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 September 30, 1995 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-
5050
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
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 November 14, 1995
Common Stock, No
Par Value 14,517,819
<PAGE>
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -
September 30, 1995 and July 1, 1995 . . 1
Consolidated Statements of Operations -
Three Months Ended September 30, 1995 and
September 24, 1994 . . . . . . . . . . . 2
Consolidated Statements of Cash Flows -
Three Months Ended September 30, 1995
and September 24, 1994. . . . . . . . . 3
Notes to Consolidated Financial
Statements . . . . . . . . . . . . . . . 4
Item 2. Management's Discussion and Analysis of
Consolidated Results of Operations and
Financial Condition . . . . . . . . . . 5 - 6
Part II. Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . 7
Item 6. Exhibits and Reports on Form 8-K . . . . . 7
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<TABLE>
Page 1
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
<CAPTION>
Sept. 30, 1995 July 1, 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,047 2,720
Trade accounts receivable less allowance
for doubtful accounts of $47 at
Sept. 30, 1995 and $264 at July 1, 1995 21,357 21,632
Inventories (note 3) 46,298 46,781
Other 5,245 1,635
Total current assets 75,947 72,768
Property, plant and equipment, net 77,411 79,573
Other assets 3,453 3,263
$156,811 155,604
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 884 1,036
Short-term borrowings from Gold Kist
(note 4) 7,135 9,221
Accounts payable 23,380 19,325
Due to Gold Kist 4,912 5,075
Income taxes payable 2,603 485
Accrued compensation and related expenses 4,861 4,688
Total current liabilities 43,775 39,830
Long-term debt, excluding current portion 6,393 12,425
Other liabilities 4,509 4,509
Total liabilities 54,677 56,764
Minority interest in consolidated partnership 9,391 9,954
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 Sept. 30, 1995 and at
July 1, 1995 65,363 65,363
Retained earnings 29,510 25,653
94,873 91,016
Less treasury stock, at cost, 101 shares
at Sept. 30, 1995 and 348 shares at
July 1, 1995 2,130 2,130
Total shareholders' equity 92,743 88,886
Contingency (note 5)
$156,811 155,604
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
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Page 2
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended
Sept. 30, Sept. 24
1995 1994
<S> <C> <C>
Net sales $143,624 127,243
Cost of sales 132,321 122,281
Gross profit 11,303 4,962
Selling, administrative and general
expenses 5,102 3,692
Operating income 6,201 1,270
Other (expense) income:
Interest expense (455) (403)
Miscellaneous, net 76 178
(379) (225)
Earnings before minority interest
and income taxes 5,822 1,045
Minority interest in partnership loss 563 213
Earnings before income taxes 6,385 1,258
Income taxes 2,383 424
Net earnings $ 4,002 834
Net earnings per share $ .28 .06
Weighted average outstanding shares 14,518 14,761
Cash dividends per share $ .01 .01
See Accompanying Notes to Consolidated Financial Statements.
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</TABLE>
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Page 3
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
<CAPTION>
Three Months Ended
Sept. 30, Sept. 24,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 4,002 834
Non-cash items included in net earnings:
Depreciation 4,256 4,212
Minority interest in partnership loss (563) (213)
Deferred taxes (212) (308)
Other (10) 31
Changes in operating assets and liabilities:
Trade accounts receivable 275 (484)
Inventories 483 1,399
Accounts payable and accrued compensation and
related expenses 4,228 2,963
Due to Gold Kist (162) 319
Income taxes 2,118 232
Other (3,594) (3,291)
Net cash provided by operating activities 10,821 5,694
Cash flows from investing activities:
Acquisitions of property, plant and equipment (2,100) (1,298)
Other 23 25
Net cash used in investing activities (2,077) (1,273)
Cash flows from financing activities:
Short-term borrowings, net, payable to Gold Kist (2,086) (749)
Principal payments of long-term debt (6,186) (3,758)
Dividends paid (145) (148)
Net cash used in financing activities (8,417) (4,655)
Net change in cash and cash equivalents 327 (234)
Cash and cash equivalents at beginning of period 2,720 3,912
Cash and cash equivalents at end of period $ 3,047 3,678
Supplemental disclosure of cash flow information:
Cash paid during the periods for:
Interest (net of amounts capitalized) $ 458 265
Income taxes $ 477 500
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
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Page 4
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands)
(Unaudited)
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 14
and pages 21 through 29, respectively, of the Company's
Annual Report in the previously filed Form 10-K for the year
ended July 1, 1995.
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>
September 30, 1995 July 1, 1995
<S> <C> <C>
Live poultry $27,175 26,234
Feed, eggs, and supplies 11,093 11,512
Marketable products 8,030 9,035
$46,298 46,781
</TABLE>
4. The amounts outstanding represent borrowings by Carolina
Golden Products under a $15.0 million Revolving Credit
Agreement with Gold Kist.
5. In January 1993, certain Alabama member patrons of Gold Kist
Inc. filed a lawsuit in the Circuit Court of Jefferson
County, Alabama, Tenth Judicial Circuit against the Company
and Gold Kist Inc. and certain directors and officers of the
companies. (Ronald Pete Windham and Windham Enterprises,
Inc. on their behalf and on behalf of and for the use and
benefit of Gold Kist, Inc. and its shareholders/members v.
Harold O. Chitwood, individually in his capacity as an
officer of Gold Kist and a Director of Golden Poultry; et
al). The lawsuit alleges that the named defendants 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 and by permitting their
continued operations. Among the remedies requested are the
transfer of the Company's operations to Gold Kist. In March
<PAGE>
1994, the Court certified the Windham litigation as a class
action. In September 1995, the Company and Carolina Golden
Products Company were dismissed from the litigation. On
October 25, 1995, the jury in the Windham case returned
verdicts in favor of the plaintiffs in the litigation.
Injunctive or equitable remedies will be determined at a
later date by the Jefferson County Alabama Circuit Court
judge. The remedies imposed on Gold Kist could have an
effect on the business and operation of the Company. The
Company is also party to other 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.
<PAGE>
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 quarter ending September 30, 1995 were $143.6
million, an increase of 12.9% from $127.2 million in the quarter
ended September 24, 1994. The net sales increase was primarily
the result of a 7.0% increase in average selling prices and a
6.0% increase in pounds of broiler products sold. The increase
in average selling prices was due primarily to hot weather
conditions this past summer, which reduced the supply of
available broiler meat. The increase in broiler pounds produced
was due to improvements in plant processing yields. During the
three months ended September 30, 1995, the Company processed an
average of 4.0 million broilers per week.
Consolidated net sales include the net sales of Carolina Golden
Products Company, a consolidated partnership, which had net sales
of $39.5 million for the three months ended September 30, 1995 as
compared to $34.1 million for the comparable period a year ago.
The Company's food distribution facility in South Florida had net
sales of $7.6 million for the three months ended September 30,
1995 as compared to $6.6 million for the same period last fiscal
year.
Cost of sales
Cost of sales, as a percentage of net sales, for the quarter
ended September 30, 1995 was 92.1%, as compared to 96.1% for the
quarter ended September 24, 1994. The decrease in the percentage
relationship resulted from the increase in average selling prices
and lower feed ingredient costs. The 6% increase in pounds sold
during the current quarter contributed to the dollar increase in
cost of sales. For the quarter ended September 30, 1995, feed
ingredient costs were approximately 3.3% lower than in the
comparable quarter a year ago. However, feed ingredient costs
for the current quarter increased 5.4% as compared to the quarter
ended July 1, 1995. Feed ingredient costs for the remainder of
fiscal 1996 are likely to trend higher than in the prior fiscal
year as a result of the weather reduced 1995 corn harvest.
Selling, administrative, and general expenses
Selling, administrative, and general expenses, as a percentage of
net sales, was 3.6% for the three months ended September 30, 1995
as compared to 2.9% for the comparable period last fiscal year.
The increase in the percentage relationship was the result of
higher incentive compensation expense related to the increase in
earnings and litigation related expenses.
Interest and other income
Interest expense for the three months ended September 30, 1995
was $455,000 as compared to $403,000 in the comparable period a
year ago. The increase was due primarily to higher interest
rates.
<PAGE>
Page 6
Minority interest in partnership loss
Minority interest in partnership loss of $563,000 for the three
months ended September 30, 1995 represents Gold Kist Inc.'s 49%
prorata share of the Carolina Golden Products Company's loss.
For the comparable period last fiscal year, Gold Kist's prorata
share of the loss was $213,000. The increase in the partnership
loss was primarily the result of higher operating losses in the
partnership's further processing operation.
Earnings (loss) before income taxes
The Company had earnings before income taxes of $6.4 million for
the three months ended September 30, 1995 as compared to $1.3
million for the comparable quarter last fiscal year. The
increase was due primarily to higher average selling prices,
improved processing efficiency and to a lesser extent, lower feed
ingredient costs.
Income Taxes
The Company's combined Federal and state income tax rate was
37.3% for the quarter ended September 30, 1995 as compared to
33.7% for the same quarter a year ago. The increase in the
effective rate was due to the expiration of the federal targeted
jobs tax credit program at the end of 1994.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995, working capital, the current ratio, and
shareholders' equity were $32.2 million, 1.73 to 1 and $92.7
million, respectively, as compared to $32.9 million, 1.83 to 1
and $88.9 million, respectively, at July 1, 1995. The Company's
ratio of long-term debt to total capitalization was 6.4% at
September 30, 1995 as compared to 12.3% at July 1, 1995. The
Company has a $20.0 million revolving credit and term loan
facility with a commercial bank, of which $1.0 million was
outstanding at September 30, 1995. Also, the Company has a $15.0
million short-term credit facility with Gold Kist of which $7.1
million was outstanding at September 30, 1995.
Net cash provided by operating activities of $10.7 million for
the three months ended September 30, 1995 resulted from net
earnings adjusted for noncash charges. Uses of cash for the
current quarter included repayments of long-term debt totaling
$6.2 million and $2.1 million in expenditures for property, plant
and equipment.
Additional capital expansion and improvements totaling $38.2
million were approved by the board of directors of which $35.0
million will be used to increase the processing capacity of the
Russellville, Alabama division by 600,000 broilers per week.
This project, which includes improvements to the hatchery, feed
and processing plant, is expected to be completed by April 1997.
These new projects are in addition to the original 1996 capital
expenditures budget of $14.0 million. The Company expects
capital expenditures of approximately $28.0 million for fiscal
1996.
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
<PAGE>
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
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 1996.
<PAGE>
Page 7
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
In January 1993, certain Alabama member patrons of Gold
Kist Inc. filed a lawsuit in the Circuit Court of Jefferson
County, Alabama, Tenth Judicial Circuit against the Company
and Gold Kist Inc. and certain directors and officers of the
companies. (Ronald Pete Windham and Windham Enterprises,
Inc. on their behalf and on behalf of and for the use and
benefit of Gold Kist, Inc. and its shareholders/members v.
Harold O. Chitwood, individually in his capacity as an
officer of Gold Kist and a Director of Golden Poultry; et
al). The lawsuit alleges that the named defendants 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 and by permitting their
continued operations. Among the remedies requested are the
transfer of the Company's operations to Gold Kist. In March
1994, the Court certified the Windham litigation as a class
action. In September 1995, the Company and Carolina Golden
Products Company were dismissed from the litigation. On
October 25, 1995, the jury in the Windham case returned
verdicts in favor of the plaintiffs in the litigation.
Injunctive or equitable remedies will be determined at a
later date by the Jefferson County Alabama Circuit Court
judge. The remedies imposed on Gold Kist could have an
effect on the business and operation of the Company. The
Company is also party to other 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.
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
September 30, 1995.
<PAGE>
Page 8
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 November 13, 1995
Kenneth N. Whitmire
Chief Executive Officer
Date November 13, 1995
Langley C. Thomas, Jr.
Chief Financial Officer
<PAGE>
Page 8
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 November 13, 1995 /s/Kenneth N. Whitmire
Kenneth N. Whitmire
Chief Executive Officer
Date November 13, 1995 /s/Langley C. Thomas, Jr.
Langley C. Thomas, Jr.
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER>1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-END> SEP-30-1995
<CASH> 3,047
<SECURITIES> 0
<RECEIVABLES> 21,404
<ALLOWANCES> 47
<INVENTORY> 46,298
<CURRENT-ASSETS> 75,947
<PP&E> 168,968
<DEPRECIATION> 91,557
<TOTAL-ASSETS> 156,811
<CURRENT-LIABILITIES> 43,775
<BONDS> 6,393
<COMMON> 65,363
0
0
<OTHER-SE> 27,380
<TOTAL-LIABILITY-AND-EQUITY> 156,811
<SALES> 143,624
<TOTAL-REVENUES> 143,700
<CGS> 132,321
<TOTAL-COSTS> 132,321
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 455
<INCOME-PRETAX> 6,385
<INCOME-TAX> 2,383
<INCOME-CONTINUING> 4,002
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,002
<EPS-PRIMARY> .28
<EPS-DILUTED> 0
<PAGE>
</TABLE>
