UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 25, 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 MAY 8, 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 -
March 25, 1995 and June 25, 1994 . . 1
Consolidated Statements of Operations -
Three Months and Nine Months
Ended March 25, 1995 and
March 26, 1994 . . . . . . . . . . . 2
Consolidated Statements of Cash Flows -
Nine Months Ended March 25, 1995
and March 26, 1994. . . . . . . . . 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
<PAGE>
<TABLE>
Page 1
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
<CAPTION>
March 25, 1995 June 25, 1994
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,871 3,912
Trade accounts receivable less allowance
for doubtful accounts of $262 at
Mar. 25, 1995 and $291 at June 25, 1994 17,398 17,913
Inventories (note 3) 43,572 41,691
Other 3,280 1,426
Total current assets 68,121 64,942
Property, plant and equipment, net 78,880 87,591
Other assets 2,845 1,967
$149,846 154,500
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt,
payable to Gold Kist $ - 8,240
Short-term borrowings from Gold Kist
(note 4) 7,164 2,573
Current portion of long-term debt 1,178 1,186
Accounts payable 19,472 18,008
Due to Gold Kist 4,412 5,874
Income taxes payable - 242
Accrued compensation and related expenses 4,013 3,995
Total current liabilities 36,239 40,118
Long-term debt, excluding current portion 10,469 13,462
Other liabilities 3,720 3,720
Total liabilities 50,428 57,300
Minority interest in consolidated partnership 11,066 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 Mar. 25, 1995 and at
June 25, 1994 65,363 65,335
Retained earnings 24,509 23,493
89,872 88,828
Less treasury stock, at cost, 248 shares 1,520 608
Total shareholders' equity 88,352 88,220
Contingency (note 5)
$149,846 154,500
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
Page 2
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
Mar. 25, Mar. 26, Mar. 25, Mar. 26,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $119,931 113,705 365,033 323,727
Cost of sales 114,750 112,952 350,990 311,034
Gross profit 5,181 753 14,043 12,693
Selling, administrative and
general expenses 4,568 3,982 12,087 11,687
Operating income (loss) 613 (3,229) 1,956 1,006
Other (expense) income:
Interest expense (401) (262) (1,180) (853)
Miscellaneous 83 51 333 345
(318) (211) (847) (508)
Earnings (loss) before
minority interest and
income taxes 295 (3,440) 1,109 498
Minority interest in partnership
loss 500 1,456 854 2,518
Earnings (loss) before
income taxes 795 (1,984) 1,963 3,016
Income tax expense (benefit) 142 (733) 504 939
Net earnings (loss) $ 653 (1,251) 1,459 2,077
Net earnings (loss) per share $ .04 (.08) .10 .14
Weighted average outstanding
shares 14,714 14,862 14,746 14,860
Cash dividends per share $ .01 .009 .03 .027
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
Page 3
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
<CAPTION>
Nine Months Ended
March 25, March 26,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,459 2,077
Non-cash items included in net earnings:
Depreciation 12,659 12,030
Minority interest in partnership loss (854) (2,518)
Deferred taxes (1,015) (978)
Other 13 16
Changes in operating assets and liabilities:
Trade accounts receivable 515 (2,760)
Inventories (1,881) (5,560)
Accounts payable and accrued compensation and
related expenses 1,482 4,380
Due to Gold Kist (1,462) 1,518
Income taxes (242) (1,450)
Other (1,723) (1,277)
Net cash provided by operating activities 8,951 5,478
Cash flows from investing activities:
Acquisitions of property, plant and equipment (4,049) (19,079)
Other 122 104
Net cash used in investing activities (3,927) (18,975)
Cash flows from financing activities:
Capital contributed to partnership by Gold Kist 2,940 11,760
Repayment of long-term debt, payable to Gold Kist (8,240) (11,760)
Short-term borrowings (repayments), net to
Gold Kist 4,591 -
Proceeds from long-term debt - 9,250
Principal payments of long-term debt (3,001) (993)
Purchases of treasury stock (912) -
Dividends paid (443) (407)
Net cash provided by (used in) financing
activities (5,065) 7,850
Net change in cash and cash equivalents (41) (5,647)
Cash and cash equivalents at beginning of period 3,912 7,502
Cash and cash equivalents at end of period $ 3,871 1,855
Supplemental disclosure of cash flow information:
Cash paid during the periods for:
Interest (net of amounts capitalized) $ 1,201 884
Income taxes $ 2,162 3,367
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
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 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>
March 25, 1995 June 25, 1994
<S> <C> <C>
Live poultry $24,793 26,593
Feed, eggs, and supplies 9,593 9,015
Marketable products 9,186 6,083
$43,572 41,691
</TABLE>
4. The amounts outstanding under short-term borrowings from
Gold Kist 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
<PAGE>
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
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.
<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 three and nine month periods ended March 25,
1995 increased 5.5% and 12.8%, respectively, as compared to
the same periods a year ago. Pounds of poultry products sold
increased approximately 10.0% and 15.7%, respectively, for the
current quarter and nine months ended March 25, 1995 resulting
from the expansion programs completed last fiscal year. The
impact of the volume increase on net sales was partially
offset by lower average selling prices for fresh and frozen
chicken. Average selling prices declined 5.0% and 3.6%,
respectively, for the three and nine month periods ended March
25, 1995 as compared to the same periods last fiscal year.
Weak broiler market prices during the current quarter 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
increases in fresh broiler production.
The Company processed on average 3.9 million broilers per week
during the current quarter and nine month period ended March
25, 1995 as compared to 3.6 million and 3.3 million,
respectively, 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 $30.8 million and $98.5 million, respectively,
for the three and nine month periods ended March 25, 1995 as
compared to $25.9 million and $79.8 million, respectively, for
the comparable periods in the prior fiscal year. The
Company's food distribution facility in South Florida had net
sales of $8.4 million and $22.7 million, respectively, for the
three and nine month periods ended March 25, 1995 as compared
to $7.1 million and $18.4 million, respectively, for the same
periods last fiscal year.
Cost of sales
For the quarter ended March 25, 1995, the 10.0% increase in
broiler pounds sold contributed to the dollar increase in cost
of sales. Cost of sales, as a percentage of net sales, for
the three and nine month periods ended March 25, 1995 was
95.7% and 96.2%, respectively, as compared to 99.3% and 96.1%,
respectively, for the same periods last fiscal year. The
decrease in the percentage relationship for the three months
ended March 25, 1995, as compared to the same quarter last
year, was due partially to the decline in feed ingredient
costs. Also, the decrease in the percentage relationship
resulted from high operating costs in the comparable quarter
last fiscal year associated with a new processing line at the
Douglas, Georgia facility. The impact of these factors on the
percentage relationships was partially offset by lower average
selling prices.
For the quarter ended March 25, 1995, feed ingredient costs
were approximately 16.3% lower than in the comparable quarter
a year ago. Feed ingredient costs for the nine months ended
March 25, 1995 decreased approximately 7.3% below the
<PAGE>
comparable nine months last fiscal year. The decrease 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 March 25, 1995
had a dollar increase of 6.1% as compared to the same quarter
a year ago. For the three months ended March 25, 1995,
broiler processing costs on a per pound basis
<PAGE>
Page 6
decreased about 5.4% as compared to the same period a year
ago. Although the Company has made improvements in processing
efficiencies over the past three quarters, the Company has
continued to experience above average processing costs as a
result of the expansion program completed last fiscal year.
Selling, administrative, and general expenses
Selling, administrative, and general expenses, as a percentage
of net sales, were 3.8% and 3.3%, respectively, for the three
months and nine months ended March 25, 1995 as compared to
3.5% and 3.6%, respectively, for the comparable periods last
fiscal year. The increase in the percentage relationship for
the quarter ending March 25, 1995 as compared to the same
quarter last fiscal year was due primarily to litigation
related expenses totaling $370,000. The decline in the
percentage relationships for the nine months ended March 25,
1995 was due primarily to the increase in net sales.
Interest and other income
Interest expense for the three months ended March 25, 1995 was
$401,000 as compared to $262,000 in the comparable period a
year ago. The increase was due to higher interest rates,
which was partially offset by reduced borrowings.
Minority interest in partnership loss
Minority interest in partnership loss of $500,000 and
$854,000, respectively, for the three and nine months ended
March 25, 1995 represents Gold Kist Inc.'s 49% prorata share
of the Carolina Golden Products Company's loss. The
partnership recorded a gain in its further processing
operation of $97,000 for the quarter ended March 25, 1995 as
compared to a loss of $1.7 million in the same quarter a year
ago. The further-processing operation's loss for the nine
months ended March 25, 1995 was $1.4 million as compared to
$3.8 million in the prior year. The improvement in operating
results is attributed to improved processing efficiencies and
lower raw material costs. Although the further-processing
losses have decreased for the nine months ended March 25,
1995, the continuation of losses has resulted primarily from
the operation of the facility at less than full production
levels.
Earnings (loss) before income taxes
The Company had earnings before income taxes of $795,000 for
the three months ended March 25, 1995 as compared to a loss
before income taxes of approximately $2.0 million in the
comparable quarter last fiscal year. The improvement was due
primarily to improved operating efficiencies and lower feed
ingredient costs, which was partially offset by lower average
selling prices.
Income Taxes
The Company's combined Federal and state income tax rate was
25.7% for the nine months ended March 25, 1995 as compared to
31.1% for the same period a year ago. The current year's tax
rate reflects the impact of state income tax refunds and
targeted jobs credits. Income taxes for the nine months ended
March 26, 1994 included a credit of $166,000 related to the
adoption of SFAS 109, "Accounting for Income Taxes".
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At March 25, 1995, working capital, the current ratio, and
shareholders' equity were $31.9 million, 1.88 to 1 and $88.4
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
<PAGE>
Page 7
capitalization was 10.6% at March 25, 1995 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 $5.0 million was outstanding at March 25, 1995.
Also, the Company has a $15.0 million short-term credit
facility with Gold Kist of which $7.2 million was outstanding
at March 25, 1995. (See note 4 of Notes to Consolidated
Financial Statements).
Net cash provided by operating activities of approximately
$9.0 million for the nine months ended March 25, 1995 resulted
from net earnings adjusted for noncash charges. Uses of cash
for the nine months ended March 25, 1995 included repayments
of long-term debt totaling $11.2 million and $4.0 million in
expenditures for property, plant and equipment. In addition,
the Company repurchased 147,000 shares of its common stock for
$912,000. 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 contributed $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 and $11.6 million in fiscal 1996.
Approximately 21% 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
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.
<PAGE>
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
March 25, 1995 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
March 25, 1995.
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 May 8, 1995
Kenneth N. Whitmire
Chief Executive Officer
Date May 8, 1995
Langley C. Thomas, Jr.
Chief Financial Officer
<PAGE>
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
March 25, 1995 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
March 25, 1995.
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 May 8, 1995 /s/Kenneth N. Whitmire
Kenneth N. Whitmire
Chief Executive Officer
Date May 8, 1995 /s/Langley C. Thomas, Jr.
Langley C. Thomas, Jr.
Chief Financial Officer
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
[TEXT]
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-01-1995
<PERIOD-END> MAR-25-1995
<CASH> 3,871
<SECURITIES> 0
<RECEIVABLES> 17,660
<ALLOWANCES> 262
<INVENTORY> 43,572
<CURRENT-ASSETS> 68,121
<PP&E> 162,471
<DEPRECIATION> 83,591
<TOTAL-ASSETS> 149,846
<CURRENT-LIABILITIES> 36,239
<BONDS> 0
<COMMON> 65,363
0
0
<OTHER-SE> 22,989
<TOTAL-LIABILITY-AND-EQUITY> 149,846
<SALES> 365,033
<TOTAL-REVENUES> 365,366
<CGS> 350,990
<TOTAL-COSTS> 350,990
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,180
<INCOME-PRETAX> 1,963
<INCOME-TAX> 504
<INCOME-CONTINUING> 1,459
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,459
<EPS-PRIMARY> .10
<EPS-DILUTED> 0
<PAGE>
</TABLE>
