FOR IMMEDIATE RELEASE
CONAGRA FOODS LOOKS TO EXIT REFRIGERATED MEATS BUSINESSES; MOVES TO REFOCUS AND
SIMPLIFY ORGANIZATIONAL STRUCTURE
OMAHA, Neb., Feb. 2, 2006 -- ConAgra Foods Inc. (NYSE: CAG), one of North
America's leading packaged food companies, announced plans to divest most of its
refrigerated meats businesses, including the Armour, Butterball, and Eckrich
brands. In addition, the company announced several changes designed to
streamline its operating structure, including moving its Grocery Foods
headquarters from Irvine, Calif., to Naperville, Ill., and further centralizing
its shared services.
"Our actions today reflect our commitment to simplify operations and to
concentrate in areas where we have the strongest competitive positions," said
Gary Rodkin, ConAgra Foods president and chief executive officer. "They put us
in a much better position to execute and drive consistent and sustainable
growth."
Divesting Refrigerated Meats Businesses
The combined annual sales for the businesses being offered for sale are about
$1.9 billion. The businesses include Armour meats and hot dogs, Butterball
turkey, and Eckrich smoked sausages, hot dogs and lunchmeats. These processed
meat products are sold to retail grocers, delis, restaurants and other
foodservice establishments. Luis Nieto, president, Packaged Meats and Deli, will
continue to lead the combined meats business during the sale process, which is
expected to take 10-12 months. The company will continue to manufacture, sell,
promote and deliver these quality products with the highest levels of customer
service during this period, and work to assure uninterrupted service through
transition to new ownership.
Neither the company's Healthy Choice brand of meat, nor its Hebrew National,
Brown `N Serve, Slim Jim, and Pemmican businesses are included in the assets for
sale. Last week Smithfield Foods, Inc. signed a definitive agreement to acquire
substantially all of the assets of the company's Cook's ham business.
"As we sell these assets, we will scale back our related corporate and shared
services infrastructure to ensure that it is the right size for our businesses
going forward," said Rodkin. "We expect a number of people directly involved in
these operations to be employed by the new owners or offered other jobs within
ConAgra Foods."
Simplifying Organizational Structure
"ConAgra Foods has a number of great brands and businesses to drive future
growth. We will build on those strengths by coupling disciplined investments in
well-positioned brands with a more streamlined operating structure," said
Rodkin.
Consistent with that logic, ConAgra Foods today announced the realignment of
various operations:
o The company's Retail and Culinary Products businesses will be combined
to form Consumer Foods. It will manage all consumer brands and foods
that are sold by ConAgra Foods to retail and foodservice customers, as
well as manage the company's international consumer foods business.
Dean Hollis, president and chief operating officer, Consumer Foods,
will oversee these businesses, which include Dairy, Frozen, Grocery,
Packaged Meats and Deli, Snacks, Store Brands, and International. Greg
Heckman, president and chief operating officer, Commercial Products,
will oversee the company's Lamb Weston brand of potato products,
ingredients brands such as ConAgra Mills, Gilroy Foods, and Spicetec,
seafood brands such as Louis Kemp, Meridian and Singleton, as well as
the ConAgra Foods Trade Group's trading, merchandising and risk
management operations.
o The ConAgra Foods Sales organization will assume responsibility for
both retail and foodservice customers, with current personnel in
culinary foodservice sales joining the company's centralized selling
organization. Doug Knudsen, president, ConAgra Foods Sales, will
oversee the combined ConAgra Foods sales organization.
o The company's Grocery Foods headquarters will move from Irvine,
Calif., to Naperville, Ill. which is currently the headquarters of its
dairy and meats businesses. Grocery, which manages the company's shelf
stable products such as Hunt's, PAM, and Chef Boyardee, will
transition people to Illinois by June 1.
o A number of people in shared functions across the company, including
product quality and development, sales and operations planning, and
transportation and warehousing management, will be relocated to Omaha,
Neb. to drive increased collaboration, functional excellence and
efficiency.
As a result of today's changes several personnel actions were also announced:
o Gregory L. Smith, who was president, Grocery Foods and prior to that
was executive vice president of Operations for Grocery Foods, and who
previously worked in supply chain, manufacturing and operations
capacities at The Quaker Oats Company will become senior vice
president of Supply Chain overseeing customer service, transportation,
warehousing and sales and operations planning. This position reports
to Jim Hardy, executive vice president, Product Supply, who also has
responsibility for manufacturing, procurement and engineering.
o David Palfenier, who was president of Frozen Foods and previously held
marketing and management positions at Frito-Lay will become president,
Grocery Foods reporting to Dean Hollis; and
o Diane Teer, who joined the company last year as president, Culinary
Products and who previously held key management positions with
Campbell Soup will become president, Frozen Foods, also reporting to
Dean Hollis.
Financial Impact
In connection with the organizational changes, the company expects to take cash
and non-cash accounting charges. The company also expects that it will take a
non-cash charge to adjust the book value of the assets to be sold, including
related goodwill. The timing and amount of these charges, as well as any related
benefits, are currently being analyzed and will be announced at a later date.
The packaged meats businesses that will be sold absorb significant costs for
shared services and centralized administrative functions provided to those
businesses. An estimate of the financial impact of the divestiture on ConAgra
Foods' future operating earnings potential will take all key factors into
account, including:
o the operating profits of the businesses to be sold;
o the extent to which the company can reduce the cost of shared services
and administrative functions allocated to those businesses, and the
timing of such reductions; and
o the likely net proceeds from the transaction and their use.
The company will provide a full analysis of the financial impact of the
divestiture as part of its previously announced March 16 investor and analyst
event in New York City.
"We look forward to sharing details of the impact of these decisions in our
investors' meeting in March,"said Rodkin. "These are only part of our broader
plans to drive sustainable top- and bottom-line growth."
ConAgra Foods Inc. (NYSE: CAG) is one of North America's largest packaged food
companies, serving grocery retailers, as well as restaurants and other
foodservice establishments. Popular ConAgra Foods consumer brands include:
Banquet, Chef Boyardee, Egg Beaters, Healthy Choice, Hebrew National, Hunt's,
Marie Callender's, Orville Redenbacher's, PAM, and many others.
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.
For more information, please visit us at www.conagrafoods.com.