial
Measures to Reported Financial Measures
(dollars in
millions)
Income from continuingNet incomeDiluted EPS from income
Selling, generaloperations beforeIncome(loss)from continuing
andincome taxes and
equitytaxattributableoperations attributable to
administrativemethod investmentexpenseIncometo Conagra Conagra Brands, Inc
FY15 Gross profitexpensesOperating profit 1earnings(benefit)tax rateBrands, Inc.common stockholders
Reported $2,296.2 $1,383.4$912.8$584.6$212.732.0 %$(252.6)$1.04
% of
Net Sales (Margins) 25.4 %15.3 %10.1%
Restructuring plans 22.625.147.747.717.530.20.07
Corporate hedging losses (gains) 24.6—24.624.69.315.30.03
Pension
valuation adjustment —6.96.96.92.74.20.01
Goodwill and intangible impairment charges
—25.725.725.72.623.10.05
Early extinguishment of debt —24.624.624.69.515.10.04
Integration of former Ralcorp business —5.05.05.01.93.10.01
Advertising and promotion expenses 2 —312.6————
Legal matters —(7.0)(7.0)(7.0)—(7.0)(0.02)
Unusual tax
items ————5.2(5.2)(0.01)
Loss from discontinued operations, net of noncontrolling interests
—————701.4
Adjusted $2,343.4 $990.5$1,040.3$712.1$261.433.0 %$527.6$1.22
% of Net Sales (Margins) 25.9 %11.0 %11.5%
1. Operating profit is derived from taking Income from continuing operations before income taxes and equity method investment earnings and
adding back Interest expense, net.
2. Advertising and promotion expense (A&P) has been removed from adjusted selling, general and
administrative expense because this metric is used in reporting to management, and
management believes this adjusted measure provides useful supplemental
information to assess the Company’s operating performance. Please note that A&P is not removed from adjusted 55
profit measures.
Reconciliation of Organic Net Sales
(dollars in millions) FY17Q1 FY18Q2 FY18Q2+Q3 FY18
Net
Sales $7,826.9 $1,804.2$2,173.4$4,167.9
Impact of foreign exchange 29.2(3.2)$(8.5)(19.4)
Net sales from acquired businesses (36.5)(31.0)$(29.5)(76.2)
Net sales
from divested businesses (71.1)--
Organic Net Sales $7,748.5 $1,770.0$2,135.4$4,072.3
(dollars in millions) FY16Q1 FY17Q2 FY17Q2+Q3 FY17
Net
Sales $8,664.1 $1,895.6$2,088.4$4,069.6
Net sales from divested businesses (468.1)(71.1)$--
Organic Net Sales $8,196.0 $1,824.5$ -$4,069.6
Year-over-year
change—Net Sales (9.7)% (4.8)%4.1%2.4%
Impact of foreign exchange (pp) 0.3(0.2)(0.4)(0.5)
Net sales from acquired businesses (pp) (0.6)(1.6)(1.4)(1.8)
Net sales
from divested businesses (pp) 4.53.6--
Organic Net Sales Growth (5.5)% (3.0)%2.3%0.1%
56
Reconciliation of Grocery & Snacks
Organic Net Sales
Reconciliation of Grocery & Snacks organic
net sales
FY18 (Dollars in millions) Q1 Q2Q3Q2+Q3
Net Sales $745.8 $900.4$838.3$ 1,738.7
Net sales from acquired
businesses (27.6)(28.4)(42.7)(71.1)
Organic Net Sales $718.2 $872.0$795.6$ 1,667.6
FY17 (Dollars in millions) Q1 Q2Q3Q2+Q3
Net
Sales $757.2 $853.2$849.0$ 1,702.2
Net sales from divested businesses ----
Organic Net Sales $757.2 $853.2$849.0$ 1,702.2
%
Change Q1 Q2Q3Q2+Q3
Net Sales (1.5)% 5.5%(1.3)%2.1%
Net sales from acquired businesses (pp) (3.6)(3.3)(5.0)(4.1)
Net sales
from divested businesses (pp) ----
Organic Net Sales (5.1)% 2.2%(6.3)%(2.0)%
57
Reconciliation of Refrigerated & Frozen
Organic Net Sales
Reconciliation of Refrigerated & Frozen
organic net sales
FY18 (Dollars in millions) Q1Q2Q3
Net Sales $615.7 $758.1$ 688.5
Net sales from acquired
businesses (3.4)(1.1)(4.0)
Organic Net Sales $612.3 $757.0$ 684.5
FY17 (Dollars in millions) Q1Q2Q3
Net
Sales $604.6 $740.7$ 667.2
Net sales from divested businesses ---
Organic Net Sales $604.6 $740.7$ 667.2
% Change
Q1Q2Q3
Net Sales 1.8%2.3%3.2%
Net sales from acquired
businesses (pp) (0.5)(0.1)(0.6)
Net sales from divested businesses (pp) ---
Organic Net Sales 1.3%2.2%2.6%
58
Revised Amounts Reflecting Reclassification of
Benefit Plan Components (dollars in millions)
2018201720162015
Q1 Q2Q3Q4FYQ1Q2Q3Q4FYFY FY
Net Sales $ 1,804.2 $
2,173.4$ 1,994.5$ 1,966.2$ 7,938.3$ 1,895.6$ 2,088.4$ 1,981.2$ 1,861.7$ 7,826.9$ 8,664.1$ 9,034.0
Reported Gross Profit $519.0 $ 658.3$
598.8$ 575.4$ 2,351.5$ 544.6$ 647.5$ 621.0$ 529.0$ 2,342.1$ 2,429.2$ 2,296.2
Reclassification of benefit plan components --------1.71.7-1.5
Revised Gross Profit $519.0 $ 658.3$ 598.8$ 575.4$ 2,351.5$ 544.6$ 647.5$ 621.0$ 530.7$ 2,343.8$ 2,429.2$ 2,297.7
Acquisitions and divestitures 0.60.6-0.50.5
Restructuring
plans 2.33.4(0.1)2.27.85.21.84.73.815.549.021.1
Corporate hedging derivative losses (gains)
6.0(7.1)(0.8)(4.3)(6.2)(0.7)0.8(0.5)5.55.1(16.4)24.6
Revised Adjusted Gross Profit $527.3 $ 654.6$ 598.5$ 573.3$ 2,353.7$ 549.1$ 650.1$
625.2$ 540.5$ 2,364.9$ 2,461.8$ 2,343.4
Reported Gross Margin 28.8%30.3%30.0%29.3%29.6%28.7%31.0%31.3%28.4%29.9%28.0%25.4%
Revised Gross Margin 28.8%30.3%30.0%29.3%29.6%28.7%31.0%31.3%28.5%29.9%28.0%25.4%
Revised Adjusted Gross Margin 29.2%30.1%30.0%29.2%29.7%29.0%31.1%31.6%29.0%30.2%28.4%25.9%
Reported Operating Profit $280.0 $ 351.0$ 268.6$ 133.9$ 1,033.5$ 312.9$ 229.6$ 271.3$ 111.2$ 925.0$ 404.6$ 912.8
Reclassification of benefit plan components (20.6)(17.5)(21.9)(20.4)(80.4)(19.3)(19.2)(3.4)(13.3)(55.2)303.8(60.6)
Revised Operating Profit $259.4 $ 333.5$ 246.7$ 113.5$ 953.1$ 293.6$ 210.4$ 267.9$ 97.9$ 869.8$ 708.4$ 852.2
Adjustment to the gain on sale of Spicetec and J.M. Swank businesses ----(198.2)0.50.3-(197.4)--
Restructuring plans 11.47.114.74.838.014.119.813.714.361.9256.046.2
Goodwill and intangible impairment charges ---4.84.8163.643.91.295.5304.250.125.7
Acquisitions and divestitures 0.87.83.14.015.7---31.431.4-
Early
extinguishment of debt -----60.632.7-93.323.924.6
Salaried pension plan lump sum settlement ----------
Pension valuation adjustment ------------
Legal
matters ---151.0151.0---(5.7)(5.7)5.0(7.0) Corporate hedging derivative losses (gains)6.0(7.1)(0.8)(4.3)(6.2)(0.7)0.8(0.5)5.55.1(16.4)24.6 Early exit of an unfavorable lease contract by purchasing the
building--34.934.9------- Integration of former Ralcorp business----------5.0 Revised Adjusted Operating Profit$277.6$ 341.3$ 298.6$ 273.8$ 1,191.3$ 272.4$ 335.9$ 315.3$ 239.0$ 1,162.6$ 1,027.0$ 971.3 Reported Operating
Margin15.5%16.2%13.5%6.8%13.0%16.5%11.0%13.7%6.0%11.8%4.7%9.4% Revised Operating Margin14.4%15.3%12.4%5.8%12.0%15.5%10.1%13.5%5.3%11.1%8.2%9.4% Revised Adjusted Operating Margin15.4%15.7%15.0%13.9%15.0%14.4%16.1%15.9%12.8%14.9%11.9%10.8% Reported
Pension and Postretirement Non-Service Income20.617.521.920.480.419.319.23.413.355.2(303.8)60.6 Restructuring plans--------1.71.725.91.5 Salaried pension plan lump sum settlement-------13.8-13.8-- Pension
valuation adjustment-4.1-1.35.4-----348.56.9 Adjusted Pension and Postretirement Non-Service Income$20.6$ 21.6$ 21.9$21.7$ 85.8$ 19.3$ 19.2$ 17.2$ 15.0$ 70.7$ 70.6$ 69.059