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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 25, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NO. 2-62681
GOLD KIST INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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GEORGIA 58-0255560
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
244 PERIMETER CENTER PARKWAY, N.E. 30346
ATLANTA, GEORGIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (404) 393-5000
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
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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
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DOCUMENTS INCORPORATED BY REFERENCE
NOT APPLICABLE.
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TABLE OF CONTENTS
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Item Page
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1. Business (and Properties) . . . . . . . . . . . . . . . . . . . 1
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 11
4. Submission of Matters to a Vote of Security Holders . . . . . . 11
5. Market for Registrant's Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . 11
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . 12
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . 13
8. Financial Statements and Supplementary Data . . . . . . . . . . 18
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure . . . . . . . . . . . . . . . . . . . 37
10. Directors and Executive Officers of the Registrant . . . . . . 37
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . 40
12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . . . . 43
13. Certain Relationships and Related Transactions. . . . . . . . . 43
14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
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GOLD KIST INC.
ANNUAL REPORT FOR THE FISCAL YEAR ENDED JUNE 25, 1994
PART I
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Item 1. Business (and Properties).
Gold Kist Inc. ("Gold Kist" or the "Association") is a diversified
agricultural membership cooperative association, headquartered in Atlanta,
Georgia. It was incorporated without capital stock in 1936 under the Georgia
Cooperative Marketing Act. The name of the Association was changed in 1970 from
Cotton Producers Association to Gold Kist Inc. In April l985, the Articles of
Incorporation and By-Laws of the Association were amended to provide for a class
of common stock and a class of preferred stock as authorized by the Georgia
Cooperative Marketing Act. Each member is issued one share of common stock
only, as evidence of membership and the right to one vote as long as the member
maintains status as an active member. Only members may hold the common stock,
which is nontransferable and receives no dividends.
Gold Kist serves approximately 25,000 active farmer members located
principally in Alabama, Florida, Georgia, North Carolina and South Carolina. In
addition, other cooperative associations are members of Gold Kist. Any person
engaged in the production of farm commodities and any firm or corporation whose
members or stockholders are persons so engaged and any cooperative association
organized under the cooperative marketing laws of any state, which enters into a
marketing and/or purchasing agreement with the Association, is eligible for
membership.
Gold Kist offers both cooperative marketing and cooperative purchasing
services to its member patrons. Farm commodities are marketed by Gold Kist on
behalf of members. Similarly, Gold Kist manufactures or processes many products
purchased for its members. The standard Membership, Marketing, and/or
Purchasing Agreement which is entered into between each member and Gold Kist
does not require the member to market his agricultural products or to purchase
farm supplies through Gold Kist. Under the agreement, Gold Kist undertakes to
market for the member agricultural products delivered which are of a type
marketed by Gold Kist and to purchase or manufacture and sell to the member such
farm supplies as the member requires, provided it is advantageous for Gold Kist
to handle such supplies in the interest of the member. The Association also
does business with non-members and engages in non-cooperative activities through
subsidiaries and partnerships. AgraTrade Financing, Inc., a wholly-owned
subsidiary of Gold Kist, provides financing to members and non-members doing
business with Gold Kist and its subsidiaries and partnerships. Financing is
extended for poultry and pork housing construction and for certain farm
commodity crop production.
Agriculture is generally cyclical in nature. Commodities marketed by Gold
Kist on behalf of its members are subject to wide fluctuations in price, based
on supply of the farm commodities and demand for the raw or processed products.
Commodity prices are also sensitive to interest rates, with high rates generally
tending to depress market prices. In addition, a portion of Gold Kist's
business is dependent on the demand of farmers for the purchase of products,
which is influenced by the general farm economy and the success of particular
crops.
Gold Kist's business is conducted in two industry segments. See Note 10 of
Notes to Consolidated Financial Statements. The Poultry segment conducts
broiler and pork production operations, providing both marketing and purchasing
services to its cooperative patrons. The Agri-Services segment purchases or
manufactures feed, seed, fertilizers, pesticides, animal health products and
other farm supply items for sale at wholesale and retail. Additionally, that
segment serves as a contract procurement agent for, and storer of, farm
commodities such as soybeans and grain. Gold Kist is also a partner in a major
peanut processing and marketing business, in a pecan processing and marketing
business and in an agricultural fertilizer and chemical production, sales and
distribution business.
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POULTRY
Broilers
Gold Kist conducts its poultry operations through six Gold Kist cooperative
broiler divisions, through its 72% majority-owned public subsidiary, Golden
Poultry Company, Inc. ("Golden Poultry"), and through its partnership interest
in Carolina Golden Products Company ("Carolina Golden").
Gold Kist's cooperative broiler operation is organized into six broiler
divisions, each encompassing one of Gold Kist's decentralized broiler complexes.
Each Gold Kist decentralized broiler complex operates within a separate
geographical area and includes within that area broiler flocks, pullet and
breeder (hatching egg) flocks, one or more hatcheries, a feed mill, poultry
processing plant(s) and management, sales and accounting office(s), and
transportation facilities. The six complexes are headquartered in Boaz and
Cullman, Alabama; Athens, Ellijay and Carrollton, Georgia; and Live Oak,
Florida. The broiler growers for each complex are members of Gold Kist. The
facilities and operations of each complex are designed to furnish the growers
flocks of chicks, feed and medicines, and processing and marketing services for
the broilers grown.
The principal products marketed by the broiler divisions are whole chickens,
cut-up chickens, segregated chicken parts and further processed products
packaged in various forms, including fresh bulk ice pack, chill pack and frozen.
Ice pack chicken is packaged in ice or dry ice and sold primarily to
distributors, grocery stores and fast food chains. Chill pack chicken is
packaged for retail sale and kept chilled by mechanical refrigeration from the
packing plant to the store counter. Frozen chicken is marketed primarily to
school systems, the military services, fast food chains and in the export
market. Further processed products, which include preformed breaded chicken
nuggets and patties and deboned, skinless and marinated products are sold
primarily to fast food and grocery store chains. Chill pack chicken is sold in
certain localities under the Young 'n Tender(R) label; however, some is sold
under customers' private labels. Most of the frozen chicken carries the Gold
Kist(R) or Early Bird(R) label. Cornish game hens are marketed in frozen form
primarily to hotels, restaurants and grocery stores under the Young 'n Tender
and Medallion(R) labels. Medallion, Big Value(R), Young 'n Tender and Early
Bird are registered trademarks of Gold Kist Inc.
Broiler products are marketed directly from the processing plant in each
broiler complex. Some packaged products are marketed from the Atlanta
headquarters. The plants at Athens, Carrollton, Boaz, and Live Oak have special
distribution facilities, and there are six separate distribution facilities
located in Florida, Tennessee, Ohio and Kentucky. Cornish game hens are
processed at facilities in Trussville, Alabama and marketed from the Atlanta
headquarters.
Golden Poultry, a majority-owned subsidiary of Gold Kist, owns and operates
three integrated poultry processing complexes in Russellville, Alabama, Douglas,
Georgia, and Sanford, North Carolina. Each of these complexes contracts for
poultry production with nonmembers and includes a hatchery, feed mill,
processing plant and management, sales and accounting office, and transportation
facilities. Golden Poultry operates two separate distribution facilities in
Durham, North Carolina, and Pompano Beach, Florida.
Carolina Golden is a general partnership consisting of general partners
AgriGolden, Inc., a wholly-owned subsidiary of Gold Kist, and Golden Poultry
Company, Inc. Carolina Golden operates an integrated poultry processing complex
located in Sumter, South Carolina, for the production of value-added and further
processed poultry products. This complex contracts for poultry production with
nonmembers and includes a hatchery, feed mill, processing plant and management,
sales and accounting office, and transportation facilities.
Gold Kist is one of the largest poultry processors in the United States. It
competes with other large processors and with smaller companies. Competition is
based upon price, quality and service. While Management believes that the
pricing and quality of its products are competitive with other processors, it
believes that Gold Kist's
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service to its customers is a principal factor that has established Gold Kist as
one of the largest United States poultry processors. Gold Kist's ability to
deliver broilers and other poultry products cut-up or otherwise produced to
order is an important service to customers.
The poultry industry, just as many other commodity industries, has
historically been cyclical. Prices of perishable commodities, such as broilers,
react directly to changes in supply and demand. Furthermore, broilers are
typically a high volume, low margin product so that small increases in costs,
such as feed ingredient costs, or small decreases in price, can produce losses.
As an integral part of its feed ingredient purchasing strategy, Gold Kist
attempts to limit the effects and risk of fluctuations in feed ingredient costs
(i.e., corn and soy) through varying amounts of commodity trading transactions
in the agricultural commodity futures and options market. Commodity trading
transactions, which are a common industry practice, have inherent risk, such
that changes in the commodities futures and options prices as a result of
favorable or unfavorable changes in the weather, crop conditions or government
policy, may have an adverse effect on Gold Kist's net feed ingredient cost as
compared to the cost in cash markets. Likewise, Gold Kist could benefit from
reduced net feed ingredient cost as a result of these changes as compared to
cost in the cash market. Gold Kist places limitations on the volume of futures
and options trading positions based on projected usage of these commodities.
Results of hedging and commodity options transactions are reflected as an
adjustment to feed ingredient cost in the Association's consolidated financial
statements and are not significant in relation to the total product cost. See
Note l (c) of Notes to Consolidated Financial Statements.
The poultry industry has also traditionally been subject to seasonality in
demand and pricing. Generally, the price and demand for poultry products peaks
during the summer months and declines to lower levels during the winter months
of November, December and January. Gold Kist broiler prices and sales volume
follow the general seasonality of the industry.
The following table shows the amount and percentage of Gold Kist's net sales
volume contributed by sales of broiler products for each of the years indicated.
<TABLE>
<CAPTION>
Fiscal Year Ended (000's Omitted)
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June 27, June 26, June 25,
1992 1993 1994
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Broiler Products
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Volume $930,311 $1,041,175 $1,152,252
Percentage (%) 71.5 74.3 73.8
</TABLE>
Pork
Gold Kist markets hogs raised by producers in Alabama, Georgia and North
Carolina. Feeder pigs are furnished to members who raise them, using Gold Kist
feed and medicines, to produce hogs for marketing. Feeder pigs are either
raised by Gold Kist members and marketed through Gold Kist to the market hog
growers, raised for Gold Kist by non-member independent contractors or purchased
by Gold Kist in the marketplace.
Live market hogs are marketed by Gold Kist in the Southeastern United States
to processors of pork products, primarily on a competitive bid basis in the
states of Alabama, Georgia, Mississippi, North Carolina, and South Carolina.
Management believes that customers are favorably impressed by the quality of its
market hogs which is principally due to superior breeding stock and management
grow-out techniques employed by Gold Kist. Gold Kist competes with other major
national producers and smaller individual producers, primarily on a regional
basis in the Southeastern United States.
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AGRI-SERVICES
Gold Kist purchases, manufactures and processes fertilizers, agricultural
chemicals, seed, pet foods, feed, animal health products and other farm supply
items for distribution and sale at wholesale and retail. These products are
distributed through approximately 87 Gold Kist retail stores and at wholesale to
national accounts and independent dealers. Gold Kist serves as a contract
procurement agent for, and storer of, farm commodities such as soybeans and
grain.
Retail Stores
The Gold Kist retail store operation is conducted in Alabama, Florida,
Georgia, and South Carolina.
The typical Gold Kist store is a complete farm supply center offering for
sale many types of feeds, animal health products, fertilizers, pesticides,
seeds, farm supplies and equipment. It also offers services such as customized
fertilizer spreading, field mapping, soil testing, insect scouting, and
agronomic and animal nutrition advice. Urban locations feature turf and garden
supplies and other consumer and houseware products.
The competition for retail sales faced by Gold Kist stores varies greatly
from locality to locality. Some compete with other purchasing cooperatives,
hardware and farm supply stores, and retail outlets owned or affiliated with
major fertilizer, agricultural chemical and feed manufacturers. In some areas
these competing manufacturers sell directly to farmers. Price competition is
important for many items. The Gold Kist stores emphasize service to the
customer.
In addition to the Gold Kist retail store operation, GK Stores, Inc., a
wholly-owned subsidiary of Gold Kist, sold lawn and garden supplies and other
consumer items on a non-cooperative basis during the fiscal year ended June 25,
1994 in eight urban store operations located in Georgia and Florida. GK Stores,
Inc. will cease operation of the urban stores in fiscal 1995.
Gold Kist purchases most of the farm supplies distributed from various
manufacturers. Steel equipment, such as storage bins, elevators and conveyor
systems, are manufactured by Luker Inc., a steel fabrication company located in
Augusta, Georgia, and a wholly-owned subsidiary of Gold Kist. Cross Equipment
Company, Inc., a wholly owned subsidiary of Gold Kist, also manufactures and
fabricates farm equipment, principally spreader and sprayer bodies for material
application by vehicles.
Gold Kist operates a system of receiving and storage facilities for handling
unprocessed farm commodities such as soybeans, corn and other grains.
Approximately 98% of Gold Kist's storage facilities are licensed by the federal
or state government and can issue negotiable warehouse receipts. Pursuant to a
renewable five-year grain handling agreement which terminates in 1995, Gold Kist
utilizes these facilities and assets exclusively as independent buying points
operating on a commission basis for the Archer Daniels Midland Company.
Fertilizers and Chemicals
Gold Kist distributes granular, blended and liquid fertilizers and
fertilizer materials. Each type is purchased or produced in varying
compositions depending upon the ultimate use of the product as a plant food.
The Association owns and operates four fertilizer plants in addition to other
blending facilities at certain Gold Kist stores where fertilizer ingredients are
physically mixed to a custom formula. Gold Kist leases or owns terminal
facilities at which fertilizer materials are warehoused for resale through Gold
Kist stores and private dealers. Granular fertilizers are purchased and
distributed in bagged and bulk form. In addition to traditional agricultural
customers, Gold Kist markets fertilizers and chemicals to, and provides
application services for, forestry, turf and industrial customers. Gold Kist is
also a 50% general partner with Scott Petroleum Corporation in FarmKist
Enterprises, an agricultural fertilizer and chemical production, sales and
distribution business based in Greenville, Mississippi.
Gold Kist is a member of CF Industries, Inc., a cooperative owned by
regional cooperatives, which
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produces and supplies fertilizer materials to its members. For the fiscal year
ended June 25, 1994, Gold Kist purchased approximately 27% of its fertilizer
materials and products at market prices from CF Industries. The remaining
fertilizer materials and products were purchased from more than 50 other
suppliers.
Gold Kist competes for fertilizer sales with the major fertilizer
manufacturers, wholesalers and brokers. Competition is largely on the basis of
price and service. Gold Kist markets premium grade fertilizers under its
trademarks Growers Pride(R), Living Lawn(R), and Garden Gold(R). Gold Kist also
markets a premium growing medium composed of soil materials and fertilizer
nutrients under its trademark Garden on the Spot(R).
Gold Kist distributes agricultural and specialty chemicals, including
pesticides, growth regulators and surfactants which it purchases from
approximately 50 chemical manufacturers. Competition for sales of agricultural
chemicals is primarily on the basis of price and service since most retailers
have access to the same inventory of products produced by the major
manufacturers. Gold Kist also provides aerial application of fertilizer for
forestry customers and ground application of fertilizer and chemicals for turf
customers.
The following table shows the amount and percentage of Gold Kist's net sales
volume contributed by sales of fertilizer and chemical products for each of the
years indicated. See Note 10 of Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>
Fiscal Year Ended (000's Omitted)
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June 27, June 26, June 25,
1992 1993 1994
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Fertilizer
and Chemicals
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Volume $174,850 $173,778 $211,218
Percentage (%) 13.4 12.4 13.5
</TABLE>
Pet Food and Animal Health
Gold Kist operates four major feed mills for its pet food, feed and animal
health operations. The mills produce feeds distributed at wholesale or at
retail through the Gold Kist stores and independent dealers. All of the mills
are batch process mills in which ingredients are weighed. This type of mill is
capable of precision feed mixing, which is especially important to the poultry
industry. Feeds are distributed in bagged and bulk form.
In the fiscal year ended June 25, 1994, Gold Kist's feed mills produced
substantially all of the feed it distributed at wholesale or retail. Gold Kist
produces and markets approximately 135 different feeds, including custom blended
feeds and feeds containing various medications. Pro Balanced(R) is a dairy feed
sold through a special program which includes survey and analysis of feed
ingredients needed for a particular herd. Gold Kist offers a similar program
for swine feed. Pro Balanced is a registered trademark of Gold Kist. Gold Kist
also markets dog food under the Pro Balanced and Performance Plus(R) trademarks
through independent dealers and under the Gold Kist and Pro Balanced trademarks
through Gold Kist retail stores. Aquaculture feed products, primarily feed for
commercial fish farming operations, also form a portion of Gold Kist's feed
business. Gold Kist purchases all animal health products that it distributes.
Feed ingredients are purchased in the marketplace from many sources,
including major grain companies. Feed formulation is based on the cost of
various alternative ingredients in a given week. Feed ingredients are
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normally purchased for one week's production and, accordingly, only five to
seven days' ingredient storage capacity is needed at the mills.
Approximately one-half of the feed sold is delivered in bulk form directly
from the feed mill to the farm; the remainder is sold in bag form. Gold Kist
operates a fleet of trucks, including feed tankers, for the delivery of feed.
Rail transportation is used occasionally for long hauls.
Competition for sales of feed is based on quality and service, as well as
price. Gold Kist competes with major feed manufacturers and local feed mills.
The major feed manufacturers distribute through independent retailers, owned
retail stores and direct to farmers. Gold Kist sells through its own retail
stores and directly to large farmers, private dealers, independent cooperatives,
wholesale grocers, and retail grocery chains.
Seed Marketing
AgraTech Seeds, Inc. ("AgraTech Seeds"), a wholly-owned subsidiary of Gold
Kist, owns and operates a seed business, which consists of the development,
contract production, processing and sale primarily of proprietary seed
varieties. AgraTech Seeds distributes approximately 230 varieties of seeds.
Seed is marketed by AgraTech Seeds at wholesale to seed retailers, including
Gold Kist stores and independent seed retail outlets in the Southeast and the
Midwest. AgraTech Seeds licenses certain seed dealers, including Golden Peanut
Company, to sell its proprietary peanut varieties "GK 7", "VC 1", "AgraTech 108"
and "AgraTech 127", and receives a royalty on licensed sales. AgraTech Seeds
contracts with farmers for the production of seed. Careful control is required
to maintain the purity of varieties. Quality and name recognition play a large
role in competition for sales of seed.
AgraTech Seeds processes or contracts for the processing of approximately
95% of the seeds it distributes. AgraTech Seeds owns and operates seed
processing facilities in McCordsville, Indiana, St. Joseph, Illinois, and Mason
City, Illinois. A seed research farm is located at Ashburn, Georgia, which
conducts research into the breeding of peanuts, soybeans and sorghum, including
the development of improved seed varieties. The McCordsville and Mason City
facilities conduct research into the breeding of corn. Proprietary corn,
soybean, sorghum and peanut seed varieties are marketed under the trademark
AgraTech(R).
As a function of its retail sales operations, Gold Kist operates a
commodity seed procurement plant at Dublin, Georgia for the cleaning, grading,
treatment and processing of commodity seeds. Seed products from its Dublin
operations are marketed primarily through the Gold Kist retail stores.
Pecans
Gold Kist is a partner in Young Pecan Company, a pecan processing and
marketing business headquartered in Florence, South Carolina, in which the
Association holds a 25% equity interest and a 35% earnings (loss) allocation.
PARTNERSHIP INTEREST
Gold Kist, Archer Daniels Midland Company ("ADM") and Alimenta Processing
Corporation ("Alimenta") are partners in Golden Peanut Company, a partnership
formed to operate a peanut procuring, processing, and marketing business. The
partners lease peanut facilities, equipment and fixed assets to the partnership.
Gold Kist, as a general partner, participates in all partnership allocations in
proportion to its 33 1/3% partnership interest. See Note 9(b) of Notes to
Consolidated Financial Statements.
The peanut facilities leased to Golden Peanut Company pursuant to the
general partnership agreement include receiving stations, shelling plants, cold
storage facilities and warehouses located in the three major peanut
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producing areas of the United States (Southeast, Southwest and
Virginia/Carolinas).
Golden Peanut Company procures, processes and markets peanuts and peanut by-
products in each of the three peanut producing areas of the United States.
Golden Peanut Company is a major processor of edible peanuts and is active in
both domestic and international markets. The principal peanut product is
shelled edible peanuts. Shelled edible peanuts are marketed domestically
primarily to manufacturers of peanut butter, candy and salted nuts and are sold
in the export market. Golden Peanut Company also processes peanuts for sale in
the shell or for processing by others into oil and meal.
EXPORT SALES
Gold Kist owns no physical facilities overseas and has no overseas
employees. Product sales managers maintain sales networks overseas through
contacts with independent dealers and customers. During the fiscal year ended
June 25, 1994, the approximate export sales volume of the primary export product
line (poultry) was $38 million. During that period, export sales of poultry
were mainly to customers in the former Soviet Union, Poland, the Far East, and
the Caribbean area.
Export sales involve an additional element of transportation and credit risk
to the shipper beyond that normally encountered in domestic sales.
Gold Kist faces competition for export sales from both domestic and foreign
suppliers. In export poultry sales, Gold Kist faces competition from other
major United States producers as well as companies in France, Thailand, and
Brazil. Tariff and non-tariff barriers to United States poultry established by
the European Economic Community (EEC) since 1962 have virtually excluded Gold
Kist and other United States poultry exporters from the EEC market. In
addition, EEC exporters are aided in price competition with United States
exporters in certain markets by subsidies from their governments.
Gold Kist and a group of other North American and foreign farm cooperatives
and agribusiness firms, acting through companies formed for this purpose, own
50% of a trading company engaged in international merchandising of grains and
other agricultural commodities. Gold Kist is a minority shareholder and deals
with the trading company on an arm's length basis.
PROPERTIES
Gold Kist corporate headquarters building, completed in 1975 and containing
approximately 260,000 square feet of office space, is located on fifteen acres
of land at 244 Perimeter Center Parkway, N.E., Atlanta, Georgia. The land and
building are owned by a partnership of Gold Kist and Cotton States Mutual
Insurance Company in which partnership Gold Kist owns 54% of the equity. Gold
Kist leases approximately 120,000 square feet of the building from the
partnership. See Note 3 of Notes to Consolidated Financial Statements.
The Association's principal operating facilities are operated by its two
industry segments, the Poultry segment and the Agri-Services segment.
Poultry
Gold Kist owns and operates seven poultry processing plants which are
located at Boaz, Trussville and Guntersville, Alabama; Athens, Ellijay and
Carrollton, Georgia; and Live Oak, Florida. These plants have an aggregate
weekly processing capacity of approximately eight million broilers and 415,000
cornish game hens. The plants are supported by hatcheries located at
Albertville, Crossville, Cullman, Curry, Ranburne and Scottsboro, Alabama; Live
Oak, Florida; and Blaine, Calhoun, Commerce, Carrollton, and Talmo, Georgia.
These hatcheries have an aggregate weekly capacity (assuming 85% hatch) of
approximately 8,860,000 chicks. Additionally, Gold Kist operates six feed mills
to support its poultry operations; the mills have an aggregate annual capacity
of 2,715,000 tons
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and are located in Guntersville and Jasper, Alabama; Calhoun, Cartersville,
and Commerce, Georgia; and Live Oak, Florida.
The Association's majority-owned subsidiary, Golden Poultry owns and
operates three poultry processing plants in Douglas, Georgia, Sanford, North
Carolina, and Russellville, Alabama. The Douglas plant has a weekly processing
capacity of approximately 1,300,000 broilers on two shifts; the Sanford and
Russellville plants have weekly processing capacities of approximately 850,000
broilers on two processing shifts. These plants are supported by hatcheries in
Siler City, North Carolina (with a hatch capacity of 870,000 chicks per week),
Douglas, Georgia (with a hatch capacity of approximately 1,350,000 chicks per
week), and Russellville, Alabama (approximately 875,000 chicks per week).
Additionally, Golden Poultry owns and operates poultry feed mills at Ambrose,
Georgia, Bonlee, North Carolina, and Pride, Alabama, which have an aggregate
annual capacity of 998,000 tons.
Carolina Golden owns and operates a processing plant in Sumter, South
Carolina with a weekly processing capacity of 1,400,000 broilers on two
processing shifts. The Sumter plant is supported by a hatchery in Sumter, South
Carolina with a hatch capacity of approximately 1,350,000 chicks per week.
Carolina Golden operates a poultry feed mill at Sumter, South Carolina with an
annual capacity of 280,000 tons.
The Association utilizes six separate distribution facilities in its sales
and distribution of poultry products: Tampa and Crestview, Florida; Chattanooga
and Nashville, Tennessee; Mt. Sterling, Kentucky; and Cincinnati, Ohio. Golden
Poultry operates distribution facilities in Pompano Beach, Florida, and Durham,
North Carolina.
Also within its Poultry segment, Gold Kist operates four pork production
centers. These production facilities include a pork production center at
Cartersville, Georgia; two gilt and pork production centers located at Kingston,
Georgia; and a boar and pork production center headquartered in Hillsborough,
North Carolina.
Agri-Services
In its retail store operations, Gold Kist operates Gold Kist stores at 22
locations in Alabama, 5 locations in Florida, 42 locations in Georgia and 18
locations in South Carolina. The retail store operations conducted by GK
Stores, Inc. during the fiscal year ended June 25, 1994 were located in Albany,
Athens, Canton, Conyers, Cumming, Fayetteville, and Lawrenceville, Georgia; and
Gainesville, Florida.
For its fertilizer and chemicals business, the Association operates four
fertilizer plants at Clyo and Cordele, Georgia and Athens and Hanceville,
Alabama, and bulk chemical storage facilities at Moultrie, Georgia and
Bishopville, South Carolina. Gold Kist utilizes chemical storage and
distribution facilities at Alcolu, South Carolina, Sylvester, Georgia,
Hanceville, Alabama and Carrollton, Texas and fertilizer distribution terminal
facilities at Bainbridge and Brunswick, Georgia; Fayetteville, Morehead City,
and Wilmington, North Carolina; Charleston, South Carolina; and Wichita Falls,
Texas.
For its pet food, feed and animal health operations, Gold Kist operates four
feed mills with an aggregate annual capacity of approximately 470,000 tons. The
mills are located at Guntersville, Alabama; Flowery Branch and Valdosta,
Georgia; and Gaston, South Carolina.
The Association operates a seed processing plant at Dublin, Georgia, which
can clean, grade and treat approximately 537,000 bags of seeds annually (when
operating on one shift). AgraTech Seeds operates seed processing plants in
McCordsville, Indiana, and Mason City and St. Joseph, Illinois, which can clean,
grade and treat approximately 350,000 bags, 150,000 bags and 100,000 bags,
respectively, of seeds annually (when operating on one shift). AgraTech Seeds
also operates a 100 acre seed research farm located at Ashburn, Georgia.
For its grain procurement and storage operations, Gold Kist operated 30
owned facilities and 2 leased facilities in Alabama, Florida, Georgia and South
Carolina in fiscal 1994. The facilities have an aggregate storage
8
<PAGE>
capacity of approximately 7 million bushels.
Gold Kist owns peanut procuring, processing and marketing facilities which
are leased to Golden Peanut Company pursuant to the general partnership
agreement executed by Gold Kist with ADM and Alimenta. The lease is for a
20-year term, beginning in 1988; however, the lease is subject to the terms of
the partnership agreement which is terminable upon 18 months prior written
notice. These facilities include 37 peanut receiving stations located in the
three major peanut producing areas of the United States (Southeast, Southwest,
and Virginia/Carolinas) and four peanut shelling plants located in Ashburn,
Georgia; Graceville, Florida; Anadarko, Oklahoma; and Comyn, Texas. Gold Kist
also owns and leases to Golden Peanut Company two cold storage facilities
located at Anadarko, Oklahoma and Suffolk, Virginia with an aggregate storage
capacity of 11,000 tons, and 48 warehouses located at 30 of the leased receiving
stations with an aggregate storage capacity of approximately 133,000 tons.
The Association holds all of the facilities in fee except for the corporate
headquarters building (lease expires June 30, 2004); poultry distribution
facilities at Tampa, Florida (lease expires January 31, 1995) and Nashville
(lease expires December 31, 1995) and Chattanooga (terminable upon 30 days
notice) Tennessee; Crossville, Alabama, poultry hatchery facility (lease expires
February 23, 2088); Athens, Georgia, poultry processing plant vehicle parking
area (lease expires February 29, 2001); pet food, feed and animal health product
storage and distribution facilities in Lawrenceville, Georgia (lease expires
November 13, 1996); Anadarko, Oklahoma peanut facility (lease expires November
30, 1996; subleased to Golden Peanut Company); grain procurement and storage
facilities at Jackson, Tennessee (lease expires January l, 1995); and retail
store facilities at Albany (lease expires December 7, 1996; subleased to GK
Stores, Inc.), Athens (lease expires December 7, 1996; subleased to GK Stores,
Inc.), Byromville (lease expires March 15, 1999), Camilla (terminable upon 30
days' notice), DeSoto (lease expires March 15, 1999), Lafayette (lease expires
March 14, 1996), and Oglethorpe (lease expires March 15, 1999), Georgia;
Brundidge (terminable upon 30 days notice), Danville (lease expires January 31,
1997), Geraldine (lease expires January 31, 1998), and Jasper (lease expires May
31, 2002) Alabama; Columbia (leases renewable annually are currently scheduled
to expire March 31, 1995 and October 30, 1994), Newberry (lease expires January
31, 1996) and Sumter (lease expires March 22, 1997) South Carolina; and
Gainesville (lease expires December 7, 1996; subleased to GK Stores, Inc.),
Florida. Chemical storage and distribution facilities are leased at Carrollton,
Texas (lease expires March 31, 1996), and fertilizer storage and distribution
space is also leased on a continuing as needed basis at terminals in Bainbridge
and Brunswick, Georgia; Fayetteville, Morehead City, and Wilmington, North
Carolina; Charleston, South Carolina; and Wichita Falls, Texas.
ENVIRONMENTAL AND REGULATORY MATTERS
Processing plants such as those operated by Gold Kist are potential sources
of emissions into the atmosphere and, in some cases, of effluent emissions into
streams and rivers. Management believes that all major Gold Kist facilities and
operations are adequately equipped to maintain compliance with current
environmental and regulatory standards. Presently, management does not know of
any material capital expenditures for environmental control facilities that will
be necessary for the remainder of the current fiscal year and the next fiscal
year in order to comply with current statutes and regulations. On January 29,
1992, the United States Environmental Protection Agency ("EPA") sent General
Notice Letters designating Gold Kist and several other companies as potentially
responsible parties (PRP's) for alleged environmental contamination at an
Albany, Georgia site previously owned by Gold Kist. Gold Kist has responded to
the General Notice Letter denying liability for the contamination. EPA has not
indicated to Gold Kist how it intends to proceed with regard to the site. The
State of South Carolina has designated as a CERCLA-South Carolina Hazardous
Waste Management Site a landfill property near Bennettsville, South Carolina
upon which residue from a fire at the former Bennettsville, South Carolina
Farmers Mutual Exchange warehouse was deposited. The Farmers Mutual Exchange of
Bennettsville ("FMX") was merged into Gold Kist in April 1977. Investigations
of this landfill have indicated insignificant contamination. Pursuant to a
consent agreement with the State of South Carolina, Gold Kist will perform a
site assessment to investigate potential sources of contamination and a
feasibility study for remedial actions, if necessary, to address the results of
the assessment activities. Gold Kist is unable to estimate at this time the
cost of compliance, if any, to be required of Gold Kist for either location.
Management believes that the potential cost of compliance for Gold Kist would
not have
9
<PAGE>
a material effect on Gold Kist's financial condition or results of operations.
The regulatory powers of various federal and state agencies, including the
federal Food and Drug Administration, apply throughout the agricultural
industry, and many of Gold Kist's products and facilities are subject to the
regulations of such agencies.
HUMAN RESOURCES
Gold Kist has approximately 14,000 employees during the course of a year.
Gold Kist's processing facilities operate year round without significant
seasonal fluctuations in manpower requirements. Gold Kist has approximately
2,500 employees who are covered by collective bargaining agreements. Employee
relations are considered to be generally satisfactory.
PATRONAGE REFUNDS
The By-Laws of Gold Kist provide that Gold Kist shall operate on a
cooperative basis. After the close of each fiscal year, the net taxable margins
of Gold Kist for that year from business done with or for member patrons
(patronage margins) are computed and, after certain adjustments, these margins
are distributed to members as patronage refunds on the basis of their respective
patronage (business done with or through the Association) during that year.
Upon the determination of the total patronage refund for any fiscal year, this
amount is allocated among the several operations of Gold Kist or one or more
groups of such operations, as determined by the Board of Directors in light of
each operation's or group's contribution for the year.
Patronage refunds are distributed in the form of either qualified or
nonqualified written notices of allocation (as defined for purposes of
Subchapter T of the Internal Revenue Code). If qualified notices are used, at
least 20% of each patronage refund is distributed in cash or by qualified check
(as defined in the Internal Revenue Code) with the remainder distributed in
patronage dividend certificates or written notices of allocated reserves, or any
combination of these forms. A distribution to a patron made in the form of a
qualified notice must be included in his gross income, at its stated dollar
amount, for the taxable year in which he receives the distribution. If
nonqualified notices are distributed, less than 20% of the refund can be
distributed in cash or by qualified check and the patron is not required to
include in gross income the noncash portion of the allocation. See Notes 1(f)
and 6 of Notes to Consolidated Financial Statements.
The retention of allocated reserves provides a means whereby the current and
active members of Gold Kist may finance the Association's continuing operations.
Each fiscal year, the members are notified by Gold Kist of the amounts, if any,
by which their equity accounts have been credited to reflect their allocated,
but undistributed, portion of the patronage refunds. Allocated reserves may be
retired and distributed to members only at the discretion of the Board of
Directors in the order of retention by years, although the Board may authorize
the retirement of small aggregate amounts (not in excess of $100.00) of reserves
or the retirement of reserves in individual cases without regard to how long
they have been outstanding. Allocated reserves bear no interest and are
subordinate in the event of insolvency of the Association to outstanding
patronage dividend certificates and to all indebtedness of Gold Kist.
INCOME TAXATION
As a cooperative association entitled to the provisions of Subchapter T of
the Internal Revenue Code, Gold Kist does not pay tax on net margins derived
from member patronage transactions which are distributed to the members by check
or in the form of qualified written notices of allocation within 8-l/2 months of
the close of each fiscal year. To the extent that Gold Kist distributes
nonqualified written notices of allocation, has income from transactions with
nonmembers or has income from non-patronage sources, it will be taxed at the
corporate rate. See Notes l (f) and 6 of Notes to Consolidated Financial
Statements.
10
<PAGE>
Gold Kist has subsidiaries which are not cooperatives, and all the income of
these subsidiaries is subject to corporate income taxes.
Item 2. Properties.
The principal facilities used in the Association's business are described in
Item 1. Business (and Properties). Management believes that the facilities are
adequate and suitable for their respective uses and the Association's current
intended operations. The properties owned by the Association are not subject to
any material lien or encumbrance.
Item 3. Legal Proceedings.
In January 1994, three Alabama member patrons of Gold Kist Inc. filed
lawsuits in the Circuit Court of Jefferson County, Alabama, Tenth Judicial
Circuit, and in the Circuit Court of DeKalb County, Alabama, against the
Association and Golden Poultry and certain directors, officers and employees of
the companies. (Ronald Pete Windham and Windham Enterprises, Inc. on their
----------------------------------------------------------
behalf and on behalf of and for the use and benefit of Gold Kist, Inc. and its
- - ------------------------------------------------------------------------------
shareholders/members v. Harold O. Chitwood, individually in his capacity as an
- - ------------------------------------------------------------------------------
officer of Gold Kist and a Director of Golden Poultry; et al; and Bertie Adams,
- - ------------------------------------------------------------- -------------
individually and derivatively on behalf of all other shareholders and members of
- - --------------------------------------------------------------------------------
Gold Kist, Inc. v. Gold Kist Inc. et al.). The lawsuits allege that the named
- - ----------------------------------------
officers, directors and employees violated their fiduciary duties by diverting
corporate opportunities from Gold Kist to Golden Poultry and Carolina Golden in
connection with the creation of Golden Poultry and Carolina Golden, by
permitting their continued operations and by selling shares of Golden Poultry
common stock to certain officers, directors and employees of the Association and
Golden Poultry. In March 1994, the Court certified the Windham litigation as a
-------
class action. In July 1994, the Court in the Adams litigation dismissed as
-----
defendants the employees of the companies who are not or were not directors or
officers of the companies. Among the remedies requested are the transfer of
Golden Poultry operations to Gold Kist as well as unspecified actual and
punitive damages. The Association intends to defend the litigation vigorously.
In February 1994, other Alabama member patrons of Gold Kist filed a lawsuit in
the Circuit Court of Walker County, Alabama, against the Association alleging
short-weight deliveries of feed from the Gold Kist Guntersville, Alabama feed
mill. (Garry Rowland on behalf of himself and a class of others similarly
------------------------------------------------------------------
situated v. Gold Kist Inc.) In June 1994, the Court certified the litigation as
- - --------------------------
a class action. The Association intends to defend the litigation vigorously.
The Association is also party to various legal and administrative proceedings,
all of which management believes constitute ordinary routine litigation incident
to the business conducted by the Association, or are not material in amount.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the fourth quarter of the fiscal year covered
by this report to a vote of security holders.
PART II
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Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
There is no market for Gold Kist equity.
11
<PAGE>
Item 6. SELECTED FINANCIAL DATA.
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below under the captions
"Consolidated Statement of Operations Data" for each of the years in the five-
year period ended June 25, 1994 and "Consolidated Balance Sheet Data" as of
June 30, 1990, June 29, 1991, June 27, 1992, June 26, 1993, and June 25, 1994
are derived from the consolidated financial statements of Gold Kist Inc. and
subsidiaries, which consolidated financial statements have been audited by KPMG
Peat Marwick LLP, independent auditors. The consolidated financial statements
as of June 26, 1993 and June 25, 1994 and for each of the years in the three-
year period ended June 25, 1994, and the report thereon of KPMG Peat Marwick
LLP, which is based partially upon the report of other auditors, are included
elsewhere. The information set forth below should be read in conjunction with
Management's Discussion and Analysis of Consolidated Results of Operations and
Financial Condition and the aforementioned consolidated financial statements,
the related notes and the audit report, which refers to changes in accounting
for income taxes and postretirement benefits other than pensions, included
elsewhere herein.
<TABLE>
<CAPTION>
FOR FISCAL YEARS ENDED (000'S OMITTED)
---------------------------------------------------
JUNE 30, JUNE 29, JUNE 27, JUNE 26, JUNE 25,
1990 1991 1992 1993 1994
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales volume........... $1,184,610 1,259,033 1,300,906 1,400,566 1,561,034
========== ========= ========= ========= =========
Interest expense........... $ 18,106 18,437 18,545 17,163 13,924
========== ========= ========= ========= =========
Margins (loss) before
cumulative effect of
accounting changes........ $ 42,119 32,933 (1,643) 27,238 34,065
Cumulative effect of
changes in accounting:
Income taxes (A)......... $ -- -- -- -- 5,339
Postretirement benefits
other than pensions (net
of $10,698 income tax
benefit) (B)............ $ -- -- (18,971) -- --
---------- --------- --------- --------- ---------
Net margins (loss)......... $ 42,119 32,933 (20,614) 27,238 39,404
========== ========= ========= ========= =========
<CAPTION>
AS OF (000'S OMITTED)
---------------------------------------------------
JUNE 30, JUNE 29, JUNE 27, JUNE 26, JUNE 25,
1990 1991 1992 1993 1994
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET
DATA:
Working capital............ $ 123,888 114,652 108,045 140,629 139,847
========== ========= ========= ========= =========
Total assets............... $ 616,741 671,756 676,698 665,102 716,432
========== ========= ========= ========= =========
Long-term liabilities...... $ 130,709 146,183 159,449 152,792 144,992
========== ========= ========= ========= =========
Total liabilities.......... $ 321,344 351,284 382,789 354,889 394,754
========== ========= ========= ========= =========
Patrons' and other equity.. $ 273,183 296,940 271,456 285,620 296,662
========== ========= ========= ========= =========
Current ratio.............. 1.65 1.56 1.48 1.70 1.56
========== ========= ========= ========= =========
Long-term liabilities to
total capitalization...... % 32.36 32.99 37.00 34.85 32.83
========== ========= ========= ========= =========
</TABLE>
- - --------
Note:
(A) See Note 6 of Notes to Consolidated Financial Statements.
(B) See Note 7(b) of Notes to Consolidated Financial Statements.
12
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The nature of the poultry industry and the agriculture (agribusiness)
industry in general is such that supply and demand market forces exert a
significant amount of influence over the operations of firms engaged in these
businesses. Prices of commodities react directly to supply and demand.
Additionally, demand for poultry and other agricultural products produced,
processed and marketed by Gold Kist is often influenced by supplies and prices
of alternative products.
As with other perishable commodity businesses, the integrated poultry
industry has demonstrated a cyclical nature with varying levels of profits, and
to a lesser extent, losses over its 35 year history. With the exception of a
brief period during 1992, the past eleven years have been a period of continued
profitability. The following addresses the various factors that have influenced
poultry industry profitability during the past several years. After a year of
weak broiler market prices in 1989, market prices increased during the winter
of 1990 as a result of increased exports to the former Soviet Union. Broiler
market prices declined again in 1991 and remained at low levels throughout 1992
as a result of the economic recession affecting the United States, the decline
in poultry exports and excess industry supply. Improved market prices in 1993
and 1994 were the result of a general economic recovery in the United States
and increased demand for poultry products. According to USDA estimates, the
supply of broilers is expected to increase at a 5.6% rate in 1994 and a 4.7%
rate in 1995 as compared to the 6.5% average annual increase between 1991 and
1993. In 1990 and 1991, feed grain prices, which represent approximately 50% of
total broiler production costs, moderated as a result of the favorable United
States grain harvests for those two years. The record 1992 United States corn
harvest brought lower feed ingredient prices in 1993. In 1994, feed ingredient
prices increased substantially as a result of the reduced corn harvest in 1993.
Flooding in the Midwestern United States during the summer of 1993 severely
impacted the 1993 United States grain harvest and boosted feed ingredient
prices to near record levels. As a result of the increase in planted corn and
soybean acreage and favorable growing conditions in the summer of 1994, market
prices for feed ingredients are expected to decrease substantially in 1995.
Management is unable to predict whether such conditions will continue in the
future or to what extent cyclical pressures will affect the Association's
operations.
Historically, weather has had a significant impact on the farm economy and
the operating results of the Association. Favorable weather conditions
contributed to normal grain production in the United States, which contributed
to lower commodity prices. Hot, dry weather conditions in the Southeast during
the summer of 1990 negatively affected yields on row crop production of corn,
soybeans and peanuts, thus lowering Southeastern farm income. Wet weather
conditions in the Southeast during the 1991 spring planting season contributed
to reduced planting of corn and soybean acreage. However, planted acreage of
peanuts and cotton, although delayed by wet weather, increased in 1991 as
compared to the prior year. Generally, favorable weather conditions throughout
1992 provided for a near perfect planting season in the Southeast, which
contributed to improved 1992 operating results in the Agri-Services segment.
Wet weather conditions in the Southeast during the 1993 spring planting season
reduced corn and peanut acreage and were followed by early summer drought
conditions. These inclement weather factors had a negative impact on 1993 Agri-
Services operating results. Hot, dry weather conditions in the late summer of
1993 damaged pastures in the Southeast, which resulted in increased sales of
agricultural products in 1994. In addition, favorable spring weather conditions
contributed to increased planting activity in 1994.
Export sales for 1992, 1993 and 1994 were $29.8 million, $27.5 million and
$37.7 million, respectively. In the two year period ending in 1993, export
sales declined as a result of reduced sales activity with the former Soviet
Union. However, in 1994, export sales increased as a result of a demand for
poultry from the Commonwealth of Independent States, Far East and Mexico.
Export sales of poultry products will be influenced by credit availability to
foreign countries, particularly the Commonwealth of Independent States, Eastern
European nations and the Far East, and the United States government's
willingness to support the industry through export enhancements.
13
<PAGE>
The Association's operations are classified into two reportable business
segments. See Note 10 of Notes to Consolidated Financial Statements. The
discussion of results of operations relates the effects of these significant
economic factors on those segments for each of the years in the three-year
period ended June 25, 1994.
RESULTS OF OPERATIONS
Fiscal 1993 Compared to Fiscal 1992
Net sales volume of $1.4 billion for 1993 increased 7.7% or $99.7 million
from the prior fiscal year primarily due to increased sales of fresh and
further-processed chicken products. The Association posted net margins from
operations, before general corporate expenses and other income, of $45.1
million for 1993 as compared to net losses from operations, before general
corporate expenses and other income, of $7.8 million for 1992. The
Association's return to profitability was primarily due to improved operating
margins in the Poultry segment resulting from higher market prices for poultry
products and lower field production costs. The Association's margins before
cumulative effect of change in accounting principle were $27.2 million for 1993
as compared to a $1.6 million loss before cumulative effect of accounting
change for 1992.
In 1993, the Poultry segment had net sales volume of $1.1 billion as compared
to $963.1 million for 1992. Net margins from operations were $43.3 million for
1993 as compared to a net loss from operations of $8.1 million for 1992. The
increase in net sales volume and net margins was due to a 6% increase in pounds
of broilers marketed, as well as a 5% increase in average selling prices. The
sales tonnage increases resulted from production and processing expansion at
three poultry complexes located in Alabama, South Carolina and Florida. In
addition to the previous discussion regarding poultry market prices, average
selling prices were positively influenced by reduced supplies of competing
meats. The increase in operating margins during 1993 was also influenced by the
decline in production costs related to a 5% decrease in poultry feed ingredient
costs. The Pork production operation's 1993 net margins from operations were
$1.2 million as compared to a net loss from operations of $121,000 for 1992.
The increase was related to the strengthening of overall meat selling prices.
Net sales volume in the Agri-Services segment for 1993 was $322.6 million,
down approximately 4.5% from $337.8 million in 1992, as a result of reduced
fertilizer and animal feed sales. The Agri-Services segment had net margins
from operations of $1.9 million as compared to $253,000 for 1992. Although the
year to year net margin comparison was favorable, results of operations for
1992 included a $2.8 million loss associated with closed operations. The
results of operations in 1993 were negatively affected by wet weather
conditions in the early spring and late spring drought conditions that hampered
and reduced planting activity in the Southeast.
In 1993, the Association's distribution, administrative and general expenses
were $111.5 million as compared to $103.7 million in 1992, an increase of 7.5%.
The increase reflects higher incentive compensation expense related to the
increase in margins and general expense increases related to expansion in the
Poultry segment. Distribution, general and administrative expenses as a
percentage of net sales were 8.0% for 1992 and 1993.
Other income (deductions) totaling $4.2 million for 1993 decreased $5.5
million from $9.7 million for 1992. The reduction of $6.7 million in the
Association's pro rata share of Golden Peanut Company's net income accounted
for the overall decline in other income (deductions). See Note 9(b) of Notes to
Consolidated Financial Statements. The decline in Golden Peanut Company's net
income in 1993 was the result of lower market prices for shelled peanuts
related to the large crop harvested in 1992. Interest income of $7.5 million
declined approximately $3.6 million for 1993. The 1992 year included $3.1
million in interest received on income tax refunds for the 1984 through 1986
years. Miscellaneous, net in 1993 includes income of $1.6 million that
represents the Association's equity in the earnings of a partially-owned
foreign affiliate as
14
<PAGE>
compared to equity in the loss of the affiliate in 1992 of $2.7 million. The
affiliate's principal activities include marketing, purchasing and resale of
edible peanuts. The 1992 operating loss sustained by the affiliate was
primarily due to low market prices for foreign sourced peanuts and the poor
quality of a significant portion of the peanuts traded. In addition,
miscellaneous, net for 1992 and 1993 includes patronage refunds from other
cooperatives and dividends of $3.8 million and $2.9 million, respectively, and
rental income of $1.9 million and $1.7 million, respectively.
Fiscal 1994 Compared to Fiscal 1993
Net sales volume of $1.6 billion for 1994 increased 11.5% or $160.5 million
from the prior fiscal year as a result of increased sales of poultry products,
as well as increased sales of agricultural production inputs. The Association
had net margins from operations, before general corporate expenses and other
deductions, of $60.6 million for 1994 as compared to $45.1 million in 1993. The
34.3% increase resulted primarily from higher selling prices for poultry
products and increased sales of agricultural products in the Southeast. The
Association's margins before the cumulative effect of accounting changes were
$34.1 million for 1994 as compared to $27.2 million in 1993.
The Poultry segment had record setting net sales volume of $1.2 billion for
1994, which represented a 9.8% increase from the previous fiscal year. Net
margins from operations for 1994 were $52.2 million, a 20.6% increase as
compared to 1993. The increase in net sales volume resulted from an 6.7%
increase in pounds of poultry marketed and a 6.3% increase in average selling
prices. The impact of these factors on net sales volume was partially offset by
lower sales of non-poultry items. As previously discussed, the increase in
market prices for poultry products reflected the general economic recovery in
the United States and the increase in poultry exports during 1994. The increase
in poultry net margins was partially offset by increased feed ingredient prices
which averaged approximately 10.0% above the prior year. Market prices for corn
and soybean meal increased 21.0% and 8.7%, respectively, over the prior year
due to the weather reduced crop in 1993. Market prices for competing meats in
late 1994 declined as a result of heavy cattle and pork processing. As a
result, net margins in the pork production operation declined to $775,000 for
1994 as compared to $1.2 million in 1993.
Net sales volume in the Agri-Services segment for 1994 was $377.3 million, an
increase of $54.7 million or 16.9% as compared to 1993. Net operating margins
for 1994 were $8.5 million which represented a $6.6 million increase from 1993.
The improvements were due primarily to increased sales of agricultural
production inputs such as fertilizers, chemicals, seed and animal feeds through
the Association's farm supply stores and independent dealers. Hot, dry weather
conditions in 1993 damaged pastures in the Southeast, which resulted in
increased sales of animal feeds in the fall and winter and led to increased
plantings necessary to reestablish pastures. Also, contributing to these
improvements was the increase in cotton acreage and generally favorable weather
conditions for planting during the late winter and spring of 1994.
In 1994, the Association's distribution, administrative and general expenses
were $121.4 million as compared to $111.5 million for 1993, an increase of
8.9%. The increase reflects higher incentive compensation expense related to
the increase in margins and general expense increases related to expansion in
the Poultry segment and increased net sales volume in the Agri-Services
segment. Distribution, general and administrative expenses as a percentage of
net sales were 7.8% for 1994 and 8.0% for 1993.
The various components included in other income (deductions) represented a
deduction of $4.3 million for 1994 as compared to income of $4.2 million for
1993. Interest income of $6.8 million for 1994 declined approximately $788,000
from 1993 due primarily to the sale of collateralized loans to an insurance
company. See Note 8 of Notes to Consolidated Financial Statements. Interest
expense for 1994 was $13.9 million as compared to $17.2 million in 1993. The
$3.2 million decline was due primarily to an 11% reduction in average
borrowings and lower interest rates. The Association's $1.1 million pro rata
share of the Golden Peanut Company's 1994 loss (equity in loss of partnership)
represented a significant portion of the decrease in other income (deductions)
for 1994. Golden Peanut Company adopted Statement of Financial Accounting
Standards No. 106 (SFAS 106) "Employers' Accounting for Postretirement Benefits
other Than Pensions," resulting in a charge of $3.9 million to earnings in
1994. Also, the decline in Golden Peanut Company's 1994
15
<PAGE>
operating results was related to the general oversupply situation that exists
in the United States for domestic peanuts, and the increase of peanut based
foods imported into the United States. See Note 9 (b) of Notes to Consolidated
Financial Statements. Miscellaneous, net includes the Association's equity in
the earnings of a partially-owned foreign affiliate whose principal business
activities include the marketing, purchasing and resale of edible peanuts. The
Association recognized income for 1994 and 1993 of $250,000 and $1.6 million,
respectively. The decline in the affiliate's net earnings was the result of
lower market prices for foreign sourced peanuts. Miscellaneous, net for 1994
includes patronage refunds from other cooperatives and other dividends totaling
$710,000 as compared to $2.9 million for 1993. Rental income of approximately
$1.8 million was included in miscellaneous, net for 1994 and 1993.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Association's liquidity is dependent upon funds from operations and
external sources of financing. The principal sources of external short-term
financing are proceeds from the continuous offering of Subordinated Loan
Certificates, a revolving credit facility with a group of banks and uncommitted
lines of credit. The Association had unused loan commitments of $37.4 million
and additional unused uncommitted facilities to provide loans and letters of
credit from banks aggregating approximately $122.6 million at June 25, 1994.
The primary sources of external long-term financing are a note agreement with
an insurance company and proceeds from the continuous offering of Subordinated
Capital Certificates of Interest. See Note 4 of Notes to Consolidated Financial
Statements.
Covenants under the terms of the loan agreements with lenders include
conditions that could limit short-term and long-term financing available from
various external sources. The terms require a ratio of current assets to
current liabilities of not less than 1.20:1, the ratio of senior funded debt to
total capitalization not to exceed 40% and total funded debt to total
capitalization not to exceed 50%. At June 25, 1994, Gold Kist's current ratio,
senior funded debt to total capitalization and total funded debt to
capitalization, determined under the loan agreements, were 1.51:1, 23% and 37%,
respectively. The loan agreements apply to the Association and its
subsidiaries, excluding Golden Poultry. The Association was in compliance with
all applicable conditions in loan agreements with all lenders at June 25, 1994.
See Note 4 of Notes to Consolidated Financial Statements.
In 1992, the principal sources of cash used to fund capital expenditures and
other investments totaling $52.8 million, as well as the $21.8 million net
increase in operating assets and liabilities, were proceeds from the
distribution of Golden Peanut Company's 1991 partnership earnings and the
disposal of investments totaling $34.7 million, income tax refunds of $21.0
million and increased short-term borrowings from commercial banks of $15.8
million. Capital expenditures of $46.0 million and the increase in inventories
and receivables during 1992 were primarily related to poultry production and
processing expansion at three poultry complexes. Increased sales of the
Association's Subordinated Capital Certificates were used primarily for the
repayment of long-term borrowings and redemptions of Subordinated Loan
Certificates. The Association's use of cash in 1992 included $8.8 million for
cash patronage refunds and other equity payments.
In 1993, net cash provided by operations and proceeds from long-term debt
were used primarily to repay short-term and long-term borrowings of $76.7
million. During 1993, the Association and its consolidated subsidiaries
investment activities included $23.3 million in expenditures for property,
plant and equipment. The Association's use of cash included $4.8 million for
cash patronage refunds and other equity payments as compared to $8.8 million in
1992. The expenditures for property, plant and equipment during 1993 included
$17.5 million related to expansion and improvements in the poultry operations,
as well as $5.5 million for the acquisition of retail stores, agricultural
chemical distribution facilities, and a chemical application equipment
manufacturer and distributor.
16
<PAGE>
In 1994, existing cash balances, proceeds from long-term debt and short-term
borrowings, and net cash provided by operations of $36.8 million were used to
fund capital expenditures, repayment of long-term debt, patronage refunds and
other equity payments. Capital expenditures in 1994 included $32.7 million
related to expansion and improvements in poultry operations, as well as $3.8
million for improvements to retail stores and other agricultural operations.
During 1994, the Association had cash payments of approximately $22.7 million
for patronage refunds and other equity payments. These payments included $10.2
million representing the redemption of Revolving Fund and Cumulative Preferred
Certificates.
The Association, including its non-cooperative subsidiaries, plans capital
expenditures of approximately $76.0 million in 1995 that primarily include
expenditures for expansion and technological advances in poultry production and
processing. In addition, planned capital expenditures include other asset
improvements and necessary replacements. Management intends to finance the
planned 1995 capital expenditures with existing cash balances and cash provided
by operating activities and additional long-term borrowings as needed. In 1995,
management expects cash expenditures to approximate $17.7 million for equity
redemptions. The Association believes cash on hand at June 25, 1994 and cash
expected to be provided from operations, in addition to borrowings available
under existing credit arrangements, will be sufficient to maintain cash flows
adequate for the Association's projected growth and operational objectives
during 1995.
EFFECTS OF INFLATION
The major factor affecting the Association's net sales volume and cost of
sales is the change in commodity market prices for broilers, feed grains,
fertilizers and hogs. The prices of these commodities are based on world market
conditions and are volatile in response to supply and demand, as well as
political and economic events. The price fluctuations of these commodities do
not necessarily correlate with the general inflation rate. Inflation has,
however, affected operating costs such as labor, energy and material costs.
FUTURE ACCOUNTING REQUIREMENTS
In May 1993, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities" (SFAS 115), which must be applied by fiscal
1995. SFAS 115 will require a change in the accounting for investments in
equity securities with determinable fair value and for all investments in debt
securities. Implementation of SFAS 115 will increase total assets and patrons'
equity by approximately $12 million, net of deferred income taxes, based
principally on the quoted market price as of June 25, 1994 of the available for
sale marketable equity security. See Note 9(a) of Notes to Consolidated
Financial Statements.
17
<PAGE>
Item 8. Financial Statements and Supplementary Data.
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
FINANCIAL STATEMENTS:
Independent Auditors' Reports............................................ 19
Consolidated Balance Sheets as of June 26, 1993 and June 25, 1994........ 21
Consolidated Statements of Operations for the years ended June 27, 1992,
June 26, 1993 and June 25, 1994........................................ 22
Consolidated Statements of Patrons' and Other Equity for the years ended
June 27, 1992, June 26, 1993 and June 25, 1994......................... 23
Consolidated Statements of Cash Flows for the years ended June 27, 1992,
June 26, 1993 and June 25, 1994........................................ 24
Notes to Consolidated Financial Statements............................... 25
FINANCIAL STATEMENT SCHEDULES
(Included in Part IV of this Report):
FINANCIAL STATEMENT SCHEDULES:
Investments as of June 26, 1993 and June 25, 1994........................ 45
Property, Plant and Equipment for the years ended June 27, 1992, June
26, 1993 and June 25, 1994............................................. 46
Accumulated Depreciation of Property, Plant and Equipment for the years
ended June 27, 1992, June 26, 1993 and June 25, 1994................... 48
Valuation Reserves for the years ended June 27, 1992, June 26, 1993 and
June 25, 1994.......................................................... 49
Short-Term Borrowings for the years ended June 27, 1992, June 26, 1993
and June 25, 1994...................................................... 50
Supplementary Income Statement Information for the years ended June 27,
1992, June 26, 1993 and June 25, 1994.................................. 51
</TABLE>
18
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Gold Kist Inc.:
We have audited the consolidated financial statements of Gold Kist Inc. and
subsidiaries as listed in the accompanying index. In connection with our audits
of the consolidated financial statements, we have also audited the financial
statement schedules as listed in the accompanying index. These consolidated
financial statements and financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedules based on our
audits. We did not audit the consolidated financial statements of Golden Peanut
Company, a partnership investment accounted for using the equity method of
accounting, as described in Note 9(b) to the consolidated financial statements.
The consolidated financial statements of Golden Peanut Company were audited by
other auditors whose report has been furnished to us, and our opinion, insofar
as it relates to the amounts included for Golden Peanut Company, is based solely
on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Gold Kist Inc. and subsidiaries as
of June 26, 1993 and June 25, 1994, and the results of their operations and
their cash flows for each of the years in the three-year period ended June 25,
1994, in conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.
As discussed in notes 6 and 7(b) to the consolidated financial statements, the
Company changed its method of accounting for income taxes in 1994 and its method
of accounting for postretirement benefits other than pensions in 1992.
KPMG PEAT MARWICK LLP
Atlanta, Georgia
September 2, 1994
19
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Partnership Committee
Golden Peanut Company
We have audited the consolidated balance sheets of Golden Peanut Company and
Subsidiaries (the "Partnership") as of June 30, 1994 and 1993, and the related
consolidated statements of income, partners' equity, and cash flows for each of
the three years in the period ended June 30, 1994 (not presented separately
herein). These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Golden Peanut
Company and Subsidiaries at June 30, 1994 and 1993, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended June 30, 1994, in conformity with generally accepted accounting
principles.
In 1994, the Partnership changed its method of accounting for postretirement
benefits other than pensions.
ERNST & YOUNG LLP
Atlanta, Georgia
August 12, 1994
20
<PAGE>
GOLD KIST INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 26, 1993 JUNE 25, 1994
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 31,086 15,670
Receivables, principally trade, including notes
receivable of $32.1 million in 1993 and $42.8
million in 1994, less allowance for doubtful ac-
counts of $5,255 in 1993 and $5,369 in 1994...... 133,771 160,714
Inventories (note 2).............................. 174,504 198,467
Other current assets.............................. 3,365 14,758
-------- -------
Total current assets............................. 342,726 389,609
Investments (note 9)............................... 75,318 72,105
Property, plant and equipment, net (note 3)........ 204,481 204,783
Other assets....................................... 42,577 49,935
-------- -------
$665,102 716,432
======== =======
LIABILITIES AND EQUITY
Current liabilities:
Notes payable and current maturities of long-term
debt (note 4):
Short-term borrowings............................ $ -- 12,798
Subordinated loan certificates................... 26,386 25,079
Current maturities of long-term debt............. 28,044 35,405
-------- -------
54,430 73,282
Accounts payable.................................. 94,236 117,926
Accrued compensation and related expenses......... 23,078 26,431
Patronage refund and other equity payable in cash. 8,526 14,588
Interest left on deposit (note 4)................. 13,392 9,340
Other current liabilities......................... 8,435 8,195
-------- -------
Total current liabilities........................ 202,097 249,762
Long-term debt, excluding current maturities (note
4)................................................ 120,334 109,817
Accrued postretirement benefit costs (note 7(b))... 31,841 34,488
Other liabilities.................................. 617 687
-------- -------
Total liabilities................................ 354,889 394,754
-------- -------
Minority interest.................................. 24,593 25,016
Patrons' and other equity (note 5):
Common stock, $1.00 par value--Authorized 500
shares;
issued and outstanding 79 in 1993 and 1994....... 79 79
Revolving fund and cumulative preferred certifi-
cates............................................ 10,253 --
Patronage reserves................................ 204,148 213,798
Retained earnings................................. 71,140 82,785
-------- -------
Total patrons' and other equity.................. 285,620 296,662
Commitments and contingent liabilities (notes 7 and
8)................................................
-------- -------
$665,102 716,432
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
21
<PAGE>
GOLD KIST INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
-----------------------------------------
JUNE 27, 1992 JUNE 26, 1993 JUNE 25, 1994
------------- ------------- -------------
<S> <C> <C> <C>
Net sales volume..................... $1,300,906 1,400,566 1,561,034
Cost of sales........................ 1,210,961 1,249,509 1,385,239
---------- --------- ---------
Gross margins....................... 89,945 151,057 175,795
Distribution, administrative and gen-
eral expenses....................... 103,681 111,519 121,417
---------- --------- ---------
Net operating margins (loss)........ (13,736) 39,538 54,378
---------- --------- ---------
Other income (deductions):
Interest income..................... 11,124 7,540 6,752
Interest expense.................... (18,545) (17,163) (13,924)
Equity in earnings (loss) of part-
nership (note 9(b))................ 11,404 4,659 (1,110)
Miscellaneous, net.................. 5,712 9,118 3,978
---------- --------- ---------
9,695 4,154 (4,304)
---------- --------- ---------
Margins (loss) before income taxes,
minority interest and
cumulative effect of accounting
changes............................ (4,041) 43,692 50,074
Income tax expense (benefit)-(note
6).................................. (1,449) 14,187 14,861
---------- --------- ---------
Margins (loss) before minority in-
terest and cumulative
effect of accounting changes....... (2,592) 29,505 35,213
Minority interest.................... 949 (2,267) (1,148)
---------- --------- ---------
Margins (loss) before cumulative ef-
fect of accounting changes......... (1,643) 27,238 34,065
Cumulative effect of changes in ac-
counting:
Income taxes (note 6)............... -- -- 5,339
Postretirement benefits other than
pensions (net of
income tax benefit of $10,698)-
(note 7(b))........................ (18,971) -- --
---------- --------- ---------
Net margins (loss).................. $ (20,614) 27,238 39,404
========== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
22
<PAGE>
GOLD KIST INC.
CONSOLIDATED STATEMENTS OF PATRONS' AND OTHER EQUITY
FOR THE YEARS ENDED JUNE 27, 1992, JUNE 26, 1993 AND JUNE 25, 1994
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
REVOLVING
FUND AND
CUMULATIVE
COMMON PREFERRED PATRONAGE RETAINED
TOTAL STOCK CERTIFICATES RESERVES EARNINGS
-------- ------ ------------ --------- --------
<S> <C> <C> <C> <C> <C>
June 29, 1991................. $296,940 86 11,107 210,489 75,258
Net loss for 1992............ (20,614) -- -- -- (20,614)
Notified equity payable
in cash..................... (137) -- -- (137) -
Redemptions and other
changes..................... (4,733) (5) (546) (8,726) 4,544
-------- --- ------- ------- -------
June 27, 1992................. 271,456 81 10,561 201,626 59,188
Net margins for 1993......... 27,238 -- -- 19,107 8,131
Nonqualified patronage refund
and other equity payable
in cash..................... (8,525) -- -- (8,525) -
Redemptions and other
changes..................... (4,549) (2) (308) (8,060) 3,821
-------- --- ------- ------- -------
June 26, 1993................. 285,620 79 10,253 204,148 71,140
Net margins for 1994......... 39,404 -- -- 30,830 8,574
Nonqualified patronage refund
and other equity payable
in cash..................... (14,588) -- -- (14,588) -
Redemptions and other
changes..................... (13,774) -- (10,253) (6,592) 3,071
-------- --- ------- ------- -------
June 25, 1994................. $296,662 79 -- 213,798 82,785
======== === ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
23
<PAGE>
GOLD KIST INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
-----------------------------------------
JUNE 27, 1992 JUNE 26, 1993 JUNE 25, 1994
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net margins (loss)..................................... $(20,614) 27,238 39,404
Non-cash items included in net margins (loss):
Depreciation and amortization......................... 34,518 36,315 37,251
Cumulative effect of changes in accounting principles. 18,971 -- (5,339)
Gains on sales of assets.............................. (468) (703) (201)
Equity in (earnings) loss of partnership.............. (11,404) (4,659) 1,110
Deferred income tax benefit........................... (9,826) (1,650) (5,562)
Other................................................. (6,988) 2,943 3,208
Changes in operating assets and liabilities:
Receivables........................................... (6,818) (4,902) (26,943)
Inventories........................................... (16,627) (5,018) (23,963)
Other current assets.................................. (551) 546 152
Income tax refund (deposit)........................... 20,953 -- (5,038)
Accounts payable and accrued expenses................. 2,216 16,167 26,803
Interest left on deposit.............................. 26 532 (4,052)
-------- ------- -------
Net cash provided by operating activities............ 3,388 66,809 36,830
-------- ------- -------
Cash flows from investing activities:
Acquisitions of investments............................ (3,024) (212) (762)
Acquisitions of property, plant and equipment.......... (45,948) (23,280) (37,232)
Proceeds from partnership earnings distribution........ 22,695 11,404 1,770
Proceeds from disposal of investments.................. 12,021 1,795 1,279
Proceeds from sales of loans........................... -- 20,084 5,040
Other.................................................. (3,842) 1,498 (7,653)
-------- ------- -------
Net cash provided by (used in) investing activities.. (18,098) 11,289 (37,558)
-------- ------- -------
Cash flows from financing activities:
Short-term borrowings (repayments), net................ 15,843 (48,675) 11,491
Proceeds from long-term debt........................... 26,226 22,381 26,668
Principal payments of long-term debt................... (19,611) (28,056) (30,130)
Patronage refunds and other equity paid in cash........ (8,821) (4,812) (22,717)
-------- ------- -------
Net cash provided by (used in) financing activities.. 13,637 (59,162) (14,688)
-------- ------- -------
Net change in cash and cash equivalents.............. (1,073) 18,936 (15,416)
Cash and cash equivalents at beginning of year.......... 13,223 12,150 31,086
-------- ------- -------
Cash and cash equivalents at end of year................ $ 12,150 31,086 15,670
======== ======= =======
Supplemental disclosure of cash flow data:
Cash paid during the years for:
Interest (net of amounts capitalized)................ $ 14,258 17,495 18,575
======== ======= =======
Income taxes......................................... $ 8,721 12,791 23,352
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
24
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 1992, JUNE 26, 1993 AND JUNE 25, 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Gold Kist Inc. and subsidiaries
conform to generally accepted accounting principles and to general practices
among agricultural cooperatives. The following is a summary of the significant
accounting policies.
(a) Basis of Presentation
The accompanying consolidated financial statements include the accounts of
Gold Kist Inc. and its wholly and majority owned subsidiaries (Gold Kist). All
significant intercompany balances and transactions have been eliminated in
consolidation. Certain reclassifications have been made to the 1993
consolidated financial statements to conform to the presentation in the 1994
consolidated financial statements.
(b) Cash and Cash Equivalents
Gold Kist's policy is to invest cash in excess of operating requirements in
highly liquid interest bearing debt instruments, which include commercial paper
and reverse repurchase agreements. These investments are stated at cost which
approximates market. For purposes of the consolidated statements of cash flows,
Gold Kist considers all highly liquid debt instruments purchased with original
maturities of three months or less to be cash equivalents.
(c) Inventories
Merchandise for sale includes feed, fertilizer, seed, pesticides, equipment
and general farm supplies purchased or manufactured by Gold Kist for sale to
agricultural producers and consumers. These inventories are stated, generally,
on the basis of the lower of cost (first-in, first-out or average) or market.
Live poultry and hogs consist of broilers, market hogs and breeding stock.
The broilers and market hogs are stated at the lower of average cost or market.
The breeding stock is stated at average cost, less accumulated amortization.
Raw materials and supplies consist of feed and fertilizer ingredients,
uncleaned seed, hatching eggs, packaging materials and operating supplies.
These inventories are stated, generally, on the basis of the lower of cost
(first-in, first-out or average) or market. Gold Kist hedges varying amounts of
its feed ingredient purchases to minimize the risk of adverse price
fluctuations. Futures contracts are accounted for as hedges and option
contracts are accounted for at market. Gains or losses on futures and options
transactions are included as a part of product cost.
Marketable products consist primarily of dressed and further processed
poultry. These inventories are stated, principally, on the basis of selling
prices, less estimated brokerage, freight and certain other selling costs where
applicable (estimated net realizable value).
(d) Property, Plant and Equipment
Property, plant and equipment is recorded at cost. Depreciation of plant and
equipment is calculated by the straight-line method over the estimated useful
lives of the respective assets.
25
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(e) Investments
Investments in other cooperatives are recorded at cost and include the amount
of patronage refund certificates and patrons' equities allocated, less
distributions received. These investments are not readily marketable and quoted
market prices are not available. The equity method of accounting is used for
investments in other companies in which Gold Kist's voting interest is 20 to 50
percent. Investments in less than 20 percent owned companies are stated at
cost. Investment in the marketable equity security is stated at the lower of
cost or market (see note 9(a)).
Gold Kist's investment in the Golden Peanut Company partnership is accounted
for using the equity method (see note 9(b)). Other investments accounted for
under the equity method are not significant.
(f) Income Taxes
Gold Kist operates as an agricultural cooperative not exempt from Federal
income taxes. Aggregate margins not refunded in cash to members or allocated in
the form of qualified written notices are subject to income taxes.
The bylaws of Gold Kist provide for the issuance of either qualified or
nonqualified patronage refunds (as defined for purposes of Subchapter T of the
Internal Revenue Code). Gold Kist utilized nonqualified patronage refunds in
1993 and 1994, which are deductible for income tax purposes only to the extent
paid or redeemed in cash.
Effective June 27, 1993, Gold Kist adopted the provisions of Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income
Taxes" and reported the cumulative effect of that change in the method of
accounting for income taxes in the 1994 consolidated statement of operations.
SFAS 109 requires an asset and liability approach in accounting for income
taxes and, therefore, required a change from the deferred method Gold Kist
previously used. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Under SFAS
109, the effect on deferred tax assets and liabilities of a change in tax rates
is recognized as income or expense in the period that includes the enactment
date.
Pursuant to the deferred method under Accounting Principles Board Opinion 11,
which was applied in fiscal 1993 and prior years, deferred income taxes that
were reported in different years for financial reporting purposes and income
tax purposes were recognized for income and expense items using the tax rate
applicable for the year of the calculation. Under the deferred method, deferred
taxes were not adjusted for subsequent changes in tax rates.
(g) Fair Value of Financial Instruments
Gold Kist's financial instruments include cash and cash equivalents, accounts
receivables and payables, notes receivable and debt. Because of the short
maturity of cash equivalents, accounts receivables and payables, and certain
short-term debt which matures in less than one year, the carrying value
approximates fair value. All financial instruments are considered to have an
estimated fair value which approximates carrying value at June 25, 1994 unless
otherwise specified.
26
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
(h) Fiscal Year
Gold Kist employs a 52/53 week fiscal year. The consolidated financial
statements for 1992, 1993 and 1994 reflect 52 weeks. Fiscal 1995 will be a 53
week year.
(2) INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
1993 1994
-------- -------
<S> <C> <C>
Merchandise for sale.................................... $ 57,147 65,795
Live poultry and hogs................................... 63,616 75,600
Raw materials and supplies.............................. 30,990 30,090
Marketable products..................................... 22,751 26,982
-------- -------
$174,504 198,467
======== =======
</TABLE>
(3) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized as follows:
<TABLE>
<CAPTION>
1993 1994
-------- -------
<S> <C> <C>
Land and land improvements.............................. $ 28,228 29,757
Buildings............................................... 151,647 159,065
Machinery and equipment................................. 282,736 304,535
Construction in progress................................ 2,600 4,332
-------- -------
465,211 497,689
Less accumulated depreciation........................... 260,730 292,906
-------- -------
$204,481 204,783
======== =======
</TABLE>
Gold Kist owns a 54% interest in its corporate headquarters building through
its investment in GC Properties, a general partnership formed between Gold Kist
and Cotton States Mutual Insurance Company solely for the purpose of acquiring
the corporate headquarters building and related mortgage obligation. One
director of Gold Kist is a director of the Cotton States Insurance Group.
Gold Kist's indirect 54% interest in the aforementioned building and related
accumulated depreciation, based on historical cost, is included in property,
plant and equipment in the accompanying consolidated financial statements.
(4) NOTES PAYABLE AND LONG-TERM DEBT
At June 25, 1994, Gold Kist had unused loan commitments of $37.4 million and
additional uncommitted facilities to provide loans and letters of credit from
banks aggregating approximately $122.6 million. These short-term, unsecured
borrowings bear interest at rates below prime.
Subordinated loan certificates of $25.1 million at June 25, 1994 bore
interest from 3.75% to 5.75% with terms of one year and were unsecured.
Interest left on deposit represents amounts of interest payable, which at the
option of the holders of various classes of certificates, is left on deposit
with Gold Kist. Additional interest on these amounts accrues at the same rates
as the related certificates. Approximately $4.5 million of interest left on
deposit was redeemed as a part of the redemption of the cumulative preferred
certificates of interest during 1994 (see note 5).
27
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
1993 1994
-------- -------
<S> <C> <C>
Unsecured senior notes payable:
9.375% interest notes, due in semi-annual installments of
$5,500 with interest payable semiannually................... $ 44,000 33,000
9.90% interest notes, due in semi-annual installments of
$1,539 with interest payable semiannually................... 18,462 15,384
9.35% interest note, due in a single installment in June 2001
with interest payable quarterly............................. 20,000 20,000
Other long term debt:
Revolving credit agreement with a commercial bank (weighted
average rate of 5.0% at June 25, 1994)...................... -- 7,000
Subordinated capital certificates of interest with interest
rates ranging from 4.50% to 16.50% and with fixed maturities
ranging from two to fifteen years, unsecured (weighted
average interest rate of 8.3% at June 26, 1993 and 7.7% at
June 25, 1994).............................................. 52,837 58,387
Tax exempt industrial revenue bonds with varying interest
rates due in quarterly and annual installments through 2002,
secured by property, plant and equipment.................... 7,325 6,263
Pro rata share of mortgage loan, at 8.47% interest, due in
monthly installments to June 30, 2004, secured by a building
(note 3).................................................... 2,832 2,673
Other........................................................ 2,922 2,515
-------- -------
148,378 145,222
Less current maturities...................................... 28,044 35,405
-------- -------
$120,334 109,817
======== =======
</TABLE>
In June 1991, Gold Kist entered into a three-year concurrent interest rate
exchange agreement on its 9.35% unsecured senior note for another party's
interest obligations on an equivalent amount of principal at a floating rate.
For the year ended June 25, 1994, the average interest rate was 5.35%. The
exchange agreement expired in June 1994 and was not renewed.
Based upon discounted cash flows of future payments, assuming interest rates
available to Gold Kist for issuance of debt with similar terms and remaining
maturities, the estimated fair value of the unsecured senior notes payable at
June 25, 1994 was approximately $71.7 million.
The terms of debt agreements specify minimum working capital, net worth and
current ratio. The debt agreements also place a limitation on equity
distribution, cash patronage refunds and additional loans, advances or
investments. The limitation provides for a carryover to 1995 of unused amounts,
$37.2 million as of June 25, 1994, and is increased by 50% of Gold Kist's net
margins (or minus 100% of a net loss) before any gains or losses on disposals
of capital assets or equity in unremitted earnings of any affiliate. At June
25, 1994, Gold Kist was in compliance with the terms of the agreements.
28
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
Annual required principal repayments on long-term debt for the five fiscal
years subsequent to June 25, 1994 are as follows:
<TABLE>
<S> <C>
Fiscal year:
1995............................................................ $35,405
1996............................................................ 24,605
1997............................................................ 17,959
1998............................................................ 9,920
1999............................................................ 10,541
=======
</TABLE>
(5) PATRONS' AND OTHER EQUITY
Gold Kist's Articles of Incorporation provide for a class of common stock and
a class of preferred stock pursuant to the provisions of the Georgia
Cooperative Marketing Act. Each member is allocated one share of common stock,
$1.00 par value. The common shares are not marketable or transferable and no
dividends will be declared on these common shares. No issuance of preferred
stock has been authorized by Gold Kist.
Revolving fund certificates and patronage reserves represent allocated
undistributed member margins less taxes paid on nonqualified equity. Patronage
reserves do not bear interest and are subordinated to all certificates
outstanding and indebtedness of Gold Kist. Patronage reserves may be revolved
and paid at the discretion of the Board of Directors.
Revolving fund certificates and cumulative preferred capital certificates of
interest with no fixed maturities are no longer issued and were redeemed in
1994. Interest on cumulative preferred capital certificates of interest and
revolving fund certificates was charged against retained earnings. The interest
rates on these certificates were 5% during 1992, 1993 and 1994.
Retained earnings include the cumulative net margins (losses) resulting from
nonmember and nonpatronage transactions, including noncooperative subsidiaries.
Also included are amounts related to the early redemption of notified equity,
representing the difference between the face value and the redemption amounts.
(6) INCOME TAXES
As discussed in Note 1 (f), the Company adopted SFAS 109 as of June 27, 1993.
The cumulative effect of this change in accounting for income taxes, which
resulted in a tax benefit of $5.3 million, was determined as of June 27, 1993
and was reflected in the consolidated statement of operations for the year
ended June 25, 1994. Prior years' financial statements have not been restated
to apply the provisions of SFAS 109.
The provisions for income tax expense (benefit), principally Federal, consist
of the following:
<TABLE>
<CAPTION>
1992 1993 1994
------- ------ ------
<S> <C> <C> <C>
Current expense........................................ $ 8,377 15,837 20,423
Deferred benefit....................................... (9,826) (1,650) (5,562)
------- ------ ------
$(1,449) 14,187 14,861
======= ====== ======
</TABLE>
In addition, Gold Kist recognized a deferred income tax benefit of $10,698 in
1992 related to the cumulative effect of change in accounting for postretirement
benefits other than pensions.
29
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
The significant components of deferred income tax benefit from operations for
the year ended June 25, 1994 are as follows:
<TABLE>
<S> <C>
Deferred tax benefit (exclusive of the effect of the other components
below)............................................................... $(5,439)
Adjustments to deferred tax assets and liabilities for enacted changes
in tax rates......................................................... (328)
Increase in beginning-of-year balance of the valuation allowance for
deferred tax assets.................................................. 205
-------
$(5,562)
=======
</TABLE>
Gold Kist's combined federal and state effective tax rates from operations
for 1992, 1993 and 1994 were 36%, 32% and 30%, respectively. A reconciliation
of income tax expense (benefit) from operations computed by applying the
Federal corporate income tax rate of 34% in 1992 and 1993 and 35% in 1994 to
margins (loss) before income taxes, minority interest and cumulative effect of
accounting changes for the applicable year follows:
<TABLE>
<CAPTION>
1992 1993 1994
------- ------ ------
<S> <C> <C> <C>
Computed expected income tax expense (benefit)....... $(1,374) 14,855 17,526
Increase (decrease) in income tax expense (benefit)
resulting from:
Cash portion of nonqualified patronage refund....... -- (1,183) (1,420)
Effect of state income taxes, net of Federal bene-
fit................................................ 573 1,428 1,050
Nonqualified equity redemptions..................... (616) (575) (525)
Other, net.......................................... (32) (338) (1,770)
------- ------ ------
$(1,449) 14,187 14,861
======= ====== ======
</TABLE>
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at June 25, 1994 are
as follows:
<TABLE>
<CAPTION>
1994
-------
<S> <C>
Deferred tax assets:
Postretirement benefits expense........................... $13,478
Insurance accruals........................................ 8,839
Bad debt reserves......................................... 2,386
State tax operating loss carryforwards.................... 1,913
Other..................................................... 1,804
-------
Total gross deferred tax assets.......................... 28,420
Less valuation allowance.................................. (1,913)
-------
Net deferred tax assets.................................. 26,507
-------
Deferred tax liabilities:
Accelerated depreciation.................................. (2,986)
Deferred compensation..................................... (4,103)
-------
Total deferred tax liabilities........................... (7,089)
-------
Net deferred tax assets.................................. $19,418
=======
</TABLE>
The valuation allowance for deferred tax assets as of June 27, 1993 was $1,708.
The net change in the total valuation allowance for the year ended June 25, 1994
was an increase of $205.
30
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
The Association's management believes the existing net deductible temporary
differences comprising the total net deferred tax assets will reverse during
periods in which the Association generates net taxable income.
Deferred income taxes result from differences in the timing of reporting
income and expenses for financial statement and income tax reporting purposes.
The sources of deferred income taxes and their tax effects are as follows:
<TABLE>
<CAPTION>
1992 1993
------- ------
<S> <C> <C>
Depreciation expense.................................... $ (527) (1,433)
Deferred compensation expense........................... 1,016 167
Insurance accruals...................................... (1,751) (1,839)
Equity in partnerships.................................. (7,821) 133
Other, net.............................................. (743) 1,322
------- ------
$(9,826) (1,650)
======= ======
</TABLE>
During 1993, the Internal Revenue Service (IRS) concluded its examination of
Gold Kist's 1987 through 1989 Federal income tax returns and issued a notice of
deficiency. In April 1994, the remaining issue, whether Gold Kist must
recognize taxable income related to the redemption of its qualified notified
equity at less than face amount, was litigated before the United States Tax
Court. A decision is not expected before fall 1995. The amount at issue,
including interest through June 25, 1994, was approximately $2.7 million. In
the event an additional assessment is made for the aforementioned issue for the
1990 through 1994 Federal income tax returns, this amount including interest
through June 25, 1994 would approximate $4.8 million.
(7) EMPLOYEE BENEFITS
(a) Pension Plans
Gold Kist has noncontributory defined benefit pension plans covering
substantially all of its employees and directors and an affiliate's employees
(participants). The plan covering the salaried participants provides pension
benefits that are based on the employees' compensation during the years before
retirement or other termination of employment. The plan covering the hourly
participants provides pension benefits that are based on years of service. Gold
Kist's funding policy is to contribute within the guidelines prescribed by
Federal regulations. Plan assets consist principally of corporate equities and
bonds, and United States Government and Agency obligations.
Net periodic pension income (expense) for 1992, 1993 and 1994 included the
following components:
<TABLE>
<CAPTION>
1992 1993 1994
------- ------ ------
<S> <C> <C> <C>
Service cost--benefits earned during the year.......... $(2,592) (3,422) (3,720)
Interest cost on projected benefit obligations......... (5,585) (6,247) (6,479)
Actual return on plan assets........................... 14,020 11,116 3,236
Net amortization and deferral.......................... (4,731) (1,827) 5,989
------- ------ ------
Net periodic pension income (expense)................. $ 1,112 (380) (974)
======= ====== ======
</TABLE>
31
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
The following table sets forth the plans' funded status, amounts recognized
in the consolidated balance sheets at June 26, 1993 and June 25, 1994 and
economic assumptions:
<TABLE>
<CAPTION>
1993 1994
-------- -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested participants........................................ $ 66,636 69,662
Nonvested.................................................. 5,542 5,416
-------- -------
Total accumulated benefit obligations..................... $ 72,178 75,078
======== =======
Projected benefit obligations for services rendered to date. $ 91,116 88,083
======== =======
Plan assets for benefits:
Plan assets at fair value.................................. $111,373 109,874
Prepaid pension cost included in other assets in consoli-
dated balance sheets...................................... (15,900) (15,195)
-------- -------
Net plan assets........................................... $ 95,473 94,679
======== =======
Plan assets in excess of projected benefit obligations...... $ 4,357 6,596
======== =======
Consisting of:
Unrecognized net asset existing at the date of adoption.... $ 12,194 10,972
Unrecognized net loss from past experience different from
that assumed and effects of changes in assumptions........ (428) (351)
Prior service cost not yet recognized in net periodic pen-
sion cost................................................. (7,409) (4,025)
-------- -------
$ 4,357 6,596
======== =======
Economic assumptions:
Weighted-average discount rate............................. 8.00% 8.25%
Weighted-average expected long-term rate of return on plan
assets.................................................... 8.75% 9.00%
Weighted-average rate of compensation increase............. 6.00% 6.00%
</TABLE>
The unrecognized net asset existing at the date of adoption of Statement of
Financial Accounting Standards No. 87 is being amortized over the remaining
service lives of the participants.
(b) Other Postretirement Benefits
In addition to providing pension benefits, Gold Kist provides health and life
insurance benefits for retired employees. Effective June 30, 1991, Gold Kist
adopted Statement of Financial Accounting Standards No. 106 (SFAS 106),
"Employers' Accounting for Postretirement Benefits Other Than Pensions." Under
SFAS 106, the cost of postretirement benefits other than pensions must be
recognized on an accrual basis as employees perform services to earn the
benefits. Gold Kist previously expensed the cost of these benefits, which are
principally health care, as claims were incurred. Gold Kist elected to
recognize this change in accounting principle on the immediate recognition
basis. The cumulative effects as of June 30, 1991 of adopting SFAS No. 106 were
an increase in accrued postretirement benefit costs of $29.7 million and an
increase in the 1992 net loss of $19.0 million. The effects of adopting SFAS
No. 106 during 1992 increased the loss before cumulative effect of change in
accounting principle by $1.5 million.
32
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
Gold Kist provides health care and death benefits to substantially all
retired employees, covered dependents and their beneficiaries. Generally,
employees who have attained age 55 and who have 10 years of service are
eligible for these benefits. In addition, employees with less than 10 years of
service who retired before July 1, 1992 are eligible for these benefits. The
health care and death benefit plans are contributory and coverages increase
with increased years of service.
Postretirement health and death benefit expense for 1992, 1993 and 1994
included the following components:
<TABLE>
<CAPTION>
1992 1993 1994
------ ----- -----
<S> <C> <C> <C>
Service cost--benefits earned during the year................ $1,100 1,293 1,728
Interest cost................................................ 2,600 2,305 2,530
------ ----- -----
$3,700 3,598 4,258
====== ===== =====
</TABLE>
Gold Kist's postretirement benefit plans are not funded. The status of the
plans at June 26, 1993 and June 25, 1994 was as follows:
<TABLE>
<CAPTION>
1993 1994
------- ------
<S> <C> <C>
Actuarial present value of accumulated postretirement benefit
obligation:
Retirees...................................................... $11,008 12,896
Fully eligible active plan participants....................... 6,186 6,956
Other active plan participants................................ 14,737 13,029
------- ------
31,931 32,881
Unrecognized net gain from experience differences............. 1,802 3,207
------- ------
$33,733 36,088
======= ======
</TABLE>
The health care cost trend rate used to determine the accumulated
postretirement benefit obligation at June 26, 1993 was 13%, declining ratably
to 5.5% by the year 2002 and remaining at that level thereafter. The health
care cost trend rate used to determine the accumulated postretirement benefit
obligation at June 25, 1994 was 11%, declining ratably to 5.5% by the year 2003
and remaining at that level thereafter. The discount rates used to determine
the accumulated postretirement benefit obligation were 8.00% and 8.25% at June
26, 1993 and June 25, 1994, respectively. A 1% increase in the health care cost
trend rate for each year would increase the accumulated postretirement benefit
obligation for health care benefits at June 25, 1994 by approximately 14% and
net postretirement health care cost by 16%.
(c) Incentive Compensation
Gold Kist has a bonus plan which provides incentive compensation to
approximately 420 management level employees. Bonuses are based on a percentage
of defined segment margins before income taxes and bonuses. An individual's
bonus is determined based upon degree of responsibility and performance. The
amounts charged to expense were $1.1 million, $5.4 million and $6.5 million in
1992, 1993 and 1994, respectively.
33
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
(8) CONTINGENT LIABILITIES AND COMMITMENTS
In January 1993, three Alabama member patrons of Gold Kist filed lawsuits in
the nature of derivative actions against Gold Kist and Golden Poultry Company,
Inc., a majority-owned subsidiary of Gold Kist, and certain directors, officers
and employees of the companies. The lawsuits allege that the named officers,
directors and employees violated their fiduciary duties by creating Golden
Poultry Company, Inc. and Carolina Golden Products Company (Golden Poultry), by
permitting their continued operations and by selling shares of Golden Poultry's
common stock to certain officers, directors and employees. Among the remedies
requested are the transfer of Golden Poultry's operations to Gold Kist, as well
as unspecified actual and punitive damages. In March 1994, the court certified
the litigation as a class action. In July 1994, the court dismissed the
employees as defendants in the applicable lawsuit. Gold Kist intends to defend
the litigation vigorously.
Gold Kist is a defendant in various legal and administrative proceedings
seeking alleged actual and punitive damages and specific performance to correct
certain alleged problems. Gold Kist management is of the opinion that the
ultimate resolution of these matters will not have a material adverse impact on
Gold Kist's financial position.
Gold Kist received proceeds of $20.0 million and $5.0 million during 1993 and
1994, respectively, for collateralized loans sold with recourse to an insurance
company, of which $21.5 million was outstanding at June 25, 1994. No gain or
loss was recognized on the sale of these loans. A $207 thousand allowance has
been recognized in the accompanying consolidated financial statements for
potential losses that may occur. As of June 25, 1994, there have been no credit
losses related to the loans guaranteed under this agreement.
Gold Kist is a guarantor of amounts outstanding under a $55.0 million secured
loan agreement between a commercial bank and Young Pecan Company, a pecan
processing and marketing partnership in which Gold Kist holds a 25% equity
interest and 35% earnings (loss) allocation. At June 25, 1994, the amounts
outstanding under this facility were $24.1 million.
(9) INVESTMENTS
(a) Marketable Equity Security
At June 26, 1993 and June 25, 1994, investments include a noncurrent
marketable equity security with a cost of $21.5 million. The market value of
the equity security was $40.6 million and $42.0 million at June 26, 1993 and
June 25, 1994, respectively. Gains realized on sales and dividends totaled $1.6
million, $169 thousand and $170 thousand and are included in miscellaneous, net
for the years ended June 27, 1992, June 26, 1993 and June 25, 1994,
respectively.
(b) Golden Peanut Company
Gold Kist has a 33 1/3% interest in Golden Peanut Company, a Georgia general
partnership. Gold Kist's investment in the partnership amounted to $23.0
million and $20.1 million at June 26, 1993 and June 25, 1994, respectively. The
partnership has a $450.0 million commercial paper facility of which $215.0
million was outstanding at June 30, 1994.
34
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
Summarized financial information of Golden Peanut Company is shown below:
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
1993 1994
-------- -------
<S> <C> <C>
Current assets.......................................... $280,921 258,195
Property, plant and equipment, net...................... 32,590 33,465
-------- -------
Total assets.......................................... $313,511 291,660
======== =======
Current liabilities..................................... $244,455 226,871
Accrued postretirement benefit costs.................... -- 4,477
Partners' equity........................................ 69,056 60,312
-------- -------
Total liabilities and partners' equity................ $313,511 291,660
======== =======
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1992 1993 1994
-------- ------- -------
<S> <C> <C> <C>
Net sales and other operating income........... $461,088 486,868 456,937
Costs and expenses............................. 429,738 472,812 460,291
-------- ------- -------
Net income (loss)............................ $ 31,350 14,056 (3,354)
======== ======= =======
</TABLE>
Golden Peanut Company's 1994 net loss includes a $3.9 million charge
resulting from the adoption of SFAS 106. Gold Kist has included its
proportionate share of Golden Peanut Company's adoption of SFAS 106 in equity
in earnings (loss) of partnership in the accompanying 1994 consolidated
statement of operations since the amount is not significant.
In 1992, 1993 and 1994, Gold Kist received $2.1 million in rental income from
Golden Peanut Company under an operating lease agreement for peanut shelling
and procurement facilities. In addition, Gold Kist received procurement
commissions and royalties of $1.6 million, $2.2 million and $2.0 million in
1992, 1993 and 1994, respectively.
(10) MAJOR BUSINESS SEGMENTS
Gold Kist is an agricultural cooperative, with operations located primarily
in the southeastern United States, engaged in marketing products and purchasing
supplies and equipment for its patrons. Gold Kist also operates non-cooperative
businesses engaged in broiler operations, farm and home retailing, and crop and
equipment financing. Gold Kist's operations are classified into industry
segments as follows:
The Poultry segment includes cooperative integrated broiler production,
processing and marketing operations, as well as subsidiary broiler operations.
This segment has decentralized broiler, pork production and cornish game hen
facilities.
The Agri-Services segment purchases or manufactures feed, seed, fertilizers,
agricultural chemicals, animal health products, and other farm supply and
equipment items for sale. These products are primarily sold through Gold Kist
owned retail outlets and independent dealers.
35
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
The following table presents certain financial information as to industry
segments:
<TABLE>
<CAPTION>
AGRI- INTERSEGMENT
POULTRY SERVICES ELIMINATIONS CONSOLIDATED
---------- -------- ------------ ------------
<S> <C> <C> <C> <C>
YEAR ENDED JUNE 27, 1992
- - ------------------------
Net sales volume................ $ 963,064 337,842 -- 1,300,906
========== ======= ======= =========
Net margins (losses) from opera-
tions.......................... $ (8,058) 253 -- (7,805)
========== ======= =======
General corporate expenses...... (5,931)
Other income, net............... 9,695
---------
Loss before income taxes,
minority interest and
cumulative effect of accounting
change......................... $ (4,041)
=========
Depreciation and amortization
expense........................ $ 28,689 5,054 775(c) 34,518
========== ======= ======= =========
Capital expenditures............ $ 39,980 5,304 664(c) 45,948
========== ======= ======= =========
Identifiable assets at June 27,
1992........................... $ 353,034 208,663 115,001(c) 676,698
========== ======= ======= =========
YEAR ENDED JUNE 26, 1993
- - ------------------------
Net sales volume................ $1,077,928 322,638 -- 1,400,566
========== ======= ======= =========
Net margins from operations..... $ 43,269 1,876 -- 45,145
========== ======= =======
General corporate expenses...... (5,607)
Other income, net............... 4,154
---------
Margins before income taxes and
minority interest.............. $ 43,692
=========
Depreciation and amortization
expense........................ $ 30,566 4,911 838(c) 36,315
========== ======= ======= =========
Capital expenditures............ $ 17,475 5,530 275(c) 23,280
========== ======= ======= =========
Identifiable assets at June 26,
1993........................... $ 352,562 202,219 110,321(c) 665,102
========== ======= ======= =========
YEAR ENDED JUNE 25, 1994
- - ------------------------
Net sales volume................ $1,183,729 377,305 -- 1,561,034
========== ======= ======= =========
Net margins from operations..... $ 52,177 8,471 -- 60,648
========== ======= =======
General corporate expenses...... (6,270)
Other deductions, net........... (4,304)
---------
Margins before income taxes,
minority interest and
cumulative effect of accounting
change......................... $ 50,074
=========
Depreciation and amortization
expense........................ $ 31,234 5,134 883(c) 37,251
========== ======= ======= =========
Capital expenditures............ $ 32,655 3,772 805(c) 37,232
========== ======= ======= =========
Identifiable assets at June 25,
1994........................... $ 375,389 218,111 122,932(c) 716,432
========== ======= ======= =========
</TABLE>
- - --------
(a) Net sales volume includes export sales amounting to $29,779, $27,511 and
$37,731 in 1992, 1993 and 1994, respectively, which have no significant
geographical concentration.
(b) Intersegment sales are generally priced at competitive market prices.
(c) Amounts relate to unallocated corporate assets.
36
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not Applicable.
PART III
--------
Item 10. Directors and Executive Officers of the Registrant.
The Directors of Gold Kist are:
<TABLE>
<CAPTION>
Years
Term Served as
Name Age Office Expires Director
- - ---- --- ------ ------- ---------
<S> <C> <C> <C> <C>
(as of
8/30/94)
W. P. Smith, Jr.* 65 Chairman of the 1995 21
Board &
Director (District 1)
Charles C. Williams 71 Director (District 2) 1995 32
Fred K. Norris, Jr.* 66 Director (District 3) 1994 17
James E. Brady, Jr. 59 Director (District 4) 1996 10
W. Kenneth Whitehead 50 Director (District 5) 1996 1
Dan Smalley* 45 Director (District 6) 1996 9
A. Jack Nally 51 Director (District 7) 1994 3
M. Michael Davis 43 Director (District 8) 1994 3 months
Phil Ogletree, Jr. 61 Director (District 9) 1995 17
- - ------------------
</TABLE>
* Member of Board of Directors Executive Committee.
37
<PAGE>
The Directors of Gold Kist are elected on a district representation basis.
The districts are redrawn from time to time by the Board of Directors, under
provisions of the By-Laws of Gold Kist, to provide for equitable representation
of members in the territory served by Gold Kist. During the past five years,
each of the Directors has owned and managed substantial farming operations,
producing such agricultural products as peanuts, cotton, soybeans, corn, other
grains, peaches, vegetable crops, cattle, poultry and dairy products. While the
size of products produced on, and personnel employed at, each of the Director's
farms varies, each Director's business activities have been related primarily to
small agribusiness enterprises. Mr. Williams is also a director of Cotton
States Life and Health Insurance Company and of Cotton States Mutual Insurance
Company. There are no family relationships among any of the Directors and
executive officers.
38
<PAGE>
The Executive Officers of Gold Kist are:
<TABLE>
<CAPTION>
Years Years
Served Served
In that with
Name Age Office Office Gold Kist
- - ---- --- ------ ------ ---------
(as of
8/30/94)
<S> <C> <C> <C> <C>
Harold O. Chitwood 64 Chief Executive Officer, 3 37
and Chairman of the
Management Executive
Committee
G. O. Coan* 58 President and Chief 3 35
Operating Officer
J. K. Hogan 60 Vice President, 11 42
Administration
Kenneth N. Whitmire 56 Group Vice President, 6 33
Poultry Group
Jack L. Lawing 56 General Counsel, Vice 18 18
President and Secretary
Peter J. Gibbons 57 Vice President, Finance 15 18
Paul G. Brower 55 Vice President, 15 15
Communications
W. A. Epperson 58 Vice President, 15 19
Human Resources
Jerry L. Stewart 54 Vice President - 13 31
Marketing, Poultry Group
John K. McLaughlin 56 Vice President, Pet Food 10 10
and Animal Products Division
Allen C. Merritt 48 Vice President, 11 22
Fertilizer
and Chemical Division
Stanley C. Rogers 48 Vice President, 4 16
AgriServices Division
Michael F. Thrailkill 46 Vice President, 2 21
Information Services
Stephen O. West 48 Treasurer 11 14
W. F. Pohl, Jr. 44 Controller 12 18
- - --------------
</TABLE>
* Member of Management Executive Committee
The officers serve for terms of one year and until their successors are
elected by the Board of Directors.
During the past five years the principal occupation of each of the above
named executive officers has been as an officer or employee of Gold Kist, except
for Mr. G. O. Coan.
Mr. G. O. Coan, who was elected to his present position with Gold Kist in
October 1991, formerly served as Executive Vice President of Gold Kist from
October 1990 until election to his current position. He was President of Golden
Peanut Company from December 1986 until October 1990. He previously served as
Executive Vice President, Agri-Services/Marketing Group, for Gold Kist Inc.
39
<PAGE>
Item 11. Executive Compensation.
Summary Compensation Table. The following table sets forth information
---------------------------
concerning the compensation received by the Chief Executive Officer and for each
of the four other most highly compensated executive officers:
<TABLE>
<CAPTION>
Annual compensation
--------------------
Other
annual All other
Fiscal compensa- compensa-
year Salary Bonus tion(1) tion
ended ($) ($) ($) ($)(2)
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Harold O. Chitwood June 25, 1994 $388,483 $310,000 - $4,722
Chief Executive Officer June 26, 1993 357,150 275,000 - 932
and Chairman of the June 27, 1992 303,261 189,000 - 5,042
Management Executive
Committee
Gaylord O. Coan June 25, 1994 $297,293 $270,000 - $4,820
President and Chief June 26, 1993 266,500 239,300 - 865
Operating Officer June 27, 1992 244,176 164,500 - 4,889
Kenneth N. Whitmire June 25, 1994 $170,558 $230,000 - $4,264
Group Vice President, June 26, 1993 162,000 210,600 - 810
Poultry Group June 27, 1992 159,615 127,000 - 3,993
Jerry L. Stewart June 25, 1994 $147,904 $150,000 - $3,698
Vice President Marketing, June 26, 1993 140,500 137,900 - 702
Poultry Group June 27, 1992 138,173 84,000 - 3,451
J. K. Hogan June 25, 1994 $161,077 $116,000 - $4,027
Vice President, June 26, 1993 153,000 103,400 - 764
Administration June 27, 1992 149,884 71,500 - 3,742
</TABLE>
- - -------------------------------
(1) In accordance with the transitional provisions applicable to the revised
rules on executive officer and director compensation disclosure adopted by
the Securities and Exchange Commission, amounts of "Other Annual
Compensation" are excluded for the Company's fiscal year ended June 27,
1992. For the fiscal years ended June 25, 1994 and June 26, 1993, no
amounts of "Other Annual Compensation" were paid to any of the above named
executive officers, except for perquisites and other personal benefits which
for each executive officer did not exceed the lesser of $50,000 or 10% of
such individual's salary plus annual bonus.
(2) The amounts set forth include amounts that were contributed by the
Association for the indicated fiscal years on behalf of the named executive
officers pursuant to the Gold Kist Profit Sharing and Investment Plan, a
qualified defined contribution plan (401(K) plan).
40
<PAGE>
Retirement Plans. Gold Kist maintains two noncontributory retirement plans, one
- - -----------------
for salaried employees and the other for hourly employees, which together cover
substantially all employees who have served at least one year with Gold Kist,
including those employees subject to collective bargaining agreements. The plan
for salaried employees was amended in 1984 to delete the one year waiting period
for credited service. For salaried employees, the plan provides a retirement
benefit after 30 years of credited service at age 65, which, when combined with
the portion of the employee's primary Social Security benefit attributable to
his/her employer's contributions, will equal 45% of his/her average earnings
during the period of five years in which he/she had the highest earnings in the
last ten years of employment immediately preceding attainment of age 65, or if
retired before age 65, in the last ten years immediately preceding early
retirement. This plan also provides an early retirement benefit after age 55,
with no reduction in benefit entitlement due to age, when the sum of the
employee's age and years of service equal or exceed 90. The benefit entitlement
is reduced in either case for each year of credited service less than 30 years.
For hourly employees who work for Gold Kist until age 65, the plan provides a
monthly pension benefit equal to $9.00 for each year of plan participation,
payable at age 65; early retirement is permitted after age 55 at reduced benefit
levels. The plans contain a death benefit for the surviving spouse of an active
employee (who had at least five years credited service or was at least 55 years
old at the time of death) which equals 50% of the deceased employee's accrued
retirement income benefit. Accrued benefits under the plans vest after the
employee attains five years of service or at age 55, and the minimum pension
benefit at age 65 is $9.00 per month for each year of credited service. Amounts
contributed for specific individuals under Gold Kist's retirement income plan
for salaried employees cannot be readily determined. For the plan year ended
December 31, 1993, the Association made a contribution of $1,066,000 to the
pension plan for hourly employees. Due to the full funding limitation of the
Internal Revenue Service, the Association was not permitted to make a tax-
deductible contribution to the retirement income plan for salaried employees for
the plan year ended December 31, 1993. Estimated annual benefits payable upon
retirement at normal retirement age (65 years) to persons in specified years of
service and remuneration classifications, before offset of Social Security
benefits, are illustrated in the following table:
<TABLE>
<CAPTION>
Estimated Annual Benefits For Years of Service Indicated
--------------------------------------------------------
Remuneration 10 Years 15 Years 20 Years 25 Years 30 Years or More
- - -------------- -------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
$100,000 $ 15,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000
$150,000 22,500 33,750 45,000 56,250 67,500
$200,000 30,000 45,000 60,000 75,000 90,000
$250,000 37,500 56,250 75,000 93,750 112,500
$350,000 52,500 78,750 105,000 124,535 * 125,682 *
$500,000 75,000 112,500 123,388 * 124,535 * 125,682 *
$750,000 112,500 122,241 * 123,388 * 124,535 * 125,682 *
$850,000 121,094 * 121,241 * 123,388 * 125,535 * 125,682 *
</TABLE>
Notes:
- - ------
* For years after 1993, the maximum annual amount of compensation that can be
used for determining an individual's benefit under a qualified plan is $150,000.
The plan covers the compensation set forth in the columns entitled "Salary"
and "Bonus" in the Summary Compensation Table. The credited years of service as
of December 31, 1993, under the retirement income plan for the five executive
officers listed in the summary compensation table are as follows: Mr. Chitwood
(30); Mr. Coan (30); Mr. Hogan (30); Mr. Whitmire (30); and Mr. Stewart (30).
A Supplemental Executive Retirement Plan has been adopted by the
Association whereby Gold Kist makes supplemental payments to certain employees
under a non-qualified deferred compensation plan to make up for any reduction in
such employees' retirement income under the Gold Kist salary retirement plan
resulting from restrictions placed on qualified retirement plans under Section
415 of the Internal Revenue Code of 1986, as amended. Such
41
<PAGE>
restrictions limit the amount of benefits payable in qualified retirement plans
with respect to the percentage of final pay to which such employees would be
otherwise entitled upon retirement. All vested amounts accrued under the Plan
have been funded in a trust which is secure against all contingencies except a
bankruptcy of the Association. The following table shows the estimated annual
benefits payable upon retirement at normal retirement age (65) to persons in
specified years of service and remuneration classifications, before offset of
Social Security benefits and without restriction imposed by the Internal Revenue
Code. The amounts shown in the table would be reduced by the amounts payable
pursuant to the Gold Kist Retirement Plan for Salaried Employees.
<TABLE>
<CAPTION>
Estimated Annual Benefits For Years of Service Indicated
--------------------------------------------------------
Remuneration 10 Years 15 Years 20 Years 25 Years 30 Years or More
- - -------------- -------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
$100,000 $ 15,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000
$150,000 22,500 33,750 45,000 56,250 67,500
$200,000 30,000 45,000 60,000 75,000 90,000
$250,000 37,500 56,250 75,000 93,750 112,500
$350,000 52,500 78,750 105,000 131,250 157,500
$500,000 75,000 112,500 150,000 187,500 225,000
$750,000 112,500 168,750 225,000 281,250 337,500
$850,000 127,500 191,250 255,000 318,750 382,500
</TABLE>
Covered compensation, computation of the average final compensation, and
credited years of service for the five executive officers listed in the summary
compensation table are the same as that set forth in the foregoing description
of the Gold Kist Retirement Plan for Salaried Employees.
In addition to the retirement benefits provided by its qualified and
nonqualified retirement plans, Gold Kist has contracted to provide certain key
employees with compensation benefits after normal retirement. These benefits,
known as the Management Deferred Compensation Plan, are paid monthly following
retirement in an annual amount equal to 25% of the average annual salary for the
ten year period immediately prior to retirement. These benefits are payable,
depending on the contract, for a 10 or 15 year period following retirement to a
former key employee or his designated beneficiary. All vested amounts accrued
under the plan have been funded in a trust which is secure against all
contingencies except a bankruptcy of the Association. Estimated annual benefits
payable under the Management Deferred Compensation Plan would be based upon the
following average annual salary of the eligible named executives for the ten
year period ended as of June 25, 1994: Mr. Chitwood - $211,808; Mr. Coan -
$171,228; Mr. Hogan - $125,037; and Mr. Whitmire - $120,030.
Change in Control Plans. Under the Gold Kist officers contingency plan,
------------------------
the Association has entered into identical change in control agreements with
each officer, including the five executive officers named in the cash
compensation table. Each change in control agreement provides that following a
change in the control of the Association (as defined in the agreements), if the
officer's employment with the Association terminates within two years after the
change in control (but prior to the officer's reaching age 65), the officer will
be entitled to receive a severance payment calculated by determining the "Base
Severance Amount" as follows:
(1) if the officer is age 60 or younger at the time of termination of his
employment, the amount equal to the officer's compensation paid by the
Association for the five full calendar years ending before the date of
the change in control, or
(2) if the officer is older than age 60 at the time of his termination of
employment, the amount equal to the officer's average annual
compensation paid by the Association for the lesser of five full
calendar years or the full calendar years of service with the
Association ending before the change in control, multiplied by the
number of years and fractions thereof remaining until the officer's 65th
birthday.
42
<PAGE>
The Base Severance Amount is to be adjusted for those officers with less than 15
years of service by prorating the Base Severance Amount with the numerator being
the number of completed calendar years of service and the denominator being 15.
However, the minimum any terminated officer would receive would be one and one-
half times the average annual compensation paid by the Association for the
actual number of full calendar years worked, if less than five, or the annual
salary amount for an officer who has worked less than one calendar year. The
severance payment will include an additional amount equal to any excise tax
under Section 4999 of the Internal Revenue Code of 1986 incurred by the officer,
plus all federal, state and local income taxes incurred by the officer with
respect to receipt of the additional amount. Additionally, under such
contracts, medical benefits would remain available to current and retired
officers on the same basis as is provided at the time of a change in control.
The Association has agreed to pay all legal fees and expenses incurred by an
officer in the pursuit of the rights and benefits provided by the change in
control agreement. The Association has entered into similar change in control
agreements with each director of Gold Kist. As of June 25, 1994, no
contingencies have occurred which would require the implementation of the
provisions of the changes in control plans, and no payments or other benefits
have been provided to the five executive officers named in the summary
compensation table or to the directors.
Director Compensation. The By-Laws of Gold Kist provide that the Directors
----------------------
shall be compensated for their services and reimbursed for their expenses, as
determined by the Board of Directors. Currently the Directors receive no
compensation other than an annual retainer paid at the rate of $14,000 per year,
with the Chairman receiving $15,500. Directors and Directors Emeriti receive a
per diem of $250 with a $500 minimum, plus expenses incurred while traveling to
and from and attending meetings of the Board of Directors or other official
meetings or conferences. Pursuant to separate agreements, Gold Kist has
arranged to provide life benefits to qualifying directors emeriti and to make
available health insurance and other medical benefits for Gold Kist directors
and directors emeriti as are available to employees of Gold Kist from time to
time pursuant to the Association group insurance program.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The Directors and Officers of Gold Kist, as a group, do not have any
beneficial ownership of 5% Cumulative Preferred Capital Certificates of Interest
as of July 31, 1994. These certificates, which have no fixed maturity dates,
are classified as equity on Gold Kist's consolidated balance sheets. See Note 5
of Notes to Consolidated Financial Statements.
Item 13. Certain Relationships and Related Transactions.
The Directors of Gold Kist are members of the Association and, during the
fiscal year ended June 25, 1994, have had dealings in the ordinary course of
business with Gold Kist as purchasing or marketing patrons. See Business (and
Properties) -- Patronage Refunds.
43
<PAGE>
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)1. Index to Consolidated Financial Statements
------------------------------------------
Consolidated Financial Statements:
Independent Auditors' Reports
Consolidated Balance Sheets--June 26, 1993 and
June 25, 1994
Consolidated Statements of Operations--Years Ended
June 27, 1992, June 26, 1993 and June 25, 1994
Consolidated Statements of Patrons' and Other
Equity-Years Ended June 27, 1992, June 26, 1993
and June 25, 1994
Consolidated Statements of Cash Flows--Years ended
June 27, 1992, June 26, 1993 and June 25, 1994
Notes to Consolidated Financial Statements
(a)2. Financial Statement Schedules:
------------------------------
Financial Statement Schedules:
I. Investments--As of June 26, 1993 and June 25, 1994
V. Property, Plant and Equipment--Years Ended June
27, 1992, June 26, 1993 and June 25, 1994
VI. Accumulated Depreciation of Property, Plant and
Equipment--Years Ended June 27, 1992, June 26, 1993
and June 25, 1994
VIII. Valuation Reserves--Years Ended June 27, 1992,
June 26, 1993 and June 25, 1994
IX. Short-Term Borrowings--Years Ended June 27, 1992,
June 26, 1993 and June 25, 1994
X. Supplementary Income Statement Information--Years
Ended June 27, 1992, June 26, 1993 and June 25, 1994
44
<PAGE>
GOLD KIST INC.
SCHEDULE I - INVESTMENTS
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
--------- --------- ---------- -------------- -----------------
Market Value Amount at Which
Number of of Each Issue Each Issue is
Shares or Cost of at Balance Carried in the
Name of Issuer Units Each Issue Sheet Date (A) Balance Sheet (B)
- - -------------- --------- ---------- -------------- -----------------
(dollar amounts in thousands)
<S> <C> <C> <C> <C>
June 26, 1993
- - -------------
CF Industries, Inc.:
Preferred, $100 par value 154,390 $15,439 - 15,439
Common, $1,000 par value 1 1 - 1
------- -------
Total 15,440 15,440
------- -------
Archer Daniels Midland Company:
Common Stock 1,709,470 21,473 40,600 21,473
Golden Peanut Company (B) 22,992 - 22,992
Other Investments 15,413 - 15,413
------- -------
Total $75,318 75,318
======= =======
June 25, 1994
- - -------------
CF Industries, Inc.:
Preferred, $100 par value 154,390 $15,439 - 15,439
Common, $1,000 par value 1 - 1
------- -------
Total 15,440 15,440
------- -------
Archer Daniels Midland Company:
Common Stock 1,794,942 21,473 41,957 21,473
Golden Peanut Company (B) 20,112 - 20,112
Other Investments 15,080 - 15,080
------- -------
Total $72,105 72,105
======= =======
</TABLE>
(A) Investments other than the common stock of Archer Daniels Midland Company
are not readily marketable. See Note 1(e) of Notes to Consolidated Financial
Statements as to valuation methods.
(B) See Note 9(b) of Notes to Consolidated Financial Statements.
45
<PAGE>
GOLD KIST INC.
Schedule V - Property, Plant, and Equipment
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- ---------- ---------- ------------ ------------ ---------
Balance at Other Balance
Beginning Additions Changes At End
Description Of Period At Cost Retirements Add (Deduct) Of Period
----------- ---------- ---------- ------------ ------------ ---------
(amounts in thousands)
<S> <C> <C> <C> <C> <C>
Year Ended June 27, 1992:
Land $ 10,615 1,212 (93) - 11,734
Land Improvements 13,847 1,924 (126) - 15,645
Buildings 132,519 15,153 (1,064) - 146,608
Machinery and Equipment 209,540 42,768 (4,924) - 247,384
Office Furniture and Equipment 11,011 1,135 (637) - 11,509
Automotive Equipment 13,562 679 (1,105) - 13,136
Leasehold Improvements 1,196 25 (37) - 1,184
Construction in Progress 20,220 (16,948) - - 3,272
-------- -------- -------- -------- --------
Total $412,510 45,948 (7,986) - 450,472
======== ======== ======== ======== ========
Year Ended June 26, 1993:
Land $ 11,734 254 (158) 109 11,939
Land Improvements 15,645 825 (181) - 16,289
Buildings 146,608 7,544 (2,595) 90 151,647
Machinery and Equipment 247,384 13,742 (3,919) - 257,207
Office Furniture and Equipment 11,509 1,106 (703) - 11,912
Automotive Equipment 13,136 481 (1,177) - 12,440
Leasehold Improvements 1,184 - (7) - 1,177
Construction in Progress 3,272 (672) - - 2,600
-------- -------- -------- -------- --------
Total $450,472 23,280 (8,740) 199 465,211
======== ======== ======== ======== ========
</TABLE>
46
<PAGE>
GOLD KIST INC.
Schedule V, Continued
Property, Plant, and Equipment
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- ---------- ---------- ------------ ------------ ---------
Balance at Other Balance
Beginning Additions Changes At End
Description Of Period At Cost Retirements Add (Deduct) Of Period
----------- ---------- ---------- ------------ ------------ ---------
(amounts in thousands)
<S> <C> <C> <C> <C> <C>
Year Ended June 25, 1994:
Land $ 11,939 481 (71) - 12,349
Land Improvements 16,289 1,132 (13) - 17,408
Buildings 151,647 7,600 (400) 218 159,065
Machinery and Equipment 257,207 24,614 (2,907) - 278,914
Office Furniture and Equipment 11,912 858 (118) - 12,652
Automotive Equipment 12,440 806 (1,463) - 11,783
Leasehold Improvements 1,177 9 - - 1,186
Construction in Progress 2,600 1,732 - - 4,332
-------- -------- -------- -------- --------
Total $465,211 37,232 (4,972) 218 497,689
======== ======== ======== ======== ========
</TABLE>
- - --------------------------
See Note 1(d) of Notes to Consolidated Financial Statements for information
as to depreciation methods used during the periods. Estimated useful lives
generally are as follows:
<TABLE>
<S> <C> <C> <C>
Land Improvements 5 - 20 Years Office Furniture and Equipment 3 - 10 Years
Buildings 10 - 40 Years Automotive Equipment 3 - 10 Years
Machinery and Equipment 3 - 10 Years
</TABLE>
47
<PAGE>
GOLD KIST INC.
Schedule VI - Accumulated Depreciation of Property, Plant, and Equipment
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- ---------- ---------- ------------ ------------ ---------
Balance at Other Balance
Beginning Changes At End
Description Of Period Additions Retirements Add (Deduct) Of Period
----------- ---------- ---------- ------------ ------------ ---------
(amounts in thousands)
<S> <C> <C> <C> <C> <C>
Year Ended June 27, 1992:
Land Improvements $ 6,455 996 (97) - 7,354
Buildings 48,844 5,821 (889) - 53,776
Machinery and Equipment 127,751 25,574 (4,276) - 149,049
Office Furniture and Equipment 8,133 950 (560) - 8,523
Automotive Equipment 12,141 687 (1,072) - 11,756
Leasehold Improvements 830 53 (13) - 870
-------- -------- -------- -------- --------
Total $204,154 34,081 (6,907) - 231,328
======== ======== ======== ======== ========
Year Ended June 26, 1993:
Land Improvements $ 7,354 1,079 (110) - 8,323
Buildings 53,776 6,170 (1,055) - 58,891
Machinery and Equipment 149,049 26,920 (3,538) - 172,431
Office Furniture and Equipment 8,523 931 (508) - 8,946
Automotive Equipment 11,756 635 (1,167) - 11,224
Leasehold Improvements 870 53 (8) - 915
-------- -------- -------- -------- --------
Total $231,328 35,788 (6,386) - 260,730
======== ======== ======== ======== ========
Year Ended June 25, 1994:
Land Improvements $ 8,323 1,190 (13) - 9,500
Buildings 58,891 6,249 (261) - 64,879
Machinery and Equipment 172,431 27,669 (2,720) - 197,380
Office Furniture and Equipment 8,946 946 (104) - 9,788
Automotive Equipment 11,224 612 (1,445) - 10,391
Leasehold Improvements 915 53 - - 968
-------- -------- -------- -------- --------
Total $260,730 36,719 (4,543) - 292,906
======== ======== ======== ======== ========
</TABLE>
48
<PAGE>
GOLD KIST INC.
Schedule VIII - Valuation Reserves
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ---------- --------------------- ---------- ----------
Additions
---------------------
Balance at Charged to Charged Balance
Beginning Cost and To Other At End
Description Of Period Expenses Accounts Deductions Of Period
----------- ---------- ---------- --------- ---------- ----------
(amounts in thousands)
<S> <C> <C> <C> <C> <C>
Deducted in the consolidated
balance sheets from the asset
to which it applies:
Allowance for doubtful accounts:
June 27, 1992 $ 4,368 2,553 - 1,824 (A) 5,097
June 26, 1993 5,097 1,495 - 1,337 (A) 5,255
June 25, 1994 5,255 1,662 - 1,548 (A) 5,369 (A)
</TABLE>
(A) Represents accounts written off.
49
<PAGE>
GOLD KIST INC.
Schedule IX - Short-Term Borrowings
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- - ----------------------- ---------- ------------- ------------- --------------- ----------------
Maximum Average Weighted
Balance At Weighted Amount Amount Out- Average Interest
Category of Aggregate End of Average Outstanding standing During Rate During
Short-Term Borrowings Period Interest Rate During Period Period (1) Period (2)
--------------------- ---------- ------------- ------------- --------------- ----------------
(amounts in thousands)
<S> <C> <C> <C> <C> <C>
Year Ended June 27, 1992:
Notes Payable to Banks $36,375 3.95% $40,150 16,494 4.66%
Subordinated Loan Certificates 38,686 5.67% 47,718 43,349 6.30%
------- ------- -------
$75,061 $87,868 59,843
======= ======= =======
Year Ended June 26, 1993:
Notes Payable to Banks $ - - $44,939 11,114 3.58%
Subordinated Loan Certificates 26,386 4.47% 36,601 32,016 4.95%
------- ------- -------
$26,386 $81,540 43,130
======= ======= =======
Year Ended June 25, 1994:
Notes Payable to Banks $12,798 4.41% $22,400 4,525 4.13%
Subordinated Loan Certificates 25,079 4.10% 26,386 25,222 4.13%
------- ------- -------
$37,877 $48,786 29,747
======= ======= =======
</TABLE>
- - ------------------------
(1) The average amount of short-term borrowings outstanding during the period
was computed by using outstanding month-end balances and the number of
months in the period.
(2) The weighted average interest rate during the period was computed by using
the average monthly balance of outstanding borrowings during the year and
actual interest expense incurred.
50
<PAGE>
GOLD KIST INC.
Schedule X - Supplementary Income Statement Information
<TABLE>
<CAPTION>
COLUMN A COLUMN B
-------- --------
ITEM CHARGED TO COSTS AND EXPENSES
---- -----------------------------
Years Ended
----------------------------
June 27, June 26, June 25,
1992 1993 1994
-------- -------- --------
(amounts in Thousands)
<S> <C> <C> <C>
Repairs and Maintenance $27,853 31,390 36,528
======= ======= =======
</TABLE>
51
<PAGE>
(a)3. Exhibits - Index of Exhibits
----------------------------
Exhibits designated as previously filed with the Commission in the Index of
Exhibits, below, are incorporated by reference into this Report.
<TABLE>
<CAPTION>
Designation
of Exhibit Document with Which Designation
in this Exhibit Was Previously of such Exhibit
Report Description of Exhibit Filed with Commission in that Document
- - ------------- ---------------------- ---------------------- ----------------
<S> <C> <C> <C>
B-2(a) Agreement and Plan of Annual Report on Form Exhibit B-2(a)
Merger, dated June 20, 10-K for the Fiscal
1986, and effective Year ended June 30,
June 30, 1986, between 1986
Carolina Golden Products,
Inc., and Golden Poultry
Company, Inc.
B-3(a) Restated and Amended Annual Report on Form Exhibit B-3(a)
Articles of Incorpo- 10-K for the Fiscal
ration of Registrant Year ended June 26, 1993
B-3(b) Current By-Laws of
Registrant, as amended
B-4(a)(1) Form of Indenture Registration filed on Exhibit 4(a)(2)
dated as of December Form S-1 (Registration
1, 1977, governing No. 2-59958)
the terms of the 9%
Fifteen Year
Subordinated Capital
Certificates of Interest,
including therein a table
of contents and cross-
reference sheet
B-4(a)(2) Form of First Supplemental Registration filed on Exhibit 4(a)(2)
Indenture, dated as of Form S-1 (Registration
September 1, 1979, amending No. 2-69267)
the terms of the Form of
Indenture dated as of
December 1, 1977, governing
the terms of the 9% Fifteen
Year Subordinated Capital
Certificates of Interest
B-4(a)(3) Form of Indenture, dated Registration filed on Exhibit 4(a)(2)
as of September 1, 1979, Form S-1 (Registration
governing the terms of the No. 2-65587)
Fifteen Year Subordinated
Capital Certificates of
Interest (Series B),
including therein a
table of contents and
cross-reference sheet
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
Designation
of Exhibit Document with Which Designation
in this Exhibit Was Previously of such Exhibit
Report Description of Exhibit Filed with Commission in that Document
- - ----------- ---------------------- ---------------------- ----------------
<S> <C> <C> <C>
B-4(a)(4) Form of First Supplemental Registration filed on Exhibit 4(a)(4)
Indenture, dated as of Form S-1 (Registration
September 1, 1980, No. 2-69267)
governing the terms of
the Fifteen Year
Subordinated Capital
Certificates of Interest
(Series C)
B-4(a)(5) Form of Second Supplemental Registration filed on Exhibit 4(a)(5)
Indenture, dated as of Form S-2 (Registration
September 1, 1982, governing No. 2-79538)
the terms of the Fifteen
Year Subordinated Capital
Certificates of Interest
(Series D)
B-4(b)(1) Form of Indenture, dated Registration filed on Exhibit 4(b)(2)
as of December 1, 1977, Form S-1 (Registration
governing the terms of the No. 2-59958)
8-1/2% Ten Year Subordinated
Capital Certificates of
Interest, including therein
a table of contents and cross-
reference sheet
B-4(b)(2) Form of First Supplemental Registration filed on Exhibit 4(b)(2)
Indenture, dated as of Form S-1 (Registration
September 1, 1979, amending No. 2-69267)
the terms of the Form of
Indenture dated as of
December 1, 1977 governing
the terms of the 8-1/2% Ten
Year Subordinated Capital
Certificates of Interest
B-4(b)(3) Form of Indenture, dated Registration filed on Exhibit 4(b)(2)
as of September 1, 1979, Form S-1 (Registration
governing the terms of No. 2-65587)
the Ten Year Subordinated
Capital Certificates of
Interest (Series B),
including a table of contents
and cross-reference sheet
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
Designation
of Exhibit Document with Which Designation
in this Exhibit Was Previously of such Exhibit
Report Description of Exhibit Filed with Commission in that Document
- - ------------- ---------------------- ---------------------- ----------------
<S> <C> <C> <C>
B-4(b)(4) Form of First Registration filed on Exhibit 4(b)(4)
Supplemental Indenture, Form S-1 (Registration
dated as of September 1, No. 2-69267)
1980, governing the terms
of the Ten Year
Subordinated Capital
Certificates of Interest
(Series C)
B-4(b)(5) Form of Second Registration filed on Exhibit 4(b)(5)
Supplemental Indenture, Form S-2 (Registration
dated as of September 1, No. 2-79538)
1982, governing the
terms of the Ten Year
Subordinated Capital
Certificates of Interest
(Series D)
B-4(c) Form of Indenture, dated Registration filed on Exhibit 4(c)
as of September 1, 1985, Form S-2 (Registration
governing the terms of No. 33-428)
the Seven Year Subordinated
Capital Certificates of
Interest (Series A),
including therein a table
of contents, cross-reference
sheet, and form of Seven
Year Subordinated Capital
Certificates of Interest
B-4(d)(1) Form of Indenture, dated Registration filed on Exhibit 4(c)(2)
as of September 1, 1979, Form S-1 (Registration
governing the terms of the No. 2-65587)
Five Year Subordinated
Capital Certificates of
Interest (Series A),
including therein a table
of contents and cross-
reference sheet
B-4(d)(2) Form of First Supplemental Registration filed on Exhibit 4(d)(2)
Indenture, dated as of Form S-1 (Registration
September 1, 1980, governing No. 2-69267)
the terms of the Five Year
Subordinated Capital Certifi-
cates of Interest (Series B)
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
Designation
of Exhibit Document with Which Designation
in this Exhibit Was Previously of such Exhibit
Report Description of Exhibit Filed with Commission in that Document
- - ------------- ---------------------- ---------------------- ----------------
<S> <C> <C> <C>
B-4(d)(3) Form of Second Supplemental Registration filed on Exhibit 4(d)(3)
Indenture, dated as of Form S-2 (Registration
September 1, 1982, governing No. 2-79538)
the terms of the Five Year
Subordinated Capital Certifi-
cates of Interest (Series C)
B-4(e) Form of Indenture, dated Registration filed on Exhibit 4(f)(2)
as of September 1, 1985, Form S-2 (Registration
governing the terms of the No. 33-428)
Three Year Subordinated
Capital Certificates of
Interest (Series A),
including therein a table of
contents, cross-reference
sheet, and form Capital
Certificates of Interest
B-4(f) Form of Indenture, dated Registration filed on Exhibit 4(g)
September 1, 1980, governing Form S-1 (Registration
the terms of the Two Year No. 2-69267)
Subordinated Capital Certifi-
cates of Interest (Series A),
including therein a table of
contents and cross-reference
sheet
B-4(g)(1) Form of Indenture, dated as Registration filed on Exhibit 4(h)(1)
of September 1, 1985, Form S-2 (Registration
governing the terms of No. 33-428)
the One Year Subordinated
Large Denomination Loan
Certificate (Series A),
including therein a table
of contents, cross-reference
sheet, and form of One Year
Subordinated Large Denomina-
tion Loan Certificates
B-4(g)(2) Form of Indenture, dated as Registration filed on Exhibit 4(d)(2)
of September 1, 1979, Form S-1 (Registration
governing the terms of the No. 2-65587)
One Year Subordinated Loan
Certificates (Series B),
including therein a table
of contents and cross-
reference sheet
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
Designation
of Exhibit Document with Which Designation
in this Exhibit Was Previously of such Exhibit
Report Description of Exhibit Filed with Commission in that Document
- - ----------- ---------------------- ---------------------- ----------------
<S> <C> <C> <C>
B-4(g)(3) Form of First Supplemental Registration filed on Exhibit 4(f)(2)
Indenture, dated as of Form S-1 (Registration
September 1, 1980, governing No. 2-69267)
the terms of the One Year
Subordinated Loan Certificates
(Series C)
B-4(h) Form of Indenture, dated as Registration filed on Exhibit 4(i)
of September 1, 1985, Form S-2 (Registration
governing the terms of the No. 33-428)
Six Month Subordinated
Large Denomination Loan
Certificate (Series A),
including therein a table of
contents, cross-reference
sheet, and form of Six Month
Subordinated Large Denomination
Loan Certificates
B-4(i)(1) Specimen of Cumulative Registration filed on Exhibit 4(f)
Preferred Capital Cer- Form S-l (Registration
tificates of Interest used No. 2-59958)
for three year (6.5%-8%),
six year (6.75%-8.5%), ten
year (7%-9%) and fifteen year
(9%) fixed-maturity cer-
tificates
B-4(i)(2) Specimen of Subordinated Annual Report on Form Exhibit B-4(h)(2)
Capital Certificates of 10-K for the Fiscal Year
Interest used for Fifteen Ended June 30, 1982
Year (Series B and C), Ten
Year (Series B and C), Five
Year (Series A and B) and Two
Year (Series A)
B-4(i)(3) Specimen of Subordinated Loan- Annual Report on Form Exhibit B-4(h)(3)
Certificates (Series B and C) 10-K for the Fiscal Year
Ended June 30, 1982
B-4(j) Specimen of 5% Cumulative Registration filed on Exhibit 4(g)
Preferred Capital Certificates Form S-l (Registration
of Interest with no fixed No. 2-59958)
maturities
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
Designation
of Exhibit Document with Which Designation
in this Exhibit Was Previously of such Exhibit
Report Description of Exhibit Filed with Commission in that Document
- - ----------- ---------------------- ---------------------- ----------------
<S> <C> <C> <C>
B-4(k) Agreement to furnish copies Registration filed on Exhibit 4(h)
of constituent instruments Form S-1 (Registration
defining the rights of the No. 2-59958)
holders of certain industrial
revenue bonds
B-4(l)(1) Note Agreement with the Quarterly Report on Form Exhibit B-4(n)
Prudential Insurance Company 10-Q for the Fiscal
of America dated as of Quarter ended December
December 15, 1986 31, 1986
B-4(l)(2) Amendment dated as of June 30, Registration filed Exhibit 4(l)(2)
1987, to Note Agreement with on Form S-2
the Prudential Insurance (Registration No.
Company of America 33-24623)
B-4(l)(3) Note Agreement with the Quarterly Report on Exhibit B-4(q)(1)
Prudential Insurance Form 10-Q for the
Company of America dated Fiscal Quarter ended
as of November 4, 1988 December 31, 1988
B-4(l)(4) Note Agreement with Quarterly Report on Exhibit B-4(q)(2)
Pruco Life Insurance Form 10-Q for the
Company dated as of Fiscal Quarter ended
November 4, 1988 December 31, 1988
B-4(l)(5) Amendment dated as of Registration filed on Exhibit 4(l)(5)
January 9, 1991, to Note Form S-2 (Registration
Agreements with the Prudential No. 33-42900)
Insurance Company of America
and Pruco Life Insurance
Company
B-4(l)(6) Note Agreement with the Registration filed on Exhibit 4(l)(6)
Prudential Insurance Company Form S-2 (Registration
of America, dated as of No. 33-42900)
June 3, 1991
B-4(l)(7) Amendment dated as of June 26, Registration filed on Exhibit 4(l)(7)
1992, to Note Agreements with Form S-2 (Registration
the Prudential Insurance Company No. 33-52268)
of America
B-4(l)(8) Amendment dated July 14, 1993, Registration filed on Exhibit 4(l)(8)
to Note Agreements with the Form S-2 (Registration
Prudential Insurance Company of No. 33-69204)
America and Pruco Life Insurance
Company
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
Designation
of Exhibit Document with Which Designation
in this Exhibit Was Previously of such Exhibit
Report Description of Exhibit Filed with Commission in that Document
- - ----------- ---------------------- ---------------------- ----------------
<S> <C> <C> <C>
B-4(m)(1) Revolving Credit and Term Loan Report on Form 8, Exhibit B-4(p)
Agreement dated as of Decem- Amendment to Quarterly
ber 30, 1986, with Trust Com- Report on Form 10-Q
pany Bank, individually and as for the Fiscal Quarter
agent for Bank of America ended December 31, 1986
National Trust and Savings
Association, the Citizens and
Southern National Bank,
Columbia Bank for Cooperatives
and the First National Bank
of Atlanta
B-4(m)(2) Amendment dated July 15, 1987, Registration filed Exhibit 4(n)(2)
to Revolving Credit and Term on Form S-2
Loan Agreement with Trust Company (Registration No.
Bank, individually, and as agent 33-24623)
for Bank of America National
Trust and Savings Association,
the Citizens and Southern
National Bank, Columbia Bank for
Cooperatives, and the First
National Bank of Atlanta
B-4(m)(3) Amendment dated as of Decem- Registration filed Exhibit 4(n)(3)
ber 30, 1987, to Revolving on Form S-2
Credit and Term Loan Agreement (Registration No.
with Trust Company Bank, 33-24623)
individually, and as agent
for Bank of Amercia National
Trust and Savings Association,
the Citizens and Southern
National Bank, Columbia Bank
for Cooperatives, and the
First National Bank of Atlanta
B-4(m)(4) Interest Rate Agreement (for Registration filed Exhibit 4(n)(4)
Revolving Credit and Term Loan on Form S-2
Agreement) dated as of Decem- (Registration No.
ber 30, 1987, with Trust Com- 33-24623)
pany Bank, individually, and as
agent for Bank of America
National Trust and Savings
Association, the Citizens and
Southern National Bank,
Columbia Bank for Cooperatives
and the First National Bank
of Atlanta
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
Designation
of Exhibit Document with Which Designation
in this Exhibit Was Previously of such Exhibit
Report Description of Exhibit Filed with Commission in that Document
- - ------------- ---------------------- ---------------------- ----------------
<S> <C> <C> <C>
B-4(m)(5) Amendment dated as of Registration filed on Exhibit 4(m)(5)
March 6, 1989, to Form S-2 (Registration
Revolving Credit and No. 33-31164)
Term Loan Agreement with
Trust Company Bank,
individually, and as agent
for Bank of America
National Trust and Savings
Association, the Citizens
and Southern National Bank,
National Bank for
Cooperatives (formerly
Columbia Bank for
Cooperatives), and the
First National Bank of
Atlanta
B-4(m)(6) Agreement regarding Registration filed on Exhibit 4(m)(6)
interest and charges Form S-2 (Registration
(for Revolving Credit No. 33-31164)
and Term Loan Agreement)
dated as of March 6,
1989, with Trust Company
Bank, individually, and
as agent for Bank of
America National Trust
and Savings Association,
the Citizens and
Southern National Bank,
Columbia Bank for
Cooperatives and the
First National Bank of
Atlanta
B-4(m)(7) Amendment dated as of Registration filed on Exhibit 4(m)(7)
July 24, 1989, to Form S-2 (Registration
Revolving Credit and No. 33-31164)
Term Loan Agreement
with Trust Company
Bank, individually, and
as agent for Bank of
America National Trust
and Savings
Association, the
Citizens and Southern
National Bank, National
Bank for Cooperatives
(formerly Columbia Bank
for Cooperatives), and
the First National Bank
of Atlanta
B-4(m)(8) Amendment dated as of Registration filed on Exhibit 4(m)(8)
December 30, 1990, to Form S-2 (Registration
revolving Credit and No. 33-42900)
Term Loan Agreement
with Trust Company
Bank, individually, and
as agent for Bank of
America National Trust
and Savings
Association, the
Citizens and Southern
National Bank, National
Bank for Cooperatives
(formerly Columbia Bank
for Cooperatives), and
the First National Bank
of Atlanta
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
Designation
of Exhibit Document with Which Designation
in this Exhibit Was Previously of such Exhibit
Report Description of Exhibit Filed with Commission in that Document
- - ------------- ---------------------- ---------------------- ----------------
<S> <C> <C> <C>
B-4(m)(9) Amendment dated as of Registration filed on Exhibit B-4(m)(9)
June 26, 1992, to Form S-2 (Registration
revolving Credit and No. 33-52268)
Term Loan Agreement
with Trust Company
Bank, individually, and
as agent for Bank of
America National Trust
and Savings
Association, the
Citizens and Southern
National Bank, National
Bank for Cooperatives
(formerly Columbia Bank
for Cooperatives), and
the First National Bank
of Atlanta
B-4(n)(1) Line of Credit Agreement Registration filed on Exhibit 4(n)
with CoBank, dated as of Form S-2 (Registration
February 22, 1991 No. 33-42900)
B-4(n)(2) Amendment dated as of Registration filed on Exhibit B-4(a)(2)
March 1, 1992, to Line Form S-2 (Registration
of Credit Agreement No. 33-52268)
with CoBank
B-4(n)(3) Amendment dated as of Registration filed on Exhibit 4(n)(3)
December 18, 1992, to Form S-2 (Registration
Line of Credit Agreement No. 33-69204)
with CoBank
B-4(n)(4) Amendment dated as of
December 13, 1993 to
Line of Credit
Agreement with CoBank
B-4(o) Guaranty dated December Registration filed on Exhibit 4(o)
18, 1992 by Gold Kist in Form S-2 (Registration
favor of NationsBank of No. 33-69204)
Georgia, N.A.
B-10(a) Form of Deferred Registration filed on Exhibit 11(d)
Compensation Agreement Form S-1 (Registration
between Gold Kist Inc. No. 2-59958)
and certain executive
officers*
</TABLE>
60
<PAGE>
<TABLE>
<CAPTION>
Designation
of Exhibit Document with Which Designation
in this Exhibit Was Previously of such Exhibit
Report Description of Exhibit Filed with Commission in that Document
- - ------------- ---------------------- ---------------------- ----------------
<S> <C> <C> <C>
B-10(b)(1) Gold Kist Management Bonus Registration filed on Exhibit 10(b)
Program* Form S-1 (Registration
No. 2-69267)
B-10(b)(2) Amended Gold Kist Management Registration filed on Exhibit 10(b)(2)
Bonus Program* Form S-2 (Registration
No. 2-79538)
B-10(b)(3) Form of Gold Kist Supplemental Registration filed on Exhibit 10(b)(3)
Executive Retirement Income Form S-2 (Registration
non-qualified deferred No. 33-9007)
compensation agreement between
Gold Kist and certain execu-
tive officers and Resolution
of Gold Kist Board of Directors
authorizing the Supplemental
Executive Retirement Plan*
B-10(b)(4) Resolution of Gold Kist Board Registration filed on Exhibit 10(b)(4)
of Directors authorizing the Form S-2 (Registration
Gold Kist Special Award Plan* No. 33-9007)
B-10(b)(5) Form of Gold Kist Executive's Registration filed on Exhibit 10(b)(5)
Change in Control Agreement Form S-2 (Registration
between Gold Kist and certain No. 33-31164)
officers and resolution of
Gold Kist Board of Directors
authorizing the Officers
Contingency Plan*
B-10(b)(6) Form of Directors Change Registration filed on Exhibit 10(b)(6)
in Control Agreement Form S-2 (Registration
between Gold Kist and No. 33-36938
Directors of Gold Kist*
B-10(b)(7) Form of Director Registration filed on Exhibit 10(b)(7)
Emeritus Life Benefits Form S-2 (Registration
Agreement* No. 33-36938)
B-10(b)(8) Form of Director Emeritus Registration filed on Exhibit 10(b)(8)
Agreement for Medical Benefits* Form S-2 (Registration
No. 33-36938)
B-10(c)(l) Form of Membership, Marketing, Registration filed on Exhibit 13(b)
and/or Purchasing Agreement of Form S-1 (Registration
Gold Kist Inc., Atlanta, No. 2-59958)
Georgia
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
Designation
of Exhibit Document with Which Designation
in this Exhibit Was Previously of such Exhibit
Report Description of Exhibit Filed with Commission in that Document
- - ------------- --------------------------------- ------------------------ ----------------
<S> <C> <C> <C>
B-10(c)(2) Form of Membership, Marketing, Registration filed on Exhibit 10(c)(2)
and/or Purchasing Agreement of Form S-1 (Registration
Gold Kist Inc., Atlanta, No. 2-74205)
Georgia, as revised October
17, 1980
B-10(c)(3) Form of Membership, Marketing, Registration filed on Exhibit 10(c)(3)
and/or Purchasing Agreement of Form S-2 (Registration
Gold Kist Inc., Atlanta, No. 33-428)
Georgia, as revised November
l, l984
B-10(c)(4) Form of Membership, Marketing, Registration filed on Exhibit 10(c)(4)
and/or Purchasing Agreement Form S-2 (Registration
of Gold Kist Inc., Atlanta, No. 33-24623)
Georgia, revised October
29, 1987
B-10(c)(5) Form of Membership, Marketing, Registration filed on Exhibit 10(c)(5)
and/or Purchasing Agreement of Form S-2 (Registration
Gold Kist Inc., Atlanta, Georgia, No. 33-42900)
revised August 21, 1991
B-10(d) CF Industries, Inc., Member Registration filed on Exhibit 13(j)
Product Purchase Agreement Form S-2 (Registration
No. 2-59958)
B-10(e)(1) General Partnership Agreement Registration filed on Exhibit 10(h)(1)
(GC Properties) between Gold Form S-2 (Registration
Kist Inc. and Cotton States No. 33-428)
Mutual Insurance Company,
dated as of July 1, 1984
B-10(e)(2) Lease from GC Properties, Registration filed on Exhibit 10(h)(2)
dated December 11, 1984, Form S-2 (Registration
for home office building No. 33-428)
space
B-10(f)(1) General Partnership Agreement Annual Report on Form Exhibit B-10(f)(1)
(Golden Peanut Company) 10-K for the Fiscal
between Gold Kist and Archer- Year Ended June 30, 1987
Daniels-Midland Company, dated
as of December 17, 1986
</TABLE>
62
<PAGE>
<TABLE>
<CAPTION>
Designation
of Exhibit Document with Which Designation
in this Exhibit Was Previously of such Exhibit
Report Description of Exhibit Filed with Commission in that Document
- - ------------- --------------------------------- ------------------------- --------------------
<S> <C> <C> <C>
B-10(f)(2) Amended and Restated Partnership Registration filed on Exhibit 10(f)(2)
Agreement (Golden Peanut Company) Form S-2 (Registration
between Gold Kist Inc., Archer- No. 33-31164)
Daniels-Midland Company and
Alimenta Processing Corporation,
dated as of March 1, 1989
B-10(f)(3) Amendment to Amended and Registration filed on Exhibit 10(f)(3)
Restated Partnership Agreement Form S-2 (Registration
(Golden Peanut Company) between No. 33-42900)
Gold Kist Inc., Archer-Daniels-
Midland Company and Alimenta
Processing Corporation, dated
as of June 30, 1991
B-10(f)(4) Master Commercial Facilities Annual Report on Form Exhibit B-10(f)(2)
Lease Agreement between Gold 10-K for the Fiscal
Kist and Golden Peanut Company Year Ended June 30, 1987
dated as of December 17, 1986
B-10(g) Agreement of Sale of Valdosta, Annual Report on Form Exhibit B-10(g)
Georgia Soy Processing Plant, 10-K for the Fiscal
between Gold Kist and Archer- Year Ended June 30, 1987
Daniels-Midland Company,
dated July 2, 1987
B-10(h) Grain Procurement Agreement Annual Report on Form Exhibit B-10(h)
between Gold Kist and Archer- 10-K for the Fiscal
Daniels-Midland Company, dated Year Ended June 30, 1987
August 31, 1987
B-10(i) General Partnership Registration filed on Exhibit 10(i)
Agreement (Carolina Golden Form S-2 (Registration
Products Company) between No. 33-42900)
AgriGolden, Inc., and
Golden Poultry Company, Inc.,
dated as of January 28, 1991
B-12 Computation of Ratio of Net
Margins to Fixed Charges
B-21 Subsidiaries of the Registrant Annual Report on Form Exhibit B-21
10-K for the Fiscal
Year Ended June 26, 1993
B-27 Financial Data Schedule
</TABLE>
_________________________________
*Plans and arrangements pursuant to which executive officers and directors of
the Association receive compensation.
(b) Reports on Form 8-K. - No reports on Form 8-K have been filed
--------------------
during the last quarter of the fiscal year ended June 25, 1994.
63
<PAGE>
SIGNATURES - Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
GOLD KIST INC.
Date: September 20, 1994 By:/s/ H. O. Chitwood
-------------------- --------------------------------------------
H. O. Chitwood, Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - -------------------------------------------------------------------------------
<S> <C> <C>
/s/ H. O. Chitwood September 20, 1994
- - -------------------------- Chief Executive Officer --------- ----
H. O. Chitwood (Principal Executive Officer)
/s/ Peter J. Gibbons September 20, 1994
- - -------------------------- Vice President-Finance --------- ----
PETER J. GIBBONS (Principal Financial Officer)
/s/ W. F. Pohl, Jr. September 20, 1994
- - -------------------------- Controller (Principal --------- ----
W. F. POHL, JR. Accounting Officer)
/s/ W. P. Smith, Jr. September 13, 1994
- - -------------------------- Director --------- ----
W. P. SMITH, JR.
/s/ Dan Smalley September 12, 1994
- - -------------------------- Director --------- ----
DAN SMALLEY
/s/ Charles C. Williams September 12, 1994
- - -------------------------- Director --------- ----
CHARLES C. WILLIAMS
/s/ Phil Ogletree, Jr. September 13, 1994
- - -------------------------- Director --------- ----
PHIL OGLETREE, JR.
/s/ Fred K. Norris, Jr. September 12, 1994
- - -------------------------- Director --------- ----
FRED K. NORRIS, JR.
/s/ James E. Brady, Jr. September 12, 1994
- - -------------------------- Director --------- ----
JAMES E. BRADY, JR.
/s/ A. Jack Nally September 14, 1994
- - -------------------------- Director --------- ----
A. JACK NALLY
/s/ W. Kenneth Whitehead September 14, 1994
- - -------------------------- Director --------- ----
W. Kenneth Whitehead
/s/ H. Michael Davis September 12, 1994
- - -------------------------- Director --------- ----
H. Michael Davis
</TABLE>
64
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- - ------ ----------- ------------
<S> <C> <C>
B-3(b) -Current By-Laws of the Registrant, as amended
B-4(n)(4) -Amendment dated as of December 13, 1993 to
Line of Credit Agreement with CoBank
B-12 -Computation of Ratio of Net Margins to Fixed Charges
B-27 -Financial Data Schedule
</TABLE>
<PAGE>
GOLD KIST INC.
AMENDED AND RESTATED BY-LAWS
(OCTOBER 28, 1993)
TABLE OF CONTENTS
<TABLE>
<CAPTION> PAGE
------
<S> <C> <C>
ARTICLE I - NAME OF CORPORATION AND PURPOSE 1
ARTICLE II - BOARD OF DIRECTORS
Section 1(a) Number of Directors 1
Section 1(b) Districts 1
Section 1(c) Redistricting 1
Section 2 Qualification of Directors 1
Section 3(a) Classification and Term of Office of Directors 2
Section 3(b) Method of Election 2
Section 4 Vacancies 2
Section 5 Regular Meetings of Directors 2
Section 6 Special Meetings of Directors 2
Section 7 Notice of Meetings 2
Section 8 Quorum 3
Section 9 Compensation 3
Section 10 Nonemployment of Relatives of Board Members 3
Section 11 Directors Emeritus 3
ARTICLE III - POWERS OF DIRECTORS 3
ARTICLE IV - DUTIES OF DIRECTORS 4
ARTICLE V - DUTIES AND POWERS OF MANAGEMENT
EXECUTIVE COMMITTEE 4
ARTICLE VI - OFFICERS 4
ARTICLE VII - DUTIES OF OFFICERS 5
Section 1 Chairman of the Board and
Vice Chairman of the Board 5
Section 2 Chief Executive Officer 5
Section 3 President 5
Section 4 Vice Presidents 5
Section 5 Secretary and Treasurer 5
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 6 Assistant Secretary and Assistant Treasure 6
ARTICLE VIII - BOARD OF DIRECTORS EXECUTIVE COMMITTEE 6
ARTICLE IX - AUDIT 6
Section 1 Annual Audit 6
Section 2 Audit Committee 6
ARTICLE X - BOOKS AND PAPERS 6
ARTICLE XI - MEETINGS - MEMBERS
Section 1 Annual Meetings 6
Section 2 Special Meetings 6
Section 3 Notice of Meeting 7
Section 4 Quorum 7
Section 5 No Proxy 7
Section 6 One Vote 7
ARTICLE XII - GENERAL PROVISIONS CONCERNING MEMBERS
Section 1 Members - Who Eligible 7
Section 2 Conditions of Membership 7
Section 3 Capital Stock 8
Section 4 Evidence of Membership 8
Section 5 Termination of Membership 8
Section 6 Property Rights 9
Section 7 Disputes Between Gold Kist and Members: Remedies 9
Section 8 Members' Charitable Foundation 10
ARTICLE XIII - BORROWING MONEY 10
ARTICLE XIV - MARKETING AND POOLS 10
ARTICLE XV - SEAL 10
ARTICLE XVI - LIABILITY OF MEMBERS 11
ARTICLE XVII - COOPERATIVE OPERATION; PATRONS' EQUITIES
Section 1 Definitions 11
Section 2 Cooperative Operation 12
Section 3 Tax Consent 12
Section 4 Computation of Patronage Earnings 12
Section 5 Distribution of Patronage Dividends 13
Section 6 Patronage Dividend Certificates 13
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
Section 7 Allocated Reserves 13
Section 8 Nonqualified Notices 14
Section 9 Individual Redemptions 14
Section 10 Subordination of Patronage Dividends 15
Section 11 Additional Patronage Distributions 15
Section 12 Losses 15
Section 13 DeMinimus Redemptions 15
ARTICLE XVIII - STOCK
Section 1 Certificates 15
Section 2 Lost, Destroyed or Stolen Stock Certificates 15
ARTICLE XIX - DISSOLUTION 16
ARTICLE XX - INDEMNIFICATION 16
ARTICLE XXI - AMENDMENTS 17
</TABLE>
3
<PAGE>
OCTOBER 28, 1993
BY-LAWS
OF
GOLD KIST INC.
ARTICLE I
Gold Kist Inc. may be hereinafter referred to as "Gold Kist."
The purposes for which Gold Kist is formed are set forth in the Articles of
Incorporation of Gold Kist.
ARTICLE II
BOARD OF DIRECTORS
Section 1(a). NUMBER OF DIRECTORS. The corporate powers, business and
property of Gold Kist shall be exercised, conducted and controlled by a Board of
not less than nine (9) directors.
Section 1(b). DISTRICTS. For the purpose of providing equitable
representation of the members on the Board of Directors, the territory served by
Gold Kist shall be divided into Districts. One director shall be elected from
each District. The number of such Districts and the areas to be contained in
each District shall be determined from time to time by the Board of Directors as
provided herein, and recorded in the minutes of the meetings of the Board of
Directors.
Section 1(c). REDISTRICTING. The Board of Directors shall determine from
time to time, but shall not be required to do so more often than once every
three years, when it is necessary to redistrict the territory served by Gold
Kist in order to maintain equitable representation of the members on the Board.
Whenever the Board shall determine that such redistricting is necessary, at
least twenty (20) days prior to the primary elections hereinafter provided, the
Board of Directors, by a majority vote, shall designate the number of such
Districts and the counties or other areas to be included in each such District.
Such redistricting shall be accomplished in such a manner as not to cause any
District Director whose term has not expired to become disqualified by reason of
the residence requirement provided in Section 2 below.
Section 2. QUALIFICATIONS OF DIRECTORS. In addition to the qualifications
otherwise imposed by the law, the Articles of Incorporation and these By-Laws,
the directors shall possess the following qualifications:
(1) A director shall be a member of Gold Kist residing in the District from
which he is elected.
4
<PAGE>
(2) No person shall be eligible for election or for re-election as a member
of the Board of Directors after reaching his seventieth (70th) birthday.
Any director who during his term fails to continue to meet the qualifications
to serve as a director set forth in this Section 2, other than a change in
District residency resulting from redistricting, shall cease to be a member of
the Board of Directors upon the passage of a resolution to such effect by a
majority of the remaining members of the Board of Directors.
Section 3(a). CLASSIFICATION AND TERM OF OFFICE OF DIRECTORS. The Board of
Directors shall be divided into three (3) classes which shall be as nearly equal
in number as possible. Directors within each class shall be elected every third
year on a rotating basis. Unless a director's elected term of office is
shortened by the Board in order to equalize the classes, each director in such
class shall be elected to hold office until the third succeeding annual meeting
of members and, except in the case of death, resignation, retirement or
disqualification, shall serve until a successor has been elected and qualified.
Section 3(b). METHOD OF ELECTION. A primary election shall be held annually
in each District in which a vacancy in the Board of Directors will occur, not
less than ten (10)days prior to the regular annual meeting of the members, which
primary election shall be conducted by mail under rules and regulations
prescribed by the Board of Directors, under the following plan:
The Secretary shall cause to be mailed to each active member in the District
at his last known address, a nomination ballot providing for the nomination of
one person by each member, to be the director for that District. The nomination
ballots shall be mailed by the members voting to the Election Committee.
The Board of Directors shall appoint an Election Committee which shall count
the ballots. If any person receives a majority of the votes cast, then that
person shall be the nominee for that District. If no person receives a majority
of the votes cast, then the Secretary shall cause a ballot to be sent to each of
the members of the District, which ballot shall bear the names of the two (2)
persons receiving the highest number of votes in the primary election. Members
shall then vote between the two names on the ballot sent out by the Secretary,
which ballot shall be mailed to the Election Committee, and counted by the
Election Committee, and the person receiving the highest number of votes shall
be the nominee for the District. The nominee for each District shall be deemed
elected as the director for such District, and his election shall be ratified at
the next regular meeting of Gold Kist.
Section 4. VACANCIES. Whenever a vacancy occurs in the Board of Directors,
other than by expiration of term, such vacancy shall be filled by a majority
vote of the remaining directors. The new director shall hold office for the
remainder of the term for which his predecessor had been elected and qualified,
or for a shorter term designated by the Board, but in either case such election
must be ratified at the next regular meeting of the
5
<PAGE>
membership of Gold Kist. Any director who ceases to be a member of Gold Kist
shall cease to be a member of the Board as soon as the majority thereof passes a
resolution to such effect, as provided by law.
Section 5. REGULAR MEETINGS OF DIRECTORS. Regular meetings of the Board of
Directors shall be held immediately after each Annual Meeting of the members and
the Board of Directors may schedule other regular meetings to occur as
determined by resolutions adopted by the Board of Directors from time to time.
Section 6. SPECIAL MEETING OF DIRECTORS. A special meeting of the Board of
Directors shall be held whenever called by the Chairman or by a majority of the
directors. Unless otherwise specified in the call for the meeting, any and all
business may be transacted at a special meeting. Each call for a special
meeting shall be in writing, signed by the person or persons making the same,
addressed and delivered to the Secretary, and shall state the time and place of
such meeting.
Section 7. NOTICE OF MEETINGS. No notice shall be required for any regular
annual meeting or any regular meeting scheduled by the Board of Directors.
Notice of each special meeting of the directors setting forth the time, place
and purpose of the meeting, shall be mailed to each director, at his last known
address, at least five (5) days prior to the time of such meeting, or may be
given by telegraph, telephone or in person at least three (3) days prior to the
time of such meeting.
Section 8. QUORUM. A majority of the directors then in office shall
constitute a quorum of the Board of Directors at all meetings.
Section 9. COMPENSATION. The directors shall be compensated for their
services hereunder, and reimbursed for their expenses, as determined by the
Board of Directors from time to time.
Section 10. NONEMPLOYMENT OF RELATIVES OF BOARD MEMBERS. No close relative
of any member of the Board of Directors shall be employed in any capacity by
Gold Kist. A close relative means a husband or wife or a person related as
child, parent, brother, sister, by blood, adoption or marriage, and shall
include in-laws within such categories.
Section 11. DIRECTORS EMERITUS. A person shall be named director emeritus at
such time as
(i) he might cease to be a member of the Board of Directors after reaching
the age of 70.
(ii) he might cease to be a member of the Board of Directors for health
reasons after reaching the age of 65, but before reaching the age of
70, or
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(iii) he has served at least ten (10) years as a member of the Board of
Directors and ceases to be a director.
Provided a director emeritus has no conflict of interest, he shall have all
the privileges of any member of the Board of Directors except that he shall not
have any voting rights. A director emeritus shall be entitled to retain his
designation as such and the privileges of said office until his resignation or
death. There shall be no limit to the number of directors emeritus serving at
any one time. Directors emeritus who shall have reached the age of sixty-five
(65) and served at least ten (10) years as members of the Board of Directors at
the time they cease to be members of the Board shall be compensated in the same
manner and amount as received by currently active directors, except that the
annual retainer, if any, shall be reduced by 5% for each year less than twenty
(20) that they might have served as active members of the Board of Directors.
ARTICLE III
POWERS OF DIRECTORS
The directors shall have the power:
(1) To conduct, manage and control the affairs and business of Gold Kist, and
to make rules and regulations for the guidance of the officers and management of
its affairs, and to take any such action under this Article, at a meeting held
pursuant to Article II, or by unanimous written consent, or at a meeting held by
conference telephone call;
(2) To appoint and remove all officers, agents and employees of Gold Kist,
prescribe their duties, fix their compensation, and may require from them bond
in such form and in such amount as may be deemed necessary;
(3) To select one or more banks to act as depository of the funds of Gold
Kist and to determine the manner of receiving, depositing and disbursing the
funds of Gold Kist, and the form of checks and the person or persons by whom
same shall be signed, with the power to change such banks and the person or
persons signing said checks and the form thereof, at will.
(4) To join with individuals, firms, partnerships or other associations or
corporations to form a non-profit cooperative association, with or without
capital stock, by entering into and executing agreements of merger or
consolidation with any such entities, which power shall be exercisable without
prior or subsequent approval by the members of Gold Kist.
In addition to the powers enumerated above, the directors shall have any
additional powers provided by law, the Articles of Incorporation or these By-
Laws.
ARTICLE IV
DUTIES OF DIRECTORS
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It shall be the duty of the Board of Directors:
(1) To keep a complete record of all its acts and of the proceedings of its
meetings, and to present a full statement at the regular annual meeting of
the members, showing in detail the conditions of the affairs of Gold Kist;
(2) To cause to be installed such a system of bookkeeping and auditing that
each member may know and be advised from time to time fully concerning the
receipts and disbursements of Gold Kist;
(3) To appoint a Management Executive Committee, the members of which shall
hold office at the pleasure of and on terms and conditions set by the Board
of Directors. No member of such Management Executive Committee may serve
in the double capacity of Executive Committee member and director. The
Chief Executive Officer shall be Chairman of the Managemen Executive
Committee.
(4) To carry out the marketing and/or purchasing contracts of Gold Kist.
ARTICLE V
DUTIES AND POWERS OF MANAGEMENT EXECUTIVE COMMITTEE
The Management Executive Committee, under the direction of the Board of
Directors, shall employ and discharge all employees, agents and laborers of Gold
Kist, and have general supervision and control over all of the activities and
business of Gold Kist subject to the orders of the Board of Directors, from time
to time.
ARTICLE VI
OFFICERS
The officers of Gold Kist shall be elected by the Board of Directors at its
regular annual meeting and shall be a Chairman of the Board, one or more Vice
Chairmen of the Board, a Chief Executive Officer, a President, one or more Vice
Presidents, a Secretary and a Treasurer, together with any other administrative
officers whom the Board of Directors may see fit in its discretion to provide
for by resolution entered upon its minutes. The office of Secretary and
Treasurer may be held by one and the same person. No officer need be a member
of Gold Kist other than the Chairman of the Board and Vice Chairmen of the
Board who shall also be members of the Board of Directors. In addition to
electing officers at its annual meeting, the Board of Directors at any other
meeting may also elect officers to fill vacancies or elect officers to fill
newly added offices. The directors shall, by vote of a majority attending the
meeting of the directors, elect each officer from among the nominees for that
office. If there are two or more nominees for a position to be filled, then
voting for an election of officers shall be by secret ballot.
The compensation of all officers shall be fixed by the Board of Directors.
Each officer shall
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hold office at the pleasure of the Board of Directors.
The Board may appoint a Chairman of the Board Emeritus.
ARTICLE VII
DUTIES OF OFFICERS
Section 1. CHAIRMAN OF THE BOARD AND VICE CHAIRMAN OF THE BOARD. The
Chairman of the Board shall preside over all meetings of the Board of Directors,
the Executive Committee of the Board of Directors and meetings of members and
shall perform such duties as may be determined by the Board of Directors. The
Vice Chairman of the Board designated by the Board from time to time to perform
such duties shall, in the absence or disability of the Chairman of the Board, or
at the direction of the Chairman of the Board or the Board of Directors, perform
the duties and exercise the powers of the Chairman of the Board.
Section 2. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall act as
Chairman of the Management Executive Committee in the exercise of its general
supervision and control capacity as provided in Article V of these By-Laws. He
shall see that all orders and resolutions of the Board of Directors are carried
into effect. In the absence or disability of the President, the Chief Executive
Officer shall perform the duties and exercise the powers of the President. The
Chief Executive Officer shall perform such other duties as may from time to time
be delegated to him by the Board of Directors.
Section 3. PRESIDENT. The President shall be the chief operating officer of
the corporation and shall be a member of the Management Executive Committee. In
the absence or disability of the Chief Executive Officer, the President shall
perform the duties and exercise the powers of the Chief Executive Officer. The
President shall perform such other duties as may from time to time be delegated
to him by the Board of Directors.
Section 4. VICE PRESIDENTS. The Vice President designated by the Board from
time to time to perform such duties shall, in the absence or disability of both
the Chief Executive Officer and the President, or at the direction of the
Management Executive Committee, perform the duties and exercise the powers of
the Chief Executive Officer and the President. Vice Presidents shall perform
whatever duties and have whatever powers the Board of Directors may from time to
time assign.
Section 5. SECRETARY AND TREASURER.
(a) The Secretary shall keep accurate records of acts and proceedings of all
meetings of members, directors and committees of directors. He shall have
authority to give all notices required by law or by these By-Laws. He shall be
custodian of the corporate books, records, contracts and other documents. The
Secretary may affix the corporate seal to any lawfully executed documents
requiring it and shall sign such instruments as may require his signature. The
Secretary shall perform whatever additional duties and have whatever additional
powers the
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Board of Directors may from time to time assign to him.
(b) The Treasurer shall be responsible for the custody of all funds and
securities belonging to Gold Kist and for the receipt, deposit or disbursements
of such funds and securities under the direction of the Board of Directors. The
Treasurer shall perform all duties as may be assigned to him from time to time
by the Board of Directors.
Section 6. ASSISTANT SECRETARY AND ASSISTANT TREASURER. The Assistant
Secretaries and Assistant Treasurers, if the same exist, shall, in the absence
or disability of the Secretary or the Treasurer, respectively, perform the
duties and exercise the powers of those offices, and they shall, in general
perform such other duties as shall be assigned to them by the Board of
Directors. Specifically, an Assistant Secretary may affix the corporate seal to
all necessary documents and attest the signature of any officer of the
corporation and may give all notices required by law or these By-Laws.
ARTICLE VIII
BOARD OF DIRECTORS EXECUTIVE COMMITTEE
At each annual meeting of the Board of Directors, an Executive Committee of
not more than five (5) and not less than three (3) members, including the
Chairman of the Board, shall be elected by the Board of Directors from among its
members, for a term of one year. The Executive Committee shall have such duties
and powers as may from time to time be prescribed by the Board of Directors.
ARTICLE IX
AUDIT
Section 1. ANNUAL AUDIT. An annual audit shall be made by a Certified Public
Accountant, and a copy of such audit shall be filed with the Board of Directors.
Each member shall be given each year a summary financial statement based on such
audit.
Section 2. AUDIT COMMITTEE. At each annual meeting of the Board of
Directors, an Audit Committee of not more than five (5) and not less than three
(3) members shall be elected by the Board of Directors from among its members,
for a term of one (1) year. The Audit Committee shall have such duties and
powers as may from time to time be prescribed by the Board of Directors.
ARTICLE X
BOOKS AND PAPERS
The books of Gold Kist and such papers as may be placed on file by vote of the
members or directors shall, at all times during business hours, be subject to
the inspection of the Board, and of any member of Gold Kist or his
representative, duly authorized in writing.
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ARTICLE XI
MEETINGS - MEMBERS
Section 1. ANNUAL MEETINGS. An annual meeting of the members shall be held
at a place within the operating area of Gold Kist and on a date as determined by
the Board of Directors for the election of directors and the transaction of such
other business as may come before the meeting.
Section 2. SPECIAL MEETINGS. Except where otherwise prescribed by law or
elsewhere in these By-Laws, a special meeting of the members may be called at
any time by the Board of Directors, and whenever one-tenth of the members shall
sign a petition requesting that a meeting of the members be called and stating
the specific purpose of such meeting, the Board of Directors shall call a
meeting of the members. Each such call shall be in writing and shall state the
time, place and purpose of such meeting. No business shall be transacted at a
special meeting other than as is stated in the purpose of the call.
Section 3. NOTICE OF MEETING. Notice of all meetings, annual and special,
stating the time, place and purpose, shall be given all members at least ten
(10) days prior to the date thereof by publication in a newspaper of general
circulation, published at the principal place of business of Gold Kist, and a
copy of such notice shall be published in the Gold member publication so that it
will go to each member of Gold Kist at least ten days prior to the date thereof.
Section 4. QUORUM. At any meeting the members present, in person, or voting
by mail, shall constitute a quorum for all purposes except when otherwise
provided by law.
Section 5. NO PROXY. Any member shall be permitted to vote at any meeting,
in person, or by mail, but no proxies shall be voted in Gold Kist.
Section 6. ONE VOTE. Each active member of Gold Kist (whether person, firm,
corporation, or cooperative association) shall have only one vote, and the right
to such vote shall be evidenced by the issuance of one share of common stock of
Gold Kist in the name of such member.
ARTICLE XII
GENERAL PROVISIONS CONCERNING MEMBERS
Section 1. MEMBERS - WHO ELIGIBLE. Any person engaged in the production of
farm commodities, including livestock and poultry, and any firm or corporation
whose members or stockholders are persons so engaged, including the lessees or
tenants, or the lessors or landlords, of land used for such production, provided
such lessors or landlords receive all or part of the rental in farm products,
and any cooperative association organized under the cooperative marketing laws
of this and any other state, is eligible to membership in Gold Kist, except that
membership may be denied in the discretion of the Board of Directors on a
reasonable basis.
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Section 2. CONDITIONS OF MEMBERSHIP. Any person, firm or corporation,
eligible to membership under these By-Laws, may apply for membership in such
manner as may be prescribed by the Board of Directors. All members shall
subscribe to a marketing and/or purchasing agreement, in a form prescribed by
the Board of Directors, or shall sign some other document which by its terms,
embodies by reference the marketing and/or purchasing agreement then in effect
and on file with the Secretary of Gold Kist. The Board of Directors shall
prescribe, from time to time, the general marketing and/or purchasing agreement
then in effect, and shall cause one copy thereof to be executed by the
President, attested by the Secretary and corporate seal of Gold Kist, to be
filed with the Secretary, and to be the general marketing and/or purchasing
agreement of Gold Kist until a new one is properly authorized by the Board of
Directors, executed by the President as aforesaid, and filed with the Secretary.
Gold Kist may have different contracts with its members varying in terms and
conditions of the contracts of any member, provided the member assents thereto;
and such modification, variation or alteration shall not affect the contracts
between Gold Kist and other members, nor shall the consent of other members be
necessary to effect such modification or change.
The Board of Directors may admit as members of Gold Kist any person, firm, or
corporation properly qualified under these By-Laws.
The Board of Directors from time to time by a resolution passed at any regular
or special meeting and duly entered on its minutes thereof may provide for a
membership fee to be paid by each new member as a condition of admission to
membership, and further may provide for fees to be paid annually or from time to
time as a continuing condition of membership. Said resolution shall fix the
amount of such fees, which may vary between members, and such other terms,
conditions and rules with respect thereto, including without limitation the
payment, collection and use thereof, as the Board of Directors in its conclusive
discretion shall deem proper or necessary.
A member may withdraw at any time by notifying Gold Kist in writing by
certified mail.
Section 3. CAPITAL STOCK. Gold Kist is organized with capital stock of the
amounts, par values, preferences, rights, privileges and restrictions as
provided in the Articles of Incorporation for the purpose of serving its members
and providing all of its facilities to them upon rules and regulations to be
prescribed by the Board of Directors of Gold Kist.
Section 4. EVIDENCE OF MEMBERSHIP. From and after April 25, 1985, membership
in Gold Kist shall be evidenced by the issuance of a share of common stock of
Gold Kist in the name of each member. Neither the share of common stock nor the
underlying membership right may be assigned by any member to any other person,
nor shall a purchaser or other successor to the property of a member be entitled
to membership rights, or to become a holder of common stock of Gold Kist, by
virtue of such transfer. However, the Board of Directors of Gold Kist may,
under certain conditions, consent to an assignment and transfer of such
membership right, provided that the assignee or transferee signs a marketing
and/or purchasing agreement with Gold Kist, and the assignor or transferor
tenders his share of common stock of Gold Kist to
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Gold Kist in exchange for a share of common stock issued in the name of the
assignee or transferee. The Board may establish reasonable rules and
regulations for the transfer of membership rights to the purchaser of a member's
land or lease; determine the conditions under which the executor or
administrator of a deceased member may continue as a member representing such
deceased member; and determine the conditions under which a purchaser at
execution sale or any successor by operation of law shall succeed to membership
rights.
Section 5. TERMINATION OF MEMBERSHIP. If the Management Executive Committee
shall find that a member has ceased to qualify for membership, the right of such
member to a vote or voice in the affairs of Gold Kist shall be suspended upon
sending written notice of such determination to such member, and the membership
of such member shall be terminated automatically thirty days after the sending
of such notice unless such member requests a hearing by the Board of Directors.
The action of the Board of Directors after a hearing shall be final with respect
to such termination.
If any member shall cease, fail, neglect, or refuse for any reason whatsoever
to abide by the terms of his marketing and/or purchasing agreement, then the
Board of Directors (or officers acting in accordance with the direction of the
Board of Directors) may cancel his marketing and/or purchasing agreement, and/or
his membership, and/or repurchase his share of common stock of Gold Kist
evidencing such membership, and, if it chooses, expel him from membership in
Gold Kist.
The expulsion of any member or the cancellation of his marketing and/or
purchasing agreement or any penalty imposed upon him for the breach of any of
these By-Laws shall be separate from, and in addition to, the provisions which
may be included in the marketing and/or purchasing agreements in reference to
liquidated damages, or other remedies. It is expressly understood that Gold
Kist may exercise any rights whatsoever under the said marketing and/or
purchasing agreement for a breach of such agreements, and in addition impose any
penalty or liquidated damages set forth in these By-Laws for the express
violation of a By-Law.
The expulsion of any member shall not operate to release any other member from
his contract with Gold Kist and shall not affect in any way the contracts of the
remaining members of Gold Kist.
If a member fails to deliver farm products to or purchase supplies from Gold
Kist for a period of one fiscal year, such member shall be deemed inactive and
shall remain on the inactive list until such time as such member shall again
deliver farm products to or purchase supplies from Gold Kist; provided, however,
if at the close of any fiscal year such member shall have no property rights
shown by the books and records of Gold Kist, the membership of such member shall
automatically terminate at the end of such fiscal year and Gold Kist shall
repurchase such member's share of common stock. So long as any member is on the
inactive list, that member shall not be entitled to a vote or voice in the
affairs of Gold Kist.
Upon final termination of membership for any reason, Gold Kist shall
repurchase the
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member's share of common stock in the manner provided in these By-Laws.
Section 6. PROPERTY RIGHTS. The property rights and interest of all members
in Gold Kist shall be in accordance with the Patronage Dividend certificates,
allocated reserves and Nonqualified Notices of such members, all as shown by the
books and records of Gold Kist, and as evidenced by shares of common stock of
Gold Kist.
The property rights of a member in Gold Kist are non-assignable and non-
transferable; however, they shall upon the death of a member be succeeded to by
his estate; and during the lifetime of a member he may, with the consent of the
Board of Directors, assign and transfer his said property rights on such
conditions as the Board of Directors shall determine.
In the event any member shall cease to be a member, he shall nevertheless
retain his property rights hereunder and shall be entitled to receive payment
thereof at the same time and to the same extent as would have been the case had
he remained a member. If after termination of his membership, any person shall
demand payment of his property rights, and in the event the laws of the State of
Georgia require the payment of such property rights to such former member, the
then present value of said property rights shall be determined by the Board of
Directors after due allowance for the probable due date to members and the risk
of losses occurring before such probable due date.
Section 7. DISPUTES BETWEEN GOLD KIST AND MEMBERS: REMEDIES.
a) Arbitration. Gold Kist and members will submit to binding arbitration all
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disputes between the parties, whether governed by federal, state, or
international contract law, tort law, statute, or treaty, and irrespective of
the form of relief sought, relating to or arising out of matters of a type
declared by Gold Kist's Board of Directors before the dispute arises to be of a
type covered by Gold Kist's arbitration policy. All such arbitrations shall be
according to rules and procedures adopted from time to time by Gold Kist's Board
of Directors.
(b) Remedies. In no event will punitive or exemplary damages be claimed by or
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awarded to either party, whether in arbitration, in court proceedings, or
otherwise. Except for punitive or exemplary damages which are excluded, the
arbitrator(s) may determine remedies as provided in the policies adopted by the
Board of Directors.
Section 8. MEMBERS' CHARITABLE FOUNDATION. Gold Kist has formed Gold Kist
Foundation, Inc. ("Foundation"), as a members' charitable foundation for
engaging in charitable activities associated with Gold Kist or its members. By
becoming a member of Gold Kist, a member agrees and directs that any amounts
represented by checks (or other evidences of payment, including electronic
transfers) issued by Gold Kist to such members but uncashed or unclaimed for
four years or more after the same were issued shall be transferred by Gold Kist
to the Foundation as a charitable contribution by such members. By failing to
claim such amounts for four years or more, a member has expressed its intention
to make the foregoing charitable contributions. Such checks or other evidences
of payment may be issued to members in payment
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of Patronage Dividends, grower payments, principal or interest on any debt or
other obligation of Gold Kist, or in redemption of Patronage Dividend
Certificates, allocated reserves, Nonqualified Notices, common stock of Gold
Kist or any other equity of Gold Kist. Pursuant to this By-Law provision, the
Foundation is hereby granted the right to demand and to receive the charitable
contributions required hereunder, provided that the Foundation must indemnify
Gold Kist from and against any obligations to any such members or to any other
person, including any governmental entity, with respect to the amounts
contributed to the Foundation pursuant to this By-Law provision.
Article XIII
BORROWING MONEY
Gold Kist shall have the power, by affirmative vote of a majority of its
directors in attendance at any meeting at which a quorum is present, to borrow
money for any corporate purposes on open account, or on the promissory note of
the corporation, unsecured, or secured by any assets of Gold Kist or any
property of members in its possession, or upon any accounts thereof, or any
property not yet distributed to the members in such amounts and upon such terms
and conditions as may from time to time seem to the Board of Directors advisable
or necessary.
ARTICLE XIV
MARKETING AND POOLS
The Board of Directors of Gold Kist, in its conclusive discretion, shall have
the right and power to provide pools and/or other services through which the
members of Gold Kist may sell their farm products or purchase their supplies;
and shall, from time to time, have the right to make such rules and regulations
as it may deem proper, governing all of said pools, options, and purchases, and
to allocate expenses as it may in its conclusive discretion deem equitable. If
any such pools and/or other services are not provided for in the written
marketing and/or purchasing agreement, the Board of Directors may, nevertheless,
provide for the same by a resolution passed at any regular or special meeting
and duly entered upon its minutes thereof. The members agree to observe all
such rules and regulations and to be bound thereby, and the failure to do so
shall be grounds for expulsion from membership.
ARTICLE XV
SEAL
The seal of Gold Kist shall contain these words "Gold Kist Inc."; said seal
shall be in a circular form, and in the center of the circle shall be the word
"SEAL."
ARTICLE XVI
LIABILITY OF MEMBERS
Except for debts lawfully contracted between him and Gold Kist, no member
shall be liable
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for the debts of Gold Kist.
ARTICLE XVII
COOPERATIVE OPERATION; PATRONS' EQUITIES
Section 1. DEFINITIONS. For purposes of this Article XVII, the following
terms shall have the following meanings.
(a) The term "patronage" shall refer to any and every transaction involving
Gold Kist and a person who, at the time of the transaction, is a member, except
such transactions as are conducted pursuant to agreements providing to the
contrary.
(b) The term "Patron" shall refer to each member or former member but only
to the extent said member or former member participates or has participated in
patronage transactions.
(c) The term "Patronage Dividend" shall mean any distribution required by
Section 5 of this Article XVII.
(d) The term "Additional Patronage Distribution" shall mean any distribution
authorized by Section 11 of this Article XVII.
(e) The term "Dividend" shall refer to distributions (other than Additional
Patronage Distributions; redemptions of Patronage Dividend certificates, written
notices of allocated reserves and Nonqualified Notices; and distributions of
deferred patronage refunds) treated as dividends for purposes of federal income
taxation, and shall not include Patronage Dividends.
(f) The term "Patronage Earnings" for any fiscal year shall mean earnings
for such year from business done with or for Patrons computed as provided in
Section 4 of this Article XVII.
(g) The term "Patronage Margins" for any fiscal year shall mean the net
income of Gold Kist for such year from business done with or for Patrons,
computed in accordance with the principles applied in preparation of Gold Kist's
federal income tax return for such year, having due regard for net operating
loss carryforwards employed and allowable for federal income tax purposes, and
without reduction for Patronage Dividends or income taxes required for such
year, redemptions of Nonqualified Notices deductible for such year, or Dividends
paid in such year.
(h) The term "Total Margins" for any fiscal year shall mean the net income
of Gold Kist for such year from all sources computed in accordance with
principles applied in preparation of Gold Kist's federal income tax return for
such year, having due regard for net operating loss carryforwards employed and
allowable for federal income tax purposes, and without reduction for Patronage
Dividends or income taxes required for such year, redemptions of Nonqualified
Notices deductible for such year, or Dividends paid in such year.
(i) The term "Common Stock Certificate" shall refer to a certificate
representing one share
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of $1 par value common stock of Gold Kist which share evidences membership, $1
of allocated reserves and an active member's right to vote.
Section 2. COOPERATIVE OPERATION. Gold Kist shall operate on a cooperative
basis. To this end, as soon as practicable after the close of each fiscal year,
and in any event within eight and one-half months after the close of such year,
Gold Kist shall determine the Patronage Earnings for such year and shall
distribute all of such Patronage Earnings to Patrons on the basis of their
respective patronage with the corporation during such year. The Board of
Directors of Gold Kist, in its sole discretion, shall determine the form of each
such distribution of Patronage Earnings, provided however that the form of each
distribution shall be uniform with respect to all Patrons entitled to
participate therein. In distributing all of such Patronage Earnings, the Board
of Directors shall allocate all or part of each such distribution into the
following forms of written notice of allocation as the same is defined for
purposes of Subchapter T of the Internal Revenue Code of 1954, as amended from
time to time, or any successor provisions thereto:
(a) Nonqualified written notice of allocation. Less than twenty percent (20%)
thereof shall be made in cash or by qualified check (as the same is defined for
purposes of Subchapter T of the Internal Revenue Code of 1954, as amended from
time to time, or any successor provisions thereto), with the remainder thereof
to be made in Nonqualified Notices, as defined hereinafter.
(b) Qualified written notice of allocation. Twenty percent (20%) or more
thereof shall be made in cash or by qualified check (as the same is defined for
purposes of Subchapter T of the Internal Revenue Code of 1954, as amended from
time to time, or any successor provisions thereto) with the remainder thereof to
be made in the form of Patronage Dividend Certificates, as defined hereinafter,
or in the form of allocated reserves, as defined hereinafter, or in any
combination of Patronage Dividend Certificates or allocated reserves. In
addition, Gold Kist shall also be authorized to issue per-unit retain
certificates (as the same are defined for purposes of Subchapter T of the
Internal Revenue Code of 1954, as amended from time to time, or any successor
provisions thereto) to Patrons.
Section 3. TAX CONSENT. Each Patron, by virtue of his membership in Gold
Kist, consents to take into account in the manner provided in Section 1385(a) of
the Internal Revenue Code of 1954, as amended from time to time, or any
successor provisions thereto (and hence generally to include in his gross
income) for the taxable year in which received by him the stated dollar amount
of any Patronage Dividend Certificate or of allocated reserves or per-unit
retain certificates issued to him pursuant to Subsection 2(b) of this Article
XVII. The consent hereby given shall survive termination of the Patron's
membership.
Section 4. COMPUTATION OF PATRONAGE EARNINGS. Patronage Earnings for any
fiscal year shall equal Patronage Margins for such fiscal year less:
(a) the excess, if any, of Patronage Margins over Total Margins for such
year;
(b) a proportion of all Dividends paid in such year, to the extent authorized
prior to such
17
<PAGE>
fiscal year for payment in such year, said proportion being the fraction (not
greater than 1) with numerator equal to such Patronage Margins and denominator
equal to such Total Margins;
(c) an amount equal to any income tax liabilities of Gold Kist for such year
to the extent such liabilities result from the inclusion in taxable income of
(i) the amount specified in subparagraph (b) and (ii) the amount specified in
this subparagraph (c); and
(d) all membership and annual fees paid by members, to the extent that such
fees affect the computation of Patronage Margins.
Section 5. DISTRIBUTION OF PATRONAGE DIVIDENDS. Upon determining the amount
of Patronage Earnings in any fiscal year, said amount shall be allocated among
the several operations of Gold Kist or one or more groups of such operations as
the Board of Directors may reasonably determine to be appropriate in light of
each operation's or group's contribution thereto, and the amounts so allocated
shall then be distributed to the Patrons of such operations or groups on a
patronage basis employing for this purpose as a measure of patronage either
dollar value or units, as the Board of Directors may reasonably determine to be
appropriate in each case. In each fiscal year in which Patronage Earnings are
so allocated, Gold Kist shall provide to its Patrons, within the time permitted
by applicable law, notice in such form and content as shall from time to time be
required by law in connection therewith.
Section 6. PATRONAGE DIVIDEND CERTIFICATES. Patronage Dividends distributed
pursuant to Subsection 2(b) may be distributed as the Board of Directors shall
determine in the form of certificates payable on demand or having fixed maturity
dates, or revolving fund certificates. Such certificates may contain such other
terms and conditions not inconsistent herewith as may be prescribed from time to
time by the Board of Directors of Gold Kist. Revolving fund certificates shall
be issued in annual series, each certificate in each series upon its face being
identified by the year in which it is issued; and each series shall be redeemed
at the stated dollar amounts fully or on a pro rata basis, only at the
discretion of the Board of Directors of Gold Kist, in the order of issuance by
years (including all such certificates as may have been issued irrespective of
the purpose or consideration for which issued) as funds are available for that
purpose. Patronage Dividend certificates shall bear such rates of interest and
only such rates of interest as the Board of Directors of Gold Kist in its sole
discretion may from time to time prescribe without any obligation on the part of
the Board of Directors of Gold Kist to pay interest on such certificates. A
record of all holders of Patronage Dividend certificates shall be kept and
maintained by Gold Kist. Such certificates shall be transferable only on the
books of Gold Kist after the approval of a majority of the Directors of Gold
Kist present at the meeting at which the transfer of such certificates is
considered and no transfer of certificates shall be binding upon Gold Kist
unless so transferred.
Section 7. ALLOCATED RESERVES. (a) Patronage Dividends distributed pursuant
to Subsection 2(b) may be made in the form of allocated reserves with respect to
which a share of common stock of the corporation shall be issued and/or a
written notice of allocated reserves shall be
18
<PAGE>
given to Patrons. Each share of common stock shall represent $1 of allocated
reserves. Each such written notice of allocated reserves shall inform the
Patron of the dollar amount allocated to him. Such written notices of allocated
reserves may be redeemed at their stated dollar amount in the same manner as
provided in Section 6 of this Article XVII with respect to revolving fund
certificates.
(b) From and after April 25, 1985, the marketing and/or purchasing agreement
with each member with an allocated reserve shall be amended, by virtue of this
subsection (b), to include the agreement to purchase a share of common stock of
Gold Kist by payment of $1 of such member's allocated reserve to Gold Kist. On
such date, the books and records of Gold Kist shall be amended to reflect that
$1 of allocated reserve of such member has been used as payment for a share of
common stock, and appropriate entries shall be made in the Gold Kist stock books
or records to reflect the issuance of a share of common stock in the name of
such member. If such member is an active member of Gold Kist, Gold Kist shall
deliver a Common Stock Certificate to such member together with a notice that
his earlier prior written notice of allocated reserve has been reduced by $1.
If such member is an inactive member of Gold Kist, Gold Kist shall not be
required to deliver a Common Stock Certificate to such member until the member
shall become active, or shall request delivery of a Common Stock Certificate by
written notice to Gold Kist, at which time Gold Kist shall deliver a Common
Stock Certificate to the member, together with a notice that his earliest prior
written notice of allocation has been reduced by $1.
(c) From and after April 25, 1985, appropriate entries shall be made in the
Gold Kist stock books or records to reflect the issuance of a share of common
stock in the name of each member with no allocated reserve as of such date, and
in the name of each new member following such date, and each such member's
marketing and/or purchasing agreement, by virtue of this Section 7(c), shall be
amended to the extent necessary to include therin the promise to purchase and to
pay for such share of common stock. Such promise shall be satisfied by
allocation of such member's first $1 of allocated reserve thereafter received as
a distribution of Patronage Earnings. A Common Stock Certificate shall be held
by Gold Kist as security for such promise to pay until payment is made as
provided above, but such retention of securities shall not affect the member's
right to vote.
(d) The share of common stock issued to each member with an allocated reserve
shall at all times represent $1 of the earliest allocated reserve outstanding of
such member at any time, and the books and records of Gold Kist shall be
appropriately amended from time to time to reflect the above. Each such member
with an allocated reserve as of April 25, 1985, is hereby notified that as of
such date the books and records of Gold Kist have been amended to reflect that
his earliest prior written notice of allocation has been reduced by $1, and
pursuant to this notice, such written notice of allocation is hereby reduced by
$1, and the same $1 shall be represented by the share of common stock issued in
the name of such member. Upon each subsequent amendment of the books and
records of Gold Kist, the member shall receive a written notice of the
restoration or reduction of prior written notices of allocated reserves
represented by the member's share of common stock.
19
<PAGE>
(e) The repurchase of a share of common stock as provided in these By-Laws
shall be accomplished by the amendment of the books and records of Gold Kist to
restore the $1 of allocated reserve represented by the common stock.
Furthermore, Gold Kist shall send a notice of repurchase to such member stating
that the member's earliest prior written notice of allocation has been restored
to its full value and requesting that the member tender his Common Stock
Certificate to Gold Kist within 60 days of the date of such notice. In the
event that such member does not tender the Common Stock Certificate to Gold Kist
within 60 days of such notice, the Common Stock Certificate shall be deemed to
have been repurchased and cancelled, and the share of common stock represented
by such certificate shall no longer be outstanding.
Section 8. NONQUALIFIED NOTICES. Patronage Dividends distributed pursuant to
Subsection 2(a) may be made in the form of Nonqualified Notices. Each
Nonqualified Notice shall inform the Patron of the dollar amount allocated to
him and the fact that it is designated as and is a nonqualified written notice
of allocation (as the same is defined for purposes of Subchapter T of the
Internal Revenue Code of 1954, as amended from time to time, or any successor
provisions thereto). Nonqualified Notices shall be issued in annual series with
each such notice being identified on its face by the year in which it is issued.
Nonqualified Notices may be redeemed at their stated dollar amount in the same
manner as provided in Section 6 of this Article XVII with respect to revolving
fund certificates.
Section 9. INDIVIDUAL REDEMPTIONS. Notwithstanding the provisions regarding
priority of payment with respect to the oldest outstanding revolving fund
certificates, written notices of allocated reserves, Nonqualified Notices or
deferred patronage refunds, the Board of Directors may authorize redemption, in
individual cases, of such certificates and notices, and distribution of such
refunds, and may further authorize redemption, in individual cases, of demand or
maturity Patronage Dividend certificates at any time.
Section 10. SUBORDINATION OF PATRONAGE DIVIDENDS. Unless Gold Kist has been
declared insolvent, the Board of Directors, in its sole discretion, shall
determine the allocation of available funds and the priority of redemption,
retirement or payment of any of the forms of Patronage Dividends described in
Sections 6, 7 and 8 of this Article XVII. In the event Gold Kist has been
declared insolvent, Patronage Dividends shall be redeemed, retired or paid in
accordance with the priority provisions contained in Article XIX hereof.
Section 11. ADDITIONAL PATRONAGE DISTRIBUTIONS. At any time and from time to
time the Board of Directors shall be authorized to distribute assets of Gold
Kist to holders, at the time of such distribution, of Patronage Dividend
certificates, written notices of allocated reserves and Nonqualified Notices,
each such distribution to be based on the respective such holdings of each
distributee. The Board of Directors shall be further authorized to distribute
assets of Gold Kist, at any time when no such holders exist, to the members of
the Association at that time on the basis of such members' respective patronage
throughout the current year (to the date specified in the declaration of the
distribution) and the immediately preceding five fiscal years.
Section 12. LOSSES. In the event of a loss to Gold Kist from any cause
whatsoever, there
20
<PAGE>
shall be no obligation on the part of any Patron or Patrons or member or members
of Gold Kist to contribute property to, or to forfeit an interest in or claim
against Gold Kist in respect thereof, nor shall any Patron or member be liable
for any debt of Gold Kist, except to the extent otherwise provided by separate
agreements of individual Patrons or members.
Section 13. DE MINIMUS REDEMPTIONS. Notwithstanding the order of redemption
for Patronage Dividends as set forth in Sections 6, 7, and 8 of this Article
XVII, for Patrons with small aggregate amounts of Patronage Dividends (as
determined by the Board of Directors, but not exceeding $100.00 per Patron), the
Board of Directors may cause the entire aggregate amounts of such Patrons'
Patronage Dividends to be redeemed even though other Patronage Dividends for
earlier years might not be redeemed.
ARTICLE XVIII
STOCK
Section 1. CERTIFICATES. Every holder of stock in Gold Kist shall be
entitled to have issued a certificate certifying the number of shares owned by
such holder in Gold Kist. Each certificate shall be signed by or in the name of
Gold Kist by the President or Chief Executive Officer or a Vice President and
the Secretary or an Assistant Secretary of Gold Kist and may be sealed with the
seal of Gold Kist or a facsimile thereof. Signatures of such officers upon any
preferred stock certificate may be facsimile if the certificate is countersigned
by a transfer agent or registered by a registrar other than Gold Kist or an
employee of Gold Kist. Signatures of such officers upon a common stock
certificate may be facsimile, with no requirement of countersignature by a
transfer agent or registration by a registrar. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by Gold Kist with
the same effect as if such person were such officer, transfer agent or registrar
at the date of issue.
Section 2. LOST, DESTROYED OR STOLEN STOCK CERTIFICATES; ISSUANCE OF NEW
CERTIFICATES. Gold Kist may issue a new certificate of stock in the place of
any certificate theretofore issued by it, alleged to have been lost, destroyed
or stolen, and Gold Kist may require the owner of the lost, destroyed or stolen
certificate, or such owner's legal representative, to give Gold Kist a bond
sufficient to indemnify it against any claim that may have been made against it
on account of the alleged loss, destruction or theft of any certificate or the
issuance of such new certificate.
ARTICLE XIX
DISSOLUTION
Upon the dissolution, liquidation or winding up of Gold Kist in any manner,
all debts (including non-maturity preferred certificates of interest) other than
those evidenced by Patronage Dividend certificates shall first be paid in full.
Thereafter all issued and outstanding shares of preferred stock shall be
redeemed by payment of the amount per share specified in the Articles of
Incorporation of Gold Kist, along with any dividends thereon accrued or in
arrears.
21
<PAGE>
Thereafter all outstanding Patronage Dividend certificates payable on demand or
having a fixed maturity date shall be redeemed at their stated dollar amounts in
full or on a pro-rata basis without priority. Thereafter all outstanding
revolving fund certificates shall be redeemed at their stated dollar amounts in
full or on a pro-rata basis without priority. Thereafter all outstanding
written notices of allocated reserves, including allocated reserves represented
by shares of common stock, shall be redeemed at their stated dollar amounts in
like manner. Thereafter all outstanding Nonqualified Notices shall be redeemed
at their stated dollar amounts. Any amounts remaining after such payments shall
be distributed in the manner provided in Section 11 of Article XVII.
In the event that Gold Kist by resolution duly adopted by its Board of
Directors shall at any time determine to transfer the property and assets of
Gold Kist to a successor association and shall designate such association as
such successor, the transfer of said property and assets by this Association to
such successor shall not be considered a dissolution or liquidation within the
meaning of this Article. Such successor association may be formed or exist
under state or federal laws, provided only that it shall be in substance a
farmers' cooperative marketing or purchasing association, and such designation
thereof as successor association may take place through the formation of another
association for the express purpose of succeeding to the property and assets of
this association, or through the recognition of another existing association as
successor association, or through merger, consolidation, or any corporate
reorganization. In any event, however, the property rights and interests of the
members of Gold Kist and/or their voting powers and rights shall be recognized
and preserved in some equitable manner in such successor association.
ARTICLE XX
INDEMNIFICATION
Each person who is or was a director or officer of Gold Kist and each person who
at Gold Kist's request is serving or has served as an officer or director of
another corporation, partnership, joint venture, trust, or other enterprise
(hereinafter referred to individually as the "Indemnitee") shall be indemnified
by Gold Kist to the full extent described in Sections 14-2-156(a) through (e) of
the Georgia Business Corporation Code, as amended from time to time, against
expenses (including attorneys' fees), judgments, fines, amounts paid in
settlement, and other liabilities actually and reasonably incurred by him in
connection with any threatened, pending or completed action, suit, or proceeding
(whether based on facts and circumstances now existing or hereafter arising) in
which the Indemnitee may be involved by reason of his being or having been a
director or officer of Gold Kist or of such other enterprise. Such
indemnification shall be made in accordance with the laws of the State of
Georgia and subject to the conditions prescribed therein, including without
limitation, any condition that the Indemnitee have met applicable standards of
conduct. In addition to the indemnification described above, Gold Kist, at the
discretion of its disinterested directors, may indemnify the Indemnitee against
amounts paid in settlement of any threatened or pending action, suit or
proceeding by or in the right of Gold Kist to secure a judgment in its favor,
subject to the same conditions set forth in Sections 14-2-156(b) and (d) of the
Georgia Business Corporation Code,
22
<PAGE>
as amended from time to time, with respect to expenses incurred by him in
connection with such an action, suit or proceeding, and subject to any
limitations set forth in Section 14-2-156(f) of the Georgia Business Corporation
Code, as amended from time to time. In keeping with and not in limitation of
the foregoing, the attorneys of Gold Kist who are officers of the company shall
be indemnified by Gold Kist against any expenses and other liabilities incurred
by them in connection with their rendering of legal opinions or providing other
services as counsel to Gold Kist or its subsidiaries or affiliated companies.
Gold Kist may purchase and maintain insurance on behalf of any Indemnitee
against any liability asserted against him whether or not Gold Kist would have
the power to indemnify the Indemnitee against such liability under the laws of
the State of Georgia. If any expenses or other amounts are paid by way of
indemnification, other than by court order, by membership action or by insurance
carrier, Gold Kist shall provide notice of such payment to the members in
accordance with the provisions of the laws of the State of Georgia.
ARTICLE XXI
AMENDMENTS
A majority vote of a quorum of the members attending a meeting of which notice
shall have been given, shall be sufficient to adopt or amend the By-Laws of Gold
Kist.
3966
23
<PAGE>
No. S0020DD
NATIONAL BANK FOR COOPERATIVES
AMENDMENT
THIS AMENDMENT is entered into as of the 13th day of December, 1993,
between the NATIONAL BANK FOR COOPERATIVES ("CoBank") and GOLD KIST, INC., (the
"Borrower").
WHEREAS, on February 22, 1991, CoBank and the Borrower entered into a Line
of Credit Agreement No. S0020-D (such agreement, as may have been previously
amended, shall hereinafter be referred to as the "Agreement");
WHEREAS, the parties now desire to amend the Agreement;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Section 1 of the Agreement is hereby amended to change the Termination
Date from December 31, 1993 to December 31, 1994.
2. To the extent not inconsistent herewith, all other terms and conditions
of the Agreement shall remain in full force and effect.
NATIONAL BANK FOR COOPERATIVES GOLD KIST, INC.
By: /S/ PORTER C. LITTLE By: /S/ PETER J. GIBBONS
-------------------- --------------------
Title: Vice President Title: V.P. Finance
----------------- -----------------
<PAGE>
GOLD KIST INC.
RATIO OF NET MARGINS TO FIXED CHARGES
For the Five Years Ended June 25, 1994
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Fixed Charges:
Debt interest 18,106 18,437 18,838 17,163 13,924
Interest portion of rents 2,325 3,703 5,334 5,189 5,390
Interest decrease (see below) -- -- --
------- ------- ------- ------- -------
Total 20,431 22,140 24,172 22,352 19,314
======= ======= ======= ======= =======
Margins (loss) before income taxes,
minority interest, and cumulative
effect of change in accounting
principle 56,319 49,905 (4,041) 43,692 50,074
Deduct: Equity in Gain (Loss) of less than
50% owned affiliates 8,284 24,985 8,732 5,593 (1,563)
Add: Earnings distributed by less than
50% owned partnership -- 8,284 22,695 11,404 1,770
Deduct: Interest decrease (see below) -- -- -- -- --
------- ------- ------- ------- -------
$58,035 $33,204 $ 9,922 $49,503 $53,407
Fixed charges 20,431 22,140 24,172 22,352 19,314
------- ------- ------- ------- -------
Subtotal 78,466 55,344 34,094 71,855 72,721
Divided by fixed charges 20,431 22,140 24,172 22,352 19,314
------- ------- ------- ------- -------
Ratio 3.84 2.50 1.41 3.21 3.77
======= ======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-25-1994
<PERIOD-START> JUN-26-1993
<PERIOD-END> JUN-25-1994
<CASH> 15,670
<SECURITIES> 0
<RECEIVABLES> 166,083
<ALLOWANCES> 5,369
<INVENTORY> 198,467
<CURRENT-ASSETS> 398,609
<PP&E> 497,689
<DEPRECIATION> 292,906
<TOTAL-ASSETS> 716,432
<CURRENT-LIABILITIES> 249,762
<BONDS> 0
<COMMON> 79
0
0
<OTHER-SE> 296,583
<TOTAL-LIABILITY-AND-EQUITY> 716,432
<SALES> 1,561,034
<TOTAL-REVENUES> 1,571,764
<CGS> 1,385,239
<TOTAL-COSTS> 1,385,239
<OTHER-EXPENSES> 1,110
<LOSS-PROVISION> 1,662
<INTEREST-EXPENSE> 13,924
<INCOME-PRETAX> 50,074
<INCOME-TAX> 14,861
<INCOME-CONTINUING> 34,065
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 5,339
<NET-INCOME> 39,404
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
