PILGRIMS PRIDE CORP, 10-K405, 1996-12-16

PILGRIMS PRIDE CORP
10-K405, 1996-12-16
POULTRY SLAUGHTERING AND PROCESSING

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended SEPTEMBER 28, 1996 Commission File number 1-9273

PILGRIM'S PRIDE CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 75-1285071
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

110 SOUTH TEXAS, PITTSBURG, TX 75686-0093
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: (903) 855-1000

Securities registered pursuant to Section 12 (b) of the Act:

Name of each exchange on
Title of each class which registered
Common Stock, Par Value $0.01 New York Stock Exchange

Securities registered pursuant to Section 12 (g) ofsf the Act: None

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]

<PAGE>
The aggregate market value of the Registrant's Common Stock, $0.01 par
value, held by non- affiliates of the Registrant as of December 13, 1996,
was $33,042,434. For purposes of the foregoing calculation only, all
directors, executive officers, and 5% beneficial owners have been deemed
affiliates.

27,589,250 shares of the Registrant's common stock, $.01 par value, were
outstanding as of December 13, 1996.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's proxy statement for the annual meeting of
stockholders to be held February 5, 1997, are incorporated by reference
into Part III.
<PAGE>
PILGRIM'S PRIDE CORPORATION
FORM 10-K
TABLE OF CONTENTS

PART I
Page
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders.

PART II
Item 5. Market for Registrant's Common Stock and Related Security Holder Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Item 8. Financial Statements and Supplementary Data (see Index to Financial
Statements and Schedules below).
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

PART III
Item 10. Directors and Executive Officers of Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions

PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
Signatures

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Report of Ernst & Young LLP--Independent Auditors
Consolidated Balance Sheets as of September 28, 1996 and September 30, 1995
Consolidated Statements of Income (Loss) for the years ended
September 28, 1996, September 30, 1995 and October 1, 1994
Consolidated Statements of Stockholders' Equity for the years ended
September 28, 1996, September 30, 1995 and October 1, 1994
Consolidated Statements of Cash Flows for the years ended
September 28, 1996, September 30, 1995 and October 1, 1994
Notes to Consolidated Financial Statements
Schedule II - Valuation and Qualifying Accounts for the years ended
September 28, 1996, September 30, 1995 and October 1, 1994
<PAGE>
PART I

ITEM 1. BUSINESS

GENERAL
The Company, which was incorporated in Texas in 1968 and
reincorporated in Delaware in 1986, is the successor to a partnership
founded as a retail feed store in October, 1946 by the late Aubrey E.
Pilgrim who was joined in the partnership by his brother Lonnie "Bo"
Pilgrim in April, 1947. Over the years, the Company grew through both
internal growth and various acquisitions of chicken farming and processing
operations. In addition to domestic growth, the Company expanded into
Mexico through acquisitions beginning in 1988 and subsequent substantial
capital investments.

The Company is a vertically integrated producer of chicken products,
controlling the breeding, hatching and growing of chickens and the
processing, preparation and packaging of its product lines. The Company is
the fifth largest producer of chicken in the United States, with production
and distribution facilities located in Texas, Arkansas, Oklahoma and
Arizona, and one of the two largest chicken producers in Mexico, with
production and distribution facilities located in Mexico City and the
states of Coahuila, San Louis Potosi, Queretaro and Hidalgo. The Company
is also a producer of table eggs, animal feeds and ingredients. See Note H
to the Consolidated Financial Statements of the Company for information
concerning revenues, operating profit and identifiable assets attributable
to the Company's U.S. and Mexican operations.

The Company's chicken products consist primarily of (i) prepared
foods, which include portion-controlled breast fillets, tenderloins and
strips, formed nuggets and patties and bone-in chicken parts, which are
sold frozen and may be either fully cooked or raw; (ii) fresh foodservice
chicken, which includes refrigerated (non-frozen), whole or cut-up chicken
sold to the foodservice industry either pre-marinated or non-marinated;
(iii) prepackaged chicken, which includes various combinations of freshly
refrigerated, whole chickens and chicken parts in trays, bags or other
consumer packs labeled and priced ready for the retail grocer's fresh meat
counter; and (iv) bulk packaged chicken which includes parts and whole
chicken, either refrigerated or frozen for U.S. export or domestic use and
is sold in eviscerated form in the U.S. and in both eviscerated and
uneviscerated forms in Mexico.

During recent years, the Company's strategy has been to identify and
develop specific, defined markets where it can achieve significant
advantages over competing suppliers. Management believes that this
strategy has enabled the Company to achieve both higher rates of growth and
higher profits than otherwise would have resulted. The Company has
primarily targeted the following markets: (1) U.S. foodservice, (2) U.S.
consumer, and (3) Mexico. The following table sets forth, for the periods
since 1990, net sales attributable to each of the Company's primary product
types in these market segments. The table is based on the Company's
internal sales reports and its classification of product types and
customers.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
<S> <C> <C> <C> <C> <C> <C> <C>
Sept 29, Sept 28, Sept 26, Oct 2, Oct 1, Sept 30, Sept 28,
1990 1991 1992 1993 1994 1995 1996
(52 Weeks) (52 Weeks) (52 Weeks) (53 Weeks) (52 Weeks) (52 (52
Weeks) Weeks)
(in thousands)
U.S. Chicken Sales:
Prepared Foods:
Foodservice $112,509 $151,661 $178,185 $183,165 $205,224 $240,456 $303,939
Consumer (Retail) 60,069 60,188 85,700 89,822 61,068 38,683 42,946
Total Prepared Foods 172,578 211,849 263,885 272,987 266,292 279,139 346,885

Fresh Chicken:
Foodservice 118,158 127,303 126,472 149,197 155,294 140,201 145,052
Consumer (Retail) 122,907 125,897 105,636 100,063 125,133 138,368 141,135
Other 95,907 85,323 72,724 77,709 88,437 113,414 140,614
Total Fresh Chicken 336,972 338,523 304,832 326,969 368,864 391,983 426,801

Mexico:
Bulk-Packaged Chicken 110,632 141,570 160,620 188,754 188,744 159,491 228,129
Total Chicken Sales 620,182 691,942 729,337 788,710 823,900 830,613 1,001,815

Sales of Other Domestic Products 100,373 94,709 88,024 99,133 98,709 101,193 137,495
Total Net Sales $720,555 $786,651 $817,361 $887,843 $922,609 $931,806 $1,139,310
</TABLE>

UNITED STATES
The following table sets forth, since fiscal 1990, the percentage of net
U.S. chicken sales attributable to each of the Company's primary products lines
and markets serviced with such products. The table and related discussion are
based on the Company's internal sales reports and its classification of product
types and customers.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
<S> <C> <C> <C> <C> <C> <C> <C>
Sept 29, Sept 28, Sept 26, Oct 2, Oct 1, Sept 30, Sept 28,
1990 1991 1992 1993 1994 1995 1996
(52 Weeks) (52 Weeks) (52 Weeks) (53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks)
U.S. Chicken Sales:
Prepared Foods:
Foodservice 22.1 % 27.6 % 31.3 % 30.5 % 32.3 % 35.8 % 39.3 %
Consumer (Retail) 11.8 10.9 15.1 15.0 9.6 5.8 5.6
Total Prepared Foods 33.9 38.5 46.4 45.5 41.9 41.6 44.9

Fresh Chicken:
Foodservice 23.2 23.1 22.2 24.9 24.5 20.9 18.7
Consumer (Retail) 24.1 22.9 18.6 16.7 19.7 20.6 18.2
Other 18.8 15.5 12.8 12.9 13.9 16.9 18.2
Total Fresh Chicken 66.1 61.5 53.6 54.5 58.1 58.4 55.1

Total U.S. Chicken Sales Mix 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
</TABLE>

<PAGE>
STRATEGY
Domestic chicken sales can be segmented into two principal product types -
prepared foods and fresh chicken. The Company's U.S. business strategy is to
(i) focus most of its primary growth in prepared foods product lines, primarily
to foodservice chain restaurants and other commercial and industrial users of
prepared chicken; (ii) grow its fresh chicken business through value-added,
prepackaged consumer (retail) products; (iii) maintain a substantial presence
in the fresh foodservice market segment, and (iv) achieve significant cost and
product advantages over competing suppliers through leadership in production
technology and new product R & D. The Company believes this strategy results in
greater growth in sales and profits than would otherwise result.

PRODUCT TYPES
U.S. Prepared Foods Overview
During 1996, $346.9 million of the Company's net U.S. chicken sales were
in prepared foods products to foodservice and consumer (retail) customers. This
is an all time high, up from $172.6 million in 1990 and reflects the strategic
focus for growth of the Company. Management believes the market for prepared
foods chicken products will be generally characterized by higher growth rates
and more stable margins than non-prepared products. The Company will grow its
prepared foods sales to the foodservice industry at a faster rate than to the
retail industry.

The Company establishes prices for its prepared chicken products based
primarily upon perceived value to the customer, production costs and prices of
competing products. However, many of these products are priced according to
formulas which are based on an underlying commodity market, and this factor
causes some price fluctuation.

U.S. Fresh Chicken Overview
During 1996, $426.8 million of the Company's net U.S. chicken sales were
in fresh chicken products to foodservice, consumer (retail) and other
customers. This is an all time high, up from $367.0 million in 1990. The most
significant changes are reflected in the sales dollar shifts since 1992 as the
Company has reemphasized its retail fresh chicken business which management
believes will continue to be a large and relatively stable base of business.
The Company anticipates that its foodservice volume will continue to gradually
shift from fresh to more of a prepared foods sales mix, however, there will
always remain a base level of fresh foodservice business. Sales growth in the
"Other" category primarily reflect approximately $47 million in 1996 exports of
fresh frozen chicken.

Most fresh chicken products are sold to established customers based upon
certain weekly or monthly market prices reported by the U.S.D.A. and other
public price reporting services, plus a markup, which is dependent upon the
customer's location, volume, product specifications and other factors. A
significant portion of the Company's fresh chicken sales is governed by
agreements with customers that provide for the pricing method and volume of
products to be purchased. The Company believes its practices with respect to
sales of its fresh chicken are generally consistent with those of its
competitors. The "Other" category of fresh chicken is the sale of the Company's
bulk-packaged, whole chicken which have historically been characterized by
lower prices and greater price volatility than the Company's more value-added
product lines. In the United States, prices of these products are negotiated
daily or weekly and are generally related to market prices quoted by the
U.S.D.A. or other public price reporting services.

MARKET SEGMENTS
U.S. Foodservice
The majority of the Company's U.S. chicken sales are derived from products
sold to the foodservice market which principally consists of chain restaurants,
institutions, foodservice distributors, and commercial or industrial users of
chicken located throughout the continental United States. The Company supplies
chicken products ranging from portion-controlled refrigerated chicken parts to
fully cooked and frozen, breaded or non-breaded chicken parts or formed
products.

As the second largest full-line supplier of chicken to the foodservice
industry, the Company believes it is well-positioned to be the primary or
secondary supplier to many national and international chain restaurants who
require multiple suppliers of chicken products. Additionally, it is well suited
to be the sole supplier for many regional chain restaurants that offer better
margin opportunities and a growing base of business. Due to its comparatively
large size in this market, management believes the Company has significant
competitive advantages in terms of product capability, production capacity,
research and development expertise, and distribution and marketing experience
relative to smaller and to non-vertically integrated producers. As a result of
these competitive advantages, the Company's sales to the foodservice market
from fiscal 1990 through fiscal 1996 grew at a compound annual growth rate of
approximately 12%. The Company markets both prepared and fresh chicken to the
foodservice industry.

FOODSERVICE - PREPARED FOODS: Prepared foods sales to the foodservice
market were $303.9 million in fiscal 1996 and have increased at a compound
annual growth rate of approximately 18% from fiscal 1990 through fiscal 1996.
The Company's prepared foods products include portion-controlled breast
fillets, tenderloins and strips, formed nuggets and patties and bone-in chicken
parts, which are sold frozen and in various stages of preparation, including
blanched, battered, breaded and partially or fully-cooked. The Company
attributes this growth in sales of prepared foods to the foodservice market to
a number of factors:

First, there has been significant growth in the number of foodservice
operators offering chicken on their menus and the number of chicken items
offered;

Second, foodservice operators are increasingly purchasing prepared chicken
products which allow them to reduce labor cost while providing greater product
consistency, quality and variety across all restaurant locations;

Third, there is a strong need among larger foodservice companies for an
alternative or additional supplier to the Company's principal competitor in the
prepared foods market. A viable alternative supplier must be able to ensure
supply, demonstrate innovation and new product development, and provide price
competition. The Company has been successful in its attempt to become the
alternative supplier of choice, and thus the primary or secondary prepared
chicken supplier to many large foodservice companies because it (i) is
vertically integrated, giving the Company control over raw material supplies,
(ii) has the capability to produce many types of chicken items and (iii) has
established a reputation for dependable quality, highly responsive service and
excellent technical support;

Fourth, as a result of the experience and reputation developed with larger
customers, the Company has increasingly become the principal supplier to
midsized foodservice organizations; and

Fifth, the Company's in-house product development group, responding to the
changing needs of the foodservice market, has enabled the Company to provide
foodservice customers with new and improved prepared foods. Approximately $160
million of the Company's sales to foodservice customers in 1996 consisted of
products which were not sold by the Company in 1990.

FOODSERVICE - FRESH CHICKEN: The Company produces and markets fresh,
refrigerated chicken for sale to domestic quick-service restaurant chains,
delicatessens and other customers. These chickens have the giblets removed,
are usually of specific weight ranges, are usually pre-cut to customer
specifications and are often marinated to enhance value and product
differentiation. By growing and processing to customers specifications, the
Company is able to assist quick service restaurant chains in controlling costs
and maintaining size consistency of chicken pieces sold to the consumer.

U.S. CONSUMER
The U.S. consumer market consists primarily of grocery store chains,
retail distributors and wholesale clubs. The Company concentrates its efforts
in this market on sales of branded, prepackaged cut-up and whole chicken to
grocery chains and retail distributors in the midwestern, southwestern and
western portions of the United States. This regional marketing focus enables
the Company to develop consumer brand franchises and capitalize on proximity to
the trade customer, in terms of lower transportation costs; more timely,
responsive service; and enhanced product freshness. For a number of years the
Company has invested in both trade and consumer marketing designed to establish
high levels of brand name awareness and consumer preferences within these
markets.

The Company utilizes numerous marketing techniques, including advertising, to
develop and strengthen trade and consumer awareness and increase brand loyalty
for consumer products marketed under the Pilgrim's Pride brand. The Company's
founder, Lonnie "Bo" Pilgrim, is the featured spokesman in the Company's
television, radio and print advertising, and a trademark cameo of a person in a
Pilgrim's hat serves as the logo on all of the Company's primary branded
products. As a result of this marketing strategy, the Company has established
a well-known brand name in certain southwestern markets, including the
Dallas/Fort Worth area where, according to a market research company, the
Company's brand name was recognized by 96% of grocery shoppers in an aided
brand recall study conducted in 1994. Management believes its efforts to
achieve and maintain brand awareness and loyalty help to provide more secure
distribution for its products and generate greater price premiums that would
otherwise be the case in certain southwestern markets. The Company also
maintains an active program to identify consumer preferences primarily by
testing new product ideas, packaging designs and methods through taste panels
and focus groups located in key geographic markets.

CONSUMER - PREPARED FOODS: The Company sells consumer oriented prepared
foods primarily to grocery store chains located in the midwestern, southwestern
and western portions of the U.S. where it also markets prepackaged fresh
chicken. Being a major, national competitor in retail, branded frozen foods is
not a part of the Company's current business strategy. The Company previously
was a national supplier of retail prepared chicken to Pace Membership Warehouse
until Pace was acquired by Sam's Club in January 1994. The wholesale club
industry is dominated by two large national operators, Sam's Club and Price-
Costco. Due to the highly concentrated nature of the club store business the
Company has redirected this prepared foods capacity to a more diversified
customer base with better overall gross margins.

CONSUMER -FRESH CHICKEN: The Company's prepackaged retail products
include various combinations of freshly refrigerated whole chickens and chicken
parts in trays, bags or other consumer packs, labeled and priced ready for the
grocer's fresh meat counter. Management believes the retail, prepackaged fresh
chicken business will continue to be a large and relatively stable market,
providing opportunities for product differentiation and regional brand loyalty.

The Company concentrates its sales and marketing efforts for the above product
types to grocery chains and retail distributors in the midwestern, southwestern
and western portions of the United States. This regional marketing focus
enables the Company to develop consumer brand franchises and capitalize on
proximity to the trade customer, in terms of lower transportation costs; more
timely, responsive service; and enhanced product freshness.

OTHER CHICKEN: The Company sells bulk whole chickens and cut-up parts
primarily to retail grocers and food distributors in the United States. In
recent years, the Company has de-
emphasized its marketing of bulk-packaged chicken in the United States in favor
of more value-added products and export opportunities. In the United States,
prices of these products are negotiated daily or weekly and are generally
related to market prices quoted by the U.S.D.A. or other public price reporting
services. The majority of the growth in sales of "other" products between 1993
and 1996 were in exports to the Far East, Middle East and Eastern Europe.
Management believes exports of both prepared and fresh chicken will grow at a
rate faster than the general industry as a whole.

MEXICO
STRATEGY
In Mexico, the Company has made capital investments in advanced production
technology, transferred experienced management personnel and utilized proven
domestic production techniques in order to be a low cost producer of chicken.
At the same time, the Company has directed its marketing efforts toward more
value added chicken products. Management believes that this strategy has
resulted in increased market share and higher profit margins relative to other
Mexican chicken producers and has positioned the Company to participate in any
growth in chicken demand which may occur in the future. Recent demand growth
in Mexico is evidenced by the increase in per capita consumption of chicken in
Mexico, from approximately 24 pounds in 1982 to approximately 37 pounds in
1994, according to an industry source. Recent per capita consumption of
chicken is estimated to be down 8% to approximately 34 pounds. The Company
considers this decline in consumption to be a temporary reaction resulting from
the economic impact of the Mexican peso's devaluation occurring in 1995.

BACKGROUND: The Mexican market is one of the Company's fastest growing
markets and represented approximately 20% of the Company's net sales in fiscal
1996. The Company entered the Mexican market in 1981 when it began selling
eggs on a limited basis. Recognizing favorable long-term demographic trends
and improving economic conditions in Mexico, the Company began exploring
opportunities to produce and market chicken in Mexico. In fiscal 1988, the
Company acquired four vertically integrated poultry production operations in
Mexico for approximately $15.1 million. Since such acquisitions and through
fiscal 1995, the Company has made capital expenditures in Mexico totaling
$151.6 million to expand and improve such operations. Included in this amount
is fiscal 1996 investments of approximately $6.1 million and fiscal 1995
investments of approximately $39.2 million for property, plant and equipment in
Mexico, of which $30.0 million was incurred in the acquisition of Union de
Queretaro, et al, a group of five chicken companies located near Queretaro,
Mexico. (See Note I to the Consolidated Financial Statements). The Company
believes its facilities are among the most technologically advanced in Mexico.
As a result of these expenditures, the Company has increased weekly production
in its Mexico operations by over 350% since its original investment in 1988.
The Company believes that it is one of the lowest cost producers of chicken in
Mexico.

PRODUCTS: During the last three years, the Company's Mexico operation has
dramatically increased its value added sales of chicken products, which should
provide higher, more stable margins. Although changing now, the market for
chicken products in Mexico is less developed than in the United States with
sales attributed to fewer, more basic products.

MARKETS: The Company sells its Mexican chicken products primarily to
large wholesalers and, to a lesser extent, to retailers through its own
distribution network, which includes several warehouse facilities located
throughout Central Mexico. The Company's customer base in Mexico covers a
broad geographic area from Mexico City, the capital of Mexico with a population
estimated to be over 20 million, to Saltillo, the capital of the State of
Coahuila, about 500 miles north of Mexico City, and from Tampico on the Gulf of
Mexico to Acapulco on the Pacific, which region includes the cities of San Luis
Potosi and Queretaro, capitals of the states of the same name.

COMPETITION
The chicken industry is highly competitive and certain of the Company's
competitors have greater financial and marketing resources than the Company.
In the United States and Mexico, the Company competes principally with other
vertically integrated chicken companies. In general, the competitive factors
in the domestic chicken industry include price, product quality, brand
identification, breadth of product line and customer service. Competitive
factors vary by major market. In the foodservice market, competition is based
on consistent quality, product development, service and price. In the domestic
consumer market, management believes that product quality, brand awareness and
customer service are the primary bases of competition. There is some
competition with non vertically integrated further processors in the U.S.
prepared food business. The Company believes it has significant, long term
cost and quality advantages over non-vertically integrated further processors.
In Mexico, where product differentiation is limited, price and product quality
are the most critical competitive factors.

OTHER ACTIVITIES
The Company markets fresh eggs under the Pilgrim's Pride brand name as
well as private labels in various sizes of cartons and flats to domestic retail
grocery and institutional foodservice customers located primarily in Texas.
The Company has a housing capacity for approximately 2.3 million commercial egg
laying hens which can produce approximately 41 million dozen eggs annually.
Domestic egg prices are determined weekly based upon reported market prices.
The domestic egg industry has been consolidating over the last few years with
the 20 largest producers accounting for more than 68% of the total number of
egg laying hens in service during 1996. The Company competes with other
domestic egg producers, primarily on the basis of product quality, reliability,
price and customer service. According to an industry publication, the Company
is the twenty-fifth largest producer of eggs in the United States.

In fiscal 1996, exports of the Company's U.S. produced chicken accounted
for approximately 6% of dollar sales. Exports were primarily to Asian, Middle
Eastern and Eastern European countries. While current activity in these markets
contributes only a small percentage of sales, the Company believes export
demand will grow at an even faster rate than U.S. demand in the future. As
export conditions become more favorable, management believes the Company is
well-positioned to increase sales of both raw and cooked chicken to foreign
countries.

The Company has regional distribution centers located in Arlington, El
Paso, Mt. Pleasant and San Antonio, Texas; Phoenix and Tucson, Arizona; and
Oklahoma City, Oklahoma that distribute the Company's own poultry products
along with certain poultry and non-poultry products purchased from third
parties. The Company's non-poultry distribution business is conducted as an
accommodation to their customers and to achieve greater economies of scale in
distribution logistics. They serve independent grocers and quick service
restaurants. The store-door delivery capabilities for the Company's own poultry
products provide a strategic service advantage in selling to quick service,
national chain restaurants.

The Company also converts chicken by-products into protein products
primarily for sale to manufacturers of pet foods. In addition, the Company
produces and sells livestock feeds at its feed mill and farm supply store in
Pittsburg, Texas, to dairy farmers and livestock producers in northeastern
Texas.

REGULATION
The chicken industry is subject to government regulation, particularly in
the health and environmental areas. The Company's domestic chicken processing
facilities are subject to on-site examination, inspection and regulation by the
U.S.D.A. The F.D.A. inspects the production of the Company's domestic feed
mills. The Company's Mexican food processing facilities and feed mills are
subject to on-site examination, inspection and regulation by a Mexican
governmental agency which performs functions similar to those performed by the
U.S.D.A. and F.D.A. Since commencement of operations by the Company's
predecessor in 1946, compliance with applicable regulations has not had a
material adverse effect upon the Company's earnings or competitive position and
such compliance is not anticipated to have a materially adverse effect in the
future. Management believes that the Company is in substantial compliance with
all applicable laws and regulations relating to the operations of its
facilities.

The Company anticipates increased regulation by the U.S.D.A. concerning
food safety, as well as by the F.D.A. concerning the use of medications in
feed. Although the Company does not anticipate any such regulation having a
material adverse effect upon the Company, no assurances can be given to that
effect.

EMPLOYEES AND LABOR RELATIONS
As of December 16, 1996 the Company employed approximately 8,300 persons
in the U.S. and 3,200 persons in Mexico. Approximately 1,200 employees at the
Company's Lufkin, Texas facility are members of a collective bargaining unit
represented by Local 540 of the United Food and Commercial Workers Union (the
"UFCW"). None of the Company's other domestic employees have union
representation. The Company has operated the Lufkin facility since its
purchase in 1986 through August 11, 1996 without a collective bargaining
agreement. On August 11, 1996 the Company entered into a two-year collective
bargaining agreement with the UFCW, the terms of which the Company believes to
be no more favorable than those provided to its non-union domestic employees.
In Mexico, most of the Company's hourly employees are covered by collective
bargaining agreements as most employees are in Mexico. The Company has not
experienced any work stoppages since May 24 and 25, 1993, and management
believes that relations with the Company's employees are satisfactory.

EXECUTIVE OFFICERS OF THE REGISTRANT
As of December 16, 1996, except as noted below, the following were the
Executive Officers of the Company. Officers are elected annually by the Board
of Directors to serve at the pleasure of the Board of Directors.

EXECUTIVE OFFICERS
OF THE COMPANY AGE POSITIONS

Lonnie "Bo" Pilgrim 68 Chief Executive Officer

Clifford E. Butler 54 Executive President
(Prior to January 1, 1997, Chief Financial
Officer, Secretary and Treasurer)

Lindy M. "Buddy" Pilgrim 42 President and Chief Operating Officer

David Van Hoose 54 President, Mexican Operations

Robert L. Hendrix 60 Executive Vice President
Operations

Richard A. Cogdill 36 Executive Vice President
Chief Financial Officer,
Secretary and Treasurer
(Prior to January 1, 1997, Senior Vice
President, Corporate Controller)

Terry Berkenbile 46 Senior Vice President
Sales & Marketing, Retail and Fresh Products

Ray Gameson 48 Senior Vice President
Human Resources

O.B. Goolsby, Jr. 49 Senior Vice President
Prepared Foods Operations

Michael D. Martin 42 Senior Vice President
DeQueen, Arkansas Complex

James J. Miner, Ph.D. 68 Senior Vice President
Technical Services

Michael J. Murray 38 Senior Vice President
Sales & Marketing, Prepared Foods

Robert N. Palm 52 Senior Vice President,
Lufkin, Texas Complex

Mr. L. A. Pilgrim has served as Chairman of the Board and Chief Executive
Officer since the organization of the Company in 1968. Prior to the
incorporation of the Company, Mr. Pilgrim was a partner in the Company's
predecessor partnership business founded in 1945.

Mr. Butler was employed by the Company as Controller in February 1969. He has
been Director of the Company since 1969, was named Senior Vice President of
Finance in 1973, he became Chief Financial Officer and Vice Chairman of the
Board in July 1983, and effective January 1, 1997 he is promoted to Executive
President.

Mr. L. M. Pilgrim serves as President and Chief Operating Officer of the
Company. He was elected as Director in March 1993 and began employment in
April 1993 under the title of President of U.S. Operations and Sales &
Marketing. From April 1993 to March 1994, the President and Chief Operating
Officer reported to him. After that time, the Chief Operating Officer title
and responsibilities were incorporated into his own. Up to October 1990, Mr.
Pilgrim was employed by the Company for 12 years in marketing and 9 years in
operations. From October 1990 to April 1993, he was President of Integrity
Management Services, Inc., a consulting firm to the food industry. He is a
nephew of Lonnie "Bo" Pilgrim.

Mr. Van Hoose has been President of Mexican Operations since April 1993. He
was previously Senior Vice President, Director General, Mexican Operations
since August 1990. Mr. Van Hoose was employed by Pilgrim's Pride in September
1988 as Senior Vice President, Texas Processing. Prior to that, Mr. Van Hoose
was employed by Cargill, Inc., as General Manager of one of its chicken
operations.

Mr. Hendrix has been Executive Vice President, Operations, of the Company since
March 1994. Prior to that he served as Senior Vice President, NETEX Processing
from August 1992 to March 1994 and as President and Chief of Complex Operations
from September 1988 to March 1992. He was on leave from the Company from March
1992 to August 1992. He was President and Chief Operating Officer of the
Company from July 1983 to September 1988. He began as Senior Vice President in
September 1981 when Pilgrim's Pride acquired Mountaire Corporation of DeQueen,
Arkansas, and, prior thereto, he was Vice President of Mountaire Corporation.

Mr. Cogdill has been promoted to Executive Vice President, Chief Financial
Officer, Secretary and Treasurer effective January 1, 1997. Currently he
serves as Senior Vice President, Corporate Controller, since August 1992 and as
Vice President, Corporate Controller from October 1991 through August 1992.
Prior to October 1991 he was a Senior Manager with Ernst & Young LLP. He is a
Certified Public Accountant.

Mr. Berkenbile was named Senior Vice President, Sales & Marketing, for Retail
and Fresh Products in July 1994. Prior to that he was Vice President, Sales &
Marketing, for Retail and Fresh Products since May 1993. From February 1991 to
April 1993 Mr. Berkenbile was Director Retail Sales & Marketing at Hudson
Foods. From February 1988 to February 1991, Mr. Berkenbile was Director Plant
Sales at Pilgrim's Pride, prior thereto, he worked in the processed red meat
industry.

Mr. Gameson has been Senior Vice President of Human Resources since October
1994. He previously served as Vice President of Human Resources since August,
1993. From December 1991 to July 1993, he was employed by Townsends, Inc. and
served as Complex Human Resource, Manager. Prior to that he was employed by
the Company as Complex Human Resource, Manager, at its Mt. Pleasant, Texas
location.

Mr. Goolsby has been Senior Vice President, Prepared Foods Operations since
August 1992. He was previously Vice President, Prepared Foods Operations
since April 1986 and was previously employed by the Company from November 1969
to January 1981.

Mr. Martin has been Senior Vice President, DeQueen, Arkansas Complex Manager,
of the Company since April 1993. He previously served as Plant Manager at the
Company's Lufkin, Texas operations and Vice President, Processing, at the
Company's Mt. Pleasant, Texas, operations up to April 1993. He has served in
various other operating management positions in the Arkansas Complex since
September 1981. Prior to that he was employed by Mountaire Corporation of
DeQueen, Arkansas, until it was acquired by the Company in September 1981.

Dr. Miner, Ph.D., has been Senior Vice President, Technical Services, since
April 1994. He has been employed by the Company and its predecessor
partnership since 1966 and previously served as Senior Vice President
responsible for live production and feed nutrition. He has been a Director
since the incorporation of the Company in 1968.

Mr. Murray has been Senior Vice President, Sales & Marketing, for Prepared
Foods since October 1994. He previously served as Vice President of Sales and
Marketing, Food Service since August 1993. From 1990 to July 1993, he was
employed by Cargill, Inc. Prior to that, from March 1987 to 1990 he was
employed by Pilgrim's Pride as a Vice President for sales and marketing and
prior thereto, he was employed by Tyson Foods, Inc.

Mr. Palm has been Senior Vice President, Lufkin, Texas, Complex Manager of the
Company, since June 1985 and was previously employed in various operating
management positions by Plus-Tex Poultry, Inc., a Lufkin, Texas based company
acquired by Pilgrim's Pride in June 1985.
<PAGE>

ITEM 2. PROPERTIES

PRODUCTION AND FACILITIES
BREEDING AND HATCHING
The Company supplies all of its domestic chicks by producing its own
hatching eggs from domestic breeder flocks owned by the Company, approximately
34% of which are maintained on 38 Company-operated breeder farms. The Company
currently owns or contracts for approximately 7.7 million square feet of
breeder housing on approximately 251 breeder farms. In Mexico, all of the
Company's breeder flocks are maintained on Company-owned farms.

The Company owns six hatcheries in the United States, located in
Nacogdoches and Pittsburg, Texas, and DeQueen and Nashville, Arkansas, where
eggs are incubated and hatched in a process requiring 21 days. Once hatched,
the day-old chicks are inspected and vaccinated against common poultry diseases
and transported by Company vehicles to grow-out farms. The Company's six
domestic hatcheries have an aggregate production capacity of approximately 7.3
million chicks per week. In Mexico, the Company owns seven hatcheries, which
have an aggregate production capacity of approximately 3.9 million chicks per
week.

GROW-OUT
The Company places its domestically grown chicks on approximately 992
grow-out farms located in Texas and Arkansas. These farms provide the Company
with approximately 46.7 million square feet of growing facilities. The Company
operates 32 grow-out farms which account for approximately 10% of its total
annual domestic chicken capacity. The Company also places chicks with farms
owned by affiliates of the Company under grow-out contracts. The remaining
chicks are placed with independent farms under grow-out contracts. Under such
grow-out contracts, the farmers provide the facilities, utilities and labor.
The Company supplies the chicks, the feed and all veterinary and technical
services. Contract grow-out farmers are paid based on live weight under an
incentive arrangement. In Mexico, the Company owns approximately 38% of its
grow-out farms and contracts with independent farmers for the balance of its
production. Arrangements with independent farmers in Mexico are similar to the
Company's arrangements with contractors in the United States.

FEED MILLS
An important factor in the production of chicken is the rate at which feed
is converted into body weight. The Company purchases feed ingredients on the
open market. The primary feed ingredients include corn, milo and soybean meal,
which historically have been the largest component of the Company's total
production cost. The quality and composition of the feed is critical to the
conversion rate, and accordingly, the Company formulates and produces its own
feed. Domestically, the Company operates five feed mills located in
Nacogdoches and Pittsburg, Texas and Nashville and Hope, Arkansas. The Company
currently has annual domestic feed requirements of approximately 1.8 million
tons and the capacity to produce approximately 2.1 million tons. The Company
owns four feed mills in Mexico which produce all of the requirements of its
Mexican operations. Mexican feed requirements are approximately .7 million
tons with a capacity to produce approximately 1.9 million tons. In fiscal
1996, approximately 55% of the grain used was imported from the United States.
However, this percentage fluctuates based on the availability and cost of local
grain supplies.

Feed grains are commodities subject to volatile price changes caused by
weather, size of harvest, transportation and storage costs and the agricultural
policies of the United States and foreign governments. Although the Company
can and sometimes does purchase grain in forward markets, it cannot eliminate
the potential adverse effect of grain price increases.

PROCESSING
Once the chickens reach processing weight, they are transported in the
Company's trucks to the Company's processing plants. These plants utilize
modern, highly automated equipment to process and package the chickens. The
Company periodically reviews possible application of new processing
technologies in order to enhance productivity and reduce costs. The Company's
five domestic processing plants, two of which are located in Mt. Pleasant,
Texas, and the remainder of which are located in Dallas and Lufkin, Texas, and
DeQueen, Arkansas, have the capacity, under present U.S.D.A. inspection
procedures, to produce approximately 1.1 billion pounds of dressed chicken
annually. The Company's three processing plants located in Mexico, which
perform fewer processing functions than the Company's U.S. facilities, have the
capacity to process approximately 470 million pounds of dressed chicken
annually.

PREPARED FOODS PLANT
The Company's prepared foods plant in Mt. Pleasant, Texas, was constructed
in 1986 and expanded in 1987. This facility has deboning lines, marination
systems, batter/breading systems, fryers, ovens, both mechanical and cryogenic
freezers, a variety of packaging systems and cold storage. This plant is
currently operating at the equivalent of two shifts a day for six days a week.
If necessary, the Company could add additional shifts during the remaining days
of the week.

EGG PRODUCTION
The Company produces eggs at three farms near Pittsburg, Texas. One farm
is owned by the Company, while two farms are operated under contract by an
entity owned by a major stockholder of the Company. The eggs are cleaned,
sized, graded and packaged for shipment at processing facilities located on the
egg farms. The farms have a housing capacity for approximately 2.3 million
producing hens and are currently housing approximately 2.0 million hens.

OTHER FACILITIES AND INFORMATION
The Company operates a rendering plant located in Mt. Pleasant, Texas,
that currently processes by-products from approximately 8.0 million chickens
weekly into protein products, which are used in the manufacture of chicken and
livestock feed and pet foods. The Company operates a feed supply store in
Pittsburg, Texas, from which it sells various bulk and sacked livestock feed
products. The Company owns an office building in Pittsburg, Texas, which
houses its executive offices, and an office building in Mexico City, which
houses the Company's Mexican marketing offices. The Company also owns
approximately 15,150 acres of farmland previously used in the Company's non-
poultry farming operations. The Company is currently in the process of
disposing of such land and related assets.

Substantially all of the Company's domestic property, plant and equipment
is pledged as collateral on its secured debt.

ITEM 3. LEGAL PROCEEDINGS

From time to time the Company is named as a defendant or co-defendant in
lawsuits arising in the course of its business. The Company does not believe
that such pending lawsuits will have a material adverse impact on the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

NOT APPLICABLE
<PAGE>
PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS

QUARTERLY STOCK PRICES AND DIVIDENDS
High and low sales prices and dividends were:

<TABLE>
<CAPTION>
Prices Prices
1996 1995 DIVIDENDS
<S> <C> <C> <C> <C> <C> <C>
QUARTER HIGH LOW HIGH LOW 1996 1995

First $8 3/8 6 5/8 $10 3/8 $9 3/8 $.015 $.015
Second 7 5/8 6 3/4 9 3/4 7 3/4 .015 .015
Third 9 6 3/4 8 3/8 7 1/2 .015 .015
Fourth 9 7 1/2 8 3/4 7 5/8 .015 .015

The Company's stock is traded on the New York Stock Exchange (ticker
symbol CHX). The Company estimates there were approximately 12,500
holders (including individual participants in security position listings)
of the Company's common stock as of December 4, 1996.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

S E L E C T E D F I N A N C I A L D A T A
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES

</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993(a) 1992(b) 1991 1990 1989

OPERATING RESULTS SUMMARY:
Net sales $1,139,310 $931,806 $922,609 $887,843 $817,361 $786,651 $720,555 $661,077
Gross margin 70,640 74,144 110,827 106,036(c) 32,802(c) 75,567 74,190 83,356
Operating income (loss) 21,504 24,930 59,698(d) 56,345(d) (13,475) 31,039 33,379 47,014
Income (loss) before
income taxes and extraordinary
charge 47 2,091 42,448 32,838 (33,712) 12,235 20,463 31,027
Income tax expense (benefit) 4,551 10,058 11,390 10,543 (4,048) (59) 4,826 10,745
Income (loss) before
extraordinary charge (4,504) (7,967) 31,058 22,295 (29,664) 12,294 15,637 20,282
Extraordinary charge - early
repayment of debt, net
of tax (2,780) - - (1,286) - - - -
Net income (loss) (7,284) (7,967) 31,058 21,009 (29,664) 12,294 15,637 20,282

PER COMMON SHARE DATA:
Income (loss) before
extraordinary charge $(0.16) $(0.29) $1.13 $ .81 $(1.24) $ .54 $ .69 $0.90
Extraordinary charge -
early repayment of debt (0.10) - - (0.05) - - - -
Net income (loss) (0.26) (0.29) 1.13 0.76 (1.24) 0.54 0.69 0.90
Cash dividends 0.06 0.06 0.06 0.03 0.06 0.06 0.06 0.06
Book value{ (e)} 5.19 5.51 5.86 4.80 4.06 4.97 4.49 3.86

BALANCE SHEET SUMMARY:
Working capital $88,455 $88,395 $99,724 $72,688 $11,277 $44,882 $54,161 $60,313
Total assets 536,722 497,604 438,683 422,846 434,566 428,090 379,694 291,102
Short-term debt 35,850 18,187 4,493 25,643 86,424 44,756 30,351 9,528
Long-term debt, less
current maturities 198,334 182,988 152,631 159,554 131,534 175,776 154,277 109,412
Total stockholders' equity 143,135 154,074 161,696 132,293 112,112 112,353 101,414 87,132

KEY INDICATORS (AS A
PERCENT OF SALES):
Gross Margin 6.2% 8.0% 12.0% 11.9%(c) 4.0%(c) 9.6% 10.3% 12.6%
Selling, general and
administrative expenses 4.3% 5.3% 5.5%(d) 5.6%(c)(d) 5.7% (c) 5.7% 5.7% 5.5%
Operating income (loss) 1.9% 2.7% 6.5%(d) 6.3%(d) (1.6)% 3.9% 4.6% 7.1%
Interest expense, net 1.9% 1.9% 2.1% 2.9% 2.8% 2.5% 2.3% 2.7%
Net income (loss) (0.6)% (0.9)% 3.4% 2.4% (3.6)% 1.6% 2.2% 3.1%
</TABLE>

(a) 1993 had 53 weeks.
(b) During 1992, the Company changed the fiscal year-end of its Mexican
subsidiaries from August to September to coincide with that of its domestic
operations. 1992 operating results included the operations of the Mexican
subsidiaries for the twelve months ended September 26, 1992. Operating
results for the Mexican subsidiaries during the month of September, 1991
have been reflected as a direct addition to stockholders' equity.
(c) Reflects reclassification of certain expenses from selling, general and
administrative to cost of sales of $4.2 million and $1.8 million in 1993 and
1992, respectively.
(d) Reflects reclassification of foreign exchange (gain) losses from selling,
general and administrative to a separate component of other expenses
(income). (See Note A to the Consolidated Financial Statements).
(e) Amounts are based on end-of-period shares of common stock outstanding.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

GENERAL

The profitability of the chicken industry is affected by market prices
of chicken and feed grains, both of which may fluctuate significantly
and exhibit cyclical characteristics. In an effort to reduce price
volatility and to generate higher, more consistent profit margins, the
Company has concentrated on the production and marketing of prepared
food products, which generally have higher margins than the Company's
other products. This concentration has resulted in an increase in
sales of prepared food products as a percentage of total domestic net
sales from 28.3% in fiscal 1990 to 38.1% in fiscal 1996. Management
believes that sales of prepared food products will become a larger
component of its total chicken sales and, accordingly, changes in
market prices for chicken and feed costs should have less impact on
profitability.

RESULTS OF OPERATIONS

FISCAL 1996 COMPARED TO FISCAL 1995:

Consolidated net sales were $1.14 billion for fiscal 1996, an increase of
$207.5 million, or 22.3%, over fiscal 1995. The increase in
consolidated net sales resulted from a $102.6 million increase in
domestic chicken sales to $773.7 million, a $68.6 million increase in
Mexican chicken sales to $228.1 million and a $36.3 million increase in
sales of other domestic products to $137.5 million. The increase in
domestic chicken sales was primarily due to a 7.7% increase in total
revenue per dressed pound produced and 7.0% increase in dressed pounds
produced. The increase in Mexican chicken sales was primarily due to a
35.6% increase in Mexican dressed pounds produced and by a 5.5%
increase in total revenue per dressed pound. The increase in Mexican
dressed pounds produced resulted primarily from the July 5, 1995
acquisition of five chicken companies located near Queretaro, Mexico.
The increase in sales of other domestic products was primarily the
result of increased sales of the Company's poultry by-products group
and higher sales prices for table eggs. Increased revenues per dressed
pound produced both domestically and in Mexico were primarily the
result of higher sales prices caused by the chicken markets adjusting
to higher feed ingredient cost.

Consolidated cost of sales was $1.07 billion in fiscal 1996, an
increase of $211.0 million, or 24.6%, over fiscal 1995. The increase
primarily resulted from a $150.8 million increase in cost of sales of
domestic operations, and a $60.2 million increase in the cost of sales
in Mexican operations.

The cost of sales increase in domestic operations of $211.0 million was
due to a 41.5% increase in feed ingredient costs, a 7.0% increase in
dressed pounds produced and increased production of higher cost and
margin products in prepared foods. Since 1995 September year end, feed
ingredient costs increased substantially due to lower crop yields in
the 1995 harvest season. Beginning in July 1996 feed ingredient prices
have reduced significantly due to a favorable crop harvest.

The $60.2 million cost of sales increase in Mexican operations was
primarily due to a 35.6% increase in dressed pounds produced and a 7.0%
increase in average costs of sales per pound. The increase in average
costs of sales per pound was primarily the result of a 37.2% increase
in feed ingredient costs resulting from the reasons discussed above.

Gross profit as a percentage of sales decreased to 6.2% in fiscal 1996
from 8.0% in fiscal 1995. The decreased gross profit resulted mainly
from increased costs of sales due to higher feed ingredient prices
experienced in fiscal 1996.

Consolidated selling, general and administrative expenses were $49.1
million in fiscal 1996 and $49.2 million in fiscal 1995. Consolidated
selling, general and administrative expenses as a percentage of sales
decreased in fiscal 1996 to 4.3% compared to 5.3% in fiscal 1995.

Consolidated operating income was $21.5 million for fiscal 1996, a
decrease of $3.4 million, when compared to fiscal 1995, resulting
primarily from higher feed ingredient cost.

Consolidated net interest expense was $21.5 million in fiscal 1996, an
increase of $4.1 million, or 23.2%, when compared to fiscal 1995. This
increase was due to higher outstanding debt levels resulting primarily
from domestic expansions and the prior year acquisitions in Mexico,
offset slightly by lower interest rates when compared to fiscal 1995.

Consolidated income tax expense in fiscal 1996 was $4.6 million
compared to expense of $10.1 million in fiscal 1995. Consolidated
income tax expense is significantly in excess of the amount computed at
the statutory U.S. income tax rate due to the non-deductibility of
Mexican losses in the U.S. in both fiscal 1996 and fiscal 1995. The
decrease in consolidated income tax expense in fiscal 1996 compared to
fiscal 1995 primarily resulted from the $13.6 decrease in income before
income taxes and extraordinary charges for domestic operations in
fiscal 1996 compared to fiscal 1995.

The extraordinary charge-early repayment of debt in the amount of $2.8
million, net of tax, was incurred while refinancing certain debt at a
lower interest rate, which will result in long-term interest expense
reductions. See Note C to the Consolidated Financial Statements.

FISCAL 1995 COMPARED TO FISCAL 1994:

Consolidated net sales were $931.8 million for fiscal 1995, an increase
of $9.2 million, or 1.0%, over fiscal 1994. The increase in
consolidated net sales resulted from a $36.0 million increase in
domestic chicken sales to $671.1 million and a $2.5 million increase in
sales of other domestic products to $101.2 million offset partially by
a $29.3 million decrease in Mexican chicken sales to $159.5 million.
The increase in domestic chicken sales was due primarily to a 3.6%
increase in dressed pounds produced and a 2.0% increase in the total
revenue per dressed pound produced. The decrease in Mexican chicken
sales resulted from a 21.9% decrease in the total revenue per dressed
pound produced caused primarily by the devaluation of the Mexican peso,
offset by an 8.1% increase in dressed pounds produced. See Impact of
Mexican Peso Devaluation discussed below.

Consolidated cost of sales was $857.7 million in fiscal 1995, an
increase of $45.9 million, or 5.7%, over fiscal 1994. The increase
primarily resulted from a $39.2 million increase in cost of sales of
domestic operations and a $6.7 million increase in the cost of sales
from Mexican operations.

The cost of sales increase in domestic operations of $39.2 million was
due primarily to a 3.6% increase in dressed pounds produced and
increased production of higher cost and margin products in prepared
foods, offset partially by a 6.1% decrease in feed ingredient cost.

The $6.7 million cost of sales increase in Mexican operations was due
primarily to an 8.1% increase in dressed pounds produced offset
partially by a 3.6% decrease in average cost of sales per dressed pound
resulting from the devaluation of the Mexican peso. See Impact of Peso
Devaluation discussed below.

Gross profit as a percentage of sales decreased to 8.0% in fiscal 1995
from 12% in fiscal 1994. The decreased gross profit resulted mainly
from the Company's Mexican operations and was primarily the result of
the Mexican peso devaluation having a greater effect on selling prices
than on cost of sales, due primarily to the dollar based
characteristics of grain prices, which is a major component of cost of
goods sold.

Consolidated selling, general and administrative expenses were $49.2
million for fiscal 1995, a decrease of $1.9 million, or 3.7%, when
compared to fiscal 1994. Consolidated selling, general and
administrative expenses as a percentage of sales decreased in fiscal
1995 to 5.3% from 5.5% in fiscal 1994.

Consolidated operating income for fiscal 1995 was $24.9 million
compared to $59.7 million in fiscal 1994. The decrease was due
primarily to lower margins in Mexican chicken operations which resulted
primarily from the effects of the Mexican peso devaluation as described
previously.

Consolidated net interest expense was $17.5 million in fiscal 1995, a
decrease of $1.7 million, or 8.8%, when compared to fiscal 1994. This
decrease was due to lower average amounts of outstanding debt when
compared to fiscal 1994.
Consolidated income tax expense decreased to $10.1 million in fiscal
1995 compared to $11.4 million in fiscal 1994. The high effective tax
rate is due to the Company having positive taxable income in the United
States offset by losses in Mexico which result in no current tax
benefit under current Mexican tax laws.

LIQUIDITY AND CAPITAL RESOURCES:

Liquidity in fiscal 1996 remained strong, however, operating losses in
Mexico resulting primarily from the Mexican peso devaluation and higher
feed ingredient costs affected most financial ratios negatively. While
the Company's working capital at September 28, 1996 increased slightly
to $88.5 million from $88.4 million at September 30, 1995, the current
ratio at September 28, 1996 decreased to 1.63 to 1 from 1.84 to 1 at
September 30, 1995 and the Company's stockholders' equity decreased to
$143.1 million at September 28, 1996 from $152.1 million at September
30, 1995. Total debt to capitalization increased to 62.1% at September
28, 1996 from 56.9% at September 30, 1995. The Company maintains $110
million in revolving credit facilities with available unused lines of
credit of $70.7 million at December 9, 1996.

Trade accounts and other receivables were $65.9 million at September
28, 1996, a $5.9 million increase from September 30, 1995. The 9.8%
increase was due primarily to increased average selling prices and
volumes. Allowances for doubtful accounts, as a percentage of trade
accounts and notes receivable were 5.7% at September 28, 1996 compared
to 6.7% at September 30, 1995. This decrease is due to increased net
sales resulting in a corresponding increase in net sales resulting in a
corresponding increase in trade accounts and other receivables with
allowances for doubtful accounts remaining relatively the same.

Inventories were $136.9 million at September 28, 1996, an increase of
$26.5 million from September 30, 1995. This 24.0% increase was due
primarily to the higher feed ingredient costs affecting the carrying
value of feed on hand and feed cost in the live chickens and finished
products.

Accounts payable were $71.4 million at September 28, 1996, a 28.2%
increase from September 30, 1995, due primarily to higher production
levels and feed ingredient costs.

Capital expenditures for fiscal 1996 were $34.3 million and were
incurred primarily to expand production capacities domestically,
improve efficiencies, reduce costs and for the routine replacement of
equipment. The Company anticipates that it will spend approximately
$35 million for capital expenditures in fiscal year 1997 and expects to
finance such expenditures with available operating cash flows and long-
term financing. The Company periodically reviews acquisition
opportunities and any business acquisitions consummated in fiscal 1997
would likely be in addition to the projected capital expenditure amount
listed above.

Cash flows provided by operating activities were $11.4 million, $32.7
million and $60.7 million in fiscal 1996, 1995 and 1994, respectively.
The change in cash flows provided by operating activities between 1996
and 1995 was primarily caused by increased inventories resulting from
higher feed costs. The difference between 1995 and 1994 was primarily
from changes in net income.

Cash provided by (used in) financing activities was $27.3 million,
$40.2 million and ($30.3) million in fiscal 1996, 1995 and 1994,
respectively. The cash provided by (used in) financing activities
primarily reflects proceeds from notes payable and long-term financings
in fiscal 1996, 1995 and debt retirements in 1994.

The Company's deferred income taxes have resulted primarily from the
Company's change from the cash method of accounting to the accrual
method of accounting for taxable periods beginning after July 2, 1988.
The Company's deferred income taxes arising from such change in method
of accounting will continue to be deferred as long as (i) at least 50%
of the voting stock and at least 50% of all other classes of stock of
the Company continue to be owned by the Lonnie "Bo" Pilgrim family and
(ii) the Company's net sales from its agricultural operation in a
taxable year equal or exceed the Company's net sales from such
operations in its taxable year ending July 2, 1988. Failure of the
first requirement will cause all of the deferred taxes attributable to
the change in accounting method to be due. Failure of the second
requirement will cause a portion of such deferred taxes to be due based
upon the amount of the relative decline in net sales from the
agricultural operations. The family of Lonnie "Bo" Pilgrim currently
owns approximately 65.3% of the stock of the company. Management
believes that likelihood of the (i) Pilgrim family ownership falling
below 50%, or (ii) gross receipts from agricultural activities falling
below the 1988 level, is remote.

IMPACT OF MEXICAN PESO DEVALUATION:

In December 1994, the Mexican government changed its policy of
defending the peso against the U.S. dollar and allowed it to float
freely on the currency markets. These events resulted in the Mexican
peso exchange rate declining from 3.39 to 1 U.S. dollar at October 1,
1994 to a low of 8.16 at November 14, 1995. On December 6, 1996 the
Mexican peso closed at 7.93 to 1 U.S. dollar. No assurance can be
given as to the future valuation of the Mexican peso and further
movement in the Mexican peso could affect future earnings positively or
negatively.

OTHER

In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "ACCOUNTING FOR
THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE
DISPOSED OF." SFAS No. 121 establishes accounting standards for the
impairment of long-lived assets to be held and used and for long-lived
assets to be disposed of. The Company adopted SFAS No. 121 effective
September 29, 1996. The adoption of SFAS No. 121 did not have a
material effect on the Company's consolidated financial statement.

IMPACT OF INFLATION:

Due to moderate inflation and the Company's rapid inventory turnover
rate, the results of operations have not been adversely affected by
inflation during the past three-year period.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements together with the report of
independent auditors, and financial statement schedules are included on
pages 36 through 46 of this document. Financial statement schedules
other than those included herein have been omitted because the required
information is contained in the consolidated financial statements or
related notes, or such information is not applicable.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

NOT APPLICABLE

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

Reference is made to "Election of Directors" on pages 3 through 5
of Registrant's Proxy Statement for its 1996 Annual Meeting of
Stockholders, which section is incorporated herein by reference.

Reference is made to "Compliance with Section 16(a) of the
Exchange Act" on page 9 of Registrant's Proxy Statement for its 1996
Annual Meeting of Stockholders, which section is incorporated herein by
reference.

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information responsive to Items 11, 12 and 13 is incorporated by
reference from sections entitled "Security Ownership", "Election of
Directors", "Executive Compensation", and "Certain Transactions" of the
Registrant's Proxy Statement for its 1996 Annual Meeting of
Stockholders.
<PAGE>
PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A) (1) The financial statements listed in the accompanying index to
financial statements and schedules are filed as part of this
report.

(2) The schedules listed in the accompanying index to financial
statements and schedules are filed as part of this report.

(3) Exhibits

2.1 Agreement and Plan of Reorganization dated September 15, 1986, by
and among Pilgrim's Pride Corporation, A Texas corporation;
Pilgrim's Pride Corporation, a Delaware corporation; and Doris
Pilgrim Julian, Aubrey Hal Pilgrim, Paulette Pilgrim Rolston,
Evanne Pilgrim, Lonnie "Bo" Pilgrim, Lonnie Ken Pilgrim, Greta
Pilgrim Owens and Patrick Wayne Pilgrim (incorporated by reference
from Exhibit 2.1 to the Company's Registration Statement on Form
S-1 (No. 33-8805) effective November 14, 1986).

3.1 Certificate of Incorporation of the Company (incorporated by
reference from Exhibit 3.1 of the Company's Registration Statement
on Form S-1 (No. 33-8805) effective November 14, 1986).

3.2 By-Laws of the Company (incorporated by reference from Exhibit 3.2
to the Company's Registration Statement on Form S-1 (No. 33-8805)
effective November 14, 1986).

4.1 Certificate of Incorporation of the Company (incorporated by
reference from Exhibit 3.1 of the Company's Registration Statement
on Form S-1 (No. 33-8805) effective November 14, 1986).

4.2 By-Laws of the Company (incorporated by reference from Exhibit 3.2
of the Company's Registration Statement on Form S-1 (No. 33-8805)
effective November 14, 1986).

4.3 Indenture dated as of May 1, 1988, between the Company and Mtrust
Corporation National Association relating to the Company's 14
1/4% Senior Notes Due 1995 (incorporated by reference from Exhibit
4.1 of the Company's Registration Statement on Form S-1 (No. 33-
21057) effective May 2, 1988).

4.4 First Supplemental Indenture dated as of October 4, 1990, between
the Company and Ameritrust Texas, N.A. supplementing the Indenture
dated as of May 1, 1988, between the Company and Mtrust
Corporation National Association relating to the Company's 14 1/4%
Senior Notes Due 1995 (incorporated by reference from Exhibit 4.4
of the Company's Form 8 filed on July 1, 1992).

4.5 Form of 14 1/4% Senior Note Due 1995 (incorporated by reference
from Exhibit 4.2 of the Company's Registration Statement on Form
S-1 (No. 33-21057) effective May 2, 1988).

4.6 Specimen Certificate for shares of Common Stock, Par value $.01
per share, of the Company (incorporated by reference from Exhibit
4.6 of the Company's Form 8 filed on July 1, 1992).

4.7 Form of Indenture between the Company and Ameritrust Texas
National Association relating to the Company's 10 7/8% Senior
Subordinated Notes Due 2003 (incorporated by reference from
Exhibit 4.6 of the Company's Registration Statement on Form S-1
(No. 33-59626) filed on March 16, 1993).

4.8 Form of 10 7/8% Senior Subordinated Note Due 2003 (incorporated by
reference from Exhibit 4.8 of the Company's Registration Statement
on Form S-1 (No. 33-61160) filed on June 16, 1993).

10.1 Pilgrim Industries, Inc., Profit Sharing Retirement Plan, restated
as of July 1, 1987 (incorporated by reference from Exhibit 10.1 of
the Company's Form 8 filed on July 1, 1992).

10.2 Bonus Plan of the Company (incorporated by reference from Exhibit
10.2 to the Company's Registration Statement on Form S-1 (No. 33-
8805) effective November 14, 1986).

10.3 Aircraft Lease dated November 15, 1984, by and between L.A.
Pilgrim d/b/a B.P. Leasing Company and the Company (incorporated
by reference from Exhibit 10.5 to the Company's Registration
Statement on Form S-1 (No. 33-8805) effective November 14, 1986).

10.4 Broiler Grower Contract dated November 11, 1985, between the
Company and Lonnie "Bo" Pilgrim (Farm #30) (incorporated by
reference from Exhibit 10.9 to the Company's Registration
Statement on Form S-1 (No. 33-8805) effective November 14, 1986).

10.5 Broiler Growing Agreements dated October 28, 1985, between the
Company and Monty K. Henderson d/b/a Central Farms and Lone Oak
Farms (incorporated by reference from Exhibit 10.11 to the
Company's Registration Statement on Form S-1 (No. 33-8805)
effective November 14, 1986).

10.6 Broiler Growing Agreement dated March 27, 1986, between the
Company and Clifford E. Butler (incorporated by reference from
Exhibit 10.12 to the Company's Registration Statement on Form S-1
(No. 33-8805) effective November 14, 1986).

10.7 Broiler Grower Contract dated July 10, 1990 between the Company
and James J. Miner d/b/a/ BJM Farms (incorporated by reference
from Exhibit 10.7 of the Company's Form 8 filed on July 1, 1992).

10.8 Commercial Egg Grower Contract dated July 1, 1986, between the
Company and Pilgrim Poultry, Ltd. (incorporated by reference from
exhibit 10.14 to the Company's Registration Statement on Form S-1
(No. 33-8805) effective November 14, 1986).

10.9 Agreement dated November 28, 1978, by and between the Company and
Pilgrim Poultry, Ltd. (incorporated by reference from Exhibit
10.15 to the Company's Registration Statement on Form S-1 (No. 33-
8805) effective November 14, 1986).

10.10 Agreement between the Company and its Principal Shareholders
dated October 2, 1974, as amended July 1, 1979 (incorporated by
reference from Exhibit 10.19 to the Company's Registration
Statement on Form S-1 (No. 33-8805) effective November 14, 1986).

10.11 Note Purchase Agreement dated as of October 1, 1986, by and
between the Company and Aetna Life Insurance Company with related
Collateral Trust Indenture, as amended by First Supplemental
Indenture dated as of November 1, 1986, and by letter dated
September 29, 1987, Texas Mortgage, Arkansas Mortgage, Guarantee
Agreement, as amended by First Amendment to Guarantee Agreement
dated June 9, 1987, and Cash Pledge Agreement (incorporated by
reference from Exhibit 10.21 of the Company's Registration
Statement on Form S-1 (No. 33-21057) effective May 2, 1988).

10.12 Letter Agreement dated April 26, 1988, by and among Aetna Life
Insurance Company, The Aetna Casualty and Surety Company, The
Connecticut Bank and Trust Company and the Company and Letter
Agreement dated April 26, 1988, by and among Bank of America
National Trust and Savings Association, The Connecticut Bank and
Trust Company and the Company amending Note Purchase Agreement
dated as of October 1, 1986 (incorporated by reference from
Exhibit 10.36 of the Company's Registration Statement on Form S-1
(No. 33-21057) effective May 2, 1988).

10.13 Note Purchase Agreement dated as of September 21, 1990, by and
among the Company, Aetna Life Insurance Company and Bank of
America National Trust and Savings Association (incorporated by
reference from Exhibit 10.20 of the Company's Form 8 filed on July
1, 1992).

10.14 Amended and Restated Collateral Trust Indenture dated as of
September 21, 1990, by and between the Company and State Street
Bank and Trust Company of Connecticut, N.A. with related Notes,
Modification Agreements and First Amendment to Guaranty
(incorporated by reference from Exhibit 10.21 of the Company's
Form 8 filed on July 1, 1992).

10.15 Supplemental Indenture and Waiver dated as of December 9, 1991,
by and between the Company and State Street Bank and Trust Company
of Connecticut, N.A. with related Notes, Modification Agreements
and First Amendment to Guaranty, Amended and Restated Collateral
Trust Indenture dated as of September 20, 1990 (incorporated by
reference from Exhibit 10.24 of the Company's Form 10-K for the
year ended September 26, 1992).

10.16 Loan Agreement dated as of August 1, 1988, by and between the
Company and Angelina and Neches River Authority Industrial
Development Corporation, with related Reimbursement and Credit
Agreement (incorporated by reference from Exhibit 10.22 of the
Company's Form 8 filed on July 1, 1992).

10.17 Indenture of Trust dated as of August 1, 1988, related to Loan
Agreement by and between the Company and Angelina and Neches River
Authority Industrial Development Corporation, with related Bond,
Irrevocable Letter of Credit, Deed of Trust, Security Agreement,
Assignment of Rents and Financing Statement (incorporated by
reference from Exhibit 10.23 of the Company's Form 8 filed on July
1, 1992).

10.18 Assumption Agreement by and between the Company, Lonnie "Bo"
Pilgrim and RepublicBank Lufkin, as trustee, dated June 14, 1985
(incorporated by reference from Exhibit 10.31 to the Company's
Registration Statement on Form S-1 (No. 33-8805) effective
November 14, 1986).

10.19 Stock Purchase Agreement dated September 15, 1986, among the
Company, Doris Pilgrim Julian, Aubrey Hal Pilgrim, Paulette
Pilgrim Rolston and Evanne Pilgrim (incorporated by reference from
Exhibit 2.2 to the Company's Registration Statement on Form S-1
(No. 33-8805) effective November 14, 1986).

10.20 Amendment No. 1 to Stock Purchase Agreement, dated as of October
31, 1986, among the Company, Doris Pilgrim Julian, Aubrey Hal
Pilgrim, Paulette Pilgrim Rolston and Evanne Pilgrim (incorporated
by reference from Exhibit 2.3 to the Company's Registration
Statement on Form S-1 (No. 33-8805) effective November 14, 1986).

10.21 Limited Partnership Interest Purchase Agreement dated September
15, 1986, by and between the Company and Doris Pilgrim Julian
(incorporated by reference from Exhibit 2.5 to the Company's
Registration Statement on Form S-1 (No. 33-8805) effective
November 14, 1986).

10.22 Employee Stock Investment Plan of the Company (incorporated by
reference from Exhibit 10.28 of the Company's Registration
Statement on Form S-1 (No. 33-21057) effective May 2, 1988).

10.23 Promissory Note dated February 1, 1988, by and between the
Company and John Hancock Mutual Life Insurance Company with
related Deed of Trust, Assignment of Rents and Security Agreement
and Mortgage and Guaranty of Note and Mortgage (incorporated by
reference from Exhibit 10.29 of the Company's Registration
Statement on Form S-1 (No. 33-21057) effective May 2, 1988).

10.24 Letter from John Hancock Mutual Life Insurance Company dated
April 25, 1988, amending Deed of Trust, Assignment of Rents and
Security Agreement dated February 1, 1988 (incorporated by
reference from Exhibit 10.35 of the Company's Registration
Statement on Form S-1 (No. 33-21057) effective May 2, 1988).

10.25 Promissory Note dated April 25, 1991, by and between the Company
and John Hancock Mutual Life Insurance Company, with related
Modification Agreement and Guaranty of Note and Mortgage
(incorporated by reference from Exhibit 10.31 of the Company's
Form 8 filed on July 1, 1992).

10.26 Stock Purchase Agreement dated May 12, 1992, between the Company
and Archer Daniels Midland Company (incorporated by reference from
Exhibit 10.45 of the Company's Form 10-K for the year ended
September 26, 1992).

10.27 Promissory Note dated September 21, 1988, by and between the
Company and Charles Schreiner Bank, with related Warranty Deed
with Vendor's Lien and Deed of Trust and Security Agreement
(incorporated by reference from Exhibit 10.40 of the Company's
Form 8 filed on July 1, 1992).

10.28 Promissory Note dated November 1, 1988, by and between the
Company and The Connecticut Mutual Life Insurance Company, with
related Deed of Trust (incorporated by reference from Exhibit
10.41 of the Company's Form 8 filed on July 1, 1992).

10.29 Promissory Note dated September 20, 1990, by and between the
Company and Hibernia National Bank of Texas (incorporated by
reference from Exhibit 10.42 of the Company's Form 8 filed on July
1, 1992).

10.30 Loan Agreement dated October 16, 1990, by and among the Company,
Lonnie "Bo" Pilgrim and North Texas Production Credit Association,
with related Variable Rate Term Promissory Note and Deed of Trust
(incorporated by reference from Exhibit 10.43 of the Company's
Form 8 filed on July 1, 1992).

10.31 Secured Credit Agreement dated May 27, 1993, by and among the
Company and Harris Trust and Savings Bank, and FBS AG Credit,
Inc., Internationale Nederlanden Bank, N.V., Boatmen's First
National Bank of Kansas City, and First Interstate Bank of Texas,
N.A. (incorporated by reference from Exhibit 10.31 of the
Company's Registration Statement on Form S-1 (No. 33-61160) filed
on June 16, 1993).

10.32 Loan and Security Agreement dated as of June 3, 1993, by and
among the Company, the banks party thereto and Creditanstalt-
Bankverein, as agent (incorporated by reference from Exhibit 10.32
of the Company's Registration Statement on Form S-1 (No. 33-61160)
filed on June 16, 1993).

10.33 First Amendment to Secured Credit Agreement dated June 30, 1994
to the Secured Credit Agreement dated May 27, 1993, by and among
the Company and Harris Trust and Savings Bank, and FBS AG Credit,
Inc., Internationale Nederlanden Bank N.V., Boatman's First
National Bank of Kansas City and First Interstate Bank of Texas,
N.A.

10.34 Amended and Restated Loan and Security Agreement date July 29,
1994, by and among the Company, the banks party thereto and
Creditanstalt-Bankverein, as agent.

10.35 Supplemental Indenture dated October 2, 1994, by and between the
Company and State Street Bank and Trust Company of Connecticut,
N.A., and Guarantee Agreement, as amended by Second Amendment to
Guarantee Agreement dated October 2, 1994.

10.36 Second Amendment to Secured Credit Agreement dated December 6,
1994 to the Secured Credit Agreement dated May 27, 1993, by and
among the Company and Harris Trust and Savings Bank, and FBS AG
Credit, Inc., Internationale Nederlanden Bank N.V., Boatman's
First National Bank of Kansas City and First Interstate Bank of
Texas, N.A.

10.37 Third Amendment to Secured Credit Agreement dated June 30, 1995
to the Secured Credit Agreement dated May 27, 1993, by and among
the Company and Harris Trust and Savings Bank, and FBS AG Credit,
Inc., Internationale Nederlanden Bank N.V., Boatman's First
National Bank of Kansas City and First Interstate Bank of Texas,
N.A.

10.38 Second Amended and Restated Loan and Security Agreement dated
July 31, 1995, by and among the Company, the banks party thereto
and Creditanstalt-Bankverein, as agent.

10.39 Revolving Credit Loan Agreement dated March 27, 1995 by and among
the Company and Agricultural Production Credit Association.

10.40 First Supplement to Revolving Credit Loan Agreement dated July 6,
1995 by and among the Company and Agricultural Production Credit
Association.

10.41 Note Purchase Agreement dated February 15, 1996, by and between
John Hancock Mutual Life Insurance Company, a Massachusetts
corporation, and Pilgrim's Pride Corporation, a Delaware
corporation.

10.42 Credit Agreement dated as of January 31, 1996 is entered into
among Pilgrim's Pride, S.A. de C.V., (the "Borrower") and
Internationale Nederlanden (U.S.) Capital Corporation (the
"Lender"), Pilgrim's Pride Corporation (the"Company"), Avicola
Pilgrim's Pride de Mexico, S.A. de C.V., (the "Parent"), Compania
Incubadora Avicola Pilgrim's Pride, S.A. de C.V., Productora Y
Distribuidora de Alimentos, S.A. de C.V., Immobiliaria Avicola
Pilgrim's Pride, S. De R.L. de C.V. and CIA. Incubadora Hidalgo,
S.A. de C.V.

10.43 Fourth Amendment to Secured Credit Agreement dated June 6, 1996
to the Secured Credit Agreement dated May 27, 1993, by and among
the Company and Harris Trust and Savings Bank, and FBS AG Credit,
Inc., Internationale Nederlanden Bank N.V., Boatman's First
National Bank of Kansas City and Wells Fargo Bank Texas, N.A.,
successor to First Interstate Bank of Texas, N.A.

10.44 Second Supplement to Revolving Credit Loan Agreement dated June
28, 1996 by and among the Company and Agricultural Production
Credit Association.

10.45 Third Supplement to Revolving Credit Loan Agreement dated August
22, 1996 by and among the Company and Agricultural Production
Credit Association.

22. Subsidiaries of Registrant.*

23. Consent of Ernst & Young LLP.*

27. Financial Data Statement.

* Filed herewith

Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K promulgated
by the Securities and Exchange Commission, the Company has not filed as
exhibits certain other instruments defining the rights of holders of
long-term debt of the Company which instruments do not pertain to
indebtedness in excess of 10% of the total assets of the Company. The
Company hereby agrees to furnish copies of such instruments to the
Securities and Exchange Commission upon request.

(b) Reports on Form 8-K

NOT APPLICABLE
<PAGE>
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the issuer has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized on
the 16th day of December 1996.

PILGRIM'S PRIDE CORPORATION

By:
Clifford E. Butler
Vice Chairman of the Board and
Chief Financial 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 dated indicated.

SIGNATURE TITLE DATE

________________________ Chairman of the Board 12/16/96
Lonnie "Bo" Pilgrim of Directors and Chief
Executive Officer
(Principal Executive
Officer)

_______________________ Vice Chairman of the 12/16/96
Clifford E. Butler Board of Directors,
Chief Financial Officer,
Secretary and Treasurer (Principal
Financial and Accounting Officer)

________________________ President and 12/16/96
Lindy M. "Buddy" Pilgrim Chief Operating Officer and
Director

_______________________ Executive Vice President 12/16/96
Robert L. Hendrix Operations and
Director

_______________________ Senior Vice President 12/16/96
James J. Miner Technical Services and
Director

_______________________ Vice President and 12/16/96
Lonnie Ken Pilgrim Director

_______________________ Director 12/16/96
Charles L. Black

_______________________ Director 12/16/96
Robert E. Hilgenfeld

_______________________ Director 12/16/96
Vance C. Miller

_______________________ Director 12/16/96
James J. Vetter, Jr.

_______________________ Director 12/16/96
Donald L. Wass
<PAGE>
REPORT OF INDEPENDENT AUDITORS

Stockholders and Board of Directors
Pilgrim's Pride Corporation

We have audited the accompanying consolidated balance sheets of
Pilgrim's Pride Corporation and subsidiaries at September 28, 1996 and
September 30, 1995 and the related consolidated statements of income
(loss), stockholders' equity, and cash flows for each of the three
years in the period ended September 28, 1996. Our audits also included
the financial statement schedule listed on the Index to Item 14(a).
These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements and schedule 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 financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of Pilgrim's Pride Corporation and subsidiaries at September 28, 1996
and September 30, 1995, and the consolidated results of their
operations and their cash flows for each of the three years in the
period ended September 28, 1996 in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects
the information set forth therein.

ERNST & YOUNG LLP

Dallas, Texas
November 5, 1996
<PAGE>
C O N S O L I D A T E D B A L A N C E S H E E T S
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
SEPTEMBER 28, SEPTEMBER 30,
1996 1995
<S> <C> <C>
(IN THOUSANDS)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 18,040 $ 11,892
Trade accounts and other receivables,
less allowance for doubtful accounts 65,887 60,031
Inventories 136,866 110,404
Deferred income taxes 6,801 9,564
Prepaid expenses 907 526
Other current assets 757 953
Total Current Assets 229,258 193,370
OTHER ASSETS 18,827 20,918
PROPERTY, PLANT AND EQUIPMENT
Land 19,818 17,637
Buildings, machinery and equipment 409,191 383,076
Autos and trucks 32,503 32,227
Construction-in-progress 5,160 9,841
466,672 442,781
Less accumulated depreciation 178,035 159,465
288,637 283,316
$ 536,722 $ 497,604
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to banks $ 27,000 $ 13,000
Accounts payable 71,354 55,658
Accrued expenses 33,599 31,130
Current maturities of long-term debt 8,850 5,187
Total Current Liabilities 140,803 104,975
LONG-TERM DEBT, LESS CURRENT MATURITIES 198,334 182,988
DEFERRED INCOME TAXES 53,608 56,725
MINORITY INTEREST IN SUBSIDIARY 842 842
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, authorized
5,000,000 shares; none issued - -
Common stock, $.01 par value, authorized 45,000,000
shares; 27,589,250 issued and outstanding in
1996 and 1995 276 276
Additional paid-in capital 79,763 79,763
Retained earnings 63,096 72,035
Total Stockholders' Equity 143,135 152,074
Commitments and Contingencies - -
$ 536,722 $ 497,604
</TABLE>
See Notes to Consolidated Financial Statements

C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E ( L O S S )
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
Years Ended
<S> <C> <C> <C>
SEPTEMBER 28, SEPTEMBER 30, OCTOBER 1,
1996 1995 1994
(N THOUSANDS, EXCEPT PER SHARE DATA)
NET SALES $ 1,139,310 $ 931,806 $ 922,609
COSTS AND EXPENSES:
Cost of sales 1,068,670 857,662 811,782
Selling, general and administrative 49,136 49,214 51,129
1,117,806 906,876 862,911
Operating Income 21,504 24,930 59,698
OTHER EXPENSES (INCOME):
Interest expense, net 21,539 17,483 19,173
Foreign exchange (gain) loss 1,275 5,605 (257)
Miscellaneous, net (1,357) (249) (1,666)
21,457 22,839 17,250
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY CHARGE 47 2,091 42,448
Income tax expense 4,551 10,058 11,390
Net income (loss) before extraordinary charge (4,504) (7,967) 31,058
Extraordinary charge-early repayment of debt, net of tax (2,780) - -
NET INCOME (LOSS) (7,284) (7,967) 31,058
Net income (loss) per common share before extraordinary charge $ (0.16) $ (0.29) $ 1.13
Extraordinary charge per common share (0.10) - -
NET INCOME (LOSS) PER COMMON SHARE $ (0.26) $ (0.29) $ 1.13
</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
Number Additional
Of Common Paid-in Retained
Shards Stock Capital Earnings Total
<S> <C> <C> <C> <C> <C>
(dollars in thousands, except per share data)
Balance at October 2, 1993 27,589,250 $ 276 $ 79,763 $ 52,254 $ 132,293
Net income for year 31,058 31,058
Cash dividends declared ($0.06 per share) (1,655) (1,655)
Balance at October 1, 1994 27,589,250 276 79,763 81,657 161,696
Net loss for year (7,967) (7,967)
Cash dividends declared ($.06 per share) (1,655) (1,655)
Balance at September 30, 1995 27,589,250 276 79,763 72,035 152,074
Net loss for year (7,284) (7,284)
Cash dividends declared ($.06 per share) (1,655) (1,655)
Balance at September 28, 1996 27,589,250 $ 276 $ 79,763 $ 63,096 $ 143,135
</TABLE>

See Notes to Consolidated Financial Statements.

<PAGE>
C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
YEARS ENDED
<S> <C> <C> <C>
September 28, September 30, October 1,
1996 1995 1994
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (7,284) $(7,967) $ 31,058
Adjustments to reconcile net income (loss) to cash
provided by operating activities:
Depreciation and amortization 28,024 26,127 25,177
Gain on property disposals (211) (263) (608)
Provision for doubtful accounts 1,003 1,133 2,666
Deferred income taxes (354) 3,785 6,720
Extraordinary charge 4,587 - -
Changes in operating assets and liabilities:
Accounts and other receivables (6,858) (3,370) 3,412
Inventories (24,830) (4,336) (8,955)
Prepaid expenses (674) 1,066 (459)
Accounts payable and accrued expenses 18,165 15,249 1,742
Other (177) 1,288 (89)
Net Cash Flows Provided by Operating Activities 11,391 32,712 60,664
INVESTING ACTIVITIES:
Acquisitions of property, plant and equipment (34,314) (35,194) (25,547)
Business acquisitions - property, plant and equipment - (29,519) -
- other net assets - (6,659) -
Proceeds from property disposal 1,468 541 2,103
Other, net 312 (758) (128)
Net Cash Used in Investing Activities (32,534) (71,589) (23,572)
FINANCING ACTIVITIES:
Proceeds from notes payable to banks 91,000 15,000 7,000
Repayments on notes payable to banks (77,000) (2,000) (19,000)
Proceeds from long-term debt 51,028 45,030 31
Payments on long-term debt (32,140) (16,202) (16,253)
Extraordinary charge, cash items (3,920) - -
Cash dividends paid (1,655) (1,655) (2,069)
Cash Provided by (Used in) Financing Activities 27,313 40,173 (30,291)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (22) (648) (83)
EQUIVALENTS
Increase in cash and cash equivalents 6,148 648 6,718
Cash and cash equivalents at beginning of year 11,892 11,244 4,526
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 18,040 $ 11,892 $ 11,244
Supplemental disclosure information:
Cash paid during the year for:
Interest (net of amount capitalized) $ 20,310 $ 16,764 $ 19,572
Income taxes $ 4,829 $ 5,128 $ 7,108
</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION: The consolidated financial statements
include the accounts of Pilgrim's Pride Corporation and its wholly
and majority owned subsidiaries (the "Company"). Significant
intercompany accounts and transactions have been eliminated.

The financial statements of the Company's Mexican subsidiaries are
remeasured as if the U.S. dollar were the functional currency.
Accordingly, assets and liabilities of the Mexican subsid-
iaries are translated at end-of- period exchange rates, except for
non-monetary assets which are translated at equivalent dollar
costs at dates of acquisition using historical rates.
Operations are translated at aver- age exchange rates in effect
during the period. Foreign exchange (gains) losses are
separately stated as components of "Other expenses (income)" in the
Consolidated Statement of Income (Loss). In recent years the
Company has experienced losses in Mexico primarily as a result of
currency devaluations and other economic factors. As of September
28, 1996, the Company has net Mexican assets of $139.9 million.

CASH EQUIVALENTS: The Company considers highly liquid invest-
ments with a maturity of three months or less when purchased to
be cash equivalents.

ACCOUNTS RECEIVABLE: The Company does not believe it has signifi-
cant concentrations of credit risk in its accounts receivable, which
are generally unsecured. Credit evaluations are performed on all
significant customers and updated as circumstances dictate.
Allowances for doubtful accounts were $4.0 million and $4.3 million
in 1996 and 1995, respectively.

INVENTORIES: Live chicken inventories are stated at the
lower of cost or market and hens at the lower of cost, less accu-
mulated amortization, or market. The costs associated with hens are
accumulated up to the production stage and amortized over the
productive lives using the straight-line method. Finished
chicken products, feed, eggs and other inventories are stated at
the lower of cost (first-in, first-out method) or market.
Occasionally, the Company hedges a portion of its purchases of major
feed ingredients using futures contracts to minimize the risk of
adverse price fluctuations. Gains and losses on the hedge transac-
tions are deferred and recognized as a component of cost of sales
when products are sold.

PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment is stated at cost. For financial
reporting purposes, depreciation is computed using the straight-
line method over the estimated useful lives of these assets.
Depreciation expense was $26.8 million, $24.8 million and $23.7
million in 1996, 1995 and 1994, respectively.

NET INCOME (LOSS) PER COMMON
SHARE: Net income (loss) per share is based on the weighted
average shares of common stock outstanding during the year. The
weighted average number of shares outstanding was 27,589,250 in all
periods.

USE OF ESTIMATES: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.

BUSINESS: Pilgrim's Pride Corporation (the "Company") is a
vertically integrated producer of chicken products, controlling the
breeding, hatching and growing of chickens and the processing,
preparation and packaging of its product lines. The Company is the
fifth largest producer of chicken in the United States, with
production and distribution facilities located in Texas,
Arkansas, Oklahoma and Arizona, and one of the two largest
producers of chicken in Mexico, with production and distribution
facilities located in Mexico City and the states of Coahuila, San
Louis Potosi, Queretaro and Hidalgo. The Company's chicken
products consist primarily of prepared foods, which include
portion-controlled breast fillets, tenderloins and strips, formed
nuggets and patties and bone-in chicken parts, fresh foodservice
chicken, prepackaged chicken, and bulk packaged chicken.

NOTE B - INVENTORIES

Inventories consist of the following:
<TABLE>
<CAPTION>
September 28, September 30,
1996 1995
(in thousands)
<S> <C> <C>
Live chickens and hens $66,248 $55,353
Feed, eggs and other 39,804 32,087
Finished chicken products 30,814 22,964
$136,866 $110,404
</TABLE>

NOTE C - NOTES PAYABLE AND LONG-TERM DEBT

The Company maintains a $100 million domestic credit facility with various
banks providing short-term lines of credit at interest rates of approximately
one and three-quarters percent above LIBOR. Domestic inventories and trade
accounts receivable of the Company are pledged as collateral on this facility.
The Company also maintains a $10 million credit facility for its Mexican
operations with a bank providing short-term lines of credit at interest rates
of approximately two and three-quarters percent above LIBOR. The Company has a
negative pledge of Mexican inventories and accounts receivable related to this
facility. At September 28, 1996, availability under these lines totaled $73.8
million. The weighted average interest rate on the Company's short-term
borrowings as of September 28, 1996, was 7.2%. The fair value of the Company's
long-term debt was estimated using quoted market prices, where available. For
long-term debt not actively traded, fair values were estimated using discounted
cash flow analysis using current market rates for similar types of borrowings.

The table below sets forth maturities on long-term debt during the next five
years.

<TABLE>
<CAPTION>
<S> <C> <C>
Year Amount
(in thousands)
1997 8,850
1998 9,741
1999 9,864
2000 24,692
2001 5,930
</TABLE>

During 1996, the Company retired certain debt prior to its scheduled maturity.
These repayments resulted in an extraordinary charge of $2.8 million, net of
$1.8 million tax benefit.

The Company is required, by certain provisions of its debt agreements, to
maintain minimum levels of working capital and net worth, to limit dividends to
a maximum of $1.7 million per year, to maintain various fixed charge, leverage,
current and debt-to-equity ratios, and to limit annual capital expenditures.

Total interest during 1996, 1995 and 1994 was $23.4 million, $19.1 million and
$20.1 million, respectively. Interest related to new construction capitalized
in 1996, 1995 and 1994 was $1.3 million, $.6 million and $.5 million,
respectively.
Long-term debt and the related fair values consist of the following:
<TABLE>
<CAPTION>
September 28, 1996 September 30, 1995
<S> <C> <C> <C> <C>
CARRYING FAIR CARRYING FAIR
AMOUNTS VALUE AMOUNTS VALUE
(IN THOUSANDS)
Senior subordinated notes due August 1, 2003,
interest at 10 7/8% (effective rate of 11 1/8 %)
payable in semi-annual installments, less $ 98,968 $ 100,219 $ 98,819 $ 96,219
discount of $1,032,000 and $1,181,000 in
1996 and 1995, respectively
Notes payable to an insurance company at 7.21%,
payable in monthly installments of $455,305
including interest, plus 48,896 46,063 - -
one final balloon payment at
maturity on February 28, 2006
Notes payable to bank, interest at LIBOR plus
2.0% in 1996 and 1.8% in 1995, respectively,
with principal payments of $167,000 and
$950,000 in quarterly installments, interest 29,732 29,732 30,233 30,233
paid monthly, in fiscal year 1996
and thereafter, respectively, plus
one final balloon payment at
maturity on June 30, 2000
Notes payable to an agricultural
lender at a rate approximating LIBOR
plus 1.65%, pay in equal equal 27,080 27,080 29,119 29,119
equal monthly installments including
interest through April 1, 2003
Senior secured debt payable to an insurance
company at 10.49%, payable in equal annual
installments beginning October 5, 1996 through - - 22,000 23,930
September 21, 2002
Senior secured debt payable to an
insurance company, interest at 9.55%, - - 4,440 4,712
payable in equal annual installments through
October 1, 1998
Other notes payable 2,508 2,547 3,564 3,745
207,184 205,641 188,175 187,958
Less current maturities 8,850 5,187
$198,334 $182,988
</TABLE>

Substantially all of the Company's domestic property, plant and equipment is
pledged as collateral on its long-term debt, however, Mexico's property, plant
and equipment is unencumbered.
<PAGE>
NOTE D - INCOME TAXES

Income (loss) before income taxes and extraordinary charge after allocation
of certain expenses to foreign operations for 1996, 1995 and 1994
was $16.3 million, $29.9 million and $33.9 million, respectively,
for domestic operations, and $(16.3) million, $(27.8) million and $8.6
million, respectively, for foreign operations. The provisions for income
taxes are based on pretax financial statement income.

The components of income tax expense (benefit) are set forth below:

<TABLE>
<S> <C> <C> <C>
September 28, 1996 September 30, 1995 October 1, 1994

Current:
Federal $3,005 $5,215 $4,573
Foreign 817 638 423
Other 1,083 420 (326)
4,905 6,273 4,670
Deferred:
Reinstatement
of deferred taxes
through utilization
of tax credits and
net operating
losses 397 3,542 6,589
Accelerated tax
depreciation (195) 215 1,002
Expenses deductible
in a different year
for tax and financial
reporting
purposes 238 411 (580)
Other, net (794) (383) (291)
(354) 3,785 6,720
$4,551 $10,058 $11,390

</TABLE>

The following is a reconciliation between the statutory U.S. federal income tax
rate and the Company's effective income tax rate.

<TABLE>
<CAPTION>
Years Ended
<S> <C> <C> <C>
SEPTEMBER 28, SEPTEMBER 30, OCTOBER 1,
1996 1995 1994
Federal income tax rate 35.0% 35.0% 35.0%
State tax rate, net 1,674.1 40.1 2.3
Effect of Mexican loss
being non-deductible in U.S. 6,252.3 411.1 -
Difference in U.S. statutory
tax rate and Mexican - - (10.7)
effective tax rate
Effect of Mexican asset
based minimum tax 1,649.3 - -
Other, net 0.2 (5.2) 0.2
9,610.9% 481.0% 26.8%
</TABLE>

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.

Significant components of the Company's deferred tax liabilities and assets are
as follows:

<TABLE>
<CAPTION>
Years Ended
<S> <C> <C>
SEPTEMBER SEPTEMBER
28, 1996 30, 1995
(IN THOUSANDS)
Deferred tax liabilities:
Tax over book depreciation $ 24,027 $ 24,221
Prior use of cash accounting 33,418 33,572
Other 930 965
Total deferred tax liabilities 58,375 58,758
Deferred tax assets:
AMT credit carryforward 4,034 2,972
General business credit carryforward - 1,459
Expenses deductible in 7,534 7,166
different years
Total deferred tax asset 11,568 11,597
Net deferred tax liabilities $ 46,807 $ 47,161
</TABLE>

On January 1, 1994, the Company completed a series of restructuring of
activities in Mexico which allowed previously nonagricultural Mexican
operations to be combined with existing agricultural operations and, as such,
qualify for taxability as agricultural operations, which are currently not
subject to taxes in Mexico. The current provision for foreign income taxes in
1996 and 1995 is the result of an asset based minimum tax. The Company has not
provided any U.S. deferred federal income taxes on the undistributed earnings
of its Mexican subsidiaries based upon its determination that such earnings
will be indefinitely reinvested. As of September 28, 1996, the cumulative
undistributed earnings of these subsidiaries were approximately $19.1 million.
If such earnings were not considered indefinitely reinvested, deferred federal
and foreign income taxes would have been provided, after consideration of
estimated foreign tax credits. (Included in this amount would be foreign taxes
resulting from earnings of the Mexican agricultural subsidiaries which would be
due upon distribution of such earnings to the U.S.) However, determination of
the amount of deferred federal and foreign income taxes is not practicable.

As of September 28, 1996, approximately $4.0 million of alternative minimum tax
credits were available to offset future taxable income. All credits have been
reflected in the financial statements as a reduction of deferred taxes. As
these credits are utilized for tax purposes, deferred taxes will be reinstated.

NOTE E - SAVINGS PLAN

The Company maintains a Section 401(k) Salary Deferral Plan (the "Plan").
Under the Plan, eligible domestic employees may voluntarily contribute a
percentage of their compensation. The Plan provides for a contribution of up
to four percent of compensation subject to an overall Company contribution
limit of five percent of income before taxes.

Under the plan outlined above, the Company's expenses were $1.8 million, $1.9
million and $2.6 million in 1996, 1995 and 1994, respectively.

NOTE F - RELATED PARTY TRANSACTIONS

The major stockholder of the Company owns an egg laying and a chicken growing
operation. Transactions with related entities are summarized as follows:
<TABLE>
<CAPTION>
Years Ended
<S> <C> <C> <C>
September SEPTEMBER OCTOBER
28, 1996 30, 1995 1, 1994
(IN THOUSANDS)
Contract egg
grower fees to
major stockholder $ 4,697 $ 4,760 $ 5,137
Chick, feed and
other sales to 18,057 12,478 9,373
major stockholder
Live chicken purchases
from major stockholder 18,112 12,721 9,346
Purchases of feed
ingredients from 23,226 44,250 56,499
Archer Daniels Midland
Company
</TABLE>

The Company leases an airplane from its major stockholder under an operating
lease agreement. The terms of the lease agreement require monthly payments of
$33,000 plus operating expenses. Lease expense was $396,000 for each of the
years 1996, 1995 and 1994. Operating expenses were $88,000, $149,000 and
$213,000 in 1996, 1995 and 1994, respectively.

Expenses incurred for the guarantee of certain debt by stockholders were
$1,027,000, $623,000 and $526,000 in 1996, 1995 and 1994, respectively.

NOTE G - COMMITMENTS AND CONTINGENCIES

The Consolidated Statements of Income (Loss) included rental expense for
operating leases of approximately $10.1 million, $9.8 million and $10.1
million in 1996, 1995 and 1994, respectively. The Company's future minimum
lease commitments under noncancelable operating leases are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR AMOUNT
(IN THOUSANDS)
1997 $8,787
1998 $8,084
1999 $7,323
2000 $6,643
2001 $5,837
Thereafter $11,336
</TABLE>

At September 28, 1996, the Company had $9.2 million letters of credit
outstanding relating to normal business transactions.

The Company is subject to various legal proceedings and claims which arise in
the ordinary course of its business. In the opinion of management, the amount
of ultimate liability with respect to these actions will not materially affect
the financial position or results of operations of the Company.

NOTE H - BUSINESS SEGMENTS

The Company operates in a single business segment as a producer of agricultural
products and conducts separate operations in the United States and Mexico.

Interarea sales, which are not material, are accounted for at prices comparable
to normal trade customer sales. Identifiable assets by geographic area
are those assets which are used in the Company's operation in each area.

Information about the Company's operations in these geographic areas is as
follows:
<TABLE>
<CAPTION>
Years Ended
<S> <C> <C> <C>
SEPTEMBER SEPTEMBER OCTOBER
28, 1996 30, 1995 1, 1994
(IN THOUSANDS)
Sales to unaffiliated
customers:
United States $ 911,181 $ 772,315 $ 733,865
Mexico 228,129 159,491 188,744
$1,139,310 $ 931,806 $ 922,609
Operating income (loss):
United States $ 29,705 $ 41,923 $ 46,421
Mexico (8,201) (16,993) 13,277
$ 21,504 $ 24,930 $ 59,698
Identifiable
assets:
United States $ 363,543 $ 328,489 $ 302,911
Mexico 173,179 169,115 135,772
$ 536,722 $ 497,604 $ 438,683
</TABLE>
NOTE I - ACQUISITIONS AND INVESTMENTS

On July 5, 1995, the Company acquired certain assets of Union de Queretaro, et
al, a group of five chicken companies located near Queretaro, Mexico for
approximately $35.3 million. These assets were integrated with the Company's
existing Mexican operation, headquartered in Queretaro, Mexico, which is one of
the two largest chicken operations in Mexico. The acquisition has been
accounted for as a purchase, and the results of operations for this acquisition
have been included in the Company's consolidated results of operations since
the acquisition date. Pro forma operating results are not presented as they
would not differ materially from actual results reported in 1995 and 1994.
<PAGE>

NOTE J - QUARTERLY RESULTS - (UNAUDITED)

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 28, 1996
<S> <C> <C> <C> <C> <C>
First Second Third Fourth Fiscal Year
Quarter Quarter Quarter Qaurter
(in thousands, except per share data)
Net sales $267,475 $272,004 $294,339 $305,492 $1,139,310
Gross profit 20,972 16,047 17,384 16,237 70,640
Operating income (loss) 8,825 3,684 5,454 3,541 21,504
Extraordinary charge(a) - (2,780) - - (2,780)
Net income (loss) (704) (3,335) 1,007 (4,252) (7,284)
Per share:
Net income (loss) before
extraordinary charge (0.03) (0.02) 0.04 (0.15) (0.16)
Extraordinary charge - (0.10) - - (0.10)
Net income (loss) (0.03) (0.12) 0.04 (0.15) (0.26)
Cash dividends 0.015 0.015 0.015 0.015 0.06
Market price:
High 8 3/8 7 5/8 9 9 9
Low 6 5/8 6 3/4 6 3/4 7 1/2 6 5/8
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1995
<S> <C> <C> <C> <C> <C>
First Second Third Fourth Fiscal Year
Quarter Quarter Quarter Quarter
(in thousands, except per share data)
Net sales $227,000 $216,830 $230,297 $257,679 $931,806
Gross profit 20,765 7,577 23,826 21,976 74,144
Operating income (loss) 8,742 (4,662) 11,843 9,007 24,930
Net income (loss) 556 (16,304) 6,143 1,638 (7,967)
Per share:
Net income (loss) 0.02 (0.59) 0.22 0.06 (0.29)
Cash dividends 0.015 0.015 0.015 0.015 0.06
Market price:
High 10 3/8 9 3/4 8 3/8 8 3/4 10 3/8
Low 9 3/8 7 3/4 7 1/2 7 5/8 7 1/2
</TABLE>

(a) The extraordinary charge of $2.8 million, net of tax, is the result of the
early repayment of 10.49% and 9.55% senior secured debt payable to an
insurance company. (See Note C).
<PAGE>
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
<S> <C> <C> <C> <C> <C>
ADDITIONS
Balance at Charged to Changes to
DESCRIPTION Beginning of Costs and Other Deductions- Balance at End
Period Expenses Accounts-Describe Describe of Period
Year ended September 28, 1996:
Reserves and allowances deducted
from asset accounts:
Allowance for doubtful accounts $ 4,280,000 $ 1,003,000 $ -- $ 1,298,000(1) $ 3,985,000
Year ended September 30, 1995:
Reserves and allowances deducted
from asset accounts:
Allowance for doubtful accounts $ 5,906,000 $ 1,333,000 $ -- $ 2,759,000(1) $ 4,280,000
Year ended October 1, 1994:
Reserves and allowances deducted
from asset accounts:
Allowance for doubtful accounts $ 3,238,000 $ 2,666,000 $ -- $ (2,000)(2) $ 5,906,000
</TABLE>

(1) The decrease in the 1996 and 1995 reserve account is primarily due to the
devaluation of the peso.

(2) Uncollectible accounts written off, net of receivables.
<PAGE>
EXHIBIT 22 - SUBSIDIARIES OF REGISTRANT

1. AVICOLA PILGRIM'S PRIDE DE MEXICO, S.A. DE C.V.
2. COMPANIA INCUBADORA AVICOLA PILGRIM'S PRIDE, S.A. DE C.V.
3. CIA. INCUBADORA HIDALGO, S.A. DE C.V.
4. INMOBILIARIA AVICOLA PILGRIM'S PRIDE, S. DE R.L. DE C.V.
5. PILGRIM'S PRIDE, S.A. DE C.V.
6. PRODUCTORA Y DISTRIBUIDORA DE ALIMENTOS, S.A. DE. C.V.
7. GALLINA PESADA S.A. DE C.V.
<PAGE>
EXHIBIT 23 - CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 3-12043) of Pilgrim's Pride Corporation of our report dated
November 5, 1996, with respect to the consolidated financial statements and
schedule of Pilgrim's Pride Corporation included in this Annual Report
(Form 10-K) for the year ended September 28, 1996.

ERNST & YOUNG LLP

Dallas, Texas 75201
December 13, 1996

SECOND SUPPLEMENT TO REVOLVING CREDIT LOAN AGREEMENT

This Second Supplement to the Revolving Credit Loan Agreement is dated as
of the date set forth below between AGRICULTURAL PRODUCTION CREDIT ASSOCIATION,
a federally chartered production credit association, organized and operating
under the Farm Credit Act of 1971, as amended, with its principal place of
business at 3210 WNW Loop 323, Tyler, Texas (hereinafter referred to as
"Lender"), and PILGRIM'S PRIDE CORPORATION, a Delaware corporation authorized
to do business in the state of Texas, with its principal place of business at
110 S. Texas, Pittsburg, Texas (hereinafter referred to as "Borrower").

RECITALS

WHEREAS, Borrower executed the Revolving Credit Loan Agreement, dated
March 27, 1995, which agreement provided Borrower with a revolving credit
facility under the terms and conditions set forth therein, and which agreement
was modified by the First Supplement to Revolving Credit Loan Agreement dated
July 6, 1995 (such documents being collectively referred to herein as the
"Agreement"); and

WHEREAS, Borrower, Guarantor, and Lender desire to amend certain material
provisions of the Agreement as set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein and in the Agreement, the parties agree as
follows:

1. CAPITALIZED TERMS. When used in this Second Supplement to
Revolving Credit Loan Agreement, all capitalized terms shall have the same
meanings and definitions set forth in the Agreement.

2. PURPOSE. Borrower and Guarantor each acknowledge that all terms
and provisions of the Agreement and the Loan Documents shall be and remain in
full force and effect as therein written, except as otherwise expressly
provided herein. Nothing herein shall operate to release Borrower or Guarantor
from any liability to keep or perform all of the terms, conditions, obligations
and agreements contained in the Agreement and in the Loan Documents, except as
herein expressly modified.

3. MODIFICATIONS. The Agreement is hereby modified as follows:

(a) Section 7.01 of the Agreement is amended to read as follow:

7.01. LEVERAGE RATIO. Borrower shall not permit its Leverage
Ratio at the end of any Fiscal Quarter from the date of this
Agreement through and including the Fiscal Quarter ending March 31,
1996 to exceed 0.675: 1.00. Borrower shall not permit its Leverage
Ratio at the end of any Fiscal Quarter following April 1, 1996
through and including the Fiscal Quarter ending December 31, 1997
to exceed 0.700: 1.00. Thereafter, Borrower shall not permit its
Leverage Ratio at the end of any succeeding Fiscal Quarter to
exceed 0.675: 1.00.

4. SUCCESSORS AND ASSIGNS. This Second Supplement to Revolving Credit
Loan Agreement shall be binding upon and inure to the benefit of Borrower,
Guarantor and Lender and their respective Affiliates, successors, permitted
assigns, heirs and legal representatives.

5. ENTIRE AGREEMENT. This Second Supplement to Revolving Credit Loan
Agreement represents all agreed modifications to the Agreement and supersedes
all prior written and oral negotiations and/or agreements pertaining to the
modifications set forth herein.

6. COUNTERPARTS. This Second Supplement to Revolving Credit Loan
Agreement may be executed in several counterparts, each of which shall be
regarded as the original and all of which shall constitute one and the same
Second Supplement to Revolving Credit Loan Agreement.

THIS SECOND SUPPLEMENT TO REVOLVING CREDIT LOAN AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO THIS MODIFICATION OF THE
REVOLVING CREDIT LOAN AGREEMENT, DATED MARCH 27, 1995, AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

Executed this the 28th day of June 1996.

Agricultural Production Pilgrim's Pride Corporation
Credit Association

By:______________________________ By:______________________________
Name: Stephen R. Ogletree Name: Lonnie "Bo" Pilgrim
Title: President Title: Chief Executive Officer

Attest:

__________________________________
Name: Cliff Butler
Title: Chief Financial Officer

Guarantors:

__________________________________
Lonnie "Bo" Pilgrim

__________________________________
Patty Redding Pilgrim

THIRD SUPPLEMENT TO REVOLVING CREDIT LOAN AGREEMENT

This Third Supplement to the Revolving Credit Loan Agreement is dated as
of the date set forth below between AGRICULTURAL PRODUCTION CREDIT ASSOCIATION,
a federally chartered production credit association, organized and operating
under the Farm Credit Act of 1971, as amended, with its principal place of
business at 3210 WNW Loop 323, Tyler, Texas (hereinafter referred to as
"Lender"), and PILGRIM'S PRIDE CORPORATION, a Delaware corporation authorized
to do business in the state of Texas, with its principal place of business at
110 S. Texas, Pittsburg, Texas (hereinafter referred to as "Borrower").

RECITALS

WHEREAS, Borrower executed the Revolving Credit Loan Agreement, dated
March 27, 1995, which agreement provided Borrower with a revolving credit
facility under the terms and conditions set forth therein, and which agreement
was modified by the First Supplement to Revolving Credit Loan Agreement dated
July 6, 1995, and the Second Supplement to Revolving Credit Loan Agreement
dated June 28, 1996 (such documents being collectively referred to herein as
the "Agreement"); and

WHEREAS, Borrower, Guarantor, and Lender desire to amend certain material
provisions of the Agreement as set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein and in the Agreement, the parties agree as
follows:

1. CAPITALIZED TERMS. When used in this Third Supplement to Revolving
Credit Loan Agreement, all capitalized terms shall have the same meanings and
definitions set forth in the Agreement.

2. PURPOSE. This Supplement to the Agreement is made to document
Borrower's desire to obtain an Advance for the purchase of certain real
property in Dallas County, Texas. Borrower and Guarantor each acknowledge that
all terms and provisions of the Agreement and the Loan Documents shall be and
remain in full force and effect as therein written, except as otherwise
expressly provided herein. Nothing herein shall operate to release Borrower or
Guarantor from any liability to keep or perform all of the terms, conditions,
obligations and agreements contained in the Agreement and in the Loan
Documents, except as herein expressly modified.

3. MODIFICATIONS. The Agreement is hereby modified as follows:

(a) Certain definitions in Section 1.01 of the Agreement are
hereby amended to read as follows:

"Deed of Trust" shall mean all and singular the Deeds of Trust,
Security Agreements, Financing Statements, Assignments of Rents,
Agreements and Mortgages executed by Borrower and assigning or
conveying the Collateral to secure the repayment of the Obligations
including, without any limitation, any such instruments executed by
Borrower on property added to the Collateral after the original
date of this Agreement, and all amendments, modifications,
supplements, extensions and revisions.

"Land" shall mean the real estate or interest therein described in
Schedule "1.01" and in Supplemental Schedule "1.01 H" attached to
the Agreement and incorporated herein by this reference, all
fixtures or other improvements situated thereon and all rights,
titles and interests appurtenant thereto.

"Title Insurance" shall mean one or more mortgagee's policies of
title insurance, all in form and substance satisfactory to Lender
and containing no exceptions (printed or otherwise) which are
unacceptable to Lender, issued by a title company (or, if Lender so
requires, by several title companies) acceptable to Lender in the
aggregate amount of at least $16,000,000.00 and insuring that
Lender has a first and prior Deed of Trust on the Collateral,
subject only to the Permitted Liens described in the Deed of Trust.

4. SUCCESSORS AND ASSIGNS. This Third Supplement to Revolving Credit
Loan Agreement shall be binding upon and inure to the benefit of Borrower,
Guarantor and Lender and their respective Affiliates, successors, permitted
assigns, heirs and legal representatives.

5. ENTIRE AGREEMENT. This Third Supplement to Revolving Credit Loan
Agreement represents all agreed modifications to the Agreement and supersedes
all prior written and oral negotiations and/or agreements pertaining to the
modifications set forth herein.

6. COUNTERPARTS. This Third Supplement to Revolving Credit Loan
Agreement may be executed in several counterparts, each of which shall be
regarded as the original and all of which shall constitute one and the same
Third Supplement to Revolving Credit Loan Agreement.

THIS THIRD SUPPLEMENT TO REVOLVING CREDIT LOAN AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO THIS MODIFICATION OF THE
REVOLVING CREDIT LOAN AGREEMENT, DATED MARCH 27, 1995, AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

Executed this the 22nd day of August, 1996.

Agricultural Production Pilgrim's Pride Corporation
Credit Association

By:______________________________ By:______________________________
Name: Stephen R. Ogletree Name: Lonnie "Bo" Pilgrim
Title: President Title: Chief Executive Officer

Attest:

__________________________________
Name: Cliff Butler
Title: Chief Financial Officer

Guarantors:

__________________________________
Lonnie "Bo" Pilgrim

__________________________________
Patty Redding Pilgrim

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