8-K


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 28, 2015
PILGRIM'S PRIDE CORPORATION
(Exact Name of registrant as specified in its charter)
 
Delaware
1-9273
75-1285071
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
 
 
 
1770 Promontory Circle
Greeley, CO
80634-9038
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (970) 506-8000
 
Not Applicable
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Item 2.02. Results of Operations and Financial Condition.
On October 28, 2015 the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.
Exhibit 99.1    Press release dated October 28, 2015

SIGNATURE  
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
PILGRIM’S PRIDE CORPORATION
 
 
 
 
Date:
October 28, 2015
 
/s/ Fabio Sandri
 
 
 
Fabio Sandri
 
 
 
Chief Financial Officer

Exhibit Index
Exhibit 99.1    Press release dated October 28, 2015


Exhibit




Pilgrim’s Pride Reports Operating Income of $231 Million with a Margin of 10.9% for the Third Quarter of 2015

GREELEY, Colo., October 28, 2015 (GLOBE NEWSWIRE) - Pilgrim’s Pride Corporation (NASDAQ: PPC) reports third quarter 2015 financial results with Net Sales of $2.11 billion for the thirteen week period, compared to $2.27 billion for the same period in 2014. The 2015 Q3 Net Income was $137.1 million compared to the $256.0 million reported in the same period in 2014. Adjusted Earnings Per Share was $0.58 in the third quarter of 2015 compared to $1.01 in the same period last year, while adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) was $274.3 million, or a 13.0% margin.

“The continued challenges in the export markets, the strong dollar and the lowest chicken cutout in the past five years during Q3 have had an impact on the commodity segments of our business, and on our U.S. export and Mexico sales. Additionally, non-routine costs at two of our facilities further weighed on our results. Despite these challenges, our team has managed to produce solid margins compared to periods when prices were at similar levels,” stated Bill Lovette, Chief Executive Officer of Pilgrim's.

“The Q3 results are a strong validation of our portfolio model, and the strategy we have pursued and implemented over the past four years is fundamental in improving our ability to maintain strong performance, minimize the impact of different market conditions, and give us more consistent financial results. Although we expect export markets to gradually reopen soon depending on the domestic AI situation, we choose not to stand still and be complacent. Instead, we continue to seek alternative and creative ways to reduce our dependencies on commodity products to produce more consistent margins by sharpening our focus on high growth markets. We also remain on track to extract $200 million in operational improvements for the year.”

“In spite of the tough environment last quarter, our cash flow generation continues to be strong and our team remains relentless in uncovering additional methods to increase operational efficiencies, enhance relationships with key customers, and build competitive advantages. We remain committed to creating and maximizing shareholder value while retaining our financial discipline. Year to date, we have paid out $1.5 billion in special dividend to our shareholders, acquired additional Mexican operations to improve our geographic diversification and competitiveness in one of the strongest emerging markets, and instituted a $150 million share repurchase agreement.”

Conference Call Information
A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, October 29, at 7:00 a.m. MDT (9 a.m. EDT). Participants are encouraged to pre-register for the conference call using the link below. Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time.
To pre-register, go to: http://services.choruscall.com/links/ppc151029.html

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You may also reach the pre-registration link by logging in through the investor section of our website at www.pilgrims.com and clicking on the link under “Upcoming Events.”

For those who would like to join the call but have not pre-registered, access is available by dialing +1 (866) 777-2509 within the US, or +1 (412) 317-5413, and requesting the “Pilgrim’s Pride Conference.” Please note that to submit a question to management during the call, you must be logged in via telephone.

Replays of the conference call will be available on Pilgrim’s website approximately two hours after the call concludes and can be accessed through the “Investor” section of www.pilgrims.com. The webcast will be available for replay through November 30, 2015.

About Pilgrim’s Pride

Pilgrim’s employs approximately 38,700 people and operates chicken processing plants and prepared-foods facilities in 12 states, Puerto Rico and Mexico. The Company’s primary distribution is through retailers and foodservice distributors. For more information, please visit www.pilgrims.com.

Forward-Looking Statements

Statements contained in this press release that state the intentions, plans, hopes, beliefs, anticipations, expectations or predictions of the future of Pilgrim’s Pride Corporation and its management are considered forward-looking statements. It is important to note that actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ materially from those projected in such forward-looking statements include: matters affecting the poultry industry generally; the ability to execute the Company’s business plan to achieve desired cost savings and profitability; future pricing for feed ingredients and the Company’s products; outbreaks of avian influenza or other diseases, either in Pilgrim’s Pride’s flocks or elsewhere, affecting its ability to conduct its operations and/or demand for its poultry products; contamination of Pilgrim’s Pride’s products, which has previously and can in the future lead to product liability claims and product recalls; exposure to risks related to product liability, product recalls, property damage and injuries to persons, for which insurance coverage is expensive, limited and potentially inadequate; management of cash resources; restrictions imposed by, and as a result of, Pilgrim’s Pride’s leverage; changes in laws or regulations affecting Pilgrim’s Pride’s operations or the application thereof; new immigration legislation or increased enforcement efforts in connection with existing immigration legislation that cause the costs of doing business to increase, cause Pilgrim’s Pride to change the way in which it does business, or otherwise disrupt its operations; competitive factors and pricing pressures or the loss of one or more of Pilgrim’s Pride’s largest customers; currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and other risks associated with foreign operations; disruptions in international markets and distribution channel, including anti-dumping proceedings and countervailing duty proceedings; and the impact of uncertainties of litigation as well as other risks described under “Risk Factors” in the Company’s Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Pilgrim’s Pride Corporation undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.








2




Contact:
Dunham Winoto
 
Director, Investor Relations
 
IRPPC@pilgrims.com
 
(970) 506-8192
 
www.pilgrims.com


3




PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
September 27, 2015
 
December 28, 2014
 
 
(Unaudited)
 
 
 
 
(In thousands)
Cash and cash equivalents
 
$
396,719

 
$
576,143

Trade accounts and other receivables, less allowance for doubtful accounts
 
369,681

 
378,890

Account receivable from related parties
 
2,581

 
5,250

Inventories
 
841,273

 
790,305

Income taxes receivable
 
4,971

 
10,288

Current deferred tax assets
 
37,561

 
27,345

Prepaid expenses and other current assets
 
96,857

 
95,439

Assets held for sale
 
6,555

 
1,419

Total current assets
 
1,756,198

 
1,885,079

Other long-lived assets
 
31,813

 
24,406

Identified intangible assets, net
 
32,177

 
26,783

Goodwill
 
174,431

 

Property, plant and equipment, net
 
1,347,239

 
1,182,795

Total assets
 
$
3,341,858

 
$
3,119,063

 
 
 
 
 
Notes payable to banks
 
$
5,869

 
$

Accounts payable
 
524,025

 
399,486

Account payable to related parties
 
10,402

 
4,862

Accrued expenses and other current liabilities
 
304,459

 
311,879

Income taxes payable
 
20,874

 
3,068

Current deferred tax liabilities
 
40,368

 
25,301

Current maturities of long-term debt
 
102

 
262

Total current liabilities
 
906,099

 
744,858

Long-term debt, less current maturities
 
1,000,398

 
3,980

Deferred tax liabilities
 
89,589

 
76,216

Other long-term liabilities
 
103,104

 
97,208

Total liabilities
 
2,099,190

 
922,262

Common stock
 
2,597

 
2,590

Treasury stock
 
(45,080
)
 

Additional paid-in capital
 
1,672,501

 
1,662,354

Retained earnings (accumulated deficit)
 
(324,400
)
 
591,492

Accumulated other comprehensive loss
 
(66,002
)
 
(62,541
)
Total Pilgrim’s Pride Corporation stockholders’ equity
 
1,239,616

 
2,193,895

Noncontrolling interest
 
3,052

 
2,906

Total stockholders’ equity
 
1,242,668

 
2,196,801

Total liabilities and stockholders’ equity
 
$
3,341,858

 
$
3,119,063



4




PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
 
 
Thirteen Weeks Ended
 
Thirty-Nine Weeks Ended
 
 
September 27, 2015
 
September 28, 2014
 
September 27, 2015
 
September 28, 2014
 
 
(In thousands, except per share data)
Net sales
 
$
2,112,529

 
$
2,268,048

 
$
6,219,324

 
$
6,472,929

Cost of sales
 
1,827,985

 
1,817,783

 
5,125,640

 
5,458,083

Gross profit
 
284,544

 
450,265

 
1,093,684

 
1,014,846

Selling, general and administrative expense
 
52,620

 
44,629

 
150,961

 
138,437

Administrative restructuring charges
 
792

 
135

 
5,605

 
2,286

Operating income
 
231,132

 
405,501

 
937,118

 
874,123

Interest expense, net of capitalized interest
 
10,501

 
11,372

 
26,870

 
45,407

Interest income
 
(319
)
 
(1,171
)
 
(3,086
)
 
(2,974
)
Foreign currency transaction loss (gain)
 
12,773

 
6,414

 
23,806

 
4,932

Miscellaneous, net
 
(2,071
)
 
(610
)
 
(7,135
)
 
(2,609
)
Income before income taxes
 
210,248

 
389,496

 
896,663

 
829,367

Income tax expense
 
73,153

 
133,693

 
313,751

 
284,932

Net income
 
137,095

 
255,803

 
582,912

 
544,435

Less: Net income (loss) attributable to noncontrolling interests
 
33

 
(181
)
 
146

 
(26
)
Net income attributable to Pilgrim’s Pride Corporation
 
$
137,062

 
$
255,984

 
$
582,766

 
$
544,461

 
 
 
 
 
 
 
 
 
Weighted average shares of common stock outstanding:
 
 
 
 
 
 
 
 
Basic
 
259,280

 
258,999

 
259,540

 
258,966

Effect of dilutive common stock equivalents
 
223

 
523

 
225

 
482

Diluted
 
259,503

 
259,522

 
259,765

 
259,448

 
 
 
 
 
 
 
 
 
Net income attributable to Pilgrim's Pride Corporation per share of
     common stock outstanding:
 
 
 
 
 
 
 
 
Basic
 
$
0.53

 
$
0.99

 
$
2.25

 
$
2.10

Diluted
 
$
0.53

 
$
0.99

 
$
2.24

 
$
2.10



5



PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
 
Thirty-Nine Weeks Ended
 
 
September 27, 2015
 
September 28, 2014
 
 
(In thousands)
Cash flows from operating activities:
 
 
 
 
Net income
 
$
582,912

 
$
544,435

Adjustments to reconcile net income to cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
116,485

 
112,740

Foreign currency transaction losses
 

 
8,585

Accretion of bond discount
 

 
342

Impairment expense
 
4,813

 

Loss (gain) on property disposals
 
(9,817
)
 
(1,112
)
Gain on investment securities
 

 
(49
)
Share-based compensation
 
2,132

 
3,504

Deferred income tax benefit
 
(7,214
)
 
(79,619
)
Changes in operating assets and liabilities:
 
 
 
 
Trade accounts and other receivables
 
40,694

 
(35,785
)
Inventories
 
17,162

 
(10,339
)
Prepaid expenses and other current assets
 
(1,415
)
 
(16,694
)
Accounts payable, accrued expenses and other current liabilities
 
92,159

 
36,686

Income taxes
 
17,836

 
239,944

Deposits
 

 

Long-term pension and other postretirement obligations
 
(2,668
)
 
(1,764
)
Other operating assets and liabilities
 
3,235

 
1,534

Cash provided by operating activities
 
856,314

 
802,408

Cash flows from investing activities:
 
 
 
 
Acquisitions of property, plant and equipment
 
(129,848
)
 
(131,349
)
Business acquisition
 
(373,532
)
 

Purchases of investment securities
 

 
(55,100
)
Proceeds from sale or maturity of investment securities
 

 
152,050

Proceeds from property disposals
 
13,553

 
8,422

Cash provided by (used in) investing activities
 
(489,827
)
 
(25,977
)
Cash flows from financing activities:
 
 
 
 
Proceeds from note payable to bank
 
5,869

 

Proceeds from revolving line of credit
 
1,680,000

 

Payments on revolving line of credit, long-term borrowings and capital lease obligations
 
(683,742
)
 
(410,199
)
Tax benefit related to share-based compensation
 
7,834

 

Sale of subsidiary common stock
 

 
332

Payment of capitalized loan costs
 
(12,322
)
 

Purchase of treasury stock
 
(45,080
)
 

Cash dividends
 
(1,498,470
)
 

Cash used in financing activities
 
(545,911
)
 
(409,867
)
Effect of exchange rate changes on cash and cash equivalents
 

 
(6,173
)
Increase (decrease) in cash and cash equivalents
 
(179,424
)
 
360,391

Cash and cash equivalents, beginning of period
 
576,143

 
508,206

Cash and cash equivalents, end of period
 
$
396,719

 
$
868,597


6



PILGRIM’S PRIDE CORPORATION
Selected Financial Information
(Unaudited)

“EBITDA” is defined as the sum of net income (loss) plus interest, taxes, depreciation and amortization. “Adjusted EBITDA” is calculated by adding to EBITDA certain items of expense and deducting from EBITDA certain items of income that we believe are not indicative of our ongoing operating performance consisting of: (i) income (loss) attributable to non-controlling interests, (ii) restructuring charges, (iii) reorganization items, (iv) losses on early extinguishment of debt and (v) foreign currency transaction losses (gains). EBITDA is presented because it is used by management and we believe it is frequently used by securities analysts, investors and other interested parties, in addition to and not in lieu of results prepared in conformity with accounting principles generally accepted in the US (“GAAP”), to compare the performance of companies. We believe investors would be interested in our Adjusted EBITDA because this is how our management analyzes EBITDA. The Company also believes that Adjusted EBITDA, in combination with the Company’s financial results calculated in accordance with GAAP, provides investors with additional perspective regarding the impact of certain significant items on EBITDA and facilitates a more direct comparison of its performance with its competitors. EBITDA and Adjusted EBITDA are not measurements of financial performance under GAAP. They 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.

PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted EBITDA
 
 
 
 
 
 
 
 
(Unaudited)
Thirteen Weeks Ended
 
Thirty-Nine Weeks Ended
 
September 27, 2015
 
September 28, 2014
 
September 27, 2015
 
September 28, 2014
 
(In thousands)
Net income
$
137,095

 
$
255,803

 
$
582,912

 
$
544,435

Add:
 
 
 
 
 
 
 
Interest expense, net
10,182

 
10,201

 
23,784

 
42,433

Income tax expense (benefit)
73,153

 
133,693

 
313,751

 
284,932

Depreciation and amortization
41,415

 
36,218

 
116,485

 
112,740

Minus:
 
 
 
 
 
 
 
Amortization of capitalized financing costs
1,119

 
871

 
2,708

 
7,364

EBITDA
260,726

 
435,044

 
1,034,224

 
977,176

Add:
 
 
 
 
 
 
 
Foreign currency transaction losses (gains)
12,773

 
6,414

 
23,806

 
4,932

Restructuring charges
792

 
135

 
5,605

 
2,286

Minus:
 
 
 
 
 
 
 
   Net income (loss) attributable to noncontrolling interest
33

 
(181
)
 
146

 
(26
)
Adjusted EBITDA
$
274,258

 
$
441,774

 
$
1,063,489

 
$
984,420



7



The summary unaudited consolidated income statement data for the twelve months ended September 27, 2015 (the LTM Period) have been calculated by subtracting the applicable unaudited consolidated income statement data for the nine months ended September 28, 2014 from the sum of (1) the applicable audited consolidated income statement data for the year ended December 28, 2014 and (2) the applicable audited consolidated income statement data for the nine months ended September 27, 2015.

PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
Thirteen Weeks Ended
 
Thirteen Weeks Ended
 
Thirteen Weeks Ended
 
Thirteen Weeks Ended
 
LTM Ended
 
 
December 28,
2014
 
March 27,
2015
 
June 28,
2015
 
September 27,
2015
 
September 27,
2015
 
(In thousands)
Net income
 
$
167,003

 
$
204,193

 
$
241,624

 
$
137,095

 
$
749,915

Add:
 
 
 
 
 
 
 
 
 
 
Interest expense, net
 
34,838

 
3,365

 
10,237

 
10,182

 
58,622

Income tax expense (benefit)
 
106,021

 
111,494

 
129,104

 
73,153

 
419,772

Depreciation and amortization
 
43,084

 
36,152

 
38,918

 
41,415

 
159,569

Asset impairments
 

 

 

 

 

Minus:
 
 
 
 
 
 
 
 
 
 
Amortization of capitalized financing costs
 
6,348

 
725

 
864

 
1,119

 
9,056

EBITDA
 
344,598

 
354,479

 
419,019

 
260,726

 
1,378,822

Add:
 
 
 
 
 
 
 
 
 
 
Foreign currency transaction losses (gains)
 
23,047

 
8,974

 
2,059

 
12,773

 
46,853

Restructuring charges
 

 

 
4,813

 
792

 
5,605

Minus:
 
 
 
 
 
 
 
 
 
 
   Net income (loss) attributable to noncontrolling interest
 
(184
)
 
(22
)
 
135

 
33

 
(38
)
Adjusted EBITDA
 
$
367,829

 
$
363,475

 
$
425,756

 
$
274,258

 
$
1,431,318



8



A reconciliation of net income (loss) attributable to Pilgrim's Pride Corporation per common diluted share to adjusted net income (loss) attributable to Pilgrim's Pride Corporation per common diluted share is as follows:
PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted Earnings
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Thirteen Weeks Ended
 
Thirty-Nine Weeks Ended
 
 
September 27,
2015
 
September 28,
2014
 
September 27,
2015
 
September 28,
2014
 
 
(In thousands, except per share data)
Net income (loss) attributable to Pilgrim's Pride Corporation
 
$
137,062

 
$
255,984

 
$
582,766

 
$
544,461

Loss on early extinguishment of debt
 

 

 
68

 

Foreign currency transaction losses (gains)
 
12,773

 
6,414

 
23,806

 
4,932

Income (loss) before loss on early extinguishment of debt and foreign currency transaction losses (gains)
 
149,835

 
262,398

 
606,640

 
549,393

Weighted average diluted shares of common stock outstanding
 
259,503

 
259,522

 
259,765

 
259,448

Income (loss) before loss on early extinguishment of debt and foreign currency transaction losses (gains)
     per common diluted share
 
$
0.58

 
$
1.01

 
$
2.34

 
$
2.12



9



Net debt is defined as total long term debt less current maturities, plus current maturities of long term debt and notes payable, minus cash, cash equivalents and investments in available-for-sale securities.  Net debt is presented because it is used by management, and we believe it is frequently used by securities analysts, investors and other parties, in addition to and not in lieu of debt as presented under GAAP, to compare the indebtedness of companies.  A reconciliation of net debt is as follows:
PILGRIM'S PRIDE CORPORATION
Reconciliation of Net Debt
(Unaudited)
 
 
 
 
 
 
 
 
 
December 30,
 
December 29,
 
December 28,
 
Thirty-Nine Weeks Ended
 
2012
 
2013
 
2014
 
September 28,
2014
 
September 27,
2015
 
(In thousands)
Long term debt, less current maturities
$
1,148,870

 
$
501,999

 
$
3,980

 
$
502,115

 
$
1,000,398

Add:  Current maturities of long term debt and notes payable
15,886

 
410,234

 
262

 
260

 
5,971

Minus:  Cash and cash equivalents
68,180

 
508,206

 
576,143

 
868,597

 
396,719

Minus:  Available-for-sale securities

 
96,902

 

 

 

Net debt (cash position)
$
1,096,576

 
$
307,125

 
$
(571,901
)
 
$
(366,222
)
 
$
609,650



10



PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
 
 
 
 
 
 
 
 
 
 
 
Thirteen Weeks Ended
 
Thirty-Nine Weeks Ended
 
 
September 27, 2015
 
September 28, 2014
 
September 27, 2015
 
September 28, 2014
 
 
(Unaudited)
 
 
 
 
 
 
 
 
(In thousands)
Sources of net sales by country of origin:
 
 
 
 
 
 
 
 
US:
 
$
1,798,375

 
$
2,026,277

 
$
5,479,993

 
$
5,758,704

Mexico:
 
314,154

 
241,771

 
739,331

 
714,225

Total net sales:
 
$
2,112,529

 
$
2,268,048

 
$
6,219,324

 
$
6,472,929

 
 
 
 
 
 
 
 
 
Sources of cost of sales by country of origin:
 
 
 
 
 
 
 
 
US:
 
$
1,552,282

 
$
1,634,863

 
$
4,511,157

 
$
4,900,087

Mexico:
 
275,727

 
182,920

 
614,554

 
557,996

Elimination:
 
(24
)
 

 
(71
)
 

Total cost of sales:
 
$
1,827,985

 
$
1,817,783

 
$
5,125,640

 
$
5,458,083

 
 
 
 
 
 
 
 
 
Sources of gross profit by country of origin:
 
 
 
 
 
 
 
 
US:
 
$
246,093

 
$
391,414

 
$
968,836

 
$
858,617

Mexico:
 
38,427

 
58,851

 
124,777

 
156,229

Elimination:
 
24

 

 
71

 

Total gross profit:
 
$
284,544

 
$
450,265

 
$
1,093,684

 
$
1,014,846




11