- Debt-to-capital reduced from 44% to 41%
- Cash flow from operations increased by $161 million
SPRINGDALE, Ark., Jan. 31 /PRNewswire-FirstCall/ -- Tyson Foods, Inc.
(NYSE: TSN), today reported $0.14 diluted earnings per share for the first
fiscal quarter ended January 1, 2005, compared to $0.16 diluted earnings per
share in the same quarter last year. Sales for the first quarter of fiscal
years 2005 and 2004 were both $6.5 billion. Operating income was $129 million
compared to $161 million and net income was $48 million compared to
$57 million for the same period last year.
Pretax earnings for the first quarter of fiscal 2005 include $12 million
received in connection with vitamin antitrust litigation, a gain of $8 million
from the sale of the Company's remaining interest in Specialty Brands, Inc.
and $3 million of costs related to a prepared foods plant closing. The
combined effect increased diluted earnings per share by $0.03.
Pretax earnings for the first quarter of fiscal 2004 included $61 million
of BSE-related charges and $25 million of costs related to prepared foods and
poultry plant closings. The combined effect decreased diluted earnings per
share by $0.16.
John Tyson, chairman and CEO, said, "The first quarter was extremely
difficult for us this year. Nevertheless, our chicken business continued to
perform well, our cash flow from operations was strong, and we reduced our
debt by $292 million. At the same time, continued market restrictions for
beef, as well as a lack of live cattle supplies, and a tougher pricing
environment for pork combined to impact our earnings. As we said last
quarter, we expect market conditions to remain challenging during the first
half of our fiscal year. However, we do expect significant improvements in
the second half of the year."
Outlook
Based upon the Company's outlook for fiscal year 2005, the Company now
estimates its fiscal 2005 diluted earnings per share to be in the range of
$1.05 to $1.30.
Segment Performance Review (in millions)
Sales
(for the first quarter ended January 1, 2005, and December 27, 2003)
First Quarter
Sales Sales Volume Avg. Sales
2005 2004 Change Price Change
Chicken $2,066 $1,900 2.3% 6.2%
Beef 2,795 3,135 1.0% (11.7)%
Pork 845 736 (5.5)% 21.4%
Prepared Foods 733 721 (5.5)% 7.6%
Other 13 13 n/a n/a
Total $6,452 $6,505 (0.1)% (0.7)%
Operating Income (Loss)
(for the first quarter ended January 1, 2005, and December 27, 2003)
First Quarter
Operating Margin
2005 2004 2005 2004
Chicken $104 116 5.0% 6.1%
Beef (16) (29) (0.6)% (0.9)%
Pork 15 49 1.8% 6.7%
Prepared Foods 12 6 1.6% 0.8%
Other 14 19 n/a n/a
Total $129 $161 2.0% 2.5%
Chicken (32.0% of Net Sales, 80.6% of Total Operating Income -
1st Quarter 2005)
-- Improved pricing and product mix led to increased sales in the
Chicken segment.
Chicken segment sales increased by 8.7% compared to the same period last
year. Sales increases were primarily due to higher average selling prices,
increased sales volumes and product mix improvements. Operating income was
negatively impacted by losses of approximately $23 million from the Company's
on-going commodity risk management activities related to grain purchases,
compared to commodity risk management gains of approximately $13 million in
the first quarter of fiscal 2004. However, these losses were offset by
approximately $11 million in decreased grain costs as compared to the same
period last year.
Beef (43.3% of Net Sales, (12.4)% of Total Operating Income -
1st Quarter 2005)
-- Sales in domestic and international fresh meats decreased due to
restricted access to export markets, weaker domestic demand and
competing protein supplies.
Beef segment sales decreased by 10.8% compared to the same period last
year. The sales decrease from the same period last year primarily results
from restrictions due to BSE that were in effect for the entire first quarter
in fiscal 2005, while the same restrictions were only in effect for the latter
part of the first quarter in fiscal 2004. Restrictions caused by BSE led to
lower international sales volumes and lower average sales prices due to the
mix of products allowed for export. Domestic sales were negatively impacted
by other competing proteins and increased domestic beef finished product
supplies, which caused lower average sales prices, partially offset by an
increase in sales volume. Excluding $10 million received in connection with
vitamin antitrust litigation in the first quarter of fiscal 2005 and BSE-
related charges of $61 million recorded in the first quarter of fiscal 2004,
operating income decreased $58 million. The decrease in operating income was
primarily due to lower domestic cattle supplies and restrictions on imports of
Canadian cattle resulting in higher live cattle costs and lower plant
utilization levels. Additionally, limited access to beef export markets has
increased domestic finished product supplies, resulting in lower average sales
prices. Sales and operating income were negatively impacted by approximately
$14 million, as compared to $24 million for the same quarter last year, from
net losses related to open mark-to-market futures positions from the Company's
on-going commodity risk management activities related to its fixed forward
boxed beef sales.
Pork (13.1% of Net Sales, 11.6% of Total Operating Income -
1st Quarter 2005)
-- Continued demand for pork products both domestically and
internationally led to sales increases caused by higher average sales
prices, but were offset by higher live prices resulting in decreased
operating margins.
Pork segment sales increased by 14.8% compared to the same period last
year. The increase in sales can be attributed to continued strong demand for
pork products both domestically and internationally which resulted in a 21.4%
increase in average sales prices, partially offset by a 5.5% decrease in
volumes. Operating income was negatively impacted by higher live prices,
which more than offset the increase in average sales prices. First quarter
fiscal 2005 included $2 million received in connection with vitamin antitrust
litigation.
Prepared Foods (11.4% of Net Sales, 9.3% of Total Operating Income -
1st Quarter 2005)
-- Higher average selling prices led to increased sales in the Prepared
Foods segment.
Prepared Foods segment sales increased by 1.7% compared to the same period
last year. Sales were positively impacted by higher average sales prices,
partially offset by lower volumes. Excluding plant closing related accruals
recorded in fiscal 2005 of $3 million and fiscal 2004 of $21 million,
operating income decreased $12 million. The decrease in operating income was
primarily due to increased raw material prices, which more than offset the
increase in higher average sales prices.
TYSON FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
Three Months Ended
January 1, December 27,
2005 2003
Sales $6,452 $6,505
Cost of Sales 6,089 6,111
363 394
Selling, General and Administrative 231 208
Other Charges 3 25
Operating Income 129 161
Other Expense (Income):
Interest 58 69
Other (5) 3
Income Before Income Taxes 76 89
Provision for Income Taxes 28 32
Net Income $48 $57
Weighted Average Shares Outstanding:
Class A Basic 242 243
Class B Basic 102 102
Diluted 356 356
Earnings Per Share:
Class A Basic $0.14 $0.17
Class B Basic $0.13 $0.15
Diluted $0.14 $0.16
Cash Dividends Per Share:
Class A $0.040 $0.040
Class B $0.036 $0.036
Sales Growth (Decline) (0.8)% 12.1%
Margins: (Percent of Sales)
Gross Profit 5.6% 6.1%
Operating Income 2.0% 2.5%
Net Income 0.7% 0.9%
Effective Tax Rate 36.6% 35.5%
TYSON FOODS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
(Unaudited)
January 1, October 2,
2005 2004
Assets
Current Assets:
Cash and cash equivalents $41 $33
Accounts receivable, net 1,168 1,240
Inventories 2,021 2,063
Other current assets 131 196
Total Current Assets 3,361 3,532
Net Property, Plant and Equipment 3,957 3,964
Goodwill 2,558 2,558
Other Assets 468 410
Total Assets $10,344 $10,464
Liabilities and Shareholders' Equity
Current Liabilities:
Current debt $364 $338
Trade accounts payable 1,006 945
Other current liabilities 1,070 1,010
Total Current Liabilities 2,440 2,293
Long-Term Debt 2,706 3,024
Deferred Income Taxes 691 695
Other Liabilities 165 160
Shareholders' Equity 4,342 4,292
Total Liabilities and Shareholders' Equity $10,344 $10,464
TYSON FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
For the Periods Ended
(In millions)
(Unaudited)
Three Months Ended
January 1, December 27,
2005 2003
Cash Flows From Operating Activities:
Net income $48 $57
Depreciation and amortization 126 119
Plant closing-related charges 3 22
Deferred income taxes and other (54) (65)
Net changes in working capital 299 128
Cash Provided by Operating Activities 422 261
Cash Flows From Investing Activities:
Additions to property, plant and equipment (110) (124)
Proceeds from sale of assets 9 3
Net investment in marketable securities 5 ---
Net changes in other assets and liabilities 5 2
Cash Used for Investing Activities (91) (119)
Cash Flows From Financing Activities:
Net change in debt (292) (114)
Purchases of treasury shares (16) (9)
Dividends (14) (14)
Stock options exercised and other (1) 7
Cash Used for Financing Activities (323) (130)
Effect of Exchange Rate Change on Cash --- 3
Increase in Cash and Cash Equivalents 8 15
Cash and Cash Equivalents at Beginning of Period 33 25
Cash and Cash Equivalents at End of Period $41 $40
Tyson Foods, Inc., founded in 1935 with headquarters in Springdale,
Arkansas, is the world's largest processor and marketer of chicken, beef, and
pork and the second-largest food company in the Fortune 500. The company
produces a wide variety of protein-based and prepared food products, which are
marketed under the "Powered by Tyson(TM)" strategy. Tyson is the recognized
market leader in the retail and foodservice markets it serves, providing
products and service to customers throughout the United States and more than
80 countries. Tyson has approximately 114,000 Team Members employed at more
than 300 facilities and offices in the United States and around the world.
A conference call to discuss the Company's financial results will be held
at 9 a.m. Eastern today. To listen live via telephone, call 888-995-9566. A
pass code and the leader's name will be required to join the call. The pass
code is Tyson Foods and the leader's name is Louis Gottsponer. International
callers dial 212-519-0800. The call also will be webcast live on the Internet
at http://ir.tysonfoodsinc.com . Financial information, such as this news
release, as well as other supplemental data, including Company distribution
channel information, can be accessed from the Company's web site at
http://ir.tysonfoodsinc.com . A telephone replay will be available until
March 3 at 6 p.m. Eastern at 866-405-7283. International callers dial
203-369-0602.
Forward-Looking Statements
Certain statements contained in this communication are "forward-looking
statements" such as statements relating to expected earnings. These forward-
looking statements are subject to risks, uncertainties and other factors,
which could cause actual results to differ materially from historical
experience or from future results expressed or implied by such forward-looking
statements. Among the factors that may cause actual results and experiences
to differ from the anticipated results and expectations expressed in such
forward-looking statements are the following: (i) fluctuations in the cost and
availability of raw materials, such as live cattle, live swine or feed grains;
(ii) market conditions for finished products, including the supply and pricing
of alternative proteins, and the demand for alternative proteins; (iii) risks
associated with effectively evaluating derivatives and hedging activities;
(iv) access to foreign markets together with foreign economic conditions,
including currency fluctuations and import/export restrictions; (v) outbreak
of a livestock disease which could have an effect on livestock owned by the
Company, the availability of livestock for purchase by the Company, or the
Company's ability to access certain markets; (vi) successful rationalization
of existing facilities, and the operating efficiencies of the facilities;
(vii) changes in the availability and relative costs of labor and contract
growers; (viii) issues related to food safety, including costs resulting from
product recalls, regulatory compliance and any related claims or litigation;
(ix) adverse results from litigation; (x) risks associated with leverage,
including cost increases due to rising interest rates or changes in debt
ratings or outlook; (xi) changes in regulations and laws (both domestic and
foreign), including changes in accounting standards, environmental laws and
occupational, health and safety laws; (xii) the ability of the Company to make
effective acquisitions, and successfully integrate newly acquired businesses
into existing operations; (xiii) effectiveness of advertising and marketing
programs; and (xiv) the effect of, or changes in, general economic conditions.
SOURCE Tyson Foods, Inc.
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Related links:
http://www.tyson.com
http://ir.tysonfoodsinc.com
CONTACT:
media, Gary Mickelson, +1-479-290-6111, or
investors, Louis Gottsponer, +1-479-290-4826, both of Tyson
Foods, Inc.
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