010368 IBP Says SEC Review Is Complete

Little Rock, AR - IBP Inc. said regulators have completed a review of its financial records allowing the nation's largest beef packer to report fourth quarter and year 2000 results, clearing the way for its acquisition by Springdale-based Tyson Foods Inc.

An investigation related to IBP's appetizer unit DFG uncovered potential manipulation of financial records and product theft, and mismanagement by former DFG managers, IBP said in a statement. The review was prompted by an inquiry from the Securities and Exchange Commission .

IBP posted fourth quarter earnings, that included a $60.4 million charge related to DFG's accounting, less than the $108 million previously estimated. For the quarter ended Dec. 30, IBP lost $6.25 million, or 6 cents per share, compared with earnings of $76.59 million, or 71 cents per share, in the year-ago period.

Fourth quarter sales rose 7% to $4.4 billion. Excluding the charge and other one-time items, the company had a profit of $35 million or 33 cents per share. Analysts surveyed by First Call/Thomson Financial had estimated earnings would be 40 cents per share.

“We are pleased to report that all outstanding issues involving the SEC's financial review, as well as the accounting issues related to (subsidiary DFG Foods) have been resolved,” IBP chairman and chief executive officer Robert L. Peterson said. “We now look forward to proceeding with the Tyson transaction.”

Tyson spokesman Ed Nicholson said the company would continue to monitor developments. He said it was still too early to determine the impact of the latest IBP announcement.

Tyson's $3.2 billion acquisition of South Dakota-based IBP was announced Jan. 1, but the acquisition, under which Tyson also will assume $1.5 billion in IBP debt, has been delayed several times.

Analysts said that with the new documents, the price for IBP could be adjusted. The last offer was $30 per share in cash and stock.

“After they assess the numbers, Tyson can decide what price they would pay for IBP,” said Stephens Inc. analyst Berry Summerour. “It's in their court right now.”

He said he expects Tyson to reduce its offer and estimated it would be $26- $29. “That's a wide range and it's difficult to pinpoint exactly,” he said.

Also Tuesday, Tyson lowered its forecast for its second quarter, saying it expects earnings to “be at or near break even” for its quarter ending March 31. The company previously projected it would earn 6 to 10 cents per share. The First Call estimate was for earnings of 9 cents per share.

The Tyson revision includes charged related to a product recall and to its divestiture of a North Carolina hog operation. Also, winter weather was worse than expected and will reduce earnings, the company said.

“Sales volumes remained strong while we have faced the most difficult operating environment we've seen since 1981,” Tyson chairman and CEO John Tyson said. The company is reducing its cost structure, managing its produce mix and working to build its core sales, he said.

Tyson said the worst of the winter impact is over and that the chicken market will improve.

RETURN TO HOME PAGE

E-mail: sflanagan@sprintmail.com