EX-99 2 mar208kdata.txt EARNINGS PRESS RELEASE - CORRECTED TEXT 6 IBP REPORTS 2000 EARNINGS AMID RECORD SALES SEC FINANCIAL REVIEW CONCLUDED Dakota Dunes, South Dakota - March 19, 2001 - IBP today released fourth quarter and full year 2000 earnings, bringing to completion a financial review by the Securities and Exchange Commission (SEC), and closing the books on accounting issues related to its DFG Foods (DFG) subsidiary. "We are pleased to report that all outstanding issues involving the SEC's financial review, as well as the accounting issues related to DFG, have now been resolved," Robert L. Peterson, IBP chairman and chief executive officer, said. "Today's earnings release brings this matter to a close and we now look forward to proceeding with the Tyson transaction." IBP entered into a $4.7 billion merger agreement with Tyson Foods on January 1, 2001. IBP recorded a fourth quarter nonrecurring, pre-tax impairment charge of $60.4 million to DFG's goodwill carrying value. The company had previously reported that this charge could be as much as $108 million. "While disappointing, this nonrecurring impairment to intangibles, $41.3 million on an after tax basis, does not affect operating cash flows and represents only 2.2% of IBP's stockholders' equity of $1.8 billion," according to Larry Shipley, IBP chief financial officer. "Looking forward, our current estimate is for DFG to be cash flow neutral in 2001. To put things in perspective, our LBO proxy projection last fall envisioned DFG Foods contributing $8.8 million or 2.0% to 2001's $446 million in total operating earnings." An IBP investigation of the DFG subsidiary, to date, has uncovered potential manipulation of financial records and product theft. It has also revealed mismanagement by former DFG managers. The previously reported restatement of the subsidiary's financial results included the amount of an earn-out payment to those who sold the DFG business, but ultimately determined by IBP not to have been earned. IBP will use the results of its forensic audit as the basis for any legal action it deems appropriate to recover its losses. 2000 Results Improved consumer demand for beef and pork, coupled with increased exports, led to record sales and strong earnings for IBP in 2000. The year was also highlighted by the continued expansion of IBP's production into higher-margin, value-added food products. 2000 net sales grew 12% reaching a record $16.9 billion, compared to $15.1 billion in 1999. Net earnings, before unusual and nonrecurring items, totaled $220 million or $2.03 per diluted share compared to $326 million or $3.03 per diluted share in 1999. 2000 net 7 earnings after unusual and nonrecurring items totaled $135 million or $1.24 per diluted share compared to $318 million or $2.96 per diluted share the previous year. Unusual items in 2000 included first quarter adjustments for a significant bad debt loss, nonrecurring merger-related expenses, cumulative effect for change in accounting principle for revenue recognition, and an extraordinary loss on extinguishment of debt, which aggregated $44 million on an after tax-basis. For the full year 2000 the unusual items also included the nonrecurring impairment charge associated with DFG. 1999 nonrecurring items included, on an after-tax basis, $21.7 million in asset write-downs, offset by a $13.8 million reduction of income tax expense. Fourth quarter 2000 sales totaled $4.4 billion versus $4.1 billion for the same period last year. Fourth quarter net earnings before unusual and nonrecurring items totaled $35 million or $.33 per diluted share compared to $88 million or $.82 per diluted share in 1999. These totals exclude $41 million in net charges due to the DFG impairment. Fourth quarter net losses after unusual and nonrecurring items were $6 million or $.06 per diluted share versus net earnings of $77 million or $.71 per diluted share during the same period in 1999. "It was a successful year for our company in many ways," Peterson said. "Our fresh meat business experienced solid earnings, exports reached new highs, and we made important strides in our effort to create the most well-known meat brand in the nation. We believe the growth of the new Thomas E. Wilson consumer brand, along with our other value-added efforts, will help us do a better job of meeting customer needs, while enhancing earnings." 2000 Operating Performance Operating earnings across IBP's fresh meat operations, which include the Beef Carcass, Beef Processing, Pork and All Other segments, in 2000 were $433 million, down 5% from the $454 million recorded in 1999. Net sales for these segments in 2000 were $13.7 billion, up 8% from $12.6 billion in 1999. Live cattle prices were 7% higher in 2000 than in 1999, while hog prices increased 30%. "While we did not reach the record earnings of 1999, our fresh meat businesses still experienced success," Peterson said. "Strong consumer demand for both beef and pork continues to be the story. Reasons for this strength include new product development, exports and the popularity of the high-protein diet." Exports reached new heights in 2000. The company exported more product than ever before, generating record sales and volumes. Export sales dollars were up 15% for the year, while export volumes increased 8%. The company experienced important export gains in the Far East. Sales to Japan, a major export destination, grew by 14% in 2000, while sales to Korea increased 24%. Japan remains IBP's largest overseas market, and should retain that status since further liberalization of meat import regulations is expected in 2001. Meanwhile, revenues generated by exports to Mexico grew by 29% in 2000. The Foodbrands America segment, involved in the production of prepared foods, experienced operating losses of $60 million for the year and $50 million for the fourth quarter of 2000. This compares to operating earnings of $102 million for all of 1999 and $15 million for the fourth quarter of 1999. Foodbrands' 2000 results included merger- related costs, additional bad debt expenses, and impairment charges collectively totaling $102 million. Segment operating earnings from operations for 2000, before these adjustments, were $42 million. 8 Foodbrands' results, in part, reflect the pressure of higher raw material costs as well as the operating loss at DFG Foods. Foodbrands continues to expand its prepared foods business in an effort to capitalize on changes in consumer trends, with people seeking more convenient food products. For example, in 2000 the Specialty Brands unit of Foodbrands launched its Jose Ole brand, a full line of Mexican foods for sale in retail frozen food cases. It was introduced to about 30 percent of the U.S. market in April and will expand to nationwide status by the end of 2001. IBP launched a line of convenient, cooked meats in the fall of 2000 under the Thomas E. Wilson brand name. The products, which include seven fully cooked beef and pork roasts that can be heated and served in minutes, are being sold in test markets in Indiana and Michigan. Enthusiastic response from consumers and retailers alike underlie plans to begin a national rollout by fall 2001. 2001 Outlook While cattle supplies were tight and live cattle prices high during the first quarter of 2001, livestock industry publications report "large marketings" are expected in late spring and summer. Greater hog supplies are also anticipated. This should result in lower raw material costs and higher earnings for IBP's fresh meat operations and the company's Foodbrands America unit. These conditions have reinforced the belief of IBP management that the company's 2001 earnings could be in the $1.80 to $2.20 per share range. This range is consistent with the company's previous estimate of $1.93 per share, which was included in IBP's preliminary LBO proxy last fall. About IBP 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 approximately 50,000 people. Forward Looking Statements Certain statements contained in this communication are "forward- looking statements", such as statements relating to future events. These forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Among the factors that may cause actual results to differ materially from those expressed in, or implied by, the statements are the following: (i) the anticipated effect of the above-described restatements and adjustments; (ii) fluctuations in the cost and availability of raw materials, such as feed grain costs; (iii) changes in the availability and relative costs of labor and contract growers; (iv) market conditions for finished products, including the supply and pricing of alternative proteins; (v) effectiveness of advertising and marketing programs; (vi) changes in regulations and laws, including changes in accounting standards, environmental laws, and occupational, health and safety laws; (vi) access to foreign markets together with foreign economic conditions, including currency fluctuations; (vii) the effect of, or changes in, general economic conditions; (viii) the effect of weather conditions; and (ix) adverse results from on-going litigation. IBP undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. #### CONTACTS: Dean Hanish Gary Mickelson Director-Investor Relations Public Affairs Dept. (605) 235-2167 605-235-2986 Robert Mead, Gavin Anderson & Co. (212) 515-1960 9 IBP, inc. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) December 30, December 25, 2000 1999 (restated) --------- --------- ASSETS ------ CURRENT ASSETS: Cash and cash equivalents $ 29,970 $ 32,865 Accounts receivable, less allowance for doubtful accounts of $19,898 and $21,352 673,485 849,679 Inventories 873,544 615,192 Deferred income tax benefits and prepaid expenses 88,595 82,992 --------- --------- TOTAL CURRENT ASSETS 1,665,594 1,580,728 Property, plant and equipment less accumulated depreciation of $1,089,775 and $960,391 1,630,774 1,362,765 Goodwill, net of accumulated amortization of $221,160 and $189,395 961,340 1,054,839 Other assets 168,548 145,225 --------- --------- $4,426,256 $4,143,557 ========= ========= LIABILITIES, REDEEMABLE STOCK, AND ---------------------------------- STOCKHOLDERS' EQUITY -------------------- CURRENT LIABILITIES: Notes payable to banks $ 775,000 $ 542,060 Accounts payable 516,030 424,855 Deferred income taxes and other current liabilities 373,019 452,677 Current portion of long-term debt 55,351 13,125 --------- --------- TOTAL CURRENT LIABILITIES 1,719,400 1,432,717 Long-term debt and capital lease obligations 658,719 789,861 Deferred income taxes and other liabilities 198,626 175,932 --------- --------- TOTAL LIABILITIES 2,576,745 2,398,510 --------- --------- REDEEMABLE STOCK - 44,564 --------- --------- STOCKHOLDERS' EQUITY: Common stock at par value 5,450 4,964 Additional paid-in capital 443,388 404,463 Retained earnings 1,481,004 1,358,971 Accumulated other comprehensive income (11,261) (8,600) Treasury stock (69,070) (59,315) --------- --------- TOTAL STOCKHOLDERS' EQUITY 1,849,511 1,700,483 --------- --------- $4,426,256 $4,143,557 ========= =========

10 IBP, inc. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) 14 Weeks 13 Weeks 53 Weeks 52 Weeks Ended Ended Ended Ended Dec. 30, Dec. 25, Dec. 30, Dec. 25, 2000 1999 2000 1999 ----------- ----------- ----------- ----------- (unaudited) (unaudited) (restated) (restated) Net sales $4,410,916 $4,135,925 $16,949,608 $15,121,689 Cost of products sold 4,148,755 3,866,039 15,913,264 14,126,619 --------- --------- ---------- ---------- Gross profit 262,161 269,886 1,036,344 995,070 Selling, general and administrative expense 175,424 129,608 597,811 440,474 Goodwill impairment charge 60,352 - 60,352 - Nonrecurring merger-related - - 31,299 - --------- --------- ---------- ---------- EARNINGS FROM OPERATIONS 26,385 140,278 346,882 554,596 Interest expense, net 24,187 19,106 88,258 67,816 --------- --------- ---------- ---------- Earnings before income taxes, accounting change and extraordinary item 2,198 121,172 258,624 486,780 Income tax expense 8,451 44,584 105,971 168,913 --------- --------- ---------- ---------- Earnings/(loss) before accounting change and extraordinary item (6,253) 76,588 152,653 317,867 Cumulative effect of change in accounting principle - - (2,429) - Extraordinary loss on early extinguishment of debt, less applicable taxes - - (15,037) - --------- --------- ---------- ---------- NET EARNINGS/(LOSS) $ (6,253) $ 76,588 $ 135,187 $ 317,867 ========= ========= ========== ========== Earnings/(loss) per common share: Earnings/(loss) before accounting change and extraordinary item $(.06) $ .79 $1.41 $3.26 Cumulative effect of change in accounting principle - - (.02) - Extraordinary item - - (.14) - --------- --------- ---------- ---------- Net earnings/(loss) $(.06) $ .79 $1.25 $3.26 ========= ========= ========== ========== Earnings/(loss) per common share - assuming dilution: Earnings/(loss) before accounting change and extraordinary item $(.06) $ .71 $1.40 $2.96 Cumulative effect of change in accounting principle - - (.02) - Extraordinary item - - (.14) - --------- --------- ---------- ---------- Net earnings/(loss) $(.06) $0.71 $1.24 $2.96 ========= ========= ========== ========== Dividends per share $.025 $.025 $.10 $.10 ========= ========= ========== ==========

11 IBP, inc. AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA (Unaudited, in thousands) 14 Weeks 13 Weeks 53 Weeks 52 Weeks Ended Ended Ended Ended Dec. 30, Dec. 25, Dec. 30, Dec. 25, 2000 1999 2000 1999 --------- ----------- ----------- ------------ (restated) (restated) Weighted average common shares outstanding 105,605 96,627 105,806 96,586 ========= ========= ========== ========== Diluted EPS denominator 106,938 106,905 107,076 106,601 ========= ========= ========== ========== Preferred stock dividends and accretion $ - $ 629 $ 2,566 $ 2,774 ======= ======= ======== ======== Capital expenditures $127,216 $ 56,311 $ 428,217 $ 208,781 Depreciation and amortization expense $ 39,950 $ 35,540 $ 146,716 $ 125,515 Amortization of intangible assets $ 8,966 $ 8,307 $ 35,376 $ 31,163 SEGMENT INFORMATION: Net sales to unaffiliated customers: Beef Carcass $ 300,014 $ 272,942 $ 1,146,790 $ 1,000,728 Beef Processing 2,042,779 1,991,048 8,157,245 7,641,552 Pork 603,737 600,358 2,371,725 2,177,513 Foodbrands America 914,259 804,402 3,264,326 2,503,942 All Other 550,127 467,175 2,009,522 1,797,954 --------- --------- ---------- ---------- $4,410,916 $4,135,925 $16,949,608 $15,121,689 Earnings from operations: Beef Carcass $ 29,968 $ 31,149 $ 142,283 $ 91,513 Beef Processing 1,881 28,709 108,150 163,656 Pork 21,441 45,839 69,603 151,689 Foodbrands America (50,472) 15,248 (60,169) 102,370 All Other 41,314 16,778 112,639 46,730 --------- --------- ---------- ---------- Earnings from segments 44,132 137,723 372,506 555,958 Corporate (17,747) 2,555 (25,624) (1,362) --------- --------- ---------- ---------- $ 26,385 $ 140,278 $ 346,882 $ 554,596 ========= ========= ========== ==========

12 IBP, inc. and SUBSIDIARIES ADJUSTED EARNINGS RECONCILIATION (unaudited, in thousands) 14 Weeks 13 Weeks 53 Weeks 52 Weeks Ended Ended Ended Ended Dec. 30, Dec. 25, Dec. 30, Dec. 25, 2000 1999 2000 1999 ---------- ----------- ---------- ---------- (restated) (restated) Earnings (loss) before accounting change and extraordinary loss ($6,253) $76,588 $152,653 $317,867 Impairment charges, net 41,282 11,393 41,282 21,744 CBFA merger expenses, net 19,406 Unusual bad debt write-off, net 6,955 Tax audit settlement (13,800) Adjusted earnings before accounting change and --------- --------- ---------- --------- extraordinary loss $35,029 $87,981 $220,296 $325,811 ========= ========= ========== ========= Diluted EPS denominator 106,938 106,905 107,076 106,601 ======= ======= ======== ======== Adjusted earnings before accounting change and extraordinary loss per per common share -- assuming dilution $0.33 $0.82 $2.03 $3.03 ======= ======= ======== ========

IBP INC 8-K/A