ConAgra Foods Reports Fourth-Quarter Results; Focuses on Efficiency Initiatives for Fiscal 2006.OMAHA Omaha, city, United States Omaha (ō`məhä, –hô), city (1990 pop. 335,795), seat of Douglas co., E Nebr., on the west bank of the Missouri River; inc. 1857. , Neb. -- ConAgra Foods ConAgra Foods, Inc. (NYSE: CAG) is one of North America's largest packaged foods companies. ConAgra's products are available in supermarkets, as well as restaurants and food service establishments. Its headquarters are located in Omaha, Nebraska. Inc. (NYSE NYSE See: New York Stock Exchange :CAG CAG 1 Chronic atrophic gastritis 2 Coronary angiography, see there ): FOURTH-QUARTER FISCAL 2005 OVERVIEW: --Fourth-quarter fiscal 2005 diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. was $0.20. --The $0.20 includes $0.06 of expense from items impacting comparability, primarily severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when expense related to a previously announced headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. reduction program. --Fourth-quarter fiscal 2005 sales were $3.7 billion, down 4% versus last year due to the estimated impact of an additional week in the same period a year ago. Excluding the benefit of an extra week last year, sales increased 4% in the fourth quarter. --While several operations posted solid year-over-year profit growth, weak results from the packaged meats operations negatively impacted performance for the Retail Products and Foodservice The foodservice (or food service) industry (US English; catering industry in British English) encompasses those places, institutions, and companies responsible for any meal eaten away from home. Products segments. --The company is focused on efficiency initiatives in three specific areas: 1) SKU (StockKeeping Unit) The number of one specific product available for sale. If a hardware device or software package comes in different versions, there is an SKU for each one. SKU - stock-keeping unit reduction, 2) headcount and general and administrative expense reduction, and 3) improvement in manufacturing capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. and plant productivity. All of these programs are geared to improve profit margins. Note: Year-Over-Year Comparability: Several items impact year-over-year comparisons of sales, operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. , and EPS, including the estimated benefit of an additional week in the fourth quarter of fiscal 2004 and the full fiscal year 2004, expenses related to the headcount reduction in the fourth quarter of fiscal 2005, costs associated with implementing efficiency initiatives in fiscal 2004 and fiscal 2005, the impact of prior year contribution from operations the company no longer owns, and other items. Comparable year-over-year changes in sales and operating profits for the fourth quarter and the fiscal year reflecting these factors are summarized in tables toward the end of this release. ConAgra Foods Inc. (NYSE:CAG), one of North America's leading packaged food companies, today reported results for the fiscal 2005 fourth quarter ended May 29, 2005. Sales for the quarter were $3.7 billion, down 4% versus last year; on a comparable basis, current quarter sales increased 4% after adjusting for the estimated benefit from an additional week in the fourth quarter of fiscal 2004. Fourth-quarter diluted EPS was $0.20, primarily reflecting lower packaged meats profits this year than last; EPS was $0.32 for the same period last year. Several items affecting comparability are detailed toward the end of this release. Fiscal 2005 sales were $14.6 billion, 3% above last year's sales of $14.1 billion. Diluted EPS was $1.23 this year and $1.53 in fiscal 2004. Several items affecting year-over-year comparability are detailed in tables toward the end of this release. In addition, year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. and historical results have been adjusted to reflect recent reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. of businesses as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Bruce Bruce, Scottish royal family descended from an 11th-century Norman duke, Robert de Brus. He aided William I in his conquest of England (1066) and was given lands in England. Rohde Rohde is a surname, and may refer to:
tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by a solid first half followed by a weak second half. It was a year of mixed results that identified many things we can and should do better. While there were many achievements - brand growth, milestones achieved with R&D and enterprise systems, important team additions, and strong results for Food Ingredients - they were overshadowed by some significant shortcomings A shortcoming is a character flaw. Shortcomings may also be:
He continued, "We furthered many important programs this year as part of our multi-year marketing, operating, and business process improvement initiatives. In addition, our strong cash resources allowed us to reduce $1.2 billion of debt, pay $550 million in dividends, invest $450 million in capital for the future and repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. more than $180 million of our stock." Operational Improvement and Efficiency Initiatives As part of multi-year efficiency initiatives that impact several major areas, the company is engaged in SKU reduction, manufacturing utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be and productivity improvement, as well as general and administrative expense and headcount reduction. SKU Reduction: The company's SKU reduction program is intended to remove relatively low-margin and low-volume products, in order to increase the focus on higher-margin and higher-volume products. As of fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. , the company has removed several thousand low-volume SKUs and is continuing to reduce SKUs at a low double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. percentage pace annually over the next two fiscal years. SKU reductions remove complexity and cost from the supply chain, which benefit margins. General and Administrative Expense and Headcount Reduction: During the fourth quarter, the company announced plans to reduce general and administrative expense as well as salaried headcount. As of fiscal year-end, the company was in the process of eliminating several hundred salaried jobs across the organization; these headcount reductions will be largely complete by the end of the first quarter of fiscal 2006, which ends August 2005. The company recognized $0.05 per diluted share of severance expense during the fourth quarter and does not anticipate significant additional severance expense. Once completed, savings from the headcount and general and administrative cost administrative cost Managed care A cost incurred by the 'business' end of a health care facility or university–eg, staffing and personnel costs, nursing home and hospital administration, insurance, and overhead expenses. Cf Indirect costs. reductions are expected to benefit the company's anticipated cost structure by more than $100 million on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis. Manufacturing Capacity Utilization and Productivity Improvement: The company is aggressively pursuing opportunities to manufacture products more efficiently, which will most likely mean better utilization from fewer plants in the future as well as lower production costs by implementing best practices across the manufacturing network. The company has more than 150 manufacturing plants, approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 100 of which are in the Retail Products and Foodservice Products segments, and is in the process of developing a manufacturing plant rationalization rationalization, in psychology: see defense mechanism. program that will be implemented during fiscal 2006 and continuing over the following two fiscal years. This initiative is intended to significantly improve capacity utilization and thereby improve gross and operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . Details on the rationalization program will be communicated once specific plans are developed and finalized See finalization. . The manufacturing rationalization program will be led by Jim Hardy Jim Hardy is a retired American football quarterback. Professional Career He played in the National Football League between 1946 and 1952. He made the Pro Bowl in 1950. , senior vice president, Enterprise Manufacturing. Hardy Hardy may refer to:
Segment Operating Challenges during the Fourth Quarter While several key operations within Retail Products, Foodservice Products, and Food Ingredients increased quarterly profits, overall company results were significantly impacted by weak packaged meats results in the retail and foodservice channels. The company's packaged meats operations have posted weak results for several quarters in a row, largely due to increased input costs coupled with ineffective pricing actions that did not recover the increased costs. The company expected aggressive pricing actions scheduled during the second half of fiscal 2005 to improve profits; the pricing actions were not executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. effectively. The year-over-year operating profit shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. in the packaged meats operations for retail and foodservice, in aggregate, was approximately $50 million for the fourth quarter and approximately $150 million for the fiscal year. The company recently made several changes within the packaged meats operations, including changes to strengthen leadership, and expects those changes, along with better pricing management, aggressive cost-savings initiatives, and SKU reduction, to improve the packaged meats operations over time. Retail Products Segment (60% of company annual sales) During the quarter, sales for the Retail Products segment were $2.1 billion, down 6% compared with the same period last year. On a comparable basis, sales were up 1% after taking into account the estimated benefit from the inclusion of an additional week in the fourth quarter of fiscal 2004. Volume increased 2% on a comparable basis. Several brands posted strong sales performance as a result of ongoing sales and marketing initiatives intended to strengthen brand equity, expand distribution of the company's most promising products, successfully develop new products, and improve returns on marketing investments: --Sales for the company's top 30 brands as a group, which represent approximately 80% of total segment sales, grew 2% on a comparable basis during the quarter. --Brands posting sales gains on a comparable basis include: ACT II, Banquet A banquet is a large public meal or feast, complete with main courses and desserts. It usually serves a purpose, such as a charitable gathering, a ceremony, or a celebration. Sometimes a banquet consists of only desserts, but it is advisable to include main courses as well. , Blue Bonnet Blue´ bon`net n. 1. A broad, flat Scottish cap of blue woolen, or one wearing such cap; a Scotchman. 2. (Bot.) A plant. Same as Bluebottle. 3. (Zool. , Chef Boyardee Ettore Boiardi (October 22, 1897 - June 21, 1985), better known as "Chef Boyardee," was an Italian-born chef who became famous for his eponymous brand of food products. History Boiardi was born in Piacenza, Italy. , Cook's, Eckrich, Healthy Choice, Hunt's, Kid Cuisine Cuisine (from French cuisine, "cooking; culinary art; kitchen"; ultimately from Latin coquere, "to cook") is a specific set of cooking traditions and practices, often associated with a specific culture. , Marie Callender's, PAM (1) (Pulse Amplitude Modulation) The conversion of audio wave samples to pulses (voltages). PAM is the first step in pulse code modulation (PCM), which is followed by converting the pulses to digital numbers. See PCM. , Parkay Parkay is a butter-substitute made by ConAgra Foods. It is available in spreadable, sprayable and squeezeable forms. Starting in 1973, a commercial was made for Parkay® called "the talking tub", in which the tub first says "butter" when someone nearby says "Parkay", then says , Reddi-wip Reddi-wip is the brand of aerosol propelled, sweetened whipped cream produced by ConAgra Foods. It is sold in the following varieties: Original, Extra-Creamy, Light, Fat-Free, Non-Dairy, and Chocolate. The Original and Extra-Creamy come in 7oz. and 14oz. cans. , Snack Pack, and Swiss Miss. Many of these brands have posted several successive quarters of solid sales growth. --Several large packaged meats brands posted sales declines on a comparable basis, including, Armour armour or body armour Protective clothing that can shield the wearer from weapons and projectiles. By extension, armour is also protective covering for animals, vehicles, and so on. Prehistoric warriors used leather hides and helmets. , Butterball, and Hebrew National. Primarily due to weakness in packaged meats operations, which represent about 25% of the segment revenues, the Retail Products segment operating profit during the quarter was $243 million; this is below the $319 million reported for the same quarter last year. On a comparable basis, operating profit was 12% below last year after considering the estimated benefit from an additional week in the fourth quarter of fiscal 2004, expenses related to the headcount reduction in the fourth quarter of fiscal 2005, and costs associated with implementing efficiency initiatives in fiscal 2004. Other than packaged meats operations, all other operations posted profit growth; improved results for these operations reflect an improved mix and cost savings. --The company estimates that the year-over-year operating profit shortfall in the packaged meats operations was approximately $35 million for the retail operations in the fourth quarter. --The company is very focused on improving the packaged meats operations by strengthening leadership, aggressive pricing management, substantial SKU reduction, and cost-saving initiatives. The company has many favorite packaged meat brands, including Armour, Brown 'N Serve, Butterball, Eckrich, Healthy Choice, and Hebrew National, and expects this business to progress to more normal levels of profitability. Over the long term, the company is focused on solid top-line growth and profit margin expansion through brand building, operating efficiency, and business process initiatives. Foodservice Products Segment (22% of company annual sales) Sales for the Foodservice Products segment were $819 million for the fourth quarter, 7% below the same period last year. Segment operating profit was $56 million in the fourth quarter, down from $93 million in the year-ago period. On a comparable basis, sales were flat compared with last year, and operating profit was 40% lower than last year after considering the estimated benefit from an additional week in the fourth quarter of fiscal 2004, expenses related to the headcount reduction in the fourth quarter of fiscal 2005, costs associated with implementing efficiency initiatives in fiscal 2004, and the impact of prior year contribution from operations the company no longer owns. The fourth-quarter segment operating performance showed mixed results; positive results in specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. potatoes were more than offset by negative results in culinary cu·li·nar·y adj. Of or relating to a kitchen or to cookery. [Latin cul  n and to a much lesser extent in seafood seafoodEdible aquatic animals excluding mammals, but including both freshwater and ocean creatures. Seafood includes bony and cartilaginous fishes, crustaceans, mollusks, edible jellyfish, sea turtles, frogs, sea urchins, and sea cucumbers. . Sales and profits for specialty potato products increased due to strong volumes, but sales and profits for culinary products were down significantly, reflecting weak results from most operations, especially packaged meats; lower packaged meats profits largely resulted from higher input costs and manufacturing inefficiencies. The company estimates that the year-over-year operating profit shortfall in packaged meats was approximately $15 million for the foodservice operations in the fourth quarter. Due to tariff-related market dynamics, sales and profits for seafood products were below year-ago levels. Over the long term, the same initiatives that should favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. influence the Retail Products segment should also improve the top line and profit margins of the Foodservice Product segment. Food Ingredients Segment (18% of company annual sales) During the quarter, sales for the Food Ingredients segment were $795 million, an increase of 9% compared with the fourth quarter last year. Segment operating profit was $64 million, an increase of 6% over the year-ago period; this was driven by growth in the trading and merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. operations. On a comparable basis, segment sales increased 18% compared with last year and operating profit increased 26% after considering the estimated benefit from an additional week in the fourth quarter of fiscal 2004, expenses related to the headcount reduction in the fourth quarter of fiscal 2005, and costs associated with implementing efficiency initiatives in fiscal 2004. Difficult cost environment and competitive conditions continued to negatively impact the performance of dehydrated de·hy·drate v. de·hy·drat·ed, de·hy·drat·ing, de·hy·drates v.tr. 1. To remove water from; make anhydrous. 2. To preserve by removing water from (vegetables, for example). onion onion, plant of the family Liliaceae (lily family), of the same genus (Allium) as the chive (A. schoenoprasum), garlic (A. sativum), leek (A. porrum), and shallot (A. ascalonium). , garlic garlic: see onion. garlic Bulbous perennial plant (Allium sativum) of the lily family, native to central Asia and growing wild in Italy and southern France. The bulbs are used as a flavouring. , capsicums, and vegetable vegetable, term originally used for any plant, now the name for many food plants, most of them annuals, and for their edible parts. There is no clear botanical distinction between vegetables and fruits. based food ingredients. Fourth-quarter operating profit includes $49 million of profit from trading and merchandising inputs, such as energy, grains, fertilizer fertilizer, organic or inorganic material containing one or more of the nutrients—mainly nitrogen, phosphorus, and potassium, and other essential elements required for plant growth. , and other input commodities, which benefited from favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. market opportunities. Operating profits for the trading and merchandising operations grew at a solid rate, but slower than in recent quarters because those operations are experiencing tougher comparisons. The Food Ingredients segment will most likely post lower profits in fiscal 2006 than in fiscal 2005 due to the unusually strong fiscal 2005 performance of the trading and merchandising operations. The company believes the Food Ingredients segment's most promising opportunities over the long term will result from its strategy to expand value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: product platforms in several customer channels. Equity Method Investments and Assets Related to Swift swift, common name for small, swallowlike birds related to the hummingbird and found all over the world, chiefly in the tropics. They range in size from 6 to 12 in. (15–30 cm) in length. Foods --Equity method investment earnings for the fourth quarter were $10 million. For the same quarter last year, equity method investment earnings were $14 million. Prior year results include approximately $4 million from the company's subsequently divested beef joint venture. --During the quarter, the company received $70 million as it completed the liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy of the cattle-feeding assets it received in connection with financing it provided Swift Foods. Those cattle-feeding assets, as well as the gain resulting from liquidating such assets, were classified as discontinued operations. --During the quarter, the company recognized a pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of $39 million related to a debt security it owns in Swift Foods. This reduction in value was recognized as a direct reduction in stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. , and did not impact EPS, as the reduction in value was considered a temporary decline in the value of an available-for-sale security. The company's investment is classified in Other Assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. . Other Capital Resource Matters and Corporate Expense --For the fourth quarter, corporate expense was $131 million compared with $100 million for the same period a year ago, primarily reflecting the impact of the severance costs as well as increased self-insurance self-insurance, n the setting aside of funds by an individual or organization to meet anticipated dental care expenses or dental care claims, and accumulation of a fund to absorb fluctuations in the amount of expenses and claims. costs. --For the fiscal year, corporate expense was $402 million compared with $352 million for last year, again reflecting headcount reduction costs and costs to implement strategic information systems. --For the quarter, capital expenditures for property, plant, and equipment totaled $102 million compared with $109 million last year. Depreciation and amortization expense was approximately $90 million for the quarter versus $90 million a year ago. Dividends paid totaled $141 million versus $137 million last year. Net interest expense for the quarter was $68 million compared with $79 million last year. --For the fiscal year, capital expenditures for property, plant, and equipment totaled $453 million compared with $349 million last year; the increase over last year is due principally to additional investment to update strategic information systems for the future. Depreciation and amortization expense was approximately $351 million for the year versus $345 million a year ago. Dividends paid totaled $550 million versus $537 million last year. Net interest expense for the year was $295 million compared with $275 million last year. Succession succession: see ecology. Plan Recently the company announced that, at the request of Bruce Rohde, chairman and chief executive officer, the board of directors commenced a formal search for Mr. Rohde's successor 1. SuccessoR - A language for distributed computing derived from SR. ["SuccessoR: Refinements to SR", R.A. Olsson et al, TR 84-3, U Arizona 1984]. 2. successor - daughter . The search committee is led by ConAgra Foods Board member, Steven Ste´ven n. 1. Voice; speech; language. Ye have as merry a steven As any angel hath that is in heaven. - Chaucer. 2. An outcry; a loud call; a clamor. To set steven to make an appointment. F. Goldstone gold·stone n. An aventurine with gold-colored inclusions. Noun 1. goldstone - aventurine spangled densely with fine gold-colored particles , retired chairman and chief executive officer of RJR Nabisco RJR Nabisco, Inc., was an American conglomerate formed in 1985 by the merger of Nabisco Brands and R.J. Reynolds Tobacco Company. RJR Nabisco was purchased in 1988 by Kohlberg Kravis Roberts & Co. in the second largest leveraged buyout in history, adjusted for inflation. , and is utilizing the services of Heidrick & Struggles, a worldwide executive search firm. Any news or updates on this matter will be issued in a public announcement at the appropriate time. Outlook The company has stated in its annual report that it expects annual EPS growth at a mid-to-high single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. rate for most years over the long term. The company is planning fiscal 2006 EPS to be higher than fiscal 2005 EPS, excluding items that impact comparability. The company is not offering specific EPS guidance for fiscal 2006, as 2006 EPS will depend on external factors, along with successful execution of numerous internal initiatives. Regarding fiscal 2006, the company offers the following: --For fiscal 2006, the single biggest profit improvement opportunity is in the retail and foodservice packaged meats operations, as profits for those operations were very low in fiscal 2005. The company notes that the current profit-enhancing initiatives within these operations may not result in improved year-over-year packaged meats profits until after the first quarter of fiscal 2006; this is due to the gradual The Gradual (Latin: graduale, sometimes called the Grail) is a chant in the extraordinary form of the Roman Catholic Mass, sung after the reading or singing of the Epistle and before the Alleluia, or, during penitential seasons, before the Tract. nature of the pricing and trade promotion initiatives under way. Consequently, the company expects earnings from its packaged meats operations to be lower in the first quarter this year than last year. Fiscal 2005 operating profits from its packaged meats operations experienced approximately $150 million shortfall versus prior year; the company may not recover all of that shortfall in fiscal 2006. --The company also notes that profits for its trading and merchandising operations within its Food Ingredients segment were very strong in fiscal 2005 due to favorable market opportunities. Those operations contributed approximately $186 million, or 71% of the segment's $263 million in operating profit for fiscal 2005. The company notes that fiscal 2005 operating profits for trading and merchandising operations were almost twice the amount earned in fiscal 2004. --Overall, the company expects EPS in the first quarter of fiscal 2006 to be less than the first quarter in fiscal 2005; any EPS growth for fiscal 2006 is expected to be more likely in the second half of the year. For more details regarding the company's financial goals, please refer to the company's Web site, www.conagrafoods.com/investors, and choose the button titled, "ConAgra Foods Comments on Strategic Direction." Major Items Affecting Fourth-Quarter Fiscal 2005 EPS Comparability Included in diluted EPS of $0.20 for the fourth quarter of fiscal 2005 (EPS amounts after tax): --Expense of $0.05 per diluted share related to severance costs resulting from the recently announced headcount reduction program. Total expense was $43 million, $32 million of which were recorded in the results of the business segments, and $11 million of which were recorded in corporate expense. --Expense of $0.01 per diluted share, related to a change in estimated effective state income tax rates. Included in the $0.32 diluted EPS for the fourth quarter of fiscal 2004 (EPS amounts after tax): --Expense of approximately $0.03 per diluted share related to implementing cost-saving initiatives. --Income of $0.02 per diluted share from discontinued operations. --A benefit of approximately $0.02 per diluted share related to the taxable gain Taxable Gain The portion of a sale that is liable to taxation. Notes: When redistributing mutual fund shares that have increased in value, returns may be subject to taxation. See also: Capital gain, Income Tax on the sale of the company's minority interest in a joint venture. --Expense of $0.05 per diluted share related to a higher than expected effective tax rate. --Estimated benefit of $0.03 per diluted share benefit from having an extra week's results in the quarter, as fiscal 2004 was a 53-week year. --Charge of $0.05 per diluted share for the establishment of a legal reserve, classified as corporate expense. Major Items Affecting Year-Over-Year Sales and Operating Profit Comparability --To determine comparable year-over-year sales and operating profit amounts for the Retail Products segment for the fourth quarter and fiscal year, management considered the estimated impacts of matters set forth in the analysis below (amounts in millions):
Fiscal Fiscal
Q4 2005 Q4 2004 2005 2004
Retail Products Sales Sales % Change Sales Sales % Change
----------------------------------------------------------------------
As reported $2,092.7 $2,230.2 (6.2%) $8,669.1 $8,434.1 2.8%
----------------------------------------------------------------------
Estimated
impact of -- ($164.6) -- ($164.6)
extra week in
FY2004 (a)
----------------------------------------------------------------------
Comparable
amounts $2,092.7 $2,065.6 1.3% $8,669.1 $8,269.5 4.8%
----------------------------------------------------------------------
Fiscal Fiscal
Q4 2005 Q4 2004 2005 2004
Operating Operating % Operating Operating %
Retail Products Profit Profit Change Profit Profit Change
----------------------------------------------------------------------
As reported $243.4 $319.4 (23.8%) $1,129.3 $1,218.0 (7.3%)
----------------------------------------------------------------------
Estimated impact
of extra week -- ($27.6) -- ($27.6)
in FY2004 (a)
----------------------------------------------------------------------
Costs related to
implementing -- $10.2 $14.6 $25.4
efficiency
initiatives
----------------------------------------------------------------------
Impairment charge -- -- $10.0 --
----------------------------------------------------------------------
Headcount $23.7 -- $23.7 --
reduction
----------------------------------------------------------------------
Favorable
litigation
settlement -- -- ($17.0) --
----------------------------------------------------------------------
Comparable $267.1 $302.0 (11.6%) $1,160.6 $1,215.8 (4.5%)
amounts
----------------------------------------------------------------------
(a) The company estimated the impact of the extra week of operations
in fiscal 2004 using a pro-rata methodology based on the last six
weeks of the fiscal year.
--To determine comparable year-over-year sales and operating profit amounts for the Foodservice Products segment for the fourth quarter and fiscal year, management considered the estimated impacts of matters set forth in the analysis below (amounts in millions):
Fiscal Fiscal
Foodservice Q4 2005 Q4 2004 2005 2004
Products Sales Sales % Change Sales Sales % Change
----------------------------------------------------------------------
As reported $818.8 $882.4 (7.2%) $3,227.3 $3,274.1 (1.4%)
----------------------------------------------------------------------
Estimated impact
of extra week in -- ($61.2) -- ($61.2)
FY2004 (a)
----------------------------------------------------------------------
Impact on FY2004
from operations -- -- -- ($27.6)
the company no
longer owns
----------------------------------------------------------------------
Comparable
amounts $818.8 $821.2 (0.3%) $3,227.3 $3,185.3 1.3%
----------------------------------------------------------------------
Fiscal Fiscal
Q4 2005 Q4 2004 2005 2004
Foodservice Operating Operating Operating Operating
Products Profit Profit % Change Profit Profit % Change
----------------------------------------------------------------------
As reported $55.8 $93.4 (40.3%) $277.1 $324.6 (14.6%)
----------------------------------------------------------------------
Estimated
impact of -- ($6.5) -- ($6.5)
extra week in
FY2004 (a)
----------------------------------------------------------------------
Costs related
to
implementing
efficiency -- $13.3 $15.7 $28.9
initiatives
and impact of
fire damage
----------------------------------------------------------------------
Headcount
reduction $4.0 -- $4.0 --
----------------------------------------------------------------------
Impact on
fiscal 2004
from
operations -- ($0.2) -- ($2.9)
the company
no longer
owns
----------------------------------------------------------------------
Comparable
amounts $59.8 $100.0 (40.2%) $296.8 $344.1 (13.7%)
----------------------------------------------------------------------
(a) The company estimated the impact of the extra week of operations
in fiscal 2004 using a pro-rata methodology based on the last six
weeks of the fiscal year.
--To determine comparable year-over-year sales and operating profit amounts for the Food Ingredients segment for the fourth quarter and fiscal year, management considered the estimated impacts of matters set forth in the analysis below (amounts in millions):
Fiscal Fiscal
Q4 2005 Q4 2004 2005 2004
Food Ingredients Sales Sales % Change Sales Sales % Change
----------------------------------------------------------------------
As reported $794.9 $730.5 8.8% $2,670.5 $2,373.6 12.5%
----------------------------------------------------------------------
Estimated impact of
extra week in -- ($54.9) -- ($54.9)
FY2004 (a)
----------------------------------------------------------------------
Comparable
amounts $794.9 $675.6 17.7% $2,670.5 $2,318.7 15.2%
----------------------------------------------------------------------
Fiscal Fiscal
Q4 2005 Q4 2004 2005 2004
Food Operating Operating Operating Operating
Ingredients Profit Profit % Change Profit Profit % Change
----------------------------------------------------------------------
As reported $64.0 $60.4 6.0% $263.1 $196.6 33.8%
----------------------------------------------------------------------
Estimated
impact of -- ($6.7) -- ($6.7)
extra week in
FY2004 (a)
----------------------------------------------------------------------
Costs related
to
implementing -- $0.3 $0.8 $7.6
efficiency
initiatives
----------------------------------------------------------------------
Impairment
charge -- -- $15.0 --
----------------------------------------------------------------------
Headcount
reduction $3.8 -- $3.8 --
----------------------------------------------------------------------
Comparable
amounts $67.8 $54.0 25.6% $282.7 $197.5 43.1%
----------------------------------------------------------------------
(a) The company estimated the impact of the extra week of operations
in fiscal 2004 using a pro-rata methodology based on the last six
weeks of the fiscal year.
--To determine comparable year-over-year sales and operating profit amounts for the total company for the fourth quarter and fiscal year, management considered the estimated impacts of matters set forth in the analysis below (amounts in millions):
Fiscal Fiscal
ConAgra Foods Q4 2005 Q4 2004 2005 2004
Sales Sales Sales % Change Sales Sales % Change
----------------------------------------------------------------------
As reported $3,706.4 $3,843.1 (3.6%) $14,566.9 $14,081.8 3.4%
----------------------------------------------------------------------
Estimated
impact of -- ($280.7) -- ($280.7)
extra week
in FY2004(a)
----------------------------------------------------------------------
Impact on
FY2004 from
operations -- -- -- ($27.6)
the company
no longer
owns
----------------------------------------------------------------------
Comparable
amounts $3,706.4 $3,562.4 4.0% $14,566.9 $13,773.5 5.8%
----------------------------------------------------------------------
Fiscal Fiscal
ConAgra Foods Q4 2005 Q4 2004 2005 2004
Operating Operating Operating Operating Operating
Profit (c) Profit Profit % Change Profit Profit % Change
----------------------------------------------------------------------
As reported $363.2 $473.2 (23.2%) $1,669.5 $1,739.2 (4.0%)
----------------------------------------------------------------------
Estimated
impact of -- ($40.8) -- ($40.8)
extra week in
FY2004(a)
----------------------------------------------------------------------
Costs related
to
implementing
efficiency -- $23.8 $31.1 $61.9
initiatives
and impact of
fire damage
----------------------------------------------------------------------
Impairment
charges -- -- $25.0 --
----------------------------------------------------------------------
Headcount
reduction $31.5(b) -- $31.5(b) --
----------------------------------------------------------------------
Favorable
litigation
settlement -- -- ($17.0) --
----------------------------------------------------------------------
Impact on
FY2004 from
operations -- ($0.2) -- ($2.9)
the company
no longer
owns
----------------------------------------------------------------------
Comparable
amounts $394.7 $456.0 (13.4%) $1,740.1 $1,757.4 (1.0%)
----------------------------------------------------------------------
(a) The company estimated the impact of the extra week of operations
in fiscal 2004 using a pro-rata methodology based on the last six
weeks of the fiscal year.
(b) Additional expense of $11.2 million was recorded as corporate
expense, resulting in a total of $43 million of severance costs.
(c) A reconciliation of total operating profit to income from
continuing operations before income tax, equity method investment
earnings and cumulative effect of changes in accounting is
presented in the segment operating results attached to this
release.
ConAgra Foods Inc. (NYSE:CAG) is one of North America's largest packaged food companies, serving consumer grocery retailers, as well as restaurants and other foodservice establishments. Popular ConAgra Foods consumer brands include: ACT II, Armour, Banquet, Blue Bonnet, Brown 'N Serve, Butterball, Chef Boyardee, Cook's, Crunch 'n Munch Crunch 'n Munch is a brand of ConAgra Foods consisting of caramel-coated popcorn and peanuts. Crunch 'n Munch currently comes in its original form of Buttery Toffee as well as the added varieties of Caramel and Almond Supreme. , DAVID David, in the Bible David, d. c.970 B.C., king of ancient Israel (c.1010–970 B.C.), successor of Saul. The Book of First Samuel introduces him as the youngest of eight sons who is anointed king by Samuel to replace Saul, who had been deemed a failure. , Decker, Eckrich, Egg Beaters n. 1. a small device having one or usually two blades, each having several stiff oval wires at the tip. The blades are swirled or rotated for beating eggs or whipping cream. , Fleischmann's, Golden Cuisine, Gulden's Gulden's, a brand of American mustard, is the third largest American manufacturer of mustard, after French's and Plochman's. It is owned by agricultural giant ConAgra. , Healthy Choice, Hebrew National, Hunt's, Kid Cuisine, Knott's Berry Farm Knott's Berry Farm is a brand name of two separate entities: a theme park in Buena Park, California, and a manufacturer of food specialty products (primarily jams and preserves) based in Placentia, California. , La Choy La Choy is a brand name of canned and prepackaged Chinese food ingredients. The brand is currently owned by ConAgra Foods. La Choy was founded in 1922 by Dr. Ilhan New (유일한), later founder of Yuhan Corporation in Korea and Wally Smith, from the , Lamb Weston Weston, town (1990 pop. 10,200), Middlesex co., E Mass., W of Boston; settled c.1642, set off from Watertown and inc. 1713. The town is mainly residential. Regis College, the Weston College Geophysical Observatory, and many 18th-century buildings are there. , Libby's, Life Choice, Lightlife Lightlife is a Turners Falls, Massachusetts-based company established in 1979 that produces vegetarian meat substitutes. They are a brand of ConAgra Foods. External links
Discussion of Results ConAgra Foods will host a conference call at 9:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT to discuss fourth-quarter results. Following the company's remarks, the call will include a question-and-answer session with the investment community. Domestic and international participants may access the conference call toll-free by dialing 1-877-447-8217 and 1-706-679-0415, respectively. No confirmation or pass code is needed. This conference call also can be accessed live on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.conagrafoods.com/investors. A rebroadcast of the conference call will be available after 2:00 p.m. EDT. To access the digital replay, a conference I.D. number will be required. Domestic participants should dial 1-800-642-1687 and international participants should dial 1-706-645-9291 and enter conference I.D. 6555739. A rebroadcast also will be available on the company's Web site, where it will be archived for two weeks. In addition, the company has posted a question-and-answer supplement relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc this release at www.conagrafoods.com/investors. To view recent company news, please visit www.conagrafoods.com/media. Note on Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are based on management's current views and assumptions of future events and financial performance and are subject to uncertainty and changes in circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . Readers of this release should understand that these statements are not guarantees of performance or results. Many factors could affect the company's actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements. These factors include, among other things, future economic circumstances, industry conditions, company performance and financial results, availability and prices of raw materials, product pricing, competitive environment and related market conditions, operating efficiencies, access to capital, actions of governments and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. factors affecting the company's businesses and other risks described in the company's reports filed with the Securities and Exchange Commission. The company cautions readers not to place undue reliance on any forward-looking statements included in this release, which speak only as of the date made.
ConAgra Foods, Inc.
Segment Operating Results
In millions
FOURTH QUARTER
---------------------------
13 Weeks 14 Weeks
Ended Ended
--------- --------- -------
May 29, May 30, Percent
2005 2004 Change
--------- --------- -------
SALES
-----
Retail Products $2,092.7 $2,230.2 (6.2)%
Foodservice Products 818.8 882.4 (7.2)%
Food Ingredients 794.9 730.5 8.8%
--------- ---------
Total 3,706.4 3,843.1 (3.6)%
--------- ---------
OPERATING PROFIT
----------------
Retail Products $243.4 $319.4 (23.8)%
Foodservice Products 55.8 93.4 (40.3)%
Food Ingredients 64.0 60.4 6.0%
--------- ---------
Total operating profit for segments 363.2 473.2 (23.2)%
Reconciliation of total operating profit to
income from continuing operations before
income taxes and equity method investment
earnings
Items excluded from segment operating
profit:
General corporate expense (130.8) (99.8) 31.1%
Interest expense, net (67.7) (79.4) (14.7)%
--------- ---------
Income from continuing operations before
income taxes and equity method investment
earnings $164.7 $294.0 (44.0)%
========= =========
Segment operating profit excludes general corporate expense, equity
method investment earnings and net interest expense. Management
believes such amounts are not directly associated with segment
performance results for the period. Management believes the
presentation of total operating profit for segments facilitates
period-to-period comparison of results of segment operations.
ConAgra Foods, Inc.
Segment Operating Results
In millions
YEAR-TO-DATE
---------------------------
52 Weeks 53 Weeks
Ended Ended
--------- --------- -------
May 29, May 30, Percent
2005 2004 Change
--------- --------- -------
SALES
-----
Retail Products $8,669.1 $8,434.1 2.8%
Foodservice Products 3,227.3 3,274.1 (1.4)%
Food Ingredients 2,670.5 2,373.6 12.5%
--------- ---------
Total 14,566.9 14,081.8 3.4%
--------- ---------
OPERATING PROFIT
----------------
Retail Products $1,129.3 $1,218.0 (7.3)%
Foodservice Products 277.1 324.6 (14.6)%
Food Ingredients 263.1 196.6 33.8%
--------- ---------
Total operating profit for segments 1,669.5 1,739.2 (4.0)%
Reconciliation of total operating profit to
income from continuing operations before
income taxes, equity method investment
earnings (loss) and cumulative effect of
changes in accounting
Items excluded from segment operating
profit:
Gain on sale of Pilgrim's Pride
Corporation common stock 185.7 - 100.0%
General corporate expense (402.2) (351.9) 14.3%
Interest expense, net (295.0) (274.9) 7.3%
--------- ---------
Income from continuing operations before
income taxes, equity method investment
earnings (loss) and cumulative effect of
changes in accounting $1,158.0 $1,112.4 4.1%
========= =========
Segment operating profit excludes general corporate expense, gain on
sale of Pilgrim's Pride Corporation common stock, equity method
investment earnings (loss) and net interest expense. Management
believes such amounts are not directly associated with segment
performance results for the period. Management believes the
presentation of total operating profit for segments facilitates
period-to-period comparison of results of segment operations.
ConAgra Foods, Inc.
Consolidated Statements of Earnings
In millions, except per share amounts FOURTH QUARTER
----------------------------
13 Weeks 14 Weeks
Ended Ended
--------- --------- --------
May 29, May 30, Percent
2005 2004 Change
--------- --------- --------
Net sales $3,706.4 $3,843.1 (3.6)%
Costs and expenses:
Cost of goods sold 2,960.5 3,020.0 (2.0)%
Selling, general and administrative
expenses 513.5 449.7 14.2%
Interest expense, net 67.7 79.4 (14.7)%
--------- ---------
Income from continuing operations before
income taxes and equity method
investment earnings 164.7 294.0 (44.0)%
Income tax expense 71.9 151.5 (52.5)%
Equity method investment earnings 9.9 14.1 (29.8)%
--------- ---------
Income from continuing operations 102.7 156.6 (34.4)%
Income (loss) from discontinued
operations, net of tax (0.8) 12.7 -
--------- ---------
Net income $101.9 $169.3 (39.8)%
========= =========
Earnings per share - basic
Income from continuing operations $0.20 $0.30 (33.3)%
Income from discontinued operations - 0.02 (100.0)%
--------- ---------
Net income $0.20 $0.32 (37.5)%
========= =========
Weighted average shares outstanding 517.3 522.4 (1.0)%
========= =========
Earnings per share - diluted
Income from continuing operations $0.20 $0.30 (33.3)%
Income from discontinued operations - 0.02 (100.0)%
--------- ---------
Net income $0.20 $0.32 (37.5)%
========= =========
Weighted average share and share
equivalents outstanding 521.0 527.1 (1.2)%
========= =========
ConAgra Foods, Inc.
Consolidated Statements of Earnings
In millions, except per share amounts YEAR-TO-DATE
-----------------------------
52 Weeks 53 Weeks
Ended Ended
---------- ---------- -------
May 29, May 30, Percent
2005 2004 Change
---------- ---------- -------
Net sales $14,566.9 $14,081.8 3.4%
Costs and expenses:
Cost of goods sold 11,464.9 10,876.1 5.4%
Selling, general and administrative
expenses 1,834.7 1,818.4 0.9%
Interest expense, net 295.0 274.9 7.3%
Gain on sale of Pilgrim's Pride
Corporation common stock 185.7 - 100.0%
---------- ----------
Income from continuing operations before
income taxes, equity method investment
earnings (loss) and cumulative effect
of change in accounting 1,158.0 1,112.4 4.1%
Income tax expense 470.0 428.8 9.6%
Equity method investment earnings (loss) (24.9) 43.5 -
---------- ----------
Income from continuing operations before
cumulative effect of changes in
accounting 663.1 727.1 (8.8)%
Income (loss) from discontinued
operations, net of tax (21.6) 97.3 -
Cumulative effect of changes in
accounting - (13.1) 100.0%
---------- ----------
Net income $641.5 $811.3 (20.9)%
========== ==========
Earnings per share - basic
Income from continuing operations before
cumulative effect of changes in
accounting $1.28 $1.38 (7.2)%
Income (loss) from discontinued
operations (0.04) 0.18 -
Cumulative effect of changes in
accounting - (0.02) 100.0%
---------- ----------
Net income $1.24 $1.54 (19.5)%
========== ==========
Weighted average shares outstanding 516.2 527.2 (2.1)%
========== ==========
Earnings per share - diluted
Income from continuing operations before
cumulative effect of changes in
accounting $1.27 $1.37 (7.3)%
Income (loss) from discontinued
operations (0.04) 0.18 -
Cumulative effect of changes in
accounting - (0.02) 100.0%
---------- ----------
Net income $1.23 $1.53 (19.6)%
========== ==========
Weighted average share and share
equivalents outstanding 520.2 530.7 (2.0)%
========== ==========
ConAgra Foods, Inc.
Consolidated Balance Sheets
In millions
May 29, May 30,
2005 2004
---------- ----------
ASSETS
Current assets
Cash and cash equivalents $207.6 $608.6
Divestiture proceeds receivable - 60.3
Receivables, less allowance for doubtful
accounts of $30.7 and $26.2 1,292.0 1,303.1
Inventories 2,614.5 2,516.5
Prepaid expenses and other current assets 380.2 439.7
Current assets of discontinued operations 29.4 221.1
---------- ----------
Total current assets 4,523.7 5,149.3
Property, plant and equipment, net 2,848.3 2,837.4
Goodwill 3,797.7 3,788.6
Brands, trademarks and other intangibles, net 819.7 826.9
Other assets 798.4 1,559.4
Noncurrent assets of discontinued operations 3.9 60.6
---------- ----------
$12,791.7 $14,222.2
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $8.5 $30.6
Current installments of long-term debt 117.3 382.4
Accounts payable 818.4 925.4
Advances on sales 149.6 178.4
Accrued payroll 272.4 272.0
Other accrued liabilities 1,012.2 1,072.9
Current liabilities of discontinued operations 10.2 142.8
---------- ----------
Total current liabilities 2,388.6 3,004.5
Senior long-term debt, excluding current
installments 3,949.1 4,878.4
Subordinated debt 400.0 402.3
Other noncurrent liabilities 1,194.6 1,143.1
Common stockholders' equity 4,859.4 4,793.9
---------- ----------
$12,791.7 $14,222.2
========== ==========
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