EXHIBIT 99.1
CONTACT: MIKE COCKRELL
TREASURER & CHIEF FINANCIAL OFFICER
(601) 649-4030
SANDERSON FARMS, INC. REPORTS FOURTH QUARTER
AND YEAR-END FISCAL 2003 RESULTS
LAUREL, Miss. (December 9, 2003) -- Sanderson Farms, Inc. (NASDAQ/NM: SAFM)
today reported record results for the fourth quarter and fiscal year ended
October 31, 2003.
Net sales for the fourth quarter of fiscal 2003 were $254.7 million
compared with $201.0 million for the same period a year ago. For the quarter,
the Company reported net income of $20.5 million, or $1.55 per diluted share,
compared with net income of $6.5 million, or $0.49 per diluted share, for the
fourth quarter of fiscal 2002. During the fourth quarter of fiscal 2002, the
Company recognized $1.5 million, net of income taxes, or $0.11 per diluted
share, for Sanderson Farms' share in the settlement of class action lawsuits
against vitamin suppliers and a methionine supplier for overcharges.
For the fiscal year ended October 31, 2003, net sales were $872.2
million, a 17.3% increase compared with net sales of $743.7 million for the
prior year. The Company reported net income of $54.1 million, or $4.12 per
diluted share, for fiscal 2003, compared with net income of $28.8 million, or
$2.15 per diluted share, for fiscal 2002. During the first and second quarters
of fiscal 2003, the Company recognized a total of $7.6 million, net of income
taxes, or $0.58 per diluted share, for Sanderson Farms' share in the settlement
of the same lawsuits described above against vitamin and methionine suppliers
for overcharges. The Company recognized a total of $3.1 million, net of income
taxes, or $0.23 per diluted share, related to the same issue in fiscal 2002.
"Sanderson Farms continued to demonstrate solid execution in the fourth
quarter of fiscal 2003, capping off an outstanding year for the Company," said
Joe F. Sanderson, Jr., president and chief executive officer of Sanderson Farms,
Inc. "Earnings for both our fourth quarter and fiscal year ended October 31,
2003, set records and reflect the continued overall improvement in the chicken
market compared with conditions a year ago. Our ability to focus and execute on
the key areas for success in our business - delivering a profitable and
favorable product mix, efficiently managing our operations and maintaining a
strong financial position - allowed us to achieve these results. More
importantly, we are pleased to deliver another year of improved earnings for our
shareholders."
According to Sanderson, market prices for all poultry products were
higher during the fourth quarter than in the prior-year period. As measured by a
simple average of the Georgia dock price for whole chickens, prices increased
approximately 7.8% in the Company's fourth fiscal quarter compared with the same
period in 2002. Boneless breast meat prices during the quarter were
approximately 26.5% higher than the prior-year period and were up 17.2% for the
year. Bulk leg
-MORE-
Sanderson Farms Reports Year-End 2003 Results
Page 2
December 9, 2003
quarter prices increased approximately 67.4% during the quarter and were up
12.8% for the year. Wing prices averaged 71.2 cents per pound, up 47.9% from the
average of 48.1 cents per pound during the fourth quarter of fiscal 2002. Market
prices for corn and soybean meal, the Company's primary feed ingredients, were
mixed during the quarter. Market prices for corn decreased 10%, while market
prices for soybean meal increased 17.3%, compared with the fourth quarter a year
ago. For the fiscal year, corn and soybean meal cash market prices increased by
6.9% and 11.2%, respectively. The Company expects that overall feed grain prices
will be higher during fiscal 2004 than during fiscal 2003.
"One of our key financial objectives for 2003 was to aggressively manage
our working capital and other key components of our balance sheet, and we are
very pleased to report that our financial position and liquidity improved
considerably in fiscal 2003," added Sanderson. "As of October 31, 2003, our
balance sheet reflects stockholders' equity of $197.1 million and net working
capital of $82.2 million. During fiscal 2003, we reduced our long-term debt by
over $28.3 million. At the end of our fiscal year, our long-term debt totaled
$21.6 million and our debt to total capitalization ratio was 11.6%. In light of
our strong cash flow during fiscal 2003, our Board of Directors declared a
special dividend of $0.50 per share that was paid in October. The Board also
increased our regular quarterly dividend to $0.12 per quarter from $0.10 per
quarter.
"Looking ahead, we hope to continue to build on this momentum in 2004.
As indicated by egg sets and breeder placements, we expect to see minimal growth
in production over the next year for poultry products, as well as for competing
meat products. While we expect overall feed grain prices to be higher during
fiscal 2004, we are comfortable with the published annual earnings estimate for
fiscal 2004 of $3.00 per share. More importantly, we remain confident we have
the right strategy in place, as well as the financial flexibility to continue to
identify and capitalize on new opportunities and deliver greater value to our
shareholders," Sanderson concluded.
Sanderson Farms will hold a conference call to discuss this press
release today, December 9, 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.fulldisclosure.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 January 10,
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 third
quarter ended July 31, 2003.
-MORE-
Sanderson Farms Reports Year-End 2003 Results
Page 3
December 9, 2003
SANDERSON FARMS, INC. AND SUBSIDIARIES
(Unaudited)
(In thousands, except per share amounts)
THREE MONTHS ENDED TWELVE MONTHS ENDED
OCTOBER 31, OCTOBER 31,
--------------- --------------- --------------- ---------------
2003 2002 2003 2002
--------------- --------------- --------------- ---------------
Net sales $ 254,712 $ 201,031 $ 872,235 $ 743,665
Cost and expenses:
Cost of sales 205,864 179,948 741,420 663,161
Selling, general and administrative 14,778 9,895 40,293 30,527
--------------- --------------- --------------- ---------------
220,642 189,843 781,713 693,688
Operating income 34,070 11,188 90,522 49,977
Other income (expense):
Interest income 29 104 80 185
Interest expense (450) (777) (2,484) (3,681)
Other 74 17 43 (1)
--------------- --------------- --------------- ---------------
(347) (656) (2,361) (3,497)
Income before income taxes 33,723 10,532 88,161 46,480
Income tax expense 13,223 3,980 34,100 17,640
--------------- --------------- --------------- ---------------
Net income $ 20,500 $ 6,552 $ 54,061 $ 28,840
=============== =============== =============== ===============
Basic earnings per share $ 1.58 $ 0.50 $ 4.17 $ 2.18
=============== =============== =============== ==============
Diluted earnings per share $ 1.55 $ 0.49 $ 4.12 $ 2.15
============== =============== =============== ==============
Dividends per share $ 0.62 $ 0.10 $ 0.92 $ 0.40
=============== =============== =============== ==============
Weighted average shares outstanding:
Basic 13,006 13,147 12,975 13,200
=============== =============== =============== ===============
Diluted 13,190 13,287 13,126 13,429
=============== =============== =============== ===============
Sanderson Farms Reports Year-End 2003 Results
Page 4
December 9, 2003
SANDERSON FARMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
OCTOBER 31, OCTOBER 31,
2003 2002
(Unaudited)
---------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 22,224 $ 9,542
Accounts receivable, net 46,195 41,073
Inventories 61,753 57,964
Refundable income taxes -- 2,764
Other current assets 13,001 12,121
---------------- ---------------
Total current assets 143,173 123,464
Property, plant and equipment:
Land and buildings 135,865 134,076
Machinery and equipment 240,369 255,590
---------------- ---------------
376,234 389,666
Less accumulated depreciation (221,010) (233,183)
----------------- ---------------
155,224 156,483
Other assets 508 563
---------------- ---------------
Total assets $ 298,905 $ 280,510
================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 19,033 $ 25,258
Accrued expenses 37,540 26,511
Current maturities of long-term debt 4,364 3,243
---------------- ---------------
Total current liabilities 60,937 55,012
Long-term debt, less current maturities 21,604 49,969
Claims payable 2,600 2,600
Deferred income taxes 16,665 17,038
Stockholders' equity 197,099 155,891
---------------- ---------------
Total liabilities and stockholders' equity $ 298,905 $ 280,510
================ ===============
-END-