ConAgra, Inc. 1996 Annual Report (logo) Building a better food
company
Cover shows food product photos of: Healthy Choice Chicken & Vegetables
Marsala and whole tomatoes and a can of Hunt's Tomato Paste
INSIDE FRONT COVER (Product photos of top 21 brands) ConAgra has
21 food brands that each chalk up annual retail sales exceeding $100 million.
ConAgra businesses operate across the food chain:
* Crop protection chemicals,fertilizer & seed distribution
* Animal feeds & feed additives
* Country General stores, principally in agricultural communities
* Flour, oat & dry corn milling; barley malting
* Worldwide commodity distribution & merchandising, other commodity services
* Natural spices, seasonings, flavors & spray-dried food ingredients
* Beef & pork products
* Branded chicken & turkey products
* Branded processed meats
* Cheeses & refrigerated dessert toppings
* Seafood products
* Processed potato products
* Private label consumer products
* Branded shelf-stable foods
* Branded frozen foods
The brand names in this annual report are owned or licensed by ConAgra, Inc.
and its subsidiaries.
Financial Highlights
Dollars in millions except per share amounts
Fiscal Year Ended May 26, 1996 May 28, 1995 Percent Change
- ---------------- ------------ ------------ --------------
Net sales $24,821.6 $24,112.3 2.9%
Before non-recurring charges
(see page 41)
Income before income taxes $916.4 $825.9 11.0%
Net income $545.2 $495.6 10.0%
Net income available
for common stock $536.6 $471.6 13.8%
Net income per common share $2.34 $2.06 13.6%
Cash earnings return on
year-beginning common
stockholders' equity
(see page 4) 24.3% 24.4%
5-year average: 23.4%
After non-recurring charges
Income before income taxes $408.6 $825.9 -50.5%
Net income $188.9 $495.6 -61.9%
Net income available
for common stock $180.3 $471.6 -61.8%
Net income per common share $ .79 $2.06 -61.7%
Common stock price at year end $42.00 $32.25 30.2%
Common stock dividend rate
at year end $.95 $.83 14.5%
Employees at year end 83,123 88,511 -6.1%
ConAgra, Inc.
ConAgra is a diversified international food company. Our mission is to
increase stockholders' wealth. Our job is to help feed people better.
We operate across the food chain, in 32 countries around the world. Our
products range from convenient prepared foods for today's busy consumers to
supplies farmers need to grow their crops.
This report contains forward-looking statements in the Letter to Stockholders,
Business Review and Management's Discussion & Analysis. The statements reflect
management's current views and estimates of future economic circumstances,
industry conditions, company performance and financial results.
The statements are based on many assumptions and factors including availability
and prices of raw materials, product pricing, competitive environment and
related market conditions, operating efficiencies, access to capital and
actions of governments. Any changes in such assumptions or factors could
produce significantly different results.
(recycled logo) Printed on recycled paper.
Contents
Letter to Stockholders . . . . . . . . . . . . . . . . . . . . . 2
Objectives & Results . . . . . . . . . . . . . . . . . . . . . .4
Business Review
Grocery/Diversified Products . . . . . . . . . . . . . . . 6
Refrigerated Foods . . . . . . . . . . . . . . . . . . . .14
Food Inputs & Ingredients . . . . . . . . . . . . . . . . .20
Sales & Operating Profit by Segment . . . . . . . . . . . . . .27
Ten-Year Results . . . . . . . . . . . . . . . . . . . . . . . .28
Management's Discussion & Analysis . . . . . . . . . . . . . . .30
Consolidated Financial Statements . . . . . . . . . . . . . . .35
Notes to Financial Statements. . . . . . . . . . . . . . . . . .40
Independent Auditors' Report . . . . . . . . . . . . . . . . . .52
Board of Directors . . . . . . . . . . . . . . . . . . . . . . .53
Principal Officers . . . . . . . . . . . . . . . . . . . . . . .54
Corporate Citizenship . . . . . . . . . . . . . . . . . . . . .56
Investor Information . . . . . . . . . . . . . . Inside Back Cover
Photo of Phil Fletcher Cutline: Phil Fletcher, Chairman & Chief
Executive Officer
To Our Stockholders, Employees and Other Friends
Building a Better Food Company
The theme of this annual report is really our job description: building a
better food company. You should expect it, and I believe we are doing it.
We worked on it in fiscal year 1996.
* Excluding non-recurring charges in fiscal 1996, earnings per share grew
nearly 14 percent, ConAgra's 16th consecutive year of record earnings.
* We met ConAgra's return on equity objective -- our most important financial
goal -- for the 21st consecutive year, excluding the non-recurring charges.
* We raised the common stock dividend 14.5 percent, the 21st consecutive year
of increases of at least 14 percent.
We also continued to invest for future results.
* We invested $669 million, an increase of 56 percent, to expand and improve
ConAgra's facilities and business systems.
* And we implemented a major restructuring program to make a good company even
better.
Restructuring and other non-recurring charges reduced fiscal 1996 reported net
earnings by $356 million, or $1.55 per share. However, we expect that the cash
expense will be only $60 million, while we estimate that pretax savings will
total $275 million during fiscal years 1997 through 1999.
Earnings Balance
The benefits of ConAgra's food-chain diversification and earnings balance were
evident in fiscal 1996. Operating profit growth of 35 percent in ConAgra's
Food Inputs & Ingredients industry segment and 15 percent in
Grocery/Diversified Products more than compensated for an operating profit
decline of eight percent in Refrigerated Foods where soaring grain prices hurt
performance. The comparisons exclude non-recurring charges in fiscal 1996.
As I've suggested in three previous annual reports, we are building a better
food company by managing our businesses aggressively and investing our cash
flows for growth.
Managing Aggressively: Structure for Success
The foundation for managing ConAgra's businesses aggressively is structuring
our company for success. With the right leadership, the right organization and
the right businesses and asset base, good things will happen more readily. To
this end, we've accomplished a series of structuring initiatives in recent
years.
First, we reduced ConAgra's major operating groups from eight to five,
bringing together businesses with compatible product lines and distribution
systems. This makes it easier to leverage the interlocking strengths of our
businesses. The advantages are obvious in our largest operating groups,
Refrigerated Foods and Grocery Products, where infrastructure enhancements
promise big benefits.
Second, during fiscal 1995 and 1996 we divested 10 non-core businesses. This
streamlining frees financial and human capital for more attractive investment
in ConAgra's core operations.
Third, in fiscal 1996's fourth quarter we announced a comprehensive
restructuring plan consistent with our strategy to structure ConAgra for
success. We are closing or reconfiguring over 20 production plants and
exiting several smaller businesses to strengthen ConAgra's core businesses and
enhance earnings growth.
Restructuring means rationalizing ConAgra's production base, especially in
Refrigerated Foods. By consolidating production in more efficient plants, we
use capacity more effectively and more profitably. Substantial financial
benefits will be available to bolster earnings and reinvest in our businesses.
For our shareholders and employees, this is the right step to make ConAgra
more competitive, more secure, more profitable. But the decision was difficult
because over 6,000 jobs will be eliminated. We are doing our best to be
sensitive and responsive to the needs of the people who are affected.
Strong Leadership
Ultimately, the most important component of structuring for success is
leadership -- the competence and commitment of the people who run ConAgra's
businesses. I'm more than pleased with the strength of ConAgra's management
teams today. Our businesses enjoy exceptionally competent, results-oriented
leadership committed to building a better food company.
Investing for Growth
Strong leaders invest more productively. In fiscal 1997, we expect to invest
over $700 million in capital expenditures to ramp up ConAgra's earning power.
Investment priorities include customer service, production efficiency and
capacity expansion. Furthermore, we are investing substantial dollars and
creative energy to add value to our products, including nearly five billion
packages of branded products we market annually. We'll also continue to invest
in leveraging ConAgra's powerful brand equities such as Healthy Choice, an
important contributor to earnings growth in fiscal 1996.
After internal investment, acquisitions are next in line for investing
ConAgra's cash flow. In fiscal 1996, acquisitions including the Van Camp's
bean business and Canada Malting added earnings from the outset. With 80 or
more candidates regularly on our shopping list, we see ample opportunity to
strengthen core businesses with acquisitions.
Rewarding Stockholders
We invest in growth to achieve ConAgra's financial objectives, found, as
always, on pages 4 and 5 of this report. I noted earlier that we've met
ConAgra's 20-percent return on equity objective for more than two decades.
We've also achieved ConAgra's 14-percent earnings per share growth objective in
recent years as well as over the long haul, excluding non-recurring charges in
fiscal 1996. On that basis, our earnings per share average annual growth rates
were 14 percent the past three years and more than 15 percent the past 16
years.
By achieving ConAgra's financial objectives, we fulfill our company's
mission: increase stockholders' wealth. Earnings per share growth of 14
percent and comparable dividend growth yield total return to investors
substantially better than the stock market's 10- or 11-percent long-term annual
return.
Fiscal 1997 Outlook: Record Earnings
I'm bullish on ConAgra's prospects for fiscal 1997. We expect double-digit
earnings per share growth compared to fiscal 1996 before non-recurring charges.
We plan earnings gains in Grocery/Diversified Products and Food Inputs &
Ingredients, though below their robust growth rates in fiscal 1996. We also
anticipate a strong positive rebound in Refrigerated Foods as it benefits from
capital investment, restructuring initiatives and industry adjustments to high
grain prices.
Thank You, Builders!
People throughout ConAgra are building a better food company. Two top builders
retired recently, each with 35 years of service to ConAgra and predecessor
companies. Al Crosson, the consummate salesman, created and led ConAgra
Grocery Products Companies, our company's branded products powerhouse. Truck
Morrison, designated globetrotter, invented our international trading
companies, then headed ConAgra International and our grain processing
operations. Both gentlemen served in ConAgra's Office of the President. Thank
you, Al and Truck.
This letter is almost long enough. I'll make it complete by expressing my
abiding gratitude to more than 80,000 ConAgrans who are building a better food
company.
Sincerely,
(Signature)
Philip B. Fletcher
Chairman and Chief Executive Officer
Objectives & Results
ConAgra is committed to major financial performance objectives that drive how
we manage our company and serve our mission to increase stockholders' wealth.
We incorporate in our financial objectives a concept called "cash earnings"
- -- net earnings plus goodwill amortization. Businesses run on cash. The
principal source of internally generated cash is net earnings before
depreciation of fixed assets and amortization of goodwill. Cash from
depreciation is generally needed for replenishment to help maintain a going
concern.
On the other hand, goodwill represents valuable non-depreciating
brands and distribution systems, primarily those we acquired with Beatrice
Company in fiscal year 1991. We invest and incur expense throughout the year
to maintain and enhance the value of these brands and distribution systems.
Consequently, goodwill amortization is not a true economic cash cost. It,
along with net earnings, is a source of decision cash - cash available to
invest in ConAgra's growth and pay dividends.
It is this decision cash that we call cash earnings. We believe the cash
earnings concept is an appropriate way to manage and measure our businesses. We
use the cash earnings concept in our financial objectives for return on common
equity and dividend growth. We do not use it in our earnings per share growth
objective because companies are not permitted to present earnings per share
data in any alternative form.
RETURN ON COMMON EQUITY
Objective
ConAgra's most important financial objective is to average more than a
20-percent after-tax cash earnings return on year-beginning common
stockholders' equity, and to earn more than a 15-percent return in any given
year.
In determining results as shown in the table below, year-beginning common
equity includes these adjustments: 1992 -- an increase of $16.9 million for a
pro rata share of the common equity associated with the acquisition of Arrow
Industries, Inc.; 1993 -- a net decrease of $337.2 million resulting from
adopting Statement of Financial Accounting Standards No. 106 (a decrease of
$121.2 million), a pro rata share of common stock purchased in the open market
for the Employee Equity Fund (a decrease of $247.9 million), and a pro rata
share of common equity associated with four acquisitions (an increase of $31.9
million). In computing the 1993 results, after-tax earnings exclude the
one-time cumulative effect of SFAS 106. The 1996 results exclude non-recurring
charges of $356.3 million after tax.
Result
Return on Common Equity
...................................................................
5-Year Average: 23.4%
- ------------------------------
92 21.5%
- ------------------------------
93 23.2%
- ------------------------------
94 23.7%
- ------------------------------
95 24.4%
- ------------------------------
96 24.3%
- ------------------------------
FINANCING
Objective
ConAgra's primary financing objective is to maintain a conservative balance
sheet.
Long-Term Debt
Senior long-term debt normally will not exceed 30 percent of total long-term
debt plus equity. Long-term subordinated debt is treated as equity due to its
preferred stock characteristics.
Short-Term Debt
Each ConAgra food business normally will eliminate at the end of its natural
fiscal year short-term debt, net of cash, used to finance assets other than
hedged commodity inventories.
Natural year end occurs when inventories and receivables are at their annual
low points -- for example, the end of February in our crop protection chemicals
and fertilizer business, and the end of May in many other ConAgra businesses.
Result
Long-Term Debt Short-Term Debt
------------------------- -------------------
Objective Result Result
maximum of: (as defined above)
(as defined above)
------------------------- -------------------
92 30% 36% 0
93 30% 30% 0
94 30% 30% 0
95 30% 30% 0
96 30% 30% 0
EARNINGS AND DIVIDEND GROWTH
Earnings Growth Objective
ConAgra's objective is to increase trend line earnings per share, on average,
at least 14 percent per year.
Although earnings balance is a strength of ConAgra's diversified food
businesses, we may not always achieve quarter-to-quarter, or sometimes
year-to-year, increases in reported earnings. However, ConAgra expects to
increase trend line earnings - what we would earn with average or normal
industry conditions - at least 14 percent per year.
Dividend Growth Objective
ConAgra's objective is to increase common stock dividends consistent with
growth in ConAgra's trend line earnings.
Over time, ConAgra expects common stock dividends to average in the range of
30 to 35 percent of cash earnings.
Our earnings and dividend growth objectives are linked. Reported earnings
per share growth varies year to year and may be higher or lower than trend line
earnings per share. Over a long period, reported earnings per share reflect
trend line earnings per share. Over a shorter period of time, dividends per
share growth is in effect a proxy for trend line earnings per share growth.
Dividend increases represent management's judgment of ConAgra's trend line, or
underlying, earning power independent of reported earnings results.
Result
ConAgra has increased earnings per share for 16 consecutive years at a compound
annual growth rate of 15.6%. During the same period, dividends per share
increased annually at an average rate of 15.4%.
During the past five years, the growth of reported earnings per share slowed
to a rate of 10.5%, mainly due to single-digit growth in 1992 and 1993. During
the same period, dividends per share increased at an average rate of 15.6%,
including increases of 16.9% in 1992 and 15.4% in 1993.
Earnings per share results exclude the one time cumulative effect of SFAS
106 in 1993 and non-recurring charges of $1.55 per share in 1996. Reported
earnings in 1996 were $.79 per share.
Compound Annual Growth:
3-year 5-year 10-year 16-year
- ----------------------------------------------------------------
Earnings per share 14.0% 10.5% 13.2% 15.6%
Dividends per share 15.3% 15.6% 15.7% 15.4%
Bar graph for Earnings per Share:
Year: 1992 1993 1994 1995 1996
$1.50 $1.58 $1.81 $2.06 $2.34
Percent Increase: 5.6% 5.3% 14.6% 13.8% 13.6%
Bar graph for Dividends per Share:
Year: 1992 1993 1994 1995 1996
$.52 $.60 $.695 $.803 $.92
Percent Increase: 16.9% 15.4% 15.8% 15.5% 14.6%
Over the last 5 years, dividends have averaged 32.4% of cash
earnings.
trusted brands
photos of: Orville Redenbacher's 100% popcorn mini cakes,
Healthy Choice Cappuccino Chocolate Chunk, boy eating Juicy Gels
Grocery/Diversified Products----------------------------
Grocery/Diversified Products operating profit increased nearly 15 percent, led
by Hunt-Wesson's robust operating profit growth, in part due to successful
acquisitions. The consumer frozen foods, microwave products and private label
businesses also contributed to the earnings gain. Potato products operating
profit was slightly above the previous year's strong result. Acquisitions and
unit volume growth drove the 9-percent segment sales increase.
The discussion of results in the Business Review (pages 6-26) excludes the
effect of non-recurring charges in fiscal 1996. See page 27 for segment sales
and operating profit both before and after non-recurring charges.
2 pie charts:
Segment Sales
(In millions)
1996 $5,261.4
1995 $4,809.5
% Change +9.4%
Operating Profit
(In millions)
1996* $ 721.8
1995 $ 629.9
% Change +14.6%
*Fiscal 1996 segment operating profit excludes certain non-recurring charges.
Segment operating profit after the charges was $644.7 million.
See Note 2 on page 41.
"We are markedly improving the way we manage our businesses across the board --
from in-store merchandising to back-office support systems. But we don't
change a thing unless we can serve a customer better or satisfy a consumer
better."
Dave Gustin
President & Chief Operating Officer
ConAgra Grocery Products Companies (Photo of Dave Gustin)
Grocery Products----------------
ConAgra Grocery Products Companies include our branded consumer food companies
that produce and market shelf-stable and frozen foods.
These businesses are continually improving their ability to respond to
consumers with products that fit their lifestyles. These companies also are
investing in new salesorganizations and sophisticated new information systems
designed to better serve our retail and foodservice customers, and make us more
responsive and more competitive in the marketplace.
Major shelf-stable brands and products are Hunt's and Healthy Choice
tomato-based products; Wesson cooking and salad oils; Healthy Choice soups;
Orville Redenbacher's and Act II popcorn products; Peter Pan peanut butter; Van
Camp's canned beans; Manwich sauces; Snack Pack puddings; Swiss Miss puddings
and cocoa mixes; Knott's Berry Farm jams and jellies; Chun King and La Choy
Oriental products; Rosarita and Gebhardt Mexican products; and Wolf Brand
chili. These products are sold through retail stores and to foodservice
markets, mass merchandisers, club stores and military markets.
Major frozen food brands are Healthy Choice, Banquet, Marie Callender's, Kid
Cuisine, Butterball, Morton, Patio, Chun King and La Choy. Our frozen food
products include dinners and entrees, kids' meals, fried chicken, boneless
chicken products, pot pies, fruit cobblers, hand-held sandwiches, french bread
pizza and ice cream.
ConAgra Grocery Products Companies in total had an excellent year, with
earnings substantially higher than in fiscal 1995. Much of the increase was due
to four acquisitions made during fiscal 1995 or as fiscal 1996 began. Three of
the new businesses -- Van Camp's canned beans and Wolf Brand chili products,
Chun King convenience foods, and Knott's Berry Farm fruit-based products --
exceeded our earnings objectives in fiscal 1996. The fourth, Marie
Callender's, did not perform up to plan, but volumes increased nicely during
the year, and the business made a good contribution to earnings.
During fiscal 1996, ConAgra Grocery Products Companies completed building a
new sales organization. The Grocery Products sales and in-store merchandising
force was expanded from 350 to 800 people supporting ConAgra Frozen Foods
products as well as Hunt-Wesson products. In addition, ConAgra Frozen Foods
replaced broker representation with a new 180-person direct sales force. This
new sales model improves ConAgra Grocery Products' ability to deliver consumer
value, improve customer service, increase sales and maintain industry
leadership.
The Hunt-Wesson businesses -- Hunt Foods, La Choy/Rosarita Foods Company,
Orville Redenbacher/Swiss Miss Foods Company, Wesson/Peter Pan Foods Company
and Knott's Berry Farm Foods -- in total had a record year, partially due to
acquisitions. The Hunt-Wesson businesses compete primarily in categories where
sales have been soft in recent years, making their continued success
impressive. Fiscal 1996 sales were about $2.3 billion.
As part of the restructuring announced in May 1996, Hunt-Wesson took several
steps to improve operating efficiencies and the long-term health of its
business. Two California plants will be closed, and a Georgia peanut shelling
business ceased operations at the end of fiscal 1996.
Hunt-Wesson's biggest business, Hunt Foods, had an excellent year with
earnings up substantially. Hunt Foods includes Hunt's and Healthy Choice
tomato products and the new Van Camp's/Wolf Brand business. Hunt's base
business was up significantly, even without the strong contribution from the
new business. Hunt's reduced costs and, despite a record tomato crop,
improved margins. New products introduced include a four-item line of Healthy
Choice Garlic Lovers Spaghetti Sauce.
The Wesson oils business achieved a significant profit turnaround, with
earnings well above fiscal 1995, when the business was hurt by an erratic crude
soybean oil market. Earnings were down for the Peter Pan peanut butter
business. Peter Pan Plus, peanut butter with added vitamins and minerals, was
introduced during the year.
The Snack Pack and Swiss Miss pudding business achieved record unit volume
and profit levels. The international business increased earnings
significantly, primarily due to a strong performance by Snack Pack puddings and
gels in Canada.
The Swiss Miss cocoa business had a good year, thanks in part to an
effective new advertising campaign and a cold winter. Unit volumes and
earnings increased. Swiss Miss Chocolate Sensations and Cocoa & Cream cocoa
mixes were successfully introduced during the year.
Fiscal 1996 was a difficult year for the Orville Redenbacher's popcorn
business. Unit volumes and earnings declined in the face of an unsuccessful
change in in-store merchandising and general softness in the microwave
popcorn category. Orville Redenbacher's Popcorn Cakes in five flavors were
introduced in about 20 percent of the U.S.
Healthy Choice soups had another good year, with volume and market share
increases and earnings above plan and the previous year. Late in fiscal 1996,
Healthy Choice began the rollout of a six-item line of Healthy Choice Recipe
Creations, condensed soups designed to make home cooking faster and easier.
The Oriental shelf-stable food business, including the La Choy and Chun King
lines, had increased earnings, helped by Chun King's above-plan performance in
its first full year with ConAgra. Earnings declined in the Rosarita/Gebhardt
business. The new Knott's business did very well, performing significantly
over plan. Hunt-Wesson's foodservice business had an excellent year, with
earnings above plan and the previous year.
Golden Valley Microwave Foods is a leader in the development of foods
exclusively for preparation in microwave ovens. Golden Valley's products
include popcorn, french fries, breakfast foods and sandwiches distributed
through the vending industry, mass merchandising outlets and grocery,
drug and club stores. Principal consumer brands are ACT II and Healthy Choice.
Category softness in the microwave popcorn category challenged Golden Valley
in fiscal 1996, but lower raw material costs were a positive. Golden Valley
significantly increased earnings and exceeded their plan. New products
introduced in fiscal 1996 include Healthy Choice Popcorn and ACT II Popcorn
Cakes.
Our frozen foods company, ConAgra Frozen Foods, is one of the largest
frozen food businesses in the United States. Sales in fiscal 1996 were about
$1.3 billion.
Frozen food industry categories across the board declined in fiscal 1996 as
consumers were offered more and more choices for convenient meals -- not only
an array of new products in the grocery stores, but also new takeout and home
delivery options. Nevertheless, ConAgra Frozen Foods' earnings increased
significantly in fiscal 1996.
Unit volumes were up, helped by incremental volume from new products
and Marie Callender's in its first full year as part of ConAgra. ConAgra
Frozen Foods also improved its market position in most key categories,
including a solid gain in single-serving meals.
Healthy Choice frozen products increased unit volumes and earnings in
fiscal 1996. The year was highlighted by two highly successful new product
introductions: Healthy Choice Hearty Handfuls, hot sandwiches made with
bakery-style breads and meat and vegetable fillings, and Healthy Choice
Special Creations, "indulgent" flavors of low-fat ice cream in pints. In fiscal
1997, Healthy Choice plans major improvements in product formulations and
packaging, accompanied by a new advertising campaign.
Earnings for the Banquet product line, excluding Banquet chicken products,
were down from the fiscal 1995 level due to investment in the new Pasta
Favorites line. Earnings for Banquet's core products -- Regular Dinners, Pot
Pies, Family Entrees and Extra Helping meals -- increased significantly.
The ConAgra Frozen Foods chicken business, which includes Banquet
and Country Skillet chicken products, grew earnings in spite of record-high
grain prices that drove product costs up substantially. Banquet chicken
products earnings were strong, reflecting good consumer response to improved
products introduced late in fiscal 1995. In fiscal 1997, two new chicken
product lines are being introduced: Butterball Chicken Requests, crispy baked
breasts in five flavors, and Banquet Fat Free Breast Patties and Tenders,
boneless, skinless cuts of lightly breaded, baked breast meat.
Earnings increased substantially to a record level for ConAgra Frozen
Foods' specialty brands -- Kid Cuisine, Chun King and La Choy frozen products,
and Patio. The largest contributor was Kid Cuisine, with dramatically improved
earnings.
Marie Callender's also made a significant earnings contribution and achieved
good increases in volume, market share and distribution. Marie Callender's line
of premium-quality frozen foods is an excellent addition to ConAgra Frozen
Foods' offerings, with continued growth potential.
We expect fiscal 1997 to be another good year for ConAgra Grocery
Products Companies. An unwavering focus on meeting consumer needs and
improving customer service will result in more innovative consumer products and
significant capital investments in manufacturing efficiencies and information
systems.
Throughout this section appears product photos of the following: Hunt's
Ketchup, Banquet Chicken Pot Pie, Hunt's Juicy Gels, Act II Popcorn, Chun King
Mini Egg Rolls, Wesson Vegetable Oil; Healthy Choice Country Breaded Chicken;
Swiss Miss Chocolate Sensation; Kid Cuisine, Rosarita Beans, Marie Callender's
Spaghetti Marinara, Van Camp's Pork and Beans, Butterball Chicken Requests,
Wolf Brand Chili, Banquet Skinless Fried Chicken, Peter Pan Plus, Healthy
Choice Recipe Creations, Act II Caramel Popcorn, Knott's 100% Fat Free Jam,
Inland Valley Homestyle Mashed Potatoes, Singleton Breaded Butterfly Shrimp,
Just Light Charcoal Briquets, Lamb Weston Pommes Frites, Hotpop Microwave
Popcorn, Meridian King Crab, Steak Express Barbecue Style Ribs, Aurelmar
seafood product, Budget Buy paper plates, Brute kitchen bags, Chef's Choice
Black Pepper, Taste O Sea fish portions,Sergeant's pet shampoo, Jack Rabbit
Long Grain Rice.
Also a photo of a woman and boy eating Inland Valley Fries-To-Go.
"ConAgra's international growth is limited only by our imagination and
energy. Our expertise across the food chain and our strong customer
relationships around the world are powerful tools for global expansion.
We see new opportunities every day."
Jim Watkins
President & Chief Operating Officer
ConAgra Diversified Products Companies
(Photo of Jim Watkins)
Diversified Products--------------------
ConAgra Diversified Products Companies in fiscal 1996 included Lamb-Weston,
Arrow Industries, our seafood businesses, a pet products business and a frozen
microwave food business in the United Kingdom. At the beginning of fiscal
1997, Arrow Industries and the pet products business became part of ConAgra
Trading and Processing Companies.
Lamb-Weston is a leading processor of frozen potato products, including
french fries and an array of potato products for foodservice markets.
Lamb-Weston supplies most of the leading restaurant chains and food
service distributors in the U.S. as well as in Europe and Asia. Annual sales
are about $960 million, excluding unconsolidated joint ventures.
In fiscal 1996, Lamb-Weston continued its growth in value-added
specialty potato products. Customer response was excellent to the new
"Stealth Fry," a french fry with a transparent coating that significantly
enhances crispness and holding quality. A new shaped potato/cheese
product, "Munchers," was introduced during the year to offer foodservice
customers an additional menu choice. Lamb-Weston also made good progress,
on both the cost reduction and the market penetration fronts, with its retail
Inland Valley brand.
The U.S. potato crop was of good quality in fiscal 1996, but short supplies
increased Lamb-Weston's product costs. Despite the potato cost increase,
Lamb-Weston had a good year, with earnings above plan. Results were only
slightly above fiscal 1995 operating profit, when a potato crop failure in
Europe resulted in extraordinarily high export demand for Lamb-Weston's U.S.
potato products. In fiscal 1996, a more normal year, there was little European
demand for U.S. potato products, but exports to the Pacific Rim continued to
grow at a steady pace.
In the first half of fiscal 1996, Lamb-Weston and Dogus Holding Corp., a
Turkish company, acquired more than 90 percent of Bolu Patates San. ve
Tic. A.S., Turkey's largest frozen potato processing company. Lamb-Weston
also acquired majority ownership of Tarai Foods Limited, a processor of frozen
vegetables and potatoes in India. These two acquisitions fit Lamb-Weston's
strategy of becoming the frozen potato supplier of choice for their customers
worldwide.
In fiscal 1997, Lamb-Weston plans continued emphasis on value-added
specialty potato products and more international growth.
Lamb-Weston also plans a continued focus on finding innovative,
environmentally sustainable ways of improving its operations. A Lamb-Weston
agreement with power company U.S. Generating Co. is a good example. Early in
fiscal 1997, a U.S. Generating cogeneration plant, powered by natural gas, will
open next to Lamb-Weston's Hermiston, Oregon plant and supply electricity in
the Pacific Northwest. Lamb-Weston will purchase the zero-discharge power
plant's steam byproduct at a reduced cost and, as a result, not only save money
but also burn less natural gas.
Arrow Industries, Inc. is a leading manufacturer and national distributor of
private label consumer products for the grocery trade, principally supermarket
retailers and wholesalers. Products include dried beans, rice, popcorn, pepper
and spices, aluminum foil, plastic bags and wraps, flexible packaging, paper
plates and bags, vegetable oil, charcoal and lighter fluid. Annual sales are
about $275 million.
In the second half of fiscal 1996, Arrow acquired the Alcan Household Foil
business, a major distributor of private label aluminum foil products to
supermarkets and wholesalers.
Arrow had a good year in fiscal 1996, with earnings above plan and well
above the fiscal 1995 level. Arrow's new management team worked well together
and implemented several strategic initiatives to improve its business,
including significant investments in information systems and a
customer-centered reorganization of the business.
Because of the breadth of products in Arrow's portfolio, results are
generally mixed to some degree. The edible bean business did well, as did
the plastics business, in spite of high and volatile resin prices. The
charcoal business was under margin pressure and had a difficult year. Arrow's
European charcoal joint venture brought its new plant on line and is
well-positioned to sell the charcoal briquet concept in Europe, where lump
charcoal is still the norm.
ConAgra's seafood businesses market a wide variety of seafood products.
They include ConAgra Shrimp Companies, O'Donnell-Usen U.S.A., Usen Fisheries --
a Canadian joint venture -- and the Gelazur seafood distribution joint venture
in France. Early in fiscal 1996, ConAgra reduced its share in Trident Seafood
Corporation from 50 percent to 10 percent. Total seafood sales, excluding
seafood joint ventures, were about $200 million in fiscal 1996.
Our seafood businesses had a difficult year, as extreme price volatility and
continued supply shortages of some varieties of seafood challenged the
industry. Our seafood earnings were well below plan and the previous year.
Shrimp prices were volatile throughout the year, and the industry was hurt
by excess, high-cost inventories. There were record low prices for some sizes
of shrimp and shortages of other sizes. In this environment, ConAgra Shrimp's
earnings declined.
In the second half of fiscal 1996, ConAgra Shrimp Companies acquired the
assets of Meridian Products, Inc., a worldwide trader and sourcer of a wide
variety of seafood. Meridian's strong international presence adds an
important dimension to our domestic shrimp processing operations. Meridian has
already opened up significant new access for ConAgra Shrimp to be a major sales
agent for premium-quality, ocean-caught Mexican shrimp.
O'Donnell-Usen and Usen Fisheries' results continued to suffer from resource
shortages, but O'Donnell-Usen, the U.S. marketing side of the business, made
good progress in their private label business. The Canadian sourcing side of
the business, the Usen Fisheries joint venture, was restructured in fiscal 1996
to allow the business to operate at a vastly reduced level. Earnings also
declined for Gelazur, our French joint venture seafood business.
ConAgra Foods Limited, our frozen food business in the U.K., had a good
year, with earnings well above the previous year. A new microwave french fry
and popcorn plant successfully began operations, and volumes increased nicely
after the new capacity was on stream. A microwavable burger-and-fry
combination was introduced, and a new sales organization began representing
three ConAgra companies in the U.K. (ConAgra Foods Limited, Lamb-Weston and
Golden Valley).
Earnings declined for our pet products business in fiscal 1996. It was a
year of reorganization. The business successfully implemented a new
management information system that should help results in future years.
This business also expanded their distribution beyond grocery channels into
mass merchandiser and pet superstore channels, and began developing private
label pet products to offer new choices to their customers.
ConAgra Diversified Products Companies as a group had lower earnings
in fiscal 1996 than in fiscal 1995. The major decline was in the seafood
businesses. These companies continue to make good international progress in
sourcing, manufacturing and distribution. We expect earnings to increase in
fiscal 1997.
Refrigerated Foods------------------
Refrigerated Foods operating profit decreased 8 percent, in large part because
escalating grain prices drove up feed costs and squeezed margins before normal
industry adjustments could soften the impact. Operating profit increased in the
cheese products, processed meats, chicken products and turkey products
businesses. Earnings dropped in beef and pork. Segment sales decreased 4
percent mainly due to lower selling prices in the beef industry, divestitures
and the transfer of a trading business to the Food Inputs & Ingredients
segment.
customer focus (contains photo of man with apron and woman holding platter
of hamburgers and food product photos of Butterball Smoked Young Turkey
and Armour Premium Hot Dogs)
2 pie charts:
Segment Sales
(In millions)
1996 $12,987.3
1995 $13,503.3
% Change -3.8%
Operating Profit
(In millions)
1996* $ 384.9
1995 $ 416.4
% Change -7.6%
*Fiscal 1996 segment operating profit excludes certain non-recurring
charges. Segment operating profit after the charges was $106.3 million.
See Note 2 on page 41.
Refrigerated Foods------------------
ConAgra Refrigerated Foods Companies include our companies that produce and
market branded processed meats, deli meats, beef and pork products, chicken and
turkey products and cheese products. These companies share common distribution
characteristics and many synergistic opportunities among the businesses and in
the marketplace.
Our Refrigerated Foods Companies are re-designing their business processes
to better serve their retail and foodservice customers and meet consumers'
needs. New systems and processes will allow faster and better response to
consumer demand, better information for us and our customers on demand
patterns, and much more efficient movement of products. Significant
investments in infrastructure enhancements are expected to improve these
businesses meaningfully.
ConAgra Refrigerated Foods Companies is the part of ConAgra most affected by
the restructuring announced in May 1996. Actions taken by our Refrigerated
Foods Companies will substantially improve the manufacturing efficiencies and
customer responsiveness in our meat, poultry and cheese businesses. These
actions include closing two beef plants in the U.S. and three in Australia, and
closing four U.S. processed meat plants, one U.S. cheese plant, three U.S.
poultry plants and 16 refrigerated foods distribution centers in the U.S.
In connection with the restructuring, plans have been announced to build a
new pork plant in Indiana or Kentucky and a new cattle hides further processing
plant in Texas, redesign and renovate a poultry plant in Louisiana and expand
beef plants in Kansas and Australia. We also are building a new processed
meats plant and expanding another processed meats plant in Kansas.
Our processed meat brands include Armour, Swift Premium, Eckrich,
Butterball, Healthy Choice, Longmont, Cook's, Hebrew National, Brown 'N Serve,
Golden Star, Decker, Webber's, and National Deli. Products include hot dogs,
bacon, hams, sausages, cold cuts, turkey products and kosher products.
Processed meat sales, excluding turkey-based products, are about $1.8 billion
annually.
New products introduced in fiscal 1996 include a seven-item line of Healthy
Choice pre-sliced deli meats, Healthy Choice Breakfast Sausage, Healthy Choice
Beef Smoked Sausage, five flavors of Healthy Choice Hearty Deli Flavor Lunch
Meat, four varieties of Armour Max Pax Lunchmakers, Armour Turkey Summer
Sausage (with 70-percent less fat), Eckrich Fat Free Franks and Fat Free
Bologna, Healthy Choice Browned Turkey Breast and Honey Maple Ham deli
products, Hebrew National Lean Smoked Turkey Sausage, Hebrew National Beef Hot
Sausage, and Hebrew National Lean Beef Salami and Bologna.
Overall processed meat earnings increased in fiscal 1996, helped by good
results for Healthy Choice processed meat products and a turnaround in the
kosher products business. A selling price increase in the fourth quarter of
the year partially covered a significant increase in raw materials costs during
the year.
New sausage products helped the Healthy Choice processed meat line achieve
another year of increased unit volumes. The Cook's ham business had a good
year and beat their plan, although earnings were below fiscal 1995's
extraordinarily strong results. We expect improved processed meat earnings in
fiscal 1997.
ConAgra's fresh meat businesses produce and market beef, pork and lamb
products for customers in domestic and international markets.
Annual sales of ConAgra's U.S.-based fresh meat companies exceed $7 billion.
In fiscal 1996, these companies processed about 6.1 million head of cattle and
9.4 million hogs. Annually, these companies produce more than five billion
pounds of beef products and nearly two billion pounds of pork products. We
also have cattle feeding operations that in fiscal 1996 supplied less than 10
percent of the needs for our U.S. beef plants.
In addition to the U.S.-based meat businesses, ConAgra owns approximately 91
percent of Australia Meat Holdings Pty Ltd. (AMH), a major Australian beef
processor and exporter headquartered in Brisbane. AMH's annual production is
about 800 million pounds of beef products; annual sales exceed $900 million.
Fiscal 1996 was a year of change for our beef businesses, from new
management to new systems. Significant capital investments to lower processing
costs and improve quality, and a plant capacity rationalization to structure
the business to better fit the customer base, are expected to pay dividends in
the years ahead. Beef plant improvements include expansion of plant chill
capacity, automated distribution and box handling systems, and specialized
manufacturing capabilities to meet the needs of customers in Japan. The new
cattle hides processing plant in Texas, scheduled to open in April 1997, is
designed to improve profit margins in beef processing.
The beef processing businesses performed reasonably well in fiscal 1996, but
earnings declined from fiscal 1995's strong level. Cattle feeding earnings,
which were hurt by record-high grain prices and low cattle prices in fiscal
1996, fell dramatically.
AMH's results were significantly worse than in fiscal 1995. The beef
industry in Australia was under considerable pressure from the U.S. beef
industry, as low cattle prices made U.S. beef more competitive than Australian
beef in export markets. The industry problems were complicated for AMH by
expenses related to labor issues, which have now been resolved. We expect
industry conditions in fiscal 1997 to remain challenging, but AMH results
should get progressively better during the year.
Swift & Company, the fresh pork business, continued in fiscal 1996 to show
the kind of improvements we expected as a result of prior years' capital
investments and plant capacity rationalization, and the pork management team's
sharp focus on the right issues. The pork business had an excellent year, but
earnings were below fiscal 1995's record level, when raw materials were at
record low prices.
Swift focused on adding value to their products, improving production
efficiencies and increasing value-based procurement. During fiscal 1996, the
pork business expanded distribution of its line of case-ready Armour Premium
branded pork products. Further expansion is planned in fiscal 1997. Improved
cooler capacity at the two largest pork plants, brought on stream during fiscal
1996, will be an advantage as Swift continues to grow its international
business.
Swift acquired an Indiana pork slaughter plant in the last quarter of fiscal
1996 and is modifying it to operate as a value-added processing plant.
Construction will begin in fiscal 1997 on a new state-of-the-art pork plant in
Indiana or Kentucky to replace Swift's outdated plant in Louisville, Kentucky.
The new plant will include complete capability to produce case-ready products.
The beef and pork industries will remain challenging in fiscal 1997, but we
expect that improvements in our beef and pork businesses will result in
increased earnings.
Beatrice Cheese Company is a producer and marketer of cheese products and
dessert toppings. Annual sales exceed $950 million. Branded products include
Healthy Choice fat-free cheese, Treasure Cave blue cheese, County Line natural
cheeses, Pauly cheeses for foodservice markets and Reddi-Wip dessert toppings.
A line of fat-free Reddi-Wip toppings will be introduced in fiscal 1997. Early
in fiscal 1996,the Alum Rock Foodservice business, a West Coast cheese product
distributor, was sold.
Fiscal 1996 was another excellent year for Beatrice Cheese, with earnings
well above plan and dramatically higher than in fiscal 1995. Retail and
foodservice cheese products achieved good volume growth, as did the Reddi-Wip
product line. Healthy Choice fat-free cheese products continued to perform
well in the marketplace. Significant operating and cost improvements, a keener
market focus and exiting the milk processing business in fiscal 1996 set the
stage for another good year for Beatrice Cheese in fiscal 1997.
Our chicken and turkey businesses are leading producers and marketers of
chicken and turkey products for retail and foodservice markets. Principal
chicken brands are Butterball, Country Pride, Country Skillet and To-Ricos.
Principal turkey brands are Butterball and Longmont.
Our chicken products company had fiscal 1996 sales of about $1.5 billion.
Our turkey products company had sales of about $600 million. Our broiler
chicken production volume for the year exceeded 1.4 billion dressed pounds.
More than 675 million pounds of turkey products were sold.
U.S. per capita consumption of chicken products continued its long-term rise
in fiscal 1996. Likewise, foreign demand for U.S. broiler meat continued
strong, and in spite of a temporary slowdown of exports to Russia, broiler
exports continued to rise.
The major problem for the poultry industry and our chicken and turkey
companies in fiscal 1996 was the record-high corn prices. Our chicken products
business improved dramatically in fiscal 1996, but the progress was masked by
the high grain costs. Results were better in fiscal 1996 than in the previous
year, but the numbers don't reflect the magnitude of the positive change in the
business.
Significant capital investments improved production facilities. New
management is clearly focused on marketing, sales, cost, quality, upgrading the
entire organization and, as a result, improving profitability. Assets of a
Delaware poultry complex and of the Mott's-Blue Coach Foods poultry processing
business were sold during the first half of fiscal 1996. The business should
be further boosted by the capacity rationalization announced as part of the
fiscal 1996 restructuring charge. We expect fiscal 1997 earnings in our
chicken products business to begin to reflect the business improvements,
although our expectations are tempered somewhat by continued high grain
costs.
Early in fiscal 1997, ConAgra Poultry Company acquired certain assets of
Texas Smokehouse Foods, Inc. Texas Smokehouse Foods produces smoked,
batter-breaded and marinated meat and poultry products sold mainly through
foodservice channels. This acquisition supports ConAgra Poultry's plan to
increase its foodservice presence and to focus on value-added products.
Butterball Turkey Company, which includes the Butterball and Longmont
businesses, increased earnings in fiscal 1996. Results would have been
substantially better, however, if grain costs had been at a more normal level.
Butterball maintained strong market positions for their branded turkey
products, with good growth in some segments. New Butterball turkey products
introduced in fiscal 1996 include Butterball Thin and Crispy Bacon, Butterball
Deli Thin lunch meat in two flavors and Butterball Fat Free Turkey Breast for
the deli.
The Longmont business has become primarily a producer of turkey products for
other ConAgra companies, a good arrangement for both Longmont and their
internal ConAgra customers. Our turkey businesses will be hard-pressed to
increase their earnings in fiscal 1997 unless feed costs moderate somewhat.
Our refrigerated foods businesses will continue their business process
improvements in fiscal 1997. Infrastructure enhancements are on track in
customer service, transportation, technology, product development and support
systems. A strategic focus on adding value to our refrigerated products is
already paying dividends for these businesses. A companywide focus on training
is well under way. We expect the fiscal 1997 results to begin to reflect these
initiatives. Earnings should increase strongly.
"We are fundamentally transforming our businesses -- systems, processes,
culture and expectations --- to leverage our protein powerhouse. We have the
leaders and the teams in place to make our businesses the best in their
industries in product quality and customer service."
Lee Lochmann
President & Chief Operating Officer
ConAgra Refrigerated Foods Companies (photo of Lee Lochmann)
Throughout this segment appears photos of the following refrigerated foods
products: Eckrich Lunch Makers Sausage Pizza, Swift Premium Brown 'N Serve,
Country Pride Fresh Chicken, Healthy Choice Fat Free American Singles,
Butterball Fresh Chicken Roasting Broiler, Decker Bacon, Armour Seasoned Pork
Roast, County Line Mozzarella Cheese, Webber Farms Original Mild Sausage,
Cook's Spiral Sliced Honey Ham, Monfort Gold Corned Beef Brisket, Healthy
Choice Lowfat Deli Thin Sliced Honey Ham, Butterball Fresh Chicken Lemon Butter
Breast Fillets, Hebrew National Reduced Fat Beef Bologna, Hebrew National Beef
Franks, Reddi Wip, Butterball Lean Fresh Turkey Hot Italian Sausage, Healthy
Choice Fat Free Nonfat Cream Cheese, Hebrew National Thin Sliced Oven Roasted
Turkey Breast, Cook's Ham Steak, Treasure Cave Blue Cheese.
new dimensions (photos of:farmer with UAP cap and holding wheat,
Eagle Mills Pizza Crust Mix and Healthy Choice bread)
Food Inputs & Ingredients-----------
Many businesses contributed to the strong Food Inputs & Ingredients operating
profit growth of 35 percent. They include grain merchandising, the crop inputs
business, commodity services, specialty food ingredients and the dry edible
bean business. The segment's profit performance also benefited from a barley
malting business acquisition during fiscal 1996 and business dispositions the
previous year. A 13-percent segment sales gain was due to volume growth,
higher commodity prices and the transfer of a trading business from the
Refrigerated Foods segment.
2 pie charts:
Segment Sales
(In millions)
1996 $ 6,572.9
1995 $ 5,799.5
% Change +13.3%
Operating Profit
(In millions)
1996* $ 333.6
1995 $ 246.7
% Change +35.2%
*Fiscal 1996 segment operating profit excludes certain non-recurring
charges. Segment operating profit after the charges was $236.5
million. See Note 2 on page 41.
"The coming changes in the world of agriculture are mind-boggling, but we have
built a business that can seize the opportunities changes will bring. We've
designed our businesses in anticipation of a rapidly growing world population,
burgeoning demand for agricultural products, increasing environmental concerns
and the biotechnology revolution."
Floyd McKinnerney
President & Chief Operating Officer
ConAgra Agri-Products Companies
(photo of Floyd McKinnerney)
Inputs------------------------------
ConAgra Agri-Products Companies' major businesses provide
inputs---crop protection chemicals, fertilizers and seeds --- that farmers
need to grow their crops. ConAgra Agri-Products Companies also include our
specialty retailing business and our participation in a number of developmental
businesses.
These businesses are building on their strengths in distribution and
technology. Our crop input distribution system spans North America and
is growing in both domestic and international markets, handling a product mix
geared to our customers' changing needs. Our strong technology base is leading
to the development of promising new businesses and products for agricultural
and industrial markets.
As agriculture begins to benefit from the commercialization of
biotechnology, ConAgra Agri-Products Companies are uniquely positioned both to
distribute new products and to identify potential applications in the food
industry and linkages to other ConAgra companies.
Crop Protection Chemicals and Fertilizer Products
United Agri Products (UAP) is the leading distributor of crop protection
chemicals to North American markets and a major marketer of fertilizers. This
core inputs business serves customers in most major agricultural areas of the
U.S. and Canada. UAP distributes a broad line of branded pesticides,
fertilizers and seeds; formulates and distributes its own products under the
Clean Crop label; and operates Cropmate retail outlets in the Midwest and
Louisiana. Annual sales are about $2.5 billion.
During fiscal 1996, UAP grew its crop input business across the U.S. and in
Canada, Mexico, the United Kingdom and Chile. UAP also achieved good growth in
its seed distribution and horticultural supply businesses. With the
divestiture of Omaha Vaccine in the first half of fiscal 1996, UAP has almost
completely exited the animal health business, which had been unprofitable.
UAP continued to demonstrate a commitment to responsible environmental
stewardship. UAP's environmental services group educates customers and
businesses across the U.S. on the environmentally sensitive use of agricultural
chemicals. UAP also continued its nationwide leadership in chemical container
recycling. To date, UAP has collected about 5.5 million empty crop protection
chemical containers and recycled them into plastic chips. UAP then uses the
chips to manufacture reusable plastic shipping pallets, and is researching
additional uses for recycled containers.
The U.S. crop protection chemical sector had a good year in fiscal 1996.
The increasing global demand for food, more planted acres and record-high
prices for corn and wheat helped the industry more than weather-related
planting delays hurt it.
UAP had an excellent year, its thirteenth consecutive year of record sales
and earnings. The UAP team achieved growth in sales and earnings for both
pesticides and fertilizers.
The year's strong performance was achieved, in part, because of UAP's
geographic diversity. The late, wet 1995 spring hurt results in the midwestern
U.S., but the other U.S. markets and the international business, notably Canada
and Mexico, made significant contributions.
In fiscal 1997, UAP plans continued growth through both internal expansion
and acquisitions. Early in fiscal 1997, UAP acquired the assets of Willmot
Pertwee, Limited, a full-service retail distributor of agricultural chemicals
in the United Kingdom. This acquisition gives UAP a leadership position in
agricultural chemicals distribution in the U.K.
Fiscal 1997 results should benefit from continued improvements in product
mix and from a major UAP initiative to maximize the efficiency of its
distribution system. The severe drought in Texas, Oklahoma and Kansas,
and the late, wet spring in the midwestern U.S. are negatives for fiscal 1997,
but continued high grain prices and another increase in planted acres are
positives for UAP. We expect another year of increased earnings.
Joint Ventures
ConAgra Agri-Products Companies' joint ventures with DuPont draw on
renewable resource technology to develop innovative and environmentally
friendly products and solutions for agricultural and industrial markets.
The largest joint venture with DuPont, DuCoa, manufactures and markets
nutrient additives for animal feeds and sells products to food and
nutraceutical markets. DuCoa also produces animal plasma products utilizing
raw materials from ConAgra beef and pork plants. DuCoa, which includes the
company previously known as NutriBasics, had a record year of sales and
earnings. An innovative new DuCoa product, N-Sure, was in the final stage of
FDA approval at press time. N-Sure is a mold retardant for broiler chicken
feed, the only product of its kind to seek FDA approval as a feed additive.
ConAgra and DuPont also have a number of smaller joint venture developmental
companies with significant growth potential for the future. Several new
products are either on the market or will be marketed in fiscal 1997. EnPac,
for example, is an environmentally friendly molded foam product used as a
packing material. Another new product, ProtiMax, was recently introduced by
DuCoa to the swine industry. ProtiMax, which uses new egg biologics technology
developed by a ConAgra/DuPont joint venture, is a feed supplement that helps
baby pigs grow optimally.
The ConAgra/DuPont joint venture companies as a group were profitable in
fiscal 1996. We expect increased earnings in fiscal 1997.
Specialty Retailing
ConAgra's specialty retailing business includes 125 Country General stores
operating under the names Country General, Wheelers, S & S, Sandvig's, Peavey
Ranch and Home, and Anfinson's. The Northwest Fabrics & Crafts chain, formerly
part of our specialty retailing business, was sold in the fourth quarter of
fiscal 1996.
As part of the restructuring announced in May 1996, Country General plans to
close 11 stores in fiscal 1997, including all nine Peavey Ranch and Home stores
in California. A California distribution center also will close.
Country General Stores carry merchandise targeted for country living,
including clothing, boots and other footwear, housewares, lawn and garden
supplies, farm and ranch supplies, hardware, animal care products and sporting
goods. Four new stores were opened during fiscal 1996; one store was closed.
Country General's sales grew modestly in fiscal 1996, but earnings declined,
hurt by lower-than-normal sales in the fall and holiday selling seasons. In
fiscal 1997, improved efficiencies, better cost and inventory control, and
stronger sales are expected to contribute to improved earnings.
Food Ingredients--------------------
ConAgra Trading and Processing Companies are involved primarily in the
processing and distribution or trading of ingredients for food products and
meat and poultry production. Annual net sales are about $3.7 billion.
These businesses are leveraging their strengths in traditional commodity
processing and trading to provide customers with value-added food products
and ingredients. These businesses also are building a targeted international
network to serve our customers as they grow and to strategically position
ConAgra in growing markets around the world.
Distribution and Trading
ConAgra's distribution and trading businesses, which primarily move food and
feed ingredients from areas of surplus to areas of need, include offices in 15
nations and extensive merchandising facilities and transportation assets in the
United States.
Major businesses are ConAgra Grain Companies, a worldwide grain
merchandiser, Klein-Berger Company, an international merchandiser of pulses --
dry edible beans, peas and lentils -- and international fertilizer trading.
Other businesses include the Australian wool business, a soybean crushing
business in Argentina and European commodity trading. Early in fiscal 1996, we
sold Petrosul International Ltd., a Canadian sulfur business.
ConAgra's distribution and trading companies had an outstanding year, with
earnings far above plan and the previous year. ConAgra Grain, Klein-Berger and
non-core business dispositions in the prior year were the major source of
fiscal 1996 earnings growth.
The largest business, ConAgra Grain, increased earnings dramatically. A new
management team performed exceptionally well, and results were helped by high
grain prices and strong export demand. ConAgra Grain's barge business
benefited from heavy demand and achieved results well above plan.
Fiscal 1997 should be another good year for ConAgra Grain, but it is
unlikely that earnings will match fiscal 1996's record level.
Klein-Berger's earnings increased, with results well ahead of fiscal 1995.
World demand for beans is strong, and Klein-Berger benefited from volatile
prices and tight bean supplies. We expect increased earnings again in fiscal
1997.
International fertilizer trading performed well in fiscal 1996, helped by
continued strong global demand for fertilizer. Earnings increased for the
Argentine soybean crushing business and the European commodity trading
business. Earnings declined significantly in the Australian wool business.
We expect another good year for our distribution and trading businesses in
fiscal 1997, but we expect earnings to be below fiscal 1996's extraordinarily
strong level.
Throughout this segment appears Food Inputs & Ingredients product photos
of: Activator 90, Grower's Choice Systemic Rose & Flower Care, DuCoa
Protimax, Envirofill 100% Biodegradable Loose Fille, DuCoa 60% Choline
Chloride, Kleenup UltraFast Grass & Weed Killer and LI 700.
Grain Processing
ConAgra's grain processing businesses include flour milling in the U.S., Canada
and Puerto Rico; oat milling in the U.S., Canada and the United Kingdom;
dry corn milling in the U.S. and Germany; tortilla manufacturing in the U.S.;
barley malting in Argentina, Australia, Canada, China, Denmark, the U.K. and
Uruguay; specialty food ingredient manufacturing and marketing in the U.S.;
commodity services marketing in the U.S., Australia, Canada, Germany and
Mexico; and animal feed production and marketing in the U.S., Puerto Rico,
Spain and Portugal.
ConAgra Flour Milling Company is a leader in the U.S. flour milling industry
with 24 mills in 13 states. ConAgra also jointly owns six flour mills, four in
Canada and two in the U.S. During fiscal 1997, we intend to sell our interest
in the four mills in Canada. Annual flour volume, excluding the Canadian
mills, is about 7.2 billion pounds.
Fiscal 1996 was a difficult year for the flour milling industry. Wheat
prices were at record highs, and supplies were tight. For the second
consecutive year, flour exports from the U.S. were very low, freeing up
domestic capacity and intensifying competition. New entrants in the industry
added more capacity, and the per capita consumption of flour declined slightly
for the first time in a decade.
In this environment, compounded by poor results in Canada, ConAgra
Flour Milling's earnings declined in fiscal 1996. In addition to beginning the
process of selling the Canadian business, ConAgra Flour Milling is
restructuring the U.S. flour milling business to improve efficiency, quality
and profitability. We exited the bulk durum flour business in fiscal 1996 and
closed two bulk durum mills.
Industry conditions are expected to remain challenging, but we believe
the actions taken to improve the flour milling business will result in
increased earnings in fiscal 1997.
ConAgra Specialty Grain Products Company includes the barley malting,
oat milling and dry corn milling businesses, and Casa de Oro Foods, a
manufacturer of wheat flour tortillas for foodservice and retail customers.
During fiscal 1996, ConAgra Specialty Grain continued to expand the tortilla
business, completed the addition of an oat oil extraction plant at our major
U.S. oat mill, and completed and opened a $30 million joint venture barley
malting facility in Denmark.
In the first half of fiscal 1996, we acquired Canada Malting Co. Limited,
one of the world's largest producers of malted barley, gaining malting
operations in Canada, the U.S. and the U.K. and barley malting joint ventures
in Argentina and Uruguay. To form a strategic alliance, we sold 50 percent of
the malting business to South Africa-based Tiger Oats Limited at the end of
fiscal 1996. The ConAgra/Tiger Oats alliance positions us well for barley
malting leadership in both established and emerging markets worldwide.
ConAgra Specialty Grain increased earnings in fiscal 1996, primarily as a
result of the Canada Malting acquisition. The barley malting, tortilla and oat
milling businesses increased earnings; earnings were down in the dry corn
milling business.
We expect good results for the Specialty Grain businesses in fiscal 1997,
but reported earnings will decline mainly because of the new joint venture
structure of the malting business.
Our commodity services business, which includes feed ingredient
merchandising, energy services and the Becher protein division, had an
outstanding year. The business achieved good volume and earnings growth,
helped by volatile markets. Earnings in Spain and Portugal declined, in part
due to costs associated with exiting the poultry business there. Earnings
declined in our U.S. feed business.
In fiscal 1996, earnings declined in our grain processing business in Puerto
Rico, partly due to a long-running labor dispute that was resolved during the
year. Construction began on a fully automated $20 million flour mill that will
replace the current mill in fiscal 1998 and significantly improve our milling
operations in Puerto Rico.
United Specialty Food Ingredients Companies manufacture and market a
broad line of natural spices, blended seasonings, natural flavors, spray-dried
food ingredients, meat-flavored sauces, gravies and soup bases, food oils, lard
and processed eggs. Early in fiscal 1996, United Specialty Food Ingredients
acquired Raul L. Navarro-Chile, S.A., a Chilean processor and exporter of
paprika products.
United Specialty Food Ingredients had an excellent year, with earnings above
plan and well above the previous year. The J.M. Swank food ingredient
distribution business continued to grow, opening a service center in Texas and
achieving excellent results. The Cal-Compack ingredient business, which did
poorly in fiscal 1995 (its first full year as part of United Specialty Food
Ingredients), achieved a strong turnaround in fiscal 1996.
Total grain processing earnings increased in fiscal 1996. We expect another
increase in fiscal 1997.
"Rapidly growing worldwide demand for grain and grain-based products is
a golden opportunity for our businesses. We are in an excellent position to
meet that demand in the years ahead with both commodity grain and value-added
grain-based products."
Tom Manuel
President & Chief Operating Officer
ConAgra Trading and Processing Companies
(photo of Tom Manuel)
Photos: Mamacita's Home Style flour tortillas and teenage boy and girl eating
nachos.
Photo: Healthy Choice Cereal, Cookies, Bread Crisps
Cutline: Healthy Choice has grown into one of only a handful of supermarket
food brands with more than $1 billion in annual retail sales. ConAgra markets
more than 300 Healthy Choice products, and annual retail sales are about $1.4
billion. Three lines of Healthy Choice grain-based products are marketed under
separate licensing agreements: Healthy Choice cereals are produced by Kellogg
USA, Inc., Healthy Choice Bread is produced by Metz Baking Company (a division
of Specialty Foods Corp.), and Healthy Choice cookies and bread crisps, new in
fiscal 1996, are produced by Nabisco Biscuit Company.
Throughout this segment also appears product photos of: ConAgra Buccaneer
Bakers Flour, To-Ricos, Eagle Mills Best Loaf Breakfast Bread Mix, ConAgra
American Beauty High Ratio Cake Flour and Amapola Corn Meal.
SALES & OPERATING PROFIT BY SEGMENT
Dollars in millions
Fiscal Year
1996 1995 1994 1993 1992
Including Excluding
Non- Non-
recurring recurring
Charges Charges
- -------------------------------------------------------------------------
Grocery/Diversified Products
Sales $5,261.4 $5,261.4 $4,809.5 $4,303.1 $4,105.4 $4,148.0
Percent
of total 21.2% 21.2% 19.9% 18.3% 19.1% 19.5%
Operating
profit 644.7 721.8 629.9 526.4 477.5 412.5
Percent
of total 65.3% 50.1% 48.7% 46.1% 45.4% 39.3%
- -------------------------------------------------------------------------
Refrigerated Foods
Sales $12,987.3 $12,987.3 $13,503.3 $13,832.2 $12,420.7 $12,105.1
Percent
of total 52.3% 52.3% 56.0% 58.8% 57.6% 57.0%
Operating
profit 106.3 384.9 416.4 398.6 354.1 402.8
Percent
of total 10.8% 26.7% 32.2% 35.0% 33.7% 38.3%
- -------------------------------------------------------------------------
Food Inputs & Ingredients
Sales $6,572.9 $6,572.9 $5,799.5 $5,382.1 $5,018.4 $4,983.4
Percent
of total 26.5% 26.5% 24.1% 22.9% 23.3% 23.5%
Operating
profit 236.5 333.6 246.7 215.5 219.4 235.1
Percent
of total 23.9% 23.2% 19.1% 18.9% 20.9% 22.4%
- ------------------------------------------------------------------------
Total
Sales $24,821.6 $24,821.6 $24,112.3 $23,517.4 $21,544.5 $21,236.5
Operating
profit* 987.5 1,440.3 1,293.0 1,140.5 1,051.0 1,050.4
Interest
expense 290.4 290.4 258.1 239.6 246.4 302.0
General
corporate
expense** 219.0 164.0 137.6 107.3 101.5 89.3
Goodwill
amortization 69.5 69.5 71.4 73.6 71.7 71.4
- ------------------------------------------------------------------------
Income
before
income
taxes $ 408.6 $ 916.4 $ 825.9 $ 720.0 $ 631.4 $ 587.7
*Operating profit is profit before interest expense (except financial
businesses), goodwill amortization, general corporate expense and income
taxes.
**The fiscal 1996 increase in general corporate expense, excluding
non-recurring charges, was caused by factors other than corporate payroll
and operating expenses, which decreased slightly. Distributions on a
subsidiary's preferred securities are the largest component of the
fiscal 1996 increase and the cause of the fiscal 1995 increase.
TEN-YEAR RESULTS
Dollars in millions except per share amounts
- -------------------------------------------------------------------------------
Fiscal Year 1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------
FOR THE YEAR
Net sales $24,821.6 $24,112.3 $23,517.4 $21,544.5 $21,236.5
Income from continuing
operations before
income taxes and
cumulative effect of
change in accounting
principle 408.6* 825.9 720.0 631.4 587.7
After-tax income from
continuing operations and
before cumulative effect
of change in accounting
principle 188.9* 495.6 437.1 391.5 372.4
Net income 188.9* 495.6 437.1 270.3 372.4
Earnings per common and
common equivalent share
Continuing operations and
before cumulative effect
of change in accounting
principle $.79* $2.06 $1.81 $1.58 $1.50
Net income $.79* $2.06 $1.81 $1.06 $1.50
Cash dividends declared
per share of common
stock $.92 $.803 $.695 $.600 $.520
Market price per share
of common stock
High $47.13 $34.50 $29.38 $34.25 $36.25
Low $32.50 $28.25 $23.00 $22.75 $24.50
Last $42.00 $32.25 $28.50 $25.13 $25.88
Weighted average number
of common and common
equivalent shares
outstanding
(in millions) 229.5 229.0 228.5 233.0 231.9
Additions to property,
plant and equipment,
including
acquisitions $1,016.1 $557.2 $498.6 $392.7 $378.9
Depreciation and
amortization 407.9 375.8 368.4 348.7 319.3
- -------------------------------------------------------------------------------
Fiscal Year 1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------
- -
AT YEAR END
Total assets $11,196.6 $10,801.0 $10,721.8 $ 9,988.7 $9,758.7
Current assets 5,566.9 5,140.2 5,143.3 4,486.7 4,371.2
Current liabilities 5,193.7 3,964.9 4,752.8 4,272.6 4,081.3
Working capital 373.2 1,175.3 390.5 214.1 289.9
Property, plant and
equipment, net 2,820.5 2,796.0 2,586.3 2,388.2 2,276.8
Capital investment 6,002.9 6,836.1 5,969.0 5,716.1 5,677.4
Senior long-term debt
(noncurrent) 1,512.9 1,770.0 1,440.8 1,393.2 1,694.4
Subordinated long-term
debt (noncurrent) 750.0 750.0 766.0 766.0 430.0
Preferred securities of
subsidiary company 525.0 525.0 100.0 -- --
Redeemable preferred
stock -- 354.9 355.6 355.9 356.0
Common stockholders'
equity 2,255.5 2,495.4 2,226.9 2,054.5 2,232.3
Stockholders' equity
(all classes) 2,255.5 2,850.3 2,582.5 2,410.4 2,588.3
Common stockholders'
equity per share $9.93 $11.03 $9.86 $9.02 $9.62
TEN-YEAR RESULTS (CONT.)
- -------------------------------------------------------------------------------
Fiscal Year 1991 1990 1989 1988 1987
- -------------------------------------------------------------------------------
FOR THE YEAR
Net sales $19,528.3 $15,519.3 $11,340.4 $9,485.5 $ 9,004.4
Income from continuing
operations before income
taxes and cumulative effect of
change in accounting
principle 515.2 356.9 312.2 240.1 271.5
After-tax income from
continuing operations
and before cumulative
effect of change in
accounting principle 311.2 231.7 197.9 154.7 148.7
Net income 311.2 231.7 197.9 154.7 148.7
Earnings per common and
common equivalent share
Continuing operations and
before cumulative effect
of change in accounting
principle $1.42 $1.25 $1.09 $.86 $.82
Net income $1.42 $1.25 $1.09 $.86 $.82
Cash dividends declared per
share of common stock $.445 $.385 $.331 $.288 $.249
Market price per share
of common stock
High $32.50 $21.25 $15.89 $16.89 $15.11
Low $19.67 $14.11 $12.00 $9.28 $11.03
Last $30.33 $20.50 $15.22 $12.33 $11.89
Weighted average
number of common and
common equivalent
shares outstanding
(in millions) 205.3 184.8 180.8 178.2 179.0
Additions to property,
plant and equipment,
including
acquisitions $1,159.9 $349.3 $241.1 $196.3 $178.3
Depreciation and
amortization 250.8 129.7 101.7 89.5 77.4
- -------------------------------------------------------------------------------
Fiscal Year 1991 1990 1989 1988 1987
- -------------------------------------------------------------------------------
AT YEAR END
Total assets $9,420.3 $4,804.2 $4,278.2 $3,042.9 $2,482.5
Current assets 4,342.9 3,347.7 3,160.4 2,076.2 1,707.1
Current liabilities 4,087.4 2,967.5 2,651.5 1,636.1 1,236.6
Working capital 255.5 380.2 508.9 440.1 470.5
Property, plant and
equipment, net 1,941.5 1,034.7 825.5 696.1 601.9
Capital investment 5,332.9 1,836.7 1,626.7 1,406.8 1,245.9
Senior long-term
debt (noncurrent) 1,663.0 605.4 530.1 489.9 428.7
Subordinated long-term
debt (noncurrent) 430.0 30.0 30.0 -- --
Preferred securities of
subsidiary company -- -- -- -- --
Redeemable preferred
stock 356.1 2.2 8.7 9.6 13.3
Common stockholders'
equity 1,817.4 1,095.8 949.5 814.4 722.5
Stockholders' equity
(all classes) 2,173.5 1,098.0 958.2 824.0 735.8
Common stockholders'
equity per share $8.67 $5.95 $5.25 $4.64 $4.12
*1996 amounts include non-recurring charges: before tax, $507.8 million; after
tax, $356.3 million, or $1.55 per common share. Excluding the charges, fiscal
1996 income before income taxes was $916.4 million, net income was $545.2
million and earnings per share were $2.34.
Results exclude restatements in 1991 and prior years for subsequent events such
as mergers accounted for as poolings of interests, and restatements in 1989 to
reflect the required consolidation of ConAgra's finance companies.
Per share results reflect the following common stock splits: three-for-two
in 1989 and three-for-two in 1991 (calendar years).
MANAGEMENT'S DISCUSSION & ANALYSIS
INTRODUCTION
Our objective in this discussion is to help stockholders understand
management's views on ConAgra's financial condition and results of operations.
This discussion should be read in conjunction with the financial statements and
the notes to the financial statements. Unless otherwise indicated, years
(1995, 1996, etc.) in this discussion refer to ConAgra's May-ending fiscal
years.
Non-recurring charges (see Note 2) in the fourth quarter of 1996
significantly affected ConAgra's financial condition and results of operations
in 1996. The charges totaled $507.8 million before income tax and $356.3
million after income tax, or $1.55 per share. The non-recurring charges, on an
after-tax basis, were for restructuring, $258.6 million; implementing SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," $79.8 million; and completion of a program to divest
non-core businesses, $17.9 million.
The restructuring plan, ConAgra's first major restructuring involving
charges in at least 20 years, is designed to streamline the company's
production base, improve efficiency and enhance ConAgra's competitiveness. The
restructuring plan resulted from an extensive strategic review of the company's
assets, operating efficiency, competitive position and anticipated operating
results.
ConAgra is closing more than 20 production plants and exiting several
smaller businesses. Approximately 6,300 jobs are being eliminated, principally
in the facilities to be closed. The restructuring charge includes
approximately $60 million in cash, substantially all of which will be paid in
1997. The balance of the restructuring charge relates to non-cash charges on
assets to be closed and disposed of.
ConAgra expects that the restructuring will result in pretax savings of
approximately $50 million in 1997, $100 million in 1998 and $125 million in
1999. ConAgra expects that some of the savings will benefit earnings in each
year and some will be reinvested to support future operating results. ConAgra
also expects that the company's revenues and liquidity will not be materially
affected by the restructuring.
FINANCIAL CONDITION
Capital Resources
ConAgra's earnings are generated principally from its capital investment, which
consists of working capital (current assets less current liabilities) plus all
noncurrent assets. Capital investment is financed with stockholders' equity,
long-term debt and other noncurrent liabilities.
Capital Investment
Dollars in millions
1996 1995 %Change
- ------------------------------------------------------------
Working capital $373.2 $1,175.3 (68)%
- ------------------------------------------------------------
Property, plant &
equipment, net 2,820.5 2,796.0 1
Intangible assets 2,405.6 2,420.1 (1)
Other noncurrent assets 403.6 444.7 (9)
- ------------------------------------------------------------
Total noncurrent assets 5,629.7 5,660.8 (1)
- ------------------------------------------------------------
Capital investment $6,002.9 $6,836.1 (12)
============================================================
During 1996, capital investment decreased 12% mainly because working
capital decreased $802 million and returned to a more normal level, comparable
to working capital of $391 million at the end of 1994. The high level of
working capital in 1995 was principally related to prefunding in late 1995 the
company's stock repurchase program in connection with the call and
conversion of its Class E preferred stock during the first half of 1996.
ConAgra invested $669 million in property, plant and equipment in 1996, and
$428 million in 1995. In addition, ConAgra invested $467 million to acquire
businesses in 1996 versus $379 million in 1995. Despite substantial
investment, property, plant and equipment including acquisitions and
divestitures, net of depreciation expense, increased only $25 million in 1996.
The increase was modest largely due to asset write-offs in connection with the
non-recurring charges.
In 1997, ConAgra expects to invest about $700 million in additions to
property, plant and equipment of present businesses. The additions
accomplished in 1996 and planned for 1997 are broadly based investments in
modernization, efficiency and capacity expansion; no single project accounts
for a major share of the total additions.
Intangible assets include approximately $1.9 billion of goodwill associated
with ConAgra's acquisition of Beatrice Company in 1991. This goodwill
represents valuable assets such as respected brands with significant
marketplace acceptance. Over time, the assets are amortized and decline from
an accounting standpoint. However, we invest on an expense-as-you-go basis to
maintain and enhance the value of these assets. Consequently, the non-cash
provision for goodwill amortization is a source of cash that can be used for
any corporate purpose such as internal investment, acquisitions and dividends.
In that respect, goodwill amortization is similar to net income-- it
provides "decision cash." It amounted to $70 million in 1996 and $71 million
in 1995, equal to 13% and 14% of net income, excluding non-recurring charges in
1996. On the other hand, depreciation of fixed assets is primarily a source
of "replenishment cash" -- cash generally needed to repair and replace assets
and maintain a going concern. Depreciation expense was $323 million in 1996
and $289 million in 1995.
Cash from net income plus goodwill amortization -- what we call "cash
earnings" -- is the primary funding source for growing ConAgra's capital
investment and earning power over the long term. That is why we focus on cash
earnings in our internal return on equity objective shown on page 4 of this
report. In 1996, cash earnings, excluding non-recurring charges, totaled
$615 million, up 8% from $567 million in 1995.
We do not intend that cash earnings replace net income as reported in our
financial statements, and cash earnings may not be a reliable measure of
liquidity or cash generated by operations. Furthermore, there is no broadly
accepted definition of cash earnings, and ConAgra's definition may not be
comparable to similarly titled measures used by other companies.
ConAgra financed its capital investment as shown in the "Capitalization"
table.
Capitalization
Dollars in millions
1996 1995 %Change
- --------------------------------------------------------------
Senior long-term debt $1,512.9 $1,770.0 (15)%
Other noncurrent liabilities 959.5 940.8 2
Subordinated long-term debt 750.0 750.0 -
Subsidiary's preferred
securities 525.0 525.0 -
Preferred
stockholders' equity -- 354.9 (100)
Common stockholders' equity 2,255.5 2,495.4 (10)
- --------------------------------------------------------------
Total capitalization $6,002.9 $6,836.1 (12)
==============================================================
In 1996, senior long-term debt decreased $257 million. Short-term
borrowings backed by long-term credit agreements and classified as long-term
decreased $116 million while other senior debt issues decreased a total of $141
million.
Other noncurrent liabilities consist of estimated postretirement health care
and pension benefits and reserves for estimated income tax, legal and
environmental liabilities Beatrice Company incurred before its acquisition by
ConAgra. It will require a number of years to resolve remaining issues related
to the Beatrice liabilities. Resolution over time will use cash, but is not
expected to affect earnings adversely because ConAgra believes reserves are
adequate.
In 1995, preferred stockholders' equity consisted almost entirely of
ConAgra's Class E $25 cumulative convertible preferred stock. In 1996, ConAgra
redeemed its Class E preferred stock. Most of the 14.2 million Class E
preferred shares were converted to 14.4 million shares of common stock. In
1996, ConAgra also redeemed its Class D cumulative convertible preferred stock.
Consequently, no preferred stock was outstanding at the end of 1996.
ConAgra's long-standing policy is to purchase on the open market shares of
the company's common stock to replace shares issued for conversion of preferred
stock, incentive programs and smaller acquisitions so that such issuance will
not dilute earnings per share. In 1996, ConAgra purchased on the open
market 17 million shares of the company's common stock at a cost of $664
million. These shares were used to cover redemption of the Class D and Class E
preferred stock and to replace common shares issued for incentive programs and
acquisitions.
Common stockholders' equity decreased $240 million in 1996 mainly because
dividends declared ($218 million) and the cost of shares purchased on the open
market exceeded the book value of preferred stock converted into common stock
and net income including non-recurring charges.
Financing Objectives
ConAgra's primary financing objective is to maintain a conservative balance
sheet. We define this as using appropriate levels of equity and long-term debt
to finance noncurrent assets and permanent working capital needs.
Short-term debt is used to finance liquid and seasonal asset requirements.
ConAgra's long-term and short-term debt objectives and results are shown
under "Financing" on page 4 of our annual report. ConAgra met its long-term
debt objective every year from 1976 through 1996, except 1991 and 1992 when we
temporarily exceeded our self-imposed long-term debt limitation due to the
Beatrice acquisition. ConAgra has met its short-term debt objective for
the past 21 years.
ConAgra has access to a wide variety of financing markets. Public debt
offerings and private debt placements provide long-term financing. At the end
of 1996, ConAgra's senior debt ratings were BBB+ (Duff & Phelps), Baa1
(Moody's) and BBB (Standard & Poor's), all investment grade ratings.
Sale of commercial paper and bank financing provide short-term credit.
Commercial paper borrowings are backed by multiyear bank credit facilities.
During 1996, short-term borrowing continued at interest rates significantly
below the prime rate. Short-term debt averaged $2.78 billion in 1996 compared
to $2.31 billion in 1995.
ConAgra's uses cancelable and noncancelable leases in its financing
activities, particularly for transportation equipment. In 1996, cancelable
lease expense was $120 million versus $119 million in 1995, and noncancelable
lease expense was $120 million versus $115 million in 1995.
To maintain a conservative financial position, ConAgra focuses on cash flow
as well as its balance sheet. ConAgra's plans incorporate cash flow sufficient
to meet financing obligations, maintain plants and pay stockholder dividends
even if a severe and unexpected decline in earnings occurs. This measure of
cash-flow adequacy provides an effective tool for managing the company's
leverage.
Asset Liquidity and Commodity Risk Management
ConAgra operates across the food chain, from basic agricultural inputs to
production and sale of branded consumer products. As a result, ConAgra uses
many different raw materials, the bulk of which are commodities. Raw materials
are generally available from several different sources, and ConAgra presently
believes that it can obtain these as needed.
Commodities are subject to price fluctuations which create price risk.
Generally, it is ConAgra's intent to hedge commodities in order to mitigate
this price risk. While this may tend to limit the company's ability to
participate in gains from commodity price fluctuations, it also tends to reduce
the risk of loss from changes in commodity prices.
Commodity price risk can be hedged by selling the end product at acceptable
fixed prices to credit-worthy customers, or by buying or selling offsetting
futures or options contracts on established commodity exchanges. The
particular hedging methods employed by ConAgra depend on a number of factors,
including availability of appropriate derivative contracts. At the end of 1996,
38% of ConAgra's total inventory was classified as "hedged commodity
inventory."
ConAgra's board of directors has established policies which limit the amount
of unhedged commodity inventory permissible for ConAgra's independent operating
companies. Processing company limits are expressed in terms of weeks of
commodity usage. Trading businesses are generally limited to a dollar risk
exposure stated in relation to equity capital.
ConAgra monitors its commodity positions on a daily basis through the use of
a companywide computer system. This system compares commodity positions with
unhedged commodity limits established for its independent operating companies.
The corporate risk officer monitors these positions and reports compliance to
the board of directors. ConAgra's total unhedged positions were well below
established corporate limits for 1994 through 1996.
Many of ConAgra's businesses are current asset intensive. Inventory and
accounts receivable were 1.8 and 1.7 times property, plant and equipment at the
end of 1996 and 1995 respectively. The seasonal nature and liquidity of
ConAgra's current asset investments explain the company's significant use
of short-term debt and emphasis on repaying short-term debt at year end.
ConAgra's reported net sales understate the degree to which current assets
turn over during the year. For 1996, total sales invoiced to customers were
approximately $30.4 billion versus $24.8 billion reported net sales. This is
because grain and feed ingredient merchandising transactions include only gross
margins in reported sales.
ConAgra's current ratio (current assets divided by current liabilities) was
1.07 to 1 at the end of 1996, 1.30 to 1 at the end of 1995 and 1.08 to 1 at
the end of 1994. The higher-than-normal current ratio at the end of 1995
reflected the prefunding of cash needs to repurchase common stock in
anticipation of conversion of the Class E preferred stock during 1996.
ConAgra's consolidated current ratio is a composite of various current
ratios appropriate for our individual businesses. We focus more on appropriate
use of short-term debt and trade credit financing than on the absolute level of
our current ratio. Many of ConAgra's businesses are able to generate
substantial trade credit which does not result in financing costs.
OPERATING RESULTS
Operating results for ConAgra's industry segments and individual businesses
were discussed extensively in the Business Review on pages 6 to 26 in this
report. See pages 4 and 5 for a review of ConAgra's financial objectives and
results. The discussion in this section addresses ConAgra's consolidated
operating results shown in the Consolidated Statements of Earnings, amplified
by Note 2 covering non-recurring charges. Unless otherwise indicated, the
discussion of earnings and earnings per share excludes the effect of
non-recurring charges in 1996.
Net sales increased 2.9% in 1996 to $24.8 billion, and 2.5% in 1995 to $24.1
billion.
Businesses contributing to the 1996 sales increase included crop
protection chemicals and fertilizer, grain processing, pork products, processed
meats, frozen foods, shelf-stable foods and potato products. The largest sales
decrease was in U.S. beef products where lower selling prices due to passing
through lower raw material costs reduced sales by more than $400 million.
Conversely, higher selling prices due to higher raw material costs increased
sales in some businesses, including grain processing and pork products.
Acquisitions, net of businesses divested, added approximately $100 million to
sales.
Businesses contributing to the 1995 sales increase included crop protection
chemicals and fertilizer, potato products, frozen foods, cheese products,
shelf-stable foods and grain processing. The net effect of businesses acquired
and businesses divested or discontinued was additive to sales by more than $150
million. Sales decreased in meat and poultry businesses as lower selling
prices due to lower raw material costs reduced sales by approximately $400
million.
In 1996, gross margin (net sales minus cost of goods sold) increased $166
million or 5.0%. Gross margin as a percent of net sales increased to 14.1% in
1996 from 13.8% in 1995 due to margin improvement in businesses including crop
protection chemicals and fertilizer, specialty food ingredients, grain
merchandising and shelf-stable foods. In 1995, gross margin increased $269
million, or 8.8%. Gross margin as a percent of net sales increased to 13.8% in
1995 from 13.0% in 1994 due to margin improvement in a number of businesses
including frozen foods, shelf-stable foods, potato products, beef and pork
products and crop protection chemicals and fertilizer.
Selling, administrative and general expenses increased $48 million, or 2.2%,
in 1996 and $139 million, or 6.6%, in 1995. Selling, administrative and
general expenses as a percent of net sales was relatively constant at 9.2% in
1996 and 1995, and 8.9% in 1994.
Interest expense increased 9.6% in 1996 to $305 million, mainly due to
higher short-term borrowings associated with higher commodity prices. Interest
expense increased 9.4% in 1995 to $278 million, mainly due to higher short-term
interest rates.
Pretax earnings increased 11.0% to $916.4 million in 1996 and 14.7% to
$825.9 million in 1995. Including non-recurring charges, pretax earnings were
$408.6 million in 1996.
Businesses contributing to the pretax earnings increase in 1996 included
crop protection chemicals and fertilizer, specialty food ingredients, commodity
services, grain merchandising, chicken products, cheese products, frozen foods
and shelf-stable foods. Businesses with lower pretax earnings included U.S.
and Australia beef products, pork products and seafood, largely due to a
business disposition. Acquisitions, notably Canada Malting and the Van Camp's
bean and Wolf Brand chili business, contributed to pretax earnings growth in
1996.
Businesses contributing to the pretax earnings increase in 1995 included
crop protection chemicals and fertilizer, specialty grain processing, commodity
services, pork and beef products, turkey products, cheese products, frozen
foods, shelf-stable foods, seafood and potato products. Businesses with lower
pretax earnings included chicken products, processed meats, specialty microwave
products, private label products, and dried fruit and nuts, which was
discontinued in 1995. Economic problems in Mexico had a negative effect on
the earnings of several ConAgra businesses in 1995.
Net income increased 10.0% to $545.2 million in 1996, and 13.4% to $495.6
million in 1995. Net income had lower percentage gains than pretax earnings
due to higher effective income tax rates. The effective income tax rate
increased from 39.3% in 1994 to 40.0% in 1995 and 40.5% in 1996. Including
non-recurring charges, net income was $188.9 million in 1996.
Net income available for common stock (net income minus preferred dividends)
increased 13.8% to $536.6 million in 1996, and 14.2% to $471.6 million in 1995.
In 1996, net income available for common stock increased significantly more
than net income because preferred dividends dropped from $24.0 million in
1995 to $8.6 million in 1996 due to the redemption of the Class E preferred
stock during 1996. Including non-recurring charges, net income available for
common stock was $180.3 million in 1996.
Earnings per share increased 13.6% to $2.34 in 1996, and 13.8% to $2.06 in
1995. Including non-recurring charges, earnings per share were $.79 in 1996.
3 bar graphs:
1992 1993 1994 1995 1996
- ----------------------------------------------------------------------
Net Sales In billions $21.2 $21.5 $23.5 $24.1 $24.8
Net Income In millions $372.4 $391.5* $437.1 $495.6 $545.2*
Cash Earnings*
In millions $443.8 $463.2* $510.7 $567.0 $614.7*
*Cash earnings are net income plus goodwill amortization.
In 1993, net income is before the cumulative effect of adopting
SFAS 106. In 1996, net income is before non-recurring charges
of $356.3 million. Including the charges, in 1996 net income
was $188.9 million and cash earnings were $258.4 million.
CONAGRA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MAY 26, 1996 AND MAY 28, 1995
Dollars in millions except per share amount
ASSETS 1996 1995
Current assets
Cash and cash equivalents $ 113.7 $ 60.0
Receivables, less allowance for doubtful
accounts of $52.1 and $63.9 (Note 3) 1,428.4 1,540.0
Inventories (Note 4) 3.573.4 3,167.3
Prepaid expenses 451.4 372.9
-------- --------
Total current assets 5,566.9 5,140.2
-------- --------
Property, plant and equipment
Land 150.3 141.2
Buildings, machinery and equipment 4,214.3 3,953.7
Other fixed assets 244.4 227.2
Construction in progress 362.3 215.7
-------- --------
4,971.3 4,537.8
Less
Accumulated depreciation (1,915.0) (1,741.8)
Valuation reserve related to
restructuring (Note 2) (235.8) -
-------- --------
Property, plant and equipment, net 2,820.5 2,796.0
Brands, trademarks and goodwill, at cost
less accumulated amortization of $489.6
and $420.9 2,405.6 2,420.1
Other assets 403.6 444.7
-------- --------
$11,196.6 $10,801.0
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
Current liabilities
Notes payable $ 416.3 $ -
Current installments of long-term debt 142.5 47.9
Accounts payable 1,856.9 1,574.8
Advances on sales 1,390.9 856.6
Accrued payroll 304.1 273.2
Other accrued liabilities 1,083.0 1,212.4
-------- --------
Total current liabilities 5,193.7 3,964.9
-------- --------
Senior long-term debt, excluding
current installments (Note 6) 1,512.9 1,770.0
Other noncurrent liabilities (Note 7) 959.5 940.8
Subordinated debt (Note 6) 750.0 750.0
Preferred securities of subsidiary company
(Note 8) 525.0 525.0
Preferred shares (Note 8) - 354.9
Common stockholders' equity (Notes 9 and 10)
Common stock of $5 par value, authorized 1,200,000,000
shares; issued 252,990,917 and 252,869,958 1,264.9 1,264.3
Additional paid-in capital 423.1 409.9
Retained earnings 1,683.5 1,712.5
Foreign currency translation adjustment (39.1) (44.9)
Less treasury stock, at cost,
common shares 9,834,464 and 7,172,312 (390.0) (206.9)
-------- --------
2,942.4 3,134.9
Less unearned restricted stock and value
of 16,014,644 and 19,423,916 common shares held
in Employee Equity Fund (Note 9) (686.9) (639.5)
-------- --------
Total common stockholders' equity 2,255.5 2,495.4
-------- --------
$11,196.6 $10,801.0
========= =========
The accompanying notes are an integral part of the
of the consolidated financial statements.
CONAGRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE FISCAL YEARS ENDED MAY 26, 1996, MAY 28, 1995 AND MAY 29, 1994
In millions except per share amounts
1996 1995 1994
Net sales $24,821.6 $24,112.3 $23,517.4
Costs and expenses
Cost of goods sold 21,322.2 20,778.4 20,452.2
Selling, administrative and general
expenses 2,278.1 2,229.9 2,091.0
Interest expense (Note 6) 304.9 278.1 254.2
Non-recurring charges (Note 2) 507.8 - -
--------- --------- ---------
24,413.0 23,286.4 22,797.4
--------- --------- ---------
Income before income taxes 408.6 825.9 720.0
Income taxes (Note 11) 219.7 330.3 282.9
--------- --------- ---------
Net Income 188.9 495.6 437.1
Less preferred dividends 8.6 24.0 24.0
--------- --------- ---------
Net income available for common
stock $ 180.3 $ 471.6 $ 413.1
========= ========= =========
Net Income per common and common
equivalent share $ .79 $ 2.06 $ 1.81
========= ========= =========
Weighted average number of common and
common equivalent shares outstanding 229.5 229.0 228.5
========= ========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
CONAGRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
FOR FISCAL YEARS ENDED MAY 26, 1996, MAY 28, 1995 AND MAY 29, 1994
Columnar amounts in millions
Foreign EEF*:
Additional Currency Stock
Common Common Paid-in Retained Translation Treasury and
Shares Stock Capital Earnings Adjustment Stock Other Total
Balance at May 30, 1993 252.3 $1,261.3 $267.1 $1,167.0 $(14.6) $ (12.7) $(613.6) $2,054.5
Shares issued
Stock option and incentive plans 0.3 1.7 5.2 1.4 8.3
EEF*: stock option, incentive and other
employee benefit plans (16.3) 46.7 30.4
Fair market valuation of EEF shares 81.6 (81.6) -
Acquisitions 0.2 0.5 5.7 6.4
Conversion of preferred stock 0.1 0.4 (0.1) 0.3
Shares acquired
Incentive plans (4.8) (4.8)
Treasury shares purchased (105.4) (105.4)
Foreign currency translation adjustment (18.5) (18.5)
Dividends declared
Preferred stock (24.0) (24.0)
Common stock, $.70 per share (157.4) (157.4)
Net income 437.1 437.1
----- -------- ------ -------- ------ ------- ------- --------
Balance at May 29, 1994 252.7 1,263.6 338.0 1,422.7 (33.1) (117.2) (647.1) 2,226.9
Shares issued
Stock option and incentive plans 0.2 0.5 1.6 (1.8) 0.3
EEF*: stock option, incentive
and other employee benefit plans (9.5) 82.7 73.2
Fair market valuation of EEF shares 74.6 (74.6) -
Acquisitions 0.1 5.1 41.2 46.4
Conversion of preferred stock 0.1 0.1 0.5 0.7
Shares acquired
Incentive plans (13.6) 1.3 (12.3)
Treasury shares purchased (117.8) (117.8)
Foreign currency translation adjustment (11.8) (11.8)
Dividends declared
Preferred stock (24.0) (24.0)
Common stock, $.80 per share (181.8) (181.8)
Net income 495.6 495.6
----- -------- ------ -------- ------ ------- ------- --------
Balance at May 28, 1995 252.9 1,264.3 409.9 1,712.5 (44.9) (206.9) (639.5) 2,495.4
Shares issued
Stock option and incentive plans 0.1 0.4 1.8 2.2
EEF*: stock option, incentive
and other employee benefit plans (0.9) 95.9 95.0
Fair market valuation of EEF shares 145.4 (145.4) -
Acquisitions 0.1 0.9 2.3 3.3
Shares acquired
Incentive plans (9.7) 2.1 (7.6)
Treasury shares purchased (664.0) (664.0)
Conversion of preferred stock into common 0.1 (134.0) 488.3 354.4
Foreign currency translation adjustment 5.8 5.8
Dividends declared
Preferred stock (8.6) (8.6)
Common stock, $.92 per share (209.3) (209.3)
Net income 188.9 188.9
----- -------- ------ -------- ------ ------- ------- --------
Balance at May 26, 1996 253.0 $1,264.9 $423.1 $1,683.5 $(39.1) $(390.0) $(686.9) $2,255.5
===== ======== ====== ======== ====== ======= ======= ========
The accompanying notes are an integral part of the consolidated financial
statements.
*Employee Equity Fund (Note 9)
CONAGRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED MAY 26, 1996, MAY 28, 1995 AND MAY 29, 1994
Dollars in millions
Increase (Decrease) in cash and cash equivalents 1996 1995 1994
Cash flows from operating activities
Net income $ 188.9 $ 495.6 $ 437.1
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and other amortization 338.4 304.4 294.8
Goodwill amortization 69.5 71.4 73.6
Non-recurring charges 507.8 - -
Other noncash items (includes nonpension postretirement
benefits) 124.3 107.3 38.8
Change in assets and liabilities before effects from business
acquisitions and non-recurring charges
Receivables (125.4) (150.1) (250.4)
Inventories and prepaid expenses (537.9) (235.1) (379.6)
Accounts payable and accrued liabilities 596.3 41.6 476.7
-------- ------- -------
Net cash flows from operating activities 1,161.9 635.1 691.0
-------- ------- -------
Cash flows from investing activities
Additions to property, plant and equipment (668.5) (427.8) (395.0)
Payment for business acquisitions (467.1) (378.8) (61.2)
Sale of businesses and property, plant and equipment 388.8 118.0 40.3
Monfort Finance Company notes receivable and other items 143.4 (6.6) (3.5)
-------- ------- -------
Net cash flows from investing activities (603.4) (695.2) (419.4)
-------- ------- -------
Cash flows from financing activities
Net short-term borrowings 503.7 (419.0) (153.8)
Proceeds from issuance of long-term debt - 384.7 172.1
Repayment of long-term debt (165.0) (147.3) (206.3)
Issuance of preferred securities of subsidiary company - 425.0 100.0
Cash dividends paid (215.5) (199.6) (176.0)
Treasury stock purchases (664.0) (117.7) (105.4)
Employee Equity Fund stock transactions 21.8 32.9 8.9
Other items 14.2 (5.3) (1.7)
-------- ------- -------
Net cash flows from financing activities (504.8) (46.3) (362.2)
-------- ------- -------
Net increase (decrease) in cash and cash equivalents 53.7 (106.4) (90.6)
Cash and cash equivalents at beginning of year 60.0 166.4 257.0
-------- ------- -------
Cash and cash equivalents at end of year $ 113.7 $ 60.0 $ 166.4
======== ======= =======
Non-cash financing activities
Treasury stock issued for conversion of Class E Cumulative
Convertible Preferred Stock into common stock (Note 8) $ 482.2 $ - $ -
======== ======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
CONAGRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MAY 26, 1996, MAY 28, 1995 and MAY 29, 1994
Columnar amounts in millions except share and per share amounts
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year - The fiscal year of ConAgra ("ConAgra" or the
"Company") ends the last Sunday in May. The fiscal years for
the consolidated financial statements presented all consist of
52-week periods.
The accounts of two wholly owned subsidiaries, ConAgra
Fertilizer Company and United Agri Products, Inc., have been
consolidated on the basis of a year ending in February. Such
fiscal period corresponds with those companies' natural business
year.
Basis of Consolidation - The consolidated financial statements
include the accounts of ConAgra, Inc. and all majority-owned
subsidiaries, except certain foreign companies that are not
material to the Company. The investments in and the operating
results of these foreign companies and 50%-or-less-owned
entities are included in the financial statements on the basis
of the equity method of accounting. All significant
intercompany investments, accounts and transactions have been
eliminated.
In the first half of fiscal 1996 ConAgra acquired the
outstanding common stock of Canada Malting Co., Limited, ("CMC")
a producer of malted barley, for approximately U.S. $300 million
in a transaction accounted for as a purchase. The entity was
consolidated at that date. During the fourth quarter of fiscal
1996, the Company sold a 50-percent interest in CMC to an
unrelated party and accordingly accounts for the remaining
interest on the equity method of accounting. The Company did
not realize a gain or loss on the sale.
The Company's financial businesses, Geldermann, Inc. (a
commodity brokerage business sold in fiscal 1995) and Monfort
Finance Company (a finance company), are included in the
consolidated financial statements.
Use of Estimates - Preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions. These
estimates or assumptions affect reported amounts of assets,
liabilities, revenue and expenses as reflected in the financial
statements. Actual results could differ from estimates.
Inventories - Grain, flour and major feed ingredient inventories
are hedged to the extent practicable and are generally stated at
market, including adjustment to market of open contracts for
purchases and sales. Short-term interest expense incurred to
finance hedged inventories is included in cost of sales in order
to properly reflect gross margins on hedged transactions.
Inventories not hedged are priced at the lower of average cost
or market.
Property and Depreciation - Property, plant and equipment are
carried at cost. Depreciation has been calculated using
primarily the straight-line method over the estimated useful
lives of the respective classes of assets as follows:
Buildings 15 - 40 years
Machinery and equipment 5 - 20 years
Other assets 5 - 15 years
Brands, Trademarks, Goodwill and Long-Lived Assets - Brands and
goodwill arising from the excess of cost of investment over
equity in net assets at date of acquisition and trademarks are
amortized using the straight-line method, principally over a
period of 40 years. Prior to fiscal 1996, the carrying value of
such brands, trademarks, goodwill and long-lived assets was
evaluated on the basis of management's estimates of future
undiscounted operating income associated with the acquired
businesses. In fiscal 1996, the Company early adopted Statement
of Financial Accounting Standards No. 121, ("SFAS No. 121"),
Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of. See Note 2.
Recoverability of goodwill not identified with impaired assets
under SFAS No. 121 will continue to be evaluated on the basis of
management's estimates of future undiscounted operating income
associated with the acquired business.
Net Sales - Gross margins earned from grain and feed ingredients
merchandised are included in net sales.
Earnings per Share - Earnings per common and common equivalent
share are calculated on the basis of weighted average
outstanding common shares and, when applicable, those
outstanding options that are dilutive and after giving effect to
preferred stock dividend requirements. Fully diluted earnings
per share did not differ significantly from primary earnings per
share in any period presented.
Stock-Based Compensation - In 1995 the Financial Accounting
Standards Board issued Statement of Financial Accounting
Standards No. 123 ("SFAS No. 123"), Accounting for Stock-Based
Compensation, which is effective for fiscal 1997. Under this
standard, companies may continue to use the intrinsic value
methodology prescribed by Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees, or may apply a
fair value methodology used in SFAS No. 123. As the Company
anticipates continuing to account for stock-based compensation
using the intrinsic method, SFAS No. 123 will not have an impact
on the Company's reported results of operations or financial
position.
Fair Values of Financial Instruments - Unless otherwise
specified, the Company believes the book value of financial
instruments approximates their fair value.
2. NON-RECURRING CHARGES
Non-recurring charges include amounts attributable to a
restructuring plan, early adoption of SFAS No. 121 and
completion of a business disposition program during fiscal 1996,
and are comprised of the following:
Before After
Income Income
Tax Tax
Restructuring plan $353.0 $258.6
Adoption of SFAS No. 121 99.8 79.8
Disposition program 55.0 17.9
------ ------
Total charges $507.8 $356.3
====== ======
The effect of these three items on net income was $1.55 per
common share.
In the fourth quarter of fiscal 1996, the Company adopted a
restructuring plan designed to streamline its production base,
improve efficiency and enhance its competitiveness. The
restructuring includes closing or reconfiguring a number of
production facilities and businesses and reducing the workforce
by approximately 6,300 employees, most of whom work in the
facilities to be closed.
Restructuring charges include approximately $60 million in cash
charges primarily related to severance costs, substantially all
of which will be paid in fiscal 1997. The balance of the
restructuring charge relates to non-cash charges on assets to be
closed and disposed of. The Company anticipates substantial
completion of its restructuring in fiscal 1997.
In addition, the Company early adopted SFAS No. 121 during the
fourth quarter of 1996. In this regard, certain long-lived
assets (primarily fixed assets) were identified as impaired.
The Company considers continued operating losses, or significant
and long-term changes in industry conditions to be its primary
indicators of potential impairment. An impairment was
recognized when the future undiscounted cash flows of each asset
was estimated to be insufficient to recover its related carrying
value. As such, the carrying values of these assets were
written down to the Company's estimates of fair value. Fair
value was based on sales of similar assets, or other estimates
of fair value such as discounting estimated future cash flows.
Considerable management judgment is necessary to estimate
discounted future cash flows. Accordingly, actual results could
vary significantly from such estimates. None of the assets
affected by this action are currently held for sale.
The non-cash charge for adoption of this standard resulted from
changes in industry conditions, continued operating losses and
from the Company's grouping assets at a lower level than under
its previous method of accounting. Under the Company's previous
policy for evaluating impairment, assets were generally grouped
at major operating entity levels, and these levels were reviewed
for impairment. On the basis of these levels of grouping, no
impairment charge was required for fiscal 1995 or 1994.
In addition, the Company recognized a pretax charge relating to
previously announced plans to dispose of certain non-core
businesses. By the fourth quarter of fiscal 1996, the only
significant unsold property in this program was Country General,
a specialty retailer. Following disappointing Christmas and
Spring selling seasons, the Company decided not to proceed with
sale of Country General at this time. The resulting charge is
the net cumulative loss on properties disposed of through fiscal
1996.
3. RECEIVABLES
The Company has an agreement to sell interests in pools of
receivables, with limited recourse, in an amount not to exceed
$550 million at any one time. Participation interests in new
receivables may be sold as collections reduce previously sold
participation interests. The participation interests are sold
at a discount which is included in Selling, Administrative and
General Expenses in the Consolidated Statements of Earnings.
Gross proceeds from the sales were $545 and $500 million at
fiscal year-end 1996 and 1995 respectively.
4. INVENTORIES
The major classes of inventories are as follows:
1996 1995
Hedged commodities $1,369.4 $ 925.4
Food products and livestock 1,219.9 1,232.2
Agricultural chemicals, fertilizer and feed 399.4 323.1
Retail merchandise 122.7 196.4
Other, principally ingredients and supplies 462.0 490.2
-------- --------
$3,573.4 $3,167.3
======== ========
5. SHORT-TERM CREDIT FACILITIES AND BORROWINGS
At May 26, 1996, the Company has credit lines from banks which
total approximately $5.2 billion, including: $1.75 billion of
long-term revolving credit facilities maturing in September
2000; $1.75 billion short-term revolving credit facilities
maturing in September 1996; and uncompensated bankers'
acceptance and money market loan facilities approximating $1.7
billion. Borrowings under the revolver agreements are at or
below prime rate and may be prepaid without penalty. The
Company pays fees for its revolving credit facilities.
The Company finances its short-term needs with bank borrowings,
commercial paper borrowings and bankers' acceptances. The
average consolidated short-term borrowings outstanding under
these facilities for the 1996 fiscal year were $2,784.3 million.
This excludes an average of $809.3 million of short-term
borrowings which were classified as long-term throughout the
fiscal year (see Note 6). The highest period-end short-term
indebtedness during fiscal 1996 was $3,963.4 million. Short-
term borrowings were at rates below prime. The weighted average
interest rate was 5.82% and 5.47%, respectively, for fiscal 1996
and 1995.
Subsequent to fiscal 1996, ConAgra secured an additional $1.02
billion of revolving credit commitments from several of its
banks. This commitment extends from June 1, 1996 to November
30, 1996.
6. SENIOR LONG-TERM DEBT, SUBORDINATED DEBT AND LOAN AGREEMENTS
1996 1995
Senior Debt
Commercial paper backed by long-term revolving
credit agreements $ 758.0 $ 874.3
9.75% senior debt due in 1998 300.0 300.0
9.875% senior debt due in 2006 100.0 100.0
7.22% to 9.8% publicly-issued unsecured
medium-term notes due in various amounts
through 2005 189.5 263.5
9.87% to 9.95% unsecured senior notes due in
various amounts in 1997 through 2010 88.5 97.8
Industrial Development Revenue Bonds
(collateralized by plant and equipment)
due on various dates through 2015 at
an average rate of 7.15% 35.9 38.6
Miscellaneous unsecured 41.0 95.8
-------- --------
Total senior debt 1,512.9 1,770.0
-------- --------
Subordinated Debt
9.75% subordinated debt due in 2021 400.0 400.0
7.375% to 7.4% subordinated debt due in 2005 350.0 350.0
-------- --------
Total subordinated debt 750.0 750.0
-------- --------
Total long-term debt, excluding current
installments $2,262.9 $2,520.0
======== ========
The aggregate minimum principal maturities of the long-term debt
for each of the five fiscal years following May 26, 1996 are as
follows:
1997 $142.5
1998 352.5
1999 53.2
2000 19.5
2001 776.3
Under the long-term credit facility referenced in Note 5, the
Company has agreements that allow it to borrow up to $1.75
billion through September 2000.
The most restrictive note agreements (the revolving credit
facilities and certain privately placed long-term debt) require
the Company to repay the debt if Consolidated Funded Debt
exceeds 60% of Consolidated Capital Base or if Fixed Charges
coverage is less than 1.75 to 1.0 as such terms are defined in
applicable agreements.
Net interest expense consists of:
1996 1995 1994
Long-term debt $212.5 $215.0 $209.8
Short-term debt 139.8 96.1 79.6
Interest income (41.6) (28.1) (33.5)
Interest capitalized (5.8) (4.9) (1.7)
------ ------ ------
$304.9 $278.1 $254.2
====== ====== ======
Net interest paid was $309.2 million, $279.9 million and $242.1
million in fiscal 1996, 1995 and 1994, respectively.
Short-term debt interest expense of $27.5 million, $17.5 million
and $12.7 million in fiscal 1996, 1995 and 1994, respectively,
incurred to finance hedged inventories, has been charged to cost
of goods sold.
The carrying amount of long-term debt (including current
installments) was $2,405.4 million and $2,567.9 million as of
May 26, 1996 and May 28, 1995, respectively. Based on current
market rates primarily provided by outside investment bankers,
the fair value of this debt at May 26, 1996 and May 28, 1995 was
estimated at $2,555.9 and $2,760.2 million, respectively. The
Company's long-term debt is generally not callable until
maturity.
7. OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities consist of estimated liabilities of
Beatrice Company (acquired in fiscal 1991) and estimated
postretirement health care and pension benefits as follows:
1996 1995
Income tax, legal and environmental
liabilities primarily associated with
the Company's acquisition of Beatrice
Company $ 488.2 $ 612.6
Estimated postretirement health care
and pensions 560.0 523.4
-------- --------
1,048.2 1,136.0
Less estimated current portion 88.7 195.2
-------- --------
$ 959.5 $ 940.8
======== ========
8. PREFERRED SECURITIES OF SUBSIDIARY COMPANY AND PREFERRED SHARES
ConAgra Capital, L.C., an indirectly controlled subsidiary of
the Company, has the following Preferred Securities outstanding:
4 million shares of 9% Series A Cumulative Preferred ("Series
A Securities") - Distributions are payable monthly.
7 million shares of Series B Adjustable Rate Cumulative
Preferred ("Series B Securities") - Distributions are payable
monthly at a rate per annum which is adjusted quarterly to
95% of the highest of three U.S. Treasury security indices,
subject to a floor of 5.0% and a ceiling of 10.5% per annum.
The distribution rate in fiscal 1996 ranged from 5.79% to
6.60%.
10 million shares of 9.35% Series C Cumulative Preferred
("Series C Securities") - Distributions are payable monthly.
For financial statement purposes, distributions on these
Securities are included in Selling, Administrative and General
Expenses in the Consolidated Statement of Earnings as they
represent minority interests.
The above Securities were issued at a price of $25 per share.
All such Securities are non-voting (except in certain limited
circumstances), and are guaranteed on a limited basis by ConAgra
and, in certain limited circumstances, are exchangeable for debt
securities of ConAgra. The Securities are redeemable at the
option of ConAgra Capital, L.C. (with ConAgra's consent) in
whole or in part, on or after May 31, 1999 with respect to
Series A Securities, June 30, 1999 with respect to Series B
Securities, and February 29, 2000 with respect to Series C
Securities, at $25 per security plus accumulated and unpaid
distributions to the date fixed for redemption.
In connection with the issuance of the Series B Securities, the
Company entered into a swap with a money center bank which
effectively changes the distribution rate to a function of the
three month LIBOR on $175.0 million until May 31, 1998. The net
cost of this swap in fiscal 1996 and 1995 was insignificant.
The estimated fair value of this swap agreement was an
obligation of $2.0 million and $2.4 million as of May 26, 1996
and May 28, 1995, respectively.
The Company has authorized shares of preferred stock as follows:
Class B - $50 par value; 150,000 shares
Class C - $100 par value; 250,000 shares
Class D - without par value; 1,100,000 shares
Class E - without par value; 16,550,000 shares
There are no preferred shares issued or outstanding as of May
26, 1996.
In 1996 the Company redeemed its Class D cumulative convertible
preferred stock at a redemption price of $25 per share plus
accrued and unpaid dividends thereon to the redemption date.
Approximately 25,000 shares of Class D preferred stock were
converted into shares of common stock. The remaining shares of
Class D preferred stock (approximately 2,000) were redeemed for
cash.
The Company also redeemed its Class E cumulative convertible
preferred stock during fiscal 1996. Approximately 14.2 million
shares were converted into common stock and approximately 18,000
shares were redeemed for cash. The Company used common shares
acquired in open market purchases at an average aggregate cost
of $482.2 million for purposes of effecting the preferred stock
conversion.
9. EMPLOYEE EQUITY FUND
In fiscal 1993 the Company established a $700 million Employee
Equity Fund (EEF), a newly formed grantor trust, to pre-fund
future stock-related obligations of the Company's compensation
and benefit plans. The EEF supports existing, previously
approved employee plans which use ConAgra common stock and does
not change those plans or the amounts of stock expected to be
issued for those plans.
For financial reporting purposes the EEF is consolidated with
ConAgra. The fair market value of the shares held by the EEF is
shown as a reduction to common stockholders' equity in the
Company's consolidated balance sheets. All dividends and
interest transactions between the EEF and ConAgra are
eliminated. Differences between cost and fair value of shares
held and/or released are included in consolidated additional
paid-in capital.
Following is a summary of shares held by the EEF:
1996 1995
Shares held 16,014,644 19,423,916
Cost - per share $ 29.105 $ 29.105
Cost - total 466.1 565.3
Fair market value - per share $ 42.000 $ 32.250
Fair market value - total 672.6 626.4
10.STOCK OPTIONS AND RIGHTS
Stock option plans approved by the stockholders provide for
granting of options to employees for purchase of common stock
generally at prices equal to fair market value at the time of
grant, and for issuance of restricted or bonus stock without
direct cost or at reduced cost to the employee. During fiscal
1996, 1995 and 1994, 98,000 shares, 20,000 shares and 20,000
shares of restricted stock were issued, respectively. The value
of the restricted and bonus stock, equal to fair market value at
the time of grant, is being amortized as compensation expense or
will be paid by a reduction in current and future incentive
compensation liabilities to the employee. This compensation
expense was not significant for fiscal 1996, 1995 and 1994.
Generally, options granted become exercisable over a five-year
period and expire ten years after the date of grant. For
participants under the long-term senior management incentive
plan, options are exercisable under various vesting schedules.
Option shares and prices are adjusted for common stock splits
and changes in capitalization.
The changes in the outstanding stock options during the three
years ended May 26, 1996 are summarized below:
Shares
(in Option Price
millions) Per Share-Range
Balance at May 30, 1993 10.1 $ 2.94 - $32.63
Granted 2.7 25.25 - 26.50
Exercised (1.0) 2.94 - 25.38
Canceled (0.1) 17.33 - 30.83
----
Balance at May 29, 1994 11.7 5.56 - 32.63
Granted 2.8 30.75 - 33.13
Exercised (1.3) 5.56 - 31.50
Canceled (0.2) 13.78 - 31.50
----
Balance at May 28, 1995 13.0 6.56 - 33.13
Granted 2.7 35.75 - 46.63
Exercised (2.4) 6.56 - 40.00
Canceled (2.2) 9.67 - 40.00
----
Balance at May 26, 1996 11.1 9.67 - 46.63
====
Exercisable at May 26, 1996 6.2
====
At May 26, 1996, approximately 9.0 million shares were reserved
for granting additional options and restricted or bonus stock
awards.
Each share of common stock carries with it one preferred stock
purchase right ("Right"). The Rights become exercisable ten
days after a person (an "Acquiring Person") acquires or
commences a tender offer for 15% or more of the Company's common
stock. Each Right entitles the holder to purchase one one-
thousandth of a share of a new series Class E Preferred Stock at
an exercise price of $200, subject to adjustment. The
Rights expire on July 12, 2006, and may be redeemed at the option
of the Company at $.01 per Right, subject to adjustment. Under
certain circumstances, if (i) any person becomes an Acquiring
Person or (ii) the Company is acquired in a merger or other
business combination after a person becomes an Acquiring Person,
each holder of a Right (other than the Acquiring Person) will
have the right to receive, upon exercise of the Right, shares of
common stock (of the Company under (i) and of the acquiring
company under (ii)) having a value of twice the exercise price
of the Right. The Rights were issued pursuant to a dividend
declared by the Company's Board of Directors on July 12, 1996
payable to stockholders of record on July 24, 1996. Prior
rights, exercisable in similar circumstances for shares of the
Company's common stock, will expire according to their terms on
July 24, 1996. At May 26, 1996, the Company has reserved
243,156,453 shares of common stock for exercise of the Rights.
11.INCOME TAXES
The provision for income taxes includes the following:
1996 1995 1994
Current
Federal $186.9 $243.9 $222.3
State 34.8 49.2 43.9
Foreign 37.1 14.7 16.2
------ ------ ------
258.8 307.8 282.4
------ ------ ------
Deferred
Federal (26.4) 20.3 0.4
State (3.0) 2.2 0.1
Foreign (9.7) - -
------ ------ ------
(39.1) 22.5 0.5
------ ------ ------
$219.7 $330.3 $282.9
====== ====== ======
Income taxes computed by applying statutory rates to income
before income taxes are reconciled to the provision for income
taxes set forth in the Consolidated Statements of Earnings as
follows:
1996 1995 1994
Computed U.S. federal income taxes $143.0 $289.1 $252.0
State income taxes, net of U.S.
federal tax benefit 20.7 33.4 28.5
Nondeductible amortization of goodwill
and other intangibles 21.7 24.4 26.1
Export and jobs tax credits (9.4) (8.6) (14.1)
Permanent differences due to
non-recurring charges 45.8 - -
Other (2.1) (8.0) (9.6)
------ ------ ------
$219.7 $330.3 $282.9
====== ====== ======
Income taxes paid were $236.3 million, $326.4 million and $203.9
million in fiscal 1996, 1995 and 1994, respectively. The
Internal Revenue Service has examined the Company's tax returns
through fiscal 1989. The IRS has proposed certain adjustments,
some of which are being contested by the Company. The Company
believes that it has made adequate provisions for income taxes
payable.
The tax effect of temporary differences and carryforwards that
give rise to significant portions of deferred tax assets and
liabilities consist of the following:
1996 1995
Assets Liabilities Assets Liabilities
Depreciation and
amortization $ - $322.7 $ - $293.2
Nonpension postretirement
benefits 170.5 - 170.2 -
Other noncurrent liabilities
which will give rise to
future tax deductions 266.3 - 312.6 -
Deferred state taxes 24.3 - 36.6 -
Accrued expenses 43.2 - 50.2 -
Others 58.6 87.0 65.0 119.5
Non-recurring charges 115.7 - - -
------ ------ ------ ------
$678.6 $409.7 $634.6 $412.7
====== ====== ====== ======
12.COMMITMENTS
The Company leases certain facilities and transportation
equipment under agreements which expire at various dates.
Management expects that in the normal course of business, leases
that expire will be renewed or replaced by other leases.
Substantially all leases require payment of property taxes,
insurance and maintenance costs in addition to rental payments.
A summary of rent expense charged to operations follows:
1996 1995 1994
Cancelable $120.2 $119.0 $101.8
Noncancelable 119.6 115.1 130.0
------ ------ ------
$239.8 $234.1 $231.8
====== ====== ======
A summary of noncancelable operating lease commitments for
fiscal years following May 26, 1996 is as follows:
Type of
Property
Real Trans-
and Other portation
Property Equipment
1997 $ 79.9 $ 40.8
1998 67.3 36.5
1999 58.0 30.2
2000 45.2 19.6
2001 32.1 12.2
Later years 89.3 4.8
------ ------
$371.8 $144.1
====== ======
In connection with its trading activities, the Company had
letters of credit and performance bonds outstanding at May 26,
1996 aggregating approximately $350.6 million.
13.CONTINGENCIES
In fiscal 1991, ConAgra acquired Beatrice Company ("Beatrice").
As a result of the acquisition and the significant pre-
acquisition tax and other contingencies of the Beatrice
businesses and its former subsidiaries, the consolidated post-
acquisition financial statements of ConAgra reflected
significant liabilities and valuation allowances associated with
the estimated resolution of these contingencies.
As a result of a settlement reached with the Internal Revenue
Service in fiscal 1995, ConAgra released $230.0 million of a
valuation allowance and reduced non-current liabilities by
$135.0 million, with a resulting reduction of goodwill
associated with the Beatrice acquisition of $365.0 million.
Federal income tax returns of Beatrice for its fiscal 1990 and
various state tax returns remain open. However, after taking
into account the foregoing adjustments, management believes that
the ultimate resolution of all remaining pre-acquisition
Beatrice tax contingencies should not exceed the reserves
established for such matters.
Beatrice is also engaged in various litigation and environmental
proceedings related to businesses divested by Beatrice prior to
its acquisition by ConAgra. The environmental proceedings
include litigation and administrative proceedings involving
Beatrice's status as a potentially responsible party at 43
Superfund, proposed Superfund or state-equivalent sites.
Beatrice has paid or is in the process of paying its liability
share at 40 of these sites. Beatrice has established substantial
reserves for these matters. The environmental reserves are
based on Beatrice's best estimate of its undiscounted
remediation liabilities, which estimates include evaluation of
investigatory studies, extent of required cleanup, the known
volumetric contribution of Beatrice and other potentially
responsible parties and Beatrice's prior experience in
remediating sites. Management believes the ultimate resolution
of such Beatrice legal and environmental contingencies should
not exceed the reserves established for such matters.
ConAgra is party to a number of other lawsuits and claims
arising out of the operation of its businesses. After taking
into account liabilities recorded for all of the foregoing
matters, management believes the ultimate resolution of such
matters should not have a material adverse effect on ConAgra's
financial condition, results of operation or liquidity.
14.PENSION AND POSTRETIREMENT BENEFITS
Retirement Pension Plans
The Company and its subsidiaries have defined benefit retirement
plans ("Plan") for eligible salaried and hourly employees.
Benefits are based on years of credited service and average
compensation or stated amounts for each year of service.
Consolidated pension costs consist of the following:
1996 1995 1994
Plan Accumulated Plan Accumulated Plan Accumulated
Assets Benefits Assets Benefits Assets Benefits
Exceed Exceed Exceed Exceed Exceed Exceed
Accumulated Plan Accumulated Plan Accumulated Plan
Benefits Assets Benefits Assets Benefits Assets
Service cost $ 24.0 $ 8.0 $30.2 $ 5.2 $26.2 $ 4.0
Interest cost 61.4 19.6 58.6 12.7 58.0 12.5
Actual return on plan assets (184.4) (40.4) (36.3) (4.3) (79.3) (14.5)
Net amortization and
deferral 122.3 29.5 (30.0) (1.9) 14.7 5.2
------ ----- ----- ----- ----- -----
Net pension costs $ 23.3 $16.7 $22.5 $11.7 $19.6 $ 7.2
====== ===== ===== ===== ===== =====
Pension costs were determined using an 8.5% discount rate (7.5%
in fiscal 1995 and 8.5% in fiscal 1994), a long-term rate of
return of 9.25% in fiscal 1996 and 9.0% in fiscal 1995 and 1994,
respectively, and a long-term rate of compensation increases of
5.5% for all years presented. The funded status of the plans at
February 28, 1996 and February 28, 1995 (dates of the most
recent actuarial reports) was as follows:
1996 1995
Plan Accumulated Plan Accumulated
Assets Benefits Assets Benefits
Exceed Exceed Exceed Exceed
Accumulated Plan Accumulated Plan
Benefits Assets Benefits Assets
Plan assets at
fair value $874.7 $220.4 $785.6 $128.2
------ ------ ------ ------
Projected benefit obligation:
Actuarial present value
of vested benefits 752.6 259.9 668.0 155.8
Actuarial present value
of nonvested benefits 47.8 16.6 34.8 9.5
------ ------ ------ ------
800.4 276.5 702.8 165.3
Additional obligation of
projected compensation
increases 153.7 23.1 100.5 13.7
------ ------ ------ ------
954.1 299.6 803.3 179.0
------ ------ ------ ------
Plan assets less than
projected benefit
obligations $(79.4) $(79.2) $(17.7) $(50.8)
====== ====== ====== ======
Consisting of:
Unrecognized
transition asset $ 14.0 $ 3.7 $ 18.3 $ 2.2
Unrecognized prior
service cost (1.7) (23.2) (1.8) (25.2)
Unrecognized net gain
(loss) (2.7) (35.0) 43.9 (14.3)
Adjustment to recognize
minimum liability - 35.4 - 23.9
Accrued pension cost on
consolidated
balance sheets (89.0) (60.1) (78.1) (37.4)
------ ------ ------ ------
$(79.4) $(79.2) $(17.7) $(50.8)
====== ====== ====== ======
Plan assets are primarily invested in equity securities,
corporate and government debt securities and common trust funds.
Included in plan assets are 2,540,171 shares of the Company's
common stock at a fair market value of $111.5 million at
February 28, 1996.
The actuarial projected benefit obligation was determined using
an assumed discount rate of 7.0% and 8.5% in fiscal 1996 and
1995, respectively, and long-term rate of compensation increases
of 5.5% for all years presented.
The Company has adopted a policy of funding accrued pension
costs to the extent deductible for income tax purposes.
The Company and its subsidiaries are also participants in multi-
employer pension plans covering certain hourly employees. Costs
associated with these plans for fiscal 1996, 1995 and 1994 were
$8.3 million, $8.2 million and $7.5 million, respectively.
Certain employees of the Company are covered under defined
contribution plans. The expense related to these plans was
$25.1 million, $23.7 million and $17.9 million in fiscal 1996,
1995 and 1994, respectively.
Postretirement Benefits
The Company's postretirement plans provide certain medical and
dental benefits to qualifying U.S. employees.
Net postretirement benefit cost includes the following
components:
1996 1995 1994
Service cost $ 3.2 $ 5.1 $ 4.5
Interest cost on accumulated
postretirement benefit obligation 34.2 29.8 30.4
Other (1.0) (1.0) (1.1)
----- ----- -----
$36.4 $33.9 $33.8
====== ===== =====
Benefit costs were generally estimated assuming retiree health
care costs would initially increase at an 11.0% annual rate for
all participants. The rates are assumed to decrease each year
to a 6.5% annual growth rate in the year 2002 and remain at a
6.5% annual growth rate thereafter. A 1% increase in these
annual trend rates would have increased the accumulated
postretirement benefit obligation at May 26, 1996 by $45.2
million with a corresponding effect on fiscal 1996
postretirement benefit expense of $4.3 million. The discount
rate used to estimate the accumulated postretirement benefit
obligation was 7.0% and 8.5% in fiscal 1996 and 1995,
respectively. Plan assets of $5.9 million consist of guaranteed
investment contracts earning a 13.7% annual rate of return. The
Company generally intends to fund claims as reported.
The status of the Company's plans at February 28, 1996 and 1995
was as follows:
1996 1995
Accumulated postretirement benefit obligations
Retirees and dependents $348.7 $353.0
Fully eligible active plan participants 35.5 31.1
Other active plan participants 47.2 35.8
------ ------
Total accumulated postretirement benefit
obligation 431.4 419.9
Plan assets at fair value (5.9) (6.1)
Unrecognized prior service cost 1.7 1.8
Unrecognized net actuarial gain 9.9 6.6
------ ------
Accrued postretirement benefit obligation $437.1 $422.2
====== ======
15.BUSINESS SEGMENTS
The Company is a diversified food company that operates across
the food chain, from basic agricultural inputs to production and
sale of branded consumer products. The Company has three
business segments. Grocery/Diversified Products include
companies that produce shelf-stable and frozen foods. This
segment markets food products in retail and foodservice
channels. Refrigerated Foods include companies that produce and
market branded processed meats, beef, pork, chicken, turkey and
cheese products to retail and foodservice markets. Food Inputs
& Ingredients include companies involved in distribution of
agricultural inputs -- crop production chemicals, fertilizers
and seeds -- and procurement, processing, trading and
distribution of commodity food ingredients.
Intersegment sales have been recorded at amounts approximating
market. Operating profit for each segment 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,
goodwill amortization, interest expense (except financial
businesses) and income taxes have been excluded from segment
operations. All assets other than cash and those assets related
to the corporate office have been identified with the segments
to which they relate. The Company operates principally in the
United States.
1996 1995 1994
Sales to unaffiliated customers
Food Inputs & Ingredients $ 6,572.9 $ 5,799.5 $ 5,382.1
Refrigerated Foods 12,987.3 13,503.3 13,832.2
Grocery/Diversified Products 5,261.4 4,809.5 4,303.1
--------- --------- ---------
Total $24,821.6 $24,112.3 $23,517.4
========= ========= =========
Intersegment sales
Food Inputs & Ingredients $ 250.0 $ 182.4 $ 125.8
Refrigerated Foods 55.0 50.0 18.3
Grocery/Diversified Products 11.0 10.6 4.0
--------- --------- ---------
316.0 243.0 148.1
Intersegment elimination (316.0) (243.0) (148.1)
--------- --------- ---------
Total $ - $ - $ -
========= ========= =========
Net sales
Food Inputs & Ingredients $ 6,822.9 $ 5,981.9 $ 5,507.9
Refrigerated Foods 13,042.3 13,553.3 13,850.5
Grocery/Diversified Products 5,272.4 4,820.1 4,307.1
Intersegment elimination (316.0) (243.0) (148.1)
--------- --------- ---------
Total $24,821.6 $24,112.3 $23,517.4
========= ========= =========
Operating profit (Note a)
Food Inputs & Ingredients $ 236.5 $ 246.7 $ 215.5
Refrigerated Foods 106.3 416.4 398.6
Grocery/Diversified Products 644.7 629.9 526.4
--------- --------- ---------
Total operating profit 987.5 1,293.0 1,140.5
General corporate expenses (Note b) 219.0 137.6 107.3
Goodwill amortization 69.5 71.4 73.6
Interest expense - excluding
financial businesses 290.4 258.1 239.6
--------- --------- ---------
Total $ 408.6 $ 825.9 $ 720.0
========= ========= =========
Identifiable assets
Food Inputs & Ingredients $ 3,213.0 $ 2,655.0 $ 2,906.3
Refrigerated Foods 3,641.6 4,006.8 4,198.0
Grocery/Diversified Products 3,809.4 3,722.4 3,328.4
Corporate 532.6 416.8 289.1
--------- --------- ---------
Total $11,196.6 $10,801.0 $10,721.8
========= ========= =========
Additions to property, plant and
equipment - including businesses
acquired
Food Inputs & Ingredients $ 396.8 $ 78.2 $ 92.1
Refrigerated Foods 351.5 199.6 287.6
Grocery/Diversified Products 260.4 278.5 118.0
Corporate 7.4 0.9 6.4
-------- ------ ------
Total $1,016.1 $557.2 $504.1
======== ====== ======
Depreciation and amortization
Food Inputs & Ingredients $ 66.6 $ 57.7 $ 58.4
Refrigerated Foods 159.7 149.7 152.6
Grocery/Diversified Products 176.2 162.3 150.5
Corporate 5.4 6.1 6.9
-------- ------ ------
Total $ 407.9 $375.8 $368.4
======== ====== ======
Note (a):
Fiscal 1996 includes before-tax non-recurring charges of $452.8
million (Note 2). The charges were included in operating profit
as follows: $97.1 million in Food Inputs & Ingredients; $278.6
million in Refrigerated Foods; and $77.1 million in
Grocery/Diversified Products.
Note (b):
Fiscal 1996 includes a before-tax charge of $55.0 million
relating to the disposal of certain non-core businesses (Note
2).
16.QUARTERLY RESULTS (Unaudited)
Stock Market Dividends
Net Gross Net Income (Loss) Price Declared
Sales Profit Amount Per Share High Low Per Share
1996
First $ 6,436.2 $ 801.8 $ 87.1 $0.36 $39.38 $32.50 $0.2075
Second 6,629.9 952.5 167.1 0.72 40.38 37.00 0.2375
Third 5,772.9 867.7 128.4 0.55 47.13 39.50 0.2375
Fourth 5,982.6 877.4 (193.7)* (0.84)* 44.63 37.63 0.2375
--------- -------- ------ ----- ------ ------ -------
Year $24,821.6 $3,499.4 $188.9* $0.79* $47.13 $32.50 $0.9200
========= ======== ====== ===== ====== ====== =======
1995
First $ 6,248.6 $ 741.8 $ 76.8 $0.31 $33.00 $28.25 $0.1800
Second 6,291.4 899.1 149.9 0.63 33.13 29.75 0.2075
Third 5,757.1 839.0 118.5 0.49 33.50 29.75 0.2075
Fourth 5,815.2 854.0 150.4 0.63 34.50 30.88 0.2075
--------- -------- ------ ----- ------ ------ -------
Year $24,112.3 $3,333.9 $495.6 $2.06 $34.50 $28.25 $0.8025
========= ======== ====== ===== ====== ====== =======
* Includes non-recurring charges of $356.3 million, or $1.55
per share (Note 2).
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
ConAgra, Inc.
We have audited the accompanying consolidated balance sheets of
ConAgra, Inc. and subsidiaries as of May 26, 1996 and May 28, 1995,
and the related consolidated statements of earnings, common
stockholders' equity and cash flows for each of the three years
(fifty-two weeks) in the period ended May 26, 1996. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion such consolidated financial statements present
fairly, in all material respects, the financial position of
ConAgra, Inc. and subsidiaries as of May 26, 1996 and May 28, 1995,
and the results of their operations and their cash flows for each
of the three years (fifty-two weeks) in the period ended May 26,
1996 in conformity with generally accepted accounting principles.
As discussed in Note 2 to the Consolidated Financial Statements, in
fiscal 1996 ConAgra, Inc. adopted the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of".
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
July 12, 1996
Omaha, Nebraska
The Conduct of Our Affairs
The major objectives of the company are expressed in terms of
return on stockholders' equity and growth in trend line earning
power. As we conduct ourselves in the pursuit of our existing
businesses and in the growth of our businesses in an ethical and
moral way, we must also fulfill our commitments to our
government, to our society and to ourselves as individuals. In
one sense, ethics involves the point of view that suggests we
live in a glass bowl, and we should feel comfortable with any
actions we take, if they were shared publicly. Further, we will
conduct our affairs within the law.
Should there be evidence of possible malfeasance on the part of
any officer or member of management, each employee must feel the
responsibility to communicate that to the appropriate party.
This is a commitment that each of us must undertake and not feel
that it is a high-risk communication, but that it is expected
and, indeed, an obligation.
- -from ConAgra's Philosophy, page 6 (originally published in 1976)
Principal Officers
The principal officers of the company include, among others, those listed on
pages 54 and 55 of this report. The principal officers are responsible for
maintaining throughout the company a system of internal controls which protect
the assets of the company on a reasonable and economic basis. They also are
responsible for maintaining records which permit the preparation of financial
statements that fairly present the financial condition and results of
operations of the company in accordance with generally accepted accounting
principles.
Audit Committee of the Board
The Audit Committee of ConAgra's Board of Directors is composed entirely of
outside directors and recommends the appointment of the company's independent
public accountants. The Audit Committee meets regularly, and when appropriate
separately, with the independent public accountants, the internal auditors and
financial management. Both the independent public accountants and the internal
auditors have unrestricted access to the Audit Committee.
Board of Directors------------------
Board Committees
Executive Committee
Charles M. Harper, Chairman
Philip B. Fletcher
Walter Scott, Jr.
William G. Stocks
Audit Committee
Thomas R. Williams, Chairman
Robert A. Krane
Jane J. Thompson
Frederick B. Wells
Corporate Affairs Committee
William G. Stocks, Chairman
Dr. Ronald W. Roskens
Marjorie M. Scardino
Dr. Clayton K. Yeutter
Human Resources Committee
Gerald Rauenhorst, Chairman
Carl E. Reichardt
Walter Scott, Jr.
Philip B. Fletcher, 63
Omaha, Nebraska.
Chairman of ConAgra board of directors since May 1993 and chief executive
officer of ConAgra since September 1992. Director since 1989.
Charles M. Harper, 68
Omaha, Nebraska.
Former chairman and chief executive officer of RJR Nabisco Holdings Corp.
ConAgra chief executive officer 1976 - September 1992. Chairman of ConAgra
board 1981 - May 1993. Director since 1975.
Robert A. Krane, 62
Denver, Colorado.
Consultant, KRA, Inc. Former president and chief executive officer of Central
Bancorporation (financial services). Director since 1982.
Gerald Rauenhorst, 68
Minneapolis, Minnesota.
Chairman of the board and chief executive officer of Opus Corporation (real
estate, construction and development). Director since 1982.
Carl E. Reichardt, 65
San Francisco, California.
Former chairman and chief executive officer of Wells Fargo & Company and Wells
Fargo Bank. Director since 1993.
Dr. Ronald W. Roskens, 63
Omaha, Nebraska.
President of Global Connections, Inc. (international business consulting).
Former president of the University of Nebraska System. Director since
1992.
Marjorie M. Scardino, 49
London, England.
Chief executive of The Economist Newspaper Ltd. (publishing). Director since
1994.
Walter Scott, Jr., 65
Omaha, Nebraska.
President and chairman of the board of Peter Kiewit Sons', Inc. (construction,
mining and telecommunications). Director since 1986.
William G. Stocks, 69
Phoenix, Arizona.
Former chairman of the board and chief executive officer of Peavey Company.
Director since 1982.
Jane J. Thompson, 45
Hoffman Estates, Illinois.
President, Home Services, Sears, Roebuck and Co. (retailing). Director since
1995.
Frederick B. Wells, 68
Minneapolis, Minnesota.
President of Asian Fine Arts (fine arts retailing).
Director since 1982.
Thomas R. Williams, 67
Atlanta, Georgia.
President and director of The Wales Group, Inc. (investment
management and counseling). Director since 1978.
Dr. Clayton K. Yeutter, 65
McLean, Virginia.
Of counsel with Washington, D.C. law firm Hogan & Hartson.
Former U.S. Trade Representative and Secretary of Agriculture. Director
1980-1985 and since 1992.
(Photo - Board of Directors)
Cutline for Board of Directors photo:
First row, left to right: Gerry Rauenhorst, Phil Fletcher,
Marjorie Scardino, Dr. Ron Roskens, Mike Harper. Second row,
left to right: Tom Williams, Bob Krane, Fred Wells, Carl
Reichardt, Dr. Clayton Yeutter. Third row, left to right: Bill
Stocks, Jane Thompson, Walter Scott.
PRINCIPAL OFFICERS
Philip B. Fletcher, 63
Chairman and Chief Executive Officer
Chief executive officer since September 16, 1992; chairman since
May 31, 1993. Named president and chief operating officer of
ConAgra in 1989. Joined ConAgra in 1982 as president of Banquet
Foods Company. Thirty-eight years of food industry experience;
formerly associated with Heublein Company, H.J. Heinz, U.S.A.
and Campbell Soup Company.
Office of the President
David J. Gustin, 45
President and Chief Operating Officer
ConAgra Grocery Products Companies
Named to current position in July 1996. President of Hunt-Wesson Grocery
Products Companies 1995-1996. Joined ConAgra in 1992 as president of Orville
Redenbacher/Swiss Miss Foods Company. Twenty-three years of food industry
experience in marketing and general management; formerly associated with
Frito-Lay, Inc. and General Foods Corporation.
Leroy O. Lochmann, 61
President and Chief Operating Officer
ConAgra Refrigerated Foods Companies
Named to current position in January 1995. Named to the Office of the
President in 1990. President and chief operating officer of Armour
Swift-Eckrich 1990-1993. President and chief operating officer of ConAgra
Meat Products Companies 1993-1995. Joined ConAgra in August
1990 when ConAgra acquired Beatrice Company. President of
Swift-Eckrich 1984-1990. Forty-three years of meat industry
experience in operations and management.
Thomas L. Manuel, 49
President and Chief Operating Officer
ConAgra Trading and Processing Companies
Named to current position in February 1994. President of ConAgra Grain
Processing Companies 1988-1994. Joined ConAgra in 1977 as general manager of
ConAgra Feed Ingredient Merchandising Company. President of ConAgra Flour
Milling Company 1987-1994. Twenty-six years of experience in the grain
processing and commodity trading industries.
Floyd McKinnerney, 59
President and Chief Operating Officer
ConAgra Agri-Products Companies
Named to current position in 1987. Joined ConAgra in 1978 as president of Mid
Valley Chemicals. Thirty-five years of experience in the agricultural
chemical industry; formerly co-owner of Dennison's Chemical Company, Weslaco,
Texas.
James D. Watkins, 48
President and Chief Operating Officer
ConAgra Diversified Products Companies
Named to current position in June 1993. Named to the Office of the President
in August 1991 after Golden Valley Microwave Foods merged with ConAgra.
President and chief operating officer of Golden Valley, Lamb-Weston and Arrow
Industries 1991-1993. Twenty-five years of food industry experience in the
development and marketing of microwave food products and general management.
Founder of Golden Valley Microwave Foods in 1978; formerly associated with
The Pillsbury Company.
CORPORATE
Management Executive Committee
Philip B. Fletcher
Chairman and Chief Executive Officer
Office of the President
(The five executives listed on this page)
Dwight J. Goslee
Senior Vice President, Business Systems and
Development, and Chief Information Officer
James P. O'Donnell
Senior Vice President and Chief Financial Officer
L.B. Thomas
Senior Vice President, Corporate Secretary and Risk Officer
Gerald B. Vernon
Senior Vice President, Human Resources
David R. Willensky
Senior Vice President, Corporate Planning and
Development
CORPORATE STAFF
Walter H. Casey
Vice President, Corporate Communications
Kenneth W. DiFonzo
Vice President and Controller
John J. Dill
Vice President, Taxes
P. David Eppenauer
Vice President, Assistant Corporate Controller
Richard L. Gady
Vice President, Public Affairs and Chief Economist
Denise M. Hagerty
Vice President, Assistant Corporate Controller
Raymond V. Hartman
Vice President, Tax and Administration,
Beatrice Co.
Reeder P. Jones
Vice President, Assistant Corporate Controller
Paul A. Korody
Vice President, Government Affairs
Margaret E. Lacey
Vice President, Corporate Treasurer
Archie L. Meairs
Vice President, Insurance and Loss Control
David G. Pederson
Vice President, Compensation and Benefits
Joseph V. Petty
Vice President, Management Information Systems
Lynn L. Phares
Vice President, Public Relations and Community Affairs
Janet M. Richardson
Vice President, Corporate Facilities and Services
Donald J. Stone
Vice President, Transportation
Michael J. Trautschold
Vice President, Corporate Marketing Services
Legal Counsel
McGrath, North, Mullin & Kratz, P.C.
Omaha, Nebraska
General Counsel:
Bruce C. Rohde
Assistant General Counsel:
David L. Hefflinger
PRINCIPAL OFFICERS
INDEPENDENT OPERATING COMPANIES
ConAgra Agri-Products Companies
Floyd McKinnerney
President and Chief Operating Officer
Philip J. James, Executive Vice President
United Agri Products Companies
J. Charles Blue, President
Country General Stores
Anthony J. Seitz, President
ConAgra Diversified Products Companies
James D. Watkins
President and Chief Operating Officer
ConAgra Foods Ltd.
United Kingdom Sales Company
William D. Bainbridge
Managing Director
ConAgra Shrimp Companies
Singleton Seafood Company
Jesse Gonzalez, President
Lamb-Weston, Inc.
Richard A. Porter, President
ConAgra Grocery Products Companies
David J. Gustin
President and Chief Operating Officer
ConAgra Frozen Foods
James T. Smith, President
ConAgra Grocery Products Companies International
Taketo Murata, President
Golden Valley Microwave Foods, Inc.
John S. McKeon, President
Hunt Foods Company
Edward A. Snell, President
Hunt-Wesson Foodservice Company
Ronald G. Bennett, President
Hunt-Wesson Grocery Products Sales Company
Douglas A. Knudsen, President
Knott's Berry Farm Foods
La Choy/Rosarita Foods Company
Williard E. Lynn, President
Orville Redenbacher/Swiss Miss Foods Company
Ronald Doornink, President
Wesson/Peter Pan Foods Company
Glen A. Smith, President
ConAgra Refrigerated Foods Companies
Leroy O. Lochmann
President and Chief Operating Officer
Beatrice Cheese Company
Kevin J. Ruda, President
Butterball Turkey Company
Dean E. Falk, President
ConAgra Poultry Company
Thomas A. Slamecka, President
Professional Food Systems
J. Rolan Brevard, President
ConAgra Red Meat Companies
William G. Fielding, President
Australia Meat Holdings Pty Ltd.
Keith A. Lawson, Executive Chairman
ConAgra Fresh Meats Company
Alan E. Glueck, President
E.A. Miller Inc.
Ted A. Miller, President
Monfort Beef and Lamb Company
Kevin D. LaFleur, President
Swift & Company
David B. Heggestad, President
ConAgra Refrigerated Foods Foodservice
Gary K. Harmon, President
ConAgra Refrigerated Foods International Sales Corporation
Charles K. Monfort, President
ConAgra Refrigerated Foods Transportation Company
Robert H. Burns, President
ConAgra Refrigerated Prepared Foods
Timothy M. Harris, President
Decker Food Company
L. Richard Belsito, President
Cook Family Foods, Ltd.
Eugene J. Dembkoski
Chief Operating Officer
National Foods Inc.
Harvey Potkin, Chairman
Steven B. Silk, President
ConAgra Trading and Processing Companies
Thomas L. Manuel
President and Chief Operating Officer
Arrow Industries
Steven P. Rosenberg, President
ConAgra Cattle Feeding
ConAgra Commodity Management Company
Gary P. White, President
ConAgra Commodity Services Company
Gregory A. Heckman, Vice President and General Manager
ConAgra Feed Company
George W. Thames
Vice President and General Manager
ConAgra Flour Milling Company
Russell J. Bragg, President
ConAgra Grain Companies
Fred E. Page, President
ConAgra Pet Products Company
Thurmond Jones, President
ConAgra Specialty Grain Products Company
Michael D. Walter, President
ConAgra Malt
(50-percent owned)
Donald C. Smith, President
International Trading
Russell J. Bragg, President
ConAgra International Fertilizer Company
Brian D. Harlander, President
Klein-Berger Company
Robert J. Corkern, President
Molinos de Puerto Rico
Manuel O. Herrera, President
United Specialty Food Ingredients Cos.
Raymond J. DeRiggi, President
CORPORATE CITIZENSHIP
ConAgra is committed to being a good corporate citizen. We aim to make a
lasting, positive impact on the quality of life in the communities where our
employees work and live -- through our civic involvement, the many volunteer
hours contributed by our employees, and the charitable dollars we invest in our
communities.
Our policy is to contribute in cash an average of one percent of pretax
earnings to organizations that are working to improve our communities or
our world. We focus our resources in four areas: Education, Health and Human
Services, Arts and Culture, and Civic and Community Betterment. In fiscal
1996, the ConAgra Foundation made cash grants to almost 400 nonprofit
organizations in these areas of focus.
In addition to cash donations, ConAgra regularly makes substantial in-kind
donations of products, equipment and facilities.
We focus in this report on the increasing emphasis we are placing on
financial support for education.
Investing in the Future
The ConAgra Foundation in fiscal 1996 funded four major scholarship programs,
two for which the children of ConAgra employees compete, and two for young
people outside the ConAgra family.
Employees' children compete for ConAgra Foundation National Merit
Scholarships and Mike Harper Leadership Scholarships. High school students
active in Future Farmers of America compete for scholarships to the University
of Nebraska-Lincoln Agribusiness Program, a program initiated and originally
funded by ConAgra. And finally, the ConAgra Foundation provided about 50
scholarships in the past year for students at Metropolitan Community College in
Omaha.
About 275 students are currently benefiting from scholarships funded by the
ConAgra Foundation. The annual value of these scholarships is about $336,000.
Matching Employees' Gifts to Higher Education
During fiscal 1996, the ConAgra Foundation began matching employees' gifts to
colleges and universities. This program, which matched gifts to 175 schools in
its first six months, is designed to encourage ConAgra employees to support
higher education, and to give employees across ConAgra a voice in selecting the
educational institutions supported by the ConAgra Foundation.
From Early Childhood Education to Career Preparation
The ConAgra Foundation funds a wide range of education-related organizations
and projects. An early childhood education initiative in Omaha, in its third
year, is designed to improve communitywide access to top-quality early
childhood education. The ConAgra Foundation, the lead funder, committed
$900,000 to the project.
A three-year-old pilot program called Success Prep, funded almost entirely
by the ConAgra Foundation, is designed to better prepare non-college-bound
young people for success in the workplace. The ConAgra Foundation has invested
more than $600,000 in this innovative Omaha program that is achieving excellent
results in job placement, job retention and good performance appraisals for its
graduates.
Other ConAgra Foundation commitments to education range from Creative
Educator Awards for K-12 teachers in Nebraska to scholarship support for
Hispanic youth in Colorado.
We focus on education because it can change lives, it can break the cycle of
poverty, it can give young people a chance. When we invest in education, we
are investing in the future.
PHOTO:Graduate
CUTLINE: Jaime Danehey, a 1996 high school graduate, is one of more than 100
students who won ConAgra Foundation scholarships in fiscal 1996. Including
scholarships renewed during the year, there were about 275 ConAgra Foundation
scholarship recipients in fiscal 1996. Jaime, the daughter of ConAgra employee
Linda Vencil, won a ConAgra Foundation National Merit Scholarship.
INVESTOR INFORMATION
ConAgra Stock
ConAgra's common stock is listed on the New York Stock Exchange.
Ticker symbol: CAG.
At the end of fiscal 1996, 243.2 million shares of common stock were
outstanding, including 16 million shares held in the company's Employee Equity
Fund. There were 34,000 stockholders of record, 25,000 holders via ConAgra's
401(k) plan for employees and an estimated 85,000 "street-name" beneficial
holders whose shares are held in names other than their own -- in brokerage
accounts, for example. During fiscal 1996, 117 million shares were traded, a
daily average of about 464,000 shares.
The Series A, Series B and Series C preferred securities of ConAgra Capital,
L.C. also are listed on the New York Stock Exchange. Ticker symbols: CAG PrA,
CAG PrB, CAG PrC. For the current dividend rate of ConAgra Capital's variable
rate preferred securities, call (800) 840-3404.
Common Stock Dividends
ConAgra normally pays quarterly common stock dividends on March 1, June 1,
September 1 and December 1. The current annual dividend rate is 95 cents per
share. The company's dividend objective and results are on page 5 of this
report.
ConAgra has paid 82 consecutive quarterly common stock dividends. The
dividend was increased 14.5 percent beginning with the December 1, 1995
payment. ConAgra has increased common stock dividends per share 14 percent or
more for 21 consecutive years.
Annual Meeting of Stockholders
ConAgra's annual stockholders meeting will be held on Thursday, September 26,
1996 at 1:30 p.m. at the Kiewit Conference Center, 1313 Farnam Street (corner
of Farnam and 13th streets), Omaha, Nebraska. Please note the new location.
See the proxy statement for additional information.
News and Publications
Call ConAgra Investor Information at (800) CAG-0244 to hear current company
news, including quarterly earnings and common stock dividends, or to request
printed materials such as the mid-year report or the Form 10-K, an annual
filing with the Securities and Exchange Commission.
Call Company News On-Call (CNOC) at (800) 758-5804, extension 200825 to
receive, at no charge, ConAgra news releases via facsimile transmission. Or
access CNOC on the Internet for ConAgra news releases and other company
information at http://www.prnewswire.com.
Visit these ConAgra sites on the Internet:
Healthy Choice at http://www.healthychoice.com
Butterball at http://www.butterball.com
Lamb-Weston at http://www.lambweston.com
Sergeant's pet accessories at http://www.sergeants.com
ConAgra mails mid-year reports to stockholders of record. Street-name
holders who would like to receive these reports may call (800) CAG-0244 and ask
to be placed on our mailing list to receive mid-year reports.
Shareholder Services
Stockholders of record who have questions about or need help with their account
may contact ConAgra Shareholder Services, (800) 840-3404.
Through ConAgra's Shareholder Service Plan, stockholders of
record may:
- - Have stock certificates held by ConAgra Shareholder Services
for safekeeping and to facilitate sale or purchase of shares.
- - Automatically reinvest some or all common and/or preferred
dividends in ConAgra common stock. Nearly 40 percent of
ConAgra's stockholders of record participate.
- - Purchase additional shares of ConAgra common stock through
voluntary cash investments of $50 to $50,000 per calendar year.
- - Automatically deposit dividends directly to bank accounts
through Electronic Funds Transfer (EFT).
For more information, call ConAgra Shareholder Services, (800)
840-3404.
Corporate Headquarters
ConAgra, Inc.
One ConAgra Drive
Omaha, NE 68102-5001
(402) 595-4000
Corporate Secretary (402) 595-4005
Corporate Communications (402) 595-4157
Analyst/Investor Inquiries (402) 595-4154
Transfer Agent and Registrar
ChaseMellon Shareholder Services, L.L.C.
Overpeck Centre
85 Challenger Road
Ridgefield Park, NJ 07660
(800) 840-3404