- Strong Chicken performance, driven by higher average sales prices and
decreased grain costs
- Beef operating margins improved in latter part of the quarter
- Sales improvements seen in all four primary operating segments versus
the second quarter last year
SPRINGDALE, Ark., May 2 /PRNewswire-FirstCall/ -- Tyson Foods, Inc.
(NYSE: TSN), today reported $0.21 diluted earnings per share for the second
fiscal quarter ended April 2, 2005, compared to $0.33 diluted earnings per
share in the same quarter last year. Second quarter 2005 sales were
$6.4 billion compared to $6.2 billion for the same period last year.
Operating income was $183 million compared to $263 million and net income was
$76 million compared to $119 million for the same period last year.
Pretax earnings for the second quarter of fiscal 2005 included $2 million
of costs related to poultry and prepared foods plant closings.
Pretax earnings for the second quarter of fiscal 2004 included $14 million
of costs, or $0.02 per diluted share, related to poultry and prepared foods
plant closings.
Diluted earnings per share for the first six months of fiscal 2005 were
$0.35 compared to $0.49 in the same period last year. Sales for the first six
months of fiscal 2005 were $12.8 billion compared to $12.7 billion for the
same period last year. Operating income for the first six months of fiscal
2005 was $312 million compared to $424 million and net income was $124 million
compared to $176 million for the same period last year.
Pretax earnings for the first six months of fiscal 2005 included
$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 $5 million of costs related to poultry and prepared foods
plant closings. The combined effect increased diluted earnings per share by
$0.03.
Pretax earnings for the first six months of fiscal 2004 included
$39 million of costs, or $0.07 per diluted share, related to poultry and
prepared foods plant closings, and $61 million of costs, or $0.11 per diluted
share, of BSE-related charges.
John Tyson, chairman and CEO, said, "Sales increased across all four of
our primary operating segments during the second quarter. The Chicken segment
in particular delivered strong performance as a result of increased prices and
lower grain costs. In addition, we continued to improve our sales mix of
value added chicken, beef and pork products. Looking forward, we expect
strong chicken demand and improving domestic cattle supplies to result in
significant improvements in our results in the second half of the fiscal year,
compared to the first two quarters."
Outlook
Based upon the Company's outlook for fiscal year 2005, including its view
of all the various markets, the Company now estimates its fiscal 2005 diluted
earnings per share to be in the range of $1.05 to $1.20.
Segment Performance Review (in millions)
Sales
(for the second quarter and six months ended April 2, 2005,
and March 27, 2004)
Second Quarter Six Months
Avg. Avg.
Sales Sales
Sales Sales Volume Price Sales Sales Volume Price
2005 2004 Change Change 2005 2004 Change Change
Chicken $2,056 $2,043 (1.5)% 2.2 % $4,122 $3,943 0.4 % 4.1 %
Beef 2,774 2,695 (1.8)% 4.8 % 5,569 5,830 (0.4)% (4.1)%
Pork 828 732 (1.1)% 14.6 % 1,673 1,468 (3.3)% 18.0 %
Prepared
Foods 690 669 (4.9)% 8.5 % 1,423 1,390 (5.2)% 8.0 %
Other 11 14 n/a n/a 24 27 n/a n/a
Total $6,359 $6,153 (1.8)% 5.3 % $12,811 $12,658 (1.0)% 2.2 %
Operating Income (Loss)
(for the second quarter and six months ended April 2, 2005,
and March 27, 2004)
Second Quarter Six Months
Operating Margin Operating Margin
2005 2004 2005 2004 2005 2004 2005 2004
Chicken $143 $189 7.0 % 9.3 % $247 $305 6.0 % 7.7 %
Beef (19) (2) (0.7)% (0.1)% (35) (31) (0.6)% (0.5)%
Pork 19 34 2.3 % 4.6 % 34 83 2.0 % 5.7 %
Prepared
Foods 20 20 2.9 % 3.0 % 32 26 2.2 % 1.9 %
Other 20 22 n/a n/a 34 41 n/a n/a
Total $183 $263 2.9 % 4.3 % $312 $424 2.4 % 3.3 %
Chicken
(32.3% of Net Sales, 78.1% of Total Operating Income - 2nd Quarter 2005)
(32.2% of Net Sales, 79.2% of Total Operating Income - Six Months 2005)
- Improved pricing and product mix led to increased sales in the Chicken
segment.
Chicken segment sales increased by 0.6% and 4.5% in the second quarter and
six months of fiscal 2005, respectively, compared to the same periods last
year. Sales increased in the second quarter of fiscal 2005 primarily due to
increased average sales prices and improved product mix, partially offset by a
decrease in sales volumes. Sales for the six months of fiscal 2005 increased
primarily due to an increase in average sales prices, improved product mix, as
well as a slight increase in sales volumes.
Operating income was negatively impacted by losses of approximately
$10 million and $33 million in the second quarter and six months of fiscal
2005, respectively, from the Company's commodity risk management activities
related to grain purchases, compared to commodity risk management gains of
approximately $90 million and $103 million in the second quarter and six
months of fiscal 2004. However, the current year losses of $10 million and
$33 million were offset by approximately $73 million and $84 million in the
second quarter and six months of fiscal 2005, respectively, in decreased grain
costs as compared to the same periods last year. Additionally, operating
income for the second quarter and six months of fiscal 2005 includes
$2 million of plant closing related accruals, as compared to $8 million and
$12 million recorded in the same periods last year.
Beef
(43.6% of Net Sales, (10.4)% of Total Operating Income - 2nd Quarter 2005)
(43.5% of Net Sales, (11.2)% of Total Operating Income - Six Months 2005)
- Sales in domestic and international fresh meats were negatively impacted
by Canadian live cattle import restrictions, limited access to export
markets, weaker domestic demand and competing protein supplies.
Beef segment sales increased by 2.9% and decreased by 4.5% in the second
quarter and six months of fiscal 2005, respectively, compared to the same
periods last year. Sales increased in the second quarter of fiscal 2005
primarily due to increased average sales prices, partially offset by a
decrease in sales volumes. Sales decreases in the six months of fiscal 2005
primarily resulted from BSE-related import and export restrictions that were
in effect for the entire six months of fiscal 2005, while the same
restrictions began in the latter part of the first quarter of fiscal 2004.
Those restrictions led to lower international sales volumes and lower average
sales prices due to the mix of products allowed for export.
Beef segment operating loss increased by $17 million and $4 million in the
second quarter and six months of fiscal 2005, respectively, as compared to the
same periods last year. Excluding $10 million received in connection with
vitamin antitrust litigation in the six months of fiscal 2005 and BSE-related
charges of $61 million recorded in the six months of fiscal 2004, operating
loss increased $75 million. The increase in operating loss was primarily due
to lower domestic cattle supplies and restrictions on imports of Canadian
cattle resulting in lower plant utilization levels. Also second quarter
fiscal 2005 operating loss was negatively impacted by higher live costs as
compared to the same period last year. Sales and operating loss were
positively impacted by $13 million in net gains and negatively impacted by
$1 million in net losses in the second quarter and six months of fiscal 2005,
respectively, as compared to $7 million in net gains and $17 million in net
losses for the same periods last year, related to open mark-to-market futures
positions from the Company's commodity risk management activities related to
its fixed forward boxed beef sales. Additionally, the Beef segment's
operating margins improved in the latter part of the quarter.
Pork
(13.0% of Net Sales, 10.4% of Total Operating Income - 2nd Quarter 2005)
(13.1% of Net Sales, 10.9% of Total Operating Income - Six Months 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 13.1% and 14.0% for the second quarter and
six months of fiscal 2005, respectively, compared to the same periods last
year. The increase in sales resulted from continued strong demand for pork
products both domestically and internationally which resulted in an increase
in average sales prices, partially offset by a decrease in volumes. Operating
income declined by $15 million and $49 million in the second quarter and six
months of fiscal 2005, respectively, as compared to the same periods last
year. The decreases in operating income were primarily due to higher live
prices, which more than offset the increase in average sales prices.
Prepared Foods
(10.9% of Net Sales, 10.9% of Total Operating Income - 2nd Quarter 2005)
(11.1% of Net Sales, 10.3% of Total Operating Income - Six Months 2005)
- Higher average selling prices led to increased sales in the Prepared
Foods segment.
Prepared Foods segment sales increased by 3.1% and 2.4% for the second
quarter and six months of fiscal 2005, respectively, compared to the same
periods last year. Sales were positively impacted by higher average sales
prices, partially offset by lower volumes. Excluding plant closing related
accruals of $3 million recorded in the six months of fiscal 2005, and
$6 million and $27 million recorded in the second quarter and six months of
fiscal 2004, operating income decreased $6 million and $18 million,
respectively. The decrease in the Prepared Foods segment's operating income
for the second quarter and six months of fiscal 2005 was primarily due to
increased raw material prices.
TYSON FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
April 2, March 27, April 2, March 27,
2005 2004 2005 2004
Sales $ 6,359 $ 6,153 $ 12,811 $ 12,658
Cost of Sales 5,937 5,668 12,026 11,779
422 485 785 879
Selling, General and
Administrative 237 208 468 416
Other Charges 2 14 5 39
Operating Income 183 263 312 424
Other Expenses:
Interest 58 72 116 141
Other 5 3 --- 6
Income Before Income Taxes 120 188 196 277
Provision for Income Taxes 44 69 72 101
Net Income $ 76 $ 119 $ 124 $ 176
Weighted Average Shares
Outstanding:
Class A Basic 242 243 242 243
Class B Basic 102 102 102 102
Diluted 357 356 357 356
Earnings Per Share:
Class A Basic $ 0.23 $ 0.35 $ 0.37 $ 0.52
Class B Basic $ 0.20 $ 0.32 $ 0.33 $ 0.47
Diluted $ 0.21 $ 0.33 $ 0.35 $ 0.49
Cash Dividends Per Share:
Class A $0.040 $ 0.040 $ 0.080 $ 0.080
Class B $0.036 $ 0.036 $ 0.072 $ 0.072
Sales Growth 3.3 % 5.3 % 1.2 % 8.7 %
Margins: (Percent of Sales)
Gross Profit 6.6 % 7.9 % 6.1 % 6.9 %
Operating Income 2.9 % 4.3 % 2.4 % 3.3 %
Net Income 1.2 % 1.9 % 1.0 % 1.4 %
Effective Tax Rate 36.6 % 36.8 % 36.6 % 36.4 %
TYSON FOODS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
(Unaudited)
April 2, October 2,
2005 2004
Assets
Current Assets:
Cash and cash equivalents $ 35 $ 33
Accounts receivable, net 1,115 1,240
Inventories 2,085 2,063
Other current assets 147 196
Total Current Assets 3,382 3,532
Net Property, Plant and Equipment 3,936 3,964
Goodwill 2,554 2,558
Other Assets 499 410
Total Assets $ 10,371 $ 10,464
Liabilities and Shareholders' Equity
Current Liabilities:
Current debt $ 499 $ 338
Trade accounts payable 840 945
Other current liabilities 1,064 1,010
Total Current Liabilities 2,403 2,293
Long-Term Debt 2,703 3,024
Deferred Income Taxes 694 695
Other Liabilities 167 160
Shareholders' Equity 4,404 4,292
Total Liabilities and Shareholders' Equity $ 10,371 $ 10,464
TYSON FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
For the Periods Ended
(In millions)
(Unaudited)
Three Months Ended Six Months Ended
April 2, March 27, April 2, March 27,
2005 2004 2005 2004
Cash Flows From Operating
Activities:
Net income $ 76 $ 119 $ 124 $ 176
Depreciation and amortization 125 119 251 238
Plant closing-related charges 1 7 4 29
Deferred income taxes and other 26 29 (28) (36)
Net changes in working capital (193) 10 106 138
Cash Provided by Operating
Activities 35 284 457 545
Cash Flows From Investing
Activities:
Additions to property,
plant and equipment (122) (107) (232) (231)
Proceeds from sale of assets 7 10 16 13
Investment in marketable
securities (39) --- (34) ---
Net changes in other
assets and liabilities (3) (23) 2 (21)
Cash Used for Investing
Activities (157) (120) (248) (239)
Cash Flows From Financing
Activities:
Net change in debt 132 (105) (160) (219)
Purchases of treasury shares (11) (29) (27) (38)
Dividends (13) (14) (27) (27)
Stock options exercised and other 6 16 5 22
Cash Provided by (Used for)
Financing Activities 114 (132) (209) (262)
Effect of Exchange Rate Change
on Cash 2 (2) 2 1
Increase (Decrease) in Cash
and Cash Equivalents (6) 30 2 45
Cash and Cash Equivalents at
Beginning of Period 41 40 33 25
Cash and Cash Equivalents at
End of Period $ 35 $ 70 $ 35 $ 70
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 888-935-0258. 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 210-234-0002. 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
June 2 at 6 p.m. Eastern at 866-486-4644. International callers dial
203-369-1636.
Forward-Looking Statements
The Company and its representatives may from time to time make written or
oral forward-looking statements, including forward-looking statements such as
statements related to expected earnings and results. These forward-looking
statements are subject to a number of factors and uncertainties which could
cause the Company's actual results and experiences to differ materially from
the anticipated results and expectations, expressed in such forward-looking
statements. The Company wishes to caution readers not to place undue reliance
on any forward-looking statements, which speak only as of the date made.
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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