CONAGRA FOODS
Q4 FY05 Question & Answer
June 30, 2005
1. What were the company's earnings in fiscal 2005, excluding major items that
impact comparability?
Diluted EPS of $1.23 included net $0.12 of expense from items that impact
comparability (detailed in question 23).
2. What were some examples of major brands in the Retail Products segment
posting sales growth on a comparable basis for the quarter?
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
Swiss Miss
3. What were some examples of major brands in the Retail Products segment
posting sales declines on a comparable basis for the quarter?
Armour
Butterball
David's
Egg Beaters
Hebrew National
LaChoy
Manwich
Peter Pan
Slim Jim
Van Camp's
Wesson
4. What were unit volume changes for the quarter on a comparable basis in the
Retail Products and Foodservice Products segments?
Retail Products volume increased 2% and Foodservice Products volume
decreased 2%.
5. How much was total Depreciation and Amortization (all types) from
continuing operations for the quarter?
Approximately $90 million (versus $90 million in Q4 2004).
$89 million of depreciation (versus $89 million in Q4 2004)
$1 million of other amortization (versus $1 million in Q4 2004)
6. How much was total Depreciation and Amortization (all types) from
continuing operations for the fiscal year?
Approximately $351 million (versus $345 million for fiscal 2004).
$349 million of depreciation (versus $342 million for fiscal 2004)
$2 million of other amortization (versus $3 million for fiscal 2004)
7. How much were Capital Expenditures from continuing operations for the
quarter?
Approximately $102 million (versus $109 million in Q4 2004).
8. How much were Capital Expenditures from continuing operations for the
fiscal year?
Approximately $453 million (versus $349 million last year). The increase
over last year is due principally to additional investment to update
strategic information systems for the future.
9. What was the net interest expense for the quarter?
$68 million.
10. What was the net interest expense for the fiscal year?
$295 million.
11. What was Corporate Expense for the quarter?
Approximately $131 million (versus approximately $100 million in Q4 2004).
The increase reflects the impact of the headcount reduction costs as well
as increased self-insurance costs.
12. How much did you pay in dividends during the quarter?
$141 million.
13. How much did you pay in dividends for the fiscal year?
$550 million.
14. What was the weighted average number of diluted shares outstanding for the
quarter?
521 million shares.
15. What was the approximate effective tax rate for the fourth quarter
(rounded)?
41%, reflecting a change in estimated effective state income tax rates.
16. What were the gross margins and operating margins this quarter ($ amounts
in millions, rounded)?
Gross Margin = Gross Profit* divided by Net Sales
Gross Margin = $746/$3,706 = 20.1%
Operating Margin = Segment Operating Profit** divided by Net Sales
Operating Margin = $363/$3,706 = 9.8%
* Gross Profit equals Net Sales - Costs of Goods Sold
($3,706 - $2,960 = $746)
**See fourth-quarter segment operating results for a reconciliation of
Operating Profit to Income from continuing operations before income
taxes, equity method investment earnings and cumulative effect of
changes in accounting. Income from continuing operations before income
taxes, equity method investment earnings and cumulative effect of
changes in accounting divided by Net Sales = $165/$3,706 = 4.4%.
17. What was the trade working capital position at quarter end, excluding
amounts for discontinued operations?
Trade working capital is defined as the net position of Accounts Receivable
plus Inventory less Current Operating Liabilities (Accounts Payable,
Accrued Expenses, and Advances on Sales).
Q4 FY05 Q4 FY04
Accounts Receivable $1,292 $1,303
Inventory $2,615 $2,517
Less: Accounts Payable $ 818 $ 925
Less: Accrued Expenses $1,285 $1,345
Less: Advances on Sales $ 150 $ 178
------- --------
Net Position $1,654 $1,372
18. What is included in the company's net debt at the end of the quarter (in
millions)?
Q4 FY05 Q4 FY04
Total Debt* $4,475 $5,694
Less: Cash On Hand $ 208 $ 609
------- ---------
Total $4,267 $5,085
* Total debt = short-term debt, long-term debt, and subordinated debt
19. What is the preliminary estimate of the effective tax rate for fiscal 2006
(rounded)?
Approximately 38%.
20. What are the projected Capital Expenditures for fiscal 2006?
Approximately $400 million.
21. What is the expected net interest expense for fiscal 2006?
Approximately $300 million.
22. Can the company comment on the liquidation of the Swift Foods'
cattle-feeding assets?
During the quarter, the company received $70 million related to the
liquidation of the cattle-feeding assets it received in connection with
financing it provided Swift Foods; the liquidation process is now complete.
Those cattle-feeding assets were classified as discontinued operations.
23. As reported in this release and prior releases, what are the main items in
fiscal 2005 EPS that will affect comparability with fiscal 2006 EPS?
Summary of major items in fiscal 2005 EPS that will affect
comparability with fiscal 2006 EPS
First Second Quarter Third Quarter Fourth Quarter
Quarter
Costs to implement efficiency initiatives -$0.02
Loss on discontinued operations -$0.01 -$0.03
Gain on Pilgrim's Pride stock $0.22
Impairment charge related to joint venture assets -$0.13
Other impairment charges & fire damage -$0.04
Litigation expense, most of which is not tax deductible -$0.04
Benefit from favorable Retail litigation settlement $0.02
Expense due to early retirement of debt -$0.03
Severance costs -$0.05
Impact of higher than estimated tax rate -$0.01
24. What are the revised historical segment results as a result of the
classification change that took place this quarter?
Please see the attached tables--one shows segment information, the
other shows the entire P/L information.
ConAgra Foods, Inc.
Segment Operating Results
($USD, in millions)
-------------------------------------------- --------------------------------------------
FY 2004 FY 2005
Q1 FY04 Q2 FY04 Q3 FY04 Q4 FY04 Total Q1 FY05 Q2 FY05 Q3 FY05 Q4 FY05 Total
------- -------- -------- -------- ------- ------- -------- -------- ---------- --------
Segment Sales
Retail Products $1,841.0 $2,271.6 $2,091.3 $2,230.2 $8,434.1 $2,014.2 $2,485.4 $2,076.8 $2,092.7 $8,669.1
Foodservice Products 772.4 842.7 776.6 882.4 3,274.1 792.2 832.4 783.9 818.8 3,227.3
Food Ingredients 508.1 577.0 558.0 730.5 2,373.6 576.8 691.3 607.5 794.9 2,670.5
------- ------- -------- -------- -------- -------- -------- -------- -------- ----------
Total 3,121.5 3,691.3 3,425.9 3,843.1 14,081.8 3,383.2 4,009.1 3,468.2 3,706.4 14,566.9
Segment Operating Profit
Retail Products 208.0 361.3 329.3 319.4 1,218.0 209.8 373.0 303.1 243.4 1,129.3
Foodservice Products 74.4 86.3 70.5 93.4 324.6 66.4 92.5 62.4 55.8 277.1
Food Ingredients 27.9 54.1 54.2 60.4 196.6 60.1 79.2 59.8 64.0 263.1
-------- ------- ------- ------- ------- ------ ------- ------- ------- --------
Total 310.3 501.7 454.0 473.2 1,739.2 336.3 544.7 425.3 363.2 1,669.5
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:
General and corporate expense (90.3) (82.6) (79.2) (99.8) (351.9) (63.6) (72.3) (135.5) (130.8) (402.2)
Gain on sale of Pilgrim's Pride - - - - - - - 185.7 - 185.7
Corporation common stock
Interest expense, net (65.5) (68.2) (61.8) (79.4) (274.9) (73.4) (85.8) (68.1) (67.7) (295.0)
------ ------ ------ ------ ------- ------ ------ ------ ------- ------
Income from continuing operations
before income taxes, equity method
investment earnings (loss) and
cumulative effect of changes
in accounting $154.5 $350.9 $313.0 $294.0 $1,112.4 $199.3 $386.6 $407.4 $164.7 $1,158.0
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Segment operating profit excludes general corporate expense, gain on sale of
Pilgrim's Pride Corporation common stock, equity method investment earnings
(loss) and net interest expense. Management believes such amounts are not
directly associated with segment performance results for the period. Management
believes the presentation of total operating profit for segments facilitates
period-to-period comparison of results of segment operations.
ConAgra Foods, Inc.
Income Statement for FY05, FY04
($USD, in millions)
--------------------------------------------- --------------------------------------------
FY 2004 FY 2005
Q1 Q2 Q3 Q4
FY04 FY04 FY04 FY04 Total Q1 FY05 Q2 FY05 Q3 FY05 Q4 FY05 Total
-------- -------- -------- -------- --------- -------- -------- -------- -------- --------
Net sales $3,121.5 $3,691.3 $3,425.9 $3,843.1 $14,081.8 $3,383.2 $4,009.1 $3,468.2 $3,706.4 $14,566.9
-------- -------- -------- -------- --------- -------- -------- -------- -------- --------
Costs and expenses
Costs of goods sold 2,439.1 2,791.7 2,625.3 3,020.0 10,876.1 2,700.3 3,108.1 2,696.0 2,960.5 11,464.9
SG&A expenses 462.4 80.5 425.8 449.7 1,818.4 410.2 428.6 482.4 513.5 1,834.7
Interest expenses, net 65.5 68.2 61.8 79.4 274.9 73.4 85.8 68.1 67.7 295.0
Gain on sale of Pilgrim's
Pride Corporation - - - - - - - 185.7 - 185.7
common stock
------ ------- ------- ------- -------- ------- ------- ------- ------- --------
Income from continuing operations before 154.5 350.9 313.0 294.0 1,112.4 199.3 386.6 407.4 164.7 1,158.0
income taxes, equity method investment
earnings (loss) and cumulative effect of
changes in accounting
Income tax expense 36.4 130.3 110.6 151.5 428.8 81.0 156.1 161.0 71.9 470.0
Equity method investment earnings (loss) 11.2 16.3 1.9 14.1 43.5 14.1 15.1 (64.0) 9.9 (24.9)
------ ----- ------ ------ ------ ------ ------ ------- ------- -------
Income from continuing operations before 129.3 236.9 204.3 156.6 727.1 132.4 245.6 182.4 102.7 663.1
cumulative effect of changes in accounting
Income (loss) from discontinued operations 40.3 31.9 12.4 12.7 97.3 2.3 (6.0) (17.1) (0.8) (21.6)
------ ------ ------ ------- ------- ------ ------- ------- ------- -------
Income before cumulative effect of 169.6 268.8 216.7 169.3 824.4 134.7 239.6 165.3 101.9 641.5
changes in accounting
Cumulative effect of changes in accounting (11.7) - (1.4) - (13.1) - - - - -
------ ------- -------- -------- ------- ------ ------- ------- ------- -------
Net income $157.9 $268.8 $215.3 $169.3 $811.3 $134.7 $239.6 $165.3 $101.9 $641.5
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Note on Forward-Looking Statements:
This document 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 document,
which speak only as of the date made.