SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended DECEMBER 28, 1996
Commission file number 1-9273
PILGRIM'S PRIDE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 75-1285071
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 SOUTH TEXAS, PITTSBURG, TX 75686-0093
(Address of principal executive offices) (Zip code)
(903) 855-1000
(Telephone number of principle executive offices)
NOT APPLICABLE
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter periods that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date.
COMMON STOCK $.01 PAR VALUE---27,589,250 SHARES AS OF FEBRUARY 6, 1997
INDEX
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1: Financial Statements (Unaudited):
Condensed consolidated balance sheets:
December 28, 1996 and September 28, 1996
Consolidated statements of income:
Three months ended December 28, 1996 and December 30, 1995
Consolidated statements of cash flows:
Three months ended December 28, 1996 and December 30, 1995
Notes to condensed consolidated financial statements--December 28,
1996
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
PART I. FINANCIAL INFORMATION
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ITEM 1: FINANCIAL STATEMENTS:
December 28,
1996 September 28,
(UNAUDITED) 1996
(in thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 17,428 $ 18,040
Trade accounts and other receivables,
less allowance for doubtful accounts 69,856 65,887
Inventories 119,324 136,866
Deferred income taxes 9,309 6,801
Prepaid expenses 1,621 907
Other current assets 211 757
Total Current Assets 217,749 229,258
Other Assets 21,815 18,827
Property, Plant and Equipment 467,444 466,672
Less accumulated depreciation 181,380 178,035
286,064 288,637
$ 525,628 $ 536,722
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to banks $ 16,000 $ 27,000
Accounts payable 57,006 71,354
Accrued expenses 34,254 33,599
Current maturities of long-term debt 9,564 8,850
Total Current Liabilities 116,824 140,803
Long-Term Debt, less current maturities 195,957 198,334
Deferred Income Taxes 59,179 53,608
Minority Interest in Subsidiary 842 842
Stockholders' Equity:
Common stock; $.01 par value 276 276
Additional paid-in capital 79,763 79,763
Retained earnings 72,787 63,096
Total Stockholders' Equity 152,826 143,135
$ 525,628 $ 536,722
See notes to condensed consolidated financial statements.
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
THREE MONTHS ENDED
December 28, December 30,
1996 1995
(in thousands, except share and per share data)
Net Sales $ 297,806 $ 267,475
Costs and Expenses:
Cost of sales 267,539 246,503
Selling, general and administrative 13,953 12,147
281,492 258,650
Operating Income 16,314 8,825
Other Expense (Income):
Interest expense, net 5,449 5,121
Foreign exchange loss 437 1,316
Miscellaneous, net [2,509] [248]
3,377 6,189
Income Before Income Taxes 12,937 2,636
Income tax expense 2,832 3,340
Net Income (Loss) $ 10,105 $ [704]
Net income (loss) per common share $ .37 $ [.03]
Dividends per common share $ .015 $ .015
Weighted average shares outstanding 27,589,250 27,589,250
See Notes to condensed consolidated financial statements.
PILGRIM'S PRIDE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
December 28, December 30,
1996 1995
(in thousands)
Cash Flows From Operating Activities:
Net income (loss) $ 10,105 $ [704]
Adjustments to reconcile net income (loss) to cash
provided by operating activities:
Depreciation and amortization 7,135 7,131
Gain on property disposals 7 [112]
Provision for doubtful accounts [321] 305
Deferred income taxes 3,064 342
Changes in operating assets and liabilities:
Accounts and other receivable [6,843] [10,297]
Inventories 17,542 8,712
Prepaid expenses [170] [495]
Accounts payable and accrued expenses [13,693] 19,785
Other [171] [152]
Net Cash Flows Provided By Operating Activities: 16,655 24,515
Investing Activities:
Acquisitions of property, plant and equipment [4,195] [12,447]
Proceeds from property disposals 77 936
Other, net [34] 106
Net Cash Used In Investing Activities [4,152] [11,405]
Financing Activities:
Proceeds from notes payable to banks 10,500 6,500
Repayments of notes payable to banks [21,500] [12,500]
Proceeds from long-term debt 0 28
Payments on long-term debt [1,702] [2,299]
Cash dividends paid [414] [414]
Cash Used In Financing Activities [13,116] [8,685]
Effect of Exchange Rate Changes on Cash
and Cash Equivalents 1 [47]
(Decrease) Increase in cash and cash equivalents [612] 4,378
Cash and cash equivalents at beginning of year 18,040 11,891
Cash and cash equivalents at end of period $ 17,428 $ 16,269
Supplemental disclosure information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 2,983 $ 2,398
Income Taxes $ 333 $ 1,792
See notes to condensed consolidated financial statements.
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES
December 28, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENT (Unaudited)
______________________________________________________________________________
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the period ended December 28, 1996 are not necessarily
indicative of the results that may be expected for the year ended September
27, 1997. For further information, refer to the consolidated financial
statements and footnotes thereto included in Pilgrim's annual report on
Form 10-K for the year ended September 28, 1996.
The consolidated financial statements include the accounts of Pilgrim's and
its wholly and majority owned subsidiaries. Significant intercompany
accounts and transactions have been eliminated.
The assets and liabilities of the foreign subsidiaries are translated at
end-of-period exchange rates, except for and non-monetary assets which are
translated at equivalent dollar costs at dates of acquisition using
historical rates. Operations of foreign subsidiaries are translated at
average exchange rates in effect during the period
NOTE B--NET INCOME PER COMMON SHARE
Earnings per share for the periods ended December 28, 1996 and December 30,
1995 are based on the weighted average shares outstanding for the periods.
NOTE C--INVENTORIES
Inventories consist of the following:
DECEMBER 28, 1996 SEPTEMBER 28, 1996
(in thousands)
Live chickens and hens $ 46,045 $ 66,248
Feed, eggs and other 37,596 39,804
Finished chicken products 35,683 30,814
$ 119,324 $ 136,866
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
_______________________________________________________________________________
The following table presents certain items as a percentage of net sales for
the periods indicated.
Percentage of Net Sales
THREE MONTHS ENDED
December 28, December 30,
1996 1995
Net sales 100.0% 100.0%
Costs and expenses:
Cost of sales 89.8% 92.2%
Gross profit 10.2% 7.8%
Selling, general and administrative 4.7% 4.5%
Operating Income 5.5% 3.3%
Interest expense 1.8% 1.9%
Income before income taxes 4.3% 1.0%
Net Income (Loss) 3.4% (0.3%)
FIRST QUARTER 1997, COMPARED TO FIRST QUARTER 1996
Consolidated net sales were $297.8 million for the first quarter of fiscal
1997, an increase of $30.3 million, or 11.3%, over the first quarter of
fiscal 1996. The increase in consolidated net sales resulted from a $14.0
million increase in Mexican chicken sales to $66.3 million, an $11.2
million increase in domestic chicken sales to $193.1 million and a $5.1
million increase of sales of other domestic products to $38.4 million. The
increase in Mexican chicken sales was primarily due to a 50.6% increase in
total revenue per dressed pound offset partially by a 15.8% decrease in
dressed pounds produced. The increase in domestic chicken sales was
primarily due to a 5.9% increase in dressed pounds produced and a .2%
increase in total revenue per dressed pound produced. The increase in
sales of other domestic products was primarily the result of increased
sales of the Company's poultry by-products group and higher sales prices
for table eggs. Increased revenues per dressed pound produced both
domestically and in Mexico were primarily the result of higher sales prices
caused by the chicken markets adjusting to higher feed ingredient costs
experienced in fiscal 1996 as well as generally improved economic
conditions in Mexico compared to the prior year.
Consolidated cost of sales was $267.5 million in the first quarter of
fiscal 1997, an increase of $21.0 million, or 8.5%, over the first quarter
of fiscal 1996. The increase primarily resulted from a $17.5 million
increase in cost of sales of domestic operations, and a $3.6 million
increase in the cost of sales in Mexican operations.
The cost of sales increase in domestic operations of $17.5 million was due
to a 5.9% increase in dressed pounds produced and increased production of
higher cost and margin products in prepared foods.
The $3.6 million cost of sales increase in Mexican operations was primarily
due to a 26.7% increase in average costs of sales per pound offset
partially by an 15.8% decrease in dressed pounds produced. The increase in
average costs of sales per pound was primarily the result of an increase in
feed ingredient costs.
Gross profit as a percentage of sales increased to 10.2% in the first
quarter of fiscal 1997 from 7.8% in the first quarter of fiscal 1996. The
increased gross profit resulted mainly from higher sales prices due to the
markets adjusting to higher feed ingredient prices experienced in fiscal
1996 and significantly higher margins in Mexico.
Consolidated selling, general and administrative expenses were $14.0
million in the first quarter of fiscal 1997, and $12.1 million in fiscal
1996. Consolidated selling, general and administrative expenses as a
percentage of sales increased in the first quarter of fiscal 1997 to 4.7%
compared to 4.5% in the first quarter of fiscal 1996.
Consolidated operating income was $16.3 million for the first quarter of
fiscal 1997, an increase of $7.5 million when compared to the first quarter
of fiscal 1996, resulting primarily from higher margins experienced in the
Mexican operations.
Consolidated net interest expense was $5.5 million in the first quarter of
fiscal 1997, an increase of $.3 million, or 6.4%, when compared to the
first quarter of fiscal 1996. This increase was due to higher outstanding
debt levels resulting primarily from domestic expansions offset slightly by
lower interest rates when compared to the first quarter of fiscal 1996.
Consolidated miscellaneous, net a compound of "Other Expense (Income)" was
$2.5 million in the first quarter of fiscal 1997, includes a $2.2 million
final settlement of claims resulting from the January 8, 1992 fire at the
Company's prepared foods plant in Mt. Pleasant, Texas.
Consolidated income tax expense in the first quarter of fiscal 1997
decreased to $2.8 million compared to expense of $3.3 million in the first
quarter of fiscal 1996. The lower consolidated income tax expense in
contrast to higher consolidated income, resulted from increased Mexican
earnings which are not currently subject to income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Strong profits improved liquidity and financial ratios in the fiscal first
quarter of 1997. The Company's working capital increased to $100.9 million
at December 28, 1996 compared to $88.5 million at September 28, 1996, the
current ratio at December 28, 1996 improved to 1.86 to 1 compared to 1.63
to 1 at September 28, 1996 and the Company's stockholder's equity increased
to $152.8 million from $143.1 million at September 28, 1996. Total debt to
capitalization decreased to 59.2% at December 28, 1996 compared to 62.1% at
September 28, 1996. The Company maintains $110 million in revolving credit
facilities with available unused lines of credit of $85.8 million at
January 31, 1997.
Trade accounts and other receivables were $69.9 million at December 28,
1996, a $4.0 million increase from September 28, 1996. The 6.0% increase
was due primarily to increased consolidated sales. Allowances for doubtful
accounts, as a percentage of trade accounts and notes receivable were 4.8%
at December 28, 1996 compared to 5.7% at September 28, 1996. This decrease
is due to increased net sales resulting in a corresponding increase in
trade accounts and other receivables with allowances for doubtful accounts
being slightly lower.
Inventories were $119.3 million at December 28, 1996, a decrease of $17.5
million from September 28, 1996. This 12.8% decrease was due primarily to
seasonal variations in sales of chicken and feed products to the Company's
principal stockholder.
Accounts payable were $57.0 million at December 28, 1996, a 20.1% decrease
from September 28, 1996, due primarily to the reduction in cost of feed
ingredients.
Capital expenditures for the first quarter of fiscal 1997 were $4.2 million
and were primarily incurred to expand production capacities domestically,
improve efficiencies, reduce costs and for the routine replacement of
equipment. The Company anticipates that it will spend approximately $35
million for capital expenditures in fiscal year 1997 and expects to finance
such expenditures with available operating cash flows and long-term
financing. The Company periodically reviews acquisition opportunities and
any business acquisitions consummated in fiscal 1997 would likely be in
addition to the projected capital expenditure amount listed above.
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the three months
ended December 28, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PILGRIM'S PRIDE CORPORATION
Date
Richard A. Cogdill
Executive Vice President and
Chief Financial Officer
Secretary and Treasurer in his
respective capacity as such
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES
December 28, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5
1,000
3-MOS
SEP-27-1997
[PERIOD] DEC-28-1996
17,428
0
69,856
3,554
119,324
217,749
467,445
181,380
525,628
116,824
195,957
276
0
0
152,550
525,628
297,806
297,806
267,539
281,492
0
(321)
5,449
12,937
2,832
10,105
0
0
0
10,105
.37
.37
