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ConAgra Foods Reports Fiscal 2014 First-Quarter Performance

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; the timing to consummate the potential joint venture combining the flour milling businesses of ConAgra Foods, Cargill, and CHS; ConAgra Foods’ ability to realize the synergies and benefits contemplated by the potential joint venture; 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 any pricing actions and promotional changes; future economic circumstances; industry conditions; ConAgra Foods’ ability to execute its operating and restructuring plans; the success of ConAgra Foods’ cost-saving initiatives, innovation, and marketing, including increased marketing investments; the competitive environment and related market conditions; operating efficiencies; the ultimate impact of any ConAgra Foods product recalls; access to capital; ConAgra Foods’ success in efficiently and effectively integrating its acquisitions; 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 Q1 FY14 and Q1 FY13 diluted earnings per share from continuing operations, Consumer Foods segment operating profit, Q1 FY14 Ralcorp (Ralcorp Food Group and Ralcorp Frozen Bakery Products segments combined) segment operating profit, and FY13 diluted earnings per share from continuing operations, adjusted for items impacting comparability. Amounts may be impacted by rounding.
 
Q1 FY14 & Q1 FY13 Diluted EPS from Continuing Operations
 
Q1 FY14 Q1 FY13 % change
Diluted EPS from continuing operations $ 0.33 $ 0.61 -46%
Items impacting comparability:
Restructuring, integration, and transactions costs (including acquisition-related restructuring) 0.05 0.02
Net expense (benefit) related to unallocated mark-to-market impact of derivatives 0.03 (0.20 )
Net benefit related to unusual tax matters (0.05 ) -
Net expense related to historical legal matters - 0.02
Rounding   0.01     (0.01 )  
Diluted EPS adjusted for items impacting comparability $ 0.37   $ 0.44   -16%
 
Consumer Foods Segment Operating Profit Reconciliation
 
(Dollars in millions) Q1 FY14 Q1 FY13 % change
Consumer Foods Segment Operating Profit $ 186 $ 236 -21%
Restructuring, integration, and transactions costs (including acquisition-related restructuring)   2     7    
Consumer Foods Segment Adjusted Operating Profit $ 189   $ 243   -22%
 
Ralcorp Segment Operating Profit Reconciliation
 
(Dollars in millions) Q1 FY14
Ralcorp Food Group Segment Operating Profit $ 61
Ralcorp Frozen Bakery Products Segment Operating Profit   21  
Ralcorp Segment Operating Profit $ 82
Restructuring, integration, and transactions costs (including acquisition-related restructuring)   1  
Ralcorp Segment Adjusted Operating Profit $ 83  
 
 
FY13 Diluted EPS from Continuing Operations
 
Total FY13
Diluted EPS from continuing operations $ 1.85
Items impacting comparability:
Acquisition expenses, including restructuring, and integration costs 0.26
Expense related to restructuring charges 0.05
Net expense related to acquisition-related tax expense 0.04
Net expense related to impairment charges for assets within Commercial Foods 0.02
Net expense related to year-end remeasurement of pensions and early retirement of debt 0.02
Net benefit related to unallocated mark-to-market impact of derivatives (0.07 )
Rounding   (0.01 )
Diluted EPS adjusted for items impacting comparability $ 2.16  
 
       
ConAgra Foods, Inc.
Segment Operating Results
(in millions)
(unaudited)
FIRST QUARTER
 
13 Weeks Ended 13 Weeks Ended
 

August 25, 2013

August 26, 2012 Percent Change

SALES

Consumer Foods $ 1,995.9 $ 2,033.0 (1.8)%
Commercial Foods 1,263.9 1,269.3 (0.4)%
Ralcorp Food Group 703.4 - N/A
Ralcorp Frozen Bakery Products   238.6     -   N/A
Total   4,201.8     3,302.3   27.2%
 

OPERATING PROFIT

Consumer Foods $ 186.5 $ 236.0 (21.0)%
Commercial Foods 129.8 139.6 (7.0)%
Ralcorp Food Group 61.0 - N/A
Ralcorp Frozen Bakery Products   20.7     -   N/A
Total operating profit for segments 398.0 375.6 6.0%
 
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) income (126.5 ) 42.5 N/A
Interest expense, net   (95.6 )   (49.3 ) 93.9%
Income from continuing operations before income taxes and equity method investment earnings $ 175.9   $ 368.8   (52.3)%
 

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.
Consolidated Statements of Earnings
(in millions, except per share amounts)

(unaudited)

 

FIRST QUARTER
 
13 Weeks Ended 13 Weeks Ended
 

August 25, 2013

August 26, 2012

Percent Change

Net sales $ 4,201.8

$

3,302.3

27.2%
Costs and expenses:
Cost of goods sold 3,370.9 2,433.7 38.5%
Selling, general and administrative expenses 559.4 450.5 24.2%
Interest expense, net   95.6     49.3   93.9%
Income from continuing operations before income taxes and equity method investment earnings 175.9 368.8 (52.3)%
 
Income tax expense 33.9 123.8 (72.6)%
Equity method investment earnings   4.1     7.6   (46.1)%
Income from continuing operations 146.1 252.6 (42.2)%
 
Income (loss) from discontinued operations, net of tax   1.1     (0.4 )

N/A

 
Net income $ 147.2  

$

252.2

  (41.6)%
Less: Net income attributable to noncontrolling interests   2.9     2.1   38.1%
Net income attributable to ConAgra Foods, Inc. $ 144.3  

$

250.1

  (42.3)%
 
Earnings per share – basic
 
Income from continuing operations $ 0.34

$

0.61

(44.3)%
Income from discontinued operations   -     -   -
Net income attributable to ConAgra Foods, Inc. $ 0.34  

$

0.61

  (44.3)%
 
Weighted average shares outstanding   421.1     407.1   3.4%
 
Earnings per share – diluted
 
Income from continuing operations $ 0.33

$

0.61

(45.9)%
Income from discontinued operations   0.01     -  

N/A

Net income attributable to ConAgra Foods, Inc. $ 0.34  

$

0.61

 

(44.3)%

 
Weighted average share and share equivalents

outstanding

  428.2     412.0   3.9%
 
     
ConAgra Foods, Inc.
Consolidated Balance Sheets
(in millions)
(unaudited)

August 25, 2013

May 26, 2013

ASSETS
Current assets
Cash and cash equivalents $ 194.2 $ 183.9

Receivables, less allowance for doubtful accounts of $7.6 and $7.6

1,246.1 1,286.2
Inventories 2,549.8 2,390.3
Prepaid expenses and other current assets 463.8 515.6
Current assets held for sale   3.5       3.8  
Total current assets (4,457.4 ) (4,379.8 )
 
Property, plant and equipment, net 3,905.8 3,850.4
Goodwill 8,417.0 8,444.1
Brands, trademarks and other intangibles, net 3,383.0 3,418.1
Other assets 286.4 293.5
Noncurrent assets held for sale   19.2       19.4  
$ 20,468.8     $ 20,405.3  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ 282.2 $ 185.0
Current installments of long-term debt 585.4 517.9
Accounts payable 1,552.0 1,501.6
Accrued payroll 161.3 287.2
Other accrued liabilities   882.4       909.6  
Total current liabilities 3,463.3 3,401.3
 
Senior long-term debt, excluding current installments 8,622.2 8,691.0
Subordinated debt 195.9 195.9
Other noncurrent liabilities 2,735.6 2,754.1
Total stockholders' equity   5,451.8       5,363.0  
$ 20,468.8     $ 20,405.3  
 
 
ConAgra Foods, Inc.
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
    Thirteen weeks ended

 

August 25, 2013

 

August 26, 2012

Cash flows from operating activities:
Net income $ 147.2 $ 252.2

Income (loss) from discontinued operations

  1.1     (0.4 )
Income from continuing operations 146.1 252.6
Adjustments to reconcile income from continuing operations to net cash flows from operating activities:
Depreciation and amortization 147.0 91.2
Asset impairment charges 2.1 0.3
Earnings of affiliates less than distributions 1.7 1.2
Pension expense (2.2 ) 6.1
Contributions to pension plans (4.5 ) (3.8 )
Share-based payments expense 17.2 13.1
Other items (6.7 ) (1.5 )
Change in operating assets and liabilities excluding effects of business acquisitions and dispositions:
Accounts receivable 43.6 (35.8 )
Inventory (158.0 ) (148.5 )
Deferred income taxes and income taxes payable, net 14.5 113.3
Prepaid expenses and other current assets (2.8 ) (33.9 )
Accounts payable 46.8 53.3
Accrued payroll (125.8 ) (30.1 )
Other accrued liabilities   44.9     50.1  
Net cash flows from operating activities – continuing operations 163.9 327.6
Net cash flows from operating activities – discontinued operations   2.2     (3.7 )
Net cash flows from operating activities   166.1     323.9  
 
Cash flows from investing activities:
Additions to property, plant and equipment (181.1 ) (98.4 )
Sale of property, plant and equipment 3.7 1.9
Purchase of businesses       (268.6 )
Net cash flows from investing activities – continuing operations (177.4 ) (365.1 )
Net cash flows from investing activities – discontinued operations   (0.2 )   (0.2 )
Net cash flows from investing activities   (177.6 )   (365.3 )
 
Cash flows from financing activities:
Net short-term borrowings 97.2 232.0
Repayment of long-term debt (2.3 ) (16.9 )
Repurchase of ConAgra Foods, Inc. common shares (30.9 ) (75.0 )
Cash dividends paid (104.8 ) (97.9 )
Exercise of stock options and issuance of other stock awards 62.9 10.8
Other items   0.5     0.2  
Net cash flows from financing activities   22.6     53.2  
 
Effect of exchange rate changes on cash and cash equivalents (0.8 ) 1.7
Net change in cash and cash equivalents 10.3 13.5
Cash and cash equivalents at beginning of period   183.9     103.0  
Cash and cash equivalents at end of period $ 194.2   $ 116.5  
 




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