Officials of IBP, inc. (NYSE:IBP) yesterday announced that second quarter net earnings totaled $42 million or $0.40 per diluted share, compared to $46 million or $0.43 per diluted share, during the same period in 2000. Holding aside the pre-tax charge for variable plan accounting for stock based compensation that totaled $12 million for the second quarter of 2001 and $1 million for the same period last year, net earnings for the quarter reached $52 million, exceeding year ago levels by 9%. Net sales for the second quarter totaled $4.4 billion versus $4.3 billion last year.
Net earnings for the first half of the year, before unusual and extraordinary items and accounting changes, totaled $62 million or $0.58 per diluted share compared to $107 million or $0.97 per diluted share last year. Net sales for the first six months of 2001 totaled $8.5 billion versus $8.2 billion for the same period in 2000. Unusual first quarter 2000 items that reduced prior year earnings included $42 million of pre-tax ($26 million net of tax) merger-related costs and bad debt provisions.
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“As anticipated, results across our beef complex improved significantly over the winter weather impacted first quarter,” Robert L. Peterson, IBP chairman and chief executive officer, said. “Beef results were also up slightly over the second quarter of last year. Meanwhile, strong marketplace dynamics in the pork sector drove dramatic year-over-year quarterly improvements with operating performance up six times over last year’s level.”
Operating earnings for IBP’s combined fresh meat operations during the quarter were $114 million, up 16% from the $98 million generated during the second quarter of 2000. Net outside sales for these segments were $3.6 billion, up 4% from the $3.5 billion a year ago. Live cattle prices were up 6% in the second quarter compared to the same period last year, while hog prices increased 3%. Annual commercial beef production is forecast to be 4% lower than 2000. At the same time pork production should equal or exceed last year.
Total export sales for the quarter were up slightly compared to the same period last year, while export sales for the first six months were down 2%. Product shipments to the Far East remained approximately 5% below year ago levels, although average sale prices improved over 1% for the quarter. Exports into Mexico, Europe and Russia continued to grow beyond last year’s levels.
The Foodbrands America segment reported operating losses of $5 million for the second quarter and $10 million, excluding a first quarter $7 million gain on the sale of a production facility, for the first six months of 2001. This compares to operating earnings of $2 million for the second quarter and $15 million, excluding unusual items, for the first half of 2000. Formula pricing practices in conjunction with higher raw material cost trend lines, particularly for beef and pork trimmings, have pressured margins during the first half of the year. Market share gains achieved across several product segments set the stage for significant margin expansion with moderating raw material price trends.
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By GlobalDataBased upon growing end product demand and the profitable contribution of its first dedicated case ready facility, IBP expanded its production of next generation meat products with the opening of a second major processing plant. In May, operations began at a new plant in Goodlettsville, Tennessee, more than doubling the company’s capacity to produce packaged cuts of fresh beef and pork, such as roasts, steaks and chops, that are ready for retail grocers to place directly into the meat case. Finished retail ready products find their way directly to the supermarket case under the company’s new Thomas E. Wilson(TM) brand name.
Plans continue for a national rollout of IBP’s new Thomas E. Wilson(TM) prepared foods. The microwaveable product line will be supplied by a new plant at Council Bluffs, Iowa, currently scheduled to begin production in early fall. The facility will produce beef and pork items that have been pre-cooked and can be prepared by the consumer in five minutes or less. IBP began marketing Thomas E. Wilson(TM) cooked beef and pork in Indiana and Michigan. Since its introduction last fall, the product line has outperformed competing brands in the test markets, generating strong repeat purchases and growing consumer acceptance.
IBP is party to a definitive merger agreement with Tyson Foods, Inc. For more information, please refer to IBP’s Schedule 14D-9, as amended, filed with the Securities and Exchange Commission.
IBP is the world’s leading producer of high quality fresh beef and pork, and supplies premium, fully prepared meats and other consumer-ready foods for the retail and foodservice industries. The company employs more than 52,000 people.
IBP, inc. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 30,
2001 2000
————- ————
ASSETS (unaudited)
——
CURRENT ASSETS:
Cash and cash equivalents $ 19,262 $ 29,970
Accounts receivable, less allowance
for doubtful accounts of $13,579
and $19,898 705,488 673,485
Inventories 982,954 873,544
Deferred income tax benefits and
prepaid expenses 93,834 88,595
———– ———–
TOTAL CURRENT ASSETS 1,801,538 1,665,594
Property, plant and equipment
less accumulated depreciation
of $1,155,614 and $1,089,775 1,731,900 1,630,774
Goodwill, net of accumulated
amortization of $235,827 and $221,160 946,660 961,340
Deferred income tax benefits and
other assets 172,255 168,548
———– ———–
$ 4,652,353 $ 4,426,256
=========== ===========
LIABILITIES AND STOCKHOLDERS’ EQUITY
————————————
CURRENT LIABILITIES:
Notes payable to banks 1,023,000 775,000
Accounts payable 432,079 516,030
Deferred income taxes and other
current liabilities 392,182 373,019
Current portion of long-term debt 5,780 55,351
———– ———–
TOTAL CURRENT LIABILITIES 1,853,041 1,719,400
———– ———–
Long-term debt and capital lease
obligations 687,652 658,719
———– ———–
Deferred income taxes and other
liabilities 199,774 198,626
———– ———–
STOCKHOLDERS’ EQUITY:
Common stock at par value 5,450 5,450
Additional paid-in capital 442,527 443,388
Retained earnings 1,537,265 1,481,004
Accumulated other comprehensive income (12,726) (11,261)
Treasury stock (60,630) (69,070)
———– ———–
TOTAL STOCKHOLDERS’ EQUITY 1,911,886 1,849,511
———– ———–
$ 4,652,353 $ 4,426,256
=========== ===========
IBP, inc. AND SUBSIDIARIES
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF EARNINGS
(In thousands, except per share data)
13 Weeks Ended 26 Weeks Ended
———————– ———————–
Restated Restated
June 30, June 24, June 30, June 24,
2001 2000 2001 2000
———– ———– ———– ———–
Net sales $4,359,304 $4,268,866 $8,485,941 $8,224,257
Cost of products sold 4,114,367 4,020,762 8,065,286 7,740,841
———– ———– ———– ———–
Gross profit 244,937 248,104 420,655 483,416
Selling, general and
administrative expense 150,968 151,069 275,310 280,565
(Gain) on sale of
production facility — — (6,897) —
Nonrecurring merger-
related expense — — — 31,299
———– ———– ———– ———–
EARNINGS FROM
OPERATIONS 93,969 97,035 152,242 171,552
Interest expense, net 24,020 21,635 50,026 42,950
———– ———– ———– ———–
Earnings before income
taxes, accounting
change and
extraordinary item 69,949 75,400 102,216 128,602
Income tax expense 27,630 28,958 39,900 48,424
———– ———– ———– ———–
Earnings before
accounting change and
extraordinary item 42,319 46,442 62,316 80,178
Cumulative effect of
change in accounting
principle — — (115) (2,429)
Extraordinary loss on
early extinguishment
of debt, less
applicable taxes — — (633) (15,037)
———– ———– ———– ———–
NET EARNINGS $ 42,319 $ 46,442 $ 61,568 $ 62,712
=========== =========== =========== ===========
Earnings per common
share:
Earnings before
cumulative effect of
accounting change and
extraordinary item $ .40 $ .44 $ .59 $ .73
Cumulative effect of
change in accounting
principle — — — (.02)
Extraordinary item — — (.01) (.14)
———– ———– ———– ———–
Net earnings $ .40 $ .44 $ .58 $ .57
=========== =========== =========== ===========
Earnings per common
share – assuming
dilution:
Earnings before
cumulative effect of
accounting change and
extraordinary item $ .40 $ .43 $ .58 $ .72
Cumulative effect of
change in accounting
principle — — — (.02)
Extraordinary item — — (.01) (.14)
———– ———– ———– ———–
Net earnings $ .40 $ .43 $ .57 $ .56
=========== =========== =========== ===========
IBP, inc. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA
(Unaudited, in thousands)
13 Weeks Ended 26 Weeks Ended
———————— ————————-
June 30, June 24, June 30, June 24,
2001 2000 2001 2000
———– ———— ———— ————
Dividends per share $ .025 $ .025 $ .05 $ .05
Weighted average
common shares
outstanding 106,047 106,019 106,001 106,030
Diluted EPS
denominator 106,687 107,178 106,932 107,334
Preferred stock
dividends and
accretion $ — $ — $ — $ 2,566
Capital
expenditures $ 92,310 $ 105,838 $ 196,410 $ 181,501
Depreciation and
amortization
expense $ 45,464 $ 35,392 $ 85,963 $ 69,288
Amortization of
intangible assets $ 8,073 $ 8,904 $ 16,046 $ 17,421
SEGMENT INFORMATION:
Net sales to unaffiliated
customers:
Beef Carcass $ 252,667 $ 274,776 $ 505,217 $ 556,864
Beef Processing 2,084,321 2,081,096 4,052,833 4,030,358
Pork 586,582 617,888 1,145,390 1,191,272
All Other 668,405 488,324 1,244,252 930,510
———– ———— ———— ————
Fresh Meats 3,591,975 3,462,084 6,947,692 6,709,004
Foodbrands America 767,329 806,782 1,538,249 1,515,253
———– ———— ———— ————
$ 4,359,304 $ 4,268,866 $ 8,485,941 $ 8,224,257
=========== ============ ============ ============
Earnings (loss) from
operations:
Beef Carcass $ 59,164 $ 22,609 $ 72,742 $ 64,662
Beef Processing 4,962 45,080 (7,726) 58,399
Pork 20,722 3,674 43,757 29,872
All Other 28,723 26,946 52,025 49,455
———– ———— ———— ————
Fresh Meats 113,571 98,309 160,798 202,388
Foodbrands America (4,992) 2,111 (2,971) (27,008)
———– ———— ———— ————
Total from segments 108,579 100,420 157,827 175,380
Corporate (14,610) (3,385) (5,585) (3,828)
———– ———— ———— ————
$ 93,969 $ 97,035 $ 152,242 $ 171,552
=========== ============ ============ ============
