<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended December 24, 1994 Commission File
No. 0-14960
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
GOLDEN POULTRY COMPANY, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-1492075
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
244 Perimeter Center Parkway, N.E., Atlanta, Georgia 30346
(Address of principal executive offices) (Zip
Code)
(Registrant's telephone number, including area code) (404)
393-5000
N/A
(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
OUTSTANDING AS OF
CLASS FEBRUARY 7, 1995
Common Stock, No
Par Value 14,721,819
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GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -
December 24, 1994 and June 25, 1994 1
Consolidated Statements of Operations -
Three Months and Six Months
Ended December 24, 1994 and
December 25, 1993 . . . . . . . . . 2
Consolidated Statements of Cash Flows -
Six Months Ended December 24, 1994
and December 25, 1993. . . . . . . . 3
Notes to Consolidated Financial
Statements . . . . . . . . . . . . . 4
Item 2. Management's Discussion and Analysis of
Consolidated Results of Operations and
Financial Condition . . . . . . . . 5 - 7
Part II. Other Information
Item 1. Legal Proceedings . . . . . . . . . . . 8
Item 6. Exhibits and Reports on Form 8-K . . . 8
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<TABLE>
Page 1
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
<PAGE>
(Unaudited)
<CAPTION>
Dec. 24, 1994 June 25, 1994
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,764 3,912
Trade accounts receivable less allowance
for doubtful accounts of $272 at
Dec. 24, 1994 and $291 at June 25, 1994 17,441 17,913
Inventories (note 3) 39,971 41,691
Other 4,414 1,426
Total current assets 63,590 64,942
Property, plant and equipment, net 81,312 87,591
Other assets 2,546 1,967
$147,448 154,500
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt,
payable to Gold Kist $ 3,240 8,240
Short-term borrowings from Gold Kist
(note 4) 6,367 2,573
Current portion of long-term debt 1,186 1,186
Accounts payable 19,557 18,008
Due to Gold Kist 5,459 5,874
Income taxes payable - 242
Accrued compensation and related expenses 3,639 3,995
Total current liabilities 39,448 40,118
Long-term debt, excluding current portion 6,895 13,462
Other liabilities 3,720 3,720
Total liabilities 50,063 57,300
Minority interest in consolidated partnership 8,626 8,980
Shareholders' equity:
Preferred stock, $1.00 par value.
Authorized 1,000 shares; no shares issued - -
Common stock, no stated par value.
Authorized 20,000 shares; issued 14,866
shares at Dec. 24, 1994 and at
June 25, 1994 65,363 65,335
Retained earnings 24,004 23,493
89,367 88,828
Less treasury stock, at cost, 101 shares 608 608
Total shareholders' equity 88,759 88,220
Contingency (note 5)
$147,448 154,500
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
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<TABLE>
Page 2
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GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
Dec. 24, Dec. 25, Dec. 24, Dec. 25,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $117,859 104,218 245,102 210,022
Cost of sales 113,959 99,121 236,240 198,082
Gross profit 3,900 5,097 8,862 11,940
Selling, administrative and
general expenses 3,827 3,805 7,519 7,705
Operating income 73 1,292 1,343 4,235
Other (expense) income:
Interest expense (376) (216) (779) (591)
Miscellaneous 72 189 250 294
(304) (27) (529) (297)
Earnings (loss) before
minority interest and
income taxes (231) 1,265 814 3,938
Minority interest in partnership
loss 141 371 354 1,062
Earnings (loss) before
income taxes (90) 1,636 1,168 5,000
Income tax expense (benefit) (62) 609 362 1,672
Net earnings (loss) $ (28) 1,027 806 3,328
Net earnings per share $ .00 .07 .05 .22
Weighted average outstanding
shares 14,763 14,861 14,762 14,860
Cash dividends per share $ .01 .009 .02 .018
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
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<TABLE>
Page 3
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
<CAPTION>
Six Months Ended
Dec. 24, Dec. 25,
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1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 806 3,328
Non-cash items included in net earnings:
Depreciation 8,405 7,808
Minority interest in partnership loss (354) (1,062)
Deferred taxes (839) (690)
Other 26 445
Changes in operating assets and liabilities:
Trade accounts receivable 472 (14)
Inventories 1,720 (3,278)
Accounts payable and accrued compensation and
related expenses 1,193 1,912
Due to Gold Kist (415) 1,720
Income taxes (745) (881)
Other (2,222) (2,296)
Net cash provided by operating activities 8,047 6,992
Cash flows from investing activities:
Acquisitions of property, plant and equipment (2,181) (13,294)
Other 53 101
Net cash used in investing activities (2,128) (13,193)
Cash flows from financing activities:
Capital contributed to partnership by Gold Kist - 11,760
Repayment of long-term debt, payable to Gold Kist (5,000) (11,760)
Short-term borrowings (repayments), net to
Gold Kist 3,795 -
Short-term borrowings (repayments), net - 2,150
Principal payments of long-term debt (6,567) (361)
Dividends paid (295) (270)
Net cash used in financing activities (8,067) 1,519
Net change in cash and cash equivalents (2,148) (4,682)
Cash and cash equivalents at beginning of period 3,912 7,502
Cash and cash equivalents at end of period $ 1,764 2,820
Supplemental disclosure of cash flow information:
Cash paid during the periods for:
Interest (net of amounts capitalized) $ 519 644
Income taxes $ 1,946 3,243
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
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Page 4
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands)
(Unaudited)
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1. The accompanying unaudited consolidated financial
statements reflect the accounts of Golden Poultry Company,
Inc. and its subsidiary and a majority owned partnership,
Carolina Golden Products Company (collectively, "the
Company"). These consolidated financial statements should
be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations
and the Notes to Consolidated Financial Statements on pages
11 through 15 and pages 22 through 30, respectively, of the
Company's Annual Report in the previously filed Form 10-K
for the year ended June 25, 1994.
2. In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of normal recurring accruals) necessary to
present fairly the financial position, results of
operations, and cash flows. Results of operations for
interim periods are not necessarily indicative of results
for the entire year.
3. Inventories consist of the following:
<TABLE>
<CAPTION>
December 24, 1994 June 25, 1994
<S> <C> <C>
Live poultry $23,797 26,593
Feed, eggs, and supplies 9,282 9,015
Marketable products 6,892 6,083
$39,971 41,691
</TABLE>
4. The amounts outstanding represent borrowings by Carolina
Golden Products under a $15 million revolving credit
agreement with Gold Kist.
5. In January 1993, three Alabama member patrons of Gold Kist
Inc. filed lawsuits in the Circuit Court of Jefferson
County, Alabama, Tenth Judicial Circuit, and the Circuit
Court of DeKalb County, Alabama, against the Company and
Gold Kist Inc. and certain directors, officers and
employees of the companies. The lawsuits allege that the
named officers, directors and employees violated their
fiduciary duties by diverting corporate opportunities from
Gold Kist to the Company and Carolina Golden Products
Company in connection with the creation of the Company and
Carolina Golden Products Company, by permitting their
continued operations and by selling shares of the Company's
common stock to certain officers, directors and employees
of the Company and Gold Kist. Among the remedies requested
are the transfer of the Company's operations to Gold Kist
as well as unspecified actual and punitive damages. In
March 1994, the Court certified the Windham litigation as a
class action. In July 1994, the Court in the Adams
litigation dismissed as defendants the Company's and Gold
Kist's employees who are or were not directors or officers
of the Company. The Company intends to defend the
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litigation vigorously. The Company is also party to
various legal and administrative proceedings, all of which
management believes constitute ordinary routine litigation
incident to the business conducted by the Company, or are
not material in amount.
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Page 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net sales
Net sales for the three and six month periods ended December
24, 1994 increased 13.1% and 16.7%, respectively, as compared
to the same periods a year ago. The Company had net sales
volume increases of approximately 16.7% and 18.8%,
respectively, for the current quarter and six months ended
December 24, 1994 resulting from the expansion programs
completed last fiscal year. The impact of the tonnage
increase on net sales was partially offset by lower average
selling prices for fresh and frozen chicken. Average selling
prices declined 4.3% and 3.0%, respectively, for the three and
six month periods ended December 24, 1994 as compared to the
same periods last fiscal year. Weak broiler market prices
during the current quarter, a seasonal factor in the broiler
industry, were also influenced by increased supplies of
competing meats (pork and beef). In addition, pricing
pressures have been experienced as sales efforts are made to
accommodate the increase in fresh broiler production.
The Company processed on average 3.9 million broilers per week
during the current quarter and six month period ended December
24, 1994 as compared to 3.2 million broilers per week in the
same periods a year ago.
Consolidated net sales include the net sales of Carolina
Golden Products Company, a consolidated partnership, which had
net sales of $33.6 million and $67.7 million, respectively,
for the three and six month periods ended December 24, 1994 as
compared to $26.2 million and $53.9 million, respectively, for
the comparable periods in the prior fiscal year. The
Company's food distribution facility in South Florida had net
sales of $7.7 million and $14.3 million, respectively, for the
three and six month periods ended December 24, 1994 as
compared to $6.1 million and $11.3 million, respectively, for
the same periods last fiscal year.
Cost of sales
For the quarter ended December 24, 1994, the 16.7% increase in
pounds sold contributed to the dollar increase in cost of
sales. Cost of sales, as a percentage of net sales, for the
three and six month periods ended December 24, 1994 was 96.7%
and 96.4%, respectively, as compared to 95.1% and 94.3%,
respectively, for the same periods last fiscal year. The
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increase in the percentage relationship for the three months
ended December 24, 1994, as compared to the same quarter last
year, was due primarily to the decline in average selling
prices discussed above. The impact of the decline in average
selling prices on the percentage relationship was partially
offset by lower per pound feed ingredient costs and processing
expenses.
For the quarter ended December 24, 1994, feed ingredient costs
were approximately 8.9% lower than in the comparable quarter a
year ago. Feed ingredient costs for the six months ended
December 24, 1994 decreased approximately 1.9% below the
comparable six months last fiscal year. The decline in feed
ingredient costs reflects the decline in commodity prices for
corn and soybeans related to the favorable U.S. harvest in the
fall of 1994.
Broiler processing costs for the quarter ended December 24,
1994 increased 14.8% as compared to the same quarter a year
ago. For the three months ended December 24, 1994, broiler
processing costs on a per pound basis
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Page 6
decreased about 5.9% as compared to the same period a year
ago. The Company has continued to experience higher-than-
expected processing costs as a result of production
inefficiencies associated with the expansion program completed
last fiscal year.
Selling, administrative, and general expenses
Selling, administrative, and general expenses, as a percentage
of net sales, were 3.2% and 3.1%, respectively, for the three
months and six months ended December 24, 1994 as compared to
3.7% for the comparable periods last fiscal year. The decline
in the percentage relationships was due primarily to the
increase in net sales. The dollar decrease for the current
fiscal year was due to lower incentive compensation expense
and reduced advertising expense.
Interest and other income
Interest expense for the three months ended December 24, 1994
was $376,000 as compared to $216,000 in the comparable period
a year ago. The increase was due to reduced capitalized
construction period interest credits and
higher interest rates.
Minority interest in partnership loss
Minority interest in partnership loss of $141,000 and
$354,000, respectively, for the three and six months ended
December 24, 1994 represents Gold Kist Inc.'s 49% prorata
share of the Carolina Golden Products Company's loss. The
partnership recorded losses in its further processing
operation of $490,000 and $1.5 million for the three and six
month periods ended December 24, 1994 as compared to $850,000
and $2.1 million for the same periods a year ago. Although
the further-processing losses have decreased for the periods
presented, the continuation of losses has resulted from the
operation of the facility at less than full production levels.
<PAGE>
Earnings (loss) before income taxes
The Company's loss before income taxes of $90,000 for the
three months ended December 24, 1994 as compared to earnings
before income taxes of $1.6 million in the comparable quarter
last fiscal year. The decrease was due primarily to lower
average selling prices, which was partially offset by lower
feed ingredient costs.
Income Taxes
The Company's combined Federal and state income tax rate was
31.0% for the six months ended December 24, 1994 as compared
to 33.4% for the same period a year ago. Income taxes for the
six months ended December 25, 1993 included a credit of
$166,000 related to the adoption of SFAS 109, "Accounting for
Income Taxes".
LIQUIDITY AND CAPITAL RESOURCES
At December 24, 1994, working capital, the current ratio, and
shareholders' equity were $24.1 million, 1.61 to 1 and $88.8
million, respectively, as compared to $24.8 million, 1.62 to 1
and $88.2 million, respectively, at June 25, 1994. The
Company's ratio of long-term debt to total capitalization was
7.2% at December 24, 1994 as compared to 13.2% at June 25,
1994. The Company has a $20.0 million revolving credit and
term loan facility with a commercial bank, of which $800,000
was outstanding at December 24, 1994. Also, the Company has a
$15.0 million short-term credit facility with Gold Kist of
which $6.4 million was outstanding at December 24, 1994. (See
note 4 of Notes to Consolidated Financial Statements).
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Page 7
Net cash provided by operating activities of $8.0 million for
the six months ended December 24, 1994 resulted from net
earnings adjusted for noncash charges. Uses of cash for the
six months ended December 24, 1994 included repayments of
long-term debt totaling $6.6 million and $2.2 million in
expenditures for property, plant and equipment. The Company's
1995 capital spending program was amended to include a $6.0
million project that will increase Carolina Golden Products'
capability to produce individual quick frozen chicken
products. In January 1995, the Company and Gold Kist will
contribute $6.0 million of partnership equity in the same
proportion as their respective ownership percentages. The
Company plans capital expenditures of $10.0 million in fiscal
1995.
Approximately 20% of the Company's net sales in the current
quarter were to one customer, a major retail grocery chain.
Management is unable to predict with any degree of certainty
what effect the loss of this major customer would have on future
results of operations and liquidity. However, the loss of the
customer would, in the opinion of management, adversely
affect results of operations if sales from the customer were
not replaced by comparable sales to other customers.
Management believes existing cash, amounts available under
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existing credit arrangements, and expected cash to be provided
from operations will be sufficient to maintain cash flows
adequate for the Company's growth and operational objectives
during fiscal 1995.
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Page 8
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
The information set forth in Item 1. "Legal
Proceedings" of Part II of the Company's Quarterly
Report on Form 10-Q for the Quarterly Period ended
September 24, 1994 is incorporated herein by
reference.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit
Designation of Exhibit
in this Report Description of Exhibit
27 Financial Data Schedule
(b) Reports on Form 8-K. Golden Poultry has not filed
any reports on Form 8-K during the three months ended
December 24, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
GOLDEN POULTRY COMPANY, INC.
(Registrant)
Date February 7, 1994
Kenneth N. Whitmire
Chief Executive Officer
Date February 7, 1994
Langley C. Thomas, Jr.
Chief Financial Officer
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Page 8
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PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
The information set forth in Item 1. "Legal
Proceedings" of Part II of the Company's Quarterly
Report on Form 10-Q for the Quarterly Period ended
September 24, 1994 is incorporated herein by
reference.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit
Designation of Exhibit
in this Report Description of Exhibit
27 Financial Data Schedule
(b) Reports on Form 8-K. Golden Poultry has not filed
any reports on Form 8-K during the three months ended
December 24, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
GOLDEN POULTRY COMPANY, INC.
(Registrant)
Date February 7, 1994 /s/Kenneth N. Whitmire
Kenneth N. Whitmire
Chief Executive Officer
Date February 7, 1994 /s/Langley C. Thomas, Jr.
Langley C. Thomas, Jr.
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-01-1995
<PERIOD-END> DEC-24-1994
<CASH> 1,764
<SECURITIES> 0
<RECEIVABLES> 17,713
<ALLOWANCES> 272
<INVENTORY> 39,971
<CURRENT-ASSETS> 63,590
<PP&E> 160,813
<DEPRECIATION> 79,501
<TOTAL-ASSETS> 147,448
<CURRENT-LIABILITIES> 39,448
<BONDS> 0
<COMMON> 65,363
0
0
<OTHER-SE> 24,004
<TOTAL-LIABILITY-AND-EQUITY> 147,448
<SALES> 245,102
<TOTAL-REVENUES> 245,352
<CGS> 236,240
<TOTAL-COSTS> 236,240
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 19
<INTEREST-EXPENSE> 779
<INCOME-PRETAX> 814
<INCOME-TAX> 362
<INCOME-CONTINUING> 806
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 806
<EPS-PRIMARY> .05
<EPS-DILUTED> 0
</TABLE>
