EXHIBIT 99.1
[Letterhead of Sanderson Farms, Inc.]
CONTACT: MIKE COCKRELL
TREASURER & CHIEF FINANCIAL OFFICER
(601) 649-4030
SANDERSON FARMS, INC. REPORTS
SECOND QUARTER RESULTS FOR FISCAL 2003
LAUREL, Miss. (May 27, 2003) -- Sanderson Farms, Inc. (NASDAQ/NM: SAFM) today
reported results for the second quarter and six months ended April 30, 2003.
Net sales for the second quarter of fiscal 2003 were $201.2 million
compared with $175.4 million for the same period a year ago. For the quarter,
the Company reported net income of $12.8 million, or $0.98 per diluted share,
compared with net income of $7.7 million, or $0.58 per diluted share, for the
second quarter of fiscal 2002. During the second quarter of fiscal 2003, the
Company recognized $3.8 million, net of income taxes, or $0.29 per diluted
share, for Sanderson Farms' share in the partial settlement of the lawsuits
against vitamin and methionine suppliers for overcharges, compared to $1.6
million, or $0.12 per diluted share, during the second quarter of last year.
Excluding these special items, net income was $9.0 million, or $0.69 per diluted
share, for the current quarter compared to $6.1 million, or $0.46 per diluted
share, for last year's second quarter.
Net sales for the first six months of fiscal 2003 were $385.4 million
compared with $339.9 million for the first half of fiscal 2002. Net income for
the first half of the year totaled $18.1 million, or $1.38 per diluted share,
compared with net income of $13.0 million, or $0.97 per diluted share, for the
first six months of last year. During the first half of fiscal 2003, the Company
recognized $7.6 million, net of income taxes, or $0.58 per diluted share, for
Sanderson Farms' share in the partial settlement of lawsuits against vitamin and
methionine suppliers for overcharges, compared to $1.6 million, or $0.12 per
diluted share, during the first half of last year. Excluding these special
items, net income was $10.5 million, or $0.80 per diluted share, for the first
half of this year, compared to $11.4 million, or $0.85 per diluted share, for
the first half of last year.
"Sanderson Farms' solid financial and operating performance continued
during the second fiscal quarter of 2003," said Joe F. Sanderson, Jr., president
and chief executive officer of Sanderson Farms, Inc. "While these results
reflect continued strength in our operations, they also reflect modest
improvement in certain sectors of the chicken market compared with a year ago.
We expect further improvement in the poultry markets as we enter the summer
months, which historically have been the period of highest demand for chicken
products. We are further encouraged that the leading production indicators of
protein supplies signal no significant increase for the balance of this fiscal
year. We began to see evidence of an improving market in May as the market price
for boneless breast meat improved to over $1.70 per pound from $1.50 on May 1,
while the Georgia dock price has improved each week during May, and currently
stands at 65.00 cents per pound."
-MORE-
Sanderson Farms Reports Second Quarter 2003 Results
Page 2
May 27, 2003
As measured by a simple average of the Georgia dock price for whole
chickens, prices increased approximately 1.1% in the Company's second fiscal
quarter compared with the same period in 2002, while decreasing 0.8% for the
first six months of the fiscal year compared with the first half of last year.
Bulk leg quarter prices decreased approximately 1.5% during the quarter compared
with last year's second quarter, and have decreased 18.2% for the first half of
the year compared with the first half of last year. On the other hand, boneless
breast meat prices during the quarter were approximately 17.8% higher than the
prior-year period, and were up 12.7% through the first six months of the year.
Wing prices averaged 69.7 cents per pound, up 9.23% from the average of 63.81
cents per pound during the second quarter of fiscal 2002. Market prices for corn
and soybean meal, our primary feed ingredients, increased 18.1% and 12.6%,
respectively, compared with the second quarter a year ago.
"We are pleased with our overall execution during the second fiscal
quarter," continued Sanderson. "This quarter marked the one-year anniversary of
the conversion of our Hazlehurst, Mississippi processing plant from a small bird
plant to a larger bird plant, and we are pleased with the solid, steady
improvement we have seen since the conversion. We began processing additional
head on the night shift of our Collins, Mississippi, processing plant in May. As
a result, production at this plant will increase to approximately 1,075,000 head
per week, moving closer to its 1.2 million head per week capacity."
"As noted, leading indicators of future production, such as weekly
broiler egg sets and chick placements, continue to indicate improved market
conditions during the current year. As a result, we remain comfortable with
earnings estimates for fiscal 2003 in a range of $2.40 to $2.50 per diluted
share, excluding non-recurring items such as the vitamin and methionine lawsuit
recoveries described above."
Sanderson Farms will hold a conference call to discuss this press
release today, May 27, 2003, at 10:00 a.m. Central, 11:00 a.m. Eastern.
Investors will have the opportunity to listen to a live Internet broadcast of
the conference call through the Company's Web site at www.sandersonfarms.com or
through www.companyboardroom.com. To listen to the live call, please go to the
Web site at least 15 minutes early to register, download, and install any
necessary audio software. For those who cannot listen to the live broadcast, an
Internet replay will be available shortly after the call and continue through
June 27, 2003.
Sanderson Farms, Inc. is engaged in the production, processing,
marketing and distribution of fresh and frozen chicken and other prepared food
items. Its shares trade on the Nasdaq Stock Market under the symbol SAFM.
This press release contains forward-looking statements based on
management's current views and assumptions. Actual results and events may
differ. For a discussion of these matters, please refer to the "Cautionary
Statement Regarding Risks and Uncertainties That May Affect Future Performance"
in Item 7 of the Company's 2002 Annual Report on Form 10-K and please refer to
the cautionary statement found in Management's Discussion and Analysis of
Financial Condition and Results of Operations under the heading "General" in
Part I, Item 2 of the Quarterly Report on Form 10-Q for the Company's second
quarter ended April 30, 2003.
-MORE-
Sanderson Farms Reports Second Quarter 2003 Results
Page 3
May 27, 2003
SANDERSON FARMS, INC. AND SUBSIDIARIES
(Unaudited)
(In thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
APRIL 30, APRIL 30,
------------------------ ------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Net sales $201,184 $175,413 $385,372 $339,940
Costs and expenses:
Cost of sales 172,803 155,560 340,396 303,663
Selling, general and administrative 7,059 6,471 14,250 13,398
-------- -------- -------- --------
179,862 162,031 354,646 317,061
-------- -------- -------- --------
Operating income 21,322 13,382 30,726 22,879
Other income (expense):
Interest income 12 10 26 51
Interest expense (694) (953) (1,432) (1,954)
Other 41 (6) (37) (3)
-------- -------- -------- --------
(641) (949) (1,443) (1,906)
-------- -------- -------- --------
Income before income taxes 20,681 12,433 29,283 20,973
Income tax expense 7,865 4,725 11,130 7,970
-------- -------- -------- --------
Net income $ 12,816 $ 7,708 $ 18,153 $ 13,003
======== ======== ======== ========
Basic earnings per share $ 0.99 $ 0.59 $ 1.40 $ 0.98
======== ======== ======== ========
Diluted earnings per share $ 0.98 $ 0.58 $ 1.38 $ 0.97
======== ======== ======== ========
Dividends per share $ 0.10 $ 0.10 $ 0.20 $ 0.20
======== ======== ======== ========
Weighted average shares outstanding:
Basic 12,942 13,072 12,976 13,264
======== ======== ======== ========
Diluted 13,119 13,308 13,167 13,468
======== ======== ======== ========
-MORE-
Sanderson Farms Reports Second Quarter 2003 Results
Page 4
May 27, 2003
SANDERSON FARMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
APRIL 30, OCTOBER 31,
2003 2002
--------- ---------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 17,336 $ 9,542
Accounts receivable, net 37,271 41,073
Inventories 62,196 57,964
Refundable income taxes 0 2,764
Prepaid expenses 12,149 12,121
--------- ---------
Total current assets 128,952 123,464
Property, plant and equipment 387,362 389,666
Less accumulated depreciation (225,180) (233,183)
--------- ---------
162,182 156,483
Other assets 445 563
--------- ---------
Total assets $ 291,579 $ 280,510
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 45,120 $ 51,769
Current maturities of long-term debt 349 3,243
--------- ---------
Total current liabilities 45,469 55,012
Long-term debt, less current maturities 57,849 49,969
Claims payable 2,600 2,600
Deferred income taxes 17,038 17,038
Stockholders' equity 168,623 155,891
--------- ---------
Total liabilities and stockholders' equity $ 291,579 $ 280,510
========= =========
-END-