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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Tyson Foods | NYSE:TSN | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.36 | -0.59% | 60.29 | 61.02 | 59.98 | 60.36 | 2,370,361 | 01:00:00 |
☒
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
☐
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Delaware
|
|
71-0225165
|
|||
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|||
2200 West Don Tyson Parkway,
|
Springdale,
|
Arkansas
|
|
72762-6999
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|||
(479)
|
290-4000
|
||||
(Registrant’s telephone number, including area code)
|
Title of Each Class
|
Trading Symbol
|
Name of Each Exchange on Which Registered
|
||
Class A Common Stock
|
Par Value
|
$0.10
|
TSN
|
New York Stock Exchange
|
Large Accelerated Filer
|
|
☒
|
|
Accelerated Filer
|
|
☐
|
Non-Accelerated Filer
|
|
☐
|
|
Smaller Reporting Company
|
|
☐
|
|
|
|
|
Emerging Growth Company
|
|
☐
|
Class
|
|
Outstanding Shares
|
|
Class A Common Stock, $0.10 Par Value (Class A stock)
|
|
295,027,770
|
|
Class B Common Stock, $0.10 Par Value (Class B stock)
|
|
70,010,355
|
|
|
|
PAGE
|
Item 1.
|
|
|
|
|
|
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||
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|
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||
|
|
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||
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||
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|
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Item 2.
|
||
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|
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Item 3.
|
||
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|
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Item 4.
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
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|
Item 2.
|
||
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|
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Item 3.
|
||
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Item 4.
|
||
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|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
Item 1.
|
Financial Statements
|
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Sales
|
$
|
10,815
|
|
|
$
|
10,193
|
|
Cost of Sales
|
9,375
|
|
|
8,838
|
|
||
Gross Profit
|
1,440
|
|
|
1,355
|
|
||
Selling, General and Administrative
|
614
|
|
|
548
|
|
||
Operating Income
|
826
|
|
|
807
|
|
||
Other (Income) Expense:
|
|
|
|
||||
Interest income
|
(3
|
)
|
|
(2
|
)
|
||
Interest expense
|
120
|
|
|
99
|
|
||
Other, net
|
(16
|
)
|
|
(3
|
)
|
||
Total Other (Income) Expense
|
101
|
|
|
94
|
|
||
Income before Income Taxes
|
725
|
|
|
713
|
|
||
Income Tax Expense
|
164
|
|
|
161
|
|
||
Net Income
|
561
|
|
|
552
|
|
||
Less: Net Income Attributable to Noncontrolling Interests
|
4
|
|
|
1
|
|
||
Net Income Attributable to Tyson
|
$
|
557
|
|
|
$
|
551
|
|
Weighted Average Shares Outstanding:
|
|
|
|
||||
Class A Basic
|
293
|
|
|
294
|
|
||
Class B Basic
|
70
|
|
|
70
|
|
||
Diluted
|
367
|
|
|
366
|
|
||
Net Income Per Share Attributable to Tyson:
|
|
|
|
||||
Class A Basic
|
$
|
1.56
|
|
|
$
|
1.54
|
|
Class B Basic
|
$
|
1.40
|
|
|
$
|
1.39
|
|
Diluted
|
$
|
1.52
|
|
|
$
|
1.50
|
|
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Net Income
|
$
|
561
|
|
|
$
|
552
|
|
Other Comprehensive Income (Loss), Net of Taxes:
|
|
|
|
||||
Derivatives accounted for as cash flow hedges
|
3
|
|
|
(9
|
)
|
||
Investments
|
—
|
|
|
1
|
|
||
Currency translation
|
35
|
|
|
8
|
|
||
Postretirement benefits
|
—
|
|
|
(3
|
)
|
||
Total Other Comprehensive Income (Loss), Net of Taxes
|
38
|
|
|
(3
|
)
|
||
Comprehensive Income
|
599
|
|
|
549
|
|
||
Less: Comprehensive Income Attributable to Noncontrolling Interests
|
4
|
|
|
1
|
|
||
Comprehensive Income Attributable to Tyson
|
$
|
595
|
|
|
$
|
548
|
|
|
December 28, 2019
|
|
September 28, 2019
|
||||
Assets
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
497
|
|
|
$
|
484
|
|
Accounts receivable, net
|
2,063
|
|
|
2,173
|
|
||
Inventories
|
4,304
|
|
|
4,108
|
|
||
Other current assets
|
329
|
|
|
404
|
|
||
Total Current Assets
|
7,193
|
|
|
7,169
|
|
||
Net Property, Plant and Equipment
|
7,384
|
|
|
7,282
|
|
||
Goodwill
|
10,862
|
|
|
10,844
|
|
||
Intangible Assets, net
|
6,975
|
|
|
7,037
|
|
||
Other Assets
|
1,397
|
|
|
765
|
|
||
Total Assets
|
$
|
33,811
|
|
|
$
|
33,097
|
|
|
|
|
|
||||
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Current debt
|
$
|
1,947
|
|
|
$
|
2,102
|
|
Accounts payable
|
1,916
|
|
|
1,926
|
|
||
Other current liabilities
|
1,673
|
|
|
1,485
|
|
||
Total Current Liabilities
|
5,536
|
|
|
5,513
|
|
||
Long-Term Debt
|
9,772
|
|
|
9,830
|
|
||
Deferred Income Taxes
|
2,369
|
|
|
2,356
|
|
||
Other Liabilities
|
1,568
|
|
|
1,172
|
|
||
Commitments and Contingencies (Note 18)
|
|
|
|
||||
Shareholders’ Equity:
|
|
|
|
||||
Common stock ($0.10 par value):
|
|
|
|
||||
Class A-authorized 900 million shares, issued 378 million shares
|
38
|
|
|
38
|
|
||
Convertible Class B-authorized 900 million shares, issued 70 million shares
|
7
|
|
|
7
|
|
||
Capital in excess of par value
|
4,354
|
|
|
4,378
|
|
||
Retained earnings
|
14,178
|
|
|
13,787
|
|
||
Accumulated other comprehensive gain (loss)
|
(79
|
)
|
|
(117
|
)
|
||
Treasury stock, at cost – 83 million shares at December 28, 2019 and 82 million shares at September 28, 2019
|
(4,079
|
)
|
|
(4,011
|
)
|
||
Total Tyson Shareholders’ Equity
|
14,419
|
|
|
14,082
|
|
||
Noncontrolling Interests
|
147
|
|
|
144
|
|
||
Total Shareholders’ Equity
|
14,566
|
|
|
14,226
|
|
||
Total Liabilities and Shareholders’ Equity
|
$
|
33,811
|
|
|
$
|
33,097
|
|
|
Three Months Ended
|
||||||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||||||
|
Shares
|
|
Amount
|
|
|
Shares
|
|
Amount
|
|
||
Class A Common Stock:
|
|
|
|
|
|
||||||
Balance at beginning and end of period
|
378
|
|
$
|
38
|
|
|
378
|
|
$
|
38
|
|
|
|
|
|
|
|
||||||
Class B Common Stock:
|
|
|
|
|
|
||||||
Balance at beginning and end of period
|
70
|
|
7
|
|
|
70
|
|
7
|
|
||
|
|
|
|
|
|
||||||
Capital in Excess of Par Value:
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
4,378
|
|
|
|
4,387
|
|
||||
Stock-based compensation
|
|
(24
|
)
|
|
|
(55
|
)
|
||||
Balance at end of period
|
|
4,354
|
|
|
|
4,332
|
|
||||
|
|
|
|
|
|
||||||
Retained Earnings:
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
13,787
|
|
|
|
12,329
|
|
||||
Net income attributable to Tyson
|
|
557
|
|
|
|
551
|
|
||||
Dividends
|
|
(166
|
)
|
|
|
(161
|
)
|
||||
Balance at end of period
|
|
14,178
|
|
|
|
12,719
|
|
||||
|
|
|
|
|
|
||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax:
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
(117
|
)
|
|
|
(15
|
)
|
||||
Other comprehensive income (loss)
|
|
38
|
|
|
|
(3
|
)
|
||||
Balance at end of period
|
|
(79
|
)
|
|
|
(18
|
)
|
||||
|
|
|
|
|
|
||||||
Treasury Stock:
|
|
|
|
|
|
||||||
Balance at beginning of period
|
82
|
|
(4,011
|
)
|
|
82
|
|
(3,943
|
)
|
||
Purchase of Class A common stock
|
2
|
|
(132
|
)
|
|
1
|
|
(83
|
)
|
||
Stock-based compensation
|
(1
|
)
|
64
|
|
|
(1
|
)
|
75
|
|
||
Balance at end of period
|
83
|
|
(4,079
|
)
|
|
82
|
|
(3,951
|
)
|
||
|
|
|
|
|
|
||||||
Total Shareholders’ Equity Attributable to Tyson
|
|
$
|
14,419
|
|
|
|
|
$
|
13,127
|
|
|
|
|
|
|
|
|
||||||
Equity Attributable to Noncontrolling Interests:
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
$
|
144
|
|
|
|
$
|
8
|
|
||
Net income attributable to noncontrolling interests
|
|
4
|
|
|
|
1
|
|
||||
Business combination and other
|
|
(1
|
)
|
|
|
123
|
|
||||
Total Equity Attributable to Noncontrolling Interests
|
|
$
|
147
|
|
|
|
$
|
132
|
|
||
|
|
|
|
|
|
||||||
Total Shareholders’ Equity
|
|
$
|
14,566
|
|
|
|
$
|
13,259
|
|
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Cash Flows From Operating Activities:
|
|
|
|
||||
Net income
|
$
|
561
|
|
|
$
|
552
|
|
Depreciation and amortization
|
288
|
|
|
250
|
|
||
Deferred income taxes
|
3
|
|
|
18
|
|
||
Other, net
|
27
|
|
|
64
|
|
||
Net changes in operating assets and liabilities
|
15
|
|
|
(16
|
)
|
||
Cash Provided by Operating Activities
|
894
|
|
|
868
|
|
||
Cash Flows From Investing Activities:
|
|
|
|
||||
Additions to property, plant and equipment
|
(312
|
)
|
|
(318
|
)
|
||
Purchases of marketable securities
|
(35
|
)
|
|
(15
|
)
|
||
Proceeds from sale of marketable securities
|
19
|
|
|
15
|
|
||
Acquisitions, net of cash acquired
|
—
|
|
|
(2,141
|
)
|
||
Proceeds from sale of business
|
29
|
|
|
—
|
|
||
Other, net
|
(82
|
)
|
|
10
|
|
||
Cash Used for Investing Activities
|
(381
|
)
|
|
(2,449
|
)
|
||
Cash Flows From Financing Activities:
|
|
|
|
||||
Proceeds from issuance of debt
|
38
|
|
|
1,807
|
|
||
Payments on debt
|
(31
|
)
|
|
(12
|
)
|
||
Borrowings on revolving credit facility
|
180
|
|
|
—
|
|
||
Payments on revolving credit facility
|
(250
|
)
|
|
—
|
|
||
Proceeds from issuance of commercial paper
|
4,675
|
|
|
5,538
|
|
||
Repayments of commercial paper
|
(4,855
|
)
|
|
(5,406
|
)
|
||
Purchases of Tyson Class A common stock
|
(132
|
)
|
|
(83
|
)
|
||
Dividends
|
(150
|
)
|
|
(134
|
)
|
||
Stock options exercised
|
20
|
|
|
3
|
|
||
Other, net
|
(2
|
)
|
|
(2
|
)
|
||
Cash (Used for) Provided by Financing Activities
|
(507
|
)
|
|
1,711
|
|
||
Effect of Exchange Rate Changes on Cash
|
7
|
|
|
—
|
|
||
Increase in Cash and Cash Equivalents
|
13
|
|
|
130
|
|
||
Cash and Cash Equivalents at Beginning of Year
|
484
|
|
|
270
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
497
|
|
|
$
|
400
|
|
|
in millions
|
|
||
Cash and cash equivalents
|
|
$
|
186
|
|
Accounts receivable
|
|
106
|
|
|
Inventories
|
|
257
|
|
|
Other current assets
|
|
34
|
|
|
Property, Plant and Equipment
|
|
676
|
|
|
Goodwill
|
|
1,120
|
|
|
Intangible Assets
|
|
659
|
|
|
Other Assets
|
|
28
|
|
|
Current debt
|
|
(73
|
)
|
|
Accounts payable
|
|
(208
|
)
|
|
Other current liabilities
|
|
(99
|
)
|
|
Long-Term Debt
|
|
(113
|
)
|
|
Deferred Income Taxes
|
|
(177
|
)
|
|
Other Liabilities
|
|
(8
|
)
|
|
Noncontrolling Interests
|
|
(122
|
)
|
|
Net assets acquired
|
|
$
|
2,266
|
|
|
December 28, 2019
|
|
September 28, 2019
|
||||
Processed products
|
$
|
2,464
|
|
|
$
|
2,362
|
|
Livestock
|
1,206
|
|
|
1,150
|
|
||
Supplies and other
|
634
|
|
|
596
|
|
||
Total inventory
|
$
|
4,304
|
|
|
$
|
4,108
|
|
|
December 28, 2019
|
|
September 28, 2019
|
||||
Land
|
$
|
199
|
|
|
$
|
198
|
|
Buildings and leasehold improvements
|
4,768
|
|
|
4,747
|
|
||
Machinery and equipment
|
8,692
|
|
|
8,607
|
|
||
Land improvements and other
|
392
|
|
|
385
|
|
||
Buildings and equipment under construction
|
857
|
|
|
713
|
|
||
|
14,908
|
|
|
14,650
|
|
||
Less accumulated depreciation
|
7,524
|
|
|
7,368
|
|
||
Net property, plant and equipment
|
$
|
7,384
|
|
|
$
|
7,282
|
|
|
December 28, 2019
|
||
Other Assets
|
$
|
527
|
|
Other current liabilities
|
161
|
|
|
Other Liabilities
|
$
|
367
|
|
|
Three Months Ended
|
||
|
December 28, 2019
|
||
Operating lease cost (a)
|
$
|
49
|
|
Variable lease cost (b)
|
111
|
|
|
Short-term lease cost
|
6
|
|
|
Total
|
$
|
166
|
|
|
Three Months Ended
|
||
|
December 28, 2019
|
||
Operating cash outflows from operating leases (in millions)
|
$
|
51
|
|
ROU assets obtained in exchange for new operating lease liabilities (in millions)
|
$
|
26
|
|
Weighted-average remaining lease term
|
5 years
|
|
|
Weighted-average discount rate
|
3
|
%
|
|
Operating Lease Commitments
|
|
|
2020 (remaining year)
|
$
|
135
|
|
2021
|
141
|
|
|
2022
|
96
|
|
|
2023
|
64
|
|
|
2024
|
51
|
|
|
2025 and beyond
|
73
|
|
|
Total undiscounted operating lease payments
|
$
|
560
|
|
Less: Imputed interest
|
32
|
|
|
Present value of total operating lease liabilities
|
$
|
528
|
|
|
Operating Lease Commitments
|
|
|
2020
|
$
|
159
|
|
2021
|
113
|
|
|
2022
|
74
|
|
|
2023
|
49
|
|
|
2024
|
40
|
|
|
2025 and beyond
|
54
|
|
|
Total
|
$
|
489
|
|
|
Livestock Grower Commitments
|
|
|
2020
|
$
|
253
|
|
2021
|
131
|
|
|
2022
|
86
|
|
|
2023
|
58
|
|
|
2024
|
49
|
|
|
2025 and beyond
|
122
|
|
|
Total
|
$
|
699
|
|
|
Three Months Ended
|
Restructuring and related charges to date
|
|
||||||
|
December 28, 2019
|
December 28, 2019
|
Total estimated Restructuring and related charges
|
|
|||||
Beef
|
$
|
5
|
|
$
|
18
|
|
$
|
18
|
|
Pork
|
2
|
|
7
|
|
7
|
|
|||
Chicken
|
21
|
|
128
|
|
139
|
|
|||
Prepared Foods
|
22
|
|
146
|
|
157
|
|
|||
Other
|
2
|
|
3
|
|
3
|
|
|||
Total restructuring and related charges, pretax
|
$
|
52
|
|
$
|
302
|
|
$
|
324
|
|
|
December 28, 2019
|
|
September 28, 2019
|
||||
Accrued salaries, wages and benefits
|
$
|
551
|
|
|
$
|
620
|
|
Other
|
1,122
|
|
|
865
|
|
||
Total other current liabilities
|
$
|
1,673
|
|
|
$
|
1,485
|
|
|
December 28, 2019
|
|
September 28, 2019
|
||||
Revolving credit facility
|
$
|
—
|
|
|
$
|
70
|
|
Commercial paper
|
819
|
|
|
1,000
|
|
||
Senior notes:
|
|
|
|
||||
Notes due June 2020 (2.46% at 12/28/2019)
|
350
|
|
|
350
|
|
||
Notes due August 2020 (2.34% at 12/28/2019)
|
400
|
|
|
400
|
|
||
4.10% Notes due September 2020
|
279
|
|
|
280
|
|
||
2.25% Notes due August 2021
|
500
|
|
|
500
|
|
||
4.50% Senior notes due June 2022
|
1,000
|
|
|
1,000
|
|
||
3.90% Senior notes due September 2023
|
400
|
|
|
400
|
|
||
3.95% Notes due August 2024
|
1,250
|
|
|
1,250
|
|
||
4.00% Notes due March 2026 ("2026 Notes")
|
800
|
|
|
800
|
|
||
3.55% Notes due June 2027
|
1,350
|
|
|
1,350
|
|
||
7.00% Notes due January 2028
|
18
|
|
|
18
|
|
||
4.35% Notes due March 2029 ("2029 Notes")
|
1,000
|
|
|
1,000
|
|
||
6.13% Notes due November 2032
|
160
|
|
|
161
|
|
||
4.88% Notes due August 2034
|
500
|
|
|
500
|
|
||
5.15% Notes due August 2044
|
500
|
|
|
500
|
|
||
4.55% Notes due June 2047
|
750
|
|
|
750
|
|
||
5.10% Notes due September 2048 ("2048 Notes")
|
1,500
|
|
|
1,500
|
|
||
Discount on senior notes
|
(47
|
)
|
|
(48
|
)
|
||
Other
|
253
|
|
|
216
|
|
||
Unamortized debt issuance costs
|
(63
|
)
|
|
(65
|
)
|
||
Total debt
|
11,719
|
|
|
11,932
|
|
||
Less current debt
|
1,947
|
|
|
2,102
|
|
||
Total long-term debt
|
$
|
9,772
|
|
|
$
|
9,830
|
|
|
|
Three Months Ended
|
||||||||||||
|
|
December 28, 2019
|
|
December 29, 2018
|
||||||||||
|
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
||||||
Shares repurchased:
|
|
|
|
|
|
|
|
|
||||||
Under share repurchase program
|
|
1.1
|
|
|
$
|
100
|
|
|
0.9
|
|
|
$
|
50
|
|
To fund certain obligations under equity compensation plans
|
|
0.4
|
|
|
32
|
|
|
0.5
|
|
|
33
|
|
||
Total share repurchases
|
|
1.5
|
|
|
$
|
132
|
|
|
1.4
|
|
|
$
|
83
|
|
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Numerator:
|
|
|
|
||||
Net income
|
$
|
561
|
|
|
$
|
552
|
|
Less: Net income attributable to noncontrolling interests
|
4
|
|
|
1
|
|
||
Net income attributable to Tyson
|
557
|
|
|
551
|
|
||
Less dividends declared:
|
|
|
|
||||
Class A
|
137
|
|
|
133
|
|
||
Class B
|
29
|
|
|
28
|
|
||
Undistributed earnings
|
$
|
391
|
|
|
$
|
390
|
|
|
|
|
|
||||
Class A undistributed earnings
|
$
|
322
|
|
|
$
|
321
|
|
Class B undistributed earnings
|
69
|
|
|
69
|
|
||
Total undistributed earnings
|
$
|
391
|
|
|
$
|
390
|
|
|
|
|
|
||||
Denominator:
|
|
|
|
||||
Denominator for basic earnings per share:
|
|
|
|
||||
Class A weighted average shares
|
293
|
|
|
294
|
|
||
Class B weighted average shares, and shares under the if-converted method for diluted earnings per share
|
70
|
|
|
70
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Stock options, restricted stock and performance units
|
4
|
|
|
2
|
|
||
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversions
|
367
|
|
|
366
|
|
||
|
|
|
|
||||
Net income per share attributable to Tyson:
|
|
|
|
||||
Class A basic
|
$
|
1.56
|
|
|
$
|
1.54
|
|
Class B basic
|
$
|
1.40
|
|
|
$
|
1.39
|
|
Diluted
|
$
|
1.52
|
|
|
$
|
1.50
|
|
Dividends Declared Per Share:
|
|
|
|
||||
Class A
|
$
|
0.465
|
|
|
$
|
0.450
|
|
Class B
|
$
|
0.419
|
|
|
$
|
0.405
|
|
in millions, except soy meal tons
|
Metric
|
|
December 28, 2019
|
|
September 28, 2019
|
||||
Commodity:
|
|
|
|
|
|
||||
Corn
|
Bushels
|
|
115
|
|
|
111
|
|
||
Soy Meal
|
Tons
|
|
1,281,300
|
|
|
1,078,800
|
|
||
Live Cattle
|
Pounds
|
|
5
|
|
|
14
|
|
||
Lean Hogs
|
Pounds
|
|
199
|
|
|
309
|
|
||
Foreign Currency
|
United States dollar
|
|
$
|
364
|
|
|
$
|
148
|
|
Interest Rate Swaps
|
Average monthly debt
|
|
$
|
400
|
|
|
$
|
400
|
|
•
|
Cash Flow Hedges – include certain commodity forward and option contracts of forecasted purchases (e.g., grains), interest rate swaps and locks, and certain foreign exchange forward contracts.
|
•
|
Fair Value Hedges – include certain commodity forward contracts of firm commitments (e.g., livestock).
|
|
Gain (Loss) Recognized in OCI
On Derivatives
|
|
|||||
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Cash flow hedge – derivatives designated as hedging instruments:
|
|
|
|
||||
Commodity contracts
|
$
|
—
|
|
|
$
|
(2
|
)
|
Interest rate hedges
|
—
|
|
|
(18
|
)
|
||
Total
|
$
|
—
|
|
|
$
|
(20
|
)
|
Consolidated Condensed
Balance Sheets Classification
|
|
|
December 28, 2019
|
|
September 28, 2019
|
||||
Inventory
|
|
|
$
|
(1
|
)
|
|
$
|
(19
|
)
|
Consolidated Condensed
Statements of Income Classification |
|
Three Months Ended
|
||||||
December 28, 2019
|
|
December 29, 2018
|
||||||
Cost of Sales
|
|
$
|
9,375
|
|
|
$
|
8,838
|
|
Interest Expense
|
|
120
|
|
|
99
|
|
||
Other Income/(Expense)
|
|
(16
|
)
|
|
(3
|
)
|
•
|
Quoted prices for similar assets or liabilities in active markets;
|
•
|
Quoted prices for identical or similar assets in non-active markets;
|
•
|
Inputs other than quoted prices that are observable for the asset or liability; and
|
•
|
Inputs derived principally from or corroborated by other observable market data.
|
December 28, 2019
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting (a)
|
|
Total
|
||||||||||
Other Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Designated as hedges
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
9
|
|
Undesignated
|
—
|
|
|
67
|
|
|
—
|
|
|
(15
|
)
|
|
52
|
|
|||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Other Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-current
|
—
|
|
|
54
|
|
|
48
|
|
|
—
|
|
|
102
|
|
|||||
Deferred compensation assets
|
10
|
|
|
339
|
|
|
—
|
|
|
—
|
|
|
349
|
|
|||||
Total assets
|
$
|
10
|
|
|
$
|
471
|
|
|
$
|
49
|
|
|
$
|
(17
|
)
|
|
$
|
513
|
|
Other Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Designated as hedges
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
(11
|
)
|
|
$
|
3
|
|
Undesignated
|
—
|
|
|
45
|
|
|
—
|
|
|
(43
|
)
|
|
2
|
|
|||||
Total liabilities
|
$
|
—
|
|
|
$
|
59
|
|
|
$
|
—
|
|
|
$
|
(54
|
)
|
|
$
|
5
|
|
September 28, 2019
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting (a)
|
|
Total
|
||||||||||
Other Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Designated as hedges
|
$
|
—
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
23
|
|
Undesignated
|
—
|
|
|
58
|
|
|
—
|
|
|
(5
|
)
|
|
53
|
|
|||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Other Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-current
|
—
|
|
|
51
|
|
|
51
|
|
|
—
|
|
|
102
|
|
|||||
Deferred compensation assets
|
7
|
|
|
311
|
|
|
—
|
|
|
—
|
|
|
318
|
|
|||||
Total assets
|
$
|
7
|
|
|
$
|
446
|
|
|
$
|
52
|
|
|
$
|
(8
|
)
|
|
$
|
497
|
|
Other Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Designated as hedges
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
(13
|
)
|
|
$
|
4
|
|
Undesignated
|
—
|
|
|
93
|
|
|
—
|
|
|
(90
|
)
|
|
3
|
|
|||||
Total liabilities
|
$
|
—
|
|
|
$
|
110
|
|
|
$
|
—
|
|
|
$
|
(103
|
)
|
|
$
|
7
|
|
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Balance at beginning of year
|
$
|
52
|
|
|
$
|
51
|
|
Total realized and unrealized gains (losses):
|
|
|
|
||||
Included in earnings
|
—
|
|
|
—
|
|
||
Included in other comprehensive income (loss)
|
—
|
|
|
—
|
|
||
Purchases
|
3
|
|
|
7
|
|
||
Issuances
|
—
|
|
|
—
|
|
||
Settlements
|
(6
|
)
|
|
(6
|
)
|
||
Balance at end of period
|
$
|
49
|
|
|
$
|
52
|
|
Total gains (losses) for the three-month period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of period
|
$
|
—
|
|
|
$
|
—
|
|
|
December 28, 2019
|
|
September 28, 2019
|
||||||||||||||||||||
|
Amortized
Cost Basis |
|
Fair
Value |
|
Unrealized
Gain (Loss) |
|
Amortized
Cost Basis |
|
Fair
Value |
|
Unrealized
Gain (Loss) |
||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. treasury and agency
|
$
|
54
|
|
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
51
|
|
|
$
|
51
|
|
|
$
|
—
|
|
Corporate and asset-backed
|
48
|
|
|
49
|
|
|
1
|
|
|
51
|
|
|
52
|
|
|
1
|
|
|
December 28, 2019
|
|
September 28, 2019
|
||||||||||||
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
||||||||
Total debt
|
$
|
12,869
|
|
|
$
|
11,719
|
|
|
$
|
12,978
|
|
|
$
|
11,932
|
|
|
Pension Plans
|
||||||
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
|
|
|
|
||||
Service cost
|
$
|
—
|
|
|
$
|
1
|
|
Interest cost
|
10
|
|
|
16
|
|
||
Expected return on plan assets
|
(9
|
)
|
|
(14
|
)
|
||
Amortization of:
|
|
|
|
||||
Net actuarial loss
|
1
|
|
|
—
|
|
||
Prior service cost
|
—
|
|
|
—
|
|
||
Settlement loss
|
—
|
|
|
19
|
|
||
Net periodic cost
|
$
|
2
|
|
|
$
|
22
|
|
|
Postretirement Benefit Plans
|
||||||
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
|
|
|
|
||||
Interest cost
|
$
|
—
|
|
|
$
|
—
|
|
Amortization of prior service cost (credit)
|
—
|
|
|
(4
|
)
|
||
Net periodic cost (credit)
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
Three Months Ended
|
||||||||||||||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||||||||||||||
|
Before Tax
|
Tax
|
After Tax
|
|
Before Tax
|
Tax
|
After Tax
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
Derivatives accounted for as cash flow hedges:
|
|
|
|
|
|
|
|
||||||||||||
(Gain) loss reclassified to interest expense
|
$
|
1
|
|
$
|
—
|
|
$
|
1
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
(Gain) loss reclassified to cost of sales
|
2
|
|
—
|
|
2
|
|
|
7
|
|
(2
|
)
|
5
|
|
||||||
Unrealized gain (loss)
|
—
|
|
—
|
|
—
|
|
|
(20
|
)
|
6
|
|
(14
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Investments:
|
|
|
|
|
|
|
|
||||||||||||
Unrealized gain (loss)
|
—
|
|
—
|
|
—
|
|
|
1
|
|
—
|
|
1
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Currency translation:
|
|
|
|
|
|
|
|
||||||||||||
Translation adjustment
|
35
|
|
—
|
|
35
|
|
|
9
|
|
(1
|
)
|
8
|
|
||||||
Translation loss reclassified to cost of sales
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Postretirement benefits:
|
|
|
|
|
|
|
|
||||||||||||
Unrealized gain (loss)
|
—
|
|
—
|
|
—
|
|
|
(28
|
)
|
8
|
|
(20
|
)
|
||||||
Pension settlement reclassified to other (income) expense
|
—
|
|
—
|
|
—
|
|
|
23
|
|
(6
|
)
|
17
|
|
||||||
Total other comprehensive income (loss)
|
$
|
38
|
|
$
|
—
|
|
$
|
38
|
|
|
$
|
(8
|
)
|
$
|
5
|
|
$
|
(3
|
)
|
|
Three Months Ended
|
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
|
||||
Sales:
|
|
|
|
|
||||
Beef
|
$
|
3,838
|
|
|
$
|
3,926
|
|
|
Pork
|
1,379
|
|
|
1,179
|
|
|
||
Chicken
|
3,292
|
|
|
3,115
|
|
|
||
Prepared Foods
|
2,140
|
|
|
2,149
|
|
|
||
International/Other
|
498
|
|
|
143
|
|
|
||
Intersegment
|
(332
|
)
|
|
(319
|
)
|
|
||
Total sales
|
$
|
10,815
|
|
|
$
|
10,193
|
|
|
|
Three Months Ended
|
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
|
||||
Operating income (loss):
|
|
|
|
|
||||
Beef
|
$
|
410
|
|
|
$
|
305
|
|
|
Pork
|
191
|
|
|
95
|
|
|
||
Chicken
|
57
|
|
|
160
|
|
(a)
|
||
Prepared Foods
|
158
|
|
|
265
|
|
|
||
International/Other
|
10
|
|
(b)
|
(18
|
)
|
(b)
|
||
Total operating income
|
826
|
|
|
807
|
|
|
||
|
|
|
|
|
||||
Total other expense
|
101
|
|
|
94
|
|
|
||
|
|
|
|
|
||||
Income before income taxes
|
$
|
725
|
|
|
$
|
713
|
|
|
|
Three Months Ended
|
||||||||||||||||||||||
|
December 28, 2019
|
||||||||||||||||||||||
|
Consumer Products(a)
|
|
Foodservice(b)
|
|
International(c)
|
|
Industrial and Other(d)
|
|
Intersegment
|
|
Total
|
||||||||||||
Beef
|
$
|
1,857
|
|
|
$
|
1,045
|
|
|
$
|
514
|
|
|
$
|
326
|
|
|
$
|
96
|
|
|
$
|
3,838
|
|
Pork
|
400
|
|
|
117
|
|
|
280
|
|
|
360
|
|
|
222
|
|
|
1,379
|
|
||||||
Chicken
|
1,389
|
|
|
1,307
|
|
|
161
|
|
|
421
|
|
|
14
|
|
|
3,292
|
|
||||||
Prepared Foods
|
1,211
|
|
|
846
|
|
|
37
|
|
|
46
|
|
|
—
|
|
|
2,140
|
|
||||||
International/Other
|
—
|
|
|
—
|
|
|
498
|
|
|
—
|
|
|
—
|
|
|
498
|
|
||||||
Intersegment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(332
|
)
|
|
(332
|
)
|
||||||
Total
|
$
|
4,857
|
|
|
$
|
3,315
|
|
|
$
|
1,490
|
|
|
$
|
1,153
|
|
|
$
|
—
|
|
|
$
|
10,815
|
|
|
Three Months Ended
|
||||||||||||||||||||||
|
December 29, 2018
|
||||||||||||||||||||||
|
Consumer Products(a)
|
|
Foodservice(b)
|
|
International(c)
|
|
Industrial and Other(d)
|
|
Intersegment
|
|
Total
|
||||||||||||
Beef
|
$
|
1,851
|
|
|
$
|
1,017
|
|
|
$
|
628
|
|
|
$
|
340
|
|
|
$
|
90
|
|
|
$
|
3,926
|
|
Pork
|
337
|
|
|
91
|
|
|
225
|
|
|
311
|
|
|
215
|
|
|
1,179
|
|
||||||
Chicken
|
1,372
|
|
|
1,130
|
|
|
157
|
|
|
442
|
|
|
14
|
|
|
3,115
|
|
||||||
Prepared Foods
|
1,275
|
|
|
789
|
|
|
24
|
|
|
61
|
|
|
—
|
|
|
2,149
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
143
|
|
|
—
|
|
|
—
|
|
|
143
|
|
||||||
Intersegment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(319
|
)
|
|
(319
|
)
|
||||||
Total
|
$
|
4,835
|
|
|
$
|
3,027
|
|
|
$
|
1,177
|
|
|
$
|
1,154
|
|
|
$
|
—
|
|
|
$
|
10,193
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
General – Sales grew 6% in the first three months of fiscal 2020 compared to the first three months of fiscal 2019, primarily due to the impact of acquisitions and increased average sales prices across all of our segments. Our operating income of $826 million was up slightly for the first three months of fiscal 2020, as strong Beef and Pork results were partially offset by a decline in Prepared Foods and Chicken results. In the three months ended December 28, 2019, our results were impacted by $52 million of restructuring and related charges and $16 million of costs, net of insurance proceeds, associated with a fire at one of our beef production facilities. In the three months ended December 29, 2018, our results were impacted by $26 million of purchase accounting and acquisition related costs associated with the Keystone Foods acquisition and $8 million of restructuring and related charges.
|
•
|
Market Environment - According to the United States Department of Agriculture (USDA), domestic protein production (beef, pork, chicken and turkey) increased approximately 4% in the first quarter of fiscal 2020 compared to the same period in fiscal 2019. We continue to monitor recent trade and tariff activity and its potential impact to exports and input costs across all our segments. Currently, we are experiencing impacts to domestic and export prices, primarily chicken, resulting from uncertainty in trade policies. All segments experienced increased operating costs in the three months ended December 28, 2019. We pursue recovery of these increased costs through pricing. Additionally, we are monitoring the potential impact of the novel coronavirus outbreak to our global business. Its financial impact is unknown at this time. The Beef segment experienced strong demand and relatively flat live cattle costs. The Pork segment experienced strong export markets which helped offset rising livestock costs. Improved operational performance in our Chicken segment was offset by challenging pricing conditions associated with increased domestic availability of supply and weak export markets. Our Prepared Foods segment continued to experience growth in the consumer products channel in a period of increased raw material costs.
|
•
|
Margins – Our total operating margin was 7.6% in the first quarter of fiscal 2020. Operating margins by segment were as follows:
|
•
|
Beef – 10.7%
|
•
|
Pork – 13.9%
|
•
|
Chicken – 1.7%
|
•
|
Prepared Foods – 7.4%
|
•
|
Liquidity – We generated $894 million of operating cash flows during the three months ended December 28, 2019. At December 28, 2019, we had approximately $1,429 million of liquidity, which included availability under our revolving credit facility after deducting amounts to backstop our commercial paper program and $497 million of cash and cash equivalents.
|
•
|
Strategy - Our strategy is to sustainably feed the world with the fastest growing protein brands. We intend to achieve our strategy as we: grow our business by delivering superior value to consumers and customers; deliver fuel for growth and returns through commercial, operational and financial excellence; and sustain our company and our world for future generations.
|
•
|
On November 30, 2018, we acquired Keystone Foods, and its results from operations are included in the Chicken segment and International/Other. On June 3, 2019, we acquired the Thai and European operations. The results from operations of these businesses since their respective acquisition dates are included in International/Other for segment presentation. For further description of these transactions, refer to Part I, Item 1, Notes to Consolidated Condensed Financial Statements, Note 2: Acquisitions.
|
•
|
In the first quarter of fiscal 2020, the Company approved a restructuring program (the "2020 Program"), which is expected to contribute to the Company's overall strategy of financial fitness through the elimination of overhead and consolidation of certain enterprise functions. As a result of this restructuring program, we expect savings of approximately $55 million and $65 million in fiscal 2020 and fiscal 2021, respectively. This restructuring program resulted in a $44 million pretax charge consisting of severance and employee related costs. As part of this program, we estimate the elimination of approximately 500 positions across several areas and job levels with most of the eliminated positions originating from the corporate offices in Springdale, Arkansas and Chicago, Illinois. We do not anticipate future costs of this restructuring program to be significant. Additionally, in the fourth quarter of fiscal 2017, our Board of Directors approved a multi-year restructuring program (the “2017 Program”), which is expected to contribute to the Company’s overall strategy of financial fitness through increased operational effectiveness and overhead reduction. Through a combination of synergies from the integration of business acquisitions and additional elimination of non-valued added costs, the program is focused on supply chain, procurement and overhead improvements, and net savings are expected to be realized in the Prepared Foods and Chicken segments. For further description refer to Part I, Item 1, Notes to the Consolidated Condensed Financial Statements, Note 6: Restructuring and Related Charges.
|
in millions, except per share data
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Net income attributable to Tyson
|
$
|
557
|
|
|
$
|
551
|
|
Net income attributable to Tyson – per diluted share
|
1.52
|
|
|
1.50
|
|
•
|
$52 million pretax, or ($0.11) per diluted share, of restructuring and related charges.
|
•
|
$16 million pretax, or ($0.03) per diluted share, of Beef production facility fire costs, net of insurance proceeds.
|
•
|
$26 million pretax, or ($0.06) per diluted share, of Keystone Foods purchase accounting and acquisition related costs, which included an $11 million purchase accounting adjustment for the amortization of the fair value step-up of inventory and $15 million of acquisition related costs.
|
•
|
$8 million pretax, or ($0.02) per diluted share, of restructuring and related charges.
|
in millions
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Sales
|
$
|
10,815
|
|
|
$
|
10,193
|
|
Change in sales volume
|
4.7
|
%
|
|
|
|||
Change in average sales price
|
1.4
|
%
|
|
|
|||
Sales growth
|
6.1
|
%
|
|
|
•
|
Sales Volume – Sales were positively impacted by an increase in sales volume which accounted for an increase of $478 million, primarily driven by incremental volumes from business acquisitions in our Chicken segment and International/Other, partially offset by decreased sales volume in our Beef segment due to a reduction in live cattle processing capacity from the temporary closure of a production facility as a result of a fire.
|
•
|
Average Sales Price – Sales were positively impacted by higher average sales prices, which accounted for an increase of $144 million. The increase in average sales price was primarily attributable to strong demand in our Pork and Beef segments and the pass through of higher livestock and raw material costs in the Pork and Prepared Foods segments, partially offset by approximately $20 million of discounted sales in the Prepared Foods segment.
|
in millions
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Cost of sales
|
$
|
9,375
|
|
|
$
|
8,838
|
|
Gross profit
|
$
|
1,440
|
|
|
$
|
1,355
|
|
Cost of sales as a percentage of sales
|
86.7
|
%
|
|
86.7
|
%
|
•
|
Cost of sales increased $537 million, which included a net increase of $496 million related to the impact of results from acquisitions.
|
•
|
For the remaining increase, lower sales volume decreased cost of sales $166 million while higher input cost per pound increased cost of sales $207 million.
|
•
|
The $207 million impact of higher input cost per pound was impacted by:
|
•
|
Increase in raw material and other input costs of approximately $80 million as well as an increase in inventory write downs and donations of approximately $20 million in our Prepared Foods segment.
|
•
|
Increase in live hog costs of approximately $45 million in our Pork segment.
|
•
|
Increase of approximately $16 million in our Beef segment of costs, net of insurance proceeds, related to the fire at our production facility.
|
•
|
Decrease in live cattle costs of approximately $20 million in our Beef segment.
|
•
|
Decrease due to net derivative gains of $44 million in the first quarter of fiscal 2020, compared to net derivative losses of $5 million in the first quarter of fiscal 2019 due to our risk management activities. These amounts exclude offsetting impacts from related physical purchase transactions, which are included in the change in live cattle and hog costs and raw material and feed ingredient costs described herein.
|
•
|
The $166 million impact of lower sales volume, excluding the impact of acquisitions, was primarily driven by decreased sales volume in our Beef segment due to a reduction in live cattle processing capacity from the temporary closure of a production facility as a result of a fire.
|
in millions
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Selling, general and administrative expense
|
$
|
614
|
|
|
$
|
548
|
|
As a percentage of sales
|
5.7
|
%
|
|
5.4
|
%
|
•
|
Increase of $66 million in selling, general and administrative was primarily driven by:
|
•
|
Increase of $36 million due to restructuring and related charges.
|
•
|
Increase of $30 million from fiscal 2019 acquisitions which were not owned by Tyson for all of the first quarter of fiscal 2019.
|
•
|
Increase of $16 million in marketing, advertising and promotion expenses.
|
•
|
Decrease of $17 million in merger and integration costs.
|
in millions
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Cash interest expense
|
$
|
123
|
|
|
$
|
102
|
|
Non-cash interest expense
|
(3
|
)
|
|
(3
|
)
|
||
Total interest expense
|
$
|
120
|
|
|
$
|
99
|
|
•
|
Cash interest expense primarily included interest expense related to our senior notes and commercial paper, in addition to commitment fees incurred on our revolving credit facility. The increase in cash interest expense in fiscal 2020 was primarily due to debt issued in connection with business acquisitions and higher interest rates.
|
in millions
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Total other (income) expense, net
|
$
|
(16
|
)
|
|
$
|
(3
|
)
|
•
|
Included $9 million of net foreign currency gains.
|
•
|
Included $17 million of net periodic pension and postretirement benefit cost, which included $19 million of pension plan settlement cost. This was offset by $16 million of insurance proceeds and other income.
|
|
Three Months Ended
|
||||
|
December 28, 2019
|
|
December 29, 2018
|
||
|
22.7
|
%
|
|
22.6
|
%
|
in millions
|
Sales
|
||||||
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Beef
|
$
|
3,838
|
|
|
$
|
3,926
|
|
Pork
|
1,379
|
|
|
1,179
|
|
||
Chicken
|
3,292
|
|
|
3,115
|
|
||
Prepared Foods
|
2,140
|
|
|
2,149
|
|
||
International/Other
|
498
|
|
|
143
|
|
||
Intersegment sales
|
(332
|
)
|
|
(319
|
)
|
||
Total
|
$
|
10,815
|
|
|
$
|
10,193
|
|
in millions
|
Operating Income (Loss)
|
||||||
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Beef
|
$
|
410
|
|
|
$
|
305
|
|
Pork
|
191
|
|
|
95
|
|
||
Chicken
|
57
|
|
|
160
|
|
||
Prepared Foods
|
158
|
|
|
265
|
|
||
International/Other
|
10
|
|
|
(18
|
)
|
||
Total
|
$
|
826
|
|
|
$
|
807
|
|
in millions
|
Three Months Ended
|
||||||||||
|
December 28, 2019
|
|
December 29, 2018
|
|
Change
|
||||||
Sales
|
$
|
3,838
|
|
|
$
|
3,926
|
|
|
$
|
(88
|
)
|
Sales volume change
|
|
|
|
|
(8.0
|
)%
|
|||||
Average sales price change
|
|
|
|
|
5.8
|
%
|
|||||
Operating income
|
$
|
410
|
|
|
$
|
305
|
|
|
$
|
105
|
|
Operating margin
|
10.7
|
%
|
|
7.8
|
%
|
|
|
•
|
Sales Volume – Sales volume decreased due to a reduction in live cattle harvest capacity as a result of a fire that caused the temporary closure of a production facility for the majority of the first quarter of fiscal 2020.
|
•
|
Average Sales Price – Average sales price increased as beef demand remained strong.
|
•
|
Operating Income – Operating income increased as we continued to maximize our revenues relative to live fed cattle costs, partially offset by increased operating costs and $16 million of net incremental costs from a production facility fire.
|
in millions
|
Three Months Ended
|
||||||||||
|
December 28, 2019
|
|
December 29, 2018
|
|
Change
|
||||||
Sales
|
$
|
1,379
|
|
|
$
|
1,179
|
|
|
$
|
200
|
|
Sales volume change
|
|
|
|
|
7.3
|
%
|
|||||
Average sales price change
|
|
|
|
|
9.7
|
%
|
|||||
Operating income
|
$
|
191
|
|
|
$
|
95
|
|
|
$
|
96
|
|
Operating margin
|
13.9
|
%
|
|
8.1
|
%
|
|
|
•
|
Sales Volume – Sales volume increased due to increased domestic availability of live hogs and strong demand for our pork products.
|
•
|
Average Sales Price – Average sales price increased associated with higher livestock costs and stronger export markets.
|
•
|
Operating Income – Operating income increased as we maximized our revenues relative to the live hog markets, partially attributable to favorable export markets and improved operational performance, which were slightly offset by higher operating costs.
|
in millions
|
Three Months Ended
|
||||||||||
|
December 28, 2019
|
|
December 29, 2018
|
|
Change
|
||||||
Sales
|
$
|
3,292
|
|
|
$
|
3,115
|
|
|
$
|
177
|
|
Sales volume change
|
|
|
|
|
4.5
|
%
|
|||||
Average sales price change
|
|
|
|
|
1.2
|
%
|
|||||
Operating income
|
$
|
57
|
|
|
$
|
160
|
|
|
$
|
(103
|
)
|
Operating margin
|
1.7
|
%
|
|
5.1
|
%
|
|
|
•
|
Sales Volume – Sales volume increased primarily due to incremental volume from a business acquisition, partially offset by lower volume from our rendering and blending business.
|
•
|
Average Sales Price – Average sales price increased due to lower rendering and blending sales, which carry a lower average sales price, largely offset by broadly weaker chicken pricing as a result of market conditions.
|
•
|
Operating Income – Operating income decreased primarily from challenging pricing conditions. Additionally, operating income in the first quarter of fiscal 2020 was impacted by $21 million in restructuring costs.
|
in millions
|
Three Months Ended
|
||||||||||
|
December 28, 2019
|
|
December 29, 2018
|
|
Change
|
||||||
Sales
|
$
|
2,140
|
|
|
$
|
2,149
|
|
|
$
|
(9
|
)
|
Sales volume change
|
|
|
|
|
(3.1
|
)%
|
|||||
Average sales price change
|
|
|
|
|
2.7
|
%
|
|||||
Operating income
|
$
|
158
|
|
|
$
|
265
|
|
|
$
|
(107
|
)
|
Operating margin
|
7.4
|
%
|
|
12.3
|
%
|
|
|
•
|
Sales Volume – Sales volume decreased as growth in volume across the consumer products business was offset by other intersegment sales channel shifts.
|
•
|
Average Sales Price – Average sales price increased due to favorable product mix and the pass through of increased raw material costs.
|
•
|
Operating Income – Operating income decreased primarily due to increased operating costs, including an $80 million increase in raw material costs. Additionally, operating income in the first quarter of fiscal 2020 was impacted by $22 million in restructuring costs.
|
in millions
|
Three Months Ended
|
||||||||||
|
December 28, 2019
|
|
December 29, 2018
|
|
Change
|
||||||
Sales
|
$
|
498
|
|
|
$
|
143
|
|
|
$
|
355
|
|
Operating income/(loss)
|
$
|
10
|
|
|
$
|
(18
|
)
|
|
$
|
28
|
|
•
|
Sales – Sales increased in the first quarter of fiscal 2020 primarily from the incremental sales from the acquisitions of Keystone Foods and the Thai and European operations.
|
•
|
Operating Income/(Loss) – Operating income increased in the first quarter of fiscal 2020 primarily from better performance in our China operations and inclusion of results from the Keystone Foods acquisition.
|
in millions
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Net income
|
$
|
561
|
|
|
$
|
552
|
|
Non-cash items in net income:
|
|
|
|
||||
Depreciation and amortization
|
288
|
|
|
250
|
|
||
Deferred income taxes
|
3
|
|
|
18
|
|
||
Other, net
|
27
|
|
|
64
|
|
||
Net changes in operating assets and liabilities
|
15
|
|
|
(16
|
)
|
||
Net cash provided by operating activities
|
$
|
894
|
|
|
$
|
868
|
|
•
|
Cash flows associated with net changes in operating assets and liabilities for the three months ended:
|
•
|
December 28, 2019 – Increased primarily from decreased accounts receivable and increased income taxes payable, partially offset by increased inventories. The decrease in accounts receivable is primarily due to timing of sales and receipts. The increase in income taxes payable is primarily due to timing of tax payments. The increase in inventory is primarily due to increased volumes and costs in the Beef segment.
|
•
|
December 29, 2018 – Decreased primarily due to increased accounts receivable and decreased accrued employee costs and other current assets and liabilities, offset by increased income taxes payable and accounts payable. The changes in these balances are largely due to the timing of sales and payments.
|
in millions
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Additions to property, plant and equipment
|
$
|
(312
|
)
|
|
$
|
(318
|
)
|
Purchases of marketable securities, net
|
(16
|
)
|
|
—
|
|
||
Acquisitions, net of cash acquired
|
—
|
|
|
(2,141
|
)
|
||
Proceeds from sale of business
|
29
|
|
|
—
|
|
||
Other, net
|
(82
|
)
|
|
10
|
|
||
Net cash used for investing activities
|
$
|
(381
|
)
|
|
$
|
(2,449
|
)
|
•
|
Additions to property, plant and equipment included spending for production growth, safety and animal well-being, in addition to acquiring new equipment, infrastructure replacements and upgrades to maintain competitive standing and position us for future opportunities. We expect capital spending for fiscal 2020 to approximate $1.3 billion.
|
•
|
Acquisitions, net of cash acquired, related to the acquisition of Keystone Foods in the first quarter of fiscal 2019. For further description refer to Part I, Item I, Notes to the Consolidated Condensed Financial Statements, Note 2: Acquisitions.
|
•
|
Other, net in the first quarter of fiscal 2020 primarily included deposits for capital expenditures.
|
in millions
|
Three Months Ended
|
||||||
|
December 28, 2019
|
|
December 29, 2018
|
||||
Proceeds from issuance of debt
|
$
|
38
|
|
|
$
|
1,807
|
|
Payments on debt
|
(31
|
)
|
|
(12
|
)
|
||
Borrowings on revolving credit facility
|
180
|
|
|
—
|
|
||
Payments on revolving credit facility
|
(250
|
)
|
|
—
|
|
||
Proceeds from issuance of commercial paper
|
4,675
|
|
|
5,538
|
|
||
Repayments of commercial paper
|
(4,855
|
)
|
|
(5,406
|
)
|
||
Purchases of Tyson Class A common stock
|
(132
|
)
|
|
(83
|
)
|
||
Dividends
|
(150
|
)
|
|
(134
|
)
|
||
Stock options exercised
|
20
|
|
|
3
|
|
||
Other, net
|
(2
|
)
|
|
(2
|
)
|
||
Net cash provided by (used for) financing activities
|
$
|
(507
|
)
|
|
$
|
1,711
|
|
•
|
During the first three months of fiscal 2019, we had proceeds of $1,807 million from issuance of debt, which primarily included proceeds from the issuance of a 364-day term loan for the initial financing of the Keystone Foods acquisition.
|
•
|
During the first three months of fiscal 2020 and 2019, we had net repayments of $180 million and net issuances of $132 million, respectively, in unsecured short-term promissory notes (commercial paper) pursuant to our commercial paper program.
|
•
|
Purchases of Tyson Class A stock included:
|
•
|
$100 million and $50 million of shares repurchased pursuant to our share repurchase program during the three months ended December 28, 2019, and December 29, 2018, respectively.
|
•
|
$32 million and $33 million of shares repurchased to fund certain obligations under our equity compensation programs during the three months ended December 28, 2019, and December 29, 2018, respectively.
|
•
|
Dividends paid during the three months ended December 28, 2019 reflected a 12% increase to our fiscal 2019 quarterly dividend rate.
|
in millions
|
|
|
|
|
|
|
|
|
|
||||||||
|
Commitments
Expiration Date
|
|
Facility
Amount
|
|
|
Outstanding
Letters of Credit
(no draw downs)
|
|
|
Amount
Borrowed
|
|
|
Amount
Available at
December 28, 2019
|
|
||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
$
|
497
|
|
||||||
Short-term investments
|
|
|
|
|
|
|
|
|
1
|
|
|||||||
Revolving credit facility
|
March 2023
|
|
$
|
1,750
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
1,750
|
|
|
Commercial paper
|
|
|
|
|
|
|
|
|
(819
|
)
|
|||||||
Total liquidity
|
|
|
|
|
|
|
|
|
$
|
1,429
|
|
•
|
Liquidity includes cash and cash equivalents, short-term investments, and availability under our revolving credit facility, less outstanding commercial paper balance.
|
•
|
At December 28, 2019, we had current debt of $1,947 million, which we intend to refinance or repay with cash generated from our operating activities and other existing or new liquidity sources.
|
•
|
The revolving credit facility supports our short-term funding needs and also serves to backstop our commercial paper program. Our maximum borrowing under the revolving credit facility during the three months ended December 28, 2019, was $130 million.
|
•
|
We expect net interest expense to approximate $450 million for fiscal 2020.
|
•
|
Our current ratio was 1.30 to 1 at December 28, 2019 and September 28, 2019.
|
•
|
At December 28, 2019, approximately $478 million of our cash was held in the accounts of our foreign subsidiaries. Generally, we do not rely on the foreign cash as a source of funds to support our ongoing domestic liquidity needs. We manage our worldwide cash requirements by reviewing available funds among our foreign subsidiaries and the cost effectiveness with which those funds can be accessed. We intend to repatriate excess cash (net of applicable withholding taxes) not subject to regulatory requirements and to indefinitely reinvest outside of the United States the remainder of cash held by foreign subsidiaries. We do not expect the regulatory restrictions or taxes on repatriation to have a material effect on our overall liquidity, financial condition or the results of operations for the foreseeable future.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Effect of 10% change in fair value
|
|
|
in millions
|
|
|||
|
December 28, 2019
|
|
September 28, 2019
|
||||
Livestock:
|
|
|
|
||||
Live Cattle
|
$
|
7
|
|
|
$
|
19
|
|
Lean Hogs
|
9
|
|
|
17
|
|
||
Grain:
|
|
|
|
||||
Corn
|
38
|
|
|
39
|
|
||
Soy Meal
|
32
|
|
|
31
|
|
|
Three Months Ended
|
|
Fiscal Year Ended
|
Twelve Months Ended
|
||||||||||
|
December 28, 2019
|
|
December 29, 2018
|
|
September 28, 2019
|
December 28, 2019
|
||||||||
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
561
|
|
|
$
|
552
|
|
|
$
|
2,035
|
|
$
|
2,044
|
|
Less: Interest income
|
(3
|
)
|
|
(2
|
)
|
|
(11
|
)
|
(12
|
)
|
||||
Add: Interest expense
|
120
|
|
|
99
|
|
|
462
|
|
483
|
|
||||
Add: Income tax expense
|
164
|
|
|
161
|
|
|
396
|
|
399
|
|
||||
Add: Depreciation
|
217
|
|
|
184
|
|
|
819
|
|
852
|
|
||||
Add: Amortization (a)
|
68
|
|
|
63
|
|
|
267
|
|
272
|
|
||||
EBITDA
|
$
|
1,127
|
|
|
$
|
1,057
|
|
|
$
|
3,968
|
|
$
|
4,038
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
||||||||
Total gross debt
|
|
|
|
|
$
|
11,932
|
|
$
|
11,719
|
|
||||
Less: Cash and cash equivalents
|
|
|
|
|
(484
|
)
|
(497
|
)
|
||||||
Less: Short-term investments
|
|
|
|
|
(1
|
)
|
(1
|
)
|
||||||
Total net debt
|
|
|
|
|
$
|
11,447
|
|
$
|
11,221
|
|
||||
|
|
|
|
|
|
|
||||||||
Ratio Calculations:
|
|
|
|
|
|
|
||||||||
Gross debt/EBITDA
|
|
|
|
|
3.0x
|
|
2.9x
|
|
||||||
Net debt/EBITDA
|
|
|
|
|
2.9x
|
|
2.8x
|
|
(a)
|
Excludes the amortization of debt issuance and debt discount expense of $3 million for the three months ended December 28, 2019, and December 29, 2018, $12 million for the fiscal year ended September 28, 2019, and for the twelve months ended December 28, 2019, as it is included in interest expense.
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
Total
Number of
Shares
Purchased
|
|
|
Average
Price Paid
per Share
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
|
|
|
Maximum Number of
Shares that May Yet Be
Purchased Under the Plans
or Programs (1)
|
|
|
Sep. 29, 2019 to Oct. 26, 2019
|
38,452
|
|
|
$
|
83.22
|
|
—
|
|
|
20,658,386
|
|
Oct. 27, 2019 to Nov. 30, 2019
|
843,685
|
|
|
88.38
|
|
535,837
|
|
|
20,122,549
|
|
|
Dec. 1, 2019 to Dec. 28, 2019
|
607,303
|
|
|
89.25
|
|
582,701
|
|
|
19,539,848
|
|
|
Total
|
1,489,440
|
|
(2)
|
$
|
88.60
|
|
1,118,538
|
|
(3)
|
19,539,848
|
|
(1)
|
On February 7, 2003, we announced our Board of Directors approved a program to repurchase up to 25 million shares of Class A common stock from time to time in open market or privately negotiated transactions. On May 3, 2012, our Board of Directors approved an increase of 35 million shares, on January 30, 2014, our Board of Directors approved an increase of 25 million shares and on February 4, 2016, our Board of Directors approved an increase of 50 million shares, authorized for repurchase under our share repurchase program. The program has no fixed or scheduled termination date.
|
(2)
|
We purchased 370,902 shares during the period that were not made pursuant to our previously announced stock repurchase program, but were purchased to fund certain Company obligations under our equity compensation plans. These transactions included 105,730 shares purchased in open market transactions and 265,172 shares withheld to cover required tax withholdings on the vesting of restricted stock.
|
(3)
|
These shares were purchased during the period pursuant to our previously announced stock repurchase program.
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
|
Exhibit Description
|
|
|
|
|
10.1
|
*
|
|
|
|
|
10.2
|
*
|
|
|
|
|
10.3
|
*
|
|
|
|
|
10.4
|
*
|
|
|
|
|
|
|
TYSON FOODS, INC.
|
|
|
|
|
|
|
|
|
|
Date: February 6, 2020
|
|
|
/s/ Stewart Glendinning
|
|
|
|
Stewart Glendinning
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
Date: February 6, 2020
|
|
|
/s/ Steve Gibbs
|
|
|
|
Steve Gibbs
|
|
|
|
Senior Vice President, Controller and Chief Accounting Officer
|
1 Year Tyson Foods Chart |
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