-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, onEWH0Cg8C6qxV4GqGO6h+xDg8eMuMJlC60eASkt1lsZ852SPU8giSwZjSn90AyG 41LenH/oBAy7yzQ5Z0zSIg== 0000052477-94-000011.txt : 19940817 0000052477-94-000011.hdr.sgml : 19940817 ACCESSION NUMBER: 0000052477-94-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940625 FILED AS OF DATE: 19940809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IBP INC CENTRAL INDEX KEY: 0000052477 STANDARD INDUSTRIAL CLASSIFICATION: 2011 IRS NUMBER: 420838666 STATE OF INCORPORATION: DE FISCAL YEAR END: 1227 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06085 FILM NUMBER: 94542342 BUSINESS ADDRESS: STREET 1: IBP AVE STREET 2: P O BOX 515 CITY: DAKOTA CITY STATE: NE ZIP: 68731 BUSINESS PHONE: 4024942061 MAIL ADDRESS: STREET 1: IBP AVE STREET 2: P O BOX 515 CITY: DAKOTA CITY STATE: NE ZIP: 68731 FORMER COMPANY: FORMER CONFORMED NAME: IOWA BEEF PROCESSORS INC /PRED/ DATE OF NAME CHANGE: 19821109 FORMER COMPANY: FORMER CONFORMED NAME: IOWA BEEF PACKERS INC DATE OF NAME CHANGE: 19701130 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q __________________________ [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the 26 weeks ended June 25, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-6085 __________________________ IBP, inc. a Delaware Corporation I.R.S. Employer Identification No. 42-0838666 IBP Avenue Post Office Box 515 Dakota City, Nebraska 68731 Telephone 402-494-2061 __________________________ 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, and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] As of August 2, 1994, the registrant had outstanding 47,462,920 shares of its common stock ($.05 par value). PART I. FINANCIAL INFORMATION IBP, inc. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) June 25, December 25, 1994 1993 (Unaudited) ASSETS CURRENT ASSETS: Cash and temporary investments $ 16,696 $ 25,196 Accounts receivable, less allowance for doubtful accounts of $5,461 and $4,198 529,502 449,570 Inventories (Note C) 222,892 191,716 Deferred income tax benefit and prepaid expenses 37,671 36,839 --------- --------- TOTAL CURRENT ASSETS 806,761 703,321 Property, plant and equipment, less accumulated depreciation of $537,385 and $507,265 617,827 588,781 Goodwill, net of accumulated amortization of $99,144 and $95,244 219,577 222,794 Deferred income tax benefit and other assets 23,191 24,011 --------- --------- $1,667,356 $1,538,907 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts and notes payable $ 251,437 $ 178,865 Other current liabilities 212,127 187,788 --------- --------- TOTAL CURRENT LIABILITIES 463,564 366,653 Long-term debt and capital lease obligations 435,631 460,723 Deferred income taxes and other liabilities 106,722 98,735 STOCKHOLDERS' EQUITY: Common stock at par value 2,375 2,375 Additional paid-in capital 440,622 441,959 Retained earnings 219,265 168,695 Treasury stock (823) (233) --------- --------- TOTAL STOCKHOLDERS' EQUITY 661,439 612,796 --------- --------- $1,667,356 $1,538,907 ========= ========= See accompanying notes to consolidated condensed financial statements. -2- IBP, inc. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited) (Amounts in thousands except per share data) 13 Weeks Ended 26 Weeks Ended June 25, June 26, June 25, June 26, 1994 1993 1994 1993 Net sales $3,040,077 $3,042,882 $5,859,430 $5,788,243 Cost of products sold 2,945,500 2,975,843 5,698,951 5,669,906 --------- --------- --------- --------- Gross profit 94,577 67,039 160,479 118,337 Selling, general and administrative expense 27,091 21,348 49,091 41,238 --------- --------- --------- --------- EARNINGS FROM OPERATIONS 67,486 45,691 111,388 77,099 Interest expense, net 10,520 11,395 20,372 22,489 --------- --------- --------- --------- Earnings before income taxes and cumulative effect of accounting change 56,966 34,296 91,016 54,610 Income tax expense 22,500 13,800 35,700 21,800 --------- --------- --------- --------- Earnings before cumulative effect of accounting change 34,466 20,496 55,316 32,810 Cumulative effect of change in method of accounting for income taxes - - - 12,626 --------- --------- --------- --------- NET EARNINGS $ 34,466 $ 20,496 $ 55,316 $ 45,436 ========= ========= ========= ========= EARNINGS PER SHARE: Earnings before cumulative effect of accounting change $ .72 $ .43 $1.15 $ .69 Cumulative effect of accounting change - - - .26 ---- ---- ---- ---- Net earnings $ .72 $ .43 $1.15 $ .95 ==== ==== ==== ==== Dividends per share $ .05 $ .05 $ .10 $ .10 ==== ==== ==== ==== Average common and common equivalent shares 48,035 47,864 48,022 47,861 ====== ====== ====== ====== See accompanying notes to consolidated condensed financial statements. -3- IBP, inc. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) 26 Weeks Ended June 25, June 26, 1994 1993 Inflows (outflows) NET CASH FLOWS USED IN OPERATING ACTIVITIES $ (42,142) $(109,364) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (37,766) (20,613) Purchase of subsidiary, net of cash acquired (20,595) - Other investing activities, net (1,032) 762 Net cash flows used in investing -------- -------- activities (59,393) (19,851) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net change in short-term revolving credit borrowings 25,000 84,872 Net change in checks in process of clearance 75,629 40,177 Dividends paid (4,749) (4,749) Other financing activities, net (2,845) (687) Net cash flows provided by -------- -------- financing activities 93,035 119,613 -------- -------- Net decrease in cash and cash equivalents (8,500) (9,602) Cash and cash equivalents at beginning of period 25,196 25,029 Cash and cash equivalents at end of -------- ------- period $ 16,696 $ 15,427 ======== ======= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the periods for: Interest, net of amounts capitalized $ 20,062 $ 22,883 Income taxes, net of refunds received 26,767 22,094 Depreciation and amortization expense 29,628 29,581 See accompanying notes to consolidated condensed financial statements. -4- IBP, inc. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS A. GENERAL The consolidated condensed balance sheet of IBP, inc. and subsidiaries ("IBP") at December 25, 1993 has been taken from audited financial statements at that date and condensed. All other consolidated condensed financial statements contained herein have been prepared by IBP and are unaudited. The consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in IBP's Annual Report on Form 10-K for the year ended December 25, 1993. In the opinion of management, the accompanying audited and unaudited consolidated condensed financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of IBP, inc. and its subsidiaries at June 25, 1994 and December 25, 1993, and the results of its operations and its cash flows for the periods presented herein. Certain reclassifications have been made to prior financial statements to conform to the current year presentation. B. OTHER IBP's interim operating results may be subject to substantial fluctuations which do not necessarily occur or recur on a seasonal basis. Such fluctuations are normally caused by competitive and other conditions in the cattle and hog markets over which IBP has little or no control. Therefore, the results of operations for the interim periods presented are not necessarily indicative of the results to be attained for the full fiscal year. C. INVENTORIES Inventories, valued at the lower of first-in, first-out cost or market, are comprised of the following: June 25, December 25, 1994 1993 (In thousands) Beef $147,366 $119,001 Pork 28,216 23,652 Supplies 47,310 49,063 ------- ------- $222,892 $191,716 ======= ======= -5- IBP, inc. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - CONTINUED D. COMMITMENTS AND CONTINGENCIES IBP is involved in various disputes incident to the ordinary course of its business. In the opinion of management, any liability for which provision has not been made relative to the various lawsuits, claims and administrative proceedings pending against IBP, including that described below, should not have a material adverse effect on its financial position. A complaint filed against IBP in April 1988 by the Department of Labor, Wage and Hour Division, in the United States District Court in Kansas seeks injunctive relief and back wages, plus interest, for certain hourly employees of the Company. The case relates to compensation allegedly due for incidental activities of hourly employees before and after regular working hours. In the liability phase of the case, the district judge ruled that IBP is required to pay back wages for a portion of the incidental activities. An appeal by the Company is in progress. The Company's management believes it has made adequate provision for any liability, the amount of which, if any, will be determined at a later time. -6- MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Increased supplies of market-ready livestock and improved production efficiencies helped IBP to a strong earnings performance in the second quarter 1994. Gross profit, measured as a percentage of net sales, improved to 3.1% in the second quarter 1994 compared to 2.2% in the second quarter 1993. For the six months ended June 25, 1994, gross profit measured 2.7% versus 2.0% in the first half of 1993. IBP's required adoption of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," in the first quarter 1993 added $12.6 million or $.26 per share to prior year net earnings. This earnings increase was primarily attributable to the adjustment of "pushdown accounting" fixed asset bases resulting from IBP's acquisition in 1981. At the same time, year-to-date 1994 and 1993 net earnings were reduced by recurring pushdown accounting adjustments, consisting primarily of goodwill amortization and depreciation of the higher values assigned to property, plant and equipment, totaling $4.9 million or $.10 per share in 1994 and $5.3 million or $.11 per share in the 26 weeks ended June 1993. These adjustments had no impact on cash flow. IBP continued to move into new value-added areas during the second quarter. The company completed its acquisition of the meats business of International Multifoods Corporation. The purchase includes a plant in New Mexico which produces prepared meats for sale to the food service industry. In addition, operations began at IBP's ham plant in Council Bluffs, Iowa, in June 1994. This new facility, located adjacent to IBP's pork plant, processes, cooks and packages retail and deli hams. These products are then marketed and distributed by Doskocil, Inc. SALES Net sales in the second quarter 1994 were virtually unchanged from the second quarter 1993 as a decrease in the average price of products sold slightly overrode an increase in pounds of products sold. Through six months, the 1.2% increase in net sales resulted primarily from an increase in pounds of products sold. Net export sales in the second quarter 1994 decreased 3.3% from the second quarter 1993 despite a 4.0% increase in pounds of export products sold. Year-to-date 1994 net export sales were 4.0% ahead of comparable 1993 net export sales, brought about by a 6.1% increase in pounds of export products sold. Year-to-date 1994 net export sales through June accounted for 12.0% of total net sales versus 12.1% through the same 1993 period. -7- COST OF PRODUCTS SOLD The cost of products sold in the quarter and six months ended June 1994 decreased 1.0% and .5% from costs incurred in the respective 1993 periods. For both comparison periods, a reduction in the overall average cost of livestock purchased more than offset the effect of an increase in pounds of products sold and increases in volume-related plant costs. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE The primary components of increased selling, general and administrative expense in the 1994 second quarter and year-to-date period ended June versus 1993 were higher accruals for incentive compensation based upon earnings and pounds of products sold, outside legal costs and bad debt expense. INTEREST EXPENSE The reductions in net interest expense in the quarterly and six-month periods ended June 1994 compared to the same 1993 periods were primarily attributable to reduced average borrowings outstanding. Outstanding borrowings averaged $97 million less in the first half of 1994 compared to 1993 due to sustained earnings strength and other positive operating cash flows. INCOME TAXES The higher quarterly and year-to-date 1994 income tax provisions through June versus 1993 resulted predominantly from the increases in pre-tax earnings. FINANCIAL CONDITION Total outstanding borrowings averaged $488 million in the first six months of 1994 compared to $585 million in the comparable 1993 period. Short-term borrowings outstanding at June 25, 1994, excluding $75 million classified as long-term debt, totaled $25 million with available unused credit capacity of $265 million. Year-to-date capital expenditures through June 1994 totaled $37.8 million compared to $20.6 million in the first half of 1993. Spending for the ham processing plants at Council Bluffs, Iowa, and Madison, Nebraska, and plant expansion projects at other locations contributed to the increase. -8- PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders (a) The annual meeting of stockholders of IBP, inc. was held on April 14, 1994, in Dakota City, Nebraska. (c) The following matters were voted upon at the annual meeting: (i) The election of the members of the Board of Directors: John S. Chalsty Votes for: 39,806,194 Votes withheld: 209,452 Alec P. Courtelis Votes for: 39,801,123 Votes withheld: 214,523 Dr. Wendy L. Gramm Votes for: 39,302,456 Votes withheld: 713,190 Eugene D. Leman Votes for: 39,727,227 Votes withheld: 288,419 Robert L. Peterson Votes for: 39,728,220 Votes withheld: 287,426 JoAnn R. Smith Votes for: 39,306,529 Votes withheld: 709,117 Dale C. Tinstman Votes for: 39,804,795 Votes withheld: 210,851 (ii) Performance-Based Compensation of the Chief Executive Officer and Chairman of the Board. Reduction of the salary of the Chief Executive Officer and Chairman to one million dollars in 1994, and a bonus for 1994, payable in 1995, calculated at 1.3 percent of the first one hundred million dollars of operating earnings plus 1.0 percent of any excess over one hundred million dollars of operating earnings in order to obtain deductibility under Section 162 (m) of the Internal Revenue Code. Votes for - 36,300,068 Votes against - 2,960,595 Votes abstained - 754,967 -9- PART II. OTHER INFORMATION - CONTINUED (iii) Amendment to the IBP Officer Long-Term Stock Plan. Amendment of the Officer Long-Term Stock plan to allow participating officers to make an irrevocable election to defer a cash equivalent that equals the number of shares to be received by the officer under the plan multiplied by the closing price of IBP stock on the date the shares are to be received by the officer with the elections to defer occuring prior to the officer rendering services for which the shares are earned and with deferrals credited to the officer's account in the IBP Retirement Income Plan. Votes for - 38,744,298 Votes against - 477,052 Votes abstained - 394,279 (iv) Amendment to the IBP 1993 Stock Option Plan. Amendment to the 1993 Stock Option plan to limit the maximum number of options that may be awarded to any individual participant in one year to 30,000 shares of common stock in order to optimize the federal corporate income tax deductibility for compensation granted under the plan by satisfying the requirements of Section 162 (m) of the Internal Revenue Code. Votes for - 38,639,511 Votes against - 929,897 Votes abstained - 446,221 Item 6. Exhibits and Reports on Form 8-K (a) See Exhibit 11, statement regarding computation of earnings per share. (b) No reports on Form 8-K were filed by the Company during the quarter ended June 25, 1994. -10- EXHIBIT 11 IBP, inc. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (Amounts in thousands except per share data) 13 Weeks Ended 26 Weeks Ended June 25, June 26, June 25, June 26, 1994 1993 1994 1993 Earnings before cumulative effect of accounting change $34,466 $20,496 $55,316 $32,810 Cumulative effect of accounting change - - - 12,626 ------ ------ ------ ------ Net earnings $34,466 $20,496 $55,316 $45,346 ====== ====== ====== ====== PRIMARY EARNINGS PER SHARE Shares used in this computation: Weighted average shares outstanding 47,441 47,494 47,452 47,495 Dilutive effect of shares under employee stock plans 594 370 570 366 ------ ------ ------ ------ Common and common equivalent shares 48,035 47,864 48,022 47,861 ====== ====== ====== ====== Earnings before cumulative effect of accounting change $ .72 $ .43 $1.15 $ .69 Cumulative effect of accounting change - - - .26 ---- ---- ---- ---- Primary earnings per share $ .72 $ .43 $1.15 $ .95 ==== ==== ==== ==== FULLY-DILUTED EARNINGS PER SHARE Shares used in this computation: Weighted average shares outstanding per above 47,441 47,494 47,452 47,495 Dilutive effect of shares under employee stock plans 638 468 643 468 ------ ------ ------ ------ Common and common equivalent shares 48,079 47,962 48,095 47,963 ====== ====== ====== ====== Earnings before cumulative effect of accounting change $ .72 $ .43 $1.15 $ .69 Cumulative effect of accounting change - - - .26 ---- ---- ---- ---- Fully-diluted earnings per share $ .72 $ .43 $1.15 $ .95 ==== ==== ==== ==== -11- SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. IBP, inc. (Registrant) Date August 8, 1994 /s/ Robert L. Peterson Robert L. Peterson Chairman of the Board, President and Chief Executive Officer /s/ Lonnie O. Grigsby Lonnie O. Grigsby Executive Vice President Finance and Administration /s/ Craig J. Hart Craig J. Hart Controller -12- -----END PRIVACY-ENHANCED MESSAGE-----