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 June 29, 1996
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:
(770) 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 28, 1996, the Registrant had 14,533,017 shares
of Common Stock outstanding, of which 3,637,123 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 $39,099,072 based on the average of
the bid and asked prices of such stock in the over-the-counter
market on August 28, 1996. 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 23, 1996, are
incorporated by reference into Part III.
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 Gold Kist
Farms and Young 'n Tender labels 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 facility will be expanded in order to provide a
weekly hatch capacity of 1.4 million chicks by December 1997.
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
12,000 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. It is
being expanded to provide a weekly processing capacity of 1.4
million chicks by December 1997.
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.
Acquisition of Siler City, North Carolina Poultry Processing
Complex. In July 1996, the Company completed an acquisition
of a poultry processing complex headquartered in Siler City,
North Carolina. The complex consists of a 60,000 square foot
processing plant with a processing capacity of 630,000
chickens per week on two shifts. The facilities also include
a feed mill in Staley, North Carolina with a capacity of 4,000
tons of feed per week for the Siler City operations, and a
35,520 square foot hatchery in Staley, North Carolina with a
weekly hatch capacity of 635,000 chicks. Products processed
at the Siler City complex include whole chickens and chicken
parts, deboned and further processed chicken products.
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 Gold Kist Farms and Young 'n Tender labels. 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
1994, 1995 and 1996, net sales to Publix accounted for 22%,
21% and 19%, 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. The Gold Kist Farms, 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 1994, 1995, and 1996, sales to Gold Kist
represented approximately 21% , 20% and 21%, 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 supplies a significant portion of its
further processed chicken products to Gold Kist at values
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 Gold Kist Farms
and Young 'n Tender labels.
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 area 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 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, 1996, the Company employed approximately 972
employees at its Sanford complex, 1,308 employees at its
Douglas complex, 1,077 employees at its Russellville complex,
36 employees at its Pompano Beach distribution center, 18
employees at its Durham distribution center, approximately
2,247 employees in its Sumter complex, and approximately 5,658
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>
John Bekkers 51 Director, Chairman of the Board
of Directors
Gaylord O. Coan 60 Director, Vice Chairman of the
Board of Directors
Kenneth N. Whitmire 58 Director, Chief Executive
Officer
E. Carlyle Ragans 50 President, Chief Operating
Officer
Sidney L. Prince 38 Vice President
Norman R. Robinson 57 Vice President
Jack L. Lawing 58 Secretary
Langley C. Thomas, Jr. 43 Treasurer, Chief Financial
Officer
Don W. Mabe 43 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.
John Bekkers was elected Chairman of the Board of Directors
of the Company on October 25, 1995; he had previously served
as Vice President of the Company since July 27, 1995. Mr.
Bekkers has served as President and Chief Operating Officer of
Gold Kist since October 1995. He was Executive Vice President
of Gold Kist from October 1994 to October 1995. He was
Division Manager of the Gold Kist Northeast Alabama Poultry
Division from May 1988 until October 1994.
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 is Chief Executive
Officer of Gold Kist, a position he has held since October
1995. He previously served as President and Chief Operating
Officer of Gold Kist from October 1991 to October 1995.
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.
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 the
Durham distribution facility leased from Gold Kist, and 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 $1.125 million balance at July 1, 1996. 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 and officers the companies (Ronald Pete Windham
and Windham Enterprises, Inc. on their behalf and on behalf of and
for the use and benefit of Gold Kist Inc. and its
shareholders/members v. Harold O. Chitwood, individually in his
capacity as an officer of Gold Kist and a Director of Golden Poultry;
et al). The lawsuit alleged that the named defendants violated their
fiduciary duties by diverting corporate opportunities from Gold Kist
to the Company and Carolina Golden Products Company in connection
with the creation of the Company and Carolina Golden Products Company
and by permitting their continued operations. Among the remedies
requested were the transfer of the Company's operations to Gold Kist.
In March 1994, the Court certified the Windham litigation as a class
action. In September 1995, the Company and Carolina Golden Products
Company were dismissed from the litigation. On October 25, 1995, the
jury in the Windham case returned verdicts in favor of the plaintiffs
in the litigation. On July 2, 1996, the Jefferson County, Alabama
Circuit Court Judge entered a memorandum opinion and non-final
judgment in the case directing Gold Kist to acquire the approximately
27% of the Company shares currently owned by investors so that all of
the issued and outstanding stock of the Company would be owned by
Gold Kist or a wholly owned subsidiary, either through a merger or a
tender offer for the minority shares of the Company stock
outstanding. Upon motions for reconsideration filed by both parties
to the action, the Court modified its memorandum opinion in a Final
Judgment and Decree entered upon September 13, 1996, under which Gold
Kist was relieved of the Court's requirement to acquire all of the
shares of Company common stock not owned by Gold Kist and was
directed to acquire only that Company stock held by any current
officers or directors of Gold Kist and their spouses and minor
children. The Court also ordered Gold Kist to cause the surrender of
all Golden Poultry stock options held by Gold Kist officers and
directors or the exercise of such options and purchase by Gold Kist
of the resultant stock, to redeem certain outstanding notified
equity of Gold Kist, to pay $4.2 million in attorney's fees to the
plaintiffs attorneys and to establish a policy prohibiting officers
and directors of Gold Kist from future ownership of Golden Poultry
stock. 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.
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 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
Fiscal 1996
First Quarter $6.88 $5.75
Second Quarter 9.00 6.13
Third Quarter 12.25 8.25
Fourth Quarter 11.25 8.50
</TABLE>
As of August 28, 1996 there were 369 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>
1995 1996
<S> <C> <C>
First Quarter $ .01 $ .01
Second Quarter .01 .01
Third Quarter .01 .01
Fourth Quarter .01 .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 June 29, 1996, and "Consolidated Balance Sheet Data" as
of June 27, 1992, June 26, 1993, June 25, 1994, July 1, 1995, and June 29,
1996 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 July 1, 1995 and June 29, 1996 and for each of the
years in the three-year period ended June 29, 1996, 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 27, June 26, June 25, July 1, June 29,
1992 1993 1994 1995 1996
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Consolidated Statements of Operations Data:
Net sales . . . . . . . . . . . . . . . . $336,806 $388,330 $447,139 $505,975 $600,237
Cost of sales . . . . . . . . . . . . . . 330,759 363,407 427,607 486,064 552,184
Gross profit . . . . . . . . . . . . . . . 6,047 24,923 19,532 19,911 48,053
Selling, administrative and general
expenses . . . . . . . . . . . . . . . 13,120 15,272 16,122 16,687 20,999
Operating income (loss) . . . . . . . . . (7,073) 9,651 3,410 3,224 27,054
Other (expense) income:
Interest expense . . . . . . . . . . . (2,273) (2,366) (1,311) (1,703) (1,459)
Interest income . . . . . . . . . . . 6 74 67 12 7
Miscellaneous, net . . . . . . . . . . 767 1,044 299 381 208
(1,500) (1,248) (945) (1,310) (1,244)
Earnings (loss) before minority interest,
income taxes, and cumulative effect
of change in accounting principle . . . (8,573) 8,403 2,465 1,914 25,810
Minority interest in partnership (earnings)
loss . . . . . . . . . . . . . . . . . . 5,751 4,102 3,259 1,965 (243)
Earnings (loss) before income taxes and
cumulative effect of change in
accounting principle . . . . . . . . . . (2,822) 12,505 5,724 3,879 25,567
Income tax expense (benefit) . . . . . . . (1,044) 4,642 1,676 1,132 9,526
Earnings (loss) before cumulative
effect of change in
accounting principle . . . . . . . . . (1,778) 7,863 4,048 2,747 16,041
Cumulative effect of change in
accounting principle, net of
income tax benefit of $748 (A) . . . . (1,517) - - - -
Net earnings (loss) . . . . . . . . . . . $ (3,295) $ 7,863 $ 4,048 $ 2,747 $16,041
Net earnings (loss) per share:
Earnings (loss) before cumulative
effect of change in accounting
principle . . . . . . . . . . . . . . $ (.12) $ .53 $ .27 $ .19 $ 1.10
Cumulative effect of change in
accounting principle . . . . . . . . . $ (.10) $ - $ - $ - $ -
Net earnings (loss) . . . . . . . . . . $ (.22) $ .53 $ .27 $ .19 $ 1.10
Cash dividends per share . . . . $ .033 $ .034 $ .037 $ .04 $ .04
Note A: In fiscal 1992, the Company adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions."
</TABLE>
<TABLE>
<CAPTION>
As of
June 27, June 26, June 25, July 1, June 29,
1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
Total assets . . . . . . . . . . . . $143,922 $141,435 $154,500 $155,604 $163,979
Property, plant and equipment, net . 93,856 82,407 87,591 79,573 73,738
Working capital . . . . . . . . . . 22,718 31,599 24,824 32,938 44,535
Long-term debt . . . . . . . . . . . 8,823 7,648 13,462 12,425 4,840
Long-term debt, payable to Gold Kist 25,000 20,000 - - -
Other liabilities . . . . . . . . . 2,664 2,473 3,720 4,509 5,495
Shareholders' equity . . . . . . . . 77,928 85,308 88,220 88,886 104,357
</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 1992, market prices for corn and soybean meal, principally feed grains,
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 in 1994, feed ingredient costs
declined in fiscal 1995. Average cash market prices for corn and soybean meal
increased 59% and 30%, respectively, during 1996 as compared to 1995 due to
the weather reduced 1995 harvest and strong export demand. Based upon planted
acreage in the United States, feed ingredient prices are likely to moderate in
1997 assuming favorable weather conditions during the summer of 1996.
Broiler market prices 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. During 1996, average broiler market prices increased approximately
10% as compared to 1995 as a result of hot, dry weather conditions that
lowered meat production in the summer of 1995, as well as lower than expected
poultry industry expansion and favorable export markets.
According to USDA estimates, the supply of broilers is expected to increase
at a 5.5% rate in 1996 and a 5.7% rate in 1997 as compared to the 6.7% average
annual increase between 1992 and 1995. 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.
Results of Operations
<TABLE>
<CAPTION>
Percentage Relationships to Net Sales
For Fiscal Years Ended
June 25, July 1, June 29,
1994 1995 1996
<S> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . 100.00% 100.00% 100.00%
Cost of sales . . . . . . . . . . . . . . . . . . . 95.63 96.06 91.99
Gross profit . . . . . . . . . . . . . . . . . . . 4.37 3.94 8.01
Selling, administrative and general expenses . . . 3.61 3.30 3.50
Operating income . . . . . . . . . . . . . . . . . .76 .64 4.51
Other (expense) income:
Interest expense . . . . . . . . . . . . . . . . (.28) (.34) (.24)
Miscellaneous . . . . . . . . . . . . . . . . . . .07 .08 .03
Earnings before minority interest and income taxes .55 .38 4.30
Minority interest in partnership (earnings) loss . .73 .39 (.04)
Earnings before income taxes . . . . . . . . . . . 1.28 .77 4.26
Income tax expense . . . . . . . . . . . . . . . . .37 .23 1.59
Net earnings (loss) . . . . . . . . . . . . . . . .91% .54% 2.67%
</TABLE>
Fiscal 1996 compared to fiscal 1995
Net Sales. Net sales for 1996 were $600.2 million, an increase of
approximately 19% from net sales of $506.0 million for 1995. The increase in
net sales was the result of a 10% increase in average selling prices and a 9%
increase in pounds of broiler products marketed. The Company sold
approximately 884.5 million pounds of broiler products in 1996 as compared to
813.4 million pounds in 1995. The increase in pounds of broilers marketed was
due to changes in product mix requiring larger broilers for the production of
deboned products. Broiler market prices strengthened in 1996 as a result of
lower than expected U.S. broiler production and strong export demand.
Consolidated net sales include the net sales of Carolina Golden Products, a
consolidated partnership, which had net sales of $167.7 million and $136.9
million, respectively, for fiscal 1996 and 1995. Net sales of Carolina Golden
Products include $127.7 million in net sales of further-processed poultry
products to Gold Kist. These further-processed products are resold under a
joint marketing agreement; whereby, similar products produced by Gold Kist and
Carolina Golden Products are marketed by Gold Kist. The Company's perishable
food distribution facility in South Florida had net sales of $33.6 million and
$31.7 million, respectively, for fiscal 1996 and 1995.
Cost of Sales. Fiscal 1996 cost of sales decreased to 91.99% of net sales
from 96.06% of net sales in fiscal 1995. The decrease in the percentage
relationship was primarily the result of the increase in average selling
prices, which was partially offset by higher feed ingredient costs. Although
cash commodity prices for feed grains, such as corn and soybean meal increased
59% and 30%, respectively, from a year ago, the Company's forward purchasing
and hedging strategies resulted in an 8% increase in feed ingredient costs for
fiscal 1996. Improvements in processing efficiency also contributed to the
decline in the percentage relationship. Fiscal 1996 cost of sales included
$32.6 million associated with the perishable food distribution facility in
South Florida as compared to $30.6 million for 1995.
Selling, administrative and general expenses. Selling, administrative and
general expenses for fiscal 1996 were $21.0 million or 3.50% of net sales as
compared to $16.7 million or 3.30% of net sales in fiscal 1995. The increase
in the percentage relationship was due primarily to increased incentive
compensation expense related to the improvement in net earnings.
Interest and other income. Fiscal 1996 interest expense of $1.5 million
decreased $244,000 as compared to fiscal 1995 as a result of lower average
borrowings. The Company recorded capitalized construction period interest
credits of $72,000 and $93,000, respectively, during fiscal 1996 and 1995.
Minority interest in partnership (earnings) loss. Minority interest in
partnership earnings of $243,000 for fiscal 1996 represents Gold Kist's 49%
pro rata share of Carolina Golden Products' earnings. For 1995, Gold Kist's
pro rata share of Carolina Golden Products' loss was $2.0 million. (See note
1(a) of Notes to Consolidated Financial Statements.) Carolina Golden Products
had earnings of $497,000 for 1996 as compared to a loss of $4.0 million in
1995. Earnings for 1996 resulted from improved performance in further-
processing operations and higher average selling prices.
Earnings before income taxes. Fiscal 1996 earnings before income taxes of
$25.6 million compares to $3.9 million for 1995. The increase in earnings
before income taxes was due to higher average selling prices and improvements
in plant operations. These factors were partially offset by increased feed
ingredient costs.
Income taxes. The Company's effective tax rate was 37.3% for 1996 as
compared to 29.2% for 1995. The increase in the effective rate was due to the
expiration of targeted jobs credits and the increase in the federal statutory
income tax rate for 1996 to 35%. The federal statutory rate for 1995 was 34%.
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
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.
Income taxes. The Company's effective tax rate was 29.2% for 1995 as
compared to 29.3% for 1994. The effective rates for 1995 and 1994 reflected
the impact of targeted jobs credits. The federal statutory rate was 34% for
1995 and 1994.
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 August 1996, the Company extended its $25.0 million revolving credit and
term loan facility with a commercial bank. The revolver extends until 1998,
when the outstanding borrowings may be converted to a term loan payable over
five years. In addition, the Company has a $15.0 million short-term credit
facility with Gold Kist. There was no outstanding borrowings under either of
these facilities at June 29, 1996. In August 1996, the Company established a
new $25.0 million revolving credit facility with a commercial bank.
At June 29, 1996, working capital was $44.5 million, the current ratio was
2.14 to 1 and shareholders' equity was $104.4 million. This compared to
working capital of $32.9 million, a current ratio of 1.83 to 1 and
shareholders' equity of $88.9 million at July 1, 1995. The Company's ratio of
long-term debt to total capitalization decreased to 4.4% at June 29, 1996 as
compared to 12.3% at July 1, 1995. 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.
During 1996, inventories increased primarily as a result of the impact of
higher feed grain costs on live poultry and feed ingredient inventories. The
increase in accounts receivable at June 29, 1996, as compared to the prior
fiscal year, was due primarily to higher average selling prices for poultry
products.
Covenants under the terms of industrial development bonds and the revolving
credit and term loan agreement require the Company to maintain certain
financial ratios and minimum levels of working capital and tangible net worth
(see note 3 of Notes to Consolidated Financial Statements). 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 1994, 1995 and 1996, 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 1996, net cash provided by operations was used to repay
borrowings and purchase property, plant and equipment.
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 Sumter, South Carolina facility. The completion
of the two projects increased the Company's processing capacity to 4.3 million
broilers per week. During fiscal 1996, the Company processed an average of
3.9 million broilers per week. Fiscal 1995 and 1996 expenditures of $9.0
million and $12.6 million, respectively, included additional further-
processing capabilities at the Sumter complex and general improvements to
existing production facilities. In July 1996, the Company acquired poultry
production facilities at Siler City, North Carolina for approximately $11.0
million. The complex, which includes a hatchery, feed mill and processing
plant, is capable of processing 630,000 broilers per week. In addition to the
Siler City, North Carolina purchase, the Company anticipates fiscal 1997
capital expenditures of approximately $51.0 million for replacements and
upgrading to existing operations, as well as the construction of additional
processing capacity at its Russellville, Alabama facility.
Approximately 19% of the Company's net sales in fiscal 1996 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 1997.
Future Accounting Requirements
In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" (SFAS 121) was issued. SFAS 121 established accounting
standards for the impairment of long-lived assets, certain identifiable
intangibles and goodwill related to those assets to be held and used, or to be
disposed of. The Company does not believe the adoption of SFAS 121 in fiscal
year 1997 will have a significant impact on the Company's financial condition
or results of operations.
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123) was issued. SFAS 123
encourages companies to adopt a fair value based method of accounting for
stock-based compensation plans in place of the intrinsic value based method
provided for by Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25). Companies which continue to apply the
provisions of APB 25 must make pro forma disclosures in the notes to their
financial statements of net income and earnings per share as if the fair value
based method of accounting defined in SFAS 123 had been applied. The Company
plans to adopt SFAS 123 in fiscal year 1997 on a pro forma disclosure basis.
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.
Item 8. Financial Statements and Supplementary Data.
INDEX
Page
FINANCIAL STATEMENTS:
Independent Auditors' Report 17
Consolidated Balance Sheets as of July 1, 1995 and June 29, 1996 18
Consolidated Statements of Operations for the years ended
June 25, 1994, July 1, 1995 and June 29, 1996 19
Consolidated Statements of Shareholders' Equity for the years
ended June 25, 1994, July 1, 1995 and June 29, 1996 20
Consolidated Statements of Cash Flows for the years ended
June 25, 1994, July 1, 1995 and June 29, 1996 21
Notes to Consolidated Financial Statements 22
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 July 1, 1995 and June 29, 1996, and
the results of their operations and their cash flows for each of the years in
the three-year period ended June 29, 1996, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Atlanta, Georgia
August 2, 1996
<TABLE>
GOLDEN POULTRY COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
<CAPTION>
July 1, 1995 June 29, 1996
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 2,720 2,599
Trade accounts receivable less allowance for doubtful
accounts of $264 in 1995 and $31 in 1996 . . . . . . . . . 21,632 23,654
Inventories (note 1(c)) . . . . . . . . . . . . . . . . . . 46,781 54,903
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,635 2,468
Total current assets . . . . . . . . . . . . . . . . . . . 72,768 83,624
Property, plant and equipment, net (notes 1(d) and 3) . . . . 79,573 73,738
Other assets . . . . . . . . . . . . . . . . . . . . . . . . 3,263 6,617
$155,604 163,979
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (note 3) . . . . . . . . $ 1,036 585
Short-term borrowings from Gold Kist (notes 3 and 7) . . . 9,221 -
Accounts payable . . . . . . . . . . . . . . . . . . . . . 19,325 26,292
Due to Gold Kist (note 7) . . . . . . . . . . . . . . . . . 5,075 1,207
Income taxes payable (note 2) . . . . . . . . . . . . . . . 485 2,705
Accrued compensation and related expenses . . . . . . . . . 4,688 8,300
Total current liabilities . . . . . . . . . . . . . . . . 39,830 39,089
Long-term debt, excluding current portion (note 3) . . . . . 12,425 4,840
Other liabilities (note 6) . . . . . . . . . . . . . . . . . 4,509 5,495
Total liabilities . . . . . . . . . . . . . . . . . . . . 56,764 49,424
Minority interest in consolidated partnership . . . . . . . . 9,954 10,198
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 14,866 shares at July 1, 1995
and 14,882 shares at June 29, 1996 . . . . . . . . . . . . 65,363 65,464
Retained earnings . . . . . . . . . . . . . . . . . . . . . 25,653 41,112
91,016 106,576
Less treasury stock, at cost, 348 shares at July 1, 1995
and 358 shares at June 29, 1996 . . . . . . . . . . . . . . 2,130 2,219
Total shareholders' equity . . . . . . . . . . . . . . 88,886 104,357
Contingencies (notes 7 and 9)
$155,604 163,979
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE> GOLDEN POULTRY COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
<CAPTION>
Years Ended
June 25, 1994 July 1, 1995 June 29, 1996
<S> <C> <C> <C>
Net sales (includes $95,787, $124,275 and
$161,409 to Gold Kist)-(notes 7 and 8) . . . . . . $447,139 505,975 600,237
Cost of sales (includes purchases of $37,576,
$44,522 and $59,930 from Gold Kist)-
(note 7) . . . . . . . . . . . . . . . . . . . . . 427,607 486,064 552,184
Gross profit . . . . . . . . . . . . . . . . 19,532 19,911 48,053
Selling, administrative and general expenses (includes
administrative expenses of $6,041, $6,042 and
$7,713 paid to Gold Kist)-(notes 5, 6 and 7) . . . 16,122 16,687 20,999
Operating income . . . . . . . . . . . . . . 3,410 3,224 27,054
Other (expense) income:
Interest expense (includes interest expense of $988,
$1,073 and $1,113 paid to Gold Kist)-(notes 1(d),
3 and 7) . . . . . . . . . . . . . . . . . . . (1,311) (1,703) (1,459)
Interest income . . . . . . . . . . . . . . . . . 67 12 7
Miscellaneous, net . . . . . . . . . . . . . . . . 299 381 208
(945) (1,310) (1,244)
Earnings before minority interest and
income taxes . . . . . . . . . . . . . . . . 2,465 1,914 25,810
Minority interest in partnership (earnings) loss . . 3,259 1,965 (243)
Earnings before income taxes . . . . . . . . 5,724 3,879 25,567
Income tax expense-(note 2) . . . . . . . . . . . . . 1,676 1,132 9,526
Net earnings . . . . . . . . . . . . . . . . $ 4,048 2,747 16,041
Net earnings per share (notes 1(f) and 4) $ .27 .19 1.10
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
GOLDEN POULTRY COMPANY, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended June 25, 1994, July 1, 1995
and June 29, 1996
(Amounts in thousands)
<CAPTION>
Total
Common stock Retained Treasury shareholders'
Shares Amount earnings stock equity
<S> <C> <C> <C> <C> <C>
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
Net earnings . . . . . . . . . . - - 16,041 - 16,041
Purchase of treasury stock . . . - - - (89) (89)
Shares issued under stock option
plan . . . . . . . . . . . . . 12 75 - - 75
Shares awarded . . . . . . . . . 4 26 - - 26
Cash dividends at $.04 per share - - (582) - (582)
Balance at June 29, 1996 . . . . 14,882 $ 65,464 41,112 (2,219) 104,357
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
GOLDEN POULTRY COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<CAPTION>
Years Ended
June 25, 1994 July 1, 1995 June 29, 1996
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings . . . . . . . . . . . . . . . . . . $ 4,048 2,747 16,041
Non-cash items included in net earnings:
Depreciation . . . . . . . . . . . . . . . . . . 16,411 16,905 15,499
Minority interest in partnership earnings (loss) (3,259) (1,965) 243
Deferred income taxes . . . . . . . . . . . . . (1,463) (1,437) (1,490)
Other . . . . . . . . . . . . . . . . . . . . . 768 738 1,133
Changes in operating assets and liabilities:
Trade accounts receivable . . . . . . . . . . . (2,589) (3,719) (2,022)
Inventories . . . . . . . . . . . . . . . . . . (7,536) (5,090) (8,122)
Accounts payable and accrued compensation and
related expenses . . . . . . . . . . . . . . . 4,401 2,010 10,579
Due to Gold Kist . . . . . . . . . . . . . . . 1,727 (799) (3,868)
Income taxes . . . . . . . . . . . . . . . . . (232) 243 2,220
Other . . . . . . . . . . . . . . . . . . . . . 110 (13) (128)
Net cash provided by operating activities . . 12,386 9,620 30,085
Cash flows from investing activities:
Acquisitions of property, plant and equipment . . (21,661) (9,011) (12,571)
Other . . . . . . . . . . . . . . . . . . . . . . 117 118 192
Net cash used in investing activities . . . . (21,544) (8,893) (12,379)
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 (11,760) (8,240) -
Short-term borrowings, net, payable to Gold Kist 879 6,648 (9,221)
Proceeds from long-term debt . . . . . . . . . . 7,000 - -
Principal payments of long-term debt . . . . . . (1,175) (1,186) (8,036)
Dividends paid . . . . . . . . . . . . . . . . . (555) (587) (582)
Purchase of treasury shares . . . . . . . . . . . (608) (1,522) (89)
Other . . . . . . . . . . . . . . . . . . . . . . 27 28 101
Net cash provided by (used in) financing
activities . . . . . . . . . . . . . . . . . 5,568 (1,919) (17,827)
Net change in cash and cash equivalents . . . . . . (3,590) (1,192) (121)
Cash and cash equivalents at beginning of year . . 7,502 3,912 2,720
Cash and cash equivalents at end of year . . . . . $ 3,912 2,720 2,599
Supplemental disclosure of cash flow information:
Cash paid during the years for:
Interest (net of amounts capitalized) . . . . . $ 1,491 1,657 1,536
Income taxes . . . . . . . . . . . . . . . . . . $ 3,371 2,326 8,796
See accompanying notes to consolidated financial statements.
</TABLE>
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 25, 1994, July 1, 1995 and June 29, 1996
(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 is headquartered
in Atlanta, Georgia and operates four poultry complexes located in the
Southeast. The Company's principal activities include broiler production,
processing and marketing. 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 adjustments to product cost.
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
Inventories consist of the following:
<TABLE>
<CAPTION>
1995 1996
(In thousands)
<S> <C> <C>
Live poultry . . . . . . . . . $26,234 32,255
Feed, eggs and supplies . . . . 11,512 13,069
Marketable products . . . . . . 9,035 9,579
$46,781 54,903
</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>
1995 1996
(In thousands)
<S> <C> <C>
Land . . . . . . . . . . . . . $ 4,543 4,543
Land improvements . . . . . . . 6,956 6,998
Buildings . . . . . . . . . . . 52,201 53,216
Machinery and equipment . . . . 100,249 105,697
Construction in progress . . . 3,032 2,603
166,981 173,057
Less accumulated depreciation . 87,408 99,319
$ 79,573 73,738
</TABLE>
The Company capitalized interest costs of $226,000, $93,000 and
$72,000 as a component of the cost of major asset construction for the
years 1994, 1995 and 1996, respectively.
(e) Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates
is recognized as income or expense in the period that includes the
enactment date.
(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 1994,
14,690,000 for 1995 and 14,524,000 for 1996. The dilutive effect of
stock options is not significant.
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(g) Fiscal Year
The Company employs a 52/53 week fiscal year. The consolidated
financial statements for 1994, 1995 and 1996 reflect 52, 53 and 52 week
years, respectively. Fiscal 1997 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,
certain short-term debt which matures in less than one year and long-
term debt with variable interest rates, the carrying value approximates
fair value. The Company's financial instruments are considered to have
an estimated fair value which approximates carrying value at June 29,
1996.
(i) Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from these estimates.
(2) Income Taxes
The provision for income tax expense from operations consists of the
following:
<TABLE>
<CAPTION>
1994 1995 1996
(In thousands)
<S> <C> <C> <C>
Current:
Federal . . . . . . . . . . . . . . $ 2,810 2,272 9,984
State . . . . . . . . . . . . . . . 329 297 1,032
3,139 2,569 11,016
Deferred:
Federal . . . . . . . . . . . . . . . (1,350) (1,301) (1,384)
State . . . . . . . . . . . . . . . . (113) (136) (106)
(1,463) (1,437) (1,490)
Total $ 1,676 1,132 9,526
</TABLE>
The Company's combined federal and state effective tax rates from
operations for 1994, 1995 and 1996 were 32.2%, 29.2% and 37.3%, respectively.
The federal statutory rate was 34% for 1994 and 1995 and 35% for 1996. A
reconciliation of income tax expense from operations for the applicable year
follows:
<TABLE>
<CAPTION>
1994 1995 1996
(In thousands)
<S> <C> <C> <C>
Income tax expense at statutory rate . . $1,946 1,319 8,948
State income tax expense, net of
Federal income tax . . . . . . . . 217 196 671
Targeted jobs credits . . . . . . . . . (299) (315) -
Other . . . . . . . . . . . . . . . . . (188) (68) (93)
$1,676 1,132 9,526
</TABLE>
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at July 1, 1995 and June 29, 1996 are as
follows:
<TABLE>
<CAPTION>
1995 1996
(In thousands)
<S> <C> <C>
Deferred tax assets:
Accrued employee compensation expense . . . . $2,784 3,967
Depreciation . . . . . . . . . . . . . . . . 1,525 1,945
State tax operating loss carryforwards . . . 535 482
Other . . . . . . . . . . . . . . . . . . . . 366 253
Gross deferred tax assets . . . . . . . . 5,210 6,647
Valuation allowance . . . . . . . . . . . . . (535) (482)
Net deferred tax assets . . . . . . . . . $4,675 6,165
</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.
(3) Short-Term Borrowings and Long-Term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1995 1996
(In thousands)
<S> <C> <C>
Revolving credit agreement with a commercial bank (weighted average
rate of 6.7% at July 1, 1995) . . . . . . . . . . . . . . . . . $ 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 . . 4,750 4,300
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 . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,260 1,125
Total long-term debt . . . . . . . . . . . . . . . . . . . 13,461 5,425
Less current portion . . . . . . . . . . . . . . . . . . . . . . . . 1,036 585
Long-term debt, excluding current portion . . . . . . . . . $12,425 4,840
</TABLE>
The effective interest rates for 1995 and 1996 were 3.7% and 3.9%,
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 1995 and 1996 were 7.4%
and 3.8%, respectively.
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
During August 1996, the Company extended its $25 million revolving credit
and term loan facility with a commercial bank. The revolver extends to 1998,
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. In addition, the Company has a $15
million revolving credit facility with Gold Kist. The revolving credit
facility with Gold Kist bears interest at prime. There were no outstanding
borrowings under these facilities at June 29, 1996.
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 June 29, 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
Years ending:
<S> <C>
June 28, 1997 . . . . . . . . . $585
June 27, 1998 . . . . . . . . . 612
June 26, 1999 . . . . . . . . . 627
July 1, 2000 . . . . . . . . . 644
July 1, 2001 . . . . . . . . . 662
</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. 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 $606,000 for 1994, $713,000
for 1995 and $744,000 for 1996.
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 July 1, 1995 and June 29, 1996, incentive stock options
outstanding were 265,002 shares and 266,374 shares, respectively, with
exercise prices per share ranging from $4.86 to $8.22. At June 29, 1996,
incentive stock options exercisable were 212,989 shares. These options are
exercisable up to ten years after the date of grant. At June 29, 1996,
options for 12,385 common shares had been exercised under this plan.
(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 retired before July 1, 1992
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
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.
Postretirement health and death benefit expenses for 1994, 1995 and 1996
included the following components:
<TABLE>
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
Service cost - benefits earned during the year . . . $470 514 664
Interest cost . . . . . . . . . . . . . . . . . . . 239 299 361
$709 813 1,025
</TABLE>
The Company's postretirement benefit plans are not funded. The status of
the plans at July 1, 1995 and June 29, 1996 was as follows:
<TABLE>
<CAPTION>
July 1, 1995 June 29, 1996
Actuarial present value of accumulated postretirement (In thousands)
benefit obligation:
<S> <C> <C>
Retirees . . . . . . . . . . . . . . . . . . . . . . . . . $ 890 923
Fully eligible active plan participants . . . . . . . . . 646 924
Other active plan participants . . . . . . . . . . . . . . 2,825 4,018
4,361 5,865
Unrecognized prior service cost . . . . . . . . . . . . . - (149)
Unrecognized net loss from experience differences . . . . - (187)
$4,361 5,529
</TABLE>
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 2001 and remaining at that level thereafter. The health care
cost trend rate used to determine the accumulated postretirement benefit
obligation at June 29, 1996 was 8%, declining ratably to 5% by the year 2001
and remaining at that level thereafter. The discount rate used to determine
the accumulated postretirement benefit obligation was 8.00% at July 1, 1995
and June 29, 1996, respectively. A one-percent increase in the health care
cost trend rate for each year would increase the accumulated postretirement
benefit obligation at June 29, 1996 by approximately 16% and net
postretirement health care cost by 17%.
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 25, July 1, June 29,
1994 1995 1996
(In thousands)
<S> <C> <C> <C>
Due to Gold Kist and long-term debt and short-term
borrowings, payable to Gold Kist, beginning
balance . . . . . . . . . . . . . . . . . . . $ 25,841 16,687 14,296
Transactions included in the consolidated
statements of operations:
Sales . . . . . . . . . . . . . . . . . . . . (95,787) (124,275) (161,409)
Purchases at market prices . . . . . . . . . . 32,318 38,898 50,261
Purchases at cost . . . . . . . . . . . . . . 5,258 5,624 9,669
Administrative expenses . . . . . . . . . . . 6,041 6,042 7,713
Interest expense . . . . . . . . . . . . . . . 988 1,073 1,113
Miscellaneous expense, net . . . . . . . . . . 35 42 43
Capital contributed to partnership . . . . . . . (11,760) (2,940) -
Dividends to Gold Kist . . . . . . . . . . . . . 394 424 424
Net cash transferred from Gold Kist . . . . . . 53,359 72,721 79,097
Due to Gold Kist and current portion of long-term
debt and short-term borrowings, payable to Gold
Kist, ending balance . . . . . . . . . . . . . . $ 16,687 14,296 1,207
</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 $5.8 million, $5.9
million and $6.2 million for 1994, 1995 and 1996, 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 1994, 1995 and 1996 were $200,000, $136,000 and $1,483,000, respectively.
Gold Kist provides a revolving credit facility with advances available up
to $15 million bearing interest at prime. At June 29, 1996, there were no
amounts outstanding under the revolving credit facility (see note 3).
As of June 29, 1996, financing for approximately 363 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 June 29, 1996, AgraTrade Financing had lease and loan agreements
with contract growers for approximately $28.0 million. As of June 29, 1996,
there have been no credit losses related to the loans and leases guaranteed
under this agreement, which has been in effect since October 1988.
GOLDEN POULTRY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(8) Supplemental Financial Information
In each of the years ended 1994, 1995 and 1996, 22%, 20% and 19%,
respectively, of the Company's net sales were to one customer, a major grocery
store chain located in Georgia and Florida. At June 29, 1996, receivables
from this customer represented 25% of the Company's trade accounts receivable.
(9) Contingencies
In January 1993, certain Alabama member patrons of Gold Kist Inc. filed a
lawsuit in the Circuit Court of Jefferson County, Alabama, Tenth Judicial
Circuit against the Company and Gold Kist Inc. and certain directors and
officers of the companies. (Ronald Pete Windham and Windham Enterprises, Inc.
on their behalf and on behalf of and for the use and benefit of Gold Kist,
Inc. and its shareholders/members v. Harold O. Chitwood, individually in his
capacity as an officer of Gold Kist and a Director of Golden Poultry; et al).
The lawsuit alleged that the named defendants violated their fiduciary duties
by diverting corporate opportunities from Gold Kist to the Company and
Carolina Golden Products Company in connection with the creation of the
Company and Carolina Golden Products Company and by permitting their continued
operations. Among the remedies requested were the transfer of the Company's
operations to Gold Kist. In March 1994, the Court certified the Windham
litigation as a class action. In September 1995, the Company and Carolina
Golden Products Company were dismissed from the litigation. On October 25,
1995, the jury in the Windham case returned verdicts in favor of the
plaintiffs in the litigation. On July 2, 1996, the Jefferson County, Alabama
Circuit Court Judge entered an Order in the case directing Gold Kist to
acquire the approximately 27% of Company shares currently owned by investors
so that all of the issued and outstanding stock of the Company would be owned
by Gold Kist. On September 13, 1996, subsequent to Motions for
Reconsideration filed by the plaintiffs and Gold Kist, the Court entered a
Final Judgment and Decree amending its July 2, 1996 Order. The Final Judgment
and Decree relieves Gold Kist of the requirement to acquire the 27% of Golden
Poultry common stock not already owned by Gold Kist. This Final Judgment and
Decree requires Gold Kist to acquire or redeem all Golden Poultry common stock
and/or stock options held or issued to Gold Kist officers and directors.
There are approximately 309,000 shares and options of Golden Poultry common
stock owned by Gold Kist officers and directors. The Company is also party to
other various legal and administrative proceedings, all of which management
believes constitute ordinary routine litigation incident to the business
conducted by the Company, or are not material in amount.
(10) Quarterly Financial Data (Unaudited)
(In thousands, except per share data)
Fiscal 1996 Quarters
First Second Third Fourth
Net sales . . . . . . . . . . . . . $143,624 144,242 153,496 158,875
Gross profit . . . . . . . . . . . 11,303 14,316 5,658 16,776
Net earnings . . . . . . . . . . . 4,002 5,100 940 5,999
Net earnings per share . . . . . . .28 .35 .06 .41
Fiscal 1995 Quarters
First Second Third Fourth
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
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 23, 1996, 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
23, 1996, 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 23, 1996, 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 23, 1996, is incorporated herein by reference.
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 17-29):
Independent Auditors' Report
Consolidated Balance Sheets--July 1, 1995 and
June 29, 1996
Consolidated Statements of Operations--Years
Ended June 25, 1994, July 1, 1995 and June 29,
1996
Consolidated Statements of Shareholders' Equity--
Years Ended June 25, 1994,
July 1, 1995 and June 29, 1996
Consolidated Statements of Cash Flows--Years
Ended June 25, 1994, July 1, 1995 and June 29,
1996
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.
(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
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, Report filed on Exhibit 3(b)
as 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
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 Exhibit 4(f)
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 Report filed on Exhibit 4(g)
May 25, 1995, to Revolving Form 10-K, dated
Credit and Term Loan September 21, 1995
Agreement with Trust Company
Bank
10 (a) (1) Form of Deferred Compensation Registration filed Exhibit 10(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 Exhibit 10(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 Exhibit 10(b)(1)
Bonus Program* on Form S-1 (Regis-
tration No. 33-7756)
10 (b) (2) Gold Kist Management Bonus Registration filed Exhibit 10(b)(2)
Program* on Form S-1 (Regis-
tration No. 33-7756)
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 Form filed on Exhibit 10(b)(6)
Plan as amended * Form 10-K dated
September 21, 1995
10(b)(7) Gold Kist Split Dollar Form filed on Exhibit 10(b)(7)
Life Insurance Plan * Form 10-K dated
September 21, 1995
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 tration No. 33-7756)
Kist Inc.
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 February 9, 1988
Gold Kist Inc.
10 (c) (4) Trademark license agreement Registration filed Exhibit 10(c)(4)
executed as of June on Form S-1 (Regis-
27, 1984,between the tration No. 33-7756)
Company and Gold 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.
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) Third Amendment to Trademark
License Agreement executed as of
May 8, 1996, between the Company
and Gold Kist Inc.
10 (c) (8) 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) (9) 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) (10) 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) (11) 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) (12) Guaranty Agreement executed Report filed on Exhibit 10(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 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) (2) 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
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 Form Exhibit 10(i)
Shareholders' Agreement 10-K dated September
executed June 15, 1988, by 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
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.
A current report on Form 8-K was filed with the
Commission on July 8, 1996, reporting the developments in
litigation concerning the Company which are set forth in Item
3, Legal Proceedings, of this report.
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 17th day of September, 1996.
GOLDEN POULTRY COMPANY, INC.
Dated: September 17, 1996 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 17 , 1996
K. N. Whitmire (Principal Executive Officer)
/s/ L. C. Thomas, Jr. Treasurer, Chief September 17, 1996
L. C. Thomas, Jr. Financial Officer
(Principal Financial Officer)
/s/ S. A. Burdell Assistant Treasurer September 17, 1996
S. A. Burdell (Principal Accounting Officer)
/s/ J. Bekkers Chairman of the Board, September 17, 1996
J. Bekkers Director
/s/ G. O. Coan Vice Chairman of the September 12, 1996
G. O. Coan Board, Director
/s/ H. O. Chitwood Director September 17, 1996
H. O. Chitwood
/s/ W. W. Gaston Director September 17, 1996
W. W. Gaston
/s/ P. J. Gibbons Director September 17, 1996
P. J. Gibbons
/s/ H. R. Holding Director September 12, 1996
H. R. Holding
/s/ J. H. Levergood Director September 17, 1996
J. H. Levergood
/s/ J. W. McIntyre Director September 17, 1996
J. W. McIntyre
/s/ D. W. Sands Director September 17, 1996
D. W. Sands
/s/ J. L. Stewart Director September 17, 1996
J. L. Stewart
/s/ K. N. Whitmire Director September 17, 1996
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 2, 1996,
relating to the consolidated balance sheets of Golden Poultry
Company, Inc. and subsidiary as of July 1, 1995 and June 29,
1996 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 June 29,
1996, which report appears in the June 29, 1996, annual report
on Form 10-K of Golden Poultry Company, Inc.
KPMG Peat Marwick LLP
Atlanta, Georgia
September 17, 1996
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Designation Sequentially
Exhibit Numbered
in this Report Description of Exhibit Page
<S> <C> <C>
10(c)(7) Third Amendment to
Trademark License Agreement
executed as of May 8, 1996,
between the Company and
Gold Kist Inc.
27 Financial Data Schedule
</TABLE>
EXHIBIT 10(c)(7)
THIRD AMENDMENT TO
TRADEMARK LICENSE AGREEMENT
THIS AGREEMENT, made as of the 8th day of May, 1996,
by and between GOLD KIST INC., a cooperative marketing
association organized pursuant to the Georgia Cooperative
Marketing Act ( Licensor ), and GOLDEN POULTRY COMPANY,
INC., a Georgia corporation ( Licensee ).
W I T N E S S E T H:
WHEREAS, Licensor is the owner of certain trademarks
which were licensed to Licensee by agreement made as of
June 27, 1984, as amended by subsequent agreements dated July 1,
1986, and July 25, 1990, (collectively referred to
hereinafter as the Agreement ); and
WHEREAS, the parties wish to amend the Agreement
further by adding to Exhibit A attached thereto, which
lists the trademarks licensed under the Agreement, the trademark
Gold Kist Farms (Intent to Use filed by Licensor with the
Patent and Trademark Office of the United States).
NOW, THEREFORE, in consideration of the mutual
covenants and agreements of the parties set forth herein,
and other good and valuable consideration, the parties do
hereby agree to amend the Agreement as follows:
1. The trademark Gold Kist Farms shall be added to
Exhibit A to the Agreement, thereby making it a
licensed trademark under the Agreement.
2. Except as amended herein, all of the terms and
provisions of the Agreement, as amended, shall
remain in full force and effect.
IN WITNESS WHEREOF, this Agreement has been executed
as of the day and year first above written.
GOLD KIST INC., Licensor
By: /s/ Gaylord O. Coan
Title: Chief Executive Officer
GOLDEN POULTRY COMPANY, INC., Licensee
By: /s/ John Bekkers
Title: Chairman of the Board
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER>1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-END> JUN-29-1996
<CASH> 2,599
<SECURITIES> 0
<RECEIVABLES> 23,685
<ALLOWANCES> 31
<INVENTORY> 54,903
<CURRENT-ASSETS> 83,624
<PP&E> 173,057
<DEPRECIATION> 99,319
<TOTAL-ASSETS> 163,979
<CURRENT-LIABILITIES> 39,089
<BONDS> 4,840
0
0
<COMMON> 65,464
<OTHER-SE> 38,893
<TOTAL-LIABILITY-AND-EQUITY> 163,979
<SALES> 600,237
<TOTAL-REVENUES> 600,452
<CGS> 552,184
<TOTAL-COSTS> 552,184
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 33
<INTEREST-EXPENSE> 1,459
<INCOME-PRETAX> 25,567
<INCOME-TAX> 9,526
<INCOME-CONTINUING> 16,041
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,041
<EPS-PRIMARY> 1.10
<EPS-DILUTED> 0
</TABLE>
