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ConAgra Foods Inc. Reports Operating Results (10-Q)

January 03, 2011 | About:
10qk

10qk

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ConAgra Foods Inc. (CAG) filed Quarterly Report for the period ended 2010-11-28.

Conagra Foods Inc. has a market cap of $9.93 billion; its shares were traded at around $22.58 with a P/E ratio of 13.94 and P/S ratio of 0.82. The dividend yield of Conagra Foods Inc. stocks is 4.07%. Conagra Foods Inc. had an annual average earning growth of 4.8% over the past 5 years.CAG is in the portfolios of Diamond Hill Capital of Diamond Hill Capital Management Inc, Jim Simons of Renaissance Technologies LLC, Pioneer Investments, Louis Moore Bacon of Moore Capital Management, LP, Mario Gabelli of GAMCO Investors, Jean-Marie Eveillard of First Eagle Investment Management, LLC.
This is the annual revenues and earnings per share of CAG over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of CAG.


Highlight of Business Operations:

Our diluted earnings per share in the second quarter of fiscal 2011 were $0.45. Diluted earnings per share in the second quarter of fiscal 2010 were $0.54 (including earnings of $0.53 per diluted share from continuing operations and $0.01 per diluted share from discontinued operations). Diluted earnings per share were $0.78 (including $0.77 per diluted share from continuing operations and $0.01 per diluted share from discontinued operations) and $0.91 (including earnings of $0.90 per diluted share from continuing operations and $0.01 per diluted share from discontinued operations), in the first half of fiscal 2011 and 2010, respectively. Several significant items affect the comparability of year-over-year results of continuing operations (see “Items Impacting Comparability” below).

We recognized charges totaling $8 million and $45 million ($4 million and $34 million in selling, general and administrative expenses, respectively, and $4 million and $11 million in cost of goods sold, respectively) in the second quarter and first half of fiscal 2010, respectively, in connection with the Garner accident. These amounts exclude lost profits from the interruption of the business. We also recognized insurance recoveries of $7 million and $41 million in selling, general and administrative expenses in the second quarter and first half of fiscal 2010, respectively. The costs incurred and insurance recoveries recognized in the second quarter and first half of fiscal 2011 were not material.

In May 2010, we made a decision to move certain administrative functions from Edina, Minnesota, to Naperville, Illinois. We completed the transition of these functions in the first half of fiscal 2011. This plan, together with the plan to move production of our meat snacks from Garner, North Carolina to Troy, Ohio, are collectively referred to as the 2010 restructuring plan (“2010 plan”). In connection with the 2010 plan, we expect to incur pre-tax cash and non-cash charges for asset impairments, accelerated depreciation, severance, relocation, and site closure costs of $70 million (of which $52 million have been incurred to date). Included in these estimates are $30 million of charges that have resulted or will result in cash outflows and $40 million of non-cash charges. In the second quarter and first half of fiscal 2011, we recognized charges of $5 million and $13 million, respectively, in relation to these plans.

Consumer Foods operating profit for the second quarter of fiscal 2011 was $284 million, a decrease of $46 million, or 14%, compared to the second quarter of fiscal 2010. Gross profits were $59 million lower for the second quarter of fiscal 2011 than for the second quarter of fiscal 2010, driven by the impact of higher production costs (particularly for proteins and fuel) and lower sales prices (discussed in Net Sales, above), partially offset by the benefit of supply chain cost savings initiatives. Consumer Foods selling, general and administrative expenses were lower in the second quarter of fiscal 2011 than in the second quarter of fiscal 2010 due to a $14 million decrease in incentive compensation expenses and an $11 million decrease in advertising and promotion expenses. The Consumer Foods segment incurred costs of $5 million in connection with the restructuring plans in the second quarter of fiscal 2011. The weakening of the U.S. dollar relative to foreign currencies resulted in an increase of operating profit of $5 million in the second quarter of fiscal 2011 as compared to the second quarter of fiscal 2010.

Consumer Foods operating profit for the first half of fiscal 2011 was $498 million, a decrease of $82 million, or 14%, compared to the first half of fiscal 2010. Gross profits were $92 million lower in the first half of fiscal 2011 than in the first half of fiscal 2010 driven by the impact of higher input costs and lower sales prices, discussed above, partially offset by the supply chain cost savings initiatives. Consumer Foods selling, general and administrative expenses were lower in the first half of fiscal 2011 than in the first half of fiscal 2010, reflecting a $19 million decrease in incentive compensation expenses and a $17 million decrease in advertising and promotion expenses. The Consumer Foods segment incurred costs of $13 million in connection with our restructuring plans in the first half of fiscal 2011. The Garner accident in June 2009 resulted in charges totaling $8 million and $45 million for the impairment of property, plant and equipment, inventory write-offs, workers’ compensation, site clean-up, and other related costs in the second quarter and first half of fiscal 2010, respectively. The impact of these charges was partially offset by insurance recoveries of $7 million and $41 million in the second quarter and first half of fiscal 2010, respectively, for the involuntary conversion of assets. Gross profits from Slim Jim® branded products were $21 million and $9 million in the first half of fiscal 2011 and 2010, respectively, reflecting the impact of the accident and the subsequent recovery of sales volumes. The weakening of the U.S. dollar relative to foreign currencies resulted in an increase of operating profit of $15 million in the first half of fiscal 2011, as compared to the first half of fiscal 2010.

Our diluted earnings per share in the second quarter of fiscal 2011 were $0.45. Diluted earnings per share in the second quarter of fiscal 2010 were $0.54 (including earnings of $0.53 per diluted share from continuing operations and $0.01 per diluted share from discontinued operations). Diluted earnings per share were $0.78 (including $0.77 per diluted share from continuing operations and $0.01 per diluted share from discontinued operations) and $0.91 (including earnings of $0.90 per diluted share from continuing operations and $0.01 per diluted share from discontinued operations), in the first half of fiscal 2011 and 2010, respectively.

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