ConAgra Foods
Q1 FY06 Question & Answer
September 21, 2005
1. What were some examples of major brands in the Retail Products segment
posting sales growth for the quarter?
Butterball
Chef Boyardee
DAVID
Kid Cuisine
La Choy
Manwich
Marie Callender's
Orville Redenbacher's
Peter Pan
Slim Jim
Snack Pack
Van Camp's
Wesson
2. What were some examples of major brands in the Retail Products segment
posting sales declines for the quarter?
ACT II
Armour
Banquet
Blue Bonnet
Cook's
Eckrich
Egg Beaters
Healthy Choice
Hebrew National
Hunt's
PAM
Parkay
Reddi-wip
Swiss Miss
3. What were unit volume changes for the quarter in the Retail Products and
Foodservice Products segments?
Retail Products volume declined 3% in the current quarter. As a point of
reference for the year-over-year comparison, Retail Products volume
increased 8% in the first quarter last fiscal year.
Foodservice Products volume increased 4% in the current quarter.
4. How much was total Depreciation and Amortization (all types) from
continuing operations for the quarter?
Approximately $89 million (versus approximately $88 million in Q1 2005).
$88 million of depreciation (versus $87 million in Q1 2005)
$1 million of other amortization (versus $1 million in Q1 2005)
5. How much were Capital Expenditures from continuing operations for the
quarter?
Approximately $71 million (versus approximately $105 million in Q1 2005).
6. What was the net interest expense for the quarter?
$68 million.
7. What was Corporate Expense for the quarter?
Approximately $73 million (versus approximately $64 million in Q1 2005).
8. How much did you pay in dividends during the quarter?
$141 million.
9. What was the weighted average number of diluted shares outstanding for the
quarter?
521 million shares.
10. What was the approximate effective tax rate for the quarter (rounded)?
36%, reflecting a slightly lower tax rate compared to the prior year.
11. What were the gross margins and operating margins for the quarter ($
amounts in millions, rounded)?
Gross Margin = Gross Profit* divided by Net Sales
Gross Margin = $728/$3,363 = 21.6%
Operating Margin = Segment Operating Profit** divided by Net Sales
Operating Margin = $367/$3,363 = 10.9%
* Gross Profit = Net Sales - Costs of Goods Sold ($3,363 - $2,635 = $728)
**See first-quarter segment operating results for a reconciliation of
Operating Profit to Income from continuing operations before income taxes
and equity method investment earnings (loss). Income from continuing
operations before income taxes and equity method investment earnings
(loss), divided by Net Sales = $555/$3,363 = 16.5%.
12. 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).
Q1 FY06 Q1 FY05
Accounts Receivable $1,287 $1,323
Inventory $2,756 $2,585
Less: Accounts Payable $ 927 $ 864
Less: Accrued Expenses $1,371 $1,420
Less: Advances on Sales $ 129 $ 103
------- ------
Net Position $1,616 $1,521
13. What is included in the company's net debt at the end of the quarter (in
millions)?
Q1 FY06 Q1 FY05
Total Debt* $4,473 $5,677
Less: Cash On Hand $ 501 $ 370
------- -------
Total $3,972 $5,307
* Total debt = short-term debt, long-term debt, and subordinated debt
14. What is the preliminary estimate of the effective tax rate for fiscal 2006
(rounded)?
Approximately 36%.
15. What are the projected Capital Expenditures for fiscal 2006?
Approximately $400 million.
16. What is the expected net interest expense for fiscal 2006?
Approximately $300 million.
17. Has the company sold all of the shares of Pilgrim's Pride Corporation
common stock it received when it divested its fresh poultry business to
Pilgrim's Pride?
Yes, ConAgra Foods sold 15.4 million shares in the quarter and no longer
owns any Pilgrim's Pride common stock.
18. As reported in the earnings release and prior releases, what are the main
items in the first-quarter fiscal 2006 diluted EPS that will affect
comparability with first-quarter fiscal 2005 diluted EPS?
Summary of major items included in diluted EPS of $0.68 for the first First Quarter FY06
quarter of fiscal 2006 ------------------
Gain on sale of Pilgrim's Pride Corporation common stock $0.40
Impairment charges related to two joint ventures $0.03
Expense related to plant closure $0.01
Income from discontinued operations $0.01
Summary of major item included in diluted EPS of $0.26 for the first First Quarter FY05
quarter of fiscal 2005 ------------------
Costs to implement efficiency initiatives $0.02
19. The attached tables were part of the fourth-quarter fiscal 2005 earnings
release Q&A and have not changed. These are provided as reference because
of classification changes that took place during the fourth quarter of
fiscal 2005.
ConAgra Foods, Inc.
Segment Operating Results
($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 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
Cost 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 462.4 480.5 425.8 449.7 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 - - - - - - - 185.7 - 185.7
Corporation common stock --------- --------- -------- -------- ---------- ------- -------- -------- -------- ----------
Income from continuing operations 154.5 350.9 313.0 294.0 1,112.4 199.3 386.6 407.4 164.7 1,158.0
before 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 129.3 236.9 204.3 156.6 727.1 132.4 245.6 182.4 102.7 663.1
before cumulative effect of changes
in accounting
Income (loss) from discontinued 40.3 31.9 12.4 12.7 97.3 2.3 (6.0) (17.1) (0.8) (21.6)
operations --------- ------- -------- --------- --------- ------- --------- -------- -------- ---------
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 (11.7) - (1.4) - (13.1) - - - - -
accounting --------- ------- --------- ------- ----------- ------- -------- -------- -------- ----------
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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