CONAGRA BRANDS AND LAMB WESTON TO OUTLINE
FISCAL 2017 AND LONG-TERM FINANCIAL GOALS AT INVESTOR EVENTS
Today ConAgra Foods, Inc. (NYSE: CAG) reported results for the
fiscal 2016 fourth quarter ended May 29, 2016.
Highlights (% cited
indicates change vs. year-ago amounts, where applicable. SG&A
refers to selling, general, and administrative expense, and COGS
refers to cost of goods sold)
- As reported, diluted EPS from
continuing operations for the fourth quarter of fiscal 2016 was
$(0.07), reflecting a charge for the year-end re-measurement of
pension amounts, compared with $0.54 in the year-ago period.
Adjusted for items impacting comparability, diluted EPS from
continuing operations was $0.52, largely as planned, compared with
$0.55 in the year-ago period.
- The comparable EPS decline reflects the
fact that the year-ago period included an additional week, and that
the current period included higher incentives expense, higher
marketing expense, and a negative impact from foreign exchange. The
impact of these items was expected, and included in the previously
communicated 2016 fourth quarter guidance.
- The company estimates that the
additional week in the year-ago period contributed an estimated 7%
to sales and volume performance in results for the fiscal 2015
fourth quarter.
- Consumer Foods continued to post good
margins in the quarter as it generated productivity savings,
experienced favorable commodity input costs, and continued to
improve discipline around promotional strategies.
- Commercial Foods demonstrated good
performance in the quarter, driven by Lamb Weston’s results
globally, with particular strength in key Asian markets.
- The company recently announced separate
agreements to sell its Spicetec Flavors & Seasonings business
and its JM Swank business, which are parts of the Commercial Foods
segment. The transactions, which are expected to close in the first
quarter of fiscal 2017, are expected to generate combined net
proceeds of approximately $479 million.
- As previously discussed, the company
plans to complete the relocation of its corporate headquarters from
Omaha, NE to Chicago, IL in the first quarter of fiscal 2017.
CEO Perspective:
Sean Connolly, CEO of ConAgra Foods commented, “Fiscal 2016 was
a year of tremendous accomplishment and progress, as we reshaped
the portfolio, strengthened the balance sheet, and transformed our
culture. Specifically, we divested the Private Brands operations,
repaid approximately $2.5 billion of debt, announced plans to
spin-off Lamb Weston and sell other parts of the Commercial Foods
segment, and prepared to move our headquarters to Chicago as part
of becoming more lean and agile.”
He continued, “Amidst all of this change, both of our operating
segments posted very good results, largely reflecting increased
focus on expanding margins through continued supply chain
productivity, better price/mix, and lower SG&A. In the near
term, we will remain focused on these areas while pursuing targeted
and impactful marketing and innovation to deliver consistent margin
and profit improvement. Each segment is in an excellent position as
we prepare to operate Conagra Brands and Lamb Weston as more
focused pure plays later this year, and I want to congratulate our
team on their successes getting us to this point.”
Overall Results
For the fiscal 2016 fourth quarter ended May 29, 2016, diluted
earnings per share from continuing operations were $(0.07) as
reported, compared with $0.54 for the fourth quarter of fiscal
2015. The reported loss in the fourth quarter was largely the
result of a charge for the re-measurement of pension amounts. After
adjusting for items impacting comparability, comparable diluted EPS
from continuing operations was $0.52 this quarter and $0.55 in the
year-ago period. Items impacting comparability are summarized and
reconciled for Regulation G purposes starting on page 11.
For the full year fiscal 2016, diluted earnings per share from
continuing operations were $1.09 compared with $1.73 for fiscal
2015. After adjusting for items impacting comparability, fiscal
2016 comparable diluted earnings per share from continuing
operations were $2.08, compared with $1.93 in fiscal 2015.
Consumer Foods SegmentBranded food items
sold worldwide in retail channels.
The focus of the Consumer Foods team in the fiscal fourth
quarter, and throughout the fiscal year, was on strengthening the
business by building a higher quality volume base; this involved
taking actions that emphasize profit margins over volume. In
particular, the company’s price increases on certain Banquet
branded products, associated with product quality improvements, as
well as improved trade promotion discipline across several areas of
the portfolio, negatively impacted volume but favorably impacted
margin. Supply chain productivity and favorable commodity input
costs played a significant role in the segment’s comparable
operating margin expansion. The strong margin performance has
enabled increased marketing investment in product-line
renovations.
The Consumer Foods segment posted sales of approximately $1.7
billion and operating profit of $230 million in the fiscal fourth
quarter, as reported. Sales declined 12%, approximately 7 points of
which is attributable to the benefit of the extra week in the
year-ago period. Adjusting for the benefit of the extra week in the
year-ago period, sales declined 5%, reflecting a 4% volume
decrease, flat price/mix, and a negative 1% impact from foreign
exchange (all rounded).
- Adjusting for the benefit of the extra
week in the year-ago period, brands posting sales growth for the
fiscal fourth quarter include Slim Jim, Hebrew National, Reddi-wip,
Peter Pan, Egg Beater’s, Rosarita, and others.
- Other brand details are in the written
Q&A document accompanying this release.
Segment operating profit was $230 million compared with $309
million in the year-ago period, as reported for the quarter. After
adjusting for items impacting comparability, current quarter
comparable operating profit of $290 million declined from the $324
million earned in the year-ago period. The comparable operating
profit decline reflects lower volume, including the impact of the
extra week in the year-ago period, as well as the impact of foreign
exchange, partially offset by lower SG&A expense. Although
comparable operating profit declined for the aforementioned
reasons, comparable operating margin continued to expand as a
result of good productivity and overall lower commodity input
costs, as well as strong SG&A discipline. Advertising increased
by $5 million, or 8%, as the company continued its previously
discussed strategy to make targeted investments in high-potential
brands.
Commercial Foods SegmentSpecialty
potato, seasonings, blends, flavors, and bakery products, as well
as consumer branded and private label packaged food items, sold to
restaurants, foodservice and commercial channels worldwide.
Sales for the Commercial Foods segment were $1.1 billion, 6%
below year ago amounts due to the extra week in the
year-ago-period, and operating profit was $156 million, in line
with year-ago amounts, as reported in the fourth quarter of fiscal
2016.
Adjusting for the impact of the extra week in the year-ago
period, Lamb Weston continued to perform well globally, with
particular strength in key Asian markets. On this same basis of
comparison, other parts of the Commercial Foods segment performed
in line with year ago results.
During the quarter, the company announced a definitive agreement
to sell its Spicetec Flavors & Seasonings business. Shortly
after the quarter, the company announced a definitive agreement to
sell its JM Swank business. Each of these divestitures is expected
to be completed during the first quarter of fiscal 2017. On an
annualized basis, these divestitures are expected to remove an
estimate of approximately $470 million of segment sales and a
comparatively modest amount of segment profit. Each divestiture
remains subject to customary closing conditions.
Hedging Activities
Hedge gains and losses are generally 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.
The net of these activities resulted in $19 million of net benefit
in the current quarter and $18 million of net benefit in the
year-ago period. The company identifies these amounts as items
impacting comparability within the discussion of unallocated
Corporate results.
Other Items
- Unallocated Corporate amounts were $414
million of expense in the current quarter and $56 million of
expense in the year-ago period. Current-quarter amounts included
$19 million of hedge-related benefit, as well as $371 million of
expense related to other items impacting comparability, the largest
of which was a $349 million non-cash charge for the year-end
re-measurement of pension amounts. Year-ago period amounts included
$18 million of hedge-related benefit, and $12 million of other
expense related to other items impacting comparability. Excluding
these amounts, unallocated Corporate expense was $62 million for
the current quarter and $62 million in the year-ago period.
- Equity method investment earnings were
$31 million for the current quarter and $30 million in the year-ago
period.
- Net interest expense was $61 million in
the current quarter and $88 million in the year-ago period,
reflecting the impact of debt reduction earlier this fiscal
2016.
Capital Items
- Dividends paid for the quarter totaled
$109 million compared with $107 million in the year-ago
period.
- The company did not repurchase any
shares during the quarter.
- The company reached agreements to sell
its Spicetec Flavors & Seasonings business and its JM Swank
business, each of which is part of the Commercial Foods segment.
The two transactions are expected to generate combined net proceeds
of approximately $479 million. These proceeds are expected to be
utilized as part of a broader balanced capital allocation plan,
which includes debt reduction, an attractive dividend, share
repurchases, and acquisitions.
- The company plans to utilize a portion
of its capital loss carryforwards generated from the Private Label
divestiture to substantially eliminate income taxes related to
these transactions that would otherwise be payable. The associated
income tax benefit of approximately $147 million has been reflected
in the results of discontinued operations for the fourth quarter of
fiscal 2016.
- For the current quarter, capital
expenditures for property, plant and equipment relating to
continuing operations were $150 million, compared with $103 million
in the year-ago period. Depreciation and amortization expense was
approximately $92 million for the fiscal fourth quarter compared
with a total of $97 million in the year-ago period.
Outlook
The company plans to separate into two independent pure play
companies, Conagra Brands and Lamb Weston. The transaction is
expected to be structured as a spin-off of the Lamb Weston
business, tax free to the company and its shareholders, in the fall
of calendar 2016. Prior to the spin-off, each company will host
investor events to outline financial goals and priorities.
The company plans to report its fiscal 2017 first quarter
results in the ordinary course, as a consolidated enterprise, in
September 2016. We expect that first quarter fiscal 2017 will show
double-digit comparable year-over-year EPS growth due to a
continuation of the productivity, price/mix, and cost discipline
initiatives underway, as well as lower interest expense.
Please see the Regulation G reconciliation on page 11 of this
document for details on EPS from continuing operations.
Major Items Impacting Fourth-quarter Fiscal 2016 EPS
Comparability
Included in the $(0.07) diluted EPS from continuing operations
for the fourth quarter of fiscal 2016 (EPS amounts rounded and
after tax):
- Approximately $0.49 per diluted share
of net expense, or $349 million pretax, related to the year-end
re-measurement of pension amounts. This is all classified within
unallocated Corporate expense (all SG&A).
- As part of a pension accounting
methodology adopted in fiscal 2012, the company expenses actuarial
gains and losses in excess of the 10% corridor annually at the
pension measurement date. This has resulted in a large non-cash
year-end pension expense for fiscal 2016, resulting primarily from
changes in pension accounting assumptions.
- Approximately $0.07 per diluted share
of net expense, or $50 million pretax, related to intangible
impairment charges for the Chef Boyardee brand (all Consumer Foods
SG&A).
- Approximately $0.04 per diluted share
of net expense, or $28 million pretax, related to restructuring
costs and costs related to the planned spin-off of Lamb Weston.
Approximately $10 million of these costs are classified within the
Consumer Foods segment ($4 million of COGS/$6 million of SG&A),
and $18 million of such costs are classified within unallocated
Corporate (all SG&A).
- Approximately $0.03 per diluted share
of net gain, or $19 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 generally 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 $0.01 per diluted share
of expense, or $5 million pretax, associated with a historical
lawsuit due to recent developments in certain legal principles at
issue in the suit, classified within unallocated Corporate (all
SG&A).
- Approximately $0.01 per diluted share
of benefit, or $5 million pretax, from selling certain assets
within the Commercial Foods segment (all SG&A).
- Approximately $0.01 per diluted share
of expense from adjustments to prior-year tax credits.
- $0.01 impact of rounding.
Included in the $0.54 diluted EPS from continuing operations for
the fourth quarter of fiscal 2015 (EPS amounts rounded and after
tax).
- Approximately $0.03 per diluted share
of net benefit, or $18 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 generally 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 $15 million pretax, resulting from restructuring
and integration costs. $10 million is classified within the
Consumer Foods segment ($6 million of COGS/$4 million of SG&A),
and $5 million of this is classified as unallocated Corporate
expense (SG&A).
- Approximately $0.01 per diluted share
of net expense, or $5 million pretax, related to the impairment of
goodwill and other intangible assets, classified within the
Consumer Foods segment (SG&A).
- Approximately $0.01 per diluted share
of net expense, or $7 million pretax, related to the year-end
re-measurement of pension amounts.
Discussion of Results
ConAgra Foods will host a conference call at 9:30 a.m. EDT today
to discuss the results. Following the company’s 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 1-877-627-6590 and
1-719-325-4810, 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 8899078. A rebroadcast also will be available on the
company’s 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.
About ConAgra FoodsConAgra Foods, Inc. (NYSE: CAG) is one
of North America's leading packaged food companies with recognized
brands such as Marie Callender's®, Healthy Choice®, Slim Jim®,
Hebrew National®, Orville Redenbacher's®, Peter Pan®, Reddi-wip®,
PAM®, Snack Pack®, Banquet®, Chef Boyardee®, Egg Beaters®, Hunt’s®
and many other ConAgra Foods brands found 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.
Note on Forward-looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on management’s
current expectations and are subject to uncertainty and changes in
circumstances. These risks and uncertainties include, among other
things: ConAgra Foods’ ability to successfully complete the
spin-off of its Lamb Weston business on a tax-free basis, within
the expected time frame or at all; ConAgra Foods’ ability to
execute its operating and restructuring plans and achieve its
targeted operating efficiencies, cost-saving initiatives, and trade
optimization programs; ConAgra Foods’ ability to successfully
execute its long-term value creation strategy; ConAgra Foods’
ability to realize the synergies and benefits contemplated by the
Ardent Mills joint venture; risks and uncertainties associated with
intangible assets, including any future goodwill or intangible
assets impairment charges; the availability and prices of raw
materials, including any negative effects caused by inflation or
weather conditions; the effectiveness of ConAgra Foods’ product
pricing efforts, whether through pricing actions or changes in
promotional strategies; the ultimate outcome of litigation,
including litigation related to the lead paint and pigment matters
and the accident at its former Garner plant; future economic
circumstances; industry conditions; the effectiveness of ConAgra
Foods’ hedging activities, including volatility in commodities that
could negatively impact ConAgra Foods’ derivative positions and, in
turn, ConAgra Foods’ earnings; the success of ConAgra Foods’
innovation and marketing investments; the competitive environment
and related market conditions; the ultimate impact of any ConAgra
Foods’ product recalls; access to capital; actions of governments
and regulatory factors affecting ConAgra Foods’ businesses,
including the Patient Protection and Affordable Care Act; the
amount and timing of repurchases of ConAgra Foods’ common stock and
debt, if any; the costs, disruption and diversion of management’s
attention associated with campaigns commenced by activist
investors; and other risks described in ConAgra Foods’ reports
filed with the Securities and Exchange Commission, including its
most recent annual report on Form 10-K and subsequent reports on
Forms 10-Q and 8-K. Investors and security holders are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as of the date they are made. ConAgra Foods
disclaims any obligation to update or revise statements contained
in this press release to reflect future events or circumstances or
otherwise.
Regulation G Disclosure Below is
a reconciliation of Q4 FY16 and Q4 FY15 diluted earnings per share
from continuing operations, Consumer Foods segment operating
profit, full FY16 and FY15 diluted earnings per share from
continuing operations, and Unallocated Corporate Expense, adjusted
for items impacting comparability. Amounts may be impacted by
rounding.
Q4 FY16 & Q4 FY15 Diluted EPS from
Continuing Operations Q4 FY16 Q4 FY15 %
change Diluted EPS from continuing operations $
(0.07 ) $ 0.54 N/A Items
impacting comparability: Net expense related to year-end
re-measurement of pension amounts 0.49 0.01 Net expense related to
intangible impairment charges 0.07 0.01 Net expense related to
restructuring costs and costs related to Lamb Weston spin-off 0.04
0.02 Net benefit related to unallocated mark-to-market impact of
derivatives (0.03 ) (0.03 ) Net expense related to recent
developments in a legacy legal matter 0.01 - Net expense related to
adjustments to prior-year tax credits 0.01 - Net benefit related to
gain on asset sale (0.01 ) - Rounding 0.01 -
Diluted EPS from continuing operations, adjusted
for items impacting comparability $ 0.52
$ 0.55 -5% Consumer Foods
Segment Operating Profit Reconciliation (Dollars in
millions)
Q4 FY16 Q4 FY15 % change Consumer
Foods Segment Operating Profit $ 230 $
309 -26% Net expense related to restructuring charges
10 10 Net expense related to intangible impairment charges
50 5
Consumer Foods Segment Adjusted
Operating Profit $ 290 $ 324
-10% FY16 & FY15 Diluted EPS from
Continuing Operations FY16 FY15 %
change Diluted EPS from continuing operations $
1.09 $ 1.73 -37% Items impacting
comparability: Net expense related to year-end re-measurement of
pension amounts 0.49 0.01 Net expense related to restructuring and
integration costs, and costs related to Lamb Weston spin-off (FY16)
0.41 0.08 Net expense related to goodwill and intangible impairment
charges 0.07 0.05 Net expense related to debt tender offer 0.04
0.04 Net (benefit) expense related to tax matters 0.03 (0.01 ) Net
benefit related to Lamb Weston pension plan settlement (0.03 ) -
Net (benefit) expense related to unallocated mark-to-market impact
of derivatives (0.03 ) 0.05 Net (benefit) expense related to recent
developments in a legacy legal matter 0.01 (0.02 ) Net benefit
related to gain on asset sale (0.01 ) - Rounding 0.01
-
Diluted EPS from continuing operations,
adjusted for items impacting comparability $ 2.08
$ 1.93 8% Unallocated
Corporate Expense Reconciliation (Dollars in millions)
Q4 FY16 Q4 FY15 Unallocated Corporate Expense
$ 414 $ 56
Net expense related to year-end
re-measurement of pension amounts
(349 ) (7 ) Net benefit related to unallocated mark-to-market
impact of derivatives 19 18 Net expense related to restructuring
and integration costs, and costs related to Lamb Weston spin-off
(FY16) (18 ) (5 ) Net expense related to recent developments in a
legacy legal matter (5 ) -
Adjusted
Unallocated Corporate Expense $ 62
$ 62 This press release includes
certain non-GAAP financial measures, including diluted earnings per
share from continuing operations adjusted for items impacting
comparability, adjusted operating profit for the Consumer Foods
segment and adjusted unallocated corporate expense. Management
considers GAAP financial measures as well as such non-GAAP
financial information in its evaluation of the company’s financial
statements and believes these non-GAAP measures provide useful
supplemental information to assess the company’s operating
performance and financial position. These measures should be viewed
in addition to, and not in lieu of, the company’s diluted earnings
per share, operating performance and financial measures as
calculated in accordance with GAAP.
ConAgra Foods, Inc.
Segment Operating Results
(in millions)
(unaudited)
FOURTH QUARTER
Thirteen weeksended
Fourteen weeksended
May 29, 2016 May 31, 2015 Percent Change
SALES
Consumer Foods $ 1,693.5 $ 1,923.3 (11.9 )% Commercial Foods
1,134.0 1,202.2 (5.7 )% Total 2,827.5
3,125.5 (9.5 )%
OPERATING
PROFIT
Consumer Foods $ 229.8 $ 309.1 (25.7 )% Commercial Foods
155.5 154.0 1.0
%
Total operating profit for segments 385.3 463.1 (16.8 )%
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 (414.1 ) (55.7 ) 643.4
%
Interest expense, net (61.0 ) (88.2 ) (30.8 )% Income
(loss) from continuing operations before income taxes and equity
method investment earnings $ (89.8 ) $ 319.2 N/A
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.
ConAgra Foods, Inc.
Segment Operating Results
(in millions)
(unaudited)
FOURTH QUARTER
Fifty-two weeksended
Fifty-three weeksended
May 29, 2016 May 31, 2015 Percent Change
SALES
Consumer Foods $ 7,225.1 $ 7,565.3 (4.5 )% Commercial Foods
4,417.8 4,371.7 1.1
%
Total 11,642.9 11,937.0 (2.5 )%
OPERATING
PROFIT
Consumer Foods $ 1,087.6 $ 1,068.0 1.8
%
Commercial Foods 633.2 566.2
11.8
%
Total operating profit for segments 1,720.8 1,634.2 5.3
%
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 (839.4 ) (303.9 ) 176.2
%
Interest expense, net (297.8 ) (330.0 ) (9.8 )%
Income from continuing operations before income taxes and equity
method investment earnings $ 583.6 $ 1,000.3 (41.7 )%
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.
ConAgra Foods, Inc.
Consolidated Statements of Operations
(in millions, except share and per share
data)
(unaudited)
FOURTH QUARTER
Thirteen weeksended
Fourteen weeksended
May 29, 2016 May 31, 2015 Percent Change Net sales $ 2,827.5
$ 3,125.5 (9.5 )% Costs and expenses: Cost of goods sold 2,066.6
2,318.9 (10.9 )% Selling, general and administrative expenses 789.7
399.2 97.8
%
Interest expense, net 61.0 88.2 (30.8
)% Income (loss) from continuing operations before income taxes and
equity method investment earnings (89.8 ) 319.2 N/A Income
tax expense (benefit) (33.9 ) 114.2 N/A Equity method investment
earnings 30.8 29.5 4.4
%
Income (loss) from continuing operations (25.1 ) 234.5 N/A Income
(loss) from discontinued operations, net of tax 146.0
(23.0 ) N/A Net income $ 120.9 $ 211.5 (42.8
)% Less: Net income attributable to noncontrolling interests
3.3 2.3 43.5
%
Net income attributable to ConAgra Foods, Inc. $ 117.6 $
209.2 (43.8 )% Earnings (loss) per share - basic
Income (loss) from continuing operations $ (0.07 ) $ 0.54
N/A Income (loss) from discontinued operations 0.34
(0.05 ) N/A Net income attributable to ConAgra Foods, Inc. $
0.27 $ 0.49 (44.9 )% Weighted average shares
outstanding 437.8 427.8 2.3
%
Earnings (loss) per share - diluted Income (loss)
from continuing operations $ (0.07 ) $ 0.54 N/A Income (loss) from
discontinued operations 0.34 (0.06 ) N/A Net
income attributable to ConAgra Foods, Inc. $ 0.27 $ 0.48
(43.8 )% Weighted average share and share equivalents
outstanding 437.8 432.8 1.2
%
ConAgra Foods, Inc.
Consolidated Statements of Operations
(in millions, except share and per share
data)
(unaudited)
FOURTH QUARTER
Fifty-two weeksended
Fifty-three weeksended
May 29, 2016 May 31, 2015 Percent Change Net sales $
11,642.9 $ 11,937.0 (2.5 )% Costs and expenses: Cost of goods sold
8,552.1 9,061.4 (5.6 )% Selling, general and administrative
expenses 2,209.4 1,545.3 43.0
%
Interest expense, net 297.8 330.0 (9.8
)% Income from continuing operations before income taxes and equity
method investment earnings 583.6 1,000.3 (41.7 )% Income tax
expense 225.4 362.1 (37.8 )% Equity method investment earnings
137.8 122.1 12.9
%
Income from continuing operations 496.0 760.3 (34.8 )% Loss from
discontinued operations, net of tax (1,161.9 )
(1,001.1 ) 16.1
%
Net loss $ (665.9 ) $ (240.8 ) 176.5
%
Less: Net income attributable to noncontrolling interests
11.1 11.8 (5.9 )% Net loss attributable to
ConAgra Foods, Inc. $ (677.0 ) $ (252.6 ) 168.0
%
Earnings (loss) per share - basic Income from
continuing operations $ 1.11 $ 1.75 (36.6 )% Loss from discontinued
operations (2.68 ) (2.35 ) 14.0
%
Net loss attributable to ConAgra Foods, Inc. $ (1.57 ) $ (0.60 )
161.7
%
Weighted average shares outstanding 434.4
426.1 2.0
%
Earnings (loss) per share - diluted Income from
continuing operations $ 1.09 $ 1.73 (37.0 )% Loss from discontinued
operations (2.65 ) (2.32 ) 14.2
%
Net loss attributable to ConAgra Foods, Inc. $ (1.56 ) $ (0.59 )
164.4
%
Weighted average share and share equivalents outstanding
438.5 431.3 1.7
%
ConAgra Foods, Inc.
Consolidated Balance Sheet
(in millions)
(unaudited)
May 29, 2016 May 31, 2015
ASSETS Current assets Cash
and cash equivalents $ 834.5 $ 164.7 Receivables, less allowance
for doubtful accounts of $3.7 and $3.8 836.6 739.0 Inventories
1,582.1 1,642.6 Prepaid expenses and other current assets 206.5
168.2 Current assets held for sale 117.0 848.8 Total
current assets 3,576.7 3,563.3 Property, plant and equipment, net
2,710.3 2,644.6 Goodwill 4,533.8 4,544.6 Brands, trademarks and
other intangibles, net 1,276.8 1,272.5 Other assets 1,067.2 926.8
Noncurrent assets held for sale 225.8 4,486.0 $
13,390.6 $ 17,437.8
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities Notes payable $ 38.8 $ 7.9 Current
installments of long-term debt 571.4 1,007.8 Accounts payable 945.4
1,080.0 Accrued payroll 271.1
206.3
Other accrued liabilities 651.0 647.1 Current liabilities held for
sale 54.7
361.0
Total current liabilities 2,532.4 3,310.1 Senior long-term debt,
excluding current installments 4,721.9 6,692.9 Subordinated debt
195.9 195.9 Other noncurrent liabilities 2,144.1 1,915.9 Noncurrent
liabilities held for sale 1.5 713.0 Total stockholders' equity
3,794.8 4,610.0 $ 13,390.6 $ 17,437.8
ConAgra Foods, Inc. and
Subsidiaries
Condensed Consolidated Statements of
Cash Flows
(in millions) (unaudited)
2016 2015 Cash flows from
operating activities: Net income (loss) $ (665.9 ) $ (240.8 )
Income (loss) from discontinued operations (1,161.9 )
(1,001.1 ) Income from continuing operations 496.0 760.3
Adjustments to reconcile income (loss) from continuing operations
to net cash flows from operating activities: Depreciation and
amortization 373.9 380.4 Asset impairment charges 62.6 36.0 Lease
cancellation expense 55.6 — Loss on extinguishment of debt 23.9
24.6 Loss on sale of fixed assets 2.3 7.5 Earnings of affiliates
less than (in excess of) distributions (59.5 ) (30.8 )
Stock-settled share-based payments expense 45.1 35.8 Contributions
to pension plans (11.5 ) (12.7 ) Pension expense 374.4 (0.8 ) Other
items 42.9
11.4
Change in operating assets and liabilities excluding effects of
business acquisitions and dispositions: Receivables (171.9 )
77.3
Inventories 55.4 (112.1 ) Deferred income taxes and income taxes
payable, net (290.6 ) 47.1 Prepaid expenses and other current
assets 14.3 (11.4 ) Accounts payable (111.0 )
(11.6
) Accrued payroll 88.8 70.8 Other accrued liabilities 54.6
(56.4 ) Net cash flows from operating activities -
continuing operations 1,045.3
1,215.4
Net cash flows from operating activities - discontinued operations
162.1
265.2
Net cash flows from operating activities 1,207.4
1,480.6 Cash flows from investing activities:
Additions to property, plant and equipment (429.8 )
(351.2
) Sale of property, plant and equipment 42.4
18.3
Purchase of businesses, net of cash acquired — (95.7 ) Purchase of
intangible assets (10.4 ) — Return of investment in equity method
investee — 391.4 Other items 0.3 — Net
cash flows from investing activities - continuing operations (397.5
)
(37.2
) Net cash flows from investing activities - discontinued
operations 2,524.9
(4.4
) Net cash flows from investing activities 2,127.4
(41.6 ) Cash flows from financing activities: Net short-term
borrowings 30.9 (150.0 ) Issuance of long-term debt 30.0 550.0
Repayment of long-term debt (2,525.0 ) (1,493.5 ) Repurchase of
ConAgra Foods, Inc. common shares — (50.0 ) Sale of ConAgra Foods,
Inc. common shares 8.6 — Cash dividends paid (432.5 ) (425.2 )
Exercise of stock options and issuance of other stock awards 260.2
153.8 Other items (8.4 ) (13.6 ) Net cash flows from
financing activities - continuing operations (2,636.2 ) (1,428.5 )
Net cash flows from financing activities - discontinued operations
(45.2 ) (1.7 ) Net cash flows from financing
activities (2,681.4 ) (1,430.2 ) Effect of exchange
rate changes on cash and cash equivalents (2.0 ) (8.8 ) Net change
in cash and cash equivalents 651.4 — Add: Cash balance included in
assets held for sale at beginning of period 18.4 64.9 Less: Cash
balance included in assets held for sale at end of period — 18.4
Cash and cash equivalents at beginning of year 164.7
118.2 Cash and cash equivalents at end of year $
834.5 $ 164.7
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160630005211/en/
ConAgra Foods, Inc.Media:Jon Harris,
312-549-5356Jon.Harris@ConAgraFoods.comorAnalysts:Johan
Nystedt, 312-549-5002Johan.Nystedt@ConAgraFoods.com
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