ConAgra Foods Announces Strategy for Strengthening Long Term Operating Performance; Streamlined Portfolio, Increased Marketing
March 16 2006 - 6:30AM
Business Wire
Rebased Fiscal 2007 Earnings Estimated at $1.10-$1.15 ConAgra Foods
Inc. (NYSE: CAG), one of North America's leading packaged food
companies, announced actions designed to improve long-term
operating performance. The company expects increased annual
marketing spending of more than $75 million, in combination with
the reallocation and disciplined application of current marketing
dollars, to result in major increases for key consumer brands. The
company also expects strong contribution to its future earnings
from the impact of plant rationalization, supply chain
improvements, the application of divestiture proceeds and
reductions in the company's administrative costs, including
significant costs currently absorbed by businesses to be divested.
"It is essential that we increase our investments behind our
highest potential brands, simplify our portfolio of businesses and
build a high quality earnings trajectory for ConAgra Foods," said
Gary Rodkin, President and Chief Executive Officer. "The planned
divestitures are the catalyst for our ability to attack costs,
streamline our operations and return quickly to recent earnings
levels, but with a significantly stronger foundation for future
performance." Although the company expects to return to current
earnings levels during fiscal 2009, the cost of implementing the
actions and the impact of planned divestitures are expected to
depress operating earnings until that time. The Company expects
fiscal year 2007 earnings in the range of $1.10-$1.15 per share,
excluding items that impact comparability, and also confirmed that
its internal plans are for year-over-year earnings per share growth
in the second half of fiscal 2006, excluding items that impact
comparability. Dividend Action. The board of directors of the
company declared a quarterly dividend of 18 cents per share payable
on June 1, 2006 to shareholders of record as of May 1, 2006. The
dividend continues to represent one of the highest payout levels
among consumer food companies, but is 9.25 cents per share lower
than the company's most recent quarterly dividend. Restructuring
Charges. The company said that it expected to take charges to
earnings during the remainder of fiscal 2006 and in future quarters
relating to planned divestitures and restructuring activities. A
portion of the charges will be non-cash impairment charges incurred
to adjust the carrying values of certain assets held for
divestiture, including the majority of the company's refrigerated
meat businesses. The balance will reflect anticipated cash and
non-cash costs relating to the implementation of restructuring
activities, including programs designed to reduce the company's
ongoing operating costs. The amount of charges for the third
quarter will be announced in connection with the company's next
earnings release. The company also expects certain divestitures to
result in gains, which will be recorded in future periods as
appropriate. Divestiture Plans. The company also announced plans to
divest its seafood and domestic and imported cheese businesses.
This follows the company's February announcement that it would
divest most of its refrigerated meats operations. It has already
announced definitive agreements for the divestiture of its Louis
Kemp seafood and Cook's Ham businesses. Aggregate annual revenue of
the meat, seafood and cheese businesses to be divested is
approximately $2.8 billion. Investor Meeting. The Company will hold
a previously announced meeting with investors and analysts today in
New York City. At the meeting, senior company executives will
discuss the company's strategy and future plans for returning to
sustainable profitable growth, including further details on items
discussed in this release. The event will be webcast live at 9 a.m.
Eastern Standard Time and is expected to conclude by 12 p.m. EST.
Investors are encouraged to access the presentation at
www.conagrafoods.com/investors. The webcast will be archived and
available for replay starting at 3 p.m. EST today. ConAgra Foods
Inc. (NYSE: CAG) is one of North America's largest packaged food
companies, serving grocery retailers, as well as restaurants and
other foodservice establishments. Popular ConAgra Foods consumer
brands include: Banquet, Chef Boyardee, Egg Beaters, Healthy
Choice, Hebrew National, Hunt's, Marie Callender's, Orville
Redenbacher's, Reddi-wip, PAM, and many others. Note on
Forward-Looking Statements: This news release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
based on management's current views and assumptions of future
events and financial performance and are subject to uncertainty and
changes in circumstances. Readers of this release should understand
that these statements are not guarantees of performance or results.
Many factors could affect the company's actual financial results
and cause them to vary materially from the expectations contained
in the forward-looking statements. These factors include, among
other things, future economic circumstances, industry conditions,
company performance and financial results, availability and prices
of raw materials, product pricing, competitive environment and
related market conditions, operating efficiencies, access to
capital, actions of governments and regulatory factors affecting
the company's businesses and other risks described in the company's
reports filed with the Securities and Exchange Commission. The
company cautions readers not to place undue reliance on any
forward-looking statements included in this release, which speak
only as of the date made. -0- *T ConAgra Foods Estimated Fiscal
Year 2007 Earnings per Share Fiscal Year 2007 ----------------
Earnings per share* $1.35 - $1.40 Net estimated impact of planned
divestiture, spending and cost reduction activities, excluding
items that impact comparability (.25) ------------- Estimated
Fiscal 2007 Earnings per share $1.10 - $1.15 ============= *T
*Earnings per share is based on estimated GAAP earnings per share
before items affecting comparability including, but not limited to,
restructuring and impairment charges and gains and losses on sales
of assets. The timing of these events and therefore the impact on
Fiscal 2007 earnings per share cannot be estimated at this time.
For more information, please visit us at www.conagrafoods.com.
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