FOR IMMEDIATE RELEASE
CONAGRA FOODS REPORTS FOURTH-QUARTER RESULTS; FOCUSES ON EFFICIENCY INITIATIVES
FOR FISCAL 2006
FOURTH-QUARTER FISCAL 2005 OVERVIEW:
o Fourth-quarter fiscal 2005 diluted EPS was $0.20.
>> The $0.20 includes $0.06 of expense from items impacting
comparability, primarily severance expense related to a previously
announced headcount reduction program.
o Fourth-quarter fiscal 2005 sales were $3.7 billion, down 4% versus last
year due to the estimated impact of an additional week in the same period a
year ago. Excluding the benefit of an extra week last year, sales increased
4% in the fourth quarter.
o While several operations posted solid year-over-year profit growth, weak
results from the packaged meats operations negatively impacted performance
for the Retail Products and Foodservice Products segments.
o The company is focused on efficiency initiatives in three specific areas:
1) SKU reduction, 2) headcount and general and administrative expense
reduction, and 3) improvement in manufacturing capacity utilization and
plant productivity. All of these programs are geared to improve profit
margins.
Note: Year-Over-Year Comparability:
Several items impact year-over-year comparisons of sales, operating profit, and
EPS, including the estimated benefit of an additional week in the fourth quarter
of fiscal 2004 and the full fiscal year 2004, expenses related to the headcount
reduction in the fourth quarter of fiscal 2005, costs associated with
implementing efficiency initiatives in fiscal 2004 and fiscal 2005, and the
impact of prior year contribution from operations the company no longer owns,
and other items. 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 toward the end of this release.
OMAHA, Neb., June 30, 2005 -- ConAgra Foods Inc. (NYSE: CAG), one of North
America's leading packaged food companies, today reported results for the fiscal
2005 fourth quarter ended May 29, 2005. Sales for the quarter were $3.7 billion,
down 4% versus last year; on a comparable basis, current quarter sales increased
4% after adjusting for the estimated benefit from an additional week in the
fourth quarter of fiscal 2004. Fourth-quarter diluted EPS was $0.20, primarily
reflecting lower packaged meats profits this year than last; EPS was $0.32 for
the same period last year. Several items affecting comparability are detailed
toward the end of this release.
Fiscal 2005 sales were $14.6 billion, 3% above last year's sales of $14.1
billion. Diluted EPS was $1.23 this year and $1.53 in fiscal 2004. Several items
affecting year-over-year comparability are detailed in tables toward the end of
this release. In addition, year-to-date and historical results have been
adjusted to reflect recent reclassification of businesses as discontinued
operations.
Bruce Rohde, chairman and chief executive officer, commented, "Fiscal 2005 was
characterized by a solid first half followed by a weak second half. It was a
year of mixed results that identified many things we can and should do better.
While there were many achievements - brand growth, milestones achieved with R&D
and enterprise systems, important team additions, and strong results for Food
Ingredients - they were overshadowed by some significant shortcomings, most
notably in basic execution within our packaged meats operations."
He continued, "We furthered many important programs this year as part of our
multi-year marketing, operating, and business process improvement initiatives.
In addition, our strong cash resources allowed us to reduce $1.2 billion of
debt, pay $550 million in dividends, invest $450 million in capital for the
future and repurchase more than $180 million of our stock."
Operational Improvement and Efficiency Initiatives
As part of multi-year efficiency initiatives that impact several major areas,
the company is engaged in SKU reduction, manufacturing utilization and
productivity improvement, as well as general and administrative expense and
headcount reduction.
SKU Reduction: The company's SKU reduction program is intended to remove
relatively low-margin and low-volume products, in order to increase the focus on
higher-margin and higher-volume products. As of fiscal year-end, the company has
removed several thousand low-volume SKUs and is continuing to reduce SKUs at a
low double-digit percentage pace annually over the next two fiscal years. SKU
reductions remove complexity and cost from the supply chain, which benefit
margins.
General and Administrative Expense and Headcount Reduction: During the fourth
quarter, the company announced plans to reduce general and administrative
expense as well as salaried headcount. As of fiscal year-end, the company was in
the process of eliminating several hundred salaried jobs across the
organization; these headcount reductions will be largely complete by the end of
the first quarter of fiscal 2006, which ends August 2005. The company recognized
$0.05 per diluted share of severance expense during the fourth quarter and does
not anticipate significant additional severance expense. Once completed, savings
from the headcount and general and administrative cost reductions are expected
to benefit the company's anticipated cost structure by more than $100 million on
an annualized basis.
Manufacturing Capacity Utilization and Productivity Improvement: The company is
aggressively pursuing opportunities to manufacture products more efficiently,
which will most likely mean better utilization from fewer plants in the future
as well as lower production costs by implementing best practices across the
manufacturing network. The company has more than 150 manufacturing plants,
approximately 100 of which are in the Retail Products and Foodservice Products
segments, and is in the process of developing a manufacturing plant
rationalization program that will be implemented during fiscal 2006 and
continuing over the following two fiscal years. This initiative is intended to
significantly improve capacity utilization and thereby improve gross and
operating margins.
Details on the rationalization program will be communicated once specific plans
are developed and finalized. The manufacturing rationalization program will be
led by Jim Hardy, senior vice president, Enterprise Manufacturing. Hardy
recently joined ConAgra Foods to lead the company's manufacturing efficiency
initiatives.
Segment Operating Challenges during the Fourth Quarter
While several key operations within Retail Products, Foodservice Products, and
Food Ingredients increased quarterly profits, overall company results were
significantly impacted by weak packaged meats results in the retail and
foodservice channels.
The company's packaged meats operations have posted weak results for several
quarters in a row, largely due to increased input costs coupled with ineffective
pricing actions that did not recover the increased costs. The company expected
aggressive pricing actions scheduled during the second half of fiscal 2005 to
improve profits; the pricing actions were not executed effectively. The
year-over-year operating profit shortfall in the packaged meats operations for
retail and foodservice, in aggregate, was approximately $50 million for the
fourth quarter and approximately $150 million for the fiscal year. The company
recently made several changes within the packaged meats operations, including
changes to strengthen leadership, and expects those changes, along with better
pricing management, aggressive cost-savings initiatives, and SKU reduction, to
improve the packaged meats operations over time.
Retail Products Segment (60% of company annual sales)
During the quarter, sales for the Retail Products segment were $2.1 billion,
down 6% compared with the same period last year. On a comparable basis, sales
were up 1% after taking into account the estimated benefit from the inclusion of
an additional week in the fourth quarter of fiscal 2004. Volume increased 2% on
a comparable basis.
Several brands posted strong sales performance as a result of ongoing sales and
marketing initiatives intended to strengthen brand equity, expand distribution
of the company's most promising products, successfully develop new products, and
improve returns on marketing investments:
o Sales for the company's top 30 brands as a group, which represent
approximately 80% of total segment sales, grew 2% on a comparable basis
during the quarter.
>> Brands posting sales gains on a comparable basis include: ACT II,
Banquet, Blue Bonnet, Chef Boyardee, Cook's, Eckrich, Healthy Choice,
Hunt's, Kid Cuisine, Marie Callender's, PAM, Parkay, Reddi-wip, Snack
Pack, and Swiss Miss. Many of these brands have posted several
successive quarters of solid sales growth.
>> Several large packaged meats brands posted sales declines on a
comparable basis, including, Armour, Butterball, and Hebrew National.
Primarily due to weakness in packaged meats operations, which represent about
25% of the segment revenues, the Retail Products segment operating profit during
the quarter was $243 million; this is below the $319 million reported for the
same quarter last year. On a comparable basis, operating profit was 12% below
last year after considering the estimated benefit from an additional week in the
fourth quarter of fiscal 2004, expenses related to the headcount reduction in
the fourth quarter of fiscal 2005, and costs associated with implementing
efficiency initiatives in fiscal 2004. Other than packaged meats operations, all
other operations posted profit growth; improved results for these operations
reflect an improved mix and cost savings.
o The company estimates that the year-over-year operating profit shortfall in
the packaged meats operations was approximately $35 million for the retail
operations in the fourth quarter.
o The company is very focused on improving the packaged meats operations by
strengthening leadership, aggressive pricing management, substantial SKU
reduction, and cost-saving initiatives. The company has many favorite
packaged meat brands, including Armour, Brown 'N Serve, Butterball,
Eckrich, Healthy Choice, and Hebrew National, and expects this business to
progress to more normal levels of profitability.
Over the long term, the company is focused on solid top-line growth and profit
margin expansion through brand building, operating efficiency, and business
process initiatives.
Foodservice Products Segment (22% of company annual sales)
Sales for the Foodservice Products segment were $819 million for the fourth
quarter, 7% below the same period last year. Segment operating profit was $56
million in the fourth quarter, down from $93 million in the year-ago period. On
a comparable basis, sales were flat compared with last year, and operating
profit was 40% lower than last year after considering the estimated benefit from
an additional week in the fourth quarter of fiscal 2004, expenses related to the
headcount reduction in the fourth quarter of fiscal 2005, costs associated with
implementing efficiency initiatives in fiscal 2004, and the impact of prior year
contribution from operations the company no longer owns.
The fourth-quarter segment operating performance showed mixed results; positive
results in specialty potatoes were more than offset by negative results in
culinary and to a much lesser extent in seafood. Sales and profits for specialty
potato products increased due to strong volumes, but sales and profits for
culinary products were down significantly, reflecting weak results from most
operations, especially packaged meats; lower packaged meats profits largely
resulted from higher input costs and manufacturing inefficiencies. The company
estimates that the year-over-year operating profit shortfall in packaged meats
was approximately $15 million for the foodservice operations in the fourth
quarter. Due to tariff-related market dynamics, sales and profits for seafood
products were below year-ago levels.
Over the long term, the same initiatives that should favorably influence the
Retail Products segment should also improve the top line and profit margins of
the Foodservice Product segment.
Food Ingredients Segment (18% of company annual sales)
During the quarter, sales for the Food Ingredients segment were $795 million, an
increase of 9% compared with the fourth quarter last year. Segment operating
profit was $64 million, an increase of 6% over the year-ago period; this was
driven by growth in the trading and merchandising operations. On a comparable
basis, segment sales increased 18% compared with last year and operating profit
increased 26% after considering the estimated benefit from an additional week in
the fourth quarter of fiscal 2004, expenses related to the headcount reduction
in the fourth quarter of fiscal 2005, and costs associated with implementing
efficiency initiatives in fiscal 2004.
Difficult cost environment and competitive conditions continued to negatively
impact the performance of dehydrated onion, garlic, capsicums, and vegetable
based food ingredients.
Fourth-quarter operating profit includes $49 million of profit from trading and
merchandising inputs, such as energy, grains, fertilizer, and other input
commodities, which benefited from favorable market opportunities. Operating
profits for the trading and merchandising operations grew at a solid rate, but
slower than in recent quarters because those operations are experiencing tougher
comparisons.
The Food Ingredients segment will most likely post lower profits in fiscal 2006
than in fiscal 2005 due to the unusually strong fiscal 2005 performance of the
trading and merchandising operations. The company believes the Food Ingredients
segment's most promising opportunities over the long term will result from its
strategy to expand value-added product platforms in several customer channels.
Equity Method Investments and Assets Related to Swift Foods
o Equity method investment earnings for the fourth quarter were $10 million.
For the same quarter last year, equity method investment earnings were $14
million. Prior year results include approximately $4 million from the
company's subsequently divested beef joint venture.
o During the quarter, the company received $70 million as it completed the
liquidation of the cattle-feeding assets it received in connection with
financing it provided Swift Foods. Those cattle-feeding assets, as well as
the gain resulting from liquidating such assets, were classified as
discontinued operations.
o During the quarter, the company recognized a pretax impairment of $39
million related to a debt security it owns in Swift Foods. This reduction
in value was recognized as a direct reduction in stockholders' equity, and
did not impact EPS, as the reduction in value was considered a temporary
decline in the value of an available-for-sale security. The company's
investment is classified in Other Assets.
Other Capital Resource Matters and Corporate Expense
o For the fourth quarter, corporate expense was $131 million compared with
$100 million for the same period a year ago, primarily reflecting the
impact of the severance costs as well as increased self-insurance costs.
o For the fiscal year, corporate expense was $402 million compared with $352
million for last year, again reflecting headcount reduction costs and costs
to implement strategic information systems.
o For the quarter, capital expenditures for property, plant, and equipment
totaled $102 million compared with $109 million last year. Depreciation and
amortization expense was approximately $90 million for the quarter versus
$90 million a year ago. Dividends paid totaled $141 million versus $137
million last year. Net interest expense for the quarter was $68 million
compared with $79 million last year.
o For the fiscal year, capital expenditures for property, plant, and
equipment totaled $453 million compared with $349 million last year; the
increase over last year is due principally to additional investment to
update strategic information systems for the future. Depreciation and
amortization expense was approximately $351 million for the year versus
$345 million a year ago. Dividends paid totaled $550 million versus $537
million last year. Net interest expense for the year was $295 million
compared with $275 million last year.
Succession Plan
Recently the company announced that, at the request of Bruce Rohde, chairman and
chief executive officer, the board of directors commenced a formal search for
Mr. Rohde's successor. The search committee is led by ConAgra Foods Board
member, Steven F. Goldstone, retired chairman and chief executive officer of RJR
Nabisco, and is utilizing the services of Heidrick & Struggles, a worldwide
executive search firm. Any news or updates on this matter will be issued in a
public announcement at the appropriate time.
Outlook
The company has stated in its annual report that it expects annual EPS growth at
a mid-to-high single digit rate for most years over the long term. The company
is planning fiscal 2006 EPS to be higher than fiscal 2005 EPS, excluding items
that impact comparability. The company is not offering specific EPS guidance for
fiscal 2006, as 2006 EPS will depend on external factors, along with successful
execution of numerous internal initiatives.
Regarding fiscal 2006, the company offers the following:
o For fiscal 2006, the single biggest profit improvement opportunity is in
the retail and foodservice packaged meats operations, as profits for those
operations were very low in fiscal 2005. The company notes that the current
profit-enhancing initiatives within these operations may not result in
improved year-over-year packaged meats profits until after the first
quarter of fiscal 2006; this is due to the gradual nature of the pricing
and trade promotion initiatives under way. Consequently, the company
expects earnings from its packaged meats operations to be lower in the
first quarter this year than last year. Fiscal 2005 operating profits from
its packaged meats operations experienced approximately $150 million
shortfall versus prior year; the company may not recover all of that
shortfall in fiscal 2006.
o The company also notes that profits for its trading and merchandising
operations within its Food Ingredients segment were very strong in fiscal
2005 due to favorable market opportunities. Those operations contributed
approximately $186 million, or 71% of the segment's $263 million in
operating profit for fiscal 2005. The company notes that fiscal 2005
operating profits for trading and merchandising operations were almost
twice the amount earned in fiscal 2004.
o Overall, the company expects EPS in the first quarter of fiscal 2006 to be
less than the first quarter in fiscal 2005; any EPS growth for fiscal 2006
is expected to be more likely in the second half of the year.
For more details regarding the company's financial goals, please refer to the
company's Web site, www.conagrafoods.com/investors, and choose the button
titled, "ConAgra Foods Comments on Strategic Direction."
Major Items Affecting Fourth-Quarter Fiscal 2005 EPS Comparability
Included in diluted EPS of $0.20 for the fourth quarter of fiscal 2005 (EPS
amounts after tax):
o Expense of $0.05 per diluted share related to severance costs resulting
from the recently announced headcount reduction program. Total expense was
$43 million, $32 million of which were recorded in the results of the
business segments, and $11 million of which were recorded in corporate
expense.
o Expense of $0.01 per diluted share, related to a change in estimated
effective state income tax rates.
Included in the $0.32 diluted EPS for the fourth quarter of fiscal 2004 (EPS
amounts after tax):
o Expense of approximately $0.03 per diluted share related to implementing
cost-saving initiatives.
o Income of $0.02 per diluted share from discontinued operations.
o 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.
o Expense of $0.05 per diluted share related to a higher than expected
effective tax rate.
o Estimated benefit of $0.03 per diluted share benefit from having an extra
week's results in the quarter, as fiscal 2004 was a 53-week year.
o Charge of $0.05 per diluted share for the establishment of a legal reserve,
classified as corporate expense.
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 2005 Q4 2004 % Change Fiscal 2005 Fiscal 2004 % Change
------- ------- -------- ----------- ----------- --------
Sales Sales Sales Sales
- ------------------ -------------- --------------- --------------- ---------- ---------------- ------------ ---------------
As reported $2,092.7 $2,230.2 (6.2%) $8,669.1 $8,434.1 2.8%
- ------------------ -------------- --------------- --------------- ---------- ---------------- ------------ ---------------
Estimated
impact of extra -- ($164.6) -- ($164.6)
week in FY2004 *
- ------------------ -------------- --------------- --------------- ---------- ---------------- ------------ ---------------
Comparable $2,092.7 $2,065.6 1.3% $8,669.1 $8,269.5 4.8%
amounts
- ------------------ -------------- --------------- --------------- ---------- ---------------- ------------ ---------------
Retail Products Q4 2005 Q4 2004 % Change Fiscal 2005 Fiscal 2004 % Change
------- ------- -------- ----------- ----------- --------
Operating Operating Operating Operating
Profit Profit Profit Profit
- ------------------ --------------- -------------- --------------- ---------- ---------------- ------------ ---------------
As reported $243.4 $319.4 (23.8%) $1,129.3 $1,218.0 (7.3%)
- ------------------ --------------- -------------- --------------- ---------- ---------------- ------------ ---------------
Estimated impact
of extra week in -- ($27.6) -- ($27.6)
FY2004 *
- ------------------ --------------- -------------- --------------- ---------- ---------------- ------------ ---------------
Costs related to
implementing
efficiency -- $10.2 $14.6 $25.4
initiatives
- ------------------ --------------- -------------- --------------- ---------- ---------------- ------------ ---------------
Impairment
charge -- -- $10.0 --
- ------------------ --------------- -------------- --------------- ---------- ---------------- ------------ ---------------
Headcount $23.7 -- $23.7 --
reduction
- ------------------ --------------- -------------- --------------- ---------- ---------------- ------------ ---------------
Favorable
litigation
settlement -- -- ($17.0) --
Comparable $267.1 $302.0 (11.6%) $1,160.6 $1,215.8 (4.5%)
amounts
- ------------------ --------------- -------------- --------------- ---------- ---------------- ------------ ---------------
* The company estimated the impact of the extra week of operations in fiscal
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 2005 Q4 2004 % Change Fiscal 2005 Fiscal 2004 % Change
------- ------- -------- ----------- ------------ --------
Products Sales Sales Sales Sales
- ------------------ -------------- -------------- ----------------- ----------- --------------- ----------- --------------
As reported $818.8 $882.4 (7.2%) $3,227.3 $3,274.1 (1.4%)
- ------------------ -------------- -------------- ----------------- ----------- --------------- ----------- --------------
Estimated impact
of extra week in -- ($61.2) -- ($61.2)
FY2004 *
- ------------------ -------------- -------------- ----------------- ----------- --------------- ----------- --------------
Impact on FY2004
from operations
the company no -- -- -- ($27.6)
longer owns
- ------------------ -------------- -------------- ----------------- ----------- --------------- ----------- --------------
Comparable $818.8 $821.2 (0.3%) $3,227.3 $3,185.3 1.3%
amounts
- ------------------ -------------- -------------- ----------------- ----------- --------------- ----------- --------------
Foodservice Q4 2005 Q4 2004 % Change Fiscal 2005 Fiscal 2004 % Change
------- ------- -------- ----------- ----------- --------
Products Operating Operating Operating Operating
Profit Profit Profit Profit
- ------------------ --------------- -------------- ---------------- ----------- --------------- ----------- --------------
As reported $55.8 $93.4 (40.3%) $277.1 $324.6 (14.6%)
- ------------------ --------------- -------------- ---------------- ----------- --------------- ----------- --------------
Estimated impact
of extra week in -- ($6.5) -- ($6.5)
FY2004 *
- ------------------ --------------- -------------- ---------------- ----------- --------------- ----------- --------------
Costs related to
implementing
efficiency
initiatives and -- $13.3 $15.7 $28.9
impact of fire
damage
- ------------------ --------------- -------------- ---------------- ----------- --------------- ----------- --------------
Headcount $4.0 -- $4.0 --
reduction
- ------------------ --------------- -------------- ---------------- ----------- --------------- ----------- --------------
Impact on fiscal
2004 from
operations the -- ($0.2) -- ($2.9)
company no
longer owns
- ------------------ --------------- -------------- ---------------- ----------- --------------- ----------- --------------
Comparable $59.8 $100.0 (40.2%) $296.8 $344.1 (13.7%)
amounts
- ------------------ --------------- -------------- ---------------- ----------- --------------- ----------- --------------
* The company estimated the impact of the extra week of operations in fiscal
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 2005 Q4 2004 % Change Fiscal 2005 Fiscal 2004 % Change
------- ------- -------- ----------- ----------- --------
Sales Sales Sales Sales
----- ----- ----- -----
- ------------------ -------------- -------------- --------------- ------------- --------------- ----------- --------------
As reported $794.9 $730.5 8.8% $2,670.5 $2,373.6 12.5%
- ------------------ -------------- -------------- --------------- ------------- --------------- ----------- --------------
Estimated impact
of extra week in -- ($54.9) -- ($54.9)
FY2004 *
- ------------------ -------------- -------------- --------------- ------------- --------------- ----------- --------------
Comparable $794.9 $675.6 17.7% $2,670.5 $2,318.7 15.2%
amounts
- ------------------ -------------- -------------- --------------- ------------- --------------- ----------- --------------
Food Ingredients Q4 2005 Q4 2004 % Change Fiscal 2005 Fiscal 2004 % Change
------- ------- -------- ----------- ----------- --------
Operating Operating Operating Operating
Profit Profit Profit Profit
- ------------------ --------------- ------------- --------------- ------------- --------------- ----------- --------------
As reported $64.0 $60.4 6.0% $263.1 $196.6 33.8%
- ------------------ --------------- ------------- --------------- ------------- --------------- ----------- --------------
Estimated impact
of extra week in -- ($6.7) -- ($6.7)
FY2004 *
- ------------------ --------------- ------------- --------------- ------------- --------------- ----------- --------------
Costs related to
implementing
efficiency -- $0.3 $0.8 $7.6
initiatives
- ------------------ --------------- ------------- --------------- ------------- --------------- ----------- --------------
Impairment
charge -- -- $15.0 --
- ------------------ --------------- ------------- --------------- ------------- --------------- ----------- --------------
Headcount $3.8 -- $3.8 --
reduction
- ------------------ --------------- ------------- --------------- ------------- --------------- ----------- --------------
Comparable $67.8 $54.0 25.6% $282.7 $197.5 43.1%
amounts
- ------------------ --------------- ------------- --------------- ------------- --------------- ----------- --------------
* The company estimated the impact of the extra week of operations in fiscal
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 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 2005 Q4 2004 % Change Fiscal 2005 Fiscal 2004 % Change
------- ------- -------- ----------- ------------ --------
Sales Sales Sales Sales Sales
----- ----- ----- -----
- ----------------------- --------- -------------- -------------- -------- ----------------- --------------- --------------
As reported $3,706.4 $3,843.1 (3.6%) $14,566.9 $14,081.8 3.4%
- ----------------------- --------- -------------- -------------- -------- ----------------- --------------- --------------
Estimated impact of
extra week in -- ($280.7) -- ($280.7)
FY2004 *
- ----------------------- --------- -------------- -------------- -------- ----------------- --------------- --------------
Impact on FY2004 from
operations the -- -- -- ($27.6)
company no longer owns
- ----------------------- --------- -------------- -------------- -------- ----------------- --------------- --------------
Comparable amounts $3,706.4 $3,562.4 4.0% $14,566.9 $13,773.5 5.8%
- ----------------------- --------- -------------- -------------- -------- ----------------- --------------- --------------
ConAgra Foods Q4 2005 Q4 2004 % Change Fiscal 2005 Fiscal 2004 % Change
------- ------- -------- ----------- ------------ --------
Operating Profit *** Operating Operating Operating Profit Operating
---------- ---------- ---------------- ---------
Profit Profit Profit
- ----------------------- ----------- ------------- ------------- -------- ----------------- --------------- --------------
As reported $363.2 $473.2 (23.2%) $1,669.5 $1,739.2 (4.0%)
- ----------------------- ----------- ------------- ------------- -------- ----------------- --------------- --------------
Estimated impact of
extra week in -- ($40.8) -- ($40.8)
FY2004 *
- ----------------------- ----------- ------------- ------------- -------- ----------------- --------------- --------------
Costs related to
implementing
efficiency -- $23.8 $31.1 $61.9
initiatives and
impact of fire damage
- ----------------------- ----------- ------------- ------------- -------- ----------------- --------------- --------------
Impairment
charges -- -- $25.0 --
- ----------------------- ----------- ------------- ------------- -------- ----------------- --------------- --------------
Headcount reduction $31.5** -- $31.5** --
- ----------------------- ----------- ------------- ------------- -------- ----------------- --------------- --------------
Favorable litigation
settlement -- -- ($17.0) --
Impact on FY2004 from
operations the -- ($0.2) -- ($2.9)
company no longer owns
- ----------------------- ----------- ------------- ------------- -------- ----------------- --------------- --------------
Comparable amounts $394.7 $456.0 (13.4%) $1,740.1 $1,757.4 (1.0%)
- ----------------------- ----------- ------------- ------------- -------- ----------------- --------------- --------------
* The company estimated the impact of the extra week of operations in fiscal
2004 using a pro-rata methodology based on the last six weeks of the fiscal
year.
** Additional expense of $11.2 million was recorded as corporate expense,
resulting in a total of $43 million of severance costs.
*** A reconciliation of total operating profit to income from continuing
operations before income tax, equity method investment earnings 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
ConAgra Foods will host a conference call at 9:00 a.m. EDT to discuss
fourth-quarter results. Following the company's remarks, the call will include a
question-and-answer session with the investment community. Domestic and
international participants may access the conference call toll-free by dialing
1-877-447-8217 and 1-706-679-0415, respectively. No confirmation or pass code is
needed. This conference call also can be accessed live on the Internet at
www.conagrafoods.com/investors. A rebroadcast of the conference call will be
available after 2:00 p.m. EDT. To access the digital replay, a conference I.D.
number will be required. Domestic participants should dial 1-800-642-1687 and
international participants should dial 1-706-645-9291 and enter conference I.D.
6555739. A rebroadcast also will be available on the company's Web site, where
it will be archived for two weeks.
In addition, the company has posted a question-and-answer supplement relating to
this release at www.conagrafoods.com/investors. To view recent company news,
please visit www.conagrafoods.com/media.
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 views and assumptions of future events and financial
performance and are subject to uncertainty and changes in circumstances. Readers
of this release should understand that these statements are not guarantees of
performance or results. Many factors could affect the company's actual financial
results and cause them to vary materially from the expectations contained in the
forward-looking statements. These factors include, among other things, future
economic circumstances, industry conditions, company performance and financial
results, availability and prices of raw materials, product pricing, competitive
environment and related market conditions, operating efficiencies, access to
capital, actions of governments and regulatory factors affecting the company's
businesses and other risks described in the company's reports filed with the
Securities and Exchange Commission. The company cautions readers not to place
undue reliance on any forward-looking statements included in this release, which
speak only as of the date made.
ConAgra Foods, Inc.
Segment Operating Results
In millions
FOURTH QUARTER
-------------------------------------------------------------
13 Weeks
Ended 14 Weeks Ended
-------------------- ------------------ ------------------
May 29, 2005 May 30, 2004 Percent Change
-------------------- ------------------ ------------------
SALES
Retail Products $ 2,092.7 $ 2,230.2 (6.2)%
Foodservice Products 818.8 882.4 (7.2)%
Food Ingredients 794.9 730.5 8.8%
-------------------- ------------------
Total 3,706.4 3,843.1 (3.6)%
-------------------- ------------------
OPERATING PROFIT
Retail Products $ 243.4 $ 319.4 (23.8)%
Foodservice Products 55.8 93.4 (40.3)%
Food Ingredients 64.0 60.4 6.0%
-------------------- ------------------
Total operating profit for segments 363.2 473.2 (23.2)%
Reconciliation of total operating profit to income
from continuing operations before income taxes
and equity method investment earnings
Items excluded from segment operating profit:
General corporate expense (130.8) (99.8) 31.1%
Interest expense, net (67.7) (79.4) (14.7)%
-------------------- ------------------
Income from continuing operations before income taxes and
equity method investment earnings $ 164.7 $ 294.0 (44.0)%
==================== ==================
Segment operating profit excludes general corporate expense, equity method
investment earnings and net interest expense. Management believes such amounts
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
-------------------------------------------------------------
52 Weeks
Ended 53 Weeks Ended
-------------------- ------------------ ------------------
May 29, 2005 May 30, 2004 Percent Change
-------------------- ------------------ ------------------
SALES
Retail Products $ 8,669.1 $ 8,434.1 2.8%
Foodservice Products 3,227.3 3,274.1 (1.4)%
Food Ingredients 2,670.5 2,373.6 12.5%
-------------------- ------------------
Total 14,566.9 14,081.8 3.4%
-------------------- ------------------
OPERATING PROFIT
Retail Products $ 1,129.3 $ 1,218.0 (7.3)%
Foodservice Products 277.1 324.6 (14.6)%
Food Ingredients 263.1 196.6 33.8%
-------------------- ------------------
Total operating profit for segments 1,669.5 1,739.2 (4.0)%
Reconciliation of total operating profit to income
from continuing operations before income taxes,
equity method investment earnings (loss) and
cumulative effect of changes in accounting
Items excluded from segment operating profit:
Gain on sale of Pilgrim's Pride Corporation common
stock 185.7 - 100.0%
General corporate expense (402.2) (351.9) 14.3%
Interest expense, net (295.0) (274.9) 7.3%
-------------------- ------------------
Income from continuing operations before income
taxes, equity method investment earnings (loss) and
cumulative effect of changes in accounting $ 1,158.0 $ 1,112.4 4.1%
==================== ==================
Segment operating profit excludes general corporate expense, gain on sale of
Pilgrim's Pride Corporation common stock, equity method investment earnings
(loss) and net interest expense. Management believes such amounts 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
---------------------------------------------------------------
13 Weeks Ended 14 Weeks Ended
------------------- ------------------- -------------------
May 29, 2005 May 30, 2004 Percent
Change
------------------- ------------------- -------------------
Net sales $ 3,706.4 $ 3,843.1 (3.6)%
Costs and expenses:
Cost of goods sold 2,960.5 3,020.0 (2.0)%
Selling, general and administrative expenses 513.5 449.7 14.2%
Interest expense, net 67.7 79.4 (14.7)%
------------------- -------------------
Income from continuing operations before income taxes and 164.7 294.0 (44.0)%
equity method investment earnings
Income tax expense 71.9 151.5 (52.5)%
Equity method investment earnings 9.9 14.1 (29.8)%
------------------- -------------------
Income from continuing operations 102.7 156.6 (34.4)%
Income (loss) from discontinued operations, net of tax (0.8) 12.7 -
------------------- -------------------
Net income $ 101.9 $ 169.3 (39.8)%
=================== ===================
Earnings per share - basic
Income from continuing operations $ 0.20 $ 0.30 (33.3)%
Income from discontinued operations - 0.02 (100.0)%
------------------- -------------------
Net income $ 0.20 $ 0.32 (37.5)%
=================== ===================
Weighted average shares outstanding 517.3 522.4 (1.0)%
=================== ===================
Earnings per share - diluted
Income from continuing operations $ 0.20 $ 0.30 (33.3)%
Income from discontinued operations - 0.02 (100.0)%
------------------- -------------------
Net income $ 0.20 $ 0.32 (37.5)%
=================== ===================
Weighted average share and share equivalents
outstanding 521.0 527.1 (1.2)%
=================== ===================
ConAgra Foods, Inc.
Consolidated Statements of Earnings
In millions, except per share amounts
YEAR-TO-DATE
---------------------------------------------------------------
52 Weeks Ended 53 Weeks Ended
------------------- ------------------- -------------------
May 29, 2005 May 30, 2004 Percent
Change
------------------- ------------------- -------------------
Net sales $ 14,566.9 $ 14,081.8 3.4%
Costs and expenses:
Cost of goods sold 11,464.9 10,876.1 5.4%
Selling, general and administrative expenses 1,834.7 1,818.4 0.9%
Interest expense, net 295.0 274.9 7.3%
Gain on sale of Pilgrim's Pride Corporation common stock 185.7 - 100.0%
------------------- -------------------
Income from continuing operations before income taxes, 1,158.0 1,112.4 4.1%
equity method investment earnings (loss) and
cumulative effect of change in accounting
Income tax expense 470.0 428.8 9.6%
Equity method investment earnings (loss) (24.9) 43.5 -
------------------- -------------------
Income from continuing operations before
cumulative effect of changes in accounting 663.1 727.1 (8.8)%
Income (loss) from discontinued operations, net of tax (21.6) 97.3 -
Cumulative effect of changes in accounting - (13.1) 100.0%
------------------- -------------------
Net income $ 641.5 $ 811.3 (20.9)%
=================== ===================
Earnings per share - basic
Income from continuing operations before
cumulative effect of changes in accounting $ 1.28 $ 1.38 (7.2)%
Income (loss) from discontinued operations (0.04) 0.18 -
Cumulative effect of changes in accounting - (0.02) 100.0%
------------------- -------------------
Net income $ 1.24 $ 1.54 (19.5)%
=================== ===================
Weighted average shares outstanding 516.2 527.2 (2.1)%
=================== ===================
Earnings per share - diluted
Income from continuing operations before $ 1.27 $ 1.37 (7.3)%
cumulative effect of changes in accounting
Income (loss) from discontinued operations (0.04) 0.18 -
Cumulative effect of changes in accounting - (0.02) 100.0%
------------------- -------------------
Net income $ 1.23 $ 1.53 (19.6)%
=================== ===================
Weighted average share and share equivalents
outstanding 520.2 530.7 (2.0)%
=================== ===================
ConAgra Foods, Inc.
Consolidated Balance Sheets
In millions
May 29, 2005 May 30, 2004
--------------------- --------------------
ASSETS
Current assets
Cash and cash equivalents $ 207.6 $ 608.6
Divestiture proceeds receivable - 60.3
Receivables, less allowance for doubtful accounts
of $30.7 and $26.2 1,292.0 1,303.1
Inventories 2,614.5 2,516.5
Prepaid expenses and other current assets 380.2 439.7
Current assets of discontinued operations 29.4 221.1
--------------------- --------------------
Total current assets 4,523.7 5,149.3
Property, plant and equipment, net 2,848.3 2,837.4
Goodwill 3,797.7 3,788.6
Brands, trademarks and other intangibles, net 819.7 826.9
Other assets 798.4 1,559.4
Noncurrent assets of discontinued operations 3.9 60.6
--------------------- --------------------
$ 12,791.7 $ 14,222.2
===================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ 8.5 $ 30.6
Current installments of long-term debt 117.3 382.4
Accounts payable 818.4 925.4
Advances on sales 149.6 178.4
Accrued payroll 272.4 272.0
Other accrued liabilities 1,012.2 1,072.9
Current liabilities of discontinued operations 10.2 142.8
--------------------- --------------------
Total current liabilities 2,388.6 3,004.5
Senior long-term debt, excluding current installments 3,949.1 4,878.4
Subordinated debt 400.0 402.3
Other noncurrent liabilities 1,194.6 1,143.1
Common stockholders' equity 4,859.4 4,793.9
--------------------- --------------------
$ 12,791.7 $ 14,222.2
===================== ====================