EXHIBIT 99.1
(SANDERSON FARMS(R) LOGO) SANDERSON FARMS, INC.
GENERAL OFFICES
Post Office Box 988 - 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 FIRST QUARTER OF FISCAL 2006
LAUREL, Miss. (February 28, 2006) -- Sanderson Farms, Inc. (NASDAQ/NM: SAFM)
today reported results for the first fiscal quarter ended January 31, 2006.
Net sales for the first quarter of fiscal 2006 were $222.1 million compared
with $233.3 million for the same period a year ago. For the quarter, the net
loss was $8.6 million, or $0.43 per diluted share, compared with net income of
$10.0 million, or $0.50 per diluted share, for the first quarter of fiscal 2005.
The Company's financial statements for the first fiscal quarter ended
January 31, 2006, reflect a receivable from the Company's insurance carriers of
$12.9 million for property damage, expenses incurred and lost profits resulting
from Hurricane Katrina. The Company's total insurance claim through January 31,
2006, for property damage, expenses incurred and lost profits is $26.3 million,
net of the applicable deductible of $2,750,000. During the first fiscal quarter,
operating income was reduced by incurred but unrecognized lost profits and
expenses of approximately $3.0 million. These unrecognized lost profits and
expenses 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 results for the first quarter of fiscal 2006 reflect a difficult
market environment," said Joe F. Sanderson, Jr., chairman and chief executive
officer of Sanderson Farms, Inc. "We experienced significantly lower market
prices during our first fiscal quarter when compared to last year's first
quarter and when compared with our last quarter. This weakness is primarily
related to a precipitous drop in export demand and more sluggish domestic demand
compared with a year ago. While these factors are affecting our financial
results over the short term, we are confident that Sanderson Farms is well
positioned to resume its pattern of profitable growth when market conditions
improve."
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Sanderson Farms Reports First-Quarter 2006 Results
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February 28, 2006
According to Sanderson, overall market prices for poultry products were
significantly lower in the first quarter of 2006 compared with prices a year
ago. As measured by a simple average of the Georgia dock price for whole
chickens, prices decreased approximately 3.2% in the Company's first fiscal
quarter compared with the same period in 2005. Bulk leg quarter prices declined
10.7% during the quarter compared with last year's first quarter. These leg
quarter prices reflect weak demand in the export market during the quarter.
Boneless breast meat prices during the quarter were approximately 21.2% lower
than the prior-year period. Wing prices averaged $0.87 per pound during the
first quarter of fiscal 2006, compared with the average of $1.05 per pound
during the first quarter of fiscal 2005. At the same time, costs for corn and
soybean meal, the Company's primary feed ingredients, increased 2.6% and 14.6%,
respectively, compared with the first quarter a year ago.
"Although market conditions are difficult, we intend to focus our efforts
on the aspects of our business we can control, and we remain optimistic about
our prospects for fiscal 2006, "added Sanderson. "Our cost structure will be
similar to fiscal 2005, and while we expect market conditions to remain
challenging through our second fiscal quarter, we believe the longer-term
fundamentals of our industry are favorable and that conditions could improve
during the second half of fiscal 2006."
Sanderson Farms will hold a conference call to discuss this press release
today, February 28, 2006, 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 March 28, 2006.
Those without Internet access or who would rather listen by telephone can call
800-478-6251, access code 3820441.
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 2005 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 first
quarter ended January 31, 2006.
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Sanderson Farms Reports First-Quarter 2006 Results
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February 28, 2006
SANDERSON FARMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
JANUARY 31, OCTOBER 31,
2006 2005
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 2,249 $ 34,616
Accounts receivable, net 41,544 38,833
Receivable from insurance companies 12,894 14,892
Inventories 89,811 84,713
Prepaid expenses 15,825 11,599
--------- ---------
Total current assets 162,323 184,653
Property, plant and equipment:
Land and building 227,377 212,463
Machinery and equipment 303,495 296,449
--------- ---------
530,872 508,912
Less accumulated depreciation (255,761) (249,586)
--------- ---------
275,111 259,326
Other assets 2,105 1,812
--------- ---------
Total assets $ 439,539 $ 445,791
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 37,790 $ 24,468
Accrued expenses 28,204 48,148
Current maturities of long-term debt 4,413 4,406
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Total current liabilities 70,407 77,022
Long-term debt, less current maturities 16,373 6,511
Claims payable 2,900 2,900
Deferred income taxes 13,890 13,705
Stockholders' equity 335,969 345,653
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Total liabilities and stockholders' equity $ 439,539 $ 445,791
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Sanderson Farms Reports First-Quarter 2006 Results
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February 28, 2006
SANDERSON FARMS, INC. AND SUBSIDIARIES
(In thousands, except per share amounts)
THREE MONTHS ENDED
JANUARY 31,
-------------------
2006 2005
-------- --------
Net sales $222,114 $233,290
Costs and expenses:
Cost of sales 222,765 203,755
Selling, general and administrative 13,384 13,027
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236,149 216,782
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Operating income (loss) (14,035) 16,508
Other income (expense):
Interest income 124 199
Interest expense (76) (318)
Other 39 4
-------- --------
87 (115)
-------- --------
Income (loss) before income taxes (13,948) 16,393
Income tax expense (benefit) (5,342) 6,352
-------- --------
Net income (loss) $ (8,606) $ 10,041
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Basic earnings (loss) per share $ (0.43) $ 0.50
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Diluted earnings (loss) per share $ (0.43) $ 0.50
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Dividends per share $ 0.12 $ 0.10
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Weighted average shares outstanding:
Basic 20,064 19,962
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Diluted 20,064 20,115
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