x
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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¨
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Delaware
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71-0225165
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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2200 Don Tyson Parkway, Springdale, Arkansas
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72762-6999
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Class
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Outstanding Shares
|
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Class A Common Stock, $0.10 Par Value (Class A stock)
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278,405,313
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Class B Common Stock, $0.10 Par Value (Class B stock)
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70,010,805
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PAGE
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 1.
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Financial Statements
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Three Months Ended
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Six Months Ended
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||||||||||||
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March 29, 2014
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March 30, 2013
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March 29, 2014
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March 30, 2013
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||||||||
Sales
|
$
|
9,032
|
|
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$
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8,383
|
|
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$
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17,793
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$
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16,749
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Cost of Sales
|
8,381
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7,915
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16,457
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15,742
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||||
Gross Profit
|
651
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468
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1,336
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1,007
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||||
Selling, General and Administrative
|
290
|
|
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232
|
|
|
563
|
|
|
467
|
|
||||
Operating Income
|
361
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|
236
|
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|
773
|
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540
|
|
||||
Other (Income) Expense:
|
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|
|
|
|
|
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||||||||
Interest income
|
(3
|
)
|
|
(2
|
)
|
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(5
|
)
|
|
(3
|
)
|
||||
Interest expense
|
25
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|
|
36
|
|
|
53
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|
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73
|
|
||||
Other, net
|
(2
|
)
|
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(19
|
)
|
|
1
|
|
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(19
|
)
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||||
Total Other (Income) Expense
|
20
|
|
|
15
|
|
|
49
|
|
|
51
|
|
||||
Income from Continuing Operations before Income Taxes
|
341
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|
|
221
|
|
|
724
|
|
|
489
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|
||||
Income Tax Expense
|
131
|
|
|
53
|
|
|
262
|
|
|
149
|
|
||||
Income from Continuing Operations
|
210
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|
|
168
|
|
|
462
|
|
|
340
|
|
||||
Loss from Discontinued Operation, Net of Tax
|
—
|
|
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(62
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)
|
|
—
|
|
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(66
|
)
|
||||
Net Income
|
210
|
|
|
106
|
|
|
462
|
|
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274
|
|
||||
Less: Net Income (Loss) Attributable to Noncontrolling Interests
|
(3
|
)
|
|
11
|
|
|
(5
|
)
|
|
6
|
|
||||
Net Income Attributable to Tyson
|
$
|
213
|
|
|
$
|
95
|
|
|
$
|
467
|
|
|
$
|
268
|
|
Amounts Attributable to Tyson:
|
|
|
|
|
|
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||||||||
Net Income from Continuing Operations
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213
|
|
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157
|
|
|
467
|
|
|
334
|
|
||||
Net Loss from Discontinued Operation
|
—
|
|
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(62
|
)
|
|
—
|
|
|
(66
|
)
|
||||
Net Income Attributable to Tyson
|
$
|
213
|
|
|
$
|
95
|
|
|
$
|
467
|
|
|
$
|
268
|
|
Weighted Average Shares Outstanding:
|
|
|
|
|
|
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|
||||||||
Class A Basic
|
273
|
|
|
283
|
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|
272
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|
|
284
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|
||||
Class B Basic
|
70
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|
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70
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|
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70
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|
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70
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|
||||
Diluted
|
356
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366
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355
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|
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364
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||||
Net Income Per Share from Continuing Operations Attributable to Tyson:
|
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||||||||
Class A Basic
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$
|
0.64
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$
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0.45
|
|
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$
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1.40
|
|
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$
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0.96
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Class B Basic
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$
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0.58
|
|
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$
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0.40
|
|
|
$
|
1.26
|
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$
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0.86
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Diluted
|
$
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0.60
|
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$
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0.43
|
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$
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1.32
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$
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0.92
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Net Loss Per Share from Discontinued Operation Attributable to Tyson:
|
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|
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||||||||
Class A Basic
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$
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—
|
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|
$
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(0.18
|
)
|
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$
|
—
|
|
|
$
|
(0.19
|
)
|
Class B Basic
|
$
|
—
|
|
|
$
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(0.15
|
)
|
|
$
|
—
|
|
|
$
|
(0.16
|
)
|
Diluted
|
$
|
—
|
|
|
$
|
(0.17
|
)
|
|
$
|
—
|
|
|
$
|
(0.18
|
)
|
Net Income Per Share Attributable to Tyson:
|
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|
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||||||||
Class A Basic
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$
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0.64
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$
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0.27
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$
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1.40
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$
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0.77
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Class B Basic
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$
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0.58
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$
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0.25
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$
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1.26
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$
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0.70
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Diluted
|
$
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0.60
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$
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0.26
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$
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1.32
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$
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0.74
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Dividends Declared Per Share:
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||||||||
Class A
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$
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0.075
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$
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0.050
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$
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0.175
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$
|
0.210
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Class B
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$
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0.068
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$
|
0.045
|
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|
$
|
0.158
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$
|
0.189
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
March 29, 2014
|
|
March 30, 2013
|
||||||||
Net Income
|
$
|
210
|
|
|
$
|
106
|
|
|
$
|
462
|
|
|
$
|
274
|
|
Other Comprehensive Income (Loss), Net of Taxes:
|
|
|
|
|
|
|
|
||||||||
Derivatives accounted for as cash flow hedges
|
7
|
|
|
(5
|
)
|
|
5
|
|
|
(14
|
)
|
||||
Investments
|
—
|
|
|
(1
|
)
|
|
3
|
|
|
(3
|
)
|
||||
Currency translation
|
6
|
|
|
(15
|
)
|
|
(5
|
)
|
|
(16
|
)
|
||||
Postretirement benefits
|
—
|
|
|
2
|
|
|
2
|
|
|
3
|
|
||||
Total Other Comprehensive Income (Loss), Net of Taxes
|
13
|
|
|
(19
|
)
|
|
5
|
|
|
(30
|
)
|
||||
Comprehensive Income
|
223
|
|
|
87
|
|
|
467
|
|
|
244
|
|
||||
Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interests
|
(3
|
)
|
|
11
|
|
|
(5
|
)
|
|
6
|
|
||||
Comprehensive Income Attributable to Tyson
|
$
|
226
|
|
|
$
|
76
|
|
|
$
|
472
|
|
|
$
|
238
|
|
|
March 29, 2014
|
|
September 28, 2013
|
||||
Assets
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
438
|
|
|
$
|
1,145
|
|
Accounts receivable, net
|
1,548
|
|
|
1,497
|
|
||
Inventories
|
2,968
|
|
|
2,817
|
|
||
Other current assets
|
230
|
|
|
145
|
|
||
Total Current Assets
|
5,184
|
|
|
5,604
|
|
||
Net Property, Plant and Equipment
|
4,105
|
|
|
4,053
|
|
||
Goodwill
|
1,925
|
|
|
1,902
|
|
||
Intangible Assets
|
156
|
|
|
138
|
|
||
Other Assets
|
516
|
|
|
480
|
|
||
Total Assets
|
$
|
11,886
|
|
|
$
|
12,177
|
|
|
|
|
|
||||
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Current debt
|
$
|
52
|
|
|
$
|
513
|
|
Accounts payable
|
1,429
|
|
|
1,359
|
|
||
Other current liabilities
|
1,024
|
|
|
1,138
|
|
||
Total Current Liabilities
|
2,505
|
|
|
3,010
|
|
||
Long-Term Debt
|
1,888
|
|
|
1,895
|
|
||
Deferred Income Taxes
|
444
|
|
|
479
|
|
||
Other Liabilities
|
585
|
|
|
560
|
|
||
Commitments and Contingencies (Note 15)
|
|
|
|
||||
Shareholders’ Equity:
|
|
|
|
||||
Common stock ($0.10 par value):
|
|
|
|
||||
Class A-authorized 900 million shares, issued 322 million shares
|
32
|
|
|
32
|
|
||
Convertible Class B-authorized 900 million shares, issued 70 million shares
|
7
|
|
|
7
|
|
||
Capital in excess of par value
|
2,181
|
|
|
2,292
|
|
||
Retained earnings
|
5,407
|
|
|
4,999
|
|
||
Accumulated other comprehensive loss
|
(103
|
)
|
|
(108
|
)
|
||
Treasury stock, at cost – 43 million shares at March 29, 2014, and 48 million shares at September 28, 2013
|
(1,088
|
)
|
|
(1,021
|
)
|
||
Total Tyson Shareholders’ Equity
|
6,436
|
|
|
6,201
|
|
||
Noncontrolling Interests
|
28
|
|
|
32
|
|
||
Total Shareholders’ Equity
|
6,464
|
|
|
6,233
|
|
||
Total Liabilities and Shareholders’ Equity
|
$
|
11,886
|
|
|
$
|
12,177
|
|
|
Six Months Ended
|
||||||
|
March 29, 2014
|
|
March 30, 2013
|
||||
Cash Flows From Operating Activities:
|
|
|
|
||||
Net income
|
$
|
462
|
|
|
$
|
274
|
|
Depreciation and amortization
|
254
|
|
|
259
|
|
||
Deferred income taxes
|
(24
|
)
|
|
(24
|
)
|
||
Convertible debt discount
|
(92
|
)
|
|
—
|
|
||
Other, net
|
32
|
|
|
57
|
|
||
Net changes in working capital
|
(367
|
)
|
|
(336
|
)
|
||
Cash Provided by Operating Activities
|
265
|
|
|
230
|
|
||
Cash Flows From Investing Activities:
|
|
|
|
||||
Additions to property, plant and equipment
|
(293
|
)
|
|
(290
|
)
|
||
Purchases of marketable securities
|
(21
|
)
|
|
(79
|
)
|
||
Proceeds from sale of marketable securities
|
18
|
|
|
16
|
|
||
Acquisitions, net of cash acquired
|
(56
|
)
|
|
(10
|
)
|
||
Other, net
|
8
|
|
|
30
|
|
||
Cash Used for Investing Activities
|
(344
|
)
|
|
(333
|
)
|
||
Cash Flows From Financing Activities:
|
|
|
|
||||
Payments on debt
|
(390
|
)
|
|
(55
|
)
|
||
Net proceeds from borrowings
|
14
|
|
|
37
|
|
||
Purchases of Tyson Class A common stock
|
(275
|
)
|
|
(188
|
)
|
||
Dividends
|
(50
|
)
|
|
(70
|
)
|
||
Stock options exercised
|
49
|
|
|
69
|
|
||
Other, net
|
19
|
|
|
2
|
|
||
Cash Used for Financing Activities
|
(633
|
)
|
|
(205
|
)
|
||
Effect of Exchange Rate Changes on Cash
|
5
|
|
|
(1
|
)
|
||
Decrease in Cash and Cash Equivalents
|
(707
|
)
|
|
(309
|
)
|
||
Cash and Cash Equivalents at Beginning of Year
|
1,145
|
|
|
1,071
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
438
|
|
|
$
|
762
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
|
March 29, 2014
|
|
March 30, 2013
|
|
March 29, 2014
|
|
March 30, 2013
|
||||||||||||||||||||
|
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
||||||||||||
Shares repurchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Under share repurchase program
|
|
2.5
|
|
|
$
|
100
|
|
|
2.1
|
|
|
$
|
50
|
|
|
7.1
|
|
|
$
|
250
|
|
|
7.2
|
|
|
$
|
150
|
|
To fund certain obligations under equity compensation plans
|
|
0.4
|
|
|
16
|
|
|
1.1
|
|
|
23
|
|
|
0.7
|
|
|
25
|
|
|
1.9
|
|
|
38
|
|
||||
Total share repurchases
|
|
2.9
|
|
|
$
|
116
|
|
|
3.2
|
|
|
$
|
73
|
|
|
7.8
|
|
|
$
|
275
|
|
|
9.1
|
|
|
$
|
188
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
March 29, 2014
|
|
March 30, 2013
|
|
March 29, 2014
|
|
March 30, 2013
|
||||||||
Sales
|
|
$
|
—
|
|
|
$
|
36
|
|
|
$
|
—
|
|
|
$
|
72
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pretax loss
|
|
—
|
|
|
(62
|
)
|
|
—
|
|
|
(66
|
)
|
||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Loss from discontinued operation, net of tax
|
|
$
|
—
|
|
|
$
|
(62
|
)
|
|
$
|
—
|
|
|
$
|
(66
|
)
|
|
March 29, 2014
|
|
September 28, 2013
|
||||
Processed products:
|
|
|
|
||||
Weighted-average method – chicken, prepared foods and international
|
$
|
745
|
|
|
$
|
799
|
|
First-in, first-out method – beef and pork
|
713
|
|
|
624
|
|
||
Livestock – first-in, first-out method
|
1,109
|
|
|
1,002
|
|
||
Supplies and other – weighted-average method
|
401
|
|
|
392
|
|
||
Total inventory
|
$
|
2,968
|
|
|
$
|
2,817
|
|
|
March 29, 2014
|
|
September 28, 2013
|
||||
Land
|
$
|
102
|
|
|
$
|
100
|
|
Buildings and leasehold improvements
|
2,983
|
|
|
2,945
|
|
||
Machinery and equipment
|
5,615
|
|
|
5,504
|
|
||
Land improvements and other
|
423
|
|
|
417
|
|
||
Buildings and equipment under construction
|
293
|
|
|
236
|
|
||
|
9,416
|
|
|
9,202
|
|
||
Less accumulated depreciation
|
5,311
|
|
|
5,149
|
|
||
Net property, plant and equipment
|
$
|
4,105
|
|
|
$
|
4,053
|
|
|
March 29, 2014
|
|
September 28, 2013
|
||||
Accrued salaries, wages and benefits
|
$
|
324
|
|
|
$
|
419
|
|
Self-insurance reserves
|
269
|
|
|
267
|
|
||
Other
|
431
|
|
|
452
|
|
||
Total other current liabilities
|
$
|
1,024
|
|
|
$
|
1,138
|
|
|
March 29, 2014
|
|
September 28, 2013
|
||||
Revolving credit facility
|
$
|
—
|
|
|
$
|
—
|
|
Senior notes:
|
|
|
|
||||
3.25% Convertible senior notes due October 2013 (2013 Notes)
|
—
|
|
|
458
|
|
||
6.60% Senior notes due April 2016 (2016 Notes)
|
638
|
|
|
638
|
|
||
7.00% Notes due May 2018
|
120
|
|
|
120
|
|
||
4.50% Senior notes due June 2022 (2022 Notes)
|
1,000
|
|
|
1,000
|
|
||
7.00% Notes due January 2028
|
18
|
|
|
18
|
|
||
Discount on senior notes
|
(5
|
)
|
|
(6
|
)
|
||
GO Zone tax-exempt bonds due October 2033 (0.07% at 3/29/2014)
|
100
|
|
|
100
|
|
||
Other
|
69
|
|
|
80
|
|
||
Total debt
|
1,940
|
|
|
2,408
|
|
||
Less current debt
|
52
|
|
|
513
|
|
||
Total long-term debt
|
$
|
1,888
|
|
|
$
|
1,895
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
March 29, 2014
|
|
March 30, 2013
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
210
|
|
|
$
|
168
|
|
|
$
|
462
|
|
|
$
|
340
|
|
Less: Net income (loss) attributable to noncontrolling interests
|
(3
|
)
|
|
11
|
|
|
(5
|
)
|
|
6
|
|
||||
Net income from continuing operations attributable to Tyson
|
213
|
|
|
157
|
|
|
467
|
|
|
334
|
|
||||
Less dividends declared:
|
|
|
|
|
|
|
|
||||||||
Class A
|
20
|
|
|
14
|
|
|
48
|
|
|
60
|
|
||||
Class B
|
5
|
|
|
3
|
|
|
11
|
|
|
13
|
|
||||
Undistributed earnings
|
$
|
188
|
|
|
$
|
140
|
|
|
$
|
408
|
|
|
$
|
261
|
|
|
|
|
|
|
|
|
|
||||||||
Class A undistributed earnings
|
$
|
153
|
|
|
$
|
114
|
|
|
$
|
332
|
|
|
$
|
213
|
|
Class B undistributed earnings
|
35
|
|
|
26
|
|
|
76
|
|
|
48
|
|
||||
Total undistributed earnings
|
$
|
188
|
|
|
$
|
140
|
|
|
$
|
408
|
|
|
$
|
261
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Denominator for basic earnings per share:
|
|
|
|
|
|
|
|
||||||||
Class A weighted average shares
|
273
|
|
|
283
|
|
|
272
|
|
|
284
|
|
||||
Class B weighted average shares, and shares under the if-converted method for diluted earnings per share
|
70
|
|
|
70
|
|
|
70
|
|
|
70
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Stock options and restricted stock
|
6
|
|
|
5
|
|
|
5
|
|
|
5
|
|
||||
Convertible 2013 Notes
|
—
|
|
|
8
|
|
|
—
|
|
|
5
|
|
||||
Warrants
|
7
|
|
|
—
|
|
|
8
|
|
|
—
|
|
||||
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversions
|
356
|
|
|
366
|
|
|
355
|
|
|
364
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net Income Per Share from Continuing Operations Attributable to Tyson:
|
|
|
|
|
|
|
|
||||||||
Class A Basic
|
$
|
0.64
|
|
|
$
|
0.45
|
|
|
$
|
1.40
|
|
|
$
|
0.96
|
|
Class B Basic
|
$
|
0.58
|
|
|
$
|
0.40
|
|
|
$
|
1.26
|
|
|
$
|
0.86
|
|
Diluted
|
$
|
0.60
|
|
|
$
|
0.43
|
|
|
$
|
1.32
|
|
|
$
|
0.92
|
|
Net Income Per Share Attributable to Tyson:
|
|
|
|
|
|
|
|
||||||||
Class A Basic
|
$
|
0.64
|
|
|
$
|
0.27
|
|
|
$
|
1.40
|
|
|
$
|
0.77
|
|
Class B Basic
|
$
|
0.58
|
|
|
$
|
0.25
|
|
|
$
|
1.26
|
|
|
$
|
0.70
|
|
Diluted
|
$
|
0.60
|
|
|
$
|
0.26
|
|
|
$
|
1.32
|
|
|
$
|
0.74
|
|
•
|
Cash Flow Hedges - include certain commodity forward and option contracts of forecasted purchases (i.e., grains) and certain foreign exchange forward contracts.
|
•
|
Fair Value Hedges - include certain commodity forward contracts of firm commitments (i.e., livestock).
|
|
Gain/(Loss)
Recognized in OCI
On Derivatives
|
|
|
Consolidated Condensed
Statements of Income
Classification
|
|
Gain/(Loss)
Reclassified from
OCI to Earnings
|
|
||||||||||
|
Three Months Ended
|
|
|
|
Three Months Ended
|
||||||||||||
|
March 29,
2014 |
|
March 30,
2013 |
|
|
|
March 29,
2014 |
|
March 30,
2013 |
||||||||
Cash Flow Hedge – Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
$
|
8
|
|
|
$
|
(10
|
)
|
|
Cost of Sales
|
|
$
|
(3
|
)
|
|
$
|
(7
|
)
|
Foreign exchange contracts
|
—
|
|
|
(5
|
)
|
|
Other Income/Expense
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
8
|
|
|
$
|
(15
|
)
|
|
|
|
$
|
(3
|
)
|
|
$
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Gain/(Loss)
Recognized in OCI On Derivatives |
|
|
Consolidated Condensed
Statements of Income
Classification
|
|
Gain/(Loss)
Reclassified from OCI to Earnings |
|
||||||||||
|
Six Months Ended
|
|
|
|
Six Months Ended
|
||||||||||||
|
March 29,
2014 |
|
March 30,
2013 |
|
|
|
March 29,
2014 |
|
March 30,
2013 |
||||||||
Cash Flow Hedge – Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
$
|
6
|
|
|
$
|
(23
|
)
|
|
Cost of Sales
|
|
$
|
(3
|
)
|
|
$
|
(3
|
)
|
Foreign exchange contracts
|
(1
|
)
|
|
(5
|
)
|
|
Other Income/Expense
|
|
—
|
|
|
(2
|
)
|
||||
Total
|
$
|
5
|
|
|
$
|
(28
|
)
|
|
|
|
$
|
(3
|
)
|
|
$
|
(5
|
)
|
|
Metric
|
|
March 29, 2014
|
|
September 28, 2013
|
||
Commodity:
|
|
|
|
|
|
||
Live Cattle
|
Pounds
|
|
358
|
|
|
209
|
|
Lean Hogs
|
Pounds
|
|
470
|
|
|
384
|
|
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||
|
Consolidated Condensed
Statements of Income
Classification
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
March 29,
2014 |
|
March 30,
2013 |
|
March 29,
2014 |
|
March 30,
2013 |
|||||||||
Gain/(Loss) on forwards
|
Cost of Sales
|
|
$
|
(34
|
)
|
|
$
|
11
|
|
|
$
|
(40
|
)
|
|
$
|
15
|
|
Gain/(Loss) on purchase contract
|
Cost of Sales
|
|
34
|
|
|
(11
|
)
|
|
40
|
|
|
(15
|
)
|
|
Consolidated Condensed
Statements of Income
Classification
|
|
Gain/(Loss)
Recognized in Earnings
|
|
|
Gain/(Loss)
Recognized in Earnings
|
|
||||||||||
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
|
March 29, 2014
|
|
March 30, 2013
|
|
March 29, 2014
|
|
March 30, 2013
|
||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
Sales
|
|
$
|
30
|
|
|
$
|
(23
|
)
|
|
$
|
32
|
|
|
$
|
(12
|
)
|
Commodity contracts
|
Cost of Sales
|
|
(40
|
)
|
|
—
|
|
|
(42
|
)
|
|
(7
|
)
|
||||
Foreign exchange contracts
|
Other Income/Expense
|
|
2
|
|
|
1
|
|
|
1
|
|
|
2
|
|
||||
Total
|
|
|
$
|
(8
|
)
|
|
$
|
(22
|
)
|
|
$
|
(9
|
)
|
|
$
|
(17
|
)
|
|
Fair Value
|
||||||
|
March 29, 2014
|
|
September 28, 2013
|
||||
Derivative Assets:
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
||||
Commodity contracts
|
$
|
5
|
|
|
$
|
4
|
|
Foreign exchange contracts
|
—
|
|
|
1
|
|
||
Total derivative assets – designated
|
5
|
|
|
5
|
|
||
|
|
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
||||
Commodity contracts
|
45
|
|
|
25
|
|
||
Foreign exchange contracts
|
1
|
|
|
2
|
|
||
Total derivative assets – not designated
|
46
|
|
|
27
|
|
||
|
|
|
|
||||
Total derivative assets
|
$
|
51
|
|
|
$
|
32
|
|
Derivative Liabilities:
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
||||
Commodity contracts
|
$
|
119
|
|
|
$
|
29
|
|
Foreign exchange contracts
|
—
|
|
|
—
|
|
||
Total derivative liabilities – designated
|
119
|
|
|
29
|
|
||
Derivatives not designated as hedging instruments:
|
|
|
|
||||
Commodity contracts
|
66
|
|
|
72
|
|
||
Foreign exchange contracts
|
1
|
|
|
1
|
|
||
Total derivative liabilities – not designated
|
67
|
|
|
73
|
|
||
|
|
|
|
||||
Total derivative liabilities
|
$
|
186
|
|
|
$
|
102
|
|
•
|
Quoted prices for similar assets or liabilities in active markets;
|
•
|
Quoted prices for identical or similar assets in non-active markets;
|
•
|
Inputs other than quoted prices that are observable for the asset or liability; and
|
•
|
Inputs derived principally from or corroborated by other observable market data.
|
March 29, 2014
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting (a)
|
|
Total
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity Derivatives
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
(35
|
)
|
|
$
|
15
|
|
Foreign Exchange Forward Contracts
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Available-for-Sale Securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Non-current
|
3
|
|
|
24
|
|
|
67
|
|
|
—
|
|
|
94
|
|
|||||
Deferred Compensation Assets
|
12
|
|
|
214
|
|
|
—
|
|
|
—
|
|
|
226
|
|
|||||
Total Assets
|
$
|
15
|
|
|
$
|
291
|
|
|
$
|
67
|
|
|
$
|
(35
|
)
|
|
$
|
338
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity Derivatives
|
$
|
—
|
|
|
$
|
185
|
|
|
$
|
—
|
|
|
$
|
(183
|
)
|
|
$
|
2
|
|
Foreign Exchange Forward Contracts
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total Liabilities
|
$
|
—
|
|
|
$
|
186
|
|
|
$
|
—
|
|
|
$
|
(183
|
)
|
|
$
|
3
|
|
September 28, 2013
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting (a)
|
|
Total
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity Derivatives
|
$
|
—
|
|
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
(21
|
)
|
|
$
|
8
|
|
Foreign Exchange Forward Contracts
|
—
|
|
|
3
|
|
|
—
|
|
|
(1
|
)
|
|
2
|
|
|||||
Available-for-Sale Securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Non-current
|
4
|
|
|
24
|
|
|
65
|
|
|
—
|
|
|
93
|
|
|||||
Deferred Compensation Assets
|
23
|
|
|
191
|
|
|
—
|
|
|
—
|
|
|
214
|
|
|||||
Total Assets
|
$
|
27
|
|
|
$
|
248
|
|
|
$
|
65
|
|
|
$
|
(22
|
)
|
|
$
|
318
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity Derivatives
|
$
|
—
|
|
|
$
|
101
|
|
|
$
|
—
|
|
|
$
|
(101
|
)
|
|
$
|
—
|
|
Foreign Exchange Forward Contracts
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total Liabilities
|
$
|
—
|
|
|
$
|
102
|
|
|
$
|
—
|
|
|
$
|
(101
|
)
|
|
$
|
1
|
|
(a)
|
Our derivative assets and liabilities are presented in our Consolidated Condensed Balance Sheets on a net basis. We net derivative assets and liabilities, including cash collateral, when a legally enforceable master netting arrangement exists between the counterparty to a derivative contract and us. At
March 29, 2014
, and
September 28, 2013
, we had posted with various counterparties
$148 million
and
$79 million
, respectively, of cash collateral related to our commodity derivatives and held no cash collateral.
|
|
Six Months Ended
|
||||||
|
March 29, 2014
|
|
March 30, 2013
|
||||
Balance at beginning of year
|
$
|
65
|
|
|
$
|
86
|
|
Total realized and unrealized gains (losses):
|
|
|
|
||||
Included in earnings
|
—
|
|
|
1
|
|
||
Included in other comprehensive income (loss)
|
—
|
|
|
—
|
|
||
Purchases
|
15
|
|
|
9
|
|
||
Issuances
|
—
|
|
|
—
|
|
||
Settlements
|
(13
|
)
|
|
(31
|
)
|
||
Balance at end of period
|
$
|
67
|
|
|
$
|
65
|
|
Total gains (losses) for the six-month period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of period
|
$
|
—
|
|
|
$
|
—
|
|
|
March 29, 2014
|
|
September 28, 2013
|
||||||||||||||||||||
|
Amortized
Cost Basis |
|
|
Fair
Value |
|
|
Unrealized
Gain/(Loss) |
|
|
Amortized
Cost Basis |
|
|
Fair
Value |
|
|
Unrealized
Gain/(Loss) |
|
||||||
Available-for-Sale Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and Agency
|
$
|
26
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
25
|
|
|
$
|
—
|
|
Corporate and Asset-Backed
|
66
|
|
|
67
|
|
|
1
|
|
|
64
|
|
|
65
|
|
|
1
|
|
||||||
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Common Stock and Warrants (a)
|
3
|
|
|
3
|
|
|
—
|
|
|
9
|
|
|
4
|
|
|
(5
|
)
|
(a)
|
At
March 29, 2014
, the amortized cost basis for Equity Securities had been reduced by accumulated other than temporary impairment of approximately
$6 million
.
|
|
March 29, 2014
|
|
September 28, 2013
|
||||||||||||
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
||||||||
Total Debt
|
$
|
2,073
|
|
|
$
|
1,940
|
|
|
$
|
2,541
|
|
|
$
|
2,408
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
March 29, 2014
|
|
March 30, 2013
|
||||||||||||||||||||||||||||||||
|
Before Tax
|
Tax
|
After Tax
|
|
Before Tax
|
Tax
|
After Tax
|
|
Before Tax
|
Tax
|
After Tax
|
|
Before Tax
|
Tax
|
After Tax
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Derivatives accounted for as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
(Gain) loss reclassified to Cost of Sales
|
$
|
3
|
|
$
|
(1
|
)
|
$
|
2
|
|
|
$
|
7
|
|
$
|
(3
|
)
|
$
|
4
|
|
|
$
|
3
|
|
$
|
(1
|
)
|
$
|
2
|
|
|
$
|
3
|
|
$
|
(1
|
)
|
$
|
2
|
|
(Gain) loss reclassified to Other Income/Expense
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
2
|
|
(1
|
)
|
1
|
|
||||||||||||
Unrealized gain (loss)
|
8
|
|
(3
|
)
|
5
|
|
|
(15
|
)
|
6
|
|
(9
|
)
|
|
5
|
|
(2
|
)
|
3
|
|
|
(28
|
)
|
11
|
|
(17
|
)
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
(Gain) loss reclassified to Other Income/Expense
|
—
|
|
—
|
|
—
|
|
|
(1
|
)
|
—
|
|
(1
|
)
|
|
6
|
|
(2
|
)
|
4
|
|
|
(1
|
)
|
—
|
|
(1
|
)
|
||||||||||||
Unrealized gain (loss)
|
—
|
|
—
|
|
—
|
|
|
1
|
|
(1
|
)
|
—
|
|
|
(1
|
)
|
—
|
|
(1
|
)
|
|
(3
|
)
|
1
|
|
(2
|
)
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Currency translation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Translation gain reclassified to Other Income/Expense
|
—
|
|
—
|
|
—
|
|
|
(19
|
)
|
(1
|
)
|
(20
|
)
|
|
—
|
|
—
|
|
—
|
|
|
(19
|
)
|
(1
|
)
|
(20
|
)
|
||||||||||||
Translation adjustment
|
6
|
|
—
|
|
6
|
|
|
5
|
|
—
|
|
5
|
|
|
(5
|
)
|
—
|
|
(5
|
)
|
|
4
|
|
—
|
|
4
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Postretirement benefits
|
1
|
|
(1
|
)
|
—
|
|
|
2
|
|
—
|
|
2
|
|
|
2
|
|
—
|
|
2
|
|
|
3
|
|
—
|
|
3
|
|
||||||||||||
Total Other Comprehensive Income (Loss)
|
$
|
18
|
|
$
|
(5
|
)
|
$
|
13
|
|
|
$
|
(20
|
)
|
$
|
1
|
|
$
|
(19
|
)
|
|
$
|
10
|
|
$
|
(5
|
)
|
$
|
5
|
|
|
$
|
(39
|
)
|
$
|
9
|
|
$
|
(30
|
)
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
|
March 29, 2014
|
|
March 30, 2013
|
|
||||||||
Sales:
|
|
|
|
|
|
|
|
|
|
||||||||
Chicken
|
$
|
2,842
|
|
|
$
|
2,733
|
|
|
|
$
|
5,498
|
|
|
$
|
5,328
|
|
|
Beef
|
3,825
|
|
|
3,447
|
|
|
|
7,559
|
|
|
6,932
|
|
|
||||
Pork
|
1,487
|
|
|
1,311
|
|
|
|
2,911
|
|
|
2,674
|
|
|
||||
Prepared Foods
|
861
|
|
|
803
|
|
|
|
1,768
|
|
|
1,644
|
|
|
||||
International
|
328
|
|
|
331
|
|
|
|
655
|
|
|
658
|
|
|
||||
Other
|
—
|
|
|
27
|
|
|
|
—
|
|
|
47
|
|
|
||||
Intersegment Sales
|
(311
|
)
|
|
(269
|
)
|
|
|
(598
|
)
|
|
(534
|
)
|
|
||||
Total Sales
|
$
|
9,032
|
|
|
$
|
8,383
|
|
|
|
$
|
17,793
|
|
|
$
|
16,749
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Income (Loss):
|
|
|
|
|
|
|
|
|
|
||||||||
Chicken
|
$
|
234
|
|
|
$
|
143
|
|
|
|
$
|
487
|
|
|
$
|
256
|
|
|
Beef
|
35
|
|
|
(26
|
)
|
|
|
93
|
|
|
20
|
|
|
||||
Pork
|
107
|
|
|
72
|
|
|
|
228
|
|
|
197
|
|
|
||||
Prepared Foods
|
21
|
|
|
28
|
|
|
|
37
|
|
|
61
|
|
|
||||
International
|
(30
|
)
|
|
(3
|
)
|
|
|
(58
|
)
|
|
(5
|
)
|
|
||||
Other
|
(6
|
)
|
|
22
|
|
|
|
(14
|
)
|
|
11
|
|
|
||||
Total Operating Income
|
361
|
|
|
236
|
|
|
|
773
|
|
|
540
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Total Other (Income) Expense
|
20
|
|
|
15
|
|
(a)
|
|
49
|
|
|
51
|
|
(a)
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Income from Continuing Operations before Income Taxes
|
$
|
341
|
|
|
$
|
221
|
|
|
|
$
|
724
|
|
|
$
|
489
|
|
|
(a)
|
Includes
$19 million
related to the recognized currency translation adjustment gain
|
•
|
After a trial in the Garcia case, which involves our Garden City, Kansas beef plant, a jury verdict in favor of the plaintiffs was entered on March 17, 2011. Exclusive of pre- and post-judgment interest, attorneys’ fees and costs, the jury found violations of federal and state laws for pre- and post-shift work activities and awarded damages in the amount of
$503,011
. Plaintiffs’ counsel filed an application for attorneys’ fees and expenses which we contested. On December 7, 2012, the court granted plaintiffs' counsel's application and awarded a total of
$3,609,723
. We appealed the jury’s verdict and trial court’s award to the Tenth Circuit Court of Appeals, and oral arguments were held on November 18, 2013.
|
•
|
A jury trial was held in the Bouaphakeo case, which involves our Storm Lake, Iowa pork plant, which resulted in a jury verdict in favor of the plaintiffs for violations of federal and state laws for pre- and post-shift work activities. The trial court also awarded the plaintiffs liquidated damages, resulting in total damages awarded in the amount of
$5,784,758
. The plaintiffs' counsel has also filed an application for attorneys' fees and expenses in the amount of
$2,692,145
. We have appealed the jury's verdict and trial court's award to the Eighth Circuit Court of Appeals. Oral arguments were held on February 11, 2014.
|
•
|
A jury trial was held in the Guyton case, which involves our Columbus Junction, Iowa pork plant, which resulted in a jury verdict in favor of Tyson on April 25, 2012. The plaintiffs have appealed to the Eighth Circuit Court of Appeals. Oral arguments were held on February 11, 2014.
|
•
|
A bench trial was held in the Acosta case, which involves our Madison, Nebraska pork plant, in January 2013. In May 2013 the trial court awarded the plaintiffs
$5,733,943
for unpaid overtime wages. Subsequently, the court ordered the class of plaintiffs expanded, and the plaintiffs submitted an updated calculation of
$6,258,330
for unpaid overtime wages as reflected by payroll data through May 2013. On January 30, 2014, the trial court entered judgment in favor of the plaintiffs in the amount of
$18,774,989
. The court denied our post-trial motions, and we appealed to the Eighth Circuit Court of Appeals.
|
•
|
A jury trial in the Gomez case, which involves our Dakota City, Nebraska beef plant, was held, and the jury found in favor of the plaintiffs on April 3, 2013. On October 2, 2013, the trial court denied the parties’ post-trial motions and entered judgment awarding unpaid overtime wages, liquidated damages, and penalties totaling
$4,960,787
. We appealed the jury’s verdict and trial court’s award to the Eighth Circuit Court of Appeals.
|
•
|
The trial court in the Edwards case, which involves our Perry and Waterloo, Iowa pork plants, decertified the state law class and granted other pre-trial motions that resulted in judgment in our favor with respect to the plaintiffs’ claims. The plaintiffs have filed a motion to modify this judgment.
|
•
|
The parties in the Carter case, which involves our Logansport, Indiana pork plant, agreed to settle all claims for
$950,000
. The parties’ joint motion for approval of the settlement is currently pending.
|
•
|
The trial court in the Abadeer case, which involves our Goodlettsville, Tennessee case-ready beef and pork plant, granted the plaintiffs’ motion for summary judgment in part, finding that certain pre- and post-shift activities were compensable and our non-payment for those activities was willful and not in good faith. The trial for the remaining issues, including damages, originally scheduled in April 2014, is now scheduled to begin in August 2014.
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Condensed Consolidating Statement of Income and Comprehensive Income for the three months ended March 29, 2014
|
|
in millions
|
|
||||||||||||||||
|
TFI
Parent |
|
TFM
Parent |
|
Non-
Guarantors |
|
Eliminations
|
|
Total
|
||||||||||
Sales
|
$
|
148
|
|
|
$
|
5,168
|
|
|
$
|
4,159
|
|
|
$
|
(443
|
)
|
|
$
|
9,032
|
|
Cost of Sales
|
4
|
|
|
4,953
|
|
|
3,867
|
|
|
(443
|
)
|
|
8,381
|
|
|||||
Gross Profit
|
144
|
|
|
215
|
|
|
292
|
|
|
—
|
|
|
651
|
|
|||||
Selling, General and Administrative
|
28
|
|
|
57
|
|
|
205
|
|
|
—
|
|
|
290
|
|
|||||
Operating Income
|
116
|
|
|
158
|
|
|
87
|
|
|
—
|
|
|
361
|
|
|||||
Other (Income) Expense:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net
|
(15
|
)
|
|
34
|
|
|
3
|
|
|
—
|
|
|
22
|
|
|||||
Other, net
|
1
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(2
|
)
|
|||||
Equity in net earnings of subsidiaries
|
(128
|
)
|
|
(6
|
)
|
|
—
|
|
|
134
|
|
|
—
|
|
|||||
Total Other (Income) Expense
|
(142
|
)
|
|
28
|
|
|
—
|
|
|
134
|
|
|
20
|
|
|||||
Income from Continuing Operations before Income Taxes
|
258
|
|
|
130
|
|
|
87
|
|
|
(134
|
)
|
|
341
|
|
|||||
Income Tax Expense
|
45
|
|
|
44
|
|
|
42
|
|
|
—
|
|
|
131
|
|
|||||
Income from Continuing Operations
|
213
|
|
|
86
|
|
|
45
|
|
|
(134
|
)
|
|
210
|
|
|||||
Loss from Discontinued Operation, Net of Tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net Income
|
213
|
|
|
86
|
|
|
45
|
|
|
(134
|
)
|
|
210
|
|
|||||
Less: Net Income (Loss) Attributable to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Net Income Attributable to Tyson
|
$
|
213
|
|
|
$
|
86
|
|
|
$
|
48
|
|
|
$
|
(134
|
)
|
|
$
|
213
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive Income (Loss)
|
224
|
|
|
91
|
|
|
51
|
|
|
(143
|
)
|
|
223
|
|
|||||
Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Comprehensive Income (Loss) Attributable to Tyson
|
$
|
224
|
|
|
$
|
91
|
|
|
$
|
54
|
|
|
$
|
(143
|
)
|
|
$
|
226
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Condensed Consolidating Statement of Income and Comprehensive Income for the three months ended March 30, 2013
|
|
in millions
|
|
||||||||||||||||
|
TFI
Parent |
|
TFM
Parent |
|
Non-
Guarantors |
|
Eliminations
|
|
Total
|
||||||||||
Sales
|
$
|
101
|
|
|
$
|
4,552
|
|
|
$
|
4,008
|
|
|
$
|
(278
|
)
|
|
$
|
8,383
|
|
Cost of Sales
|
11
|
|
|
4,479
|
|
|
3,703
|
|
|
(278
|
)
|
|
7,915
|
|
|||||
Gross Profit
|
90
|
|
|
73
|
|
|
305
|
|
|
—
|
|
|
468
|
|
|||||
Selling, General and Administrative
|
12
|
|
|
45
|
|
|
175
|
|
|
—
|
|
|
232
|
|
|||||
Operating Income
|
78
|
|
|
28
|
|
|
130
|
|
|
—
|
|
|
236
|
|
|||||
Other (Income) Expense:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net
|
9
|
|
|
15
|
|
|
10
|
|
|
—
|
|
|
34
|
|
|||||
Other, net
|
4
|
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|
(19
|
)
|
|||||
Equity in net earnings of subsidiaries
|
(51
|
)
|
|
10
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|||||
Total Other (Income) Expense
|
(38
|
)
|
|
25
|
|
|
(13
|
)
|
|
41
|
|
|
15
|
|
|||||
Income from Continuing Operations before Income Taxes
|
116
|
|
|
3
|
|
|
143
|
|
|
(41
|
)
|
|
221
|
|
|||||
Income Tax Expense
|
21
|
|
|
2
|
|
|
30
|
|
|
—
|
|
|
53
|
|
|||||
Income from Continuing Operations
|
95
|
|
|
1
|
|
|
113
|
|
|
(41
|
)
|
|
168
|
|
|||||
Loss from Discontinued Operation, Net of Tax
|
—
|
|
|
—
|
|
|
(62
|
)
|
|
—
|
|
|
(62
|
)
|
|||||
Net Income
|
95
|
|
|
1
|
|
|
51
|
|
|
(41
|
)
|
|
106
|
|
|||||
Less: Net Income (Loss) Attributable to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|||||
Net Income Attributable to Tyson
|
$
|
95
|
|
|
$
|
1
|
|
|
$
|
40
|
|
|
$
|
(41
|
)
|
|
$
|
95
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive Income (Loss)
|
87
|
|
|
(22
|
)
|
|
(19
|
)
|
|
41
|
|
|
87
|
|
|||||
Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|||||
Comprehensive Income (Loss) Attributable to Tyson
|
$
|
87
|
|
|
$
|
(22
|
)
|
|
$
|
(30
|
)
|
|
$
|
41
|
|
|
$
|
76
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Condensed Consolidating Statement of Income and Comprehensive Income for the six months ended March 29, 2014
|
|
in millions
|
|
||||||||||||||||
|
TFI
Parent |
|
TFM
Parent |
|
Non-
Guarantors |
|
Eliminations
|
|
Total
|
||||||||||
Sales
|
$
|
315
|
|
|
$
|
10,216
|
|
|
$
|
8,146
|
|
|
$
|
(884
|
)
|
|
$
|
17,793
|
|
Cost of Sales
|
21
|
|
|
9,779
|
|
|
7,541
|
|
|
(884
|
)
|
|
16,457
|
|
|||||
Gross Profit
|
294
|
|
|
437
|
|
|
605
|
|
|
—
|
|
|
1,336
|
|
|||||
Selling, General and Administrative
|
51
|
|
|
112
|
|
|
400
|
|
|
—
|
|
|
563
|
|
|||||
Operating Income
|
243
|
|
|
325
|
|
|
205
|
|
|
—
|
|
|
773
|
|
|||||
Other (Income) Expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense, net
|
(10
|
)
|
|
49
|
|
|
9
|
|
|
—
|
|
|
48
|
|
|||||
Other, net
|
7
|
|
|
(1
|
)
|
|
(5
|
)
|
|
—
|
|
|
1
|
|
|||||
Equity in net earnings of subsidiaries
|
(303
|
)
|
|
(12
|
)
|
|
—
|
|
|
315
|
|
|
—
|
|
|||||
Total Other (Income) Expense
|
(306
|
)
|
|
36
|
|
|
4
|
|
|
315
|
|
|
49
|
|
|||||
Income from Continuing Operations before Income Taxes
|
549
|
|
|
289
|
|
|
201
|
|
|
(315
|
)
|
|
724
|
|
|||||
Income Tax Expense
|
82
|
|
|
96
|
|
|
84
|
|
|
—
|
|
|
262
|
|
|||||
Income from Continuing Operations
|
467
|
|
|
193
|
|
|
117
|
|
|
(315
|
)
|
|
462
|
|
|||||
Loss from Discontinued Operation, Net of Tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net Income
|
467
|
|
|
193
|
|
|
117
|
|
|
(315
|
)
|
|
462
|
|
|||||
Less: Net Income (Loss) Attributable to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||||
Net Income Attributable to Tyson
|
$
|
467
|
|
|
$
|
193
|
|
|
$
|
122
|
|
|
$
|
(315
|
)
|
|
$
|
467
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive Income (Loss)
|
467
|
|
|
192
|
|
|
114
|
|
|
(306
|
)
|
|
467
|
|
|||||
Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||||
Comprehensive Income (Loss) Attributable to Tyson
|
$
|
467
|
|
|
$
|
192
|
|
|
$
|
119
|
|
|
$
|
(306
|
)
|
|
$
|
472
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Condensed Consolidating Statement of Income and Comprehensive Income for the six months ended March 30, 2013
|
|
in millions
|
|
||||||||||||||||
|
TFI
Parent |
|
TFM
Parent |
|
Non-
Guarantors |
|
Eliminations
|
|
Total
|
||||||||||
Sales
|
$
|
176
|
|
|
$
|
9,302
|
|
|
$
|
7,876
|
|
|
$
|
(605
|
)
|
|
$
|
16,749
|
|
Cost of Sales
|
27
|
|
|
9,017
|
|
|
7,303
|
|
|
(605
|
)
|
|
15,742
|
|
|||||
Gross Profit
|
149
|
|
|
285
|
|
|
573
|
|
|
—
|
|
|
1,007
|
|
|||||
Selling, General and Administrative
|
32
|
|
|
97
|
|
|
338
|
|
|
—
|
|
|
467
|
|
|||||
Operating Income
|
117
|
|
|
188
|
|
|
235
|
|
|
—
|
|
|
540
|
|
|||||
Other (Income) Expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense, net
|
17
|
|
|
31
|
|
|
22
|
|
|
—
|
|
|
70
|
|
|||||
Other, net
|
4
|
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|
(19
|
)
|
|||||
Equity in net earnings of subsidiaries
|
(200
|
)
|
|
(14
|
)
|
|
—
|
|
|
214
|
|
|
—
|
|
|||||
Total Other (Income) Expense
|
(179
|
)
|
|
17
|
|
|
(1
|
)
|
|
214
|
|
|
51
|
|
|||||
Income from Continuing Operations before Income Taxes
|
296
|
|
|
171
|
|
|
236
|
|
|
(214
|
)
|
|
489
|
|
|||||
Income Tax Expense
|
28
|
|
|
53
|
|
|
68
|
|
|
—
|
|
|
149
|
|
|||||
Income from Continuing Operations
|
268
|
|
|
118
|
|
|
168
|
|
|
(214
|
)
|
|
340
|
|
|||||
Loss from Discontinued Operation, Net of Tax
|
—
|
|
|
—
|
|
|
(66
|
)
|
|
—
|
|
|
(66
|
)
|
|||||
Net Income
|
268
|
|
|
118
|
|
|
102
|
|
|
(214
|
)
|
|
274
|
|
|||||
Less: Net Income (Loss) Attributable to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|||||
Net Income Attributable to Tyson
|
$
|
268
|
|
|
$
|
118
|
|
|
$
|
96
|
|
|
$
|
(214
|
)
|
|
$
|
268
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive Income (Loss)
|
244
|
|
|
99
|
|
|
31
|
|
|
(130
|
)
|
|
244
|
|
|||||
Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|||||
Comprehensive Income (Loss) Attributable to Tyson
|
$
|
244
|
|
|
$
|
99
|
|
|
$
|
25
|
|
|
$
|
(130
|
)
|
|
$
|
238
|
|
Condensed Consolidating Balance Sheet as of March 29, 2014
|
|
in millions
|
|
||||||||||||||||
|
TFI
Parent |
|
TFM
Parent |
|
Non-
Guarantors |
|
Eliminations
|
|
Total
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
418
|
|
|
$
|
—
|
|
|
$
|
438
|
|
Accounts receivable, net
|
1
|
|
|
636
|
|
|
911
|
|
|
—
|
|
|
1,548
|
|
|||||
Inventories
|
—
|
|
|
1,245
|
|
|
1,723
|
|
|
—
|
|
|
2,968
|
|
|||||
Other current assets
|
137
|
|
|
46
|
|
|
222
|
|
|
(175
|
)
|
|
230
|
|
|||||
Total Current Assets
|
138
|
|
|
1,947
|
|
|
3,274
|
|
|
(175
|
)
|
|
5,184
|
|
|||||
Net Property, Plant and Equipment
|
31
|
|
|
906
|
|
|
3,168
|
|
|
—
|
|
|
4,105
|
|
|||||
Goodwill
|
—
|
|
|
881
|
|
|
1,044
|
|
|
—
|
|
|
1,925
|
|
|||||
Intangible Assets
|
—
|
|
|
18
|
|
|
138
|
|
|
—
|
|
|
156
|
|
|||||
Other Assets
|
165
|
|
|
145
|
|
|
265
|
|
|
(59
|
)
|
|
516
|
|
|||||
Investment in Subsidiaries
|
12,230
|
|
|
2,046
|
|
|
—
|
|
|
(14,276
|
)
|
|
—
|
|
|||||
Total Assets
|
$
|
12,564
|
|
|
$
|
5,943
|
|
|
$
|
7,889
|
|
|
$
|
(14,510
|
)
|
|
$
|
11,886
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
52
|
|
|
$
|
—
|
|
|
$
|
52
|
|
Accounts payable
|
36
|
|
|
650
|
|
|
743
|
|
|
—
|
|
|
1,429
|
|
|||||
Other current liabilities
|
4,157
|
|
|
286
|
|
|
822
|
|
|
(4,241
|
)
|
|
1,024
|
|
|||||
Total Current Liabilities
|
4,193
|
|
|
936
|
|
|
1,617
|
|
|
(4,241
|
)
|
|
2,505
|
|
|||||
Long-Term Debt
|
1,771
|
|
|
1
|
|
|
175
|
|
|
(59
|
)
|
|
1,888
|
|
|||||
Deferred Income Taxes
|
26
|
|
|
73
|
|
|
345
|
|
|
—
|
|
|
444
|
|
|||||
Other Liabilities
|
138
|
|
|
156
|
|
|
291
|
|
|
—
|
|
|
585
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Tyson Shareholders’ Equity
|
6,436
|
|
|
4,777
|
|
|
5,433
|
|
|
(10,210
|
)
|
|
6,436
|
|
|||||
Noncontrolling Interest
|
—
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
28
|
|
|||||
Total Shareholders’ Equity
|
6,436
|
|
|
4,777
|
|
|
5,461
|
|
|
(10,210
|
)
|
|
6,464
|
|
|||||
Total Liabilities and Shareholders’ Equity
|
$
|
12,564
|
|
|
$
|
5,943
|
|
|
$
|
7,889
|
|
|
$
|
(14,510
|
)
|
|
$
|
11,886
|
|
Condensed Consolidating Balance Sheet as of September 28, 2013
|
|
in millions
|
|
||||||||||||||||
|
TFI
Parent |
|
TFM
Parent |
|
Non-
Guarantors |
|
Eliminations
|
|
Total
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
1,124
|
|
|
$
|
—
|
|
|
$
|
1,145
|
|
Accounts receivable, net
|
—
|
|
|
571
|
|
|
926
|
|
|
—
|
|
|
1,497
|
|
|||||
Inventories
|
—
|
|
|
1,039
|
|
|
1,778
|
|
|
—
|
|
|
2,817
|
|
|||||
Other current assets
|
351
|
|
|
88
|
|
|
117
|
|
|
(411
|
)
|
|
145
|
|
|||||
Total Current Assets
|
351
|
|
|
1,719
|
|
|
3,945
|
|
|
(411
|
)
|
|
5,604
|
|
|||||
Net Property, Plant and Equipment
|
32
|
|
|
891
|
|
|
3,130
|
|
|
—
|
|
|
4,053
|
|
|||||
Goodwill
|
—
|
|
|
881
|
|
|
1,021
|
|
|
—
|
|
|
1,902
|
|
|||||
Intangible Assets
|
—
|
|
|
21
|
|
|
117
|
|
|
—
|
|
|
138
|
|
|||||
Other Assets
|
895
|
|
|
162
|
|
|
244
|
|
|
(821
|
)
|
|
480
|
|
|||||
Investment in Subsidiaries
|
11,975
|
|
|
2,035
|
|
|
—
|
|
|
(14,010
|
)
|
|
—
|
|
|||||
Total Assets
|
$
|
13,253
|
|
|
$
|
5,709
|
|
|
$
|
8,457
|
|
|
$
|
(15,242
|
)
|
|
$
|
12,177
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current debt
|
$
|
457
|
|
|
$
|
132
|
|
|
$
|
251
|
|
|
$
|
(327
|
)
|
|
$
|
513
|
|
Accounts payable
|
27
|
|
|
575
|
|
|
757
|
|
|
—
|
|
|
1,359
|
|
|||||
Other current liabilities
|
4,625
|
|
|
200
|
|
|
901
|
|
|
(4,588
|
)
|
|
1,138
|
|
|||||
Total Current Liabilities
|
5,109
|
|
|
907
|
|
|
1,909
|
|
|
(4,915
|
)
|
|
3,010
|
|
|||||
Long-Term Debt
|
1,770
|
|
|
679
|
|
|
241
|
|
|
(795
|
)
|
|
1,895
|
|
|||||
Deferred Income Taxes
|
24
|
|
|
93
|
|
|
362
|
|
|
—
|
|
|
479
|
|
|||||
Other Liabilities
|
149
|
|
|
155
|
|
|
282
|
|
|
(26
|
)
|
|
560
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Tyson Shareholders’ Equity
|
6,201
|
|
|
3,875
|
|
|
5,631
|
|
|
(9,506
|
)
|
|
6,201
|
|
|||||
Noncontrolling Interest
|
—
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
|||||
Total Shareholders’ Equity
|
6,201
|
|
|
3,875
|
|
|
5,663
|
|
|
(9,506
|
)
|
|
6,233
|
|
|||||
Total Liabilities and Shareholders’ Equity
|
$
|
13,253
|
|
|
$
|
5,709
|
|
|
$
|
8,457
|
|
|
$
|
(15,242
|
)
|
|
$
|
12,177
|
|
Condensed Consolidating Statement of Cash Flows for the six months ended March 29, 2014
|
|
in millions
|
|
||||||||||||||||
|
TFI
Parent |
|
TFM
Parent |
|
Non-
Guarantors |
|
Eliminations
|
|
Total
|
||||||||||
Cash Provided by (Used for) Operating Activities
|
$
|
10
|
|
|
$
|
129
|
|
|
$
|
171
|
|
|
$
|
(45
|
)
|
|
$
|
265
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Additions to property, plant and equipment
|
(1
|
)
|
|
(67
|
)
|
|
(225
|
)
|
|
—
|
|
|
(293
|
)
|
|||||
(Purchases of)/Proceeds from marketable securities, net
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Acquisitions, net of cash acquired
|
—
|
|
|
—
|
|
|
(56
|
)
|
|
—
|
|
|
(56
|
)
|
|||||
Other, net
|
—
|
|
|
1
|
|
|
7
|
|
|
—
|
|
|
8
|
|
|||||
Cash Provided by (Used for) Investing Activities
|
(1
|
)
|
|
(66
|
)
|
|
(277
|
)
|
|
—
|
|
|
(344
|
)
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net change in debt
|
(370
|
)
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(376
|
)
|
|||||
Purchases of Tyson Class A common stock
|
(275
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(275
|
)
|
|||||
Dividends
|
(50
|
)
|
|
—
|
|
|
(45
|
)
|
|
45
|
|
|
(50
|
)
|
|||||
Stock options exercised
|
49
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49
|
|
|||||
Other, net
|
19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|||||
Net change in intercompany balances
|
618
|
|
|
(64
|
)
|
|
(554
|
)
|
|
—
|
|
|
—
|
|
|||||
Cash Provided by (Used for) Financing Activities
|
(9
|
)
|
|
(64
|
)
|
|
(605
|
)
|
|
45
|
|
|
(633
|
)
|
|||||
Effect of Exchange Rate Change on Cash
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||
Increase (Decrease) in Cash and Cash Equivalents
|
—
|
|
|
(1
|
)
|
|
(706
|
)
|
|
—
|
|
|
(707
|
)
|
|||||
Cash and Cash Equivalents at Beginning of Year
|
—
|
|
|
21
|
|
|
1,124
|
|
|
—
|
|
|
1,145
|
|
|||||
Cash and Cash Equivalents at End of Period
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
418
|
|
|
$
|
—
|
|
|
$
|
438
|
|
Condensed Consolidating Statement of Cash Flows for the six months ended March 30, 2013
|
|
in millions
|
|
||||||||||||||||
|
TFI
Parent |
|
TFM
Parent |
|
Non-
Guarantors |
|
Eliminations
|
|
Total
|
||||||||||
Cash Provided by (Used for) Operating Activities
|
$
|
89
|
|
|
$
|
76
|
|
|
$
|
78
|
|
|
$
|
(13
|
)
|
|
$
|
230
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Additions to property, plant and equipment
|
(2
|
)
|
|
(54
|
)
|
|
(234
|
)
|
|
—
|
|
|
(290
|
)
|
|||||
(Purchases of)/Proceeds from marketable securities, net
|
—
|
|
|
(13
|
)
|
|
(50
|
)
|
|
—
|
|
|
(63
|
)
|
|||||
Acquisitions, net of cash acquired
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
|||||
Other, net
|
(3
|
)
|
|
—
|
|
|
33
|
|
|
—
|
|
|
30
|
|
|||||
Cash Provided by (Used for) Investing Activities
|
(5
|
)
|
|
(67
|
)
|
|
(261
|
)
|
|
—
|
|
|
(333
|
)
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net change in debt
|
(1
|
)
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
(18
|
)
|
|||||
Purchases of Tyson Class A common stock
|
(188
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(188
|
)
|
|||||
Dividends
|
(70
|
)
|
|
—
|
|
|
(13
|
)
|
|
13
|
|
|
(70
|
)
|
|||||
Stock options exercised
|
69
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|||||
Other, net
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Net change in intercompany balances
|
103
|
|
|
4
|
|
|
(107
|
)
|
|
—
|
|
|
—
|
|
|||||
Cash Provided by (Used for) Financing Activities
|
(85
|
)
|
|
4
|
|
|
(137
|
)
|
|
13
|
|
|
(205
|
)
|
|||||
Effect of Exchange Rate Change on Cash
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Increase (Decrease) in Cash and Cash Equivalents
|
(1
|
)
|
|
13
|
|
|
(321
|
)
|
|
—
|
|
|
(309
|
)
|
|||||
Cash and Cash Equivalents at Beginning of Year
|
1
|
|
|
9
|
|
|
1,061
|
|
|
—
|
|
|
1,071
|
|
|||||
Cash and Cash Equivalents at End of Period
|
$
|
—
|
|
|
$
|
22
|
|
|
$
|
740
|
|
|
$
|
—
|
|
|
$
|
762
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
General – Operating income grew 53% in the second quarter of fiscal 2014 over the same period in fiscal 2013 and was led by strong earnings in our Chicken and Pork segments.
|
•
|
We continued to execute our strategy of accelerating growth in domestic value-added chicken sales, prepared food sales and international chicken production, innovating products, services and customer insights and cultivating our talent development to support Tyson's growth for the future.
|
•
|
We also maintained focus on maximizing our margins through margin management and operational efficiency improvements. Margin management improvements occurred in the areas of mix, export sales, price optimization and value-added product initiatives. The operational efficiencies occurred in areas of yields, cost reduction and labor management.
|
•
|
Market environment – Our Chicken segment delivered strong results in the second quarter of fiscal 2014 driven by favorable domestic market conditions associated with strong demand for our chicken products. Our Beef segment experienced record high fed cattle costs and reduced availability of fed cattle supplies but increased operating margins by maximizing our revenues relative to the rising live cattle markets. Our Pork segment results remained strong in the second quarter of fiscal 2014 due to mix changes and favorable market conditions associated with lower total pork supplies. Our Prepared Foods segment was challenged by volatile raw material prices in addition to costs incurred as we continue to invest in our lunchmeat business and growth platforms. Our International segment experienced losses due to challenging market conditions in China and Brazil.
|
•
|
Discontinued Operation – In the third quarter of fiscal 2013, we reported our Weifang operation in China, which was previously part of our Chicken segment, as a discontinued operation. Accordingly, Weifang's results are reported as a discontinued operation for all periods presented.
|
•
|
Margins – Our total operating margin was
4.0%
in the
second
quarter of fiscal
2014
. Operating margins by segment were as follows:
|
•
|
Chicken
–
8.2%
|
•
|
Beef
–
0.9%
|
•
|
Pork
–
7.2%
|
•
|
Prepared Foods
–
2.4%
|
•
|
International
–
(9.1)%
|
•
|
Debt and Liquidity – During the
second
quarter of fiscal
2014
we used
$96 million
of cash to fund operations. Additionally, we repurchased, as part of our share repurchase program,
2.5 million
shares of our Class A stock for
$100 million
. At
March 29, 2014
, we had approximately
$1.4 billion
of liquidity, which includes availability under our credit facility and
$438 million
of cash and cash equivalents.
|
in millions, except per share data
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
March 29, 2014
|
|
March 30, 2013
|
||||||||
Net income from continuing operations attributable to Tyson
|
$
|
213
|
|
|
$
|
157
|
|
|
$
|
467
|
|
|
$
|
334
|
|
Net income from continuing operations attributable to Tyson – per diluted share
|
0.60
|
|
|
0.43
|
|
|
1.32
|
|
|
0.92
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss from discontinued operation attributable to Tyson
|
—
|
|
|
(62
|
)
|
|
—
|
|
|
(66
|
)
|
||||
Net loss from discontinued operation attributable to Tyson – per diluted share
|
—
|
|
|
(0.17
|
)
|
|
—
|
|
|
(0.18
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Tyson
|
213
|
|
|
95
|
|
|
467
|
|
|
268
|
|
||||
Net income attributable to Tyson – per diluted share
|
0.60
|
|
|
0.26
|
|
|
1.32
|
|
|
0.74
|
|
•
|
$19 million, or $0.05 per diluted share, related to a recognized currency translation adjustment.
|
in millions
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
March 29, 2014
|
|
March 30, 2013
|
||||||||
Sales
|
$
|
9,032
|
|
|
$
|
8,383
|
|
|
$
|
17,793
|
|
|
$
|
16,749
|
|
Change in sales volume
|
2.8
|
%
|
|
|
|
2.6
|
%
|
|
|
||||||
Change in average sales price
|
5.2
|
%
|
|
|
|
3.8
|
%
|
|
|
||||||
Sales growth
|
7.7
|
%
|
|
|
|
6.2
|
%
|
|
|
•
|
Sales Volume
– Sales were positively impacted by higher sales volume, which accounted for an increase of $141 million. All segments, with the exception of the Beef segment, had an increase in sales volume.
|
•
|
Average Sales Price
– Sales were positively impacted by higher average sales prices, which accounted for an increase of $508 million. The Beef and Pork segments had an increase in average sales price largely due to increased pricing associated with rising cattle and hog costs. These increases were partially offset by a decrease in average sales price in the Chicken, Prepared Foods and International segments which was driven by lower feed ingredient costs and volatile markets in our International segment.
|
•
|
Sales Volume
– Sales were positively impacted by higher sales volume, which accounted for an increase of $362 million. All segments, with the exception of the Pork segment, had an increase in sales volume.
|
•
|
Average Sales Price
– Sales were positively impacted by higher average sales prices, which accounted for an increase of $682 million. All segments, with the exception of the Chicken and International segments, had an increase in average sales price largely due to continued tight domestic availability of protein, increased pricing associated with rising live and raw material costs, and improved mix. These increases were partially offset by a decrease in average sales price in the Chicken and International segments driven by lower feed ingredient costs and volatile markets in our International segment.
|
in millions
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
March 29, 2014
|
|
March 30, 2013
|
||||||||
Cost of sales
|
$
|
8,381
|
|
|
$
|
7,915
|
|
|
$
|
16,457
|
|
|
$
|
15,742
|
|
Gross profit
|
$
|
651
|
|
|
$
|
468
|
|
|
$
|
1,336
|
|
|
$
|
1,007
|
|
Cost of sales as a percentage of sales
|
92.8
|
%
|
|
94.4
|
%
|
|
92.5
|
%
|
|
94.0
|
%
|
•
|
Cost of sales increased $466 million. Higher input cost per pound increased cost of sales $314 million and higher sales volume increased cost of sales $152 million.
|
•
|
The $314 million impact of higher input cost per pound was primarily driven by:
|
•
|
Increases in live cattle and live hog costs of approximately $355 million and $90 million, respectively.
|
•
|
Increase in raw material and other input costs in our Prepared Foods segment of approximately $25 million.
|
•
|
Decreases in feed costs of approximately $175 million in our Chicken segment and $13 million in our International segment.
|
•
|
The $152 million impact of higher sales volume was driven by increases in sales volume in all of our segments other than our Beef segment.
|
•
|
Cost of sales increased $715 million. Higher input cost per pound increased cost of sales $357 million and higher sales volume increased cost of sales $358 million.
|
•
|
The $357 million impact of higher input cost per pound was primarily driven by:
|
•
|
Increases in live cattle and live hog costs of approximately $450 million and $140 million, respectively.
|
•
|
Increase in raw material and other input costs in our Prepared Foods segment of approximately $65 million.
|
•
|
Decrease in feed costs of approximately $340 million in our Chicken segment and $18 million in our International segment.
|
•
|
The $358 million impact of higher sales volume was driven by increases in sales volume in all of our segments other than our Pork segment.
|
in millions
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
March 29, 2014
|
|
March 30, 2013
|
||||||||
Selling, general and administrative expense
|
$
|
290
|
|
|
$
|
232
|
|
|
$
|
563
|
|
|
$
|
467
|
|
As a percentage of sales
|
3.2
|
%
|
|
2.8
|
%
|
|
3.2
|
%
|
|
2.8
|
%
|
•
|
Increase of $24 million related to employee costs including payroll and stock-based and incentive-based compensation.
|
•
|
Increase of $18 million related to advertising, sales promotions and commissions.
|
•
|
Increase of $12 million related to professional fees and charitable contributions.
|
•
|
Increase of $37 million related to employee costs including payroll and stock-based and incentive-based compensation.
|
•
|
Increase of $35 million related to advertising, sales promotions and commissions.
|
•
|
Increase of $20 million related to professional fees and charitable contributions.
|
in millions
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
March 29, 2014
|
|
March 30, 2013
|
||||||||
Cash interest expense
|
$
|
24
|
|
|
$
|
29
|
|
|
$
|
49
|
|
|
$
|
59
|
|
Non-cash interest expense
|
1
|
|
|
7
|
|
|
4
|
|
|
14
|
|
||||
Total Interest Expense
|
$
|
25
|
|
|
$
|
36
|
|
|
$
|
53
|
|
|
$
|
73
|
|
•
|
Cash interest expense includes interest expense related to the coupon rates for senior notes and commitment/letter of credit fees incurred on our revolving credit facilities. The decrease is due to a lower average debt balance compared to the same period in fiscal 2013 as our 2013 Notes were paid off and retired on October 15, 2013.
|
•
|
Non-cash interest expense primarily includes interest related to the amortization of debt issuance costs and discounts/premiums on note issuances. The decrease is due to lower amortization of debt issuance costs and discounts compared to the same period in fiscal 2013 as our 2013 Notes were paid off and retired on October 15, 2013.
|
in millions
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
March 29, 2014
|
|
March 30, 2013
|
||||||||
|
$
|
(2
|
)
|
|
$
|
(19
|
)
|
|
$
|
1
|
|
|
$
|
(19
|
)
|
•
|
Included an expense of
$6 million
related to the impairment of an equity security investment, which was partially offset by income of $5 million of equity earnings in joint ventures and foreign currency exchange gains.
|
•
|
Included $19 million related to a currency translation adjustment gain recognized in conjunction with the receipt of proceeds constituting the final resolution of our investment in Canada.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
March 29, 2014
|
|
March 30, 2013
|
||||
|
38.3
|
%
|
|
23.9
|
%
|
|
36.2
|
%
|
|
30.4
|
%
|
•
|
state income taxes;
|
•
|
the domestic production deduction; and
|
•
|
losses in foreign jurisdictions for which no benefit is recognized.
|
•
|
the non-taxable currency translation adjustment gain;
|
•
|
the retroactive extension of tax credits;
|
•
|
change in tax reserves;
|
•
|
state income taxes;
|
•
|
the domestic production deduction; and
|
•
|
losses in foreign jurisdictions for which no benefit is recognized.
|
in millions
|
Sales
|
||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
March 29, 2014
|
|
March 30, 2013
|
||||||||
Chicken
|
$
|
2,842
|
|
|
$
|
2,733
|
|
|
$
|
5,498
|
|
|
$
|
5,328
|
|
Beef
|
3,825
|
|
|
3,447
|
|
|
7,559
|
|
|
6,932
|
|
||||
Pork
|
1,487
|
|
|
1,311
|
|
|
2,911
|
|
|
2,674
|
|
||||
Prepared Foods
|
861
|
|
|
803
|
|
|
1,768
|
|
|
1,644
|
|
||||
International
|
328
|
|
|
331
|
|
|
655
|
|
|
658
|
|
||||
Other
|
—
|
|
|
27
|
|
|
—
|
|
|
47
|
|
||||
Intersegment Sales
|
(311
|
)
|
|
(269
|
)
|
|
(598
|
)
|
|
(534
|
)
|
||||
Total
|
$
|
9,032
|
|
|
$
|
8,383
|
|
|
$
|
17,793
|
|
|
$
|
16,749
|
|
in millions
|
Operating Income (Loss)
|
||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
March 29, 2014
|
|
March 30, 2013
|
||||||||
Chicken
|
$
|
234
|
|
|
$
|
143
|
|
|
$
|
487
|
|
|
$
|
256
|
|
Beef
|
35
|
|
|
(26
|
)
|
|
93
|
|
|
20
|
|
||||
Pork
|
107
|
|
|
72
|
|
|
228
|
|
|
197
|
|
||||
Prepared Foods
|
21
|
|
|
28
|
|
|
37
|
|
|
61
|
|
||||
International
|
(30
|
)
|
|
(3
|
)
|
|
(58
|
)
|
|
(5
|
)
|
||||
Other
|
(6
|
)
|
|
22
|
|
|
(14
|
)
|
|
11
|
|
||||
Total
|
$
|
361
|
|
|
$
|
236
|
|
|
$
|
773
|
|
|
$
|
540
|
|
in millions
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
Change
|
|
March 29, 2014
|
|
March 30, 2013
|
|
Change
|
||||||||||||
Sales
|
$
|
2,842
|
|
|
$
|
2,733
|
|
|
$
|
109
|
|
|
$
|
5,498
|
|
|
$
|
5,328
|
|
|
$
|
170
|
|
Sales Volume Change
|
|
|
|
|
4.3
|
%
|
|
|
|
|
|
3.4
|
%
|
||||||||||
Average Sales Price Change
|
|
|
|
|
(0.3
|
)%
|
|
|
|
|
|
(0.2
|
)%
|
||||||||||
Operating Income
|
$
|
234
|
|
|
$
|
143
|
|
|
$
|
91
|
|
|
$
|
487
|
|
|
$
|
256
|
|
|
$
|
231
|
|
Operating Margin
|
8.2
|
%
|
|
5.2
|
%
|
|
|
|
8.9
|
%
|
|
4.8
|
%
|
|
|
•
|
Sales Volume
– Sales volumes grew due to stronger demand for chicken products and mix of rendered product sales.
|
•
|
Average Sales Price
– The slight decrease in average sales price was primarily due to lower feed ingredient costs, partially offset by mix changes.
|
•
|
Operating Income
– Operating income was positively impacted by increased sales volume, operational improvements and lower feed ingredient costs, partially offset by decreased average sales price. Feed costs decreased $175 million and $340 million for the second quarter and first six months of fiscal 2014, respectively.
|
in millions
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
Change
|
|
March 29, 2014
|
|
March 30, 2013
|
|
Change
|
||||||||||||
Sales
|
$
|
3,825
|
|
|
$
|
3,447
|
|
|
$
|
378
|
|
|
$
|
7,559
|
|
|
$
|
6,932
|
|
|
$
|
627
|
|
Sales Volume Change
|
|
|
|
|
(1.8
|
)%
|
|
|
|
|
|
1.1
|
%
|
||||||||||
Average Sales Price Change
|
|
|
|
|
13.0
|
%
|
|
|
|
|
|
7.9
|
%
|
||||||||||
Operating Income
|
$
|
35
|
|
|
$
|
(26
|
)
|
|
$
|
61
|
|
|
$
|
93
|
|
|
$
|
20
|
|
|
$
|
73
|
|
Operating Margin
|
0.9
|
%
|
|
(0.8
|
)%
|
|
|
|
1.2
|
%
|
|
0.3
|
%
|
|
|
•
|
Sales Volume
– Sales volumes decreased for the second quarter of fiscal 2014 due to a reduction in live cattle processed as a result of reduced export sales. However, sales volumes increased for the first six months of fiscal 2014 due to better demand for our beef products.
|
•
|
Average Sales Price
– Average sales price increased due to lower domestic availability of fed cattle supplies, which drove up livestock costs.
|
•
|
Operating Income
– Operating income increased due to improved operational execution and maximizing our revenues relative to the rising live cattle markets, partially offset by increased operating costs.
|
in millions
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
Change
|
|
March 29, 2014
|
|
March 30, 2013
|
|
Change
|
||||||||||||
Sales
|
$
|
1,487
|
|
|
$
|
1,311
|
|
|
$
|
176
|
|
|
$
|
2,911
|
|
|
$
|
2,674
|
|
|
$
|
237
|
|
Sales Volume Change
|
|
|
|
|
0.7
|
%
|
|
|
|
|
|
(0.7
|
)%
|
||||||||||
Average Sales Price Change
|
|
|
|
|
12.5
|
%
|
|
|
|
|
|
9.6
|
%
|
||||||||||
Operating Income
|
$
|
107
|
|
|
$
|
72
|
|
|
$
|
35
|
|
|
$
|
228
|
|
|
$
|
197
|
|
|
$
|
31
|
|
Operating Margin
|
7.2
|
%
|
|
5.5
|
%
|
|
|
|
7.8
|
%
|
|
7.4
|
%
|
|
|
•
|
Sales Volume
– Sales volumes increased for the second quarter of fiscal 2014 as a result of better domestic demand for our pork products. However, sales volumes decreased for the first six months of fiscal 2014 as a result of reduced export sales during our first quarter of fiscal 2014.
|
•
|
Average Sales Price
– Average sales price increased primarily due to mix changes and lower total hog supplies, which resulted in higher input costs.
|
•
|
Operating Income
– Operating income increased due to maximizing our revenues relative to live hog markets, partially attributable to operational and mix performance.
|
in millions
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
Change
|
|
March 29, 2014
|
|
March 30, 2013
|
|
Change
|
||||||||||||
Sales
|
$
|
861
|
|
|
$
|
803
|
|
|
$
|
58
|
|
|
$
|
1,768
|
|
|
$
|
1,644
|
|
|
$
|
124
|
|
Sales Volume Change
|
|
|
|
|
8.1
|
%
|
|
|
|
|
|
5.7
|
%
|
||||||||||
Average Sales Price Change
|
|
|
|
|
(0.9
|
)%
|
|
|
|
|
|
1.7
|
%
|
||||||||||
Operating Income
|
$
|
21
|
|
|
$
|
28
|
|
|
$
|
(7
|
)
|
|
$
|
37
|
|
|
$
|
61
|
|
|
$
|
(24
|
)
|
Operating Margin
|
2.4
|
%
|
|
3.5
|
%
|
|
|
|
2.1
|
%
|
|
3.7
|
%
|
|
|
•
|
Sales Volume
– Sales volumes increased as a result of improved demand for our prepared foods products and incremental volumes from the purchase of three businesses.
|
•
|
Average Sales Price
– Average sales price decreased slightly for the second quarter of fiscal 2014 due to mix changes. However, average sales price increased for the first six months of fiscal 2014 due to better product mix and price increases associated with higher input costs.
|
•
|
Operating Income
– Operating income decreased, despite increases in sales volumes, as a result of higher raw material and other input costs of approximately $25 million and $65 million for the second quarter and first six months of fiscal 2014, respectively, and additional costs incurred as we invested in our growth platforms. Because many of our sales contracts are formula based or shorter-term in nature, we are typically able to offset rising input costs through pricing. However, there is a lag time for price increases to take effect.
|
in millions
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
March 29, 2014
|
|
March 30, 2013
|
|
Change
|
|
March 29, 2014
|
|
March 30, 2013
|
|
Change
|
||||||||||||
Sales
|
$
|
328
|
|
|
$
|
331
|
|
|
$
|
(3
|
)
|
|
$
|
655
|
|
|
$
|
658
|
|
|
$
|
(3
|
)
|
Sales Volume Change
|
|
|
|
|
13.8
|
%
|
|
|
|
|
|
12.4
|
%
|
||||||||||
Average Sales Price Change
|
|
|
|
|
(12.9
|
)%
|
|
|
|
|
|
(11.4
|
)%
|
||||||||||
Operating Income
|
$
|
(30
|
)
|
|
$
|
(3
|
)
|
|
$
|
(27
|
)
|
|
$
|
(58
|
)
|
|
$
|
(5
|
)
|
|
$
|
(53
|
)
|
Operating Margin
|
(9.1
|
)%
|
|
(0.9
|
)%
|
|
|
|
(8.9
|
)%
|
|
(0.8
|
)%
|
|
|
•
|
Sales Volume
– Sales volumes increased as we continue to grow our businesses in Brazil and China.
|
•
|
Average Sales Price
– Average sales price decreased due to poor export market conditions in Brazil, supply imbalances associated with weak demand in China and a less favorable pricing environment in Mexico.
|
•
|
Operating Income
– Operating income decreased due to poor operational execution in Brazil, challenging market conditions in Brazil and China and additional costs incurred as we continue to grow our International operation.
|
•
|
Chicken
– We expect domestic chicken production to increase around 2-3% in fiscal 2014 compared to fiscal 2013. Based on current futures prices, we expect lower feed costs in fiscal 2014 compared to fiscal 2013 of approximately $500 million. Many of our sales contracts are formula based or shorter-term in nature, but there may be a lag time for price changes to take effect. Due to the relative value of chicken compared to other proteins, we believe demand will remain strong in fiscal 2014. We believe our Chicken segment should be above its normalized range of 5.0%-7.0% for fiscal 2014.
|
•
|
Beef
– We expect to see a reduction of industry fed cattle supplies of 3-4% in fiscal 2014 as compared to fiscal 2013. Although we generally expect adequate supplies in regions we operate our plants, there may be periods of imbalance of fed cattle supply and demand. For fiscal 2014, we believe our Beef segment's profitability will be similar to fiscal 2013, which was below its normalized range of 2.5%-4.5%.
|
•
|
Pork
– We expect industry hog supplies to decrease around 4-5% in fiscal 2014 compared to fiscal 2013, partially offset by increased average live weights. For fiscal 2014, we believe our Pork segment will be in its normalized range of 6.0%-8.0%.
|
•
|
Prepared Foods
– We expect operational improvements and pricing to offset increased raw material costs. Because many of our sales contracts are formula based or shorter-term in nature, we are typically able to offset rising input costs through increased pricing. As we continue to invest heavily in our growth platforms, we expect our Prepared Foods segment to be below its normalized range of 4.0%-6.0% for fiscal 2014.
|
•
|
International
– We expect our International chicken production to increase around 15% in fiscal 2014 compared to fiscal 2013. Based on current futures prices, we expect lower feed costs in fiscal 2014 compared to fiscal 2013 of approximately $40 million. Unless market conditions improve, we will incur losses for the remainder of the year; however the losses in the third and fourth quarters of fiscal 2014 should be lower than the losses sustained in the first two quarters of fiscal 2014.
|
•
|
Sales
– We expect fiscal 2014 sales to approximate $37 billion as we continue to execute our strategy of accelerating growth in domestic value-added chicken sales, prepared food sales and international chicken production, as well as price increases associated with rising cattle and hog costs.
|
•
|
Capital Expenditures
– We expect fiscal 2014 capital expenditures to be approximately $650 to $700 million.
|
•
|
Net Interest Expense
– We expect net interest expense will approximate $95 million for fiscal 2014.
|
•
|
Debt and Liquidity
– We expect total liquidity, which was
$1.4 billion
at
March 29, 2014
, to be above our goal to maintain liquidity in excess of $1.2 billion.
|
•
|
Share Repurchases
– We expect to continue repurchasing shares under our share repurchase program. As of
March 29, 2014
,
32.1 million
shares remained authorized for repurchases under this program. The timing and extent to which we repurchase shares will depend upon, among other things, our working capital needs, market conditions, liquidity targets, our debt obligations and regulatory requirements.
|
in millions
|
Six Months Ended
|
||||||
|
March 29, 2014
|
|
March 30, 2013
|
||||
Net income
|
$
|
462
|
|
|
$
|
274
|
|
Non-cash items in net income:
|
|
|
|
||||
Depreciation and amortization
|
254
|
|
|
259
|
|
||
Deferred income taxes
|
(24
|
)
|
|
(24
|
)
|
||
Other, net
|
32
|
|
|
57
|
|
||
Convertible debt discount
|
(92
|
)
|
|
—
|
|
||
Changes in working capital
|
(367
|
)
|
|
(336
|
)
|
||
Net cash provided by operating activities
|
$
|
265
|
|
|
$
|
230
|
|
•
|
Operating cash outflow associated with the Convertible debt discount relate to the initial debt discount of $92 million on our 2013 Notes, which matured and were retired in the first quarter of fiscal 2014.
|
•
|
Cash flows associated with changes in working capital for the six months ended:
|
•
|
March 29, 2014
– Decreased primarily due to higher inventory and accounts receivable balances and decreases in taxes payable and accrued salaries, wages and benefits balances, partially offset by an increase in accounts payable. The increase in inventory and accounts receivable balances is largely due to increased raw material costs and timing of sales.
|
•
|
March 30, 2013
– Decreased primarily due to higher inventory and accounts receivable balances and decreases in accounts payable and accrued salaries, wages and benefits balances. The increase in inventory and accounts receivable balances is largely due to increased raw material costs and timing of sales.
|
in millions
|
Six Months Ended
|
||||||
|
March 29, 2014
|
|
March 30, 2013
|
||||
Additions to property, plant and equipment
|
$
|
(293
|
)
|
|
$
|
(290
|
)
|
(Purchases of)/Proceeds from marketable securities, net
|
(3
|
)
|
|
(63
|
)
|
||
Acquisitions, net of cash acquired
|
(56
|
)
|
|
(10
|
)
|
||
Other, net
|
8
|
|
|
30
|
|
||
Net cash used for investing activities
|
$
|
(344
|
)
|
|
$
|
(333
|
)
|
•
|
Additions to property, plant and equipment include acquiring new equipment and upgrading our facilities to maintain competitive standing and position us for future opportunities as well as ongoing development of our International segment.
|
•
|
Capital spending for fiscal
2014
is expected to be approximately $650 to $700 million, and will include spending on our operations for production and labor efficiencies, yield improvements and sales channel flexibility, as well as expansion of our International segment.
|
•
|
Acquisitions - During the first six months of fiscal 2014, we acquired a value-added food business as part of our strategic expansion initiative. The purchase price of the acquisition was $56 million, which included $12 million for property, plant and equipment, $27 million allocated to Intangible Assets and $18 million allocated to Goodwill.
|
in millions
|
Six Months Ended
|
||||||
|
March 29, 2014
|
|
March 30, 2013
|
||||
Payments on debt
|
$
|
(390
|
)
|
|
$
|
(55
|
)
|
Net proceeds from borrowings
|
14
|
|
|
37
|
|
||
Purchases of Tyson Class A common stock
|
(275
|
)
|
|
(188
|
)
|
||
Dividends
|
(50
|
)
|
|
(70
|
)
|
||
Stock options exercised
|
49
|
|
|
69
|
|
||
Other, net
|
19
|
|
|
2
|
|
||
Net cash used for financing activities
|
$
|
(633
|
)
|
|
$
|
(205
|
)
|
•
|
Our 2013 Notes matured on October 15, 2013 at which time we paid the
$458 million
principal value with cash on hand, and settled the conversion premium by issuing
11.7 million
shares of our Class A stock from available treasury shares. The 2013 Notes were initially recorded at a $92 million discount, which equaled the fair value of an equity conversion premium instrument. The portion of the payment of the Notes related to the initial $92 million discount was recorded in cash flows from operating activities. Simultaneous to the settlement of the conversion premium, we received
11.7 million
shares of our Class A stock from the call options.
|
•
|
During the first six months of fiscal 2014, we received proceeds of $11 million and paid $21 million related to borrowings at our foreign subsidiaries. Total debt related to our foreign subsidiaries was $50 million at
March 29, 2014
($37 million current, $13 million long-term).
|
•
|
Purchases of Tyson Class A stock included:
|
•
|
$250 million
and
$150 million
for shares repurchased pursuant to our share repurchase program during the six months ended March 29, 2014 and March 30, 2013, respectively; and
|
•
|
$25 million
and
$38 million
for shares repurchased to fund certain obligations under our equity compensation plans during the during the six months ended March 29, 2014 and March 30, 2013, respectively.
|
•
|
Dividends during the first six months of fiscal 2014 included a 50% increase to our quarterly dividend rate. Dividends during the first six months of fiscal 2013 include a special dividend of $0.10 and $0.09 to holders of our Class A stock and Class B stock, respectively.
|
in millions
|
|
|
|
|
|
|
|
|
|
||||||||
|
Commitments
Expiration Date
|
|
Facility
Amount
|
|
|
Outstanding
Letters of Credit
(no draw downs)
|
|
|
Amount
Borrowed
|
|
|
Amount
Available
|
|
||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
$
|
438
|
|
||||||
Short-term investments
|
|
|
|
|
|
|
|
|
$
|
2
|
|
||||||
Revolving credit facility
|
August 2017
|
|
$
|
1,000
|
|
|
$
|
45
|
|
|
$
|
—
|
|
|
$
|
955
|
|
Total liquidity
|
|
|
|
|
|
|
|
|
$
|
1,395
|
|
•
|
The revolving credit facility supports our short-term funding needs and letters of credit. The letters of credit issued under this facility are primarily in support of workers’ compensation insurance programs and derivative activities.
|
•
|
In October 2013 our 2013 Notes matured at which time we paid the
$458 million
principal value with cash on hand.
|
•
|
At
March 29, 2014
, approximately
71%
of our cash was held in the international accounts of our foreign subsidiaries. Generally, we do not rely on the foreign cash as a source of funds to support our ongoing domestic liquidity needs. Rather, we manage our worldwide cash requirements by reviewing available funds among our foreign subsidiaries and the cost effectiveness with which those funds can be accessed. The repatriation of cash balances from certain of our subsidiaries could have adverse tax consequences or be subject to regulatory capital requirements; however, those balances are generally available without legal restrictions to fund ordinary business operations. Our U.S. income taxes, net of applicable foreign tax credits, have not been provided on undistributed earnings of foreign subsidiaries. Our intention is to reinvest these earnings permanently or to repatriate the earnings only when it is tax effective to do so.
|
•
|
Our current ratio was
2.07
to 1 and
1.86
to 1 at
March 29, 2014
, and
September 28, 2013
, respectively.
|
Ratings Level (S&P/Moody's/Fitch)
|
Facility Fee
Rate
|
|
Undrawn Letter of
Credit Fee and
Borrowing Spread
|
|
BBB+/Baa1/BBB+ or above
|
0.150
|
%
|
1.125
|
%
|
BBB/Baa2/BBB (current level)
|
0.175
|
%
|
1.375
|
%
|
BBB-/Baa3/BBB-
|
0.225
|
%
|
1.625
|
%
|
BB+/Ba1/BB+
|
0.275
|
%
|
1.875
|
%
|
BB/Ba2/BB or lower or unrated
|
0.325
|
%
|
2.125
|
%
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Effect of 10% change in fair value
|
|
|
in millions
|
|
|||
|
March 29, 2014
|
|
September 28, 2013
|
||||
Livestock:
|
|
|
|
||||
Cattle
|
$
|
57
|
|
|
$
|
13
|
|
Hogs
|
56
|
|
|
35
|
|
||
Grain
|
12
|
|
|
23
|
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
Total
Number of
Shares
Purchased
|
|
|
Average
Price Paid
per Share
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
|
|
|
Maximum Number of
Shares that May Yet Be
Purchased Under the Plans
or Programs
(1)
|
|
|
Dec. 29, 2013 to Jan. 25, 2014
|
165,988
|
|
|
$
|
33.88
|
|
—
|
|
|
9,614,083
|
|
Jan. 26, 2014 to Mar. 1, 2014
|
1,301,272
|
|
|
37.20
|
|
1,128,200
|
|
|
33,485,883
|
|
|
Mar. 2, 2014 to Mar. 29, 2014
|
1,508,248
|
|
|
40.55
|
|
1,431,112
|
|
|
32,054,771
|
|
|
Total
|
2,975,508
|
|
(2)
|
$
|
38.71
|
|
2,559,312
|
|
(3)
|
32,054,771
|
|
(1)
|
On February 7, 2003, we announced our Board of Directors approved a program to repurchase up to 25 million shares of Class A common stock from time to time in open market or privately negotiated transactions. On May 3, 2012, our Board of Directors approved an increase of 35 million shares authorized for repurchase under this program. On January 30, 2014, our Board of Directors approved an increase of 25 million shares authorized for repurchase under this program. The program has no fixed or scheduled termination date.
|
(2)
|
We purchased 416,196 shares during the period that were not made pursuant to our previously announced stock repurchase program, but were purchased to fund certain Company obligations under our equity compensation plans. These transactions included 391,103 shares purchased in open market transactions and 25,093 shares withheld to cover required tax withholdings on the vesting of restricted stock.
|
(3)
|
These shares were purchased during the period pursuant to our previously announced stock repurchase program.
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
No.
|
|
Exhibit Description
|
|
|
|
|
|
10.1
|
|
Amended and Restated Employment Agreement, dated May 1, 2014, by and between the Company and John Tyson.
|
|
|
|
|
|
12.1
|
|
Ratio of Earnings to Fixed Charges
|
|
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to SEC Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to SEC Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
32.2
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
101
|
|
The following financial information from our Quarterly Report on Form 10-Q for the quarter ended March, 29, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Condensed Statements of Income, (ii) Consolidated Condensed Statements of Comprehensive Income, (iii) Consolidated Condensed Balance Sheets, (iv) Consolidated Condensed Statements of Cash Flows, and (v) the Notes to Consolidated Condensed Financial Statements.
|
|
|
TYSON FOODS, INC.
|
|
|
|
|
|
Date: May 5, 2014
|
|
|
/s/ Dennis Leatherby
|
|
|
|
Dennis Leatherby
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
Date: May 5, 2014
|
|
|
/s/ Curt T. Calaway
|
|
|
|
Curt T. Calaway
|
|
|
|
Senior Vice President, Controller and Chief Accounting Officer
|
(i)
|
Tyson shall make available to you the use of Tyson-owned assets, including entertainment assets, and the use of Tyson aircraft for up to 275 hours annually, in a manner consistent with Tyson’s then existing policies; provided that your personal use of Tyson-owned assets shall not interfere with Tyson’s business use of such assets. If you do not use all of such aircraft hours in a given year,
|
(ii)
|
Tyson shall arrange for secure access to Tyson’s computer system from your home office as necessary for you to perform your duties from time to time, and pay all reasonable expenses associated therewith;
|
(iii)
|
Tyson shall provide you with reasonable access to and use of its security personnel consistent with past practice. If you request security services when reasonably warranted for any business activity including without limit travel (and more particularly, international travel), Tyson shall arrange for or reimburse you for such reasonable and mutually agreed upon services, up to $50,000 annually;
|
(iv)
|
Tyson shall reimburse you for the annual premium payment on that certain existing $7,500,000 life insurance policy on your life consistent with past practice. If during the Period of Employment you choose to replace the existing policy with a different life insurance policy, Tyson’s obligation to reimburse you for the annual premium will not exceed the amount paid to you for the last year under the existing policy. Tyson has no interest in any such policy nor the proceeds payable under any such policy; and
|
(v)
|
Tyson will reimburse you (and gross-up such reimbursements to cover) any and all income tax liability (including interest and penalties) imposed upon you in connection with the availability or receipt of the services, perquisites and benefits set forth in this section 2(g) and for and after taking into account any reimbursements received by you under this Section 2(g)(v) all in an amount sufficient so that such services, perquisites, benefits and reimbursements will be received and provided by you without reduction for taxes (i.e. on an after tax basis).
|
(i)
|
any willful and wrongful conduct or omission by you that injures Tyson;
|
(ii)
|
any act by you of intentional misrepresentation or embezzlement, misappropriation or conversion of assets of Tyson;
|
(iii)
|
you are (A) convicted of, (B) confess to, (C) plead no contest to, or (D) become the subject of proceedings that provide a reasonable basis for Tyson to believe that you have been engaged in, a felony; or
|
(iv)
|
your intentional or willful violation of any restrictive covenant provided for under Section 6 of this Agreement or any other agreement to which you are a party.
|
(x)
|
Written notice is provided to you not less than 30 days prior to the date of termination setting forth Tyson’s intention to terminate you for Cause, including a statement of the intended date of termination and a detailed description of the specific facts that Tyson believes to constitute Cause;
|
(y)
|
You are offered an opportunity to respond to such statement by appearing in person, together with your legal counsel, before the Board prior to the date of termination; and
|
(z)
|
By the affirmative vote of a majority of all the independent members of the Board, the Board determines that the specified actions constituted Cause and your employment should accordingly be terminated for Cause.
|
(i)
|
Any accrued but unpaid base salary for services rendered to the Termination Date, any accrued but unpaid expenses required to be reimbursed under this Agreement,
|
(ii)
|
Any benefits accrued through the Termination Date to which you may be entitled pursuant to the plans, policies and arrangements, as determined and paid in accordance with the terms of such plans, policies and arrangements (collectively “Plan Benefits”).
|
(i)
|
Accrued Compensation;
|
(ii)
|
Plan Benefits;
|
(iii)
|
Tyson shall provide you, your spouse and eligible dependents with health care coverage ("Post Termination Health Care Coverage"). Tyson may choose to provide the Post Termination Health Care Coverage through either of the following programs: (A) healthcare, hospitalization, medical, long term care, vision, dental, and other similar insurance coverage or benefits under the Tyson Healthcare Continuation Plan or any successor or additional plan maintained by Tyson and at such coverage levels and upon such terms and conditions as shall otherwise be made available to any of the most senior officers of Tyson (including, without limitation, the provision of such coverage at a monthly cost to you that is equal to the monthly premium cost paid by other similarly situated participants); or (B) a Medicare supplemental policy (including, without limitation, a pharmaceutical supplement) at no cost to you. In addition, you, your spouse and eligible dependents will continue to participate in Tyson's Executive Medical Reimbursement program. The Post Termination Health Care Coverage will provide you, your spouse and eligible dependents with coverage that is substantially similar to the healthcare, hospitalization, medical, long term care, vision, dental and other similar insurance coverage/benefits you, your spouse and eligible dependents received under this Agreement. This coverage will be provided until such time as you and your spouse
|
(iv)
|
Upon written notice given to Tyson by you or your legal representative, as applicable, terminate and redeem all outstanding vested and unexercised options to purchase any Tyson stock held by you in exchange for a lump sum payment equal to the aggregate difference between (x) the fair market value of the stock represented by such options as determined as of the close of Tyson’s business on the date of the occurrence of the event giving rise to application hereof less (y) the strike price for such stock under the applicable options (the “Option Cash Out”); and
|
(v)
|
Tyson shall, within thirty (30) days of your death or termination for your Disability, pay you, your legal representative or your designated beneficiary a lump sum payment equal to the remaining payments that would have been made to you under Section 2(b) of this Agreement for the period of time between your Termination Date and the last day of the then existing term of this Agreement (had your death or Disability not occurred).
|
(i)
|
Accrued Compensation;
|
(ii)
|
Plan Benefits;
|
(iii)
|
Post Termination Health Coverage; and
|
(iv)
|
Subject to your execution of the Release (as defined below), Tyson will provide or pay the following:
|
(A)
|
A lump sum amount equal to, and on terms equal to, your base salary for the period of time between your Termination Date and the last day of the
|
(B)
|
You will become fully vested in any of your unvested stock options that are outstanding on the Termination Date and then be eligible to receive the Option Cash Out;
|
(C)
|
You will become vested in a pro rata portion of any of your unvested restricted stock awards that are outstanding on your Termination Date provided the applicable performance criteria, if any, are met. Such pro rata portion shall be equal to the percentage of the total vesting period, measured in days, in which you remained employed by Tyson and/or its affiliates multiplied by the number of shares subject to the award. Any award subject to this subsection (C) that is performance based shall not be paid until such time as it would have otherwise been paid under the terms of the award and will only be paid if the performance criteria are met; and
|
(D)
|
You will become entitled to a pro rata portion of any performance share awards that are outstanding on the Termination Date provided the applicable performance criteria is met. The pro rata portion of your award shall equal the percentage of the total performance period, measured in days, in which you remained employed by Tyson multiplied by the percentage of the award that you would have received had you remained employed for the entire performance period. Any award subject to this subsection (D) shall not be paid until such time as it would have otherwise been paid under the terms of the award and will only be paid if the performance criteria are met.
|
(d)
|
Release
. For purposes of this Agreement, “Release” means that specific document which Tyson shall present to you for consideration and execution after your termination of employment, under which you and Tyson mutually agree to irrevocably and unconditionally release and forever discharge one another (including your and Tyson’s respective subsidiaries, affiliates, heirs, successors, assigns, representatives and related parties) from any and all claims and causes of
|
5.
|
Acceleration of Stock Grants on Change in Control.
|
(i)
|
Tyson may elect to cancel any and all payments of benefits otherwise due to you, but not yet paid, under this Agreement or otherwise; and
|
(ii)
|
you will refund to Tyson any amounts, plus interest, previously paid by Tyson to you in excess of your Accrued Compensation and Plan Benefits (within the meaning of Section 4).
|
|
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||||||
|
|
Six
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Months
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Ending
|
|
Fiscal Years
|
||||||||||||||||||||
|
|
March 29, 2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) from continuing operations before income taxes and equity method investment earnings
|
|
$
|
720
|
|
|
$
|
1,254
|
|
|
$
|
949
|
|
|
$
|
1,066
|
|
|
$
|
1,224
|
|
|
$
|
(541
|
)
|
Add: Fixed charges
|
|
92
|
|
|
219
|
|
|
264
|
|
|
305
|
|
|
360
|
|
|
388
|
|
||||||
Add: Amortization of capitalized interest
|
|
3
|
|
|
5
|
|
|
5
|
|
|
4
|
|
|
3
|
|
|
4
|
|
||||||
Less: Capitalized interest
|
|
(5
|
)
|
|
(8
|
)
|
|
(10
|
)
|
|
(9
|
)
|
|
(11
|
)
|
|
(3
|
)
|
||||||
Total adjusted earnings
|
|
810
|
|
|
1,470
|
|
|
1,208
|
|
|
1,366
|
|
|
1,576
|
|
|
(152
|
)
|
||||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest
|
|
49
|
|
|
116
|
|
|
150
|
|
|
191
|
|
|
240
|
|
|
289
|
|
||||||
Capitalized interest
|
|
5
|
|
|
8
|
|
|
10
|
|
|
9
|
|
|
11
|
|
|
3
|
|
||||||
Amortization of debt discount expense
|
|
4
|
|
|
28
|
|
|
39
|
|
|
44
|
|
|
46
|
|
|
38
|
|
||||||
Rentals at computed interest factor
(1)
|
|
34
|
|
|
67
|
|
|
65
|
|
|
61
|
|
|
63
|
|
|
58
|
|
||||||
Total fixed charges
|
|
$
|
92
|
|
|
$
|
219
|
|
|
$
|
264
|
|
|
$
|
305
|
|
|
$
|
360
|
|
|
$
|
388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of Earnings to Fixed Charges
|
|
8.80
|
|
|
6.71
|
|
|
4.58
|
|
|
4.48
|
|
|
4.38
|
|
|
|
|
||||||
Insufficient Coverage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
540
|
|
(1)
|
Amounts represent those portions of rent expense (one-third) that are reasonable approximations of interest costs.
|
/s/ Donnie Smith
|
|
Donnie Smith
|
|
President and Chief Executive Officer
|
|
/s/ Dennis Leatherby
|
|
Dennis Leatherby
|
|
Executive Vice President and Chief Financial Officer
|
|
/s/ Donnie Smith
|
|
Donnie Smith
|
|
President and Chief Executive Officer
|
|
|
|
May 5, 2014
|
|
/s/ Dennis Leatherby
|
|
Dennis Leatherby
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
May 5, 2014
|
|