ConAgra Foods, Inc., (NYSE: CAG) one of North America�s leading
packaged food companies, today reported results for the fiscal 2008
fourth quarter ended May 25, 2008. Overall sales grew 15% and
diluted EPS from continuing operations grew 38%. Current-quarter
diluted EPS (continuing and discontinued operations) was $0.41,
which includes net $0.03 per diluted share of expense from items
impacting comparability. Prior-year diluted EPS (continuing and
discontinued operations) of $0.39 included net $0.01 per diluted
share of expense from items impacting comparability. Items
impacting comparability in the current and prior year are
summarized toward the end of this release. Gary Rodkin, chief
executive officer of ConAgra Foods, commented, �In fiscal 2008, we
made progress in several important areas of our company, most
notably pricing, the innovation pipeline, more effective marketing,
and efficiencies. While our higher-than-planned fourth-quarter EPS
largely reflects another strong performance from the Trading &
Merchandising operations, we are also pleased with the improved
execution demonstrated in our continuing operations. Given the
operating progress made this fiscal year as well as the recent
divestiture of our Trading & Merchandising operations, we have
an even greater focus on successfully executing the initiatives in
our core food operations, as well as a much stronger foundation on
which to deliver predictable and sustainable profitable growth
going forward.� The following summary of segment sales and
operating profit performance reflects activities within continuing
operations. EPS of $0.23 per diluted share from discontinued
operations, discussed toward the end of this document, reflects a
strong performance from the company�s Trading & Merchandising
operations. The company notes that the reclassification of certain
results from continuing operations to discontinued operations
during the quarter was due largely to the divestiture of the
Trading & Merchandising operations; current and historical
financial results reflect this change in classification. Consumer
Foods Segment (59% of fiscal 2008 sales) Branded consumer products
sold in retail and foodservice channels; excludes international
consumer operations. � Volume & Sales Data � Year-over-year %
Change � � As Reported � Comparable(a) Unit Volumes � Flat � -1%
Overall Sales � 6% � 4% Sales for Priority Investment Brands � 4% �
2% Sales for Enabler Brands � 9% � 9% (a) Comparable sales
calculations exclude the impact of 1) sales contributed by the
peanut butter business in the current and prior years, 2) sales
contributed by the Banquet and private label pot pie business in
the current and prior years, 3) sales for Alexia Foods, which was
acquired during Q1 of fiscal 2008, and 4) sales for Lincoln Snacks,
which was acquired during Q2 of fiscal 2008. See page 9 for
Regulation G reconciliations. The Consumer Foods segment posted
sales of $1.7 billion and operating profit of $167 million for the
quarter. The following Consumer Foods segment commentary relates to
comparable performance unless otherwise indicated. Consumer Foods�
comparable sales growth was 4%, reflecting a 5% increase in net
realized pricing and a 1% decrease in volume. Significant net
pricing actions for the company�s consumer products were
implemented with customers March 24 and thus were in effect for
approximately two months of the quarter; future quarters will
reflect the full quarterly impact of these price increases.
Comparable sales for priority investment brands, which represent
almost 70% of segment sales, increased 2%; this reflects net price
increases of approximately 4% and a volume decline of approximately
2%. Comparable sales for enabler brands increased 9%, reflecting
net price increases of approximately 10% and an overall volume
decline of 1%. A significant portion of the increased pricing
relates to cooking oil. More brand details can be found in the
Q&A document accompanying this release. Operating profit of
$167 million was slightly ahead of last year, as reported, and
declined 5% on a comparable basis as detailed on page 9; this
represents a significant improvement from recent quarterly trends.
This sequential improvement was largely driven by recent price
increases. Although the company continued to successfully implement
cost-saving initiatives, these were more than offset by input cost
inflation in the range of $150 million. The company expects the
Consumer Foods segment to perform well in fiscal 2009 given the
strength of the innovation pipeline, recent and planned pricing
actions, and the cost-saving initiatives in place. Food and
Ingredients Segment (35% of fiscal 2008 sales) Specialty potato,
dehydrated vegetable, seasonings, blends, flavors, and milled grain
products sold to foodservice and commercial channels worldwide.
During the quarter, sales for the Food and Ingredients segment were
$1.2 billion, 32% ahead of last year. Sales for the milling
operations grew as higher wheat costs were passed on as higher
selling prices; Lamb Weston specialty potato and appetizer
operations benefited from improved pricing and product mix as well
as volume growth in export markets, the combination of which more
than offset the impact of significant inflation. Sales results for
dehydrated products and seasoning blends grew due to new
initiatives with key customers. The recent acquisition of Watts
Brothers Farms contributed approximately 2 points of sales growth
to the overall segment, and the company notes that the integration
of the business is going smoothly. Segment operating profit was
$115 million for the quarter, 9% ahead of year-ago amounts, due to
the strong sales results discussed above and a focus on
efficiencies. International Foods Segment (6% of fiscal 2008 sales)
Branded consumer products sold internationally to retail channels.
During the quarter, sales for the International Foods segment were
$185 million, 17% ahead of year-ago amounts, largely due to strong
performances for popcorn, tomato, canned pasta, and snack products
in key markets. The impact of foreign currency exchange rates
contributed 7 points of sales growth. Canada and Mexico, the
largest geographic markets in the segment, posted strong overall
sales growth. As reported, operating profit of $11 million was 39%
below the $18 million earned in the year-ago period, primarily due
to $10 million of restructuring costs incurred in the current
quarter to improve future operating efficiencies. Excluding these
restructuring costs in the current quarter, operating profit was
ahead of year-ago amounts, reflecting sales growth as well as a
focus on efficiencies. Other Items The company is very focused on
SG&A efficiencies across its operations. Pursuing SG&A
savings resulted in restructuring charges in the fourth quarter of
$22 million ($10 million in International Foods, $7 million in
Consumer Foods and approximately $5 million of unallocated
corporate expense). Corporate expense was $114 million for the
quarter and $164 million in the year-ago period. Current quarter
includes approximately $5 million of restructuring costs. The
comparable year-over-year decrease reflects a focus on SG&A
efficiencies in several expense areas. Professional services costs,
primarily related to information technology projects, were below
prior-year amounts, as were incentive accruals. Equity method
investment earnings were $7 million for the fourth quarter, down
from $14 million in the year-ago period, primarily reflecting
higher input costs for an international specialty potato joint
venture. Net interest expense was $70 million in the current
quarter and $57 million in the year-ago period; during the quarter,
the company increased its commercial paper borrowings to support
working capital needs, primarily in the Trading & Merchandising
operations. The effective tax rate was 26% in the current quarter;
the EPS impact of the lower-than-expected tax rate is listed as an
item impacting comparability. Capital Items During the quarter, the
company repurchased approximately 4.1 million shares of its stock
for approximately $100 million. Dividends paid during the quarter
totaled $93 million versus $90 million last year. For the quarter,
capital expenditures from continuing operations for property, plant
and equipment were $128 million compared with $146 million in the
year-ago period. Depreciation and amortization expense from
continuing operations was approximately $76 million for the
quarter, in line with year-ago amounts. During the quarter, the
company purchased Watts Brothers Farms, which owns and operates
agricultural and farming businesses in Washington and Oregon. The
purchase price was approximately $130 million in cash, plus the
assumption of approximately $85 million of interest-bearing debt.
During the quarter, the company sold the Knott�s Berry Farm brand
of jams, jellies and preserves for pretax proceeds of approximately
$55 million in cash. The company recently completed the divestiture
of its Trading & Merchandising operations to an investment
group led by Ospraie Special Opportunities Fund. The purchase price
was approximately $2.8 billion, net of transaction costs and
subject to post-closing adjustments, which included before-tax
proceeds of approximately $2.2 billion of cash and $550 million
(face value) of payment-in-kind debt securities. From the after-tax
cash proceeds, the company expects to repurchase approximately $900
million of its shares during the first half of fiscal 2009, which,
along with the $100 million repurchased in the fiscal fourth
quarter of fiscal 2008, should meaningfully contribute to fiscal
2009 EPS performance as the fiscal year progresses. The company
also plans to significantly reduce its commercial paper balances
with the after-tax cash proceeds of the transaction. Discontinued
Operations During the quarter, diluted EPS from discontinued
operations was $0.23 as reported, which includes $0.02 per diluted
share of net expense from items impacting comparability, most of
which relates to an unusually high tax rate. These earnings were
largely driven by the Trading & Merchandising operations, now
classified as discontinued operations, which had strong results in
wholesale fertilizer operations and agricultural commodities
merchandising. The Trading & Merchandising operations were sold
after the fiscal year-end. Current-quarter discontinued operations
also include results for the Knott�s Berry Farm brand, including a
small pretax gain on the sale of that brand, which occurred on May
13, 2008. Outlook The company expects EPS from continuing
operations, excluding items impacting comparability, to be in the
range of $1.56-$1.59 in fiscal 2009. Reflecting the seasonality of
operating results as well as the fact that the planned
share-repurchase and debt-reduction activities are not expected to
be completed until the end of the first half of fiscal 2009, the
company expects diluted EPS from continuing operations for the
first quarter of fiscal 2009 to be in the range of $0.26-$0.28.
This first-quarter outlook excludes items impacting comparability.
The company will comment on its outlook in the regularly scheduled
earnings releases throughout the year. The company notes that
fiscal 2009 has 53 weeks. Major Items Affecting Fourth-quarter
Fiscal 2008 EPS Comparability Included in the $0.41 diluted EPS
(continuing and discontinued operations combined) for the fourth
quarter of fiscal 2008 (EPS amounts rounded and after tax): $22
million pretax, or $0.03 per diluted share, of expense related to
restructuring efforts to improve operating efficiencies in
continuing operations. These are reflected in the Consumer Foods
segment (approximately $7 million of SG&A) and the
International Foods segment (approximately $1 million of Cost of
goods sold, $9 million of SG&A) and approximately $5 million of
unallocated corporate expense. Approximately $0.02 per diluted
share of benefit from an unusually low tax rate on continuing
operations. Approximately $0.02 per diluted share of net expense in
discontinued operations, primarily due to an unusually high tax
rate. Included in the $0.39 of diluted EPS (continuing and
discontinued operations combined) for the fourth quarter of fiscal
2007 (EPS amounts rounded and after tax): Costs resulting from the
peanut butter recall negatively impacted EPS by approximately $0.02
per diluted share, or $18 million pretax, almost all of which is
reflected within the Consumer Foods segment ($5 million impact on
Gross Profit, $12 million impact on SG&A). Benefit of
approximately $0.01 per diluted share from a slightly
lower-than-expected tax rate. Discussion of Results ConAgra Foods
will host a conference call at 9:30 a.m. EDT today to discuss
fourth-quarter 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 1-888-224-1164 and
1-913-981-5591, 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. 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
8891440. A rebroadcast also will be available on the company�s Web
site. 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 leading 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, PAM, Reddi-wip, and many others. For more
information, please visit us at www.conagrafoods.com. Note on
Forward-looking Statements: This release contains forward-looking
statements. 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. The
company undertakes no responsibility for updating these statements.
Readers of this release should understand that these statements are
not guarantees of performance or results. Many factors could affect
the 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, availability
and prices of raw materials, product pricing, future economic
circumstances, industry conditions, the company�s ability to
execute its operating and restructuring plans, competitive
environment and related market conditions, operating efficiencies,
the ultimate impact of the company�s recalls, 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. Regulation G Disclosure Consumer Foods
Segment Below is a reconciliation of segment sales and operating
profit exclusive of the pot pie business, the peanut butter
business, Alexia Foods business, Lincoln Snacks business, recall
costs and restructuring charges. � � � Consumer Foods Segment
Reconciliation (impacted by rounding) � (Dollars in millions) Q4
FY08 Q4 FY07 % Change � � Consumer Foods Net Sales $ 1,704 $ 1,609
6 % Pot Pie Net Sales (21 ) (26 ) Net Sales of Acquired Businesses
(Alexia & Lincoln Snacks) (16 ) - Peanut Butter Net Sales � (23
) � - � � Adjusted Consumer Foods Net Sales $ 1,644 � $ 1,583 � 4 %
� (Dollars in millions) Q4 FY08 Q4 FY07 % Change � � Priority
Investment Brands Net Sales $ 1,194 $ 1,143 4 % Banquet Pot Pie Net
Sales (17 ) (22 ) Net Sales of Acquired Businesses (Alexia &
Lincoln Snacks) (14 ) - Peter Pan Net Sales � (23 ) � - � �
Priority Investment Brands Adjusted Net Sales $ 1,140 � $ 1,121 � 2
% � (Dollars in millions) Q4 FY08 Q4 FY07 % Change � � Enabler
Brands Net Sales $ 510 $ 466 9 % Private Label Pot Pie Net Sales (4
) (4 ) Private Label Net Sales of Acquired Businesses � (2 ) � - �
� Enabler Brands Adjusted Net Sales $ 504 � $ 462 � 9 % � (Dollars
in millions) Q4 FY08 Q4 FY07 % Change � � Consumer Foods Segment
Operating Profit $ 167 $ 166 1 % Peter Pan Recall Costs - 17
Restructuring Plan Charges/Benefits � 7 � � - � � Consumer Foods
Segment Adjusted Operating Profit $ 174 � $ 183 � -5 % ConAgra
Foods, Inc. � � � � Segment Operating Results In millions FOURTH
QUARTER � 13 Weeks Ended 13 Weeks Ended � May 25, 2008 May 27, 2007
PercentChange SALES Consumer Foods $ 1,703.9 $ 1,609.4 5.9 % Food
and Ingredients 1,188.8 897.6 32.4 % International Foods � 185.4 �
� 158.3 � 17.1 % Total � 3,078.1 � � 2,665.3 � 15.5 % � OPERATING
PROFIT Consumer Foods $ 166.7 $ 166.1 0.4 % Food and Ingredients
114.7 104.8 9.4 % International Foods � 10.7 � � 17.5 � (38.9 )%
Total operating profit for segments 292.1 288.4 1.3 % �
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 (113.6 ) (164.4 ) (30.9 )% Interest expense, net
� (69.6 ) � (56.9 ) 22.3 % Income from continuing operations before
income taxes and equity method investment earnings $ 108.9 � $ 67.1
� 62.3 % 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 YEAR TO DATE � 52 Weeks Ended 52 Weeks Ended �
May 25, 2008 May 27, 2007 PercentChange SALES Consumer Foods $
6,799.8 $ 6,496.7 4.7 % Food and Ingredients 4,128.1 3,421.5 20.7 %
International Foods � 677.8 � � 613.5 � 10.5 % Total � 11,605.7 � �
10,531.7 � 10.2 % � OPERATING PROFIT Consumer Foods $ 780.8 $ 847.6
(7.9 )% Food and Ingredients 511.7 434.8 17.7 % International Foods
� 49.3 � � 64.4 � (23.4 )% Total operating profit for segments
1,341.8 1,346.8 (0.4 )% � 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 (392.3 ) (427.9 ) (8.3 )%
Interest expense, net � (253.3 ) � (219.5 ) 15.4 % Income from
continuing operations before income taxes and equity method
investment earnings $ 696.2 � $ 699.4 � (0.5 )% 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 FOURTH QUARTER 13 Weeks Ended 13 Weeks Ended � May
25, 2008 May 27, 2007 PercentChange Net sales $ 3,078.1 $ 2,665.3
15.5 % Costs and expenses: Cost of goods sold 2,430.4 2,031.3 19.6
% Selling, general and administrative expenses 469.2 510.0 (8.0 )%
Interest expense, net � 69.6 56.9 22.3 % Income from continuing
operations before income taxes and equity method investment
earnings 108.9 67.1 62.3 % Income tax expense 30.1 18.8 60.1 %
Equity method investment earnings � 6.8 14.3 (52.4 )% Income from
continuing operations 85.6 62.6 36.7 % � Income from discontinued
operations, net of tax � 115.7 129.4 (10.6 )% � Net income $ 201.3
$ 192.0 4.8 % � Earnings per share � basic � Income from continuing
operations $ 0.18 $ 0.13 38.5 % Income from discontinued operations
� 0.23 0.26 (11.5 )% Net income $ 0.41 $ 0.39 5.1 % � Weighted
average shares outstanding � 486.0 494.9 (1.8 )% � Earnings per
share � diluted � Income from continuing operations $ 0.18 $ 0.13
38.5 % Income from discontinued operations � 0.23 0.26 (11.5 )% Net
income $ 0.41 $ 0.39 5.1 % � Weighted average share and share
equivalents outstanding � 489.3 498.2 (1.8 )% ConAgra Foods, Inc. �
� � � Consolidated Statements of Earnings In millions, except per
share amounts YEAR TO DATE 52 Weeks Ended 52 Weeks Ended � May 25,
2008 May 27, 2007 PercentChange Net sales $ 11,605.7 $ 10,531.7
10.2 % Costs and expenses: Cost of goods sold 8,890.1 7,838.7 13.4
% Selling, general and administrative expenses 1,766.1 1,774.1 (0.5
)% Interest expense, net � 253.3 � 219.5 15.4 % Income from
continuing operations before income taxes and equity method
investment earnings 696.2 699.4 (0.5 )% Income tax expense 227.2
245.5 (7.5 )% Equity method investment earnings � 49.7 � 28.4 75.0
% Income from continuing operations 518.7 482.3 7.5 % � Income from
discontinued operations, net of tax � 411.9 � 282.3 45.9 % � Net
income $ 930.6 $ 764.6 21.7 % � Earnings per share � basic � Income
from continuing operations $ 1.06 $ 0.96 10.4 % Income from
discontinued operations � 0.85 � 0.56 51.8 % Net income $ 1.91 $
1.52 25.7 % � Weighted average shares outstanding � 487.5 � 504.2
(3.3 )% � Earnings per share � diluted � Income from continuing
operations $ 1.06 $ 0.95 11.6 % Income from discontinued operations
� 0.84 � 0.56 50.0 % Net income $ 1.90 $ 1.51 25.8 % � Weighted
average share and share equivalents outstanding � 490.9 � 507.1
(3.2 )% ConAgra Foods, Inc. � � � Consolidated Balance Sheets In
millions May 25, 2008 May 27, 2007 ASSETS Current assets Cash and
cash equivalents $ 140.9 $ 730.8 Receivables, less allowance for
doubtful accounts of $17.6 and $16.8 890.6 819.0 Inventories
1,931.5 1,625.1 Prepaid expenses and other current assets 451.6
319.2 Current assets held for sale � 2,667.4 � � 1,511.9 Total
current assets 6,082.0 5,006.0 � Property, plant and equipment, net
2,489.8 2,206.5 Goodwill 3,483.3 3,404.8 Brands, trademarks and
other intangibles, net 816.7 774.8 Other assets 553.2 230.8
Noncurrent assets held for sale � 257.5 � � 212.6 $ 13,682.5 � $
11,835.5 � LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities
Notes payable $ 599.8 $ 21.3 Current installments of long-term debt
14.9 17.9 Accounts payable 786.0 746.5 Accrued payroll 374.2 334.5
Other accrued liabilities 688.3 846.3 Current liabilities held for
sale � 1,188.1 � � 714.4 Total current liabilities 3,651.3 2,680.9
� Senior long-term debt, excluding current installments 3,186.9
3,218.6 Subordinated debt 200.0 200.0 Other noncurrent liabilities
1,293.0 1,129.9 Noncurrent liabilities held for sale 13.9 23.2
Common stockholders' equity � 5,337.4 � � 4,582.9 $ 13,682.5 � $
11,835.5
ConAgra Brands (NYSE:CAG)
Historical Stock Chart
From Jun 2024 to Jul 2024
ConAgra Brands (NYSE:CAG)
Historical Stock Chart
From Jul 2023 to Jul 2024