FORM 10-Q
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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
|
|
75-1285071
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
|
|
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1770 Promontory Circle,
Greeley, CO
|
|
80634-9038
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(Address of principal executive offices)
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(Zip code)
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Large Accelerated Filer
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ý
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|
Accelerated Filer
|
|
¨
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|
|
|
|
||
Non-accelerated Filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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||
Item 1.
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||
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||
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||
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||
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||
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||
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Item 2.
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||
Item 3.
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||
Item 4.
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||
Item 1.
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||
Item 1A.
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||
Item 2.
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Item 6.
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||
PART I.
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FINANCIAL INFORMATION
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ITEM 1.
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CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
|
PILGRIM’S PRIDE CORPORATION
|
||||||||
CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS
|
||||||||
(Unaudited)
|
||||||||
|
||||||||
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|
September 24, 2017
|
|
December 25, 2016
|
||||
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|
(In thousands)
|
||||||
Cash and cash equivalents
|
|
$
|
401,789
|
|
|
$
|
292,544
|
|
Restricted cash
|
|
4,841
|
|
|
4,979
|
|
||
Trade accounts and other receivables, less allowance for
doubtful accounts
|
|
624,802
|
|
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445,553
|
|
||
Accounts receivable from related parties
|
|
970
|
|
|
4,010
|
|
||
Inventories
|
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1,196,201
|
|
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975,608
|
|
||
Income taxes receivable
|
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16,362
|
|
|
—
|
|
||
Prepaid expenses and other current assets
|
|
102,914
|
|
|
81,932
|
|
||
Assets held for sale
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2,777
|
|
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5,259
|
|
||
Total current assets
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2,350,656
|
|
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1,809,885
|
|
||
Other long-lived assets
|
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20,007
|
|
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19,260
|
|
||
Identified intangible assets, net
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620,693
|
|
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471,591
|
|
||
Goodwill
|
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995,582
|
|
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887,221
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|
||
Property, plant and equipment, net
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2,076,347
|
|
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1,833,985
|
|
||
Total assets
|
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$
|
6,063,285
|
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$
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5,021,942
|
|
|
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|
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||||
Accounts payable
|
|
$
|
743,528
|
|
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$
|
790,378
|
|
Accounts payable to related parties
|
|
7,091
|
|
|
4,468
|
|
||
Accrued expenses and other current liabilities
|
|
416,476
|
|
|
347,021
|
|
||
Income taxes payable
|
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191,432
|
|
|
27,578
|
|
||
Current maturities of long-term debt
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61,811
|
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15,712
|
|
||
Total current liabilities
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1,420,338
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1,185,157
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||
Long-term debt, less current maturities
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2,548,575
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1,396,124
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|
||
Deferred tax liabilities
|
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286,038
|
|
|
251,807
|
|
||
Other long-term liabilities
|
|
98,098
|
|
|
102,722
|
|
||
Total liabilities
|
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4,353,049
|
|
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2,935,810
|
|
||
Common stock
|
|
2,602
|
|
|
307,288
|
|
||
Treasury stock
|
|
(231,758
|
)
|
|
(217,117
|
)
|
||
Additional paid-in capital
|
|
1,926,386
|
|
|
3,100,332
|
|
||
Retained earnings (accumulated deficit)
|
|
39,606
|
|
|
(782,785
|
)
|
||
Accumulated other comprehensive loss
|
|
(36,517
|
)
|
|
(329,858
|
)
|
||
Total Pilgrim’s Pride Corporation stockholders’ equity
|
|
1,700,319
|
|
|
2,077,860
|
|
||
Noncontrolling interest
|
|
9,917
|
|
|
8,272
|
|
||
Total stockholders’ equity
|
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1,710,236
|
|
|
2,086,132
|
|
||
Total liabilities and stockholders’ equity
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$
|
6,063,285
|
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$
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5,021,942
|
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PILGRIM’S PRIDE CORPORATION
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||||||||||||||||
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
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||||||||||||||||
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Thirteen Weeks Ended
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Thirty-Nine Weeks Ended
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||||||||||||
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September 24, 2017
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September 25, 2016
|
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September 24, 2017
|
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September 25, 2016
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||||||||
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(In thousands, except per share data)
|
||||||||||||||
Net sales
|
|
$
|
2,793,885
|
|
|
$
|
2,495,281
|
|
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$
|
8,025,511
|
|
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$
|
7,507,681
|
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Cost of sales
|
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2,315,301
|
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2,242,221
|
|
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6,815,701
|
|
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6,632,568
|
|
||||
Gross profit
|
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478,584
|
|
|
253,060
|
|
|
1,209,810
|
|
|
875,113
|
|
||||
Selling, general and administrative expense
|
|
102,191
|
|
|
75,933
|
|
|
284,009
|
|
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229,786
|
|
||||
Administrative restructuring charges
|
|
4,147
|
|
|
279
|
|
|
8,496
|
|
|
279
|
|
||||
Operating income
|
|
372,246
|
|
|
176,848
|
|
|
917,305
|
|
|
645,048
|
|
||||
Interest expense, net of capitalized interest
|
|
24,636
|
|
|
19,119
|
|
|
66,315
|
|
|
58,480
|
|
||||
Interest income
|
|
(2,128
|
)
|
|
(253
|
)
|
|
(3,600
|
)
|
|
(2,000
|
)
|
||||
Foreign currency transaction loss (gain)
|
|
(888
|
)
|
|
4,569
|
|
|
(2,500
|
)
|
|
(1,769
|
)
|
||||
Miscellaneous, net
|
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(1,083
|
)
|
|
(2,371
|
)
|
|
(5,198
|
)
|
|
(7,327
|
)
|
||||
Income before income taxes
|
|
351,709
|
|
|
155,784
|
|
|
862,288
|
|
|
597,664
|
|
||||
Income tax expense
|
|
113,396
|
|
|
53,819
|
|
|
278,046
|
|
|
202,979
|
|
||||
Net income
|
|
238,313
|
|
|
101,965
|
|
|
584,242
|
|
|
394,685
|
|
||||
Less: Net income from Granite Holdings Sàrl prior to
acquisition by Pilgrim's Pride Corporation |
|
6,093
|
|
|
3,438
|
|
|
23,486
|
|
|
25,105
|
|
||||
Less: Net income (loss) attributable to noncontrolling
interests
|
|
(460
|
)
|
|
(130
|
)
|
|
514
|
|
|
(334
|
)
|
||||
Net income attributable to Pilgrim’s Pride Corporation
|
|
$
|
232,680
|
|
|
$
|
98,657
|
|
|
$
|
560,242
|
|
|
$
|
369,914
|
|
|
|
|
|
|
|
|
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|
||||||||
Weighted average shares of Pilgrim's Pride Corporation common stock outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
248,753
|
|
|
254,460
|
|
|
248,732
|
|
|
254,607
|
|
||||
Effect of dilutive common stock equivalents
|
|
235
|
|
|
460
|
|
|
230
|
|
|
430
|
|
||||
Diluted
|
|
248,988
|
|
|
254,920
|
|
|
248,962
|
|
|
255,037
|
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||||
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|
||||||||
Net income attributable to Pilgrim’s Pride Corporation
per share of common stock outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.94
|
|
|
$
|
0.39
|
|
|
$
|
2.25
|
|
|
$
|
1.45
|
|
Diluted
|
|
$
|
0.93
|
|
|
$
|
0.39
|
|
|
$
|
2.25
|
|
|
$
|
1.45
|
|
PILGRIM’S PRIDE CORPORATION
|
||||||||||||||||
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
|
||||||||||||||||
|
|
Thirteen Weeks Ended
|
|
Thirty-Nine Weeks Ended
|
||||||||||||
|
|
September 24, 2017
|
|
September 25, 2016
|
|
September 24, 2017
|
|
September 25, 2016
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Net income
|
|
$
|
238,313
|
|
|
$
|
101,965
|
|
|
$
|
584,242
|
|
|
$
|
394,685
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
||||||||
Gains (losses) arising during the period
|
|
22,378
|
|
|
(43,961
|
)
|
|
89,153
|
|
|
(171,509
|
)
|
||||
Income tax effect
|
|
3,211
|
|
|
—
|
|
|
3,211
|
|
|
—
|
|
||||
Derivative financial instruments designated as cash
flow hedges |
|
|
|
|
|
|
|
|
||||||||
Gains (losses) arising during the period
|
|
(779
|
)
|
|
65
|
|
|
(137
|
)
|
|
167
|
|
||||
Reclassification to net earnings for losses (gains)
realized |
|
—
|
|
|
(285
|
)
|
|
9
|
|
|
(35
|
)
|
||||
Available-for-sale securities
|
|
|
|
|
|
|
|
|
||||||||
Gains (losses) arising during the period
|
|
—
|
|
|
—
|
|
|
—
|
|
|
426
|
|
||||
Income tax effect
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
||||
Reclassification to net earnings for losses (gains)
realized |
|
—
|
|
|
—
|
|
|
—
|
|
|
(534
|
)
|
||||
Income tax effect
|
|
—
|
|
|
—
|
|
|
—
|
|
|
202
|
|
||||
Defined benefit plans
|
|
|
|
|
|
|
|
|
||||||||
Gains (losses) arising during the period
|
|
393
|
|
|
2,852
|
|
|
(4,078
|
)
|
|
(11,500
|
)
|
||||
Income tax effect
|
|
(148
|
)
|
|
(1,077
|
)
|
|
1,539
|
|
|
4,342
|
|
||||
Reclassification to net earnings of losses realized
|
|
233
|
|
|
165
|
|
|
699
|
|
|
494
|
|
||||
Income tax effect
|
|
(88
|
)
|
|
(62
|
)
|
|
(264
|
)
|
|
(187
|
)
|
||||
Total other comprehensive income (loss), net of tax
|
|
25,200
|
|
|
(42,303
|
)
|
|
90,132
|
|
|
(178,295
|
)
|
||||
Comprehensive income
|
|
263,513
|
|
|
59,662
|
|
|
674,374
|
|
|
216,390
|
|
||||
Less: Comprehensive income (loss) for Granite
Holdings Sàrl prior to acquisition by Pilgrim's Pride Corporation |
|
460
|
|
|
(42,432
|
)
|
|
88,050
|
|
|
(152,927
|
)
|
||||
Less: Comprehensive income (loss) attributable to
noncontrolling interests |
|
(460
|
)
|
|
(130
|
)
|
|
514
|
|
|
(334
|
)
|
||||
Comprehensive income attributable to Pilgrim's Pride
Corporation |
|
$
|
263,513
|
|
|
$
|
102,224
|
|
|
$
|
585,810
|
|
|
$
|
369,651
|
|
PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES
|
||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF STOCKHOLDERS’ EQUITY
|
||||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in Capital |
|
Retained Earnings (Accumulated
Deficit) |
|
Accumulated
Other Comprehensive Loss |
|
Noncontrolling
Interest |
|
Total
|
||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||||||||||
|
|
(In thousands)
|
||||||||||||||||||||||||||||||||
Pilgrim's Pride Corporation balance at December 25, 2016
|
|
259,682
|
|
|
$
|
2,597
|
|
|
(10,636
|
)
|
|
$
|
(217,117
|
)
|
|
$
|
1,686,742
|
|
|
$
|
(520,635
|
)
|
|
$
|
(64,243
|
)
|
|
$
|
9,403
|
|
|
$
|
896,747
|
|
Granite Holdings Sàrl balance at December 25, 2016
|
|
13,000
|
|
|
304,691
|
|
|
—
|
|
|
—
|
|
|
1,413,590
|
|
|
(262,150
|
)
|
|
(265,615
|
)
|
|
(1,131
|
)
|
|
1,189,385
|
|
|||||||
Combined balance at December 25, 2016
|
|
272,682
|
|
|
307,288
|
|
|
(10,636
|
)
|
|
(217,117
|
)
|
|
3,100,332
|
|
|
(782,785
|
)
|
|
(329,858
|
)
|
|
8,272
|
|
|
2,086,132
|
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
583,728
|
|
|
—
|
|
|
514
|
|
|
584,242
|
|
|||||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90,132
|
|
|
—
|
|
|
90,132
|
|
|||||||
Share-based compensation plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Common stock issued under compensation plans
|
|
486
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Requisite service period recognition
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,454
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,454
|
|
|||||||
Common stock purchased under share repurchase program
|
|
—
|
|
|
—
|
|
|
(780
|
)
|
|
(14,641
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,641
|
)
|
|||||||
Deemed equity contribution resulting from the transfer of
Granite Holdings Sàrl net assets from JBS S.A. to Pilgrim's
Pride Corporation in a common-control transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
237,195
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
237,195
|
|
|||||||
Transfer of Granite Holdings Sàrl net assets from JBS S.A. to
Pilgrim's Pride Corporation in a common-control transaction
|
|
(13,000
|
)
|
|
(304,691
|
)
|
|
—
|
|
|
—
|
|
|
(1,413,590
|
)
|
|
238,663
|
|
|
203,209
|
|
|
1,131
|
|
|
(1,275,278
|
)
|
|||||||
Balance at September 24, 2017
|
|
260,168
|
|
|
$
|
2,602
|
|
|
(11,416
|
)
|
|
$
|
(231,758
|
)
|
|
$
|
1,926,386
|
|
|
$
|
39,606
|
|
|
$
|
(36,517
|
)
|
|
$
|
9,917
|
|
|
$
|
1,710,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Pilgrim's Pride Corporation balance at December 27, 2015
|
|
259,685
|
|
|
$
|
2,597
|
|
|
(4,862
|
)
|
|
$
|
(99,233
|
)
|
|
$
|
1,675,674
|
|
|
$
|
(261,252
|
)
|
|
$
|
(58,930
|
)
|
|
$
|
2,954
|
|
|
$
|
1,261,810
|
|
Granite Holdings Sàrl balance at December 27, 2015
|
|
13,000
|
|
|
304,691
|
|
|
—
|
|
|
—
|
|
|
1,414,716
|
|
|
(287,668
|
)
|
|
(32,543
|
)
|
|
(1,131
|
)
|
|
1,398,065
|
|
|||||||
Combined balance at December 27, 2015
|
|
272,685
|
|
|
307,288
|
|
|
(4,862
|
)
|
|
(99,233
|
)
|
|
3,090,390
|
|
|
(548,920
|
)
|
|
(91,473
|
)
|
|
1,823
|
|
|
2,659,875
|
|
|||||||
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
395,019
|
|
|
—
|
|
|
(334
|
)
|
|
394,685
|
|
|||||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(178,295
|
)
|
|
—
|
|
|
(178,295
|
)
|
|||||||
Requisite service period recognition under share-based
compensation plans
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,404
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,404
|
|
|||||||
Common stock purchased from retirement plan participants
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(73
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(73
|
)
|
|||||||
Common stock purchased under share repurchase program
|
|
—
|
|
|
—
|
|
|
(925
|
)
|
|
(20,333
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,333
|
)
|
|||||||
Equity contributions to subsidiary by noncontrolling stockholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,252
|
|
|
7,252
|
|
|||||||
Dividend paid by Granite Holdings Sàrl to JBS S.A.
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,870
|
)
|
|
—
|
|
|
—
|
|
|
(14,870
|
)
|
|||||||
Special cash dividend
|
|
—
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
(699,915
|
)
|
|
—
|
|
|
—
|
|
|
(699,915
|
)
|
|||||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,126
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,126
|
)
|
|||||||
Balance at September 25, 2016
|
|
272,682
|
|
|
$
|
307,288
|
|
|
(5,787
|
)
|
|
$
|
(119,566
|
)
|
|
$
|
3,094,595
|
|
|
$
|
(868,686
|
)
|
|
$
|
(269,768
|
)
|
|
$
|
8,741
|
|
|
$
|
2,152,604
|
|
PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES
|
||||||||
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
|
||||||||
|
|
Thirty-Nine Weeks Ended
|
||||||
|
|
September 24, 2017
|
|
September 25, 2016
|
||||
|
|
(In thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
584,242
|
|
|
$
|
394,685
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
204,625
|
|
|
174,128
|
|
||
Foreign currency transaction loss related to borrowing arrangements
|
|
6,830
|
|
|
—
|
|
||
Asset impairment
|
|
4,947
|
|
|
—
|
|
||
Gain on property disposals
|
|
(540
|
)
|
|
(7,315
|
)
|
||
Loss (gain) on equity method investments
|
|
(44
|
)
|
|
194
|
|
||
Share-based compensation
|
|
2,454
|
|
|
5,404
|
|
||
Deferred income tax expense (benefit)
|
|
25,768
|
|
|
(6
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Trade accounts and other receivables
|
|
(146,477
|
)
|
|
(65,649
|
)
|
||
Inventories
|
|
(149,806
|
)
|
|
(18,099
|
)
|
||
Prepaid expenses and other current assets
|
|
(15,377
|
)
|
|
1,990
|
|
||
Accounts payable, accrued expenses and other current liabilities
|
|
(36,105
|
)
|
|
35,346
|
|
||
Income taxes
|
|
149,063
|
|
|
45,789
|
|
||
Long-term pension and other postretirement obligations
|
|
(9,660
|
)
|
|
(8,294
|
)
|
||
Other operating assets and liabilities
|
|
(1,429
|
)
|
|
(6,190
|
)
|
||
Cash provided by operating activities
|
|
618,491
|
|
|
551,983
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Acquisitions of property, plant and equipment
|
|
(258,364
|
)
|
|
(221,035
|
)
|
||
Purchase of acquired businesses, net of cash acquired
|
|
(658,520
|
)
|
|
—
|
|
||
Proceeds from property disposals
|
|
2,585
|
|
|
12,977
|
|
||
Cash used in investing activities
|
|
(914,299
|
)
|
|
(208,058
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Proceeds from note payable to bank
|
|
—
|
|
|
36,838
|
|
||
Payments on note payable to bank
|
|
—
|
|
|
(65,564
|
)
|
||
Proceeds from revolving line of credit and long-term borrowings
|
|
1,013,662
|
|
|
515,292
|
|
||
Payments on revolving line of credit, long-term borrowings and capital lease
obligations |
|
(609,678
|
)
|
|
(504,078
|
)
|
||
Proceeds from equity contribution under Tax Sharing Agreement between
JBS USA Food Company Holdings and Pilgrim’s Pride Corporation
|
|
5,038
|
|
|
3,691
|
|
||
Capital contributions to subsidiary by noncontrolling stockholders
|
|
—
|
|
|
7,252
|
|
||
Payment of capitalized loan costs
|
|
(4,550
|
)
|
|
(693
|
)
|
||
Purchase of common stock under share repurchase program
|
|
(14,641
|
)
|
|
(20,333
|
)
|
||
Purchase of common stock from retirement plan participants
|
|
—
|
|
|
(73
|
)
|
||
Payment of special cash dividends
|
|
—
|
|
|
(715,711
|
)
|
||
Cash provided by (used in) financing activities
|
|
389,831
|
|
|
(743,379
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
15,084
|
|
|
(28,937
|
)
|
||
Increase (decrease) in cash, cash equivalents and restricted cash
|
|
109,107
|
|
|
(428,391
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
|
297,523
|
|
|
696,553
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
406,630
|
|
|
$
|
268,162
|
|
1.
|
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
|
|
|
September 24, 2017
|
|
December 25, 2016
|
||||
|
|
(In thousands)
|
||||||
Cash and cash equivalents
|
|
$
|
401,789
|
|
|
$
|
292,544
|
|
Restricted cash
|
|
4,841
|
|
|
4,979
|
|
||
Total cash, cash equivalents and restricted cash shown in the
Condensed Consolidated and Combined Statements of Cash Flows |
|
$
|
406,630
|
|
|
$
|
297,523
|
|
2.
|
BUSINESS ACQUISITIONS
|
Negotiated sales price
|
$
|
350,000
|
|
Working capital adjustment
|
7,252
|
|
|
Preliminary purchase price
|
$
|
357,252
|
|
Cash and cash equivalents
|
$
|
10
|
|
Trade accounts and other receivables
|
18,453
|
|
|
Inventories
|
56,459
|
|
|
Prepaid expenses and other current assets
|
3,414
|
|
|
Property, plant and equipment
|
144,138
|
|
|
Identifiable intangible assets
|
131,120
|
|
|
Other long-lived assets
|
829
|
|
|
Total assets acquired
|
354,423
|
|
|
Accounts payable
|
23,848
|
|
|
Other current liabilities
|
11,866
|
|
|
Other long-term liabilities
|
3,393
|
|
|
Total liabilities assumed
|
39,107
|
|
|
Total identifiable net assets
|
315,316
|
|
|
Goodwill
|
41,936
|
|
|
Total net assets
|
$
|
357,252
|
|
|
Fair Value
|
|
Useful Life
|
||
|
(In thousands)
|
|
(In years)
|
||
Customer relationships
|
$
|
92,900
|
|
|
13.0
|
Trade names
|
38,200
|
|
|
20.0
|
|
Non-compete agreement
|
20
|
|
|
3.0
|
|
Total fair value
|
$
|
131,120
|
|
|
|
Weighted average useful life
|
|
|
15.2
|
•
|
Property, plant and equipment, net
. Property, plant and equipment at fair value gave consideration to the highest and best use of the assets. The valuation of the Company's real property improvements and the majority of its personal property was based on the cost approach. The valuation of the Company's land, as if vacant, and certain personal property assets was based on the market or sales comparison approach.
|
•
|
Trade names
. The Company valued
two
trade names using the income approach, specifically the relief from royalty method. Under this method, the asset value of each trade name was determined by estimating the hypothetical royalties that would have to be paid if it was not owned. Royalty rates were selected based on consideration of several factors, including (i) prior transactions involving GNP trade names, (ii) incomes derived from license agreements on comparable trade names within the food industry and (iii) the relative profitability and perceived contribution of each trade name. The royalty rate used in the determination of the fair values of the
two
trade names was
2.0%
of expected net sales related to the respective trade names. In estimating the fair value of the trade names, net sales related to the respective trade names were estimated to grow at a rate of
2.5%
. Income taxes were estimated at
39.3%
of pre-tax income, a tax amortization benefit factor was estimated at
1.2098
and the hypothetical savings generated by avoiding royalty costs were discounted using a rate of
13.8%
.
|
•
|
Customer relationships
. The Company valued GNP customer relationships using the income approach, specifically the multi-period excess earnings model. Under this model, the fair value of the customer relationships asset was determined by estimating the net cash inflows from the relationships discounted to present value. In estimating the fair value of the customer relationships, net sales related to existing GNP customers were estimated to grow at a rate of
2.5%
annually, but we also anticipate losing existing GNP customers at an attrition rate of
4.0%
. Income taxes were estimated at
39.3%
of pre-tax income, a tax amortization benefit factor was estimated at
1.2098
and net cash flows attributable to our existing customers were discounted using a rate of
13.8%
.
|
|
Thirty-Nine Weeks
Ended
September 24, 2017
|
|
Thirty-Nine Weeks
Ended
September 25, 2016 |
||||
|
(In thousands, except per share amount)
|
||||||
Net sales
|
$
|
8,031,311
|
|
|
$
|
7,833,406
|
|
Net income attributable to Pilgrim's Pride Corporation
|
572,063
|
|
|
363,735
|
|
||
Net income attributable to Pilgrim's Pride Corporation
per common share - diluted |
2.30
|
|
|
1.40
|
|
3.
|
FAIR VALUE MEASUREMENTS
|
Level 1
|
|
Unadjusted quoted prices in active markets for identical assets or liabilities;
|
|
|
|
Level 2
|
|
Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability; or
|
|
|
|
Level 3
|
|
Unobservable inputs, such as discounted cash flow models or valuations.
|
|
|
September 24, 2017
|
||||||
|
|
Level 1
|
|
Total
|
||||
|
|
(In thousands)
|
||||||
Fair value assets:
|
|
|
|
|
||||
Commodity futures instruments
|
|
$
|
2,168
|
|
|
$
|
2,168
|
|
Commodity options instruments
|
|
1,200
|
|
|
1,200
|
|
||
Foreign currency instruments
|
|
586
|
|
|
586
|
|
||
Fair value liabilities:
|
|
|
|
|
||||
Commodity futures instruments
|
|
(1,587
|
)
|
|
(1,587
|
)
|
||
Commodity options instruments
|
|
(2,196
|
)
|
|
(2,196
|
)
|
||
Foreign currency instruments
|
|
(387
|
)
|
|
(387
|
)
|
|
|
December 25, 2016
|
||||||
|
|
Level 1
|
|
Total
|
||||
|
|
(In thousands)
|
||||||
Fair value assets:
|
|
|
|
|
||||
Commodity futures instruments
|
|
$
|
5,341
|
|
|
$
|
5,341
|
|
Commodity options instruments
|
|
98
|
|
|
98
|
|
||
Foreign currency instruments
|
|
516
|
|
|
516
|
|
||
Fair value liabilities:
|
|
|
|
|
||||
Commodity futures instruments
|
|
(4,063
|
)
|
|
(4,063
|
)
|
||
Commodity option instruments
|
|
(2,764
|
)
|
|
(2,764
|
)
|
||
Foreign currency instruments
|
|
(153
|
)
|
|
(153
|
)
|
|
|
September 24, 2017
|
|
December 25, 2016
|
||||||||||||
|
|
Carrying
Amount |
|
Fair
Value |
|
Carrying
Amount |
|
Fair
Value |
||||||||
|
|
|
|
(In thousands)
|
|
|
||||||||||
Fixed-rate senior notes payable at 5.75%, at Level 1 inputs
|
|
$
|
(500,000
|
)
|
|
$
|
(521,250
|
)
|
|
$
|
(500,000
|
)
|
|
$
|
(503,395
|
)
|
Fixed-rate senior notes payable at 6.25%, at Level 1 inputs
|
|
(401,983
|
)
|
|
(415,622
|
)
|
|
(369,736
|
)
|
|
(389,709
|
)
|
||||
Chattels Mortgages, at Level 3 inputs
|
|
(1,015
|
)
|
|
(989
|
)
|
|
(1,432
|
)
|
|
(1,379
|
)
|
4.
|
TRADE ACCOUNTS AND OTHER RECEIVABLES
|
|
|
September 24, 2017
|
|
December 25, 2016
|
||||
|
|
(In thousands)
|
||||||
Trade accounts receivable
|
|
$
|
612,983
|
|
|
$
|
435,818
|
|
Notes receivable - current
|
|
5,130
|
|
|
630
|
|
||
Other receivables
|
|
14,644
|
|
|
15,766
|
|
||
Receivables, gross
|
|
632,757
|
|
|
452,214
|
|
||
Allowance for doubtful accounts
|
|
(7,955
|
)
|
|
(6,661
|
)
|
||
Receivables, net
|
|
$
|
624,802
|
|
|
$
|
445,553
|
|
|
|
|
|
|
||||
Account receivable from related parties
(a)
|
|
$
|
970
|
|
|
$
|
4,010
|
|
Balance, beginning of period
|
|
$
|
(6,661
|
)
|
Provision charged to operating results
|
|
(1,962
|
)
|
|
Account write-offs and recoveries
|
|
858
|
|
|
Effect of exchange rate
|
|
(190
|
)
|
|
Balance, end of period
|
|
$
|
(7,955
|
)
|
5.
|
INVENTORIES
|
|
September 24, 2017
|
|
December 25, 2016
|
||||
|
(In thousands)
|
||||||
Live chicken and hens
|
$
|
471,394
|
|
|
$
|
407,475
|
|
Feed, eggs and other
|
263,576
|
|
|
257,049
|
|
||
Finished chicken products
|
399,085
|
|
|
243,824
|
|
||
Total chicken inventories
|
1,134,055
|
|
|
908,348
|
|
||
Commercial feed and other
|
62,146
|
|
|
67,260
|
|
||
Total inventories
|
$
|
1,196,201
|
|
|
$
|
975,608
|
|
6.
|
INVESTMENTS IN SECURITIES
|
|
|
September 24, 2017
|
|
December 25, 2016
|
||||||||||||
|
|
Amortized Cost
|
|
Fair
Value |
|
Amortized Cost
|
|
Fair
Value |
||||||||
|
|
(In thousands)
|
||||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Fixed income securities
|
|
$
|
155,216
|
|
|
$
|
155,216
|
|
|
$
|
140,480
|
|
|
$
|
140,480
|
|
Other
|
|
62
|
|
|
62
|
|
|
61
|
|
|
61
|
|
7.
|
DERIVATIVE FINANCIAL INSTRUMENTS
|
|
September 24, 2017
|
|
December 25, 2016
|
||||
|
(Fair values in thousands)
|
||||||
Fair values:
|
|
|
|
||||
Commodity derivative assets
|
$
|
3,368
|
|
|
$
|
5,439
|
|
Commodity derivative liabilities
|
(3,782
|
)
|
|
(6,827
|
)
|
||
Foreign currency derivative assets
|
586
|
|
|
516
|
|
||
Foreign currency derivative liabilities
|
(387
|
)
|
|
(153
|
)
|
||
Cash collateral posted with brokers
|
4,841
|
|
|
4,979
|
|
||
Derivatives coverage
(a)
:
|
|
|
|
||||
Corn
|
0.7
|
%
|
|
2.3
|
%
|
||
Soybean meal
|
0.2
|
%
|
|
0.3
|
%
|
||
Period through which stated percent of needs are covered:
|
|
|
|
||||
Corn
|
September 2018
|
|
|
September 2018
|
|
||
Soybean meal
|
August 2018
|
|
|
July 2017
|
|
(a)
|
Derivatives coverage is the percent of anticipated commodity needs covered by outstanding derivative instruments through a specified date.
|
|
Gain (Loss) Recognized in Other Comprehensive Income on Derivative (Effective Portion)
|
||||||||||||||
|
Thirteen Weeks Ended
|
|
Thirty-Nine Weeks Ended
|
||||||||||||
|
September 24, 2017
|
|
September 25, 2016
|
|
September 24, 2017
|
|
September 25, 2016
|
||||||||
|
(In thousands)
|
||||||||||||||
Foreign currency derivatives
|
$
|
(779
|
)
|
|
$
|
(220
|
)
|
|
$
|
(128
|
)
|
|
$
|
132
|
|
Total
|
$
|
(779
|
)
|
|
$
|
(220
|
)
|
|
$
|
(128
|
)
|
|
$
|
132
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net Realized Gains (Losses) Recognized in Income on Derivative (Ineffective Portion)
|
||||||||||||||
|
Thirteen Weeks Ended
|
|
Thirty-Nine Weeks Ended
|
||||||||||||
|
September 24, 2017
|
|
September 25, 2016
|
|
September 24, 2017
|
|
September 25, 2016
|
||||||||
|
(In thousands)
|
||||||||||||||
Foreign currency derivatives
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
|
Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
|
||||||||||||||
|
Thirteen Weeks Ended
|
|
Thirty-Nine Weeks Ended
|
||||||||||||
|
September 24, 2017
|
|
September 25, 2016
|
|
September 24, 2017
|
|
September 25, 2016
|
||||||||
|
(In thousands)
|
||||||||||||||
Foreign currency derivatives
|
$
|
—
|
|
|
$
|
285
|
|
|
$
|
(9
|
)
|
|
$
|
35
|
|
Total
|
$
|
—
|
|
|
$
|
285
|
|
|
$
|
(9
|
)
|
|
$
|
35
|
|
8.
|
GOODWILL AND INTANGIBLE ASSETS
|
|
|
December 25, 2016
|
|
Additions
|
|
Currency Translation
|
|
September 24, 2017
|
||||||||
|
|
(In thousands)
|
||||||||||||||
United States
|
|
$
|
—
|
|
|
$
|
41,936
|
|
|
$
|
—
|
|
|
$
|
41,936
|
|
U.K. and Europe
|
|
761,613
|
|
|
—
|
|
|
66,425
|
|
|
828,038
|
|
||||
Mexico
|
|
125,608
|
|
|
—
|
|
|
—
|
|
|
125,608
|
|
||||
Total
|
|
$
|
887,221
|
|
|
$
|
41,936
|
|
|
$
|
66,425
|
|
|
$
|
995,582
|
|
|
|
December 25, 2016
|
|
Periodic Activity
|
|
September 24, 2017
|
||||||||||||||||||||||||||
|
|
Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Additions
|
|
Amortization
|
|
Currency Translation
|
|
Impairment
|
|
Net Carrying Amount
|
||||||||||||||||
|
|
(In thousands)
|
||||||||||||||||||||||||||||||
Identified intangible
assets subject to
amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Trade names
|
|
$
|
41,369
|
|
|
$
|
(37,029
|
)
|
|
$
|
4,340
|
|
|
$
|
38,200
|
|
|
$
|
(2,794
|
)
|
|
$
|
61
|
|
|
$
|
—
|
|
|
$
|
39,807
|
|
Customer
relationships
|
|
171,152
|
|
|
(72,327
|
)
|
|
98,825
|
|
|
92,900
|
|
|
(16,418
|
)
|
|
5,851
|
|
|
|
|
181,158
|
|
|||||||||
Non-compete
agreements
|
|
300
|
|
|
(300
|
)
|
|
—
|
|
|
20
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
15
|
|
||||||||
Identified intangible
assets not subject
to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Trademarks
|
|
368,426
|
|
|
—
|
|
|
368,426
|
|
|
—
|
|
|
—
|
|
|
31,287
|
|
|
—
|
|
|
399,713
|
|
||||||||
Total identified
intangible assets
|
|
$
|
581,247
|
|
|
$
|
(109,656
|
)
|
|
$
|
471,591
|
|
|
$
|
131,120
|
|
|
$
|
(19,217
|
)
|
|
$
|
37,199
|
|
|
$
|
—
|
|
|
$
|
620,693
|
|
Customer relationships
|
5-16 years
|
Trade names
|
3-20 years
|
Non-compete agreements
|
3 years
|
9.
|
PROPERTY, PLANT AND EQUIPMENT
|
|
September 24, 2017
|
|
December 25, 2016
|
||||
|
(In thousands)
|
||||||
Land
|
$
|
204,176
|
|
|
$
|
150,127
|
|
Buildings
|
1,650,262
|
|
|
1,487,353
|
|
||
Machinery and equipment
|
2,442,031
|
|
|
2,268,526
|
|
||
Autos and trucks
|
56,641
|
|
|
58,454
|
|
||
Construction-in-progress
|
237,323
|
|
|
255,086
|
|
||
PP&E, gross
|
4,590,433
|
|
|
4,219,546
|
|
||
Accumulated depreciation
|
(2,514,086
|
)
|
|
(2,385,561
|
)
|
||
PP&E, net
|
$
|
2,076,347
|
|
|
$
|
1,833,985
|
|
10.
|
CURRENT LIABILITIES
|
|
September 24, 2017
|
|
December 25, 2016
|
||||
|
(In thousands)
|
||||||
Accounts payable:
|
|
|
|
||||
Trade accounts
|
$
|
653,248
|
|
|
$
|
722,495
|
|
Book overdrafts
|
77,189
|
|
|
63,577
|
|
||
Other payables
|
13,091
|
|
|
4,306
|
|
||
Total accounts payable
|
743,528
|
|
|
790,378
|
|
||
Accounts payable to related parties
(a)
|
7,091
|
|
|
4,468
|
|
||
Accrued expenses and other current liabilities:
|
|
|
|
||||
Compensation and benefits
|
168,551
|
|
|
160,591
|
|
||
Interest and debt-related fees
|
16,452
|
|
|
10,907
|
|
||
Insurance and self-insured claims
|
80,210
|
|
|
82,544
|
|
||
Derivative liabilities:
|
|
|
|
||||
Commodity futures
|
1,587
|
|
|
4,063
|
|
||
Commodity options
|
2,196
|
|
|
2,764
|
|
||
Foreign currency derivatives
|
387
|
|
|
153
|
|
||
Other accrued expenses
|
147,093
|
|
|
85,999
|
|
||
Total accrued expenses and other current liabilities
|
416,476
|
|
|
347,021
|
|
||
|
$
|
1,167,095
|
|
|
$
|
1,141,867
|
|
11.
|
LONG-TERM DEBT AND OTHER BORROWING ARRANGEMENTS
|
|
Maturity
|
|
September 24, 2017
|
|
December 25, 2016
|
||||
|
|
|
(In thousands)
|
||||||
Long-term debt and other long-term borrowing arrangements:
|
|
|
|
|
|
||||
Senior notes payable at 5.75%
|
2025
|
|
$
|
500,000
|
|
|
$
|
500,000
|
|
Senior notes payable at 6.25%
|
2021
|
|
401,982
|
|
|
369,736
|
|
||
U.S. Credit Facility (defined below):
|
|
|
|
|
|
||||
Term note payable at 2.55%
|
2022
|
|
790,000
|
|
|
500,000
|
|
||
Revolving note payable at 2.48%
|
2022
|
|
73,262
|
|
|
—
|
|
||
Mexico Credit Facility (defined below) with notes payable at
TIIE Rate plus 0.95% |
2019
|
|
84,524
|
|
|
23,304
|
|
||
Moy Park Multicurrency Revolving Facility with notes payable at
LIBOR rate plus 2.5%
|
2018
|
|
9,953
|
|
|
11,985
|
|
||
Moy Park Receivable with payables at LIBOR plus 1.5%
|
2020
|
|
—
|
|
|
—
|
|
||
Moy Park France Invoice Discounting Revolver with payables at
EURIBOR plus 0.8%
|
2018
|
|
3,930
|
|
|
8,918
|
|
||
Chattels mortgages with payables at weighted average of 3.74%
|
Various
|
|
1,015
|
|
|
1,432
|
|
||
JBS S.A. Promissory Note at 0.0%
|
2018
|
|
753,705
|
|
|
—
|
|
||
Term Loan Agence L'eau
|
2018
|
|
6
|
|
|
6
|
|
||
Capital lease obligations
|
Various
|
|
10,703
|
|
|
14,600
|
|
||
Long-term debt
|
|
|
2,629,080
|
|
|
1,429,981
|
|
||
Less: Current maturities of long-term debt
|
|
|
(61,811
|
)
|
|
(15,712
|
)
|
||
Long-term debt, less current maturities
|
|
|
2,567,269
|
|
|
1,414,269
|
|
||
Less: Capitalized financing costs
|
|
|
(18,694
|
)
|
|
(18,145
|
)
|
||
Long-term debt, less current maturities, net of capitalized financing costs:
|
|
|
$
|
2,548,575
|
|
|
$
|
1,396,124
|
|
12.
|
INCOME TAXES
|
13.
|
PENSION AND OTHER POSTRETIREMENT BENEFITS
|
|
Thirty-Nine Weeks Ended
September 24, 2017 |
|
Thirty-Nine Weeks Ended
September 25, 2016 |
||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
Change in projected benefit obligation:
|
(In thousands)
|
||||||||||||||
Projected benefit obligation, beginning of period
|
$
|
167,159
|
|
|
$
|
1,648
|
|
|
$
|
165,952
|
|
|
$
|
1,672
|
|
Interest cost
|
4,178
|
|
|
38
|
|
|
4,189
|
|
|
38
|
|
||||
Actuarial losses (gains)
|
9,433
|
|
|
25
|
|
|
12,233
|
|
|
95
|
|
||||
Benefits paid
|
(7,571
|
)
|
|
(111
|
)
|
|
(7,274
|
)
|
|
(105
|
)
|
||||
Projected benefit obligation, end of period
|
$
|
173,199
|
|
|
$
|
1,600
|
|
|
$
|
175,100
|
|
|
$
|
1,700
|
|
|
Thirty-Nine Weeks Ended
September 24, 2017 |
|
Thirty-Nine Weeks Ended
September 25, 2016 |
||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
Change in plan assets:
|
(In thousands)
|
||||||||||||||
Fair value of plan assets, beginning of period
|
$
|
97,526
|
|
|
$
|
—
|
|
|
$
|
96,947
|
|
|
$
|
—
|
|
Actual return on plan assets
|
9,321
|
|
|
—
|
|
|
4,769
|
|
|
—
|
|
||||
Contributions by employer
|
10,538
|
|
|
111
|
|
|
8,983
|
|
|
105
|
|
||||
Benefits paid
|
(7,571
|
)
|
|
(111
|
)
|
|
(7,274
|
)
|
|
(105
|
)
|
||||
Fair value of plan assets, end of period
|
$
|
109,814
|
|
|
$
|
—
|
|
|
$
|
103,425
|
|
|
$
|
—
|
|
|
September 24, 2017
|
|
December 25, 2016
|
||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
Funded status:
|
(In thousands)
|
||||||||||||||
Unfunded benefit obligation, end of period
|
$
|
(63,385
|
)
|
|
$
|
(1,600
|
)
|
|
$
|
(69,633
|
)
|
|
$
|
(1,648
|
)
|
|
September 24, 2017
|
|
December 25, 2016
|
||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
Amounts recognized in the Condensed Consolidated and Combined Balance Sheets at end of period:
|
(In thousands)
|
||||||||||||||
Current liability
|
$
|
(13,098
|
)
|
|
$
|
(147
|
)
|
|
$
|
(13,113
|
)
|
|
$
|
(147
|
)
|
Long-term liability
|
(50,287
|
)
|
|
(1,453
|
)
|
|
(56,520
|
)
|
|
(1,501
|
)
|
||||
Recognized liability
|
$
|
(63,385
|
)
|
|
$
|
(1,600
|
)
|
|
$
|
(69,633
|
)
|
|
$
|
(1,648
|
)
|
|
September 24, 2017
|
|
December 25, 2016
|
||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
Amounts recognized in accumulated other comprehensive loss at end of period:
|
(In thousands)
|
||||||||||||||
Net actuarial loss (gain)
|
$
|
49,847
|
|
|
$
|
(6
|
)
|
|
$
|
46,494
|
|
|
$
|
(31
|
)
|
|
Thirteen Weeks Ended
September 24, 2017 |
|
Thirteen Weeks Ended
September 25, 2016 |
|
Thirty-Nine Weeks Ended
September 24, 2017
|
|
Thirty-Nine Weeks Ended
September 25, 2016
|
||||||||||||||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||||
Interest cost
|
$
|
1,392
|
|
|
$
|
13
|
|
|
$
|
1,396
|
|
|
$
|
12
|
|
|
$
|
4,178
|
|
|
$
|
38
|
|
|
$
|
4,189
|
|
|
$
|
38
|
|
Estimated return on plan assets
|
(1,314
|
)
|
|
—
|
|
|
(1,314
|
)
|
|
—
|
|
|
(3,940
|
)
|
|
—
|
|
|
(3,942
|
)
|
|
—
|
|
||||||||
Amortization of net loss
|
233
|
|
|
—
|
|
|
165
|
|
|
—
|
|
|
699
|
|
|
—
|
|
|
494
|
|
|
—
|
|
||||||||
Net costs
|
$
|
311
|
|
|
$
|
13
|
|
|
$
|
247
|
|
|
$
|
12
|
|
|
$
|
937
|
|
|
$
|
38
|
|
|
$
|
741
|
|
|
$
|
38
|
|
|
September 24, 2017
|
|
December 25, 2016
|
||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||
Assumptions used to measure benefit obligation at end of period:
|
|
|
|
|
|
|
|
||||
Discount rate
|
3.87
|
%
|
|
3.41
|
%
|
|
4.31
|
%
|
|
3.81
|
%
|
|
Thirty-Nine Weeks Ended
September 24, 2017 |
|
Thirty-Nine Weeks Ended
September 25, 2016 |
||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||
Assumptions used to measure net pension and other postretirement cost:
|
|
|
|
|
|
|
|
||||
Discount rate
|
4.32
|
%
|
|
3.81
|
%
|
|
4.47
|
%
|
|
4.47
|
%
|
Expected return on plan assets
|
5.50
|
%
|
|
NA
|
|
|
5.50
|
%
|
|
NA
|
|
|
Increase in Discount Rate of 0.25%
|
|
Decrease in Discount Rate of 0.25%
|
||||
|
(In thousands)
|
||||||
Impact on projected benefit obligation for pension benefits
|
$
|
(4,786
|
)
|
|
$
|
5,088
|
|
|
September 24, 2017
|
|
December 25, 2016
|
||
Cash and cash equivalents
|
—
|
%
|
|
—
|
%
|
Pooled separate accounts
(a)
:
|
|
|
|
||
Equity securities
|
5
|
%
|
|
5
|
%
|
Fixed income securities
|
5
|
%
|
|
5
|
%
|
Common collective trust funds
(a)
:
|
|
|
|
||
Equity securities
|
61
|
%
|
|
60
|
%
|
Fixed income securities
|
29
|
%
|
|
30
|
%
|
Total assets
|
100
|
%
|
|
100
|
%
|
(a)
|
Pooled separate accounts (“PSAs”) and common collective trust funds (“CCTs”) are two of the most common types of alternative vehicles in which benefit plans invest. These investments are pooled funds that look like mutual funds, but they are not registered with the SEC. Often times, they will be invested in mutual funds or other marketable securities, but the unit price generally will be different from the value of the underlying securities because the fund may also hold cash for liquidity purposes, and the fees imposed by the fund are deducted from the fund value rather than charged separately to investors. Some PSAs and CCTs have no restrictions as to their investment strategy and can invest in riskier investments, such as derivatives, hedge funds, private equity funds, or similar investments.
|
|
September 24, 2017
|
|
December 25, 2016
|
||||||||||||||||||||||||||||
|
Level 1
(a)
|
|
Level 2
(b)
|
|
Level 3
(c)
|
|
Total
|
|
Level 1
(a)
|
|
Level 2
(b)
|
|
Level 3
(c)
|
|
Total
|
||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||||
Cash and cash equivalents
|
$
|
146
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
146
|
|
|
$
|
119
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
119
|
|
Pooled separate accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Large U.S. equity funds
(d)
|
—
|
|
|
3,228
|
|
|
—
|
|
|
3,228
|
|
|
—
|
|
|
3,302
|
|
|
—
|
|
|
3,302
|
|
||||||||
Small/Mid U.S. equity funds
(e)
|
—
|
|
|
388
|
|
|
—
|
|
|
388
|
|
|
—
|
|
|
406
|
|
|
—
|
|
|
406
|
|
||||||||
International equity funds
(f)
|
—
|
|
|
1,585
|
|
|
—
|
|
|
1,585
|
|
|
—
|
|
|
1,231
|
|
|
—
|
|
|
1,231
|
|
||||||||
Fixed income funds
(g)
|
—
|
|
|
5,024
|
|
|
—
|
|
|
5,024
|
|
|
—
|
|
|
4,867
|
|
|
—
|
|
|
4,867
|
|
||||||||
Common collective trusts funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Large U.S. equity funds
(d)
|
—
|
|
|
27,077
|
|
|
—
|
|
|
27,077
|
|
|
—
|
|
|
24,547
|
|
|
—
|
|
|
24,547
|
|
||||||||
Small U.S. equity funds
(e)
|
—
|
|
|
19,853
|
|
|
—
|
|
|
19,853
|
|
|
—
|
|
|
17,344
|
|
|
—
|
|
|
17,344
|
|
||||||||
International equity funds
(f)
|
—
|
|
|
20,306
|
|
|
—
|
|
|
20,306
|
|
|
—
|
|
|
17,006
|
|
|
—
|
|
|
17,006
|
|
||||||||
Fixed income funds
(g)
|
—
|
|
|
32,207
|
|
|
—
|
|
|
32,207
|
|
|
—
|
|
|
28,704
|
|
|
—
|
|
|
28,704
|
|
||||||||
Total assets
|
$
|
146
|
|
|
$
|
109,668
|
|
|
$
|
—
|
|
|
$
|
109,814
|
|
|
$
|
119
|
|
|
$
|
97,407
|
|
|
$
|
—
|
|
|
$
|
97,526
|
|
(a)
|
Unadjusted quoted prices in active markets for identical assets are used to determine fair value.
|
(b)
|
Quoted prices in active markets for similar assets and inputs that are observable for the asset are used to determine fair value.
|
(c)
|
Unobservable inputs, such as discounted cash flow models or valuations, are used to determine fair value.
|
(d)
|
This category is comprised of investment options that invest in stocks, or shares of ownership, in large, well-established U.S. companies. These investment options typically carry more risk than fixed income options but have the potential for higher returns over longer time periods.
|
(e)
|
This category is generally comprised of investment options that invest in stocks, or shares of ownership, in small to medium-sized U.S. companies. These investment options typically carry more risk than larger U.S. equity investment options but have the potential for higher returns.
|
(f)
|
This category is comprised of investment options that invest in stocks, or shares of ownership, in companies with their principal place of business or office outside of the U.S.
|
(g)
|
This category is comprised of investment options that invest in bonds, or debt of a company or government entity (including U.S. and non-U.S. entities). It may also include real estate investment options that directly own property. These investment options typically carry more risk than short-term fixed income investment options (including, for real estate investment options, liquidity risk), but less overall risk than equities.
|
|
Pension Benefits
|
|
Other Benefits
|
||||
|
(In thousands)
|
||||||
2017 (remaining)
|
$
|
4,241
|
|
|
$
|
37
|
|
2018
|
11,617
|
|
|
147
|
|
||
2019
|
11,088
|
|
|
146
|
|
||
2020
|
11,019
|
|
|
144
|
|
||
2021
|
10,790
|
|
|
142
|
|
||
2022-2026
|
49,927
|
|
|
640
|
|
||
Total
|
$
|
98,682
|
|
|
$
|
1,256
|
|
|
Thirty-Nine Weeks Ended
September 24, 2017 |
|
Thirty-Nine Weeks Ended
September 25, 2016 |
||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
|
(In thousands)
|
||||||||||||||
Net actuarial loss (gain), beginning of period
|
$
|
46,494
|
|
|
$
|
(31
|
)
|
|
$
|
38,115
|
|
|
$
|
(79
|
)
|
Amortization
|
(699
|
)
|
|
—
|
|
|
(494
|
)
|
|
—
|
|
||||
Curtailment and settlement adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Actuarial loss (gain)
|
9,433
|
|
|
25
|
|
|
12,233
|
|
|
95
|
|
||||
Asset loss (gain)
|
(5,381
|
)
|
|
—
|
|
|
(828
|
)
|
|
—
|
|
||||
Net actuarial loss (gain), end of period
|
$
|
49,847
|
|
|
$
|
(6
|
)
|
|
$
|
49,026
|
|
|
$
|
16
|
|
14.
|
STOCKHOLDERS' EQUITY
|
|
Thirty-Nine Weeks Ended September 24, 2017
(a)
|
||||||||||||||||||
|
Gains (Losses) Related to Foreign Currency Translation
|
|
Unrealized Gains (Losses) on Derivative Financial Instruments Classified as Cash Flow Hedges
|
|
Losses Related to Pension and Other Postretirement Benefits
|
|
Unrealized Holding Gains on Available-for-Sale Securities
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Balance, beginning of period
|
$
|
(265,714
|
)
|
|
$
|
99
|
|
|
$
|
(64,243
|
)
|
|
$
|
—
|
|
|
$
|
(329,858
|
)
|
Granite Holdings Sàrl common-control transaction
|
204,577
|
|
|
(1,368
|
)
|
|
—
|
|
|
—
|
|
|
203,209
|
|
|||||
Other comprehensive income (loss) before
reclassifications |
92,364
|
|
|
(137
|
)
|
|
(2,539
|
)
|
|
—
|
|
|
89,688
|
|
|||||
Amounts reclassified from accumulated other
comprehensive loss to net income |
—
|
|
|
9
|
|
|
435
|
|
|
—
|
|
|
444
|
|
|||||
Net current period other comprehensive
income (loss) |
92,364
|
|
|
(128
|
)
|
|
(2,104
|
)
|
|
—
|
|
|
90,132
|
|
|||||
Balance, end of period
|
$
|
31,227
|
|
|
$
|
(1,397
|
)
|
|
$
|
(66,347
|
)
|
|
$
|
—
|
|
|
$
|
(36,517
|
)
|
|
Thirty-Nine Weeks Ended September 25, 2016
(a)
|
||||||||||||||||||
|
Losses Related to Foreign Currency Translation
|
|
Unrealized Gains (Losses) on Derivative Financial Instruments Classified as Cash Flow Hedges
|
|
Losses Related to Pension and Other Postretirement Benefits
|
|
Unrealized Holding Gains on Available-for-Sale Securities
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Balance, beginning of period
|
$
|
(32,482
|
)
|
|
$
|
(61
|
)
|
|
$
|
(58,997
|
)
|
|
$
|
67
|
|
|
$
|
(91,473
|
)
|
Other comprehensive income (loss) before
reclassifications |
(171,509
|
)
|
|
167
|
|
|
(7,158
|
)
|
|
265
|
|
|
$
|
(178,235
|
)
|
||||
Amounts reclassified from accumulated other
comprehensive loss to net income |
—
|
|
|
(35
|
)
|
|
307
|
|
|
(332
|
)
|
|
$
|
(60
|
)
|
||||
Net current period other comprehensive
income (loss) |
(171,509
|
)
|
|
132
|
|
|
(6,851
|
)
|
|
(67
|
)
|
|
(178,295
|
)
|
|||||
Balance, end of period
|
$
|
(203,991
|
)
|
|
$
|
71
|
|
|
$
|
(65,848
|
)
|
|
$
|
—
|
|
|
$
|
(269,768
|
)
|
(a)
|
All amounts are net of tax. Amounts in parentheses indicate debits to accumulated other comprehensive loss.
|
|
|
Amounts Reclassified from Accumulated Other Comprehensive Loss
(a)
|
|
|
||||||
Details about Accumulated Other Comprehensive Loss Components
|
|
Thirty-Nine Weeks Ended
September 24, 2017
|
|
Thirty-Nine Weeks Ended
September 25, 2016
|
|
Affected Line Item in the Condensed Consolidated and Combined Statements of Income
|
||||
|
|
(In thousands)
|
|
|
||||||
Realized gain (loss) on settlement of derivative
financial instruments classified as cash flow
hedges
|
|
$
|
(9
|
)
|
|
$
|
35
|
|
|
Cost of sales
|
Realized gain on sale of securities
|
|
—
|
|
|
534
|
|
|
Interest income
|
||
Amortization of defined benefit pension
and other postretirement plan actuarial
losses:
|
|
|
|
|
|
|
||||
Union employees pension plan
(b)(d)
|
|
(18
|
)
|
|
(15
|
)
|
|
Cost of sales
|
||
Legacy Gold Kist plans
(c)(d)
|
|
(212
|
)
|
|
(149
|
)
|
|
Cost of sales
|
||
Legacy Gold Kist plans
(c)(d)
|
|
(469
|
)
|
|
(330
|
)
|
|
Selling, general and administrative expense
|
||
Total before tax
|
|
(708
|
)
|
|
75
|
|
|
|
||
Tax benefit (expense)
|
|
264
|
|
|
(15
|
)
|
|
|
||
Total reclassification for the period
|
|
$
|
(444
|
)
|
|
$
|
60
|
|
|
|
(a)
|
Amounts in parentheses represent debits to results of operations.
|
(b)
|
The Company sponsors the Pilgrim’s Pride Retirement Plan for Union Employees, a qualified defined benefit pension plan covering certain locations or work groups with collective bargaining agreements.
|
(c)
|
The Company sponsors the Pilgrim’s Pride Plan for Legacy Gold Kist Employees, a qualified defined benefit pension plan covering certain eligible U.S. employees who were employed at locations that the Company purchased through its acquisition of Gold Kist in 2007, the Former Gold Kist Inc. Supplemental Executive Retirement Plan, a nonqualified defined benefit retirement plan covering certain former Gold Kist executives, the Former Gold Kist Inc. Directors’ Emeriti Plan, a nonqualified defined benefit retirement plan covering certain former Gold Kist directors, and the Gold Kist Inc. Retiree Life Insurance Plan, a defined benefit postretirement life insurance plan covering certain retired Gold Kist employees.
|
(d)
|
These accumulated other comprehensive income components are included in the computation of net periodic pension cost. See “Note 13. Pension and Other Postretirement Benefits” to the Condensed Consolidated and Combined Financial Statements.
|
15.
|
INCENTIVE COMPENSATION
|
Award Type
|
|
Benefit
Plan
|
|
Awards Granted
|
|
Grant
Date
|
|
Grant Date Fair Value per Award
(a)
|
|
Vesting Condition
|
|
Vesting Date
|
|
Vesting Date Fair Value per Award
(a)
|
|
Estimated Forfeiture Rate
|
|
Awards Forfeited to Date
|
|
Settlement Method
|
|||||||
RSU
|
|
LTIP
|
|
449,217
|
|
|
02/19/2014
|
|
$
|
16.70
|
|
|
Service
|
|
12/31/2016
|
|
$
|
18.99
|
|
|
13.49
|
%
|
|
86,458
|
|
|
Stock
|
RSU
|
|
LTIP
|
|
223,701
|
|
|
03/03/2014
|
|
17.18
|
|
|
Performance / Service
|
|
12/31/2017
|
|
|
|
12.34
|
%
|
|
55,516
|
|
|
Stock
|
|||
RSU
|
(b)
|
LTIP
|
|
45,961
|
|
|
02/11/2015
|
|
25.87
|
|
|
Service
|
|
12/31/2017
|
|
18.99
|
|
|
12.34
|
%
|
|
—
|
|
|
Stock
|
||
RSU
|
|
LTIP
|
|
251,136
|
|
|
03/30/2016
|
|
25.36
|
|
|
Performance / Service
|
|
12/31/2019
|
|
18.99
|
|
|
(d)
|
|
|
251,136
|
|
|
Stock
|
||
RSU
|
(b)
|
LTIP
|
|
74,536
|
|
|
10/13/2016
|
|
20.93
|
|
|
Service
|
|
12/31/2016
|
|
|
|
—
|
%
|
|
—
|
|
|
Stock
|
|||
RSU
|
|
LTIP
|
|
389,424
|
|
|
01/19/2017
|
|
18.39
|
|
|
Performance / Service
|
|
(e)
|
|
|
|
—
|
%
|
|
—
|
|
|
Stock
|
|||
RSU
|
(c)
|
LTIP
|
|
48,586
|
|
|
02/13/2017
|
|
20.52
|
|
|
Service
|
|
2/13/2017
|
|
|
|
—
|
%
|
|
—
|
|
|
Stock
|
|||
RSU
|
(c)
|
LTIP
|
|
23,469
|
|
|
02/13/2017
|
|
20.52
|
|
|
Service
|
|
12/31/2017
|
|
|
|
—
|
%
|
|
—
|
|
|
Stock
|
(a)
|
The fair value of each RSU granted or vested represents the closing price of the Company's common stock on the respective grant date or vesting date.
|
(b)
|
On February 17, 2015, the Company paid a special cash dividend to stockholders of record as of January 30, 2015 totaling
$5.77
per share. On January 27, 2015, the Compensation Committee of the Company's Board of Directors agreed to grant additional RSUs to LTIP participants that were equal to the amount of the dividend that would be awarded to them had their RSUs existing as of the dividend record date been vested. The additional RSUs that were granted to the LTIP participants are subject to the same vesting requirements as the underlying RSUs granted under the LTIP.
|
(c)
|
On May 18, 2016, the Company paid a special cash dividend to stockholders of record as of May 10, 2015 totaling
$2.75
per share. On October 27, 2016, the Compensation Committee of the Company's Board of Directors agreed to grant additional RSUs to LTIP participants that were equal to the amount of the dividend that would be awarded to them had their RSUs existing as of the dividend record date been vested. The additional RSUs that were granted to the LTIP participants are subject to the same vesting requirements as the underlying RSUs granted under the LTIP.
|
(d)
|
Performance conditions associated with these awards were not satisfied. Therefore,
100%
of the awards were forfeited during the thirty-nine weeks ended
September 24, 2017
.
|
(e)
|
The subject RSUs will vest in ratable tranches on December 31, 2018, December 31, 2019, and December 31, 2020.
|
|
Thirteen Weeks Ended
|
|
Thirty-Nine Weeks Ended
|
||||||||||||
|
September 24, 2017
|
|
September 25, 2016
|
|
September 24, 2017
|
|
September 25, 2016
|
||||||||
|
(In thousands)
|
||||||||||||||
Share-based compensation cost:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
$
|
32
|
|
|
$
|
449
|
|
|
$
|
219
|
|
|
$
|
710
|
|
Selling, general and administrative expense
|
475
|
|
|
3,086
|
|
|
2,235
|
|
|
4,694
|
|
||||
Total
|
$
|
507
|
|
|
$
|
3,535
|
|
|
$
|
2,454
|
|
|
$
|
5,404
|
|
|
|
|
|
|
|
|
|
||||||||
Income tax benefit
|
$
|
132
|
|
|
$
|
1,083
|
|
|
$
|
733
|
|
|
$
|
1,633
|
|
|
Thirty-Nine Weeks Ended September 24, 2017
|
|
Thirty-Nine Weeks Ended September 25, 2016
|
||||||||||
|
Number
|
|
Weighted Average Grant Date Fair Value
|
|
Number
|
|
Weighted Average Grant Date Fair Value
|
||||||
|
(In thousands, except weighted average fair values)
|
||||||||||||
Outstanding at beginning of period
|
906
|
|
|
$
|
20.00
|
|
|
774
|
|
|
$
|
19.30
|
|
Granted
|
462
|
|
|
18.72
|
|
|
251
|
|
|
25.36
|
|
||
Vested
|
(486
|
)
|
|
17.73
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
(251
|
)
|
|
25.36
|
|
|
(193
|
)
|
|
24.51
|
|
||
Outstanding at end of period
|
631
|
|
|
$
|
18.68
|
|
|
832
|
|
|
$
|
19.92
|
|
16.
|
RELATED PARTY TRANSACTIONS
|
|
Thirteen Weeks Ended
|
|
Thirty-Nine Weeks Ended
|
|
||||||||||||
|
September 24, 2017
|
|
September 25, 2016
|
|
September 24, 2017
|
|
September 25, 2016
|
|
||||||||
|
(In thousands)
|
|
||||||||||||||
JBS S.A.:
|
|
|
|
|
|
|
|
|
||||||||
JBS S.A. Promissory Note
(a)
|
$
|
753,704
|
|
|
$
|
—
|
|
|
$
|
753,704
|
|
|
$
|
—
|
|
|
Expenditures paid by JBS S.A. on
behalf of Pilgrim's Pride Corporation
(b)
|
—
|
|
|
5,887
|
|
|
3,824
|
|
|
5,887
|
|
|
||||
Expenditures paid by Pilgrim's Pride Corporation on
behalf of JBS S.A.
(b)
|
—
|
|
|
—
|
|
|
5
|
|
|
19
|
|
|
||||
JBS USA Food Company Holdings:
|
|
|
|
|
|
|
|
|
||||||||
Letter of credit fees
(c)
|
—
|
|
|
—
|
|
|
—
|
|
|
202
|
|
|
||||
JBS USA Food Company:
|
|
|
|
|
|
|
|
|
||||||||
Purchases from JBS USA Food Company
(d)
|
31,161
|
|
|
28,799
|
|
|
83,444
|
|
|
75,687
|
|
|
||||
Expenditures paid by JBS USA Food Company on behalf
of Pilgrim’s Pride Corporation
(e)
|
10,856
|
|
|
17,242
|
|
|
29,127
|
|
|
33,568
|
|
|
||||
Sales to JBS USA Food Company
(d)
|
4,221
|
|
|
4,819
|
|
|
13,618
|
|
|
12,235
|
|
|
||||
Expenditures paid by Pilgrim’s Pride Corporation on
behalf of JBS USA Food Company
(e)
|
1,516
|
|
|
1,142
|
|
|
3,976
|
|
|
9,858
|
|
|
||||
JBS Chile Ltda.:
|
|
|
|
|
|
|
|
|
||||||||
Sales to JBS Chile Ltda.
|
—
|
|
|
126
|
|
|
—
|
|
|
438
|
|
|
||||
JBS Global (UK) Ltd.:
|
|
|
|
|
|
|
|
|
||||||||
Sales to JBS Global (UK) Ltd.
|
—
|
|
|
—
|
|
|
19,217
|
|
|
122
|
|
|
||||
JBS Five Rivers:
|
|
|
|
|
|
|
|
|
||||||||
Sales to JBS Five Rivers
|
7,271
|
|
|
—
|
|
|
23,787
|
|
|
—
|
|
|
||||
J&F Investimentos Ltd..:
|
|
|
|
|
|
|
|
|
||||||||
Sales to J&F Investimentos Ltd.
(f)
|
—
|
|
|
—
|
|
|
104
|
|
|
—
|
|
|
||||
JBS Seara International Ltd.:
|
|
|
|
|
|
|
|
|
||||||||
Sales to JBS Seara International Ltd.
(g)
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
||||
Expenditures paid by Pilgrim’s Pride Corporation on
behalf of JBS Seara International Ltd.
(g)
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
||||
Toledo International NV:
|
|
|
|
|
|
|
|
|
|
|||||||
Purchases from Toledo International NV
(h)
|
149
|
|
|
67
|
|
|
190
|
|
|
67
|
|
|
||||
Sales to Toledo International NV
(h)
|
—
|
|
|
—
|
|
|
—
|
|
|
148
|
|
|
||||
JBS Seara Alimentos:
|
|
|
|
|
|
|
|
|
||||||||
Purchases from JBS Seara Alimentos
(i)
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
||||
JBS Seara Meats B.V.:
|
|
|
|
|
|
|
|
|
||||||||
Purchases from JBS Seara Meats B.V.
(j)
|
3,343
|
|
|
5,702
|
|
|
9,719
|
|
|
16,730
|
|
|
||||
Expenditures paid by Pilgrim’s Pride Corporation on
behalf of JBS Seara Meats B.V.
(j)
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
(a)
|
On September 8, 2017, Onix Investments UK Ltd., a wholly owned subsidiary of the Company, executed the JBS S.A. Promissory Note, which had a maturity date of September 6, 2018. Interest on the outstanding principal balance of the JBS S.A. Promissory Note accrued at the rate per annum equal to (i) from and after November 8, 2017 and prior to January 7, 2018,
4.00%
, (ii) from and after January 7, 2018 and prior to March 8, 2018,
6.00%
and (iii) from and after March 8, 2018,
8.00%
. The JBS S.A. Promissory Note was repaid in full on October 2, 2017.
|
(b)
|
There was
no
outstanding receivable from JBS S.A. at
September 24, 2017
. The outstanding receivable from JBS S.A. at December 25, 2016 was less than
$0.1 million
, respectively.
|
(c)
|
JBS USA Food Company Holdings (“JBS USA Holdings”) arranged for letters of credit to be issued on its account in the aggregate amount of
$56.5 million
to an insurance company on behalf of the Company in order to allow that insurance company to return cash it held as collateral against potential workers’ compensation, auto liability and general liability claims. In return for providing this letter of credit, the Company has agreed to reimburse JBS USA Holdings for the letter of credit fees the Company would otherwise incur under its U.S. Credit Facility. The letter of credit arrangements for
$40.0 million
and
$16.5 million
were terminated on March 7, 2016 and April 1, 2016, respectively. For the thirty-nine weeks ended September 25, 2016, the Company paid JBS USA Holdings $
0.2 million
for letter of credit fees.
|
(d)
|
We routinely execute transactions to both purchase products from JBS USA Food Company (“JBS USA”) and sell products to them. As of
September 24, 2017
and December 25, 2016, the outstanding payable to JBS USA was
$5.6 million
and
$1.4 million
, respectively. As of
September 24, 2017
and December 25, 2016, the outstanding receivable from JBS USA was
$0.9 million
and
$3.8 million
, respectively. As of
September 24, 2017
, approximately $
0.7 million
of goods from JBS USA were in transit and not reflected on our Condensed Consolidated Balance Sheet.
|
(e)
|
The Company has an agreement with JBS USA to allocate costs associated with JBS USA’s procurement of SAP licenses and maintenance services for its combined companies. Under this agreement, the fees associated with procuring SAP licenses and maintenance services are allocated between the Company and JBS USA in proportion to the percentage of licenses used by each company. The agreement expires on the date of expiration, or earlier termination, of the underlying SAP license agreement. The Company also has an agreement with JBS USA to allocate the costs of supporting the business operations by one consolidated corporate team, which have historically been supported by their respective corporate teams. Expenditures paid by JBS USA on behalf of the Company will be reimbursed by the Company and expenditures paid by the Company on behalf of JBS USA will be reimbursed by JBS USA. This agreement expires on December 31, 2019.
|
(f)
|
The outstanding receivable from J&F Investimentos Ltd. at
September 24, 2017
was less than
$0.1 million
. There was
no
outstanding receivable or payable from J&F Investimentos Ltd. at December 25, 2016.
|
(g)
|
The outstanding receivable from JBS Seara International Ltd. at
September 24, 2017
and December 25, 2016 was less than
$0.1 million
, respectively. There was
no
outstanding payable from JBS Seara International Ltd. at September 24, 2017 and December 25, 2016.
|
(h)
|
There was
no
outstanding receivable from Toledo International NV at
September 24, 2017
and December 25, 2016. The outstanding payable from Toledo International NV at September 24, 2017 and December 25, 2016 was less than
$0.1 million
, respectively.
|
(i)
|
There was
no
outstanding receivable or payable from JBS Seara Alimentos at
September 24, 2017
and December 25, 2016.
|
(j)
|
There was
no
outstanding receivable from JBS Seara Meats B.V. at
September 24, 2017
and December 25, 2016. The outstanding payable from JBS Seara Meats B.V. at September 24, 2017 and December 25, 2016 was
$1.3 million
and
$3.0 million
, respectively.
|
17.
|
COMMITMENTS AND CONTINGENCIES
|
Net sales
|
Thirteen Weeks Ended
|
|
Thirty-Nine Weeks Ended
|
||||||||||||
|
September 24, 2017
|
|
September 25, 2016
|
|
September 24, 2017
|
|
September 25, 2016
|
||||||||
|
(In thousands)
|
||||||||||||||
U.S.
|
$
|
1,938,542
|
|
|
$
|
1,724,625
|
|
|
$
|
5,557,089
|
|
|
$
|
5,072,351
|
|
U.K. and Europe
|
514,325
|
|
|
463,560
|
|
|
1,473,854
|
|
|
1,484,708
|
|
||||
Mexico
|
341,018
|
|
|
307,096
|
|
|
994,568
|
|
|
950,622
|
|
||||
Total net sales
|
$
|
2,793,885
|
|
|
$
|
2,495,281
|
|
|
$
|
8,025,511
|
|
|
$
|
7,507,681
|
|
Operating income
|
Thirteen Weeks Ended
|
|
Thirty-Nine Weeks Ended
|
||||||||||||
|
September 24, 2017
|
|
September 25, 2016
|
|
September 24, 2017
|
|
September 25, 2016
|
||||||||
|
(In thousands)
|
||||||||||||||
U.S.
|
$
|
307,962
|
|
|
$
|
141,195
|
|
|
$
|
719,121
|
|
|
$
|
480,280
|
|
U.K. and Europe
|
18,569
|
|
|
13,027
|
|
|
51,874
|
|
|
55,841
|
|
||||
Mexico
|
45,692
|
|
|
22,603
|
|
|
146,241
|
|
|
108,856
|
|
||||
Elimination
|
23
|
|
|
23
|
|
|
69
|
|
|
71
|
|
||||
Total operating income
|
372,246
|
|
|
176,848
|
|
|
917,305
|
|
|
645,048
|
|
||||
Interest expense, net of capitalized interest
|
24,636
|
|
|
19,119
|
|
|
66,315
|
|
|
58,480
|
|
||||
Interest income
|
(2,128
|
)
|
|
(253
|
)
|
|
(3,600
|
)
|
|
(2,000
|
)
|
||||
Foreign currency transaction gain
|
(888
|
)
|
|
4,569
|
|
|
(2,500
|
)
|
|
(1,769
|
)
|
||||
Miscellaneous, net
|
(1,083
|
)
|
|
(2,371
|
)
|
|
(5,198
|
)
|
|
(7,327
|
)
|
||||
Income before income taxes
|
$
|
351,709
|
|
|
$
|
155,784
|
|
|
$
|
862,288
|
|
|
$
|
597,664
|
|
Goodwill
|
September 24, 2017
|
|
December 25, 2016
|
||||
|
(In thousands)
|
||||||
U.S.
|
$
|
41,936
|
|
|
$
|
—
|
|
U.K. and Europe
|
828,038
|
|
|
761,613
|
|
||
Mexico
|
125,608
|
|
|
125,608
|
|
||
Total goodwill
|
$
|
995,582
|
|
|
$
|
887,221
|
|
Assets
|
September 24, 2017
|
|
December 25, 2016
|
|
||||
|
(In thousands)
|
|
||||||
U.S.
|
$
|
3,515,513
|
|
|
$
|
2,472,931
|
|
|
U.K. and Europe
|
2,204,885
|
|
|
2,013,725
|
|
|
||
Mexico
|
947,112
|
|
|
840,088
|
|
|
||
Eliminations
|
(604,225
|
)
|
|
(304,802
|
)
|
(a)
|
||
Total assets
|
$
|
6,063,285
|
|
|
$
|
5,021,942
|
|
|
(a)
|
Eliminations for the period ended
September 24, 2017
include the elimination of the U.S. segment's
$191.7 million
investment in the Mexico segment, the elimination of
$111.2 million
in intersegment receivables and payables between the U.S. and Mexico segments and the elimination of the U.S. segment's
$301.3 million
investment in the U.K. and Europe segment. Eliminations for the period ended December 25, 2016 include the elimination of the U.S. segment's
$191.8 million
investment in the Mexico segment and the elimination of
$113.0 million
in intersegment receivables and payables between the U.S. and Mexico segments.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Corn
|
|
Soybean Meal
|
||||||||||||
|
Highest Price
|
|
Lowest Price
|
|
Highest Price
|
|
Lowest Price
|
||||||||
2017:
|
|
|
|
|
|
|
|
||||||||
Third Quarter
|
$
|
4.15
|
|
|
$
|
3.46
|
|
|
$
|
346.20
|
|
|
$
|
296.50
|
|
Second Quarter
|
3.96
|
|
|
3.66
|
|
|
321.00
|
|
|
297.20
|
|
||||
First Quarter
|
3.86
|
|
|
3.55
|
|
|
352.70
|
|
|
314.10
|
|
||||
2016:
|
|
|
|
|
|
|
|
||||||||
Fourth Quarter
|
3.98
|
|
|
3.58
|
|
|
320.70
|
|
|
269.00
|
|
||||
Third Quarter
|
3.94
|
|
|
3.16
|
|
|
401.00
|
|
|
302.80
|
|
||||
Second Quarter
|
4.38
|
|
|
3.52
|
|
|
418.30
|
|
|
266.80
|
|
||||
First Quarter
|
3.73
|
|
|
3.52
|
|
|
275.30
|
|
|
257.20
|
|
||||
2015:
|
|
|
|
|
|
|
|
||||||||
Fourth Quarter
|
3.98
|
|
|
3.58
|
|
|
320.70
|
|
|
269.00
|
|
||||
Third Quarter
|
4.34
|
|
|
3.48
|
|
|
374.80
|
|
|
302.40
|
|
||||
Second Quarter
|
4.10
|
|
|
3.53
|
|
|
326.40
|
|
|
286.50
|
|
||||
First Quarter
|
4.13
|
|
|
3.70
|
|
|
377.40
|
|
|
317.50
|
|
Sources of net sales
|
|
Thirteen
Weeks Ended September 24, 2017 |
|
Change from
Thirteen Weeks Ended September 25, 2016 |
|
|||||||
Amount
|
|
Percent
|
|
|||||||||
|
|
(In thousands, except percent data)
|
|
|||||||||
United States
|
|
$
|
1,938,542
|
|
|
$
|
213,917
|
|
|
12.4
|
%
|
(a)
|
U.K. and Europe
|
|
514,325
|
|
|
50,765
|
|
|
11.0
|
%
|
(b)
|
||
Mexico
|
|
341,018
|
|
|
33,922
|
|
|
11.0
|
%
|
(c)
|
||
Total net sales
|
|
2,793,885
|
|
|
298,604
|
|
|
12.0
|
%
|
|
(a)
|
U.S. net sales generated in the
thirteen weeks
ended
September 24, 2017
increased
$213.9 million
, or
12.4%
, from U.S. net sales generated in the
thirteen weeks
ended
September 25, 2016
primarily because of net sales generated by the recently acquired GNP operations and an increase in net sales per pound experienced by our existing operations. The impact of the acquired business contributed $108.6 million, or 6.3 percentage points, to the increase in net sales. The net sales per pound increase experienced by our existing U.S. segment contributed $199.7 million, or 11.5 percentage points, to the increase in net sales. A decrease in sales volume experienced by our existing U.S. segment partially offset the effect that the acquired business and the increase in net sales per pound had on U.S. net sales by $94.4 million, or 5.5 percentage points. Lower sales volume resulted primarily from decreased exported chicken products resulting from shipping delays at Southeastern U.S. ports following the recent hurricanes. Included in U.S. net sales generated during the thirteen weeks ended
September 24, 2017
and
September 25, 2016
were net sales to JBS USA Food Company totaling $11.5 million and
$4.8 million
, respectively.
|
(b)
|
U.K. and Europe net sales generated in the
thirteen weeks
ended
September 24, 2017
increased
$
50.8 million
, or
11.0%
, from U.K. and Europe net sales generated in the
thirteen weeks
ended
September 25, 2016
primarily because of an increase in sales volume. Increased sales volume resulted in an increase in net sales by $66.3 million, or 14.3 percentage points. The increase in net sales from increased sales volume was partially offset by the
|
(c)
|
Mexico net sales generated in the
thirteen weeks
ended
September 24, 2017
increased
$33.9 million
, or
11.0%
, from Mexico net sales generated in the
thirteen weeks
ended
September 25, 2016
primarily because of the increase in net sales per pound and the positive impact of foreign currency remeasurement. Increased net sales per pound, which resulted primarily from higher market prices, and impact of foreign currency remeasurement resulted in an increase in net sales by $15.0 million, or 4.9 percentage points, and $16.5 million, or 5.4 percentage points, respectively. An increase in sales volume also contributed to the increase in net sales by $2.4 million, or 0.8 percentage points.
|
Components of gross profit
|
|
Thirteen
Weeks Ended September 24, 2017 |
|
Change from
Thirteen Weeks Ended September 25, 2016 |
|
Percent of Net Sales
|
|
|||||||||||
|
|
Thirteen Weeks Ended
|
|
|||||||||||||||
|
Amount
|
|
Percent
|
|
September 24, 2017
|
|
September 25, 2016
|
|
||||||||||
|
|
In thousands, except percent data
|
|
|||||||||||||||
Net sales
|
|
$
|
2,793,885
|
|
|
$
|
298,604
|
|
|
12.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Cost of sales
|
|
2,315,301
|
|
|
73,080
|
|
|
3.3
|
%
|
|
82.9
|
%
|
|
89.9
|
%
|
(a)(b)(c)
|
||
Gross profit
|
|
$
|
478,584
|
|
|
$
|
225,524
|
|
|
89.1
|
%
|
|
17.1
|
%
|
|
10.1
|
%
|
|
Sources of gross profit
|
|
Thirteen
Weeks Ended September 24, 2017 |
|
Change from
Thirteen Weeks Ended September 25, 2016 |
|
|||||||
Amount
|
|
Percent
|
|
|||||||||
|
|
(In thousands, except percent data)
|
|
|||||||||
United States
|
|
$
|
377,209
|
|
|
$
|
197,873
|
|
|
110.3
|
%
|
(a)
|
U.K. and Europe
|
|
46,951
|
|
|
3,981
|
|
|
9.3
|
%
|
(b)
|
||
Mexico
|
|
54,401
|
|
|
23,671
|
|
|
77.0
|
%
|
(c)
|
||
Elimination
|
|
23
|
|
|
(1
|
)
|
|
(4.2
|
)%
|
|
||
Total gross profit
|
|
$
|
478,584
|
|
|
$
|
225,524
|
|
|
89.1
|
%
|
|
Sources of cost of sales
|
|
Thirteen
Weeks Ended September 24, 2017 |
|
Change from
Thirteen Weeks Ended September 25, 2016 |
|
|||||||
Amount
|
|
Percent
|
|
|||||||||
|
|
(In thousands, except percent data)
|
|
|||||||||
United States
|
|
$
|
1,561,333
|
|
|
$
|
16,044
|
|
|
1.0
|
%
|
(a)
|
U.K. and Europe
|
|
467,374
|
|
|
46,784
|
|
|
11.1
|
%
|
(b)
|
||
Mexico
|
|
286,617
|
|
|
10,251
|
|
|
3.7
|
%
|
(c)
|
||
Elimination
|
|
(23
|
)
|
|
1
|
|
|
(4.2
|
)%
|
|
||
Total cost of sales
|
|
$
|
2,315,301
|
|
|
$
|
73,080
|
|
|
3.3
|
%
|
|
(a)
|
Cost of sales incurred by our U.S. segment during the
thirteen weeks
ended
September 24, 2017
increased
$16.0 million
, or
1.0%
, from cost of sales incurred by our U.S. segment during the
thirteen weeks
ended
September 25, 2016
. Cost of sales increased primarily because of costs incurred by the acquired GNP operations. Cost of sales incurred by the acquired GNP operations contributed $89.1 million, or 5.8 percentage points, to the increase in U.S. cost of sales. An decrease in cost of sales incurred by our existing U.S. segment partially offset the impact that the GNP operations had on cost of sales by $72.9 million, or 4.7 percentage points. Cost of sales incurred by our existing U.S. segment decreased primarily because of a $63.7 million decrease in feed costs, a $23.9 million net increase in derivative gains, a $4.2 million decrease in repair and maintenance costs, partially offset by a $22.4 million increase in compensation costs and $1.9 million in damages to our Puerto Rico assets resulting from Hurricane Maria.
|
(b)
|
Cost of sales incurred by our U.K. and Europe segment during the
thirteen weeks
ended
September 24, 2017
increased
$
46.8 million
, or
11.1%
, from cost of sales incurred by our U.K. and Europe segment during the
thirteen weeks
ended
September 25, 2016
. U.K. and Europe c
ost of sales increased primarily because of a $37.8 million increase in raw material costs, a $4.2 million increase in labor costs, and a $2.4 million increase in freight costs.
|
(c)
|
Cost of sales incurred by our Mexico segment during the
thirteen weeks
ended
September 24, 2017
increased
$10.3 million
, or
3.7%
, from cost of sales incurred by our Mexico segment during the
thirteen weeks
ended
September 25, 2016
. Mexico c
ost of sales increased primarily because of a $14.6 million increase in contracted grower pay, partially offset by a $1.4 million decrease in catching costs, a $1.1 million decrease in depreciation expense on machinery and equipment, a $1.2 increase in other income, and a $0.6 million decrease in travel and entertainment costs.
|
Components of operating income
|
|
Thirteen
Weeks Ended September 24, 2017 |
|
Change from
Thirteen Weeks Ended September 25, 2016 |
|
Percent of Net Sales
|
|
|||||||||||
Thirteen Weeks Ended
|
|
|||||||||||||||||
Amount
|
|
Percent
|
|
September 24, 2017
|
|
September 25, 2016
|
|
|||||||||||
|
|
(In thousands, except percent data)
|
|
|||||||||||||||
Gross profit
|
|
$
|
478,584
|
|
|
$
|
225,524
|
|
|
89.1
|
%
|
|
17.1
|
%
|
|
10.1
|
%
|
|
SG&A expense
|
|
102,191
|
|
|
26,257
|
|
|
34.6
|
%
|
|
3.7
|
%
|
|
3.0
|
%
|
(a)(b)(c)
|
||
Administrative restructuring charges
|
|
4,147
|
|
|
3,869
|
|
|
1,386.4
|
%
|
|
0.1
|
%
|
|
—
|
%
|
(d)(e)
|
||
Operating income
|
|
$
|
372,246
|
|
|
$
|
195,398
|
|
|
110.5
|
%
|
|
13.3
|
%
|
|
7.1
|
%
|
|
Sources of operating income
|
|
Thirteen
Weeks Ended September 24, 2017 |
|
Change from
Thirteen Weeks Ended September 25, 2016 |
|
|||||||
Amount
|
|
Percent
|
|
|||||||||
|
|
(In thousands, except percent data)
|
|
|||||||||
United States
|
|
$
|
307,962
|
|
|
$
|
166,767
|
|
|
118.1
|
%
|
|
U.K. and Europe
|
|
18,569
|
|
|
5,542
|
|
|
42.5
|
%
|
|
||
Mexico
|
|
45,692
|
|
|
23,089
|
|
|
102.2
|
%
|
|
||
Elimination
|
|
23
|
|
|
—
|
|
|
—
|
%
|
|
||
Total operating income
|
|
$
|
372,246
|
|
|
$
|
195,398
|
|
|
110.5
|
%
|
|
|
|
|
|
|
|
|
|
|||||
Sources of SG&A expense
|
|
Thirteen
Weeks Ended September 24, 2017 |
|
Change from
Thirteen Weeks Ended September 25, 2016 |
|
|||||||
Amount
|
|
Percent
|
|
|||||||||
|
|
(In thousands, except percent data)
|
|
|||||||||
United States
|
|
$
|
66,793
|
|
|
$
|
28,930
|
|
|
76.4
|
%
|
(a)
|
U.K. and Europe
|
|
26,689
|
|
|
(3,255
|
)
|
|
(10.9
|
)%
|
(b)
|
||
Mexico
|
|
8,709
|
|
|
582
|
|
|
7.2
|
%
|
(c)
|
||
Total SG&A expense
|
|
$
|
102,191
|
|
|
$
|
26,257
|
|
|
34.6
|
%
|
|
|
|
|
|
|
|
|
|
|||||
Sources of administrative restructuring charges
|
|
Thirteen
Weeks Ended September 24, 2017 |
|
Change from
Thirteen Weeks Ended September 25, 2016 |
|
|||||||
Amount
|
|
Percent
|
|
|||||||||
|
|
(In thousands, except percent data)
|
|
|||||||||
United States
|
|
$
|
2,454
|
|
|
$
|
2,176
|
|
|
779.6
|
%
|
(d)
|
U.K. and Europe
|
|
1,693
|
|
|
1,693
|
|
|
100.0
|
%
|
(e)
|
||
Mexico
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
||
Total administrative restructuring charges
|
|
$
|
4,147
|
|
|
$
|
3,869
|
|
|
1,386.4
|
%
|
|
(a)
|
SG&A expense incurred by our U.S. segment during the thirteen weeks ended
September 24, 2017
increased
$28.9 million
, or
76.4%
, from SG&A expense incurred by our U.S. segment during the thirteen weeks ended
September 25, 2016
, primarily because of expenses incurred by the acquired GNP operations and by increases in SG&A expenses incurred by our existing operations. Expenses incurred by the acquired GNP business contributed $7.3 million, or 19.2 percentage points, to the overall increase in SG&A expenses. Expenses incurred by our existing U.S. segment contributed $21.6 million, or 57.2 percentage points, to the overall increase in SG&A expenses. SG&A expense incurred by our existing U.S. segment increased primarily because of $14.0 million in transaction costs related to the Moy Park acquisition, a $2.1 million increase in wages and benefits, a $1.8 million increase in legal fees, a $1.0 million increase in charitable contributions, and a $1.0 million increase in depreciation expenses. Other factors affecting SG&A expense were individually immaterial.
|
(b)
|
SG&A expense incurred by our U.K. and Europe segment during the thirteen weeks ended
September 24, 2017
decreased
$3.3 million
, or
10.9%
, from SG&A expense incurred by our U.K. and Europe segment during the thirteen weeks ended
September 25, 2016
. SG&A expense incurred by our U.K. and Europe segment decreased primarily because of a $5.9 million decrease in management fees paid to JBS S.A.
, a $0.9 million increase in other selling expenses, a $0.6 million increase in personnel expenses and a $.6 million increase in amortization expense.
Other factors affecting SG&A expense were individually immaterial.
|
(c)
|
SG&A expense incurred by our Mexico segment during the thirteen weeks ended
September 24, 2017
increased
$0.6 million
, or
7.2%
, from SG&A expense incurred by our Mexico segment during the thirteen weeks ended
September 25, 2016
. SG&A expense incurred by our existing Mexico segment increased primarily because of a $0.9 million increase in employee relations, offset by a $0.2 million decrease in contracted security expenses. Other factors affecting SG&A expense were individually immaterial.
|
(d)
|
Administrative restructuring charges incurred by our U.S. segment during the thirteen weeks ended September 24, 2017 included $2.5 million in severance costs related to the GNP acquisition.
|
(e)
|
Administrative restructuring charges incurred by the U.K. and Europe segment during the thirteen weeks ended September 24, 2017 included a $1.7 million impairment of property in Dublin, Ireland.
|
Sources of net sales
|
|
Thirty-Nine
Weeks Ended September 24, 2017 |
|
Change from
Thirty-Nine Weeks Ended September 25, 2016 |
|
|||||||
Amount
|
|
Percent
|
|
|||||||||
|
|
(In thousands, except percent data)
|
|
|||||||||
United States
|
|
$
|
5,557,089
|
|
|
$
|
484,737
|
|
|
9.6
|
%
|
(a)
|
U.K. and Europe
|
|
1,473,854
|
|
|
(10,854
|
)
|
|
(0.7
|
)%
|
(b)
|
||
Mexico
|
|
994,568
|
|
|
43,946
|
|
|
4.6
|
%
|
(c)
|
||
Total net sales
|
|
$
|
8,025,511
|
|
|
$
|
517,829
|
|
|
6.9
|
%
|
|
(a)
|
U.S. net sales generated in the thirty-nine weeks ended
September 24, 2017
increased
$
484.7 million
, or
9.6%
, from U.S. net sales generated in the thirty-nine weeks ended
September 25, 2016
primarily because of net sales generated by the recently acquired GNP operations and an increase in net sales per pound experienced by our existing operations. The impact of the acquired business contributed $322.4 million, or 6.4 percentage points, to the increase in net sales. The net sales per pound increase experienced by our existing U.S. segment contributed $332.0 million, or 6.5 percentage points, to the increase in net sales. A decrease in sales volume experienced by our existing U.S. segment partially offset the effect that the acquired business and the increase in net sales per pound had on U.S. net sales by $169.6 million, or 3.3 percentage points. Decreased sales volume resulted primarily from lower demand for exported chicken products and domestic prepared foods products. Included in U.S. net sales generated during the thirty-nine weeks ended
September 24, 2017
and
September 25, 2016
were net sales to JBS USA Food Company totaling $37.4 million and $12.2 million, respectively.
|
(b)
|
U.K. and Europe net sales generated in the thirty-nine weeks ended
September 24, 2017
decreased
$10.9 million, or 0.7%, from U.K. and Europe net sales generated in the thirty-nine weeks ended
September 25, 2016
primarily because of the negative impact of foreign currency translation and increased sales volume. The negative impact of foreign currency translation contributed to the decrease in net sales by $135.3 million, or 9.1 percentage points. The negative impacts of foreign currency translation were offset by increased sales volume and net sales per pound by $51.7 million, or 3.5 percentage points, and $72.7 million, or 4.9 percentage points, respectively.
|
(c)
|
Mexico net sales generated in the thirty-nine weeks ended
September 24, 2017
increased
$
43.9 million
, or
4.6%
, from Mexico net sales generated in the thirty-nine weeks ended
September 25, 2016
primarily because of the increase in net sales per pound and increased sales volume. Higher net sales per pound, which resulted primarily from higher market prices, and increased sales volume resulted in increases in net sales of $68.3 million, or 7.2 percentage points, and $14.0 million, or 1.5 percentage points, respectively. The negative impact of foreign currency remeasurement partially offset the increase in net sales by $38.3 million, or 4.0 percentage points. Other factors affecting the decrease in Mexico net sales were immaterial.
|
Components of gross profit
|
|
Thirty-Nine
Weeks Ended
September 24, 2017 |
|
Change from
Thirty-Nine Weeks Ended September 25, 2016 |
|
Percent of Net Sales
|
|
|||||||||||
|
|
Thirty-Nine Weeks Ended
|
|
|||||||||||||||
|
Amount
|
|
Percent
|
|
September 24, 2017
|
|
September 25, 2016
|
|
||||||||||
|
|
In thousands, except percent data
|
|
|||||||||||||||
Net sales
|
|
$
|
8,025,511
|
|
|
$
|
517,829
|
|
|
6.9
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Cost of sales
|
|
6,815,701
|
|
|
183,133
|
|
|
2.8
|
%
|
|
84.9
|
%
|
|
88.3
|
%
|
(a)(b)
|
||
Gross profit
|
|
$
|
1,209,810
|
|
|
$
|
334,696
|
|
|
38.2
|
%
|
|
15.1
|
%
|
|
11.7
|
%
|
|
Sources of gross profit
|
|
Thirty-Nine
Weeks Ended September 24, 2017 |
|
Change from
Thirty-Nine Weeks Ended September 25, 2016 |
|
|||||||
Amount
|
|
Percent
|
|
|||||||||
|
|
(In thousands, except percent data)
|
|
|||||||||
United States
|
|
$
|
900,262
|
|
|
$
|
298,560
|
|
|
49.6
|
%
|
(a)
|
U.K. and Europe
|
|
137,734
|
|
|
(3,732
|
)
|
|
(2.6
|
)%
|
(b)
|
||
Mexico
|
|
171,745
|
|
|
39,871
|
|
|
30.2
|
%
|
(c)
|
||
Elimination
|
|
69
|
|
|
(1
|
)
|
|
(1.4
|
)%
|
|
||
Total gross profit
|
|
$
|
1,209,810
|
|
|
$
|
334,696
|
|
|
38.2
|
%
|
|
Sources of cost of sales
|
|
Thirty-Nine Weeks Ended
September 24, 2017 |
|
Change from
Thirty-Nine Weeks Ended September 25, 2016 |
|
|||||||
Amount
|
|
Percent
|
|
|||||||||
|
|
(In thousands, except percent data)
|
|
|||||||||
United States
|
|
$
|
4,656,825
|
|
|
$
|
186,177
|
|
|
4.2
|
%
|
(a)
|
U.K. and Europe
|
|
1,336,123
|
|
|
(7,120
|
)
|
|
(0.5
|
)%
|
(b)
|
||
Mexico
|
|
822,822
|
|
|
4,073
|
|
|
0.5
|
%
|
(c)
|
||
Elimination
|
|
(69
|
)
|
|
2
|
|
|
(2.8
|
)%
|
|
||
Total cost of sales
|
|
$
|
6,815,701
|
|
|
$
|
183,133
|
|
|
2.8
|
%
|
|
(a)
|
Cost of sales incurred by our U.S. segment during the thirty-nine weeks ended
September 24, 2017
increased
$
186.2 million
, or
4.2%
, from cost of sales incurred by our U.S. segment during the thirty-nine weeks ended
September 25, 2016
. Cost of sales increased primarily because of costs incurred by the acquired GNP operations. Cost of sales incurred by the acquired GNP operations contributed $267.3 million, or 6.0 percentage points, to the increase in U.S. cost of sales. A decrease in cost of sales incurred by our existing U.S. segment partially offset the impact that the acquired business had on cost of sales by $80.9 million, or 1.8 percentage points. Cost of sales incurred by our existing operations decreased primarily because of a $103.1 million decrease in feed costs, an $18.4 million net increase in derivative gains, a $7.3 million decrease in scrapped materials, partially offset by a $49.5 million increase in compensation and benefit costs and $1.9 million in damages to our Puerto Rico assets resulting from Hurricane Maria.
|
(b)
|
Cost of sales incurred by our U.K. and Europe segment during the thirty-nine weeks ended
September 24, 2017
decreased
$7.1 million, or 0.5%, from cost of sales incurred by our U.K. and Europe segment during the thirty-nine weeks ended
September 25, 2016
. The decrease in cost of sales was due to a $23.9 million increase in cost of raw materials, offset by a $16.3 million decrease in labor costs, a $12.5 million decrease in other cost of sales, and a $3.4 million decrease in bird amortization costs.
|
(c)
|
Cost of sales incurred by our Mexico segment during the thirty-nine weeks ended
September 24, 2017
increased
$
4.1 million
, or
0.5%
, from cost of sales incurred by our Mexico segment during the thirty-nine weeks ended
September 25, 2016
. The increase in cost of sales was primarily due to a $29.4 million increase in grower pay and a $6.0 million increase in utility costs that were partially offset by the $27.6 million impact of inventory valuation adjustments resulting from currency rate movement and a $3.8 million decrease in catching costs.
|
Components of operating income
|
|
Thirty-Nine
Weeks Ended September 24, 2017 |
|
Change from
Thirty-Nine Weeks Ended September 25, 2016 |
|
Percent of Net Sales
|
|
|||||||||||
Thirty-Nine Weeks Ended
|
|
|||||||||||||||||
Amount
|
|
Percent
|
|
September 24, 2017
|
|
September 25, 2016
|
|
|||||||||||
|
|
(In thousands, except percent data)
|
|
|||||||||||||||
Gross profit
|
|
$
|
1,209,810
|
|
|
$
|
334,696
|
|
|
38.2
|
%
|
|
15.1
|
%
|
|
11.7
|
%
|
|
SG&A expense
|
|
284,009
|
|
|
54,223
|
|
|
23.6
|
%
|
|
3.5
|
%
|
|
3.1
|
%
|
(a)(b)(c)
|
||
Administrative restructuring charges
|
|
8,496
|
|
|
8,217
|
|
|
2,945.2
|
%
|
|
0.1
|
%
|
|
—
|
%
|
(d)(e)
|
||
Operating income
|
|
$
|
917,305
|
|
|
$
|
272,256
|
|
|
42.2
|
%
|
|
11.5
|
%
|
|
8.6
|
%
|
|
Sources of operating income
|
|
Thirty-Nine
Weeks Ended September 24, 2017 |
|
Change from
Thirty-Nine Weeks Ended September 25, 2016 |
|
|||||||
Amount
|
|
Percent
|
|
|||||||||
|
|
(In thousands, except percent data)
|
|
|||||||||
United States
|
|
$
|
719,121
|
|
|
$
|
238,841
|
|
|
49.7
|
%
|
|
U.K. and Europe
|
|
51,874
|
|
|
(3,967
|
)
|
|
(7.1
|
)%
|
|
||
Mexico
|
|
146,241
|
|
|
37,385
|
|
|
34.3
|
%
|
|
||
Elimination
|
|
69
|
|
|
(3
|
)
|
|
(2.8
|
)%
|
|
||
Total operating income
|
|
$
|
917,305
|
|
|
$
|
272,256
|
|
|
42.2
|
%
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||
Sources of SG&A expense
|
|
Thirty-Nine
Weeks Ended September 24, 2017 |
|
Change from
Thirty-Nine Weeks Ended September 25, 2016 |
|
|||||||
Amount
|
|
Percent
|
|
|||||||||
|
|
(In thousands, except percent data)
|
|
|||||||||
United States
|
|
$
|
174,340
|
|
|
$
|
53,196
|
|
|
43.9
|
%
|
(a)
|
U.K. and Europe
|
|
84,165
|
|
|
(1,460
|
)
|
|
(1.7
|
)%
|
(b)
|
||
Mexico
|
|
25,504
|
|
|
2,487
|
|
|
10.8
|
%
|
(c)
|
||
Total SG&A expense
|
|
$
|
284,009
|
|
|
$
|
54,223
|
|
|
23.6
|
%
|
|
|
|
|
|
|
|
|
|
|||||
Sources of administrative restructuring charges
|
|
Thirty-Nine
Weeks Ended
September 24, 2017 |
|
Change from
Thirty-Nine Weeks Ended September 25, 2016 |
|
|||||||
Amount
|
|
Percent
|
|
|||||||||
|
|
(In thousands, except percent data)
|
|
|||||||||
United States
|
|
$
|
6,803
|
|
|
$
|
6,524
|
|
|
2,338.4
|
%
|
(d)
|
U.K. and Europe
|
|
1,693
|
|
|
1,693
|
|
|
—
|
%
|
(e)
|
||
Mexico
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
||
Total administrative restructuring charges
|
|
$
|
8,496
|
|
|
$
|
8,217
|
|
|
2,945.2
|
%
|
|
(a)
|
SG&A expense incurred by our U.S. segment during the thirty-nine weeks ended
September 24, 2017
increased
$
53.2 million
, or
43.9%
, from SG&A expense incurred by our U.S. segment during the thirty-nine weeks ended
September 25, 2016
, primarily because of expenses incurred by the acquired GNP operations and, to a lesser extent, by increases in SG&A expense incurred by our existing U.S. segment. Expenses incurred by the acquired GNP business contributed $27.4 million, or 22.6 percentage points, to the overall increase in SG&A expenses. Expenses incurred by our existing U.S. segment contributed $25.8 million, or 21.3 percentage points, to the overall increase in SG&A expenses. SG&A expenses incurred by our existing U.S. segment increased primarily because of $14.0 million in transaction costs related to the Moy Park acquisition, a $4.8 million increase in allocated costs charged for administrative functions shared with JBS USA Food Company, a $2.8 million increase in legal fees and a $2.1 million increase in advertising and promotion expenses. Other factors affecting SG&A expense were individually immaterial.
|
(b)
|
SG&A expense incurred by our U.K. and Europe segment during the thirty-nine weeks ended
September 24, 2017
decreased
$1.5 million, or 1.7%, from SG&A expense incurred by our U.K. and Europe segment during the thirty-nine weeks ended
September 25, 2016
primarily because of a $2.3 million decrease in advertising expenses and a $2.2 million decrease in management fees paid to JBS S.A. that were partially offset by a $1.2 million increase in amortization expenses and a $1.3 million increase in miscellaneous income from sale of assets.
|
(c)
|
SG&A expense incurred by our Mexico segment during the thirty-nine weeks ended
September 24, 2017
increased
$
2.5 million
, or
10.8%
, from SG&A expense incurred by our Mexico segment during the thirty-nine weeks ended
September 25, 2016
because of a $1.9 million increase in employee relations expenses and a $1.4 million increase advertising and promotion expenses that were partially offset by a $0.8 million decrease in contract service expenses. Other factors affecting SG&A expense were individually immaterial.
|
(d)
|
Administrative restructuring charges incurred by the U.S. segment during the thirty-nine weeks ended
September 24, 2017
included a $3.5 million impairment of the aggregate carrying amount of an asset group held for sale in Alabama, $2.6 million in severance costs related to the GNP acquisition and the elimination of prepaid costs totaling $0.7 million related to obsolete software assumed in the GNP acquisition,
|
(e)
|
Administrative restructuring charges incurred by the U.K. and Europe segment during the thirty-nine weeks ended
September 24, 2017
included a $1.7 million impairment of property in Dublin, Ireland.
|
Source of Liquidity
|
|
Facility
Amount
|
|
Amount
Outstanding
|
|
Amount
Available
|
|
||||||
|
|
(In millions)
|
|
||||||||||
Cash and cash equivalents
|
|
|
|
|
|
$
|
401.8
|
|
|
||||
Borrowing arrangements:
|
|
|
|
|
|
|
|
||||||
U.S. Credit Facility
|
|
$
|
750.0
|
|
|
$
|
73.3
|
|
|
631.9
|
|
(a)
|
|
Mexico Credit Facility
(b)
|
|
84.5
|
|
|
84.5
|
|
|
—
|
|
(b)
|
|||
U.K. and Europe Credit Facilities
(c)
|
|
122.8
|
|
|
13.9
|
|
|
108.9
|
|
|
(a)
|
Availability under the U.S. Credit Facility (as described below) is also reduced by our outstanding standby letters of credit. Standby letters of credit outstanding at
September 24, 2017
totaled $44.8 million.
|
(b)
|
As of
September 24, 2017
, the U.S. dollar-equivalent of the amount available under the Mexico Credit Facility (as described below) was $5,636. The Mexico Credit Facility provides for a loan commitment of $1.5 billion Mexican pesos.
|
(c)
|
As of
September 24, 2017
, the U.S. dollar-equivalent of the amount available under the U.K. and Europe Credit Facilities (as described below) was $108.9 million. The U.K. and Europe Credit Facilities provide for loan commitments of £45.0 million (or $60.1 million U.S. dollar equivalent), £20.0 million (or $26.8 million U.S. dollar equivalent) and €30.0 million (or $35.7 million U.S. dollar equivalent).
|
Contractual Obligations
(a)
|
|
Total
|
|
Less than
One Year
|
|
One to
Three Years
|
|
Three to
Five Years
|
|
Greater than
Five Years
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Long-term debt
(b)
|
|
$
|
2,618,378
|
|
|
$
|
809,734
|
|
|
$
|
164,987
|
|
|
$
|
1,143,657
|
|
|
$
|
500,000
|
|
Interest
(c)
|
|
431,220
|
|
|
83,945
|
|
|
155,926
|
|
|
119,474
|
|
|
71,875
|
|
|||||
Capital leases
|
|
10,803
|
|
|
5,780
|
|
|
4,999
|
|
|
24
|
|
|
—
|
|
|||||
Operating leases
|
|
230,887
|
|
|
50,444
|
|
|
78,295
|
|
|
51,915
|
|
|
50,233
|
|
|||||
Derivative liabilities
|
|
4,169
|
|
|
4,169
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchase obligations
(d)
|
|
122,505
|
|
|
122,505
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
3,417,962
|
|
|
$
|
1,076,577
|
|
|
$
|
404,207
|
|
|
$
|
1,315,070
|
|
|
$
|
622,108
|
|
(a)
|
The total amount of unrecognized tax benefits at
September 24, 2017
was $15.9 million. We did not include this amount in the contractual obligations table above as reasonable estimates cannot be made at this time of the amounts or timing of future cash outflows.
|
(b)
|
Long-term debt is presented at face value and excludes
$44.8 million
in letters of credit outstanding related to normal business transactions. Included in the long-term debt maturing in less than one year is the $753.8 million JBS S.A. Promissory Note, which was paid off on October 2, 2017 using the net proceeds from the sale of Senior Notes due 2027 on September 29, 2017 and the $250.0 million add-on to existing Senior Notes.
|
(c)
|
Interest expense in the table above assumes the continuation of interest rates and outstanding borrowings as of
September 24, 2017
.
|
(d)
|
Includes agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
|
•
|
Matters affecting the chicken industry generally, including fluctuations in the commodity prices of feed ingredients and chicken;
|
•
|
Our ability to obtain and maintain commercially reasonable terms with vendors and service providers;
|
•
|
Our ability to maintain contracts that are critical to our operations;
|
•
|
Our ability to retain management and other key individuals;
|
•
|
Outbreaks of avian influenza or other diseases, either in our own flocks or elsewhere, affecting our ability to conduct our operations and/or demand for our poultry products;
|
•
|
Contamination of our products, which has previously and can in the future lead to product liability claims and product recalls;
|
•
|
Exposure to risks related to product liability, product recalls, property damage and injuries to persons, for which insurance coverage is expensive, limited and potentially inadequate;
|
•
|
Changes in laws or regulations affecting our operations or the application thereof;
|
•
|
Our ability to ensure that our directors, officers, employees, agents, third-party intermediaries and the companies to which we outsource certain of our business operations will comply with anti-corruption laws or other laws governing the conduct of business with government entities;
|
•
|
New immigration legislation or increased enforcement efforts in connection with existing immigration legislation that cause our costs of business to increase, cause us to change the way in which we do business or otherwise disrupt our operations;
|
•
|
Competitive factors and pricing pressures or the loss of one or more of our largest customers;
|
•
|
Inability to consummate, or effectively integrate, any acquisition, including the acquisitions of Moy Park and GNP, or to realize the associated anticipated cost savings and operating synergies;
|
•
|
Currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and other risks associated with foreign segments;
|
•
|
Restrictions imposed by, and as a result of, Pilgrim's Pride's leverage;
|
•
|
Disruptions in international markets and distribution channels;
|
•
|
Our ability to maintain favorable labor relations with our employees and our compliance with labor laws;
|
•
|
Extreme weather or natural disasters;
|
•
|
The impact of uncertainties in litigation; and
|
•
|
Other risks described herein and under “Risk Factors” in our annual report on Form 10-K for the year ended December 25, 2016 as filed with the SEC.
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
It could affect our ability to satisfy our obligations under our credit agreements and any other financing arrangements;
|
•
|
A substantial portion of our cash flow from operations is required to be dedicated to interest and principal payments and may not be available for operations, working capital, capital expenditures, expansion, acquisitions or general corporate or other purposes;
|
•
|
Our ability to obtain additional financing and to fund working capital, capital expenditures and other general corporate requirements in the future may be impaired;
|
•
|
We may be more highly leveraged than some of our competitors, which may place us at a competitive disadvantage;
|
•
|
Our flexibility in planning for, or reacting to, changes in our business may be limited;
|
•
|
It may limit our ability to pursue acquisitions and sell assets; and
|
•
|
It may make us more vulnerable in the event of a continued or new downturn in our business or the economy in general.
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Issuer Purchases of Equity Securities
|
||||||||||||||
Period
|
|
Total Number of Shares Purchased
|
|
Average Price
Paid per Share |
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of the Shares That May Yet Be Purchased Under the Plans or Programs
|
||||||
June 26, 2017 through July 23, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
72,913,018
|
|
July 24, 2017 through August 27, 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
72,913,018
|
|
||
August 28, 2017 through September 24, 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
72,913,018
|
|
||
Total
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
72,913,018
|
|
*
|
|
Filed herewith.
|
**
|
|
Furnished herewith.
|
|
|
PILGRIM’S PRIDE CORPORATION
|
|
|
|
Date: November 7, 2017
|
|
/s/ Fabio Sandri
|
|
|
Fabio Sandri
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer, Chief Accounting Officer and Duly Authorized Officer)
|
ARTICLE 1
|
NAME AND OFFICES 1
|
1.1
|
Name 1
|
1.2
|
Registered Office and Agent 1
|
1.3
|
Other Offices 1
|
ARTICLE 2
|
STOCKHOLDERS 1
|
2.1
|
Place of Meetings 1
|
2.2
|
Annual Meetings 1
|
2.3
|
Special Meetings 2
|
2.4
|
Notice 2
|
2.5
|
Voting List 3
|
2.6
|
Quorum 3
|
2.7
|
Requisite Vote 4
|
2.8
|
Withdrawal of Quorum 4
|
2.9
|
Voting at Meeting 4
|
(a)
|
Voting Power 4
|
(b)
|
Exercise of Voting Power; Proxies 4
|
(c)
|
Election of Directors 5
|
2.10
|
Record Date 5
|
2.11
|
No Actions Without Meeting 6
|
2.12
|
Stockholder Proposals 6
|
|
1
|
|
ARTICLE 3
|
DIRECTORS 8
|
3.1
|
Management Powers 8
|
3.2
|
Number and Qualification 8
|
3.3
|
Composition of the Board 8
|
3.4
|
Term of Office 10
|
3.5
|
Voting on Directors 11
|
3.6
|
Vacancies 11
|
3.7
|
Removal 12
|
3.8
|
Meetings 12
|
(a)
|
Place 12
|
(b)
|
Annual Meeting 12
|
(c)
|
Regular Meetings 12
|
(d)
|
Special Meetings 12
|
(e)
|
Notice and Waiver of Notice 12
|
(f)
|
Quorum 13
|
(g)
|
Requisite Vote 13
|
3.9
|
Action Without Meetings 13
|
3.10
|
Committees 13
|
(a)
|
Designation and Appointment 13
|
(b)
|
Members; Alternate Members; Terms 14
|
|
2
|
|
(c)
|
Authority 14
|
(d)
|
Records 14
|
(e)
|
Change in Number 14
|
(f)
|
Special Nominating Committees 14
|
(g)
|
Removal 16
|
(h)
|
Meetings 16
|
(i)
|
Quorum; Requisite Vote 16
|
(j)
|
Actions Without Meetings 16
|
(k)
|
Responsibility 16
|
3.11
|
Compensation 16
|
3.12
|
Maintenance of Records 17
|
3.13
|
Interested Directors and Officers 17
|
ARTICLE 4
|
NOTICES 18
|
4.1
|
Method of Notice 18
|
4.2
|
Waiver 18
|
ARTICLE 5
|
OFFICERS AND AGENTS 19
|
5.1
|
Designation 19
|
5.2
|
Election of Officers 19
|
5.3
|
Qualifications 19
|
5.4
|
Term of Office 19
|
|
3
|
|
5.5
|
Authority 20
|
5.6
|
Removal 20
|
5.7
|
Vacancies 20
|
5.8
|
Compensation 20
|
5.9
|
Chairman of the Board 20
|
5.10
|
Chief Executive Officer 21
|
5.11
|
Chief Financial Officer 21
|
5.12
|
Chief Operating Officer 22
|
5.13
|
President 22
|
5.14
|
Vice Presidents 22
|
5.15
|
Secretary 23
|
5.16
|
Assistant Secretaries 23
|
5.17
|
Treasurer 23
|
5.18
|
Assistant Treasurers 24
|
ARTICLE 6
|
INDEMNIFICATION 24
|
6.1
|
Mandatory Indemnification 24
|
6.2
|
Determination of Indemnification 25
|
6.3
|
Advancement of Expenses 26
|
6.4
|
Right of Indemnitee to Bring Suit 26
|
6.5
|
Permissive Indemnification 28
|
6.6
|
Nature of Indemnification 28
|
|
4
|
|
6.7
|
Insurance 28
|
ARTICLE 7
|
STOCK CERTIFICATES AND TRANSFER REGULATIONS 29
|
7.1
|
Description of Certificates 29
|
7.2
|
Signatures 30
|
7.3
|
Registered Owners 30
|
7.4
|
Lost, Stolen or Destroyed Certificates 31
|
(a)
|
Proof of Loss 31
|
(b)
|
Timely Request 31
|
(c)
|
Bond 31
|
(d)
|
Other Requirements 31
|
7.5
|
Registration of Transfers 32
|
(a)
|
Endorsement 32
|
(b)
|
Guaranty and Effectiveness of Signature 32
|
(c)
|
Adverse Claims 32
|
(d)
|
Collection of Taxes 32
|
(e)
|
Additional Requirements Satisfied 32
|
7.6
|
Restrictions on Transfer and Legends on Certificates 33
|
(a)
|
Shares in Classes or Series 33
|
(b)
|
Restriction on Transfer 33
|
|
5
|
|
ARTICLE 8
|
GENERAL PROVISIONS 33
|
8.1
|
Dividends 33
|
8.2
|
Reserves 33
|
8.3
|
Books and Records 34
|
8.4
|
Contracts and Negotiable Instruments 34
|
8.5
|
Fiscal Year 35
|
8.6
|
Corporate Seal 35
|
8.7
|
Resignations 35
|
8.8
|
Amendment of Bylaws 35
|
8.9
|
Construction 36
|
8.10
|
Telephone Meetings 36
|
8.11
|
Table of Contents; Captions 37
|
ARTICLE 9
|
DEFINITIONS 37
|
ARTICLE 10
|
FORUM FOR ADJUDICATION OF DISPUTES 40
|
|
6
|
|
|
Thirty-Nine Weeks Ended
|
||||||
|
September 24, 2017
|
|
September 25, 2016
|
||||
|
(In thousands)
|
||||||
Earnings:
|
|
|
|
||||
Income before income taxes
|
$
|
862,288
|
|
|
$
|
597,664
|
|
Add: Total fixed charges (see below)
|
81,091
|
|
|
68,332
|
|
||
Less: Interest capitalized
|
5,345
|
|
|
1,653
|
|
||
Total earnings
|
$
|
938,034
|
|
|
$
|
664,343
|
|
|
|
|
|
||||
Fixed charges:
|
|
|
|
||||
Interest
(a)
|
$
|
71,660
|
|
|
$
|
60,133
|
|
Portion of noncancelable lease expense representative of interest factor
(b)
|
9,431
|
|
|
8,200
|
|
||
Total fixed charges
|
$
|
81,091
|
|
|
$
|
68,333
|
|
|
|
|
|
||||
Ratio of earnings to fixed charges
|
11.57
|
|
|
9.72
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended
September 24, 2017
, of Pilgrim's Pride Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: November 7, 2017
|
|
/s/ William W. Lovette
|
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William W. Lovette
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Principal Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended
September 24, 2017
, of Pilgrim's Pride Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date: November 7, 2017
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/s/ Fabio Sandri
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Fabio Sandri
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Chief Financial Officer
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Date: November 7, 2017
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/s/ William W. Lovette
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William W. Lovette
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Principal Executive Officer
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Date: November 7, 2017
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/s/ Fabio Sandri
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Fabio Sandri
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Chief Financial Officer
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