Exhibit 99.1
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial
statements give effect to ConAgra Foods, Inc.'s ("ConAgra Foods" or the
"company") sale of a controlling interest in its fresh beef and pork operations
to Swift Foods Company, a venture led by Hicks, Muse, Tate & Furst Incorporated
and Greeley Investments, LLC (an affiliate of George N. Gillett, Jr.), on
September 19, 2002, after giving effect to the pro forma adjustments described
in the accompanying notes.
The unaudited pro forma combined condensed financial statements are derived
from the company's historical consolidated financial statements. The unaudited
pro forma combined condensed statements of earnings give effect to the sale as
if it had occurred at the beginning of the period presented and exclude
non-recurring direct transaction costs which are expected to be incurred by the
company of approximately $.03 to $.04 per share. The unaudited pro forma
combined condensed balance sheet gives effect to the sale as if it had occurred
on May 26, 2002.
The unaudited pro forma combined condensed financial statements are
presented for illustrative purposes only and do not purport to be indicative of
the operating results or financial position that would have actually occurred if
the sale had been in effect on the dates indicated, nor is it necessarily
indicative of future operating results or financial position of the company. The
unaudited pro forma combined condensed financial statements should be read in
conjunction with the consolidated financial statements and related notes
included in the company's annual report on Form 10-K for the year ended May 26,
2002.
CONAGRA FOODS, INC.
Pro Forma Combined Condensed Statement of Earnings
For the Year-Ended May 26, 2002
(Unaudited)
(Amounts in Millions, Except Per Share Data)
ConAgra Foods Elimination of Pro Forma
Historical (1) Businesses Sold (2) --------------------------------
As
Adjustments(3) Adjusted(5)
Net sales.................. $27,629.6 ($7,732.9) $ -- $19,896.7
Costs and expenses:
Cost of goods sold....... 23,536.5 (7,432.6) -- 16,103.9
Selling, general and
administrative expenses.... 2,423.4 (106.7) (30.5) 2,286.2
Interest expense ........ 401.5 (1.8) (49.7) 350.0
---------- ------------ ---- -----
26,361.4 (7,541.1) (80.2) 18,740.1
---------- ------------ ------ --------
Income before income taxes.. 1,268.2 (191.8) 80.2 1,156.6
Income taxes................ 483.2 (69.0) 18.9 433.1
---------- ------------ ------ --------
Income before cumulative
effect of change in 785.0 (122.8) 61.3 723.5
accounting
Cumulative effect of change in
accounting (2.0) -- -- (2.0)
----- -- -- -----
Net income $ 783.0 ($122.8) $ 61.3 $ 721.5
======= ======== ====== =======
Earnings per share - basic: $ 1.48 $ 1.36
======= =======
Earnings per share - diluted: $ 1.47 $ 1.35
======= =======
See notes to unaudited pro forma combined condensed financial statements.
CONAGRA FOODS, INC.
Pro Forma Combined Condensed Balance Sheet
May 26, 2002
(Unaudited)
(Amounts in Millions, Except Share Data)
ConAgra Foods Elimination of Pro Forma
ASSETS Historical (1) Businesses Sold (2) Adjustments(4) As Adjusted
Current assets
Cash and cash equivalents....... $ 157.9 $ -- $ 602.1 $ 760.0
Receivables, net................ 1,393.6 (273.2) -- 1,120.4
Inventories..................... 4,304.7 (682.5) -- 3,622.2
Other current assets............ 577.7 (20.6) 557.1
------------ ----------- --
Total current assets.......... 6,433.9 (976.3) 602.1 6,059.7
------------ ----------- ----- -------
Property, plant and equipment, net 3,893.9 (553.1) -- 3,340.8
Brands, trademarks and goodwill, net 4,747.6 (76.2) -- 4,671.4
Other assets...................... 420.8 (13.7) 766.1 1,173.2
------------ ------------ ---------- ---------
$15,496.2 $(1,619.3) $ 1,368.2 $ 15,245.1
========= ========== ========= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable................... $ 30.9 $ -- $ -- $ 30.9
Current installments of long-term
debt......................... 209.0 -- -- 209.0
Accounts payable................ 2,165.3 (228.8) -- 1,936.5
Other accrued liabilities....... 1,908.2 (72.3) 50.0 1,885.9
-------- ------- ---------
Total current liabilities..... 4,313.4 (301.1) 50.0 4,062.3
----------- --------- ------- ---------
Senior long-term debt, excluding
current installments............ 4,991.6 -- -- 4,991.6
Other non-current liabilities..... 955.9 -- -- 955.9
Subordinated debt................. 752.1 -- -- 752.1
Preferred securities of subsidiary
company......................... 175.0 -- -- 175.0
Total common stockholders' equity 4,308.2 (1,318.2) 1,318.2 4,308.2
----------- ------------ ------- -------
$15,496.2 $(1,619.3) $ 1,368.2 $ 15,245.1
========= ========== ======= ==========
See notes to unaudited pro forma combined condensed financial statements.
CONAGRA FOODS, INC.
Notes to Unaudited Pro Forma Combined Condensed Financial Statements
(Amounts in Millions, Except Per Share Data)
On September 19, 2002, ConAgra Foods, Inc. sold a controlling interest
in its fresh beef and pork businesses to Swift Foods Company ("Swift"), a
venture controlled by Hicks, Muse, Tate & Furst Incorporated and Greeley
Investments, LLC (an affiliate of George N. Gillett, Jr.). The aggregate
consideration received by ConAgra Foods at September 19, 2002 was equal to the
adjusted net book value (subject to post-closing adjustments) of the businesses
sold and consisted of approximately $766 million in cash, a $150 million equity
interest in Swift, $180 million in promissory notes from subsidiaries of Swift,
and $262 million in advances to the domestic cattle feeding business under a
$350 million credit line. ConAgra Foods, Inc. also purchased $150 million senior
subordinated notes from a subsidiary of Swift, as part of the transaction. The
unaudited pro forma combined condensed financial statements are based on the
following:
1. The historical consolidated financial statements of ConAgra Foods, Inc. as
of and for the year ended May 26, 2002.
2. The elimination of the assets, liabilities and operating results of the
businesses sold.
3. The unaudited pro forma statement of earnings adjustments reflecting:
a. The company's equity in earnings of $30.5 million for the venture's
operations based on its 46% ownership interest.
b. A reduction in net interest expense relating to (i) the assumed
repayment of short-term borrowing with the cash proceeds received in
the transaction at the company's weighted average short-term interest
rate of 3.2%, (ii) interest income on the $180 million of 8%
promissory notes, (iii) interest income on the $150 million 12.5%
senior subordinated note and (iv) net interest income on the domestic
cattle feeding credit line as follows:
Reduction in interest expense $19.4 Increase in interest income:
Promissory notes 14.4
Senior subordinated notes 9.4
Cattle feeding credit line 6.5
------
$49.7
The company has the ability to sell or dispose of its interest in the
$150 senior subordinated notes after a six-month period and, as a
result, has only reflected interest income on these notes for that
period of time.
c. The tax effects of the taxable adjustments at an estimated effective
tax rate of 38%.
4. The unaudited pro forma balance sheet adjustments are as follows:
Actual cash received on September 19, 2002 $ 765.7
Purchased senior subordinated notes (150.0)
Increase in book value from May 26, 2002
to Sept. 19, 2002 (a) (13.6)
------
Pro forma net cash received as of
May 26, 2002 $ 602.1
Other assets:
Equity investment 150.0
Promissory notes receivable 150.0
Senior subordinated notes receivable 150.0
Cattle feeding assets sold (b) 316.1 766.1
------ (50.0)
Cattle feeding liabilities sold (b) -------
Net adjustments $1,318.2
(a) Actual cash received is based on estimated adjusted net book
value (subject to post-closing adjustments) as of September 19,
2002. Pro forma cash received is based on a closing balance sheet
date of May 26, 2002.
(b) The company will continue to finance the domestic cattle feeding
operations with a secured credit line of up to $350 million and a
$30 million promissory note. Accordingly, although the company
has legally divested this operation, in accordance with
applicable accounting literature the company will continue to
include the assets and liabilities of the cattle feeding business
within its consolidated balance sheet. The notes receivable to
ConAgra Foods, Inc. relating to the cattle feeding financing are
therefore reflected as the net assets of the cattle feeding
operations. The cattle feeding assets and liabilities included in
the adjustments table reflect the net assets of the domestic
cattle feeding operations as of the pro forma acquisition date of
May 26, 2002.
5. The unaudited pro forma combined condensed financial statements exclude
non-recurring direct transaction costs expected to be incurred by the
company of approximately $.03 - $.04 per share.
6. The pro forma ratio of earnings to fixed charges for the year ended May 26,
2002 is as follows:
Fixed Charges as Defined:
Interest expense $ 416.1
Capitalized interest 5.7
Interest in cost of goods sold 20.6
Preferred distributions of subsidiary 25.1
One third of non-cancelable lease rent 43.1
----------
Total fixed charges (A) $ 510.6
=========
Earnings as Defined:
Pretax income after elimination of undistributed
earnings of equity method investees $1,109.1
Add fixed charges 510.6
Less capitalized interest (5.7)
------------
Earnings and fixed charges (B) $1,614
========
Ratio of earnings to fixed charges (B/A) 3.2
7. The following is certain pro forma financial information for fiscal 2002
with respect to the impact of the transaction on the company's Meat
Processing reporting segment.
Meat Processing Elimination of Pro Forma
Historical Businesses Sold Adjustments As Adjusted
Net Sales $ 10,023.5 $ (7,732.9) $ -- $ 2,290.6
Operating Profit (a) $ 269.3 $ (192.3) $ 30.5 $ 107.5
(a) Operating profit is profit before interest, goodwill amortization, general
corporate expense and income taxes.