ConAgra: Insurance Covers Profit Loss at North Carolina Slim Jim Plant

June 22, 2009

ConAgra Foods Inc. said Thursday the North Carolina Slim Jim plant where an explosion killed three people last week is closed for now, with production not resuming until some time in August.

While production will resume in August, the packaging part of the plant will be closed for the foreseeable future, a spokeswoman said.

However, ConAgra said in regulatory documents that despite the explosion it expects to meet its previous long-term growth forecast for earnings per share from continuing operations of 8 to 10 percent.

The accident is not expected to have a material adverse impact on results of operations, financial condition or liquidity in fiscal 2010, or on the profit growth opportunities for its Consumer Foods business, it said in documents filed with the Securities and Exchange Commission.

Three workers died and more than 40 were injured June 9 when an explosion caused a roof collapse at the plant in Garner, North Carolina, south of the state capital in Raleigh.

Federal investigators determined that the explosion was the result of an accidental natural gas release and not deliberate, the company said. A new natural gas-fired hot water system was being installed at the facility at the time.

Annual revenue for Slim Jim-branded products has totaled about $200 million in recent years. The company said because it was insured it will only incur modest costs, which will be reflected in earnings releases for fiscal 2010, which began on June 1, according to the filing.

ConAgra said its expects its business-interruption insurance to “substantially compensate” for any lost profits from the disruption.

The company has continued to service Slim Jim product supply from inventory, although at reduced levels, according to the filing.

Steps taken by ConAgra include shifting some Slim Jim production to other plants, increasing supply of certain products to existing third-party manufacturers and establishing interim manufacturing arrangements with other manufacturers, according to the filing.

The company expects production from the interim providers to begin within four to six weeks.

ConAgra expects to have access to a combined production base needed to service business during August, and business to return to “acceptable service levels” during the second quarter of fiscal 2010, according to the filing.

The company said it continues to analyze the impact of the accident and will share additional details in its fiscal fourth-quarter earnings release, scheduled for June 25.

(Reporting by Ben Klayman; Editing by Brian Moss)

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