-----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, go+BTlF+2IU+azvfyuQ+b47QciEV4yVEKKiI8Cld3bCPPqq66y432hoUCcf1/55y IojKzHBI6UFFkij0PQmexQ== 0000812128-95-000011.txt : 19950613 0000812128-95-000011.hdr.sgml : 19950613 ACCESSION NUMBER: 0000812128-95-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950131 FILED AS OF DATE: 19950228 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SANDERSON FARMS INC CENTRAL INDEX KEY: 0000812128 STANDARD INDUSTRIAL CLASSIFICATION: 2015 IRS NUMBER: 640615843 STATE OF INCORPORATION: MS FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16567 FILM NUMBER: 95515912 BUSINESS ADDRESS: STREET 1: 225 N 13TH AVE STREET 2: PO BOX 988 CITY: LAUREL STATE: MS ZIP: 39441 BUSINESS PHONE: 6016494030 MAIL ADDRESS: STREET 1: 225 N 13TH AVENUE STREET 2: PO BOX 988 CITY: LAUREL STATE: MS ZIP: 39441 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 1995 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________to_______________ Commission file number 0-16567 Sanderson Farms, Inc. (Exact name of registrant as specified in its charter) Mississippi 64-0615843 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 225 North Thirteenth Avenue Laurel, Mississippi 39440 (Address of principal executive offices) (Zip Code) (601) 649-4030 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed since last report.) 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 (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes X No _____ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes _____ No _____ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $1 Per Share Par Value-----13,613,080 shares outstanding as of January 31, 1995. INDEX SANDERSON FARMS, INC. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed consolidated balance sheets--January 31, 1995 and October 31, 1994 Condensed consolidated statements of income--Three months ended January 31, 1995 and 1994 Condensed consolidated statements of cash flows--Three months ended January 31, 1995 and 1994 Notes to condensed consolidated financial statements --January 31, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II OTHER INFORMATION Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES PART I. FINANCIAL INFORMATION Item 1. Financial Statements
SANDERSON FARMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS January 31, October 31, 1995 1994 (Unaudited) (Note) (In thousands) Assets Current assets Cash and temporary cash investments $ 5,942 $ 4,125 Accounts receivables, net 19,136 18,986 Inventories - Note 2 29,782 29,375 Prepaid Expenses 3,847 3,293 Total current assets 58,707 55,779 Property, plant and equipment 206,205 202,877 Less accumulated depreciation (81,712) (78,110) 124,493 124,767 Other assets 1,267 1,163 Total assets $184,467 $181,709 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued expenses $ 11,595 $ 9,859 Current maturities of long- term debt 226 77 Total current liabilities 11,821 9,936 Long-term debt, less current maturities 55,951 56,176 Deferred income taxes 9,410 9,410 Stockholders' equity - Note 4 Preferred Stock: Series A Junior Participating Preferred Stock, $100 par value: authorized 500,000 shares; none issued Par value to be determined by the Board of Directors: authorized 4,500,000 shares; none issued Common Stock, $1 par value: authorized 100,000,000 shares; issued and outstanding shares - 13,613,080 13,613 9,075 Paid-in capital 2,871 7,410 Retained earnings 90,801 89,702 Total stockholders' equity 107,285 106,187 Total liabilities and stockholders' equity $184,467 $181,709 NOTE: The balance sheet at October 31, 1994 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See notes to condensed consolidated financial statements.
SANDERSON FARMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended January 31, 1995 1994 (In thousands, except share and per share data) Net sales $ 87,569 $ 81,445 Cost and expenses: Cost of sales 80,472 75,428 Selling, general and administrative 3,333 3,439 83,805 78,867 OPERATING INCOME 3,764 2,578 Other income (expense): Interest income 43 25 Interest expense (912) (820) Other (35) 113 (904) (682) INCOME BEFORE INCOME TAXES 2,860 1,896 Income tax expense 1,080 710 NET INCOME $ 1,780 $ 1,186 Earnings per share $ .13 $ .09 Dividends per share $ .05 $ .05 Weighted average shares outstanding 13,613,080 13,613,080 See notes to condensed consolidated financial statements.
SANDERSON FARMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended January 31, 1995 1994 (In thousands) Operating activities Net income $ 1,780 $ 1,186 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,380 3,709 Change in assets and liabilities: Increase in accounts receivable ( 150) ( 361) Increase in inventories ( 407) (1,965) Increase in other assets (745) ( 260) Increase in accounts payable and accrued expenses 1,736 2,825 Total adjustments 4,814 3,948 Net cash provided by operating activities 6,594 5,134 Investing activities Net proceeds from sale of equipment 10 9 Capital expenditures ( 4,028) ( 9,538) Net cash used in investing activities ( 4,018) ( 9,529) Financing activities Principal payments on long-term debt (77) (73) Net borrowings under revolving line of credit -0- 3,000 Dividends paid (682) (681) Net cash provided by (used in) financing activities ( 759) 2,246 Net Increase (decrease) in cash and temporary cash investments 1,817 (2,149) Cash and temporary cash investments at beginning of period 4,125 3,979 Cash and temporary cash investments at end of period $ 5,942 $ 1,830 See notes to condensed consolidated financial statements.
SANDERSON FARMS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) January 31, 1995 NOTE 1 -- BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair presentation have been included. Operating results for the three month period ended January 31, 1995, are not necessarily indicative of the results that may be expected for the year ending October 31, 1995. For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended October 31, 1994. NOTE 2--INVENTORIES The components of inventory were as follows:
January 31, October 31, 1995 1994 (In thousands) Live poultry-broilers and breeders $16,732 $16,453 Feed, eggs and other 3,659 3,795 Processed poultry 2,829 3,005 Processed food 4,313 4,149 Packaging materials 2,249 1,973 $29,782 $29,375
NOTE 3--INCOME TAXES Deferred income taxes relate principally to cash basis temporary differences and depreciation expense which are accounted for differently for financial and income tax purposes. Effective November 1, 1988, the Company could no longer use cash basis accounting for its farming subsidiary because of tax law changes. The taxes on the cash basis temporary differences as of that date will not be payable under current tax laws provided there are no changes in ownership control and future annual revenues exceed 1988 revenues. Management does not anticipate the payment of such taxes related to these cash basis temporary differences during fiscal 1995. NOTE 4-COMMON STOCK During the quarter ended January 31, 1995, the Company's Board of Directors declared a 3 for 2 stock split effected in the form of a stock dividend. All share and per share data presented herein have been restated for the effect of the stock split. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General The Company's poultry operations are integrated through its control of all functions relative to the production of its chicken products, including hatching egg production, hatching, feed manufacturing, raising chickens to marketable age ("grow out"), processing, and marketing. Consistent with the industry, its profitability is substantially impacted by the market price for finished product and feed grains, both of which may fluctuate substantially and exhibit cyclical characteristics typically associated with commodity markets. Other costs, excluding feed, related to the profitability of its poultry operations, including hatching egg production, hatching, growing, and processing cost, are responsive to efficient cost containment programs and management practices. The Company believes that value-added products are subject to less price volatility and generate higher, more consistent profit margins than whole chickens ice packed and shipped in bulk form. To reduce its exposure to market cyclicality that has historically characterized commodity chicken sales, the Company has increasingly concentrated on the production and marketing of value-added product lines with emphasis on product quality, customer service and brand recognition. The Company adds value to its poultry products by performing one or more processing steps beyond the stage where the whole chicken is first saleable as a finished product, such as cutting, deep chilling, packaging and labeling the product. The Company believes that one of its major strengths is its ability to change its product mix to meet customer demands. The Company's processed and prepared foods product line includes over 100 institutional and consumer packaged food items that it sells nationally and regionally, primarily to distributors, food service establishments and retailers. A majority of the prepared food items are made to the specifications of food service users. On January 26, 1995, the Company announced plans to add a second shift at its poultry processing plant in Pike County, Mississippi. The addition of the second shift will increase the plants total processing capacity by 600,000 birds per week and will increase Sanderson Farms' total processing capacity to more than 4 million birds per week. Following the development of production capacity to support the expanded processing level, the second shift is expected to begin operations in the spring of 1996. The Company announced plans to construct a new poultry complex in Texas at the annual stockholders meeting on February 23, 1995. The state-of-art complex will include a feed mill, hatchery, and poultry processing plant with capacity to process 1.2 million birds per week. At full capacity, it will employ approximately 1,400 people and require 280 contract growers. Initial operations are scheduled to begin in the spring of 1997. Results of Operations Net sales for the three months ended January 31, 1995, increased $6.1 million or 7.5% as compared to the three months ended January 31, 1994. The increase in net sales is due to a 10.7% increase in pounds of products sold and a 2.9% decrease in the average sale price of products as compared to the first quarter of fiscal 1994. During the first quarter of fiscal 1995 the pounds of poultry products sold increased 11.4%, while the average sale price of poultry products decreased 3.6% as compared to the first quarter of fiscal 1994. Market prices for poultry, as measured by the Georgia dock prices, ranged from a low of $.5125 to a high of $.5300 during the first quarter of fiscal 1995, as compared to a low of $ .5250 to a high of $.5525 in the first quarter of fiscal 1994. For the three months ended January 31, 1995 as compared to the three months ended January 31, 1994, the prepared foods operations reported increases in both the average sale price and pounds of products sold of 5.7% and 2.5%, respectively. Cost of sales for the first three months during fiscal 1995 as compared to the same period in fiscal 1994, increased $5.0 million or 6.7%. Costs of sales of poultry products increased $4.7 million or 7.3% during the first quarter of fiscal 1995 as compared to the first quarter of fiscal 1994. The increase in the cost of poultry sales was a result of the additional pounds of poultry products sold and lower costs of feed grains. A simple average of the corn and soy meal cash market prices for fiscal 1995 reflected a decrease of 18.0% and 23.0%, respectively, when compared to fiscal 1994. For the three months ended January 31, 1995, cost of sales of prepared food products sold increased $0.3 million or 3.1%, primarily due to the increase in the pounds of prepared food products sold. During the first quarter of fiscal 1995 as compared to the first quarter of fiscal 1994, the Company's average gross profit per pound was adversely affected by lower prices for poultry products. However, the decrease in the costs of feed grains and the increased margins from prepared food products more than offset the decrease in the average sale price of poultry products. Selling, general and administrative expenses decreased $.1 million or 3.1% during the quarter ended January 31, 1995 as compared to the quarter ended January 31, 1994. Interest expense increased $.1 million during the first quarter of fiscal 1995 as compared to the same period during fiscal 1994. The increase in interest expense resulted primarily from higher interest rates. The Company's effective tax rate for the three months ended January 31, 1995 was 37.8% as compared to 37.4 during the three months ended January 31, 1994. Liquidity and Capital Resources The Company's working capital on January 31, 1995 was $46.9 million and its current ratio was 5.0 to 1 as compared to working capital of $45.8 million and a current ratio of approximately 5.6 to 1 at October 31, 1994. During the three months ended January 31, 1995 the Company expended $4.0 million on planned capital projects. The Company's outstanding debt on its $70.0 million revolving credit agreement remained at $30.0 million at January 31, 1995. The capital budget for fiscal 1995 as of January 31, 1995, has been increased to $23.9 million from $23.2 as of October 31, 1994. This increase of $.7 million pertains to items not approved at the end of the fiscal year pending justification, field trial and alternate costing. PART II. OTHER INFORMATION Item 5. Other Information On June 30, 1994, an election was held by the National Labor Relations Board at the Company's Collins, Mississippi processing plant as a result of a petition filed by the Laborer's International union of North America Local 693 seeking recognition as the exclusive collective bargaining representative of certain employees at that plant. The results of the election were inconclusive, with 430 votes cast in favor of union representation, 413 votes cast against union representation, and 29 votes not opened or counted because of challenges to their eligibility. On July 7, 1994, the Company filed its objections with the National Labor Relations Board asking that Board to set aside the election as a result of improper election activity on the part of the union, and to open 20 ballots cast by employees at the child care center. A hearing was conducted, and on October 19, 1994, a hearing officer issued a report adverse to the Company. Exceptions to the report were filed by the Company with the National Labor Relations Board in Washington D.C. on November 16, 1994. This matter is pending. On January 27, 1995, a National Labor Relations Board election was held at the Company's Hazlehurst, Mississippi processing plant as a result of a petition filed by the Laborer's International Union of North America Local 693 seeking recognition as the exclusive collective bargaining representative of certain employees at that plant. 223 votes were cast in favor of union representation, 195 cast against union representation, with 21 ballots not opened or counted because of challenges to their eligibility. On February 3, 1995, the Company filed objections with the National Labor Relations Board asking that Board to set aside the election as a result of improper election activity on the part of the union. This matter is pending. Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits are filed with this report (15) Letter re: Unaudited financial information (b) The Company is a party of various agreements defining the rights of holders of long-term debt of the Company, but no single agreement authorized securities in an amount which exceeds 10% of the total assets of the Company. Upon request of the Commission, the Company will furnish a copy of such agreements to the Commission. Such agreements are therefore omitted as exhibits as permitted by Item 601(b)(4)(v) of Regulation S-K. (c) The Company did not file any reports on Form 8-K during the three months ended January 31, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by he undersigned thereunto duly authorized. _____ SANDERSON FARMS, INC. ____ (Registrant) Date: February 28, 1995 By: D. Michael Cockrell D. Michael Cockrell Treasurer and Chief Financial Officer Date: February 28, 1995 By: James A. Grimes James A. Grimes Secretary and Principal Accounting Officer EXHIBIT 15 INDEPENDENT AUDITORS' REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION Shareholders and Board of Directors Sanderson Farms, Inc. We have reviewed the accompanying condensed consolidated balance sheet of Sanderson Farms, Inc. and subsidiaries as of January 31, 1995, and the related condensed consolidated statements of income and cash flows for the three-months ended January 31, 1995 and 1994. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Sanderson Farms, Inc. and subsidiaries as of October 31, 1994, and the related consolidated statements of income, stockholders' equity and cash flows for the year then ended (not presented herein) and in our report dated December 15, 1994, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of October 31, 1994, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. ERNST & YOUNG LLP Jackson, Mississippi February 23, 1995 EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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