Hedging Activities – This language primarily relates to operations other than the company’s milling operations.
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 $21 million of unfavorable impact in the current quarter and $130 million of favorable impact in the year-ago period. The company identifies these amounts as items impacting comparability.
- Unallocated Corporate amounts were $127 million of expense in the current quarter and $43 million of benefit in the year-ago period. Current-quarter amounts include $21 million of unfavorable hedge-related impact and $34 million of net expense from other items impacting comparability (details starting on page 7 of this release). Year-ago period amounts include $130 million of favorable hedge-related impact and $12 million of expense related to other items impacting comparability. Excluding these amounts, unallocated Corporate expense was $72 million for the current quarter and $75 million in the year-ago period.
- Equity method investment earnings were $4 million for the current quarter and $8 million in the year-ago period; the year-over-year decline largely reflects difficult market conditions for a European potato joint venture.
- Net interest expense was $96 million in the current quarter and $49 million in the year-ago period; the increase reflects the incremental interest related to the debt incurred to fund acquisitions, principally Ralcorp.
- Dividends for the current quarter totaled $105 million versus $98 million in the year-ago period.
- The company repurchased approximately 876,000 shares of common stock during the quarter for approximately $31 million, as it deployed proceeds from stock option exercises.
- For the current quarter, capital expenditures for property, plant and equipment were $181 million, compared with $98 million in the year-ago period; $34 million of the increase relates to Ralcorp. The comparable increase reflects several significant planned plant expansions and improvements. Depreciation and amortization expense was approximately $147 million for the fiscal first quarter; this compares with a total of $91 million in the year-ago period. Approximately $50 million of the increase in depreciation and amortization relates to Ralcorp.
- The company recently announced the divestiture of Lightlife, one of ConAgra Foods’ smaller brands and product lines that includes vegetarian-based burgers, hotdogs and other meatless frozen and refrigerated items. The brand, which was part of the Consumer Foods segment, was sold on Sept. 16, after the end of the fiscal first quarter, to Brynwood Partners for an undisclosed amount. Results for Lightlife for the fiscal first quarter and all prior periods are classified as discontinued operations.
- After the quarter-end, the company purchased certain dessert production assets from Harlan Bakeries, a former co-manufacturing partner who made frozen fruit and cream pies as well as pastry shells under the Marie Callender’s and Claim Jumper brand names.
- The company has extended the termination date for its $1.5 billion revolving credit facility by another two years; the facility will now terminate on Sept. 14, 2018.
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