Pilgrim's Pride Corporation to Close Chicken Processing Complex and Six
Distribution Centers
Company Announces Plan to Curtail Losses Amid Unprecedented Increases in
Feed-Ingredient Costs and Oversupply of Chicken in United States
PITTSBURG, Texas, March 12 /PRNewswire-FirstCall/ -- Pilgrim's Pride
Corporation (NYSE: PPC), today announced it will close a chicken processing
complex and six of its 13 distribution centers in the United States in
response to the crisis facing the U.S. chicken industry from soaring
feed-ingredient costs resulting from corn-based ethanol production. These
actions are part of a plan to curtail losses amid record-high costs for corn,
soybean meal and other feed ingredients and an oversupply of chicken in the
United States. The closings, which are expected to begin immediately and will
be completed by June, will result in the elimination of approximately
1,100 jobs. Additionally, the Company announced that it is in the process of
reviewing other production facilities for potential mix changes, closure
and/or consolidation in response to current negative industry fundamentals.
Under the plan announced today, the Company will close its chicken
processing complex in Siler City, N.C., which employs approximately
830 people. Pilgrim's Pride also plans to shut down distribution centers in
Oskaloosa, Iowa; Plant City and Pompano Beach, Fla.; Jackson, Miss.;
Nashville, Tenn.; and Cincinnati, Ohio. Pilgrim's Pride will provide
transition programs to employees to assist them in securing new employment,
filing for unemployment and other applicable benefits. No decision has been
made about the future use of the Siler City facility, however, when industry
fundamentals improve, portions of the live production capabilities associated
with the Siler City operation may be redeployed to supply other Company
facilities in that region of the country. The company expects to record asset
impairment and other charges related to the facility closures of approximately
$35 million, $21.7 million net of tax, or $0.33 per share.
"Our Company and industry are struggling to cope with unprecedented
increases in feed-ingredient costs this year due largely to the U.S.
government's ill-advised policy of providing generous federal subsidies to
corn-based ethanol blenders," said Clint Rivers, president and chief executive
officer. "The cost burden is already enormous, and it's growing even larger.
Based on current commodity futures markets, our company's total costs for corn
and soybean meal to feed our flocks in fiscal 2008 would be more than
$1.3 billion higher than what they were two years ago. We simply must find
ways to pass along these higher costs. Additionally, we believe that the
recent impact of food-based inflation, coupled with the need for food
producers to continue to increase prices for their products, will further
stimulate inflation, weaken consumer confidence and negatively affect demand
for products in certain market channels. This will require that the industry
adjust its production output to levels commensurate with a reduced demand, at
higher and necessary prices, sufficient to sustain the industry as a whole."
Mr. Rivers added: "While the decision to close a facility is always very
difficult, we believe the actions we are announcing today are absolutely
necessary to help bring supply and demand into better balance. That portion
of the demand for our products that exists solely at pricing levels below the
cost of production is no longer a demand that this industry can continue to
supply."
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 the
expected benefits and synergies associated with the acquisition of Gold Kist
and 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; asset impairment and other charges related
to facility closures or modifications; 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.
Media Contact: Ray Atkinson
Director of Corporate Communications
(540) 896-0406
Investor Contact: Gary Rhodes
Vice President, Corporate Communications and
Investor Relations
(903) 434-1495
SOURCE Pilgrim's Pride Corporation
media, Ray Atkinson, Director of Corporate Communications, +1-540-896-0406, or
investors, Gary Rhodes, Vice President, Corporate Communications and Investor
Relations, +1-903-434-1495, both of Pilgrim's Pride Corporation
