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.





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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. These risks, uncertainties, and factors include, among other things: the risk that the cost savings and any other synergies from the 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; risks related to our ability to achieve the intended benefits of other recent acquisitions and divestitures; risks associated with general economic and industry conditions; risks associated with our ability to successfully execute our long-term value creation strategies; risks related to our ability to deleverage on currently anticipated timelines, and to continue to access capital on acceptable terms or at all; risks related to our ability to execute operating and restructuring plans and achieve targeted operating efficiencies from cost-saving initiatives, and to benefit from trade optimization programs; risks related to the effectiveness of our hedging activities and 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 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, as well as any securities litigation, including securities class action lawsuits; risk associated with actions of governments and regulatory bodies that affect our businesses, including the ultimate impact of new or revised regulations or interpretations; risks related to the impact of the COVID-19 pandemic on our business, suppliers, consumers, customers, and employees; risks related to our forecasts of consumer eat-at-home habits as the impacts of the COVID-19 pandemic abate; risks related to the availability and prices of supply chain resources, including raw materials, packaging, and transportation, including any negative effects caused by changes in inflation rates, weather conditions, health pandemics or outbreaks of disease, or actual or threatened hostilities or war, or other geopolitical uncertainty; disruptions or inefficiencies in our supply chain and/or operations, including from the COVID-19 pandemic; risks related to disruptions in the global economy caused by the ongoing conflict between Russia and Ukraine; risks associated with actions by our customers, including changes in distribution and purchasing terms; risks and uncertainties associated with intangible assets, including any future goodwill or intangible assets impairment charges; risks related to a material failure in or breach of our or our vendors' information technology systems; the amount and timing of future dividends, which remain subject to Board approval and depend on market and other conditions; risks related to the Company's ability to execute on its strategies or achieve expectations related to environmental, social, and governance matters, including as a result of evolving legal, regulatory, and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, and changes in carbon markets; and other risks described in our reports filed from time to time with the Securities and Exchange Commission (the "SEC"). We caution readers not to place undue reliance on 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, 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 29, 2022 and subsequent filings with the SEC. Results for the first quarter of fiscal 2023 are not necessarily indicative of results that may be attained in the future.





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®, Banquet®, Healthy Choice®, Slim Jim®, Reddi-wip®, and Vlasic® as well as emerging brands, including Angie's® BOOMCHICKAPOP®, Duke's®, Earth Balance®, Gardein®, and Frontera®, offer choices for every occasion.

Fiscal 2023 First Quarter Results

In the first quarter of fiscal 2023, results reflected an increase in net sales, with organic (excludes the impact of foreign exchange) increases in all of our segments, in each case compared to the first quarter of fiscal 2022. Overall gross profit increased primarily as a result of higher net sales, which more than offset input cost inflation, elevated supply chain operating costs, and unfavorable operating leverage. Overall segment operating profit decreased in our Refrigerated & Frozen, International, and Foodservice segments, which was partially offset by an increase in our Grocery & Snacks segment. Corporate expenses were higher primarily due to higher share-based payment expense. Selling, general and administrative ("SG&A") expenses were higher due primarily to our goodwill and brand impairment charges in addition to other items impacting comparability as discussed below. We recognized higher equity method investment earnings, higher interest expense, and lower income tax expense, in each case compared to the first quarter of fiscal 2022. Excluding items impacting comparability, our effective tax rate was slightly lower compared to the first quarter of fiscal 2022.

Diluted loss per share in the first quarter of fiscal 2023 was $0.16. Diluted earnings per share in the first quarter of fiscal 2022 was $0.49. Diluted loss per share was affected by lower net income in the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022.

In the first quarter of fiscal 2023, we continued to experience significant input cost inflation, including elevated supply chain costs, that negatively impacted gross margins. We expect input cost inflation to remain elevated throughout the rest of fiscal 2023. Supply chain realized productivity and pricing actions are expected to mitigate some of the inflationary pressures. As our estimates of inflation for fiscal 2023 continue to change, it is impractical to quantify the impact at this time. As we approach our annual goodwill and brand impairment assessment in the fourth quarter of fiscal 2023, continued increases to interest rates coupled with the uncertainty in the inflationary environment creates a heightened risk for future impairments later in the fiscal year.

Although we are a North American focused company with no operations in or direct exposure to Russia and Ukraine, we have experienced shortages in materials and increased costs for transportation, energy, and raw material due in part to the negative impact of the Russia-Ukraine military conflict on the global economy. To date, the conflict between Russia and Ukraine has not had a material impact on our business, financial condition, or result of operations.





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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 first quarter of fiscal 2023 included the following:





  ? charges totaling $385.7 million ($326.8 million after-tax) related to the
    goodwill and Birds Eye® brand impairments in connection with certain reporting
    unit changes within our Refrigerated & Frozen segment,




  ? charges totaling $26.7 million ($20.1 million after-tax) related to the
    impairment of businesses held for sale, and




  ? net charges totaling $4.9 million ($3.7 million after-tax) in connection with
    our restructuring plans.



Items of note impacting comparability for the first quarter of fiscal 2022 included the following:





  ? charges totaling $15.8 million ($11.9 million after-tax) in connection with
    our restructuring plans and




  ? an income tax benefit of $3.6 million related to the settlement of a tax
    matter that was previously reserved.




Restructuring Plans



In fiscal 2019, senior management initiated a 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 first quarter of fiscal 2023, 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 August 28, 2022, we have approved the incurrence of $180.6 million ($53.8 million of cash charges and $126.8 million of non-cash charges) for several projects associated with the Conagra Restructuring Plan. As of August 28, 2022, we have incurred or expect to incur $148.7 million of charges ($46.8 million of cash charges and $101.9 million of non-cash charges) for actions identified to date under the Conagra Restructuring Plan. In the first quarter of fiscal 2023 and 2022, we recognized charges of $4.1 million and $8.5 million, respectively, in connection with the Conagra Restructuring Plan. We expect to incur costs related to the Conagra Restructuring Plan over a multi-year period.

As of August 28, 2022, we have substantially completed our restructuring activities related to our Pinnacle Integration Restructuring Plan. In the first quarter of fiscal 2023 and 2022, we recognized charges of $0.8 million and $7.3 million, respectively, in connection with the Pinnacle Integration Restructuring Plan. Our total pre-tax expenses for this plan related to our continuing operations are expected to be $346.4 million ($284.2 million of cash charges and $62.2 million of non-cash charges).





COVID-19 Pandemic


We continue to monitor the impact of the COVID-19 pandemic on all aspects of our business. During the first quarter of fiscal 2023, we continued to experience elevated demand for our products in the retail segments versus pre-pandemic levels, but volumes were lower compared to the first quarter of fiscal 2022 primarily due to the elasticity impact from inflation-driven pricing actions. We experienced higher demand for our foodservice products across all of our major markets during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022 as consumer traffic in away-from-home food outlets continues to recover from the impacts of the pandemic.

As we continue throughout fiscal 2023, we generally expect retail demand levels to remain elevated versus pre-pandemic levels and we continue to expect foodservice demand levels to return to more historical norms. However, uncertainty remains with the pandemic and such trends ultimately depend on the length and severity of the pandemic, inclusive of the introduction of new strains and variants of the virus; infection rates in the markets where we do business; the federal, state, and local government actions taken in response; vaccine effectiveness; and the macroeconomic environment. We also continue to expect a decrease in costs related to the COVID-19 pandemic and a decrease in supply chain costs as we continue to recover our service levels. We will continue to evaluate the extent to which the COVID-19 related uncertainty and attendant costs will impact those in our supply chain, including suppliers, distributors, and manufacturers, which may impact our business, consolidated results of operations, and financial condition.





SEGMENT REVIEW


We reflect our results of operations in four reporting segments: Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice.





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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 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


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

Presentation of Derivative Gains (Losses) from 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. See Note 15 "Business Segments and Related Information", to the Condensed Consolidated Financial Statements contained in this report for further discussion.

Net Sales



                                                Net Sales
($ in millions)                           Thirteen Weeks Ended
Reporting Segment        August 28, 2022       August 29, 2021       % Inc (Dec)
Grocery & Snacks        $         1,188.3     $         1,075.1                11 %
Refrigerated & Frozen             1,207.6               1,101.8                10 %
International                       233.5                 236.6                (1 )%
Foodservice                         274.9                 239.8                15 %
Total                   $         2,904.3     $         2,653.3                 9 %



Net sales for the first quarter of fiscal 2023 in our Grocery & Snacks segment included a decrease in volumes of 6% compared to the prior-year period. The decrease in volumes was primarily due to the elasticity impact from inflation-driven pricing actions. Price/mix increased 17% for the first quarter of fiscal 2023 when compared to the prior-year period due to favorability in inflation-driven pricing and favorable brand mix.

Net sales for the first quarter of fiscal 2023 in our Refrigerated & Frozen segment reflected a decrease in volumes of 2% compared to the prior-year period primarily due to the elasticity impact from inflation-driven pricing actions. Price/mix increased by 12% for the first quarter of fiscal 2023 when compared to the prior-year period due to favorability in inflation-driven pricing.

Net sales for the first quarter of fiscal 2023 in our International segment reflected a 7% decrease in volumes, a 2% decrease due to unfavorable foreign exchange rates, and an 8% increase in price/mix, in each case compared to the prior-year period. The decrease in volumes was driven by the elasticity impact from inflation-driven pricing actions. The increase in price/mix was primarily due to favorability in inflation-driven pricing.

Net sales for the first quarter of fiscal 2023 in our Foodservice segment reflected a 4% decrease in volumes compared to the prior-year period. The decrease in volumes was driven by the elasticity impact from inflation-driven pricing actions. Price/mix increased by 19% in the first quarter of fiscal 2023 compared to the prior-year period, reflecting inflation-driven pricing.





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SG&A Expenses (includes general corporate expenses)

SG&A expenses totaled $741.6 million for the first quarter of fiscal 2023, an increase of $431.5 million, as compared to the first quarter of fiscal 2022. SG&A expenses for the first quarter of fiscal 2023 reflected the following:

Items impacting comparability of earnings





  ? charges totaling $385.7 million related to the goodwill and Birds Eye® brand
    impairments in connection with certain reporting unit changes within our
    Refrigerated & Frozen segment,




  ? charges totaling $26.7 million related to the impairment of businesses held
    for sale, and




  ? net charges of $4.7 million in connection with our restructuring plans.



Other changes in expenses compared to the first quarter of fiscal 2022





  ? an increase in share-based payment expense of $20.3 million primarily due to a
    decrease in our share price in the prior-year period and more significant
    award vesting in the current period,




  ? a decrease in deferred compensation expense of $3.9 million primarily due to
    market gains in the prior-year period,




  ? an increase in salary, wage, and fringe benefit expense of $2.7 million,




  ? an increase consulting and professional fees of $2.1 million, and




  ? an increase in travel and entertainment expense of $2.1 million.



SG&A expenses for the first quarter of fiscal 2022 included the following items impacting the comparability of earnings:





  ? expenses of $9.4 million in connection with our restructuring plans and




  ? expenses of $1.0 million associated with costs incurred for planned
    divestitures.



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





                                         Operating Profit (Loss)
($ in millions)                           Thirteen Weeks Ended
Reporting Segment        August 28, 2022       August 29, 2021       % Inc (Dec)
Grocery & Snacks        $           250.4     $           215.9                16 %
Refrigerated & Frozen              (216.3 )               157.6               N/A
International                        26.9                  34.1               (21 )%
Foodservice                           1.2                  20.3               (94 )%



Operating profit in our Grocery & Snacks segment for the first quarter of fiscal 2023 reflected an increase in gross profits of $34.8 million compared to the first quarter of fiscal 2022. The higher gross profit was driven by the net sales growth discussed above, partially offset by the impacts of input cost inflation, unfavorable fixed cost leverage, and elevated supply chain operating costs. Operating profit of the Grocery & Snacks segment was impacted by expense of $0.3 million and $4.1 million related to our restructuring plans in the first quarter of fiscal 2023 and 2022, respectively. The first quarter of fiscal 2023 included expenses of $2.6 million related to a municipal water break.

Operating loss in our Refrigerated & Frozen segment for the first quarter of fiscal 2023 reflected an increase in gross profits of $21.8 million compared to the first quarter of fiscal 2022. The increase was driven by the net sales growth discussed above, partially offset by the impacts of input cost inflation, unfavorable fixed cost leverage, and elevated supply chain operating costs. Operating loss in the first quarter of fiscal 2023 included charges of $385.7 million related to the goodwill and Birds Eye® brand impairments in connection with certain reporting unit changes within our Refrigerated & Frozen segment. Operating loss in the first quarter of fiscal 2023 also included charges of $5.7 million related to the impairment of businesses held for sale. Operating loss of the Refrigerated & Frozen segment was impacted by expense of $0.6 million and $5.0 million related to our restructuring plans in the first quarter of fiscal 2023 and 2022, respectively.

Operating profit in our International segment for the first quarter of fiscal 2023 reflected a decrease in gross profits of $6.4 million when compared to the prior-year period due to the impacts of input cost inflation and unfavorable fixed cost leverage.





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Operating profit in our Foodservice segment for the first quarter of fiscal 2023 reflected an increase in gross profits of $1.4 million compared to the first quarter of fiscal 2022. The increase in gross profit was driven by the net sales growth discussed above, partially offset by the impacts of input cost inflation, unfavorable fixed cost leverage, and elevated supply chain operating costs. The first quarter of fiscal 2023 included expense of $20.5 million related to the impairment of businesses held for sale.

Pension and Postretirement Non-service Income

In the first quarter of fiscal 2023, pension and postretirement non-service income was $6.1 million, a decrease of $10.0 million compared to the first quarter of fiscal 2022. The first quarter of fiscal 2023 reflected higher interest costs.





Interest Expense, Net



Net interest expense was $97.1 million and $94.2 million for the first quarter of fiscal 2023 and 2022, respectively. The increase was driven by a higher weighted average interest rate on outstanding debt. See Note 4, "Long-Term Debt and Revolving Credit Facility", to the Condensed Consolidated Financial Statements contained in this report for further discussion.





Income Taxes


In the first quarter of fiscal 2023 and 2022, we recognized income tax expense of $14.4 million and $69.7 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was approximately (22.8)% and 22.8% for the first quarter of fiscal 2023 and 2022, respectively. The effective tax rate for the first quarter of fiscal 2023 was principally impacted by the non-deductible goodwill impairments noted above. See Note 10, "Income Taxes", to the Condensed Consolidated Financial Statements contained in this report for a discussion on the change in effective tax rates.

Equity Method Investment Earnings

Equity method investment earnings were $49.2 million and $20.2 million for the first quarter of fiscal 2023 and 2022, respectively. Ardent Mills earnings for the first quarter of fiscal 2023 reflected favorable market conditions, including the joint venture's effective management through the recent volatility in the wheat markets.





Earnings (Loss) Per Share



Diluted loss per share in the first quarter of fiscal 2023 was $0.16. Diluted earnings per share in the first quarter of fiscal 2022 was $0.49. The decrease in diluted earnings per share reflected lower net income.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity and Capital

The primary objective of our financing strategy is to maintain a prudent capital structure that provides us flexibility to pursue our growth objectives. We use a combination of equity and short- and long-term debt. 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). We are committed to maintaining solid investment grade credit ratings.

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

Borrowing Facilities and Long-Term Debt

At August 28, 2022, we had a revolving credit facility (the "Revolving Credit Facility") with a syndicate of financial institutions providing for a maximum aggregate principal amount outstanding at any one time of $2.0 billion (subject to increase to a maximum aggregate principal amount of $2.5 billion with the consent of the lenders). The Revolving Credit Facility matures on August 26, 2027 and is unsecured. The Company may request the term of the Revolving Credit Facility be extended for additional one-year or two-year periods from the then-applicable maturity date on an annual basis. We have historically used a credit facility principally as a back-up for our commercial paper program. As of August 28, 2022, there were no outstanding borrowings under the Revolving Credit Facility.

As of August 28, 2022, we had $248.0 million outstanding under our commercial paper program. The highest level of borrowings during the first quarter of fiscal 2023 was $398.0 million. We had $180.0 million outstanding under our commercial paper program as of May 29, 2022.





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During the first quarter of fiscal 2023, we entered into an unsecured term loan agreement (the "Term Loan Agreement") with a financial institution. The Term Loan Agreement provides for delayed draw term loans to the Company in an aggregate principal amount of up to $500.0 million. The Term Loan Agreement matures on August 26, 2025. As of August 28, 2022, there were no outstanding borrowings under the Term Loan Agreement. Subsequent to the end of the first quarter of fiscal 2023, we borrowed the full $500.0 million aggregate principal amount available under the Term Loan Agreement. The proceeds were used to repay the outstanding $250.0 million aggregate principal amount of our 3.25% senior notes on the maturity date of September 15, 2022 as well as to repay outstanding borrowings under our commercial paper program.

For additional information about our long-term debt balances, refer to Note 4, "Long-Term Debt and Revolving Credit Facility", to the Condensed Consolidated Financial Statements contained in this report and Note 3, "Long-Term Debt", to the Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended May 29, 2022. The weighted average coupon interest rate of long-term debt obligations outstanding as of August 28, 2022, was approximately 4.4%.

We expect to maintain or have access to sufficient liquidity to retire or refinance long-term debt at maturity or otherwise, from operating cash flows, our commercial paper program, access to the capital markets, and our Revolving Credit Facility. We continuously evaluate opportunities to refinance our debt; however, any refinancing is subject to market conditions and other factors, including financing options that may be available to us from time to time, and there can be no assurance that we will be able to successfully refinance any debt on commercially acceptable terms at all.

As of the end of the first quarter of fiscal 2023, 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, 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, or impossible.

Our most restrictive debt agreement (the Revolving Credit Facility) generally requires our ratio of earnings before interest, taxes, depreciation and amortization ("EBITDA") to interest expense not be less than 3.0 to 1.0 and our ratio of funded net debt to EBITDA not to exceed 4.75 to 1.0 through the third quarter of fiscal 2023 and 4.5 to 1.0 for each quarter there-after. Each ratio is to be calculated on a rolling four-quarter basis. As of August 28, 2022, we were in compliance with these financial covenants.





Equity and Dividends


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. 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 the first quarter of fiscal 2023, we repurchased 1.4 million shares of our common stock under this authorization for an aggregate of $50.0 million. The Company's total remaining share repurchase authorization as of August 28, 2022, was $1.02 billion.

On September 1, 2022, the company paid a quarterly cash dividend on shares of its common stock of $0.33 per share to stockholders of record as of close of business on August 3, 2022. On October 5, 2022, our Board approved and the Company announced a quarterly dividend payment of $0.33 per share to be paid on December 1, 2022, to stockholders of record as of close of business on November 3, 2022.





Contractual Obligations



As part of our ongoing operations, we enter into contractual arrangements that obligate us to make future cash payments. These obligations impact our liquidity and capital resource needs. In addition to principal and interest payments on our outstanding long-term debt and notes payable balances, discussed above, our contractual obligations primarily consist of lease payments, income taxes, pension and postretirement benefits, and unconditional purchase obligations.

As of August 28, 2022, our finance and operating lease liabilities reported in our Condensed Consolidated Balance Sheet totaled $122.7 million and $232.3 million, respectively. We have entered into contracts that are or contain a lease that have not yet commenced with aggregate payments totaling $270.6 million, as of August 28, 2022. For additional information, refer to Note 14, "Leases", to the Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended May 29, 2022.

The liability for gross unrecognized tax benefits related to uncertain tax positions was $68.0 million as of August 28, 2022. For additional information, refer to Note 10, "Income Taxes", to the Condensed Consolidated Financial Statements contained in this report and Note 13, "Pre-Tax Income and Income Taxes", to the Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended May 29, 2022.





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As of May 29, 2022, we had an aggregate funded pension asset of $162.1 million and an aggregate unfunded postretirement benefit obligation totaling $61.4 million. We expect to make payments totaling approximately $12.4 million and $8.1 million in fiscal 2023 to fund our pension and postretirement plans, respectively. See Note 12 "Pension and Postretirement Benefits", to the Condensed Consolidated Financial Statements contained in this report and Note 17, "Pension and Postretirement Benefits", to the Consolidated Financial Statements and "Critical Accounting Estimates - Employee-Related Benefits" contained in the Company's Annual Report on Form 10-K for the fiscal year ended May 29, 2022, for further discussion of our pension obligation and factors that could affect estimates of these obligations.

As of August 28, 2022, our 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) totaled approximately $3.03 billion. Approximately $2.12 billionof this balance is due in less than one year. Included in this amount are open purchase orders and other supply agreements totaling approximately $1.89 billion, which are generally settleable in the ordinary course of business. Some are not legally binding and/or may be cancellable. Warehousing service agreements totaling approximately $622 millionmake up a majority of our remaining unconditional purchase obligations with various terms of up to 10 years.

We expect to have sufficient cash flows from the above cited sources to meet the material cash requirements of these contractual obligations as they become settleable in the ordinary course of business.





Capital Expenditures


We continue to make investments in our business and operating facilities. Our estimate of capital expenditures for fiscal 2023 is approximately $500 million.





Supplier Arrangements


We offer certain suppliers access to a third-party service that allows them to view our scheduled payments online. The 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 balances remain as obligations to our suppliers as stated in our supplier agreements and are reflected in accounts payable within our Condensed Consolidated Balance Sheets. The associated payments are included in net cash flows from operating activities within our Condensed Consolidated Statements of Cash Flows. As of August 28, 2022 and May 29, 2022, $384.1 million and $378.3 million, respectively, of our total accounts payable was payable to suppliers who utilize this third-party service.

The program commenced at about the same time that we began an initiative to negotiate extended payment terms with our suppliers. Although difficult to predict, we generally expect the incremental cash flow benefits associated with these extended payment terms to increase at a slower rate in the future. A number of factors may impact our future payment terms, including our relative creditworthiness, overall market liquidity, and changes in interest rates and other general economic conditions.





Cash Flows


During the first quarter of fiscal 2023, we used $15.9 million of cash, which was the net result of $263.7 million generated from operating activities, $123.4 million used in investing activities, $154.4 million used in financing activities, and a decrease of $1.8 million due to the effects of changes in foreign currency exchange rates.

Cash generated from operating activities totaled $263.7 million and $139.8 million in the first quarter of fiscal 2023 and 2022, respectively. The increase in operating cash flows for the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022 was primarily driven by higher gross profits and the accelerated receipt of our outstanding receivables. In the first quarter of fiscal 2023, we utilized certain customer payment term offerings to accelerate receipt on our outstanding receivables in exchange for a slightly higher prompt pay discount, which increased our cash flow from operations by approximately $164 million. This was partially offset by higher inventory balances, largely due to input cost inflation and some inventory rebuild from previous supply chain constraints.

Cash used in investing activities totaled $123.4 million and $154.9 million in the first quarter of fiscal 2023 and 2022, respectively. Net cash outflows from investing activities in the first quarter of fiscal 2023 and 2022 consisted primarily of capital expenditures totaling $125.4 million and $154.9 million, respectively.

Cash used in financing activities totaled $154.4 million in the first quarter of fiscal 2023, compared to cash generated of $5.5 million in the first quarter of fiscal 2022. Financing activities in the first quarter of fiscal 2023 principally reflect net short-term borrowing issuances of $69.1 million, cash dividends paid of $150.0 million, and common stock repurchases of $50.0 million. Financing activities in the first quarter of fiscal 2022 principally reflect net proceeds of $499.1 million from the issuance of $500.0 million aggregate principal amount of long-term debt, net short-term borrowing repayments of $248.8 million, cash dividends paid of $132.1 million, and common stock repurchases of $50.0 million.





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Cash Held by International Subsidiaries

The Company had cash and cash equivalents of $67.4 million at August 28, 2022 and $83.3 million at May 29, 2022, of which $59.4 million at August 28, 2022, and $74.7 million at May 29, 2022 was held in foreign countries. A deferred tax liability is provided for certain undistributed foreign earnings in fiscal 2023 that are not considered to be indefinitely reinvested or cannot be remitted in a tax-neutral transaction. Other undistributed foreign earnings are invested indefinitely and therefore we have not provided deferred taxes on those earnings.

CRITICAL ACCOUNTING ESTIMATES

For further discussion of our critical accounting estimates, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section in Part II, Item 7, of our Annual Report on Form 10-K for the fiscal year ended May 29, 2022.

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