EXHIBIT 99.1
CONAGRA FOODS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF EARNINGS
FOR THE TWENTY-SIX WEEKS ENDED NOVEMBER 26, 2000
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
The following unaudited pro forma combined condensed statements of earnings give
effect to the merger of International Home Foods, Inc. with and into a wholly
owned subsidiary of ConAgra Foods, Inc. on August 24, 2000 using the purchase
method of accounting, after giving effect to the pro forma adjustments described
in the accompanying notes. The unaudited pro forma combined condensed statements
of earnings should be read in conjunction with the audited and unaudited
historical consolidated financial statements and notes of ConAgra Foods and
International Home Foods.
The unaudited pro forma combined condensed statements of earnings give effect to
the merger as if it had occurred at the beginning of the period presented.
ConAgra Foods' fiscal year ended on May 28, 2000 and International Home Foods'
fiscal year ended on December 31, 1999. The unaudited pro forma combined
condensed statements of earnings for the year ended May 28, 2000 and the
twenty-six weeks ended November 26, 2000 combine the historical consolidated
statements of earnings of ConAgra Foods with the recasted unaudited consolidated
statements of earnings of International Home Foods for the twelve-month and
three-month periods ended June 30, 2000. For purposes of presenting the
unaudited pro forma combined condensed statements of earnings, International
Home Foods' fiscal year has been recasted to June 30, 2000, by including the
unaudited reported financial statements for the quarter ended June 30, 2000 and
the three previous quarters ended March 31, 2000, December 31, 1999 and
September 30, 1999. The merger is reflected in ConAgra Foods' historical
unaudited consolidated balance sheet as of November 26, 2000, and accordingly no
pro forma balance sheet is provided.
The unaudited pro forma adjustments described in the accompanying notes are
based upon preliminary estimates and assumptions that the managements of ConAgra
Foods and International Home Foods believe are reasonable. The pro forma
adjustments are based on the information and assumptions currently available.
The purchase price allocation will be completed after the finalization of asset
and liability valuations. The unaudited pro forma combined condensed statements
of earnings are presented for illustrative purposes only and do not purport to
be indicative of the operating results or financial position that would have
actually occurred if the merger had been in effect on the dates indicated, nor
is it necessarily indicative of future operating results or financial position
of the merged companies. The unaudited pro forma combined condensed financial
statements do not give effect to any potential cost savings or other operating
synergies that ConAgra Foods expects to result from the transaction.
20
EXHIBIT 99.1
CONAGRA FOODS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF EARNINGS
FOR THE TWENTY-SIX WEEKS ENDED NOVEMBER 26, 2000
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
CONAGRA FOODS INTERNATIONAL HOME FOODS
TWENTY-SIX WEEKS THREE MONTHS PRO FORMA
ENDED ENDED ---------------------------
NOVEMBER 26, 2000(1) JUNE 30, 2000(2) ADJUSTMENTS(3) COMBINED
-------------------- ---------------- -------------- ----------
Net Sales......................... $14,081.5 $530.6 $ (92.5) $ 14,519.6
Costs and Expenses:
Cost of goods sold.............. 11,925.0 270.5 26.0 12,221.5
Selling, general and
administrative expenses...... 1,238.0 189.1 (108.6) 1,318.5
Interest expense................ 192.3 24.3 13.3 229.9
-------- ----- -------- ----------
13,355.3 483.9 (69.3) 13,769.9
-------- ----- -------- ----------
Income before income taxes........ 726.2 46.7 (23.2) 749.7
Income taxes 278.4 17.7 (5.0) 291.1
----- ---- -------- ----------
Net income ....................... $ 447.8 $ 29.0 $ (18.2) $458.6
======= ====== ======== ======
Income per share - basic(4): $ .90 $ .39 $ .88
====== ====== ======
Income per share - diluted(4): $ .89 $ .38 $ .88
====== ====== ======
See notes to unaudited pro forma combined condensed financial statements.
21
EXHIBIT 99.1
CONAGRA FOODS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF EARNINGS
FOR THE YEAR ENDED MAY 28, 2000
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
CONAGRA FOODS INTERNATIONAL HOME FOODS
FISCAL YEAR FISCAL YEAR PRO FORMA
ENDED ENDED -----------------------------
MAY 28, 2000(1) JUNE 30, 2000(2) ADJUSTMENTS(3) COMBINED(5)
--------------- ---------------- -------------- -----------
Net Sales......................... $25,794.2 $2,209.7 $(375.6) $27,628.3
Costs and Expenses:
Cost of goods sold.............. 22,151.4 1,150.8 108.4 23,410.6
Selling, general and
administrative expenses....... 2,350.8 762.6 (444.3) 2,669.1
Interest expense................ 303.7 99.9 50.8 454.4
Restructuring/Impairment charges 322.2 -- -- 322.2
--------- -------- ------- ---------
25,128.1 2,013.3 (285.1) 26,856.3
--------- -------- ------- ---------
Income before income taxes........ 666.1 196.4 (90.5) 772.0
Income taxes...................... 253.1 96.1 (19.3) 329.9
--------- -------- ------- ---------
Net Income ....................... $ 413.0 $ 100.3 $(71.2) $ 442.1
========= ======== ======= =========
Income per share - basic(4): $ .87 $ 1.36 $ .86
========= ======== =========
Income per share - diluted(4): $ .86 $ 1.32 $ .85
========= ======== =========
See notes to unaudited pro forma combined condensed financial statements.
22
EXHIBIT 99.1
CONAGRA FOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
On August 24, 2000, ConAgra Foods acquired all of the issued and outstanding
shares of common stock and stock options of International Home Foods in a
transaction accounted for as a purchase business combination. The assets
acquired and liabilities assumed will be assigned a portion of the purchase
price equal to their respective fair market values at August 24, 2000. The
unaudited pro forma combined condensed financial statements are based on the
following:
1. The historical consolidated condensed statements of earnings of ConAgra
Foods. The merger is reflected in ConAgra Foods' historical unaudited
statement of earnings for the thirteen weeks ended November 26, 2000,
and accordingly the unadudited pro forma combined condensed statement
of earnings for the twenty-six weeks ended November 26, 2000 combine
the historical unaudited consolidated condensed statement of earnings
of ConAgra Foods with the unadudited consolidated condensed statements
of earnings of International Home Foods for the three-month period
ended June 30, 2000.
2. The historical consolidated condensed statements of earnings of
International Home Foods recasted for the twelve-month and three-month
periods ended June 30, 2000.
3. The pro forma statements of earnings adjustments are as follows:
a. Provide depreciation and amortization of the fair values
assigned to all identifiable tangible and intangible assets.
The excess of the purchase price over the net assets acquired
has preliminarily been allocated to brands, trademarks and
goodwill and is being amortized using the straight-line method
over 40 years.
ConAgra Foods expects to allocate a portion of the purchase
price to buildings, machinery and equipment and other
intangible assets. Assuming these assets had a weighted
average life of 20 years, for each $100.0 million allocated to
buildings, machinery and equipment or other intangible assets,
pro forma operating expenses would increase by $3.5 million
and pro forma net income would decrease by $1.6 million.
b. Reclassification of International Home Foods' trade promotion
expenses from selling, general and administrative expenses to
net sales to conform to ConAgra Foods' presentation, as well
as reclassification of certain International Home Foods'
freight costs from selling, general and administrative
expenses to cost of goods sold to conform to ConAgra Foods'
presentation.
c. Adjust interest expense relating to (1) additional borrowings
under ConAgra Foods' credit facilities of approximately $875
million for the cash portion of the purchase price and
approximately $719 million for the repayment of International
Home Foods' credit facilities at an assumed interest rate of
7.81% and (2) additional long-term borrowings of $385 million
at 6.8% for the repayment of International Home Foods' $385
million 10.375% Senior Secured Notes as follows:
TWENTY-SIX WEEKS FISCAL YEAR
ENDED ENDED
NOVEMBER 26, 2000 MAY 28, 2000
----------------- ------------
Interest expense on credit facilities $ 31.1 $ 124.5
Interest expense on long-term borrowings 6.5 26.2
IHF historical interest expense (24.3) (99.9)
-------- -------
Net adjustment $ 13.3 $ 50.8
======= ======
23
EXHIBIT 99.1
CONAGRA FOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
A .125% change in the interest rate on the new indebtedness
would change interest expense by approximately $.6 million and
$2.5 million for the twenty-six weeks ended November 26, 2000
and fiscal year ended May 28, 2000, respectively.
d. Change in income tax expense/benefit as a result of pro forma
adjustments which affect taxable income. No pro forma income
taxes have currently been provided on the portion of the
purchase price preliminarily allocated to non-deductible
goodwill.
4. The pro forma weighted average shares outstanding for the twenty-six
weeks ended November 26, 2000 and fiscal year ended May 28, 2000 are as
follows:
TWENTY-SIX WEEKS FISCAL YEAR
ENDED ENDED
NOVEMBER 26, 2000 MAY 28, 2000
----------------- ------------
Basic:
Historical shares outstanding 499.5 475.7
Effect of shares issued 20.5 41.0
----- -----
520.0 516.7
===== =====
Diluted:
Historical shares and share equivalents
outstanding 502.3 478.6
Effect of shares issued 20.5 41.0
Effect of options assumed 1.3 2.8
----- -----
524.1 522.4
===== =====
5. ConAgra Foods' financial data for fiscal year ended May 28, 2000
includes restructuring plan charges of $621.4 million before tax
($385.3 million after tax). Excluding these restructuring plan charges,
unaudited pro forma basic income per share for fiscal 2000 would be
$1.60 and unaudited pro forma diluted income per share would be $1.58.
24
EXHIBIT 99.1
CONAGRA FOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
6. The pro forma ratio of earnings to fixed charges for the twenty-six
weeks ended November 26, 2000 and fiscal year ended May 28, 2000 is as
follows:
TWENTY-SIX WEEKS FISCAL YEAR
ENDED ENDED
NOVEMBER 26, 2000 MAY 28, 2000
----------------- ------------
Fixed Charges as defined:
Interest expense $ 244.8 $ 502.0
Capitalized interest 2.7 5.5
Interest in cost of goods sold 16.2 31.4
Preferred distributions of subsidiary 21.2 43.0
One third of non-cancelable lease rent 13.7 35.2
--------- ---------
Total fixed charges (A) $ 298.6 $ 617.1
========= =========
Earnings as defined:
Pretax income after elimination of undistributed
earnings of equity method investees $ 751.8 $ 760.0
Add fixed charges 298.6 617.1
Less capitalized interest (2.7) (5.5)
--------- ---------
Earnings and fixed charges (B) $ 1,047.7 $ 1,371.6
========= =========
Ratio of earnings to fixed charges (B/A) 3.5 2.2
The pro forma ratio of earnings to fixed charges for the fiscal year
ended May 28, 2000 includes restructuring plan charges of $621.4
million. Excluding these restructuring plan charges, the pro forma
ratio of earnings to fixed charges for the fiscal year ended May 28,
2000 would be 3.2.
25