UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 27, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 2-62681
GOLD KIST INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-0255560
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
244 Perimeter Center Parkway, N.E., Atlanta, Georgia 30346
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (770) 393-
5000
N/A
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
GOLD KIST INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -
March 27, 1999 and June 27, 1998 ...... 1
Consolidated Statements of Operations
Three Months and Nine Months Ended
March 27, 1999 and March 28, 1998 ..... 2
Consolidated Statements of Cash Flows -
Nine Months Ended March 27, 1999
and March 28, 1998 .................... 3
Notes to Consolidated Financial
Statements ............................ 4 - 6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial
Condition ............................. 7 - 12
Part II. Other Information
Item 6. Exhibits and reports on Form 8-K 13
<TABLE>
Page 1
Item 1. Financial GOLD KIST INC.
Statements CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
(Unaudited)
<CAPTION>
Mar. 27, June 27,
1999 1998
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 19,624 11,789
Receivables, principally trade,
less allowance for doubtful
accounts of $1,955 at
March 27, 1999 and $3,113
at June 27, 1998 102,773 107,957
Inventories (note 3) 180,710 174,204
Deferred income taxes 19,032 45,431
Other current assets 20,713 32,673
Net assets of discontinued operations 13,923 247,621
Total current assets 356,775 619,675
Investments 110,621 125,623
Property, plant and equipment, net 248,503 255,791
Other assets 79,204 79,566
$795,103 1,080,655
LIABILITIES AND EQUITY
Current liabilities:
Notes payable and current maturities of
long-term debt:
Short-term borrowings $ 71,085 201,939
Subordinated loan certificates 17,458 35,005
Current maturities of long-term debt 15,551 93,248
104,094 330,192
Accounts payable 98,107 85,188
Accrued compensation and related expenses 38,903 32,466
Other current liabilities 21,097 22,250
Total current liabilities 262,201 470,096
Long-term debt, excluding current maturities 193,580 320,600
Accrued postretirement benefit costs 52,298 48,678
Other liabilities 7,398 7,275
Total liabilities 515,477 846,649
Patrons' and other equity:
Common stock, $1.00 par value - Authorized
500 shares; issued and outstanding 33 at
March 27, 1999 and June 27, 1998 33 33
Patronage reserves 245,744 198,517
Unrealized gain on marketable equity
security (net of deferred income taxes
of $9,658 at March 27, 1999 and $14,592
at June 27, 1998) 17,936 27,099
Retained earnings 15,913 8,357
Total patrons' and other equity 279,626 234,006
Contingencies (note 5)
$795,103 1,080,655
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
Page 2
GOLD KIST INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
Mar. 27, Mar. 28, Mar. 27, Mar. 28,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales volume $421,405 408,759 1,336,542 1,230,961
Cost of sales 395,913 401,703 1,170,412 1,277,035
Gross margins (loss) 25,492 7,056 166,130 (46,074)
Distribution, administrative
and general expenses 18,902 15,873 60,598 47,998
Net operating margins (loss) 6,590 (8,817) 105,532 (94,072)
Other income (deductions):
Interest income 308 307 1,363 1,343
Interest expense (6,002) (8,366) (19,455) (18,833)
Equity in earnings of
partnership (note 4) 339 816 2,225 2,048
Miscellaneous, net 1,015 532 3,115 5,621
Total other deductions (4,340) (6,711) (12,752) (9,821)
Margins (loss) from continuing
operations before income taxes 2,250 (15,528) 92,780 (103,893)
Income tax expense(benefit) 543 (5,695) 32,348 (37,140)
Margins(loss) from continuing
operations 1,707 (9,833) 60,432 (66,753)
Discontinued operations (note 5):
Loss from operations of dis-
continued Agri-Services segment
(less applicable income taxes
of $1,983 and $9,940, respec-
tively, for the three and nine
months ended March 28, 1998 - (3,094) - (17,872)
Net margins (loss) $ 1,707 (12,927) 60,432 (84,625)
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
Page 3
GOLD KIST INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
Mar. 27, Mar. 28,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Margins (loss) from continuing operations $ 60,432 (66,753)
Non-cash items included in margins (loss)
from continuing operations:
Depreciation and amortization 30,474 27,170
Equity in earnings of partnership (2,225) (2,048)
Deferred income tax expense (benefit) 26,943 (1,245)
Other (354) 219
Changes in operating assets and liabilities:
Receivables 5,184 (2,970)
Inventories (6,506) 6,200
Commodities margin deposits - 51,701
Income taxes receivable 14,652 (26,268)
Other current assets (2,692) (838)
Accounts payable and accrued expenses 17,130 (11,586)
Net cash provided by (used in) operating
activities of continuing operations 143,038 (26,418)
Net cash provided by (used in) operating
activities of discontinued operations 15,385 (67,971)
Net cash provided by (used in) operating
activities 158,423 (94,389)
Cash flows from investing activities:
Acquisitions of property, plant and equipment (21,816) (42,490)
Acquisition of subsidiary minority interest - (53,104)
Other 10,608 5,653
Net cash used in investing activities of
continuing operations (11,208) (89,941)
Net cash used in investing activities of
discontinued operations:
Acquisitions of property, plant and equipment - (5,009)
Proceeds from sale of the Agri-Services segment 218,313 -
Net cash provided by (used in) investing
activities of discontinued operations 218,313 (5,009)
Net cash provided by (used in) investing
activities 207,105 (94,950)
Cash flows from financing activities:
Short-term repayments, net (148,401) (46,034)
Proceeds from long-term debt 83,891 285,200
Principal repayments of long-term debt (288,608) (52,361)
Patronage refunds and other equity paid in cash (4,575) (3,414)
Net cash provided by (used in) financing
activities (357,693) 183,391
Net change in cash and cash equivalents 7,835 (5,948)
Cash and cash equivalents at beginning of period 11,789 17,921
Cash and cash equivalents at end of period $ 19,624 11,973
Supplemental disclosure of cash flow data (Note 7)
See Accompanying Notes to Consolidated Financial Statements.
Page 4
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands)
(Unaudited)
1. The accompanying unaudited consolidated financial
statements reflect the accounts of Gold Kist Inc. and its
subsidiaries ("Gold Kist" or the "Association"). These
consolidated financial statements should be read in
conjunction with Management's Discussion and Analysis of
Consolidated Results of Operations and Financial Condition
and the Notes to Consolidated Financial Statements on
pages 13 through 18 and pages 23 through 39, respectively,
of Gold Kist's Annual Report in the previously filed Form
10-K for the year ended June 27, 1998.
2. In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of normal recurring accruals) necessary to
present fairly the financial position, the results of
operations, and the cash flows. All significant
intercompany balances and transactions have been
eliminated in consolidation. Results of operations for
interim periods are not necessarily indicative of results
for the entire year.
3. Inventories consist of the following:
</TABLE>
<TABLE>
<CAPTION>
Mar. 27, 1999 June 27, 1998
<S> <C> <C>
Live poultry and hogs $ 89,768 94,005
Marketable products 54,470 45,081
Raw materials and supplies 36,472 35,118
$180,710 174,204
</TABLE>
4. Gold Kist has a 33% interest in Golden Peanut Company, a
Georgia general partnership. Gold Kist's investment in
the partnership was $20.5 million at March 27, 1999 and
$22.7 million at June 27, 1998. In July 1998, the
Association received a distribution of $4.4 million from
the partnership.
Summarized operating statement information of Golden Peanut
Company is shown below:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Mar. 27, Mar. 28, Mar. 27, Mar. 28,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales and other
operating income $93,061 105,372 303,376 275,027
Costs and expenses 92,045 102,929 296,702 268,884
Net earnings $ 1,016 2,443 6,674 6,143
</TABLE>
Page 5
5. In October 1998, the Association completed the sale of
assets of the Agri-Services segment to Southern States
Cooperative, Inc. (Southern States). Proceeds of $218.3
million from the sale represented an amount equal to
$39.9 million plus 100% of estimated net current asset
value less the remaining obligations under an industrial
development bond and a lease obligation assumed by
Southern States. Also, the proceeds reflected a $10.0
million hold back deduction provided for in the purchase
agreement.
Net sales volume of the Agri-Services segment for the
three and nine month periods ended March 28, 1998 was
$186.8 million and $456.1 million, respectively. Net
sales volume for the fifteen weeks ended October 10, 1998
was $151.0 million.
In order to complete the transaction with Southern States,
the Association committed to purchase, subject to certain
terms and conditions, from Southern States up to $100
million principal amount of preferred securities if
Southern States is unable to market the securities to other
purchasers. In March 1999, the Association agreed to
extend its commitment to purchase the preferred securities
until October 5, 1999. The preferred securities, if
purchased, will carry an initial weighted average dividend
rate of 7.8%. The Association will have no obligation to
purchase the preferred securities if Southern States places
with other purchasers similar capital and/or equity
securities. To the extent Southern States places with
other purchasers capital and/or equity securities similar
to the preferred securities in an amount less than $100
million, the Association's commitment to purchase preferred
securities shall be reduced correspondingly on a dollar-
for-dollar basis. The Association has established a $100
million irrevocable direct pay letter of credit to secure
its contingent obligation. There are no assurances that
Southern States will be able to market such securities and
relieve the Association of its commitment to purchase such
securities.
In connection with the sale of assets transaction, Southern
States delivered to the Association a post-closing
statement of net asset value (the "Post-Closing Valuation")
prepared pursuant to the terms of the purchase agreement
(the "Agreement"). The final purchase price as determined
by Southern States pursuant to the Post-Closing Valuation
was approximately $203 million compared to an estimated
purchase price of $218.3 million. Taking into account
certain agreed upon adjustments, Southern States' Post-
Closing Valuation would result in a repayment by the
Association to Southern States of approximately $15
million, with interest from the closing date. The
difference between the estimated purchase price as
determined by the pre-closing valuation and Southern
States' determination of the final purchase price as shown
by the Post-Closing Valuation was principally due to an
increase in the reserve for bad debts applicable to the
accounts receivable purchased pursuant to the Agreement.
The Association subsequently objected to Southern States'
Post-Closing Valuation, and asserted that Southern States
owes the Association an additional $6.7 million.
Currently, the Association and Southern States have been
working together to resolve the differences. If these
differences cannot be mutually resolved, the matter will be
submitted to a
Page 6
mutually agreed upon nationally recognized independent
certified public accounting firm who shall act as
arbitrator. Upon conclusion of the arbitration procedure,
any difference between the estimated purchase price and the
final purchase will be paid by the Association or Southern
States, as the case may be, including interest.
6. Effective June 28, 1998, the Association adopted SFAS No.
130, "Reporting Comprehensive Income." This statement
establishes items that are required to be recognized under
accounting standards as components of comprehensive
income. SFAS No. 130 requires, among other things, that
an enterprise report a total for comprehensive income in
condensed financial statements of interim periods. For
the three month period ended March 27, 1999, the
Association's consolidated comprehensive loss was $4.5
million. For the nine month period ended March 27, 1999,
the Association's consolidated comprehensive income was
$51.3 million. For the three and nine month periods ended
March 28, 1998, the Association's consolidated
comprehensive loss was $11.6 million and $86.4 million,
respectively. The difference between consolidated
comprehensive income, as disclosed here, and
traditionally-determined consolidated net margins (loss),
as set forth on the accompanying Condensed Consolidated
Statements of Operations, results from unrealized holding
gains (losses) on marketable securities less applicable
income taxes.
7. The Association incurred cash payments for interest (net
of amounts capitalized) of $21.2 million and $28.0
million, respectively, for the nine months ended March 27,
1999 and March 28, 1998, respectively. The Association
incurred cash payments for income taxes of $12.4 million
for the nine months ended March 27, 1999.
Page 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net Sales Volume
Gold Kist net sales volume of $421.4 million for the three months
ended March 27, 1999 increased 3.1% or $12.6 million as compared
to the same period a year ago. The increase in net sales volume
for the three months ended March 27, 1999 was primarily the
result of a 7.9% increase in pounds of poultry sold, which was
partially offset by a 1.2% decrease in average selling prices.
Net sales volume of $1.3 billion for the nine months ended March
27, 1999 increased 8.6% or $105.6 million as compared to the same
period a year ago. The net sales volume increase for the nine
months ended March 27, 1999 was primarily the result of a 4.4%
increase in average selling prices and a 7.4% increase in pounds
of poultry sold. The impact of these factors on net sales volume
was partially offset by lower average selling prices for live
hogs and feeder pigs.
Lower poultry market prices for the quarter ended March 27, 1999
as compared to the same period last year were due to the weakness
in export sales and a cessation of the field production problems
that restricted industry wide broiler supplies last summer.
Higher domestic poultry market prices for the nine months ended
March 27, 1999 as compared to the nine month period ended March
28, 1998 were attributable to a reduction in the growth of
industry wide broiler production. The production decline was
attributed to problems in the breeder flocks that restricted live
broiler production, as well as hot weather last summer that
reduced broiler growth rates in the Southeast. During the
current nine month period, market prices for poultry dark meat,
which represent about 30% of the value of broilers, have declined
substantially as a result of the Russian and Asian economic
crises that began in the summer of 1998.
Net Operating Margins (Loss)
The Association had net operating margins of $6.6 million for the
three months ended March 27, 1999 as compared to a net operating
loss of $8.8 million in the comparable period last year. Net
operating margins for the nine months ended March 27, 1999 were
$105.5 million as compared to a net operating loss of $94.1
million for the nine month period ended March 28, 1998. The
improvements in operating margins were due to the increase in
poultry market prices discussed above and lower feed ingredient
costs. Feed ingredient costs for the three and nine months ended
March 27, 1999 declined 26.8% and 35.3%, respectively, as
compared to the three and nine months ended March 28, 1998. Corn
and soybean meal cash market prices decreased substantially as a
result of the favorable 1998 grain harvest and reduced foreign
demand for U.S. grains. Higher distribution, administrative and
general expenses for the three months and nine months ended March
27, 1999 reflected the increase in incentive compensation
expenses related to the increase in net margins.
Page 8
Other Income (Deductions)
Interest expense of $6.0 million for the three months ended March
27, 1999 declined $2.4 million as compared to the same three
month period a year ago as a result of lower borrowings. Reduced
debt levels resulted from the sale of the Agri-Services segment
in October 1998 and the improvement in net cash flow from
operations. The impact of the decline in borrowings was
partially offset by higher interest rates related to a weakening
in the financial condition of the Association during the fiscal
year ended June 27, 1998. Interest expense for the nine months
ended March 27, 1999 was $19.5 million as compared to $18.8
million for the nine months ended March 28, 1998. The increase
was due to higher interest rates and increased average borrowings
during the nine months ended March 27, 1999 related to the
decline in Gold Kist's financial condition during the prior
fiscal year.
Equity in the earnings of the partnership of approximately
$339,000 and $2.2 million represented the Association's pro rata
share of Golden Peanut Company's earnings for the three and nine
months ended March 27, 1999, respectively. This compared to a
$816,000 and $2.0 million, respectively, pro rata share of the
partnership's earnings for the comparable periods a year ago.
Miscellaneous, net was $1.0 million for the three months ended
March 27, 1999 as compared to $532,000 for the same period last
year. Miscellaneous, net for the three months ended March 27,
1999 includes dividends of $870,000. Miscellaneous, net for the
nine months ended March 27, 1999 was $3.1 million as compared to
$5.6 million for the same period a year ago. Miscellaneous, net
for the nine months ended March 28, 1998 includes income of $2.0
million related to a poultry grower agreement.
LIQUIDITY AND CAPITAL RESOURCES
The Association's liquidity is dependent upon funds from
operations and external sources of financing. The principal
source of external short-term financing is a secured committed
credit facility with a commercial bank. The primary source of
external long-term financing is a secured revolving credit
facility.
In August 1998, the Association replaced its $440 million secured
committed credit facility with a $500 million credit agreement
with a commercial bank that included a secured $125 million 364-
day line of credit commitment, a secured $125 million three-year
revolving credit facility and a $250 million three-year unsecured
bridge facility. In accordance with terms of the loan
agreements, the $250 million three-year bridge loan was paid on
October 13, 1998 with proceeds of $218.1 million from the sale of
certain assets of the Agri-Services segment and cash provided by
operations. The 364-day line of credit and three-year revolving
facility are secured by inventories and receivables of the
Association. At March 27, 1999, the Association had unused loan
commitments of $237 million.
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
Page 9
to current liabilities of not less than 1.25 to 1 and the ratio
of total funded debt to total capitalization not to exceed 65%.
At March 27, 1999, the Association's current ratio and ratio of
total funded debt to capitalization, determined under the loan
agreements, were 1.36 to 1 and 53%, respectively. The terms of
the loan agreements require specific quarterly fixed charge
coverage ratios during fiscal 1999 and a fixed charge ratio for
fiscal 1999 of 1.50 to 1. In addition, the terms place a
limitation on capital expenditures, equity distributions, cash
patronage refunds and commodity hedging contracts that include
cash forward purchases, as well as futures and certain option
contracts. At March 27, 1999, the Association was in compliance
with the loan agreements.
Working capital and the current ratio were $94.6 million and 1.36
to 1, respectively, at March 27, 1999, as compared to $149.6
million and 1.32 to 1, respectively, at June 27, 1998. Patrons
equity at March 27, 1999 was $279.6 million as compared to $234.0
million at June 27, 1998. The increase in patron's equity was
the result of net margins of $60.4 million which were partially
offset by the $9.2 million unrealized holding loss on marketable
equity securities and equity redemptions of $4.6 million for the
nine months ended March 27, 1999. Net cash provided by operations
reflected the improvements in poultry operating margins and net
cash from investing activities reflected proceeds from the sale
of assets of the Agri-Services segment. Cash provided by
operations and investing activities was used to repay short and
long-term borrowings.
In October 1998, the Association completed the sale of assets of
the Agri-Services segment to Southern States Cooperative, Inc.
(Southern States). Proceeds of $218.3 million from the sale
represented an amount equal to $39.9 million plus 100% of
estimated net current asset value less the remaining obligations
under an industrial development bond and a lease obligation.
Also, the proceeds reflected a $10.0 million hold back deduction
provided for in the purchase agreement. The Association antici-
pates a post-closing settlement of actual net current asset value
with Southern States by the end of fiscal 1999. See Note 5 of
Notes to Consolidated Financial Statements.
In order to complete the transaction with Southern States, the
Association committed to purchase, subject to certain terms and
conditions, from Southern States up to $100 million principal
amount of preferred securities if Southern States is unable to
market the securities to other purchasers by October 1999. The
purchase of the preferred securities by the Association may
result in an additional loss in discontinued operations if the
securities' fair values are less than the purchase amount. See
Note 5 of Notes to Consolidated Financial Statements.
The Association plans capital expenditures of approximately $45
million in 1999 that 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 planned 1999 capital expenditures and related working
capital needs with existing cash balances, net margins adjusted
for non-cash items and additional long-term borrowings, as
needed. In 1999, management expects cash expenditures to
approximate $4.5 million for equity payments less insurance
proceeds. In connection with the sale of assets of the Agri-
Services segment to Southern States, Gold Kist discontinued the
sale of Subordinated Certificates in October 1998. The
Association believes cash and cash equivalents at March 27, 1999
and cash expected to be provided
Page 10
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 1999 and to fund the repayment of
outstanding Subordinated Certificates as they mature.
Approximately $18.0 million of Subordinated Certificates and
accrued interest will mature during the six month period ended
September 30, 1999.
Year 2000 Disclosure Statement
The year 2000 issue is the result of computer programs written
using two digits (rather than four) to define the applicable
year. Any of the Association's programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather
than the year 2000, which could result in miscalculations or
system failures.
The Association has completed its identification of information
technology systems that are not year 2000 compliant and is in
the process of implementing a comprehensive initiative to make
its information technology systems ("IT" systems) and its non-
information technology systems ("non-IT" systems), including
embedded microprocessors in equipment, refrigeration systems,
feed mills, hatcheries and environmental controls, year 2000
compliant. The initiative covers the following three phases:
(1) identification of all IT and non-IT systems and an
assessment of repair requirements, (2) repair of the identified
IT and non-IT systems, and (3) testing of the IT and non-IT
systems repaired to determine correct manipulation of dates and
date-related data. Although Phase (1) was completed in 1998,
the Association is reexamining its inventory of embedded micro
processing in equipment, refrigeration systems, feed mills,
hatcheries and environmental controls to insure all have been
identified. The Association expects to complete phase (2) by
October 1999. The Association expects the final testing phase
to be complete by October 1999. The Association believes that
it has allocated sufficient resources to resolve all significant
year 2000 issues in the above time frame.
As part of its year 2000 initiative, the Association is also
contacting key suppliers and business partners to evaluate their
year 2000 compliance plans and state of readiness and determine
whether a year 2000 problem will impede the ability of such
suppliers and business partners to provide goods and services as
the year 2000 is approached and reached. The Association has
received responses from a majority of its key trading partners
and is currently assessing their state of compliance. As a
general matter, the Association is vulnerable to key suppliers'
inability to remedy their own year 2000 issues and there can be
no assurance that all date-handling problems in the IT systems of
those suppliers will be identified in advance of their
occurrence.
The Association estimates that its cost of repairing the IT
systems and non-IT systems will range from $750,000 to $1
million. To date, the Association has yet to fully assess any
additional costs that may be incurred to complete the testing
phase of the year 2000 initiative and resolve any problems
identified during that phase. The Association believes such
costs will not have a material effect on liquidity or its
financial condition or results of operations. To date, the
Association has not identified any IT
Page 11
or non-IT system that presents a material risk of not being year
2000 ready or for which a suitable alternative cannot be
implemented. However, as the initiative moves into the testing
phase, it is possible that the Association may identify potential
risks of year 2000 disruption. It is also possible that such a
disruption could have a material adverse effect on the financial
condition and results of operations. In addition, if any third
parties who provide goods or services that are critical to the
Association's business activities fail to appropriately address
their year 2000 issues, there could be a material adverse effect
on the Association's financial condition and results of
operations.
Because the Association has not completed the testing phase of
its initiative, and, accordingly, has not fully assessed its
risks from potential year 2000 failures, the Association has not
yet fully developed year 2000 specific contingency plans. These
plans will be developed as appropriate, if the results of testing
identify a material business function that is substantially at
risk.
Important Considerations Related to Forward-Looking Statements
It should be noted that this discussion contains forward-looking
statements which are subject to substantial risks and
uncertainties. There are many factors which could cause actual
results to differ materially from those anticipated by statements
made herein. Such factors include, but are not limited to,
changes in general economic conditions, weather, the growth rate
of the market for the Association's products and services, the
availability of raw inputs, global political events, the ability
of the Association to implement changes in sales strategies and
organization on a timely basis, the affect of competitive
products and pricing, seasonal revenues, as well as a number of
other risk factors which could effect the future performance of
the Association.
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, hogs and feed grains. The prices of these commodities
are affected by 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 February 1998, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No.
132, "Employers' Disclosure about Pension and Other
Postretirement Benefits" that revised disclosure requirements for
pension and other postretirement benefits. It does not affect
the measurement of the expense of the Association's pension and
other postretirement benefits. The disclosure requirements of
the standard will be reflected in the Association's 1999
consolidated financial
Page 12
statements. In June 1998, the FASB issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities."
The Statement requires the recognition of all derivative
instruments on the balance sheet at fair value. The
Association's derivative instruments, which include agricultural
related futures and options, are specifically designated as
hedges. Changes in the fair value of these derivative
instruments will either be offset against the change in fair
value of the corresponding hedged assets, liabilities, or firm
commitments through earnings or reflected as other comprehensive
income until the hedged item is recognized in earnings. The
disclosure requirements of the Statement will be reflected in
the Association's 2000 consolidated financial statements.
Page 13
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit
Designation of Exhibit
in this Report Description of Exhibit
27 Financial Data Schedule
(b) Reports on Form 8-K. Gold Kist has not filed any
reports on Form 8-K during the three months ended
March 27, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
GOLD KIST INC.
(Registrant)
Date May 11, 1999
Gaylord O. Coan
Chief Executive Officer
(Principal Executive Officer)
Date May 11, 1999
Walter F. Pohl, Jr.
Controller
(Principal Accounting Officer)
Page 13
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit
Designation of Exhibit
in this Report Description of Exhibit
27 Financial Data Schedule
(b) Reports on Form 8-K. Gold Kist has not filed
any reports on Form 8-K during the three months
ended March 27, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
GOLD KIST INC.
(Registrant)
Date May 11, 1999 /s/ Gaylord O. Coan
Gaylord O. Coan
Chief Executive Officer
(Principal Executive Officer)
Date May 11, 1999 /s/ Walter F. Pohl, Jr.
Walter F. Pohl, Jr.
Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-26-1999
<PERIOD-END> MAR-27-1999
<CASH> 19,624
<SECURITIES> 0
<RECEIVABLES> 104,728
<ALLOWANCES> 1,955
<INVENTORY> 180,710
<CURRENT-ASSETS> 356,775
<PP&E> 614,693
<DEPRECIATION> 366,190
<TOTAL-ASSETS> 795,103
<CURRENT-LIABILITIES> 262,201
<BONDS> 193,580
0
0
<COMMON> 33
<OTHER-SE> 279,593
<TOTAL-LIABILITY-AND-EQUITY> 795,103
<SALES> 1,336,542
<TOTAL-REVENUES> 1,343,245
<CGS> 1,170,412
<TOTAL-COSTS> 1,170,412
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 250
<INTEREST-EXPENSE> 19,455
<INCOME-PRETAX> 92,780
<INCOME-TAX> 32,348
<INCOME-CONTINUING> 60,432
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 60,432
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
