FOR IMMEDIATE RELEASE
CONAGRA FOODS REPORTS SOLID FOURTH QUARTER SALES AND EARNINGS; EXPECTS SOLID
FISCAL 2005 EPS
SEVEN MILLION SHARES REPURCHASED DURING THE QUARTER
FOURTH QUARTER 2004 HIGHLIGHTS
o Diluted EPS of $0.40 vs. $0.28 last year.
o Sales rose to $4.0 billion compared with $3.6 billion last year. All
operating segments posted year-over-year sales gains.
o Due to strategic portfolio changes, new segment classifications are now in
effect: Retail Products, Foodservice Products, and Food Ingredients.
o Repurchased seven million shares of the company's stock at a cost of
approximately $200 million.
FISCAL YEAR 2004 HIGHLIGHTS
o Fiscal year diluted EPS of $1.66 vs. $1.46 in the prior fiscal year.
o Repurchased 15 million shares of the company's stock at a cost of
approximately $419 million.
<page>
Note: Year-Over-Year Comparability:
Several items impact year-over-year comparisons of sales, operating profit, and
EPS, including the prior year contribution from businesses the company no longer
owns, fiscal year 2004 costs associated with implementing efficiency
initiatives, the estimated benefit from the inclusion of one additional week in
the fourth quarter and the full fiscal year 2004, and changing the fiscal
year-end for an operation within the Food Ingredients segment to match ConAgra
Foods fiscal year-end. Comparable year-over-year changes in sales and operating
profits for the fourth quarter and the fiscal year reflecting these factors are
summarized in tables at the end of this release.
OMAHA, Neb., July 1, 2004 -- ConAgra Foods, Inc. (NYSE: CAG), one of America's
leading packaged food companies, today reported earnings for the fourth quarter
ended May 30, 2004. Net income for the quarter rose 41% to $212 million, or
$0.40 per diluted share, compared with earnings a year ago of $150 million, or
$0.28 per diluted share. For all of fiscal year 2004, net income rose to $880
million, or $1.66 per diluted share. In fiscal 2003, the company earned $775
million, or $1.46 per diluted share.
Bruce Rohde, chairman and chief executive officer, commented, "Fiscal year 2004
was a year of significant momentum for ConAgra Foods; we accomplished the
strategic reshaping of our portfolio that we set out to do by completing the
divesture of non-core businesses, and we made measurable progress with key
initiatives designed to drive profitable future growth. We are expanding profit
margins through sales, marketing, and operational platform initiatives, as we
build our business base into a richer, and more consumer-focused enterprise."
For the quarter: Sales were up 9% to $4.0 billion vs. $3.6 billion last year.
Current quarter operating profit was $465 million, 4% below the $486 million
reported last year. On a comparable basis, sales were 4% ahead of last year and
operating profit increased 2% over last year, after considering the impact of
prior year contributions from businesses the company no longer owns, fiscal year
2004 costs associated with implementing efficiency initiatives, the estimated
benefit from the inclusion of one additional week in the fourth quarter, and
changing the fiscal year-end for an operation within the Food Ingredients
segment to match ConAgra Foods fiscal year-end, all of which are detailed in
tables at the end of this release. Current quarter income from continuing
operations before income tax and the cumulative effect of changes in accounting
was $305 million, equal to last fiscal year.
For fiscal 2004: Sales were $14.5 billion, 14% below last year's sales of $16.9
billion. Fiscal year 2004 operating profit totaled $1.7 billion, 8% below $1.9
billion reported last year. Sales increased 3% and operating profit increased 2%
on a comparable basis, after considering the impact of prior year contributions
from businesses the company no longer owns, fiscal year 2004 costs associated
with implementing efficiency initiatives, and the estimated benefit from the
inclusion of one additional week in the full fiscal year 2004, all of which are
detailed in tables at the end of this release. For the fiscal year 2004, income
from continuing operations before income tax and cumulative effect of changes in
accounting was $1.2 billion, down 6% compared to last year.
Segment Comments & Operating Efficiency Initiatives
Reflecting strategic portfolio changes and management realignment in 2004, the
company began reporting its operations in three segments: Retail Products,
Foodservice Products, and Food Ingredients. Historical segment results have been
adjusted to reflect the segment changes.
The company has several operating efficiency initiatives underway that are
designed to improve the company's cost structure, margins, and competitive
position. Implementing these initiatives resulted in approximately $62 million
of charges, or $0.07 per diluted share of expense for the fiscal year 2004; this
includes $24 million, or $0.03 per diluted share, in the fourth quarter. Most of
the expenses were incurred in the Foodservice Products and Retail Products
segments. The company currently plans for these initiatives to continue in
fiscal year 2005 and result in approximately $0.03 per diluted share of similar
charges in that year.
Retail Products
Sales for the Retail Products segment (58% of total annual sales) were $2.2
billion for the fourth quarter, up 3%. Sales were essentially equal to last year
on a comparable basis, after considering the impact of prior year contribution
from businesses the company no longer owns and the estimated benefit from the
inclusion of one additional week in the fourth quarter, which are detailed in
tables at the end of this release.
o Several major consumer brands posted sales gains on a comparable
13-week basis including: Banquet, Blue Bonnet, Chef Boyardee, DAVID,
Egg Beaters, Hebrew National, Hunt's, Kid Cuisine, La Choy, Manwich,
Marie Callender's, PAM, Peter Pan, Reddi-wip, Slim Jim, Snack Pack,
Wesson, and others. Many have posted several successive quarters of
solid sales growth and strong category performance.
The sales performance reflects distribution gains for many products. Efforts to
expand distribution have been made more effective by the unification of the
retail sales team; earlier in fiscal 2004, the retail sales force consolidated
and now serves customers as a consolidated ConAgra Foods team representing the
ConAgra Foods Retail Products portfolio. This consolidation is expected to
improve customer contact, service, and expand product promotion and bundling
opportunities that benefit customers and the company.
Improved marketing efforts for some brands are starting to favorably influence
brand performance, as the company has formalized its approach to building brands
to utilize best practices and to prioritize marketing investments. In addition,
selling prices for many items are increasing, made necessary by rising input
costs. Other factors contributing to the improved sales performance include a
portfolio that has a variety of quality foods and product platforms which are
on-trend with current consumer preferences. Life Choice, the company's new line
of frozen meals targeting carb-conscious consumers, performed well. During the
quarter, the company introduced Banquet(R) Crock-Pot(R) Classics, a new line of
frozen meals specifically for Crock-Pot(R) slow cookers; the product is off to a
strong start and the company is optimistic about its prospects. Weak popcorn
volumes negatively impacted the segment's sales performance, due to category and
competitive challenges.
The Retail Products segment operating profit for the quarter was $315 million,
7% below the $340 million posted last year. On a comparable basis, operating
profit was 11% below last year after considering the impact of prior year
contribution from businesses the company no longer owns, fiscal year 2004 costs
associated with implementing efficiency initiatives, and the estimated benefit
from the inclusion of one additional week in the fourth quarter, as detailed in
tables at the end of this release. Increased input costs, which were not fully
offset by higher selling prices during the year for several of the company's
products, negatively affected segment profits as did a less favorable mix of
products. The company noted that operating profits for its branded processed
meats and popcorn products were weak compared to past trends, reflecting current
category and competitive challenges.
Fiscal year 2004 sales for the Retail Products segment reached $8.4 billion, 3%
below the $8.7 billion reported last fiscal year primarily due to divestitures.
Operating profit for the segment was $1.2 billion, 7% below the $1.3 billion
reported last fiscal year. Sales were 1% ahead of last year and operating profit
was 4% below last year after considering the impact of the prior year
contribution from businesses the company no longer owns, fiscal year 2004 costs
associated with implementing efficiency initiatives, and the estimated benefit
from the inclusion of one additional week in the full fiscal year 2004, all of
which are detailed in tables at the end of this release.
Foodservice Products
Sales for the Foodservice Products segment (26% of total annual sales) were $1.0
billion for the fourth quarter, an increase of 9% over the $916 million in the
fourth quarter last year. Segment operating profit for the quarter was $90
million, 15% above the $78 million posted last year. On a comparable basis,
sales were 5% above last year and operating profit was 29% higher than last year
after considering the impact of prior year contribution from businesses the
company no longer owns, fiscal year 2004 costs associated with implementing
efficiency initiatives, and the estimated benefit from the inclusion of one
additional week in the fourth quarter, all of which are detailed in tables at
the end of this release.
As a result of recent organizational changes, the company's Foodservice Products
segment now consists of three specialized sales platforms: culinary, specialty
potatoes, and seafood. The company's culinary group represents several different
types of products, including branded consumer products sold in the foodservice
channel, prepared meats, frozen prepared entrees, pizza, ethnic foods,
condiments, sauces, custom products, and others.
Comparable Foodservice Products sales growth for the quarter reflects strong
customer demand for specialty potato and culinary products; seafood sales
declined despite unit volume gains, reflecting market conditions. The overall
comparable operating profit growth for the quarter reflects strong volumes
across a variety of products and effective cost and pricing management.
The company believes that all components of its foodservice business have solid
opportunities for growth, and that its culinary business unit, in particular,
has an excellent opportunity to identify new customers and gain more business
with existing customers given that this business unit was recently established.
This unit is expected to benefit from stronger marketplace presence, sales
penetration, and greater efficiencies.
Fiscal year 2004 sales for the Foodservice Products segment reached $3.7
billion, 3% ahead of the $3.6 billion reported last fiscal year. Operating
profit was $321 million, 7% below the $345 million reported last fiscal year
primarily due to costs related to implementing efficiency initiatives. On a
comparable basis, sales grew 4% and operating profit grew 2% after considering
the impact of prior year contribution from businesses the company no longer
owns, fiscal year 2004 costs associated with implementing efficiency
initiatives, and the estimated benefit from the inclusion of one additional week
in full fiscal year 2004, all of which are detailed in tables at the end of this
release.
Food Ingredients
During the quarter, sales for the Food Ingredients (16% of total annual sales)
segment increased 32% to $731 million from $553 million last year. Operating
profit improved 223% to $60 million this year compared with $19 million last
year. On a comparable basis, sales increased 14% and operating profit increased
74%, after considering the impact of prior year contribution from businesses the
company no longer owns, fiscal year 2004 costs associated with implementing
efficiency initiatives, the estimated benefit from the inclusion of one
additional week in the fourth quarter, and changing the fiscal year-end for an
operation within the Food Ingredients segment to match ConAgra Foods fiscal
year-end, all of which are detailed in tables at the end of this release. The
operating profit increase reflects a slightly improved business environment and
more efficient operations for dehydrated, seasonings and flavors, and milled
product lines as well as better results from ingredient merchandising
operations. The sales increase largely reflects fluctuating market prices and a
more favorable environment for commodity merchandising operations.
For fiscal year 2004, sales for the Food Ingredients segment totaled $2.4
billion, 8% ahead of the $2.2 billion reported last year, and operating profit
for the fiscal year was $197 million, 57% above the $125 million reported last
fiscal year. On a comparable basis, fiscal 2004 sales increased 5% and operating
profit increased 58%, after considering the impact of prior year contribution
from businesses the company no longer owns, fiscal year 2004 costs associated
with implementing efficiency initiatives, and the estimated benefit from the
inclusion of one additional week in the full fiscal year 2004, all of which are
detailed in tables at the end of this release.
During the quarter, the company divested a non-core European animal feed
business that had approximately $282 million in annual revenues and an
immaterial amount of segment profits. As a result of this transaction that
business has now been reclassified as a discontinued operation; historical
results reflect this reclassification. That divestiture resulted in a net $0.02
per share gain in the fourth quarter, which is classified within discontinued
operations.
Earnings from Equity Method Investments & Discontinued Operations
Equity method investment earnings for the quarter were $14 million, compared
with $10 million for the same quarter last year. Fiscal year 2004 results for
equity method investment earnings were $44 million, compared with $37 million
for last fiscal year.
During the quarter, diluted EPS from discontinued operations totaled $0.03 per
share, including a net $0.02 gain from selling the European animal feed
business, described above.
Capital Resource Management & Corporate Expense
The company repurchased approximately 7 million shares of common stock during
the fourth quarter at a total cost of approximately $200 million. During fiscal
year 2004, the company repurchased over 15 million shares for a total cost of
approximately $419 million.
o Continuing operations - fiscal fourth quarter: Capital expenditures for
property, plant, and equipment totaled $106 million compared with $120
million last year. Depreciation and amortization expense was approximately
$93 million for the quarter versus $93 million a year ago. Dividends paid
totaled $137 million. Net interest expense for the quarter was $80 million
compared with $59 million last year.
o Continuing operations - fiscal year 2004: Capital expenditures for
property, plant, and equipment were $352 million, compared with $376
million in fiscal year 2003. Depreciation and amortization expense amounted
to $352 million versus $375 million last year. Dividends paid totaled $537
million. Net interest expense was $275 million, compared with $275 million
last fiscal year.
o Corporate expense was $95 million for the quarter, compared with $133
million last year. The year-over-year reduction was favorably influenced by
a $21 million taxable gain in the current quarter from selling a minority
interest in a joint venture. Additionally, the company established a $25
million legal reserve in the fourth quarter this year in connection with
the previously disclosed September 28, 2001 SEC formal order of nonpublic
investigation.
o For the fiscal year, corporate expense was $342 million, compared with $407
million last year.
New Product News
During the quarter, ConAgra Foods introduced Banquet(R) Crock-Pot(R) Classics,
the first complete meal designed and created for Crock-Pot(R) slow cooking.
Banquet Crock-Pot Classics contain all of the high-quality ingredients needed
for a slow-cooked meal--like tender meats, fresh vegetables, hearty potatoes and
perfectly seasoned sauces--and are ready to cook with less than five minutes of
preparation. The product is off to a strong start.
Outlook
The company believes fiscal 2005 will show a solid EPS performance and growth in
sales and operating profits from its current business segments. In addition to
paying a strong dividend, the company expects to continue allocating capital
toward repurchasing its shares during fiscal 2005 as well as toward acquisition
opportunities that fit with the company's strategic and financial goals.
The company is currently implementing profit-enhancing initiatives that impact
the marketing, sales, operations, and information system functions, and expects
the benefit from these initiatives to have an increasingly positive impact to
the company's overall EPS over the next three fiscal years. For more detail on
these initiatives, please refer to the company's website,
www.conagrafoods.com/investors, and choose the button titled "ConAgra Foods
Comments on Strategic Direction."
Major Items Affecting Year-Over-Year EPS Comparability of Fourth-Quarter 2004
Results
Included in the $0.40 diluted EPS for the fourth quarter of fiscal 2004:
o Current quarter results include expense of approximately $0.03 per diluted
share related to implementing cost-saving initiatives.
o Current quarter results include $0.03 per diluted share of income from
discontinued operations.
o Current quarter results include a benefit of approximately $0.02 per
diluted share related to the taxable gain on the sale of the company's
minority interest in a joint venture; this is classified as a $21 million
reduction of corporate expense.
o Current quarter results include a $0.02 per share benefit from a lower than
normal effective tax rate, due primarily to the utilization of capital loss
carryforwards and foreign tax credits.
o Current quarter results include an estimated $0.03 per share benefit from
having an extra week's results in the quarter, as fiscal 2004 was a 53-week
year.
o Current quarter results include a $0.05 per share charge for the
establishment of a legal reserve, described previously in this release and
classified as corporate expense.
Included in the $0.28 diluted EPS for the fourth quarter of fiscal 2003:
o Prior year results include $0.12 per diluted share of loss from
discontinued operations, mostly related to the divestiture of chicken
processing operations.
o Prior year results include a favorable insurance settlement of $0.06 per
diluted share. This is classified as operating profit in the Meat
Processing segment.
o Prior year results include a tax benefit of $0.04 per diluted share, due to
a lower than normal tax rate in the fiscal fourth quarter of 2003.
Major Items Affecting Year-Over-Year Sales and Operating Profit Comparability
o To determine comparable year-over-year sales and operating profit amounts
for the Retail Products segment for the fourth quarter and fiscal year,
management considered the estimated impacts of matters set forth in the
analysis below (amounts in millions):
- ------------------ -------------- --------------- --------------- ---------------- ------------ ---------------
Retail Products Q4 2004 Q4 2003 % Change Fiscal 2004 Fiscal 2003 % Change
Sales Sales Sales Sales Sales
- ------------------ -------------- --------------- --------------- ---------------- ------------ ---------------
As Reported $2,230.2 $2,157.2 3.4% $8,434.1 $8,668.1 (2.7%)
- ------------------ -------------- --------------- --------------- ---------------- ------------ ---------------
Estimated ($164.6) - ($164.6) -
impact of extra
week in 2004 *
- ------------------ -------------- --------------- --------------- ---------------- ------------ ---------------
Impact on fiscal - ($94.9) - ($492.9)
2003 from
operations the
company no
longer owns
- ------------------ -------------- --------------- --------------- ---------------- ------------ ---------------
Comparable $2,065.6 $2,062.3 0.2% $8,269.5 $8,175.2 1.2%
Amounts
- ------------------ --------------- -------------- --------------- ---------------- ------------ ---------------
Retail Products Q4 2004 Q4 2003 % Change Fiscal 2004 Fiscal 2003 % Change
Operating Operating Operating Operating Operating
Profit Profit Profit Profit Profit
- ------------------ --------------- -------------- --------------- ---------------- ------------ ---------------
As Reported $314.8 $339.8 (7.4%) $1,206.8 $1,298.0 (7.0%)
- ------------------ --------------- -------------- --------------- ---------------- ------------ ---------------
Estimated impact ($27.6) - ($27.6) -
of extra week in
2004 *
- ------------------ --------------- -------------- --------------- ---------------- ------------ ---------------
Costs Related to $10.2 - $25.4 -
Implementing
Efficiency
Initiatives in
2004
- ------------------ --------------- -------------- --------------- ---------------- ------------ ---------------
Impact on fiscal - ($6.3) - ($43.2)
2003 from
operations the
company no
longer owns
- ------------------ --------------- -------------- --------------- ---------------- ------------ ---------------
Comparable $297.4 $333.5 (10.8%) $1,204.6 $1,254.8 (4.0%)
Amounts
- ------------------ --------------- -------------- --------------- ---------------- ------------ ---------------
(a) The company estimated the impact of the extra week of operations in 2004
using a pro-rata methodology based on the last six weeks of the fiscal year.
o To determine comparable year-over-year sales and operating profit amounts
for the Foodservice Products segment for the fourth quarter and fiscal
year, management considered the estimated impacts of matters set forth in
the analysis below (amounts in millions):
- ------------------ -------------- -------------- ----------------- --------------- ----------- --------------
Foodservice Q4 2004 Q4 2003 % Change Fiscal 2004 Fiscal % Change
Products Sales Sales Sales 2003
Sales Sales
- ------------------ -------------- -------------- ----------------- --------------- ----------- --------------
As Reported $1,001.7 $915.6 9.4% $3,714.4 $3,597.9 3.2%
- ------------------ -------------- -------------- ----------------- --------------- ----------- --------------
Estimated impact ($69.5) - ($69.5) -
of extra week in
2004 *
- ------------------ -------------- -------------- ----------------- --------------- ----------- --------------
Impact on fiscal - ($28.3) - ($93.1)
2003 from
operations the
company no
longer owns
- ------------------ -------------- -------------- ----------------- --------------- ----------- --------------
Comparable $932.2 $887.3 5.1% $3,644.9 $3,504.8 4.0%
Amounts
- ------------------ -------------- -------------- ----------------- --------------- ----------- --------------
- ------------------ --------------- -------------- ---------------- --------------- ----------- --------------
Foodservice Q4 2004 Q4 2003 % Change Fiscal 2004 Fiscal % Change
Products Operating Operating Operating 2003
Operating Profit Profit Profit Profit Operating
Profit
- ------------------ --------------- -------------- ---------------- --------------- ----------- --------------
As Reported $89.9 $78.0 15.3% $321.4 $344.5 (6.7%)
- ------------------ --------------- -------------- ---------------- ----------- -------------- --------------
Estimated impact ($6.6) - ($6.6) -
of extra week in
2004 *
- ------------------ --------------- -------------- ---------------- --------------- ----------- --------------
Costs Related to $13.3 - $28.9 -
Implementing
Efficiency
Initiatives in
2004
- ------------------ --------------- -------------- ---------------- --------------- ----------- --------------
Impact on fiscal - ($2.9) - ($6.2)
2003 from
operations the
company no
longer owns
- ------------------ --------------- -------------- ---------------- --------------- ----------- --------------
Comparable $96.6 $75.1 28.6% $343.7 $338.3 1.6%
Amounts
- ------------------ --------------- -------------- ---------------- --------------- ----------- --------------
(a) The company estimated the impact of the extra week of operations in 2004
using a pro-rata methodology based on the last six weeks of the fiscal year.
o To determine comparable year-over-year sales and operating profit amounts
for the Food Ingredients segment for the fourth quarter and fiscal year,
management considered the estimated impacts of matters set forth in the
analysis below (amounts in millions):
- ------------------ -------------- -------------- --------------- --------------- ----------- --------------
Food Ingredients Q4 2004 Q4 2003 % Change Fiscal 2004 Fiscal % Change
Sales Sales Sales Sales 2003 Sales
- ------------------ -------------- -------------- --------------- --------------- ----------- --------------
As Reported $730.5 $552.5 32.2% $2,373.6 $2,204.4 7.7%
- ------------------ -------------- -------------- --------------- --------------- ----------- --------------
Estimated impact ($54.9) - ($54.9) -
of extra week in
2004 *
- ------------------ -------------- -------------- --------------- --------------- ----------- --------------
Impact of change - $42.9 - -
in fiscal year
of fertilizer
operations**
- ------------------ -------------- -------------- --------------- --------------- ----------- --------------
Comparable $675.6 $595.4 13.5% $2,318.7 $2,204.4 5.2%
Amounts
- ------------------ -------------- -------------- --------------- --------------- ----------- --------------
- ------------------ --------------- ------------- --------------- --------------- ----------- --------------
Food Ingredients Q4 2004 Q4 2003 % Change Fiscal 2004 Fiscal % Change
Operating Profit Operating Operating Operating 2003
Profit Profit Profit Operating
Profit
- ------------------ --------------- ------------- --------------- --------------- ----------- --------------
As Reported $60.4 $18.7 223.0% $196.6 $125.1 57.2%
- ------------------ --------------- ------------- --------------- --------------- ----------- --------------
Estimated impact ($6.7) - ($6.7) -
of extra week in
2004 *
- ------------------ --------------- ------------- --------------- --------------- ----------- --------------
Costs Related to $0.3 - $7.6 -
Implementing
Efficiency
Initiatives in
2004
- ------------------ --------------- ------------- --------------- --------------- ----------- --------------
Impact of change - $12.4 - -
in fiscal year
of fertilizer
operations**
- ------------------ --------------- ------------- --------------- --------------- ----------- --------------
Comparable $54.0 $31.1 73.6% $197.5 $125.1 57.9%
Amounts
- ------------------ --------------- ------------- --------------- --------------- ----------- --------------
(a) The company estimated the impact of the extra week of operations in 2004
using a pro-rata methodology based on the last six weeks of the fiscal year.
(b) Certain of the company's fertilizer operations historically had a February
fiscal year end. In the current year the company changed these operations'
year-end to May. As such, the fourth quarter results for fiscal 2003 are for the
three months ended February, as compared to the fourth quarter fiscal 2004
results which are for the three months ended May. Due to seasonality, the
fertilizer operations are typically significantly greater for the three months
ended May as compared to the three months ended February. There is no material
impact of change on the full year comparison.
o To determine comparable year-over-year sales and operating profit amounts
for the total company for the fourth quarter and fiscal year, management
considered the estimated impacts of matters set forth in the analysis below
(amounts in millions):
- ----------------------- --------- -------------- -------------- ----------------- --------------- --------------
ConAgra Foods Q4 2004 Q4 2003 % Change Fiscal 2004 Fiscal 2003 % Change
Sales Sales Sales Sales Sales
- ----------------------- --------- -------------- -------------- ----------------- --------------- --------------
As Reported $3,962.4 $3,625.3 9.3% $14,522.1 $16,939.1 (14.3%)
- ----------------------- --------- -------------- -------------- ----------------- --------------- --------------
Estimated impact of ($289.0) - ($289.0) -
extra week in 2004 *
- ----------------------- --------- -------------- -------------- ----------------- --------------- --------------
Impact of change in - $42.9 - -
fiscal year of
fertilizer
operations**
- ----------------------- --------- -------------- -------------- ----------------- --------------- --------------
Impact on fiscal 2003 - ($123.2) - ($3,054.7)
from operations the
company no longer owns
- ----------------------- --------- -------------- -------------- ----------------- --------------- --------------
Comparable Amounts $3,673.4 $3,545.0 3.6% $14,233.1 $13,884.4 2.5%
- ----------------------- --------- -------------- -------------- ----------------- --------------- --------------
- ----------------------- ----------- ------------- ------------- ----------------- --------------- --------------
ConAgra Foods Q4 2004 Q4 2003 % Change Fiscal 2004 Fiscal 2003 % Change
Operating Profit *** Operating Operating Operating Profit Operating
Profit Profit Profit
- ----------------------- ----------- ------------- ------------- ----------------- --------------- --------------
As Reported $465.1 $486.2 (4.3%) $1,724.8 $1,867.0 (7.6%)
- ----------------------- ----------- ------------- ------------- ----------------- --------------- --------------
Estimated impact of ($40.9) - ($40.9) -
extra week in 2004 *
- ----------------------- ----------- ------------- ------------- ----------------- --------------- --------------
Costs Related to $23.8 - $61.9 -
Implementing
Efficiency
Initiatives in 2004
- ----------------------- ----------- ------------- ------------- ----------------- --------------- --------------
Impact of change in - $12.4 - -
fiscal year of
fertilizer
operations**
- ----------------------- ----------- ------------- ------------- ----------------- --------------- --------------
Impact on fiscal 2003 - ($58.9) - ($148.8)
from operations the
company no longer owns
- ----------------------- ----------- ------------- ------------- ----------------- --------------- --------------
Comparable Amounts $448.0 $439.7 1.9% $1,745.8 $1,718.2 1.6%
- ----------------------- ----------- ------------- ------------- ----------------- --------------- --------------
(a) The company estimated the impact of the extra week of operations in 2004
using a pro-rata methodology based on the last six weeks of the fiscal year.
(b) Certain of the company's fertilizer operations historically had a February
fiscal year end. In the current year the company changed these operations'
year-end to May. As such, the fourth quarter results for fiscal 2003 are for the
three months ended February, as compared to the fourth quarter fiscal 2004
results which are for the three months ended May. Due to seasonality, the
fertilizer operations are typically significantly greater for the three months
ended May as compared to the three months ended February. There is no material
impact of change on the full year comparison.
(c) A reconciliation of total operating profit to income from continuing
operations before income tax and cumulative effect of changes in accounting is
presented in the segment operating results attached to this release.
ConAgra Foods, Inc. (NYSE: CAG) is one of North America's largest packaged food
companies, serving consumer grocery retailers, as well as restaurants and other
foodservice establishments. Popular ConAgra Foods consumer brands include: ACT
II, Armour, Banquet, Blue Bonnet, Brown N' Serve, Butterball, Chef Boyardee,
Cook's, Crunch 'n Munch, DAVID, Decker, Eckrich, Egg Beaters, Fleischmann's,
Golden Cuisine, Gulden's, Healthy Choice, Hebrew National, Hunt's, Kid Cuisine,
Knott's Berry Farm, La Choy, Lamb Weston, Libby's, Life Choice, Lightlife, Lunch
Makers, MaMa Rosa's, Manwich, Marie Callender's, Orville Redenbacher's, PAM,
Parkay, Pemmican, Peter Pan, Reddi-wip, Rosarita, Ro*Tel, Slim Jim, Snack Pack,
Swiss Miss, Van Camp's, Wesson, Wolf, and many others. For more information,
please visit us at www.conagrafoods.com.
Discussion of Results
A discussion of ConAgra Foods' fourth-quarter results will be available today at
8:30 a.m. EDT. To access the discussion, call toll-free at 1-877-447-8217.
International callers should dial 1-706-679-0415. On the Internet, you may
access the discussion at www.conagrafoods.com/investors. No passcode or call
identification number is needed for the call at 8:30 a.m. EDT. A digital replay
of the discussion will be available after 9:30 a.m. EDT at 1-800-642-1687 and at
1-706-645-9291 for international callers. The conference identification number
for the digital replay for domestic callers and international callers is
7645047. The company has posted a question-and-answer supplement relating to
this release and an audio archive of management's discussion at
www.conagrafoods.com/investors. See the ConAgra Foods Web site for recent news
at www.conagrafoods.com.
Note on Forward-Looking Statements:
This news release contains "forward-looking" statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements are based
on management's current expectations and are subject to uncertainty and changes
in circumstances. Actual results may vary materially from the expectations
contained in the forward-looking statements. Future economic circumstances,
industry conditions, company performance and financial results, availability and
prices of raw materials, product pricing, competitive environment and related
market conditions, operating efficiencies, access to capital, actions of
governments and regulatory factors affecting the company's businesses and other
risks described in the company's reports filed with the Securities and Exchange
Commission are examples of factors, among others, that could cause actual
results to differ materially from those described in the forward-looking
statements. The company is under no obligation to (and expressly disclaims any
such obligation to) update or alter its forward-looking statements whether as a
result of new information, future events, or otherwise.
ConAgra Foods, Inc.
Segment Operating Results
In millions
FOURTH QUARTER
-------------------------------------------------------------
14 Weeks Ended 13 Weeks Ended
-------------------- ------------------ ------------------
May 30, 2004 May 25, 2003 Percent Change
-------------------- ------------------ ------------------
SALES
Retail Products $ 2,230.2 $ 2,157.2 3.4 %
Foodservice Products 1,001.7 915.6 9.4%
Food Ingredients 730.5 552.5 32.2 %
Meat Processing - - -
-------------------- ------------------
Total 3,962.4 3,625.3 9.3%
-------------------- ------------------
OPERATING PROFIT
Retail Products $ 314.8 $ 339.8 (7.4)%
Foodservice Products 89.9 78.0 15.3%
Food Ingredients 60.4 18.7 223.0%
Meat Processing - 49.7 (100.0)%
-------------------- ------------------
Total operating profit for segments 465.1 486.2 (4.3)%
Reconciliation of total operating profit to income from continuing operations
before income tax and cumulative effect of changes in accounting
Items excluded from segment operating profit:
General corporate expense 95.2 132.8 (28.3)%
Interest expense, net 79.5 58.7 35.4%
Equity method investment earnings 14.1 10.0 41.0%
-------------------- ------------------
Income from continuing operations before income tax and
cumulative effect of changes in accounting $ 304.5 $ 304.7 (0.1)%
==================== ==================
Segment operating profit excludes general corporate expense, equity method
investment earnings and net interest expense. Management believes such
expenses are not directly associated with segment performance results for
the period. Management believes the presentation of total operating profit
for segments facilitates period-to-period comparison of results of segment
operations.
ConAgra Foods, Inc.
Segment Operating Results
In millions
YEAR TO DATE
-------------------------------------------------------------
53 Weeks Ended 52 Weeks Ended
-------------------- ------------------ ------------------
May 30, 2004 May 25, 2003 Percent Change
-------------------- ------------------ ------------------
SALES
Retail Products $ 8,434.1 $ 8,668.1 (2.7)%
Foodservice Products 3,714.4 3,597.9 3.2%
Food Ingredients 2,373.6 2,204.4 7.7 %
Meat Processing - 2,468.7 (100.0)%
-------------------- ------------------
Total 14,522.1 16,939.1 (14.3)%
-------------------- ------------------
OPERATING PROFIT
Retail Products $ 1,206.8 $ 1,298.0 (7.0)%
Foodservice Products 321.4 344.5 (6.7)%
Food Ingredients 196.6 125.1 57.2%
Meat Processing - 99.4 (100.0)%
-------------------- ------------------
Total operating profit for segments 1,724.8 1,867.0 (7.6)%
Reconciliation of total operating profit to income from continuing operations
before income tax and cumulative effect of changes in accounting
Items excluded from segment operating profit:
General corporate expense 342.1 406.8 (15.9)%
Interest expense, net 274.9 274.7 0.1%
Equity method investment earnings 43.5 37.1 17.3%
-------------------- ------------------
Income from continuing operations before income tax and
cumulative effect of changes in accounting $ 1,151.3 $ 1,222.6 (5.8)%
==================== ==================
Segment operating profit excludes general corporate expense, equity method
investment earnings and net interest expense. Management believes such
expenses are not directly associated with segment performance results for
the period. Management believes the presentation of total operating profit
for segments facilitates period-to-period comparison of results of segment
operations.
ConAgra Foods, Inc.
Consolidated Statements of Earnings
In millions, except per share amounts
FOURTH QUARTER
---------------------------------------------------------------
14 Weeks Ended 13 Weeks Ended
------------------- ------------------- -------------------
May 30, 2004 May 25, 2003 Percent
Change
------------------- ------------------- -------------------
Net sales $ 3,962.4 $ 3,625.3 9.3%
Costs and expenses:
Cost of goods sold 3,144.0 2,831.9 11.0%
Selling, general and administrative expenses 448.5 440.0 1.9%
Interest expense, net 79.5 58.7 35.4%
------------------- -------------------
3,672.0 3,330.6 10.3%
Equity method investment earnings 14.1 10.0 41.0%
------------------- -------------------
Income from continuing operations before income taxes
and cumulative effect of changes in accounting 304.5 304.7 (0.1)%
Income tax expense 105.5 88.9 18.7%
------------------- -------------------
Income from continuing operations before
cumulative effect of changes in accounting 199.0 215.8 (7.8)%
Income (loss) from discontinued operations, net of tax 12.5 (65.4) N/A
Cumulative effect of changes in accounting N/A
- -
------------------- -------------------
Net income $ 211.5 $ 150.4 40.6%
=================== ===================
Earnings per share - basic
Income from continuing operations before
cumulative effect of changes in accounting $ 0.38 $ 0.41 (7.3)%
Income (loss) from discontinued operations 0.02 (0.12) N/A
------------------- -------------------
Net income $ 0.40 $ 0.29 37.9%
=================== ===================
Weighted average shares outstanding 522.4 529.2 (1.3)%
=================== ===================
Earnings per share - diluted
Income from continuing operations before
cumulative effect of changes in accounting $ 0.37 $ 0.40 (7.5)%
Income (loss) from discontinued operations 0.03 (0.12) N/A
------------------- -------------------
Net income $ 0.40 $ 0.28 42.9%
=================== ===================
Weighted average share and share equivalents
outstanding 527.1 530.0 (0.5)%
=================== ===================
ConAgra Foods, Inc.
Consolidated Statements of Earnings
In millions, except per share amounts
YEAR TO DATE
---------------------------------------------------------------
53 Weeks Ended 52 Weeks Ended
------------------- ------------------- -------------------
May 30, 2004 May 25, 2003 Percent
Change
------------------- ------------------- -------------------
Net sales $ 14,522.1 $ 16,939.1 (14.3)%
Costs and expenses:
Cost of goods sold 11,326.1 13,569.9 (16.5)%
Selling, general and administrative expenses 1,813.3 1,909.0 (5.0)%
Interest expense, net 274.9 274.7 0.1%
------------------- -------------------
13,414.3 15,753.6 (14.8)%
Equity method investment earnings 43.5 37.1 17.3%
------------------- -------------------
Income from continuing operations before income taxes
and cumulative effect of changes in accounting 1,151.3 1,222.6 (5.8)%
Income tax expense 355.3 415.6 (14.5)%
Income from continuing operations before
cumulative effect of changes in accounting 796.0 807.0 (1.4)%
Income (loss) from discontinued operations, net of tax 96.9 (36.1) N/A
Cumulative effect of changes in accounting (13.1) 3.9 N/A
------------------- -------------------
Net income $ 879.8 $ 774.8 13.6%
=================== ===================
Earnings per share - basic
Income from continuing operations before
cumulative effect of changes in accountingn $ 1.51 $ 1.53 (1.3)%
Income from discontinued operations 0.18 (0.07) N/A
Cumulative effect of changes in accounting (0.02) 0.01 N/A
------------------- -------------------
Net income $ 1.67 $ 1.47 13.6%
=================== ===================
Weighted average shares outstanding 527.2 528.6 (0.3)%
=================== ===================
Earnings per share - diluted
Income from continuing operations before
cumulative effect of changes in accounting $ 1.50 $ 1.52 (1.3)%
Income from discontinued operations 0.18 (0.07) N/A
Cumulative effect of changes in accounting (0.02) 0.01 N/A
------------------- -------------------
Net income $ 1.66 $ 1.46 13.7%
=================== ===================
Weighted average share and share equivalents 530.7 530.7 -
outstanding
=================== ===================
ConAgra Foods, Inc.
Consolidated Balance Sheets
In millions
May 30, 2004 May 25, 2003
--------------------- --------------------
ASSETS
Current assets
Cash and cash equivalents $ 588.7 $ 628.6
Divestiture proceeds receivable 60.3 -
Receivables, less allowance for doubtful accounts
of $26.5 and $33.1 1,324.1 800.9
Inventories 2,625.6 2,455.6
Prepaid expenses and other current assets 410.6 669.3
Current assets of discontinued operations 135.6 1,505.2
--------------------- --------------------
Total current assets 5,144.9 6,059.6
Property, plant and equipment, net 2,880.0 2,678.3
Goodwill 3,798.8 3,807.2
Brands, trademarks and other intangibles, net 826.9 824.3
Other assets 1,569.5 1,144.4
Noncurrent assets of discontinued operations 10.0 557.6
--------------------- --------------------
$ 14,230.1 $ 15,071.4
===================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ 30.6 $ 1.6
Current installments of long-term debt 382.4 508.7
Accounts payable 940.8 788.1
Advances on sales 178.4 112.0
Other accrued liabilities 1,348.9 1,396.6
Current liabilities of discontinued operations 120.5 996.4
--------------------- --------------------
Total current liabilities 3,001.6 3,803.4
Senior long-term debt, excluding current installments 4,878.4 4,632.2
Subordinated debt 402.3 763.0
Preferred securities of subsidiary company - 175.0
Other noncurrent liabilities 1,108.3 1,058.7
Noncurrent liabilities of discontinued operations - 17.4
Common stockholders' equity 4,839.5 4,621.7
--------------------- --------------------
$ 14,230.1 $ 15,071.4
===================== ====================