Pilgrim’s Pride– 2002

James L. Harbin: Texas A&M Texarkana
Forest R. David, Mississippi State Universit
A. Case Abstract
!i"#rim$s !ride %&'()*++),''', ---.pi"#rimspride..om/ is a .ompre0ensive
b1siness po"i. and strate#i. mana#ement .ase t0at in."1des t0e .ompan$s ear)
end 2'', 3inan.ia" statements, .ompetitor in3ormation and more. T0e .ase time
settin# is t0e ear 2''2. S133i.ient interna" and externa" data are provided to
enab"e st1dents to eva"1ate .1rrent strate#ies and re.ommend a t0ree)ear
strate#i. p"an 3or t0e .ompan. Head41artered in !ittsb1r#, Texas, !i"#rims
!ride$s .ommon sto.k is p1b"i." traded on t0e 5e- 6ork Sto.k 7x.0an#e 1nder
t0e ti.ker smbo" .0x. T0e .ompan exports on" abo1t ,28 o3 its prod1.t "ine.
!i"#rim$s !ride s1pp"ies 9F:, :01r.0$s, ;a")Mart, !epsi:o, <1r#er 9in#,
=rand$s, :0i"i$s, ;end$s and Lon# Jo0n Si"ver$s.
;it0 2>,+'' emp"oees, !i"#rim?s !ride is a verti.a"" inte#rated prod1.er
o3 po1"tr prod1.ts, .ontro""in# t0e breedin# and #ro-in# o3 .0i.kens and
t1rkes, and t0e pro.essin#, preparation and pa.ka#in# o3 its prod1.ts. For t0e 2@
-eeks ended Mar.0 (', 2''2, sa"es rose (+ 8 to A,.2@ bi""ion. 5et in.ome rose
3rom A2.& mi""ion to A,>.2 mi""ion. Res1"ts re3"e.t t0e ;LR Foods a.41isition, a
3orei#n ex.0an#e #ain o3 A*&+9 vs. a "oss o3 A,@(9 and a A&.B mi""ion tax bene3it
d1e to .0an#es in Mexi.an tax "a-s.
Headed b :7C David Hoose, !i"#rim?s !ride :orporation$s net in.ome o3
A(.( mi""ion, or A.'* per s0are, 3or t0e t0ird 3is.a" 41arter ended J1ne 2&, 2''2,
represents a A22.' mi""ion de.rease -0en .ompared to t0e prior ear?s t0ird 3is.a"
41arter net in.ome o3 A2+.( mi""ion, or A.@2 per s0are. :HD$s net sa"es 3or t0e
t0ird 3is.a" 41arter ended J1ne 2&, 2''2 -ere A@(B., mi""ion, a ,.>8 de.rease
-0en .ompared to t0e A@>+.* mi""ion 3or t0e same period "ast ear.
Tson Foods a##ressive" .ompetes a#ainst !i"#rim$s in t0is ind1str.
!i"#rim$s needs bot0 a domesti. and a #"oba" expansion strate# to #ain 31rt0er
e.onomies o3 s.a"e. T0e .ompan a.t1a"" s0o1"d make additiona" a.41isitions to
.ompete better a#ainst Tson. :ompanies in Latin or So1t0 Ameri.a t0at are
invo"ved in .0i.ken prod1.tion, pro.essin# and marketin# -o1"d be ex.e""ent
.andidates. St1dents s0o1"d prepare a t0ree)ear strate#i. p"an 3or :7C Hoose.
B. Vision Statement
ETo <e a ;or"d :"ass :0i.ken :ompan F <etter T0an t0e <est.G
@&
C. Mission Statement %proposed/ %.orrespondin# .omponents "isted be"o-/
!i"#rim$s !ride is t0e se.ond)"ar#est 31rt0er pro.essin# .0i.ken .ompan in t0e
United States and t0e t0ird)"ar#est domesti. .0i.ken prod1.er and 3o1rt0)"ar#est
t1rke prod1.er %2/. ;e prod1.e, pro.ess, and market o1r prod1.ts 3or 3ood
servi.e distrib1tors, s1permarkets, and 3ast)3ood .0ains %,/ in t0e United States
and Mexi.o %(/. !i"#rim$s !ride "eads t0e ind1str in resear.0 and deve"opment,
3o.1sin# on improvin# #eneti., n1tritiona", and pro.essin# te.0no"o#ies %>/. C1r
.ompan$s p0i"osop0 is to .ond1.t a"" operations in a 0i#0" et0i.a" manner %@/.
;e be"ieve t0at t0is p0i"osop0, as -e"" as attention to pr1dent b1siness
operations, -i"" ens1re t0e #ro-t0 and pro3itabi"it o3 !i"#rim$s !ride %+/. ;e are
dedi.ated to bein# a #ood .orporate .itiHen %B, */ ever-0ere -e .ond1.t
b1siness. ;e are .ommitted to providin# a sa3e -ork environment 3or o1r
emp"oees %&/.
,. :1stomers
2. !rod1.ts or servi.es
(. Markets
>. Te.0no"o#
+. :on.ern 3or s1rviva", #ro-t0, pro3itabi"it
@. !0i"osop0
B. Se"3).on.ept
*. :on.ern 3or p1b"i. ima#e
&. :on.ern 3or emp"oees
D. Class Discussion Questions and Issues
,. To -0at extent 0ave !i"#rim$s !ride and its .ompetitors been ab"e to es.ape t0e
.ommodit aspe.t t0at 3or man ears 0as p"a#1ed t0e ind1strI :an it do more
in t0e 31t1reI
:0i.ken .ompanies 1sed to operate in .."es o3 abo1t t0ree ears, #oin# 3rom an
1nders1pp" to a #"1tted market and ba.k to an 1nders1pp". Toda$s ind1str
"eaders 0ave bene3ited 3rom t0eir abi"it to estab"is0 brand re.o#nition and
pre3eren.e. T0e 3irms t0at 0ave s1rvived and #ro-n 0ave been t0e e33e.tive
marketers in an ind1str t0at traditiona"" 0as been prod1.tion)oriented. !i"#rim$s
!ride$s ads, 1sin# E<oG as t0eir spokesman, 0ave been parti.1"ar" e33e.tive. Jn
t0e past, Tson 0as 1sed Tom T. 0a"", a .o1ntr)-estern star, as t0eir spokesman.
E<oG !i"#rim 0as promoted 0is .0i.ken as "eaner and -0iter. Frank
!erd1e, o3 !erd1e Farms, promotes 0is .0i.kens as p"1mper and e""o-ier,
."aimin# t0at t0e e""o- si#ni3ies 0is .0i.kens are best 3ed %e.#., 0andpi.ked
mari#o"d peta"s and a more expensive diet/. A"t0o1#0 it is tr1e t0at ant0in# .an
be di33erentiated, t0ere are sti"" man .ons1mers, resta1rant .ooks, and .0e3s t0at
be"ieve t0at a .0i.ken is a .0i.ken.
B'
2. Has t0e demand 3or .0i.ken be#1n to "eve" o1t in .omparison to ot0er meatsI
Jt ma be t0at t0e demand 3or .0i.ken re"ative to ot0er meats 0as peaked. F1t1re
#ro-t0 .o1"d be "imited to pop1"ation #ro-t0 and in.reased demand 3or
pro.essed, pa.ka#ed, and va"1e)added .0i.ken items. <ot0 t0e bee3 and pork
ind1str 0ave stepped 1p t0eir primar advertisin#. To t0is -riter$s kno-"ed#e,
t0e .0i.ken ind1str 0as never en#a#ed in primar advertisin#. Cn t0e ot0er
0and, providin# no maKor sa"mone""a s.ares, t0e nation$s 0ea"t0 .on.erns and
pri.e attra.tiveness ma .ontin1e to 31e" t0e demand 3or .0i.ken.
T0e bee3 ind1str 0as attempted to .ombat its ne#ative 0ea"t0 ima#e
t0ro1#0 nationa" .ampai#ns, s1.0 as E7at More <ee3,G and ERea" Food 3or Rea"
!eop"e,G 1sin# noted .e"ebrities. Some experts are predi.tin# t0at bee3 -i""
be.ome t0e .ons1mer$s n1mber one .0oi.e in t0e next de.ade as it -as in t0e
,&B's. Resear.0ers are .1rrent" .ond1.tin# tests on a 3eed additive t0at -i""
"o-er 3at .ontent in .att"e b 2'8.
T0e 5ationa" !ork !rod1.ers :o1n.i" %-0i.0 represents ,'',''' 0o#
3armers/ 0as imitated po1"tr$s #ood ima#e b promotin# pork as Et0e ot0er -0ite
meat.G T0e :o1n.i" 3i#1res t0at i3 bee3 .an promote itse"3 as Erea" 3ood 3or rea"
peop"eGL 3att mi"k .an ."aim it Edoes a bod #oodGL and e##s, s-immin# in
.0o"estero", .an be bi""ed as Ein.redib"e and edib"eG, t0en pork .an be .a""ed a
En1tritio1s -0ite meat.G
T0e !ork !rod1.ers :o1n.i" .ites resear.0 s0o-in# t0at -it0 0o# 3at
.ontent 0a"ved 3rom t-o de.ades a#o, pork$s 3at and .0o"estero" .ontent is
Evirt1a"" e41iva"entG to t0at o3 .0i.ken. T0e a"so s0o- a ."ose .omparison
bet-een t0ree o1n.es o3 t0e "eanest .1t o3 .0i.ken %skin"ess breast/ and t0e
"eanest .1t o3 pork %trimmed tender"oin/: ( #rams o3 3at and ,>' .a"ories 3or t0e
.0i.ken .ompared -it0 > #rams o3 3at and t0e same n1mber o3 .a"ories 3or t0e
pork. ;0at t0e are not promotin# is t0at a ()o1n.e servin# o3 t0e avera#e .1t o3
3res0 pork 0as a"most t-i.e as m1.0 3at as a ()o1n.e servin# o3 t0e avera#e .1t o3
.0i.ken and 0as more .a"ories as -e"".
Cvera"", it -o1"d appear t0at t0e ear" #ro-t0 in t0e po1"tr ind1str -i""
3a"" ba.k to a more modest +)@ 8 ran#e. T0is, in "ar#e part, is be.a1se o3 t0e bee3
and pork ind1str$s ad .ampai#n.
(. ;0at strate#i. moves m1st !i"#rim$s !ride make to #ro- in t0e 31t1reI

!i"#rim$s !ride m1st .ontin1e to o33er ne- prod1.t 3orms and pa.ka#in# t0at
in.rease t0e .onvenien.e and prod1.t versati"it o3 .0i.ken. To #ain a..eptan.e
o3 t0ese ne- items, it is s1##ested t0at t0e .ontin1e and even in.rease t0e 1se o3
E<oG in t0eir advertisin#. T0ere are man -as in -0i.0 0e .o1"d be 1sed to
promote .ompan prod1.ts %e.#., E<o kno-s .0i.kenG/. T0e s1rvivors in t0e
B,
ind1str 0ave a"" been t0e s1..ess31" marketers, and t0is is espe.ia"" tr1e 3or
va"1e)added "ines.
T0e "a-s o3 s1pp" and demand are sti"" o3 1tmost importan.e 3or t0is
ind1str. 7ven sma"" varian.es in 3eed .osts .an 0ave a maKor impa.t on pro3its
espe.ia"" 3or non)va"1e added items.
Jt is eas to s1##est t0at !i"#rim$s !ride s0o1"d expand #eo#rap0i.a"",
0o-ever t0at -o1"d probab" be ver di33i.1"t and expensive. To #ain market
s0are in a ne- area, !i"#rim$s !ride -o1"d 0ave to Estea"G market s0are and s0e"3
spa.e 3rom a .ompetitor. Jt took Tson ten ears to #ain t0e M.Dona"d$s a..o1nt.
>. :ompare !i"#rim$s !ride strate# to Tson$s.
Tson "itera"" d-ar3s t0e rest o3 t0e po1"tr .ompanies. Jt 0as been and
.ontin1es to be a ver a##ressive .ompan -0ose prime #ro-t0 strate# is
t0ro1#0 a.41isition. Jt a"so 0as diversi3ied into ot0er meats in t0e past: bee3,
pork, 3is0. :1rrent", 0o-ever, t0e are divestin# t0emse"ves o3 t0ese and
ret1rnin# to t0eir .ore b1siness: .0i.ken. T0e strate#ies o3 a.41isitions and
diversi3i.ation 0ave rare" been pra.ti.ed b !i"#rim$s.
+. Ana"He t0e -as !i"#rim$s !ride and t0e ind1str s0o1"d be dea"in# -it0
prob"ems s1.0 as bad p1b"i. re"ations, .ases o3 sa"mone""a poisonin#, -orkin#
.onditions, and .on.erns o3 #ro-ers.
Jnd1str s1pporters aside, it -o1"d appear t0at t0e ind1str 0as done "itt"e to
.ombat its prob"ems to date. As t0ese .on.erns be.ome more p1b"i., 0o-ever, it
-i"" be.ome ne.essar to address t0em more .onstr1.tive".
Sa"mone""a s.ares .rop 1p periodi.a"". To date t0ese s.ares, as -e"" as
most o3 t0e ot0er ind1str prob"ems, 0as 0ad "itt"e impa.t on ind1str sa"es. T0is
.o1"d .0an#e overni#0t. T0e 3edera" #overnment 0as re.ent" passed "e#is"ation
t0at re41ires pro.essors to atta.0 preparation instr1.tions to 3ood and meat
prod1.ts. Anot0er .ase o3 an ind1str$s 0avin# to rea.t rat0er t0an bein#
proa.tive.
7ven t0o1#0 t0e #ro-ers are sti"" %and in a"" probabi"it -i"" .ontin1e to
be/ a "oose" or#aniHed #ro1p, t0e pro.essors need to be proa.tive. T0e need to
re.o#niHe t0at t0e need one anot0er 1n"ess t0e pro.essors are -i""in# to ass1me
t0e #ro-er$s 31n.tion -it0 31rt0er inte#ration. T0eir re"ations0ip s0o1"d be more
positive, and "on#)term F m1.0 "ike t0e re"ations0ips man man13a.t1res 0ave
re.ent" estab"is0ed -it0 t0eir s1pp"iers.
B2
. !ternal Audit
"##ortunities
,. T0ere is in.reasin# demand 3or .0i.ken.
2. T0ere is an in.reasin# demand 3or prepared 3oods.
(. 7xportin# andMor pro.essin# .0i.ken to ot0er nations .an be done.
>. Te.0no"o# o33ers possib"e improvements.
+. Additiona" improvements are possib"e t0ro1#0 #eneti. resear.0.
@. !i"#rim$s !ride .an be inte#rated 31rt0er.
B. :0i.ken 0as a si#ni3i.ant pri.e advanta#e over ot0er meats.
*. T0ere is a ne- treatment to red1.e sa"mone""a in .0i.ks.
&. T0e e.onom is in re.ession.
$%reats
,. T0e rep1tation o3 .0i.ken ind1str isn$t #ood.
2. T0e ind1str sti"" 0as aspe.ts o3 a .ommodit ind1str.
(. T0ere is in.reased #overnmenta" re#1"ation.
>. Sa"mone""a s.ares .rop 1p 3re41ent".
+. Jnd1str is 0i#0" "abor)intensive.
@. ;orkin# .onditions o3 emp"oees 0as re.eived bad p1b"i.it.
B. =ro-ers 0ave in.reased bar#ainin# po-er.
*. !ro3it is s1bKe.t to pri.e 3"1.t1ations o3 #rain.
&. T0ere is stron# .ompetition, espe.ia"" 3rom Tson.
,'. Jnd1str is .0ara.teriHed b s"im pro3it mar#ins.
& MA$'I(

)I*+$D
,e- !ternal &actors )I*+$ 'A$I.* SC"'
"##ortunities
T0ere is an in.reasin# demand 3or .0i.ken. '.'B > '.2*
T0ere is an in.reasin# demand 3or prepared 3ood. '.'* > '.(2
7xportin# andMor pro.essin# .0i.ken to ot0er
nations .an be done. '.'+ ( '.,+
Te.0no"o# o33ers possib"e improvements. '.'( 2 '.'@
Additiona" improvements are possib"e t0ro1#0
#eneti. resear.0. '.'( 2 '.'@
!ossib"e !i"#rim$s !ride .an be inte#rated 31rt0er. '.'2 ( '.'@
:0i.ken 0as a si#ni3i.ant pri.e advanta#e over
ot0er meats. '.'+ ( '.,+
T0ere is a ne- treatment to red1.e sa"mone""a in
B(
.0i.ks. '.'> 2 '.'*
T0e e.onom is in re.ession. '.'( > '.,2
$%reats
T0e rep1tation o3 .0i.ken ind1str isn$t #ood. '.'+ ( '.,+
T0e ind1str sti"" 0as aspe.ts o3 a .ommodit
ind1str. '.'@ ( '.,*
T0ere is in.reased #overnmenta" re#1"ation. '.'> 2 '.'*
Sa"mone""a s.ares .rop 1p 3re41ent". '.'@ 2 '.,2
Jnd1str is 0i#0" "abor)intensive. '.'@ 2 '.,2
;orkin# .onditions o3 emp"oees 0as re.eived
bad p1b"i.it. '.'> 2 '.'*
=ro-ers 0ave in.reased bar#ainin# po-er. '.'+ 2 '.,'
!ro3it is s1bKe.t to pri.e 3"1.t1ations o3 #rain '.'B 2 '.,>
T0ere is stron# .ompetition: Tson. '.'& ( '.2B
Jnd1str is .0ara.teriHed b s"im pro3it mar#in. '.'* , '.'*
$"$A/ 0.00 2.10
Com#etiti2e Pro3ile Matri!
Pilgrim’s $-son *old ,ist
Critical
Success &actor )eig%t 'ating )S 'ating )S 'ating )S
Market s0are '.(' ( '.&' > ,.2' ( '.&'
!ri.e .ompetitiveness '.,' ( '.(' ( '.(' ( '.('
Finan.ia" position '.(' 2 '.@' > ,.2' ( '.&'
!rod1.t 41a"it '.,' ( '.(' ( '.(' ( '.('
:ons1mer "oa"t '.2' 2 '.>' > '.*' ( '.@'
$"$A/ 0.00 2.40 5.60 5.00
&. Internal Audit
Cas% Value o3 Pilgrims Pride in 7millions at 02850800
,. Sto.k0o"ders$ 741it N =ood-i"" A(*' N ' A (*'
2. 5et in.ome x + O A>, x + A 2'+
(. S0are pri.e O A,( M7!S O A,.'( x 5et Jn.ome A>, A +,B
>. 51mber o3 S0ares C1tstandin# D S0are !ri.e O >, x A,( A +((
Met%od A2erage 7 906
&inancial 'atio Anal-sis :;ul- 2002<
Jnd1str: Food !ro.essin#
Se.tor: :ons1merM5on):."i.a"
B>
So1r.e: ---.investor.sto.kpoint..om
Pilgrim’s Pride Industr- Sector SandP 400
Valuation 'atios
!M7 Ratio %TTM/ ,>.BB 22.BB 2+.2' 2+.2+
!M7 Hi#0 ) Last + 6rs 2B.,& >'.(, +(.,@ >&.B&
!M7 Lo- ) Last + 6rs >.'B ,+.@B ,&.(' ,B.(*
<eta '.++ '.(, '.>, ,.''
!ri.e to Sa"es %TTM/ '.,* ,.>* 2.>B 2.@B
!ri.e to <ook %MRP/ ,.,B +.(' B.,> >.,&
!ri.e to Tan#ib"e <ook %MRP/ ,.,B B.2@ ,(.+, @.+&
!ri.e to :as0 F"o- %TTM/ (.B@ ,*.,' ,*.@+ ,B.(*
!ri.e to Free :as0 F"o- %TTM/ *.(( ,&.2& >'.(' ('.*@
8 C-ned Jnstit1tions ,*.&& >+.,+ +>.>@ @'.@@
Di2idends
Dividend 6ie"d '.+( 2.,& 2.(' 2.2*
Dividend 6ie"d ) + 6r Av# '.+' 2.'2 ,.&B ,.(@
Dividend + 6r =ro-t0 Rate *.>+ @.B' *.,( B.&2
!ao1t Ratio %TTM/ B.** >'.2( >+.(' 2&.@B
*ro=t% 'ates >
Sa"es %MRP/ vs Ptr , 6r A#o ),.(+ *.>( @.B, ,.>B
Sa"es %TTM/ vs TTM , 6r A#o 2&.*2 ,&.>B &.*& ,.2+
Sa"es ) + 6r =ro-t0 Rate ,>.22 +.>@ >.@> ,,.>>
7!S %MRP/ vs Ptr , 6r A#o )*@.&& 2&.B@ 2'.,* ,'.>2
7!S %TTM/ vs TTM , 6r A#o )2'.*& 2'.+B ,2.'2 '.2@
7!S ) + 6r =ro-t0 Rate '.B+ @.,B B.>& *.>@
:apita" Spendin# ) + 6r =ro-t0 Rate 2@.*> ,.>@ '.(@ &.(*
&inancial Strengt%
P1i.k Ratio %MRP/ '.(( '.+& '.+B ,.,2
:1rrent Ratio %MRP/ ,.+> ,.(* ,.,* ,.@+
LT Debt to 741it %MRP/ ,.'> ,.(( '.&B '.@*
Tota" Debt to 741it %MRP/ ,.2' ,.+& ,.2> ,.'>
Jnterest :overa#e %TTM/ 5M @.(* ,(.2+ &.(@
Pro3itabilit- 'atios >
=ross Mar#in %TTM/ *.*, (&.2* >*.,( >@.&'
=ross Mar#in ) + 6r Av# ,'.B2 (*.(, >B.>& >*.,B
7<JTD Mar#in %TTM/ @.>& ,(.@2 ,*.+2 2'.'2
7<JTD ) + 6r Av# *.,+ ,>.,' ,*.2+ 2,.*>
Cperatin# Mar#in %TTM/ (.B@ ,,.'& ,+.(2 ,B.,&
Cperatin# Mar#in ) + 6r Av# +.B' ,,.'( ,>.B& ,*.,,
!re)Tax Mar#in %TTM/ 2.(+ &.>> ,>.>, ,>.@2
!re)Tax Mar#in ) + 6r Av# >.2* &.@B ,(.&, ,B.'>
5et !ro3it Mar#in %TTM/ ,.2> @.22 &.@B &.@2
5et !ro3it Mar#in ) + 6r Av# (.>( @.'+ *.&> ,,.2'
733e.tive Tax Rate %TTM/ ,'.&, (+.>, (>.@( ((.2+
733e.tive Tax Rate ) + 6r Av# ,&.2B (B.@* (@.*' (+.@&
Management 33ecti2eness >
Ret1rn on Assets %TTM/ 2.@( B.'B ,'.2& @.'B
Ret1rn on Assets ) + 6r Av# B.@@ *.&* ,'.*B B.&B
Ret1rn on Jnvestment %TTM/ (.(@ ,'.'> ,>.&2 &.B&
B+
Ret1rn on Jnvestment ) + 6r Av# &.+* ,(.*+ ,@.@( ,2.BB
Ret1rn on 741it %TTM/ *.,+ 22.>+ ('.'> ,B.+B
Ret1rn on 741it ) + 6r Av# 2'.>@ 2&.+@ ((.+* 2,.B,
33icienc-
Reven1eM7mp"oee %TTM/ ,'(,>B@ (+B,+(* >'(,**2 >*2,&@&
5et Jn.omeM7mp"oee %TTM/ ,,2B& ,&,*(+ >,,((, B*,,+>
Re.eivab"e T1rnover %TTM/ 2+.(+ ,2.>, ,(.,+ &.@+
Jnventor T1rnover %TTM/ B.@& B.2' @.*+ ,'.',
Asset T1rnover %TTM/ 2.,( ,.(B ,.,* '.&&
===.in2estor.stoc?#oint.com
;ul- 2002
Strengt%s@
,. T0ere is a broad ran#e o3 .0i.ken prod1.ts.
2. =eo#rap0i.a" "o.ation o3 !i"#rim$s !ride.
(. E<oG 0as experien.e and entreprene1ria" spirit.
>. T0ere is brand a-areness t0ro1#0 marketin#.
+. 5et sa"es in 2''' -ere approximate" A,.+ bi""ion.
@. !i"#rim$s !ride is 2
nd
"ar#est in ind1str in Mexi.o.
B. A.41isition o3 ;LR, Foods.
*. Jt .an deve"op and prod1.e ne- prod1.ts to meet spe.i3i. .1stomer$s
needs.
&. !i"#rim$s is t0e 2
nd
"ar#est .0i.ken pro.essor in t0e United States.
)ea?nesses@
,. :ost o3 #oods so"d is 0i#0.
2. Jt is not invo"ved in an ot0er meat ind1str.
(. T0ere -as a ne#ative 2'8 in.ome #ro-t0 in 2'''.
>. Lo- pro3itabi"it mar#ins.
+. A.41isitions present a 3inan.ia" di33i.1"t.
I& MA$'I(@
,e- Internal &actors
)I*+$D
)I*+$ 'A$I.* SC"'
Strengt%s@
A broad ran#e o3 prod1.ts .,2 > .>*
=eo#rap0i.a" "o.ation .'@ ( .,*
<o$s experien.e .'* > .(2
<rand a-areness .'* > .(2
A,.+ bi""ion sa"es .'@ > .2>
B@
Mexi.o position .'* ( .2>
A.41isition o3 ;LR .'@ ( .2>
Deve"ops ne- prod1.ts .'@ > .2>
2nd "ar#est prod1.er .,2 ( .(@
)ea?nesses@
Hi#0 .ost o3 #oods so"d .,' 2 .2'
:0i.ken on" .'2 ( .'@
%)2'8/ in.ome #ro-t0 2''' .'> 2 .'*
Lo- pro3its .'@ 2 .,2
A.41isitions di33i.1"t .'@ 2 .,2
$"$A/ 0.00 5.20
*. $")S Anal-sis@
S$'.*$+S@
,. T0ere is a broad ran#e o3
.0i.ken prod1.ts.
2. =eo#rap0i.a" "o.ation o3
!i"#rim$s.
(. E<oG 0as experien.e and
entreprene1ria" spirit.
>. Hi#0 brand a-areness
t0ro1#0 marketin#.
+. 5et sa"es in 2''' -ere
approximate" A,.+ <i""ion.
@. !i"#rim$s 2
nd
"ar#est in
Mexi.o.
B. A.41isition o3 ;LR
*. Jt .an deve"op and prod1.e
ne- prod1.ts.
&. !i"#rim$s is t0e 2nd "ar#est in
U.S.
)A,.SSS@
,. Hi#0 .ost o3 #oods so"d.
2. Jt is not invo"ved in an ot0er
meat ind1str.
(. A ne#ative 2'8 in.ome
#ro-t0 in 2'''.
>. Lo- pro3it mar#ins.
+. A.41isitions a 3inan.ia"
di33i.1"t.
"PP"'$A.I$IS@
,. Jn.reasin# demand 3or
.0i.ken.
2. Jn.reasin# demand 3or
prepared 3oods.
(. 7xportin# andMor pro.essin#
.0i.ken to ot0er nations is
avai"ab"e.
>. Te.0no"o# o33ers possib"e
improvements.
+. Jmprovements t0ro1#0
#eneti. resear.0.
@. !i"#rim$s .an be inte#rated
31rt0er.
B. :0i.ken 0as a si#ni3i.ant
pri.e advanta#e over ot0er
meats.
S8" S$'A$*IS@
,. 7xpand a.ross United States.
%S2, C,/
2. Diversi3 into ot0er meats.
%S>, C&/
(. Deve"op ne- pro.essed
3oods. %S*, C2/
>. Jn.rease resear.0 and
deve"opment. %S&, C>/
+. Market Esa3erG .0i.ken.
%S+, C*/
)8" S$'A$*IS@
,. Diversi3 into ot0er meats.
%;2, C&/
2. A.41ire s1pp"iers. %;,, C@/
(. Seek to be a.41ired b
Tson. %;(, ;>, C2/
>. La1n.0 a premi1m "ine o3
prepared .0i.ken prod1.ts.
%;,, ;>, C2/
+. 7stab"is0 a pro.essin# p"ant
in t0e eastern U.S. %;+, C,/
BB
*. 5e- treatment to red1.e
sa"mone""a in .0i.ks.
&. 7.onom in re.ession.
$+'A$S@
,. T0e rep1tation o3 .0i.ken
ind1str bad.
2. T0e ind1str is "ike a
.ommodit ind1str.
(. T0ere is in.reased
#overnment re#1"ation.
>. Sa"mone""a s.ares .rop 1p
3re41ent".
+. Jnd1str is 0i#0" "abor)
intensive.
@. ;orkin# .onditions o3
emp"oees is bad.
B. =ro-ers 0ave in.reased
bar#ainin# po-er.
*. !ro3it is s1bKe.t to pri.e
3"1.t1ations o3 #rain.
&. T0ere is stron# .ompetition:
Tson.
,'. Jnd1str is .0ara.teriHed b
s"im pro3it mar#in.
S8$ S$'A$*IS@
,. Mer#e -it0 Tson. %S2, T&/
2. Jn.rease e33i.ien.M.apa.it
o3
existin# 3a.i"ities. %S&, T&,
T,'/
(. Jn.rease marketin#. %S>, C&/

)8$ S$'A$*IS@
,. Mer#e -it0 !erd1e. %;>, T&/
2. Jn.rease advertisin#. %T,, T2/
(. Se"" additiona" .ommon
sto.k. %;+, T&/
+. SPAC Matri!@
y-axis
Finan.ia" stren#t0 N> N, best to N@ -orst 6 axis: > N %)2/ O 2
7nvironmenta" stabi"it )2 )@ -orst to F, best
x-axis
:ompetitive advanta#e )( )@ 1nstab"e to F, stab"e D axis: > N %)(/ O ,
Jnd1str stren#t0 N> N, best to N@ -orst
:onservative FS A##ressive
:A JS
B*
De3ensive 7S :ompetitive
I. *rand Strateg- Matri!
RA!JD MAR97T
=RC;TH
P1adrant JJ P1adrant J
Pilgrims
;7A9 STRC5=
:CM!7TJTJQ7 :CM!7TJTJQ7
!CSJTJC5 !CSJTJC5

P1adrant JJJ P1adrant JQ
SLC; MAR97T
=RC;TH
,. Market deve"opment
2. Market penetration
(. !rod1.t deve"opment
>. For-ard inte#ration
+. <a.k-ard inte#ration
@. HoriHonta" inte#ration
B. :on.entri. diversi3i.ation
B&
;. $%e Internal8!ternal :I< Matri!
$%e I& $otal )eig%ted Score
Stron# Avera#e ;eak
(.' to >.' 2.' to 2.&& ,.' to ,.&&
Hi#0 J JJ JJJ
(.' to (.&&


Medi1m JQ Q QJ
$%e & $otal
)eig%ted Score
2.' to 2.&&

Lo- QJJ QJJJ JD
+old and Maintain
,.' to
,.&&

,. Matri! Anal-sis and $")S Summar-
Alternati2e Strategies I SPAC *'A.D C"A.$
For-ard Jnte#ration D D 2
<a.k-ard Jnte#ration D D 2
HoriHonta" Jnte#ration D D 2
Market !enetration D D D 2
Market Deve"opment D D 2
!rod1.t Deve"opment D D D 2
:on.entri. Diversi3i.ation D D 2
:on#"omerate Diversi3i.ation D 2
HoriHonta" Diversi3i.ation D 2
Joint Qent1re ,
Retren.0ment
Divestit1re
Li41idation
*'
/. QSPM
Strategic Alternati2es
C'I$ICA/ &AC$"'S )eig%t !#and Ad2ertise
AS $AS AS $AS

Strengt%s@
A broad ran#e o3 prod1.ts '.,2 2 '.2> ( '.(@
=eo#rap0i.a" "o.ation '.'@ ) ) ) )
E<o$sG experien.e '.'* ) ) ) )
<rand a-areness '.'* 2 '.,@ > '.(2
A,.+ bi""ion sa"es '.'@ 2 '.,2 ( '.,*
Mexi.o position '.'* ( '.2> 2 '.,@
A.41isition o3 ;LR '.'@ ) ) ) )
Deve"ops ne- prod1.ts '.'@ , '.'@ > '.2>
2nd "ar#est prod1.er '.,2 ( '.(@ 2 '.2>
)ea?nesses@
Hi#0 .ost o3 #oods so"d '.,' , '.,' ( '.('
!o1"tr on" '.'2 ) ) ) )
)2'8 2''' in.ome #ro-t0 '.'> 2 '.'* 2 '.'*
Lo- pro3its '.'@ 2 '.,2 2 '.,2
A.41isitions di33i.1"t '.'@ ) ) ) )
SAB$"$A/@ 0.00 0.96 2.00
"##ortunities@
Jn.reasin# .0i.ken demand '.'B 2 '.,> , '.'B
Jn.reasin# prepared 3ood demand '.'* ( '.2> > '.(2
7xportin# '.'+ > '.2' 2 '.,'
!ossib"e te.0no"o# improvements '.'( ) ) ) )
!ossib"e #eneti. improvements '.'( ) ) ) )
F1rt0er inte#ration '.'2 > '.'* 2 '.'>
!ri.e advanta#e o3 .0i.ken '.'+ ( '.,+ > '.2'
5e- sa"mone""a treatment '.'> ( '.,2 2 '.'*
7.onom in re.ession '.'( ( '.'& 2 '.'@
$%reats@
Rep1tation o3 .0i.ken '.'+ ) ) ) )
:ommodit ind1str '.'@ , '.'@ > '.2>
Jn.reased #overnment re#1"ation '.'> ) ) ) )
Sa"mone""a s.ares '.'@ ) ) ) )
Hi#0" "abor intensive '.'@ , '.'@ ( '.,*
;orkin# .onditions '.'> ) ) ) )
=ro-ers in.reased bar#ainin# po-er '.'+ ) ) ) )
!ri.e 3"1.t1ations o3 #rain '.'B ) ) ) )
*,
Tson '.'& ( '.2B ( '.2B
Sma"" pro3it mar#ins '.'* ( '.2> ( '.2>
SAB$"$A/@ 0.00 0.14 0.60
SAM $"$A/ A$$'AC$IV.SS SC"'@ 5.05 5.60

M. PS8BI$ Anal-sis 3or Pilgrims Pride :in 7millions at 02850800<
AAmo1nt 5eeded: A+''
Sto.k !ri.e A,(
7<JT Ran#e A,'' to A+''
Tax Rate 2,M@( O.(( O ((8
Jnterest Rate +8
RS0ares C1tstandin# >,
Common Stoc? &inancing Debt &inancing
+ig% /o= +ig% /o=
7<JT %A&>.+ in 2'',/
Jnterest %+8/
7<T
Taxes ((8
7AT
R o3 S0ares C1tstandin#
7!S
A+''
'
+''
,@+
((+
B&
>.2>
A,''
'
,''
((
@B
B&
.*>*
A+''
2+
>B+
,+B
(2*
>,
*.''
A,''
2+
B+
2+
+'
>,
,.22
:on."1sion: !i"#rims !ride s0o1"d 1se debt to raise t0e A+'' mi""ion.
.. #ilogue

Jn mid)2''2, !i"#rim$s !ride -o1"d make no statements abo1t its 1se o3
antibioti.s in #ro-in# .0i.kens, -0i.0 t0reatens to 1ndermine t0e e33i.a. o3
antibioti.s in 01man medi.ine. For ears, .0i.ken prod1.ers 0ave "a.ed t0e 3eed
and -ater #iven to .0i.kens -it0 01#e amo1nts o3 antibioti.s, o3ten 3or t0e so"e
p1rpose o3 speedin# t0e anima"s? #ro-t0. <1t re.ent mont0s 0ave seen a dramati.
.0an#e in t0e ind1str as severa" o3 t0e nation?s "ar#est .0i.ken prod1.ers 0ave
anno1n.ed t0e 0ave red1.ed antibioti. 1se in 0ea"t0 .0i.kens. Un3ort1nate",
t0e t0ird "ar#est U.S. .0i.ken prod1.er, !i"#rim?s !ride, 0ead41artered in
!ittsb1r#, Texas, apparent" -o1"d not red1.e its 1se o3 antibioti.s.
7stimates are t0at B'8 o3 a"" antibioti.s 1sed in t0e United States are 3ed
to .0i.kens, pi#s and .o-s 3or non)t0erape1ti. p1rposes "ike #ro-t0 promotion.
T0e over1se o3 antibioti.s in po1"tr prod1.tion en.o1ra#es disease).a1sin#
ba.teria t0at .an resist dr1# treatment. T0e Ameri.an Medi.a" Asso.iation 0as
.a""ed 3or an end to t0e non)t0erape1ti. 1se o3 antibioti.s in anima" 3armin#.
*2
Sma""er prod1.ers pioneered t0e move a-a 3rom antibioti.s, b1t mid)2''2 is t0e
3irst time maKor .0i.ken prod1.ers 0ave a.kno-"ed#ed t0e antibioti. resistan.e
prob"em.
Top ,' U.S. .0i.ken prod1.ers: !erd1e, :onA#ra, ;ane Farms and
Foster Farms, -0o prod1.e a .ombined ,>2.2( mi""ion po1nds o3 .0i.ken per
-eek, 0ave moved to stop 3eedin# medi.a"" important antibioti.s to 0ea"t0
.0i.kens. A spokesman 3or !erd1e 0as #one on)re.ord sain# t0at t0e .ompan
41it 3eedin# antibioti.s to 0ea"t0 .0i.kens so t0at, S-e are in no -a, s0ape or
3orm .ontrib1tin# to antibioti. resistan.e in 01mans.S !i"#rim?s !ride, -0i.0
prod1.es +@.B mi""ion po1nds o3 .0i.ken per -eek, 0as s0o-n no si#n o3 makin#
a simi"ar move.
!i"#rim?s !ride :orporation anno1n.ed in Apri" 2''2 t0at it 0ad net
in.ome o3 A,.( mi""ion, or A'.'( per s0are, 3or t0e se.ond 3is.a" 41arter ended
Mar.0 (', 2''2 an A,,., mi""ion in.rease -0en .ompared to t0e net "oss in t0e
prior ear?s se.ond 41arter o3 A&.* mi""ion, or A'.2> per s0are. T0e :ompan a"so
anno1n.ed re.ord net sa"es 3or t0e se.ond 3is.a" 41arter ended Mar.0 (', 2''2 o3
A@''.* mi""ion, a ,'.&8 in.rease -0en .ompared to t0e A+>,.@ mi""ion o3 net
sa"es 3or t0e same period "ast ear, -it0 t0e in.rease res1"tin# primari" 3rom t0e
a.41isition o3 ;LR Foods, Jn.., -0i.0 -as e33e.tive Jan1ar 2B, 2'',.
As o3 mid)2''2, !i"#rim?s !ride :orporation is t0e se.ond "ar#est po1"tr
prod1.er in t0e United States, t0e t0ird "ar#est in .0i.ken and 3i3t0 "ar#est in
t1rke, and se.ond "ar#est .0i.ken .ompan in Mexi.o. !i"#rim?s !ride emp"os
more t0an 2>,+'' persons and operates pro.essin# and 31rt0er pro.essin# p"ants,
distrib1tion .enters, 0at.0eries and 3eed mi""s in Texas, Arkansas, AriHona, 5ort0
:aro"ina, !enns"vania, Ck"a0oma, Qir#inia, ;est Qir#inia and Mexi.o.
*(

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