* APA 7th ed. referencing.* Writing skills P.hd level* Analysis should be very constructive
finance project 2/annual reports conagra/Annual Report 2016 conagra.pdf C o n A g ra F o o d s, In c ., A n n u a l R e p o rt 2 0 16 222 W Merchandise Mart Plaza Suite 1300 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 of the Forest Stewardship Council®, which promotes environmentally appropriate, socially beneficial and economically viable 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. Schindler 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 officer Colleen Batcheler Executive vice president, general counsel and corporate secretary Dave Biegger Executive vice president and chief supply chain officer Charisse Brock Executive vice president and chief human resources officer Derek De La Mater Executive vice president and president, sales John Gehring Executive vice president and chief financial officer Jon Harris Senior vice president and chief communications officer Tom McGough President, Consumer Foods Darren Serrao Executive vice president and chief growth officer Tom Werner President, Commercial Foods Rob Wise Senior vice president and corporate controller 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 become 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 brands 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 better concentrate our resources, and greater flexibility for these businesses 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 range of Healthy Choice® Café Steamers organic entrees, three new USDA-certified organic tomato offerings from the Hunt’s® brand, and Peter Pan® Simply Ground™. We also announced that all currently in-market offerings in our Alexia® branded 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 brand 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 brands 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 terrific 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 both 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 abroad. 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 embraced 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 Officer 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 report 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 responsible 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 to Commission File No. 1-7275 _________________________________________________ CONAGRA FOODS, INC. (Exact name of registrant as specified in its charter) __________________________________________________ Delaware 47-0248710 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 222 W. Merchandise Mart Plaza, Suite 1300 Chicago, Illinois 60654 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code (312) 549-5000 ___________________________________________________ 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