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 April 30, 2000
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-----13,739,355 shares outstanding
as of April 30, 2000.
<PAGE>
INDEX
SANDERSON FARMS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets--April 30, 2000 and
October 31, 1999
Condensed consolidated statements of income (loss)--Three months
ended April 30, 2000 and 1999; Six months ended April 30, 2000
and 1999
Condensed consolidated statements of cash flows--Six months ended
April 30, 2000 and 1999
Notes to condensed consolidated financial statements--
April 30, 2000 and 1999
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures of Market Risks
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Matters
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
ART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SANDERSON FARMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
April 30, October 31,
2000 1999
(Unaudited) (Note 1)
(In thousands)
Assets
Current assets
Cash and temporary cash investments $ 1,069 $ 7,052
Accounts receivables, net 32,540 36,577
Inventories - Note 2 53,256 47,634
Refundable income taxes 3,265 426
Other current assets 7,745 7,503
Total current assets 97,875 99,192
Property, plant and equipment 364,515 356,276
Less accumulated depreciation (184,653) (173,204)
179,862 183,072
Other assets 730 1,246
Total assets $278,467 $283,510
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and
Accrued expenses $ 27,800 $ 27,877
Current maturities of long-
term debt 4,048 4,043
Total current liabilities 31,848 31,920
Long-term debt, less current maturities 108,696 104,651
Claims payable 1,100 1,100
Deferred income taxes 14,995 14,995
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 - 13,739,355
and 13,932,455 at April 30, 2000 and
October 31, 1999, respectively 13,739 13,932
Paid-in capital 4,301 5,835
Retained earnings 103,788 111,077
Total stockholders' equity 121,828 130,844
Total liabilities and stockholders' equity $278,467 $283,510
See notes to condensed consolidated financial statements.
<PAGE>
SANDERSON FARMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
Three Months Ended Six Months Ended
April 30, April 30,
2000 1999 2000 1999
(In thousands, except per share data)
Net sales $139,781 $134,586 $276,789 $260,815
Cost and expenses:
Cost of sales 137,809 124,273 268,989 238,481
Selling, general and
administrative 7,144 4,839 13,317 9,838
144,953 129,112 282,306 248,319
OPERATING INCOME (LOSS) (5,172) 5,474 (5,517) 12,496
Other income (expense):
Interest income 24 44 94 148
Interest expense (2,010) (1,613) (3,688) (3,205)
Other (17) 11 41 (12)
(2,003) (1,558) (3,553) (3,069)
INCOME (LOSS) BEFORE
INCOME TAXES AND
CUMULATIVE EFFECT
OF ACCOUNTING CHANGE (7,175) 3,916 (9,070) 9,427
Income tax expense (benefit) (2,678) 1,478 (3,392) 3,545
NET INCOME (LOSS) BEFORE
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE (4,497) 2,438 (5,678) 5,882
Cumulative effect of accounting
change (net of income taxes
of $140,000) 0 0 (234) 0
NET INCOME (LOSS) $ (4,497) $ 2,438 $ (5,912) $ 5,882
Earnings (loss) per share:
Basic and diluted earnings
(loss) before cumulative
effect of accounting change $ (.33) $ .17 $ (.41) $ .41
Cumulative effect of
accounting change 0 0 (.02) 0
Basic and diluted earnings
(loss) $ (.33) $ .17 $ (.43) $ .41
Dividends per share $ .05 $ .05 $ .10 $ .10
Basic weighted average
shares outstanding 13,739 14,025 13,800 14,206
Diluted weighted average
shares outstanding 13,739 14,090 13,800 14,296
See notes to condensed consolidated financial statements.
<PAGE>
SANDERSON FARMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
April 30,
2000 1999
(In thousands)
Operating activities
Net income(loss) $ (5,912) $ 5,882
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Cumulative effect of accounting change 234 0
Depreciation and amortization 13,065 12,158
Change in assets and liabilities:
(Increase) decrease in accounts receivable,net 4,037 (429)
Increase in inventories (5,622) (4,056)
Increase in refundable income taxes (2,839) 0
(Increase) decrease in other assets (34) 686
Decrease in accounts payable and
Accrued expenses (77) (3,271)
Total adjustments 8,764 5,088
Net cash provided by operating activities 2,852 10,970
Investing activities
Net proceeds from sales of property and equipment 66 282
Capital expenditures (9,847) (18,301)
Net cash used in investing activities (9,781) (18,019)
Financing activities
Principal payments on long-term debt (2,950) (3,844)
Net change in revolving credit 7,000 20,000
Retirement of Common Stock (1,727) (6,916)
Net proceeds from Common Stock issued 0 414
Dividends paid (1,377) (1,414)
Net cash proved by financing
activities 946 8,240
Net increase (decrease) in cash and temporary
cash investments (5,983) 1,191
Cash and temporary cash investments
at beginning of period 7,052 3,626
Cash and temporary cash investments
at end of period $ 1,069 $ 4,817
See notes to condensed consolidated financial statements.
<PAGE>
SANDERSON FARMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
April 30, 2000
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 accounting principles generally
accepted in the United States 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- and six-month periods ended April 30, 2000
are not necessarily indicative of the results that may be expected for the
year ending October 31, 2000. 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, 1999.
The balance sheet at October 31, 1999 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.
NOTE 2--INVENTORIES
Inventories consisted of the following:
April 30, October 31,
2000 1999
(In thousands)
Live poultry-broilers and breeders $32,165 $29,323
Feed, eggs and other 6,564 6,494
Processed poultry 4,978 3,037
Processed food 4,983 4,900
Packaging materials 4,566 3,880
$53,256 $47,634
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 full 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 2000.
<PAGE>
NOTE 4--START-UP COSTS
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-5, "Reporting the Costs of Start-Up Activities",
which requires that costs related to start-up activities be expensed as
incurred. Prior to October 31, 1999, the Company capitalized its start-up
costs. The Company adopted the provisions of the SOP in its financial
statements in the first quarter of fiscal 2000. The effect of adoption of
SOP 98-5 was to record a charge for the cumulative effect of an accounting
change of $234,000 (net of income taxes of $140,000) or $.02 per basic and
diluted earnings per share.
NOTE 5--EMPLOYEE BENEFIT PLANS
During the second quarter of fiscal 2000, the Company's Board of Directors
approved an amendment to the 401(k) plan (the "Plan") to add a matching
feature. Effective July 1, 2000, the Company will match 100% of employee
contributions to the Plan up to 3% of each employee's compensation and 50% of
employee contributions between 3% to 5% of each employee's compensation, as
limited by Internal Revenue Service regulations.
<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, 1999.
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 cannot 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 products 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.
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
The Company's net sales for the quarter ended April 30, 2000 were $139.8
million as compared to $134.6 million for the quarter ended April 30, 1999.
The increase in the Company's net sales of $5.2 million or 3.9% resulted from
increases in the pounds of poultry products sold of 6.9% and prepared food
products sold of 4.4% during the second quarter of fiscal 2000 as compared to
the second quarter of fiscal 1999. The effect of these increases in pounds
of poultry and prepared food sold on the Company's net sales was partially
offset by a net decrease in the average sales price per pound of 2.8%. For
the quarter ended April 30, 2000 as compared to the quarter ended April 30,
1999 the net sales price of poultry products decreased 3.7%. A simple
average of the Georgia dock whole bird prices for the second quarter of
fiscal 2000 as compared to the second quarter of fiscal 1999 reflected a
decrease of 3.5%. Market prices for breast and wings were substantially lower
as the industry continues to be adversely affected by an over supply of
chicken and other meats. Net sales of prepared food products increased $1.7
million or 9.7% during the three months ended April 30, 2000 as compared to
the three months ended April 30, 1999.
Net sales for the six months ended April 30, 2000 were $276.8 million, an
increase of $16.0 million or 6.1% as compared to net sales for the six months
ended April 30, 1999 of $260.8 million. A majority of the increase in net
sales was derived from an increase in the pounds of poultry products sold of
11.3%. However, the increase in pounds of poultry products sold was partially
offset by a decrease in the average sales price per pound of 4.9%, as the
Company continued to be adversely affected by lower prices of poultry
products. During the first six months of fiscal 2000 as compared to the same
period during fiscal 1999, a simple average of the Georgia dock whole bird
prices reflected a decrease of 7.1%. Net sales of prepared food products
during the six months ended April 30, 2000 as compared to the six months
ended April 30, 1999, increased $2.6 million, or 7.7%, as a result of an
increase in the average sales price per pound of prepared food products of
4.5% and an increase in the pounds of prepared food products sold of 3.1%.
Cost of sales for the three months ended April 30, 2000 as compared to the
three months ended April 30, 1999 increased $13.5 million or 10.9%. The cost
of sales of poultry products increased $12.3 million or 11.2% due to the
increase in the pounds of poultry products sold of 6.9% and an increase in
the average cost per pound of poultry products sold of 4.1%. The increase in
the average cost per pound of poultry products sold resulted from an increase
in the cost of feed grains and increased packaging and labor costs associated
with the Company's larger presence in the chill pack markets. Corn and
soybean meal cash market prices for the three months ended April 30, 2000 as
compared to the three months ended April 30, 1999 reflected increases of 2.4%
and 24.2%, respectively. Cost of sales of prepared food products increased
$1.2 million or 8.3%, resulting from the increase in the pounds of prepared
food products sold of 4.4% and a change in the mix of products sold.
For the six months ended April 30, 2000 as compared to the six months ended
April 30, 1999, cost of sales increased $30.5 million or 12.8%. Cost of
sales of poultry products increased $29.2 million or 14.0%. This increase in
the cost of sales of poultry products was the result of an increase in the
pounds of poultry products sold of 11.3%, an increase in the processing cost
of poultry products related to the Company's increased presence in the chill
pack market and higher cost of soybean meal. Corn and soybean meal cash
market prices reflected a decrease of 2.5% and an increase of 14.0%,
respectively, when compared to the same six months a year ago. Cost of
sales of prepared food products during the first half of fiscal 2000 as
compared to the first half of fiscal 1999 increased $1.3 million or 4.4% due
primarily to the increase in the pounds of prepared food products sold of
3.1%.
Selling, general and administrative expenses for the first quarter and first
half of fiscal 2000 increased $2.3 and $3.5 million, respectively, as
compared to the same periods during fiscal 1999. These increases reflect the
additional advertising and marketing costs related to the Company's change of
certain of its production from the fast food market to the chill pack market.
In addition, the Company recorded a bad debt reserve of $1.2 million during
the second quarter of fiscal 2000 resulting from the bankruptcy filing by
Ameriserve on February 1, 2000.
The Company's operating loss for the second quarter of fiscal 2000 was $5.2
million as compared to operating income during the same quarter of fiscal
1999 of $5.5 million. During fiscal 2000 as compared to fiscal 1999 the
Company experienced lower prices for poultry products and slightly higher
average cost of feed grains. Also, the bad debt reserve relating to the
bankruptcy filing by Ameriserve increased the Company's operating loss by
$1.2 million during fiscal 2000 as compared fiscal 1999. During fiscal 2000,
the weakness in the poultry market more than offset the advantage of
historically low cost of feed grains. The Company expects the current
weakness in the poultry market to continue through the third quarter of
fiscal 2000.
Interest expense during the second quarter of fiscal 2000 was $2.0 million as
compared to $1.6 million during the second quarter of fiscal 1999. For the
first six months of fiscal 2000 as compared to the same period during fiscal
1999, interest expense increased $483,000 to $3.7 million.
The Company adopted the AICPA Statement of Position 98-5, "Reporting the
Costs of Start-up Activities" in the first quarter of fiscal 2000. The
effect of adopting SOP 98-5 was to record a charge for the cumulative effect
of an accounting change of $234,000 (net of income taxes of $140,000).
The effective tax rate for the three months and the six months ended April
30, 2000 was 37.3% and 37.4%, respectively as compared to effective tax
rates during the same periods of fiscal 1999 of 37.7% and 37.6%.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 2000, the Company's working capital was $66.0 million and its
current ratio was 3.1 to 1, as compared to working capital of $67.3 million
and a current ratio of 3.1 to 1 at October 31, 1999. During the six months
ended April 30, 2000 the Company spent approximately $9.8 million on planned
capital projects and $1.7 million to repurchase 193,100 shares of its Common
Stock under its existing stock repurchase plan.
The Company's capital budget for fiscal 2000 was increased to $18.9 million
from $15.8 million. The increase of $3.1 million pertains to items not
approved at the beginning of fiscal 2000, pending justification, field trial
and alternate costing. Included in the fiscal 2000 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 2000
will be funded from working capital and by cash flows from operations;
however, as of April 30, 2000 the Company had $27.0 million available under
its revolving credit agreement, if needed.
<PAGE>
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
There have been no material changes in the market risks reported in the
Company's fiscal 1999 Annual Report on 10K.
<PAGE>
PART II. OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security Holders
At the 2000 Annual Meeting of Shareholders of Sanderson Farms, Inc. held
February 24, 2000, the shareholders elected the following persons to the
Company's Board of Directors by the votes indicated below:
Name For Withheld
Hugh V. Sanderson 13,081,682 34,364
Rowan H. Taylor 13,090,740 25,306
Mike Cockrell 13,072,497 43,549
John H. Baker III 13,085,906 30,140
By a vote of 13,108,385 for, 7,109 against, and 552 abstaining, the
shareholders ratified the Board's selection of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending October 31, 1989.
Item 5: Other Matters
On January 4, 1998, Joe Frank Sanderson, a co-founder of the company and a
member of its board of directors, died. The 3,229,672 shares of Common
Stock of the Company that Mr. Sanderson owned of record are now owned of
record by the Estate of Joe Frank Sanderson, deceased (the "Estate"). The
co-executors of the Estate are Mr. Sanderson's sons, Joe F. Sanderson, Jr.
and William R. Sanderson (the "Co-executors"). On March 21, 2000, the Estate
borrowed $13,500,000 from Harris Trust and Savings Bank and SunTrust Bank
under a Credit Agreement dated as of that date (the "Credit Agreement"). The
entire proceeds were used to pay the Estate's obligations to another
financial institution incurred for the payment of federal and state estate
taxes. The loan under the Credit Agreement is secured by the Estate's pledge
of 3,229,672 shares of Common Stock of the Company. The loan requires that
the ratio of the principal amount of the loan, divided by the market value of
the pledged Common Stock not exceed 60%. In making this calculation, the
value of the pledged Common Stock is its market value, except that if the
market value is less than $5.00 per share, the Common Stock is deemed to have
no collateral value. In addition, in making this calculation, the principal
amount of the loan is reduced by any cash collateral held by the banks, and
also by the principal amount of any guaranty of the loan that the Company may
decide to provided to the banks. Although the Company's Board of Directors
has authorized the officers of the Company to deliver the Company's guaranty
of the loan, the guaranty has not become necessary. If a guaranty is
provided by the Company, it will be released at the request of the Estate or
the Company if, on the last day of any calendar quarter, the above-mentioned
ratio is 50% or less. The Estate has agreed to indemnify the Company against
any loss from any such guaranty. Upon payment in full to the banks, the
Company, if it has delivered any quaranty of the loan to the banks,
would succeed to the bank's position as pledgee of the Common Stock,
and the shares would secure any obligation of the Estate to the Company.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed with this report
Exhibit 15a - Independent Auditors' Review Report
Exhibit 15b - Auditors' letter re: Unaudited Financial
Information
(b) The Company did not file any reports on Form 8-K
during the three months ended April 30, 2000.
<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 duly authorized officers.
_____ SANDERSON FARMS, INC. _______
(Registrant)
Date: May 30, 2000 By:/s/D. Michael Cockrell
Treasurer and Chief
Financial Officer
Date: May 30, 2000 By: /s/ James A. Grimes
Secretary and Principle
Accounting Officer
<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 April 30, 2000, and the related
condensed consolidated statements of income (loss) and cash flows for the
three-and six-month periods ended April 30, 2000 and 1999. 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 auditing standards generally accepted in the United States,
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 accounting
principles generally accepted in the United States.
We previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet of Sanderson
Farms, Inc. and subsidiaries as of October 31, 1999, and the related
consolidated statements of income, stockholders' equity and cash flows for
the year then ended (not presented herein) and in our report dated December
8, 1999, 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, 1999, is fairly
stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
ERNST & YOUNG LLP
Jackson, Mississippi
May 23, 2000
<PAGE>
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-8 No. 33-67474) of Sanderson Farms,
Inc. for the registration of 750,000 shares of its common stock of our report
dated May 23, 2000 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 April 30, 2000.
ERNST & YOUNG LLP
Jackson, Mississippi
May 23, 2000
<PAGE>
