FORM 10-Q
|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
75-1285071
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
1770 Promontory Circle,
Greeley, CO
|
|
80634-9038
|
(Address of principal executive offices)
|
|
(Zip code)
|
Title of each class
|
|
Trading Symbol
|
|
Name of Exchange on Which Registered
|
Common Stock, Par Value $0.01
|
|
PPC
|
|
The NASDAQ Stock Market LLC
|
Large Accelerated Filer
|
ý
|
|
Accelerated Filer
|
|
¨
|
Non-accelerated Filer
|
¨
|
|
Smaller reporting company
|
|
¨
|
|
|
|
Emerging growth company
|
|
¨
|
|
||
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 6.
|
||
PART I.
|
FINANCIAL INFORMATION
|
ITEM 1.
|
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
PILGRIM’S PRIDE CORPORATION
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
(Unaudited)
|
||||||||
|
||||||||
|
|
March 31, 2019
|
|
December 30, 2018
|
||||
|
|
(In thousands)
|
||||||
Cash and cash equivalents
|
|
$
|
378,518
|
|
|
$
|
338,386
|
|
Restricted cash and cash equivalents
|
|
20,373
|
|
|
23,192
|
|
||
Trade accounts and other receivables, less allowance for
doubtful accounts
|
|
564,055
|
|
|
561,549
|
|
||
Accounts receivable from related parties
|
|
854
|
|
|
1,331
|
|
||
Inventories
|
|
1,166,002
|
|
|
1,159,519
|
|
||
Income taxes receivable
|
|
31,985
|
|
|
38,479
|
|
||
Prepaid expenses and other current assets
|
|
124,265
|
|
|
112,023
|
|
||
Assets held for sale
|
|
178
|
|
|
178
|
|
||
Total current assets
|
|
2,286,230
|
|
|
2,234,657
|
|
||
Deferred tax assets
|
|
4,166
|
|
|
4,248
|
|
||
Other long-lived assets
|
|
16,275
|
|
|
16,717
|
|
||
Identified intangible assets, net
|
|
569,870
|
|
|
564,128
|
|
||
Goodwill
|
|
970,640
|
|
|
949,750
|
|
||
Operating lease assets, net
|
|
330,040
|
|
|
—
|
|
||
Property, plant and equipment, net
|
|
2,195,706
|
|
|
2,161,702
|
|
||
Total assets
|
|
$
|
6,372,927
|
|
|
$
|
5,931,202
|
|
|
|
|
|
|
||||
Accounts payable
|
|
$
|
818,482
|
|
|
$
|
830,059
|
|
Accounts payable to related parties
|
|
5,550
|
|
|
7,269
|
|
||
Revenue contract liability
|
|
25,812
|
|
|
33,328
|
|
||
Accrued expenses and other current liabilities
|
|
472,365
|
|
|
386,941
|
|
||
Income taxes payable
|
|
7,884
|
|
|
8,221
|
|
||
Current maturities of long-term debt
|
|
27,637
|
|
|
30,405
|
|
||
Total current liabilities
|
|
1,357,730
|
|
|
1,296,223
|
|
||
Noncurrent operating lease liability, less current maturities
|
|
252,281
|
|
|
—
|
|
||
Long-term debt, less current maturities
|
|
2,303,735
|
|
|
2,295,190
|
|
||
Noncurrent income taxes payable
|
|
7,731
|
|
|
7,731
|
|
||
Deferred tax liabilities
|
|
236,931
|
|
|
237,422
|
|
||
Other long-term liabilities
|
|
70,019
|
|
|
75,051
|
|
||
Total liabilities
|
|
4,228,427
|
|
|
3,911,617
|
|
||
Common stock
|
|
2,609
|
|
|
2,604
|
|
||
Treasury stock
|
|
(231,994
|
)
|
|
(231,994
|
)
|
||
Additional paid-in capital
|
|
1,947,013
|
|
|
1,945,136
|
|
||
Retained earnings
|
|
505,899
|
|
|
421,888
|
|
||
Accumulated other comprehensive loss
|
|
(88,926
|
)
|
|
(127,834
|
)
|
||
Total Pilgrim’s Pride Corporation stockholders’ equity
|
|
2,134,601
|
|
|
2,009,800
|
|
||
Noncontrolling interest
|
|
9,899
|
|
|
9,785
|
|
||
Total stockholders’ equity
|
|
2,144,500
|
|
|
2,019,585
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
6,372,927
|
|
|
$
|
5,931,202
|
|
PILGRIM’S PRIDE CORPORATION
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
||||||||
(Unaudited)
|
||||||||
|
|
|
|
|
||||
|
|
Thirteen Weeks Ended
|
||||||
|
|
March 31, 2019
|
|
April 1, 2018
|
||||
|
|
(In thousands, except per share data)
|
||||||
Net sales
|
|
$
|
2,724,675
|
|
|
$
|
2,746,678
|
|
Cost of sales
|
|
2,505,736
|
|
|
2,459,013
|
|
||
Gross profit
|
|
218,939
|
|
|
287,665
|
|
||
Selling, general and administrative expense
|
|
81,924
|
|
|
85,283
|
|
||
Administrative restructuring activity
|
|
(27
|
)
|
|
789
|
|
||
Operating income
|
|
137,042
|
|
|
201,593
|
|
||
Interest expense, net of capitalized interest
|
|
33,562
|
|
|
50,300
|
|
||
Interest income
|
|
(3,340
|
)
|
|
(1,590
|
)
|
||
Foreign currency transaction loss (gain)
|
|
2,636
|
|
|
(1,721
|
)
|
||
Miscellaneous, net
|
|
(357
|
)
|
|
(1,617
|
)
|
||
Income before income taxes
|
|
104,541
|
|
|
156,221
|
|
||
Income tax expense
|
|
20,416
|
|
|
36,997
|
|
||
Net income
|
|
84,125
|
|
|
119,224
|
|
||
Less: Net income (loss) attributable to noncontrolling
interests
|
|
114
|
|
|
(194
|
)
|
||
Net income attributable to Pilgrim’s Pride Corporation
|
|
$
|
84,011
|
|
|
$
|
119,418
|
|
|
|
|
|
|
||||
Weighted average shares of Pilgrim's Pride Corporation common stock outstanding:
|
|
|
|
|
||||
Basic
|
|
249,167
|
|
|
248,838
|
|
||
Effect of dilutive common stock equivalents
|
|
390
|
|
|
151
|
|
||
Diluted
|
|
249,557
|
|
|
248,989
|
|
||
|
|
|
|
|
||||
Net income attributable to Pilgrim’s Pride Corporation
per share of common stock outstanding:
|
|
|
|
|
||||
Basic
|
|
$
|
0.34
|
|
|
$
|
0.48
|
|
Diluted
|
|
$
|
0.34
|
|
|
$
|
0.48
|
|
PILGRIM’S PRIDE CORPORATION
|
|||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|||||||||
(Unaudited)
|
|||||||||
|
|||||||||
|
|
Thirteen Weeks Ended
|
|||||||
|
|
March 31, 2019
|
|
April 1, 2018
|
|||||
|
|
(In thousands)
|
|||||||
Net income
|
|
$
|
84,125
|
|
|
$
|
119,224
|
|
|
Other comprehensive income:
|
|
|
|
|
|||||
Foreign currency translation adjustment
|
|
|
|
|
|||||
Gains arising during the period
|
|
37,442
|
|
|
52,565
|
|
|||
Income tax effect
|
|
—
|
|
|
(37
|
)
|
|||
Derivative financial instruments designated as cash
flow hedges |
|
|
|
|
|||||
Losses arising during the period
|
|
(898
|
)
|
|
(15
|
)
|
|||
Reclassification to net earnings for losses (gains) realized
|
|
(221
|
)
|
|
250
|
|
|||
Available-for-sale securities
|
|
|
|
|
|||||
Gains arising during the period
|
|
22
|
|
|
374
|
|
|||
Income tax effect
|
|
(5
|
)
|
|
(91
|
)
|
|||
Reclassification to net earnings for gains realized
|
|
(135
|
)
|
|
(172
|
)
|
|||
Income tax effect
|
|
34
|
|
|
42
|
|
|||
Defined benefit plans
|
|
|
|
|
|||||
Gains arising during the period
|
|
3,200
|
|
|
5,899
|
|
|||
Income tax effect
|
|
(779
|
)
|
|
(1,434
|
)
|
|||
Reclassification to net earnings of losses realized
|
|
328
|
|
|
301
|
|
|||
Income tax effect
|
|
(80
|
)
|
|
(73
|
)
|
|||
Total other comprehensive income, net of tax
|
|
38,908
|
|
|
57,609
|
|
|||
Comprehensive income
|
|
123,033
|
|
|
176,833
|
|
|||
Less: Comprehensive income (loss) attributable to noncontrolling interests
|
|
114
|
|
|
(194
|
)
|
|||
Comprehensive income attributable to Pilgrim's Pride Corporation
|
|
$
|
122,919
|
|
|
$
|
177,027
|
|
PILGRIM’S PRIDE CORPORATION
|
||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED 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)
|
||||||||||||||||||||||||||||||||
Balance at December 30, 2018
|
|
260,396
|
|
|
$
|
2,604
|
|
|
(11,431
|
)
|
|
$
|
(231,994
|
)
|
|
$
|
1,945,136
|
|
|
$
|
421,888
|
|
|
$
|
(127,834
|
)
|
|
$
|
9,785
|
|
|
$
|
2,019,585
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
84,011
|
|
|
—
|
|
|
114
|
|
|
84,125
|
|
|||||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38,908
|
|
|
—
|
|
|
38,908
|
|
|||||||
Share-based compensation plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Common stock issued under compensation plans
|
|
459
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Requisite service period recognition
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,882
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,882
|
|
|||||||
Balance at March 31, 2019
|
|
260,855
|
|
|
$
|
2,609
|
|
|
(11,431
|
)
|
|
$
|
(231,994
|
)
|
|
$
|
1,947,013
|
|
|
$
|
505,899
|
|
|
$
|
(88,926
|
)
|
|
$
|
9,899
|
|
|
$
|
2,144,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance at December 31, 2017
|
|
260,168
|
|
|
$
|
2,602
|
|
|
(11,416
|
)
|
|
$
|
(231,758
|
)
|
|
$
|
1,932,509
|
|
|
$
|
173,943
|
|
|
$
|
(31,140
|
)
|
|
$
|
9,505
|
|
|
$
|
1,855,661
|
|
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
119,418
|
|
|
—
|
|
|
(194
|
)
|
|
119,224
|
|
|||||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57,609
|
|
|
—
|
|
|
57,609
|
|
|||||||
Share-based compensation plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Common stock issued under compensation plans
|
|
228
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Requisite service period recognition
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,273
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,273
|
|
|||||||
Balance at April 1, 2018
|
|
260,396
|
|
|
$
|
2,604
|
|
|
(11,416
|
)
|
|
$
|
(231,758
|
)
|
|
$
|
1,933,780
|
|
|
$
|
293,361
|
|
|
$
|
26,469
|
|
|
$
|
9,311
|
|
|
$
|
2,033,767
|
|
PILGRIM’S PRIDE CORPORATION
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
|
||||||||
|
|
Thirteen Weeks Ended
|
||||||
|
|
March 31, 2019
|
|
April 1, 2018
|
||||
|
|
(In thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
84,125
|
|
|
$
|
119,224
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
67,182
|
|
|
67,444
|
|
||
Loan cost amortization
|
|
1,201
|
|
|
1,757
|
|
||
Share-based compensation
|
|
1,882
|
|
|
1,273
|
|
||
Foreign currency transaction loss (gain) related to borrowing arrangements
|
|
(1,034
|
)
|
|
5,745
|
|
||
Deferred income tax benefit
|
|
(4,089
|
)
|
|
(4,735
|
)
|
||
Accretion of discount related to Senior Notes
|
|
246
|
|
|
76
|
|
||
Amortization of premium related to Senior Notes
|
|
(167
|
)
|
|
(167
|
)
|
||
Loss (gain) on property disposals
|
|
(108
|
)
|
|
80
|
|
||
Gain on equity-method investments
|
|
(16
|
)
|
|
(16
|
)
|
||
Noncash loss on early extinguishment of debt
|
|
—
|
|
|
3,918
|
|
||
Asset impairment
|
|
—
|
|
|
470
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Trade accounts and other receivables
|
|
2,381
|
|
|
(61,945
|
)
|
||
Inventories
|
|
(1,368
|
)
|
|
19,541
|
|
||
Prepaid expenses and other current assets
|
|
(11,479
|
)
|
|
(20,777
|
)
|
||
Accounts payable, accrued expenses and other current liabilities
|
|
(21,968
|
)
|
|
(29,171
|
)
|
||
Income taxes
|
|
6,579
|
|
|
(98,784
|
)
|
||
Long-term pension and other postretirement obligations
|
|
(1,315
|
)
|
|
(2,759
|
)
|
||
Other operating assets and liabilities
|
|
(1,683
|
)
|
|
(534
|
)
|
||
Cash provided by operating activities
|
|
120,369
|
|
|
640
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Acquisitions of property, plant and equipment
|
|
(87,941
|
)
|
|
(76,681
|
)
|
||
Proceeds from property disposals
|
|
539
|
|
|
1,021
|
|
||
Cash used in investing activities
|
|
(87,402
|
)
|
|
(75,660
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Proceeds from revolving line of credit and long-term borrowings
|
|
67,193
|
|
|
502,341
|
|
||
Payments on revolving line of credit, long-term borrowings and capital lease
obligations |
|
(62,293
|
)
|
|
(433,550
|
)
|
||
Proceeds (payment) from equity contribution (distribution) under Tax Sharing Agreement between JBS USA Food Company Holdings and Pilgrim’s Pride Corporation
|
|
(525
|
)
|
|
5,558
|
|
||
Payment of capitalized loan costs
|
|
(458
|
)
|
|
(4,061
|
)
|
||
Cash provided by financing activities
|
|
3,917
|
|
|
70,288
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
429
|
|
|
6,669
|
|
||
Increase in cash, cash equivalents and restricted cash
|
|
37,313
|
|
|
1,937
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
|
361,578
|
|
|
589,531
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
398,891
|
|
|
$
|
591,468
|
|
1.
|
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
|
|
|
March 31, 2019
|
|
December 30, 2018
|
||||
|
|
(In thousands)
|
||||||
Cash and cash equivalents
|
|
$
|
378,518
|
|
|
$
|
338,386
|
|
Restricted cash
|
|
20,373
|
|
|
23,192
|
|
||
Total cash, cash equivalents and restricted cash shown in the
Condensed Consolidated Statements of Cash Flows |
|
$
|
398,891
|
|
|
$
|
361,578
|
|
2.
|
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.
|
|
|
March 31, 2019
|
||||||
|
|
Level 1
|
|
Total
|
||||
|
|
(In thousands)
|
||||||
Fair value assets:
|
|
|
|
|
||||
Commodity futures instruments
|
|
$
|
2,207
|
|
|
$
|
2,207
|
|
Commodity options instruments
|
|
1,384
|
|
|
1,384
|
|
||
Foreign currency instruments
|
|
1,009
|
|
|
1,009
|
|
||
Fair value liabilities:
|
|
|
|
|
||||
Commodity futures instruments
|
|
(7,677
|
)
|
|
(7,677
|
)
|
||
Commodity options instruments
|
|
(3,439
|
)
|
|
(3,439
|
)
|
||
Foreign currency instruments
|
|
(2,034
|
)
|
|
(2,034
|
)
|
|
|
December 30, 2018
|
||||||
|
|
Level 1
|
|
Total
|
||||
|
|
(In thousands)
|
||||||
Fair value assets:
|
|
|
|
|
||||
Commodity futures instruments
|
|
$
|
2,244
|
|
|
$
|
2,244
|
|
Foreign currency instruments
|
|
1,311
|
|
|
1,311
|
|
||
Fair value liabilities:
|
|
|
|
|
||||
Commodity futures instruments
|
|
(1,479
|
)
|
|
(1,479
|
)
|
||
Commodity option instruments
|
|
(3,312
|
)
|
|
(3,312
|
)
|
||
Foreign currency instruments
|
|
(6,649
|
)
|
|
(6,649
|
)
|
|
|
March 31, 2019
|
|
December 30, 2018
|
||||||||||||
|
|
Carrying
Amount |
|
Fair
Value |
|
Carrying
Amount |
|
Fair
Value |
||||||||
|
|
|
|
(In thousands)
|
|
|
||||||||||
Fixed-rate senior notes payable at 5.75%, at Level 1 inputs
|
|
$
|
(1,002,396
|
)
|
|
$
|
(1,014,930
|
)
|
|
$
|
(1,002,497
|
)
|
|
$
|
(937,300
|
)
|
Fixed-rate senior notes payable at 5.875%, at Level 1 inputs
|
|
(843,896
|
)
|
|
(856,333
|
)
|
|
(843,717
|
)
|
|
(768,188
|
)
|
||||
Secured loans, at Level 3 inputs
|
|
(2,990
|
)
|
|
(2,936
|
)
|
|
(319
|
)
|
|
(319
|
)
|
3.
|
TRADE ACCOUNTS AND OTHER RECEIVABLES
|
|
|
March 31, 2019
|
|
December 30, 2018
|
||||
|
|
(In thousands)
|
||||||
Trade accounts receivable
|
|
$
|
524,466
|
|
|
$
|
533,645
|
|
Notes receivable - current
|
|
4,630
|
|
|
4,630
|
|
||
Other receivables
|
|
43,114
|
|
|
31,331
|
|
||
Receivables, gross
|
|
572,210
|
|
|
569,606
|
|
||
Allowance for doubtful accounts
|
|
(8,155
|
)
|
|
(8,057
|
)
|
||
Receivables, net
|
|
$
|
564,055
|
|
|
$
|
561,549
|
|
|
|
|
|
|
||||
Accounts receivable from related parties(a)
|
|
$
|
854
|
|
|
$
|
1,331
|
|
Balance, beginning of period
|
|
$
|
(8,057
|
)
|
Provision charged to operating results
|
|
(261
|
)
|
|
Account write-offs and recoveries
|
|
78
|
|
|
Effect of exchange rate
|
|
85
|
|
|
Balance, end of period
|
|
$
|
(8,155
|
)
|
4.
|
INVENTORIES
|
|
March 31, 2019
|
|
December 30, 2018
|
||||
|
(In thousands)
|
||||||
Raw materials and work in process
|
$
|
744,811
|
|
|
$
|
747,801
|
|
Finished products
|
324,604
|
|
|
317,410
|
|
||
Operating supplies
|
43,966
|
|
|
43,825
|
|
||
Maintenance materials and parts
|
52,621
|
|
|
50,483
|
|
||
Total inventories
|
$
|
1,166,002
|
|
|
$
|
1,159,519
|
|
5.
|
INVESTMENTS IN SECURITIES
|
|
|
March 31, 2019
|
|
December 30, 2018
|
||||||||||||
|
|
Cost
|
|
Fair
Value |
|
Cost
|
|
Fair
Value |
||||||||
|
|
(In thousands)
|
||||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Fixed income securities
|
|
$
|
150,812
|
|
|
$
|
150,812
|
|
|
$
|
135,286
|
|
|
$
|
135,286
|
|
Other
|
|
88,151
|
|
|
88,151
|
|
|
67,474
|
|
|
67,474
|
|
6.
|
DERIVATIVE FINANCIAL INSTRUMENTS
|
|
March 31, 2019
|
|
December 30, 2018
|
||||
|
(Fair values in thousands)
|
||||||
Fair values:
|
|
|
|
||||
Commodity derivative assets
|
$
|
3,591
|
|
|
$
|
2,263
|
|
Commodity derivative liabilities
|
(11,116
|
)
|
|
(4,791
|
)
|
||
Foreign currency derivative assets
|
1,009
|
|
|
1,311
|
|
||
Foreign currency derivative liabilities
|
(2,034
|
)
|
|
(6,649
|
)
|
||
Cash collateral posted with brokers(a)
|
20,373
|
|
|
23,192
|
|
||
Derivatives coverage(b):
|
|
|
|
||||
Corn
|
12.0
|
%
|
|
6.0
|
%
|
||
Soybean meal
|
7.0
|
%
|
|
6.0
|
%
|
||
Period through which stated percent of needs are covered:
|
|
|
|
||||
Corn
|
March 2020
|
|
|
March 2020
|
|
||
Soybean meal
|
December 2019
|
|
|
December 2019
|
|
(a)
|
Collateral posted with brokers consists primarily of cash, short-term treasury bills, or other cash equivalents.
|
(b)
|
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
|
||||||
|
Thirteen Weeks Ended
|
||||||
|
March 31, 2019
|
|
April 1, 2018
|
||||
|
(In thousands)
|
||||||
Foreign currency derivatives
|
$
|
(915
|
)
|
|
$
|
1
|
|
Total
|
$
|
(915
|
)
|
|
$
|
1
|
|
|
|
|
|
||||
|
Gain (Loss) Reclassified from AOCI into Income
|
||||||
|
Thirteen Weeks Ended
|
||||||
|
March 31, 2019
|
|
April 1, 2018
|
||||
|
(In thousands)
|
||||||
Foreign currency derivatives
|
$
|
221
|
|
|
$
|
(250
|
)
|
Total
|
$
|
221
|
|
|
$
|
(250
|
)
|
7.
|
GOODWILL AND INTANGIBLE ASSETS
|
|
|
December 30, 2018
|
|
Currency Translation
|
|
March 31, 2019
|
||||||
|
|
(In thousands)
|
||||||||||
U.S.
|
|
$
|
41,936
|
|
|
$
|
—
|
|
|
$
|
41,936
|
|
U.K. and Europe
|
|
782,207
|
|
|
20,890
|
|
|
803,097
|
|
|||
Mexico
|
|
125,607
|
|
|
—
|
|
|
125,607
|
|
|||
Total
|
|
$
|
949,750
|
|
|
$
|
20,890
|
|
|
$
|
970,640
|
|
|
|
December 30, 2018
|
|
Amortization
|
|
Currency Translation
|
|
March 31, 2019
|
||||||||
|
(In thousands)
|
|||||||||||||||
Cost:
|
|
|
|
|
|
|
|
|
||||||||
Trade names
|
|
$
|
78,343
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
78,343
|
|
Customer relationships
|
|
247,706
|
|
|
—
|
|
|
2,326
|
|
|
250,032
|
|
||||
Non-compete agreements
|
|
320
|
|
|
—
|
|
|
—
|
|
|
320
|
|
||||
Trade names not subject to amortization
|
|
380,067
|
|
|
—
|
|
|
9,891
|
|
|
389,958
|
|
||||
Accumulated amortization:
|
|
|
|
|
|
|
|
|
||||||||
Trade names
|
|
(43,552
|
)
|
|
(491
|
)
|
|
—
|
|
|
(44,043
|
)
|
||||
Customer relationships
|
|
(98,441
|
)
|
|
(5,191
|
)
|
|
(791
|
)
|
|
(104,423
|
)
|
||||
Non-compete agreements
|
|
(315
|
)
|
|
(2
|
)
|
|
—
|
|
|
(317
|
)
|
||||
Total
|
|
$
|
564,128
|
|
|
$
|
(5,684
|
)
|
|
$
|
11,426
|
|
|
$
|
569,870
|
|
Customer relationships
|
5-16 years
|
Trade names
|
3-20 years
|
Non-compete agreements
|
3 years
|
8.
|
LEASES
|
|
Thirteen Weeks Ended
|
||
|
March 31, 2019
|
||
|
(In thousands)
|
||
Operating lease cost (a)
|
$
|
25,663
|
|
Finance lease cost
|
|
||
Amortization of finance leases
|
27
|
|
|
Interest on finance leases
|
3
|
|
|
Short-term and variable lease cost
|
14,218
|
|
|
Net lease cost
|
$
|
39,911
|
|
|
March 31, 2019
|
Weighted-average remaining lease term (years):
|
|
Operating leases
|
6.35
|
Finance leases
|
1.75
|
Weighted-average discount rate:
|
|
Operating leases
|
4.80%
|
Finance leases
|
8.51%
|
|
Thirteen Weeks Ended
|
||
|
March 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
23,994
|
|
Financing cash flows from finance leases
|
27
|
|
|
|
|
||
Operating lease assets obtained in exchange for operating lease liabilities
|
$
|
22,798
|
|
|
Operating Leases
|
|
Finance Leases
|
||||
For the fiscal years ending December:
|
|
|
|
||||
Less than one year
|
$
|
97,683
|
|
|
$
|
98
|
|
Year two
|
68,481
|
|
|
67
|
|
||
Year three
|
58,476
|
|
|
—
|
|
||
Year four
|
49,761
|
|
|
—
|
|
||
Year five
|
39,684
|
|
|
—
|
|
||
Thereafter
|
73,457
|
|
|
—
|
|
||
Total future minimum lease payments
|
387,542
|
|
|
165
|
|
||
Less: imputed interest
|
56,298
|
|
|
12
|
|
||
Present value of lease liabilities
|
$
|
331,244
|
|
|
$
|
153
|
|
|
Operating Leases
|
|
Finance Leases
|
||||
Accrued expenses and other current liabilities
|
$
|
78,963
|
|
|
$
|
1
|
|
Current maturities of long-term debt
|
—
|
|
|
88
|
|
||
Noncurrent operating lease liability, less current maturities
|
252,281
|
|
|
—
|
|
||
Long-term debt, less current maturities
|
—
|
|
|
64
|
|
||
Total lease liabilities
|
$
|
331,244
|
|
|
$
|
153
|
|
9.
|
PROPERTY, PLANT AND EQUIPMENT
|
|
March 31, 2019
|
|
December 30, 2018
|
||||
|
(In thousands)
|
||||||
Land
|
$
|
197,988
|
|
|
$
|
196,769
|
|
Buildings
|
1,711,953
|
|
|
1,697,703
|
|
||
Machinery and equipment
|
2,667,438
|
|
|
2,618,213
|
|
||
Autos and trucks
|
61,839
|
|
|
59,195
|
|
||
Construction-in-progress
|
304,431
|
|
|
269,166
|
|
||
PP&E, gross
|
4,943,649
|
|
|
4,841,046
|
|
||
Accumulated depreciation
|
(2,747,943
|
)
|
|
(2,679,344
|
)
|
||
PP&E, net
|
$
|
2,195,706
|
|
|
$
|
2,161,702
|
|
10.
|
CURRENT LIABILITIES
|
|
March 31, 2019
|
|
December 30, 2018
|
||||
|
(In thousands)
|
||||||
Accounts payable:
|
|
|
|
||||
Trade accounts
|
$
|
734,960
|
|
|
$
|
744,105
|
|
Book overdrafts
|
66,080
|
|
|
69,475
|
|
||
Other payables
|
17,442
|
|
|
16,479
|
|
||
Total accounts payable
|
818,482
|
|
|
830,059
|
|
||
Accounts payable to related parties(a)
|
5,550
|
|
|
7,269
|
|
||
Revenue contract liability(b)
|
25,812
|
|
|
33,328
|
|
||
Accrued expenses and other current liabilities:
|
|
|
|
||||
Compensation and benefits
|
148,666
|
|
|
149,507
|
|
||
Interest and debt-related fees
|
32,785
|
|
|
33,596
|
|
||
Insurance and self-insured claims
|
79,254
|
|
|
80,990
|
|
||
Current maturities of operating lease liabilities
|
78,963
|
|
|
—
|
|
||
Derivative liabilities:
|
|
|
|
||||
Commodity futures
|
7,677
|
|
|
1,479
|
|
||
Commodity options
|
3,439
|
|
|
3,312
|
|
||
Foreign currency derivatives
|
2,034
|
|
|
6,649
|
|
||
Other accrued expenses
|
119,547
|
|
|
111,408
|
|
||
Total accrued expenses and other current liabilities
|
472,365
|
|
|
386,941
|
|
||
|
$
|
1,322,209
|
|
|
$
|
1,257,597
|
|
|
Maturity
|
|
March 31, 2019
|
|
December 30, 2018
|
||||
|
|
|
(In thousands)
|
||||||
Long-term debt and other long-term borrowing arrangements:
|
|
|
|
|
|
||||
Senior notes payable, net of premium and discount at 5.75%
|
2025
|
|
$
|
1,002,396
|
|
|
$
|
1,002,497
|
|
Senior notes payable, net of discount at 5.875%
|
2027
|
|
843,896
|
|
|
843,717
|
|
||
U.S. Credit Facility (defined below):
|
|
|
|
|
|
|
|
||
Term note payable at 3.65%
|
2023
|
|
493,750
|
|
|
500,000
|
|
||
Revolving note payable at 5.25%
|
2023
|
|
—
|
|
|
—
|
|
||
Moy Park Bank of Ireland Revolving Facility with notes payable at
LIBOR or EURIBOR plus 1.25% to 2.00% |
2023
|
|
14,471
|
|
|
—
|
|
||
Moy Park France Invoice Discounting Revolver with payables at
EURIBOR plus 0.8% |
2019
|
|
—
|
|
|
2,277
|
|
||
Moy Park Credit Agricole Bank Overdraft with notes payable at
EURIBOR plus 1.50% |
On Demand
|
|
—
|
|
|
88
|
|
||
Mexico Credit Facility (defined below) with notes payable at
TIIE plus 0.95% |
2023
|
|
—
|
|
|
—
|
|
||
Secured loans with payables at weighted average of 3.80%
|
Various
|
|
2,990
|
|
|
319
|
|
||
Finance lease obligations
|
Various
|
|
152
|
|
|
3,707
|
|
||
Long-term debt
|
|
|
2,357,655
|
|
|
2,352,605
|
|
||
Less: Current maturities of long-term debt
|
|
|
(27,637
|
)
|
|
(30,405
|
)
|
||
Long-term debt, less current maturities
|
|
|
2,330,018
|
|
|
2,322,200
|
|
||
Less: Capitalized financing costs
|
|
|
(26,283
|
)
|
|
(27,010
|
)
|
||
Long-term debt, less current maturities, net of capitalized
financing costs: |
|
|
$
|
2,303,735
|
|
|
$
|
2,295,190
|
|
Balance, beginning of period
|
|
$
|
33,328
|
|
Revenue recognized
|
|
(14,130
|
)
|
|
Cash received, excluding amounts recognized as revenue during the period
|
|
6,614
|
|
|
Balance, end of period
|
|
$
|
25,812
|
|
14.
|
PENSION AND OTHER POSTRETIREMENT BENEFITS
|
|
Thirteen Weeks Ended
March 31, 2019
|
|
Thirteen Weeks Ended
April 1, 2018
|
||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
Change in projected benefit obligation:
|
(In thousands)
|
||||||||||||||
Projected benefit obligation, beginning of period
|
$
|
157,619
|
|
|
$
|
1,462
|
|
|
$
|
178,247
|
|
|
$
|
1,603
|
|
Interest cost
|
1,467
|
|
|
13
|
|
|
1,366
|
|
|
12
|
|
||||
Actuarial losses (gains)
|
4,235
|
|
|
32
|
|
|
(6,829
|
)
|
|
(48
|
)
|
||||
Benefits paid
|
(5,611
|
)
|
|
(37
|
)
|
|
(2,174
|
)
|
|
(37
|
)
|
||||
Projected benefit obligation, end of period
|
$
|
157,710
|
|
|
$
|
1,470
|
|
|
$
|
170,610
|
|
|
$
|
1,530
|
|
|
Thirteen Weeks Ended
March 31, 2019
|
|
Thirteen Weeks Ended
April 1, 2018
|
||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
Change in plan assets:
|
(In thousands)
|
||||||||||||||
Fair value of plan assets, beginning of period
|
$
|
102,414
|
|
|
$
|
—
|
|
|
$
|
112,570
|
|
|
$
|
—
|
|
Actual return on plan assets
|
8,816
|
|
|
—
|
|
|
541
|
|
|
—
|
|
||||
Contributions by employer
|
1,752
|
|
|
37
|
|
|
2,888
|
|
|
37
|
|
||||
Benefits paid
|
(5,611
|
)
|
|
(37
|
)
|
|
(2,174
|
)
|
|
(37
|
)
|
||||
Fair value of plan assets, end of period
|
$
|
107,371
|
|
|
$
|
—
|
|
|
$
|
113,825
|
|
|
$
|
—
|
|
|
March 31, 2019
|
|
December 30, 2018
|
||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
Funded status:
|
(In thousands)
|
||||||||||||||
Unfunded benefit obligation, end of period
|
$
|
(50,339
|
)
|
|
$
|
(1,470
|
)
|
|
$
|
(55,205
|
)
|
|
$
|
(1,462
|
)
|
|
March 31, 2019
|
|
December 30, 2018
|
||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
Amounts recognized in the Condensed Consolidated Balance Sheets at end of period:
|
(In thousands)
|
||||||||||||||
Current liability
|
$
|
(8,253
|
)
|
|
$
|
(148
|
)
|
|
$
|
(8,267
|
)
|
|
$
|
(149
|
)
|
Long-term liability
|
(42,086
|
)
|
|
(1,322
|
)
|
|
(46,938
|
)
|
|
(1,313
|
)
|
||||
Recognized liability
|
$
|
(50,339
|
)
|
|
$
|
(1,470
|
)
|
|
$
|
(55,205
|
)
|
|
$
|
(1,462
|
)
|
|
March 31, 2019
|
|
December 30, 2018
|
||||||||||||
|
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)
|
$
|
50,783
|
|
|
$
|
(2
|
)
|
|
$
|
54,343
|
|
|
$
|
(34
|
)
|
|
Thirteen Weeks Ended
March 31, 2019
|
|
Thirteen Weeks Ended
April 1, 2018 |
||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
|
(In thousands)
|
||||||||||||||
Interest cost
|
$
|
1,467
|
|
|
$
|
13
|
|
|
$
|
1,366
|
|
|
$
|
12
|
|
Estimated return on plan assets
|
(1,349
|
)
|
|
—
|
|
|
(1,517
|
)
|
|
—
|
|
||||
Amortization of net loss
|
328
|
|
|
—
|
|
|
301
|
|
|
—
|
|
||||
Net costs
|
$
|
446
|
|
|
$
|
13
|
|
|
$
|
150
|
|
|
$
|
12
|
|
|
March 31, 2019
|
|
December 30, 2018
|
||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||
Assumptions used to measure benefit obligation at end
of period:
|
|
|
|
|
|
|
|
||||
Discount rate
|
4.15
|
%
|
|
3.80
|
%
|
|
4.40
|
%
|
|
4.07
|
%
|
|
Thirteen Weeks Ended March 31, 2019
|
|
Thirteen Weeks Ended April 1, 2018
|
||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||
Assumptions used to measure net pension and other
postretirement cost:
|
|
|
|
|
|
|
|
||||
Discount rate
|
4.40
|
%
|
|
4.07
|
%
|
|
3.69
|
%
|
|
3.39
|
%
|
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
|
$
|
(3,927
|
)
|
|
$
|
4,124
|
|
|
March 31, 2019
|
|
December 30, 2018
|
||
Cash and cash equivalents
|
1
|
%
|
|
—
|
%
|
Pooled separate accounts(a):
|
|
|
|
||
Equity securities
|
5
|
%
|
|
4
|
%
|
Fixed income securities
|
4
|
%
|
|
5
|
%
|
Common collective trust funds(a):
|
|
|
|
||
Equity securities
|
44
|
%
|
|
45
|
%
|
Fixed income securities
|
41
|
%
|
|
41
|
%
|
Real estate
|
5
|
%
|
|
5
|
%
|
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.
|
|
March 31, 2019
|
|
December 30, 2018
|
||||||||||||||||||||||||||||
|
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
|
$
|
974
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
974
|
|
|
$
|
110
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
110
|
|
Pooled separate accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Large U.S. equity funds(d)
|
—
|
|
|
2,915
|
|
|
—
|
|
|
2,915
|
|
|
—
|
|
|
2,491
|
|
|
—
|
|
|
2,491
|
|
||||||||
Small/Mid U.S. equity funds(e)
|
—
|
|
|
354
|
|
|
—
|
|
|
354
|
|
|
—
|
|
|
292
|
|
|
—
|
|
|
292
|
|
||||||||
International equity funds(f)
|
—
|
|
|
1,704
|
|
|
—
|
|
|
1,704
|
|
|
—
|
|
|
1,489
|
|
|
—
|
|
|
1,489
|
|
||||||||
Fixed income funds(g)
|
—
|
|
|
4,668
|
|
|
—
|
|
|
4,668
|
|
|
—
|
|
|
4,763
|
|
|
—
|
|
|
4,763
|
|
||||||||
Common collective trusts funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Large U.S. equity funds(d)
|
—
|
|
|
18,238
|
|
|
—
|
|
|
18,238
|
|
|
—
|
|
|
17,351
|
|
|
—
|
|
|
17,351
|
|
||||||||
Small U.S. equity funds(e)
|
—
|
|
|
6,137
|
|
|
—
|
|
|
6,137
|
|
|
—
|
|
|
5,880
|
|
|
—
|
|
|
5,880
|
|
||||||||
International equity funds(f)
|
—
|
|
|
23,278
|
|
|
—
|
|
|
23,278
|
|
|
—
|
|
|
22,516
|
|
|
—
|
|
|
22,516
|
|
||||||||
Fixed income funds(g)
|
—
|
|
|
43,749
|
|
|
—
|
|
|
43,749
|
|
|
—
|
|
|
42,217
|
|
|
—
|
|
|
42,217
|
|
||||||||
Real estate(h)
|
—
|
|
|
5,354
|
|
|
—
|
|
|
5,354
|
|
|
—
|
|
|
5,305
|
|
|
—
|
|
|
5,305
|
|
||||||||
Total assets
|
$
|
974
|
|
|
$
|
106,397
|
|
|
$
|
—
|
|
|
$
|
107,371
|
|
|
$
|
110
|
|
|
$
|
102,304
|
|
|
$
|
—
|
|
|
$
|
102,414
|
|
(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). These investment options typically carry more risk than short-term fixed income investment options, but less overall risk than equities.
|
(h)
|
This category is comprised of investment options that invest in real estate investment trusts or private equity pools that own real estate. These long-term investments are primarily in office buildings, industrial parks, apartments or retail complexes. These investment options typically carry more risk, including liquidity risk, than fixed income investment options.
|
|
Pension Benefits
|
|
Other Benefits
|
||||
|
(In thousands)
|
||||||
2019 (remaining)
|
$
|
13,479
|
|
|
$
|
112
|
|
2020
|
11,526
|
|
|
147
|
|
||
2021
|
11,200
|
|
|
145
|
|
||
2022
|
10,891
|
|
|
141
|
|
||
2023
|
10,627
|
|
|
137
|
|
||
2024-2028
|
48,429
|
|
|
589
|
|
||
Total
|
$
|
106,152
|
|
|
$
|
1,271
|
|
|
Thirteen Weeks Ended March 31, 2019
|
|
Thirteen Weeks Ended April 1, 2018
|
||||||||||||
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
|
(In thousands)
|
||||||||||||||
Net actuarial loss (gain), beginning of period
|
$
|
54,343
|
|
|
$
|
(34
|
)
|
|
$
|
54,235
|
|
|
$
|
35
|
|
Amortization
|
(328
|
)
|
|
|
|
|
(301
|
)
|
|
—
|
|
||||
Actuarial loss (gain)
|
4,235
|
|
|
32
|
|
|
(6,829
|
)
|
|
(48
|
)
|
||||
Asset loss (gain)
|
(7,467
|
)
|
|
|
|
|
976
|
|
|
—
|
|
||||
Net actuarial loss (gain), end of period
|
$
|
50,783
|
|
|
$
|
(2
|
)
|
|
$
|
48,081
|
|
|
$
|
(13
|
)
|
15.
|
STOCKHOLDERS' EQUITY
|
|
Thirteen Weeks Ended March 31, 2019(a)
|
||||||||||||||||||
|
Losses Related to Foreign Currency Translation
|
|
Unrealized Losses on Derivative Financial Instruments Classified as Cash Flow Hedges
|
|
Losses Related to Pension and Other Postretirement Benefits
|
|
Unrealized Holding Losses on Available-for-Sale Securities
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Balance, beginning of period
|
$
|
(55,770
|
)
|
|
$
|
(683
|
)
|
|
$
|
(71,463
|
)
|
|
$
|
82
|
|
|
$
|
(127,834
|
)
|
Other comprehensive income (loss) before
reclassifications |
37,442
|
|
|
(915
|
)
|
|
2,421
|
|
|
17
|
|
|
38,965
|
|
|||||
Amounts reclassified from accumulated other
comprehensive income (loss) to net income |
—
|
|
|
(221
|
)
|
|
248
|
|
|
(101
|
)
|
|
(74
|
)
|
|||||
Currency translation
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||
Net current period other comprehensive income
|
37,442
|
|
|
(1,119
|
)
|
|
2,669
|
|
|
(84
|
)
|
|
38,908
|
|
|||||
Balance, end of period
|
$
|
(18,328
|
)
|
|
$
|
(1,802
|
)
|
|
$
|
(68,794
|
)
|
|
$
|
(2
|
)
|
|
$
|
(88,926
|
)
|
|
Thirteen Weeks Ended April 1, 2018(a)
|
||||||||||||||||||
|
Gains Related to Foreign Currency Translation
|
|
Unrealized 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
|
$
|
42,081
|
|
|
$
|
(1,848
|
)
|
|
$
|
(71,434
|
)
|
|
$
|
61
|
|
|
$
|
(31,140
|
)
|
Other comprehensive income before
reclassifications
|
52,528
|
|
|
1
|
|
|
4,465
|
|
|
283
|
|
|
$
|
57,277
|
|
||||
Amounts reclassified from accumulated other
comprehensive income (loss) to net income |
—
|
|
|
250
|
|
|
228
|
|
|
(130
|
)
|
|
$
|
348
|
|
||||
Currency translation
|
—
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|||||
Net current period other comprehensive income
|
52,528
|
|
|
235
|
|
|
4,693
|
|
|
153
|
|
|
57,609
|
|
|||||
Balance, end of period
|
$
|
94,609
|
|
|
$
|
(1,613
|
)
|
|
$
|
(66,741
|
)
|
|
$
|
214
|
|
|
$
|
26,469
|
|
(a)
|
All amounts are net of tax. Amounts in parentheses indicate debits to accumulated other comprehensive income (loss).
|
|
|
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)(a)
|
|
|
||||||
Details about Accumulated Other Comprehensive Income (Loss) Components
|
|
Thirteen Weeks
Ended March 31, 2019 |
|
Thirteen Weeks
Ended April 1, 2018 |
|
Affected Line Item in the Condensed Consolidated Statements of Income
|
||||
|
|
(In thousands)
|
|
|
||||||
Realized gain (loss) on settlement of derivative
financial instruments classified as cash flow
hedges
|
|
$
|
221
|
|
|
$
|
(250
|
)
|
|
Cost of sales
|
Realized gain on sale of securities
|
|
135
|
|
|
172
|
|
|
Interest income
|
||
Amortization of defined benefit pension
and other postretirement plan actuarial
losses:
|
|
|
|
|
|
|
||||
Union employees pension plan(b)(d)
|
|
(18
|
)
|
|
(12
|
)
|
|
Miscellaneous, net
|
||
Legacy Gold Kist plans(c)(d)
|
|
(97
|
)
|
|
(90
|
)
|
|
Miscellaneous, net
|
||
Legacy Gold Kist plans(c)(d)
|
|
(213
|
)
|
|
(199
|
)
|
|
Miscellaneous, net
|
||
Total before tax
|
|
28
|
|
|
(379
|
)
|
|
|
||
Tax benefit
|
|
46
|
|
|
31
|
|
|
|
||
Total reclassification for the period
|
|
$
|
74
|
|
|
$
|
(348
|
)
|
|
|
(a)
|
Amounts in parentheses represent debits to results of operations.
|
(b)
|
The Company sponsors the Union Plan, a qualified defined benefit pension plan covering certain locations or work groups with collective bargaining agreements.
|
(c)
|
The Company sponsors the GK Pension Plan, 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 SERP Plan, a nonqualified defined benefit retirement plan covering certain former Gold Kist executives, the Directors’ Emeriti Plan, a nonqualified defined benefit retirement plan covering certain former Gold Kist directors and the Retiree Life Plan, a defined benefit postretirement life insurance plan covering certain retired Gold Kist employees (collectively, the “Legacy Gold Kist Plans”).
|
(d)
|
These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See “Note 14. Pension and Other Postretirement Benefits” to the Condensed Consolidated Financial Statements.
|
16.
|
INCENTIVE COMPENSATION
|
Award Type
|
|
Benefit
Plan
|
|
Awards Granted
|
|
Grant
Date
|
|
Grant Date Fair Value per Award
|
|
Vesting Condition
|
|
Vesting Date
|
|
Vesting Date Fair Value per Award(a)
|
|
Awards Forfeited to Date
|
|
Settlement Method
|
||||
RSU
|
|
LTIP
|
|
410,000
|
|
|
02/14/2018
|
|
25.59
|
|
|
Service
|
|
01/01/2019
|
|
15.51
|
|
|
—
|
|
|
Stock
|
RSU
|
|
LTIP
|
|
163,764
|
|
|
03/01/2018
|
|
24.93
|
|
|
Service
|
|
(a)
|
|
15.51
|
|
|
45,755
|
|
|
Stock
|
RSU
|
|
LTIP
|
|
283,525
|
|
|
03/01/2018
|
|
24.93
|
|
|
Performance / Service
|
|
(b)
|
|
—
|
|
|
151,228
|
|
|
Stock
|
RSU
|
|
LTIP
|
|
11,144
|
|
|
05/10/2018
|
|
21.54
|
|
|
Service
|
|
(c)
|
|
—
|
|
|
—
|
|
|
Stock
|
RSU
|
|
LTIP
|
|
262,500
|
|
|
12/18/2018
|
|
16.06
|
|
|
Service
|
|
07/01/2019
|
|
—
|
|
|
—
|
|
|
Stock
|
RSU
|
|
LTIP
|
|
506,417
|
|
|
01/07/2019
|
|
16.47
|
|
|
Performance / Service
|
|
(d)
|
|
—
|
|
|
83,705
|
|
|
Stock
|
(a)
|
The restricted stock units vest in ratable tranches on December 31, 2018, December 31, 2019 and December 31, 2020. Expected compensation cost related to these units totals $2.9 million based on a closing stock price for the Company’s common stock of $24.93 per share on March 1, 2018. Compensation cost will be amortized to profit/loss over the remaining vesting period.
|
(b)
|
The restricted stock units vest in ratable tranches on December 31, 2019, December 31, 2020 and December 31, 2021. Expected compensation cost related to these units totals $3.3 million based on a closing stock price for the Company’s common stock of $24.93 per share on March 1, 2018. Compensation cost will be amortized to profit/loss over the remaining vesting period.
|
(c)
|
These restricted stock units were granted to the four non-employees who currently serve on the Company's Board of Directors. Each participating director's units will vest upon his departure from the Company's Board of Directors. Compensation cost was recognized in profit/loss upon the grant date.
|
(d)
|
If performance conditions related to the Company's 2019 operating results are satisfied, the restricted stock units vest in ratable tranches on December 31, 2020, December 31, 2021 and December 31, 2022. Expected compensation cost related to these units totals $7.0 million based on a closing stock price for the Company's common stock of $16.47 per share on January 7, 2019. Compensation cost will be amortized to profit/loss upon satisfaction of the performance conditions over the remaining vesting period.
|
|
Thirteen Weeks Ended
|
||||||
|
March 31, 2019
|
|
April 1, 2018
|
||||
|
(In thousands)
|
||||||
Share-based compensation cost:
|
|
|
|
||||
Cost of sales
|
$
|
12
|
|
|
$
|
52
|
|
Selling, general and administrative expense
|
1,870
|
|
|
1,221
|
|
||
Total
|
$
|
1,882
|
|
|
$
|
1,273
|
|
|
|
|
|
||||
Income tax benefit
|
$
|
458
|
|
|
$
|
310
|
|
|
Thirteen Weeks Ended
March 31, 2019
|
|
Thirteen Weeks Ended
April 1, 2018
|
||||||||||
|
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
|
1,069
|
|
|
$
|
22.97
|
|
|
389
|
|
|
$
|
18.39
|
|
Granted
|
506
|
|
|
16.47
|
|
|
708
|
|
|
25.19
|
|
||
Vested
|
(459
|
)
|
|
25.52
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
(218
|
)
|
|
21.70
|
|
|
(389
|
)
|
|
18.39
|
|
||
Outstanding at end of period
|
898
|
|
|
$
|
18.31
|
|
|
708
|
|
|
$
|
25.19
|
|
Type of Cost
|
40 North Foods
|
|
GNP
|
|
Total Estimated Amount Expected to be Incurred
|
||||||
|
(In thousands)
|
||||||||||
Employee termination benefits
|
$
|
449
|
|
|
$
|
4,074
|
|
|
$
|
4,523
|
|
Inventory impairments
|
—
|
|
|
472
|
|
|
472
|
|
|||
Asset impairments
|
103
|
|
|
470
|
|
|
573
|
|
|||
Other charges(a)
|
150
|
|
|
1,983
|
|
|
2,133
|
|
|||
|
$
|
702
|
|
|
$
|
6,999
|
|
|
$
|
7,701
|
|
(a)
|
Comprised of other costs directly related to the restructuring initiatives, including prepaid software impairment, St. Cloud, Minnesota office lease costs, Luverne, Minnesota plant closure costs, and Boulder, Colorado office lease costs.
|
|
Expenses (Income)
|
|
Cash Outlays
|
||||
|
(In thousands)
|
||||||
40 North Foods other charges
|
$
|
(27
|
)
|
|
$
|
1
|
|
GNP employee termination benefits
|
—
|
|
|
34
|
|
||
|
$
|
(27
|
)
|
|
$
|
35
|
|
|
40 North Foods Initiative
|
|
GNP Initiative
|
||||||||||||||||||||||||
|
Employee Termination Benefits
|
|
Other Charges
|
|
Total
|
|
Employee Termination Benefits
|
|
Inventory
Impairments |
|
Other
Charges |
|
Total
|
||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||
Restructuring charges incurred
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,381
|
|
|
$
|
699
|
|
|
$
|
752
|
|
|
$
|
4,832
|
|
Payments and disposals
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,581
|
)
|
|
—
|
|
|
—
|
|
|
(2,581
|
)
|
|||||||
Liability or reserve at December 31, 2017
|
—
|
|
|
—
|
|
|
—
|
|
|
800
|
|
|
699
|
|
|
752
|
|
|
2,251
|
|
|||||||
Restructuring charges incurred
|
449
|
|
|
115
|
|
|
564
|
|
|
936
|
|
|
(227
|
)
|
|
(17
|
)
|
|
692
|
|
|||||||
Payments and disposals
|
(449
|
)
|
|
(29
|
)
|
|
(478
|
)
|
|
(1,500
|
)
|
|
(472
|
)
|
|
(735
|
)
|
|
(2,707
|
)
|
|||||||
Liability or reserve at December 30, 2018
|
—
|
|
|
86
|
|
|
86
|
|
|
236
|
|
|
—
|
|
|
—
|
|
|
236
|
|
|||||||
Restructuring income recognized
|
—
|
|
|
(27
|
)
|
|
(27
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Payments and disposals
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(34
|
)
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|||||||
Liability or reserve at March 31, 2019
|
$
|
—
|
|
|
$
|
58
|
|
|
$
|
58
|
|
|
$
|
202
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
202
|
|
18.
|
COMMITMENTS AND CONTINGENCIES
|
19.
|
RELATED PARTY TRANSACTIONS
|
|
Thirteen Weeks Ended
|
||||||
|
March 31, 2019
|
|
April 1, 2018
|
||||
|
(In thousands)
|
||||||
Sales to related parties:
|
|
|
|
||||
JBS USA Food Company(a)
|
$
|
3,658
|
|
|
$
|
1,529
|
|
JBS Five Rivers
|
—
|
|
|
7,096
|
|
||
JBS Global (U.K.) Ltd.
|
43
|
|
|
—
|
|
||
JBS Chile Ltda.
|
78
|
|
|
60
|
|
||
Combo, Mercado De Congelados
|
4
|
|
|
—
|
|
||
Total sales to related parties
|
$
|
3,783
|
|
|
$
|
8,685
|
|
|
|
|
|
||||
Cost of goods purchased from related parties:
|
|
|
|
||||
JBS USA Food Company(a)
|
$
|
30,413
|
|
|
$
|
27,824
|
|
Seara Meats B.V.
|
4,521
|
|
|
4,240
|
|
||
JBS Aves Ltda.
|
—
|
|
|
703
|
|
||
JBS Toledo NV
|
120
|
|
|
165
|
|
||
Total cost of goods purchased from related parties
|
$
|
35,054
|
|
|
$
|
32,932
|
|
|
|
|
|
||||
Expenditures paid by related parties:
|
|
|
|
||||
JBS USA Food Company(b)
|
$
|
10,006
|
|
|
$
|
10,499
|
|
JBS Chile Ltda.
|
5
|
|
|
—
|
|
||
Total expenditures paid by related parties
|
$
|
10,011
|
|
|
$
|
10,499
|
|
|
|
|
|
||||
Expenditures paid on behalf of related parties:
|
|
|
|
||||
JBS USA Food Company(b)
|
$
|
2,203
|
|
|
$
|
2,288
|
|
Seara International Ltd.
|
—
|
|
|
20
|
|
||
Total expenditures paid on behalf of related parties
|
$
|
2,203
|
|
|
$
|
2,308
|
|
|
March 31, 2019
|
|
December 30, 2018
|
||||
|
(In thousands)
|
||||||
Accounts receivable from related parties:
|
|
|
|
||||
JBS USA Food Company(a)
|
$
|
788
|
|
|
$
|
1,236
|
|
JBS Chile Ltda.
|
20
|
|
|
—
|
|
||
Combo, Mercado de Congelados
|
—
|
|
|
79
|
|
||
Seara International Ltd.
|
3
|
|
|
16
|
|
||
JBS Global (U.K.) Ltd.
|
43
|
|
|
—
|
|
||
Total accounts receivable from related parties
|
$
|
854
|
|
|
$
|
1,331
|
|
|
|
|
|
||||
Accounts payable to related parties:
|
|
|
|
||||
JBS USA Food Company(a)
|
$
|
4,562
|
|
|
$
|
5,121
|
|
Seara Meats B.V.
|
930
|
|
|
2,142
|
|
||
JBS Chile Ltda.
|
—
|
|
|
6
|
|
||
JBS Toledo NV
|
58
|
|
|
—
|
|
||
Total accounts payable to related parties
|
$
|
5,550
|
|
|
$
|
7,269
|
|
(a)
|
The Company routinely executes transactions to both purchase products from JBS USA Food Company (“JBS USA”) and sell products to them. As of March 31, 2019, approximately $1.7 million of goods purchased from JBS USA were in transit and not reflected on our Condensed and Consolidated Balance Sheet.
|
(b)
|
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.
|
|
Thirteen Weeks Ended
|
||||||
|
March 31, 2019
|
|
April 1, 2018
|
||||
Operating Income
|
(In thousands)
|
||||||
U.S.
|
$
|
114,840
|
|
|
$
|
127,286
|
|
U.K. and Europe
|
12,714
|
|
|
21,413
|
|
||
Mexico
|
9,464
|
|
|
52,870
|
|
||
Elimination
|
24
|
|
|
24
|
|
||
Total operating income
|
137,042
|
|
|
201,593
|
|
||
Interest expense, net of capitalized interest
|
33,562
|
|
|
50,300
|
|
||
Interest income
|
(3,340
|
)
|
|
(1,590
|
)
|
||
Foreign currency transaction loss (gain)
|
2,636
|
|
|
(1,721
|
)
|
||
Miscellaneous, net
|
(357
|
)
|
|
(1,617
|
)
|
||
Income before income taxes
|
$
|
104,541
|
|
|
$
|
156,221
|
|
|
March 31, 2019
|
|
December 30, 2018
|
||||
Long-Lived Assets(a)
|
(In thousands)
|
||||||
U.S.
|
$
|
1,535,489
|
|
|
$
|
1,506,217
|
|
U.K. and Europe
|
367,765
|
|
|
359,621
|
|
||
Mexico
|
292,452
|
|
|
295,864
|
|
||
Total assets
|
$
|
2,195,706
|
|
|
$
|
2,161,702
|
|
(a)
|
For this disclosure, we exclude financial instruments, deferred tax assets, operating lease assets and intangible assets in accordance with Accounting Standards Codification (“ASC”) 280-10-50-41, Segment Reporting. Long-lived assets, as used in ASC 280-10-50-41, implies hard assets that cannot be readily removed.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Corn(a)
|
|
Soybean Meal(a)
|
|
Wheat(a)
|
||||||||||||||||||
|
Highest
Price
|
|
Lowest Price
|
|
Highest Price
|
|
Lowest Price
|
|
Highest Price
|
|
Lowest Price
|
||||||||||||
|
|
|
|
|
|
||||||||||||||||||
2019:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
First Quarter
|
$
|
3.98
|
|
|
$
|
3.66
|
|
|
$
|
330.20
|
|
|
$
|
305.30
|
|
|
£
|
173.80
|
|
|
£
|
155.30
|
|
2018:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fourth Quarter
|
3.90
|
|
|
3.68
|
|
|
327.30
|
|
|
307.80
|
|
|
179.30
|
|
|
167.00
|
|
||||||
Third Quarter
|
3.87
|
|
|
3.43
|
|
|
341.40
|
|
|
303.30
|
|
|
194.65
|
|
|
165.75
|
|
||||||
Second Quarter
|
4.27
|
|
|
3.66
|
|
|
391.70
|
|
|
329.90
|
|
|
156.75
|
|
|
142.40
|
|
||||||
First Quarter
|
4.01
|
|
|
3.63
|
|
|
394.10
|
|
|
319.60
|
|
|
139.20
|
|
|
134.70
|
|
(a)
|
We obtain corn and soybean meal prices from the Chicago Board of Trade, and we obtain wheat prices from the London International Financial Futures and Options Exchange.
|
Sources of net sales
|
|
Thirteen Weeks Ended March 31, 2019
|
|
Change from Thirteen Weeks Ended April 1, 2018
|
|||||||
Amount
|
|
Percent
|
|||||||||
|
|
(In thousands, except percent data)
|
|||||||||
U.S.(a)
|
|
$
|
1,883,591
|
|
|
$
|
42,486
|
|
|
2.3
|
%
|
U.K. and Europe(b)
|
|
514,962
|
|
|
(29,338
|
)
|
|
(5.4
|
)%
|
||
Mexico(c)
|
|
326,122
|
|
|
(35,151
|
)
|
|
(9.7
|
)%
|
||
Total net sales
|
|
$
|
2,724,675
|
|
|
$
|
(22,003
|
)
|
|
(0.8
|
)%
|
(a)
|
U.S. net sales generated in the thirteen weeks ended March 31, 2019 increased $42.5 million, or 2.3%, from U.S. net sales generated in the thirteen weeks ended April 1, 2018 primarily because of increases in both net sales per pound and sales volume. The net sales per pound increase experienced by the U.S. segment contributed $25.8 million, or 1.4 percentage points, to the increase in net sales. The increase in sales volume contributed $16.6 million, or 0.9 percentage points, to the increase in net sales. Included in the U.S. net sales generated in the thirteen weeks ended March 31, 2019 and April 1, 2018 were net sales to JBS USA Food Company totaling $3.7 million and $1.5 million, respectively.
|
(b)
|
U.K. and Europe net sales generated in the thirteen weeks ended March 31, 2019 decreased $29.3 million, or 5.4%, from U.K. and Europe net sales generated in the thirteen weeks ended April 1, 2018 primarily because of the unfavorable impact of foreign currency translation of $35.3 million, or 6.5 percentage points, and a decrease in sales volume of $23.1 million, or 4.2 percentage points. The increase in net sales per pound partially offset the unfavorable impact of foreign currency translation and decrease in sales volume by $29.0 million, or 5.3 percentage points.
|
(c)
|
Mexico net sales generated in the thirteen weeks ended March 31, 2019 decreased $35.2 million, or 9.7%, from Mexico net sales generated in the thirteen weeks ended April 1, 2018 primarily because of a decrease in net sales per pound of $33.9 million, or 9.4 percentage points, and the unfavorable impact of foreign currency remeasurement of $8.2 million, or 2.3 percentage points. The increase in sales volume partially offset the decrease in net sales per pound and unfavorable impact of foreign currency remeasurement by $7.0 million, or 1.9 percentage points.
|
Components of gross profit
|
|
Thirteen
Weeks Ended March 31, 2019
|
|
Change from Thirteen Weeks Ended April 1, 2018
|
|
Percent of Net Sales
|
|||||||||||
|
|
Thirteen Weeks Ended
|
|||||||||||||||
|
Amount
|
|
Percent
|
|
March 31, 2019
|
|
April 1, 2018
|
||||||||||
|
|
(In thousands, except percent data)
|
|||||||||||||||
Net sales
|
|
$
|
2,724,675
|
|
|
$
|
(22,003
|
)
|
|
(0.8
|
)%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales(a)(b)(c)
|
|
2,505,736
|
|
|
46,723
|
|
|
1.9
|
%
|
|
92.0
|
%
|
|
89.5
|
%
|
||
Gross profit
|
|
$
|
218,939
|
|
|
$
|
(68,726
|
)
|
|
(23.9
|
)%
|
|
8.0
|
%
|
|
10.5
|
%
|
Sources of gross profit
|
|
Thirteen
Weeks Ended March 31, 2019
|
|
Change from Thirteen Weeks Ended April 1, 2018
|
|||||||
Amount
|
|
Percent
|
|||||||||
|
|
(In thousands, except percent data)
|
|||||||||
U.S.(a)
|
|
$
|
170,172
|
|
|
$
|
(12,198
|
)
|
|
(6.7
|
)%
|
U.K. and Europe(b)
|
|
29,584
|
|
|
(13,149
|
)
|
|
(30.8
|
)%
|
||
Mexico(c)
|
|
19,159
|
|
|
(43,379
|
)
|
|
(69.4
|
)%
|
||
Elimination
|
|
24
|
|
|
—
|
|
|
—
|
%
|
||
Total gross profit
|
|
$
|
218,939
|
|
|
$
|
(68,726
|
)
|
|
(23.9
|
)%
|
Sources of cost of sales
|
|
Thirteen
Weeks Ended March 31, 2019
|
|
Change from Thirteen Weeks Ended April 1, 2018
|
|||||||
Amount
|
|
Percent
|
|||||||||
|
|
(In thousands, except percent data)
|
|||||||||
U.S.(a)
|
|
$
|
1,713,419
|
|
|
$
|
54,685
|
|
|
3.3
|
%
|
U.K. and Europe(b)
|
|
485,378
|
|
|
(16,190
|
)
|
|
(3.2
|
)%
|
||
Mexico(c)
|
|
306,963
|
|
|
8,228
|
|
|
2.8
|
%
|
||
Elimination
|
|
(24
|
)
|
|
—
|
|
|
—
|
%
|
||
Total cost of sales
|
|
$
|
2,505,736
|
|
|
$
|
46,723
|
|
|
1.9
|
%
|
(a)
|
Cost of sales incurred by our U.S. segment during the thirteen weeks ended March 31, 2019 increased $54.7 million, or 3.3%, from cost of sales incurred by our U.S. segment during the thirteen weeks ended April 1, 2018. Cost of sales increased primarily because of the $39.7 million impact of increased cost per pound and the $15.0 million impact of sales volume increases. Included in this increase in cost of sales is higher payroll related costs of $28.9 million mainly due to increased pay rates and overtime pay, an increase in derivative related losses of $10.0 million, an increase in lease costs of $5.8 million, an increase of $5.2 million related to employee health insurance and worker's compensation costs due to higher reserves and an increase of $4.9 million related to contract services costs, mainly due to greater outside processing labor. Other factors affecting cost of sales were individually immaterial.
|
(b)
|
Cost of sales incurred by our U.K. and Europe segment during the thirteen weeks ended March 31, 2019 decreased $16.2 million, or 3.2%, from cost of sales incurred by our U.K. and Europe segment during the thirteen weeks ended April 1, 2018. U.K. and Europe cost of sales decreased primarily because of a $33.2 million impact of foreign currency translation and a $21.3 million impact due to a reduction in sales volume. These decreases in cost of sales were partially offset by an increase in net cost per pound of $38.3 million. Included in the impact of foreign currency translation, reduced sales volume and increased net cost per pound on the decrease in cost of sales was a reduction in meat input costs of $52.0 million. The impact of reduced meat input costs on cost of sales was partially offset by increased feed cost of $20.6 million, increased lease and rent costs of $4.6 million and an increase in utility costs of $3.3 million due to increased utility rates. Other factors affecting cost of sales were individually immaterial.
|
(c)
|
Cost of sales incurred by our Mexico segment during the thirteen weeks ended March 31, 2019 increased $8.2 million, or 2.8%, from cost of sales incurred by our Mexico segment during the thirteen weeks ended April 1, 2018. Mexico cost of sales increased primarily because of the $10.2 million impact of increased cost per pound and the $5.8 million impact of sales volume increases. Partially offsetting the impact of the increases in both cost per pound and sales volume on cost of sales was a $7.7 million impact of foreign currency remeasurement. Included in the the impact of increased cost per pound, increased sales volume and foreign currency remeasurement on the increase in cost of sales was an increase in grower pay of $3.7 million due to higher pay rates, a $2.0 million increase in electricity costs due to higher rates and a $1.8 million increase in freight costs. Other factors affecting cost of sales were individually immaterial.
|
Components of operating income
|
|
Thirteen
Weeks Ended March 31, 2019
|
|
Change from Thirteen Weeks Ended April 1, 2018
|
|
Percent of Net Sales
|
|||||||||||
Thirteen Weeks Ended
|
|||||||||||||||||
Amount
|
|
Percent
|
|
March 31, 2019
|
|
April 1, 2018
|
|||||||||||
|
|
(In thousands, except percent data)
|
|||||||||||||||
Gross profit
|
|
$
|
218,939
|
|
|
(68,726
|
)
|
|
(23.9
|
)%
|
|
8.0
|
%
|
|
10.5
|
%
|
|
SG&A expense(a)(b)(c)
|
|
81,924
|
|
|
(3,359
|
)
|
|
(3.9
|
)%
|
|
3.0
|
%
|
|
3.1
|
%
|
||
Administrative restructuring activities(d)(e)
|
|
(27
|
)
|
|
(816
|
)
|
|
(103.4
|
)%
|
|
—
|
%
|
|
—
|
%
|
||
Operating income
|
|
$
|
137,042
|
|
|
$
|
(64,551
|
)
|
|
(32.0
|
)%
|
|
5.0
|
%
|
|
7.3
|
%
|
Sources of operating income
|
|
Thirteen
Weeks Ended March 31, 2019
|
|
Change from Thirteen Weeks Ended April 1, 2018
|
|||||||
Amount
|
|
Percent
|
|||||||||
|
|
(In thousands, except percent data)
|
|||||||||
U.S.
|
|
$
|
114,840
|
|
|
$
|
(12,446
|
)
|
|
(9.8
|
)%
|
U.K. and Europe
|
|
12,714
|
|
|
(8,699
|
)
|
|
(40.6
|
)%
|
||
Mexico
|
|
9,464
|
|
|
(43,406
|
)
|
|
(82.1
|
)%
|
||
Elimination
|
|
24
|
|
|
—
|
|
|
—
|
%
|
||
Total operating income
|
|
$
|
137,042
|
|
|
$
|
(64,551
|
)
|
|
(32.0
|
)%
|
|
|
|
|
|
|
|
|||||
Sources of SG&A expense
|
|
Thirteen
Weeks Ended March 31, 2019
|
|
Change from Thirteen Weeks Ended April 1, 2018
|
|||||||
Amount
|
|
Percent
|
|||||||||
|
|
(In thousands, except percent data)
|
|||||||||
U.S.(a)
|
|
$
|
55,358
|
|
|
$
|
1,062
|
|
|
2.0
|
%
|
U.K. and Europe(b)
|
|
16,871
|
|
|
(4,448
|
)
|
|
(20.9
|
)%
|
||
Mexico(c)
|
|
9,695
|
|
|
27
|
|
|
0.3
|
%
|
||
Total SG&A expense
|
|
$
|
81,924
|
|
|
$
|
(3,359
|
)
|
|
(3.9
|
)%
|
|
|
|
|
|
|
|
|||||
Sources of administrative restructuring activities
|
|
Thirteen
Weeks Ended March 31, 2019
|
|
Change from Thirteen Weeks Ended April 1, 2018
|
|||||||
Amount
|
|
Percent
|
|||||||||
|
|
(In thousands, except percent data)
|
|||||||||
U.S.(d)
|
|
$
|
(27
|
)
|
|
$
|
(816
|
)
|
|
(103.4
|
)%
|
U.K. and Europe
|
|
—
|
|
|
—
|
|
|
—
|
%
|
||
Mexico
|
|
—
|
|
|
—
|
|
|
—
|
%
|
||
Total administrative restructuring activities
|
|
$
|
(27
|
)
|
|
$
|
(816
|
)
|
|
(103.4
|
)%
|
(a)
|
SG&A expense incurred by our U.S. segment during the thirteen weeks ended March 31, 2019 increased $1.1 million, or 2.0%, from SG&A expense incurred by our U.S. segment during the thirteen weeks ended April 1, 2018, primarily because of a $1.6 million increase in payroll related expenses, a $1.4 million increase in incentive compensation expenses, a $0.5 million increase in legal expenses and a $0.4 million increase in advertising and promotional expenses. These increases in SG&A expenses were partially offset by a $2.8 million decrease in consulting expenses mostly related to our prepared foods line of business. 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 March 31, 2019 decreased $4.4 million, or 20.9%, from SG&A expense incurred by our U.K. and Europe segment during the thirteen weeks ended April 1, 2018. SG&A expense incurred by our U.K. and Europe segment decreased primarily because of a $2.6 million reduction in payroll related expenses, a $1.1 million reduction in legal fees and a $0.6 million reduction in customer relationship amortization. Other factors affecting SG&A expense were individually immaterial.
|
(c)
|
SG&A expense incurred by our Mexico segment during the thirteen weeks ended March 31, 2019 increased approximately $27,000, or 0.3%, from SG&A expense incurred by our Mexico segment during the thirteen weeks ended April 1, 2018. Factors affecting our Mexico segment's SG&A expense were individually immaterial.
|
(d)
|
Administrative restructuring activities incurred by our U.S. segment during the thirteen weeks ended March 31, 2019 included approximately $27,000 in sublease rental income related to the termination of our 40 North Foods operations. Administrative restructuring activities incurred by our U.S. segment during the thirteen weeks ended April 1, 2018 included $0.5 million in severance costs related to the GNP acquisition and $0.3 million related to the closure of the Luverne, Minnesota facility.
|
Source of Liquidity
|
|
Facility
Amount
|
|
Amount
Outstanding
|
|
Amount
Available
|
||||||
|
|
(In millions)
|
||||||||||
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
378.5
|
|
Borrowing arrangements:
|
|
|
|
|
|
|
||||||
U.S. Credit Facility(a)
|
|
750.0
|
|
|
—
|
|
|
708.4
|
|
|||
Mexico Credit Facility(b)
|
|
77.2
|
|
|
—
|
|
|
77.2
|
|
|||
U.K. and Europe Credit Facilities(c)
|
|
141.5
|
|
|
14.5
|
|
|
127.0
|
|
(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 March 31, 2019 totaled $41.6 million.
|
(b)
|
The U.S. dollar-equivalent of the amount available under the Mexico Credit Facility (as described below) was $77.2 million. The Mexico Credit Facility provides for a loan commitment of $1.5 billion Mexican pesos.
|
(c)
|
The U.K. and Europe Credit Facilities (as described below) provide for aggregate loan commitments of £100.0 million (or $130.3 million U.S. dollar-equivalent) and €10.0 million (or $11.2 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)
|
|
$
|
2,361,210
|
|
|
$
|
27,549
|
|
|
$
|
50,440
|
|
|
$
|
433,221
|
|
|
$
|
1,850,000
|
|
Interest(c)
|
|
869,794
|
|
|
125,845
|
|
|
248,456
|
|
|
238,243
|
|
|
257,250
|
|
|||||
Finance leases
|
|
165
|
|
|
98
|
|
|
67
|
|
|
—
|
|
|
—
|
|
|||||
Operating leases
|
|
387,542
|
|
|
97,683
|
|
|
126,957
|
|
|
89,445
|
|
|
73,457
|
|
|||||
Derivative liabilities
|
|
13,150
|
|
|
13,150
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchase obligations(d)
|
|
321,853
|
|
|
314,142
|
|
|
7,711
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
3,953,714
|
|
|
$
|
578,467
|
|
|
$
|
433,631
|
|
|
$
|
760,909
|
|
|
$
|
2,180,707
|
|
(a)
|
The total amount of unrecognized tax benefits at March 31, 2019 was $12.4 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 $41.6 million in letters of credit outstanding related to normal business transactions.
|
(c)
|
Interest expense in the table above assumes the continuation of interest rates and outstanding borrowings as of March 31, 2019.
|
(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.
|
•
|
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 flock 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 acquisition of Moy Park, 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 30, 2018 as filed with the SEC.
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
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 (a)
|
||||||
December 31, 2018 through January 27, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
199,763,489
|
|
January 28, 2019 through March 3, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
199,763,489
|
|
||
March 4, 2019 through March 31, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
199,763,489
|
|
||
Total
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
199,763,489
|
|
*
|
|
Filed herewith.
|
**
|
|
Furnished herewith.
|
***
|
|
The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
|
†
|
|
Represents a management contract on compensation plan arrangement.
|
|
|
PILGRIM’S PRIDE CORPORATION
|
|
|
|
Date: May 1, 2019
|
|
/s/ Fabio Sandri
|
|
|
Fabio Sandri
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer, Chief Accounting Officer and Duly Authorized Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2019, 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:
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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.
|
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: May 1, 2019
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/s/ Jayson Penn
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Jayson Penn
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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 March 31, 2019, 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.
|
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: May 1, 2019
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|
/s/ Fabio Sandri
|
|
|
Fabio Sandri
|
|
|
Chief Financial Officer
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Date: May 1, 2019
|
|
/s/ Jayson Penn
|
|
|
Jayson Penn
|
|
|
Principal Executive Officer
|
Date: May 1, 2019
|
|
/s/ Fabio Sandri
|
|
|
Fabio Sandri
|
|
|
Chief Financial Officer
|