ConAgra Foods Reports Solid First-Quarter Results.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 ): First-Quarter Fiscal 2006 Overview: --First-quarter fiscal 2006 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 $0.68, reflecting a large gain from selling 15.4 million shares of Pilgrim's Pride Pilgrim's Pride Corp. NYSE: PPC, headquartered in Pittsburg, Texas, is the largest chicken producer in the United States and Puerto Rico and the second-largest chicken producer in Mexico. They employ approximately 56,000 people with sales of $5. Corporation common stock as well as a solid performance in several areas of the business. --The $0.68 per diluted share includes a $0.40 per share gain from the sale of Pilgrim's Pride Corporation common stock, $0.04 per share of expense from asset 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. and plant closure costs, and $0.01 per share of earnings from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . These items impacting comparability are summarized toward the end of this release. --Prior-year earnings of $0.26 per diluted share included $0.02 per share of net expense related to implementing cost-saving initiatives. --New chief executive officer Gary Rodkin Gary Rodkin is the current CEO and President of ConAgra Foods, one of the largest food processing companies in North America. Rodkin was formerly the CEO and president of the North America division of PepsiCo from 1995 to 2005, and still is a special consultant through his exit will join ConAgra Foods on Oct. 1. ConAgra Foods Inc. (NYSE:CAG), one of North America's leading packaged food companies, today reported results for the fiscal 2006 first quarter ended Aug. 28, 2005. First-quarter diluted EPS was $0.68, and diluted EPS was $0.26 for the same period last year; the major items affecting comparability are summarized toward the end of this release. Sales for the quarter were $3.4 billion, slightly less than the same period last year. Bruce Rohde, chairman and chief executive officer of ConAgra Foods, commented, "Operating profitability for fiscal 2006 is off to a good start. We are executing better in key areas of our business, and we are also encouraged by the fact that input cost inflation trends for some items are moderating following the significant cost increases we experienced in recent quarters. Fiscal 2006 should be a year of solid 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. performance as we continue to improve our packaged meats operations and make our cost structure more efficient." Retail Products Segment (58% of company sales) During the quarter, sales for the Retail Products segment were $1.9 billion, a decrease of 4% compared with the same period last year; sales mix sales mix See product mix. was slightly negative, as volume declined 3%. Sales and volume decreases reflect a combination of the effect of price increases, customer and product mix changes, continued challenges for some packaged meats products, and to a lesser extent, a rigorous 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 (stock keeping unit) reduction program. --Sales for the company's top 30 brands as a group, which represent approximately 80% of total segment sales, decreased 1% during the quarter. --Several brands posted strong sales performance as a result of ongoing sales and marketing initiatives intended to strengthen brand equity and improve category share performance. Popular brands posting sales gains include: Butterball, 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. , 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. , 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. , 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 , Manwich, Marie Callender's, Orville Redenbacher's, Peter Pan, Slim Jim Slim Jim is a brand of dry meat snack manufactured by ConAgra Foods, Inc. They are popular in the United States, due in part to their unique texture, salty taste and "hip" marketing. More than 500 million are produced annually in at least 20 varieties,. , Snack Pack, Van Camp's, and Wesson. --Those brands posting sales declines include: ACT II, 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. , 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. , Cook's, 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. , Healthy Choice, Hebrew National, Hunt'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, Reddi-wip, and Swiss Miss. The Retail Products segment operating profit for the quarter was $211 million, slightly above the amount reported for the same quarter last year. Several factors contributed to the profit performance, including price increases across several product lines, more efficient manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. , and overall cost-management efforts. Those factors largely offset higher input costs for beef, steel, resin resin, any of a class of amorphous solids or semisolids. Resins are found in nature and are chiefly of vegetable origin. They are typically light yellow to dark brown in color; tasteless; odorless or faintly aromatic; translucent or transparent; brittle, fracturing , and transportation. Profit margin trends for the packaged meats operations have improved from the trends experienced during the second half of fiscal 2005, even though profits for those operations are substantially below desired levels. The packaged meats operations are benefiting from new management and lower pork input costs, as well as better net pricing policies that are closely linked to SKU optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. efforts and product and customer mix improvement. The company is encouraged by the progress being made by the new packaged meats team, and continues to expect year-over-year profit improvement for these operations in the second half of fiscal 2006. $7 million of costs associated with a plant closure in the current year, and $8 million of costs associated with implementing efficiency initiatives in the prior year, impact year-over-year comparability of segment operating profit. Foodservice Products Segment (23% of company sales) Sales for the Foodservice Products segment were $790 million for the first quarter, roughly equal to the same period last year. Segment operating profit was $80 million in the first quarter, up from $66 million in the year-ago period. Last year's operating profit includes $5 million of costs associated with implementing efficiency initiatives as well as $11 million of unfavorable production costs associated with a planned plant consolidation. During the first quarter, specialty potato products and culinary cu·li·nar·y adj. Of or relating to a kitchen or to cookery. [Latin cul  n products increased volumes with key customers. Growth in operating
profits for specialty potato products and culinary products primarily
reflects increased volumes and improved operating efficiencies. Due to
tariff-related market dynamics, sales and profits for 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. products were below year-ago levels. Higher transportation costs for the overall segment were partially offset by effective cost-management efforts. Food Ingredients Segment (19% of company sales) During the quarter, sales for the Food Ingredients segment were $631 million, an increase of 9% compared with the first quarter last year. Segment operating profit was $76 million, an increase of 27% over the year-ago period; this increase was largely driven by a very favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. market environment for the commodity 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. Those operations, which include trading and merchandising 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, contributed $47 million of the segment's total operating profit of $76 million. Despite a weak performance from the 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). product lines, the specialty ingredients products posted growth in sales and operating profit due to a strong performance from the flour milling operations. Pilgrim's Pride Stock Sale --During the quarter, ConAgra Foods sold all of its remaining 15.4 million shares of Pilgrim's Pride Corporation (NYSE: PPC See Pocket PC, PowerPC and pay-per-click. PPC - PowerPC ) common stock for approximately $482 million, resulting in a net pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern gain of approximately $329 million. That gain is classified on the company's income statement as Gain on sale of Pilgrim's Pride Corporation common stock. ConAgra Foods acquired these shares in the fall of 2003 in connection with the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of its chicken-processing operations to Pilgrim's Pride. Equity Method Investments, Corporate Expense, Capital Resource Matters, and Tax Rate --Equity method investments posted a pretax loss pretax loss A loss reported before tax benefits are considered. of $14 million for the first quarter, reflecting impairment charges totaling $19 million associated with two joint ventures. For the same quarter last year, equity method investment earnings were $14 million. Prior to the company's sale of its equity investment in Swift Foods during the second quarter of fiscal 2005, that investment provided $7 million of equity method investment earnings to ConAgra Foods during the first quarter of fiscal 2005. --For the first quarter, corporate expense was $73 million, compared with $64 million for the same period a year ago. --For the quarter, capital expenditures for property, plant, and equipment totaled $71 million compared with $105 million last year. Depreciation and amortization expense was approximately $89 million for the quarter versus $88 million a year ago. Dividends paid totaled $141 million versus $135 million last year. Net interest expense for the quarter was $68 million compared with $73 million last year. --At the end of the first quarter, interest-bearing debt was $4.5 billion, compared with $5.7 billion for the same period a year ago. Because of debt prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. made in fiscal 2005, the company has only $126 million of debt scheduled to be paid in fiscal 2006. As of the end of the first quarter, the company had more than $500 million of cash and cash equivalents on hand. --The company benefited from an effective tax rate of approximately 36% in the quarter; that rate is slightly less than the 38% effective tax rate in the first quarter of last year. The company currently expects the effective tax rate for fiscal 2006 to be in line with that of the first quarter. New CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. and New Chairman of the Board Recently the company announced that Gary Rodkin will become the company's new president and chief executive officer and a member of its board of directors on Oct. 1. He will succeed Bruce Rohde, the current chief executive officer. Board member Steven F. Goldstone gold·stone n. An aventurine with gold-colored inclusions. Noun 1. goldstone - aventurine spangled densely with fine gold-colored particles has been elected the non-executive chairman, commencing Oct. 1. Mr. Goldstone is a 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 succeeds Bruce Rohde, the company's current chairman. Outlook As previously stated, the company continues to expect fiscal 2006 EPS to be higher than fiscal 2005 EPS, excluding amounts that impact comparability. That earnings improvement is expected to be more apparent in the second half of the fiscal year as the company makes more progress working through the issues that have negatively impacted the packaged meats operations. Major Items Affecting First-Quarter Fiscal 2006 EPS Comparability Included in diluted EPS of $0.68 for the first quarter of fiscal 2006 (EPS amounts after tax): --A gain of $0.40 per diluted share from the sale of Pilgrim's Pride Corporation common stock that is classified as such on the company's income statement. --Expense of $0.03 per diluted share resulting from impairment charges associated with two joint ventures. These amounts are included in the equity method investment results. --Expense of $0.01 per diluted share related to plant closure costs classified as part of the results for the Retail Products segment. --Income of $0.01 per diluted share from discontinued operations. Included in the $0.26 diluted EPS for the first quarter of fiscal 2005 (EPS amounts after tax): --Expense of approximately $0.02 per diluted share related to implementing cost-saving initiatives. 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." 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, Eckrich, Egg Beaters, Fleischmann's, Golden Cuisine, Gulden's, 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, Lamb Weston, Libby's, Lightlife, Lunch Makers, MaMa Rosa's, Manwich, Marie Callender's, Orville Redenbacher's, PAM, Parkay, Pemmican pemmican (pĕm`ĭkən), a travel food of the Native North American. Slices of lean venison or buffalo meat were sun dried, pounded to a paste, and packed with melted fat in rawhide bags. , Peter Pan, Reddi-wip, Rosarita, Ro*Tel, Slim Jim, Snack Pack, Swiss Miss, Van Camp's, Wesson, Wolf, and many others. For more information, please visit us at www.conagrafoods.com. 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 first-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 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. 8266376. A rebroadcast also will be available on the company's Web site, where it will be archived. 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 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
FIRST QUARTER
-----------------------------------------------
13 Weeks 13 Weeks
Ended Ended
--------------- --------------- ---------------
August 28, 2005 August 29, 2004 Percent Change
--------------- --------------- ---------------
SALES
-----
Retail Products $1,941.6 $2,014.2 (3.6)%
Foodservice Products 789.9 792.2 (0.3)%
Food Ingredients 631.4 576.8 9.5%
--------------- ---------------
Total 3,362.9 3,383.2 (0.6)%
--------------- ---------------
OPERATING PROFIT
----------------
Retail Products $210.7 $209.8 0.4%
Foodservice Products 79.5 66.4 19.7%
Food Ingredients 76.3 60.1 27.0%
--------------- ---------------
Total operating
profit for
segments 366.5 336.3 9.0%
Reconciliation of
total operating
profit to income from
continuing operations
before income taxes
and equity method
investment earnings
(loss)
Items excluded from
segment operating
profit:
General corporate
expense (73.0) (63.6) 14.8%
Gain on sale of
Pilgrim's Pride
Corporation
common stock 329.4 - 100.0%
Interest expense,
net (68.1) (73.4) (7.2)%
--------------- ---------------
Income from continuing
operations before
income taxes and
equity method
investment earnings
(loss) $554.8 $199.3 178.4%
=============== ===============
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 FIRST QUARTER
-----------------------------------------------
13 Weeks Ended 13 Weeks Ended
--------------- --------------- ---------------
Percent
August 28, 2005 August 29, 2004 Change
--------------- --------------- ---------------
Net sales $3,362.9 $3,383.2 (0.6)%
Costs and expenses:
Cost of goods sold 2,635.4 2,700.4 (2.4)%
Selling, general and
administrative
expenses 434.0 410.1 5.8%
Interest expense,
net 68.1 73.4 (7.2)%
Gain on sale of
Pilgrim's Pride
Corporation common
stock 329.4 - 100.0%
--------------- ---------------
Income from continuing
operations before
income taxes and
equity method
investment earnings
(loss) 554.8 199.3 178.4%
Income tax expense 193.6 81.0 139.0%
Equity method
investment earnings
(loss) (13.9) 14.1 -
--------------- ---------------
Income from continuing
operations 347.3 132.4 162.3%
Income from
discontinued
operations, net of
tax 4.8 2.3 108.7%
--------------- ---------------
Net income $352.1 $134.7 161.4%
=============== ===============
Earnings per share -
basic
Income from continuing
operations $0.67 $0.26 157.7%
Income from
discontinued
operations 0.01 - 100.0%
--------------- ---------------
Net income $0.68 $0.26 161.5%
=============== ===============
Weighted average
shares outstanding 518.1 517.0 0.2%
=============== ===============
Earnings per share -
diluted
Income from continuing
operations $0.67 $0.26 157.7%
Income from
discontinued
operations 0.01 - 100.0%
--------------- ---------------
Net income $0.68 $0.26 161.5%
=============== ===============
Weighted average share
and share equivalents
outstanding 520.5 521.4 (0.2)%
=============== ===============
ConAgra Foods, Inc.
Consolidated Balance Sheets
In millions
August 28, 2005 August 29, 2004
--------------- ----------------
ASSETS
Current assets
Cash and cash equivalents $501.4 $369.8
Receivables, less allowance for
doubtful accounts of $31.7 and
$28.2 1,286.9 1,322.9
Inventories 2,756.3 2,584.9
Prepaid expenses and other current
assets 572.7 372.6
Current assets of discontinued
operations 8.5 257.6
--------------- ----------------
Total current assets 5,125.8 4,907.8
Property, plant and equipment, net 2,834.5 2,868.7
Goodwill 3,794.0 3,791.2
Brands, trademarks and other
intangibles, net 819.3 826.4
Other assets 444.4 1,564.9
Noncurrent assets of discontinued
operations 0.4 54.9
--------------- ----------------
$13,018.4 $14,013.9
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $10.8 $22.4
Current installments of long-term
debt 119.1 366.9
Accounts payable 926.9 863.4
Advances on sales 128.8 103.0
Accrued payroll 194.3 175.4
Other accrued liabilities 1,177.4 1,245.0
Current liabilities of discontinued
operations 4.2 181.0
--------------- ----------------
Total current liabilities 2,561.5 2,957.1
Senior long-term debt, excluding
current installments 3,943.5 4,887.1
Subordinated debt 400.0 400.3
Other noncurrent liabilities 1,121.9 1,154.8
Common stockholders' equity 4,991.5 4,614.6
--------------- ----------------
$13,018.4 $14,013.9
=============== ================
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