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Announces Further Restructuring of Franconia, PA Turkey Operations
Announces First Fiscal Quarters Conference Call for January 23, 2006
PITTSBURG, Texas, Jan. 3 /PRNewswire-FirstCall/ -- Pilgrims Pride
Corporation (NYSE: PPC) today announced that it is lowering its previously
issued earnings guidance for its first quarter of fiscal 2006 to a range of
$0.36 to $0.41 per share, which excludes charges associated with the further
restructuring of its Turkey operations and certain one time tax benefits in
the Companys Mexico operations, which amounts have not been fully determined
at this time, however, we currently do not expect the net of these two items
to be material, versus the $0.75 to $0.85 per share range previously
communicated by the Company. The results for the quarter are expected to be
less than previously forecasted due primarily to a significantly worse than
expected performance in the Companys Mexico operations and lower sales prices
realized during the quarter on chicken leg quarters in its U.S. operations.
"We are extremely disappointed with the results realized this quarter by
our Mexico operations," stated Mr. O.B. Goolsby, President and Chief Executive
Officer of Pilgrims Pride Corporation. "After turning in a record
performance last fiscal year, the turn about we saw this quarter was
significant as sales momentum during the Christmas holiday season in Mexico
failed to live up to expectations and last years performance. Additionally,
our U.S. operations were negatively impacted by sharp declines in the selling
price for chicken leg quarters, which declined from an average selling price
of $0.45 per pound in the fourth fiscal quarter of 2005 to approximately $0.29
per pound in the first fiscal quarter of 2006. We attribute this drop in
selling price primarily to the effects focus and concern over avian influenza
has had on international demand for poultry products and to the disruptions
caused by having to reroute product in transit to locations other than those
intended as these concerns materialized."
Turkey Division Restructuring
"Today we also are announcing plans to further restructure our turkey
business by ceasing the production of ground turkey and cooked turkey deli
breast meat items at our Franconia, PA further processing plant effective
March 3, 2006. After this time, this facility will focus strictly on the
Companys profitable refrigerated salads line and our Turkey operations will
be limited to fresh and frozen whole turkeys, produced in New Oxford, PA."
Goolsby added.
"The restructuring is expected to have a positive impact on annualized
pre-tax earnings of approximately $10 - $15 million per year, reduce working
capital employed in the Franconia plant by approximately $13 million and will
result in a reduction in workforce of approximately 300 employees."
The Company is also withdrawing its previously issued guidance for the
rest of fiscal 2006, which is not being updated at this time but intends to
update such guidance during a conference call to discuss the Companys first
quarter of fiscal 2006 financial results which will be held at 10:00 a.m. CDT
(11:00 a.m. EDT) on January 23, 2006. To listen live via telephone, call 800-
391-2548, verbal pass code Pilgrims Pride or VG495227. The call will also be
webcast live on the Internet at http://phx.corporate-
ir.net/phoenix.zhtml?p=irol-eventDetails&c=68228&eventID=1189714 (Please copy
and past the link into the browser)
The webcast will be available for replay within two hours of the
conclusion of the call. A telephone replay will be available beginning at
2:00 p.m. CDT on January 23 through January 30 at 800-355-2355 pass code
495227#.
Pilgrims Pride Corporation is the second-largest poultry producer in the
United States and Mexico and the largest chicken producer in Puerto Rico.
Pilgrims Pride employs more than 40,000 people and has major operations in
Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina,
Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with
other facilities in Arizona, California, Florida, Iowa, Mississippi, Utah and
Wisconsin.
Pilgrims Pride products are sold to foodservice, retail and frozen entree
customers. The Companys 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,
hopes, beliefs, anticipations, expectations or predictions of the future of
Pilgrims Pride Corporation and its management, including the earnings
guidance for the first quarter of fiscal 2006 and our expectations regarding
the financial effects of the restructuring of our 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 our own flocks or elsewhere, affecting
our ability to conduct or operations and/or demand for our poultry products;
contamination of our 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 our operations or the application
thereof; competitive factors and pricing pressures or the loss of one or more
of our largest customers; currency exchange rate fluctuations, trade barriers,
exchange controls, expropriation and other risks associated with foreign
operations; management of our cash resources, particularly in light of our
leverage, and restrictions imposed by and as a result of, our leverage; 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. Pilgrims 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.
For further information contact:
Rick Cogdill
Pilgrims Pride Corporation
(903) 434-1508
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