<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended May 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ______________ to _______________
Commission File No. 1-7275
CONAGRA, INC.
---------------------------------------------------
(Exact name of registrant, as specified in charter)
A Delaware Corporation 47-0248710
- ---------------------- ----------
(State of Incorporation) (I.R.S. Employer's
Number)
One ConAgra Drive
Omaha, Nebraska 68102-5001
- --------------- ----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (402) 595-4000
--------------
Securities Registered Pursuant to Section 12 (b) of the Act:
- -----------------------------------------------------------
Name of Exchange on
Title of Each Class Which Registered
- ------------------- ----------------
Common Stock, $5.00 par value New York Stock
Exchange
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
---
At July 31,1998, 488,090,714 common shares were outstanding. The aggregate
market value of the voting common stock of ConAgra, Inc. held by
non-affiliates on July 31, 1998, was approximately $12.6 billion.
Documents incorporated by reference are listed on page 2.
<PAGE>
Documents Incorporated by Reference
1. Portions of the Registrant's Annual Report to Stockholders for the fiscal
year ended May 31, 1998 are incorporated into Parts I, II and IV.
2. Portions of the Registrant's definitive Proxy Statement filed for
Registrant's 1998 Annual Meeting of Stockholders are incorporated into Part
III.
2
<PAGE>
PART I
This 10-K report contains certain forward-looking statements, including such
statements in the documents incorporated herein by reference. The statements
reflect management's current views and estimates of future economic
circumstances, industry conditions, company performance and financial
results. The statements are based on many assumptions and factors including
availability and prices of raw materials, product pricing, competitive
environment and related market conditions, operating efficiencies, access to
capital and actions of governments. Any changes in such assumptions or
factors could produce significantly different results.
ITEM 1. BUSINESS
a) General Development of Business
Nebraska Consolidated Mills Company, which was originally incorporated in
Nebraska on September 29, 1919, changed its name to ConAgra, Inc.
("ConAgra" or the "Company") on February 25, 1971, and since December 5,
1975, has been incorporated in Delaware.
b) Financial Information About Industry Segments
The Company's businesses are classified into three industry segments:
Grocery & Diversified Products, Refrigerated Foods and Food Inputs &
Ingredients. The contributions of each industry segment to net sales and
operating profit, and the identifiable assets attributable to each industry
segment set forth in Note 18 "Business Segments" on pages 60 and 61 of the
Company's 1998 Annual Report to Stockholders are incorporated herein by
reference.
c) Narrative Description of Business
The information set forth in the "Business Review" on pages 22 through 34
of the Company's 1998 Annual Report to Stockholders is incorporated herein
by reference.
The following comments pertain to the Company as a whole.
ConAgra is a diversified food company that operates across the food chain,
from basic agricultural inputs to production and sale of branded consumer
products. As a result, ConAgra uses many different raw materials, the bulk
of which are commodities. Raw materials are generally available from
several different sources and ConAgra presently believes that it can obtain
these as needed.
Each business is highly competitive. Many companies compete in one or more
of the markets served by ConAgra, some of which have greater sales and
assets than ConAgra.
Quality control processes at principal manufacturing locations emphasize
applied research and technical services directed at product improvement and
quality control. In addition, the Refrigerated Foods and the Grocery &
Diversified Products segments conduct research activities related to the
development of new products.
Many of ConAgra's facilities and products are subject to various laws and
regulations administered by the United States Department of Agriculture,
the Federal Food and Drug Administration, and other federal, state, local
and foreign governmental agencies relating to the quality of products,
sanitation, safety and environmental control. The Company believes that it
complies with such laws and regulations in all material respects, and that
continued compliance with such regulations will not have a material effect
upon capital expenditures, earnings or the competitive position of the
Company.
ConAgra and its subsidiaries have more than 80,000 employees, primarily in
the United States.
3
<PAGE>
ITEM 1. BUSINESS (CONTINUED)
d) Foreign Operations
The information set forth in the "Business Review" on pages 22 through 34
of the Company's 1998 Annual Report to Stockholders is incorporated herein
by reference. The Company is not engaged in material operations in foreign
countries, nor are material portions of sales or revenues derived from
customers in foreign countries.
ITEM 2. PROPERTIES
The Company's corporate headquarters are located in Omaha, Nebraska. The
headquarters and principal operating locations of each business are set forth on
the following list of "ConAgra Locations."
The Company maintains a number of distribution facilities, in addition to
distribution facilities and warehouse space available at substantially all of
its manufacturing facilities.
Utilization of manufacturing capacity varies by type of product manufactured,
plant and week. In general, ConAgra operates most of its manufacturing
facilities in excess of 80% of standard industry capacity. Standards vary by
industry from 40 hours per week to 144 hours per week.
Most principal manufacturing facilities are held in fee. However, certain
parcels of land, machinery and buildings, and substantially all of ConAgra's
transportation equipment used in its processing and merchandising operations,
including covered rail hopper cars and river barges, are leased.
4
<PAGE>
ITEM 2. PROPERTIES (CONTINUED)
CONAGRA LOCATIONS
GROCERY & DIVERSIFIED PRODUCTS
CONAGRA FROZEN PREPARED FOODS
Headquarters in Omaha, Nebraska.
CONAGRA FROZEN FOODS
Headquarters and Corporate sales office in Omaha, Nebraska.
Seven plants in Arkansas, Iowa, Missouri and Virginia. Four broiler
growing and processing complexes in Arkansas and Louisiana. Product
development facility in Omaha, Nebraska.
GILARDI FOODS
Headquarters and sales office in Sidney, Ohio.
Three processing plants in Ohio and Oklahoma.
PIERCE FOODS
Headquarters and sales office in Winchester, Virginia.
Main processing plant in Moorefield, West Virginia.
CONAGRA SEAFOOD COMPANIES
CONAGRA SHRIMP COMPANIES
Headquarters in Tampa, Florida.
Main processing plant and sales office in Tampa, Florida.
MERIDIAN PRODUCTS
Headquarters in Santa Fe Springs, California.
Seafood trading company.
O'DONNELL-USEN U.S.A.
Headquarters and sales office in Tampa, Florida.
CONAGRA GROCERY PRODUCTS COMPANIES
Headquarters in Fullerton, California.
HUNT-WESSON, INC.
Headquarters in Fullerton, California.
Product development facility in Fullerton. 21 manufacturing plants, 12
distribution and customer service centers and over 40 grocery and
foodservice sales offices serving the U.S. and Canada:
CONAGRA GROCERY PRODUCTS COMPANIES INTERNATIONAL
HUNT FOODS COMPANY
HUNT-WESSON FOODSERVICE COMPANY
HUNT-WESSON GROCERY PRODUCTS SALES COMPANY
ORVILLE REDENBACHER/SWISS MISS FOODS COMPANY
WESSON/PETER PAN FOODS COMPANY
5
<PAGE>
ITEM 2. PROPERTIES (CONTINUED)
CONAGRA LOCATIONS (CONTINUED)
GOLDEN VALLEY MICROWAVE FOODS
Headquarters in Edina, Minnesota.
Five plants in Iowa, Minnesota and Ohio. Popcorn storage warehouse in
Nebraska, product development facility in Eden Prairie, Minnesota and
microwave packaging production facility in Maple Grove, Minnesota.
CONAGRA FOODS LTD.
Headquarters in Manchester, England.
Manufacturer of microwave meals and snacks, supplying UK and other
European countries.
LAMB-WESTON, INC.
Headquarters in Tri-Cities, Washington.
12 plants in Idaho, Oregon, Washington, Minnesota (50-percent owned), the
Netherlands (50-percent owned) and Turkey (50-percent owned). Product
development facility in Richland, Washington. International Business
Development Center in Boise, Idaho.
CONAGRA REFRIGERATED FOODS COMPANIES
CONAGRA REFRIGERATED PREPARED FOODS COMPANIES
Headquarters in Downers Grove, Illinois.
ARMOUR SWIFT-ECKRICH
Product development in Downers Grove and 26 plants in 17 states, processed
meat plant in Panama, and a food distribution center in Puerto Rico,
serving:
ASE CONSUMER PRODUCTS COMPANY
ASE DELI/FOODSERVICE COMPANY
BUTTERBALL TURKEY COMPANY
DECKER FOOD COMPANY
NATIONAL FOODS, INC.
COOK FAMILY FOODS, LTD.
Headquarters in Lincoln, Nebraska.
Three plants in Nebraska, Kentucky and Missouri.
BEATRICE CHEESE COMPANY
Headquarters in Waukesha, Wisconsin.
10 facilities located in eight states include natural and processed cheese
manufacturing, direct and indirect retail sales, foodservice sales, cheese
importing and aerosol.
6
<PAGE>
ITEM 2. PROPERTIES (CONTINUED)
CONAGRA LOCATIONS (CONTINUED)
CONAGRA TRADING & PROCESSING COMPANIES MEAT GROUP
Headquarters in Greeley, Colorado
AUSTRALIA MEAT HOLDINGS PTY LTD.
Headquarters in Dinmore, Australia.
Nine plants and feedlots in Australia.
CONAGRA CATTLE FEEDING COMPANY
Headquarters in Greeley, Colorado.
Three feedlots in Colorado.
CONAGRA POULTRY COMPANY
Headquarters in Duluth, Georgia.
CONAGRA BROILER COMPANY
Headquarters in Duluth, Georgia.
Six broiler growing and processing divisions in Alabama, Arkansas,
Georgia, and Puerto Rico.
PROFESSIONAL FOOD SYSTEMS
Headquarters in El Dorado, Arkansas.
17 sales and distribution units in 12 states.
TEXAS SIGNATURE FOODS
Headquarters in Lufkin, Texas.
Processing, sales and distribution facilities in Texas.
CONAGRA REFRIGERATED FOODS INTERNATIONAL SALES CORPORATION
Headquarters in Greeley, Colorado.
E. A. MILLER, INC.
Headquarters in Hyrum, Utah.
Processing facilities in Utah and a feedlot in Idaho.
MONFORT BEEF AND LAMB COMPANY
Headquarters in Greeley, Colorado.
Ten plants in Colorado, Kansas, Nebraska and Texas.
MONFORT FOOD DISTRIBUTION CO.
Headquarters in Greeley, Colorado.
Eight sales and distribution branches in seven states.
MONFORT FRESH MEATS COMPANY
Headquarters in Greeley, Colorado.
Four plants in Idaho, Nebraska, and Alabama.
SWIFT & COMPANY
Headquarters in Greeley, Colorado.
Three pork processing plants in Iowa, Minnesota and Kentucky. Four further
processing plants in Illinois, Indiana, Florida and California.
7
<PAGE>
ITEM 2. PROPERTIES (CONTINUED)
CONAGRA LOCATIONS (CONTINUED)
FOOD INPUTS & INGREDIENTS
CONAGRA AGRI-PRODUCTS COMPANIES
Headquarters in Greeley, Colorado.
UNITED AGRI PRODUCTS COMPANIES
Headquarters in Greeley, Colorado.
Over 500 field sales, administration, warehouse, rail, formulation and
joint venture locations in the United States, Canada, United Kingdom,
Mexico, South Africa, Chile, Bolivia, Ecuador, France, Peru, Hong Kong and
Taiwan. Businesses are involved with crop protection products, seed,
liquid and dry fertilizer operations and one terminal facility.
CONAGRA TRADING & PROCESSING COMPANIES GRAIN GROUP
Headquarters in Omaha, Nebraska.
CONAGRA COMMODITY SERVICES
Headquarters in Omaha, Nebraska.
Feed Ingredient Merchandising and ConAgra Energy Services in Omaha,
Nebraska and a protein trading operation in Bremen, Germany.
CONAGRA FLOUR MILLING COMPANY
Headquarters in Omaha, Nebraska.
24 flour mills in 14 states. Eight country elevators in South Dakota. One
joint venture flour mill and one joint venture elevator in the U.S.
CONAGRA GRAIN COMPANIES
Headquarters in Minneapolis, Minnesota.
ConAgra Grain Companies consists of a North American network of grain
merchandising offices and over 90 elevators, river loading facilities,
export elevators and barges. Two joint ventures operating export
facilities in the United States. D.R. Johnston, an international protein
trading company, operates in Australia, Singapore and New Zealand.
INTERNATIONAL
Headquarters in Omaha, Nebraska.
Trading operations in four countries doing business as BDR Agriculture
Ltd., ConAgra International S.A., J.F. Braun and Camerican. Wool
processing plant in Australia. Poultry, animal feed and processed meat
facilities in Portugal and feed plants in Spain. Six malt joint ventures
with barley malting facilities in the United States, Canada, Australia, the
United Kingdom, Uruguay, Argentina, Denmark and China. Four mushroom farms
in Canada, doing business as Leaver Mushroom (operations sold April 1998).
A food products distribution joint venture in Mexico doing business as
Verde Valle. Two feed plants, a flour mill and dry corn mill in Puerto
Rico, doing business as Molinos de Puerto Rico. ITC Agro-Tech is an edible
oil processing and grain trading joint venture in India. International
fertilizer trading operations headquartered in Savannah, Georgia. Joint
venture oilseed processing plant in Argentina, doing business as Pecom
Agra.
8
<PAGE>
ITEM 2. PROPERTIES (CONTINUED)
CONAGRA LOCATIONS (CONTINUED)
KBC TRADING AND PROCESSING COMPANY
Headquarters in Stockton, California.
Operates over 40 facilities processing edible beans in nine states and
South America and one walnut processing facility in California.
SERGEANT'S PET PRODUCTS COMPANY
Headquarters in Omaha, Nebraska.
Manufacturing operations in Tennessee and Colorado and distribution centers
in Colorado and Canada.
OATS/CORN
Headquarters in Omaha, Nebraska.
Corn merchandising and processing facilities in Kansas and Bremen, Germany.
Two oat processing facilities in Nebraska and Canada. Two grain elevators
in Minnesota. Two joint ventures, one specialty processing facility in
Minnesota and one oat processing facility in the United Kingdom.
UNITED SPECIALTY FOOD INGREDIENTS COMPANIES
Headquarters in Carol Stream, Illinois.
Two food processing plants and a research and development facility in
Kentucky. A dehydrated food ingredients plant and animal feed ingredients
plant in Minnesota. A spice plant and research and development facility in
Illinois and seasoning plants in Massachusetts, Michigan and New Jersey,
with supporting research and development facilities. A flavorings plant in
New Jersey. Food ingredients distribution business headquartered in Iowa
with distribution centers in Texas and Colorado. A distribution center for
food manufacturers in Texas. Chili products plants located in California
(two), New Mexico, and Santiago, Chile, with a research and development
facility in California. A specialty marketing business with processed
eggs, Mexican food products, and food oils business headquartered in Texas.
Two garlic and onion dehydration and processing facilities with a
supporting research and development facility in California and plants in
Nevada and Texas. Food plastics and paper products plants in Texas and
Tennessee. A lighter fluid facility in Texas. A plastic bags and wrap
plant in Georgia. Charcoal plants in Texas and Arkansas. An aluminum foil
products plant in Georgia. Flour tortilla processing facilities in
Nebraska and Kentucky.
9
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
In fiscal 1991, ConAgra acquired Beatrice Company ("Beatrice"). As a result
of the acquisition and the significant pre-acquisition tax and other
contingencies of the Beatrice businesses and its former subsidiaries, the
consolidated post-acquisition financial statements of ConAgra reflected
significant liabilities and valuation allowances associated with the
estimated resolution of these contingencies. The material pre-acquisition
tax contingencies were resolved in fiscal 1995.
Beatrice is also engaged in various litigation and environmental proceedings
related to businesses divested by Beatrice prior to its acquisition by ConAgra.
The environmental proceedings include litigation and administrative proceedings
involving Beatrice's status as a potentially responsible party at 47 Superfund,
proposed Superfund or state-equivalent sites. Beatrice has paid or is in the
process of paying its liability share at 43 of these sites. Substantial
reserves for these matters have been established based on the Company's best
estimate of its undiscounted remediation liabilities, which estimates include
evaluation of investigatory studies, extent of required cleanup, the known
volumetric contribution of Beatrice and other potentially responsible parties
and its experience in remediating sites.
In March 1997, the Environmental Protection Agency filed an action in federal
district court in Colorado against a subsidiary of the Company which operates a
pesticide formulation facility in Greeley, Colorado seeking civil monetary
penalties for violation of the Resource Conservation and Recovery Act; this
action was settled pursuant to a Consent Agreement in May 1998 which provides in
part for payment of a civil penalty of $203,000 by the subsidiary. In June
1998, a subsidiary of the Company engaged in processing potatoes entered into a
Consent Decree with the Environmental Protection Agency in federal district
court in Idaho which provided in part for the payment of a civil penalty of
$160,000 by the subsidiary for violations of the Clean Air Act. In March 1996,
the Environmental Protection Agency filed an action in federal district court in
Idaho against the Company as owner and operator of a beef packing plant in
Nampa, Idaho seeking civil monetary penalties for alleged violations of the
Clean Water Act; the Company is defending this action.
ConAgra is party to a number of other lawsuits and claims arising out of the
operation of its businesses. After taking into account liabilities recorded for
all of the foregoing matters, management believes the ultimate resolution of
such matters should not have a material adverse effect on ConAgra's financial
condition, results of operations or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
10
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT AS OF AUGUST 15, 1998
<TABLE>
<CAPTION>
Year Assumed
Name Title & Capacity Age Present Office
- ---- ---------------- --- --------------
<S> <C> <C> <C>
Bruce C. Rohde President and Chief Executive Officer 49 1997
Kenneth W. DiFonzo Senior Vice President and Controller 46 1997
Dwight J. Goslee Senior Vice President, Mergers and
Acquisitions 48 1997
Owen C. Johnson Senior Vice President, Human Resources 52 1998
Thomas L. Manuel President and Chief Operating Officer, ConAgra
Trading and Processing Companies 51 1994
James P. O'Donnell Executive Vice President, Chief
Financial Officer and Corporate Secretary 50 1997
Gerald B. Vernon Executive Vice President and
Chief Administrative Officer 57 1997
</TABLE>
The foregoing have held executive officer positions with ConAgra for the past
five years, except as follows:
Bruce C. Rohde became Vice Chairman of the Board and President in August 1996
and was named Chief Executive Officer and President in September 1997. He
previously had been ConAgra's general counsel since 1984. He was president of
the Omaha-based law firm McGrath, North, Mullin & Kratz, P.C. from 1984 to 1996.
Owen C. Johnson was Senior Vice President, Human Resources, Corporate
Communications and Administration of Northern Indiana Power Corporation from
1990 to 1998. He joined ConAgra in his current position in June 1998.
11
<PAGE>
OTHER SIGNIFICANT EMPLOYEES OF THE REGISTRANT AS OF AUGUST 15, 1998
<TABLE>
<CAPTION>
Year Assumed
Name Title & Capacity Age Present Office
- ---- ---------------- --- --------------
<S> <C> <C> <C>
J. Charles Blue President and Chief Operating Officer,
ConAgra Agri-Products Companies 59 1998
Raymond J. De Riggi President and Chief Operating Officer,
ConAgra Grocery Products Companies 50 1998
Kenneth W. Gerhardt Senior Vice President and
Chief Information Officer 48 1998
Timothy M. Harris President and Chief Operating Officer, ConAgra
Refrigerated Prepared Foods Companies 42 1997
Timothy P. McMahon Senior Vice President, Corporate
Marketing Development 44 1997
Richard A. Porter Chairman, Lamb-Weston and President,
ConAgra Foodservice Sales Company 49 1998
James T. Smith President, ConAgra Frozen Foods 50 1993
Michael D. Walter Senior Vice President, Trading and
Procurement Management 49 1996
</TABLE>
J. Charles Blue was President of United Agri Products Companies since 1991
and was named to his current position in June 1998.
Raymond J. De Riggi was President of United Specialty Food Ingredients Cos.
since 1995. He was Executive Vice President of Sales for Pet, Inc. from 1992
to 1995. He was named to his current position in June 1998.
Kenneth W. Gerhardt was Senior Vice President and Chief Information Officer of
Ameriserve Distribution, Inc. from 1997 to 1998. Prior to 1997, he worked for
Pepsico, Inc. in various capacities, including Vice President and Chief
Information Officer for Pepsico Food Services from 1996 to 1997; Senior
Director, Information Technology for Pepsi Cola North American from 1994 to
1996; and Senior Director, Corporate Systems for Pizza Hut, Inc. from 1991 to
1994. He joined ConAgra in his current position in March 1998.
Timothy M. Harris was President of ConAgra Refrigerated Prepared Foods from 1995
to 1997. He was President of Butterball Turkey Company from 1994 to 1995;
Executive Vice President of Business Management for Butterball and Healthy
Choice during 1994; and Vice President and General Manager, Prepared Foods
Company from 1990 to 1994. He was named to his current position in September
1997.
Timothy P. McMahon was Vice President, Marketing for ConAgra Trading and
Processing Companies from June 1997 to October 1997. Prior to that, he was
President of McMahon Marketing Communications Company for ten years. He was
named to his current position in October 1997.
Richard A. Porter was President of Lamb-Weston, Inc. from 1990 to 1998. He was
named to his current position in June 1998.
James T. Smith joined ConAgra as President of ConAgra Frozen Foods in 1993.
Michael D. Walter joined ConAgra in 1989 as President of ConAgra Specialty Grain
Products Company. He was named to his current position in October 1996.
12
<PAGE>
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Incorporated herein by reference to "Investor Information" on the inside back
cover and Note 19 "Quarterly Results (Unaudited)" on page 62 of the Company's
1998 Annual Report to Stockholders.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated herein by reference to the information for years 1994 through 1998
on pages 36 and 37 of the Company's 1998 Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Incorporated herein by reference to "Management's Discussion & Analysis" on
pages 38 through 44 and "Objectives and Results" on pages 4 and 5 of the
Company's 1998 Annual Report to Stockholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Incorporated herein by reference to the subsection "Market Risk" in
"Management's Discussion & Analysis" on pages 40 and 41 of the Company's
1998 Annual Report to Stockholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of ConAgra, Inc. and
Subsidiaries and Independent Auditors' Report set forth on pages 45 through 63
of the Company's 1998 Annual Report to Stockholders are incorporated herein by
reference:
Independent Auditors' Report
Consolidated Statements of Earnings - Years ended May 31, 1998, May 25,
1997, and May 26, 1996
Consolidated Balance Sheets - May 31, 1998 and May 25, 1997
Consolidated Statements of Common Stockholders' Equity - Years ended May
31, 1998, May 25, 1997 and May 26, 1996
Consolidated Statements of Cash Flows - Years ended May 31, 1998, May 25,
1997 and May 26, 1996
Notes to Consolidated Financial Statements
The supplementary data regarding quarterly results of operations set forth
in Note 19 "Quarterly Results (Unaudited)" on page 62 of the Company's 1998
Annual Report to Stockholders is incorporated herein by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
None.
13
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference to "Board of Directors and Election" on pages 2
through 4 of the Company's Proxy Statement for its Annual Meeting of
Stockholders to be held on September 24, 1998. Information concerning all
Executive Officers of the Company is included in Part I above.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference to (i) "Executive Compensation" through
"Benefit Plans Retirement Programs" on pages 6 through 10 of the Company's Proxy
Statement, and (ii) information on director compensation on pages 4 and 5 of the
Company's Proxy Statement for its Annual Meeting of Stockholders to be held on
September 24, 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference to "Voting Securities and Ownership by Certain
Beneficial Owners" and "Voting Securities Owned by Executive Officers and
Directors" on page 2 of the Company's Proxy Statement for its Annual Meeting of
Stockholders to be held on September 24, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference to (i) the last two paragraphs of "Directors'
Meetings and Compensation" on page 5 of the Company's Proxy Statement, and (ii)
the last two paragraphs of "Benefit Plans Retirement Programs" on page 10 of the
Company's Proxy Statement for its Annual Meeting of Stockholders to be held on
September 24, 1998.
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K
a) List of documents filed as part of this report:
1. Financial Statements
All financial statements of the company as set forth under Item 8 of
this report on Form 10-K.
2. Financial Statement Schedules
<TABLE>
<CAPTION>
Schedule Page
Number Description Number
------ ----------- ------
<S> <C> <C>
II Valuation and Qualifying Accounts 15
</TABLE>
All other schedules are omitted because they are not applicable, or
not required, or because the required information is included in the
consolidated financial statements, notes thereto, or the Management's
Discussion & Analysis section of the Company's 1998 Annual Report to
Stockholders.
Separate financial statements of the registrant have been omitted
because the registrant meets the requirements permitting omission.
3. Exhibits
All exhibits as set forth on the Exhibit Index, which is incorporated
herein by reference.
b) Reports on Form 8-K
There were no reports on Form 8-K filed during the last quarter of the
period covered by this report.
14
<PAGE>
SCHEDULE II
CONAGRA, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
For the Fiscal Years ended May 31, 1998, May 25, 1997 and May 26, 1996
(in millions)
<TABLE>
<CAPTION>
Additions
Balance at ------------------------ Deductions Balance at
Beginning Charged from Close of
Description of Period to Income Other Reserves Period
- ----------- --------- --------- ----- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year ended May 31, 1998:
Allowance for doubtful
receivables $ 67.2 29.0 .4(2) 28.1(1) $ 67.7
Year ended May 25, 1997:
Allowance for doubtful
receivables $ 52.1 39.2 - 24.1(1) $ 67.2
Valuation reserve related
to restructuring $235.8 - - 235.8(3) -
Year ended May 26, 1996:
Allowance for doubtful
receivables $ 63.9 34.6 .8(2) 47.2(1) $ 52.1
Valuation reserve related
to restructuring - 235.8 - - $235.8
</TABLE>
(1) Bad debts charged off, less recoveries.
(2) Primarily reserve accounts of acquired businesses less reserve accounts of
divested businesses and foreign currency translation adjustments.
(3) Assets written-off to valuation reserve.
15
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
ConAgra, Inc.
Omaha, Nebraska
We have audited the consolidated financial statements of ConAgra, Inc. and
subsidiaries as of May 31, 1998 and May 25, 1997, and for each of the three
years in the period ended May 31, 1998, and have issued our report thereon
dated July 10, 1998; such financial statements and report are included in
your 1998 Annual Report to Stockholders and are incorporated herein by
reference. Our audits also included the financial statement schedule of
ConAgra, Inc. and subsidiaries, listed in Item 14. This financial statement
schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ Deloitte & Touche LLP
DELOITTE TOUCHE LLP
Omaha, Nebraska
July 10, 1998
16
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, ConAgra, Inc. has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on the 28th day of August, 1998.
CONAGRA, INC.
/s/ Bruce C. Rohde
-----------------------------------------
Bruce C. Rohde
President and Chief Executive Officer
/s/ James P. O'Donnell
-----------------------------------------
James P. O'Donnell
Executive Vice President, Chief Financial Officer and
Corporate Secretary (Principal Financial Officer)
/s/ Kenneth W. DiFonzo
-----------------------------------------
Kenneth W. DiFonzo
Senior Vice President and
Controller (Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the 28th day of August, 1998.
/s/ Bruce C. Rohde
- ------------------------- Director
Bruce C. Rohde
Mogens C. Bay* Director
Philip B. Fletcher* Director
Charles M. Harper* Director
Robert A. Krane* Director
Gerald Rauenhorst* Director
Carl E. Reichardt* Director
Ronald W. Roskens* Director
Marjorie M. Scardino* Director
Walter Scott, Jr.* Director
Kenneth E. Stinson* Director
Jane J. Thompson* Director
Frederick B. Wells* Director
Thomas R. Williams* Director
Clayton K. Yeutter* Director
* Bruce C. Rohde, by signing his name hereto, signs this Annual Report on
behalf of each person indicated. A Power-of-Attorney authorizing Bruce C.
Rohde to sign this Annual Report on Form 10-K on behalf of each of the
indicated Directors of ConAgra, Inc. has been filed herein as exhibit 24.
By: /s/ Bruce C. Rohde
-----------------------------
Bruce C. Rohde
Attorney-In-Fact
17
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description Page No.
- ------ ----------- -------
<S> <C> <C>
3.1 ConAgra's Certificate of Incorporation, as
amended, incorporated herein by reference to
ConAgra's annual report on Form 10-K for the
fiscal year ended May 26, 1996.
3.2 ConAgra's Bylaws, as amended, incorporated
herein by reference to ConAgra's quarterly report
on Form 10-Q for the quarter ended August 24, 1997.
4.1 Rights Agreement dated as of July 12, 1996,
incorporated herein by reference to ConAgra's
current report on Form 8-K dated July 12, 1996.
4.2 Certificate of Adjustment dated October 1, 1997
to Rights Agreement, incorporated herein by reference
to ConAgra's quarterly report on Form 10-Q for the
quarter ended August 24, 1997.
4.3 Amendment to Rights Agreement dated as of July 10, 1998 22
4.4 Documents establishing Series A, Series B and
Series C of Preferred Securities of ConAgra
Capital, L.L.C., incorporated herein by
reference to ConAgra's current reports on
Form 8-K dated June 8, 1994 and February 11, 1995.
10.1 ConAgra's Amended and Restated Long-Term
Senior Management Incentive Plan, Amendment
thereto, and Operational Document, and
Amendment thereto, incorporated herein by
reference to Exhibit 10.1 of ConAgra's annual
report on Form 10-K for the fiscal year ended
May 25, 1997.
10.2 Second Amendment to ConAgra's Long-Term Senior
Management Incentive Plan Operational Document,
incorporated herein by reference to Exhibit 10.2
of ConAgra's annual report on Form 10-K for
the fiscal year ended May 28, 1995.
10.3 Form of Employment Agreement between ConAgra
and its executive officers 25
10.4 ConAgra's Employee Flexible Bonus Payment Plan,
incorporated herein by reference to Exhibit 10.4
of ConAgra's annual report on Form 10-K for the
fiscal year ended May 25, 1997.
10.5 ConAgra's 1985 Stock Option Plan, with
amendments thereto incorporated herein by
reference to Exhibit 10.5 of ConAgra's annual
report on Form 10-K for the fiscal year ended
May 25, 1997.
</TABLE>
18
<PAGE>
EXHIBIT INDEX - (Continued)
<TABLE>
<CAPTION>
Number Description Page No.
- ------ ----------- -------
<S> <C> <C>
10.6 ConAgra Non-Qualified CRISP Plan, incorporated
herein by reference to Exhibit 10.9 of ConAgra's
annual report on Form 10-K for the fiscal year
ended May 29, 1994.
10.7 ConAgra Non-Qualified Pension Plan, and First
Amendment thereto, incorporated herein by
reference to Exhibit 10.10 of ConAgra's annual
report on Form 10-K for the fiscal year ended
May 29, 1994.
10.8 ConAgra Supplemental Pension and CRISP Plan for
Change of Control, incorporated herein by
reference to Exhibit 10.11 of ConAgra's annual
report on Form 10-K for the fiscal year ended
May 29, 1994.
10.9 ConAgra Incentives and Deferred Compensation
Change of Control Plan, incorporated herein by
reference to Exhibit 10.12 of ConAgra's annual
report on Form 10-K for the fiscal year ended
May 29, 1994.
10.10 ConAgra 1990 Stock Plan, and amendments thereto,
incorporated herein by reference to Exhibit 10.11
of ConAgra's annual report on Form 10-K for the
fiscal year ended May 28, 1995.
10.11 ConAgra 1995 Stock Plan, incorporated herein by
reference to Exhibit 10.1 of ConAgra's quarterly
report on Form 10-Q for the quarter ended
August 27, 1995.
10.12 ConAgra Directors' Unfunded Deferred
Compensation Plan, and First Amendment thereto,
incorporated herein by reference to Exhibit 10.12
of ConAgra's annual report on Form 10-K for the
fiscal year ended May 28, 1995.
10.13 Second Amendment to the ConAgra Directors' Unfunded
Deferred Compensation Plan, incorporated herein
by reference to Exhibit 10.2 of ConAgra's
quarterly report on Form 10-Q for the quarter
ended February 23, 1997.
10.14 Third Amendment to the ConAgra Directors' Unfunded
Deferred Compensation Plan 33
</TABLE>
19
<PAGE>
EXHIBIT INDEX - (Continued)
<TABLE>
<CAPTION>
Number Description Page No.
- ------ ----------- -------
<S> <C> <C>
10.15 ConAgra Employee Equity Fund Trust Agreement,
with Stock Purchase Agreement and Revolving
Promissory Note executed in connection therewith,
incorporated herein by reference to Exhibit 10.14 of
ConAgra's annual report on Form 10-K for the fiscal
year ended May 25, 1997.
10.16 P. B. Fletcher Incentive Agreement dated July 15,
1993, as amended and restated, incorporated
herein by reference to Exhibit 10.15 of ConAgra's annual
report on Form 10-K for the fiscal year ended May 26, 1996.
10.17 Amendment to the P.B. Fletcher Incentive Agreement
dated July 11, 1997, incorporated herein by reference to
Exhibit 10.16 of ConAgra's annual report on Form 10-K
for the fiscal year ended May 25, 1997.
10.18 Employment Contract between ConAgra and Bruce C.
Rohde, incorporated herein by reference to
Exhibit 10.1 of ConAgra's quarterly report on
Form 10-Q for the quarter ended February 23, 1997.
10.19 Amendment dated February 16, 1998 to Bruce C.
Rohde Employment Contract 34
10.20 C. M. Harper Deferred Compensation Agreement
dated March 15, 1976 35
10.21 ConAgra Executive Annual Incentive Plan,
incorporated herein by reference to Exhibit 10.20
of ConAgra's annual report on Form 10-K for the
fiscal year ended May 29, 1994.
11 Statement regarding computation of income per share 38
12 Statement regarding computation of ratio of
earnings to fixed charges and ratio of earnings
to combined fixed charges and preferred stock
dividends 40
13 ConAgra's Annual Report to Stockholders for its
fiscal year ended May 31, 1998 41
21 Subsidiaries of ConAgra 114
23 Consent of Deloitte & Touche LLP 117
24 Powers of Attorney 118
</TABLE>
20
<PAGE>
EXHIBIT INDEX - (Continued)
Pursuant to Item 601(b)(4) of Regulation S-K, certain instruments with
respect to ConAgra's long-term debt are not filed with this Form 10-K.
ConAgra will furnish a copy of any such long-term debt agreement to the
Securities and Exchange Commission upon request.
Except for those portions of the ConAgra annual report to stockholders for
its fiscal year ended May 31, 1998 (Exhibit 13) specifically incorporated by
reference in this report on Form 10-K, such annual report is furnished solely
for the information of the Securities and Exchange Commission and is not to
be deemed "filed" as a part of this filing.
Items 10.1 through 10.21 are management contracts or compensatory plans filed
as exhibits pursuant to Item 14(c) of Form 10-K.
21
<PAGE>
Exhibit 4.3
-----------
AMENDMENT
TO
RIGHTS AGREEMENT DATED JULY 12, 1996
This Amendment executed between ConAgra, Inc. (the "Company") and
ChaseMellon Shareholder Services, L.L.C. ("ChaseMellon") dated as of July 10,
1998 amends the Rights Agreement between the Company and ChaseMellon dated
July 12, 1996 (the "Rights Agreement").
RECITALS
A. Section 21 of the Rights Agreement permits the Company to remove a
Rights Agent (as defined in the Rights Agreement) and appoint a successor
Rights Agent.
B. Pursuant to the terms of the Rights Agreement, ChaseMellon serves
as the Rights Agent.
C. The Company has appointed Norwest Bank of Minnesota, N.A.
("Norwest") as its transfer agent and registrar and dividend disbursing agent
and Rights Agent pursuant to a resolution adopted by the Board of Directors
of the Company on July 10, 1998.
D. Pursuant to Section 21 of the Rights Agreement, the Company has
provided notification to ChaseMellon on July 10, 1998 that it has appointed
Norwest as Rights Agent effective August 10, 1998.
NOW, THEREFORE, the Company and ChaseMellon agree as follows:
Effective August 10, 1998, the term "Rights Agent" shall be amended to
mean Norwest and its successors and assigns or any successor entity
appointed by the Company.
The fifth sentence of Section 21 is deleted and is replaced with the
following:
Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be a corporation organized and doing business
under the laws of the United States or of any state of the United
States or the District of Columbia so long as such corporation is in
good standing, and is authorized under such laws to exercise corporate
trust powers and is subject to supervision or examination by federal
or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50 million.
22
<PAGE>
Section 26 is amended by deleting the address for the Rights Agent
provided for and inserting instead:
Norwest Bank of Minnesota, N.A.
161 North Concord Exchange
South St. Paul, MN 55075
This amendment shall be governed by and construed in accordance with the
laws of the State of Delaware.
This amendment may be executed in counterparts and each such counterpart
shall be deemed to be an original.
The Rights Agreement as amended by this Amendment shall be read together
to constitute one agreement.
CONAGRA, INC. CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: /s/ J. P. O'Donnell By: /s/ Stanley E. Siekierski
---------------------------------- ------------------------------
J.P. O'Donnell Stanley E. Siekierski
Executive Vice President, Title: Vice President
Chief Financial Officer and
Corporate Secretary
23
<PAGE>
Norwest Bank of Minnesota, N.A. herewith accepts appointment as
successor Rights Agent effective August 10, 1998 as described in the attached
Amendment dated as of July 10, 1998 to Rights Agreement between ConAgra, Inc.
and ChaseMellon Shareholder Services, L.L.C. dated July 12, 1996.
NORWEST BANK OF MINNESOTA, N.A.
/s/ Lisa Dornburg
By: Lisa Dornburg
Title: OFFICER, NORWEST BANK MN, N.A.
24
<PAGE>
Exhibit 10.3
------------
AGREEMENT
Agreement made this ____ day of ____________, ____, by and between
ConAgra, Inc., a Delaware corporation, hereinafter referred to as "ConAgra",
and __________________, hereinafter referred to as "Employee".
WHEREAS, the Board of Directors of ConAgra ("Board") has determined that
the interests of ConAgra stockholders will be best served by assuring that
all key corporate executives of ConAgra will adhere to the policy of the
Board with respect to any event by which another entity would acquire
effective control of ConAgra, including but not limited to a tender offer, and
WHEREAS, the Board has also determined that it is in the best interests
of ConAgra stockholders to promote stability among key executives and
employees.
NOW, THEREFORE, it is agreed as follows:
1. DUTIES OF EMPLOYEE. Employee shall support the position of the
Board and the chief executive officer, and shall take any action requested by
the Board or the chief executive officer with respect to any "Change of
Control" (as defined at Section 7 below) of ConAgra. If the Employee
violates the provisions of this Section, he shall forfeit any payments due to
him under the terms of this Agreement.
2. EMPLOYMENT CONTRACT. If a Change of Control of ConAgra occurs, and
if at the initiation of the Change of Control attempt Employee is then
employed by ConAgra, ConAgra hereby agrees to continue the employment of
Employee for a period of three years from the date the Change of Control
effectively occurs. During said three year period, Employee shall receive
annual base and incentive compensation in an amount not less than that
specified in Section 3(a) below.
If Employee is Involuntarily Terminated (as defined at Section 7 below),
at any time during the three year period, ConAgra shall pay to Employee an
amount equal to that which Employee would have received pursuant to Section
3(a) below for the remainder of the three year period, and shall also make
the payments specified in Sections 3(b) and 3(c) and, if applicable, any
additional payments specified in Section 5 below. In addition, in the event
of Involuntary Termination at any time, Employee shall receive payment of the
base and incentive compensation described in Section 3(a) for one year. Any
such termination payment of base and incentive compensation shall be made to
Employee in a lump sum within thirty (30) days after termination.
If Employee voluntarily terminates his employment at any time during the
three year period, the Acquiror (as defined below), ConAgra, and their
subsidiaries will not be obligated to pay the Employee any amount that might
be due for the remainder of the three year period, or for any termination
pay; however, they shall make any additional payments specified in Sections
3(b), 3(c) and 5 (if applicable) below.
3. DESCRIPTION OF PAYMENTS. The payments to be made to Employee are:
(a) ANNUAL BASE AND INCENTIVE COMPENSATION. Employee shall receive
for the three year period described in Section 2 above an annual
amount equal to his current annual rate of compensation, which current
annual compensation shall be computed as follows: twenty-six times
the Employee's highest bi-weekly salary payment received during the
one year period ending immediately prior to the Change of Control of
ConAgra. In addition, Employee shall receive (i) an amount for short
term incentive equal to the larger of (I) the short term incentive
target, if any, most recently approved by the Human Resources
Committee of the Board ("Committee"), and (II) the highest of the
three actual short term incentive awards
25
<PAGE>
(including deferred amounts) made to Employee for the three fiscal
years immediately preceding such Change of Control, plus (ii) an
amount for the Long Term Senior Management Incentive Plan Award
equal to the highest per unit award made during the three fiscal
years immediately preceding such Change of Control multiplied by
the number of units of participation approved by the Committee for
the current fiscal year.
(b) RETIREMENT BENEFITS. Employee shall receive an amount equal to
that which he would have received as retirement benefits under the
provisions of the ConAgra Pension Plan for Salaried Employees
("Qualified Pension Plan") and the ConAgra Retirement Income Savings
Plan ("CRISP") in effect immediately prior to the Change of Control of
ConAgra, had Employee continued his employment until age 65 at the
current annual rate of base and short term incentive compensation as
determined above and assuming no limitations under Sections 401(a)(17)
and 415 of the Internal Revenue Code of 1986, as amended ("Code").
(i) The supplemental pension benefit hereunder shall be equal to
the result of subtracting (x) the benefit the Employee will
receive under the Qualified Pension Plan from (y) the
pension benefit the Employee would obtain under the
Qualified Pension Plan if the Employee remained in the
employ of ConAgra until the Employee attained age 65. The
supplemental pension benefit is to be computed assuming the
Employee is to receive an unreduced normal retirement
pension benefit payable beginning at the later of the date
the Employee attains age 60 or the date of the Employee's
termination of employment. If the Employee begins to
receive his supplemental pension benefit at a time other
than as described in the preceding sentence, an actuarial
adjustment shall be made to reflect such event. The
supplemental pension benefit shall be reduced by the amount
of benefit received from the ConAgra Nonqualified Pension
Plan (or any successor plan) which relates to periods
following the Employee's termination of employment.
(ii) The supplemental CRISP benefit shall be equal to the amount
computed, as follows:
A. The additional years of service that the Employee would
receive if his or her employment was not terminated
prior to attaining age 65 is multiplied by the
Employee's current annual base and short term incentive
compensation (as described in Section 3(a)).
B. The result in A, immediately above, is multiplied by
3%.
C. The result in B, immediately above, is present valued
to the date of the Employee's termination of
employment. The discount factor for such present value
shall be the discount factor used by the Qualified
Pension Plan at the time of such termination of
employment. The present value shall be computed based
on the assumption that the result in B, immediately
above, is paid ratably (and monthly) over the
additional years of service of the Employee.
D. The present value amount determined pursuant to C,
immediately above, shall be funded pursuant to
Subsection (iv) of this Section 3(b).
26
<PAGE>
(iii) For purposes of computing the amounts described in Sections
3(b)(i)(y) and 3(b)(ii)A, the following shall apply:
A. The total amount of current annual base pay and short
term incentive pay (as described in Section 3(a)) shall
be used without any reduction for the limitation
imposed upon compensation by Code Section 401(a)(17)
(or any successor section thereto).
B. The limitations imposed by Code Section 415 shall not
apply.
C. If, at the time of termination, the Employee is not
eligible to participate in the Qualified Pension Plan,
the amount computed under Section 3(b)(1) shall be
based solely on the years after termination of
employment.
D. If, at the time of termination, the Employee is not
eligible to participate in the Qualified Plan, but does
participate in a defined benefit plan of ConAgra, its
successor, or one of their affiliates ("Other Defined
Benefit Plan"), the Employee shall receive an
additional supplemental benefit equal to the result of
subtracting (x) the benefit the Employee will receive
from the Other Defined Benefit Plan from (y) the
benefit the Employee would receive from the Other
Defined Benefit Plan assuming the Employee is to
receive an unreduced normal retirement pension benefit
payable beginning at the later of the date the Employee
attains age 60 or the date of the Employee's
termination and assuming the Employee's pay, for
purposes of calculating the Employee's Other Defined
Benefit Plan benefit, is, and always has been, equal to
the Employee's current annual base pay and short term
incentive (as described in Section 3(a)).
(iv) The actuarial assumptions and methods used by this Section
3(b) shall be the same as those used by the Qualified
Pension Plan. The timing of payment and the form of the
supplemental pension benefit under this Section 3(b) shall
be the same as elected by the Employee under the Qualified
Pension Plan and the timing of payment and the form of the
supplemental CRISP benefit shall be the same as elected by
the Employee under CRISP. If the Employee does not
participate in the Qualified Pension Plan and/or CRISP, the
Employee shall elect (from the respective options under the
Qualified Pension Plan and CRISP) the timing and form of the
supplemental pension and CRISP benefits;
(v) The supplemental pension and CRISP benefits payable under
this Section 3(b) shall be unfunded until a Voluntary
Termination or Involuntary Termination following a Change of
Control. Within 60 days following such a termination, the
supplemental pension and CRISP benefits shall be funded, in
one lump sum payment, through a trust in the form attached
to the ConAgra Supplemental Pension and CRISP Plan for
Change of Control and which trust is incorporated by
reference. The transferred amount for the supplemental
CRISP benefit shall be held in a separate account and
separately invested by the trustee. The amount accumulated
in such
27
<PAGE>
account shall be the sole source of payment of the
supplemental CRISP benefit, and shall be the amount of
the supplemental CRISP benefit hereunder. The Acquiror,
ConAgra and their subsidiaries shall make up any
supplemental pension benefit payments the Employee does
not receive under the trust, e.g., if the funds in the
trust are insufficient to make the payments due to
insufficient earnings in the trust. The trustee of such
trust shall be a national or state chartered bank. If
funding of the trust is not made within the sixty day
period described in this Subsection (iv) of this Section
3(b), the Employee's supplemental pension and CRISP
benefits 3(b), the Employee's supplemental pension and
CRISP benefits shall then be equal to the product of 150%
multiplied by the amount of supplemental pension and
CRISP benefits described in this Section 3(b) above;
provided, however, this increase in benefits is not
intended to remove or detract from the obligation to fund
the trust. The supplemental pension and CRISP benefits
shall not be paid from the assets of the Qualified
Pension Plan or CRISP.
(c) ADDITIONAL PAYMENT. If a Change of Control of ConAgra occurs,
Employee shall receive an amount equal to the excess, if any, of the
highest per share price offered (valued in U.S. currency) by the
successful Acquiror for ConAgra common stock (which stock will then be
treated for purposes of this Agreement as converted into equivalent
shares of such Acquiror's or the surviving company's capital stock as
of the date of the Change of Control of ConAgra) over the closing per
share price of such Acquiror's or the surviving company's ("Acquiror")
stock quoted on an established securities market (or if applicable,
the closing bid price for the Acquiror's stock that is quoted on a
secondary market or substantial equivalent thereof) on the date of
termination (or if the date of termination is not a business day, on
the next preceding business day), multiplied by the highest number of
shares of the Acquiror's capital stock owned by the Employee at any
time during the period beginning on the date of the Change of Control
of ConAgra and ending on the date of termination. For purposes of
this Section 3(c), the additional amount due hereunder shall be
computed as if Employee owned all of the Acquiror's stock with respect
to which Employee has an option to purchase in connection with his
employment with the Acquiror, ConAgra or any of their subsidiaries.
Said amount shall be paid to Employee within ten days after
termination. In addition, if Employee sells any of the Acquiror's
stock within one year following said termination, Employee shall
receive the amount by which the closing price of such stock per share
on the date of termination (determined as aforesaid) exceeds the per
share actual net sales price of the Acquiror's stock on the date of
sale realized by Employee, multiplied by the number of shares sold by
Employee. Said amount shall be paid in immediately available funds to
Employee within ten days after the sale. In addition, to the extent
any of ConAgra's common stock remains outstanding after a Change of
Control, then Employee shall receive additional amounts computed and
payable in a manner similar to that provided in this Section 3(c) for
Acquiror's stock owned, or subject to an option held, by Employee.
These provisions shall be appropriately modified or adjusted to take
into account the fact that the computations pursuant to the preceding
sentence are with respect to ConAgra common stock and related options
rather than the Acquiror's capital stock and options related thereto.
The computations and payments under this Section 3(c) shall include
appropriate adjustments for any stock splits, stock dividends,
recapitalizations or similar share restructurings that may occur from
time to time.
4. MERGER. ConAgra shall not merge, reorganize, consolidate or sell all
or substantially all of its assets, to or with any other corporation until such
corporation and its subsidiaries, if any, expressly assume the duties of ConAgra
set forth herein.
28
<PAGE>
5. CERTAIN ADDITIONAL PAYMENTS BY CONAGRA.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by
ConAgra to or for the benefit of the Employee, whether paid or payable
or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would be subject to the excise
tax imposed by Section 4999 of the Code or any interest or penalties
with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Employee shall be entitled to receive
an additional payment (a "Gross-Up Payment") in any amount such that
after payment by the Employee of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise
Tax, imposed upon the Gross-Up Payment, the Employee retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Subsection (c) below, all
determinations required to be made under this Section, including
whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment, shall be made by the certified public accounting firm then
representing ConAgra (the "Accounting Firm") which shall provide
detailed supporting calculations both to ConAgra and the Employee
within 15 business days of the date of termination, if applicable, or
such earlier time as is requested by ConAgra or Employee. If the
Accounting Firm determines that no Excise Tax is payable by the
Employee, it shall furnish the Employee with an opinion that he has
substantial authority not to report any Excise Tax on his federal
income tax return. Any determination by the Accounting Firm shall be
binding upon ConAgra and the Employee. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by ConAgra should
have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that ConAgra exhausts its
remedies pursuant to Subsection (c) below and the Employee thereafter
is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and
any such Underpayment shall be promptly paid by ConAgra to or for the
benefit of the Employee.
(c) The Employee shall notify ConAgra in writing of any claim by the
Internal Revenue Service that, if successful, would require the
payment by ConAgra of the Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than ten (10) business
days after the Employee knows of such claim and shall apprise ConAgra
of the nature of such claim and the date on which such claim is
requested to be paid. The Employee shall not pay such claim prior to
the expiration of the thirty-day (30 day) period following the date on
which it gives such notice to ConAgra (or such shorter period ending
on the date that any payment of taxes with respect to such claim is
due). If ConAgra notifies the Employee in writing prior to the
expiration of such period that it desires to contest such claim, the
Employee shall:
(i) give ConAgra any information reasonably requested by ConAgra
relating to such claim,
(ii) take such action in connection with contesting such claim as
ConAgra shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by ConAgra,
29
<PAGE>
(iii) cooperate with ConAgra in good faith in order to effectively
contest such claim,
(iv) permit ConAgra to participate in any proceedings relating to
such claim;
provided, however, that ConAgra shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Employee
harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a
result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Subsection (c),
ConAgra shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option,
either direct the Employee to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Employee
agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one
or more appellate courts, as ConAgra shall determine; provided,
however, that if ConAgra directs the Employee to pay such claim and
sue for a refund, ConAgra shall advance the amount of such payment to
the Employee, on an interest-free basis and shall indemnify and hold
the Employee harmless, on an after-tax basis, from any Excise Tax or
income tax, including interest or penalties with respect thereto,
imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes
for the taxable year of the Employee with respect to which such
contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, ConAgra's control of the contest shall
be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by
ConAgra pursuant to Subsection (c) above, the Employee becomes
entitled to receive any refund with respect to such claim, the
Employee shall (subject to ConAgra's complying with the requirements
of Subsection (c)) promptly pay to ConAgra the amount of such refund
(together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Employee of an
amount advanced by ConAgra pursuant to Subsection (c), a determination
is made that the Employee shall not be entitled to any refund with
respect to such claim and ConAgra does not notify the Employee in
writing of its intent to contest such denial of refund prior to the
expiration of thirty days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
6. TERM AND BINDING EFFECT. This Agreement shall bind ConAgra and
Employee as long as Employee remains in the employ of ConAgra; provided,
however, ConAgra may terminate this Agreement at any time by giving notice to
Employee; and provided further, however, that ConAgra may not terminate this
Agreement at any time subsequent to the announcement of an event that could
result in a Change of Control of ConAgra. This Agreement shall be binding upon
the parties hereto, their heirs, executors, administrators and successors.
7. CERTAIN DEFINITIONS. The following definitions shall apply for the
purposes of this Agreement:
(a) CHANGE OF CONTROL OF CONAGRA. The term "Change of Control" shall
mean:
30
<PAGE>
(i) The acquisition (other than from ConAgra) by any person,
entity or "group", within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934 (the
"Exchange Act"), (excluding, for this purpose, ConAgra or
its subsidiaries, or any employee benefit plan of ConAgra or
its subsidiaries, which acquires beneficial ownership of
voting securities of ConAgra) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 30% or more of either the then outstanding
shares of common stock or the combined voting power of
ConAgra's then outstanding voting securities entitled to
vote generally in the election of directors; or
(ii) Individuals who, as of the date hereof, constitute the Board
(as of the date hereof the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to
the date hereof whose election, or nomination for election
by ConAgra's shareholders, was approved by a vote of at
least a majority of the directors then comprising the
Incumbent Board shall be, for purposes of this Agreement,
considered as though such person were a member of the
Incumbent Board; or
(iii) Approval of the shareholders of ConAgra of a reorganization,
merger, consolidation, in each case, with respect to which
persons who were the shareholders of ConAgra immediately
prior to such reorganization, merger or consolidation do
not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the
election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities,
or a liquidation or dissolution of ConAgra or of the sale of
all or substantially all of its assets.
(b) INVOLUNTARY TERMINATION. The term "Involuntary Termination" or
any variation thereof shall mean either (i) the actual involuntary
termination of Employee's employment with the Acquiror, ConAgra and
their subsidiaries after a Change of Control (with or without cause)
or (ii) the constructive involuntary termination of the Employee's
employment with the Acquiror, ConAgra and their subsidiaries after a
Change of Control. The term "constructive involuntary termination"
shall include (w) a reduction in the Employee's compensation
(including applicable fringe benefits); (x) a substantial change in
the location of the Employee's job without the Employee's written
consent; (y) the Employee's demotion or diminution in the Employee's
position, authority, duties or responsibilities without the Employee's
written consent; or (z) the sale or disposition of the stock of
Employee's immediate employer, which was a subsidiary of the Acquiror,
ConAgra, or their other subsidiaries immediately prior to such sale or
disposition, provided Employee is not employed after such sale or
disposition by the Acquiror, ConAgra, or any of their subsidiaries
that are retained after such sale or disposition. "Substantial change
in location" means any location change in excess of 35 miles from the
location of the Employee's job with ConAgra or its subsidiaries at the
time of the Change of Control of ConAgra.
8. COSTS. All costs of litigation necessary for the Employee to defend
the validity of this contract are to be paid by ConAgra or its successors or
assigns.
9. PRIOR AGREEMENTS. This Agreement supersedes, restates and replaces
any and all prior agreements to which both ConAgra and the Employee are parties
with respect to the Change of Control of
31
<PAGE>
ConAgra.
IN WITNESS WHEREOF, the parties have executed this Agreement.
EMPLOYEE: CONAGRA, INC.
______________________________ ________________________________
32
<PAGE>
Exhibit 10.14
-------------
THIRD AMENDMENT TO THE CONAGRA, INC.,
DIRECTORS' UNFUNDED DEFERRED COMPENSATION PLAN
The ConAgra, Inc., Directors' Unfunded Deferred Compensation Plan, is
amended, as follows:
ARTICLE I
Paragraph 4 of the Plan is amended in its entirety to read, as
follows:
"4. Amounts deferred under the Plan together with accumulated
interest, including interest accruing after the participant ceases to
be a director, shall be distributed in twenty (20) semi-annual
installments on January 1 and July 1 of each year after the year in
which the participant in the Plan ceases to be a director, provided
that a participant may also, upon becoming a participant in the Plan,
elect to receive payment of deferred amounts (i) in a lump sum at a
date certain or (ii) in semi-annual installments over a period elected
by the participant commencing at the date certain elected by the
participant. Participants in the Plan as of the date of adoption of
this amendment may also elect, within sixty (60) days of such
adoption, any of the three payment alternatives described above. If
the participant dies prior to the payment in full of all amounts due
him under the Plan, the balance of the account shall be payable to his
designated beneficiary in a lump sum. The beneficiary designation
shall be revocable and should be made in writing in a manner provided
by ConAgra. In addition, at the request of a participant, the
Executive Committee of the Board, at their sole discretion, may
authorize a change in the method of payment elected by a participant.
If for any reason, the Executive Committee of the Board determines it
to be in the best interest of ConAgra or the participant to pay the
participant in full, including a determination that the participant
upon termination becomes a proprietor, officer, partner, employer or
otherwise becomes affiliated with any business that is in competition
with ConAgra, ConAgra may make a payment in full to said participant
when he or she ceases to be a director without his or her consent.
Payment of the aggregate number of shares credited by book entry to a
Director's Stock Account shall be made in shares of Common Stock."
33
<PAGE>
Exhibit 10.19
-------------
ConAgra, Inc.
One ConAgra Drive
Omaha, NE 68102-5001
Phone: (402) 595-4000
February 16, 1998
Bruce Rohde
President and
Chief Executive Officer
ConAgra, Inc.
One ConAgra Drive
Omaha, Nebraska 68102-5001
Dear Bruce:
This letter will constitute an amendment of the terms and conditions of
the employment agreement between you and ConAgra dated August 26, 1996 (the
"Agreement"). First, the definition of "accrued benefits" in Section
5.1(ii), applicable in part in connection with the events described in
Sections 5.1 and 5.2, is amended to read as follows: all options previously
granted to Executive in connection with the LTSMIP shall become fully vested
and exercisable during the remainder of the term of such options, and all
options granted in accordance with Section 3.5 above shall become fully
vested and exercisable during the remainder of the term of such options.
Second, pursuant to Section 4.2 of the Agreement, you shall be credited with
92 months of additional service for purposes of determining your benefits
payable and for vesting qualification under ConAgra's nonqualified pension
plan and related benefit plans. Third, in the event of a termination by
ConAgra without Cause or by you for Good Reason (as described in Section 5.2
of the Agreement), you may elect to receive your benefits under ConAgra's
nonqualified pension plan in a lump sum.
Subject to the amendments referenced above, all of the other terms and
conditions of your Agreement are hereby ratified and affirmed. If you are in
agreement with the amendments set forth above, please so indicate by signing
below and returning an executed original of this letter to me for placement
in the files of the Human Resources Committee of ConAgra's Board of Directors.
Sincerely,
/s/ Philip B. Fletcher
_____________________________
Philip B. Fletcher, Chairman
of the Board of Directors
Acknowledged and Agreed to:
/s/ Bruce Rohde
___________________________
Bruce Rohde
34
<PAGE>
EXHIBIT 10.20
-------------
CONAGRA, INC.
DEFERRED COMPENSATION AGREEMENT
C. M. HARPER
AGREEMENT made this 15th day of March, 1976, between ConAgra, Inc., a
Delaware Corporation, hereinafter referred to as the Corporation and C. M.
Harper, hereinafter referred to as Harper.
1. DUTIES:
The Corporation hereby employs Harper as President of the Corporation
and his duty in that capacity are to be such as may be determined by the Board
of Directors and he shall serve in that capacity until such time as his service
is terminated by action of the Board of Directors, by death, disability or
retirement whichever occurs first.
2. COMPENSATION:
The Corporation shall pay to him each year such basic compensation as
is fixed by the Board of Directors for his services rendered hereunder as
President of the Corporation, and additional compensation in the amount of
Twenty-five Thousand ($25,000.00) Dollars per year, for each year of service
rendered by Harper as President of the Corporation prior to termination of his
employment as President either by action of the Board of Directors or by death,
disability or retirement, whichever occurs first. Such additional compensation
shall be computed, deferred and paid out as follows:
(a) AMOUNT. At the end of each fiscal year occurring after the date of
the execution of this agreement Twenty-five Thousand ($25,000.00)
Dollars shall be allocated by the Corporation to Harper's Deferred
Compensation account if Harper is employed as President of the
Corporation as of the end of such fiscal year. In the event of
Harper's employment as President of the Corporation is terminated
prior to the end of any fiscal year the Corporation shall allocate
to his account that portion of the Twenty-five Thousand
($25,000.00) Dollars in deferred compensation for that fiscal year
which is proportionate to the number of days during the fiscal year
which Harper served as President of the Corporation prior to
termination of his employment as such President or death,
disability or retirement, whichever occurs first.
(b) INTEREST. At the end of each fiscal year the Corporation shall
allocate to Harper's account an amount equal to eight (8%) percent of
the balance of said account as of the beginning of such year. Such
allocation shall be made until all amounts allocated to Harper's
account have been paid out pursuant to this agreement.
35
<PAGE>
(c) PAYMENT. Upon termination of Harper's employment as President of the
Corporation by the Board of Directors, or upon his death, disability
or retirement the Corporation shall make equal annual payments to
Harper on the first day following the end of the fiscal year in which
his employment is terminated or his death, disability or retirement
occurs and each year thereafter for as many years as are equal to the
number of years that Harper has served as President of the Corporation
from the date of execution of this agreement until the date of
termination of his employment as President of the Corporation or his
death, disability or retirement, whichever occurs first. In computing
the amount of each equal annual installment to be paid to Harper the
Corporation shall give Harper credit for eight (8%) percent interest
on the balance that will be in his account during each of the fiscal
years between the date of termination of his employment as President
or his death, disability or retirement whichever occurs first.
3. PAYMENT IN EVENT OF DEATH.
All amounts payable to Harper under the terms of the agreement
shall be the event of his death be paid to the beneficiary designated in this
agreement. Harper reserves the right, and the company acknowledges this
right, to change the designated beneficiary at any time by giving written
notice to the Corporation in writing by registered mail. Said notice shall
be addressed to the Chairman of the Board of Directors of the Corporation.
4. BENEFICIARY.
Harper hereby designates as the beneficiary of any benefits payable
in the event of his death: Northwestern National Bank of Minneapolis
Trustee, under written trust with Charles M. Harper dated 3-31-1960. In the
event the foregoing person predeceases Harper, said amounts payable to such
beneficiary shall be paid to Harper's estate.
5. NON-ASSIGNMENT:
Harper shall not have any right to commute, encumber, or dispose of
the right to receive payments hereunder, except by the designation of
beneficiary as provided herein, and the payments provided herein and the
right thereto are expressly declared to be nonassignable and nontransferable.
6. MERGER.
Corporation shall not merge, reorganize or consolidate with any
other corporation until such Corporation expressly assumes the duty of the
company herein set forth.
7. BINDING EFFECT.
This agreement shall be binding upon the parties hereto, their
heirs, executors, administrators or successors.
36
<PAGE>
IN WITNESS WHEREOF the parties have executed this agreement.
ATTEST: CONAGRA, INC.
/s/ R. W. Goodrich BY: /s/ Robert B. Daugherty
__________________________ __________________________________
Secretary Chairman of the Board of Directors
/s/ C. M. Harper
_____________________________________
C. M. Harper
37
<PAGE>
Exhibit 11
----------
CONAGRA, INC. AND SUBSIDIARIES
Computation of Income Per Share
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------------------------------------------------
52/53 Weeks
-------------------------------------------------------------------
May 29, May 28, May 26, May 25, May 31,
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Income per share - basic:
Income before cumulative effect of change
in accounting $437.1 $495.6 $188.9 $615.0 $628.0
Less preferred dividends 24.0 24.0 8.6 - -
------ ------ ------ ------ ------
Income available for common stock
before cumulative effect of change in accounting 413.1 471.6 180.3 615.0 628.0
Cumulative effect of change in accounting - - - - (14.8)
------ ------ ------ ------ ------
Net income available for common stock $413.1 $471.6 $180.3 $615.0 $613.2
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Weighted average shares outstanding -
basic 453.3 453.0 451.3 451.3 451.8
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Income per share - basic:
Income before cumulative effect
of change in accounting $ 0.91 $ 1.04 $ 0.40 $ 1.36 $1.39
Cumulative effect of change in accounting - - - - (0.03)
------ ------ ------ ------ ------
Basic income per share $ 0.91 $ 1.04 $ 0.40 $ 1.36 $1.36
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Income per share - diluted:
Income available for common stock
before cumulative effect of change in accounting $413.1 $471.6 $180.3 $615.0 $628.0
Add dividends on convertible preferred
stock where dilutive 24.0 24.0 - - -
------ ------ ------ ------ ------
Income available for common stock
before cumulative effect of change
in accounting assuming full dilution 437.1 495.6 180.3 615.0 628.0
Cumulative effect of change in accounting - - - - (14.8)
------ ------ ------ ------ ------
Net income assuming full dilution $437.1 $495.6 $180.3 $615.0 $613.2
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>
38
<PAGE>
Exhibit 11 (Continued)
---------------------
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------------------------------------------------
52/53 Weeks
-------------------------------------------------------------------
May 29, May 28, May 26, May 25, May 31,
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average shares
outstanding - basic 453.3 453.0 451.3 451.3 451.8
Add shares contingently issuable upon
exercise of stock options 3.7 4.9 7.6 7.7 9.5
Add shares assumed issued for
convertible preferred stock where
dilutive 29.3 29.3 - - -
------ ------ ------ ------ ------
Weighted average shares
outstanding - diluted 486.3 487.2 458.9 459.0 461.3
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Income per share - diluted:
Income before cumulative effect of change
in accounting $ 0.90 $ 1.02 $ 0.39 $ 1.34 $ 1.36
Cumulative effect of change in accounting - - - - (0.03)
------ ------ ------ ------ ------
Diluted income per share $ 0.90 $ 1.02 $ 0.39 $ 1.34 $ 1.33
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>
Note 1: 1996 includes nonrecurring charges of $.79 and $.78 for basic and
diluted income per share, respectively.
39
<PAGE>
Exhibit 12
----------
CONAGRA, INC. AND SUBSIDIARIES
Computation of Ratios of Earnings to Fixed Charges and of
Earnings to Combined Fixed Charges and Preferred Stock Dividends
(Dollars in millions)
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------------------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense $ 295.1 $ 324.3 $ 362.8 $ 351.1 $ 367.4
Capitalized interest 1.7 4.9 5.8 11.2 11.4
Interest in cost of goods sold 12.7 17.5 27.5 21.8 19.1
One third of non-cancelable lease rent 43.5 38.6 40.1 37.1 38.5
-------- -------- -------- -------- ---------
Total fixed charges (A) 353.0 385.3 436.2 421.2 436.4
Add preferred stock dividends of the Company 39.3 39.3 14.6 - -
-------- -------- -------- -------- ---------
Total fixed charges and preferred stock
dividends (B) $ 392.3 $ 424.6 $ 450.8 $ 421.2 $ 436.4
-------- -------- -------- -------- ---------
-------- -------- -------- -------- ---------
Earnings:
Pretax income $ 720.0 $ 825.9 $ 408.6 $1,017.7 $ 1,021.1
Adjusted for unconsolidated subsidiaries (1.8) 10.6 2.3 (.4) 1.9
-------- -------- -------- -------- ---------
Pretax income of the Company as a whole 718.2 836.5 410.9 1,017.3 1,023.0
Add fixed charges 353.0 385.3 436.2 421.2 436.4
Less capitalized interest (1.7) (4.9) (5.8) (11.2) (11.4)
-------- -------- -------- -------- ---------
Earnings and fixed charges (C) $1,069.5 $1,216.9 $ 841.3 $1,427.3 $ 1,448.0
-------- -------- -------- -------- ---------
-------- -------- -------- -------- ---------
Ratio of earnings to fixed charges (C/A) 3.0 3.2 1.9* 3.4 3.3
Ratio of earnings to combined fixed charges
and preferred stock dividends (C/B) 2.7 2.9 1.9* 3.4 3.3
</TABLE>
*In 1996, pretax income includes non-recurring charges of $507.8 million.
Excluding the charges, the "ratio of earnings to fixed charges" and the
"ratio of earnings to combined fixed charges and preferred stock dividends"
was 3.1 and 3.0, respectively. See Note 2 "Non-Recurring Charges" on page 52
of the Company's 1998 Annual Report to Stockholders.
For purposes of computing the above ratio of earnings to fixed charges,
earnings consist of income before taxes and fixed charges. Fixed charges,
for the purpose of computing earnings are adjusted to exclude interest
capitalized. Fixed charges include interest on both long and short-term debt
(whether said interest is expensed or capitalized and including interest
charged to cost of goods sold), and a portion of non-cancelable rental
expense representative of the interest factor. The ratio is computed using
the amounts for ConAgra as a whole, including its majority-owned
subsidiaries, whether or not consolidated, and its proportionate share of any
50% owned subsidiaries, whether or not ConAgra guarantees obligations of
these subsidiaries.
For purposes of calculating the above ratio of earnings to combined fixed
charges and preferred dividends, preferred stock dividend requirements
(computed by increasing preferred stock dividends to an amount representing
the pre-tax earnings which would be required to cover such dividend
requirements) are combined with fixed charges as described above, and the
total is divided into earnings as described above.
40
<PAGE>
CONAGRA, INC. is a diversified international food company. We operate across
the food chain in 35 countries around the world. Our mission is to increase
stockholders' wealth. Our job is to help feed people better.
ConAgra people are committed to excellence - excellence in the results
we achieve, in the products and services we provide, and excellence in the
way we do our jobs. We pride ourselves on our success in serving our
customers and meeting consumer needs.
Contents
Financial Highlights 1
Letter to Stockholders 2
Objectives & Results 4
An Appetite for Excellence 6
Business Review
Grocery & Diversified Products 22
Refrigerated Foods 27
Food Inputs & Ingredients 31
Sales & Operating Profit by Segment 35
Eleven-Year Results 36
Management's Discussion & Analysis 38
Consolidated Financial Statements 45
Notes to Financial Statements 50
Independent Auditors' Report 63
Board of Directors 64
Principal Officers 66
World Map of ConAgra Operations 68
Corporate Citizenship 70
Investor Information Inside Back Cover
This report contains forward-looking statements in the Letter to
Stockholders, Business Review and Management's Discussion & Analysis. The
statements reflect management's current views and estimates of future
economic circumstances, industry conditions, company performance and
financial results. The statements are based on many assumptions and factors
including availability and prices of raw materials, product pricing,
competitive environment and related market conditions, operating
efficiencies, access to capital and actions of governments. Any changes in
such assumptions or factors could produce significantly different results.
The brand names in this annual report are owned or licensed by ConAgra, Inc.
and its subsidiaries.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------
May 31, May 25, Percent
Dollars in millions except per share amounts 1998 1997 Change
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $23,840.5 $24,002.1 -.7%
Income before income taxes and change in accounting $ 1,021.1 $ 1,017.7 .3%
Income before change in accounting $ 628.0 $ 615.0 2.1%
Net income $ 613.2 $ 615.0 -.3%
Basic income per share before change in accounting $ 1.39 $ 1.36 2.2%
Basic income per share $ 1.36 $ 1.36 -
Diluted income per share before change in accounting $ 1.36 $ 1.34 1.5%
Diluted income per share $ 1.33 $ 1.34 -.7%
Cash earnings return on year-beginning
common stockholders' equity * 28.1% 30.3%
5-year average: 26.2%
Common stock price at year end $ 29.25 $ 30.25 -3.3%
Common stock dividend rate at year end $ .625 $ .545 14.7%
Employees at year end 82,629 82,169 .6%
- ------------------------------------------------------------------------------------------------
</TABLE>
* As defined on page 4, Objectives & Results.
THROUGHOUT THIS REPORT, ALL REFERENCES TO NUMBER OF COMMON SHARES AND AMOUNTS
PER SHARE REFLECT AN OCTOBER 1, 1997 2-FOR-1 STOCK SPLIT.
[GRAPH]
18 Years of Record Diluted Earnings per Share (In dollars)
Compound Growth Rate: 15%
1980 = .11; 1981 = .16; 1982 = .19; 1983 = .20; 1984 = .23;
1985 = .29; 1986 = .33; 1987 = .41; 1988 = .43; 1989 = .54;
1990 = .61; 1991 = .71; 1992 = .75; 1993 = .79; 1994 = .90;
1995 = 1.02; 1996 = 1.17; 1997 = 1.34; 1998 = 1.36
[GRAPH]
Dividends per Share (In cents)
Compound Growth Rate: 15.4%
1980 = .046; 1981 = .054; 1982 = .062; 1983 = .072; 1984 = .082;
1985 = .094; 1986 = .108; 1987 = .124; 1988 = .144; 1989 = .166;
1990 = .193; 1991 = .223; 1992 = .260; 1993 = .300; 1994 = .348;
1995 = .401; 1996 = .460; 1997 = .528; 1998 = .605
Excludes accounting changes in 1993 and 1998, non-recurring charges in 1983,
1984 and 1996, non-recurring income in 1990.
1998 Annual Report 1
<PAGE>
TO OUR STOCKHOLDERS, EMPLOYEES AND OTHER FRIENDS
An Appetite for Excellence
The theme of this annual report is "An Appetite for Excellence" -- with good
reason. ConAgra's appetite for excellence in people, products and performance
has led to the best long-term earnings growth record among all major food
companies in the world.
ConAgra's earnings per share have increased every year since 1980,
excluding required accounting changes and non-recurring charges. Since 1980 our
company's earnings per share have grown at an average annual rate of 15 percent,
fulfilling our 14-percent trend line earnings growth objective. Other major food
companies averaged about nine-percent earnings-per-share growth during the same
period.
There has been a pattern to ConAgra's long-term earnings growth. Earnings
per share grow at a 14-plus-percent pace for three or four years, then drop off
to single-digit growth, typically as a result of industry conditions, then
resume 14-plus percent growth.
Fiscal 1998 Results
Fiscal 1998 was a drop-off year, more precisely a drop-off second half, on
the heels of four years of 14-plus percent average earnings growth. Following
13-percent earnings-per-share growth in the first half, earnings per share
fell eight percent in the second half, excluding a one-time, non-cash
provision for a required accounting change. The full-year gain was 1.5
percent, excluding the accounting change.
Most ConAgra businesses performed very well last year. Our Grocery &
Diversified Products and Food Inputs & Ingredients business segments increased
operating profit 12.5 percent and 18 percent, respectively. Branded processed
meats, the largest profit contributor in Refrigerated Foods, also enjoyed
double-digit operating profit growth. Moreover, these businesses all beat their
annual profit plans.
On the other hand, abnormally high supply growth and decelerating Asian
export demand depressed selling prices and profit margins in the fresh meat and
poultry industry. Pressured by the protein glut, our fresh meat and poultry
earnings plummeted during fiscal 1998's second half, and Refrigerated Foods
full-year operating profit was down 40 percent.
Fiscal 1999 Outlook
Our game plan for the new fiscal year is straightforward. Maintain positive
earnings momentum in businesses that performed well last year and improve
protein performance. We are making strides in our protein performance. We are
targeting earnings growth in fiscal 1999, with results improving as the year
progresses.
Rewarding Stockholders
ConAgra's mission is uncomplicated: increase stockholders' wealth. We've
rewarded our stockholders with premium long-term returns. During fiscal 1998, we
split ConAgra's common stock two-for-one and increased the dividend 14.7
percent, the 23rd consecutive year of dividend increases of at least 14 percent.
Over the last 10 fiscal years, ConAgra's average annual total return to
investors was 19.4 percent, including reinvested dividends. Our stock price grew
at a 16.8-percent pace, beating a strong stock market's 15.7-percent growth
rate. However, our recent stock price performance is unsatisfactory. The remedy
is earnings growth. We are managing aggressively to drive earnings and sustain
14-percent trend line earnings-per-share growth.
Leadership and Growth
The three keys to driving long-term earnings growth are leadership, profit
margin expansion and profitable top-line growth. As always, strong leadership is
most important.
We've aggressively strengthened leadership in ConAgra's protein sector,
particularly in the beef business, which hurt earnings last year. New
leadership, headed by a proven 20-year ConAgra executive, is building a
top-notch management team to shore up results.
As the new year began, we announced a series of leadership and
organizational initiatives to accelerate growth in branded shelf-stable grocery
products, foodservice, international agri-products, biotech activities and
commodity management.
2 ConAgra, Inc.
<PAGE>
These initiatives share two common facets. First, they are designed to do
better what we do well. Second, these initiatives are led by executives with
well-established records of growing ConAgra businesses successfully.
We expect our corporate staff officers to be leaders of change and growth.
During the past year, we've strengthened corporate leadership in mergers and
acquisitions, marketing, information technology and human resources.
2 ConAgra, Inc.
<PAGE>
Margin Expansion
ConAgra's operating and pretax profit margins have improved over 65 percent
in the 1990s. We want to continue to improve by adding at least a full
percentage point during the next three years. One point is powerful, equal to
nearly $240 million in additional pretax earnings.
Some of ConAgra's margin improvement in the 1990s came from a targeted
process we called Get The Family Money!. Its emphasis on profit-building
collaboration among our operating companies helped set the stage for our new
strategic sourcing initiative.
This initiative is focused on becoming a much more efficient customer by
leveraging ConAgra-wide procurement of raw materials, packaging and other basic
goods and services. We see potential for substantial cost reduction and margin
improvement.
Profitable Top-Line Growth
ConAgra's flat sales results in recent years are somewhat misleading. During the
past two years, business divestments, restructuring initiatives and lower
commodity costs passed through as lower selling prices reduced reported sales
nearly $2.4 billion, 10 percent of total sales. Nevertheless, increasing
profitable top-line growth via internal initiatives and acquisitions is a top
strategic priority.
Our acquisition pace quickened with a series of attractive additions during
fiscal 1998's second half. In the first quarter of fiscal 1999, GoodMark Foods
merged with ConAgra, and we announced an agreement to buy Nabisco, Inc.'s Egg
Beaters and margarine businesses.
GoodMark's Slim Jim brand and three of the margarine brands we are
acquiring from Nabisco -- Parkay, Blue Bonnet and Fleischmann's -- will raise to
25 the number of ConAgra brands that each chalk up over $100 million in annual
retail sales.
Branded food products account for well over half of ConAgra's earnings.
Building on our powerful brands is another important avenue to profitable
top-line growth.
ConAgra's People
Gerry Rauenhorst and Fred Wells have served our shareholders well and then some
as ConAgra board members since 1982. They take with them to retirement this
September our congratulations and gratitude.
[PHOTO]
BRUCE ROHDE (LEFT) AND PHIL FLETCHER
Our shareholders benefited from the contributions of four ConAgra
executives who retired last year. Congratulations and many thanks to Lee
Lochmann, who headed Refrigerated Foods, and corporate vice presidents Don
Stone, transportation; John Dill, taxes; and Joe Petty, management information
systems. We were deeply saddened by the passing of Paul Korody, our marvelous
government vice president and guru for many years.
More than 80,000 ConAgrans are the primary source of our company's
strength, success and appetite for excellence. We applaud you, we thank you, and
we know we can count on you to make ConAgra's future as bright as it can be.
Sincerely,
/s/ Phil Fletcher
Philip B. Fletcher
Chairman
/s/ Bruce Rohde
Bruce Rohde
President and Chief Executive Officer
1998 Annual Report 3
<PAGE>
OBJECTIVES & RESULTS
ConAgra is committed to major financial performance objectives that drive how we
manage our company and serve our mission to increase stockholders' wealth.
We incorporate in our financial objectives a concept called "cash earnings" --
net earnings plus goodwill amortization. Businesses run on cash. The principal
source of internally generated cash is net earnings before depreciation of fixed
assets and amortization of goodwill. Cash from depreciation is generally needed
for replenishment to help maintain a going concern.
On the other hand, goodwill represents valuable non-depreciating brands and
distribution systems. We invest and incur expense throughout the year to
maintain and enhance the value of these brands and distribution systems.
Consequently, goodwill amortization typically is not a true economic cash cost.
It, along with net earnings, is a source of "decision cash" -- cash available to
invest in ConAgra's growth and pay dividends.
It is this decision cash that we call cash earnings. We believe the cash
earnings concept is an appropriate way to manage and measure our businesses. We
use the cash earnings concept in our financial objectives for return on common
equity and dividend growth. We do not use it in our earnings-per-share growth
objective because companies are not permitted to present earnings-per-share data
in any alternative form.
Return on Common Equity
Objective
ConAgra's most important financial objective is to average more than a 20%
after-tax cash earnings return on year-beginning common stockholders' equity,
and to earn more than a 15% return in any given year.
In determining results as shown in the table below, the 1996 results
exclude non-recurring charges of $356.3 million after tax, and the 1998 results
exclude a cumulative one-time, non-cash provision of $14.8 million after tax for
a required accounting change.
<TABLE>
<CAPTION>
Result
Return on Common Equity
- --------------------------------------------------
<S> <C>
5-Year Average: 26.2%
1994 23.7%
1995 24.4%
1996 24.3%
1997 30.3%
1998 28.1%
- --------------------------------------------------
</TABLE>
Financing
Objective
ConAgra's primary financing objective is to maintain a conservative balance
sheet.
Long-Term Debt
Senior long-term debt normally will not exceed 30% of total long-term debt plus
equity. Long-term subordinated debt is treated as equity due to its preferred
stock characteristics.
Short-Term Debt
Most ConAgra businesses normally will eliminate at the end of their natural
fiscal year short-term debt, net of cash, used to finance assets other than
hedged commodity inventories.
Natural year end occurs when inventories and receivables are at their
annual low points -- for example, the end of February in our crop inputs
business, and the end of May in many other ConAgra businesses.
<TABLE>
<CAPTION>
Result
Long-Term Debt Short-Term Debt
- ------------------------------------------------------------------------
<S> <C> <C>
1994 30% 0
1995 30% 0
<PAGE>
4 ConAgra, Inc.
1996 30% 0
1997 30% 0
1998 30% 0
- ------------------------------------------------------------------------
</TABLE>
4 ConAgra, Inc.
<PAGE>
Earnings and Dividend Growth
Earnings Growth Objective
ConAgra's objective is to increase trend line earnings per share, on average, at
the rate of at least 14%.
Although earnings balance is a strength of ConAgra's diversified food
businesses, we may not always achieve quarter-to-quarter, or sometimes
year-to-year, increases in reported earnings. However, ConAgra expects to
increase trend line earnings -- what we would earn over time with average or
normal industry conditions -- at the rate of at least 14%.
Dividend Growth Objective
ConAgra's objective is to increase common stock dividends consistent with growth
in ConAgra's trend line earnings.
Over time, ConAgra expects common stock dividends to average in the range
of 30 to 35% of cash earnings.
Our earnings and dividend growth objectives are linked. Reported
earnings-per-share growth varies year to year and may be higher or lower than
trend line earnings per share. Over a long period, reported earnings per
share reflect trend line earnings per share. Over a shorter period of time,
dividends-per-share growth is in effect a proxy for trend line
earnings-per-share growth. Dividend increases represent management's judgment
of ConAgra's trend line, or underlying, earning power independent of reported
earnings results.
Result
ConAgra has increased earnings per share for 18 consecutive years (see note
below) at a compound annual growth rate of 15%. During the same period,
dividends per share increased annually at an average rate of 15.4%.
During the past 10 years, the growth rate of earnings per share was 12.2%,
mainly due to single-digit growth in 1992, 1993 and 1998. During the same 10
years, dividends per share increased at an average rate of 15.4%, including
increases of 16.9% in 1992, 15.4% in 1993 and 14.7% in 1998.
Note: Diluted earnings per share exclude the one-time, non-cash cumulative
effect of required accounting changes in 1993 and 1998 and non-recurring charges
of $.78 per share in 1996. Reported earnings in 1996 were $.39 per share
including the non-recurring charges.
<TABLE>
<CAPTION>
Compound Annual Growth:
10-year 18-year
- ------------------------------------------------------------------
<S> <C> <C>
Earnings per share 12.2% 15.0%
Dividends per share 15.4% 15.4%
- ------------------------------------------------------------------
[Bar Graph]
<CAPTION>
Diluted Earnings per Share
Year: 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C>
$ 0.90 $ 1.02 $ 1.17 $ 1.34 $ 1.36
Percent Increase: 13.9% 13.3% 14.7% 14.5% 1.5%
[Bar Graph]
Dividends per Share
Year: 1994 1995 1996 1997 1998
$ .3475 $ .4013 $ .4600 $ .5275 $ .6050
Percent Increase: 15.8% 15.5% 14.6% 14.7% 14.7%
</TABLE>
1998 Annual Report 5
<PAGE>
Over the last five years, dividends have averaged 34.9% of cash earnings,
excluding impact of non-recurring charges and accounting change.
1998 Annual Report 5
<PAGE>
AN APPETITE FOR EXCELLENCE
From farm gate to dinner plate, superior business results and premium long-term
returns to stockholders fulfill ConAgra's hunger for achievement. Our appetite
for excellence is fully met when we also have satisfied customers and consumers
who want even more, and employees who use their exceptional talents to provide
it -- thereby renewing our success. As ConAgra has grown to about 80 independent
operating companies across the global food chain, our recipe for achievement has
been refined and enhanced. Essential ingredients include strong leaders who
manage for profitable long-term growth; acquisitions and internal investments
that contribute to business results; leveraging the interlocking strengths of
ConAgra's companies across the food chain; and adding value to trusted ConAgra
brands. This year's annual report provides a sampling of ConAgra's achievements
and our companywide focus on growth, innovation and working smarter. At ConAgra,
our "appetite for excellence" is a never-ending opportunity.
6 ConAgra, Inc.
<PAGE>
[PHOTOS: Various ConAgra products and employees]
1998 Annual Report 7
<PAGE>
EXCELLENCE THROUGH GROWTH
"Mother always said you are known by the company you keep." This is a refrain
warmly used to welcome visitors to Hester Industries, also known as Pierce
Foods. ConAgra acquired Hester Industries in December 1997. As a producer of
more than 200 value-added poultry products, Hester's addition to the ConAgra
family of companies brings profitability, excellence in customer service,
innovation and integrity to the table. Jeff Hester, who succeeded his father Del
Hester as company president in 1989, leads 850 skilled employees who provide
great-tasting, nutritious and convenient chicken products to foodservice outlets
in the U.S. and nine other countries. During the past 10 years, ConAgra has
acquired or created joint ventures with approximately 150 companies and invested
$4.1 billion in capital projects to enhance already-owned ConAgra businesses.
During the same period, net sales have increased 151 percent and ConAgra
earnings per share are up 216 percent (excluding the impact of the 1998 change
in accounting). ConAgra growth means making international and domestic
acquisitions that fit our farm-to-plate presence and investing internally to
create and sell products and services that surpass the expectations of our
customers and consumers.
AT PIERCE FOODS HEADQUARTERS IN WINCHESTER, VIRGINIA, ARE, FROM LEFT: (FRONT
ROW) DEL HESTER, FORMER PRESIDENT, AND JEFF HESTER, PRESIDENT; (MIDDLE ROW)
JESSE SAAR, VICE PRESIDENT, LOGISTICS, AND TOM WIDDER, VICE PRESIDENT,
ENGINEERING; (BACK ROW) ANDY SEYMOUR, VICE PRESIDENT, MARKETING; GEORGE HOTT,
VICE PRESIDENT, SALES; STEVE BISHOP, VICE PRESIDENT, FINANCE; AND STEVE MYERS,
VICE PRESIDENT, PRODUCTION.
8 ConAgra, Inc.
<PAGE>
[PHOTO: Pierce Foods Employees]
1998 Annual Report 9
<PAGE>
INTERNATIONAL GROWTH
Identifying international opportunities, growing with domestic customers
overseas and maintaining a long-term commitment to feed the world guide
ConAgra's international growth. Right: Verde Valle, S.A. is a ConAgra joint
venture in Mexico. As a leading packager and distributor of branded grocery
products, primarily rice and beans, Verde Valle provides ConAgra with a valuable
opportunity to have an important distribution link and supermarket presence in
Mexico. Left: In 1994, ConAgra company Lamb-Weston, a leading supplier of
french fries and other frozen products worldwide, formed a joint venture with
Dutch company Meijer Frozen Foods. Today, as a preeminent supplier of potato
products throughout Europe, the Holland plant is prospering.
[PHOTO]
GERT JAN VAN DEN BERG, OPERATIONS CONTROLLER AT THE LAMB-WESTON PLANT IN
KRUININGEN, HOLLAND.
[PHOTO]
FROM LEFT: GERMAN ROSALES WYBO, VICE PRESIDENT, MARKETING AND R&D; SERGIO E.
ROSALES WYBO, PRESIDENT; AND ALFONSO ROSALES WYBO, VICE PRESIDENT, SALES, AT
VERDE VALLE IN GUADALAJARA, MEXICO.
10 ConAgra, Inc.
<PAGE>
NEW PRODUCTS
Satisfying consumers' changing tastes and lifestyles provides ConAgra with a
welcome opportunity to introduce new branded food products that are
great-tasting, nutritious and easy to prepare. Combined, ConAgra innovation,
experience across the food chain and an understanding of tomorrow's
marketplace lead to new product success. New products shown on this page
include Advantage\10 low-fat vegetarian products, Healthy Choice Bowl
Creations, Orville Redenbacher's Double Feature Popcorn, Hunt's Snack Pack
Puddin' Pies puddings and Banquet Hot Wings.
[PHOTO: Various Products]
1998 Annual Report 11
<PAGE>
EXCELLENCE THROUGH INNOVATION
Our job is to help feed people better. To do so requires innovation. At research
and development centers across ConAgra, innovation and achievement flourish. The
Mike Harper Product Development Center in Omaha, Nebraska, shown in the
photograph, is a place where talented culinary experts, dietitians, home
economists, food technologists and engineers collaborate to prepare new and
enhanced food products; it is a birthplace of consumer satisfaction. Creative
innovation is encouraged as part of the working culture at ConAgra. Innovation
influences the agricultural and food products we produce, the way we conduct
business, our diligent activities to sustain and protect the environment, and
our business results. At ConAgra, earnings per share, excluding required
accounting changes and non-recurring charges and income, have increased for 18
consecutive years at a compound annual growth rate of 15 percent. Innovation has
enhanced our success. Accelerated innovation will guide ConAgra's future.
AT CONAGRA'S MIKE HARPER PRODUCT DEVELOPMENT CENTER IN OMAHA, NEBRASKA, ARE
BEVERLY HICKEY, SENIOR FOOD TECHNOLOGIST (FOREGROUND); TIM GOODMANN, MANAGER,
TECHNICAL SERVICES (BACK LEFT); AND ALECIA JONES, ASSOCIATE FOOD TECHNOLOGIST.
12 ConAgra, Inc.
<PAGE>
[PHOTO: Employees at Mike Harper Product Development Center]
1998 Annual Report 13
<PAGE>
[PHOTO: Employees at Warren Analytical Laboratory]
LEADERSHIP IN FOOD SAFETY
Food safety at ConAgra is a process of continuous improvement and innovation. In
the past year alone, we invested about $20 million just in our U.S. meat and
poultry plants on new food safety measures. Across all ConAgra plants, the cost
of food safety is much higher -- a price we pay without hesitation. We have no
greater obligation to our customers and consumers than to do our part to ensure
a safe and wholesome food supply. Shown in the photo, ConAgra's Warren
Analytical Laboratory in Greeley, Colorado, is a full-service food testing lab
that combines the scientific skills of many talented ConAgrans with today's most
reliable advanced technology to verify the effectiveness of food safety
protocols. It's just one of many layers of food safety protection at work
throughout ConAgra.
SHOWN ABOVE AT THE WARREN ANALYTICAL LABORATORY ARE ED GROVE, MICROBIOLOGY
SUPERVISOR, AND CARA PETERSEN, MICROBIOLOGIST.
14 ConAgra, Inc.
<PAGE>
CONVENIENCE
Consumers want quick and convenient meals and snacks to help make their lives
easier. Flavor, ease of preparation and nutrition are the standards by which
convenient foods are measured. ConAgra creates products that deliver
convenience. We work hard to understand today's consumers and how we can be
their time-saving partner. And while we provide convenient foods today, our
opportunity lies in providing even more convenient and satisfying ConAgra foods
tomorrow. Time-saving products shown here include Swift Morning Makers, Marie
Callender's Meatloaf Family Meal, Lamb-Weston Inland Valley Homestyle Mashed
Potatoes and Armour Fully Cooked Bacon.
[3 PHOTOS: Various ConAgra products]
1998 Annual Report 15
<PAGE>
HEALTHY CHOICE
Healthy Choice is a brand people trust, offering consumers great-tasting,
nutritious food and consumer tips for healthful eating and lifestyles. ConAgra
first introduced Healthy Choice in 1988. Since then, Healthy Choice products
have transformed grocery stores into a virtual "sea of green." Today, ConAgra
markets more than 300 Healthy Choice products. With the planned introduction of
more than 30 new Healthy Choice products in fiscal 1999, Healthy Choice
leadership and innovation will continue.
[3 PHOTOS: Various ConAgra products]
16 ConAgra, Inc.
<PAGE>
PROTEIN POWER
ConAgra provides the beef, pork and poultry products that consumers trust --
delivering the satisfying, consistent quality people expect. Our innovations in
branded meats have led to new products in consumer-friendly packaging, providing
delicious, convenient and nutritious eating experiences time and time again.
Responding to strong consumer demand and ever-changing lifestyles, ConAgra's
offerings of innovative branded protein products will continue to grow.
[3 PHOTOS: Various ConAgra products]
1998 Annual Report 17
<PAGE>
EXCELLENCE THROUGH WORKING SMARTER
Leveraging the internal strengths provided by the diversity of our presence
along the food chain provides limitless opportunities for profitable growth. In
April 1999, ConAgra will open the company's new Global Trading Center on the
headquarters campus in Omaha, Nebraska. The Center will be home to several
ConAgra trading companies, and it will be a place where all ConAgra companies
can buy and sell commodities such as grains, oilseeds, meats and energy, while
effectively managing their risks. It will be the workplace for more than 200
superb ConAgra commodity traders and allied staff, who will combine their
talents at one location for the first time. When completed, the new facility
will be equipped with the world's best trading technology and systems. Focusing
these trading activities at one location simply makes good business sense.
Internal collaboration at ConAgra leads to profitable business relationships,
accurate and timely communication, innovation, productivity and a better
understanding of the marketplace.
KATRINA BECKER, MANAGER, ADMINISTRATION AND SUPPORT, AND DAVE PENRICE,
PRESIDENT, SOFT COMMODITY DIVISION, OF THE CONAGRA TRADE GROUP, AND THEIR
COLLEAGUES AT CONAGRA'S COMMODITY TRADING FLOOR ON THE COMPANY'S OMAHA,
NEBRASKA, CAMPUS.
18 ConAgra, Inc.
<PAGE>
[PHOTO: Employees at ConAgra's commodity trading floor]
1998 Annual Report 19
<PAGE>
SUSTAINING OUR ENVIRONMENT
[PHOTO: Employees working at a Michigan farm field]
At ConAgra, business success and environmental stewardship are naturally
compatible. In the past year, new sustainable development initiatives across
ConAgra meant $25 million to ConAgra operations. They also resulted in 12,000
trees saved; 4.3 million pounds of cardboard and corrugated box materials
recycled; 1.5 million pounds of paper recycled; and 5 million pounds of plastic
packaging reduced. In the photo, ConAgra's Grower Service Corporation uses
global positioning satellites, airplanes and soil experts who gather field data
to help farmers increase their yields through selectively applied fertilizers.
The result: efficient fertilizer use, healthy crops, and properly managed and
sustained land.
CONAGRA'S GROWER SERVICE CORPORATION'S COMMERCIAL PRODUCT DEVELOPMENT
REPRESENTATIVE SHARON VENNIX AND MARC HOOPER, COMMERCIAL PRODUCT DEVELOPMENT
MANAGER, WORKING AT A MICHIGAN FARM FIELD.
20 ConAgra, Inc.
<PAGE>
WORKING SAFELY
Employees at ConAgra's Butterball Turkey Company facility in Huntsville,
Arkansas, recently celebrated 5 million hours worked without a lost-time
accident. The plant safety team says the key is teamwork and understanding
that fellow employees are family. Absolute excellence in safety is the
standard in every ConAgra workplace. Results in the past year have been good.
Eighteen ConAgra plants have collectively achieved 32 million hours without a
lost-time accident. And many other facilities are improving already-good
safety records.
SHOWN BELOW ARE BUTTERBALL TURKEY CO. SAFETY TEAM MEMBERS IN HUNTSVILLE (FROM
LEFT): DONNA EMITT, DEBBIE BENEDICT, BETTY BENEDICT, LUCY WAMPLER, JACINDA
MCCONNELL, ANDREW LEKWA, CONNIE SHARP AND RICK ALLRED.
[PHOTO: Safety team members in Huntsville]
1998 Annual Report 21
<PAGE>
The following Business Review section (pages 22-34) describes the businesses
in which ConAgra operates, provides a fiscal-year-in-review report on these
businesses and gives a brief look forward into fiscal 1999.
GROCERY & DIVERSIFIED PRODUCTS OPERATING PROFIT INCREASED 12.5 PERCENT. ALL
BUSINESSES IN THIS SEGMENT CONTRIBUTED TO THE OPERATING PROFIT GROWTH. THE
FROZEN FOODS, POTATO PRODUCTS, SEAFOOD AND MICROWAVE PRODUCTS BUSINESSES ALL
INCREASED OPERATING PROFIT SUBSTANTIALLY. AN EARNINGS SURGE LATE IN THE FISCAL
YEAR LIFTED THE HUNT-WESSON COMPANIES TO FULL-YEAR OPERATING PROFIT GROWTH. BOTH
UNIT VOLUME GROWTH AND ACQUISITIONS CONTRIBUTED TO THE 5.4 PERCENT SEGMENT SALES
INCREASE.
GROCERY & DIVERSIFIED PRODUCTS
<TABLE>
<CAPTION>
[PIE CHART] [PIE CHART]
Segment Sales Operating Profit
(In millions) (In millions)
<S> <C>
-----------------------------------------------------
1998 $5,620.1 1998 $913.2
1997 $5,333.9 1997 $811.5
% Change +5.4% % Change +12.5%
-----------------------------------------------------
</TABLE>
FROZEN FOODS
PRINCIPAL ACTIVITIES: PRODUCTION AND MARKETING OF FROZEN FOODS TO GROCERY,
FOODSERVICE AND SPECIAL MARKET CUSTOMERS SUCH AS CLUB STORES AND SUPERCENTERS.
MAJOR BRANDS: HEALTHY CHOICE, BANQUET, MARIE CALLENDER'S, KID CUISINE,
BUTTERBALL, SINGLETON, TASTE O'SEA, PIERCE, MAMA ROSA, PAPA G'S, GILARDI'S,
MORTON, PATIO, CHUN KING AND LA CHOY.
The CONAGRA FROZEN PREPARED FOODS group of companies includes ConAgra Frozen
Foods, Pierce Foods, Gilardi Foods and ConAgra Seafood Companies. ConAgra Frozen
Prepared Foods' sales were about $2 billion in fiscal 1998. Earnings for the
group increased substantially.
CONAGRA FROZEN FOODS' well-known brands are top consumer choices in grocery
stores across the U.S. Through innovation and consumer responsiveness, ConAgra
Frozen Foods stays on the leading edge of providing consumers with tasty,
convenient meal solutions.
Frozen food industry categories during ConAgra's fiscal year were generally
flat to down slightly, and competition in the industry was intense. ConAgra
Frozen Foods held its own, with retail volume year to year about even following
significant growth the previous year. A sharp focus on customer needs led to a
reorganization of ConAgra Frozen Foods' in-store sales structure late in fiscal
1998, and the results are expected to improve customer service and consumers'
ability to easily find the ConAgra products they want.
Fiscal 1998's best volume performers were the Marie Callender's and Kid
Cuisine brands. A line of Marie Callender's entrees was launched early in fiscal
1998 in the western U.S., and consumers responded strongly. Expansion in the
rest of the country began in the fourth quarter of the fiscal year. The entree
line introduction was fueled by first-ever television advertising for Marie
Callender's, using the slogan "Unbelievably Good Frozen Food." Kid Cuisine Taco
Roll-ups and Waffle Sticks were introduced and received good marks from young
consumers.
22 ConAgra, Inc.
<PAGE>
Earnings increased to a record level for both Healthy Choice meals and
Healthy Choice Ice Cream. Fourteen new flavors of Healthy Choice Ice Cream were
introduced during the year. An innovative new line of Healthy Choice Bowl
Creations -- six full-flavor, "homemade"-style meals served in bowls -- is being
introduced early in fiscal 1999.
Banquet frozen poultry products had a good year in a highly competitive
freezer case. Earnings increased significantly for ConAgra Frozen Foods' Banquet
and Butterball poultry products. Late in fiscal 1998, ConAgra Frozen Foods
introduced Banquet Grilled Chicken and Banquet Wings, two of the most innovative
Banquet products in recent years.
ConAgra Frozen Foods' foodservice meals business grew dramatically in
fiscal 1998. While still a relatively small part of the company, the foodservice
meals business is extending ConAgra Frozen Foods' expertise in new product
development to meet the needs of consumers when they prefer a great-tasting
ready-to-eat meal.
Two important strategic acquisitions during fiscal 1998 added foodservice
and retail strength to ConAgra Frozen Foods' growing stable of products. Hester
Industries, known in the food industry as PIERCE FOODS, was acquired in December
1997. Pierce Foods is a producer of high-quality poultry products for
foodservice customers. Best known is Pierce's popular Wing Dings, a chicken
wings product served in foodservice outlets.
GILARDI FOODS, acquired in February 1998, produces and markets
superior-quality pizzas and other dough-based products, most often sold in
the refrigerated cases and at the deli counters of retail outlets. Gilardi's
brands include MaMa Rosa, Papa G's and Gilardi's. Late in fiscal 1998,
Gilardi's introduced two great-tasting varieties of MaMa Rosa Stuffed Crust
Pizza.
CONAGRA SEAFOOD COMPANIES include ConAgra Shrimp Companies, O'Donnell-Usen
and Meridian Products. Total seafood sales were about $450 million in fiscal
1998.
ConAgra Shrimp Companies, our largest seafood business, continued to
broaden its product line to serve the growing seafood needs of foodservice
customers. ConAgra Shrimp achieved a major earnings increase in fiscal 1998.
Meridian Products, a worldwide seafood trader, significantly broadened the
variety of products it supplies, and volume increased accordingly. Meridian also
strengthened its supermarket deli business.
The seafood industry continues to be challenged by volatility in both price
and raw material availability, while consumer demand for seafood remains strong.
ConAgra Seafood Companies managed well in this environment, and earnings
increased substantially.
Fiscal 1999 should be another good year for the total ConAgra Frozen
Prepared Foods group. These companies plan innovative new products, substantial
sales and marketing investments, and increased operating efficiencies.
1998 Annual Report 23
<PAGE>
SHELF-STABLE FOODS
PRINCIPAL ACTIVITIES: PRODUCTION AND MARKETING OF PRIMARILY SHELF-STABLE FOODS
TO GROCERY, FOODSERVICE AND SPECIAL MARKET CUSTOMERS.
MAJOR BRANDS: HUNT'S, HEALTHY CHOICE, WESSON, ORVILLE REDENBACHER'S, ACT II,
PETER PAN, VAN CAMP'S, MANWICH, SNACK PACK, SWISS MISS, KNOTT'S BERRY FARM, CHUN
KING, LA CHOY, ROSARITA, GEBHARDT, WOLF BRAND, ADVANTAGE\10 AND SLIM JIM.
CONAGRA GROCERY PRODUCTS COMPANIES includes the Hunt-Wesson operating companies
and Golden Valley Microwave Foods. ConAgra Grocery Products' impressive
portfolio of powerful brands are consumer favorites in a wide range of
categories from cooking oils and cocoa to puddings and popcorn. In fiscal 1998,
consumers gained even more choices on store shelves, as more than 50 new
products and line extensions were introduced by ConAgra Grocery Products.
Marketing spending, largely to support new products, was modestly higher than in
fiscal 1997.
ConAgra's branded shelf-stable products competed in a tough environment
during the year, with industry category declines more the rule than the
exception. ConAgra products more than held their own, however, with unit volumes
up modestly.
The HUNT-WESSON businesses in total had another record year, with earnings
slightly above the previous year. Hunt-Wesson sales were about $2.3 billion in
fiscal 1998.
A reorganization of Hunt-Wesson's in-store sales force to better meet
customer needs was initiated late in the year and is expected to improve sales
in fiscal 1999. The Hunt-Wesson group continued to refine the comprehensive
customer leadership program designed to improve sales, customer service,
marketplace decisions and profits.
Hunt-Wesson's largest business is Hunt Foods Company. Hunt Foods includes
Hunt's, Healthy Choice, Van Camp's, Wolf Brand, La Choy, Chun King, Rosarita and
Gebhardt products. Hunt's earnings in fiscal 1998 were slightly above the prior
year's. Margins were squeezed by spending to introduce Van Camp's Baked Beans
and Mediterania pasta sauces. A late tomato crop created manufacturing problems
that were costly for Hunt's.
The Wesson/Peter Pan business, which includes Wesson, Peter Pan and Knott's
Berry Farm products, had a good year. Earnings increased significantly, with a
strong performance by Peter Pan and Wesson Oil products. A new product,
Mediterania Olive Oil, was introduced. Unit volumes increased for Knott's Berry
Farm products -- jams, jellies, syrups and salad dressings.
The Orville Redenbacher/Swiss Miss Foods Company includes Orville
Redenbacher's popcorn products and Swiss Miss, Snack Pack and Healthy Choice
pudding products. Earnings for this group were modestly ahead of fiscal 1997
earnings. The line of great-tasting Orville Redenbacher's Popcorn Cakes
continued to expand
24 ConAgra, Inc.
<PAGE>
distribution and attract new consumers to the "rice cake" category. Three new
flavors -- Milk Chocolate regular cakes, and Chocolate Peanut Crunch and Sour
Cream & Onion mini cakes -- were introduced during the year. Late in fiscal
1998, Orville Redenbacher's innovative Double Feature Popcorn -- jumbo-size
popcorn with a real butter pour-over sauce -- was introduced.
Pudding products performed well. Snack Pack improved its market position,
and two new pudding products -- Healthy Choice Pudding and Swiss Miss Pie
Lover's Pudding -- achieved good consumer acceptance. The Swiss Miss Cocoa
business was hurt by the unusually warm winter in much of the United States.
Hunt-Wesson's international business, which primarily markets branded
products from the Hunt-Wesson group in Canada, had a good year, but earnings
were hurt by the drop in Canadian currency value. Hunt-Wesson began distributing
some of its products in Mexico during fiscal 1998, working with the ConAgra
joint venture company Verde Valle, S.A.
Hunt-Wesson's foodservice business increased volumes meaningfully and
boosted earnings significantly in fiscal 1998. Products from the Hunt-Wesson
group also did well in the special markets they serve, such as club stores and
mass merchandisers.
GOLDEN VALLEY MICROWAVE FOODS is a leading marketer of microwave popcorn,
specialty snacks and other convenient food products sold internationally in
mass-merchandising outlets, vending machines and grocery, drug, club,
convenience and video stores. Its principal brands are Act II, Healthy Choice
and Advantage\10. Golden Valley's products include microwave and ready-to-eat
popcorn, popped corn cakes and frozen microwave french fries, pancakes and
waffles.
Golden Valley had an excellent year, with volumes and earnings up strongly.
Results were helped by Act II popcorn products' expansion in grocery stores,
good manufacturing results and an unusually high raw popcorn price which
benefited Golden Valley's Vogel Popcorn unit, a commodity popcorn supplier.
During fiscal 1998, Golden Valley acquired Rygmyr Foods, a marketer of popcorn
novelty items, and introduced Act II 2000 Extreme Butter, a popcorn product with
the buttery flavor so many consumers love.
Golden Valley also introduced a line of great-tasting Advantage\10 products
during the year. Healthful Advantage\10 products are low-fat, vegetarian and
have less than 10 percent of calories from fat. Endorsed by well-known physician
and wellness pioneer, Dr. Dean Ornish, Advantage\10 products are sold in natural
food stores. Products include frozen entrees and Oven-Roasted Pizzas, Veggie
Burgers, Fruit Smoothies and Nutrition Bars.
Early in fiscal 1999, ConAgra and GOODMARK FOODS, INC. merged. GoodMark
Foods is a leading producer and marketer of branded meat snacks. Its principal
brands include Slim Jim, Penrose and Pemmican meat snacks and Andy Capp's grain
snacks. GoodMark's annual sales are about $170 million.
The addition of the Slim Jim brand raised from 21 to 22 the number of
ConAgra
1998 Annual Report 25
<PAGE>
brands with annual retail sales exceeding $100 million. To take advantage of
opportunities for synergies in snack foods marketing and distribution, GoodMark
became a unit of Golden Valley.
CONAGRA FOODS LIMITED produces and markets microwaveable popcorn products,
french fries and frozen foods, primarily in Europe. ConAgra Foods Limited
improved results in fiscal 1998.
We expect fiscal 1999 to be a good year for ConAgra Grocery Products
Companies. These companies are aggressive and flexible in the marketplace, and
their businesses are designed to respond innovatively and rapidly to their
customers and consumers.
POTATO PRODUCTS
PRINCIPAL ACTIVITIES: PRODUCTION AND MARKETING OF POTATO PRODUCTS, INCLUDING
FRENCH FRIES AND AN ARRAY OF SPECIALTY FROZEN POTATO PRODUCTS, PRIMARILY FOR
FOODSERVICE MARKETS.
Major brands: Lamb-Weston for foodservice, Inland Valley in retail markets.
LAMB-WESTON, INC. supplies potato products to most of the leading restaurant
chains and foodservice distributors in the U.S., Europe and Asia. Lamb-Weston
products are sold in more than 70 countries on six continents. Annual sales
exceed $1 billion.
U.S. and world demand for frozen potato products continues to increase.
As Lamb-Weston's foodservice customers open new restaurants around the world,
Lamb-Weston is positioned to provide the potato products they need.
In fiscal 1998, Lamb-Weston had another good year, exceeding plan and
fiscal 1997 earnings. The company benefited from strong volumes, continued
improvement in its product mix (with specialty products a higher percentage of
sales and growing), improved manufacturing efficiency, favorable raw material
costs in the U.S., and a U.S. potato crop of excellent quality. Lamb-Weston's
sales to Asian markets were flat year-to-year, a good showing in view of the
economic woes in Asia.
In retail markets, Lamb-Weston increased distribution of Inland Valley
Crispy Classics french fries and Inland Valley Homestyle Mashed Potatoes. Both
of these frozen products deliver superior taste and texture, and get high marks
in consumer taste tests. Crispy Classics will achieve national distribution in
fiscal 1999, and Homestyle Mashed Potatoes will enter new markets during the
year.
The fiscal 1997 consolidation of Holland potato processing into one plant
paid off in efficiency gains in fiscal 1998. The Netherlands plant, which serves
most of Europe, is expanding early in fiscal 1999 to meet the growing European
demand for french fries.
Lamb-Weston's 10 U.S. processing plants operate near capacity, and demand
for the company's products is growing. In May 1998, Lamb-Weston announced plans
to build a new potato products plant in Alberta, Canada. The new plant, in one
of North America's best potato-growing regions, will be well-positioned to serve
many of Lamb-Weston's customers. The plant is expected to be completed in the
middle of calendar year 1999.
In fiscal 1999, Lamb-Weston plans continued emphasis on the development of
the innovative and easy-to-prepare foodservice products that drive potato
industry volume growth. We expect another good year, but earnings probably won't
equal fiscal 1998's results. Uncertainties include the Asian economy, U.S. raw
material costs and U.S. crop quality.
26 ConAgra, Inc.
<PAGE>
Refrigerated Foods operating profit decreased 40.1 percent, primarily due to
abnormally high supplies of U.S. protein products and declining Asian export
demand. The U.S. beef, pork, chicken and turkey products businesses all were
negatively impacted by industry conditions. The branded processed meats
business, the segment's largest profit contributor, increased operating profit
substantially. Operating profit also increased substantially in the Australian
beef business. Operating profit declined modestly in the cheese products
business. Segment sales decreased 3.4 percent. Adjusted for lower commodity
selling prices and acquisitions, segment sales were up slightly for the year.
REFRIGERATED FOODS
<TABLE>
<CAPTION>
[PIE CHART] [PIE CHART]
Segment Sales Operating Profit
(In millions) (In millions)
-------------------------------------------------------
<S> <C> <C> <C>
1998 $12,307.7 1998 $231.1
1997 $12,738.1 1997 $385.6
% Change -3.4% % Change -40.1%
-------------------------------------------------------
</TABLE>
PRINCIPAL ACTIVITIES: PRODUCTION AND MARKETING OF BRANDED PROCESSED MEATS, BEEF
AND PORK PRODUCTS, CHICKEN AND TURKEY PRODUCTS, AND CHEESE AND DESSERT TOPPING
PRODUCTS.
MAJOR BRANDS: BUTTERBALL, HEALTHY CHOICE, ARMOUR, ECKRICH, SWIFT PREMIUM,
DECKER, COOK'S, HEBREW NATIONAL, MONFORT, COUNTRY PRIDE, TO-RICOS, TEXAS BBQ,
BROWN 'N SERVE, GOLDEN STAR, NATIONAL DELI, COUNTY LINE, TREASURE CAVE, PAULY'S
AND REDDI-WIP.
ConAgra's PROCESSED MEATS businesses had an excellent year across the board.
These companies achieved a substantial earnings increase by improving
manufacturing efficiencies and by sharpening their focus on meeting the unique
needs of their different customers. Processed meat sales exceed $2 billion
annually.
Innovative new processed meat products were introduced in fiscal 1998.
Swift Morning Makers breakfast sandwiches, produced in partnership with
Lamb-Weston, are traditional breakfast favorites (scrambled eggs, cheese and
sausage, bacon or ham) wrapped in soft-baked bread, microwaveable in one
minute. These tasty products achieved national distribution early in fiscal
1999. Two new varieties of Eckrich SnackMakers, ready-to-eat nacho chips and
salsa or nacho cheese sauce, debuted during the year.
Armour Fully Cooked Bacon, long a popular foodservice product, was
introduced at retail as a shelf-stable product to meet some consumers' growing
preference for
1998 Annual Report 27
<PAGE>
precooked bacon. Hebrew National 97% Fat Free Franks and premium Hebrew National
Hors d'oeuvres added exciting new choices to the popular kosher line of
products. Other new products included Butterball Classic Link Sausages, Eckrich
Bold Ones and Decker Ranch Smoked Poultry Sausage.
In May 1998, ConAgra purchased the bacon-processing business of Schreiber
Foods, Inc., a leader in providing precooked bacon products to foodservice
customers.
Fiscal 1998's strong earnings performance was led by the Swift Premium
Brown 'N Serve brand. Unit volumes and market positions improved solidly. The
Healthy Choice deli business, Healthy Choice lunch meats, National Foods and
Decker all contributed to the earnings increase.
The Cook Family Foods ham business had another excellent year, beating
its profit plan and its fiscal 1997 earnings. Cook Family Foods continued its
brand-building and advertising programs designed to introduce more consumers
to Cook's superior meat products.
In processed meats brand marketing, highlights included the return of the
popular Armour Hot Dogs radio jingle and the extension of Hebrew National's
powerful "We Answer to a Higher Authority" television advertising to 10 new
geographic markets. We expect another increase in processed meats earnings in
fiscal 1999.
ConAgra's FRESH BEEF AND PORK BUSINESSES produce and market fresh meat
products for customers in domestic and international markets. Annual sales of
ConAgra's U.S.-based fresh meat companies are about $6.6 billion. ConAgra's
Australia Meat Holdings Pty Ltd. (AMH), a major Australian beef processor and
exporter, has annual sales of more than $920 million.
Fiscal 1998 was a dismal year for our U.S. beef business. Major issues were
burdensome supplies of animal protein (beef and competing meats) in the U.S.,
the economic crisis in Asia, soft markets for byproducts and management missteps
in some areas of the business. Asian export demand fell sharply at the same time
domestic meat and poultry availability hit a 10-year high. The result was a
protein glut that kept cattle prices low and beef demand soft (because competing
meats were less expensive). The resulting earnings decline was especially severe
in beef because beef processing and cattle feeding, which often naturally hedge
each other's results, both suffered price and margin compression. The U.S. beef
business was unprofitable in fiscal 1998.
The situation in Australia was much better. AMH expanded its customer base
in Australia and benefited from the competitive advantage of the weak Australian
dollar (vs. the U.S. dollar) in export markets. AMH also benefited from
operating efficiencies resulting from recent plant improvements. AMH earnings
beat the profit plan and substantially beat fiscal 1997 earnings.
New management has been running the U.S. beef business since early in
calendar 1998, and aggressive steps are being taken to manage risk and margins
better. Production efficiency is improving, communication and teamwork across
the business are being
28 ConAgra, Inc.
<PAGE>
enhanced, and new risk management policies are in place.
Our U.S. beef business has the potential for significantly better results
in fiscal 1999 if the beef industry works through the glut of domestic protein.
AMH should have another good year in fiscal 1999.
SWIFT & COMPANY, our fresh pork business, performed well below expectations
and fiscal 1997 results. The Asian economic crisis and the domestic protein glut
hurt Swift's results in fiscal 1998; contracts with pork producers also were a
factor. A meaningful percentage of Swift's raw material costs is determined by
procurement contracts. In the first half of fiscal 1998, when raw material costs
were high, the contracts were a positive factor. In the second half, as raw
material costs fell, contracts hurt Swift's earnings. Swift could have managed
the volatility better, however; better margin management processes are in place.
If supply and demand in the pork industry are better balanced in fiscal
1999, we expect good improvement in Swift's performance.
Swift continued during fiscal 1998 to focus on developing and marketing new
value-added consumer products. Fiscal 1998 new product highlights included The
Market Grill by Armour -- fully-cooked, refrigerated pork loin chops and roasts,
some varieties accompanied by exotic sauces -- and Armour Individually Quick
Frozen (IQF) pork products. The IQF products, in two-pound resealable bags,
include Pork Filets, Breaded Pork Chops and Nuggets.
In the third quarter of fiscal 1998, ConAgra acquired Zoll Foods
Corporation, a leading processor and marketer of custom-cut pork ribs and other
pork products for foodservice customers. Zoll Foods became part of Swift &
Company, strengthening Swift's foodservice presence and expanding the company's
value-added product portfolio and production capabilities.
BEATRICE CHEESE COMPANY produces and markets cheese products and dessert
toppings. Annual sales are about $900 million.
Cheese consumption increased modestly in ConAgra's fiscal 1998, and the
U.S. cheese industry was fairly healthy. The major negative was an
extraordinarily high butterfat price, which forced high raw material costs for
processed cheese. Earnings for Beatrice Cheese were down somewhat from the
fiscal 1997 level. Reddi-Wip volumes increased nicely; cheese volumes declined,
largely due to a planned reduction of less profitable offerings.
Late in fiscal 1998, Beatrice Cheese relaunched the Healthy Choice Cheese
line. These products are now low-fat cheese products rather than fat-free, and
flavors were improved substantially. Healthy Choice Cheese products have less
than one gram of fat per serving. Beatrice Cheese also began marketing a
foodservice version of Healthy Choice Cheese. This company continues to make
progress in improving its product mix to include more value-added offerings.
1998 Annual Report 29
<PAGE>
In fiscal 1999, Beatrice Cheese will introduce new branded products for
retail and foodservice markets and substantially increase marketing spending to
support branded products. We expect an earnings increase in fiscal 1999.
In the first quarter of fiscal 1999, ConAgra agreed to acquire Nabisco's
EGG BEATERS AND TABLESPREADS BUSINESS. Egg Beaters, the first fat-free,
cholesterol-free egg product, is a "healthy foods" pioneer and the longtime
market leader. The tablespreads business manufactures and markets margarine,
holding a leading position with the Parkay, Blue Bonnet, Fleischmann's, Touch of
Butter, Chiffon and Move Over Butter brand names. Annual sales of the combined
businesses are about $480 million.
These profitable businesses will expand ConAgra's presence in the
refrigerated sections of grocery stores and offer significant opportunities for
growth. The Parkay, Blue Bonnet and Fleischmann's brands will raise to 25 the
number of ConAgra brands with annual retail sales exceeding $100 million.
Our poultry businesses are CONAGRA POULTRY COMPANY (chicken products) and
BUTTERBALL TURKEY COMPANY (turkey products). ConAgra Poultry had fiscal 1998
sales of about $1.3 billion; Butterball Turkey had sales of about $330 million.
The turkey products sales number excludes significant intercompany sales.
U.S. per capita consumption of chicken products continued on its long-term
growth trend in fiscal 1998. Grain prices declined from the fiscal 1997 level,
but broiler export demand weakened, and the domestic protein glut constrained
chicken selling prices and margins.
ConAgra Poultry Company made progress in fiscal 1998, but its results were
still not satisfactory. Positives included margin improvement, quality
enhancement, cost reductions and the introduction of more value-added products.
Both Professional Food Systems and Texas Signature Foods had good years.
The To-Ricos brand of chicken products, marketed by ConAgra for many years
in Puerto Rico, was introduced successfully in several U.S. markets for Hispanic
consumers. Texas Signature Foods, in its first full year as part of ConAgra,
continued to work with other ConAgra companies to broaden distribution of its
tasty barbecued meat and poultry products, sold in both foodservice and retail
channels.
We expect ConAgra Poultry's results to improve in fiscal 1999 as management
continues to focus on across-the-board business improvements.
The turkey industry as a whole has been unprofitable for about two years
due to an imbalance in supply and demand. In fiscal 1998, ConAgra's turkey
products were profitable and raised operating profit as better processed turkey
results more than offset weaker results in the whole-bird and parts sector.
Butterball is America's favorite brand of turkey, and Butterball branded
turkey products did well in the marketplace. Results were helped during the year
by improvements achieved in manufacturing efficiency.
As fiscal 1998 ended, turkey industry production was declining, which
should gradually bring supply and demand in line. We don't expect a quick
rebound, but fiscal 1999 should be a better year for our turkey products
companies.
For the Refrigerated Foods group in total, we expect that aggressive,
focused management will improve internal operations as fiscal 1999 progresses.
Assuming the protein markets recover, we anticipate meaningfully better results
in the new year.
30 ConAgra, Inc.
<PAGE>
FOOD INPUTS & INGREDIENTS OPERATING PROFIT INCREASED 18 PERCENT. OPERATING
PROFIT INCREASED SUBSTANTIALLY IN THE CROP INPUTS, SPECIALTY FOOD INGREDIENTS,
COMMODITY SERVICES, FLOUR MILLING AND DRY CORN PROCESSING BUSINESSES. OPERATING
PROFIT DECLINED IN GRAIN MERCHANDISING DUE TO WEAK GLOBAL DEMAND FOR U.S. GRAIN.
RESULTS DECLINED FOR THE INTERNATIONAL GROUP OF BUSINESSES AND FOR THE DRY
EDIBLE BEAN BUSINESS. SEGMENT SALES DECREASED SLIGHTLY. ADJUSTED FOR A FISCAL
1998 FIRST QUARTER BUSINESS DIVESTITURE, ACQUISITIONS AND LOWER COMMODITY COSTS
PASSED THROUGH AS LOWER SELLING PRICES, SEGMENT SALES INCREASED 4 PERCENT FOR
THE YEAR.
FOOD INPUTS & INGREDIENTS
<TABLE>
<CAPTION>
[PIE CHART] [PIE CHART]
Segment Sales Operating Profit
(In millions) (In millions)
-----------------------------------------------------
<S> <C> <C> <C>
1998 $5,912.7 1998 $407.3
1997 $5,930.1 1997 $345.1
% Change -.3% % Change +18.0%
-----------------------------------------------------
</TABLE>
INPUTS
PRINCIPAL ACTIVITIES: DISTRIBUTION OF CROP INPUTS (CROP PROTECTION CHEMICALS,
FERTILIZER PRODUCTS AND SEEDS) IN THE UNITED STATES, CANADA, BOLIVIA, CHILE,
ECUADOR, FRANCE, MEXICO, THE UNITED KINGDOM AND SOUTH AFRICA.
MAJOR BRANDS: CLEAN CROP, ACA, SHOTGUN AND SAVAGE BRANDED PRODUCTS, CROPMATE
AND WILLMOT PERTWEE RETAIL OUTLETS.
UNITED AGRI PRODUCTS (UAP) is a leading global distributor of crop inputs.
Annual sales are about $2.9 billion.
The world market for crop protection chemicals is about $30 billion and
still growing modestly. UAP's opportunities to grow its business internationally
are virtually unlimited, and UAP added substantially to its international base
in fiscal 1998. The company acquired its joint venture partners' interests in
businesses in Chile and the U.K., and operated for almost a full year a South
African business in which it acquired a majority interest.
Early in fiscal 1999, UAP acquired a majority interest in Phyto-Service,
S.A., a crop input business in France, and started businesses in Bolivia and
Ecuador.
In Canada and in the U.S., UAP opened several retail centers located at
ConAgra grain elevators. The cooperative venture with ConAgra Grain Companies is
working
1998 Annual Report 31
<PAGE>
well. For farmers, the arrangement offers the convenience of being able to
purchase inputs and sell grain at one location.
The U.S. crop input industry had a relatively normal year in UAP's fiscal
1998, in spite of some unusually wet weather patterns caused by El Nino in
western and southeastern states. Planted acreage of the crops most important to
UAP, corn and soybeans, increased slightly. A number of relatively small
acquisitions in the U.S. during the year added to UAP's domestic base.
Fiscal 1998 was UAP's fifteenth consecutive year of record sales and
earnings, an extraordinary achievement by this entrepreneurial company. UAP's
earnings increased substantially. Both domestic and international operations
contributed to the good results. U.S. seed sales grew strongly in fiscal 1998,
as did UAP's horticultural business.
UAP's ongoing improvements in its product mix were a positive factor in
fiscal 1998. UAP works closely with its basic suppliers to offer the best
product mix for serving growers' needs.
UAP continues to be a leader in responsible environmental stewardship. The
company is a national leader in the recycling and reuse of empty crop protection
chemical containers, and runs an extensive program to educate customers and
businesses on the environmentally sensitive use of agricultural chemicals. In
the U.K., the Willmot Pertwee Conservation Trust works with schools to promote
knowledge and appreciation of conservation.
In the U.S., UAP continues to work with the U.S. Department of Agriculture
on an innovative initiative to encourage farmers to install strategically
located buffer strips. Buffer strips are strips of land maintained in permanent
vegetation and designed to intercept potential pollutants.
UAP also is a leader in the distribution of new biotechnology products,
principally seeds, and crop protection products that benefit from biotech seeds.
As biotechnology creates new opportunities to improve foods and farming, UAP and
ConAgra are uniquely positioned to participate. As a distributor of new
products, UAP is the connection between the manufacturer and the grower. As part
of ConAgra, UAP identifies applications for biotechnology in the food industry
and creates linkages to other ConAgra companies. Those companies can then
capitalize on the application potential for consumers.
Early in fiscal 1998, Country General Stores and a group of agri-products
joint ventures operated with DuPont were sold.
In UAP's fiscal 1999, corn and soybean planted acres in the U.S. are
expected to increase again. UAP plans aggressive international and domestic
growth and continued product mix improvements. An organizational initiative
announced early in fiscal 1999 should help drive international growth and
sharpen our biotechnology focus. We expect another year of increased earnings.
FOOD INGREDIENTS
PRINCIPAL ACTIVITIES: SOURCING, TRADING, PROCESSING AND DISTRIBUTION OF
GRAIN-BASED PRODUCTS AND FOOD INGREDIENTS AROUND THE WORLD. MAJOR BUSINESSES:
FLOUR, OAT AND CORN MILLING; GRAIN MERCHANDISING; SPECIALTY FOOD INGREDIENTS
MANUFACTURING; COMMODITY SERVICES; BARLEY MALTING; DRY EDIBLE BEAN PROCESSING
AND MERCHANDISING; TORTILLA MANUFACTURING; SOYBEAN PROCESSING; FOOD-RELATED
COMMODITY TRADING; FOOD PROCESSING AND DISTRIBUTION; PET PRODUCTS; AND
PRIVATE LABEL CONSUMER PRODUCTS.
CONAGRA FLOUR MILLING COMPANY, a longtime leader in the U.S. flour milling
industry, has 24 mills in 14 states. ConAgra also has a jointly owned mill.
Annual flour volume, excluding the jointly owned mill, is about 6.7 billion
pounds.
32 ConAgra, Inc.
<PAGE>
The per capita consumption of flour and of grain-based foods in general is
growing at a healthy pace. ConAgra Flour Milling is moving aggressively to
respond to the growing demand, especially in fast-growing population areas. Two
major capital projects were announced in fiscal 1998: construction of a new
mill in Southern California and significant expansion of a Colorado mill. A new
flour and corn mill in Puerto Rico opened in January 1998.
ConAgra Flour Milling had another outstanding year, with earnings at a
record level and substantially higher than the profit plan and the fiscal 1997
level. A continuing commitment to training has improved milling techniques and
therefore yields from existing equipment. Wheat quality and price also were
positive factors during fiscal 1998.
We expect flour demand to remain strong in fiscal 1999, and, at press time
for this report, wheat supplies and prices looked reasonable. The flour business
may not match fiscal 1998's record performance, but we expect another good year.
Results in our other U.S. milling businesses were mixed; earnings increased
in corn milling, and declined in oat milling.
The most profitable of ConAgra's food ingredient businesses in fiscal 1998
was UNITED SPECIALTY FOOD INGREDIENTS COMPANIES (USFI). USFI manufactures and
markets internationally a broad line of food ingredients -- flavorings,
seasonings, blends and other specialty ingredients. Earnings increased
substantially, thanks in large part to the success of Gilroy Foods, acquired
early in fiscal 1997. Improvements made after the acquisition to Gilroy's
manufacturing facilities and agricultural practices have paid off handsomely,
and Gilroy's performance has exceeded expectations.
Results in other major USFI businesses were generally positive. Casa de
Oro, a tortilla business, had an excellent year. The acquisition of Mesa Food
Products assets late in the year gave Casa de Oro a needed second production
facility. Both General Spice and Armour Food Ingredients achieved significantly
better earnings than in fiscal 1997. The Arrow private label consumer products
business did not perform as well as expected. USFI in total expects another good
year in fiscal 1999.
CONAGRA COMMODITY SERVICES, which includes our feed ingredient
merchandising and energy services businesses, had an excellent year. Earnings
for the group were substantially over plan and fiscal 1997 earnings.
CONAGRA GRAIN COMPANIES is a global grain merchandiser. ConAgra Grain was
hurt by a general lack of grain movement in the U.S. due to substantially lower
export demand and many farmers' decisions to store grain rather than sell it.
Earnings in the company's barge business were especially hurt since reduced
grain movement naturally reduced the demand for barges to transport grain.
Extraordinarily large grain crops in Europe, subsidized by governments, made the
competitive environment for U.S. grain even worse.
Earnings for ConAgra Grain declined from the fiscal 1997 level, but the
company managed well in the difficult environment. We are cautiously optimistic
that ConAgra Grain will have better results in fiscal 1999.
Fiscal 1998 was an eventful year for ConAgra Grain Companies. Three newly
constructed grain elevators, which include full-service United Agri Products
retail centers, began operating in Canada. A fourth new Canadian elevator/UAP
retail center will open in fiscal 1999. In February 1998, ConAgra announced
plans to build a new Global Trading Center in Omaha, which will become ConAgra
Grain's new headquarters. The new Trading Center will capitalize on the
considerable trading talent in several ConAgra companies and leverage synergies
across ConAgra.
Early in fiscal 1999, plans to create ConAgra Trade Group were announced.
ConAgra Trade Group, to be based in the new Global Trading Center, will combine
our grain and commodity services businesses to drive commodity volume
performance and
1998 Annual Report 33
<PAGE>
foster increased intracompany collaboration to boost earnings.
ConAgra Grain and Farmland Industries, the largest farmer-owned cooperative
in North America, formed a grain-based alliance late in fiscal 1998 to improve
both companies' services to farmers and grain marketing and export activities.
The alliance created Concourse Grain, which will operate four large export
elevators, two from ConAgra and two from Farmland. The alliance will enable
customers to access multiple classes of wheat, and international customers can
be served from multiple U.S. export points.
Also late in fiscal 1998, ConAgra and Archer Daniels Midland (ADM) formed a
joint venture to operate the Kalama, Washington, grain export facility formerly
operated solely by ConAgra Grain Companies.
KBC TRADING AND PROCESSING COMPANY'S core business is the processing and
trading of dry edible beans. The bean business performed well in fiscal 1998,
but KBC was hurt by results in walnut trading. Earnings declined for the year.
Weather problems in Mexico and parts of Brazil may boost export prospects for
the U.S. bean crop in fiscal 1999; KBC results should improve.
Results were mixed for our INTERNATIONAL TRADING AND PROCESSING BUSINESSES.
ConAgra Malt, a joint venture with South Africa-based Tiger Oats Limited, had a
disappointing year. ConAgra Malt's domestic business within the countries where
it operates did well, but the export business was dismal. The global malt market
is based on the U.S. dollar, and the dollar's strength, coupled with European
malt subsidies and uncompetitive Australian barley prices in fiscal 1998, put
ConAgra Malt at a significant competitive disadvantage. The international
fertilizer trading business struggled during the year, primarily due to lack of
demand in Asia. As the year progressed, however, new customers in other parts of
the world took up the slack, and fiscal 1998 earnings increased.
Earnings increased for our business in Puerto Rico; earnings were down for
our businesses in Spain and Portugal. The Spain and Portugal businesses' decline
was due to the strong U.S. dollar. Earnings declined in soybean crushing in
Argentina and the Australian wool business.
ConAgra owns 50 percent of Verde Valle, S.A., a leading packager and
distributor of grocery products in Mexico. Verde Valle was hurt by rising bean
prices during the year, but overall volumes increased. Other ConAgra companies
began working with Verde Valle during the year to distribute products in Mexico,
and Verde Valle began selling packaged rice and beans in Hispanic markets in the
U.S.
In the first half of fiscal 1998, ConAgra and Tiger Oats Limited, a South
African company, jointly purchased a majority interest in ITC Agro-Tech Limited,
a branded and commodity oil business in India. ITC Agro-Tech has good products
and distribution systems across India and gives ConAgra an opportunity to
compete in the fast-growing Indian market.
ConAgra's trading and processing businesses as a group beat their profit
plan and their fiscal 1997 results. The outlook for these businesses is good,
and we expect another strong showing in fiscal 1999.
[PHOTO: Pecom Agra Employees]
ARGENTINA IS HOME TO PECOM AGRA, S.A., A CONAGRA JOINT VENTURE COMPANY THAT
IS A QUALITY-ORIENTED, LOW-COST PROCESSOR OF SOYBEANS INTO OIL AND MEAL. THE
COMPANY SERVES CUSTOMERS ON FOUR CONTINENTS. SHOWN FROM LEFT ARE JUAN
CATALA, PRODUCTION SUPERVISOR; ADOLFO RIO, INDUSTRIAL MANAGER; RUBEN PERRONE,
SILO SUPERVISOR; AND DIEGO BARBERO, GENERAL MANAGER.
34 ConAgra, Inc.
<PAGE>
SALES & OPERATING PROFIT BY SEGMENT
<TABLE>
<CAPTION>
Fiscal Year
- -----------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------
Including Excluding
Non-recurring Non-recurring
Dollars in millions Charges Charges
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Grocery & Diversified Products
Sales $ 5,620.1 $ 5,333.9 $ 4,947.8 $ 4,947.8 $ 4,517.4 $3,989.8
Percent of total 23.6% 22.2% 20.7% 20.7% 19.3% 17.3%
Operating profit 913.2 811.5 639.5 703.1 615.6 501.6
Percent of total 58.9% 52.6% 64.8% 48.8% 47.6% 44.0%
- ------------------------------------------------------------------------------------------------------------------------------
Refrigerated Foods
Sales $12,307.7 $12,738.1 $12,984.1 $12,984.1 $13,498.4 $13,828.0
Percent of total 51.6% 53.1% 54.3% 54.3% 57.6% 59.9%
Operating profit 231.1 385.6 120.9 386.7 416.3 398.6
Percent of total 14.9% 25.0% 12.2% 26.9% 32.2% 34.9%
- ------------------------------------------------------------------------------------------------------------------------------
Food Inputs & Ingredients
Sales $ 5,912.7 $ 5,930.1 $ 5,967.4 $ 5,967.4 $ 5,410.0 $5,278.0
Percent of total 24.8% 24.7% 25.0% 25.0% 23.1% 22.8%
Operating profit 407.3 345.1 227.1 350.5 261.1 240.3
Percent of total 26.2% 22.4% 23.0% 24.3% 20.2% 21.1%
- ------------------------------------------------------------------------------------------------------------------------------
Total
Sales $23,840.5 $24,002.1 $23,899.3 $23,899.3 $23,425.8 $23,095.8
Operating profit* 1,551.6 1,542.2 987.5 1,440.3 1,293.0 1,140.5
Interest expense 299.7 277.3 290.4 290.4 258.1 239.6
General corporate expense 163.4 178.6 219.0 164.0 137.6 107.3
Goodwill amortization 67.4 68.6 69.5 69.5 71.4 73.6
- ------------------------------------------------------------------------------------------------------------------------------
Income before income taxes** $ 1,021.1 $ 1,017.7 $ 408.6 $ 916.4 $ 825.9 $ 720.0
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Operating profit is profit before interest expense (except financial
businesses), goodwill amortization, general corporate expense and income
taxes.
** Excludes impact of change in accounting in 1998.
1998 Annual Report 35
<PAGE>
Eleven-Year Results
Dollars in millions except per share amounts
For the Fiscal Years Ended May
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
FOR THE YEAR
Net sales* $ 23,840.5 $ 24,002.1 $ 23,899.3 $ 23,425.8 $ 23,095.8 $ 21,194.3
Income from continuing
operations before income
taxes and cumulative effect
of changes in accounting 1,021.1 1,017.7 408.6** 825.9 720.0 631.4
After-tax income from continuing
operations and before cumulative
effect of changes in accounting 628.0 615.0 188.9** 495.6 437.1 391.5
Net income 613.2 615.0 188.9** 495.6 437.1 270.3
Basic earnings per share
Continuing operations and before
cumulative effect of changes
in accounting $ 1.39 $ 1.36 $ .40** $ 1.04 $ .91 $ .80
Net income $ 1.36 $ 1.36 $ .40** $ 1.04 $ .91 $ .54
Diluted earnings per share
Continuing operations and before
cumulative effect of changes
in accounting $ 1.36 $ 1.34 $ .39** $ 1.02 $ .90 $ .79
Net income $ 1.33 $ 1.34 $ .39** $ 1.02 $ .90 $ .53
Cash dividends declared per
share of common stock $ .6050 $ .5275 $ .4600 $ .4013 $ .3475 $ .3000
Market price per share
of common stock
High $ 38.75 $ 30.75 $ 23.57 $ 17.25 $ 14.69 $ 17.13
Low $ 27.00 $ 20.69 $ 16.25 $ 14.13 $ 11.50 $ 11.38
Last $ 29.25 $ 30.25 $ 21.00 $ 16.13 $ 14.25 $ 12.57
Weighted average shares
outstanding -- basic (in millions) 451.8 451.3 451.3 453.0 453.3 460.5
Weighted average shares
outstanding -- diluted (in millions) 461.3 459.0 458.9 487.2 486.3 465.9
Additions to property, plant and
equipment, including acquisitions $ 637.3 $ 729.4 $ 1,016.1 $ 557.2 $ 498.6 $ 392.7
Depreciation and amortization 446.3 413.8 407.9 375.8 368.4 348.7
At Year End
Total assets $ 11,702.8 $ 11,277.1 $ 11,196.6 $ 10,801.0 $10,721.8 $ 9,988.7
Current assets 5,487.4 5,205.0 5,566.9 5,140.2 5,143.3 4,486.7
Current liabilities 5,070.2 4,989.6 5,193.7 3,964.9 4,752.8 4,272.6
Working capital 417.2 215.4 373.2 1,175.3 390.5 214.1
Property, plant and equipment, net 3,395.8 3,242.5 2,820.5 2,796.0 2,586.3 2,388.2
Capital investment 6,632.6 6,287.5 6,002.9 6,836.1 5,969.0 5,716.1
Senior long-term
debt (noncurrent) 1,737.4 1,605.7 1,512.9 1,770.0 1,440.8 1,393.2
Subordinated long-term
debt (noncurrent) 750.0 750.0 750.0 750.0 766.0 766.0
Preferred securities of
subsidiary company 525.0 525.0 525.0 525.0 100.0 --
Redeemable preferred stock -- -- -- 354.9 355.6 355.9
Common stockholders' equity 2,778.9 2,471.7 2,255.5 2,495.4 2,226.9 2,054.5
Stockholders' equity (all classes) 2,778.9 2,471.7 2,255.5 2,850.3 2,582.5 2,410.4
Common stockholders'
equity per share $ 6.06 $ 5.50 $ 4.97 $ 5.52 $ 4.93 $ 4.51
36 ConAgra, Inc.
<PAGE>
1992 1991 1990 1989 1988
FOR THE YEAR
Net sales* $ 21,236.5 $ 19,528.3 $ 15,519.3 $ 11,340.4 $ 9,485.5
Income from continuing
operations before income
taxes and cumulative effect of
changes in accounting 587.7 515.2 356.9 312.2 240.1
After-tax income from continuing
operations and before cumulative
effect of changes in accounting 372.4 311.2 231.7 197.9 154.7
Net income 372.4 311.2 231.7 197.9 154.7
Basic earnings per share
Continuing operations and before
cumulative effect of changes
in accounting $ .76 $ .72 $ .63 $ .55 $ .44
Net income $ .76 $ .72 $ .63 $ .55 $ .44
Diluted earnings per share
Continuing operations and before
cumulative effect of changes
in accounting $ .75 $ .71 $ .62 $ .54 $ .43
Net income $ .75 $ .71 $ .62 $ .54 $ .43
Cash dividends declared per
share of common stock $ .2600 $ .2225 $ .1928 $ .1656 $ .1439
Market price per share
of common stock
High $ 18.13 $ 16.25 $ 10.63 $ 7.95 $ 8.45
Low $ 12.25 $ 9.84 $ 7.06 $ 6.00 $ 4.64
Last $ 12.94 $ 15.17 $ 10.25 $ 7.61 $ 6.17
Weighted average shares
outstanding -- basic (in millions) 455.8 403.2 364.2 356.9 351.4
Weighted average shares
outstanding -- diluted (in millions) 463.8 410.7 372.2 366.6 363.1
Additions to property, plant and
equipment, including acquisitions $ 378.9 $ 1,159.9 $ 349.3 $ 241.1 $ 196.3
Depreciation and amortization 319.3 250.8 129.7 101.7 89.5
At Year End
Total assets $ 9,758.7 $ 9,420.3 $ 4,804.2 $ 4,278.2 $ 3,042.9
Current assets 4,371.2 4,342.9 3,347.7 3,160.4 2,076.2
Current liabilities 4,081.3 4,087.4 2,967.5 2,651.5 1,636.1
Working capital 289.9 255.5 380.2 508.9 440.1
Property, plant and equipment, net 2,276.8 1,941.5 1,034.7 825.5 696.1
Capital investment 5,677.4 5,332.9 1,836.7 1,626.7 1,406.8
Senior long-term
debt (noncurrent) 1,694.4 1,663.0 605.4 530.1 489.9
Subordinated long-term
debt (noncurrent) 430.0 430.0 30.0 30.0 --
Preferred securities of
subsidiary company -- -- -- -- --
Redeemable preferred stock 356.0 356.1 2.2 8.7 9.6
Common stockholders' equity 2,232.3 1,817.4 1,095.8 949.5 814.4
Stockholders' equity (all classes) 2,588.3 2,173.5 1,098.0 958.2 824.0
Common stockholders'
equity per share $ 4.81 $ 4.34 $ 2.98 $ 2.63 $ 2.32
</TABLE>
* Beginning in fiscal 1997, international fertilizer sales are restated on a
gross margin basis rather than invoice basis, consistent with how ConAgra
accounts for sales in comparable businesses. Sales in fiscal years 1993
through 1996 have been restated accordingly; sales in fiscal years 1988
through 1992 have not been restated.
** 1996 amounts include non-recurring charges: before tax, $507.8 million;
after tax, $356.3 million. Excluding the charges, fiscal 1996 income
before income taxes was $916.4 million, net income was $545.2 million,
basic earnings per share were $1.19, and diluted earnings per share were
$1.17.
Results exclude restatements in 1991 and prior years for subsequent events
such as mergers accounted for as poolings of interests, and restatements
in 1989 to reflect the required consolidation of ConAgra's finance
companies.
Per share results reflect the following common stock splits: three-for-two
in 1989, three-for-two in 1991 and two-for-one in 1997 (calendar years).
1998 Annual Report 37
<PAGE>
MANAGEMENT'S DISCUSSION & ANALYSIS
INTRODUCTION
Our objective here is to help stockholders understand management's views on
ConAgra's financial condition and results of operations. This discussion should
be read in conjunction with the financial statements and the notes to the
financial statements. Years (1997, 1998, etc.) in this discussion refer to
ConAgra's May-ending fiscal years.
FINANCIAL CONDITION AND CASH FLOW
CAPITAL RESOURCES -- ConAgra's earnings are generated principally from its
capital investment, which consists of working capital (current assets less
current liabilities) plus all noncurrent assets. Capital investment is financed
with stockholders' equity, long-term debt and other noncurrent liabilities.
CAPITAL INVESTMENT
Dollars in millions
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
1998 1997 % Change
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Working capital $ 417.2 $ 215.4 94%
Property, plant &
equipment, net 3,395.8 3,242.5 5
Intangible assets 2,390.8 2,434.0 (2)
Other noncurrent assets 428.8 395.6 8
- ---------------------------------------------------------------------------------
Total noncurrent assets 6,215.4 6,072.1 2
- ---------------------------------------------------------------------------------
Capital investment $6,632.6 $6,287.5 5
- ---------------------------------------------------------------------------------
</TABLE>
During 1998, capital investment increased $345 million, or 5%, mainly
because property, plant and equipment increased $153 million and working capital
increased $202 million to $417 million, more comparable with the working capital
levels in 1994 and 1996. Higher levels of working capital in 1995 were the
result of prefunding of the company's stock repurchase program in connection
with a planned redemption of its Class E preferred stock in 1996.
Intangible assets are mainly goodwill related to acquisitions, principally
goodwill associated with ConAgra's acquisition of Beatrice Company in 1991. This
goodwill represents valuable assets such as respected brands with significant
marketplace acceptance. The non-cash provision for goodwill amortization is a
source of cash, as is the non-cash provision for depreciation of fixed assets.
Goodwill amortization was $67 million in 1998 and $69 million in 1997, while
depreciation expense was $365 million in 1998 and $326 million in 1997.
ConAgra financed its capital investment as shown in the following table:
CAPITALIZATION
Dollars in millions
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
1998 1997 % Change
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Senior long-term debt $1,737.4 $1,605.7 8%
Other noncurrent liabilities 841.3 935.1 (10)
Subordinated long-term debt 750.0 750.0 --
Subsidiary's preferred
securities 525.0 525.0 --
Common stockholders' equity 2,778.9 2,471.7 12
- ---------------------------------------------------------------------------------
Total capitalization $6,632.6 $6,287.5 5
- ---------------------------------------------------------------------------------
</TABLE>
In 1998, senior long-term debt, excluding the current portion of long-term
debt, increased $132 million. Short-term borrowings backed by long-term credit
agreements and classified as long-term decreased $123 million, while other
senior debt issues increased $255 million.
38 ConAgra, Inc.
<PAGE>
Other noncurrent liabilities consist of estimated postretirement health
care and pension benefits plus reserves for estimated income tax, legal and
environmental liabilities Beatrice Company incurred before its acquisition by
ConAgra. It will require a number of years to resolve remaining issues related
to the Beatrice liabilities. Resolution over time will use cash, but is not
expected to affect earnings adversely because ConAgra believes reserves are
adequate.
ConAgra's long-standing policy is to purchase on the open market shares
of the company's common stock to replace shares issued for conversion of
preferred stock, employee incentive and benefit programs, and smaller
acquisitions accounted for as purchases so that such issuance will not dilute
earnings per share. In 1998, ConAgra purchased on the open market 4.4 million
shares of the company's common stock at a cost of $148 million. The number of
shares purchased before a two-for-one common stock split during 1998 has been
adjusted to a post-split basis. During the six years through 1998, ConAgra
invested over $1.6 billion to purchase the company's common stock on the open
market.
38 ConAgra, Inc.
<PAGE>
Common stockholders' equity increased $307 million in 1998 mainly
because net income and the value of shares issued exceeded $274 million in
cash dividends declared and the cost of shares purchased on the open market.
CASH FLOW -- Cash provided by operating activities was $576 million in 1998,
compared to $938 million in 1997. The decrease in 1998 versus 1997 was
primarily the result of higher inventories in Food Inputs & Ingredients and a
higher level of receivables across all businesses. Depreciation and
amortization increased in 1998 as compared to 1997.
In 1997, cash provided by operating activities was $938 million compared to
$1,162 million in 1996. The decrease was the result of reduced working capital
needs in 1996, due mainly to the effects of grain markets and closure of a beef
processing facility at the end of 1996. Depreciation and amortization in 1997
increased slightly.
Cash used for investing activities was $384 million in 1998 versus $881
million in 1997. ConAgra invested $569 million in property, plant and equipment
in 1998, and $670 million in 1997. ConAgra's investment in businesses acquired,
net of disposals, was $169 million in 1997. In 1998, proceeds from businesses
sold exceeded cash acquisition expenditures by $191 million as ConAgra issued
common stock for certain acquisitions.
Cash used for investing activities was $881 million in 1997 versus $603
million in 1996. Most of the increase in 1997 was due to a higher net
investment in businesses acquired in that year.
In 1999, ConAgra expects to invest $600 million to $650 million in
additions to property, plant and equipment of present businesses. The capital
projects in 1998 and planned for 1999 are broadly based investments in
modernization, efficiency and capacity expansion. Larger projects planned for
1999 include construction of a new soybean products plant, a new potato products
plant, a new flour plant and a major addition to an existing flour plant.
Spending on these projects is expected to continue into 2000.
Cash used in financing activities was $203 million in 1998 versus $65
million in 1997. In 1998, ConAgra repaid $356 million of senior long-term debt
and reduced the amount of short-term borrowings backed by long-term credit
agreements and classified as long-term by $123 million. In 1997, long-term debt
repayments totaled $147 million. In 1998, ConAgra issued $305 million of senior
long-term notes, with $300 million issued at 6.70%. In 1997, ConAgra issued $400
million of senior long-term notes, at a rate of 7.125% and increased short-term
borrowings backed by long-term credit agreements and classified as long-term by
$51 million. Short-term borrowings, used primarily to fund working capital
needs, increased $329 million in 1998 compared to a $97 million increase in
1997. The cost of stock repurchased by ConAgra was $148 million in 1998 versus
$260 million in 1997. Cash dividends paid totaled $263 million, up 14% from the
$230 million paid in 1997.
Cash used in financing activities was $65 million in 1997, down from $505
million in 1996. Treasury stock repurchases totaled $260 million in 1997, down
substantially from the $664 million repurchased in 1996. The 1996 repurchases
included shares bought back to effect the conversion of Class E cumulative
convertible preferred stock into common. Repayments of long-term debt totaled
$147 million in 1997, up from $49 million in 1996. Short-term borrowings backed
by long-term credit agreements and classified as long-term increased by $51
million in 1997 versus a $116 million decrease in 1996. Short-term debt, used
primarily to fund working capital requirements, increased $97 million in 1997
versus a $504 million increase in 1996. Cash dividends paid on common stock
totaled $230 million in 1997, versus $216 million paid on common and preferred
stock in 1996.
FINANCING OBJECTIVES -- ConAgra's primary financing objective is to maintain a
conservative balance sheet. We define this as using appropriate levels of equity
and long-term debt to finance noncurrent assets and permanent working capital
needs. Short-term debt is used to finance liquid and seasonal asset
requirements.
ConAgra's long-term and short-term debt objectives and results are shown
under "Financing" on page 4 of our annual report. ConAgra met its long-term debt
objective
1998 Annual Report 39
<PAGE>
every year from 1976 through 1998, except 1991 and 1992 when we temporarily
exceeded our self-imposed long-term debt limitation to acquire Beatrice. ConAgra
has met its short-term debt objective for the past 23 years.
ConAgra has access to a wide variety of financing markets. Public debt
offerings and private debt placements provide long-term financing. At the end of
1998, ConAgra's senior debt ratings were BBB+ (Duff & Phelps), Baa1 (Moody's)
and BBB+ (Standard & Poor's), all investment grade ratings.
Short-term credit is provided by the sale of commercial paper and bank
financing. Commercial paper borrowings are backed by multiyear bank credit
facilities. During 1998, short-term borrowing continued at interest rates
significantly below the prime rate. Short-term debt averaged $2.52 billion in
1998 compared to $2.53 billion in 1997, excluding short-term borrowings
classified as long-term. ConAgra uses cancelable and noncancelable leases in its
financing activities, particularly for transportation equipment. In 1998,
cancelable lease expense was $152 million versus $133 million in 1997, and
noncancelable lease expense was $114 million versus $111 million in 1997.
To maintain a conservative financial position, ConAgra focuses on cash flow
as well as its balance sheet. ConAgra's plans incorporate cash flow sufficient
to meet financing obligations, maintain capital investment and pay stockholder
dividends even if a severe and unexpected decline in earnings occurs. This
measure of cash-flow adequacy provides an effective tool for managing the
company's leverage.
ASSET LIQUIDITY -- Many of ConAgra's businesses are current asset intensive.
Inventory and accounts receivable were 1.5 times property, plant and equipment
at the end of 1998 and 1997. The seasonal nature and liquidity of ConAgra's
current asset investments explain the company's significant use of short-term
debt and emphasis on repaying short-term debt at year end.
ConAgra's reported net sales understate the degree to which current assets
turn over during the year. For 1998, total sales invoiced to customers were
approximately $29.8 billion versus $23.8 billion reported net sales. This is
because grain, feed ingredient merchandising and international fertilizer
merchandising transactions include only gross margins in reported sales.
ConAgra's current ratio (current assets divided by current liabilities) was
1.08 to 1 at the end of 1998, and 1.04 to 1 at the end of 1997. ConAgra's
consolidated current ratio is a composite of various current ratios appropriate
for our individual businesses. We focus more on appropriate use of short-term
debt and trade credit financing than on the absolute level of our current ratio.
Some ConAgra businesses are able to generate substantial trade credit that does
not result in financing costs.
MARKET RISK -- The principal market risks affecting ConAgra are exposure to
changes in commodity or energy prices and interest rates on debt. While the
company does have international operations, and operates in international
markets, it considers its market risk in such activities to be immaterial.
COMMODITIES -- ConAgra operates across the food chain, from basic agricultural
inputs to production and sale of branded consumer products. As a result, ConAgra
uses various raw materials, many of which are commodities. Raw materials are
generally available from several different sources, and ConAgra presently
believes that it can obtain them as needed.
Commodities are subject to price fluctuations that may create price risk.
Generally, it is ConAgra's intent to hedge commodities in order to mitigate this
price risk. While this may tend to limit the company's ability to participate in
gains from commodity price fluctuations, it also tends to reduce the risk of
loss from changes in commodity prices.
ConAgra has established policies that limit the amount of unhedged
inventory positions permissible for ConAgra's independent operating companies.
Processing company limits are expressed in terms of weeks of commodity usage.
Trading businesses are generally limited to a dollar risk exposure stated in
relation to equity capital.
ConAgra typically purchases certain commodities such as wheat, corn, oats,
soybeans, soybean meal, soybean oil, cattle and hogs, for use in its processing
businesses. In addition, ConAgra purchases and sells certain commodities such as
wheat, corn, soybeans, soybean meal, soybean oil and oats in its trading
businesses. The commodity price risk associated with these activities can be
hedged by selling (or buying) the underlying commodity, or by using an
appropriate derivative commodity instrument. The particular hedging instrument
used by ConAgra depends on a number of factors, including availability of
appropriate derivative instruments. ConAgra utilizes exchange-traded futures and
options as well as non-exchange-traded derivatives, in which case the company
monitors the amount of associated credit risk.
40 Conagra, Inc.
<PAGE>
The following table presents one measure of market risk exposure using
sensitivity analysis. Market risk exposure is defined as the change in the fair
value of the derivative commodity instruments assuming a hypothetical change of
10% in market prices. Actual changes in market prices may differ from
hypothetical changes. Fair value was determined using quoted market prices and
was based on the company's net derivative position by commodity at each month
end during the fiscal year. The market risk exposure analysis excludes the
underlying commodity positions that are being hedged. The underlying commodities
hedged have a high inverse correlation to price changes of the derivative
commodity instrument.
<TABLE>
<CAPTION>
EFFECT OF 10% CHANGE IN FAIR VALUE
(In millions)
- -------------------------------------------------------------
<S> <C>
Processing Businesses
Grains/Food
High $ 30.0
Low 9.0
Average 23.6
Meats
High 22.5
Low 2.6
Average 11.1
Trading Businesses
Grains
High 16.4
Low 5.8
Average 11.5
- -------------------------------------------------------------
</TABLE>
ENERGY -- ConAgra's operating companies incur substantial energy costs in
their manufacturing facilities and incur higher operating expenses as a
result of increases in energy costs. ConAgra has formed an energy subsidiary
to hedge the companies' operations against adverse price movements in energy
costs, primarily natural gas and electricity. In addition, the energy
subsidiary trades derivative commodity and financial instruments as a
profit-making activity. Trading is limited in terms of maximum dollar
exposure and monitored to ensure compliance with these limits. The subsidiary
uses both exchange-traded derivative commodity instruments and
non-exchange-traded swaps and options. The company monitors the amount of
associated counterparty credit risk for non-exchange-traded transactions.
The following presents one measure of market risk exposure using
sensitivity analysis. Market risk exposure is defined as the change in the fair
value of the derivative commodity and financial instruments assuming a
hypothetical change of 10% in market prices. Actual changes in market prices may
differ from hypothetical changes. Fair value was determined using quoted market
prices, if available, and was based on the subsidiary's net derivative position
by commodity at each month end during the fiscal year. The market risk exposure
analysis excludes the anticipated energy requirements or physical delivery
commitments that are being hedged by these instruments.
<TABLE>
<CAPTION>
EFFECT OF 10% CHANGE IN FAIR VALUE
(In millions)
- -------------------------------------------------------------
<S> <C>
High $ 11.5
Low 2.1
Average 5.9
- -------------------------------------------------------------
</TABLE>
INTEREST RATES -- ConAgra uses interest rate swaps to hedge adverse interest
rate changes on a portion of its short-term debt. At May 31, 1998, the
company had $600 million notional value of interest rate swaps outstanding.
These swaps effectively change the interest rate on $600 million in
short-term debt to a 6% fixed rate through the period ending December 22,
1998. Assuming year-end fiscal 1998 variable rates and
1998 Annual Report 41
<PAGE>
average short-term borrowings for fiscal 1998, a one-hundred-basis-point
change in interest rates would impact net interest expense by $25.6 million,
net of the effect of swaps.
FOREIGN OPERATIONS -- Transactions denominated in a currency other than an
entity's functional currency are generally hedged to reduce this market risk.
The company uses principally non-exchange-traded contracts to effect this
coverage. Market risk on such transactions is not material to the company's
results of operations or financial position.
The company's market risk from translation of foreign-based entities'
annual profit and loss, and from amounts permanently invested in foreign
subsidiaries, is not material.
1998 Annual Report 41
<PAGE>
YEAR 2000 -- The Year 2000 computer software compliance issues affect ConAgra
and many companies in the U.S. Historically, certain computer programs were
written using two digits rather than four to define the applicable years. As
a result, software may recognize a date using the two digits "00" as 1900
rather than the year 2000. Computer programs that do not recognize the proper
date could generate erroneous data or cause systems to fail.
ConAgra has performed an assessment of its major information technology
systems and expects that all necessary modifications and/or replacements will
be completed in a timely manner to ensure that systems are Year 2000
compliant. ConAgra continues to evaluate the estimated costs associated with
these effects based on its experience to date. Based on current estimates,
the costs to address these issues over the next two fiscal years are
estimated to be approximately $50 to $60 million.
OPERATING RESULTS
This section addresses ConAgra's consolidated operating
results shown in the Consolidated Statements of Earnings and should be read
together with Note 2 to the financial statements covering non-recurring
charges and the business segments information shown in Note 18 to the
financial statements.
1998 COMPARED WITH 1997 -- 1998 had 53 weeks versus 52 weeks in 1997. The
holiday-shortened (Memorial Day) extra week added sales and expenses. The
effect on earnings was not material.
<TABLE>
<CAPTION>
NET SALES
Dollars in millions
- --------------------------------------------------------------------------------
1998 1997 % Change
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Grocery & Diversified Products $ 5,620.1 $ 5,333.9 5.4%
Refrigerated Foods 12,307.7 12,738.1 -3.4%
Food Inputs & Ingredients 5,912.7 5,930.1 -.3%
- --------------------------------------------------------------------------------
Total $23,840.5 $24,002.1 -.7%
- --------------------------------------------------------------------------------
</TABLE>
Seafood, potato products, frozen foods and acquisitions contributed to
sales growth in Grocery & Diversified Products. Shelf-stable foods sales
increased slightly. The main cause of the Refrigerated Foods sales decrease was
lower commodity costs passed through as lower selling prices in fresh beef, pork
and poultry. In Food Inputs & Ingredients, a large sales increase in crop inputs
was offset mainly by the sale of a specialty retailing business in 1998's first
quarter and lower commodity costs passed through as lower selling prices in
grain processing. For ConAgra in total, lower commodity selling prices and
business divestitures, net of sales added by acquisitions, reduced 1998 sales by
approximately $650 million, nearly 3 percentage points.
In 1998, gross margin (net sales minus cost of goods sold) increased $117.8
million, up 3.3%, while gross margin as a percent of sales increased to 15.4% in
1998 from 14.8% in 1997. Gross margin dollar and percent gains in Grocery &
Diversified Products and Food Inputs & Ingredients more than offset declines in
Refrigerated Foods.
Selling, general and administrative (SG&A) expenses increased $92.3
million, or 4.1%, in 1998 due to business expansion, increased marketing
spending and the extra week in the year. SG&A expenses as a percent of sales
increased to 9.9% in 1998 versus 9.4% in 1997. SG&A expenses increased in all
three business segments, excluding the specialty retailing divestiture in Food
Inputs & Ingredients. The general corporate expense component of SG&A expenses
decreased $15.2 million, or 8.5%, to $163.4 million in 1998 mainly due to lower
incentive compensation and pension expense.
OPERATING PROFIT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1998 1997 % Change
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Grocery & Diversified Products $ 913.2 $ 811.5 12.5%
Refrigerated Foods 231.1 385.6 -40.1%
Food Inputs & Ingredients 407.3 345.1 18.0%
- --------------------------------------------------------------------------------
Total $1,551.6 $1,542.2 .6%
- --------------------------------------------------------------------------------
</TABLE>
42 ConAgra, Inc.
<PAGE>
Operating profit represents earnings before interest expense (except
financial businesses), goodwill amortization, general corporate expense and
income taxes.
All Grocery & Diversified businesses -- frozen foods, potato products,
shelf-stable foods and seafood -- contributed to that segment's gain in
operating income. Acquisitions accounted for a little under one percentage
point of this segment's operating profit growth.
In Refrigerated Foods, operating profit growth in branded processed meats
and Australian beef was more than offset by a major decline in U.S. fresh meat
and poultry -- the beef, pork, chicken and turkey products businesses. Excess
supplies of animal
42 ConAgra, Inc.
<PAGE>
protein, lower realizations from byproducts and reduced Asian export demand
combined to depress industry selling prices and margins. As a result, U.S.
fresh meat and poultry was unprofitable in 1998.
Crop inputs, specialty food ingredients, commodity services and grain
processing drove Food Inputs & Ingredients operating profit increases.
Decreases in grain merchandising and offshore operations partially offset
these gains.
In 1998, net interest expense increased 8.0% to $299.3 million due to
slightly higher average borrowing balances and interest rates, lower interest
income and the extra week in the year. Income before income taxes and change in
accounting increased .3% to $1.02 billion in 1998.
In 1998, ConAgra implemented a new Financial Accounting Standards Board
Emerging Issues Task Force directive requiring expensing rather than
capitalizing certain business systems reengineering costs. This required
accounting change resulted in a cumulative one-time, non-cash provision of $14.8
million after tax, or 3 cents per share.
Before the accounting change, net income increased 2.1% to $628.0 million
in 1998, and diluted earnings per share increased 1.5% to $1.36 from $1.34 in
1997. The effective tax rate was 38.5% in 1998 versus 39.6% in 1997. Including
the accounting change, net income decreased .3% to $613.2 million, and diluted
earnings per share decreased .7% to $1.33.
1997 COMPARED WITH 1996 -- Non-recurring charges (see Note 2 to the financial
statements) in the fourth quarter of 1996 significantly affected ConAgra's
results of operations in 1996. The charges totaled $507.8 million before
income tax and $356.3 million after income tax, or $.78 per diluted share.
The non-recurring charges, on an after-tax basis, were for restructuring,
$258.6 million; implementing SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of, $79.8 million;
and completion of a program to divest non-core businesses, $17.9 million.
The restructuring plan was designed to streamline the company's production
base, improve efficiency and enhance ConAgra's competitiveness. ConAgra
implemented most of the plan during 1997 and substantially completed remaining
projects in 1998.
<TABLE>
<CAPTION>
NET SALES
Dollars in millions
- -----------------------------------------------------------------------------------
1997 1996 % Change
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Grocery & Diversified Products $ 5,333.9 $ 4,947.8 7.8%
Refrigerated Foods 12,738.1 12,984.1 -1.9%
Food Inputs & Ingredients 5,930.1 5,967.4 -.6%
- -----------------------------------------------------------------------------------
Total $24,002.1 $23,899.3 .4%
- -----------------------------------------------------------------------------------
</TABLE>
Frozen foods, potato products and seafood contributed to sales growth in
Grocery & Diversified Products, with the seafood increase largely due to an
acquisition. In Refrigerated Foods, sales gains in branded processed meats and
pork products were more than offset by a restructuring-related sales decrease,
principally in beef products. In Food Inputs & Ingredients, sales growth led by
crop inputs and specialty food ingredients, the latter mainly due to an
acquisition, was offset by a large sales decrease caused by deconsolidating the
malt processing business when 50% of it was sold at the end of 1996. For ConAgra
in total, restructuring initiatives and business dispositions, net of
acquisitions, reduced 1998 sales by $1.05 billion -- over 4 percentage points.
In 1997, gross margin increased $60.9 million, up 1.7%, while gross margin
as a percent of sales increased to 14.8% in 1997 from 14.6% in 1996. Gross
margin dollar and percent gains in Grocery & Diversified Products and Food
Inputs & Ingredients more than offset declines in Refrigerated Foods.
SG&A expenses decreased $12.7 million, or .6%, in 1997, while SG&A as a
percent of sales was 9.4% in 1997 and 9.5% in 1996. Increases in Grocery &
Diversified Products, Food Inputs & Ingredients and the general corporate
component were more than offset by a decrease in Refrigerated Foods.
<TABLE>
<CAPTION>
OPERATING PROFIT
- -----------------------------------------------------------------------------------
1997 1996 % Change
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Grocery & Diversified Products $ 811.5 $639.5 26.9%
Refrigerated Foods 385.6 120.9 218.9%
1998 Annual Report 43
<PAGE>
Food Inputs & Ingredients 345.1 227.1 52.0%
- -----------------------------------------------------------------------------------
Total $1,542.2 $987.5 56.2%
- -----------------------------------------------------------------------------------
</TABLE>
Comparisons of 1997 versus 1996 operating profit are affected substantially
by non-recurring charges of $452.8 million before tax in 1996 for restructuring
and SFAS No. 121 implementation. For purposes of segment reporting, these
charges are included
1998 Annual Report 43
<PAGE>
in operating profit of the individual segment, while a before-tax charge of $55
million related to disposal of non-core businesses is included in general
corporate expense (see Note 18).
In 1997, Grocery & Diversified Products operating profit was $811.5
million, up 26.9% including the charges and 15.4% excluding the charges in 1996.
As was the case in 1998, all segment businesses contributed to the 1997
operating profit gain.
Refrigerated Foods 1997 operating profit was $385.6 million, up 218.9%
including the charges and down .3% excluding the charges the previous year.
Excluding the charges, operating profit increased in branded processed meats,
U.S. beef and Australia beef. This was offset by decreases in the poultry, pork
and cheese businesses. The poultry and pork businesses suffered from high grain
prices in 1997, while depressed raw material prices hurt overall margins in the
cheese business.
Food Inputs & Ingredients 1997 operating profit was $345.1 million, up
52.0% including the charges and down 1.5% excluding the charges in 1996.
Excluding the charges, operating profit increased in businesses including flour
milling, specialty food ingredients, crop inputs and specialty retailing. This
was offset by operating profit decreases in grain merchandising, specialty grain
processing, commodity services and international fertilizer. Much of this
decrease can be traced to a lower-than-normal U.S. grain supply in the first
half of 1997. Also, 1996 was an exceptional profit year for ConAgra Grain
Companies.
Excluding the charges in 1996, Food Inputs & Ingredients' reported
operating profit was down modestly due to a higher proportion of equity earnings
in 1997 (equity earnings are reported on an after-tax basis).
ConAgra's total operating profit was $1.54 billion in 1997, up 56.2%
including the charges and 7.1% excluding the charges in 1996. The 7.1% gain was
also depressed by a greater proportion of equity earnings in 1997.
In 1997, net interest expense decreased 9.1% to $277.2 million mainly due
to lower short-term interest rates and lower short-term borrowings. Income
before income tax in 1997 was $1,017.7 million, up 149.1% including the charges
and 11.1% excluding the charges in 1996. The effective tax rate was 39.6% in
1997 versus 40.5% in 1996, excluding the impact of non-recurring charges.
Net income in 1997 was $615.0 million, up 225.6% including the charges and
12.8% excluding the charges in 1996. Net income available for common stock (net
income minus preferred dividends), though also $615.0 million in 1997, increased
more than net income because preferred dividends dropped from $8.6 million in
1996 to zero in 1997 due to the redemption of ConAgra's Class E preferred stock
during 1996. Consequently, net income available for common stock increased
241.1% including the charges and 14.6% excluding the charges in 1996.
Diluted earnings per share in 1997 were $1.34, up 243.6% from $.39 in 1996
including the charges, and up 14.5% from $1.17 in 1996 excluding the charges.
44 ConAgra, Inc.
<PAGE>
<TABLE>
<CAPTION>
CONAGRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE FISCAL YEARS ENDED MAY
IN MILLIONS EXCEPT PER SHARE AMOUNTS
- ------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Net sales $ 23,840.5 $ 24,002.1 $ 23,899.3
Costs and expenses
Cost of goods sold 20,162.4 20,441.8 20,399.9
Selling, administrative and general expenses 2,357.7 2,265.4 2,278.1
Interest expense (Note 7) 299.3 277.2 304.9
Non-recurring charges (Note 2) - - 507.8
---------- ---------- ----------
22,819.4 22,984.4 23,490.7
---------- ---------- ----------
Income before income taxes and cumulative effect of change in
accounting 1,021.1 1,017.7 408.6
Income taxes (Note 13) 393.1 402.7 219.7
---------- ---------- ----------
Income before cumulative effect of change in accounting 628.0 615.0 188.9
Cumulative effect of change in accounting for
systems reengineering costs (14.8) - -
---------- ---------- ----------
Net income 613.2 615.0 188.9
Less preferred dividends - - 8.6
---------- ---------- ----------
Net income available for common stock $ 613.2 $ 615.0 $ 180.3
---------- ---------- ----------
---------- ---------- ----------
Income per share - basic (Note 3)
Income before cumulative effect of change in accounting $ 1.39 $ 1.36 $ .40
Cumulative effect of change in accounting (.03) - -
---------- ---------- ----------
Net income $ 1.36 $ 1.36 $ .40
---------- ---------- ----------
---------- ---------- ----------
Income per share - diluted (Note 3)
Income before cumulative effect of change in accounting $ 1.36 $ 1.34 $ .39
Cumulative effect of change in accounting (.03) - -
---------- ---------- ----------
Net income $ 1.33 $ 1.34 $ .39
---------- ---------- ----------
---------- ---------- ----------
The accompanying notes are an integral part of the consolidated financial statements.
1998 Annual Report 45
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONAGRA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MAY 31, 1998 AND MAY 25, 1997
DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------
ASSETS 1998 1997
------------- -------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 95.2 $ 105.8
Receivables, less allowance for doubtful accounts
of $67.7 and $67.2 (Note 4) 1,535.6 1,367.6
Inventories (Note 5) 3,523.1 3,342.9
Prepaid expenses 333.5 388.7
----------- -----------
Total current assets 5,487.4 5,205.0
----------- -----------
Property, plant and equipment
Land 150.9 156.5
Buildings, machinery and equipment 4,739.6 4,387.9
Other fixed assets 379.8 293.9
Construction in progress 397.2 436.0
----------- -----------
5,667.5 5,274.3
Less accumulated depreciation (2,271.7) (2,031.8)
----------- -----------
Property, plant and equipment, net 3,395.8 3,242.5
----------- -----------
Brands, trademarks and goodwill, at cost
less accumulated amortization of $639.0 and $565.8 2,390.8 2,434.0
Other assets 428.8 395.6
----------- -----------
$ 11,702.8 $ 11,277.1
----------- -----------
----------- -----------
46 ConAgra, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1997
------------- -------------
<S> <C> <C>
Current liabilities
Notes payable $ 858.1 $ 529.0
Current installments of long-term debt 52.2 352.9
Accounts payable 1,962.0 1,894.7
Advances on sales 829.7 766.5
Accrued payroll 292.0 283.3
Other accrued liabilities 1,076.2 1,163.2
----------- -----------
Total current liabilities 5,070.2 4,989.6
----------- -----------
Senior long-term debt, excluding current installments (Note 7) 1,737.4 1,605.7
Other noncurrent liabilities (Note 8) 841.3 935.1
Subordinated debt (Note 7) 750.0 750.0
Preferred securities of subsidiary company (Note 9) 525.0 525.0
Common stockholders' equity (Notes 10, 11 and 12)
Common stock of $5 par value, authorized 1,200,000,000
shares; issued 510,314,837 and 506,161,530 2,551.6 1,265.4
Additional paid-in capital 317.5 643.3
Retained earnings 1,325.6 2,061.2
Foreign currency translation adjustment (67.6) (31.5)
Less treasury stock, at cost,
common shares 30,011,958 and 30,036,626 (705.2) (655.1)
----------- -----------
3,421.9 3,283.3
Less unearned restricted stock and value of 21,376,632 and
26,202,608 common shares held in Employee Equity Fund (Note 11) (643.0) (811.6)
----------- -----------
Total common stockholders' equity 2,778.9 2,471.7
----------- -----------
$ 11,702.8 $ 11,277.1
----------- -----------
----------- -----------
The accompanying notes are an integral part of the consolidated financial statements.
1998 Annual Report 47
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONAGRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
FOR FISCAL YEARS ENDED MAY
COLUMNAR AMOUNTS IN MILLIONS
- ----------------------------------------------------------------------------------------------------------------------------------
FOREIGN EEF*
ADDITIONAL CURRENCY STOCK
COMMON COMMON PAID-IN RETAINED TRANSLATION TREASURY AND
SHARES STOCK CAPITAL EARNINGS ADJUSTMENT STOCK OTHER TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT MAY 29, 1995 505.8 $1,264.3 $ 409.9 $ 1,712.5 $ (44.9) $(206.9) $ (639.5) $ 2,495.4
Shares issued
Stock option and
incentive plans .2 .4 1.8 2.2
EEF*: stock option,
incentive and other
employee benefit plans (.9) 95.9 95.0
Fair market valuation of
EEF shares 145.4 (145.4) -
Acquisitions .1 .9 2.3 3.3
Shares acquired
Incentive plans (9.7) 2.1 (7.6)
Treasury shares purchased (664.0) (664.0)
Conversion of preferred stock
into common .1 (134.0) 488.3 354.4
Foreign currency translation
adjustment 5.8 5.8
Dividends declared
Preferred stock (8.6) (8.6)
Common stock, $.460 per share (209.3) (209.3)
Net income 188.9 188.9
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MAY 26, 1996 506.0 1,264.9 423.1 1,683.5 (39.1) (390.0) (686.9) 2,255.5
Shares issued
Stock option and
incentive plans .2 .4 1.4 .4 2.2
EEF*: stock option,
incentive and other
employee benefit plans 13.0 78.8 91.8
Fair market valuation
of EEF shares 204.8 (204.8) -
Acquisitions .1 1.1 4.3 5.5
Shares acquired
Incentive plans (.1) (10.1) 1.3 (8.9)
Treasury shares purchased (259.7) (259.7)
Foreign currency translation
adjustment 7.6 7.6
Dividends declared
Common stock, $.528 per share (237.3) (237.3)
Net income 615.0 615.0
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MAY 25, 1997 506.2 1,265.4 643.3 2,061.2 (31.5) (655.1) (811.6) 2,471.7
Shares issued
Stock option and
incentive plans .2 1.3 2.4 .5 4.2
EEF*: stock option,
incentive and other
employee benefit plans 34.7 70.5 105.2
Fair market valuation of
EEF shares (97.1) 97.1 -
Acquisitions 8.8 43.9 (16.7) 31.6 2.2 61.0
Shares acquired
Incentive plans (19.4) 1.0 (18.4)
Treasury shares purchased (148.3) (148.3)
Shares retired (4.9) (24.6) (90.3) 114.9 -
Two-for-one stock split 1,265.6 (249.1) (1,016.5) -
Foreign currency
translation adjustment (36.1) (36.1)
Dividends declared
Common stock, $.605
per share (273.6) (273.6)
Net income 613.2 613.2
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MAY 31, 1998 510.3 $2,551.6 $ 317.5 $ 1,325.6 $ (67.6) $ (705.2) $ (643.0) $ 2,778.9
----- -------- --------- --------- --------- --------- --------- ----------
----- -------- --------- --------- --------- --------- --------- ----------
The accompanying notes are an integral part of the consolidated financial statements.
*Employee Equity Fund (Note 11)
48 ConAgra, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONAGRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED MAY
DOLLARS IN MILLIONS
- -----------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 613.2 $ 615.0 $ 188.9
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and other amortization 378.9 345.2 338.4
Goodwill amortization 67.4 68.6 69.5
Cumulative effect of change in accounting and non-recurring charges 24.0 - 507.8
Other noncash items (includes nonpension postretirement benefits) 87.1 92.4 124.3
Change in assets and liabilities before effects from business acquisitions
Receivables (190.1) 106.2 (125.4)
Inventories and prepaid expenses (273.6) 326.8 (537.9)
Accounts payable and accrued liabilities (130.8) (616.0) 596.3
-------- -------- --------
Net cash flows from operating activities 576.1 938.2 1,161.9
-------- -------- --------
Cash flows from investing activities
Additions to property, plant and equipment (569.1) (670.0) (668.5)
Payment for business acquisitions (33.7) (197.8) (467.1)
Sale of businesses and property, plant and equipment 224.2 28.7 388.8
Notes receivable and other items (4.9) (41.6) 143.4
-------- -------- --------
Net cash flows from investing activities (383.5) (880.7) (603.4)
--------- -------- --------
Cash flows from financing activities
Net short-term borrowings 329.1 97.4 503.7
Proceeds from issuance of long-term debt 305.0 448.5 -
Repayment of long-term debt (479.1) (147.1) (165.0)
Cash dividends paid (263.2) (229.9) (215.5)
Treasury stock purchases (148.3) (259.7) (664.0)
Employee Equity Fund stock transactions 43.6 17.3 21.8
Other items 9.7 8.1 14.2
-------- -------- --------
Net cash flows from financing activities (203.2) (65.4) (504.8)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents (10.6) (7.9) 53.7
Cash and cash equivalents at beginning of year 105.8 113.7 60.0
-------- -------- --------
Cash and cash equivalents at end of year $ 95.2 $ 105.8 $ 113.7
-------- -------- --------
-------- -------- --------
Noncash financing activities
Treasury stock issued for conversion of Class E cumulative convertible
preferred stock into common stock (Note 10) $ - $ - $ 482.2
-------- -------- --------
-------- -------- --------
The accompanying notes are an integral part of the consolidated financial statements.
1998 Annual Report 49
</TABLE>
<PAGE>
CONAGRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MAY 31, 1998, MAY 25, 1997 AND MAY 26, 1996
COLUMNAR AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS
- -----------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR - The fiscal year of ConAgra ("ConAgra" or the "Company")
ends the last Sunday in May. The fiscal years for the consolidated
financial statements presented consist of 53-week periods (fiscal 1998)
or 52-week periods (fiscal 1997 and 1996).
The accounts of two wholly owned subsidiaries, ConAgra Fertilizer Company
and United Agri Products, Inc., have been consolidated on the basis of a
year ending in February. Such fiscal period corresponds with those
companies' natural business year.
BASIS OF CONSOLIDATION - The consolidated financial statements include
the accounts of ConAgra, Inc. and all majority-owned subsidiaries, except
certain foreign companies that are not material to the Company. The
investments in and the operating results of these foreign companies and
50%-or-less-owned entities are included in the financial statements on
the basis of the equity method of accounting. All significant
intercompany investments, accounts and transactions have been eliminated.
In the first half of fiscal 1996, ConAgra acquired the outstanding common
stock of Canada Malting Co., Limited ("CMC"), a producer of malted
barley, for approximately U.S. $300 million in a transaction accounted
for as a purchase. The entity was consolidated at that date. During the
fourth quarter of fiscal 1996, the Company sold a 50-percent interest in
CMC to an unrelated party and accordingly accounts for the remaining
interest on the equity method of accounting. The Company did not realize
a gain or loss on the sale.
USE OF ESTIMATES - Preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions. These estimates or assumptions affect reported
amounts of assets, liabilities, revenue and expenses as reflected in the
financial statements. Actual results could differ from estimates.
INVENTORIES - Grain, flour and major feed ingredient inventories are
hedged to the extent practicable and are generally stated at market,
including adjustment to market of open contracts for purchases and sales.
Short-term interest expense incurred to finance hedged inventories is
included in cost of sales in order to properly reflect gross margins on
hedged transactions. Inventories not hedged are priced at the lower of
average cost or market.
PROPERTY AND DEPRECIATION - Property, plant and equipment are carried at
cost. Depreciation has been calculated using primarily the straight-line
method over the estimated useful lives of the respective classes of
assets as follows:
Buildings 15 - 40 years
Machinery and equipment 5 - 20 years
Other fixed assets 5 - 15 years
BRANDS, TRADEMARKS, GOODWILL AND LONG-LIVED ASSETS - Brands and goodwill
arising from the excess of cost of investment over fair value of net
assets at date of acquisition and trademarks are amortized using the
straight-line method, principally over a period of 40 years. As required
by SFAS No. 121, an impairment is recognized when future undiscounted
cash flows of assets are estimated to be insufficient to recover their
related carrying value. The Company considers continued operating losses,
or significant and long-term changes in industry conditions, to be its
primary indicators of potential impairment.
Recoverability of goodwill not identified with impaired assets under SFAS
No. 121 is evaluated on the basis of management's estimates of future
undiscounted operating income associated with the acquired business.
DERIVATIVE INSTRUMENTS - The Company uses derivatives for the purpose of
hedging commodity price and, to a lesser extent, interest rate exposure,
that exist as a part of its ongoing business operations.
INTEREST RATE SWAP AGREEMENTS - The Company utilizes interest rate swap
agreements to alter the impact of changes of interest rates. Interest
differentials to be paid or received on such swaps are recognized in
income as incurred, as a component of interest expense.
50 ConAgra, Inc.
<PAGE>
COMMODITY CONTRACTS - The Company uses commodity futures and option
contracts, swaps and forward contracts to manage price fluctuations in
various commodities traded or used in its businesses. In the trading
businesses, commodity contracts are marked-to-market with net amounts due
to or from counterparties recorded in accounts receivable or payable and
the related gains or losses recorded in the statement of earnings. The
Company's processing businesses reflect commodity contract gains and
losses as adjustments to the basis of underlying hedged commodities
purchased; gains or losses are recognized in the statement of earnings as
a component of cost of goods sold upon sale of the hedged commodity.
In general, derivatives used as hedges must be effective at reducing the
risk associated with the exposure being hedged and must be designated as
a hedge at the inception of the contract. Changes in market values of
derivative instruments must be highly correlated with changes in market
values of underlying hedged items both at inception of the hedge and over
the life of the hedge contract. Deferred gains or losses related to any
instrument 1) designated but ineffective as a hedge of existing assets,
liabilities, or firm commitments, or 2) designated as a hedge of an
anticipated transaction which is no longer likely to occur, are
recognized immediately in the statement of earnings.
Cash flows related to derivative financial instruments are classified in
the statements of cash flows in a manner consistent with those of
transactions being hedged.
NET SALES - Gross margins earned from grain, international fertilizer and
feed ingredients merchandised, which are included in net sales, total
$214.3 million, $176.8 million and $179.8 million for fiscal 1998, 1997
and 1996, respectively.
Sales and cost of sales, if reported on a gross basis for these
activities, would be increased by $6.0 billion, $6.0 billion and $6.5
billion for fiscal 1998, 1997 and 1996, respectively.
FAIR VALUES OF FINANCIAL INSTRUMENTS - Unless otherwise specified, the
Company believes the book value of financial instruments approximates
their fair value.
ACCOUNTING CHANGES - In fiscal 1998, the Company adopted Statement of
Financial Accounting Standards No. 128 ("SFAS No. 128"),
EARNINGS PER SHARE. See Note 3.
In the third quarter of fiscal 1998, the Company recorded a one-time,
after-tax, non-cash charge of $14.8 million to comply with a recently
issued ruling by the Financial Accounting Standards Board's Emerging
Issues Task Force: (EITF) No. 97-13. This EITF requires business process
reengineering costs associated with computer systems development to be
expensed as incurred. Previously, the Company had capitalized such costs
as development costs.
In fiscal 1997, the Company adopted the disclosure provisions of
Statement of Financial Accounting Standards No. 123 ("SFAS No. 123"),
ACCOUNTING FOR STOCK-BASED COMPENSATION. As permitted under SFAS No. 123,
the Company continues to account for employee stock option plans using
the intrinsic value method of accounting. See Note 12.
In fiscal 1996, the Company adopted Statement of Financial Accounting
Standards No. 121, ("SFAS No. 121"), ACCOUNTING FOR THE IMPAIRMENT OF
LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. See
Note 2.
In fiscal 1998, Statement of Financial Accounting Standards No. 130,
REPORTING COMPREHENSIVE INCOME, Statement of Financial Accounting
Standards No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND
RELATED INFORMATION and Statement of Financial Accounting Standards No.
132, EMPLOYERS' DISCLOSURES ABOUT PENSIONS AND OTHER POSTRETIREMENT
BENEFITS were issued. These standards, which will become effective in
fiscal 1999, expand or modify disclosures and will have no effect on the
Company's consolidated financial position, results of operations or cash
flows.
In June 1998, Statement of Financial Accounting Standards No. 133,
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, was issued.
This standard will become effective in fiscal 2001. The Company has not
quantified the impact, if any, resulting from adoption of this standard.
RECLASSIFICATION - Certain amounts in the fiscal 1997 Notes to
Consolidated Financial Statements have been reclassified to conform to
fiscal 1998 presentation.
1998 Annual Report 51
<PAGE>
2. NON-RECURRING CHARGES
In the fourth quarter of fiscal 1996 the Company recorded non-recurring
charges for a restructuring plan, early adoption of SFAS No. 121 and
completion of a previously announced disposition program. These charges
were as follows:
<TABLE>
<CAPTION>
BEFORE AFTER
INCOME TAX INCOME TAX
---------- ----------
<S> <C> <C>
Restructuring plan $ 353.0 $ 258.6
Adoption of SFAS No. 121 99.8 79.8
Disposition program 55.0 17.9
--------- ---------
Total charges $ 507.8 $ 356.3
--------- ---------
--------- ---------
</TABLE>
The effect of these charges in fiscal 1996 was $.79 for basic income per
share and $.78 for diluted income per share.
The fiscal 1996 restructuring plan was designed to streamline the
Company's production base, improve efficiency and enhance its
competitiveness. The restructuring plan included closing or reconfiguring
a number of production facilities and businesses and reducing the
workforce by approximately 6,000 employees.
Restructuring reserves were established in fiscal 1996 totaling $353.0
million. Of this amount, $278.4 million was reserved for asset
impairment, $41.0 million for employee-related cash outlays and $33.6
million for other charges relating to the restructuring initiative, the
majority of which required cash outlays. Substantially all assets have
been written off or cash payments made as of fiscal year end 1998. None
of the above reserves were released to profit and loss in fiscal 1998 or
fiscal 1997.
In fiscal 1996, the Company also early adopted SFAS No. 121. The noncash
charge from the adoption of this standard resulted from changes in
industry conditions, continued operating losses and from the Company's
grouping assets at a lower level than under its previous method of
accounting. Under the Company's previous policy for evaluating
impairment, assets were generally grouped at major operating entity
levels, and at those levels of grouping, no impairment charge was
required.
Also in fiscal 1996, the Company recognized a charge relating to
previously announced plans to dispose of certain non-core businesses.
3. INCOME PER SHARE
In fiscal 1998, the Company adopted Statement of Financial Accounting
Standards No. 128 ("SFAS No. 128"), EARNINGS PER SHARE, which requires
presentation of basic and diluted income per share on the face of the
Consolidated Statements of Earnings. Basic income per share is calculated
on the basis of weighted average outstanding common shares, after giving
effect to preferred stock dividends. Diluted income per share is computed
on the basis of weighted average outstanding common shares; plus
equivalent shares assuming exercise of stock options and conversion of
outstanding convertible securities, where dilutive. All income per share
disclosures have been restated in accordance with SFAS No. 128.
The following table reconciles the income and average share amounts used
to compute both basic and diluted income per share:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
INCOME PER SHARE - BASIC
Income before cumulative effect of
change in accounting $ 628.0 $ 615.0 $ 188.9
Less preferred dividends - - (8.6)
---------- ---------- ---------
Income available for common stock before
cumulative effect of change in accounting 628.0 615.0 180.3
Cumulative effect of change in accounting (14.8) - -
--------- ---------- ----------
Net income available for common stock $ 613.2 $ 615.0 $ 180.3
--------- ---------- ----------
--------- ---------- ----------
Weighted average shares outstanding - basic 451.8 451.3 451.3
--------- ---------- ----------
--------- ---------- ----------
INCOME PER SHARE - DILUTED
Income available for common stock before
cumulative effect of change in accounting $ 628.0 $ 615.0 $ 180.3
Cumulative effect of change in accounting (14.8) - -
--------- ---------- ----------
Net income available for common stock $ 613.2 $ 615.0 $ 180.3
--------- ---------- ----------
--------- ---------- ----------
Weighted average shares outstanding - basic 451.8 451.3 451.3
Add shares contingently issuable upon
exercise of stock options 9.5 7.7 7.6
--------- ---------- ----------
Weighted average shares outstanding - diluted 461.3 459.0 458.9
--------- ---------- ----------
--------- ---------- ----------
</TABLE>
4. RECEIVABLES
The Company has an agreement to sell interests in pools of receivables,
in an amount not to exceed $550 million at any one time. Participation
interests in new receivables may be sold, as collections
52 ConAgra, Inc.
<PAGE>
reduce previously sold participation interests. The participation
interests are sold at a discount that is included in selling,
administrative and general expenses in the Consolidated Statements of
Earnings. Gross proceeds from the sales were $524 and $534 million at
fiscal year-end 1998 and 1997, respectively.
5. INVENTORIES
The major classes of inventories are as follows:
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Hedged commodities $ 1,199.3 $ 1,169.8
Food products and livestock 1,245.6 1,191.0
Agricultural chemicals, fertilizer and feed 581.4 381.4
Retail merchandise 13.6 127.5
Other, principally ingredients and supplies 483.2 473.2
------------- -------------
$ 3,523.1 $ 3,342.9
------------- -------------
------------- -------------
</TABLE>
6. SHORT-TERM CREDIT FACILITIES AND BORROWINGS
At May 31, 1998, the Company has credit lines from banks which total
approximately $5.3 billion, including: $1.75 billion of long-term
revolving credit facilities maturing in September 2002; $1.75 billion
short-term revolving credit facilities maturing in September 1998; and
uncompensated bankers' acceptance and money market loan facilities
approximating $1.8 billion. Borrowings under the revolver agreements are
at or below prime rate and may be prepaid without penalty. The Company
pays fees for its revolving credit facilities.
The Company finances its short-term needs with bank borrowings,
commercial paper borrowings and bankers' acceptances. The average
consolidated short-term borrowings outstanding under these facilities for
the 1998 fiscal year were $2,515.1 million. This excludes an average of
$646.8 million of short-term borrowings that were classified as long-term
throughout the fiscal year (see Note 7). The highest period-end
short-term indebtedness during fiscal 1998 was $3,545.5 million.
Short-term borrowings were at rates below prime. The weighted average
interest rate was 5.78% and 5.63%, respectively, for fiscal 1998 and
1997.
In fiscal 1998 and 1997, the Company entered into interest rate swap
agreements to eliminate the impact of changes in short-term borrowing
rates. At May 31, 1998, the Company had outstanding interest rate swap
agreements effectively changing the interest rate exposure on $600
million of short-term borrowings from variable to a 6% fixed rate. The
swaps will mature on December 22, 1998. At May 25, 1997, the Company had
outstanding interest rate swap agreements effectively changing the
interest rate exposure on $1,400 million of short-term borrowings from
variable to fixed rates (ranging from 5.8% to 6.4%). The swap agreements
matured in fiscal 1998. The net cost in fiscal 1998 and fiscal 1997, and
the estimated fair value of these agreements as of May 31, 1998 and May
25, 1997 were not material.
7. SENIOR LONG-TERM DEBT, SUBORDINATED DEBT AND LOAN AGREEMENTS
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Senior Debt
Commercial paper backed by long-term revolving
credit agreements $ 685.6 $ 808.9
9.875% senior debt due in 2006 100.0 100.0
7.125% senior debt due in 2026 (redeemable at option of
holders in 2006) 397.6 397.6
6.70% senior debt due in 2027 (redeemable at option of
holders in 2009) 300.0 -
6.34% to 9.77% publicly issued unsecured medium-term notes
due in various amounts through 2004 119.5 154.5
9.87% to 9.95% unsecured senior notes due in various
amounts through 2009 66.5 78.1
Industrial Development Revenue Bonds (collateralized by
plant and equipment) due on various dates through 2017 at
an average rate of 6.73% and 6.91% 31.3 29.7
Miscellaneous unsecured 36.9 36.9
----------- -----------
Total senior debt 1,737.4 1,605.7
----------- -----------
Subordinated Debt
9.75% subordinated debt due in 2021 400.0 400.0
7.375% to 7.4% subordinated debt due through 2005 350.0 350.0
----------- -----------
Total subordinated debt 750.0 750.0
----------- -----------
Total long-term debt, excluding current installments $ 2,487.4 $ 2,355.7
----------- -----------
----------- -----------
</TABLE>
The aggregate minimum principal maturities of the long-term debt for each
of the five fiscal years following May 31, 1998 are as follows:
<TABLE>
<CAPTION>
<S> <C>
1999 $ 52.2
2000 19.7
2001 18.5
2002 122.2
2003 692.5
1998 Annual Report 53
</TABLE>
<PAGE>
Under the long-term credit facility referenced in Note 6, the Company has
agreements that allow it to borrow up to $1.75 billion through September
2002.
The most restrictive note agreements (the revolving credit facilities and
certain privately placed long-term debt) require the Company to repay the
debt if Consolidated Funded Debt exceeds 60% of Consolidated Capital Base
or if Fixed Charges coverage is less than 1.75 to 1.0 as such terms are
defined in applicable agreements.
Net interest expense consists of:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Long-term debt $ 205.6 $ 202.9 $ 212.5
Short-term debt 142.9 129.0 139.8
Interest income (37.8) (43.5) (41.6)
Interest capitalized (11.4) (11.2) (5.8)
-------- -------- --------
$ 299.3 $ 277.2 $ 304.9
-------- -------- --------
-------- -------- --------
</TABLE>
Net interest paid was $299.1 million, $274.5 million and $309.2 million
in fiscal 1998, 1997 and 1996, respectively.
Short-term debt interest expense of $19.1 million, $21.8 million and
$27.5 million in fiscal 1998, 1997 and 1996, respectively, incurred to
finance hedged inventories, has been charged to cost of goods sold.
The carrying amount of long-term debt (including current installments)
was $2,539.6 million and $2,708.6 million as of May 31, 1998 and May 25,
1997, respectively. Based on current market rates primarily provided by
outside investment bankers, the fair value of this debt at May 31, 1998
and May 25, 1997 was estimated at $2,776.3 million and $2,821.7 million,
respectively. The Company's long-term debt is generally not callable
until maturity.
8. OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities consist of estimated liabilities of Beatrice
Company (acquired in fiscal 1991) and estimated postretirement health
care and pension benefits as follows:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Income tax, legal and environmental liabilities primarily
associated with the Company's acquisition of
Beatrice Company $ 372.3 $ 460.2
Estimated postretirement health care and pensions 552.2 551.9
-------- --------
924.5 1,012.1
Less estimated current portion 83.2 77.0
-------- --------
$841.3 $935.1
-------- --------
-------- --------
</TABLE>
9. PREFERRED SECURITIES OF SUBSIDIARY COMPANY
ConAgra Capital, L.C., an indirectly controlled subsidiary of the
Company, has the following Preferred Securities outstanding:
4 MILLION SHARES OF 9% SERIES A CUMULATIVE PREFERRED ("SERIES A
SECURITIES")
Distributions are payable monthly.
7 MILLION SHARES OF SERIES B ADJUSTABLE RATE CUMULATIVE PREFERRED
("SERIES B SECURITIES")
Distributions are payable monthly at a rate per annum, which is
adjusted quarterly to 95% of the highest of three U.S. Treasury
security indices, subject to a floor of 5.0% and a ceiling of 10.5%
per annum. The distribution rate in fiscal 1998 ranged from 5.6% to
6.6%.
10 MILLION SHARES OF 9.35% SERIES C CUMULATIVE PREFERRED ("SERIES C
SECURITIES")
Distributions are payable monthly.
For financial statement purposes, distributions on these Securities are
included in selling, administrative and general expenses in the
Consolidated Statements of Earnings as such amounts represent minority
interests.
The above Securities were issued at a price of $25 per share. All such
Securities are non-voting (except in certain limited circumstances), and
are guaranteed on a limited basis by ConAgra and, in certain limited
circumstances, are exchangeable for debt securities of ConAgra. The
Securities are redeemable at the option of ConAgra Capital, L.C. (with
ConAgra's consent) in whole or in part, on or after May 31, 1999 with
respect to Series A Securities, June 30, 1999 with respect to Series B
Securities, and
54 ConAgra, Inc.
<PAGE>
February 29, 2000 with respect to Series C Securities, at $25 per
security plus accumulated and unpaid distributions to the date fixed for
redemption.
In connection with the issuance of the Series B Securities, the Company
entered into a swap with a money center bank that effectively changed the
distribution rate to a function of the three-month LIBOR on $175.0
million until May 31, 1998. The net cost of this swap in fiscal 1998,
1997 and 1996 was insignificant. The estimated fair value of this swap
agreement was an obligation of $1.5 million as of May 25, 1997.
10. CAPITAL STOCK
The Company has authorized shares of preferred stock as follows:
Class B - $50 par value; 150,000 shares
Class C - $100 par value; 250,000 shares
Class D - without par value; 1,100,000 shares
Class E - without par value; 16,550,000 shares
There are no preferred shares issued or outstanding as of May 31, 1998.
In fiscal 1996 the Company redeemed its Class D cumulative convertible
preferred stock at a redemption price of $25 per share plus accrued and
unpaid dividends thereon to the redemption date. Approximately 25,000
shares of Class D preferred stock were converted into shares of common
stock. The remaining shares of Class D preferred stock (approximately
2,000) were redeemed for cash.
The Company also redeemed its Class E cumulative convertible preferred
stock during fiscal 1996. Approximately 14.2 million shares were
converted into common stock and approximately 18,000 shares were redeemed
for cash. The Company used common shares acquired in open market
purchases at an aggregate cost of $482.2 million for purposes of
effecting the preferred stock conversion.
In connection with a two-for-one split of the Company's common stock,
effective October 1, 1997, the Company issued 253.1 million shares
(including 17.1 million shares and 12.2 million shares added to treasury
stock and the Employee Equity Fund, respectively) in the form of a stock
dividend. All references in the financial statements with regard to
number of shares of common stock, related dividends and per share amounts
have been restated to reflect this stock split.
11. EMPLOYEE EQUITY FUND
In fiscal 1993, the Company established a $700 million Employee Equity
Fund ("EEF"), a newly formed grantor trust, to pre-fund future
stock-related obligations of the Company's compensation and benefit
plans. The EEF supports existing, previously approved employee plans that
use ConAgra common stock and does not change those plans or the amounts
of stock expected to be issued for those plans.
For financial reporting purposes the EEF is consolidated with ConAgra.
The fair market value of the shares held by the EEF is shown as a
reduction to common stockholders' equity in the Company's Consolidated
Balance Sheets. All dividends and interest transactions between the EEF
and ConAgra are eliminated. Differences between cost and fair value of
shares held and/or released are included in consolidated additional
paid-in capital.
Following is a summary of shares held by the EEF:
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Shares held (in millions) 21.4 26.2
Cost - per share $14.552 $ 14.552
Cost - total 311.1 381.3
Fair market value - per share $29.25 $ 30.25
Fair market value - total 625.3 792.6
</TABLE>
12. STOCK OPTIONS AND RIGHTS
Stock option plans approved by the stockholders provide for granting of
options to employees for purchase of common stock generally at prices
equal to fair market value at the time of grant, and for issuance of
restricted or bonus stock without direct cost to the employee. During
fiscal 1998, 1997 and 1996, 274,926 shares, 565,722 shares and 493,036
shares of restricted stock (including stock issued under incentive plans)
were issued. The value of the restricted stock, equal to fair market
value at the time of grant, is being amortized as compensation expense.
This compensation expense was not significant for fiscal 1998, 1997 and
1996. Generally, options granted become exercisable over a four-year
period and expire ten years after the date of grant. For participants
under the long-term senior management incentive plan, options are
exercisable under various vesting schedules. Option shares and prices are
adjusted for common stock splits and changes in capitalization.
1998 Annual Report 55
<PAGE>
The changes in the outstanding stock options during the three years ended
May 31, 1998 are summarized below:
<TABLE>
<CAPTION>
1998 1997 1996
---------------------------------------------------------------------------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beginning of year 22.2 $ 17.40 22.2 $ 14.98 26.0 $ 13.11
Granted 5.1 33.72 5.7 24.03 5.4 20.03
Exercised (3.1) 14.45 (4.2) 13.87 (4.8) 12.24
Canceled (1.2) 21.19 (1.5) 16.51 (4.4) 13.10
End of year 23.0 $ 21.23 22.2 $ 17.40 22.2 $ 14.98
Exercisable
at end of year 13.2 $ 17.36 12.1 $ 14.92 12.4 $ 13.42
</TABLE>
The following summarizes information about stock options outstanding as
of May 31, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------------ -------------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
REMAINING EXERCISE EXERCISE
RANGE OF EXERCISE PRICE SHARES LIFE PRICE SHARES PRICE
---------------------------------- ------------------ ----------------- ----------------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
$ 5.58 - $ 8.22 .3 .6 $ 6.89 .3 $ 6.89
8.56 - 12.69 3.3 3.8 11.43 3.3 11.43
13.13 - 19.50 5.8 5.1 15.47 4.9 15.40
19.94 - 29.50 8.7 7.9 22.35 3.7 21.96
31.88 - 36.81 4.9 9.3 33.81 1.0 33.81
5.58 - 36.81 23.0 6.8 21.23 13.2 17.36
</TABLE>
The Company has elected to account for its employee stock option plans
using the intrinsic value method of accounting. Accordingly, no
compensation expense is recognized for stock options because the exercise
price of the stock options equals the market price of the underlying
stock on the date of the grant.
Pro forma information regarding net income and income per share is
required by SFAS No. 123, assuming the Company accounted for its employee
stock options using the fair value method. The fair value of options was
estimated at the date of the grant using the Black-Scholes option pricing
model with the following weighted average assumptions for 1998, 1997 and
1996, respectively: risk-free interest rate of 6.03%, 6.40% and 5.25%; a
dividend yield of 2.1%, 2.2% and 2.2%; expected volatility of 19.1%,
20.9% and 22.4%; and an expected option life of six years. The weighted
average fair value of options granted in fiscal 1998, 1997 and 1996 was
$8.53, $6.54 and $5.14, respectively. Pro forma net income and income per
share, after cumulative effect of change in accounting, are as follows
(because SFAS No. 123 is applicable only to options granted subsequent to
fiscal 1995, its pro forma effect will not be fully reflected until
fiscal 2000):
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Pro forma net income available for common stock $ 602.2 $ 608.6 $ 177.6
Pro forma basic income per share 1.33 1.35 .39
Basic income per share - as reported 1.36 1.36 .40
Pro forma diluted income per share 1.31 1.33 .39
Diluted income per share - as reported 1.33 1.34 .39
</TABLE>
At May 31, 1998, approximately 13.6 million shares were reserved for
granting additional options and restricted or bonus stock awards.
Each share of common stock carries with it one-half preferred stock
purchase right ("Right"). The Rights become exercisable ten days after a
person (an "Acquiring Person") acquires or commences a tender offer for
15% or more of the Company's common stock. Each Right entitles the holder
to purchase one one-thousandth of a share of a new series of Class E
Preferred Stock at an exercise price of $200, subject to adjustment. The
Rights expire on July 12, 2006, and may be redeemed at the option of the
Company at $.01 per Right, subject to adjustment. Under certain
circumstances, if (i) any person becomes an Acquiring Person or (ii) the
Company is acquired in a merger or other business combination after a
person becomes an Acquiring Person, each holder of a Right (other than
the Acquiring Person) will have the right to receive, upon exercise of
the Right, shares of common stock (of the Company under (i) and of the
acquiring company under (ii)) having a value of twice the exercise price
of the Right. The Rights were issued pursuant to a dividend declared by
the Company's Board of Directors on July 12, 1996 payable to stockholders
of record on July 24, 1996. The one Right for each outstanding share was
adjusted to one-half Right for each share effective October 1, 1997 as a
result of the two-for-one stock split. At May 31, 1998, the Company has
reserved one million Class E preferred shares for exercise of the Rights.
56 ConAgra, Inc.
<PAGE>
13. PRETAX INCOME AND INCOME TAXES
Income before taxes and cumulative effect of change in accounting
consisted of the following:
<TABLE>
<CAPTION>
1998 1997 1996
----------- ------------ ------------
<S> <C> <C> <C>
United States $ 949.0 $ 971.1 $ 386.3
Foreign 72.1 46.6 22.3
--------- ---------- ----------
$ 1,021.1 $ 1,017.7 $ 408.6
--------- ---------- ----------
--------- ---------- ----------
</TABLE>
The provision for income taxes includes the following:
<TABLE>
<CAPTION>
1998 1997 1996
----------- ------------ -----------
<S> <C> <C> <C>
Current
Federal $ 282.3 $ 268.2 $ 186.9
State 55.9 58.8 34.8
Foreign 12.3 7.9 37.1
---------- ---------- ----------
350.5 334.9 258.8
---------- ---------- ----------
Deferred
Federal 38.2 61.1 (26.4)
State 4.4 6.7 (3.0)
Foreign - - (9.7)
---------- ---------- ----------
42.6 67.8 (39.1)
---------- ---------- ----------
$ 393.1 $ 402.7 $ 219.7
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Income taxes computed by applying statutory rates to income before income
taxes are reconciled to the provision for income taxes set forth in the
Consolidated Statements of Earnings as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------- ------------ ------------
<S> <C> <C> <C>
Computed U.S. federal income taxes $ 357.4 $ 356.2 $ 143.0
State income taxes, net of U.S. federal tax benefit 39.2 42.5 20.7
Nondeductible amortization of goodwill and other
intangibles 20.0 21.6 21.7
Export and jobs tax credits (7.5) (6.3) (9.4)
Permanent differences due to non-recurring charges - - 45.8
Other (16.0) (11.3) (2.1)
--------- ---------- ----------
$ 393.1 $ 402.7 $ 219.7
--------- ---------- ----------
--------- ---------- ----------
</TABLE>
Income taxes paid were $278.5 million, $315.1 million and $236.3 million
in fiscal 1998, 1997 and 1996, respectively. The Internal Revenue Service
has examined the Company's tax returns through fiscal 1992. The IRS has
proposed certain adjustments, some of which are being contested by the
Company. The Company believes that it has made adequate provisions for
income taxes payable.
The tax effect of temporary differences and carryforwards that give rise
to significant portions of deferred tax assets and liabilities consist of
the following:
<TABLE>
<CAPTION>
1998 1997
-------------------------------------------------------------------
ASSETS LIABILITIES ASSETS LIABILITIES
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Depreciation and amortization $ - $ 336.7 $ - $ 338.5
Nonpension postretirement benefits 170.2 - 171.5 -
Other noncurrent liabilities which will
give rise to future tax deductions 216.0 - 250.3 -
Accrued expenses 71.9 - 45.5 -
Other 82.9 108.7 78.8 109.5
Non-recurring charges 59.5 - 85.5 -
-------- ------- -------- -------
$ 600.5 $ 445.4 $ 631.6 $ 448.0
-------- ------- -------- -------
-------- ------- -------- -------
</TABLE>
14. COMMITMENTS
The Company leases certain facilities and transportation equipment under
agreements that expire at various dates. Management expects that in the
normal course of business, leases that expire will be renewed or replaced
by other leases. Substantially all leases require payment of property
taxes, insurance and maintenance costs in addition to rental payments.
A summary of rent expense charged to operations follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Cancelable $ 152.3 $ 133.3 $ 120.2
Noncancelable 114.1 110.6 119.6
-------- -------- --------
$ 266.4 $ 243.9 $ 239.8
-------- -------- --------
-------- -------- --------
1998 Annual Report 57
</TABLE>
<PAGE>
A summary of noncancelable operating lease commitments for fiscal years
following May 31, 1998 is as follows:
<TABLE>
<CAPTION>
TYPE OF PROPERTY
--------------------------------------------------
REAL AND OTHER TRANSPORTATION
PROPERTY EQUIPMENT
------------------------ -------------------------
<S> <C> <C>
1999 $ 76.5 $ 33.6
2000 69.0 28.7
2001 59.1 20.0
2002 51.3 9.4
2003 40.6 4.4
Later years 76.5 6.8
-------- --------
$ 373.0 $ 102.9
-------- --------
-------- --------
</TABLE>
The Company had letters of credit, performance bonds and other
commitments and guarantees outstanding at May 31, 1998 aggregating
approximately $233.5 million.
15. CONTINGENCIES
In fiscal 1991, ConAgra acquired Beatrice Company ("Beatrice"). As a
result of the acquisition and the significant pre-acquisition tax and
other contingencies of the Beatrice businesses and its former
subsidiaries, the consolidated post-acquisition financial statements of
ConAgra reflected significant liabilities and valuation allowances
associated with the estimated resolution of these contingencies. The
material pre-acquisition tax contingencies were resolved in fiscal 1995.
Beatrice is also engaged in various litigation and environmental
proceedings related to businesses divested by Beatrice prior to its
acquisition by ConAgra. The environmental proceedings include litigation
and administrative proceedings involving Beatrice's status as a
potentially responsible party at 47 Superfund, proposed Superfund or
state-equivalent sites. Beatrice has paid or is in the process of paying
its liability share at 43 of these sites. Substantial reserves for these
matters have been established based on the Company's best estimate of its
undiscounted remediation liabilities, which estimates include evaluation
of investigatory studies, extent of required cleanup, the known
volumetric contribution of Beatrice and other potentially responsible
parties and its experience in remediating sites.
ConAgra is party to a number of other lawsuits and claims arising out of
the operation of its businesses. After taking into account liabilities
recorded for all of the foregoing matters, management believes the
ultimate resolution of such matters should not have a material adverse
effect on ConAgra's financial condition, results of operations or
liquidity.
16. DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses interest rate swaps to manage its interest rate risk, as
outlined in Note 6. In addition, the Company uses derivative financial
instruments such as swaps, forwards and options in its hedging and
trading activities in energy markets. At May 31, 1998, the Company had
long natural gas and electricity positions in derivative financial
instruments with a notional value of $256 million and associated short
positions with a notional value of $258 million. At May 25, 1997, such
amounts were not material. All contracts are marked to the market, with
gains and losses recorded in the income statement, consistent with all
trading business activity within the Company. The market risk on the net
position in derivative financial instruments in the energy complex was
not material.
The Company performs credit assessments on all counterparties and obtains
additional guarantees of financial performance, if deemed necessary. The
predominance of these trades are swaps, where the Company pays or
receives only the difference between the contract value and the market
value. The amount at risk is therefore limited to the gain on the swap.
The Company does not anticipate any material loss because of
nonperformance by a counterparty.
Certain of the Company's operations use foreign exchange forwards to
hedge fixed purchase and sales commitments denominated in a foreign
currency. The fair value of these foreign exchange positions was not
material as of May 31, 1998 and May 25, 1997.
17. PENSION AND POSTRETIREMENT BENEFITS
RETIREMENT PENSION PLANS
The Company and its subsidiaries have defined benefit retirement plans
("Plan") for eligible salaried and hourly employees. Benefits are based
on years of credited service and average compensation or stated amounts
for each year of service.
58 ConAgra, Inc.
<PAGE>
Consolidated pension costs consist of the following:
<TABLE>
<CAPTION>
1998 1997 1996
--------------------------------------------------------------------------------------------------
PLAN ACCUMULATED PLAN ACCUMULATED PLAN ACCUMULATED
ASSETS BENEFITS ASSETS BENEFITS ASSETS BENEFITS
EXCEED EXCEED EXCEED EXCEED EXCEED EXCEED
ACCUMULATED PLAN ACCUMULATED PLAN ACCUMULATED PLAN
BENEFITS ASSETS BENEFITS ASSETS BENEFITS ASSETS
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 39.1 $ 4.6 $ 38.7 $ 6.5 $ 24.0 $ 8.0
Interest cost 78.0 13.2 72.5 13.2 61.4 19.6
Actual return on
plan assets (265.0) (19.3) (140.4) (8.2) (184.4) (40.4)
Net amortization and
deferral 182.5 15.0 72.5 4.7 122.3 29.5
------ ------ ------ ------ ------ ------
Net pension costs $ 34.6 $ 13.5 $ 43.3 $ 16.2 $ 23.3 $ 16.7
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
</TABLE>
Pension costs were determined using a 7.5% discount rate (7.0% in fiscal
1997 and 8.5% in fiscal 1996), a long-term rate of return of 9.25% and a
long-term rate of compensation increases of 5.5% for all years presented.
The funded status of the plans at February 28, 1998 and February 28, 1997
(dates of the most recent actuarial reports) was as follows:
<TABLE>
<CAPTION>
1998 1997
---------------------------------------------------------------------------
PLAN ACCUMULATED PLAN ACCUMULATED
ASSETS BENEFITS ASSETS BENEFITS
EXCEED EXCEED EXCEED EXCEED
ACCUMULATED PLAN ACCUMULATED PLAN
BENEFITS ASSETS BENEFITS ASSETS
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Plan assets at fair value $1,350.3 $ 131.0 $1,105.3 $ 130.6
-------- -------- -------- --------
Projected benefit obligation:
Actuarial present value of
vested benefits 936.6 164.8 852.4 171.7
Actuarial present value of
nonvested benefits 69.9 9.6 53.0 7.6
-------- -------- -------- --------
Accumulated benefits 1,006.5 174.4 905.4 179.3
Additional obligation of projected
compensation increases 160.4 15.7 144.5 15.8
-------- -------- -------- --------
1,166.9 190.1 1,049.9 195.1
-------- -------- -------- --------
Plan assets greater (less) than
projected benefit obligations $ 183.4 $ (59.1) $ 55.4 $ (64.5)
-------- -------- -------- --------
-------- -------- -------- --------
Consisting of:
Unrecognized transition asset $ 11.1 $ 1.0 $ 13.7 $ 1.2
Unrecognized prior service cost (8.0) (17.7) (8.1) (16.7)
Unrecognized net gain (loss) 262.7 (13.4) 128.4 (24.5)
Adjustment to recognize
minimum liability - 15.1 - 24.3
Accrued pension cost on
consolidated balance sheets (82.4) (44.1) (78.6) (48.8)
-------- -------- -------- --------
$ 183.4 $ (59.1) $ 55.4 $ (64.5)
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
Plan assets are primarily invested in equity securities, corporate and
government debt securities and common trust funds. Included in plan
assets are 5,080,342 shares of the Company's common stock at a fair
market value of $152.4 million at February 28, 1998.
The actuarial projected benefit obligation was determined using an
assumed discount rate of 7.25% and 7.5% as of February 28, 1998 and
February 28, 1997, respectively, and long-term rate of compensation
increases of 5.5% for all years presented.
The Company funds these plans in accordance with the minimum and maximum
limits established by law.
The Company and its subsidiaries are also participants in multi-employer
pension plans covering certain hourly employees. Costs associated with
these plans for fiscal 1998, 1997 and 1996 were $9.5 million, $8.8
million and $8.3 million, respectively.
Certain employees of the Company are covered under defined contribution
plans. The expense related to these plans was $29.0 million, $28.6
million and $25.1 million in fiscal 1998, 1997 and 1996, respectively.
1998 Annual Report 59
<PAGE>
POSTRETIREMENT BENEFITS
The Company's postretirement plans provide certain medical and dental
benefits to qualifying U.S. employees.
Net postretirement benefit cost includes the following components:
<TABLE>
<CAPTION>
1998 1997 1996
--------- -------- ---------
<S> <C> <C> <C>
Service cost $ 2.6 $ 3.8 $ 3.2
Interest cost on accumulated postretirement
benefit obligation 24.9 29.0 34.2
Other (4.5) (1.8) (1.0)
------- ------- -------
$ 23.0 $ 31.0 $ 36.4
------- ------- -------
------- ------- -------
</TABLE>
Benefit costs were generally estimated assuming retiree health care costs
would initially increase at a 7.0% annual rate for all participants. The
rates are assumed to decrease each year to a 5.5% annual growth rate in
fiscal 2000 and remain at a 5.5% annual growth rate thereafter. A 1%
increase in these annual trend rates would have increased the accumulated
postretirement benefit obligation at February 28, 1998 by $39.2 million
with a corresponding effect on fiscal 1998 postretirement benefit expense
of $2.8 million. The discount rate used to estimate the accumulated
postretirement benefit obligation was 7.25% and 7.5% in fiscal 1998 and
1997, respectively. Plan assets consist of guaranteed investment
contracts earning a 13.7% annual rate of return. The Company generally
intends to fund claims as reported.
The status of the Company's plans at February 28, 1998 and 1997 was as
follows:
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Accumulated postretirement benefit obligations
Retirees and dependents $ 292.6 $ 288.7
Fully eligible active plan participants 24.0 29.3
Other active plan participants 32.3 30.4
--------- ---------
Total accumulated postretirement benefit obligation 348.9 348.4
Plan assets at fair value (5.5) (5.7)
Unrecognized prior service cost 1.5 1.6
Unrecognized net actuarial gain 91.5 89.6
--------- ---------
Accrued postretirement benefit obligation
at fiscal year-end $ 436.4 $ 433.9
--------- ---------
--------- ---------
</TABLE>
18. BUSINESS SEGMENTS
The Company is a diversified food company that operates across the food
chain, from basic agricultural inputs to production and sale of branded
consumer products. The Company has three business segments. Grocery &
Diversified Products includes companies that produce shelf-stable and
frozen foods. This segment markets food products in retail and
foodservice channels. Refrigerated Foods includes companies that produce
and market branded processed meats, beef, pork, chicken, turkey and
cheese products to retail and foodservice markets. Food Inputs &
Ingredients includes companies involved in distribution of agricultural
inputs -- crop protection chemicals, fertilizers and seeds -- and
procurement, processing, trading and distribution of commodity food
ingredients.
Intersegment sales have been recorded at amounts approximating market.
Operating profit for each segment is based on net sales less all
identifiable operating expenses and includes the related equity in
earnings of companies included on the basis of the equity method of
accounting. General corporate expense, goodwill amortization, interest
expense (except financial businesses) and income taxes have been excluded
from segment operations. All assets other than cash and those assets
related to the corporate office have been identified with the segments to
which they relate. The Company operates principally in the United States.
60 ConAgra, Inc.
<PAGE>
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Sales to unaffiliated customers
Grocery & Diversified Products $ 5,620.1 $ 5,333.9 $ 4,947.8
Refrigerated Foods 12,307.7 12,738.1 12,984.1
Food Inputs & Ingredients 5,912.7 5,930.1 5,967.4
----------- ----------- -----------
Total $ 23,840.5 $ 24,002.1 $ 23,899.3
----------- ----------- -----------
----------- ----------- -----------
Intersegment sales
Grocery & Diversified Products $ 12.5 $ 10.3 $ 3.4
Refrigerated Foods 199.1 121.7 55.0
Food Inputs & Ingredients 220.7 255.7 256.0
----------- ----------- -----------
432.3 387.7 314.4
Intersegment elimination (432.3) (387.7) (314.4)
----------- ----------- -----------
Total $ - $ - $ -
----------- ----------- -----------
----------- ----------- -----------
Net sales
Grocery & Diversified Products $ 5,632.6 $ 5,344.2 $ 4,951.2
Refrigerated Foods 12,506.8 12,859.8 13,039.1
Food Inputs & Ingredients 6,133.4 6,185.8 6,223.4
Intersegment elimination (432.3) (387.7) (314.4)
----------- ----------- -----------
Total $ 23,840.5 $ 24,002.1 $ 23,899.3
----------- ----------- -----------
----------- ----------- -----------
Operating profit (Note a)
Grocery & Diversified Products $ 913.2 $ 811.5 $ 639.5
Refrigerated Foods 231.1 385.6 120.9
Food Inputs & Ingredients 407.3 345.1 227.1
----------- ----------- -----------
Total operating profit 1,551.6 1,542.2 987.5
Interest expense excluding financial businesses 299.7 277.3 290.4
General corporate expenses (Note b) 163.4 178.6 219.0
Goodwill amortization 67.4 68.6 69.5
----------- ----------- -----------
Total $ 1,021.1 $ 1,017.7 $ 408.6
----------- ----------- -----------
----------- ----------- -----------
Identifiable assets
Grocery & Diversified Products $ 3,852.7 $ 3,741.1 $ 3,656.9
Refrigerated Foods 4,072.0 3,902.5 3,641.8
Food Inputs & Ingredients 3,389.6 3,184.5 3,358.5
Corporate 388.5 449.0 539.4
----------- ----------- -----------
Total $ 11,702.8 $ 11,277.1 $ 11,196.6
----------- ----------- -----------
----------- ----------- -----------
Additions to property, plant and
equipment - including businesses acquired
Grocery & Diversified Products $ 263.7 $ 230.4 $ 246.9
Refrigerated Foods 223.2 311.7 351.4
Food Inputs & Ingredients 141.4 181.7 410.4
Corporate 9.0 5.6 7.4
----------- ----------- -----------
Total $ 637.3 $ 729.4 $ 1,016.1
----------- ----------- -----------
----------- ----------- -----------
Depreciation and amortization
Grocery & Diversified Products $ 194.4 $ 180.9 $ 170.1
Refrigerated Foods 185.6 164.5 159.6
Food Inputs & Ingredients 63.8 62.8 72.8
Corporate 2.5 5.6 5.4
----------- ----------- -----------
Total $ 446.3 $ 413.8 $ 407.9
----------- ----------- -----------
----------- ----------- -----------
Note a: Fiscal 1996 includes before-tax non-recurring charges of $452.8
million (Note 2). The charges were included in operating profit as
follows: $63.6 million in Grocery & Diversified Products; $265.8 million
in Refrigerated Foods; and $123.4 million in Food Inputs & Ingredients.
Note b: Fiscal 1996 includes a before-tax charge of $55.0 million
relating to the disposal of certain non-core businesses (Note 2).
1998 Annual Report 61
</TABLE>
<PAGE>
19. QUARTERLY RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
INCOME PER SHARE STOCK MARKET PRICE DIVIDENDS
NET GROSS NET ---------------------------- ------------------------------- DECLARED
SALES PROFIT INCOME BASIC DILUTED HIGH LOW PER SHARE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998
First $ 6,140.4 $ 842.0 $110.1 $ .25 $.24 $35.81 $ 29.63 $.13625
Second 6,433.6 999.1 210.6 .47 .46 37.25 28.69 .15625
Third 5,385.0 846.7 138.6* .30* .30* 38.75 27.00 .15625
Fourth 5,881.5 990.3 168.7 .37 .36 32.94 27.88 .15625
----------- -------- ------ ----- ----- -------
Year $ 23,840.5 $3,678.1 $628.0* $1.39* $1.36* $38.75 $ 27.00 $.60500
----------- -------- ------ ----- ----- -------
----------- -------- ------ ----- ----- -------
1997
First $ 6,157.5 $ 791.9 $ 96.1 $ .21 $.21 $23.69 $ 20.69 $.11875
Second 6,590.2 958.2 187.3 .42 .41 26.50 20.75 .13625
Third 5,459.1 877.6 145.1 .32 .32 27.63 24.19 .13625
Fourth 5,795.3 932.6 186.5 .41 .41 30.75 25.75 .13625
----------- -------- ------ ----- ----- -------
Year $ 24,002.1 $3,560.3 $615.0 $1.36 $1.34** $30.75 $ 20.69 $.52750
----------- -------- ------ ----- ----- -------
----------- -------- ------ ----- ----- -------
* Amounts presented exclude one-time cumulative effect of change in
accounting for business process reengineering costs associated with
computer systems development of $14.8 million after-tax or $.03 per
share for both basic and diluted income per share.
** Quarterly diluted income per share numbers for fiscal 1997 do not
agree to the total for the year due to rounding.
62 ConAgra, Inc.
</TABLE>
<PAGE>
RESPONSIBILITIES
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
ConAgra, Inc.
We have audited the accompanying consolidated balance sheets of ConAgra,
Inc. and subsidiaries as of May 31, 1998 and May 25, 1997, and the related
consolidated statements of earnings, common stockholders' equity and cash flows
for each of the three years in the period ended May 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of ConAgra, Inc. and subsidiaries
as of May 31, 1998 and May 25, 1997, and the results of their operations and
their cash flows for each of the three years in the period ended May 31, 1998 in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
July 10, 1998
Omaha, Nebraska
THE CONDUCT OF OUR AFFAIRS
The major objectives of the company are expressed in terms of return on
stockholders' equity and growth in trend line earning power. As we conduct
ourselves in the pursuit of our existing businesses and in the growth of our
businesses in an ethical and moral way, we must also fulfill our commitments to
our government, to our society and to ourselves as individuals. In one sense,
ethics involves the point of view that suggests we live in a glass bowl, and we
should feel comfortable with any actions we take, if they were shared publicly.
Further, we will conduct our affairs within the law.
Should there be evidence of possible malfeasance on the part of any officer
or member of management, each employee must feel the responsibility to
communicate that to the appropriate party. This is a commitment that each of us
must undertake and not feel that it is a high-risk communication, but that it is
expected and, indeed, an obligation.
- -- from ConAgra's Philosophy, page 6
(originally published in 1976)
PRINCIPAL OFFICERS
The principal officers of the company include, among others, those listed on
pages 66 and 67 of this report. The principal officers are responsible for
maintaining throughout the company a system of internal controls which protect
the assets of the company on a reasonable and economic basis. They also are
responsible for maintaining records which permit the preparation of financial
statements that fairly present the financial condition and results of operations
of the company in accordance with generally accepted accounting principles.
AUDIT COMMITTEE OF THE BOARD
The Audit Committee of ConAgra's Board of Directors is composed entirely of
outside directors and recommends the appointment of the company's independent
public accountants. The Audit Committee meets regularly, and when appropriate
separately, with the independent public accountants, the internal auditors and
financial management. Both the independent public accountants and the internal
auditors have unrestricted access to the Audit Committee.
1998 Annual Report 63
<PAGE>
BOARD OF DIRECTORS
Mogens C. Bay, 49
OMAHA, NEBRASKA.
Chairman and chief executive officer of Valmont Industries (irrigation
equipment, metal fabrication). Director since 1996.
Philip B. Fletcher, 65
SCOTTSDALE, ARIZONA.
Chairman of ConAgra board of directors since May 1993 and chief executive
officer of ConAgra September 1992-September 1997. Director since 1989.
Charles M. Harper, 70
OMAHA, NEBRASKA.
Former chairman and chief executive officer of RJR Nabisco Holdings Corp.;
ConAgra chief executive officer 1976 - September 1992. Chairman of ConAgra board
1981-1993. Director since 1975.
Robert A. Krane, 64
DENVER, COLORADO.
Consultant, KRA, Inc. Former president and chief executive officer of Central
Bancorporation (financial services). Director since 1982.
Gerald Rauenhorst, 70
MINNEAPOLIS, MINNESOTA.
Chairman of the board of Opus U.S. Corporation and Opus U.S., LLC (real estate,
construction and development). Director since 1982.
Carl E. Reichardt, 67
SAN FRANCISCO, CALIFORNIA.
Former chairman and chief executive officer of Wells Fargo & Company and Wells
Fargo Bank. Director since 1993.
Bruce Rohde, 49
OMAHA, NEBRASKA.
Vice chairman of ConAgra board of directors and president since August 1996;
chief executive officer of ConAgra since September 1997.
Dr. Ronald W. Roskens, 65
OMAHA, NEBRASKA.
President of Global Connections, Inc. (international business consulting).
Former president of the University of Nebraska. Director since 1992.
Marjorie M. Scardino, 51
LONDON, ENGLAND.
Chief executive officer of Pearson Plc. (international media company). Director
since 1994.
Walter Scott, Jr., 67
OMAHA, NEBRASKA.
Chairman emeritus of Peter Kiewit Sons', Inc. (construction and mining).
Chairman of board, Level 3 Communications (telecommunications and communications
services). Director since 1986.
Kenneth E. Stinson, 55
OMAHA, NEBRASKA.
Chairman and chief executive officer of Peter Kiewit Sons', Inc. (construction
and mining). Director since 1996.
Jane J. Thompson, 47
HOFFMAN ESTATES, ILLINOIS.
President, Sears Direct, Sears, Roebuck and Co. (retailing). Director since
1995.
Frederick B. Wells, 70
MINNEAPOLIS, MINNESOTA.
President of Asian Fine Arts (fine arts retailing). Director since 1982.
Thomas R. Williams, 69
ATLANTA, GEORGIA.
President and director of The Wales Group, Inc. (investment management and
counseling). Director since 1978.
Dr. Clayton K. Yeutter, 67
MCLEAN, VIRGINIA.
Of counsel with Washington, D.C. law firm Hogan & Hartson. Former U.S. Trade
Representative and Secretary of Agriculture. Director 1980-1985 and since 1992.
BOARD COMMITTEES
EXECUTIVE COMMITTEE
Charles M. Harper, Chairman
Philip B. Fletcher
Gerald Rauenhorst
Bruce Rohde
Walter Scott, Jr.
AUDIT COMMITTEE
Walter Scott, Jr., Chairman
Mogens C. Bay
Robert A. Krane
Jane J. Thompson
Frederick B. Wells
CORPORATE AFFAIRS COMMITTEE
Gerald Rauenhorst, Chairman
Dr. Ronald W. Roskens
Marjorie M. Scardino
Kenneth E. Stinson
HUMAN RESOURCES COMMITTEE
Carl E. Reichardt, Chairman
Thomas R. Williams
Dr. Clayton K. Yeutter
64 ConAgra, Inc.
<PAGE>
[PHOTO: ConAgra Board of Directors]
1998 Annual Report 65
<PAGE>
PRINCIPAL OFFICERS
OFFICE OF THE PRESIDENT
J. Charles Blue
PRESIDENT AND CHIEF OPERATING OFFICER
CONAGRA AGRI-PRODUCTS COMPANIES
Raymond J. De Riggi
PRESIDENT AND CHIEF OPERATING OFFICER
CONAGRA GROCERY PRODUCTS COMPANIES
Timothy M. Harris
PRESIDENT AND CHIEF OPERATING OFFICER
CONAGRA REFRIGERATED PREPARED FOODS COMPANIES
Thomas L. Manuel
PRESIDENT AND CHIEF OPERATING OFFICER
CONAGRA TRADING AND PROCESSING COMPANIES
Richard A. Porter
CHAIRMAN, LAMB-WESTON AND
PRESIDENT, CONAGRA FOODSERVICE SALES COMPANY
James T. Smith
PRESIDENT
CONAGRA FROZEN FOODS
CEO'S COUNCIL
OFFICE OF THE PRESIDENT
(The six executives at left.)
Kenneth W. DiFonzo
SENIOR VICE PRESIDENT AND CORPORATE CONTROLLER
Kenneth W. Gerhardt
SENIOR VICE PRESIDENT AND CHIEF INFORMATION OFFICER
Dwight J. Goslee
SENIOR VICE PRESIDENT
MERGERS AND ACQUISITIONS
Owen C. Johnson
SENIOR VICE PRESIDENT
HUMAN RESOURCES
Timothy P. McMahon
SENIOR VICE PRESIDENT
CORPORATE MARKETING DEVELOPMENT
James P. O'Donnell
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND CORPORATE SECRETARY
Gerald B. Vernon
EXECUTIVE VICE PRESIDENT AND CHIEF ADMINISTRATIVE OFFICER
Michael D. Walter
SENIOR VICE PRESIDENT, TRADING AND PROCUREMENT MANAGEMENT
CORPORATE STAFF
Jay D. Bolding
VICE PRESIDENT
BUSINESS PROCESSES AND FINANCIAL ANALYSIS
Walter H. Casey
SENIOR VICE PRESIDENT
INVESTOR RELATIONS AND BUSINESS ANALYSIS
Richard L. Gady
VICE PRESIDENT, PUBLIC AFFAIRS AND CHIEF ECONOMIST
Denise M. Hagerty
VICE PRESIDENT, ASSISTANT CORPORATE CONTROLLER
James W. Hollenbeck
VICE PRESIDENT
AVIATION
Philip J. James
SENIOR VICE PRESIDENT SUSTAINABLE DEVELOPMENT
Reeder P. Jones
VICE PRESIDENT, ASSISTANT CORPORATE CONTROLLER
Debra L. Keith
VICE PRESIDENT
TAXES
Margaret E. Lacey
VICE PRESIDENT, CORPORATE TREASURER AND ASSISTANT CORPORATE SECRETARY
Archie L. Meairs
VICE PRESIDENT, INSURANCE AND LOSS CONTROL
David G. Pederson
VICE PRESIDENT, COMPENSATION AND BENEFITS
Lynn L. Phares
VICE PRESIDENT
CORPORATE RELATIONS
David A. Reitz
VICE PRESIDENT
STRATEGIC SOURCING
Janet M. Richardson
VICE PRESIDENT, CORPORATE FACILITIES AND SERVICES
James P. Salvadori
VICE PRESIDENT
CREDIT SERVICES
Jon A.Vanderhoof, M.D.
VICE PRESIDENT
NUTRITION AND HEALTH SCIENCES
LEGAL COUNSEL
McGrath, North, Mullin
& Kratz, P.C.
Omaha, Nebraska
GENERAL COUNSEL:
David L. Hefflinger
ASSISTANT GENERAL COUNSELS:
Leo A. Knowles
Roger W. Wells
INDEPENDENT OPERATING COMPANIES
BEATRICE CHEESE COMPANY
Kevin J. Ruda
PRESIDENT
CONAGRA AGRI-PRODUCTS COMPANIES
Floyd McKinnerney
CHAIRMAN
J. Charles Blue
PRESIDENT AND CHIEF OPERATING OFFICER
Philip J. James
EXECUTIVE VICE PRESIDENT
UNITED AGRI PRODUCTS COMPANIES
J. Charles Blue
PRESIDENT
66 ConAgra, Inc.
<PAGE>
CONAGRA FOODSERVICE SALES COMPANY
Richard A. Porter
PRESIDENT
ConAgra Frozen Foods
James T. Smith
PRESIDENT
CONAGRA SEAFOOD COMPANIES
Jesse Gonzalez
PRESIDENT
PIERCE FOODS
Jeffrey D. Hester
PRESIDENT
CONAGRA GROCERY PRODUCTS COMPANIES
Raymond J. De Riggi
PRESIDENT AND CHIEF OPERATING OFFICER
CONAGRA GROCERY PRODUCTS COMPANIES INTERNATIONAL
Glen A. Smith
PRESIDENT
GOLDEN VALLEY MICROWAVE FOODS, INC.
John S. McKeon
PRESIDENT
HUNT FOODS COMPANY
Edward A. Snell
PRESIDENT
HUNT-WESSON FOODSERVICE COMPANY
Garnet E. Pigden
PRESIDENT
HUNT-WESSON SALES COMPANY
Douglas A. Knudsen
PRESIDENT
ORVILLE REDENBACHER/SWISS MISS FOODS COMPANY
WESSON/PETER PAN FOODS COMPANY
Joseph Jimenez
PRESIDENT
CONAGRA REFRIGERATED PREPARED FOODS COMPANIES
Timothy M. Harris
PRESIDENT AND CHIEF OPERATING OFFICER
ASE CONSUMER PRODUCTS COMPANY
L. Richard Belsito
PRESIDENT
ASE DELI/FOODSERVICE COMPANY
Richard G. Scalise
PRESIDENT
BUTTERBALL TURKEY COMPANY
Timothy M. Harris
PRESIDENT
COOK FAMILY FOODS
Eugene J. Dembkoski
PRESIDENT
DECKER FOOD COMPANY
Michael E. Brown
PRESIDENT
NATIONAL FOODS
Steven B. Silk
PRESIDENT
CONAGRA TRADING AND PROCESSING COMPANIES
Thomas L. Manuel
PRESIDENT AND CHIEF OPERATING OFFICER
- MEAT GROUP -
AUSTRALIA MEAT HOLDINGS PTY LTD.
Keith E. Lawson
EXECUTIVE CHAIRMAN
CONAGRA POULTRY COMPANY
Russell J. Bragg
PRESIDENT
PROFESSIONAL FOOD SYSTEMS
J. Rolan Brevard
PRESIDENT
TEXAS SIGNATURE FOODS
Steven R. McClure
VICE PRESIDENT AND GENERAL MANAGER
TO-RICOS
Hector L. Mattei
PRESIDENT
CONAGRA REFRIGERATED FOODS INTERNATIONAL SALES CORP.
Charles K. Monfort
PRESIDENT
E. A. MILLER
Ted A. Miller
PRESIDENT
MONFORT, INC.
Thomas L. Manuel
PRESIDENT
SWIFT & COMPANY
Thomas L. Manuel
PRESIDENT
- GRAIN GROUP -
Larry A. Carter
EXECUTIVE VICE PRESIDENT
CONAGRA IBERIA COMPANIES
Jose Rocha Martins
PRESIDENT
CONAGRA INTERNATIONAL FERTILIZER COMPANY
Brian D. Harlander
PRESIDENT
CONAGRA MALT
(50-percent owned)
Donald C. Smith
PRESIDENT
MOLINOS DE PUERTO RICO
Manuel O. Herrera
PRESIDENT
CONAGRA FLOUR MILLING COMPANY
Darek M. Nowakowski
PRESIDENT
CONAGRA TRADE GROUP
Gregory A. Heckman
CHIEF OPERATING OFFICER
Fred E. Page
CHIEF OPERATING OFFICER
CONAGRA GRAIN COMPANIES
James D. Anderson
PRESIDENT
CONAGRA TRADE GROUP
SOFT COMMODITY DIVISION
David L. Penrice
PRESIDENT
KBC TRADING AND PROCESSING COMPANY
Robert J. Corkern
PRESIDENT
UNITED SPECIALTY FOOD INGREDIENTS COMPANIES
David W. Blue
PRESIDENT
LAMB-WESTON, INC.
Richard A. Porter
CHAIRMAN
Robert S. Horowitz
President and Chief Operating Officer
1998 Annual Report 67
<PAGE>
PRINCIPAL CONAGRA LOCATIONS
[MAP]
Canada
shelf-stable and frozen foods processing and distribution
barley malting
grain handling, merchandising and storage
crop protection chemical distribution
horticulture products distribution
Mexico
shelf-stable and frozen foods processing and distribution
meat sales and marketing
crop protection chemical distribution
fertilizer distribution
seed distribution
Panama
meat processing and distribution
Australia
meat processing, distribution and merchandising
barley malting
wool processing
commodity merchandising
New Zealand
commodity merchandising
United States
shelf-stable and frozen foods processing and distribution
potato products processing and distribution
meats and cheeses processing and distribution
crop protection chemical, fertilizer and seed distribution
flour, oat and corn milling; barley malting
grain merchandising; commodity trading
food ingredients manufacturing
tortilla manufacturing
edible beans processing and merchandising
Puerto Rico
frozen foods distribution
meat sales, marketing and distribution
flour milling
corn milling
animal feed manufacturing
Brazil
meat sales and marketing
fertilizer distribution
Uruguay
fertilizer distribution
Argentina
edible beans processing
soybean crushing
fertilizer distribution
Bolivia
crop protection chemical distribution
fertilizer distribution
seed distribution
Ecuador
crop protection chemical distribution
fertilizer distribution
seed distribution
Peru
crop protection chemical distribution
fertilizer distribution
seed distribution
Chile
capsicum (chili peppers) manufacturing, distribution
and merchandising
edible beans processing
and merchandising
raisin processing
crop protection chemical distribution
fertilizer distribution
68 ConAgra, Inc.
<PAGE>
[MAP]
United Kingdom
frozen foods processing and distribution
popcorn processing and distribution
barley malting
oat processing
grain merchandising
specialty vegetable ingredients distribution
crop protection chemical distribution
fertilizer distribution and procurement
horticulture products distribution
seed distribution
France
crop protection chemical distribution
Spain
animal feed processing
Portugal
processed meats processing and distribution
animal feed processing
poultry processing
Switzerland
edible beans merchandising
Germany
corn processing
commodity merchandising
Italy
frozen foods processing and distribution
South Africa
crop protection chemical distribution
grain merchandising
Netherlands
potato products processing and distribution
Denmark
barley malting
Turkey
potato products processing and distribution
India
edible oils processing and distribution
seed distribution
Thailand
specialty product sourcing and distribution
Malaysia
fertilizer distribution and procurement
China
frozen foods distribution
meat sales and marketing
barley malting
fertilizer distribution
edible beans merchandising
Korea
meat sales and marketing
frozen foods distribution
Japan
potato products distribution
frozen foods distribution
meat sales and marketing
Taiwan
meat sales and marketing
crop protection chemical distribution
Philippines
prepared food distribution
Vietnam
fertilizer distribution
Singapore
frozen foods distribution
fertilizer distribution and procurement
commodity merchandising
[Legend] ConAgra Industry Segments
Grocery & Diversified Products
Refrigerated Foods
Food Inputs & Ingredients
1998 Annual Report 69
<PAGE>
CORPORATE CITIZENSHIP
CONAGRA IS COMMITTED TO BEING A GOOD CORPORATE CITIZEN IN THE COMMUNITIES WHERE
OUR EMPLOYEES WORK AND LIVE. WE AIM TO HAVE A LASTING, POSITIVE IMPACT ON OUR
COMMUNITIES, OUR INDUSTRIES AND THE COUNTRIES IN WHICH WE DO BUSINESS.
IN FISCAL 1998, THE CONAGRA FOUNDATION, THE PHILANTHROPIC ARM OF CONAGRA,
MADE ABOUT 250 GRANTS IN MORE THAN 80 CONAGRA COMMUNITIES IN 27 STATES. IN
ADDITION, CONAGRA OPERATING COMPANIES IN THE U.S. AND OTHER NATIONS MADE DIRECT
CONTRIBUTIONS TO THEIR COMMUNITIES.
JUST AS IMPORTANT, THOUSANDS OF CONAGRA EMPLOYEES ARE COMMUNITY LEADERS,
VOLUNTEERS AND CONTRIBUTORS IN CITIES AND TOWNS AROUND THE WORLD. WE SALUTE
INDIVIDUALS ACROSS CONAGRA FOR GIVING SO GENEROUSLY OF THEIR TIME, TALENT AND
RESOURCES TO MAKE THEIR COMMUNITIES BETTER PLACES TO LIVE.
FOLLOWING ARE SOME EXAMPLES OF CONAGRA FOUNDATION SUPPORT FOR CONAGRA
COMMUNITIES IN FISCAL 1998:
AMERICAN FALLS, IDAHO American Falls Rural Fire Department -- $25,000 to
help purchase a more reliable search and rescue vehicle.
ASHLAND, KENTUCKY Salvation Army of Ashland, Kentucky -- $25,000 to help
renovate a building for use as an emergency shelter for individuals and families
in eastern Kentucky.
CHADRON, NEBRASKA Chadron State Foundation -- $15,000 to support a
community/school revitalization project for small communities in Nebraska.
COLUMBIA, MISSOURI Great Rivers Council, Boy Scouts of America -- $50,000
to help upgrade Camp Thunderbird, which serves families from three Missouri
towns with ConAgra plants (Macon, Marshall and Milan).
FARMERVILLE, LOUISIANA Union Council on Aging -- $10,000 to expand the
number of elderly residents who receive home-delivered meals.
GRAND ISLAND, NEBRASKA Grand Island Task Force on Domestic Violence --
$20,000 to help purchase a domestic violence shelter.
GREELEY, COLORADO North Colorado Medical Center -- $25,000 (of a $125,000
pledge) to support a clinic for medically underserved children.
JONESBORO, ARKANSAS Habitat for Humanity of Greater Jonesboro -- $25,000
to purchase material for Jonesboro's eighth Habitat home.
MOOREFIELD, WEST VIRGINIA Moorefield Elementary School -- $25,000 to help
the school purchase 25 computers.
OMAHA, NEBRASKA Boys and Girls Clubs of Omaha -- $100,000 to underwrite
the operations of Success Prep, an innovative school-to-work transition program
ConAgra initiated and has underwritten since 1993.
OMAHA, NEBRASKA Omaha Community Playhouse/ Nebraska Theatre Caravan --
$33,000 to support a performance tour across Nebraska.
SAN BERNARDINO, CALIFORNIA San Bernardino National Forest Association --
$25,000 to help revitalize trails and support environmental education at the
Children's Forest. ConAgra company Hunt-Wesson also donated $25,000 to this
project.
WORTHINGTON, MINNESOTA Southwest Minnesota Foundation -- $10,000 (of a
$30,000 pledge) to help support the Community Connectors Program, which assists
the community of Worthington in responding to the needs of non-English-speaking
residents. ConAgra's Swift & Co., which has a plant in Worthington, pledged an
additional $15,000 to this project.
[PHOTO]
CONAGRAN BOB CORKERN (PRESIDENT OF KBC TRADING AND PROCESSING COMPANY),
SURROUNDED BY STUDENTS, IS A LEADER IN PUBLIC EDUCATION IMPROVEMENT PROGRAMS IN
STOCKTON, CALIFORNIA. THE SAN JOAQUIN A+ PROGRAM IN STOCKTON, NOMINATED BY KBC,
WAS A 1998 CONAGRA FOUNDATION COMMUNITY SERVICE AWARD WINNER. IN THE PHOTO,
FIRST ROW, FROM LEFT, GREGORY PRUETT, JOSIE SENEGOR, BOB CORKERN, GINA SENEGOR,
PATRICK KUCICH, MICHAEL MITCHELL AND CHRISTINA MITCHELL. TOP ROW, FROM LEFT,
BRET RINGER; SUSAN SMITH, SAN JOAQUIN A+ EXECUTIVE DIRECTOR; SCOTT SAKODA; AND
ANN QUINN, COMMUNITY AFFAIRS DIRECTOR, LINCOLN UNIFIED SCHOOL DISTRICT.
70 ConAgra, Inc.
<PAGE>
INVESTOR INFORMATION
ConAgra Stock
ConAgra's common stock is listed on the New York Stock Exchange. Ticker symbol:
CAG.
At the end of fiscal 1998, 480.3 million shares of common stock were
outstanding, including 21.4 million shares held in the company's Employee Equity
Fund. There were 33,000 shareholders of record, 30,000 holders via ConAgra's
401(k) plan for employees and over 100,000 "street-name" beneficial holders
whose shares are held in names other than their own -- in brokerage accounts,
for example. During fiscal 1998, 283 million shares were traded, a daily average
of about 1,100,000 shares. Shares traded before the October 1997 two-for-one
stock split have been adjusted to a post-split basis.
The Series A, Series B and Series C preferred securities of ConAgra
Capital, L.C. also are listed on the New York Stock Exchange. Ticker symbols:
CAG PrA, CAG PrB, CAG PrC. For the current dividend rate of ConAgra Capital's
Series B adjustable rate preferred securities, call (800) 214-0349.
Common Stock Dividends
ConAgra normally pays quarterly common stock dividends on March 1, June 1,
September 1 and December 1. The current annual dividend rate is 62.5 CENTS per
share. The company's dividend objective and results are on page 5 of this
report.
ConAgra has paid 90 consecutive quarterly common stock dividends. The
dividend was increased 14.7 percent beginning with the December 1, 1997 payment.
ConAgra has increased common stock dividends per share 14 percent or more for 23
consecutive years.
Annual Meeting of Shareholders
ConAgra's annual shareholders' meeting will be held on Thursday, September 24,
1998 at 1:30 p.m. at the Doubletree Hotel, 1616 Dodge Street, Omaha, Nebraska.
See the proxy statement for additional information.
News and Publications
Call ConAgra Investor Information at (800) CAG-0244 to hear current company
news, including quarterly earnings and common stock dividends, or to request
printed materials such as the mid-year report or the Form 10-K, an annual filing
with the Securities and Exchange Commission. ConAgra stockholders also can
obtain the Form 10-K at no charge by writing to: James P. O'Donnell, Corporate
Secretary, One ConAgra Drive, Omaha, NE 68102-5001.
ConAgra mails mid-year reports to shareholders of record. Street-name
holders who would like to receive these reports may call (800) CAG-0244 and ask
to be placed on our mailing list to receive mid-year reports.
Call Company News On-Call (CNOC) at (800) 758-5804, extension 200825 to
receive, at no charge, ConAgra news releases via fax. Or access CNOC on the
Internet for ConAgra news releases at http://www.prnewswire.com.
Visit the ConAgra home page on the Internet at http://www.
conagra.com for extensive information about ConAgra, including news releases,
new products, selected sections of the annual report and the company's
environmental program.
Shareholder Services
Stockholders of record who have questions about or need help with their account
may contact ConAgra Shareholder Services, (800) 214-0349.
Through ConAgra's Shareholder Service Plan, stockholders of record may:
-Have stock certificates held by ConAgra Shareholder Services for
safekeeping and to facilitate sale or purchase of shares.
-Automatically reinvest some or all dividends in ConAgra common stock.
About 60 percent of ConAgra's stockholders of record participate.
-Purchase additional shares of ConAgra common stock through voluntary
cash investments of $50 to $50,000 per calendar year.
-Have bank accounts automatically debited to purchase additional ConAgra
shares.
-Automatically deposit dividends directly to bank accounts through
Electronic Funds Transfer (EFT).
For more information, call ConAgra Shareholder Services, (800) 214-0349.
Corporate Headquarters
ConAgra, Inc.
One ConAgra Drive
Omaha, NE 68102-5001
(402) 595-4000
Assistant Corporate Secretary (402) 595-4005
Investor Relations (402) 595-4154 (for analyst/investor inquiries)
Corporate Relations (402) 595-4153 (for media/other inquiries)
Transfer Agent and Registrar
Norwest Shareowner Services
161 N. Concord Exchange
P.O. Box 64856
St. Paul, MN 55164-0856
(800) 214-0349
<PAGE>
Exhibit 21
----------
Subsidiaries of ConAgra
ConAgra, Inc. is the parent corporation owning 100% (unless otherwise noted) of
the voting securities of the following subsidiaries as of May 31, 1998:
<TABLE>
<CAPTION>
Jurisdiction of
Subsidiary Incorporation
- ---------- -------------
<S> <C>
A. M. Gilardi & Sons, Inc. Ohio
ConAgra Brands, Inc. Nebraska
ConAgra Capital L.C. (indirectly controlled) Iowa
ConAgra Energy Services, Inc. Delaware
ConAgra Fertilizer Company Nebraska
ConAgra Foreign Sales Corporation, Inc. Guam
ConAgra International (Far East) Limited (owns 100% of the
voting securities of four foreign corporations engaged
principally in the worldwide commodities trading business) Hong Kong
ConAgra International Fertilizer Company Delaware
ConAgra International, Inc. (owns 100% of the voting securities
of 15 foreign corporations, 99% of five foreign corporations,
98% of one foreign corporation, 85% of one foreign corporation,
50% of two foreign corporations and 30% of two foreign corporations,
all engaged principally in the worldwide commodities
trading business and the processing of beef, wool and malt) Delaware
ConAgra International, S.A. Spain
ConAgra Poultry Company (owns 100% of two domestic corporations
engaged principally in poultry operations) Delaware
ConAgra Refrigerated Foods Companies, Inc. Delaware
ConAgra Trade Group, Inc. Delaware
Creative Seasonings, Inc. Massachusetts
CTC North America, Inc. Delaware
Golden Valley Microwave Foods, Ltd United Kingdom
Hester Industries, Inc. Virginia
</TABLE>
114
<PAGE>
Exhibit 21 (Continued)
---------------------
<TABLE>
<CAPTION>
Jurisdiction of
Subsidiary Incorporation
- ---------- -------------
<S> <C>
Hunt-Wesson, Inc. (owns 100% of the voting securities
of nine domestic corporations, 70% of one
foreign corporation and 100% of three foreign corporations, all engaged
principally in the production and marketing of retail, foodservice
and industrial food products) Delaware
International Pizza Corporation Ohio
Kurt A. Becher GmbH & Company KG Germany
Lamb-Weston, Inc. (owns 100% of the voting securities
of one domestic corporation and one foreign corporation,
all engaged in the potato products business) Delaware
Meridian Seafood Products, Inc. Delaware
Miller Bros. Company, Inc. Utah
Molinos de Puerto Rico, Inc. Nebraska
Monfort, Inc. (owns 100% of the voting securities
of four domestic corporations and one foreign corporation,
all engaged principally in the livestock feeding
and processing business) Delaware
Rygmyr Foods, Inc. Minnesota
Sergeant's Pet Products, Inc. Delaware
Superior Barge Lines, Inc. (80% owned) Delaware
Swift & Company Delaware
To-Ricos, Inc. Nebraska
United Agri Products, Inc. (owns 100% of the voting securities
of 32 domestic corporations, all engaged principally
in the agricultural chemicals business) Delaware
USFI-Gilroy, Inc. Delaware
Weld Insurance Company, Inc. Colorado
Zoll Foods Corporation Illinois
</TABLE>
The corporations listed above and on the previous page are included in the
consolidated financial statements, which are a part of this report.
115
<PAGE>
Exhibit 21 (Continued)
---------------------
ConAgra and its subsidiaries account for the following investments using the
equity method of accounting:
<TABLE>
<CAPTION>
Jurisdiction of
Subsidiary Incorporation
- ---------- -------------
<S> <C>
Saprogal (99.98% owned) Spain
Sapropor (99.87% owned) Portugal
Phyto-Service S.A. (65% owned) France
Barrett Burston Malting Co. Pty. Ltd. (50% owned) Australia
Agri-Pacific Co., Ltd. (50% owned) Taiwan
CAG 28, Inc. (50% owned) United States
CAG 29, B.V. (50% owned) Denmark
Canada Malting Company Limited (50% owned) Canada
ConAgra 29 B.V. (50% owned) Netherlands
Concampo S.A. de C.V. (50% owned) Mexico
European Oat Millers Ltd. (50% owned) United Kingdom
Great Western Malting Co. (50% owned) Delaware
IMEX International Pty. Ltd. (50% owned) South Africa
Malt Real Property Pty. Ltd. (50% owned) Australia
Pecom-Agra, S.A. (50% owned) Argentina
Productos Verde Valle S.A. de C.V. (50% owned) Mexico
Tecnica Agricola de Mexico S.A. de C.V. (50% owned) Mexico
Tradoil, Inc. (50% owned) Panama
Ulgrave Limited (50% owned) United Kingdom
</TABLE>
116
<PAGE>
Exhibit 23
----------
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in all currently effective
Registration Statements of ConAgra, Inc. on Form S-3 and on Form S-8
(including any Post Effective Amendments thereto) filed on or before August
24, 1998, of our reports dated July 10, 1998, appearing in and incorporated
by reference in the Annual Report on Form 10-K of ConAgra, Inc. for the year
ended May 31, 1998.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Omaha, Nebraska
August 24, 1998
117
<PAGE>
Exhibit 24
----------
POWER OF ATTORNEY
The undersigned Director of ConAgra, Inc., a Delaware corporation, hereby
constitutes and appoints Bruce C. Rohde as Attorney-in-Fact in his name, place
and stead to execute ConAgra's Annual Report on Form 10-K for the fiscal year
ended May 31, 1998, together with any and all subsequent amendments thereof, in
his capacity as a Director and hereby ratifies all that said Attorney-in-Fact
may do by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
10th day of July, 1998.
/s/ Mogens Bay
----------------------------
Mogens Bay
118
<PAGE>
POWER OF ATTORNEY
The undersigned Director of ConAgra, Inc., a Delaware corporation, hereby
constitutes and appoints Bruce C. Rohde as Attorney-in-Fact in his name, place
and stead to execute ConAgra's Annual Report on Form 10-K for the fiscal year
ended May 31, 1998, together with any and all subsequent amendments thereof, in
his capacity as a Director and hereby ratifies all that said Attorney-in-Fact
may do by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
10th day of July, 1998.
/s/ Philip B. Fletcher
----------------------------
Philip B. Fletcher
119
<PAGE>
POWER OF ATTORNEY
The undersigned Director of ConAgra, Inc., a Delaware corporation, hereby
constitutes and appoints Bruce C. Rohde as Attorney-in-Fact in his name, place
and stead to execute ConAgra's Annual Report on Form 10-K for the fiscal year
ended May 31, 1998, together with any and all subsequent amendments thereof, in
his capacity as a Director and hereby ratifies all that said Attorney-in-Fact
may do by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
10th day of July, 1998.
/s/ C. M. Harper
----------------------------
C. M. Harper
120
<PAGE>
POWER OF ATTORNEY
The undersigned Director of ConAgra, Inc., a Delaware corporation, hereby
constitutes and appoints Bruce C. Rohde as Attorney-in-Fact in his name, place
and stead to execute ConAgra's Annual Report on Form 10-K for the fiscal year
ended May 31, 1998, together with any and all subsequent amendments thereof, in
his capacity as a Director and hereby ratifies all that said Attorney-in-Fact
may do by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
10th day of July, 1998.
/s/ Robert A. Krane
----------------------------
Robert A. Krane
121
<PAGE>
POWER OF ATTORNEY
The undersigned Director of ConAgra, Inc., a Delaware corporation, hereby
constitutes and appoints Bruce C. Rohde as Attorney-in-Fact in his name, place
and stead to execute ConAgra's Annual Report on Form 10-K for the fiscal year
ended May 31, 1998, together with any and all subsequent amendments thereof, in
his capacity as a Director and hereby ratifies all that said Attorney-in-Fact
may do by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
10th day of July, 1998.
/s/ Gerald Rauenhorst
----------------------------
Gerald Rauenhorst
122
<PAGE>
POWER OF ATTORNEY
The undersigned Director of ConAgra, Inc., a Delaware corporation, hereby
constitutes and appoints Bruce C. Rohde as Attorney-in-Fact in his name,
place and stead to execute ConAgra's Annual Report on Form 10-K for the fiscal
year ended May 31, 1998, together with any and all subsequent amendments
thereof, in his capacity as a Director and hereby ratifies all that said
Attorney-in-Fact may do by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
10th day of July, 1998.
/s/ Carl E. Reichardt
----------------------------
Carl E. Reichardt
123
<PAGE>
POWER OF ATTORNEY
The undersigned Director of ConAgra, Inc., a Delaware corporation, hereby
constitutes and appoints Bruce C. Rohde as Attorney-in-Fact in his name, place
and stead to execute ConAgra's Annual Report on Form 10-K for the fiscal year
ended May 31, 1998, together with any and all subsequent amendments thereof, in
his capacity as a Director and hereby ratifies all that said Attorney-in-Fact
may do by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
10th day of July, 1998.
/s/ Ronald W. Roskens
----------------------------
Ronald W. Roskens
124
<PAGE>
POWER OF ATTORNEY
The undersigned Director of ConAgra, Inc., a Delaware corporation, hereby
constitutes and appoints Bruce C. Rohde as Attorney-in-Fact in his name, place
and stead to execute ConAgra's Annual Report on Form 10-K for the fiscal year
ended May 31, 1998, together with any and all subsequent amendments thereof, in
his capacity as a Director and hereby ratifies all that said Attorney-in-Fact
may do by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
10th day of July, 1998.
/s/ Marjorie M. Scardino
----------------------------
Marjorie M. Scardino
125
<PAGE>
POWER OF ATTORNEY
The undersigned Director of ConAgra, Inc., a Delaware corporation, hereby
constitutes and appoints Bruce C. Rohde as Attorney-in-Fact in his name,
place and stead to execute ConAgra's Annual Report on Form 10-K for the fiscal
year ended May 31, 1998, together with any and all subsequent amendments
thereof, in his capacity as a Director and hereby ratifies all that said
Attorney-in-Fact may do by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
10th day of July, 1998.
/s/ Walter Scott, Jr.
----------------------------
Walter Scott, Jr
126
<PAGE>
POWER OF ATTORNEY
The undersigned Director of ConAgra, Inc., a Delaware corporation, hereby
constitutes and appoints Bruce C. Rohde as Attorney-in-Fact in his name, place
and stead to execute ConAgra's Annual Report on Form 10-K for the fiscal year
ended May 31, 1998, together with any and all subsequent amendments thereof, in
his capacity as a Director and hereby ratifies all that said Attorney-in-Fact
may do by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
10th day of July, 1998.
/s/ Kenneth E. Stinson
----------------------------
Kenneth E. Stinson
127
<PAGE>
POWER OF ATTORNEY
The undersigned Director of ConAgra, Inc., a Delaware corporation, hereby
constitutes and appoints Bruce C. Rohde as Attorney-in-Fact in his name, place
and stead to execute ConAgra's Annual Report on Form 10-K for the fiscal year
ended May 31, 1998, together with any and all subsequent amendments thereof, in
his capacity as a Director and hereby ratifies all that said Attorney-in-Fact
may do by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
10th day of July, 1998.
/s/ Jane J. Thompson
----------------------------
Jane J. Thompson
128
<PAGE>
POWER OF ATTORNEY
The undersigned Director of ConAgra, Inc., a Delaware corporation, hereby
constitutes and appoints Bruce C. Rohde as Attorney-in-Fact in his name,
place and stead to execute ConAgra's Annual Report on Form 10-K for the
fiscal year ended May 31, 1998, together with any and all subsequent
amendments thereof, in his capacity as a Director and hereby ratifies all
that said Attorney-in-Fact may do by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
10th day of July, 1998.
/s/ Frederick B. Wells
----------------------------
Frederick B. Wells
129
<PAGE>
POWER OF ATTORNEY
The undersigned Director of ConAgra, Inc., a Delaware corporation, hereby
constitutes and appoints Bruce C. Rohde as Attorney-in-Fact in his name, place
and stead to execute ConAgra's Annual Report on Form 10-K for the fiscal year
ended May 31, 1998, together with any and all subsequent amendments thereof, in
his capacity as a Director and hereby ratifies all that said Attorney-in-Fact
may do by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
10th day of July, 1998.
/s/ Thomas R. Williams
----------------------------
Thomas R. Williams
130
<PAGE>
POWER OF ATTORNEY
The undersigned Director of ConAgra, Inc., a Delaware corporation, hereby
constitutes and appoints Bruce C. Rohde as Attorney-in-Fact in his name, place
and stead to execute ConAgra's Annual Report on Form 10-K for the fiscal year
ended May 31, 1998, together with any and all subsequent amendments thereof, in
his capacity as a Director and hereby ratifies all that said Attorney-in-Fact
may do by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
10th day of July, 1998.
/s/ Clayton K. Yeutter
----------------------------
Clayton K. Yeutter
131
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> MAY-26-1997
<PERIOD-END> MAY-31-1998
<CASH> 95,200
<SECURITIES> 0
<RECEIVABLES> 1,603,300
<ALLOWANCES> 67,700
<INVENTORY> 3,523,100
<CURRENT-ASSETS> 5,487,400
<PP&E> 5,667,500
<DEPRECIATION> 2,271,700
<TOTAL-ASSETS> 11,702,800
<CURRENT-LIABILITIES> 5,070,200
<BONDS> 2,487,400
0
525,000
<COMMON> 2,551,600
<OTHER-SE> 227,300
<TOTAL-LIABILITY-AND-EQUITY> 11,702,800
<SALES> 23,840,500
<TOTAL-REVENUES> 23,840,500
<CGS> 20,162,400
<TOTAL-COSTS> 20,162,400
<OTHER-EXPENSES> 2,357,700
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 299,300
<INCOME-PRETAX> 1,021,100
<INCOME-TAX> 393,100
<INCOME-CONTINUING> 628,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 14,800
<NET-INCOME> 613,200
<EPS-PRIMARY> 1.36
<EPS-DILUTED> 1.33
</TABLE>
