SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
____________________________
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-6085
____________________________
IBP, inc.
a Delaware Corporation
I.R.S. Employer Identification No. 42-0838666
IBP Avenue
Post Office Box 515
Dakota City, Nebraska 68731
Telephone 402-494-2061
____________________________
Indicate by check mark whether the registrant(1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
As of November 1, 1998, the registrant had outstanding 92,833,778 shares of
its common stock ($.05 par value).
PART I. FINANCIAL INFORMATION
IBP, inc. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 26, December 27,
1998 1997
------------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 39,932 $ 69,022
Marketable securities 29,485 3,120
Accounts receivable, less allowance for
doubtful accounts of $10,583 and $10,063 596,780 564,125
Inventories 395,971 389,753
Deferred income tax benefits and
prepaid expenses 56,439 57,907
---------- ----------
TOTAL CURRENT ASSETS 1,118,607 1,083,927
Property, plant and equipment,
less accumulated depreciation
of $820,092 and $774,694 1,039,700 1,017,082
Goodwill, net of accumulated
amortization of $153,457 and $137,996 652,831 671,557
Other assets 109,295 66,375
--------- ---------
$2,920,433 $2,838,941
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to banks $ 243,235 $ 192,010
Accounts payable 278,325 345,728
Deferred income taxes and other
current liabilities 354,893 339,080
--------- ---------
TOTAL CURRENT LIABILITIES 876,453 876,818
Long-term debt and capital lease
obligations 566,592 568,281
Deferred income taxes and other
liabilities 161,346 156,773
STOCKHOLDERS' EQUITY:
Common stock at par value 4,750 4,750
Additional paid-in capital 405,158 406,952
Retained earnings 978,244 886,964
Accumulated other comprehensive income (12,075) (6,114)
Treasury stock (60,035) (55,483)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 1,316,042 1,237,069
--------- ---------
$2,920,433 $2,838,941
========= =========
See accompanying notes to condensed consolidated financial statements.
-2-
IBP, inc. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands, except per share data)
13 Weeks Ended 39 Weeks Ended
-------------------- ---------------------
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
1998 1997 1998 1997
-------- --------- --------- ---------
Net sales $3 210,689 $3,416,706 $9,769,973 $9,999,634
Cost of products sold 3,017,438 3,291,265 9,346,752 9,671,378
--------- --------- --------- ---------
Gross profit 193,251 125,441 423,221 328,256
Selling, general and
administrative expense 77,319 64,460 206,092 150,159
--------- --------- --------- ---------
EARNINGS FROM OPERATIONS 115,932 60,981 217,129 178,097
Interest expense, net 9,951 14,060 34,596 24,502
--------- --------- --------- ---------
Earnings before incomee
taxes and extraordinary
item 105,981 46,921 182,533 153,595
Income tax expense 40,400 17,800 69,500 58,300
--------- --------- --------- ---------
Earnings before
extraordinary item 65,581 29,121 113,033 95,295
Extraordinary loss on early
extinguishment of debt,
less applicable taxes
(Note D) - - 14,815 -
--------- --------- -------- --------
NET EARNINGS $ 65,581 $ 29,121 $ 98,218 $ 95,295
========= ========= ======== ========
Earnings per share:
Earnings before
extraordinary item $ .71 $ .32 $ 1.22 $1.03
Extraordinary item - - (.16) -
---- ---- ----- ----
Net earnings $ .71 $ .32 $ 1.06 $1.03
==== ==== ===== ====
Earnings per share - assuming
dilution:
Earnings before
extraordinary item $ .70 $ .31 $ 1.21 $1.02
Extraordinary item - - (.16) -
---- ---- ----- ---
Net earnings $ .70 $ .31 $ 1.05 $1.02
==== ==== ===== ====
Dividends per share $.025 $.025 $.075 $.075
==== ==== ==== ====
See accompanying notes to condensed consolidated financial statements.
-3-
IBP, inc. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
39 Weeks Ended
---------------------------
Sept. 26, Sept. 27,
1998 1997
--------- ---------
Inflows(outflows)
NET CASH FLOWS USED IN OPERATING ACTIVITIES $ 128,365 $ 9,134
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (200,227) (215,073)
Proceeds from disposals of marketable
securities 177,370 380,439
Capital expenditures (123,182) (93,389)
Investment in life insurance contracts (33,000) -
Payment for stock of new subsidiaries,
net of cash acquired - (325,234)
Other investing activities, net 4,686 10,940
--------- ---------
Net cash flows used in
investing activities (174,353) (242,317)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings under revolving
credit agreements 113,500 333,500
Principal payments on long-term
obligations (113,765) (211,420)
Proceeds from issuance of long-term debt 49,766 132,253
Net change in checks in process of
clearance 1,665 (8,697)
Premiums paid on early retirement
of debt (20,636) -
Purchases of treasury stock (5,324) (65,617)
Other financing activities, net (8,189) (8,305)
--------- --------
Net cash flows provided by
financing activities 17,017 171,714
--------- --------
Effect of exchange rate on cash
and cash equivalents (119) (134)
--------- --------
Net change in cash and cash equivalents (29,090) (61,603)
Cash and cash equivalents at beginning
of period 69,022 94,164
--------- --------
Cash and cash equivalents at end of
period $ 39,932 $ 32,561
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the periods for:
Interest, net of amounts capitalized $ 45,424 $ 21,316
Income taxes, net of refunds received 26,140 39,934
Depreciation and amortization expense 74,841 66,703
Amortization of intangible assets 19,731 12,309
See accompanying notes to condensed consolidated financial statements.
-4-
IBP, inc. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. GENERAL
The condensed consolidated balance sheet of IBP, inc. and
subsidiaries ("IBP" or "the company") at December 27, 1997 has been
taken from audited financial statements at that date and condensed. All
other condensed consolidated financial statements contained herein have
been prepared by IBP and are unaudited. The condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto included in IBP's Annual
Report on Form 10-K for the year ended December 27, 1997.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting
only of normal recurring adjustments, necessary to present fairly the
financial position of IBP at September 26, 1998 and the results of its
operations and its cash flows for the periods presented herein.
Derivatives and hedging activities: In June 1998, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities.: The company must adopt this standard no later than the
first quarter of fiscal 2000. Management is reviewing the requirements
of this statement, which are quite complex. Although management expects
that this standard will not materially affect its financial position and
results of operations, it has not yet determined the impact of this
standard on the financial statements of the company.
Business segments: Effective at year-end 1998, the company will
adopt SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information." Management is reviewing the requirements of this
statement and believes that it will change the extent of its current
business segment disclosure. This statement does not impact the basic
consolidated financial statements; it affects the presentation of
segment information in the Notes to Consolidated Financial Statements.
Reclassifications: Certain reclassifications have been made to prior
financial statements to conform to the current year presentation.
B. OTHER
IBP's interim operating results may be subject to substantial
fluctuations which do not necessarily occur or recur on a seasonal
basis. Such fluctuations are normally caused by competitive and other
conditions in the cattle and hog markets over which IBP has little or no
control. Therefore, the results of operations for the interim periods
presented are not necessarily indicative of the results to be attained
for the full fiscal year.
-5-
C. INVENTORIES
Inventories, valued at the lower of first-in, first-out cost or
market, are comprised of the following:
September 26, December 27,
1998 1997
------------- ------------
(In thousands)
Product inventories:
Raw materials $ 18,941 $ 22,952
Work in process 72,047 82,679
Finished goods 157,836 165,970
------- -------
248,824 271,601
Livestock 73,247 45,908
Supplies 73,900 72,244
------- -------
$395,971 $389,753
======= =======
D. LONG-TERM OBLIGATIONS
Long-term obligations are summarized as follows:
September 26, December 28,
(in thousands) 1998 1997
-------------------------------------------------------------
7.45% Senior Notes due 2007 $125,000 $125,000
6.125% Senior Notes due 2006 100,000 100,000
7.125% Senior Notes due 2026 100,000 100,000
6.00% Securities due 2011 50,000 -
10.75% Senior Subordinated
Notes due 2006 - 112,050
Revolving credit facilities 175,000 112,950
Present value of minimum
capital lease obligations 17,654 19,093
Other 1,098 1,400
------- -------
568,752 570,493
Less amounts due within
one year 2,160 2,212
------- -------
$566,592 $568,281
======= =======
During the first quarter 1998, the company completed its
purchase of all of the $112 million outstanding 10.75% Senior
Subordinated Notes of its wholly-owned subsidiary, Foodbrands
America, Inc. Net prepayment premiums, accelerated amortization
of unamortized deferred financing costs, and transaction expenses
totaled $24 million, before applicable income tax benefit of $9
million, and was accounted for as an extraordinary loss.
The purchase of these obligations by IBP was funded with
available credit facilities and will likely be refinanced at a
later date. Under the company's $300 million Medium-Term Notes
program registered with the Securities and Exchange Commission.
The portion of borrowings under IBP's revolving credit facilities
considered long-term increased to $175 million at September 26,
1998 from $113 million at December 27, 1997.
-6-
In January 1998, the company settled and closed its public
offering of $50 million aggregate principal amount of 6.00%
Remarketable or Redeemable Securities, due January 15, 2011 (the
"6.00% Securities"). The net proceeds from the 6.00% Securities
were added to the company's working capital. The 6.00%
Securities were the first series of notes issued under the
company's Medium-Term Notes program.
E. EARNINGS PER SHARE
(in thousands, except per share amounts)
For the Thirteen Weeks Ended September 26, 1998
-----------------------------------------------
Earnings Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Basic EPS:
Net earnings $65,581 92,495 $ .71
====
Effect of dilutive
securities:
Employee stock plans 759
------ ------
Diluted EPS $65,581 93,254 $ .70
====== ====== ====
For the Thirteen Weeks Ended September 26,1997
----------------------------------------------
Earnings Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Basic EPS:
Net earnings $29,121 92,105 $ .32
====
Effect of dilutive
securities:
Employee stock plans 1,004
------ ------
Diluted EPS $29,121 93,109 $ .31
====== ====== ====
For the Thirty-nine Weeks Ended September 26,1998
-------------------------------------------------
Earnings Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Basic EPS:
Earnings before
extraordinary item $113,033 93,540 $1.22
====
Effect of dilutive
securities:
Employee stock plans 845
------- ------
Diluted EPS $113,033 93,385 $1.21
======= ====== ====
For the Thirty-nine weeks Ended September 27, 1997
--------------------------------------------------
Earnings Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Basic EPS:
Net earnings $95,295 92,686 $1.03
====
Effect of dilutive
securities:
Employee stock plans 1,159
------ ------
Diluted EPS $95,295 93,845 $1.02
====== ====== ====
-7-
The following summary lists stock options outstanding at the
end of the fiscal quarters which were not included in the
computations of diluted EPS because the options' exercise prices
were greater than the average market price of the common shares,
These options had varying expiration dates.
1998 1997
---- ----
Stock options excluded from
diluted EPS computation 2,014 1,469
Average option price per share $23.67 $24.93
F. COMMITMENTS AND CONTINGENCIES
IBP is involved in numerous disputes incident to the ordinary
course of its business. In the opinion of management, any
liability for which provision has not been made relative to the
various lawsuits, claims and administrative proceedings pending
against IBP, including that described below, will not have a
material adverse effect on its consolidated results of operations,
financial position or liquidity.
In July 1996, a lawsuit was filed against IBP by certain
cattle producers in the U.S. District Court, Middle District of
Alabama, seeking certification of a class of all cattle producers.
The complaint alleges, inter alia, that IBP has used its market
power and alleged "captive supply" agreements to reduce the prices
paid to producers for cattle. Plaintiffs initially disclosed
that, in addition to declaratory relief and punitive damages, they
sought disgorgement of all profits earned in 1994, 1995 and 1996
in excess of what they deem a "fair" return. On September 15,
1998, the District Court rendered a decision denying class
certification. Plaintiffs have filed a motion requesting
reconsideration of this decision, attempting to limit the class in
a manner necessary to avoid conflicts between class members, and
attempting to present a damage analysis which the District Court
will accept. Based upon IBP's review of this information,
management still believes that class certification is unlikely.
As previously stated, IBP believes it has acted properly and
lawfully in its dealings with cattle producers.
G. COMPREHENSIVE INCOME
In the first quarter of 1998, the company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income." The standard requires the display and reporting of
comprehensive income, which includes all changes in stockholders'
equity with the exception of additional investments by
stockholders or distributions to stockholders. Comprehensive
income for the company includes net income and foreign currency
translation adjustments which are charged or credited to the
cumulative translation account within stockholders' equity.
Comprehensive income for the 39 weeks ended September 26, 1998 and
September 27, 1998 was as follows (unaudited,in thousands):
-8-
39 Weeks Ended
-----------------------
Sept. 26, Sept. 27,
1998 1997
--------- ---------
NET EARNINGS $ 98,218 $ 95,295
Other comprehensive income,
before tax:
Foreign currency translation
adjustments (5,961) (1,164)
Income tax expense related
to items of other
comprehensive income 2,265 442
-------- ------
Other comprehensive income,
net of tax (3,696) (722)
-------- ------
COMPREHENSIVE INCOME $ 94,522 $ 94,573
======== =======
-9-
MANAGEMENT'S DISCUSSION AND ANALYSIS
The matters discussed herein contain forward-looking statements that
involve risks and uncertainties including risk of changing market
conditions with regard to livestock supplies and demand for the
company's products, domestic and international regulatory risks,
competitive and other risks over which IBP has little or no control.
Consequently, future results may differ from management's expectations.
Moreover, past financial performance should not be considered a reliable
indicator of future performance.
RESULTS OF OPERATIONS
IBP's fresh meats operations were much improved in the third quarter
1998 over the third quarter 1997 and, combined with a strong foodservice
division performance, resulted in increased consolidated earnings.
Earnings from operations, measured as a percentage of net sales,
improved to 3.6% in the third quarter 1998 from 1.8% in the same 1997
period. Both the beef and pork operations benefited from increased
capacity utilization and lower raw material costs, offset somewhat by
higher selling, general and administrative expenses. In addition, IBP's
foodservice subsidiaries, consisting of Foodbrands America, Inc.
("Foodbrands") and The Bruss Company ("Bruss"), performed above
expectations as product demand increased and raw material prices
decreased.
For the nine months ended September, 1998 operating earnings
measured 2.2% versus 1.8% in the same 1997 period. Excluding Foodbrands
and Bruss, which were acquired in the second quarter 1997, IBP's 1998
year-to-date operating margin measured 1.8% of net sales compared to
1.7% last year. The higher 1998 figure reflected much-improved pork
margins offset by lower beef margins caused by burdensome competing
domestic meat supplies and weaker export demand resulting from economic
problems in the Far East. Foodservice operations contributed positively
due to the above-mentioned factors.
Industry experts predict that fed cattle supplies will remain strong
into the first half of 1999 before tightening somewhat. Meanwhile,
favorable hog supplies are expected throughout next year due to hog
production expansion and relatively low grain prices.
SALES
Third quarter 1998 net sales decreased 6% from the third quarter
1997. The decrease primarily reflected pressure on selling prices
caused by abundant market supplies of beef, pork and poultry. This
factor was offset somewhat by increases in pounds of products sold,
especially in the pork and foodservice divisions. New operations did
not materially impact third quarter 1998 to 1997 comparative net sales
as Foodbrands and Bruss were part of the company during the entire third
quarter 1997.
-10-
In the year-to-date period ended September, 1998 net sales decreased
2% from the prior year. Excluding new operations (Foodbrands, Bruss and
Platte County Processed Meats, Inc. ("Platte County"), a ground beef
processing plant in Nebraska), year-to-date 1998 net sales decreased 6%
compared to 1997. Lower average prices of beef and pork products sold
were only partially offset by increases in pounds of beef and pork
products sold.
Third quarter and year-to-date 1998 net export sales decreased 19%
and 7%, respectively, from the comparable 1997 periods. Export tonnage
in 1998 increased 13% and 20% during the same comparison periods, but
was offset by unfavorable price and product mix variances.
The Asian region accounted for 67% of total net export sales in the
first three quarters of 1998 compared to 74% in the same 1997 period.
The Far East shortfall was absorbed by increased exports to Mexico,
Canada and South America destinations. Exports accounted for
approximately 12% of consolidated net sales in 1998 through September
and 13% in the comparable 1997 timeframe.
COST OF PRODUCTS SOLD
Third quarter 1998 cost of products sold decreased 8% from the third
quarter 1997. The fresh meats and foodservice businesses both benefited
from lower raw material prices offset somewhat by volume increases in
pounds of pork and foodservice products sold. Plant costs in the third
quarter 1998 increased over the third quarter 1997 primarily as a result
of higher labor and volume-related costs.
The cost of products sold in the nine months ended September 1998
decreased 3% from the same 1997 period. Excluding the aforementioned
new operations, IBP's fresh meats operations experienced a 6% decrease
in 1998 costs versus the prior year. This decrease was primarily due to
lower average prices paid for live hogs and cattle which overrode the
effect of increases in pounds of pork and beef products sold. Plant
costs increased due primarily to higher labor costs and increased pork
volume.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Third quarter 1998 expense increased 20% over the third quarter
1997. The primary reasons for the increase were higher earnings-based
incentive compensation, computer system enhancements, and amortization
of intangibles.
Year-to-date 1998 expense through September was 37% higher than in
the comparable year-earlier period. Excluding the effect of new
subsidiaries, year-to-date 1998 expense was 1% higher than in 1997.
Generally, higher incentive compensation and amortization of intangibles
was partially offset by accrual of refunds of U.S. harbor maintenance
taxes paid in prior years, based upon a U.S. Supreme Court decision
which ruled their collection unconstitutional, as well as cessation of
current year harbor tax expense.
Foodbrands' selling expense is much higher as a percentage of net
sales compared to IBP's fresh meats operations due to the incrementally
higher value-added nature of its product lines.
-11-
INTEREST EXPENSE
Net interest expense fell 29% in the third quarter 1998 versus the
third quarter 1997. Average borrowings decreased in the third quarter
1998 relative to the same 1997 period, due primarily to positive
operating cash flows. A lower third quarter 1998 effective interest
rate compared to the third quarter 1997 also contributed to the lower
net interest expense.
The 41% higher net interest expense in the year-to-date period ended
September 1998 versus 1997 was primarily attributable to higher average
borrowings brought about by the purchases of Foodbrands and Bruss in the
second quarter 1997.
LIQUIDITY AND CAPITAL RESOURCES
Total consolidated outstanding borrowings averaged $858 million in
the first nine months of 1998 compared to $602 million in the comparable
1997 period. Borrowings outstanding at September 26, 1998 under
committed facilities totaled $242 million, $175 million of which was
classified as long-term in the consolidated balance sheet, and available
unused credit capacity under committed facilities was $358 million.
The purchase of the Foodbrands 10.75% Notes in the first quarter
1998 by IBP, inc. was funded with available credit facilities and will
likely be refinanced at a later date under the company's $300 million
Medium-Term Notes program registered with the Securities and Exchange
Commission. The portion of borrowings under IBP's revolving credit
facilities considered long-term increased to $175 million at September
26, 1998 from $113 million at December 27, 1997.
In January 1998, the company settled and closed its public offering
of $50 million aggregate principal amount of 6.00% Remarketable or
Redeemable Securities, due January 15, 2011 (the "6.00% Securities").
The net proceeds from the 6.00% Securities were added to the company's
working capital. The 6.00% Securities were a series of notes issued
under the company's Medium-Term Notes program.
The company invested $37 million during the fourth quarter 1997 and
the first quarter 1998 in life insurance contracts for key employees.
Among other advantages, expected changes in the cash value of these
contracts are intended to effectively act as a hedge against changes in
the company's deferred compensation liabilities.
Year-to-date capital expenditures through September 26, 1998 totaled
$123 million compared to $94 million in the first nine months of 1997.
Current year spending was primarily for pork and foodservice plant
expansions, construction of the company's new world headquarters,
acquisition of a closed beef mufacturing facility in Norfolk, Nebraska,
and ongoing replacements and modifications to existing facilities.
-12-
YEAR 2000
The "Year 2000" problem relates to computer systems that have time
and date-sensitive programs that were designed to read years beginning
with "19," but may not properly recognize the year 2000. If a computer
system or other equipment with embedded chips or processors
(collectively, "Business Systems") used by the company or a third party
dealing with the company fails because of the inability of the system or
application to properly read the year "2000," the results could
conceivably have a material adverse effect on the company. This Year
2000 issue can arise at any point in the company's supply,
manufacturing, processing, distribution, and financial chains.
The company has an internal team responsible for assessing the
impact of Year 2000 and leading and monitoring the company's state of
readiness with respect to this issue. The assessment and planning phase
is approximately 90% complete, the implementation phase is approximately
75% complete, and the testing phase is approximately 40% complete. All
phases are expected to be completed before or during 1999.
A significant portion of the company's Business Systems is
internally developed and has been or is in the process of being
remediated. The Business Systems considered most critical to continuing
operations are being given the highest priority. None of the company's
other information technology projects have been delayed due to the
implementation of the Year 2000 readiness program.
As part of the Year 2000 readiness program, significant service
providers, vendors, suppliers, customers, and governmental entities
("Key Business Partners") that are considered critical to business
operations in the periods prior to and subsequent to January 1, 2000,
have been identified and steps are being undertaken in an attempt to
reasonably ascertain their stage of Year 2000 readiness as it relates
directly or indirectly to the company.
The possible consequences of the company or its Key Business
Partners not being fully Year 2000 compliant by January 1, 2000 include,
among other things, temporary plant closings, delays in the delivery of
products and/or receipt of supplies, invoice and collection errors and
inventory and supply obsolescence. However, the company believes that
its Year 2000 readiness program, including the contingency planning
discussed below, should significantly reduce the adverse effect any such
disruptions may have.
The company currently has no formal contingency plan in place.
However, the progress of the Year 2000 readiness program is being
closely monitored and additional measures will be taken as risks are
identified. These measures may include stockpiling critical supplies
and packaging materials, securing alternate sources of supplies or
services, and other appropriate measures.
-13-
It is currently estimated that the aggregate cost of the company's
Year 2000 efforts will be approximately $14 million, of which $5 million
has been spent, and will be funded with operating cash flows. The
budgeted $14 million includes approximately $8 million, of which $2
million has been spent, for computer hardware, substantially all of
which will be capitalized. The remaining $6 million is primarily for
computer software, all of which will be expensed as incurred.
Approximately $3 million has been expensed to date.
The company's Year 2000 readiness program is an ongoing process and
the estimates of costs and completion dates for various components of the
Year 2000 readiness program described above are subject to change.
PART II. OTHER INFORMATION
Item 5. Other Information
In connection with its Medium-Term Notes program, the company
hereby reports the following computations (in thousands, except
ratio data):
39 Weeks Ended
---------------------
Sept. 26, Sept. 27,
1998 1997
--------- ---------
Earnings before income taxes
and extraordinary item $182,553 $153,595
Total fixed charges 48,858 37,873
Capitalized interest (5,792) (5,435)
------- -------
Earnings before fixed charges,
income taxes and extraordinary
item $225,619 $186,033
======= =======
Ratio of earnings to fixed charges 4.6 4.9
=== ===
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the company during the
quarter ended September 26, 1998.
-14-
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IBP, inc.
--------------------------
(Registrant)
November 4, 1998 /s/ Robert L. Peterson
- -------------------------- --------------------------
(date) Robert L. Peterson
Chairman of the Board and
Chief Executive Officer
/s/ Larry Shipley
--------------------------
Larry Shipley
Chief Financial Officer
/s/ Craig J. Hart
-------------------------
Craig J. Hart
Vice President
and Controller
-15-
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0
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<NET-INCOME> 98,218
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.05
</TABLE>
