(d) | Exhibit |
Exhibit Number | Description |
99.1 | Press Release, dated November 19, 2012, announcing results of operations of Tyson Foods, Inc. for its fourth quarter and 12 months ended September 29, 2012 |
TYSON FOODS, INC. | |||
Date: November 19, 2012 | By: | /s/ Dennis Leatherby | |
Name: | Dennis Leatherby | ||
Title: | Executive Vice President and | ||
Chief Financial Officer |
• | Fourth quarter 2012 reported EPS $0.51; adjusted1 EPS $0.55 |
• | Comparable fourth quarter 2011 reported and adjusted1 EPS $0.26 |
• | Overall fourth quarter operating margin was 4.0% |
• | Repurchased 3.2 million shares for $50 million in fourth quarter |
• | Fiscal 2012 reported EPS $1.58; adjusted1 EPS $1.91 |
• | Comparable fiscal 2011 reported EPS $1.97; adjusted1 EPS $1.89 |
• | Record sales of $33 billion in fiscal 2012 |
• | Repurchased 12.5 million shares for $230 million in fiscal 2012 |
• | Liquidity totaled $2.0 billion at September 29, 2012 |
• | Board declares $0.10 special dividend and a 25% increase on regular dividend |
(in millions, except per share data) | Fourth Quarter | 12 Months | |||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Sales | $ | 8,373 | $ | 8,404 | $ | 33,278 | $ | 32,266 | |||||||
Operating Income | 332 | 172 | 1,248 | 1,285 | |||||||||||
Net Income | 181 | 95 | 576 | 733 | |||||||||||
Less: Net Loss Attributable to Noncontrolling Interest | (4 | ) | (2 | ) | (7 | ) | (17 | ) | |||||||
Net Income Attributable to Tyson | $ | 185 | $ | 97 | $ | 583 | $ | 750 | |||||||
Reported Net Income Per Share Attributable to Tyson | $ | 0.51 | $ | 0.26 | $ | 1.58 | $ | 1.97 | |||||||
Adjusted1 Net Income Per Share Attributable to Tyson | $ | 0.55 | $ | 0.26 | $ | 1.91 | $ | 1.89 |
Sales | ||||||||||||||||||||
(for the fourth quarter and 12 months ended September 29, 2012, and October 1, 2011) | ||||||||||||||||||||
Fourth Quarter | 12 Months | |||||||||||||||||||
Volume | Avg. Price | Volume | Avg. Price | |||||||||||||||||
2012 | 2011 | Change | Change | 2012 | 2011 | Change | Change | |||||||||||||
Chicken | $ | 3,016 | $ | 2,859 | (3.5 | )% | 9.4 | % | $ | 11,591 | $ | 11,017 | (3.6 | )% | 9.2 | % | ||||
Beef | 3,432 | 3,516 | (12.5 | )% | 11.6 | % | 13,755 | 13,549 | (11.3 | )% | 14.4 | % | ||||||||
Pork | 1,319 | 1,430 | 5.0 | % | (12.2 | )% | 5,510 | 5,460 | 2.4 | % | (1.5 | )% | ||||||||
Prepared Foods | 805 | 827 | — | % | (2.6 | )% | 3,237 | 3,215 | (0.9 | )% | 1.6 | % | ||||||||
Other | 43 | 64 | n/a | n/a | 167 | 127 | n/a | n/a | ||||||||||||
Intersegment Sales | (242 | ) | (292 | ) | n/a | n/a | (982 | ) | (1,102 | ) | n/a | n/a | ||||||||
Total | $ | 8,373 | $ | 8,404 | (3.9 | )% | 4.0 | % | $ | 33,278 | $ | 32,266 | (4.3 | )% | 7.7 | % |
Operating Income (Loss) | ||||||||||||||||||||
(for the fourth quarter and 12 months ended September 29, 2012, and October 1, 2011) | ||||||||||||||||||||
Fourth Quarter | 12 Months | |||||||||||||||||||
Operating Margin | Operating Margin | |||||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||||||
Chicken | $ | 116 | $ | (82 | ) | 3.8 | % | (2.9 | )% | $ | 446 | $ | 164 | 3.8 | % | 1.5 | % | |||
Beef | 117 | 118 | 3.4 | % | 3.4 | % | 218 | 468 | 1.6 | % | 3.5 | % | ||||||||
Pork | 68 | 113 | 5.2 | % | 7.9 | % | 417 | 560 | 7.6 | % | 10.3 | % | ||||||||
Prepared Foods | 39 | 28 | 4.8 | % | 3.4 | % | 181 | 117 | 5.6 | % | 3.6 | % | ||||||||
Other | (8 | ) | (5 | ) | n/a | n/a | (14 | ) | (24 | ) | n/a | n/a | ||||||||
Total | $ | 332 | $ | 172 | 4.0 | % | 2.0 | % | $ | 1,248 | $ | 1,285 | 3.8 | % | 4.0 | % |
• | Chicken - Current USDA data shows U.S. chicken production will be down slightly in fiscal 2013. Due to the reduced crop supply, we expect higher grain costs in fiscal 2013 compared to fiscal 2012 of approximately $600 million. However, the capital investment and significant operational, mix and pricing improvements we have made in our Chicken segment have better positioned us to adapt to rising grain prices. For fiscal 2013, we anticipate our Chicken segment will remain profitable, but could be below our normalized range of 5.0%-7.0%. |
• | Beef - We expect to see a reduction of industry fed cattle supplies of 2-3% in fiscal 2013 as compared to fiscal 2012. Although we generally expect adequate supplies in regions we operate our plants, there may be periods of imbalance of fed cattle supply and demand. We anticipate beef exports will remain strong. For fiscal 2013, we believe our Beef segment will remain profitable, but could be below our normalized range of 2.5%-4.5%. |
• | Pork - We expect industry hog supplies in fiscal 2013 to be flat compared to fiscal 2012 and pork exports to remain strong. For fiscal 2013, we believe our Pork segment will be in or above our normalized range of 6.0%-8.0%. |
• | Prepared Foods - We expect operational improvements and increased pricing to offset increased raw material costs. 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. For fiscal 2013, we believe our Prepared Foods segment will remain in its normalized range of 4.0%-6.0%. |
• | Sales - We expect fiscal 2013 sales to increase to approximately $35 billion mostly resulting from price increases related to decreases in domestic availability of protein and rising raw material costs. |
• | Capital Expenditures - Our preliminary capital expenditures plan for fiscal 2013 is approximately $550 million. The reduction in planned capital expenditures from fiscal 2012 is primarily a result of an anticipated rise in working capital needs in fiscal 2013. Once we gain more visibility into our working capital needs, or should forecasted conditions change, we may raise our capital expenditures target. We will continue to make significant investments in our production facilities for high return operational efficiencies, other profit improvement projects and development of our foreign operations. |
• | Net Interest Expense - We expect fiscal 2013 net interest expense will approximate $140 million. |
• | Debt and Liquidity - We do not have any significant maturities of debt due until October 2013. We may use our available cash to repurchase notes when available at attractive rates. Total liquidity at September 29, 2012, was $2.0 billion, well above our goal to maintain liquidity in excess of $1.2 billion. |
• | Share Repurchases - We expect to continue repurchasing shares under our share repurchase plan. In fiscal 2012, we repurchased 12.5 million shares for approximately $230 million. As of September 29, 2012, 35.2 million shares remain authorized for repurchases. The timing and extent to which we repurchase shares will depend upon, among other things, our working capital needs, market conditions, liquidity targets, our debt obligations and regulatory requirements. |
• | Dividends - On November 15, 2012, the Board of Directors declared a special dividend of $0.10 per share on our Class A common stock and $0.09 per share on our Class B common stock. Additionally, the Board increased the quarterly dividend previously declared on August 3, 2012, to $0.05 per share on our Class A common stock and $0.045 per share on our Class B common stock. Both the special dividend and the increased quarterly dividend are payable on December 14, 2012, to shareholders of record at the close of business on November 30, 2012. The Board also declared a quarterly dividend of $0.05 per share on our Class A common stock and $0.045 per share on our Class B common stock, payable on March 31, 2013, to shareholders of record at the close of business on March 1, 2013. |
in millions | Three Months Ended | 12 Months Ended | |||||||||||||||||||||
September 29, 2012 | October 1, 2011 | Change | September 29, 2012 | October 1, 2011 | Change | ||||||||||||||||||
Sales | $ | 3,016 | $ | 2,859 | $ | 157 | $ | 11,591 | $ | 11,017 | $ | 574 | |||||||||||
Sales Volume Change | (3.5 | )% | (3.6 | )% | |||||||||||||||||||
Average Sales Price Change | 9.4 | % | 9.2 | % | |||||||||||||||||||
Operating Income | $ | 116 | $ | (82 | ) | $ | 198 | $ | 446 | $ | 164 | $ | 282 | ||||||||||
Operating Margin | 3.8 | % | (2.9 | )% | 3.8 | % | 1.5 | % |
• | Included a non-cash impairment charge of $15 million related to non-core assets in China |
• | Sales and Operating Income – |
• | Sales Volume – The decrease in sales volumes in the fourth quarter and 12 months of fiscal 2012 was largely due to the impact of domestic production cuts we made in late fiscal 2011 and maintained throughout fiscal 2012, in order to balance our supply with forecasted customer demand. For the 12 months, these production cuts reduced our total domestic slaughter pounds by approximately 4%. The decrease in domestic slaughter pounds was partially offset by increases in international sales volumes and open-market meat purchases. |
• | Average Sales Price – The increase in average sales price is primarily due to mix changes and price increases associated with reduced industry supply and increased input costs. |
• | Operating Income – Operating income was positively impacted by increases in average sales price, improved mix and operational improvements. These increases were partially offset by increased grain and feed ingredients costs of $30 million and $320 million for the fourth quarter and 12 months of fiscal 2012, respectively. Increases in other growout operating costs of $50 million also negatively impacted operating income for the 12 months of fiscal 2012. Additionally, our foreign start-up businesses in Brazil and China incurred operating losses of approximately $45 million and $105 million for the fourth quarter and 12 months of fiscal 2012, respectively, which included $15 million for the impairment of non-core assets. |
• | 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. |
Income/(Loss) - in millions | Qtr | YTD | ||||||
2012 | $ | (3 | ) | $ | (25 | ) | ||
2011 | (31 | ) | 41 | |||||
Improvement/(Decline) in operating results | $ | 28 | $ | (66 | ) |
in millions | Three Months Ended | 12 Months Ended | |||||||||||||||||||||
September 29, 2012 | October 1, 2011 | Change | September 29, 2012 | October 1, 2011 | Change | ||||||||||||||||||
Sales | $ | 3,432 | $ | 3,516 | $ | (84 | ) | $ | 13,755 | $ | 13,549 | $ | 206 | ||||||||||
Sales Volume Change | (12.5 | )% | (11.3 | )% | |||||||||||||||||||
Average Sales Price Change | 11.6 | % | 14.4 | % | |||||||||||||||||||
Operating Income | $ | 117 | $ | 118 | $ | (1 | ) | $ | 218 | $ | 468 | $ | (250 | ) | |||||||||
Operating Margin | 3.4 | % | 3.4 | % | 1.6 | % | 3.5 | % |
• | Sales and Operating Income – |
• | Average sales price increased for the fourth quarter and 12 months of fiscal 2012 due to price increases associated with increased livestock costs. Sales volume decreased for the fourth quarter and 12 months of fiscal 2012 due to reductions in live cattle processed and outside tallow purchases. Operating income decreased for the 12 months of fiscal 2012 due to higher fed cattle costs and periods of reduced demand for beef products, which made it difficult to pass along increased input costs, as well as lower sales volumes and increased employee related operating costs. |
• | 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. |
Income/(Loss) - in millions | Qtr | YTD | ||||||
2012 | $ | 10 | $ | 31 | ||||
2011 | (1 | ) | (41 | ) | ||||
Improvement in operating results | $ | 11 | $ | 72 |
in millions | Three Months Ended | 12 Months Ended | |||||||||||||||||||||
September 29, 2012 | October 1, 2011 | Change | September 29, 2012 | October 1, 2011 | Change | ||||||||||||||||||
Sales | $ | 1,319 | $ | 1,430 | $ | (111 | ) | $ | 5,510 | $ | 5,460 | $ | 50 | ||||||||||
Sales Volume Change | 5.0 | % | 2.4 | % | |||||||||||||||||||
Average Sales Price Change | (12.2 | )% | (1.5 | )% | |||||||||||||||||||
Operating Income | $ | 68 | $ | 113 | $ | (45 | ) | $ | 417 | $ | 560 | $ | (143 | ) | |||||||||
Operating Margin | 5.2 | % | 7.9 | % | 7.6 | % | 10.3 | % |
• | Sales and Operating Income – |
• | Average sales price decreased for the fourth quarter and 12 months of fiscal 2012 due to increased domestic availability of pork products, which drove lower live hog costs. Operating income decreased in the fourth quarter and 12 months of fiscal 2012 due to compressed pork margins caused by the excess domestic availability of pork products. We were able to maintain strong operating margins for the 12 months of fiscal 2012 by maximizing our revenues relative to the live hog markets, partially due to strong export sales and operational and mix performance. |
• | 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. |
Income/(Loss) - in millions | Qtr | YTD | ||||||
2012 | $ | 15 | $ | 66 | ||||
2011 | (17 | ) | (32 | ) | ||||
Improvement in operating results | $ | 32 | $ | 98 |
in millions | Three Months Ended | 12 Months Ended | |||||||||||||||||||||
September 29, 2012 | October 1, 2011 | Change | September 29, 2012 | October 1, 2011 | Change | ||||||||||||||||||
Sales | $ | 805 | $ | 827 | $ | (22 | ) | $ | 3,237 | $ | 3,215 | $ | 22 | ||||||||||
Sales Volume Change | — | % | (0.9 | )% | |||||||||||||||||||
Average Sales Price Change | (2.6 | )% | 1.6 | % | |||||||||||||||||||
Operating Income | $ | 39 | $ | 28 | $ | 11 | $ | 181 | $ | 117 | $ | 64 | |||||||||||
Operating Margin | 4.8 | % | 3.4 | % | 5.6 | % | 3.6 | % |
• | Sales and Operating Income – Operating margins were positively impacted by lower raw material costs, which were partially offset by a decrease in average sales prices. |
• | Sales and Operating Income – Operating margins were positively impacted by lower raw material costs of $75 million and increased average sales prices, which were partially offset by lower volumes and increased operational costs of approximately $30 million, largely due to costs related to revamping our lunchmeat business and the start-up of a new pepperoni plant. Because many of our sales contracts are formula based or shorter-term in nature, we typically offset changing input costs through pricing. However, there is a lag time for price changes to take effect, which is what we experienced during fiscal 2011. |
Three Months Ended | 12 Months Ended | ||||||||||||||
September 29, 2012 | October 1, 2011 | September 29, 2012 | October 1, 2011 | ||||||||||||
Sales | $ | 8,373 | $ | 8,404 | $ | 33,278 | $ | 32,266 | |||||||
Cost of Sales | 7,803 | 8,013 | 31,118 | 30,067 | |||||||||||
Gross Profit | 570 | 391 | 2,160 | 2,199 | |||||||||||
Selling, General and Administrative | 238 | 219 | 912 | 914 | |||||||||||
Operating Income | 332 | 172 | 1,248 | 1,285 | |||||||||||
Other (Income) Expense: | |||||||||||||||
Interest income | (3 | ) | (3 | ) | (12 | ) | (11 | ) | |||||||
Interest expense | 40 | 55 | 356 | 242 | |||||||||||
Other, net | (6 | ) | (5 | ) | (23 | ) | (20 | ) | |||||||
Total Other (Income) Expense | 31 | 47 | 321 | 211 | |||||||||||
Income before Income Taxes | 301 | 125 | 927 | 1,074 | |||||||||||
Income Tax Expense | 120 | 30 | 351 | 341 | |||||||||||
Net Income | 181 | 95 | 576 | 733 | |||||||||||
Less: Net Loss Attributable to Noncontrolling Interest | (4 | ) | (2 | ) | (7 | ) | (17 | ) | |||||||
Net Income Attributable to Tyson | $ | 185 | $ | 97 | $ | 583 | $ | 750 | |||||||
Weighted Average Shares Outstanding: | |||||||||||||||
Class A Basic | 288 | 299 | 293 | 303 | |||||||||||
Class B Basic | 70 | 70 | 70 | 70 | |||||||||||
Diluted | 363 | 375 | 370 | 380 | |||||||||||
Net Income Per Share Attributable to Tyson: | |||||||||||||||
Class A Basic | $ | 0.53 | $ | 0.27 | $ | 1.64 | $ | 2.04 | |||||||
Class B Basic | $ | 0.48 | $ | 0.24 | $ | 1.48 | $ | 1.84 | |||||||
Diluted | $ | 0.51 | $ | 0.26 | $ | 1.58 | $ | 1.97 | |||||||
Cash Dividends Per Share: | |||||||||||||||
Class A | $ | 0.040 | $ | 0.040 | $ | 0.160 | $ | 0.160 | |||||||
Class B | $ | 0.036 | $ | 0.036 | $ | 0.144 | $ | 0.144 | |||||||
Sales Growth | (0.4 | )% | 3.1 | % | |||||||||||
Margins: (Percent of Sales) | |||||||||||||||
Gross Profit | 6.8 | % | 4.7 | % | 6.5 | % | 6.8 | % | |||||||
Operating Income | 4.0 | % | 2.0 | % | 3.8 | % | 4.0 | % | |||||||
Net Income | 2.2 | % | 1.1 | % | 1.7 | % | 2.3 | % | |||||||
Effective Tax Rate | 39.9 | % | 24.1 | % | 37.9 | % | 31.8 | % |
September 29, 2012 | October 1, 2011 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 1,071 | $ | 716 | |||
Accounts receivable, net | 1,378 | 1,321 | |||||
Inventories | 2,809 | 2,587 | |||||
Other current assets | 145 | 156 | |||||
Total Current Assets | 5,403 | 4,780 | |||||
Net Property, Plant and Equipment | 4,022 | 3,823 | |||||
Goodwill | 1,891 | 1,892 | |||||
Intangible Assets | 129 | 149 | |||||
Other Assets | 451 | 427 | |||||
Total Assets | $ | 11,896 | $ | 11,071 | |||
Liabilities and Shareholders’ Equity | |||||||
Current Liabilities: | |||||||
Current debt | $ | 515 | $ | 70 | |||
Accounts payable | 1,372 | 1,264 | |||||
Other current liabilities | 943 | 1,040 | |||||
Total Current Liabilities | 2,830 | 2,374 | |||||
Long-Term Debt | 1,917 | 2,112 | |||||
Deferred Income Taxes | 558 | 424 | |||||
Other Liabilities | 549 | 476 | |||||
Total Tyson Shareholders’ Equity | 6,012 | 5,657 | |||||
Noncontrolling Interest | 30 | 28 | |||||
Total Shareholders’ Equity | 6,042 | 5,685 | |||||
Total Liabilities and Shareholders’ Equity | $ | 11,896 | $ | 11,071 |
12 Months Ended | |||||||
September 29, 2012 | October 1, 2011 | ||||||
Cash Flows From Operating Activities: | |||||||
Net income | $ | 576 | $ | 733 | |||
Depreciation and amortization | 499 | 506 | |||||
Deferred income taxes | 140 | 86 | |||||
Loss on early extinguishment of debt | 167 | — | |||||
Other, net | 52 | 67 | |||||
Net change in other current assets and liabilities | (247 | ) | (346 | ) | |||
Cash Provided by Operating Activities | 1,187 | 1,046 | |||||
Cash Flows From Investing Activities: | |||||||
Additions to property, plant and equipment | (690 | ) | (643 | ) | |||
Purchases of marketable securities | (58 | ) | (146 | ) | |||
Proceeds from sale of marketable securities | 47 | 66 | |||||
Proceeds from notes receivable | — | 51 | |||||
Other, net | 41 | 28 | |||||
Cash Used for Investing Activities | (660 | ) | (644 | ) | |||
Cash Flows From Financing Activities: | |||||||
Payments on debt | (993 | ) | (500 | ) | |||
Net proceeds from borrowings | 1,116 | 115 | |||||
Purchase of redeemable noncontrolling interest | — | (66 | ) | ||||
Purchases of Tyson Class A common stock | (264 | ) | (207 | ) | |||
Dividends | (57 | ) | (59 | ) | |||
Other, net | 27 | 59 | |||||
Cash Used for Financing Activities | (171 | ) | (658 | ) | |||
Effect of Exchange Rate Change on Cash | (1 | ) | (6 | ) | |||
Increase (Decrease) in Cash and Cash Equivalents | 355 | (262 | ) | ||||
Cash and Cash Equivalents at Beginning of Year | 716 | 978 | |||||
Cash and Cash Equivalents at End of Period | $ | 1,071 | $ | 716 |
Three Months Ended | 12 Months Ended | ||||||||||||||
September 29, 2012 | October 1, 2011 | September 29, 2012 | October 1, 2011 | ||||||||||||
Reported net income per share attributable to Tyson | $ | 0.51 | $ | 0.26 | $ | 1.58 | $ | 1.97 | |||||||
Less: $11 million gain on sale of interests in an equity method investment | — | — | — | (0.03 | ) | ||||||||||
Less: $21 million reversal of reserves for foreign uncertain tax positions | — | — | — | (0.05 | ) | ||||||||||
Add: $167 million loss on early extinguishment of debt | — | — | 0.29 | — | |||||||||||
Add: $15 million impairment of non-core assets in China | 0.04 | — | 0.04 | — | |||||||||||
Adjusted net income per share attributable to Tyson | $ | 0.55 | $ | 0.26 | $ | 1.91 | $ | 1.89 |
12 Months Ended | |||||||
September 29, 2012 | October 1, 2011 | ||||||
Net income | $ | 576 | $ | 733 | |||
Less: Interest income | (12 | ) | (11 | ) | |||
Add: Interest expense | 356 | 242 | |||||
Add: Income tax expense | 351 | 341 | |||||
Add: Depreciation | 443 | 433 | |||||
Add: Amortization (a) | 17 | 29 | |||||
EBITDA | $ | 1,731 | $ | 1,767 | |||
Total gross debt | $ | 2,432 | $ | 2,182 | |||
Less: Cash and cash equivalents | (1,071 | ) | (716 | ) | |||
Total net debt | $ | 1,361 | $ | 1,466 | |||
Ratio Calculations: | |||||||
Gross debt/EBITDA | 1.4x | 1.2x | |||||
Net debt/EBITDA | 0.8x | 0.8x |
(a) | Excludes the amortization of debt discount expense of $39 million and $44 million for the 12 months ended September 29, 2012, and October 1, 2011, respectively, as it is included in Interest expense. |