Edit: Conagra halved the dividend to $0.175 a quarter the morning the 10-K came out. I missed it. Corrected math in the comments.
CAG has fallen far enough that the 10-K itself lists the share price as a trigger for the Q4 goodwill test. The number everyone repeats is the loss, so I walked the FY26 10-K from net loss to free cash flow to see whether the business stopped generating cash or whether the loss is a write-down. Fiscal year ended May 31, filed in July.
Net loss of $1,916.2 million at the top of the cash flow statement. Add back asset impairment charges of $2,950.9 million, all non-cash, and you're already at positive $1,034.7 million. Add depreciation and amortization of $396.0 million. Other adjustments net to negative $41.2 million: stock comp of $54.7 million, less the $42.2 million gain on selling Chef Boyardee and the frozen fish brands, less $48.8 million of pension items and $4.9 million of odds and ends. Working capital added $12.6 million, which hides two big offsetting moves: inventories released $144.9 million, and litigation accruals came down $156.8 million as settlements were paid, with $80.2 million of that coming back from insurers. That lands on net cash from operations of $1,402.1 million, which is what the statement says. Less capex of $423.4 million gives $978.7 million of free cash flow. Same arithmetic on the two prior years: $1,302.6 million and $1,627.5 million. Dividends paid this year were $669.7 million.
One thing held me up. The income statement shows goodwill impairment of $2,382.4 million and brand impairment of $547.2 million, which is $2,929.6 million, but the cash flow statement adds back $2,950.9 million, and neither face names the $21.3 million difference. The answer is that the cash flow caption is broader than the two income statement lines. It also sweeps in write-downs of plants and equipment from the restructuring program, which sit inside cost of goods sold and SG&A. The same excess is there in all three years, roughly $42 million in FY24 and $78 million in FY25, so it's presentation, not a hidden charge. I could get it to the right note but not tie it out to the dollar.
So the loss is a write-down and the walk is clean. The harder part is that free cash flow is down 40% in two years on sales that fell about 6%, and FY26 flatters itself twice: it had a 53rd week (the 10-K says FY26 was 53 weeks, the prior two were 52) and a one-time inventory release. Strip out every working capital line and operating cash is still down about 27% over two years. The dividend is fixed at roughly $670 million, which was 41% of free cash in FY24 and 68% in FY26. Selling Chef Boyardee early in the year doesn't distort any of this, the proceeds sit in investing and the gain is backed out, but FY26 is missing most of a year of that business's cash, and the 53rd week gives about 2% back the other way.
My read is that the impairment and the cash decline aren't two different stories. A write-down is management cutting its own forecasts for these brands, and the cash flow statement shows those cuts already landing.
What I can't settle is whether FY26 is the floor. If the inventory release and the litigation payout were one-offs, underlying free cash is around $900 million and the dividend is covered with a little room. If the volume losses behind the brand write-downs keep going, one more year like this and it isn't. Which of those would you underwrite, and what in the Q1 print would tell you which one you're looking at?