SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarter ended March 30, 2002 Commission file number 1-9273 PILGRIM'S PRIDE CORPORATION (Exact name of registrant as specified in its charter) <TABLE> <CAPTION> DELAWARE 75-1285071 <S> <C> <C> (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 110 SOUTH TEXAS, PITTSBURG, TX 75686-0093 (Address of principal executive offices) (Zip code) </TABLE> (903) 855-1000 (Telephone number of principal executive offices) Not Applicable Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes XNo Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 27,589,250 shares of the Registrant's Class B Common Stock, $.01 par value, were outstanding as of May 14, 2002. 13,523,429 shares of the Registrant's Class A Common Stock, $.01 par value, were outstanding as of May 14, 2002. 1
INDEX PILGRIM'S PRIDE CORORATION AND SUBSIDIARIES PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated balance sheets March 30, 2002 and September 29, 2001 Consolidated statements of income Three months and six months ended March 30, 2002 and March 31, 2001 Consolidated statements of cash flows Six months ended March 30, 2002 and March 31, 2001 Notes to consolidated financial statements as of March 30, 2002 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures about Market Risk PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 4. Submission of Matters to a Vote of Security Holders Item 6. Exhibits and Reports on Form 8-K SIGNATURES
<TABLE> <CAPTION> PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Pilgrim's Pride Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) March 30, 2002 September 29, 2001 ASSETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) <S> <C> <C> <C> <C> CURRENT ASSETS: Cash and cash equivalents $ 8,649 $ 20,916 Trade accounts and other receivables, less allowance for doubtful accounts 82,703 95,022 Inventories 322,622 314,400 Other current assets 11,461 12,934 Total Current Assets 425,435 443,272 OTHER ASSETS 19,952 20,067 PROPERTY, PLANT AND EQUIPMENT: Land 36,917 36,350 Buildings, machinery and equipment 990,475 929,922 Autos and trucks 55,560 53,264 Construction-in-progress 38,679 71,427 1,121,631 1,090,963 Less accumulated depreciation 371,466 338,607 750,165 752,356 $1,195,552 $1,215,695 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes Payable to Banks $ 55,000 $ -- Accounts payable 141,453 151,265 Accrued expenses 73,987 83,558 Current maturities of long-term debt 5,126 5,099 Total Current Liabilities 275,566 239,922 LONG-TERM DEBT, LESS CURRENT MATURITIES 410,628 467,242 DEFERRED INCOME TAXES 113,736 126,710 MINORITY INTEREST IN SUBSIDIARY 1,981 889 COMMITMENTS AND CONTINGENCIES -- -- STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, authorized 5,000,000 shares; none issued -- -- Common stock - Class A, $.01 par value, authorized 100,000,000 shares; 13,794,529 issued and outstanding 138 138 Common stock - Class B, $.01 par value, authorized 60,000,000 shares; 27,589,250 issued and outstanding 276 276 Additional paid-in capital 79,625 79,625 Retained earnings 315,763 302,758 Accumulated other comprehensive loss (593) (297) Less treasury stock, 271,100 shares (1,568) (1,568) Total Stockholders' Equity 393,641 380,932 $1,195,552 $1,215,695 See notes to consolidated financial statements. </TABLE>
<TABLE> <CAPTION> Pilgrim's Pride Corporation and Subsidiaries Consolidated Income Statements (Unaudited) Three Months Six Months Ended Ended March 30, March 31, March 30, March 31, 2002 2001 2002 2001 (in thousands, except share and per share data) <S> <C> <C> <C> <C> <C> <C> <C> <C> Net Sales $ 600,753 $ 541,593 $1,256,783 $ 927,625 Costs and Expenses: Cost of sales 572,122 512,377 1,170,288 851,243 Selling, general and administrative 33,003 34,488 67,537 58,443 605,125 546,865 1,237,825 909,686 Operating (loss) income (4,372) (5,272) 18,958 17,939 Other Expense (Income): Interest expense,net 7,262 7,085 15,835 11,225 Foreign exchange (gain) loss (360) 42 (895) 163 Miscellaneous, net 873 (281) 486 (403) 7,775 6,846 15,426 10,985 Income (loss) before income taxes (12,147) (12,118) 3,532 6,954 Income tax (benefit) expense (13,399) (2,316) (10,711) 4,019 Net income (loss) $ 1,252 $ (9,802) $ 14,243 $ 2,935 Net income (loss) per common share - basic and diluted $ 0.03 $ (0.24) $ 0.35 $ 0.07 Dividends per common share $ 0.015 $ 0.015 $ 0.03 $ 0.03 Weighted average shares outstanding 41,112,679 41,112,679 41,112,679 41,112,679 See notes to consolidated financial statements. </TABLE>
<TABLE> <CAPTION> Pilgrim's Pride Corporation and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) SIX MONTHS ENDED MARCH 30, 2002 MARCH 31, 2001 (IN THOUSANDS) <S> <C> <C> <C> <C> Cash Flows From Operating Activities: Net income $ 14,243 $ 2,935 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 35,045 20,820 Loss (gain) on property disposals 109 (2) Deferred income taxes (12,974) (1,755) Changes in operating assets and liabilities: Accounts and other receivables 12,319 (4,363) Inventories (8,222) (17,777) Prepaid expenses and other current assets 1,473 (3,445) Accounts payable and accrued expenses (19,383) (27,735) Other 452 (164) Cash Provided By (Used In) Operating Activities 23,062 (31,486) INVESTING ACTIVITIES: Acquisitions of property, plant and equipment (32,231) (60,400) Business acquisitions -- (239,539) Proceeds from property disposals 199 856 Other, net (645) (364) Net Cash Used In Investing Activities (32,677) (299,447) FINANCING ACTIVITIES: Borrowing for acquisition -- 285,070 Repayments on WLR Foods, Inc. debt -- (45,531) Proceeds from notes payable to banks 128,500 136,000 Repayments of notes payable to banks (73,500) (77,000) Proceeds from long-term debt 28,850 32,430 Payments on long-term debt (85,436) (22,107) Cash dividends paid (1,238) (1,233) Cash (Used In) Provided By Financing Activities (2,824) 307,629 Effect of exchange rate changes on cash and cash equivalents 172 (11) Decrease in cash and cash equivalents (12,267) (23,315) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 20,916 28,060 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,649 $ 4,745 SUPPLEMENTAL DISCLOSURE INFORMATION: Cash paid during the period for: Interest (net of amount capitalized) $18,364 $8,590 Income taxes $1,302 $3,970 See notes to consolidated financial statements. </TABLE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A-BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Pilgrim's Pride Corporation ("Pilgrim's" or the "Company") have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the period ended March 30, 2002 are not necessarily indicative of the results that may be expected for the year ended September 28, 2002. For further information, refer to the consolidated financial statements and footnotes thereto included in Pilgrim's annual report on Form 10-K for the year ended September 29, 2001. The consolidated financial statements include the accounts of Pilgrim's and its wholly and majority owned subsidiaries. Significant intercompany accounts and transactions have been eliminated. Total comprehensive income for the six months ending March 30, 2002 and March 31, 2001 was $13.9 million and $2.9 million, respectively. On January 27, 2001, we acquired WLR Foods, Inc. (formerly Nasdaq:WLRF) for approximately $239.5 million and the assumption of approximately $45.5 million of indebtedness. WLR operations have been included since the acquisition on January 27, 2001. The acquisition was accounted for under the purchase method of accounting and the purchase price has been allocated based on the estimated fair value of assets and liabilities. Pro Forma Financial Information: The following unaudited pro forma financial information has been presented as if the acquisition of WLR Foods, Inc. had occurred as of the beginning of each March 31, 2001 period presented. In addition, certain reclassifications have been made to the WLR historical financial statements to conform to the presentation used by Pilgrim's Pride Corporation. <TABLE> <CAPTION> Historical Pro Forma MARCH 30, 2002 MARCH 31, 2001 <S> <C> <C> <C> <C> THREE MONTHS ENDED Net Sales $600,753 $590,659 Operating Loss (4,372) (23,603) Interest Expense, Net 7,262 9,338 Loss Before Tax (12,147) (32,834) Net Income (Loss) 1,252 (22,439) Depreciation and Amortization 17,647 13,556 Net Income (Loss) per Common Share - Basic and Diluted $ 0.03 $ (0.55) Historical Pro Forma SIX MONTHS ENDED MARCH 30, 2002 MARCH 31, 2001 Net Sales $1,256,783 $1,192,055 Operating Income 18,958 6,195 Interest Expense, Net 15,835 20,239 Income (Loss) Before Tax 3,532 (13,939) Net Income (Loss) 14,243 (9,810) Depreciation and Amortization 35,045 29,953 Net Income (Loss) per Common Share - Basic and Diluted $ 0.35 $ (0.24) </TABLE> NOTE B-ACCOUNTS RECEIVABLE In 1998 the Company entered into an Asset Sale Agreement to sell up to $60 million of accounts receivable. In connection with the Asset Sale Agreement, the Company sells, on a revolving basis, certain of its trade receivables (the "Pooled Receivables") to a special purpose corporation wholly owned by the Company, which in turn sells a percentage ownership interest to third parties. At March 30, 2002 and September 29, 2001, an interest in these Pooled Receivables of $60.0 million and $58.5 million, respectively, had been sold to third parties and is reflected as a reduction to accounts receivable. The increase in pooled receivable sales from September 29, 2001 is included in cash flows from operating activities in the Consolidated Statements of Cash Flows. Losses on sales were immaterial. NOTE C-INVENTORIES <TABLE> <CAPTION> <S> <C> <C> <C> <C> Inventories consist of the following: MARCH 30, 2002 SEPTEMBER 29, 2001 (IN THOUSANDS) Chicken: Live chicken and hens $ 98,499 $ 97,073 Feed, eggs and other 69,135 77,970 Finished chicken products 73,032 70,493 240,666 245,536 Turkey: Live turkey and hens 30,834 30,694 Feed, eggs and other 8,032 3,906 Finished turkey products 43,090 34,264 81,956 68,864 Total Inventory $322,622 $314,400 </TABLE> On March 12, 2002 an outbreak of low-pathogenic avian influenza was discovered in Virginia, a disease contagious to turkey, chicken and other birds. Due to the outbreak of low pathogenic avian influenza we reduced approximately $5.5 million of turkey inventory during the quarter ended March 30, 2002 in anticipation of the flocks being destroyed. (See management discussions in Management Discussion and Analysis of Financial and Results of Operations for further information.) NOTE D-LONG TERM DEBT At March 30, 2002, the Company maintained $130.0 million in revolving credit facilities and $400.0 million in a secured revolving/term borrowing facility. The $400.0 million revolving/term borrowing facility provides for $285.0 million and $115.0 million of 10-year and 7-year commitments, respectively. Borrowings under these facilities are split pro rata between the 10-year and 7-year maturities as they occur. The credit facilities provide for interest at rates ranging from LIBOR plus five-eights percent to LIBOR plus two and three-quarters percent depending upon the Company's total debt to capitalization ratio. Interest rates on debt outstanding under these facilities at March 30, 2002 ranged from LIBOR plus one and one-quarter percent to LIBOR plus two and one-quarter percent. These facilities are secured by inventory and fixed assets or are unsecured. At March 30, 2002, approximately $32.3 million was available under the revolving credit facilities, borrowing under these facilities, are intended to be paid within one year and are classified as current liabilities and $274.0 million was available under the revolving/term borrowing facility. Annual maturities of long-term debt for the remainder of fiscal 2002 and for the five years subsequent to March 30, 2002 are: 2002 -- $2.5 million; 2003 -- $6.4 million; 2004 -- $11.8 million; 2005 -- $11.5 million; and 2006 -- $50.6 million. NOTE E -- INCOME TAXES Effective January 1, 2002, the Mexican Congress passed the Mexican tax reform (the "Reform") legislation, which eliminated the previous tax exemption under Simplified Regime for the Company's Mexico subsidiaries. The Reform requires the Company's Mexican subsidiaries to calculate and pay taxes under a new simplified regime pursuant to Mexico's income tax laws beginning January 1, 2002, subject to certain transitional provisions. The primary transitional provision was an exit calculation, which generated a net operating loss carryforward for Mexican income tax purposes. As a result of the Reform, the Company recognized a tax benefit of approximately $9.7 million as of January 1, 2002, primarily to reflect the benefit of the net operating loss carryforward for Mexican tax purposes. The additional deferred tax assets and liabilities resulting from the enactment of the Reform effective January 1, 2002 are summarized as follows: <TABLE> <CAPTION> <S> <C> <C> <C> <C> Deferred tax liabilities: Tax over book depreciation $17,468 Inventory valuation 6,905 Other 5,559 Total deferred tax liabilities 29,932 Deferred tax assets: Mexico net operating losses (47,732) Other (524) Total deferred tax asset (48,256) Less: Valuation allowance 8,613 Net deferred tax (assets) ($ 9,711) </TABLE> The valuation allowance reflects the portion of the net operating losses attributable to certain Mexican subsidiaries that currently do not have significant operations and, accordingly, such losses are expected to expire unutilized. The Mexican tax operating loss carryforwards expire in the years ranging from 2008 through 2012. NOTE F-RELATED PARTY TRANSACTIONS The major stockholder of the Company owns a chicken growing and an egg laying operation. Transactions with related parties are summarized as follows: <TABLE> <CAPTION> Three Months Ended Six Months Ended March 30, March 31, March 30, March 31, 2002 2001 2002 2001 (in thousands) <S> <C> <C> <C> <C> <C> <C> <C> <C> Contract egg grower fees to major stockholder $ - $ 3,852 $ 8 $ 5,100 Lease payments on commercial egg property 188 188 376 188 Chick, feed and other sales to major stockholder 6,950 7,345 44,060 38,115 Live chicken purchases from major stockholder 23,623 25,607 44,173 39,053 </TABLE> On December 29, 2000 the Company entered into an agreement to lease a commercial egg property and assume all of the ongoing costs of the operation from the Company's major stockholder. The Company had previously purchased the eggs produced from this operation pursuant to a contract grower agreement. The lease term runs for ten years with a monthly lease payment of $62,500. The Company has an option to extend the lease for an additional five years, with an option at the end of the lease to purchase the property at fair market value as determined by an independent appraisal. The Company had accounts receivable of approximately $0.1 million at March 30, 2002 from its major stockholder and related parties. Additionally, the Company had $0.2 million in notes receivable from officers of the Company. NOTE G-CONTINGENCIES In January of 1998, seventeen of our current and/or former employees filed the case of "Octavius Anderson, et al. v. Pilgrim's Pride Corporation" in the United States District Court for the Eastern District of Texas, Lufkin Division claiming Pilgrim's Pride violated requirements of the Fair Labor Standards Act. The suit alleged Pilgrim's Pride failed to pay employees for all hours worked. The suit generally alleged that (1) employees should be paid for time spent to put on, take off, and clean certain personal gear at the beginning and end of their shifts and breaks and (2) the use of a master time card or production "line" time fails to pay employees for all time actually worked. Plaintiffs sought to recover unpaid wages plus liquidated damages and legal fees. Approximately 1,700 consents to join as plaintiffs were filed with the court by current and/or former employees. During the week of March 5, 2001, the case was tried in the Federal Court of the Eastern District of Texas, Lufkin, Texas. The Company prevailed at the trial with a judgment issued by the judge, which found no evidence presented to support the plaintiffs' allegations. The plaintiffs have filed an appeal in the Fifth Circuit Court of Appeals to reverse the judge's decision. The plaintiff's brief was submitted to the court on November 5, 2001. Pilgrim's Pride's response to the plaintiff's brief to the Fifth Circuit Court of Appeals was submitted on December 5, 2001 and oral arguments have been set for the week of June 3, 2002. Appellants filed a short reply brief. The National Chicken Council has filed an Amicus Curiae brief in support of our position on this appeal, which was accepted by the court. Neither the likelihood of an unfavorable outcome nor the amount of ultimate liability, if any, with respect to this case can be determined at this time. The Company does not expect this matter, individually or collectively, to have a material impact on our financial position, operations or liquidity. Substantially similar suits have been filed against other integrated poultry companies, including the Betty Kennell case discussed below, a number of which have favorable results at the trial or appellate court level. In August of 2000, four of our current and/or former employees filed the case of "Betty Kennell, et al. v. Wampler Foods, Inc." in the United States District Court for the Northern District of West Virginia, claiming we violated requirements of the Fair Labor Standards Act. The suit generally makes the same allegations as Anderson v. Pilgrim's Pride discussed above. Plaintiffs seek to recover unpaid wages plus liquidated damages and legal fees. Approximately 150 consents to join as plaintiffs were filed with the court by current and/or former employees. No trial date has been set. To date, only limited discovery has been performed. Neither the likelihood of an unfavorable outcome nor the amount of ultimate liability, if any, with respect to this case can be determined at this time. We do not expect this matter, individually or collectively, to have a material impact on our financial position, operations or liquidity. NOTE H - BUSINESS SEGMENTS Since the acquisition of WLR Foods on January 27, 2001, the Company operates in two reportable business segments as (1) a producer of chicken and other products and (2) a producer of turkey products. The Company's chicken and other products segment primarily includes sales of chicken products the Company produces and purchases for resale in the United States and Mexico, and also includes table eggs and feed. The Company's chicken and other products segment conducts separate operations in the United States and Mexico and is reported as two separate geographical areas. The Company's turkey segment includes sales of turkey products produced in our turkey operation recently acquired from WLR Foods, whose operations are exclusively in the United States. Inter-area sales and inter-segment sales, which are not material, are accounted for at prices comparable to normal trade customer sales. Corporate assets and expenses are included with chicken and other products. The following table presents certain information regarding the Company's segments: <TABLE> <CAPTION> Three Months Ended Six Months Ended March 30, March 31, March 30, March 31, 2002 2001* 2002 2001* (in thousands) <S> <C> <C> <C> <C> <C> <C> <C> <C> Net Sales to Customers: Chicken and Other Products: United States $449,564 $402,909 $897,627 $710,461 Mexico 80,376 75,844 171,292 154,324 Sub-total 529,940 478,753 1,068,919 864,785 Turkey 70,813 62,840 187,864 62,840 Total $600,753 $541,593 $1,256,783 $927,625 Operating Income (Loss): Chicken and Other Products: United States $ 4,971 $ 1,795 $ 14,328 $ 22,426 Mexico (513) (5,201) 7,957 (2,621) Sub-total 4,458 (3,406) 22,285 19,805 Turkey (8,830) (1,866) (3,327) (1,866) Total $(4,372) $(5,272) $ 18,958 $ 17,939 Depreciation and Amortization Chicken and Other Products: United States $12,552 $ 8,797 $ 23,344 $ 14,685 Mexico 3,377 1,792 6,794 4,571 Sub-total 15,929 10,589 30,138 19,256 Turkey 1,717 1,564 4,907 1,564 Total $17,646 $12,153 $ 35,045 $ 20,820 * In 2001, the Company identified certain products produced by the former WLR Foods that were included in Turkey net sales but were more properly classified as United States Chicken and Other Products net sales. As a result, $8.6 million has been reclassified from Turkey net sales to United States Chicken and Other Products net sales, for each of the six months ended March 30, 2001 and the three months ended March 30, 2001. Additionally, $2.1 million has been reclassified from Turkey operating loss to United States Chicken and Other Products operating income to properly reflect operating income after the reclassification of the net sales for the six months ended March 30, 2001 and the three months ended March 30, 2001. </TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Profitability in the poultry industry is materially affected by the commodity prices of feed ingredients, chicken and turkey, which are determined by supply and demand factors. As a result, the chicken and turkey industries are subject to cyclical earnings fluctuations. Cyclical earnings fluctuations can be mitigated somewhat by: - Business strategy; - Product mix; - Sales and marketing plans; and - Operating efficiencies. In an effort to reduce price volatility and to generate higher, more consistent profit margins, we have concentrated on the production and marketing of prepared foods products. Prepared foods products generally have higher profit margins than our other products. Also, the production and sale in the U.S. of prepared foods products reduces the impact of the costs of feed ingredients on our profitability. Feed ingredient purchases are the single largest component of our cost of goods sold, representing approximately 30.1% of our cost of goods sold in fiscal 2001. The production of feed ingredients is positively or negatively affected primarily by weather patterns throughout the world, the global level of supply inventories, demand for feed ingredients and the agricultural policies of the United States and foreign governments. As further processing is performed, feed ingredient costs become a decreasing percentage of a product's total production costs, thereby reducing their impact on our profitability. Products sold in this form enable us to charge a premium, reduce the impact of feed ingredient costs on our profitability and improve and stabilize our profit margins. The following table presents certain information regarding our segments: <TABLE> <CAPTION> Three Months Ended Six Months Ended March 30, March 31, March 30, March 31, 2002 2001* 2002 2001* (in thousands) <S> <C> <C> <C> <C> <C> <C> <C> <C> Net Sales to Customers: Chicken and Other Products: United States $449,564 $402,909 $897,627 $710,461 Mexico 80,376 75,844 171,292 154,324 Sub-total 529,940 478,753 1,068,919 864,785 Turkey 70,813 62,840 187,864 62,840 Total $600,753 $541,593 $1,256,783 $927,625 Operating Income (Loss): Chicken and Other Products: United States $ 4,971 $ 1,795 $ 14,328 $ 22,426 Mexico (513) (5,201) 7,957 (2,621) Sub-total 4,458 (3,406) 22,285 19,805 Turkey (8,830) (1,866) (3,327) (1,866) Total $(4,372) $(5,272) $ 18,958 $ 17,939 Depreciation and Amortization Chicken and Other Products: United States $12,552 $ 8,797 $ 23,344 $ 14,685 Mexico 3,377 1,792 6,794 4,571 Sub-total 15,929 10,589 30,138 19,256 Turkey 1,717 1,564 4,907 1,564 Total $17,646 $12,153 $ 35,045 $ 20,820 * In 2001, the Company identified certain products produced by the former WLR Foods that were included in Turkey net sales but were more properly classified as United States Chicken and Other Products net sales. As a result, $8.6 million has been reclassified from Turkey net sales to United States Chicken and Other Products net sales, for each of the six months ended March 30, 2001 and the three months ended March 30, 2001. Additionally, $2.1 million has been reclassified from Turkey operating loss to United States Chicken and Other Products operating income to properly reflect operating income after the reclassification of the net sales for the six months ended March 30, 2001 and the three months ended March 30, 2001. </TABLE> The following table presents certain items as a percentage of net sales for the periods indicated. <TABLE> <CAPTION> Percentage of Net Sales Three Months Ended Six Months Ended March March March March 30, 2002 31, 2001 30, 2002 31, 2001 <S> <C> <C> <C> <C> <C> <C> <C> <C> Net Sales 100.0 % 100.0 % 100.0 % 100.0 % Costs and Expenses: Cost of sales 95.2 94.6 93.1 91.8 Gross profit 4.8 5.4 6.9 8.2 Selling, general and administrative 5.5 6.4 5.4 6.3 Operating (Loss) Income (0.7) (1.0) 1.5 1.9 Interest Expense 1.2 1.3 1.3 1.2 Income (Loss) before Income Taxes (2.0) (2.2) 0.3 0.7 Net Income (Loss) 0.2 (1.8) 1.1 0.3 </TABLE> RESULTS OF OPERATIONS On January 27, 2001, we completed the acquisition of WLR Foods, a vertically integrated producer of chicken and turkey products located in the eastern United States. Accordingly, the results of the former WLR Foods' operations are included in our second quarter ended and first six months ended March 30, 2002. In the prior year, WLR Foods' results from and after January 27, 2001 are included in our second quarter ended and first six months ended March 31, 2001. On March 12, 2002 an outbreak of low-pathogenic avian influenza was discovered in Virginia, a disease contagious to turkey, chicken and other birds. Due to the outbreak of low pathogenic avian influenza we reduced approximately $5.5 million of turkey inventory during the quarter ended March 30, 2002 in anticipation of the flocks being destroyed. To date, the avian influenza outbreak has been limited to certain turkey operations in Virginia and chicken operations in close proximity thereto. Although we expect the outbreak to have a significant negative financial impact on our turkey operations through at least the second quarter of fiscal 2003, the severity of the effect on our results of operations will depend upon a number of factors outside of our control, including when and to what extent the avian influenza outbreak is contained, the terms on which we can replace the affected production capacity in the short-term and reestablish the affected production capacity in the longer-term, the effect the reduced supply of poultry products caused by the outbreak will have on the commodity prices of poultry products, and the extent and levels of governmental subsidies, if any. Assuming that the outbreak has been contained, we currently estimate that the production and the resulting sales from our turkey operation will be significantly reduced over the next twelve months reducing operating income in each of the third and fourth quarters of fiscal 2002 by an estimated $2.0 - $3.0 million, when compared to the comparable periods of the prior fiscal year and will reduce operating income for the first six months of fiscal 2003 by approximately $20.0 million, when compared to the comparable period of the prior fiscal year. However, there can be no assurance that the avian influenza outbreak has been contained or that the negative impact of the outbreak on our results of operations will not materially exceed these estimates. FISCAL SECOND QUARTER 2002 COMPARED TO FISCAL SECOND QUARTER 2001 CONSOLIDATED NET SALES. Consolidated net sales were $600.8 million for the second quarter of fiscal 2002, an increase of $59.2 million, or 10.9%, from the second quarter of fiscal 2001. The increase in consolidated net sales resulted from a $44.7 million increase in U.S. chicken sales to $401.0 million, an $8.0 million increase in turkey sales to $70.8 million, a $4.5 million increase in Mexico chicken sales to $80.4 million and a $2.0 million increase in sales of other U.S. products to $48.6 million. The increase in U.S. chicken sales was primarily due to a 15.5% increase in dressed pounds produced, which resulted primarily from the inclusion of three months results in this year's quarter as opposed to two months results for the same period last year from the acquisition of WLR Foods, offset partially by a 2.6% decrease in total revenue per dressed pound produced. The 12.7% increase in turkey sales was due to the acquisition of WLR Foods, effective January 27, 2001. The $2.0 million increase in sales of other U.S. products to $48.6 million was primarily due to higher volume in the Company's wholesale feed operations and increased sales of other products by the Company's distribution centers. The $4.5 million increase in Mexico chicken sales was primarily due to a 13.9% increase in average revenue per dressed pound produced offset partially by a 7.0% decrease in dressed pounds produced. COST OF SALES. Consolidated cost of sales was $572.1 million in the second quarter of fiscal 2002, an increase of $59.7 million, or 11.7%, compared to the second quarter of fiscal 2001. The U.S. operations accounted for $61.2 million of the increase in the cost of sales, which was offset partially by a $1.5 million decrease in the cost of sales of our Mexico operations. The cost of sales increase in our U.S. operations of $61.2 million was due primarily to the acquisition of WLR Foods. $15.2 million of the increase related to turkey operations, which includes a $5.5 million turkey inventory write down related to the low pathogenic avian influenza described above. The increase in cost of sales for chicken products also resulted from increased production of higher cost prepared foods products. The $1.5 million decrease in cost of sales in our Mexico operations was primarily due to a 7.0% decrease in dressed pounds produced. GROSS PROFIT. Gross profit was $28.6 million for the second quarter of fiscal 2002, a decrease of $0.6 million, or 2.0%, over the same period last year. Gross profit as a percentage of sales decreased to 4.8% in the second quarter of fiscal 2002, from 5.4% in the second quarter of fiscal 2001 due primarily to the negative effects of the avian influenza outbreak in our Eastern Division offset by improved operating efficiencies. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Consolidated selling, general and administrative expenses were $33.0 million in the second quarter of fiscal 2002 and $34.5 million in the second quarter of fiscal 2001. The $1.5 million decrease was due primarily synergies resulting from the WLR Foods acquisition. Consolidated selling, general and administrative expenses as a percentage of sales decreased in the second quarter of fiscal 2002 to 5.5%, compared to 6.4% in the second quarter of fiscal 2001, due primarily to synergies resulting from the WLR Foods acquisition. OPERATING (LOSS). Consolidated operating loss was $4.4 million for the second quarter of fiscal 2002, decreasing by approximately $0.9 million, when compared to the second quarter of fiscal 2001. INTEREST EXPENSE. Consolidated net interest expense increased 2.5% to $7.3 million in the second quarter of fiscal 2002, when compared to $7.1 million for the second quarter of fiscal 2001, due to higher outstanding balances offset partially by lower interest rates. INCOME TAX BENEFIT. Consolidated income tax benefit in the second quarter of fiscal 2002 increased to $13.4 million compared to $2.3 million in the second quarter of fiscal 2001. This increase in benefit resulted primarily from a $9.7 million tax benefit from changes in the Mexico tax laws becoming effective this quarter. Based on the passage of the new Mexico tax law, the Company anticipates that the effective tax rate on Mexican earnings will be approximately 20% in subsequent periods. However, the significant Mexican tax loss carryforward will limit cash payments for taxes (see note E). FIRST SIX MONTHS OF FISCAL 2002 COMPARED TO FIRST SIX MONTHS OF FISCAL 2001 CONSOLIDATED NET SALES. Consolidated net sales were $1.3 billion for the first six months of fiscal 2002, an increase of $329.2 million, or 35.5%, from the first six months of fiscal 2001. The increase in consolidated net sales resulted from a $181.1 million increase in U.S. chicken sales to $803.2 million, a $125.0 million increase in turkey sales to $187.9 million, a $17.0 million increase in Mexico chicken sales to $171.3 million and a $6.9 million increase in sales of other U.S. products to $94.4 million. The increase in U.S. chicken sales was primarily due to a 32.5% increase in dressed pounds produced, which resulted primarily from the acquisition of WLR Foods, offset partially by a 3.1% decrease in total revenue per dressed pound produced. The increase in turkey sales was due to the inclusion of six months results in this year's first six months as opposed to two months results for the same period last year from the acquisition of WLR Foods. The $17.0 million increase in Mexico chicken sales was primarily due to an 11.2% increase in average revenue per dressed pound produced offset partially by a 0.2% decrease in dressed pounds produced. The $6.9 million increase in sales of other U.S. products was primarily due to poultry by-products sales price increases and increase in sales of other products. COST OF SALES. Consolidated cost of sales was $1.2 billion in the first six months of fiscal 2002, an increase of $319.0 million, or 37.5 % compared to the first six months of fiscal 2001. The U.S. operations accounted for $315.6 million of the increase in the cost of sales and our Mexico operations accounted for $3.4 million of the increase. The cost of sales increase in our U.S. operations of $315.6 million was due primarily to the acquisition of WLR, $120.9 million of which is related to the turkey operations, which included a $5.5 million inventory write down related to an outbreak of a low pathogenic avian influenza. The increase in cost of sales of chicken products also resulted from increased production of higher cost prepared foods products. The $3.4 million cost of sales increase in our Mexico operations was primarily due to a 2.5% increase in dressed pounds produced. GROSS PROFIT. Gross profit was $86.5 million for the first six months of fiscal 2002, an increase of $10.1 million, or 13.2%, over the same period last year, due primarily to the acquisition of WLR Foods. Gross profit as a percentage of sales decreased to 6.9% in the first six months of fiscal 2002, from 8.2% in the first six months of fiscal 2001 primarily due to increased operating expenses from the avian influenza in our Eastern Division. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Consolidated selling, general and administrative expenses were $67.5 million in the first six months of fiscal 2002 and $58.4 million in the first six months of fiscal 2001. The $9.1 million increase was due primarily to the acquisition of WLR Foods. Consolidated selling, general and administrative expenses as a percentage of sales decreased in the first six months of fiscal 2002 to 5.4%, compared to 6.3% in the first six months of fiscal 2001, due primarily to synergies resulting from the WLR Foods acquisition. OPERATING INCOME. Consolidated operating income remained relatively stable at $19.0 million for the first six months of fiscal 2002, increasing by approximately $1.0 million, when compared to the first six months of fiscal 2001. INTEREST EXPENSE. Consolidated net interest expense increased 41.1% to $15.8 million in the first six months of fiscal 2002, when compared to $11.2 million for the first six months of fiscal 2001, due to higher outstanding balances partially offset by lower interest rates. INCOME TAX EXPENSE. Consolidated income tax benefit in the first six months of fiscal 2002 was $10.7 million compared to an income tax expenses of $4.0 million in the first six months of fiscal 2001. This decrease was a result of a $9.7 million income tax benefit resulting from changes in the Mexico tax laws and from lower U.S. pre-tax earnings. LIQUIDITY AND CAPITAL RESOURCES WE MAINTAIN $130.0 MILLION IN REVOLVING CREDIT FACILITIES AND $400.0 MILLION IN A SECURED REVOLVING/TERM BORROWING FACILITY. THE $400.0 MILLION REVOLVING/TERM BORROWING FACILITY PROVIDES FOR $285.0 MILLION AND $115.0 MILLION OF 10-YEAR AND 7-YEAR COMMITMENTS, RESPECTIVELY. BORROWINGS UNDER THIS FACILITY ARE SPLIT PRO RATA BETWEEN THE 10-YEAR AND 7-YEAR MATURITIES AS THEY OCCUR. THE CREDIT FACILITIES PROVIDE FOR INTEREST AT RATES RANGING FROM LIBOR PLUS FIVE-EIGHTHS PERCENT TO LIBOR PLUS TWO AND THREE-QUARTERS PERCENT, DEPENDING UPON OUR TOTAL DEBT TO CAPITALIZATION RATIO. INTEREST RATES ON DEBT OUTSTANDING UNDER THESE FACILITIES AS OF MARCH 30, 2002 RANGED FROM LIBOR PLUS ONE AND ONE-QUARTER PERCENT TO LIBOR PLUS TWO AND ONE-QUARTER PERCENT. THESE FACILITIES ARE SECURED BY INVENTORY AND FIXED ASSETS. AT MARCH 30, 2002, $32.3 MILLION WAS AVAILABLE UNDER THE REVOLVING CREDIT FACILITIES AND $274.0 MILLION WAS AVAILABLE UNDER THE REVOLVING/TERM BORROWING FACILITY. IN 1998, WE ENTERED INTO AN ASSET SALE AGREEMENT TO SELL UP TO $60 MILLION OF ACCOUNTS RECEIVABLE, WHICH AGREEMENT EXPIRES IN JUNE 2003. IN CONNECTION WITH THE ASSET SALE AGREEMENT, WE SELL, ON A REVOLVING BASIS, CERTAIN OF OUR TRADE RECEIVABLES (THE "POOLED RECEIVABLES") TO A SPECIAL PURPOSE CORPORATION WHOLLY OWNED BY US, WHICH IN TURN SELLS A PERCENTAGE OWNERSHIP INTEREST TO THIRD PARTIES. AT MARCH 30, 2002 AND SEPTEMBER 29, 2001, AN INTEREST IN THESE POOLED RECEIVABLES OF $60.0 MILLION AND $58.5 MILLION, RESPECTIVELY, HAD BEEN SOLD TO THIRD PARTIES AND IS REFLECTED AS A REDUCTION IN ACCOUNTS RECEIVABLE. THESE TRANSACTIONS HAVE BEEN RECORDED AS SALES IN ACCORDANCE WITH FINANCIAL ACCOUNTING STANDARDS BOARD STATEMENT NO. 140, ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES. THE INCREASE IN POOLED RECEIVABLE SALES FROM SEPTEMBER 29, 2001 IS INCLUDED IN CASH FLOWS FROM OPERATING ACTIVITIES IN OUR CONSOLIDATED STATEMENTS OF CASH FLOWS. LOSSES ON THESE SALES WERE IMMATERIAL. ON JUNE 29, 1999, THE CAMP COUNTY INDUSTRIAL DEVELOPMENT CORPORATION ISSUED $25.0 MILLION OF VARIABLE-RATE ENVIRONMENTAL FACILITIES REVENUE BONDS SUPPORTED BY LETTERS OF CREDIT OBTAINED BY PILGRIM'S PRIDE. WE MAY DRAW FROM THESE PROCEEDS OVER THE CONSTRUCTION PERIOD FOR NEW SEWAGE AND SOLID WASTE DISPOSAL FACILITIES AT A POULTRY BY-PRODUCTS PLANT TO BE BUILT IN CAMP COUNTY, TEXAS. WE ARE NOT REQUIRED TO BORROW THE FULL AMOUNT OF THE PROCEEDS FROM THE BONDS. ALL AMOUNTS BORROWED FROM THESE FUNDS WILL BE DUE IN 2029. THE AMOUNTS THAT WE BORROW WILL BE REFLECTED AS DEBT WHEN RECEIVED FROM THE CAMP COUNTY INDUSTRIAL DEVELOPMENT CORPORATION. THE INTEREST RATES ON AMOUNTS BORROWED WILL CLOSELY FOLLOW THE TAX-EXEMPT COMMERCIAL PAPER RATES. PRESENTLY, THERE ARE NO BORROWINGS OUTSTANDING UNDER THE BONDS. AT MARCH 30, 2002, OUR WORKING CAPITAL DECREASED TO $149.9 MILLION AND OUR CURRENT RATIO DECREASED TO 1.54 TO 1, COMPARED WITH WORKING CAPITAL OF $203.4 MILLION AND A CURRENT RATIO OF 1.85 TO 1 AT SEPTEMBER 29, 2001, PRIMARILY DUE TO INCREASED SHORT TERM BORROWINGS USED TO REPAY CERTAIN LONG-TERM DEBT. TRADE ACCOUNTS AND OTHER RECEIVABLES WERE $82.7 MILLION AT MARCH 30, 2002, COMPARED TO $95.0 MILLION AT SEPTEMBER 29, 2001. THE 13.0% DECREASE IN TRADE ACCOUNTS AND OTHER RECEIVABLES WAS PRIMARILY DUE TO NORMAL SEASONAL VARIATIONS. EXCLUDING THE SALE OF RECEIVABLES, TRADE ACCOUNTS AND OTHER RECEIVABLES WOULD HAVE DECREASED $10.8 MILLION TO $142.7 MILLION AT THE END OF THE SECOND QUARTER OF FISCAL 2002 FROM $153.5 MILLION AT THE END OF FISCAL 2001. INVENTORIES WERE $322.6 MILLION AT MARCH 30, 2002, COMPARED TO $314.4 MILLION AT SEPTEMBER 29, 2001. THE $8.2 MILLION, OR 2.6%, INCREASE IN INVENTORIES WAS PRIMARILY DUE TO NORMAL INCREASES IN FINISHED TURKEY PRODUCTS INVENTORIES RELATING TO EXPECTED INCREASES IN SALES OF TURKEY PRODUCTS IN THE HOLIDAY SEASON. ACCOUNTS PAYABLE AND ACCRUED EXPENSES DECREASED $19.4 MILLION TO $215.4 MILLION AT MARCH 30, 2002, COMPARED TO $234.8 MILLION AT SEPTEMBER 29, 2001 DUE TO SEASONAL VARIATIONS. CAPITAL EXPENDITURES OF $32.2 MILLION AND $60.4 MILLION, FOR THE SIX MONTHS ENDED MARCH 30, 2002 AND MARCH 31, 2001, RESPECTIVELY, WERE INCURRED PRIMARILY TO ACQUIRE AND EXPAND CERTAIN FACILITIES, IMPROVE EFFICIENCIES, REDUCE COSTS AND FOR THE ROUTINE REPLACEMENT OF EQUIPMENT. WE ANTICIPATE SPENDING APPROXIMATELY $70.0 MILLION IN FISCAL 2002 TO IMPROVE EFFICIENCIES AND FOR THE ROUTINE REPLACEMENT OF EQUIPMENT. WE EXPECT TO FINANCE SUCH EXPENDITURES WITH AVAILABLE OPERATING CASH FLOWS AND EXISTING CREDIT FACILITIES. CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES WERE $23.1 MILLION AND ($31.5) MILLION FOR THE SIX MONTHS ENDED MARCH 30, 2002 AND MARCH 31, 2001, RESPECTIVELY. THE INCREASE IN CASH FLOWS PROVIDED BY OPERATING ACTIVITIES IN THE FIRST SIX MONTHS OF FISCAL 2002 COMPARED TO THE FIRST SIX MONTHS OF FISCAL 2001 WAS PRIMARILY DUE TO INCREASED NET INCOME, INCREASED DEPRECIATION FROM THE WLR ACQUISITION AND DECREASED TRADE ACCOUNTS AND OTHER RECEIVABLES FROM THE IMPROVED COLLECTIONS. CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES WERE ($2.8) MILLION AND $307.6 MILLION FOR THE SIX MONTH PERIODS ENDED MARCH 30, 2002 AND MARCH 30, 2001, RESPECTIVELY. THE CASH USED IN FINANCING ACTIVITIES PRIMARILY REFLECTS THE PAYMENTS ON NOTES PAYABLE AND LONG-TERM FINANCING AND DEBT RETIREMENT. DURING THE SIX MONTHS ENDED MARCH 31, 2001 THE COMPANY PURCHASED WLR FOODS, INC. USING $239.9 MILLION IN BORROWINGS TO COMPLETE THE ACQUISITION. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes from the information provided in Item 7a of the Company's Annual Report on Form 10-K for the year ended September 29, 2001. Forward Looking Statements Statements of our intentions, beliefs, expectations or predictions for the future, denoted by the words "anticipate", "believe", "estimate", "expect", "project", "imply", "intend", "foresee" and similar expressions, are forward-looking statements that reflect our current views about future events and are subject to risks, uncertainties and assumptions. Such risks, uncertainties and assumptions include the following: * Matters affecting the poultry industry generally, including fluctuations in the commodity prices of feed ingredients, chicken and turkey; * Disease outbeaks affecting the production performance and/or marketability of the Company's poultry products; * Management of our cash resources, particularly in light of our substantial leverage; * Restrictions imposed by, and as a result of, our substantial leverage; * Currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and other risks associated with foreign operations; * Changes in laws or regulations affecting our operations, as well as competitive factors and pricing pressures; * Inability to effectively integrate WLR Foods or realize the associated cost savings and operating synergies currently anticipated; and * The impact of uncertainties of litigation as well as other risks described in our filings with the Securities and Exchange Commission. Actual results could differ materially from those projected in these forward-looking statements as a result of these factors, among others, many of which are beyond our control. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In January of 1998, seventeen of our current and/or former employees filed the case of "Octavius Anderson, et al. v. Pilgrim's Pride Corporation" in the United States District Court for the Eastern District of Texas, Lufkin Division claiming Pilgrim's Pride violated requirements of the Fair Labor Standards Act. The suit alleged Pilgrim's Pride failed to pay employees for all hours worked. The suit generally alleged that (1) employees should be paid for time spent to put on, take off, and clean certain personal gear at the beginning and end of their shifts and breaks and (2) the use of a master time card or production "line" time fails to pay employees for all time actually worked. Plaintiffs sought to recover unpaid wages plus liquidated damages and legal fees. Approximately 1,700 consents to join as plaintiffs were filed with the court by current and/or former employees. During the week of March 5, 2001, the case was tried in the Federal Court of the Eastern District of Texas, Lufkin, Texas. The Company prevailed at the trial with a judgment issued by the judge, which found no evidence presented to support the plaintiffs' allegations. The plaintiffs have filed an appeal in the Fifth Circuit Court of Appeals to reverse the judge's decision. The plaintiff's brief was submitted to the court on November 5, 2001. Pilgrim's Pride's response to the plaintiff's brief to the Fifth Circuit Court of Appeals was submitted on December 5, 2001 and oral arguments have been set for the week of June 3, 2002. Appellants filed a short reply brief. The National Chicken Council has filed an Amicus Curiae brief in support of our position on this appeal, which was accepted by the court. Neither the likelihood of an unfavorable outcome nor the amount of ultimate liability, if any, with respect to this case can be determined at this time. The Company does not expect this matter, individually or collectively, to have a material impact on our financial position, operations or liquidity. Substantially similar suits have been filed against other integrated poultry companies, including the Betty Kennell case discussed below, a number of which have been favorably resolved at the trial or appellate court level. In August of 2000, four of our current and/or former employees filed the case of "Betty Kennell, et al. v. Wampler Foods, Inc." in the United States District Court for the Northern District of West Virginia, claiming we violated requirements of the Fair Labor Standards Act. The suit generally makes the same allegations as Anderson v. Pilgrim's Pride discussed above. Plaintiffs seek to recover unpaid wages plus liquidated damages and legal fees. Approximately 150 consents to join as plaintiffs were filed with the court by current and/or former employees. No trial date has been set. To date, only limited discovery has been performed. Neither the likelihood of an unfavorable outcome nor the amount of ultimate liability, if any, with respect to this case can be determined at this time. We do not expect this matter, individually or collectively, to have a material impact on our financial position, operations or liquidity. The Company is subject to various other legal proceedings and claims, which arise in the ordinary course of its business. In the opinion of management, the amount of ultimate liability with respect to these actions will not materially affect the financial position, results of operations or cash flows of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Pilgrim's Pride Corporation held its Annual Meeting of Shareholders on January 31, 2002. The meeting was held to elect the Board of Directors for the ensuing year; to appoint Ernst & Young LLP as the Company's independent auditors for the fiscal year ending September 28, 2002; and to transact such other business as may be properly brought before the meeting. There were 12,335,507 Class A shares and 26,479,675 Class B shares represented with one vote per share for Class A shares (12,335,507 votes in the aggregate) and twenty votes per share for Class B shares (529,593,500 votes in the aggregate). With regard to the election of Directors for the ensuing year, the following votes were cast: <TABLE> <CAPTION> NOMINEE FOR AGAINST WITHHELD <S> <C> <C> <C> <C> <C> <C> Lonnie "Bo" Pilgrim Class A 12,034,820 -- 300,687 Class B 490,539,280 -- 39,054,220 Clifford E. Butler Class A 12,006,640 -- 328,867 Class B 504,047,680 -- 25,545,820 David Van Hoose Class A 12,006,392 -- 329,115 Class B 504,040,660 -- 25,552,840 Richard A. Cogdill Class A 12,175,401 -- 160,106 Class B 508,329,920 -- 21,263,580 Lonnie Ken Pilgrim Class A 12,006,758 -- 328,749 Class B 490,584,100 -- 39,009,400 Charles L. Black Class A 12,283,320 -- 52,187 Class B 524,810,920 -- 4,782,580 S. Key Coker Class A 12,282,393 -- 53,114 Class B 524,855,680 -- 4,737,820 Vance C. Miller, Sr. Class A 12,282,096 -- 53,411 Class B 524,788,200 -- 4,805,300 James G. Vetter, Jr. Class A 12,114,674 -- 220,833 Class B 524,476,080 -- 9,117,420 Donald L. Wass, Ph.D. Class A 12,283,373 -- 52,134 Class B 524,788,260 -- 4,805,240 </TABLE> All Directors were elected by the above results. With regard to ratifying the appointment of Ernst & Young LLP as the Company's independent auditors for fiscal 2001, the following votes were cast: <TABLE> <CAPTION> For Against Abstained <S> <C> <C> <C> <C> <C> <C> Class A 12,328,520 5,540 1,447 Class B 529,445,240 77,600 70,660 </TABLE> ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit Number <TABLE> <CAPTION> <S> <C> <C> 10.29 Promissory note dated January 4, 2002 signed by David Van Hoose in favor of Pilgrim's Pride Corporation. 10.30 Promissory note dated January 4, 2002 signed by Clifford E. Butler in favor of Pilgrim's Pride Corporation. 10.31 Promissory note dated January 4, 2002 signed by Richard A. Cogdill in favor of Pilgrim's Pride Corporation. 10.32 Promissory note dated January 4, 2002 signed by Robert L. Hendrix in favor of Pilgrim's Pride Corporation. 10.33 Promissory note dated January 4, 2002 signed by Mike Murray in favor of Pilgrim's Pride Corporation. 10.34 Promissory note dated January 4, 2002 signed by O. B. Goolsby in favor of Pilgrim's Pride Corporation. 10.35 Promissory note dated January 4, 2002 signed by Lonnie Ken Pilgrim in favor of Pilgrim's Pride Corporation. </TABLE> (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the fiscal quarter ending March 30, 2002. 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 thereunto duly authorized. PILGRIM'S PRIDE CORPORATION Date May 14, 2002 /s/ Richard A. Cogdill Richard A. Cogdill Executive Vice President, Chief Financial Officer, Secretary and Treasurer in his respective capacity as such