Fiscal 2014 fourth-quarter highlights (% cited vs. year-ago
period amounts, where applicable):
- Diluted loss per share from
continuing operations was $(0.76) as reported, due to significant
impairment charges, vs. diluted EPS of $0.45 a year ago. Comparable
EPS of $0.55 declined 8%.
- Consumer Foods sales and comparable
operating profit declined due to weak volumes. Volume and profit
improvement initiatives are expected to improve results in fiscal
2015.
- Commercial Foods sales and
comparable operating profit were in line with year-ago
amounts.
- Private Brands sales were in line
with year-ago amounts, while comparable operating profit decreased
significantly. Pricing concessions necessitated by previously
discussed operating challenges, as well as higher operating costs
associated with business transition, weighed on results.
- The segment will start to lap the
impact of the pricing concessions in the back half of fiscal 2015,
and benefit from a more efficient cost structure throughout all of
fiscal 2015.
- Due primarily to expectations for
continued profit challenges for Private Brands and certain Consumer
Foods brands, the company recognized $681 million of non-cash
impairment charges, which are treated as items impacting
comparability.
- The company generated in excess of
$1.5 billion of operating cash flow in fiscal 2014, above
expectations.
- The company repaid a significant
amount of debt in the fiscal fourth quarter, resulting in total
debt repayment in excess of $600 million for the full year,
exceeding targets.
- The Ardent Mills transaction closed
on May 29, shortly after the close of the quarter, resulting in a
cash distribution to ConAgra Foods of approximately $530 million,
net of estimated tax. Most of this distribution will be used for
debt reduction in fiscal 2015.
- The company expects comparable EPS
in fiscal 2015 to reflect a mid-single digit rate of growth over
the comparable base of $2.17 in fiscal 2014.
- The company expects operating cash
flow of approximately $1.6-$1.7 billion in fiscal 2015, and to
repay approximately $1 billion of debt using a combination of
operating cash flow and Ardent Mills net proceeds.
- The company plans to continue its
$1.00 per share annual dividend, and is committed to maintaining a
strong dividend policy.
ConAgra Foods, Inc., (NYSE: CAG) one of North America’s leading
food companies, today reported results for the fiscal 2014 fourth
quarter ended May 25, 2014. Diluted loss per share from continuing
operations was $(0.76) as reported for the fiscal fourth quarter
vs. diluted EPS of $0.45 in the year-ago period. After adjusting
for items impacting comparability, current-quarter diluted EPS of
$0.55 was 8% below the comparable $0.60 earned in the year-ago
period. Items impacting comparability are summarized toward the end
of this release and reconciled for Regulation G purposes on pages
12-13.
Gary Rodkin, ConAgra Foods’ chief executive officer, said, “We
are disappointed with fiscal 2014 overall, and we have a very
focused sense of urgency directed toward improving our results.
Despite the difficult year, we were able to generate substantial
cash, meet our debt reduction commitments, and pay a strong
dividend.”
He continued, “Our focus is on improving branded volumes through
more effective trade, marketing, and resource allocation,
particularly on several large underperforming brands. We expect
private brand profitability to strengthen through organic growth,
strong synergies, and gradually improving price/mix. Some of the
challenges from fiscal 2014 will still be with us in fiscal 2015,
although we believe results will gradually improve throughout the
fiscal year. Given that, we consider fiscal 2015 to be a year of
stabilization and recovery with a mid-single digit rate of EPS
growth, which we expect to accelerate in fiscal 2016 and 2017 based
on a stronger foundation. Throughout this period, we expect to
benefit from strong productivity, robust cost synergies related to
the Ralcorp acquisition, and SG&A efficiency and effectiveness
initiatives. We will remain focused on growing our top line,
continually improving our cost structure, and sound capital
allocation.”
Consumer Foods Segment
Branded food items sold worldwide in retail
channels.
The Consumer Foods segment posted sales of approximately $1.8
billion for the quarter and operating profit of $177 million as
reported. Sales declined 7%, with a 7% volume decrease, 1%
favorable price/mix, and a 1% unfavorable impact of foreign
exchange.
- While several brands posted weak
volumes in the quarter, a meaningful portion of the overall volume
decline was driven by Healthy Choice, Orville Redenbacher’s and
Chef Boyardee (these collectively have annual sales in excess of $1
billion), which have continued to face volume and profit
challenges. The company has product and promotion changes, as well
as refinements to consumer communication under way, which are
expected to gradually improve the volume and profit performance of
these brands throughout fiscal 2015.
- Overall category softness, as well as a
shift in the timing of promotions, negatively impacted current
quarter volumes.
Operating profit of $177 million was 34% below year ago amounts,
as reported. After adjusting for $91 million of expense in the
current quarter (principally impairment charges) and $4 million of
expense in the year-ago period from items impacting comparability,
current quarter operating profit of $268 million was 3% below the
comparable $275 million in the year-ago period. Cost savings in
excess of inflation, as well as lower advertising and promotion
expenses, offset a meaningful portion of the profit shortfall
resulting from weak volumes. Regarding fiscal 2015, the company
expects branded volume to improve gradually through a focus on
faster-growing customer channels, opportunities in international
markets, and more effective trade and marketing support.
Commercial Foods Segment
Specialty potato, bakery products, seasonings,
blends, flavors, as well as consumer branded and private branded
packaged food items, sold to foodservice and commercial channels
worldwide.
Sales for the Commercial Foods segment were $1.63 billion, up 1%
compared with $1.61 billion in the year-ago period, as reported.
Segment operating profit of $281 million was 49% above year-ago
period amounts, as reported. After adjusting for $91 million of net
benefit in the current quarter primarily related to gains on
divesting mills in connection with the formation of the Ardent
Mills joint venture, comparable current quarter operating profit of
$190 million was 1% above year-ago period amounts.
Lamb Weston potato products posted sales and profit growth
largely due to strong international volumes, as well as
productivity initiatives that helped offset crop quality
challenges. Flour milling sales decreased, reflecting the
pass-through of lower wheat costs, and comparable milling profits
declined reflecting market conditions.
After the close of the quarter, the Ardent Mills joint venture
was formed, and the company contributed its milling operations for
a 44% interest in Ardent Mills and cash proceeds. Other Ardent
Mills details are discussed under the Capital Items portion of this
document.
Private Brands
Private brand food items sold in domestic
markets.
Sales for the Private Brands segment were approximately $1
billion in the quarter, in line with year-ago period amounts. The
segment posted an operating loss of $573 million, as reported, due
to impairment charges. After adjusting for $617 million of net
expense from impairment charges and other items impacting
comparability, current quarter operating profit of $44 million was
$60 million below comparable year-ago period amounts. The
significant profit decline reflects pricing concessions made
earlier in the year necessitated by competitive bids and customer
service issues; higher-than-planned operating costs resulting from
business transition also weighed on profits.
While operating profits for the Private Brands segment are
expected to remain below prior year amounts for the first half of
fiscal 2015 given the pricing concessions, year-over-year
performance in the second half of fiscal 2015 is expected to
improve. This reflects pricing concessions to be lapped, new
business to be added with favorable price/mix, and significant
synergies and other operating efficiencies to be realized.
Current projections are for modest sales and profit growth in
this segment in fiscal 2015, and for growth to accelerate in
fiscals 2016 and 2017. Over the long term, the company remains
confident in the growth prospects for its private brands business
based on the fundamental appeal to consumers, the strategic
importance of private brands to trade customers, and value-added
capabilities of the ConAgra Foods’ private brand operations.
Hedging Activities – This language primarily relates to
operations other than the company’s milling operations or
significant financing activities.
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. The net of these
activities resulted in $14 million of favorable impact in the
current quarter and $37 million of unfavorable impact in the
year-ago period. The company identifies these amounts as items
impacting comparability.
Other Items
- Unallocated Corporate amounts were $65
million of expense in the current quarter and $181 million of
expense in the year-ago period, as reported. After adjusting for $3
million of net expense in the current quarter, and $88 million of
net expense in the year-ago period from items impacting
comparability, current quarter expense of $62 million declined from
$93 million in the year-ago period. The comparable decline largely
reflects lower incentives, lower pension expense, and efficiency
initiatives.
- Equity method investment earnings were
$12 million for the current quarter and $5 million in the year-ago
period. The increase reflects improved results for Lamb Weston’s
European potato joint venture. In future periods, earnings
associated with the company’s interest in Ardent Mills will be
reported in equity method investment earnings.
- Net interest expense was $93 million in
the current quarter and $102 million in the year-ago period,
reflecting debt reduction.
Capital Items
- During the quarter, the company repaid
significant amounts of debt, resulting in more than $600 million of
debt reduction for the fiscal year. The company plans to reduce
debt by approximately $1 billion in fiscal 2015, using a
combination of operating cash and net proceeds received from the
formation of Ardent Mills. Once the fiscal 2015 goal is achieved,
the company will have repaid approximately $2 billion of debt since
the acquisition of Ralcorp in fiscal 2013.
- Dividends for the current quarter
totaled $105 million versus $104 million in the year-ago period,
reflecting an increase in shares outstanding.
- The company did not repurchase any
shares of common stock during the quarter.
- For the current quarter, capital
expenditures for property, plant and equipment were $131 million,
compared with $163 million in the year-ago period. Depreciation and
amortization expense was approximately $156 million for the fiscal
fourth quarter; this compares with a total of $145 million in the
year-ago period.
- Shortly after the end of the quarter,
the company contributed its milling operations into Ardent Mills, a
milling joint venture. In connection with the formation of this
venture and the divestiture of three mills, ConAgra Foods received
approximately $530 million of cash, net of estimated tax, and a 44%
interest in Ardent Mills. In the first quarter of fiscal 2015, the
company intends to adopt a new accounting standard that is expected
to result in reclassifying the milling operations as discontinued
operations, which will change the presentation of prior periods.
ConAgra Foods’ portion of Ardent Mills profits will be reflected
pretax within equity method investment earnings. ConAgra Foods
expects to earn approximately $0.07-$0.09 less per diluted share in
fiscal 2015 from Ardent Mills (including the benefit of lower
interest expense from allocating Ardent-related proceeds toward
debt reduction) than it earned in fiscal 2014 from its milling
operations, on a comparable basis.
Outlook
The company expects fiscal 2015 EPS to reflect a mid-single
digit rate of growth over the comparable fiscal 2014 EPS of $2.17.
Fiscal 2016 and 2017 EPS is expected to show a high-single digit
rate of annual EPS growth as the company benefits from a stronger
underlying business, sizeable synergies, good productivity and
efficiencies, and lower interest expense. Other long-term goals are
unchanged.
With regard to specific fiscal 2015 assumptions, the company
expects:
- Consumer Foods volume to sequentially
improve throughout fiscal 2015.
- Commercial Foods to show good sales and
profit growth; its results will be restated to reflect the
reclassification of milling results to discontinued
operations.
- Private Brands profits to grow modestly
over fiscal 2014 amounts, although down year-over-year in the first
half of the fiscal year due to pricing concessions yet to be
lapped. Private Brands sales are expected to increase modestly for
the fiscal year.
- Strong productivity as well as
synergies related to the Ralcorp acquisition. Together these are
expected to be approximately $350 - $375 million for the entire
company in fiscal 2015, which should more than offset the expected
2-3% inflation planned for fiscal 2015. Segment expectations
described above reflect these amounts.
- More than $50 million of Selling,
General & Administrative (“SG&A”) savings generated by
efficiency initiatives.
- Higher incentives.
- $30 million of lower interest expense
resulting from the fiscal 2014 debt repayment.
- The benefit of an extra week in fiscal
2015 versus fiscal 2014.
- To earn $0.07-$0.09 per share less from
Ardent Mills (and related capital allocation) than it earned from
the milling operations last fiscal year.
- To generate at least $1.6-$1.7 billion
of operating cash flow, and to repay approximately $1 billion of
debt from a combination of operating cash flow and net proceeds
received from the formation of Ardent Mills.
- With regard to the mid-single digit EPS
growth expected in fiscal 2015, the company currently expects the
EPS growth to be concentrated in the second half of the fiscal
year. The company currently expects comparable EPS in the fiscal
2015 first quarter to be slightly below comparable year-ago
amounts.
Major Items Impacting Fourth-quarter Fiscal 2014 EPS
Comparability
Included in the $(0.76) diluted loss per share from continuing
operations for the fourth quarter of fiscal 2014 (EPS amounts
rounded and after tax):
- Approximately $1.47 per diluted share
of expense, or $681 million pretax, a substantial portion of which
is not tax deductible, from impairment charges and the
corresponding impact on diluted share count. Approximately $605
million of this is classified within the Private Brands segment
(SG&A), $73 million is classified within the Consumer Foods
segment (SG&A), and $3 million is classified as unallocated
Corporate expense.
- Approximately $0.13 per diluted share
benefit, or $91 million pretax, from selling three flour mills
prior to the formation of Ardent Mills. This gain is classified
within the Commercial Foods segment (SG&A).
- Approximately $0.08 per diluted share
of expense, or $58 million pretax, resulting from restructuring,
transaction, and integration costs. $18 million is classified
within the Consumer Foods segment (SG&A), $5 million is
classified within the Commercial Foods segment (SG&A), $12
million is classified within the Private Brands segment (SG&A),
and $23 million is classified within unallocated Corporate
expense.
- Approximately $0.06 per diluted share
of benefit from unusual tax items, which included favorable tax
adjustments resulting from changes in legal structure and state tax
filing positions and the resolution of certain foreign income tax
matters.
- Approximately $0.02 per diluted share
of benefit, or $14 million pretax, from 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 benefit, or $10 million pretax, related to historical legal
matters, a portion of which is not tax deductible; this is
classified within unallocated Corporate expense.
- Approximately $0.01 per diluted share
of benefit, or $5 million pretax, resulting from a gain on the sale
of a non-operating asset in the Commercial Foods segment
(SG&A).
Included in the $0.45 diluted EPS from continuing operations for
the fourth quarter of fiscal 2013 (EPS amounts rounded and after
tax):
- Approximately $0.10 per diluted share
of net expense, or $67 million pretax, resulting from
restructuring, integration, and transaction costs (including
acquisition-related restructuring). $61 million is within
unallocated Corporate expense ($11 million in cost of goods sold,
$50 million in SG&A), $4 million is within Consumer Foods (all
SG&A), and $2 million is within Private Brands (SG&A).
- Approximately $0.05 per diluted share
of net expense, or $37 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 $0.03 per diluted share
of net benefit, or $22 million pretax, related to historical legal
matters, classified within unallocated Corporate expense.
- Approximately $0.02 per diluted share
of net expense, or $12 million pretax, related to the year-end
re-measurement of certain pensions, as well as the cost of early
retirement of debt; this is classified within unallocated Corporate
expense.
- Approximately $0.01 per diluted share
of acquisition-related tax expense.
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 1-800-500-0311 and
1-719-325-2118, 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 9659870. 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.
ConAgra Foods, Inc., (NYSE: CAG) is one of North America's
largest packaged food companies with branded and private branded
food found in 99 percent of America’s households, as well as a
strong commercial foods business serving restaurants and
foodservice operations globally. Consumers can find recognized
brands such as Banquet®, Chef Boyardee®, Egg Beaters®, Healthy
Choice®, Hebrew National®, Hunt's®, Marie Callender's®, Orville
Redenbacher's®, PAM®, Peter Pan®, Reddi-wip®, Slim Jim®, Snack
Pack® and many other ConAgra Foods brands, along with food sold by
ConAgra Foods under private brand labels, in grocery, convenience,
mass merchandise, club and drug stores. Additionally, ConAgra Foods
supplies frozen potato and sweet potato products as well as other
vegetable, seasoning blends, flavors, and bakery products to
commercial and foodservice customers. ConAgra Foods operates
ReadySetEat.com, an interactive recipe website that provides
consumers with easy dinner recipes and more. 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 assumptions and are subject to certain
risks, uncertainties and changes in circumstances that could cause
actual results to differ materially from potential results
discussed in the forward-looking statements. These risks and
uncertainties include, among other things: ConAgra Foods’ ability
to realize the synergies and benefits contemplated by the
acquisition of Ralcorp Holdings, Inc. (“Ralcorp”) and its ability
to promptly and effectively integrate the business of Ralcorp;
ConAgra Foods’ ability to realize the synergies and benefits
contemplated by the recently formed joint venture combining the
flour milling businesses of ConAgra Foods, Cargill, Incorporated,
and CHS Inc.; risks and uncertainties associated with intangible
assets, including any future goodwill impairment charges; the
availability and prices of raw materials, including any negative
effects caused by inflation or adverse weather conditions; the
effectiveness of ConAgra Foods’ product pricing, including product
innovation, any pricing actions and changes in promotional
strategies; the ultimate outcome of litigation, including the lead
paint matter; future economic circumstances; industry conditions;
ConAgra Foods’ ability to execute its operating and restructuring
plans; the success of ConAgra Foods’ cost-savings initiatives, and
innovation and marketing investments; the competitive environment;
operating efficiencies; 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; 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 FY14 and Q4 FY13 diluted earnings per share
from continuing operations, Consumer Foods segment operating
profit, Commercial Foods segment operating profit, Private Brands
segment operating profit, and FY14 and FY13 diluted earnings per
share from continuing operations, adjusted for items impacting
comparability. Amounts may be impacted by rounding.
Q4
FY14 & Q4 FY13 Diluted EPS from Continuing Operations
Q4 FY14 Q4 FY13 % change Diluted EPS
from continuing operations $ (0.76 )
$ 0.45 N/A Items impacting comparability: Net
expense related to impairment charges, including the impact on
diluted share count 1.47 - Net benefit related to sale of flour
mills (0.13 ) - Net expense related to restructuring, transaction,
and integration costs 0.08 0.10 Net expense (benefit) related to
unusual tax matters (0.06 ) 0.01 Net expense (benefit) related to
unallocated mark-to-market impact of derivatives (0.02 ) 0.05 Net
benefit related to historical legal matters (0.02 ) (0.03 ) Net
gain from sale of non-operating asset in the Commercial Foods
segment (0.01 ) - Net expense related to year-end remeasurement of
pensions and early retirement of debt - 0.02
Diluted EPS adjusted for items impacting
comparability $ 0.55 $ 0.60
-8% Consumer Foods Segment Operating Profit
Reconciliation (Dollars in millions)
Q4 FY14
Q4 FY13 % change Consumer Foods Segment Operating
Profit $ 177 $ 270 -34%
Restructuring, integration, and transactions costs (including
acquisition-related restructuring) 18 4 Intangible asset impairment
charges 73 -
Consumer Foods
Segment Adjusted Operating Profit $ 268
$ 275 -3% Commercial Foods
Segment Operating Profit Reconciliation (Dollars in
millions)
Q4 FY14 Q4 FY13 % change
Commercial Foods Segment Operating Profit $
281 $ 189 49% Restructuring costs 5 -
Gain on sale of non-operating assets (5 ) - Gain on sale of flour
mills (91 ) -
Commercial Foods
Segment Adjusted Operating Profit $ 190
$ 189 1% Private Brands
Segment Operating Profit Reconciliation (Dollars in
millions)
Q4 FY14 Q4 FY13 % change Private
Brands Segment Operating Profit $ (573 )
$ 102 N/A Restructuring, integration, and
transactions costs (including acquisition-related restructuring) 12
2 Goodwill and intangible asset impairment charges 605
-
Private Brands Segment Adjusted
Operating Profit $ 44 $ 104
-58% FY14 and FY13 Diluted EPS from
Continuing Operations Total FY14 Total
FY13 % change Diluted EPS from continuing
operations $ 0.70 $ 1.85
-62% Items impacting comparability: Net expense related to
intangible asset impairment charges 1.46 - Net expense related to
restructuring, transaction, and integration costs 0.25 0.32 Net
expense (benefit) related to unusual tax matters (0.16 ) 0.04 Net
benefit related to sale of flour mills (0.13 ) - Net expense
related to settlement of interest rate derivatives 0.08 - Net
benefit related to unallocated mark-to-market impact of derivatives
(0.05 ) (0.07 ) Net expense related to impairment costs, net of
gain on sale of non-operating asset, in the Commercial Foods
segment 0.03 0.02 Net benefit related to historical legal,
insurance, and environmental matters (0.02 ) - Net expense related
to year-end remeasurement of pensions and early retirement of debt
0.01 0.02 Note: EPS contribution subsequently reclassed to
discontinued operations originally in guidance 0.01 - Rounding
(0.01 ) (0.02 )
Diluted EPS adjusted for
items impacting comparability $ 2.17
$ 2.16 0% ConAgra Foods, Inc.
Segment Operating Results (in millions)
(unaudited) FOURTH QUARTER 13 Weeks Ended 13 Weeks Ended
May 25, 2014
May 26, 2013 Percent Change
SALES
Consumer Foods $ 1,779.7 $ 1,922.1 (7.4)% Commercial Foods 1,627.2
1,611.2 1.0% Private Brands 1,029.9 1,030.0
0.0% Total 4,436.8 4,563.3
(2.8)%
OPERATING
PROFIT
Consumer Foods $ 177.1 $ 270.2 (34.5)% Commercial Foods 280.8 189.4
48.3% Private Brands (573.1 ) 102.2 N/A Total
operating profit (loss) for segments (115.2 ) 561.8 N/A
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 (65.0 ) (181.3 ) (64.1)% Interest
expense, net (93.0 ) (102.3 ) (9.1)% Income (loss)
from continuing operations before income taxes and equity method
investment earnings $ (273.2 ) $ 278.2 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 52 Weeks Ended 52 Weeks Ended
May 25, 2014
May 26, 2013 Percent Change
SALES
Consumer Foods $ 7,315.5 $ 7,551.4 (3.1)% Commercial Foods 6,191.2
6,067.0 2.0% Private Brands 4,195.9 1,808.2
132.0% Total 17,702.6 15,426.6
14.8%
OPERATING
PROFIT
Consumer Foods $ 899.4 $ 1,000.2 (10.1)% Commercial Foods 774.6
731.3 5.9% Private Brands (375.0 ) 123.1 N/A
Total operating profit for segments 1,299.0 1,854.6 (30.0)%
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 (343.6 ) (429.0 ) (19.9)%
Interest expense, net (379.0 ) (275.6 ) 37.5% Income
from continuing operations before income taxes and equity method
investment earnings $ 576.4 $ 1,150.0 (49.9)%
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
Earnings (in millions, except per share amounts) (unaudited) FOURTH
QUARTER 13 Weeks Ended 13 Weeks Ended Percent May 25, 2014 May 26,
2013 Change Net sales $ 4,436.8 $ 4,563.3 (2.8)% Costs and
expenses: Cost of goods sold 3,531.3 3,602.2 (2.0)% Selling,
general and administrative expenses 1,085.7 580.6 87.0% Interest
expense, net 93.0 102.3 (9.1)% Income (loss)
from continuing operations before income taxes and equity method
investment earnings (273.2 ) 278.2 N/A Income tax expense
57.3 89.5 (36.0)% Equity method investment earnings 12.2
5.1 139.2% Income (loss) from continuing operations
(318.3 ) 193.8 N/A Income (loss) from discontinued
operations, net of tax (3.1 ) 0.2 N/A Net
income (loss) $ (321.4 ) $ 194.0 N/A Less: Net income attributable
to noncontrolling interests 2.8 1.8 55.6% Net
income (loss) attributable to ConAgra Foods, Inc. $ (324.2 ) $
192.2 N/A Earnings per share – basic Income (loss)
from continuing operations $ (0.76 ) $ 0.46 N/A Income (loss) from
discontinued operations (0.01 ) - (100.0)% Net income
(loss) attributable to ConAgra Foods, Inc. $ (0.77 ) $ 0.46 N/A
Weighted average shares outstanding 422.0
418.4 0.9% Earnings per share – diluted Income
(loss) from continuing operations $ (0.76 ) $ 0.45 N/A Income
(loss) from discontinued operations (0.01 ) -
(100.0)% Net income (loss) attributable to ConAgra Foods, Inc. $
(0.77 ) $ 0.45 N/A
Weighted average share and share
equivalents outstanding
422.0 426.2 (1.0)% ConAgra Foods, Inc.
Consolidated Statements of Earnings (in
millions, except per share amounts) (unaudited) FOURTH QUARTER 52
Weeks Ended 52 Weeks Ended Percent May 25, 2014 May 26, 2013 Change
Net sales $ 17,702.6 $ 15,426.6 14.8% Costs and expenses: Cost of
goods sold 13,980.1 11,864.4 17.8% Selling, general and
administrative expenses 2,767.1 2,136.6 29.5% Interest expense, net
379.0 275.6 37.5%
Income from continuing operations before
income taxes and equity method investment earnings
576.4 1,150.0 (49.9)% Income tax expense 298.2 400.7 (25.6)%
Equity method investment earnings 32.8 37.5
(12.5)% Income from continuing operations 311.0 786.8 (60.5)%
Income (loss) from discontinued operations, net of tax
4.1 (0.7 ) N/A Net income $ 315.1 $ 786.1
(59.9)% Less: Net income attributable to noncontrolling
interests 12.0 12.2 (1.6)% Net income
attributable to ConAgra Foods, Inc. $ 303.1 $ 773.9 (60.8)%
Earnings per share – basic Income from continuing
operations $ 0.71 $ 1.88 (62.2)% Income from discontinued
operations 0.01 - 100.0% Net income
attributable to ConAgra Foods, Inc. $ 0.72 $ 1.88 (61.7)%
Weighted average shares outstanding 421.3
410.8 2.6% Earnings per share – diluted Income
from continuing operations $ 0.70 $ 1.85 (62.2)% Income from
discontinued operations - - N/A Net income
attributable to ConAgra Foods, Inc. $ 0.70 $ 1.85 (62.2)%
Weighted average share and share
equivalents outstanding
427.5 417.6 2.4% ConAgra Foods, Inc.
Consolidated Balance Sheets (in millions) (unaudited)
May 25, 2014
May 26, 2013
ASSETS Current assets Cash and cash equivalents $ 183.1 $
183.9
Receivables, less allowance for doubtful
accounts of $5.3 and $7.6
1,230.8 1,279.4 Receivable on sale of flour milling assets 162.4 -
Inventories 2,292.6 2,340.9 Prepaid expenses and other current
assets 361.9 510.8 Current assets held for sale -
64.8 Total current assets (4,230.8 ) (4,379.8
) Property, plant and equipment, net 3,811.9 3,757.6
Goodwill 7,836.5 8,426.7 Brands, trademarks and other intangibles,
net 3,205.8 3,403.6 Other assets 270.5 293.5 Noncurrent assets held
for sale 10.9 144.1 $ 19,366.4
$ 20,405.3
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities Notes payable $ 141.8 $ 185.0
Current installments of long-term debt 84.2 517.9 Accounts payable
1,492.4 1,498.1 Accrued payroll 156.6 287.0 Other accrued
liabilities 767.4 908.5 Current liabilities held for sale -
4.8 Total current liabilities 2,642.4
3,401.3 Senior long-term debt, excluding current
installments 8,571.7 8,691.0 Subordinated debt 195.9 195.9 Other
noncurrent liabilities 2,601.2 2,754.0 Noncurrent liabilities held
for sale - 0.1 Total stockholders' equity 5,355.2
5,363.0 $ 19,366.4 $ 20,405.3
ConAgra Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (in
millions) (unaudited)
Fifty-two weeks ended May 25,
2014 May 26, 2013 Cash flows from operating
activities: Net income $ 315.1 $ 786.1 Income (loss) from
discontinued operations 4.1 (0.7 ) Income from continuing
operations 311.0 786.8 Adjustments to reconcile income from
continuing operations to net cash flows from operating activities:
Depreciation and amortization 602.9 443.4 Asset impairment charges
720.0 20.2 (Gain) loss on sale of fixed assets (85.2 ) 10.9
Earnings of affiliates less than (in excess of) distributions 13.3
(11.1 ) Share-based payments expense 60.2 67.4 Contributions to
pension plans (18.3 ) (19.8 ) Pension expense (5.9 ) 23.5 Other
items (6.3 ) (8.6 ) Change in operating assets and liabilities
excluding effects of business acquisitions and dispositions:
Accounts receivable 63.3 (72.3 ) Inventory 49.4 19.5 Deferred
income taxes and income taxes payable, net 23.3 123.4 Prepaid
expenses and other current assets 4.0 (22.0 ) Accounts payable (5.2
) 6.5 Accrued payroll (130.0 ) 109.9 Other accrued liabilities
(44.9 ) (69.2 ) Net cash flows from operating activities —
continuing operations 1,551.6 1,408.5 Net cash flows from operating
activities — discontinued operations (0.4 ) 3.7 Net cash
flows from operating activities 1,551.2 1,412.2 Cash
flows from investing activities: Additions to property, plant and
equipment (602.4 ) (453.7 ) Sale of property, plant and equipment
42.5 18.0 Purchase of businesses, net of cash acquired (39.9 )
(5,018.8 ) Purchase of intangible assets (1.0 ) (4.8 ) Investment
in equity method investee — (1.5 ) Net cash flows from
investing activities — continuing operations (600.8 ) (5,460.8 )
Net cash flows from investing activities — discontinued operations
86.7 (5.0 ) Net cash flows from investing activities (514.1
) (5,465.8 ) Cash flows from financing activities: Net short-term
borrowings (43.2 ) 145.0 Issuance of long-term debt — 6,217.7 Debt
issuance costs — (56.6 ) Repayment of long-term debt (569.2 )
(2,074.0 ) Issuance of ConAgra Foods, Inc. common shares — 269.2
Repurchase of ConAgra Foods, Inc. common shares (100.0 ) (245.0 )
Cash dividends paid (420.9 ) (400.7 ) Exercise of stock options and
issuance of other stock awards 103.7 274.4 Other items (4.5 ) 3.0
Net cash flows from financing activities
(1,034.1
) 4,133.0 Effect of exchange rate changes on cash and cash
equivalents (3.8 ) 1.5 Net change in cash and cash equivalents (0.8
) 80.9 Cash and cash equivalents at beginning of period 183.9
103.0 Cash and cash equivalents at end of period $
183.1 $ 183.9
ConAgra Foods, Inc.Media:Teresa Paulsen,
402-240-5210Vice President,Communication & External
RelationsorAnalysts:Chris Klinefelter, 402-240-4154Vice
President, Investor Relationswww.conagrafoods.com
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