UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) September 20, 2012
ConAgra Foods, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 1-7275 | 47-0248710 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
One ConAgra Drive Omaha, NE |
68102 | |||
(Address of Principal Executive Offices) | (Zip Code) |
(402) 240-4000
(Registrants Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition
On September 20, 2012, ConAgra Foods, Inc. (the Company) issued a press release and posted a question and answer document (Q&A) on its website containing information on the Companys first quarter fiscal 2013 financial results. The press release and Q&A are furnished with this Form 8-K as Exhibits 99.1 and 99.2, respectively.
The press release and Q&A include the non-GAAP financial measures of adjusted operating profit for the Consumer Foods segment, adjusted operating profit for the Commercial Foods segment, adjusted unallocated corporate expense, adjusted diluted earnings per share from continuing operations, effective tax rate excluding items impacting comparability and net debt. Management considers GAAP financial measures as well as such non-GAAP financial information in its evaluation of the Companys financial statements and believes these non-GAAP measures provide useful supplemental information to assess the Companys operating performance and financial position. To the extent required, these measures are reconciled in the press release and Q&A to the most directly comparable measures as reported in accordance with GAAP, and should be viewed in addition to, and not in lieu of, the Companys diluted earnings per share and operating performance and financial measures as calculated in accordance with GAAP.
Item 9.01 Financial Statements and Exhibits
(d) | Exhibits |
Exhibit 99.1 | Press Release issued September 20, 2012 |
Exhibit 99.2 | Questions and Answers |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CONAGRA FOODS, INC. | ||||
Date: September 20, 2012 | By: | /s/ Colleen Batcheler | ||
| ||||
Name: Colleen Batcheler | ||||
Title: Executive Vice President, General Counsel and Corporate Secretary |
Exhibit Index
Exhibit 99.1 | Press release issued September 20, 2012 | |
Exhibit 99.2 | Questions and Answers |
Exhibit 99.1
![]() |
News Release |
For more information, contact: Teresa Paulsen MEDIA Vice President, Communication & External Relations 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
CONAGRA FOODS REPORTS VERY STRONG FIRST-QUARTER EPS; RAISES
FISCAL 2013 EPS GUIDANCE; INCREASES DIVIDEND TO ANNUALIZED
RATE OF $1.00 PER SHARE
Fiscal 2013 First-quarter Highlights (% cited vs. year-ago amounts, where applicable):
| Diluted EPS from continuing operations of $0.61 as reported and $0.44 adjusted for items impacting comparability, up 177% as reported and up 42% on a comparable basis. |
| Consumer Foods operating profit increased 20% as reported and 14% on a comparable basis, even with a strong increase in marketing investment. Segment sales increased 8%, driven by acquisitions. |
| Commercial Foods operating profit grew 43% as reported and 37% on a comparable basis, as Lamb Weston potato operations delivered good volume, favorable price/mix, and operational efficiencies. Segment sales increased 5%. |
| The company has raised its EPS expectations for the fiscal year and now expects fiscal 2013 EPS, adjusted for items impacting comparability, to be in the range of $2.03 $2.06, which includes a strong year-over-year increase in marketing investment. |
| The company continues to expect operating cash flow in excess of $1.2 billion for the fiscal year. |
| The board of directors raised the quarterly dividend by $0.01 to $0.25 per share, starting with the dividend to be paid in December 2012. With this change, the annualized dividend becomes $1.00 per share. |
OMAHA, Neb., Sept. 20, 2012 ConAgra Foods, Inc., (NYSE: CAG) one of North Americas leading packaged food companies, today reported results for the fiscal 2013 first quarter ended Aug. 26, 2012. Diluted EPS from continuing operations was $0.61 in the current quarter, up 177% over $0.22 earned in the year-ago period. Excluding $0.17 of net benefit in the current quarter and $0.09
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of net expense in the year-ago period from items impacting comparability, current quarter comparable EPS of $0.44 was 42% above the comparable $0.31 earned in the year-ago period. Items impacting comparability in the current year and prior year are summarized toward the end of this release and reconciled for Regulation G purposes starting on page 10.
Gary Rodkin, ConAgra Foods chief executive officer, said, We are very pleased with our strong start to fiscal 2013. Based on continued momentum in our potato operations, effective margin management initiatives across the portfolio, and contribution from acquisitions, we are able to post a strong EPS performance in the midst of difficult marketplace conditions. It is clear that our operating capabilities, strategic initiatives, and prudent capital allocation are accelerating EPS performance. We have raised our EPS expectations for fiscal 2013 while continuing to make strong levels of marketing investment as part of long-term brand building initiatives.
Consumer Foods Segment (62% of first-quarter sales)
Branded and non-branded food sold in retail and foodservice channels.
The Consumer Foods segment posted sales of $2,043 million and operating profit of $235 million for the first quarter. Sales increased 8%, reflecting 8% contribution from acquisitions, 5% favorable price/mix, and a 4% organic volume decline. Foreign exchange rates negatively impacted sales by 1%.
| Brands posting sales growth for the quarter include ACT II, Lightlife, Marie Callenders, Orville Redenbachers, PAM, Peter Pan, Reddi-wip, Ro*Tel, Rosarita, Slim Jim, Wesson, and others. |
| More brand details can be found in the Q&A document accompanying this release. |
Operating profit of $235 million grew 20% over $196 million in the year-ago period, as reported. After adjusting for $7 million of net expense in the current period, and $16 million of net expense a year ago, from items impacting comparability, current-quarter operating profit of $242 million increased 14% over the comparable $212 million a year ago. Marketing investment increased at a double-digit rate, as planned, reflecting the companys commitment to building long-term brand
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strength. Operating profit growth reflects success with margin management initiatives (notably, price increases necessitated by inflation, and productivity programs that target in excess of $240 million of cost savings this fiscal year), as well as less severe inflation (approximately 3% of cost of goods sold this quarter), contribution from acquisitions, and favorable product mix.
Despite the recent increase in many commodities prices, net inflation for the Consumer Foods segment is expected to be slightly lower than originally planned; this reflects the companys effective procurement and hedging programs as well as the nature of the companys raw input needs. The segments year-over-year volume performance is expected to improve throughout the fiscal year as the company laps the volume impact of price increases taken in fiscal 2012; the segments innovation pipeline and increased marketing investment are expected to contribute to sequentially improved volume performance as the fiscal year progresses.
Commercial Foods Segment (38% of first-quarter sales)
Specialty potato, seasonings, blends, flavors, and milled grain products sold to foodservice and commercial channels worldwide.
Sales for the Commercial Foods segment were $1,269 million, 5% above year-ago amounts. The sales increase was due to a strong top-line performance for the Lamb Weston potato operations, which posted good volume growth, particularly in international markets, as well as favorable price/mix. All of the segments product lines posted volume growth.
Segment operating profit was $140 million, 43% above year-ago amounts as reported. After adjusting for $4 million of net expense from items impacting comparability in the year-ago period, current quarter profits increased 37% on a comparable basis. Lamb Westons potato operations drove the segments profit growth due to strong sales and a focus on operating efficiencies; international results for Lamb Weston were notably strong. Flour milling profits were in line with year-ago amounts.
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Hedging Activities This language primarily relates to operations other than the companys milling operations.
The company recorded $130 million of net hedge gains in the current quarter, and $34 million of net hedging loss in the year-ago period, as unallocated Corporate expense. The company identifies these amounts as items impacting comparability. Hedge gains and losses are aggregated, and net amounts are reclassified from unallocated Corporate expense to the operating segments when the underlying commodity or foreign currency being hedged is expensed in segment cost of goods sold.
Other Items
| Unallocated Corporate amounts were a net gain of $43 million for the current quarter, and a net expense of $104 million in the year-ago period, as reported. Current-quarter amounts include $130 million of net benefit due to hedge gains and $12 million of expense related to other items impacting comparability, while year-ago amounts include $34 million of hedge losses and $3 million of restructuring charges. Excluding these amounts, unallocated Corporate expense was $75 million for the current quarter and $67 million in the year-ago period. |
| Equity method investment earnings were $8 million for the fiscal first quarter, ahead of $6 million in the year-ago period. |
| Net interest expense was $49 million in the current quarter and $53 million a year ago. |
| The company expects the effective tax rate for the full fiscal year 2013 to be approximately 34%, excluding items impacting comparability. |
Capital Items
| During the quarter, the company completed its acquisition of the Bertolli and P.F. Changs Home Menu frozen meals businesses from Unilever PLC. Annual sales for these operations in aggregate are approximately $300 million; the purchase price was approximately $267 million. The company utilized its commercial paper program to finance the cash transaction. |
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| The board of directors raised the quarterly dividend to $0.25 per share, starting with the dividend to be paid in December 2012. With this change, the annualized dividend becomes $1.00 per share. |
| Dividends for the current quarter totaled $98 million versus $94 million in the year-ago period; the increase reflects a higher dividend rate partially offset by fewer shares outstanding. |
| The company repurchased approximately 2.95 million of its shares of common stock during the quarter for approximately $75 million; as of quarter end, the company has approximately $450 million remaining on its current share repurchase authorization. |
| For the current quarter, capital expenditures from continuing operations for property, plant and equipment were $99 million, compared with $96 million in the year-ago period. Depreciation and amortization expense from continuing operations was approximately $91 million for the fiscal first quarter; this compares with a total of $91 million in the year-ago period. |
| Subsequent to the quarter end, on September 13, 2012, the company issued senior unsecured notes with a face value totaling $750 million. As a result of the companys strong balance sheet and an attractive market environment, the company obtained historically low coupons on each tranche issued. The three tranches of $250 million each and their respective coupon rates were for 3 years at 1.35%, 5.5 years at 2.10%, and 10 years at 3.25%. Proceeds will be used for general corporate purposes, including repayment of outstanding commercial paper mostly utilized for a recent acquisition. |
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Fiscal 2013 EPS Outlook
Based on the strong start to the fiscal year, the company now expects fiscal 2013 diluted EPS to be in the range of $2.03 $2.06, adjusted for items impacting comparability.
The company expects its operating capabilities, strategic initiatives, and prudent capital allocation to continue to drive good underlying performance for the remainder of fiscal 2013. Relative to the strong comparable year-over-year EPS growth rate posted for the fiscal first quarter, the remaining fiscal quarters of fiscal 2013 are expected to show more modest rates of comparable year-over-year EPS growth, reflecting more difficult year-over-year comparisons as well as continued increases in marketing investment.
Major Items Impacting First-quarter Fiscal 2013 EPS Comparability
Included in the $0.61 diluted EPS from continuing operations for the first quarter of fiscal 2013 (EPS amounts rounded and after tax):
| Approximately $0.20 per diluted share of net benefit, or $130 million pretax, related to the mark-to-market impact of derivatives used to hedge input costs, temporarily classified in unallocated Corporate expense. Hedge gains and losses are aggregated, and net amounts are reclassified from unallocated Corporate expense to the operating segments when the underlying commodity or foreign currency being hedged is expensed in segment cost of goods sold. |
| Approximately $0.02 per diluted share of net expense, or $8 million pretax, related to historical legal matters, classified as unallocated Corporate expense. This amount is not tax-deductible. |
| Approximately $0.01 per diluted share of net expense, or $4 million pretax, related to restructuring activities designed to improve efficiencies. $3 million of these are in the Consumer Foods segment ($2 million cost of goods sold (COGS) / $1 million Selling, General, & Administrative expenses (SG&A)), and $1 million is in unallocated Corporate expense (SG&A). |
| Approximately $0.01 per diluted share of net expense, or $7 million pretax, from acquisition and related costs. $4 million is classified within the Consumer Foods segment ($2 million COGS, $2 million in SG&A) and $3 million is classified within unallocated Corporate expense (SG&A). |
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Included in the $0.22 diluted EPS from continuing operations for the first quarter of fiscal 2012 (EPS amounts rounded and after tax):
| 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. Hedge gains and losses are aggregated, and net amounts are reclassified from unallocated Corporate expense to the operating segments when the underlying commodity or foreign currency being hedged is 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 COGS, $13 million in SG&A expense), $4 million are in the Commercial Foods segment (all SG&A), and $3 million are unallocated Corporate expense (SG&A). |
Discussion of Results
ConAgra Foods will host a conference call at 9:30 a.m. EDT today to discuss the results. Following the companys remarks, the call will include a question-and-answer session with the investment community. Domestic and international participants may access the conference call toll-free by dialing 1-877-675-4750 and 1-719-325-4747, respectively. No confirmation or pass code is needed. This conference call also can be accessed live on the Internet at http://investor.conagrafoods.com.
A rebroadcast of the conference call will be available after 1 p.m. EDT today. To access the digital replay, a pass code number will be required. Domestic participants should dial 1-888-203-1112, and international participants should dial 1-719-457-0820 and enter pass code 2164760. A rebroadcast also will be available on the companys website.
In addition, the company has posted a question-and-answer supplement relating to this release at http://investor.conagrafoods.com. To view recent company news, please visit http://media.conagrafoods.com.
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Annual Stockholders Meeting Webcast
The company will webcast its 2012 Annual Stockholders Meeting on Friday, Sept. 21, 2012. This event will be webcast live beginning at 2:30 p.m. EDT. The webcast will be archived starting at 4:30 p.m. EDT on Friday, Sept. 21, and can be accessed at http://investor.conagrafoods.com.
ConAgra Foods, Inc., (NYSE: CAG) is one of North Americas leading food companies, with brands in 97 percent of Americas households. Consumers find Banquet, Chef Boyardee, Egg Beaters, Healthy Choice, Hebrew National, Hunts, Marie Callenders, Orville Redenbachers, PAM, Peter Pan, Reddi-wip, Slim Jim, Snack Pack and many other ConAgra Foods brands in grocery, convenience, mass merchandise and club stores. ConAgra Foods also has a strong business-to-business presence, supplying frozen potato and sweet potato products as well as other vegetable, spice and grain products to a variety of well-known restaurants, foodservice operators and commercial customers. For more information, please visit us at www.conagrafoods.com.
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Note on Forward-looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on managements current views and assumptions of future events and financial performance and are subject to uncertainty and changes in circumstances. The company undertakes no responsibility for updating these statements. Readers of this release should understand that these statements are not guarantees of performance or results. Many factors could affect the companys actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements. These factors include, among other things: availability and prices of raw materials, including any negative effects caused by inflation and adverse weather conditions; the effectiveness of its product pricing, including any pricing actions and promotional changes; future economic circumstances; industry conditions; the companys ability to execute its operating and restructuring plans; the success of the companys innovation, marketing, including increased marketing investments, and cost-saving initiatives; the competitive environment and related market conditions; operating efficiencies; the ultimate impact of the companys product recalls; access to capital; the companys success in effectively and efficiently integrating its acquisitions, actions of governments and regulatory factors affecting the companys businesses, including the Patient Protection and Affordable Care Act; the amount and timing of repurchases of the companys common stock, if any; and other risks described in the companys 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.
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Regulation G Disclosure
Below is a reconciliation of Q1 FY13 and Q1 FY12 diluted earnings per share from continuing operations, Consumer Foods segment operating profit, and Commercial Foods segment operating profit, adjusted for items impacting comparability. Amounts may be impacted by rounding.
Q1 FY13 & Q1 FY12 Diluted EPS from Continuing Operations
Q1 FY13 | Q1 FY12 | % change | ||||||||||
Diluted EPS from continuing operations |
$ | 0.61 | $ | 0.22 | 177 | % | ||||||
Items impacting comparability: |
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Net expense (benefit) related to unallocated mark-to-market impact of derivatives |
(0.20 | ) | 0.05 | |||||||||
Expense related to historical legal matters |
0.02 | | ||||||||||
Expense related to transaction costs of acquisitions |
0.01 | | ||||||||||
Expense related to restructuring charges |
0.01 | 0.04 | ||||||||||
Rounding |
(0.01 | ) | | |||||||||
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Diluted EPS adjusted for items impacting comparability |
$ | 0.44 | $ | 0.31 | 42 | % | ||||||
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Consumer Foods Segment Operating Profit Reconciliation
(Dollars in millions) | Q1 FY13 | Q1 FY12 | % change | |||||||||
Consumer Foods Segment Operating Profit |
$ | 235 | $ | 196 | 20 | % | ||||||
Expense related to restructuring charges |
3 | 16 | ||||||||||
Expense related to transaction costs of acquisitions |
4 | | ||||||||||
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Consumer Foods Segment Adjusted Operating Profit |
$ | 242 | $ | 212 | 14 | % | ||||||
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Commercial Foods Segment Operating Profit Reconciliation
(Dollars in millions) | Q1 FY13 | Q1 FY12 | % change | |||||||||
Commercial Foods Segment Operating Profit |
$ | 140 | $ | 98 | 43 | % | ||||||
Expense related to restructuring charges |
| 4 | ||||||||||
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Commercial Foods Segment Adjusted Operating Profit |
$ | 140 | $ | 102 | 37 | % | ||||||
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ConAgra Foods, Inc.
Segment Operating Results
(in millions)
(unaudited)
FIRST QUARTER | ||||||||||||
13 Weeks Ended | 13 Weeks Ended | |||||||||||
August 26, 2012 | August 28, 2011 | Percent Change | ||||||||||
SALES |
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Consumer Foods |
$ | 2,042.6 | $ | 1,891.7 | 8.0 | % | ||||||
Commercial Foods |
1,269.3 | 1,213.6 | 4.6 | % | ||||||||
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Total |
3,311.9 | 3,105.3 | 6.7 | % | ||||||||
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OPERATING PROFIT |
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Consumer Foods |
$ | 235.3 | $ | 196.2 | 19.9 | % | ||||||
Commercial Foods |
139.6 | 97.5 | 43.2 | % | ||||||||
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Total operating profit for segments |
374.9 | 293.7 | 27.6 | % | ||||||||
Reconciliation of total operating profit to income from continuing operations before income taxes and equity method investment earnings |
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Items excluded from segment operating profit: |
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General corporate expense |
42.5 | (104.3 | ) | N/A | ||||||||
Interest expense, net |
(49.3 | ) | (52.9 | ) | (6.8 | )% | ||||||
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Income from continuing operations before income taxes and equity method investment earnings |
$ | 368.1 | $ | 136.5 | 169.7 | % | ||||||
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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.
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ConAgra Foods, Inc.
Consolidated Statements of Earnings
(in millions, except per share amounts)
(unaudited)
FIRST QUARTER | ||||||||||||
13 Weeks Ended | 13 Weeks Ended | |||||||||||
August 26, 2012 | August 28, 2011 | Percent Change |
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Net sales |
$ | 3,311.9 | $ | 3,105.3 | 6.7 | % | ||||||
Costs and expenses: |
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Cost of goods sold |
2,440.6 | 2,509.3 | (2.7 | )% | ||||||||
Selling, general and administrative expenses |
453.9 | 406.6 | 11.6 | % | ||||||||
Interest expense, net |
49.3 | 52.9 | (6.8 | )% | ||||||||
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Income from continuing operations before income taxes and equity method investment earnings |
368.1 | 136.5 | 169.7 | % | ||||||||
Income tax expense |
123.5 | 48.7 | 153.6 | % | ||||||||
Equity method investment earnings |
7.6 | 6.2 | 22.6 | % | ||||||||
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Income from continuing operations |
252.2 | 94.0 | 168.3 | % | ||||||||
Income from discontinued operations, net of tax |
| 0.1 | (100.0 | )% | ||||||||
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Net income |
$ | 252.2 | $ | 94.1 | 168.0 | % | ||||||
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Less: Net income attributable to noncontrolling interests |
2.1 | 0.3 | 600.0 | % | ||||||||
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Net income attributable to ConAgra Foods, Inc. |
$ | 250.1 | $ | 93.8 | 166.6 | % | ||||||
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Earnings per share basic |
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Income from continuing operations |
$ | 0.61 | $ | 0.23 | 165.2 | % | ||||||
Income from discontinued operations |
| | 0.0 | % | ||||||||
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Net income attributable to ConAgra Foods, Inc. |
$ | 0.61 | $ | 0.23 | 165.2 | % | ||||||
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Weighted average shares outstanding |
407.1 | 412.7 | (1.4 | )% | ||||||||
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Earnings per share diluted |
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Income from continuing operations |
$ | 0.61 | $ | 0.22 | 177.3 | % | ||||||
Income from discontinued operations |
| | 0.0 | % | ||||||||
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Net income attributable to ConAgra Foods, Inc. |
$ | 0.61 | $ | 0.22 | 177.3 | % | ||||||
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Weighted average share and share equivalents outstanding |
412.0 | 418.1 | (1.5 | )% | ||||||||
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ConAgra Foods, Inc.
Consolidated Balance Sheets
(in millions)
(unaudited)
August 26, 2012 | May 27, 2012 | |||||||
ASSETS |
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Current assets |
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Cash and cash equivalents |
$ | 116.5 | $ | 103.0 | ||||
Receivables, less allowance for doubtful accounts of $5.7 and $5.9 |
963.9 | 924.8 | ||||||
Inventories |
2,065.7 | 1,869.6 | ||||||
Prepaid expenses and other current assets |
329.8 | 321.4 | ||||||
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Total current assets |
3,475.9 | 3,218.8 | ||||||
Property, plant and equipment, net |
2,784.5 | 2,741.9 | ||||||
Goodwill |
4,166.6 | 4,015.4 | ||||||
Brands, trademarks and other intangibles, net |
1,221.2 | 1,191.5 | ||||||
Other assets |
280.4 | 274.3 | ||||||
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$ | 11,928.6 | $ | 11,441.9 | |||||
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities |
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Notes Payable |
$ | 272.0 | $ | 40.0 | ||||
Current installments of long-term debt |
23.2 | 38.1 | ||||||
Accounts payable |
1,224.7 | 1,190.3 | ||||||
Accrued payroll |
147.2 | 177.2 | ||||||
Other accrued liabilities |
927.2 | 779.6 | ||||||
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Total current liabilities |
2,594.3 | 2,225.2 | ||||||
Senior long-term debt, excluding current installments |
2,663.8 | 2,662.7 | ||||||
Subordinated debt |
195.9 | 195.9 | ||||||
Other noncurrent liabilities |
1,824.4 | 1,822.1 | ||||||
Total stockholders equity |
4,650.2 | 4,536.0 | ||||||
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$ | 11,928.6 | $ | 11,441.9 | |||||
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ConAgra Foods, Inc.
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
Thirteen weeks ended | ||||||||
August 26, 2012 |
August 28, 2011 |
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Cash flows from operating activities: |
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Net income |
$ | 252.2 | $ | 94.1 | ||||
Income from discontinued operations |
| 0.1 | ||||||
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Income from continuing operations |
252.2 | 94.0 | ||||||
Adjustments to reconcile income from continuing operations to net cash flows from operating activities: |
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Depreciation and amortization |
91.4 | 91.5 | ||||||
Asset impairment charges |
0.3 | 7.1 | ||||||
Earnings of affiliates less than (in excess of) distributions |
1.2 | (2.2 | ) | |||||
Pension expense |
6.1 | 6.2 | ||||||
Contributions to Company pension plans |
(3.8 | ) | (3.0 | ) | ||||
Share-based payments expense |
13.1 | 12.3 | ||||||
Other items |
(1.5 | ) | (15.7 | ) | ||||
Change in operating assets and liabilities excluding effects of business acquisitions and dispositions: |
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Accounts receivable |
(35.9 | ) | (63.1 | ) | ||||
Inventory |
(152.0 | ) | (12.1 | ) | ||||
Deferred income taxes and income taxes payable, net |
113.5 | 48.9 | ||||||
Prepaid expenses and other current assets |
(33.9 | ) | (3.0 | ) | ||||
Accounts payable |
53.1 | 108.9 | ||||||
Accrued payroll |
(30.1 | ) | 1.6 | |||||
Other accrued liabilities |
50.2 | 40.6 | ||||||
|
|
|
|
|||||
Net cash flows from operating activities continuing operations |
323.9 | 312.0 | ||||||
Net cash flows from operating activities discontinued operations |
| 3.1 | ||||||
|
|
|
|
|||||
Net cash flows from operating activities |
323.9 | 315.1 | ||||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Additions to property, plant and equipment |
(98.6 | ) | (95.6 | ) | ||||
Sale of property, plant and equipment |
1.9 | 3.8 | ||||||
Purchase of businesses |
(268.6 | ) | | |||||
Purchase of intangible assets |
| (57.5 | ) | |||||
|
|
|
|
|||||
Net cash flows from investing activities |
(365.3 | ) | (149.3 | ) | ||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Net short-term borrowings |
232.0 | | ||||||
Repayment of long-term debt |
(16.9 | ) | (2.5 | ) | ||||
Repurchase of ConAgra Foods common shares |
(75.0 | ) | | |||||
Cash dividends paid |
(97.9 | ) | (94.3 | ) | ||||
Exercise of stock options and issuance of other stock awards |
10.8 | 55.7 | ||||||
Other items |
0.2 | | ||||||
|
|
|
|
|||||
Net cash flows from financing activities |
53.2 | (41.1 | ) | |||||
|
|
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents |
1.7 | (1.9 | ) | |||||
Net change in cash and cash equivalents |
13.5 | 122.8 | ||||||
Cash and cash equivalents at beginning of period |
103.0 | 972.4 | ||||||
|
|
|
|
|||||
Cash and cash equivalents at end of period |
$ | 116.5 | $ | 1,095.2 | ||||
|
|
|
|
# # #
Exhibit 99.2
Q1 FY13 Question & Answer
September 20, 2012
1. | What were some examples of brands in the Consumer Foods segment posting sales growth for the quarter? |
- ACT II | - PAM | - Rosarita | ||
- Blue Bonnet | - Parkay | - Slim Jim | ||
- Lightlife | - Peter Pan | - Wesson | ||
- Marie Callenders | - Reddi-wip | - Wolf | ||
- Orville Redenbachers | - Ro*Tel |
2. | What were some examples of brands in the Consumer Foods segment posting sales declines for the quarter? |
- Andy Capps | - Egg Beaters | - La Choy | - Van Camps | |||
- Banquet | - Healthy Choice | - Libbys | ||||
- Chef Boyardee | - Hebrew National | - Manwich | ||||
- Crunch n Munch | - Hunts | - Snack Pack | ||||
- DAVID | - Kid Cuisine | - Swiss Miss |
3. | What were unit volume changes for the quarter in the Consumer Foods and Commercial Foods segments? |
Consumer Foods organic volume decreased 4%.
Commercial Foods volume increased 4%.
4. | Why are there slight differences in Commercial Foods segment sales in prior periods? |
There has been a change in methodology regarding the presentation of certain types of product sales. Previously, the margin from these sales was included as a reduction of cost of goods sold, and now it is reported on a gross basis as sales and cost of goods sold. This has no impact on profitability.
5. | How much was total depreciation and amortization from continuing operations for the quarter? |
Approximately $91 million (versus approximately $91 million in Q1 FY12)
1
6. | How much were capital expenditures from continuing operations for the quarter? |
Approximately $99 million (versus approximately $96 million in Q1 FY12)
7. | What was the net interest expense for the quarter? |
Approximately $49 million (versus approximately $53 million in Q1 FY12)
8. | What was Corporate expense for the quarter? |
Unallocated Corporate amounts were a net gain of $43 million for the current quarter, and a net expense of $104 million in the year-ago period, as reported. Current-quarter amounts include $130 million of net benefit due to hedge gains and $12 million of expense related to other items impacting comparability, while year-ago amounts include $34 million of hedge losses and $3 million of restructuring charges. Excluding these amounts, unallocated Corporate expense was $75 million for the current quarter (rounded) and $67 million in the year-ago period.
9. | How much did the company pay in dividends during the quarter? |
Approximately $98 million (versus approximately $94 million in Q1 FY12), reflecting an increase in the dividend rate earlier this fiscal year, which was partially offset by the impact of fewer shares outstanding.
10. | What was the weighted average number of diluted shares outstanding for the quarter (rounded)? |
Approximately 412 million shares for the quarter
11. | Did the company repurchase any shares during the quarter? |
The company repurchased approximately 2.95 million of its shares of common stock during the quarter for approximately $75 million; the company has approximately $450 million remaining on its current share repurchase authorization.
12. | What were the gross margins and operating margins for the quarter ($ amounts in millions, rounded)? |
Gross margin = segment gross profit* divided by net sales
Gross margin = $741/$3,312 = 22%
Operating margin = segment operating profit** divided by net sales
Operating margin = $375/$3,312 = 11%
* | Gross profit = net sales costs of goods sold ($3,312 $2,571 = $741) |
** | 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 = $368/$3,312 = 11%. |
2
13. | What is included in the companys net debt at the end of the quarter (rounded, in millions)? |
Q1 FY13 | ||||
Total debt* |
$ | 3,155 | ||
Less: Cash on hand |
$ | 117 | ||
|
|
|||
Net debt |
$ | 3,038 |
* | Total debt = notes payable, short-term debt, long-term debt, and subordinated debt. |
14. | What is the net debt to total capital ratio at quarter end? |
40% currently and 31% a year ago
This ratio is defined as net debt divided by the sum of net debt plus shareholders equity. See question No. 13 for the components of net debt.
15. | What is the projected tax rate for FY13? |
The company expects the tax rate 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%.
16. | What are the projected capital expenditures for FY13? |
Total capital expenditures for fiscal 2013 are expected to modestly exceed $450 million.
17. | What is the expected net interest expense for FY13? |
Net interest expense for fiscal 2013 is expected to be approximately $215 million.
3
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 managements current views and assumptions of future events and financial performance and are subject to uncertainty and changes in circumstances. The company undertakes no responsibility for updating these statements. Readers of this document should understand that these statements are not guarantees of performance or results. Many factors could affect the companys actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements. These factors include, among other things: availability and prices of raw materials, including any negative effects caused by inflation and adverse weather conditions; the effectiveness of its product pricing, including any pricing actions and promotional changes; future economic circumstances; industry conditions; the companys ability to execute its operating and restructuring plans; the success of the companys innovation, marketing, including increased marketing investments, and cost-saving initiatives; the competitive environment and related market conditions; operating efficiencies; the ultimate impact of the companys product recalls; access to capital; the companys success in effectively and efficiently integrating its acquisitions, actions of governments and regulatory factors affecting the companys businesses, including the Patient Protection and Affordable Care Act; the amount and timing of repurchases of the companys common stock, if any; and other risks described in the companys 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.
4
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