UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
____________________
FORM
10-K
____________________
(Mark
One)
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x
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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For
the fiscal year ended September 29,
2007
OR
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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For
the transition period from
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to
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Commission
File number 1-9273
PILGRIM’S
PRIDE CORPORATION
(Exact
name of registrant as specified in its charter)
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Delaware
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75-1285071
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(State
or other jurisdiction of
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(I.R.S.
Employer Identification No.)
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incorporation
or organization)
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4845
US Hwy 271 North
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Pittsburg,
Texas
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75686-0093
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(Address
of principal executive offices)
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(Zip
code)
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Registrant’s
telephone number, including area code: (903)
434-1000
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Securities
registered pursuant to Section 12(b) of the Act:
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Title
of each class
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Name
of each exchange on which registered
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Common
Stock, Par Value $0.01
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New
York Stock Exchange
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Securities
registered pursuant to Section 12(g) of the
Act: None
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Pilgrim's
Pride Corporation
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined
in
Rule 405 of the Securities Act. Yes x No ¨
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No x
Indicate
by check mark whether the Registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days. Yes x No ¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of Registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this
Form 10-K. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of
“accelerated filer” and “large accelerated filer” in Rule 12B-2 of the Exchange
Act.
Large
Accelerated Filer x Accelerated
Filer o Non-accelerated
Filer o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ¨ No x
The
aggregate market value of the Registrant’s Common Stock, $0.01 par value, held
by non-affiliates of the Registrant as of March 31, 2007, was
$1,340,874,524. For purposes of the foregoing calculation only, all
directors, executive officers and 5% beneficial owners have been deemed
affiliates.
Number
of
shares of the Registrant’s Common Stock outstanding as of November 13, 2007, was
66,555,733.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the Registrant’s proxy statement for the annual meeting of stockholders to be
held January 30, 2008 are incorporated by reference into Part III.
2
Pilgrim's
Pride Corporation
PILGRIM’S
PRIDE CORPORATION
FORM
10-K
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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
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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
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38
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PART
II
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Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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39
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Selected
Financial Data
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44
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Management’s
Discussion and Analysis of Financial Condition and Results
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of
Operations
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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
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Schedules
below)
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68
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Changes
in and Disagreements with Accountants on Accounting and
Financial
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Disclosure
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68
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Controls
and Procedures
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68
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Other
Information
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72
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PART
III
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Directors
and Executive Officers and Corporate Governance
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74
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Executive
Compensation
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74
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Security
Ownership of Certain Beneficial Owners and Management and
Related
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Stockholder
Matters
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74
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Certain
Relationships and Related Transactions, and Director
Independence
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74
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Principal
Accounting Fees and Services
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75
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PART
IV
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Exhibits
and Financial Statement Schedules
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76
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83
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INDEX
TO FINANCIAL STATEMENTS AND SCHEDULES
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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.
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Business
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(a) General
Development of Business
Overview
The
Company, which was incorporated in Texas in 1968 and reincorporated in Delaware
in 1986, is the successor to a partnership founded in 1946 as a retail feed
store. Over the years, the Company grew through both internal growth
and various acquisitions of farming operations and poultry processors including
the significant acquisitions in fiscal 2004 and 2007 discussed
below. We are the world’s largest chicken company and have one of the
best known brand names in the chicken industry. In the U.S., we
produce both prepared and fresh chicken and fresh turkey; while in Mexico and
Puerto Rico, we exclusively produce fresh chicken. Through vertical
integration, we control the breeding, hatching and growing of
chickens. We also control the processing, preparation, packaging and
sale of our product lines, which we believe has made us one of the highest
quality, lowest-cost producers of chicken in North America. We have
consistently applied a long-term business strategy of focusing our growth
efforts on the higher-value, higher-margin prepared foods products and have
become a recognized industry leader in this market
segment. Accordingly, our sales efforts have traditionally been
targeted to the foodservice industry, principally chain restaurants and food
processors, and have more recently been targeted to retailers seeking
value-added products. We have continually made investments to ensure
our prepared foods capabilities remain state-of-the-art and have complemented
these investments with a substantial and successful research and development
effort. In fiscal 2007, we sold 7.7 billion pounds of dressed chicken
and 151.7 million pounds of dressed turkey and generated net sales of $7.6
billion. In fiscal 2007, our U.S. operations, including Puerto Rico,
accounted for 93.3% of our net sales, with the remaining 6.7% arising from
our
Mexico operations.
Recent
Business Acquisition Activities
On
December 27, 2006, we acquired a majority of the outstanding common stock of
Gold Kist Inc. (“Gold Kist”) through a tender offer. We subsequently
acquired all remaining Gold Kist shares and, on January 9, 2007, Gold Kist
became our wholly owned subsidiary. We sometimes refer to this
acquisition as the “fiscal 2007 acquisition”. 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. Gold Kist operated a fully-integrated chicken
production business that included live production, processing, marketing and
distribution. This acquisition has positioned us 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. We are also better positioned to
compete in the industry both internationally and in the U.S. as consolidations
occur.
On
November 23, 2003, we completed the purchase of all the outstanding stock of
the
corporations represented as the ConAgra Foods, Inc. chicken division (“ConAgra
chicken division”). We sometimes refer to this acquisition as the
“fiscal 2004 acquisition.” The acquired business
has been included in our results of operations since the date of the
acquisition. The acquisition provided us with additional lines of
specialty prepared chicken products, well-known brands, well-established
distributor relationships and Southeastern U.S. processing
facilities. The acquisition also included the largest distributor of
chicken products in Puerto Rico.
Strategy
Our
objectives are (1) to increase sales, profit margins and earnings and (2) to
outpace the growth of, and maintain our leadership position in, the chicken
industry. To achieve these goals, we plan to continue pursuing the
following strategies:
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-
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.
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-
Capitalize
on attractive U.S. prepared foods
market. We focus our U.S. growth initiatives on sales
of prepared foods to the foodservice and value-added retail markets because
they
continue to be two of the fastest growing and most profitable segments in the
poultry industry. Products sold to these market segments require
further processing, which enables us to charge a premium for our products,
reducing the impact of feed ingredient costs on our profitability and improving
and stabilizing our profit margins. Feed ingredient costs typically
decrease from approximately 33%-49% of total production cost for fresh chicken
products to approximately 17%-24% for prepared chicken products. Due
to increased demand from our customers and our fiscal 2004 and 2007
acquisitions, our sales of prepared chicken products grew from $921.1 million
in
fiscal 2003 to $2,492.4 million in fiscal 2007, a compounded annual growth
rate
of 28.3%. Prepared foods sales represented 39.5% of our total U.S.
chicken revenues in fiscal 2007, which we believe provides us with a significant
competitive advantage and reduces our exposure to feed price
fluctuations. The addition of well-known brands, including Pierce®
and Easy-Entree®, from our fiscal 2004 acquisition significantly expanded our
already sizeable prepared foods chicken offerings. Similarly, our
acquisition of highly customized cooked chicken products, including breaded
cutlets, sizzle strips and Wing-Dings®, for restaurants and specialty
foodservice customers from this acquisition complemented our existing lines
of
pre-cooked
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breast
fillets, tenderloins, burgers, nuggets, salads and other prepared
products
for institutional foodservice, fast-food and retail
customers.
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- 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.
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- 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.
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-
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:
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-
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standardizing
lowest-cost production processes across our various
facilities;
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-
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centralizing
purchasing and other shared services;
and
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-
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standardizing
and upgrading technology where
appropriate.
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In
addition, we have a proven history of increasing capacity while improving
operating efficiencies at acquired properties in both the U.S. and
Mexico. As a result, according to industry data, since 1993 we have
consistently been one of the lower-cost producers of chicken.
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-
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.
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-
Capitalize
on export opportunities. We intend to continue to focus on
international opportunities to complement our U.S. chicken operations and
capitalize on attractive export markets. According to the USDA, the
export of U.S. chicken products increased 9.7%
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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.
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(b)
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Financial
Information About Segments
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We
operate in three reportable business segments as (1) a producer and seller
of
chicken products, (2) a producer and seller of turkey products and (3) a seller
of other products. See a discussion of our business segments in Item
7. “Management’s Discussion and Analysis of Financial Condition and Results of
Operations.”
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(c)
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Narrative
Description of Business
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Products
and
Markets
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Our
chicken products consist primarily of:
(1)
Prepared chicken products, which are products such as portion-controlled breast
fillets, tenderloins and strips, delicatessen products, salads, formed nuggets
and patties and bone-in chicken parts. These products are sold either
refrigerated or frozen and may be fully cooked, partially cooked or
raw. In addition, these products are breaded or non-breaded and
either pre-marinated or non-marinated.
(2)
Fresh
chicken, which is refrigerated (non-frozen) whole or cut-up chicken sold to
the
foodservice industry either pre-marinated or non-marinated. Fresh
chicken also includes prepackaged case-ready chicken, which includes various
combinations of freshly refrigerated, whole chickens and chicken parts in trays,
bags or other consumer packs labeled and priced ready for the retail grocer's
fresh meat counter.
(3)
Export and other chicken products, which are primarily parts and whole chicken,
either refrigerated or frozen for U.S. export or domestic use, and chicken
prepared foods products for U.S. export.
Our
turkey products consist primarily of fresh and frozen whole
turkeys.
Our
chicken and turkey products are sold primarily to:
(1) Foodservice
customers, which are customers such as chain restaurants, food processors,
foodservice distributors and certain other institutions. We sell
products to our foodservice customers ranging from portion-controlled
refrigerated poultry parts to fully-cooked and frozen, breaded or non-breaded
poultry parts or formed products.
(2) Retail
customers, which are customers such as grocery store chains, wholesale clubs
and
other retail distributors. We sell to our retail customers branded,
pre-packaged, cut-up and whole poultry, and fresh refrigerated or frozen whole
poultry and poultry parts in trays, bags or other consumer packs.
(3) Export
and other product customers, who purchase chicken products for export to Eastern
Europe, including Russia; the Far East, including China; Mexico; and other
world
markets. Our export and other chicken products, with the exception of
our exported prepared foods products, consist of whole chickens and chicken
parts sold primarily in bulk, non-branded form, either refrigerated to
distributors in the U.S. or frozen for distribution to export
markets.
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Our
other products consist of:
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(1) Other
types of meat along with various other staples purchased and sold by our
distribution centers as a convenience to our chicken customers who purchase
through the distribution centers.
(2) The
production and sale of table eggs, commercial feeds and related items, live
hogs
and proteins.
The following table sets forth, for the periods beginning with fiscal 2003,
net
sales attributable to each of our primary product lines and markets served
with
those products. Consistent with our long-term strategy, we emphasized
our U.S. growth initiatives on sales of prepared foods products, primarily
to
the foodservice market. This product and market segment has
experienced, and we believe will continue to experience, greater growth than
fresh chicken products. We based the table on our internal sales
reports and their classification of product types and customers.
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Fiscal
Year Ended
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||||||||||||||||||||
| Sept. 29, 2007(a) |
Sept.
30, 2006
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Oct.
1, 2005
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Oct. 2, 2004(a) |
Sept.
27, 2003
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(52
weeks)
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(52
weeks)
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(52
weeks)
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(53
weeks)
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(52
weeks)
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U.S.
Chicken Sales:
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(in
thousands)
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Prepared
Foods:
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Foodservice
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$ | 1,897,643 | $ | 1,567,297 | $ | 1,622,901 | $ | 1,647,904 | $ | 731,331 | ||||||||||
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Retail
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511,470
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308,486
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283,392
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213,775
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163,018
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|||||||||||||||
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Total
Prepared Foods
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2,409,113
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1,875,783
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1,906,293
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1,861,679
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894,349
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Fresh
Chicken:
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Foodservice
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2,280,057
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1,388,451
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1,509,189
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1,328,883
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474,251
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|||||||||||||||
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Retail
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975,659
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496,560
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612,081
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653,798
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257,911
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|||||||||||||||
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Total
Fresh Chicken
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3,255,716
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1,885,011
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2,121,270
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1,982,681
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732,162
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Export
and Other:
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Export:
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Prepared
Foods
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83,317
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64,338
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59,473
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34,735
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26,714
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|||||||||||||||
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Chicken
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559,429
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257,823
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303,150
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212,611
|
85,087
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|||||||||||||||
| Total Export(b) |
642,746
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322,161
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362,623
|
247,346
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111,801
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|||||||||||||||
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Other
Chicken By-Products
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20,779
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15,448
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21,083
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(b)
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(b)
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|||||||||||||||
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Total
Export and Other
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663,525
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337,609
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383,706
|
247,346
|
111,801
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|||||||||||||||
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Total
U.S. Chicken
|
6,328,354
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4,098,403
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4,411,269
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4,091,706
|
1,738,312
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|||||||||||||||
|
Mexico
Chicken Sales:
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488,466
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418,745
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403,353
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362,442
|
349,305
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|||||||||||||||
|
Total
Chicken Sales
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6,816,820
|
4,517,148
|
4,814,622
|
4,454,148
|
2,087,617
|
|||||||||||||||
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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 | ||||||||||
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|
(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.
|
The following table sets forth, beginning with fiscal 2003, the percentage
of
net U.S. chicken and turkey sales attributable to each of our primary product
lines and the markets serviced with those products. We based the
table and related discussion on our internal sales reports and their
classification of product types and customers.
|
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.
|
UNITED
STATES
Product
Types
Chicken
Products
Prepared
Foods
Overview. During
fiscal 2007, $2,409.1 million of our U.S. chicken sales were in prepared
foods
products to foodservice customers and retail distributors, as compared to
$894.3
million in fiscal 2003. These numbers reflect the strategic focus for
our growth and our fiscal 2004 and 2007 acquisitions. The market for
prepared chicken products has experienced, and we believe will continue to
experience, greater growth, higher average sales prices and higher margins
than
fresh chicken products. Also, the production and sale in the U.S. of
prepared foods products reduce the impact of the costs of feed ingredients
on
our profitability. Feed ingredient costs are the single largest
component of our total U.S. cost of sales, representing approximately 35.8%
of
our U.S. cost of sales for fiscal 2007. The production of feed
ingredients is positively or negatively affected primarily by weather patterns
throughout the world, the global level of supply inventories, demand for
feed
ingredients and the agricultural policies of the U.S. and foreign
governments. As further processing is performed, feed ingredient
costs become a decreasing percentage of a product’s total production cost,
thereby reducing their impact on our profitability. Products sold in
this form enable us to charge a premium, reduce the impact of feed ingredient
costs on our profitability and improve and stabilize our profit
margins.
We
establish prices for our prepared chicken products based primarily upon
perceived value to the customer, production costs and prices of competing
products. The majority of these products are sold pursuant to
agreements with varying terms that either set a fixed price for the products
or
set a price according to formulas based on an underlying commodity market,
subject in many cases to minimum and maximum prices.
Fresh
Chicken
Overview. Our
fresh chicken business is an important component of our sales and accounted
for
$3,255.7 million, or 51.4%, of our total U.S. chicken sales for fiscal
2007. In addition to maintaining sales of mature, 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 marinated chicken and chicken parts, and to continually
shift
portions of this product mix into the higher value and margin prepared foods
category.
Most
fresh chicken products are sold to established customers, based upon certain
weekly or monthly market prices reported by the USDA and other public price
reporting services, plus a markup, which is dependent upon the customer’s
location, volume, product specifications and other factors. We
believe our practices with respect to sales of fresh chicken are generally
consistent with those of our competitors. The majority of these
products are sold pursuant to agreements with varying terms that either set
a
fixed price for the products or set a price according to formulas based on
an
underlying commodity market, subject in many cases to minimum and maximum
prices.
Export and Other Chicken
Products Overview. Our
export and other products consist of whole chickens and chicken parts sold
primarily in bulk, non-branded form, either refrigerated
to
distributors
in the U.S. or frozen for distribution to export markets, and branded and
non-branded prepared foods products for distribution to export
markets. In fiscal 2007, approximately $663.5 million, or 10.4%, of
our total U.S. chicken sales were attributable to U.S. chicken export and
other
products. These exports and other products, other than the prepared
foods products, have historically been characterized by lower prices and
greater
price volatility than our more value-added product
lines.
Turkey
Products
Turkey
Overview. Our
turkey business accounted for $122.4 million of sales in fiscal
2007. As is typical for the industry, a significant portion of the
sales of fresh and frozen whole turkeys is seasonal in nature, with the height
of sales occurring during the Thanksgiving and Christmas
holidays.
Most
turkey products are sold to established customers pursuant to agreements with
varying terms that either set a fixed price or are subject to a market driven
formula with some agreements based upon market prices reported by the USDA
and
other public price reporting services, plus a markup, subject in many cases
to
minimum and maximum prices. This is dependent upon the customer’s
location, volume, product specifications and other factors. We
believe our practices with respect to sales of fresh turkey are generally
consistent with those of our competitors with similar programs.
Markets
for Chicken Products
Foodservice. The
foodservice market principally consists of chain restaurants, food processors,
broad-line distributors and certain other institutions located throughout the
continental U.S. We supply chicken products ranging from
portion-controlled refrigerated chicken parts to fully cooked and frozen,
breaded or non-breaded chicken parts or formed products.
We
believe the Company is well-positioned to be the primary or secondary supplier
to many national and international chain restaurants who require multiple
suppliers of chicken products. Additionally, we believe we are well
suited to be the sole supplier for many regional chain
restaurants. Regional chain restaurants often offer better margin
opportunities and a growing base of business.
We believe we have significant competitive strengths in terms of full-line
product capabilities, high-volume production capacities, research and
development expertise and extensive distribution and marketing experience
relative to smaller and non-vertically integrated producers. While
the overall chicken market has grown consistently, we believe the majority
of
this growth in recent years has been in the foodservice
market. According to the National Chicken Council, from 2002 through
2006, sales of chicken products to the foodservice market grew at a compounded
annual growth rate of approximately 7.9%, versus 4.9% growth for the chicken
industry overall. Foodservice growth is anticipated to continue as
food-away-from-home expenditures continue to outpace overall industry
rates. According to Technomic Information Services,
food-away-from-home expenditures grew at a compounded annual growth rate of
approximately 5.5% from 2002 through 2006 and are projected to grow at a
4.8%
compounded
annual growth rate from 2007 through 2012. Due to internal growth and
our fiscal 2004 and 2007 acquisitions, our sales to the foodservice market
from
fiscal 2003 through fiscal 2007 grew at a compounded annual growth rate of
36.4%
and represented 66.1% of the net sales of our U.S. chicken operations in
fiscal
2007.
Foodservice
–
Prepared
Foods. Our
prepared chicken products sales to the foodservice market were $1,897.6 million
in fiscal 2007 compared to $731.3 million in fiscal 2003, a compounded annual
growth rate of approximately 26.9%. In addition to the significant
increase in sales created by the fiscal 2004 and 2007 acquisitions, we attribute
this growth in sales of prepared chicken products to the foodservice market
to a
number of factors:
First,there
has been significant growth in the number of foodservice operators offering
chicken on their menus and in the number of chicken items
offered.
Second,foodservice
operators are increasingly purchasing prepared chicken products, which allow
them to reduce labor costs while providing greater product consistency, quality
and variety across all restaurant locations.
Third,there
is a strong need among larger foodservice companies for a single-source supplier
in the prepared chicken products market. A viable supplier must be
able to ensure supply, demonstrate innovation and new product development
and
provide competitive pricing. We have been successful in our objective
of becoming a supplier of choice by being the primary or secondary prepared
chicken products supplier to many large foodservice companies
because:
- We
are vertically integrated, giving us control over our supply of chicken and
chicken parts;
- Our
further processing facilities, with a wide range of capabilities, are
particularly well suited to the high-volume production as well as low-volume
custom production runs necessary to meet both the capacity and quality
requirements of the foodservice market; and
- We
have established a reputation for dependable quality, highly responsive service
and excellent technical support.
Fourth,as
a result of the experience and reputation developed with larger customers,
we
have increasingly become the principal supplier to mid-sized foodservice
organizations.
Fifth,our
in-house product development group follows a customer-driven research and
development focus designed to develop new products to meet customers’ changing
needs. Our research and development personnel often work directly
with institutional customers in developing products for these
customers.
Sixth,
we
are a leader in utilizing advanced processing technology, which enables us
to
better meet our customers’ needs for product innovation, consistent quality and
cost efficiency.
Foodservice
–
Fresh
Chicken. We
produce and market fresh, refrigerated chicken for sale to U.S. quick-service
restaurant chains, delicatessens and other customers. These chickens
have the giblets removed, are usually of specific weight ranges and are usually
pre-cut to customer specifications. They are often marinated to
enhance value and product differentiation. By growing and processing
to customers’ specifications, we are able to assist quick-service restaurant
chains in controlling costs and maintaining quality and size consistency
of
chicken pieces sold to the consumer.
Retail. The
retail market consists primarily of grocery store chains, wholesale clubs
and
other retail distributors. We concentrate our efforts in this market
on sales of branded, prepackaged cut-up and whole chicken and chicken parts
to
grocery store chains and retail distributors. For a number of years,
we have invested in both trade and retail marketing designed to establish
high
levels of brand name awareness and consumer preferences.
We
utilize numerous marketing techniques, including advertising, to develop
and
strengthen trade and consumer awareness and increase brand loyalty for consumer
products marketed under the Pilgrim’s Pride®
brand. Our co-founder, Lonnie “Bo” Pilgrim, is the featured
spokesperson in our television, radio and print advertising, and a trademark
cameo of a person wearing a Pilgrim’s hat serves as the logo on all of our
primary branded products. As a result of this marketing strategy,
Pilgrim’s Pride®
is a well-known brand name in a number of markets. We believe our
efforts to achieve and maintain brand awareness and loyalty help to provide
more
secure distribution for our products. We also believe our efforts at
brand awareness generate greater price premiums than would otherwise be the
case
in certain markets. We also maintain an active program to identify
consumer preferences. The program primarily consists of discovering
and validating new product ideas, packaging designs and methods through
sophisticated qualitative and quantitative consumer research techniques in
key
geographic markets.
Retail
–
Prepared
Foods. We
sell retail-oriented prepared chicken products primarily to grocery store
chains
located throughout the U.S. Our prepared chicken products sales to
the retail market were $511.5 million in fiscal 2007 compared to $163.0 million
in fiscal 2003, a compounded annual growth rate of approximately
33.1%. We believe that our growth in this market segment will
continue as retailers concentrate on satisfying consumer demand for more
products that are quick, easy and convenient to prepare at
home.
Retail
–
Fresh
Chicken. Our
prepackaged retail products include various combinations of freshly
refrigerated, whole chickens and chicken parts in trays, bags or other consumer
packs labeled and priced ready for the retail grocer’s fresh meat
counter. Our retail fresh chicken products are sold in the
midwestern, southwestern, southeastern and western regions of the
U.S. Our fresh chicken sales to the retail market were $975.7 million
in fiscal 2007 compared to $257.9 million in fiscal 2003, a compounded annual
growth rate of approximately 39.5% resulting primarily from our fiscal 2004
and
2007 acquisitions. We believe the retail prepackaged fresh chicken
business will continue to be a large and relatively stable market, providing
opportunities for product differentiation and regional brand
loyalty.
Export
and Other
Chicken Products. Our
export and other chicken products, with the exception of our exported prepared
foods products, consist of whole chickens and chicken
parts
sold
primarily in bulk, non-branded form either refrigerated to distributors in
the
U.S. or frozen for distribution to export markets. In the U.S.,
prices of these products are negotiated daily or weekly and are generally
related to market prices quoted by the USDA or other public price reporting
services. We sell U.S.-produced chicken products for export to
Eastern Europe, including Russia; the Far East, including China; Mexico;
and
other world markets.
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. We have also begun selling
prepared chicken products for export to the international divisions of our
U.S.
chain restaurant customers. We believe that U.S. chicken exports will
continue to grow as worldwide demand increases for high-grade, low-cost meat
protein sources. We also believe that worldwide demand for higher
margin prepared foods products will increase over the next several
years. Accordingly, we believe we are well positioned to capitalize
on such growth. Also included in this category are chicken
by-products, which are converted into protein products and sold primarily
to
manufacturers of pet foods.
Markets
for Turkey Products
Most
of
our turkey sales are derived from products sold to the retail
market. This market consists primarily of grocery store chains,
wholesale clubs and other retail distributors. We concentrate our
efforts in this market on sales of branded, prepackaged whole turkeys to
grocery
store chains and retail distributors in the eastern and southwestern regions
of
the U.S. We believe this regional marketing focus enables us to
develop consumer brand franchises and capitalize on proximity to the trade
customer in terms of lower transportation costs, more timely and responsive
service and enhanced product freshness.
We
utilize numerous marketing techniques, including advertising, to develop
and
strengthen trade and consumer awareness and increase brand loyalty for consumer
products marketed generally under the Pilgrim’s Pride®
and
Pilgrim’s SignatureTMbrands. We
believe our efforts to achieve and maintain brand awareness and loyalty help
to
provide more secure distribution for our products. We also believe
our efforts at brand awareness generate greater price premiums than would
otherwise be the case in certain markets in the eastern regions of the
U.S. We also maintain an active program to identify consumer
preferences. The program primarily consists of testing new product
ideas, packaging designs and methods through sophisticated qualitative and
quantitative consumer research techniques in key geographic
markets.
Markets
for Other Products
We
have regional distribution centers located in Arizona, Florida, Iowa,
Mississippi, Ohio, Tennessee, Texas and Utah that are primarily focused on
distributing our own chicken products; however, the distribution centers
also
distribute certain poultry and non-poultry products purchased from third
parties
to independent grocers and quick service restaurants. Our non-chicken
distribution business is conducted as an accommodation to our customers and
to
achieve greater economies of scale in distribution logistics. Poultry
sales from our regional distribution centers are included in the chicken
and
turkey sales amounts contained in the above tables; however, all non-poultry
sales amounts are contained in the Other Products. We believe
the
store-door
delivery capabilities for our own poultry products provide a strategic service
advantage in selling to quick service, national chain restaurants.
We
market fresh eggs under the Pilgrim’s Pride®brand
name, as well as under private labels, in various sizes of cartons and flats
to
U.S. retail grocery and institutional foodservice customers located primarily
in
Texas. We have a housing capacity for approximately 2.1 million
commercial egg laying hens which can produce approximately 42 million dozen
eggs
annually. U.S. egg prices are determined weekly based upon reported
market prices. The U.S. egg industry has been consolidating over the
last few years, with the 25 largest producers accounting for more than 74.3%
of
the total number of egg laying hens in service during 2007. We
compete with other U.S. egg producers primarily on the basis of product quality,
reliability, price and customer service.
We
market a high-nutrient egg called EggsPlus™. This
egg contains high levels of Omega-3 and Omega-6 fatty acids along with Vitamin
E, making the egg a heart-friendly product. Our marketing of
EggsPlus™ has received national recognition for our progress in being an
innovator in the “functional foods” category.
In
addition, we produce and sell livestock feeds at our feed mill in Mt. Pleasant,
Texas and at our farm supply store in Pittsburg, Texas to dairy farmers and
livestock producers in northeastern Texas. We engage in similar sales
activities at our other U.S. feed mills.
We
also have a small pork operation that we acquired through our 2007 acquisition
that raises and sells live hogs to processors.
MEXICO
Background
The
Mexico market represented approximately 6.7% of our net sales in fiscal
2007. We are the second largest producer and seller of chicken in
Mexico. We believe that we are one of the lower-cost producers of
chicken in Mexico.
Product
Types
While
the market for chicken products in Mexico is less developed than in the U.S.,
with sales attributed to fewer, more basic products, we have been successful
in
differentiating our products through high quality client service and product
improvements such as dry-air chilled eviscerated products. The
supermarket chains consider us the leaders in innovation for fresh
products. The market for value added products is
increasing. Our strategy is to capitalize on this trend through our
vast U.S. experience in both products and quality and our well-known
service.
Markets
We
sell our chicken products primarily to wholesalers, large restaurant chains,
fast food accounts, supermarket chains and direct retail distribution in
selected markets. We have national presence and are currently present
in all but two of the 32 Mexican States, which in total represent 99% of
the
Mexican population.
Foreign
Operations Risks
Our
foreign operations pose special risks to our business and
operations. See Item 1A. “Risk Factors” for a discussion of foreign
operations risks.
GENERAL
Competitive
Conditions
The
chicken and turkey industries are highly competitive and our largest U.S.
competitor has greater financial and marketing resources than we
do. In the U.S., Mexico and Puerto Rico, we compete principally with
other vertically integrated poultry companies. We are the largest
producer of chicken in the U.S. and Puerto Rico, and the second largest producer
in Mexico. The second largest producer in the U.S. is Tyson Foods,
Inc. The largest producer in Mexico is Industrias Bachoco SA de
CV.
In
general, the competitive factors in the U.S. chicken and turkey industries
include price, product quality, product development, brand identification,
breadth of product line and customer service. Competitive factors
vary by major market. In the foodservice market, competition is based
on consistent quality, product development, service and price. In the
U.S. retail market, we believe that product quality, brand awareness, customer
service and price are the primary bases of competition. There is some
competition with non-vertically integrated further processors in the U.S.
prepared food business. We believe vertical integration generally
provides significant, long-term cost and quality advantages over non-vertically
integrated further processors.
In
Mexico, where product differentiation has traditionally been limited, product
quality, service and price have been the most critical competitive
factors. The North American Free Trade Agreement eliminated tariffs
for chicken and chicken products sold to Mexico on January 1,
2003. However, in July 2003, the U.S. and Mexico entered into a
safeguard agreement with regard to imports into Mexico of chicken leg quarters
from the U.S. Under this agreement, a tariff rate for chicken leg
quarters of 98.8% of the sales price was established. The tariff rate
on import duties was reduced on January 1, 2007, to 19.8%, and on January
1,
2008 the tariff rate is scheduled to be reduced to zero. As this
tariff is reduced, we expect greater amounts of chicken to be imported into
Mexico from the U.S., which could negatively affect the profitability of
Mexican
chicken producers.
We
are not a significant competitor in the distribution business as it relates
to
products other than chicken. We distribute these products solely as a
convenience to our chicken customers. The broad-line distributors do
not consider us to be a factor in those markets. The competition
related to our other products such as table eggs, feed and protein are much
more
regionalized and no one competitor is dominant.
Key
Customers
Our
two largest customers accounted for approximately 18% of our net sales in
fiscal
2007, and our largest customer, Wal-Mart Stores Inc., accounted for 12% of
our
net sales.
Regulation
and Environmental Matters
The
chicken and turkey industries are subject to government regulation, particularly
in the health and environmental areas, including provisions relating to the
discharge of materials into
the
environment, by the Centers for Disease Control, the USDA, the Food and Drug
Administration (“FDA”) and the Environmental Protection Agency (“EPA”) in the
U.S. and by similar governmental agencies in Mexico. Our chicken processing
facilities in the U.S. are subject to on-site examination, inspection and
regulation by the USDA. The FDA inspects the production of our feed
mills in the U.S. Our Mexican food processing facilities and feed
mills are subject to on-site examination, inspection and regulation by a
Mexican
governmental agency, which performs functions similar to those performed
by the
USDA and FDA. We believe that we are in substantial compliance with
all applicable laws and regulations relating to the operations of our
facilities.
We
anticipate increased regulation by the USDA concerning food safety, by the
FDA
concerning the use of medications in feed and by the EPA and various other
state
agencies concerning discharges to the environment. Although we do not
anticipate any regulations having a material adverse effect upon us, a material
adverse effect may occur.
Employees
and Labor Relations
As
of September 29, 2007, we employed approximately 49,800 persons in the U.S.
and
5,100 persons in Mexico. Approximately 16,350 employees at various
facilities in the U.S. are members of collective bargaining units. In
Mexico, approximately 2,950 employees are covered by collective bargaining
agreements. We have not experienced any work stoppage at any location
in over five years. We believe our relations with our employees are
satisfactory. At any given time, we will be in some stage of contract
negotiation with various collective bargaining units.
Financial
Information about Foreign Operations
The
Company’s foreign operations are in Mexico. Geographic financial
information is set forth in Item 7. “Management’s Discussion and Analysis of
Financial Condition and Results of Operation.”
Available
Information; NYSE CEO Certification
The
Company’s Internet website is http://www.pilgrimspride.com. The
Company makes available, free of charge, through its Internet website, the
Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, Directors and Officers Forms 3, 4 and 5, and amendments
to
those reports, as soon as reasonably practicable after electronically filing
such materials with, or furnishing them to, the Securities and Exchange
Commission. The public may read and copy any materials that the
Company files with the Securities and Exchange Commission at its Public
Reference Room at 100 F Street, NE, Washington, DC 20549 and may obtain
information about the operation of the Public Information Room by calling
the
Securities and Exchange Commission at 1-800-SEC-0330.
In addition, the Company makes available, through its Internet website, the
Company’s Business Code of Conduct and Ethics, Corporate Governance Guidelines
and the written charter of the Audit Committee, each of which is available
in
print to any stockholder who requests it by
contacting
the Secretary of the Company at 4845 U.S. Highway 271 North, Pittsburg, Texas
75686-0093.
As
required by the rules of the New York Stock Exchange, the Company submitted
its
unqualified Section 303A.12(a) Co-Principal Executive Officers Certification
for
the preceding year to the New York Stock Exchange.
We
included the certifications of the Co-Principal Executive Officers and the
Chief
Financial Officer of the Company required by Section 302 of the Sarbanes-Oxley
Act of 2002 and related rules, relating to the quality of the Company's public
disclosure, in this report on Form 10-K as Exhibits 31.1, 31.2 and
31.3.
Executive
Officers
Set
forth below is certain information relating to our current executive
officers:
|
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
|
||
Lonnie "Bo"
Pilgrim has served as
Senior Chairman of the Board since July 2007. He served as Chairman
of the Board since the organization of Pilgrim's Pride in July 1968 until
July
2007. He also served as Chief Executive Officer from July 1968 to
June 1998. Prior to the incorporation of Pilgrim's Pride, Mr. Pilgrim
was a partner in its predecessor partnership business founded in
1946.
Lonnie Ken Pilgrim has served as
Chairman of the Board since July 2007. He served as Executive Vice
President, Assistant to Chairman from November 2004 until July 2007, and
he
served as Senior Vice President, Transportation from August 1997 to November
2004. Prior to that he served as Vice President. He has been a member
of the Board of Directors since March 1985, and he has been employed by
Pilgrim’s Pride since 1977. He is a son of Lonnie “Bo”
Pilgrim.
Clifford
E. Butler serves
as Vice Chairman of the Board. On October 10, 2007, Clifford E.
Butler announced his retirement from his position as Vice Chairman of the
Board
effective December 31, 2007, and that he will not stand for re-election
as a
director. Mr. Butler joined us as Controller and director in 1969,
was named Senior Vice President of Finance in 1973, became Chief Financial
Officer and Vice Chairman of the Board
in July 1983, became Executive President in January 1997 and served in
such
capacity through July 1998.
O.B. Goolsby, Jr. has
served as President and Chief
Executive Officer since September 2004. Mr. Goolsby served as President
and Chief Operating Officer from November 2002 to September 2004. Prior to
being named as President and Chief Operating Officer in November 2002,
Mr.
Goolsby served as Executive Vice President, Prepared Foods Complexes from
June
1998 to November 2002. He was previously Senior Vice President, Prepared
Foods Operations from August 1992 to June 1998 and Vice President, Prepared
Foods Operations from September 1987 to August 1992 and was employed by
the
Company in other capacities from November 1969 to January
1981.
Richard A. Cogdillhas served as
Chief Financial Officer, Secretary and Treasurer since January
1997. Mr. Cogdill became a Director in September
1998. Previously he served as Senior Vice President, Corporate
Controller, from August 1992 through December 1996 and as
Vice
President, Corporate Controller from October 1991 through August
1992. Prior to October 1991, he was a Senior Manager with Ernst &
Young LLP. Mr. Cogdill is a Certified Public Accountant.
J.
Clinton Rivers has served
as Chief Operating Officer since October 2004. He served as Executive Vice
President of Prepared Food Operations from November 2002 to October 2004.
Mr. Rivers was the Senior Vice President of Prepared Foods Operations from
1999
to November 2002, and was the Vice President of Prepared Foods Operations
from
1992 to 1999. From 1989 to 1992, he served as Plant Manager of the Mount
Pleasant, Texas Production Facility. Mr. Rivers joined Pilgrim’s Pride in
1986 as the Quality Assurance Manager, and also held positions at Perdue
Farms
and Golden West Foods.
Robert
A. Wright has
served as Executive Vice President of Sales and Marketing since June 2004.
He served as Executive Vice President, Turkey Division from October 2003
to June
2004. Prior to October 2003, Mr. Wright served as President of Butterball
Turkey Company for five years.
Forward
Looking Statements
Statements
of our intentions, beliefs, expectations or predictions for the future,
denoted
by the words "anticipate," "believe," "estimate," "expect," "plan," "project,"
"imply," "intend," "foresee" and similar expressions, are forward-looking
statements that reflect our current views about future events and are subject
to
risks, uncertainties and assumptions. Such risks, uncertainties and
assumptions include those described under "Risk Factors" below and elsewhere
in
this Annual Report on Form 10-K.
Actual
results could differ materially from those projected in these forward-looking
statements as a result of these factors, among others, many of which are
beyond
our control.
In
making these statements, we are not undertaking, and specifically decline
to
undertake, any obligation to address or update each or any factor in future
filings or communications regarding our business or results, and we are
not
undertaking to address how any of these factors may have caused changes
in
information contained in previous filings or communications. The
risks described below are not the only risks we face, and additional risks
and
uncertainties may also impair our business operations. The occurrence
of any one or more of the following or other currently unknown factors
could
materially adversely affect our business and operating results.
Risk
Factors
The
following risk factors should be read carefully in connection with evaluating
our business and the forward-looking information contained in this Annual
Report
on Form 10-K. Any of the following risks could materially adversely
affect our business, operations, industry or financial position or our
future
financial performance. While we believe we have identified and
discussed below the key risk factors affecting our business, there may
be
additional risks and uncertainties that are not presently known or that
are not
currently believed to be significant that
adversely
affect our business, operations, industry, financial position and financial
performance in the future.
Cyclicality
and Commodity Prices.
Industry cyclicality can affect our earnings, especially due to
fluctuations in commodity prices of feed ingredients, chicken and
turkey.
Profitability
in the chicken and turkey industries is materially affected by the commodity
prices of feed ingredients, chicken and turkey, which are determined by
supply
and demand factors. As a result, the chicken and turkey industries
are subject to cyclical earnings fluctuations.
The
production of feed ingredients is positively or negatively affected primarily
by
weather patterns throughout the world, the global level of supply inventories
and demand for feed ingredients and the agricultural policies of the United
States and foreign governments. In particular, weather patterns often
change agricultural conditions in an unpredictable manner. A
significant change in weather patterns could affect supplies of feed
ingredients, as well as both the industry's and our ability to obtain feed
ingredients, grow chickens and turkeys or deliver products.
The
cost of corn and soybean meal, our primary feed ingredients, increased
significantly from August 2006 to the date of this report and there can
be no
assurance that the price of corn or soybean meal will not continue to rise
as a
result of, among other things, increasing demand for these products around
the
world and alternative uses of these products, such as ethanol and biodiesel
production.
High
feed ingredient prices have had a material adverse effect on our operating
results. We periodically seek, to the extent available, to enter into
advance purchase commitments or financial hedging contracts for the purchase
of
feed ingredients in an effort to manage our feed ingredient
costs. The use of such instruments may not be
successful.
Livestock
and Poultry Disease,
including Avian Influenza. Outbreaks of livestock diseases in
general and poultry diseases in particular, including avian influenza,
can
significantly affect our ability to conduct our operations and demand for
our
products.
We
take precautions designed to ensure that our flocks are healthy and that
our
processing plants and other facilities operate in a sanitary and
environmentally-sound manner. However, events beyond our control,
such as the outbreaks of disease, either in our own flocks or elsewhere,
could
significantly affect demand for our products or our ability to conduct
our
operations. Furthermore, an outbreak of disease could result in
governmental restrictions on the import and export of our fresh chicken,
turkey
or other products to or from our suppliers, facilities or customers, or
require
us to destroy one or more of our flocks. This could also result in
the cancellation of orders by our customers and create adverse publicity
that
may have a material adverse effect on our ability to market our products
successfully and on our business, reputation and prospects.
During
the first half of fiscal 2006, there was substantial publicity regarding
a
highly pathogenic strain of avian influenza, known as H5N1, which has been
affecting Asia since 2002
and
which has also been found in Europe and Africa. It is widely believed
that H5N1 is being spread by migratory birds, such as ducks and
geese. There have also been some cases where H5N1 is believed to have
passed from birds to humans as humans came into contact with live birds
that
were infected with the disease.
Although
highly pathogenic H5N1 has not been identified in North America, there
have been
outbreaks of low pathogenic strains of avian influenza in North America,
and in
Mexico outbreaks of both high and low-pathogenic strains of avian influenza
are
a fairly common occurrence. Historically, the outbreaks of low
pathogenic avian influenza have not generated the same level of concern,
or
received the same level of publicity or been accompanied by the same reduction
in demand for poultry products in certain countries as that associated
with the
highly pathogenic H5N1 strain. Accordingly, even if the highly
pathogenic H5N1 strain does not spread to North or Central America, there
can be
no assurance that it will not materially adversely affect demand for North
or
Central American produced poultry internationally and/or domestically,
and, if
it were to spread to North or Central America, there can be no assurance
that it
would not significantly affect our ability to conduct our operations and/or
demand for our products, in each case in a manner having a material adverse
effect on our business, reputation and/or prospects.
Contamination
of
Products. If our poultry products become contaminated, we may
be subject to product liability claims and product recalls.
Poultry
products may be subject to contamination by disease-producing organisms,
or
pathogens, such as Listeria
monocytogenes, Salmonella
and generic E.coli. These
pathogens are generally found in the environment, and, as a result, there
is a
risk that they, as a result of food processing, could be present in our
processed poultry products. These pathogens can also be introduced as
a result of improper handling at the further processing, foodservice or
consumer
level. These risks may be controlled, although not eliminated, by
adherence to good manufacturing practices and finished product
testing. We have little, if any, control over proper handling once
the product has been shipped. Illness and death may result if the
pathogens are not eliminated at the further processing, foodservice or
consumer
level. Even an inadvertent shipment of contaminated products is a
violation of law and may lead to increased risk of exposure to product
liability
claims, product recalls and increased scrutiny by federal and state regulatory
agencies and may have a material adverse effect on our business, reputation
and
prospects.
In
October 2002, one product sample produced in our Franconia, Pennsylvania
facility that had not been shipped to customers tested positive for
Listeria. We later received information from the USDA suggesting
environmental samples taken at the facility had tested positive for both
the
strain of Listeria identified in the product and a strain having characteristics
similar to those of the strain identified in a Northeastern Listeria
outbreak. As a result, we voluntarily recalled all cooked deli
products produced at the plant from May 1, 2002 through October 11,
2002. We carried insurance designed to cover the direct recall
related expenses and certain aspects of the related business interruption
caused
by the recall.
Product
Liability. Product liability claims or product recalls can
adversely affect our business reputation and expose us to increased scrutiny
by
federal and state regulators.
The
packaging, marketing and distribution of food products entail an inherent
risk
of product liability and product recall and the resultant adverse
publicity. We may be subject to significant liability if the
consumption of any of our products causes injury, illness or
death. We could be required to recall certain of our products in the
event of contamination or damage to the products. In addition to the
risks of product liability or product recall due to deficiencies caused by our
production or processing operations, we may encounter the same risks if
any
third party tampers with our products. We cannot assure you that we
will not be required to perform product recalls, or that product liability
claims will not be asserted against us, in the future. Any claims
that may be made may create adverse publicity that would have a material
adverse
effect on our ability to market our products successfully or on our business,
reputation, prospects, financial condition and results of
operations.
If
our poultry products become contaminated, we may be subject to product
liability
claims and product recalls. There can be no assurance that any
litigation or reputational injury associated with product recalls will
not have
a material adverse effect on our ability to market our products successfully
or
on our business, reputation, prospects, financial condition and results
of
operations.
Substantial
Leverage. Our
substantial indebtedness could
adversely affect our financial condition.
Our
acquisition of Gold Kist increased our indebtedness significantly. We currently
have a substantial amount of indebtedness, which could adversely affect
our
financial condition and could have important consequences to you. For
example, it could:
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Make
it more difficult for us to satisfy our obligations under our
debt
securities;
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Increase
our vulnerability to general adverse economic
conditions;
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Limit
our ability to obtain necessary financing and to fund future
working
capital, capital expenditures and other general corporate
requirements;
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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;
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Limit
our flexibility in planning for, or reacting to, changes in our
business
and the industry in which we
operate;
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Place
us at a competitive disadvantage compared to our competitors
that have
less debt;
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Limit
our ability to pursue acquisitions and sell assets;
and
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Limit,
along with the financial and other restrictive covenants in our indebtedness,
our ability to borrow additional funds. Failing to comply with those
covenants could
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result
in an event of default or require redemption of
indebtedness. Either of these events could have a material
adverse effect on us.
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Our
ability to make payments on and to refinance our indebtedness will depend
on our
ability to generate cash in the future, which is dependent on various
factors. These factors include the commodity prices of feed
ingredients, chicken and turkey and general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our
control.
Additional
Borrowings Available. Despite
our substantial indebtedness, we may still be able to incur significantly
more
debt; this could intensify the risks described above.
Despite
our significant indebtedness, we are not prohibited from incurring significant
additional indebtedness in the future. If additional debt is added to
our current substantial debt levels, the related risks that we now face
could
intensify.
Insurance. We
are exposed to risks relating to product liability, product recall, property
damage and injuries to persons for which insurance coverage is expensive,
limited and potentially inadequate.
Our
business operations entail a number of risks, including risks relating
to
product liability claims, product recalls, property damage and injuries
to
persons. We currently maintain insurance with respect to certain of
these risks, including product liability insurance, property insurance,
workers
compensation insurance and general liability insurance, but in many cases
such
insurance is expensive, difficult to obtain and no assurance can be given
that
such insurance can be maintained in the future on acceptable terms, or
in
sufficient amounts to protect us against losses due to any such events,
or at
all. Moreover, even though our insurance coverage may be designed to
protect us from losses attributable to certain events, it may not adequately
protect us from liability and expenses we incur in connection with such
events. For example, the losses attributable to our October 2002
recall of cooked deli-products produced at one of our facilities significantly
exceeded available insurance coverage. Additionally, in the past, two
of our insurers encountered financial difficulties and were unable to fulfill
their obligations under the insurance policies as anticipated and, separately,
two of our other insurers contested coverage with respect to claims covered
under policies purchased, forcing us to litigate the issue of coverage
before we
were able to collect under these policies.
Significant
Competition. Competition
in the chicken and turkey industries with other vertically integrated poultry
companies may make us unable to compete successfully in these industries,
which
could adversely affect our business.
The
chicken and turkey industries are highly competitive. In both the U.S.
and
Mexico, we primarily compete with other vertically integrated poultry
companies.
In
general, the competitive factors in the U.S. poultry industry
include:
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Price;
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Product
quality;
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Product
development;
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Brand
identification;
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Breadth
of product line; and
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Customer
service.
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Competitive
factors vary by major market. In the foodservice market, competition
is based on consistent quality, product development, service and
price. In the U.S. retail market, we believe that competition is
based on product quality, brand awareness, customer service and
price. Further, there is some competition with non-vertically
integrated further processors in the prepared food business.
In
Mexico, where product differentiation has traditionally been limited, product
quality and price have been the most critical competitive
factors. The North American Free Trade Agreement eliminated tariffs
for chicken and chicken products sold to Mexico on January 1,
2003. However, in July 2003, the U.S. and Mexico entered into a
safeguard agreement with regard to imports into Mexico of chicken leg quarters
from the U.S. Under this agreement, a tariff rate for chicken leg
quarters of 98.8% of the sales price was established. This tariff was
reduced on January 1, 2006 to 39.5%, and was further reduced to 19.8% on
January
1, 2007. On January 1, 2008, the tariff is scheduled to be reduced to
zero. In connection with the reduction of the tariffs in Mexico,
increased competition from chicken imported into Mexico from the U.S. may
have a
material adverse effect on the Mexican chicken industry in general, and
on our
Mexican operations in particular.
Loss
of Key Customers. The
loss of one or more of our largest customers could adversely affect our
business.
Our
two largest customers accounted for approximately 18% of our net sales
in fiscal
2007, and our largest customer, Wal-Mart Stores Inc., accounted for 12%
of our
net sales. Our business could suffer significant setbacks in revenues
and operating income if we lost one or more of our largest customers, or
if our
customers' plans and/or markets should change significantly.
Integration
of Gold Kist. There
can be no assurance that Gold Kist can be combined successfully with our
business.
In
evaluating the terms of our acquisition of Gold Kist, we analyzed the respective
businesses of the Company and Gold Kist and made certain assumptions concerning
their respective future operations. A principal assumption was that
the acquisition will produce operating results better than those historically
experienced or expected to be experienced in the future by us in the absence
of
the acquisition. There can be no assurance, however, that this
assumption is correct or that the businesses of the Company and Gold Kist
will
be successfully integrated in a timely manner.
Synergies
of Gold Kist. There
can be no assurance that we will achieve anticipated synergies from our
acquisition of Gold Kist.
We
consummated the Gold Kist acquisition with the expectation that it will
result
in beneficial synergies, such as cost savings and enhanced
growth. Success in realizing these benefits and the timing of this
realization depend upon the successful integration of the operations of
Gold
Kist into the Company, and upon general and industry-specific economic
factors. The integration of two independent companies is a complex,
costly and time-consuming process. The difficulties of combining the
operations of the companies include, among others:
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Transitioning
and preserving Gold Kist's customer, contractor, supplier and
other
important third-party
relationships;
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Integrating
corporate and administrative
infrastructures;
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Coordinating
sales and marketing functions;
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Minimizing
the diversion of management's attention from ongoing business
concerns;
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Coordinating
geographically separate organizations;
and
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Retaining
key employees.
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Even
if we are able to effectively integrate the operations of Gold Kist into
our
existing operations and economic conditions remain stable, there can be
no
assurance that the anticipated synergies will be achieved.
Assumption
of Unknown Liabilities in Acquisitions. Assumption
of unknown liabilities in acquisitions may harm our financial condition
and
operating results.
Acquisitions
may be structured in such a manner that would result in the assumption
of
unknown liabilities not disclosed by the seller or uncovered during
pre-acquisition due diligence. For example, our acquisition of Gold
Kist was structured as a stock purchase. In that acquisition we
assumed all of the liabilities of Gold Kist, including liabilities that
may be
unknown. These obligations and liabilities could harm our financial
condition and operating results.
Potential
Acquisitions. We
intend to pursue opportunities to acquire complementary businesses, which
could
increase leverage and debt service requirements and could adversely affect
our
financial situation if we fail to successfully integrate the acquired
business.
We
intend to pursue selective acquisitions of complementary businesses in
the
future. Inherent in any future acquisitions are certain risks such as
increasing leverage and debt service requirements and combining company
cultures
and facilities, which could have a material adverse effect on our operating
results, particularly during the period immediately following such
acquisitions. Additional debt or equity capital may be required to
complete future
acquisitions,
and there can be no assurance that we will be able to raise the required
capital. Furthermore, acquisitions involve a number of risks and
challenges, including:
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Diversion
of management's attention;
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The
need to integrate acquired
operations;
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Potential
loss of key employees and customers of the acquired
companies;
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Lack
of experience in operating in the geographical market of the
acquired
business;
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and
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An
increase in our expenses and working capital
requirements.
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Any
of these and other factors could adversely affect our ability to achieve
anticipated cash flows at acquired operations or realize other anticipated
benefits of acquisitions.
Foreign
Operations Risks. Our
foreign operations pose special risks to our business and
operations.
We
have significant operations and assets located in Mexico and may participate
in
or acquire operations and assets in other foreign countries in the
future. Foreign operations are subject to a number of special risks,
including among others:
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Currency
exchange rate fluctuations;
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Trade
barriers;
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Exchange
controls;
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Expropriation;
and
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Changes
in laws and policies, including those governing foreign-owned
operations.
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Currency
exchange rate fluctuations have adversely affected us in the
past. Exchange rate fluctuations or one or more other risks may have
a material adverse effect on our business or operations in the
future.
Our
operations in Mexico are conducted through subsidiaries organized under
the laws
of Mexico. We may rely in part on intercompany loans and distributions
from our
subsidiaries to meet our obligations. Claims of creditors of our
subsidiaries, including trade creditors, will generally have priority as
to the
assets of our subsidiaries over our claims. Additionally, the ability
of our Mexican subsidiaries to make payments and distributions to us will
be
subject to, among other things, Mexican law. In the past, these laws
have not had a material adverse effect on the ability of our Mexican
subsidiaries to make these payments and distributions. However, laws
such as these may have a material adverse effect on the ability of our
Mexican
subsidiaries to make these payments and distributions in the
future.
In
October 2007, Mexico’s legislative bodies enacted La Ley del Impuesto
Empresarial a Tasa Única (“IETU”), a new minimum corporation tax, which will be
assessed on companies doing business in Mexico beginning January 1,
2008. We are currently evaluating the anticipated impact that IETU
will have on our business and operating results. Because of IETU,
there can be no assurance that we will be able to utilize the net operating
loss
carryovers and other deferred tax benefits generated in Mexico. There
can also be no assurance that IETU will not have a material adverse effect
on
our financial results.
Disruptions
in International Markets and Distribution
Channels. Disruptions
in international markets and distribution channels could adversely affect
our
business.
Historically,
we have targeted international markets to generate additional demand for
our
chicken dark meat, specifically leg quarters, which are 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 meat. As part of this initiative,
we have created a significant international distribution network into several
markets, including Eastern Europe, including Russia; the Far East, including
China; and Mexico. Our success in these markets could be, and in
recent periods has been, adversely affected by disruptions in poultry export
markets. These disruptions are often caused by restrictions on
imports of U.S.-produced poultry products imposed by foreign governments
for a
variety of reasons, including the protection of their domestic poultry
producers
and allegations of consumer health issues, and may also be caused by outbreaks
of disease such as avian influenza, either in our own flocks or elsewhere
in the
world, and resulting changes in consumer preferences. There can be no assurance
that one or more of these or other disruptions in our international markets
and
distribution channels will not adversely affect our business.
Extreme
Weather and Natural Disasters. Extreme
weather or natural disasters could negatively impact our business.
Extreme
weather or natural disasters, including droughts, floods, excessive cold
or
heat, hurricanes or other storms, could impair the health or growth of
our
flocks or interfere with our operations due to power outages, fuel shortages,
damage to our production and processing facilities or disruption of
transportation channels, among other things. Any of these factors could
have an
adverse effect on our financial results.
Government
Regulation. Regulation,
present and future, is a constant factor affecting our
business.
Our
operations are subject to federal, state and local governmental regulation,
including in the health, safety and environmental areas. We
anticipate increased regulation by various agencies concerning food safety,
the
use of medication in feed formulations and the disposal of poultry by-products
and wastewater discharges.
Also, changes in laws or regulations or the application thereof may lead
to
government enforcement actions and the resulting litigation by private
litigants. We are aware of an industry-wide investigation by the Wage
and Hour Division of the U.S. Department of Labor to ascertain compliance
with
various wage and hour issues, including the compensation of employees
for
the
time
spent on such activities such as donning and doffing work
equipment. We have been named a defendant in a number of related
suits brought by employees. Due, in part, to the government
investigation and the recent U.S. Supreme Court decision in IBP, Inc.
v.
Alvarez, it is possible that we may be subject to additional employee
claims.
Unknown matters, new laws and regulations, or stricter interpretations
of
existing laws or regulations may materially affect our business or operations
in
the future.
Immigration
Legislation and Enforcement. New
immigration legislation or increased enforcement efforts in connection
with
existing immigration legislation could cause our costs of doing business
to
increase, cause us to change the way in which we do business or otherwise
disrupt our operations.
Immigration
reform continues
to attract significant attention in the public arena and the United
States Congress. If new federal immigration legislation is enacted or
if states in which we do business enact immigration laws, such laws may
contain
provisions that could make it more difficult or costly for us to hire
United States citizens and/or legal immigrant workers. In such case,
we may incur additional costs to run our business or may have to change
the way
we conduct our operations, either of which could have a material adverse
effect
on our business, operating results and financial condition. Also,
despite our past and continuing efforts to hire only United States
citizens and/or persons legally authorized to work in the United
States,
increased enforcement efforts with respect to existing immigration laws
by
governmental authorities may disrupt a portion of our workforce or our
operations at one or more of our facilities, thereby negatively impacting
our
business.
Control
of Voting Stock. Control
over the Company is maintained by members of the family of Lonnie "Bo"
Pilgrim.
As
described in more detail in Item 12. "Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters," through two limited
partnerships and related trusts and voting agreements, Lonnie "Bo" Pilgrim,
Patricia R. Pilgrim, his wife, and Lonnie Ken Pilgrim, his son, control
62.225%
of the voting power of our outstanding common stock. Accordingly,
they control the outcome of all actions requiring stockholder approval,
including the election of directors and significant corporate transactions,
such
as a merger or other sale of the Company or its assets. This ensures
their ability to control the foreseeable future direction and management
of the
Company. In addition, an event of default under certain agreements
related to our indebtedness will occur if Lonnie "Bo" Pilgrim and certain
members of his family cease to own at least a majority of the voting power
of
the outstanding common stock.
Item
1B. Unresolved Staff Comments
None.
Item
2. Properties
Operating
Facilities
We
operate 34 poultry processing plants in the U.S. Of this total, 33
process chicken and are located in Alabama, Arkansas, Florida, Georgia,
Kentucky, Louisiana, North Carolina, South Carolina, Tennessee, Texas,
Virginia,
and West Virginia. We have one turkey processing plant in
Pennsylvania, one chicken processing plant in Puerto Rico and three chicken
processing plants in Mexico.
The
U.S. chicken processing plants have weekly capacity to process 42.5 million
broilers and operated at 92.8% of capacity in fiscal 2007.
Our
turkey plant has the weekly capacity to process 0.2 million birds under
current
inspection and line configurations and operates at 94% of
capacity. Our Mexico facilities have the capacity to process 3.2
million broilers per week and operated at 89% of capacity in fiscal
2007. Our Puerto Rico processing plant has the capacity to process
0.3 million birds per week based on one eight-hour shift per day. For
segment reporting purposes, we include Puerto Rico with our U.S.
operations.
In
the U.S., the processing plants are supported by 42 hatcheries, 31 feed
mills
and 12 rendering plants. The hatcheries, feed mills and rendering
plants operated at 85%, 84% and 76% of capacity, respectively, in fiscal
2007. In Puerto Rico, the processing plant is supported by one
hatchery and one feed mill which operated at 82% and 50% of capacity,
respectively, in fiscal 2007. In Mexico, the processing plants are
supported by six hatcheries, four feed mills and two rendering
facilities. The Mexico hatcheries, feed mills and rendering
facilities operated at 97%, 80% and 70% of capacity, respectively, in fiscal
2007.
We
also operate twelve prepared foods plants. These plants are located
in Alabama, Georgia, Louisiana, Pennsylvania, South Carolina, Tennessee,
Texas
and West Virginia. These plants have the capacity to produce
approximately 1,545 million pounds of further processed product per year
and in
fiscal 2007 operated at approximately 87% of capacity based on the current
product mix and six-day production at most facilities and 24/7 production
at two
facilities.
Other
Facilities and Information
We
own a partially automated distribution freezer located outside of Pittsburg,
Texas, which includes 125,000 square feet of storage area. We operate
a commercial egg operation and farm store in Pittsburg, Texas, a commercial
feed
mill in Mt. Pleasant, Texas and a pork grow-out operation in Jefferson,
Georgia.
We own office buildings in Pittsburg, Texas and Atlanta, Georgia, which
house
our executive offices, our Logistics and Customer Service offices and our
general corporate functions as well as an office building in Mexico City,
which
houses our Mexican marketing offices, and an office building in Broadway,
Virginia, which houses additional sales and marketing, research and development,
and support activities. We lease offices in Dallas, Texas and Duluth,
Georgia, which house additional sales and marketing and support
activities.
We
have 13 regional distribution centers located in Arizona, Florida, Iowa,
Mississippi, Ohio, Tennessee, Texas, and Utah, five of which we own and
eight of
which we lease.
Most
of our domestic property, plant and equipment is pledged as collateral
on our
long-term debt and credit facilities. See Item 7. “Management’s
Discussion and Analysis of Financial Condition and Results of
Operation.”
Item
3. Legal Proceedings
On
July 1, 2002, three individuals, on behalf of themselves and a putative
class of
chicken growers, filed their original class action complaint against the
Company
in the United States District Court for the Eastern District of Texas,
Texarkana
Division, styled “Cody Wheeler, et al. vs. Pilgrim’s Pride
Corporation.” In their lawsuit, plaintiffs initially alleged that the
Company violated the Packers and Stockyards Act (7 U.S.C. Section 192)
(the
“PSA”) and breached fiduciary duties allegedly owed to the plaintiff
growers. The plaintiffs also brought individual actions under the
Packers and Stockyards Act alleging, among other things, breach of fiduciary
duties and breach of contract. On September 30, 2005, plaintiffs
amended their lawsuit to join Tyson Foods, Inc. as a
co-defendant. Two additional former chicken growers were also added
as plaintiffs to the lawsuit. This amendment, which occurred 38
months after the lawsuit’s initial filing, virtually re-wrote most of the
allegations. Now the plaintiffs contend that the Company and Tyson
are involved in a conspiracy to violate federal antitrust laws. The
plaintiffs’ initial allegations, although still contained in the amended
lawsuit, are no longer the sole focus of the case. On January 3,
2006, the Court entered an Order severing the plaintiffs’ Packers and Stockyards
Act and antitrust claims. The Court ordered that the plaintiffs may
proceed with their Packers and Stockyards Act claims as set forth in Plaintiffs’
Third Amended Complaint. The Court also ordered that the plaintiffs
may proceed with their respective antitrust claims asserted against the
Company
and Tyson in a separate cause of action styled “Cody Wheeler, et al vs.
Pilgrim’s Pride Corporation, et al.” On March 6, 2006, the plaintiffs
filed their motion for class certification in the original
lawsuit. Pilgrim’s Pride attacked the plaintiffs’ class certification
brief on several grounds, and ultimately the plaintiffs voluntarily withdrew
their Motion for Class Certification on May 26, 2006. As a result,
the Court canceled the class certification hearing and on June 2, 2006
the Court
entered an Order withdrawing Plaintiffs’ Motion for Class Certification and
prohibiting the plaintiffs from filing any additional class-action claims
against Pilgrim’s Pride in this lawsuit. Additionally, the two former
growers who joined the lawsuit on September 30, 2005 withdrew from the
case. On March 30, 2007, the Court issued an order granting in part
and denying in part the Company’s pending motion for summary
judgment. In the order, the Court ruled that plaintiffs do not have
to demonstrate an adverse effect on competition in order to prevail under
the
PSA. This ruling is inconsistent with many other jurisdictions’
interpretation of the PSA. The Court issued an order staying the
lawsuit until the issue is decided by the Fifth Circuit. On June 29,
2007, the Fifth Circuit accepted the appeal. The matter is currently
being briefed by the parties. The Company intends to defend
vigorously against the plaintiffs’ individual claims. The Company
does not expect this matter to have a material impact on its financial
position,
operations or liquidity.
On January 3, 2006, an action styled "Cody Wheeler, et al. vs. Pilgrim's
Pride
Corporation, et al.," arising out of the original Wheeler litigation described
above, was filed in the United States District Court for the Eastern District
of
Texas, Texarkana Division. The lawsuit was filed by the three
original plaintiffs and a former grower, both in their individual capacities
and
on behalf of a putative class of chicken growers. In the lawsuit, the
four plaintiffs allege that the Company and Tyson are involved in a conspiracy
to violate federal antitrust laws. On September 28, 2007, the court
issued an order denying plaintiffs’ request to certify a class
action. Plaintiffs filed the Petition for Permission to Appeal the
District Court’s Order on October 15, 2007 with the U.S. Court of Appeals for
the Fifth Circuit. The Company intends to defend vigorously any
attempts by the Plaintiffs to reverse the District Court’s Order denying
certification to the matter as a class
action
and the merits of the four plaintiffs’ individual claims. The Company
does not expect this matter to have a material impact on its financial
position,
operations or liquidity.
On
December 31, 2003, we were served with a purported
class action complaint styled “Angela Goodwin, Gloria
Willis, Johnny Gill, Greg Hamilton, Nathan Robinson, Eddie Gusby, Pat Curry,
Persons Similarly Situated v. ConAgra Poultry Company and Pilgrim’s Pride,
Incorporated” in the United States District Court, Western District of Arkansas,
El Dorado Division, alleging racial and age discrimination at one of the
facilities we acquired from ConAgra. Two of the named plaintiffs,
Greg Hamilton and Gloria Willis, were voluntarily dismissed from this
action. The Company deposed all of the remaining plaintiffs
and filed individual motions for summary judgment against each of
them. On March 28, 2006, the Court issued Orders concerning the
motions for summary judgment. It granted the Company’s motion against
Plaintiff Robert Nelson and dismissed all of his claims in their entirety
based
on the theory of judicial estoppel. The Court heard oral argument on
the Plaintiffs’ Class Certification Motion on August 11, 2006, and the Court
took the matter under advisement. On May 15, 2007, the Court issued
its order denying Plaintiffs’ Motion for Class Certification in its
entirety. The plaintiffs subsequently withdrew their petition to
appeal to the Eight Circuit Court of Appeals. Thus, the Court’s order
denying plaintiffs’ class certification motion stands as a final, binding
judgment. On July 18, 2007, the Court ordered the remaining six
individual Plaintiffs to file their own individual lawsuits without any
class
action allegations. In contravention of the Court’s instructions,
Plaintiffs’ counsel added new and/or dismissed allegations to each new
Complaint. On October 1, 2007, Pilgrim’s moved to strike those
allegations and filed its Answers subject to same. The Court entered
an Order striking the errant allegations, and the Plaintiffs are in the
process
of redrafting their individual Complaints. The Company intends to
re-file its already completed motions for summary judgment after the individual
Complaints are re-filed. The Company intends to defend
vigorously against the Plaintiffs’ individual claims. The Company
believes it has meritorious defenses to these individual claims and intends
to
vigorously defend these claims. The ultimate liability with respect
to these claims cannot be determined at this time; however, the Company
does not
expect this matter to have a material impact on its financial position,
operations or liquidity.
The
Wage and Hour Division of the U.S. Department of Labor conducted an industry
wide investigation to ascertain compliance with various wage and hour issues,
including the compensation of employees for the time spent on such activities
such as donning and doffing work equipment. Due, in part, to the
government investigation and the recent U.S. Supreme Court decision in
IBP,
Inc. v. Alvarez, employees have brought claims against the
Company. The claims filed against the Company as of the date of this
Annual Report include: “Juan Garcia, et al. v. Pilgrim’s Pride
Corporation, a/k/a Wampler Foods, Inc.”, filed in Pennsylvania state court on
January 27, 2006 and subsequently removed to the U.S. District Court for
the
Eastern District of Pennsylvania; “Esperanza Moya, et al. v. Pilgrim’s Pride
Corporation and Maxi Staff, LLC”, filed March 23, 2006 in the Eastern District
of Pennsylvania; “Barry Antee, et al. v. Pilgrim’s Pride Corporation” filed
April 20, 2006 in the Eastern District of Texas; “Stephania Aaron, et al. v.
Pilgrim’s Pride Corporation” filed August 22, 2006 in the Western District of
Arkansas; “Salvador Aguilar, et al. v. Pilgrim’s Pride Corporation” filed August
23, 2006 in the Northern District of Alabama; “Benford v. Pilgrim’s Pride
Corporation” filed November 2, 2006 in the Northern District of Alabama; and
“Porter v. Pilgrim’s Pride Corporation” filed December 7, 2006 in the Eastern
District of Tennessee; “Freida Brown, et al
v.
Pilgrim’s Pride Corporation” filed March 14, 2007 in the Middle District of
Georgia, Athens Division; “Roy Menser, et al v. Pilgrim’s Pride Corporation”
filed February 28, 2007 in the Western District of Paducah, Kentucky; “Victor
Manuel Hernandez v. Pilgrim’s Pride Corporation” filed January 30, 2007 in the
Northern District of Georgia, Rome Division; “Angela Allen et al v. Pilgrim’s
Pride Corporation” filed March 27, 2007 in United States District Court, Middle
District of Georgia, Athens Division; Daisy Hammond and Felicia Pope
v. Pilgrim’s Pride Corporation, in the Gainesville Division, Northern District
of Georgia, filed on June 6, 2007; Gary Price v. Pilgrim’s Pride Corporation, in
the U.S. District Court for the Northern District of Georgia, Atlanta Division,
filed on May 21, 2007; and Kristin Roebuck et al v. Pilgrim’s Pride Corporation,
in the U.S. District Court, Athens, Georgia, Middle District, filed on
May 23,
2007. The plaintiffs generally purport to bring a collective action
for unpaid wages, unpaid overtime wages, liquidated damages, costs, attorneys'
fees, and declaratory and/or injunctive relief and generally allege that
they
are not paid for the time it takes to either clear security, walk to their
respective workstations, don and doff protective clothing, and/or sanitize
clothing and equipment. The presiding judge in the consolidated action in
El Dorado issued an initial Case Management order on July 9,
2007. Plaintiffs’ counsel filed a Consolidated Amended Complaint and
the parties filed a Joint Rule 26(f) Report. A complete
scheduling order has not been issued, and discovery has not yet
commenced. Plaintiffs have filed a consolidated motion for
conditional certification in the consolidated case. On October 12,
2007, Pilgrim’s filed its response in opposition to that motion. As
of the date of this Annual Report, the following suits have been filed
against
Gold Kist, now merged into Pilgrim’s Pride Corporation, which make one or more
of the allegations referenced above: Merrell v. Gold Kist, Inc., in the
U.S.
District Court for the Northern District of Georgia, Gainesville Division,
filed
on December 21, 2006; Harris v. Gold Kist, Inc., in the U.S. District Court
for
the Northern District of Georgia, Newnan Division, filed on December 21,
2006;
Blanke v. Gold Kist, Inc., in the U.S. District Court for the Southern
District
of Georgia, Waycross Division, filed on December 21, 2006; Clarke v. Gold
Kist,
Inc., in the U.S. District Court for the Middle District of Georgia, Athens
Division, filed on December 21, 2006; Atchison v. Gold Kist, Inc., in the
U.S.
District Court for the Northern District of Alabama, Middle Division, filed
on
October 3, 2006; Carlisle v. Gold Kist, Inc., in the U.S. District Court
for the Northern District of Alabama, Middle Division, filed on October
2, 2006;
Benbow v. Gold Kist, Inc., in the U.S. District Court for the District
of South
Carolina, Columbia Division, filed on October 2, 2006; Bonds v. Gold Kist,
Inc.,
in the U.S. District Court for the Northern District of Alabama, Northwestern
Division, filed on October 2, 2006. On April 23, 2007, Pilgrim’s
filed a Motion to Transfer and Consolidate with the Judicial Panel on
Multidistrict Litigation (“JPML”) requesting that all of the pending Gold Kist
cases be consolidated into one case. Pilgrim’s withdrew its Motion
subject to the Plaintiffs’ counsel’s agreement to consolidate the seven separate
actions into the pending Benbow
case by dismissing those lawsuits and refiling/consolidating them into
the Benbow
action. Motions to Dismiss have been filed in all of the pending
seven cases, and all of these cases have been formally
dismissed. Pursuant to the Court’s April 16, 2007 Order, the parties
reached agreement on the terms of class notice and the Court granted conditional
class certification. Discovery has recently been
initiated. The Company intends to assert a vigorous defense to the
litigation. The amount of ultimate liability with respect to any of
these cases cannot be determined at this time.
We
are subject to various other legal proceedings and claims, which arise
in the
ordinary course of our business. In the opinion of management, the
amount of ultimate liability with
respect
to these actions will not materially affect our financial position or results
of
operations. See Note J “Commitments and Contingencies” of Item 8
“Financial Statements and Supplementary Data”, which is incorporated herein by
reference.
Item
4. Submission of Matters to a Vote of Security
Holders
None.
|
Item
5.Market for the Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
|
|
Quarterly
Stock Prices and Dividends
High
and low prices of
and dividends relating to the Company’s common stock for the periods indicated
were:
|
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
|
||||||||||||||||||
Holders
The
Company’s common stock (ticker symbol “PPC”) is traded on the New York Stock
Exchange. The Company estimates there were approximately 35,000
holders (including individual participants in security position listings)
of the
Company’s common stock as of November 9, 2007.
Dividends
Starting
in the first quarter of fiscal 2006, the Company’s Board of Directors has
declared quarterly cash dividends of $0.0225 per share of common
stock. Additionally, in the first quarter of fiscal 2006, the
Company’s Board of Directors declared a special $1.00 dividend per share of
common stock. Prior to fiscal 2006 and with the exception of two
quarters in 1993, the Company's Board of Directors declared cash dividends
of
$0.015 per share of common stock (on a split adjusted basis) every fiscal
quarter since the Company's initial public offering in 1986. Payment
of future dividends will depend upon the Company's financial condition,
results
of operations and other factors deemed relevant by the Company's Board
of
Directors, as well as any limitations imposed by lenders under the Company's
credit facilities. The Company's revolving credit facility and
revolving/term borrowing facility currently limit dividends to a maximum
of $26
million per year. See Note E of the notes to Consolidated Financial
Statements included in Item 15 for additional discussions of the Company's
credit facilities.
Issuer
Purchases of Equity Security in Fiscal 2007
The
Company did not repurchase any of its equity securities in fiscal
2007.
Total
Return on Registrant’s Common Equity
The
following graphs compare the performance of the Company with that of the
Russell
2000 composite index and a peer group of companies with the investment
weighted
on market capitalization. The total cumulative return on investment (change
in
the year-end stock price plus reinvested dividends) for each of the periods
for
the Company, the Russell 2000 composite index and the peer group is based
on the
stock price or composite index at the beginning of the applicable
period. Companies in the peer group index include Cagle's, Inc.,
Sanderson Farms Inc., Hormel Foods Corp., Smithfield Foods Inc. and Tyson
Foods
Inc.
The
first graph covers the period from November 21, 2003 through September
29, 2007
and shows the performance of the Company's single class of common stock.
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.
The
second graph covers the five fiscal year period ending September 29, 2007
and
shows the performance of the Company's Class A and Class B shares after
giving
effect to the reclassification into the Company's single class of common
stock
on November 21, 2003 based on a one to one exchange ratio. The third
graph covers the period from September 29, 2002 through November 20, 2003,
the
last date on which the Company's Class A and Class B shares traded on the
New
York Stock
Exchange prior to reclassification into a single new class of
shares of common stock.
The
stock price performance represented by these graphs is not necessarily
indicative of future stock performance.
|
|
|
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
|
(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.
43
Pilgrim's
Pride Corporation
Item
6. Selected
Financial
Data
|
(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
|
%
|
|||||||||||||||||||||