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The Corporation changed its year end for fiscal 2000 to the Sunday nearest April 30 to correspond with the year end of its controlling shareholder, Smithfield Foods, Inc. The new reporting calendar has four quarters of thirteen weeks compared to the previous method of reporting thirteen four-week periods. Our report for the third quarter, therefore, compares the thirty-nine weeks ended January 28, 2001, to the thirty-seven weeks ended January 29, 2000.
Sales for the first thirty-nine weeks of fiscal 2001 were $972.4 million compared to sales of $732.7 million for the thirty-seven weeks of the same three quarters last year. The sales increase reflects the consolidation of the results of Mitchell’s Gourmet Foods Inc. from October 31, 2000, and growth in sales in both our consumer foods and pork business sectors, reflecting volume growth in our value-added consumer products and maintenance of pork sales volumes at higher selling prices compared to year ago levels. Net earnings for the first three quarters were $11.4 million or $1.56 per share compared to $17.0 million or $2.32 per share for the comparable three quarters last year.
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Financial Highlights 39 weeks 37 weeks
(thousands of dollars except per share data) ended ended
January 28, January 29,
2001 2000
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Sales $972,408 $732,704
Earnings from operations 27,532 32,953
Net earnings per share 1.56 2.32
Cash flow from operations 27,114 31,405
Cash used in investing activities 68,461 9,829
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Consumer Foods
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By GlobalDataEarnings from operations for the first three quarters of the year were $15.6 million compared to $25.4 million for the same three quarters of fiscal 2000. The decline reflects lower profit margins resulting from higher raw material costs which could not be recovered through higher selling prices.
During the quarter, the Corporation increased its ownership in Mitchell’s Gourmet Foods Inc. from 38% to 54%. The Corporation also increased its ownership in Cappola Food Inc. from 50% to 68%. Increasing our ownership in both of these companies supports our strategic thrust to expand our market penetration in value-added products in Canada and the United States.
Mitchell’s is expanding its processing operations in Saskatoon, Saskatchewan with the construction of a 157,000 sq. ft. plant to meet increasing customer demand for its value-added products. Commissioning of this plant is on schedule for the spring of 2001.
Pork
Earnings from operations were $7.6 million, the same as was achieved in the comparable three quarters of the previous fiscal year. During the quarter, the Corporation announced that it had accepted an offer from Maple Leaf Foods Inc. for its Manitoba fresh pork operations. Hog supply in Manitoba and western Canada is currently insufficient to satisfy production capacity, and hog expansion is occurring at a slower than anticipated pace. This has caused the Corporation to reconsider our investment in a new pork processing plant in Manitoba, and we made the decision to change course and re-deploy our capital to support continued growth in our value-added retail and foodservice businesses. The Corporation remains committed to the fresh pork business in Canada through its investment in Mitchell’s Gourmet Foods.
In addition, as part of the transaction, the Corporation will purchase Maple Leaf Foods’ interest in National Meats Inc. This acquisition will strengthen our ability to support continued growth in value-added beef products through independent manufacturing, marketing and sales.
Interest expense of $9 million was higher than a year ago due to the level of borrowing necessary to fund the investments in acquisitions, capacity expansions to meet customer demand and the higher dollar values of accounts receivable and inventory. All of the investments noted above will improve earnings in the last quarter of this fiscal year and in fiscal 2002.
(signed) (signed)
Douglas W. Dodds Gerald A. Hooper
Chairman and Senior Vice President and
Chief Executive Officer Chief Financial Officer
SCHNEIDER CORPORATION
Consolidated Statements of Earnings
(unaudited)
Thirteen weeks Thirteen weeks
ended January 28 ended January 29
(in thousands) 2001 2000
Sales $ 349,691 $ 257,903
Expenses:
Cost of products sold 311,388 226,249
Selling, marketing and
administrative 21,814 17,503
Depreciation and amortization 5,479 3,545
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338,681 247,297
Earnings from operations 11,010 10,606
Interest expense 3,679 1,687
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Earnings before income taxes
and minority interest 7,331 8,919
Income taxes 2,470 3,521
Minority interest 513 –
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Net earnings $ 4,348 $ 5,398
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Earnings per share $ 0.59 $ 0.74
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Thirty-nine weeks Thirty-seven weeks
ended January 28 ended January 29
(in thousands) 2001 2000
Sales $ 972,408 $ 732,704
Expenses:
Cost of products sold 875,113 640,431
Selling, marketing and
administrative 56,310 48,475
Depreciation and amortization 13,453 10,845
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944,876 699,751
Earnings from operations 27,532 32,953
Interest expense 9,011 4,757
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Earnings before income taxes
and minority interest 18,521 28,196
Income taxes 6,611 11,209
Minority interest 513 –
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Net earnings $ 11,397 $ 16,987
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Earnings per share $ 1.56 $ 2.32
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Consolidated Statements of Changes In Financial Position
(unaudited)
(in thousands)
Thirty-nine weeks Thirty-seven weeks
ended January 28 ended January 29
2001 2000
Cashflows from operating activities:
Net income $ 11,397 $ 16,987
Adjustments to reconcile net income
to net cash:
Depreciation and amortization 13,453 10,845
Deferred pension (6,184) (12,644)
Accounts receivable 5,149 (1,352)
Other current assets 2,273 (3,197)
Accounts payable (2,265) 9,459
Future income taxes 1,751 4,779
Deferred post employment benefits 1,035 942
Inventory (354) 2,154
Restructuring – 2,125
Other 859 1,307
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Net cash provided by operating activities 27,114 31,405
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Cash flows from investing activities:
Capital expenditures (35,427) (9,075)
Acquisitions (29,000) (3,007)
Bank advances acquired (3,899) –
Proceeds on sale of property, plant
and equipment 82 1,408
Other (217) 845
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Net cash used in investing activities (68,461) (9,829)
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Cash flows from financing activities:
Proceeds from issuance of
long-term debt 71,146 17,666
Principal payments on long-term debt (11,070) (4,702)
Share redemption (1,404) (1,022)
Dividends (391) (992)
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Net cash provided by financing
activities 58,281 10,950
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Net decrease in bank advances 16,934 32,526
Bank advances at beginning of period (45,767) (43,612)
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Bank advances at end of period $ (28,833) $ (11,086)
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Bank advances consists of bank loans of $39,576 (2000-$11,086) net of
short-term investments of $10,743 (2000-nil).
SCHNEIDER CORPORATION
Consolidated Balance Sheets
(unaudited)
January 28 January 29
(in thousands) 2001 2000
Assets
Current assets:
Short-term investments $ 10,743 $ –
Accounts receivable 97,472 71,421
Inventories 82,112 53,691
Other current assets 6,301 7,526
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196,628 132,638
Property, plant and equipment 203,998 115,808
Deferred pension 44,149 43,123
Investment in associated companies 5,313 28,676
Other assets 60,478 15,953
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313,938 203,560
Total assets $ 510,566 $ 336,198
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Liabilities and shareholders’
equity
Current liabilities:
Bank advances 39,576 11,086
Accounts payable and accrued
liabilities 92,555 73,610
Other current liabilities 14,693 12,590
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146,824 97,286
Debentures and loans 163,660 73,203
Deferred post employment benefits 28,833 28,017
Non-controlling interest 22,686 –
Other liabilities 18,937 17,392
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234,116 118,612
Shareholders’ equity:
Capital stock 35,252 35,688
Retained earnings 94,374 84,612
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129,626 120,300
Total liabilities and
shareholders’ equity $ 510,566 $ 336,198
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Consolidated Financial Information
(unaudited)
Acquisitions and Divestitures
During fiscal 2001, the Corporation increased its ownership in Mitchell’s Gourmet Foods Inc. from 38% to 54% for cash consideration of $29,000,000. The acquisition has been accounted for by the purchase method with the results of operations included in these financial statements beginning October 31, 2000. Previously, the investment was accounted for using the equity basis of accounting.
During fiscal 2001, the Corporation increased its ownership in Cappola Food Inc. from 50% to 68% by converting 2,425,000 preferred shares of Cappola with a value of $2,425,000 into 225 common shares. The acquisition has been accounted for by the purchase method with the results of operations included in these financial statements beginning October 31, 2000.
On January 15, 2001, the Corporation announced its intention to sell its Manitoba pork operations to Maple Leaf Foods Inc. for $34,000,000 plus the cost of inventory. The estimated gain on disposal is $6,000,000, net of applicable taxes. Results of discontinued operations have not been reported separately as the agreement is subject to regulatory approval. As part of the transaction, the Corporation will purchase Maple Leaf Foods’ interest in National Meats Inc. for cash consideration of $3,050,000, increasing the Corporation’s ownership in National Meats Inc. from 50% to 100%.
Effective March 8, 2000, the Corporation purchased 100% of the outstanding shares of Gallant Foods Inc., a manufacturer and marketer of processed poultry products, for cash consideration of $11,400,000.
Other Information
Interest paid year-to-date, net of amount capitalized, was $8,100,000. Income taxes paid year-to-date were $3,200,000.
The Corporation changed its year end to correspond with the year end of its controlling shareholder, Smithfield Foods, Inc. The Corporation’s fiscal year ends on the Sunday nearest April 30.
