Claremont, NC - WSMP, Inc. reported consolidated financial results for the year ended Feb. 27, 1998 (fiscal 1998). The company had substantially higher operating revenues for the fiscal year and comparable net earnings despite significant non-recurring expenses.
Operating revenues for fiscal 1998 increased 22% to $158,411,561, compared to operating revenues of $129,933,925 for the fiscal year ended Feb. 28, 1997.
Net income for fiscal 1998 was $2,250,000, or $0.40 per share, compared to net income for the previous year of $2,439,789, or $0.48 per share. Pretax income for fiscal 1998 was impacted by non- recurring expenses of approximately $2.6 million that related to the consummation of the merger of WSMP, Inc., and Sagebrush, Inc., and the restructuring of the combined operations. These costs were expensed in accordance with pooling of interests accounting.
Financial results for both fiscal years reflect the pooling of interests merger of WSMP and Sagebrush, which was finalized in January 1998. In this transaction, WSMP acquired Sagebrush in a stock for stock merger.
“We feel we have had a rapid and successful merger and restaurant restructuring effort,” said David R. Clark, WSMP president and chief operating officer. “When we announced finalization of the merger, we said we expected it to immediately have a positive impact on WSMP earnings. Our earnings per share for fiscal 1997, with accounting for the pooling, was 36 cents and the fiscal 1998 per share earnings for our merger company is 40 cents, an increase of 11%.
“In fact, our earnings without the non-recurring expenses were 70 cents a share, which is in line with our expectations,” Clark said.
WSMP is comprised of a variety of prepared foods operations and a restaurant division. In its prepared foods operations, WSMP has the capacity to produce more than 4.5 million microwaveable sandwiches per week and it produces and packages sandwiches under numerous nationally recognized labels. In addition to the sandwich and bakery portion of its prepared foods operations, WSMP is one of the nation's largest country ham producers. WSMP's restaurant division owns and operates 38 Texas-style Sagebrush(R) steakhouse restaurants in North Carolina, South Carolina, Virginia and Tennessee. The company's other restaurant operations include 23 company-owned and 42 franchised restaurants, with a majority of these being Western Steer(R) Steaks, Buffet and Bakery restaurants, Prime Sirloin(R) Buffet, Bakery and Steaks restaurants, and Bennett's(TM) Smokehouse and Saloon restaurants.
Earlier this month, it was announced that WSMP Inc. and Tyson Foods Inc had signed a definitive asset purchase agreement for WSMP to acquire the core business of Pierre Foods from Tyson for $122 million in cash. WSMP is to acquire the brand name and assets of Pierre Foods and to assume its liabilities. The target closing date for the transaction is mid-June 1998. The core business portion of Pierre Foods that WSMP is to acquire represents approximately $150 million in annual revenue. Pierre Foods is primarily engaged in producing and distributing packaged, fully cooked food products to the foodservice industry.
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