-----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, MLTPm4CU7BejFdJyd2Ad9D69NgOUZ8E4NEgF0BqZ3UrKwnGc4bM3AsvPzyUOfdZk J1q2M4sEBYM8bu2JkBMWyw== 0000052477-95-000005.txt : 19950509 0000052477-95-000005.hdr.sgml : 19950509 ACCESSION NUMBER: 0000052477-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950401 FILED AS OF DATE: 19950508 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IBP INC CENTRAL INDEX KEY: 0000052477 STANDARD INDUSTRIAL CLASSIFICATION: MEAT PACKING PLANTS [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: 95535202 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 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________ [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the 13 weeks ended April 1, 1995 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 May 1, 1995, the registrant had outstanding 47,413,462 shares of its common stock ($.05 par value). PART I. FINANCIAL INFORMATION IBP, inc. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) April 1, December 31, 1995 1994 (Unaudited) ASSETS CURRENT ASSETS: Cash and temporary investments $ 92,271 $ 160,536 Accounts receivable, less allowance for doubtful accounts of $9,178 and $9,397 521,445 514,800 Inventories (Note B) 272,855 244,048 Deferred income tax benefits and prepaid expenses 54,902 54,538 --------- --------- TOTAL CURRENT ASSETS 941,473 973,922 Property, plant and equipment, less accumulated depreciation of $568,452 and $556,769 670,470 651,364 Goodwill, net of accumulated amortization of $105,124 and $103,217 214,872 216,779 Other assets 23,789 23,398 --------- --------- $1,850,604 $1,865,463 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 260,779 $ 275,595 Deferred income taxes and other current liabilities 287,581 339,089 --------- --------- TOTAL CURRENT LIABILITIES 548,360 614,684 Long-term debt and capital lease obligations 361,681 361,760 Deferred income taxes and other liabilities 111,475 108,525 STOCKHOLDERS' EQUITY: Common stock at par value 2,375 2,375 Additional paid-in capital 438,978 439,567 Retained earnings 390,936 341,492 Currency translation adjustments (944) (1,074) Treasury stock (2,257) (1,866) --------- --------- TOTAL STOCKHOLDERS' EQUITY 829,088 780,494 --------- --------- $1,850,604 $1,865,463 ========= ========= See accompanying notes to consolidated condensed financial statements. -2- IBP, inc. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited) (In thousands except per share data) 13 Weeks Ended -------------------------- April 1, March 26, 1995 1994 ---------- ---------- Net sales $3,006,909 $2,819,353 Cost of products sold 2,889,217 2,753,451 --------- --------- Gross profit 117,692 65,902 Selling, general and administrative expense 26,088 22,000 --------- --------- EARNINGS FROM OPERATIONS 91,604 43,902 Interest expense, net 6,589 9,852 --------- --------- Earnings before income taxes 85,015 34,050 Income tax expense 33,200 13,200 --------- --------- NET EARNINGS $ 51,815 $ 20,850 ========= ========= Earnings per share $1.08 $ .43 ==== ==== Dividends per share $ .05 $ .05 ==== ==== Average common and common equivalent shares 48,142 48,034 ====== ====== See accompanying notes to consolidated condensed financial statements. -3- IBP, inc. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) 13 Weeks Ended ------------------------- April 1, March 26, 1995 1994 -------- ---------- Inflows (outflows) NET CASH FLOWS USED IN OPERATING ACTIVITIES $ (69,253) $ (78,426) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (31,606) (17,705) Other investing activities, net 736 202 Net cash flows used in investing -------- -------- activities (30,770) (17,503) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net change in checks in process of clearance 35,188 54,967 Dividends paid (2,373) (2,374) Net change in short-term revolving credit borrowings - 35,000 Other financing activities, net (1,057) (1,529) Net cash flows provided by -------- -------- financing activities 31,758 86,064 -------- -------- Net decrease in cash and cash equivalents (68,265) (9,865) Cash and cash equivalents at beginning of period 160,536 25,196 -------- -------- Cash and cash equivalents at end of period $ 92,271 $ 15,331 ======== ======== SUPPLEMENTAL INFORMATION: Cash payments during the periods for: Interest, net of amounts capitalized $16,833 $18,758 Income taxes, net of refunds received 43,886 (558) Depreciation and amortization expense 14,185 14,518 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 31, 1994 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 31, 1994. 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 as of April 1, 1995 and December 31, 1994, 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: April 1, December 31, 1995 1994 (In thousands) Held for sale: Beef products $156,040 $140,697 Livestock 32,445 27,495 Pork products 28,809 21,829 Other 7,046 6,037 ------- ------- 224,340 196,058 Supplies 48,515 47,990 ------- ------- $272,855 $244,048 ======= ======= -5- IBP, inc. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - CONTINUED D. COMMITMENTS AND CONTINGENCIES IBP is involved in numerous 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 those described below, will 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 Court ruled that certain incidental activities may be compensable time. The Tenth Circuit Court of Appeals affirmed the District Court's ruling. The trial on the issue of the extent of damages has been set for July 10, 1995. A $15,004,000 judgement was entered against IBP in November 1994 in an Iowa State District Court. The plaintiff, a former IBP employee, sued the Company and another former employee in February 1993 for slander and breach of fiduciary duty regarding his treatment as a workers' compensation claimant. The jury determined that the plaintiff sustained $4,000 in actual damages, and further returned a punitive damage award against IBP and the other defendant in the amount of $15,000,000, all of which was provided for by the Company in 1994. On March 2, 1995, the Iowa State District Court entered an order reducing the punitive damages to $100,000. IBP and the plaintiff have both appealed the Court's March 2, 1995 post-trial order. -6- MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expanded operations, improved production efficiencies and increased export sales contributed to a strong first quarter 1995. Net earnings of $51.8 million in the first quarter 1995 exceeded first quarter 1994 net earnings of $20.9 million by $30.9 million or 148%. First quarter 1995 earnings per share of $1.08 were 151% better than the $.43 earned in the first quarter 1994. Gross profit, measured as a percentage of net sales, improved to 3.9% in the first quarter 1995 from 2.3% in the same 1994 period. Both beef and pork operations achieved improved capacity utilization and operating earnings in 1995 versus the first quarter 1994, while IBP's newest subsidiaries, including Lakeside Farm Industries, Ltd., Supreme Processed Foods, Inc. and Prepared Foods, Inc., also contributed to the increased earnings from operations. In late March and early April 1995, IBP purchased cow processing facilities owned by Western Packing Company and Gibbon Packing Company, Inc., marking IBP's entrance into this sector of the beef processing business. These purchases include plants at Sealy, Texas, Gibbon, Nebraska, and Tama, Iowa. Cow meat is used primarily in the production of chopped meats, hamburger and sausage. The application of purchase accounting principles resulting from IBP's acquisition in 1981 has, since that date, reduced IBP's earnings by the impact of "pushdown" accounting. Amortization of goodwill and depreciation of the higher values assigned to property, plant and equipment reduced net earnings by $2.4 million or $.05 per share in the first quarters of 1995 and 1994. These adjustments had no impact on cash flow. IBP's selling prices and the prices it pays for live cattle and hogs are determined by constantly changing market forces of supply and demand, over which IBP has little or no control. Therefore, past results will not necessarily be indicative of future performance. SALES Net sales in the first quarter 1995 increased 6.7% from the first quarter 1994. The increase was primarily attributable to an increase in pounds of beef and pork products sold. Net sales from IBP's newest subsidiaries, all of which were acquired or which commenced operations subsequent to the first quarter 1994, also contributed to the increase in consolidated net sales. Net export sales in the first quarter 1995 increased 18.4% from the first quarter 1994 due chiefly to an 11.7% increase in pounds of red meat products sold. Red meat sales have a relatively higher sales value per pound than hides and variety meat items. The majority of IBP's red meat exports go to destinations in the Far East, especially to Japan. Exports to Japan have increased in part due to lowered import restrictions and a stronger yen versus the dollar. -7- COST OF PRODUCTS SOLD The 4.9% increase in the cost of products sold in the first quarter 1995 versus the same 1994 three-month period resulted primarily from costs incurred at IBP's newest subsidiaries, especially at Lakeside Farm Industries, Ltd., the Company's Canadian subsidiary acquired in October 1994. For comparative operations, livestock costs were flat in the first quarter 1995 versus the first quarter 1994 as an increase in pounds of products sold was offset by a decrease in the average cost of livestock purchased. Plant costs also increased in 1995 due mostly to higher production volume. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE Selling, general and administrative expense in the first quarter 1995 increased over 19% from the same 1994 period. The majority of the higher 1995 expense was due to higher accruals for earnings-based incentive compensation. Selling and administrative expense associated with new subsidiaries also contributed to the higher 1995 expense. INTEREST EXPENSE The 33.1% decrease in first quarter 1995 net interest expense from the first quarter 1994 was the result of reduced average borrowings and increased amounts of capitalized interest and interest income from temporary investments. INCOME TAXES The higher year-to-date 1995 income tax provision compared to the first quarter 1994 resulted almost solely from the increase in pre-tax earnings. FINANCIAL CONDITION Total outstanding borrowings averaged $370 million in the first three months of 1995 compared to $480 million in the comparable 1994 period. There were no short-term borrowings outstanding at April 1, 1995, with available unused credit capacity under committed facilities of $300 million. The corresponding decreases in cash and current liabilities at April 1, 1995 from December 31, 1994 resulted primarily from first quarter 1995 payments for 1994 deferred livestock payables, incentive compensation and income taxes. Year-to-date capital expenditures through April 1, 1995 totaled $31.6 million compared to $17.7 million in the first three months of 1994. The increased 1995 spending was due in part to continued renovation of the Logansport, Indiana, pork plant and various expansion projects in progress. The Logansport plant is scheduled to commence operations in the third quarter 1995. -8- PART II. OTHER INFORMATION Item 1. Legal Proceedings See Note D to the consolidated condensed financial statements. 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 April 1, 1995. -9- Exhibit 11 IBP, inc. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (In thousands except per share data) 13 Weeks Ended ------------------------- April 1, March 26, 1995 1994 -------- --------- NET EARNINGS $51,815 $20,850 ====== ====== PRIMARY EARNINGS PER SHARE Shares used in this computation: Weighted average shares outstanding 47,396 47,462 Dilutive effect of shares under employee stock plans 746 572 ------ ------ Common and common equivalent shares 48,142 48,034 ====== ====== Primary earnings per share $1.08 $ .43 ==== ==== FULLY-DILUTED EARNINGS PER SHARE Shares used in this computation: Weighted average shares outstanding 47,396 47,462 Dilutive effect of shares under employee stock plans 798 580 ------ ------ Common and common equivalent shares 48,194 48,042 ====== ====== Fully-diluted earnings per share $1.08 $ .43 ==== ==== -10- 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) May 8, 1995 /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 -11- EX-27 2
5 1,000 3-MOS DEC-30-1995 APR-01-1995 92,271 0 530,623 9,178 272,855 941,473 1,238,922 568,452 1,850,604 548,360 0 2,375 0 0 826,713 1,850,604 2,996,917 3,006,909 2,889,217 26,088 0 0 6,589 85,015 33,200 51,815 0 0 0 51,815 1.08 1.08
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