Fiscal 2015 Second-quarter Highlights (% cited vs. year-ago
period amounts, where applicable):
- Diluted EPS from continuing
operations of $0.05 as reported, due to significant non-cash
impairment charges, vs. diluted EPS of $0.48 a year ago. After
adjusting for items impacting comparability, comparable diluted EPS
of $0.61 this quarter was in line with plans and slightly below
year-ago comparable EPS of $0.62.
- Consumer Foods sales decreased 2%,
with volume down 1%, largely as expected. Key brands are
stabilizing as planned. Comparable segment operating profit
increased.
- Commercial Foods sales and
comparable operating profit grew as the segment gained domestic
share and benefitted from better potato crop quality.
- Private Brands profits were
substantially below year ago amounts, reflecting pricing
concessions made last fiscal year which have not yet been lapped,
weak volumes resulting from an intense bidding environment, and
higher commodity costs.
- Due to expectations for a
continuation of soft volumes and difficult pricing conditions in
the near term, the company now expects the recovery in this segment
to take longer than originally planned. Fiscal 2015 full year
comparable Private Brands segment operating profit is expected to
be considerably below comparable fiscal 2014 amounts.
- In connection with the revised
outlook, the company recognized pre-tax impairment charges of
approximately $247 million, writing down Private Brands goodwill
and other intangible assets; this amount is identified as an item
impacting comparability.
- Based on executional improvements
underway, Private Brands profits are expected to demonstrate strong
comparable year-over-year growth in fiscal 2016; profit margins are
expected to improve gradually thereafter.
- The company continues to expect
full-year diluted EPS to show a mid-single digit rate of growth
over the comparable diluted EPS of $2.17 earned in fiscal
2014.
- The company continues to expect to
repay approximately $1 billion of debt this fiscal year,
approximately $500 million of which was repaid earlier in the
fiscal year; other capital allocation goals are also
unchanged.
ConAgra Foods, Inc., (NYSE: CAG) one of North America’s leading
food companies, today reported results for the fiscal 2015 second
quarter ended Nov. 23, 2014. Diluted EPS from continuing operations
was $0.05 as reported for the fiscal second quarter vs. $0.48 in
the year-ago period. After adjusting for items impacting
comparability, comparable diluted EPS was $0.61 this quarter and
$0.62 in the year-ago period. Items impacting comparability are
summarized toward the end of this release and reconciled for
Regulation G purposes on page 11.
Gary Rodkin, ConAgra Foods’ chief executive officer, said, “We
are pleased that the fundamentals in our Consumer Foods and
Commercial Foods segments are improving. Key retail brands are
strengthening, Lamb Weston is gaining domestic share and
benefitting from a better quality potato crop, and we are
generating COGS and SG&A efficiencies across our operations.
EPS came in as planned this quarter; despite challenges in one of
our segments, we have reaffirmed our full-year EPS guidance because
we expect two of our segments to continue to deliver good
performance, and for our whole organization to continue generating
strong productivity and efficiencies.”
“Based on current executional challenges, we expect the recovery
in the Private Brands segment to take longer than previously
expected. Our team is highly focused on opportunities to drive
improved execution in this segment over the next several quarters,
and we expect these efforts to enable the segment to grow profits
in fiscal 2016. We remain confident in the long-term potential for
our Private Brands segment given the important role of these
products to consumers and trade customers and our ability to
utilize our infrastructure to add value for customers.”
Consumer Foods Segment
Branded food items sold worldwide in retail
channels.
The Consumer Foods segment posted sales of approximately $2
billion and operating profit of $302 million, as reported. Sales
declined 2%, with volume down 1% and price/mix down 1%; this was in
line with expectations. Foreign exchange did not significantly
impact the year-over-year sales comparison.
- Brands posting sales growth for the
quarter include ACT II, Chef Boyardee, Hebrew National, Marie
Callender’s, PAM, Reddi-wip, Slim Jim, Swiss Miss and others. The
company notes good performance in alternative channels given the
focus on those opportunities this fiscal year.
- The packaging, assortment, product, and
merchandising initiatives designed to improve the performance of
Chef Boyardee, Healthy Choice, and Orville Redenbacher’s, are
making a positive difference; those brands are expected to continue
to improve sequentially over the next several quarters.
- Other brand details are provided in the
written Q&A document accompanying this release.
Operating profit of $302 million was 6% above year-ago amounts
as reported. After adjusting for $8 million of net expense in the
current quarter and $4 million of net expense in the year-ago
period from items impacting comparability, current quarter
operating profit of $310 million increased 7% over comparable
year-ago amounts. The comparable profit growth reflects lower
advertising expense in light of stronger promotional support, as
well as manageable inflation and good productivity and
efficiencies.
Commercial Foods Segment
Specialty potato, seasonings, blends, flavors,
and bakery products, 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 $1.1 billion, up 2%
over year-ago period amounts, and segment operating profit was $148
million, 16% above year-ago period amounts, as reported. After
adjusting for $9 million of expense in the year-ago period from
items impacting comparability, current quarter operating profit
increased 8% on a comparable basis.
Sales and operating profits for Lamb Weston potato products
increased, due to strong performance domestically, a better quality
raw potato crop, and good operating efficiencies. Strong domestic
performance this year more than offset weaker international sales
and profits related to near-term challenges facing quick-serve
restaurant customers in key Asian markets. Given the strength of
its domestic business, Lamb Weston expects overall profit growth
this fiscal year, despite short-term challenges in some
international markets and the negative impact of the ongoing
longshoremen labor dispute. Profits for the rest of the Commercial
Foods segment were in line with year-ago period amounts.
Private Brands
Private brand food items sold in domestic
markets.
Sales for the Private Brands segment were $1.1 billion in the
quarter, down 5% from year-ago amounts, driven by 6% lower volume.
Overall volume declines for major product lines including snacks,
cereal, pasta, condiments, and bakery more than offset some
progress winning new business and gaining distribution in new
accounts, notably in crackers.
The segment posted an operating loss of $202 million, as
reported, due to impairing goodwill and other intangible assets.
After adjusting for $251 million of net expense from items
impacting comparability (approximately $247 million of which were
impairment charges) in the current quarter, and $2 million of items
impacting comparability in year-ago period amounts, comparable
operating profit declined 46%. Pricing concessions made last fiscal
year but not yet lapped drove a meaningful portion of the
comparable profit decline, while lower volumes resulting from an
intense bidding environment as well as higher commodity costs also
weighed on profitability. Pricing initiatives underway should help
pass on the higher commodity costs over time.
Given recent performance and the current outlook, the company
expects year-over-year profit improvement for this segment to occur
in fiscal 2016 instead of fiscal 2015, and now expects fiscal 2015
comparable operating profits for the Private Brands segment to be
below those of fiscal 2014. The outlook reflects expectations for a
continuation of an intense bidding environment, heavy discounting
by branded manufacturers, and the corresponding negative impacts on
volume, price/mix, and profits in the near term. Pricing
initiatives are expected to lag input cost increases this fiscal
year, which are expected to weigh on fiscal 2015 profitability but
benefit fiscal 2016 profitability. The company believes that
improved execution will bolster customer relationships, make for a
more stable base of business, and strengthen results over time.
Initiatives to improve execution and the speed of overall
decision-making through simpler and more customer-focused
processes, as well as better connectivity throughout the
organization, are underway, but are not expected to begin to
favorably impact business results until fiscal 2016.
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 $25 million of unfavorable
impact in the current quarter and $9 million of unfavorable impact
in the year-ago period. The company identifies these amounts as
items impacting comparability.
As part of its ongoing monitoring and review, the company
recently determined that changes in correlations among commodities
and certain of its index hedges, exacerbated by volatility, require
the company to recognize changes in the fair value of such index
hedges directly into segment results as part of the mark-to-market
process. This contrasts with the current approach of temporarily
classifying those amounts within unallocated Corporate results.
Based on current positions, the company expects to recognize index
hedge losses directly within segment results over the next few
quarters. For other of its hedging activities, the company will
continue with its current approach of temporarily classifying
hedging results within unallocated Corporate expense prior to being
recognized within segment results.
Other Items
- Unallocated Corporate amounts were $92
million of expense in the current quarter and $97 million of
expense in the year-ago period. Current-quarter amounts include $25
million of unfavorable hedge-related impact and $9 million of net
expense from other items impacting comparability. Year-ago period
amounts include $9 million of unfavorable hedge-related impact and
$24 million of expense related to other items impacting
comparability. Excluding these amounts, unallocated Corporate
expense was $58 million for the current quarter and $64 million in
the year-ago period.
- Equity method investment earnings were
$34 million for the current quarter and $5 million in the year-ago
period; the year-over-year increase mostly reflects the inclusion
of profits for Ardent Mills (which are not in year-ago
amounts).
- Net interest expense was $79 million in
the current quarter and $95 million in the year-ago period; the
decrease reflects significant debt repayment.
Capital Items
- The company continues to expect to
repay approximately $1 billion of debt this fiscal year, resulting
in a cumulative debt repayment of approximately $2 billion since
the acquisition of Ralcorp. The company repaid approximately $500
million of this year’s $1 billion goal earlier this fiscal year.
Other capital allocation goals are also unchanged.
- Dividends were $106 million this
quarter and in the year-ago period.
- Share repurchases during the quarter
were minimal.
- For the current quarter, capital
expenditures for property, plant and equipment were $90 million,
compared with $171 million in the year-ago period. The decrease
reflects several significant planned plant expansions and
improvements in the year-ago period. Depreciation and amortization
expense was approximately $150 million for the fiscal second
quarter; this compares with a total of $138 million in the year-ago
period.
Outlook
The company continues to expect fiscal 2015 diluted EPS,
adjusted for items impacting comparability, to show a mid-single
digit rate of growth over the comparable diluted EPS of $2.17
earned in fiscal 2014. For the full fiscal year, a continuation of
good performance from Consumer Foods and Commercial Foods, as well
as the benefit of productivity and efficiency initiatives, are
expected to offset a profit decline in the Private Brands segment.
The company continues to expect operating cash flow to be in the
range of $1.6 billion-$1.7 billion, and to reduce debt by a total
of $1 billion in fiscal 2015 ($500 million of which was repaid in
the fiscal first quarter), thereby reaching its broader debt
reduction goals for the fiscal 2013-2015 period.
Major Items Impacting Second-quarter Fiscal 2015 EPS
Comparability
Included in the $0.05 diluted EPS from continuing operations for
the second quarter of fiscal 2015 (EPS amounts rounded and after
tax). These include references to selling, general, and
administrative (SG&A) expense, and cost of goods sold
(COGS):
- Approximately $0.51 per diluted share
of net expense, or $247 million pretax, related to the impairment
of goodwill and other intangible assets in the Private Brands
segment (all SG&A).
- Approximately $0.04 per diluted share
of net expense, or $25 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 $0.03 per diluted share
of net expense, or $21 million pretax, resulting from restructuring
and integration costs. $9 million of this is classified as
unallocated Corporate expense (SG&A), $8 million is classified
within the Consumer Foods segment (all SG&A), and $5 million is
classified within the Private Brands segment (all SG&A).
- Approximately $0.02 per diluted share
of net benefit from favorable adjustments to prior-year tax
credits.
Included in the $0.48 diluted EPS from continuing operations for
the second quarter of fiscal 2014 (EPS amounts rounded and after
tax):
- Approximately $0.04 per diluted share
of net expense, or $29 million pretax, resulting from
restructuring, integration, and transaction costs (including
acquisition-related restructuring). $24 million of this is
classified as unallocated Corporate expense (SG&A), $4 million
is classified within the Consumer Foods segment (essentially all
SG&A), and $2 million is classified within the Private Brands
segment (essentially all SG&A).
- Approximately $0.01 per diluted share
of net expense, or $9 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 $0.01 of net expense, or
$9 million pretax, related to impairment of assets in the
Commercial Foods segment, all SG&A.
- Approximately $0.01 of net expense, or
$3 million pretax, related to the re-measurement of pensions at an
international potato venture, classified within equity method
investment earnings.
- Note: in the second quarter of fiscal
2014, comparable EPS included approximately $0.06 of net
contribution from items previously classified within continuing
operations (primarily profits from flour milling), which have been
reclassified to discontinued operations, as well as rounding.
Discussion of Results
ConAgra Foods will host a conference call at 9:30 a.m. EST 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 1-888-554-1417 and
1-719-325-2492, 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. EST 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 7731178. 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, spice, bakery and grain 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 are subject to uncertainty and changes in
circumstances. These risks and uncertainties include, among other
things: ConAgra Foods’ ability to realize the synergies and
benefits contemplated by the acquisition of 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 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, including product
innovation, any pricing actions and changes in promotional
strategies; the ultimate outcome of litigation, including
litigation related to the lead paint and pigment matters; 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; ConAgra Foods’
ability to execute its operating and restructuring plans and
achieve operating efficiencies; the success of ConAgra Foods’
cost-saving initiatives, 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; 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 Q2 FY15 and Q2 FY14 diluted
earnings per share from continuing operations, Consumer Foods
segment operating profit, Commercial Foods segment operating
profit, Private Brands segment operating profit, and FY14 diluted
earnings per share from continuing operations, adjusted for items
impacting comparability. Amounts may be impacted by rounding.
Q2 FY15 & Q2 FY14 Diluted EPS from Continuing Operations
Q2 FY15 Q2 FY14 % change
Diluted EPS from continuing operations $ 0.05
$ 0.48 -90% Items impacting comparability: Net
expense related to impairment of goodwill and other intangible
assets 0.51 - Net expense related to unallocated mark-to-market
impact of derivatives 0.04 0.01 Net expense related to
restructuring, transaction, and integration costs 0.03 0.04 Net
benefit related to unusual tax matters (0.02 ) - Net expense
related to impairment costs in the Commercial Foods segment - 0.01
Net expense related to re-measurement of pensions at an
international joint venture - 0.01 Rounding -
0.01
Diluted EPS from continuing operations, adjusted for items
impacting comparability $ 0.61 $
0.56 Net EPS contribution previously within continuing
operations and subsequently reclassified to discontinued
operations: From milling operations - 0.05 Net expense related to
transaction costs (associated with flour milling) -
0.01
Diluted EPS adjusted for items impacting
comparability $ 0.61 $ 0.62
-2% Consumer Foods Segment Operating Profit
Reconciliation (Dollars in millions)
Q2 FY15
Q2 FY14 % change Consumer Foods Segment Operating
Profit $ 302 $ 286 6%
Restructuring, integration, and transactions costs 8
4
Consumer Foods Segment Adjusted Operating
Profit $ 310 $ 290 7%
Commercial Foods Segment Operating Profit
Reconciliation (Dollars in millions)
Q2 FY15
Q2 FY14 % change Commercial Foods Segment
Operating Profit $ 148 $ 128
16% Net expense related to impairment costs -
9
Commercial Foods Segment Adjusted Operating
Profit $ 148 $ 137 8%
Private Brands Segment Operating Profit
Reconciliation (Dollars in millions)
Q2 FY15
Q2 FY14 % change Private Brands Segment Operating
Profit $ (202 ) $ 90
N/A Restructuring, integration, and transactions costs 5 2
Impairment of goodwill and other intangible assets $ 247 $ -
Private Brands Segment Adjusted Operating Profit
$ 49 $ 92 -46%
FY14 Diluted EPS from Continuing Operations Total
FY14 Diluted EPS from continuing operations $
0.37 Items impacting comparability: Net expense related to
intangible asset impairment charges 1.46 Net expense related to
restructuring, transaction, and integration costs 0.23 Net expense
related to settlement of interest rate derivatives 0.08 Net expense
related to impairment costs, net of gain on sale of non-operating
asset, in the Commercial Foods segment 0.03 Net expense related to
year-end remeasurement of pensions and early retirement of debt
0.01 Net benefit related to historical legal, insurance, and
environmental matters (0.02 ) Net benefit related to unallocated
mark-to-market impact of derivatives (0.05 ) Net benefit related to
unusual tax matters (0.16 )
Diluted EPS from continuing
operations, adjusted for items impacting comparability $
1.95 Net EPS contribution previously within continuing
operations and subsequently reclassified to discontinued
operations: From milling operations 0.32 Net expense related to
transaction costs (associated with flour milling) 0.02 From other
divested businesses 0.01 Net benefit related to sale of flour mills
(0.13 )
Diluted EPS adjusted for items impacting
comparability $ 2.17
ConAgra Foods, Inc.
Segment Operating Results
(in millions)
(unaudited)
SECOND QUARTER Thirteen weeks ended Thirteen weeks
ended November 23, 2014 November 24, 2013 Percent Change
SALES
Consumer Foods $ 1,977.2 $ 2,016.3 (1.9)% Commercial Foods 1,120.8
1,099.8
1.9 %
Private Brands 1,052.0 1,105.0 (4.8)% Total 4,150.0
4,221.1 (1.7)%
OPERATING
PROFIT
Consumer Foods $ 301.7 $ 285.9
5.5 %
Commercial Foods 148.1 127.7
16.0 %
Private Brands (202.3 ) 89.8 N/A Total operating profit for
segments 247.5 503.4 (50.8)%
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 (91.6 ) (96.7 )
(5.3)% Interest expense, net (79.3 ) (95.5 ) (17.0)% Income from
continuing operations before income taxes and equity method
investment earnings $ 76.6 $ 311.2 (75.4)%
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)
SECOND QUARTER Twenty-six weeks ended Twenty-six
weeks ended November 23, 2014 November 24, 2013 Percent
Change
SALES
Consumer Foods $ 3,609.5 $ 3,665.7 (1.5)% Commercial Foods 2,209.1
2,168.7
1.9 %
Private Brands 2,032.4 2,102.5 (3.3)% Total 7,851.0
7,936.9 (1.1)%
OPERATING
PROFIT
Consumer Foods $ 491.7 $ 450.9
9.0 %
Commercial Foods 269.2 264.8
1.7 %
Private Brands (160.4 ) 155.3 N/A Total operating profit for
segments 600.5 871.0 (31.1)%
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 (232.8 ) (210.3
)
10.7 %
Interest expense, net (163.0 ) (191.3 ) (14.8)% Income from
continuing operations before income taxes and equity method
investment earnings $ 204.7 $ 469.4 (56.4)%
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)
(unaudited)
SECOND QUARTER Thirteen weeks ended Thirteen weeks
ended November 23, 2014 November 24, 2013 Percent Change Net
sales $ 4,150.0 $ 4,221.1 (1.7)% Costs and expenses: Cost of goods
sold 3,261.5 3,261.3
— %
Selling, general and administrative expenses 732.6 553.1
32.5 %
Interest expense, net 79.3 95.5 (17.0)% Income from
continuing operations before income taxes and equity method
investment earnings 76.6 311.2 (75.4)% Income tax expense
84.0 106.0 (20.8)% Equity method investment earnings 34.0
5.2
553.8 %
Income from continuing operations 26.6 210.4 (87.4)% Income (loss)
from discontinued operations, net of tax (10.7 ) 42.0 N/A
Net income $ 15.9 $ 252.4 (93.7)% Less: Net income
attributable to noncontrolling interests 5.9 3.7
59.5 %
Net income attributable to ConAgra Foods, Inc. $ 10.0 $
248.7 (96.0)% Earnings per share - basic
Income from continuing operations $ 0.05 $ 0.49 (89.8)% Income
(loss) from discontinued operations (0.03 ) 0.10 N/A Net
income attributable to ConAgra Foods, Inc. $ 0.02 $ 0.59
(96.6)% Weighted average share outstanding 425.7
421.1
1.1 %
Earnings per share - diluted Income from continuing
operations $ 0.05 $ 0.48 (89.6)% Income (loss) from discontinued
operations (0.03 ) 0.10 N/A Net income attributable to
ConAgra Foods, Inc. $ 0.02 $ 0.58 (96.6)%
Weighted average share and share equivalents outstanding 430.8
427.0
0.9 %
ConAgra Foods, Inc.
Consolidated Statements of Earnings
(in millions)
(unaudited)
SECOND QUARTER Twenty-six weeks ended Twenty-six
weeks ended November 23, 2014 November 24, 2013 Percent
Change Net sales $ 7,851.0 $ 7,936.9 (1.1)% Costs and expenses:
Cost of goods sold 6,258.7 6,185.0
1.2 %
Selling, general and administrative expenses 1,224.6 1,091.2
12.2 %
Interest expense, net 163.0 191.3 (14.8)% Income from
continuing operations before income taxes and equity method
investment earnings 204.7 469.4 (56.4)% Income tax expense
126.5 134.9 (6.2)% Equity method investment earnings 59.6
9.3
540.9 %
Income from continuing operations 137.8 343.8 (59.9)% Income from
discontinued operations, net of tax 362.6 55.8
549.8 %
Net income $ 500.4 $ 399.6
25.2 %
Less: Net income attributable to noncontrolling interests 8.1
6.6
22.7 %
Net income attributable to ConAgra Foods, Inc. $ 492.3 $
393.0
25.3 %
Earnings per share - basic Income from continuing
operations $ 0.30 $ 0.80 (62.5)% Income from discontinued
operations 0.86 0.13
561.5 %
Net income attributable to ConAgra Foods, Inc. $ 1.16 $ 0.93
24.7 %
Weighted average share outstanding 424.8 421.0
0.9 %
Earnings per share - diluted Income from continuing
operations $ 0.30 $ 0.79 (62.0)% Income from discontinued
operations 0.84 0.13
546.2 %
Net income attributable to ConAgra Foods, Inc. $ 1.14 $ 0.92
23.9 %
Weighted average share and share equivalents outstanding
430.0 427.5
0.6 %
ConAgra Foods, Inc.
Consolidated Balance Sheet
(in millions)
(unaudited)
November 23, 2014 May 25, 2014
ASSETS Current assets
Cash and cash equivalents $ 121.9 $ 141.3
Receivables, less allowance for doubtful
accounts of $4.9 and $4.0
1,201.1 1,058.4 Inventories 2,532.9 2,077.0 Prepaid expenses and
other current assets 260.2 322.4 Current assets held for sale —
631.7 Total current assets 4,116.1 4,230.8 Property, plant
and equipment, net 3,635.4 3,636.0 Goodwill 7,616.8 7,828.5 Brands,
trademarks and other intangibles, net 3,114.9 3,204.9 Other assets
1,007.6 267.3 Noncurrent assets held for sale 10.9 198.9 $
19,501.7 $ 19,366.4
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities Notes payable $ 550.7
$ 141.8 Current installments of long-term debt 258.9 84.1 Accounts
payable 1,643.4 1,349.3 Accrued payroll 185.5 154.3 Other accrued
liabilities 766.8 748.1 Current liabilities held for sale —
164.8 Total current liabilities 3,405.3 2,642.4 Senior long-term
debt, excluding current installments 7,473.1 8,571.5 Subordinated
debt 195.9 195.9 Other noncurrent liabilities 2,772.3 2,599.4
Noncurrent liabilities held for sale — 2.0 Total stockholders'
equity 5,655.1 5,355.2 $ 19,501.7 $ 19,366.4
ConAgra Foods, Inc. and
Subsidiaries
Condensed Consolidated Statements of
Cash Flows
(in millions)
(unaudited)
Twenty-six weeks ended November 23,
November 24, 2014 2013 Cash flows from
operating activities: Net income $ 500.4 $ 399.6 Income from
discontinued operations 362.6 55.8 Income from
continuing operations 137.8 343.8 Adjustments to reconcile income
from continuing operations to net cash flows from operating
activities: Depreciation and amortization 297.8 277.8 Asset
impairment charges 250.4 14.8 Earnings of affiliates less than (in
excess of) distributions (52.4 ) 1.4 Share-based payments expense
35.0 31.8 Contributions to pension plans (6.4 ) (10.1 ) Pension
expense (7.2 ) (4.5 ) Other items
18.9
(5.5 ) Change in operating assets and liabilities excluding effects
of business acquisitions and dispositions: Accounts receivable
(137.7 ) (139.7 ) Inventory (451.2 ) (364.6 ) Deferred income taxes
and income taxes payable, net
(20.5
) 106.0 Prepaid expenses and other current assets 33.1 53.2
Accounts payable 291.7 286.8 Accrued payroll 37.8 (100.4 ) Other
accrued liabilities (16.5 ) 50.5 Net cash flows from
operating activities — continuing operations
410.6
541.3 Net cash flows from operating activities — discontinued
operations
7.1
41.4 Net cash flows from operating activities 417.7
582.7 Cash flows from investing activities: Additions to
property, plant and equipment (202.1 ) (342.5 ) Sale of property,
plant and equipment 4.7 12.1 Purchase of business, net of cash
acquired (75.4 ) (39.6 ) Return of investment in equity method
investee 391.4 — Net cash flows from investing
activities — continuing operations 118.6 (370.0 ) Net cash flows
from investing activities — discontinued operations 114.0
38.0 Net cash flows from investing activities 232.6
(332.0 ) Cash flows from financing activities: Net short-term
borrowings 392.8 48.7 Issuance of long-term debt 550.0 — Repayment
of long-term debt (1,489.4 ) (50.7 ) Repurchase of ConAgra Foods,
Inc. common shares — (100.0 ) Cash dividends paid (211.7 ) (210.4 )
Exercise of stock options and issuance of other stock awards 55.2
70.3 Other items (6.9 ) 0.8 Net cash flows from financing
activities: (710.0 ) (241.3 ) Effect of exchange rate changes on
cash and cash equivalents (1.5 ) (0.6 ) Net change in cash and cash
equivalents (61.2 ) 8.8 Discontinued operations cash activity
included above: Add: Cash balance included in assets held for sale
at beginning of period 41.8 33.0 Less: Cash balance included in
assets held for sale at end of period — 24.6 Cash and cash
equivalents at beginning of period 141.3 150.9 Cash
and cash equivalents at end of period $ 121.9 $ 168.1
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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