IBP this week released fourth quarter and full year 2000 earnings, bringing to completion a financial review by the Securities and Exchange Commission (SEC) and closing the books on accounting issues related to its DFG Foods (DFG) subsidiary.
"We are pleased to report that all outstanding issues involved in the SEC's financial review, as well as the accounting issues related to DFG have now been resolved," Robert L. Peterson, IBP chairman and chief executive officer said. "We now look forward to proceeding with the Tyson transaction." IBP entered into a $4.7 billion merger agreement with Tyson Foods on Jan. 1, 2001.
IBP recorded a fourth quarter nonrecurring, pre-tax impairment charge of $60.4 million to DFGs carrying value. The company had previously reported that this charge could be as much as $108 million.
"While disappointing, this nonrecurring impairment to intangibles, $41.3 million on an after tax basis, does not affect operating cash flows and represents only 2.2 percent of IBP's stockholders' equity of $1.8 billion," according to Larry Shipley, IBP chief financial officer.
An IBP investigation of the DFG subsidiary, to date, has uncovered potential manipulation of financial records and product theft. It has also revealed mismanagement by former DFG managers. The previously reported restatement of the subsidiary's financial results included the amount of an earn-out payment to those who sold the DFG business, but ultimately determined by IBP not to have been earned. IBP will use the results of its audit as the basis for any legal action it deems appropriate to recover its losses.
Read the rest of this story in the 3/22 Pilot Tribune.