(d) | Exhibit |
Exhibit Number | Description |
99.1 | Press Release, dated May 6, 2013, announcing the unaudited results of operations of Tyson Foods, Inc. for its second quarter and six months ended March 30, 2013 |
TYSON FOODS, INC. | |||
Date: May 6, 2013 | By: | /s/ Dennis Leatherby | |
Name: | Dennis Leatherby | ||
Title: | Executive Vice President and | ||
Chief Financial Officer |
(in millions, except per share data) | Second Quarter | Six Months | |||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Sales | $ | 8,419 | $ | 8,268 | $ | 16,821 | $ | 16,597 | |||||||
Operating Income | 174 | 302 | 474 | 580 | |||||||||||
Net Income | 106 | 166 | 274 | 322 | |||||||||||
Less: Net Income Attributable to Noncontrolling Interest | 11 | — | 6 | — | |||||||||||
Net Income Attributable to Tyson | $ | 95 | $ | 166 | $ | 268 | $ | 322 | |||||||
Net Income Per Share Attributable to Tyson | $ | 0.26 | $ | 0.44 | $ | 0.74 | $ | 0.86 | |||||||
Adjusted1 Net Income Per Share Attributable to Tyson | $ | 0.36 | $ | 0.44 | $ | 0.84 | $ | 0.86 |
• | Reported EPS was $0.26; Adjusted EPS was $0.36 compared to $0.44 last year |
• | Overall operating margin was 2.1% |
• | Net interest expense was $34 million, down 28% compared to last year |
• | Repurchased 2.1 million shares for $50 million |
• | Liquidity totaled $1.8 billion at March 30, 2013 |
Sales | ||||||||||||||||||||
(for the second quarter and six months ended March 30, 2013, and March 31, 2012) | ||||||||||||||||||||
Second Quarter | Six Months | |||||||||||||||||||
Volume | Avg. Price | Volume | Avg. Price | |||||||||||||||||
2013 | 2012 | Change | Change | 2013 | 2012 | Change | Change | |||||||||||||
Chicken | $ | 3,094 | $ | 2,911 | 0.1 | % | 6.2 | % | $ | 6,050 | $ | 5,673 | (0.5 | )% | 7.1 | % | ||||
Beef | 3,447 | 3,369 | (3.9 | )% | 6.5 | % | 6,932 | 6,836 | (7.0 | )% | 9.1 | % | ||||||||
Pork | 1,311 | 1,372 | (2.2 | )% | (2.2 | )% | 2,674 | 2,847 | (2.2 | )% | (3.9 | )% | ||||||||
Prepared Foods | 803 | 807 | (0.8 | )% | 0.3 | % | 1,644 | 1,668 | 0.5 | % | (2.0 | )% | ||||||||
Other | 27 | 46 | n/a | n/a | 47 | 100 | n/a | n/a | ||||||||||||
Intersegment Sales | (263 | ) | (237 | ) | n/a | n/a | (526 | ) | (527 | ) | n/a | n/a | ||||||||
Total | $ | 8,419 | $ | 8,268 | (1.8 | )% | 3.9 | % | $ | 16,821 | $ | 16,597 | (2.5 | )% | 4.3 | % |
Operating Income (Loss) | ||||||||||||||||||||
(for the second quarter and six months ended March 30, 2013, and March 31, 2012) | ||||||||||||||||||||
Second Quarter | Six Months | |||||||||||||||||||
Operating Margin | Operating Margin | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||
Chicken | $ | 78 | $ | 145 | 2.5 | % | 5.0 | % | $ | 185 | $ | 177 | 3.1 | % | 3.1 | % | ||||
Beef | (26 | ) | (1 | ) | (0.8 | )% | — | % | 20 | 30 | 0.3 | % | 0.4 | % | ||||||
Pork | 72 | 115 | 5.5 | % | 8.4 | % | 197 | 280 | 7.4 | % | 9.8 | % | ||||||||
Prepared Foods | 28 | 44 | 3.5 | % | 5.5 | % | 61 | 95 | 3.7 | % | 5.7 | % | ||||||||
Other | 22 | (1 | ) | n/a | n/a | 11 | (2 | ) | n/a | n/a | ||||||||||
Total | $ | 174 | $ | 302 | 2.1 | % | 3.7 | % | $ | 474 | $ | 580 | 2.8 | % | 3.5 | % |
• | Operating income was reduced by $56 million related to the impairment of non-core assets in China, which is included in our Chicken segment. |
• | Chicken - Despite increased domestic and international production, total sales volumes decreased in the six months of fiscal 2013 due to reduced open-market meat purchases and mix of rendered product sales. The increase in average sales price in the second quarter and six months of fiscal 2013 was primarily due to mix changes and price increases associated with increased input costs. Since many of our sales contracts are formula based or shorter-term in nature, we were able to offset rising input costs through increased pricing and mix. Operating income was positively impacted by increases in average sales price, improved live performance and operational improvements, as well as improved performance in our foreign-produced operations. These increases were partially offset by increased feed costs of $165 million and $335 million for the second quarter and six months of fiscal 2013, respectively. |
• | Beef - Fed cattle supplies decreased which drove up average sales price and livestock cost. Sales volumes decreased due to a reduction in outside trim and tallow purchases. Operating income decreased in the second quarter and six months of fiscal 2013 as the result of volatile market conditions, regional lower availability of live cattle supplies, reduced demand for premium beef products and increased operating costs. |
• | Pork - Live hog supplies increased which drove down average sales price and livestock cost. Sales volumes decreased as a result of balancing our supply with customer demand and reduced exports. While reduced compared to prior year, operating income remained strong in the six months of fiscal 2013 despite brief periods of imbalance in industry supply and customer demand. |
• | Prepared Foods - Although up slightly in the six months of fiscal 2013, total sales volumes decreased in the second quarter of fiscal 2013 due to reduced demand for certain foodservice products. The decrease in average sales price in the six months of fiscal 2013 was due to product mix and reduced raw material costs. Operating income decreased in the second quarter and six months of fiscal 2013 due to product mix changes related to reduced foodservice demand and additional costs incurred as we invested in our lunchmeat business. |
• | Chicken – Current USDA data shows U.S. chicken production to increase 2-3% in fiscal 2013 compared to fiscal 2012. Based on current futures prices, we expect higher feed costs in fiscal 2013 compared to fiscal 2012 of approximately $450 million. The capital investment and significant operational improvements we have made in our Chicken segment have better positioned us to adjust to rising feed costs. Additionally, many of our sales contracts are formula based or shorter-term in nature, which allows us to offset rising input costs through pricing. However, there may be a lag time for price changes to take effect. We anticipate our Chicken segment will return to its normalized range of 5.0%-7.0% for the second-half of fiscal 2013. |
• | Beef – We expect to see a reduction of industry fed cattle supplies of 2-3% and beef exports to decrease 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. For fiscal 2013, we believe our Beef segment will remain profitable, but will be below its normalized range of 2.5%-4.5%. |
• | Pork – We expect industry hog supplies to be flat and pork exports to decrease compared to fiscal 2012. For fiscal 2013, we believe our Pork segment will be in its 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 may be below its normalized range of 4.0%-6.0%. |
• | Sales – We expect fiscal 2013 sales to approximate $34.5 billion mostly resulting from price increases related to expected decreases in domestic availability of certain protein and increased raw material costs. |
• | Capital Expenditures – We expect fiscal 2013 capital expenditures will approximate $550-$600 million. |
• | Net Interest Expense – We expect fiscal 2013 net interest expense will approximate $140 million. |
• | Debt and Liquidity – Our next significant debt maturity is scheduled for October 2013, which we currently plan to use current cash on hand and/or cash flows from operations for payment. We may also use additional available cash to repurchase notes when available at attractive rates. Total liquidity at March 30, 2013, was $1.8 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 program. As of March 30, 2013, 28 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. |
Three Months Ended | Six Months Ended | ||||||||||||||
March 30, 2013 | March 31, 2012 | March 30, 2013 | March 31, 2012 | ||||||||||||
Sales | $ | 8,419 | $ | 8,268 | $ | 16,821 | $ | 16,597 | |||||||
Cost of Sales | 8,011 | 7,733 | 15,876 | 15,569 | |||||||||||
Gross Profit | 408 | 535 | 945 | 1,028 | |||||||||||
Selling, General and Administrative | 234 | 233 | 471 | 448 | |||||||||||
Operating Income | 174 | 302 | 474 | 580 | |||||||||||
Other (Income) Expense: | |||||||||||||||
Interest income | (2 | ) | (5 | ) | (3 | ) | (7 | ) | |||||||
Interest expense | 36 | 52 | 73 | 101 | |||||||||||
Other, net | (19 | ) | (2 | ) | (19 | ) | (14 | ) | |||||||
Total Other (Income) Expense | 15 | 45 | 51 | 80 | |||||||||||
Income before Income Taxes | 159 | 257 | 423 | 500 | |||||||||||
Income Tax Expense | 53 | 91 | 149 | 178 | |||||||||||
Net Income | 106 | 166 | 274 | 322 | |||||||||||
Less: Net Income Attributable to Noncontrolling Interest | 11 | — | 6 | — | |||||||||||
Net Income Attributable to Tyson | $ | 95 | $ | 166 | $ | 268 | $ | 322 | |||||||
Weighted Average Shares Outstanding: | |||||||||||||||
Class A Basic | 283 | 294 | 284 | 295 | |||||||||||
Class B Basic | 70 | 70 | 70 | 70 | |||||||||||
Diluted | 366 | 373 | 364 | 374 | |||||||||||
Net Income Per Share Attributable to Tyson: | |||||||||||||||
Class A Basic | $ | 0.27 | $ | 0.47 | $ | 0.77 | $ | 0.90 | |||||||
Class B Basic | $ | 0.25 | $ | 0.42 | $ | 0.70 | $ | 0.81 | |||||||
Diluted | $ | 0.26 | $ | 0.44 | $ | 0.74 | $ | 0.86 | |||||||
Dividends Declared Per Share: | |||||||||||||||
Class A | $ | 0.050 | $ | 0.040 | $ | 0.210 | $ | 0.080 | |||||||
Class B | $ | 0.045 | $ | 0.036 | $ | 0.189 | $ | 0.072 | |||||||
Sales Growth | 1.8 | % | 1.3 | % | |||||||||||
Margins: (Percent of Sales) | |||||||||||||||
Gross Profit | 4.8 | % | 6.5 | % | 5.6 | % | 6.2 | % | |||||||
Operating Income | 2.1 | % | 3.7 | % | 2.8 | % | 3.5 | % | |||||||
Net Income | 1.3 | % | 2.0 | % | 1.6 | % | 1.9 | % | |||||||
Effective Tax Rate | 33.2 | % | 35.3 | % | 35.1 | % | 35.5 | % |
March 30, 2013 | September 29, 2012 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 762 | $ | 1,071 | |||
Accounts receivable, net | 1,428 | 1,378 | |||||
Inventories | 2,921 | 2,809 | |||||
Other current assets | 188 | 145 | |||||
Total Current Assets | 5,299 | 5,403 | |||||
Net Property, Plant and Equipment | 4,002 | 4,022 | |||||
Goodwill | 1,892 | 1,891 | |||||
Intangible Assets | 115 | 129 | |||||
Other Assets | 481 | 451 | |||||
Total Assets | $ | 11,789 | $ | 11,896 | |||
Liabilities and Shareholders’ Equity | |||||||
Current Liabilities: | |||||||
Current debt | $ | 512 | $ | 515 | |||
Accounts payable | 1,265 | 1,372 | |||||
Other current liabilities | 955 | 943 | |||||
Total Current Liabilities | 2,732 | 2,830 | |||||
Long-Term Debt | 1,904 | 1,917 | |||||
Deferred Income Taxes | 498 | 558 | |||||
Other Liabilities | 541 | 549 | |||||
Total Tyson Shareholders’ Equity | 6,076 | 6,012 | |||||
Noncontrolling Interest | 38 | 30 | |||||
Total Shareholders’ Equity | 6,114 | 6,042 | |||||
Total Liabilities and Shareholders’ Equity | $ | 11,789 | $ | 11,896 |
Six Months Ended | |||||||
March 30, 2013 | March 31, 2012 | ||||||
Cash Flows From Operating Activities: | |||||||
Net income | $ | 274 | $ | 322 | |||
Depreciation and amortization | 259 | 245 | |||||
Deferred income taxes | (24 | ) | 53 | ||||
Other, net | 57 | 41 | |||||
Net change in other current assets and liabilities | (336 | ) | (207 | ) | |||
Cash Provided by Operating Activities | 230 | 454 | |||||
Cash Flows From Investing Activities: | |||||||
Additions to property, plant and equipment | (290 | ) | (344 | ) | |||
Purchases of marketable securities | (79 | ) | (25 | ) | |||
Proceeds from sale of marketable securities | 16 | 13 | |||||
Other, net | 20 | 17 | |||||
Cash Used for Investing Activities | (333 | ) | (339 | ) | |||
Cash Flows From Financing Activities: | |||||||
Payments on debt | (55 | ) | (41 | ) | |||
Net proceeds from borrowings | 37 | 56 | |||||
Purchases of Tyson Class A common stock | (188 | ) | (128 | ) | |||
Dividends | (70 | ) | (29 | ) | |||
Other, net | 71 | 29 | |||||
Cash Used for Financing Activities | (205 | ) | (113 | ) | |||
Effect of Exchange Rate Change on Cash | (1 | ) | 5 | ||||
Increase (Decrease) in Cash and Cash Equivalents | (309 | ) | 7 | ||||
Cash and Cash Equivalents at Beginning of Year | 1,071 | 716 | |||||
Cash and Cash Equivalents at End of Period | $ | 762 | $ | 723 |
Six Months Ended | Fiscal Year Ended | Twelve Months Ended | |||||||||||||
March 30, 2013 | March 31, 2012 | September 29, 2012 | March 30, 2013 | ||||||||||||
Net income | $ | 274 | $ | 322 | $ | 576 | $ | 528 | |||||||
Less: Interest income | (3 | ) | (7 | ) | (12 | ) | (8 | ) | |||||||
Add: Interest expense | 73 | 101 | 356 | 328 | |||||||||||
Add: Income tax expense | 149 | 178 | 351 | 322 | |||||||||||
Add: Depreciation | 237 | 217 | 443 | 463 | |||||||||||
Add: Amortization (a) | 8 | 7 | 17 | 18 | |||||||||||
EBITDA | $ | 738 | $ | 818 | $ | 1,731 | $ | 1,651 | |||||||
Total gross debt | $ | 2,432 | $ | 2,416 | |||||||||||
Less: Cash and cash equivalents | (1,071 | ) | (762 | ) | |||||||||||
Less: Short-term investments | (3 | ) | (47 | ) | |||||||||||
Total net debt | $ | 1,358 | $ | 1,607 | |||||||||||
Ratio Calculations: | |||||||||||||||
Gross debt/EBITDA | 1.4x | 1.5x | |||||||||||||
Net debt/EBITDA | 0.8x | 1.0x |
(a) | Excludes the amortization of debt discount expense of $14 million and $21 million for the six months ended March 30, 2013, and March 31, 2012, respectively, and $39 million for the fiscal year ended September 29, 2012, as it is included in Interest expense. |
Three Months Ended | Six Months Ended | ||||||||||||||
March 30, 2013 | March 31, 2012 | March 30, 2013 | March 31, 2012 | ||||||||||||
Reported net income per share attributable to Tyson | $ | 0.26 | $ | 0.44 | $ | 0.74 | $ | 0.86 | |||||||
Less: $19 million recognized currency translation adjustment gain | (0.05 | ) | — | (0.05 | ) | — | |||||||||
Add: $56 million impairment of non-core assets in China | 0.15 | — | 0.15 | — | |||||||||||
Adjusted net income per share attributable to Tyson | $ | 0.36 | $ | 0.44 | $ | 0.84 | $ | 0.86 |