UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, DC
20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the
Securities Exchange Act of
1934
Date of
report (Date of earliest event reported): May 5, 2008
PILGRIM'S PRIDE
CORPORATION
(Exact
Name of Registrant as Specified in its Charter)
|
Delaware
|
1-9273
|
75-1285071
|
|
(State or Other Jurisdiction
|
(Commission
|
(IRS
Employer
|
|
of Incorporation)
|
File
Number)
|
Identification
No.)
|
|
4845 US Hwy.
271 N.
|
|
|
Pittsburg,
Texas
|
75686-0093
|
|
(Address of Principal Executive Offices)
|
(ZIP
Code)
|
Registrant's
telephone number, including area code: (903) 434-1000
Not Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
q
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
q
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
q
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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q
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)
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Item 2.02. Results of Operations and Financial
Condition.
The
information in this Item 2.02 and the Exhibit attached hereto shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly
set forth by specific reference in such filing.
On May 5,
2008, Pilgrim's Pride Corporation reported a net loss of $111.4 million, or
$1.67 per share, on net sales of $2.1 billion for the second fiscal quarter
ended March 29, 2008. These results include asset impairment and
restructuring charges of approximately $17.7 million, $11.1 million net of tax,
or $0.17 per share, related to the previously announced closing of one
processing plant and six distribution centers. For the second quarter of fiscal
2007, the company reported a net loss of $40.1 million, or $0.60 per share, on
total sales of $1.99 billion.
The press
release is furnished as Exhibit 99.1 to this Form 8-K.
Item 9.01. Financial Statements and
Exhibits.
(c)
Exhibits
Exhibit
Number Description
99.1
Press Release dated May 5, 2008.
Signatures
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
PILGRIM'S PRIDE
CORPORATION
Date: May
5, 2008
By:
/s/ Richard A
Cogdill
Richard A. Cogdill
Executive Vice President,
Chief Financial Officer,
Secretary and Treasurer
Exhibit Index
Exhibit
Number Description
99.1 Press
Release dated May 5, 2008.
PILGRIM'S
PRIDE CORPORATION REPORTS FINANCIAL RESULTS
FOR
SECOND QUARTER OF FISCAL 2008
PITTSBURG,
Texas, May 5, 2008 – Pilgrim's Pride Corporation (NYSE: PPC) today reported a
net loss of $111.4 million, or $1.67 per share, on net sales of $2.1 billion for
the second fiscal quarter ended March 29, 2008. These results include
asset impairment and restructuring charges of approximately $17.7 million, $11.1
million net of tax, or $0.17 per share, related to the previously announced
closing of one processing plant and six distribution centers. For the second
quarter of fiscal 2007, the company reported a net loss of $40.1 million, or
$0.60 per share, on total sales of $1.99 billion.
“Our
financial results in the second quarter of fiscal 2008 reflect the crisis facing
our company and industry from record-high feed costs caused by the federal
government’s deeply flawed ethanol policy,” said Clint Rivers, president and
chief executive officer of Pilgrim’s Pride.
Pilgrim’s
Pride said its costs for corn and soybean meal in the quarter climbed $200
million, when compared to the same period a year ago, as the average price for a
bushel of corn increased 29% and soybean meal gained more than
63%. Based on the actual costs incurred for the first half of the
fiscal year and current commodity futures markets for the remainder, the
company’s total feed-ingredient costs for fiscal 2008 would be up more than $800
million from last fiscal year.
“While we
continue working to pass along price increases to our customers, the simple fact
is that to date, we have not been able to raise prices fast enough to match the
extreme price volatility in the grain markets,” Mr. Rivers
explained.
“The
operating environment for chicken producers today is among the most difficult I
have seen during my 27 years in the business,” he said. “The federal
government has helped spark a growing worldwide food crisis by mandating
corn-based ethanol production at the expense of affordable
food. American consumers are only just beginning to feel the impact
of sharply higher food prices. There will be much more to come as
food producers fully pass along these higher input costs. Meanwhile,
the government is using tax dollars to provide generous subsidies to big oil
companies for blending ethanol and stiff duties on imported ethanol help protect
domestic ethanol producers at the expense of end consumers. As a
direct result of these soaring grain costs, a growing number of food companies
are shutting down plants and eliminating thousands of jobs in rural
America.”
Mr.
Rivers added: “At Pilgrim’s Pride, we have made a series of tough decisions over
the past two months to address the challenges facing our
business. Those decisions include closing a processing plant and six
distribution centers, and a planned reduction in production by 5% in the second
half of fiscal 2008. While consumer demand for chicken remains strong, we
believe that production cuts are necessary to bring supply into better balance
with demand at appropriate selling prices to cover input
costs. Indeed, industry data for the last full week in April show
that egg sets declined 2.4% year over year, the fifth consecutive weekly
decline. In addition, market pricing for breast meat has begun a
much-needed rise, though we believe that little, if any, of this increase is
attributable to the recent production cutbacks. While we are
encouraged by these positive trends, we believe that high grain costs will
continue to exert pressure on our operating results during the second half of
fiscal 2008. Accordingly, we continue to evaluate our production
facilities for potential mix changes, closure, sale and/or consolidation in an
effort to position the company for a return to profitability.”
For the
first six months of fiscal 2008, Pilgrim’s Pride reported a net loss of $143.8
million, or $2.16 per share, on net sales of $4.1 billion compared to a pro
forma net loss of $82.9 million, or $1.25 per share, on pro forma net sales of
$3.8 billion in the same period last year. The pro forma amounts
assume the acquisition of Gold Kist Inc., which closed on December 27, 2006, was
completed on September 30, 2006, and included in the operating results for the
six months. The results for the first six months of fiscal 2008
include a non-recurring income tax charge of approximately $13.0 million, or
$0.20 per share, related to an adjustment in deferred taxes as a result of a
newly enacted tax law in Mexico, and asset impairment and restructuring charges
of approximately $17.7 million, $11.1 million net of tax, or $0.17 per share,
related to the closing of one processing plant and six distribution
centers.
Conference
Call Information
A
conference call to discuss the Company's first-quarter results will be held at
10 a.m. Central (11 a.m. Eastern) on May 5, 2008. To listen live via
telephone, call toll-free 877-656-8906, verbal pass code
Pilgrim’s. The call also will be broadcast live over the Internet at
http://www.videonewswire.com/event.asp?id=47334. (Please
copy and paste the link into the browser.)
Additionally,
the Company has posted a slide presentation on its website at http://www.pilgrimspride.com,
which may be viewed by listeners in connection with today’s conference
call. The webcast will be available for replay within approximately
two hours of the conclusion of the call. A telephone replay will be
available beginning at approximately 2 p.m. (Central) on May 5 at toll-free
877-919-4059 pass code 48467528. The replay will be available for 60
days.
About
Pilgrim’s Pride
Pilgrim’s
Pride Corporation is the largest chicken company in the United States and Puerto
Rico and the second-largest in Mexico. Pilgrim’s Pride employs
approximately 54,500 people and operates 37 chicken processing and 12
prepared-foods facilities, with major operations in Texas, Alabama, Arkansas,
Florida, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, South
Carolina, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico as well as
other facilities in Arizona, Iowa, Mississippi, Ohio and Utah.
Pilgrim's
Pride products are sold to foodservice, retail and frozen entree customers. The
Company's primary distribution is through retailers, foodservice distributors
and restaurants throughout the United States and Puerto Rico and in the Northern
and Central regions of Mexico. For more information, please visit http://www.pilgrimspride.com.
Forward-Looking
Statements
Statements contained in this press
release that state the intentions, plans, hopes, beliefs, anticipations,
expectations or predictions of the future of Pilgrim's Pride Corporation and its
management, including as to changes in pricing, demand and market conditions for
chicken products and profitability, are forward-looking statements. It is
important to note that the actual results could differ materially from those
projected in such forward-looking statements. Factors that could
cause actual results to differ materially from those projected in such
forward-looking statements include: matters affecting the poultry industry
generally, including fluctuations in the commodity prices of feed ingredients,
chicken and turkey; additional outbreaks of avian influenza or other diseases,
either in our own flocks or elsewhere, affecting our ability to conduct our
operations and/or demand for our poultry products; contamination of our
products, which has previously and can in the future lead to product liability
claims and product recalls; exposure to risks related to product liability,
product recalls, property damage and injuries to persons, for which insurance
coverage is expensive, limited and potentially inadequate; management of our
cash resources, particularly in light of our substantial leverage; restrictions
imposed by, and as a result of, our substantial leverage; changes in laws or
regulations affecting our operations or the application thereof; new immigration legislation or
increased enforcement efforts in connection with existing immigration
legislation that cause our costs of doing business to increase, cause us to
change the way in which we do business, or otherwise disrupt our operations;
competitive factors and pricing pressures or the loss of one or more of our
largest customers; inability to consummate, or effectively integrate, any
acquisition, including integrating our recent acquisition of Gold Kist, or
realize the associated cost savings and operating synergies currently
anticipated; currency exchange rate fluctuations, trade barriers, exchange
controls, expropriation and other risks associated with foreign operations;
disruptions in international markets and distribution channels; and the impact
of uncertainties of litigation as well as other risks described under "Risk
Factors" in our Annual Report on Form 10-K and subsequent filings with the
Securities and Exchange Commission. Pilgrim's Pride Corporation undertakes no
obligation to update or revise publicly any forward-looking statements, whether
as a result of new information, future events or otherwise.
Contact: Gary
Rhodes
Vice President, Corporate
Communications & Investor Relations
(903) 434-1495
PILGRIM'S
PRIDE CORPORATION
News
Release
May 5,
2008
Page
3
PILGRIM'S
PRIDE CORPORATION
Consolidated
Statements of Operations
(Unaudited)
[In
thousands, except share and per share data]
|
Three Months Ended
|
March
29, 2008
|
March
31, 2007
|
||||||
|
Net
sales
|
$ | 2,100,794 | $ | 1,987,185 | ||||
|
Cost
of sales
|
2,124,173 | 1,903,136 | ||||||
|
Asset
impairment
|
12,022 | -- | ||||||
|
Gross
profit (loss)
|
(35,401 | ) | 84,049 | |||||
|
Selling,
general and administrative
|
102,559 | 94,723 | ||||||
|
Restructuring
charges
|
5,669 | -- | ||||||
|
Operating
loss
|
(143,629 | ) | (10,674 | ) | ||||
|
Other
expense (income):
|
||||||||
|
Interest
expense
|
33,777 | 38,696 | ||||||
|
Interest
income
|
(446 | ) | (1,684 | ) | ||||
|
Loss
on early extinguishment of debt
|
-- | 14,475 | ||||||
|
Miscellaneous,
net
|
(1,161 | ) | (3,668 | ) | ||||
|
Total
other expenses, net
|
32,170 | 47,819 | ||||||
|
Loss
from continuing operations before income taxes
|
(175,799 | ) | (58,493 | ) | ||||
|
Income
tax benefit
|
(64,295 | ) | (19,426 | ) | ||||
|
Loss
from continuing operations
|
(111,504 | ) | (39,067 | ) | ||||
|
Loss
from operation of discontinued business, net of tax
|
(847 | ) | (1,010 | ) | ||||
|
Gain
on disposal of discontinued business, net of tax
|
903 | -- | ||||||
|
Net
loss
|
$ | (111,448 | ) | $ | (40,077 | ) | ||
|
Net
loss per common share – basic and diluted:
|
||||||||
|
Continuing
operations
|
$ | (1.67 | ) | $ | (0.59 | ) | ||
|
Discontinued
business
|
-- | (0.01 | ) | |||||
|
Net
loss
|
$ | (1.67 | ) | $ | (0.60 | ) | ||
|
Dividends
declared per common share
|
$ | 0.0225 | $ | 0.0225 | ||||
|
Weighted
average shares outstanding
|
66,555,733 | 66,555,733 | ||||||
PILGRIM'S
PRIDE CORPORATION
News
Release
May 5,
2008
Page
4
PILGRIM'S
PRIDE CORPORATION
Consolidated
Statements of Operations
(Unaudited)
[In
thousands, except share and per share data]
|
Six Months
Ended
|
March
29, 2008
|
March
31, 2007
|
||||||
|
Net
sales
|
$ | 4,148,147 | $ | 3,279,142 | ||||
|
Cost
of sales
|
4,066,423 | 3,132,855 | ||||||
|
Asset
impairment
|
12,022 | -- | ||||||
|
Gross
profit
|
69,702 | 146,287 | ||||||
|
Selling,
general and administrative
|
206,992 | 161,863 | ||||||
|
Restructuring
charges
|
5,669 | -- | ||||||
|
Operating
loss
|
(142,959 | ) | (15,576 | ) | ||||
|
Other
expense (income):
|
||||||||
|
Interest
expense
|
63,788 | 52,416 | ||||||
|
Interest
income
|
(954 | ) | (2,993 | ) | ||||
|
Loss
on early extinguishment of debt
|
-- | 14,475 | ||||||
|
Miscellaneous,
net
|
(4,024 | ) | (4,679 | ) | ||||
|
Total
other expenses, net
|
58,810 | 59,219 | ||||||
|
Loss
from continuing operations before income taxes
|
(201,769 | ) | (74,795 | ) | ||||
|
Income
tax benefit
|
(57,055 | ) | (25,872 | ) | ||||
|
Loss
from continuing operations
|
(144,714 | ) | (48,923 | ) | ||||
|
Loss
from operation of discontinued business, net of tax
|
34 | 111 | ||||||
|
Gain
on disposal of discontinued business, net of tax
|
903 | -- | ||||||
|
Net
loss
|
$ | (143,777 | ) | $ | (48,812 | ) | ||
|
Net
income (loss) per common share – basic and diluted:
|
||||||||
|
Continuing
operations
|
$ | (2.17 | ) | $ | (0.73 | ) | ||
|
Discontinued
business
|
0.01 | -- | ||||||
|
Net
loss
|
$ | (2.16 | ) | $ | (0.73 | ) | ||
|
Dividends
declared per common share
|
$ | 0.0450 | $ | 0.0450 | ||||
|
Weighted
average shares outstanding
|
66,555,733 | 66,555,733 | ||||||
PILGRIM'S
PRIDE CORPORATION
News
Release
May 5,
2008
Page
5
|
PILGRIM'S
PRIDE CORPORATION
Pro
forma Financial Information
(Unaudited)
(In
thousands except per share amounts)
The
unaudited pro forma financial information has been presented as if the
acquisition of Gold Kist Inc. had occurred as of the beginning of the
fiscal year presented.
|
||||||||
|
Six Months
Ended
|
March
29, 2008
|
March
31, 2007
|
||||||
|
(Actual)
|
(Pro
forma)
|
|||||||
|
Net
sales
|
$ | 4,148,147 | $ | 3,806,952 | ||||
|
Depreciation
and amortization
|
$ | 115,601 | $ | 112,776 | ||||
|
Operating
loss
|
$ | (142,959 | ) | $ | (46,008 | ) | ||
|
Interest
expense, net
|
$ | 62,834 | $ | 75,245 | ||||
|
Income
tax benefit
|
$ | (57,055 | ) | $ | (46,579 | ) | ||
|
Loss
from continuing operations
|
$ | (144,714 | ) | $ | (83,031 | ) | ||
|
Net
loss
|
$ | (143,777 | ) | $ | (82,920 | ) | ||
|
Net
loss per common share
|
$ | (2.16 | ) | $ | (1.25 | ) | ||
|
EBITDA
|
$ | (25,436 | ) | $ | 55,323 | |||
|
Capital
expenditures
|
$ | 70,216 | $ | 107,193 | ||||
PILGRIM'S
PRIDE CORPORATION
News
Release
May 5,
2008
Page
6
PILGRIM'S
PRIDE CORPORATION
Condensed
Consolidated Balance Sheets
(Unaudited)
[In
thousands]
|
March
29, 2008
|
September
29, 2007
|
|||||||
|
ASSETS
|
||||||||
|
Cash
and cash equivalents
|
$ | 97,195 | $ | 66,168 | ||||
|
Investments
in available-for-sale securities
|
10,205 | 8,153 | ||||||
|
Other
current assets
|
1,378,863 | 1,225,547 | ||||||
|
Total
current assets
|
1,486,263 | 1,299,868 | ||||||
|
Goodwill
|
499,669 | 505,166 | ||||||
|
Other
assets
|
125,053 | 138,546 | ||||||
|
Investments
in available-for-sale securities
|
44,227 | 46,035 | ||||||
|
Property,
plant and equipment, net
|
1,736,817 | 1,784,621 | ||||||
|
Total
assets
|
$ | 3,892,029 | $ | 3,774,236 | ||||
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
||||||||
|
Current
maturities of long-term debt
|
$ | 2,891 | $ | 2,872 | ||||
|
Other
current liabilities
|
901,968 | 902,330 | ||||||
|
Total
current liabilities
|
904,859 | 905,202 | ||||||
|
Long-term
debt, less current maturities
|
1,629,930 | 1,318,558 | ||||||
|
Deferred
income taxes
|
248,486 | 326,570 | ||||||
|
Other
long-term liabilities
|
83,990 | 51,685 | ||||||
|
Total
stockholders' equity
|
1,024,764 | 1,172,221 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 3,892,029 | $ | 3,774,236 | ||||
PILGRIM'S
PRIDE CORPORATION
News
Release
May 5,
2008
Page
7
PILGRIM'S
PRIDE CORPORATION
Selected
Financial Information
(Unaudited)
(In thousands)
Note: “EBITDA”
is defined as the sum of the income (loss) from continuing operations plus
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. We have also included
EBITDA as adjusted to exclude a loss on early extinguishment of debt. We believe
investors may be interested in this information as this is a manner in which our
management analyzes our results from continuing operations. EBITDA is
calculated as follows:
|
Three
Months Ended
|
March
29, 2008
Actual
|
March
31, 2007
Actual
|
||||||
|
Loss
from continuing operations
|
$ | (111,504 | ) | $ | (39,067 | ) | ||
|
Add:
|
||||||||
|
Income
tax benefit
|
(64,295 | ) | (19,426 | ) | ||||
|
Interest
expense, net
|
33,331 | 37,012 | ||||||
|
Depreciation
and amortization
|
60,057 | 54,575 | ||||||
|
Minus:
|
||||||||
|
Amortization
of capitalized financing costs
|
1,058 | 1,110 | ||||||
|
EBITDA
|
$ | (83,469 | ) | $ | 31,984 | |||
|
Asset
impairment and restructuring charges
|
17,691 | -- | ||||||
|
Loss
on early extinguishment of debt
|
-- | 14,475 | ||||||
|
EBITDA
- Adjusted
|
(65,778 | ) | 46,459 | |||||
|
Capital
expenditures
|
$ | 27,533 | $ | 55,101 | ||||
|
Six
Months Ended
|
March
29, 2008
Actual
|
March
31, 2007
Actual
|
March
31, 2007
Pro
forma
|
|||||||||
|
Loss
from continuing operations
|
$ | (144,714 | ) | $ | (48,923 | ) | $ | (83,031 | ) | |||
|
Add:
|
||||||||||||
|
Income
tax benefit
|
(57,055 | ) | (25,872 | ) | (46,579 | ) | ||||||
|
Interest
expense, net
|
62,834 | 49,423 | 75,245 | |||||||||
|
Depreciation
and amortization
|
115,601 | 86,898 | 112,776 | |||||||||
|
Minus:
|
||||||||||||
|
Amortization
of capitalized financing costs
|
2,102 | 1,815 | 2,312 | |||||||||
|
EBITDA
|
$ | (25,436 | ) | $ | 59,711 | $ | 56,099 | |||||
|
Asset
impairment and restructuring charges
|
17,691 | -- | -- | |||||||||
|
Loss
on early extinguishment of debt
|
-- | 14,475 | 14,475 | |||||||||
|
EBITDA
- Adjusted
|
(7,745 | ) | 74,186 | 70,574 | ||||||||
|
Capital
expenditures
|
$ | 70,216 | $ | 94,449 | $ | 107,193 | ||||||