UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): December 27, 2006
PILGRIM’S PRIDE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 1-9273 | 75-1285071 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Pilgrim’s Pride Corporation, a Delaware Corporation (the “Company”), hereby amends Item 9.01 of its Current Report on Form 8-K (Date of Report: December 27, 2006), as previously amended by its Form 8-K/A (Amendment No. 1) filed January 11, 2007, to read in its entirety as follows:
| Item 9.01. | Financial Statements and Exhibits. |
(a) Financial Statements of Business Acquired.
| (1) | The audited consolidated balance sheets of Gold Kist Inc. and its subsidiaries as of October 1, 2005 and September 30, 2006 and the related consolidated statements of operations, patrons’ and other equity/stockholders’ equity and comprehensive income (loss) and cash flows for the fiscal year ended June 26, 2004, the transition quarter ended October 2, 2004 and the fiscal years ended October 1, 2005 and September 30, 2006 (previously filed as Exhibit 99.3 to the Company’s Form 8-K/A (Amendment No. 1) filed January 11, 2007). |
(b) Pro Forma Financial Information.
| (1) | Pro forma financial data of Pilgrim’s Pride Corporation as of September 30, 2006 and for the fiscal year ended September 30, 2006 (filed herewith). |
(d) Exhibits.
| Exhibit Number |
Description | |
| 99.1 | Pro forma financial data of Pilgrim’s Pride Corporation as of September 30, 2006 and for the fiscal year ended ended September 30, 2006. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| PILGRIM’S PRIDE CORPORATION | ||||||
| Date: January 24, 2007 | By: | /s/ Richard A. Cogdill | ||||
| Richard A. Cogdill | ||||||
| Executive Vice President, Chief Financial Officer, Secretary and Treasurer | ||||||
EXHIBIT INDEX
| Exhibit Number |
Description | |
| 99.1 | Pro forma financial data of Pilgrim’s Pride Corporation as of September 30, 2006 and for the fiscal year ended ended September 30, 2006. |
Exhibit 99.1
UNAUDITED PRO FORMA FINANCIAL DATA
The unaudited pro forma statement of operations sets forth certain income statement and other data of Pilgrim’s Pride Corporation (the “Company” or “Pilgrim’s Pride”) on a pro forma basis giving effect to the acquisition of Gold Kist Inc. (“Gold Kist”), the refinancing of certain of the Company’s notes payable in December 2006, the completion on January 24, 2007 of the offering of $400 million aggregate principal amount of the Company’s 7 5/8% Senior Notes due May 1, 2015 and $250 million aggregate principal amount of the Company’s 8 3/8% Senior Subordinated Notes due May 1, 2017, and the application of the net proceeds of such offering to repay the entire indebtedness outstanding under the Company’s bridge loan facility and indebtedness outstanding under the Company’s revolving/term loan facility (both incurred in connection with the Gold Kist Acquisition) and to repurchase certain of the Company’s 9 1/4% Senior Subordinated Notes due November 15, 2013, as if the transactions had occurred as of the beginning of the fiscal year ended September 30, 2006. The unaudited pro forma balance sheet data give effect to the Gold Kist acquisition, the refinancing of certain Pilgrim’s Pride notes payable in December 2006, the completion of the offering of the 7 5/8% Senior Notes due 2015 and the 8 3/8% Senior Subordinated Notes due 2017 and the application of the net proceeds as described above as if they had occurred on September 30, 2006. The pro forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable. The unaudited pro forma financial data are provided for information purposes only and are not necessarily indicative of the Company’s future results or the operating results or financial condition that would have actually been obtained had such transactions been consummated as of the assumed dates. These unaudited pro forma financial data should be read in conjunction with the Company’s consolidated financial statements and the related notes, “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and “Selected Financial Data” included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006 filed by Pilgrim’s Pride with the Securities and Exchange Commission on November 20, 2006 and Gold Kist’s consolidated financial statements and the related notes included in the Company’s current report on Form 8-K/A (Amendment No. 1) filed with the Securities and Exchange Commission on January 11, 2007.
Pilgrim’s Pride Corporation
Unaudited Pro Forma Condensed Balance Sheet
September 30, 2006
(In thousands)
| Pilgrim’s Pride |
Gold Kist | Pro Forma Adjustments |
Pro Forma Combined | ||||||||||
| Assets |
|||||||||||||
| Current assets: |
|||||||||||||
| Cash and cash equivalents |
$ | 156,404 | $ | 77,532 | $ | (83,936 | )(B,C) | $ | 150,000 | ||||
| Investments in available for sale securities |
21,246 | — | — | 21,246 | |||||||||
| Trade accounts and other receivables, less allowance for doubtful accounts |
263,149 | 114,758 | — | 377,907 | |||||||||
| Inventories |
585,940 | 225,831 | — | 811,771 | |||||||||
| Income taxes receivable |
39,167 | — | (18,244 | )(B) | 20,923 | ||||||||
| Current deferred taxes |
7,288 | 11,015 | — | 18,303 | |||||||||
| Other current assets |
32,480 | 14,279 | — | 46,759 | |||||||||
| Total Current Assets |
1,105,674 | 443,415 | (102,180 | ) | 1,446,909 | ||||||||
| Investments |
115,375 | — | — | 115,375 | |||||||||
| Deferred income taxes, net |
— | 17,682 | (17,682 | )(B) | — | ||||||||
| Other Assets |
50,825 | 55,216 | 5,218 | (B,E) | 111,259 | ||||||||
| Goodwill |
— | 19,922 | 510,674 | (B) | 530,596 | ||||||||
| Property, plant and equipment |
1,154,994 | 332,902 | 338,723 | (B) | 1,826,619 | ||||||||
| Total Assets |
$ | 2,426,868 | $ | 869,137 | $ | 734,753 | $ | 4,030,758 | |||||
See accompanying notes.
| Pilgrim’s Pride |
Gold Kist | Pro Forma Adjustments |
Pro Forma Combined |
|||||||||||||
| Liabilities and Stockholders’ Equity |
||||||||||||||||
| Current Liabilities: |
||||||||||||||||
| Accounts payable |
$ | 293,685 | $ | 69,927 | $ | — | $ | 363,612 | ||||||||
| Accrued expenses |
272,830 | 83,559 | 82,160 | (B) | 438,549 | |||||||||||
| Income taxes payable |
— | 18,244 | (18,244 | )(B) | — | |||||||||||
| Current maturities of long term debt |
10,322 | 2,221 | (9,248 | )(C) | 3,295 | |||||||||||
| Total Current Liabilities |
576,837 | 173,951 | 54,668 | 805,456 | ||||||||||||
| Long-Term Debt |
||||||||||||||||
| Secured revolving credit facility |
74,682 | — | — | 74,682 | ||||||||||||
| Note payable to an insurance company maturing in 2012 |
50,115 | — | (50,115 | )(C) | — | |||||||||||
| Notes payable to an insurance company maturing in 2013 |
41,333 | — | (41,333 | )(C) | — | |||||||||||
| Revolving credit facility |
— | — | 676,500 | (C) | 676,500 | |||||||||||
| Term credit facility |
— | — | 100,000 | (C) | 100,000 | |||||||||||
| 9 5/8% Senior Notes due 2011 |
299,601 | — | — | 299,601 | ||||||||||||
| 7 5/8% Senior Notes due 2015 |
— | — | 400,000 | (C) | 400,000 | |||||||||||
| 8 3/8% Senior Subordinated Notes due 2017 |
— | — | 250,000 | (C) | 250,000 | |||||||||||
| 9 1/4% Senior Subordinated Notes due 2013 |
82,640 | — | (75,655 | )(C) | 6,985 | |||||||||||
| 10 1/4% Senior Notes due 2014 |
— | 128,505 | (128,505 | )(C) | — | |||||||||||
| Other Debt |
16,827 | 15,156 | (13,595 | )(C) | 18,388 | |||||||||||
| Less current maturities |
(10,322 | ) | (2,221 | ) | 9,248 | (C) | (3,295 | ) | ||||||||
| Net long term debt |
554,876 | 141,440 | 1,126,545 | 1,822,861 | ||||||||||||
| Deferred income taxes |
175,869 | — | 78,628 | (B) | 254,497 | |||||||||||
| Other long term liabilities |
— | 82,288 | (44,389 | )(B) | 37,899 | |||||||||||
| Minority Interest in Subsidiary |
1,958 | — | — | 1,958 | ||||||||||||
| Stockholders’ equity |
1,117,328 | 471,458 | (480,699 | )(B) | 1,108,087 | |||||||||||
| Total liabilities and stockholders’ equity |
$ | 2,426,868 | $ | 869,137 | $ | 734,753 | $ | 4,030,758 | ||||||||
Pilgrim’s Pride Corporation
Unaudited Pro Forma Statement of Operations
For the Year Ended September 30, 2006
(In thousands)
| Pilgrim’s Pride |
Gold Kist |
Pro Forma Adjustments |
Pro Forma Combined |
|||||||||||||
| Statement of Operations: |
||||||||||||||||
| Net sales |
$ | 5,235,565 | $ | 2,127,374 | $ | (10,860 | )(D) | $ | 7,352,079 | |||||||
| Cost of sales |
4,937,965 | 2,041,171 | 14,796 | (D) | 6,993,932 | |||||||||||
| Gross Profit |
297,600 | 86,203 | (25,656 | ) | 358,147 | |||||||||||
| Selling, general and administrative expenses |
294,598 | 107,526 | (4,309 | )(D) | 397,815 | |||||||||||
| Other charges |
— | 6,152 | (6,152 | )(H) | — | |||||||||||
| Operating income (loss) |
3,002 | (27,475 | ) | (15,195 | ) | (39,668 | ) | |||||||||
| Interest expense |
50,601 | 15,347 | 79,563 | (F) | 145,511 | |||||||||||
| Interest income |
(10,048 | ) | (5,528 | ) | — | (15,576 | ) | |||||||||
| Foreign exchange loss |
144 | — | — | 144 | ||||||||||||
| Other (income) from joint venture, net |
— | (2,461 | ) | — | (2,461 | ) | ||||||||||
| Other income, net |
(1,378 | ) | (2,464 | ) | — | (3,842 | ) | |||||||||
| Loss before taxes |
(36,317 | ) | (32,369 | ) | (94,758 | ) | (163,444 | ) | ||||||||
| Income tax benefit |
(2,085 | ) | (14,624 | ) | (34,113 | )(G) | (50,822 | ) | ||||||||
| Net loss |
$ | (34,232 | ) | $ | (17,745 | ) | $ | (60,645 | ) | $ | (112,622 | ) | ||||
| Net loss per common share (basic and diluted) |
$ | (.51 | ) | $ | (.35 | ) | $ | (1.69 | ) | |||||||
| Weighted average shares outstanding (basic and diluted) |
66,555,733 | 50,100,000 | 66,555,733 | |||||||||||||
| Other Data: |
||||||||||||||||
| Depreciation and amortization |
$ | 135,133 | $ | 44,793 | $ | 34,528 | $ | 214,796 | ||||||||
| Capital expenditures |
$ | 143,882 | $ | 90,438 | $ | — | $ | 234,320 | ||||||||
| Amortization of capitalized financing charges |
$ | 2,606 | $ | 943 | $ | 997 | $ | 4,546 | ||||||||
See accompanying notes.
NOTES TO UNAUDITED PRO FORMA FINANCIAL DATA
| (A) | Fiscal year 2006 for each of Gold Kist and Pilgrim’s Pride ended on September 30, 2006. |
| (B) | The Gold Kist acquisition is accounted for as a purchase business combination. The acquisition was completed on January 9, 2007, and funded by drawings under the Company’s revolving/term borrowing facility and borrowings under the Company’s bridge loan agreement, which were refinanced with the net proceeds of the offering of the Company’s 7 5/8% Senior Notes due 2015 and its 8 3/8% Senior Subordinated Notes due 2017. The Unaudited Pro Forma Financial Data do not include any adjustments related to restructuring costs or recurring benefits expected from synergies. The purchase price allocation is preliminary and further adjustments may be made based on the completion of final valuation and other studies. The Company’s management has preliminarily valued the plant, property and equipment and other assets based on their experience with valuations for similar properties and assets in the past. Pilgrim’s Pride will revise the purchase price allocation when final valuations are available. Pilgrim’s Pride is in the process of completing a valuation of fixed assets and other intangibles and the Company will adjust the purchase price allocation accordingly. Pilgrim’s Pride cannot currently estimate the ultimate adjustment to the final purchase price as a result of various purchase price adjustments. |
| Pilgrim’s Pride expects to terminate the Gold Kist defined benefit pension plan, effective February 8, 2007, and has adjusted the pension liability to a preliminary estimate of the amount necessary to terminate the plan. |
| The Gold Kist acquisition was made pursuant to a cash tender offer at $21.00 per share and a subsequent merger. Vesting of all outstanding restricted stock and other share-based awards was accelerated and the holders of such awards were paid the $21.00 per share acquisition price or the difference between such price and the value of the relevant award (determined pursuant to the award agreement), as applicable. Pilgrim’s Pride also made a cash offer and related consent solicitation for, and purchased the entire $130 million outstanding principal amount of, Gold Kist’s 10¼% Senior Notes due 2014 at a purchase price (including accrued interest to the payment date) of $1,122.41 per $1,000 principal amount of notes plus, in the case of holders of such notes who tendered their notes and related consents on or prior to the consent date specified in the offer to purchase, an additional consent payment of $30.00 per $1,000 principal amount of notes. In addition, Pilgrim’s Pride intends to redeem Gold Kist’s outstanding certificates of interest for $22.6 million. Change in control payments of approximately $19.5 million were incurred and Pilgrim’s Pride expects to pay other transaction costs of approximately $35.5 million. |
| The following preliminary purchase price and purchase price allocation is based on the consolidated balance sheet of Gold Kist as follows (in thousands, except share and per share amounts): |
| Purchase consideration: |
|||
| Purchase 51,024,977 shares at $21.00 per share |
$ | 1,071,525 | |
| Purchase of 10 1/4% Senior Notes |
153,766 | ||
| Retirement of certificates of interest |
22,595 | ||
| Retirement of various share-based compensation awards |
13,714 | ||
| Various costs and fees |
54,966 | ||
| Total purchase price |
$ | 1,316,566 | |
| Purchase price allocation: |
|||
| Current assets |
$ | 425,171 | |
| Property, plant and equipment |
671,625 | ||
| Goodwill |
530,596 | ||
| Other assets |
50,997 | ||
| Total assets acquired |
1,678,389 | ||
| Current liabilities |
238,538 | ||
| Long-term debt, less current maturities |
1,561 | ||
| Deferred income taxes |
83,825 | ||
| Other long-term liabilities |
37,899 | ||
| Total liabilities assumed |
361,823 | ||
| Total purchase price |
$ | 1,316,566 | |
| The purchase price allocation includes reclassifications to conform Gold Kist’s financial statement presentation to the Company’s presentation and to adjust the basis in the acquired assets and liabilities based on the purchase price. |
| Goodwill represents the purchase price in excess of the value assigned to identifiable tangible and intangible assets. The value assigned to goodwill is supported by expected benefits gained by consolidating the two companies. |
| (C) | Represents adjustments to long-term debt and interest expense to consider the following attributes of the Gold Kist acquisition and the related offering and financings: |
| i. | Tender offer and purchase of Gold Kist’s 10 1/4% Senior Notes due 2014 at $1,122.41 per $1,000 principal amount of notes plus $30.00 per $1,000 principal amount of notes paid for tenders on or prior to the consent date for a total premium of $19.8 million and the prompt retirement of Gold Kist’s outstanding certificates of interest; |
| ii. | Increase in long-term debt resulting from the issuance of the 7 5/8% Senior Notes due 2015 and the 8 3/8% Subordinated Notes due 2017; |
| iii. | Increase in long-term debt resulting from $676.5 million of borrowings under the revolver portion of the Company’s revolving/term credit facility. Excess cash of $83.9 million was used to reduce the amount borrowed under the revolver portion of the revolving/term credit facility; |
| iv. | Increase in long-term debt resulting from $100.0 million of borrowings under the Company’s term credit facility; and |
| v. | Reduction in long-term debt for the extinguishment of two classes of Pilgrim’s Pride notes payable to insurance companies in December 2006 and $75.7 million of Pilgrim’s Pride 9 1/4% Senior Subordinated Notes due 2013 for $83.0 million, plus accrued interest of approximately $2.6 million, from proceeds of the issuance of the 7 5/8% Senior Notes due 2015 and the 8 3/8% Senior Subordinated Notes due 2017. Deferred financing costs of approximately $7.1 million and a premium of $7.4 million will be expensed as a result of the refinancing. |
| (D) | Represents the adjustments to give effect to the following: |
| i. | Elimination of intercompany sales and related cost of sales between Pilgrim’s Pride and Gold Kist. |
| ii. | Additional depreciation expense based on the fair value preliminarily assigned to property, plant and equipment assuming a useful life of 10 years. |
| iii. | Additional compensation costs related to the reversal of the Gold Kist pension plan expense and replacement with the expense of the Pilgrim’s Pride 401K plan reflecting management’s termination of the Gold Kist pension plan, effective February 8, 2007. |
| iv. | Reclassification of certain selling, general and administrative costs to cost of sales to conform Gold Kist’s financial statement presentation to the Company’s presentation. |
| (E) | As a result of these financing transactions, Pilgrim’s Pride expects to incur deferred financing costs of $16.5 million, which have been capitalized in other assets, related to the refinancing of the long-term debt. |
| (F) | Represents revised interest costs as a result of the acquisition and refinancing as described in C and E above. Interest also includes the 1.0% guarantee fee required to be paid to the Company’s major stockholder for his guarantees on 50% of the secured debt described in (c) iii. and iv. above. |
| (G) | Represents the adjustment to estimated income tax expense as a result of the Gold Kist acquisition and the pro forma adjustments. |
| (H) | Reversal of transaction costs incurred by Gold Kist as of September 30, 2006, related to the acquisition. |