Pilgrim's Pride Corporation Reports Financial Results for Second Quarter of Fiscal 2008

    PITTSBURG, Texas, May 5 /PRNewswire-FirstCall/ -- Pilgrim's Pride
 Corporation (NYSE:   PPC) today reported a net loss of $111.4 million, or
 $1.67 per share, on net sales of $2.1 billion for the second fiscal quarter
 ended March 29, 2008. These results include asset impairment and
 restructuring charges of approximately $17.7 million, $11.1 million net of
 tax, or $0.17 per share, related to the previously announced closing of one
 processing plant and six distribution centers. For the second quarter of
 fiscal 2007, the company reported a net loss of $40.1 million, or $0.60 per
 share, on total sales of $1.99 billion.
 
     "Our financial results in the second quarter of fiscal 2008 reflect the
 crisis facing our company and industry from record-high feed costs caused
 by the federal government's deeply flawed ethanol policy," said Clint
 Rivers, president and chief executive officer of Pilgrim's Pride.
 
     Pilgrim's Pride said its costs for corn and soybean meal in the quarter
 climbed $200 million, when compared to the same period a year ago, as the
 average price for a bushel of corn increased 29% and soybean meal gained
 more than 63%. Based on the actual costs incurred for the first half of the
 fiscal year and current commodity futures markets for the remainder, the
 company's total feed-ingredient costs for fiscal 2008 would be up more than
 $800 million from last fiscal year.
 
     "While we continue working to pass along price increases to our
 customers, the simple fact is that to date, we have not been able to raise
 prices fast enough to match the extreme price volatility in the grain
 markets," Mr. Rivers explained.
 
     "The operating environment for chicken producers today is among the
 most difficult I have seen during my 27 years in the business," he said.
 "The federal government has helped spark a growing worldwide food crisis by
 mandating corn-based ethanol production at the expense of affordable food.
 American consumers are only just beginning to feel the impact of sharply
 higher food prices. There will be much more to come as food producers fully
 pass along these higher input costs. Meanwhile, the government is using tax
 dollars to provide generous subsidies to big oil companies for blending
 ethanol and stiff duties on imported ethanol help protect domestic ethanol
 producers at the expense of end consumers. As a direct result of these
 soaring grain costs, a growing number of food companies are shutting down
 plants and eliminating thousands of jobs in rural America."
 
     Mr. Rivers added: "At Pilgrim's Pride, we have made a series of tough
 decisions over the past two months to address the challenges facing our
 business. Those decisions include closing a processing plant and six
 distribution centers, and a planned reduction in production by 5% in the
 second half of fiscal 2008. While consumer demand for chicken remains
 strong, we believe that production cuts are necessary to bring supply into
 better balance with demand at appropriate selling prices to cover input
 costs. Indeed, industry data for the last full week in April show that egg
 sets declined 2.4% year over year, the fifth consecutive weekly decline. In
 addition, market pricing for breast meat has begun a much-needed rise,
 though we believe that little, if any, of this increase is attributable to
 the recent production cutbacks. While we are encouraged by these positive
 trends, we believe that high grain costs will continue to exert pressure on
 our operating results during the second half of fiscal 2008. Accordingly,
 we continue to evaluate our production facilities for potential mix
 changes, closure, sale and/or consolidation in an effort to position the
 company for a return to profitability."
 
     For the first six months of fiscal 2008, Pilgrim's Pride reported a net
 loss of $143.8 million, or $2.16 per share, on net sales of $4.1 billion
 compared to a pro forma net loss of $82.9 million, or $1.25 per share, on
 pro forma net sales of $3.8 billion in the same period last year. The pro
 forma amounts assume the acquisition of Gold Kist Inc., which closed on
 December 27, 2006, was completed on September 30, 2006, and included in the
 operating results for the six months. The results for the first six months
 of fiscal 2008 include a non-recurring income tax charge of approximately
 $13.0 million, or $0.20 per share, related to an adjustment in deferred
 taxes as a result of a newly enacted tax law in Mexico, and asset
 impairment and restructuring charges of approximately $17.7 million, $11.1
 million net of tax, or $0.17 per share, related to the closing of one
 processing plant and six distribution centers.
 
     Conference Call Information
 
     A conference call to discuss the Company's first-quarter results will
 be held at 10 a.m. Central (11 a.m. Eastern) on May 5, 2008. To listen live
 via telephone, call toll-free 877-656-8906, verbal pass code Pilgrim's. The
 call also will be broadcast live over the Internet at
 http://www.videonewswire.com/event.asp?id=47334. (Please copy and paste the
 link into the browser.)
 
     Additionally, the Company has posted a slide presentation on its
 website at http://www.pilgrimspride.com, which may be viewed by listeners
 in connection with today's conference call. The webcast will be available
 for replay within approximately two hours of the conclusion of the call. A
 telephone replay will be available beginning at approximately 2 p.m.
 (Central) on May 5 at toll-free 877-919-4059 pass code 48467528. The replay
 will be available for 60 days.
 
     About Pilgrim's Pride
 
     Pilgrim's Pride Corporation is the largest chicken company in the
 United States and Puerto Rico and the second-largest in Mexico. Pilgrim's
 Pride employs approximately 54,500 people and operates 37 chicken
 processing and 12 prepared-foods facilities, with major operations in
 Texas, Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, North
 Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia,
 Mexico and Puerto Rico as well as other facilities in Arizona, Iowa,
 Mississippi, Ohio and Utah.
 
     Pilgrim's Pride products are sold to foodservice, retail and frozen
 entree customers. The Company's primary distribution is through retailers,
 foodservice distributors and restaurants throughout the United States and
 Puerto Rico and in the Northern and Central regions of Mexico. For more
 information, please visit http://www.pilgrimspride.com.
 
     Forward-Looking Statements
 
     Statements contained in this press release that state the intentions,
 plans, hopes, beliefs, anticipations, expectations or predictions of the
 future of Pilgrim's Pride Corporation and its management, including as to
 changes in pricing, demand and market conditions for chicken products and
 profitability, are forward-looking statements. It is important to note that
 the actual results could differ materially from those projected in such
 forward-looking statements. Factors that could cause actual results to
 differ materially from those projected in such forward-looking statements
 include: matters affecting the poultry industry generally, including
 fluctuations in the commodity prices of feed ingredients, chicken and
 turkey; additional 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;
 management of our cash resources, particularly in light of our substantial
 leverage; restrictions imposed by, and as a result of, our substantial
 leverage; changes in laws or regulations affecting our operations or the
 application thereof; new immigration legislation or increased enforcement
 efforts in connection with existing immigration legislation that cause our
 costs of doing 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 integrating our recent acquisition of Gold Kist, or realize the
 associated cost savings and operating synergies currently anticipated;
 currency exchange rate fluctuations, trade barriers, exchange controls,
 expropriation and other risks associated with foreign operations;
 disruptions in international markets and distribution channels; and the
 impact of uncertainties of litigation as well as other risks described
 under "Risk Factors" in our Annual Report on Form 10-K and subsequent
 filings with the Securities and Exchange Commission. Pilgrim's Pride
 Corporation undertakes no obligation to update or revise publicly any
 forward-looking statements, whether as a result of new information, future
 events or otherwise.
 
 
Contact: Gary Rhodes Vice President, Corporate Communications & Investor Relations (903) 434-1495 PILGRIM'S PRIDE CORPORATION Consolidated Statements of Operations (Unaudited) [In thousands, except share and per share data] Three Months Ended March 29, March 31, 2008 2007 Net sales $ 2,100,794 $ 1,987,185 Cost of sales 2,124,173 1,903,136 Asset impairment 12,022 -- Gross profit (loss) (35,401) 84,049 Selling, general and administrative 102,559 94,723 Restructuring charges 5,669 -- Operating loss (143,629) (10,674) Other expense (income): Interest expense 33,777 38,696 Interest income (446) (1,684) Loss on early extinguishment of debt -- 14,475 Miscellaneous, net (1,161) (3,668) Total other expenses, net 32,170 47,819 Loss from continuing operations before income taxes (175,799) (58,493) Income tax benefit (64,295) (19,426) Loss from continuing operations (111,504) (39,067) Loss from operation of discontinued business, net of tax (847) (1,010) Gain on disposal of discontinued business, net of tax 903 -- Net loss $ (111,448) $ (40,077) Net loss per common share - basic and diluted: Continuing operations $ (1.67) $ (0.59) Discontinued business -- (0.01) Net loss $ (1.67) $ (0.60) Dividends declared per common share $ 0.0225 $ 0.0225 Weighted average shares outstanding 66,555,733 66,555,733 PILGRIM'S PRIDE CORPORATION Consolidated Statements of Operations (Unaudited) [In thousands, except share and per share data] Six Months Ended March 29, March 31, 2008 2007 Net sales $ 4,148,147 $ 3,279,142 Cost of sales 4,066,423 3,132,855 Asset impairment 12,022 -- Gross profit 69,702 146,287 Selling, general and administrative 206,992 161,863 Restructuring charges 5,669 -- Operating loss (142,959) (15,576) Other expense (income): Interest expense 63,788 52,416 Interest income (954) (2,993) Loss on early extinguishment of debt -- 14,475 Miscellaneous, net (4,024) (4,679) Total other expenses, net 58,810 59,219 Loss from continuing operations before income taxes (201,769) (74,795) Income tax benefit (57,055) (25,872) Loss from continuing operations (144,714) (48,923) Loss from operation of discontinued business, net of tax 34 111 Gain on disposal of discontinued business, net of tax 903 -- Net loss $ (143,777) $ (48,812) Net income (loss) per common share - basic and diluted: Continuing operations $ (2.17) $ (0.73) Discontinued business 0.01 -- Net loss $ (2.16) $ (0.73) Dividends declared per common share $ 0.0450 $ 0.0450 Weighted average shares outstanding 66,555,733 66,555,733 PILGRIM'S PRIDE CORPORATION Pro forma Financial Information (Unaudited) (In thousands except per share amounts) The unaudited pro forma financial information has been presented as if the acquisition of Gold Kist Inc. had occurred as of the beginning of the fiscal year presented. Six Months Ended March 29, 2008 March 31, 2007 (Actual) (Pro forma) Net sales $ 4,148,147 $ 3,806,952 Depreciation and amortization $ 115,601 $ 112,776 Operating loss $ (142,959) $ (46,008) Interest expense, net $ 62,834 $ 75,245 Income tax benefit $ (57,055) $ (46,579) Loss from continuing operations $ (144,714) $ (83,031) Net loss $ (143,777) $ (82,920) Net loss per common share $ (2.16) $ (1.25) EBITDA $ (25,436) $ 55,323 Capital expenditures $ 70,216 $ 107,193 PILGRIM'S PRIDE CORPORATION Condensed Consolidated Balance Sheets (Unaudited) [In thousands] March 29, September 29, 2008 2007 ASSETS Cash and cash equivalents $ 97,195 $ 66,168 Investments in available-for-sale securities 10,205 8,153 Other current assets 1,378,863 1,225,547 Total current assets 1,486,263 1,299,868 Goodwill 499,669 505,166 Other assets 125,053 138,546 Investments in available-for-sale securities 44,227 46,035 Property, plant and equipment, net 1,736,817 1,784,621 Total assets $ 3,892,029 $ 3,774,236 LIABILITIES AND STOCKHOLDERS' EQUITY Current maturities of long-term debt $ 2,891 $ 2,872 Other current liabilities 901,968 902,330 Total current liabilities 904,859 905,202 Long-term debt, less current maturities 1,629,930 1,318,558 Deferred income taxes 248,486 326,570 Other long-term liabilities 83,990 51,685 Total stockholders' equity 1,024,764 1,172,221 Total liabilities and stockholders' equity $ 3,892,029 $ 3,774,236 PILGRIM'S PRIDE CORPORATION Selected Financial Information (Unaudited) (In thousands) Note: "EBITDA" is defined as the sum of the income (loss) from continuing operations plus interest, taxes, depreciation and amortization. EBITDA is presented because it is used by us, and we believe it is frequently used by securities analysts, investors and other interested parties, in addition to and not in lieu of Generally Accepted Accounting Principles (GAAP) results, to compare the performance of companies. EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of our operating performance or any other measures of performance derived in accordance with GAAP. We have also included EBITDA as adjusted to exclude a loss on early extinguishment of debt. We believe investors may be interested in this information as this is a manner in which our management analyzes our results from continuing operations. EBITDA is calculated as follows:
Three Months Ended March 29, 2008 March 31, 2007 Actual Actual Loss from continuing operations $ (111,504) $ (39,067) Add: Income tax benefit (64,295) (19,426) Interest expense, net 33,331 37,012 Depreciation and amortization 60,057 54,575 Minus: Amortization of capitalized financing costs 1,058 1,110 EBITDA $ (83,469) $ 31,984 Asset impairment and restructuring charges 17,691 -- Loss on early extinguishment of debt -- 14,475 EBITDA - Adjusted (65,778) 46,459 Capital expenditures $ 27,533 $ 55,101 March 29, March 31, March 31, 2008 2007 2007 Six Months Ended Actual Actual Pro forma Loss from continuing operations $ (144,714) $ (48,923) $ (83,031) Add: Income tax benefit (57,055) (25,872) (46,579) Interest expense, net 62,834 49,423 75,245 Depreciation and amortization 115,601 86,898 112,776 Minus: Amortization of capitalized financing costs 2,102 1,815 2,312 EBITDA $ (25,436) $ 59,711 $ 56,099 Asset impairment and restructuring charges 17,691 -- -- Loss on early extinguishment of debt -- 14,475 14,475 EBITDA - Adjusted (7,745) 74,186 70,574 Capital expenditures $ 70,216 $ 94,449 $ 107,193

SOURCE Pilgrim's Pride Corporation
RELATED LINKS
http://www.pilgrimspride.com

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