-----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, Lc+zFwWdWd3GklRFGsHNxx2LkIY5aOD0GR5FddN6GOYcPAPrzsLarxr9g95Fuz25 EQPbqeWG8YTaLwDAKMSL5Q== 0000916641-94-000112.txt : 19941003 0000916641-94-000112.hdr.sgml : 19941003 ACCESSION NUMBER: 0000916641-94-000112 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940731 FILED AS OF DATE: 19940930 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMITHFIELD FOODS INC CENTRAL INDEX KEY: 0000091388 STANDARD INDUSTRIAL CLASSIFICATION: 2011 IRS NUMBER: 520845861 STATE OF INCORPORATION: DE FISCAL YEAR END: 0427 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02258 FILM NUMBER: 94551094 BUSINESS ADDRESS: STREET 1: 501 N CHURCH ST CITY: SMITHFIELD STATE: VA ZIP: 23430 BUSINESS PHONE: 8043574321 MAIL ADDRESS: STREET 1: 501 N CHURCH STREET CITY: SMITHFIELD STATE: VA ZIP: 23430 FORMER COMPANY: FORMER CONFORMED NAME: LIBERTY EQUITIES CORP DATE OF NAME CHANGE: 19710221 FORMER COMPANY: FORMER CONFORMED NAME: LIBERTY REAL ESTATE TRUST DATE OF NAME CHANGE: 19661113 10-Q 1 FORM 10-Q 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 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended July 31, 1994 Commission File Number 0-2258 SMITHFIELD FOODS, INC. 501 North Church Street Smithfield, Virginia 23430 (804) 357-4321 Delaware 52-0845861 (State of Incorporation) (I.R.S. Employer Identification Number) 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 Shares outstanding Class at September 2, 1994 Common Stock, $.50 value per share 16,284,026 1-11 SMITHFIELD FOODS, INC. CONTENTS Page PART I. FINANCIAL INFORMATION Item 1. Financial Statements. Consolidated Balance Sheets - July 31, 1994 and May 1, 1994 3-4 Consolidated Statements of Operations - 13 Weeks Ended July 31, 1994 and August 1, 1993 5 Consolidated Statements of Cash Flows - 13 Weeks Ended July 31, 1994 and August 1, 1993 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 8-9 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. 9-10 Item 6. Exhibits and Reports on Form 8-K. 10 2-11 PART I. FINANCIAL INFORMATION SMITHFIELD FOODS, INC. CONSOLIDATED BALANCE SHEETS July 31, May 1, (In thousands) 1994 1994 ASSETS (unaudited) Current assets: Cash $ 8,310 $ 12,350 Accounts receivable less allowances of $484 and $458 63,634 60,586 Inventories 136,900 119,269 Advances to joint hog production arrangements 22,003 20,178 Prepaid expenses and other current assets 15,326 13,946 Total current assets 246,173 226,329 Property, plant and equipment 356,380 330,133 Less accumulated depreciation (128,515) (124,112) Net property, plant and equipment 227,865 206,021 Other assets: Cost in excess of net assets acquired less accumulated amortization of $1,499 and $1,456 7,507 4,385 Investments in partnerships 10,613 10,672 Other 5,022 4,872 Total other assets 23,142 19,929 $ 497,180 $ 452,279 See accompanying notes to consolidated financial statements. 3-11 SMITHFIELD FOODS, INC. CONSOLIDATED BALANCE SHEETS July 31, May 2, (In thousands) 1994 1994 LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited) Current liabilities: Notes payable $ 49,030 $ 52,135 Current portion of long-term debt and capital lease obligations 9,243 9,655 Accounts payable 49,705 48,017 Accrued expenses and other current liabilities 32,297 31,840 Income taxes payable 320 3,153 Total current liabilities 140,595 144,800 Long-term debt and capital lease obligations 167,828 118,942 Other noncurrent liabilities: Deferred income taxes 11,630 11,767 Pension and post-retirement benefits 4,855 5,220 Minority interest 2,148 3,836 Other 2,866 2,764 Total other noncurrent liabilities 21,499 23,587 Series B 6.75% cumulative convertible redeemable preferred stock, $1.00 par value, 1,000 shares authorized, issued and outstanding 10,000 10,000 Stockholders' equity: Preferred stock $1.00 par value, authorized 1,000,000 shares - - Common stock, $.50 par value, authorized 25,000,000 shares, issued 16,721,026 and 16,713,126 shares 8,361 8,357 Additional paid-in capital 48,066 47,964 Retained earnings 108,474 106,272 Treasury stock, at cost, 437,000 shares (7,643) (7,643) Total stockholders' equity 157,258 154,950 $ 497,180 $ 452,279 See accompanying notes to consolidated financial statements. 4-11 SMITHFIELD FOODS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) 13 Weeks 13 Weeks Ended Ended (In thousands, except per share data) July 31, 1994 August 1, 1993 Sales $ 342,655 $ 299,230 Costs and expenses: Cost of sales 295,297 260,941 Selling, general and administrative 35,707 30,321 Depreciation 4,700 5,751 Interest 3,190 2,670 338,894 299,683 Income (loss) before income taxes 3,761 (453) Income taxes (credit) 1,391 (84) Net income (loss) $ 2,370 $ (369) Net income (loss) available for common stockholders $ 2,201 $ (538) Net income (loss) per share $ .13 $ (.03) Weighted average shares outstanding 16,987 16,724
See accompanying notes to consolidated financial statements. 5-11 SMITHFIELD FOODS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 13 Weeks 13 Weeks Ended Ended (Dollars in thousands) July 31, 1994 August 1, 1993 Cash flows from operating activities: Net income (loss) $ 2,370 $ (369) Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 5,100 6,113 Gain on sale of property and equipment 222 15 Increase in accounts receivable (3,048) (4,545) Increase in inventories (17,631) (27,462) (Increase) decrease in prepaid expenses and other current assets (1,380) 243 Increase in other assets (3,672) (207) Increase (decrease) in other liabilities (951) 4,830 Increase (decrease) in deferred income taxes (137) 366 Net cash used in operating activities (19,127) (21,016) Cash flows from investing activities: Capital expenditures (27,381) (7,820) Proceeds from sale of property, plant and equipment 615 326 Decrease in investment in partnerships 58 - (Increase) decrease in advances to joint hog production arrangements (1,825) 4,500 Other - (10) Net cash used in investing activities (28,533) (3,004) Cash flows from financing activities: Net borrowings on notes payable to banks (3,105) 26,265 Increase in long-term debt 50,000 2,967 Principal payments on long-term debt and capital lease obligations (1,525) (1,453) Dividends on preferred stock (169) (169) Proceeds from exercise of stock options 107 102 Increase (decrease) in minority interest (1,688) 224 Net cash provided by financing activities 43,620 27,936 Net increase (decrease) in cash (4,040) 3,916 Cash at beginning of quarter 12,350 3,079 Cash at end of quarter $ 8,310 $ 6,995 Supplemental disclosures of cash flow information: Cash paid during the quarter for: Interest (net of amount capitalized) $ 2,444 $ 3,328 Income taxes $ 5,071 $ 172 See accompanying notes to consolidated financial statements. 6-11 SMITHFIELD FOODS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) The Notes to Financial Statements included in Registrant's Annual Report for the fiscal year ended May 1, 1994 should be read in conjunction with the quarterly financial statements. (2) The financial information furnished herein is unaudited. The information reflects all adjustments (which included only normal recurring adjustments) which are, in the opinion of management, necessary to a fair statement of the results of operations for the interim periods included in this report. (3) Inventories consist of the following: July 31, May 1, (In thousands) 1994 1994 Fresh and processed meats $ 106,914 $ 90,219 Livestock and manufacturing supplies 21,401 19,809 Other 8,585 9,241 $ 136,900 $ 119,269 (4) In the third quarter of fiscal 1994, the Registrant revised the estimated useful lives of certain assets. This change in accounting estimate reduced depreciation charges by $1,934,000 and increased net income and net income per share by $1,218,000 and $.07, respectively, in the first quarter of fiscal 1995. 7-11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 13 Weeks Ended July 31, 1994 - 13 Weeks Ended August 1, 1993 Sales in the first quarter of fiscal 1995 increased $43.4 million, or 14.5%, from the same quarter a year ago. The increase was the result of a 15.5% increase in sales tonnage offset by a 1.5% decrease in unit sales prices. The increase in sales tonnage was the result of a 24.0% increase in fresh pork tonnage combined with a 4.4% increase in processed meats tonnage. The increase in fresh pork tonnage reflected the Registrant's commitment to expand its sales of fresh pork. Cost of sales increased $34.3 million, or 13.2%, in the first quarter of fiscal 1995, due primarily to increased sales tonnage offset by decreased raw material costs due to lower live hog prices. Gross profit (sales less cost of sales) in the first quarter of fiscal 1995 increased by $9.1 million, or 23.5%, compared to the same quarter of fiscal 1994. This increase in gross profit primarily resulted from higher margins on sales of fresh pork and processed meats and substantially increased sales tonnage of fresh pork. Gross profit also reflected sharply improved results at Brown's of Carolina, Inc. ("Brown's"), the Registrant's hog production operation. Selling, general and administrative expenses increased $5.4 million, or 17.8%, in the first quarter of fiscal 1995. The increase reflected higher distribution and sales and marketing costs associated with the increased sales tonnage and higher storage costs associated with increased inventories of hams for the fall holiday season. Depreciation expense decreased $1.1 million, or 18.3%, in the first quarter of fiscal 1995 from the same quarter a year ago. The decrease reflected a revision in the estimated useful lives of certain assets offset by increased depreciation charges related to expansion at Brown's. This change in accounting estimate reduced depreciation charges and increased net income in the first quarter by $1.9 million and $1.2 million, respectively. Interest expense increased $.5 million, or 19.5%, in the first quarter of fiscal 1995, reflecting significantly higher long-term debt related to the funding of capital projects, including improvements at the Bladen County plant and additional hog production facilities at Brown's. Reflecting the factors discussed above, net income increased to $2.4 million in the first quarter of 1995 compared to a net loss of $.4 million in the same quarter of the prior fiscal year. LIQUIDITY AND CAPITAL RESOURCES During the first quarter of fiscal 1995, the Registrant's cash used by operations was $19.1 million, largely the result of a significant increase in the levels of inventories associated with the build up of freezer stocks for the fall holiday season. Traditionally, the Registrant builds large inventories of hams in the spring and summer months which are sold during the heavy fall selling season. 8-11 Capital expenditures in the first quarter of fiscal 1995 totaled $27.4 million, consisting primarily of $22.0 million related to capital improvements at the Bladen County plant, including a rapid carcass chilling system designed to improve fresh pork quality, additional refrigeration that will accommodate the start-up of a second shift, and a conversion room that will sharply increase production capacity for boneless, value-added fresh pork products. In addition, the Registrant expended $3.5 million related to hog production facilities at Brown's. The significant increases in the levels of inventories and capital expenditures were funded with $46.9 million in borrowings under existing lines of credit. In August, the Registrant placed $50.0 million of three- year notes with a bank, secured by the Bladen County plant. The notes bear interest at a rate ranging from prime to three-quarters of a point above prime. The note agreement requires that the Registrant prepay the loan with the proceeds of any new long-term financings. As a result of the placement of these notes, the Registrant presented $50.0 million of notes payable as long-term debt as of July 31, 1994. As of July 31, 1994, the Registrant had definitive commitments of $23.6 million for capital improvements for the remainder of fiscal 1995, primarily related to the improvements at the Bladen County plant and the construction of new hog production facilities at Brown's. PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. (a) Annual Meeting of Stockholders held August 31, 1994. (b) and (c) There were 16,284,026 shares of Registrant's Common stock outstanding as of July 15, 1994, the record date for the 1994 Annual Meeting of Stockholders. A total of 12,192,846 shares were voted at the meeting. (b) All of management's nominees for directors of the Registrant were elected with the following vote: Votes Broker Director Nominee Votes For Withheld Non-Votes F. J. Faison, Jr. 11,953,689 239,157 0 Joel W. Greenberg 11,952,689 240,157 0 Cecil W. Gwaltney 11,953,489 239,357 0 George E. Hamilton, Jr. 11,953,489 239,357 0 Richard J. Holland 11,953,689 239,157 0 Roger R. Kapella 11,953,689 239,157 0 Lewis R. Little 11,953,689 239,157 0 Joseph W. Luter, III 11,953,689 239,157 0 Robert W. Manly 11,953,689 239,157 0 Wendell H. Murphy 11,953,689 239,157 0 William H. Prestage 11,953,689 239,157 0 Aaron D. Trub 11,953,689 239,157 0 9-11 (c) All of the Registrant's proposals were approved or ratified with the following votes: Votes Votes Broker Votes For Against Abstaining Non-Votes (1) Proposal to approve 10,398,569 503,597 894,356 396,324 the amendment and restatement of the Registrant's 1992 Stock Incentive Plan. (2) Proposal to approve an 10,672,755 225,975 897,792 396,324 amendment to the Registrant's 1984 Stock Option Plan. (3) Proposal to approve the 10,533,002 358,383 892,927 408,534 Registrant's Incentive Bonus Plan. (4) Proposal to ratify the 11,328,454 62,734 801,658 0 selection of Arthur Andersen & Co. as independent public accountants of the Registrant for the fiscal year ending April 30, 1995. (d) Not applicable.
Item 5. Other Information. In an election held on August 25, 1994, the employees at the Registrant's plant in Bladen County, North Carolina, rejected efforts by the United Food and Commercial Workers Union to represent them as their bargaining agent. Item 6. Exhibits and Reports on Form 8-K. A. Exhibits. Exhibit 11 - Computation of Net Income (Loss) Per Share B. Reports on Form 8-K. None 10-11 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 the undersigned thereunto duly authorized. SMITHFIELD FOODS, INC. /s/ Aaron D. Trub Aaron D. Trub Vice President, Secretary & Treasurer /s/ C. Larry Pope C. Larry Pope Controller Date: September 2, 1994 11-11 EX-11 2 EXHIBIT 11 SMITHFIELD FOODS, INC. EXHIBIT 11 COMPUTATION OF NET INCOME (LOSS) PER SHARE Net income (loss) and the number of shares and common equivalent shares used in the computation of net income (loss) per share were computed as follows: 13 Weeks 13 Weeks Ended Ended Income (loss) (in thousands) July 31, 1994 Aug. 1, 1993 Net income (loss) $ 2,370 $ (369) Dividends accumulated for Series B preferred stock (169) (169) Net income (loss) available for common stockholders $ 2,201 $ (538) Shares Weighted average shares: Outstanding 16,279 16,275 Net effect of dilutive stock options 708 449 Shares for computation 16,987 16,724 Net income (loss) per share $ .13 $ (.03) EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 QTR-1 APR-30-1995 JUL-31-1994 8310 0 64118 484 136900 246173 356380 128515 497180 140595 167828 8361 10000 0 148897 497180 342655 342655 295297 295297 0 00 3190 3761 1391 2370 0 0 0 2370 .13 0
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