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Form 8 K header

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): July 26, 2004
 
 
 
PILGRIM’S 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)
 
Registrant’s telephone number, including area code: (903) 855-1000
 
 
Item 12.
Results of Operations and Financial Condition.
 
Attached hereto as Exhibit 99.1 is a press release issued by Pilgrim’s Pride Corporation on July 26, 2004, announcing its results of operations for the third quarter of fiscal 2004.
 
(c) Exhibits
 
 
 
 
Exhibit
Number
  
 
Description
99.1
  
Press Release issued on July 26, 2004.
 
Signature
 
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.
 
 
 
 
PILGRIM’S PRIDE CORPORATION
 
 
Date: July 26, 2004.
 
 
 
 
 
By:
 
/s/    Richard A. Cogdill
 
 
[Graphic]
 
 
Richard A. Cogdill
Executive Vice President, Chief Financial Officer,
Secretary and Treasurer
 
Exhibit Index
 
 
 
 
Exhibit
Number
  
 
Description
99.1
  
Press Release issued on July 26, 2004.
Press Release issued on July 26, 2004.


EXHIBIT 99.1
[Pilgrims Pride LOGO]

Pilgrim’s Pride Reports Third Quarter Earnings
of $9.8 million, or $0.15 Per Share

Earnings Impacted by Previously Announced Turkey Restructuring and Other Charges of $63.9 million, $39.6 million Net of Tax, or $0.60 Per Share


PITTSBURG, Texas, July 26, 2004 -- Pilgrim’s Pride Corporation (NYSE: PPC) today reported net income of $9.8 million, or $0.15 per share, for the third fiscal quarter ended July 3, 2004. Included in the fiscal 2004 third quarter earnings results were turkey restructuring and other related charges of $52.2 million and $11.7 million, respectively, $39.6 million combined net of tax, or $0.60 per share, associated with the previously announced sale or closure of the Company’s Hinton, VA turkey operations. This compares with net income of $17.4 million, or $0.42 per share, in the third quarter of fiscal 2003. Included in fiscal 2003 third quarter results was a $0.25 per share gain for the partial settlements of vitamin and methionine lawsuits, net of tax and related employee incentive plan accruals. The Company also reported net sales for the third quarter en ded July 3, 2004, of $1.4 billion, an increase of $796.1 million, or 122.1%, compared with net sales of $651.9 million for the same period last year, with the increase resulting primarily from the acquisition of ConAgra Foods, Inc.’s chicken division, which was effective November 23, 2003, along with positive industry and consumption trends and improved company-wide efficiencies.

For the nine months ended July 3, 2004, the Company reported net income of $53.1 million, or $0.86 per share, for the nine months ended July 3, 2004. Included in the first nine months earnings results were turkey restructuring and other related charges of $52.2 million and $11.7 million, respectively, $39.6 million combined net of tax, or $0.65 per share, associated with the previously announced sale or closure of the Company’s Hinton, VA turkey operations. This compares with net income of $31.0 million, or $0.75 per share, for the nine months ended June 28, 2003. The first nine months of fiscal 2003 results included a $1.06 per share gain from partial settlements of vitamin and methionine lawsuits, net of tax and related employee incentive plan accruals. The Company also reported net sales for the first nine months of fiscal 2004 of $3.9 billion, an increase of $2.0 billion, or 103.0%, compared with net sales of $1.9 billion for the same period last year, with the increase resulting primarily from the acquisition of ConAgra Foods, Inc.’s chicken division, which was effective November 23, 2003, along with positive industry and consumption trends and improved company-wide efficiencies.

O.B. Goolsby, President and Chief Operating Officer of Pilgrim’s Pride, said: “Our outstanding quarterly results reflect a combination of positive industry trends and our success in achieving quicker-than-expected synergies from the integration of the ConAgra chicken division. I am very pleased that seven months into the acquisition, we are well ahead of our integration synergy timeline and have achieved an estimated $27 million of synergies thru the end of the third fiscal quarter of 2004; an amount in excess of fifty-percent of the previously announced anticipated acquisition synergies. Product and process innovations and enhanced operation, distribution and customer service capabilities achieved as a result of the ConAgra acquisition are allowing us to take full advantage of the favorable industry conditions that exist today.”

“Some of the industry factors that are contributing to our strong performance include the continued growth in consumer demand for lean protein products, low inventories and the ongoing rationalization of chicken production in the U.S., which together are helping to sustain the favorable domestic pricing environment for all chicken product lines. Recent moderation of feed grain commodity pricing is anticipated to sustain our current operating leverage for the remainder of fiscal 2004. We are also encouraged by projections for a continued increase in demand for the healthy, convenient poultry products that make up the Pilgrim’s Pride family of brands. As a leading supplier of premium, value-added poultry products, we are well-positioned to capitalize on these exciting growth opportunities and continue creating value for our shareholders,” Goolsby conc luded.

Pilgrim’s Pride will hold a conference call to discuss the Company’s third quarter fiscal 2004 financial results at 10 a.m. CDT (11 a.m. EDT) on July 26, 2004. To listen live via telephone, call 888-275-4480 Conference ID 8534623. The call also will be webcast live on the Internet at http://www.firstcallevents.com/service/ajwz408716717gf12.html. Additionally, the Company has posted a slide presentation on its website at http://www.pilgrimspride.com, which may be viewed by listeners in connection with today’s conference call. The webcast will be available for replay within two hours of the conclusion of the call. A telephone replay will be available beginn ing at 2 p.m. CDT on July 26, 2004 through August 2, 2004 at 800-642-1687 Conference ID 8534623.

Pilgrim's Pride Corporation is the second-largest poultry producer in the United States and Mexico and the largest chicken producer in Puerto Rico. Pilgrim's Pride employs more than 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with other facilities in Arizona, California, Iowa, Mississippi, Utah and Wisconsin.

Pilgrim's Pride products are sold to foodservice, retail and frozen entree customers. The Company's primary distribution is through retailers, foodservice distributors and restaurants throughout the United States and Puerto Rico and in the Northern and Central regions of Mexico.

For more information, please visit www.pilgrimspride.com

Forward-Looking Statements:
Statements contained in this press release that state the intentions, hopes, beliefs, anticipations, expectations or predictions of the future of Pilgrim's 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. Factors that could cause actual results to differ materially from those projected in such forward- looking statements include: additional outbreaks of avian influenza or other diseases affecting the production performance and/or marketability of the company's poultry products; matters affecting the poultry industry generally, including fluctuations in the commodity prices of feed ingredients, chicken and turkey; contamination of our products, which has recently and can in the future lead to product l iability 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 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 ConAgra's chicken business or realize the associated cost savings and operating synergies currently anticipated; inability to recognize the anticipated cost savings and anticipated benefits in connection with our turkey division restructuring; and the impact of uncertainties of litigation as well as other risks described under "Risk Factors" in our Annual Repor t on Form 10-K and subsequent filings with the Securities and Exchange Commission.

Contact:
Sondra Fowler
Pilgrim's Pride Corporation
(903) 855 4195
 
     
PILGRIM’S PRIDE CORPORATION
News Release
July 26, 2004
Page 3
 
 

Pilgrim’s Pride Corporation and Subsidiaries
Consolidated Statements of Income (in thousands except per share amounts)
(Unaudited)
Three Months Ended
  
July 3, 2004
June 28, 2003
  
Net Sales
  
$
1,447,995
  
$
651,877
  
Costs and Expenses:
    
 
    
 
  
Cost of sales
    
1,280,467
    
600,932
  
Non-recurring recoveries
    
--
    
(10,302
)
Selling, general, and administrative
    
78,209
    
35,107
  
Restructuring charges
    
52,202
    
--
 
   
 
 
 
    
1,410,878
    
625,737
  
   
 
 
Operating Income
    
37,117
    
26,140
  
Other Expenses (Income):
    
 
    
 
  
Interest expense, net
    
14,690
    
9,417
  
Foreign exchange loss
    
65
    
(334
)
Miscellaneous, net
    
285
    
(8,124
)
   
 
 
Total other expenses, net
    
15,040
    
959
  
   
 
 
Income before income taxes
    
22,077
    
25,181
  
Income tax expense
    
12,263
    
7,740
  
   
 
 
Net Income
  
$
9,814
  
$
17,441
  
   
 
 
Net income per common share
  
$
0.15
  
$
0.42
  
   
 
 
Dividends declared per share
  
$
0.015
  
$
0.015
  
   
 
 
Weighted average shares outstanding
    
66,555,733
    
41,112,679
  
   
 
 
Nine Months Ended
    
July 3, 2004
    
June 28, 2003
  
    
   
 
   
(40 Weeks) 
    
(39 Weeks
)
 
    
 
    
 
  
Net Sales
  
$
3,877,269
  
$
1,909,874
  
Costs and Expenses:
    
 
    
 
  
Cost of sales
    
3,505,547
    
1,805,257
  
Non-recurring recoveries
    
(76
)
  
(36,002
)
Selling, general, and administrative
    
190,160
    
102,728
  
Restructuring charges
    
52,202
    
--
  
   
 
 
 
    
3,747,833
    
1,871,983
  
   
 
 
Operating Income
    
129,436
    
37,891
  
Other Expenses (Income):
    
 
    
 
  
Interest expense, net
    
40,658
    
28,835
  
Foreign exchange loss
    
328
    
(466
)
Miscellaneous, net
    
1,222
    
(36,787
)
   
 
 
Total other expenses (income), net
    
42,208
    
(8,418
)
   
 
 
Income before income taxes
    
87,228
    
46,309
  
Income tax expense
    
34,178
    
15,346
  
   
 
 
Net Income
  
$
53,050
  
$
30,963
  
   
 
 
Net income per common share
  
$
0.86
  
$
0.75
  
   
 
 
Dividends declared per share
  
$
0.045
  
$
0.045
  
   
 
 
Weighted average shares outstanding
    
61,376,254
    
41,112,679
  
   
 
 
 
    
 
    
 
  
 
     
PILGRIM’S PRIDE CORPORATION
News Release
July 26, 2004
Page 4
 

Pilgrim’s Pride Corporation
Condensed Consolidated Balance Sheet (in thousands)
(Unaudited)
       
ASSETS
  
July 3, 2004
September 27, 2003
  
 
Cash
  
$
36,839
  
$
16,606
  
Other current assets
    
865,278
    
474,102
  
Total current assets
    
902,117
    
490,708
  
Other assets
    
85,581
    
31,302
  
Property, plant, and equipment, net
    
1,146,531
    
735,474
  
 
 
 
Total Assets
  
$
2,134,229
  
$
1,257,484
  
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
    
 
    
 
  
    
 
    
 
  
Current maturities of long-term debt
  
$
8,175
  
$
2,680
  
Other current liabilities
    
560,539
    
276,909
  
Total current liabilities
    
568,714
    
279,589
  
Long-term debt-less current maturities
    
591,297
    
415,965
  
Deferred income taxes
    
123,104
    
113,988
  
Minority interest in subsidiary
    
1,252
    
1,246
  
Total stockholders’ equity
    
849,862
    
446,696
  
 
 
 
Total Liabilities and Stockholders’ Equity
  
$
2,134,229
  
$
1,257,484
  
  
 
 

 
     
PILGRIM’S PRIDE CORPORATION
News Release
July 26, 2004
Page 5
 
 
Selected Financial Information (in thousands)
(Unaudited)
Note: “EBITDA” is defined as the sum of the net income (loss) before 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 Generally Accepted Accounting Principals (GAAP) results, to compare the performance of companies. EBITDA is not a measurement of financial performance under GAAP 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 GAAP, EBITDA is calculated as follows:
 
  
 
 
Three Months Ended
  
July 3, 2004
June 28, 2003
  
Net Income
  
$
9,814
  
$
17,441
  
Add:
    
 
    
 
  
Income tax expense
    
12,263
    
7,740
  
Interest expense, net
    
14,690
    
9,417
  
Depreciation and amortization
    
27,936
    
18,940
  
Minus:
    
 
    
 
  
Amortization of capitalized financing costs
    
409
    
307
  
   
 
 
EBITDA(a)
  
$
64,294
  
$
53,231
  
   
 
 
Capital expenditures
  
$
19,922
  
$
11,122
  
   
 
 
Nine Months Ended
    
July 3, 2004
    
June 28, 2003
  
  
 
 
Net Income
  
$
53,050
  
$
30,963
  
Add:
    
 
    
 
  
Income tax expense
    
34,178
    
15,346
  
Interest expense, net
    
40,658
    
28,835
  
Depreciation and amortization
    
86,933
    
54,253
  
Minus:
    
 
    
 
  
Amortization of capitalized financing costs
    
1,416
    
1,062
  
   
 
 
EBITDA(a)
  
$
213,403
  
$
128,335
  
   
 
 
Capital expenditures
  
$
59,902
  
$
36,146
  
   
 
 
 
    
 
    
 
  
 
    
July 3, 2004 
    
June 28, 2003
  
   
 
 
Other Data:
    
 
    
 
  
Current maturities of long-term debt
  
$
8,175
  
$
2,635
  
Long-term debt
    
591,297
    
480,150
  
   
 
 
Total Debt
  
$
599,472
  
$
482,785
  
   
 
 
 
    
 
    
 
  
(a)    Included in both the three and nine month periods ended July 3, 2004, EBITDA results were the restructuring and other related charges of $52.2 million and $11.7 million,
respectively, associated with the previously announced sale or closure of the Company’s Hinton, Virginia turkey operations.
 
 
 
     
PILGRIM’S PRIDE CORPORATION
News Release
July 26, 2004
Page 6
 
 
Pilgrim’s Pride Corporation
Proforma Financial Information (in thousands except per share amounts)
 
The unaudited proforma financial information has been presented as if the acquisition of the ConAgra chicken division had occurred as of the beginning of each period presented. For the three and nine month periods ended June 28, 2003, the ConAgra Chicken division information has been included with a one-month lag to the Pilgrim’s Pride reporting period in order to maintain their existing quarterly periods.
       
Three Months Ended
  
July 3, 2004
June 28, 2003
  
Net sales
  
$
1,447,995
  
$
1,251,241
  
Depreciation and amortization
  
$
27,936
  
$
35,900
  
Restructuring charges
  
$
52,202
    
--
  
Operating income
 
$
37,117
  
$
18,920
  
Interest expense, net
  
$
14,690
  
$
18,313
  
Income tax expense
  
$
12,263
  
$
3,445
  
Net income
  
$
9,814
  
$
5,620
  
Net income per common share
  
$
0.15
  
$
0.08
  
               
 
    
 
    
 
  
Nine Months Ended
    
July 3, 2004
    
June 28, 2004
  
  
 
 
Net sales
  
$
4,338,717
  
$
3,650,744
  
Depreciation and amortization
  
$
95,424
  
$
101,964
  
Restructuring charges
  
$
52,202
    
--
  
Operating income
 
$
154,542
  
$
12,694
  
Interest expense, net
  
$
45,029
  
$
53,500
  
Income tax expense (benefit)
  
$
42,319
  
$
(776
)
Net income (loss)
  
$
66,335
  
$
(1,265
)
Net income (loss) per common share
  
$
1.00
  
$
(.02
)