SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended July 1, 2000
Commission File No. 2-59958
GOLD KIST INC.
(Exact name of registrant as specified in its charter)
Georgia 58-0255560
(State or other jurisdiction (I.R.S. Employer
of 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
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
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 l934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
YES X . NO .
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained to the best of Registrant's
knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [X].
DOCUMENTS INCORPORATED BY REFERENCE
Not Applicable.
TABLE OF CONTENTS
Item Page
1. Business (and Properties) 1
2. Properties 7
3. Legal Proceedings 7
4. Submission of Matters to a Vote of
Security Holders 8
5. Market for Registrant's Common
Equity and Related Stockholder Matters 8
6. Selected Financial Data 9
7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 10
7A. Quantitative and Qualitative
Disclosure about Market Risk 16
8. Financial Statements and
Supplementary Data 17
9. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure 36
10. Directors and Executive Officers
of the Registrant 36
11. Executive Compensation 39
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 46
- i -
GOLD KIST INC.
ANNUAL REPORT FOR THE FISCAL YEAR ENDED JULY 1, 2000
This Report contains statements which to the extent they
are not recitations of historical fact, may constitute
"forward looking statements" within the meaning of applicable
federal securities law. All forward looking statements in
this Report are intended to be subject to the safe harbor
protection provided by the Private Securities Litigation
Reform Act of 1995 and Section 21E of the Securities Exchange
Act of 1934, as amended. For a discussion identifying some
important factors that could cause actual results to vary
materially from those anticipated in the forward looking
statements made by the Company, see Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
PART I
Item 1. Business (and Properties).
Gold Kist Inc. ("Gold Kist" or the "Association") is an
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 1985, 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.
The membership of Gold Kist consists of approximately
25,000 active farmer members located principally in Alabama,
Florida, Georgia, Mississippi, 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 cooperative marketing services to its
member patrons. Farm commodities, principally poultry, are
marketed by Gold Kist on behalf of members. Under the
standard Membership, Marketing, and/or Purchasing Agreement
which is entered into between each member and Gold Kist, Gold
Kist undertakes to market for the member agricultural products
delivered which are of a type marketed by Gold Kist. 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 doing
business with Gold Kist and its subsidiaries and partnerships.
Financing is extended for poultry housing construction.
Prior to October 1998, Gold Kist's business was conducted
in two industry segments. The Poultry segment conducts
broiler production operations, providing both marketing and
purchasing services to its cooperative patrons. Until October
1998, the Agri-Services segment purchased or manufactured
feed, seed, fertilizers, pesticides, animal health products
and other farm supply items for sale at wholesale and retail.
Additionally, that segment served as a contract procurement
agent for, and storer of, farm commodities such as soybeans
and grain and was engaged in the purchase, sale, processing
and storage of cotton. Essentially all of the assets of the
AgriServices segment were sold, pursuant to, and the
operations of that segment terminated after, the transaction
with Southern States Cooperative, Incorporated ("Southern
States") hereinafter described. Gold Kist also continues to
conduct pork production and aquaculture research operations,
is a member in a major peanut processing and marketing
business and a partner in a pecan processing and marketing
business, and participates as a member of limited liability
companies which are engaged in the production and sale of hogs
and of fertilizer ingredients.
In October 1998, Gold Kist consummated an Asset Purchase
Agreement (the "Agreement"), dated as of July 23, 1998, with
Southern States, pursuant to which the Association sold and
assigned, and Southern States purchased and assumed, the
assets and certain of the obligations of the Association's
agricultural inputs business. The affected assets included
substantially all of the assets of the Association's
AgriServices segment (including the retail stores division,
the fertilizer and chemicals division, and the pet food and
animal products division), as well as certain crop notes
receivable of AgraTrade Financing, Inc. The Association's
poultry, pork, aquaculture, seed marketing and other
operations and businesses were not affected by this
transaction. Upon the consummation of this transaction, the
Association was no longer engaged in the business operated by
the affected segment. See Note 11 of Notes to Consolidated
Financial Statements.
In addition, in September 1998, the Association sold
certain assets of its cotton marketing business. As a result
of that transaction, and the conveyance of certain cotton
ginning and storage facilities operated by the Association to
Southern States pursuant to the Agreement described above, the
Association terminated its cotton operations (other than the
Moultrie, Georgia cotton warehouse activities) in the first
quarter of fiscal 1999.
POULTRY
Broilers
Gold Kist's cooperative broiler operation is organized
into broiler divisions, each encompassing one or more 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, and accounting office(s), and transportation
facilities. The complexes operated by Gold Kist in fiscal
2000 are headquartered in Boaz, Cullman, and Russellville,
Alabama; Athens, Douglas, Ellijay and Carrollton, Georgia;
Live Oak, Florida; Sanford and Siler City, North Carolina; and
Sumter, South Carolina. 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 to provide processing services
for the broilers grown.
The principal products marketed by Gold Kist 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 Gold Kist Farmsr and Young 'n
Tenderr labels; however, some is sold under customers' private
labels. Most of the frozen chicken carries the Gold Kistr or
Early Birdr label. Cornish game hens are marketed in frozen
form primarily to hotels, restaurants and grocery stores under
the Gold Kist Farms, Young 'n Tender and Medallionr labels.
Medallion, Big Valuer, Gold Kist Farms, Young 'n Tender and
Early Bird are registered trademarks of Gold Kist Inc.
Broiler products were marketed in fiscal 2000 directly
from the Company's corporate headquarters in Atlanta. The
plants at Athens, Carrollton, Boaz, and Live Oak have special
distribution facilities, and there are seven separate
distribution facilities located in Florida, Tennessee, North
Carolina, Ohio and Kentucky. Cornish game hens are processed
at facilities in Trussville, Alabama and marketed from the
Atlanta headquarters.
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 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
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 soybean meal) 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. Results of hedging and commodity options transactions
are reflected as an adjustment to feed ingredient cost in the
Association's consolidated financial statements. See Item 7A
- Quantitative and Qualitative Disclosure About Market Risks
and 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, January and February. 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 from continuing operations
contributed by sales of broiler products for each of the years
indicated. See Notes 1 and 11 of Notes to Consolidated
Financial Statements.
<TABLE>
<CAPTION>
Fiscal Year Ended (000's Omitted)
June 27, June 26, July 1,
1998 1999 2000
<S> <C> <C> <C>
Broiler Products
Volume $1,630,437 $1,746,946 $1,679,719
Percentage (%) 98.7 98.9 98.4
</TABLE>
PORK AND AQUACULTURE
Gold Kist currently markets hogs raised by producers in
Alabama, Georgia, and Mississippi. Feeder pigs are furnished
to members who raise them 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. The Association
also has a joint venture arrangement with another regional
cooperative association in the form of a limited liability hog
sales and production company. Gold Kist raises and provides
young pigs for the venture.
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 and Mississippi. 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.
Gold Kist entered into agreements for the disposition of
its pork assets and its interest in the joint venture limited
liability sales and production company. If those agreements
are successfully consummated, Gold Kist will terminate its
participation in the pork industry. Under the agreements,
Gold Kist will dispose of its assets at their carrying values
and will assign production contracts with growers to the
purchaser of the assets conveyed.
Gold Kist also conducts aquaculture research operations
at its aquaculture research facilities in Indianola,
Mississippi. Research has been focused on the development of
superior breeding lines for catfish production. Sales of
proprietary lines of improved catfish breeding stock are made
to catfish producers primarily in Mississippi and Alabama.
SEED MARKETING
AgraTech Seeds is operated as a division of Gold Kist and
conducts a seed business, which consists of the development,
contract production, processing and sale primarily of
proprietary seed varieties. AgraTech Seeds licenses certain
seed dealers, including Golden Peanut Company, to sell its
proprietary peanut varieties "GK 7", "GK 7 Hi-Oleic",
"AgraTech 108", "AgraTech 120" and "ViruGard"T, 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. Proprietary soybean, sorghum and peanut seed varieties
are marketed under the trademark AgraTechr.
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. See Note 9 of
Notes to Consolidated Financial Statements.
LUKER INC.
Luker Inc., a steel fabrication company located in
Augusta, Georgia, and a wholly-owned subsidiary of Gold Kist,
manufactures steel equipment such as poultry processing
equipment, storage bins, elevators and conveyor systems.
GOLDEN PEANUT COMPANY, LLC
Gold Kist, Archer Daniels Midland Company, Cargill, Inc.,
and Alimenta Holdings, Inc. are members in Golden Peanut
Company, a limited liability company formed to operate a
peanut procuring, processing, and marketing business. Gold
Kist has a 25% membership interest and participates in all
allocations in accordance with the organizational agreement.
See Note 10(b) of Notes to Consolidated Financial Statements.
Golden Peanut Company procures, processes and markets
peanuts and peanut by-products in each of the three peanut
producing areas of the United States and operates processing
and other facilities in Argentina for the procurement and
processing of peanuts. 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 July 1, 2000, the
approximate export sales volume of poultry was $48.8 million.
During that period, export sales were mainly to customers in
Russia, Eastern Europe, the Far East, South Africa, Central
and South America and the Caribbean.
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.
Poultry
The poultry processing plants operated as Gold Kist
facilities in fiscal 2000 are located at Boaz, Russellville,
Trussville and Guntersville, Alabama; Athens, Douglas, Ellijay
and Carrollton, Georgia; Live Oak, Florida; Sumter, South
Carolina; and Sanford and Siler City, North Carolina. These
plants have an aggregate weekly processing capacity of
approximately 14.4 million broilers and 400,000 cornish game
hens. The plants are supported by hatcheries located at
Albertville, Crossville, Cullman, Curry, Ranburne,
Russellville, and Scottsboro, Alabama; and Blaine, Bowdon,
Calhoun, Commerce, Carrollton, Douglas, and Talmo, Georgia;
Live Oak, Florida; Siler City and Staley, North Carolina; and
Sumter, South Carolina. These hatcheries have an aggregate
weekly capacity (assuming 85% hatch) of approximately 15.3
million chicks. Additionally, Gold Kist operates twelve feed
mills to support its poultry operations; the mills have an
aggregate annual capacity of approximately 4.7 million tons
and are located in Guntersville, Pride, and Jasper, Alabama;
Ambrose, Calhoun, Cartersville, Commerce, and Waco, Georgia;
Live Oak, Florida; Sumter, South Carolina; and Bonlee and
Staley, North Carolina.
The Association operated six separate distribution centers
in fiscal 2000 in its sales and distribution of poultry
products: Tampa, Pompano Beach, and Crestview, Florida;
Nashville, Tennessee; Mt. Sterling, Kentucky; and Cincinnati,
Ohio.
Gold Kist currently operates four pork production centers.
These production facilities include a gilt production center
in Stephens, Georgia; two gilt and pork production centers
located at Kingston, Georgia; and a boar and pork production
center headquartered in Stephens, Georgia.
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 May 14, 2005) and Nashville (lease expires
December 31, 2000) Tennessee; and Crossville, Alabama, poultry
hatchery facility (lease expires February 23, 2088).
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.
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.
Gold Kist is unable to estimate at this time the cost of
compliance, if any, to be required of Gold Kist for the
location. Management believes that the potential cost of
compliance for Gold Kist would not have a material effect on
Gold Kist's financial condition or results of operations.
The Georgia Environmental Protection Division ("GEPD") has
issued a request for submittal of a Compliance Status Report
("CSR") for the former Gold Kist chemical blending facility in
Cordele, Georgia. Gold Kist sold this facility in 1985. The
site of this facility has been listed on Georgia's Hazardous
Sites Inventory list under the State's Hazardous Sites
Response Act due to the presence of pesticide residue above
regulatory standards. Completion of the CSR will require
assessment and delineation of the extent of the pesticide
residue conditions, which are present both on and off-site.
Remediation may be required in the future to meet regulatory
clean-up standards. Since the extent of the conditions at the
site have not been defined at this time, Gold Kist is unable
to estimate cost of the compliance to be required of Gold Kist
for this location. Management believes that the potential
cost of compliance for Gold Kist would not have 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 18,000 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 3,500
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 deductions for a reasonable
reserve for permanent non-allocated equity 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(g) and 6 of Notes to Consolidated Financial
Statements.
The deduction for unallocated reserves and retention of
allocated reserves provide 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 (g) and 7 of Notes to
Consolidated Financial Statements.
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. There are no material liens or
encumbrances on the properties owned by the Association except
for mortgages on the Association's Marshall County, Alabama
and Sumter County, South Carolina facilities to secure certain
credit facilities with the Association's lenders. See Note 4
of Notes to Consolidated Financial Statements.
Item 3. Legal Proceedings.
The Association is a 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
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
There is no market for Gold Kist equity.
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 July 1,
2000 and "Consolidated Balance Sheet Data" as of June 29,
1996, June 28, 1997, June 27, 1998, June 26, 1999 and July 1,
2000 are derived from the consolidated financial statements of
Gold Kist Inc. and subsidiaries. The consolidated financial
statements as of June 26, 1999 and July 1, 2000 and for each
of the years in the three-year period ended July 1, 2000, and
the report thereon of KPMG LLP, which is based partially upon
the report of other auditors, are included elsewhere herein.
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 reports.
<TABLE>
<CAPTION>
For Fiscal Years Ended (000's omitted)
Consolidated Statement of June 29, June 28, June 27, June 26, July 1,
Operations Data: 199 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C>
Net sales volume $1,420,281 1,658,191 1,651,115 1,766,104 1,706,884
Margins (loss) from
continuing operations $ 33,706 10,870 (57,036) 69,361 (26,086)
</TABLE>
<TABLE>
<CAPTION>
As of (000's omitted)
Consolidated Balance Sheet June 29, June 28, June 27, June 26, July 1,
Data: 1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C>
Total assets $ 914,161 1,051,813 1,080,655 814,137 881,290
Long-term liabilities $ 224,183 301,190 376,553 275,408 331,837
Patrons' and other equity $ 326,410 346,075 234,006 279,367 239,490
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONSOLIDATED RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The nature of the poultry 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 worldwide
supply and demand. Additionally, demand for poultry and costs
of other agricultural products utilized by Gold Kist are often
influenced by supplies and prices of alternative products.
Agriculture is generally cyclical in nature. Commodities
marketed by Gold Kist on behalf of its members are subject to
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, and to worldwide
economic and political factors.
As with other perishable commodity businesses, the
integrated poultry industry has demonstrated varying levels of
profitability, and to a lesser extent, losses over its thirty-
seven year history. The following addresses the various
factors that have influenced poultry industry profitability
during the past five years. During 1996, broiler market
prices increased approximately 10% as compared to 1995 as a
result of hot, dry weather conditions that reduced meat
production in the summer of 1995, as well as lower than
expected industry expansion and increased exports. Average
market prices for broilers during 1997 remained at relatively
high levels as compared to historical averages. However,
during the May-June 1997 period, market prices declined below
1996 levels as a result of the increase in industry
production. Export prices for broiler leg-quarters declined
substantially in 1997 as a result of disruptions in the
Russian markets. Although market prices for broiler products
strengthened in the fourth quarter of 1998, average market
prices for 1998 were approximately 4.0% lower than in 1997.
Favorable broiler market prices continued during the first
half of fiscal 1999 as a result of industry-wide live
production problems that restricted broiler supplies. Broiler
prices weakened in the second half of 1999 as a result of a
cessation of the live production problems. Market prices for
poultry dark meat were weak during 1999 as a result of the
Russian and Asian economic crises that began during the summer
of 1998. Depressed broiler prices continued through 2000 due
to increased production levels and the large supply of
competing meats (pork and beef). According to USDA estimates,
the supply of broilers increased at a 4.5% rate in 2000 and
was projected to increase at an approximate 4.6% rate in 2001.
However, recent hatching egg placement data indicates that
industry cutbacks may be taking place which could bring 2001
broiler production more in line with 2000 levels.
Generally, the cost of feed grains, primarily corn and
soybean meal, represent approximately fifty percent of total
broiler production costs. Average cash market prices for corn
and soybean meal increased 59% and 30%, respectively, during
1996 as compared to 1995 due to the weather reduced 1995 grain
harvest and strong export demand. During 1997, average cash
market prices for corn declined 14% as a result of the
favorable 1996 harvest. However, soybean meal average cash
market prices increased approximately 26% for 1997 as compared
to 1996 as a result of strong demand and lower carryover
stocks. Average cash market prices for corn and soybean meal
declined 18% and 20%, respectively, during 1998 as a result of
the favorable 1997 harvest and reduced exports of agricultural
commodities. In 1999, average cash market prices for corn and
soybean meal declined 20% and 34%, respectively, as a result
of favorable U.S. grain production and the decline in world
demand for feed grains. Feed grain prices generally held
steady or slightly below these levels through 2000.
Historically, weather has had a significant impact on the
agricultural economy and the operating results of the
Association. Favorable growing conditions in the summer of
1997 contributed to a slight increase in the 1997 grain
harvest as compared to 1996. Favorable growing conditions in
the summer of 1998 contributed to the second largest grain
harvest on record in the United States resulting in cash
market prices for feed grains at levels significantly less
than those experienced over the past five years. A strong
grain harvest in the fall of 1999 continued the trend of
declining feed grain prices. Although drought conditions have
been experienced in several grain producing areas of the
country, the fall 2000 grain harvest is projected at levels
slightly higher than the prior year.
Poultry export sales for 1998, 1999 and 2000 were $61.6
million, $40.9 million and $48.8 million, respectively. During
1998 and 1999, export sales declined as a result of lower
market prices for poultry and the economic crises in Southeast
Asia and Russia. Export markets strengthened during 2000 as
demand from Russia increased due to changes in import tariffs
and improved economic conditions due to the rise in world oil
prices. Export sales of poultry products will be influenced
by credit availability to foreign countries and political and
economic stability, particularly in Russia, Eastern Europe and
Mexico.
In May 1998, the Association's Board of Directors adopted a
plan to discontinue operations of the Agri-Services segment.
Accordingly, the operating results of the Agri-Services
segment, including provisions for losses during the phase out
period, have been segregated from continuing operations and
reported separately in the Statements of Operations. See
Notes 1 and 11 of Notes to Consolidated Financial Statements.
The Association's continuing operations include the
Association's poultry and pork operations. The discussion and
analysis of results of operations that follows relates solely
to the continuing operations of the Association for each of
the years in the three-year period ended July 1, 2000.
Results of Operations
Fiscal 1999 Compared to Fiscal 1998
Net sales volume for 1999 was approximately $1.77 billion,
which represented a 7.0% increase over net sales volume of
$1.65 billion for 1998. Margins from operations for 1999 were
approximately $69.4 million as compared to a loss from
continuing operations of $57.0 million for 1998. The overall
increase in net sales volume was the result of a 5.2% increase
in pounds of poultry sold and a 2.0% increase in average
selling prices. The impact of these factors on net sales
volume was partially offset by lower average selling prices
for live hogs. Increased domestic poultry market prices for
1999, as compared to 1998, were attributable to a reduction in
industry-wide broiler production. The decline in production
was due to problems in the breeder flocks that restricted live
production, as well as hot weather in the summer of 1998 that
reduced growth rates. In late 1999, the impact of these
factors on poultry market prices lessened as a result of the
weakness in export sales and a cessation of the field
production problems. During 1999, market prices for dark
chicken meat declined substantially as a result of the Russian
and Asian economic crises that began in late summer of 1998.
Cost of sales for 1999 declined $94.5 million or 5.7% as
compared to 1998. The decrease in cost of sales for 1999, as
compared to 1998, was due primarily to lower feed ingredient
costs. Raw feed ingredient costs for 1999 decreased 22.8% as
compared to 1998. Corn and soybean meal cash market prices
decreased substantially as a result of the favorable 1998
grain harvest and reduced foreign demand for grains. The
impact of the decline in feed ingredient costs on cost of
sales was partially offset by the increase in pounds of
poultry produced and marketed. Cost of sales for 1998
included losses realized on commodities futures and options
transactions of $85.2 million. As a percent of net sales
volume, cost of sales was 88.8% of net sales volume for 1999
as compared to 100.7% for 1998.
Distribution, administrative and general expenses of $76.3
million for 1999 increased 14.3% as compared to 1998. As a
percent of net sales volume, distribution, administrative and
general expenses were 4.3% of net sales volume for 1999 as
compared to 4.0% for 1998. The increase in the percentage
relationship for 1999 was due primarily to the increase in
incentive compensation expense related to the improvement in
operating results.
The components included in other income (deductions)
represent a $18.4 million deduction for 1999 as compared to
$14.2 million for 1998. Interest income was $2.2 million for
1999 as compared to $2.0 million for 1998. Interest expense
for 1999 was $26.0 million as compared to $26.9 million for
1998. Equity in the earnings of the affiliate represents the
Association's pro rata share of the Golden Peanut Company's
1999 and 1998 earnings in accordance with the membership
agreement. See Note 10(b) of Notes to Consolidated Financial
Statements. Miscellaneous, net for 1999 includes a $824
thousand gain representing the Association's equity in the
earnings of a pecan processing and marketing enterprise. The
Association recorded a $192 thousand loss on this investment
in 1998. Miscellaneous, net for 1999 includes a $2.3 million
gain on the sale of a portion of an investment in a trading
company engaged in international merchandising of grains and
other agricultural commodities. Miscellaneous, net for 1998
includes $2.0 million of income related to a poultry grower
agreement and net rental income of $2.1 million.
In 1999 and 1998, the Association's combined federal and
state effective income tax rates for continuing operations
were 33% and (38)%, respectively. See Note 7 of Notes to
Consolidated Financial Statements.
Fiscal 2000 Compared to Fiscal 1999
The Association's accounting cycle resulted in 53 weeks of
operations in the year ended July 1, 2000 as compared to 52
weeks of operations in the year ended June 26, 1999.
Net sales volume of $1.71 billion for 2000 decreased
approximately 3.4% or $59 million as compared to 1999. The net
sales volume decrease was primarily the result of a 7.5%
decrease in average selling prices, which was partially offset
by a 3.7% increase in pounds of poultry sold. Management
believes the decline in sales prices is a result of an
industry-wide increase in poultry production coupled with
large supplies of competing meats (pork and beef).
The Association had a net operating loss of approximately
$21.0 million for 2000 as compared to net operating margins of
$121.9 million for 1999. Cost of sales increased $77.7
million or 5% as compared to 1999. The decline in net
operating margins was due primarily to the decrease in broiler
sales prices discussed above and increases in field production
and processing costs. These increases were partially offset
by lower feed ingredient costs. Feed ingredient costs
declined 3.3% in 2000 as compared to 1999. Management believes
lower feed ingredient prices reflect the continuation of weak
U.S. grain exports and favorable grain harvests during the
past three years. The Association's pork division posted an
operating margin of $86 thousand as compared to operating
losses of $6.7 million for 1999.
The increase in distribution, administrative and general
expenses in 2000 reflected additions to the allowance for
doubtful accounts resulting from a customer bankruptcy, the
additional week of operations in 2000, and the costs
associated with the centralization of the sales and marketing
functions of the poultry operations in July 1999.
The components included in other deductions totaled $27.2
million in 2000 as compared to $18.4 million in 1999.
Interest and dividend income of $7.6 million in 2000 included
income from the preferred securities purchased from Southern
States in October 1999 of $5.8 million. Interest expense was
$30.4 million for 2000 as compared to $26.0 million for 1999. The
increases primarily reflected higher average borrowings
necessary to fund the purchase of Southern States
securities for $98.6 million in October 1999 and the
repurchase of $25.7 million of accounts and crop notes
receivable from Southern States in September 1999. See Note
11 of Notes to Consolidated Financial Statements. In
addition, borrowings increased during 2000 as a result of
cash used to fund operating losses. Equity in loss of
affiliate of $4.4 million represented the Association's pro
rata share of Golden Peanut Company's loss for 2000. This
compared to the $188 thousand pro rata share of the
affiliate's earnings for 1999. Golden Peanut Company's loss
for fiscal 2000 resulted from litigation related expenses and
inventory write-downs. The Association's pro rata share of
the litigation expense was 40%, as compared to the current 25%
equity interest, which was the ownership percentage at the
time of the events giving rise to the litigation. See Note
10(b) of Notes to Consolidated Financial Statements.
Miscellaneous, net was income of $33 thousand for 2000 as
compared to $5.3 million for 1999. Miscellaneous, net for
2000 includes losses of $4.7 million from the Association's
ownership interest in a company engaged in the manufacture and
distribution of fertilizer additives. An insurance settlement
of $3.9 million, representing the recovery of product theft
losses at the Association's South Carolina poultry complex,
was received in 2000. Miscellaneous, net also included a $615
thousand gain in 2000 from the Association's ownership
interest in a pecan processing and marketing company as
compared to a $824 thousand gain in 1999.
For 2000 and 1999, the Association's combined federal and
state effective income tax rates were (46)% and 33%,
respectively. Income tax expense (benefit) for the periods
presented reflects income taxes at statutory rates adjusted
for available tax credits and deductible patronage payments,
if applicable. See Note 7 of Notes to Consolidated Financial
Statements.
In response to the adverse operating conditions experienced
in 2000, the Association has implemented a profit recovery
plan, including cut backs in live broiler production,
reduction in plant operating hours, salary reductions for
senior management and salary freezes for salaried employees.
A curtailment/reduction in certain benefit plans has also been
instituted with increased cost shifting to employees. Total
savings before income taxes from these changes is anticipated
to approximate $12 million annually with a one time benefit of
$30 million in 2001. However, if broiler sales prices
deteriorate further or operating costs increase without a
corresponding increase in broiler sales prices, the
Association will have to implement further cost reduction
measures or consider the sale of assets or investments.
Financial Condition
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. In August 1998, the Association refinanced
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. Upon the
consummation of the sale of certain assets of the Agri-
Services segment in October 1998, the bridge loan was repaid.
See Notes 1 and 11 of Notes to Consolidated Financial
Statements. In 1998, the Association obtained a $50 million
term loan from an agricultural credit bank and a $69.9 million
rolling four-month equity swap arrangement with a commercial
bank. The equity swap was refinanced in 1999 for $58.1
million and was refinanced again in 2000 for $42.9 million.
In December 1999, the Association reduced its $250 million
secured committed credit facility to $200 million and in July
2000 increased the facility to $220 million. The facility
includes a three-year $120 million revolving credit commitment
and a $100 million 364-day line of credit commitment which
expires on November 6, 2000. At September 30, 2000, the
Association had unused loan commitments of $22 million.
As of October 10, 2000, the Association had received $240
million in commitments for Senior Secured Credit Facilities
with a group of financial institutions that will include a
$100 million 364-day revolving line of credit, a $95 million
two year term loan, and a $45 million five year term loan.
The interest rates on the 364-day and two year term facilities
will range from 2.25% to 3% over the London Interbank Offered
Rate (LIBOR), adjusted quarterly based on the Association's
financial condition, while interest on the five year term loan
will be fixed at 4.75% over the Five Year U. S. Treasury Note
at the loan closing date. These credit facilities are
expected to close on or before November 6, 2000. The
Association's senior notes, senior secured credit facilities
and term loan with an agricultural bank will be secured by
substantially all of the Association's inventory, receivables,
and property, plant and equipment and subject to similar
covenants and conditions as the prior agreement. In the event
the aforementioned senior secured credit facilities are not
consummated, Gold Kist's liquidity would be significantly
affected and, as a result, alternative plans would require
implementation. 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 of debt agreements specify minimum consolidated
tangible net worth, current ratio and coverage ratio
requirements, as well as a limitation on the funded debt to
total capital ratio. The debt agreements place a limitation
on capital expenditures, equity distributions, cash patronage
refunds, commodity hedging contracts and additional loans,
advances or investments. At July 1, 2000, the Association was
in compliance with, or had obtained waivers for, all
applicable loan covenants. See Note 4 of Notes to
Consolidated Financial Statements.
In October 1998, the Association completed the sale of
assets of the Agri-Services segment to 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, a lease obligation assumed by Southern
States and a $10.0 million hold back deduction provided for in
the asset purchase agreement. 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 Association subsequently objected
to Southern States' post-closing valuation principally with
regard to the valuation of accounts and crop notes receivable.
In order to resolve the post-closing valuation, the
Association agreed in September 1999 to repurchase from
Southern States approximately $34.5 million of accounts and
crop notes receivable. The agreement resulted in a final
settlement payment to Southern States of approximately $21.2
million in September 1999. 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 was unable to market
the securities to other purchasers. In October 1999, the
Company purchased for $98.6 million the $100 million principal
amount of preferred securities as required under the
commitment. The preferred securities carry an initial
weighted average dividend rate of 7.8%. Gold Kist is
permitted to sell the preferred securities, which are
classified as investments in the accompanying consolidated
balance sheet, pursuant to applicable securities regulations.
See Note 11 of Notes to Consolidated Financial Statements.
In 1999, the operating activities of continuing operations
provided $156.2 million in cash as a result of the improvement
in poultry operating margins. Net cash from investing
activities reflected proceeds of $218.3 million from the sale
of the Agri-Services segment. Cash flow from investing
activities included $14.2 million from the sale of loans and
disposals of investments. The proceeds from these activities
were used to repay short-term borrowings and long-term debt,
which included maturing Subordinated Certificates. In
addition, cash uses included the funding of capital
expenditures of $31.9 million and redemptions of equity.
In 2000, the operating activities of continuing operations
used $7.8 million in cash as a result of the net operating
loss caused by the depressed poultry market conditions. Net
cash used in investing activities included the purchase of the
Southern States securities for $98.6 million and the
repurchase of accounts and crop notes receivable from Southern
States for a net amount of $20.5 million. See Note 11 of
Notes to Consolidated Financial Statements. In addition, cash
was used to fund capital expenditures of $29.9 million and to
pay patronage refunds and equity redemptions of $5.8 million.
Existing cash balances and increases in short and long term
borrowings were used to fund these activities.
Working capital and patrons' equity were $23.8 million and
$239.5 million, respectively, at July 1, 2000 as compared to
$100.1 million and $279.4 million, respectively, at June 26,
1999. The decrease in working capital reflected the increase
in short-term borrowings and current maturities of long term
debt. The decline in patrons' equity reflected the $10.3
million decline in value of a marketable equity security, net
equity redemptions of $3.5 million and the $26.1 million net
loss.
The Association plans capital expenditures of approximately
$35 million in 2001 that primarily include expenditures for
expansion of further processing capacity 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 2001 capital expenditures and related working capital
needs with existing cash balances, cash expected to be
provided from operations and additional borrowings, as needed.
In 2001, management expects cash expenditures to approximate
$5 million for equity distributions less insurance proceeds.
In connection with the sale of assets of the Agri-Services
segment to Southern States during 1999, Gold Kist
discontinued the sale of Subordinated Certificates. The
Association believes cash on hand and cash equivalents at July
1, 2000 and cash expected to be provided from operations, in
addition to borrowings available under committed credit
arrangements, will be sufficient to maintain cash flows
adequate for the Association's operational objectives during
2001 and to fund the repayment of outstanding Subordinated
Certificates as they mature.
Year 2000 Disclosure Statement
The year 2000 problem is the result of computer programs
written using two digits (rather than four) to define the
applicable year. Any of the computer programs that have time-
sensitive software might recognize a date using "00" as the
year 1900 rather than the year 2000, which could result in
miscalculations or system failures.
The Association completed its preparation for the year 2000
issue in November 1999 and as of September 30, 2000, there
have been no significant business interruptions related to the
year 2000 issue. The Association will continue to monitor and
test its systems and those of our key vendors and develop
contingency plans, if needed, should any issues be identified.
The Association's cost of repairing the IT systems and non-IT
systems was approximately $800 thousand, of which
approximately $300 thousand was spent in fiscal 2000.
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. In light of these risks and
uncertainties, the Association cautions readers not to place
undue reliance on any forward-looking statements. The
Association undertakes no obligation to publicly update or
revise any forward-looking statements based on the occurrence
of future events, the receipt of new information or otherwise.
Among the factors that may affect the operating results of
the Association are the following: (i) fluctuations in the
cost and availability of raw materials, such as feed grain
costs; (ii) changes in the availability and relative costs of
labor and contract growers; (iii) market conditions for
finished products, including the supply and pricing of
alternative proteins; (iv) effectiveness of sales and
marketing programs; (v) risks associated with leverage,
including cost increases due to rising interest rates; (vi)
changes in regulations and laws, including changes in
accounting standards, environmental laws and occupational,
health and safety laws; (vii) access to foreign markets
together with foreign economic conditions; and (viii) changes
in general economic conditions.
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 June 1998, the Financial Accounting Standards Board
(FASB) issued Statement No. 133 "Accounting for Derivative
Instruments and Hedging Activities," which was amended in June
2000 by FASB Statement No. 138. The Statement requires the
recognition of all derivatives on the balance sheet at fair
value. The Company's derivatives include agricultural related
forward purchase contracts, futures and options. The
Company's futures have historically been designated as hedges
and options have been marked to market. Effective in the
first quarter of 2001, changes in the fair value of these
derivatives will be offset against the change in fair value of
the corresponding hedged assets, liabilities, or firm
commitments through earnings. The disclosure requirements of
the Statement will be reflected in the Association's 2001
consolidated financial statements. The effect of the adoption
of the new Statement in the first quarter of 2001 is not
expected to be significant to the financial statements.
Item 7A. Quantitative And Qualitative Disclosure About
Market Risks.
Market Risk
The principal market risks affecting the Association are
exposure to changes in commodity prices and interest rates on
borrowings. Although the Company has international net sales
volume and related accounts receivable for foreign customers,
there is no foreign currency exchange risk as all sales are
denominated in United States dollars.
Commodities Risk
The Association is a purchaser of certain agricultural
commodities used for the manufacture of poultry feeds. The
Association uses commodity futures and options for hedging
purposes to reduce the effect of changing commodity prices and
to ensure supply of a portion of its commodity inventories and
related purchase and sale contracts. Feed ingredients futures
contracts, primarily corn and soybean meal, are recognized
when closed and option contracts are accounted for at market.
Gains and losses on the transactions are recorded as a
component of product cost. Terms of the Association's
committed secured credit facility limit the use of cash
forward contracts and commodities futures and options to hedge
no more than twenty-six weeks of the Association's soybean
meal and corn requirements. At July 1, 2000, the notional
amounts and fair value of the Association's outstanding
commodity futures and options positions were not material and
there were no significant deferred gains or losses.
Item 8. Financial Statements and Supplementary Data.
INDEX
Page
GOLD KIST INC.
CONSOLIDATED FINANCIAL STATEMENTS:
Independent Auditors' Reports 18
Consolidated Balance Sheets as of June 26, 1999
and July 1, 2000 20
Consolidated Statements of Operations for the years
ended June 27, 1998, June 26, 1999 and July 1, 2000 21
Consolidated Statements of Patrons' and Other Equity
and Comprehensive Income (Loss) for the years ended
June 27, 1998, June 26, 1999 and July 1, 2000 22
Consolidated Statements of Cash Flows for the years
ended June 27, 1998, June 26, 1999 and July 1, 2000 23
Notes to Consolidated Financial Statements 24
FINANCIAL STATEMENT SCHEDULES
(Included in Part IV of this Report):
Valuation and Qualifying Accounts for the years ended
June 27, 1998, June 26, 1999 and July 1, 2000 45
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Gold Kist Inc.:
We have audited the accompanying consolidated balance
sheets of Gold Kist Inc. and subsidiaries as of June 26, 1999
and July 1, 2000, and the related consolidated statements of
operations, patrons' and other equity and comprehensive income
(loss), and cash flows for each of the years in the three-year
period ended July 1, 2000, as listed in the accompanying
index. In connection with our audits of the consolidated
financial statements, we also have audited the financial
statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement
schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these
consolidated financial statements and financial statement
schedule based on our audits. We did not audit the
consolidated financial statements of Golden Peanut Company,
LLC and Subsidiaries, an investment accounted for using the
equity method of accounting, as described in Note 10(b) to the
consolidated financial statements. The consolidated financial
statements of Golden Peanut Company, LLC and Subsidiaries 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, LLC and Subsidiaries, is
based solely on the report of the other auditors.
We conducted our audits in accordance with auditing
standards generally accepted in the United States of America.
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 the other auditors
provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the
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, 1999 and July 1, 2000, and the results of their
operations and their cash flows for each of the years in the
three-year period ended July 1, 2000, in conformity with
accounting principles generally accepted in the United States
of America. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth
therein.
KPMG LLP
Atlanta, Georgia
September 8, 2000,
except for the sixth
paragraph of Note 4
as to which the date
is October 10, 2000
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Golden Peanut Company, LLC
We have audited the accompanying consolidated balance
sheets of Golden Peanut Company, LLC and Subsidiaries (the
"Company") as of June 30, 2000 and 1999, and the related
consolidated statements of operations, members' equity, and
cash flows for each of the three years in the period ended
June 30, 2000 (not presented separately herein). These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing
standards generally accepted in the United States. 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, LLC and
Subsidiaries at June 30, 2000 and 1999, and the consolidated
results of their operations and their cash flows for each of
the three years in the period ended June 30, 2000, in
conformity with accounting principles generally accepted in
the United States.
Ernst & Young LLP
Atlanta, Georgia
August 25, 2000, except the third
paragraph of Note 6, as to which
the date is October 11, 2000.
<TABLE>
GOLD KIST INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
<CAPTION>
June 26, 1999 July 1, 2000
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 20,810 8,671
Receivables, principally trade, less
allowance for doubtful accounts of
$3,261 in 1999 and $4,041 in 2000 109,060 106,698
Inventories (note 2) 182,799 183,061
Deferred income taxes 17,842 16,360
Other current assets 28,999 18,924
Total current assets 359,510 333,714
Investments (notes 10 and 11) 106,199 167,988
Property, plant and equipment, net
(note 3) 248,016 239,188
Other assets 100,412 140,400
$814,137 881,290
LIABILITIES AND EQUITY
Current liabilities:
Notes payable and current maturities of
long-term debt (note 4):
Short-term borrowings $ 58,085 131,910
Subordinated loan certificates 10,095 40
Current maturities of long-term debt 16,820 34,352
85,000 166,302
Accounts payable 84,393 72,325
Accrued compensation and related expenses 36,165 24,052
Interest left on deposit (note 4) 10,487 11,528
Other current liabilities 43,317 35,756
Total current liabilities 259,362 309,963
Long-term debt, excluding current
maturities (note 4) 186,913 251,714
Accrued postretirement benefit costs
(note 8(b)) 53,432 58,407
Other liabilities 35,063 21,716
Total liabilities 534,770 641,800
Patrons' and other equity (note 6):
Common stock, $1.00 par value -
Authorized 500 shares; issued and
outstanding 31 in 1999 and 30 in 2000 31 30
Patronage reserves 204,080 197,520
Accumulated other comprehensive income -
unrealized gain on marketable equity
security (note 10(a)) 19,015 8,747
Retained earnings 56,241 33,193
Total patrons' and other equity 279,367 239,490
Commitments and contingencies (notes 4,
5, 6, 8, 9 and 10(b))
$814,137 881,290
See accompanying notes to consolidated financial
statements.
</TABLE>
<TABLE>
GOLD KIST INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
<CAPTION>
Years Ended
June 27, 1998 June 26, 1999 July 1, 2000
<S> <C> <C> <C>
Net sales volume $1,651,115 1,766,104 1,706,884
Cost of sales 1,662,376 1,567,906 1,645,614
Gross margins (loss) (11,261) 198,198 61,270
Distribution, administrative and
general expenses 66,695 76,258 82,297
Net operating margins (loss) (77,956) 121,940 (21,027)
Other income (deductions):
Interest and dividend income 1,955 2,177 7,572
Interest expense (26,910) (26,050) (30,425)
Equity in earnings (loss) of
affiliate (note 10(b)) 4,369 188 (4,393)
Miscellaneous, net (note 10(a)) 6,383 5,316 33
Total other deductions (14,203) (18,369) (27,213)
Margins (loss) from continuing
operations before income taxes (92,159) 103,571 (48,240)
Income tax expense (benefit)-(note 7) (35,123) 34,210 (22,154)
Margins (loss) from continuing
operations (57,036) 69,361 (26,086)
Discontinued operations
(notes 7 and 11):
Loss from operations of discontinued
Agri-Services segment (less
applicable income tax benefit
of $(8.6) million for 1998) (15,130) - -
Loss on disposal of Agri-Services
segment including provision of
$20.4 million accrued in 1998
for operating losses during
phase out period (less appli-
cable income tax benefit of
$(16.5) million for 1998 and
$(4.3) million for 1999). (30,622) (8,034) -
Net margins (loss) $ (102,788) 61,327 (26,086)
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
GOLD KIST INC.
CONSOLIDATED STATEMENTS OF PATRONS' AND OTHER EQUITY
AND COMPREHENSIVE INCOME (LOSS)
For the Years Ended June 27, 1998, June 26, 1999 and July 1, 2000
(Amounts in Thousands)
<CAPTION>
Accumulated other
comprehensive
income - unrealized
gain (loss) on
Common Patronage marketable equity Retained
stock Reserves security earnings Total
<S> <C> <C> <C> <C> <C>
June 28, 1997 $ 32 203,988 32,749 109,306 346,075
Comprehensive loss:
Net loss for 1998 - - - (102,788) (102,788)
Change in value of
marketable equity
security, net of
tax (note 10(a)) - - (5,650) - (5,650)
Total comprehensive
loss (108,438)
Redemptions and other
changes 1 (5,471) - 1,839 (3,631)
June 27, 1998 33 198,517 27,099 8,357 234,006
Comprehensive income:
Net margins for 1999 - 14,990 - 46,337 61,327
Change in value of
marketable equity
security, net of
tax (note 10(a)) - - (8,084) - (8,084)
Total comprehensive
income 53,243
Cash portion of
nonqualified
patronage refund - (2,263) - - (2,263)
Redemptions and other
changes (2) (7,164) - 1,547 (5,619)
June 26, 1999 31 204,080 19,015 56,241 279,367
Comprehensive loss:
Net loss for 2000 - - - (26,086) (26,086)
Change in value of
marketable equity
security, net of
tax (note 10(a)) - - (10,268) - (10,268)
Total comprehensive
loss (36,354)
Redemptions and other
changes (1) (6,560) - 3,038 (3,523)
July 1, 2000 $ 30 197,520 8,747 33,193 239,490
See accompanying notes to consolidated financial statements.</TABLE>
<TABLE>
GOLD KIST INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
<CAPTION>
Years Ended
June 27, 1998 June 26, 1999 July 1, 2000
<S> <C> <C> <C>
Cash flows from operating activities:
Margins (loss) from continuing
operations $ (57,036) 69,361 (26,086)
Non-cash items included in margins
(loss) from continuingoperations:
Depreciation and amortization 37,547 40,979 43,312
Equity in (earnings) loss of
affiliate (4,369) (188) 4,393
Deferred income tax expense
(benefit) (14,486) 10,460 (18,373)
Other 8,549 (988) 2,855
Changes in operating assets and
liabilities:
Receivables (8,225) (1,103) 2,362
Inventories 5,285 (8,595) (262)
Other current assets 28,539 14,072 1,209
Accounts payable and accrued
expenses (5,919) 33,159 (18,282)
Interest left on deposit 56 (964) 1,041
Net cash provided by (used in)
operating activities of continuing
operations (10,059) 156,193 (7,831)
Net cash provided by (used in)
operating activities of
discontinued operations (52,400) 34,083 -
Net cash provided by (used in)
operating activities (62,459) 190,276 (7,831)
Cash flows from investing
activities:
Acquisitions of investments (2,236) - (98,605)
Acquisitions of property, plant and
equipment (54,360) (31,887) (29,874)
Acquisition of subsidiary minority
interest (53,104) - -
Proceeds from disposal of investments 1,305 6,028 3,429
Proceeds from sale of loans - 8,191 -
Other 1,444 2,598 (2,592)
Net cash used in investing activities
of continuing operations (106,951) (15,070) (127,642)
Net cash provided by (used in)
investing activities of dis-
continued operations:
Proceeds from sale of the Agri-
Services segment - 218,313 -
Repurchase of accounts and crop
notes receivable, net - - (20,538)
Other (6,385) - 3,554
Net cash provided by (used in)
investing activities (113,336) 203,243 (144,626)
Cash flows from financing
activities:
Short-term borrowings, net 21,578 (168,764) 63,770
Proceeds from long-term debt 272,116 85,699 100,000
Principal payments of long-term
debt (120,400) (295,814) (17,667)
Patronage refunds and other equity
paid in cash (3,631) (5,619) (5,785)
Net cash provided by (used in)
financing activities. 169,663 (384,498) 140,318
Net change in cash and cash
equivalents (6,132) 9,021 (12,139)
Cash and cash equivalents at
beginning of year 17,921 11,789 20,810
Cash and cash equivalents at end
of year $ 11,789 20,810 8,671
Supplemental disclosure of cash
flow data:
Cash paid during the years for:
Interest (net of amounts
capitalized) $ 45,577 28,512 29,738
Income taxes $ - 12,465 2,940
See accompanying notes to consolidated financial statements.
</TABLE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 27, 1998, June 26, 1999 and July 1, 2000
(Dollar Amounts in Thousands)
(1) Summary of Significant Accounting Policies
Gold Kist Inc. is an agricultural membership cooperative
association, headquartered in Atlanta, Georgia. Gold Kist
Inc. has approximately 25,000 farmer members and other
cooperative associations located principally in the
southeastern United States. Gold Kist Inc. operates fully
integrated broiler production, processing and marketing
operations, as well as pork production facilities. These
operations provide marketing and purchasing services to
approximately 2,300 breeder, broiler and pork producers.
Gold Kist Inc. and Southern States Cooperative, Incorporated
("Southern States") entered into an Asset Purchase Agreement
(the "Agreement"), dated as of July 23, 1998, pursuant to
which Gold Kist Inc. agreed to sell and assign, and Southern
States agreed to purchase and assume, the assets and certain
of the liabilities of Gold Kist Inc.'s agricultural inputs
business. In October 1998, Gold Kist Inc. completed the sale
of assets and certain liabilities to Southern States. The
affected assets included substantially all of the assets of
the Agri-Services segment (see note 11).
The accounting and reporting policies of Gold Kist Inc. and
subsidiaries conform to accounting principles generally
accepted in the United States of America 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 (collectively "Gold Kist" or
"Company" or "Association"). All significant
intercompany balances and transactions have been
eliminated in consolidation.
(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
Live poultry and hogs consist of broilers, breeding
stock and market hogs. 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
ingredients, 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 engages in
commodity futures and options transactions to manage the
risk of adverse price fluctuations with regard to its
feed ingredient purchases. 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. At June 26, 1999 and July 1, 2000, there were no
significant unrealized commodity futures positions.
GOLD KIST INC.
Notes to Consolidated Financial Statements, Continued
(Dollar Amounts in Thousands)
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) Revenue Recognition
Revenue is recognized upon shipment or upon transfer
of ownership of the product to the customer.
(e) Property, Plant and Equipment
Property, plant and equipment is recorded at cost.
Depreciation of plant and equipment is calculated using
the straight-line method over the estimated useful lives
of the respective assets.
(f) 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. Accordingly, it is not practical to determine
these investments' fair value. 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 which
are not readily marketable are stated at cost.
Gold Kist applies the provisions of Statement of
Financial Accounting Standards No. 115 (SFAS 115),
"Accounting for Certain Investments in Debt and Equity
Securities." Pursuant to the provisions of SFAS 115,
the Company has classified its marketable equity
security as "available-for-sale." "Available-for-sale"
securities are those the Company intends to hold for a
period of time and are not acquired with the intent of
selling them in the near term. Accumulated other
comprehensive income - unrealized gains and losses on
"available-for-sale" securities are included as a
separate component of patrons' and other equity in the
accompanying consolidated financial statements, net of
deferred income taxes. Management believes the carrying
value of the collateralized loans approximate market
value and, accordingly, no adjustment has been recognized
in the accompanying consolidated financial statements.
Gold Kist's investment in Golden Peanut Company is
accounted for using the equity method (see note 10(b)).
Other investments accounted for under the equity method
are not significant.
(g) 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 utilizes nonqualified patronage
refunds which are deductible for income tax purposes only
to the extent paid or redeemed in cash.
GOLD KIST INC.
Notes to Consolidated Financial Statements, Continued
(Dollar Amounts in Thousands)
Income taxes are accounted for 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. 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.
(h) Fair Value of Financial Instruments
Gold Kist's financial instruments include cash and
cash equivalents, receivables and accounts payables and
accrued expenses, interest left on deposit, notes
receivable and debt. Because of the short maturity of
cash equivalents, receivables and accounts payables and
accrued expenses, interest left on deposit, certain short-
term debt which matures in less than one year and long-
term debt with variable interest rates, the carrying
value approximates fair value. All financial instruments
are considered to have an estimated fair value which
approximates carrying value at June 26, 1999 and July 1,
2000 unless otherwise specified (see notes 1(f) and 4).
(i) Impairment of Long-Lived Assets and Long-Lived Assets
to Be Disposed Of
Gold Kist applies the provisions of SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of" (SFAS 121).
SFAS 121 requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment
whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to
future net cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by
which the carrying amount of the assets exceed the fair
value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair
value less costs to sell.
(j) Comprehensive Income
In 1999, Gold Kist adopted SFAS No. 130, "Reporting
Comprehensive Income" (SFAS 130). SFAS 130 establishes
rules for reporting of comprehensive income and its
components. Comprehensive income consists of net margins
and unrealized gains and losses on marketable security
and is presented in the consolidated statements of
patrons' and other equity and comprehensive income
(loss). The adoption of SFAS 130 had no impact on total
patrons' equity. Prior year financial statements have
been reclassified to conform to the SFAS 130
requirements.
(k) Fiscal Year
Gold Kist employs a 52/53 week fiscal year. The
consolidated financial statements for 1998 and 1999
reflect 52 weeks. Fiscal 2000 was a 53 week year.
Fiscal 2001 will be a 52 week year.
(l) Use of Estimates
Management of Gold Kist has made a number of
estimates and assumptions relating to the reporting of
assets and liabilities and the disclosure of contingent
assets and liabilities to prepare these consolidated
financial statements in conformity with generally
accepted accounting principles. Actual results could
differ from these estimates.
GOLD KIST INC.
Notes to Consolidated Financial Statements, Continued
(Dollar Amounts in Thousands)
(2) Inventories
Inventories are summarized as follows:
<TABLE>
<CAPTION>
1999 2000
<S> <C> <C>
Live poultry and hogs $ 93,999 97,623
Marketable products 56,097 53,367
Raw materials and supplies 32,703 32,071
$182,799 183,061
</TABLE>
(3) Property, Plant and Equipment
Property, plant and equipment is summarized as follows:
<TABLE>
<CAPTION>
1999 2000
<S> <C> <C>
Land and land improvements $ 33,406 33,654
Buildings 186,635 185,626
Machinery and equipment 397,655 386,108
Construction in progress 1,134 7,937
618,830 613,325
Less accumulated
depreciation 370,814 374,137
$248,016 239,188
</TABLE>
(4) Notes Payable and Long-Term Debt
Short-term borrowings at July 1, 2000 include $42.9 million
under a rolling four-month secured agreement with a commercial
bank entered into in April 1998. The commercial bank holds a
marketable equity security owned by Gold Kist as collateral
(see note 10(a)). The Company is required to maintain funds
with the bank to account for volatility in the market price of
the security held as collateral. Interest on the borrowings
are at one-month London Interbank Offered Rate (LIBOR) plus
.75% per annum. The Company earns interest on the collateral
funds at rates that approximate the federal funds rate.
The Company's long-term debt includes a $20 million single
installment senior note, the Series A Senior Notes and the
Series B Senior Notes with an insurance company. The interest
rates on these notes are adjusted quarterly in accordance with
the Company's financial condition. As of July 1, 2000,
interest rates on the single installment interest notes, the
Series A Senior Notes and the Series B Senior Notes were
11.1%, 9.35% and 9.69%, respectively.
At June 26, 1999, the Company's syndicated credit facility
included a secured $125 million 364-day line of credit
commitment and a secured $125 million three-year revolving
credit facility with a group of financial institutions. The
364-day line of credit and three-year revolving credit
facility, as well as, the Company's senior notes payable, term
loan with an agricultural credit bank and any letters of
credit were secured by all inventory and receivables of the
Company and by mortgages on the Company's facilities in
Marshall County, Alabama and Sumter County, South Carolina.
In July 2000, the Company reduced the secured committed credit
facility to $220 million, which includes a three-year $120
million revolving credit agreement and a $100 million 364-day
line of credit. The $220 million secured credit facility will
expire on November 6, 2000.
GOLD KIST INC.
Notes to Consolidated Financial Statements, Continued
(Dollar Amounts in Thousands)
As of July 1, 2000, the balance outstanding under the 364-
day line of credit was $89.0 million with a weighted average
interest rate of 9%. Subordinated loan certificates of $10.1
million at June 26, 1999 bore interest rates of 6.3% to 6.4%
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.
As of October 10, 2000, the Company had received $240
million in commitments for Senior Secured Credit Facilities
with a group of financial institutions that will include a
$100 million 364-day revolving line of credit, a $95 million
two year term loan and a $45 million five year term loan. The
interest rates on the 364-day and two year term facilities
will range from 2.25% to 3% over LIBOR, adjusted quarterly
based on the Company's financial condition, while interest on
the five year term loan will be fixed at 4.75% over the Five
Year U. S. Treasury Note at the loan closing date. These
credit facilities are expected to close on or before November
6, 2000. The Company's senior notes, senior secured credit
facilities and term loan with an agricultural bank will be
secured by substantially all of the Association's inventory,
receivables, and property, plant and equipment and subject to
similar covenants and conditions as the prior agreement. In
the event the aforementioned senior secured credit facilities
are not consummated, Gold Kist's liquidity would be significantly
affected and, as a result, alternative plans would require
implementation.
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
1999 2000
<S> <C> <C>
Single installment senior note due in June
2001 with interest payable quarterly $ 20,000 20,000
Series A senior notes, due in annual
installments of $2,727 beginning in
February 2002 with interest payable
quarterly 30,000 30,000
Series B senior notes, due in annual
installments of $2,272 beginning in
May 2002 with interest payable
quarterly 25,000 25,000
Revolving credit agreements with financial
institutions (weighted average rate of
8.1% at July 1, 2000) - 100,000
Term loan agreements with agricultural
credit bank, due in semi-annual install-
ments of $1,785 with interest payable
quarterly (weighted average interest
rate of 7.7% at June 26, 1999 and 8.5%
at July 1, 2000) 48,215 44,645
Subordinated capital certificates of
interest with fixed maturities ranging
from two to fifteen years, unsecured
(weighted average interest rate of 7.6%
at June 26, 1999 and July 1, 2000) 66,905 53,863
Tax exempt industrial revenue bonds with
varying interest rates, due in quarterly
and annual installments through 2016,
secured by property, plant and equipment 10,450 10,000
Pro rata share of mortgage loan, at 8.47%
interest, due in monthly installments
to June 30, 2004, secured by a building 1,627 1,360
Other 1,536 1,198
203,733 286,066
Less current maturit ies 16,820 34,352
$186,913 251,714
</TABLE>
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 senior notes at June 26, 1999 and
July 1, 2000 was approximately $72.4 million and $74.4
million, respectively. Based upon discounted cash flows of
future payments, assuming interest rates available to the
Association for issuance of debt with similar terms and
remaining maturities, the estimated fair value of the term
loans with the agricultural credit bank at June 26, 1999 and
July 1, 2000 was approximately $45.3 million and $41.8
million, respectively.
GOLD KIST INC.
Notes to Consolidated Financial Statements, Continued
(Dollar Amounts in Thousands)
The terms of debt agreements specify minimum consolidated
tangible net worth, current ratio and coverage ratio
requirements, as well as a limitation on the funded debt to
total capital ratio. The debt agreements place a limitation
on capital expenditures, equity distributions, cash patronage
refunds, commodity hedging contracts and additional loans,
advances or investments. At July 1, 2000, the Association was
in compliance with, or had obtained waivers for, all loan
covenants.
Annual required principal repayments on long-term debt for
the five years subsequent to July 1, 2000 are as follows:
<TABLE>
<CAPTION>
Year:
<S> <C>
2001 $ 34,352
2002 122,836
2003 16,282
2004 22,136
2005 10,860
</TABLE>
(5) Leases
Gold Kist leases vehicles, transportation and processing
equipment and certain facilities from third parties under
operating leases, many of which contain renewal options. Rent
expense from continuing operations for 1998, 1999 and 2000 was
$12.8 million, $13.4 million and $16.3 million, respectively.
Commitments for minimum rentals under non-cancelable operating
leases at the end of 2000 are as follows:
<TABLE>
<CAPTION>
<S> <C>
2001 $11,003
2002 8,819
2003 5,691
2004 3,452
2005 1,971
</TABLE>
(6) 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.
Patronage reserves represent undistributed member margins
allocated as either qualified or nonqualified notified equity,
less income taxes paid on undistributed nonqualified equity.
Qualified notified equity is deductible for income tax
purposes when allocated; whereas, nonqualified notified equity
is deductible upon redemption. The redemption of qualified
and nonqualified notified equity is subject to the discretion
of the Board of Directors. Patronage reserves do not bear
interest and are subordinated to all certificates outstanding
and indebtedness of Gold Kist.
Retained earnings include an allocation of member margins
based on financial ratios, as well as cumulative net margins
(losses) resulting from nonmember and nonpatronage
transactions, including noncooperative subsidiaries, and
losses from patronage operations. Also included are amounts
related to the early redemption of notified equity,
representing the difference between the face value and the
redemption amounts.
GOLD KIST INC.
Notes to Consolidated Financial Statements, Continued
(Dollar Amounts in Thousands)
(7) Income Taxes
Total income tax expense (benefit) was allocated as follows:
<TABLE>
<CAPTION>
1998 1999 2000
<S> <C> <C> <C>
Margins (loss) from continuing operations $(35,123) 34,210 (22,154)
Discontinued operations (8,571) - -
Loss on disposal of Agri-Services segment,
including operating losses during phase
out period (16,489) (4,326) -
Patrons' and other equity - accumulated
comprehensive income - unrealized gain on
marketable equity security (3,043) (4,353) (5,040)
$(63,226) 25,531 (27,194)
</TABLE>
The provisions for income tax expense (benefit), principally
Federal, related to margins (loss) from continuing operations
consist of the following:
<TABLE>
<CAPTION>
1998 1999 2000
<S> <C> <C> <C>
Current expense (benefit) $(20,637) 23,750 (3,781)
Deferred expense (benefit) (14,486) 10,460 (18,373)
$(35,123) 34,210 (22,154)
</TABLE>
Gold Kist's combined federal and state effective tax rate
from operations for 1998, 1999 and 2000 was (38)%, 33% and
(46)%, respectively. A reconciliation of income tax expense
(benefit) allocated to margins (loss) from continuing
operations computed by applying the Federal corporate income
tax rate of 35% in 1998, 1999 and 2000 to margins (loss) from
continuing operations before income taxes for the applicable
year follows:
<TABLE>
<CAPTION>
1998 1999 2000
<S> <C> <C> <C>
Computed expected income tax expense
(benefit) $(32,256) 36,250 (16,884)
Increase (decrease) in income tax expense
(benefit) resulting from:
Cash portion of nonqualified patronage
refund - (792) -
Effect of state income taxes, net of
Federal benefit (2,199) 1,274 (2,644)
Nonqualified equity redemptions (1,203) (1,543) (1,187)
Employment credits (80) (109) (219)
Other, net 615 (870) (1,220)
$(35,123) 34,210 (22,154)
</TABLE>
GOLD KIST INC.
Notes to Consolidated Financial Statements, Continued
(Dollar Amounts in Thousands)
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred
tax liabilities at June 26, 1999 and July 1, 2000 are as
follows:
<TABLE>
<CAPTION>
1999 2000
<S> <C> <C>
Deferred tax assets:
Postretirement benefits $20,694 22,781
Federal tax operating loss carryforward - 9,058
Insurance accruals 10,437 10,092
Federal alternative minimum tax carryforward 1,408 1,678
Allowance for doubtful accounts 1,523 1,811
State tax operating loss carryforwards 2,111 3,777
Equity in partnerships 2,221 4,622
Investment reserve... 5,698 7,822
Discontinued operations 3,708 3,708
Other 1,144 3,606
Total gross deferred tax assets 48,944 68,955
Less valuation allowance (620) (397)
Total net deferred tax assets 48,324 68,558
Deferred tax liabilities:
Unrealized gain on marketable equity security (10,239) (5,199)
Accelerated depreciation (4,229) (6,048)
Deferred compensation (7,727) (8,117)
Total deferred tax liabilities (22,195) (19,364)
Net deferred tax assets $ 26,129 49,194
</TABLE>
The net change in the total valuation allowance for the
years ended 1998, 1999 and 2000 was an increase of $58, a
decrease of $516 and a decrease of $223, respectively. The
Company's management believes the existing net deductible
temporary differences comprising the total net deferred tax
assets will reverse during periods in which the Company
generates net taxable income.
At July 1, 2000, Gold Kist has an alternative minimum tax
carryforward for federal income tax purposes of $1.7 million,
which is available to offset future federal income taxes, if
any. The federal tax operating loss carryforward of $26
million at July 1, 2000 expires on July 1, 2020, which is
available to offset future federal income taxes, if any,
during such period.
(8) Employee Benefits
(a) Pension Plan
Gold Kist has a noncontributory defined benefit
pension plan covering substantially all of its employees
and directors and an affiliate's employees
(participants). The affiliate's benefit obligation, plan
assets and net periodic benefit cost are not included in
the following tables. The plan provisions 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 provisions 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.
GOLD KIST INC.
Notes to Consolidated Financial Statements, Continued
(Dollar Amounts in Thousands)
(b) Medical and Life Insurance Plans
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.
The following table sets forth the plans' change in benefit
obligation, change in plan assets and economic assumptions for
the years ended June 26, 1999 and July 1, 2000.
<TABLE>
<CAPTION>
Medical & Life
Pension Benefits Insurance Benefits
1999 2000 1999 2000
<S> <C> <C> <C> <C>
Change in benefit obligation
Benefit obligation at beginning
of year $129,299 121,685 59,612 66,057
Service cost 4,470 4,072 3,181 3,539
Interest cost 9,145 8,914 4,106 4,679
Actuarial (gains) and losses 4,834 (4,208) 5,184 1,764
Benefits paid (other than
settlements) (5,258) (12,987) (2,443) (2,968)
Plan amendments - 12,928 - - -
Divestitures, curtailments, or
settlements (22,177) - (3,583) -
Special termination benefits 1,372 - - -
Benefit obligation at end of year 121,685 130,404 66,057 73,071
Change in plan assets
Fair value of plan assets at
beginning of year 182,612 179,910 - -
Actual return on plan assets 18,659 12,139 - -
Contributions by employer 2,202 1,420 2,443 2,968
Benefits paid (other than
settlements) (5,258) (12,987) (2,443) (2,968)
Settlements (18,305) - - -
Fair value of plan assets at
end of year 179,910 180,482 - -
Funded status 58,225 50,078 (66,057) (73,071)
Unrecognized transition (asset)
/obligation (4,503) (3,327) - -
Unrecognized prior service cost 3,991 16,320 443 376
Unrecognized actuarial (gain)
/loss (30,090) (33,548) 9,051 10,639
Contributions after the measure-
ment date 167 174 626 781
Additional liability (555) (1,963) - -
Prepaid expense/(accrued
liability) $ 27,235 27,734 (55,937) (61,275)
Less current portion 2,505 2,868
$(53,432) (58,407)
Weighted-average assumptions as of year-end
Discount rate 7.25% 8.00% 7.25% 8.00%
Expected return on plan assets 9.50 9.50 - -
Rate of compensation increase 5.50 5.02 - -
</TABLE>
The health care cost trend rate used to determine the
medical and life insurance benefit obligation at June 26, 1999
was 6.5%, declining ratably to 5% by the year 2002 and
remaining at that level thereafter. The health care cost trend
rate used to determine the medical and life insurance benefit
obligation at July 1, 2000 was 8%, declining ratably to 5% by
the year 2005 and remaining at that level thereafter. A 1%
increase in the health care cost trend rate would increase the
medical and life insurance benefit obligation as of July 1,
2000 by $16,028. A 1% decrease in the health care cost trend
rate would decrease the medical and life insurance benefit
obligation as of July 1, 2000 by $2,758.
GOLD KIST INC.
Notes to Consolidated Financial Statements, Continued
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Medical & Life
Pension Benefits Insurance Benefits
1998 1999 2000 1998 1999 2000
<S> <C> <C> <C> <C> <C> <C>
Components of net periodic
benefit cost
Service cost $ 4,485 4,470 4,072 2,917 3,181 3,539
Interest cost 8,676 9,145 8,914 4,290 4,106 4,679
Estimated return on plan
assets (12,077) (13,681) (13,899) - - -
Net amortization (347) 17 433 155 130 243
Net periodic benefit
expense (income) $ 737 (49) (480) 7,362 7,417 8,461
</TABLE>
A 1% increase in the health care cost trend rate would
increase the medical and life insurance service and interest
cost components as of July 1, 2000 by $1,191. A 1% decrease
in the health care cost trend rate would decrease the medical
and life insurance service and interest cost components as of
July 1, 2000 by $968.
(9) Contingent Liabilities and Commitments
Gold Kist is a party to various legal and administrative
proceedings, all of which management believes constitute
ordinary routine litigation incidental to the business
conducted by Gold Kist, or are not material in amount.
Gold Kist is a guarantor of $60.0 million under a $75.0
million secured loan agreement between an agricultural credit
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 July 1, 2000, the amounts
outstanding under this facility were $70.3 million.
Gold Kist is a guarantor of a $6.0 million secured loan
agreement between a commercial bank and Scott G. Williams, a
fertilizer additive manufacturer and marketer, in which Gold
Kist holds a 50% equity interest. At July 1, 2000, the
amounts outstanding under this facility were $5.2 million.
Gold Kist received proceeds in prior years for
collateralized loans sold with recourse to an insurance
company, of which $9.0 million was outstanding at July 1,
2000. No gain or loss was recognized on the sale of these
loans.
(10) Investments
(a) Marketable Equity Security
At June 27, 1998, the Association's marketable equity
security was carried at its fair value of $62.4 million,
which represents a gross unrealized gain of $41.7 million.
The 1998 gross unrealized gain, net of deferred taxes of
$14.6 million, has been reflected as a separate component
of patrons' and other equity. At June 26, 1999, the
Association's marketable equity security was carried at
its fair value of $50.0 million, which represents a gross
unrealized gain of $29.3 million. The 1999 gross unrealized
gain, net of deferred taxes of $10.2 million, has been
reflected as a separate component of patrons' and other
equity. At July 1, 2000, the Association's marketable
equity security was carried at its fair value of $34.2
million, which represents a gross unrealized gain of
$13.5 million. The 2000 gross unrealized gain, net of
deferred income taxes of $4.7 million, has been reflected
as a separate component of patrons' and other equity.
Dividends of $625 thousand, $656 thousand and $690
thousand are included in miscellaneous, net for the years
ended June 27, 1998, June 26, 1999 and July 1, 2000,
respectively.
(b) Golden Peanut Company
Gold Kist has a 25% interest in Golden Peanut Company,
LLC and subsidiaries (Golden Peanut). Gold Kist's
investment in Golden Peanut amounted to $19.7 million
and $14.2 million at June 26, 1999 and July 1, 2000,
respectively. In 1999 and 2000, Gold Kist made additional
investments of $1.9 million and $1.2 million,
GOLD KIST INC.
Notes to Consolidated Financial Statements, Continued
(Dollar Amounts in Thousands)
respectively. In 1998, 1999 and 2000, Gold Kist
received distributions of $5.8 million, $5.1 million and
$2.3 million, respectively, from Golden Peanut. Golden
Peanut has a $450 million commercial paper facility
supported by annual and seasonal backup lines of credit
with various banks. At July 1, 2000, borrowings of
$190.5 million were outstanding under the commercial
paper facility.
Summarized financial information of Golden Peanut is
shown below:
<TABLE>
Condensed Consolidated Balance Sheets
<CAPTION>
1999 2000
<S> <C> <C>
Current assets $222,115 254,664
Property, plant and equipment, net
and other noncurrent assets 37,246 65,979
Total assets $259,361 320,643
Current liabilities $186,740 236,918
Accrued postretirement benefits other
than pensions 7,230 8,394
Other noncurrent liabilities 4,511 7,434
Members' equity 60,880 67,897
Total liabilities and members' equity $259,361 320,643
</TABLE>
<TABLE>
Condensed Consolidated Statements of Operations
<CAPTION>
1998 1999 2000
<S> <C> <C> <C>
Net sales and other
operating income $436,615 447,676 468,372
Costs and expenses 423,510 445,296 478,059
Net earnings (loss) $ 13,105 2,380 (9,687)
</TABLE>
In 1998, Gold Kist received $2.1 million in rental
income from Golden Peanut under an operating lease
agreement for peanut shelling and procurement facilities.
Beginning in 1999 annual rent payments to Gold Kist were
reduced to $1.00. Gold Kist received procurement
commissions, royalties and administrative service fees of
$2.5 million, $1.2 million and $.8 million in 1998, 1999
and 2000, respectively. In addition, Gold Kist purchased
$1.7 million of inventory from Golden Peanut in 1998.
(11) Discontinued Operations
The Company's Agri-Services segment purchased or
manufactured feed, seed, fertilizers, pesticides, animal
health products and other farm supply items for sale at
wholesale and retail. Additionally, the Agri-Services segment
was engaged in the processing, storage and marketing of
cotton, served as a contract procurement agent for, and
stored, farm commodities such as soybeans and grain. In May
1998, the Gold Kist Board of Directors adopted a plan to
discontinue operations of the Agri-Services segment.
In July 1998, Gold Kist entered into an Asset Purchase
Agreement, pursuant to which the Company agreed to sell and
assign the assets and certain of the liabilities of the
Company's agricultural inputs businesses (see note 1). In
August 1998, the Company entered into an agreement to sell or
assign the cotton marketing operation's purchases and sales
commitments for the 1998 cotton crop.
Accordingly, the operating results of the Agri-Services
segment, including provisions for losses during the phase-out
period, have been segregated from continuing operations and
reported separately in the consolidated statements of
operations and cash flows for 1998 and 1999. Net sales volume
of the Agri-Services segment was $720.0 million and $153.9
million,
GOLD KIST INC.
Notes to Consolidated Financial Statements, Continued
(Dollar Amounts in Thousands)
respectively, in 1998 and 1999. Gold Kist has allocated
interest expense to Agri-Services segment based upon net
operating assets employed at interest rates that approximate
market. Interest expense charged to the Agri-Services segment
for 1998 and 1999 was $20.8 million and $4.5 million,
respectively.
In October 1998, the Association completed the sale of
assets of the Inputs business to 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 asset purchase agreement.
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
Association subsequently objected to Southern States' Post-
Closing Valuation principally with regard to the valuation of
accounts and crop notes receivable. In order to resolve the
post-closing valuation, the Association agreed in September
1999 to repurchase from Southern States approximately $34.5
million of accounts and crop notes receivable. The agreement
resulted in a final settlement payment to Southern States of
approximately $21.2 million in September 1999.
In order to complete the transaction, the Association
committed to purchase from Southern States, subject to certain
terms and conditions, up to $100 million principal amount of
preferred securities if Southern States was unable to market
the securities to other purchasers. In October 1999, the
Company purchased for $98.6 million the $100 million principal
amount of preferred securities as required under the
commitment. The preferred securities carry an initial
weighted average dividend rate of 7.8%. Gold Kist is
permitted to sell the preferred securities, which are
classified as investments in the accompanying consolidated
balance sheet, pursuant to applicable securities regulations.
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
(as of
8/30/00)
<S> <C> <C> <C> <C>
W. A. Smith 41 Director (District 1) 2001 2
Herbert A. Daniel, Jr. 48 Director (District 2) 2001 5
Douglas A. Reeves 59 Director (District 3) 2000 6 months
James E. Brady, Jr.* 64 Director (District 4) 2002 16
W. Kenneth Whitehead 56 Director (District 5) 2002 7
Dan Smalley* 51 Director (District 6) 2002 15
A. Jack Nally* 57 Director (District 7) 2000 9
M. Michael Davis 49 Director (District 8) 2000 6
Phil Ogletree, Jr. 67 Director (District 9) 2001 23
</TABLE>
* Member of Board of Directors Executive Committee. Mr.
Smalley serves as Chairman of the Board of Directors, and Mr.
Brady serves as Vice-Chairman of the Board.
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 and types 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. There are no
family relationships among any of the Directors and executive
officers.
The Executive Officers of Gold Kist are:
<TABLE>
<CAPTION>
Years Years
Served Served
In that with
Name Age Office Office Gold Kist
(as of (as of (as of
8/30/00) 8/30/00) 8/30/00)
<S> <C> <C> <C> <C>
G. O. Coan* 64 Chief Executive Officer, 5 41
and Chairman of the
Management Executive
Committee
John Bekkers* 55 President and Chief 5 15
Operating Officer
M. A. Stimpert 56 Senior Vice President, 4 17
Planning and Administration
Stephen O. West 54 Chief Financial Officer and 2 20
Treasurer
J. David Dyson 53 General Counsel, Vice 2 20
President and Secretary
Paul G. Brower 61 Vice President 21 21
Corporate Relations
Jerry L. Stewart 60 Vice President 19 37
Marketing and Sales
Donald W. Mabe 46 Vice President 3 15
Operations
Marshall Smitherman 58 Vice President 2 21
Purchasing
John K. McLaughlin 62 Vice President Pork and 2 16
Aquaculture
Allen C. Merritt 54 Vice President, Science 2 28
and Technology
Harry T. McDonald 55 Vice President, 5 months 3
Human Resources
W. F. Pohl, Jr. 50 Controller 18 24
</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, with exception of
Michael A. Stimpert, Donald W. Mabe, Marshall Smitherman, and
Harry T. McDonald has been as an officer or employee of Gold
Kist.
Mr. Michael A. Stimpert was elected Senior Vice
President, Planning and Administration, effective April 1,
1996. He previously served as Vice President from January 1,
1996 until election to his current position. From December
19, 1986 until January 1996, Mr. Stimpert served as Executive
Vice President of Golden Peanut Company, a peanut processing
and marketing company headquartered in Atlanta, Georgia. Mr.
Stimpert was employed by Gold Kist Inc. from June 1974 until
December 1986 in a variety of positions, including Group Vice
President, Agricommodities Group and Group Vice President,
AgriProducts Group.
Mr. Donald W. Mabe was elected Vice President -
Operations, Poultry Group, effective July 25, 1997. He
previously served as President of Carolina Golden Products
Company from January 1991 until election to his current
position.
Mr. Marshall Smitherman was elected Vice President,
Purchasing Division, effective October 1998. He previously
served as Vice President, Cotton Division from July 1997 until
election to his current position and as Manager, Cotton
Division from February 1995 until July 1997. From 1988, until
rejoining the Association in 1995, he was a grain broker
located in Atlanta, Georgia.
Mr. Harry T. McDonald was elected Vice President, Human
Resources, effective April 2000. He previously served as
director of Management Systems for the Gold Kist Poultry Group
from September 1997 until election to his current position.
From August 1, 1996 through August 1, 1997, he served as
President of Claxton Poultry, an integrated poultry company
headquartered in Claxton, Georgia. Mr. McDonald also served
as president of the poultry division of Seaboard Farms,
headquartered in Shawnee Mission, Kansas, from March 1990
through June 1996.
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(2)
ended ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
G. O. Coan July 1, 2000 $619,231 $ 0 $3,532 $12,144
Chief Exec. Officer and June 26, 1999 493,269 525,000 3,304 8,203
Chairman of the Manage- June 27, 1998 475,000 0 2,211 9,786
ment Executive Committee
John Bekkers July 1, 2000 $440,385 $ 0 $14,258 $9,251
President and Chief June 26, 1999 386,538 450,000 10,218 5,253
Operating Officer June 27, 1998 347,500 0 5,757 7,186
M. A. Stimpert July 1, 2000 $269,231 $ 0 $9,376 $10,313
Senior Vice President, June 26, 1999 230,577 200,000 9,041 5,959
Planning & Admin. June 27, 1998 204,615 0 5,812 7,518
Jerry L. Stewart July 1, 2000 $227,519 $ 0 $10,181 $9,772
Vice President June 26, 1999 182,500 175,000 8,035 5,710
Marketing and Sales June 27, 1998 182,231 0 4,767 7,270
Donald W. Mabe July 1, 2000 $186,154 $ 0 $5,918 $6,500
Vice President June 26, 1999 151,569 168,000 3,505 2,082
Operations June 27, 1998 132,233 0 2,267 3,018
</TABLE>
_______________________________
(1)The amounts shown for the fiscal years ended June 26, 1999
and June 27, 1998 set forth that portion of interest earned
on voluntary salary and bonus deferrals under non-qualified
deferred compensation plans above 120% of the applicable
federal rate. Other than such amounts, for the fiscal years
ended July 1, 2000, June 26, 1999, and June 27, 1998, 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 the following amounts that
were contributed by the Association for fiscal years 2000,
1999, and 1998 on behalf of the named executive officers
pursuant to the Gold Kist Profit Sharing and Investment Plan
(401K Plan) and the Company's Executive Defined Contribution
Plan, both qualified defined contribution plans: Mr. Coan -
$5,100, $960, and $2,400, respectively, Mr. Bekkers -
$5,100, $975, and $2,814, respectively; Mr. Stimpert -
$5,349, $1,065, and $2,450, respectively; Mr. Stewart -
$5,156, $960, and $2,422, respectively; and Mr. Mabe $5,318,
$909, and $1,857, respectively. In addition, the amounts
set forth include for fiscal years 1998, 1999, and 2000, the
following amounts which represent the value of the named
executive officer's benefit from premiums paid by the
Association under a split dollar life insurance plan for the
named executive officers: Mr. Coan - $7,386, $7,243, and
$7.044, respectively; Mr. Bekkers - $4,372, $4,278, and
$4,151, respectively; Mr. Stimpert - $5,068, $4,894, and
$4,694, respectively; Mr. Stewart - $4,848, $4,750, and
$4,616, respectively; and Mr. Mabe $1,161, $1,173, and
$1,182, respectively. The Association uses the modified
premium method in determining the portion of each premium
dollar attributable to the named executive officers. The
Association will recover the cost of premium payments from
the cash value of the policies.
Retirement Plans. Through December 31, 1999, Gold Kist
maintained two noncontributory retirement plans, one for
salaried employees and the other for hourly employees, which
together covered 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 provided 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, would 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
provided 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
provided a monthly pension benefit equal to $9.00 for each
year of plan participation, payable at age 65; early
retirement was permitted after age 55 at reduced benefit
levels. The plans contained 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
vested after the employee attains five years of service or at
age 55, and the minimum pension benefit at age 65 was $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,
1999, the Association made a contribution of $191,000 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, 1999.
Effective January 1, 2000, the Company merged the assets of
the Salaried Employee Retirement Income Plan and the Hourly
Employee Pension Plan, creating one pension fund, the Gold
Kist Pension Plan, with separate benefit formulas for salaried
and hourly employees. Also effective January 1, 2000, the
Company increased retirement income benefits payable to
salaried retirees and hourly retirees. The Plan now provides
salaried employees a pension benefit after thirty (30) years
of credited service at age 65, which, when combined with a
portion of the employee's primary Social Security benefit
attributable to the employer's contributions, will equal fifty
percent (50%) (formerly forty-five percent) of the employee's
average earnings during the period of five years in which the
employee 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. For hourly employees who work for
Gold Kist until age 65, the Plan provides a monthly pension
benefit equal to $11.00 (formerly $9.00) per month for each
year of Plan participation payable at age 65. The Plan
provides early retirement benefits for salaried and hourly
employees after age 55 and contains a death benefit for the
surviving spouse of an active employee (who had at least five
(5) years credited service or was at least age 55 at the date
of death) which equals fifty percent (50%) of the deceased
employee's accrued retirement income benefit. Accrued
benefits under the Plans vest after the employee attains five
(5) years of service or at age 55.
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>
$ 30,000 $ 5,000 $ 7,500 $10,000 $12,500 $15,000
$100,000 16,667 25,000 33,333 41,667 50,000
$150,000 25,000 37,500 50,000 62,500 75,000
</TABLE>
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, 1999,
under the retirement income plan for the five executive
officers listed in the summary compensation table are as
follows: Mr. Coan (30); Mr. Bekkers (15); Mr. Stimpert (26);
Mr. Stewart (30); and Mr. Mabe (15).
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 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 $ 16,667 $ 25,000 $ 33,333 $ 41,667 $ 50,000
$150,000 25,000 37,500 50,000 62,500 75,000
$200,000 33,333 50,000 66,667 83,333 100,000
$250,000 41,667 62,500 83,333 104,167 125,000
$350,000 58,333 87,500 116,667 145,833 175,000
$500,000 83,333 125,000 166,667 208,333 250,000
$750,000 125,000 187,500 250,000 312,500 375,500
$850,000 141,667 212,500 283,333 354,167 425,000
</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
July 1, 2000: Mr. Coan - $348,467; Mr. Bekkers - $205,096; Mr.
Stimpert - $165,994; and Mr. Stewart - $158,815.
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.
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 July 1,
2000, no contingencies have occurred which would require the
implementation of the provisions of the change in control
agreements, 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 $20,000 per
year, with the Chairman receiving $21,500. 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 insurance
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.
Compensation Committee Interlocks and Insider
Participation. Directors Dan Smalley, James E. Brady, Jr.,
and A. Jack Nally serve as members of the Association's
Compensation Committee.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
Not Applicable.
Item 13. Certain Relationships and Related Transactions.
The Directors of Gold Kist are members of the Association
and, during the fiscal year ended July 1, 2000, have had
dealings in the ordinary course of business with Gold Kist as
purchasing or marketing patrons. See Business (and
Properties) -- Patronage Refunds.
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, 1999 and
July 1, 2000
Consolidated Statements of Operations-Years
Ended June 27, 1998, June 26, 1999 and
July 1,2000
Consolidated Statements of Patrons' and Other
Equity and Comprehensive Income (Loss)-Years
Ended June 27, 1998, June 26, 1999 and July 1,
2000
Consolidated Statements of Cash Flows-Years
ended June 27, 1998, June 26, 1999 and
July 1, 2000
Notes to Consolidated Financial Statements
(a)2.Financial Statement Schedules:
Gold Kist Inc.
Financial Statement Schedule:
II. Valuation and Qualifying Accounts--Years Ended
June 27, 1998, June 26, 1999 and July 1, 2000
<TABLE>
GOLD KIST INC.
Schedule II - Valuation Reserves and Qualifying Accounts
(Dollar Amounts in Thousands)
<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
<S> <C> <C> <C> <C> <C>
Deducted in the con-
solidated balance
sheets from the asset
to which it applies:
Allowance for doubtful
accounts:
June 27, 1998 $1,426 1,975 - 288 (A) 3,113
June 26, 1999 3,113 786 - 638 (A) 3,261
July 1, 2000 3,261 2,389 - 1,609 (A) 4,041
(A) Represents accounts written off.
Allowance for deferred tax
assets valuation:
June 27, 1998 1,078 58 (B) - - 1,136
June 26, 1999 1,136 - - 516 (C) 620
July 1, 2000 620 - - 377 (C) 397
(B) Represents establishment of allowance for net operating loss deductions
not available for state income tax purposes.
(C) Represents estimate of net operating loss deductions that are realizable.
</TABLE>
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 Agreement of Merger, dated as of Amendment to Schedule Exhibit 3
April 22, 1997, among 13D filed April 25, 1997
Golden Poultry Company, Inc.,
Gold Kist Inc., Agri International,
Inc. and Golden Poultry Acquisition
Corp.
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 Annual Report on Form Exhibit B-3(b)
Registrant, as amended 10-K for the Fiscal
Year ended June 28, 1997
B-4(a)(1) 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
B-4(a)(2) Form of First Supplemental Registration filed on Exhibit 4(a)(4)
Indenture, dated as of Form S-1 (Registration
September 1, 1980, governing No. 2-69267)
the terms of the Fifteen
Year Subordinated Capital
Certificates of Interest
(Series C)
B-4(a)(3) 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 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
B-4(b)(2) Form of First Supplemental Registration filed on Exhibit 4(b)(4)
Indenture, dated as of Form S-1 (Registration
September 1, 1980, governing No. 2-69267)
the terms of the Ten Year
Subordinated Capital
Certificates of Interest
(Series C)
B-4(b)(3) Form of Second Supplemental Registration filed on Exhibit 4(b)(5)
Indenture, dated as of Form S-2 (Registration
September 1, 1982, governing No. 2-79538)
the terms of the Ten Year
Subordinated Capital
Certificates of Interest
(Series D)
B-4(c) Form of Indenture, dated as Registration filed on Exhibit 4(c)
of September 1, 1985, Form S-2 (Registration
governing the terms of the No. 33-428)
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)
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 as of Registration filed on Exhibit 4(f)(2)
September 1, 1985, governing Form S-2 (Registration
the terms of the Three Year No. 33-428)
Subordinated Capital Certifi-
cates 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 of Registration filed on Exhibit 4(h)(1)
September 1, 1985, governing Form S-2 (Registration
the terms of the One Year No. 33-428)
Subordinated Large Denomi-
nation Loan Certificate
(Series A), including therein
a table of contents, cross-
reference sheet, and form of
One Year Subordinated Large
Denomination Loan Certificates
B-4(g)(2) Form of Indenture, dated as of Registration filed on Exhibit 4(d)(2)
September 1, 1979, governing Form S-1 (Registration
the terms of the One Year No. 2-65587)
Subordinated Loan Certificates
(Series B), including therein
a table of contents and
cross-reference sheet
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) 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(i)(1) Multiple Advance Term Loan Annual Report on Form Exhibit B-4(i)1
Supplement with CoBank, ACB 10-K for the Fiscal Year
dated as of September 1, 1997 Ended June 26, 1999
B-4(i)(2) 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(i)(3) Amendment dated as of June 26, Registration filed on Exhibit 4(l)(7)
1992, to Note Agreement with Form S-2 (Registration
the Prudential Insurance Company No. 33-52268)
of America
B-4(i)(4) Amendment dated July 14, 1993, Registration filed on Exhibit 4(l)(8)
to Note Agreement with the Form S-2 (Registration
Prudential Insurance Company of No. 33-69204)
America
B-4(i)(5) Note Purchase and Private Shelf Registration filed on Exhibit 4(j)(9)
Agreement, dated as of February Form S-2(Registration
11, 1997, with the Prudential No. 333-36291)
Insurance Company of America
B-4(i)(6) Amendment dated May 13, 1997 Registration filed on Exhibit 4(j)(10)
to Note Agreement dated Form S-2 (Registration
as of June 3, 1991 with the No. 333-36291)
Prudential Insurance Company of
America; and Note Purchase and
Private Shelf Agreement with the
Prudential Insurance Company of
America
B-4(i)(7) Amendment dated September 5, 1997
to Note Agreement dated
as of June 3, 1991 with the
Prudential Insurance Company of
America; and Note Purchase and
Private Shelf Agreement with the
Prudential Insurance Company of
America
B-4(i)(8) Amendment dated October 13, 1998
to Note Agreement dated
as of June 3, 1991 with the
Prudential Insurance Company of
America; and Note Purchase and
Private Shelf Agreement with the
Prudential Insurance Company of
America
B-4(i)(9) Amendment dated June 7, 1999
to Note Agreement dated
as of June 3, 1991 with the
Prudential Insurance Company of
America; and Note Purchase and
Private Shelf Agreement with the
Prudential Insurance Company of
America
B-4(i)(10)Amendment dated January 21, 2000
to Note Agreement dated
as of June 3, 1991 with the
Prudential Insurance Company of
America; and Note Purchase and
Private Shelf Agreement with the
Prudential Insurance Company of
America
B-4(i)(11)Amendment dated March 23, 2000
to Note Agreement dated
as of June 3, 1991 with the
Prudential Insurance Company of
America; and Note Purchase and
Private Shelf Agreement with the
Prudential Insurance Company of
America
B-10(a) Form of Deferred Compensation Registration filed on Exhibit 11(d)
Agreement between Gold Kist Form S-1 (Registration
Inc. and certain executive No. 2-59958)
officers*
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(b)(9)Gold Kist Executive Savings Registration filed on Exhibit 10(b)(9)
Plan, as amended * Form S-2 (Registration
No. 33-62869)
B-10(b)(10)Gold Kist Director Savings Registration filed on Exhibit 10(b)(10)
Plan, as amended * Form S-2 (Registration
No. 33-62869)
B-10(b)(11)Gold Kist Split Dollar Life Registration filed on Exhibit 10(b)(11)
Insurance Plan * Form S-2 (Registration
No. 33-62869)
B-10(b)(12)Gold Kist Executive Defined
Contribution Plan *
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
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(c)(6)Form of Membership, Marketing, Registration filed on Exhibit 10(c)(6)
and/or Purchasing Agreement of Form S-2(Registration
Gold Kist Inc., Atlanta, Georgia No. 333-36291)
revised July 9, 1997
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)Golden Peanut Company LLC
Operating Agreement between
Alimenta Holdings, Inc., Archer
Daniels-Midland Company, Cargill,
Incorporated, and Gold Kist Inc.,
dated as of March 30, 2000
B-10(g) Guaranty dated December 18, Registration filed on Exhibit 4(o)
1992 by Gold Kist in favor of Form S-2 (Registration
NationsBank of Georgia, N.A. No. 33-69204)
B-10(h)(1)Credit Agreement dated as of Annual Report on Form Exhibit B-10(i)
August 4, 1998, with various 10-K for the Fiscal Year
banks and lending institutions, ended June 27, 1998
as lendors, and Cooperatieve
Centrale Raiffeisen-Boerenleen
Bank B.A., New York Branch, as agent
B-10(h)(2)First Amendment dated as of Annual Report on Form Exhibit B-10(h)(2)
September 30, 1998, to 10-K for the Fiscal Year
Credit Agreement dated as of ended June 26, 1999
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(h)(3)Second Amendment dated as of Annual Report on Form Exhibit B-10(h)(3)
October 13, 1998, to 10-K for the Fiscal Year
Credit Agreement dated as of ended June 26, 1999
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(h)(4)Third Amendment dated as of Annual Report on Form Exhibit B-10(h)(4)
December 3, 1998, to 10-K for the Fiscal Year
Credit Agreement dated as of ended June 26, 1999
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(h)(5)Fourth Amendment dated as of Annual Report on Form Exhibit B-10(h)(5)
April 30, 1999, to 10-K for the Fiscal Year
Credit Agreement dated as of ended June 26, 1999
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(h)(6)Fifth Amendment dated as of Report filed on Form Exhibit B-10(h)(6)
November 29, 1999, to Quarter 10-Q for the
Credit Agreement dated as of Fiscal ended December 31, 1999
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(h)(7)Sixth Amendment dated as of Report filed on Form Exhibit B-10(h)(7)
December 21, 1999, to 10-Q for the Fiscal
Credit Agreement dated as of Quarter ended December 31, 1999
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(h)(8)Seventh Amendment dated as of Report filed on Form Exhibit B-10(h)(8)
March 20, 2000, to 10-Q for the Fiscal
Credit Agreement dated as of Quarter ended April 1, 2000
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(h)(9)Eighth Amendment dated as of
June 22, 2000, to
Credit Agreement dated as of
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(h)(10)Ninth Amendment dated as of
June 23, 2000, to
Credit Agreement dated as of
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(h)(11)Tenth Amendment dated as of
July 6, 2000, to
Credit Agreement dated as of
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(h)(12)Eleventh Amendment dated as of
July 26, 2000, to
Credit Agreement dated as of
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(h)(13)Pledge Agreement dated as of
June 13, 2000, with respect to
Credit Agreement dated as of
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(j) Asset Purchase Agreement dated Report filed on Form Exhibit 10(k)
as of July 23, 1998, between 8-K dated as of
Southern States Cooperative, July 23, 1998
Incorporated and Gold Kist Inc.
B-10(k)(1)Commitment Letter for Purchase Annual Report on Form Exhibit B-10(k)(1)
of Securities dated October 13, 10-K for the Fiscal Year
1998 between Southern States ended June 26, 1999
Cooperative, Incorporated and
Gold Kist Inc.
B-10(k)(2)Amendment dated March 25, Annual Report on Form Exhibit B-10(k)(2)
1999 to Commitment Letter 10-K for the Fiscal Year
for Purchase of Securities ended June 26, 1999
between Southern States
Cooperative, Incorporated
and Gold Kist Inc.
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 were
filed during the last quarter of the fiscal year ended July 1,
2000.
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: October 12, 2000 By:/s/ G. O. Coan
G. O. Coan, 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/ G. O. Coan Chief Executive Officer October 12, 2000
G. O. COAN (Principal Executive Officer)
/s/ Stephen O. West Chief Financial Officer October 12, 2000
STEPHEN O. WEST (Principal Financial Officer)
/s/ W. F. Pohl, Jr. Controller (Principal October 12, 2000
W. F. POHL, JR. Accounting Officer)
/s/ Dan Smalley Director October 12, 2000
DAN SMALLEY
/s/ James E. Brady, Jr. Director October 12, 2000
JAMES E. BRADY, JR.
/s/ Phil Ogletree, Jr. Director October 12, 2000
PHIL OGLETREE, JR.
/s/ A. Jack Nally Director October 12, 2000
A. JACK NALLY
/s/ W. Kenneth Whitehead Director October 12, 2000
W. KENNETH WHITEHEAD
/s/H. Michael Davis Director October 12, 2000
H. MICHAEL DAVIS
/s/ Herbert A. Daniel, Jr. Director October 12, 2000
HERBERT A. DANIEL, JR.
/s/ W. A. Smith Director October 12, 2000
W. A. SMITH
/s/ Douglas A. Reeves Director October 12, 2000
DOUGLAS A. REEVES
</TABLE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
<S> <C> <C>
B-4(i)(7) Amendment dated September 5, 1997
to Note Agreement dated
as of June 3, 1991 with the
Prudential Insurance Company of
America; and Note Purchase and
Private Shelf Agreement with the
Prudential Insurance Company of America
B-4(i)(8) Amendment dated October 13, 1998
to Note Agreement dated
as of June 3, 1991 with the
Prudential Insurance Company of
America; and Note Purchase and
Private Shelf Agreement with the
Prudential Insurance Company of America
B-4(i)(9) Amendment dated June 7, 1999
to Note Agreement dated
as of June 3, 1991 with the
Prudential Insurance Company of
America; and Note Purchase and
Private Shelf Agreement with the
Prudential Insurance Company of America
B-4(i)(10) Amendment dated January 21, 2000
to Note Agreement dated
as of June 3, 1991 with the
Prudential Insurance Company of
America; and Note Purchase and
Private Shelf Agreement with the
Prudential Insurance Company of America
B-4(i)(11) Amendment dated March 23, 2000
to Note Agreement dated
as of June 3, 1991 with the
Prudential Insurance Company of
America; and Note Purchase and
Private Shelf Agreement with the
Prudential Insurance Company of America
B-10(b)(12) Gold Kist Executive Defined
Contribution Plan *
B-10(f)(1) Golden Peanut Company LLC
Operating Agreement between
Alimenta Holdings, Inc., Archer
Daniels-Midland Company, Cargill,
Incorporated, and Gold Kist Inc.,
dated as of March 30, 2000
B-10(h)(9) Eighth Amendment dated as of
June 22, 2000, to
Credit Agreement dated as of
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(h)(10) Ninth Amendment dated as of
June 23, 2000, to
Credit Agreement dated as of
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(h)(11) Tenth Amendment dated as of
July 6, 2000, to
Credit Agreement dated as of
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(h)(12) Eleventh Amendment dated as of
July 26, 2000, to
Credit Agreement dated as of
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-10(h)(13) Pledge Agreement dated as of
June 13, 2000, with respect to
Credit Agreement dated as of
August 4, 1998, with various banks
and lending institutions, as lendors,
and Cooperatieve Centrale Raiffeisen-
Boerenleen Bank B.A., New York
Branch, as agent
B-27 Financial Data Schedule
</TABLE>
