<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 27, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 1-7275
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CONAGRA FOODS, INC.
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(Exact name of registrant, as specified in charter)
Delaware 47-0248710
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One ConAgra Drive, Omaha, Nebraska 68102-5001
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(Address of Principal Executive Offices) (Zip Code)
(402) 595-4000
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(Registrant's telephone number, including area code)
CONAGRA, INC.
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(Former name, former address and former fiscal year,
if changed since last report.)
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 [ ]
Number of shares outstanding of issuer's common stock, as of September 24, 2000
was 533,378,100.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
CONAGRA FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in millions except per share amounts)
(unaudited)
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<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
AUGUST 27, AUGUST 29,
2000 1999
--------- ---------
<S> <C> <C>
Net sales $ 6,801.6 $ 6,593.6
Costs and expenses
Cost of goods sold (1) 5,754.7 5,617.4
Selling, general and administrative expenses (1) 735.1 732.3
Interest expense 76.1 76.2
Restructuring/Impairment charges - 3.5
----------- -----------
Income before income taxes 235.7 164.2
Income taxes 89.6 62.4
----------- --------------
Net income $ 146.1 $ 101.8
=========== ===========
Income per share - basic $ .31 $ .22
=========== ===========
Income per share - diluted $ .30 $ .21
=========== ===========
</TABLE>
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(1)For the thirteen weeks ended August 29, 1999, other restructuring-related
items include accelerated depreciation of $31.0 million and inventory
markdowns of $8.6 million included in cost of goods sold, and $4.0 million of
accelerated depreciation included in selling, general and administrative
expenses.
See notes to the condensed consolidated financial statements.
2
<PAGE>
CONAGRA FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
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<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
AUGUST 27, AUGUST 29,
2000 1999
--------- -----------
<S> <C> <C>
Net income $ 146.1 $ 101.8
Other comprehensive income (loss):
Currency translation adjustment 8.6 (6.5)
----------- -----------
Comprehensive income $ 154.7 $ 95.3
=========== ===========
</TABLE>
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See notes to the condensed consolidated financial statements.
3
<PAGE>
CONAGRA FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions except per share amounts)
(unaudited)
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<TABLE>
<CAPTION>
ASSETS AUGUST 27, MAY 28, AUGUST 29,
2000 2000 1999
---------- ----------- -----------
<S> <C> <C> <C>
Current assets
Cash and cash equivalents $ 82.0 $ 157.6 $ 10.7
Receivables, less allowance for doubtful accounts
of $73.2, $62.8 and $78.7 2,638.3 1,606.8 2,615.5
Inventories 4,452.5 3,787.3 4,012.1
Prepaid expenses 478.8 414.8 334.8
----------- ----------- -----------
Total current assets 7,651.6 5,966.5 6,973.1
----------- ----------- -----------
Property, plant and equipment 6,828.5 6,441.8 6,389.1
Less accumulated depreciation (2,950.2) (2,857.8) (2,783.7)
----------- ----------- -----------
Property, plant and equipment, net 3,878.3 3,584.0 3,605.4
----------- ----------- -----------
Brands, trademarks and goodwill 4,607.0 2,366.0 2,396.0
Other assets 412.9 379.3 404.1
----------- ----------- -----------
$ 16,549.8 $ 12,295.8 $ 13,378.6
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ 3,536.6 $ 1,255.5 $ 3,415.7
Current installments of long-term debt 20.6 20.6 19.9
Accounts payable 2,066.5 2,044.6 1,645.1
Advances on sales 148.7 888.7 125.3
Other accrued liabilities 1,445.8 1,279.8 1,348.0
----------- ----------- -----------
Total current liabilities 7,218.2 5,489.2 6,554.0
----------- ----------- -----------
Senior long-term debt, excluding current installments 3,399.3 1,816.8 1,810.1
Other noncurrent liabilities 770.3 750.7 790.9
Subordinated debt 750.0 750.0 750.0
Preferred securities of subsidiary company 525.0 525.0 525.0
Commitments and contingencies - - -
Common stockholders' equity
Common stock of $5 par value, authorized 1,200,000,000
shares; issued 565,202,119, 524,137,617 and 523,852,872 2,826.0 2,620.7 2,619.2
Additional paid-in capital 729.1 147.5 175.0
Retained earnings 1,469.7 1,420.7 1,397.2
Foreign currency translation adjustment (94.5) (103.1) (72.4)
Less treasury stock, at cost, common
shares 32,066,747, 31,925,505 and 31,645,189 (764.1) (760.2) (754.3)
----------- ----------- -----------
4,166.2 3,325.6 3,364.7
Less unearned restricted stock and value of 14,158,601,
15,246,068 and 16,379,449 common shares held in
Employee Equity Fund (279.2) (361.5) (416.1)
----------- ----------- -----------
Total common stockholders' equity 3,887.0 2,964.1 2,948.6
$ 16,549.8 $ 12,295.8 $ 13,378.6
=========== =========== ===========
</TABLE>
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See notes to the condensed consolidated financial statements.
4
<PAGE>
CONAGRA FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
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<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
AUGUST 27, AUGUST 29,
2000 1999
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 146.1 $ 101.8
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and other amortization 117.1 114.4
Goodwill amortization 16.3 16.1
Restructuring/Impairment and other restructuring-related
charges (includes accelerated depreciation) - 47.1
Other noncash items (includes nonpension postretirement benefits) 32.0 32.6
Change in assets and liabilities before effects
of business acquisitions (2,177.5) (2,747.3)
--------- ----------
Net cash flows from operating activities (1,866.0) (2,435.3)
--------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment (112.4) (111.6)
Payments for business acquisitions (908.4) -
Sale of businesses and property, plant and equipment 50.1 6.1
Notes receivable and other items (15.0) 8.5
---------- ---------
Net cash flows from investing activities (985.7) (97.0)
--------- ---------
Cash flows from financing activities:
Net short-term borrowings 2,402.1 2,550.9
Proceeds from issuance of long-term debt 1,197.8 17.2
Repayment of long-term debt (.9) (5.9)
Repayment of acquired company's debt (729.3) -
Cash dividends paid (100.4) (87.9)
Other items 6.8 5.9
--------- ---------
Net cash flows from financing activities 2,776.1 2,480.2
--------- ---------
Net change in cash and cash equivalents (75.6) (52.1)
Cash and cash equivalents at beginning of period 157.6 62.8
--------- ---------
Cash and cash equivalents at end of period $ 82.0 $ 10.7
========= =========
</TABLE>
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See notes to the condensed consolidated financial statements.
5
<PAGE>
CONAGRA FOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THIRTEEN WEEKS ENDED AUGUST 27, 2000
(COLUMNAR DOLLARS IN MILLIONS)
1. ACCOUNTING POLICIES
The unaudited interim financial information included herein reflects
normal recurring adjustments which are, in the opinion of management,
necessary for a fair presentation of the results of operations,
financial position, and cash flows for the periods presented. These
consolidated condensed financial statements should be read in
conjunction with the consolidated financial statements and related
notes included in the ConAgra Foods, Inc. (the "Company") fiscal 2000
annual report on Form 10-K.
The results of operations for any interim period are not necessarily
indicative of the results to be expected for other interim periods or
the full year.
Certain prior year amounts have been reclassified in order to conform
with current year classifications.
In December 1999, SEC Staff Accounting Bulletin (SAB) No. 101, REVENUE
RECOGNITION IN FINANCIAL STATEMENTS, was issued. This SAB will become
effective for the Company in fiscal 2001. The Company has not
quantified the impact, if any, resulting from the adoption of this SAB.
In July 2000, the FASB's Emerging Issues Task Force (EITF) reached a
consensus on EITF Issue No. 00-14, ACCOUNTING FOR COUPONS, REBATES, AND
DISCOUNTS. This EITF Issue will become effective for the Company in
fiscal 2001. The Company has not quantified the impact, if any,
resulting from the adoption of this EITF Issue.
2. ACQUISITIONS
On August 24, 2000, the Company acquired all of the outstanding shares
of common stock and stock options of International Home Foods ("IHF")
in a transaction accounted for as a purchase business combination. As
part of the acquisition, the Company issued approximately 41 million
shares of Company common stock and assumed options to acquire
approximately 5 million post-acquisition shares of Company common stock
with an aggregate fair value of approximately $850 million. In
addition, the Company paid approximately $875 million in cash to the
IHF shareholders and assumed approximately $1.1 billion of debt. IHF's
results of operations did not impact the Company's results during the
first quarter of fiscal 2001 as the acquisition was completed at the
conclusion of the quarter.
The Company preliminarily allocated the excess of the purchase price
over the net assets acquired to goodwill. The purchase price allocation
will be completed upon finalization of asset and liability valuations.
In connection with this acquisition, the Company expects to consolidate
certain plants and will include the associated costs as part of the
purchase price allocation. Goodwill arising from the transaction will
be amortized on a straight-line basis over a period of 40 years.
On September 15, 2000, the Company issued $600 million of 7.5% senior
notes, due September 15, 2005, $750 million of 7.875% senior notes, due
September 15, 2010 and $300 million of 8.25% senior notes, due
September 15, 2030. The net proceeds were used to reduce outstanding
borrowings under short-term credit facilities with maturities less than
six months and bearing interest at a rate between 6.7% and 6.8% per
annum. In addition, the Company assumed $385
6
<PAGE>
CONAGRA FOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THIRTEEN WEEKS ENDED AUGUST 27, 2000
(COLUMNAR DOLLARS IN MILLIONS)
million of IHF 10.375% senior secured notes due in 2006 and redeemed
the notes on October 6, 2000.
The Company's unaudited pro forma results of operations for the
thirteen weeks ended August 27, 2000 and August 29, 1999, assuming the
acquisition of IHF occurred as of the beginning of the periods
presented are as follows:
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
AUGUST 27, AUGUST 29,
2000 1999
---------- ----------
<S> <C> <C>
Net sales $ 7,239.7 $ 7,022.2
Net income 156.9 139.1
Income per share - diluted .30 .27
</TABLE>
3. OPERATION OVERDRIVE
During the fourth quarter of fiscal 2000, the Company completed a
restructuring plan in connection with its previously announced
initiative, "Operation Overdrive." The restructuring plan was aimed at
eliminating overcapacity, streamlining operations and improving future
profitability through margin improvement and expense reductions. The
pre-tax charge of the plan totaled $1,062.2 million with $621.4 million
and $440.8 million recognized in fiscal 2000 and 1999, respectively.
Included in the Company's first quarter of fiscal 2000 are
restructuring plan charges of $47.1 million, as follows:
<TABLE>
<CAPTION>
PACKAGED REFRIGERATED AGRICULTURAL
FOODS FOODS PRODUCTS TOTAL
----- ----- -------- -----
<S> <C> <C> <C> <C>
Accelerated depreciation $ 27.4 $ 7.6 $ - $ 35.0
Inventory markdowns - .1 8.5 8.6
Restructuring/Impairment 1.4 .4 1.7 3.5
-------- -------- -------- --------
Total $ 28.8 $ 8.1 $ 10.2 $ 47.1
======== ======== ======== ========
</TABLE>
The $47.1 million charge ($29.2 million net of tax) recognized in the
first quarter of fiscal 2000 consisted of the following: $31.0 million
included in cost of goods sold resulting from accelerated depreciation
on certain assets; $8.6 million included in cost of goods sold for
inventory markdowns; $4.0 million included in selling, general and
administrative expenses resulting from accelerated depreciation on
certain assets; and $3.5 million included in restructuring/impairment
charges resulting primarily from contractual termination and employee
related costs.
Certain assets to be disposed of that were not immediately removed from
operations were depreciated on an accelerated basis over their
remaining useful lives. Inventory markdowns represented losses to write
down the carrying value of non-strategic inventory resulting from the
closure of facilities and discontinuation of certain products.
Approximately 8,450 employees received notification of their
termination as a result of the restructuring plan, primarily in
manufacturing and operating facilities. In addition, other exit
7
<PAGE>
CONAGRA FOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THIRTEEN WEEKS ENDED AUGUST 27, 2000
(COLUMNAR DOLLARS IN MILLIONS)
costs (consisting of lease termination and other contractual
termination costs) occurred as a result of the restructuring plan.
Such activity is as follows:
<TABLE>
<CAPTION>
SEVERANCE OTHER EXIT
AMOUNT HEADCOUNT COSTS
------ --------- -----
<S> <C> <C> <C>
Fiscal 1999 activity:
Charges to income $ 45.1 3,160 $ 7.3
Utilized (6.1) (260) -
-------- ----- --------
Balance, May 30, 1999 39.0 2,900 7.3
Fiscal 2000 activity:
Charges to income 57.8 5,290 50.9
Utilized (44.3) (4,990) (21.5)
-------- ----- --------
Balance, May 28, 2000 52.5 3,200 36.7
Fiscal 2001 activity:
Utilized (10.8) (1,300) (13.6)
-------- ----- --------
Balance, August 27, 2000 $ 41.7 1,900 $ 23.1
======== ===== ========
</TABLE>
4. INCOME PER SHARE
The following table reconciles the income and average share amounts
used to compute both basic and diluted income per share:
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
AUGUST 27, AUGUST 29,
2000 1999
---------- ----------
<S> <C> <C>
NET INCOME $ 146.1 $ 101.8
=========== ===========
INCOME PER SHARE - BASIC
Weighted average shares outstanding - basic 478.7 473.1
=========== ===========
INCOME PER SHARE - DILUTED
Weighted average shares outstanding - basic 478.7 473.1
Add shares contingently issuable upon
exercise of stock options 1.9 4.6
----------- -----------
Weighted average shares outstanding - diluted 480.6 477.7
=========== ===========
</TABLE>
5. INVENTORIES
<TABLE>
<CAPTION>
The major classes of inventories are as follows:
AUGUST 27, MAY 28, AUGUST 29,
2000 2000 1999
------------ ------------ ------------
<S> <C> <C> <C>
Hedged commodities $ 1,133.8 $ 1,305.7 $ 1,108.0
Food products and livestock 1,714.5 1,350.7 1,345.9
Agricultural chemicals, fertilizer and feed 1,041.5 671.9 922.9
Other, principally ingredients and supplies 562.7 459.0 635.3
------------ ------------ ------------
$ 4,452.5 $ 3,787.3 $ 4,012.1
============ ============ ============
</TABLE>
8
<PAGE>
CONAGRA FOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THIRTEEN WEEKS ENDED AUGUST 27, 2000
(COLUMNAR DOLLARS IN MILLIONS)
6. CONTINGENCIES
In fiscal 1991, the Company acquired Beatrice Company ("Beatrice"). As
a result of the acquisition and the significant pre-acquisition
contingencies of the Beatrice businesses and its former subsidiaries,
the consolidated post-acquisition financial statements of the Company
reflect significant liabilities associated with the estimated
resolution of these contingencies. These include various litigation and
environmental proceedings related to businesses divested by Beatrice
prior to its acquisition by the Company. The environmental proceedings
include litigation and administrative proceedings involving Beatrice's
status as a potentially responsible party at 42 Superfund, proposed
Superfund or state-equivalent sites. Beatrice has paid or is in the
process of paying its liability share at 34 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.
The Company is a 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 the Company's financial condition, results
of operations or liquidity.
7. BUSINESS SEGMENTS
The Company has three segments, which are organized based upon similar
economic characteristics and are similar in the nature of products and
services offered, the nature of production processes, the type or class
of customer and distribution methods. Packaged Foods 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 and turkey. This segment markets food products in
retail and foodservice channels. Agricultural Products includes
companies involved in distribution of agricultural inputs and
procurement, processing, trading and distribution of commodity food
ingredients and agricultural commodities.
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 and income taxes have been excluded from segment operations.
9
<PAGE>
CONAGRA FOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THIRTEEN WEEKS ENDED AUGUST 27, 2000
(COLUMNAR DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
AUGUST 27, AUGUST 29,
2000 1999
------------ ------------
<S> <C> <C>
Sales to unaffiliated customers
Packaged Foods $ 1,747.9 $ 1,736.8
Refrigerated Foods 3,343.6 3,121.1
Agricultural Products 1,710.1 1,735.7
------------ ------------
Total $ 6,801.6 $ 6,593.6
============ ============
Intersegment sales
Packaged Foods $ 10.0 $ 11.9
Refrigerated Foods 70.2 50.4
Agricultural Products 58.9 53.4
------------ ------------
139.1 115.7
Intersegment elimination (139.1) (115.7)
------------ ------------
Total $ - $ -
=========== ===========
Net sales
Packaged Foods $ 1,757.9 $ 1,748.7
Refrigerated Foods 3,413.8 3,171.5
Agricultural Products 1,769.0 1,789.1
Intersegment elimination (139.1) (115.7)
------------ ------------
Total $ 6,801.6 $ 6,593.6
============ ============
Operating profit*
Packaged Foods $ 206.6 $ 169.4
Refrigerated Foods 108.2 109.5
Agricultural Products 95.0 59.8
------------ ------------
Total operating profit 409.8 338.7
Interest expense 76.1 76.2
General corporate expenses 81.7 82.2
Goodwill amortization 16.3 16.1
------------ ------------
Income before tax $ 235.7 $ 164.2
============ ============
</TABLE>
* Thirteen weeks ended August 29, 1999 includes before-tax restructuring
and restructuring-related charges of $47.1 million. The charges were
included in operating profit as follows: $28.8 million in Packaged
Foods; $8.1 million in Refrigerated Foods; and $10.2 million in
Agricultural Products.
As a result of the Company's acquisition of IHF, the Packaged Foods
segment's total assets have increased by approximately $3.1 billion, or
67%, as compared to fiscal year end May 28, 2000.
10
<PAGE>
CONAGRA FOODS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Following is management's discussion and analysis of certain significant factors
which have affected the Company's financial condition and operating results for
the periods included in the accompanying condensed consolidated financial
statements. Results for the thirteen-week period ended August 27, 2000 are not
necessarily indicative of results that may be attained in the future.
This report contains forward-looking statements. 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.
FINANCIAL CONDITION
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.
On August 24, 2000, the Company acquired all of the outstanding International
Home Foods ("IHF") common stock and assumed options exercisable post-acquisition
for shares of Company common stock for total consideration of approximately $1.7
billion plus the assumption of approximately $1.1 billion in debt. Primarily as
a result of this acquisition, capital investment increased approximately $2.5
billion as compared to May 28, 2000, consisting of a $43.9 million working
capital decrease and a $2.6 billion increase in noncurrent assets. In addition,
senior long-term debt increased approximately $1.6 billion as compared to May
28, 2000, primarily as a result of the IHF acquisition.
On September 15, 2000, the Company issued $600 million of 7.5% senior notes, due
September 15, 2005, $750 million of 7.875% senior notes, due September 15, 2010
and $300 million of 8.25% senior notes, due September 15, 2030. The net proceeds
were used to reduce outstanding borrowings under short-term credit facilities
with maturities less than six months and bearing interest at a rate between 6.7%
and 6.8% per annum. In addition, the Company assumed $385 million of IHF 10.375%
senior secured notes due in 2006 and redeemed the notes on October 6, 2000.
The Company's long-term debt objective is that senior long-term debt will not
normally exceed 30% of total long-term debt plus equity. Long-term subordinated
debt is treated as equity due to its preferred stock characteristics. The
Company's policy has been that it would temporarily exceed this self-imposed
limit for a major strategic acquisition that is intended to create value for
shareholders over the long term. In management's view, the fiscal 2001
acquisition of IHF represents such an opportunity.
OPERATING RESULTS
A summary of the period to period increases (decreases) in the principal
components of operations, both before and after restructuring and other
restructuring-related charges ("restructuring charges") recognized in the first
quarter of fiscal 2000, is shown below (dollars in millions, except per share
amounts).
11
<PAGE>
CONAGRA FOODS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
AUGUST 27, 2000 AND AUGUST 29, 1999
-----------------------------------
EXCLUDING
AS RESTRUCTURING
REPORTED CHARGES
-------- -------
<S> <C> <C>
Net sales $ 208.0 $ 208.0
Costs and expenses
Cost of goods sold 137.3 176.9
Selling, general and administrative 2.8 6.8
Interest expense (0.1) (0.1)
Restructuring/Impairment charges (3.5) -
------------ -----------
Income before income taxes 71.5 24.4
Income taxes 27.2 9.3
----------- -----------
Net income $ 44.3 $ 15.1
=========== ===========
Income per share - basic $ 0.09 $ 0.03
=========== ===========
Income per share - diluted $ 0.09 $ 0.03
=========== ===========
</TABLE>
In comparison to fiscal 2000 first quarter, the Company's fiscal 2001 first
quarter diluted income per share was $.30, an increase of $.09, or 42.9 percent;
operating profit was $409.8 million, an increase of $71.1 million, or 21.0
percent; and net income was $146.1 million, an increase of $44.3 million, or
43.5 percent. Excluding restructuring charges recognized in the first quarter of
fiscal 2000, the Company's fiscal 2001 first quarter diluted income per share
increased $.03, or 11.1 percent; operating profit increased $24.0 million, or
6.2 percent; and net income increased $15.1 million, or 11.5 percent. The first
quarter of fiscal 2001 did not include restructuring charges.
In the Company's Packaged Foods segment, sales increased $11.1 million, or 0.6
percent, as compared to first quarter fiscal 2000. Operating profit increased
$37.2 million, or 22.0 percent, as compared to the same period in fiscal 2000.
The sales and operating profit increases were achieved, in part, due to strong
results in the Company's french fry and specialty meats businesses as well as
restructuring charges recognized in the first quarter of fiscal 2000 which did
not recur in the first quarter of fiscal 2001. The segment's recently acquired
IHF operations did not impact the segment's results during the first quarter of
fiscal 2001 as the acquisition was completed at the conclusion of the quarter.
Excluding restructuring charges recognized in the first quarter of fiscal 2000,
operating profit increased $8.4 million or 4.2 percent over the same period in
fiscal 2000.
In the Company's Refrigerated Foods segment, sales increased $222.5 million, or
7.1 percent compared to the same period in fiscal 2000. Operating profit
decreased $1.3 million, or 1.2 percent, versus the same period in fiscal 2000.
Both sales and operating profits for the segment's beef and branded processed
meat operations increased, however, oversupply in the poultry industry resulted
in operating profit declines for the segment in total. Excluding restructuring
charges recognized in the first quarter of fiscal 2000, operating profit
decreased 8.0 percent, or $9.4 million, as compared to fiscal 2000 first
quarter.
In the Company's Agricultural Products segment, sales decreased $25.6 million,
or 1.5 percent as compared to the same period in fiscal 2000, primarily due to
dispositions of certain low-margin, non-core businesses. Operating profit
increased $35.2 million, or 58.9 percent over the same period in fiscal 2000,
12
<PAGE>
CONAGRA FOODS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
primarily as a result of strong results in the segment's United Agri Products
business unit as well as restructuring charges recognized in the first
quarter of fiscal 2000 which did not recur in the first quarter of fiscal
2001. Excluding restructuring charges recognized in the first quarter of
fiscal 2000, operating profit increased 35.7 percent, or $25.0 million,
versus first quarter fiscal 2000.
13
<PAGE>
CONAGRA FOODS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
There have been no material changes in the Company's market risk during the
first quarter ended August 27, 2000. For additional information, refer to pages
38 and 39 of the Company's 2000 Annual Report to Stockholders, incorporated by
reference into the Company's annual report on Form 10-K for the fiscal year
ended May 28, 2000.
14
<PAGE>
CONAGRA FOODS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
The Company's annual meeting of stockholders was held on September 28,
2000. The stockholders elected three directors to serve three-year terms,
ratified the appointment of Deloitte & Touche LLP to audit the Company's
financial statements for fiscal year 2001, approved the ConAgra 2000 Stock
Plan and approved the Company's name change to ConAgra Foods, Inc. Voting
on these items was as follows:
1. Election of Directors
FOR WITHHELD
Robert A. Krane 390,476,218 11,997,798
Bruce Rohde 385,891,488 16,582,528
Walter Scott, Jr. 390,360,202 12,113,814
2. Ratification of Independent Accountants
FOR: 399,537,010
AGAINST: 1,359,380
ABSTAIN: 1,577,626
BROKER/NON-VOTES: 0
3. Approval of the ConAgra 2000 Stock Plan
FOR: 298,691,710
AGAINST: 38,441,089
ABSTAIN: 3,440,341
BROKER/NON-VOTES: 61,900,876
4. Approval of the Company name change to ConAgra Foods, Inc.
FOR: 380,560,192
AGAINST: 20,005,287
ABSTAIN: 1,908,537
BROKER/NON-VOTES: 0
ITEM 5. OTHER INFORMATION
(A) On September 28, 2000, the Company's Board of Directors authorized an
11 percent increase in the Company's common stock dividend and declared
a quarterly common stock cash dividend of 22.5 cents per share, payable
December 1, 2000 to stockholders of record October 27, 2000. The prior
quarterly dividend was 20.35 cents per share. The new indicated annual
dividend rate is 90.0 cents per share, up from the previous 81.4 cents
per share.
(B) The unaudited pro forma combined condensed financial statements, which
give effect to the acquisition of International Home Foods by the
Company under the purchase method of accounting for the thirteen weeks
ended August 27, 2000 and the fiscal year ended May 28, 2000, are
attached hereto as Exhibit 99.1.
15
<PAGE>
CONAGRA FOODS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
3.1 - ConAgra Foods' Certificate of Incorporation, as amended
10.1 - ConAgra 2000 Stock Plan
12 - Statement regarding computation of ratio of earnings to fixed
charges
27 - Financial Data Schedule
99.1 - The unaudited pro forma combined condensed financial
statements, which give effect to the acquisition of
International Home Foods by ConAgra Foods under the purchase
method of accounting.
(B) Reports on Form 8-K
The Company filed a report on Form 8-K dated June 22, 2000 announcing
an agreement and plan of merger between the Company and International
Home Foods, Inc. The Company subsequently filed a report on Form 8-K
dated August 24, 2000, announcing the completion of the merger which
included financial statements of International Home Foods and unaudited
pro forma information giving effect to the merger under the purchase
method of accounting based upon the periods presented by the Company's
then filed financial statements. The Company filed a report on Form 8-K
dated September 5, 2000, with additional unaudited pro forma
information giving effect to the merger based upon the period presented
by the Company's Form 10-K for the fiscal year ended May 28, 2000.
CONAGRA FOODS, INC.
By:
/s/ James P. O'Donnell
---------------------------------
James P. O'Donnell
Executive Vice President,
Chief Financial Officer and
Corporate Secretary
By:
/s/ Jay D. Bolding
---------------------------------
Jay D. Bolding
Senior Vice President, Controller
Dated this 11th day of October, 2000.
16
<PAGE>
CONAGRA FOODS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
<S> <C> <C>
3.1 ConAgra Foods' Certificate of Incorporation, as 18
amended
10.1 ConAgra 2000 Stock Plan 63
12 Statement regarding computation of ratio of 71
earnings to fixed charges
27 Financial Data Schedule
99.1 The unaudited pro forma combined condensed 72
financial statements, which give effect to the acquisition
of International Home Foods by ConAgra Foods under the
purchase method of accounting.
</TABLE>
17
