CAG-2.24.2013-10Q3 http://www.sec.gov/Archives/edgar/data/23217/000144530513... 10-Q 1 cag-2242013x10q3.htm 10-Q Table of Contents 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 February 24, 2013 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 ______________________________________________________ CONAGRA FOODS, INC. (Exact name of registrant as specified in its charter) ______________________________________________________ Delaware 47-0248710 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One ConAgra Drive, Omaha, Nebraska 68102-5001 (Address of principal executive offices) (Zip Code) (402) 240-4000 (Registrant’s telephone number, including area code) (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 ¨ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post 1 of 92 4/9/13 1:27 PM CAG-2.24.2013-10Q3 http://www.sec.gov/Archives/edgar/data/23217/000144530513... such files). Yes x No ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x Number of shares outstanding of issuer’s common stock, as of March 24, 2013, was 416,805,822. 2 of 92 4/9/13 1:27 PM CAG-2.24.2013-10Q3 http://www.sec.gov/Archives/edgar/data/23217/000144530513... Table of Contents Table of Contents Part I. FINANCIAL INFORMATION 1 Item 1 Financial Statements 1 Unaudited Condensed Consolidated Statements of Earnings for the Thirteen and Thirty-nine Weeks ended February 24, 2013 and February 26, 2012 1 Unaudited Condensed Consolidated Statements of Comprehensive Income for the Thirteen and Thirty-nine Weeks ended February 24, 2013 and February 26, 2012 2 Unaudited Condensed Consolidated Balance Sheets as of February 24, 2013 and May 27, 2012 3 Unaudited Condensed Consolidated Statements of Cash Flows for the Thirty-nine Weeks ended February 24, 2013 and February 26, 2012 4 Notes to Unaudited Condensed Consolidated Financial Statements 5 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Item 3 Quantitative and Qualitative Disclosures About Market Risk 44 Item 4 Controls and Procedures 45 Part II. OTHER INFORMATION 46 Item 1 Legal Proceedings 46 Item 1A Risk Factors 46 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 46 Item 6 Exhibits 47 Signatures 48 Exhibit Index Exhibit 12 Exhibit 31.1 Exhibit 31.2 Exhibit 32.1 Exhibit 101.1 3 of 92 4/9/13 1:27 PM CAG-2.24.2013-10Q3 http://www.sec.gov/Archives/edgar/data/23217/000144530513... Table of Contents PART I — FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ConAgra Foods, Inc. and Subsidiaries Condensed Consolidated Statements of Earnings (in millions except per share amounts) (unaudited) Thirteen weeks ended Thirty-nine weeks ended February 24, February 26, February 24, February 26, 2013 2012 2013 2012 Net sales $ 3,850.5 $ 3,396.0 $ 10,897.9 $ 9,933.0 Costs and expenses: Cost of goods sold 2,976.5 2,609.4 8,289.7 7,796.4 Selling, general and administrative expenses 614.0 356.7 1,564.6 1,202.2 Interest expense, net 70.6 49.7 173.3 153.2 Income from continuing operations before income taxes and equity method investment earnings 189.4 380.2 870.3 781.2 Income tax expense 78.0 112.1 310.6 253.7 Equity method investment earnings 12.0 12.6 32.4 30.3 Income from continuing operations 123.4 280.7 592.1 557.8 Income from discontinued operations, net of tax — — — 0.1 Net income $ 123.4 $ 280.7 $ 592.1 $ 557.9 Less: Net income attributable to noncontrolling interests 3.4 0.6 10.4 3.8 Net income attributable to ConAgra Foods, Inc. $ 120.0 $ 280.1 $ 581.7 $ 554.1 Earnings per share — basic Net income attributable to ConAgra Foods, Inc. common stockholders $ 0.29 $ 0.68 $ 1.42 $ 1.34 Earnings per share — diluted Net income attributable to ConAgra Foods, Inc. common stockholders $ 0.29 $ 0.67 $ 1.40 $ 1.32 Cash dividends declared per common share $ 0.25 $ 0.24 $ 0.74 $ 0.71 See notes to the condensed consolidated financial statements. 1 4 of 92 4/9/13 1:27 PM CAG-2.24.2013-10Q3 http://www.sec.gov/Archives/edgar/data/23217/000144530513... Table of Contents ConAgra Foods, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (in millions) (unaudited) Thirteen weeks ended Thirty-nine weeks ended February 24, February 26, February 24, February 26, 2013 2012 2013 2012 Net income $ 123.4 $ 280.7 $ 592.1 $ 557.9 Other comprehensive income (loss): Net derivative adjustment, net of tax 32.4 11.5 29.4 (68.7) Unrealized gains on available-for-sale securities, net of tax 0.1 0.2 0.1 — Currency translation adjustment: Unrealized translation gains (losses) (4.6) 32.4 14.0 (18.5) Reclassification adjustment for losses included in net income — 6.0 — 6.0 Pension and postretirement healthcare liabilities, net of tax (5.7) (0.6) (4.6) 18.4 Comprehensive income 145.6 330.2 631.0 495.1 Comprehensive income attributable to noncontrolling interests 5.3 0.6 12.2 3.8 Comprehensive income attributable to ConAgra Foods, Inc. $ 140.3 $ 329.6 $ 618.8 $ 491.3 See notes to the condensed consolidated financial statements. 2 5 of 92 4/9/13 1:27 PM CAG-2.24.2013-10Q3 http://www.sec.gov/Archives/edgar/data/23217/000144530513... Table of Contents ConAgra Foods, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in millions except share data) (unaudited) February 24, May 27, 2013 2012 ASSETS Current assets Cash and cash equivalents $ 723.8 $ 103.0 Receivables, less allowance for doubtful accounts of $7.6 and $5.9 1,219.3 924.8 Inventories 2,648.3 1,869.6 Prepaid expenses and other current assets 554.6 321.4 Total current assets 5,146.0 3,218.8 Property, plant and equipment 7,087.5 5,995.7 Less accumulated depreciation (3,280.3) (3,253.8) Property, plant and equipment, net 3,807.2 2,741.9 Goodwill 8,369.3 4,015.4 Brands, trademarks and other intangibles, net 3,475.3 1,191.5 Other assets 309.7 274.3 $ 21,107.5 $ 11,441.9 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Notes payable $ 1.1 $ 40.0 Current installments of long-term debt 719.7 38.1 Accounts payable 1,501.7 1,190.3 Accrued payroll 265.4 177.2 Other accrued liabilities 934.6 779.6 Total current liabilities 3,422.5 2,225.2 Senior long-term debt, excluding current installments 9,649.4 2,662.7 Subordinated debt 195.9 195.9 Other noncurrent liabilities 2,715.9 1,822.1 Total liabilities 15,983.7 6,905.9 Commitments and contingencies (Note 11) Common stockholders' equity Common stock of $5 par value, authorized 1,200,000,000 shares; issued 567,907,172 2,839.7 2,839.7 Additional paid-in capital 985.7 901.5 Retained earnings 5,042.1 4,765.1 Accumulated other comprehensive loss (262.0) (299.1) Less treasury stock, at cost, 151,290,940 and 160,294,748 common shares (3,582.3) (3,767.7) 6 of 92 4/9/13 1:27 PM CAG-2.24.2013-10Q3 http://www.sec.gov/Archives/edgar/data/23217/000144530513... Total ConAgra Foods, Inc. common stockholders' equity 5,023.2 4,439.5 Noncontrolling interests 100.6 96.5 Total stockholders' equity 5,123.8 4,536.0 $ 21,107.5 $ 11,441.9 See notes to the condensed consolidated financial statements. 3 7 of 92 4/9/13 1:27 PM CAG-2.24.2013-10Q3 http://www.sec.gov/Archives/edgar/data/23217/000144530513... Table of Contents ConAgra Foods, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) Thirty-nine weeks ended February 24, February 26, 2013 2012 Cash flows from operating activities: Net income $ 592.1 $ 557.9 Income from discontinued operations — 0.1 Income from continuing operations 592.1 557.8 Adjustments to reconcile income from continuing operations to net cash flows from operating activities: Depreciation and amortization 299.2 277.1 Asset impairment charges 19.8 7.9 Gain on acquisition of controlling interest in Agro Tech Foods Ltd.