SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended July 1, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to __________
Commission File No. 0-14960
GOLDEN POULTRY COMPANY, INC.
(Exact name of registrant as specified in its charter)
__________________________
Georgia 58-1492075
(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:
(404) 393-5000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock No Par Value
__________________________
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 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]
As of August 25, 1995, the Registrant had 14,517,819 shares of
Common Stock outstanding, of which 3,410,208 shares were owned
by non-affiliates of the Registrant (shareholders other than
Directors and Executive Officers of the Registrant, and
beneficial holders of 5% or more of Registrant's outstanding
Common Stock). The aggregate market value of the Common Stock
held by non-affiliates is $19,608,696 based on the average of
the bid and asked prices of such stock in the over-the-counter
market on August 25, 1995. The exclusion of the market value of
shares owned by any person shall not be deemed an admission by
the Registrant that such person is an affiliate of the
Registrant.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement to be
furnished to Shareholders in connection with its Annual Meeting
of Shareholders to be held on October 25, 1995, are incorporated
by reference into Part III.
<PAGE>
PART I
Item 1. Business.
The Broiler Industry
The broiler industry is conducted principally by integrated
poultry companies. The typical domestic integrated broiler
company encompasses the breeding, growing and processing of
chicken and the marketing of chicken products. A broiler is a
chicken raised solely for consumption rather than for egg
production. Vertical integration of the industry has led to
efficiencies and enhanced coordination among all stages of
production and processing. Price competition has resulted in
improved genetic, nutritional and processing technologies to
minimize production costs. Successful broiler processors have
coordinated functions to control production from breeding of the
chickens through sale of the finished products.
General
Golden Poultry Company, Inc. ("Golden Poultry" or the
"Company") is an integrated producer, processor, marketer and
distributor of poultry products consisting primarily of fresh
chicken cut and packaged to customer specifications. It sells
processed whole chickens, chicken parts, and other value-added
and further-processed poultry products to retail grocers and the
commercial and institutional food service industry. The Company
produces golden-skin broiler products at integrated poultry
complexes to serve the Company's retail markets. The Company's
retail products are marketed under the Young 'n Tender label or
under customer private labels and sold primarily in Florida,
Georgia, California and the Mid-Atlantic, Northeastern and
Midwestern United States. The Company also purchases and
resells processed chicken, turkey, beef and pork products,
ready-to-eat products, seafood products and dairy products.
The Company is a 73% owned subsidiary of Gold Kist Inc. ("Gold
Kist"), a diversified agricultural cooperative association whose
business is conducted primarily in the Southeastern United
States. The executive offices of the Company are located in
Atlanta, Georgia and its production and processing facilities
are headquartered in Sanford, North Carolina, Douglas, Georgia,
and Russellville, Alabama.
In January 1982, Agri International, Inc., a wholly owned
subsidiary of Gold Kist, acquired the Douglas, Georgia,
integrated broiler complex which had been owned and operated by
Swift Independent Packing Company since 1958. Agri
International, Inc., operated the complex until August 1982, at
which time the Company was incorporated and began business. At
that time, Agri International, Inc., transferred the assets and
liabilities of the Douglas operations to the Company.
In June 1986, Carolina Golden Products, Inc., owner of a North
Carolina integrated poultry processing complex, was merged into
the Company. Carolina Golden Products, Inc. had been a joint
venture of Gold Kist and FCX, Inc., and Gold Kist acquired FCX's
interest in the joint venture in January 1986.
In May 1987, the Company acquired the perishable foods
warehouse and distribution center facilities formerly operated
by Don Lowe Foods, Inc., at Pompano Beach, Florida. In addition
to the wholesale distribution of institutional food products
sold to hotels, restaurants and retail chains, the Company
distributes fresh and frozen poultry products through the
Pompano Beach facility.
In April 1989, the Company replaced its Durham, North Carolina
plant with a new 76,000 square foot processing plant located on
438 acres in Sanford, North Carolina. This facility has enabled
the Company to increase production, to produce a wider range of
products and to expand as needs require.
The Company commenced operations at a new integrated
production complex near Russellville, Alabama, in 1990. This
complex includes a hatchery, feed mill and processing plant and
produces value-added poultry products primarily for the fast
food industry. The Russellville complex increased the Company's
processing capacity by approximately 50% and diversified the
Company's operations beyond its focus on retail and
institutional sales.
In January 1991, the Company entered into a general
partnership agreement with AgriGolden, Inc., a wholly owned
subsidiary of Gold Kist, to form Carolina Golden Products
Company ("Carolina Golden Products"). The Company is a 51%
general partner in Carolina Golden Products which has acquired
and is operating a poultry processing and further processing
complex headquartered in Sumter, South Carolina. This complex
includes a processing plant, feed mill, broiler farm and
hatchery. It produces fresh, frozen and further processed
poultry products for the fast food industry and other customers.
Products
The principal poultry products marketed are cut-up chicken,
segregated chicken parts, whole chickens and further processed
poultry products. The Company also produces deboned chicken
products for sale to the retail grocery market, deboned chicken
breast meat for further processing and sale by the fast food
industry, and marinated, raw breaded chicken, fully cooked
chicken and preformed nugget and pattie products for sale to
distributors, retailers and fast food customers. The Company
produces a golden-skin broiler which is particularly attractive
for shelf display for retail sales and meets consumer demand in
the Florida, Mid-Atlantic, Northeastern and California retail
grocery markets served by the Company. The Company also
distributes other processed and prepared foods primarily through
its Pompano Beach, Florida, distribution facility.
The Company's products are packaged in the following forms:
controlled vacuum pack ("CVP"); ice pack; frozen, fresh and
further processed; and chill pack.
Controlled Vacuum Pack Chicken. CVP production, utilized
primarily by the Douglas facility, involves the vacuum sealing
of bulk packaged chickens. This process enhances the shelf life
of the packaged chicken and facilitates broader geographic
distribution of the products. CVP chicken is packaged primarily
for retail sales and includes whole and cut-up chickens.
Ice Pack Chicken. The Company produces and markets fresh ice
pack chicken parts and deboned product for sale to distributors,
retailers and the fast food industry. The Company also sells
ice pack whole chickens to distributors and retailers.
Frozen Chicken. The Company produces and markets frozen whole
and cut-up chicken. Freezing extends product life and permits
delivery for sales outside of the continental United States.
The Company also sells frozen chicken to the military services
and fast food chains.
Chill Pack Chicken. The Company produces chill pack products
at its Sanford plant. Chill pack chicken can be packaged,
labeled and priced ready for the retail supermarket's fresh meat
counter and is kept chilled by mechanical refrigeration from the
processing plant to the store counter.
Operations and Facilities
An integrated poultry operation combines the elements
necessary to produce a finished poultry product, ready for sale
to supermarkets or other customers. The integrated operations
proceed from the growing of breeder poultry stock for hatching
egg production to the packaging and distribution of the finished
poultry product.
Breeding and Hatching. The Douglas, Sanford, Russellville and
Sumter complexes contract on an incentive basis with pullet
(young female chickens raised to become breeding hens) and
breeder farm operators located near the Douglas, Sanford,
Russellville and Sumter processing plants for the raising of
poultry pullets and breeding stock. The breeding chickens lay
eggs, which are then transported to the Company hatcheries in
Douglas, Georgia, Siler City, North Carolina, Russellville,
Alabama and Sumter, South Carolina for hatching. The Douglas
hatchery has been expanded to a 49,700 square foot facility with
a hatch capacity of 1,350,000 chicks per week. The Siler City
hatchery has been expanded to 31,000 square feet increasing
weekly hatch capacity to 870,000 chicks to accommodate
operations at the Sanford processing facility. The
Russellville hatchery is a 35,000 square foot facility with a
fully utilized present hatch capacity of 875,000 chicks per
week. The Sumter hatchery has been expanded to 52,700 square
feet which will facilitate a weekly hatch capacity of 1,350,000
chicks.
Grow-out. After the eggs are hatched, the Company delivers
day-old chicks from its hatcheries to approved poultry grower
farms near Douglas, Sanford, Russellville and Sumter. Under
incentive contracts that compensate growers for productivity,
growers raise the chickens to an age of six to eight weeks, at
which time they are transported to the Company processing
plants. The Sanford complex has incentive contracts with
approximately 150 contract growers, and the Douglas complex has
incentive contracts with approximately 130 growers. The
Russellville complex currently has incentive contracts with
approximately 110 growers, and the Sumter complex has incentive
contracts with approximately 100 growers. The Company
emphasizes the importance of communications with contract
growers to assure that flocks are raised in accordance with the
Company's requirements and standards for live production.
During the grow-out period, the Company provides feed,
medication, technical services and consultation to the growers,
who must satisfy Company requirements for care and production of
the chickens.
In addition to utilizing contract growers, the Company
operates a broiler grow-out farm on 70 acres near Douglas in
Coffee County, Georgia. The farm consists of 14 houses with a
capacity of up to 420,000 chickens. The Company operates a
broiler grow-out farm for the Sanford complex in Chatham County,
North Carolina, which consists of 16 houses with a capacity of
up to 340,000 chickens. The Sumter complex has a 315 acre farm
on which is situated 10 broiler houses with a capacity of up to
300,000 chickens. The Company farms are operated to supplement
the supply of chickens for the processing plants and to provide
a continuing demonstration to growers of modern grow-out
facilities and procedures.
Feed Mills. Poultry feed for broiler production at the
Company's Douglas and Sanford grow-out farms and contract grower
farms is manufactured at the Company's feed mills in Ambrose,
Georgia, located 9 miles from the Douglas facility, and in
Bonlee, North Carolina, 15 miles from the Sanford facility. The
feed mill in Ambrose provides a capacity of 7,700 tons of feed
per week for the Douglas operations; the feed mill in Bonlee has
a capacity of 5,500 tons per week. The Company's feed mill
in Pride, Alabama, serving the Russellville complex, has a
capacity of 7,200 tons of feed per week. It is located
approximately 28 miles from the Russellville facility. The
Sumter complex feed mill serves the Company's grow-out farm and
the complex's contract growers. It has a capacity of 6,500 tons
per week. Feed ingredients for feed formulation are delivered
by rail service to the feed mills, and formulated feed is
delivered by the Company to the contract growers and the
Company's farms by truck. Combined with Gold Kist's purchasing
power and expertise, Company-owned feed mills give the Company
significant advantages in quality and cost control.
Processing. Upon the completion of the grow-out period, the
six to eight-week old broilers are delivered on live-haul trucks
to the Company's processing plants in Sanford, Douglas,
Russellville and Sumter. The Company either performs or
contracts for the catching of the chickens, and conducts its own
live-haul transportation, using Company employees and Company-
owned or leased vehicles and equipment.
Processing is conducted at the Sanford, Douglas, Russellville
and Sumter plants. The Douglas processing plant has live bird
holding facilities, a service center for rolling stock, and
offal and waste water pre-treatment facilities. The processing
facility has controlled vacuum packaging capability. The
current processing weekly capacity is approximately 1.3 million
broilers and the facility size is 130,000 square feet.
The Douglas facility has three picking lines and three
eviscerating lines; two processing shifts are run daily. The
plant has cold storage holding capacity sufficient to
accommodate two or three days' production. As with the other
complexes, products are moved from storage on a first-in, first-
out basis to ensure freshness.
The Sanford plant consists of a 76,000 square foot processing
facility, offal and complete waste water treatment facilities,
a live bird holding shed, and a service center for rolling
stock. The facility has the packaging capacity for over-wrapped
tray packed items and whole birds. Tray packed parts and whole
birds can be chill-packed and weighed, pre-priced and labeled to
the customer's order.
The Sanford facility utilizes two picking lines, two
eviscerating lines, and two separate chilling systems; two
processing shifts are run daily. The processing facilities at
Sanford have a capacity of 850,000 chickens per week.
The facilities at the Russellville processing complex include
a 110,000 square foot processing plant with wastewater treatment
facilities, live bird holding facilities, and a service center
for rolling stock. The processing facilities at Russellville
have a capacity of 850,000 chickens per week. This facility
includes deboning production and other further processing
capability and utilizes two picking lines, two eviscerating
lines, and two daily processing shifts.
The Sumter complex has live bird holding facilities,
wastewater treatment facilities, and a service center for
rolling stock. The 435,000 square foot processing plant, with
further processing capability, has a production capacity of 1.4
million chickens per week on two shifts, utilizing four
eviscerating lines and two picking lines.
Distribution. Finished poultry products are shipped directly
to customers or through the Company's Pompano Beach, Florida and
Durham, North Carolina distribution centers. The Pompano Beach
distribution center is a 32,000 square foot refrigerated
warehouse facility constructed specifically for the handling of
perishable foods and is used for distribution to Florida
customers. The 5,000 square foot Durham facility is used by the
Company for local sales and distribution in Durham and eastern
North Carolina.
Contract carriers transport Company products from the Sanford,
Douglas, Russellville and Sumter complexes to the distribution
centers and customers. Other products brokered or purchased and
resold by the Company (such as processed turkey, beef and pork
products, ready-to-eat products, seafood and dairy products) are
also distributed from the Pompano Beach facility.
Marketing and Sales
The primary markets served by the Company include the retail
grocery market, the institutional and commercial food market and
the frozen food market. The addition of the Russellville and
Sumter operations has enabled the Company to expand its market
in serving the fast food industry.
Marketing and sales of the Company's fresh products are conducted
primarily on a decentralized basis by Company management and
sales personnel at the Douglas, Russellville, Sanford and Sumter
complexes. Each complex has a sales manager and sales
representatives to coordinate marketing and distribution efforts
and to provide customer service. The Company uses local
television, radio and newspaper advertising, coupon promotion,
point of purchase material and other marketing techniques to
develop brand recognition for the Young 'n Tender label. The
Company also uses independent brokers to sell its frozen chicken
products.
Products from Douglas are marketed principally to the Publix
supermarket chain which has more than 400 stores located
throughout Florida, Georgia and South Carolina. Douglas sells
chicken to Publix in the form of whole, cut-up and packaged
chicken and marinated and deboned chicken parts. In fiscal
1993, 1994 and 1995, net sales to Publix accounted for 21%,
22%, and 21%, respectively, of the Company's net sales. Loss of
Publix as a customer would adversely affect the Company if these
revenues were not replaced by comparable sales to other
customers. The remainder of the Douglas production is sold to
a variety of domestic purchasers primarily in Florida and
California and some customers in the export markets in the Far
East and Caribbean. Some of these products are marketed under
the Early Bird label. Both the Young 'n Tender and the Early
Bird marks are registered trademarks licensed by Gold Kist to
the Company on a royalty basis under non-exclusive license
agreements.
In fiscal 1993, 1994, and 1995, sales to Gold Kist represented
approximately 20%, 21% and 20%, respectively, of the Company's
net sales, principally pursuant to a marketing agreement between
Gold Kist and Carolina Golden Products under which the Sumter
complex sells a significant portion of its further processed
chicken products to Gold Kist at prices which approximate market
for cooperative marketing.
Products from Sanford are marketed to retail and wholesale
markets in North Carolina, the Mid-Atlantic, and the Midwestern
and Northeastern United States and to export markets. Sanford
sells ice pack and chill pack whole chicken, cut-up chicken and
value-added packaged products. In addition, it produces tray-
packed items and other specialized chicken products popular in
the retail food market. These products are sold primarily under
customers' private labels although Sanford sells some products
under the Young 'n Tender label.
The Sanford and Douglas complexes provide each other back-up
production capacity. This capability helps to address
conditions of seasonal or peak market demands and possible
production problems encountered by the complexes.
The Company's Russellville, Alabama complex is currently
producing chicken product for the fast food market, primarily
deboned white meat products from male chickens. The other
Russellville production is sold in the retail, institutional and
export markets.
The Sumter complex produces fresh, frozen and further
processed poultry products for the fast food industry and retail
grocery and institutional customers primarily in the
Southeastern United States. Products include skinless and skin-
on cut-up chicken, marinated breaded and partially or fully
cooked chicken products. Further processed products produced
at the Sumter Complex are marketed pursuant to a marketing
agreement with Gold Kist.
Poultry prices and demand have historically been seasonal,
with demand for poultry declining in winter
months. Management believes that the Company's strong position
in the Florida market reduces the impact of this seasonality,
particularly for the Douglas complex. Because of the large
influx of people into Florida during the winter months, the
winter demand for poultry products increases even though per-
capita demand decreases as it does elsewhere in the country.
Competition
The Company markets its products in competition with larger
poultry producers and smaller companies on the basis of service,
quality and price. The principal competitive factors for the
retail and grocery market are quality of product and timely
service. Brand name recognition is also a factor. The
principal competitive factors in the fast food industry are
customized product form and size, quality and timely service.
The Company's premium golden-skin poultry products with the
attractive shelf display characteristic of the product enhance
retail sales due to regional customer preferences in the
Florida, Mid-Atlantic, Northeastern and California markets. The
Company's value-added product line provides the ability to
deliver poultry products responsive to purchasers' special
orders. Moreover, the Company's live-production performance,
technologically advanced facilities and its feed ingredient and
other input purchasing expertise (through its relationship with
Gold Kist) facilitate flexibility and responsiveness in serving
its customers.
The Company also competes with other poultry processors for
contract growers to grow pullets and breeding stock and to raise
broiler chickens for processing.
Administrative Services Agreement
Gold Kist provides certain administrative, staff and operating
functions for the Company pursuant to management services
agreements which are renewable annually. Under the agreements,
Gold Kist provides a broad range of corporate functions and
services. The areas of service include:
(1) accounting, auditing and financial reporting, consultation
and services;
(2) purchasing and distribution;
(3) marketing and advertising;
(4) poultry feed manufacturing and consultation services;
(5) engineering services;
(6) information systems processing and consultation;
(7) research, quality assurance, veterinary and technical
services;
(8) corporate protection and risk management services;
(9) real estate and corporate planning services;
(10) human resources management;
(11) communications and government and public relations; and
(12) credit services.
The Company pays to Gold Kist (a) a negotiated annual sum equal
to Gold Kist's costs in providing these services, plus (b) 5.8%
of the Company's earnings before income taxes assuming a Company
return on assets employed ("ROAE") of more than 10%, or 3.5% of
the Company's earnings before income taxes assuming a positive
Company ROAE of less than 10%.
Environmental and Regulatory Matters
The Company's facilities and operations are subject to the
regulatory jurisdiction of various federal and state agencies,
including the Federal Food and Drug Administration, United
States Department of Agriculture, Environmental Protection
Agency, Occupational Safety and Health Administration, and
corresponding state agencies. Management believes that all
facilities and operations are currently in compliance with
environmental and regulatory standards. Management does not
know of any material capital expenditures that will be necessary
to comply with current statutes and regulations. Compliance has
not had a materially adverse effect upon the Company's earnings
or competitive position in the past, and it is not anticipated
to have a materially adverse effect in the future.
Human Resources
As of July 1, 1995, the Company employed approximately 972
employees at its Sanford complex, 1,243 employees at its Douglas
complex, 905 employees at its Russellville complex, 38 employees
at its Pompano Beach distribution center, 21 employees at its
Durham distribution center, approximately 1,918 employees in its
Sumter complex, and approximately 5,097 employees in all of its
operations. None of the operations are unionized.
Executive Officers of the Registrant
The Executive Officers of the Company who are elected to serve
at the pleasure of the Board of Directors are as follows:
<TABLE>
<CAPTION>
Name Age Position with the Company
<S> <C> <C>
Harold O. Chitwood 65 Director, Chairman of the Board of Directors
Gaylord O. Coan 59 Director, Vice Chairman of the Board of
Directors
Kenneth N. Whitmire 57 Director, Chief Executive Officer
E. Carlyle Ragans 49 President, Chief Operating Officer
John Bekkers 50 Vice President
Sidney L. Prince 37 Vice President
Norman R. Robinson 56 Vice President
Jack L. Lawing 57 Secretary
Langley C. Thomas, Jr. 42 Treasurer, Chief Financial Officer
Don W. Mabe 42 President, Carolina Golden Products
</TABLE>
Each of the Executive Officers of the Company, with the
exception of E. Carlyle Ragans, Sidney L. Prince, Norman R.
Robinson and Don W. Mabe, has been principally employed by
Gold Kist for the past five years.
The following information describes the business experience
of the Company's Executive Officers since July 1, 1990.
Harold O. Chitwood has been the Chairman of the Board of
Directors of the Company since October 1992. He served as
Vice Chairman of the Board of Directors from 1986 until
election to his current office, as Chief Executive Officer of
the Company from June 1986 until October 1988, and as
President of the Company from August 1982 until June 1986.
Mr. Chitwood became Chief Executive Officer and Chairman of
the Management Executive Committee of Gold Kist in October
1991, having previously served as Executive Vice President and
Chief Operating Officer of Gold Kist since January 1, 1989.
He served as Executive Vice President of Gold Kist, from July
1, 1988, until December 31, 1988. From 1984 to 1988, Mr.
Chitwood served as Executive Vice President, Gold Kist Poultry
Group. He is a Director of the NationsBank of Georgia, N.A.,
Highland Exchange Service Cooperative and the National Council
of Farmer Cooperatives.
Gaylord O. Coan has been the Vice Chairman of the Board of
Directors of the Company since October 1992, having previously
served as Vice President of the Company from October 1991
until election to his current position. He has served as
President and Chief Operating Officer of Gold Kist since
October 1991. Previously Mr. Coan served as Executive Vice
President of Gold Kist from 1990 to October 1991. He also
served as President of Golden Peanut Company, a peanut
procurement, processing and marketing company headquartered in
Atlanta, Georgia, from 1986 until 1990. Mr. Coan is a
Director of the Archer Daniels Midland Company.
Kenneth N. Whitmire has served as Chief Executive Officer of
the Company since October 1988. He is also Group Vice
President of the Gold Kist Poultry Group. Mr. Whitmire
previously served as Vice President - Operations of the Gold
Kist Poultry Group from 1981 until election to Group Vice
President on July 1, 1988.
John Bekkers was elected Vice President of the Company on
July 27, 1995. He has served as Executive Vice President of
Gold Kist since October 1994. Previously, he served as
Division Manager of the Gold Kist Northeast Alabama Poultry
Division from May 1988 until October 1994.
E. Carlyle Ragans was elected President and Chief Operating
Officer of the Company on June 10, 1988. From 1982 until his
election to his current position, Mr. Ragans served as
Division Manager of the Gold Kist West Georgia Poultry
Division.
Sidney L. Prince is Vice President of the Company, a position
he has held since January 26, 1995. Mr. Prince previously
served as Division Sales Manager for the Company's
Russellville complex from December 1990 until election to his
current position and as a sales representative for the Gold
Kist West Georgia Poultry Division from August 1987 until
December 1990.
Norman R. Robinson has been Vice President of the Company
since October 1990, and was Division Manager of the
Russellville, Alabama, operations of the Company from 1989
until election to his current position. Mr. Robinson
previously served as Assistant Division Manager of the Gold
Kist Northeast Alabama Poultry Division from 1988 until 1989,
and as Field Operations Manager of the Gold Kist Northeast
Georgia Poultry Division from 1983 until 1988.
Don W. Mabe was elected President of Carolina Golden Products
in January 1991. From June 1988 until election to his current
position, he served as Division Manager of the Gold Kist West
Georgia Poultry Division. Mr. Mabe was Processing Plant
Manager for the Gold Kist West Georgia Poultry Division prior
to his assignment as Division Manager.
Jack L. Lawing has been the Secretary of the Company since
August 1982, and served as Vice President -Law and Corporate
Secretary of Gold Kist from 1976 until 1990 when he was
elected General Counsel, Vice President and Corporate
Secretary of Gold Kist.
Langley C. Thomas, Jr., has been the Treasurer and Chief
Financial Officer of the Company since June 1986, and has
served as Manager of Financial Reporting for Gold Kist since
June 1983.
Item 2. Properties.
Facilities used in the Company's business are described in
"Item 1 - Business." The Company believes that its facilities
are adequate and suitable for their respective uses. The
Company owns all of its operating facilities, except for (1)
the Durham distribution facility leased from Gold Kist; (2)
the Douglas broiler farm and Ambrose, Georgia feed mill, both
of which are leased from the Douglas-Coffee County, Georgia
Industrial Development Authority; and (3) the Russellville,
Alabama feed mill site which is leased from the Industrial
Development Board of Colbert County, Alabama. There are no
material encumbrances on the Company's facilities except for a
mortgage deed on the Pompano Beach distribution facility with
a $1.3 million balance at July 1, 1995. See Note 3 of "Notes
to Consolidated Financial Statements."
Item 3. 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, officers and employees 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 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 and by permitting their continued operations.
Among the remedies requested are the transfer of the
Company's operations to Gold Kist as well as
unspecified actual damages. In March 1994, the Court
certified the Windham litigation as a class action.
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.
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 through the solicitation of proxies or otherwise.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
The Common Stock of the Company is presently traded in the
National Association of Securities Dealers Automated Quotation
("NASDAQ") National Market System under the symbol "CHIK."
The Common Stock was initially registered for a public
offering effective September 25, 1986, and prior to that time
there was no public market for the Common Stock. In the last
two fiscal years, the high and low bid price per share of
Common Stock, as reported by NASDAQ for the fiscal periods
indicated are as follows:
<TABLE>
<CAPTION>
Period High Low
<S> <C> <C>
Fiscal 1994
First Quarter $8.18 $6.36
Second Quarter 8.18 6.36
Third Quarter 8.00 6.36
Fourth Quarter 7.25 5.75
Fiscal 1995
First Quarter $7.75 $ 5.63
Second Quarter 7.25 5.56
Third Quarter 7.25 5.50
Fourth Quarter 6.50 5.75
</TABLE>
As of August 25, 1995, there were 403 holders of record of
the Company's Common Stock.
The Company has paid cash dividends since January 1986.
Prior to 1986, the Company did not declare or pay any cash
dividends.
As adjusted to reflect one for ten stock dividends in March
1994, the Company has paid quarterly cash dividends per share,
as follows:
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
First Quarter $.008 $ .01
Second Quarter .008 .01
Third Quarter .009 .01
Fourth Quarter .009 .01
</TABLE>
<PAGE>
Item 6. Selected Financial Data.
The selected financial data presented below under the
captions "Consolidated Statements of Operations Data" for each of
the years in the five-year period ended July 1, 1995, and "Consolidated
Balance Sheet Data" as of June 29, 1991, June 27, 1992, June 26, 1993,
June 25, 1994, and July 1, 1995 are derived from the consolidated
financial statements of Golden Poultry Company, Inc. and subsidiary,
which consolidated financial statements have been audited by KPMG Peat
Marwick LLP, independent auditors. The consolidated financial statements
as of June 25, 1994 and July 1, 1995 and for each of the years in the
three-year period ended July 1, 1995, and the report thereon, are
included elsewhere herein. The information set forth below should
be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the
aforementioned consolidated financial statements and related notes,
and the audit report, all included elsewhere herein.
<TABLE>
<CAPTION>
For Fiscal Years Ended
June 29, June 27, June 26, June 25, July 1,
1991 1992 1993 1994 1995
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Consolidated Statements of Operations Data:
Net sales . . . . . . . . . . . . . . . . . $260,970 $336,806 $388,330 $447,139 $505,975
Cost of sales . . . . . . . . . . . . . . . 247,987 330,759 363,407 427,607 486,064
Gross profit . . . . . . . . . . . . . . . . 12,983 6,047 24,923 19,532 19,911
Selling, administrative and general
expenses . . . . . . . . . . . . . . . . . 10,805 13,120 15,272 16,122 16,687
Operating income (loss) . . . . . . . . . . 2,178 (7,073) 9,651 3,410 3,224
Other (expense) income:
Interest expense . . . . . . . . . . . . . (463) (2,273) (2,366) (1,311) (1,703)
Interest income . . . . . . . . . . . . . 494 6 74 67 12
Miscellaneous, net . . . . . . . . . . . . 293 767 1,044 299 381
324 (1,500) (1,248) (945) (1,310)
Earnings (loss) before minority interest,
income taxes, and cumulative effect
of change in accounting principle . . . . 2,502 (8,573) 8,403 2,465 1,914
Minority interest in partnership loss . . . 1,917 5,751 4,102 3,259 1,965
Earnings (loss) before income taxes and
cumulative effect of change in
accounting principle . . . . . . . . . . . 4,419 (2,822) 12,505 5,724 3,879
Income tax expense (benefit) . . . . . . . . 1,621 (1,044) 4,642 1,676 1,132
Earnings (loss) before cumulative
effect of change in
accounting principle . . . . . . . . . . . 2,798 (1,778) 7,863 4,048 2,747
Cumulative effect of change in
accounting principle, net of
income tax benefit of $748 (A) . . . . . . - (1,517) - - -
Net earnings (loss) . . . . . . . . . . . . $ 2,798 $ (3,295) $ 7,863 $ 4,048 $2,747
Net earnings (loss) per share:
Earnings (loss) before cumulative
effect of change in accounting
principle . . . . . . . . . . . . . $ .20 $ (.12) $ .53 $ .27 $ .19
Cumulative effect of change in
accounting principle . . . . . . . $ - $ (.10) $ - $ - $ -
Net earnings (loss). . . . . . . . . . . $ .20 $ (.22) $ .53 $ .27 $ .19
Cash dividends per share. . . . . . . . . . . $ .033 $ .033 $ .034 $ .037 $ .04
</TABLE>
Note A: In fiscal 1992, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions."
<PAGE>
<TABLE>
<CAPTION>
As of
June 29, June 27, June 26, June 25, July 1,
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
Total assets . . . . . . . . . . . . . $136,470 $143,922 $141,435 $154,500 $155,604
Property, plant and equipment, net . . 92,970 93,856 82,407 87,591 79,573
Working capital . . . . . . . . . . . 14,950 22,718 31,599 24,824 32,938
Long-term debt . . . . . . . . . . . . 9,988 8,823 7,648 13,462 12,425
Long-term debt, payable to Gold Kist . 10,000 25,000 20,000 - -
Other liabilities . . . . . . . . . . - 2,664 2,473 3,720 4,509
Shareholders' equity . . . . . . . . . 81,703 77,928 85,308 88,220 88,886
</TABLE>
Information herein has been adjusted to reflect two one for ten
stock dividends paid in February 1993 and February 1994.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
General
Profitability in the broiler industry is primarily related to
consumer demand for chicken and market prices for feed grains, a
major component of production costs. The industry, like other
agricultural businesses that sell and purchase perishable commodities,
is cyclical and especially sensitive to supply and demand market
forces. Supply and demand, in turn, vary greatly with changing
weather conditions, supply and pricing of alternative products,
changes in export markets, government policy and industry production
capacity.
The Company's profitability, consistent with other broiler
companies, is substantially affected by market prices for broiler
products and feed grains. Broiler and feed grain prices historically
have fluctuated, sometimes in opposite directions. As part of its
feed ingredient purchasing strategy, the Company has attempted to limit
the effects and risk of fluctuations in feed ingredient costs
through commodity trading transactions in the agricultural commodity
futures and options markets as market conditions dictate. (See note
1(c) of Notes to Consolidated Financial Statements.) Feed grain
costs represent approximately fifty percent of total broiler
production costs. Other production costs include hatching egg
production, hatching, grow-out, transportation, feed manufacturing and
processing costs, which are positively influenced by efficient cost
control procedures and management practices.
In fiscal 1991, feed ingredient prices declined due to adequate
grain production in 1990. Market prices in 1992 for corn and soybean
meal increased as supplies came more in balance with world
demand. Exports to the Commonwealth of Independent States
contributed to this increase. During fiscal 1993, market prices
for corn declined about 5% due to the record 1992 corn harvest.
As a result of the midwestern floods in 1993, market prices for
corn and soybeans for fiscal 1994 increased 21% and 9%, respectively.
Due to increased production of U.S. feed grains expected in 1994,
feed ingredient costs declined in fiscal 1995. Feed ingredient
prices are expected to increase in fiscal 1996 as a result of
poor spring planting conditions and difficult growing conditions
during the summer of 1995.
Broiler market prices declined in fiscal 1991 and remained at
low levels throughout most of fiscal 1992 due to the economic
recession affecting the United States, the decline in poultry exports
and excess industry supply. As the United States economy improved
in 1992 and early 1993, market prices for broilers for fiscal 1993
increased approximately 5% as a result of increased consumer demand
for poultry products. In fiscal 1994, broiler market prices increased
approximately 6% as a result of the improvement in the domestic
economy and the increases in poultry exports. During fiscal 1995,
broiler market prices declined approximately 5% due primarily to the
large supply of competing meats, such as beef and pork, and the
continuation of poultry industry expansion. According to USDA
estimates, the supply of broilers is expected to increase at
a 6.6% rate in 1995 and a 6.2% rate in 1996 as compared to
the 6.5% average annual increase between 1991 and 1994.
Management is unable to predict whether such conditions will
continue in the future or to what extent cyclical pressures
will affect the Company's operations.
<PAGE>
<TABLE>
<CAPTION>
Results of Operations
Percentage Relationships to Net Sales
For Fiscal Years Ended
June 26, June 25, July 1,
1993 1994 1995
<S> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . 100.00% 100.00% 100.00%
Cost of sales . . . . . . . . . . . . . . . . . . 93.58 95.63 96.06
Gross profit . . . . . . . . . . . . . . . . . . 6.42 4.37 3.94
Selling, administrative and general expenses . . 3.93 3.61 3.30
Operating income (loss) . . . . . . . . . . . . . 2.49 .76 .64
Other (expense) income:
Interest expense . . . . . . . . . . . . . . . (.59) (.28) (.34)
Miscellaneous . . . . . . . . . . . . . . . . .26 .07 .08
Earnings before minority interest and income taxes 2.16 .55 .38
Minority interest in partnership loss . . . . . . 1.06 .73 .39
Earnings before income taxes . . . . . . . . . . 3.22 1.28 .77
Income tax expense . . . . . . . . . . . . . . . 1.20 .37 .23
Net earnings (loss) . . . . . . . . . . . . . . 2.02% .91% .54%
</TABLE>
Fiscal 1995 compared to fiscal 1994
The Company's accounting cycle resulted in 53 weeks of operations
in fiscal 1995 and 52 weeks in fiscal 1994.
Net sales. Net sales of $506.0 million increased approximately
13% from $447.1 million in fiscal 1994. The increase in
consolidated net sales resulted from a 16% increase in pounds of
broiler products sold, which was partially offset by a 3% decrease
in average selling prices. The increase in pounds processed and
marketed was primarily the result of an expansion program completed
in the prior fiscal year. Broiler market prices declined during
fiscal 1995 as a result of increased supplies of competing meats and
increased U.S. broiler production.
Consolidated net sales include the net sales of Carolina Golden
Products, a consolidated partnership, which had net sales of $136.9
million and $109.9 million, respectively, for fiscal 1995 and 1994.
Net sales of Carolina Golden Products include $102.1 million in net
sales of further-processed and fresh poultry products to Gold Kist.
The Company's perishable food distribution facility in South Florida
had net sales of $31.7 million and $25.2 million, respectively, for
fiscal 1995 and 1994.
Cost of Sales. Fiscal 1995 cost of sales increased to 96.06% of
net sales from 95.63% of net sales in fiscal 1994. The increase
in the percentage relationship was primarily the result of the
decline in average selling prices, which was partially offset by
lower feed ingredient costs and lower processing costs on a per pound
basis. Feed ingredient costs for fiscal 1995 declined about 8% as
compared to fiscal 1994. Fiscal 1995 cost of sales included $30.6
million associated with the perishable food distribution facility
in South Florida as compared to $24.2 million for 1994.
Selling, administrative and general expenses. Selling,
administrative and general expenses for fiscal 1995 were $16.7 million
or 3.30% of net sales as compared to $16.1 million or 3.61% of net
sales in fiscal 1994. The decline in the percentage relationship
reflected the impact of the increase in sales volume.
Interest and other income. Fiscal 1995 interest expense of $1.7
million increased $392,000 as compared to fiscal 1994 due to higher
interest rates and lower capitalized construction period interest
credits. The Company recorded capitalized construction period interest
credits of $93,000 during fiscal 1995 as compared to $226,000 for fiscal
1994.
Minority interest in partnership loss. Minority interest in
partnership loss of approximately $2.0 million and $3.3 million for
fiscal 1995 and 1994, respectively, represents Gold Kist's 49% pro
rata share of Carolina Golden Products' loss. (See note 1(a)
of Notes to Consolidated Financial Statements.) The decline in
partnership loss resulted from improved operating performance in
further-processing operations, which was partially offset by
the weak broiler market prices in fresh poultry operations.
Earnings before income taxes. Fiscal 1995 earnings before income
taxes of $3.9 million compares to $5.7 million for fiscal 1994.
The decline in earnings before income taxes reflects the decrease in
average selling prices, which was partially offset by lower feed
ingredient prices.
Fiscal 1994 compared to fiscal 1993
Net sales. Net sales of $447.1 million for fiscal 1994
increased $58.8 million or approximately 15% from $388.3 million in
fiscal 1993. The increase in consolidated net sales resulted from
a 12% increase in pounds of broiler products sold and a 3% increase
in average selling prices. The increase in pounds processed and
marketed was the result of an expansion program at the Douglas,
Georgia facility that increased processing capacity at that facility
by 50% to 1.3 million broilers per week. Market prices for broilers
increased as a result of increased exports and the general economic
recovery in the United States. Consolidated net sales include the
net sales of Carolina Golden Products, a consolidated partnership,
which had net sales of $109.9 million and $92.4 million,
respectively, for fiscal 1994 and 1993. Net sales of Carolina Golden
Products include $81.6 million in net sales of further-processed
and fresh poultry products to Gold Kist. The Company's perishable
food distribution facility in South Florida had net sales of $25.2
million and $23.0 million, respectively, for fiscal 1994 and 1993.
Cost of sales. Fiscal 1994 cost of sales increased to 95.63%
of net sales from 93.58% of net sales in fiscal 1993. The
increase in the percentage relationship was partially the result
of a 10% increase in feed ingredient costs. Higher market
prices for corn and soybeans increased cost of sales approximately
$17.0 million in fiscal 1994. In addition, the increase in the
percentage relationship was the result of start-up costs associated
with the new processing line at the Douglas, Georgia facility.
Fiscal 1994 cost of sales included $24.2 million associated with
the perishable food distribution facility in South Florida as
compared to $22.0 million for 1993.
Selling, administrative and general expenses. Selling,
administrative and general expenses for fiscal 1994, were $16.1
million or 3.61% of net sales as compared to $15.3 million or
3.93% of net sales in fiscal 1993. The decline in the percentage
relationship reflected the impact of the increase in sales
volumes and the decrease in incentive compensation expense
related to the decline in earnings before income taxes.
Interest and other income. Interest expense for fiscal 1994
was $1.3 million as compared to $2.4 million in fiscal 1993. The
decline was primarily the result of an $11.8 million reduction in
long-term debt payable to Gold Kist, associated with the
recapitalization of Carolina Golden Products, which was partially
offset by borrowings under a revolving credit agreement. In
addition, the Company recorded capitalized construction period
interest credits of $226,000 during fiscal 1994 as compared to $9,000
for fiscal 1993.
Minority interest in partnership loss. Minority interest in
partnership loss of $3.3 million and $4.1 million for fiscal 1994 and
1993, respectively, represents Gold Kist's 49% pro rata share of
Carolina Golden Products' loss. (See note 1(a) of Notes to Consolidated
Financial Statements.)
Earnings (loss) before income taxes and cumulative effect of
change in accounting principle. Fiscal 1994's earnings before
income taxes and cumulative effect of change in accounting principle
of $5.7 million compares to earnings before income taxes and cumulative
effect of change in accounting principle of $12.5 million for fiscal
1993. The decline in earnings reflects the increase in production
costs related to higher feed ingredient costs and increased operating
costs associated with the new processing line at the Douglas,
Georgia facility.
Liquidity and Capital Resources
The Company's liquidity is dependent upon cash flows from operations
and the ability to obtain additional financing from external sources
and Gold Kist. In July 1995, the Company extended its $20.0 million
revolving credit and term loan facility with a commercial bank. The
revolver extends until 1997, when the outstanding borrowings may be
converted to a term loan payable over five years. At July 1, 1995,
the Company had borrowings under the agreement totaling $7.0
million. In addition, the Company has a $15.0 million short-term
credit facility with Gold Kist of which $9.2 million was outstanding
at July 1, 1995. At July 1, 1995, the Company had unused
available loan commitments to borrow an additional $18.8 million under
these facilities.
At July 1, 1995, working capital was $32.9 million, the current
ratio was 1.83 to 1 and shareholders' equity was $88.9 million.
This compared to working capital of $24.8 million, a current
ratio of 1.62 to 1 and shareholders' equity of $88.2 million at
June 25, 1994. The Company's ratio of long-term debt to total
capitalization decreased to 12.3% at July 1, 1995 as compared to
13.2% at June 25, 1994. The improvement in the liquidity measures,
working capital and current ratio, was due to net cash provided by
operating activities and a reduction in expenditures for property,
plant and equipment.
Covenants under the terms of industrial development bonds and the
revolving credit and term loan agreement (see note 3 of Notes to
Consolidated Financial Statements) require the Company to maintain
certain financial ratios and minimum levels of working capital
and tangible net worth. Additional provisions impose
restrictions on future borrowings and investments. Under the
industrial development bond covenants, the Company must maintain
net earnings, plus depreciation expense, equal to or greater than
170% of the total of the current portion of long-term debt. The
revolving credit and term loan agreement covenants require the
Company to maintain a 1.5 to 1 ratio of earnings before interest
and taxes to interest expense on a rolling eight quarter basis.
Effective July 23, 1993, the Company and Gold Kist contributed
$24.0 million of partnership equity to Carolina Golden Products
Company in the same proportion as their respective ownership
percentages. The Company's equity contribution of $12.2 million
represented conversion of existing short-term financing provided
to Carolina Golden Products Company. Gold Kist's equity
contribution of $11.8 million to the partnership was used to repay
long-term debt owed to Gold Kist. In January 1995, the
Company and Gold Kist contributed $6.0 million of partnership equity
in the same proportion as their respective ownership percentages.
During fiscal 1993, 1994 and 1995, the Company's cash used in
investment activities principally involved capital expenditures to
construct, expand and improve broiler production, processing and
distribution facilities. The sources of cash for these
expenditures were cash flows generated from operating activities,
long-term borrowings and additional partnership equity. During fiscal
1995, net cash provided by operations was used to fund property, plant
and equipment expenditures.
Fiscal 1993 capital expenditures of $4.4 million were
primarily for improvements to an existing hatchery and processing
facilities. Fiscal 1994 capital expenditures of $21.7 million
included a major expansion of the processing plant at the
Douglas, Georgia Complex and an additional fresh processing line
at the South Carolina facility. The completion of the two
projects increased the Company's processing capacity to 4.3 million
broilers per week. During fiscal 1995, the Company processed an average
of 3.9 million broilers per week. Fiscal 1995 expenditures of $9.0
million included the additional further-processing capabilities at the
Sumter complex and general improvements to existing production
facilities. The Company anticipates fiscal 1996 capital
expenditures of approximately $14.0 million for replacements and
upgrading to existing operations and additional further-processing
capabilities.
Approximately 20% of the Company's net sales in fiscal 1995 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 1996.
Effects of Inflation
The major factors affecting the Company's net sales and cost of
sales are changes in market prices for broilers and feed ingredients such
as grains and soybeans. The prices of these commodities are based
on world market conditions and are highly sensitive to supply and
demand forces, as well as political and economic events. The
fluctuations in price of these commodities do not necessarily
correlate with the general inflation rate. Inflation during the
previous three years has not materially affected materials, energy
or labor costs.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
INDEX
FINANCIAL STATEMENTS:
Independent Auditors' Report . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of June 25, 1994
and July 1, 1995 . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations for the years
ended June 26, 1993, June 25, 1994 and July 1, 1995 . . .
Consolidated Statements of Shareholders' Equity for
the years ended June 26, 1993, June 25, 1994 and
July 1, 1995 . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the years
ended June 26, 1993, June 25, 1994 and July 1, 1995 . . .
Notes to Consolidated Financial Statements . . . . . . . .
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Golden Poultry Company, Inc.:
We have audited the consolidated financial statements of Golden
Poultry Company, Inc. and subsidiary as listed in the accompanying
index. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements based
on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. 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 consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Golden Poultry Company, Inc. and subsidiary as of June 25,
1994 and July 1, 1995, and the results of their operations and their
cash flows for each of the years in the three-year period ended July
1, 1995, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Atlanta, Georgia
August 4, 1995
<PAGE>
<TABLE>
<CAPTION>
GOLDEN POULTRY COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
June 25, 1994 July 1, 1995
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . $ 3,912 2,720
Trade accounts receivable less allowance for doubtful
accounts of $291 in 1994 and $264 in 1995 . . . . 17,913 21,632
Inventories (note 1(c)) . . . . . . . . . . . . . . 41,691 46,781
Other. . . . . . . . . . . . . . . . . . . . . . . 1,426 1,635
Total current assets . . . . . . . . . . . . . . . 64,942 72,768
Property, plant and equipment, net (notes 1(d) and 3) 87,591 79,573
Other assets . . . . . . . . . . . . . . . . . . . . 1,967 3,263
$154,500 155,604
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt,
payable to Gold Kist (notes 3 and 7) . . . . . . . $ 8,240 -
Current portion of long-term debt (note 3) . . . . 1,186 1,036
Short-term borrowings, payable to Gold Kist
(notes 3 and 7) . . . . . . . . . . . . . . . . . 2,573 9,221
Accounts payable . . . . . . . . . . . . . . . . . 18,008 19,325
Due to Gold Kist (note 7) . . . . . . . . . . . . . 5,874 5,075
Income taxes payable . . . . . . . . . . . . . . . 242 485
Accrued compensation and related expenses . . . . . 3,995 4,688
Total current liabilities . . . . . . . . . . . . 40,118 39,830
Long-term debt, excluding current portion (note 3) . 13,462 12,425
Other liabilities (note 6) . . . . . . . . . . . . . 3,720 4,509
Total liabilities . . . . . . . . . . . . . . . . 57,300 56,764
Minority interest in consolidated partnership . . . . 8,980 9,954
Shareholders' equity (note 4):
Preferred stock, $1.00 par value. Authorized 1,000
shares; no shares issued . . . . . . . . . . . . . - -
Common stock, no stated par value. Authorized 20,000
shares; issued 14,862 shares at June 25, 1994
and 14,866 shares at July 1, 1995 . . . . . . . . 65,335 65,363
Retained earnings . . . . . . . . . . . . . . . . . 23,493 25,653
88,828 91,016
Less treasury stock, at cost, 101 shares at
June 25, 1994 and 348 shares at July 1, 1995 . . . 608 2,130
Total shareholders' equity . . . . . . . . . . . . 88,220 88,886
Contingencies (notes 7 and 9)
$154,500 155,604
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
GOLDEN POULTRY COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
<CAPTION>
Years Ended
June 26, 1993 June 25, 1994 July 1, 1995
<S> <C> <C> <C>
Net sales (includes $77,482, $95,787 and
$124,275 to Gold Kist)-(notes 7 and 8) . . . . . . . $388,330 447,139 505,975
Cost of sales (includes purchases of $27,380,
$37,576 and $44,522 from Gold Kist)-
(note 7) . . . . . . . . . . . . . . . . . . . . . . 363,407 427,607 486,064
Gross profit . . . . . . . . . . . . . . . . . . 24,923 19,532 19,911
Selling, administrative and general expenses (includes
administrative expenses of $5,423, $6,041 and
$6,042 paid to Gold Kist)-(notes 5, 6 and 7) . . . . 15,272 16,122 16,687
Operating income . . . . . . . . . . . . . . . . 9,651 3,410 3,224
Other (expense) income:
Interest expense (includes interest expense of
$1,917, $988 and $1,073 paid to Gold Kist)-
(notes 1(d), 3 and 7) . . . . . . . . . . . . . . (2,366) (1,311) (1,703)
Interest income . . . . . . . . . . . . . . . . . . 74 67 12
Miscellaneous, net . . . . . . . . . . . . . . . . 1,044 299 381
(1,248) (945) (1,310)
Earnings before minority interest and
income taxes . . . . . . . . . . . . . . . . 8,403 2,465 1,914
Minority interest in partnership loss . . . . . . . . . 4,102 3,259 1,965
Earnings before income taxes . . . . . . . . . . 12,505 5,724 3,879
Income tax expense-(note 2) . . . . . . . . . . . . . . 4,642 1,676 1,132
Net earnings . . . . . . . . . . . . . . . . . . $ 7,863 4,048 2,747
Net earnings per share (notes 1(f) and 4) . . . . . . . $ .53 .27 .19
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
GOLDEN POULTRY COMPANY, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended June 26, 1993, June 25, 1994
and July 1, 1995
(Amounts in thousands)
<CAPTION>
Total
Common stock Retained Treasury shareholders'
Shares Amount earnings stock equity
<S> <C> <C> <C> <C> <C>
Balance at June 27, 1992 . . . . 14,856 $65,287 12,641 - 77,928
Net earnings . . . . . . . . . . - - 7,863 - 7,863
Shares awarded . . . . . . . . . 3 21 - - 21
Cash dividends at $.034 per share - - (504) - (504)
Balance at June 26, 1993 . . . . 14,859 65,308 20,000 - 85,308
Net earnings . . . . . . . . . . - - 4,048 - 4,048
Purchase of treasury stock . . . - - - (608) (608)
Shares awarded . . . . . . . . . 3 27 - - 27
Cash dividends at $.037 per share - - (555) - (555)
Balance at June 25, 1994 . . . . 14,862 65,335 23,493 (608) 88,220
Net earnings . . . . . . . . . . - - 2,747 - 2,747
Purchase of treasury stock . . . - - - (1,522) (1,522)
Shares awarded . . . . . . . . . 4 28 - - 28
Cash dividends at $.04 per share - - (587) - (587)
Balance at July 1, 1995 . . . . . 14,866 $ 65,363 25,653 (2,130) 88,886
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
GOLDEN POULTRY COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<CAPTION>
Years Ended
June 26, 1993 June 25, 1994 July 1, 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings . . . . . . . . . . . . . . . . . $ 7,863 4,048 2,747
Non-cash items included in net earnings: . . .
Depreciation . . . . . . . . . . . . . . . . . 15,657 16,411 16,905
Minority interest in partnership loss . . . . (4,102) (3,259) (1,965)
Deferred income taxes . . . . . . . . . . . . 218 (1,462) (1,437)
Other . . . . . . . . . . . . . . . . . . . . 236 767 738
Changes in operating assets and liabilities:
Trade accounts receivable . . . . . . . . . . (1,638) (2,589) (3,719)
Inventories . . . . . . . . . . . . . . . . . (2,981) (7,536) (5,090)
Accounts payable and accrued compensation and
related expenses . . . . . . . . . . . . . . 2,243 4,401 2,010
Due to Gold Kist . . . . . . . . . . . . . . 1,460 1,727 (799)
Income taxes . . . . . . . . . . . . . . . . 547 (232) 243
Other . . . . . . . . . . . . . . . . . . . . 234 110 (13)
Net cash provided by operating activities . 19,737 12,386 9,620
Cash flows from investing activities:
Acquisitions of property, plant and equipment . (4,369) (21,661) (9,011)
Other . . . . . . . . . . . . . . . . . . . . . 37 117 118
Net cash used in investing activities . . . (4,332) (21,544) (8,893)
Cash flows from financing activities:
Capital contributed to partnership by Gold Kist - 11,760 2,940
Repayments of long-term debt, payable to Gold Kist (5,000) (11,760) (8,240)
Short-term borrowings, net, payable to Gold Kist 1,591 879 6,648
Proceeds from long-term debt . . . . . . . . . - 7,000 -
Short-term borrowings (repayments), net . . . . (5,175) - -
Principal payments of long-term debt . . . . . (1,166) (1,175) (1,186)
Dividends paid . . . . . . . . . . . . . . . . (504) (555) (587)
Purchase of treasury shares . . . . . . . . . . - (608) (1,522)
Other . . . . . . . . . . . . . . . . . . . . . 21 27 28
Net cash provided by (used in) financing
activities . . . . . . . . . . . . . . . . (10,233) 5,568 (1,919)
Net change in cash and cash equivalents . . . . . 5,172 (3,590) (1,192)
Cash and cash equivalents at beginning of year . 2,330 7,502 3,912
Cash and cash equivalents at end of year . . . . $ 7,502 3,912 2,720
. . . . . . . . . . . . . . . . . . . . .
Supplemental disclosure of cash flow information:
Cash paid during the years for:
Interest (net of amounts capitalized) . . . . $ 2,724 1,491 1,657
Income taxes . . . . . . . . . . . . . . . . . $ 3,763 3,371 2,326
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 26, 1993, June 25, 1994 and July 1, 1995
(1) Summary of Significant Accounting Policies
Golden Poultry Company, Inc. is a fully integrated broiler
producer which is majority owned by Gold Kist Inc. (Gold Kist).
The Company includes Golden Poultry Company, Inc., a consolidated
partnership and a subsidiary. The accounting reporting policies
of the Company conform to generally accepted accounting principles
and to general practice in the poultry industry. The following is
a summary of the significant accounting policies.
(a) Basis of Presentation
The accompanying consolidated financial statements reflect
the accounts of Golden Poultry Company, Inc. and its subsidiary,
GP Finance Corporation, and Carolina Golden Products
Company, a general partnership in which the Company holds a
51% interest. The remaining 49% ownership interest in Carolina
Golden Products is held by Gold Kist. All significant
intercompany balances and transactions have been eliminated
in consolidation. The Company recognizes revenues from
sales when products are shipped to the customers.
Effective July 23, 1993, the Company and Gold Kist contributed
$24.0 million of partnership equity to Carolina Golden Products
Company in the same proportion as their respective ownership
percentages. The Company's equity contribution of $12.2 million
represented conversion of existing short-term financing provided
to Carolina Golden Products Company. Gold Kist's equity
contribution of $11.8 million to the partnership was used
to repay long-term debt owed to Gold Kist.
Effective January 1, 1995, the Company and Gold Kist contributed
$6.0 million of partnership equity to Carolina Golden Products
in the same proportion as their respective ownership percentages.
(b) Cash and Cash Equivalents
The Company'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, the Company considers all highly liquid debt instruments
purchased with original maturities of three months or less to be
cash equivalents.
(c) Inventories
Live poultry consists of broilers and breeders. Broilers are
stated at the lower of average cost or market and breeders
are stated at average cost less accumulated amortization.
Inventories of feed, eggs and supplies are stated at the lower
of cost (first-in, first-out or average) or market. Marketable
products are stated at net realizable value. The Company
hedges varying amounts of its poultry feed ingredient
purchases to minimize the risk of adverse price
fluctuations. 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
product cost.
<PAGE>
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
Inventories consist of the following:
<TABLE>
<CAPTION>
1994 1995
(In thousands)
<S> <C> <C>
Live poultry . . . . . . . . . $26,593 26,234
Feed, eggs and supplies . . . . 9,015 11,512
Marketable products . . . . . . 6,083 9,035
$41,691 46,781
</TABLE>
(d) Property, Plant and Equipment
Property, plant and equipment is stated at cost.
Depreciation of plant and equipment is calculated using
the straight-line method over the estimated useful lives of
the respective assets.
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
1994 1995
(In thousands)
<S> <C> <C>
Land . . . . . . . . . . . . . $ 4,457 4,543
Land improvements . . . . . . . 6,831 6,956
Buildings . . . . . . . . . . . 50,743 52,201
Machinery and equipment . . . . 96,422 100,249
Construction in progress . . . 693 3,032
159,146 166,981
Less accumulated depreciation . 71,555 87,408
$ 87,591 79,573
</TABLE>
The Company capitalized interest costs of $9,000,
$226,000 and $93,000 as a component of the cost of major
asset construction for the years 1993, 1994 and 1995,
respectively.
(e) Income Taxes
Effective June 27, 1993, the Company adopted the
provisions of Statement of Financial Accounting Standards
No. 109 (SFAS 109), "Accounting for Income Taxes" and
reported the cumulative effect of that change in the method
of accounting for income taxes in the 1994 consolidated
statement of operations, as a component of income tax
expense since the amount was not significant. SFAS 109
requires an asset and liability approach in accounting
for income taxes and, therefore, required a change from
the deferred method the Company previously used. 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. Under
SFAS 109, 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.
<PAGE>
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
Pursuant to the deferred method under Accounting Principles
Board Opinion 11, which was applied in fiscal 1993 and prior
years, deferred income taxes that were reported in different
years for financial reporting purposes and income tax purposes
were recognized for income and expense items using the tax rate
applicable for the year of the calculation. Under the deferred
method, deferred taxes were not adjusted for subsequent changes
in tax rates.
(f) Earnings Per Share
Net earnings per share are based on the weighted average
number of shares outstanding for each year, which was 14,858,000
for 1993 and 1994 and 14,690,000 for 1995. The dilutive effect
of stock options is not significant.
(g) Fiscal Year
The Company employs a 52/53 week fiscal year. The
consolidated financial statements for 1993 and 1994 reflect 52
week years and 1995 reflects a 53 week year. Fiscal 1996 will be
a 52 week year.
(h) Fair Value of Financial Instruments
The Company's financial instruments include primarily cash
and cash equivalents, trade receivables and payables and debt.
Because of the short maturity of cash equivalents, trade
receivables and payables and certain short-term debt which
matures in less than one year, the carrying value
approximates fair value. The Company's financial
instruments are considered to have an estimated fair
value which approximates carrying value at July 1, 1995.
(2) Income Taxes
As discussed in Note 1(e), the Company adopted SFAS 109 as of
June 27, 1993. The cumulative effect of this change in accounting
for income taxes, which resulted in a tax benefit of $166,000, was
determined as of June 27, 1993 and has been reflected in the 1994
consolidated statement of operations, as a component of income tax
expense since the amount was not significant. Prior years'
financial statements have not been restated to apply the
provisions of SFAS 109.
<PAGE>
The provision for income tax expense from operations consists
of the following:
<TABLE>
<CAPTION>
1993 1994 1995
(In thousands)
<S> <C> <C> <C>
Current:
Federal . . . . . . . . . . . . . . $ 3,692 2,810 2,272
State . . . . . . . . . . . . . . . 732 329 297
4,424 3,139 2,569
Deferred:
Federal . . . . . . . . . . . . . . 218 (1,184) (1,301)
State . . . . . . . . . . . . . . . - (113) (136)
218 (1,297) (1,437)
Total $ 4,642 1,842 1,132
</TABLE>
<PAGE>
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
The Company's combined federal and state effective tax
rates from operations for 1993, 1994 and 1995 were 37.1%, 32.2% and
29.2%, respectively. A reconciliation of income tax expense from
operations for the applicable year follows:
<TABLE>
<CAPTION>
1993 1994 1995
(In thousands)
<S> <C> <C> <C>
Income tax expense at statutory rate . . . . . . . . $ 4,252 1,946 1,319
State income tax expense, net of Federal income tax 521 217 196
Targeted jobs credits . . . . . . . . . . . . . . . (111) (299) (315)
Other . . . . . . . . . . . . . . . . . . . . . . . (20) (22) (68)
$ 4,642 1,842 1,132
</TABLE>
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets at July 1, 1995 are
as follows:
<TABLE>
<CAPTION>
1994 1995
(In thousands)
<S> <C> <C>
Deferred tax assets:
Accrued employee compensation expense . . . . . . . . . . . . $2,601 2,784
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . 503 1,525
State tax operating loss carryforwards . . . . . . . . . . . . 547 535
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 366
Gross deferred tax assets . . . . . . . . . . . . . . . . . 3,785 5,210
Valuation allowance . . . . . . . . . . . . . . . . . . . . . (547) (535)
Net deferred tax assets . . . . . . . . . . . . . . . . . . $3,238 4,675
</TABLE>
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.
For years ending before June 30, 1993, deferred income taxes
resulted from differences in the timing of reporting income and
expenses for financial statement and income tax reporting purposes.
The sources of these differences and the tax effect of each for 1993
are as follows:
<PAGE>
<TABLE>
<CAPTION>
1993
(In thousands)
<S> <C>
Alternative minimum tax . . . . . . . . . . . . . . $ 1,195
State deferred tax benefit . . . . . . . . . . . . . -
Depreciation expense . . . . . . . . . . . . . . . . (574)
Employee compensation expense . . . . . . . . . . . (244)
Other, net . . . . . . . . . . . . . . . . . . . . . (159)
$ 218
</TABLE>
<PAGE>
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(3) Short-Term Borrowings and Long-Term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1994 1995
(In thousands)
<S> <C> <C>
Revolving credit agreement with a commercial bank (weighted average
rate of 5.0% at June 25, 1994 and 6.7% at July 1, 1995) . . . . . $ 7,000 7,000
Colbert County, Alabama tax-exempt industrial development bonds with
floating interest rates dated February 1, 1990 payable in
annual installments of $450 with final installment of $2,050
due on February 1, 2002; secured by Colbert County feed mill . . . 5,200 4,750
Douglas-Coffee County, Georgia tax-exempt industrial development
bonds with floating interest rates dated December 31, 1985 payable
in quarterly installments of $153 with final installment of $145
due on January 1, 1996; secured by Coffee County feed mill . . . . 1,063 451
Promissory term note, to an individual, dated May 4, 1987, interest
at 9% payable in monthly installments of $20 for fifteen years
with final payment due on June 1, 2002; secured by distribution
facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,385 1,260
Total long-term debt . . . . . . . . . . . . . . . . . . . . 14,648 13,461
Less current portion . . . . . . . . . . . . . . . . . . . . . . . . 1,186 1,036
Long-term debt, excluding current portion . . . . . . . . . . $13,462 12,425
Promissory term note, to Gold Kist, dated December 6, 1991, interest
at 6.92% payable semi-annual on June 6 and December 6,
principal due on December 6, 1994 . . . . . . . . . . . . . . . . $ 5,000 -
Promissory term note, to Gold Kist, dated December 27, 1991, interest
at 6.50% payable monthly, principal due on December 27, 1994 . . . 3,240 -
Total long-term debt, payable to Gold Kist . . . . . . . . . 8,240 -
Less current portion . . . . . . . . . . . . . . . . . . . . . . . . 8,240 -
Long-term debt, payable to Gold Kist . . . . . . . . . . . . $ - -
</TABLE>
The effective interest rates for 1994 and 1995 were 2.6%
and 3.7%, respectively, on the Colbert County, Alabama industrial
development bonds.
A concurrent exchange agreement of the Company's interest obligation
on the Douglas-Coffee County, Georgia industrial development bonds
for another party's obligations, with respect to interest payments on
an equivalent amount of fixed-rate indebtedness, reduces the Company's
exposure to fluctuations in the floating rate. The effective interest
rates for 1994 and 1995 were 7.0% and 7.4%, respectively.
During July 1995, the Company extended its $20 million revolving
credit and term loan facility with a commercial bank. The revolver
extends to 1997, when the outstanding borrowings may be converted
to a term loan payable in quarterly installments over five years.
An annual commitment fee of .375% is payable quarterly on the unused
portion of the revolver. The revolving credit facility bears interest
at prime or below. The unused available credit under this facility
was $13.0 million at July 1, 1995. In addition, the Company has a
$15 million revolving credit facility with Gold Kist of which $5.8
million was unused at July 1, 1995. The revolving credit facility
with Gold Kist bears interest at prime.
<PAGE>
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
Under provisions of the industrial development bonds and the
revolving credit and term loan facility, the Company is required
to maintain certain financial ratios and a minimum level of working
capital. The Company is also required to maintain specified
amounts of tangible net worth. Other provisions impose
restrictions on future borrowings.
Annual required principal repayments of existing long-term
debt (assumes revolving credit agreement will be converted to a
term loan) for the five fiscal years subsequent to July 1, 1995
are as follows (in thousands):
<TABLE>
<CAPTION>
Years ending:
<S> <C>
June 29, 1996 . . . . . . . . $1,036
June 28, 1997 . . . . . . . . 598
June 27, 1998 . . . . . . . . 2,012
June 26, 1999 . . . . . . . . 2,027
July 1, 2000 . . . . . . . . . 2,044
</TABLE>
(4) Shareholders' Equity
On January 27, 1994, the Board of Directors approved a 10% stock
dividend, which was issued on February 24, 1994 to shareholders of
record on February 10, 1994. A 10% stock dividend was also issued in
1993. All share and per share data and shareholders' equity
account balances in the accompanying consolidated financial
statements have been retroactively adjusted to reflect the additional
shares outstanding resulting from the stock dividends.
(5) Employee Benefits
The Company participates in two noncontributory multiemployer
defined benefit pension plans of Gold Kist which cover substantially
all employees meeting the service requirements. The Company also
participates in the voluntary Profit Sharing and Investment Plan
of Gold Kist. Total pension expense charged to the Company's
operations was $434,000 for 1993, $606,000 for 1994 and $713,000 for
1995.
The Company has a long-term incentive plan which allows the
Board of Directors to grant incentive stock options and award
common stock to employees, officers and certain directors. Under
the terms of the plan, 756,250 shares of the Company's common stock
may be issued for options granted and stock awards. At June 25, 1994
and July 1, 1995, incentive stock options outstanding were 245,500
shares and 265,002 shares, respectively, with exercise prices
per share ranging from $4.86 to $8.22. At July 1, 1995,
incentive stock options exercisable were 171,450 shares. These
options are exercisable up to ten years after the date of grant.
At July 1, 1995, 757 common shares had been exercised under this plan.
<PAGE>
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(6) Postretirement Benefits Other Than Pensions
The Company 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 were
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
cost of postretirement benefits other than pensions has been
recognized on an accrual basis as employees perform services
to earn the benefits. For 1993, postretirement health and
death benefit costs were $489,000, which included service costs
of $292,000 and interest cost of $197,000. For 1994,
postretirement health and death benefit costs were $709,000,
which included service costs of $470,000 and interest cost
of $239,000. For 1995, postretirement health and death benefit
costs were $813,000, which included service costs of $514,000 and
interest cost of $299,000.
The Company's postretirement benefit plans are not funded. The
status of the plans at June 25, 1994 and July 1, 1995 was as follows:
<TABLE>
<CAPTION>
June 25, 1994 July 1, 1995
Actuarial present value of accumulated postretirement (In thousands)
benefit obligation:
<S> <C> <C>
Retirees . . . . . . . . . . . . . . . . . . . . . . . . . $ 602 890
Fully eligible active plan participants . . . . . . . . . 566 646
Other active plan participants . . . . . . . . . . . . . . 2,270 2,825
$3,438 4,361
</TABLE>
The health care cost trend rate used to determine the
accumulated postretirement benefit obligation at June 25, 1994 was
11%, declining ratably to 5.5% by the year 2003 and remaining at
that level thereafter. The health care cost trend rate used to
determine the accumulated postretirement benefit obligation at July
1, 1995 was 9%, declining ratably to 5% by the year 2003 and
remaining at that level thereafter. The discount rates used to
determine the accumulated postretirement benefit obligation were
8.25% and 8.00% at June 25, 1994 and July 1, 1995, respectively.
A one-percent increase in the health care cost trend rate for
each year would increase the accumulated postretirement
benefit obligation at July 1, 1995 by approximately 18% and net
postretirement health care cost by 14%.
<PAGE>
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(7) Related Party Transactions
A summary of the transactions with Gold Kist follows:
<TABLE>
<CAPTION>
Years Ended
June 26, June 25, July 1,
1993 1994 1995
(In thousands)
<S> <C> <C> <C>
Due to Gold Kist and long-term debt and short-term
borrowings, payable to Gold Kist, beginning
balance . . . . . . . . . . . . . . . . . . . $ 27,790 25,841 16,687
Transactions included in the consolidated
statements of operations:
Sales . . . . . . . . . . . . . . . . . . . . (77,482) (95,787) (124,275)
Purchases at market prices . . . . . . . . . . 22,797 32,318 38,898
Purchases at cost . . . . . . . . . . . . . . 4,583 5,258 5,624
Administrative expenses . . . . . . . . . . . 5,423 6,041 6,042
Interest expense . . . . . . . . . . . . . . . 1,917 988 1,073
Miscellaneous expense, net . . . . . . . . . . 46 35 42
Capital contributed to partnership . . . . . . . - (11,760) (2,940)
Dividends to Gold Kist . . . . . . . . . . . . . 359 394 424
Net cash transferred from Gold Kist . . . . . . 40,408 53,359 72,721
Due to Gold Kist and current portion of long-term
debt and short-term borrowings, payable to Gold
Kist, ending balance . . . . . . . . . . . . . . $ 25,841 16,687 14,296
</TABLE>
Sales and purchases of dressed and further processed poultry
products with Gold Kist approximate current market prices. Purchases
of feed ingredients, finished feed and live broilers from Gold Kist
are at cost. Administrative expenses represent management services,
including incentive compensation, paid to Gold Kist by the Company.
Gold Kist provides, for the Company, certain administrative,
staff, and operating functions pursuant to a management services
agreement which is renewable annually. The Company pays to Gold Kist
an amount representing Gold Kist's cost in providing these functions,
plus 5.8% of the Company's earnings before income taxes if the rate of
return on assets employed exceeds 10%, or 3.5% of earnings before
income taxes if the rate of return on assets employed is positive,
but is less than 10%. The Company paid $4.7 million, $5.8
million and $5.9 million for 1993, 1994 and 1995, respectively,
representing Gold Kist's cost, exclusive of the incentive amounts
based on earnings, to provide these functions. The incentive
compensation amounts paid to Gold Kist for 1993, 1994 and 1995 were
$725,000, $200,000 and $136,000, respectively.
Gold Kist provides a revolving credit facility with advances
available up to $15 million. At July 1, 1995, there was $9.2 million
outstanding under the revolving credit facility bearing interest at
prime (see note 3).
As of July 1, 1995, financing for approximately 460 broiler
and breeder houses operated by the Company's contract growers was
provided by AgraTrade Financing, Inc., a wholly-owned subsidiary of
Gold Kist. The Company has agreed to indemnify AgraTrade Financing
for an amount equal to fifty percent of credit losses related to loans
and/or leases made to the Company's contract growers. At July 1, 1995,
AgraTrade Financing had lease and loan agreements with contract
growers for approximately $31.9 million. As of July 1, 1995, there
have been no credit losses related to the loans and leases guaranteed
under this agreement, which has been in effect since October 1988.
<PAGE>
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(8) Supplemental Financial Information
In each of the years ended 1993, 1994 and 1995, 21%, 22%
and 20%, respectively, of the Company's net sales were to one customer,
a major grocery store chain located in Georgia and Florida. At July 1,
1995, receivables from this customer represented 22% of the Company's
trade accounts receivable.
(9) Contingencies
In January 1993, two Alabama member patrons of Gold Kist filed
a lawsuit in the nature of a derivative action against the Company
and Gold Kist and certain directors, officers and employees of
the companies. The lawsuit alleges that the named officers,
directors and employees violated their fiduciary duties by
creating Golden Poultry Company, Inc. 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, as well as unspecified actual damages.
In March 1994, the court certified the litigation as a class
action. The Company has advanced the payment of litigation
expenses incurred by the Company directors who are defendants in
the litigation. The Company intends to defend the litigation
vigorously.
(10) Quarterly Financial Data (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal 1995 Quarters
First Second Third Fourth
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . $127,243 117,859 119,931 140,942
Gross profit . . . . . . . . . . . . . . 4,962 3,900 5,181 5,868
Net earnings (loss) . . . . . . . . . . . 834 (28) 653 1,288
Net earnings (loss) per share . . . . . . .06 .00 .04 .09
</TABLE>
<TABLE>
<CAPTION>
Fiscal 1994 Quarters
First Second Third Fourth
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . $105,804 104,218 113,705 123,412
Gross profit . . . . . . . . . . . . . . . . . 6,843 5,097 753 6,839
Net earnings (loss) . . . . . . . . . . . . . . 2,301 1,027 (1,251) 1,971
Net earnings (loss) per share . . . . . . . . . .15 .07 (.08) .13
</TABLE>
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
This item is not applicable.
PART III
Item 10. Directors and Executive Officers of the
Registrant.
Information relating to the Company's Directors is set forth
under the heading "Election of Directors" contained in the
Proxy Statement for the Company's Annual Meeting of
Shareholders to be held on October 25, 1995, and is
incorporated herein by reference. Information relating to the
Executive Officers of the Company is contained in Part I
hereof.
Item 11. Executive Compensation.
The information set forth under the heading "Executive
Compensation" in the Company's Proxy Statement for the Annual
Meeting of Shareholders of the Company to be held on October
25, 1995, is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners
and Management.
The information set forth under the heading "Ownership of
Securities" in the Company's Proxy Statement for the Annual
Meeting of Shareholders to be held on October 25, 1995, is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
The information set forth under the heading "Certain
Relationships and Related Transactions" in the Company's Proxy
Statement for the Annual Meeting of Shareholders to be held
October 25, 1995, is incorporated herein by reference.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.
(a) The following documents are filed as a part of this
report:
(1) Consolidated Financial Statements (included
herein at pages 15 - 29):
Independent Auditors' Report
Consolidated Balance Sheets--June 25, 1994 and
July 1, 1995
Consolidated Statements of Operations--Years
Ended June 26, 1993, June 25, 1994 and July 1,
1995
Consolidated Statements of Shareholders' Equity--
Years Ended June 26, 1993, June 25, 1994 and July
1, 1995
Consolidated Statements of Cash Flows--Years
Ended June 26, 1993, June 25, 1994 and July 1,
1995
Notes to Consolidated Financial Statements
All other schedules are omitted as the required information
is inapplicable or the information is presented in the
consolidated financial statements or related notes.
<PAGE>
(2) 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>
Document with
Which Exhibit
Designation Was Previously Designation
of Exhibit Description of Filed with of such Exhibit
in this Report Exhibit Commission in that Document
<S> <C> <C> <C>
2 (a) Articles of Merger of Caro- Registration filed Exhibit 2(a)
lina Golden Products, Inc. on Form S-1 (Regis-
into the Company effective tration No. 33-7756)
June 30, 1986
2 (b) Agreement executed as of Registration filed Exhibit 2(b)
April l, l985, for sale of on Form S-1 (Regis-
Gold Kist Processed Meats tration No. 33-7756)
Division to the Company
2 (c) Amendment to Agreement for Registration filed Exhibit 2(c)
sale of Gold Kist Process- on Form S-1 (Regis-
ed Meats Division to the tration No. 33-7756)
Company dated as of April
16, 1985
2 (d) Agreement dated April 1, Report on Form 8-K Exhibit 2(d)
1987, for the sale of the dated May 18, 1987
former Don Lowe Foods, Inc.,
Pompano Beach, Florida,
perishable food warehouse
distribution center to the
Company
3 (a) (1) Articles of Incorporation Registration filed Exhibit 3(a)(1)
of the Company, dated on Form S-1 (Regis-
August 10, 1982 tration No. 33-7756)
3 (a) (2) Amendment to Articles of Registration filed Exhibit 3(a)(2)
Incorporation of the Com- on Form S-1 (Regis-
pany, dated as of July 3l, tration No. 33-7756)
1984
3 (a) (3) Amendment to Articles of Report filed on Exhibit 3(a)(3)
Incorporation of the Com- Form 10-Q dated
pany, dated as of August February 9, 1988
1, 1986
3 (a) (4) Amendment to Articles of Report filed on Exhibit 3(a)(4)
Incorporation of the Form 10-Q dated
Company, dated as of February 9, 1988
November 18, 1987
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Document with
Which Exhibit
Designation Was Previously Designation
of Exhibit Description of Filed with of such Exhibit
in this Report Exhibit Commission in that Document
<S> <C> <C> <C>
3 (a) (5) Restated and Amended Report filed on Exhibit 3(a)(5)
Articles of Incorpora- Form 10-Q dated
tion of the Company February 12, 1990
3 (b) By-Laws of the Company, as Report filed on Exhibit 3(b)
amended Form 10-Q dated
February 8, 1993
4 (a) Specimen of Common Stock Registration filed Exhibit 4(a)
Certificate on Form S-1 (Regis-
tration No. 33-7756)
4 (b) (1) Trust Indenture executed as Registration filed Exhibit 4(b)(1)
of December 1, 1985, between on Form S-1 (Regis-
the Douglas-Coffee County, tration No. 33-7756)
Georgia, Industrial Authority
and the Citizens and Southern
National Bank, Atlanta, Georgia
4 (b) (2) Supplemental Trust Indenture Registration filed Exhibit 4(b)(2)
executed as of February 1, on Form S-1 (Regis-
1986, between the Douglas- tration No. 33-7756)
Coffee County, Georgia, Ind-
ustrial Authority and the
Citizens and Southern
National Bank, Atlanta,
Georgia
4 (c) Trust Indenture executed Report filed on Exhibit 4(c)
as of February 1, 1990, Form 10-Q dated
between the Industrial May 14, 1990
Development Board of
Colbert County, Alabama,
and Trust Company Bank,
Atlanta, Georgia
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Document with
Which Exhibit
Designation Was Previously Designation
of Exhibit Description of Filed with of such Exhibit
in this Report Exhibit Commission in that Document
<S> <C> <C> <C>
4 (d) $15 million revolving credit Report filed on Exhibit 4(h)
facility with GK Finance Form 10-K, dated
Corporation, dated January 28, September 21, 1992
1991
4 (e) $20 million Revolving Credit Report filed on Exhibit 4(h)
and Term Loan agreement Form 10-K, dated
with Trust Company September 21, 1993
Bank, dated May 25, 1993
4 (f) Amendment dated as of Report filed on
May 25, 1994, to Revolving Form 10-K, dated
Credit and Term Loan September 15, 1994
Agreement with Trust Company
Bank
4 (g) Amendment dated as of
May 25, 1995, to Revolving
Credit and Term Loan
Agreement with Trust Company
Bank
10 (a) (1) Form of Deferred Compensation Registration filed Exhibit10(a)(1)
Agreement between Gold Kist on Form S-1 (Regis-
and certain executive officers tration No. 33-7756)
of Gold Kist*
10 (a) (2) Form of Supplemental Exec- Registration filed Exhibit10(a)(2)
utive Retirement Income on Form S-1 (Regis-
Agreement between Gold Kist tration No. 33-7756)
and certain executive
officers of Gold Kist and
Resolution of Gold Kist
Board of Directors
authorizing Gold Kist
Supplemental Executive
Retirement Plan*
10(b)(1) Golden Poultry Management Registration filed Exhibit10(b)(1)
Bonus Program* on Form S-1 (Regis-
tration No. 33-7756)
10 (b) (2) Gold Kist Management Bonus Registration filed Exhibit10(b)(2)
Program* on Form S-1 (Regis-
tration No. 33-7756)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Document with
Which Exhibit
Designation Was Previously Designation
of Exhibit Description of Filed with of such Exhibit
in this Report Exhibit Commission in that Document
<S> <C> <C> <C>
10 (b) (3) 1988 Golden Poultry Long Report filed on Exhibit 10(b)(3)
Term Incentive Plan* Form 10-Q dated
February 6, 1989
10 (b) (4) 1989 Golden Poultry Report filed on Exhibit 10(b)(4)
Non-Employee Directors Form 10-Q dated
Stock Award Plan* February 12, 1990
10 (b)(5) Amended and Restated 1989 Report filed on Exhibit 10(b)(5)
Non-Employee Directors Stock Form 10-Q dated
Award Plan* February 8, 1993
10(b)(6) Gold Kist Executive Savings
Plan as amended *
10(b)(7) Gold Kist Split Dollar
Life Insurance Plan *
10 (c) (1) Service Agreement executed Registration filed Exhibit 10(c)(1)
as of July 1, 1986, between on Form S-1 (Regis-
the Company and Gold Kist Inc tration No. 33-7756)
10 (c) (2) Amendment to Service Report filed on Exhibit 10(c)(2)
Agreement, executed as of Form 10-K, dated
July 25, 1990, between the September 26, 1990
Company and Gold Kist
Inc.
10 (c) (3) Broker Agreement executed Report filed on Exhibit 10(c)(2)
as of June 28, 1987, by Form 10-Q dated
the Company and Gold Kist Inc February 9, 1988
10 (c) (4) Trademark license agreement Registration filed Exhibit 10(c)(4)
executed as of June 27, 1984, on Form S-1 (Regis-
between the Company and Gold tration No. 33-7756)
Kist Inc.
10 (c) (5) Amendment to Trademark Lic- Registration filed Exhibit 10(c)(5)
ense Agreement executed as on Form S-1 (Regis-
of July 1, 1986, between the tration No. 33-7756)
Company and Gold Kist Inc.
</TABLE>
<TABLE>
<CAPTION>
Document with
Which Exhibit
Designation Was Previously Designation
of Exhibit Description of Filed with of such Exhibit
in this Report Exhibit Commission in that Document
<S> <C> <C> <C>
10 (c) (6) Second Amendment to Report filed on Exhibit 10(c)(6)
Trademark License Agreement Form 10-K, dated
executed as of July 25, 1990 September 26, 1990
between the Company and Gold
Kist Inc.
10 (c) (7) Lease agreement executed as Registration filed Exhibit 10(c)(6)
of July 1, 1986, between on Form S-1 (Regis-
the Company and Gold Kist tration No. 33-7756)
Inc.
10 (c) (8) Amendment to Lease Agreement Report filed on Exhibit 10(c)(7)
executed as of June 1, Form 10-K, dated
1987, between the Company September 22, 1987
and Gold Kist Inc.
10 (c) (9) Export Services Agreement Report filed on Exhibit 10(c)(8)
executed January 29, 1988, Form 10-Q dated
by the Company and Gold May 9, 1988
Kist Inc.
10 (c) (10) Commission and Representa- Report filed on Exhibit 10(c)(9)
tive Agreement executed Form 10-Q dated
January 29, 1988, by the May 9, 1988
Company and GKX, Inc.
10 (c) (11) Guaranty Agreement executed Report filed on Exhibit10(c)(10)
as of October 12, 1988, by Form 10-Q dated
the Company in favor of February 6, 1989
AgraTrade Financing, Inc.
10 (d) (1) Lease agreement executed as Registration filed Exhibit 10(d)(1)
of December 31, 1985, on Form S-1 (Regis-
between the Company and the tration No. 33-7756)
Douglas-Coffee County,
Georgia, Industrial Develop-
ment Authority
10 (d) (2) Amendatory Lease Agreement Registration filed Exhibit 10(d)(2)
executed as of February 1, on Form S-1 (Regis-
1986, between the Company tration No. 33-7756)
and the Douglas-Coffee County,
Georgia, Industrial Develop-
ment Authority
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Document with
Which Exhibit
Designation Was Previously Designation
of Exhibit Description of Filed with of such Exhibit
in this Report Exhibit Commission in that Document
<S> <C> <C> <C>
10 (d) (3) Second Amendatory Lease Registration filed Exhibit 10(d)(3)
Agreement executed as of on Form S-1 (Regis-
August 1, 1987, between tration No. 33-29142)
the Company and the Douglas-
Coffee County, Georgia,
Industrial Development
Authority
10 (d) (4) Guaranty agreement executed Registration filed Exhibit 10(d)(3)
as of December 1, 1985, by on Form S-1 (Regis-
the Company in favor of the tration No. 33-7756)
Citizens and Southern Nation-
al Bank, Atlanta, Georgia
10 (d) (5) Master Interest Rate Swap Registration filed Exhibit 10(d)(4)
Agreement executed as of on Form S-1 (Regis-
January 2, 1986, between the tration No. 33-7756)
Company and Bank of America
National Trust and Savings
Association with Confirm-
ations dated January 9,
1986, and March 6, 1986
10 (d) (6) Lease agreement executed Report filed on Exhibit 10(d)(6)
as of February 1, 1990, Form 10-Q dated
between the Company and May 14, 1990
the Industrial Development
Board of Colbert County,
Alabama
10 (d) (7) Guaranty Agreement Report filed on Exhibit 10(d)(7)
executed as of February Form 10-Q dated
1, 1990, by the Company May 14, 1990
in favor of Trust Company
Bank, Atlanta, Georgia
10 (e) 9.0% principal amount Report filed on Exhibit 10(f)
two million dollar note Form 8-K dated
dated May 4, 1987, due May 18, 1987
May 1, 2002, executed by
the Company in favor of
Gail Lowe Delp
</TABLE>
<PAGE>
<TABLE>
<CAPTION> Document with
Which Exhibit
Designation Was Previously Designation
of Exhibit Description of Filed with of such Exhibit
in this Report Exhibit Commission in that Document
<S> <C> <C> <C>
10 (f) Water Purchase Contract Report filed on Exhibit 10(g)
executed as of June 1, 1987, Form 10-K dated
between the Company and Lee September 22, 1987
County, North Carolina
10 (g) Tax Allocation and Indemnity Report filed on Exhibit 10(h)
Agreement executed as of Form 10-K dated
October 2, 1986, between the September 22, 1987
Company and Gold Kist.
10 (h) Hen Co., Inc. (Georgia) Report filed on Exhibit 10(i)
Shareholders' Agreement Form 10-K dated
executed June 15, 1988, by September 21, 1988
the Company, Gold Kist Inc.,
Fieldale Corporation, Crider's
Poultry Inc. and Cagle's Inc.
10 (i) Product Sales Agreement Registration filed Exhibit 10(i)
executed February 13, 1989, on Form S-1 (Regis-
between the Company and tration No. 33-29142)
Keystone Foods Corporation
10 (j) (1) General Partnership Report filed on Exhibit 10(j)(1)
Agreement (Carolina Golden Form 10-Q dated
Products Company) executed May 13, 1991
as of January 28, 1991,
between the Company and
AgriGolden, Inc.
10 (j) (2) Services Agreement executed Report filed on Exhibit 10(j)(2)
as of January 28, 1991 Form 10-Q dated
between Gold Kist and May 13, 1991
Carolina Golden Products
Company
10 (j)(3) Amendment to Services Report filed on Exhibit 10(j)(3)
Agreement between Gold Kist Form 10-K dated
and Carolina Golden Products September 21, 1993
Company executed as of June 9,
1993
10 (j) (4) Marketing Agreement Report filed on Exhibit 10(j)(3)
executed as of January Form 10-Q dated
28, 1991 between Gold May 13, 1991
Kist Inc. and Carolina
Golden Products Company
</TABLE>
<TABLE>
<CAPTION>
Document with
Which Exhibit
Designation Was Previously Designation
of Exhibit Description of Filed with of such Exhibit
in this Report Exhibit Commission in that Document
<S> <C> <C> <C>
10 (j) (5) Trademark License Report filed on Exhibit 10(j)(4)
Agreement executed as of Form 10-Q dated
January 28, 1991 between May 13, 1991
Gold Kist Inc. and
Carolina Golden Products
Company
10 (j) (6) Commission and Representative Report filed on Exhibit 10(j)(5)
Agreement, executed as of Form 10-K dated
January 28, 1991, between September 23, 1991
GKX, Inc. and Carolina
Golden Products Company
11 Computation of per share See Pages 18 and
earnings 23 of this Report
21 Subsidiaries of the Report filed on Exhibit 22
Company Form 10-K dated
September 26, 1990
23 Consent of KPMG Peat Marwick LLP
(set forth in Page 42 herein)
27 Financial Data Schedule
</TABLE>
___________________________________
*Plans and arrangements pursuant to which Executive Officers
and Directors of the Company receive compensation.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the last
quarter of the fiscal year ended July 1, 1995.
<PAGE>
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, in the City of
Atlanta, Georgia on the 21st day of September, 1995.
GOLDEN POULTRY COMPANY, INC.
Dated: September 21, 1995 By: /s/ K. N. Whitmire
K. N. Whitmire,
Chief 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/ K. N. Whitmire Chief Executive Officer September 21, 1995
K. N. Whitmire (Principal Executive Officer)
/s/ L. C. Thomas, Jr. Treasurer, Chief September 21, 1995
L. C. Thomas, Jr. Financial Officer
(Principal Financial Officer)
/s/ S. A. Burdell Assistant Treasurer September 21, 1995
S. A. Burdell (Principal Accounting Officer)
/s/ H. O. Chitwood Chairman of the Board, September 21, 1995
H. O. Chitwood Director
/s/ G. O. Coan Vice Chairman of the September 15, 1995
G. O. Coan Board, Director
/s/ John Bekkers Director September 15, 1995
John Bekkers
/s/ W. W. Gaston Director September 15, 1995
W. W. Gaston
/s/ P. J. Gibbons Director September 15, 1995
P. J. Gibbons
/s/ H. R. Holding Director September 19, 1995
H. R. Holding
/s/ J. H. Levergood Director September 14, 1995
J. H. Levergood
/s/ J. W. McIntyre Director September 14, 1995
J. W. McIntyre
/s/ D. W. Sands Director September 15, 1995
D. W. Sands
/s/ J. L. Stewart Director September 18, 1995
J. L. Stewart
<PAGE>
/s/ K. N. Whitmire Director September 21, 1995
K. N. Whitmire
</TABLE>
ACCOUNTANTS' CONSENT
The Board of Directors
Golden Poultry Company, Inc.:
We consent to incorporation by reference in the
Registration Statement (No. 33-26094) on Form S-8 of Golden
Poultry Company, Inc. of our report dated August 4, 1995,
relating to the consolidated balance sheets of Golden Poultry
Company, Inc. and subsidiary as of June 25, 1994 and July 1,
1995 and the related consolidated statements of operations,
shareholders' equity, and cash flows and related schedules for
each of the years in the three-year period ended July 1, 1995,
which report appears in the July 1, 1995, annual report on
Form 10-K of Golden Poultry Company, Inc.
KPMG Peat Marwick LLP
Atlanta, Georgia
September 19, 1995
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Designation Sequentially
Exhibit Numbered
in this Report Description of Exhibit Page
<S> <C> <C>
4(g) Amendment dated as of
May 25, 1995, to
Revolving Credit and Term
Loan Agreement with Trust
Company Bank
10(b)(6) Gold Kist Executive Savings
Plan as amended
10(b)(7) Gold Kist Split Dollar
Life Insurance Plan
27 Financial Data Schedule
</TABLE>
EXHIBIT 4(G)
<PAGE>
Execution Counterpart
SECOND AMENDMENT TO REVOLVING CREDIT
AND TERM LOAN AGREEMENT
THIS SECOND AMENDMENT TO REVOLVING CREDIT AND TERM LOAN
AGREEMENT (the "Second Amendment") is entered into as of this
25th day of May, 1995 by and among GOLDEN POULTRY COMPANY,
INC., a Georgia corporation ("Borrower") and TRUST COMPANY
BANK, a Georgia banking corporation ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower and Lender have entered into that
certain Revolving Credit and Term Loan Agreement, dated as of
May 25, 1993, as amended by that certain First Amendment to
Revolving Credit and Term Loan Agreement, dated as of May 25,
1994 (as amended, the "Agreement"); and
WHEREAS, Borrower and Lender desire to further amend the
Agreement so as to extend the term of the revolving credit for
a period of one additional year, and to make certain other
corresponding changes;
NOW, THEREFORE, for and in consideration of the mutual
premises, covenants and conditions contained herein, and other
good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as
follows:
1.
Section 2.6 of Article 2 is hereby amended by superseding
the existing section in its entirety and substituting in lieu
thereof the following paragraph:
"2.6. Revolving Credit Period, Conversion Date
and Termination Date. The unpaid principal balance and all
accrued and unpaid interest on the Revolving Credit Note will
be due and payable upon the first of the following dates or
events to occur: (i) acceleration of the maturity of the
Revolving Credit Note in accordance with the remedies
contained in Section 7.2 of this Agreement; or (ii) upon the
expiration of the Revolving Credit on the four year
anniversary of the Closing Date, unless otherwise extended
pursuant to clause (c) below (the four year anniversary of the
Closing Date or such later date to which the Revolving Credits
has been extended hereinafter referred to as the "Termination
Date").
Provided no Default or Event of Default has
occurred:
(a) The Revolving Credit shall be in full
force and effect for a period of four years from the
Closing Date (the "Revolving Period").
(b) On the four year anniversary of the
Closing Date (the "Conversion Date"), the Borrower
shall have the one-time right to satisfy in full or
in part its obligation to repay the then outstanding
Borrowings by executing and delivering to the Lender
the Term Note in accordance with Section 2.8 hereof
(the "Conversion Date").
(c) Lender, solely at its option, may extend
the Revolving Period in the manner set forth in this
clause (c) on the four year anniversary of the
Closing Date, and on each subsequent anniversary of
such date (an "Extension Date") for a period of
either one (1) year or two (2) years after the date
on which the Revolving Period would have expired.
At any time prior to the 60th day prior to any
Extension Date, Borrower may request that Lender
extend the term of the Revolving Period for either
one year or two years from the applicable Extension
Date by written notice to Lender given in accordance
with the provisions of Section 8.2 hereof. Within
twenty (20) Business Days from Lender's receipt of
such notice from Borrower, Lender shall notify
Borrower of the decision with respect to such
extension. If Lender elects not to extend the
Revolving Period the Revolving Period shall not be
extended and the Revolving Credits shall expire on
the Termination Date. Notwithstanding the
foregoing, Lender shall have no obligation to extend
the Revolving Period and may extend the Revolving
Period on such terms and conditions as Lender shall,
in its sole discretion, determine."
2.
Exhibits A and B to the Agreement are hereby superseded
and the exhibits attached hereto are substituted in lieu
thereof.
3.
The Agreement, as amended by the Second Amendment, shall
remain in full force and effect in accordance with the terms
thereof in effect prior to this Second Amendment to the extent
not inconsistent with this Second Amendment. The Agreement,
as amended by the Second Amendment, is hereby reaffirmed and
restated on the date hereof; furthermore, nothing contained
herein shall be construed as a waiver or modification of
existing rights or obligations under the Agreement. From and
after the date hereof, references to the Agreement shall be
deemed to be references to the Agreement as amended to the
date hereof by the Second Amendment.
4.
All of the representations and warranties set forth in
Article 4 of the Agreement are true and correct on the date
hereof. No Default or Event of Default, as defined by the
Agreement, exists under the Agreement as of the date hereof.
5.
This Second Amendment shall be binding on, and shall
inure to the benefit of, the parties hereto and their
respective successors and assigns.
6.
This Second Amendment shall be governed by, and construed
in accordance with, the laws of the State of Georgia.
7.
This Second Amendment constitutes the entire
understanding of the parties with respect to the subject
matter hereof, and any other prior or contemporaneous
agreements, whether written or oral, with respect thereto are
expressly superseded hereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Second Amendment to be executed and delivered by their duly
authorized officers as of the day and year first above
written.
GOLDEN POULTRY COMPANY, INC.
By: /s/ Langley J. Thomas, Jr.
Title: Treasurer/Chief Financial
Officer
Attest: /s/ J. David Dyson
Title: Assistant Secretary
[CORPORATE SEAL]
TRUST COMPANY BANK
By: /s/ David W. Penter
Title: Vice President
By: /s/ Laura J. Sanders
Title: Assistant Vice President
<PAGE>
EXHIBIT A
FORM OF REVOLVING CREDIT NOTE
Principal: $20,000,000.00
Date: May 25, 1995
Place: Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned GOLDEN POULTRY
COMPANY, INC., a Georgia corporation whose principal place of
business is located at 244 Perimeter Center Parkway, N.E.,
Atlanta, Georgia 30346 (the "Maker"), hereby promises to pay
to the order of TRUST COMPANY BANK, a Georgia banking
corporation (the "Payee;" the Payee and all subsequent holders
hereof hereafter referred to as the "Holder"), without grace,
at its principal office at One Park Place, Atlanta, Georgia
30303, or at such other place as the holder hereof may
designate, on the lesser of the principal sum of TWENTY
MILLION AND NO/100 DOLLARS ($20,000,000.00), or so much
thereof as is then outstanding hereunder, in immediately
available funds in lawful money of the United States of
America.
In addition to principal, the Maker agrees to pay
interest on the principal amount outstanding hereunder from
time to time. Interest shall accrue from the date hereof up
to and through the date on which all principal and interest
hereunder is paid in full, shall be paid in immediately
available funds in lawful money of the United States of
America, shall be computed in accordance with the terms of the
Agreement, as hereinafter defined, and shall be calculated on
the daily outstanding principal balance hereunder at an annual
rate of interest in accordance with the terms of the
Agreement, as hereinafter defined.
In addition to principal and interest, the Maker
agrees to pay all costs of collection, including, without
limitation, actual attorneys' fees reasonably incurred if the
indebtedness evidenced hereby is collected by or through an
attorney-at-law.
This Revolving Credit Note is given in accordance
with the terms and conditions of that certain Revolving Credit
and Term Loan Agreement, dated as of May 25, 1993, by and
between the Maker and the Payee, as amended by that certain
First Amendment to Revolving Credit and Term Loan Agreement,
dated as of May 25, 1994, and as further amended by that
certain Second Amendment to Revolving Credit and Term Loan
Agreement, dated as of May 25, 1995 (collectively, and as the
same may be further amended or otherwise modified, the
"Agreement"), and the Holder is and shall be entitled to the
benefits of the security provided for therein. Upon the
occurrence of an Event of Default as specified in Article 7 of
the Agreement, the unpaid balance hereof, including principal
and accrued and unpaid interest shall be immediately due and
payable as provided for in the Agreement and the interest rate
on the unpaid amount from such date until the date of final
payment shall be equal to the interest rate then in effect
plus two percent (2%) per annum (the "Default Rate").
Otherwise, all principal and unpaid accrued interest shall be
due and payable in accordance with the terms of the Agreement.
This Revolving Credit Note may be prepaid in whole
or in part on the terms and provisions set forth in Section
2.5 of the Agreement.
No delay or failure on the part of the Payee or
other Holder in the exercise of any right, power or privilege
granted under this Revolving Credit Note or the Agreement, or
otherwise available by agreement, at law or in equity, shall
impair any such right, power or privilege or be construed as a
waiver of any event of default or any acquiescence therein.
No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right,
power or privilege. No waiver shall be valid against the
Holder unless made in writing and signed by the Holder, and
then only to the extent expressly specified therein.
IT IS HEREBY EXPRESSLY AGREED that if from any
circumstances whatsoever fulfillment of any provision of this
Revolving Credit Note at the time performance of such
provision shall be due shall involve transcending the limit of
validity presently prescribed by any applicable usury statute
or any other law, with regard to obligations of like character
and amount, then ipso facto the obligation to be fulfilled
shall be reduced to the limit of such validity, so that in no
event shall any exaction be possible under this Revolving
Credit Note that is in excess of the limit of such validity,
but such obligation shall be fulfilled to the limit of such
validity.
TIME IS OF THE ESSENCE HEREUNDER. This Revolving
Credit Note shall be deemed to be made under, and shall be
construed in accordance with and governed by, the laws of the
State of Georgia.
PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND
PROTEST ARE HEREBY WAIVED.
IN WITNESS WHEREOF, the Maker, through its duly
authorized agent or representative, has hereunto set its hand
and affixed its seal as of the date first above written.
MAKER:
GOLDEN POULTRY COMPANY, INC.
By: ______________________
Name:
Title: ____________________
Attest: _________________
Name:__________________
Title:
[CORPORATE SEAL]
<PAGE>
EXHIBIT B
FORM OF TERM NOTE
Principal:_________
Date:_____________
Place: Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned GOLDEN POULTRY
COMPANY, INC., a Georgia corporation whose principal place of
business is located at 244 Perimeter Center Parkway, N.E.,
Atlanta, Georgia 30346 (the "Maker") hereby promises to pay
to the order of TRUST COMPANY BANK, a Georgia banking
corporation (the "Payee;" the Payee and all subsequent holders
hereof hereafter referred to as the "Holder"), without grace,
at its principal office at One Park Place, Atlanta, Georgia
30303, or at such other place as the holder hereof may
designate, on the lesser of the principal sum of
__________________________ ($____________), in immediately
available funds in lawful money of the United States of
America.
In addition to principal, the Maker agrees to pay
interest on the principal amount outstanding hereunder from
time to time. Interest shall accrue from the date hereof up
to and through the date on which all principal and interest
hereunder is paid in full, shall be paid in immediately
available funds in lawful money of the United States of
America, shall be computed in accordance with the terms of the
Agreement, as hereinafter defined, and shall be calculated on
the daily outstanding principal balance hereunder at an annual
rate of interest in accordance with the terms of the
Agreement, as hereinafter defined.
In addition to principal and interest, the Maker
agrees to pay all costs of collection, including, without
limitation, actual attorneys' fees reasonably incurred if the
indebtedness evidenced hereby is collected by or through an
attorney-at-law.
This Term Note is given in accordance with the terms
and conditions of that certain Revolving Credit and Term Loan
Agreement, dated as of May 25, 1993, by and between the Maker
and the Payee, as amended by that certain First Amendment to
Revolving Credit and Term Loan Agreement, dated as of May 25,
1994, and as further amended by that certain Second Amendment
to Revolving Credit and Term Loan Agreement, dated as of May
25, 1995 (collectively, and as the same may be further amended
or otherwise modified, the "Agreement"), and the Holder is and
shall be entitled to the benefits of the security provided for
therein. Upon the occurrence of an Event of Default as
specified in Article 7 of the Agreement, the unpaid balance
hereof, including principal and accrued and unpaid interest
shall be immediately due and payable as provided for in the
Agreement and the interest rate on the unpaid amount from such
date until the date of final payment shall be equal to the
interest rate then in effect plus two percent (2%) per annum
(the "Default Rate"). Otherwise, all principal and unpaid
accrued interest shall be due and payable in accordance with
the terms of the Agreement.
This Term Note may be prepaid in whole or in part on
the terms and provisions set forth in Section 2.5 of the
Agreement.
No delay or failure on the part of the Payee or
other Holder in the exercise of any right, power or privilege
granted under this Term Note or the Agreement, or otherwise
available by agreement, at law or in equity, shall impair any
such right, power or privilege or be construed as a waiver of
any event of default or any acquiescence therein. No single
or partial exercise of any such right, power or privilege
shall preclude the further exercise of such right, power or
privilege. No waiver shall be valid against the Holder unless
made in writing and signed by the Holder, and then only to the
extent expressly specified therein.
IT IS HEREBY EXPRESSLY AGREED that if from any
circumstances whatsoever fulfillment of any provision of this
Term Note at the time performance of such provision shall be
due shall involve transcending the limit of validity presently
prescribed by any applicable usury statute or any other law,
with regard to obligations of like character and amount, then
ipso facto the obligation to be fulfilled shall be reduced to
the limit of such validity, so that in no event shall any
exaction be possible under this Term Note that is in excess of
the limit of such validity, but such obligation shall be
fulfilled to the limit of such validity.
TIME IS OF THE ESSENCE HEREUNDER. This Term Note
shall be deemed to be made under, and shall be construed in
accordance with and governed by, the laws of the State of
Georgia.
PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND
PROTEST ARE HEREBY WAIVED.
IN WITNESS WHEREOF, the Maker, through its duly
authorized agent or representative, has hereunto set its hand
and affixed its seal as of the date first above written.
MAKER:
GOLDEN POULTRY COMPANY, INC.
By:
Name:_______________________
Title: _______________________
Attest: _________________
Name:_________________
Title:
[CORPORATE SEAL]
<PAGE>
REVOLVING CREDIT NOTE
Principal: $20,000,000.00
Date: May 25, 1995
Place: Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned GOLDEN POULTRY
COMPANY, INC., a Georgia corporation whose principal place of
business is located at 244 Perimeter Center Parkway, N.E.,
Atlanta, Georgia 30346 (the "Maker"), hereby promises to pay
to the order of TRUST COMPANY BANK, a Georgia banking
corporation (the "Payee;" the Payee and all subsequent holders
hereof hereafter referred to as the "Holder"), without grace,
at its principal office at One Park Place, Atlanta, Georgia
30303, or at such other place as the holder hereof may
designate, on the lesser of the principal sum of TWENTY
MILLION AND NO/100 DOLLARS ($20,000,000.00), or so much
thereof as is then outstanding hereunder, in immediately
available funds in lawful money of the United States of
America.
In addition to principal, the Maker agrees to pay
interest on the principal amount outstanding hereunder from
time to time. Interest shall accrue from the date hereof up
to and through the date on which all principal and interest
hereunder is paid in full, shall be paid in immediately
available funds in lawful money of the United States of
America, shall be computed in accordance with the terms of the
Agreement, as hereinafter defined, and shall be calculated on
the daily outstanding principal balance hereunder at an annual
rate of interest in accordance with the terms of the
Agreement, as hereinafter defined.
In addition to principal and interest, the Maker
agrees to pay all costs of collection, including, without
limitation, actual attorneys' fees reasonably incurred if the
indebtedness evidenced hereby is collected by or through an
attorney-at-law.
This Revolving Credit Note is given in accordance
with the terms and conditions of that certain Revolving Credit
and Term Loan Agreement, dated as of May 25, 1993, by and
between the Maker and the Payee, as amended by that certain
First Amendment to Revolving Credit and Term Loan Agreement,
dated as of May 25, 1994, and as further amended by that
certain Second Amendment to Revolving Credit and Term Loan
Agreement, dated as of May 25, 1995 (collectively, and as the
same may be further amended or otherwise modified, the
"Agreement"), and the Holder is and shall be entitled to the
benefits of the security provided for therein. Upon the
occurrence of an Event of Default as specified in Article 7 of
the Agreement, the unpaid balance hereof, including principal
and accrued and unpaid interest shall be immediately due and
payable as provided for in the Agreement and the interest rate
on the unpaid amount from such date until the date of final
payment shall be equal to the interest rate then in effect
plus two percent (2%) per annum (the "Default Rate").
Otherwise, all principal and unpaid accrued interest shall be
due and payable in accordance with the terms of the Agreement.
This Revolving Credit Note may be prepaid in whole
or in part on the terms and provisions set forth in Section
2.5 of the Agreement.
No delay or failure on the part of the Payee or
other Holder in the exercise of any right, power or privilege
granted under this Revolving Credit Note or the Agreement, or
otherwise available by agreement, at law or in equity, shall
impair any such right, power or privilege or be construed as a
waiver of any event of default or any acquiescence therein.
No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right,
power or privilege. No waiver shall be valid against the
Holder unless made in writing and signed by the Holder, and
then only to the extent expressly specified therein.
IT IS HEREBY EXPRESSLY AGREED that if from any
circumstances whatsoever fulfillment of any provision of this
Revolving Credit Note at the time performance of such
provision shall be due shall involve transcending the limit of
validity presently prescribed by any applicable usury statute
or any other law, with regard to obligations of like character
and amount, then ipso facto the obligation to be fulfilled
shall be reduced to the limit of such validity, so that in no
event shall any exaction be possible under this Revolving
Credit Note that is in excess of the limit of such validity,
but such obligation shall be fulfilled to the limit of such
validity.
TIME IS OF THE ESSENCE HEREUNDER. This Revolving
Credit Note shall be deemed to be made under, and shall be
construed in accordance with and governed by, the laws of the
State of Georgia.
PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND
PROTEST ARE HEREBY WAIVED.
IN WITNESS WHEREOF, the Maker, through its duly
authorized agent or representative, has hereunto set its hand
and affixed its seal as of the date first above written.
MAKER:
GOLDEN POULTRY COMPANY, INC.
By:
Name:_______________________
Title: _______________________
Attest: ___________________
Name:
Title: ____________________
[CORPORATE SEAL]
<PAGE>
AMENDMENT NO. 1
TO THE GOLD KIST INC.
EXECUTIVE SAVINGS PLAN
THIS AMENDMENT NO. 1 is made this 28th day of October, 1994, by Gold
----
Kist Inc. (the "Company").
WITNESSETH:
WHEREAS the Company has adopted the Gold Kist Inc. Executive Savings Plan
(the "Plan") effective June 1, 1994; and
WHEREAS the Company seeks to clarify certain eligibility provisions
inadvertently omitted from Plan.
NOW, THEREFORE, the Plan is amended as set forth below.
ITEM ONE
Section 3.2 of the Plan is amended by adding the following language:
Notwithstanding any provisions in this Plan to the contrary, should any
Participant after execution and delivery of a Deferral Election (the
"Current Deferral Election") refuse or otherwise fail to cooperate fully
(as determined in the sole judgment of the Committee) in the process of
obtaining a life insurance policy or policies insuring the Participant to
be owned by the Company to fund its obligations under the Plan in whole or
in part, such Participant's participation in the Plan with respect to the
Current Deferral Election shall be rescinded and terminated, all amounts
deferred with respect to the Current Deferral Election shall be paid to
such Participant and such Participant shall be deemed ineligible for
further participation in the Plan.
<PAGE>
ITEM TWO
This amendment shall be effective June 1, 1994, as if it were originally
included in the Plan.
IN WITNESS WHEREOF, Gold Kist Inc. has caused this Amendment No. 1 to be
executed as of the day and year first above written.
GOLD KIST INC.
By: /s/ Harold O. Chitwood
------------------------------------
Chief Executive Officer and Chairman,
Management Executive Committee
[Corporate Seal]
ATTEST:
/s/ Jack L. Lawing
- --------------------------------
Secretary
<PAGE>
GOLD KIST INC.
EXECUTIVE SAVINGS PLAN
_____________________________________
Effective June 1, 1994
_____________________________________
GOLD KIST INC.
244 Perimeter Center Parkway, N.E.
Atlanta, Georgia 30346
<PAGE>
GOLD KIST INC.
EXECUTIVE SAVINGS PLAN
TABLE OF CONTENTS
Page
----
ARTICLE 1 ESTABLISHMENT AND PURPOSE...... 1
ARTICLE 2 DEFINITIONS
2.1 Adjustment Date................ 1
2.2 Affiliate...................... 1
2.3 Authorized Leave of Absence.... 1
2.4 Beneficiary.................... 1
2.5 Bonus.......................... 1
2.6 Code........................... 1
2.7 Committee...................... 2
2.8 Company........................ 2
2.9 Deferral Account............... 2
2.10 Deferral Election(s)........... 2
2.11 Early Retirement............... 2
2.12 Effective Date................. 2
2.13 Employee....................... 2
2.14 ERISA.......................... 2
2.15 Fiscal Year.................... 2
2.16 Interest....................... 2
2.17 Normal Retirement.............. 3
2.18 Participant.................... 3
2.19 Participating Company.......... 3
2.20 Plan........................... 3
2.21 Plan Administrator............. 3
2.22 Plan Year...................... 3
2.23 Retirement..................... 3
2.24 Salary......................... 3
2.25 Severance...................... 3
2.26 Surviving Spouse............... 3
2.27 Termination of Employment...... 3
2.28 Total Disability............... 4
2.29 Unforeseeable Emergency........ 4
ARTICLE 3 ELIGIBILITY AND PARTICIPATION.. 4
3.1 Eligibility.................... 4
3.2 Participation.................. 4
3.3 Deferral Elections............. 5
3.4 Payment Election............... 5
i
<PAGE>
ARTICLE 4 RETIREMENT BENEFITS................ 6
4.1 Eligibility........................ 6
4.2 Payment Method, Timing and Amount.. 6
4.3 Payment to Beneficiary............. 6
ARTICLE 5 DEATH BENEFIT...................... 7
5.1 Eligibility........................ 7
5.2 Payment Method, Timing and Amount.. 7
ARTICLE 6 SEVERANCE BENEFITS................. 8
6.1 Eligibility........................ 8
6.2 Payment Method, Timing and Amount.. 8
6.3 Payment to Beneficiary............. 8
ARTICLE 7 HARDSHIP........................... 8
7.1 Eligibility........................ 8
7.2 Payment Method, Timing and Amount.. 9
ARTICLE 8 ADJUSTMENTS........................ 9
8.1 Accounts........................... 9
8.2 Adjustments to Deferral Accounts... 9
ARTICLE 9 ADMINISTRATION..................... 10
9.1 Committee.......................... 10
9.2 Claims for Benefits................ 10
9.3 Beneficiary Designation............ 10
ARTICLE 10 AMENDMENT AND TERMINATION.......... 11
10.1 Right to Amend or Terminate Plan... 11
10.2 Notice............................. 12
ARTICLE 11 GENERAL PROVISIONS................. 12
11.1 No Right to Continued Employment... 12
11.2 Payment on Behalf of Payee......... 12
11.3 Nonalienation...................... 12
11.4 No Trust or Funding Created........ 12
11.5 Binding Effect..................... 13
11.6 Merger or Consolidation............ 13
11.7 Entire Plan........................ 13
11.8 Miscellaneous...................... 13
ii
<PAGE>
GOLD KIST INC.
--------------
EXECUTIVE SAVINGS PLAN
----------------------
ARTICLE 1 - ESTABLISHMENT AND PURPOSE
-------------------------------------
The Plan is established for the benefit of selected key employees and shall
be known as the "Gold Kist Inc. Executive Savings Plan." The purpose of the
Plan is to provide deferred compensation benefits to selected key employees upon
termination of employment, disability or death in order to recruit and retain
such employees. The Company intends that the Plan be an unfunded arrangement
for both tax and ERISA Title I purposes and that participating employees will be
unsecured general creditors of the Company as to the benefits provided under the
Plan.
ARTICLE 2 - DEFINITIONS
-----------------------
The following words and phrases as used in the Plan have the following
meanings:
2.1 ADJUSTMENT DATE: The last day of each calendar year, the date of
commencement of payment of any benefit pursuant to the Plan and any other date
specified by the Committee upon or as of which accounts are adjusted as set
forth in Article 8.
2.2 AFFILIATE: Either (a) any employer that is a corporation included
with Gold Kist Inc. in a "controlled group of corporations," as defined in Code
section 414(b), or an unincorporated business included with Gold Kist Inc. in a
group of trades or businesses under "common control," as defined by regulations
prescribed by the Secretary of the Treasury under Code section 414(c) or (b) any
other employer, whether incorporated or unincorporated, which is not described
in the foregoing clause (a) but which Gold Kist Inc. has an ownership interest
in to any extent.
2.3 AUTHORIZED LEAVE OF ABSENCE: Either (a) a leave of absence authorized
by the Company provided that the Employee returns within the period specified,
or (b) an absence required to be considered an Authorized Leave of Absence by
applicable law.
2.4 BENEFICIARY: The beneficiary or beneficiaries designated by a
Participant pursuant to Article 9 to receive the benefits, if any, payable on
behalf of the Participant under the Plan after the death of such Participant,
or, when there has been no such designation or an invalid designation, the
individual or entity, or the individuals or entities, who will receive such
amount pursuant to Section 9.3(b).
2.5 BONUS: A bonus which is awarded and payable by the Company to the
Employee for service during the Fiscal Year and which is not earned until
actually awarded.
2.6 CODE: the Internal Revenue Code of 1986, as amended from time to
time.
1
<PAGE>
2.7 COMMITTEE: The Committee provided for in Article 9 and responsible
for administering the Plan.
2.8 COMPANY: Gold Kist Inc., a Georgia corporation, or any entity which
succeeds to its rights and obligations with respect to the Plan and any other
Affiliate of Gold Kist Inc. which is a Participating Company.
2.9 DEFERRAL ACCOUNT: With respect to Deferral Elections, the separate
bookkeeping account kept to record the Participant's Salary Deferrals and Bonus
Deferrals under such Deferral Elections and Interest accrued on the account,
adjusted as of each Adjustment Date or other date as provided in Article 8.
2.10 DEFERRAL ELECTION(S): The Participant's irrevocable written election,
made in accordance with Section 3.3 and in such form as specified by the
Committee, to forego the receipt of a stipulated whole percent of Salary or
Bonus. Amounts so foregone are called either "Salary Deferral(s)" or "Bonus
Deferral(s)," as the case may be.
2.11 EARLY RETIREMENT: Termination of Employment, other than on account of
death, on or after the date the Participant attains age 55 but prior to the date
the Participant attains age 65.
2.12 EFFECTIVE DATE: The "Effective Date," the date the provisions of this
Plan become effective, is June 1, 1994.
2.13 EMPLOYEE: A person who is a common law employee of the Company or an
Affiliate.
2.14 ERISA: The Employee Retirement Income Security Act of 1974, as now in
effect or as hereafter amended. All citations to sections of ERISA are to such
sections as they may from time to time be amended or renumbered.
2.15 FISCAL YEAR: The fiscal year of the Gold Kist Inc..
2.16 INTEREST: With respect to each Adjustment Date or other applicable
date, the dollar amount of interest to be credited to the Participant's Deferral
Account as provided in Article 8. Prior to the beginning of each Plan Year, the
Committee shall announce the annual rate of interest ("Announced Interest
Rate") applicable with respect to the next Plan Year. If the Committee shall
fail to announce such annual rate of interest, the last Announced Interest Rate
shall apply. Provided, however, the minimum annual rate of interest ("Minimum
Interest Rate") with respect to each Plan Year shall be the prime lending rate
as quoted in the Wall Street Journal's Money Rate Section on December 31 (or the
last business day) preceding such Plan Year.
2
<PAGE>
2.17 NORMAL RETIREMENT: Termination of Employment, other than on account
of death, on the date the Participant attains age 65.
2.18 PARTICIPANT: As of any date, any individual who commenced
participation in the Plan as provided in Article 3 and who is either (a) an
Employee or (b) a former Employee of the Company who is eligible for a benefit
under the Plan.
2.19 PARTICIPATING COMPANY: Gold Kist Inc. or an Affiliate which by action
of its board of directors or equivalent governing body and with the written
consent of the Board of Directors ("Board") of Gold Kist Inc., has adopted the
Plan; provided that the Board may, subject to the foregoing proviso, waive the
requirement that such board of directors or equivalent governing body effect
such adoption. The term "Participating Company" shall be construed as if the
Plan were solely the Plan of such Participating Company, unless the context
plainly requires otherwise. Notwithstanding the foregoing, (i) if a Participant
is employed by an Affiliate as defined in clause (a) of Section 2.2 of this
Plan, then the obligation to pay benefits hereunder that are attributable to
Salary and Bonus Deferrals made while the Participant is employed by such
Affiliate shall be the obligation of Gold Kist Inc. as well as such Affiliate;
and (ii) if a Participant is employed by an Affiliate as defined in clause (b)
of Section 2.2 of this Plan, then the obligation to pay benefits hereunder that
are attributable to Salary and Bonus Deferrals made while the Participant is
employed by such Affiliate shall be the obligation solely of such Affiliate, and
not a joint obligation of Gold Kist Inc. or any other Affiliate.
2.20 PLAN: The Gold Kist Inc. Executive Savings Plan as contained herein
and as it may be amended from time to time hereafter.
2.21 PLAN ADMINISTRATOR: The Committee.
2.22 PLAN YEAR: The calendar year.
2.23 RETIREMENT: A Participant's Normal Retirement or Early Retirement.
2.24 SALARY: With respect to a Participant, cash base salary payable by
the Company to the Participant for services rendered by the Participant to the
Company.
2.25 SEVERANCE: Termination of Employment both (i) other than on account
of Retirement or death and (ii) prior to attaining age 65.
2.26 SURVIVING SPOUSE: The survivor of a deceased Participant to whom such
deceased Participant was legally married immediately before the Participant's
death.
2.27 TERMINATION OF EMPLOYMENT: A termination of employment with the
Company as determined by the Committee in accordance with reasonable standards
and policies adopted by the Committee; provided, however, that a Termination of
Employment shall occur on the earlier of (a) or (b) where:
3
<PAGE>
(a) is the date as of which an Employee quits, is discharged,
terminates employment in connection with a disability (excluding Total
Disability), Retires or dies, and
(b) is the first day of absence of an Employee who fails to return to
employment at the expiration of an Authorized Leave of Absence or the cessation
of Total Disability.
A Participant shall not be considered as terminating his employment during his
Total Disability. A Participant shall be deemed to have terminated his
employment upon cessation of his Total Disability if he does not resume active
employment with the Company.
2.28 TOTAL DISABILITY: A Participant shall be under a "Total Disability"
if, in the determination of the Committee in the exercise of its sole and
absolute discretion based upon competent medical evidence, the Participant's
physical or mental condition prevents the Participant from performing the
material duties of the Participant's regular occupation.
2.29 UNFORESEEABLE EMERGENCY: A severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in Section 152(a) of the Code) of the
Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. Examples of what are not
considered to be Unforeseeable Emergencies include the need to send a
Participant's child to college or the desire to purchase a home. The
determination of whether a Participant has an Unforeseeable Emergency shall be
determined by the Committee in the exercise of its sole and absolute discretion.
ARTICLE 3 - ELIGIBILITY AND PARTICIPATION
-----------------------------------------
3.1 ELIGIBILITY. An Employee shall be eligible to become a Participant in
the Plan if the Employee:
(A) is a member of the Company's "select group of management or
highly compensated employees," as defined in Sections 201(2), 301(a)(3) and
401(a) of ERISA; and
(B) is designated by the Committee as eligible.
3.2 PARTICIPATION. An Employee who is eligible to become a
Participant shall become a Participant upon execution and delivery of a Deferral
Election. A Participant shall continue his participation until the date the
Participant is no longer entitled to a benefit under this Plan.
4
<PAGE>
3.3 DEFERRAL ELECTIONS.
(A) PROCEDURES.
(1) An eligible Employee shall have until December 31st of each year
to execute and deliver to the Committee a Deferral Election providing for the
deferral of a stipulated whole percent of Salary and/or Bonus to be earned
during the following calendar year and which, but for such Deferral Election,
would be paid to the Employee.
(2) In the year in which this Plan is first implemented, an eligible
Employee shall have 30 days following the Effective Date to execute and deliver
to the Committee a Deferral Election providing for the deferral of a stipulated
whole percent of Salary and/or Bonus to be earned after delivery of such
Deferral Election and during the calendar year of such implementation and which,
but for such Deferral Election, would be paid to the Employee.
(3) In the first year in which an Employee first becomes eligible to
participate in the Plan, such eligible Employee shall have 30 days following the
date the Employee becomes eligible to execute and deliver to the Committee a
Deferral Election providing for the deferral of a stipulated whole percent of
Salary and/or Bonus to be earned after delivery of such Deferral Election and
during the calendar year such Employee first becomes eligible to participate in
the Plan and which, but for such Deferral Election, would be paid to the
Employee.
(B) CONDITIONS. No Deferral Election shall be valid until accepted by
the Committee in the exercise of its sole and absolute discretion. Maximum
Salary Deferrals and Bonus Deferrals for a Plan Year shall be 100% of Salary
and/or Bonus less any amounts which must be withheld from wages for income or
employment tax purposes. Minimum annual Salary Deferrals shall be $1,200.
3.4 PAYMENT ELECTION.
(A) A Participant may elect to have the Retirement Benefit under Article 4
and the Death Benefit under Article 5 paid in either (i) a lump sum or (ii) in
ten (10) equal annual installments. A separate Payment Election shall be made
for the Retirement Benefit and the Death Benefit. If no such election is made,
such benefits shall be paid in ten (10) equal annual installments.
(B) A Participant shall make such election on such form as specified by the
Committee and shall have the right to change such election from time to time,
provided, however, only such election made more than two years prior to the
commencement of payment of benefits shall be effective. Provided, further, no
payment election, or change thereof, shall be effective unless received by the
Committee prior to the Participant's death or Retirement.
5
<PAGE>
ARTICLE 4 - RETIREMENT BENEFITS
--------------------------------
4.1 ELIGIBILITY. Upon the earliest to occur of (i) a Participant's
Retirement or (ii) a Participant's attainment of age 65, the Company shall pay
the Participant the "Retirement Benefit" described in this Article 4.
4.2 PAYMENT METHOD, TIMING AND AMOUNT.
(A) The Retirement benefit shall be either a lump sum or ten (10) equal
annual installments, as based on the Participant's Payment Election. Payment
shall be made, in the case of a lump sum, or shall commence, in the case of
annual installments, on the first day of the second month following the month of
the Participant's Retirement or the Participant's attainment of age 65,
whichever shall apply. Such Retirement benefit shall be in lieu of all other
benefits under the Plan.
(B) The lump sum shall equal the Participant's Deferral Account adjusted as
provided in Subsection 8.2(a).
(C) The ten (10) equal annual installments shall be based on the
Participant's Deferral Account adjusted as provided in Subsection 8.2(a) and the
interest rate applicable to the Participant's Deferral Account in accordance
with Section 2.16 during the Plan Year in which the Participant's Retirement
occurs.
Example - At the commencement of payment of his Retirement Benefit,
-------
Participant's Deferral Account balance (including deferrals and interest) is
$100,000 and the interest rate applicable at such time is 10%. The
Participant's equal annual installments are determined by calculating the
level annuity payments in advance, payable for 10 periods, with interest at
10% and with a principal balance of $100,000. The resulting equal annual
installments are in the amount of $14,795.
4.3 PAYMENT TO BENEFICIARY. If a Participant entitled to a
Retirement Benefit under this Article 4 dies before the payment of the full
benefit is made, then the Retirement Benefit shall be paid to the Participant's
Beneficiary. In the event the Participant's Retirement Benefit is being paid in
ten (10) equal annual installments, the Participant's Beneficiary may make a
written request to the Committee to receive, in lieu of all other payments, a
lump sum payment equal to the present value of the remaining installments
calculated with a discount rate equal to the Announced Interest Rate applicable
to the Participant's Deferral Account during the Plan Year in which the
Participant's Retirement occurred. The Committee's decision on such request
shall be based on the sole and absolute discretion of the Committee.
6
<PAGE>
Example - Participant retires and elects to receive his Retirement Benefit in
-------
10 equal annual installments of $100,000 per installment when the applicable
interest rate is 10%. After receiving 6 installments, Participant dies and
his Beneficiary requests a lump sum payment of the remaining 4 installments.
Assuming the Committee grants the Beneficiary's request for a lump sum payment
which is made on the next installment due date, the lump sum will be
$348,685 (the present value of 4 payments of $100,000 each, discounted at
10%).
ARTICLE 5 - DEATH BENEFIT
-------------------------
5.1 ELIGIBILITY. Upon a Participant's death prior to his attainment of
age 65, Retirement or Severance, the Company shall pay the Participant's
Beneficiary the "Death Benefit" described in this Article 5.
5.2 PAYMENT METHOD, TIMING AND AMOUNT.
(A) The Death Benefit shall be either a lump sum or ten (10) equal annual
installments, as based on the Participant's Payment Election. Payment shall be
made, in the case of a lump sum, or shall commence, in the case of annual
installments, on the first day of the second month following the month of the
Participant's Death. Such Death Benefit shall be in lieu of all other benefits
under the Plan.
(B) The lump sum shall equal the Participant's "Enhanced Deferral Account"
as described in Subsection (d) below.
(C) The ten (10) equal annual installments shall be based on the
Participant's "Enhanced Deferral Account" as described in Subsection (d) below,
and the interest rate applicable to the Participant's Deferral Account in
accordance with Section 2.16 during the Plan Year in which the Participant's
death occurs.
(D) A Participant's Enhanced Deferral Account shall be equal to (i) the
Participant's Deferral Account adjusted as provided in Subsection 8.2(a)
multiplied by (ii) the following enhancement factor:
Participant's Age at Death Enhancement Factor
-------------------------- ------------------
Less than age 50 2.00
Age 50 or greater but less than age 55 1.75
Age 55 or greater but less than age 60 1.50
Age 60 or greater but less than age 65 1.25
Example - At the commencement of payment of the Death Benefit to the
-------
Participant's Beneficiary (based on the Participant's prior effective election
to have such benefit paid in a lump sum), the Participant's Deferral Account
7
<PAGE>
balance (including deferrals and interest) is $100,000 and the Participant's
age at the time of death is age 49. The Death Benefit payable to the
Participant's Beneficiary is $200,000 (actual Deferral Account balance of
$100,000 times the Enhancement Factor of 2.0).
(E) In the event the Death Benefit is payable in ten (10) equal annual
installments, the Participant's Beneficiary may make a written request to the
Committee, prior to commencement of payment of the first installment, to
receive, in lieu of all other payments, a lump sum payment equal to the
Participant's "Enhanced Deferral Account" as described in Subsection (d) above.
The decision on such request shall be based on the sole and absolute discretion
of the Committee.
ARTICLE 6 - SEVERANCE BENEFITS
------------------------------
6.1 ELIGIBILITY. Upon a Participant's Severance, the Company shall pay
the Participant the "Severance Benefit" described in this Article 6.
6.2 PAYMENT METHOD, TIMING AND AMOUNT.
(A) The Severance Benefit shall be a lump sum. Payment shall be made on
the first day of the second month following the month of the Participant's
Severance. Such Severance Benefit shall be in lieu of all other benefits under
the Plan.
(B) Except as provided in Subsection (c) below, the lump sum shall be equal
to the Participant's Deferral Account adjusted as provided in Subsection 8.2(a).
(C) If the Participant's Severance is on account of his voluntary
Termination of Employment, the lump sum shall be equal to the Participant's
Deferral Account adjusted as provided in Subsection 8.2(b).
6.3 PAYMENT TO BENEFICIARY. If a Participant entitled to a Severance
Benefit under this Article 6 dies after his Severance but before the payment of
the benefit is made, then the benefit shall be paid to the Participant's
Beneficiary.
ARTICLE 7 - HARDSHIP
--------------------
7.1 ELIGIBILITY. A Participant who has an Unforeseeable Emergency may be
entitled to receive the "Hardship Benefit" described in this Article 7 upon (i)
application to the Committee, (ii) submission of such evidence of such
Unforeseeable Emergency as required by the Committee and (iii) the Committee's
determination that the Participant has an Unforeseeable Emergency. In making
such determination the Committee is instructed not to grant payment to the
extent that the Participant's hardship is or may be relieved (i) through
reimbursement or compensation by insurance or otherwise, (ii) by liquidation of
the Participant's assets, to the extent the liquidation of such assets would not
itself cause severe financial hardship or (iii) cessation of deferrals under
this Plan.
8
<PAGE>
7.2 PAYMENT METHOD, TIMING AND AMOUNT.
(A) The Hardship Benefit shall be a lump sum. Payment shall be made on
such date as determined by the Committee.
(B) The lump sum shall be equal to the lesser of (i) the Participant's
Deferral Account adjusted as provided in Subsection 8.2(b) or (ii) the amount
determined by the Committee, in the exercise of its sole and absolute judgment,
to satisfy the Participant's Unforeseeable Emergency.
ARTICLE 8 - ADJUSTMENTS
-----------------------
8.1 ACCOUNTS. The Committee shall establish and cause to be maintained
with respect to each Participant, a Deferral Account and shall adjust each
account as provided in this Article 8.
8.2 ADJUSTMENTS TO DEFERRAL ACCOUNTS.
(A) Except as provided in Subsection (b) below, as of each Adjustment Date,
a Participant's Deferral Account shall be adjusted as follows:
(1) Salary Deferrals. There shall be credited the Participant's
Salary Deferrals, if any, made since the last Adjustment Date.
(2) Bonus Deferrals. There shall be credited the Participant's Bonus
Deferrals, if any, made since the last Adjustment Date.
(3) Hardship Benefit. There shall be debited any Hardship Benefit
paid to the Participant as provided in Article 7.
(4) Interest. There shall be credited Interest for the period since
the last Adjustment Date. Interest shall calculated on the balance in the
Deferral Account after adjustment pursuant to paragraphs (1), (2) and (3) above
at such rate to yield an effective annual rate equal to the Minimum Interest
Rate or the Announced Interest Rate, whichever is greater.
(B) With respect to a Severance Benefit payable pursuant to Subsection
6.2(c) or a Hardship Benefit payable pursuant to Article 7, the Participant's
Deferral Account shall be determined in the manner specified in Subsection (a)
above but by modifying the crediting of Interest pursuant to paragraph (3) of
Subsection (a) above by substituting for the "Announced Interest Rate" as it
appears therein the words "Announced Interest Rate minus two percent (2%)."
9
<PAGE>
ARTICLE 9 - ADMINISTRATION
--------------------------
9.1 COMMITTEE. The Committee shall be the Gold Kist Pension Committee.
The Committee shall have general responsibility for administration of the Plan
(including but not limited to complying with reporting and disclosure
requirements, and establishing and maintaining Plan records). In the exercise
of its sole and absolute discretion, the Committee shall interpret the Plan's
provisions and determine the eligibility of individuals for benefits.
9.2 CLAIMS FOR BENEFITS. For claims procedure purposes, the "Claims
Manager" shall be the Vice President, Human Resources of Gold Kist Inc..
(A) If for any reason a claim for benefits under this Plan is denied by the
Company, the Claims Manager shall deliver to the claimant a written explanation
setting forth the specific reasons for the denial, pertinent references to the
section of the Plan on which the denial is based, such other data as may be
pertinent and information on the procedures to be followed by the claimant in
obtaining a review of the claim, all written in a manner calculated to be
understood by the claimant. For this purpose:
(1) The claimant's claim shall be deemed filed when presented orally
or in writing to the Claims Manager.
(2) The Claims Manager's explanation shall be in writing delivered to
the claimant within ninety (90) days of the date the claim is filed.
(B) The claimant shall have sixty (60) days following receipt of the denial
of the claim to file with the Claims Manager a written request for review of the
denial. For such review, the claimant or the claimant's representative may
submit pertinent documents and written issues and comments.
(C) The Claims Manager shall decide the issue on review and furnish the
claimant with a copy within sixty (60) days of receipt of the claimant's request
for review of the claim. The decision on review shall be in writing and shall
include specific reasons for the decision written in a manner calculated to be
understood by the claimant, as well as specific references to the pertinent
provisions of the Plan on which the decision is based. If a copy of the
decision is not so furnished to the claimant within such sixty (60) days, the
claim shall be deemed denied on review. The Claims Manager's decision shall be
final and binding upon all parties for purposes of administrative review under
this Plan.
9.3 BENEFICIARY DESIGNATION.
10
<PAGE>
(A) Every Participant shall file with the Committee a written designation,
in such form as specified by the Committee, of one or more persons as the
Beneficiary who shall be entitled to receive the benefits, if any, payable under
the Plan after the Participant's death. A Participant may from time to time
revoke or change such Beneficiary designation without the consent of any prior
Beneficiary by filing a new designation with the Committee. The last such
designation received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of any date prior to such receipt. All decisions of
the Committee concerning the effectiveness of any Beneficiary designation, and
the identity of any Beneficiary, shall be final. If a Beneficiary shall die
after the death of the Participant and prior to receiving the payment(s) that
would have been made to such Beneficiary had such Beneficiary's death not
occurred, and no contingent Beneficiary has been designated, then for the
purposes of the Plan the payment(s) that would have been received by such
Beneficiary shall be made to the Beneficiary's estate.
(B) If no Beneficiary designation is in effect at the time of a
Participant's death, the benefits, if any, payable under the Plan after the
Participant's death shall be made to the Participant's Surviving Spouse, if any,
or if the Participant has no Surviving Spouse, to the Participant's estate. If
the Committee is in doubt as to the right of any person to receive such
benefits, the Committee may direct the Company to withhold payment, without
liability for any interest thereon, until the rights thereto are determined, or
the Committee may direct the Company to pay any such amount into any court of
appropriate jurisdiction and such payment shall be a complete discharge of the
liability of the Company therefor.
ARTICLE 10 - AMENDMENT AND TERMINATION
--------------------------------------
10.1 RIGHT TO AMEND OR TERMINATE PLAN.
(A) Subject to Subsection (c), the Board of Directors of Gold Kist Inc.
reserves the right at any time to amend or terminate the Plan, in whole or in
part, and for any reason and without the consent of any Participant or
Beneficiary.
(B) The Committee may adopt any ministerial and non substantive amendment
which may be necessary or appropriate to facilitate the administration,
management and interpretation of the Plan, provided the amendment does not
materially affect the currently estimated cost to the Company of maintaining the
Plan.
(C) In no event shall an amendment or termination reduce the Company's
obligations under Deferral Elections made before such amendment or termination;
provided, however, that this restriction shall not apply to any benefit that has
not actually accrued of the date of such amendment or termination (such as the
right to an enhanced death benefit, if the Participant is still living on the
date of such amendment or termination, or the right to make future deferrals
under the Plan), nor shall this restriction prevent the Company from discharging
its obligations under this Plan by providing for an immediate payout of the
benefits actually accrued under this Plan as of the date of such amendment or
termination.
11
<PAGE>
10.2 NOTICE. Notice of any termination or material amendment of the Plan
shall be given by the Board of Directors of Gold Kist Inc. or by the Committee,
whichever adopts the amendment, to each Participant.
ARTICLE 11 - GENERAL PROVISIONS
-------------------------------
11.1 NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained in the Plan shall
give any Participant the right to be retained in the employment of the Company
or affect the right of the Company to dismiss any Participant. The adoption and
maintenance of the Plan shall not constitute a contract between any Company and
Participant or consideration for, or an inducement to or condition of, the
employment of any Participant.
11.2 PAYMENT ON BEHALF OF PAYEE. If the Committee shall find that any
person to whom any amount is payable under the Plan is unable to care for such
person's affairs because of illness or accident, or is a minor, or has died,
then any payment due such person or such person's estate (unless a prior claim
therefor has been made by a duly appointed legal representative) may, if the
Committee so elects, be paid to such person's spouse, a child, a relative, an
institution maintaining or having custody of such person, or any other person
deemed by the Committee to be a proper recipient on behalf of such person
otherwise entitled to payment. Any such payment shall be a complete discharge
of the liability of the Plan and the Company therefor.
11.3 NONALIENATION. No interest, expectancy, benefit, payment, claim or
right of any Participant or Beneficiary under the Plan shall be (a) subject in
any manner to any claims of any creditor of the Participant or Beneficiary, (b)
subject to the debts, contracts, liabilities or torts of the Participant or
Beneficiary or (c) subject to alienation by anticipation, sale, transfer,
assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind.
If any person shall attempt to take any action contrary to this Section, such
action shall be null and void and of no effect, and the Committee and the
Company shall disregard such action and shall not in any manner be bound thereby
and shall suffer no liability on account of its disregard thereof. If the
Participant, Beneficiary, or any other beneficiary hereunder shall become
bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber, or
charge any right hereunder, then such right or benefit shall, in the discretion
of the Committee, cease and terminate, and in such event the Committee may hold
or apply the same or any part thereof for the benefit of the Participant or
Beneficiary or the spouse, children, or other dependents of the Participant or
Beneficiary, or any of them, in such manner and in such amounts and proportions
as the Committee may deem proper.
11.4 NO TRUST OR FUNDING CREATED. The obligations of the Company to make
payments hereunder shall constitute a liability of the Company to a Participant
or Beneficiary, as the case may be. Such payments shall be made from the
12
<PAGE>
general funds of the Company, and the Company shall not be required to establish
or maintain any special or separate fund, or purchase or acquire life insurance
on a Participant's life, or otherwise to segregate assets to assure that such
payment shall be made, and neither a Participant nor a Beneficiary shall have
any interest in any particular asset of the Company by reason of its obligations
hereunder. Nothing contained in the Plan shall create or be construed as
creating a trust of any kind or any other fiduciary relationship between the
Company and a Participant or any other person. The rights and claims of a
Participant or a Beneficiary to a benefit provided hereunder shall
have no greater or higher status than the rights and claims of any other
general, unsecured creditor of the Company.
11.5 BINDING EFFECT. Obligations incurred by the Company pursuant to this
Plan shall be binding upon and inure to the benefit of the Company, its
successors and assigns, and the Participant and the Participant's Beneficiary.
11.6 MERGER OR CONSOLIDATION. In the event of a merger or a consolidation
by the Company with another corporation, or the acquisition of substantially all
of the assets or outstanding stock of the Company by another corporation, then
and in such event the obligations and responsibilities of the Company under this
Plan shall be assumed by any such successor or acquiring corporation, and all of
the rights, privileges and benefits of the Participants and Beneficiaries
hereunder shall continue.
11.7 ENTIRE PLAN. This document, any written amendments hereto and the
Deferral Elections contain all the terms and provisions of the Plan and shall
constitute the entire Plan, any other alleged terms or provisions being of no
effect.
11.8 MISCELLANEOUS. Where appropriate in this Plan, words used in the
singular shall include the plural, and words used in the masculine shall include
the feminine or neuter. This Plan and all rights hereunder are governed by
ERISA and, to the extent that state law is applicable, the laws of the State of
Georgia shall govern this Plan.
IN WITNESS WHEREOF, Gold Kist Inc. has caused this Plan to be executed this
22nd day of July, 1994.
- ---- ----
GOLD KIST INC.
[Corporate Seal] By: /s/ Harold O. Chitwood
-------------------------------------
Chief Executive Officer and Chairman,
Management Executive Committee
ATTEST:
/s/ Jack L. Lawing
- ------------------
Secretary
13
<PAGE>
SALARY DEFERRAL ELECTION UNDER THE
GOLD KIST INC. EXECUTIVE SAVINGS PLAN
Gold Kist Inc. maintains the Executive Savings Plan to help eligible
employees accumulate benefits for retirement. As an eligible employee, You may
elect to make deferrals and receive benefits as set forth in the Plan.
You and the Participating Company agree as follows:
1. YOU AGREE TO DEFER SALARY. You elect to defer the receipt of the
-------------------------
following annual percent of SALARY AND/OR BONUS which You earn during the
________ calendar year(s) and which, but for this Deferral Election, would be
paid to You:
______________________
Salary %
______________________
Bonus %
______________________
2. THE COMPANY PROMISES TO PAY BENEFITS. The Participating Company
------------------------------------
promises to pay benefits as provided in the Plan, subject to all terms and
conditions provided in the Plan.
3. INCORPORATION OF PLAN. The Plan and all its provisions are
---------------------
incorporated herein by reference and shall govern the rights and obligations
hereunder, including the meanings of any capitalized terms which are defined in
the Plan.
4. ENTIRE AGREEMENT. This Deferral Election and the Plan constitute the
----------------
entire agreement between You and the Participating Company with respect to the
deferrals made hereunder and the benefits based thereon.
-----------------------
Your Signature
-----------------------
Your Printed Name
Date:
-----------------
Received and approved by the Committee:
By:
---------------------
Date:
--------------------
<PAGE>
BENEFICIARY DESIGNATION UNDER THE
GOLD KIST INC. EXECUTIVE SAVINGS PLAN
You and the Participating Company have entered into one or more Deferral
Elections under the Executive Savings Plan.
As a Participant in the Plan, You hereby name the following person or
persons, entity or entities (herein called "Designated Beneficiary(ies)") to
receive such amounts, if any, that are payable under the Plan after your death
(herein called "Survivor Benefits"):
PRIMARY BENEFICIARY
Social Security
Name and Relationship Address Number
- -------------------------------------------------------------------------------
1.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
3.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
4.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
If your Survivor Benefits, if any, are to be paid to more than one
Designated Beneficiary, such Survivor Benefits shall be divided equally between
or among such Designated Beneficiaries.
If any Primary Beneficiary(ies) named above is (are) not in existence at
your death, then You name the following Contingent Beneficiary(ies) to receive
the benefit that such Primary Beneficiary(ies) would have received:
CONTINGENT BENEFICIARY
Social Security
Name and Relationship Address Number
Contingent Beneficiary to Primary Beneficiary No. _____:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Contingent Beneficiary to Primary Beneficiary No. _____:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
Contingent Beneficiary to Primary Beneficiary No. _____:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Contingent Beneficiary to Primary Beneficiary No. _____:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
If a Primary Beneficiary dies before You do and there is no Contingent
Beneficiary named to take such Primary Beneficiary's share, then the Survivor
Benefits will be paid to your Surviving Spouse, if any, and if not to your
estate.
If a Designated Beneficiary dies after You do but before all Survivor
Benefit payments have been made to such Designated Beneficiary, then the
remaining payments will be made to the Designated Beneficiary's estate.
This Beneficiary Designation Form shall remain in effect until revoked by
You in writing or until superseded by your execution and delivery of a
substitute Beneficiary Designation Form. No such revocation or substitute
Beneficiary Designation Form will be effective until it is actually received by
the Committee.
Survivor Benefit payments will have federal and state tax consequences and
such consequences may depend on the identity of the beneficiary of such payments
(for example, whether the beneficiary is your spouse); and You acknowledge that
You have been advised to consult an independent, professional tax advisor before
completing this Beneficiary Designation Form.
-----------------------
Your Signature
-----------------------
Your Printed Name
Date:
-----------------
Received by the Committee:
By:
---------------------
Date:
--------------------
<PAGE>
PAYMENT ELECTION UNDER THE
GOLD KIST INC. EXECUTIVE SAVINGS PLAN
You and the Participating Company have entered into one or more Deferral
Elections under the Executive Savings Plan.
PAYMENT ELECTION - RETIREMENT BENEFIT
-------------------------------------
As a Participant in the Plan, I hereby elect pursuant to Section 3.4 of the
Plan to have any Retirement Benefit under Article 4 paid in the following
manner:
[ ] Lump sum
[ ] Equal annual installments for 10 years
[ ] I do not wish to make an election at this time. I understand that
if I do not make a valid election pursuant to the terms of the
Plan, benefits will be paid in equal annual installments for 10
years.
PAYMENT ELECTION - DEATH BENEFIT
--------------------------------
As a Participant in the Plan, I hereby elect pursuant to Section 3.4 of the
Plan to have any Death Benefit under Article 5 paid in the following manner:
[ ] Lump sum
[ ] Equal annual installments for 10 years
[ ] I do not wish to make an election at this time. I understand that
if I do not make a valid election pursuant to the terms of the
Plan, benefits will be paid in equal annual installments for 10
years.
-----------------------
Your Signature
-----------------------
Your Printed Name
Date:
-----------------
Received by the Committee:
By:
---------------------
Date:
--------------------
<PAGE>
GOLD KIST INC.
SPLIT DOLLAR LIFE INSURANCE PLAN
ARTICLE I
ESTABLISHMENT AND PURPOSE
-------------------------
This Plan is established for the benefit of selected key Employees and
Directors and shall be known as the "Gold Kist Inc. Split Dollar Life Insurance
Plan." The purpose of the Plan is to provide Company-financed split dollar life
insurance benefits in order to recruit and to retain selected key Employees and
Directors for the Company.
ARTICLE II
DEFINITIONS
-----------
The following words and phrases as used in the Plan have the following
meanings:
2.1 "Affiliate" means either (a) any employer that is a corporation
---------
included with Gold Kist Inc. in a "controlled group of corporations," as defined
in Code section 414(b), or an unincorporated business included with Gold Kist
Inc. in a group of trades or businesses under "common control," as defined by
regulations prescribed by the Secretary of the Treasury under Code section
414(c) or (b) any other employer, whether incorporated or unincorporated, which
is not described in the foregoing clause (a) but which Gold Kist Inc. has an
ownership interest in to any extent.
2.2 "Agreement" means a Split Dollar Insurance Agreement in the form
---------
approved by the Company.
<PAGE>
2.3 "Board" (or "Board of Directors") means the present and any
-----
succeeding Board of Directors of Gold Kist Inc. or the Executive Committee of
said Board which shall have the authority of said Board with respect to the
Plan.
2.4 "Code" means the Internal Revenue Code of 1986, as amended from time
----
to time.
2.5 "Company" means Gold Kist Inc., a Georgia corporation, or any
-------
entity which succeeds to its rights and obligations with respect to the Plan and
any other Affiliate of Gold Kist Inc. which is a Participating Company.
2.6 "Director" means a person who is either a Director or Director
--------
Emeritus in accordance with the by-laws of the Company.
2.7 "Employee" means an employee of the Company or an Affiliate (a) who
--------
is designated in writing by the Plan Administrator to participate in the Plan
and (b) on whose life the Company is able to purchase a Policy on terms and at a
cost that are acceptable to the Company in its sole discretion.
2.8 "Participant" means either an Employee or Director or, if the
-----------
Employee or Director so elects and the Company consents, either the trustee or
trustees of a trust established by the Employee or Director or an individual or
individuals designated by the Employee or Director.
2.9 "Participating Company" means Gold Kist Inc. or an Affiliate which
---------------------
by action of its board of directors or equivalent governing body and with the
written consent of the Board of Directors ("Board") of Gold Kist Inc., has
adopted the Plan; provided that the Board may, subject to the foregoing proviso,
waive the requirement that such board of directors or equivalent governing body
effect such adoption. The term "Participating Company" shall be construed as if
the Plan were solely the Plan of such Participating Company, unless the context
plainly requires otherwise. Notwithstanding the foregoing, (i) if a Participant
is employed by or a Director of an Affiliate as defined in clause (a) of Section
2.2 of this Plan, then the obligation to provide benefits hereunder while the
Participant is employed by such Affiliate shall be the obligation of Gold Kist
Inc. as well as such Affiliate; and (ii) if a Participant is employed by or a
Director an Affiliate as defined in clause (b) of Section 2.2 of this Plan, then
the obligation to provide benefits hereunder while the Participant is employed
by such Affiliate shall be the obligation solely of such Affiliate, and not a
joint obligation of Gold Kist Inc. or any other Affiliate.
2
<PAGE>
2.10 "Plan" means the "Gold Kist Inc. Split Dollar Life Insurance Plan"
----
as set forth herein and as amended from time to time.
2.11 "Plan Administrator" means the Chief Executive Officer of Gold Kist
------------------
Inc. or such other person(s) as he shall designate in writing.
2.12 "Plan Year" means the calendar year; provided that records with
---------
respect to each individual policy under the Plan shall be maintained on the
basis of the applicable policy year.
2.13 "Policy" means a life insurance policy issued by an insurance
------
company designated by the Company on the life of the Employee or Director or a
joint life insurance policy on the life of the Employee or Director and another
individual designated by the Employee or Director and approved by the Company.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
-----------------------------
3.1 Agreements. In order to participate in the Plan, a Participant
----------
shall enter into an Agreement with the Company and execute an assignment of the
Policy as collateral (the "Collateral Assignment") in favor of the Company on
such terms as shall be determined by the Company in its sole discretion. The
Agreement and the Collateral Assignment are hereby incorporated into and made a
part of the Plan.
3.2 Policy. Each Agreement shall provide for the purchase of a Policy
------
from an insurance company. Both the identity of the insurance company and the
terms of the Policy shall be determined by the Company in its sole discretion.
3.3 Benefits. All benefits paid under the Plan in respect of a
--------
Participant shall be determined by the terms of the applicable Agreement.
3.4 Multiple Agreements. The Company and a Participant may enter into
-------------------
more than one Agreement pursuant to the Plan.
3
<PAGE>
ARTICLE IV
ADMINISTRATION
--------------
4.1 In General. The Plan shall be administered by the Plan
----------
Administrator, who shall be the Plan's named fiduciary.
4.2 Expenses. The expenses incident to the operation of the Plan,
--------
including the compensation of attorneys, advisors, actuaries, and such other
persons providing technical and clerical assistance as may be required, shall be
paid by the Company. Notwithstanding the foregoing, "expenses" shall not be
deemed to include sales commissions, mortality charges, insurance company
administrative expenses or similar charges that customarily would be charged
internally to each Policy.
4.3 Powers of the Plan Administrator. In addition to any implied powers
--------------------------------
and duties that may be needed to carry out the provisions of the Plan, the
Agreement and the Collateral Assignment, the Plan Administrator shall have the
following specific powers and duties in his sole discretion:
(a) To make and enforce such rules and regulations as he shall deem
necessary or proper for the efficient administration of the Plan;
(b) To interpret the Plan and to decide any and all matters arising
hereunder, including the right to remedy possible ambiguities, inconsistencies,
or omissions; provided that all such interpretations and decisions shall be
applied in a uniform and nondiscriminatory manner to all persons similarly
situated;
(c) To compute the amount of benefits that shall be payable to any
Participant in accordance with the provisions of the Plan;
(d) To appoint other persons to carry out such ministerial
responsibilities under the Plan as he may determine; and
4
<PAGE>
(e) To employ one or more persons to render advice with respect to
any of his responsibilities under the Plan.
4.4 Finality. To the extent permitted by applicable law, determinations
--------
by the Plan Administrator and any interpretation, rule or decision adopted by
the Plan Administrator under the Plan, the Agreement, or the Collateral
Assignment or in carrying out or administering the Plan shall be final and
binding for all purposes and upon all interested persons, their heirs and
personal representatives.
4.5 Benefit Claims Procedure. A claim for a benefit under the Plan by
------------------------
any person shall be filed in the manner and governed by the procedures set forth
in the Agreement.
ARTICLE V
AMENDMENTS
----------
5.1 Amendment and Termination.
-------------------------
(a) The Board of Directors of Gold Kist Inc. reserves the right at any
time to amend or terminate the Plan, in whole or in part, and for any reason and
without the consent of any Participant.
(b) The Plan Administrator may adopt any ministerial and non
substantive amendment which may be necessary or appropriate to facilitate the
administration, management and interpretation of the Plan, provided the
amendment does not materially affect the currently estimated cost to the Company
of maintaining the Plan.
5.2 Merger or Consolidation. In the event of a merger or a
-----------------------
consolidation by the Company with another corporation, or the acquisition of
substantially all of the assets or outstanding stock of the Company by another
corporation, then and in such event the obligations and responsibilities of the
Company under this Agreement shall be assumed by any such successor or acquiring
corporation, and all of the rights, privileges and benefits of the Participant
under this Agreement shall continue.
5
<PAGE>
ARTICLE VI
MISCELLANEOUS
-------------
6.1 Incapacity. If the Company determines that any person entitled to
----------
benefits hereunder is unable to care for his affairs because of illness or
accident, any payment due (unless a duly qualified guardian or other legal
representative has been appointed) may be paid for the benefit of such person to
his spouse, parent, brother, sister or other party deemed by the Plan
Administrator to have incurred expenses for such person or may be paid to a
trust for the benefit of such person where the Plan Administrator determines in
its sole discretion that such trust provides for the primary benefit of such
person.
6.3 Required Information. Any person eligible to receive benefits
--------------------
hereunder shall furnish to the Plan Administrator any information or proof
requested by the Plan Administrator and reasonably required for the proper
administration of the Plan. Failure on the part of any person to comply with
any such request within a reasonable period of time shall be sufficient grounds
for delay in the payment of any benefits due under the Plan until such
information or proof is received by the Plan Administrator. If any person
claiming benefits under the Plan makes a false statement that is material to
such person's claim for benefits, the Company may offset against future payments
any amount paid to such person to which such person was not entitled under the
provisions of the Plan.
6.4 Policy Claims. Any claim for benefits under a Policy shall be
-------------
subject to and governed by the terms of the Policy.
6.5 No Right To Employment. Nothing in this Plan or any Agreement shall
----------------------
be deemed to constitute a contract of employment or to give any Employee the
right to be retained in the service of the Company or an Affiliate or to
interfere with the right of the Company or an Affiliate to discharge any
Employee at any time without regard to the effect that such discharge may have
upon the Employee under the Plan.
6.6 Withholding Taxes. The Plan Administrator may make any appropriate
-----------------
arrangements to deduct from all amounts paid under the Plan any taxes required
to be withheld by any government or government agency. The Employee shall pay
all taxes on amounts paid under the Plan to the extent that no taxes are
withheld, irrespective of whether withholding is required.
6
<PAGE>
6.7 Gender and Number. In order to shorten and to improve the
-----------------
understandability of the Plan document by eliminating usage of such phrases as
"his or her" and "Affiliate or Affiliates," any masculine terminology herein
shall also include the feminine and neuter, and the definition of any term
herein in the singular shall also include the plural, except when otherwise
indicated by the context.
6.8 Headings. Any headings used in this instrument are for convenience
--------
of reference only and are to be ignored in the construction of any provision
hereof.
6.9 Severability. If any provision of the Plan shall be held illegal or
------------
invalid for any reason, such illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
such illegal or invalid provision had never been inserted herein.
6.10 Governing Law. The Plan shall be construed, administered and
-------------
regulated in accordance with the laws of the State of Georgia, except to the
extent that such laws are preempted by Federal law.
6.11 Effective Date. The Plan shall be effective as of March 1, 1995.
--------------
Gold Kist Inc.
By: /s/ Harold O. Chitwood
-------------------------------------
Chairman and Chief Executive Officer
[Corporate Seal]
Attest:
By: /s/ Jack L. Lawing
-----------------------
Secretary
7
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-01-1995
<PERIOD-END> JUL-01-1995
<CASH> 2,720
<SECURITIES> 0
<RECEIVABLES> 21,896
<ALLOWANCES> 264
<INVENTORY> 46,781
<CURRENT-ASSETS> 72,768
<PP&E> 166,981
<DEPRECIATION> 87,408
<TOTAL-ASSETS> 155,604
<CURRENT-LIABILITIES> 39,830
<BONDS> 12,425
<COMMON> 65,363
0
0
<OTHER-SE> 23,523
<TOTAL-LIABILITY-AND-EQUITY> 155,604
<SALES> 505,975
<TOTAL-REVENUES> 506,368
<CGS> 486,064
<TOTAL-COSTS> 486,064
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 34
<INTEREST-EXPENSE> 1,703
<INCOME-PRETAX> 3,879
<INCOME-TAX> 1,132
<INCOME-CONTINUING> 2,747
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,747
<EPS-PRIMARY> .19
<EPS-DILUTED> 0
</TABLE>
