-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GLW80gjO4WwVQ4FJJHD539pf5wIsQW1mhIu/lqvqBJA7OM9HTzUnwdXegw/1V4i/ p8mUgf2ktlw5VPjtN0c3Vw== 0000052477-95-000009.txt : 19951119 0000052477-95-000009.hdr.sgml : 19951119 ACCESSION NUMBER: 0000052477-95-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 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: 95589632 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 39 weeks ended September 30, 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 November 1, 1995, the registrant had outstanding 47,386,037 shares of its common stock ($.05 par value). PART I. FINANCIAL INFORMATION IBP, inc. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) September 30, December 31, 1995 1994 (Unaudited) ASSETS CURRENT ASSETS: Cash and temporary investments $ 145,855 $ 160,536 Accounts receivable, less allowance for doubtful accounts of $9,554 and $9,397 614,147 514,800 Inventories (Note C) 304,248 244,048 Deferred income tax benefits and prepaid expenses 52,002 54,538 _________ _________ TOTAL CURRENT ASSETS 1,116,252 973,922 Property, plant and equipment, less accumulated depreciation of $618,590 and $556,769 709,729 651,364 Goodwill, net of accumulated amortization of $111,177 and $103,217 208,819 216,779 Other assets 28,203 23,398 --------- --------- $2,063,003 $1,865,463 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts and notes payable $ 270,737 $ 275,595 Current portion of long-term obligations 55,607 355 Deferred income taxes and other current liabilities 337,200 338,734 --------- --------- TOTAL CURRENT LIABILITIES 663,544 614,684 Long-term debt and capital lease obligations 305,877 361,760 Deferred income taxes and other liabilities 100,565 108,525 STOCKHOLDERS' EQUITY: Common stock at par value 2,375 2,375 Additional paid-in capital 435,927 439,567 Retained earnings 557,451 341,492 Currency translation adjustments 977 (1,074) Treasury stock (3,713) (1,866) --------- --------- TOTAL STOCKHOLDERS' EQUITY 993,017 780,494 --------- --------- $2,063,003 $1,865,463 ========= ========= 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 39 Weeks Ended September 30, September 24, September 30, September 24, 1995 1994 1995 1994 Net sales $3,290,986 $2,982,479 $9,507,240 $8,841,909 Cost of products sold 3,112,942 2,865,992 9,029,418 8,564,943 --------- --------- --------- --------- Gross profit 178,044 116,487 477,822 276,966 Selling, general and administrative expense 33,483 25,254 94,723 74,345 --------- --------- --------- --------- EARNINGS FROM OPERATIONS 144,561 91,233 383,099 202,621 Interest expense, net 4,649 9,178 17,428 29,550 --------- --------- --------- --------- Earnings before income taxes 139,912 82,055 365,671 173,071 Income tax expense 54,500 32,900 142,600 68,600 --------- --------- --------- --------- NET EARNINGS $ 85,412 $ 49,155 $ 223,071 $ 104,471 ========= ========= ========= ========= Earnings per share $1.76 $1.02 $4.62 $2.17 ==== ==== ==== ==== Dividends per share $ .05 $ .05 $ .15 $ .15 ==== ==== ==== ==== Average common and common equivalent shares 48,455 48,146 48,254 48,050 ====== ====== ======= ====== Capital expenditures $46,021 $26,822 $116,998 $64,588 ====== ====== ======= ====== Depreciation and amortization expense $20,172 $15,095 $ 72,640 $44,723 ====== ====== ======= ====== See accompanying notes to consolidated condensed financial statements. -3- IBP, inc. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) 39 Weeks Ended September 30, September 24, 1995 1994 Inflows (outflows) NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 101,201 $ 48,222 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (116,998) (64,588) Payment for stock of new subsidiary, net of cash acquired - (20,595) Other investing activities, net (3,011) (449) -------- ------- Net cash flows used in investing activities (120,009) (85,632) -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Net change in checks in process of clearance 17,375 64,872 Dividends paid (7,115) (25,131) Payments of long-term debt (645) (7,122) Other financing activities, net (5,488) (4,253) -------- ------- Net cash flows provided by financing activities 4,127 28,366 -------- ------- Net change in cash and cash equivalents (14,681) (9,044) Cash and cash equivalents at beginning of period 160,536 25,196 -------- ------- Cash and cash equivalents at end of period $ 145,855 $ 16,152 ======== ======= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the periods for: Interest, net of amounts capitalized $ 27,212 $38,410 Income taxes 158,121 38,123 Depreciation and amortization expense 72,640 44,723 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 at September 30, 1995 and December 31, 1994, and the results of their operations and their cash flows for the periods presented herein. B. OTHER IBP's interim operating results may be subject to 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: September 30, December 31, 1995 1994 (In thousands) Held for sale: Beef products $186,922 $140,697 Livestock 27,716 27,495 Pork products 33,898 21,829 Other 8,748 6,037 ------- ------- 257,284 196,058 Supplies 46,964 47,990 ------- ------- $304,248 $244,048 ======= ======= -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 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. A trial on the issue of the extent of damages was held on July 10, 1995. No decision on damages has been entered to date. A $15,004,000 jury verdict was returned 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. Both IBP and the plaintiff have appealed the Court's March 2, 1995 post-trial order. -6- MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Continued production efficiencies and increased export sales contributed to a strong third quarter 1995 performance. Net earnings for the thirteen weeks ended September 30 totaled $85.4 million or $1.76 per share compared to $49.2 million or $1.02 per share in the third quarter 1994. Year-to-date 1995 net earnings through nine months totaled $223.1 million or $4.62 per share versus $104.5 million or $2.17 per share through September 1994. Gross profit, measured as a percentage of net sales, improved to 5.4% in the third quarter 1995 from 3.9% in the same 1994 period. IBP's beef operations were stronger due to higher production efficiencies and strong demand while pork operations were weaker in the third quarter 1995 compared to 1994. For the nine months ended September 30, 1995, gross profit measured 5.0% of net sales versus 3.1% in the first three quarters of 1994. Beef operations were the most significant contributor to the improved year-to-date 1995 gross profit. Aiding beef operations in its contributions were IBP's newest operations, including its Canadian subsidiary, Lakeside Farm Industries, Ltd. (Lakeside), and its beef boning division. All other IBP divisions made positive year-to-date gross profit contributions. 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 1995 third quarter and year-to-date periods ended September 1995 increased 10.3% and 7.5%, respectively, from the comparable 1994 periods. An increase in pounds of products sold in 1995 versus 1994 for both comparison periods was the main factor in these increased net sales. The additions of Lakeside, which was an October 1994 purchase, and three beef boning plants acquired in 1995, were the primary reason for the increase in pounds of products sold. Third quarter and year-to-date 1995 net export sales increased 32.7% and 26.6%, respectively, from the same 1994 periods due chiefly to product mix changes and an increase in pounds of products sold to Asian markets. Exports to the Far East, IBP's most significant export market, have increased in part due to increased demand, lowered import restrictions, favorable currency exchange rates and development of additional markets. Exports accounted for 15.4% of consolidated net sales in the third quarter 1995 and 14.4% in the first nine months of 1995 versus 12.8% and 12.2% in the comparative 1994 periods. -7- COST OF PRODUCTS SOLD Increases in the cost of products sold in the third quarter and year-to-date periods ended September 30, 1995 versus the same 1994 periods resulted primarily from costs incurred at Lakeside and the beef boning plants. IBP's fresh meats division, exclusive of new operations, experienced higher livestock costs in the third quarter 1995 versus 1994 due mostly to an increase in pounds of products sold. For the same operations, year-to-date 1995 livestock costs were lower than comparative 1994 costs as the impact of a decrease in the average cost of livestock purchased overrode an increase in pounds of products sold. Also, an adjustment in the second quarter 1995 to reduce the estimated salvage value for most fixed assets to better reflect actual experience increased year-to-date 1995 cost of products sold by approximately $17 million. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE The principal components of increased selling, general and administrative expense in the 1995 third quarter and nine-month periods versus 1994 were higher accruals for earnings-based incentive compensation, incremental selling and administrative expense associated with new operations and increased export-related selling expense. INTEREST EXPENSE Net interest expense was reduced 49.4% in the third quarter and 41.0% in the year-to-date period ended September 30, 1995 versus the comparable 1994 periods. The favorable effect of long- term debt reductions of $112 million in the second half of 1994, increased interest income earned on investment of free cash flows and increased amounts of interest capitalized on fixed assets were the principal contributing factors to the lower 1995 net expense. IBP will prepay in the fourth quarter 1995 both of its currently outstanding $275 million 9.82% Senior Notes due 2000 and $75 million 10.93% Senior Subordinated Debentures due 2002. The company has sent required notices to all holders of its intention for a complete prepayment of all such outstanding notes and debentures on December 15, 1995. Although the company's prepayment premiums will ultimately be based upon the U.S. treasury market two days before the date of prepayment, management's calculation of the prepayment premiums as of November 9, 1995, would be approximately $21 million, net of applicable taxes, or approximately $.43 per share of IBP's common stock. The net expense will be classified as an extraordinary loss in the fourth quarter 1995. The prepayment of these notes and debentures is part of an overall refinancing effort to lower IBP's future interest expense by taking advantage of more favorable debt markets. -8- INCOME TAXES The higher year-to-date 1995 income tax provision compared to the first nine months of 1994 resulted almost solely from the increase in pre-tax earnings. FINANCIAL CONDITION Total outstanding borrowings averaged $370 million in the first nine months of 1995 compared to $474 million in the comparable 1994 period. There were no short-term borrowings under committed facilities outstanding at September 30, 1995, with available unused credit capacity of $300 million. Year-to-date capital expenditures through September 30, 1995 totaled $117 million compared to $65 million in the first nine months of 1994. The increased 1995 spending was due in part to continued expansion and renovation of the Logansport, Indiana, pork plant, purchases of three beef boning plants and various other expansion projects in progress. The Logansport plant commenced operations in the third quarter 1995. -9- 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) IBP filed a report on Form 8-K, dated August 3, 1995 and received by the Commission on August 7, 1995, describing in Item 4 a change in the company's certifying accountants. -10- IBP, inc. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (Amounts in thousands except per share data) 13 Weeks Ended 39 Weeks Ended -------------------- ------------------- September September September September 30, 24, 30, 24, 1995 1994 1995 1994 --------- --------- --------- --------- Net earnings $85,412 $49,155 $223,071 $104,471 ====== ====== ======= ======= PRIMARY EARNINGS PER SHARE Shares used in this computation: Weighted average shares outstanding 47,363 47,428 47,379 47,444 Dilutive effect of shares under employee stock plans 1,092 718 875 606 ------ ------ ------ ------ Common and common equivalent shares 48,455 48,146 48,254 48,050 ====== ====== ====== ====== Primary earnings per share $1.76 $1.02 $4.62 $2.17 ==== ==== ==== ==== FULLY-DILUTED EARNINGS PER SHARE Shares used in this computation: Weighted average shares outstanding per above 47,363 47,428 47,379 47,444 Dilutive effect of shares under employee stock plans 1,186 800 1,232 832 ------ ------ ------ ------ Common and common equivalent shares 48,549 48,228 48,611 48,276 ====== ====== ====== ====== Fully-diluted earnings per share $1.76 $1.02 $4.59 $2.16 ==== ==== ==== ==== -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 November 10, 1995 /s/ Robert L. Peterson Chairman of the Board and Chief Executive Officer /s/ Larry Shipley Larry Shipley Executive Vice President /s/ Craig J. Hart Craig J. Hart Vice President and Controller -12- EX-27 2
5 9-MOS DEC-30-1995 SEP-30-1995 145,855 0 623,701 9,554 304,248 1,116,252 1,328,319 618,590 2,062,003 663,544 305,877 2,375 0 0 990,642 2,063,003 9,507,240 9,507,240 9,029,418 9,029,418 94,723 0 17,428 365,671 142,600 223,071 0 0 0 223,071 4.62 4.59
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