Tyson Foods, Inc. (NYSE: TSN), today reported $0.12 diluted earnings per share for the first fiscal quarter ended December 30, 2000, compared to $0.25 in the same quarter last year. These results exceeded the consensus estimate of $0.10 per share as reported by First Call, and were at the high end of management’s expectations for the period. First quarter earnings were $27 million compared to $57 million for the same period last year.
Total first quarter sales were $1.74 billion compared to $1.78 billion last year, a decrease of 2.0 percent with a 4.9 percent decrease in volume. Gross profits for the first quarter were $261 million compared to $313 million in the same quarter last year with gross margin at 15.0 percent compared to 17.6 percent last year.
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John Tyson, chairman, president, and CEO, said, “While we met earnings expectations we continue to be disappointed in the depressed market conditions for chicken. During this difficult time we have remained focused on moving our products further up the value chain and growing our market share, resulting in less dependency on pure commodity sales. We feel we are extremely well positioned to capitalize on the more favorable market supply forecasts for the spring of this year.” Mr. Tyson added, “In the meantime we will continue to closely manage the fundamentals of our business.”
The Company presently identifies segments based on the products offered and the nature of customers. This results in the following reported business segments: Food Service, Consumer Products, International, Swine and Other. The Company measures segment profit as gross profit less selling expenses. Information on segments is as follows (in millions):
Sales by Segment Segment Profit
Three Months Ended Three Months Ended
Dec. 30, 2000 Jan. 1, 2000 Dec. 30, 2000 Jan. 1, 2000
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By GlobalData Food Service $802 $825 $37 $70
Consumer Products 529 538 38 53
International 187 188 2 24
Swine 38 32 — (1)
Other 187 196 43 21
Total $1,743 $1,779 $120 $167
First Quarter Segment Review
Food Service first quarter sales decreased 2.8 percent compared to the same period last year, with a 7.9 percent decrease in volume partially offset by a 5.6 percent increase in average sales prices. Segment profit for Food Service decreased $33 million from the same period last year primarily due to lower market prices and product mix changes.
Consumer Products first quarter sales decreased 1.7 percent compared to the same period last year, with a 3.4 percent decrease in average sales prices partially offset by a 1.8 percent increase in volume. Segment profit for Consumer Products decreased $15 million from the same period last year primarily due to lower market prices.
International first quarter sales were comparable to the same period last year, with a 15.5 percent decrease in volume primarily offset by an 18.2 percent increase in average sales prices. Segment profit for International decreased $22 million from the same period last year with $9 million related to the lingering effect of Exotic Newcastle disease on Tyson de Mexico and the remainder due to lower volumes and a change in product mix.
Swine first quarter sales increased 18.8 percent over the same period last year, with a 17.9 percent increase in average sales prices and a 0.6 percent increase in volume. Segment profit for Swine improved slightly from the same period last year primarily due to the increase in average sales prices.
Other first quarter sales decreased 4.6 percent from the same period last year primarily due to a decrease in Prepared Foods sales. Other consists primarily of the Specialty Products group, the Prepared Foods group, the chicken breeding stock subsidiary and other corporate operating activities.
The unaudited results are as follows:
CONSOLIDATED CONDENSED
STATEMENTS OF INCOME
(In millions except per share data)
Three Months Ended
December 30, January 1,
2000 2000
Sales $1,743 $1,779
Cost of Sales 1,482 1,466
261 313
Operating Expenses:
Selling 141 146
General and administrative 44 36
Amortization 8 8
Operating Income 68 123
Other Expense (Income):
Interest 26 29
Foreign currency exchange 1 1
Other — 1
Income Before Taxes on Income
And Minority Interest 41 92
Provision for Income Taxes 14 33
Minority Interest — 2
Net Income $27 $57
Diluted Earnings Per Share $0.12 $ 0.25
Diluted Average Shares Outstanding 224 228
Dividends Per Share:
Class A $0.040 $0.040
Class B $0.036 $0.036
Sales Growth (Decline) (2.0%) (2.5%)
Amounts as Percent of Sales
Gross Profit 15.0% 17.6%
Operating Income 3.9% 6.9%
Income Before Taxes on Income
And Minority Interest 2.3% 5.2%
Net Income 1.5% 3.2%
Effective Tax Rate 34.8% 35.9%
CONSOLIDATED CONDENSED
BALANCE SHEETS
(In millions except per share amounts)
Assets Dec. 30, 2000 Sept. 30, 2000
Current Assets:
Cash and cash equivalents $33 $43
Accounts receivable, net of allowance 506 520
Inventories 984 965
Other current assets 43 48
Total Current Assets 1,566 1,576
Net Property, Plant and Equipment 2,101 2,141
Excess of Investments over Net Assets Acquired 929 937
Investments and Other Assets 203 200
Total Assets $4,799 $4,854
Liabilities and Shareholders’ Equity
Current Liabilities:
Notes payable $50 $62
Current portion of long-term debt 73 123
Trade accounts payable 326 346
Accrued compensation and benefits 138 104
Other accrued liabilities 254 251
Total Current Liabilities 841 886
Long-Term Debt 1,342 1,357
Deferred Income Taxes 389 385
Other Liabilities 51 51
Shareholders’ Equity:
Common stock ($.10 par value)
Class A-authorized 900 million shares:
Issued 138 million shares at 12-30-00
and 9-30-00 14 14
Class B-authorized 900 million shares:
Issued 103 million shares at 12-30-00
and 9-30-00 10 10
Capital in excess of par value 735 735
Retained earnings 1,734 1,715
Other accumulated comprehensive income (6) (5)
2,487 2,469
Less treasury stock, at cost –
18 million shares at 12-30-00
and 16 million shares at 9-30-00 303 284
Less unamortized deferred compensation 8 10
Total Shareholders’ Equity 2,176 2,175
Total Liabilities and Shareholders’ Equity $4,799 $4,854
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
For the Three Months Ended
(In millions)
Dec. 30, 2000 Jan. 1, 2000
Cash Flows from Operating Activities:
Net income $27 $57
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation 65 63
Amortization 8 8
Amortization of deferred compensation 2 —
Foreign currency exchange 1 1
Minority interest — 2
Deferred income taxes (2) (3)
Loss on dispositions of assets — 2
Decrease in accounts receivable, net 14 23
(Increase) decrease in inventories (19) 19
Decrease in trade accounts payable (20) (29)
Increase (decrease) in accrued
compensation and benefits 34 12
Net change in other current assets and
other current liabilities 13 50
Cash Provided by Operating Activities 123 205
Cash Flows from Investing Activities:
Additions to property, plant and equipment (47) (49)
Proceeds from disposition of assets 21 1
Net change in other assets and liabilities (5) (6)
Cash Used for Investing Activities (31) (54)
Cash Flows from Financing Activities:
Net change in notes payable (12) (2)
Proceeds from long-term debt 51 —
Repayments of long-term debt (116) (79)
Purchases of treasury shares (19) (33)
Dividends and other (9) (7)
Cash Used for Financing Activities (105) (121)
Effect of Exchange Rate Change on Cash 3 (1)
(Decrease) Increase in Cash and
Cash Equivalents (10) 29
Cash and Cash Equivalents at
Beginning of Period 43 30
Cash and Cash Equivalents at End of Period $33 $59
Tyson Foods, Inc., headquartered in Springdale, Ark., is the world’s largest fully integrated producer, processor and marketer of chicken and chicken-based convenience foods, with 68,000 team members and 7,400 contract growers in 100 communities. Tyson has operations in 18 states and 15 countries and exports to 73 countries worldwide. Tyson is the recognized market leader in almost every retail and foodservice market it serves. Through its Cobb-Vantress subsidiary, Tyson is also a leading chicken breeding stock supplier. In addition, Tyson is the nation’s second largest maker of corn and flour tortillas under the Mexican Original® brand, as well as a leading provider of live swine.
Forward Looking Statements.
Certain statements contained in this communication are “forward-looking statements,” such as statements relating to the market supply forecasts made by independent third parties for the spring of this year. 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 to differ materially from those expressed in, or implied by, the statements are the following: (i) risks associated with the availability and costs of financing, including cost increases due to rising interest rates; (ii) fluctuations in the cost and availability of raw materials, such as feed grain costs; (iii) changes in the availability and relative costs of labor and contract growers; (iv) market conditions for finished products, including the supply and pricing of alternative proteins; (v) effectiveness of advertising and marketing programs; (vi) changes in regulations and laws, including changes in accounting standards, environmental laws, and occupational, health and safety laws; (vii) access to foreign markets together with foreign economic conditions, including currency fluctuations; (viii) the effect of, or changes in, general economic conditions; and (ix) adverse results from on-going litigation. Tyson undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
Financial information, such as this news release, as well as other historical data and current Company information can now be accessed from the Company’s web site on the internet at http://www.tyson.com.
For a copy of this release, call fax-on-demand at (800) 758-5804, ext. 113769.
