finance project 2/annual reports conagra/Annual Report 2016 conagra.pdf
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222 W Merchandise Mart Plaza
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Chicago, IL 60654
©ConAgra Foods, Inc. All rights reserved.
ConAgra Foods Annual Report
2016
The paper for this publication is FSC®
certified and meets the strict standards
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management of the world’s forests.
Leadership
W. G. Jurgensen
Columbus, Ohio
Former chief executive officer of
Nationwide Financial Insurance Services,
Inc. (insurance company).
Director since 2002.
Richard H. Lenny
Chicago, Ill.
Former chairman and chief executive
officer of The Hershey Company
(confectionary and snack products).
Director since 2009.
Ruth Ann Marshall
Fisher Island, Fla.
Retired president of MasterCard
International’s Americas division
(payments industry).
Director since 2007.
Timothy R. McLevish
Naples, Fla.
Former executive vice president and
chief financial officer of Walgreens Co.
(drugstore chain).
Director since 2015.
Andrew J. Schindle
Winston-Salem, N.C.
Retired chairman of Reynolds American
Inc. (tobacco products company).
Former chairman and CEO of R.J.
Reynolds Tobacco Holdings Inc. (tobacco
products company).
Director since 2007.
Sean Connolly
President and chief
executive office
Colleen Batchele
Executive vice president,
general counsel and
corporate secretary
Dave Biegge
Executive vice president
and chief supply chain office
Charisse Brock
Executive vice president
and chief human resources office
Derek De La Mate
Executive vice president
and president, sales
John Gehring
Executive vice president
and chief financial office
Jon Ha
is
Senior vice president
and chief communications office
Tom McGough
President, Consumer Foods
Da
en Se
ao
Executive vice president
and chief growth office
Tom Werne
President, Commercial Foods
Rob Wise
Senior vice president and
corporate controlle
Fiscal 2016 was a year of transformation and positive results
for ConAgra Foods. We are building a higher-margin, more
contemporary and higher-performing company for the long-term,
and doing so has required us to make fundamental changes to
the way we operate. The ConAgra Foods team took aggressive
steps to implement changes in fiscal 2016 that are enabling us to
ecome a more focused food company, with the discipline and
performance orientation we need to succeed. We have much
more to do to fully optimize our business, and we are hard at work
to unlock shareholder value. I’m pleased to share some of the
highlights from the last twelve months.
We made bold changes to our portfolio, including the sale of the
private label business to TreeHouse Foods and agreements to divest
two smaller, non-core businesses, Spicetec Flavors & Seasonings
and JM Swank. We also announced our plans to separate ConAgra
Foods into two publicly traded, pure-play companies, one
comprising our robust consumer portfolio of diverse and leading
ands and the other comprising our market–leading foodservice
portfolio of innovative frozen potato products. The collective
impact of these transactions will be sharpened focus, the ability to
etter concentrate our resources, and greater flexibility for these
usinesses to capitalize on their unique growth opportunities.
We are implementing a major cost-reduction program designed
to realize at least $300 million of efficiency benefits by the end of
fiscal 2018. This will be done through a combination of reductions
in SG&A and enhancements to trade spend processes and tools.
In addition, we launched our new Growth Center of Excellence,
which encompasses our insights, research and development, and
marketing teams. Our new innovation processes are taking hold
and we are continuing to build a pipeline of exciting new offerings.
Recently, we launched many on-trend products, including a
ange of Healthy Choice® Café Steamers organic entrees, three
new USDA-certified organic tomato offerings from the Hunt’s®
and, and Peter Pan® Simply Ground™. We also announced that
all cu
ently in-market offerings in our Alexia®
anded line of
products will be non-GMO by the end of 2016.
We’ve also taken bold steps to transform our culture this past year,
including moving into our new headquarters in Chicago’s iconic
Merchandise Mart. Our new space was selected specifically to enable
greater collaboration across our teams while enhancing our ability to
attract and retain top talent. Some things, however, have remained
constant. ConAgra Foods has continued our commitment to corporate
citizenship. During fiscal 2016, we were named to the prestigious Dow
Jones Sustainability Index for the fifth consecutive year.
But with all of the change underway at ConAgra Foods during fiscal
2016, we never lost sight of our financial commitments to shareholders.
Financial Highlights:
• Diluted comparable EPS1 for fiscal 2016 was $2.08, compared
to $1.93 in fiscal 2015, which included an extra week. On a
GAAP basis, diluted EPS from continuing operations was $1.09,
compared with $1.73 in the prior year.
• We generated more than $1 billion in cash flows from operations.
• Total operating profit for our segments was $1.7 billion this year
versus last year’s $1.6 billion, a 5.3% increase.
• We repaid approximately $2.5 billion of debt.
Our Consumer Foods team was focused on three imperatives
in fiscal 2016: expanding margins, improving
and health and
delivering more consistent performance. The team aggressively
executed against these imperatives during the year, and delivered
margin expansion and profit growth. The team’s success was
enabled by smarter resource allocation, driven by portfolio
segmentation and a focus on building a higher quality investment-
grade volume base, as well as favorable commodity input costs.
This focus meant walking away from less profitable volume during
the year, and accepting an overall segment sales decline. However,
this was both expected and planned.
Importantly, the work completed in fiscal 2016 has strengthened
the health of our business. Our volume base is improved and we
have begun strategically supporting those
ands that are ready for
increased advertising and promotion activity. In addition, our supply
chain efficiency has grown, and we have become more effective in
pricing, mix management and trade promotion productivity.
We made tremendous progress in reigniting our operating
performance during fiscal 2016. For the full fiscal year, comparable
operating margin1 for Consumer Foods grew to just under
17%, almost a 200 basis point improvement over last year, and
comparable operating profit grew1 7% to $1.2 billion. Overall, this
was a very strong performance by the team.
Every business in our Commercial Foods segment performed for
shareholders in fiscal 2016. Overall net sales in the segment were
approximately $4.4 billion, up slightly from the prior year, and the
segment’s operating profit was approximately $630 million, up
nearly 12%.
The largest component of the segment, Lamb Weston, had a
te
ific year. We continue to see significant opportunities to drive
growth across the Lamb Weston business, supported by food-
away-from home trends in the U.S. and growing demand for frozen
potato products in emerging markets. As a result, we announced
an important investment in our Richland, Washington potato
processing facility, expanding our production capacity available for
oth domestic and export markets. We also announced an exciting
investment in Russia by our Lamb Weston Meijer joint venture.
I’m confident that these investments will enhance our ability to
capitalize on the increasing consumer demand for value-added
frozen potato products domestically and a
oad.
In close, I want to acknowledge the dedication and passion of
our talented team as we work to transform ConAgra Foods into
a stronger, more consistent company. I’m proud of the way our
people have em
aced the changes needed to drive value and
serve our customers and shareholders.
Thank you for your continued support of ConAgra Foods.
Sincerely,
Sean M. Connolly
President and Chief Executive Office
Fellow Shareholders
1 Reflects diluted earnings per share from continuing operations, Consumer segment operating profit and Consumer segment operating margin, each as adjusted for items impacting comparability. These
non-GAAP (Generally Accepted Accounting Principles) financial measures are reconciled to the most directly comparable measures, as reported in accordance with GAAP on page 107 of this annual
eport and should be viewed in addition to, and not in place of, the company’s financial measures, as calculated in accordance with GAAP.
Paper from
esponsible sources
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended May 29, 2016
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from XXXXXXXXXXto
Commission File No XXXXXXXXXX
_________________________________________________
CONAGRA FOODS, INC.
(Exact name of registrant as specified in its charter)
__________________________________________________
Delaware XXXXXXXXXX
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employe
Identification No.)
222 W. Merchandise Mart Plaza, Suite 1300
Chicago, Illinois 60654
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code XXXXXXXXXX
___________________________________________________
Securities registered pursuant to section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $5.00 par value New York Stock Exchange
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data
File required