x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
||||
For
the transition period from
|
to
|
Delaware
|
75-1285071
|
(State
or other jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
incorporation
or organization)
|
|
4845
US Hwy 271 North
|
|
Pittsburg,
Texas
|
75686-0093
|
(Address
of principal executive offices)
|
(Zip
code)
|
Registrant’s
telephone number, including area code: (903)
434-1000
|
|
Securities
registered pursuant to Section 12(b) of the Act:
|
|
Title
of each class
|
Name
of each exchange on which registered
|
Common
Stock, Par Value $0.01
|
New
York Stock Exchange
|
Securities
registered pursuant to Section 12(g) of the Act:
None
|
PART I
|
||
Page
|
||
Item 1.
|
Business
|
4
|
Item 1A.
|
Risk Factors
|
24
|
Item 1B.
|
Unresolved Staff Comments
|
32
|
Item 2.
|
Properties
|
32
|
Item 3.
|
Legal Proceedings
|
33
|
Item 4.
|
Submission of Matters to a Vote of Security
Holders
|
35
|
PART II
|
||
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
|
36
|
Item 6.
|
Selected Financial Data
|
37
|
Item 7.
|
Management’s Discussion and Analysis of Financial
Condition and Results
|
|
of Operations
|
40
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures about
Market
Risk
|
58
|
Item 8.
|
Financial Statements and Supplementary Data (see
Index to
Financial Statements and
|
|
Schedules below)
|
59
|
|
Item 9.
|
Changes in and Disagreements with Accountants
on
Accounting and Financial
|
|
Disclosure
|
60
|
|
Item 9A.
|
Controls and Procedures
|
60
|
Item 9B.
|
Other Information
|
64
|
PART III
|
||
Item 10.
|
Directors and Executive Officers of the
Registrant
|
64
|
Item 11.
|
Executive Compensation
|
64
|
Item 12.
|
Security Ownership of Certain Beneficial Owners
and
Management and Related
|
|
Stockholder Matters
|
64
|
|
Item 13.
|
Certain Relationships and Related Transactions
|
64
|
Item 14.
|
Principal Accountant Fees and Services
|
65
|
PART IV
|
||
Item 15.
|
Exhibits and Financial Statement Schedules
|
65
|
Signatures
|
73
|
|
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
|
||
Report of Independent Registered Public Accounting
Firm
|
76
|
|
Consolidated Balance Sheets as of September 30,
2006 and
October 1, 2005
|
77
|
|
Consolidated Statements of Income (Loss) for each
of the
three years ended September 30, 2006
|
78
|
|
Consolidated Statements of Stockholders’ Equity for each
of the three years ended September 30, 2006
|
79
|
|
Consolidated Statements of Cash Flows for each
of the
three years ended September 30, 2006
|
80
|
|
Notes to Consolidated Financial Statements
|
81
|
|
Schedule II - Valuation and Qualifying Accounts
for each
of the three years ended September 30, 2006
|
102
|
|
Fiscal
Year Ended
|
||||||||||||||||
Sept.
30, 2006
|
Oct.
1, 2005
|
Oct.
2, 2004(a)
|
Sept.
27, 2003
|
Sept.
28, 2002
|
||||||||||||
(52
weeks)
|
(52
weeks)
|
(53
weeks)
|
(52
weeks)
|
(52
weeks)
|
||||||||||||
U.S.
Chicken Sales:
|
(in
thousands)
|
|||||||||||||||
Prepared
Foods:
|
||||||||||||||||
Foodservice
|
$
|
1,567,297
|
$
|
1,622,901
|
$
|
1,647,904
|
$
|
731,331
|
$
|
659,856
|
||||||
Retail
|
308,486
|
283,392
|
213,775
|
163,018
|
158,299
|
|||||||||||
Total
Prepared Foods
|
1,875,783
|
1,906,293
|
1,861,679
|
894,349
|
818,155
|
|||||||||||
Fresh
Chicken:
|
||||||||||||||||
Foodservice
|
1,388,451
|
1,509,189
|
1,328,883
|
474,251
|
448,376
|
|||||||||||
Retail
|
496,560
|
612,081
|
653,798
|
257,911
|
258,424
|
|||||||||||
Total
Fresh Chicken
|
1,885,011
|
2,121,270
|
1,982,681
|
732,162
|
706,800
|
|||||||||||
Export
and Other:
|
||||||||||||||||
Export:
|
||||||||||||||||
Prepared
Foods
|
64,338
|
59,473
|
34,735
|
26,714
|
30,528
|
|||||||||||
Chicken
|
257,823
|
303,150
|
212,611
|
85,087
|
93,575
|
|||||||||||
Total
Export(b)
|
322,161
|
362,623
|
247,346
|
111,801
|
124,103
|
|||||||||||
Other
Chicken By-Products
|
15,448
|
21,083
|
(b
|
)
|
(b
|
)
|
(b
|
)
|
||||||||
Total
Export and Other
|
337,609
|
383,706
|
247,346
|
111,801
|
124,103
|
|||||||||||
Total
U.S. Chicken
|
4,098,403
|
4,411,269
|
4,091,706
|
1,738,312
|
1,649,058
|
|||||||||||
Mexico
Chicken Sales:
|
418,745
|
403,353
|
362,442
|
349,305
|
323,769
|
|||||||||||
Total
Chicken Sales
|
4,517,148
|
4,814,622
|
4,454,148
|
2,087,617
|
1,972,827
|
|||||||||||
U.S.
Turkey Sales:
|
||||||||||||||||
Foodservice
|
30,269
|
73,908
|
120,676
|
138,405
|
170,770
|
|||||||||||
Retail
|
96,968
|
125,741
|
154,289
|
154,552
|
162,220
|
|||||||||||
127,237
|
199,649
|
274,965
|
292,957
|
332,990
|
||||||||||||
Export
and Other(b)
|
3,664
|
5,189
|
11,287
|
12,721
|
15,128
|
|||||||||||
Total
U.S. Turkey Sales
|
130,901
|
204,838
|
286,252
|
305,678
|
348,118
|
|||||||||||
Other
Products:
|
||||||||||||||||
United
States
|
570,510
|
626,056
|
600,091
|
207,284
|
193,691
|
|||||||||||
Mexico
|
17,006
|
20,759
|
23,232
|
18,766
|
19,082
|
|||||||||||
Total
Other Products
|
587,516
|
646,815
|
623,323
|
226,050
|
212,773
|
|||||||||||
Total
Net Sales
|
$
|
5,235,565
|
$
|
5,666,275
|
$
|
5,363,723
|
$
|
2,619,345
|
$
|
2,533,718
|
||||||
Total
Chicken Prepared Foods
|
$
|
1,940,121
|
$
|
1,965,766
|
$
|
1,896,414
|
$
|
921,063
|
$
|
848,683
|
Fiscal
Year Ended
|
||||||||||||||||
Sept.
30, 2006
|
Oct.
1, 2005
|
Oct.
2, 2004(a)
|
Sept.
27, 2003
|
Sept.
28, 2002
|
||||||||||||
U.S.
Chicken Sales:
|
||||||||||||||||
Prepared
Foods:
|
||||||||||||||||
Foodservice
|
38.2
|
36.8
|
40.3
|
42.1
|
39.9
|
|||||||||||
Retail
|
7.5
|
6.4
|
5.2
|
9.4
|
9.6
|
|||||||||||
Total
Prepared Foods
|
45.7
|
%
|
43.2
|
%
|
45.5
|
%
|
51.5
|
%
|
49.5
|
%
|
||||||
Fresh
Chicken:
|
||||||||||||||||
Foodservice
|
33.9
|
34.2
|
32.5
|
27.3
|
27.2
|
|||||||||||
Retail
|
12.1
|
13.9
|
16.0
|
14.8
|
15.7
|
|||||||||||
Total
Fresh Chicken
|
46.0
|
%
|
48.1
|
%
|
48.5
|
%
|
42.1
|
%
|
42.9
|
%
|
||||||
Export
and Other:
|
||||||||||||||||
Export:
|
||||||||||||||||
Prepared
Foods
|
1.6
|
1.3
|
0.8
|
1.5
|
1.9
|
|||||||||||
Chicken
|
6.3
|
6.9
|
5.2
|
4.9
|
5.7
|
|||||||||||
Total
Export(b)
|
7.9
|
8.2
|
6.0
|
6.4
|
7.6
|
|||||||||||
Other
Chicken By-Products
|
0.4
|
0.5
|
(b
|
)
|
(b
|
)
|
(b
|
)
|
||||||||
Total
Export and Other
|
8.3
|
%
|
8.7
|
%
|
6.0
|
%
|
6.4
|
%
|
7.6
|
%
|
||||||
Total
U.S. Chicken
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||
Total
Chicken Prepared Foods as a percentage of U.S. Chicken
|
47.3
|
%
|
44.5
|
%
|
46.3
|
%
|
53.0
|
%
|
51.4
|
%
|
||||||
U.S.
Turkey Sales:
|
||||||||||||||||
Foodservice
|
23.1
|
36.0
|
42.1
|
45.3
|
49.1
|
|||||||||||
Retail
|
74.1
|
61.4
|
53.9
|
50.5
|
46.6
|
|||||||||||
97.2
|
%
|
97.4
|
%
|
96.0
|
%
|
95.8
|
%
|
95.7
|
%
|
|||||||
Export
and Other(b)
|
2.8
|
2.6
|
4.0
|
4.2
|
4.3
|
|||||||||||
Total
U.S. Turkey
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||
Name
|
Age
|
Positions
|
Lonnie
"Bo" Pilgrim
|
78
|
Chairman
of the Board
|
Clifford
E. Butler
|
64
|
Vice
Chairman of the Board
|
O.B.
Goolsby, Jr.
|
59
|
President,
Chief Executive Officer, and Director
|
Richard
A. Cogdill
|
46
|
Chief
Financial Officer
|
Secretary,
Treasurer and Director
|
||
J.
Clinton Rivers
|
47
|
Chief
Operating Officer
|
Robert
A. Wright
|
52
|
Executive
Vice President of
|
Sales
and Marketing
|
•
|
Lack
of experience in operating in the geographical market of the
acquired
business;
|
· |
Increase
our vulnerability to general adverse economic conditions;
|
· |
Limit
our ability to obtain necessary financing and to fund future working
capital, capital expenditures and other general corporate requirements;
|
· |
Require
us to dedicate a substantial portion of our cash flow from operations
to
payments on our indebtedness, thereby reducing the availability
of our
cash flow to fund working capital, capital expenditures and for
other
general corporate purposes;
|
· |
Limit
our flexibility in planning for, or reacting to, changes in our
business
and the industry in which we operate;
|
· |
Place
us at a competitive disadvantage compared to our competitors that
have
less debt;
|
· |
Limit
our ability to pursue acquisitions and sell assets; and
|
· |
Limit,
along with the financial and other restrictive covenants in our
indebtedness, our ability to borrow additional funds. Failing to
comply
with those covenants could result in an event of default or require
redemption of indebtedness. Either of these events could have a
material
adverse effect on us.
|
•
|
Changes
in laws and policies, including those governing foreign-owned
operations.
|
Prices
2006
|
Prices
2005
|
Dividends
|
|||||||||||||||||
Quarter
|
High
|
Low
|
High
|
Low
|
2006
|
2005
|
|||||||||||||
PPC
Common Stock
|
|||||||||||||||||||
First
|
$
|
37.75
|
$
|
30.11
|
$
|
35.00
|
$
|
25.76
|
$
|
1.0225
|
$
|
.015
|
|||||||
Second
|
27.00
|
20.95
|
39.85
|
28.84
|
.0225
|
.015
|
|||||||||||||
Third
|
28.09
|
20.85
|
38.61
|
33.32
|
.0225
|
.015
|
|||||||||||||
Fourth
|
29.00
|
23.11
|
40.23
|
30.91
|
.0225
|
.015
|
|||||||||||||
(In
thousands, except ratios and per share data)
|
Eleven
Years Ended September 30, 2006
|
||||||||||||
2006
|
2005
|
2004(a)(b)
|
2003
|
||||||||||
(53
weeks)
|
|||||||||||||
Income
Statement Data:
|
|||||||||||||
Net
sales
|
$
|
5,235,565
|
$
|
5,666,275
|
$
|
5,363,723
|
$
|
2,619,345
|
|||||
Gross
profit(d)
|
297,600
|
745,199
|
529,039
|
200,483
|
|||||||||
Operating
income(d)
|
3,002
|
435,812
|
265,314
|
63,613
|
|||||||||
Interest
expense, net
|
40,553
|
43,932
|
52,129
|
37,981
|
|||||||||
Income
(loss) before income taxes(d)
|
(36,317
|
)
|
403,523
|
208,535
|
63,235
|
||||||||
Income
tax expense (benefit)(e)
|
(2,085
|
)
|
138,544
|
80,195
|
7,199
|
||||||||
Net
income (loss)(d)
|
(34,232
|
)
|
264,979
|
128,340
|
56,036
|
||||||||
Ratio
of earnings to fixed charges(f)
|
(f
|
)
|
7.19x
|
4.08x
|
2.24x
|
||||||||
Per
Common Share Data:(g)
|
|||||||||||||
Net
income (loss)
|
$
|
(0.51
|
)
|
$
|
3.98
|
$
|
2.05
|
$
|
1.36
|
||||
Cash
dividends
|
1.090
|
0.06
|
0.06
|
0.06
|
|||||||||
Book
value
|
16.79
|
18.38
|
13.87
|
10.46
|
|||||||||
Balance
Sheet Summary:
|
|||||||||||||
Working
capital
|
$
|
528,836
|
$
|
404,601
|
$
|
383,726
|
$
|
211,119
|
|||||
Total
assets
|
2,426,868
|
2,511,903
|
2,245,989
|
1,257,484
|
|||||||||
Notes
payable and current maturities of long-term debt
|
10,322
|
8,603
|
8,428
|
2,680
|
|||||||||
Long-term
debt, less current maturities
|
554,876
|
518,863
|
535,866
|
415,965
|
|||||||||
Total
stockholders’ equity
|
1,117,327
|
1,223,598
|
922,956
|
446,696
|
|||||||||
Cash
Flow Summary:
|
|||||||||||||
Operating
cash flow
|
$
|
30,382
|
$
|
493,073
|
$
|
272,404
|
$
|
98,892
|
|||||
Depreciation
& amortization(h)
|
135,133
|
134,944
|
113,788
|
74,187
|
|||||||||
Purchases
of investment securities
|
318,266
|
305,458
|
--
|
--
|
|||||||||
Proceeds
from sale or maturity of investment securities
|
490,764
|
--
|
--
|
--
|
|||||||||
Capital
expenditures
|
143,882
|
116,588
|
79,642
|
53,574
|
|||||||||
Business
acquisitions, net of equity consideration(a)(c)
|
--
|
--
|
272,097
|
4,499
|
|||||||||
Financing
activities, net provided by (used in)
|
(38,750
|
)
|
18,860
|
96,665
|
(39,767
|
)
|
|||||||
Other
Data:
|
|||||||||||||
EBITDA(i)
|
$
|
136,763
|
$
|
580,078
|
$
|
372,501
|
$
|
173,926
|
|||||
Key
Indicators (as a percentage of net sales):
|
|||||||||||||
Gross
profit(d)
|
5.7
|
%
|
13.2
|
%
|
9.9
|
%
|
7.7
|
%
|
|||||
Selling,
general and
administrative
expenses
|
5.6
|
%
|
5.5
|
%
|
4.8
|
%
|
5.2
|
%
|
|||||
Operating
income (d)
|
0.8
|
%
|
7.7
|
%
|
4.9
|
%
|
2.4
|
%
|
|||||
Interest
expense, net
|
1.0
|
%
|
0.9
|
%
|
1.0
|
%
|
1.5
|
%
|
|||||
Net
income (loss)(d)
|
(0.7
|
)%
|
4.7
|
%
|
2.4
|
%
|
2.1
|
%
|
Eleven
Years Ended September 30, 2006
|
||||||||||||||||||||||
2002
|
2001(c)
|
2000
|
1999
|
1998
|
1997
|
1996
|
||||||||||||||||
(53
weeks)
|
||||||||||||||||||||||
$
|
2,533,718
|
$
|
2,214,712
|
$
|
1,499,439
|
$
|
1,357,403
|
$
|
1,331,545
|
$
|
1,277,649
|
$
|
1,139,310
|
|||||||||
165,165
|
213,950
|
165,828
|
185,708
|
136,103
|
114,467
|
70,640
|
||||||||||||||||
29,904
|
94,542
|
80,488
|
109,504
|
77,256
|
63,894
|
21,504
|
||||||||||||||||
32,003
|
30,775
|
17,779
|
17,666
|
20,148
|
22,075
|
21,539
|
||||||||||||||||
1,910
|
61,861
|
62,786
|
90,904
|
56,522
|
43,824
|
(4,533
|
)
|
|||||||||||||||
(12,425
|
)
|
20,724
|
10,442
|
25,651
|
6,512
|
2,788
|
2,751
|
|||||||||||||||
14,335
|
41,137
|
52,344
|
65,253
|
50,010
|
41,036
|
(7,284
|
)
|
|||||||||||||||
|
(f)
|
2.13x
|
3.04x
|
4.33x
|
2.96x
|
2.57x
|
(f
|
)
|
||||||||||||||
$
|
0.35
|
$
|
1.00
|
$
|
1.27
|
$
|
1.58
|
$
|
1.21
|
$
|
0.99
|
$
|
(0.18
|
)
|
||||||||
0.06
|
0.06
|
0.06
|
0.045
|
0.04
|
0.04
|
0.04
|
||||||||||||||||
9.59
|
9.27
|
8.33
|
7.11
|
5.58
|
4.41
|
3.46
|
||||||||||||||||
$
|
179,037
|
$
|
203,350
|
$
|
124,531
|
$
|
154,242
|
$
|
147,040
|
$
|
133,542
|
$
|
88,455
|
|||||||||
1,227,890
|
1,215,695
|
705,420
|
655,762
|
601,439
|
579,124
|
536,722
|
||||||||||||||||
3,483
|
5,099
|
4,657
|
4,353
|
5,889
|
11,596
|
35,850
|
||||||||||||||||
450,161
|
467,242
|
165,037
|
183,753
|
199,784
|
224,743
|
198,334
|
||||||||||||||||
394,324
|
380,932
|
342,559
|
294,259
|
230,871
|
182,516
|
143,135
|
||||||||||||||||
$
|
98,113
|
$
|
87,833
|
$
|
130,803
|
$
|
$81,452
|
$
|
85,016
|
$
|
49,615
|
$
|
11,391
|
|||||||||
70,973
|
55,390
|
36,027
|
34,536
|
32,591
|
29,796
|
28,024
|
||||||||||||||||
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
80,388
|
112,632
|
92,128
|
69,649
|
53,518
|
50,231
|
34,314
|
||||||||||||||||
|
--
|
239,539
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
(21,793
|
)
|
246,649
|
(24,769
|
)
|
(19,634
|
)
|
(32,498
|
)
|
348
|
27,313
|
||||||||||||
$
|
103,469
|
$
|
146,166
|
$
|
115,356
|
$
|
142,043
|
$
|
108,268
|
$
|
94,782
|
$
|
43,269
|
|||||||||
6.5
|
%
|
9.7
|
%
|
11.1
|
%
|
13.7
|
%
|
10.2
|
%
|
9.0
|
%
|
6.2
|
%
|
|||||||||
5.3
|
%
|
5.4
|
%
|
5.7
|
%
|
5.6
|
%
|
4.4
|
%
|
4.0
|
%
|
4.3
|
%
|
|||||||||
1.2
|
%
|
4.3
|
%
|
5.4
|
%
|
8.1
|
%
|
5.8
|
%
|
5.0
|
%
|
1.9
|
%
|
|||||||||
1.3
|
%
|
1.4
|
%
|
1.2
|
%
|
1.3
|
%
|
1.5
|
%
|
1.7
|
%
|
1.9
|
%
|
|||||||||
0.6
|
%
|
1.9
|
%
|
3.5
|
%
|
4.8
|
%
|
3.8
|
%
|
3.2
|
%
|
(0.6
|
)%
|
(a)
|
The
Company acquired the ConAgra chicken division on November 23,
2003 for
$635.2 million including the non-cash value of common stock issued
of
$357.5 million. The acquisition has been accounted for as a purchase
and
the results of operations for this acquisition have been included
in our
consolidated results of operations since the acquisition
date.
|
|
|
(b)
|
On
April 26, 2004, the Company announced a plan to restructure its
turkey
division, including the sale of some facilities in Virginia.
The
facilities were sold in the fourth quarter of fiscal 2004. In
connection
with the restructuring, the Company recorded in cost of
sales-restructuring charges of approximately $64.2 million and
$7.9
million of other restructuring charges.
|
(c)
|
The
Company acquired WLR Foods on January 27, 2001 for $239.5 million
and the
assumption of $45.5 million of indebtedness. The acquisition
has been
accounted for as a purchase and the results of operations for
this
acquisition have been included in our consolidated results of
operations
since the acquisition date.
|
(d)
|
Gross
profit, operating income and other income include the following
non-recurring recoveries, restructuring charges and other unusual
items
for each of the years presented (in
millions):
|
2005
|
2004
|
2003
|
||||||||
Effect
on Gross Profit and Operating Income:
|
||||||||||
Cost
of sales-restructuring
|
$
|
--
|
$
|
(64.2
|
)
|
$
|
--
|
|||
Non-recurring
recoveries recall insurance
|
$
|
--
|
$
|
23.8
|
$
|
--
|
||||
Non-recurring
recoveries for avian influenza
|
$
|
--
|
$
|
--
|
$
|
26.6
|
||||
Non-recurring recoveries for vitamin and methionine
litigation
|
$
|
--
|
$
|
0.1
|
$
|
19.9
|
||||
Additional
effect on Operating Income:
|
||||||||||
Other
restructuring charges
|
$
|
--
|
$
|
(7.9
|
)
|
$
|
--
|
|||
Other
income for litigation settlement
|
11.7
|
--
|
--
|
|||||||
Other
income for vitamin and methionine litigation
|
$
|
--
|
$
|
0.9
|
$
|
36.0
|
In
addition, the Company estimates its losses related to the October
2002
recall (excluding the insurance recovery described above) and
the 2002
avian influenza outbreak negatively affected gross profit and
operating
income in each of the years presented as follows (in
millions):
|
2004
|
2003
|
2002
|
||||||||
Recall
effects (estimated)
|
$
|
(20.0
|
)
|
$
|
(65.0
|
)
|
$
|
--
|
||
Losses
from avian influenza (estimated)
|
$
|
--
|
$
|
(7.3
|
)
|
$
|
(25.6
|
)
|
(e)
|
Fiscal
2006 included income tax expense of $25.8 million associated
with the
restructuring of the Mexico operations and subsequent repatriation
of
foreign earnings under American Jobs Creation Act of 2004. Fiscal
2003
included a non-cash tax benefit of $16.9 million associated with
the
reversal of a valuation allowance on net operating losses in
the Company’s
Mexico operations. Fiscal 2002 included a tax benefit of $11.9
million
from changes in Mexican tax laws.
|
(f)
|
For
purposes of computing the ratio of earnings to fixed charges,
earnings
consist of income before income taxes plus fixed charges (excluding
capitalized interest). Fixed charges consist of interest (including
capitalized interest) on all indebtedness, amortization of capitalized
financing costs and that portion of rental expense that we believe
to be
representative of interest. Earnings were inadequate to cover
fixed
charges by $40.6 million, $4.1 million and $5.8 million in fiscal
2006,
2002 and 1996, respectively.
|
|
|
(g)
|
Historical
per share amounts represent both basic and diluted and have been
restated
to give effect to a stock dividend issued on July 30, 1999. The
stock
reclassification on November 21, 2003 that resulted in the new
common
stock traded as PPC did not affect the number of shares
outstanding.
|
|
|
(h)
|
Includes
amortization of capitalized financing costs of approximately
$2.6 million,
$2.3 million, $2.0 million, $1.5 million, $1.4 million, $1.9
million, $1.2
million, $1.1 million, $1.0 million, $0.9 million and $1.8 million
in
fiscal years 2006, 2005, 2004, 2003, 2002, 2001, 2000, 1999,
1998, 1997
and 1996, respectively.
|
|
|
(i)
|
“EBITDA”
is defined as the sum of 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 Principles (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.
|
2006
|
2005
|
2004
|
2003
|
2002
|
2001
|
2000
|
1999
|
1998
|
1997
|
1996
|
||||||||||||||||||||||||
Net
Income (loss)
|
$ |
(34,232
|
)
|
$
|
264,979
|
$
|
128,340
|
$
|
56,036
|
$
|
14,335
|
$
|
41,137
|
$
|
52,344
|
$
|
65,253
|
$
|
50,010
|
$
|
41,036
|
$
|
(7,284
|
)
|
||||||||||
Add:
|
||||||||||||||||||||||||||||||||||
Interest
expense, net
|
40,553
|
43,932
|
52,129
|
37,981
|
32,003
|
30,775
|
17,779
|
17,666
|
20,148
|
22,075
|
21,539
|
|||||||||||||||||||||||
In
Income tax expense (benefit)
|
(2,085
|
)
|
138,544
|
80,195
|
7,199
|
(12,425
|
)
|
20,724
|
10,442
|
25,651
|
6,512
|
2,788
|
2,751
|
|||||||||||||||||||||
D Depreciation
and amortization(h)
|
135,133
|
134,944
|
113,788
|
74,187
|
70,973
|
55,390
|
36,027
|
34,536
|
32,591
|
29,796
|
28,024
|
|||||||||||||||||||||||
Minus:
|
||||||||||||||||||||||||||||||||||
A Amortization
of capitalized financing costs(h)
|
2,606
|
2,321
|
1,951
|
1,477
|
1,417
|
1,860
|
1,236
|
1,063
|
993
|
913
|
1,761
|
|||||||||||||||||||||||
EBITDA
|
$
|
136,763
|
$
|
580,078
|
$
|
372,501
|
$
|
173,926
|
$
|
103,469
|
$
|
146,166
|
$
|
115,356
|
$
|
142,043
|
$
|
108,268
|
$
|
94,782
|
$
|
43,269
|
· |
First,
we have delayed one-half of our planned expansion in the Fresh
Food
Service Division of our Mayfield, Kentucky plant from early July
until
mid-September of this year, and the other half of this expansion
from
early July 2006 until June 2007.
|
· |
Second,
beginning on July 1, 2006, we reduced our weekly slaughter rate
by
approximately 3%, which is equivalent to approximately 830,000
head per
week. In addition, we recently announced a further reduced weekly
slaughter to achieve a 5% year-over-year decline, which is equivalent
to
approximately 1.3 million head per week, beginning in January 2007.
We
currently intend to keep this reduction in slaughter in effect
until we
believe that the average industry profit margins have returned
to a more
normalized level.
|
· |
Third,
we reduced our capital investments for fiscal 2006 to $144
million. Our original capital investment projection for the year had
been in the range of $180-$200 million. Our estimated range for
fiscal 2007 is $140-$160 million. We are focusing only on those
projects we deem critically necessary to our business or those in
which our immediate investment is judged by us to be
in our best long-term interests.
|
· |
Fourth,
we have sharpened our focus on reducing costs and operating more
efficiently.
|
· |
Reduced
selling prices for chicken primarily created by market disruptions
caused
by the avian influenza scares in other parts of the world. Reduced
selling
prices for our Mexico produced chicken partially offset by an increase
in
pounds sold in Mexico.
|
· |
Increased
cost of sales due to higher energy and packaging
costs.
|
· |
Tax
expense of $25.8 million related to the restructuring of our Mexico
operations and subsequent repatriation of foreign earnings under
the
American Jobs Creation Act of 2004.
|
Fiscal
Year Ended
|
||||||||||
September
30, 2006
|
October
1, 2005
|
October
2, 2004(a)
|
||||||||
(In
thousands)
|
||||||||||
Net
Sales to Customers:
|
||||||||||
Chicken:
|
||||||||||
United
States
|
$
|
4,098,403
|
$
|
4,411,269
|
$
|
4,091,706
|
||||
Mexico
|
418,745
|
403,353
|
362,442
|
|||||||
Sub-total
|
4,517,148
|
4,814,622
|
4,454,148
|
|||||||
Turkey
|
130,901
|
204,838
|
286,252
|
|||||||
Other
Products:
|
||||||||||
United
States
|
570,510
|
626,056
|
600,091
|
|||||||
Mexico
|
17,006
|
20,759
|
23,232
|
|||||||
Sub-total
|
587,516
|
646,815
|
623,323
|
|||||||
Total
|
$
|
5,235,565
|
$
|
5,666,275
|
$
|
5,363,723
|
||||
Operating
Income (Loss):
|
||||||||||
Chicken:
|
||||||||||
United
States
|
$
|
28,619
|
$
|
405,662
|
$
|
329,694
|
||||
Mexico
|
(17,960
|
)
|
39,809
|
(7,619
|
)
|
|||||
Sub-total
|
10,659
|
445,471
|
322,075
|
|||||||
Turkey(b)
|
(15,511
|
)
|
(22,539
|
)
|
(96,839
|
)
|
||||
Other
Products:
|
||||||||||
United
States
|
6,216
|
8,250
|
35,969
|
|||||||
Mexico
|
1,638
|
4,630
|
4,033
|
|||||||
Sub-total
|
7,854
|
12,880
|
40,002
|
|||||||
Non-recurring
recoveries
|
--
|
--
|
76
|
|||||||
Total
|
$
|
3,002
|
$
|
435,812
|
$
|
265,314
|
||||
Depreciation
and Amortization:(c)
|
||||||||||
Chicken:
|
||||||||||
United
States
|
$
|
109,346
|
$
|
114,131
|
$
|
89,767
|
||||
Mexico
|
11,305
|
12,085
|
12,217
|
|||||||
Sub-total
|
120,651
|
126,216
|
101,984
|
|||||||
Turkey
|
6,593
|
3,343
|
6,887
|
|||||||
Other
Products:
|
||||||||||
United
States
|
7,743
|
5,196
|
4,773
|
|||||||
Mexico
|
146
|
189
|
144
|
|||||||
Sub-total
|
7,889
|
5,385
|
4,917
|
|||||||
Total
|
$
|
135,133
|
$
|
134,944
|
$
|
113,788
|
||||
Total
Assets:
|
||||||||||
Chicken:
|
||||||||||
United
States
|
$
|
1,897,763
|
$
|
2,059,579
|
$
|
1,830,051
|
||||
Mexico
|
361,887
|
287,414
|
212,492
|
|||||||
Sub-total
|
2,259,650
|
2,346,993
|
2,042,543
|
|||||||
Turkey
|
76,908
|
77,319
|
122,163
|
|||||||
Other
Products:
|
||||||||||
United
States
|
88,650
|
85,581
|
78,754
|
|||||||
Mexico
|
1,660
|
2,010
|
2,529
|
|||||||
Sub-total
|
90,310
|
87,591
|
81,283
|
|||||||
Total
|
$
|
2,426,868
|
$
|
2,511,903
|
$
|
2,245,989
|
||||
Capital
Expenditures:
|
||||||||||
Chicken:
|
||||||||||
United
States
|
$
|
133,106
|
$
|
102,470
|
$
|
54,433
|
||||
Mexico
|
6,536
|
4,924
|
8,640
|
|||||||
Sub-total
|
139,642
|
107,394
|
63,073
|
|||||||
Turkey
|
257
|
3,604
|
8,151
|
|||||||
Other
Products:
|
||||||||||
United
States
|
3,567
|
5,448
|
8,395
|
|||||||
Mexico
|
416
|
142
|
23
|
|||||||
Sub-total
|
3,983
|
5,590
|
8,418
|
|||||||
Total
|
$
|
143,882
|
$
|
116,588
|
$
|
79,642
|
(a)
|
The
Company acquired the ConAgra chicken division on November 23,
2003 for
$635.2 million. The acquisition has been accounted for as a purchase
and
the results of operations for this acquisition have been included
in our
consolidated results of operations since the acquisition
date.
|
(b)
|
Included
in fiscal 2004 are restructuring charges totaling $72.1 million
offset
somewhat by the non-recurring recovery of $23.8 million representing
the
gain recognized on the insurance proceeds received in connection
with the
October 2002 recall. In addition, the Company estimates its losses
related
to the October 2002 recall (excluding the insurance recovery
described
above) negatively affected gross profit and operating income
by $20.0
million in fiscal 2004 and $65.0 million in fiscal
2003.
|
(c)
|
Includes
amortization of capitalized financing costs of approximately
$2.6 million,
$2.3 million and $2.0 million in fiscal years 2006, 2005 and
2004,
respectively.
|
September
30,
2006
|
October
1,
2005
|
October
2,
2004
|
||||||||
Net
sales
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||
Cost
and Expenses
|
||||||||||
Cost
of sales
|
94.3
|
86.8
|
89.4
|
|||||||
Cost
of sales-restructuring
|
--
|
--
|
1.2
|
|||||||
Non-recurring
recoveries
|
--
|
--
|
(0.4
|
)
|
||||||
Gross
profit
|
5.7
|
13.2
|
9.9
|
|||||||
Selling,
general and administrative expense
|
5.6
|
5.5
|
4.8
|
|||||||
Other
restructuring charges
|
--
|
--
|
0.1
|
|||||||
Operating
income
|
0.1
|
7.7
|
4.9
|
|||||||
Interest
expense, net
|
0.8
|
0.7
|
1.0
|
|||||||
Income
(loss) before income taxes
|
(0.7
|
)
|
7.1
|
3.9
|
||||||
Net
income (loss)
|
(0.7
|
)
|
4.7
|
2.4
|
||||||
Fiscal
Year Ended
|
||||||||||||||||
September
30,
|
Change
from
|
Percentage
|
||||||||||||||
Source
|
2006
|
Fiscal
2005
|
Change
|
|||||||||||||
Chicken:
|
||||||||||||||||
United
States
|
$
|
4,098.4
|
$
|
(312.8
|
)
|
(7.1
|
)%
|
(a
|
)
|
|||||||
Mexico
|
418.7
|
15.3
|
3.8
|
%
|
(b
|
)
|
||||||||||
$
|
4,517.1
|
$
|
(297.5
|
)
|
(6.2
|
)%
|
||||||||||
Turkey
|
$
|
130.9
|
$
|
(73.9
|
)
|
(36.1
|
)%
|
(c
|
)
|
|||||||
Other
products:
|
||||||||||||||||
United
States
|
$
|
570.6
|
$
|
(55.5
|
)
|
(8.9
|
)%
|
(d
|
)
|
|||||||
Mexico
|
17.0
|
(3.8
|
)
|
(18.3
|
)%
|
(e
|
)
|
|||||||||
$
|
587.6
|
$
|
(59.3
|
)
|
(9.2
|
)%
|
||||||||||
Net
Sales
|
$
|
5,235.6
|
$
|
(430.7
|
)
|
(7.6
|
)%
|
(a)
|
U.S.
chicken sales declined primarily due to 15.8% lower breast meat
prices and
19.7% lower leg quarter prices and 2.3% reduction in
volume.
|
(b)
|
Mexico
chicken sales increased compared to fiscal year 2005, due primarily
to
increases in production, partially offset by a 9.1% decrease
in pricing
per pound sold.
|
(c)
|
Turkey
sales declined due to our decision in the first quarter of fiscal
2006 to
cease production of certain products at our Franconia, Pennsylvania
turkey
cooking operations.
|
(d)
|
U.S.
sales of other products decreased primarily due to the divesture
of
certain distribution centers whose sales included a large volume
of
non-poultry products.
|
(e)
|
Mexico
other products sales decreased due to reduced sales volumes of
commercial
feed.
|
Fiscal
Year Ended
|
Percentage
|
Percentage
|
||||||||||||||||||||
September
30,
|
Change
from
|
Percentage
|
of
Net Sales
|
of
Net Sales
|
||||||||||||||||||
Components
|
2006
|
Fiscal
2005
|
Change
|
Fiscal
2006
|
Fiscal
2005
|
|||||||||||||||||
Net
sales
|
$
|
5,235.6
|
$
|
(430.7
|
)
|
(7.6
|
)%
|
100.0
|
%
|
100.0
|
%
|
|||||||||||
Cost
of sales
|
4,938.0
|
16.9
|
0.3
|
%
|
94.3
|
%
|
86.8
|
%
|
(a
|
)
|
||||||||||||
Gross
profit
|
$
|
297.6
|
$
|
(447.6
|
)
|
(60.1
|
)%
|
5.7
|
%
|
13.2
|
%
|
(a)
|
Cost
of sales in the U.S. chicken operations increased $71.8 million
due
primarily to increased energy, and packaging costs. Cost of sales
in our
turkey operations decreased significantly because of the restructuring
of
this division in fiscal 2004 and first quarter of fiscal 2006.
Cost of
sales in our Mexico chicken operations increased $71.6 million
primarily
due to a 9.7% increase in production volumes.
|
Fiscal
Year Ended
|
|||||||||||||
September
30,
|
Change
from
|
Percentage
|
|||||||||||
Source
|
2006
|
Fiscal
2005
|
Change
|
||||||||||
Chicken:
|
|||||||||||||
United
States
|
$
|
28.6
|
$
|
(377.1
|
)
|
(93.0
|
)%
|
||||||
Mexico
|
(17.9
|
)
|
(57.7
|
)
|
(145.0
|
)%
|
|||||||
$
|
10.7
|
$
|
(434.8
|
)
|
(97.6
|
)%
|
|||||||
Turkey
|
$
|
(15.5
|
)
|
$
|
7.0
|
31.1
|
%
|
||||||
Other
Products:
|
|||||||||||||
United
States
|
$
|
6.2
|
$
|
(2.0
|
)
|
(24.4
|
)%
|
||||||
Mexico
|
1.6
|
(3.0
|
)
|
(65.2
|
)%
|
||||||||
$
|
7.8
|
$
|
(5.0
|
)
|
(39.1
|
)%
|
|||||||
Non-recurring
recoveries
|
--
|
--
|
--
|
||||||||||
Operating
Income
|
$
|
3.0
|
$
|
(432.8
|
)
|
(99.3
|
)%
|
Fiscal
Year Ended
|
Percentage
|
Percentage
|
||||||||||||||||||||
September
30,
|
Change
from
|
Percentage
|
of
Net Sales
|
of
Net Sales
|
||||||||||||||||||
Components
|
2006
|
Fiscal
2005
|
Change
|
Fiscal
2006
|
Fiscal
2005
|
|||||||||||||||||
Gross
profit
|
$
|
297.6
|
$
|
(447.6
|
)
|
(60.1
|
)%
|
5.7
|
%
|
13.2
|
%
|
|||||||||||
Selling,
general and administrative expense
|
294.6
|
(14.8
|
)
|
(4.8
|
)%
|
5.6
|
%
|
5.5
|
%
|
(a
|
)
|
|||||||||||
Operating
income
|
$
|
3.0
|
$
|
(432.8
|
)
|
(99.3
|
)%
|
0.1
|
%
|
7.7
|
%
|
(b
|
)
|
(a)
|
Selling,
general and administrative expense decreased due primarily to
a decrease
in costs associated with our profit-based retirement and compensation
plans.
|
(b)
|
The
decrease in operating income when compared to fiscal 2005 is
due primarily
to lower market pricing for chicken products, as well as increased
costs
for energy and packaging.
|
Fiscal
Year Ended
|
|||||||||||||
October
1,
|
Change
from
|
Percentage
|
|||||||||||
Source
|
2005
|
Fiscal
2004
|
Change
|
||||||||||
Chicken:
|
|||||||||||||
United
States
|
$
|
4,411.2
|
$
|
319.5
|
7.8
|
%
|
(a
|
)
|
|||||
Mexico
|
403.4
|
41.0
|
11.3
|
%
|
(b
|
)
|
|||||||
$
|
4,814.6
|
$
|
360.5
|
8.1
|
%
|
||||||||
Turkey
|
$
|
204.8
|
$
|
(81.5
|
)
|
(28.5
|
)%
|
(c
|
)
|
||||
Other
Products:
|
|||||||||||||
United
States
|
$
|
626.1
|
$
|
26.0
|
4.3
|
%
|
(d
|
)
|
|||||
Mexico
|
20.8
|
(2.4
|
)
|
(10.3
|
)%
|
(e
|
)
|
||||||
$
|
646.9
|
$
|
23.6
|
3.8
|
%
|
||||||||
Net
Sales
|
$
|
5,666.3
|
$
|
302.6
|
5.6
|
%
|
(a)
|
U.S.
chicken sales increased primarily due to the inclusion of the
fiscal 2004
acquisition for 52 weeks in fiscal 2005 versus 45 weeks in fiscal
2004.
|
(b)
|
Mexico
chicken sales after adjusting for a 52-week year in 2004 increased
primarily due to a 14.8% increase in total revenue per pound
produced,
partially offset by a 1.3% decline in dressed pounds
produced.
|
(c)
|
The
decrease in turkey sales was due primarily to our fiscal 2004
restructuring of our turkey operations. See “Note B - Restructuring
Charges and Non-Recurring Recoveries” of the notes to Consolidated
Financial Statements included elsewhere herein. We estimate that
commodity
sales in our turkey division decreased by approximately $55 million
in
fiscal 2005 as a result of this restructuring.
|
(d)
|
U.S.
sales of other products increased primarily due to the inclusion
of the
distribution centers of the fiscal 2004 acquisition for 52 weeks
in fiscal
2005 versus 45 weeks in fiscal 2004. Also affecting the U.S.
sales of
other products was a decline in pricing for products at our commercial
egg
operations and our rendering plants.
|
(e)
|
Mexico
other products sales decreased due to reduced sales volumes of
our
commercial feed.
|
Fiscal
Year Ended
|
Change
|
Percentage
|
Percentage
|
|||||||||||||||||||
October
1,
|
from
|
Percentage
|
of
Net Sales
|
of
Net Sales
|
||||||||||||||||||
Components
|
2005
|
Fiscal
2004
|
Change
|
Fiscal
2005
|
Fiscal
2004
|
|||||||||||||||||
Net
sales
|
$
|
5,666.3
|
$
|
302.6
|
5.6
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||||||||
Cost
of sales
|
4,921.1
|
126.7
|
2.6
|
%
|
86.8
|
%
|
89.4
|
%
|
(a
|
)
|
||||||||||||
Cost
of sales-restructuring
|
--
|
(64.2
|
)
|
--
|
--
|
%
|
1.2
|
%
|
(b
|
)
|
||||||||||||
Non-recurring
recoveries
|
--
|
23.9
|
--
|
--
|
%
|
(0.4
|
)%
|
(c
|
)
|
|||||||||||||
Gross
profit
|
$
|
745.2
|
$
|
216.2
|
40.9
|
%
|
13.2
|
%
|
9.9
|
%
|
||||||||||||
(a)
|
Cost
of sales in the U.S. chicken operations increased $180.0 million
due
primarily to the fiscal 2004 acquisition, offset partially by
the cost of
feed ingredient purchases averaging 17% lower in cost in fiscal
2005
compared to the prior year. Cost of sales in our turkey operations
decreased significantly because of the restructuring of this
division in
fiscal 2004. Cost of sales in our Mexico operations decreased
$13.2
million primarily due to a 3.2% decline in production volumes
after
adjusting for a 52-week year in 2004, and a 17.5% decrease in
average cost
of feed ingredient purchases.
|
(b)
|
On
April 26, 2004, we announced a plan to restructure our turkey
business to
significantly reduce our production of commodity turkey meat
and
strengthen our focus on value-added turkey products. As part
of our
restructuring effort, we sold our Hinton, Virginia turkey commodity
meat
operations. In fiscal 2004, we recorded, as cost of sales-restructuring,
approximately $64.2 million of asset impairment charges and inventory
losses on discontinued products and, as other restructuring charges,
$7.9
million, primarily related to exit and severance costs.
|
(c)
|
Non-recurring
recoveries in fiscal year 2004 consisted mainly of a $23.8 million
gain
from insurance proceeds related to our 2002 product recall.
|
Fiscal
Year Ended
|
|||||||||||||
October
1,
|
Change
from
|
Percentage
|
|||||||||||
Source
|
2005
|
Fiscal
2004
|
Change
|
||||||||||
Chicken
|
|||||||||||||
United
States
|
$
|
405.7
|
$
|
76.0
|
23.1
|
%
|
|||||||
Mexico
|
39.8
|
47.4
|
623.7
|
%
|
|||||||||
$
|
445.5
|
$
|
123.4
|
38.3
|
%
|
||||||||
Turkey
|
$
|
(22.5
|
)
|
$
|
74.3
|
76.8
|
%
|
||||||
Other
Products
|
|||||||||||||
United
States
|
$
|
8.2
|
$
|
(27.7
|
)
|
(77.2
|
)%
|
||||||
Mexico
|
4.6
|
0.6
|
15.0
|
%
|
|||||||||
$
|
12.8
|
$
|
(27.1
|
)
|
(67.9
|
)%
|
|||||||
Non-recurring
recoveries
|
$
|
--
|
$
|
(0.1
|
)
|
--
|
%
|
||||||
Operating
Income
|
$
|
435.8
|
$
|
170.5
|
64.3
|
%
|
Fiscal
Year Ended
|
Percentage
|
Percentage
|
||||||||||||||||||||
October
1,
|
Change
from
|
Percentage
|
of
Net Sales
|
of
Net Sales
|
||||||||||||||||||
Components
|
2005
|
Fiscal
2004
|
Change
|
Fiscal
2005
|
Fiscal
2004
|
|||||||||||||||||
Gross
profit
|
$
|
745.2
|
$
|
216.2
|
40.9
|
%
|
13.2
|
%
|
9.9
|
%
|
||||||||||||
Selling,
general and administrative expense
|
309.4
|
53.6
|
21.0
|
%
|
5.5
|
%
|
4.8
|
%
|
(a
|
)
|
||||||||||||
Other
restructuring charges
|
--
|
(7.9
|
)
|
--
|
--
|
0.1
|
(b
|
)
|
||||||||||||||
Operating
income
|
$
|
435.8
|
$
|
170.5
|
64.3
|
%
|
7.7
|
%
|
4.9
|
%
|
(c
|
)
|
(a)
|
Selling,
general and administrative expense increased due to costs associated
with
increased sales of prepared foods because of the fiscal 2004
acquisition
and due to increases in costs associated with our profit-based
retirement
and compensation plans.
|
(b)
|
On
April 26, 2004, we announced a plan to restructure our turkey
division,
including the sale or closure of some facilities in Virginia.
Approximately $7.9 million related to exit and severance costs
in
connection with the restructuring were charged to other restructuring
charges.
|
(c)
|
The
increase in operating income over fiscal 2004 is due primarily
to lower
feed ingredient pricing, the $72.1 million in turkey restructuring
and
other related restructuring charges sustained in fiscal 2004
and the other
items described above.
|
Facility
|
Amount
|
||||||||||||
Source
of Liquidity
|
Amount
|
Outstanding
|
Available
|
||||||||||
(in
millions)
|
|||||||||||||
Cash
and cash equivalents
|
$
|
--
|
$
|
--
|
$
|
156.4
|
|||||||
Investments
in available for sale securities
|
--
|
--
|
136.6
|
||||||||||
Debt
Facilities:
|
|||||||||||||
Revolving
credit facilities
|
225.0
|
75.0
|
126.6
|
(a
|
)
|
||||||||
Revolving/term
facility
|
795.0
|
--
|
(b
|
)
|
|||||||||
Term
loan
|
430.0
|
--
|
(b
|
)
|
|||||||||
Bridge
loan
|
450.0
|
--
|
(c
|
)
|
|||||||||
Receivables
purchase
|
|||||||||||||
agreement
|
125.0
|
--
|
125.0
|
||||||||||
(a)
|
At
September 30, 2006, the Company had $23.4 million in letters
of credit
outstanding relating to normal business transactions.
|
(b)
|
The
amount available at September 30, 2006 under these facilities
was $535.3
million. If our tender offers are successful, the amount of
borrowings available will increase by up to $486 million and,
with the
pledging of additional identified collateral to secure this
facility; the
full amount of the commitment under this facility will be
available.
|
(c)
|
Reflects
a commitment letter obtained by the Company from certain investment
banks,
pursuant to which, subject to specified conditions, the investment
banks
have agreed to make available to the Company a $450 million
senior
unsecured bridge loan facility for the purchase of shares of
common stock
of Gold Kist.
|
|
Payments
Due By Period
|
|||||||||||||||
Contractual
Obligations
|
Total
|
Less
than 1 year
|
1-3
years
|
3-5
years
|
More
than 5 years(b)
|
|
||||||||||
Long-term
debt(a)
|
$
|
565.2
|
$
|
10.3
|
$
|
20.4
|
$
|
378.6
|
$
|
155.9
|
||||||
Guarantee
fees
|
9.5
|
1.5
|
2.7
|
2.4
|
2.9
|
|||||||||||
Operating
leases
|
93.9
|
30.0
|
43.0
|
20.3
|
0.6
|
|||||||||||
Purchase
obligations
|
28.1
|
28.1
|
--
|
--
|
--
|
|||||||||||
Total
|
$
|
696.7
|
$
|
69.9
|
$
|
66.1
|
$
|
401.3
|
$
|
159.4
|
(a) |
Excludes
$23.4 million in letters of credit outstanding related to normal
business
transactions.
|
(a)
|
Financial
Statements
|
|
(1)
|
The
financial statements and schedules listed in the accompanying
index to
financial statements and schedules are filed as part of this
report.
|
|
(2)
|
All
other schedules for which provision is made in the applicable
accounting
regulations of the SEC are not required under the related
instructions or
are not applicable and therefore have been omitted.
|
|
(3)
|
The
financial statements schedule entitled “Valuation and Qualifying Accounts
and Reserves” is filed as part of this report on page
102.
|
|
(b)
|
Exhibits
|
2.1
|
Agreement
and Plan of Reorganization dated September 15, 1986, by and
among
Pilgrim’s Pride Corporation, a Texas corporation; Pilgrim’s Pride
Corporation, a Delaware corporation; and Doris Pilgrim Julian,
Aubrey Hal
Pilgrim, Paulette Pilgrim Rolston, Evanne Pilgrim, Lonnie
“Bo” Pilgrim,
Lonnie Ken Pilgrim, Greta Pilgrim Owens and Patrick Wayne
Pilgrim
(incorporated by reference from Exhibit 2.1 to the Company’s Registration
Statement on Form S-1 (No. 33-8805) effective November 14,
1986).
|
|
2.2
|
Agreement
and Plan of Merger dated September 27, 2000 (incorporated
by reference
from Exhibit 2 of WLR Foods, Inc.’s Current Report on Form 8-K (No.
000-17060) dated September 28, 2000).
|
|
3.1
|
Certificate
of Incorporation of the Company, as amended (incorporated
by reference
from Exhibit 3.1 of the Company’s Annual Report on Form 10-K for the
fiscal year ended October 2, 2004).
|
|
3.2
|
Amended
and Restated Corporate Bylaws of the Company (incorporated
by reference
from Exhibit 4.4 of the Company’s Registration Statement on Form S-8 (No.
333-111929) filed on January 15, 2004).
|
|
4.1
|
Certificate
of Incorporation of the Company, as amended (included as
Exhibit
3.1).
|
|
4.2
|
Amended
and Restated Corporate Bylaws of the Company (included as
Exhibit
3.2).
|
|
4.3
|
Indenture
dated as of August 9, 2001 by and between Pilgrim’s Pride Corporation and
The Chase Manhattan Bank relating to Pilgrim’s Pride’s 9 5/8% Senior Notes
Due 2011 (incorporated by reference from Exhibit 4.1 of the
Company’s
Current Report on Form 8-K (No. 001-09273) dated August 9,
2001).
|
4.4
|
First
Supplemental Indenture dated as of August 9, 2001 by and
between Pilgrim’s
Pride Corporation and The Chase Manhattan Bank relating to
Pilgrim’s
Pride’s 9 5/8% Senior Notes Due 2011 (incorporated by reference
from
Exhibit 4.2 to the Company’s Current Report on Form 8-K (No. 001-09273)
dated August 9, 2001).
|
|
4.5
|
Form
of 9 5/8% Senior Note Due 2011 (incorporated by reference
from Exhibit 4.3
of the Company’s Current Report on Form 8-K (No. 001-09273) dated August
9, 2001).
|
|
4.6
|
Indenture,
dated November 21, 2003, between Pilgrim's Pride Corporation
and The Bank
of New York as Trustee relating to Pilgrim’s Pride’s 9 ¼% Senior Notes due
2013 (incorporated by reference from Exhibit 4.1 of the Company's
Registration Statement on Form S-4 (No. 333-111975) filed on January 16,
2004).
|
|
4.7
|
Registration
Rights Agreement, dated as of November 6, 2003, among Pilgrim's
Pride
Corporation and Credit Suisse First Boston LLC relating to
Pilgrim’s
Pride’s 9 ¼% Senior Notes due 2013 (incorporated by reference from Exhibit
4.2 of the Company's Registration Statement on Form S-4 (No.
333-111975)
filed on January 16, 2004).
|
|
4.8
|
Form
of 9 ¼% Note due 2013 (incorporated by reference from Exhibit 4.3
of the
Company's Registration Statement on Form S-4 (No. 333-111975)
filed on
January 16, 2004).
|
|
10.1
|
Pilgrim’s
Industries, Inc. Profit Sharing Retirement Plan, restated
as of July 1,
1987 (incorporated by reference from Exhibit 10.1 of the
Company’s Form
8-K filed on July 1, 1992). …
|
|
10.2
|
Senior
Executive Performance Bonus Plan of the Company (incorporated
by reference
from Exhibit A in the Company’s Proxy Statement dated December 13, 1999).
…
|
|
10.3
|
Aircraft
Lease Extension Agreement between B.P. Leasing Co. (L.A.
Pilgrim,
individually) and Pilgrim’s Pride Corporation (formerly Pilgrim’s
Industries, Inc.) effective November 15, 1992 (incorporated
by reference
from Exhibit 10.48 of the Company’s Quarterly Report on Form 10-Q for the
three months ended March 29, 1997).
|
|
10.4
|
Broiler
Grower Contract dated May 6, 1997 between Pilgrim’s Pride Corporation and
Lonnie “Bo” Pilgrim (Farm 30) (incorporated by reference from Exhibit
10.49 of the Company’s Quarterly Report on Form 10-Q for the three months
ended March 29, 1997).
|
|
10.5
|
Commercial
Egg Grower Contract dated May 7, 1997 between Pilgrim’s Pride Corporation
and Pilgrim Poultry G.P. (incorporated by reference from
Exhibit 10.50 of
the Company’s Quarterly Report on Form 10-Q for the three months ended
March 29, 1997).
|
|
10.6
|
Agreement
dated October 15, 1996 between Pilgrim’s Pride Corporation and Pilgrim
Poultry G.P. (incorporated by reference from Exhibit 10.23
of the
Company’s Quarterly Report on Form 10-Q for the three months ended
January 2, 1999).
|
10.7
|
Heavy
Breeder Contract dated May 7, 1997 between Pilgrim’s Pride Corporation and
Lonnie “Bo” Pilgrim (Farms 44, 45 & 46) (incorporated by reference
from Exhibit 10.51 of the Company’s Quarterly Report on Form 10-Q for the
three months ended March 29, 1997).
|
|
10.8
|
Broiler
Grower Contract dated January 9, 1997 by and between Pilgrim’s Pride and
O.B. Goolsby, Jr. (incorporated by reference from Exhibit
10.25 of the
Company’s Registration Statement on Form S-1 (No. 333-29163) effective
June 27, 1997).
|
|
10.9
|
Broiler
Grower Contract dated January 15, 1997 by and between Pilgrim’s Pride
Corporation and B.J.M. Farms (incorporated by reference from
Exhibit 10.26
of the Company’s Registration Statement on Form S-1 (No. 333-29163)
effective June 27, 1997).
|
|
10.10
|
Broiler
Grower Agreement dated January 29, 1997 by and between Pilgrim’s Pride
Corporation and Clifford E. Butler (incorporated by reference
from Exhibit
10.27 of the Company’s Registration Statement on Form S-1 (No. 333-29163)
effective June 27, 1997).
|
|
10.11
|
Receivables
Purchase Agreement between Pilgrim’s Pride Funding Corporation, as Seller,
Pilgrim’s Pride Corporation, as Servicer, Pooled Accounts Receivable
Capital Corporation, as Purchaser, and Nesbitt Burns Securities
Inc., as
Agent (incorporated by reference from Exhibit 10.33 of the
Company’s
Quarterly Report on Form 10-Q for the three months ended
June 27,
1998).
|
|
10.12
|
Purchase
and Contribution Agreement dated as of June 26, 1998 between
Pilgrim’s
Pride Funding Corporation and Pilgrim’s Pride Corporation (incorporated by
reference from Exhibit 10.34 of the Company’s Quarterly Report on Form
10-Q for the three months ended June 27, 1998).
|
|
10.13
|
Guaranty
Fee Agreement between Pilgrim’s Pride Corporation and Pilgrim Interests,
LTD., dated June 11, 1999 (incorporated by reference from
Exhibit 10.24 of
the Company’s Annual Report on Form 10-K for the fiscal year ended October
2, 1999).
|
|
10.14
|
Broiler
Production Agreement between Pilgrim's Pride Corporation
and Lonnie “Bo”
Pilgrim dated November 15, 2005 (incorporated by reference
from Exhibit
99.1 of the Company’s Current Report on Form 8-K dated November 10,
2005).
|
|
10.15
|
Commercial
Property Lease dated December 29, 2000 between Pilgrim’s Pride Corporation
and Pilgrim Poultry G.P. (incorporated by reference from
Exhibit 10.30 of
the Company’s Quarterly Report on Form 10-Q for the three months ended
December 30, 2000).
|
|
10.16
|
Revolving
Credit Agreement, made as of September 7, 2001 by and between
Grupo
Pilgrim’s Pride Funding S. de R.L. de C.V., Comerica Bank and Comerica
Bank Mexico, S.A., Institucion de Banca Multiple (incorporated
by
reference from Exhibit 10.27 of the Company’s Annual Report on Form 10-K
for the fiscal year ended September 29,
2001).
|
10.17
|
Amendment
No. 1 dated as of July 12, 2002 to Receivables Purchase Agreement
dated as
of June 26, 1998 among Pilgrim’s Pride Funding Corporation, the Company,
Fairway Finance Corporation (as successor in interest to
Pooled Accounts
Receivable Capital Corporation) and BMO Nesbitt Burns Corp.
(f/k/a Nesbitt
Burns Securities Inc.). (incorporated by reference from Exhibit
10.32 of
the Company’s Annual Report on Form 10-K filed on December 6,
2002).
|
|
10.18
|
Retirement
agreement dated November 11, 2002 between Pilgrim’s Pride Corporation and
David Van Hoose (incorporated by reference from Exhibit 10.34
of the
Company’s Annual Report on Form 10-K filed on December 6,
2002).
|
|
10.19
|
Amendment
No. 3 dated as of July 18, 2003 to Receivables Purchase Agreement
dated as
of June 26, 1998 between Pilgrim’s Pride Funding Corporation (“Seller”),
Pilgrim’s Pride Corporation as initial Servicer, Fairway Finance
Corporation (as successor in interest to Pooled Accounts
Receivable
Capital Corporation) (“Purchaser”) and Harris Nesbitt Corporation as agent
for the purchaser (incorporated by reference from Exhibit
10.1 of the
Company’s Quarterly Report on Form 10-Q filed July 23,
2003).
|
|
10.20
|
Stock
Purchase Agreement dated June 7, 2003 by and between Pilgrim’s Pride
Corporation and ConAgra Foods, Inc. (the “Stock Purchase Agreement”)
(incorporated by reference from Exhibit 99.2 of the Company’s Current
Report on Form 8-K dated June 7, 2003).
|
|
10.21
|
Exhibit
1.1(a) to the Stock Purchase Agreement - Applicable Accounting
Principles
(incorporated by reference from Exhibit 99.3 of the Company’s Current
Report on Form 8-K dated June 7, 2003).
|
|
10.22
|
Exhibit
1.1(b) to the Stock Purchase Agreement - Business Facilities
(incorporated
by reference from Exhibit 99.4 of the Company’s Current Report on Form 8-K
dated June 7, 2003).
|
|
10.23
|
Exhibit
1.1(c) to the Stock Purchase Agreement - ConAgra Supply Agreement
(incorporated by reference from Exhibit 99.5 of the Company’s Current
Report on Form 8-K dated June 7, 2003).
|
|
10.24
|
Exhibit
1.1(d) to the Stock Purchase Agreement - Environmental License
Agreement
(incorporated by reference from Exhibit 99.6 of the Company’s Current
Report on Form 8-K dated June 7, 2003).
|
|
10.25
|
Exhibit
1.1(f) to the Stock Purchase Agreement - Molinos Supply Agreement
(incorporated by reference from Exhibit 99.7 of the Company’s Current
Report on Form 8-K dated June 7, 2003).
|
|
10.26
|
Exhibit
1.1(g) to the Stock Purchase Agreement - Montgomery Supply
Agreement
(incorporated by reference from Exhibit 99.8 of the Company’s Current
Report on Form 8-K dated June 7, 2003).
|
|
10.27
|
Exhibit
1.1(i) to the Stock Purchase Agreement - Registration Rights
Agreements
(incorporated by reference from Exhibit 99.9 of the Company’s Current
Report on Form 8-K dated June 7, 2003).
|
|
10.28
|
Exhibit
1.1(m) to the Stock Purchase Agreement - Transition Trademark
License
Agreement (incorporated by reference from Exhibit 99.11 of
the Company’s
Current Report on Form 8-K dated June 7,
2003).
|
10.29
|
Exhibit
9.4.3 to the Stock Purchase Agreement - Retained Assets (incorporated
by
reference from Exhibit 99.14 of the Company’s Current Report on Form 8-K
dated June 7, 2003).
|
|
10.30
|
Amendment
No. 1 to Stock Purchase Agreement dated August 11, 2003,
between ConAgra
Foods, Inc. and Pilgrim’s Pride Corporation (incorporated by reference
from Exhibit 10.1 of the Company’s Current Report on Form 8-K dated August
12, 2003).
|
|
10.31
|
Amendment
No. 2 to Stock Purchase Agreement dated August 20, 2003,
between ConAgra
Foods, Inc. and Pilgrim’s Pride Corporation (incorporated by reference
from Annex F of the Company’s Preliminary Proxy Statement filed October 6,
2003).
|
|
10.32
|
Agricultural
Lease between Pilgrim’s Pride Corporation (Lessor) and Patrick W. Pilgrim
(Tenant) dated May 1, 2003 (incorporated by reference from
Exhibit 10.15
of the Company’s Quarterly Report on Form 10-Q filed July 23,
2003).
|
|
10.33
|
First
Amendment to the Revolving Credit Agreement made as of September
7, 2001
by and between Grupo Pilgrim’s Pride Funding S. de R.L. de C.V., Comerica
Bank Mexico, S.A., Institucion de Banca Multiple dated as
of June 28, 2002
(incorporated by reference from Exhibit 10.1 of the Company’s Quarterly
Report on Form 10-Q/A filed August 12, 2003).
|
|
10.34
|
Second
Amendment to the Revolving Credit Agreement made as of September
7, 2001
by and between Grupo Pilgrim’s Pride Funding S. de R.L. de C.V., Comerica
Bank Mexico, S.A., Institucion de Banca Multiple dated as
of September 10,
2002 (incorporated by reference from Exhibit 10.2 of the
Company’s
Quarterly Report on Form 10-Q/A filed August 12, 2003).
|
|
10.35
|
Third
Amendment to the Revolving Credit Agreement made as of September
7, 2001
by and between Grupo Pilgrim’s Pride Funding S. de R.L. de C.V., Comerica
Bank Mexico, S.A., Institucion de Banca Multiple dated as
of December 13,
2002 (incorporated by reference from Exhibit 10.3 of the
Company’s
Quarterly Report on Form 10-Q/A filed August 12, 2003).
|
|
10.36
|
Fourth
Amendment to the Revolving Credit Agreement made as of September
7, 2001,
by and between Grupo Pilgrim's Pride Funding S. de R.L. de
C.V., Comerica
Bank and Comerica Bank Mexico, S.A., Institucion de Banca
Multiple dated
as of November 18, 2003 (incorporated by reference from Exhibit
10.1 of
the Company's Quarterly Report on Form 10-Q filed February
4, 2004).
|
|
10.37
|
Fourth
Amended and Restated Note Purchase Agreement dated November
18, 2003,
among Pilgrim's Pride Corporation, John Hancock Life Insurance
Company,
ING Capital LLC and the other parties named therein (incorporated
by
reference from Exhibit 10.2 of the Company's Quarterly Report
on Form 10-Q
filed February 4, 2004).
|
|
10.38
|
Amendment
No. 3 to Stock Purchase Agreement, dated November 23, 2003,
between
Pilgrim's Pride Corporation and ConAgra Foods, Inc. (incorporated
by
reference from Exhibit 2.16 of the Company's Current Report
on Form 8-K
(No. 001-09273) dated December 8,
2003).
|
10.39
|
Amendment
No. 4 dated as of December 31, 2003 to Receivables Purchase
Agreement
dated as of June 26, 1998, among Pilgrim's Pride Funding
Corporation,
Pilgrim's Pride Corporation as initial Servicer, Fairway
Finance Company,
LLC (as successor to Fairway Finance Corporation) as purchaser
and Harris
Nesbitt Corp. (f/k/a BMO Nesbitt Burns Corp.) as agent for
the purchaser
(incorporated by reference from Exhibit 10.4 of the Company's
Quarterly
Report on Form 10-Q filed February 4, 2004).
|
|
10.40
|
Amendment
No. 1 dated as of December 31, 2003 to Purchase and Contribution
Agreement
dated as of June 26, 1998, between Pilgrim's Pride Funding
Corporation and
Pilgrim's Pride Corporation (incorporated by reference from
Exhibit 10.5
of the Company's Quarterly Report on Form 10-Q filed February
4,
2004).
|
|
10.41
|
Employee
Stock Investment Plan of the Company (incorporated by reference
from
Exhibit 4.1 of the Company's Registration Statement on Form
S-8 (No.
333-111929) filed on January 15, 2004). …
|
|
10.42
|
2004
Amended and Restated Credit Agreement, dated as of April
7, 2004, between
Pilgrim's Pride Corporation and CoBank, ACB, as lead arranger
and book
manager, and as administrative, documentation and collateral
agent and the
lenders from time to time parties thereto as lenders (incorporated
by
reference from Exhibit 10.1 of the Company's Quarterly Report
on Form 10-Q
filed May 4, 2004).
|
|
10.43
|
Third
Amended and Restated Secured Credit Agreement, dated April
7, 2004,
between Pilgrim's Pride Corporation and Harris Trust and
Savings Bank,
individually and as agent, and the lenders from time to time
parties
thereto as lenders (incorporated by reference from Exhibit
10.2 of the
Company's Quarterly Report on Form 10-Q filed May 4, 2004).
|
|
10.44
|
Fifth
Amendment to Revolving Credit Agreement made as of September
7, 2001, by
and among Grupo Pilgrim's Pride Funding S. de R.L. de C.V.,
Comerica Bank
and Comerica Bank Mexico, S.A., Institucion de Banca Multiple
dated as of
September 7, 2004 (incorporated by reference from Exhibit
10.1 of the
Company's Current Report on Form 8-K (No. 001-09273) filed
September 10,
2004).
|
|
10.45
|
Purchase
and Amendment Agreement between Pilgrim's Pride Corporation
and ConAgra
Foods, Inc. dated August 3, 2005 (incorporated by reference
from Exhibit
10.1 of the Company’s Current Report on Form 8-K dated August 4,
2005).
|
|
10.46
|
2005
Deferred Compensation Plan of the Company (incorporated by
reference from
Exhibit 10.1 of the Company’s Current Report on Form 8-K dated December
27, 2004). …
|
|
10.47
|
First
Amendment to Third Amended and Restated Credit Agreement
dated November
25, 2005 between Pilgrim's Pride Corporation, Harris N.A.,
and the other
lenders party thereto (incorporated by reference from Exhibit
1.1 of the
Company's Current Report on Form 8-K dated December 5,
2005).
|
10.48
|
Second
Amendment to Credit Agreement dated November 28, 2005 between
Pilgrim's
Pride Corporation, CoBank, ACB, and certain syndication parties
thereto
(incorporated by reference from Exhibit 1.2 of the Company's
Current
Report on Form 8-K dated December 5, 2005).
|
|
10.49
|
Vendor
Service Agreement dated effective December 28, 2005 between
Pilgrim's
Pride Corporation and Pat Pilgrim (incorporated by reference
from Exhibit
10.2 of the Company's Current Report on Form 8-K dated January
6,
2006).
|
|
10.50
|
Transportation
Agreement dated effective December 28, 2005 between Pilgrim's
Pride
Corporation and Pat Pilgrim (incorporated by reference from
Exhibit 10.3
of the Company's Current Report on Form 8-K dated January
6,
2006).
|
|
10.51
|
Ground
Lease Agreement dated effective January 4, 2006 between Pilgrim's
Pride
Corporation and Pat Pilgrim (incorporated by reference from
Exhibit 10.4
of the Company's Current Report on Form 8-K dated January
6,
2006).
|
|
10.52
|
Credit
Agreement by and among the Avícola Pilgrim’s Pride de México, S. de R.L.
de C.V. (the "Borrower"), Pilgrim's Pride Corporation, certain
Mexico
subsidiaries of the Borrower, ING Capital LLC, and the lenders
signatory
thereto dated as of September 25, 2006 (incorporated by reference
from
Exhibit 10.1 of the Company's Current Report on Form 8-K
dated September
22, 2006).
|
|
10.53
|
Credit
Agreement by and among CoBank, ACB, Agriland, FCS and the
Company dated as
of September 21, 2006 (incorporated by reference from Exhibit
10.2 of the
Company's Current Report on Form 8-K dated September 22,
2006).
|
|
10.54
|
Pilgrim's
Pride Corporation $450,000,000 Senior Unsecured Increasing
Rate Bridge
Facility Commitment Letter from Lehman Brothers to the Company
dated
September 27, 2006 (incorporated by reference from Exhibit
10.3 of the
Company's Current Report on Form 8-K dated September 22,
2006).
|
|
10.55
|
Consent
of Harris N.A. pursuant to Third Amended and Restated Credit
Agreement
dated April 7, 2004.*
|
|
10.56
|
Consent
of Purchasers pursuant to Fourth Amended and Restated Purchase
Agreement
dated November 18, 2003.*
|
|
12
|
Ratio
of Earnings to Fixed Charges for the years ended September
30, 2006,
October 1, 2005, October 2, 2004, September 27, 2003, and
September 28,
2002.*
|
|
21
|
Subsidiaries
of Registrant.*
|
|
23
|
Consent
of Ernst & Young LLP.*
|
|
31.1
|
Certification
of Co-Principal
Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
31.2
|
Certification
of Co-Principal Executive Officer pursuant to Section 302
of the
Sarbanes-Oxley Act of 2002.*
|
|
31.3
|
Certification
of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley
Act of 2002.*
|
32.1
|
Certification
of Co-Principal Executive Officer of Pilgrim's Pride Corporation
pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
32.2
|
Certification
of Co-Principal Executive Officer of Pilgrim's Pride Corporation
pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
32.3
|
Certification
of Chief Financial Officer of Pilgrim's Pride Corporation
pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002.*
|
By:
|
/s/
Richard A. Cogdill
|
Richard
A. Cogdill
|
|
Chief
Financial and Accounting Officer
|
Signature
|
Title
|
Date
|
/s/
Lonnie “Bo” Pilgrim
|
Chairman
of the Board
|
11/17/06
|
Lonnie
“Bo” Pilgrim
|
||
/s/
Clifford E. Butler
|
Vice
Chairman of the Board
|
11/17/06
|
Clifford
E. Butler
|
||
|
||
/s/
O.B. Goolsby, Jr.
|
President
|
11/17/06
|
O.B.
Goolsby, Jr.
|
Chief
Executive Officer
|
|
Director
|
||
/s/
Richard A. Cogdill
|
Chief
Financial Officer
|
11/17/06
|
Richard
A. Cogdill
|
Secretary
and Treasurer
|
|
Director
|
||
(Principal
Financial and Accounting Officer)
|
||
/s/
Lonnie Ken Pilgrim
|
Executive
Vice President,
|
11/17/06
|
Lonnie
Ken Pilgrim
|
Assistant
to Chairman
|
|
Director
|
||
/s/
Charles L. Black
|
Director
|
11/17/06
|
Charles
L. Black
|
||
/s/
Linda Chavez
|
Director
|
11/17/06
|
Linda
Chavez
|
||
/s/
S. Key Coker
|
Director
|
11/17/06
|
S.
Key Coker
|
||
/s/
Keith W. Hughes
|
Director
|
11/17/06
|
Keith
W. Hughes
|
||
Signature
|
Title
|
Date
|
/s/
Blake D. Lovette
|
Director
|
11/17/06
|
Blake
D. Lovette
|
||
/s/
Vance C. Miller, Sr.
|
Director
|
11/17/06
|
Vance
C. Miller, Sr.
|
||
/s/
James G. Vetter, Jr.
|
Director
|
11/17/06
|
James
G. Vetter, Jr.
|
||
/s/
Donald L. Wass, Ph.D
|
Director
|
11/17/06
|
Donald
L. Wass, Ph.D.
|
||
(In
thousands, except share and per share data)
|
September
30, 2006
|
October
1, 2005
|
|||||
Assets
|
|||||||
Current
Assets:
|
|||||||
Cash
and cash equivalents
|
$
|
156,404
|
$
|
132,567
|
|||
Investment
in available for sale securities
|
21,246
|
--
|
|||||
Trade
accounts and other receivables, less
allowance
for doubtful accounts
|
263,149
|
288,528
|
|||||
Inventories
|
585,940
|
527,329
|
|||||
Income
taxes receivable
|
39,167
|
--
|
|||||
Current
deferred taxes
|
7,288
|
25,107
|
|||||
Other
current assets
|
32,480
|
25,884
|
|||||
Total
Current Assets
|
1,105,674
|
999,415
|
|||||
Investment
in Available for Sale Securities
|
115,375
|
304,593
|
|||||
Other
Assets
|
50,825
|
53,798
|
|||||
Property,
Plant and Equipment:
|
|||||||
Land
|
52,493
|
51,887
|
|||||
Buildings,
machinery and equipment
|
1,702,949
|
1,612,739
|
|||||
Autos
and trucks
|
57,177
|
55,202
|
|||||
Construction-in-progress
|
63,853
|
58,942
|
|||||
1,876,472
|
1,778,770
|
||||||
Less
accumulated depreciation
|
(721,478
|
)
|
(624,673
|
)
|
|||
1,154,994
|
1,154,097
|
||||||
$
|
2,426,868
|
$
|
2,511,903
|
||||
Liabilities
and Stockholders’ Equity
|
|||||||
Current
Liabilities:
|
|||||||
Accounts
payable
|
$
|
293,685
|
$
|
281,909
|
|||
Accrued
expenses
|
272,830
|
288,106
|
|||||
Income
taxes payable
|
--
|
16,196
|
|||||
Current
maturities of long-term debt
|
10,322
|
8,603
|
|||||
Total
Current Liabilities
|
576,837
|
594,814
|
|||||
Long-Term
Debt, Less Current Maturities
|
554,876
|
518,863
|
|||||
Deferred
Income Taxes
|
175,869
|
173,232
|
|||||
Minority
Interest in Subsidiary
|
1,958
|
1,396
|
|||||
Commitments
and Contingencies
|
|||||||
Stockholders’
Equity:
|
|||||||
Preferred
stock, $.01 par value, 5,000,000 authorized shares; none
issued
|
--
|
--
|
|||||
Common
stock - $.01 par value, 160,000,000 authorized shares;
66,555,733 and
66,826,833 issued and outstanding, respectively
|
665
|
668
|
|||||
Additional
paid-in capital
|
469,779
|
471,344
|
|||||
Retained
earnings
|
646,750
|
753,527
|
|||||
Accumulated
other comprehensive income (loss)
|
134
|
(373
|
)
|
||||
Less
treasury stock, 271,100 shares
|
--
|
(1,568
|
)
|
||||
Total
Stockholders’ Equity
|
1,117,328
|
1,223,598
|
|||||
$
|
2,426,868
|
$
|
2,511,903
|
See
Notes to Consolidated Financial
Statements
|
(In
thousands, except per share data)
|
Three
Years Ended September 30, 2006
|
|||||||||
2006
|
2005
|
2004
|
||||||||
Net
Sales
|
$
|
5,235,565
|
$
|
5,666,275
|
$
|
5,363,723
|
||||
Cost
and Expenses:
|
||||||||||
Cost
of sales
|
4,937,965
|
4,921,076
|
4,794,415
|
|||||||
Cost
of sales-restructuring
|
--
|
--
|
64,160
|
|||||||
Non-recurring
recoveries
|
--
|
--
|
(23,891
|
)
|
||||||
4,937,965
|
4,921,076
|
4,834,684
|
||||||||
Gross
Profit
|
297,600
|
745,199
|
529,039
|
|||||||
Selling,
general and administrative
|
294,598
|
309,387
|
255,802
|
|||||||
Other
restructuring charges
|
--
|
--
|
7,923
|
|||||||
294,598
|
309,387
|
263,725
|
||||||||
Operating
Income
|
3,002
|
435,812
|
265,314
|
|||||||
Other
Expenses (Income):
|
||||||||||
Interest
expense
|
50,601
|
49,585
|
54,436
|
|||||||
Interest
income
|
(10,048
|
)
|
(5,653
|
)
|
(2,307
|
)
|
||||
Foreign
exchange (gain) loss
|
144
|
(474
|
)
|
205
|
||||||
Miscellaneous,
net
|
(1,378
|
)
|
(11,169
|
)
|
4,445
|
|||||
39,319
|
32,289
|
56,779
|
||||||||
Income
(Loss) Before Income Taxes
|
(36,317
|
)
|
403,523
|
208,535
|
||||||
Income
Tax Expense (Benefit)
|
(2,085
|
)
|
138,544
|
80,195
|
||||||
Net
Income (Loss)
|
$
|
(34,232
|
)
|
$
|
264,979
|
$
|
128,340
|
|||
Net
Income (Loss) per Common Share-Basic and Diluted
|
$
|
(0.51
|
)
|
$
|
3.98
|
$
|
2.05
|
|||
See
Notes to Consolidated Financial Statements
|
(In
thousands, except share data)
|
||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||
Shares
of Common Stock
|
Total
|
Additional
|
Other
|
|||||||||||||||||||||||||
Par
|
Paid-In
|
Retained
|
Comprehensive
|
Treasury
|
||||||||||||||||||||||||
PPC
|
Class
A
|
Class
B
|
Value
|
Capital
|
Earnings
|
Income
(Loss)
|
Stock
|
Total
|
||||||||||||||||||||
Balance
at September 28, 2003
|
--
|
13,794,529
|
27,589,250
|
$
|
414
|
$
|
79,625
|
$
|
368,195
|
$
|
30
|
($1,568
|
)
|
$
|
446,696
|
|||||||||||||
Reclassification
of Class A and Class B common stock to PPC common stock
|
41,383,779
|
(13,794,529
|
)
|
(27,589,250
|
)
|
|||||||||||||||||||||||
Issuance
of common stock for ConAgra chicken division acquisition
|
25,443,054
|
--
|
--
|
254
|
352,037
|
352,291
|
||||||||||||||||||||||
Net
income for year
|
128,340
|
128,340
|
||||||||||||||||||||||||||
Other
comprehensive income (loss)
|
(378
|
)
|
(378
|
)
|
||||||||||||||||||||||||
Total
comprehensive income (loss)
|
127,962
|
|||||||||||||||||||||||||||
Cash
dividends declared
($.06
per share)
|
(3,993
|
)
|
(3,993
|
)
|
||||||||||||||||||||||||
Balance
at October 2, 2004
|
66,826,833
|
--
|
--
|
$
|
668
|
$
|
431,662
|
$
|
492,542
|
($348
|
)
|
($1,568
|
)
|
$
|
922,956
|
|||||||||||||
Sale
of common stock
|
15,443,054
|
--
|
--
|
154
|
521,774
|
521,928
|
||||||||||||||||||||||
Purchase
and retirement of
common
stock
|
(15,443,054
|
)
|
--
|
--
|
(154
|
)
|
(482,092
|
)
|
(482,246
|
)
|
||||||||||||||||||
Net
income for year
|
264,979
|
264,979
|
||||||||||||||||||||||||||
Other
comprehensive income (loss)
|
(25
|
)
|
(25
|
)
|
||||||||||||||||||||||||
Total
comprehensive income (loss)
|
264,954
|
|||||||||||||||||||||||||||
Cash
dividends declared
($.06
per share)
|
(3,993
|
)
|
(3,993
|
)
|
||||||||||||||||||||||||
Balance
at October 1, 2005
|
66,826,833
|
--
|
--
|
$
|
668
|
$
|
471,344
|
$
|
753,527
|
($373
|
)
|
($1,568
|
)
|
$
|
1,223,598
|
|||||||||||||
Cancellation
of Treasury Stock
|
(271,100
|
)
|
--
|
--
|
(3
|
)
|
(1,565
|
)
|
1,568
|
|||||||||||||||||||
Net
loss for year
|
(34,232
|
)
|
(34,232
|
)
|
||||||||||||||||||||||||
Other
comprehensive income (loss)
|
507
|
507
|
||||||||||||||||||||||||||
Total
comprehensive income (loss)
|
(33,725
|
)
|
||||||||||||||||||||||||||
Cash
dividends declared
($1.09
per share)
|
(72,545
|
)
|
(72,545
|
)
|
||||||||||||||||||||||||
Balance
at September 30, 2006
|
66,555,733
|
--
|
--
|
$
|
665
|
$
|
469,779
|
$
|
646,750
|
$
|
134
|
--
|
$
|
1,117,328
|
||||||||||||||
(In
thousands)
|
Three
Years Ended September 30, 2006
|
||||||||||||
2006
|
2005
|
2004
|
|||||||||||
Cash
Flows From Operating Activities:
|
|||||||||||||
Net
income (loss)
|
$
|
(34,232
|
)
|
$
|
264,979
|
$
|
128,340
|
||||||
Adjustments
to reconcile net income (loss) to cash provided by
operating
activities
|
|||||||||||||
Depreciation
and amortization
|
135,133
|
134,944
|
113,788
|
||||||||||
Loss
on restructuring-asset impairment
|
3,767
|
--
|
45,384
|
||||||||||
Loss
on property disposals
|
1,781
|
4,326
|
5,605
|
||||||||||
Deferred
income taxes
|
20,455
|
2,247
|
3,295
|
||||||||||
Changes
in operating assets and liabilities
|
|||||||||||||
Accounts
and other receivables
|
31,121
|
21,192
|
(70,936
|
)
|
|||||||||
Income
taxes (payable) receivable
|
(55,363
|
)
|
(38,251
|
)
|
33,556
|
||||||||
Inventories
|
(58,612
|
)
|
82,669
|
(73,445
|
)
|
||||||||
Prepaid
expenses and other current assets
|
(6,594
|
)
|
20,800
|
(28,763
|
)
|
||||||||
Accounts
payable, income taxes payable and accrued expenses
|
(3,501
|
)
|
(610
|
)
|
116,684
|
||||||||
Other
|
(3,573
|
)
|
777
|
(1,104
|
)
|
||||||||
Cash
Provided by Operating Activities
|
30,382
|
493,073
|
272,404
|
||||||||||
Investing
Activities:
|
|||||||||||||
Acquisitions
of property, plant and equipment
|
(143,882
|
)
|
(116,588
|
)
|
(79,642
|
)
|
|||||||
Purchase
of investment securities
|
(318,266
|
)
|
(305,458
|
)
|
--
|
||||||||
Proceeds
from sale or maturity of investment securities
|
490,764
|
--
|
--
|
||||||||||
Business
acquisition, net of equity consideration
|
--
|
--
|
(272,097
|
)
|
|||||||||
Proceeds
from property disposals
|
4,148
|
4,963
|
4,583
|
||||||||||
Other,
net
|
(506
|
)
|
(524
|
)
|
(304
|
)
|
|||||||
Cash
Provided by (Used in) Investing Activities
|
32,258
|
(417,607
|
)
|
(347,460
|
)
|
||||||||
Financing
Activities:
|
|||||||||||||
Proceeds
from notes payable to banks
|
270,500
|
--
|
96,000
|
||||||||||
Repayments
on notes payable to banks
|
(270,500
|
)
|
--
|
(96,000
|
)
|
||||||||
Proceeds
from long-term debt
|
74,683
|
--
|
332,516
|
||||||||||
Payments
on long-term debt
|
(36,950
|
)
|
(16,829
|
)
|
(523,634
|
)
|
|||||||
Purchases
for retirement of common stock
|
--
|
(482,246
|
)
|
--
|
|||||||||
Sale
of common stock
|
--
|
521,928
|
--
|
||||||||||
Borrowing
for acquisition
|
--
|
--
|
300,767
|
||||||||||
Equity
and debt issue costs
|
(3,938
|
)
|
--
|
(8,991
|
)
|
||||||||
Cash
dividends paid
|
(72,545
|
)
|
(3,993
|
)
|
(3,993
|
)
|
|||||||
Cash
Provided by (Used in) Financing Activities
|
(38,750
|
)
|
18,860
|
96,665
|
|||||||||
Effect
of exchange rate changes on cash and cash equivalents
|
(53
|
)
|
76
|
(50
|
)
|
||||||||
Increase
in cash and cash equivalents
|
23,837
|
94,402
|
21,559
|
||||||||||
Cash
and cash equivalents at beginning of year
|
132,567
|
38,165
|
16,606
|
||||||||||
Cash
and Cash Equivalents at End of Year
|
$
|
156,404
|
$
|
132,567
|
$
|
38,165
|
|||||||
Supplemental
Disclosure Information:
|
|||||||||||||
Cash
paid during the year for:
|
|||||||||||||
Interest
(net of amount capitalized)
|
$
|
48,590
|
$
|
46,945
|
$
|
49,675
|
|||||||
Income
taxes paid
|
$
|
37,813
|
$
|
172,929
|
$
|
47,128
|
|||||||
Supplemental
Non-cash Disclosure Information:
|
|||||||||||||
Business
acquisition, equity consideration (before cost of
issuance)
|
$
|
--
|
$
|
--
|
357,475
|
||||||||
See
Notes to Consolidated Financial Statements
|
September
30,
|
October
1,
|
||||||
(In
thousands)
|
2006
|
2005
|
|||||
Chicken:
|
|||||||
Live
chicken and hens
|
$
|
196,284
|
$
|
196,406
|
|||
Feed
and eggs
|
132,309
|
114,091
|
|||||
Finished
chicken products
|
201,516
|
164,412
|
|||||
530,109
|
474,909
|
||||||
Turkey:
|
|||||||
Live
turkey and hens
|
$
|
7,138
|
$
|
7,209
|
|||
Feed
and eggs
|
4,740
|
4,924
|
|||||
Finished
turkey products
|
26,685
|
23,072
|
|||||
38,563
|
35,205
|
||||||
Other
Products:
|
|||||||
Commercial
feed, table eggs, and retail farm store
|
$
|
7,080
|
$
|
4,866
|
|||
Distribution
inventories
(other
than chicken & turkey products)
|
10,188
|
12,349
|
|||||
17,268
|
17,215
|
||||||
Total
Inventories
|
$
|
585,940
|
$
|
527,329
|
Final
Maturity
|
September
30, 2006
|
October
1, 2005
|
||||||||
Senior
unsecured notes, at 9 5/8%
|
2011
|
$
|
299,601
|
$
|
302,588
|
|||||
Senior
subordinated unsecured notes, at 9 1/4%
|
2013
|
82,640
|
100,000
|
|||||||
Secured
revolving credit facility with notes payable at LIBOR
plus 1.25% to LIBOR
plus 2.75%
|
2011
|
74,682
|
--
|
|||||||
Note
payable to an insurance company at 6.68%
|
2012
|
50,115
|
53,103
|
|||||||
Notes
payable to an insurance company at LIBOR plus 2.2075%
|
2013
|
41,333
|
54,667
|
|||||||
Revolving
term/credit facility, with notes payable at LIBOR or
US Treasuries, plus a
spread
|
2016
|
--
|
--
|
|||||||
Other
|
Various
|
16,827
|
17,108
|
|||||||
565,198
|
527,466
|
|||||||||
Less
current maturities
|
(10,322
|
)
|
(8,603
|
)
|
||||||
Total
|
$
|
554,876
|
$
|
518,863
|
||||||
(In
thousands)
|
2006
|
2005
|
2004
|
|||||||
Current:
|
||||||||||
Federal
|
$
|
(23,147
|
)
|
$
|
117,518
|
$
|
71,144
|
|||
Foreign
|
5,130
|
3,880
|
2,092
|
|||||||
State
and other
|
(4,523
|
)
|
14,899
|
3,664
|
||||||
Total
current
|
(22,540
|
)
|
136,297
|
76,900
|
||||||
Deferred
|
||||||||||
Federal
|
9,511
|
(1,594
|
)
|
(2,225
|
)
|
|||||
Foreign
|
10,221
|
4,475
|
5,673
|
|||||||
State
and other
|
723
|
113
|
(153
|
)
|
||||||
Total
deferred
|
20,455
|
2,994
|
3,295
|
|||||||
Change
in valuation allowance
|
--
|
(747
|
)
|
--
|
||||||
$
|
(2,085
|
)
|
$
|
138,544
|
$
|
80,195
|
2006
|
2005
|
2004
|
||||||||
Federal
income tax rate
|
(35.0
|
)%
|
35.0
|
%
|
35.0
|
%
|
||||
State
tax rate, net
|
(0.7
|
)
|
2.1
|
2.1
|
||||||
Difference
in U.S. statutory tax rate and foreign country effective tax
rate
|
(1.0
|
)
|
(1.3
|
)
|
5.9
|
|||||
Tax
credits
|
(13.1
|
)
|
(1.1
|
)
|
(0.1
|
)
|
||||
Tax
effect of American Jobs Creation Act repatriation
|
68.3
|
0.6
|
--
|
|||||||
Currency
related differences
|
8.4
|
(1.1
|
)
|
(4.2
|
)
|
|||||
Change
in contingency reserves
|
(29.7
|
)
|
--
|
--
|
||||||
Change
in valuation allowance
|
--
|
(0.2
|
)
|
--
|
||||||
Other
|
(3.0
|
)
|
0.3
|
(0.2
|
)
|
|||||
Total
|
(5.8
|
)%
|
34.3
|
%
|
38.5
|
%
|
(In
thousands)
|
2006
|
2005
|
|||||
|
|||||||
Deferred
tax liabilities:
|
|||||||
Property
and equipment
|
$
|
144,361
|
$
|
137,109
|
|||
Inventories
|
43,627
|
47,206
|
|||||
Prior
use of cash accounting
|
18,457
|
20,135
|
|||||
Acquisition
related items
|
15,600
|
16,518
|
|||||
Deferred
foreign taxes
|
24,127
|
--
|
|||||
Other
|
36,570
|
39,775
|
|||||
Total
deferred tax liabilities
|
282,742
|
260,743
|
|||||
Deferred
tax assets:
|
|||||||
Foreign
net operating losses
|
42,683
|
25,435
|
|||||
Expenses
deductible in different years
|
71,478
|
87,183
|
|||||
Total
deferred tax asset
|
114,161
|
112,618
|
|||||
Net
deferred tax liabilities
|
$
|
168,581
|
$
|
148,125
|
Pension
Benefits
|
|||||||
2006
|
2005
|
||||||
Comparison
of obligations to plan assets
|
|||||||
Projected
benefit obligation
|
$
|
9,882
|
$
|
8,778
|
|||
Accumulated
benefit obligation
|
9,310
|
7,694
|
|||||
Fair
value of plan assets at measurement date
|
6,252
|
5,405
|
Pension
Benefits
|
|||||||
2006
|
2005
|
||||||
Assumptions
|
|||||||
Discount
rate to determine net periodic benefit cost
|
5.25
|
%
|
5.50
|
%
|
|||
Discount
rate to determine benefit obligations
|
5.75
|
%
|
5.25
|
%
|
|||
Rate
of compensation increase
|
3.00
|
%
|
3.00
|
%
|
|||
Expected
return on plan assets
|
7.75
|
%
|
7.75
|
%
|
2006
|
2005
|
||||||
Plan
assets by category
|
|||||||
Equity
securities
|
66
|
%
|
63
|
%
|
|||
Debt
securities
|
34
|
%
|
37
|
%
|
|||
Total
assets
|
100
|
%
|
100
|
%
|
|||
(In
thousands)
|
2006
|
2005
|
2004
|
|||||||
Lease
payments on commercial egg property
|
$
|
750
|
$
|
750
|
$
|
750
|
||||
Chick,
feed and other sales to major stockholder
|
$
|
747
|
$
|
51,258
|
$
|
53,481
|
||||
Live
chicken purchases and other payments to major stockholder
|
$
|
1,208
|
$
|
54,318
|
$
|
54,180
|
||||
Loan
guaranty fees
|
$
|
1,615
|
$
|
1,775
|
$
|
2,634
|
||||
Lease
payments and operating expenses on airplane
|
$
|
492
|
$
|
536
|
$
|
587
|
Fiscal
Year Ended
|
||||||||||
September
30, 2006
|
October
1, 2005
|
October
2, 2004(a)
|
||||||||
(In
thousands)
|
||||||||||
Net
Sales to Customers:
|
||||||||||
Chicken:
|
||||||||||
United
States
|
$
|
4,098,403
|
$
|
4,411,269
|
$
|
4,091,706
|
||||
Mexico
|
418,745
|
403,353
|
362,442
|
|||||||
Sub-total
|
4,517,148
|
4,814,622
|
4,454,148
|
|||||||
Turkey
|
130,901
|
204,838
|
286,252
|
|||||||
Other
Products:
|
||||||||||
United
States
|
570,510
|
626,056
|
600,091
|
|||||||
Mexico
|
17,006
|
20,759
|
23,232
|
|||||||
Sub-total
|
587,516
|
646,815
|
623,323
|
|||||||
Total
|
5,235,565
|
5,666,275
|
5,363,723
|
|||||||
Operating
Income (Loss):
|
||||||||||
Chicken:
|
||||||||||
United
States
|
$
|
28,619
|
$
|
405,662
|
$
|
329,694
|
||||
Mexico
|
(17,960
|
)
|
39,809
|
(7,619
|
)
|
|||||
Sub-total
|
10,659
|
445,471
|
322,075
|
|||||||
Turkey(b)
|
(15,511
|
)
|
(22,539
|
)
|
(96,839
|
)
|
||||
Other
Products:
|
||||||||||
United
States
|
6,216
|
8,250
|
35,969
|
|||||||
Mexico
|
1,638
|
4,630
|
4,033
|
|||||||
Sub-total
|
7,854
|
12,880
|
40,002
|
|||||||
Non-recurring
recoveries
|
--
|
--
|
76
|
|||||||
Total
|
$
|
3,002
|
$
|
435,812
|
$
|
265,314
|
||||
Depreciation
and Amortization:(c)
|
||||||||||
Chicken:
|
||||||||||
United
States
|
$
|
109,346
|
$
|
114,131
|
$
|
89,767
|
||||
Mexico
|
11,305
|
12,085
|
12,217
|
|||||||
Sub-total
|
120,651
|
126,216
|
101,984
|
|||||||
Turkey
|
6,593
|
3,343
|
6,887
|
|||||||
her
Products:
|
||||||||||
United
States
|
7,743
|
5,196
|
4,773
|
|||||||
Mexico
|
146
|
189
|
144
|
|||||||
Sub-total
|
7,889
|
5,385
|
4,917
|
|||||||
Total
|
$
|
135,133
|
$
|
134,944
|
$
|
113,788
|
||||
Total
Assets:
|
||||||||||
Chicken:
|
||||||||||
United
States
|
$
|
1,897,763
|
$
|
2,059,579
|
$
|
1,830,051
|
||||
Mexico
|
361,887
|
287,414
|
212,492
|
|||||||
Sub-total
|
2,259,650
|
2,346,993
|
2,042,543
|
|||||||
Turkey
|
76,908
|
77,319
|
122,163
|
|||||||
Other
Products:
|
||||||||||
United
States
|
88,650
|
85,581
|
78,754
|
|||||||
Mexico
|
1,660
|
2,010
|
2,529
|
|||||||
Sub-total
|
90,310
|
87,591
|
81,283
|
|||||||
Total
|
$
|
2,426,868
|
$
|
2,511,903
|
$
|
2,245,989
|
||||
Capital
Expenditures:
|
||||||||||
Chicken:
|
||||||||||
United
States
|
$
|
133,106
|
$
|
102,470
|
$
|
54,433
|
||||
Mexico
|
6,536
|
4,924
|
8,640
|
|||||||
Sub-total
|
139,642
|
107,394
|
63,073
|
|||||||
Turkey
|
257
|
3,604
|
8,151
|
|||||||
Other
Products:
|
||||||||||
United
States
|
3,567
|
5,448
|
8,395
|
|||||||
Mexico
|
416
|
142
|
23
|
|||||||
Sub-total
|
3,983
|
5,590
|
8,418
|
|||||||
Total
|
$
|
143,882
|
$
|
116,588
|
$
|
79,642
|
(a)
|
The
Company acquired the ConAgra chicken division on November 23,
2003 for
$635.2 million. The acquisition has been accounted for as a purchase
and
the results of operations for this acquisition have been included
in our
consolidated results of operations since the acquisition
date.
|
(b)
|
Included
in fiscal 2004 are restructuring charges totaling $72.1 million
offset
somewhat by the non-recurring recovery of $23.8 million representing
the
gain recognized on the insurance proceeds received in connection
with the
October 2002 recall. In addition, the Company estimates its losses
related
to the October 2002 recall (excluding the insurance recovery
described
above) negatively affected gross profit and operating income
by $20.0
million in fiscal 2004 and $65.0 million in fiscal
2003.
|
(c)
|
Includes
amortization of capitalized financing costs of approximately
$2.3 million,
$2.0 million and $1.5 million in fiscal years 2005, 2004 and
2003,
respectively.
|
(In
thousands, except per share data)
|
Year
ended September 30, 2006
|
||||||||||||||||||||||||||||||
|
First
|
Second
|
Third
|
Fourth
|
Fiscal
|
||||||||||||||||||||||||||
Quarter
|
Quarter
|
Quarter
|
Quarter
(a)
|
Year
|
|||||||||||||||||||||||||||
Net
sales
|
$
|
1,343,812
|
$
|
1,265,709
|
$
|
1,287,646
|
$
|
1,338,398
|
$
|
5,235,565
|
|||||||||||||||||||||
Gross
profit
|
118,400
|
37,201
|
42,696
|
99,303
|
297,600
|
||||||||||||||||||||||||||
Operating
income (loss)
|
46,198
|
(37,936)
|
(26,737)
|
21,477
|
3,002
|
||||||||||||||||||||||||||
Net
income (loss)
|
25,678
|
(31,954)
|
(20,473)
|
(7,483)
|
(34,232)
|
||||||||||||||||||||||||||
Per
Share:
|
|||||||||||||||||||||||||||||||
Net
income (loss)
|
0.39
|
(0.48)
|
(0.31)
|
(0.11)
|
(0.51)
|
||||||||||||||||||||||||||
Cash
dividends
|
1.0225
|
0.0225
|
0.0225
|
0.0225
|
1.090
|
(In
thousands, except per share data)
|
Year
ended October 1, 2005
|
||||||||||||||||||||||||||||||
First
|
Second
|
Third
|
Fourth
|
Fiscal
|
|||||||||||||||||||||||||||
Quarter
|
Quarter(b)
|
Quarter
|
Quarter
|
Year
|
|||||||||||||||||||||||||||
Net
sales
|
$
|
1,368,247
|
$
|
1,375,321
|
$
|
1,440,039
|
$
|
1,482,668
|
$
|
5,666,275
|
|||||||||||||||||||||
Gross
profit
|
161,118
|
164,055
|
219,221
|
200,805
|
745,199
|
||||||||||||||||||||||||||
Operating
income
|
91,015
|
88,955
|
135,993
|
119,849
|
435,812
|
||||||||||||||||||||||||||
Net
income
|
48,509
|
56,389
|
85,353
|
74,728
|
264,979
|
||||||||||||||||||||||||||
Per
Share:
|
|||||||||||||||||||||||||||||||
Net
income
|
0.73
|
0.85
|
1.28
|
1.12
|
3.98
|
||||||||||||||||||||||||||
Cash
dividends
|
0.015
|
0.015
|
0.015
|
0.015
|
0.06
|
||||||||||||||||||||||||||
(a)
|
Included
in gross profit in the fourth quarter of fiscal 2006 are charges
for
accounting adjustments of $6.4 million, pretax, related to certain
benefit
plans. Included in net income in the fourth quarter of fiscal
2006 is a
$25.8 million tax provision for the American Jobs Creation Act
of 2004 and
a $10.6 million tax benefit for a change in estimate of contingency
reserves as described in Note A-“Business and Summary of Significant
Accounting Policies - Income Taxes”.
|
(b)
|
Included
in net income in the second quarter of fiscal 2005 is a $7.5
million after
tax gain from a litigation
settlement.
|
PILGRIM'S
PRIDE CORPORATION
|
|||||||||||||||||||||||||||||||
SCHEDULE
II-VALUATION AND QUALIFYING ACCOUNTS
|
|||||||||||||||||||||||||||||||
Col.
A
|
Col.
B
|
Col.
C
|
Col.
D
|
Col.
E
|
|||||||||||||||||||||||||||
ADDITIONS
|
|||||||||||||||||||||||||||||||
Charged
to
|
|||||||||||||||||||||||||||||||
Balance
at
|
Charged
to
|
Other
|
Balance
at
|
||||||||||||||||||||||||||||
DESCRIPTION
|
Beginning
|
Costs
|
Accounts-
|
Deductions
|
end
|
||||||||||||||||||||||||||
of
Period
|
and
Expenses
|
Describe(1)
|
Describe(2)
|
of
Period
|
|||||||||||||||||||||||||||
Year
ended September 30, 2006:
|
|||||||||||||||||||||||||||||||
Reserves
and allowances deducted
|
|||||||||||||||||||||||||||||||
from
asset accounts:
|
|||||||||||||||||||||||||||||||
Allowance
for doubtful accounts
|
$
|
4,663,155
|
$
|
(100,676
|
)
|
$
|
--
|
$
|
2,478,070
|
$
|
2,084,409
|
||||||||||||||||||||
Year
ended October 1, 2005:
|
|||||||||||||||||||||||||||||||
Reserves
and allowances deducted
|
|||||||||||||||||||||||||||||||
from
asset accounts:
|
|||||||||||||||||||||||||||||||
Allowance
for doubtful accounts
|
$
|
4,244,644
|
$
|
767,923
|
$
|
--
|
$
|
349,412
|
$
|
4,663,155
|
|||||||||||||||||||||
Year
ended October 2, 2004:
|
|||||||||||||||||||||||||||||||
Reserves
and allowances deducted
|
|||||||||||||||||||||||||||||||
from
asset accounts:
|
|||||||||||||||||||||||||||||||
Allowance
for doubtful accounts
|
$
|
1,184,199
|
$
|
1,124,878
|
$
|
5,228,623
|
$
|
3,293,056
|
$
|
4,244,644
|
|||||||||||||||||||||
(1)
Balance of allowance for doubtful accounts established for accounts
receivable acquired from ConAgra.
|
|||||||||||||||||||||||||||||||
(2)
Uncollectible accounts written off, net of
recoveries.
|
(a)
|
Consent
to the consummation of the Acquisition Transaction and waive any
Potential
Default or Event of Default under Sections 7.6, 7.7, 7.17 and 7.27
of the
Credit Agreement as a result
therefrom;
|
(b)
|
Consent
to the Acquisition Financing in a principal amount of up to $1.315
billion
and any liens, pledges, mortgages and security interests granted
on the
assets of the Company and the Target (other than the Collateral)
to secure
such Acquisition Financing, which shall be in addition to any other
indebtedness, liens, pledges, mortgages and security interests permitted
by Sections 7.15 and 7.16 of the Credit Agreement, and waive any
Potential
Default or Event of Default under Sections 7.15 and 7.16 of the Credit
Agreement as a result therefrom;
|
(c)
|
Consent
to the indebtedness and liabilities evidenced or payable in respect
of the
financing of the Senior Notes and Subordinated
Capital Certificates of
Target (or its successor) in the aggregate principal amount of up
to $165
million, which shall be in addition to any other indebtedness permitted
by
Section 7.16 of the Credit Agreement, and waive any Potential Default
or
Event of Default under Section 7.16 of the Credit Agreement as a
result
therefrom; and
|
(d)
|
Waive
any Potential Default or Event of Default under Sections 7.9 and
7.11 of
the Credit Agreement from and after the closing of the Acquisition
Transaction in which the Company has acquired at least a majority
of the
outstanding capital stock of the Target through and including March
31,
2007. In the event the Company has acquired at least a majority of
the
outstanding capital stock of the Target, then on or before March
31, 2007,
Agent, the Banks and the Company agree, in good faith, to amend Sections
7.9 and 7.11 in order to take into account and give effect to the
consummation of the Acquisition
Transaction.
|
John
Hancock Financial Services, Inc.
|
128
South Tryon Street
Suite
880
Charlotte,
NC 28202
(704)
377-2653
Fax:
(704) 377-8545
E-mail:
kwarlick@jhancock.com
Website:http://food.jhancock.com
|
|
Kenneth
L. Warlick
Managing
Director
|
1. |
Consent
to the consummation of the Acquisition Transaction and waive any Potential
Event of Default or Event of Default under Sections 10.7, 10.10 and
10.12
of the Note Purchase Agreement that may result
therefrom.
|
2. |
Consent
to the incurrence or assumption of Debt of Target (or its successor),
including Debt evidenced by the Senior Notes, Subordinated
Capital Certificates and term loans
and agree that the Company shall not be required to provide any guaranty
under Section 10.11 of the Note Purchase Agreement or otherwise so
long as
the Company has not caused the Company's 9 5/8% Senior Notes due 2011
and
the Company's 9 1/4% Senior Subordinated Notes due 2013 to be guaranteed
by the Target (or its successor).
|
3. |
Consent
to the Acquisition Financing, provided that in the event that the Hancock
Purchasers determine to participate in such Acquisition Financing pursuant
to the 2006 Amended and Restated Credit Agreement dated as of
September 21, 2006 (the "Credit
Agreement")
by and between CoBank, ACB, the other parties named therein and the
Company (the "Acquisition
Financing Facility"),
such participation shall be subject to the following additional
terms:
|
(a) |
The
Hancock Purchasers will be entitled to participate in the Acquisition
Financing Facility in the aggregate amount of $100 million (the
"Hancock
Participation"),
which participation will be in the form of a Term Loan (as provided
in the
Credit Agreement), to be funded in full on the initial Term Loan Advance
Date (as defined in the Credit Agreement). The Hancock Participation
will
consist of a refinancing of the debt outstanding under the Notes with
the
balance in the form of new advances. The entire Hancock Participation
will
be at a fixed rate of interest as provided in the Credit Agreement.
The
amortization of the Hancock Participation will be as set forth in the
Credit Agreement.
|
(b) |
The
Company will pay to the Hancock Purchasers the following fees concurrent
with the initial funding of the Term Loan by the Hancock
Purchasers:
|
(i) |
with
respect to the 2003 Series A Notes that are subject to the Series A
Floating Rate, 1% of the then current balance of such Notes; provided,
however, if for any reason less than $100 million of the Term Loan
with
the Hancock Purchasers is not funded on or before March 31, 2007, then
the
fee described in this clause (i) shall be increased to 2% of the 2003
Series A Floating Rate Notes and such additional amount shall be due
and
payable on March 31, 2007; and
|
(ii) |
with
respect to the Fixed Rate Notes, a fee (if positive) equal to the
Make-Whole Premium calculated as of such date, provided that for purposes
of calculating such Premium the Reinvestment Yield will be determined
based on the Term Loan fixed rates under the Acquisition Financing
Facility (the "Acquisition
Facility Fixed Rate").
Notwithstanding the foregoing, if the Acquisition Facility Fixed Rate
is
greater than or equal to 6.68%, the Make-Whole Premium on the Fixed
Rate
Notes will be waived.
|
4. |
Concurrent
with the execution of this consent, ING's revolving commitment provided
in
Section 2.4 of the Note Purchase Agreement will be terminated, any
amounts
outstanding and any accrued commitment fees under such revolving
commitment will be immediately repaid in full and ING shall not have
any
further obligations to make advances
thereunder.
|
5. |
Concurrent
with the initial funding of the Term Loan by the Hancock Purchasers,
the
Note Purchase Agreement will be
terminated.
|
6. |
To
the extent any Acquisition Financing is issued by an Unrestricted
Subsidiary (as defined in the indentures related to the Company's 9
5/8%
Senior Unsecured Notes due 2011 and Company's 9 1/4% Senior Subordinated
Notes due 2013), then notwithstanding anything contained in the Note
Purchase Agreement to the contrary, no default with respect to any
such
Acquisition Financing (including any rights that the holders thereof
may
have to take enforcement action against the Subsidiary obligated in
respect of such Acquisition Financing) would constitute a Potential
Event
of Default or Event of Default under the Note Purchase Agreement.
|
7. |
Current
Liabilities and Funded Debt shall not include any indebtedness so long
as
the trustee or agent in respect of such indebtedness holds cash and
cash
equivalents sufficient to repay the principal balance of such
indebtedness.
|
Year
Ended
|
|||||||||||||||||||
September
30, 2006
|
October
1,
2005
|
October
2,
2004
|
September
27, 2003
|
September
28, 2002
|
|||||||||||||||
(amounts in thousands, except ratio)
|
|||||||||||||||||||
EARNINGS:
|
|||||||||||||||||||
Income
before income taxes
|
$
|
(36,317
|
)
|
$
|
403,523
|
$
|
208,535
|
$
|
63,235
|
$
|
61,861
|
||||||||
Add:
Total fixed charges (see below)
|
64,172
|
64,735
|
67,168
|
49,647
|
48,394
|
||||||||||||||
Less:
Interest Capitalized
|
(4,298
|
)
|
(2,841
|
)
|
(1,714
|
)
|
(1,535
|
)
|
(7,153
|
)
|
|||||||||
Total
Earnings
|
$
|
26,557
|
$
|
465,417
|
$
|
273,989
|
$
|
111,347
|
$
|
103,102
|
|||||||||
FIXED
CHARGES:
|
|||||||||||||||||||
Interest
(1)
|
$
|
54,899
|
$
|
52,426
|
$
|
56,150
|
40,356
|
$
|
38,840
|
||||||||||
Portion
of rental expense representative of the interest factor
(2)
|
12,273
|
12,309
|
11,018
|
9,291
|
9,554
|
||||||||||||||
Total
fixed charges
|
$
|
67,172
|
$
|
64,735
|
$
|
67,168
|
$
|
49,647
|
$
|
48,394
|
|||||||||
Ratio
of earnings to fixed charges
|
(3
|
)
|
7.19
|
4.08
|
2.24
|
|
(4
|
)
|
|||||||||||
(1)
Interest includes amortization of capitalized financing fees.
|
|||||||||||||||||||
(2)
One-third of rental expenses is assumed to be representative
of the
interest factor.
|
|||||||||||||||||||
(3)
Earnings were insufficient to cover fixed charges by
$40,615.
|
|||||||||||||||||||
(4)
Earnings were insufficient to cover fixed charges by
$4,104.
|
SUBSIDIARIES
OF REGISTRANT
|
JURISDICTION
OF INCORPORATION OR ORGANIZATION
|
||
1.
|
COMERCIALIZADORA
DE CARNES DE MEXICO S. DE R.L. DE C.
V.
|
MEXICO
|
|
2.
|
INCUBADORA
HIDALGO S. DE R.L. DE C. V.
|
MEXICO
|
|
3.
|
INMOBILIARIA
AVICOLA PILGRIM’S PRIDE, S. DE R.L.
|
MEXICO
|
|
4.
|
PILGRIM’S
PRIDE S. DE R.L. DE C. V.
|
MEXICO
|
|
5.
|
GALLINA
PESADA S.A. DE C.V.
|
MEXICO
|
|
6.
|
PILGRIM'S
PRIDE FUNDING CORPORATION
|
DELAWARE
|
|
7.
|
PPC
OF DELAWARE BUSINESS TRUST
|
DELAWARE
|
|
8
|
PILGRIM’S
PRIDE MKTG, LTD.
|
TEXAS
|
|
9.
|
PILGRIM'S
PRIDE AFFORDABLE HOUSING CORPORATION
|
TEXAS
|
|
10.
|
GRUPO
PILGRIM’S PRIDE FUNDING HOLDINGS S. DE R.L. DE
C.V.
|
MEXICO
|
|
11.
|
GRUPO
PILGRIM’S PRIDE FUNDING S. DE R.L. DE C.V.
|
MEXICO
|
|
12.
|
VALLEY
RAIL SERVICE, INC.
|
TEXAS
|
|
13.
|
PILGRIM’S
PRIDE OF NEVADA, INC.
|
NEVADA
|
|
14.
|
SERVICIOS
ADMINISTRATIVOS PILGRIM’S PRIDE S. DE R.L. DE C.
V.
|
MEXICO
|
|
15.
|
PFS
DISTRIBUTION COMPANY
|
TEXAS
|
|
16.
|
MAYFLOWER
INSURANCE
|
BERMUDA
|
|
17.
|
TO-RICOS,
INC.
|
NEBRASKA
|
|
18.
|
PILGRIM’S
PRIDE CORPORATION OF WEST VIRGINIA, INC.
|
WEST
VIRGINIA
|
|
19.
|
PPC
TRANSPORTATION COMPANY
|
DELAWARE
|
|
20.
|
PILGRIM’S
PRIDE LUXEMBOURG FUNDING S.A.R. L.
|
LUXEMBOURG
|
|
21.
|
PILGRIM’S
TURKEY COMPANY, LLC
|
DELAWARE
|
|
22.
|
OPERADORA
DE PRODUCTOS AVICOLAS S. DE R.L. DE C.
V.(INACTIVE)
|
MEXICO
|
|
23.
|
CARNES
Y PRODUCTOS AVICOLAS DE MEXICO S. DE R.L. DE C.
V.(INACTIVE)
|
MEXICO
|
|
24.
|
POPPSA
3, LLC
|
DELAWARE
|
|
25.
|
POPPSA
4, LLC
|
DELAWARE
|
|
26.
|
PROTEIN
ACQUISITION CORPORATION
|
DELAWARE
|
|
27.
|
TO-RICOS
DISTRIBUTION, LTD.
|
BERMUDA
|
|
28.
|
TO-RICOS,
LTD.
|
BERMUDA
|
|
29.
|
TO-RICOS,
(CAYMAN) INC.
(INACTIVE)
|
CAYMAN
|
|
30.
|
TO-RICOS
DISTRIBUTION, INC.
(INACTIVE)
|
CAYMAN
|
|
31.
|
PPC
OF DELAWARE, LLC (INACTIVE)
|
DELAWARE
|
|
32.
|
PILGRIM’S
PRIDE, LLC
|
DELAWARE
|
|
33.
|
PPC
OF DELAWARE, INC.
|
DELAWARE
|
|
34.
|
Avicola Pilgrim's Pride de Mexico, S. DE R.L. DE C. V. | MEXICO |
1.
|
I
have reviewed this annual report on Form 10-K for the fiscal year
ended
Septemer 30, 2006, of Pilgrim's Pride Corporation;
|
|||
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statement made, in light of the circumstances under which such
statements
were made, not misleading with respect to the period covered by
this
report;
|
|||
3.
|
Based
on my knowledge, the financial statements and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual
report;
|
|||
4.
|
The
registrant’s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures
(as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
|||
a.)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including
its
consolidated subsidiaries, is made known to us by others within
those
entities, particularly during the period in which this annual report
is
being prepared;
|
|||
b.)
|
Designed
such internal control over financial reporting, or caused such
internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|||
c.)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based upon such evaluation; and
|
|||
d.)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
|
|||
5.
|
The
registrant’s other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting,
to
the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent
functions):
|
|||
a.)
|
All
significant deficiencies and material weaknesses in the design
or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|||
b.)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
|||
Date:
November 17, 2006
|
/s/
Lonnie "Bo" Pilgrim
|
Lonnie
"Bo" Pilgrim
|
|
Co-Principal
Executive
Officer
|
1.
|
I
have reviewed this annual report on Form 10-K for the fiscal year
ended
Septemer 30, 2006, of Pilgrim's Pride Corporation;
|
|||
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statement made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|||
3.
|
Based
on my knowledge, the financial statements and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual
report;
|
|||
4.
|
The
registrant’s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
|||
a.)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is
being prepared;
|
|||
b.)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|||
c.)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based upon such evaluation; and
|
|||
d.)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
|
|||
5.
|
The
registrant’s other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting,
to
the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent
functions):
|
|||
a.)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|||
b.)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
|||
Date:
November 17, 2006
|
/s/
O.B. Goolsby, Jr.
|
O.B.
Goolsby, Jr.
|
|
Co-Principal
Executive Officer
|
1.
|
I
have reviewed this annual report on Form 10-K for the fiscal year
ended
September 30, 2006, of Pilgrim's Pride Corporation;
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statement made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
3.
|
Based
on my knowledge, the financial statements and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual
report;
|
|
4.
|
The
registrant’s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is
being prepared;
|
|
b.)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c.)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based upon such evaluation; and
|
|
d.)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting
|
5.
|
The
registrant’s other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting,
to
the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent
functions):
|
|||
a.)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|||
b.)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting
|
|||
Date:
November 17, 2006
|
/s/
Richard A. Cogdill
|
|||
Richard
A. Cogdill
|
||||
Chief
Financial and Accounting
Officer
|
Date:
November 17, 2006
|
/s/
Lonnie “Bo” Pilgrim
|
Lonnie
“Bo” Pilgrim
|
|
Co-Principal
Executive Officer
|
|
Date:
November 17, 2006
|
/s/
O.B. Goolsby, Jr.
|
O.B.
Goolsby, Jr.
|
|
Co-Principal
Executive Officer
|
|
Date:
November 17, 2006
|
/s/
Richard A. Cogdill
|
Richard
A. Cogdill
|
|
Chief
Financial and Accounting Officer
|
|