ConAgra Foods Reports Strong First Quarter Sales with Solid Profits; Share Repurchases Continued During the Quarter.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 ) HIGHLIGHTS: --First quarter fiscal 2005 sales rose 8% to $3.5 billion, driven mostly by strong volume performance in the Retail Products segment. --First 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. of $0.26 includes $0.02 per share of previously announced costs related to implementing efficiency initiatives. --First quarter fiscal 2004 diluted EPS of $0.37 included contribution from businesses the company no longer owns and other items affecting year-over-year comparisons. Those items are detailed toward the end of this release. --Almost seven million shares were repurchased during the first quarter of fiscal 2005 for approximately $181 million. ConAgra Foods Inc. (NYSE:CAG), one of North America's leading packaged food companies, today reported earnings for the first quarter ended Aug. 29, 2004. Net income for the quarter was $135 million, or $0.26 per diluted share, and includes $0.02 per share of previously announced costs related to implementing efficiency initiatives. Earnings for the first quarter last year were $195 million, or $0.37 per diluted share, reflecting contribution from businesses the company no longer owns, as well as other items that impact year-over-year comparability. Sales for the company increased 8% to $3.5 billion from $3.2 billion last year. Current quarter 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. was $341 million, 9% above the $312 million reported last year. Current quarter income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the before income tax and the cumulative effect of changes in accounting was $214 million, 29% ahead of $166 million last fiscal year. 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:
Rohde continued, "And because we have taken some price increases and reduced operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. in several areas, our overall operating profit this quarter was solid, but it was not as strong as we wanted; this was mainly due to significantly increased input costs across the industry. As we plan for the balance of this fiscal year, we expect to continue making price adjustments to offset increased input costs, as well as to continue growing volumes and capitalizing on cost savings opportunities so that we strengthen margins throughout the year." Retail Products (58% of total sales) Sales for the Retail Products segment increased 9% to $2 billion, the result of 8% volume growth. --Brands posting sales gains 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. , 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. , Cook's, 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. , 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. , Hebrew National, 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. , Manwich Manwich is the brand name of a canned sloppy joe sauce produced by ConAgra Foods, Inc. and Hunt's introduced in 1969. The can contains seasoned tomato sauce that is added to cooked ground beef in a skillet. It is marketed as a quick and easy one-pan meal for the whole family. , 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 , Peter Pan, 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. , Swiss Miss, and Wesson; many of these increased at double-digit rates. --Sales for the company's top 30 brands as a group, which represent almost 80% of total segment sales, grew 9%; category share trends for many of the company's most significant brands showed solid year-over-year improvement. The strong volume performance reflects disciplined sales and marketing initiatives designed to continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. strengthen brand equities, increase category shares, expand distribution, optimize optimize - optimisation return on marketing investment, and improve profit contribution from new items. The company notes that segment volume performance in the first quarter last fiscal year was soft, reflecting the consolidation of the Retail Products sales force underway at that time. This consolidation, now complete, reduced the role of brokers and resulted in a direct approach for serving customers. That transition has resulted in improved sales execution, which contributed to the strong volume performance this quarter. During the quarter, the segment's selling prices increased slightly, which only partly offset higher input costs; additional price increases continue to be implemented to address increased raw material costs. The Retail Products segment operating profit for the quarter was $213 million, 3% above the $208 million posted last year, reflecting the strong volume performance and a focus on operating cost reduction in the face of increased input costs. Significantly increased input costs negatively impacted operating profit growth and profit margin, as did $8 million of costs associated with implementing efficiency initiatives. Profits for branded processed meats were significantly below prior year results, reflecting a combination of increased costs and competitive challenges. The company expects price increases as well as the marketing and operating initiatives underway to accelerate the rate of operating profit growth for this segment as the fiscal year progresses. Foodservice Products (26% of total sales) Sales for the Foodservice Products segment were $905 million for the first quarter, an increase of 3% over last year, reflecting price increases that offset increased input costs. Sales for specialty potato and culinary cu·li·nar·y adj. Of or relating to a kitchen or to cookery. [Latin cul  n products grew, while 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 declined due to market conditions. Segment operating profit for the quarter was $67 million, 11% below the $76 million posted last year, largely due to $11 million of unfavorable production costs associated with a planned plant consolidation. Results also include $5 million of costs associated with implementing efficiency initiatives. The company expects price increases as well as the marketing and operating initiatives underway to accelerate the rate of operating profit growth for this segment as the fiscal year progresses. Food Ingredients (16% of total sales) During the quarter, sales for the Food Ingredients segment increased 14% to $577 million from $508 million last year. Operating profit more than doubled to $60 million this year. The strong sales and operating profit increases are primarily the result of a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. environment for input 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. Sales and operating profit results for the value-added specialty ingredients product lines were essentially equal to those of a year ago. Earnings from Equity Method Investments Equity method investment earnings for the quarter were $14 million, compared with $11 million for the same quarter last year. Capital Resource Management & Corporate Expense --The company repurchased nearly seven million shares of common stock during the first quarter at a total cost of approximately $181 million. Since announcing a $1 billion share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program in December 2003, the company has repurchased approximately 22 million shares for a total cost of approximately $600 million. --Capital expenditures for property, plant, and equipment totaled $105 million compared with $71 million last year; the increase over last year reflects additional investment in information systems. Depreciation and amortization expense was approximately $89 million for the quarter versus $85 million a year ago. Dividends paid totaled $135 million. Net interest expense for the quarter was $73 million compared with $65 million last year. --Corporate expense was $67 million for the quarter, compared with $92 million last year. Prior year amounts include approximately $22 million related to a litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlement. New Product News During the quarter the company announced its whole-grain flour flour, finely ground, usually sifted, meal of grain, such as wheat, rye, corn, rice, or buckwheat. Flour is also made from potatoes, peas, beans, peanuts, etc. Usually it refers to the finely ground and bolted (i.e. , Ultragrain White Whole Wheat, its proprietary product that the company expects to be revolutionary in the baking baking: see cooking. baking Process of cooking by dry heat, especially in an oven. Baked products include bread, cookies, pies, and pastries. industry. Ultragrain combines the nutritional benefits of whole grains with the taste, texture, and finished-baked qualities of refined flour that consumers and bakers often prefer. Ultragrain can be used in many applications including: bread, pizza crusts, pastas, tortillas, snacks, and cereals among other uses. Initial inquiries from potential trade customers including food manufacturers, bakeries, and ingredients companies suggest that the product has significant potential. Also during the quarter, Banquet Crock-Pot Classics, the first complete meal designed and created for Crock-Pot slow cooking, reached nationwide distribution, and is off to strong start. Banquet Crock-Pot Classics contain all of the high-quality ingredients needed for a slow-cooked meal--like tender meats, fresh vegetables, hearty heart·y adj. heart·i·er, heart·i·est 1. Expressed warmly, exuberantly, and unrestrainedly: a hearty welcome. 2. potatoes, and perfectly seasoned sauces--and are ready to cook with less than five minutes of preparation, providing consumers with a convenient, on-demand homemade home·made adj. 1. Made or prepared in the home: homemade pie. 2. Made by oneself. 3. Crudely or simply made. Adj. 1. family meal. Outlook The company believes that the marketing and operating initiatives currently being implemented, along with appropriate price increases, and the share repurchase program, will drive a solid EPS performance this fiscal year; the company expects the benefit of its profit-enhancing initiatives and pricing actions to be more apparent in the company's profit margins (profit as a percentage of sales) during the second half of the fiscal year than in the first half. For more detail on 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 Year-Over-Year EPS Comparability of First-Quarter 2005 Results Included in the $0.26 diluted EPS for the first quarter of fiscal 2005: --Current quarter results include expense of approximately $0.02 per diluted share related to implementing cost-saving initiatives. --Current quarter results do not include any significant contribution from operations now classified as discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: . Included in the $0.37 diluted EPS for the first quarter of fiscal 2004: --Prior year results include a tax-related benefit of $0.12 per diluted share. --Prior year results include $0.07 per diluted share of income 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. . --Prior year results include approximately $0.03 per diluted share of litigation expense, which was classified as a corporate SG&A expense. --Prior year results include $0.02 per diluted share of expense from the cumulative effect of an accounting change relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 143. 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, Decker, 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 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, Libby's, Life Choice, 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 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, Swiss Miss, Van Camp's, Wesson, Wolf, and many others. For more information, please visit us at www.conagrafoods.com. Discussion of Results A discussion of ConAgra Foods' first quarter results will be available today at 8:30 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 access the discussion, call toll-free at 1-877-447-8217. International callers should dial 1-706-679-0415. 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 , you may access the discussion at www.conagrafoods.com/investors. No passcode or call identification number is needed for the call at 8:30 a.m. EDT. A digital replay of the discussion will be available after 9:30 a.m. EDT at 1-800-642-1687 and at 1-706-645-9291 for international callers. The conference identification number for the digital replay for domestic callers and international callers is 9483317. The company has posted a question-and-answer supplement relating to this release and an audio archive of management's discussion at www.conagrafoods.com/investors. See the ConAgra Foods Web site for recent news at www.conagrafoods.com. 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
Dollars in millions
FIRST QUARTER
-------------------------------
13 Weeks 13 Weeks
Ended Ended
---------- ---------- ---------
August 29, August 24, Percent
2004 2003 Change
---------- ---------- ---------
SALES
-----
Retail Products $2,014.2 $1,841.0 9.4%
Foodservice Products 904.6 880.3 2.8%
Food Ingredients 576.8 508.1 13.5%
---------- ----------
Total 3,495.6 3,229.4 8.2%
---------- ----------
OPERATING PROFIT
----------------
Retail Products $213.3 $208.0 2.5%
Foodservice Products 67.4 76.0 (11.3)%
Food Ingredients 60.1 27.9 115.4%
---------- ----------
Total operating profit for segments 340.8 311.9 9.3%
Reconciliation of total operating
profit to income from continuing
operations before income tax and
cumulative effect of changes in
accounting
Items excluded from segment operating
profit:
General corporate expense 67.1 91.7 (26.8)%
Interest expense, net 73.4 65.4 12.2%
Equity method investment earnings 14.1 11.2 25.9%
---------- ----------
Income from continuing operations
before income tax and cumulative
effect of changes in accounting $214.4 $166.0 29.2%
========== ==========
Segment operating profit excludes general corporate expense,
equity method investment earnings and net interest expense.
Management believes such expenses 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 13 Weeks
Ended Ended
---------- ---------- ---------
August 29, August 24, Percent
2004 2003 Change
---------- ---------- ---------
Net sales $3,495.6 $3,229.4 8.2%
Costs and expenses:
Cost of goods sold 2,807.4 2,545.2 10.3%
Selling, general and administrative
expenses 414.5 464.0 (10.7)%
Interest expense, net 73.4 65.4 12.2%
---------- ----------
3,295.3 3,074.6 7.2%
Equity method investment earnings 14.1 11.2 25.9%
---------- ----------
Income from continuing operations
before income taxes and cumulative
effect of changes in accounting 214.4 166.0 29.2%
Income tax expense (benefit) 81.1 (1.3) N/A
---------- ----------
Income from continuing operations
before cumulative effect of changes
in accounting 133.3 167.3 (20.3)%
Income from discontinued operations,
net of tax 1.7 39.3 (95.7)%
Cumulative effect of changes in
accounting, net of tax - (11.7) (100.0)%
---------- ----------
Net income $135.0 $194.9 (30.7)%
========== ==========
Earnings per share - basic
Income from continuing operations
before cumulative effect of changes
in accounting $0.26 $0.32 (18.8)%
Income from discontinued operations - 0.07 (100.0)%
Cumulative effect of changes in
accounting - (0.02) 100.0%
---------- ----------
Net income $0.26 $0.37 (29.7)%
========== ==========
Weighted average shares outstanding 517.0 530.0 (2.5)%
========== ==========
Earnings per share - diluted
Income from continuing operations
before cumulative effect of changes
in accounting $0.26 $0.32 (18.8)%
Income from discontinued operations - 0.07 (100.0)%
Cumulative effect of changes in
accounting - (0.02) 100.0%
---------- ----------
Net income $0.26 $0.37 (29.7)%
========== ==========
Weighted average share and share
equivalents outstanding 521.4 531.5 (1.9)%
========== ==========
ConAgra Foods, Inc.
Consolidated Balance Sheets
Dollars in millions
August 29, 2004 August 24, 2003
--------------- ---------------
ASSETS
Current assets
Cash and cash equivalents $369.8 $722.0
Receivables, less allowance for
doubtful accounts
of $28.5 and $32.3 1,349.7 807.5
Inventories 2,640.3 2,542.6
Prepaid expenses and other current
assets 368.2 524.9
Current assets of discontinued
operations 175.4 1,976.7
--------------- ---------------
Total current assets 4,903.4 6,573.7
Property, plant and equipment, net 2,906.2 2,649.9
Goodwill 3,801.4 3,802.4
Brands, trademarks and other
intangibles, net 826.4 823.5
Other assets 1,575.0 1,137.0
Noncurrent assets of discontinued
operations 9.4 552.7
--------------- ---------------
$14,021.8 $15,539.2
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $22.4 $134.1
Current installments of long-term
debt 366.9 520.4
Accounts payable 873.5 849.1
Advances on sales 103.0 113.0
Other accrued liabilities 1,423.3 1,559.4
Current liabilities of discontinued
operations 164.9 1,192.8
--------------- ---------------
Total current liabilities 2,954.0 4,368.8
Senior long-term debt, excluding
current installments 4,887.1 4,526.0
Subordinated debt 400.3 758.4
Preferred securities of subsidiary
company - 175.0
Other noncurrent liabilities 1,120.0 950.2
Noncurrent liabilities of discontinued
operations - 17.2
Common stockholders' equity 4,660.4 4,743.6
--------------- ---------------
$14,021.8 $15,539.2
=============== ===============
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