Exhibit 99.5
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial
statements give effect to the merger of International Home Foods, Inc. with and
into a wholly owned subsidiary of ConAgra, Inc. on August 24, 2000 using the
purchase method of accounting, after giving effect to the pro forma adjustments
described in the accompanying notes. The unaudited pro forma combined condensed
financial statements should be read in conjunction with the audited and
unaudited historical consolidated financial statements and notes of ConAgra and
International Home Foods.
The unaudited pro forma combined condensed statements of earnings give
effect to the merger as if it had occurred at the beginning of the earliest
period presented. ConAgra's fiscal year ended on May 30, 1999 and International
Home Foods' fiscal year ended on December 31, 1999. The unaudited pro forma
combined condensed statements of earnings for the year ended May 30, 1999 and
the thirty-nine weeks ended February 27, 2000 combine the historical
consolidated statements of earnings of ConAgra with the recasted unaudited
consolidated statements of income of International Home Foods for the
twelve-month period ended June 30, 1999 and the nine-month period ended March
31, 2000, respectively. For purposes of presenting unaudited pro forma combined
condensed statements of earnings, International Home Foods' fiscal year has been
recasted to June 30, 1999, by including the unaudited reported financial
statements for the quarter ended June 30, 1999 and the three previous quarters
ended March 31, 1999, December 31, 1998 and September 30, 1998. International
Home Foods' statements of income for the nine-months ended March 31, 2000
include unaudited reported financial data for the quarter ended March 31, 2000,
December 31, 1999 and September 30, 1999. The unaudited pro forma combined
condensed balance sheet gives effect to the merger as if it had occurred on
February 27, 2000 and combines ConAgra's consolidated balance sheet as of
February 27, 2000 with International Home Foods' consolidated balance sheet as
of March 31, 2000. The unaudited consolidated financial statements of
International Home Foods for the quarter ended June 30, 2000, set forth in
Exhibit 99.4 of ConAgra's Current Report dated August 24, 2000, are not included
in the unaudited pro forma combined condensed financial statements.
The unaudited pro forma adjustments described in the accompanying notes
are based upon preliminary estimates and assumptions that the managements of
ConAgra and International Home Foods believe are reasonable. The pro forma
adjustments are based on the information and assumptions available at the time
of the merger. The purchase price allocation will be finalized subsequent to the
closing of the transaction and finalization of asset and liability valuations.
The unaudited pro forma combined condensed financial statements are presented
for illustrative purposes only and do not purport to be indicative of the
operating results or financial position that would have actually occurred if the
merger had been in effect on the dates indicated, nor is it necessarily
indicative of future operating results or financial position of the merged
companies. The unaudited pro forma combined condensed financial statements do
not give effect to any potential cost savings or other operating efficiencies
that ConAgra expects to result from the transaction.
<PAGE>
CONAGRA, INC.
INTERNATIONAL HOME FOODS, INC.
Pro Forma Combined Condensed Statements of Earnings
For the Thirty-Nine Weeks Ended February 27, 2000
(Unaudited)
(Amounts in Millions, Except Per Share Data)
<TABLE>
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ConAgra International
Thirty-Nine Weeks Home Foods
Ended Nine Months Ended Pro Forma
-------------------------------
Feb. 27, 2000(1) March 31, 2000(2) Adjustments(5) Combined(7)
------------- -------------- ----------- --------
Net Sales......................... $18,994.3 $ 1,679.0 ($283.3) $20,390.0
Costs and Expenses
Cost of goods sold.............. 15,859.0 880.3 -- 16,739.3
Selling, administrative and
general expenses............. 2,142.4 573.4 (254.0) 2,461.8
Interest expense................ 233.9 75.6 35.5 345.0
Restructuring/Impairment
charges...................... 61.4 -- -- 61.4
--------- ---------- ------- --------
18,296.7 1,529.3 (218.5) 19,607.5
--------- ---------- ------- --------
Income before income taxes........ 697.6 149.7 (64.8) 782.5
Income taxes...................... 265.1 78.4 (13.5) 330.0
------- --------- ------ -----
Net Income ....................... $ 432.5 $ 71.3 ($51.3) $452.5
======= ======= ======= ======
Income per share - basic (6): $ .91 $ .97 $.88
======= ======= ====
Income per share - diluted (6): $ .90 $ .94 $.87
======= ======= ====
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
<PAGE>
CONAGRA, INC.
INTERNATIONAL HOME FOODS, INC.
Pro Forma Combined Condensed Statements of Earnings
For the Year-Ended May 30, 1999
(Unaudited)
(Amounts in Millions, Except Per Share Data)
<TABLE>
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ConAgra International Home Foods
Fiscal Year Ended Fiscal Year Pro Forma
Ended ------------------------------
May 30, 1999(1) June 30, 1999(2) Adjustments(5) Combined(7)
------------ ------------- ----------- --------
Net Sales......................... $24,594.3 $1,935.5 ($298.3) $26,231.5
Costs and Expenses:
Cost of goods sold.............. 20,556.2 1,034.7 -- 21,590.9
Selling, administrative and general
expenses..................... 2,598.4 637.1 (259.2) 2,976.3
Interest expense................ 316.6 99.8 48.3 464.7
Non-recurring charges .......... 440.8 102.3 -- 543.1
------- ------- ------- -----
23,912.0 1,873.9 (210.9) 25,575.0
-------- ------- ------- --------
Income before income taxes........ 682.3 61.6 (87.4) 656.5
Income taxes...................... 323.9 26.9 (18.4) 332.4
------- ------- ------ -----
Net Income ....................... $ 358.4 $ 34.7 ($69.0) $ 324.1
======= ======= ======= =======
Income per share - basic(6): $ .76 $ .47 $ .63
====== ======= ======
Income per share - diluted(6): $ .75 $ .45 $ .62
====== ======= ======
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
<PAGE>
CONAGRA, INC.
INTERNATIONAL HOME FOODS, INC.
Pro Forma Combined Condensed Balance Sheet
(Unaudited)
(Amounts in Millions, Except Share Data)
<TABLE>
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ASSETS ConAgra International Home Foods Pro Forma
Feb. 27, 2000(1) March 31, 2000(2) Adjustments(4) Combined
---------------- ------------------------ -------------- --------
Current assets
Cash and cash equivalents....... $ 17.4 $ 16.4 $ -- $ 33.8
Receivables, net................ 1,973.9 181.5 -- 2,155.4
Inventories..................... 4,236.7 307.1 -- 4,543.8
Other current assets............ 307.3 48.2 -- 355.5
----------- ------- ---- -------
Total current assets.......... 6,535.3 553.2 -- 7,088.5
----------- ------- ----- -------
Property, plant and equipment, net 3,752.8 312.0 -- 4,064.8
Brands, trademarks and goodwill, net 2,404.2 434.5 1,563.7 4,402.4
Other assets...................... 423.0 272.1 21.0 716.1
----------- ------- ------- -------
$13,115.3 $1,571.8 $ 1,584.7 $16,271.8
========= ======== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable................... $2,406.3 $ -- $ -- $2,406.3
Revolving credit facility ...... -- 118.0 -- 118.0
Current installments of long-term
debt......................... 19.0 83.3 -- 102.3
Accounts payable................ 2,130.3 83.1 (21.0) 2,192.4
Advance on sales................ 156.2 -- -- 156.2
Other accrued liabilities....... 1,354.9 125.9 -- 1,480.8
-------- ----- ----- -------
Total current liabilities..... 6,066.7 410.3 (21.0) 6,456.0
-------- ----- ----- -------
Senior long-term debt, excluding
current installments............ 1,871.7 962.7 905.6 3,740.0
Other non-current liabilities..... 809.5 28.2 -- 837.7
Subordinated debt................. 750.0 -- -- 750.0
Preferred securities of subsidiary
company......................... 525.0 -- -- 525.0
Common stockholders' equity
Common stock ................... 2,620.6 .8 201.9 2,823.3
Additional paid-in capital...... 38.3 63.6 604.4 706.3
Retained earnings............... 1,537.2 164.5 (164.5) 1,537.2
Treasury stock, at cost......... (759.3) (57.2) 57.2 (759.3)
Accumulated other
comprehensive loss ........... (79.5) (1.1) 1.1 (79.5)
-------- ------ ------ ------
3,357.3 170.6 700.1 4,228.0
Less unearned restricted stock and
common shares held in
Employee Equity Fund............ (264.9) -- -- (264.9)
--------- ------ ------ -------
Total common shareholders' equity 3,092.4 170.6 700.1 3,963.1
--------- ------ ------ -------
$13,115.3 $1,571.8 $ 1,584.7 $ 16,271.8
========= ======== ========= ==========
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
<PAGE>
CONAGRA, INC.
INTERNATIONAL HOME FOODS, INC.
Notes to Unaudited Pro Forma Combined Condensed Financial Statements
(Amounts in Millions, Except Per Share Data)
On June 22, 2000, ConAgra signed an agreement to acquire all of the
issued and outstanding shares of common stock and stock options of International
Home Foods in a transaction to be accounted for as a purchase business
combination. The assets acquired and liabilities assumed will be assigned a
portion of the purchase price equal to their respective fair market values at
the date of acquisition of August 24, 2000. The unaudited pro forma financial
statements are based on the following:
1. The historical consolidated financial statements of ConAgra.
2. The historical consolidated financial statements of International Home
Foods' recasted for the nine-month period ended March 31, 2000 and the
twelve-month period ended June 30, 1999.
3. a. The consideration paid for International Home Foods common stock
was $22, consisting of $11 in cash and a fraction of a share of
ConAgra common stock valued at $11 per share. The common stock
portion of the merger consideration is calculated as follows:
International Home Foods common stock outstanding
at May 31, 2000 74.13
Exchange ratio 0.54692
-------
ConAgra common stock to be issued in exchange
for International Home Foods common stock 40.543
Average price of ConAgra common stock $20.113
-------
Total common stock consideration $815.4
======
The exchange ratio of .54692 shares of ConAgra common stock for
each share of International Home Foods common stock outstanding was
determined by dividing $11 by ConAgra's average closing price of
$20.113 as provided for in the merger agreement. The exchange
ratio was determined by the average closing price of ConAgra's
common stock on the ten trading days ending on the fifth full
trading day immediately preceding the merger.
b. Based on common stock options outstanding on May 31, 2000, ConAgra
would assume approximately 6.2 million common stock options and
would pay approximately $55.2 million in cash in exchange for all
of the International Home Foods outstanding stock options.
c. The cash portion of the purchase price, including transaction
costs, was provided by increased borrowings of ConAgra under its
existing credit facilities. In addition, ConAgra intends to replace
International Home Foods credit facilities and long-term debt with
borrowings under ConAgra's credit facilities and other long-term
debt.
<PAGE>
4. The pro forma balance sheet adjustments to reflect the effect of the
acquisition accounted for as a purchase business combination are as
follows:
Consideration:
Value of ConAgra common stock $ 815.4
Value of ConAgra common stock options 55.2
Cash issued for common stock and stock options 870.6
Transaction costs 35.0
---------
Total consideration 1,776.2
Net assets acquired 170.6
--------
1,605.6
Preliminary Allocation:
Deferred income taxes 41.9
--------
Goodwill $1,563.7
========
ConAgra expects to allocate a portion of the purchase price to
buildings, machinery and equipment and other identifiable assets. The
purchase price allocation will be completed after the closing of the
transaction and finalization of asset and liability valuations. In
connection with the acquisition, ConAgra may consolidate certain plants
and will include the associated costs as part of the purchase price
allocation. ConAgra's management has not currently completed its
assessment of such activities .
5. The pro forma statement of earnings adjustments are as follows:
a. Provide depreciation and amortization of the fair values assigned
to all identifiable tangible and intangible assets. The excess of
the purchase price over the net assets acquired has preliminarily
been allocated to nondeductible goodwill and is being amortized
using the straight-line method over 40 years.
ConAgra expects to allocate a portion of the purchase price to
buildings, machinery and equipment and other intangible assets,
including brands. Assuming these assets had a weighted average
life of 20 years, for each $100.0 million allocated to buildings,
machinery and equipment or other intangible assets pro forma
operating expenses would increase by $2.5 million and pro forma
net income would decrease by $.6 million.
b. Reclassification of International Home Foods' trade promotion
expenses from selling, administrative and general expenses to net
sales to conform to ConAgra's presentation.
c. Adjust interest expense relating to (1) additional borrowings
under ConAgra's credit facilities of approximately $905.6 million
for the cash portion of the purchase price and approximately
$778.9 million for the repayment of International Home Foods
credit facilities at an assumed interest rate of 6.85% and (2)
additional long-term borrowings of $385 million at 8.5% for the
repayment of International Home Foods $385 million 10.375% Senior
Secured Notes as follows:
<TABLE>
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Thirty-nine Weeks Fifty-two Weeks
Ended Ended
February 27, 2000 May 30, 1999
----------------- ------------
Interest expense on credit facilities $86.6 $115.4
Interest expense on long-term borrowings 24.5 32.7
IHF historical interest expense (75.6) (99.8)
------ ------
Net adjustment $35.5 $48.3
----- -----
</TABLE>
<PAGE>
A .125% change in the interest rate on the new indebtedness
would change annual interest expense by approximately $2.6
million.
d. Change in income tax expense/benefit as a result of pro forma
adjustments which affect taxable income. No pro forma income
taxes have currently been provided on the portion of the
purchase price preliminarily allocated to non-deductible
goodwill.
6. The pro forma weighted average shares outstanding for the thirty-nine
weeks ended February 27, 2000 and the year ended May 30, 1999 are as
follows:
<TABLE>
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2000 1999
Basic:
Historical shares outstanding 475.3 470.0
Shares issued 40.5 40.5
---- ----
515.8 510.5
===== =====
Diluted:
Historical shares and share equivalents 478.7 476.7
outstanding
Shares issued 40.5 40.5
Effect of options assumed 3.3 3.8
--- ---
522.5 521.0
===== =====
</TABLE>
7. ConAgra's financial data for the thirty-nine weeks ended February 27,
2000, includes non-recurring charges of $236.1 million before tax
($146.4 million after tax). If these charges were excluded, unaudited
pro forma basic earnings per share for the thirty-nine weeks ended
February 27, 2000 would be $1.16 and unaudited pro forma diluted
earnings per share would be $1.15.
ConAgra's financial data for fiscal 1999 includes non-recurring charges
of $440.8 million before tax ($337.9 million after tax). International
Home Foods financial data for the twelve-month period ended June 30,
1999 includes non-recurring charges and gain on sale of the Polaner
business of $102.3 million before tax ($65.7 million after tax). If
these non-recurring items were excluded, unaudited pro forma basic
earnings per share for fiscal 1999 would be $1.43 and unaudited pro
forma diluted earnings per share would be $1.40.
