000859 WLR Foods Reports Quarter and Year Results

Broadway, VA - WLR Foods, Inc. reported results for its fiscal fourth quarter and full year ended July 1, 2000.

For the fourth quarter of fiscal 2000, the Company reported a net loss of $0.1 million, or $0.01 per diluted share, compared with net earnings from continuing operations in the fourth quarter of fiscal 1999 of $3.9 million, or $0.23 per diluted share, before non-recurring items. Net sales for the fiscal 2000 fourth quarter were $212.7 million, compared with $228.0 million in the same period a year ago.

The Company's fiscal 2000 fourth quarter results primarily reflect continued severe pricing pressures in the markets for its chicken products. Revenues were also lower in the fourth quarter because the prior fiscal fourth quarter had one extra week as compared to the current period. These factors were somewhat offset by improved pricing and operating efficiencies in the Company's turkey business, which was profitable for the quarter.

Prior year results also included a $1.8 million after-tax gain relating to the final settlement of the gain recognized on the sale of the Company's Cassco Ice & Cold Storage subsidiary, which was sold in the fiscal 1999 first quarter. Including the $1.8 million gain in the prior year resulted in net earnings for the fourth quarter of fiscal 1999 of $5.7 million, or $0.34 per diluted share.

James L. Keeler, President and Chief Executive Officer of WLR Foods, commented, “While our chicken operations were positively impacted by the efficiency improvements achieved at our Marshville, North Carolina facility, this was more than offset by the issues that have followed the entire chicken industry throughout fiscal 2000, as ongoing oversupply conditions in the chicken market led to extremely low pricing for our products. In the fourth quarter, whole breast market pricing was approximately 20% below last year's levels and approximately 25% below historical averages.”

Mr. Keeler continued, “The weakness in the chicken markets was somewhat offset by continued improvements in turkey operations. Along with improved pricing for our turkey products, we continue to be pleased with our operational results, especially our Franconia, Pennsylvania facility, where we have achieved annual savings of approximately $7 million beginning in April of 1999 from consolidating all further processing operations into this location. Our results also benefited from our strong financial position, which resulted in a 55% decrease in interest expense for the year.”

For the full year, revenues were $832.7 million, compared with $888.1 million in fiscal 1999. Lower chicken pricing resulted in decreased sales of approximately $51 million when compared to last year, accounting for the vast majority of the revenue decline. The Company reported fiscal 2000 net earnings of $2.2 million, or $0.13 per diluted share, compared with net earnings from continuing operations of $18.9 million, or $1.12 per diluted share, before unusual items in the prior year. The Company's full-year results primarily reflect the aforementioned pricing pressures in the Company's chicken markets partially offset by improved performance within the Company's turkey operations. The Company's results also reflect the impact of a 53-week period in fiscal 1999 versus a 52-week period in fiscal 2000.

For fiscal 1999, net earnings from continuing operations were $22.7 million, or $1.34 per diluted share, and included a net after-tax gain of $3.8 million, primarily related to the sale of the Company's Goldsboro, North Carolina chicken complex. Net earnings for fiscal 1999 were $38.8 million, or $2.29 per diluted share, and included net one-time after-tax income of $16.0 million, primarily related to the sale of the Company's Cassco Ice & Cold Storage subsidiary.

The Company also reported that through the fiscal 2000 year end, it had repurchased approximately 470,000 shares of its common stock for total consideration of approximately $2.7 million. As previously announced, the Company is authorized to repurchase up to $10 million in stock.

Mr. Keeler concluded, “While we have seen some modest improvements in chicken pricing recently, we do not believe that considerable sustained improvements will be achievable until next spring, the next seasonal up-cycle for the chicken business. We do, however, remain optimistic regarding the long- term prospects for our chicken business, particularly in light of our continued focus on increasing the overall mix of higher-valued products in our sales program. Our turkey operations continue to run well, and conditions look favorable for the upcoming holiday season. Furthermore, with expectations for large corn and soybean crops in the coming season, grain costs should be very attractive in fiscal 2001. As we move through fiscal 2001, we remain committed to taking steps that will allow WLR Foods to adapt to the changing conditions of its markets.”

WLR Foods is a fully integrated provider of high quality value-added turkey and chicken products primarily under the Wampler Foods(r) brand. It is nationally ranked as the seventh largest poultry food processor by sales volume and is an international leader in poultry exports. WLR Foods has processing operations in Virginia, North Carolina, West Virginia, and Pennsylvania.

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