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RESULTS OF OPERATIONS
2000 compared to 1999 Sales in fiscal year 2000 increased $17,506,000 (12.6%) when compared to sales of the prior year, primarily as a result of increased unit sales volume. Cost of products sold increased by $14,751,000 (18.3%) when compared to the prior year. The gross margin was approximately 39% in 2000, 42% in 1999, and 40% in 1998. Costs for pork commodity products increased in 2000 compared to the historical lows experienced during 1999. Flour costs continued to be favorable in 2000, 1999 and 1998. Selling, general and administrative expenses increased $4,303,000 (11.1%) when compared to the prior year. This increase was generally consistent with the overall increase in sales. The Company’s capital expansion projects remained at levels consistent with the prior year. The Company expects to continue the growth and modernization of facilities and equipment used in the business. The effective tax rate remained consistent with the prior year at 38%.
1999 compared to 1998 Sales in fiscal year 1999 increased $3,970,000 (2.9%) when compared to sales of the prior year, primarily as a result of increased sales volume. Cost of products sold decreased by $332,000 when compared to the prior year. The gross margin was approximately 42% in 1999 and 40% in 1998. Costs for pork commodity products remained at historically low levels and flour costs continued to be favorable in 1999 and 1998. Selling, general and administrative expenses increased $1,844,000 (5.0%) when compared to the prior year. This increase was generally consistent with the overall increase in sales. Selling expenses slightly outpaced sales growth due to an increased sales force and higher performance bonuses due to record profitability. The Company’s
capital expansion projects increased compared to recent years. The Company
expects to continue the growth and modernization of facilities and equipment
used in the business. The effective tax rate remained consistent with
the prior year at 38%.
LIQUIDITY AND CAPITAL RESOURCES Favorable operating results over the past several years have continued to provide significant liquidity to the Company. Net cash provided by operating activities was $8,348,000 in the 2000 fiscal year, $9,635,000 in 1999 and $14,579,000 in 1998. Accounts receivable balances increased $1,617,000 (13%) in 1999 and $699,000 (6%) in 1998 due to higher sales and slower collections. Inventories increased $2,042,000 in 2000 and $2,083,000 in 1999 due to higher unit quantities. Non-current assets increased $1,431,000 (16%) and $1,363,000 (18%), in 1999 and 1998 primarily due to the increased cash surrender value of life-insurance policies and increases in deferred income tax benefits. Accounts payable and accrued expenses increased $1,901,000 in 2000 due to higher purchasing activity to support strong fourth quarter sales. The Company’s capital improvement expenditures remained consistent in 2000 compared to the prior year. Significant projects in process at November 3, 2000 included $1.8 million for an updated management information system. Cash and cash equivalents decreased $6,720,000 in 2000 (26.9%). The decrease was primarily a result of capital expenditures in the amount of $5,124,000; common stock repurchases of $7,643,000, and higher inventory balances. The company also funded its defined benefit pension plan in the amount of $3,000,000 during fiscal year 2000. Cash and cash equivalents increased $2,749,000 in 1999 (12.3%). The increase was lower than in recent years due to higher tax payments, increased capital expenditures and higher accounts receivable and inventory balances. Cash and cash equivalents increased $9,894,000 in 1998 primarily as a result of lower capital expenditures, improved profitability and significant increases in non-funded employee benefits. The Company has remained free of interest-bearing debt for fourteen consecutive years. Working capital decreased $5,291,000(12.1%) in 2000 and increased $6,509,000 (17.5%) and $7,569,000 (25.5%) in 1999 and 1998. The decrease in working capital in 2000 primarily resulted from the common stock repurchase program and significant pension contribution during 2000. The Company maintains a line of credit with Bank of America that expires April 30, 2002. There were no borrowings under this line of credit during fiscal 2000. |
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