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
27,
2008
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: None
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Securities registered pursuant to
Section 12(g) of the Act: Common Stock, Par Value
$0.01
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Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities
Act. Yes ¨ No x
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 (Do not check if a smaller reporting
company) Smaller reporting company 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 29, 2008, was $829,596,309. For purposes of the foregoing
calculation only, all directors, executive officers and 5% beneficial owners have been deemed
affiliates.
Indicate by check mark whether the
registrant has filed all documents and reports required to be filed by Section
12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities
under a plan confirmed by a court. Yes x No ¨
Number of shares of the
Registrant’s Common Stock outstanding as of
December 11,
2008, was 74,055,733.
DOCUMENTS INCORPORATED BY
REFERENCE
Portions of the Registrant’s proxy statement for the 2009 annual meeting of stockholders are
incorporated by reference into Part III.
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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22
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Unresolved Staff
Comments
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34
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Properties
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34
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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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48
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of
Operations
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Quantitative and Qualitative
Disclosures about Market Risk
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75
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Financial Statements and
Supplementary Data (see Index to Financial Statements
and
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77
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Schedules
below)
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Changes in and Disagreements with
Accountants on Accounting and Financial
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77
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Disclosure
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Controls and
Procedures
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78
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Other
Information
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82
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PART III
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Directors and Executive Officers and Corporate
Governance
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83
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Executive
Compensation
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83
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Security Ownership of Certain
Beneficial Owners and Management and Related
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83
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Stockholder
Matters
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Certain Relationships and Related
Transactions,
and Director
Independence
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83
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Principal Accounting Fees and
Services
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84
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PART IV
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Exhibits and Financial Statement
Schedules
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85
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93
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INDEX TO FINANCIAL STATEMENTS AND
SCHEDULES
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96
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Consolidated Balance
Sheets as of September 27, 2008 and September 29, 2007
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98
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Consolidated
Statements of Operations for each of the three years
ended
September 27, 2008
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99
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Consolidated
Statements of Stockholders’ Equity for each
of the three years
ended
September 27, 2008
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100
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Consolidated
Statements of Cash Flows for each of the three years
ended
September 27, 2008
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101
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102
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Schedule
II—Valuation and Qualifying Accounts
for each of the three
years ended
September 27, 2008
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153
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PART
I
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Item
1.
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Pilgrim’s
Pride Corporation (“Pilgrim’s Pride” or the “Company”) operates on the basis of
a 52/53-week fiscal year that ends on the Saturday closest to September 30. The
reader should assume any reference we make to a particular year (for example,
2008) in this report applies to our fiscal year and not the calendar
year.
Chapter
11 Bankruptcy Filings
On
December 1, 2008 (the "Petition Date"), the Company and certain of its
subsidiaries (collectively, the “Debtor Subsidiaries,” and together with the
Company, the "Debtors") filed voluntary petitions for reorganization under
Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in the
United States Bankruptcy Court for the Northern District of Texas, Fort Worth
Division (the "Bankruptcy Court"). The cases are being jointly administered
under Case No. 08-45664. The Company’s operations in Mexico and certain
operations in the United States were not included in the filing (the “Non-filing
Subsidiaries”) and will continue to operate outside of the Chapter 11
process.
Effective December
1, 2008, the New York Stock
Exchange delisted our common stock as a result of the Company's filing of
its Chapter 11 petitions. Our common stock is now quoted on the Pink Sheets Electronic
Quotation Service under the ticker symbol "PGPDQ.PK."
The
filing of the Chapter 11 petitions constituted an event of default under
certain of our debt obligations, and those debt obligations became automatically
and immediately due and payable, subject to an automatic stay of any action to
collect, assert, or recover a claim against the Company and the application of
applicable bankruptcy law. As a result, the accompanying Consolidated Balance
Sheet as of September 27, 2008 includes a reclassification of $1,872.1 million
to reflect as current certain long-term debt under its credit facilities that,
absent the stay, would have become automatically and immediately due and
payable.
Chapter
11 Process
The
Debtors are currently operating as "debtors in possession" under the
jurisdiction of the Bankruptcy Court and in accordance with the applicable
provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In
general, as debtors in possession, we are authorized under Chapter 11 to
continue to operate as an ongoing business, but may not engage in transactions
outside the ordinary course of business without the prior approval of the
Bankruptcy Court.
On
December 2, 2008, the Bankruptcy
Court granted interim approval authorizing the Company and the
Debtor Subsidiaries organized in the
United States (the "US Subsidiaries") to enter into
a Post-Petition Credit Agreement (the
"DIP Credit Agreement") among the Company, as borrower, the US Subsidiaries, as
guarantors, Bank of
Montreal, as agent, and the lenders party thereto. On December 2, 2008, the
Company, the US Subsidiaries and the other parties entered into the DIP Credit
Agreement, subject to final approval of the Bankruptcy
Court.
The DIP Credit Agreement provides for an aggregate
commitment of up to $450 million, which permits borrowings on a revolving basis.
The Company received interim approval to access $365 million of the commitment pending
issuance of the final order by the Bankruptcy Court. Outstanding borrowings
under the DIP Credit Agreement will bear interest at a per annum rate equal to
8.0% plus the greatest of (i) the prime rate as established by the DIP agent
from time to time, (ii) the average federal funds rate plus 0.5%, or
(iii) the LIBOR rate plus 1.0%, payable monthly. The loans under the DIP Credit Agreement
were used to repurchase all receivables sold under the Company's Amended and Restated Receivables Purchase Agreement
dated September
26, 2008, as amended
(“RPA”) and may be used to fund the working capital
requirements of the Company and its subsidiaries according to a budget as
approved by the required lenders under the DIP Credit Agreement. For additional information on the
RPA, see Item 7. "Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Liquidity and Capital
Resources."
Actual borrowings by the Company under
the DIP Credit Agreement are subject to a borrowing base, which is a formula
based on certain eligible inventory and eligible receivables. The borrowing base
formula is reduced by pre-petition obligations under the Fourth
Amended and Restated Secured Credit Agreement dated as of February 8, 2007,
among the Company and certain of its subsidiaries, Bank of Montreal, as
administrative agent, and the lenders parties thereto, as amended, administrative and professional expenses,
and the amount owed by the Company and the Debtor Subsidiaries to any person on
account of the purchase price of agricultural products or services (including
poultry and livestock) if that person is entitled to any grower's or producer's lien or other
security arrangement. The borrowing base is also limited to 2.22 times the
formula amount of total eligible receivables. As of December 6, 2008, the applicable borrowing base
was $324.8 million and the amount available for borrowings under the DIP Credit
Agreement was $210.9 million.
The principal amount of outstanding
loans under the DIP Credit Agreement, together with accrued and unpaid interest
thereon, are payable in full at maturity on December 1, 2009, subject to
extension for an additional
six months with the approval of all lenders thereunder. All obligations under
the DIP Credit Agreement are unconditionally guaranteed by the US Subsidiaries
and are secured by a first priority priming lien on substantially all
of the assets of the Company and the US
Subsidiaries, subject to specified permitted liens in the DIP Credit
Agreement.
The DIP Credit Agreement allows the Company to provide advances to the Non-filing Subsidiaries of up to approximately $25 million at
any time
outstanding. Management believes that all of the Non-filing
Subsidiaries, including
the Company’s Mexican subsidiaries, will be able to operate within this
limitation.
For additional information on the DIP
Credit Agreement, see Item 7. "Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital
Resources."
The Bankruptcy Court has approved
payment of certain of the Debtors’ pre-petition obligations, including,
among other things, employee wages, salaries and benefits, and the Bankruptcy
Court has approved the Company's payment of vendors and other providers in the
ordinary course for goods and services received from and after the Petition Date
and other business-related payments necessary to maintain the operation of our businesses. The
Debtors have retained, subject to Bankruptcy Court approval, legal and
financial professionals to advise the Debtors on the bankruptcy proceedings and
certain other "ordinary course" professionals. From time to time, the
Debtors may seek Bankruptcy Court approval
for the retention of additional professionals.
Shortly
after the Petition Date, the Debtors began notifying all known current or
potential creditors of the Chapter 11 filing. Subject to certain exceptions
under the Bankruptcy Code, the Debtors’ Chapter 11 filing automatically
enjoined, or stayed, the continuation of any judicial or administrative
proceedings or other actions against the Debtors or their property to recover
on, collect or secure a claim arising prior to the Petition Date. Thus, for
example, most creditor actions to obtain possession of property from the
Debtors, or to create, perfect or enforce any lien against the property of the
Debtors, or to collect on monies owed or otherwise exercise rights or remedies
with respect to a pre-petition claim are enjoined unless and until the
Bankruptcy Court lifts the automatic stay. Vendors are being paid for goods
furnished and services provided after the Petition Date in the ordinary course
of business.
As
required by the Bankruptcy Code, the United States Trustee for the Northern
District of Texas appointed an official committee of unsecured creditors (the
"Creditors’ Committee"). The Creditors’ Committee and its legal representatives
have a right to be heard on all matters that come before the Bankruptcy Court
with respect to the Debtors. There can be no assurance that the Creditors’
Committee will support the Debtors’ positions on matters to be presented to the
Bankruptcy Court in the future or on any plan of reorganization, once proposed.
Disagreements between the Debtors and the Creditors’ Committee could protract
the Chapter 11 proceedings, negatively impact the Debtors’ ability to operate
and delay the Debtors’ emergence from the Chapter 11 proceedings.
Under
Section 365 and other relevant sections of the Bankruptcy Code, we may assume,
assume and assign, or reject certain executory contracts and unexpired leases,
including, without limitation, leases of real property and equipment, subject to
the approval of the Bankruptcy Court and certain other conditions. Any
description of an executory contract or unexpired lease in this report,
including where applicable our express termination rights or a quantification of
our obligations, must be read in conjunction with, and is qualified by, any
overriding rejection rights we have under Section 365 of the Bankruptcy
Code.
In order
to successfully exit Chapter 11, the Debtors will need to propose, and obtain
confirmation by the Bankruptcy Court of a plan of reorganization that satisfies
the requirements of the Bankruptcy Code. A plan of reorganization would, among
other things, resolve the Debtors’ pre-petition obligations, set forth the
revised capital structure of the newly reorganized entity and provide for
corporate governance subsequent to exit from bankruptcy.
The
Debtors have the exclusive right for 120 days after the Petition Date to file a
plan of reorganization and, if we do so, 60 additional days to obtain necessary
acceptances of our plan. We will likely file one or more motions to request
extensions of these time periods. If the Debtors’ exclusivity period lapsed, any
party in interest would be able to file a plan of reorganization for any of the
Debtors. In addition to being voted on by holders of impaired claims and equity
interests, a plan of reorganization must satisfy certain requirements of the
Bankruptcy Code and must be approved, or confirmed, by the Bankruptcy Court in
order to become effective.
The
timing of filing a plan of reorganization by us will depend on the timing and
outcome of numerous other ongoing matters in the Chapter 11 proceedings. There
can be no assurance at this time that a plan of reorganization will be confirmed
by the Bankruptcy Court or that any such plan will be implemented
successfully.
We have
incurred and will continue to incur significant costs associated with our
reorganization. The amount of these costs, which are being expensed as incurred
commencing in November 2008, are expected to significantly affect our results of
operations.
Under the
priority scheme established by the Bankruptcy Code, unless creditors agree
otherwise, pre-petition liabilities and post-petition liabilities must be
satisfied in full before stockholders are entitled to receive any distribution
or retain any property under a plan of reorganization. The ultimate recovery to
creditors and/or stockholders, if any, will not be determined until confirmation
of a plan or plans of reorganization. No assurance can be given as to what
values, if any, will be ascribed in the Chapter 11 cases to each of these
constituencies or what types or amounts of distributions, if any, they would
receive. A plan of reorganization could result in holders of our liabilities
and/or securities, including our common stock, receiving no distribution on
account of their interests and cancellation of their holdings. Because of such
possibilities, the value of our liabilities and securities, including our common
stock, is highly speculative. Appropriate caution should be exercised with
respect to existing and future investments in any of the liabilities and/or
securities of the Debtors. At this time there is no assurance we will be able to
restructure as a going concern or successfully propose or implement a plan of
reorganization.
Going
Concern Matters
The
accompanying Consolidated Financial Statements have been prepared assuming that
the Company will continue as a going concern. However, there is substantial
doubt about the Company’s ability to continue as a going concern based on the
factors previously discussed. The Consolidated Financial Statements do not
include any adjustments related to the recoverability and classification of
recorded assets or the amounts and classification of liabilities or any other
adjustments that might be necessary should the Company be unable to continue as
a going concern. The Company’s ability to continue as a going concern is
dependent upon the ability of the Company to return to historic levels of
profitability and, in the near term, restructure its obligations in a manner
that allows it to obtain confirmation of a plan of reorganization by the
Bankruptcy Court.
Management
is addressing the Company’s ability to return to profitability by conducting
profitability reviews at certain facilities in an effort to reduce
inefficiencies and manufacturing costs. The Company reduced production capacity
in the near term by closing two production complexes and consolidating
operations at a third production complex into its other facilities. This action
resulted in a headcount reduction of approximately 2,300 production employees.
Subsequent to September 27, 2008, the Company also reduced headcount by 335
non-production employees.
On
November 7, 2008, the Board of
Directors appointed a Chief Restructuring Officer (“CRO”) for the Company. The appointment of a CRO was a
requirement included in the waivers received from the Company’s lenders on October 27, 2008.
The CRO will assist the Company with
cost reduction initiatives, restructuring plans development and long-term
liquidity improvement. The CRO reports to the Board of Directors of the
Company.
In order
to emerge from bankruptcy, the Company will need to obtain alternative financing
to replace the DIP Credit Agreement and to satisfy the secured claims of its
pre-bankruptcy creditors.
General
Development of Business
Overview
The
Company, which was incorporated in Texas in 1968 and re-incorporated in Delaware
in 1986, is the successor to a partnership founded in 1946 that operated a
retail feed store. Over the years, the Company grew as the result of expanding
markets, increased market penetration and various acquisitions of farming
operations and poultry processors. This included the significant acquisitions in
2004 and 2007 discussed below. Pilgrim’s Pride is one of the largest chicken
companies in the United States (“US”), Mexico and Puerto Rico. The Company’s prepared chicken products meet the needs of some of the
largest customers in the food service industry across the US. Under the well-established
Pilgrim's Pride brand name,
our fresh chicken retail line is sold in the southeastern, central, southwestern and western regions of the US, throughout Puerto Rico, and in the northern and central regions of Mexico. Additionally, the Company exports commodity chicken products to 80
countries. As a vertically integrated company, we
control every phase of the production of our products. We operate feed mills, hatcheries, processing
plants and distribution centers in 14 US states, Puerto Rico and Mexico. We believe this vertical integration has made us
one of the highest-quality producers of chicken in North America.
We have
consistently applied a long-term business strategy of focusing our growth
efforts on the historically higher-value prepared chicken products and have
become a recognized industry leader in this market. Accordingly, we focused our
sales efforts on the foodservice industry, principally chain restaurants and
food processors. More recently, we also focused our sales efforts on retailers
seeking value-added products. In 2008, we sold 8.4 billion pounds of dressed
chicken and generated net sales of $8.5 billion. In 2008, our US operations,
including Puerto Rico, accounted for 93.2% of our net sales. Our Mexico
operations generated the remaining 6.8% of our net sales.
Recent
Business Acquisition Activities
In
December 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, in January 2007, Gold Kist became our wholly
owned subsidiary. Gold Kist operated a fully-integrated chicken production
business that included live production, processing, marketing and distribution.
This acquisition positioned us as the largest chicken company in the US, and
that position provided us with opportunities to expand our geographic reach and
customer base and further pursue value-added and prepared chicken
opportunities.
In
November 2003, we completed the purchase of all the outstanding stock of the
corporations represented as the ConAgra Foods, Inc. chicken division (“ConAgra
Chicken”). The acquisition provided us with additional lines of specialty
prepared chicken products, well-known brands, well-established distributor
relationships, and processing facilities located in the southeastern region of
the US. The acquisition also included the largest distributor of chicken
products in Puerto Rico.
Financial
Information about Segments
We
operate in two reportable business segments as (i) a producer and seller of
chicken products and (ii) 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.”
Narrative
Description of Business
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Products and
Markets
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Our
chicken products consist primarily of:
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(1)
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Fresh
chicken products, which are refrigerated (non-frozen) whole or cut-up
chickens 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.
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(2)
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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.
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(3)
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Export
and other chicken products, which are primarily parts and whole chicken,
either refrigerated or frozen for US export or domestic use, and prepared
chicken products for US
export.
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Our
chicken products are sold primarily to:
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(1)
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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 chicken and chicken parts in trays, bags or other consumer
packs.
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(2)
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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
chicken parts to fully-cooked and frozen, breaded or non-breaded chicken
parts or formed products.
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(3)
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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 chicken products, consist of whole
chickens and chicken parts sold primarily in bulk, non-branded form,
either refrigerated to distributors in the US or frozen for distribution
to export markets.
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Our other
products consist of:
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(1)
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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.
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(2)
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The
production and sale of table eggs, commercial feeds and related items,
live hogs and proteins.
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The
following table sets forth, for the periods beginning with 2004, net sales
attributable to each of our primary product lines and markets served with those
products. We based the table on our internal sales reports and their
classification of product types and customers.
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2008
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2007(a)
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2006
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2005
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2004(a)
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(52
weeks)
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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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US
chicken:
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(In
thousands)
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Prepared
chicken:
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Foodservice
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$ | 2,033,489 | $ | 1,897,643 | $ | 1,567,297 | $ | 1,622,901 | $ | 1,647,904 | ||||||||||
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Retail
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518,576 | 511,470 | 308,486 | 283,392 | 213,775 | |||||||||||||||
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Total
prepared chicken
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2,552,065 | 2,409,113 | 1,875,783 | 1,906,293 | 1,861,679 | |||||||||||||||
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Fresh
chicken:
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Foodservice
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2,550,339 | 2,280,057 | 1,388,451 | 1,509,189 | 1,328,883 | |||||||||||||||
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Retail
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1,041,446 | 975,659 | 496,560 | 612,081 | 653,798 | |||||||||||||||
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Total
fresh chicken
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3,591,785 | 3,255,716 | 1,885,011 | 2,121,270 | 1,982,681 | |||||||||||||||
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Export
and other:
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Export:
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Prepared
chicken
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94,795 | 83,317 | 64,338 | 59,473 | 34,735 | |||||||||||||||
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Fresh
chicken
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818,239 | 559,429 | 257,823 | 303,150 | 212,611 | |||||||||||||||
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Total
export(c)
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913,034 | 642,746 | 322,161 | 362,623 | 247,346 | |||||||||||||||
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Other
chicken by-products
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20,163 | 20,779 | 15,448 | 21,083 |
(b)
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|||||||||||||||
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Total
export and other
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933,197 | 663,525 | 337,609 | 383,706 | 247,346 | |||||||||||||||
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Total
US chicken
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7,077,047 | 6,328,354 | 4,098,403 | 4,411,269 | 4,091,706 | |||||||||||||||
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Mexico
chicken
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543,583 | 488,466 | 418,745 | 403,353 | 362,442 | |||||||||||||||
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Total
chicken
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7,620,630 | 6,816,820 | 4,517,148 | 4,814,622 | 4,454,148 | |||||||||||||||
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Other
products:
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||||||||||||||||||||
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US
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869,850 | 661,115 | 618,575 | 626,056 | 600,091 | |||||||||||||||
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Mexico
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34,632 | 20,677 | 17,006 | 20,759 | 23,232 | |||||||||||||||
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Total
other products
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904,482 | 681,792 | 635,581 | 646,815 | 623,323 | |||||||||||||||
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Total
net sales
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$ | 8,525,112 | $ | 7,498,612 | $ | 5,152,729 | $ | 5,461,437 | $ | 5,077,471 | ||||||||||
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Total
prepared chicken
|
$ | 2,646,860 | $ | 2,492,430 | $ | 1,940,121 | $ | 1,965,766 | $ | 1,896,414 | ||||||||||
|
(a)
|
The
Gold Kist acquisition on December 27, 2006 and the ConAgra Chicken
acquisition on November 23, 2003 have been accounted for as
purchases.
|
|
(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 products.
Prior to 2005, by-product sales were not specifically identifiable within
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 2005 would not be dissimilar in
2004.
|
|
(c)
|
Export
items include certain chicken parts that have greater value in the
overseas markets than in the
US.
|
The
following table sets forth, beginning with 2004, the percentage of net US
chicken 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.
|
2008
|
2007(a)
|
2006
|
2005
|
2004(a)
|
||||||||||||||||
|
Prepared
chicken:
|
||||||||||||||||||||
|
Foodservice
|
28.8 | % | 30.1 | % | 38.2 | % | 36.8 | % | 40.3 | % | ||||||||||
|
Retail
|
7.3 | % | 8.1 | % | 7.5 | % | 6.4 | % | 5.2 | % | ||||||||||
|
Total
prepared chicken
|
36.1 | % | 38.2 | % | 45.7 | % | 43.2 | % | 45.5 | % | ||||||||||
|
Fresh
chicken:
|
||||||||||||||||||||
|
Foodservice
|
36.0 | % | 36.0 | % | 33.9 | % | 34.2 | % | 32.5 | % | ||||||||||
|
Retail
|
14.7 | % | 15.4 | % | 12.1 | % | 13.9 | % | 16.0 | % | ||||||||||
|
Total
fresh chicken
|
50.7 | % | 51.4 | % | 46.0 | % | 48.1 | % | 48.5 | % | ||||||||||
|
Export
and other:
|
||||||||||||||||||||
|
Export:
|
||||||||||||||||||||
|
Prepared
chicken
|
1.3 | % | 1.3 | % | 1.6 | % | 1.3 | % | 0.8 | % | ||||||||||
|
Fresh
chicken
|
11.6 | % | 8.8 | % | 6.3 | % | 6.9 | % | 5.2 | % | ||||||||||
|
Total
export(c)
|
12.9 | % | 10.1 | % | 7.9 | % | 8.2 | % | 6.0 | % | ||||||||||
|
Other
chicken by-products
|
0.3 | % | 0.3 | % | 0.4 | % | 0.5 | % |
(b)
|
|||||||||||
|
Total
export and other
|
13.2 | % | 10.4 | % | 8.3 | % | 8.7 | % | 6.0 | % | ||||||||||
|
Total
US chicken
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
|
Total
prepared chicken as a percent of US chicken
|
37.4 | % | 39.5 | % | 47.3 | % | 44.5 | % | 46.3 | % | ||||||||||
|
(a)
|
The
Gold Kist acquisition on December 27, 2006 and the ConAgra Chicken
acquisition on November 23, 2003 have been accounted for as
purchases.
|
|
(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 products.
Prior to 2005, by-product sales were not specifically identifiable within
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 2005 would not be dissimilar in
2004.
|
|
(c)
|
Export
items include certain chicken parts that have greater value in the
overseas markets than in the US.
|
UNITED
STATES
Product
Types
Fresh Chicken
Overview. Our fresh chicken business is an important component
of our sales and accounted for $3,591.8 million, or 50.7%, of our total US
chicken sales for 2008. In addition to maintaining sales of mature, traditional
fresh chicken products, our strategy has been to shift the mix of our US fresh
chicken products by continuing to increase sales of faster-growing products,
such as marinated whole chicken and chicken parts, and to continually shift
portions of this product mix into the higher-value prepared chicken
category.
Most
fresh chicken products are sold to established customers, based upon certain
weekly or monthly market prices reported by the US Department of Agriculture
(“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.
Prepared Chicken
Overview. During 2008, $2,522.1 million of our US chicken
sales were in prepared chicken products to foodservice customers and retail
distributors, as compared to $1,861.7 million in 2004. These numbers reflect the
impact of our historical strategic focus for growth in the prepared chicken
markets and our acquisition of Gold Kist. The market for prepared chicken
products has experienced, and we believe will continue to experience, greater
growth and higher average sales prices than fresh chicken products. Also,
the production and sale in the US of prepared chicken products reduce the impact
of the costs of feed ingredients on our profitability. Feed ingredient costs are
the single largest component of our total US cost of sales, representing
approximately 38.1% of our total US cost of sales for 2008. The production of
feed ingredients is positively or negatively affected primarily by the global
level of supply inventories, demand for feed ingredients, the agricultural
policies of the US and foreign governments and weather patterns throughout the
world. 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. Many times, these prices are dependent upon
the customer's location, volume, product specifications and other
factors.
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 US or frozen for distribution
to export markets, and branded and non-branded prepared chicken products for
distribution to export markets. In 2008, approximately $933.2 million, or
13.2%, of our total US chicken sales were attributable to US chicken export and
other products. These exports and other products, other than the prepared
chicken products, have historically been characterized by lower prices and
greater price volatility than our more value-added product lines.
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 US. 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 positioned to be the primary or secondary supplier to
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 operational 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 2003 through 2007, sales of chicken products to the foodservice
market grew at a compounded annual growth rate of approximately 7.5%, versus
6.6% growth for the chicken industry overall. Foodservice growth, outside of any
temporary effects resulting from the current recessionary impacts being
experienced in the US, 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 4.9% from 2003 through 2007 and are
projected to grow at a 4.8% compounded annual growth rate from 2008 through
2012. Due to internal growth and the impact of both the Gold Kist and ConAgra
Chicken acquisitions, our sales to the foodservice market from 2004 through 2008
grew at a compounded annual growth rate of 11.4% and represented 64.8% of the
net sales of our US chicken operations in 2008.
Foodservice—Prepared
Chicken. Our prepared chicken sales to the foodservice market
were $2,033.5 million in 2008 compared to $1,647.9 million in 2004, a compounded
annual growth rate of approximately 5.4%. In addition to the significant
increase in sales created by the acquisition of Gold Kist, we attribute this
growth in sales of prepared chicken to the foodservice market to a number of
factors:
|
·
|
There
has been significant growth in the number of foodservice operators
offering chicken on their menus and in the number of chicken items
offered.
|
|
·
|
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.
|
|
·
|
There
is a strong need among larger foodservice companies for a limited-source
supplier base in the prepared chicken 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 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.
|
|
·
|
As
a result of the experience and reputation developed with larger customers,
we have increasingly become the principal supplier to mid-sized
foodservice organizations.
|
|
·
|
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.
|
|
·
|
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 US 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. Our fresh chicken products sales to the foodservice
market were $2,550.3 million in 2008 compared to $1,328.9 million in 2004, a
compounded annual growth rate of approximately 17.7%.
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.
Due to
internal growth and the impact of both the Gold Kist and ConAgra Chicken
acquisitions, our sales to the retail market from 2004 through 2008 grew at a
compounded annual growth rate of 15.8% and represented 22.0% of the net sales of
our US chicken operations in 2008.
Retail—Prepared
Chicken. We sell retail-oriented prepared chicken products
primarily to grocery store chains located throughout the US. Our prepared
chicken products sales to the retail market were $518.6 million in 2008 compared
to $213.8 million in 2004, a compounded annual growth rate of approximately
24.8%. 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 US. Our fresh
chicken sales to the retail market were $1,041.4 million in 2008 compared to
$653.8 million in 2004, a compounded annual growth rate of approximately 12.3%
resulting primarily from our acquisition of Gold Kist in 2007. 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 chicken products, consist of whole
chickens and chicken parts sold primarily in bulk, non-branded form either
refrigerated to distributors in the US or frozen for distribution to export
markets. In the US, 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 US-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 US operations given our
concentration on prepared chicken products and the US customers’ general
preference for white chicken meat. We have also begun selling prepared chicken
products for export to the international divisions of our US chain restaurant
customers. We believe that US chicken exports will continue to grow as worldwide
demand increases for high-grade, low-cost meat protein sources. 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 Other Products
We have
regional distribution centers located in Arizona, 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. Chicken sales from our regional distribution centers are
included in the chicken sales amounts contained in the above tables; however,
all non-chicken sales amounts are contained in the Other Products sales in the
above tables.
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
US 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. US
egg prices are determined weekly based upon reported market prices. The US egg
industry has been consolidating over the last few years, with the 25 largest
producers accounting for more than 65% of the total number of egg laying hens in
service during 2008. We compete with other US 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.
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 US feed mills.
We also
have a small pork operation that we acquired through the Gold Kist acquisition
that raises and sells live hogs to processors.
MEXICO
Background
The
Mexico market represented approximately 6.8% of our net sales in 2008. 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 US, 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 leader in innovation for fresh products. The market for
value-added products is increasing. Our strategy is to capitalize on this trend
through our vast US 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 2 of the
32 Mexican States, which in total represent 99.7% of the Mexican
population.
Foreign
Operations Risks
Our
foreign operations pose special risks to our business and operations. A
discussion of foreign operations risks is included in Item 1A. “Risk
Factors.”
GENERAL
Competitive
Conditions
The
chicken industry is highly competitive and our largest US competitor has greater
financial and marketing resources than we do. In addition, our liquidity
constraints have had a negative effect on our competitive position, relative to
our competitors that are less highly leveraged. See Item 7. “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources.” In the US, Mexico and Puerto Rico,
we compete principally with other vertically integrated poultry companies. We
are one of the largest producers of chicken in the US, Mexico and Puerto
Rico, and the second largest producer in Mexico. The second largest producer in
the US is Tyson Foods, Inc. The largest producer in Mexico is Industrias Bachoco
S.A.B. de C.V.
In
general, the competitive factors in the US chicken industry include price,
product quality, product development, brand identification, breadth of product
line and customer service. Competitive factors vary by major market. In the US
retail market, we believe that product quality, brand awareness, customer
service and price are the primary bases of competition. In the foodservice
market, competition is based on consistent quality, product development, service
and price. There is some competition with non-vertically integrated further
processors in the US prepared chicken 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. In
July 2003, the US and Mexico entered into a safeguard agreement with regard to
imports into Mexico of chicken leg quarters from the US. Under this agreement, a
tariff rate for chicken leg quarters of 98.8% of the sales price was
established. This tariff was imposed because of concerns that the duty-free
importation of such products as provided by the North American Free Trade
Agreement would injure Mexico’s poultry industry. This tariff rate was
eliminated on January 1, 2008. As a result of the elimination of this tariff, we
expect greater amounts of chicken to be imported into Mexico from the US. This
could negatively affect the profitability of Mexican chicken producers,
including our Mexico operations.
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 16% of our net sales in 2008, and
our largest customer, Wal-Mart Stores Inc., accounted for 11% of our net
sales.
Regulation
and Environmental Matters
The
chicken industry is 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 US and by similar governmental agencies in Mexico. Our chicken
processing facilities in the US are subject to on-site examination, inspection
and regulation by the USDA. The FDA inspects the production of our feed mills in
the US. Our Mexican food processing facilities and feed mills are subject to
on-site examination, inspection and regulation by a Mexican governmental agency
that 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 27, 2008, we employed approximately 44,750 persons in the US and
approximately 5,000 persons in Mexico. There are 13,771 employees at various
facilities in the US who are members of collective bargaining units. In Mexico,
2,832 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 US Highway 271 North, Pittsburg, Texas 75686-0093.
As
required by the rules of the New York Stock Exchange (“NYSE”), the Company
submitted its unqualified Section 303A.12(a) Co-Principal Executive Officers
Certification for the preceding year to the NYSE.
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
|
80
|
Senior
Chairman of the Board
|
||
|
Lonnie
Ken Pilgrim
|
50
|
Chairman
of the Board
|
||
|
J.
Clinton Rivers
|
49
|
President,
Chief Executive Officer, and Director
|
||
|
Richard
A. Cogdill
|
48
|
Chief
Financial Officer, Secretary, Treasurer and Director
|
||
|
Robert
A. Wright
|
54
|
Chief
Operating Officer
|
||
|
William
K. Snyder
|
49
|
Chief
Restructuring Officer
|
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. Mr. Pilgrim served as Chairman of the
Board and Interim President from January 2008 to March 2008. 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.
J. Clinton Rivers has served as President,
Chief Executive Officer and Director since March 2008. Mr. Rivers served as
Chief Operating Officer from October 2004 to March 2008. 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.
Richard A. Cogdill has 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.
Robert A. Wright has served
as Chief Operating Officer since April 2008. Mr. Wright served as Executive Vice
President of Sales and Marketing from June 2004 to April 2008. 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.
William K. Snyder has served
as Chief Restructuring Officer since November 2008. Mr. Snyder has served as a Managing Partner of CRG Partners Group, LLC ("CRG"), a
provider of corporate turnaround and restructuring services, since 2001. Mr.
Snyder will continue to be employed by CRG and will perform service as Chief
Restructuring Officer of the Company through CRG. In connection with his position as Managing Partner
of CRG, Mr. Snyder served as court-appointed examiner of Mirant Corporation, Corporate Responsible Partner of Furrs
Restaurant Group Inc., Chief Financial Officer of Reliant Building Products
Inc., and as a senior executive officer of a number of private
companies. Previously, Mr. Snyder was president of his own financial consulting
company, The Snyder Company.
Item 1A. Risk Factors
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 most
significant 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 may adversely affect our business, operations,
industry, financial position and financial performance in the
future.
Chapter 11
Filing. We filed for protection under Chapter 11 of the
Bankruptcy Code on December 1, 2008.
During
our Chapter 11 proceedings, our operations, including our ability to execute our
business plan, are subject to the risks and uncertainties associated with
bankruptcy. Risks and uncertainties associated with our Chapter 11 proceedings
include the following:
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Actions
and decisions of our creditors and other third parties with interests in
our Chapter 11 proceedings may be inconsistent with our
plans;
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Our
ability to obtain court approval with respect to motions in the Chapter 11
proceedings prosecuted from time to
time;
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Our
ability to develop, prosecute, confirm and consummate a plan of
reorganization with respect to the Chapter 11
proceedings;
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Our
ability to obtain and maintain commercially reasonable terms with vendors
and service providers;
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Our
ability to maintain contracts that are critical to our
operations;
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Our
ability to retain management and other key individuals;
and
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Risks
associated with third parties seeking and obtaining court approval to
terminate or shorten the exclusivity period for us to propose and confirm
a plan of reorganization, to appoint a Chapter 11 trustee or to
convert the cases to Chapter 7
cases.
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These
risks and uncertainties could affect our business and operations in various
ways. For example, negative events or publicity associated with our Chapter 11
proceedings could adversely affect our sales and relationships with our
customers, as well as with vendors and employees, which in turn could adversely
affect our operations and financial condition, particularly if the Chapter 11
proceedings are protracted. Also, transactions outside the ordinary course of
business are subject to the prior approval of the Bankruptcy Court, which may
limit our ability to respond timely to certain events or take advantage of
certain opportunities.
Because
of the risks and uncertainties associated with our Chapter 11 proceedings, the
ultimate impact that events that occur during these proceedings will have on our
business, financial condition and results of operations cannot be
accurately predicted or quantified. We cannot provide any assurance as to what
values, if any, will be ascribed in our bankruptcy proceedings to our various
pre-petition liabilities, common stock and other securities. As a result of
Chapter 11 proceedings, our currently outstanding common stock could have
no value and may be canceled under any plan of reorganization we might propose
and, therefore, we believe that the value of our various pre-petition
liabilities and other securities is highly speculative. Accordingly, caution
should be exercised with respect to existing and future investments in any of
these liabilities or securities.
Our stock is no longer listed on a
national securities exchange. It will likely be more difficult
for stockholders and investors to sell our common stock or to obtain accurate
quotations of the share price of our common stock.
Effective
December 1, 2008, the NYSE delisted our common stock from trading. Our stock is
now traded over the counter and is quoted on the Pink Sheet Electronic Quotation
Service (“Pink Sheets”). We can provide no assurance that we will be able to
re-list our common stock on a national securities exchange or that the stock
will continue being traded on the Pink Sheets. The trading of our
common stock over the counter negatively impacts the trading price of our common
stock and the levels of liquidity available to our stockholders. In addition, securities that trade on the Pink Sheets are not
eligible for margin loans and make our common stock subject to the provisions of
Rule 15g-9 of the Securities Exchange Act of 1934, commonly referred to as the
"penny stock rule." In connection with the delisting of our stock, there may also be other negative implications, including the potential
loss of confidence in our Company by suppliers, customers and employees and the
loss of institutional investor interest in our common stock.
Substantial
Leverage. Our substantial indebtedness could adversely affect
our financial condition.
We
currently have a substantial amount of indebtedness, which could adversely
affect our financial condition and could have important consequences to you and
we are not in compliance with covenants in a substantial portion of our
indebtedness. Our indebtedness:
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Makes
it more difficult for us to satisfy our obligations under our debt
securities;
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Increases
our vulnerability to general adverse economic
conditions;
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Limits
our ability to obtain necessary financing and to fund future working
capital, capital expenditures and other general corporate
requirements;
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Requires
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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Limits
our flexibility in planning for, or reacting to, changes in our business
and the industry in which we
operate;
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Places
us at a competitive disadvantage compared to our competitors that have
less debt;
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Limits
our ability to pursue acquisitions and sell assets;
and
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Limits,
along with the financial and other restrictive covenants in our
indebtedness, our ability to borrow additional funds. Failing to comply
with those covenants could 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 and chicken and
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control.
Liquidity. Our liquidity
position imposes significant risks to our operations.
Because of the public disclosure of our
liquidity constraints, our ability to maintain normal credit terms with our
suppliers has become impaired. We have been required to pay cash in advance to certain vendors and have experienced
restrictions on the availability of trade credit, which has further reduced our
liquidity. If liquidity problems persist, our suppliers could refuse to provide
key products and services in the future. In addition, due to public perception
of our financial condition and results of operations, in particular with regard
to our potential failure to meet our debt obligations, some customers have
become reluctant to enter into long-term agreements with us.
The DIP Credit Agreement provides for an
aggregate commitment of up to $450 million, which permits borrowings on a
revolving basis. The Company received interim approval to access
$365 million of the commitment pending
issuance of the final order by the Bankruptcy Court. As of December 6, 2008, the applicable borrowing
base was approximately $324.8 million and the amount available for
borrowings under the DIP Credit Agreement was $210.9 million. There can be no
assurance that the amounts of cash from operations together with amounts
available under our DIP Credit Agreement will be sufficient to fund operations.
In the event that cash flows and available borrowings under the DIP
Credit Agreement are not sufficient to meet our liquidity
requirements, we may be required to seek additional financing. There can be no
assurance that such additional financing would be available or, if available,
offered on acceptable terms. Failure to secure any necessary additional
financing would have a material adverse impact on our operations. For additional
information on our liquidity, see Item 7. “Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Liquidity and Capital
Resources.”
If the
Company is unable to return to profitability, we may be required to record an
impairment on tangible assets such as facilities and equipment as well as
intangible assets such as intellectual property, which would have a negative
impact on our financial results.
Cyclicality and Commodity Prices.
Industry cyclicality can affect our earnings, especially due to
fluctuations in commodity prices of feed ingredients and chicken.
Profitability
in the chicken industry is materially affected by the commodity prices of feed
ingredients and chicken, which are determined by supply and demand factors. As a
result, the chicken industry is subject to cyclical earnings
fluctuations.
The
production of feed ingredients is positively or negatively affected primarily by
the global level of supply inventories and demand for feed ingredients, the
agricultural policies of the United States and foreign governments and weather
patterns throughout the world. 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 or deliver
products.
The cost
of corn and soybean meal, our primary feed ingredients, increased significantly
from August 2006 to July 2008, before moderating by the date of this report, and
there can be no assurance that the price of corn or soybean meal will not
significantly rise again 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, and may continue to have, a material adverse effect
on our operating results, which has resulted in, and may continue to result in,
additional non-cash expenses due to impairment of the carrying amounts of
certain of our assets. We periodically seek, to the extent available, to enter
into advance purchase commitments or financial derivative 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 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 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.
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, business interruption 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 industry with other
vertically integrated poultry companies may make us unable to compete
successfully in these industries, which could adversely affect our
business.
The
chicken industry is highly competitive. In both the US and Mexico, we primarily
compete with other vertically integrated chicken companies.
In
general, the competitive factors in the US chicken 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 US 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 chicken business.
In addition, our filing for protection under Chapter 11 of the Bankruptcy Code
and the associated risks and uncertainties may be used by competitors in an
attempt to divert our existing customers or may discourage future customers from
purchasing our products under long-term arrangements.
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 US and
Mexico entered into a safeguard agreement with regard to imports into Mexico of
chicken leg quarters from the US. Under this agreement, a tariff rate for
chicken leg quarters of 98.8% of the sales price was established. On January 1,
2008, the tariff was eliminated. In connection with the elimination of those
tariffs in Mexico, increased competition from chicken imported into Mexico from
the US 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 16% of our net sales in 2008, and
our largest customer, Wal-Mart Stores Inc., accounted for 11% of our net sales.
Our filing for protection under Chapter 11 of the Bankruptcy Code and the
associated risks and uncertainties may affect our customers' perception of our
business and increase our risk of losing key customers. 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.
Continued 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 any remaining separate 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 has been and remains 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 remaining operations of Gold Kist into
our existing operations, 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.
We do not
currently intend to make any acquisition in the near future. However, if we do,
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.
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.
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 US operations, given our concentration on
prepared chicken products and the US 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
US-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.
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 US
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 US 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, we are unable to ensure that all of our
employees are United States citizens and/or persons legally authorized to work
in the United States. US Immigration and Customs Enforcement has recently been
investigating identity theft within our workforce. With our cooperation,
during 2008 US Immigration and Customs Enforcement arrested approximately
350 of our employees believed to have engaged in identity theft at five of our
facilities. No assurances can be given that further enforcement efforts by
governmental authorities will not disrupt a portion of our workforce or our
operations at one or more of our facilities, thereby negatively impacting our
business.
Key Employee
Retention. Loss of essential employees could have a
significant negative impact on our business.
Our success is largely dependent on the
skills, experience, and efforts of our management and other employees.
Our deteriorating financial performance, along with our Chapter 11
proceedings, creates uncertainty that could lead to an increase in unwanted
attrition. The loss of the
services of one or more members of our senior management or of numerous
employees with essential skills could have a negative effect on our business,
financial condition and results of operations. If we are not able to attract
talented, committed individuals to fill vacant positions when needs arise, it
may adversely affect our ability to achieve our business
objectives.
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, production or availability of feed ingredients, 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.
Control of Voting
Stock. Control over the Company is maintained by affiliates
and 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 62.25%
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 31 poultry processing plants located in Alabama, Arkansas, Florida,
Georgia, Kentucky, Louisiana, North Carolina, South Carolina, Tennessee, Texas,
Virginia, and West Virginia. We have one chicken processing plant in Puerto Rico
and three chicken processing plants in Mexico.
The US
chicken processing plants have weekly capacity to process 43.0 million broilers
and operated at 90.7% of capacity in 2008.
Our
Mexico facilities have the capacity to process 3.27 million broilers per week
and operated at 82% of capacity in 2008. 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
US operations.
In the
US, the processing plants are supported by 41 hatcheries, 29 feed mills and 12
rendering plants. The hatcheries, feed mills and rendering plants operated at
88%, 85% and 69% of capacity, respectively, in 2008. In Puerto Rico, the
processing plant is supported by one hatchery and one feed mill which operated
at 82% and 80% of capacity, respectively, in 2008. 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%, 84% and 69% of capacity, respectively, in 2008.
We also
operate eleven prepared chicken 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 1,453 million
pounds of further processed product per year and in 2008 operated at
approximately 90% of capacity.
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
five regional distribution centers located in Arizona, Texas, and Utah, one of
which we own and four 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
As
discussed in Part I above, on December 1, 2008, the Debtors filed voluntary
petitions for reorganization under Chapter 11 of the Bankruptcy Code in the
Bankruptcy Court. The cases are being jointly administered under Case No.
08-45664. The Debtors continue to operate their business as
"debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in
accordance with the applicable provisions of the Bankruptcy Code and orders of
the Bankruptcy Court. As of the date of the Chapter 11 filing,
virtually all pending litigation against the Company (including the actions
described below) is stayed as to the Company, and absent further order of the
Bankruptcy Court, no party, subject to certain exceptions, may take any action,
also subject to certain exceptions, to recover on pre-petition claims against
the Debtors. At this time it is not possible to predict the outcome of the
Chapter 11 filings or their effect on our business or the actions described
below.
On
October 29, 2008, Ronald Alcaldo filed suit in the U.S. District Court for the
Eastern District of Texas, Marshall Division, styled Ronald Alcaldo, Individually and On
Behalf of All Others Similarly Situated v. Pilgrim's Pride Corporation, et
al, against the Company and individual defendants Lonnie “Bo” Pilgrim,
Lonnie Ken Pilgrim, J. Clinton Rivers, Richard A. Cogdill and Clifford E.
Butler. The complaint alleges that the Company and the individual defendants
violated sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as
amended, and Rule 10b-5 promulgated thereunder, by allegedly failing to disclose
that "(a) the Company’s hedges to protect it from adverse changes in costs were
not working and in fact were harming the Company’s results more than helping;
(b) the Company’s inability to continue to use illegal workers would adversely
affect its margins; (c) the Company’s financial results were continuing to
deteriorate rather than improve, such that the Company’s capital structure was
threatened; (d) the Company was in a much worse position than its competitors
due to its inability to raise prices for consumers sufficient to offset cost
increases, whereas it competitors were able to raise prices to offset higher
costs affecting the industry; and (e) the Company had not made sufficient
changes to its business to succeed in the more difficult industry conditions."
Mr. Alcaldo further alleges that he purports to represent a class of all persons
or entities who acquired the common stock of the Company from May 5, 2008
through September 24, 2008. The complaint seeks unspecified injunctive relief
and an unspecified amount of damages. On November 21, 2008, the Company and the
individual defendants filed a Motion to Dismiss the lawsuit for failure to state
a claim, failure to plead fraud with particularity, and failure to satisfy the
heightened pleading requirements of the Private Securities Litigation Reform Act
of 1995. The Company intends to defend vigorously against the merits of the
action and any attempts by Alcaldo to certify a class action. The likelihood of
an unfavorable outcome or the amount or range of any possible loss to the
Company cannot be determined at this time.
The Wage
and Hour Division of the US 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 activities such as
donning and doffing clothing and personal protective equipment. Due, in part, to
the government investigation and the recent US 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 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 US 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; “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 US District Court for the Northern District of
Georgia, Atlanta Division, filed on May 21, 2007; Kristin Roebuck et al v.
Pilgrim’s Pride Corporation, in the US District Court, Athens, Georgia, Middle
District, filed on May 23, 2007; and Elaine Chao v. Pilgrim’s Pride Corporation,
in the US District Court, Dallas, Texas, Northern District, filed on August 6,
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. The parties are currently negotiating the scope of discovery. On
March 13, 2008, Judge Barnes issued an opinion and order finding that plaintiffs
and potential class members are similarly situated and conditionally certifying
the class for a collective action. On May 14, 2008, the Court issued its order
modifying and approving the court-authorized notice for current and former
employees to opt into the class. Persons who choose to opt into the class are to
do so within 90 days after the date on which the first notice was mailed. The
opt-in period is now closed. As of October 2, 2008, approximately 12,605
plaintiffs have opted into the class.
As of the
date of this 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 US District
Court for the Northern District of Georgia, Gainesville Division, filed on
December 21, 2006; Harris v. Gold Kist, Inc., in the US District Court for the
Northern District of Georgia, Newnan Division, filed on December 21, 2006;
Blanke v. Gold Kist, Inc., in the US District Court for the Southern District of
Georgia, Waycross Division, filed on December 21, 2006; Clarke v. Gold Kist,
Inc., in the US District Court for the Middle District of Georgia, Athens
Division, filed on December 21, 2006; Atchison v. Gold Kist, Inc., in the US
District Court for the Northern District of Alabama, Middle Division, filed on
October 3, 2006; Carlisle v. Gold Kist, Inc., in the US District Court for the
Northern District of Alabama, Middle Division, filed on October 2, 2006; Benbow
v. Gold Kist, Inc., in the US District Court for the District of South Carolina,
Columbia Division, filed on October 2, 2006; Bonds v. Gold Kist, Inc., in the US
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 Pride 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 an agreement between the
parties, which was approved by Court-order on June 6, 2007, these cases have
been consolidated with the Benbow case. On that date,
Plaintiffs were authorized to send notice to individuals regarding the pending
lawsuits and were instructed that individuals had three months to file consents
to opting in as plaintiffs in the consolidated cases. The opt-in period is now
closed. To date, there are approximately 3,006 named plaintiffs and opt-in
plaintiffs in the consolidated cases. The Company and Plaintiffs have jointly
requested the Court to remove 367 opt-in plaintiffs because they do not fall
within
the class
definition. The Court recently ordered that Pilgrim’s can depose and serve
written discovery on the named plaintiffs and approximately 10% of the opt-in
class. 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 condition, results of operations or cash flows.
Item 4. Submission of Matters to a Vote of Security
Holders
None.
PART
II
|
|
Item 5.Market for the Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities
|
Market
Information
During
the period covered by this report, the Company’s common stock was traded on the
NYSE under the ticker symbol “PPC”. Effective December 1, 2008, the NYSE delisted our common stock
as a result of the Company's filing of its Chapter 11
petitions. Our common stock is now quoted on the Pink Sheets Electronic
Quotation Service under the ticker symbol "PGPDQ.PK."
High and low prices of and dividends
relating to the Company’s common stock for the periods indicated
were:
|
2008
Prices
|
2007
Prices
|
Dividends
|
||||||||||||||||||||||
|
Quarter
|
High
|
Low
|
High
|
Low
|
2008
|
2007
|
||||||||||||||||||
|
First
|
$ | 35.98 | $ | 22.52 | $ | 29.54 | $ | 23.64 | $ | 0.0225 | $ | 0.0225 | ||||||||||||
|
Second
|
$ | 28.96 | $ | 20.38 | $ | 33.19 | $ | 28.59 | $ | 0.0225 | $ | 0.0225 | ||||||||||||
|
Third
|
$ | 27.15 | $ | 12.90 | $ | 38.17 | $ | 32.77 | $ | 0.0225 | $ | 0.0225 | ||||||||||||
|
Fourth
|
$ | 18.16 | $ | 3.26 | $ | 40.59 | $ | 32.29 | $ | 0.0225 | $ | 0.0225 | ||||||||||||
Holders
The
Company estimates there were approximately 29,700 holders (including individual
participants in security position listings) of the Company’s common stock as of
December 9, 2008.
Dividends
Under the
terms of the DIP Credit Agreement and applicable bankruptcy law, the Company may
not pay dividends on the common stock while it is in bankruptcy. Any payment of
future dividends and the amounts thereof will depend on our emergence from
bankruptcy, our earnings, our financial requirements and other factors deemed
relevant by our Board of Directors at the time. See Note L—Notes Payable and
Long-Term Debt to the Consolidated Financial Statements included in Item 15 for
additional discussions of the Company's credit facilities.
Issuer
Purchases of Equity Security in 2008
The
Company did not repurchase any of its equity securities in 2008.
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 27, 2008 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 years ending September 27, 2008 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 27, 2003 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
|
9/27/08
|
||||||||||||||||||
|
Pilgrim’s
Pride Corporation
|
$ | 100.00 | $ | 190.89 | $ | 254.14 | $ | 197.18 | $ | 251.08 | $ | 25.79 | ||||||||||||
|
Russell
2000
|
$ | 100.00 | $ | 113.10 | $ | 129.73 | $ | 142.61 | $ | 160.21 | $ | 160.21 | ||||||||||||
|
Peer
Group
|
$ | 100.00 | $ | 112.59 | $ | 131.40 | $ | 127.35 | $ | 140.41 | $ | 110.00 | ||||||||||||
|
9/27/03
|
11/20/03
|
10/2/04
|
10/1/05
|
9/30/06
|
9/29/07
|
9/27/08
|
||||||||||||||||||||||
|
Pilgrim's
Pride Corporation Class A(1)
|
$ | 100.00 | $ | 106.95 | $ | 212.12 | $ | 282.40 | $ | 219.11 | $ | 279.00 | $ | 28.65 | ||||||||||||||
|
Pilgrim's
Pride Corporation Class B(1)
|
$ | 100.00 | $ | 107.94 | $ | 211.79 | $ | 281.96 | $ | 218.77 | $ | 278.57 | $ | 28.61 | ||||||||||||||
|
Russell
2000
|
$ | 100.00 | $ | 107.93 | $ | 122.74 | $ | 140.79 | $ | 154.77 | $ | 173.86 | $ | 154.19 | ||||||||||||||
|
Peer
Group
|
$ | 100.00 | $ | 110.95 | $ | 123.52 | $ | 144.17 | $ | 139.71 | $ | 154.04 | $ | 120.69 | ||||||||||||||
|
(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.
|
|
9/27/03
|
11/20/03
|
|||||||
|
Pilgrim's
Pride Corporation Class A(1)
|
$ | 100.00 | $ | 106.95 | ||||
|
Pilgrim's
Pride Corporation Class B(1)
|
$ | 100.00 | $ | 107.94 | ||||
|
Russell
2000
|
$ | 100.00 | $ | 107.93 | ||||
|
Peer
Group
|
$ | 100.00 | $ | 110.95 | ||||
|
(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.
|
Item 6. Selected Financial
Data
|
(In
thousands, except ratios and per share data)
|
Eleven
Years Ended September 27, 2008
|
|||||||||||||||||||
|
2008(a)
|
2007(a)(b)
|
2006(a)
|
2005(a)
|
|||||||||||||||||
|
Income
Statement Data:
|
||||||||||||||||||||
|
Net
sales
|
$ | 8,525,112 | $ | 7,498,612 | $ | 5,152,729 | $ | 5,461,437 | ||||||||||||
|
Gross
profit (loss)(e)
|
(163,495 | ) | 592,730 | 297,083 | 751,317 | |||||||||||||||
|
Goodwill
impairment
|
501,446 | — | — | — | ||||||||||||||||
|
Operating
income (loss)(e)
|
(1,057,696 | ) | 237,191 | 11,105 | 458,351 | |||||||||||||||
|
Interest
expense, net
|
131,627 | 118,542 | 38,965 | 42,632 | ||||||||||||||||
|
Loss
on early extinguishment of debt
|
— | 26,463 | — | — | ||||||||||||||||
|
Income
(loss) from continuing operations before income taxes(e)
|
(1,187,093 | ) | 98,835 | (26,626 | ) | 427,632 | ||||||||||||||
|
Income
tax expense (benefit)(f)
|
(194,921 | ) | 47,319 | 1,573 | 147,543 | |||||||||||||||
|
Income
(loss) from continuing operations(e)
|
(992,172 | ) | 51,516 | (28,199 | ) | 279,819 | ||||||||||||||
|
Net
income (loss)(e)
|
(998,581 | ) | 47,017 | (34,232 | ) | 264,979 | ||||||||||||||
|
Ratio
of earnings to fixed charges(g)
|
(g)
|
1.63 | x |
(g)
|
7.69 | x | ||||||||||||||
|
Per
Common Share Data:(h)
|
||||||||||||||||||||
|
Income
(loss) from continuing operations
|
$ | (14.31 | ) | $ | 0.77 | $ | (0.42 | ) | $ | 4.20 | ||||||||||
|
Net
income (loss)
|
(14.40 | ) | 0.71 | (0.51 | ) | 3.98 | ||||||||||||||
|
Cash
dividends
|
0.09 | 0.09 | 1.09 | 0.06 | ||||||||||||||||
|
Book
value
|
5.07 | 17.61 | 16.79 | 18.38 | ||||||||||||||||
|
Balance
Sheet Summary:
|
||||||||||||||||||||
|
Working
capital surplus (deficit)
|
$ | (1,262,242 | ) | $ | 395,858 | $ | 528,837 | $ | 404,601 | |||||||||||
|
Total
assets
|
3,298,709 | 3,774,236 | 2,426,868 | 2,511,903 | ||||||||||||||||
|
Notes
payable and current maturities of long-term debt
|
1,874,469 | 2,872 | 10,322 | 8,603 | ||||||||||||||||
|
Long-term
debt, less current maturities
|
67,514 | 1,318,558 | 554,876 | 518,863 | ||||||||||||||||
|
Total
stockholders’ equity
|
351,741 | 1,172,221 | 1,117,328 | 1,223,598 | ||||||||||||||||
|
Cash
Flow Summary:
|
||||||||||||||||||||
|
Cash
flows from operating activities
|
$ | (680,726 | ) | $ | 464,010 | $ | 30,329 | $ | 493,073 | |||||||||||
|
Depreciation
and amortization(i)
|
240,305 | 204,903 | 135,133 | 134,944 | ||||||||||||||||
|
Impairment
of goodwill and other assets
|
514,630 | — | 3,767 | — | ||||||||||||||||
|
Purchases
of investment securities
|
(38,043 | ) | (125,045 | ) | (318,266 | ) | (305,458 | ) | ||||||||||||
|
Proceeds
from sale or maturity of investment securities
|
27,545 | 208,676 | 490,764 | — | ||||||||||||||||
|
Acquisitions
of property, plant and equipment
|
(152,501 | ) | (172,323 | ) | (143,882 | ) | (116,588 | ) | ||||||||||||
|
Business
acquisitions, net of equity consideration(b)(c)(d)
|
— | (1,102,069 | ) | — | — | |||||||||||||||
|
Cash
flows from financing activities
|
797,743 | 630,229 | (38,750 | ) | 18,860 | |||||||||||||||
|
Other
Data:
|
||||||||||||||||||||
|
EBITDA(j)
|
$ | (820,878 | ) | $ | 414,139 | $ | 143,443 | $ | 599,274 | |||||||||||
|
Key
Indicators (as a percent of net sales):
|
||||||||||||||||||||
|
Gross
profit (loss)(e)
|
(1.9 | ) |
%
|
7.9 |
%
|
5.8 |
%
|
13.8 | % | |||||||||||
|
Selling,
general and administrative expenses
|
4.4 |
%
|
4.7 |
%
|
5.6 |
%
|
5.4 | % | ||||||||||||
|
Operating
income (loss)(e)
|
(12.4 | ) |
%
|
3.2 |
%
|
0.2 |
%
|
8.4 | % | |||||||||||
|
Interest
expense, net
|
1.5 |
%
|
1.6 |
%
|
0.8 |
%
|
0.8 | % | ||||||||||||
|
Income
(loss) from continuing operations(e)
|
(11.6 | ) |
%
|
0.7 |
%
|
(0.5 | ) |
%
|
5.1 | % | ||||||||||
|
Net
income (loss)(e)
|
(11.7 | ) |
%
|
0.6 |
%
|
(0.7 | ) |
%
|
4.9 | % | ||||||||||
|
Eleven
Years Ended September 27, 2008
|
|||||||||||||||||||||||||||||||||
|
2004(a)(c)
|
2003(a)
|
2002(a)
|
2001(a)(d)
|
2000
|
1999
|
1998
|
|||||||||||||||||||||||||||
|
(53
weeks)
|
(53
weeks)
|
||||||||||||||||||||||||||||||||
| $ | 5,077,471 | $ | 2,313,667 | $ | 2,185,600 | $ | 1,975,877 | $ | 1,499,439 | $ | 1,357,403 | $ | 1,331,545 | ||||||||||||||||||||
| 611,838 | 249,363 | 153,599 | 197,561 | 165,828 | 185,708 | 136,103 | |||||||||||||||||||||||||||
| — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| 385,968 | 137,605 | 48,457 | 90,253 | 80,488 | 109,504 | 77,256 | |||||||||||||||||||||||||||
| 48,419 | 30,726 | 24,199 | 25,619 | 17,779 | 17,666 | 20,148 | |||||||||||||||||||||||||||
| — | — | — | 1,433 | — | — | — | |||||||||||||||||||||||||||
| 332,899 | 144,482 | 28,267 | 62,728 | 62,786 | 90,904 | 56,522 | |||||||||||||||||||||||||||
| 127,142 | 37,870 | (2,475 | ) | 21,051 | 10,442 | 25,651 | 6,512 | ||||||||||||||||||||||||||
| 205,757 | 106,612 | 30,742 | 41,677 | 52,344 | 65,253 | 50,010 | |||||||||||||||||||||||||||
| 128,340 | 56,036 | 14,335 | 41,137 | 52,344 | 65,253 | 50,010 | |||||||||||||||||||||||||||
| 6.22 | x | 4.37 | x | 1.21 | x | 1.80 | x | 3.04 | x | 4.33 | x | 2.96 | x | ||||||||||||||||||||
| $ | 3.28 | $ | 2.59 | $ | 0.75 | $ | 1.01 | $ | 1.27 | $ | 1.58 | $ | 1.21 | ||||||||||||||||||||
| 2.05 | 1.36 | 0.35 | 1.00 | 1.27 | 1.58 | 1.21 | |||||||||||||||||||||||||||
| 0.06 | 0.06 | 0.06 | 0.06 | 0.06 | 0.05 | 0.04 | |||||||||||||||||||||||||||
| 13.87 | 10.46 | 9.59 | 9.27 | 8.33 | 7.11 | 5.58 | |||||||||||||||||||||||||||
| $ | 383,726 | $ | 211,119 | $ | 179,037 | $ | 203,350 | $ | 124,531 | $ | 154,242 | $ | 147,040 | ||||||||||||||||||||
| 2,245,989 | 1,257,484 | 1,227,890 | 1,215,695 | 705,420 | 655,762 | 601,439 | |||||||||||||||||||||||||||
| 8,428 | 2,680 | 3,483 | 5,099 | 4,657 | 4,353 | 5,889 | |||||||||||||||||||||||||||
| 535,866 | 415,965 | 450,161 | 467,242 | 165,037 | 183,753 | 199,784 | |||||||||||||||||||||||||||
| 922,956 | 446,696 | 394,324 | 380,932 | 342,559 | 294,259 | 230,871 | |||||||||||||||||||||||||||
| $ | 272,404 | $ | 98,892 | $ | 98,113 | $ | 87,833 | $ | 130,803 | $ | 81,452 | $ | 85,016 | ||||||||||||||||||||
| 113,788 | 74,187 | 70,973 | 55,390 | 36,027 | 34,536 | 32,591 | |||||||||||||||||||||||||||
| 45,384 | — | — | — | — | — | — | |||||||||||||||||||||||||||
| — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| (79,642 | ) | (53,574 | ) | (80,388 | ) | (112,632 | ) | (92,128 | ) | (69,649 | ) | (53,518 | ) | ||||||||||||||||||||
| (272,097 | ) | (4,499 | ) | — | (239,539 | ) | — | — | — | ||||||||||||||||||||||||