Form 8-K CONAGRA FOODS INC /DE/ For: Mar 23
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 23, 2015
ConAgra Foods, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction
of Incorporation)
1-7275 | 47-0248710 | |
(Commission File Number) |
(IRS Employer Identification No.) |
One ConAgra Drive Omaha, NE |
68102 | |
(Address of Principal Executive Offices) | (Zip Code) |
(402) 240-4000
(Registrants Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. | Entry into a Material Definitive Agreement. |
On March 23, 2015, ConAgra Foods, Inc. (the Company) entered into Amendment No. 3 to Revolving Credit Agreement (the Amendment) with JPMorgan Chase Bank, N.A., as administrative agent and a lender, and the other financial institutions party thereto (collectively, the Revolving Lenders), amending that certain Revolving Credit Agreement, dated as of September 14, 2011, as amended, among the Company, the Agent and the Revolving Lenders (the Revolving Credit Agreement). The Amendment amends the Revolving Credit Agreement to exclude certain non-cash goodwill and other intangible asset impairments from the calculation of the fixed charge coverage ratio.
A copy of the Amendment is filed herewith as Exhibit 10.1. The foregoing description of the Amendment is qualified in its entirety by reference to the full text of the Amendment, which is incorporated herein by reference.
Item 2.02. Results of Operations and Financial Condition.
On March 26, 2015, ConAgra Foods, Inc. (the Company) issued a press release and posted a question and answer document (Q&A) on its website containing information on the Companys third quarter fiscal 2015 financial results. The press release and Q&A are furnished with this Form 8-K as Exhibits 99.1 and 99.2, respectively.
The press release and Q&A include the non-GAAP financial measures of diluted earnings per share from continuing operations adjusted for items impacting comparability, adjusted operating profit for each of the Consumer Foods, Commercial Foods and Private Brands segments, adjusted unallocated corporate expense, effective tax rate excluding items impacting comparability and net debt. Management considers GAAP financial measures as well as such non-GAAP financial information in its evaluation of the Companys financial statements and believes these non-GAAP measures provide useful supplemental information to assess the Companys operating performance and financial position. To the extent required, these measures are reconciled in the press release and Q&A to the most directly comparable measures as reported in accordance with GAAP, and should be viewed in addition to, and not in lieu of, the Companys diluted earnings per share, operating performance and financial measures as calculated in accordance with GAAP. The inability to predict the amount and timing of future items makes a detailed reconciliation of projections of diluted EPS and effective tax rate adjusted for items impacting comparability, impracticable.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit 10.1 | Amendment No. 3 to Revolving Credit Agreement dated as of September 14, 2011, among the Company, JPMorgan Chase Bank, N.A., as administrative agent and a lender, and the other financial institutions party thereto | |
Exhibit 99.1 | Press Release issued March 26, 2015 | |
Exhibit 99.2 | Questions and Answers |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CONAGRA FOODS, INC. | ||||||||||
Date: March 26, 2015 | By: | /s/ Lyneth Rhoten | ||||||||
Name: | Lyneth Rhoten | |||||||||
Title: | Vice President, Securities Counsel and Assistant Corporate Secretary |
Exhibit Index
Exhibit 10.1 | Amendment No. 3 to Revolving Credit Agreement dated as of September 14, 2011, among the Company, JPMorgan Chase Bank, N.A., as administrative agent and a lender, and the other financial institutions party thereto | |
Exhibit 99.1 | Press Release issued March 26, 2015 | |
Exhibit 99.2 | Questions and Answers |
Exhibit 10.1
EXECUTION COPY
AMENDMENT NO. 3
Dated as of March 23, 2015
to
REVOLVING CREDIT AGREEMENT
Dated as of September 14, 2011
THIS AMENDMENT NO. 3 (Amendment) is made as of March 23, 2015 (the Amendment Effective Date) by and among ConAgra Foods, Inc., as Company (the Company), the Banks listed on the signature pages hereof and party hereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (the Administrative Agent), under that certain Revolving Credit Agreement, dated as of September 14, 2011, by and among the Company, the financial institutions parties thereto as Banks (the Banks) and the Administrative Agent (as amended, supplemented or otherwise modified from time to time, the Credit Agreement). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Credit Agreement.
WHEREAS, the Company has requested that the Banks and the Administrative Agent agree to make certain modifications to the Credit Agreement; and
WHEREAS, the Company, the Banks and the Administrative Agent have so agreed on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company, the Banks party hereto and the Administrative Agent hereby agree as follows.
1. Amendment to the Credit Agreement. Effective as of the Amendment Effective Date, but subject to the satisfaction of the condition precedent set forth in Section 2 below, Section 6.3 of the Credit Agreement is hereby amended and restated in its entirety as follows:
6.3 Fixed Charge Coverage. The Company and its Subsidiaries will maintain, on a consolidated basis, a ratio of (i) Profit Before Taxes and Extraordinary Items plus Fixed Charges plus amortization of intangible assets minus equity in earnings of Affiliates to (ii) Fixed Charges greater than 1.75 to 1.0 on a four-quarter rolling basis calculated at each quarter end; provided, however, that non-cash impairment charges for the Companys fourth fiscal quarter of 2014, the Companys second fiscal quarter of 2015 and the Companys third fiscal quarter of 2015 shall be excluded from the Companys computation of its compliance
herewith for such fiscal quarters. With respect to the Companys third fiscal quarter of 2015, an Authorized Officer of the Company shall deliver to the Administrative Agent a written certification as to the amount of such excluded non-cash impairment charges for such quarter, including reasonable detail as to the nature of such charges. Such written certification shall be delivered together with the financials for such quarter as required under Section 5.1.1 hereof.
2. Conditions of Effectiveness. The effectiveness of this Amendment is subject only to the conditions precedent that (a) the Administrative Agent shall have received counterparts of this Amendment duly executed by the Company, the Banks required to execute and deliver this Amendment in order to give effect hereto, and the Administrative Agent, (b) the Administrative Agent shall have received from an Authorized Officer of the Company a written certification as to the amounts of the non-cash impairment charges excluded pursuant to Section 1 of this Amendment for the Companys fourth fiscal quarter of 2014 and the Companys second fiscal quarter of 2015, including reasonable detail as to the nature of such charges, and (c) the Administrative Agent, on behalf of each Bank that executes and delivers to the Administrative Agent its signature page hereto by 3:00 p.m. New York City time on Friday March 20, 2015 (with the Administrative Agent determining whether any page has been delivered by such cut-off time), shall have received from the Company an amendment fee in immediately available funds equal to 0.05% multiplied by such approving Banks Commitment in effect as of the Amendment Effective Date.
3. Representations and Warranties of the Company. The Company hereby represents and warrants as follows:
(a) This Amendment and the Credit Agreement, as amended hereby, constitute legal, valid and binding obligations of the Company and are enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
(b) As of the date hereof and immediately after giving effect to the terms of this Amendment, (i) no Event of Default or Potential Default shall have occurred and be continuing and (ii) the representations and warranties of the Company set forth in the Credit Agreement, as amended hereby, are true and correct in all material respects as of the date hereof; provided, that to the extent such representations and warranties are expressly stated to be made as of an earlier date, such representations and warranties shall be true and correct in all material respects as of such earlier date.
4. Reference to and Effect on the Credit Agreement.
(a) Upon the effectiveness of this Amendment, (a) this Amendment shall be a Loan Document and (b) on and after the date hereof, each reference in the Credit Agreement to this Agreement, hereunder, hereof, herein or words of like import shall mean and be a reference to the Credit Agreement, as amended hereby.
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(b) Except as specifically amended above, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or the Banks, nor constitute a waiver of any provision of the Credit Agreement.
5. Costs and Expenses. The Company shall pay on demand all reasonable invoiced costs and out-of-pocket expenses paid or incurred by the Administrative Agent (including the reasonable and invoiced fees, costs and expenses of external counsel to the Administrative Agent) incurred in connection with the preparation, execution and delivery of this Amendment.
6. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
7. Execution. This Amendment may be executed in any number of counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or other electronic imaging shall be effective as delivery of a manually executed counterpart of this Amendment.
8. Headings. Section headings used herein are for convenience of reference only, are not part of this Amendment and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment.
[Signature Pages Follow]
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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.
CONAGRA FOODS, INC., as the Company | ||||
By | /s/ Scott E. Messel | |||
Name: | Scott E. Messel | |||
Title: | Senior Vice President, Treasurer and Assistant Corporate Secretary |
Signature Page to
ConAgra 2011 Revolving Credit Agreement
Amendment No. 3
JPMORGAN CHASE BANK, N.A., | ||||
as Administrative Agent, an Issuing Bank and as a Bank | ||||
By: | /s/ Tony Yung | |||
Name: | Tony Yung | |||
Title: | Executive Director |
Signature Page to
ConAgra 2011 Revolving Credit Agreement
Amendment No. 3
Bank of America, N.A. | ||||
By: | /s/ J. Casey Cosgrove | |||
Name: | J. Casey Cosgrove | |||
Title: | Director |
Signature Page to
ConAgra 2011 Revolving Credit Agreement
Amendment No. 3
BNP Paribas | ||||
By: | /s/ Mike Shryock | |||
Name: | Mike Shryock | |||
Title: | Managing Director | |||
By: | /s/ Emma Petersen | |||
Name: | Emma Petersen | |||
Title: | Vice President |
Signature Page to
ConAgra 2011 Revolving Credit Agreement
Amendment No. 3
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. | ||||
By: | /s/ Harumi Kambara | |||
Name: | Harumi Kambara | |||
Title: | Authorized Signatory |
Signature Page to
ConAgra 2011 Revolving Credit Agreement
Amendment No. 3
THE ROYAL BANK OF SCOTLAND plc | ||||
By: | /s/ Michael Fabiano | |||
Name: | Michael Fabiano | |||
Title: | Director |
Signature Page to
ConAgra 2011 Revolving Credit Agreement
Amendment No. 3
WELLS FARGO BANK, N.A. | ||||
By: | /s/ Greg Campbell | |||
Name: | Greg Campbell | |||
Title: | Director |
Signature Page to
ConAgra 2011 Revolving Credit Agreement
Amendment No. 3
Barclays Bank PLC | ||||
By: | /s/ Ronnie Glenn | |||
Name: | Ronnie Glenn | |||
Title: | Vice President |
Signature Page to
ConAgra 2011 Revolving Credit Agreement
Amendment No. 3
Mizuho Bank (USA) | ||||
By: | /s/ David Lim | |||
Name: | David Lim | |||
Title: | Senior Vice President |
Signature Page to
ConAgra 2011 Revolving Credit Agreement
Amendment No. 3
THE BANK OF NOVA SCOTIA | ||||
By: | /s/ Paula J. Czach | |||
Name: | Paula J. Czach | |||
Title: | Managing Director |
Signature Page to
ConAgra 2011 Revolving Credit Agreement
Amendment No. 3
U.S. Bank National Association | ||||
By: | /s/ Karen Nelsen | |||
Name: | Karen Nelsen | |||
Title: | Vice President |
Signature Page to
ConAgra 2011 Revolving Credit Agreement
Amendment No. 3
CoBank, ACB | ||||
By: | /s/ Kyle Weaver | |||
Name: | Kyle Weaver | |||
Title: | Vice President |
Signature Page to
ConAgra 2011 Revolving Credit Agreement
Amendment No. 3
State Street Bank and Trust Company | ||||
By: | /s/ Deirdre M. Holland | |||
Name: | Deirdre M. Holland | |||
Title: | Managing Director |
Signature Page to
ConAgra 2011 Revolving Credit Agreement
Amendment No. 3
Exhibit 99.1
News Release |
For more information, contact: Teresa Paulsen MEDIA Vice President, Communication & External Relations ConAgra Foods, Inc. tel: 402-240-5210
Chris Klinefelter ANALYSTS Vice President, Investor Relations ConAgra Foods, Inc. tel: 402-240-4154 www.conagrafoods.com |
FOR IMMEDIATE RELEASE
CONAGRA FOODS COMPARABLE THIRD-QUARTER EPS ABOVE
EXPECTATIONS; FISCAL 2015 EPS GUIDANCE INCREASED;
FISCAL 2015 DEBT REDUCTION GOAL REAFFIRMED;
IMPAIRMENT CHARGE FOR PRIVATE BRANDS
Fiscal 2015 Third-quarter Highlights (% cited vs. year-ago period amounts, where applicable):
| Diluted EPS from continuing operations posted a loss of $(2.23) per share as reported, due to significant non-cash impairment charges, vs. $0.52 a year ago. After adjusting for items impacting comparability, diluted EPS of $0.59 this quarter was ahead of expectations and below year-ago comparable diluted EPS of $0.62. |
| Consumer Foods posted flat volume, and comparable segment operating profit increased. |
| Commercial Foods sales and comparable operating profit grew as the segment posted good domestic results for Lamb Weston potato operations and good overall efficiencies. |
| Private Brands comparable profits were substantially below year-ago amounts due to a continued competitive bidding environment and execution shortfalls. Private Brands comparable profits are expected to improve in fiscal 2016 and beyond due to execution-related initiatives being implemented. |
| The company recognized pre-tax noncash impairment charges of approximately $1.3 billion, writing down Private Brands goodwill and other intangible assets. This amount is identified as an item impacting comparability. |
| Due to the fiscal third quarter EPS performance, the company has raised fiscal 2015 diluted EPS expectations to $2.15-$2.19, adjusted for items impacting comparability. |
| The company continues to expect to repay approximately $1 billion of debt this fiscal year. The company has repaid more than $600 million of debt so far this fiscal year, approximately $500 million of which reflects the utilization of proceeds related to the Ardent Mills transaction. Other capital allocation goals are unchanged. |
| As previously announced, Sean Connolly began his role as CEO-Elect on March 3, 2015 and becomes CEO on April 6, 2015. |
OMAHA, Neb., March 26, 2015 ConAgra Foods, Inc., (NYSE: CAG) one of North Americas leading food companies, today reported results for the fiscal 2015 third quarter ended Feb. 22, 2015.
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Diluted loss per share from continuing operations was $(2.23) for the fiscal third quarter 2015, due to a significant impairment charge, vs. diluted EPS of $0.52 as reported for the fiscal 2014 third quarter. After adjusting for items impacting comparability, comparable diluted EPS was $0.59 this quarter and $0.62 in the year-ago period. Items impacting comparability are summarized toward the end of this release and reconciled for Regulation G purposes starting on page 11.
Gary Rodkin, ConAgra Foods chief executive officer, said, We are pleased with the performance of our Consumer Foods segment and our domestic Commercial Foods business, as well as the robust efficiencies we are generating across the company. Our Private Brands segment, however, is significantly below expectations; we are in the midst of implementing initiatives to improve execution to drive better performance starting in fiscal 2016.
Given my upcoming retirement from ConAgra Foods, I would like to thank all of our shareholders for their interest, encouragement, and support over the last nine years as we have significantly transformed the company. Over these years, our team made significant strides culturally, organizationally, operationally, and in the marketplace, generating consistently strong cash flow and putting us in a good position to capitalize on the next set of opportunities. I am very excited that Sean Connolly will be the companys next CEO, and I look forward to watching the companys progress under his leadership.
Consumer Foods Segment
Branded food items sold worldwide in retail channels.
The Consumer Foods segment posted sales of approximately $1.8 billion and operating profit of $274 million, as reported. Sales declined 2% as reported, with flat volume, a 1% decline in price/mix, and 1% negative impact from foreign exchange.
| Brands posting sales growth for the quarter include ACT II, Chef Boyardee, Hebrew National, PAM, PF Changs, Rosarita, and Slim Jim. The company notes good performance in alternative channels given the focus on those opportunities this fiscal year. |
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| The packaging, assortment, product, and merchandising initiatives designed to improve the performance of Chef Boyardee, Healthy Choice, and Orville Redenbachers are underway and expected to drive continuously improving performance. |
| Other brand details are provided in the written Q&A document accompanying this release. |
Operating profit of $274 million was 3% above year-ago amounts as reported. After adjusting for $8 million of net expense in the current quarter and $4 million of net expense in the year-ago period from items impacting comparability, current quarter operating profit of $282 million increased 5% over comparable year-ago amounts. Advertising expense declined approximately $20 million, reflecting a continually increasing focus on efficiency and return on investment, as well as a timing shift in which some spend has been moved from the fiscal third quarter into the fiscal fourth quarter. Good cost savings and efficiencies more than offset inflation.
Current quarter comparable operating profit also includes:
| $21 million of negative impact from certain index hedge losses, discussed in the Hedging Activities section of this document. |
| $8 million of negative impact from changes in foreign exchange rates. |
Commercial Foods Segment
Specialty potato, seasonings, blends, flavors, and bakery products, as well as consumer branded and private branded packaged food items, sold to foodservice and commercial channels worldwide.
Sales for the Commercial Foods segment were $1 billion, up 1% vs. year-ago period amounts, and segment operating profit was $145 million, 18% above year-ago period amounts, as reported. After adjusting for items impacting comparability in the current quarter and year-ago period, current quarter operating profit increased 4%.
Sales and operating profits for Lamb Weston potato products grew modestly, largely reflecting good domestic performance, a better quality raw potato crop, and good operating efficiencies; collectively, these more than offset lower international results. International sales and profits were weak, resulting from recent challenges facing quick-serve restaurant customers in key Asian markets and the
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slowdown in shipments from the West Coast port labor dispute. The West Coast port labor dispute was resolved toward the end of the companys fiscal third quarter; the company expects slower than normal shipments throughout the remainder of the fiscal year due to the backlog created by the dispute. Profits for the rest of the Commercial Foods segment grew modestly, largely reflecting good efficiencies. Comparable segment operating profit also includes $2 million of negative impact from certain index hedge losses, discussed in the Hedging Activities section of this document.
Private Brands
Private brand food items sold in domestic markets.
Note: On February 12, 2015 the company lowered the fiscal 2015 outlook for this segment.
Sales for the Private Brands segment were $1 billion in the quarter, down 5% from year-ago period amounts, reflecting 7% lower volume. Overall volume declines for most major product lines - pasta, cereal, snacks, condiments, and in-store bakery - more than offset some growth in nutrition bars.
The segment posted an operating loss of $(1.3 billion), as reported, due to an impairment of goodwill and other intangible assets. The impairment follows further deterioration in business results during the fiscal third quarter; as such, the profit outlook for this segment has been significantly reduced, and it will take longer than previously expected to manage through the challenges for this business. After adjusting for $1.3 billion of net expense from items impacting comparability (most of which are significant impairment charges) in the current quarter, and $21 million of items impacting comparability in year-ago period amounts, comparable operating profit declined 44%. Execution challenges and higher commodity costs, notably in durum wheat and snack nuts, played a significant role in the comparable profit decrease; continued volume declines across most categories, largely reflecting an intense bidding environment, also weighed on profitability. Pricing initiatives underway should help pass on the higher commodity costs over time. As previously discussed, the company is implementing changes focusing on four main areas designed to improve overall execution and customer relationships:
| Responsiveness to customer requests for product modifications, notably graphics changes, |
| The speed of commercializing new items, |
| On-time deliveries, fill-rates, and other core measurements of customer service, and |
| The alignment between core functions driving margins, specifically sales and supply chain, to drive better cost management when input costs fluctuate. |
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These initiatives have begun and will continue over the next several quarters, and are expected to favorably impact business results starting in fiscal 2016. Comparable segment profit also includes $6 million of negative impact from certain index hedge losses, discussed in the Hedging Activities section of this document.
Hedging Activities
Hedge gains and losses are generally 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 $6 million of favorable impact in the current quarter and $52 million of favorable impact in the year-ago period. The company identifies these amounts as items impacting comparability within the discussion of unallocated Corporate results.
Certain hedge amounts recognized directly within segments this quarter:
As previously disclosed in the companys fiscal second-quarter earnings announcement, as part of its ongoing monitoring and review, the company had determined that changes in correlations among commodities and certain of its index hedges, exacerbated by volatility, required the company to change its method of recognizing certain mark-to-market amounts. The resulting method involves recognizing the prospective changes in the fair value of such index hedges directly into segment results as part of the mark-to-market process, which contrasts with the companys historical and ongoing practice of temporarily classifying those amounts within unallocated Corporate results (discussed above). As such, the company has recognized approximately $28 million of expense directly to its operating segments this quarter; without this change in methodology, most of that expense would have been temporarily classified within unallocated Corporate expense and recognized within segment results over the next few quarters. The $28 million of expense is not identified as an item impacting comparability. The company has effectively exited the hedge positions that necessitated this methodology change and does not expect to have to recognize hedges in this manner in the foreseeable future.
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For its other hedges, the company will continue with its approach of temporarily classifying hedging results within unallocated Corporate expense prior to being recognized within segment results.
Other Items
| Unallocated Corporate amounts were $50 million of expense in the current quarter and $45 million of expense in the year-ago period. Current-quarter amounts include $6 million of hedge-related benefit and $5 million of net expense from other items impacting comparability. Year-ago period amounts include $52 million of hedge-related benefit and $68 million of expense related to other items impacting comparability. Excluding these amounts, unallocated Corporate expense was $51 million for the current quarter and $29 million in the year-ago period. The increase largely reflects higher employee benefits and incentive accruals, as well as timing differences (across fiscal quarters) for certain expenses. |
| Equity method investment earnings were $33 million for the current quarter and $11 million in the year-ago period; the year-over-year increase mostly reflects the inclusion of profits for the companys Ardent Mills joint venture (which are not in year-ago amounts). |
| Net interest expense was $80 million in the current quarter and $95 million in the year-ago period; the decrease reflects significant debt repayment. |
Capital Items
| The company continues to expect to repay approximately $1 billion of debt this fiscal year, resulting in a cumulative debt repayment of approximately $2 billion since the acquisition of Ralcorp. The company has repaid more than $600 million of debt so far this fiscal year, approximately $500 million of which reflects the utilization of proceeds related to the Ardent Mills transaction. Other capital allocation goals are unchanged. |
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| Dividends for the quarter totaled $107 million versus $105 million in the year-ago period, reflecting an increase in shares outstanding. |
| The company repurchased approximately 1 million shares of common stock during the quarter for approximately $38 million. |
| For the current quarter, capital expenditures for property, plant and equipment were $116 million, compared with $133 million in the year-ago period. The decrease reflects several significant planned plant expansions and improvements in the year-ago period. Depreciation and amortization expense was approximately $145 million for the fiscal third quarter; this compares with a total of $150 million in the year-ago period. |
Outlook
The company now expects fiscal 2015 diluted EPS, adjusted for items impacting comparability, to be in the range of $2.15-$2.19. The company now expects operating cash flow to approximate $1.55 billion, slightly below the prior forecast of $1.6 billion; the revision reflects higher inventory levels due to certain crop-based inputs and higher raw material costs. The company continues to expect to reduce debt by a total of $1 billion in fiscal 2015, thereby completing its broader debt reduction goals for the fiscal 2013-2015 period.
Major Items Impacting Third-quarter Fiscal 2015 EPS Comparability
Included in the $(2.23) diluted EPS from continuing operations for the third quarter of fiscal 2015 (EPS amounts rounded and after tax). These include references to selling, general, and administrative (SG&A) expense, and cost of goods sold (COGS):
| Approximately $2.81 per diluted share of net expense, or $1,299 million pretax, related to the impairment of goodwill and other intangible assets in the Private Brands segment (SG&A) as well as the impact on diluted share count. |
| Approximately $0.03 per diluted share of net expense, or $22 million pretax, resulting from restructuring and integration costs. $9 million is classified within the Private Brands segment |
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($1 million in COGS, $8 million in SG&A), $8 million is classified within the Consumer Foods segment (all SG&A), and $5 million of this is classified as unallocated Corporate expense (SG&A). |
| Approximately $0.01 per diluted share of net benefit, or $6 million pretax, related to the mark-to-market impact of derivatives used to hedge input costs, temporarily classified in unallocated Corporate expense. Hedge gains and losses are generally 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. |
| Approximately $0.01 per diluted share of net benefit from favorable adjustments to prior-year tax credits. |
Included in the $0.52 diluted EPS from continuing operations for the third quarter of fiscal 2014 (EPS amounts rounded and after tax):
| Approximately $0.08 per diluted share of net benefit, or $52 million pretax, related to the mark-to-market impact of derivatives used to hedge input costs, temporarily classified in unallocated Corporate expense. 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. |
| Approximately $0.08 per diluted share of net expense, or $55 million pretax, related to the settlement of interest rate derivative hedges that were initiated in prior years in anticipation of refinancing debt that matured in the fourth quarter of fiscal 2014. Based on an assessment of the companys debt repayment alternatives, the company decided to forego refinancing that debt, and therefore recognized the derivative loss in earnings immediately. |
| Approximately $0.06 per diluted share of net expense, or $38 million pretax, resulting from restructuring and integration (including acquisition-related restructuring). $21 million of this is classified within the results of the Private Brands segment (mostly SG&A), $13 million is classified as unallocated Corporate expense (SG&A), and $4 million is classified within the Consumer Foods segment (mostly SG&A). |
| Approximately $0.04 per diluted share of net benefit due to resolving U.S. and foreign tax matters related to transactions occurring in prior years. |
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| Approximately $0.02 per diluted share of net expense, or $17 million pretax, resulting from impairment of assets in the Commercial Foods segment (SG&A). |
| Note: in the third quarter of fiscal 2014, comparable EPS included approximately $0.05 of net contribution from items previously classified within continuing operations (primarily profits from flour milling), which have been reclassified to discontinued operations, as well as rounding. |
Discussion of Results
ConAgra Foods will host a conference call at 9:30 a.m. EDT today to discuss the results. Following the companys 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 1-877-397-0286 and 1-719-325-4824, 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 today. 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 9593616. A rebroadcast also will be available on the companys website.
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 Americas largest packaged food companies with branded and private branded food found in 99 percent of Americas 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®, Hunts®, Marie Callenders®, Orville Redenbachers®, 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
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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 managements 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; ConAgra Foods ability to realize the synergies and benefits contemplated by the Ardent Mills joint venture; risks and uncertainties associated with intangible assets, including any future goodwill or intangible assets impairment charges; the availability and prices of raw materials, including any negative effects caused by inflation or 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 litigation related to the lead paint and pigment matters; future economic circumstances; industry conditions; the effectiveness of ConAgra Foods hedging activities, including volatility in commodities that could negatively impact ConAgra Foods derivative positions and, in turn, ConAgra Foods earnings; ConAgra Foods ability to execute its operating and restructuring plans and achieve operating efficiencies; the success of ConAgra Foods cost-saving initiatives, innovation, and marketing investments; the competitive environment and related market conditions; 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; the longshoremen labor dispute on the U.S. West Coast and its impact on ConAgra Foods exports; 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.
-more-
CONAGRA FOODS
page 11
Regulation G Disclosure
Below is a reconciliation of Q3 FY15 and Q3 FY14 diluted earnings per share from continuing operations, Consumer Foods segment operating profit, Commercial Foods segment operating profit, and Private Brands segment operating profit, adjusted for items impacting comparability. Amounts may be impacted by rounding.
Q3 FY15 & Q3 FY14 Diluted EPS from Continuing Operations
Q3 FY15 | Q3 FY14 | % change | ||||||||||
Diluted EPS from continuing operations |
$ | (2.23 | ) | $ | 0.52 | N/A | ||||||
Items impacting comparability: |
||||||||||||
Net expense related to impairment of goodwill and other intangible assets, including the impact on diluted share count |
2.81 | | ||||||||||
Net expense related to restructuring, transaction, and integration costs |
0.03 | 0.06 | ||||||||||
Net benefit related to unallocated mark-to-market impact of derivatives |
(0.01 | ) | (0.08 | ) | ||||||||
Net benefit related to unusual tax matters |
(0.01 | ) | (0.04 | ) | ||||||||
Net expense related to settlement of interest rate derivatives |
| 0.08 | ||||||||||
Net expense related to impairment costs in the Commercial Foods segment |
| 0.02 | ||||||||||
Rounding |
| 0.01 | ||||||||||
|
|
|
|
|||||||||
Diluted EPS from continuing operations, adjusted for items impacting comparability |
$ | 0.59 | $ | 0.57 | ||||||||
Net EPS contribution previously within continuing operations and subsequently reclassified to discontinued operations: |
||||||||||||
From milling operations |
| 0.05 | ||||||||||
|
|
|
|
|
|
|||||||
Diluted EPS adjusted for items impacting comparability |
$ | 0.59 | $ | 0.62 | -5 | % | ||||||
|
|
|
|
|
|
|||||||
Consumer Foods Segment Operating Profit Reconciliation | ||||||||||||
(Dollars in millions) | Q3 FY15 | Q3 FY14 | % change | |||||||||
Consumer Foods Segment Operating Profit |
$ | 274 | $ | 265 | 3 | % | ||||||
Restructuring, integration, and transactions costs |
8 | 4 | ||||||||||
|
|
|
|
|
|
|||||||
Consumer Foods Segment Adjusted Operating Profit |
$ | 282 | $ | 269 | 5 | % | ||||||
|
|
|
|
|
|
|||||||
Commercial Foods Segment Operating Profit Reconciliation | ||||||||||||
(Dollars in millions) | Q3 FY15 | Q3 FY14 | % change | |||||||||
Commercial Foods Segment Operating Profit |
$ | 145 | $ | 123 | 18 | % | ||||||
Net expense related to impairment costs |
| 17 | ||||||||||
|
|
|
|
|
|
|||||||
Commercial Foods Segment Adjusted Operating Profit |
$ | 145 | $ | 139 | 4 | % | ||||||
|
|
|
|
|
|
|||||||
Private Brands Segment Operating Profit Reconciliation | ||||||||||||
(Dollars in millions) | Q3 FY15 | Q3 FY14 | % change | |||||||||
Private Brands Segment Operating Profit (Loss) |
$ | (1,272 | ) | $ | 45 | N/A | ||||||
Restructuring, integration, and transactions costs |
9 | 21 | ||||||||||
Impairment of goodwill and other intangible assets |
1,299 | | ||||||||||
|
|
|
|
|
|
|||||||
Private Brands Segment Adjusted Operating Profit |
$ | 37 | $ | 66 | -44 | % | ||||||
|
|
|
|
|
|
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CONAGRA FOODS
page 12
ConAgra Foods, Inc.
Segment Operating Results
(in millions)
(unaudited)
THIRD QUARTER | ||||||||||||
Thirteen weeks ended | Thirteen weeks ended | |||||||||||
February 22, 2015 | February 23, 2014 | Percent Change | ||||||||||
SALES |
||||||||||||
Consumer Foods |
$ | 1,835.2 | $ | 1,870.3 | (1.9 | )% | ||||||
Commercial Foods |
1,028.3 | 1,013.7 | 1.4 | % | ||||||||
Private Brands |
1,013.2 | 1,063.3 | (4.7 | )% | ||||||||
|
|
|
|
|||||||||
Total |
3,876.7 | 3,947.3 | (1.8 | )% | ||||||||
|
|
|
|
|||||||||
OPERATING PROFIT (LOSS) |
||||||||||||
Consumer Foods |
$ | 274.2 | $ | 265.1 | 3.4 | % | ||||||
Commercial Foods |
145.2 | 122.7 | 18.3 | % | ||||||||
Private Brands |
(1,271.6 | ) | 44.7 | N/A | ||||||||
|
|
|
|
|||||||||
Total operating profit (loss) for segments |
(852.2 | ) | 432.5 | N/A | ||||||||
Reconciliation of total operating profit (loss) to income from continuing operations before income taxes and equity method investment earnings |
||||||||||||
Items excluded from segment operating profit (loss): |
||||||||||||
General corporate expense |
(50.1 | ) | (44.3 | ) | 13.1 | % | ||||||
Interest expense, net |
(80.3 | ) | (95.0 | ) | (15.5 | )% | ||||||
|
|
|
|
|||||||||
Income (loss) from continuing operations before income taxes and equity method investment earnings |
$ | (982.6 | ) | $ | 293.2 | N/A | ||||||
|
|
|
|
Segment operating profit (loss) 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.
-more-
CONAGRA FOODS
page 13
ConAgra Foods, Inc.
Segment Operating Results
(in millions)
(unaudited)
THIRD QUARTER | ||||||||||||
Thirty-nine weeks ended |
Thirty-nine weeks ended |
|||||||||||
February 22, 2015 | February 23, 2014 | Percent Change | ||||||||||
SALES |
||||||||||||
Consumer Foods |
$ | 5,444.7 | $ | 5,536.0 | (1.6 | )% | ||||||
Commercial Foods |
3,237.4 | 3,182.4 | 1.7 | % | ||||||||
Private Brands |
3,045.6 | 3,165.8 | (3.8 | )% | ||||||||
|
|
|
|
|||||||||
Total |
11,727.7 | 11,884.2 | (1.3 | )% | ||||||||
|
|
|
|
|||||||||
OPERATING PROFIT (LOSS) |
||||||||||||
Consumer Foods |
$ | 765.9 | $ | 716.0 | 7.0 | % | ||||||
Commercial Foods |
414.4 | 387.5 | 6.9 | % | ||||||||
Private Brands |
(1,432.0 | ) | 200.0 | N/A | ||||||||
|
|
|
|
|||||||||
Total operating profit (loss) for segments |
(251.7 | ) | 1,303.5 | N/A | ||||||||
Reconciliation of total operating profit (loss) to income from continuing operations before income taxes and equity method investment earnings |
||||||||||||
Items excluded from segment operating profit (loss): |
||||||||||||
General corporate expense |
(282.9 | ) | (254.6 | ) | 11.1 | % | ||||||
Interest expense, net |
(243.3 | ) | (286.3 | ) | (15.0 | )% | ||||||
|
|
|
|
|||||||||
Income (loss) from continuing operations before income taxes and equity method investment earnings |
$ | (777.9 | ) | $ | 762.6 | N/A | ||||||
|
|
|
|
Segment operating profit (loss) 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.
-more-
CONAGRA FOODS
page 14
ConAgra Foods, Inc.
Consolidated Statements of Earnings
(in millions)
(unaudited)
THIRD QUARTER | ||||||||||||
Thirteen weeks ended | Thirteen weeks ended | |||||||||||
February 22, 2015 | February 23, 2014 | Percent Change | ||||||||||
Net sales |
$ | 3,876.7 | $ | 3,947.3 | (1.8 | )% | ||||||
Costs and expenses: |
||||||||||||
Cost of goods sold |
3,052.9 | 3,024.2 | 0.9 | % | ||||||||
Selling, general and administrative expenses |
1,726.1 | 534.9 | 222.7 | % | ||||||||
Interest expense, net |
80.3 | 95.0 | (15.5 | )% | ||||||||
|
|
|
|
|||||||||
Income (loss) from continuing operations before income taxes and equity method investment earnings |
(982.6 | ) | 293.2 | N/A | ||||||||
Income tax expense |
2.5 | 78.2 | (96.8 | )% | ||||||||
Equity method investment earnings |
33.0 | 11.1 | 197.3 | % | ||||||||
|
|
|
|
|||||||||
Income (loss) from continuing operations |
(952.1 | ) | 226.1 | N/A | ||||||||
Income (loss) from discontinued operations, net of tax |
(0.6 | ) | 10.8 | N/A | ||||||||
|
|
|
|
|||||||||
Net income (loss) |
$ | (952.7 | ) | $ | 236.9 | N/A | ||||||
|
|
|
|
|||||||||
Less: Net income attributable to noncontrolling interests |
1.4 | 2.6 | (46.2 | )% | ||||||||
|
|
|
|
|||||||||
Net income (loss) attributable to ConAgra Foods, Inc. |
$ | (954.1 | ) | $ | 234.3 | N/A | ||||||
|
|
|
|
|||||||||
Earnings (loss) per share - basic |
||||||||||||
Income (loss) from continuing operations |
$ | (2.23 | ) | $ | 0.53 | N/A | ||||||
Income from discontinued operations |
| 0.03 | (100.0 | )% | ||||||||
|
|
|
|
|||||||||
Net income (loss) attributable to ConAgra Foods, Inc. |
$ | (2.23 | ) | $ | 0.56 | N/A | ||||||
|
|
|
|
|||||||||
Weighted average shares outstanding |
427.1 | 421.2 | 1.4 | % | ||||||||
|
|
|
|
|||||||||
Earnings (loss) per share - diluted |
||||||||||||
Income (loss) from continuing operations |
$ | (2.23 | ) | $ | 0.52 | N/A | ||||||
Income from discontinued operations |
| 0.03 | (100.0 | )% | ||||||||
|
|
|
|
|||||||||
Net income (loss) attributable to ConAgra Foods, Inc. |
$ | (2.23 | ) | $ | 0.55 | N/A | ||||||
|
|
|
|
|||||||||
Weighted average share and share equivalents outstanding |
427.1 | 427.3 | (0.1 | )% | ||||||||
|
|
|
|
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CONAGRA FOODS
page 15
ConAgra Foods, Inc.
Consolidated Statements of Earnings
(in millions)
(unaudited)
THIRD QUARTER | ||||||||||||
Thirty-nine weeks ended |
Thirty-nine weeks ended |
|||||||||||
February 22, 2015 | February 23, 2014 | Percent Change | ||||||||||
Net sales |
$ | 11,727.7 | $ | 11,884.2 | (1.3 | )% | ||||||
Costs and expenses: |
||||||||||||
Cost of goods sold |
9,311.6 | 9,209.2 | 1.1 | % | ||||||||
Selling, general and administrative expenses |
2,950.7 | 1,626.1 | 81.5 | % | ||||||||
Interest expense, net |
243.3 | 286.3 | (15.0 | )% | ||||||||
|
|
|
|
|||||||||
Income (loss) from continuing operations before income taxes and equity method investment earnings |
(777.9 | ) | 762.6 | N/A | ||||||||
Income tax expense |
129.0 | 213.1 | (39.5 | )% | ||||||||
Equity method investment earnings |
92.6 | 20.4 | 353.9 | % | ||||||||
|
|
|
|
|||||||||
Income (loss) from continuing operations |
(814.3 | ) | 569.9 | N/A | ||||||||
Income from discontinued operations, net of tax |
362.0 | 66.6 | 443.5 | % | ||||||||
|
|
|
|
|||||||||
Net income (loss) |
$ | (452.3 | ) | $ | 636.5 | N/A | ||||||
|
|
|
|
|||||||||
Less: Net income attributable to noncontrolling interests |
9.5 | 9.2 | 3.3 | % | ||||||||
|
|
|
|
|||||||||
Net income (loss) attributable to ConAgra Foods, Inc. |
$ | (461.8 | ) | $ | 627.3 | N/A | ||||||
|
|
|
|
|||||||||
Earnings (loss) per share - basic |
||||||||||||
Income (loss) from continuing operations |
$ | (1.94 | ) | $ | 1.33 | N/A | ||||||
Income from discontinued operations |
0.85 | 0.16 | 431.3 | % | ||||||||
|
|
|
|
|||||||||
Net income (loss) attributable to ConAgra Foods, Inc. |
$ | (1.09 | ) | $ | 1.49 | N/A | ||||||
|
|
|
|
|||||||||
Weighted average shares outstanding |
425.5 | 421.1 | 1.1 | % | ||||||||
|
|
|
|
|||||||||
Earnings (loss) per share - diluted |
||||||||||||
Income (loss) from continuing operations |
$ | (1.94 | ) | $ | 1.31 | N/A | ||||||
Income from discontinued operations |
0.85 | 0.15 | 466.7 | % | ||||||||
|
|
|
|
|||||||||
Net income (loss) attributable to ConAgra Foods, Inc. |
$ | (1.09 | ) | $ | 1.46 | N/A | ||||||
|
|
|
|
|||||||||
Weighted average share and share equivalents outstanding |
425.5 | 427.4 | (0.4 | )% | ||||||||
|
|
|
|
-more-
CONAGRA FOODS
page 16
ConAgra Foods, Inc.
Consolidated Balance Sheet
(in millions)
(unaudited)
February 22, 2015 | May 25, 2014 | |||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 137.3 | $ | 141.3 | ||||
Receivables, less allowance for doubtful accounts of $5.0 and $4.0 |
1,050.7 | 1,058.4 | ||||||
Inventories |
2,379.8 | 2,077.0 | ||||||
Prepaid expenses and other current assets |
355.5 | 322.4 | ||||||
Current assets held for sale |
| 631.7 | ||||||
|
|
|
|
|||||
Total current assets |
3,923.3 | 4,230.8 | ||||||
Property, plant and equipment, net |
3,579.9 | 3,636.0 | ||||||
Goodwill |
6,305.0 | 7,828.5 | ||||||
Brands, trademarks and other intangibles, net |
3,062.8 | 3,204.9 | ||||||
Other assets |
997.9 | 267.3 | ||||||
Noncurrent assets held for sale |
| 198.9 | ||||||
|
|
|
|
|||||
$ | 17,868.9 | $ | 19,366.4 | |||||
|
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities |
||||||||
Notes payable |
$ | 442.0 | $ | 141.8 | ||||
Current installments of long-term debt |
1,008.9 | 84.1 | ||||||
Accounts payable |
1,334.4 | 1,349.3 | ||||||
Accrued payroll |
184.7 | 154.3 | ||||||
Other accrued liabilities |
746.9 | 748.1 | ||||||
Current liabilities held for sale |
| 164.8 | ||||||
|
|
|
|
|||||
Total current liabilities |
3,716.9 | 2,642.4 | ||||||
Senior long-term debt, excluding current installments |
6,723.4 | 8,571.5 | ||||||
Subordinated debt |
195.9 | 195.9 | ||||||
Other noncurrent liabilities |
2,694.1 | 2,599.4 | ||||||
Noncurrent liabilities held for sale |
| 2.0 | ||||||
Total stockholders equity |
4,538.6 | 5,355.2 | ||||||
|
|
|
|
|||||
$ | 17,868.9 | $ | 19,366.4 | |||||
|
|
|
|
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CONAGRA FOODS
page 17
ConAgra Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
Thirty-nine weeks ended | ||||||||
February 22, 2015 |
February 23, 2014 |
|||||||
Cash flows from operating activities: |
||||||||
Net income (loss) |
$ | (452.3 | ) | $ | 636.5 | |||
Income from discontinued operations |
362.0 | 66.6 | ||||||
|
|
|
|
|||||
Income (loss) from continuing operations |
(814.3 | ) | 569.9 | |||||
Adjustments to reconcile income from continuing operations to net cash flows from operating activities: |
||||||||
Depreciation and amortization |
442.9 | 427.5 | ||||||
Asset impairment charges |
1,555.7 | 34.5 | ||||||
Earnings of affiliates in excess of distributions |
(56.7 | ) | (2.7 | ) | ||||
Share-based payments expense |
46.4 | 45.5 | ||||||
Contributions to pension plans |
(10.0 | ) | (13.7 | ) | ||||
Pension expense |
(10.8 | ) | (6.7 | ) | ||||
Terminated forward starting swap payable |
| 54.9 | ||||||
Other items |
27.8 | 0.6 | ||||||
Change in operating assets and liabilities excluding effects of business acquisitions and dispositions: |
||||||||
Accounts receivable |
14.2 | (8.0 | ) | |||||
Inventory |
(299.2 | ) | (168.2 | ) | ||||
Deferred income taxes and income taxes payable, net |
(110.7 | ) | 45.8 | |||||
Prepaid expenses and other current assets |
(48.8 | ) | (27.5 | ) | ||||
Accounts payable |
(7.7 | ) | 48.4 | |||||
Accrued payroll |
37.0 | (114.0 | ) | |||||
Other accrued liabilities |
(32.4 | ) | (0.1 | ) | ||||
|
|
|
|
|||||
Net cash flows from operating activities continuing operations |
733.4 | 886.2 | ||||||
Net cash flows from operating activities discontinued operations |
7.1 | 81.8 | ||||||
|
|
|
|
|||||
Net cash flows from operating activities |
740.5 | 968.0 | ||||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Additions to property, plant and equipment |
(318.4 | ) | (475.2 | ) | ||||
Sale of property, plant and equipment |
19.9 | 15.0 | ||||||
Purchase of business, net of cash acquired |
(74.7 | ) | (39.9 | ) | ||||
Return of investment in equity method investee |
391.4 | | ||||||
|
|
|
|
|||||
Net cash flows from investing activities continuing operations |
18.2 | (500.1 | ) | |||||
Net cash flows from investing activities discontinued operations |
114.0 | 30.6 | ||||||
|
|
|
|
|||||
Net cash flows from investing activities |
132.2 | (469.5 | ) | |||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Net short-term borrowings |
284.1 | (39.3 | ) | |||||
Issuance of long-term debt |
550.0 | | ||||||
Repayment of long-term debt |
(1,492.9 | ) | (71.2 | ) | ||||
Repurchase of ConAgra Foods, Inc. common shares |
(35.1 | ) | (100.0 | ) | ||||
Cash dividends paid |
(318.2 | ) | (315.5 | ) | ||||
Exercise of stock options and issuance of other stock awards |
113.8 | 87.4 | ||||||
Other items |
(12.5 | ) | | |||||
|
|
|
|
|||||
Net cash flows from financing activities: |
(910.8 | ) | (438.6 | ) | ||||
|
|
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents |
(7.7 | ) | (4.6 | ) | ||||
Net change in cash and cash equivalents |
(45.8 | ) | 55.3 | |||||
Discontinued operations cash activity included above: |
||||||||
Add: Cash balance included in assets held for sale at beginning of period |
41.8 | 33.0 | ||||||
Less: Cash balance included in assets held for sale at end of period |
| 33.7 | ||||||
Cash and cash equivalents at beginning of period |
141.3 | 150.9 | ||||||
|
|
|
|
|||||
Cash and cash equivalents at end of period |
$ | 137.3 | $ | 205.5 | ||||
|
|
|
|
# # #
Exhibit 99.2
Q3 FY15 Question & Answer
March 26, 2015
1. | What were some examples of brands in the Consumer Foods segment posting sales growth for the quarter? |
ACT II |
PAM | |
Andy Capps |
PF Changs | |
Chef Boyardee |
Rosarita | |
Crunch n Munch |
Slim Jim | |
Hebrew National |
2. | What were some examples of brands in the Consumer Foods segment posting sales declines for the quarter? |
Banquet |
Healthy Choice |
Marie Callenders |
Ro*Tel |
Wesson | ||||
Bertolli |
Hunts |
Manwich |
Reddi-wip |
Wolf | ||||
Blue Bonnet |
Kid Cuisine |
Orville Redenbachers |
Snack Pack |
|||||
DAVID |
Libbys |
Parkay |
Swiss Miss |
|||||
Egg Beaters |
La Choy |
Peter Pan |
Van Camps |
3. | How much were capital expenditures from continuing operations for the quarter? |
Approximately $116 million (versus approximately $133 million in Q3 FY14), reflecting several significant planned plant expansions and improvements in the year-ago period.
4. | How much was total depreciation and amortization from continuing operations for the quarter? |
Approximately $145 million (versus approximately $150 million in Q3 FY14).
5. | What was the net interest expense for the quarter? |
Approximately $80 million (versus approximately $95 million in Q3 FY14), reflecting significant debt repayment.
1
6. | What was Corporate expense for the quarter? |
Unallocated Corporate amounts were $50 million of expense in the current quarter and $45 million of expense in the year-ago period. Current-quarter amounts include $6 million of hedge-related benefit and $5 million of net expense from other items impacting comparability. Year-ago period amounts include $52 million of hedge-related benefit and $68 million of expense related to other items impacting comparability. Excluding these amounts, unallocated Corporate expense was $51 million for the current quarter and $29 million in the year-ago period. The increase largely reflects higher employee benefits and incentive accruals, as well as timing differences (across fiscal quarters) for certain expenses.
7. | How much did the company pay in dividends during the quarter? |
Approximately $107 million (versus approximately $105 million in Q3 FY14), reflecting an increase in shares outstanding.
8. | What was the weighted average number of diluted shares outstanding for the quarter (rounded)? |
Approximately 427 million shares for the quarter.
9. | Why are the basic and fully diluted weighted average share count numbers the same for the quarter? |
Under GAAP rules, the basic and fully diluted weighted average share count numbers are required to be the same when there is a loss. If the company had not reported a loss for the quarter, the weighted average fully diluted share count would have been approximately 432 million.
10. | Did the company repurchase any shares during the quarter? |
The company repurchased approximately 1 million shares of common stock during the quarter for approximately $38 million.
11. | What is included in the companys net debt at the end of the quarter (rounded, in millions)? |
Q3 FY15 | ||||
Total debt* |
$ | 8,370 | ||
Less: Cash on hand |
$ | 137 | ||
|
|
|||
Net debt |
$ | 8,233 |
* | Total debt = notes payable, short-term debt, long-term debt, and subordinated debt. |
12. | What is the net-debt-to-total-capital ratio at quarter end? |
The net-debt-to-total-capital ratio for the quarter was 64%.
This ratio is defined as net debt divided by the sum of net debt plus shareholders equity. See question No. 11 for the components of net debt.
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13. | What is the projected tax rate for FY15? |
The company expects the tax rate to be in the range of 32-33%, excluding items impacting comparability. The company acknowledges that the quarterly rates may be different from this, given the timing of certain matters, but the overall rate is expected to approximate 32-33%.
14. | What are the projected capital expenditures for FY15? |
Total capital expenditures for fiscal 2015 are projected to be approximately $500 million.
15. | What is the projected depreciation and amortization expense for FY15? |
Total depreciation and amortization for fiscal 2015 is projected to be approximately $560 million.
16. | What is the projected net interest expense for FY15? |
Net interest expense for fiscal 2015 is projected to be approximately $330 million.
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Note on Forward-looking Statements:
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on managements 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; ConAgra Foods ability to realize the synergies and benefits contemplated by the Ardent Mills joint venture; risks and uncertainties associated with intangible assets, including any future goodwill or intangible assets impairment charges; the availability and prices of raw materials, including any negative effects caused by inflation or 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 litigation related to the lead paint and pigment matters; future economic circumstances; industry conditions; the effectiveness of ConAgra Foods hedging activities, including volatility in commodities that could negatively impact ConAgra Foods derivative positions and, in turn, ConAgra Foods earnings; ConAgra Foods ability to execute its operating and restructuring plans and achieve operating efficiencies; the success of ConAgra Foods cost-saving initiatives, innovation, and marketing investments; the competitive environment and related market conditions; 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; the longshoremen labor dispute on the U.S. West Coast and its impact on ConAgra Foods exports; 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 document to reflect future events or circumstances or otherwise.
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