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WLR Foods, Inc.

 


Address:
P.O. Box 7000
Broadway, Virginia 22815
U.S.A.

Telephone: (540) 896-7000
Fax: (540) 896-0498


Statistics:
Public Company
Incorporated: 1984 as Wampler-Longacre, Inc.
Employees: 8,500
Sales: $997.6 million (1996)
Stock Exchanges: NASDAQ
SICs: 2015 Poultry Slaughtering & Processing; 5144 Poultry & Poultry Products; 4222 Refrigerated Warehousing & Storage


Company History:

WLR Foods, Inc., is a fully integrated producer, processor, distributor, and marketer of poultry products that conducts its business throughout the United States. The company has the capacity and capability to function on an almost completely self-sufficient basis because it owns poultry hatcheries, feed mills, grain storage facilities, numerous processing plants, and its own distribution system. WLR Foods markets its chicken and turkey products under the Wampler-Longacre brand name. The company also owns and operates Cassco Ice & Cold Storage, Inc., which manufactures ice for retail sale and runs a refrigerated warehousing service.

The Early Years

Although WLR Foods, Inc., is a relatively young company--having just been incorporated in 1984--a portion of the company's history actually dates back many years earlier, to the 1920s. In 1922, a man by the name of Charles Wampler was in the business of raising turkeys in Virginia's Shenandoah Valley. His business, called Wampler Foods, experimented with different methods of raising poultry in an attempt to find a simple and cost-effective way to raise the birds on a larger scale. In doing so, Wampler became the first in the poultry industry to incubate turkey eggs through the use of artificial means. The practice saved time and money, because live turkeys were no longer needed in order to incubate and hatch the eggs.

Wampler's incubation practice helped him expand his business a great deal over the years, enabling him to keep up with demand for the whole turkeys Wampler Foods provided to customers--especially during the holiday rush season. Throughout the next few decades, Wampler agreed to participate in mergers with other poultry businesses, two of which helped him more than double his poultry enterprise. By the time the company was actually incorporated in 1984, it had engaged in five different friendly acquisitions throughout the years and was able to serve a large consumer base. One important merger was that of Wampler Foods with Horace W. Longacre, a poultry processor, in a transaction that created Wampler-Longacre. Wampler's son, Charles Jr., was put in charge of the new corporation.

Once it was formed in Virginia in 1984, Wampler-Longacre, Inc., operated for four years as a privately held company. Then in 1988, management decided that the time had come to offer stock to the public and use the proceeds to fund further expansion efforts. The company was listed on NASDAQ under the Wampler-Longacre name, until the purchase of Rockingham Poultry Marketing Cooperative, Inc., later that year. Rockingham, a chicken grower, was a powerful addition to Wampler-Longacre, and therefore the company changed its name to Wampler-Longacre-Rockingham, Inc. Shortly thereafter, the name was shortened to WLR Foods, Inc. The company hired James Keeler in 1988 to act as the new CEO; Charles Wampler, Jr., continued as the company's chairman.

The following year, 1989, the new WLR made strides to improve its operational procedures and efficiency. After years of combining many different companies into one business and still attempting to use each branch's original production facilities and distribution and export channels, WLR made an effort to centralize its operations. Use of its production plants was reorganized, and distribution methods were streamlined and organized to avoid spending time or money on unnecessary procedures. The company also initiated a plan to eventually offer its entire retail poultry product line under the Wampler-Longacre brand name.

The 1990s: Expansion into New Niches

The numerous mergers throughout the company's history had resulted in a dramatically expanded product line. The company's early practice of producing mainly whole birds for consumers to purchase had evolved into a vast range of products. Entering the 1990s, WLR was not only producing whole birds but was also processing poultry into approximately 250 different products, including chicken franks and packaged ground turkey. The ability to produce multiple products meant that the company was then able to alter its production and focus more heavily on the product line in heaviest demand at any given time. For example, the demand for whole birds increased every year during the Thanksgiving and Christmas holiday season, whereas the demand for chicken franks increased in the summer months. WLR Foods could then tailor its production schedule to meet consumer demand--a capability that contributed greatly to the company's growth.

Another important product introduction came in 1990 when the company rolled out its line of Wampler-Longacre prepackaged turkey burgers. In a society that was becoming increasingly health-conscious, the demand for turkey was rising while beef was slowly falling out of favor. The popularity of ground turkey was skyrocketing, and the prepackaged turkey burger catered to the growing demand for simple, ready-to-cook foods. WLR Foods targeted the retail market first, offering 6 and 12-count boxes in the frozen foods sections of grocery stores. The company also began formulating plans to obtain contracts with noncommercial organizations like schools and hospitals.

Also in 1990 WLR Foods began a string of acquisitions that came to typify the decade. First the company purchased a one-third interest in Golden Acre Foods, Inc., and all of the assets of the Cassco Corporation. Cassco, which soon began to operate separately as Cassco Ice & Cold Storage, Inc., marked WLR Foods' entrance into a business unrelated to poultry. Cassco was both a producer of ice and a refrigerated warehousing facility. Then, just a month after the first round of purchases, WLR Foods acquired the remaining two-thirds of Golden Acre Foods and completely merged the company into itself. WLR Foods' rapid expansion efforts and its diversification in product offerings prompted the company to begin its first multimedia advertising campaign the following year.

In 1992, WLR Foods purchased Southern Ice Co., an ice manufacturer and distributor, and added it to Cassco Ice & Cold Storage, Inc. The addition was projected to increase Cassco's existing revenues by 30 percent. Also in 1992 the company acquired Round Hill Foods, a Pennsylvania-based producer of turkey products. Round Hill also possessed its own distribution center, which WLR Foods soon integrated into its recently centralized distribution system. Following its purchases that year, WLR Foods successfully repurchased 21 percent of its common stock and then issued preferred stock in the company. Revenues in 1992 broke the half-billion mark, topping off at $514.5 million.

In 1993 WLR Foods made two acquisitions. First came the purchase of the Commonwealth Ice Co. of Richmond, Virginia, which was incorporated into the Cassco division. Next came the addition of Beverley Co. of Washington, D.C. WLR Foods then announced plans to significantly expand Cassco's storage capacity with the construction of a new $4.2-million addition to its cold storage facility in Harrisonburg, Virginia.

The following year was a notable one in WLR Foods' history, for more than one reason. The company registered a huge increase in sales, which rose to $727.3 million. Profit for the year also jumped to $16.6 million. But primarily, 1994 came to be remembered as the year that the company and its stockholders fended off a heated takeover attempt by poultry industry giant Tyson Foods of Springdale, Arkansas.

Early in the year, when feed prices were high, poultry prices were low, and sales were weak, Don Tyson approached WLR Foods' CEO James Keeler and offered the company $30 per share for its stock holdings. At the time, the company's stock was trading at under $20, but Keeler and the WLR Foods board rejected Tyson's offer, calling it, according to Financial World, "totally unsolicited, unwanted and out of line with our long-term business plans." Tyson persisted nonetheless, calling numerous WLR Foods shareholder meetings throughout the year in attempts to vote his 5 percent stake in the company. He also filed lawsuits against WLR Foods, alleging that the company was engaging in illegal defense strategies against his takeover bid. The courts disagreed, upholding WLR Foods' position.

Ultimately WLR was able to thwart the takeover attempt, due in large part to clever maneuvering on the part of Keeler. A former lawyer, Keeler used an unfamiliar Virginia anti-takeover law to tie Tyson up in the court system for a while in order to buy WLR Foods some time to secure its position. Meanwhile, the company let four inside directors leave the company payroll so that they could vote their collective 13 percent stake in the favor of WLR. Keeler also engineered the purchase of Cuddy Farms, Inc., a turkey producer and processor, for another 10 percent of WLR Foods' outstanding shares. According to the terms of the transaction, Cuddy was bound to vote its stake in WLR according to the demands of the board of directors for four years. Another portion of the company's stock was in the hands of farmers who were opposed to the takeover. When Tyson saw that the majority of WLR's stock was tied up by the company, he finally withdrew and WLR celebrated a victory. The following year, WLR Foods' sales rose to $908.8 million.

The End of the Century and Beyond

WLR Foods continued to expand through acquisitions in 1995. The company purchased the production and processing assets of New Hope Feeds, Inc., which included a hatchery, a feed mill, grain storage facilities, a new processing plant, and an affiliated company called Economy Truck Leasing, Inc. Cassco Ice & Cold Storage also continued to expand its division, finalizing a deal with Modern Cold Storage Co. to purchase the remaining 50 percent of a facility in Marshville, North Carolina, of which it was already using half.

Nearing the turn of the century, WLR Foods held approximately 11 percent of the U.S. market for turkey, which was second only to ConAgra's 14 percent share of the market. It was an important position for the company to be in, given that turkey consumption had risen in the United States about 54 percent over the previous decade, while beef consumption had actually declined in that same time period. Sales in 1996 just narrowly missed breaking the $1 billion mark, topping off at $997.6 million. With a strong balance sheet, a successful acquisition and integration process in place to spur the company's expansion, and a consumer base that was constantly becoming more receptive to new chicken and turkey product offerings, WLR Foods seemed to possess great potential for continued success.

Principal Subsidiaries: Wampler-Longacre Turkey, Inc.; Wampler-Longacre Chicken, Inc.; Cassco Ice & Cold Storage, Inc.; May Supply Company, Inc. (65%); Rockingham Poultry, Inc.





Further Reading:


David, Gregory E., "Turkey Trot," Financial World, January 3, 1995, p. 48.
Palmeri, Christopher, "Not Gobbled Up," Forbes, December 5, 1994, p. 290.
"Turkey Burger Offerings Latest Entry in Poultry's War on Beef Competition," Quick Frozen Foods International, January 1991, p. 82.
Wiener, Daniel P., "A Little Advice from Wall Street, in Triplicate," U.S. News & World Report, July 3, 1989, p. 61.

Source: International Directory of Company Histories, Vol. 21. St. James Press, 1998.




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