* Strong Chicken Performance, Resulting in a Third Quarter Operating
Margin of 9.5%
* Third Quarter Cash Flow From Operations Increased By $219 Million
* Exceeded Fiscal 2005 Debt-to-Capital Goal of 40%, By Reaching 39% at
July 2, 2005
SPRINGDALE, Ark., Aug. 1 /PRNewswire-FirstCall/ -- Tyson Foods, Inc.
(NYSE: TSN), today reported $0.36 diluted earnings per share for the third
fiscal quarter ended July 2, 2005, compared to $0.45 diluted earnings per
share in the same quarter last year. Third quarter 2005 sales were
$6.7 billion compared to $6.6 billion for the same period last year.
Operating income was $263 million compared to $323 million and net income was
$131 million compared to $161 million for the same period last year.
Pretax earnings for the third quarter of fiscal 2005 included $33 million
of costs related to a legal settlement involving the Company's live swine
operations, as well as $10 million of costs related to poultry plant closings
resulting from the on-going effort to increase the production of value-added
products and enhance operating efficiencies. The combined effect of these
items decreased diluted earnings per share by $0.08.
Diluted earnings per share for the first nine months of fiscal 2005 were
$0.71 compared to $0.94 in the same period last year. Sales for the first
nine months of fiscal 2005 were $19.5 billion compared to $19.3 billion for
the same period last year. Operating income for the first nine months of
fiscal 2005 was $575 million compared to $747 million and net income was
$255 million compared to $337 million for the same period last year.
Pretax earnings for the first nine months of fiscal 2005 included
$33 million of costs related to a legal settlement involving the Company's
live swine operations, $15 million of costs related to poultry and prepared
foods plant closings, $12 million received in connection with vitamin
antitrust litigation and a gain of $8 million from the sale of the Company's
remaining interest in Specialty Brands, Inc. The combined effect of these
items decreased diluted earnings per share by $0.05.
Pretax earnings for the first nine months of fiscal 2004 included
$40 million of costs related to poultry and prepared foods plant closings, and
$61 million of costs of BSE-related charges. The combined effect of these
items decreased diluted earnings per share by $0.18.
John Tyson, chairman and CEO, said, "The Chicken segment performed well,
and Beef and Prepared Foods improved compared to the first half of the year,
but our Pork results were disappointing. We continued to generate strong cash
flow which enabled us to achieve our debt to capital goal one quarter earlier
than expected. Our value-added product mix continues to grow and we expect it
to reach 40% by the end of our fiscal year. We made progress on our effort to
improve our operating efficiencies. However, we also expect the fourth
quarter to be more challenging."
Outlook
Based upon the Company's outlook for fiscal year 2005, including its view
of all the various markets, as well as to reflect the $0.08 in charges
incurred during the third quarter, the Company now estimates its fiscal 2005
GAAP diluted earnings per share to be in the range of $0.95 to $1.05.
Segment Performance Review (in millions)
Sales
(for the third quarter and nine months ended July 2, 2005, and June 26, 2004)
Third Quarter Nine Months
Avg. Avg.
Sales Sales
Sales Sales Volume Price Sales Sales Volume Price
2005 2004 Change Change 2005 2004 Change Change
Chicken $2,085 $2,111 1.4% (2.5)% $6,207 $6,054 0.7% 1.8%
Beef 3,102 2,973 2.3% 2.0% 8,671 8,803 0.5% (2.0)%
Pork 811 828 (2.3)% 0.2% 2,484 2,296 (3.0)% 11.6%
Prepared
Foods 696 707 (4.2)% 2.8% 2,119 2,097 (4.9)% 6.2%
Other 14 15 n/a n/a 38 42 n/a n/a
Total $6,708 $6,634 0.7% 0.4% $19,519 $19,292 (0.4)% 1.6%
Operating Income (Loss)
(for the third quarter and nine months ended July 2, 2005, and June 26, 2004)
Third Quarter Nine Months
Operating Margin Operating Margin
2005 2004 2005 2004 2005 2004 2005 2004
Chicken $198 $145 9.5% 6.9% $445 $450 7.2% 7.4%
Beef 36 118 1.2% 4.0% 1 87 0.0% 1.0%
Pork (19) 34 (2.3)% 4.1% 15 117 0.6% 5.1%
Prepared
Foods 28 7 4.0% 1.0% 60 33 2.8% 1.6%
Other 20 19 n/a n/a 54 60 n/a n/a
Total $263 $323 3.9% 4.9% $575 $747 2.9% 3.9%
Chicken (31.1% of Net Sales, 75.3% of Total Operating Income - 3rd
Quarter 2005)
(31.8% of Net Sales, 77.4% of Total Operating Income - Nine
Months 2005)
* Operating margin for the third quarter of fiscal 2005 was 10.0%
excluding plant closing related accruals.
Chicken segment operating income for the third quarter fiscal 2005
increased $62 million excluding plant closing related accruals of $10 million
recorded in the third quarter of fiscal 2005, and $1 million recorded in the
third quarter of fiscal 2004. Operating margin for the third quarter of
fiscal 2005 was 10.0% excluding those plant closing related accruals.
Operating income for the third quarter was positively impacted by decreased
grain costs of $113 million as compared to the same period last year.
However, the current period benefits from decreased grain costs were partially
offset by the effect of the Company realizing a gain of $5 million in the
third quarter of fiscal 2005 as compared to a gain of $44 million in the third
quarter of fiscal 2004 from the Company's commodity risk management activities
related to grain purchases.
Chicken segment volume increased by 1.4% and 0.7% in the third quarter and
nine months of fiscal 2005, respectively, compared to the same periods last
year. Sales decreased by 1.2% and increased by 2.5% in the third quarter and
nine months of fiscal 2005, respectively, compared to the same periods last
year. Sales decreased in the third quarter of fiscal 2005 primarily due to
lower average sales prices, partially offset by an increase in sales volumes.
Sales for the nine months of fiscal 2005 increased primarily due to an
increase in average sales prices, as well as a slight increase in sales
volumes.
Operating income for the nine months of fiscal 2005 decreased $6 million
excluding plant closing related accruals of $12 million recorded in fiscal
2005 and $13 million recorded in fiscal 2004. Operating income for the nine
months of fiscal 2005 was positively impacted by decreased grain costs of
$197 million as compared to the same period last year. However, the current
year benefits from decreased grain costs were partially offset by the effect
of the Company realizing a loss of $28 million in the fiscal 2005 as compared
to a gain of $147 million in fiscal 2004 from the Company's commodity risk
management activities related to grain purchases. Additionally, operating
income was negatively impacted by higher energy costs.
Beef (46.2% of Net Sales, 13.7% of Total Operating Income - 3rd
Quarter 2005)
(44.4% of Net Sales, 0.2% of Total Operating Income - Nine
Months 2005)
* Increased volumes and higher sales prices resulted in sales
increases which were more than offset by higher live costs and
lower plant utilization levels.
Beef segment volume increased by 2.3% and 0.5% in the third quarter and
nine months of fiscal 2005, respectively, compared to the same periods last
year. Beef segment sales increased by 4.3% and decreased by 1.5% in the third
quarter and nine months of fiscal 2005, respectively, compared to the same
periods last year. Sales increased in the third quarter of fiscal 2005
primarily due to higher average sales prices and increased sales volumes.
Sales decreases in the nine months of fiscal 2005 primarily resulted from BSE-
related import and export restrictions that were in effect for the entire nine
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 income decreased by $82 million and $86 million in
the third quarter and nine 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 nine months of fiscal 2005 and BSE-related
charges of $61 million recorded in the nine months of fiscal 2004, operating
income decreased $157 million. The decrease in operating income was primarily
due to lower domestic cattle supplies and restrictions on imports of Canadian
cattle resulting in lower plant utilization levels. Also, third quarter
fiscal 2005 operating income was negatively impacted by higher live costs as
compared to the same period last year. Additionally, sales and operating
income were negatively impacted by $13 million and $14 million in net losses
in the third quarter and nine months of fiscal 2005, respectively, as compared
to $45 million and $28 million in net gains 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 price forward boxed beef
sales.
Pork (12.1% of Net Sales, (7.2)% of Total Operating Income - 3rd
Quarter 2005)
(12.7% of Net Sales, 2.6% of Total Operating Income - Nine
Months 2005)
* Higher average sales prices in the first nine months were offset
by higher live prices and legal settlement costs resulting in
decreased operating margins.
Pork segment sales decreased by 2.1% and increased by 8.2% for the third
quarter and nine months of fiscal 2005, respectively, compared to the same
periods last year. Sales decreased in third quarter of fiscal 2005 primarily
due to decreased sales volumes and lower average domestic sales prices. Sales
increases for the nine months of fiscal 2005 resulted primarily from stronger
demand for pork products, both domestically and internationally, as compared
to the same periods last year. The increased demand resulted in higher
average sales prices, partially offset by a decrease in volumes.
Excluding costs of $33 million related to a legal settlement involving the
Company's live swine operations, operating income decreased $20 million and
$69 million in the third quarter and nine months of fiscal 2005, respectively,
as compared to the same periods last year. The decreases in operating income
for the nine months were primarily due to higher live prices and lower
volumes, which more than offset the increase in average sales prices.
Additionally, sales and operating income for the third quarter and nine months
of fiscal 2005 were negatively impacted by $8 million in net losses related to
open mark-to-market futures positions from the Company's commodity risk
management activities related to its fixed price forward boxed pork sales.
Prepared Foods (10.4% of Net Sales, 10.6% of Total Operating Income -
3rd Quarter 2005)
(10.9% of Net Sales, 10.4% of Total Operating Income -
Nine Months 2005)
* Higher average sales prices led to increased operating
income in the Prepared Foods segment.
Prepared Foods segment operating income increased by $21 million in the
third quarter as compared to the same period last year. Excluding plant
closing related accruals of $3 million recorded in the nine months of fiscal
2005, and $27 million recorded in the nine months of fiscal 2004, operating
income increased $3 million. The increase in operating income for the third
quarter and nine months of fiscal 2005 was primarily due to an increase in
average sales prices, offset partially by higher raw material prices. Sales
decreased by 1.6% and increased by 1.0% for the third quarter and nine months
of fiscal 2005, respectively, compared to the same periods last year. Sales
decreased in the third quarter of fiscal 2005 primarily due to lower sales
volumes, partially offset by higher average sales prices. Decreased sales
volumes for the first nine months of fiscal 2005 were more than offset by
higher averages sales prices.
TYSON FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
July 2, June 26, July 2, June 26,
2005 2004 2005 2004
Sales $6,708 $6,634 $19,519 $19,292
Cost of Sales 6,182 6,084 18,208 17,863
526 550 1,311 1,429
Selling, General and
Administrative 220 226 688 642
Other Charges 43 1 48 40
Operating Income 263 323 575 747
Other (Income) Expenses:
Interest 56 67 172 208
Other 6 (2) 6 4
Income before Income Taxes 201 258 397 535
Provision for Income Taxes 70 97 142 198
Net Income $131 $161 $255 $337
Weighted Average Shares
Outstanding:
Class A Basic 243 243 243 243
Class B Basic 102 102 102 102
Diluted 358 358 357 357
Earnings Per Share:
Class A Basic $0.39 $0.48 $0.76 $1.00
Class B Basic $0.35 $0.43 $0.68 $0.90
Diluted $0.36 $0.45 $0.71 $0.94
Cash Dividends Per Share:
Class A $0.040 $0.040 $0.120 $0.120
Class B $0.036 $0.036 $0.108 $0.108
Sales Growth 1.1% 4.8% 1.2% 7.3%
Margins: (Percent of Sales)
Gross Profit 7.8% 8.3% 6.7% 7.4%
Operating Income 3.9% 4.9% 2.9% 3.9%
Net Income 2.0% 2.4% 1.3% 1.7%
Effective Tax Rate 35.2% 37.8% 35.9% 37.1%
TYSON FOODS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
(Unaudited)
July 2, 2005 October 2, 2004
Assets
Current Assets:
Cash and cash equivalents $32 $33
Accounts receivable, net 1,190 1,240
Inventories 2,022 2,063
Other current assets 115 196
Total Current Assets 3,359 3,532
Net Property, Plant and Equipment 3,972 3,964
Goodwill 2,529 2,558
Other Assets 506 410
Total Assets $10,366 $10,464
Liabilities and Shareholders' Equity
Current Liabilities:
Current debt $302 $338
Trade accounts payable 896 945
Other current liabilities 1,182 1,010
Total Current Liabilities 2,380 2,293
Long-Term Debt 2,593 3,024
Deferred Income Taxes 691 695
Other Liabilities 174 160
Shareholders' Equity 4,528 4,292
Total Liabilities and Shareholders' Equity $10,366 $10,464
TYSON FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended Nine Months Ended
July 2, June 26, July 2, June 26,
2005 2004 2005 2004
Cash Flows From Operating
Activities:
Net income $131 $161 $255 $337
Depreciation and
amortization 126 121 377 359
Plant closing-related
charges 8 (1) 12 28
Deferred income taxes
and other 16 25 (12) (11)
Net changes in working
capital 183 (61) 289 77
Cash Provided by Operating
Activities 464 245 921 790
Cash Flows From Investing
Activities:
Additions to property,
plant and equipment (163) (115) (395) (346)
Proceeds from sale
of assets 7 7 23 20
Investment in marketable
securities (8) (89) (42) (89)
Net changes in other
assets and liabilities 14 5 16 (16)
Cash Used for Investing
Activities (150) (192) (398) (431)
Cash Flows From Financing
Activities:
Net change in debt (307) (62) (467) (281)
Purchases of treasury
shares (9) (11) (36) (49)
Dividends (14) (14) (41) (41)
Stock options exercised
and other 11 15 16 37
Cash Used for Financing
Activities (319) (72) (528) (334)
Effect of Exchange Rate
Change on Cash 2 --- 4 1
Increase (Decrease) in
Cash and Cash Equivalents (3) (19) (1) 26
Cash and Cash Equivalents
at Beginning of Period 35 70 33 25
Cash and Cash Equivalents
at End of Period $32 $51 $32 $51
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 888-390-5357. 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 517-308-9001. 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
September 1 at 6 p.m. Eastern at 866-454-2130. International callers dial
203-369-1246.
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.
 back to top
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.
|
