Gold Kist Inc. Reports Fiscal First Quarter 2006 Results
Gold Kist Inc. (NASDAQ:GKIS) today reported financial results for the first fiscal quarter of fiscal 2006, which ended December 31, 2005. Net income for the first fiscal quarter was $2.5 million, or $0.05 per diluted share, compared with net income of $4.2 million, or $0.08 per diluted share, for the quarter ended January 1, 2005. Net sales for the first quarter of fiscal 2006 were $545.4 million compared with net sales of $552.0 million reported for the quarter ended January 1, 2005.
Commenting on the results, John Bekkers, president and chief executive officer, said, “Given the downturn in the market during the quarter compounded by higher energy costs, results for the first quarter of 2006 were disappointing, but not completely unexpected. Sales for the quarter were down slightly from the first quarter of fiscal 2005 ended January 1, 2005, due primarily to a 1.8% decrease in average broiler prices. Concerns in the export markets about avian influenza reduced consumption in those markets, which decreased export volume, particularly to Russia, and contributed to greater domestic supply and lower prices.
“Processing costs increased during the first quarter of fiscal 2006 due to additional pounds processed and due to higher utilities, freight and packaging costs. These increases were partially offset by lower feed ingredient costs, which were 1.4% lower for the first quarter of fiscal 2006 compared with the same period last year.
“Looking ahead, we will continue with our strategy of enhancing our value-added product lines, focusing on cost controls and growing our private-label business. We believe this strategy will not only create additional sales opportunities but will serve to help offset some of the impact of the market’s volatility on our results,” Bekkers concluded.
Gold Kist Inc. will hold a conference call to discuss this press release today, February 6, 2006, at 11:00 a.m. Eastern time. Investors will have the opportunity to listen to a live Internet broadcast of the conference call through the Company’s Web site at www.goldkist.com or through www.earnings.com. To listen to the live call, please go to the Web site at least 15 minutes early to register and download and install any necessary audio software.
For those who cannot listen to the live broadcast, an Internet replay will be available shortly after the call and continue through March 6, 2006. If Internet access is unavailable, you may participate on the live call by telephone by dialing (800) 289-0518. The confirmation number for this call is 1946055. Gold Kist will also file a first quarter report on Form 10-Q with the Securities and Exchange Commission that will contain additional details on its financial results for the quarter.
This news release contains “forward-looking statements” as defined in the federal securities laws regarding Gold Kist’s beliefs, anticipations, expectations or predictions of the future, including statements relating to the Company’s strategy of enhancing its value-added product lines, focusing on cost controls and growing the Company’s private label business, and relating to supply and pricing trends, particularly in export markets, and Gold Kist’s ability to create additional sales opportunities and offset market volatility. These forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated in such forward-looking statements include market conditions for finished and value-added products including competitive factors and the supply and pricing of alternative meat proteins; effectiveness of our sales and marketing programs; disease outbreaks affecting broiler production, demand and/or marketability of our products; uncertainties relating to fluctuations in the cost and availability of raw materials, such as feed ingredients; risks associated with effectively executing risk management activities; changes in the availability and relative costs of labor and contract growers; effectiveness of our capital expenditures and other cost-savings measures; contamination of products, which can lead to product liability and product recalls; access to foreign markets together with foreign economic conditions; acquisition activities and the effect of completed acquisitions; pending or future litigation; the ability to obtain additional financing or make payments on our debt; regulatory developments, industry conditions and market conditions; and general economic conditions; as well as other risks described under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended October 1, 2005, and subsequent filings with the Securities and Exchange Commission. Gold Kist undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
About Gold Kist
Gold Kist is the third largest chicken company in the United States, accounting for more than 9 percent of chicken produced in the United States in 2005. Gold Kist operates a fully-integrated chicken production business that provides processing, purchasing and marketing services. Gold Kist’s production operations include nine complexes located in Alabama, Florida, Georgia, North Carolina and South Carolina. For more information, visit our Web site at www.goldkist.com.
GOLD KIST INC. CONSOLIDATED BALANCE SHEETS (Amounts in Thousands) (Unaudited) October 1, Dec. 31, 2005 2005 ——— ——— ASSETS Current assets: Cash and cash equivalents $ 153,561 $ 144,835 Receivables, net 125,389 120,619 Inventories 233,681 223,459 Deferred income taxes, net 11,506 11,957 Other current assets 26,873 37,569 ——— ——— Total current assets 551,010 538,439 Investments 10,747 10,363 Property, plant and equipment, net 286,515 297,116 Deferred income taxes, net 25,133 25,465 Other assets 52,284 58,557 ——— ——— $ 925,689 $ 929,940 ========= ========= LIABILITIES AND EQUITY Current liabilities: Notes payable and current maturities of long-term debt $ 1,518 $ 1,357 Accounts payable 87,486 78,578 Accrued compensation and related expenses 27,292 16,802 Income taxes payable 34,850 28,046 Accrued insurance costs 39,458 52,251 Other current liabilities 36,105 37,288 ——— ——— Total current liabilities 226,709 214,322 Long-term debt, less current maturities 143,714 143,423 Accrued pension costs 54,450 57,965 Accrued postretirement benefit costs 3,961 3,571 Accrued insurance costs 32,600 40,017 Other liabilities 13,527 15,062 ——— ——— Total liabilities 474,961 474,360 ——— ——— Stockholders’ equity: Preferred stock — — Common stock 511 511 Additional paid-in capital 399,619 401,928 Accumulated other comprehensive loss (61,265) (61,265) Retained earnings 112,246 114,789 Less: Treasury stock (383) (383) ——— ——— Total stockholders’ equity 450,728 455,580 ——— ——— $ 925,689 $ 929,940 ========= ========= GOLD KIST INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in Thousands, Except Per Share Amounts) (Unaudited) Three Months Ended ———————- January 1, Dec. 31, 2005 2005 ——— ——— Net sales $ 551,958 $ 545,360 Cost of sales 504,122 512,963 ——— ——— Gross profit 47,836 32,397 Distribution, administrative and general expenses 24,966 27,013 Conversion expenses 1,418 — ——— ——— Net operating income 21,452 5,384 ——— ——— Other income (expenses): Interest and dividend income 825 1,572 Interest expense (7,090) (4,389) Debt prepayment interest expense and write-off of related fees and discount (10,016) — Miscellaneous, net 1,702 1,154 ——— ——— Total other expenses, net (14,579) (1,663) ——— ——— Income before income taxes 6,873 3,721 Income tax expense 2,680 1,178 ——— ——— Net income $ 4,193 $ 2,543 ========= ========= Net income per common share: Basic $ 0.08 $ 0.05 ========= ========= Diluted $ 0.08 $ 0.05 ========= ========= Weighted average common shares outstanding: Basic 49,973 50,042 ========= ========= Diluted 50,131 51,024 ========= =========