Quarterly operating profit for the Private Brands is expected to show a comparable year-over-year decline of approximately $60 million. While the majority of the profit shortfall was driven by pricing concessions previously discussed, cost challenges associated with integration and business transition also weighed on profit performance. The company remains highly confident in the long-term growth opportunities for the Private Brands segment given the company’s strong value-added capabilities that will be leveraged in the years ahead, the fundamental appeal of private brands to consumers, and the strategic importance of private brands to the retail customer base.Based on the challenges in the Private Brands segment in fiscal 2014 and the gradual nature of the anticipated recovery from fiscal 2014 earnings levels, the company’s current profit projections for the Private Brands segment are below original plans for the next several years, despite continued expectations for achievement of strong cost-related synergies in line with original plans. These revised profit projections, as well as expectations for continued profit challenges for some retail brands (primarily Chef Boyardee), have resulted in an estimated $681 million of non-cash impairment charges in the fiscal 2014 fourth quarter. These non-cash charges, most of which relate to the Private Brands segment, reduce the amount of goodwill and other intangibles on the company’s balance sheet, and the resulting non-cash expenses will be treated as items impacting comparability. The revised profit projections for the applicable segments have been taken into consideration in the fiscal 2015-2017 EPS growth expectations cited earlier in this release. The company notes that it generated in excess of $1.5 billion of cash from operations and repaid approximately $600 million of debt during fiscal 2014, exceeding targets for the fiscal year. The company is confident in its ability to meet its fiscal year 2015 debt repayment goals as well. The company will provide more financial and operating details on the current quarter performance, and future EPS outlook, with its regularly scheduled earnings release on June 26, 2014.
About ConAgra FoodsConAgra 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, and bakery 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 assumptions and are subject to certain risks, uncertainties and changes in circumstances that could cause actual results to differ materially from potential results discussed in the forward-looking statements. These risks and uncertainties include, among other things: ConAgra Foods’ ability to realize the synergies and benefits contemplated by the acquisition of Ralcorp Holdings, Inc. (“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 recently formed joint venture combining the flour milling businesses of ConAgra Foods, Cargill, Incorporated, and CHS Inc.; risks and uncertainties associated with intangible assets, including any future goodwill impairment charges; 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 product innovation, any pricing actions and changes in promotional strategies; the ultimate outcome of litigation, including the lead paint matter; future economic circumstances; industry conditions; ConAgra Foods’ ability to execute its operating and restructuring plans; the success of ConAgra Foods’ cost-savings initiatives, and innovation and marketing investments; the competitive environment; operating efficiencies; 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 DisclosureBelow is a reconciliation of preliminary Q4 FY14 diluted earnings per share from continuing operations, adjusted for items impacting comparability. Amounts may be impacted by rounding.
|Q4 FY14 Diluted EPS from Continuing Operations|
|Diluted EPS from continuing operations||$||(0.76||)|
|Items impacting comparability:|
|Net expense related to impairment charges, including the impact on diluted share count||1.47|
|Net benefit related to sale of flour mills||(0.13||)|
|Net expense related to restructuring, transaction, and integration costs||0.08|
|Net benefit related to unusual tax matters||(0.06||)|
|Net benefit related to unallocated mark-to-market impact of derivatives||(0.02||)|
|Net benefit related to historical legal matters||(0.01||)|
|Net gain from sale of non-operating asset in the Commercial Foods segment||(0.01||)|
|Diluted EPS, adjusted for items impacting comparability||$||0.55|