* Fourth Quarter Fiscal 2006 Net Loss Per Diluted Share Is $0.17 -- Loss
Includes Charges of $0.04 Related to the Company's Cost Reduction
Initiative, Plant Closing Costs and Other Business Consolidation Efforts --
Loss Includes Charges of $0.04 Related to the Company's Tax Adjustments --
Loss Includes a Charge of $0.02 Related to a Cumulative Effect of Change in
Accounting Principle
* Positive Operating Cash Flow, Enabled the Reduction of Debt by $133
Million From Previous Quarter
* Fiscal 2007 Diluted Earnings Per Share Is Estimated to be $0.50 to $0.80
SPRINGDALE, Ark., Nov. 13 /PRNewswire-FirstCall/ -- Tyson Foods, Inc.
(NYSE: TSN), today reported a net loss of $0.17 per diluted share for the
fourth quarter of fiscal 2006, compared to $0.33 diluted earnings per share
in the same quarter last year. Fourth quarter 2006 and 2005 sales were both
$6.5 billion. Operating loss was $20 million compared to operating income
of $188 million, and net loss was $56 million compared to net income of
$117 million, respectively, for the fourth quarter of fiscal 2006 and 2005.
Net loss per diluted share for fiscal 2006 was $0.58 compared to
diluted earnings per share of $1.04 for last year. Sales for fiscal 2006
were $25.6 billion compared to $26.0 billion for last year. Operating loss
was $77 million compared to operating income of $745 million, and net loss
was $196 million compared to net income of $372 million, respectively, for
fiscal 2006 and 2005.
During the fourth quarter of fiscal 2006, the Company recorded pretax
charges totaling $23 million associated with the Company's previously
announced $200 million cost reduction initiative, plant closing costs and
other business consolidation efforts. These charges included severance
expenses, product rationalization costs and other asset impairment related
expenses. The Company previously recorded plant closing costs of $59
million for the first nine months of fiscal 2006. The combined effect of
these items impacted net loss by $0.04 and $0.15 per diluted share for the
fourth quarter and fiscal year 2006.
As previously announced, the Company began a review in the fourth
quarter of fiscal 2006 of its tax account balances as a result of
differences noted in deferred tax liabilities related to temporary book to
tax differences. At the time of the previous announcement, the Company
disclosed the tax effect of the aggregated basis differences was an
understatement of approximately $22 million. While the Company is nearing
completion, the review is not yet final. Based upon the information
available at this time, the Company recorded a charge in the fourth quarter
of fiscal 2006 of approximately $15 million or $0.04 per diluted share. As
the Company completes its process, additional information may become
available that could change the amount and timing of the charge (which
includes the results reported in this release). The Company expects to
complete its assessment prior to filing its fiscal 2006 Form 10-K.
Net loss for the fourth quarter and 12 months of fiscal 2006 includes a
charge of $5 million, or $0.02 per diluted share, related to the cumulative
effect of a change in accounting principle due to the Company's adoption of
Financial Accounting Standards Board Interpretation No. 47, "Accounting for
Conditional Asset Retirement Obligations," an interpretation of FASB
Statement No. 143.
"The best thing I can say about fiscal 2006 is, it's over," said
Richard L. Bond, president and chief executive officer. "For most of the
year, we were plagued by supply and demand imbalance as well as export
market disruptions in our chicken and beef segments. Despite some
continuing problems in the protein sector, during the quarter our core
business showed improvement and continued to strengthen.
"In addition, we successfully launched several programs that will
better position us for 2007 and beyond," Bond said. "We implemented a
comprehensive cost management initiative to generate approximately $200
million in annual savings. We also consolidated beef processing facilities,
refocused on running cost-efficient and competitive operations and
introduced price increases across retail and foodservice channels. Finally,
we have enhanced our strong management team by adding several key
executives in our finance, consumer products and international groups. I
believe the solid execution of these and other initiatives by Tyson Team
Members is favorably impacting our business. We set a short-term goal to
return to profitability, and based on our business performance to date, I
am very confident we will achieve it in our first fiscal quarter of 2007."
Outlook
Based on the Company's outlook for fiscal 2007, diluted earnings per
share are estimated to be in the range of $0.50 to $0.80.
Segment Performance Review (in millions)
Sales
(for the fourth quarter and 12 months ended September 30, 2006, and
October 1, 2005)
Fourth Quarter 12 Months
Avg. Sales Avg. Sales
Sales Sales Price Volume Sales Sales Price Volume
2006 2005 Change Change 2006 2005 Change Change
Chicken $1,960 $2,088 (4.0)% (2.2)% $7,928 $8,295 (7.2)% 3.0%
Beef 3,021 2,947 4.5% (1.9)% 11,825 11,618 (0.8)% 2.6%
Pork 785 763 1.0% 2.0% 3,060 3,247 (6.2)% 0.5%
Prepared Foods 697 682 (1.3)% 3.4% 2,692 2,801 (4.2)% 0.3%
Other 8 15 n/a n/a 54 53 n/a n/a
Total $6,471 $6,495 0.7% (1.1)% $25,559 $26,014 (3.9)% 2.3%
Operating Income (Loss)
(for the fourth quarter and 12 months ended September 30, 2006, and
October 1, 2005)
Fourth Quarter 12 Months
Operating Operating
Margin Margin
2006 2005 2006 2005 2006 2005 2006 2005
Chicken $(20) $137 (1.0)% 6.6% $53 $582 0.7% 7.0%
Beef (34) (13) (1.1)% (0.4)% (296) (12) (2.5)% (0.1)%
Pork 15 32 1.9% 4.2% 47 47 1.5% 1.4%
Prepared Foods (1) 18 (0.1)% 2.6% 45 78 1.7 2.8%
Other 20 14 n/a n/a 74 50 n/a n/a
Total $(20) $188 (0.3)% 2.9% $(77) $745 (0.3)% 2.9%
Q4 2006:
Chicken - Includes charges of $9 million related to the cost reduction
initiative, other business consolidation efforts and plant closing costs
Beef - Includes charges of $7 million related to the cost reduction
initiative, other business consolidation efforts and plant closing costs
Pork - Includes charges of $2 million related to the cost reduction
initiative and other business consolidation efforts
Prepared Foods - Includes charges of $5 million related to other
business consolidation efforts and the cost reduction initiative
Q4 2005:
Chicken - Includes charges of $8 million related to Hurricane Katrina
losses
Prepared Foods - Includes income of $1 million related to the reversal
of plant closing costs
YTD 2006:
Chicken - Includes charges of $9 million related to the cost reduction
initiative, other business consolidation efforts and plant closing costs
Beef - Includes charges of $52 million related to plant closing costs,
the cost reduction initiative and other business consolidation efforts
Pork - Includes charges of $2 million related to the cost reduction
initiative and other business consolidation efforts
Prepared Foods - Includes charges of $19 million related to plant
closing costs, other business consolidation efforts and the cost reduction
initiative
YTD 2005:
Chicken - Includes charges of $12 million related to plant closing
costs and $8 million related to Hurricane Katrina losses
Beef - Includes income of $10 million related to vitamin antitrust
litigation
Pork - Includes charges of $33 million related to a live swine legal
settlement and income of $2 million related to vitamin antitrust litigation
Prepared Foods - Includes charges of $2 million related to plant
closing costs
Chicken (30.3% of Net Sales - 4th Quarter 2006)
(31.0% of Net Sales - 12 Months 2006)
Chicken segment sales were $2.0 billion and $7.9 billion in the fourth
quarter and fiscal year 2006, respectively. Chicken segment operating loss
was $20 million in the fourth quarter of fiscal 2006, and operating income
was $53 million in fiscal 2006. The operating results for both the fourth
quarter and fiscal year 2006 include charges of $9 million related to the
Company's cost reduction initiative, other business consolidation efforts
and plant closing costs. Low average sales prices, predominantly caused by
an oversupply of proteins in the marketplace, adversely impacted sales and
operating results. Additionally, the Chicken segment's operating results
were negatively impacted by higher energy costs and decreased margins at
the Company's operations in Mexico.
Beef (46.7% of Net Sales - 4th Quarter 2006)
(46.3% of Net Sales - 12 Months 2006)
Beef segment sales were $3.0 billion and $11.8 billion in the fourth
quarter and fiscal year 2006, respectively. Beef segment operating loss was
$34 million and $296 million in the fourth quarter and fiscal year 2006,
respectively. The operating results for the fourth quarter and fiscal year
2006 include $7 million and $52 million, respectively, related to plant
closing costs, the Company's cost reduction initiative and other business
consolidation efforts. Low average sales prices, predominantly caused by an
oversupply of proteins in the marketplace, adversely impacted sales and
operating results. Additionally, the Beef segment's operating results were
negatively impacted by significant operating margin reductions at the
Company's Lakeside operation in Canada.
Pork (12.1% of Net Sales - 4th Quarter 2006)
(12.0% of Net Sales - 12 Months 2006)
Pork segment sales were $785 million and $3.1 billion in the fourth
quarter and fiscal year 2006, respectively. Pork segment operating income
was $15 million and $47 million in the fourth quarter and fiscal year 2006,
respectively. The operating results for both the fourth quarter and fiscal
year 2006 include $2 million related to the Company's cost reduction
initiative and other business consolidation efforts. Low average sales
prices, predominantly caused by an oversupply of proteins in the
marketplace, adversely impacted sales and operating results. The low
average sales prices were partially offset by low average live prices.
Prepared Foods (10.8% of Net Sales -4th Quarter 2006)
(10.5% of Net Sales -12 Months 2006)
Prepared Foods segment sales were $697 million and $2.7 billion in the
fourth quarter and fiscal year 2006, respectively. Prepared Foods operating
loss was $1 million for the fourth quarter of fiscal 2006 and operating
income was $45 million for the fiscal year 2006. The operating results for
the fourth quarter and fiscal year 2006 include $5 million and $19 million,
respectively, related to plant closing costs, other business consolidation
efforts and the Company's cost reduction initiative. Operating results were
negatively impacted by low average sales prices and higher than anticipated
bacon raw material costs.
TYSON FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended 12 Months Ended
Sept. 30, Oct. 1, Sept. 30, Oct. 1,
2006 2005 2006 2005
Sales $6,471 $6,495 $25,559 $26,014
Cost of Sales 6,243 6,068 24,631 24,294
228 427 928 1,720
Selling, General and
Administrative 235 240 935 928
Other Charges 13 (1) 70 47
Operating Income (Loss) (20) 188 (77) 745
Other (Income) Expenses:
Interest Income (13) (3) (30) (10)
Interest Expense 79 58 268 237
Other (9) 2 (22) (10)
Income (Loss) before
Income Taxes (77) 131 (293) 528
Income tax (benefit)
expense (26) 14 (102) 156
Income (Loss) before
Cumulative Effect of
Change in Accounting
Principle (51) 117 (191) 372
Cumulative Effect of
Change in Accounting
Principle, net of tax 5 --- 5 ---
Net Income (Loss) $(56) $117 $(196) $372
Weighted Average Shares
Outstanding:
Class A Basic 258 243 249 243
Class B Basic 87 102 96 102
Diluted 345 358 345 357
Earnings (Loss) before
Cumulative Effect of
Change in Accounting
Principle:
Class A Basic $(0.15) $0.35 $(0.56) $1.11
Class B Basic $(0.14) $0.32 $(0.52) $1.00
Diluted $(0.15) $0.33 $(0.56) $1.04
Cumulative Effect of
Change in Accounting
Principle:
Class A Basic $(0.02) $--- $(0.02) $---
Class B Basic $(0.01) $--- $(0.01) $---
Diluted $(0.02) $--- $(0.02) $---
Net Earnings (Loss)
Per Share:
Class A Basic $(0.17) $0.35 $(0.58) $1.11
Class B Basic $(0.15) $0.32 $(0.53) $1.00
Diluted $(0.17) $0.33 $(0.58) $1.04
Cash Dividends Per
Share:
Class A $0.040 $0.040 $0.160 $0.160
Class B $0.036 $0.036 $0.144 $0.144
Sales Decline (0.4)% (9.1)% (1.7)% (1.6)%
Margins: (Percent of
Sales)
Gross Profit 3.5% 6.6% 3.6% 6.6%
Operating Income
(Loss) (0.3)% 2.9% (0.3)% 2.9%
Net Income (Loss) (0.9)% 1.8% (0.8)% 1.4%
Effective Tax Rate (33.5)% 10.1% (34.8)% 29.5%
TYSON FOODS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
(Unaudited)
Sept. 30, Oct. 1,
2006 2005
Assets
Current Assets:
Cash and cash equivalents $28 $40
Short-term investment 770 ---
Accounts receivable, net 1,183 1,214
Inventories 2,057 2,062
Other current assets 149 169
Total Current Assets 4,187 3,485
Net Property, Plant and Equipment 3,945 4,007
Goodwill 2,512 2,502
Other Assets 477 510
Total Assets $11,121 $10,504
Liabilities and Shareholders' Equity
Current Liabilities:
Current debt $992 $126
Trade accounts payable 942 961
Other current liabilities 912 1,070
Total Current Liabilities 2,846 2,157
Long-Term Debt 2,987 2,869
Deferred Income Taxes 522 638
Other Liabilities 326 169
Shareholders' Equity 4,440 4,671
Total Liabilities and Shareholders' Equity $11,121 $10,504
TYSON FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended 12 Months Ended
Sept. 30, Oct. 1, Sept. 30, Oct. 1,
2006 2005 2006 2005
Cash Flows From
Operating Activities:
Net income (loss) $(56) $117 $(196) $372
Depreciation and
amortization 134 124 517 501
Plant closing-related
charges, net 5 (2) 51 10
Deferred income taxes
and other 49 (58) (62) (70)
Net changes in working
capital 43 (103) (19) 186
Cash Provided by Operating
Activities 175 78 291 999
Cash Flows From Investing
Activities:
Additions to property,
plant and equipment (61) (176) (531) (571)
Proceeds from sale of
assets 7 24 21 47
Investments in marketable
securities, net 12 3 23 (39)
Purchase of short-term
investment --- --- (750) ---
Other 2 (15) 13 2
Cash Used for Investing
Activities (40) (164) (1,224) (561)
Cash Flows From Financing
Activities:
Net change in debt (133) 100 (8) (367)
Net proceeds from notes
offering --- --- 992 ---
Purchases of treasury
shares (12) (9) (42) (45)
Dividends (14) (14) (55) (55)
Stock options exercised
and other 7 9 38 24
Cash Provided by (Used
for) Financing
Activities (152) 86 925 (443)
Effect of Exchange Rate
Change on Cash 1 8 (4) 12
Increase (Decrease) in
Cash and Cash Equivalents (16) 8 (12) 7
Cash and Cash Equivalents
at Beginning of Period 44 32 40 33
Cash and Cash Equivalents
at End of Period $28 $40 $28 $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, the second-largest food company in the Fortune 500 and a member
of the S&P 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. The Company has
approximately 110,000 Team Members employed at more than 300 facilities and
offices in the United States and around the world. Through its Core Values,
Code of Conduct and Team Member Bill of Rights, Tyson strives to operate
with integrity and trust and is committed to creating value for its
shareholders, customers and Team Members. The Company also strives to be
faith-friendly, provide a safe work environment and serve as stewards of
the animals, land and environment entrusted to it.
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
888-469-0567. 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 Ruth Ann
Wisener. International callers dial 210-234-0004. The call also will be
webcast live on the Internet at http://ir.tyson.com . A telephone replay
will be available through December 13 at 888-567-0443. International
callers dial 402-998-1795. Financial information, such as this news
release, as well as other quarterly information, including Company
distribution channel information, can be accessed from the Company's web
site at http://ir.tyson.com .
Forward-Looking Statements
Certain information contained in the press release may constitute
forward- looking statements, such as statements relating 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 inputs and raw materials, such as live cattle, live swine, or feed
grains (including corn), and energy; (ii) the Company's ability to realize
anticipated savings from its cost reduction initiatives; (iii) market
conditions for finished products, including competition from other global
and domestic food processors, the supply and pricing of alternative
proteins, and the demand for alternative proteins; (iv) risks associated
with effectively evaluating derivatives and hedging activities; (v) access
to foreign markets together with foreign economic conditions, including
currency fluctuations, and import/export restrictions and foreign politics;
(vi) outbreak of a livestock disease (such as avian influenza (AI) or
bovine spongiform encephalopathy (BSE)) which could have an effect on
livestock owned by the Company, the availability of livestock for purchase
by the Company, consumer perception of certain protein products or the
Company's ability to access certain domestic and foreign markets; (vii)
successful rationalization of existing facilities, and the operating
efficiencies of the facilities; (viii) changes in the availability and
relative costs of labor and contract growers, and the ability of the
Company to maintain good relationships with employees, labor unions,
contract growers and independent producers providing livestock to the
Company; (ix) issues related to food safety, including costs resulting from
product recalls, regulatory compliance and any related claims or
litigation; (x) changes in consumer preference and diets, and the Company's
ability to identify and react to consumer trends; (xi) significant
marketing plan changes by large customers, or the loss of one or more large
customers; (xii) adverse results from litigation; (xiii) risks associated
with leverage, including cost increases due to rising interest rates or
changes in debt ratings or outlook; (xiv) changes in regulations and laws
(both domestic and foreign), including changes in accounting standards, tax
laws, environmental laws and occupational, health and safety laws; (xv) the
ability of the Company to make effective acquisitions and successfully
integrate newly acquired businesses into existing operations; (xvi)
effectiveness of advertising and marketing programs; (xvii) the results of
the Company's on-going tax account balance review; and (xviii) the effect
of, or changes in, general economic conditions.
SOURCE Tyson Foods, Inc.
 back to top
Related links:
http://www.tyson.com
http://ir.tyson.com
CONTACT:
media, Gary Mickelson, +1-479-290-6111, or
investors, Ruth Ann Wisener, +1-479-290-4235, both of Tyson
Foods, Inc.
|
