SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X / Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the fiscal year ended October 31, 1995
/ / Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from to
Commission file number : 0-16567
SANDERSON FARMS, INC.
(Exact name of registrant as specified in its charter)
Mississippi 64-0615843
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
225 North 13th Avenue
Laurel, Mississippi 39440
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (601) 649-4030
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $1.00 per share par value
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
X Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ]
Aggregate market value (based on the closing sales price in the NASDAQ
National Market System) of the voting stock held by non-affiliates of the
Registrant as of December 31, 1995: approximately $57,833,651.97.
Number of Shares outstanding of the Registrant's common stock as of
December 31, 1995: 13,613,080 shares of common stock, $1.00 per share par
value.
Portions of the Registrant's definitive proxy statement filed or to be
filed in connection with its 1996 Annual Meeting of Stockholders are
incorporated by reference into Part III.
INTRODUCTORY
Definitions. Except where the context indicates otherwise, the
following terms have the following respective meanings when used in this
Annual Report. "Registrant" and "Company" mean Sanderson Farms, Inc. and its
subsidiaries and predecessor organizations. "Fiscal year" means the fiscal
year ended October 31, 1995, which is the year for which this Annual Report is
filed.
Presentation and Dates of Information. Except for Item 4A herein, the
Item numbers and letters appearing in this Annual Report correspond with those
used in Securities and Exchange Commission Form 10-K (and, to the extent that
it is incorporated into Form 10-K, the letters used in the Commission's
Regulation S-K) as effective on the date hereof, which specifies the
information required to be included in Annual Reports to the Commission. Item
4A ("Executive Officers of the Registrant") has been included by the
Registrant in accordance with General Instruction G(3) of Form 10-K and
Instruction 3 of Item 401(b) of Regulation S-K. The information contained in
this Annual Report is, unless indicated to be given as of a specified date or
for the specified period, given as of the date of this Report, which is
January 26, 1996.
PART I
Item 1. Business
(a) GENERAL DEVELOPMENT OF THE REGISTRANT'S BUSINESS
The Registrant was incorporated in Mississippi in 1955, and is a fully-
integrated poultry processing company engaged in the production, processing,
marketing and distribution of fresh and frozen chicken products. In addition,
through its wholly-owned subsidiary, Sanderson Farms, Inc. (Foods Division),
the Registrant is engaged in the processing, marketing and distribution of
processed and prepared food items.
The Registrant sells ice pack, chill pack and frozen chicken, in whole,
cut-up and boneless form, primarily under the Miss Goldy brand name to
retailers, distributors, and fast food operators principally in the
southeastern, southwestern and western United States. During its fiscal year
ended October 31, 1995, the Registrant processed 174.2 million chickens, or
approximately 571.0 million dressed pounds. According to 1995 industry
statistics, the Registrant was the 14th largest processor of dressed chickens
in the United States based on estimated average weekly processing.
The Registrant's chicken operations presently encompass four hatcheries,
three feed mills, five processing plants and one by-products plant. The
Registrant has contracts with operators of approximately 407 grow-out farms
that provide it with sufficient housing capacity for its current operations.
The Registrant also has contracts with operators of 127 breeder farms.
The Registrant sells over 100 processed and prepared food items
nationally and regionally, primarily to distributors, national food service
accounts, retailers and club stores. These food items include frozen entrees,
such as chicken and dumplings, lasagna, seafood gumbo, and shrimp creole and
specialty products, such as chicken patties and corn dogs. The Registrant
also sells a retail entree line of six different two-pound frozen entrees
including chicken primavera, lasagna with meat, seafood gumbo and mexican
casserole with beef. This product line is designed as a convenient, quality
product for the family.
Since the Registrant completed the initial public offering of its common
stock through the sale of 1,150,000 shares to an underwriting syndicate
managed by Smith Barney, Harris Upham & Co. Incorporated and Morgan Keegan &
Co. Inc. in May 1987, the Registrant has significantly expanded its operations
to increase production capacity, product lines and marketing flexibility.
Through 1994, this expansion included the expansion of the Registrant's
Hammond, Louisiana processing facility, the construction of new waste water
facilities at the Hammond, Louisiana and Collins and Hazlehurst, Mississippi
processing facilities, the addition of second shifts at the Hammond,
Louisiana, Laurel, Mississippi, Hazlehurst, Mississippi, and Collins,
Mississippi processing facilities, expansion of freezer and production
capacity at its prepared foods facility in Jackson, Mississippi, the expansion
of freezer capacity at its Laurel, Mississippi, Hammond, Louisiana and
Collins, Mississippi processing facilities, the addition of deboning
capabilities at all of the Registrant's poultry processing facilities, and the
construction and start-up of its Pike County, Mississippi, production and
processing facilities, including a hatchery, a feed mill, a processing plant,
a waste water treatment facility and a water treatment facility. In addition,
since 1987, the Registrant completed the expansion and renovation of the
hatchery at its Hazlehurst, Mississippi production facilities, and completed
the renovation and expansion of its Collins, Mississippi by-products facility,
allowing for the elimination of a smaller by-products facility at the Laurel,
Mississippi plant.
Capital expenditures for fiscal 1995 were funded by working capital and
borrowings under a revolving credit agreement. Effective April 17, 1995, the
Registrant amended its revolving credit agreement to, among other things,
increase the revolving credit available to the Registrant thereunder to $100.0
million from $70.0 million. On November 16, 1995, the Registrant entered into
a loan agreement with the Robertson County, Texas Industrial Development
Corporation (the "Issuer") pursuant to which the Issuer loaned to the
Registrant the proceeds of the issuance of $7.2 million Variable Rate Demand
Industrial Development Bonds (Sanderson Farms, Inc. Project) Series 1995 (the
"Bonds"), for use by the Registrant in the construction of its feed
manufacturing facility to be located in Robertson County, Texas. The Bonds
are secured by a letter of credit issued pursuant to the Registrant's
revolving credit agreement. The credit otherwise available to the Registrant
under the revolving credit agreement is reduced by the amount available to be
drawn under the letter of credit. The Registrant anticipates that capital
expenditures for fiscal 1996 will be funded by internally generated working
capital, borrowings under the revolving credit agreement, and the proceeds of
the Bonds.
The Registrant currently has additional processing capacity available to
it through the double shifting of its Pike County, Mississippi processing
facility, which is scheduled to occur on March 1, 1996, and the double
shifting of the second line at its Collins, Mississippi processing facility.
During 1995 the Company announced that it will construct a new state-of-the-
art poultry complex consisting of a feedmill, hatchery, processing plant and
wastewater treatment facility in Brazos and Robertson Counties, Texas. At
full capacity this facility will have the capacity to process 1.2 million
birds per week and will employ approximately 1,400 people. Construction of
the new facility began during the fall of 1995 with initial operations
expected to begin in the Spring of 1997. In addition, the Registrant
continually evaluates internal and external expansion opportunities to
continue its growth in poultry and/or related food products.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Not applicable.<PAGE>
(c) NARRATIVE DESCRIPTION OF BUSINESS
REGISTRANT'S BUSINESS
General
The Registrant is engaged in the production, processing, marketing and
distribution of fresh and frozen chicken and the preparation, processing,
marketing and distribution of processed and prepared food items.
The Registrant sells chill pack, ice pack and frozen chicken, both whole
and cut-up, primarily under the Miss Goldy brand name to retailers,
distributors and fast food operators principally in the southeastern,
southwestern and western United States. During its fiscal year ended October
31, 1995, the Registrant processed approximately 174.2 million chickens, or
approximately 571.0 million dressed pounds. In addition, the Registrant
purchased and further processed 52.4 million pounds of poultry products during
fiscal 1995. According to 1995 industry statistics, the Registrant was the
14th largest processor of dressed chicken in the United States based on
estimated average weekly processing.
The Registrant conducts its chicken operations through Sanderson Farms,
Inc. (Production Division) and Sanderson Farms, Inc. (Processing Division),
both of which are wholly-owned subsidiaries of Sanderson Farms, Inc. The
production subsidiary, Sanderson Farms, Inc. (Production Division), which has
facilities in Laurel, Collins, Hazlehurst and Pike County, Mississippi, and a
field office in Bryan, Texas, is engaged in the production of chickens to the
broiler stage. Sanderson Farms, Inc. (Processing Division), which has
facilities in Laurel, Collins, Hazlehurst and Pike County, Mississippi, and
Hammond, Louisiana, is engaged in the processing, sale and distribution of
chickens.
The Registrant conducts its processed and prepared foods business
through its wholly-owned subsidiary, Sanderson Farms, Inc. (Foods Division),
which has a facility in Jackson, Mississippi. The Foods Division is engaged
in the processing, marketing and distribution of over 100 processed and
prepared food items, which it sells nationally and regionally, principally to
distributors, national food service accounts, retailers and club stores.
Products
The Registrant has the ability to produce a wide range of processed
chicken products and processed and prepared food items thereby allowing it to
take advantage of marketing opportunities as they arise.
Processed chicken is first saleable as an ice packed whole chicken. The
Registrant adds value to its ice packed whole chickens by removing the
giblets, weighing, packaging and labelling the product to specific customer
requirements and cutting the product based on customer specifications. The
additional processing steps of giblet removal, close tolerance weighing and
cutting increase the value of the product to the customer over whole chickens
by reducing customer handling and cutting labor and capital costs, reducing
the shrinkage associated with cutting, and ensuring consistently sized
portions.
With respect to chill pack products, additional value can be achieved by
deep chilling and packaging whole chickens in bags or combinations of fresh
chicken parts in various sized individual trays under the Registrant's brand
name, which then may be weighed and prepriced, based on each customer's needs.
The chill pack process increases the value of the product by extending shelf
life, reducing customer weighing and packaging labor, and providing the
customer with a wide variety of products with uniform, well designed
packaging, all of which enhance the customer's ability to merchandise chicken
products.
To satisfy some customers' merchandising needs, the Registrant quick
freezes the chicken product, which adds value by meeting the customers'
handling, storage, distribution and marketing needs and by permitting shipment
of product overseas where transportation time may be as long as 25 days.
Value added products usually generate higher sale prices per pound,
exhibit less finished price volatility and generally result in higher and more
consistent profit margins over the long-term than non-value added product
forms. Selling fresh chickens as a prepackaged brand name product has been a
significant step in the development of the value added, higher margin consumer
business. The Registrant evaluates daily the potential profitability of all
product lines and attempts to maximize its profits on a short-term basis by
making strategic changes in its product mix to meet customer demand.
The following table sets forth, for the periods indicated, the
contribution, as a percentage of sales of chicken products, of value added
and non-value added chicken products.
<TABLE>
Fiscal Year Ended October 31,
<CAPTION>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Value added 95.7% 96.3% 97.2% 98.3% 98.2%
Non-value added 4.3% 3.7% 2.8% 1.7% 1.8%
Total Registrant
chicken sales . 100.0% 100.0%100.0% 100.0% 100.0%
The following table sets forth, for the years indicated, the contribution, as a percentage of net sales, of
each of the Registrant's major product lines.
Fiscal Year Ended October 31,
1991 1992 1993 1994 1995
Registrant processed
chicken:
Value added:
Chill pack(1) 28.3% 24.3% 20.9% 18.2% 19.3%
Fresh bulk pack(1) 37.8 42.2 49.6 56.2 51.6
Frozen 8.1 9.2 8.8 10.2 13.5
Subtotal 74.2 75.7 79.3 84.6 84.4
Non-value added:
Ice pack 2.0 2.1 1.8 0.9 0.7
Frozen 1.4 .8 0.4 0.6 0.8
Subtotal 3.4 2.9 2.2 1.5 1.5
Total Company
processed
chicken 77.6 78.6 81.5 86.1 85.9
Processed and
prepared
foods 21.5 20.9 18.4 13.8 14.1
Other(2) 0.9 .5 0.1 0.1 0.0
Total . 100.0% 100.0% 100.0% 100.0% 100.0%
</TABLE>
(1) Vacuum pack poultry products have been restated in 1993 and included in
1994 and 1995 as fresh bulk pack, which includes ice pack and vacuum
pack products. The vacuum packproducts were classified as chill
pack products in the 1993 Form 10-K.
(2) Consists of sales of poultry products that the Registrant purchases
from other poultry processors for resale, as necessary, to meet
customer demand.
Sales and Marketing
The Registrant's chicken products are sold primarily to retailers
(including national and regional supermarket chains and local
supermarkets), distributors and fast food operators located principally
in the southeastern, southwestern and western United States. The
Registrant also sells its chicken products to governmental agencies
and to customers who resell the products outside of the continental
United States. This wide range of customers, together with the
Registrant's broad product mix, provides the Registrant with
flexibility in responding to changing market conditions in its effort
to maximize profits. This flexibility also assists the Registrant in
its efforts to reduce its exposure to market volatility.
Sales and distribution of the Registrant's chicken products are
conducted primarily by sales personnel at the Registrant's general
corporate offices in Laurel, Mississippi and by customer service
representatives at each of its five processing complexes and through
independent food brokers. Each complex has individual on-site
distribution centers and uses the Registrant's truck fleet, as well as
contract carriers, for distribution of its products.
Generally, the Registrant prices much of its chicken products based
upon weekly market prices reported by the United States Department of
Agriculture. Consistent with the industry, the Registrant's
profitability is impacted by such market prices, which may fluctuate
substantially and exhibit cyclical characteristics. The Registrant
adds a markup to base prices, which depends upon value added, volume,
product mix and other factors. While base prices may change weekly,
the Registrant's markup is generally negotiated from time to time with
the Registrant's customers. The Registrant's sales are generally made
on an as-ordered basis, and the Registrant maintains no long-term
sales contracts with its customers.
The Registrant uses television, radio and newspaper advertising,
coupon promotion, point of purchase material and other marketing techniques
to develop consumer awareness of and brand recognition for its Miss Goldy
products. The Registrant has achieved a high level of public awareness
and acceptance of its products through television advertising featuring a
celebrity as the Registrant's spokesperson. Brand awareness is an
important element of the Registrant's marketing philosophy, and
it intends to continue brand name merchandising of its products.
The Registrant's processed and prepared food items are sold nationally
and regionally, primarily to distributors, national food service accounts,
retailers and club stores. Sales of such products are handled by
independent food brokers located throughout the United States, primarily in
the southeast and southwest United States, and by sales personnel of the
Registrant. Processed and prepared food items are distributed from the
Registrant's plant in Jackson, Mississippi, through
arrangements with contract carriers.
Production and Facilities
General. The Registrant is a vertically-integrated producer of fresh
and frozen chicken products, controlling the production of hatching eggs,
hatching, feed manufacturing, growing, processing
and packaging of its product lines.
Breeding and Hatching. The Registrant maintains its own breeder flocks
for the production of hatching eggs. The Registrant's breeder flocks are
acquired as one-day old chicks (known as pullets or cockerels) from primary
breeding companies that specialize in the production of genetically designed
breeder stock. As of October 31, 1995, the Registrant maintained contracts
with 26 pullet farm operators for the grow-out of pullets (growing the
pullet to the point at which it is capable of egg production, which takes
approximately six months). Thereafter, the mature breeder flocks are
transported by Registrant vehicles to breeder farms that are maintained, as
of October 31, 1995, by 101 independent contractors under the Registrant's
supervision. Eggs produced by independent contract breeders are transported
to Registrant's hatcheries in Registrant vehicles.
The Registrant owns and operates four hatcheries located in Mississippi
where eggs are incubated and hatched in a process requiring 21 days.
Once hatched, the day-old chicks are vaccinated against common poultry
diseases and are transported by Registrant vehicles to independent contract
grow-out farms. As of October 31, 1995, the Registrant's hatcheries were
capable of producing an aggregate of approximately 3.6 million chicks per
week.
Grow-out. The Registrant places it chicks on 407 grow-out farms,
as of October 31, 1995, located in Mississippi and Louisiana where broilers
are grown to an age of approximately six to seven weeks. The farms provide
the Registrant with sufficient housing capacity for its operations, and are
typically family-owned farms operated under contract with the Registrant.
The farm owners provide facilities, utilities and labor; the Registrant
supplies the day-old chicks, feed and veterinary and technical services.
The farm owner is compensated pursuant to an incentive formula designed to
promote production cost efficiency.
Historically, the Registrant has been able to accommodate expansion in
grow-out facilities through additional contract arrangements with
independent growers.
Feed Mills. An important factor in the grow-out of chickens is the
rate at which chickens convert feed into body weight. The Registrant
purchases on the open market the primary feed ingredients, including corn
and soybean meal, which historically have been the largest cost components
of the Registrant's total feed costs. The quality and composition of the
feed is critical to the conversion rate, and accordingly, the Registrant
formulates and produces its own feed. As of October 31, 1995, the
Registrant operated three feed mills, all of which are located in
Mississippi. The Registrant's annual feed requirements for fiscal 1995
were approximately 802,300 tons, and it has the capacity to produce
approximately 936,000 tons of finished feed annually under current
configurations.
Feed grains are commodities subject to volatile price changes caused
by weather, size of harvest, transportation and storage costs and the
agricultural policies of the United States and foreign governments. On
October 31, 1995, the Registrant had approximately 396,500 bushels of corn
storage capacity at its feed mills, which was sufficient to store all of
its weekly requirements for corn. The Registrant purchases its corn and
other feed supplies at current prices from suppliers and, to a limited
extent, direct from farmers. Feed grains are available from an adequate
number of sources. Although the Registrant has not experienced and does
not anticipate problems in securing adequate supplies of feed grains, price
fluctuations of feed grains can be expected to have a direct and material
effect upon the Registrant's profitability. Although the Registrant
sometimes purchases grains in forward markets, it cannot eliminate the
potentially adverse affect of grain price increases.
Processing. Once the chicks reach processing weight, they are
transported to the Registrant's processing plants. These plants use modern,
highly automated equipment to process and package the chickens. The
Registrant's Pike County, Mississippi processing plant, which currently
operates two processing lines on a single shift basis, is currently
processing approximately 650,000 chickens per week. The Registrant has
announced its plans to double shift both lines of its Pike County,
Mississippi processing plant during 1996, increasing its production to
1.2 million birds per week. The Registrant's Collins, Mississippi
processing plant, which is currently operating one of its two lines on a
double shift basis and one line on a single shift basis, is currently
processing approximately 950,000 chickens per week. The Registrant's Laurel
and Hazlehurst, Mississippi and Hammond, Louisiana processing plants
currently operate on a double shift basis, and have the capacity to process
an aggregate of approximately 1,875,000 chickens per week. The Registrant
also has the capabilities to produce deboned product at all five processing
facilities. At October 31, 1995, all five of these deboning facilities were
operating on a double shifted basis resulting in a combined capacity to
process approximately 3.5 million pounds of product per week at all
deboning facilities.
Sanderson Farms, Inc. (Foods Division). The facilities of Sanderson
Farms, Inc. (Foods Division) are located in Jackson, Mississippi in a plant
with approximately 75,000 square feet of refrigerated manufacturing and
storage space. The plant uses highly automated equipment to prepare,
process and freeze food items. The Registrant could increase significantly
its production of processedand prepared food items without incurring
significant capital expenditures or delays.
Executive Offices; Other Facilities. The Registrant's corporate
offices are located in Laurel, Mississippi. As of October 31, 1995,
the Registrant operated one by-products plant, and five automotive
maintenance shops which service approximately 361 Registrant over-the-road
and farm vehicles. In addition, the Registrant has one child care facility
located near its Collins, Mississippi, processing plant currently serving
over 200 children.
Quality Control
The Registrant believes that quality control is important to its
business and conducts quality control activities throughout all
aspects of its operations. The Registrant believes these activities are
beneficial to efficient production and in assuring its customers wholesome,
high quality products.
From the corporate offices, the Director of Technical Services
supervises the operation of a modern, well-equipped laboratory which, among
other things, monitors sanitation at the hatcheries,
quality and purity of the Registrant's feed ingredients and feed, the
health of the Registrant's breeder flocks and broilers, and conducts
microbiological tests of live chickens, facilities and finished products.
The Registrant conducts on-site quality control activities at each of
the five processing plants and the processed and prepared food plant.
Regulation
The Registrant's facilities and operations are subject to regulation by
various federal and state agencies, including, but not limited to, the
federal Food and Drug Administration ("F.D.A."), the United States Department
of Agriculture ("U.S.D.A."), the Environmental Protection Agency, the
Occupational Safety and Health Administration and corresponding state
agencies. The Registrant's chicken processing plants are subject to
continuous on-site inspection by the U.S.D.A. The Sanderson Farms,
Inc. (Foods Division) processing plant operates under the U.S.D.A.'s Total
Quality Control Program which is a strict self-inspection plan written in
cooperation with and monitored by the U.S.D.A. The F.D.A. inspects the
production of the Registrant's feed mills.
Compliance with existing regulations has not had a material adverse
effect upon the Registrant's earnings or competitive position in the past
and is not anticipated to have a materially adverse effect in the future.
Management believes that the Registrant is in substantial compliance with
existing laws and regulations relating to the operation of its facilities
and does not know of any major capital expenditures necessary to comply
with such statutes and regulations.
The Registrant takes extensive precautions to ensure that its
flocks are healthy and that its processing plants and other facilities
operate in a healthy and environmentally sound manner. Events
beyond the control of the Registrant, however, such as an outbreak of
disease in its flocks or the adoption by governmental agencies of
more stringent regulations, could materially and adversely affect
its operations.
Competition
The Registrant is subject to significant competition from regional
and national firms in all markets in which it competes. Some of the
Registrant's competitors have greater financial and marketing resources
than the Registrant.
The primary methods of competition are price, product quality, number
of products offered, brand awareness and customer service. The Registrant
has emphasized product quality and brand awareness through its advertising
strategy. See "Business - Sales and Marketing". Although poultry is
relatively inexpensive in comparison with other meats, the Registrant
competes indirectly with the producers of other meats and fish, since
changes in the relative prices of these foods may alter
consumer buying patterns.
Sources of Supply
During fiscal 1995, the Registrant purchased its pullets and its
cockerels from four major breeders. The Registrant has found the genetic
cross of the breeds supplied by these companies to produce chickens
most suitable to the Registrant's purposes. The Registrant has no
written contracts with these breeders for the supply of breeder stock.
Other sources of breeder stock are available, and the Registrant
continually evaluates these sources of supply. Should breeder
stock from its present suppliers not be available for any reason,
the Registrant believes that it could obtain adequate breeder
stock from other suppliers.
Other major raw materials used by the Registrant include feed grains,
cooking ingredients and packaging materials. The Registrant purchases
these materials from a number of different vendors and believes that its
sources of supply are adequate for its present needs. The Registrant does
not anticipate any difficulty in obtaining these materials in the future.
Seasonality
The demand for the Registrant's chicken products generally is greatest
during the spring and summer months and lowest during the winter months.
Trademarks
The Registrant has registered with the United States Patent and
Trademark Office the trademark Miss Goldy which it uses in connection
with the distribution of its premium grade chill pack products.
The Registrant considers the protection of this trademark to be
important to its marketing efforts due to consumer awareness of and
loyalty to the Miss Goldy label. The Registrant also has
registered with the United States Patent and Trademark Office six other
trademarks which are used in connection with the distribution of chicken
and other products and for other competitive purposes.
The Registrant has registered with the United States Patent
and Trademark Office the trademark Sanderson Farms which it uses in
connection with the distribution of its prepared foods and
two pound frozen entree products.
The Registrant, over the years, has developed important non-public
proprietary information regarding product related matters. While the
Registrant has internal safeguards and procedures to protect the
confidentiality of such information, it does not generally seek patent
protection for its technology.
Employees and Labor Relations
As of October 31, 1995, the Registrant had 5,278 employees, including 721
salaried and 4,557 hourly employees. A collective bargaining agreement with
the United Food and Commercial Workers International Union covering 651
hourly employees who work at the Registrant's processing plant in
Hammond, Louisiana will expire on November 30, 1998. The collective
bargaining agreement has a grievance procedure and no strike-no lockout
clauses that should assist in maintaining stable labor relations at the
Hammond plant.
A collective bargaining agreement with the Laborers' International
Union of North America, Professional Employees Local Union #693, AFL-CIO,
covering 536 hourly employees who work at the Registrant's processing plant
in Hazlehurst, Mississippi was negotiated and signed by the union and the
Registrant effective July 15, 1995. This Agreement will expire on June 30,
1999. This collective bargaining agreement has a grievance procedure
and no strike-no lockout clauses that should assist in
maintaining stable labor relations at the Hazlehurst plant.
A collective bargaining agreement with the Laborers' International Union
of North America, Professional Employees Local Union #693, AFL-CIO, covering
1,218 hourly employees who work at the Registrant's processing plant in
Collins, Mississippi was negotiated and signed by the union and the
Registrant effective September 9, 1995, and will expire on December 30, 1999.
This collective bargaining agreement also has a grievance procedure and no
strike-no lockout clauses that should assist in maintaining stable labor
relations at the Collins, Mississippi processing plant.<PAGE>
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND
DOMESTIC OPERATIONS AND EXPORT SALES
The Registrant engages in no material foreign operations, and no
material portion of its revenues was derived from customers in foreign
countries.
Item 2. Properties.
The Registrant owns substantially all of its major operating facilities
with the following exceptions: one processing plant and feed mill complex is
leased on an annual renewal basis through 2063 with an option to purchase at
a nominal amount, at the end of the lease term. One processing plant complex
is leased under four leases, three of which are renewable annually through
2061, 2063, 2075 and 2073, respectively. Certain infrastructure improvements
associated with a processing plant are leased under a lease which expires
in 2012 and is thereafter renewable annually through 2091. All of the
foregoing leases are capital leases.
There are no material encumbrances on the major operating facilities
owned by the Registrant, except that the plant of Sanderson Farms, Inc.
(Foods Division) is encumbered by a mortgage which collateralizes a note
with an outstanding principal balance of $1,536,499 on December 31, 1995,
which bears interest at the rate of 5% per annum and is payable in equal
annual installments through 2009. In addition, under the terms of the
revolving credit agreement effective July 29, 1992, and under the
$20 million long-term fixed rate loan agreement effective in February 1993,
the Registrant may not pledge any additional assets as collateral other
than fixed assets up to 15% of its tangible assets.
Management believes that the Company's facilities are suitable for
its current purposes, and believes that current renovations and
expansions will enhance present operations and allow for future
internal growth.
Item 3. Legal Proceedings.
There are no material pending legal proceedings, other than routine
litigation incidental to the Registrant's business, to which the
Registrant is a party or of which its property is the subject, and no
such proceedings are known by the Registrant to be contemplated by
governmental authorities.
Item 4. Submission of Matters to
a Vote of Security Holders.
No matters were submitted to a vote of the Registrant's security
holders, through the solicitation of proxies or otherwise, during the
fourth quarter of the Fiscal Year.
<PAGE>
<TABLE>
Item 4A. Executive Officers of the Registrant.
Executive
Name Age Office Officer Since
<CAPTION>
<S> <C> <C> <C>
Joe Frank Sanderson 70 Chairman of the 1955 (1)
Board
Joe F. Sanderson, Jr. 48 President and 1984 (2)
Chief Executive
Officer
D. Michael Cockrell 38 Treasurer and Chief 1994 (3)
Financial Officer
James A. Grimes 47 Secretary and 1994 (4)
Chief Accounting
Officer
</TABLE>
(1) Joe Frank Sanderson, a founder of the Registrant, has served as
Chairman of the Board for more than five years. Prior to November 1, 1989,
Mr. Sanderson also served as Chief Executive Officer and Treasurer of
the Registrant.
(2) Joe F. Sanderson, Jr. has served as President and Chief Executive
Officer of the Registrant since November 1, 1989. From January 1984,
to November 1989, Mr. Sanderson served as Vice-President, Processing
and Marketing of the Registrant.
(3) D. Michael Cockrell became Treasurer and Chief Financial Officer
of the Registrant effective November 1, 1993. Prior to that time, for more
than five years, Mr. Cockrell was a member and shareholder of the Jackson,
Mississippi law firm of Wise Carter Child & Caraway, Professional
Association.
(4) James A. Grimes became Secretary of the Registrant effective November 1,
1993. Mr. Grimes also serves as Chief Accounting Officer, which position
he has held since 1985.
Executive officers of the Company serve at the pleasure of the Board
of Directors. There are no understandings or agreements relating to any
person's service or prospective service as an executive officer of
the Registrant. Joe F. Sanderson, Jr. is the son of Joe Frank Sanderson.
Joe Frank Sanderson and Joe F. Sanderson, Jr. are also Directors of the
Registrant.
<PAGE>
PART II
Item 5. Market for the Registrant's Common
Equity and Related Stockholder Matters.
The Company's common stock is traded on the NASDAQ National Market
System under the symbol SAFM. The number of stockholders as of December 31,
1995, was 628.
The following table shows quarterly cash dividends and quarterly
high and low prices for the common stock for the past two fiscal years.
National Market quotations are based on actual sales prices.
<TABLE>
Stock Price
<CAPTION>
Fiscal Year 1995 High Low Dividends
<S> <C> <C> <C>
First Quarter $14.83 $11.83 $.05
Second Quarter $14.00 $11.125 $.05
Third Quarter $12.75 $10.00 $.05
Fourth Quarter $12.25 $10.50 $.05
Stock Price
Fiscal Year 1994 High Low Dividends
First Quarter $12.33 $9.33 $.05
Second Quarter $11.83 $9.83 $.05
Third Quarter $13.16 $11.00 $.05
Fourth Quarter $13.50 $12.33 $.05
</TABLE>
All dividends and stock prices have been adjusted to reflect a 3 for 2
stock split effected in the form of a stock dividend in February 1995.
On December 30, 1995, the closing sales price for the common stock was
$10 5/8 per share.
Item 6. Selected Financial Data.
<TABLE>
Year Ended October 31
<CAPTION>
1995 1994 1993 1992 1991
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Net sales $ 392,896 $371,502 $269,059 $210,057 $186,077
Income from operations 21,239 28,184 20,767 8,033 10,058
Net income 10,856 15,479 11,938 5,253 7,552
Earnings per share(1) 0.80 1.14 .88 .39 .55
Working capital 47,605 45,843 42,548 33,371 43,545
Total assets 193,197 181,709 169,006 126,339 94,198
Long-term debt, less
current maturities 54,806 56,176 60,253 29,826 1,931
Stockholders' equity 114,319 106,187 93,431 84,216 81,686
Cash dividends declared
per share(1) $ .20 $ .20 $ .20 $ .20 $ .20
</TABLE>
<TABLE>
QUARTERLY FINANCIAL DATA
<CAPTION>
Fiscal Year 1995
First Second Third Fourth
Quarter Quarter Quarter Quarter
(In thousands, except per share data)
(Unaudited)
<S> <C> <C> <C> <C>
Net sales $87,569 $92,449 $101,195 $111,683
Operating income 3,764 3,583 4,690 9,202
Net income 1,780 1,703 2,305 5,068
Earnings per share(1) $ .13 $ .13 $ .17 $ 0.37
Fiscal Year 1994
First Second Third Fourth
Quarter Quarter Quarter Quarter
(In thousands, except per share data)
(Unaudited)
Net sales $81,445 $91,536 $99,382 $99,139
Operating income 2,578 5,704 9,204 10,698
Net income 1,186 3,041 5,175 6,077
Earnings per share(1) $ .09 $ .22 $ .38 $ .45
</TABLE>
(1)All per share numbers have been adjusted to reflect a 3 for 2 stock split
effected in the form of a stock dividend in February 1995.
<PAGE>
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
GENERAL
The Company's poultry operations are integrated through its control of all
functions relative to the production of its chicken products, including
hatching eggs production, hatching, feed manufacturing, raising chickens to
marketable age ("grow-out"), processing and marketing. Consistent with the
industry, its profitability is substantially impacted by the market
price for finished product and feed grains, both of which may fluctuate
substantially and exhibit cyclical characteristics typically associated
with commodity markets. Other costs, excluding feed, related to the
profitability of its poultry operations, and including hatching eggs
production, hatching, growing, and processing costs, are responsive to
efficient cost containment programs and management practices. Over the
past three fiscal years, these other production costs have averaged
approximately 61% of the Company's total production costs.
The Company believes that value-added products are subject to less price
volatility and generate higher, more consistent profit margin than whole
chickens ice-packed and shipped in bulk form. To reduce its exposure to
market cyclicality that has historically characterized commodity chicken
sales, the Company has increasingly concentrated on the production and
marketing of value-added product lines with emphasis on product quality,
customer service and brand recognition. The Company adds value to its
poultry products by performing one or more processing steps beyond the stage
where the whole chicken is first saleable as a finished product, such
as cutting, deep chilling, packaging and labelling the product. The Company
believes that one of its major's strengths is its ability to change its
product mix to meet the customer demands.
The Company's processed and prepared foods product line includes over 100
institutional and consumer packaged food items that it sells nationally and
regionally, primarily to distributors, food service establishments
and retailers. A majority of the prepared food items are made to the
specifications of food service users.
On January 26, 1995, the Company announced plans to add a second shift at
its poultry processing plant in Pike County, Mississippi. The addition of
the second shift will increase the plant's total processing capacity by
600,000 birds per week and will increase Sanderson Farms' total processing
capacity to more than 4 million birds per week. Following the development
of production capacity to support the expanded processing level,
the second shift is expected to begin operations in the spring of 1996.
The Company also announced plans to construct a new poultry complex in Texas
at the annual stockholders meeting on February 23, 1995. The
state-of-the-art complex will include a feed mill, hatchery and poultry
processing plant with capacity to process 1.2 million birds per week. At
full capacity, it will employ approximately 1,400 people and require 280
contract growers. Initial operations are scheduled to begin in the
spring of 1997.
<PAGE>
Poultry prices per pound, as measured by the Georgia dock price, fluctuated
during the three years ended October 31, 1995, as follows:
<TABLE>
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
<CAPTION>
Fiscal 1995
<S> <C> <C> <C> <C>
High $ .5300 $.5200 $.5675 $.6150*
Low $ .5125* $.5125* $.5125 $.5775
Fiscal 1994
High $ .5525 $.5625 $.6025* $.5650
Low $ .5250* $.5300 $.5650 $.5375
Fiscal 1993
High $ .5325 $.5425 $.5675 $.5875*
Low $ .4850* $.5075 $.5525 $.5525
</TABLE>
*Year High/Low
Market prices for whole birds, as measured by the Georgia dock price,
remained relatively strong through the Thanksgiving holiday at $.5975
per pound. Market prices for whole birds steadily decreased after the
Thanksgiving holiday to $.5825 per pound at the end of December 1995.
During fiscal 1994, the poultry industry experienced higher prices for
poultry products as compared to the previous fiscal year. However,
the positive effect of improved prices of poultry products was
partially offset by higher costs of feed grains. For the year ended
October 31, 1995, the Company experienced lower poultry
prices and higher feed costs as compared to the year ended October 31, 1994.
Although market prices for poultry products are higher during the beginning
of fiscal 1996 as compared to the beginning of fiscal 1995, the cost of feed
grain continues to increase and place pressure on margins. The Company is
unable to predict how long current conditions will continue or to what
extent cyclical pressures will affect operations.
RESULTS OF OPERATIONS:
Fiscal 1995 Compared to Fiscal 1994
For the year ended October 31, 1995, net sales increased to $392.9 million,
an increase of $21.4 million, or 5.8%. The increase in net sales resulted
from an increase in the pounds of product sold of 7.2%, while the average
sales price of products decreased by 1.3%. During fiscal 1995, net sales
of poultry products increased 6.5% as compared to fiscal 1994. The increase
in the net sales of poultry products resulted from an increase
in the pounds of poultry products sold of 7.8% and a decrease in the average
sale price of poultry products of 1.2% during fiscal 1995 as compared to
fiscal 1994. For the year ended October 31, 1995 as compared to the
year ended October 31, 1994, net sales of prepared foods products
increased approximately 1.2%. This increase in the net sales of prepared
foods products resulted from an increase in the average sale price of
prepared foods products of 3.3%, which was partially offset by a decrease
in the pounds of prepared foods products sold of 2.1%.
Cost of sales for fiscal 1995 as compared to fiscal 1994 increased $26.6
million, or 8.1%. Costs of sales of poultry products increased $26.9
million, or 9.5%, due to the increase in pounds of poultry products sold
and higher average feed grain prices. A simple average of corn cash market
prices for fiscal 1995 reflected an increase of 2.0% as compared to fiscal
1994. Cost of sales of prepared food products sold decreased $.3
million, or .6%, during the year ended October 31, 1995 as compared to the
year ended October 31, 1994 primarily due to the decrease in pounds of
prepared food products sold.
Selling, general and administrative expenses during fiscal 1995 as compared
to fiscal 1994 increased $1.7 million, or 12.3%. Measured as a percentage
of net sales, selling, general and administrative expenses for fiscal 1995
were 4.0% as compared to 3.8% during fiscal 1994.
Interest expense during fiscal 1995 was approximately $3.8 million as
compared to approximately $3.7 million during fiscal 1994.
The Company's effective tax rate increased in fiscal 1995 to approximately
38.1% as compared to approximately 37.7% for fiscal 1994, primarily from
state income taxes.
Fiscal 1994 Compared to Fiscal 1993
Net sales for the year ended October 31, 1994, increased to $371.5 million,
an increase of $102.4 million, or 38.1%. The increase in net sales resulted
from a 35.2% increase in the total pounds of products sold and a
2.1% increase in the average sale price of products. Net sales of poultry
products increased $100.0 million, or 45.8%, when compared to fiscal 1993.
The increase in the net sales of poultry products was due to an
increase in the pounds of poultry products sold of 38.3% and an increase in
the average net sales price of poultry products of 5.5%. Net sales of
prepared food products increased $2.4 million, or 4.7%. The pounds of
prepared food products sold increased 3.2% as the average sale price of
prepared food products increased 1.5% during fiscal 1994 as compared to
fiscal 1993.
Cost of sales for fiscal 1994 increased approximately $94.6 million, or
40.3%, as compared to fiscal 1993. Cost of sales of poultry products sold
increased $92.6 million, or 46.1%, during fiscal 1994 as compared to fiscal
1993. The increase in cost of sales for fiscal 1994 as compared to fiscal
1993 resulted primarily from the increased pounds of poultry products sold
and an increase in the overall costs of feed grains. A simple average of
the corn and soybean meal cash market prices reflected an increase of 10.4%
and a decrease of 3.5%, respectively, during fiscal 1994 as compared to
the previous fiscal year. Cost of sales of prepared food products increased
$2.0 million, or 6.1%, during the year ended October 31, 1994 as compared
to the year ended October 31, 1993.
Selling, general and administrative expenses in fiscal 1994 increased
$.4 million, or 3.1%, as compared to fiscal 1993. Measured as a percentage
of net sales, selling, general and administrative expenses for fiscal 1994
were 3.8% as compared to 5.1% during fiscal 1993.
Interest expense increased approximately $1.6 million during fiscal
1994 as compared to fiscal 1993. The increase in interest expense was due
primarily to higher interest rates and reflects interest incurred on
borrowed funds for the financing of the Pike County complex and other major
construction projects for the entire year of fiscal 1994.
The Company's effective tax rate increased in fiscal 1994 to approximately
37.7% as compared to approximately 37.1% in fiscal 1993. The increase was
primarily due to higher earnings in fiscal 1994 as compared to fiscal 1993,
which resulted in tax calculations using higher tax rates.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
On October 31, 1995, the Company's working capital totaled $47.6 million and
its current ratio was 4.6 to 1 as compared to working capital of $45.8
million and a current ratio of 5.6 to 1 at October 31, 1994. During fiscal
1995, the Company expended $24.9 million on planned capital projects and
$1.0 million to reduce the outstanding debt under its revolving credit
agreement.
The Company's original capital budget for fiscal 1995 was approximately
$23.2 million. The fiscal 1995 budget was increased to $30.5 million
at October 31, 1995. This increase of $7.3 million relates to the addition
of items not approved at the beginning of fiscal 1995 pending justification,
field trial and alternate costing.
The Company's capital budget for fiscal 1996 is approximately $46.1 million,
which includes approximately $5.2 million relating to fiscal 1995 budget
items that were not completed or started during fiscal 1995. Also included
in the fiscal 1996 budget is approximately $36.2 million pertaining to the
poultry processing plant and hatchery under construction in Brazos County,
Texas, and the feed mill under construction in Robertson County, Texas.
Construction at this new poultry complex began during the fall of 1995 with
initial operations scheduled to begin during the spring of 1997. Other
major capital projects for fiscal 1996 include renovations, changes and
additions to existing processing facilities to allow better product flow
and product mix for more market flexibility.
On November 16, 1995, the Company borrowed $7.2 million in connection with
the issuance of Industrial Revenue Bonds to be used to construct the feed
mill in Robertson County, Texas. The banks participating in the revolving
credit agreement provided a letter of credit in connection with the issuance
of the Industrial Revenue Bonds and the credit otherwise available to be
drawn under the letter of credit. The capital requirements for fiscal
1996 will be funded by working capital, proceeds of the Industrial Revenue
Bonds loaned to the Company, and borrowings under the revolving credit
agreement.<PAGE>
Item 8. Financial Statements and Supplementary Data.
<TABLE>
Sanderson Farms, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<CAPTION>
October 31
1995 1994
(In thousands)
<S> <C> <C>
Assets
Current assets:
Cash and temporary cash investments $ 447 $ 4,125
Accounts receivables, less allowance of $130,000 in
1995 and $100,000 in 1994 22,624 18,986
Inventories (Note 2) 33,275 29,375
Prepaid expenses 4,619 3,293
Total current assets 60,965 55,779
Property, plant and equipment (Note 3):
Land and buildings 76,529 70,176
Machinery and equipment 140,678 126,060
Construction in process 8,997 6,641
226,204 202,877
Accumulated depreciation (94,873) (78,110)
131,331 124,767
Other assets 901 1,163
Total assets $ 193,197 $181,709
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 4,205 $2,837
Accrued expenses 7,372 5,399
Accrued income taxes 1,557 1,623
Current maturities of long-term debt 226 77
Total current liabilities 13,360 9,936
Long-term debt, less current maturities (Note 3) 54,806 56,176
Deferred income taxes (Note 4) 10,712 9,410
Stockholders' equity (Note 6):
Preferred Stock:
Series A Junior Participating Preferred Stock, $100
par value: authorized shares - 500,000; none issued
Par value to be determined by the Board of Directors:
authorized shares 4,500,000; none issued
Common Stock, $1 par value: authorized shares
100,000,000;
issued and outstanding shares
13,618,080 13,613 9,075
Paid-in capital 2,871 7,410
Retained earnings 97,835 89,702
Total stockholders' equity 114,319 106,187
Total liabilities and stockholders' equity $193,197 $181,709
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
Sanderson Farms, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Years Ended October 31
1995 1994 1993
(In thousands, except per share data)
<S> <C> <C> <C>
Net sales $ 392,896 $ 371,502 $ 69,059
Cost and expenses:
Cost of sales 355,907 329,294 234,691
Selling, general and administrative 15,750 14,024 13,601
371,657 343,318 248,292
Operating income 21,239 28,184 20,767
Other income (expense):
Interest income 180 109 158
Interest expense (3,774) (3,655) (2,090)
Other (99) 195 158
(3,693) (3,351) (1,774)
Income before income taxes 17,546 24,833 18,993
Income tax expense (Note 4) 6,690 9,354 7,055
Net income $ 10,856 $ 15,479 $11,938
Net income per share $ .80 $ 1.14 $ .88
See accompanying notes.
</TABLE>
<TABLE>
Sanderson Farms, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Total
Common Stock Paid-in Retained Stockholders'
Shares Amount Capital Earnings Equity
(In thousands, except shares)
<S> <C> <C> <C> <C> <C>
Balance at November 1, 1992 9,075,427 $9,075 $7,410 $ 67,731 $ 84,216
Net income for year 11,938 11,938
Cash dividends ($.20 per share) (2,723) (2,723)
Balance at October 31, 1993 9,075,427 9,075 7,410 76,946 93,431
Net income for year 15,479 15,479
Cash dividends ($.20 per share) (2,723) (2,723)
Balance at October 31, 1994 9,075,427 9,075 7,410 89,702 106,187
Net income for year 10,856 10,856
Cash dividends ($.20 per share) (2,723) (2,723)
Stock split (3 for 2) effected in the
form of stock dividend 4,537,653 4,538 (4,538)
Redemption of fractional shares (1) (1)
Balance at October 31, 1995 13,613,080 13,613 2,871 $ 97,835 $ 114,319
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
SANDERSON FARMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Years Ended October 31
1995 1994 1993
(In thousands)
<S> <C> <C> <C>
Operating activities
Net income $10,856 $15,479 $11,938
Adjustments to reconcile net
income to net cash
provided by operating activities:
Depreciation and amortization 18,439 15,604 11,370
Provision for losses on accounts receivable 54 36 43
Deferred income taxes 950 1,500 1,300
Change in assets and liabilities:
Increase in accounts receivable (3,692) (2,008) (5,332)
Increase in inventories (3,900) (2,950) (8,059)
Increase in prepaid expenses (974) (331) (798)
Increase in other assets (93) (269) (737)
Increase (decrease) in accounts payable 1,368 (519) 1,356
Increase in accrued expenses 1,907 2,829 201
Total adjustments 14,059 13,892 (656)
Net cash provided by operating activities 24,915 29,371 11,282
Investing activities
Net proceeds from sale of property
and equipment 286 15 83
Capital expenditures (24,934) (22,444) (38,181)
Net cash used in investing activities (24,648) (22,429) (38,098)
Financing activities
Long-term borrowings -0- -0- 20,000
Net change in revolving credit (1,000) (4,000) 6,000
Principal payments on long-term debt (77) (73) (105)
Principal payments on Capital Lease (144) -0- -0-
Dividends paid (2,723) (2,723) (2,723)
Redemption of fractional shares (1) -0- -0-
Net cash provided by (used in)
financing activities (3,945) (6,796) 23,172
Net increase (decrease) in cash and
temporary cash investments (3,678) 146 (3,644)
Cash and temporary cash investments
at beginning of year 4,125 3,979 7,623
Cash and temporary cash investments
at end of year $ 447 $4,125 $3,979
Supplemental disclosure of cash flow information:
Cash paid for income taxes $5,807 $6,736 $6,229
Cash paid for interest $3,492 $3,945 $2,301
Non-cash financing activities
related to capital lease $ -0- $ -0- $4,500
See accompanying notes.
/TABLE
<PAGE>
Sanderson Farms, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Principles of Consolidation: The consolidated financial statements include
the accounts of Sanderson Farms, Inc. (the "Company") and its wholly-owned
subsidiaries. All significant intercompany transactions and accounts
have been eliminated in consolidation.
Temporary Cash Investments: Temporary cash investments are stated at cost
which approximates market. Included are investment agreements for securities
purchased under agreements to resell with a maturity of one day.
Accounts Receivable: The Company sells fresh and frozen chicken and other
prepared food items to retailers, distributors and fast food operators in
the southern and western United States. Management periodically
performs credit evaluations of its customers' financial condition and
generally does not require collateral. Credit losses have consistently
been within management's expectations.
Inventories: Processed food and poultry inventories and inventories of feed,
egg, medication and packaging supplies are stated at the lower of cost
(first-in, first-out method) or market.
Live poultry inventories of broilers are stated at the lower of cost or
market and breeders at cost less accumulated amortization. The costs
associated with breeders are accumulated up to the production stage and
amortized over the productive lives using the straight-line method.
Property, Plant and Equipment: Property, plant and equipment is stated at
cost. Depreciation of property, plant and equipment is provided by the
straight-line and units of production methods over the estimated useful lives.
Income Taxes: Deferred income taxes are accounted for using the liability
method and relate principally to cash basis temporary differences and
depreciation expense accounted for differently for financial and income tax
purposes. Effective November 1, 1988, the Company could no longer use cash
basis accounting for its farming subsidiary because of tax law changes.
The taxes on the cash basis temporary differences as of that date will
not be payable under current tax laws provided there are no changes in
ownership control and future annual revenues of the farming subsidiary
exceed 1988 revenues. Management does not anticipate the payment of
such taxes related to these cash bases timing differences during fiscal
1996. (See Note 4).
Earnings Per Share: During fiscal 1995, the Company's Board of Directors
declared a 3 for 2 stock split effected in the form of a stock dividend.
As a result, $4,538,000 was transferred from paid-in-capital to
common stock. All historical shares and per share data presented herein
have been restated for the effect of the stock split. Earnings per
share are based upon the weighted average number of shares outstanding
during each year. The weighted average shares outstanding used in
the calculation of earnings per share were 13,613,080 in 1995, 1994 and 1993.
<PAGE>
2. Inventories
Inventories consisted of the following:
<TABLE>
October 31
1995 1994
<CAPTION> (In thousands)
<S> <C> <C>
Live poultry broilers and breeders $18,484 $16,453
Feed, eggs and other 4,974 3,795
Processed poultry 3,999 3,005
Processed food 3,578 4,149
Packaging materials 2,240 1,973
$33,275 $29,375
3. Long-term Credit Facilities and Debt
Long-term debt consisted of the following:
</TABLE>
<TABLE>
October 31
1995 1994
(In thousands)
<CAPTION>
<S> <C> <C>
Revolving credit agreement with banks
(weighted average rate of 6.8% at
October 31, 1995) $29,000 $30,000
Term loan with an insurance company,
accruing interest at 7.49%; due in
annual principal installments of
$2,850,000 beginning in 1997 20,000 20,000
Note payable, accruing interest at 5%;
due in annual installments of $161,400,
including interest, maturing in
2009 1,617 1,694
6% Mississippi Business Investment Act
bond capital lease obligation 4,356 4,500
Notes payable to an insurance company,
accruing interest at 5% 59 59
55,032 56,253
Less current maturities of long-term debt 226 77
$54,806 $56,176
</TABLE>
The Company has a $100.0 million ($71.0 million available at October 31,
1995) revolving credit agreement with four banks. The revolver extends
to 1998, when the outstanding borrowings may be converted to a term
loan payable in equal semiannual installments over four years. Borrowings
are at prime or below and may be prepaid without penalty. A commitment
fee of .20% is payable quarterly on the unused portion of the revolver.
The Company intends to renew beyond one year of October 31, 1995 the amount
of its borrowings at year-end under the revolver. Covenants related
to the revolving credit and the term loan agreements include
requirements for maintenance of minimum consolidated net working capital,
tangible net worth, debt to total capitalization and current ratio. The
agreements also establish limits on dividends, assets that can be pledged
and capital expenditures.
Property, plant and equipment with a carrying value of approximately
$7,631,000 is pledged as collateral to a note payable and the capital
lease obligation.
Interest costs of $416,000 was capitalized in 1993.
The aggregate annual maturities of long-term debt at October 31, 1995
(assuming borrowings under the revolver will be converted to a term loan
in 1998) are as follows (in thousands):
<TABLE>
Fiscal Year Amount
<CAPTION>
<S> <C>
1996 226
1997 3,090
1998 10,604
1999 10,618
2000 10,633
Thereater 19,861
$55,032
</TABLE>
On November 16, 1995, the Company borrowed $7.2 million in connection
with the issuance of Industrial Revenue Bonds to be used to construct
a feed mill in Texas. The banks participating in the revolving credit
agreement provided a letter of credit in connection with the issuance of
the Industrial Revenue Bonds, and the credit otherwise available to the
Company under the revolving credit agreement is reduced by the amount
available to be drawn under the letter of credit.
4. Income Taxes
Income tax expense consisted of the following:
<TABLE>
Years Ended October 31
<CAPTION>
1995 1994 1993
(In thousands)
<S> <C> <C> <C>
Current:
Federal $ 5,110 $ 7,150 $ 5,233
State 630 704 522
5,740 7,854 5,755
Deferred
Federal 780 1,370 1,200
State 170 130 100
950 1,500 1,300
$ 6,690 $ 9,354 $ 7,055
/TABLE
<PAGE>
Significant components of the Company's deferred tax assets and
liabilities were as follows:
<TABLE>
October 31
1995 1994
<CAPTION>
Deferred tax assets (In thousands)
<S> <C> <C>
(included in prepaid expenses):
Accrued expenses $ 898 $ 550
Prepaid expenses (136) (140)
$ 762 $ 410
Deferred tax liabilities:
Cash basis temporary differences $3,900 $3,900
Property, plant and equipment 6,812 5,510
$10,712 $9,410
</TABLE>
The differences between the consolidated effective income tax rate and the
federal statutory rate were as follows:
<TABLE>
Years Ended October 31
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Taxes at statutory rate 34.3% 34.9% 34.3%
State income taxes 3.6 3.1 3.8
State income tax credit (.6) (.8) (1.5)
Other, net .8 .5 .5
38.1% 37.7% 37.1%
</TABLE>
5. Employee Benefit Plans
The Company had a defined contribution profit sharing plan covering all
employees and an employee stock ownership plan that was restricted to
salaried employees. During fiscal 1995, the profit sharing plan was
merged into the employee stock ownership plan. The resulting defined
contribution employee stock ownership plan was expanded to cover all
employees. Total contributions under the employee stock ownership plan were
$850,000 in 1995. Total contributions under both plans were $1,200,000
in 1994 and $750,000 in 1993.
Under the Company's Stock Option Plan, 750,000 shares of Common Stock
have been reserved for grant to key management personnel. Options to
purchase an aggregate of 45,000 shares at $10.67 per share, 82,500
shares at $11.00 per share and 108,000 shares at $11.25 per share are
outstanding at October 31, 1995.
Options for 43,875 shares are exercisable at October 31, 1995.
6. Shareholder Rights Agreement
On April 21, 1989, the shareholders of the Company approved a shareholders
rights agreement (the "Agreement") under which one share purchase right
("right") was declared as a dividend for each share of the Company's Common
Stock outstanding on May 31, 1989. The rights do not become exercisable and
certificates for the rights will not be issued until ten business days after
a person or group acquires or announces a tender offer for the beneficial
ownership of 20% or more of the Company's Common Stock.
Special rules set forth in the Agreement apply to determine beneficial
ownership for members of the Sanderson family. Under these rules, such a
member will not be considered to beneficially own certain shares of Common
Stock, the economic benefit of which is received by any member of the
Sanderson family, and certain shares of Common Stock acquired pursuant
to profit sharing plans of the Company.
The exercise price of a right has been established at $35 3/8. Once
exercisable, each right would entitle the holder to purchase one
one-hundredth of a share of Series A Junior Participating Preferred Stock,
par value $100 per share. The rights may be redeemed by the Board of
Directors at $.01 per right prior to an acquisition, through open market
purchases, a tender offer or otherwise, of the beneficial ownership of
20% or more of the Company's Common Stock, or by two-thirds of the Directors
who are not the acquirer, or an affiliate of the acquirer, prior to the
acquisition of 50% or more of the Company's Common Stock by such acquirer.
The rights expire on April 21, 1999.
7. Other Matters
One customer accounted for 10.4% and of consolidated sales for the year
ended October 31, 1993. No customer accounted for more than 10% of
consolidated sales for the years ended October 31, 1995 and 1994.
Export sales were less than 10% of consolidated sales in each year presented.
The effects of adopting in 1994 FASB Statement No. 106 "Employers'
Accounting for Postretirment Benefits other than Pension" were insignificant
to the Company's financial position and operation.
Item 9. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive
Officers of the Registrant.
As required by General Instruction G(3) to Form 10-K, reference is
made to the information concerning the Directors of the Registrant and
the nominees for election as Directors appearing in the Registrant's
definitive proxy statement filed or to be filed with the Commission pursuant
to Rule 14a-6(c). Such information is incorporated herein by reference
to the definitive proxy statement.
Information concerning the executive officers of the Registrant
is set forth in Item 4A of Part I of this Annual Report.
Item 11. Executive Compensation.
As required by General Instruction G(3) to Form 10-K, reference
is made to the information concerning remuneration of Directors and
executive officers of the Registrant appearing in the Registrant's
definitive proxy statement filed or to be filed with the Commission
pursuant to Rule 14a-6(c). Such information is incorporated herein by
reference to the definitive proxy statement.
<PAGE>
Item 12. Security Ownership of Certain
Beneficial Owners and Management.
As required by General Instruction G(3) to Form 10-K, reference
is made to the information concerning beneficial ownership of
the Registrant's Common Stock, which is the only class of the Registrant's
voting securities, appearing in the Registrant's definitive proxy
statement filed or to be filed with the Commission pursuant to Rule 14a-6(c).
Such information is incorporated herein by reference to the definitive
proxy statement.
Item 13. Certain Relationships
and Related Transactions.
PART IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K.
(a)1. FINANCIAL STATEMENTS:
The following consolidated financial statements of the Registrant
are included in Item 8:
Consolidated Balance Sheets - October 31, 1995 and 1994
Consolidated Statements of Income - Years ended October 31, 1995,
1994 and 1993
Consolidated Statements of Stockholders' Equity - Years ended
October 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows - Years ended October 31,
1995, 1994 and 1993
Notes to Consolidated Financial Statements - October 31, 1995
(a)2. FINANCIAL STATEMENT SCHEDULES:
The following consolidated financial statement schedules of the Registrant
are included in Item 8:
Schedule VIII - Valuation and Qualifying Accounts
All other schedules are omitted as they are not applicable or the required
information is set forth in the Financial Statements or notes thereto.
<PAGE>
(a)3(i). EXHIBITS:
The following exhibits are filed with this Annual Report or
are incorporated herein by reference:
Exhibit Brief
Number Description
(1) 3-A - Copy of Articles of Incorporation of the Registrant,
as amended.
(8) 3-B - Copy of Restated By-Laws of the Registrant as of
October 27, 1994.
(1) 4 - Copy of Certificate of Designations of Series
A Junior Participating Preferred Stock of the
Registrant
(2) 10-A - Copy of Agreement of Purchase and Sale of Assets
dated March 10, 1986 among the Registrant,
National Prepared Foods, Inc., Trend Line
Corporation, Business Advisors and Investor, Inc.,
W.T. Hogg, Jr., W.T. Hogg, Jr. Trust for
Grandchildren, Noreen Mary Hogg Case Trust Under
Agreement December 20, 1972 and Sherri Ann Hogg Ford
Trust Under Agreement December 20, 1972.
(2) 10-B - Copy of Contract dated July 31, 1964 between
the Registrant and the City of Laurel, Mississippi.
(2) 10-B-1 - Copy of Contract Amendment dated December 1, 1970
between the Registrant and the City of Laurel,
Mississippi.
(2) 10-B-2 - Copy of Contract Amendment dated June 11, 1985
between the Registrant and the City of Laurel,
Mississippi.
(2) 10-B-3 - Copy of Contract Amendment dated October 7, 1986
between the Registrant and the City of Laurel,
Mississippi.
(8) 10-B-4 - Copy of Contract Amendment dated August 16, 1994
between the Registrant and the City of Laurel,
Mississippi.
(2) 10-C - Copy of Lease Agreement dated May 19, 1964 among the
Town of Collins, Covington County, Mississippi and
Mississippi Federated Cooperatives AAL.
(2) 10-C-1 - Copy of Assignment of Lease and Leasehold Estate,
and Conveyance of Leaseholder Improvements and Other
Properties, Reserving a Purchase Money Security
Interest, dated December 21, 1981 between MFC
Services (AAL) and Sanderson Farms, Inc.
(Processing Division).
(2) 10-D - Copy of Lease Agreement dated November 28, 1962
between the Board of Supervisors of Covington County,
Mississippi acting for and on behalf of Supervisors
Districts 1, 2, 3 and 5 of Covington County,
Mississippi and Mississippi Federated Cooperatives,
AAL.
(2) 10-D-1 - Copy of Contract dated October 2, 1972 between
the Board of Supervisors of Covington County,
Mississippi, acting for and on behalf of Covington
County, Mississippi and MFC Services (AAL).
(2) 10-D-2 - Copy of Lease Agreement dated May 1, 1976 between
Supervisors Districts One, Two, Three and Five
of Covington County, Mississippi and MFC Services
(AAL).
(2) 10-D-3 - Copy of Assignment of Leases and Leasehold Estate,
and Conveyance of Leasehold Improvements and Other
Properties, Reserving a Purchase Money Security
Interest, dated December 21, 1981 between MFC
Services (AAL) and Sanderson Farms, Inc.
(Processing Division).
(2) 10-E - Copy of Agreement dated December 1, 1986, between
Sanderson Farms, Inc. (Hammond Processing Division)
and United Food and Commercial Workers Local
Union 210 affiliated with the United Food and
Commercial Workers International Union.
(5) 10-E-1 - Copy of Agreement dated February 14, 1990 between
Sanderson Farms, Inc. (Hammond Processing Division)
and United Food and Commercial Workers Local
Union 210, affiliated with the United Food and
Commercial Workers International Union.
(8) 10-E-2 - Copy of Agreement effective November 6, 1994 between
Sanderson Farms, Inc. (Hammond Processing Division)
and United Food and Commercial Workers Local
Union 210, affiliated with the United Food and
Commercial Workers International Union.
10-E-3 - Copy of Agreement effective July 15, 1995 between
Sanderson Farms, Inc. (Hazlehurst Processing
Division) and Laborers' International Union of
North America, Professional Employees Local
Union #697, AFL-CIO.
10-E-4 - Copy of Agreement effective September 9, 1995 between
Sanderson Farms, Inc. (Collins Processing Division)
and Laborers' International Union of North America,
Professional Employees Local Union #697, AFL-CIO.
(2) 10-F - Copy of Employee Stock Ownership Plan and Trust
Agreement of Sanderson Farms, Inc. and Affiliates.
(2) 10-F-1 - Copy of Amendment One to the Employee Stock
Ownership Plan and Trust Agreement of Sanderson
Farms, Inc. and Affiliates.
(3) 10-F-2 - Copy of Amendment Two to the Employee Stock
Ownership Plan and Trust Agreement of Sanderson
Farms, Inc. and Affiliates.
(2) 10-G - Copy of General Employee's Profit Sharing-Retirement
Trust Agreement of Sanderson Farms, Inc. and
Affiliates.
(6) 10-H - Copy of Sanderson Farms, Inc. Performance Incentive
Program effective January 1, 1991.
(6) 10-H-1 - Copy of Sanderson Farms, Inc. Performance Incentive
Program for Sanderson Farms, Inc. (Foods Division)
effective November 1, 1990.
(6) 10-H-2 - Copy of Sanderson Farms, Inc. Performance Incentive
Program for Sanderson Farms, Inc. (Foods Division)
Retail Entree effective November 1, 1990.
(8) 10-H-3 - Copy of Sanderson Farms, Inc. Bonus Award Program
effective November 1, 1993.
(7) 10-I - Copy of Sanderson Farms, Inc. and Affiliates Stock
Option Plan.
(5) 10-J - Copy of Memorandum of Agreement dated as of June 13,
1989, between Pike County, Mississippi and the
Registrant.
(6) 10-K - Copy of Wastewater Treatment Agreement between the
City of Magnolia, Mississippi and the Registrant
dated August 19, 1991.
(6) 10-L - Copy of Memorandum of Agreement and Purchase Option
between Pike County, Mississippi and the Registrant
dated May, 1991.
10-M - Copy of Lease Agreement between Pike County,
Mississippi and the Registrant dated as of
November 1, 1992.
13 - Copy of the Registrant's definitive proxy statement
related to the 1996 Annual Meeting of Shareholders.
22 - List of subsidiaries of the Registrant.
24 - Consent of Independent Auditors
27 - Copy of Financial Data Schedule
(2) 28-A - Copy of Certificate of Registration of
Trademark "Miss Goldy".
(2) 28-B - Copy of Certificate of Registration of Trademark
"Wise Choice".
(2) 28-C - Copy of Certificate of Registration of Trademark
"Buttercup Farms".
(2) 28-D - Copy of Certificate of Registration of Trademark
"Collinswood".
(2) 28-E - Copy of Certificate of Registration of Trademark
"Covington Farms".
(2) 28-F - Copy of Certificate of Registration of Trademark
"Smart Cuts".
(4) 28-G - Copy of Certificate of Registration of Trademark
"Kettle Classics".
(5) 28-H - Copy of Certificate of Registration of Trademark
"Sanderson Farms".
(1) Filed as an exhibit to the Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1989, and incorporated herein by
reference.
(2) Filed as an exhibit to the Registrant's Registration Statement on
Form S-1 (Commission File No. 33-13141) and incorporated herein by reference.
(3) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the fiscal year ended October 31, 1987, and incorporated herein by reference.
(4) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the fiscal year ended October 31, 1988, and incorporated herein by reference.
(5) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the fiscal year ended October 31, 1990, and incorporated herein by reference.
(6) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the fiscal year ended October 31, 1991, and incorporated herein by reference.
(7) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the fiscal year ended October 31, 1992, and incorporated herein by reference.
(8) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the fiscal year ended October 31, 1994 and incorporated herein by reference.<PAGE>
(a)(3)(ii) Agreements Available Upon Request by the Commission.
The Registrant is a party to various agreements defining the rights
of holders of long-term debt of the Registrant, but no single agreement
authorizes securities in an amount which exceeds 10% of the total assets
of the Company. Upon request of the Commission, the Registrant will
furnish a copy of any such agreement to the Commission. Accordingly, such
agreements are omitted as exhibits as permitted by Item 601(b)(4)(iii) of
Regulation S-K.
(b) REPORTS ON FORM 8-K:
No reports on From 8-K were filed during the fourth quarter of the
Fiscal Year ended October 31,
1995.
QUALIFICATION BY REFERENCE
Information contained in this Annual Report as to the contents of any
contract or other document referred to or evidencing a transaction referred
to is necessarily not complete, and in each document filed as an exhibit to
this Annual Report or incorporated herein by reference, all such information
being qualified in its entirety by such reference.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Sanderson Farms, Inc.
We have audited the accompanying consolidated balance sheets of Sanderson
Farms, Inc. and subsidiaries as of October 31, 1995 and 1994, and the
related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended October 31, 1995.
Our audit also included the financial statements listed in the index under
Item 14(a). These financial statements and schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion
on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of Sanderson Farms, Inc. and subsidiaries at October 31, 1995 and
1994, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended
October 31, 1995, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements
taken as a whole, present fairly in all material respects the information
set forth therein.
/s/Ernst & Young LLP
Jackson, Mississippi
December 18, 1995
<PAGE>
<TABLE>
Sanderson Farms, Inc. and Subsidiaries
Valuation and Qualifying Accounts
Schedule VIII
<CAPTION>
________________________________________________________________________________
COL. A COL. B COL. C COL. D COL. E COL. F
Balance at Charged to Charged to Balance at
Beginning Costs and Other Deductions End of
Classification of Period Expenses Accounts Describe(1) Period
(In Thousands)
<S> <C> <C> <C> <C>
Year ended
October 31, 1995
Deducted from accounts
receivable:
Allowance for doubtful
accounts
Totals $100 $54 $24 $130
Year ended October 31, 1994
Deducted from accounts
receivable:
Allowance for doubtful
accounts
Totals $80 $34 $14 $100
Year ended October 31, 1993
Deducted from accounts
receivable:
Allowance for doubtful
accounts
Totals $50 $43 $13 $80
(1) Uncollectible accounts written off, net of recoveries.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SANDERSON FARMS, INC.
Date: January 22, 1996 /s/Joe Frank Sanderson
Joe Frank Sanderson
Chairman of the Board
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities as of the dates indicated.
/s/Joe Frank Sanderson 1/22/96 /s/John H. Baker, III. 1/22/96
Joe Frank Sanderson, John H. Baker, III.
Chairman of the Board Director
/s/Joe F. Sanderson, Jr. 1/22/96 /s/Charles W. Ritter, Jr. 1/22/96
Joe F. Sanderson, Jr., Charles W. Ritter, Jr.,
President, Chief Executive Director
Officer and Director
/s/Dewey R. Sanderson, Jr. 1/22/96 /s/Rowan H. Taylor 1/22/96
Dewey R. Sanderson, Jr., Rowan H. Taylor,
Director Director
/s/Donald W. Zacharias 1/22/96 /s/Robert Buck Sanderson 1/22/96
Donald W. Zacharias, Robert Buck Sanderson,
Director Director
/s/Phil K. Livingston 1/22/96 /s/James A. Grimes 1/22/96
Phil K. Livingston, James A. Grimes,
Director Secretary and Chief Accounting Officer
/s/D. Michael Cockrell 1/22/96
D. Michael Cockrell,
Treasurer and Chief
Financial Officer
<PAGE>
ARTICLE 1
AGREEMENT
Section 1. This Agreement made and entered into this 9th day of September,
1995, by and between Sanderson Farms, Inc. (Collins Processing Division) at
its Collins, Mississippi, location (hereinafter referred to as the "Company"),
and Laborers' International Union of North America, Professional Employees
Local Union #693, AFL-CIO (hereinafter referred to as the "Union".
ARTICLE 2
RECOGNITION
Section 2.1. The Employer recognizes the Union as the sole exclusive
bargaining agency for all production and maintenance employees, including
truck drivers and rendering employees, employed at its Collins, Mississippi
facility, excluding office clerical employees, truck shop employees, guards,
professional employees, and supervisors, as defined in the Act, certified on
February 23, 1995, by the National Labor Relations Board through an NLRB
election, Case No. 15-RC-7846.
The following jobs are excluded from coverage:
(1) Office Clerical Employees (2) Cost Counting Records Clerks
(3) Processing Accounting Clerks (4) Sales Clerks
(5) Live Haul Drivers (6) Cage Repair Employees
(7) Professional Employees (8) Guards and Supervisors
(9) Child Care Employees (10) Maintenance Parts Buyers
ARTICLE 3
MANAGEMENT PREROGATIVES
Section 3.1. Nothing in this Agreement shall be deemed to limit the
Employer in any way in the exercise of the customary functions of management
which are recognized as the Employer's exclusive responsibility, including,
but not limited to, the right to plan, direct, and control operations, to
utilize the services of contractors, to determine the number, size and
location of its establishments, to close an establishment or departments
thereof, to hire, to promote, to demote, and for proper cause to discipline,
suspend or discharge, to assign and schedule work and transfer employees from
one job or department to another, and to make and enforce reasonable rules and
regulations relative to any and all of these matters or to the management of
its operation, provided that the reasonableness of rules may be tested in the
grievance procedure. The Employer shall be the exclusive judge of all matters
pertaining to its operations and their scheduling and the methods, processes,
equipment, means of operation and size of workforce.
Section 3.2. The Employer retains all prerogatives and rights of
management and all privileges and responsibilities not specifically limited by
this Agreement.
ARTICLE 4
SHOP STEWARDS
Section 4.1. The Employer recognizes the right of the Union to designate
shop stewards, not to exceed eleven (11) in number, who shall be assigned to
serve specific areas of the plant to handle such Union business as may arise.
The shop stewards shall be employees of the Company. The Union shall notify
the Company in writing as to the names of the stewards and of any changes in
designation of stewards.
Section 4.2. A representative of the Union shall be permitted to enter
the plant at reasonable times, upon Employer's premises and plant, provided
such representative shall in no way interfere with the operations of
Employer's business and shall make arrangements with the Employer's manager.
ARTICLE 5
UNION BULLETIN BOARD
Section 5.1. The Employer will provide a bulletin board in the plant for
posting of Union notices. All matters to be posted shall be submitted to the
Division Manager or a designated representative for approval prior to posting,
and management's decision shall be final.
ARTICLE 6
NO STRIKE - NO LOCK OUTSection 6.1. For the duration of this
Agreement, there shall be no strike, stoppages, slowdowns, picketing, or
other interruption of or interference with the operations of the plant.
Section 6.2. The Company shall not lock out employees for the duration of
this Agreement.
Section 6.3. Neither the violation of any provisions of the Agreement,
nor the commission of any act constituting an unfair labor practice, or
otherwise made unlawful, shall excuse the employees, the Union, or the Company
from their obligations under the provisions of this Article.
Section 6.4. An employee discharged or otherwise disciplined for
violation of this Article, may seek review of such discipline through the
grievance and arbitration procedures provided herein. In this event, the only
question to be reviewed shall be whether or not the employee participated in
the prohibited conduct.
ARTICLE 7
GRIEVANCE PROCEDURE
Section 7.1. Grievances arising under this contract are herein defined as
a claim by a party to this Agreement or an employee covered by this Agreement
that the Company or the Union has violated a provision of this Agreement.
STEP I
The employee shall discuss the grievance or complaint with the immediate
supervisor within five (5) working days after the event giving rise thereto
occurs, or within five (5) working days following the date on which the
grievant had or reasonably would have had knowledge thereof. In the event the
employee so requests, the appropriate steward shall be present at this step.
The supervisor shall give an answer within five (5) working days after the
grievance is received.
STEP 2
If there is no settlement in Step 1, the grievance may be presented by
the employee and/or shop steward within five (5) working days from the date on
which the supervisor's answer was given in Step 1. The grievance must be
presented in writing to the department superintendent and must state the
following information:
(a) name or names of employee or employees involved;
(b) the department or departments involved;
(c) the date and time of the occurrence or discovery of the grievance;
(d) the facts of the incident on which the claim is based;
(e) the specific provision of this Agreement alleged to have been
violated;
(f) the remedy requested.
The department superintendent shall give the Company's answer in writing
within five (5) working days after the grievance is received by the
superintendent.
STEP 3 In the event the grievance is not settled in Step 2, then the
grievance may be appealed in writing to the division manager or a designated
representative by the Union to Step 3 within five (5) working days from the
Company's answer in Step 2. The division manager or a designated
representative shall give an answer in writing within five (5) working days
from the date of the appeal. In the event the grievance is not settled then
the aggrieved party or parties shall have the right to request arbitration.
In the event a grievance arises on behalf of the Employer, the matter
shall be presented to the Union Business Agent in writing, who shall have
seven (7) days from the date of submission within which to endeavor to
reconcile the grievance presented and shall give an answer in writing within
that time. If not settled within that time, the aggrieved party or parties
shall have the right to request arbitration.
Section 7.2. Discharge grievances shall be processed initially under Step
3 of the grievance procedure. The written grievance shall be filed with the
division manager within five (5) working days following the date of discharge.
Section 7.3. A failure to observe the time limit specified herein for
original presentation of a grievance or presentation in any subsequent step of
the grievance procedure on the part of either the grievant or the Union shall
be conclusive evidence that the grievance has been settled and abandoned.
Failure on the part of the Company to comply with the time limits for
delivering its answer in any step of the grievance procedure shall
automatically advance the grievance to the next step of the grievance
procedure.
The time limits of the grievance procedure may be extended by mutual
consent of the Union and the Company.
ARTICLE 8
ARBITRATION
Section 8.1. If a party to this Agreement desires to take a grievance to
arbitration, it shall within fifteen (15) calendar days after the denial of
the grievance, give written notice of his intention to the other party,
together with a written statement of the specific provision or provisions of
this Agreement at issue.
Section 8.2. The parties shall attempt to select an impartial arbitrator.
If they are unable to agree upon a choice within seven (7) calendar days after
the receipt of Notice of Intent to Arbitrate, either party may request the
Federal Mediation and Conciliation Service to submit a list of five (5)
arbitrators, from which the arbitrator will be selected. Selection shall be
made by the parties alternately striking any name from the list (the first to
strike shall be the party requesting arbitration) until only one (1) name
remains. The final name remaining shall be the arbitrator of the grievance.
Section 8.3. The jurisdiction and the decision of the arbitrator of the
grievance shall be confined to a determination of the acts and the
interpretation or application of the specific provision or provisions of this
Agreement at issue. The Arbitrator shall be bound by terms and provisions of
this Agreement and shall have the authority to consider only grievances
representing solely an arbitration issue under this Agreement. The arbitrator
shall have no authority to add to, alter, amend, or modify any provision of
this Agreement. The decision of the arbitrator in writing on any issue
properly before the arbitrator in accordance with the provisions of this
Agreement, shall be final and binding on the aggrieved employee or employees,
the Union, and the Employer.
Section 8.4. Multiple grievances shall not be heard before one arbitrator
at the same hearing except by mutual agreement of the parties.
Section 8.5. The Union and the Employer shall each bear its own costs in
these arbitration proceedings, except that they shall share equally the fee
and other expenses of the arbitrator in connection with the grievance.
ARTICLE 9
SENIORITY
Section 9.1. Seniority is defined as the length of an employee's
continuous employment in the bargaining unit at the Company's Collins,
Mississippi, poultry processing plant since the last permanent date of
employment. For purposes of layoff, recall, promotion, and vacation only,
this shall include continuous service which began prior to the acquisition of
the plant by the Company.
Section 9.2. All newly hired or rehired employees shall be considered as
probationary employees for a period of ninety (90) days during which period
they shall not acquire seniority, and during which they may be discharged
without recourse to the grievance and arbitration procedures provided herein.
If retained as a regular employee upon satisfactory completion of the
probationary period, seniority shall be retroactive to the first day of
employment.
Section 9.3. In matters of layoff, recall, and promotion, consideration
will be given to an employee's skill, ability, attendance, versatility,
training, physical fitness, and seniority; and when, in the opinion of the
Company, the factors other than seniority are relatively equal, seniority will
be the deciding factor.
Section 9.4. An employee's seniority shall be lost and employment
considered terminated by:
(a) discharge for just cause;
(b) failure to return from layoff within five (5) working days after
written notice by certified mail is sent by the Company to the
employee's last known address on the Company's books. Actual
notice to the employee of recall by any other means shall satisfy
the terms of this provision;
(c) voluntary termination of employment;
(d) failure to report after termination of a leave of absence approved
by the Company in writing on the first scheduled day following the
expiration of such leave of absence;
(e) engaging in a gainful occupation while on leave of absence;
(f) absence from work for three (3) consecutive working days without
notice to the Company, which shall be considered as a voluntary
quit, unless notice was prevented by a cause beyond the control of
the employee;
(g) separation from the Company's active payroll for any reason,
exclusive of leaves of absence approved by the Company, for a
period exceeding an employee's length of service in the Collins
plant, or three (3) months, whichever is less.
Section 9.5. For the purposes of this Agreement, layoffs shall be
classified as (a) "short term" and (b) "long term". A short term layoff is a
layoff which will not exceed ten (10) workdays in length. Short term layoffs
may be made without regard to seniority. A long term layoff is a layoff which
will exceed ten (10) workdays in length. Long term layoffs shall be made
subject to Section 3 of this Article.
Section 9.6. All permanent job vacancies in premium rated classifications
shall be posted for two (2) consecutive working days on the plant bulletin
board. Employees in lower rated classifications desiring promotion to such
jobs shall sign a bid sheet posted on the bulletin board. An employee who
does not sign such bid sheet shall have no right to consideration for the
vacancy. However, the fact that an employee did not sign the bid sheet will
not preclude that employee's selection for the job by the Company if none of
the signers is determined to be qualified. If no qualified employee bids on
the posted position, the Company may fill the position in its discretion. If,
after a reasonable period not to exceed thirty (30) days, the employee
selected for the posted position achieves an acceptable level of performance,
the employee shall receive the rate of the new position. If the employee
fails to perform in an acceptable manner, such employee shall return to a job
in their former classification and the premium job shall be posted again. An
employee who self-disqualifies shall return to the extra board at the line
operator's rate of pay and shall not be eligible for bidding on a premium job
for a period of six (6) months.
Section 9.7. Assignments involving employees on the extra board shall be
in order of seniority. Within a department, no extra board employee shall be
retained over a permanently assigned employee.
ARTICLE 10
SENIORITY LIST
Section 10.1. Upon request at any reasonable time, the Company shall
furnish to the Union a current seniority list.
ARTICLE 11
HOURS OF WORK
Section 11.1. The regular work week shall consist of five (5) days or
forty (40) hours. This shall not be construed as a guarantee of any amount of
hours or work. The basic work week shall be the seven (7) day period from
12:01 a.m. Sunday until midnight the following Saturday. Employees will be
given at least one (1) calendar week's notice of any change by the Company of
the payroll week.
Section 11.2. An employee who works more than forty (40) hours in any one
week shall be paid at time and one-half the regular rate of pay for all hours
in excess of forty (40).
Section 11.3. When employees are called to work a shift outside their
regularly scheduled shift and report for work, or when they report to work at
their regularly scheduled time, they shall be given the opportunity to work a
minimum of three (3) hours or receive pay for same at the applicable hourly
rate, except that no such pay shall be made when the plant cannot operate for
reasons beyond the control of the Employer, such as, but not limited to,
strikes, utility failure, fire, flood, storms or other acts of God interfering
with work, or a breakdown of machinery or equipment when the Company notifies
the employees not to report to work at least four (4) hours prior to the
scheduled time to work.
Section 11.4. Employees will be paid at their regular rate for all waiting
time of thirty (30) minutes or less, so long as they do any job they are
assigned. Employees will not be paid for waiting time which exceeds thirty
(30) minutes if (1) they are relieved of all duties, (2) are free to leave the
plant, and (3) are told the time they must return to work. Employees will not
be relieved without pay more than once in any workday except for a lunch break
of not more than one (1) hour.
Section 11.5. The Company will provide one (1) unpaid break of not less
than thirty (30) minutes for lunch during each shift, and shall provide one
(1) twelve (12) minute paid rest period prior to lunch each day. In addition,
all employees will be allowed one (1) twelve (12) minute paid rest period
after the lunch break provided the work time is expected to be not less than
two and one-half (2 1/2) hours. No unpaid break shall be provided for
maintenance employees and truck drivers.
The Company shall have the right to provide a twenty-four (24) minute
paid lunch break to Clean-Up Line Operators on restricted hours in lieu of all
breaks provided in this Section.
Section 11.6. A Clean-Up Line Operator who has completed the probationary
period and is permanently assigned to restricted hours in the clean up
department shall receive an hourly adjustment of ninety (90) cents for each
hour worked in that assignment.
Section 11.7. Employees who have completed the probationary period and are
temporarily assigned for one or more consecutive hours to perform the duties
of an absent employee in a higher paid classification shall receive the rate
of that classification while performing the duties of the classification.
Employees who work at more than one pay rate during a week in which they earn
overtime shall receive overtime pay based upon an average of the rates earned
during that week.
ARTICLE 12
LEAVES OF ABSENCE
Section 12.1. An employee who has completed the probationary period may be
granted, at the Company's discretion, a leave of absence without pay for a
reasonable period of time, not to exceed one (1) month, for the following
reasons:
(a) emergency personal business;
(b) serious illness in the immediate family (spouse,
children or parents), supported by a doctor's certificate; and
(c) Union business, upon written request by the Union's
Business Manager, provided that no more than three (3)
employees shall be on such leave simultaneously.
Section 12.2. Employees who have completed their probationary period are
eligible for up to thirteen (13) weeks per year of unpaid family and medical
treatment leave for the following reasons:
(a) Employee's serious health condition -- a medical certification
will be required which states that the employee is unable to perform the
functions of the employee's position.
(b) Family serious health condition -- spouse, parent, or child. A
medical certification will be required stating the employee is "needed to care
for the individual."
(c) New child leave -- the birth, adoption or foster care placement by
a state agency of a child, and, the need to care for the child; such leave may
be prior to the actual birth or placement.
The provisions of this Section shall be administered in accordance with
the Family and Medical Leave Act of 1993 (FMLA).
Section 12.3. Employees who have completed their probationary period who
lose actual work time in order to attend the funeral of a family member shall
receive a paid funeral leave for time necessarily lost during the employee's
regularly scheduled shift, provided the employee would have been scheduled and
at work during that day. Said leave shall be up to three (3) days with pay
for a deceased parent, spouse, child, brother, or sister and one (1) day for a
deceased father-in-law, mother-in-law, grandparent, brother-in-law, or sister-
in-law. In order to receive pay under this Section, an employee must be
actively working, must make application for such paid leave, and must attend
the funeral. The Company may require satisfactory evidence of attendance at
the funeral and the relationship of the deceased.
Section 12.4. If the Company has knowledge that an employee, in a premium-
rated classification, will be on family and medical leave, military leave, or
an industrial injury leave for more than thirty (30) calendar days, the job
will be posted and filled on a temporary basis. The successful bidder will
receive the rate of the premium classification for the period its duties are
performed. When employees on leave under this Section return, they shall be
immediately assigned to their old job; employees temporarily filling the job
shall return to their regular classification and pay rate.
Section 12.5. The Company shall pay each active employee who reports for
jury duty the difference between pay up to eight times the hourly rate for
time actually lost and the juror's daily fee for each day the employee is
required to serve on a jury. The employee must report to work during those
days of his regularly scheduled shift during which the employee is not
required to report for jury duty or be available at court for jury service.
The employee must present proof of jury service and the amount of compensation
received from the court.
ARTICLE 13
VACATIONS
Section 13.1. Regular full-time employees shall be eligible for one (1)
week's vacation after the first anniversary date of continuous employment, and
after the anniversary date of each succeeding year.
Employees shall be eligible for a second week of vacation after the
second anniversary date of continuous employment, and after the anniversary
date of each succeeding year of continuous employment.
Employees shall be eligible for a third week of vacation after the tenth
anniversary date of continuous employment, and after the anniversary date of
each succeeding year of continuous employment.
Section 13.2. To be eligible for a vacation, an employee must have worked
sixteen hundred (1,600) hours during the preceding twelve (12) months or
eighty (80) percent of available hours for that period, whichever is less.
Vacations and holidays not worked shall be considered time worked for purposes
of this Section.
Section 13.3. Vacation pay shall be computed at forty (40) times the
Employee's regular straight time hourly rate.
Section 13.4. Due consideration will be given employees' choice of
vacation time, but all vacations scheduled are subject to the final approval
of the Company in keeping with the Company's scheduling needs. In the event
that two or more employees cannot be released at the same time, the employee
with the longest service with the Company will be given preference. An
employee who notifies the Company of a vacation choice thirty (30) days in
advance shall not lose that vacation choice to another employee. Vacations
may not be scheduled for periods of less than a week, and all vacations must
be taken within an anniversary year.
Section 13.5. The Company reserves the right to schedule a plant shutdown
for one .(l) week in any year, which shall be treated as a vacation week for
those employees entitled to vacation.
ARTICLE 14
HOLIDAYS
Section 14.1. The following shall be considered holidays:
New Year's Day Labor Day
Martin Luther King's Birthday Thanksgiving Day
July Fourth Christmas Day
In addition to the above holidays, there shall be one (1) additional holiday
which shall be announced each year by the Company one week prior to the day
when it will be observed. In the event any holiday falls on a Saturday or
Sunday, the Company will announce whether it will be observed on the Friday
preceding or the Monday following the holiday. Such notice shall be given at
least four (4) days in advance.
Section 14.2. All regular full-time employees who have completed their
probationary period shall be paid for eight (8) hours at their regular
straight time rate for each holiday enumerated above, provided they report for
work and work all scheduled hours on the workday preceding and the workday
next following the holiday, unless the employee was necessarily absent due to
personal illness, supported by a doctor's certificate, or because of an
emergency occurring to the employee or the employee's immediate family
(meaning only spouse, children, or parents). No employee shall lose holiday
pay because of missing no more than thirty (30) minutes on the workday before
or the workday following the holiday.
In any event, an employee must work at least one (1) day during the
calendar week in which a holiday falls in order to be eligible for holiday
pay, except the employee who is on vacation.
Section 14.3. Employees required to work on a holiday shall be paid
the amount provided above, in addition to their regular earnings for that day.
Hours not worked on a holiday shall not be considered as work time in
computing any additional compensation due under the overtime provisions of
this contract.
Section 14.4. If an employee is required to work and fails to report or
fails to work scheduled hours on a holiday, the employee shall forfeit holiday
pay for that day.
Section 14.5. Employees on vacation during the week in which a holiday
falls shall receive holiday pay.
ARTICLE 15
INSURANCE
Section 15.1. The Company will provide a group insurance program for
employees covered by this Agreement. The Company will continue to make
monthly contributions toward group insurance premiums in the same proportion
as is currently in effect. Employees will bear the remaining costs of the
insurance.
ARTICLE 16
WAGES
Section 16.1. Wages shall be paid as provided in Appendix A attached
hereto and made a part of this Agreement.
Section 16.2. Whenever a new job classification is created by the
Company, or there is a change or merger of job classifications or the job
content of job classifications, the Company will discuss the appropriate wage
rate with the Union. If a mutually satisfactory rate cannot be agreed upon,
the Company will set the rate. The Union may file a grievance on the rate,
and the dispute shall be settled in accordance with the grievance and
arbitration procedures of this contract.
Section 16.3. Any employees who, upon the effective date of the wage rate
set forth in Appendix A, are earning in excess of the applicable rate, shall,
during the term of this Agreement, continue to receive their current rate
until the contract rate equals or exceeds that rate. This section shall not
apply to any employee in a classification which has been paid on a salary
basis under any past contract.
Section 16.4. In addition to the wage rates as provided in Appendix
A, production employees who have been continuously employed for five (5) or
more years shall receive seniority pay of twenty (20) cents per hour.
Maintenance employees and distribution drivers who have been continuously
employed for five (5) or more years will receive seniority pay of fifty (50)
cents per hour. Long haul drivers who have been continuously employed for
five (5) more years will receive an additional one (1) cent on the applicable
mileage rate.
Section 16.5. Employees who have been continuously employed for one (1) or
more years shall receive a night shift differential of twenty-five (25) cents
per hour for work performed on a shift starting during the hours beginning
12:00 noon through 1:00 a.m. The starting time of a shift determines if it is
subject to the shift differential. Employees performing work on a night shift
which is not their regular shift will receive shift differential for such work
if it lasts three (3) or more hours. Distribution drivers shall not receive
shift differential regardless of the time they begin work.
ARTICLE 17
MISCELLANEOUS
Section 17.1. The Company shall maintain safe, sanitary, and healthy
working conditions at all times, and employees will be required to cooperate
in maintaining such conditions. Any complaints regarding safety or health
shall be processed through the grievance and arbitration provisions of this
Agreement.
Section 17.2. The Company will provide any uniforms required of employees
who have completed their probationary period.
The Company will furnish required safety equipment, gloves, aprons, hair
nets, freezer gloves, cotton gloves, and smocks at no cost to the employee.
Needed replacements, through normal use, will be made at no cost provided the
worn out article is returned to the Company. If an item is lost or destroyed
through employee negligence, the employee will be charged for its replacement.
Section 17.3. The Employer may require any employee to take a physical
examination at any time at the Employer's expense.
Section 17.4. It shall be the responsibility of all employees to keep the
Employer apprised of their current address, telephone number, marital status
and number of dependents.
Section 17.5. It is the intent of the parties hereto that no provisions of
this Agreement shall require either party to perform any act which shall be
unlawful under any Mississippi or Federal statute.
ARTICLE 18
EMPLOYEE STOCK OWNERSHIP PLAN - RETIREMENT
Section 18.1. Employees covered by this Agreement will continue to be
covered by the Employee Stock Ownership Plan of Sanderson Farms, Inc. and
Affiliates. Participation and benefits in the plan shall be in accordance
with the provisions of that plan.
ARTICLE 19
NO DISCRIMINATION
Section 19.1. The Company and the Union agree that they will not
discriminate against any person with regard to employment or Union membership
because of race, creed, color, sex, religion, age, national origin, or
disability (as defined in the Americans With Disabilities Act).
Section 19.2. Whenever masculine gender is used in this Agreement, it
shall apply to the feminine gender.
<PAGE>
ARTICLE 20
AUTHORIZATION FOR REPRESENTATION AND CHECK-OFF
Section 20.1. During the term of this Agreement, the Company will deduct
initiation fees, assessments, and Union dues from the wages of employees who
individually authorize the Company on a form in compliance with Appendix B to
this Agreement.
Section 20.2. The Union shall save the Company harmless against and from
all claims, demands, suits or other forms of liability that arise out of or by
reason of action taken or not taken by the Company in reliance upon or
compliance with any provisions of this Article.
Section 20.3. It is agreed that by reason of institution of the above
check-off system, collections by any other method on the Company's premises
are prohibited, except with the permission of the Company.
ARTICLE 21
UNION SECURITY
Section 21.1. It shall be a condition of employment that all employees of
the Employer covered by this Agreement become members of the Union in good
standing not later than thirty-one (31) days after the effective date of this
Agreement, and remain members in good standing of the Union. It shall also be
a condition of employment that all employees covered by this Agreement and
hired on or after its effective date shall on the thirty-first (31st) day
following the beginning of such employment become and remain members in good
standing in the Union.
The Union shall save the Company harmless against and from all claims,
demands, suits, or other forms of liability that arise out of or by reason of
action taken or not taken by the Company in reliance upon or compliance with
any provisions of this Article.
It is understood and agreed that the provisions of this Article shall be
effective only to the extent permitted by applicable law.
ARTICLE 22
DURATION OF AGREEMENT
Section 22.1. This Agreement shall remain in full force and effect from
the 9th day of September, 1995 until the 30th day of December, 1999, and shall
continue thereafter from year to year until either party to this Agreement
desires to terminate this Agreement by giving written notice at least sixty
(60) days prior to December 30, 1999, or at least sixty (60) days' written
notice prior to any anniversary date thereafter. The parties to this
Agreement shall endeavor to satisfactorily negotiate any contemplated change
or execute a new Agreement during the sixty (60) day period, after proper
notice in writing has been given as provided herein and above. Notice, as
specified in this Article, shall be mailed via United States Certified Mail.
IN WITNESS WHEREOF, the parties have hereunto signed their names this
______ day of September, 1995.
SANDERSON FARMS, INC. LABORERS' INTERNATIONAL UNION
(Collins Processing Division) OF NORTH AMERICA, PROFESSIONAL
EMPLOYEES LOCAL UNION #693
AFL-CIO
/s/Daniel J. Nicovich
/s/Bob Bellipannie /s/Rena Barnes
/s/Wallace C. Price
/s/Leroy C. Carney
/s/Jimmie Funchess
/s/McArthur Brown
/s/Angela M. Williams
/s/Rodney Sonnier
/s/Rossco Johnson<PAGE>
<TABLE>
APPENDIX "A"
WAGE SCHEDULE
<CAPTION>
CURRENT: EFFECTIVE:
1/7/96 1/5/97 1/4/98 1/3/99
<S> <C> <C> <C> <C> <C>
PROCESSING
Receiving
Forklift Operator 7.10 7.30 7.50 7.70 7.90
Hanging Dock 6.95 7.15 7.35 7.55 7.75
Picking
Killer 7.20 7.40 7.60 7.80 8.00
Floorworker 6.85 7.05 7.25 7.45 7.65
Line Operator 6.70 6.90 7.10 7.30 7.50
Eviscerating
Floorworker 6.85 7.05 7.25 7.45 7.65
Bird Chiller Operator 6.85 7.05 7.25 7.45 7.65
Line Operator 6.70 6.90 7.10 7.30 7.50
PACKING
Drip Line
Forklift Operator 7.15 7.35 7.55 7.75 7.95
Scale Operator 6.95 7.15 7.35 7.55 7.75
Floorworker 6.85 7.05 7.25 7.45 7.65
Giblet Chiller Operator 6.85 7.05 7.25 7.45 7.65
Grader 6.80 7.00 7.20 7.40 7.60
Line Operator 6.70 6.90 7.10 7.30 7.50
Specialty
Scale Operator 6.95 7.15 7.35 7.55 7.75
Floorworker 6.85 7.05 7.25 7.45 7.65
Line Operator 6.70 6.90 7.10 7.30 7.50
Polybag
Scale Operator 6.95 7.15 7.35 7.55 7.75
Floorworker 6.85 7.05 7.25 7.45 7.65
Line Operator 6.70 6.90 7.10 7.30 7.50
Paw Line
Scale Operator 6.95 7.15 7.35 7.55 7.75
Chiller Operator 6.85 7.05 7.25 7.45 7.65
Line Operator 6.70 6.90 7.10 7.30 7.50
</TABLE>
<PAGE>
<TABLE>
CURRENT: EFFECTIVE:
11/6/94 1/7/96 1/5/97 1/4/98 1/3/99
<CAPTION>
<S> <C> <C> <C> <C> <C>
CHILLING/PREPRICE/SHIPPING
Chilling
Forklift Operator 7.15 7.35 7.55 7.75 7.95
Chilling Room Operator 6.80 7.00 7.20 7.40 7.60
Preprice
Data Printer Operator 6.95 7.15 7.35 7.55 7.75
Line Operator 6.70 6.90 7.10 7.30 7.50
Shipping
Forklift Operator 7.15 7.35 7.55 7.75 7.95
Billing Clerk 6.85 7.05 7.25 7.45 7.65
Loading Crew 6.80 7.00 7.20 7.40 7.60
Distribution Driver 8.45 9.45 9.65 9.85 10.05
DEBONE DEPARTMENT
Deboning
Scale Operator 6.95 7.15 7.35 7.55 7.75
Floorworker 6.85 7.05 7.25 7.45 7.65
Knife Sharpener 6.85 7.05 7.25 7.45 7.65
Cooler Arranger 6.80 7.00 7.20 7.40 7.60
Combo Packer 6.80 7.00 7.20 7.40 7.60
Dumper 6.80 7.00 7.20 7.40 7.60
Stack Off 6.80 7.00 7.20 7.40 7.60
Line Operator 6.70 6.90 7.10 7.30 7.50
QUALITY CONTROL
Quality Control
Technician 6.95 7.15 7.35 7.55 7.75
Purchasing
Supply Clerk 6.75 6.95 7.15 7.35 7.55
Line Operator 6.70 6.90 7.10 7.30 7.50
Waste Water
Waste Treatment Operator 6.80 7.00 7.20 7.40 7.60
</TABLE>
<PAGE>
<TABLE>
CURRENT: EFFECTIVE:
11/6/94 1/7/96 1/5/97 1/4/98 1/3/99
<CAPTION>
MAINTENANCE DEPARTMENT
<S> <C> <C> <C> <C> <C>
Master Skilled
Operator I 11.20 11.70 11.90 12.10 12.30
Master Skilled
Operator II 9.70 10.20 10.40 10.60 10.80
Skilled Maintenance Men 8.80 9.30 9.50 9.70 9.90
Mechanic 8.20 8.70 8.90 9.10 9.30
Mechanic Helper 7.00 7.20 7.40 7.60 7.80
Clean-Up Floor Worker 6.85 7.05 7.25 7.45 7.65
Clean-Up Line Operators 6.70 6.90 7.10 7.30 7.50
BY-PRODUCTS (Rendering)
Maintenance
Master Skilled
Maint. I 11.20 11.70 11.90 12.10 12.30
Master Skilled
Maint. II 9.70 10.20 10.40 10.60 10.80
Skilled Maintenance 8.80 9.30 9.50 9.70 9.90
Mechanic 8.20 8.70 8.90 9.10 9.30
Mechanic Production
Feather Loader 7.15 7.35 7.55 7.75 7.95
Feather Cooker Operator 7.15 7.35 7.55 7.75 7.95
Meat Cooker Operator 7.15 7.35 7.55 7.75 7.95
Utility 7.15 7.35 7.55 7.75 7.95
By-Products Crew 7.15 7.35 7.55 7.75 7.95
Bobcat Loader 6.95 7.15 7.35 7.55 7.75
Driver
Raw Material Driver 7.90 8.10 8.30 8.50 8.70
Finish Material Driver 7.90 8.10 8.30 8.50 8.70
</TABLE>
Probationary employees shall receive a training rate of $5.40 per hour
for the first ninety (90) days of their employment, which shall be
$5.50 effective January 7, 1996, $5.60 effective January 5, 1997, $5.70
effective January 4, 1998, and $5.80 effective January 3, 1999. Upon
the expiration of the ninety (90) day period, the rate shall be $6.15 per
hour, which shall be $6.25 effective January 7, 1996, $6.35 effective
January 5, 1997, $6.45 effective January 4, 1998, and $6.55 effective
January 3, 1999. After one year of employment, an employee's rate shall
be as shown hereinabove. Newly hired employees in premium classifications
above shall receive the rate of that classification upon the expiration
of a forty-five (45) day period.
Long haul drivers receive mileage rates of 26 cents per mile for
trips in excess of 100 miles; 30 cents under 100 miles; and 16 cents for
double team trips.
Miscellaneous paid time, including breakdowns, is paid at the
distribution driver hourly rate. Compensation shall be reviewed
annually, and the Union will be notified of any changes.<PAGE>
APPENDIX "B"
CHECK-OFF AUTHORIZATION AND ASSIGNMENT
TO: ALL EMPLOYERS BY WHOM I AM EMPLOYED
I, _________________________________________________________, do
hereby assign to Local Union No. 693, LIUNA Professional
Employees, AFL-CIO, such amounts from my wages as shall be
required to pay the initiation fees, readmission fees, membership
dues and assessments of the Local Union as may be established from
time to time. My Employer is hereby authorized to deduct amounts
from my wages and pay the same to the Local Union and/or its
authorized representative, in accordance with the collective
bargaining agreement in existence between the Local Union and my
Employer.
This authorization shall become operative upon the effective date
of each collective bargaining agreement entered into between my
Employer and the Local Union.
This authorization shall be irrevocable for a period of one year,
or until the termination of the collective bargaining agreement in
existence between my Employer and the Local Union, whichever
occurs sooner; and I agree and direct that this authorization
shall be automatically renewed and shall be irrevocable for
successive periods of one year each, or for the period of such
succeeding applicable collective bargaining agreement between my
Employer and the Local Union, whichever be shorter, unless I give
written notice to my Employer and the Local Union not more than
twenty days and not less than ten days prior to the expiration of
each period of one year, or of each applicable collective
bargaining agreement between my Employer and the Local Union,
whichever occurs sooner.
Dues and fees paid to Local Union No. 693 are not deductible as
charitable contributions for federal income tax purposes. Dues
and fees paid to Local Union 693, however, may qualify as business
expenses, and may be deductible in limited circumstances subject
to various restrictions imposed by the Internal Revenue Service.
This assignment has been executed this _____ day of
______________________________, 19_______
ARTICLE 1
AGREEMENT
Section 1. This Agreement made and entered into this 15th day of July,
1995, by and between Sanderson Farms, Inc. (Hazlehurst Processing Division)
at its Hazlehurst, Mississippi, location (hereinafter referred to as the
"Company"), and Laborers' International Union of North America, Professional
Employees Local Union #693, AFL-CIO (hereinafter referred to as the "Union".
WITNESSETH
Section 1.2. WHEREAS, the Company and the Union are desirous of entering
into a contractual relationship covering rates of pay, hours of work and other
terms and conditions of employment of employees employed within the unit of
representation as hereinafter described; and
Section 1.3. WHEREAS, the parties have conferred, negotiated and agreed
upon the terms and conditions of employment to be applicable to the employees
covered by this Agreement for the contract period as herein specified.
Section 1.4. NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties do hereby agree as follows:
ARTICLE 2
RECOGNITION
Section 2.1. The Employer recognizes the Union as the sole exclusive
bargaining agency for all production and maintenance employees employed by its
Hazlehurst, Mississippi Poultry Processing Plan, excluding office clerical
employees, guards, professional employees, and supervisors, as defined in the
Act, certified on March 15, 1995, by the National Labor Relations Board
through an NLRB election, Case No. 15-RC-7876.
The following jobs are excluded from coverage:
(1) Office Clerical Employees (2) Cost Counting Records Clerks
(3) Processing Accounting Clerks (4) Sales Clerks
(5) Live Haul Drivers (6) Cage Repair Employees
(7) Professional Employees (8) Guards and Supervisors
(9) Quality Control Technicians (10) Maintenance Parts Buyers
Section 2.2. No employee shall be required to make any written or verbal
agreement that will conflict with this Agreement. No employee shall be
reclassified so as to defeat the purpose of this Agreement.
ARTICLE 3
MANAGEMENT PREROGATIVES
Section 3.1. Nothing in this Agreement shall be deemed to limit the
Employer in any way in the exercise of the customary functions of management
which are recognized as the Employer's exclusive responsibility, including,
but not limited to, the right to plan, direct, and control operations, to
utilize the services of contractors, to determine the number, size and
location of its establishments, to close an establishment or departments
thereof, to hire, to promote, to demote, and for proper cause to discipline,
suspend or discharge, to assign and schedule work and transfer employees from
one job or department to another, and to make and enforce reasonable rules and
regulations relative to any and all of these matters or to the management of
its operation, provided that the reasonableness of rules may be tested in the
grievance procedure. The Employer shall be the exclusive judge of all matters
pertaining to its operations and their scheduling and the methods, processes,
equipment, means of operation and size of workforce.
Section 3.2. The Employer retains all prerogatives and rights of
management and all privileges and responsibilities not specifically limited by
this Agreement.
ARTICLE 4
SHOP STEWARDS
Section 4.1. The Employer recognizes the right of the Union to designate
shop stewards, not to exceed eight (8) in number, who shall be assigned to
serve specific areas of the plant to handle such Union business as may arise.
The shop stewards shall be employees of the Company. The Union shall notify
the Company in writing as to the names of the stewards and of any changes in
designation of stewards.
Section 4.2. A representative of the Union shall be permitted to enter
the plant at reasonable times, upon Employer's premises and plant, provided
such representative shall in no way interfere with the operations of
Employer's business and shall make arrangements with the Employer's manager.
ARTICLE 5UNION BULLETIN BOARD
Section 5.1. The Employer will provide a bulletin board in the plant for
posting of Union notices. All matters to be posted shall be submitted to the
Division Manager or a designated representative for approval prior to posting,
and management's decision shall be final.
ARTICLE 6
NO STRIKE - NO LOCK OUT
Section 6.1. For the duration of this Agreement, there shall be no
strike, stoppages, slowdowns, picketing, or other interruption of or
interference with the operations of the plant.
Section 6.2. The Company shall not lock out employees for the duration of
this Agreement.
Section 6.3. Neither the violation of any provisions of the Agreement,
nor the commission of any act constituting an unfair labor practice, or
otherwise made unlawful, shall excuse the employees, the Union, or the Company
from their obligations under the provisions of this Article.
Section 6.4. An employee discharged or otherwise disciplined for
violation of this Article, may seek review of such discipline through the
grievance and arbitration procedures provided herein. In this event, the only
question to be reviewed shall be whether or not the employee participated in
the prohibited conduct.
ARTICLE 7
GRIEVANCE PROCEDURE
Section 7.1. Grievances arising under this contract are herein defined as
a claim by a party to this Agreement or an employee covered by this Agreement
that the Company or the Union has violated a provision of this Agreement.
<PAGE>
STEP I
The employee shall discuss the grievance or complaint with the immediate
supervisor within five (5) working days after the event giving rise thereto
occurs, or within five (5) working days following the date on which the
grievant had or reasonably would have had knowledge thereof. In the event the
employee so requests, the appropriate steward shall be present at this step.
The supervisor shall give an answer within five (5) working days after the
grievance is received.
STEP 2
If there is no settlement in Step 1, the grievance may be presented by
the employee and/or shop steward within five (5) working days from the date on
which the supervisor's answer was given in Step 1. The grievance must be
presented in writing to the department superintendent and must state the
following information:
(a) name or names of employee or employees involved;
(b) the department or departments involved;
(c) the date and time of the occurrence or discovery of the grievance;
(d) the facts of the incident on which the claim is based;
(e) the specific provision of this Agreement alleged to have been
violated;
(f) the remedy requested.
The department superintendent shall give the Company's answer in writing
within five (5) working days after the grievance is received by the
superintendent.
STEP 3
In the event the grievance is not settled in Step 2, then the grievance
may be appealed in writing to the division manager or a designated
representative by the Union to Step 3 within five (5) working days from the
Company's answer in Step 2. The division manager or a designated
representative shall give an answer in writing within five (5) working days
from the date of the appeal. In the event the grievance is not settled then
the aggrieved party or parties shall have the right to request arbitration.
In the event a grievance arises on behalf of the Employer, the matter
shall be presented to the Union Business Agent in writing, who shall have
seven (7) days from the date of submission within which to endeavor to
reconcile the grievance presented and shall give an answer in writing within
that time. If not settled within that time, the aggrieved party or parties
shall have the right to request arbitration.
Section 7.2. Discharge grievances shall be processed initially under Step
3 of the grievance procedure. The written grievance shall be filed with the
division manager within five (5) working days following the date of discharge.
Section 7.3. A failure to observe the time limit specified herein for
original presentation of a grievance or presentation in any subsequent step of
the grievance procedure on the part of either the grievant or the Union shall
be conclusive evidence that the grievance has been settled and abandoned.
Failure on the part of the Company to comply with the time limits for
delivering its answer in any step of the grievance procedure shall
automatically advance the grievance to the next step of the grievance
procedure.
The time limits of the grievance procedure may be extended by mutual
consent of the Union and the Company.
ARTICLE 8
ARBITRATION
Section 8.1. If a party to this Agreement desires to take a grievance to
arbitration, it shall within fifteen (15) calendar days after the denial of
the grievance, give written notice of his intention to the other party,
together with a written statement of the specific provision or provisions of
this Agreement at issue.
Section 8.2. The parties shall attempt to select an impartial arbitrator.
If they are unable to agree upon a choice within seven (7) calendar days after
the receipt of Notice of Intent to Arbitrate, either party may request the
Federal Mediation and Conciliation Service to submit a list of five (5)
arbitrators, from which the arbitrator will be selected. Selection shall be
made by the parties alternately striking any name from the list (the first to
strike shall be the party requesting arbitration) until only one (1) name
remains. The final name remaining shall be the arbitrator of the grievance.
Section 8.3. The jurisdiction and the decision of the arbitrator of the
grievance shall be confined to a determination of the acts and the
interpretation or application of the specific provision or provisions of this
Agreement at issue. The Arbitrator shall be bound by terms and provisions of
this Agreement and shall have the authority to consider only grievances
representing solely an arbitration issue under this Agreement. The arbitrator
shall have no authority to add to, alter, amend, or modify any provision of
this Agreement. The decision of the arbitrator in writing on any issue
properly before the arbitrator in accordance with the provisions of this
Agreement, shall be final and binding on the aggrieved employee or employees,
the Union, and the Employer.
Section 8.4. Multiple grievances shall not be heard before one arbitrator
at the same hearing except by mutual agreement of the parties.
Section 8.5. The Union and the Employer shall each bear its own costs in
these arbitration proceedings, except that they shall share equally the fee
and other expenses of the arbitrator in connection with the grievance.
ARTICLE 9
SENIORITY
Section 9.1. Seniority is defined as the length of an employee's
continuous employment in the bargaining unit at the Company's Hazlehurst,
Mississippi, poultry processing plant since the last permanent date of
employment. For purposes of layoff, recall, promotion, and vacation only,
this shall include continuous service which began prior to the acquisition of
the plant by the Company.
Section 9.2. All newly hired or rehired employees shall be considered as
probationary employees for a period of ninety (90) days during which period
they shall not acquire seniority, and during which they may be discharged
without recourse to the grievance and arbitration procedures provided herein.
If retained as a regular employee upon satisfactory completion of the
probationary period, seniority shall be retroactive to the first day of
employment.
Section 9.3. In matters of layoff, recall, and promotion, consideration
will be given to an employee's skill, ability, attendance, versatility,
training, physical fitness, and seniority; and when, in the opinion of the
Company, the factors other than seniority are relatively equal, seniority will
be the deciding factor.
<PAGE>
Section 9.4. An employee's seniority shall be lost and employment
considered terminated by:
(a) discharge for just cause;
(b) failure to return from layoff within five (5) working days after
written notice by certified mail is sent by the Company to the
employee's last known address on the Company's books. Actual
notice to the employee of recall by any other means shall satisfy
the terms of this provision;
(c) voluntary termination of employment;
(d) failure to report after termination of a leave of absence approved
by the Company in writing on the first scheduled day following the
expiration of such leave of absence;
(e) engaging in a gainful occupation while on leave of absence;
(f) absence from work for three (3) consecutive working days without
notice to the Company, which shall be considered as a voluntary
quit, unless notice was prevented by a cause beyond the control of
the employee;
(g) separation from the Company's active payroll for any reason,
exclusive of leaves of absence approved by the Company, for a
period exceeding an employee's length of service in the Hazlehurst
plant, or three (3) months, whichever is less.
Section 9.5. For the purposes of this Agreement, layoffs shall be
classified as (a) "short term" and (b) "long term". A short term layoff is a
layoff which will not exceed ten (10) workdays in length. Short term layoffs
may be made without regard to seniority. A long term layoff is a layoff which
will exceed ten (10) workdays in length. Long term layoffs shall be made
subject to Section 3 of this Article.
Section 9.6. All permanent job vacancies in premium rated classifications
shall be posted for two (2) consecutive working days on the plant bulletin
board. Employees in lower rated classifications desiring promotion to such
jobs shall sign a bid sheet posted on the bulletin board. An employee who
does not sign such bid sheet shall have no right to consideration for the
vacancy. However, the fact that an employee did not sign the bid sheet will
not preclude that employee's selection for the job by the Company if none of
the signers is determined to be qualified. If no qualified employee bids on
the posted position, the Company may fill the position in its discretion. If,
after a reasonable period not to exceed thirty (30) days, the employee
selected for the posted position achieves an acceptable level of performance,
the employee shall receive the rate of the new position. If the employee
fails to perform in an acceptable manner, such employee shall return to a job
in their former classification and the premium job shall be posted again. An
employee who self-disqualifies shall return to the extra board at the line
operator's rate of pay and shall not be eligible for bidding on a premium job
for a period of six (6) months.
Section 9.7. Assignments involving employees on the extra board shall be
in order of seniority. Within a department, no extra board employee shall be
retained over a permanently assigned employee.
ARTICLE 10
SENIORITY LIST
Section 10.1. Upon request at any reasonable time, the Company shall
furnish to the Union a current seniority list.
ARTICLE 11
HOURS OF WORK
Section 11.1. The regular work week shall consist of five (5) days
or forty (40) hours. This shall not be construed as a guarantee of any amount
of hours or work. The basic work week shall be the seven (7) day period from
12:01 a.m. Sunday until midnight the following Saturday. Employees will be
given at least one (1) calendar week's notice of any change by the Company of
the payroll week.
Section 11.2. An employee who works more than forty (40) hours in
any one week shall be paid at time and one-half the regular rate of pay for
all hours in excess of forty (40).
Section 11.3. When employees are called to work a shift outside
their regularly scheduled shift and report for work, or when they report to
work at their regularly scheduled time, they shall be given the opportunity to
work a minimum of three (3) hours or receive pay for same at the applicable
hourly rate, except that no such pay shall be made when the plant cannot
operate for reasons beyond the control of the Employer, such as, but not
limited to, strikes, utility failure, fire, flood, storms or other acts of God
interfering with work, or a breakdown of machinery or equipment when the
Company notifies the employees not to report to work at least four (4) hours
prior to the scheduled time to work.
Section 11.4. Employees will be paid at their regular rate for all
waiting time of thirty (30) minutes or less, so long as they do any job they
are assigned. Employees will not be paid for waiting time which exceeds
thirty (30) minutes if (1) they are relieved of all duties, (2) are free to
leave the plant, and (3) are told the time they must return to work.
Employees will not be relieved without pay more than once in any workday
except for a lunch break of not more than one (1) hour.
Section 11.5. The Company will provide one (1) unpaid break of not
less than thirty (30) minutes for lunch during each shift, and shall provide
one (1) twelve (12) minute paid rest period prior to lunch each day. In
addition, all employees will be allowed one (1) twelve (12) minute paid rest
period after the lunch break provided the work time is expected to be not less
than two and one-half (2 1/2) hours. No unpaid break shall be provided for
maintenance employees and truck drivers.
The Company shall have the right to provide a twenty-four (24) minute
paid lunch break to Clean-Up Line Operators on restricted hours in lieu of all
breaks provided in this Section.
Section 11.6. A Clean-Up Line Operator who has completed the
probationary period and is permanently assigned to restricted hours in the
clean up department shall receive an hourly adjustment of ninety (90) cents
for each hour worked in that assignment.
Section 11.7. Employees who have completed the probationary period
and are temporarily assigned for one or more consecutive hours to perform the
duties of an absent employee in a higher paid classification shall receive the
rate of that classification while performing the duties of the classification.
Employees who work at more than one pay rate during a week in which they earn
overtime shall receive overtime pay based upon an average of the rates earned
during that week.
ARTICLE 12
LEAVES OF ABSENCE
Section 12.1. An employee who has completed the probationary period
may be granted, at the Company's discretion, a leave of absence without pay
for a reasonable period of time, not to exceed one (1) month, for the
following reasons:
(a) emergency personal business;
(b) serious illness in the immediate family (spouse,
children or parents), supported by a doctor's certificate; and
(c) Union business, upon written request by the Union's
Business Manager, provided that no more than three (3)
employees shall be on such leave simultaneously.
Section 12.2. Employees who have completed their probationary period
are eligible for up to thirteen (13) weeks per year of unpaid family and
medical treatment leave for the following reasons:
(a) Employee's serious health condition -- a medical certification
will be required which states that the employee is unable to perform the
functions of the employee's position.
(b) Family serious health condition -- spouse, parent, or child. A
medical certification will be required stating the employee is "needed to care
for the individual."
(c) New child leave -- the birth, adoption or foster care placement by
a state agency of a child, and, the need to care for the child; such leave may
be prior to the actual birth or placement.
The provisions of this Section shall be administered in accordance with
the Family and Medical Leave Act of 1993 (FMLA).
Section 12.3. Employees who have completed their probationary period
who lose actual work time in order to attend the funeral of a family member
shall receive a paid funeral leave for time necessarily lost during the
employee's regularly scheduled shift, provided the employee would have been
scheduled and at work during that day. Said leave shall be up to three (3)
days with pay for a deceased parent, spouse, child, brother, or sister and one
(1) day for a deceased father-in-law, mother-in-law, grandparent, brother-in-
law, or sister-in-law. In order to receive pay under this Section, an
employee must be actively working, must make application for such paid leave,
and must attend the funeral. The Company may require satisfactory evidence of
attendance at the funeral and the relationship of the deceased.
Section 12.4. If the Company has knowledge that an employee, in a
premium-rated classification, will be on family and medical leave, military
leave, or an industrial injury leave for more than thirty (30) calendar days,
the job will be posted and filled on a temporary basis. The successful bidder
will receive the rate of the premium classification for the period its duties
are performed. When employees on leave under this Section return, they shall
be immediately assigned to their old job; employees temporarily filling the
job shall return to their regular classification and pay rate.
Section 12.5. The Company shall pay each active employee who reports
for jury duty the difference between pay up to eight times the hourly rate for
time actually lost and the juror's daily fee for each day the employee is
required to serve on a jury. The employee must report to work during those
days of his regularly scheduled shift during which the employee is not
required to report for jury duty or be available at court for jury service.
The employee must present proof of jury service and the amount of compensation
received from the court.
<PAGE>
ARTICLE 13
VACATIONS
Section 13.1. Regular full-time employees shall be eligible for one
(1) week's vacation after the first anniversary date of continuous employment,
and after the anniversary date of each succeeding year.
Employees shall be eligible for a second week of vacation after the
second anniversary date of continuous employment, and after the anniversary
date of each succeeding year of continuous employment.
Employees shall be eligible for a third week of vacation after the tenth
anniversary date of continuous employment, and after the anniversary date of
each succeeding year of continuous employment.
Section 13.2. To be eligible for a vacation, an employee must have
worked sixteen hundred (1,600) hours during the preceding twelve (12) months
or eighty (80) percent of available hours for that period, whichever is less.
Vacations and holidays not worked shall be considered time worked for purposes
of this Section.
Section 13.3. Vacation pay shall be computed at forty (40) times the
Employee's regular straight time hourly rate.
Section 13.4. Due consideration will be given employees' choice of
vacation time, but all vacations scheduled are subject to the final approval
of the Company in keeping with the Company's scheduling needs. In the event
that two or more employees cannot be released at the same time, the employee
with the longest service with the Company will be given preference. An
employee who notifies the Company of a vacation choice thirty (30) days in
advance shall not lose that vacation choice to another employee. Vacations
may not be scheduled for periods of less than a week, and all vacations must
be taken within an anniversary year.
Section 13.5. The Company reserves the right to schedule a plant
shutdown for one .(l) week in any year, which shall be treated as a vacation
week for those employees entitled to vacation.
ARTICLE 14
HOLIDAYS
Section 14.1. The following shall be considered holidays:
New Year's Day Labor Day
Martin Luther King's Birthday Thanksgiving Day
July Fourth Christmas Day
In addition to the above holidays, there shall be one (1) additional holiday
which shall be announced each year by the Company one week prior to the day
when it will be observed. In the event any holiday falls on a Saturday or
Sunday, the Company will announce whether it will be observed on the Friday
preceding or the Monday following the holiday. Such notice shall be given at
least four (4) days in advance.
Section 14.2. All regular full-time employees who have completed
their probationary period shall be paid for eight (8) hours at their regular
straight time rate for each holiday enumerated above, provided they report for
work and work all scheduled hours on the workday preceding and the workday
next following the holiday, unless the employee was necessarily absent due to
personal illness, supported by a doctor's certificate, or because of an
emergency occurring to the employee or the employee's immediate family
(meaning only spouse, children, or parents). No employee shall lose holiday
pay because of missing no more than thirty (30) minutes on the workday before
or the workday following the holiday.
In any event, an employee must work at least one (1) day during the
calendar week in which a holiday falls in order to be eligible for holiday
pay, except the employee who is on vacation.
Section 14.3. Employees required to work on a holiday shall be paid
the amount provided above, in addition to their regular earnings for that day.
Hours not worked on a holiday shall not be considered as work time in
computing any additional compensation due under the overtime provisions of
this contract.
Section 14.4. If an employee is required to work and fails to report
or fails to work scheduled hours on a holiday, the employee shall forfeit
holiday pay for that day.
Section 14.5. Employees on vacation during the week in which a
holiday falls shall receive holiday pay.
ARTICLE 15
INSURANCE
Section 15.1. The Company will provide a group insurance program for
employees covered by this Agreement. The Company will continue to make
monthly contributions toward group insurance premiums in the same proportion
as is currently in effect. Employees will bear the remaining costs of the
insurance.
ARTICLE 16
WAGES
Section 16.1. Wages shall be paid as provided in Appendix A attached
hereto and made a part of this Agreement.
Section 16.2. Whenever a new job classification is created by the
Company, or there is a change or merger of job classifications or the job
content of job classifications, the Company will discuss the appropriate wage
rate with the Union. If a mutually satisfactory rate cannot be agreed upon,
the Company will set the rate. The Union may file a grievance on the rate,
and the dispute shall be settled in accordance with the grievance and
arbitration procedures of this contract.
Section 16.3. Any employees who, upon the effective date of the wage
rate set forth in Appendix A, are earning in excess of the applicable rate,
shall, during the term of this Agreement, continue to receive their current
rate until the contract rate equals or exceeds that rate. This section shall
not apply to any employee in a classification which has been paid on a salary
basis under any past contract.
Section 16.4. If, during the term of this Agreement, Congress enacts
new minimum wage legislation which requires the payment of a minimum wage
greater than the rate provided in Appendix A for newly-hired employees, the
rate for newly-hired employees shall be raised to the federal minimum rate,
and the spread between the rates provided in this Agreement shall be
maintained. Any such change shall be effective upon the effective date of the
new federal minimum rate.
<PAGE>
Section 16.5. In addition to the wage rates as provided in Appendix
A, production employees who have been continuously employed for five (5) or
more years shall receive seniority pay of twenty (20) cents per hour.
Maintenance employees and distribution drivers who have been continuously
employed for five (5) or more years will receive seniority pay of fifty (50)
cents per hour.
Section 16.6. Employees who have been continuously employed for one
(1) or more years shall receive a night shift differential of twenty-five (25)
cents per hour for work performed on a shift starting during the hours
beginning 12:00 noon through 1:00 a.m. The starting time of a shift
determines if it is subject to the shift differential. Employees performing
work on a night shift which is not their regular shift will receive shift
differential for such work if it lasts three (3) or more hours. Distribution
drivers shall not receive shift differential regardless of the time they begin
work.
ARTICLE 17
MISCELLANEOUS
Section 17.1. The Company shall maintain safe, sanitary, and healthy
working conditions at all times, and employees will be required to cooperate
in maintaining such conditions. Any complaints regarding safety or health
shall be processed through the grievance and arbitration provisions of this
Agreement.
Section 17.2. The Company will provide any uniforms required of
employees who have completed their probationary period.
The Company will furnish required safety equipment, gloves, aprons, hair
nets, freezer gloves, cotton gloves, and smocks at no cost to the employee.
Needed replacements, through normal use, will be made at no cost provided the
worn out article is returned to the Company. If an item is lost or destroyed
through employee negligence, the employee will be charged for its replacement.
Section 17.3. The Employer may require any employee to take a
physical examination at any time at the Employer's expense.
Section 17.4. It shall be the responsibility of all employees to
keep the Employer apprised of their current address, telephone number, marital
status and number of dependents.
Section 17.5. It is the intent of the parties hereto that no
provisions of this Agreement shall require either party to perform any act
which shall be unlawful under any Mississippi or Federal statute.
ARTICLE 18
EMPLOYEE STOCK OWNERSHIP PLAN - RETIREMENT
Section 18.1. Employees covered by this Agreement will continue to
be covered by the Employee Stock Ownership Plan of Sanderson Farms, Inc. and
Affiliates. Participation and benefits in the plan shall be in accordance
with the provisions of that plan.
ARTICLE 19
NO DISCRIMINATION
Section 19.1. The Company and the Union agree that they will not
discriminate against any person with regard to employment or Union membership
because of race, creed, color, sex, religion, age, national origin, or
disability (as defined in the Americans With Disabilities Act).
Section 19.2. Whenever masculine gender is used in this Agreement,
it shall apply to the feminine gender.
ARTICLE 20
AUTHORIZATION FOR REPRESENTATION AND CHECK-OFF
Section 20.1. During the term of this Agreement, the Company will
deduct initiation fees, assessments, and Union dues from the wages of
employees who individually authorize the Company on a form in compliance with
Appendix B to this Agreement.
Section 20.2. The Union shall save the Company harmless against and
from all claims, demands, suits or other forms of liability that arise out of
or by reason of action taken or not taken by the Company in reliance upon or
compliance with any provisions of this Article.
Section 20.3. It is agreed that by reason of institution of the
above check-off system, collections by any other method on the Company's
premises are prohibited, except with the permission of the Company.
ARTICLE 21
UNION SECURITY
Section 21.1. It shall be a condition of employment that all
employees of the Employer covered by this Agreement become members of the
Union in good standing not later than thirty-one (31) days after the effective
date of this Agreement, and remain members in good standing of the Union. It
shall also be a condition of employment that all employees covered by this
Agreement and hired on or after its effective date shall on the thirty-first
(31st) day following the beginning of such employment become and remain
members in good standing in the Union.
The Union shall save the Company harmless against and from all claims,
demands, suits, or other forms of liability that arise out of or by reason of
action taken or not taken by the Company in reliance upon or compliance with
any provisions of this Article.
It is understood and agreed that the provisions of this Article shall be
effective only to the extent permitted by applicable law.
ARTICLE 22
DURATION OF AGREEMENT
Section 22.1. This Agreement shall remain in full force and effect
from the 15th day of July, 1995 until the 30th day of June, 1999, and shall
continue thereafter from year to year until either party to this Agreement
desires to terminate this Agreement by giving written notice at least sixty
(60) days prior to June 30, 1999, or at least sixty (60) days' written notice
prior to any anniversary date thereafter. The parties to this Agreement shall
endeavor to satisfactorily negotiate any contemplated change or execute a new
Agreement during the sixty (60) day period, after proper notice in writing has
been given as provided herein and above. Notice, as specified in this
Article, shall be mailed via United States Certified Mail.
IN WITNESS WHEREOF, the parties have hereunto signed their names this
______ day of July, 1995.
SANDERSON FARMS, INC. LABORERS' INTERNATIONAL UNION
(Hazlehurst Processing Division) OF NORTH AMERICA, PROFESSIONAL
EMPLOYEES LOCAL UNION #693
AFL-CIO
/s/Marvin M. Herner ___________________________________
/s/Tony F. Waltman
________________________________ /s/Evorice Ganier
/s/Kathy Barden
/s/Aujounette Smith
/s/Michael M. Taylor
/s/Annie Thrasher
/s/Alberta Terrell
/s/Rodney Sonnier
/s/Rossco Johnson
<PAGE>
<TABLE>
APPENDIX "A"
WAGE SCHEDULE
<CAPTION>
CURRENT: EFFECTIVE:
1/7/96 1/5/97 1/4/98 1/3/99
<S> <C> <C> <C> <C> <C>
PROCESSING
Receiving
Forklift Operator 7.10 7.30 7.50 7.70 7.90
Hanging Dock 6.95 7.15 7.35 7.55 7.75
Picking
Killer 7.20 7.40 7.60 7.80 8.00
Floorworker 6.85 7.05 7.25 7.45 7.65
Line Operator 6.70 6.90 7.10 7.30 7.50
Eviscerating
Floorworker 6.85 7.05 7.25 7.45 7.65
Bird Chiller Operator 6.85 7.05 7.25 7.45 7.65
Line Operator 6.70 6.90 7.10 7.30 7.50
By-Products Department
By-Products Operator 6.95 7.15 7.35 7.55 7.75
CUSTOMER SERVICE
Saws
Floorworker 6.85 7.05 7.25 7.45 7.65
Line Operator 6.70 6.90 7.10 7.30 7.50
Packing
Scale Operator 6.95 7.15 7.35 7.55 7.75
Floorworker 6.85 7.05 7.25 7.45 7.65
Giblet Chiller
Operator 6.85 7.05 7.25 7.45 7.65
Grader 6.80 7.00 7.20 7.40 7.60
Line Operator 6.70 6.90 7.10 7.30 7.50
Specialty
Forklift Operator 7.15 7.35 7.55 7.75 7.95
Scale Operator 6.95 7.15 7.35 7.55 7.75
Floorworker 6.85 7.05 7.25 7.45 7.65
Stackoff 6.80 7.00 7.20 7.40 7.60
Line Operator 6.70 6.90 7.10 7.30 7.50
Marination Scale Operator 6.95 7.15 7.35 7.55 7.75
Formulating Mixer 6.85 7.05 7.25 7.45 7.65
Floorworker 6.85 7.05 7.25 7.45 7.65
Stack Off 6.80 7.00 7.20 7.40 7.60
Line Operator 6.70 6.90 7.10 7.30 7.50
CURRENT: EFFECTIVE:
11/6/94 1/7/96 1/5/97 1/4/98 1/3/99
SHIPPING
Forklift Operator 7.15 7.35 7.55 7.75 7.95
Cooler & Shipping Dock 6.80 7.00 7.20 7.40 7.60
Distribution Driver 8.45 9.45 9.65 9.85 10.05
DEBONE DEPARTMENT
Deboning
Forklift Operator 7.10 7.30 7.50 7.70 7.90
Scale Operator 6.95 7.15 7.35 7.55 7.75
Floorworker 6.85 7.05 7.25 7.45 7.65
Front Half Puller 6.80 7.00 7.20 7.40 7.60
Combo Packer 6.80 7.00 7.20 7.40 7.60
Stack Off 6.80 7.00 7.20 7.40 7.60
Line Operator 6.70 6.90 7.10 7.30 7.50
Quality Control Technician 6.95 7.15 7.35 7.55 7.75
MAINTENANCE DEPARTMENT
Master Skilled
Operator I 11.20 11.70 11.90 12.10 12.30
Master Skilled
Operator II 9.70 10.20 10.40 10.60 10.80
Skilled Maintenance
Men 8.80 9.30 9.50 9.70 9.90
Mechanic 8.20 8.70 8.90 9.10 9.30
Mechanic Helper 7.00 7.20 7.40 7.60 7.80
Clean-Up Line
Operators 6.70 6.90 7.10 7.30 7.50
</TABLE>
Probationary employees shall receive a training rate of $5.40 per hour
for the first ninety (90) days of their employment, which shall be $5.50
effective January 7, 1996, $5.60 effective January 5, 1997, $5.70
effective January 4, 1998, and $5.80 effective January 3, 1999. Upon
the expiration of the ninety (90) day period, the rate shall be $6.15
per hour, which shall be $6.25 effective January 7, 1996, $6.35 effective
January 5, 1997, $6.45 effective January 4, 1998, and $6.55 effective
January 3, 1999. After one year of employment, an employee's rate
shall be as shown hereinabove. Newly hired employees in premium
classifications above shall receive the rate of that classification
upon the expiration of a forty-five (45) day period.
<PAGE>
APPENDIX "B"
CHECK-OFF AUTHORIZATION AND ASSIGNMENT
TO: ALL EMPLOYERS BY WHOM I AM EMPLOYED
I, _________________________________________________________, do hereby
assign to Local Union No. 693, LIUNA Professional Employees, AFL-CIO, such
amounts from my wages as shall be required to pay the initiation fees,
readmission fees, membership dues and assessments of the Local Union as
may be established from time to time. My Employer is hereby authorized
to deduct amounts from my wages and pay the same to the Local Union
and/or its authorized representative, in accordance with the collective
bargaining agreement in existence between the Local Union and my
Employer.
This authorization shall become operative upon the effective date of each
collective bargaining agreement entered into between my Employer and the
Local Union.
This authorization shall be irrevocable for a period of one year, or
until the termination of the collective bargaining agreement in existence
between my Employer and the Local Union, whichever occurs sooner; and I
agree and direct that this authorization shall be automatically renewed
and shall be irrevocable for successive periods of one year each, or for
the period of such succeeding applicable collective bargaining agreement
between my Employer and the Local Union, whichever be shorter, unless
I give written notice to my Employer and the Local Union not more than
twenty days and not less than ten days prior to the expiration
of each period of one year, or of each applicable collective bargaining
agreement between my Employer and the Local Union, whichever occurs sooner.
Dues and fees paid to Local Union No. 693 are not deductible as charitable
contributions for federal income tax purposes. Dues and fees paid to
Local Union 693, however, may qualify as business expenses, and may be
deductible in limited circumstances subject to various restrictions
imposed by the Internal Revenue Service.
This assignment has been executed this _____ day of _____________,
19_______
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<CASH> 447
<SECURITIES> 0
<RECEIVABLES> 22,624
<ALLOWANCES> 130
<INVENTORY> 33,275
<CURRENT-ASSETS> 60,965
<PP&E> 226,204
<DEPRECIATION> 94,873
<TOTAL-ASSETS> 193,197
<CURRENT-LIABILITIES> 13,360
<BONDS> 54,806
<COMMON> 13,613
0
0
<OTHER-SE> 100,706
<TOTAL-LIABILITY-AND-EQUITY> 193,197
<SALES> 392,896
<TOTAL-REVENUES> 392,896
<CGS> 355,907
<TOTAL-COSTS> 355,907
<OTHER-EXPENSES> 15,750
<LOSS-PROVISION> 54
<INTEREST-EXPENSE> 3,774
<INCOME-PRETAX> 17,546
<INCOME-TAX> 6,690
<INCOME-CONTINUING> 10,856
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,856
<EPS-PRIMARY> .80
<EPS-DILUTED> .80
</TABLE>
