UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended December 30, 1995 Commission File
No. 0-14960
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
GOLDEN POULTRY COMPANY, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-1492075
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
244 Perimeter Center Parkway, N.E., Atlanta, Georgia 30346
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (770) 393-
5050
N/A
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
OUTSTANDING AS OF
CLASS February 12, 1996
Common Stock, No
Par Value 14,521,449
<PAGE>
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -
December 30, 1995 and July 1, 1995 . . . 1
Consolidated Statements of Operations -
Three Months and Six Months
Ended December 30, 1995 and
December 24, 1994 . . . . . . . . . . . 2
Consolidated Statements of Cash Flows -
Six Months Ended December 30, 1995
and December 24, 1994. . . . . . . . . . 3
Notes to Consolidated Financial
Statements . . . . . . . . . . . . . . . 4
Item 2. Management's Discussion and Analysis of
Consolidated Results of Operations and
Financial Condition . . . . . . . . . . 5 - 7
Part II. Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . 8
Item 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . 8
Item 6. Exhibits and Reports on Form 8-K . . . . . 8
<PAGE>
<TABLE>
Page 1
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
<CAPTION>
Dec. 30, 1995 July 1, 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,614 2,720
Trade accounts receivable less allowance
for doubtful accounts of $51 at
Dec. 30, 1995 and $264 at July 1, 1995 21,737 21,632
Inventories (note 3) 49,191 46,781
Other 4,047 1,635
Total current assets 79,589 72,768
Property, plant and equipment, net 74,876 79,573
Other assets 3,680 3,263
$158,145 155,604
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 731 1,036
Short-term borrowings from Gold Kist 5,344 9,221
(note 4)
Accounts payable 25,624 19,325
Due to Gold Kist 2,220 5,075
Income taxes payable 941 485
Accrued compensation and related expenses 6,044 4,688
Total current liabilities 40,904 39,830
Long-term debt, excluding current portion 5,359 12,425
Other liabilities 4,509 4,509
Total liabilities 50,772 56,764
Minority interest in consolidated partnership 9,650 9,954
Shareholders' equity:
Preferred stock, $1.00 par value.
Authorized 1,000 shares; no shares issued - -
Common stock, no stated par value.
Authorized 20,000 shares; issued 14,870
shares at Dec. 30, 1995 and 14,866 at
July 1, 1995 65,389 65,363
Retained earnings 34,464 25,653
99,853 91,016
Less treasury stock, at cost, 348 shares
at Dec. 30, 1995 and July 1, 1995 2,130 2,130
Total shareholders' equity 97,723 88,886
Contingency (note 5)
$158,145 155,604
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Page 2
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
Dec. 30, Dec. 24, Dec. 30, Dec. 24,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $144,242 117,859 287,866 245,102
Cost of sales 129,926 113,959 262,247 236,240
Gross profit 14,316 3,900 25,619 8,862
Selling, administrative and
general expenses 5,449 3,827 10,551 7,519
Operating income 8,867 73 15,068 1,343
Other (expense) income:
Interest expense (324) (376) (779) (779)
Miscellaneous, net 79 72 155 250
(245) (304) (624) (529)
Earnings (loss) before
minority interest and
income taxes 8,622 (231) 14,444 814
Minority interest in partnership
(gain) loss (258) 141 305 354
Earnings (loss) before
income taxes 8,364 (90) 14,749 1,168
Income tax expense (benefit) 3,264 (62) 5,647 362
Net earnings (loss) $ 5,100 (28) 9,102 806
Net earnings per share $ .35 .00 .63 .05
Weighted average outstanding
shares 14,522 14,861 14,519 14,860
Cash dividends per share $ .01 .009 .02 .018
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Page 3
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
<CAPTION>
Six Months Ended
Dec. 30, Dec. 24,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 9,102 806
Non-cash items included in net earnings:
Depreciation 8,720 8,405
Minority interest in partnership loss (305) (354)
Deferred taxes (388) (839)
Other 74 26
Changes in operating assets and liabilities:
Trade accounts receivable (105) 472
Inventories (2,410) 1,720
Accounts payable and accrued compensation and
related expenses 7,655 1,193
Due to Gold Kist (2,855) (415)
Income taxes 456 (745)
Other (2,456) (2,222)
Net cash provided by operating activities 17,488 8,047
Cash flows from investing activities:
Acquisitions of property, plant and equipment (4,110) (2,181)
Other 55 53
Net cash used in investing activities (4,055) (2,128)
Cash flows from financing activities:
Repayment of long-term debt, payable to Gold Kist - (5,000)
Short-term borrowings (repayments), net, payable
to Gold Kist (3,877) 3,795
Principal payments of long-term debt (7,372) (6,567)
Dividends paid (290) (295)
Net cash used in financing activities (11,539) (8,067)
Net change in cash and cash equivalents 1,894 (2,148)
Cash and cash equivalents at beginning of period 2,720 3,912
Cash and cash equivalents at end of period $ 4,614 1,764
Supplemental disclosure of cash flow information:
Cash paid during the periods for:
Interest (net of amounts capitalized) $ 772 519
Income taxes $ 5,578 1,946
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
Page 4
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands)
(Unaudited)
1. The accompanying unaudited consolidated financial statements
reflect the accounts of Golden Poultry Company, Inc. and its
subsidiary and a majority owned partnership, Carolina Golden
Products Company (collectively, "the Company"). These
consolidated financial statements should be read in
conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations and the Notes
to Consolidated Financial Statements on pages 11 through 14
and pages 21 through 29, respectively, of the Company's
Annual Report in the previously filed Form 10-K for the year
ended July 1, 1995.
2. In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of normal recurring accruals) necessary to
present fairly the financial position, results of operations,
and cash flows. Results of operations for interim periods
are not necessarily indicative of results for the entire
year.
3. Inventories consist of the following:
<TABLE>
<CAPTION>
December 30, 1995 July 1, 1995
<S> <C> <C>
Live poultry $29,500 26,234
Feed, eggs, and supplies 11,377 11,512
Marketable products 8,314 9,035
$49,191 46,781
</TABLE>
4. The amounts outstanding represent borrowings by Carolina
Golden Products under a $15.0 million Revolving Credit
Agreement with Gold Kist.
5. In January 1993, certain Alabama member patrons of Gold Kist
Inc. filed a lawsuit in the Circuit Court of Jefferson
County, Alabama, Tenth Judicial Circuit against the Company
and Gold Kist Inc. and certain directors and officers of the
companies. (Ronald Pete Windham and Windham Enterprises,
Inc. on their behalf and on behalf of and for the use and
benefit of Gold Kist, Inc. and its shareholders/members v.
Harold O. Chitwood, individually in his capacity as an
officer of Gold Kist and a Director of Golden Poultry; et
al). The lawsuit alleges that the named defendants violated
their fiduciary duties by diverting corporate opportunities
from Gold Kist to the Company and Carolina Golden Products
Company in connection with the creation of the Company and
Carolina Golden Products Company and by permitting their
continued operations. Among the remedies requested are the
<PAGE>
transfer of the Company's operations to Gold Kist. In March
1994, the Court certified the Windham litigation as a class
action. In September 1995, the Company and Carolina Golden
Products Company were dismissed from the litigation. On
October 25, 1995, the jury in the Windham case returned
verdicts in favor of the plaintiffs in the litigation.
Injunctive or equitable remedies will be determined at a
later date by the Jefferson County Alabama Circuit Court
judge. The remedies imposed on Gold Kist could have an
effect on the business and operation of the Company. The
Company is also party to other various legal and
administrative proceedings, all of which management believes
constitute ordinary routine litigation incident to the
business conducted by the Company, or are not material in
amount.
<PAGE>
Page 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net sales
Net sales for the three and six months ending December 30, 1995
increased 22.4% and 17.4%, respectively, as compared to the
comparable periods a year ago. The net sales increase for the
quarter ended December 30, 1995 was due primarily to an 11%
increase in average selling prices and a 11% increase in pounds
of poultry products sold. Higher seasonal broiler market prices
continued in the October-November period as a result of lower
than expected broiler production. Hatching egg production was
reduced by the late summer heat stress, which contributed to
lower than expected broiler supplies. The increase in pounds sold
was due primarily to improvements in plant processing yields and
changes in product mix. For the three months ended December 30,
1995, the Company processed an average of 3.8 million broilers
per week.
Consolidated net sales include the net sales of Carolina Golden
Products Company, a consolidated partnership, which had net sales
of $41.4 million and $80.9 million, respectively, for the three
months and six months ended December 30, 1995 as compared to
$33.6 million and $67.7 million for the comparable periods a year
ago. The Company's food distribution facility in South Florida
had net sales of $8.6 million and $16.2 million, respectively,
for the three and six months ended December 30, 1995 as compared
to $7.7 million and $14.3 million for the same periods last
fiscal year.
Cost of sales
Cost of sales, as a percentage of net sales, for the three and
six months ended December 30, 1995 were 90.1% and
91.1%,respectively, as compared to 96.7% and 96.4%, respectively,
for the comparable periods a year ago. The decreases in the
percentage relationships for the quarter ended December 30, 1995
were the result of increased average selling prices, lower feed
ingredient costs, net and improved plant processing efficiency.
The 11% increase in pounds sold during the current quarter
contributed to the dollar increase in cost of sales. Despite
significant increases in commodity market prices for feed grains,
the Company's forward purchasing strategies resulted in a 1.6%
decline in feed ingredient costs, net for the quarter ended
December 30, 1995 as compared to the same period last fiscal
year.
<PAGE>
Although management has employed various risk management
strategies to reduce the impact of further increases in feed
grain costs over the next eight months, feed ingredient costs for
the remainder of fiscal 1996 are likely to trend higher.
Increased market prices for feed grains have resulted from the
weather reduced 1995 corn harvest.
<PAGE>
Page 6
Selling, administrative, and general expenses
Selling, administrative and general expenses, as a percentage of
net sales, were 3.8% and 3.7%, respectively, for the three and
six months ended December 30, 1995 as compared to 3.2% and 3.1%
for the comparable periods last fiscal year. The increases in
the percentage relationships were the result of higher incentive
compensation expense related to the increase in earnings before
income taxes and litigation related expenses.
Interest and other income
Interest expense for the three months ended December 30, 1995 was
$324,000 as compared to $376,000 in the comparable period a year
ago. The decrease was due primarily to lower average
borrowings, which was partially offset by higher interest rates.
Minority interest in partnership loss
Minority interest in partnership gain of $258,000 for the three
months ended December 30, 1995 represents Gold Kist Inc.'s 49%
prorata share of the Carolina Golden Products Company's quarterly
gain. For the comparable period last fiscal year, Gold Kist's
prorata share of the loss was $141,000. The gain for the quarter
ended December 30, 1995 was due to profitability in its fresh
poultry and deboning operations. During the current quarter
Carolina Golden continued to incur losses in its further
processing operations.
Earnings (loss) before income taxes
The Company had earnings before income taxes of $8.4 million for
the three months ended December 30, 1995 as compared to a loss
before income taxes of $90,000 for the comparable quarter last
fiscal year. The increase was due primarily to higher average
selling prices, feed ingredient purchasing strategies and
improved processing efficiency.
Income Taxes
The Company's combined federal and state income tax rate was
38.3% for the six months ended December 30, 1995 as compared to
31.0% for the same period a year ago. The increase in the
effective rate was due to the expiration of the federal targeted
jobs tax credit program and the impact of the graduated federal
income tax rate.
LIQUIDITY AND CAPITAL RESOURCES
At December 30, 1995, working capital, the current ratio, and
shareholders' equity were $38.7 million, 1.95 to 1 and $97.7
million, respectively, as compared to $32.9 million, 1.83 to 1
and $88.9 million, respectively, at July 1, 1995. The Company's
ratio of long-term debt to total capitalization was 5.2% at
December 30, 1995 as compared to 12.3% at July 1, 1995. The
Company has a $20.0 million revolving credit and term loan
facility with a commercial bank. There were no outstanding
borrowings under this facility at December 30, 1995. Also, the
Company has a $15.0 million short-term credit facility with Gold
Kist of which $2.2 million was outstanding at December 30, 1995.
<PAGE>
Page 7
Net cash provided by operating activities of $17.5 million for
the six months ended December 30, 1995 resulted from net earnings
adjusted for noncash charges. Uses of cash for the current six
month period included repayments of long-term debt totaling $7.4
million and $4.1 million in expenditures for property, plant and
equipment.
Capital expansion and improvements totaling $38.2 million were
approved by the board of directors of which $35.0 million will be
used to increase the processing capacity of the Russellville,
Alabama division by 600,000 broilers per week. This project,
which includes improvements to the hatchery, feed and processing
plant, is expected to be completed May 1997. These new projects
are in addition to the original 1996 capital expenditures budget
of $14.0 million. The Company expects capital expenditures of
approximately $28.0 million for fiscal 1996.
Approximately 19% of the Company's net sales in the current
quarter were to one customer, a major retail grocery chain.
Management is unable to predict with any degree of certainty what
effect the loss of this major customer would have on future
results of operations and liquidity. However, the loss of the
customer would, in the opinion of management, adversely affect
results of operations if sales from the customer were not
replaced by comparable sales to other customers.
Management believes existing cash, amounts available under
existing credit arrangements, and expected cash to be provided
from operations will be sufficient to maintain cash flows
adequate for the Company's growth and operational objectives
during fiscal 1996.
<PAGE>
Page 8
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
In January 1993, certain Alabama member patrons of Gold
Kist Inc. filed a lawsuit in the Circuit Court of Jefferson
County, Alabama, Tenth Judicial Circuit against the Company
and Gold Kist Inc. and certain directors and officers of the
companies. (Ronald Pete Windham and Windham Enterprises,
Inc. on their behalf and on behalf of and for the use and
benefit of Gold Kist, Inc. and its shareholders/members v.
Harold O. Chitwood, individually in his capacity as an
officer of Gold Kist and a Director of Golden Poultry; et
al). The lawsuit alleges that the named defendants violated
their fiduciary duties by diverting corporate opportunities
from Gold Kist to the Company and Carolina Golden Products
Company in connection with the creation of the Company and
Carolina Golden Products Company and by permitting their
continued operations. Among the remedies requested are the
transfer of the Company's operations to Gold Kist. In March
1994, the Court certified the Windham litigation as a class
action. In September 1995, the Company and Carolina Golden
Products Company were dismissed from the litigation. On
October 25, 1995, the jury in the Windham case returned
verdicts in favor of the plaintiffs in the litigation.
Injunctive or equitable remedies will be determined at a
later date by the Jefferson County Alabama Circuit Court
judge. The remedies imposed on Gold Kist could have an
effect on the business and operation of the Company. The
Company is also party to other various legal and
administrative proceedings, all of which management believes
constitute ordinary routine litigation incident to the
business conducted by the Company, or are not material in
amount.
Item 4. Submission of Matters to a Vote of Security Holders.
(c) At the Annual Meeting of Shareholders held on October
25, 1995, Shareholders voted upon the election of
Directors. All nominees for Directors listed in the
Proxy Statement for the Company's Annual Meeting were
elected without opposition. The results of the election
were as follows:
<TABLE>
<CAPTION>
Nominee For Against Withheld
<S> <C> <C> <C>
W. W. Gaston 13,793,953 942 139,054
J. W. McIntyre 13,795,453 942 137,554
D. W. Sands 13,794,093 942 138,914
J. Bekkers 13,796,058 942 136,949
</TABLE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit
Designation of Exhibit
in this Report Description of Exhibit
27 Financial Data Schedule
(b) Reports on Form 8-K. Golden Poultry has not filed
any reports on Form 8-K during the three months
ended December 30, 1995.
<PAGE>
Page 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
GOLDEN POULTRY COMPANY, INC.
(Registrant)
Date February 13, 1996
Gaylord O. Coan
Vice Chairman of the Board
Date February 13, 1996
Langley C. Thomas, Jr.
Chief Financial Officer
<PAGE>
Page 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
GOLDEN POULTRY COMPANY, INC.
(Registrant)
Date February 13, 1996 /s/ Gaylord O. Coan
Gaylord O. Coan
Vice Chairman of the Board
Date February 13, 1996 /s/Langley C. Thomas, Jr.
Langley C. Thomas, Jr.
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-END> DEC-30-1995
<CASH> 4,614
<SECURITIES> 0
<RECEIVABLES> 21,788
<ALLOWANCES> 51
<INVENTORY> 49,191
<CURRENT-ASSETS> 79,589
<PP&E> 170,119
<DEPRECIATION> 95,243
<TOTAL-ASSETS> 158,145
<CURRENT-LIABILITIES> 40,904
<BONDS> 0
0
0
<COMMON> 65,389
<OTHER-SE> 32,334
<TOTAL-LIABILITY-AND-EQUITY> 158,145
<SALES> 287,866
<TOTAL-REVENUES> 288,021
<CGS> 262,247
<TOTAL-COSTS> 262,247
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 779
<INCOME-PRETAX> 14,749
<INCOME-TAX> 5,647
<INCOME-CONTINUING> 9,102
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,102
<EPS-PRIMARY> .63
<EPS-DILUTED> 0
</TABLE>
