1-7275 | 47-0248710 | |
(Commission File Number) | (IRS Employer Identification No.) | |
One ConAgra Drive | ||
Omaha, NE | 68102 | |
(Address of Principal Executive Offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
CONAGRA FOODS, INC. |
||||
Date: September 20, 2011 | By: | /s/ Colleen Batcheler | ||
Name: | Colleen Batcheler | |||
Title: | Executive Vice President, General Counsel and Corporate Secretary |
![]() |
News Release |
For more information, contact: | ||
Teresa Paulsen MEDIA | ||
Vice President, Corporate Communication | ||
ConAgra Foods, Inc. | ||
tel: 402-240-5210 | ||
Chris Klinefelter ANALYSTS | ||
Vice President, Investor Relations | ||
ConAgra Foods, Inc. | ||
tel: 402-240-4154 | ||
www.conagrafoods.com |
FOR IMMEDIATE RELEASE |
| Diluted EPS from continuing operations of $0.20 as reported and $0.29 adjusted for items impacting comparability, down 38% as reported and 15% on a comparable basis. | |
| Consumer Foods sales increased 4%, reflecting 4% price/mix and flat volume; the segments operating profits declined slightly, reflecting 11% inflation that offset strong cost savings and the benefit of pricing. Additional pricing actions are under way. | |
| Commercial Foods sales grew at a double-digit rate; profitability decreased due to wheat market dynamics, which more than offset the benefit of necessary price increases at Lamb Weston. The balance of the year is expected to reflect stronger price/mix for the potato operations. | |
| The company continues to expect low- to mid-single-digit EPS growth, adjusted for items impacting comparability, in fiscal 2012; due to the timing of inflation and pricing, the growth is expected to occur in the second half of the year. | |
| The company continues to expect operating cash flow in excess of $1.2 billion for the fiscal year. |
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| Brands posting sales growth for the quarter include DAVID, Healthy Choice, Hebrew National, Manwich, Marie Callenders, Orville Redenbachers, PAM, Parkay, Peter Pan, Reddi-wip, Slim Jim, Swiss Miss, Wesson, and others. | |
| The company posted strong sales results for several key sales channels. | |
| More brand details can be found in the Q&A document accompanying this release. |
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| Corporate expense was $118 million for the quarter and $80 million in the year-ago period. Current-quarter amounts include $34 million due to hedge losses and $3 million of restructuring charges, and year-ago amounts include $6 million of hedge losses. Excluding these amounts, Corporate expense was $81 million for the current quarter and $74 million in the year-ago period. | |
| Equity method investment earnings were $6 million for the first quarter, in line with year-ago amounts. | |
| Net interest expense was $53 million in the current quarter, compared with $37 million in the year-ago period; interest income from the notes receivable held in connection with the divestiture of the Trading & Merchandising operations benefited year-ago period amounts by $18 million. | |
| The effective tax rate for continuing operations for the quarter was 34%. The company expects the effective tax rate for the full fiscal year 2012 to be approximately 34%, excluding items impacting comparability. |
| Dividends for the current quarter totaled $94 million versus $88 million in the year-ago period; the increase reflects a higher dividend rate partially offset by fewer shares outstanding. | |
| The company did not repurchase any shares during the quarter. The company has approximately $125 million remaining on its current share repurchase authorization. | |
| For the current quarter, capital expenditures from continuing operations for property, plant, and equipment were $96 million, compared with $129 million in the year-ago period. Depreciation and amortization expense from continuing operations was approximately $91 million for the quarter; this compares with a total of $86 million in the year-ago period. |
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| On September 14, 2011, subsequent to the fiscal first quarter, the company entered into an unsecured revolving credit agreement, which replaces the companys prior revolving credit agreement that was to mature in December 2011. The new Credit Agreement provides for a revolving credit facility in a maximum aggregate principal amount outstanding at any one time of $1.5 billion (subject to increase to a maximum aggregate principal amount of $2.0 billion), matures on September 14, 2016, and may be extended for additional one-year periods on an annual basis. | |
| Subsequent to quarter end, the company repaid $343 million of current portion of long-term debt. |
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| Approximately $0.05 per diluted share of net expense, or $34 million pretax, related to the mark-to-market impact of derivatives used to hedge input costs, temporarily classified in unallocated Corporate expense. This expense will later be reclassified to the operating segments when underlying hedged items are expensed in segment cost of goods sold. | |
| Approximately $0.04 per diluted share of net expense, or $24 million pretax, related to restructuring activities designed to improve efficiencies. $16 million of these are in the Consumer Foods segment ($3 million in cost of goods sold (COGS), $13 million in selling, general, and administrative (SG&A) expense), $4 million are in the Commercial Foods segment (all SG&A), and $3 million are unallocated Corporate expense (SG&A). |
| Approximately $0.01 of expense, or $8 million pretax, related to restructuring plans; this expense is classified within the Consumer Foods segment ($4 million in COGS, $4 million in SG&A). | |
| Approximately $0.01 per diluted share of net expense, or $6 million pretax, related to the mark-to-market impact of derivatives used to hedge input costs, temporarily classified in unallocated Corporate expense. This expense will later be reclassified to the operating segments when underlying hedged items are expensed in segment cost of goods sold. |
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Year- | ||||||||||||
over-year | ||||||||||||
Q1 FY12 | Q1 FY11 | %change | ||||||||||
Diluted EPS from continuing operations |
$ | 0.20 | $ | 0.32 | -38 | % | ||||||
Items impacting comparability: |
||||||||||||
Net expense related to unallocated mark-to-market impact of derivatives |
0.05 | 0.01 | ||||||||||
Expense related to restructuring charges |
0.04 | 0.01 | ||||||||||
Diluted EPS adjusted for items impacting comparability |
$ | 0.29 | $ | 0.34 | -15 | % | ||||||
Year- | ||||||||||||
over-year | ||||||||||||
(Dollars in millions) | Q1 FY12 | Q1 FY11 | %change | |||||||||
Consumer Foods Segment Operating Profit |
$ | 196 | $ | 208 | -6 | % | ||||||
Expense related to restructuring charges |
16 | 8 | ||||||||||
Consumer Foods Segment Adjusted Operating Profit |
$ | 212 | $ | 216 | -1 | % | ||||||
Year- | ||||||||||||
over-year | ||||||||||||
(Dollars in millions) | Q1 FY12 | Q1 FY11 | %change | |||||||||
Commercial Foods Segment Operating Profit |
$ | 98 | $ | 113 | -14 | % | ||||||
Expense related to restructuring charges |
4 | | ||||||||||
Commercial Foods Segment Adjusted Operating Profit |
$ | 102 | $ | 113 | -10 | % | ||||||
Total FY11 | ||||
Diluted EPS from continuing operations |
$ | 1.90 | ||
Items impacting comparability: |
||||
Expense related to restructuring charges |
0.08 | |||
(Benefit) related to unallocated mark-to-market impact of derivatives |
(0.05 | ) | ||
(Benefit) related to receipt of insurance proceeds from Garner, N.C., accident |
(0.15 | ) | ||
(Benefit) of gain on early repayment of Trading & Merchandising divestiture-related PIK note |
(0.04 | ) | ||
Rounding |
0.01 | |||
Diluted EPS adjusted for items impacting comparability |
$ | 1.75 | ||
FIRST QUARTER | ||||||||||||
13 Weeks Ended | 13 Weeks Ended | |||||||||||
August 28, 2011 | August 29, 2010 | Percent Change | ||||||||||
SALES |
||||||||||||
Consumer Foods |
$ | 1,891.7 | $ | 1,811.5 | 4.4 | % | ||||||
Commercial Foods |
1,180.3 | 992.8 | 18.9 | % | ||||||||
Total |
3,072.0 | 2,804.3 | 9.5 | % | ||||||||
OPERATING PROFIT |
||||||||||||
Consumer Foods |
$ | 196.2 | $ | 207.7 | (5.5 | )% | ||||||
Commercial Foods |
97.5 | 113.1 | (13.8 | )% | ||||||||
Total operating profit for segments |
293.7 | 320.8 | (8.4 | )% | ||||||||
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 |
(117.9 | ) | (79.5 | ) | 48.3 | % | ||||||
Interest expense, net |
(52.9 | ) | (37.3 | ) | 41.8 | % | ||||||
Income from continuing operations before
income taxes and equity method investment
earnings |
$ | 122.9 | $ | 204.0 | (39.8 | )% | ||||||
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. |
FIRST QUARTER | ||||||||||||
13 Weeks Ended | 13 Weeks Ended | |||||||||||
August 28, 2011 | August 29, 2010 | Percent Change | ||||||||||
Net sales |
$ | 3,072.0 | $ | 2,804.3 | 9.5 | % | ||||||
Costs and expenses: |
||||||||||||
Cost of goods sold |
2,473.3 | 2,153.0 | 14.9 | % | ||||||||
Selling, general and administrative expenses |
422.9 | 410.0 | 3.1 | % | ||||||||
Interest expense, net |
52.9 | 37.3 | 41.8 | % | ||||||||
Income from continuing operations before
income taxes and equity method investment
earnings |
122.9 | 204.0 | (39.8 | )% | ||||||||
Income tax expense |
43.6 | 66.9 | (34.8 | )% | ||||||||
Equity method investment earnings |
6.2 | 6.2 | | % | ||||||||
Income from continuing operations |
85.5 | 143.3 | (40.3 | )% | ||||||||
Income from discontinued operations, net of tax |
0.1 | 3.0 | (96.7 | )% | ||||||||
Net income |
$ | 85.6 | $ | 146.3 | (41.5 | )% | ||||||
Less: Net income (loss) attributable to
noncontrolling interests |
0.3 | (0.1 | ) | N/A | ||||||||
Net income attributable to ConAgra Foods, Inc. |
$ | 85.3 | $ | 146.4 | (41.7 | )% | ||||||
Earnings per share basic |
||||||||||||
Income from continuing operations |
$ | 0.21 | $ | 0.32 | (34.4 | )% | ||||||
Income from discontinued operations |
| 0.01 | (100.0 | )% | ||||||||
Net income attributable to ConAgra Foods, Inc. |
$ | 0.21 | $ | 0.33 | (36.4 | )% | ||||||
Weighted average shares outstanding |
412.7 | 441.5 | (6.5 | )% | ||||||||
Earnings per share diluted |
||||||||||||
Income from continuing operations |
$ | 0.20 | $ | 0.32 | (37.5 | )% | ||||||
Income from discontinued operations |
| 0.01 | (100.0 | )% | ||||||||
Net income attributable to ConAgra Foods, Inc. |
$ | 0.20 | $ | 0.33 | (39.4 | )% | ||||||
Weighted average share and share equivalents
outstanding |
418.1 | 446.0 | (6.3 | )% | ||||||||
August 28, 2011 | May 29, 2011 | |||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 1,095.2 | $ | 972.4 | ||||
Receivables, less allowance for doubtful accounts
of $7.7 and $7.8 |
922.0 | 849.4 | ||||||
Inventories |
1,815.3 | 1,803.4 | ||||||
Prepaid expenses and other current assets |
261.1 | 274.1 | ||||||
Total current assets |
4,093.6 | 3,899.3 | ||||||
Property, plant and equipment, net |
2,638.0 | 2,670.1 | ||||||
Goodwill |
3,609.0 | 3,609.4 | ||||||
Brands, trademarks and other intangibles, net |
989.3 | 936.3 | ||||||
Other assets |
280.8 | 293.6 | ||||||
$ | 11,610.7 | $ | 11,408.7 | |||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities |
||||||||
Current installments of long-term debt |
$ | 376.8 | $ | 363.5 | ||||
Accounts payable |
1,165.5 | 1,083.7 | ||||||
Accrued payroll |
125.7 | 124.1 | ||||||
Other accrued liabilities |
666.2 | 554.3 | ||||||
Total current liabilities |
2,334.2 | 2,125.6 | ||||||
Senior long-term debt, excluding current installments |
2,659.8 | 2,674.4 | ||||||
Subordinated debt |
195.9 | 195.9 | ||||||
Other noncurrent liabilities |
1,690.5 | 1,704.3 | ||||||
Total stockholders equity |
4,730.3 | 4,708.5 | ||||||
$ | 11,610.7 | $ | 11,408.7 | |||||
Thirteen weeks ended | ||||||||
August 28, | August 29, | |||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 85.6 | $ | 146.3 | ||||
Income from discontinued operations |
0.1 | 3.0 | ||||||
Income from continuing operations |
85.5 | 143.3 | ||||||
Adjustments to reconcile income from continuing operations to net cash flows from operating activities: |
||||||||
Depreciation and amortization |
91.5 | 85.8 | ||||||
Asset impairment charges |
7.1 | 0.2 | ||||||
Insurance recoveries recognized related to Garner accident |
| (1.3 | ) | |||||
Advances from insurance carriers related to Garner accident |
| 3.0 | ||||||
Distributions from affiliates less than current earnings |
(2.2 | ) | (2.6 | ) | ||||
Contributions to pension plans |
(3.0 | ) | (110.1 | ) | ||||
Share-based payments expense |
12.3 | 8.4 | ||||||
Non-cash interest income on payment-in-kind notes |
| (18.5 | ) | |||||
Other items |
(6.7 | ) | 24.0 | |||||
Change in operating assets and liabilities before effects of business acquisitions and dispositions: |
||||||||
Accounts receivable |
(63.1 | ) | (2.2 | ) | ||||
Inventory |
(12.1 | ) | (148.3 | ) | ||||
Prepaid expenses and other current assets |
12.9 | 37.8 | ||||||
Accounts payable |
108.9 | 81.1 | ||||||
Accrued payroll |
1.6 | (131.9 | ) | |||||
Other accrued liabilities |
79.3 | 135.5 | ||||||
Net cash flows from operating activities continuing operations |
312.0 | 104.2 | ||||||
Net cash flows from operating activities discontinued operations |
3.1 | 4.6 | ||||||
Net cash flows from operating activities |
315.1 | 108.8 | ||||||
Cash flows from investing activities: |
||||||||
Additions to property, plant and equipment |
(95.6 | ) | (129.1 | ) | ||||
Sale of property, plant and equipment |
3.8 | 1.0 | ||||||
Advances from insurance carriers related to Garner accident |
| 2.5 | ||||||
Purchase of businesses and intangible assets |
(57.5 | ) | (129.7 | ) | ||||
Net cash flows from investing activities continuing operations |
(149.3 | ) | (255.3 | ) | ||||
Net cash flows from investing activities discontinued operations |
| 248.9 | ||||||
Net cash flows from investing activities |
(149.3 | ) | (6.4 | ) | ||||
Cash flows from financing activities: |
||||||||
Repayment of long-term debt |
(2.5 | ) | (38.4 | ) | ||||
Repurchase of ConAgra Foods common shares |
| (100.0 | ) | |||||
Cash dividends paid |
(94.3 | ) | (88.5 | ) | ||||
Exercise of stock options and issuance of other stock awards |
55.7 | 10.9 | ||||||
Other items |
| (0.3 | ) | |||||
Net cash flows from financing activities continuing operations |
(41.1 | ) | (216.3 | ) | ||||
Net cash flows from financing activities discontinued operations |
| (0.1 | ) | |||||
Net cash flows from financing activities |
(41.1 | ) | (216.4 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents |
(1.9 | ) | 1.7 | |||||
Net change in cash and cash equivalents |
122.8 | (112.3 | ) | |||||
Cash and cash equivalents at beginning of period |
972.4 | 953.2 | ||||||
Cash and cash equivalents at end of period |
$ | 1,095.2 | $ | 840.9 | ||||
1. | What were some examples of brands in the Consumer Foods segment posting sales growth for the quarter? |
- Andy Capps
|
- Manwich | - Reddi-wip | ||
- Blue Bonnet
|
- Marie Callenders | - Ro*Tel | ||
- DAVID
|
- Orville Redenbachers | - Slim Jim | ||
- Healthy Choice
|
- PAM | - Swiss Miss | ||
- Hebrew National
|
- Parkay | - Wesson | ||
- Libbys
|
- Peter Pan | - Wolf |
Sales for Egg Beaters, Lightlife, and Rosarita were in line with year-ago amounts. | ||
2. | What were some examples of brands in the Consumer Foods segment posting sales declines for the quarter? |
- ACT II - Banquet - Chef Boyardee - Crunch n Munch - Hunts |
- Kid Cuisine - La Choy - Snack Pack - Van Camps |
3. | What were unit volume changes for the quarter in the Consumer Foods and Commercial Foods segments? | |
Consumer Foods organic unit volume was flat. | ||
Commercial Foods volume was up approximately 2%. | ||
4. | How much was total depreciation and amortization from continuing operations for the quarter? | |
Approximately $91 million (versus approximately $86 million in Q1 FY11) |
1
5. | How much were capital expenditures from continuing operations for the quarter? | |
Approximately $96 million (versus approximately $129 million in Q1 FY11) | ||
6. | What was the net interest expense for the quarter? | |
Approximately $53 million (versus approximately $37 million in Q1 FY11) | ||
7. | What was corporate expense for the quarter? | |
Corporate expense was $118 million for the quarter and $80 million in the year-ago period. Current-quarter amounts include $34 million due to hedge losses and $3 million of restructuring charges, and prior-year amounts include $6 million of hedge losses. Excluding these amounts, Corporate expense was $81 million for the current quarter and $74 million in the year-ago period. | ||
8. | What were dividends for the quarter? | |
Approximately $94 million (versus approximately $88 million in Q1 FY11); the increase reflects a higher dividend rate partially offset by fewer shares outstanding. | ||
9. | What was the weighted average number of diluted shares outstanding for the quarter (rounded)? | |
Approximately 418 million shares for the quarter | ||
10. | What were the gross margins and operating margins for the quarter ($ amounts in millions, rounded)? | |
Gross margin = segment gross profit* divided by net sales Gross margin = $632/$3,072 = 21% |
||
Operating margin = segment operating profit** divided by net sales Operating margin = $294/$3,072 = 10% |
* | Gross profit = net sales costs of goods sold ($3,072 $2,440 = $632) | |
** | 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 = $123/$3,072 = 4%. |
11. | What is included in the companys net debt at the end of the quarter (rounded, in millions)? |
Q1 FY12 | ||||
Total debt* |
$ | 3,233 | ||
Less: Cash on hand |
$ | 1,095 | ||
Net debt total |
$ | 2,138 |
* | Total debt = notes payable, short-term debt, long-term debt, and subordinated debt. |
2
12. | What is the net-debt-to-total-capital ratio at quarter end? | |
The net-debt-to-total-capital ratio for the quarter was 31%. | ||
This ratio is defined as net debt divided by the sum of net debt plus shareholder equity. See question No. 11 for the components of net debt. | ||
13. | What was the effective tax rate for the quarter? | |
The effective tax rate for continuing operations for the quarter was 34%. | ||
14. | What is the projected effective tax rate for FY12? | |
The company expects the effective tax rate for FY12 to be in the range of 34%, excluding items impacting comparability. The company acknowledges that the quarterly rates may be different from this, given the timing of certain matters, but that the overall rate is expected to approximate 34%. | ||
15. | What are the projected capital expenditures for FY12? | |
Total capital expenditures for FY12 are expected to be approximately $475 million. | ||
16. | What is the expected net interest expense for FY12? | |
Net interest expense is expected to be approximately $200 million. |
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