UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 27, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________to_____________
Commission File Number 1-7275
___________________________________________
CONAGRA, INC.
__________________________________________________________________
(Exact name of registrant, as specified in charter)
Delaware 47-0248710
__________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One ConAgra Drive, Omaha, Nebraska 68102-5001
__________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
(402) 595-4000
__________________________________________________________________
(Registrant's telephone number, including area code)
NA
__________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
_______ _______
Number of shares outstanding of issuer's common stock, as of
March 27, 1994 was 248,036,180.
PART I - FINANCIAL INFORMATION
CONAGRA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
FEB 27, MAY 30, FEB 28,
1994 1993 1993
__________ __________ __________
ASSETS
Current assets:
Cash and cash equivalents $ 76.2 $ 257.0 $ 99.2
Receivables, less allowance for
doubtful accounts of $61.5, $47.5
and $58.9 2,293.8 1,421.4 1,701.0
Margin deposits and segregated
funds 321.2 190.0 222.6
Inventory:
Hedged commodities 978.2 656.5 968.3
Other 2,363.7 1,782.7 2,191.2
__________ __________ __________
Total inventory 3,341.9 2,439.2 3,159.5
Prepaid expenses 208.8 179.1 188.4
__________ __________ __________
Total current assets 6,241.9 4,486.7 5,370.7
__________ __________ __________
Other assets:
Investments in affiliates 240.0 306.1 304.3
Sundry investments, deposits
and other noncurrent assets 129.3 137.4 223.0
__________ __________ __________
Total other assets 369.3 443.5 527.3
__________ __________ __________
Property, plant and equipment
at cost, less accumulated
depreciation of $1509.4, $1330.8
and $1277.2 2,524.8 2,388.2 2,314.8
Brands, trademarks and goodwill, at
cost less accumulated amortization 2,645.7 2,670.3 2,691.7
__________ __________ __________
$ 11,781.7 $ 9,988.7 $ 10,904.5
__________ __________ __________
__________ __________ __________
The accompanying notes are an integral part of the consolidated
financial statements.
CONAGRA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
FEB 27, MAY 30, FEB 28,
1994 1993 1993
__________ __________ __________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 2,629.7 $ 570.2 $ 1,943.7
Current installments of
long-term debt 107.6 139.9 134.5
Accounts payable 1,509.2 1,459.6 1,327.0
Advances on sales 198.3 663.5 267.3
Payable to customers, clearing
associations, etc. 397.7 270.9 244.3
Other accrued liabilities 1,234.6 1,168.5 1,152.7
__________ __________ __________
Total current liabilities 6,077.1 4,272.6 5,069.5
__________ __________ __________
Senior long-term debt, excluding
current installments 1,308.4 1,393.2 1,553.2
Other noncurrent liabilities 1,145.5 1,146.5 1,149.0
Subordinated debt 766.0 766.0 766.0
Preferred shares subject to
mandatory redemption 355.6 355.9 355.9
Common stockholders' equity:
Common stock of $5 par value,
authorized 1,200,000,000 shares,
issued 252,540,456, 252,256,807
and 252,096,519 1,262.7 1,261.3 1,260.5
Additional paid-in capital 297.9 267.1 331.7
Retained earnings 1,337.5 1,167.0 1,105.9
Foreign currency translation
adjustment (31.2) (14.6) (9.1)
Less treasury stock, at cost, common
shares 4,504,620, 546,762 and 400,878 (116.6) (12.7) (10.5)
__________ __________ __________
2,750.3 2,668.1 2,678.5
Less unearned restricted stock and
value of 22,537,094, 23,889,777 and
23,353,429 common shares held in EEF (621.2) (613.6) (667.6)
__________ __________ __________
Total common stockholders' equity 2,129.1 2,054.5 2,010.9
__________ __________ __________
$ 11,781.7 $ 9,988.7 $ 10,904.5
__________ __________ __________
__________ __________ __________
The accompanying notes are an integral part of the consolidated
financial statements.
CONAGRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars and shares in millions except per share amounts)
THIRTEEN WEEKS ENDED
FEB 27, FEB 28,
1994 1993
__________ __________
Net sales $ 5,581.3 $ 5,060.4
__________ __________
Costs and expenses:
Cost of goods sold 4,825.4 4,358.4
Selling, administrative and
general expenses 518.8 503.0
Interest expense, net 67.1 62.3
__________ __________
5,411.3 4,923.7
__________ __________
Income before equity in earnings of
affiliates and income taxes 170.0 136.7
Equity in earnings of affiliates 1.1 4.7
__________ __________
Income before income taxes 171.1 141.4
Income taxes 67.4 50.3
__________ __________
Net income 103.7 91.1
Less preferred dividends 6.0 6.0
__________ __________
Net income available for common stock $ 97.7 $ 85.1
__________ __________
__________ __________
Earnings per common and common
equivalent share $ 0.43 $ 0.37
__________ __________
__________ __________
Weighted average number of common
and common equivalent shares
outstanding 227.3 231.6
__________ __________
__________ __________
Cash dividends declared per common
share $ 0.180 $ 0.155
__________ __________
__________ __________
The accompanying notes are an integral part of the
consolidated financial statements.
CONAGRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars and shares in millions except per share amounts)
THIRTY-NINE WEEKS ENDED
FEB 27, FEB 28,
1994 1993
__________ __________
Net sales $ 17,623.8 $ 16,140.8
__________ __________
Costs and expenses:
Cost of goods sold 15,380.9 13,980.9
Selling, administrative and
general expenses 1,545.7 1,509.6
Interest expense, net 194.7 204.6
__________ __________
17,121.3 15,695.1
__________ __________
Income before equity in earnings of
affiliates, income taxes and
cumulative effect of change in
accounting principle 502.5 445.7
Equity in earnings of affiliates 4.6 18.9
__________ __________
Income before income taxes and
cumulative effect of change in
accounting principle 507.1 464.6
Income taxes 201.8 176.2
__________ __________
Net income before cumulative effect
of change in accounting principle 305.3 288.4
Cumulative effect of change in
accounting for nonpension
postretirement benefits (net of taxes
of $74.2) - (121.2)
__________ __________
Net income 305.3 167.2
Less preferred dividends 18.0 18.0
__________ __________
Net income available for common stock $ 287.3 $ 149.2
__________ __________
__________ __________
Earnings per common and common
equivalent share:
Before change in accounting principle $ 1.26 $ 1.16
Cumulative effect of change in
accounting for nonpension
postretirement benefits - (0.52)
__________ __________
Net income $ 1.26 $ 0.64
__________ __________
__________ __________
Weighted average number of common
and common equivalent shares
outstanding 228.7 234.0
__________ __________
__________ __________
Cash dividends declared per common
share $ 0.515 $ 0.445
__________ __________
__________ __________
The accompanying notes are an integral part of the
consolidated financial statements.
CONAGRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
THIRTY-NINE WEEKS ENDED
FEB 27, FEB 28,
Decrease in Cash and Cash Equivalents 1994 1993
__________ __________
Cash flows from operating activities:
Net income $ 305.3 $ 167.2
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and other amortization 217.7 204.8
Goodwill amortization 55.0 54.5
Provision for deferred income taxes - (74.3)
Provision for losses on accounts receivable 20.6 18.9
Undistributed earnings of affiliates (4.6) (18.9)
Issuance of common stock in connection with
management incentive plans 4.6 5.8
Provision for nonpension postretirement benefits 15.0 207.0
Other noncash items, primarily interest 2.2 13.4
Change in assets and liabilities before
effects from business acquisitions:
Accounts receivable (893.3) (317.7)
Inventory (819.5) (709.8)
Prepaid expenses (20.7) (13.8)
Accounts payable and accrued expenses (404.4) (841.8)
Interest and income taxes 51.7 58.2
__________ __________
Net cash flows from operating activities (1,470.4) (1,246.5)
__________ __________
Cash flows from investing activities:
Sale of property, plant and equipment 18.8 6.9
Additions to property, plant and equipment (249.4) (206.5)
Increase in investment in affiliates (0.9) (29.3)
Decrease in notes receivable-Monfort Finance
Company 26.8 12.8
Other items (6.6) (31.9)
__________ __________
Net cash flows from investing activities (211.3) (248.0)
__________ __________
Cash flows from financing activities:
Net short term borrowings 2,019.6 1,560.7
Proceeds from issuance of long-term debt 4.0 360.5
Decrease in accounts receivable sold (100.0) (85.0)
Proceeds from exercise of employee stock
options 5.9 18.3
Cash dividends paid (129.4) (117.7)
Repayment of long-term debt (185.6) (127.5)
Treasury stock purchases (105.4) (4.0)
ConAgra Employee Equity Fund stock transactions 8.9 (331.4)
Other items, primarily reduction of other
noncurrent liabilities (17.1) (35.0)
__________ __________
Net cash flows from financing activities 1,500.9 1,238.9
__________ __________
Net decrease in cash & cash equivalents (180.8) (255.6)
Cash and cash equivalents at beginning of year 257.0 354.8
__________ __________
Cash and cash equivalents at end of period $ 76.2 $ 99.2
__________ __________
__________ __________
The accompanying notes are an integral part of the
consolidated financial statements.
CONAGRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FEBRUARY 27, 1994
(1) The information furnished herein relating to interim
periods has not been examined by independent Certified
Public Accountants. In the opinion of management, all
adjustments necessary for a fair statement of the
results for the periods covered have been included.
All such adjustments are of a normal recurring nature.
The accounting policies followed by the Company, and
additional footnotes, are set forth in the financial
statements included in the Company's 1993 annual
report, which report was incorporated by reference in
Form 10-K for the fiscal year ended May 30, 1993.
(2) The composition of inventories is as follows (in
millions):
FEB 27, MAY 30, FEB 28,
1994 1993 1993
________ ________ ________
Hedged commodities $ 978.2 $ 656.5 $ 968.3
Food products and livestock 1,275.4 1,120.2 1,256.1
Agricultural chemicals,
fertilizer and feed 390.8 146.1 328.7
Retail merchandise 167.6 170.1 164.0
Other, principally
ingredients and supplies 529.9 346.3 442.4
________ ________ ________
$ 3,341.9 $ 2,439.2 $ 3,159.5
________ ________ ________
________ ________ ________
(3) At February 27, 1994, the Company had equity interests
in Saprogal (100%), Sapropor (92%) and Trident Seafoods
Corporation (50%). During the second quarter of fiscal
1994, ConAgra increased its equity interest in Australia
Meat Holdings Pty. Ltd. (AMH) from 50 percent to
approximately 90 percent. The purchase price of this
additional interest was approximately $60 million. The
transaction was effective as of the beginning of fiscal
1994, accounting for the substantial drop in fiscal 1994
first nine months equity in earnings of and investment
in affiliates.
The summary financial information of these companies and
certain other individually insignificant businesses, at
and for each of the periods presented, is set forth
below and includes amounts since date of acquisition of
each respective equity interest:
FEB 27, MAY 30, FEB 28,
1994 1993 1993
________ ________ ________
Current assets $ 484.4 $ 619.9 $ 702.0
Noncurrent assets 473.2 612.8 576.7
________ ________ ________
Total assets 957.6 1,232.7 1,278.7
________ ________ ________
Current liabilities 382.9 454.6 526.0
Noncurrent liabilities 193.9 281.6 263.5
________ ________ ________
Total liabilities 576.8 736.2 789.5
________ ________ ________
Net assets $ 380.8 $ 496.5 $ 489.2
________ ________ ________
________ ________ ________
ConAgra's investment $ 240.0 $ 306.1 $ 304.3
________ ________ ________
________ ________ ________
THIRTEEN THIRTY-NINE
WEEKS ENDED WEEKS ENDED
FEB 27, FEB 28, FEB 27, FEB 28,
1994 1993 1994 1993
________ ________ ________ ________
Net sales $ 420.3 $ 884.0 $ 1,277.3 $ 2,354.4
Net income 1.6 9.0 3.6 32.7
ConAgra's equity
in earnings 1.1 4.7 4.6 18.9
(4) Following is a condensed statement of common stockholders'
equity (in millions):
<captions>
Unearned
Add'l Foreign Restricted
Common Paid-In Retained Curr Treasury & EEF
Stock Capital Earnings Trns Adj Stock Stock Total
_________ _________ _________ _________ _________ _________ _________
Balance 5/30/93 $ 1,261.3 $ 267.1 $ 1,167.0 $ (14.6)$ (12.7)$ (613.6) $ 2,054.5
Shares issued in
connection with
employee stock
option and
incentive plans 0.8 (10.3) (4.1) 24.1 10.5
Shares issued in
connection with
acquisitions 0.6 0.5 5.6 6.7
Treasury stock
purchases (105.4) (105.4)
Other share
activity
associated with
Employee Equity
Fund 40.6 (31.7) 8.9
Foreign currency
translation
adjustment (16.6) (16.6)
Cash dividends
declared (134.8) (134.8)
Net income 305.3 305.3
_________ _________ _________ _________ _________ _________ _________
Balance 2/27/94 $ 1,262.7 $ 297.9 $ 1,337.5 $ (31.2)$ (116.6)$ (621.2) $ 2,129.1
_________ _________ _________ _________ _________ _________ _________
_________ _________ _________ _________ _________ _________ _________
[TEXT]
(5) With respect to operations of the Company excluding
the transaction discussed below, there was no
litigation at February 27, 1994 which, in the opinion
of management, would have a material adverse effect on
the financial position of the Company.
On August 14, 1990, ConAgra acquired Beatrice Company.
The Beatrice businesses and its former subsidiaries (the
"Subsidiaries") are engaged in various litigation
proceedings incident to their respective businesses and
in various environmental and other matters. Beatrice
and various of its Subsidiaries have agreed to indemnify
divested businesses or the purchasers thereof for
various legal proceedings and tax matters. The federal
income tax returns of Beatrice and its predecessors for
the fiscal years ended 1985 through 1987 have been
audited by the Internal Revenue Service and a report has
been issued. The findings contained in the examining
agent's report have been timely protested and
negotiations with the Appellate Division of the Internal
Revenue Service are underway in an attempt to resolve
disputed items. Disputed items being negotiated with
the Appellate Division of the Internal Revenue Service
include proposed deficiencies relating to previously
filed carryback claims to fiscal years ended prior to
1985 (principally fiscal years ended 1982 through 1984).
Additionally, the federal income tax returns of Norton
Simon, Inc. ("NSI"), have been audited by the Internal
Revenue Service for the fiscal years ended 1982 and 1983
and a report has been issued. The findings contained in
the examining agent's report have been timely protested
and negotiations with the Appellate Division of the
Internal Revenue Service are underway in an attempt to
resolve disputed items. Various state tax authorities
are also examining tax returns of Beatrice and its
predecessors for prior taxable years, including, in the
case of one state, years back to fiscal 1978. It is
expected that additional claims will be asserted for
additional taxes. It is not possible at this time to
determine the ultimate liabilities that may arise from
these matters which at any given point in time will be
at various stages of administrative and legal
proceedings and will aggregate hundreds of millions of
dollars. Substantial reserves for these matters have
been established and are reflected as liabilities on the
Subsidiaries' balance sheets. The liabilities include
accrued interest on the tax claims. After taking into
account liabilities that have been recorded and payments
made, management is of the opinion that the ultimate
disposition of the above matters will not have a
material adverse effect on ConAgra's financial
condition, results of operations or liquidity.
(6) Earnings per common and common equivalent share are
calculated on the basis of the weighted average
outstanding common shares and, when applicable, those
outstanding options which are dilutive and after giving
effect to the preferred stock dividend requirements.
Fully diluted earnings per share did not differ
significantly from primary earnings per share in any
period presented.
(7) In the fourth quarter of 1993, the Company adopted,
effective June 1, 1992, the provisions of Statement of
Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than
Pensions." Provisions of the statement, and its effect
on the Company, are set forth in the accounting
policies and additional footnotes 16 and 19 in the
financial statements included in the Company's 1993
annual report, which report was incorporated by
reference in Form 10-K for the fiscal year ended May
30, 1993. Fiscal 1993 quarterly results have been
restated to reflect this effect.
CONAGRA, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of
certain significant factors which have affected the
Company's financial condition and operating results for
the periods included in the accompanying consolidated
condensed financial statements. Results for the fiscal
1994 third quarter and first nine months are not
necessarily indicative of results which may be attained in
the future.
FINANCIAL CONDITION
During the first nine months of fiscal 1994, the Company's
capital investment (working capital plus noncurrent
assets) decreased $11.5 million. Working capital decreased
$49.3 million and noncurrent assets increased $37.8 million.
The decrease in working capital resulted from an increase
in notes payable and was primarily due to the
purchase of property, plant and equipment, treasury
stock and the additional interest in AMH (see Note 3).
The Company's objective is that senior long-term debt
normally will not exceed 30 percent of total long-term
debt plus equity. At February 27, 1994, senior long-term
debt was 29 percent of total long-term debt plus equity
compared to 30 percent at May 30, 1993 and 33 percent at
February 28, 1993.
OPERATING RESULTS
A summary of the period to period increases(decreases) in
the principal components of operations is shown below
(dollars in millions, except per share amounts).
COMPARISON OF THE PERIODS ENDED
FEB. 27, 1994 & FEB. 28, 1993
THIRTEEN WEEKS THIRTY-NINE WEEKS
DOLLARS % DOLLARS %
________________________________
Net sales 520.9 10.3 1,483.0 9.2
Cost of goods sold 467.0 10.7 1,400.0 10.0
Gross profit 53.9 7.7 83.0 3.8
Selling, administrative
and general expense 15.8 3.1 36.1 2.4
Interest expense, net 4.8 7.7 (9.9) (4.8)
Income before equity in
earnings of affiliates and
income taxes 33.3 24.4 56.8 12.7
Equity in earnings of
affiliates (See Note 3) (3.6) (76.6) (14.3) (75.7)
Income before income taxes
and cumulative effect of
change in accounting
principle 29.7 21.0 42.5 9.1
Income taxes 17.1 34.0 25.6 14.5
Net income before
cumulative effect of change
in accounting principle 12.6 13.8 16.9 5.9
Earnings per common and common
equivalent share before
change in accounting
principle 0.06 16.2 0.10 8.6
The acquisition of the additional equity interest in AMH
during the second quarter of fiscal 1994 (see Note 3) was
the primary source of increased sales and expenses during
the Company's third quarter and first nine months. Other
sources of increased sales and expenses during the third
quarter and first nine months included the crop protection
chemical and red meat businesses, and the acquisition, after
last year's second quarter, of National Foods.
In the Company's largest industry segment, Prepared Foods,
operating profit increased in fiscal 1994's third quarter
and first nine months.
The consumer frozen foods business reported third quarter
and nine month earnings growth with unit volume gains and
profit improvement in the Healthy Choice product line.
Helped by unit volume growth in the third quarter,
Hunt-Wesson's operating profit increased in the quarter
and first nine months.
Branded packaged meats operating profit rose in the third
quarter and was ahead of last year through the first nine
months. The diversified products businesses reported
third quarter and nine month earnings gains, led by profit
growth in the Lamb-Weston potato processing business.
Improvement in pork and beef products margins pushed fresh
red meat third quarter and nine month operating profit
ahead of last year's results.
Operating profit was down in chicken and turkey products
in the third quarter. Through nine months, total poultry
products operating profit was up as first half results in
chicken products more than offset a downturn in turkey
products.
In the Company's Trading and Processing industry segment,
operating profit decreased in the third quarter and was
down through nine months. Grain processing operating
profit increased in both periods. Operating profit in the
trading businesses and offshore operating businesses was
down in both periods.
In the Company's Agri-Products segment, operating profit
decreased in the third quarter and first nine months. The
largest Agri-Products business, crop protection chemicals,
increased third quarter operating profit but was down
through nine months. Fertilizer operating profit was up
in both periods, and specialty retailing earnings were
down in both periods.
Operating profit is based on net sales less all
identifiable operating expenses and includes the related
equity in earnings of companies included on the basis of
the equity method of accounting. General corporate
expense, interest expense (except financial businesses)
and income taxes are excluded from segment operations.
For financial businesses, operating profit includes the
effect of interest, which is a large element of their
operating costs.
The Company increased its interest in AMH (see Note 3) from
50 percent to approximately 90 percent at the end of fiscal
1994's second quarter effective at the beginning of the
fiscal year. Consolidating AMH's results this year
contributed to the third quarter and nine month drop in
equity in earnings of affiliates versus fiscal 1993 when
ConAgra's share of AMH's earnings was included in equity in
earnings of affiliates. AMH also was a source of the net
sales increase in fiscal 1994's third quarter and first nine
months and a contributor to nine month operating profit
growth.
Lower equity in earnings of affiliates also was a cause of
the increase in ConAgra's nine month effective tax rate
from 37.9 percent in fiscal 1993 to 39.8 percent in fiscal
1994. Weighted average shares outstanding decreased in
fiscal 1994's third quarter and first nine months as a
consequence of share repurchase programs last year and
this year.
In the fourth quarter of 1993, the Company adopted the
provisions of Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." As provided therein,
financial statements for the first nine months and third
quarter of fiscal 1993 have been restated to reflect
adoption, effective June 1, 1992. Provisions of the
statement, and its effect on the Company, are set forth in
the accounting policies and additional footnotes 16 and 19
in the financial statements included in the Company's 1993
annual report, which report was incorporated by reference
in Form 10-K for the fiscal year ended May 30, 1993.
CONAGRA, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS.
10.1 - Employment Agreements between ConAgra and
Albert J. Crosson, Leroy O. Lochmann and
James P. O'Donnell.
12.1 - Statement regarding computation of ratio
of earnings to fixed charges, and ratio
of earnings to combined fixed charges and
preferred dividends.
(B) REPORTS ON FORM 8-K.
ConAgra did not file any reports on Form 8-K during
the fiscal quarter ended February 27, 1994.
CONAGRA, INC.
By: /s/ Stephen L. Key
____________________________
Stephen L. Key
Executive Vice President and
Chief Financial Officer
By: /s/ Dwight J. Goslee
___________________________
Dwight J. Goslee
Vice President, Controller
Dated this 7th day of April, 1994.
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
10.1 Employment Agreements between ConAgra and
Albert J. Crosson, Leroy O. Lochmann and
James P. O'Donnell...........................
12.1 Statement regarding computation of
ratio of earnings to fixed charges,
and ratio of earnings to combined
fixed charges and preferred
dividends....................................