(in millions, except per share data) | Third Quarter | Nine Months | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Sales | $ | 9,682 | $ | 8,731 | $ | 27,475 | $ | 25,480 | |||||||
Operating Income | 351 | 419 | 1,124 | 959 | |||||||||||
Income from Continuing Operations | 258 | 249 | 720 | 589 | |||||||||||
Loss from Discontinued Operation, Net of Tax | — | (4 | ) | — | (70 | ) | |||||||||
Net Income | 258 | 245 | 720 | 519 | |||||||||||
Less: Net Income (Loss) Attributable to Noncontrolling Interests | (2 | ) | (4 | ) | (7 | ) | 2 | ||||||||
Net Income Attributable to Tyson | $ | 260 | $ | 249 | $ | 727 | $ | 517 | |||||||
Adjusted¹ Operating Income from Continuing Operations | $ | 407 | $ | 419 | $ | 1,180 | $ | 959 | |||||||
Net Income Per Share from Continuing Operations Attributable to Tyson | $ | 0.73 | $ | 0.69 | $ | 2.05 | $ | 1.61 | |||||||
Adjusted¹ Net Income Per Share from Continuing Operations Attributable to Tyson | $ | 0.75 | $ | 0.69 | $ | 2.07 | $ | 1.56 | |||||||
Net Income Per Share Attributable to Tyson | $ | 0.73 | $ | 0.68 | $ | 2.05 | $ | 1.42 | |||||||
Adjusted¹ Net Income Per Share Attributable to Tyson | $ | 0.75 | $ | 0.68 | $ | 2.07 | $ | 1.52 |
• | Reported EPS was $0.73; Adjusted EPS up 9% to $0.75 compared to EPS from continuing operations of $0.69 in third quarter of fiscal 2013 |
• | Quarterly sales up to $9.7 billion resulting in 11% increase over third quarter of fiscal 2013 |
• | Adjusted operating margin was 4.2% |
• | Acquisition of the Hillshire Brands on track for closing in fourth quarter of fiscal 2014 |
Sales | ||||||||||||||||||||
(for the third quarter and nine months ended June 28, 2014, and June 29, 2013) | ||||||||||||||||||||
Third Quarter | Nine Months | |||||||||||||||||||
Volume | Avg. Price | Volume | Avg. Price | |||||||||||||||||
2014 | 2013 | Change | Change | 2014 | 2013 | Change | Change | |||||||||||||
Chicken | $ | 2,829 | $ | 2,820 | 1.3 | % | (1.0 | )% | $ | 8,327 | $ | 8,148 | 2.7 | % | (0.5 | )% | ||||
Beef | 4,189 | 3,723 | (0.9 | )% | 13.5 | % | 11,748 | 10,655 | 0.4 | % | 9.8 | % | ||||||||
Pork | 1,766 | 1,332 | 5.0 | % | 26.3 | % | 4,677 | 4,006 | 1.1 | % | 15.4 | % | ||||||||
Prepared Foods | 901 | 797 | 4.0 | % | 8.7 | % | 2,669 | 2,441 | 5.2 | % | 4.0 | % | ||||||||
International | 365 | 343 | 17.2 | % | (9.2 | )% | 1,020 | 1,001 | 14.0 | % | (10.6 | )% | ||||||||
Other | — | — | n/a | n/a | — | 47 | n/a | n/a | ||||||||||||
Intersegment Sales | (368 | ) | (284 | ) | n/a | n/a | (966 | ) | (818 | ) | n/a | n/a | ||||||||
Total | $ | 9,682 | $ | 8,731 | 2.2 | % | 8.5 | % | $ | 27,475 | $ | 25,480 | 2.5 | % | 5.4 | % |
Operating Income (Loss) | ||||||||||||||||||||
(for the third quarter and nine months ended June 28, 2014, and June 29, 2013) | ||||||||||||||||||||
Third Quarter | Nine Months | |||||||||||||||||||
Operating Margin | Operating Margin | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Chicken | $ | 195 | $ | 215 | 6.9 | % | 7.6 | % | $ | 682 | $ | 471 | 8.2 | % | 5.8 | % | ||||
Beef | 101 | 114 | 2.4 | % | 3.1 | % | 194 | 134 | 1.7 | % | 1.3 | % | ||||||||
Pork | 128 | 67 | 7.2 | % | 5.0 | % | 356 | 264 | 7.6 | % | 6.6 | % | ||||||||
Prepared Foods | (50 | ) | 24 | (5.5 | )% | 3.0 | % | (13 | ) | 85 | (0.5 | )% | 3.5 | % | ||||||
International | (15 | ) | 5 | (4.1 | )% | 1.5 | % | (73 | ) | — | (7.2 | )% | — | % | ||||||
Other | (8 | ) | (6 | ) | n/a | n/a | (22 | ) | 5 | n/a | n/a | |||||||||
Total | $ | 351 | $ | 419 | 3.6 | % | 4.8 | % | $ | 1,124 | $ | 959 | 4.1 | % | 3.8 | % |
• | Operating income was reduced by $49 million in the Prepared Foods segment for impairments related to the closure of three plants. |
• | Operating income was reduced by $7 million in Other for third party transaction fees incurred as part of the Hillshire Brands acquisition. |
• | Chicken - Sales volumes for the third quarter and nine months of fiscal 2014 grew as a result of stronger demand for chicken products and mix of rendered product sales. Average sales price decreased as feed ingredient costs declined, partially offset by mix changes. Operating income for the third quarter of fiscal 2014 was negatively impacted by rapidly rising costs of outside meat purchases as well as operational disruptions at two of our facilities. For the nine months of fiscal 2014, operating income increased due to higher sales volume and lower feed ingredient costs, partially offset by decreased average sales price. Feed costs decreased $120 million and $460 million for the third quarter and nine months of fiscal 2014, respectively. |
• | Beef - Sales volumes decreased for the third quarter of fiscal 2014 due to a reduction in live cattle processed. However, sales volumes were up for the nine months of fiscal 2014 due to better domestic demand for our beef products, partially offset by reduced exports. Average sales price increased due to lower domestic availability of fed cattle supplies, which additionally drove up livestock costs. Operating income decreased for the third quarter of fiscal 2014 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 operating costs. For the nine months of fiscal 2014, operating income increased due to improved operational execution and maximizing our revenues relative to the rising live cattle markets, partially offset by increased operating costs. |
• | Pork - Sales volumes increased as a result of better domestic demand for our pork products. Average sales price increased due to lower total hog supplies, which additionally resulted in higher input costs. Operating income increased as we maximized our revenues relative to live hog markets, partially attributable to operational and mix performance. |
• | Prepared Foods - Sales volumes increased as a result of improved demand for our prepared foods products and incremental volumes from the purchase of three businesses. Average sales price increased due to better product mix and price increases associated with higher input costs. Operating income decreased as a result of higher raw material and other input costs of approximately $95 million and $160 million for the third quarter and nine months of fiscal 2014, respectively, and additional costs incurred as we invested in our growth platforms. 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. Additionally, in the third quarter of fiscal 2014, we incurred a $49 million impairment charge related to the planned closure of three plants, which are expected to cease operation by mid-fiscal 2015. |
• | International - Sales volumes increased as we grew our businesses in Brazil and China. Average sales price decreased due to poor export market conditions in Brazil, supply imbalances associated with weak demand in China and a less favorable pricing environment in Mexico. Operating income decreased due to poor operational execution in Brazil, challenging market conditions in Brazil and China and additional costs incurred as we grew our International operation. |
Three Months Ended | Nine Months Ended | ||||||||||||||
June 28, 2014 | June 29, 2013 | June 28, 2014 | June 29, 2013 | ||||||||||||
Sales | $ | 9,682 | $ | 8,731 | $ | 27,475 | $ | 25,480 | |||||||
Cost of Sales | 9,045 | 8,049 | 25,502 | 23,791 | |||||||||||
Gross Profit | 637 | 682 | 1,973 | 1,689 | |||||||||||
Selling, General and Administrative | 286 | 263 | 849 | 730 | |||||||||||
Operating Income | 351 | 419 | 1,124 | 959 | |||||||||||
Other (Income) Expense: | |||||||||||||||
Interest income | (1 | ) | (2 | ) | (6 | ) | (5 | ) | |||||||
Interest expense | 25 | 36 | 78 | 109 | |||||||||||
Other, net | 17 | — | 18 | (19 | ) | ||||||||||
Total Other (Income) Expense | 41 | 34 | 90 | 85 | |||||||||||
Income from Continuing Operations before Income Taxes | 310 | 385 | 1,034 | 874 | |||||||||||
Income Tax Expense | 52 | 136 | 314 | 285 | |||||||||||
Income from Continuing Operations | 258 | 249 | 720 | 589 | |||||||||||
Loss from Discontinued Operation, Net of Tax | — | (4 | ) | — | (70 | ) | |||||||||
Net Income | 258 | 245 | 720 | 519 | |||||||||||
Less: Net Income (Loss) Attributable to Noncontrolling Interests | (2 | ) | (4 | ) | (7 | ) | 2 | ||||||||
Net Income Attributable to Tyson | $ | 260 | $ | 249 | $ | 727 | $ | 517 | |||||||
Amounts attributable to Tyson: | |||||||||||||||
Net Income from Continuing Operations | 260 | 253 | 727 | 587 | |||||||||||
Net Loss from Discontinued Operation | — | (4 | ) | — | (70 | ) | |||||||||
Net Income Attributable to Tyson | $ | 260 | $ | 249 | $ | 727 | $ | 517 | |||||||
Weighted Average Shares Outstanding: | |||||||||||||||
Class A Basic | 280 | 283 | 275 | 284 | |||||||||||
Class B Basic | 70 | 70 | 70 | 70 | |||||||||||
Diluted | 356 | 369 | 355 | 366 | |||||||||||
Net Income Per Share from Continuing Operations Attributable to Tyson: | |||||||||||||||
Class A Basic | $ | 0.75 | $ | 0.73 | $ | 2.15 | $ | 1.69 | |||||||
Class B Basic | $ | 0.68 | $ | 0.66 | $ | 1.94 | $ | 1.52 | |||||||
Diluted | $ | 0.73 | $ | 0.69 | $ | 2.05 | $ | 1.61 | |||||||
Net Loss Per Share from Discontinued Operation Attributable to Tyson: | |||||||||||||||
Class A Basic | $ | — | $ | (0.01 | ) | $ | — | $ | (0.20 | ) | |||||
Class B Basic | $ | — | $ | (0.02 | ) | $ | — | $ | (0.18 | ) | |||||
Diluted | $ | — | $ | (0.01 | ) | $ | — | $ | (0.19 | ) | |||||
Net Income Per Share Attributable to Tyson: | |||||||||||||||
Class A Basic | $ | 0.75 | $ | 0.72 | $ | 2.15 | $ | 1.49 | |||||||
Class B Basic | $ | 0.68 | $ | 0.64 | $ | 1.94 | $ | 1.34 | |||||||
Diluted | $ | 0.73 | $ | 0.68 | $ | 2.05 | $ | 1.42 | |||||||
Dividends Declared Per Share: | |||||||||||||||
Class A | $ | 0.075 | $ | 0.050 | $ | 0.250 | $ | 0.260 | |||||||
Class B | $ | 0.068 | $ | 0.045 | $ | 0.226 | $ | 0.234 | |||||||
Sales Growth | 10.9 | % | 7.8 | % | |||||||||||
Margins: (Percent of Sales) | |||||||||||||||
Gross Profit | 6.6 | % | 7.8 | % | 7.2 | % | 6.6 | % | |||||||
Operating Income | 3.6 | % | 4.8 | % | 4.1 | % | 3.8 | % | |||||||
Income from Continuing Operations | 2.7 | % | 2.9 | % | 2.6 | % | 2.3 | % | |||||||
Effective Tax Rate for Continuing Operations | 16.8 | % | 35.4 | % | 30.4 | % | 32.6 | % |
June 28, 2014 | September 28, 2013 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 587 | $ | 1,145 | |||
Accounts receivable, net | 1,624 | 1,497 | |||||
Inventories | 3,061 | 2,817 | |||||
Other current assets | 241 | 145 | |||||
Total Current Assets | 5,513 | 5,604 | |||||
Net Property, Plant and Equipment | 3,941 | 4,053 | |||||
Goodwill | 1,925 | 1,902 | |||||
Intangible Assets | 151 | 138 | |||||
Other Assets | 525 | 480 | |||||
Total Assets | $ | 12,055 | $ | 12,177 | |||
Liabilities and Shareholders’ Equity | |||||||
Current Liabilities: | |||||||
Current debt | $ | 41 | $ | 513 | |||
Accounts payable | 1,496 | 1,359 | |||||
Other current liabilities | 1,075 | 1,138 | |||||
Total Current Liabilities | 2,612 | 3,010 | |||||
Long-Term Debt | 1,784 | 1,895 | |||||
Deferred Income Taxes | 404 | 479 | |||||
Other Liabilities | 545 | 560 | |||||
Total Tyson Shareholders’ Equity | 6,694 | 6,201 | |||||
Noncontrolling Interests | 16 | 32 | |||||
Total Shareholders’ Equity | 6,710 | 6,233 | |||||
Total Liabilities and Shareholders’ Equity | $ | 12,055 | $ | 12,177 |
Nine Months Ended | |||||||
June 28, 2014 | June 29, 2013 | ||||||
Cash Flows From Operating Activities: | |||||||
Net income | $ | 720 | $ | 519 | |||
Depreciation and amortization | 382 | 387 | |||||
Deferred income taxes | (64 | ) | (21 | ) | |||
Convertible debt discount | (92 | ) | — | ||||
Other, net | 76 | 80 | |||||
Net changes in working capital | (479 | ) | (193 | ) | |||
Cash Provided by Operating Activities | 543 | 772 | |||||
Cash Flows From Investing Activities: | |||||||
Additions to property, plant and equipment | (437 | ) | (425 | ) | |||
Purchases of marketable securities | (25 | ) | (123 | ) | |||
Proceeds from sale of marketable securities | 24 | 22 | |||||
Acquisitions, net of cash acquired | (56 | ) | (106 | ) | |||
Other, net | 44 | 36 | |||||
Cash Used for Investing Activities | (450 | ) | (596 | ) | |||
Cash Flows From Financing Activities: | |||||||
Payments on debt | (407 | ) | (69 | ) | |||
Net proceeds from borrowings | 28 | 48 | |||||
Purchases of Tyson Class A common stock | (286 | ) | (298 | ) | |||
Dividends | (76 | ) | (87 | ) | |||
Stock options exercised | 61 | 93 | |||||
Other, net | 26 | 13 | |||||
Cash Used for Financing Activities | (654 | ) | (300 | ) | |||
Effect of Exchange Rate Changes on Cash | 3 | (4 | ) | ||||
Decrease in Cash and Cash Equivalents | (558 | ) | (128 | ) | |||
Cash and Cash Equivalents at Beginning of Year | 1,145 | 1,071 | |||||
Cash and Cash Equivalents at End of Period | $ | 587 | $ | 943 |
Nine Months Ended | Fiscal Year Ended | Twelve Months Ended | ||||||||||||
June 28, 2014 | June 29, 2013 | September 28, 2013 | June 28, 2014 | |||||||||||
Net income | $ | 720 | $ | 519 | $ | 778 | $ | 979 | ||||||
Less: Interest income | (6 | ) | (5 | ) | (7 | ) | (8 | ) | ||||||
Add: Interest expense | 78 | 109 | 145 | 114 | ||||||||||
Add: Income tax expense (a) | 314 | 287 | 409 | 436 | ||||||||||
Add: Depreciation | 362 | 354 | 474 | 482 | ||||||||||
Add: Amortization (b) | 15 | 12 | 17 | 20 | ||||||||||
EBITDA | $ | 1,483 | $ | 1,276 | $ | 1,816 | $ | 2,023 | ||||||
Total gross debt | $ | 2,408 | $ | 1,825 | ||||||||||
Less: Cash and cash equivalents | (1,145 | ) | (587 | ) | ||||||||||
Less: Short-term investments | (1 | ) | (2 | ) | ||||||||||
Total net debt | $ | 1,262 | $ | 1,236 | ||||||||||
Ratio Calculations: | ||||||||||||||
Gross debt/EBITDA | 1.3x | 0.9x | ||||||||||||
Net debt/EBITDA | 0.7x | 0.6x |
(a) | Includes income tax expense of discontinued operation. |
(b) | Excludes the amortization of debt discount expense of $5 million and $21 million for the 9 months ended June 28, 2014, and June 29, 2013, respectively, and $28 million for the fiscal year ended September 28, 2013, as it is included in Interest expense. |
Three Months Ended | Nine Months Ended | ||||||||||||||
June 28, 2014 | June 29, 2013 | June 28, 2014 | June 29, 2013 | ||||||||||||
Reported net income from continuing operations per share attributable to Tyson | $ | 0.73 | $ | 0.69 | $ | 2.05 | $ | 1.61 | |||||||
Less: $19 million recognized currency translation adjustment gain | — | — | — | (0.05 | ) | ||||||||||
Less: $40 million gain on unrecognized tax benefit | (0.11 | ) | — | (0.11 | ) | — | |||||||||
Add: $29 million Hillshire Brands acquisition fees paid to third parties | 0.05 | — | 0.05 | — | |||||||||||
Add: $49 million impairment due to closure of three facilities | 0.08 | — | 0.08 | — | |||||||||||
Adjusted net income from continuing operations per share attributable to Tyson | $ | 0.75 | $ | 0.69 | $ | 2.07 | $ | 1.56 | |||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
June 28, 2014 | June 29, 2013 | June 28, 2014 | June 29, 2013 | ||||||||||||
Reported net income per share attributable to Tyson | $ | 0.73 | $ | 0.68 | $ | 2.05 | $ | 1.42 | |||||||
Less: $19 million recognized currency translation adjustment gain | — | — | — | (0.05 | ) | ||||||||||
Add: $56 million impairment of non-core assets in China | — | — | — | 0.15 | |||||||||||
Less: $40 million gain on unrecognized tax benefit | (0.11 | ) | — | (0.11 | ) | — | |||||||||
Add: $29 million Hillshire Brands acquisition fees paid to third parties | 0.05 | — | 0.05 | — | |||||||||||
Add: $49 million impairment due to closure of three facilities | 0.08 | — | 0.08 | — | |||||||||||
Adjusted net income per share attributable to Tyson | $ | 0.75 | $ | 0.68 | $ | 2.07 | $ | 1.52 |
Three Months Ended | Nine Months Ended | ||||||||||||||
June 28, 2014 | June 29, 2013 | June 28, 2014 | June 29, 2013 | ||||||||||||
Reported from continuing operations | $ | 351 | $ | 419 | $ | 1,124 | $ | 959 | |||||||
Add: Hillshire Brands acquisition fees paid to third parties | 7 | — | 7 | — | |||||||||||
Add: Impairment due to closure of three facilities | 49 | — | 49 | — | |||||||||||
Adjusted from continuing operations | $ | 407 | $ | 419 | $ | 1,180 | $ | 959 | |||||||
(d) | Exhibit |
Exhibit Number | Description |
99.1 | Press Release, dated July 28, 2014, announcing the unaudited results of operations of Tyson Foods, Inc. for its third quarter ended June 28, 2014 |
TYSON FOODS, INC. | |||
Date: July 28, 2014 | 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 | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Sales | $ | 9,682 | $ | 8,731 | $ | 27,475 | $ | 25,480 | |||||||
Operating Income | 351 | 419 | 1,124 | 959 | |||||||||||
Income from Continuing Operations | 258 | 249 | 720 | 589 | |||||||||||
Loss from Discontinued Operation, Net of Tax | — | (4 | ) | — | (70 | ) | |||||||||
Net Income | 258 | 245 | 720 | 519 | |||||||||||
Less: Net Income (Loss) Attributable to Noncontrolling Interests | (2 | ) | (4 | ) | (7 | ) | 2 | ||||||||
Net Income Attributable to Tyson | $ | 260 | $ | 249 | $ | 727 | $ | 517 | |||||||
Adjusted¹ Operating Income from Continuing Operations | $ | 407 | $ | 419 | $ | 1,180 | $ | 959 | |||||||
Net Income Per Share from Continuing Operations Attributable to Tyson | $ | 0.73 | $ | 0.69 | $ | 2.05 | $ | 1.61 | |||||||
Adjusted¹ Net Income Per Share from Continuing Operations Attributable to Tyson | $ | 0.75 | $ | 0.69 | $ | 2.07 | $ | 1.56 | |||||||
Net Income Per Share Attributable to Tyson | $ | 0.73 | $ | 0.68 | $ | 2.05 | $ | 1.42 | |||||||
Adjusted¹ Net Income Per Share Attributable to Tyson | $ | 0.75 | $ | 0.68 | $ | 2.07 | $ | 1.52 |
• | Reported EPS was $0.73; Adjusted EPS up 9% to $0.75 compared to EPS from continuing operations of $0.69 in third quarter of fiscal 2013 |
• | Quarterly sales up to $9.7 billion resulting in 11% increase over third quarter of fiscal 2013 |
• | Adjusted operating margin was 4.2% |
• | Acquisition of the Hillshire Brands on track for closing in fourth quarter of fiscal 2014 |
Sales | ||||||||||||||||||||
(for the third quarter and nine months ended June 28, 2014, and June 29, 2013) | ||||||||||||||||||||
Third Quarter | Nine Months | |||||||||||||||||||
Volume | Avg. Price | Volume | Avg. Price | |||||||||||||||||
2014 | 2013 | Change | Change | 2014 | 2013 | Change | Change | |||||||||||||
Chicken | $ | 2,829 | $ | 2,820 | 1.3 | % | (1.0 | )% | $ | 8,327 | $ | 8,148 | 2.7 | % | (0.5 | )% | ||||
Beef | 4,189 | 3,723 | (0.9 | )% | 13.5 | % | 11,748 | 10,655 | 0.4 | % | 9.8 | % | ||||||||
Pork | 1,766 | 1,332 | 5.0 | % | 26.3 | % | 4,677 | 4,006 | 1.1 | % | 15.4 | % | ||||||||
Prepared Foods | 901 | 797 | 4.0 | % | 8.7 | % | 2,669 | 2,441 | 5.2 | % | 4.0 | % | ||||||||
International | 365 | 343 | 17.2 | % | (9.2 | )% | 1,020 | 1,001 | 14.0 | % | (10.6 | )% | ||||||||
Other | — | — | n/a | n/a | — | 47 | n/a | n/a | ||||||||||||
Intersegment Sales | (368 | ) | (284 | ) | n/a | n/a | (966 | ) | (818 | ) | n/a | n/a | ||||||||
Total | $ | 9,682 | $ | 8,731 | 2.2 | % | 8.5 | % | $ | 27,475 | $ | 25,480 | 2.5 | % | 5.4 | % |
Operating Income (Loss) | ||||||||||||||||||||
(for the third quarter and nine months ended June 28, 2014, and June 29, 2013) | ||||||||||||||||||||
Third Quarter | Nine Months | |||||||||||||||||||
Operating Margin | Operating Margin | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Chicken | $ | 195 | $ | 215 | 6.9 | % | 7.6 | % | $ | 682 | $ | 471 | 8.2 | % | 5.8 | % | ||||
Beef | 101 | 114 | 2.4 | % | 3.1 | % | 194 | 134 | 1.7 | % | 1.3 | % | ||||||||
Pork | 128 | 67 | 7.2 | % | 5.0 | % | 356 | 264 | 7.6 | % | 6.6 | % | ||||||||
Prepared Foods | (50 | ) | 24 | (5.5 | )% | 3.0 | % | (13 | ) | 85 | (0.5 | )% | 3.5 | % | ||||||
International | (15 | ) | 5 | (4.1 | )% | 1.5 | % | (73 | ) | — | (7.2 | )% | — | % | ||||||
Other | (8 | ) | (6 | ) | n/a | n/a | (22 | ) | 5 | n/a | n/a | |||||||||
Total | $ | 351 | $ | 419 | 3.6 | % | 4.8 | % | $ | 1,124 | $ | 959 | 4.1 | % | 3.8 | % |
• | Operating income was reduced by $49 million in the Prepared Foods segment for impairments related to the closure of three plants. |
• | Operating income was reduced by $7 million in Other for third party transaction fees incurred as part of the Hillshire Brands acquisition. |
• | Chicken - Sales volumes for the third quarter and nine months of fiscal 2014 grew as a result of stronger demand for chicken products and mix of rendered product sales. Average sales price decreased as feed ingredient costs declined, partially offset by mix changes. Operating income for the third quarter of fiscal 2014 was negatively impacted by rapidly rising costs of outside meat purchases as well as operational disruptions at two of our facilities. For the nine months of fiscal 2014, operating income increased due to higher sales volume and lower feed ingredient costs, partially offset by decreased average sales price. Feed costs decreased $120 million and $460 million for the third quarter and nine months of fiscal 2014, respectively. |
• | Beef - Sales volumes decreased for the third quarter of fiscal 2014 due to a reduction in live cattle processed. However, sales volumes were up for the nine months of fiscal 2014 due to better domestic demand for our beef products, partially offset by reduced exports. Average sales price increased due to lower domestic availability of fed cattle supplies, which additionally drove up livestock costs. Operating income decreased for the third quarter of fiscal 2014 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 operating costs. For the nine months of fiscal 2014, operating income increased due to improved operational execution and maximizing our revenues relative to the rising live cattle markets, partially offset by increased operating costs. |
• | Pork - Sales volumes increased as a result of better domestic demand for our pork products. Average sales price increased due to lower total hog supplies, which additionally resulted in higher input costs. Operating income increased as we maximized our revenues relative to live hog markets, partially attributable to operational and mix performance. |
• | Prepared Foods - Sales volumes increased as a result of improved demand for our prepared foods products and incremental volumes from the purchase of three businesses. Average sales price increased due to better product mix and price increases associated with higher input costs. Operating income decreased as a result of higher raw material and other input costs of approximately $95 million and $160 million for the third quarter and nine months of fiscal 2014, respectively, and additional costs incurred as we invested in our growth platforms. 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. Additionally, in the third quarter of fiscal 2014, we incurred a $49 million impairment charge related to the planned closure of three plants, which are expected to cease operation by mid-fiscal 2015. |
• | International - Sales volumes increased as we grew our businesses in Brazil and China. Average sales price decreased due to poor export market conditions in Brazil, supply imbalances associated with weak demand in China and a less favorable pricing environment in Mexico. Operating income decreased due to poor operational execution in Brazil, challenging market conditions in Brazil and China and additional costs incurred as we grew our International operation. |
• | Acquisition – On July 1, 2014, we entered into a definitive merger agreement to acquire Hillshire Brands for $63 per share in cash. The transaction is expected to close before September 27, 2014, subject to customary regulatory approvals, and the satisfaction of other closing conditions. The transaction is valued at $8.7 billion, including the assumption of Hillshire Brands' net debt. Additionally, Tyson paid $163 million breakage fee related to Hillshire Brands' terminated acquisition of another company. The results of Hillshire Brands will be included in the Prepared Foods segment. |
• | Chicken – Current USDA data shows U.S. chicken production to increase around 2% in fiscal 2015 compared to fiscal 2014. Based on current futures prices, we expect lower feed costs in fiscal 2015 compared to fiscal 2014 of approximately $400 million. Many of our sales contracts are formula based or shorter-term in nature, but there may be a lag time for price changes to take effect. Due to the relative value of chicken compared to other proteins, we believe demand will remain strong. We believe our Chicken segment's operating margin should be at or above 10% in fiscal 2015. |
• | Beef – We expect to see a reduction of industry fed cattle supplies of 4-5% in fiscal 2015 as compared to fiscal 2014. 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 2015, we believe our Beef segment's profitability will be similar to fiscal 2014. |
• | Pork – We expect industry hog supplies to increase around 2% in fiscal 2015 compared to fiscal 2014. For fiscal 2015, we believe our Pork segment's operating margin will be in its normalized range of 6.0%-8.0%. |
• | Prepared Foods – As announced on July 25, 2014, we will close three Prepared Foods plants. The production from the closed plants will be moved to other existing facilities. Consequently, the closures will not impact revenues but will result in significant cost savings and production efficiencies. Additionally, we anticipate the Hillshire Brands acquisition will add $4 billion in revenues in fiscal 2015. We expect to realize substantial synergies from combining our Prepared Foods business with Hillshire Brands. Synergies are expected to come from operational improvements, purchasing and distribution. As we execute our Prepared Foods strategy, we estimate the impact of the Hillshire Brands synergies, along with the cost savings and the production efficiencies associated with the announced plant closures, will positively impact our Prepared Foods segment by more than $225 million in fiscal 2015, and should exceed $500 million by the third full year of ownership. A new normalized range for the Prepared Foods segment will be quantified after the transaction closes. |
• | International – For fiscal 2014, we expect our International segment to incur losses of approximately $100 million. We anticipate the sale of our Brazil and Mexico chicken production operations to close in late fiscal 2014 or early fiscal 2015. As a result, we expect our International chicken revenues in fiscal 2015 to decrease by approximately $1 billion as compared to fiscal 2014. Excluding any gain or loss associated with the sale of the Brazil and Mexico operations, we expect the International segment's operating income to improve by $50 million in fiscal 2015. |
• | Sales – We expect 2014 sales to approximate $38 billion. We expect fiscal 2015 sales to approximate $42 billion as we integrate Hillshire Brands and continue to execute our strategy of accelerating growth in domestic value-added chicken sales and Prepared Food sales. |
• | Capital Expenditures – We expect fiscal 2014 capital expenditures will approximate $600 to $650 million. We expect fiscal 2015 capital expenditures to be approximately $900 million. |
• | Net Interest Expense – We expect net interest expense will approximate $130 million and $290 million for fiscal 2014 and fiscal 2015, respectively. These amounts include estimates regarding the timing and composition of debt financing and closing of the Hillshire Brands acquisition. |
• | Debt and Liquidity – We expect total liquidity, which was $1.5 billion at June 28, 2014, to be above our goal to maintain liquidity in excess of $1.2 billion. |
• | Share Repurchases – We currently do not plan to repurchase shares other than to fund obligations under equity compensation programs. |
Three Months Ended | Nine Months Ended | ||||||||||||||
June 28, 2014 | June 29, 2013 | June 28, 2014 | June 29, 2013 | ||||||||||||
Sales | $ | 9,682 | $ | 8,731 | $ | 27,475 | $ | 25,480 | |||||||
Cost of Sales | 9,045 | 8,049 | 25,502 | 23,791 | |||||||||||
Gross Profit | 637 | 682 | 1,973 | 1,689 | |||||||||||
Selling, General and Administrative | 286 | 263 | 849 | 730 | |||||||||||
Operating Income | 351 | 419 | 1,124 | 959 | |||||||||||
Other (Income) Expense: | |||||||||||||||
Interest income | (1 | ) | (2 | ) | (6 | ) | (5 | ) | |||||||
Interest expense | 25 | 36 | 78 | 109 | |||||||||||
Other, net | 17 | — | 18 | (19 | ) | ||||||||||
Total Other (Income) Expense | 41 | 34 | 90 | 85 | |||||||||||
Income from Continuing Operations before Income Taxes | 310 | 385 | 1,034 | 874 | |||||||||||
Income Tax Expense | 52 | 136 | 314 | 285 | |||||||||||
Income from Continuing Operations | 258 | 249 | 720 | 589 | |||||||||||
Loss from Discontinued Operation, Net of Tax | — | (4 | ) | — | (70 | ) | |||||||||
Net Income | 258 | 245 | 720 | 519 | |||||||||||
Less: Net Income (Loss) Attributable to Noncontrolling Interests | (2 | ) | (4 | ) | (7 | ) | 2 | ||||||||
Net Income Attributable to Tyson | $ | 260 | $ | 249 | $ | 727 | $ | 517 | |||||||
Amounts attributable to Tyson: | |||||||||||||||
Net Income from Continuing Operations | 260 | 253 | 727 | 587 | |||||||||||
Net Loss from Discontinued Operation | — | (4 | ) | — | (70 | ) | |||||||||
Net Income Attributable to Tyson | $ | 260 | $ | 249 | $ | 727 | $ | 517 | |||||||
Weighted Average Shares Outstanding: | |||||||||||||||
Class A Basic | 280 | 283 | 275 | 284 | |||||||||||
Class B Basic | 70 | 70 | 70 | 70 | |||||||||||
Diluted | 356 | 369 | 355 | 366 | |||||||||||
Net Income Per Share from Continuing Operations Attributable to Tyson: | |||||||||||||||
Class A Basic | $ | 0.75 | $ | 0.73 | $ | 2.15 | $ | 1.69 | |||||||
Class B Basic | $ | 0.68 | $ | 0.66 | $ | 1.94 | $ | 1.52 | |||||||
Diluted | $ | 0.73 | $ | 0.69 | $ | 2.05 | $ | 1.61 | |||||||
Net Loss Per Share from Discontinued Operation Attributable to Tyson: | |||||||||||||||
Class A Basic | $ | — | $ | (0.01 | ) | $ | — | $ | (0.20 | ) | |||||
Class B Basic | $ | — | $ | (0.02 | ) | $ | — | $ | (0.18 | ) | |||||
Diluted | $ | — | $ | (0.01 | ) | $ | — | $ | (0.19 | ) | |||||
Net Income Per Share Attributable to Tyson: | |||||||||||||||
Class A Basic | $ | 0.75 | $ | 0.72 | $ | 2.15 | $ | 1.49 | |||||||
Class B Basic | $ | 0.68 | $ | 0.64 | $ | 1.94 | $ | 1.34 | |||||||
Diluted | $ | 0.73 | $ | 0.68 | $ | 2.05 | $ | 1.42 | |||||||
Dividends Declared Per Share: | |||||||||||||||
Class A | $ | 0.075 | $ | 0.050 | $ | 0.250 | $ | 0.260 | |||||||
Class B | $ | 0.068 | $ | 0.045 | $ | 0.226 | $ | 0.234 | |||||||
Sales Growth | 10.9 | % | 7.8 | % | |||||||||||
Margins: (Percent of Sales) | |||||||||||||||
Gross Profit | 6.6 | % | 7.8 | % | 7.2 | % | 6.6 | % | |||||||
Operating Income | 3.6 | % | 4.8 | % | 4.1 | % | 3.8 | % | |||||||
Income from Continuing Operations | 2.7 | % | 2.9 | % | 2.6 | % | 2.3 | % | |||||||
Effective Tax Rate for Continuing Operations | 16.8 | % | 35.4 | % | 30.4 | % | 32.6 | % |
June 28, 2014 | September 28, 2013 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 587 | $ | 1,145 | |||
Accounts receivable, net | 1,624 | 1,497 | |||||
Inventories | 3,061 | 2,817 | |||||
Other current assets | 241 | 145 | |||||
Total Current Assets | 5,513 | 5,604 | |||||
Net Property, Plant and Equipment | 3,941 | 4,053 | |||||
Goodwill | 1,925 | 1,902 | |||||
Intangible Assets | 151 | 138 | |||||
Other Assets | 525 | 480 | |||||
Total Assets | $ | 12,055 | $ | 12,177 | |||
Liabilities and Shareholders’ Equity | |||||||
Current Liabilities: | |||||||
Current debt | $ | 41 | $ | 513 | |||
Accounts payable | 1,496 | 1,359 | |||||
Other current liabilities | 1,075 | 1,138 | |||||
Total Current Liabilities | 2,612 | 3,010 | |||||
Long-Term Debt | 1,784 | 1,895 | |||||
Deferred Income Taxes | 404 | 479 | |||||
Other Liabilities | 545 | 560 | |||||
Total Tyson Shareholders’ Equity | 6,694 | 6,201 | |||||
Noncontrolling Interests | 16 | 32 | |||||
Total Shareholders’ Equity | 6,710 | 6,233 | |||||
Total Liabilities and Shareholders’ Equity | $ | 12,055 | $ | 12,177 |
Nine Months Ended | |||||||
June 28, 2014 | June 29, 2013 | ||||||
Cash Flows From Operating Activities: | |||||||
Net income | $ | 720 | $ | 519 | |||
Depreciation and amortization | 382 | 387 | |||||
Deferred income taxes | (64 | ) | (21 | ) | |||
Convertible debt discount | (92 | ) | — | ||||
Other, net | 76 | 80 | |||||
Net changes in working capital | (479 | ) | (193 | ) | |||
Cash Provided by Operating Activities | 543 | 772 | |||||
Cash Flows From Investing Activities: | |||||||
Additions to property, plant and equipment | (437 | ) | (425 | ) | |||
Purchases of marketable securities | (25 | ) | (123 | ) | |||
Proceeds from sale of marketable securities | 24 | 22 | |||||
Acquisitions, net of cash acquired | (56 | ) | (106 | ) | |||
Other, net | 44 | 36 | |||||
Cash Used for Investing Activities | (450 | ) | (596 | ) | |||
Cash Flows From Financing Activities: | |||||||
Payments on debt | (407 | ) | (69 | ) | |||
Net proceeds from borrowings | 28 | 48 | |||||
Purchases of Tyson Class A common stock | (286 | ) | (298 | ) | |||
Dividends | (76 | ) | (87 | ) | |||
Stock options exercised | 61 | 93 | |||||
Other, net | 26 | 13 | |||||
Cash Used for Financing Activities | (654 | ) | (300 | ) | |||
Effect of Exchange Rate Changes on Cash | 3 | (4 | ) | ||||
Decrease in Cash and Cash Equivalents | (558 | ) | (128 | ) | |||
Cash and Cash Equivalents at Beginning of Year | 1,145 | 1,071 | |||||
Cash and Cash Equivalents at End of Period | $ | 587 | $ | 943 |
Nine Months Ended | Fiscal Year Ended | Twelve Months Ended | ||||||||||||
June 28, 2014 | June 29, 2013 | September 28, 2013 | June 28, 2014 | |||||||||||
Net income | $ | 720 | $ | 519 | $ | 778 | $ | 979 | ||||||
Less: Interest income | (6 | ) | (5 | ) | (7 | ) | (8 | ) | ||||||
Add: Interest expense | 78 | 109 | 145 | 114 | ||||||||||
Add: Income tax expense (a) | 314 | 287 | 409 | 436 | ||||||||||
Add: Depreciation | 362 | 354 | 474 | 482 | ||||||||||
Add: Amortization (b) | 15 | 12 | 17 | 20 | ||||||||||
EBITDA | $ | 1,483 | $ | 1,276 | $ | 1,816 | $ | 2,023 | ||||||
Total gross debt | $ | 2,408 | $ | 1,825 | ||||||||||
Less: Cash and cash equivalents | (1,145 | ) | (587 | ) | ||||||||||
Less: Short-term investments | (1 | ) | (2 | ) | ||||||||||
Total net debt | $ | 1,262 | $ | 1,236 | ||||||||||
Ratio Calculations: | ||||||||||||||
Gross debt/EBITDA | 1.3x | 0.9x | ||||||||||||
Net debt/EBITDA | 0.7x | 0.6x |
(a) | Includes income tax expense of discontinued operation. |
(b) | Excludes the amortization of debt discount expense of $5 million and $21 million for the 9 months ended June 28, 2014, and June 29, 2013, respectively, and $28 million for the fiscal year ended September 28, 2013, as it is included in Interest expense. |
Three Months Ended | Nine Months Ended | ||||||||||||||
June 28, 2014 | June 29, 2013 | June 28, 2014 | June 29, 2013 | ||||||||||||
Reported net income from continuing operations per share attributable to Tyson | $ | 0.73 | $ | 0.69 | $ | 2.05 | $ | 1.61 | |||||||
Less: $19 million recognized currency translation adjustment gain | — | — | — | (0.05 | ) | ||||||||||
Less: $40 million gain on unrecognized tax benefit | (0.11 | ) | — | (0.11 | ) | — | |||||||||
Add: $29 million Hillshire Brands acquisition fees paid to third parties | 0.05 | — | 0.05 | — | |||||||||||
Add: $49 million impairment due to closure of three facilities | 0.08 | — | 0.08 | — | |||||||||||
Adjusted net income from continuing operations per share attributable to Tyson | $ | 0.75 | $ | 0.69 | $ | 2.07 | $ | 1.56 | |||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
June 28, 2014 | June 29, 2013 | June 28, 2014 | June 29, 2013 | ||||||||||||
Reported net income per share attributable to Tyson | $ | 0.73 | $ | 0.68 | $ | 2.05 | $ | 1.42 | |||||||
Less: $19 million recognized currency translation adjustment gain | — | — | — | (0.05 | ) | ||||||||||
Add: $56 million impairment of non-core assets in China | — | — | — | 0.15 | |||||||||||
Less: $40 million gain on unrecognized tax benefit | (0.11 | ) | — | (0.11 | ) | — | |||||||||
Add: $29 million Hillshire Brands acquisition fees paid to third parties | 0.05 | — | 0.05 | — | |||||||||||
Add: $49 million impairment due to closure of three facilities | 0.08 | — | 0.08 | — | |||||||||||
Adjusted net income per share attributable to Tyson | $ | 0.75 | $ | 0.68 | $ | 2.07 | $ | 1.52 |
Three Months Ended | Nine Months Ended | ||||||||||||||
June 28, 2014 | June 29, 2013 | June 28, 2014 | June 29, 2013 | ||||||||||||
Reported from continuing operations | $ | 351 | $ | 419 | $ | 1,124 | $ | 959 | |||||||
Add: Hillshire Brands acquisition fees paid to third parties | 7 | — | 7 | — | |||||||||||
Add: Impairment due to closure of three facilities | 49 | — | 49 | — | |||||||||||
Adjusted from continuing operations | $ | 407 | $ | 419 | $ | 1,180 | $ | 959 | |||||||
%)3
M<7`X2VEO)B-X03MY:DAJ16,X5$@K24E9B6#AN<3,U8BM7<$QV6#5F371Y2&M%82MM;#-/9U-7-6UP)B-X
M03MX85EQ1E=G07%",')5,4A436Y1-&-H2GE:3UHU1'5D1#)H<6\X07A1-69D
M-5!5G@K5TU/=5!09%=2:5=7-31T9%=D)B-X03MW<$U%%8R2W5X5C)+=7A6,DMU>%8R2W5X5C)+=7A6,DMU>%8R2W5X5C)+
M=7A6,DMV2B]W03$Y4G9,)B-X03M587IC=T4K=$1$0D)%4E0T23,S3&(K2FMB
M+TU:>C)V.5=P:D4X9SED,D1H:DE10C5%:R](.$)++TPQ-CET*U9U;6%R<71V
M3&51:E=X)B-X03MD6'-R;5530DAD=59Y2D5+=GE6;35"<2]A>EEG*VEZ+T%$
M=C!/5')-6$9R-30X6D54-%A#3U9C=G!R;'9YFIT
M-4AS8FXQ4F]&;S=#;U-3)B-X03LW=3=M*U%!*TYU570P8F)X8D98<&UL-DIB
M,DA&=U$X>7`V569&5FII:6DR4'!14DI263!Q4&-N8FM445565$A&6%EQ-T98
M67$W1EA9)B-X03MQ-T9867$W1EA9<3=&6%EQ-T9867$W1EA9<3=&6%EQ-T98
M67$W1EA9<3=&6%EQ-T9867$W1EA9<3=&6%EQ-T9867$W1EA9<3=&6%EQ)B-X
M03LW1EA9<3=&6%EQ-T9867$W1EA9<3=&6%EQ-T9867$W1EA9<3=&6%EQ-T98
M67$W1EA9<3=&6%EQ-T9867$W1EA9<3=&6%EQ-T9867$W)B-X03M&6%EQ-T98
M67$W1EA9<3=&6%EQ-T9867$W1EA9<3=&6%EQ-T9867$W1EA9<3=&6%EQ-T98
M67$W1EA9<3=&6%EQ-T9867$W1EA9<3=&)B-X03M867$W1EA9<3=&6%EQ-T98
M67$W1EA9<3=&6%EQ-T9867$W1EA9<3=&6%EQ-T9867$W1EA9<3=&6%EQ-T98
M67$W1EA9<3=&6%EQ-T98)B-X03M9<3=&6%EQ-T9867$W1EA9<3=&6%EQ-T98
M67$W1EA9<3=&6%EQ-T9867$W1EA9<3=&6%EQ-T9867$W1EA9<3=&6%EQ-T98
M67$W1EA9)B-X03MQ-T9867$W1EA9<3=&6%EQ-T9867$W1EA9<3=&6%EQ-T98
M67$W1EA9<3=&6%EQ-T960RMV%=U;7A8171H0W0Q85=D:%!:5V]J4DET3U$R
?$Y3'92#@^;'5M-6Q6/T/D
MII94Y_U_9U#<6]PNJW='7U5@P_D3T%+FSN[-_#O(I(I/1U93^Q@.NI\1BZDL
MTU!3%W%FE2)8IR.?]WQ:)AR?]5]?;W2:O37+M>C/-+4UE(572J+**B&_X9Q4
MK).UO\)%]^ZWU";"9FGL:>KIJL`$G6)*22_-@B?Y3&QY_+K[]UKK`:O*T>G[
MR@JHUL6+A!41(`2"9)J8S11@_C4P/OW7NI5-G()0"''T^JL#^+W'UX]^Z]T[
MQ5\;_1U/^OQ_OB/]?W[KW4U:@'\V_P!?D?[[_6]^Z]U($@/_`!K_`(I^/?NO
M=K'NL_Y?'PSZI--5YC![I[\W)3VD;(;\R3X'9Z5.@(9*+:."%'
M]S2\$^#)/7"[$ZN%TQ#O7O8SUBVU68<*C]->/&IU25]::*C\^L?^8O?'WJYM
M#107-IR]MC8T6B>-
T&Y;SMFTIJOI51J87BQ^Q1GRXF@]2.@_P`Y
M>Y')7(%I]5S9N$%J2*K&3JFDX_V<*:I6X4U!=(--3#JWOI_^4YUMM#[;+?)+
MLN?>67C`DEZXZFDDI%+S_D^:WODJ>"NK(@&`EBI*>AEC=?3-(OUAWF+WFL
M+,M#M8K(,5%';_#X:^A!+GY5ZQ2YJ^]#S7O>JU]N-L6QLC@7E^`9"/XH[9"5
M4_PF1I%(.54\++-D4&Q^H\,^W.D^NMH=4861%BJ6VUC(6W!E%32$DSFYZM)L
MSF:D*BCS3RO-90-9`'N$-Z]Q.8=XD+>(8U/G74].--1PH_TBKUC[NUONO-5X
M-RYXW&\WB_!J/'<^"GRB@4B.-