(d) | Exhibit |
Exhibit Number | Description |
99.1 | Press Release, dated August 5, 2013, announcing the unaudited results of operations of Tyson Foods, Inc. for its third quarter and nine months ended June 29, 2013 |
TYSON FOODS, INC. | |||
Date: August 5, 2013 | By: | /s/ Dennis Leatherby | |
Name: | Dennis Leatherby | ||
Title: | Executive Vice President and | ||
Chief Financial Officer |
(in millions, except per share data) | Third Quarter | Nine Months | |||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Sales | $ | 8,731 | $ | 8,261 | $ | 25,480 | $ | 24,740 | |||||||
Operating Income | 419 | 342 | 959 | 932 | |||||||||||
Income from Continuing Operations | 249 | 79 | 589 | 411 | |||||||||||
Loss from Discontinued Operation | (4 | ) | (6 | ) | (70 | ) | (16 | ) | |||||||
Net Income | 245 | 73 | 519 | 395 | |||||||||||
Less: Net Income (Loss) Attributable to Noncontrolling Interest | (4 | ) | (3 | ) | 2 | (3 | ) | ||||||||
Net Income Attributable to Tyson | $ | 249 | $ | 76 | $ | 517 | $ | 398 | |||||||
Net Income Per Share from Continuing Operations Attributable to Tyson | $ | 0.69 | $ | 0.22 | $ | 1.61 | $ | 1.11 | |||||||
Adjusted1 Net Income Per Share from Continuing Operations Attributable to Tyson | $ | 0.69 | $ | 0.51 | $ | 1.56 | $ | 1.40 | |||||||
Net Income Per Share Attributable to Tyson | $ | 0.68 | $ | 0.21 | $ | 1.42 | $ | 1.07 | |||||||
Adjusted1 Net Income Per Share Attributable to Tyson | $ | 0.68 | $ | 0.50 | $ | 1.52 | $ | 1.36 |
• | EPS from continuing operations was $0.69 compared to $0.51 last year on an adjusted basis |
• | 35% increase on adjusted basis, or 214% increase on GAAP basis |
• | Record Sales of $8.7 billion |
• | Overall operating margin was 4.8% |
• | Record Chicken segment earnings of $220 million |
• | 7.0% operating margin |
• | Beef segment rebounded with earnings of $114 million, or 3.1% operating margin |
• | Repurchased 4 million shares for $100 million |
• | Liquidity totaled $2 billion at June 29, 2013 |
Sales | ||||||||||||||||||||
(for the third quarter and nine months ended June 29, 2013, and June 30, 2012) | ||||||||||||||||||||
Third Quarter | Nine Months | |||||||||||||||||||
Volume | Avg. Price | Volume | Avg. Price | |||||||||||||||||
2013 | 2012 | Change | Change | 2013 | 2012 | Change | Change | |||||||||||||
Chicken | $ | 3,158 | $ | 2,855 | 4.4 | % | 6.0 | % | $ | 9,136 | $ | 8,410 | 1.8 | % | 6.7 | % | ||||
Beef | 3,723 | 3,487 | 3.8 | % | 2.9 | % | 10,655 | 10,323 | (3.6 | )% | 7.1 | % | ||||||||
Pork | 1,332 | 1,344 | (4.7 | )% | 4.0 | % | 4,006 | 4,191 | (3.0 | )% | (1.4 | )% | ||||||||
Prepared Foods | 797 | 764 | 1.3 | % | 3.0 | % | 2,441 | 2,432 | 0.8 | % | (0.4 | )% | ||||||||
Other | — | 24 | n/a | n/a | 47 | 124 | n/a | n/a | ||||||||||||
Intersegment Sales | (279 | ) | (213 | ) | n/a | n/a | (805 | ) | (740 | ) | n/a | n/a | ||||||||
Total | $ | 8,731 | $ | 8,261 | 2.2 | % | 3.7 | % | $ | 25,480 | $ | 24,740 | (0.7 | )% | 4.1 | % |
Operating Income (Loss) | ||||||||||||||||||||
(for the third quarter and nine months ended June 29, 2013, and June 30, 2012) | ||||||||||||||||||||
Third Quarter | Nine Months | |||||||||||||||||||
Operating Margin | Operating Margin | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||
Chicken | $ | 220 | $ | 159 | 7.0 | % | 5.6 | % | $ | 471 | $ | 346 | 5.2 | % | 4.1 | % | ||||
Beef | 114 | 71 | 3.1 | % | 2.0 | % | 134 | 101 | 1.3 | % | 1.0 | % | ||||||||
Pork | 67 | 69 | 5.0 | % | 5.1 | % | 264 | 349 | 6.6 | % | 8.3 | % | ||||||||
Prepared Foods | 24 | 47 | 3.0 | % | 6.2 | % | 85 | 142 | 3.5 | % | 5.8 | % | ||||||||
Other | (6 | ) | (4 | ) | n/a | n/a | 5 | (6 | ) | n/a | n/a | |||||||||
Total | $ | 419 | $ | 342 | 4.8 | % | 4.1 | % | $ | 959 | $ | 932 | 3.8 | % | 3.8 | % |
• | Chicken - Sales volume grew due to increased domestic and international production driven by stronger demand for chicken products. The increase in average sales price in the third quarter and nine months of fiscal 2013 was primarily due to mix changes and price increases associated with higher 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 improved pricing and mix. Operating income was positively impacted by increased average sales price and volume, improved live performance and operational execution, as well as improved performance in our foreign-produced operations. These increases were partially offset by increased feed costs of $105 million and $440 million for the third quarter and nine months of fiscal 2013, respectively. |
• | Beef - Fed cattle supplies decreased which drove up average sales price and livestock cost. Sales volumes increased in the third quarter due to increased demand for our beef products. Sales volumes decreased in the nine months of fiscal 2013 due to a reduction in outside trim and tallow purchases. Operating income increased in the third quarter and nine months of fiscal 2013 due to improved operational execution and less volatile live cattle markets. |
• | Pork - For the third quarter of fiscal 2013, demand for pork products improved, which drove up average sales price and livestock cost despite a slight increase in live hog supplies. For the nine months of fiscal 2013, 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 nine months of fiscal 2013 despite brief periods of imbalance in industry supply and customer demand. |
• | Prepared Foods - Operating income decreased, despite increased sales volumes, as the result of product mix, increased raw material costs and additional costs incurred as we invested in our lunchmeat business. Because many of our sales contracts are formula based or shorter-term in nature, we are typically able to offset rising input costs through pricing. However, there is a lag time for price increases to take effect. |
• | Chicken – Current USDA data shows U.S. chicken production to increase 2-3% in fiscal 2014 compared to fiscal 2013. Based on current futures prices, we expect lower feed costs in fiscal 2014 compared to fiscal 2013 of approximately $500 million. Many of our sales contracts are formula based or shorter-term in nature, which allows us to adjust pricing when input costs fluctuate. However, there may be a lag time for price changes to take effect. For fiscal 2014, we believe our Chicken segment will be in or above its normalized range of 5.0%-7.0%. |
• | Beef – We expect to see a reduction of industry fed cattle supplies of 2-3% in fiscal 2014 as compared to fiscal 2013. 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 2014, we believe our Beef segment's profitability will be similar to fiscal 2013, but could be below its normalized range of 2.5%-4.5%. |
• | Pork – We expect industry hog supplies to be flat and exports to improve compared to fiscal 2013. For fiscal 2014, we believe our Pork segment will be in its normalized range of 6.0%-8.0%. |
• | Prepared Foods – We expect operational improvements and 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 2014, we believe our Prepared Foods segment could be slightly below its normalized range of 4.0%-6.0% as we continue to invest in our growth platforms. |
• | Sales – We expect fiscal 2013 sales to approximate $34.5 billion mostly resulting from price increases related to decreases in domestic availability of certain protein and increased raw material costs. We expect fiscal 2014 sales to approximate $36 billion as we continue to execute our strategy of accelerating growth in domestic value-added chicken sales, prepared food sales and international chicken production. |
• | Capital Expenditures – We expect fiscal 2013 capital expenditures will approximate $550-$600 million. We expect fiscal 2014 capital expenditures to approximate $650-$700 million. |
• | Net Interest Expense – We expect net interest expense will approximate $140 million and $100 million for fiscal 2013 and 2014, respectively. |
• | Debt and Liquidity – Our next significant debt maturity is scheduled for October 2013, which we currently plan to use 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 June 29, 2013, was $2 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 June 29, 2013, 24 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 | Nine Months Ended | ||||||||||||||
June 29, 2013 | June 30, 2012 | June 29, 2013 | June 30, 2012 | ||||||||||||
Sales | $ | 8,731 | $ | 8,261 | $ | 25,480 | $ | 24,740 | |||||||
Cost of Sales | 8,049 | 7,695 | 23,791 | 23,140 | |||||||||||
Gross Profit | 682 | 566 | 1,689 | 1,600 | |||||||||||
Selling, General and Administrative | 263 | 224 | 730 | 668 | |||||||||||
Operating Income | 419 | 342 | 959 | 932 | |||||||||||
Other (Income) Expense: | |||||||||||||||
Interest income | (2 | ) | (2 | ) | (5 | ) | (9 | ) | |||||||
Interest expense | 36 | 215 | 109 | 316 | |||||||||||
Other, net | — | (3 | ) | (19 | ) | (17 | ) | ||||||||
Total Other (Income) Expense | 34 | 210 | 85 | 290 | |||||||||||
Income from Continuing Operations before Income Taxes | 385 | 132 | 874 | 642 | |||||||||||
Income Tax Expense | 136 | 53 | 285 | 231 | |||||||||||
Income from Continuing Operations | 249 | 79 | 589 | 411 | |||||||||||
Loss from Discontinued Operation, Net of Tax | (4 | ) | (6 | ) | (70 | ) | (16 | ) | |||||||
Net Income | 245 | 73 | 519 | 395 | |||||||||||
Less: Net Income (Loss) Attributable to Noncontrolling Interest | (4 | ) | (3 | ) | 2 | (3 | ) | ||||||||
Net Income Attributable to Tyson | $ | 249 | $ | 76 | $ | 517 | $ | 398 | |||||||
Amounts attributable to Tyson: | |||||||||||||||
Net Income from Continuing Operations | 253 | 82 | 587 | 414 | |||||||||||
Net Loss from Discontinued Operation | (4 | ) | (6 | ) | (70 | ) | (16 | ) | |||||||
Net Income Attributable to Tyson | $ | 249 | $ | 76 | $ | 517 | $ | 398 | |||||||
Weighted Average Shares Outstanding: | |||||||||||||||
Class A Basic | 283 | 291 | 284 | 294 | |||||||||||
Class B Basic | 70 | 70 | 70 | 70 | |||||||||||
Diluted | 369 | 369 | 366 | 373 | |||||||||||
Net Income Per Share from Continuing Operations Attributable to Tyson: | |||||||||||||||
Class A Basic | $ | 0.73 | $ | 0.23 | $ | 1.69 | $ | 1.16 | |||||||
Class B Basic | $ | 0.66 | $ | 0.20 | $ | 1.52 | $ | 1.04 | |||||||
Diluted | $ | 0.69 | $ | 0.22 | $ | 1.61 | $ | 1.11 | |||||||
Net Loss Per Share from Discontinued Operation Attributable to Tyson: | |||||||||||||||
Class A Basic | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.20 | ) | $ | (0.05 | ) | |||
Class B Basic | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.18 | ) | $ | (0.04 | ) | |||
Diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.19 | ) | $ | (0.04 | ) | |||
Net Income Per Share Attributable to Tyson: | |||||||||||||||
Class A Basic | $ | 0.72 | $ | 0.21 | $ | 1.49 | $ | 1.11 | |||||||
Class B Basic | $ | 0.64 | $ | 0.19 | $ | 1.34 | $ | 1.00 | |||||||
Diluted | $ | 0.68 | $ | 0.21 | $ | 1.42 | $ | 1.07 | |||||||
Dividends Declared Per Share: | |||||||||||||||
Class A | $ | 0.050 | $ | 0.040 | $ | 0.260 | $ | 0.120 | |||||||
Class B | $ | 0.045 | $ | 0.036 | $ | 0.234 | $ | 0.108 | |||||||
Sales Growth | 5.7 | % | 3.0 | % | |||||||||||
Margins: (Percent of Sales) | |||||||||||||||
Gross Profit | 7.8 | % | 6.9 | % | 6.6 | % | 6.5 | % | |||||||
Operating Income | 4.8 | % | 4.1 | % | 3.8 | % | 3.8 | % | |||||||
Income from Continuing Operations | 2.9 | % | 1.0 | % | 2.3 | % | 1.7 | % | |||||||
Effective Tax Rate for Continuing Operations | 35.4 | % | 40.2 | % | 32.6 | % | 35.9 | % |
June 29, 2013 | September 29, 2012 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 943 | $ | 1,071 | |||
Accounts receivable, net | 1,454 | 1,378 | |||||
Inventories | 2,901 | 2,809 | |||||
Other current assets | 229 | 145 | |||||
Total Current Assets | 5,527 | 5,403 | |||||
Net Property, Plant and Equipment | 4,042 | 4,022 | |||||
Goodwill | 1,903 | 1,891 | |||||
Intangible Assets | 143 | 129 | |||||
Other Assets | 487 | 451 | |||||
Total Assets | $ | 12,102 | $ | 11,896 | |||
Liabilities and Shareholders’ Equity | |||||||
Current Liabilities: | |||||||
Current debt | $ | 508 | $ | 515 | |||
Accounts payable | 1,309 | 1,372 | |||||
Other current liabilities | 1,121 | 943 | |||||
Total Current Liabilities | 2,938 | 2,830 | |||||
Long-Term Debt | 1,899 | 1,917 | |||||
Deferred Income Taxes | 467 | 558 | |||||
Other Liabilities | 551 | 549 | |||||
Total Tyson Shareholders’ Equity | 6,213 | 6,012 | |||||
Noncontrolling Interest | 34 | 30 | |||||
Total Shareholders’ Equity | 6,247 | 6,042 | |||||
Total Liabilities and Shareholders’ Equity | $ | 12,102 | $ | 11,896 |
Nine Months Ended | |||||||
June 29, 2013 | June 30, 2012 | ||||||
Cash Flows From Operating Activities: | |||||||
Net income | $ | 519 | $ | 395 | |||
Depreciation and amortization | 387 | 369 | |||||
Deferred income taxes | (21 | ) | 75 | ||||
Loss on early extinguishment of debt | — | 167 | |||||
Other, net | 80 | (1 | ) | ||||
Net change in other current assets and liabilities | (193 | ) | (286 | ) | |||
Cash Provided by Operating Activities | 772 | 719 | |||||
Cash Flows From Investing Activities: | |||||||
Additions to property, plant and equipment | (425 | ) | (530 | ) | |||
Purchases of marketable securities | (123 | ) | (45 | ) | |||
Proceeds from sale of marketable securities | 22 | 36 | |||||
Acquisitions, net of cash acquired | (106 | ) | — | ||||
Other, net | 36 | 19 | |||||
Cash Used for Investing Activities | (596 | ) | (520 | ) | |||
Cash Flows From Financing Activities: | |||||||
Payments on debt | (69 | ) | (919 | ) | |||
Net proceeds from borrowings | 48 | 1,082 | |||||
Purchases of Tyson Class A common stock | (298 | ) | (209 | ) | |||
Dividends | (87 | ) | (44 | ) | |||
Stock options exercised | 93 | 32 | |||||
Other, net | 13 | (26 | ) | ||||
Cash Used for Financing Activities | (300 | ) | (84 | ) | |||
Effect of Exchange Rate Changes on Cash | (4 | ) | (3 | ) | |||
Increase (Decrease) in Cash and Cash Equivalents | (128 | ) | 112 | ||||
Cash and Cash Equivalents at Beginning of Year | 1,071 | 716 | |||||
Cash and Cash Equivalents at End of Period | $ | 943 | $ | 828 |
Nine Months Ended | Fiscal Year Ended | Twelve Months Ended | |||||||||||||
June 29, 2013 | June 30, 2012 | September 29, 2012 | June 29, 2013 | ||||||||||||
Net income | $ | 519 | $ | 395 | $ | 576 | $ | 700 | |||||||
Less: Interest income | (5 | ) | (9 | ) | (12 | ) | (8 | ) | |||||||
Add: Interest expense | 109 | 316 | 356 | 149 | |||||||||||
Add: Income tax expense (a) | 287 | 231 | 351 | 407 | |||||||||||
Add: Depreciation | 354 | 327 | 443 | 470 | |||||||||||
Add: Amortization (b) | 12 | 13 | 17 | 16 | |||||||||||
EBITDA | $ | 1,276 | $ | 1,273 | $ | 1,731 | $ | 1,734 | |||||||
Total gross debt | $ | 2,432 | $ | 2,407 | |||||||||||
Less: Cash and cash equivalents | (1,071 | ) | (943 | ) | |||||||||||
Less: Short-term investments | (3 | ) | (81 | ) | |||||||||||
Total net debt | $ | 1,358 | $ | 1,383 | |||||||||||
Ratio Calculations: | |||||||||||||||
Gross debt/EBITDA | 1.4x | 1.4x | |||||||||||||
Net debt/EBITDA | 0.8x | 0.8x |
(a) | Includes income tax expense of discontinued operation |
(b) | Excludes the amortization of debt discount expense of $21 million and $29 million for the nine months ended June 29, 2013, and June 30, 2012, respectively, and $39 million for the fiscal year ended September 29, 2012, as it is included in Interest expense. |
Three Months Ended | Nine Months Ended | ||||||||||||||
June 29, 2013 | June 30, 2012 | June 29, 2013 | June 30, 2012 | ||||||||||||
Reported net income from continuing operations per share attributable to Tyson | $ | 0.69 | $ | 0.22 | $ | 1.61 | $ | 1.11 | |||||||
Less: $19 million recognized currency translation adjustment gain | — | — | (0.05 | ) | — | ||||||||||
Add: $167 million early extinguishment of debt charge | — | 0.29 | — | 0.29 | |||||||||||
Adjusted net income from continuing operations per share attributable to Tyson | $ | 0.69 | $ | 0.51 | $ | 1.56 | $ | 1.40 |
Three Months Ended | Nine Months Ended | ||||||||||||||
June 29, 2013 | June 30, 2012 | June 29, 2013 | June 30, 2012 | ||||||||||||
Reported net income per share attributable to Tyson | $ | 0.68 | $ | 0.21 | $ | 1.42 | $ | 1.07 | |||||||
Less: $19 million recognized currency translation adjustment gain | — | — | (0.05 | ) | — | ||||||||||
Add: $56 million impairment of non-core assets in China | — | — | 0.15 | — | |||||||||||
Add: $167 million early extinguishment of debt charge | — | 0.29 | — | 0.29 | |||||||||||
Adjusted net income per share attributable to Tyson | $ | 0.68 | $ | 0.50 | $ | 1.52 | $ | 1.36 |