Exhibit 99.1
(SANDERSON FARMS(R) LOGO) SANDERSON FARMS, INC.
GENERAL OFFICES
Post Office Box 998 - Laurel, Mississippi 39441-0988
Telephone (601)649-4030 - Facsimile (601)426-1461
CONTACT: MIKE COCKRELL
TREASURER & CHIEF FINANCIAL OFFICER
(601) 649-4030
SANDERSON FARMS, INC. REPORTS
RESULTS FOR FOURTH QUARTER AND FISCAL 2005
LAUREL, Miss. (December 6, 2005) -- Sanderson Farms, Inc. (NASDAQ/NM: SAFM)
today reported results for the fourth quarter and fiscal year ended October 31,
2005.
Net sales for the fourth quarter of fiscal 2005 were $249.1 million
compared with $259.2 million for the same period a year ago. For the quarter,
net income was $10.1 million, or $0.50 per diluted share, compared with net
income of $5.1 million, or $0.25 per diluted share, for the fourth quarter of
fiscal 2004.
Net sales for fiscal 2005 were $1.006 billion compared with $1.052 billion
for fiscal 2004. Net income for the year totaled $70.6 million, or $3.51 per
diluted share, compared with net income of $91.4 million, or $4.57 per diluted
share, for last year.
The Company's financial statements for the fourth fiscal quarter and year
ended October 31, 2005, reflect a receivable from the Company's insurance
carriers of $14.9 million for property damage, expenses incurred and lost
profits resulting from Hurricane Katrina. The Company's total insurance claim
through October 31, 2005, for property damage, expenses incurred and lost
profits is $20.0 million, net of the applicable deductible of $2,750,000. The
total reduction in operating income of $7.9 million relates to the deductible of
$2,750,000 and incurred but unrecognized lost profits and expenses of
approximately $5.1 million. The unrecognized lost profits and expenses of $5.1
million were the direct result of the effect of Hurricane Katrina and the
Company's efforts to minimize the potential loss from the Hurricane and will be
recognized once negotiations with the insurance carriers are complete and the
final amounts are determined. The Company intends to seek reimbursement for all
of its insured losses, including the unrecognized lost profits and expenses.
Negotiations with the Company's insurance carriers are expected to be completed
during 2006. The Company believes the remaining effects of lost production and
additional expenses related to Hurricane Katrina that will be incurred during
the first fiscal quarter of 2006 will be substantially covered by the Company's
insurance policies.
"Our fourth quarter performance completed another good year for Sanderson
Farms," said Joe F. Sanderson, Jr., chairman and chief executive officer of
Sanderson Farms, Inc. "We continued to execute well in all areas of our business
despite softer market conditions at the close of our fiscal year and the effects
of Hurricane Katrina on our operations. Overall, fiscal 2005 was another
successful year for Sanderson Farms as we exceeded $1.0 billion in sales for the
second time in the Company's history and we again delivered strong earnings to
our shareholders."
According to Sanderson, overall market prices for poultry products were
softer in the fourth quarter than earlier in fiscal 2005. As measured by a
simple average of the Georgia dock price for whole chickens, prices decreased
approximately 3.8% in the Company's fourth fiscal quarter compared
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Sanderson Farms Reports Year-end 2005 Results
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December 6, 2005
with the same period in 2004, and decreased 0.61% for the full fiscal year
compared with last year. Bulk leg quarter prices increased 54.6% during the
quarter compared with last year's fourth quarter, and were 17.9% higher for the
year compared with last year. These leg quarter prices reflect improved
conditions in the export market during the year. Boneless breast meat prices
during the quarter were approximately 14.2% lower than the prior-year period,
and were down 24.9% for the year. Wing prices averaged $0.86 per pound during
the fourth quarter of fiscal 2005, compared with the average of $1.03 per pound
during the fourth quarter of fiscal 2004. At the same time, however, costs for
corn and soybean meal, the Company's primary feed ingredients, decreased 16.8%
and 32.5%, respectively, compared with the fourth quarter a year ago. For the
year, feed costs were lower by 15.0% and 30.9%, respectively. The substantial
increase in operating income in the fourth quarter of fiscal 2005 as compared to
the same quarter in fiscal 2004 is directly related to the decrease in the costs
of feed grains.
Sanderson added, "Fiscal 2005 also marked an important milestone for the
Company with our expansion into Georgia. We are pleased with the results of our
initial operations and recently began a second shift on our first line as
scheduled. The Georgia facility is dedicated exclusively to serving retail
customers, and we intend to take advantage of its location in close proximity to
our growing list of customers in the Southeast. With the conversion of the
Collins, Mississippi, plant to a larger weight bird and the additional retail
capacity from the Georgia facility, we will increase our overall production by
just over 26% when both projects are running at full capacity and will also
continue to maintain a favorable product mix between the retail market and the
big bird deboning market.
"Maintaining a strong balance sheet and carefully managing our working
capital have continued to be top priorities for Sanderson Farms. As of October
31, 2005, our balance sheet reflects $34.6 million in cash and cash equivalents.
We ended fiscal 2005 with this strong cash position while at the same time we
spent $128 million on capital expenditures, reduced debt by over $4 million, and
rewarded our shareholders through another increase in our quarterly dividends.
At the end of our fiscal year, our long-term debt totaled $6.5 million and our
debt to total capitalization ratio was 3.0%. Additionally, our strong financial
position provides us with the flexibility to capitalize on additional market
opportunities in fiscal 2006.
"Looking ahead, the fundamentals of our markets remain positive, and we
expect supply and demand to remain balanced as we begin another year. We look
forward to the opportunities ahead for Sanderson Farms and our prospects for
continued growth with our expanded production capabilities. We remain confident
we have the right strategy in place, as well as the ability to leverage our core
strengths, including operational execution, a proven product mix, exceptional
customer service and a strong balance sheet," concluded Sanderson.
Sanderson Farms will hold a conference call to discuss this press release
today, December 6, 2005, 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.earnings.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 6, 2006.
Those without Internet access or who would rather listen by telephone can call
800-811-7286.
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.
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December 6, 2005
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 2004 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, 2005.
SANDERSON FARMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
OCTOBER 31, OCTOBER 31,
2005 2004
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 34,616 $ 75,910
Accounts receivable, net 38,833 49,240
Insurance claim receivable 14,892 0
Income taxes receivable 0 2,592
Inventories 84,713 75,603
Prepaid expenses 11,599 13,077
--------- ---------
Total current assets 184,653 216,422
Property, plant and equipment:
Land and building 212,463 141,727
Machinery and equipment 296,449 257,671
--------- ---------
508,912 399,398
Less accumulated depreciation (249,586) (242,685)
--------- ---------
259,326 156,713
Other assets 1,812 1,872
--------- ---------
Total assets $ 445,791 $ 375,007
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 24,468 $ 30,384
Accrued expenses 48,148 31,029
Current maturities of long-term debt 4,406 4,385
--------- ---------
Total current liabilities 77,022 65,798
Long-term debt, less current maturities 6,511 10,918
Claims payable 2,900 2,600
Deferred income taxes 13,705 16,350
Stockholders' equity 345,653 279,341
--------- ---------
Total liabilities and stockholders' equity $ 445,791 $ 375,007
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Sanderson Farms Reports Year-end 2005 Results
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December 6, 2005
SANDERSON FARMS, INC. AND SUBSIDIARIES
(In thousands, except per share amounts)
THREE MONTHS ENDED TWELVE MONTHS ENDED
OCTOBER 31, OCTOBER 31,
------------------- -----------------------
2005 2004 2005 2004
-------- -------- ---------- ----------
Net sales $249,069 $259,223 $1,006,185 $1,052,297
Costs and expenses:
Cost of sales 215,632 233,033 826,670 842,337
Selling, general and administrative 18,213 18,166 66,031 59,806
-------- -------- ---------- ----------
233,845 251,199 892,701 902,143
-------- -------- ---------- ----------
Operating income 15,224 8,024 113,484 150,154
Other income (expense):
Interest income 305 547 1,257 743
Interest expense (57) (322) (433) (1,569)
Other 98 2 173 (60)
-------- -------- ---------- ----------
346 227 997 (886)
-------- -------- ---------- ----------
Income before income taxes 15,570 8,251 114,481 149,268
Income tax expense 5,515 3,190 43,843 57,840
-------- -------- ---------- ----------
Net income $ 10,055 $ 5,061 $ 70,638 $ 91,428
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Basic earnings per share $ 0.50 $ 0.25 $ 3.53 $ 4.62
======== ======== ========== ==========
Diluted earnings per share $ 0.50 $ 0.25 $ 3.51 $ 4.57
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Dividends per share $ 0.12 $ 0.60 $ 0.42 $ 0.84
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Weighted average shares outstanding:
Basic 20,060 19,945 20,014 19,789
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Diluted 20,159 20,105 20,137 19,995
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