Pilgrim's Pride Corporation Press Release 1-03-2006
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
report (Date of earliest event reported): December 30, 2005
PILGRIM'S
PRIDE CORPORATION
(Exact
Name of Registrant as Specified in its Charter)
Delaware 1-9273 75-1285071
(State or Other Jurisdiction (Commission File
Number)
(IRS
Employer Identification
No.)
of Incorporation)
4845
US
Highway 271 North
Pittsburg, Texas 75686-0093
(Address
of Principal Executive Offices) (ZIP
Code)
Registrant's
telephone number, including area code: (903)
434-1000
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
q Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
q Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
q
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR
240.14d-2(b))
|
q Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01. Entry into a Material Definitive Agreement.
On
December 31, 2005, the Board of Directors of Pilgrim's Pride Corporation (the
"Company") adopted the Amended and Restated Pilgrim's Pride Corporation 2005
Deferred Compensation Plan (the "Amended Plan"), which amended and restated
the
Pilgrim's Pride Corporation 2005 Deferred Compensation Plan (the "Plan")
originally adopted on December 21, 2004, in order to reflect additional guidance
under the deferred compensation rules set forth in Section 409A of the Internal
Revenue Code (the "Code"), including, but not limited to, clarifying the process
for making deferral elections, the effect of revising deferral elections,
updating distribution procedures and permitting termination distributions prior
to retirement. Among the changes to the Plan, under the Amended Plan a
participant may rescind or modify his deferral election to the extent permitted
under Code Section 409A by filing the appropriate form provided by the
Administrative Committee. In addition, the distribution procedures in the
Amended Plan were modified by eliminating the requirement that a participant
attain age fifty-five before being eligible to receive termination installment
payments and by adding additional installment payment options. The Amended
Plan
also sets forth limited circumstances under which Code Section 409A would permit
the Company to delay distributions. In terms of participating companies outside
the United States, the Amended Plan provides the Administrative Committee with
the authority to adopt additional plan rules to comply with the laws of a
foreign jurisdiction. The changes to the Plan are generally effective
retroactive to January 1, 2005.
The
Company's Amended Plan is a nonqualified, unfunded deferred compensation and
supplemental savings plan that permits a select group of management or highly
compensated employees to defer the receipt of base salary or bonus. The Company
has the ability to make contributions to a participant’s account. A participant
is always fully vested in the amounts deferred to the Amended Plan; however,
any
Company contributions are subject to a six year graded vesting schedule. A
participant may elect to receive a distribution upon separation from service
with the Company or a participating subsidiary, on a specified payment date
or
in connection with a "Hardship Distribution" as defined in the Amended Plan
and,
depending upon the participant’s election, distributions will be paid as a lump
sum or in quarterly installments over a specified period. Separate distribution
elections may be made with respect to each plan year balance. Notwithstanding
the foregoing to the contrary, if on a payment date the participant’s vested
account balance is $50,000 or less, then the amount to be distributed will
be
paid in a lump sum. Amounts deferred under the Amended Plan are to be deemed
to
be invested in certain approved investments designated by the Oversight
Committee of the Board of Directors, although the Oversight Committee in its
discretion may grant each participant the right to designate how the funds
in
the participant's account shall be invested.
The
Amended Plan is filed as Exhibit 10.1 to this Current Report and is incorporated
herein by reference, and the foregoing summary is qualified in its entirety
thereby.
As
referenced in the Company's Proxy Statement for its 2006 Annual Meeting, on
November 30, 2005, the Audit Committee pre-approved the Company entering into
a
services agreement, a transportation agreement and a ground lease agreement
with
Pat Pilgrim, the son of Lonnie "Bo" Pilgrim, the Company's Chairman and largest
stockholder. Accordingly, the Company entered into a vendor service agreement
and a transportation agreement on January 3, 2006 and a ground lease agreement
on January 4, 2006 with Pat Pilgrim (collectively, the "Agreements"). The vendor
service agreement, which is attached hereto as Exhibit 10.2 and incorporated
herein by reference, provides that Pat Pilgrim will provide services to the
Company as mutually agreed upon by the parties for specified fees and charges.
The transportation agreement, which is attached hereto as Exhibit 10.3 and
incorporated herein by reference, provides that Pat Pilgrim will provide motor
contract carrier services to the Company for the transportation of grain
products and other goods and will be compensated for each shipment in accordance
with the rates set forth on IBIDTransport.com, a web-based rate management
system, or based on the delivery destination of the cargo, the total number
of
tons of cargo hauled and the agreed upon rate as contained in the applicable
purchase order. The ground lease agreement, which is attached hereto as Exhibit
10.4 and incorporated herein by reference, provides for Pat Pilgrim to lease
certain land from the Company for rent payments of $21,833.50 per year.
Management believes the terms of each of the Agreements are substantially
similar to those obtainable from unaffiliated parties.
The
foregoing summary of the Agreements is qualified in its entirety by the terms
and conditions of the Agreements.
Item
2.02. Results of Operations and Financial Condition.
The
information in this Item 2.02 and Exhibit 99.1 attached hereto shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, nor shall it be deemed incorporated by reference in any filing under
the
Securities Act of 1933, except as shall be expressly set forth by specific
reference in such filing.
On
January 3, 2006, the Company issued a press release announcing that it had
revised its previously issued earnings guidance for its first quarter of fiscal
2006.
The
press
release is furnished as Exhibit 99.1 to this Current Report.
Item
2.05. Costs Associated with Exit or Disposal Activities.
On
December 30, 2005, the Company committed tothe restructuring of its turkey
operations described in the above-referenced press release, which will result
in
the Company ceasing the production of ground turkey and cooked turkey deli
breast meat items at it Franconia, Pennsylvania further processing plan
effective March 3, 2006. As referenced in the press release, the Company
expects to take a charge for inventory valuation adjustments in its fiscal
quarter ended December 31, 2005 that could be as much as $4 million related
to
inventories and supplies of the restructured operations. In addition, the
Company expects that it may dispose of equipment related to the restructured
operations having a net book value of approximately $.62 million, which would
result in additional charges being recorded during the remainder of fiscal
2006.
Forward-Looking
Statements: Statements contained in this Current Report that state the
intentions, hopes, beliefs, anticipations, expectations or predictions of
the
future of the Company and its management, including the earnings guidance
for
the first quarter of fiscal 2006 and the Company's expectations regarding
the
financial effects of the restructuring of its Turkey operation, 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 the Company's flocks or elsewhere, affecting
the
Company's ability to conduct its operations and/or demand for the Company's
poultry products; contamination of the Company's products, which has recently
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 the Company's
operations or the application thereof; competitive factors and pricing pressures
or the loss of one or more of the Company's largest customers; currency exchange
rate fluctuations, trade barriers, exchange controls, expropriation and other
risks associated with foreign operations; management of the Company's cash
resources, particularly in light of the Company's leverage, and restrictions
imposed by and as a result of, the Company's leverage; and the impact of
uncertainties of litigation as well as other risks described under "Risk
Factors" in the Company's Annual Report on Form 10-K and subsequent filings
with
the Securities and Exchange Commission. The Company undertakes no obligation
to
update or revise publicly any forward-looking statements, whether as a result
of
new information, future events or otherwise.
Item
9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description
|
10.1
|
Amended
and Restated Pilgrim's Pride Corporation 2005 Deferred Compensation
Plan
|
|
10.2
|
Vendor
Service Agreement
|
|
10.3
|
Transportation
Agreement
|
|
10.4
|
Ground
Lease Agreement
|
|
99.1
|
Press
Release dated January 3, 2006
|
Signatures
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
PILGRIM'S
PRIDE
CORPORATION
Date:
January 6, 2006 By:
/s/
Richard A. Cogdill
Richard
A. Cogdill
Executive
Vice President, Chief
Financial Officer,
Secretary and Treasurer
Exhibit
Index
Exhibit
Number Description
|
10.1
|
Amended
and Restated Pilgrim's Pride Corporation 2005 Deferred Compensation
Plan
|
|
10.2
|
Vendor
Service Agreement
|
|
10.3
|
Transportation
Agreement
|
|
10.4
|
Ground
Lease Agreement
|
|
99.1
|
Press
Release dated January 3,
2006
|