UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1999
OR
( ) 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 (I.R.S. Employer
incorporation or organization) Identification No.)
225 North Thirteenth Avenue Laurel, Mississippi 39440
(Address of principal executive offices) (Zip Code)
(601) 649-4030
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report.)
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 periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days.
Yes X No _____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes _____ No _____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $1 Per Share Par Value-----14,402,705 shares outstanding as
of January 31, 1999.
Page 1 of 15
<PAGE>
INDEX
SANDERSON FARMS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets--January 31, 1999 and
October 31, 1998
Condensed consolidated statements of income (loss)--Three months
ended January 31, 1999 and 1998
Condensed consolidated statements of cash flows--Three months ended
January 31, 1999 and 1998
Notes to condensed consolidated financial statements--
January 31, 1999
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
Page 2 of 15
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SANDERSON FARMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
January 31, October 31,
1999 1998
(Unaudited) (Note)
(In thousands)
Assets
Current assets:
Cash and temporary cash investments $ 3,849 $ 3,626
Accounts receivable, net 25,807 31,023
Inventories - Note 2 44,948 42,879
Other current assets 7,735 7,664
------- -------
Total current assets 82,339 85,192
Property, plant and equipment 338,190 332,985
Less accumulated depreciation (157,517) (153,897)
-------- --------
180,673 179,088
Other assets 1,090 1,391
------- -------
Total assets $264,102 $265,671
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and
accrued expenses $ 20,874 $ 21,499
Current maturities of long-
term debt 4,033 4,028
------ ------
Total current liabilities 24,907 25,527
Long-term debt, less current
maturities 91,696 95,695
Claims payable 1,100 1,100
Deferred income taxes 13,867 13,867
Stockholders' equity
Preferred Stock:
Series A Junior Participating
Preferred Stock, $100 par value:
authorized 500,000 shares; none issued
Par value to be determined by the
Board of Directors: authorized
4,500,000 shares; none issued
Common Stock, $1 par value: authorized
100,000,000 shares; issued and
outstanding shares - 14,402,705 shares
and 14,373,580 at January 31, 1999 and
October 31, 1998, respectively 14,403 14,374
Paid-in capital 12,066 11,770
Retained earnings 106,063 103,338
------- -------
Total stockholders' equity 132,532 129,482
Total liabilities and stockholders' equity $264,102 $265,671
NOTE: The balance sheet at October 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. See notes to condensed consolidated financial statements.
Page 3 of 15
<PAGE>
SANDERSON FARMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)
Three Months Ended
January 31,
1999 1998
(In thousands, except share
and per share data)
Net sales $126,229 $113,674
Cost and expenses:
Cost of sales 114,208 112,764
Selling, general and
administrative 4,999 5,254
------ ------
119,207 118,018
OPERATING INCOME(LOSS) 7,022 (4,344)
Other income (expense):
Interest income 104 70
Interest expense (1,592) (2,066)
Other (23) 71
------ ------
(1,511) (1,925)
INCOME (LOSS) BEFORE INCOME TAXES 5,511 (6,269)
Income tax expense (benefit) 2,067 (2,319)
------ ------
NET INCOME (LOSS) $ 3,444 $(3,950)
====== ======
Basic and diluted earnings (loss) per share $ .24 $ (.27)
====== ======
Dividends per share $ .05 $ .05
====== ======
Basic weighted average shares outstanding 14,381 14,368
Diluted weighted average shares outstanding 14,501 14,368
See notes to condensed consolidated financial statements.
Page 4 of 15
<PAGE>
SANDERSON FARMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
January 31,
1999 1998
(In thousands)
Operating activities
Net income (loss) $ 3,444 $(3,950)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 6,125 5,808
Change in assets and liabilities:
Decrease in accounts receivable 5,216 3,065
Increase in inventories (2,069) (1,392)
Increase in refundable income taxes -0- (2,585)
(Increase) decrease in other assets 96 (581)
Increase (decrease) in accounts payable and
accrued expenses (625) 2,789
------- -------
Total adjustments 8,743 7,104
------- -------
Net cash provided by operating activities 12,187 3,154
Investing activities
Net proceeds from sales of property and equipment 171 -0-
Capital expenditures (7,746) (4,438)
Net cash used in investing activities (7,575) (4,438)
Financing activities
Principal payments on long-term debt (995) (89)
Net change in revolving credit (3,000) 1,000
Principal payments received on note receivable
from ESOP -0- 125
Net proceeds from common stock issued 325 -0-
Dividends paid (719) (718)
Net cash provided by (used in) financing
activities (4,389) 318
------- ------
Net increase (decrease) in cash and temporary
cash investments 223 (966)
Cash and temporary cash investments
at beginning of period 3,626 1,531
------- ------
Cash and temporary cash investments
at end of period $ 3,849 $ 565
====== ======
See notes to condensed consolidated financial statements.
Page 5 of 15
<PAGE>
SANDERSON FARMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
January 31, 1999
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments consisting
of normal recurring accruals considered necessary for a fair presentation have
been included. Operating results for the three-month period ended January 31,
1999 are not necessarily indicative of the results that may be expected for the
year ending October 31, 1999. For further information, reference is made to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended October 31, 1998.
NOTE 2--INVENTORIES
Inventories consisted of the following:
January 31, October 31,
1999 1998
(In thousands)
Live poultry-broilers and breeders $28,183 $26,970
Feed, eggs and other 6,265 5,676
Processed poultry 3,529 3,522
Processed food 3,274 3,029
Packaging materials 3,697 3,682
------- -------
$44,948 $42,879
======= =======
NOTE 3--INCOME TAXES
Deferred income taxes relate principally to cash basis temporary differences and
depreciation expense which are accounted for differently for financial and
income tax purposes. Effective November 1, 1988, the Company changed from the
cash to the accrual basis of accounting for its farming subsidiary. The Taxpayer
Relief Act of 1997 (the "Act") provides that the taxes on the cash basis
temporary differences as of that date are payable over the next 20 years or in
the first fiscal year in which the Company fails to qualify as a "Family Farming
Corporation". The Company will continue to qualify as a "Family Farming
Corporation" provided there are no changes in ownership control, which
management does not anticipate during fiscal 1999.
Page 6 of 15
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The following Discussion and Analysis should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in Item 7 of the Company's Annual Report on Form 10-K for
its fiscal year ended October 31, 1998.
This Quarterly Report, and other periodic reports filed by the Company under the
Securities and Exchange Act of 1934, and other written or oral statements made
by it or on its behalf, may include forward-looking statements, which are based
on a number of assumptions about future events and are subject to various risks,
uncertainties and other factors that may cause actual results to differ
materially from the views, beliefs and estimates expressed in such statements.
These risks, uncertainties and other factors include, but are not limited to the
following:
(1) Changes in the market price for the Company's finished products and feed
grains, both of which may fluctuate substantially and exhibit cyclical
characteristics typically associated with commodity markets.
(2) Changes in economic and business conditions, monetary and fiscal policies or
the amount of growth, stagnation or recession in the global or U.S. economies,
either of which may affect the value of inventories, the collectability of
accounts receivable or the financial integrity of customers.
(3) Changes in laws, regulations, and other activities in government agencies
and similar organizations applicable to the Company and the poultry industry.
(4) Various inventory risks due to changes in market conditions.
(5) Changes in and effects of competition, which is significant in all markets
in which the Company competes with regional and national firms, some of which
have greater financial and marketing resources than the Company.
(6) Changes in accounting policies and practices adopted voluntarily by the
Company or required to be adopted by generally accepted accounting principles.
Readers are cautioned not to place undue reliance on forward-looking statements
made by or on behalf of Sanderson Farms. Each such statement speaks only as of
the day it was made. The Company undertakes no obligation to update or to revise
any forward-looking statements. The factors described above can not be
controlled by the Company. When used in this quarterly report, the words
"believes," "estimates," "plans," "expects," "should," "outlook," and
"anticipates" and similar expressions as they relate to the Company or its
management are intended to identify forward-looking statements.
The Company's poultry operations are integrated through its control of all
functions relative to the production of its chicken products, including hatching
egg production, hatching, feed manufacturing, raising chickens to marketable age
("grow out"), processing, and marketing. Consistent with the poultry industry,
the Company's profitability is substantially impacted by the market prices for
its finished product and feed grains, both of which may fluctuate substantially
and exhibit cyclical characteristics typically associated with commodity
markets. Other costs, excluding feed grains, related to the profitability of the
Company's poultry operations, including hatching egg production, hatching,
growing, and processing cost, are responsive to efficient cost containment
programs and management practices.
Page 7 of 15
<PAGE>
The Company believes that value-added products are subject to less price
volatility and generate higher, more consistent profit margins than whole
chickens ice packed and shipped in bulk form. To reduce its exposure to market
cyclicality that has historically characterized commodity chicken market prices,
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. Nevertheless, market prices continue to have a significant
influence on prices of the Company's chicken products. 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 labeling the product. The Company believes
that one of its major strengths is its ability to change its product mix to meet
customer demands.
The Company's processed and prepared foods product line includes over 200
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.
RESULTS OF OPERATION
Net sales for the quarter ended January 31, 1999 were $126.2 million as compared
to $113.7 million for the quarter ended January 31, 1998. The increase in net
sales of $12.6 million or 11.0% was the result of an increase in the pounds of
poultry products sold of 17.3% and a decrease in the pounds of prepared food
products sold of 16.5%. The additional pounds of poultry products resulted from
an increase in the number of chickens processed at the Company's processing
facility in Brazos, Texas and a planned increase in the Company's average live
weight of chickens as compared to the quarter ended January 31, 1998. The
additional live weight is the result of the Company's shift of certain chicken
production from markets demanding a smaller live weight chicken to markets
requiring a larger bird. With the additional capacity at the Brazos, Texas
facility and the shift of some production to larger bird market segments, the
Company expects the pounds of poultry products sold for the fiscal year ended
October 31, 1999 to be significantly higher as compared to the pounds of poultry
products sold for the fiscal year ended October 31, 1998. The Company's average
sales price of poultry products decreased .4% during the three months ended
January 31, 1999 as compared to the three months ended January 31, 1998.
Although a simple average of the Georgia dock whole bird prices for the first
quarter of fiscal 1999 reflected an increase of 15.6% as compared to the first
quarter of fiscal 1998, leg quarter prices were at their lowest point in recent
history because Russia, the most significant buyer of leg quarters, continued to
experience economic problems. Net sales of prepared food products sold decreased
16.7% due primarily to a reduction in the pounds of prepared food products sold
of 16.5%.
Cost of sales for the three months ended January 31, 1999 as compared to the
three months ended January 31, 1998 increased by only $1.4 million or 1.3%
despite the increase in the pounds of products sold of 15.1%. Cost of sales of
poultry products increased $5.1 million or 5.4% during the first quarter of
fiscal 1999 as compared to the first quarter of fiscal 1998. The Company's lower
average cost of sales of poultry products was caused primarily by two factors.
Feed grain costs were significantly lower during the quarter ended January 31,
1999 as compared to the same quarter ended January 31, 1998. Corn
Page 8 of 15
<PAGE>
and soybean meal cash market prices reflected decreases of 18.1% and 33.5%,
respectively. Secondarily, the planned shift to a larger live weight chicken at
certain of the Company's processing facilities resulted in lower average per
pound processing costs. Cost of sales of prepared food products decreased $3.7
million or 20.4% during the three months ended January 31, 1999 as compared to
the three months ended January 31, 1998.
Selling, general and administrative expenses for the first quarter of fiscal
1999 decreased $.3 million or 4.9%, as compared to the first quarter of fiscal
1998. As a percentage of net sales for the quarter ended January 31, 1999,
selling, general and administrative expenses were 4.0%, as compared to 4.6% for
the quarter ended January 31, 1998.
The Company's operating income for the three months ended January 31, 1999 was
$7.0 million, an increase of $11.4 million as compared to the three months ended
January 31, 1998. The increased profitability for the first quarter of fiscal
1999 as compared to the first quarter of fiscal 1998 resulted primarily from
relatively favorable grain prices, offset slightly by lower selling prices of
poultry products.
Interest expense decreased approximately $.5 million during the three months
ended January 31, 1999 as compared to the three months ended January 31, 1998,
reflecting the Company's lower debt during the first quarter of fiscal 1999 as
compared to the first quarter during fiscal 1998.
The effective tax rate for the three months ended January 31, 1999 was 37.5% as
compared to a tax benefit for the three months ended January 31, 1998 of 37.0%.
LIQUIDITY AND CAPITAL RESOURCES
As of January 31, 1999 the Company's current ratio and working capital was 3.3
to 1 and $57.4 million, respectively, compared to a current ratio of 3.3 to 1
and working capital of $59.7 million as of October 31, 1998. During the first
three months of fiscal 1999 the Company spent approximately $7.7 million on
planned capital projects.
The capital budget for fiscal 1999 was increased during the first fiscal quarter
to $23.0 million from $21.5 million. The increase of $1.5 million pertains to
items not approved at the beginning of fiscal 1999, pending justification, field
trial and alternate costing. Included in the fiscal 1999 budget is approximately
$.8 million relating to fiscal 1998 budget items that were not completed or
started during fiscal 1998. Also included in the fiscal 1999 budget are items
that include cost of renovations, changes and additions to existing processing
facilities to allow better product flows and product mix for more product
flexibility.
The Company believes that anticipated capital expenditures for fiscal 1999 will
be funded from working capital and by cash flows from operations; however, as of
January 31, 1999 the Company had $60.0 million available under its revolving
credit agreement, if needed.
Impact of Year 2000 Issues
The "Year 2000 problem" arises because many existing computer programs use only
the last two digits (for example, 99) to refer to a year (for example, 1999).
Such programs are not able to distinguish between the year 1900
Page 9 of 15
<PAGE>
(written "00") and the year 2000 (also written "00"). That inability could
result in the failure of applications using such programs, or in the generation
of business and financial misinformation. The Year 2000 problem could
potentially affect the Company due to its own systems, and also due to the
systems of its customers and of suppliers that provide goods and/or services to
it. For purposes of this discussion, such systems are divided into two types:
information technology systems ("IT systems"), meaning those systems that deal
with business and financial information; and non-information technology systems
("non-IT systems"), meaning systems, like microcontrollers, that are embedded in
machinery and equipment and control or affect their function.
The Company has assessed the impact of the Year 2000 on its IT systems and
believes that the modifications to software and replacements necessary to make
the IT systems Year 2000 compliant have been substantially completed. In
addition, the Company is continuing to assess possible problems with its non- IT
systems, particularly those embedded within operating equipment in its
hatcheries, feed mills and processing plants, which is expected to be completed
by June 30, 1999. The cost of modifications to its existing non-IT systems is
not expected to be material.
The Company's cost of modifications to its existing IT systems software and
conversions to new IT systems software were approximately $.5 million and such
modifications and conversions were substantially completed, but not yet fully
tested, as of January 31, 1999. Once these modifications and conversions have
been completed and successfully tested, which is expected to occur by March 31,
1999, the Year 2000 issue is not expected to pose significant operational
problems for the Company's IT systems. However, if such modifications and
conversions are not completed timely the Year 2000 issue could have a material
impact on the operations of the Company. In addition, approximately $.3 million
was capitalized in the quarter ended January 31, 1999 and approximately $.1
million is projected to be capitalized during the remainder of fiscal 1999
because certain personal computers are being replaced in the normal course of
business.
The Company is examining the impact of the Year 2000 problem on suppliers
(including vendors and equipment manufacturers) by requesting that they report
to the Company on their readiness for Year 2000. Presently, the Company has no
reason to believe that such parties will not be Year 2000 compliant, but the
Company has not yet completed its inquiry and, even where it has, the Company is
not normally in a position to test or challenge the information provided by such
third parties. If the responses of such parties are not satisfactory to it, the
Company will consider new business relationships with alternate suppliers to the
extent alternatives are available.
The Company believes that its most significant exposure from third parties lies
in the availability from them of transportation facilities that deliver feed
grains, and of utilities like electricity, natural gas and water that are
necessary for operating the Company's plants. The Company's supply of feed
grains on-hand does not usually exceed that used in a matter of days. Shipping
routes normally involve, at one or more points, rail transportation for which
alternate suppliers are not readily available. Similarly, there are no effective
alternate suppliers of utilities. Disruption of more than a few days in these
transportation and utilities services used by the Company would begin to have a
material adverse effect that would expand as any such disruption continued.
While the Company has no information that causes it to expect a prolonged
disruption that would have a material adverse effect, the
Page 10 of 15
<PAGE>
Company cannot give any assurance that such a disruption will not occur, because
the Company will have no control over such an occurrence or its duration. The
Company does not believe that it can develop adequate contingency plans for any
prolonged disruption. The Company considers disruptions of this nature to be its
worst case Year 2000 problem, but the Company cannot predict the likelihood of
such disruptions or, if they occur, the duration. As to minor disruptions, the
Company expects to address remedial action when and if such a minor disruption
arises. The Company believes that other risks created by the failure of third
persons to make their IT systems and/or non-IT systems Year 2000 ready would be
less substantial in that they would not likely affect the Company's ability to
operate its plants. The Company plans to address those problems when and if they
arise and has not developed a contingency plan with respect to them.
The Company routinely receives inquiries from its suppliers and customers as to
the Company's state of readiness for the Year 2000 problem, just as the Company
seeks such information from others. The Company believes, and therefore
responds, that its own systems (IT and non-IT) will be ready. The Company could
incur liability to persons to whom it responds if its response turns out to be
incorrect and the persons who sought the response are damaged thereby. Such
liability, if any, is not expected to be material, but there can be no assurance
that it will not be. The Company is not insured against losses of this type and,
even if it were not ultimately held liable, could be subjected to significant
costs for defense.
The foregoing discussion about the timetable and cost of Year 2000 readiness
involves forward-looking estimates that the Company believes are reasonable but
which it cannot guarantee. Those estimates could be affected by the Company's
failure to identify IT, or more likely non-IT, systems that are affected by the
Year 2000 problem or by the Company's miscalculation as to the time or expense
required to remedy identified deficiencies. With respect to the systems of third
parties, the Company cannot possibly verify all of the information it has
gathered or will gather, and cannot compel third parties even to respond at all.
Nor can the Company actually predict the extent to which the Company's financial
condition and operations could be adversely affected if third persons are not
ready for the Year 2000 on a timely basis.
Page 11 of 15
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed with this report
Exhibit 15a Independent Accountants' Review Report
Exhibit 15b Accountants' Letter re: Unaudited Financial
Information
(b) The Company did not file any reports on Form 8-K during the three
months ended January 31, 1999.
Page 12 of 15
<PAGE>
SIGNATURES
Pursuant to the requirements 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. _______
(Registrant)
Date: February 24, 1999 By: /s//D. Michael Cockrell
D. Michael Cockrell
Treasurer and Chief
Financial Officer
Date: February 24, 1999 By:/s/James A. Grimes
James A. Grimes
Secretary and Principal
Accounting Officer
Page 13 of 15
<PAGE>
EXHIBIT 15a
INDEPENDENT AUDITORS' REPORT ON REVIEW OF INTERIM
FINANCIAL INFORMATION
Shareholders and
Board of Directors
Sanderson Farms, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of
Sanderson Farms, Inc. and subsidiaries as of January 31, 1999, and the related
condensed consolidated statements of income (loss) cash flows for the
three-month periods ended January 31, 1999 and 1998. These financial statements
are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We previously audited, in accordance with generally accepted auditing standards,
the consolidated balance sheet of Sanderson Farms, Inc. and subsidiaries as of
October 31, 1998, and the related consolidated statements of operations, and
cash flows for the year then ended (not presented herein) and in our report
dated December 8, 1998, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of October 31, 1998, is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
/s/ERNST & YOUNG LLP
Jackson, Mississippi
February 18, 1999
Page 14 of 15
EXHIBIT 15b
Shareholders and Board of Directors
Sanderson Farms, Inc.
We are aware of the incorporation by reference in Post-Effective Amendment No.
1 to Registration Statement (Form S-No. 33-67474) of Sanderson Farms, Inc.
for the registration of 750,000 shares of its common stock of our report dated
February 18, 1999 relating to the unaudited condensed consolidated interim
financial statements of Sanderson Farms, Inc. that are included in its Form
10-Q for the quarter ended January 31, 1999.
/s/ERNST & YOUNG LLP
Jackson, Mississippi
February 18, 1999
Page 15 of 15
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