Filed by Agribrands International, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Commission File No.: 1-13479
Subject Company: Agribrands International, Inc.
The following is the press release disseminated by Agribrands International,
Inc. on October 26, 2000 and filed by Agribrands on a Form 8-K with the
Securities Exchange Commission.
To: Editor From: Investor Relations
(314) 812-0590
Agribrands Announces Fourth Quarter Earnings
--------------------------------------------
St. Louis, Missouri, October 26, 2000 ... Agribrands International, Inc. today
announced fourth quarter net earnings of $10.7 million compared to $11.6 million
for the prior year. Diluted earnings per share for the quarter were $1.06
compared to $1.08 for the prior year. For the year ended August 31, 2000, the
Company reported net earnings of $45.0 million compared to $44.0 million for the
prior year. Diluted earnings per share were $4.33 in 2000 compared to $4.11 in
1999.
Consolidated net sales decreased $3.7 million or 1.2% in the fourth quarter and
$68.4 million or 5.4% in the twelve months ended August 31, 2000 as compared to
the same periods last year. Consolidated feed sales volume declined 33,000
metric tons or 2.7% in the fourth quarter and 116,200 tons or 2.3% for the full
year as higher volume from the Asia segment partly offset declines experienced
in Europe and the Americas. Feed volume in Europe decreased 46,400 tons or 13.1%
in the fourth quarter and 142,200 tons or 9.5% in the current year. A
significant portion of the decline was caused by reduced demand in Spain for
commercial feed due to favorable grazing conditions versus the same periods in
the prior year. Feed volume in Asia increased 22,200 tons or 6.5% in the fourth
quarter and 91,500 tons or 7.1% in the current year as a result of successful
new product and marketing initiatives. Sales efforts were enhanced by higher
prices for live hogs which improved demand for hog feeds, the segment's largest
product line.
Consolidated operating profit for the current quarter was $14.0 million compared
to $13.7 million for the same quarter last year. Operating profit for last
year's fourth quarter included $2.0 million of charges related to the relocation
and centralization of key employees in Europe. Excluding unusual items,
consolidated operating profit for the current quarter decreased $1.7 million
primarily due to a combination of lower volume, lower margins and higher
operating expenses in the Americas segment. Fourth quarter sales of the
segment's profitable aqua feeds were down 14% as many customers accelerated
harvesting of shrimp in response to favorable market prices for smaller shrimp
and concerns over increased incidence of shrimp disease. Fourth quarter
operating profit in the Americas segment was also negatively impacted by higher
marketing and sales expenses in Brazil and higher labor expenses in Mexico.
<PAGE>
For the year ended August 31, 2000, consolidated operating profit declined $5.3
million to $62.1 million primarily as a result of both lower volume and lower
margins in the Americas and Europe. While operating profits declined in the
Americas and Europe segments, operating performance improved significantly in
the Asia segment, reflecting the increase in sales volume.
Commenting on operating results, Bill Armstrong, Chief Operating Officer,
stated, "Our business will remain subject to short-term variability due to the
potential impact of conditions in the various local markets in which we compete.
Despite favorable conditions in Asia this year, on the whole, cyclical economic
and political conditions were less favorable in 2000 than in the prior year. We
believe, however, that global market fundamentals will support, and our plans
will generate, long-term average growth in earnings consistent with trends over
the last several years."
Operating profit excludes provisions for restructuring and gains on sale of
property. In fiscal 2000, Agribrands recorded provisions for restructuring which
reduced earnings after income taxes by $0.2 million in the fourth quarter and
$1.4 million for the year. These restructuring charges represented severance
costs in connection with downsizing activities in France and Colombia. In the
fourth quarter of fiscal 1999, Agribrands realized a gain on the sale of land in
Korea which increased earnings before income taxes by $1.8 million and net
earnings by $1.2 million.
Interest expense decreased $0.4 million in the fourth quarter and $5.0 million
in the current year as a result of both lower average borrowings and lower
interest rates in the markets where the Company had outstanding borrowings.
Income taxes, which include federal, state and foreign taxes, were 31.0% and
26.1% of pre-tax earnings in the quarters ended August 31, 2000 and 1999,
respectively. The effective tax rate in the fourth quarter of fiscal 1999 was
favorably impacted by a reduction in valuation allowances against tax loss
carryforwards in France and Spain and tax credit carryforwards in Mexico.
Income taxes were 32.7% and 37.5% of pre-tax earnings in the years ended August
31, 2000 and 1999, respectively. The lower effective tax rate in 2000 is
primarily the result of a reduction in valuation allowances against foreign tax
credit carryforwards and other deferred tax assets in the United States. As a
result of recently implemented tax planning initiatives, the Company now
believes it will generate sufficient foreign source taxable income in the United
States to realize a tax benefit for these deferred tax assets.
The Company plans to complete its Form 10-K and file it with the Securities and
Exchange Commission by the end of November.
Agribrands is one of the leading international producers and marketers of animal
feeds and, through its subsidiaries and joint venture partners, operates 70
manufacturing plants in 17 countries. Its products are marketed outside the
United States under the "Purina" and "Chow" trademarks and the "Checkerboard"
logo through a network of approximately 4,000 independent dealers, as well as an
independent and a direct sales force.
On August 8, 2000, the Company and Ralcorp Holdings, Inc. announced that they
had entered into a definitive agreement to combine in a merger-of-equals
transaction. The companies have filed a preliminary proxy statement with the
Securities and Exchange Commission relating to the transaction. The merger is
conditioned, among other things, upon two-thirds approval of Ralcorp and
Agribrands shareholders, receipt of a ruling from the Internal Revenue Service
that the transaction will not affect the tax-free status of Agribrands' spin-off
from Ralston Purina Company in 1998, and customary regulatory approvals. The
transaction is expected to close during the first quarter of 2001. Ralcorp
Holdings is a leading manufacturer of private label and value-branded consumer
food products.
Statements in this press release that are not historical are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. The Company cautions readers not to place undue reliance on any
forward-looking statements, which speak only as of the date made. The Company
advises readers to review the various risks and uncertainties which may be
detailed from time to time in the Company's publicly filed documents, including
its Annual Report on Form 10-K for the period ended August 31, 1999.
<PAGE>
<TABLE>
<CAPTION>
AGRIBRANDS INTERNATIONAL, INC.
SELECTED OPERATING SEGMENT DATA
(Dollars in millions)
Corporate and
Americas Europe Asia Tradico Consolidated
----------------- ---------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Quarter Ended August 31, 2000:
Net sales $ 143.7 $ 64.3 $ 94.5 $ 0.4 $ 302.9
Operating profit * $ 5.4 $ 3.3 $ 9.8 $ (4.5) $ 14.0
Tons of feed product sold 531,100 308,600 362,200 100 1,202,000
Income over ingredient cost ** $ 36.8 $ 20.5 $ 25.7 $ (0.3) $ 82.7
Quarter Ended August 31, 1999:
Net sales $ 139.9 $ 75.5 $ 88.6 $ 2.6 $ 306.6
Operating profit * $ 10.1 $ 0.9 $ 7.1 $ (4.4) $ 13.7
Tons of feed product sold 539,000 355,000 340,000 1,000 1,235,000
Income over ingredient cost ** $ 38.8 $ 25.5 $ 25.0 $ (0.1) $ 89.2
Year Ended August 31, 2000:
Net sales $ 548.6 $ 284.7 $ 358.7 $ 1.1 $ 1,193.1
Operating profit * $ 23.3 $ 13.7 $ 40.2 $(15.1) $ 62.1
Tons of feed product sold 2,100,100 1,357,800 1,388,500 400 4,846,800
Income over ingredient cost ** $ 138.9 $ 92.4 $ 103.4 $ (0.1) $ 334.6
Year Ended August 31, 1999:
Net sales $ 572.5 $ 341.8 $ 344.6 $ 2.6 $ 1,261.5
Operating profit * $ 33.4 $ 15.6 $ 33.0 $(14.6) $ 67.4
Tons of feed product sold 2,165,000 1,500,000 1,297,000 1,000 4,963,000
Income over ingredient cost ** $ 147.3 $ 115.0 $ 94.5 $ (0.1) $ 356.7
</TABLE>
* Operating profit excludes provisions for restructuring and gains on sale of
property.
** The commercial animal feed industry generally prices products on the basis of
aggregate ingredient cost plus a per-unit margin. As ingredient prices
fluctuate, the changes are generally passed on to customers through changes in
the Company's product pricing. Income over ingredient cost (which is equal to
net sales minus the cost of ingredients), rather than sales dollars, is the key
indicator of revenue performance because of the distortions in sales dollars
caused by changes in commodity prices.
<PAGE>
<TABLE>
<CAPTION>
AGRIBRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
(Dollars in millions except per share data)
Quarter Ended Twelve Months Ended
August 31, August 31,
----------------------------- ------------------------------
2000 1999 2000 1999
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net Sales $ 302.9 $ 306.6 $ 1,193.1 $ 1,261.5
------------ ------------ ----------- ------------
Costs and Expenses
Cost of products sold 254.6 254.3 996.0 1,050.6
Selling, general and administrative 34.3 38.6 135.0 143.5
Interest 0.7 1.1 3.0 8.0
Provisions for restructuring 0.2 - 1.4 -
Gain on sale of property - (1.8) - (2.3)
Other (income)/expense, net (2.4) (1.3) (9.2) (8.7)
------------ ------------ ----------- ------------
287.4 290.9 1,126.2 1,191.1
------------ ------------ ----------- ------------
Earnings before Income Taxes 15.5 15.7 66.9 70.4
Income Taxes 4.8 4.1 21.9 26.4
------------ ------------ ----------- ------------
Net Earnings $ 10.7 $ 11.6 $ 45.0 $ 44.0
============ ============ =========== ============
Earnings Per Share
Basic $ 1.09 $ 1.11 $ 4.46 $ 4.16
============ ============ =========== ============
Diluted $ 1.06 $ 1.08 $ 4.33 $ 4.11
============ ============ =========== ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AGRIBRANDS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
August 31
(Dollars in millions)
2000 1999
---------- ----------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 174.6 $ 178.0
Receivables, less allowance for doubtful accounts 75.4 77.0
Inventories 96.6 81.3
Other current assets 7.1 11.9
---------- ----------
Total Current Assets 353.7 348.2
---------- ----------
Investments and Other Assets 59.5 51.3
Property, Plant and Equipment - net 168.4 174.0
---------- ----------
Total $ 581.6 $ 573.5
========== ==========
Liabilities and Shareholders Equity
Current Liabilities
Current maturities of long-term debt $ 0.4 $ 2.4
Notes payable 27.8 18.5
Accounts payable and accrued liabilities 116.0 125.1
Income taxes 4.5 8.5
---------- ----------
Total Current Liabilities 148.7 154.5
---------- ----------
Long-Term Debt 10.7 11.5
Deferred Income Taxes 9.4 11.0
Other Liabilities 19.3 23.2
Shareholders Equity
Common stock, $.01 par value, authorized
50,000,000 shares 0.1 0.1
Capital in excess of par value 419.5 419.5
Retained earnings 95.1 50.1
Common stock in treasury, at cost (33.8) (10.8)
Accumulated other comprehensive loss (87.4) (85.6)
---------- ----------
Total Shareholders Equity 393.5 373.3
---------- ----------
Total $ 581.6 $ 573.5
========== ==========
</TABLE>
