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
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(State
or other jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
incorporation
or organization)
|
|
4845
US Hwy 271 North
|
|
Pittsburg,
Texas
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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
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||
Page
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||
Business
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4
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Risk
Factors
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23
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Unresolved
Staff Comments
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32
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|
Properties
|
33
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|
Legal
Proceedings
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35
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Submission
of Matters to a Vote of Security Holders
|
38
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PART
II
|
||
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
39
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|
Selected
Financial Data
|
44
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|
Management’s
Discussion and Analysis of Financial Condition and Results
|
||
of
Operations
|
47
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Quantitative
and Qualitative Disclosures about Market Risk
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66
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Financial
Statements and Supplementary Data (see Index to Financial Statements
and
|
||
Schedules
below)
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68
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|
Changes
in and Disagreements with Accountants on Accounting and
Financial
|
||
Disclosure
|
68
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|
Controls
and Procedures
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68
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Other
Information
|
72
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PART
III
|
||
Directors
and Executive Officers and Corporate Governance
|
74
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Executive
Compensation
|
74
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|
Security
Ownership of Certain Beneficial Owners and Management and
Related
|
||
Stockholder
Matters
|
74
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|
Certain
Relationships and Related Transactions, and Director
Independence
|
74
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Principal
Accounting Fees and Services
|
75
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PART
IV
|
||
Exhibits
and Financial Statement Schedules
|
76
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|
83
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||
INDEX
TO FINANCIAL STATEMENTS AND SCHEDULES
|
||
86
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||
87
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||
88
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||
89
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||
90
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91
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118
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Item
1.
|
Business
|
|
-
Capitalize
on significant scale with leading industry position and brand
recognition. We are the largest producer of chicken
products in the U.S. We estimate that our U.S. market share,
based on the total annual chicken production in the U.S., is approximately
25%, which is approximately 20% higher than the second largest competitor
in the chicken industry. The complementary fit of markets,
distributor relationships and geographic locations are a few of the
many
benefits we realized from our fiscal 2004 and 2007 acquisitions previously
discussed. We believe the acquired businesses’ established
relationships with broad-line national distributors and retailers
have
enabled us to expand our customer base and provide nationwide distribution
capabilities for all of our product lines. As a result, we
believe we are one of only two U.S. chicken producers that can supply
the
growing demand for a broad range of price competitive standard and
specialized products with well-known brand names on a nationwide
basis
from a single source supplier.
|
|
breast
fillets, tenderloins, burgers, nuggets, salads and other prepared
products
for institutional foodservice, fast-food and retail
customers.
|
|
- Emphasize
customer-driven research and technology. We have a
long-standing reputation for customer-driven research and development
in
designing new products and implementing advanced processing
technology. This enables us to better meet our customers’
changing needs for product innovation, consistent quality and cost
efficiency. In particular, customer-driven research and
development is integral to our growth strategy for the prepared foods
market in which customers continue to place greater importance on
value-added services. Our research and development personnel
often work directly with customers in developing products for them,
which
we believe helps promote long-term
relationships.
|
|
- Enhance
U.S. fresh chicken profitability through value-added, branded
products. Our U.S.
fresh chicken sales accounted for $3,255.7 million, or 51.4%, of
our U.S.
chicken sales for fiscal 2007. In addition to maintaining the
sales of traditional fresh chicken products, our strategy is to shift
the
mix of our U.S. fresh chicken products by continuing to increase
sales of
higher margin, faster growing products, such as fixed weight packaged
products and marinated chicken and chicken parts, and to continually
shift
portions of this product mix into the higher value and margin prepared
chicken products. Much of our fresh chicken products are sold
under the Pilgrim’s Pride®
brand name, which is a well-known brand in the chicken
industry.
|
|
-
Improve
operating efficiencies and increase capacity on a cost-effective
basis. As production and sales grow, we continue to
focus on improving operating efficiencies by investing in state-of-the-art
technology and processes, training and our total quality management
program. Specific initiatives
include:
|
-
|
standardizing
lowest-cost production processes across our various
facilities;
|
-
|
centralizing
purchasing and other shared services;
and
|
-
|
standardizing
and upgrading technology where
appropriate.
|
|
-
Continue
to
seek strategic acquisitions. We have pursued
opportunities to expand through acquisitions in the past. We
expect to continue to pursue acquisition opportunities in the future
that
would complement our existing businesses, broaden our production
capabilities and/or improve our operating
efficiencies.
|
|
from
2002 through 2006. We believe U.S. chicken exports will
continue to grow as worldwide demand increases for high-grade, low-cost
meat protein sources. According to USDA data, the export market
for chicken is expected to grow at a compounded annual growth rate
of 1.8%
from 2006 to 2011. Historically, we have targeted international
markets to generate additional demand for our dark chicken meat,
which is
a natural by-product of our U.S. operations given our concentration
on
prepared foods products and the U.S. customers’ general preference for
white chicken meat. As part of this initiative, we have created
a significant international distribution network into several markets,
including Mexico, which we now utilize not only for dark chicken
meat
distribution, but also for various higher margin prepared foods and
other
poultry products. We employ both a direct international sales
force and export brokers. Our key international markets include
Eastern Europe, including Russia; the Far East, including China;
and
Mexico. We believe that we have substantial opportunities to
expand our sales to these markets by capitalizing on direct international
distribution channels supplemented by our existing export broker
relationships. Our export sales accounted for approximately
10.1% and 21.1% of our U.S. chicken sales and pounds, respectively,
for
fiscal 2007.
|
(b)
|
Financial
Information About Segments
|
(c)
|
Narrative
Description of Business
|
Products
and
Markets
|
|
Our
other products consist of:
|
|
Fiscal
Year Ended
|
||||||||||||||||||||
Sept. 29, 2007(a) |
Sept.
30, 2006
|
Oct.
1, 2005
|
Oct. 2, 2004(a) |
Sept.
27, 2003
|
||||||||||||||||
(52
weeks)
|
(52
weeks)
|
(52
weeks)
|
(53
weeks)
|
(52
weeks)
|
||||||||||||||||
U.S.
Chicken Sales:
|
(in
thousands)
|
|||||||||||||||||||
Prepared
Foods:
|
||||||||||||||||||||
Foodservice
|
$ | 1,897,643 | $ | 1,567,297 | $ | 1,622,901 | $ | 1,647,904 | $ | 731,331 | ||||||||||
Retail
|
511,470
|
308,486
|
283,392
|
213,775
|
163,018
|
|||||||||||||||
Total
Prepared Foods
|
2,409,113
|
1,875,783
|
1,906,293
|
1,861,679
|
894,349
|
|||||||||||||||
Fresh
Chicken:
|
||||||||||||||||||||
Foodservice
|
2,280,057
|
1,388,451
|
1,509,189
|
1,328,883
|
474,251
|
|||||||||||||||
Retail
|
975,659
|
496,560
|
612,081
|
653,798
|
257,911
|
|||||||||||||||
Total
Fresh Chicken
|
3,255,716
|
1,885,011
|
2,121,270
|
1,982,681
|
732,162
|
|||||||||||||||
Export
and Other:
|
||||||||||||||||||||
Export:
|
||||||||||||||||||||
Prepared
Foods
|
83,317
|
64,338
|
59,473
|
34,735
|
26,714
|
|||||||||||||||
Chicken
|
559,429
|
257,823
|
303,150
|
212,611
|
85,087
|
|||||||||||||||
Total Export(b) |
642,746
|
322,161
|
362,623
|
247,346
|
111,801
|
|||||||||||||||
Other
Chicken By-Products
|
20,779
|
15,448
|
21,083
|
(b)
|
(b)
|
|||||||||||||||
Total
Export and Other
|
663,525
|
337,609
|
383,706
|
247,346
|
111,801
|
|||||||||||||||
Total
U.S. Chicken
|
6,328,354
|
4,098,403
|
4,411,269
|
4,091,706
|
1,738,312
|
|||||||||||||||
Mexico
Chicken Sales:
|
488,466
|
418,745
|
403,353
|
362,442
|
349,305
|
|||||||||||||||
Total
Chicken Sales
|
6,816,820
|
4,517,148
|
4,814,622
|
4,454,148
|
2,087,617
|
|||||||||||||||
U.S.
Turkey Sales:
|
||||||||||||||||||||
Foodservice
|
14,025
|
30,269
|
73,908
|
120,676
|
138,405
|
|||||||||||||||
Retail
|
104,239
|
96,968
|
125,741
|
154,289
|
154,552
|
|||||||||||||||
118,264
|
127,237
|
199,649
|
274,965
|
292,957
|
||||||||||||||||
Export and other(b) |
4,100
|
3,664
|
5,189
|
11,287
|
12,721
|
|||||||||||||||
Total
U.S. Turkey Sales
|
122,364
|
130,901
|
204,838
|
286,252
|
305,678
|
|||||||||||||||
Other
Products:
|
||||||||||||||||||||
United
States
|
638,738
|
570,510
|
626,056
|
600,091
|
207,284
|
|||||||||||||||
Mexico
|
20,677
|
17,006
|
20,759
|
23,232
|
18,766
|
|||||||||||||||
Total
Other Products
|
659,415
|
587,516
|
646,815
|
623,323
|
226,050
|
|||||||||||||||
Total
Net Sales
|
$ | 7,598,599 | $ | 5,235,565 | $ | 5,666,275 | $ | 5,363,723 | $ | 2,619,345 | ||||||||||
Total
Chicken Prepared Foods
|
$ | 2,492,430 | $ | 1,940,121 | $ | 1,965,766 | $ | 1,896,414 | $ | 921,063 |
|
(a) The
fiscal 2007 acquisition on December 27, 2006 and fiscal 2004 acquisition
on November 23, 2003 have been accounted for as purchases. For
financial reporting purposes, we have not included the operation
results
and cash flows of the fiscal 2007 acquisition in our consolidated
financial statements for the period from December 27, 2006 through
December 30, 2006. The operating results and cash flows of the
fiscal 2007 acquisition from December 27, 2006 through December 30,
2006
were not material. The results of operations for the fiscal
2004 acquisition have been included in our consolidated results of
operations since the acquisition
date.
|
|
(b) The
Export and Other category historically included the sales of certain
chicken by-products sold in international markets, as well as the
export
of chicken and turkey products. Prior to fiscal 2005,
by-product sales were not specifically identifiable from the Export
and
Other category. Accordingly, a detail breakout is not available
prior to such time; however, the Company believes that the relative
split
between these categories as shown in fiscal 2005 would not be dissimilar
in the prior fiscal periods. Export items include certain
poultry parts that have greater value in some overseas markets than
in the
U.S.
|
Fiscal
Year Ended
|
||||||||||||||||||||
Sept.
29, 2007 (a)
|
Sept.
30, 2006
|
Oct.
1, 2005
|
Oct.
2, 2004(a)
|
Sept.
27, 2003
|
||||||||||||||||
U.S.
Chicken Sales:
|
||||||||||||||||||||
Prepared
Foods:
|
||||||||||||||||||||
Foodservice
|
30.1
|
38.2
|
36.8
|
40.3
|
42.1
|
|||||||||||||||
Retail
|
8.1
|
7.5
|
6.4
|
5.2
|
9.4
|
|||||||||||||||
Total
Prepared Foods
|
38.2 | % | 45.7 | % | 43.2 | % | 45.5 | % | 51.5 | % | ||||||||||
Fresh
Chicken:
|
||||||||||||||||||||
Foodservice
|
36.0
|
33.9
|
34.2
|
32.5
|
27.3
|
|||||||||||||||
Retail
|
15.4
|
12.1
|
13.9
|
16.0
|
14.8
|
|||||||||||||||
Total
Fresh Chicken
|
51.4 | % | 46.0 | % | 48.1 | % | 48.5 | % | 42.1 | % | ||||||||||
Export
and Other:
|
||||||||||||||||||||
Export:
|
||||||||||||||||||||
Prepared
Foods
|
1.3
|
1.6
|
1.3
|
0.8
|
1.5
|
|||||||||||||||
Chicken
|
8.8
|
6.3
|
6.9
|
5.2
|
4.9
|
|||||||||||||||
Total Export(b) |
10.1
|
7.9
|
8.2
|
6.0
|
6.4
|
|||||||||||||||
Other
Chicken By-Products
|
0.3
|
0.4
|
0.5
|
(b)
|
(b)
|
|||||||||||||||
Total
Export and Other
|
10.4 | % | 8.3 | % | 8.7 | % | 6.0 | % | 6.4 | % | ||||||||||
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
|
39.5 | % | 47.3 | % | 44.5 | % | 46.3 | % | 53.0 | % | ||||||||||
U.S.
Turkey Sales:
|
||||||||||||||||||||
Foodservice
|
11.4
|
23.1
|
36.0
|
42.1
|
45.3
|
|||||||||||||||
Retail
|
85.2
|
74.1
|
61.4
|
53.9
|
50.5
|
|||||||||||||||
96.6 | % | 97.2 | % | 97.4 | % | 96.0 | % | 95.8 | % | |||||||||||
Export and Other(b) |
3.4
|
2.8
|
2.6
|
4.0
|
4.2
|
|||||||||||||||
Total
U.S. Turkey
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
|
(a) The
fiscal 2007 acquisition on December 27, 2006 and fiscal 2004 acquisition
on November 23, 2003 have been accounted for as purchases. For
financial reporting purposes, we have not included the operating
results
and cash flows of the fiscal 2007 acquisition in our consolidated
financial statements for the period from December 27, 2006 through
December 30, 2006. The operating results and cash flows of
the fiscal 2007 acquisition from December 27, 2006 through December
30, 2006 were not material. The results of operations for the
fiscal 2004 acquisition have been included in our consolidated
results of operations since the acquisition
date.
|
|
(b)
The Export and Other category historically included the sales of
certain
chicken by-products sold in international markets as well as the
export of
chicken and turkey products. Prior to fiscal 2005, by-product
sales were not specifically identifiable from the Export and Other
category. Accordingly, a detail breakout is not available prior
to such time; however, the Company believes that the relative split
between these categories as shown in fiscal 2005 would not be dissimilar
in the prior fiscal periods. Export items include certain
poultry parts that have greater value in some overseas markets than
in the
U.S.
|
Name
|
Age
|
Positions
|
||
Lonnie
"Bo" Pilgrim
|
79
|
Senior
Chairman of the Board
|
||
Lonnie
Ken Pilgrim
|
49
|
Chairman
of the Board
|
||
Clifford
E. Butler
|
65
|
Vice
Chairman of the Board
|
||
O.B.
Goolsby, Jr.
|
60
|
President,
Chief Executive Officer, and Director
|
||
Richard
A. Cogdill
|
47
|
Chief
Financial Officer
|
||
Secretary,
Treasurer and Director
|
||||
J.
Clinton Rivers
|
48
|
Chief
Operating Officer
|
||
Robert
A. Wright
|
53
|
Executive
Vice President of Sales and Marketing
|
||
-
|
Make
it more difficult for us to satisfy our obligations under our
debt
securities;
|
-
|
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
|
-
|
result
in an event of default or require redemption of
indebtedness. Either of these events could have a material
adverse effect on us.
|
-
|
Price;
|
-
|
Product
quality;
|
-
|
Product
development;
|
-
|
Brand
identification;
|
-
|
Breadth
of product line; and
|
-
|
Customer
service.
|
-
|
Transitioning
and preserving Gold Kist's customer, contractor, supplier and
other
important third-party
relationships;
|
-
|
Integrating
corporate and administrative
infrastructures;
|
-
|
Coordinating
sales and marketing functions;
|
-
|
Minimizing
the diversion of management's attention from ongoing business
concerns;
|
-
|
Coordinating
geographically separate organizations;
and
|
-
|
Retaining
key employees.
|
-
|
Diversion
of management's attention;
|
-
|
The
need to integrate acquired
operations;
|
-
|
Potential
loss of key employees and customers of the acquired
companies;
|
-
|
Lack
of experience in operating in the geographical market of the
acquired
business;
|
-
|
An
increase in our expenses and working capital
requirements.
|
-
|
Currency
exchange rate fluctuations;
|
-
|
Trade
barriers;
|
-
|
Exchange
controls;
|
-
|
Expropriation;
and
|
-
|
Changes
in laws and policies, including those governing foreign-owned
operations.
|
Item
5.Market for the Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
|
|
Fiscal
2007 Prices
|
Fiscal
2006 Prices
|
Dividends
|
||||||||||||||||||||||
Fiscal
Quarter
|
High
|
Low
|
High
|
Low
|
2007
|
2006
|
||||||||||||||||||
PPC
Common Stock
|
||||||||||||||||||||||||
First
|
$ | 29.54 | $ | 23.64 | $ | 37.75 | $ | 30.11 | $ | .0225 | $ | 1.0225 | ||||||||||||
Second
|
33.19
|
28.59
|
27.00
|
20.95
|
.0225
|
.0225
|
||||||||||||||||||
Third
|
38.17
|
32.77
|
28.09
|
20.85
|
.0225
|
.0225
|
||||||||||||||||||
Fourth
|
40.59
|
32.29
|
29.00
|
23.11
|
.0225
|
.0225
|
||||||||||||||||||
|
|
11/21/03
|
10/2/04
|
10/1/05
|
9/30/06
|
9/29/07
|
Pilgrim's
Pride Corporation
|
100.00
|
190.89
|
254.14
|
197.18
|
251.08
|
|
Russell
2000
|
100.00
|
113.10
|
129.73
|
142.61
|
160.21
|
|
Peer
Group
|
100.00
|
112.59
|
131.40
|
127.35
|
140.41
|
|
9/28/02
|
9/27/03
|
11/20/03
|
10/2/04
|
10/1/05
|
9/30/06
|
9/29/07
|
Pilgrim's
Pride Corporation Class A(1)
|
100.00
|
180.96
|
195.33
|
383.25
|
510.23
|
395.88
|
504.10
|
Pilgrim's
Pride Corporation Class B(1)
|
100.00
|
140.92
|
150.72
|
298.92
|
397.96
|
308.77
|
393.18
|
Russell
2000
|
100.00
|
136.01
|
146.80
|
166.94
|
191.49
|
210.50
|
236.47
|
Peer
Group
|
100.00
|
119.32
|
132.39
|
147.39
|
172.02
|
166.72
|
183.81
|
(1)
|
On
November 21, 2003, each share of the Company’s then outstanding Class A
common stock and Class B common stock was reclassified into one share
of
new common stock, which is now the only authorized class of the Company’s
common stock.
|
9/28/02
|
9/27/03
|
11/20/03
|
|
Pilgrim's
Pride Corporation Class A(1)
|
100.00
|
180.96
|
195.33
|
Pilgrim's
Pride Corporation Class B(1)
|
100.00
|
140.92
|
150.72
|
Russell
2000
|
100.00
|
136.01
|
146.80
|
Peer
Group
|
100.00
|
119.32
|
132.39
|
(In
thousands, except ratios and per share data)
|
Eleven
Years Ended September 29, 2007
|
||||||||||||||||||
2007(a)
|
|
2006
|
2005
|
2004(b)(c)
|
|||||||||||||||
(53
weeks)
|
|||||||||||||||||||
Income
Statement Data:
|
|||||||||||||||||||
Net
sales
|
$ | 7,598,599 | $ | 5,235,565 | $ | 5,666,275 | $ | 5,363,723 | |||||||||||
Gross
profit(e)
|
591,538
|
297,600
|
745,199
|
529,039
|
|||||||||||||||
Operating
income(e)
|
232,537
|
3,002
|
435,812
|
265,314
|
|||||||||||||||
Interest
expense, net
|
125,757
|
40,553
|
43,932
|
52,129
|
|||||||||||||||
Loss
on early extinguishment of debt
|
26,463
|
--
|
--
|
--
|
|||||||||||||||
Income
(loss) before income taxes(e)
|
91,607
|
(36,317 | ) |
403,523
|
208,535
|
||||||||||||||
Income
tax expense (benefit)(f)
|
44,590
|
(2,085 | ) |
138,544
|
80,195
|
||||||||||||||
Net
income (loss)(e)
|
47,017
|
(34,232 | ) |
264,979
|
128,340
|
||||||||||||||
Ratio
of earnings to fixed charges(g)
|
1.57 | x |
(f)
|
7.19 | x | 4.08 | x | ||||||||||||
Per
Common Share Data:(h)
|
|||||||||||||||||||
Net
income (loss)
|
$ | 0.71 | $ | (0.51 | ) | $ | 3.98 | $ | 2.05 | ||||||||||
Cash
dividends
|
0.09
|
1.09
|
0.06
|
0.06
|
|||||||||||||||
Book
value
|
17.61
|
16.79
|
18.38
|
13.87
|
|||||||||||||||
Balance
Sheet Summary:
|
|||||||||||||||||||
Working
capital
|
$ | 379,132 | $ | 528,836 | $ | 404,601 | $ | 383,726 | |||||||||||
Total
assets
|
3,774,236
|
2,426,868
|
2,511,903
|
2,245,989
|
|||||||||||||||
Notes
payable and current maturities of long-term debt
|
2,872
|
10,322
|
8,603
|
8,428
|
|||||||||||||||
Long-term
debt, less current maturities
|
1,318,558
|
554,876
|
518,863
|
535,866
|
|||||||||||||||
Total
stockholders’ equity
|
1,172,221
|
1,117,327
|
1,223,598
|
922,956
|
|||||||||||||||
Cash
Flow Summary:
|
|||||||||||||||||||
Operating
cash flow
|
$ | 463,964 | $ | 30,382 | $ | 493,073 | $ | 272,404 | |||||||||||
Depreciation
& amortization(i)
|
204,903
|
135,133
|
134,944
|
113,788
|
|||||||||||||||
Purchases
of investment securities
|
125,045
|
318,266
|
305,458
|
--
|
|||||||||||||||
Proceeds
from sale or maturity of investment securities
|
208,676
|
490,764
|
--
|
--
|
|||||||||||||||
Capital
expenditures
|
172,323
|
143,882
|
116,588
|
79,642
|
|||||||||||||||
Business
acquisitions, net of equity consideration(a)(b) (d)
|
1,102,069
|
--
|
--
|
272,097
|
|||||||||||||||
Financing
activities, net provided by (used in)
|
630,229
|
(38,750 | ) |
18,860
|
96,665
|
||||||||||||||
Other
Data:
|
|||||||||||||||||||
EBITDA(j)
|
$ | 411,073 | $ | 136,763 | $ | 580,078 | $ | 372,501 | |||||||||||
Key
Indicators (as a percentage of net sales):
|
|||||||||||||||||||
Gross
profit(e)
|
7.8
|
%
|
5.7
|
%
|
13.2
|
%
|
9.9 | % | |||||||||||
Selling,
general and
administrative
expenses
|
4.7
|
%
|
5.6
|
%
|
5.5
|
%
|
4.8 | % | |||||||||||
Operating
income (e)
|
3.1
|
%
|
0.8
|
%
|
7.7
|
%
|
4.9 | % | |||||||||||
Interest
expense, net
|
1.6
|
%
|
1.0
|
%
|
0.9
|
%
|
1.0 | % | |||||||||||
Net
income (loss)(e)
|
0.6
|
%
|
(0.7 | ) |
%
|
4.7
|
%
|
2.4 | % |
Eleven
Years Ended September 29, 2007
|
||||||||||||||||||||||||||||||||
2003
|
2002
|
2001(d)
|
2000
|
1999
|
1998
|
1997
|
||||||||||||||||||||||||||
(53
weeks)
|
||||||||||||||||||||||||||||||||
$ | 2,619,345 | $ | 2,533,718 | $ | 2,214,712 | $ | 1,499,439 | $ | 1,357,403 | $ | 1,331,545 | $ | 1,277,649 | |||||||||||||||||||
200,483
|
165,165
|
213,950
|
165,828
|
185,708
|
136,103
|
114,467
|
||||||||||||||||||||||||||
63,613
|
29,904
|
94,542
|
80,488
|
109,504
|
77,256
|
63,894
|
||||||||||||||||||||||||||
37,981
|
32,003
|
29,342
|
17,779
|
17,666
|
20,148
|
22,075
|
||||||||||||||||||||||||||
--
|
--
|
1,433
|
--
|
--
|
--
|
--
|
||||||||||||||||||||||||||
63,235
|
1,910
|
61,861
|
62,786
|
90,904
|
56,522
|
43,824
|
||||||||||||||||||||||||||
7,199
|
(12,425 | ) |
20,724
|
10,442
|
25,651
|
6,512
|
2,788
|
|||||||||||||||||||||||||
56,036
|
14,335
|
41,137
|
52,344
|
65,253
|
50,010
|
41,036
|
||||||||||||||||||||||||||
2.24 | x |
(g)
|
2.13 | x | 3.04 | x | 4.33 | x | 2.96 | x | 2.57 | x | ||||||||||||||||||||
$ | 1.36 | $ | 0.35 | $ | 1.00 | $ | 1.27 | $ | 1.58 | $ | 1.21 | $ | 0.99 | |||||||||||||||||||
0.06
|
0.06
|
0.06
|
0.06
|
0.045
|
0.04
|
0.04
|
||||||||||||||||||||||||||
10.46
|
9.59
|
9.27
|
8.33
|
7.11
|
5.58
|
4.41
|
||||||||||||||||||||||||||
$ | 211,119 | $ | 179,037 | $ | 203,350 | $ | 124,531 | $ | 154,242 | $ | 147,040 | $ | 133,542 | |||||||||||||||||||
1,257,484
|
1,227,890
|
1,215,695
|
705,420
|
655,762
|
601,439
|
579,124
|
||||||||||||||||||||||||||
2,680
|
3,483
|
5,099
|
4,657
|
4,353
|
5,889
|
11,596
|
||||||||||||||||||||||||||
415,965
|
450,161
|
467,242
|
165,037
|
183,753
|
199,784
|
224,743
|
||||||||||||||||||||||||||
446,696
|
394,324
|
380,932
|
342,559
|
294,259
|
230,871
|
182,516
|
||||||||||||||||||||||||||
$ | 98,892 | $ | 98,113 | $ | 87,833 | $ | 130,803 | $ | 81,452 | $ | 85,016 | $ | 49,615 | |||||||||||||||||||
74,187
|
70,973
|
55,390
|
36,027
|
34,536
|
32,591
|
29,796
|
||||||||||||||||||||||||||
--
|
--
|
--
|
--
|
--
|
--
|
--
|
||||||||||||||||||||||||||
--
|
--
|
--
|
--
|
--
|
--
|
--
|
||||||||||||||||||||||||||
53,574
|
80,388
|
112,632
|
92,128
|
69,649
|
53,518
|
50,231
|
||||||||||||||||||||||||||
4,499
|
--
|
239,539
|
--
|
--
|
--
|
--
|
||||||||||||||||||||||||||
(39,767 | ) | (21,793 | ) |
246,649
|
(24,769 | ) | (19,634 | ) | (32,498 | ) |
348
|
|||||||||||||||||||||
$ | 173,926 | $ | 103,469 | $ | 146,166 | $ | 115,356 | $ | 142,043 | $ | 108,268 | $ | 94,782 | |||||||||||||||||||
7.7
|
%
|
6.5
|
%
|
9.7
|
%
|
11.1
|
%
|
13.7
|
%
|
10.2
|
%
|
9.0 | % | |||||||||||||||||||
5.2
|
%
|
5.3
|
%
|
5.4
|
%
|
5.7
|
%
|
5.6
|
%
|
4.4
|
%
|
4.0 | % | |||||||||||||||||||
2.4
|
%
|
1.2
|
%
|
4.3
|
%
|
5.4
|
%
|
8.1
|
%
|
5.8
|
%
|
5.0 | % | |||||||||||||||||||
1.5
|
%
|
1.3
|
%
|
1.3
|
%
|
1.2
|
%
|
1.3
|
%
|
1.5
|
%
|
1.7 | % | |||||||||||||||||||
2.1
|
%
|
0.6
|
%
|
1.9
|
%
|
3.5
|
%
|
4.8
|
%
|
3.8
|
%
|
3.2 | % |
(a)
|
The
Company acquired Gold Kist Inc. on December 27, 2006 for $1.139
billion. For financial reporting purposes, we have not included
the operating results and cash flows of Gold Kist in our consolidated
financial statements for the period from December 27, 2006
through December 30, 2006. The operating results and
cash flows of Gold Kist from December 27, 2006 through December
30, 2006
were not material.
|
(b)
|
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.
|
(c)
|
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.
|
(d)
|
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.
|
(e)
|
Gross
profit, operating income and net 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 insurance recoveries) 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 | ) |
(f)
|
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 the 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.
|
(g)
|
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 and $4.1 million
in
fiscal 2006 and 2002 respectively.
|
(h)
|
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.
|
(i)
|
Includes
amortization of capitalized financing costs of approximately $6.6
million,
$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 and $0.9 million
in
fiscal years 2007, 2006, 2005, 2004, 2003, 2002, 2001, 2000, 1999,
1998
and 1997, respectively.
|
(j)
|
“EBITDA”
is defined as the sum of net income (loss) 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.
|
2007
|
2006
|
2005
|
2004
|
2003
|
2002
|
2001
|
2000
|
1999
|
1998
|
1997
|
||||||||||||||||||||||||||||||||||
Net
Income (loss)
|
$ |
47,017
|
$ | (34,232 | ) | $ |
264,979
|
$ |
128,340
|
$ |
56,036
|
$ |
14,335
|
$ |
41,137
|
$ |
52,344
|
$ |
65,253
|
$ |
50,010
|
$ |
41,036
|
|||||||||||||||||||||
Add:
|
||||||||||||||||||||||||||||||||||||||||||||
Interest
expense, net
|
121,117
|
40,553
|
43,932
|
52,129
|
37,981
|
32,003
|
29,342
|
17,779
|
17,666
|
20,148
|
22,075
|
|||||||||||||||||||||||||||||||||
I Income
tax expense
(benefit)
|
44,590
|
(2,085 | ) |
138,544
|
80,195
|
7,199
|
(12,425 | ) |
20,724
|
10,442
|
25,651
|
6,512
|
2,788
|
|||||||||||||||||||||||||||||||
Depreciation
and amortization(i)
|
204,903
|
135,133
|
134,944
|
113,788
|
74,187
|
70,973
|
55,390
|
36,027
|
34,536
|
32,591
|
29,796
|
|||||||||||||||||||||||||||||||||
Minus:
|
||||||||||||||||||||||||||||||||||||||||||||
Amortization
of capitalized financing costs(i)
|
6,554
|
2,606
|
2,321
|
1,951
|
1,477
|
1,417
|
1,860
|
1,236
|
1,063
|
993
|
913
|
|||||||||||||||||||||||||||||||||
EBITDA
|
411,073
|
136,763
|
580,078
|
372,501
|
173,926
|
103,469
|
144,733
|
115,356
|
142,043
|
108,268
|
94,782
|
|||||||||||||||||||||||||||||||||
Add:
|
||||||||||||||||||||||||||||||||||||||||||||
Loss on early extinguishment of debt
|
26,463
|
1,433
|
||||||||||||||||||||||||||||||||||||||||||
Adjusted
EBITDA
|
$
|
437,536
|
$
|
146,166
|
-
|
First,
we delayed one-half of our planned expansion in the Fresh Food
Service
Division of our Mayfield, Kentucky plant from July 2006 until September
2006, and the other half of this expansion from 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. Beginning on January 1, 2007, we further reduced weekly
slaughter to achieve a 5% year-over-year decline, which is equivalent
to
approximately 1.3 million head per
week.
|
-
|
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. We focused only on those
projects we deemed critically necessary to our business or those in
which our immediate investment was judged by us to be
in our best long-term
interests.
|
-
|
Fourth,
we sharpened our focus on reducing costs and operating more
efficiently.
|
·
|
In
addition to the effects of the Gold Kist acquisition, cost of sales
increased from fiscal 2006 to fiscal 2007 due in part to higher
feed
ingredient and fuel costs between the two periods, operational
inefficiencies and labor shortages. Feed ingredients costs rose
38.2% and 31.3% in the U.S. and Mexico chicken divisions, respectively,
due primarily to corn and soybean meal
prices.
|
·
|
Net
interest expense increased $80.6 million in fiscal 2007, when compared
to
fiscal 2006, due primarily to the financing of the Gold Kist
acquisition.
|
·
|
We
recognized $14.5 million and $12.0 million of losses on the early
extinguishments of debt during the second and fourth quarters of
fiscal
2007, respectively.
|
|
- Business
strategy;
|
Fiscal
Year Ended
|
||||||||||||
September
29, 2007(a)
|
September
30, 2006
|
October
1, 2005
|
||||||||||
(In
thousands)
|
||||||||||||
Net
Sales to Customers:
|
||||||||||||
Chicken:
|
||||||||||||
United
States
|
$ | 6,328,354 | $ | 4,098,403 | $ | 4,411,269 | ||||||
Mexico
|
488,466
|
418,745
|
403,353
|
|||||||||
Sub-total
|
6,816,820
|
4,517,148
|
4,814,622
|
|||||||||
Turkey
|
122,364
|
130,901
|
204,838
|
|||||||||
Other
Products:
|
||||||||||||
United
States
|
638,738
|
570,510
|
626,056
|
|||||||||
Mexico
|
20,677
|
17,006
|
20,759
|
|||||||||
Sub-total
|
659,415
|
587,516
|
646,815
|
|||||||||
Total
|
$ | 7,598,599 | $ | 5,235,565 | $ | 5,666,275 | ||||||
Operating
Income (Loss):
|
||||||||||||
Chicken:
|
||||||||||||
United
States
|
$ | 192,447 | $ | 28,619 | $ | 405,662 | ||||||
Mexico
|
13,116
|
(17,960 | ) |
39,809
|
||||||||
Sub-total
|
205,563
|
10,659
|
445,471
|
|||||||||
Turkey
|
(4,655 | ) | (15,511 | ) | (22,539 | ) | ||||||
Other
Products:
|
||||||||||||
United
States
|
28,637
|
6,216
|
8,250
|
|||||||||
Mexico
|
2,992
|
1,638
|
4,630
|
|||||||||
Sub-total
|
31,629
|
7,854
|
12,880
|
|||||||||
Total
|
$ | 232,537 | $ | 3,002 | $ | 435,812 | ||||||
Depreciation
and Amortization: (b)
|
||||||||||||
Chicken:
|
||||||||||||
United
States
|
$ | 183,808 | $ | 109,346 | $ | 114,131 | ||||||
Mexico
|
11,015
|
11,305
|
12,085
|
|||||||||
Sub-total
|
194,823
|
120,651
|
126,216
|
|||||||||
Turkey
|
1,587
|
6,593
|
3,343
|
|||||||||
Other
Products:
|
||||||||||||
United
States
|
8,278
|
7,743
|
5,196
|
|||||||||
Mexico
|
215
|
146
|
189
|
|||||||||
Sub-total
|
8,493
|
7,889
|
5,385
|
|||||||||
Total
|
$ | 204,903 | $ | 135,133 | $ | 134,944 | ||||||
Total
Assets:
|
||||||||||||
Chicken:
|
||||||||||||
United
States
|
$ | 3,247,812 | $ | 1,897,763 | $ | 2,059,579 | ||||||
Mexico
|
348,894
|
361,887
|
287,414
|
|||||||||
Sub-total
|
3,596,706
|
2,259,650
|
2,346,993
|
|||||||||
Turkey
|
69,653
|
76,908
|
77,319
|
|||||||||
Other
Products:
|
||||||||||||
United
States
|
103,757
|
88,650
|
85,581
|
|||||||||
Mexico
|
4,120
|
1,660
|
2,010
|
|||||||||
Sub-total
|
107,877
|
90,310
|
87,591
|
|||||||||
Total
|
$ | 3,774,236 | $ | 2,426,868 | $ | 2,511,903 | ||||||
Capital
Expenditures (excluding acquisition):
|
||||||||||||
Chicken:
|
||||||||||||
United
States
|
$ | 164,449 | $ | 133,106 | $ | 102,470 | ||||||
Mexico
|
1,633
|
6,536
|
4,924
|
|||||||||
Sub-total
|
166,082
|
139,642
|
107,394
|
|||||||||
Turkey
|
502
|
257
|
3,604
|
|||||||||
Other
Products:
|
||||||||||||
United
States
|
5,699
|
3,567
|
5,448
|
|||||||||
Mexico
|
40
|
416
|
142
|
|||||||||
Sub-total
|
5,739
|
3,983
|
5,590
|
|||||||||
Total
|
$ | 172,323 | $ | 143,882 | $ | 116,588 |
(a)
|
The
Company acquired Gold Kist on December 27, 2006 for $1.139
billion. For financial reporting purposes, we have not included
the operating results and cash flows of Gold Kist in our consolidated
financial statements for the period from December 27, 2006
through December 30, 2006. The operating results and
cash flows of Gold Kist from December 27, 2006 through December
30, 2006
were not material.
|
(b)
|
Includes
amortization of capitalized financing costs of approximately $6.6
million,
$2.6 million, and $2.3 million in fiscal 2007, 2006 and 2005,
respectively, and amortization of intangible assets of approximately
$6.3
million in fiscal 2007.
|
September
29,
2007
|
September
30,
2006
|
October
1,
2005
|
||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | ||||||
Cost
and Expenses
|
||||||||||||
Cost
of sales
|
92.2
|
94.3
|
86.8
|
|||||||||
Gross
profit
|
7.8
|
5.7
|
13.2
|
|||||||||
Selling,
general and administrative expense
|
4.7
|
5.6
|
5.5
|
|||||||||
Operating
income
|
3.1
|
0.1
|
7.7
|
|||||||||
Interest
expense, net
|
1.6
|
0.8
|
0.7
|
|||||||||
Income
(loss) before income taxes
|
1.2
|
(0.7 | ) |
7.1
|
||||||||
Net
income (loss)
|
0.6
|
(0.7 | ) |
4.7
|
||||||||
Fiscal
Year Ended
|
|||||||||||||
September
29,
|
Change
from
|
Percentage
|
|||||||||||
Source
|
2007
|
Fiscal
2006
|
Change
|
||||||||||
Chicken:
|
|||||||||||||
United
States
|
$ | 6,328.3 | $ | 2,229.9 | 54.4 | % |
(a)
|
||||||
Mexico
|
488.5
|
69.8
|
16.7 | % |
(b)
|
||||||||
$ | 6,816.8 | $ | 2,299.7 | 50.9 | % | ||||||||
Turkey
|
$ | 122.4 | $ | (8.5 | ) | (6.5 | ) % |
(c)
|
|||||
Other
products:
|
|||||||||||||
United
States
|
$ | 638.7 | $ | 68.1 | 11.9 | % |
(d)
|
||||||
Mexico
|
20.7
|
3.7
|
21.8 | % |
(e)
|
||||||||
$ | 659.4 | $ | 71.8 | 12.2 | % | ||||||||
Net
Sales
|
$ | 7,598.6 | $ | 2,363.0 | 45.1 | % |
(a)
|
U.S.
chicken sales increased primarily as the result of a 41.1% increase
in
volume due to the acquisition of Gold Kist on December 27, 2006,
increases
in the average selling prices of chicken and, for legacy Pilgrim’s Pride
products, an improved product mix containing more higher-margin,
value-added products.
|
(b)
|
Mexico
chicken sales increased compared to fiscal year 2006, due primarily
to
increases in production and a 21.2% increase in pricing per pound
sold.
|
(c)
|
Turkey
sales declined due primarily to an 8.1% decrease in pricing of
turkey
products.
|
(d)
|
U.S.
sales of other products increased primarily due to the acquisition
of Gold
Kist on December 27, 2006 and improved pricing from rendering
operations.
|
(e)
|
Mexico
other products sales increased due to increased sales volumes of
and
increased sales prices for commercial
feed.
|
Fiscal
Year Ended
|
Percentage
|
Percentage
|
|||||||||||||||||||
September
29,
|
Change
from
|
Percentage
|
of
Net Sales
|
of
Net Sales
|
|||||||||||||||||
Components
|
2007
|
Fiscal
2006
|
Change
|
Fiscal
2007
|
Fiscal
2006
|
||||||||||||||||
Net
sales
|
$ | 7,598.6 | $ | 2,363.0 | 45.1 | % | 100.0 | % | 100.0 | % | |||||||||||
Cost
of sales
|
7,007.1
|
2,069.1
|
41.9 | % | 92.2 | % | 94.3 | % |
(a)
|
||||||||||||
Gross
profit
|
$ | 591.5 | $ | 293.9 | 98.8 | % | 7.8 | % | 5.7 | % |
(b)
|
(a)
|
Cost
of sales in the U.S. chicken operations increased $1,995.7 million
due
primarily to the acquisition of Gold Kist and increased quantities
and
costs of energy and feed ingredients. We also experienced in
fiscal 2007, and continue to experience, increased production and
freight
costs related to operational inefficiencies, labor shortages at
several
facilities and higher fuel costs. We believe the labor
shortages are attributable in part to heightened publicity of governmental
immigration enforcement efforts, ongoing Company compliance efforts
and
continued changes in the Company’s employment practices in light of
recently published governmental best practices and the pending
new labor
hiring regulations. Cost of sales in our Mexico chicken
operations increased primarily due to increased feed ingredient
cost.
|
(b)
|
Gross
profit as a percent of net sales improved 2.1 percentage points
due to
sales prices in the industry increasing in response to the increased
cost
of feed ingredients.
|
Fiscal
Year Ended
|
||||||||||||
September
29,
|
Change
from
|
Percentage
|
||||||||||
Source
|
2007
|
Fiscal
2006
|
Change
|
|||||||||
Chicken:
|
||||||||||||
United
States
|
$ | 192.5 | $ | 163.9 | 573.1 | % | ||||||
Mexico
|
13.1
|
31.0
|
173.2 | % | ||||||||
$ | 205.6 | $ | 194.9 | NM | ||||||||
Turkey
|
$ | (4.7 | ) | $ | 10.8 | 70.0 | % | |||||
Other
Products:
|
||||||||||||
United
States
|
$ | 28.6 | $ | 22.4 | 361.3 | % | ||||||
Mexico
|
3.0
|
1.4
|
87.5 | % | ||||||||
$ | 31.6 | $ | 23.8 | 305.1 | % | |||||||
Operating
Income
|
$ | 232.5 | $ | 229.5 | NM |
Fiscal
Year Ended
|
Percentage
|
Percentage
|
||||||||||||
September
29,
|
Change
from
|
Percentage
|
of
Net Sales
|
of
Net Sales
|
||||||||||
Components
|
2007
|
Fiscal
2006
|
Change
|
Fiscal
2007
|
Fiscal
2006
|
|||||||||
Gross
profit
|
$
|
591.5
|
$
|
293.9
|
98.8
|
%
|
7.8
|
%
|
5.7
|
%
|
||||
S Selling, general and administrative expense
|
359.0
|
64.4
|
21.9
|
%
|
4.7
|
%
|
5.6
|
%
|
(a)
|
|||||
Operating
income
|
$
|
232.5
|
$
|
229.5
|
NM
|
|
3.1
|
%
|
0.1
|
%
|
(b)
|
(a)
|
Selling,
general and administrative expense increased due primarily to the
acquisition of Gold Kist.
|
(b)
|
The
increase in operating income when compared to fiscal 2006 is due
primarily
to the acquisition of Gold Kist, increases in the average selling
prices
of chicken, improved product mix and a reduction of selling, general
and
administrative expenses as a percentage of net sales, offset by
increased
production and freight costs and the other factors described
above.
|
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
|
Change
|
Percentage
|
Percentage
|
||||||||||||||||||
September
30,
|
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 | ) % | ||||||
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 | % | ||||||||||
S
Sel l
ing, 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.
|
Facility
|
Amount
|
|||||||||
Source
of Liquidity
|
Amount
|
Outstanding
|
Available
|
|||||||
(in
millions)
|
||||||||||
Cash
and cash equivalents
|
$
|
--
|
$
|
--
|
$
|
66.2
|
||||
Investments
in available-for-sale securities
|
--
|
--
|
8.2
|
|||||||
Debt
facilities:
|
||||||||||
Revolving
credit facilities
|
350.0
|
26.3
|
238.8
|
(a)
|
||||||
Revolving/term
facility
|
550.0
|
--
|
550.0
|
|||||||
|
||||||||||
Receivables
purchase agreement
|
300.0
|
300.0
|
--
|
|||||||
(a)
|
At
September 29, 2007, the Company had $84.9 million in letters
of credit
outstanding relating to normal business transactions.
|
Payments
Due By Period
|
||||||||||||||||||||
Contractual
Obligations
|
Total
|
Less
than 1 year
|
1-3
years
|
3-5
years
|
More
than 5 years
|
|||||||||||||||
Long-term
debt(a)
|
$ | 1,321.4 | $ | 2.9 | $ | 3.7 | $ | 29.3 | $ | 1,285.5 | ||||||||||
Guarantee
fees
|
31.2
|
3.6
|
7.0
|
7.0
|
13.6
|
|||||||||||||||
Operating
leases
|
147.5
|
46.8
|
65.4
|
30.3
|
5.0
|
|||||||||||||||
Purchase
obligations
|
40.1
|
40.1
|
--
|
--
|
--
|
|||||||||||||||
Total
|
$ | 1,540.2 | $ | 93.4 | $ | 76.1 | $ | 66.6 | $ | 1,304.1 |
(a)
|
Excludes
$84.9 million in letters of credit outstanding related to normal
business
transactions.
|
|
Not
Applicable.
|
|
PART
III
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
(a)
|
Financial
Statements
|
|
(1)
|
The
financial statements and schedules listed in the index to financial
statements and schedules on page 3 of this report 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
118.
|
|
(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).
|
|
2.3
|
Agreement
and Plan of Merger dated as of December 3, 2006, by and among
the Company,
Protein Acquisition Corporation, a wholly-owned subsidiary of
the Company,
and Gold Kist Inc. (incorporated by reference from Exhibit 99.(D)(1)
to
Amendment No. 11 to the Company’s Tender Offer Statement on Schedule TO
filed on December 5, 2006).
|
|
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 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).
|
4.4
|
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).
|
|
4.5
|
Senior
Debt Securities Indenture dated as of January 24, 2007, by and
between the
Company and Wells Fargo Bank, National Association, as trustee
(incorporated by reference from Exhibit 4.1 to the Company’s Current
Report on Form 8-K filed on January 24, 2007).
|
|
4.6
|
First
Supplemental Indenture to the Senior Debt Securities Indenture
dated as of
January 24, 2007, by and between the Company and Wells Fargo
Bank,
National Association, as trustee (incorporated by reference from
Exhibit
4.2 to the Company’s Current Report on Form 8-K filed on January 24,
2007).
|
|
4.7
|
Form
of 7 5/8% Senior Note due 2015 (incorporated by reference from
Exhibit 4.3
to the Company’s Current Report on Form 8-K filed on January 24,
2007).
|
|
4.8
|
Senior
Subordinated Debt Securities Indenture dated as of January 24,
2007, by
and between the Company and Wells Fargo Bank, National Association,
as
trustee (incorporated by reference from Exhibit 4.4 to the Company’s
Current Report on Form 8-K filed on January 24, 2007).
|
|
4.9
|
First
Supplemental Indenture to the Senior Subordinated Debt Securities
Indenture dated as of January 24, 2007, by and between the Company
and
Wells Fargo Bank, National Association, as trustee (incorporated
by
reference from Exhibit 4.5 to the Company’s Current Report on Form 8-K
filed on January 24, 2007).
|
|
4.10
|
Form
of 8 3/8% Subordinated Note due 2017 (incorporated by reference
from
Exhibit 4.6 to the Company’s Current Report on Form 8-K filed on January
24, 2007).
|
|
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 dated June 26, 1998 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
|
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).
|
|
10.17
|
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).
|
|
10.18
|
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).
|
|
10.19
|
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).
|
|
10.20
|
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).
|
|
10.21
|
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). …
|
|
10.22
|
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).
|
|
10.23
|
Amended
and Restated 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 30, 2005). …
|
|
10.24
|
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).
|
10.25
|
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).
|
|
10.26
|
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).
|
|
10.27
|
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 filed
on
September 28, 2006).
|
|
10.28
|
2006
Amended and Restated 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
filed on September 28, 2006).
|
|
10.29
|
First
Amendment to the Pilgrim’s Pride Corporation Amended and Restated 2005
Deferred Compensation Plan Trust, dated as of November 29, 2006
(incorporated by reference from Exhibit 10.03 of the Company’s Current
Report on Form 8-K filed on December 05, 2006). …
|
|
10.30
|
Agreement
and Plan of Merger dated as of December 3, 2006, by and among
the Company,
the Purchaser and Gold Kist Inc. (incorporated by reference from
Exhibit
99.(D)(1) to Amendment No. 11 to the Company’s Tender Offer Statement on
Schedule TO filed on December 5, 2006).
|
|
10.31
|
First
Amendment to Credit Agreement, dated as of December 13, 2006,
by and among
the Company, as borrower, CoBank, ACB, as lead arranger and co-syndication
agent, and sole book runner, and as administrative, documentation
and
collateral agent, Agriland, FCS, as co-syndication agent, and
as a
syndication party, and the other syndication parties signatory
thereto
(incorporated by reference from Exhibit 10.01 to the Company’s Current
Report on Form 8-K filed on December 19, 2006).
|
|
10.32
|
Second
Amendment to Credit Agreement, dated as of January 4, 2007, by
and among
the Company, as borrower, CoBank, ACB, as lead arranger and co-syndication
agent, and sole book runner, and as administrative, documentation
and
collateral agent, Agriland, FCS, as co-syndication agent, and
as a
syndication party, and the other syndication parties signatory
thereto
(incorporated by reference from Exhibit 10.01 to the Company’s Current
Report on Form 8-K filed on January 9, 2007).
|
|
10.33
|
Fourth
Amended and Restated Secured Credit Agreement, dated as of February
8,
2007, by and among the Company, To-Ricos, Ltd., To-Ricos Distribution,
Ltd., Bank of Montreal, as agent, SunTrust Bank as syndication
agent, U.S.
Bank National Association and Wells Fargo Bank, National Association
as
Co-Documentation Agents, BMO Capital Market as lead arranger,
and the
other lenders signatory thereto (incorporated by reference from
Exhibit
10.01 of the Company’s Current Report on Form 8-K dated February 12,
2007).
|
10.34
|
Third
Amendment to Credit Agreement, dated as of February 7, 2007,
by and among
the Company as borrower, CoBank, ACB, as lead arranger and co-syndication
agent, and the sole book runner, and as administrative, documentation
and
collateral agent, Agriland, FCS, as co-syndication agent, and
as a
syndication party, and the other syndication parties signatory
thereto
(incorporated by reference from Exhibit 10.02 of the Company’s Current
Report on Form 8-K dated February 12, 2007).
|
|
10.35
|
First
Amendment to Credit Agreement, dated as of March 15, 2007, by
and among
the Borrower, the Company, the Subsidiary Guarantors, ING Capital
LLC, and
the Lenders (incorporated by reference from Exhibit 10.01 of
the Company’s
Current Report on Form 8-K dated March 20, 2007).
|
|
10.36
|
Fourth
Amendment to Credit Agreement, dated as of July 3, 2007, by and
among the
Company as borrower, CoBank, ACB, as lead arranger and co-syndication
agent, and the sole book runner, and as administrative, documentation
and
collateral agent, Agriland, FCS, as co-syndication agent, and
as
syndication party, and the other syndication parties signatory
thereto
(incorporated by reference from Exhibit 10.1 of the Company's
Quarterly
Report on Form 10-Q filed July 31, 2007).
|
|
10.37
|
Amendment
No. 5 to Receivables Purchase Agreement dated as of August 20,
2007, among
the Company, Pilgrim's Pride Funding Corporation, Fairway Finance
Company,
LLC and BMO Capital Markets Corp. (incorporated by reference
from Exhibit
10.01 of the Company’s Current Report on Form 8-K dated August 24,
2007).
|
|
10.38
|
Retirement
and Consulting Agreement dated as of October 10, 2007, between
the Company
and Clifford E. Butler (incorporated by reference from Exhibit
10.1 of the
Company’s Current Report on Form 8-K dated October 10, 2007). …
|
|
10.39
|
Fifth
Amendment to Credit Agreement, dated as of August 7, 2007, by
and among
the Company as borrower, CoBank, ACB, as lead arranger and co-syndication
agent, and the sole book runner, and as administrative, documentation
and
collateral agent, Agriland, FCS, as co-syndication agent, and
as
syndication party, and the other syndication parties signatory
thereto.*
|
|
10.40
|
Sixth
Amendment to Credit Agreement, dated as of November 7, 2007,
by and among
the Company as borrower, CoBank, ACB, as administrative agent,
and the
other syndication parties signatory thereto (incorporated by
reference
from Exhibit 10.1 of the Company’s Current Report on Form 8-K dated
November 13, 2007).
|
|
12
|
Ratio
of Earnings to Fixed Charges for the years ended September 29,
2007,
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.*
|
|
*Filed
herewith
|
|
…Represents
a management contract or compensation plan
arrangement
|
By:
|
/s/
Richard A. Cogdill
|
Richard
A. Cogdill
|
|
Chief
Financial Officer, Secretary and Treasurer
|
|
(Principal
Financial and Accounting Officer)
|
Signature
|
Title
|
Date
|
/s/
Lonnie “Bo” Pilgrim
|
Senior
Chairman of the Board
|
11/19/07
|
Lonnie
“Bo” Pilgrim
|
||
/s/
Lonnie Ken Pilgrim
|
Chairman
of the Board
|
11/19/07
|
Lonnie
Ken Pilgrim
|
||
/s/
Clifford E. Butler
|
Vice
Chairman of the Board
|
11/19/07
|
Clifford
E. Butler
|
||
/s/
O.B. Goolsby, Jr.
|
President
|
11/19/07
|
O.B.
Goolsby, Jr.
|
Chief
Executive Officer
|
|
Director
|
||
/s/
Richard A. Cogdill
|
Chief
Financial Officer,
|
11/19/07
|
Richard
A. Cogdill
|
Secretary
and Treasurer
|
|
Director
|
||
(Principal
Financial and Accounting Officer)
|
||
/s/
Charles L. Black
|
Director
|
11/19/07
|
Charles
L. Black
|
||
/s/
Linda Chavez
|
Director
|
11/16/07
|
Linda
Chavez
|
||
/s/
S. Key Coker
|
Director
|
11/19/07
|
S.
Key Coker
|
||
/s/
Keith W. Hughes
|
Director
|
11/19/07
|
Keith
W. Hughes
|
/s/
Blake D. Lovette
|
Director
|
11/19/07
|
Blake
D. Lovette
|
||
/s/
Vance C. Miller, Sr.
|
Director
|
11/19/07
|
Vance
C. Miller, Sr.
|
||
/s/
James G. Vetter, Jr.
|
Director
|
11/19/07
|
James
G. Vetter, Jr.
|
||
/s/
Donald L. Wass, Ph.D.
|
Director
|
11/19/07
|
Donald
L. Wass, Ph.D.
|
||
(In
thousands, except share and per share data)
|
September
29, 2007
|
September
30, 2006
|
||||||
Assets
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 66,168 | $ | 156,404 | ||||
Investment
in available-for-sale securities
|
8,153
|
21,246
|
||||||
Trade
accounts and other receivables, less
allowance
for doubtful accounts
|
130,173
|
263,149
|
||||||
Inventories
|
961,885
|
585,940
|
||||||
Income
taxes receivable
|
61,901
|
39,167
|
||||||
Current
deferred taxes
|
8,095
|
7,288
|
||||||
Other
current assets
|
47,959
|
32,480
|
||||||
Total
Current Assets
|
1,284,334
|
1,105,674
|
||||||
Investment
in Available-for-Sale Securities
|
46,035
|
115,375
|
||||||
Other
Assets
|
138,546
|
50,825
|
||||||
Goodwill
|
505,166
|
--
|
||||||
Property,
Plant and Equipment:
|
||||||||
Land
|
115,101
|
52,493
|
||||||
Buildings,
machinery and equipment
|
2,391,154
|
1,702,949
|
||||||
Autos
and trucks
|
59,559
|
57,177
|
||||||
Construction
in progress
|
124,193
|
63,853
|
||||||
2,690,007
|
1,876,472
|
|||||||
Less
accumulated depreciation
|
(889,852 | ) | (721,478 | ) | ||||
1,800,155
|
1,154,994
|
|||||||
$ | 3,774,236 | $ | 2,426,868 | |||||
Liabilities
and Stockholders’ Equity
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable
|
$ | 402,316 | $ | 293,685 | ||||
Accrued
expenses
|
500,014
|
272,830
|
||||||
Current
maturities of long-term debt
|
2,872
|
10,322
|
||||||
Total
Current Liabilities
|
905,202
|
576,837
|
||||||
Long-Term
Debt, Less Current Maturities
|
1,318,558
|
554,876
|
||||||
Deferred
Income Taxes
|
326,570
|
175,869
|
||||||
Other
Long-Term Liabilities
|
51,685
|
1,958
|
||||||
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 issued
and outstanding
|
665
|
665
|
||||||
Additional
paid-in capital
|
469,779
|
469,779
|
||||||
Retained
earnings
|
687,775
|
646,750
|
||||||
Accumulated
other comprehensive income
|
14,002
|
134
|
||||||
Total
Stockholders’ Equity
|
1,172,221
|
1,117,328
|
||||||
$ | 3,774,236 | $ | 2,426,868 | |||||
See
Notes to Consolidated Financial Statements
|
(In
thousands, except per share data)
|
Three
Years Ended September 29, 2007
|
|||||||||||
2007
|
2006
|
2005
|
||||||||||
Net
Sales
|
$ | 7,598,599 | $ | 5,235,565 | $ | 5,666,275 | ||||||
Cost
and Expenses:
|
||||||||||||
Cost
of sales
|
7,007,061
|
4,937,965
|
4,921,076
|
|||||||||
Gross
Profit
|
591,538
|
297,600
|
745,199
|
|||||||||
Selling,
general and administrative
|
359,001
|
294,598
|
309,387
|
|||||||||
Operating
Income
|
232,537
|
3,002
|
435,812
|
|||||||||
Other
Expenses (Income):
|
||||||||||||
Interest
expense
|
125,757
|
50,601
|
49,585
|
|||||||||
Interest
income
|
(4,640 | ) | (10,048 | ) | (5,653 | ) | ||||||
Loss
on early extinguishment of debt
|
26,463
|
--
|
--
|
|||||||||
Foreign
exchange (gain) loss
|
1,378
|
144
|
(474 | ) | ||||||||
Miscellaneous,
net
|
(8,028 | ) | (1,378 | ) | (11,169 | ) | ||||||
140,930
|
39,319
|
32,289
|
||||||||||
Income
(Loss) Before Income Taxes
|
91,607
|
(36,317 | ) |
403,523
|
||||||||
Income
Tax Expense (Benefit)
|
44,590
|
(2,085 | ) |
138,544
|
||||||||
Net
Income (Loss)
|
$ | 47,017 | $ | (34,232 | ) | $ | 264,979 | |||||
N
Net Income (Loss) per Common Share-Basic and Diluted
|
$ | 0.71 | $ | (0.51 | ) | $ | 3.98 | |||||
See
Notes to Consolidated Financial Statements
|
Accumulated
|
||||||||||||||||||||||||||||
Total
|
Additional
|
Other
|
||||||||||||||||||||||||||
Shares
of
|
Par
|
Paid-In
|
Retained
|
Comprehensive
|
Treasury
|
|||||||||||||||||||||||
Common
Stock
|
Value
|
Capital
|
Earnings
|
Income
(Loss)
|
Stock
|
Total
|
||||||||||||||||||||||
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 loss
|
(25 | ) | (25 | ) | ||||||||||||||||||||||||
Total
comprehensive income
|
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
|
507
|
507
|
||||||||||||||||||||||||||
Total
comprehensive loss
|
(33,725 | ) | ||||||||||||||||||||||||||
Cash
dividends declared ($1.09
per share)
|
(72,545 | ) | (72,545 | ) | ||||||||||||||||||||||||
Balance
at September 30, 2006
|
66,555,733
|
665
|
469,779
|
646,750
|
134
|
--
|
1,117,328
|
|||||||||||||||||||||
Net
income for year
|
47,017
|
47,017
|
||||||||||||||||||||||||||
Other
comprehensive income
|
13,868
|
13,868
|
||||||||||||||||||||||||||
Total
comprehensive income
|
60,885
|
|||||||||||||||||||||||||||
Cash
dividends declared ($.09
per share)
|
(5,992 | ) | (5,992 | ) | ||||||||||||||||||||||||
Balance
at September 29, 2007
|
66,555,733
|
$ |
665
|
$ |
469,779
|
$ |
687,775
|
$ |
14,002
|
--
|
$ |
1,172,221
|
||||||||||||||||
(In
thousands)
|
Three
Years Ended September 29, 2007
|
|||||||||||
2007
|
2006
|
2005
|
||||||||||
Cash
Flows From Operating Activities:
|
||||||||||||
Net
income (loss)
|
$ | 47,017 | $ | (34,232 | ) | $ | 264,979 | |||||
Adjustments
to reconcile net income (loss) to cash provided by
operating
activities
|
||||||||||||
Depreciation
and amortization
|
204,903
|
135,133
|
134,944
|
|||||||||
Non-cash
loss on early extinguishment of debt
|
9,543
|
--
|
--
|
|||||||||
Asset
impairment
|
--
|
3,767
|
--
|
|||||||||
(Gain)
loss on property disposals
|
(446 | ) |
1,781
|
4,326
|
||||||||
Deferred
income taxes
|
83,884
|
20,455
|
2,247
|
|||||||||
Changes
in operating assets and liabilities, net of the effect of business
acquired
|
||||||||||||
Accounts
and other receivables
|
247,217
|
31,121
|
21,192
|
|||||||||
Income
taxes (payable) receivable
|
5,570
|
(55,363 | ) | (38,251 | ) | |||||||
Inventories
|
(129,645 | ) | (58,612 | ) |
82,669
|
|||||||
Prepaid
expenses and other current assets
|
(2,981 | ) | (6,594 | ) |
20,800
|
|||||||
Accounts
payable, and accrued expenses
|
(5,097 | ) | (3,501 | ) | (610 | ) | ||||||
Other
|
3,999
|
(3,573 | ) |
777
|
||||||||
Cash
Provided by Operating Activities
|
463,964
|
30,382
|
493,073
|
|||||||||
Investing
Activities:
|
||||||||||||
Acquisitions
of property, plant and equipment
|
(172,323 | ) | (143,882 | ) | (116,588 | ) | ||||||
Purchase
of investment securities
|
(125,045 | ) | (318,266 | ) | (305,458 | ) | ||||||
Proceeds
from sale or maturity of investment securities
|
208,676
|
490,764
|
--
|
|||||||||
Business
acquisition, net of cash acquired
|
(1,102,069 | ) |
--
|
--
|
||||||||
Proceeds
from property disposals
|
6,286
|
4,148
|
4,963
|
|||||||||
Other,
net
|
--
|
(506 | ) | (524 | ) | |||||||
Cash
Provided by (Used in) Investing Activities
|
(1,184,475 | ) |
32,258
|
(417,607 | ) | |||||||
Financing
Activities:
|
||||||||||||
Proceeds
from notes payable to banks
|
--
|
270,500
|
--
|
|||||||||
Repayments
on notes payable to banks
|
--
|
(270,500 | ) |
--
|
||||||||
Proceeds
from long-term debt
|
751,255
|
74,683
|
--
|
|||||||||
Payments
on long-term debt
|
(1,368,700 | ) | (36,950 | ) | (16,829 | ) | ||||||
Bank
overdraft activity
|
39,231
|
--
|
--
|
|||||||||
Purchases
for retirement of common stock
|
--
|
--
|
(482,246 | ) | ||||||||
Sale
of common stock
|
--
|
--
|
521,928
|
|||||||||
Borrowing
for acquisition
|
1,230,000
|
--
|
--
|
|||||||||
Equity
and debt issue costs
|
(15,565 | ) | (3,938 | ) |
--
|
|||||||
Cash
dividends paid
|
(5,992 | ) | (72,545 | ) | (3,993 | ) | ||||||
Cash
Provided by (Used in) Financing Activities
|
630,229
|
(38,750 | ) |
18,860
|
||||||||
Effect
of exchange rate changes on cash and cash equivalents
|
46
|
(53 | ) |
76
|
||||||||
(Decrease)
increase in cash and cash equivalents
|
(90,236 | ) |
23,837
|
94,402
|
||||||||
Cash
and cash equivalents at beginning of year
|
156,404
|
132,567
|
38,165
|
|||||||||
Cash
and Cash Equivalents at End of Year
|
$ | 66,168 | $ | 156,404 | $ | 132,567 | ||||||
Supplemental
Disclosure Information:
|
||||||||||||
Cash
paid during the year for:
|
||||||||||||
Interest
(net of amount capitalized)
|
$ | 104,394 | $ | 48,590 | $ | 46,945 | ||||||
Income
taxes paid
|
$ | 11,164 | $ | 37,813 | $ | 172,929 | ||||||
See
Notes to Consolidated Financial Statements
|
September
29, 2007
|
September
30, 2006
|
|||||||
(Dollars
in thousands)
|
||||||||
Compensation
and benefits
|
$ | 231,401 | $ | 143,555 | ||||
Interest
|
49,063
|
5,276
|
||||||
Other
|
219,550
|
123,999
|
||||||
Accrued
expenses
|
$ | 500,014 | $ | 272,830 |
Purchase
50,146,368 shares at $21.00 per share
|
$ | 1,053,074 | ||
Premium
paid on retirement of debt
|
22,208
|
|||
Retirement
of various share-based compensation awards
|
25,677
|
|||
Various
costs and fees
|
37,740
|
|||
Total
purchase price
|
$ | 1,138,699 |
Current
assets
|
$ | 418,583 | ||
Property,
plant and equipment
|
675,054
|
|||
Goodwill
|
505,166
|
|||
Intangible
assets
|
64,500
|
|||
Other
assets
|
65,597
|
|||
Total
assets acquired
|
1,728,900
|
|||
Current
liabilities
|
276,194
|
|||
Long-term
debt, less current maturities
|
140,674
|
|||
Deferred
income taxes
|
93,509
|
|||
Other
long-term liabilities
|
79,824
|
|||
Total
liabilities assumed
|
590,201
|
|||
Total
purchase price
|
$ | 1,138,699 | ||
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
Amortization
|
|
||
|
|
Fair
Value
|
|
|
Period
|
|
||
|
|
(In
millions)
|
|
|
(In
years)
|
|
||
|
||||||||
I
In tangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
Customer
relationships
|
|
$
|
51,000
|
13.0
|
|
|||
Trade
name
|
|
|
13,200
|
3.0
|
|
|||
Non-compete
agreements
|
|
|
300
|
3.0
|
|
|||
|
|
|
|
|
|
|
|
|
Total
intangible assets subject to amortization
|
|
|
64,500
|
|
|
|
|
|
G Goodwill
|
|
|
505,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
intangible assets
|
|
$
|
569,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average amortization period
|
|
|
|
|
|
|
10.9
|
|
-
|
The
combined company is now positioned as the world’s leading chicken producer
and that position has provided us with enhanced abilities
to:
|
·
|
Compete
more efficiently and provide even better customer
service;
|
·
|
Expand
our geographic reach and customer
base;
|
·
|
Further
pursue value-added and prepared foods opportunities;
and
|
·
|
Offer
long-term growth opportunities for our stockholders, employees,
and
growers.
|
-
|
The
combined company is better positioned to compete in the industry
both
internationally and in the United States as additional consolidation
occurs.
|
In
thousands, except share and per share data
|
|
|||||||
Fiscal
2007
(Pro
forma)
|
Fiscal
2006
(Pro
forma)
|
|||||||
Net
sales
|
$ | 8,126,409 | $ | 7,352,018 | ||||
Depreciation
and amortization
|
$ | 230,126 | $ | 228,105 | ||||
Operating
income (loss)
|
$ | 201,986 | $ | (53,585 | ) | |||
Interest
expense, net
|
$ | 146,928 | $ | 125,314 | ||||
Income
(loss) before taxes
|
$ | 36,372 | $ | (172,740 | ) | |||
Net
income (loss)
|
$ | 12,832 | $ | (118,571 | ) | |||
Net
income (loss) per common share
|
$ | 0.19 | $ | (1.78 | ) | |||
Weighted average shares outstanding
|
66,555,733
|
66,555,733
|
September
29,
|
September
30,
|
|||||||
(In
thousands)
|
2007
|
2006
|
||||||
Chicken:
|
||||||||
Live
chicken and hens
|
$ | 343,185 | $ | 196,284 | ||||
Feed
and eggs
|
223,631
|
132,309
|
||||||
Finished
chicken products
|
337,052
|
201,516
|
||||||
903,868
|
530,109
|
|||||||
Turkey:
|
||||||||
Live
turkey and hens
|
$ | 8,839 | $ | 7,138 | ||||
Feed
and eggs
|
2,664
|
4,740
|
||||||
Finished
turkey products
|
25,929
|
26,685
|
||||||
37,432
|
38,563
|
|||||||
Other
Products:
|
||||||||
Commercial feed, table eggs, and retail farm store
|
$ | 11,327 | $ | 7,080 | ||||
Distribution inventories
(other
than chicken & turkey products)
|
9,258
|
10,188
|
||||||
20,585
|
17,268
|
|||||||
Total
Inventories
|
$ | 961,885 | $ | 585,940 |
(in
thousands)
|
Final
Maturity
|
|
September
29, 2007
|
|
|
September
30, 2006
|
|
||
|
|
|
|
|
|
|
|
||
Senior
unsecured notes, at 7 5/8%
|
2015
|
|
$
|
400,000
|
|
|
$
|
--
|
|
Senior
unsecured notes, at 8 3/8%
|
2017
|
|
|
250,000
|
|
|
|
--
|
|
Senior
unsecured notes, at 9 5/8%
|
2011
|
|
|
--
|
|
|
|
299,601
|
|
Senior
subordinated unsecured notes, at 9 1/4%
|
2013
|
|
|
5,135
|
|
|
|
82,640
|
|
Secured
revolving credit facility with notes payable at LIBOR plus 1.25%
to LIBOR
plus 2.75%
|
2011
|
|
|
26,293
|
|
|
|
74,682
|
|
Note
payable to an insurance company at 6.68%
|
2012
|
|
|
--
|
|
|
|
50,115
|
|
Notes
payable to an insurance company at LIBOR plus 2.2075%
|
2013
|
|
|
--
|
|
|
|
41,333
|
|
Secured
revolving-term/credit facility with notes payable at LIBOR or
US
Treasuries, plus a spread
|
2016
|
|
|
622,350
|
|
|
|
--
|
|
Other
|
Various
|
|
|
17,652
|
|
|
|
16,827
|
|
|
|
|
|
1,321,430
|
|
|
|
565,198
|
|
Less
current maturities
|
|
|
|
(2,872
|
)
|
|
|
(10,322
|
)
|
Total
|
|
|
$
|
1,318,558
|
|
|
$
|
554,876
|
|
(In
thousands)
|
2007
|
2006
|
2005
|
|||||||||
Current:
|
||||||||||||
Federal
|
$ | (37,191 | ) | $ | (23,147 | ) | $ | 117,518 | ||||
Foreign
|
1,573
|
5,130
|
3,880
|
|||||||||
State
and other
|
(3,676 | ) | (4,523 | ) |
14,899
|
|||||||
Total
current
|
(39,294 | ) | (22,540 | ) |
136,297
|
|||||||
Deferred
|
||||||||||||
Federal
|
73,285
|
9,511
|
(1,594 | ) | ||||||||
Foreign
|
(1,637 | ) |
10,221
|
4,475
|
||||||||
State
and other
|
12,236
|
723
|
113
|
|||||||||
Total
deferred
|
83,884
|
20,455
|
2,994
|
|||||||||
Change
in valuation allowance
|
--
|
--
|
(747 | ) | ||||||||
$ | 44,590 | $ | (2,085 | ) | $ | 138,544 |
2007
|
2006
|
2005
|
||||||||||
Federal
income tax rate
|
35.0 | % | (35.0 | ) % | 35.0 | % | ||||||
State
tax rate, net
|
2.6
|
(0.7 | ) |
2.1
|
||||||||
Permanent Items
|
2.9
|
|||||||||||
D
Difference in U.S. statutory tax rate and foreign country effective
tax
rate
|
(0.8 | ) | (1.0 | ) | (1. 3 | ) | ||||||
T Tax
credits
|
(8.0 | ) | (13.1 | ) | (1.1 | ) | ||||||
Tax effect of American Jobs Creation Act
repatriation
|
--
|
68.3
|
0.6
|
|||||||||
Currency
related differences
|
3.8
|
8.4
|
(1.1 | ) | ||||||||
Change
in contingency reserves
|
6.8
|
(29.7 | ) |
--
|
||||||||
Change
in valuation allowance
|
--
|
--
|
(0.2 | ) | ||||||||
Change
in tax rate
|
3.2
|
--
|
--
|
|||||||||
Other
|
3.2
|
(3.0 | ) |
0.3
|
||||||||
Total
|
48.7 | % | (5.8 | ) % | 34.3 | % |
(In
thousands)
|
2007
|
2006
|
||||||
Deferred
tax liabilities:
|
||||||||
Property
and equipment
|
$ | 256,341 | $ | 144,361 | ||||
Inventories
|
109,410
|
43,627
|
||||||
Prior
use of cash accounting
|
16,936
|
18,457
|
||||||
Acquisition
related items
|
14,820
|
15,600
|
||||||
Deferred
foreign taxes
|
25,002
|
24,127
|
||||||
Identified
intangibles
|
21,964
|
--
|
||||||
Other
|
58,956
|
36,570
|
||||||
Total
deferred tax liabilities
|
503,429
|
282,742
|
||||||
Deferred
tax assets:
|
||||||||
Foreign
net operating losses
|
41,257
|
42,683
|
||||||
Expenses
deductible in different years
|
143,697
|
71,478
|
||||||
Total
deferred tax asset
|
184,954
|
114,161
|
||||||
Net
deferred tax liabilities
|
$ | 318,475 | $ | 168,581 |
·
|
the
Pilgrim’s Pride Retirement Savings Plan (the “RS Plan”), a Section 401(k)
Salary Deferral Plan
|
·
|
the
Pilgrim’s Pride Retirement Plan for Union Employees (the “Union Plan”), a
defined benefit plan
|
·
|
the
To-Rico’s Employee Cash or Deferred Arrangement Profit Sharing Plan (the
“To-Rico’s Plan”), a Section 1165(e) Salary Deferral
Plan
|
·
|
the
legacy Gold Kist Pension Plan (the “GK Pension Plan”), a defined benefit
plan acquired with Gold Kist, Inc.
|
Pension
Benefits
|
Other
Postretirement Benefits
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Change
in benefit obligation:
|
||||||||||||||||
Benefit
obligation at beginning of year
|
$ | 9,882 | $ | 8,778 | $ | -- | $ | -- | ||||||||
Service
cost
|
2,029
|
2,242
|
--
|
--
|
||||||||||||
Interest
cost
|
8,455
|
458
|
103
|
--
|
||||||||||||
Plan
participant contributions
|
61
|
27
|
681
|
--
|
||||||||||||
Actuarial
(gains) losses
|
(12,933 | ) | (1,533 | ) | (41 | ) |
--
|
|||||||||
Acquisitions
|
218,623
|
--
|
2,689
|
--
|
||||||||||||
Prior
service cost (credit)
|
237
|
--
|
-
|
--
|
||||||||||||
Benefits
paid
|
(29,551 | ) | (90 | ) | (1,000 | ) |
--
|
|||||||||
Benefit
obligation at end of year
|
196,803
|
9,882
|
2,432
|
--
|
||||||||||||
Change
in plan assets:
|
||||||||||||||||
Fair
value of plan assets at beginning of year
|
6,252
|
5,405
|
--
|
--
|
||||||||||||
Acquisitions
|
139,229
|
--
|
--
|
--
|
||||||||||||
Actual
return on plan assets
|
11,571
|
208
|
--
|
--
|
||||||||||||
Contributions
by employer
|
10,462
|
702
|
319
|
--
|
||||||||||||
Plan
participant contributions
|
61
|
27
|
681
|
--
|
||||||||||||
Benefits
paid
|
(29,551 | ) | (90 | ) | (1,000 | ) |
--
|
|||||||||
Fair
value of plan assets at end of year
|
138,024
|
6,252
|
--
|
--
|
||||||||||||
Funded
status
|
(58,779 | ) | (3,630 | ) | (2,432 | ) |
--
|
|||||||||
Unrecognized
prior service cost (benefit)
|
237
|
--
|
--
|
--
|
||||||||||||
Unrecognized
net (gain) loss
|
(14,824 | ) | (818 | ) | (41 | ) |
--
|
|||||||||
Net
(accrued) prepaid expense
|
$ | (73,366 | ) | $ | (4,448 | ) | $ | (2,473 | ) | $ | -- | |||||
Accumulated
other comprehensive loss
|
14,587
|
--
|
41
|
--
|
||||||||||||
Net
amount recognized
|
$ | (58,779 | ) | $ | (4,448 | ) | $ | (2,432 | ) | $ | -- | |||||
Projected
benefit obligation
|
$ | 196,803 | $ | 9,882 | $ | 2,432 |
--
|
|||||||||
Accumulated
benefit obligation
|
196,217
|
9,301
|
2,432
|
--
|
||||||||||||
Fair
value of plan assets
|
138,024
|
6,252
|
--
|
--
|
||||||||||||
Weighted-average
assumptions used to determine benefit obligation:
|
|||||||||||||
Discount
rate
|
5.06 | % | 5.75 | % | 5.87 | % |
NA
|
||||||
Rate
of increase in compensation levels
|
3.00 | % | 3.00 | % |
NA
|
NA
|
Pension
Benefits
|
Other
Postretirement Benefits
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Components
of net periodic benefit cost (income):
|
||||||||||||||||
Service
cost
|
$ |
2,029
|
$ |
2,242
|
$ |
--
|
$ |
--
|
||||||||
Interest
cost
|
8,455
|
458
|
103
|
--
|
||||||||||||
Estimated
return on plan assets
|
(8,170 | ) | (454 | ) |
--
|
--
|
||||||||||
Settlement
(gain) loss
|
(2,327 | ) |
--
|
--
|
--
|
|||||||||||
Net
periodic benefit cost (income)
|
$ | (13 | ) | $ |
2,246
|
103
|
$ |
--
|
||||||||
Weighted-average
assumptions used to determine benefit cost:
|
||||||||||||||||
Discount
rate
|
5.06 | % | 5.25 | % | 5.50 | % |
NA
|
|||||||||
Rate
of increase in compensation levels
|
3.00 | % | 3.00 | % |
NA
|
NA
|
||||||||||
Expected
return on plan assets
|
7.75 | % | 7.75 | % | 7.75 | % |
NA
|
(in
thousands)
|
||||
Unrecognized
(gain) loss at beginning of period
|
$ | (818 | ) | |
Curtailment
and settlement adjustments
|
2,327
|
|||
Actuarial
(gain) loss
|
(12,974 | ) | ||
Asset
(gain) loss
|
(3,400 | ) | ||
Prior
service cost (credit)
|
237
|
|||
$ | (14,628 | ) |
Pension
Benefits
|
|||||||
2007
|
2006
|
||||||
(in
thousands)
|
|||||||
Fair
value of plan assets at end of year
|
$
|
138,024
|
$
|
6,252
|
|||
Asset
allocation:
|
|||||||
Cash
and money market funds
|
2
|
%
|
0
|
%
|
|||
Equity
securities
|
71
|
%
|
66
|
%
|
|||
Debt
securities
|
27
|
%
|
34
|
%
|
|||
Total
assets
|
100
|
%
|
100
|
%
|
Expected
Benefit Payments for fiscal year:
|
Pension
Benefits
|
Other
Postretirement Benefits
|
|||||||
(in
thousands)
|
|||||||||
2008
|
$ | 17,614 | $ | 380 | |||||
2009
|
17,502
|
243
|
|||||||
2010
|
17,010
|
205
|
|||||||
2011
|
16,230
|
175
|
|||||||
2012
|
15,812
|
177
|
|||||||
2013-2017 |
62,515
|
889
|
|||||||
Total
|
$ | 146,683 | $ | 2,069 |
2007
|
2006
|
2005
|
||||||||||
(In
thousands)
|
||||||||||||
Lease
payments on commercial egg property
|
$ | 750 | $ | 750 | $ | 750 | ||||||
Contract
grower pay
|
885
|
976
|
682
|
|||||||||
Other
sales to major stockholder
|
620
|
747
|
51,258
|
|||||||||
Live
chicken purchases from major stockholder
|
--
|
231
|
50,070
|
|||||||||
Loan
guaranty fees
|
3,592
|
1,615
|
1,775
|
|||||||||
Lease
payments and operating expenses on airplane
|
507
|
492
|
536
|
Fiscal
Year Ended
|
||||||||||||
September
29, 2007(a)
|
September
30, 2006
|
October
1, 2005
|
||||||||||
(In
thousands)
|
||||||||||||
Net
Sales to Customers:
|
||||||||||||
Chicken:
|
||||||||||||
United
States
|
$ | 6,328,354 | $ | 4,098,403 | $ | 4,411,269 | ||||||
Mexico
|
488,466
|
418,745
|
403,353
|
|||||||||
Sub-total
|
6,816,820
|
4,517,148
|
4,814,622
|
|||||||||
Turkey
|
122,364
|
130,901
|
204,838
|
|||||||||
Other
Products:
|
||||||||||||
United
States
|
638,738
|
570,510
|
626,056
|
|||||||||
Mexico
|
20,677
|
17,006
|
20,759
|
|||||||||
Sub-total
|
659,415
|
587,516
|
646,815
|
|||||||||
Total
|
7,598,599
|
5,235,565
|
5,666,275
|
|||||||||
Operating
Income (Loss):
|
||||||||||||
Chicken:
|
||||||||||||
United
States
|
$ | 192,447 | $ | 28,619 | $ | 405,662 | ||||||
Mexico
|
13,116
|
(17,960 | ) |
39,809
|
||||||||
Sub-total
|
205,563
|
10,659
|
445,471
|
|||||||||
Turkey
|
(4,655 | ) | (15,511 | ) | (22,539 | ) | ||||||
Other
Products:
|
||||||||||||
United
States
|
28,637
|
6,216
|
8,250
|
|||||||||
Mexico
|
2,992
|
1,638
|
4,630
|
|||||||||
Sub-total
|
31,629
|
7,854
|
12,880
|
|||||||||
Total
|
$ | 232,537 | $ | 3,002 | $ | 435,812 | ||||||
Depreciation
and
Amortization:(b)
|
||||||||||||
Chicken:
|
||||||||||||
United
States
|
$ | 183,808 | $ | 109,346 | $ | 114,131 | ||||||
Mexico
|
11,015
|
11,305
|
12,085
|
|||||||||
Sub-total
|
194,823
|
120,651
|
126,216
|
|||||||||
Turkey
|
1,587
|
6,593
|
3,343
|
|||||||||
Other
Products:
|
||||||||||||
United
States
|
8,278
|
7,743
|
5,196
|
|||||||||
Mexico
|
215
|
146
|
189
|
|||||||||
Sub-total
|
8,493
|
7,889
|
5,385
|
|||||||||
Total
|
$ | 204,903 | $ | 135,133 | $ | 134,944 | ||||||
Total
Assets:
|
||||||||||||
Chicken:
|
||||||||||||
United
States
|
$ | 3,247,812 | $ | 1,897,763 | $ | 2,059,579 | ||||||
Mexico
|
348,894
|
361,887
|
287,414
|
|||||||||
Sub-total
|
3,596,706
|
2,259,650
|
2,346,993
|
|||||||||
Turkey
|
69,653
|
76,908
|
77,319
|
|||||||||
Other
Products:
|
||||||||||||
United
States
|
103,757
|
88,650
|
85,581
|
|||||||||
Mexico
|
4,120
|
1,660
|
2,010
|
|||||||||
Sub-total
|
107,877
|
90,310
|
87,591
|
|||||||||
Total
|
$ | 3,774,236 | $ | 2,426,868 | $ | 2,511,903 | ||||||
C
Capital Expenditures (excluding acquisition):
|
||||||||||||
Chicken:
|
||||||||||||
United
States
|
$ | 164,449 | $ | 133,106 | $ | 102,470 | ||||||
Mexico
|
1,633
|
6,536
|
4,924
|
|||||||||
Sub-total
|
166,082
|
139,642
|
107,394
|
|||||||||
Turkey
|
502
|
257
|
3,604
|
|||||||||
Other
Products:
|
||||||||||||
United
States
|
5,699
|
3,567
|
5,448
|
|||||||||
Mexico
|
40
|
416
|
142
|
|||||||||
Sub-total
|
5,739
|
3,983
|
5,590
|
|||||||||
Total
|
$ | 172,323 | $ | 143,882 | $ | 116,588 |
(a)
|
The
Company acquired Gold Kist on December 27, 2006 for $1.139
billion. For financial reporting purposes, we have not included
the operating results and cash flows of Gold Kist in our consolidated
financial statements for the period from December 27, 2006
through December 30, 2006. The operating results and
cash flows of Gold Kist from December 27, 2006 through December
30, 2006
were not material.
|
(b)
|
Includes
amortization of capitalized financing costs of approximately
$6.6 million,
$2.3 million, and $2.0 million in fiscal 2007, 2006 and 2005,
respectively, and amortization of intangible assets of approximately
$6.3
million in fiscal 2007.
|
(In
thousands, except per share data)
|
Fiscal
Year Ended September 29, 2007
|
|||||||||||||||||||
First
|
Second
|
Third
|
Fourth
|
Fiscal
|
||||||||||||||||
Quarter
|
Quarter
(b)
|
Quarter(b)
|
Quarter(b)
|
Year
|
||||||||||||||||
Net
sales
|
$ | 1,337,132 | $ | 1,993,965 | $ | 2,118,386 | $ | 2,149,116 | $ | 7,598,599 | ||||||||||
Gross
profit
|
65,526
|
83,942
|
235,239
|
206,831
|
591,538
|
|||||||||||||||
Operating
income (loss)
|
(2.906 | ) | (11,699 | ) |
136,777
|
110,365
|
232,537
|
|||||||||||||
Net
income (loss)
|
(8,736 | ) | (40,077 | ) |
62,641
|
33,189
|
47,017
|
|||||||||||||
Per
Share:
|
||||||||||||||||||||
Net
income (loss)
|
(0.13 | ) | (0.60 | ) |
0.94
|
0.50
|
0.71
|
|||||||||||||
Cash
dividends
|
0.0225
|
0.0225
|
0.0225
|
0.0225
|
0.090
|
(In
thousands, except per share data)
|
Fiscal
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
|
|||||||||||||||
(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 and Note F.
|
(b)
|
The
Company acquired Gold Kist on December 27, 2006 for $1.139
billion. For financial reporting purposes, we have not included
the operating results and cash flows of Gold Kist in our consolidated
financial statements for the period from December 27, 2006
through December 30, 2006. The operating results and
cash flows of Gold Kist from December 27, 2006 through December
30, 2006
were not material.
|
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(a)
|
Describe(b)
|
of
Period
|
||||||||||||||||
Year
ended September 29, 2007:
|
||||||||||||||||||||
Reserves
and allowances deducted
|
||||||||||||||||||||
from
asset accounts:
|
||||||||||||||||||||
Allowance
for doubtful accounts
|
$ | 2,084,409 | $ | 4,768,272 | $ | 1,324,131 | $ | 2,313,018 | $ | 5,863,794 | ||||||||||
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 | ||||||||||
(a) Balance
of allowance for doubtful accounts established for accounts receivable
acquired from Gold Kist.
|
||||||||||||||||||||
(b) Uncollectible
accounts written off, net of recoveries.
|
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).
|
|
2.3
|
Agreement
and Plan of Merger dated as of December 3, 2006, by and among
the Company,
Protein Acquisition Corporation, a wholly-owned subsidiary of
the Company,
and Gold Kist Inc. (incorporated by reference from Exhibit 99.(D)(1)
to
Amendment No. 11 to the Company’s Tender Offer Statement on Schedule TO
filed on December 5, 2006).
|
|
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
|
C 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 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).
|
|
4.4
|
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).
|
|
4.5
|
Senior
Debt Securities Indenture dated as of January 24, 2007, by and
between the
Company and Wells Fargo Bank, National Association, as trustee
(incorporated by reference from Exhibit 4.1 to the Company’s Current
Report on Form 8-K filed on January 24, 2007).
|
|
4.6
|
First
Supplemental Indenture to the Senior Debt Securities Indenture
dated as of
January 24, 2007, by and between the Company and Wells Fargo
Bank,
National Association, as trustee (incorporated by reference from
Exhibit
4.2 to the Company’s Current Report on Form 8-K filed on January 24,
2007).
|
|
4.7
|
Form
of 7 5/8% Senior Note due 2015 (incorporated by reference from
Exhibit 4.3
to the Company’s Current Report on Form 8-K filed on January 24,
2007).
|
4.8
|
Senior
Subordinated Debt Securities Indenture dated as of January 24,
2007, by
and between the Company and Wells Fargo Bank, National Association,
as
trustee (incorporated by reference from Exhibit 4.4 to the Company’s
Current Report on Form 8-K filed on January 24, 2007).
|
|
4.9
|
First
Supplemental Indenture to the Senior Subordinated Debt Securities
Indenture dated as of January 24, 2007, by and between the Company
and
Wells Fargo Bank, National Association, as trustee (incorporated
by
reference from Exhibit 4.5 to the Company’s Current Report on Form 8-K
filed on January 24, 2007).
|
|
4.10
|
Form
of 8 3/8% Subordinated Note due 2017 (incorporated by reference
from
Exhibit 4.6 to the Company’s Current Report on Form 8-K filed on January
24, 2007).
|
|
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 dated June 26, 1998 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
|
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).
|
|
10.17
|
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).
|
10.18
|
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).
|
|
10.19
|
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).
|
|
10.20
|
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).
|
|
10.21
|
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). …
|
|
10.22
|
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).
|
|
10.23
|
Amended
and Restated 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 30, 2005). …
|
|
10.24
|
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).
|
|
10.25
|
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).
|
|
10.26
|
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).
|
|
10.27
|
|
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 filed
on
September 28, 2006).
|
10.28
|
2006
Amended and Restated 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
filed on September 28, 2006).
|
10.29
|
First
Amendment to the Pilgrim’s Pride Corporation Amended and Restated 2005
Deferred Compensation Plan Trust, dated as of November 29, 2006
(incorporated by reference from Exhibit 10.03 of the Company’s Current
Report on Form 8-K filed on December 05, 2006). …
|
|
10.30
|
Agreement
and Plan of Merger dated as of December 3, 2006, by and among
the Company,
the Purchaser and Gold Kist Inc. (incorporated by reference from
Exhibit
99.(D)(1) to Amendment No. 11 to the Company’s Tender Offer Statement on
Schedule TO filed on December 5, 2006).
|
|
10.31
|
First
Amendment to Credit Agreement, dated as of December 13, 2006,
by and among
the Company, as borrower, CoBank, ACB, as lead arranger and co-syndication
agent, and sole book runner, and as administrative, documentation
and
collateral agent, Agriland, FCS, as co-syndication agent, and
as a
syndication party, and the other syndication parties signatory
thereto
(incorporated by reference from Exhibit 10.01 to the Company’s Current
Report on Form 8-K filed on December 19, 2006).
|
|
10.32
|
Second
Amendment to Credit Agreement, dated as of January 4, 2007, by
and among
the Company, as borrower, CoBank, ACB, as lead arranger and co-syndication
agent, and sole book runner, and as administrative, documentation
and
collateral agent, Agriland, FCS, as co-syndication agent, and
as a
syndication party, and the other syndication parties signatory
thereto
(incorporated by reference from Exhibit 10.01 to the Company’s Current
Report on Form 8-K filed on January 9, 2007).
|
|
10.33
|
Fourth
Amended and Restated Secured Credit Agreement, dated as of February
8,
2007, by and among the Company, To-Ricos, Ltd., To-Ricos Distribution,
Ltd., Bank of Montreal, as agent, SunTrust Bank as syndication
agent, U.S.
Bank National Association and Wells Fargo Bank, National Association
as
Co-Documentation Agents, BMO Capital Market as lead arranger,
and the
other lenders signatory thereto (incorporated by reference from
Exhibit
10.01 of the Company’s Current Report on Form 8-K dated February 12,
2007).
|
|
10.34
|
Third
Amendment to Credit Agreement, dated as of February 7, 2007,
by and among
the Company as borrower, CoBank, ACB, as lead arranger and co-syndication
agent, and the sole book runner, and as administrative, documentation
and
collateral agent, Agriland, FCS, as co-syndication agent, and
as a
syndication party, and the other syndication parties signatory
thereto
(incorporated by reference from Exhibit 10.02 of the Company’s Current
Report on Form 8-K dated February 12, 2007).
|
|
10.35
|
First
Amendment to Credit Agreement, dated as of March 15, 2007, by
and among
the Borrower, the Company, the Subsidiary Guarantors, ING Capital
LLC, and
the Lenders (incorporated by reference from Exhibit 10.01 of
the Company’s
Current Report on Form 8-K dated March 20, 2007).
|
|
10.36
|
Fourth
Amendment to Credit Agreement, dated as of July 3, 2007, by and
among the
Company as borrower, CoBank, ACB, as lead arranger and co-syndication
agent, and the sole book runner, and as administrative, documentation
and
collateral agent, Agriland, FCS, as co-syndication agent, and
as
syndication party, and the other syndication parties signatory
thereto
(incorporated by reference from Exhibit 10.1 of the Company's
Quarterly
Report on Form 10-Q filed July 31,
2007).
|
10.37
|
Amendment
No. 5 to Receivables Purchase Agreement dated as of August 20,
2007, among
the Company, Pilgrim's Pride Funding Corporation, Fairway Finance
Company,
LLC and BMO Capital Markets Corp. (incorporated by reference
from Exhibit
10.01 of the Company’s Current Report on Form 8-K dated August 24,
2007).
|
|
10.38
|
Retirement
and Consulting Agreement dated as of October 10, 2007, between
the Company
and Clifford E. Butler (incorporated by reference from Exhibit
10.1 of the
Company’s Current Report on Form 8-K dated October 10, 2007). …
|
|
Fifth
Amendment to Credit Agreement, dated as of August 7, 2007, by
and among
the Company as borrower, CoBank, ACB, as lead arranger and co-syndication
agent, and the sole book runner, and as administrative, documentation
and
collateral agent, Agriland, FCS, as co-syndication agent, and
as
syndication party, and the other syndication parties signatory
thereto.*
|
||
10.40
|
Sixth
Amendment to Credit Agreement, dated as of November 7, 2007,
by and among
the Company as borrower, CoBank, ACB, as administrative agent,
and the
other syndication parties signatory thereto (incorporated by
reference
from Exhibit 10.1 of the Company’s Current Report on Form 8-K dated
November 13, 2007).
|
|
Ratio
of Earnings to Fixed Charges for the years ended September 29,
2007,
September 30, 2006, October 1, 2005, October 2, 2004, September
27, 2003,
and September 28, 2002.*
|
||
S Subsidiaries
of Registrant.*
|
||
Consent
of Ernst & Young LLP.*
|
||
Certification
of Co-Principal Executive Officer pursuant to Section 302 of
the
Sarbanes-Oxley Act of 2002.*
|
||
Certification
of Co-Principal Executive Officer pursuant to Section 302 of
the
Sarbanes-Oxley Act of 2002.*
|
||
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.*
|
||
Certification
of Co-Principal Executive Officer of Pilgrim's Pride Corporation
pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
||
Certification
of Co-Principal Executive Officer of Pilgrim's Pride Corporation
pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
||
Certification
of Chief Financial Officer of Pilgrim's Pride Corporation pursuant
to
Section 906 of the Sarbanes-Oxley Act of
2002.*
|
|
*Filed
herewith
|
|
…Represents
a management contract or compensation plan
arrangement
|
Year
Ended
|
||||||||||||||||||||
September
29,
2007
|
September
30,
2006
|
October
1,
2005
|
October
2,
2004
|
September
27,
2003
|
||||||||||||||||
(amounts
in thousands, except ratio)
|
||||||||||||||||||||
EARNINGS:
|
||||||||||||||||||||
Income
before income taxes
|
$ | 91,607 | $ | (36,317 | ) | $ | 403,523 | $ | 208,535 | $ | 63,235 | |||||||||
Add: Total
fixed charges (see below)
|
149,493
|
67,172
|
64,735
|
67,168
|
49,647
|
|||||||||||||||
Less: Interest
capitalized
|
(5,736 | ) | (4,298 | ) | (2,841 | ) | (1,714 | ) | (1,535 | ) | ||||||||||
Total
earnings
|
$ | 235,364 | $ | 26,557 | $ | 465,417 | $ | 273,989 | $ | 111,347 | ||||||||||
FIXED
CHARGES:
|
||||||||||||||||||||
Interest
(a)
|
$ | 131,493 | $ | 54,899 | $ | 52,426 |
56,150
|
$ | 40,356 | |||||||||||
Portion
of rental expense representative of the interest factor (b)
|
18,000
|
12,273
|
12,309
|
11,018
|
9,291
|
|||||||||||||||
Total
fixed charges
|
$ | 149,493 | $ | 67,172 | $ | 64,735 | $ | 67,168 | $ | 49,647 | ||||||||||
Ratio
of earnings to fixed charges
|
1.57
|
(c)
|
7.19
|
4.08
|
2.24
|
|||||||||||||||
(a) Interest
includes amortization of capitalized financing fees.
|
||||||||||||||||||||
(b) One-third
of rental expenses is assumed to be representative of the interest
factor.
|
||||||||||||||||||||
(c) Earnings
were insufficient to cover fixed charges by $40,615.
|
||||||||||||||||||||
SUBSIDIARIES
OF REGISTRANT
|
JURISDICTION
OF INCORPORATION OR ORGANIZATION
|
U.S.
Entities
|
|||
PFS
DISTRIBUTION COMPANY
|
DELAWARE
|
||
GK
FINANCE CORPORATION
|
DELAWARE
|
||
PILGRIM'S
PRIDE FUNDING CORPORATION
|
DELAWARE
|
||
PILGRIM’S
TURKEY COMPANY, LLC
|
DELAWARE
|
||
PPC
OF DELAWARE BUSINESS TRUST
|
DELAWARE
|
||
PPC
OF DELAWARE, INC.
|
DELAWARE
|
||
PPC
TRANSPORTATION COMPANY
|
DELAWARE
|
||
PILGRIM’S
PRIDE, LLC
|
DELAWARE
|
||
PPC
OF DELAWARE LLC
|
DELAWARE
|
||
POPPSA
3, LLC
|
DELAWARE
|
||
POPPSA
4, LLC
|
DELAWARE
|
||
AGRATECH
SEEDS INC.
|
GEORGIA
|
||
AGRATRADE
FINANCING, INC.
|
GEORGIA
|
||
AGVESTMENTS,
INC.
|
GEORGIA
|
||
GK
PECANS, INC.
|
GEORGIA
|
||
LUKER
INC.
|
GEORGIA
|
||
PPC
OF ALABAMA, INC.
|
GEORGIA
|
||
PILGRIM’S
PRIDE CORPORATION FOUNDATION, INC.
|
GEORGIA
|
||
GC
PROPERTIES, GP
|
GEORGIA
|
||
PILGRIM’S
PRIDE CORPORATION POLITICAL ACTION COMMITTEE, INC.
|
GEORGIA
|
||
PILGRIM’S
PRIDE AFFORDABLE HOUSING CORPORATION
PILGRIM’S
PRIDE OF NEVADA, INC.
|
NEVADA
NEVADA
|
||
PPC
MARKETING, LTD.
|
TEXAS
|
||
GK
INSURANCE COMPANY
|
VERMONT
|
||
VALLEY
RAIL SERVICE, INC.
|
VIRGINIA
|
||
PILGRIM’S
PRIDE CORPORATION OF WEST VIRGINIA, INC.
|
WEST
VIRGINIA
|
||
Foreign
Entities
|
|||
MAYFLOWER
INSURANCE
|
BERMUDA
|
||
TO-RICOS
DISTRIBUTION, LTD.
|
BERMUDA
|
||
TO-RICOS,
LTD.
|
BERMUDA
|
||
AVICOLA
PILGRIM’S PRIDE DE MEXICO, S. DE R.L. DE C.
V.
|
MEXICO
|
||
CARNES
Y PRODUCTOS AVICOLA S DE MEXICO S. DE R.L. DE C. V.
(INACTIVE)
|
MEXICO
|
||
COMERCIALIZADORA
DE CARNES DE MEXICO S. DE
R.L. DE C. V.
|
MEXICO
|
||
COMPANIA
INCUBADORA HIDALGO S. DE
R.L. DE C. V.
|
MEXICO
|
||
GALLINA
PESADA S.A. DE C.V.
|
MEXICO
|
||
GRUPO
PILGRIM’S PRIDE FUNDING HOLDINGS S. DE R.L. DE C.V.
|
MEXICO
|
||
GRUPO
PILGRIM’S PRIDE FUNDING S. DE R.L. DE C.V.
|
MEXICO
|
||
INMOBILIARIA
AVICOLA PILGRIM’S PRIDE, S. DE R.L.
|
MEXICO
|
||
OPERADORA DE
PRODUCTOS AVICOLAS S. DE R.L. DE C. V. (INACTIVE)
|
MEXICO
|
||
PILGRIM’S
PRIDE S. DE R.L. DE C.
V.
|
MEXICO
|
||
SERVICIOS
ADMINISTRATIVOS PILGRIM’S PRIDE S. DE R.L. DE C.
V.
|
MEXICO
|
1.
|
I
have reviewed this annual report on Form 10-K for the fiscal year
ended
September 29, 2007, 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
19, 2007
|
/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
September 29, 2007, 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
19, 2007
|
/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 29, 2007, 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
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|
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.
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Date: November
19, 2007
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/s/
Richard A. Cogdill
|
Richard
A. Cogdill
|
|
Principal
Financial and Accounting
Officer
|
Date: November
19, 2007
|
/s/
Lonnie “Bo” Pilgrim
|
Lonnie
“Bo” Pilgrim
|
|
Co-Principal
Executive Officer
|
|
Date: November
19, 2007
|
/s/
O.B. Goolsby, Jr.
|
O.B.
Goolsby, Jr.
|
|
Co-Principal
Executive Officer
|
|
Date: November
19, 2007
|
/s/
Richard A. Cogdill
|
Richard
A. Cogdill
|
|
Chief
Financial and Accounting Officer
|
|