SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 5, 2003
PILGRIMS PRIDE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware | 1-9273 | 75-1285071 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
110 South Texas Street Pittsburg, Texas |
75686-0093 | |
(Address of Principal Executive Offices) | (ZIP Code) |
Registrants telephone number, including area code: (903) 855-1000
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits. The exhibits below, which are referred to in Item 9 (pursuant to Item 12) of this Form 8-K are furnished solely pursuant to Item 12 of this Form 8-K and shall not be (i) subject to Section 18 of the Act, or Sections 11 or 12 of the Securities Act of 1933, as amended, or deemed incorporated by reference into a registration statement, proxy statement or report or other document we may file with the SEC, regardless of any general incorporation language in such a filing (except as shall otherwise be expressly set forth by specific reference in such a filing), or (ii) subject to Item 10 of Regulation S-K except as specifically required under the instructions to Item 12 of Form 8-K.
The following exhibits are filed with this report on Form 8-K:
Exhibit Number |
Description | |
99.1 | Press Release dated November 5, 2003 |
Item 9. Regulation FD Disclosure (Pursuant To Item 12. Results of Operations and Financial Condition).
In accordance with SEC Release No. 33-8216, the following information, intended to be furnished under Item 12. Results of Operations and Financial Condition, is instead furnished under Item 9. Regulation FD Disclosure. The information in this Form 8-K and the Exhibits attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
On November 5, 2003, Pilgrims Pride Corporation issued a press release announcing its results of operations for the fourth quarter of fiscal 2003, a copy of which is furnished with this Form 8-K as Exhibit 99.1.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PILGRIMS PRIDE CORPORATION | ||||||||
Date: November 5, 2003 | By: | /s/ Richard A. Cogdill | ||||||
Richard A. Cogdill Executive Vice President, Chief Financial Officer, Secretary and Treasurer |
Exhibit Index
Exhibit Number |
Description | |
99.1 | Press Release dated November 5, 2003 |
Exhibit 99.1
[PILGRIMS PRIDE LOGO]
PILGRIMS PRIDE CORPORATION
REPORTS RECORD QUARTERLY AND ANNUAL NET SALES
FOR THE FOURTH QUARTER AND FOR FISCAL 2003
Sets Special Meeting Date of November 20, 2003 for Stockholders to Vote on Proposals to Create a Single
Class of Stock and to Issue New Shares in Connection with Acquisition of ConAgra Foods Chicken Division
Pittsburg, TXNovember 5, 2003Pilgrims Pride Corporation (NYSE: CHX, CHX.A) today reported net income of $25.1 million, or $0.61 per share, for the fourth fiscal quarter ended September 27, 2003, an increase of $28.3 million, or $0.69 per share, compared with a net loss of $3.2 million, or ($0.08) per share, in the fourth fiscal quarter of 2002. The Company also reported record net sales for the fourth fiscal quarter of 2003 of $709.5 million, an increase of $69.7 million, compared with net sales of $639.8 million for the same period last year.
Included in this years fourth quarter is an $11.2 million gain, or $6.3 million net of tax and related employee incentive plan accruals or $0.15 a share, which is attributable to the recoveries from the prior years avian influenza and settlements of vitamin and methionine antitrust lawsuits. In addition this years fourth quarter included a non-cash tax benefit of $16.9 million or $0.41 per share associated with the reversal of a valuation allowance on net operating losses in the Companys Mexico operations. Included in last years fourth quarter results, was approximately $5.3 million, or $3.0 million net of tax and related employee incentive plan accruals, or $0.07 per share of negative effects related to the March 2002 avian influenza outbreak in the Companys turkey division. Also included in last years fourth quarter results was a $1.1 million gain or $0.6 million net of tax and related employee incentive plan accruals, or $0.01 per share attributable to the partial payments from settlements of vitamin and methionine antitrust lawsuits. Additionally, last years fourth quarter results included a non-cash tax benefit of $2.2 million or $0.05 per share associated with the tax law changes in Mexico.
Our very successful fourth quarter and fiscal year performance reflects an improvement in the pricing environment for chicken and better operating efficiencies, commented O.B. Goolsby, President and Chief Operating Officer of Pilgrims Pride. Over the last several months, lower domestic supplies of meat proteins, the lifting of recent export restrictions and increased consumer demand for chicken products have resulted in higher chicken prices and increased operating margins. We expect these favorable trends to continue positively impacting prices and margins as we enter fiscal 2004. While we are disappointed by the results posted by our turkey business this quarter, we remain committed to improving the product mix, sales volume and profitability of this business and are taking a number of steps that we believe will allow us to achieve this goal.
We continue to make significant progress in readying our Company for the completion of our pending acquisition of ConAgras chicken division. This acquisition will enhance our ability to capitalize on the growing demand for prepared and fresh case-ready chicken and will give us the capacity to enhance the technological leadership and cost-efficiency for which we are known. Our transition team has been working hard to ensure a smooth and successful integration, and we look forward to completing the ConAgra acquisition later this month so we can begin to realize the many benefits we expect it will create for our customers, partners and shareholders. As the second largest poultry company in the United States, Pilgrims Pride will be even better-positioned to drive growth and shareholder value by providing customers at every point on the distribution chain with the broadest range of quality fresh and value-added chicken products and services available in the marketplace today, Mr. Goolsby concluded.
For fiscal 2003, the Companys net income was $56.0 million, or $1.36 per share, an increase of $41.7 million, or $1.01 per share, compared with net income of $14.3 million, or $0.35 per share in the prior fiscal year. The Company also reported record annual net sales for fiscal 2003 of $2,619.3 million, an $85.6 million increase compared with $2,533.7 million for the same period last year.
Included in the fiscal 2003 results were proceeds received from the federal government to reimburse poultry producers for losses incurred due to avian influenza, amounting to approximately $26.6 million, $15.0 million net of tax and related employee incentive plan accruals, or $0.36 per share. Also included in this years results were an estimated $7.3 million of negative effects related to the avian influenza outbreak, which affected the Companys first two quarters through March of 2003. This amount on a net of tax and related employee incentive plan accruals basis was approximately $4.1 million or $0.10 per share. Accordingly, on a combined basis, these total avian influenza effects for fiscal 2003 were a positive $10.9 million net of tax and related employee incentive plan accruals, or $0.26 per share. In fiscal 2002, avian influenza for last year had negative effects of an estimated $26.0 million. On a net of tax basis and related employee incentive plan accruals this was approximately $14.7 million, or $0.35 per share. All in all, the cumulative avian influenza effects on the Companys bottom line in fiscal 2002 and fiscal 2003 combined was a negative $6.7 million dollars, $3.8 million on a net of tax and related employee incentive plan accruals basis, or $0.10 per share.
Also included in the fiscal 2003 results was $56.0 million, or $31.6 million net of tax and related employee incentive plan accruals or $0.77 per share of recoveries from a number of lawsuits filed by the Company alleging various anti-trust violations by several vitamin, methionine and choline chloride manufacturers. That compares to last years recovery amounts under these legal actions of $10.4 million, or $5.9 million net of tax and related employee incentive plan accruals or $0.14 a share.
Pilgrims Pride also announced that it will hold a special meeting of stockholders on November 20, 2003 at 9:00 a.m at its Corporate Headquarters in Pittsburg, Texas. The purpose of the special meeting is to allow Pilgrims Pride stockholders to vote on proposals to issue shares of Pilgrims Pride common stock to ConAgra in connection with the Companys acquisition of ConAgras chicken division and to combine its class A and class B common stock into a single class of common stock.
As previously announced, the New York Stock Exchange has already approved the Companys proposed plan for combining the two classes of common stock into a single security. Additionally, Lonnie Bo Pilgrim, the Companys chairman, and his son Lonnie Ken Pilgrim, a director of the Company, collectively own or control over 62% of both the class A and class B common stock and will vote in favor of both proposals, thus ensuring their approval at the special meeting.
Pilgrims Pride Corporation is the second largest poultry producer in the United States; the fourth largest in chicken and fifth largest in turkey, and second largest chicken company in Mexico. Pilgrims Pride employs more than 24,500 persons and operates processing and further processing plants, distribution centers, hatcheries and feed mills in Texas, Arkansas, Arizona, North Carolina, Pennsylvania, Virginia and West Virginia and Mexico.
Products are sold to foodservice, retail and frozen entrée customers. The Companys primary distribution is through retailers and restaurants throughout the United States and in the Northern and Central regions of Mexico and to the foodservice industry nation-wide in both countries.
A conference call to discuss the Companys fourth quarter of fiscal 2003 financial results will be held at 9:00 a.m. CST (10:00 a.m. EST) on November 5, 2003. To listen live via telephone, call 800-556-3831 access code 00977. The call will also be web cast live on the Internet at http://www.firstcallevents.com/service/ajwz391670823gf12.html. The web cast will be available for replay within two hours of the conclusion of the call. A telephone replay will be available beginning at 1:00 p.m. CST on November 5 through November 12 at 800-876-6305.
Statements contained in this press release that state the intentions, hopes, beliefs, anticipations, expectations or predictions of the future of Pilgrims Pride Corporation and its management are forward looking statements. It is important to note that the actual results could differ materially from those projected in such forward looking statements. For example, factors that could cause actual results to differ materially from those projected in such forward looking statements include: matters affecting the poultry industry generally, including fluctuations in the commodity prices of feed ingredients, chicken and turkey; disease outbreaks affecting the production performance and/or marketability of the Companys poultry products; contamination of our products, which has recently and can in the future lead to product liability claims and product recalls; exposure to risks related to product liability, product recalls, property damage and injuries to persons, for which insurance coverage is expensive, limited and potentially inadequate; 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 risk associated with foreign operations; changes in laws or regulations affecting our operations as well as competitive factors and pricing pressures; inability to effectively integrate ConAgras chicken business or realize the associated cost savings and operating synergies currently anticipated; and the impact of uncertainties of litigation as well as other risks described under Risk Factors in our Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission
Important Legal Information
Investors and security holders are urged to read the proxy statement regarding the proposed transaction with ConAgra Foods, Inc. and the stock combination because it contains important information. The proxy statement has been filed with the U.S. Securities and Exchange Commission by Pilgrims Pride Corporation and security holders may obtain a free copy of the proxy statement, and other documents filed with the SEC by Pilgrims Pride Corporation, at the SECs web site at www.sec.gov.
Contact:
Richard A. Cogdill
Chief Financial Officer
540/896-0406
PILGRIMS PRIDE CORPORATION
News Release
November 5, 2003
Page 4
PILGRIMS PRIDE CORPORATION
Consolidated Statements of Income
[In thousands, except share and per share amounts]
Three Months Ended |
September 27, 2003 |
September 28, 2002 |
||||||
Net Sales |
$ | 709,471 | $ | 639,819 | ||||
Costs and Expenses: |
||||||||
Cost of sales |
660,085 | 608,214 | ||||||
Non-recurring recoveries |
[10,477 | ] | [65 | ] | ||||
Selling, general and administrative |
34,141 | 34,770 | ||||||
683,749 | 642,919 | |||||||
Operating Income |
25,722 | [3,100 | ] | |||||
Other Expense [Income]: |
||||||||
Interest expense, net |
9,146 | 7,137 | ||||||
Foreign exchange loss |
107 | 89 | ||||||
Miscellaneous, net |
[457 | ] | [2,180 | ] | ||||
8,796 | 5,046 | |||||||
Income before income taxes |
16,926 | [8,146 | ] | |||||
Income tax benefit |
[8,147 | ] | [4,972 | ] | ||||
Net Income |
$ | 25,073 | $ | [3,174 | ] | |||
Net Income per Common Share |
||||||||
Basic and Diluted |
$ | 0.61 | $ | [0.08 | ] | |||
Dividends Declared per Common Share |
$ | 0.015 | $ | 0.015 | ||||
Weighted Average Shares Outstanding |
41,112,679 | 41,112,679 | ||||||
Year Ended |
September 27, 2003 |
September 28, 2002 |
||||||
Net Sales |
$ | 2,619,345 | $ | 2,533,718 | ||||
Costs and Expenses: |
||||||||
Cost of sales |
2,465,341 | 2,369,309 | ||||||
Non-recurring recoveries |
[46,479 | ] | [756 | ] | ||||
Selling, general and administrative |
136,870 | 135,261 | ||||||
2,555,732 | 2,503,814 | |||||||
Operating Income |
63,613 | 29,904 | ||||||
Other Expense [Income]: |
||||||||
Interest expense, net |
37,981 | 32,003 | ||||||
Foreign exchange [gain] loss |
[359 | ] | 1,463 | |||||
Miscellaneous, net |
[37,244 | ] | [5,472 | ] | ||||
378 | 27,994 | |||||||
Income Before Income Taxes |
63,235 | 1,910 | ||||||
Income Tax Expense [Benefit] |
7,199 | [12,425 | ] | |||||
Net Income |
$ | 56,036 | $ | 14,335 | ||||
Net Income per Common Share |
||||||||
Basic and Diluted |
$ | 1.36 | $ | 0.35 | ||||
Dividends Declared per Common Share |
$ | 0.06 | $ | 0.06 | ||||
Weighted Average Shares Outstanding |
41,112,679 | 41,112,679 |
PILGRIMS PRIDE CORPORATION
News Release
November 5, 2003
Page 5
Note: EBITDA is defined as the sum of net income (loss) before extraordinary charges, interest, taxes, depreciation and amortization. EBITDA is presented because it is used by us, and we believe it is frequently used by securities analysts, investors and other interested parties, in addition to and not in lieu of GAAP results, to compare the performance of companies. EBITDA is not a measurement of financial performance under generally accepted accounting principles and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of our operating performance or any other measures of performance derived in accordance with generally accepted accounting principles. EBITDA is calculated as follows:
Three Months Ended |
September 27, 2003 |
September 28, 2002 |
||||||
Net Income |
$ | 25,073 | $ | (3,174 | ) | |||
Add: |
||||||||
Income tax benefit |
(8,147 | ) | (4,972 | ) | ||||
Interest expense, net |
9,146 | 7,137 | ||||||
Depreciation and amortization |
19,934 | 18,114 | ||||||
Minus: |
||||||||
Amortization of capitalized financing costs |
414 | 369 | ||||||
EBITDA |
$ | 45,592 | $ | 16,736 | ||||
Year Ended |
September 27, 2003 |
September 28, 2002 |
||||||
Net Income |
$ | 56,036 | $ | 14,335 | ||||
Add: |
||||||||
Income tax expense (benefit) |
7,199 | (12,425 | ) | |||||
Interest expense, net |
37,981 | 32,003 | ||||||
Depreciation and amortization |
74,187 | 70,973 | ||||||
Minus: |
||||||||
Amortization of capitalized financing costs |
1,476 | 1,417 | ||||||
EBITDA |
$ | 173,927 | $ | 103,469 | ||||
PILGRIMS PRIDE CORPORATION
News Release
November 5, 2003
Page 6
PILGRIMS PRIDE CORPORATION
Condensed Consolidated Balance Sheets
[In thousands]
September 27, 2003 |
September 28, 2002 | |||||
ASSETS |
||||||
Total Current Assets |
$ | 490,708 | $ | 443,918 | ||
Other Assets |
30,302 | 21,940 | ||||
Property, Plant and Equipment, net |
735,474 | 762,032 | ||||
$ | 1,257,484 | $ | 1,227,890 | |||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||
Total Current Liabilities |
$ | 291,211 | $ | 264,881 | ||
Long-Term Debt, Less Current Maturities |
415,965 | 450,161 | ||||
Deferred Income Taxes |
102,366 | 116,911 | ||||
Minority Interest in Subsidiary |
1,246 | 1,613 | ||||
Total Stockholders Equity |
446,696 | 394,324 | ||||
$ | 1,257,484 | $ | 1,227,890 | |||
PILGRIMS PRIDE CORPORATION
Condensed Consolidated Statements of Cash Flows
[In thousands]
Year Ended |
September 27, 2003 |
September 28, 2002 |
||||||
Cash Provided by Operating Activities |
$ | 97,055 | $ | 98,113 | ||||
Investing Activities: |
||||||||
Acquisitions of property, plant and equipment |
[53,574 | ] | [80,388 | ] | ||||
Business acquisitions |
[4,019 | ] | | |||||
Proceeds from property disposals |
1,779 | 1,426 | ||||||
Other, net |
722 | [2,867 | ] | |||||
Cash Used in Investing Activities |
[55,092 | ] | [81,829 | ] | ||||
Financing Activities: |
||||||||
Net payments on long-term debt |
[35,000 | ] | [18,696 | ] | ||||
Cash dividends paid |
[2,467 | ] | [2,467 | ] | ||||
Cash Used In Financing Activities |
[39,767 | ] | [21,793 | ] | ||||
Effect of exchange rate changes on cash and cash equivalents |
[503 | ] | [494 | ] | ||||
Increase [Decrease] in cash and cash equivalents |
$ | 1,693 | $ | [6,003 | ] | |||