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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
 
FORM 10-Q

 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 3, 2004

OR

¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File number 1-9273
 
 
PILGRIM’S PRIDE CORPORATION
(Exact name of registrant as specified in its charter)
 
 

Delaware
 
75-1285071
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)
 
 
 
110 South Texas, Pittsburg, TX
 
75686-0093
(Address of principal executive offices)
 
(Zip code)
 
 
 
(903) 855-1000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report.)
 
 

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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

Number of shares outstanding of the issuer’s common stock, as of August 13, 2004, was 66,555,733.
     
Table of Contents
PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES
 
PART I. FINANCIAL INFORMATION
 
Item 1.
Financial Statements (Unaudited)
 
 
Consolidated balance sheets July 3, 2004 and September 27, 2003
 
 
    Three months and nine months ended July 3, 2004 and June 28, 2003
 
 
    Nine months ended July 3, 2004 and June 28, 2003
 
 
 
Item 2.
 
Item 3.
 
Item 4.
 
 
 
PART II. OTHER INFORMATION
 
Item 1.
 
Item 6.
 
 
 
 

 
  2  
Table of Contents
 
Item 1. Financial Statements
Pilgrim’s Pride Corporation and Subsidiaries
Consolidated Balance Sheets
 
  
July 3, 2004
September 27, 2003
   
 
  
(Unaudited)
 
Assets
  
     (in thousands except share data)
Current Assets:
    
 
    
 
  
Cash and cash equivalents
  
$
36,839
  
$
16,606
  
Trade accounts and other receivables, less allowance for doubtful accounts
    
214,812
    
127,020
  
Inventories
    
625,208
    
340,881
  
Other current assets
    
57,758
    
6,201
  
   
 
 
Total Current Assets
    
934,617
    
490,708
  
 
    
 
    
 
  
Other Assets
    
48,831
    
31,302
  
 
    
 
    
 
  
Property, Plant and Equipment:
    
 
    
 
  
Land
    
51,247
    
38,708
  
Buildings, machinery and equipment
    
1,532,973
    
1,085,281
  
Autos and trucks
    
60,948
    
55,239
  
Construction-in-progress
    
33,018
    
21,209
  
   
 
 
 
    
1,678,186
    
1,200,437
  
Less accumulated depreciation
    
(527,405
 )  
(464,963
 )
   
 
 
 
    
1,150,781
    
 
735,474
  
   
 
 
 
  
$
2,134,229
  
$
1,257,484
  
   
 
 
Liabilities and Stockholders’ Equity
Current Liabilities:
    
 
    
 
  
Accounts payable
  
$
298,431
  
$
159,164
  
Accrued expenses
    
251,866
    
107,503
  
Current deferred income tax
    
10,242
    
10,242
  
Current maturities of long-term debt
    
8,175
    
2,680
  
   
 
 
Total Current Liabilities
    
568,714
    
279,589
  
 
    
 
    
 
  
Long-Term Debt, Less Current Maturities
    
591,297
    
415,965
  
Deferred Income Taxes
    
123,104
    
113,988
  
Minority Interest in Subsidiary
    
1,252
    
1,246
  
Commitments and Contingencies
    
--
    
--
  
 
    
 
    
 
  
Stockholders’ Equity:
    
 
    
 
  
Preferred stock, $.01 par value, 5,000,000 authorized shares; none issued
    
--
    
--
  
Common stock – $.01 par value, 160,000,000 authorized shares; 66,826,833 and 41,383,779 issued, respectively
    
668
    
414
  
Additional paid-in capital
    
431,662
    
79,625
  
Retained earnings
    
418,246
    
368,195
  
Accumulated other comprehensive income
    
854
    
30
  
Less treasury stock, 271,100 shares
    
(1,568
)
  
(1,568
)
   
 
 
Total Stockholders’ Equity
    
849,862
    
446,696
  
   
 
 
 
  
$
2,134,229
  
$
1,257,484
  
   
 
 
See notes to consolidated financial statements.
    
 
    
 
  

 
  3  
 Table of Contents

Consolidated Income Statements
(Unaudited)
 
  
 
 
 
  
Three Months Ended
Nine Months Ended
   
 
  
 
July 3, 2004
 
June 28, 2003
July 3, 2004
(40 Weeks)
June 28, 2003
(39 Weeks)
   
 
  
(in thousands, except share and per share data)
     
Net Sales
  
$
1,447,995
  
$
651,877
 
$
3,877,269
  
$
1,909,874
  
Costs and Expenses:
    
 
    
 
    
 
    
 
  
Cost of sales
    
1,268,764
    
600,932
    
3,493,844
    
1,805,257
  
Cost of sales-restructuring
    
55,982
    
--
    
55,982
    
--
  
Non-recurring recoveries
    
--
    
(10,302
)
  
(76
)
  
(36,002
)
Selling, general and administrative
    
78,209
    
35,107
    
190,160
    
102,728
  

   Other restructuring charges

   7,923      --      7,923      --   
   
   
   
   
 
 
    
1,410,878
    
625,737
    
3,747,833
    
1,871,983
  
   
 
 
 
 
Operating income
   
37,117
    
26,140
    
129,436
    
37,891
  
 
    
 
    
 
    
 
    
 
  
Other Expense (Income):
    
 
    
 
    
 
    
 
  
Interest expense, net
    
14,690
    
9,417
    
40,658
    
28,835
  
Foreign exchange (gain) loss
    
65
    
(334
)
  
328
    
(466
)
Miscellaneous, net
    
285
    
(8,124
)
  
1,222
    
(36,787
)
   
 
 
 
 
 
    
15,040
    
959
    
42,208
    
(8,418
)
     
   
   
   
 
Income before income taxes
    
22,077
    
25,181
    
87,228
    
46,309
  
Income tax expense
    
12,263
    
7,740
    
34,178
    
15,346
  
   
 
 
 
 
Net income
 
$
9,814
  
$
17,441
 
$
53,050
  
$
30,963
  
   
 
 
 
 
Net income per common share– basic and diluted
    
 
$ 0.15
    
 
$ 0.42
    
 
$ 0.86
    
 
$ 0.75
  
   
 
 
 
 
Dividends per common share
  
$
0.015
  
$
0.015
  
$
0.045
  
$
0.045
  
   
 
 
 
 
Weighted average shares outstanding
    
 
66,555,733
    
 
41,112,679
    
 
61,376,254
    
 
41,112,679
  
   
 
 
 
 
 
    
 
    
 
    
 
    
 
  
See notes to consolidated financial statements.
 
  4  
 Table of Contents

Consolidated Statements of Cash Flows
(Unaudited)
 
  
 
 
  
Nine Months Ended
   
 
  
July 3, 2004
(40 Weeks)
June 28, 2003
(39 Weeks)
   
 
  
(in thousands)
Cash Flows From Operating Activities:
 
 
 
Net income
  
$
53,050
  
$
30,963
  
Adjustments to reconcile net income to cash provided by operating activities:
    
 
    
 
  
Depreciation and amortization
    
88,120
    
54,253
  
Non-cash restructuring charges
    
44,279
    
--
  
Loss on property disposals
    
1,631
    
(277
)
Deferred income taxes
    
9,117
    
17,318
  
Changes in operating assets and liabilities:
    
 
    
 
  
Accounts and other receivables
    
38,639
    
(33,265
)
Inventories
    
(90,158
)
  
(31,509
)
Other current assets
    
(15,520
)
  
1,566
  
Accounts payable and accrued expenses
    
96,525
    
(22,997
)
Other
    
64
    
(1,357
)
   
 
 
Cash provided by operating activities
    
225,747
 &n