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Sanderson Farms, Inc. Reports Results For Fourth Quarter And Fiscal 2012

This press release includes forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are based on a number of assumptions about future events and are subject to various risks, uncertainties and other factors that may cause actual results to differ materially from the views, beliefs, projections and estimates expressed in such statements. These risks, uncertainties and other factors include, but are not limited to those discussed under “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended October 31, 2012, and the following:

(1) Changes in the market price for the Company’s finished products and feed grains, both of which may fluctuate substantially and exhibit cyclical characteristics typically associated with commodity markets.

(2) Changes in economic and business conditions, monetary and fiscal policies or the amount of growth, stagnation or recession in the global or U.S. economies, either of which may affect the value of inventories, the collectability of accounts receivable or the financial integrity of customers, and the ability of the end user or consumer to afford protein.

(3) Changes in the political or economic climate, trade policies, laws and regulations or the domestic poultry industry of countries to which the Company or other companies in the poultry industry ship product, and other changes that might limit the Company’s or the industry’s access to foreign markets.

(4) Changes in laws, regulations, and other activities in government agencies and similar organizations applicable to the Company and the poultry industry and changes in laws, regulations and other activities in government agencies and similar organizations related to food safety.

(5) Various inventory risks due to changes in market conditions including, but not limited to, the risk that market values of live and processed poultry inventories might be lower than the cost of such inventories, requiring a downward adjustment to record the value of such inventories at the lower of cost or market as required by generally accepted accounting principles.

(6) Changes in and effects of competition, which is significant in all markets in which the Company competes, and the effectiveness of marketing and advertising programs. The Company competes with regional and national firms, some of which have greater financial and marketing resources than the Company.

(7) Changes in accounting policies and practices adopted voluntarily by the Company or required to be adopted by accounting principles generally accepted in the United States.

(8) Disease outbreaks affecting the production performance and/or marketability of the Company’s poultry products, or the contamination of its products.

(9) Changes in the availability and cost of labor and growers.

(10) The loss of any of the Company’s major customers.

(11) Inclement weather that could hurt Company flocks or otherwise adversely affect its operations, or changes in global weather patterns that could impact the supply and price of feed grains.

(12) Failure to respond to changing consumer preferences.

(13) Failure to successfully and efficiently start up and run a new plant or integrate any business the Company might acquire.

Readers are cautioned not to place undue reliance on forward-looking statements made by or on behalf of Sanderson Farms. Each such statement speaks only as of the day it was made. The Company undertakes no obligation to update or to revise any forward-looking statements. The factors described above cannot be controlled by the Company. When used in this press release or in the related conference call, the words “believes”, “estimates”, “plans”, “expects”, “should”, “outlook”, and “anticipates” and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements. Examples of forward-looking statements include statements of the Company’s belief about future demand for its products, future prices for feed grains and future production levels.


Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)

Three Months Ended

Twelve Months Ended

October 31,

October 31,





Net sales $ 648,379 $ 559,842 $ 2,386,105 $ 1,978,085
Costs and expenses:
Cost of sales 612,547 562,347 2,212,692 2,085,248
Live inventory adjustment 0 9,000 0 9,000
Selling, general and administrative 20,325 17,984 77,097 72,217
632,872 589,331 2,289,789 2,166,465
Operating income (loss) 15,507 (29,489 ) 96,316 (188,380 )
Other income (expense):
Interest income 8 3 17 41
Interest expense (1,814 ) (2,443 ) (9,201 ) (6,413 )
Other 0 9 (560 ) 510
(1,806 ) (2,431 ) (9,744 ) (5,862 )
Income (loss) before income taxes 13,701 (31,920 ) 86,572 (194,242 )
Income tax expense (benefit) 4,354 (10,358 ) 32,628 (67,165 )
Net income (loss) $ 9,347 $ (21,562 ) $ 53,944 $ (127,077 )
Basic earnings (loss) per share $ 0.41 $ (0.97 ) $ 2.35 $ (5.74 )
Diluted earnings (loss) per share $ 0.41 $ (0.97 ) $ 2.35 $ (5.74 )
Dividends per share $ 0.17 $ 0.17 $ 0.68 $ 0.68


Condensed Consolidated Balance Sheets
(In thousands)

October 31,

October 31,


Current assets:
Cash and cash equivalents $ 27,802 $ 11,075
Accounts receivable, net 98,022 94,021
Inventories 235,912 211,753
Refundable income taxes 4,467 88,512
Deferred income taxes 3,945 6,357
Prepaid expenses 27,639 26,240
Total current assets 397,787 437,958
Property, plant and equipment 985,198 939,535
Less accumulated depreciation (489,885 ) (434,030 )
495,313 505,505
Other assets 3,353 5,058
Total assets $ 896,453 $ 948,521
Current liabilities:
Accounts payable $ 82,755 $ 66,761
Accrued expenses 42,082 35,795
Current maturities of long-term debt 10,757 11,106
Total current liabilities 135,594 113,662
Long-term debt, less current maturities 150,212 273,670
Claims payable 4,000 3,300
Deferred income taxes 56,572 50,989
Stockholders' equity:
Common stock 22,969 22,872
Paid-in capital 135,283 130,528
Retained earnings 391,823 353,500
Total stockholders’ equity 550,075 506,900
Total liability and stockholders’ equity $ 896,453 $ 948,521


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