(d)
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Exhibit
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Exhibit
Number
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Description
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99.1
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Press Release, dated May 9, 2011, announcing the unaudited results of operations of Tyson Foods, Inc. for its second quarter and six months ended April 2, 2011
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TYSON FOODS, INC.
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Date: May 9, 2011
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By:
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/s/ Dennis Leatherby
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Name:
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Dennis Leatherby
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Title:
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Executive Vice President and
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Chief Financial Officer
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●
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2nd quarter 2011 EPS was $0.42, as compared to $0.42 last year
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●
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2nd quarter 2011 Sales were $8.0 billion, up 15.7% compared to last year
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●
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Overall Operating Margin was 3.8%
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●
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Chicken operating income $37 million, or 1.4% of sales
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Beef operating income $94 million, or 2.8% of sales
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●
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Pork operating income $146 million, or 10.5% of sales
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●
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Prepared Foods operating income $31 million, or 4.0% of sales
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●
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Net interest expense is projected to be $100 million lower in fiscal 2011 vs fiscal 2010 due to bond buybacks, recent rating upgrades and the amendment of our revolving credit facility
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(in millions, except per share data)
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Second Quarter
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Six Months
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||||||||||||||
2011
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2010
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2011
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2010
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|||||||||||||
Sales
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$ | 8,000 | $ | 6,916 | $ | 15,615 | $ | 13,551 | ||||||||
Operating Income
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303 | 344 | 801 | 658 | ||||||||||||
Net Income
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156 | 156 | 450 | 315 | ||||||||||||
Less: Net Loss Attributable to Noncontrolling Interest
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(3 | ) | (3 | ) | (7 | ) | (4 | ) | ||||||||
Net Income Attributable to Tyson
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$ | 159 | $ | 159 | $ | 457 | $ | 319 | ||||||||
Net Income Per Share Attributable to Tyson
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$ | 0.42 | $ | 0.42 | $ | 1.20 | $ | 0.84 |
●
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Six Months Fiscal 2011 – Included an $11 million, or $0.03 per diluted share, gain related to a sale of interests in an equity method investment.
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Sales
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||||||||||||||||||||||||||||||||
(for the second quarter and six months ended April 2, 2011, and April 3, 2010)
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||||||||||||||||||||||||||||||||
Second Quarter
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Six Months
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Volume
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Avg. Price
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Volume
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Avg. Price
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|||||||||||||||||||||||||||||
2011
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2010
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Change
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Change
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2011
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2010
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Change
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Change
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|||||||||||||||||||||||||
Chicken
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$ | 2,739 | $ | 2,491 | 6.0 | % | 3.7 | % | $ | 5,358 | $ | 4,916 | 7.2 | % | 1.7 | % | ||||||||||||||||
Beef
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3,333 | 2,804 | (0.6 | )% | 19.6 | % | 6,518 | 5,521 | 0.0 | % | 18.0 | % | ||||||||||||||||||||
Pork
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1,384 | 1,097 | 6.6 | % | 18.4 | % | 2,622 | 2,044 | 6.2 | % | 20.8 | % | ||||||||||||||||||||
Prepared Foods
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778 | 734 | (4.6 | )% | 11.1 | % | 1,584 | 1,447 | (2.2 | )% | 11.9 | % | ||||||||||||||||||||
Other
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25 | 0 | n/a | n/a | 33 | 0 | n/a | n/a | ||||||||||||||||||||||||
Intersegment Sales
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(259 | ) | (210 | ) | n/a | n/a | (500 | ) | (377 | ) | n/a | n/a | ||||||||||||||||||||
Total
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$ | 8,000 | $ | 6,916 | 3.0 | % | 12.3 | % | $ | 15,615 | $ | 13,551 | 3.7 | % | 11.1 | % |
Operating Income
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||||||||||||||||||||||||||||||||
(for the second quarter and six months ended April 2, 2011, and April 3, 2010)
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Second Quarter
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Six Months
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Operating Margin
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Operating Margin
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2011
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2010
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2011
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2010
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2011
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2010
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2011
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2010
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|||||||||||||||||||||||||
Chicken
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$ | 37 | $ | 114 | 1.4 | % | 4.6 | % | $ | 218 | $ | 192 | 4.1 | % | 3.9 | % | ||||||||||||||||
Beef
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94 | 126 | 2.8 | % | 4.5 | % | 210 | 245 | 3.2 | % | 4.4 | % | ||||||||||||||||||||
Pork
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146 | 69 | 10.5 | % | 6.3 | % | 323 | 131 | 12.3 | % | 6.4 | % | ||||||||||||||||||||
Prepared Foods
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31 | 37 | 4.0 | % | 5.0 | % | 59 | 92 | 3.7 | % | 6.4 | % | ||||||||||||||||||||
Other
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(5 | ) | (2 | ) | n/a | n/a | (9 | ) | (2 | ) | n/a | n/a | ||||||||||||||||||||
Total
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$ | 303 | $ | 344 | 3.8 | % | 5.0 | % | $ | 801 | $ | 658 | 5.1 | % | 4.9 | % |
In fiscal 2011, overall domestic protein (chicken, beef, pork and turkey) production is expected to slightly increase. Because exports are likely to grow as well, we forecast total domestic availability of protein to be down slightly compared to fiscal 2010, which should continue to support pricing. The following is a summary of the fiscal 2011 outlook for each of our segments, as well as an outlook on sales, capital expenditures, net interest expense and debt:
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●
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Chicken – Based on USDA data, we expect industry production will increase from fiscal 2010 levels. In addition, current futures prices indicate higher grain costs in fiscal 2011 compared to fiscal 2010 of nearly $500 million. We expect to offset a portion of the increased grain costs and the impact of additional supplies with operational, pricing and mix improvements.
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●
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Because of these factors, we expect our operating margins will be below our normalized range; however, we continue to expect to remain profitable during the remainder of fiscal 2011. Additionally, a significant portion of our increased capital expenditures focus on production and labor efficiencies, yield improvements and sales mix flexibility. These improvements, which began in late fiscal 2010 and are scheduled to continue throughout fiscal 2011, are expected to result in $200 million of operational improvements in fiscal 2011.
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●
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Beef – We expect to see a gradual reduction in fed cattle supplies of 1-2% for the remainder of fiscal 2011 as compared to fiscal 2010. We do not expect a significant change in the fundamentals of our Beef business for the balance of fiscal 2011. We expect adequate supplies in the regions we operate our plants and for beef exports to remain strong in fiscal 2011.
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●
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Pork – We expect hog supplies in fiscal 2011 to be comparable to fiscal 2010 and to be adequate in the regions in which we operate. We expect pork exports to remain strong in fiscal 2011. While we expect results should remain above our normalized range for the balance of the fiscal year, we do not expect operating margins for the remainder of fiscal 2011 to be at the level of the first half of our fiscal year.
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●
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Prepared Foods – We expect operational improvements and increased pricing to offset the likely increase in raw material costs in fiscal 2011. Because many of our sales contracts are formula based or shorter-term in nature, we are typically able to offset rising input costs through increased pricing. However, there is a lag time for price increases to take effect.
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●
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Sales – We expect fiscal 2011 sales to exceed $32 billion mostly due to price increases associated with the rising raw material costs.
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Capital Expenditures – We expect fiscal 2011 capital expenditures to be approximately $700 million.
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Net Interest Expense – We expect fiscal 2011 net interest expense will be approximately $230 million, down approximately $100 million compared to fiscal 2010 and down $15 million from our previous projection because of the amendment of our revolving credit facility and our recent ratings upgrades.
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Debt – We will continue to use our available cash to repurchase notes when available at attractive rates. The only significant maturities of debt coming due over the next three fiscal years (2011-2013) are our 8.25% Notes due October 1, 2011, of which the balance was $314 million at April 2, 2011. We plan to retire these notes with current cash on hand and/or cash flows from operations.
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in millions
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Three Months Ended
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Six Months Ended
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||||||||||||||||||||||
April 2, 2011
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April 3, 2010
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Change
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April 2, 2011
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April 3, 2010
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Change
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|||||||||||||||||||
Sales
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$ | 2,739 | $ | 2,491 | $ | 248 | $ | 5,358 | $ | 4,916 | $ | 442 | ||||||||||||
Sales Volume Change
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6.0 | % | 7.2 | % | ||||||||||||||||||||
Average Sales Price Change
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3.7 | % | 1.7 | % | ||||||||||||||||||||
Operating Income
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$ | 37 | $ | 114 | $ | (77 | ) | $ | 218 | $ | 192 | $ | 26 | |||||||||||
Operating Margin
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1.4 | % | 4.6 | % | 4.1 | % | 3.9 | % |
Second quarter and six months – Fiscal 2011 vs Fiscal 2010
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●
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Sales and Operating Income –
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●
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Sales Volume – We cut production in the second quarter of fiscal 2011 to balance our inventory supply with customer demand. Even with our production volume cutbacks, sales volume grew as a result of significant reductions in our inventory levels.
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●
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Operational Improvements – Operating results were positively impacted by an increase in sales volume and operational improvements, which included: yield and mix; additional processing flexibility; and reduced interplant product movement. However, during fiscal 2011, we were negatively impacted by an increase in other feed ingredient costs, freight and weather-related expenses.
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●
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Derivative Activities – Operating results included the following amounts for commodity risk management activities related to grain and energy purchases. These amounts exclude the impact from related physical purchase transactions, which impact current and future period operating results.
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Income - in millions
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Qtr
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YTD
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||||||
2011
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$ | 23 | $ | 74 | ||||
2010
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0 | 1 | ||||||
Improvement in operating results
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$ | 23 | $ | 73 |
●
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Grain Costs – As compared to the same periods of fiscal 2010, operating results were negatively impacted in the second quarter and six months of fiscal 2011 by an increase in grain costs of $82 million and $66 million, respectively, which lowered operating margins by 3.0% and 1.2%.
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in millions
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Three Months Ended
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Six Months Ended
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April 2, 2011
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April 3, 2010
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Change
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April 2, 2011
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April 3, 2010
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Change
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|||||||||||||||||||
Sales
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$ | 3,333 | $ | 2,804 | $ | 529 | $ | 6,518 | $ | 5,521 | $ | 997 | ||||||||||||
Sales Volume Change
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(0.6 | )% | 0.0 | % | ||||||||||||||||||||
Average Sales Price Change
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19.6 | % | 18.0 | % | ||||||||||||||||||||
Operating Income
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$ | 94 | $ | 126 | $ | (32 | ) | $ | 210 | $ | 245 | $ | (35 | ) | ||||||||||
Operating Margin
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2.8 | % | 4.5 | % | 3.2 | % | 4.4 | % |
Second quarter and six months – Fiscal 2011 vs Fiscal 2010
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●
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Sales and Operating Income –
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●
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We have sustained our operating income by maximizing our revenues relative to the rising live cattle markets, partially attributable to strong export sales. This was offset by an increase in operating costs.
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●
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Derivative Activities – Operating results included the following amounts for commodity risk management activities related to forward futures contracts for live cattle. These amounts exclude the impact from related physical sale and purchase transactions, which impact current and future period operating results.
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Income/(Loss) - in millions
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Qtr
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YTD
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2011
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$ | (30 | ) | $ | (39 | ) | ||
2010
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(4 | ) | 2 | |||||
Decline in operating results
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$ | (26 | ) | $ | (41 | ) | ||
in millions
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Three Months Ended
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Six Months Ended
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April 2, 2011
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April 3, 2010
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Change
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April 2, 2011
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April 3, 2010
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Change
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Sales
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$ | 1,384 | $ | 1,097 | $ | 287 | $ | 2,622 | $ | 2,044 | $ | 578 | ||||||||||||
Sales Volume Change
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6.6 | % | 6.2 | % | ||||||||||||||||||||
Average Sales Price Change
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18.4 | % | 20.8 | % | ||||||||||||||||||||
Operating Income
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$ | 146 | $ | 69 | $ | 77 | $ | 323 | $ | 131 | $ | 192 | ||||||||||||
Operating Margin
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10.5 | % | 6.3 | % | 12.3 | % | 6.4 | % |
Second quarter and six months – Fiscal 2011 vs Fiscal 2010
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●
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Sales and Operating Income –
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●
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We increased our operating margins by maximizing our revenues relative to the live hog markets, partially attributable to strong export sales and operational and mix performance.
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●
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Derivative Activities – Operating results included the following amounts for commodity risk management activities related to forward futures contracts for live hogs. These amounts exclude the impact from related physical sale and purchase transactions, which impact current and future period operating results.
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Income/(Loss) - in millions
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Qtr
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YTD
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2011
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$ | (22 | ) | $ | (9 | ) | ||
2010
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(22 | ) | (29 | ) | ||||
Improvement in operating results
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$ | 0 | $ | 20 | ||||
in millions
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Three Months Ended
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Six Months Ended
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April 2, 2011
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April 3, 2010
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Change
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April 2, 2011
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April 3, 2010
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Change
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Sales
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$ | 778 | $ | 734 | $ | 44 | $ | 1,584 | $ | 1,447 | $ | 137 | ||||||||||||
Sales Volume Change
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(4.6 | )% | (2.2 | )% | ||||||||||||||||||||
Average Sales Price Change
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11.1 | % | 11.9 | % | ||||||||||||||||||||
Operating Income
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$ | 31 | $ | 37 | $ | (6 | ) | $ | 59 | $ | 92 | $ | (33 | ) | ||||||||||
Operating Margin
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4.0 | % | 5.0 | % | 3.7 | % | 6.4 | % |
Second quarter and six months – Fiscal 2011 vs Fiscal 2010
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●
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Operating margins were positively impacted by an increase in our average sales prices, which were partially offset by the increase in raw material costs. In addition, we also had an increase in selling, general and administrative expenses. In the first six months of fiscal 2010, we received $8 million in insurance proceeds related to the flood damage at our Jefferson, Wisconsin, plant.
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Three Months Ended
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Six Months Ended
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April 2, 2011
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April 3, 2010
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April 2, 2011
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April 3, 2010
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Sales
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$ | 8,000 | $ | 6,916 | $ | 15,615 | $ | 13,551 | ||||||||
Cost of Sales
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7,467 | 6,352 | 14,338 | 12,458 | ||||||||||||
Gross Profit
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533 | 564 | 1,277 | 1,093 | ||||||||||||
Selling, General and Administrative
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230 | 220 | 476 | 435 | ||||||||||||
Operating Income
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303 | 344 | 801 | 658 | ||||||||||||
Other (Income) Expense:
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||||||||||||||||
Interest income
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(3 | ) | (4 | ) | (6 | ) | (7 | ) | ||||||||
Interest expense
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63 | 100 | 129 | 180 | ||||||||||||
Other, net
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2 | (1 | ) | (8 | ) | 0 | ||||||||||
Total Other (Income) Expense
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62 | 95 | 115 | 173 | ||||||||||||
Income before Income Taxes
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241 | 249 | 686 | 485 | ||||||||||||
Income Tax Expense
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85 | 93 | 236 | 170 | ||||||||||||
Net Income
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156 | 156 | 450 | 315 | ||||||||||||
Less: Net Loss Attributable to Noncontrolling Interest
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(3 | ) | (3 | ) | (7 | ) | (4 | ) | ||||||||
Net Income Attributable to Tyson
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$ | 159 | $ | 159 | $ | 457 | $ | 319 | ||||||||
Weighted Average Shares Outstanding:
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||||||||||||||||
Class A Basic
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305 | 303 | 305 | 303 | ||||||||||||
Class B Basic
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70 | 70 | 70 | 70 | ||||||||||||
Diluted
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383 | 378 | 381 | 377 | ||||||||||||
Net Income Per Share Attributable to Tyson:
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||||||||||||||||
Class A Basic
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$ | 0.43 | $ | 0.43 | $ | 1.24 | $ | 0.87 | ||||||||
Class B Basic
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$ | 0.39 | $ | 0.39 | $ | 1.12 | $ | 0.78 | ||||||||
Diluted
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$ | 0.42 | $ | 0.42 | $ | 1.20 | $ | 0.84 | ||||||||
Cash Dividends Per Share:
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||||||||||||||||
Class A
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$ | 0.040 | $ | 0.040 | $ | 0.080 | $ | 0.080 | ||||||||
Class B
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$ | 0.036 | $ | 0.036 | $ | 0.072 | $ | 0.072 | ||||||||
Sales Growth
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15.7 | % | 15.2 | % | ||||||||||||
Margins: (Percent of Sales)
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||||||||||||||||
Gross Profit
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6.7 | % | 8.2 | % | 8.2 | % | 8.1 | % | ||||||||
Operating Income
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3.8 | % | 5.0 | % | 5.1 | % | 4.9 | % | ||||||||
Net Income
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2.0 | % | 2.3 | % | 2.9 | % | 2.3 | % | ||||||||
Effective Tax Rate
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34.9 | % | 37.1 | % | 34.3 | % | 35.0 | % |
April 2, 2011
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October 2, 2010
|
|||||||
Assets
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||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
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$ | 794 | $ | 978 | ||||
Accounts receivable, net
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1,256 | 1,198 | ||||||
Inventories, net
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2,730 | 2,274 | ||||||
Other current assets
|
157 | 168 | ||||||
Total Current Assets
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4,937 | 4,618 | ||||||
Net Property, Plant and Equipment
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3,762 | 3,674 | ||||||
Goodwill
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1,895 | 1,893 | ||||||
Intangible Assets
|
161 | 166 | ||||||
Other Assets
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471 | 401 | ||||||
Total Assets
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$ | 11,226 | $ | 10,752 | ||||
Liabilities and Shareholders’ Equity
|
||||||||
Current Liabilities:
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||||||||
Current debt
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$ | 390 | $ | 401 | ||||
Trade accounts payable
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1,126 | 1,110 | ||||||
Other current liabilities
|
963 | 1,034 | ||||||
Total Current Liabilities
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2,479 | 2,545 | ||||||
Long-Term Debt
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2,105 | 2,135 | ||||||
Deferred Income Taxes
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389 | 321 | ||||||
Other Liabilities
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500 | 486 | ||||||
Redeemable Noncontrolling Interest
|
65 | 64 | ||||||
Total Tyson Shareholders’ Equity
|
5,649 | 5,166 | ||||||
Noncontrolling Interest
|
39 | 35 | ||||||
Total Shareholders’ Equity
|
5,688 | 5,201 | ||||||
Total Liabilities and Shareholders’ Equity
|
$ | 11,226 | $ | 10,752 |
Six Months Ended
|
||||||||
April 2, 2011
|
April 3, 2010
|
|||||||
Cash Flows From Operating Activities:
|
||||||||
Net income
|
$ | 450 | $ | 315 | ||||
Depreciation and amortization
|
256 | 247 | ||||||
Deferred income taxes
|
60 | 1 | ||||||
Other, net
|
40 | 47 | ||||||
Net changes in working capital
|
(552 | ) | (124 | ) | ||||
Cash Provided by Operating Activities
|
254 | 486 | ||||||
Cash Flows From Investing Activities:
|
||||||||
Additions to property, plant and equipment
|
(319 | ) | (264 | ) | ||||
Purchases of marketable securities
|
(107 | ) | (26 | ) | ||||
Proceeds from sale of marketable securities
|
27 | 22 | ||||||
Other, net
|
25 | 41 | ||||||
Cash Used for Investing Activities
|
(374 | ) | (227 | ) | ||||
Cash Flows From Financing Activities:
|
||||||||
Payments on debt
|
(65 | ) | (555 | ) | ||||
Net proceeds from borrowings
|
0 | 15 | ||||||
Change in restricted cash to be used for financing activities
|
0 | 140 | ||||||
Purchases of treasury shares
|
(21 | ) | (31 | ) | ||||
Dividends
|
(30 | ) | (30 | ) | ||||
Other, net
|
45 | 15 | ||||||
Cash Used for Financing Activities
|
(71 | ) | (446 | ) | ||||
Effect of Exchange Rate Change on Cash
|
7 | (5 | ) | |||||
Decrease in Cash and Cash Equivalents
|
(184 | ) | (192 | ) | ||||
Cash and Cash Equivalents at Beginning of Year
|
978 | 1,004 | ||||||
Cash and Cash Equivalents at End of Period
|
$ | 794 | $ | 812 |