SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended JUNE 30, 2001
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 principal 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 practicable date.
27,589,250 shares of the Registrant's Class B Common Stock, $.01 par value,
were outstanding as of July 24, 2001.
13,523,429 shares of the Registrant's Class A Common Stock, $.01 par value,
were outstanding as of July 24, 2001.
INDEX
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets
June 30, 2001 and September 30, 2000
Consolidated statements of income
Three month and nine month periods ended June 30, 2001
and July 1, 2000
Consolidated statements of cash flows
Nine months ended June 30, 2001 and July 1, 2000
Notes to condensed consolidated financial statements--June 30, 2001
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, 2001 September 30, 2000
(in thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 8,767 $ 28,060
Trade accounts and other receivables,
less allowance for doubtful accounts 130,060 50,286
Inventories 305,614 181,237
Deferred income taxes 5,783 6,256
Prepaid expenses and other current assets 7,766 3,131
Total Current Assets 457,990 268,970
Other Assets 20,047 18,576
Property, Plant and Equipment:
Land 31,802 26,137
Buildings, machinery and equipment 880,068 565,034
Autos and trucks 52,135 48,187
Construction in progress 85,211 68,743
Total Fixed Assets 1,049,216 708,101
Less accumulated depreciation 322,433 290,227
726,783 417,874
$ 1,204,820 $ 705,420
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to banks $ 54,000 $ --
Accounts payable 139,441 105,078
Accrued expenses 82,333 34,704
Current maturities of long-term debt 5,022 4,657
Total Current Liabilities 280,796 144,439
Long-Term Debt, less current maturities 444,125 165,037
Deferred Income Taxes 110,531 52,496
Minority Interest in Subsidiary 889 889
Stockholders' Equity:
Preferred stock, $.01 par value,
authorized 5,000,000
shares; none issued -- --
Common stock - Class A, $.01 par value,
authorized 100,000,000 shares; 13,523,429
issued and outstanding at June 30, 2001
and September 30, 2000, respectively 138 138
Common stock - Class B, $.01 par value,
authorized 60,000,000 shares; 27,589,250
issued and outstanding at June 30, 2001 and
September 30, 2000, respectively 276 276
Additional paid-in capital 79,625 79,625
Retained earnings 290,436 264,088
Other Comprehensive Income (428) --
Less treasury stock (1,568) (1,568)
Total Stockholders' Equity 368,479 342,559
$ 1,204,820 $ 705,420
See notes to condensed consolidated financial statements.
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
June 30,2001 July 1, 2000 June 30, 2001 July 1, 2000
(in thousands, except share and per share data)
Net Sales $ 645,836 $ 391,979 $1,573,461 $1,120,064
Costs and Expenses:
Cost of sales 570,211 345,314 1,421,454 993,894
Selling, general and
administrative 30,139 20,316 88,581 61,317
600,350 365,630 1,510,035 1,055,211
Operating income 45,486 26,349 63,426 64,853
Other Expense (Income):
Interest expense, net 10,014 4,967 21,239 13,569
Foreign exchange (gain)/loss (602) 598 (439) 532
Miscellaneous, net 1,751 465 1,348 (252)
11,163 6,030 22,148 13,849
Income before income taxes 34,323 20,319 41,278 51,004
Income tax expense 9,056 3,175 13,075 9,979
Net income $ 25,267 $ 17,144 $ 28,203 $ 41,025
Net income per common share
- basic and diluted $ 0.62 $ 0.41 $ 0.69 $ 0.99
Dividends per common share $ 0.015 $ 0.015 $ 0.045 $ 0.045
Weighted average shares
outstanding 41,112,679 41,274,680 41,112,679 41,347,413
See Notes to condensed consolidated financial statements.
PILGRIM'S PRIDE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
June 30, 2001 July 1, 2000
(in thousands)
Cash Flows From Operating Activities:
Net income $28,203 $41,025
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 39,428 26,748
Loss on property disposals 76 572
Provision for doubtful accounts (1,577) (1,403)
Deferred income taxes 4,486 (3,043)
Changes in operating assets and
liabilities: (23,171) 11,809
Accounts and other receivables (18,167) (16,743)
Inventories (2,326) (4,007)
Prepaid expenses (9,181) 6,932
Accounts payable and accrued expenses
Other (519) (184)
Cash Provided by Operating Activities 17,252 61,706
Investing Activities:
Acquisitions of property, plant and equipment (87,640) (56,933)
Business acquisitions (239,539) --
Proceeds from property disposals 1,622 2,202
Other, net 3,040 (6,996)
Net Cash Used In Investing Activities (322,517) (61,727)
Financing Activities:
Borrowing for acquisition 285,070 --
Repayment on WLR Foods, Inc. debt (45,531) --
Proceeds from notes payable to banks 136,000 55,000
Repayment of notes payable to banks (82,000) (55,000)
Proceeds from long-term debt 102,631 20,047
Payments on long-term debt (108,491) (30,865)
Purchase of treasury stock -- (1,314)
Cash dividends paid (1,854) (1,860)
Cash Provided By (Used In) Financing Activities 285,825 (13,992)
Effect of exchange rate changes on cash and
cash equivalents 147 12
Decrease in cash and cash equivalents (19,293) (14,001)
Cash and cash equivalents at beginning of year 28,060 15,703
Cash and cash equivalents at end of period $ 8,767 $ 1,702
Supplemental disclosure information:
Cash paid during the period for:
Interest (net of amount capitalized) $16,262 $10,459
Income taxes 6,845 13,059
See notes to condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Pilgrim's Pride Corporation ("Pilgrim's" or "the Company") 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 adjustments)
considered necessary for a fair presentation have been included. Operating
results for the period ended June 30, 2001 are not necessarily indicative
of the results that may be expected for the year ended September 29, 2001.
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 30, 2000.
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 any 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.
On January 27, 2001, the Company completed the acquisition of all of the
outstanding shares of WLR Foods, Inc. ("WLR") common stock for $14.25 per
share or approximately $239.5 million and refinanced approximately $45.5
million of WLR debt.
The purchase price and refinancing were provided by borrowings on the
Company's existing secured term borrowing facility and revolving credit
facility (See Note D). WLR operations have been included since the
acquisition on January 27, 2001. The acquisition is being accounted for
under the purchase method of accounting and the purchase price has been
allocated primarily to fixed assets, summarized as follows:
Current assets, less current liabilities $ 77,549
Fixed assets 261,676
Deferred taxes established (54,024)
Long-term debt (45,662)
Total Purchase Price $239,539
The purchase price allocation is preliminary, but in the opinion of
management represents the estimated fair value of assets acquired and
liabilities assumed.
The following table represents pro forma financial information as if the
acquisition of WLR had occurred as of the first day of each period
presented. Certain reclassifications have been made to the WLR historical
financial statements to conform to the presentation used by Pilgrim's.
Three Months Ended Nine Months Ended
June 30, 2001 July 1, 2000 June 30, 2001 July 1, 2000
(in thousands)
Net Sales $645,836 $597,104 $1,837,908 $1,728,254
Depreciation and Amortization 18,609 16,234 48,603 47,647
Interest Expense, Net 10,014 11,727 30,253 33,850
Net Income $ 25,267 $ 12,757 $ 25,343 $ 28,607
Net Income Per Common Share
- Basic and Diluted $ 0.62 $ 0.31 $ 0.62 $ 0.69
NOTE B--ACCOUNTS RECEIVABLE
On June 26, 1998 the Company entered into an asset sale agreement (the
"Agreement") to sell up to $60.0 million of accounts receivable. In
connection with the Agreement, the Company sells, on a revolving basis,
certain of its trade receivables (the "Pooled Receivables") to a special
purpose corporation wholly owned by the Company, which in turn sells a
percentage ownership interest to third parties. At June 30, 2001 and
September 30, 2000, an interest in Pooled Receivables of $38.0 and $35.4
million had been sold to third parties and is reflected as a reduction to
accounts receivable. These transactions have been recorded as sales in
accordance with FASB Statement No. 140, ACCOUNTING FOR TRANSFERS AND
SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES
("SFAS140"). The gross proceeds resulting from the sale are included in
cash flows from operating activities in the Consolidated Statements of Cash
Flows. Losses on these sales were immaterial.
NOTE C--INVENTORIES
Inventories consist of the following:
June 30, 2001 September 30, 2000
(in thousands)
Chicken:
Live chicken and hens $ 97,125 $ 72,438
Feed, eggs and other 69,607 54,627
Finished chicken products 63,819 54,172
230,551 181,237
Turkey:
Live turkey and hens 29,826 -
Feed, eggs and other 12,129 -
Finished turkey products 33,108 -
75,063 -
Total Inventories $305,614 $181,237
NOTE D--LONG TERM DEBT
We maintain $120.0 million in revolving credit facilities and $400.0
million in a secured revolving/term borrowing facility. The $400.0 million
revolving/term borrowing facility provides for $285.0 million and $115.0
million of 10-year and 7-year commitments, respectively. Borrowings under
this facility are split pro rata between the 10-year and 7-year maturities
as they occur. The credit facilities provide for interest at rates ranging
from LIBOR plus five-eighths percent to LIBOR plus two and three-quarters
percent, depending upon our total debt to capitalization ratio. Interest
rates on debt outstanding under these facilities as of June 30, 2001 ranged
from LIBOR plus two to LIBOR plus two and one-quarter percent. These
facilities are secured by inventory and fixed assets or are unsecured.
As of June 30, 2001, annual maturities of long-term debt for the remainder
of fiscal 2001 and for the five years subsequent to fiscal 2001 are: 2001-
$1.2 million; 2002 - $5.0 million; 2003 - $99.1 million; 2004 - $23.0
million; 2005 - $22.0 million; and 2006 - $59.6 million
At June 30, 2001, $24.3 million was available under the revolving/term
borrowing credit facilities and $110.0 million was available under the term
borrowing facilities.
NOTE E--RELATED PARTY TRANSACTIONS
Transactions with related entities are summarized as follows:
Three Months Ended Nine Months Ended
June 30, 2001 July 1, 2001 June 30, 2001 July 1, 2000
(in thousands)
Contract egg grower $ 48 $ 1,302 $ 1,468 $ 4,065
fees to major stockholder
Lease payments to a
major stockholder 188 - 376 -
Chick, feed and other
sales to major stockholder 344 440 38,459 31,663
Live chicken purchases
from major stockholder 288 198 39,341 31,889
NOTE F--HEDGING
On October 1, 2000, the Company adopted Financial Accounting Standards
Board Statement (SFAS) No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES, as amended. This Statement requires the
Company to recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through
earnings. If the derivative is a hedge, depending on the nature of the
hedge, changes in the fair value of derivatives will either be offset
against the change in fair value of the hedged assets, liabilities or
firm commitments through earnings, or recognized in other comprehensive
income (loss) until the hedged item is recognized in earnings.
The ineffective portion of a derivative's change in fair value is
recognized in earnings.
The adoption of SFAS No. 133 had no impact on the Company as of October 1,
2000.
The Company periodically uses derivatives to moderate the financial and
commodity market risks of its business operations, primarily derivative
products, such as futures and option contracts, are used to hedge against
changes in the amount of future cash flows related to commodities
procurement.
The Company expects commodity derivatives to be cash flow hedges (i.e.,
hedging the exposure of variability in expected future cash flows that is
attributable to a particular risk). The effective portion of the
cumulative gain or loss on the derivative instrument is reported as a
component of other comprehensive income (loss) in shareholders' equity and
recognized into earnings in the same period or periods during which the
hedged transaction affects earnings (for commodity hedges when the chickens
that consumed the hedged grain are sold. The remaining cumulative gain or
loss on the derivative instrument in excess of the cumulative change in the
present value of the future cash flows of the hedged item, if any, is
recognized in earnings during the period of change. During the quarter
ended June 30, 2001, the Company used derivative futures contracts to hedge
commodity purchases, all of which occurred during the quarter. No
ineffectiveness was recognized on cash flow hedges during the nine months
ended June 30, 2001. During the quarter ended June 30, 2001, the Company
realized losses due to commodity hedges, net of gains, totaling
approximately $1.2 million, of which approximately $0.7 million ($0.4
million net of tax) was deferred to future periods and is recorded in
other comprehensive income (loss) at June 30, 2001, and will be recognized
within the next quarter. No futures contracts were outstanding as of June
30, 2001.
NOTE G--CONTINGENCIES
Since March 23, 1999, the Company has been a plaintiff in two antitrust
lawsuits in U.S. District Court in Washington, D.C. alleging a world-wide
conspiracy to control production capacity and raise prices of common
vitamins such as A, B-4, C and E. On November 3, 1999, a settlement, which
was entered into as part of a class action lawsuit to which the Company was
a member, was agreed to among the defendants and the class, which would
provide for a recovery of between 18-20% of vitamins purchased from the
defendants from 1990 through 1998. On March 28, 2000, the judge presiding
over the case accepted the negotiated settlement between the parties;
however, appeals from various sources are in process. The Company has
filed documentation showing that vitamin purchases made during the recovery
period totaled approximately $14.9 million. During the first fiscal
quarter of 2001, the Company received $2.2 million in partial settlement of
its claim and received an additional $1.1 million in the third fiscal
quarter of 2001 in final settlement.
In January of 1998, seventeen of our current and/or former employees filed
the case of "Octavius Anderson, et al. v. Pilgrim's Pride Corporation" in
the United States District Court for the Eastern District of Texas, Lufkin
Division claiming Pilgrim's Pride violated requirements of the Fair Labor
Standards Act. The suit alleged Pilgrim's Pride failed to pay employees
for all hours worked. The suit generally alleged that (1) employees should
be paid for time spent to put on, take off, and clean certain personal gear
at the beginning and end of their shifts and breaks and (2) the use of a
master time card or production "line" time fails to pay employees for all
time actually worked. Plaintiffs sought to recover unpaid wages plus
liquidated damages and legal fees. Approximately 1,700 consents to join as
plaintiffs were filed with the court by current and/or former employees.
During the week of March 5, 2001, the case was tried in the Federal Court
of the Eastern District of Texas, Lufkin, Texas. The Company prevailed at
the trial with a judgment issued by the judge, which found no evidence
presented to support the plaintiffs' allegations. The plaintiffs have
filed an appeal in the Fifth Circuit Court of Appeals to reverse the
judge's decision. Neither the likelihood of an unfavorable outcome nor the
amount of ultimate liability, if any, with respect to this case can be
determined at this time. The Company does not expect this matter,
individually or collectively, to have a material impact on our financial
position, operations or liquidity. Substantially similar suits have been
filed against four other integrated chicken companies, including WLR, one
of which resulted in a federal judge dismissing most of the plaintiffs'
claims in that action with facts similar to our case.
In August of 2000, four of our current and/or former employees filed the
case of "Betty Kennell, et al. v. Wampler Foods, Inc." in the United States
District Court for the Northern District of West Virginia, claiming we
violated requirements of the Fair Labor Standards Act. The suit generally
makes the same allegations as Anderson v. Pilgrim's Pride discussed above.
Plaintiffs seek to recover unpaid wages plus liquidated damages and legal
fees. Approximately 100 consents to join as plaintiffs were filed with the
court by current and/or former employees. No trial date has been set. To
date, only limited discovery has been performed. Neither the likelihood of
an unfavorable outcome nor the amount of ultimate liability, if any, with
respect to this case can be determined at this time. We do not expect this
matter, individually or collectively, to have a material impact on our
financial position, operations or liquidity.
NOTE H--BUSINESS SEGMENTS
Since the acquisition of WLR on January 27, 2001, the Company operates in
two reportable business segments as (1) a producer of chicken and other
products and (2) a producer of turkey products.
The Company's chicken and other products segment includes sales of chicken
and sales of other products the Company produces and purchases for resale
in the United States and Mexico. The Company's chicken and other products
segment conducts separate operations in the United States and Mexico and is
reported as two separate geographical areas. The Company's turkey segment
includes sales of turkey products produced in our turkey operation recently
acquired from WLR, whose operations are exclusively in the United States.
Inter-area sales and inter-segment sales, which are not material, are
accounted for at prices comparable to normal trade customer sales.
Identifiable assets by segment and geographic area are those assets which
are used in the Company's operations in each segment or area. Corporate
assets are included with chicken and other products.
The following table presents certain information regarding our segments:
Three Months Ended Nine Months Ended
JUNE 30, JULY 1, JUNE 30, JULY 1,
2001 2000 2001 2000
(in thousands)
Net Sales to Customers:
Chicken and
Other Products:
United States $ 477,291 $ 310,913 $1,179,165 $ 891,823
Mexico 89,752 81,066 244,076 228,241
Sub-total 567,043 391,979 1,423,241 1,120,064
Turkey 78,793 - 150,220 -
Total $ 645,836 $ 391,979 $1,573,461 $1,120,064
Operating Income(Loss):
Chicken and
Other Products:
United States 30,023 12,910 50,397 37,519
Mexico 13,767 13,439 11,145 27,334
Sub-total 43,790 26,349 61,542 64,853
Turkey 1,696 - 1,883 -
Total $ 45,486 $ 26,349 $ 63,425 $ 64,853
Depreciation and Amortization:
Chicken and
Other Products:
United States $ 13,275 $ 6,321 $ 26,790 $ 18,026
Mexico 3,123 2,963 8,864 8,722
Sub-total 16,398 9,284 35,654 26,748
Turkey 2,210 - 3,774 -
Total $ 18,608 $ 9,284 $ 39,428 $ 26,748
Total Assets:
Chicken and
Other Products:
United States $ 806,629 $806,629
Mexico 212,658 212,658
Sub-total 1,019,287 1,019,287
Turkey 185,533 185,533
Total $1,204,820 $1,204,820
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES
JUNE 30, 2001
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Profitability in the poultry industry is materially affected by the
commodity prices of feed ingredients, chicken and turkey, which are
determined by supply and demand factors. As a result, the chicken and
turkey industries are subject to cyclical earnings fluctuations. Cyclical
earnings fluctuations can be mitigated somewhat by:
* Business strategy;
* Product mix;
* Sales and marketing plans; and
* Operating efficiencies.
In an effort to reduce price volatility and to generate higher, more
consistent profit margins, we have concentrated on the production and
marketing of prepared foods products. Prepared foods products generally
have higher profit margins than our other products. Also, the production
and sale in the U.S. of prepared foods products reduce the impact of the
costs of feed ingredients on our profitability. Feed ingredient purchases
are the single largest component of our cost of goods sold, representing
approximately 27.6% of our consolidated cost of goods sold in fiscal 2000.
The production of feed ingredients is positively or negatively affected
primarily by weather patterns throughout the world, the global level of
supply inventories and demand for feed ingredients, and the agricultural
policies of the United States and foreign governments. As further
processing is performed, feed ingredient costs become a decreasing
percentage of a product's total production cost, thereby reducing their
impact on our profitability. Products sold in this form enable us to charge
a premium, reduce the impact of feed ingredient costs on our profitability
and improve and stabilize our profit margins.
The following table presents certain information regarding our segments:
Three Months Ended Nine Months Ended
JUNE 30, JULY 1, JUNE 30, JULY 1,
2001 2000 2001 2000
(in thousands)
Net Sales to Customers:
Chicken and
Other Products:
United States $ 477,291 $ 310,913 $1,179,165 $ 891,823
Mexico 89,752 81,066 244,076 228,241
Sub-total 567,043 391,979 1,423,241 1,120,064
Turkey 78,793 - 150,220 -
Total $ 645,836 $ 391,979 $1,573,461 $1,120,064
Operating Income(Loss):
Chicken and
Other Products:
United States 30,023 12,910 50,397 37,519
Mexico 13,767 13,439 11,145 27,334
Sub-total 43,790 26,349 61,542 64,853
Turkey 1,696 - 1,883 -
Total $ 45,486 $ 26,349 $ 63,425 $ 64,853
Depreciation and Amortization:
Chicken and
Other Products:
United States $ 13,275 $ 6,321 $ 26,790 $ 18,026
Mexico 3,123 2,963 8,864 8,722
Sub-total 16,398 9,284 35,654 26,748
Turkey 2,210 - 3,774 -
Total $ 18,608 $ 9,284 $ 39,428 $ 26,748
The following table presents certain items as a percentage of net sales for
the periods indicated.
Percentage of Net Sales
Three Months Ended Nine Months Ended
June 30, July 1, June 30, July 1,
2001 2000 2001 2000
Net Sales 100.0 % 100.0 % 100.0 % 100.0 %
Costs and Expenses:
Cost of sales 88.3 88.1 90.3 88.7
Gross profit 11.7 11.9 9.7 11.3
Selling, general and
administrative 4.7 5.2 5.6 5.5
Operating Income 7.0 6.7 4.0 5.8
Interest Expense 1.6 1.3 1.3 1.2
Income before Income Taxes 5.3 5.2 2.6 4.6
Net Income 3.9 4.4 1.8 3.7
RESULTS OF OPERATIONS
FISCAL THIRD QUARTER 2001 COMPARED TO FISCAL THIRD QUARTER 2000
On January 27, 2001, the Company completed the acquisition of WLR, a
vertically integrated producer of chicken and turkey products located in
the Eastern United States. Accordingly, the Company's results for the
third fiscal quarter of 2001 include 13 weeks of operations for the former
WLR, whereas the third fiscal quarter of 2000 does not.
CONSOLIDATED NET SALES. Consolidated net sales were $645.8 million for the
third quarter of fiscal 2001, an increase of $253.9 million, or 64.8%, from
the third quarter of fiscal 2000. The increase in consolidated net sales
resulted from a $148.6 million increase in U.S. chicken sales to $431.6
million, a $78.8 million increase in turkey sales, a $17.8 million increase
in sales of other U.S. products to $45.7 million and by an $8.7 million
increase in Mexico chicken sales to $89.8 million.
The increase in U.S. chicken sales was primarily due to a 48.3% increase in
dressed pounds produced, which resulted primarily from the acquisition of
WLR, and to a 2.7% increase in total revenue per dressed pound produced.
The increase in turkey sales was due to the addition of WLR. The $17.8
million increase in sales of other U.S. products was due primarily to the
acquisition of WLR.
The $8.7 million increase in Mexico chicken sales was primarily due to
14.1% increase in dressed pounds produced offset partially by a 3.0%
decrease in revenue per dressed pound.
COST OF SALES. Consolidated cost of sales was $570.2 million in the third
quarter of fiscal 2001, an increase of $224.9 million, or 65.1%, compared
to the third quarter of fiscal 2000. The increase resulted primarily from a
$217.2 million increase in the cost of sales of U.S. operations and from a
$7.7 million increase in the cost of sales in Mexico operations.
The cost of sales increase in our U.S. operations of $217.2 million was due
primarily to the acquisition of WLR, $75.9 million of which related to the
turkey operations, and increased production of higher cost prepared food
products and higher energy costs.
The $7.7 million cost of sales increase in our Mexico operations was
primarily due to a 14.1% increase in dressed pounds produced offset
partially by a 1.7% decrease in average costs of sales per dressed pound
produced.
GROSS PROFIT. Gross profit was $75.6 million for the third quarter of
fiscal 2001, an increase of $29.0 million, or 62.1%, over the same period
last year due primarily to the WLR acquisition. Gross profit as a
percentage of sales decreased to 11.7% in the third quarter of fiscal 2001
from 11.9% in the third quarter of fiscal 2000 due primarily to lower net
sales prices in Mexico.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Consolidated selling,
general and administrative expenses were $30.1 million in the third quarter
of fiscal 2001 and $20.3 million in the third quarter of fiscal 2000. The
$9.8 million, or 48.4%, increase was due primarily to the acquisition of
WLR and certain integration costs related thereto. Consolidated selling,
general and administrative expenses as a percentage of sales decreased in
the third quarter of fiscal 2001 to 4.7%, compared to 5.2% in the third
quarter of fiscal 2000.
OPERATING INCOME. Consolidated operating income was $45.5 million for the
third quarter of fiscal 2001, an increase of $19.1 million when compared to
the third quarter of fiscal 2000, resulting primarily from lower operating
margins in Mexico.
INTEREST EXPENSE. Consolidated net interest expense increased to $10.0
million in the third quarter of fiscal 2001, compared to $5.0 million in
the third quarter of fiscal 2000, due to higher outstanding balances
resulting from the acquisition of WLR.
INCOME TAX EXPENSE. Consolidated income tax expense in the third quarter
of fiscal 2001 was $9.1 million compared to $3.2 million in the third
quarter of fiscal 2000. This increase resulted from higher U.S. pre-tax
earnings in the third quarter of fiscal 2001 than in the same period of
fiscal 2000.
FIRST NINE MONTHS OF FISCAL 2001 COMPARED TO FIRST NINE MONTHS OF FISCAL
2000
On January 27, 2001, the Company completed the acquisition of WLR, a
vertically integrated producer of chicken and turkey products located in
the Eastern United States. Accordingly, twenty-two weeks of operations of
the former WLR are included in the Company's results for the first nine
months of fiscal 2001.
Consolidated Net Sales. Consolidated net sales were $1.6 billion for the
first nine months of fiscal 2001, an increase of $453.4 million, or 40.5%,
from the first nine months of fiscal 2000. The increase in consolidated
net sales resulted from a $258.3 million increase in U.S. chicken sales to
$1.0 billion, a $150.2 million increase in turkey sales, a $29.0 million
increase in sales of other U.S. products to $134.0 million and by a $15.8
million increase in Mexico chicken sales to $244.1 million.
The increase in U.S. chicken sales was primarily due to a 29.1% increase in
dressed pounds produced, which resulted primarily from the acquisition of
WLR, and to a 2.9% increase in total revenue per dressed pound produced.
The increase in turkey sales was due to the acquisition of WLR. The $29.0
million increase in sales of other U.S. products to $134.0 million was
primarily due to the acquisition of WLR and higher prices in the Company's
commercial egg and poultry by-products operations.
The $15.8 million increase in Mexico chicken sales was primarily due to a
15.6% increase in dressed pounds produced offset partially by a 7.5%
decrease in average revenue per dressed pound produced.
COST OF SALES. Consolidated cost of sales were $1.4 billion in the first
nine months of fiscal 2001, an increase of $427.6 million, or 43.0%,
compared to the first nine months of fiscal 2000. The increase resulted
primarily from a $397.3 million increase in the cost of sales of U.S.
operations and by a $30.3 million increase in the cost of sales in Mexico
operations.
The cost of sales increase in our U.S. operations of $397.3 million was due
primarily to the acquisition of WLR, $140.9 million of which related to the
turkey operations, increased production of higher cost prepared food
products, higher energy costs and higher feed ingredient costs.
The $30.3 million cost of sales increase in our Mexico operations was
primarily due to a 15.6% increase in dressed pounds produced.
GROSS PROFIT. Gross profit was $152.0 million for the first nine months of
fiscal 2001, an increase of $25.8 million, or 20.5%, over the same period
last year. Gross profit as a percentage of sales decreased to 9.7% in the
first nine months of fiscal 2001 from 11.3% in the first nine months of
fiscal 2000 due primarily to lower sale prices in Mexico.
Beginning in the fourth quarter of fiscal 1999, commodity chicken margins
in the U.S. have been under pressure due, in part, to increased levels of
chicken production. To the extent that these trends continue, subsequent
periods' operations could be negatively affected to the extent not offset
by other factors such as those discussed under "-General" above.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Consolidated selling,
general and administrative expenses were $88.6 million in the first nine
months of fiscal 2001 and $61.3 million in the first nine months of fiscal
2000. The $27.3 million increase was due primarily to the acquisition of
WLR and certain integration costs related thereto. Consolidated selling,
general and administrative expenses as a percentage of sales increased in
the first nine months of fiscal 2001 to 5.6%, compared to 5.5% in the first
nine months of fiscal 2000.
OPERATING INCOME. Consolidated operating income was $63.4 million for the
first nine months of fiscal 2001, a decrease of $1.4 million when compared
to the first nine months of fiscal 2000, resulting primarily from the
acquisition of WLR and lower sales prices in Mexico.
INTEREST EXPENSE. Consolidated net interest expense increased 56.5% to
$21.2 million in the first nine months of fiscal 2001, when compared to
$13.6 million for the first nine months of fiscal 2000, due to higher
outstanding balances incurred for the acquisition of WLR.
INCOME TAX EXPENSE. Consolidated income tax expense in the first nine
months of fiscal 2001 increased to $13.1 million compared to an expense of
$10.0 million in the first nine months of fiscal 2000. This increase
resulted from higher U.S. pre-tax earnings in the first nine months of
fiscal 2001 than in the first nine months of fiscal 2000.
LIQUIDITY AND CAPITAL RESOURCES
We maintain $120.0 million in revolving credit facilities and $400.0
million in a secured revolving/term borrowing facility. The $400.0 million
revolving/term borrowing facility provides for $285.0 million and $115.0
million of 10-year and 7-year commitments, respectively. Borrowings under
this facility are split pro rata between the 10-year and 7-year maturities
as they occur. The credit facilities provide for interest at rates ranging
from LIBOR plus five-eighths percent to LIBOR plus two and three-quarters
percent, depending upon our total debt to capitalization ratio. Interest
rates on debt outstanding under these facilities as of June 30, 2001 ranged
from LIBOR plus two percent to LIBOR plus two and one-quarter percent.
These facilities are secured by inventory and fixed assets or are
unsecured.
We propose to offer $200.0 million of senior unsecured notes due in 2011.
The notes would be issued under our shelf registration statement covering
an aggregate of $400.0 million of securities. The net proceeds of the
offering would be used to redeem all of our outstanding senior subordinated
notes due 2003 and repay indebtedness outstanding under our revolving/term
borrowing facility. This does not constitute an offer to sell or the
solicitation of an offer to buy the notes.
As of June 30, 2001, annual maturities of long-term debt for the remainder
of fiscal 2001 and for the five years subsequent to fiscal 2001 are: 2001-
$1.2 million; 2002 - $5.0 million; 2003 - $99.1 million; 2004 - $23.0
million; 2005 - $22.0 million; and 2006 - $59.6 million.
At June 30, 2001, $24.3 million was available under the revolving credit
facilities and $110.0 million was available under the revolving/term
borrowing facility.
On June 26, 1998, we entered into an Asset Sale Agreement to sell up to $60
million of accounts receivable. In connection with the Asset Sale
Agreement, we sell, on a revolving basis, certain of our trade receivables
(the "Pooled Receivables") to a special purpose corporation wholly owned by
us, which in turn sells a percentage ownership interest to third parties.
At June 30, 2001 and September 30, 2000, an interest in these Pooled
Receivables of $38.0 million and $35.4 million, respectively, had been sold
to third parties and is reflected as a reduction in accounts receivable.
These transactions have been recorded as sales in accordance with Financial
Accounting Standards Board Statement No. 140, ACCOUNTING FOR TRANSFERS AND
SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES. The
gross proceeds resulting from the sale are included in cash flows from
operating activities in our Consolidated Statements of Cash Flows. Losses
on these sales were immaterial.
On June 29, 1999, the Camp County Industrial Development Corporation issued
$25.0 million of variable-rate environmental facilities revenue bonds
supported by letters of credit obtained by Pilgrim's Pride. We may draw
from these proceeds over the construction period for new sewage and solid
waste disposal facilities at a poultry by-products plant to be built in
Camp County, Texas. We are not required to borrow the full amount of the
proceeds from the bonds. All amounts borrowed from these funds will be due
in 2029. The amounts that we borrow will be reflected as debt when received
from the Camp County Industrial Development Corporation. The interest rates
on amounts borrowed will closely follow the tax-exempt commercial paper
rates. Presently, there are no borrowings outstanding under the bonds.
At June 30, 2001, our working capital increased to $177.2 million and our
current ratio decreased to 1.63 to 1, compared with working capital of
$124.5 million and a current ratio of 1.86 to 1 at September 30, 2000, and
was primarily due to the acquisition of WLR.
Trade accounts and other receivables were $130.1 million at June 30, 2001,
compared to $50.3 million at September 30, 2000. The 158.7% increase in
trade accounts and other receivables between June 30, 2001 and September
30, 2000 was primarily due to the acquisition of WLR's trade receivables
and other accounts partially offset by the sale of receivables under the
Asset Sale Agreement discussed above. Excluding the sale of receivables,
trade accounts and other receivables would have increased 96.1%, to $168.1
million. This increase was primarily due to the acquisition of WLR.
Inventories were $305.6 million at June 30, 2001, compared to $181.2
million at September 30, 2000. The $124.4 million, or 68.6%, increase in
inventories between September 30, 2000 and June 30, 2001 was primarily due
to the acquisition of WLR.
Accounts payable and accrued expenses were $221.8 million at June 30, 2001,
compared to $139.8 million at September 30, 2000. The 58.7% increase in
accounts payable and accrued expenses between September 30, 2000 and June
30, 2001, was primarily due to the acquisition of WLR.
Capital expenditures of $87.6 million and $56.9 million for the nine months
ended June 30, 2001 and July 1, 2000, respectively, were primarily incurred
to acquire and expand certain facilities, improve efficiencies, reduce
costs and for the routine replacement of equipment. We anticipate spending
$15.0 to $20.0 million in the fourth quarter of fiscal 2001 and $55.0 to
$65.0 million in fiscal 2002 to improve efficiencies and for the routine
replacement of equipment. We expect to finance such expenditures with
available operating cash flows and long-term financing.
Cash flows provided by operating activities were $17.3 million and $61.7
million for the nine month periods ended June 30, 2001 and July 1, 2000,
respectively. The decrease in cash flows provided by operating activities
for the nine months ended June 30, 2001, compared to the nine months ended
July 1, 2000, was primarily due to the increase of: accounts receivable,
due primarily to a higher level of sales activity; and inventories, due
primarily to higher levels of live poultry and frozen turkey inventory
resulting primarily from seasonal variations in the live production cycle
and sales of turkey products.
Cash flows provided by (used in) financing activities were $285.8 million
and $(14.0) million for the nine month periods ended June 30, 2001 and July
1, 2000, respectively. The increase in cash flows provided by (used in)
financing activities for the nine month period ended June 30, 2001, when
compared to the nine month period ended July 1, 2000, reflects the net
proceeds (payments) from borrowings to finance the acquisition of WLR.
FORWARD LOOKING STATEMENTS
Statements of our intentions, beliefs, expectations or predictions for the
future, denoted by the words "anticipate", "believe", "estimate", "expect",
"project", "imply", "intend", "foresee" and similar expressions, are
forward-looking statements that reflect our current views about future
events and are subject to risks, uncertainties and assumptions, including:
* Matters affecting the poultry industry generally, including
fluctuations in the commodity prices of feed ingredients, chicken
and turkey;
* Management of our cash resources, particularly in light of our
substantial leverage;
* Restrictions imposed by, and as a result of, our substantial
leverage;
* Currency exchange rate fluctuations, trade barriers, exchange
controls, expropriation and other risks associated with foreign
operations;
* Changes in laws or regulations affecting our operations, as well as
competitive factors and pricing pressures;
* Inability to effectively integrate WLR or realize the associated
cost savings and operating synergies currently anticipated; and
* The impact of uncertainties of litigation, as well as other risks
described in the Company's Security and Exchange Commission ("SEC")
filings.
Actual results could differ materially from those projected in these
forward-looking statements as a result of these factors, among others, many
of which are beyond our control.
The Company does not intend to provided updated information about the
matters referred to in these forward looking statements, other than in the
context of Management's Discussion and Analysis of Results of Operations
and Financial Condition contained herein and other disclosures in the
Company's SEC filings.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The risk inherent in the Company's market risk sensitive instruments and
positions is the potential loss arising from adverse changes in the price
of feed ingredients, foreign currency exchange rates and interest rates as
discussed below and as adjusted for the acquisition of WLR. The
sensitivity analyses presented do not consider the effects that such
adverse changes may have on overall economic activity, nor do they consider
additional actions management may take to mitigate its exposure to such
changes. Actual results may differ.
FEED INGREDIENTS. The Company purchases certain commodities, primarily corn
and soybean meal. As a result, the Company's earnings are affected by
changes in the price and availability of such feed ingredients. As market
conditions dictate, the Company will from time to time lock-in future feed
ingredient prices using various hedging techniques, including forward
purchase agreements with suppliers and futures contracts. The Company does
not use such financial instruments for trading purposes and is not a party
to any leveraged derivatives. Market risk is estimated as a hypothetical
10% increase in the weighted-average cost of the Company's primary feed
ingredients as of June 30, 2001. Based on the Company's feed consumption
during the twelve-month period ending June 30, 2001, such an increase
would have resulted in an increase to cost of sales of approximately $51.7
million in that period. As of June 30, 2001, the Company had not
hedged any of its remaining fiscal 2001 or 2002 feed requirements.
FOREIGN CURRENCY. Our earnings are affected by foreign exchange rate
fluctuations related to the Mexican peso net monetary position of our
Mexico subsidiaries denominated in Mexican pesos. We manage this exposure
primarily by attempting to minimize our Mexican peso net monetary position,
but from time to time we have also considered executing hedges to help
minimize this exposure. Such instruments, however, have historically not
been economically feasible. We are also exposed to the effect of potential
exchange rate fluctuations to the extent that amounts are repatriated from
Mexico to the United States. However, we currently anticipate that the
cash flows of our Mexico subsidiaries will continue to be reinvested in our
Mexico operations. In addition, the Mexican peso exchange rate can
directly and indirectly impact our results of operations and financial
position in several manners, including potential economic recession in
Mexico resulting from a devalued peso. The impact on our financial
position and results of operations of a hypothetical change in the exchange
rate between the U.S. dollar and the Mexican peso cannot be reasonably
estimated. Foreign currency exchange gains and losses, representing the
change in the U.S. dollar value of the net monetary assets of our Mexico
subsidiaries denominated in Mexican pesos, were a loss of $2.3 million in
1998, a gain of $0.1 million and $0.2 million in fiscal 1999 and 2000,
respectively, and a gain of $1.1 million for the twelve-month period ending
June 30, 2001. On June 30, 2001, the Mexican peso closed at 9.04 to 1
U.S. dollar, a decrease from 9.45 at September 30, 2000. No assurance can
be given as to how future movements in the peso could affect our future
earnings.
INTEREST RATES. The Company's earnings are also affected by changes in
interest rates due to the impact those changes have on its variable-rate
debt instruments. The acquisition of WLR substantially increased the
Company's outstanding balances of variable-rate debt. The Company has
variable-rate debt instruments representing approximately 64.6% of its
long-term debt at June 30, 2001. Holding other variables constant,
including levels of indebtedness, a 25 basis points increase in interest
rates during the 12 month period ending June 29, 2002, would increase our
interest expense by $725,000 over the same period in 2001. These amounts
are determined by considering the impact of the hypothetical interest rates
on the Company's variable-rate long-term debt at June 30, 2001.
Market risk for fixed-rate long-term debt is estimated as the potential
increase in fair value resulting from a hypothetical 25 basis points
decrease in interest rates and amounts to approximately $487,000 as of June
30, 2001, using discounted cash flow analysis.
NEW ACCOUNTING PRONOUNCEMENTS. On October 1, 2000, the Company adopted
Financial Accounting Standards Board Statement (SFAS) No. 133, ACCOUNTING
FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, as amended. This
Statement requires the Company to recognize all derivatives on the balance
sheet at fair value. Derivatives that are not hedges must be adjusted to
fair value through earnings. If the derivative is a hedge, depending on
the nature of the hedge, changes in the fair value of derivatives will
either be offset against the change in fair value of the hedged assets,
liabilities or firm commitments through earnings, or recognized in other
comprehensive income (loss) until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair value
is recognized in earnings.
The adoption of SFAS No. 133 had no impact on the Company as of October 1,
2000.
The Company periodically uses derivatives to moderate the financial and
commodity market risks of its business operations, primarily derivative
products, such as futures and option contracts, are used to hedge against
changes in the amount of future cash flows related to commodities
procurement.
The Company expects commodity derivatives to be cash flow hedges (i.e.,
hedging the exposure of variability in expected future cash flows that is
attributable to a particular risk). The effective portion of the
cumulative gain or loss on the derivative instrument is reported as a
component of other comprehensive income (loss) in shareholders' equity and
recognized into earnings in the same period or periods during which the
hedged transaction affects earnings (for commodity hedges when the chickens
that consumed the hedged grain are sold). The remaining cumulative gain or
loss on the derivative instrument in excess of the cumulative change in the
present value of the future cash flows of the hedged item, if any, is
recognized in earnings during the period of change. During the quarter
ended June 30, 2001, the Company used derivative futures contracts to hedge
commodity purchases, all of which occurred during the quarter. No
ineffectiveness was recognized on cash flow hedges during the nine months
ended June 30, 2001. During the quarter ended June 30, 2001, the Company
realized losses due to commodity hedges, net of gains, totaling
approximately $1.2 million, of which approximately $0.7 million ($0.4
million net of tax) was deferred to future periods and is recorded in
other comprehensive income (loss) at June 30, 2001 and will be recognized
within the next quarter. No futures contracts were outstanding as of
June 30, 2001.
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES
JUNE 30, 2001
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Since March 23, 1999, the Company has been a plaintiff in two antitrust
lawsuits in U.S. District Court in Washington, D.C. alleging a world-wide
conspiracy to control production capacity and raise prices of common
vitamins such as A, B-4, C and E. On November 3, 1999, a settlement, which
was entered into as part of a class action lawsuit to which the Company was
a member, was agreed to among the defendants and the class, which would
provide for a recovery of between 18-20% of vitamins purchased from the
defendants from 1990 through 1998. On March 28, 2000, the judge presiding
over the case accepted the negotiated settlement between the parties;
however, appeals from various sources are in process. The Company has
filed documentation showing that vitamin purchases made during the recovery
period totaled approximately $14.9 million. During the first fiscal
quarter of 2001, the Company received $2.2 million in partial settlement of
its claim and received an additional $1.1 million in the third fiscal
quarter of 2001 in final settlement.
In January of 1998, seventeen of our current and/or former employees filed
the case of "Octavius Anderson, et al. v. Pilgrim's Pride Corporation" in
the United States District Court for the Eastern District of Texas, Lufkin
Division claiming Pilgrim's Pride violated requirements of the Fair Labor
Standards Act. The suit alleged Pilgrim's Pride failed to pay employees
for all hours worked. The suit generally alleged that (1) employees should
be paid for time spent to put on, take off, and clean certain personal gear
at the beginning and end of their shifts and breaks and (2) the use of a
master time card or production "line" time fails to pay employees for all
time actually worked. Plaintiffs sought to recover unpaid wages plus
liquidated damages and legal fees. Approximately 1,700 consents to join as
plaintiffs were filed with the court by current and/or former employees.
During the week of March 5, 2001, the case was tried in the Federal Court
of the Eastern District of Texas, Lufkin, Texas. We prevailed at the trial
with a judgment issued by the judge, which found no evidence presented to
support the plaintiffs' allegations. The plaintiffs have filed an appeal
in the Fifth Circuit Court of Appeals to reverse the judge's decision.
Neither the likelihood of an unfavorable outcome nor the amount of ultimate
liability, if any, with respect to this case can be determined at this
time. We do not expect this matter, individually or collectively, to have
a material impact on our financial position, operations or liquidity.
Substantially similar suits have been filed against four other integrated
chicken companies, including WLR, one of which resulted in a federal judge
dismissing most of the plaintiffs' claims in that action with facts similar
to our case.
In August of 2000, four of our current and/or former employees filed the
case of "Betty Kennell, et al. v. Wampler Foods, Inc." in the United States
District Court for the Northern District of West Virginia, claiming we
violated requirements of the Fair Labor Standards Act. The suit generally
makes the same allegations as Anderson v. Pilgrim's Pride discussed above.
Plaintiffs seek to recover unpaid wages plus liquidated damages and legal
fees. Approximately 100 consents to join as plaintiffs were filed with the
court by current and/or former employees. No trial date has been set. To
date, only limited discovery has been performed. Neither the likelihood of
an unfavorable outcome nor the amount of ultimate liability, if any, with
respect to this case can be determined at this time. We do not expect this
matter, individually or collectively, to have a material impact on our
financial position, operations or liquidity.
On February 9, 2000, the U.S. Department of Labor ("DOL") began a
nationwide audit of wage and hour practices in the chicken industry. The
DOL has audited 51 chicken plants, four of which are owned by us. The DOL
audit examined pay practices relating to both processing plant and catching
crew employees and includes practices which are the subject of Anderson v.
Pilgrim's Pride and Kennell v. Wampler Foods discussed above. We met with
the DOL in a closing conference in March of 2001 and are currently
considering the recommendations presented by the DOL, the majority of which
are procedural. We do not expect this matter, individually or
collectively, to have a material impact on our financial position,
operations or liquidity.
We are subject to various other legal proceedings and claims, which arise
in the ordinary course of our business. In the opinion of management, the
amount of ultimate liability with respect to these actions will not
materially affect our financial position, results of operations or cash
flows.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
(a) Computation of Ratio of Earnings to Fixed Charges
REPORTS ON FORM 8-K
The Company filed a Form 8-K/A on April 12, 2001, as an amendment to the
Form 8-K filed on February 8, 2001, relating to the acquisition by a
wholly-owned subsidiary of Pilgrim's Pride Corporation of WLR.
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 JULY 24, 2001 Richard A. Cogdill
Executive Vice President and
Chief Financial Officer and
Secretary and Treasurer
in his respective capacity as such
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES
JUNE 30, 2001
EXHIBIT 12
PILGRIM'S PRIDE CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
NINE MONTHS ENDED
JUNE 30, 2001 JULY 1, 2000
EARNINGS:
Income before income taxes
and extraordinary charge $ 41,277 $ 51,004
Add: Total fixed charges (see below) 33,877 21,734
Less: Interest Capitalized 5,232 2,255
Total Earnings $ 69,922 $ 70,483
FIXED CHARGES:
Interest (1) $ 27,032 $ 16,257
Portion of rental expense
representative of the
interest factor 6,845 5,477
Total fixed charges $ 33,877 $ 21,734
Ratio of earnings to fixed charges 2.06 3.24
(1) Interest includes amortization of capitalized financing fees.