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ConAgra restates earnings
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May 24, 2001: 8:38 a.m. ET
Food firm finds improper accounting, to restates results for last 3 years
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NEW YORK (CNNfn) - No. 2 U.S. food processor ConAgra Foods Inc. will restate earnings for fiscal 1998, 1999 and 2000 because of accounting irregularities and questionable conduct at one of its subsidiaries, the company said.
Omaha, Neb.-based Con Agra (CAG: Research, Estimates) said late Wednesday that earnings and sales for those years would be lowered after an internal audit revealed employees at its United Agri Products Cos. subsidiary, which sells seed, fertilizer and chemicals to agricultural customers, engaged in questionable conduct.
ConAgra, whose brands include Armour meats, Bumblebee tuna and Butterball turkey, also said the restatement will cause higher earnings and revenue for fiscal 2001.
The internal investigation and an informal inquiry by the U.S. Securities and Exchange Commission continue, ConAgra said.
United Agri Products is one of three businesses in ConAgra's agricultural products reporting segment and represented about 9 percent of the company's operating profit for fiscal 1998, 1999 and 2000.
ConAgra said UAP filled out fictitious sales records and improperly recorded incomplete sales contracts as complete to boost profit and revenue. The unit also improperly recorded write-offs, which increased its reserve for bad debt, ConAgra said.
"Our preliminary findings indicate that certain conduct at UAP circumvented generally accepted accounting practices and violated ConAgra Foods' corporate policy," ConAgra Chairman Bruce Rohde said. "Those actions will not be tolerated."
Rohde said he had directed that the control systems at UAP be strengthened and "personnel changes" be made.
The company's stock closed up 11 cents at $20.61 Wednesday.
Con Agra had commissioned an outside law firm to conduct an investigation into UAP's accounting practices in November 2000 following an informal SEC inquiry.
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ConAgra said preliminary changes will cut fiscal 1998 revenue to $24.19 billion from $24.27 billion, and fully-diluted earnings per share to $1.32 from $1.35. Fiscal 1999 revenue will be reduced to $24.92 billion from $25.02 billion and earnings per share to $1.41 from $1.46. Fiscal 2000 revenue will be reduced to $25.63 billion from $25.8 billion, and earning per share to $1.60 from $1.67.
Fiscal 2001 revenue will be increased by $350 million and earnings per share increased by 15 cents.
The company said the changes are preliminary and that it will report final audited numbers at the end of June, when it reports earnings for the year. 
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ConAgra Foods
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