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 West 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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286,947,904
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Class B Common Stock, $0.10 Par Value (Class B stock)
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70,010,755
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PAGE
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 1.
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Financial Statements
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Three Months Ended
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||||||
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December 31, 2016
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January 2, 2016
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||||
Sales
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$
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9,182
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|
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$
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9,152
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Cost of Sales
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7,699
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7,951
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Gross Profit
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1,483
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1,201
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Selling, General and Administrative
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501
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425
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Operating Income
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982
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776
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Other (Income) Expense:
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||||
Interest income
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(2
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)
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(2
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)
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Interest expense
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58
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67
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Other, net
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14
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(1
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)
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Total Other (Income) Expense
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70
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64
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Income before Income Taxes
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912
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712
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Income Tax Expense
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318
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251
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Net Income
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594
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461
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Less: Net Income Attributable to Noncontrolling Interests
|
1
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—
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Net Income Attributable to Tyson
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$
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593
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$
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461
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Weighted Average Shares Outstanding:
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||||
Class A Basic
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297
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325
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Class B Basic
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70
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70
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Diluted
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373
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400
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Net Income Per Share Attributable to Tyson:
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||||
Class A Basic
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$
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1.64
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$
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1.18
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Class B Basic
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$
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1.49
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$
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1.09
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Diluted
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$
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1.59
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$
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1.15
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Dividends Declared Per Share:
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||||
Class A
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$
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0.300
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$
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0.200
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Class B
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$
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0.270
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$
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0.180
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Three Months Ended
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||||||
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December 31, 2016
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January 2, 2016
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||||
Net Income
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$
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594
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$
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461
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Other Comprehensive Income (Loss), Net of Taxes:
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|
|
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||||
Derivatives accounted for as cash flow hedges
|
3
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|
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—
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Investments
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(1
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)
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(1
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)
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Currency translation
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(14
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)
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(5
|
)
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||
Postretirement benefits
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(3
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)
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(2
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)
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Total Other Comprehensive Income (Loss), Net of Taxes
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(15
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)
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(8
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)
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Comprehensive Income
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579
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453
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Less: Comprehensive Income Attributable to Noncontrolling Interests
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1
|
|
|
—
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Comprehensive Income Attributable to Tyson
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$
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578
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$
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453
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December 31, 2016
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October 1, 2016
|
||||
Assets
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|
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|
||||
Current Assets:
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||||
Cash and cash equivalents
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$
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307
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$
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349
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Accounts receivable, net
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1,512
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1,542
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Inventories
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2,767
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2,732
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Other current assets
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156
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265
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Total Current Assets
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4,742
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4,888
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Net Property, Plant and Equipment
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5,206
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5,170
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Goodwill
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6,669
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6,669
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Intangible Assets, net
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5,064
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5,084
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Other Assets
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576
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|
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562
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Total Assets
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$
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22,257
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$
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22,373
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Liabilities and Shareholders’ Equity
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Current Liabilities:
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Current debt
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$
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66
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$
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79
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Accounts payable
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1,591
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1,511
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Other current liabilities
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1,315
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1,172
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Total Current Liabilities
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2,972
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2,762
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Long-Term Debt
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5,901
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6,200
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Deferred Income Taxes
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2,538
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2,545
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Other Liabilities
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1,279
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1,242
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Commitments and Contingencies (Note 16)
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Shareholders’ Equity:
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Common stock ($0.10 par value):
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Class A-authorized 900 million shares, issued 367 million shares
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37
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36
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Convertible Class B-authorized 900 million shares, issued 70 million shares
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7
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7
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Capital in excess of par value
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4,342
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4,355
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Retained earnings
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8,837
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8,348
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Accumulated other comprehensive loss
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(60
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)
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(45
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)
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Treasury stock, at cost – 80 million shares at December 31, 2016, and 73 million shares at October 1, 2016
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(3,613
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)
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(3,093
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)
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Total Tyson Shareholders’ Equity
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9,550
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9,608
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Noncontrolling Interests
|
17
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16
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Total Shareholders’ Equity
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9,567
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9,624
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Total Liabilities and Shareholders’ Equity
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$
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22,257
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$
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22,373
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Three Months Ended
|
||||||
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December 31, 2016
|
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January 2, 2016
|
||||
Cash Flows From Operating Activities:
|
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|
||||
Net income
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$
|
594
|
|
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$
|
461
|
|
Depreciation and amortization
|
177
|
|
|
172
|
|
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Deferred income taxes
|
(4
|
)
|
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69
|
|
||
Other, net
|
7
|
|
|
(1
|
)
|
||
Net changes in operating assets and liabilities
|
360
|
|
|
394
|
|
||
Cash Provided by Operating Activities
|
1,134
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|
|
1,095
|
|
||
Cash Flows From Investing Activities:
|
|
|
|
||||
Additions to property, plant and equipment
|
(200
|
)
|
|
(188
|
)
|
||
Purchases of marketable securities
|
(15
|
)
|
|
(12
|
)
|
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Proceeds from sale of marketable securities
|
13
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10
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|
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Other, net
|
(12
|
)
|
|
(1
|
)
|
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Cash Used for Investing Activities
|
(214
|
)
|
|
(191
|
)
|
||
Cash Flows From Financing Activities:
|
|
|
|
||||
Payments on debt
|
(20
|
)
|
|
(20
|
)
|
||
Borrowings on revolving credit facility
|
435
|
|
|
—
|
|
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Payments on revolving credit facility
|
(735
|
)
|
|
—
|
|
||
Purchases of Tyson Class A common stock
|
(576
|
)
|
|
(387
|
)
|
||
Dividends
|
(79
|
)
|
|
(54
|
)
|
||
Stock options exercised
|
6
|
|
|
34
|
|
||
Other, net
|
12
|
|
|
23
|
|
||
Cash Used for Financing Activities
|
(957
|
)
|
|
(404
|
)
|
||
Effect of Exchange Rate Changes on Cash
|
(5
|
)
|
|
(1
|
)
|
||
Increase (Decrease) in Cash and Cash Equivalents
|
(42
|
)
|
|
499
|
|
||
Cash and Cash Equivalents at Beginning of Year
|
349
|
|
|
688
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
307
|
|
|
$
|
1,187
|
|
|
December 31, 2016
|
|
October 1, 2016
|
||||
Processed products
|
$
|
1,517
|
|
|
$
|
1,530
|
|
Livestock
|
851
|
|
|
772
|
|
||
Supplies and other
|
399
|
|
|
430
|
|
||
Total inventory
|
$
|
2,767
|
|
|
$
|
2,732
|
|
|
December 31, 2016
|
|
October 1, 2016
|
||||
Land
|
$
|
128
|
|
|
$
|
126
|
|
Buildings and leasehold improvements
|
3,671
|
|
|
3,662
|
|
||
Machinery and equipment
|
6,815
|
|
|
6,789
|
|
||
Land improvements and other
|
301
|
|
|
300
|
|
||
Buildings and equipment under construction
|
405
|
|
|
290
|
|
||
|
11,320
|
|
|
11,167
|
|
||
Less accumulated depreciation
|
6,114
|
|
|
5,997
|
|
||
Net property, plant and equipment
|
$
|
5,206
|
|
|
$
|
5,170
|
|
|
December 31, 2016
|
|
October 1, 2016
|
||||
Accrued salaries, wages and benefits
|
$
|
417
|
|
|
$
|
563
|
|
Income taxes payable
|
263
|
|
|
7
|
|
||
Accrued marketing, advertising and promotion expense
|
193
|
|
|
212
|
|
||
Other
|
442
|
|
|
390
|
|
||
Total other current liabilities
|
$
|
1,315
|
|
|
$
|
1,172
|
|
|
December 31, 2016
|
|
October 1, 2016
|
||||
Revolving credit facility
|
$
|
—
|
|
|
$
|
300
|
|
Senior notes:
|
|
|
|
||||
7.00% Notes due May 2018
|
120
|
|
|
120
|
|
||
2.65% Notes due August 2019
|
1,000
|
|
|
1,000
|
|
||
4.10% Notes due September 2020
|
284
|
|
|
284
|
|
||
4.50% Senior notes due June 2022
|
1,000
|
|
|
1,000
|
|
||
3.95% Notes due August 2024
|
1,250
|
|
|
1,250
|
|
||
7.00% Notes due January 2028
|
18
|
|
|
18
|
|
||
6.13% Notes due November 2032
|
163
|
|
|
163
|
|
||
4.88% Notes due August 2034
|
500
|
|
|
500
|
|
||
5.15% Notes due August 2044
|
500
|
|
|
500
|
|
||
Discount on senior notes
|
(8
|
)
|
|
(8
|
)
|
||
Term loans:
|
|
|
|
||||
Tranche B due April 2019 (1.94% at 12/31/16)
|
500
|
|
|
500
|
|
||
Tranche B due August 2019 (2.31% at 12/31/16)
|
552
|
|
|
552
|
|
||
Amortizing notes - tangible equity units (see Note 7: Equity)
|
53
|
|
|
71
|
|
||
Other
|
62
|
|
|
58
|
|
||
Unamortized debt issuance costs
|
(27
|
)
|
|
(29
|
)
|
||
Total debt
|
5,967
|
|
|
6,279
|
|
||
Less current debt
|
66
|
|
|
79
|
|
||
Total long-term debt
|
$
|
5,901
|
|
|
$
|
6,200
|
|
|
Three Months Ended
|
||||||||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||||||||
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
||||||
Shares repurchased:
|
|
|
|
|
|
|
|
||||||
Under share repurchase program
|
8.6
|
|
|
$
|
550
|
|
|
7.6
|
|
|
$
|
357
|
|
To fund certain obligations under equity compensation plans
|
0.4
|
|
|
26
|
|
|
0.7
|
|
|
30
|
|
||
Total share repurchases
|
9.0
|
|
|
$
|
576
|
|
|
8.3
|
|
|
$
|
387
|
|
|
Equity Component
|
|
Debt Component
|
|
Total
|
||||||
Price per TEU
|
$
|
43.17
|
|
|
$
|
6.83
|
|
|
$
|
50.00
|
|
Gross proceeds
|
1,295
|
|
|
205
|
|
|
1,500
|
|
|||
Issuance cost
|
(40
|
)
|
|
(6
|
)
|
|
(46
|
)
|
|||
Net proceeds
|
$
|
1,255
|
|
|
$
|
199
|
|
|
$
|
1,454
|
|
•
|
If the Applicable Market Value is equal to or greater than the conversion price of
$46.79
per share, we will deliver
1.0685
shares of Class A stock per purchase contract, or a minimum of
10.3 million
Class A shares.
|
•
|
If the Applicable Market Value is greater than the reference price of
$37.44
but less than the conversion price of
$46.79
per share, we will deliver a number of shares per purchase contract equal to
$50
, divided by the Applicable Market Value.
|
•
|
If the Applicable Market Value is less than or equal to the reference price of
$37.44
per share, we will deliver
1.3358
shares of Class A stock per purchase contract, or a maximum of
12.9 million
Class A shares.
|
|
Three Months Ended
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||
Numerator:
|
|
|
|
||||
Net income
|
$
|
594
|
|
|
$
|
461
|
|
Less: Net income attributable to noncontrolling interests
|
1
|
|
|
—
|
|
||
Net income attributable to Tyson
|
593
|
|
|
461
|
|
||
Less dividends declared:
|
|
|
|
||||
Class A
|
86
|
|
|
58
|
|
||
Class B
|
19
|
|
|
13
|
|
||
Undistributed earnings
|
$
|
488
|
|
|
$
|
390
|
|
|
|
|
|
||||
Class A undistributed earnings
|
$
|
403
|
|
|
$
|
327
|
|
Class B undistributed earnings
|
85
|
|
|
63
|
|
||
Total undistributed earnings
|
$
|
488
|
|
|
$
|
390
|
|
Denominator:
|
|
|
|
||||
Denominator for basic earnings per share:
|
|
|
|
||||
Class A weighted average shares
|
297
|
|
|
325
|
|
||
Class B weighted average shares, and shares under the if-converted method for diluted earnings per share
|
70
|
|
|
70
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Stock options, restricted stock and performance units
|
6
|
|
|
5
|
|
||
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversions
|
373
|
|
|
400
|
|
||
|
|
|
|
||||
Net income per share attributable to Tyson:
|
|
|
|
||||
Class A basic
|
$
|
1.64
|
|
|
$
|
1.18
|
|
Class B basic
|
$
|
1.49
|
|
|
$
|
1.09
|
|
Diluted
|
$
|
1.59
|
|
|
$
|
1.15
|
|
•
|
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
|
||||||||||||
|
December 31, 2016
|
|
January 2, 2016
|
|
|
|
December 31, 2016
|
|
January 2, 2016
|
||||||||
Cash flow hedge – derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
Cost of sales
|
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
Foreign exchange contracts
|
—
|
|
|
—
|
|
|
Other income/expense
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
|
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
|
|
|
|
||||||
|
Consolidated Condensed
Statements of Income
Classification
|
|
Three Months Ended
|
||||||
|
|
December 31, 2016
|
|
January 2, 2016
|
|||||
Gain (Loss) on forwards
|
Cost of sales
|
|
$
|
28
|
|
|
$
|
33
|
|
Gain (Loss) on purchase contract
|
Cost of sales
|
|
(28
|
)
|
|
(33
|
)
|
|
Consolidated Condensed
Statements of Income
Classification
|
|
Gain (Loss)
Recognized in Earnings
|
|
|||||
|
|
|
Three Months Ended
|
||||||
|
|
|
December 31, 2016
|
|
January 2, 2016
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
||||
Commodity contracts
|
Sales
|
|
$
|
51
|
|
|
$
|
9
|
|
Commodity contracts
|
Cost of sales
|
|
(1
|
)
|
|
(15
|
)
|
||
Foreign exchange contracts
|
Other income/expense
|
|
—
|
|
|
—
|
|
||
Total
|
|
|
$
|
50
|
|
|
$
|
(6
|
)
|
•
|
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.
|
December 31, 2016
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting (a)
|
|
Total
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Designated as hedges
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Undesignated
|
—
|
|
|
48
|
|
|
—
|
|
|
(22
|
)
|
|
26
|
|
|||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current
|
—
|
|
|
3
|
|
|
1
|
|
|
—
|
|
|
4
|
|
|||||
Non-current
|
—
|
|
|
39
|
|
|
54
|
|
|
—
|
|
|
93
|
|
|||||
Deferred compensation assets
|
8
|
|
|
249
|
|
|
—
|
|
|
—
|
|
|
257
|
|
|||||
Total assets
|
$
|
8
|
|
|
$
|
343
|
|
|
$
|
55
|
|
|
$
|
(22
|
)
|
|
$
|
384
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Designated as hedges
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
Undesignated
|
—
|
|
|
24
|
|
|
—
|
|
|
(23
|
)
|
|
1
|
|
|||||
Total liabilities
|
$
|
—
|
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
(40
|
)
|
|
$
|
1
|
|
October 1, 2016
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting (a)
|
|
Total
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Designated as hedges
|
$
|
—
|
|
|
$
|
72
|
|
|
$
|
—
|
|
|
$
|
(27
|
)
|
|
$
|
45
|
|
Undesignated
|
—
|
|
|
38
|
|
|
—
|
|
|
(34
|
)
|
|
4
|
|
|||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current
|
—
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
4
|
|
|||||
Non-current
|
—
|
|
|
38
|
|
|
55
|
|
|
—
|
|
|
93
|
|
|||||
Deferred compensation assets
|
18
|
|
|
236
|
|
|
—
|
|
|
—
|
|
|
254
|
|
|||||
Total assets
|
$
|
18
|
|
|
$
|
386
|
|
|
$
|
57
|
|
|
$
|
(61
|
)
|
|
$
|
400
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Designated as hedges
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
Undesignated
|
—
|
|
|
68
|
|
|
—
|
|
|
(68
|
)
|
|
—
|
|
|||||
Total liabilities
|
$
|
—
|
|
|
$
|
69
|
|
|
$
|
—
|
|
|
$
|
(69
|
)
|
|
$
|
—
|
|
(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
December 31, 2016
, and
October 1, 2016
, we had posted with various counterparties
$18 million
and
$8 million
, respectively, of cash collateral related to our commodity derivatives and held no cash collateral. At December 31, 2016, we had posted, with a single counterparty,
$1 million
of cash collateral where a legally enforceable master netting arrangement did not exist.
|
|
Three Months Ended
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||
Balance at beginning of year
|
$
|
57
|
|
|
$
|
61
|
|
Total realized and unrealized gains (losses):
|
|
|
|
||||
Included in earnings
|
—
|
|
|
—
|
|
||
Included in other comprehensive income (loss)
|
(1
|
)
|
|
—
|
|
||
Purchases
|
4
|
|
|
4
|
|
||
Issuances
|
—
|
|
|
—
|
|
||
Settlements
|
(5
|
)
|
|
(6
|
)
|
||
Balance at end of period
|
$
|
55
|
|
|
$
|
59
|
|
Total gains (losses) for the three-month period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of period
|
$
|
—
|
|
|
$
|
—
|
|
|
December 31, 2016
|
|
October 1, 2016
|
||||||||||||||||||||
|
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
|
$
|
42
|
|
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
40
|
|
|
$
|
40
|
|
|
$
|
—
|
|
Corporate and asset-backed
|
55
|
|
|
55
|
|
|
—
|
|
|
56
|
|
|
57
|
|
|
1
|
|
|
December 31, 2016
|
|
October 1, 2016
|
||||||||||||
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
||||||||
Total debt
|
$
|
6,138
|
|
|
$
|
5,967
|
|
|
$
|
6,698
|
|
|
$
|
6,279
|
|
|
Pension Plans
|
||||||
|
Three Months Ended
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||
|
|
|
|
||||
Service cost
|
$
|
3
|
|
|
$
|
4
|
|
Interest cost
|
16
|
|
|
20
|
|
||
Expected return on plan assets
|
(15
|
)
|
|
(17
|
)
|
||
Amortization of:
|
|
|
|
||||
Net actuarial loss
|
2
|
|
|
1
|
|
||
Settlement (gain) loss (a)
|
—
|
|
|
(12
|
)
|
||
Net periodic cost (credit)
|
$
|
6
|
|
|
$
|
(4
|
)
|
|
Postretirement Benefit Plans
|
||||||
|
Three Months Ended
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||
|
|
|
|
||||
Interest cost
|
$
|
—
|
|
|
$
|
1
|
|
Amortization of:
|
|
|
|
||||
Prior service credit
|
(6
|
)
|
|
(4
|
)
|
||
Net periodic cost (credit)
|
$
|
(6
|
)
|
|
$
|
(3
|
)
|
|
Three Months Ended
|
||||||||||||||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||||||||||||||
|
Before Tax
|
Tax
|
After Tax
|
|
Before Tax
|
Tax
|
After Tax
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
Derivatives accounted for as cash flow hedges:
|
|
|
|
|
|
|
|
||||||||||||
(Gain) loss reclassified to cost of sales
|
$
|
4
|
|
$
|
(2
|
)
|
$
|
2
|
|
|
$
|
1
|
|
$
|
—
|
|
$
|
1
|
|
Unrealized gain (loss)
|
1
|
|
—
|
|
1
|
|
|
(2
|
)
|
1
|
|
(1
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Investments:
|
|
|
|
|
|
|
|
||||||||||||
Unrealized gain (loss)
|
(1
|
)
|
—
|
|
(1
|
)
|
|
(1
|
)
|
—
|
|
(1
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Currency translation:
|
|
|
|
|
|
|
|
||||||||||||
Translation adjustment
|
(14
|
)
|
—
|
|
(14
|
)
|
|
(5
|
)
|
—
|
|
(5
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Postretirement benefits
|
(4
|
)
|
1
|
|
(3
|
)
|
|
(3
|
)
|
1
|
|
(2
|
)
|
||||||
Total other comprehensive income (loss)
|
$
|
(14
|
)
|
$
|
(1
|
)
|
$
|
(15
|
)
|
|
$
|
(10
|
)
|
$
|
2
|
|
$
|
(8
|
)
|
|
Three Months Ended
|
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
|
||||
Sales:
|
|
|
|
|
||||
Chicken
|
$
|
2,706
|
|
|
$
|
2,636
|
|
|
Beef
|
3,528
|
|
|
3,614
|
|
|
||
Pork
|
1,252
|
|
|
1,213
|
|
|
||
Prepared Foods
|
1,895
|
|
|
1,896
|
|
|
||
Other
|
90
|
|
|
99
|
|
|
||
Intersegment sales
|
(289
|
)
|
|
(306
|
)
|
|
||
Total sales
|
$
|
9,182
|
|
|
$
|
9,152
|
|
|
|
|
|
|
|
||||
Operating income (loss):
|
|
|
|
|
||||
Chicken
|
$
|
263
|
|
|
$
|
358
|
|
|
Beef
|
299
|
|
|
71
|
|
|
||
Pork
|
247
|
|
|
158
|
|
|
||
Prepared Foods
|
190
|
|
|
207
|
|
|
||
Other
|
(17
|
)
|
(a)
|
(18
|
)
|
(a)
|
||
Total operating income
|
982
|
|
|
776
|
|
|
||
|
|
|
|
|
||||
Total other (income) expense
|
70
|
|
|
64
|
|
|
||
|
|
|
|
|
||||
Income before income taxes
|
$
|
912
|
|
|
$
|
712
|
|
|
•
|
Bouaphakeo (f/k/a Sharp), et al. v. Tyson Foods, Inc., N.D. Iowa, February 6, 2007
- A jury trial was held involving 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 appealed the jury's verdict and trial court's award to the Eighth Circuit Court of Appeals. The appellate court affirmed the jury verdict and judgment on August 25, 2014, and we filed a petition for rehearing on September 22, 2014, which was denied. We filed a petition for a writ of certiorari with the United States Supreme Court, which was granted on June 8, 2015, and oral arguments before the Supreme Court occurred on November 10, 2015. On March 22, 2016, the Supreme Court affirmed the appellate court’s rulings and remanded to the trial court to allocate the lump sum award among the class participants. On remand, the trial court determined that the lump sum award should be allocated to class participants according to the method prescribed by plaintiffs’ expert at trial. The trial court has yet to enter a judgment.
|
•
|
Edwards, et al. v. Tyson Foods, Inc. d.b.a. Tyson Fresh Meats, Inc., S.D. Iowa, March 20, 2008
- The trial court in this 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.
|
•
|
Murray, et al. v. Tyson Foods, Inc., C.D. Illinois, January 2, 2008
; and
DeVoss v. Tyson Foods, Inc. d.b.a. Tyson Fresh Meats, C.D. Illinois, March 2, 2011
- These cases involve our Joslin, Illinois, beef plant and are in their preliminary stages.
|
•
|
Dozier, Southerland, et al. v. The Hillshire Brands Company, E.D. North Carolina, September 2, 2014
- This case involves our Tarboro, North Carolina, prepared foods plant. On March 25, 2016, the parties filed a joint motion for settlement totaling
$425,000
, which includes all of the plaintiffs’ attorneys’ fees and costs.
|
•
|
Awad, et al. v. Tyson Foods, Inc. and Tyson Fresh Meats, Inc., M.D. Tennessee, February 12, 2015
- On October 12, 2016, the parties filed a joint motion for approval of a
$725,000
settlement, and plaintiffs filed an application for attorneys’ fees and costs. The court granted its preliminary approval of the parties’ joint motion and the application for attorneys’ fees and costs, on October 21, 2016, and dismissed the action with prejudice.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
General – Our operating income grew 27% in the first quarter of fiscal 2017, which was led by record earnings in our Beef and Pork segments with continued solid performance in our Chicken and Prepared Foods segments. Our Beef and Pork segments had a $228 million and $89 million improvement in operating income, respectively. In addition to the strong performance across each of our segments, in the first quarter of fiscal 2017, we incurred an incremental $58 million of compensation and benefit integration expense as we continued to integrate and make investments in our talent. Sales increased in the first quarter of fiscal 2017 as sales volume increased 2.4%, partially offset by declining beef prices. Sales volume increased in each of our segments in the first quarter of fiscal 2017. We continued to execute our strategy of accelerating growth in domestic value-added chicken sales, prepared food sales, innovating products, services and customer insights and cultivating our talent development to support Tyson's growth for the future.
|
•
|
Integration - We maintain focus on the integration of The Hillshire Brands Company ("Hillshire Brands") and synergy capture. As we continue to execute our Prepared Foods strategy, we estimate the impact of the Hillshire Brands synergies, along with the profit improvement plan related to our legacy Prepared Foods business, will have a positive impact of approximately $675 million in fiscal 2017. The majority of these benefits are expected to be realized in the Prepared Foods segment. We will continue to invest a portion of the synergies in innovation, new product launches and supporting the growth of our brands. In the first quarter of fiscal 2017, we captured an incremental $40 million of synergies above the $121 million realized in the first quarter of fiscal 2016, for a total of $161 million of synergies and profit improvement initiatives realized in the first quarter of fiscal 2017.
|
•
|
Market Environment - According to the United States Department of Agriculture (USDA), domestic protein production (chicken, beef, pork, and turkey) increased approximately 3%, in the first quarter of fiscal 2017, over the same period in fiscal 2016, and we expect it to be up 2-3% for the full fiscal year. Our Chicken segment delivered solid results driven by favorable demand for our products and lower feed costs, partially offset with higher marketing, advertising, and promotion spend. The Beef segment had a record operating margin due to better domestic and export demand and more favorable market conditions associated with an increase in cattle supply which resulted in lower fed cattle costs. The Pork segment also had a record operating margin as domestic market conditions were favorable with lower livestock cost, improved export markets, and better demand for our pork products. Our Prepared Foods segment delivered solid operating income as a result of increased sales volumes due to improved demand for our prepared foods products, as well as synergies and lower input costs, partially offset with higher operating costs at some of our facilities and increased marketing, advertising, and promotion spend.
|
•
|
Margins – Our total operating margin was
10.7%
in the
first
quarter of fiscal
2017
. Operating margins by segment were as follows:
|
•
|
Chicken
–
9.7%
|
•
|
Beef
–
8.5%
|
•
|
Pork
–
19.7%
|
•
|
Prepared Foods
–
10.0%
|
•
|
Liquidity – We generated $1.1 billion of operating cash flows during the first three months of fiscal
2017
. At
December 31, 2016
, we had approximately
$1.6 billion
of liquidity, which includes availability under our revolving credit facility and
$307 million
of cash and cash equivalents.
|
in millions, except per share data
|
Three Months Ended
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||
Net income attributable to Tyson
|
$
|
593
|
|
|
$
|
461
|
|
Net income attributable to Tyson – per diluted share
|
1.59
|
|
|
1.15
|
|
in millions
|
Three Months Ended
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||
Sales
|
$
|
9,182
|
|
|
$
|
9,152
|
|
Change in sales volume
|
2.4
|
%
|
|
|
|||
Change in average sales price
|
(2.0
|
)%
|
|
|
|||
Sales growth
|
0.3
|
%
|
|
|
•
|
Sales Volume
– Sales were positively impacted by an increase in sales volume, which accounted for an increase of $216 million. Each segment had an increase in sales volume with the Beef segment contributing the majority of the increase driven by increased availability of live cattle supply in addition to better demand for our beef products.
|
•
|
Average Sales Price
– Sales were negatively impacted by lower average sales prices, which accounted for a decrease of $186 million. The Beef, Pork and Prepared Foods segments had a decrease in average sales price as a result of decreased pricing associated with lower live cattle and hog costs and other raw material costs, partially offset with an increase in average sales price in the Chicken segment from sales mix changes.
|
in millions
|
Three Months Ended
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||
Cost of sales
|
$
|
7,699
|
|
|
$
|
7,951
|
|
Gross profit
|
$
|
1,483
|
|
|
$
|
1,201
|
|
Cost of sales as a percentage of sales
|
83.8
|
%
|
|
86.9
|
%
|
•
|
Cost of sales decreased $252 million. Lower input cost per pound decreased cost of sales $440 million while higher sales volume increased cost of sales $188 million.
|
•
|
The $440 million impact of lower input cost per pound was primarily driven by:
|
•
|
Decrease in live cattle costs of approximately $410 million in our Beef segment.
|
•
|
Decrease in live hog costs of approximately $85 million in our Pork segment.
|
•
|
Decrease in raw material and other input costs of $100 million in our Prepared Foods segment.
|
•
|
Decrease in feed costs of approximately $20 million in our Chicken segment.
|
•
|
Increase in cost per pound due to a mix upgrade in the Chicken segment as we increased sales volume in value-added products.
|
•
|
Increase in operating costs across all segments, which also included $43 million of compensation and benefit integration expense.
|
•
|
The $188 million impact of higher sales volume was due to sales volume increases in each segment with the Beef segment contributing the majority of the increase as a result of an increase in live cattle processed and better demand for our beef products.
|
in millions
|
Three Months Ended
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||
Selling, general and administrative expense
|
$
|
501
|
|
|
$
|
425
|
|
As a percentage of sales
|
5.5
|
%
|
|
4.6
|
%
|
•
|
Increase of $76 million in selling, general and administrative was primarily driven by:
|
•
|
Increase of $28 million in employee costs including payroll and stock-based and incentive-based compensation, which included $15 million compensation and benefit integration expense.
|
•
|
Increase of $20 million related to marketing, advertising and promotion expense to drive sales growth.
|
•
|
Increase of $16 million in severance related expenses.
|
•
|
Increase of $12 million in all other primarily related to professional fees and information technology costs.
|
in millions
|
Three Months Ended
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||
Cash interest expense
|
$
|
58
|
|
|
$
|
67
|
|
Total interest expense
|
$
|
58
|
|
|
$
|
67
|
|
•
|
Cash interest expense primarily included interest expense related to the coupon rates for senior notes and term loans and commitment/letter of credit fees incurred on our revolving credit facilities. The decrease in cash interest expense in the first quarter of fiscal 2017 was primarily due to a reduction of our debt.
|
in millions
|
Three Months Ended
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||
Total other (income) expense, net
|
$
|
14
|
|
|
$
|
(1
|
)
|
•
|
Included $16 million of legal cost related to a 1995 plant closure of an apparel manufacturing facility operated by a former subsidiary of The Hillshire Brands Company, which was acquired by us in fiscal 2014. Also, included $1 million in net foreign currency exchange losses and $3 million of income from equity earnings in joint ventures.
|
•
|
Included $1 million in net foreign currency exchange losses and $2 million of income from equity earnings in joint ventures.
|
|
Three Months Ended
|
||||
|
December 31, 2016
|
|
January 2, 2016
|
||
|
34.9
|
%
|
|
35.2
|
%
|
•
|
state income taxes; and
|
•
|
the domestic production deduction.
|
•
|
state income taxes; and
|
•
|
the domestic production deduction.
|
in millions
|
Sales
|
||||||
|
Three Months Ended
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||
Chicken
|
$
|
2,706
|
|
|
$
|
2,636
|
|
Beef
|
3,528
|
|
|
3,614
|
|
||
Pork
|
1,252
|
|
|
1,213
|
|
||
Prepared Foods
|
1,895
|
|
|
1,896
|
|
||
Other
|
90
|
|
|
99
|
|
||
Intersegment sales
|
(289
|
)
|
|
(306
|
)
|
||
Total
|
$
|
9,182
|
|
|
$
|
9,152
|
|
in millions
|
Operating Income (Loss)
|
||||||
|
Three Months Ended
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||
Chicken
|
$
|
263
|
|
|
$
|
358
|
|
Beef
|
299
|
|
|
71
|
|
||
Pork
|
247
|
|
|
158
|
|
||
Prepared Foods
|
190
|
|
|
207
|
|
||
Other
|
(17
|
)
|
|
(18
|
)
|
||
Total
|
$
|
982
|
|
|
$
|
776
|
|
in millions
|
Three Months Ended
|
||||||||||
|
December 31, 2016
|
|
January 2, 2016
|
|
Change
|
||||||
Sales
|
$
|
2,706
|
|
|
$
|
2,636
|
|
|
$
|
70
|
|
Sales volume change
|
|
|
|
|
1.3
|
%
|
|||||
Average sales price change
|
|
|
|
|
1.4
|
%
|
|||||
Operating income
|
$
|
263
|
|
|
$
|
358
|
|
|
$
|
(95
|
)
|
Operating margin
|
9.7
|
%
|
|
13.6
|
%
|
|
|
•
|
Sales Volume
– Sales volume increased as a result of better demand for our chicken products, partially offset by a decrease in rendered product sales.
|
•
|
Average Sales Price
– Average sales price increased as a result of sales mix changes which offset general market price declines.
|
•
|
Operating Income
– Operating income decreased due to increased marketing, advertising and promotion spend and higher operating costs which included $23 million of compensation and benefit integration expense. Feed costs decreased $20 million during the first quarter of fiscal 2017.
|
in millions
|
Three Months Ended
|
||||||||||
|
December 31, 2016
|
|
January 2, 2016
|
|
Change
|
||||||
Sales
|
$
|
3,528
|
|
|
$
|
3,614
|
|
|
$
|
(86
|
)
|
Sales volume change
|
|
|
|
|
4.5
|
%
|
|||||
Average sales price change
|
|
|
|
|
(6.6
|
)%
|
|||||
Operating income
|
$
|
299
|
|
|
$
|
71
|
|
|
$
|
228
|
|
Operating margin
|
8.5
|
%
|
|
2.0
|
%
|
|
|
•
|
Sales Volume
– Sales volume increased due to improved availability of cattle supply and stronger domestic and export demand for our beef products.
|
•
|
Average Sales Price
– Average sales price decreased due to higher domestic availability of beef supplies and lower livestock cost.
|
•
|
Operating Income
– Operating income increased due to more favorable market conditions as we maximized our revenues relative to the decline in live fed cattle costs, partially offset by higher operating costs.
|
in millions
|
Three Months Ended
|
||||||||||
|
December 31, 2016
|
|
January 2, 2016
|
|
Change
|
||||||
Sales
|
$
|
1,252
|
|
|
$
|
1,213
|
|
|
$
|
39
|
|
Sales volume change
|
|
|
|
|
4.3
|
%
|
|||||
Average sales price change
|
|
|
|
|
(1.0
|
)%
|
|||||
Operating income
|
$
|
247
|
|
|
$
|
158
|
|
|
$
|
89
|
|
Operating margin
|
19.7
|
%
|
|
13.0
|
%
|
|
|
•
|
Sales Volume
– Sales volume increased due to strong demand for our pork products and increased exports.
|
•
|
Average Sales Price
– Live hog supplies increased, which drove down livestock cost and average sales price.
|
•
|
Operating Income
– Operating income increased as we maximized our revenues relative to the live hog markets, partially attributable to stronger export markets and operational and mix performance, which were partially offset by higher operating costs.
|
in millions
|
Three Months Ended
|
||||||||||
|
December 31, 2016
|
|
January 2, 2016
|
|
Change
|
||||||
Sales
|
$
|
1,895
|
|
|
$
|
1,896
|
|
|
$
|
(1
|
)
|
Sales volume change
|
|
|
|
|
2.9
|
%
|
|||||
Average sales price change
|
|
|
|
|
(2.9
|
)%
|
|||||
Operating income
|
$
|
190
|
|
|
$
|
207
|
|
|
$
|
(17
|
)
|
Operating margin
|
10.0
|
%
|
|
10.9
|
%
|
|
|
•
|
Sales Volume
– Sales volume increased due to improved demand for our prepared foods products.
|
•
|
Average Sales Price
– Average sales price decreased primarily due to a decline in input costs of approximately $100 million, partially offset by product mix changes.
|
•
|
Operating Income
– Operating income decreased due to higher operating costs at some of our facilities, increased marketing, advertising and promotion spend and $22 million of compensation and benefit integration expense. Additionally, Prepared Foods operating income was positively impacted by $127 million in synergies, of which $32 million was incremental synergies in the first quarter of fiscal 2017 above the $95 million of synergies realized in the first quarter of fiscal 2016. The positive impact of these synergies to operating income was partially offset with investments in innovation, new product launches and supporting the growth of our brands.
|
in millions
|
Three Months Ended
|
||||||||||
|
December 31, 2016
|
|
January 2, 2016
|
|
Change
|
||||||
Sales
|
$
|
90
|
|
|
$
|
99
|
|
|
$
|
(9
|
)
|
Operating loss
|
$
|
(17
|
)
|
|
$
|
(18
|
)
|
|
$
|
1
|
|
•
|
Sales
– Sales decreased due to a decline in sales volume and decrease in average sales price in our foreign chicken production operations.
|
•
|
Operating Loss
– Operating loss improved due to better performance at our China operation, partially offset by a slight increase in third-party merger and integration expense.
|
in millions
|
Three Months Ended
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||
Net income
|
$
|
594
|
|
|
$
|
461
|
|
Non-cash items in net income:
|
|
|
|
||||
Depreciation and amortization
|
177
|
|
|
172
|
|
||
Deferred income taxes
|
(4
|
)
|
|
69
|
|
||
Other, net
|
7
|
|
|
(1
|
)
|
||
Net changes in operating assets and liabilities
|
360
|
|
|
394
|
|
||
Net cash provided by operating activities
|
$
|
1,134
|
|
|
$
|
1,095
|
|
•
|
Cash flows associated with net changes in operating assets and liabilities for the three months ended:
|
•
|
December 31, 2016
– Increased primarily due to decreased accounts receivable and income tax receivable balances and increased accounts payable and income taxes payable balances, partially offset by decreased accrued employee costs. The decreased accounts receivable, income tax receivable and accrued employee costs, as well as the increased accounts payable and income taxes payable balances are largely due to the timing of sales and payments.
|
•
|
January 2, 2016
– Increased primarily due to decreases in accounts receivable and inventory balances and increases accounts payable and income taxes payable balances. The decrease in accounts receivable and inventory is largely due to decreased raw materials costs and timing of sales. The increase in accounts payable is largely due to timing of payments.
|
in millions
|
Three Months Ended
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||
Additions to property, plant and equipment
|
$
|
(200
|
)
|
|
$
|
(188
|
)
|
(Purchases of)/Proceeds from marketable securities, net
|
(2
|
)
|
|
(2
|
)
|
||
Other, net
|
(12
|
)
|
|
(1
|
)
|
||
Net cash used for investing activities
|
$
|
(214
|
)
|
|
$
|
(191
|
)
|
•
|
Additions to property, plant and equipment include acquiring new equipment and upgrading our facilities to maintain competitive standing and position us for future opportunities.
|
•
|
Capital spending for fiscal
2017
is expected to approximate $1 billion and will include spending for production growth, safety, animal well-being, infrastructure replacements and upgrades, and operational improvements that will result in production and labor efficiencies, yield improvements and sales channel flexibility.
|
in millions
|
Three Months Ended
|
||||||
|
December 31, 2016
|
|
January 2, 2016
|
||||
Payments on debt
|
$
|
(20
|
)
|
|
$
|
(20
|
)
|
Borrowings on revolving credit facility
|
435
|
|
|
—
|
|
||
Payments on revolving credit facility
|
(735
|
)
|
|
—
|
|
||
Purchases of Tyson Class A common stock
|
(576
|
)
|
|
(387
|
)
|
||
Dividends
|
(79
|
)
|
|
(54
|
)
|
||
Stock options exercised
|
6
|
|
|
34
|
|
||
Other, net
|
12
|
|
|
23
|
|
||
Net cash used for financing activities
|
(957
|
)
|
|
(404
|
)
|
•
|
We had net payments on our revolving credit facility of $300 million for the first three months of fiscal 2017. We utilized our revolving credit facility to balance our cash position with changes in working capital.
|
•
|
Purchases of Tyson Class A stock included:
|
•
|
$550 million
and
$357 million
of shares repurchased pursuant to our share repurchase program during the
three
months ended
December 31, 2016
, and
January 2, 2016
, respectively.
|
•
|
$26 million
and
$30 million
of shares repurchased to fund certain obligations under our equity compensation programs during the
three
months ended
December 31, 2016
, and
January 2, 2016
, respectively.
|
•
|
We expect to continue repurchasing shares under our share repurchase program. As of
December 31, 2016
,
31.7 million
shares remain authorized for repurchases. The timing and extent to which we repurchase shares will depend upon, among other things, our working capital needs, markets, industry conditions, liquidity targets, limitations under our debt obligations and regulatory requirements.
|
•
|
Dividends paid during the first
three
months of fiscal
2017
included a 50% increase to our fiscal
2016
quarterly dividend rate.
|
in millions
|
|
|
|
|
|
|
|
|
|
||||||||
|
Commitments
Expiration Date
|
|
Facility
Amount
|
|
|
Outstanding
Letters of Credit
(no draw downs)
|
|
|
Amount
Borrowed
|
|
|
Amount
Available
|
|
||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
$
|
307
|
|
||||||
Short-term investments
|
|
|
|
|
|
|
|
|
4
|
|
|||||||
Revolving credit facility
|
September 2019
|
|
$
|
1,250
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
1,243
|
|
|
Total liquidity
|
|
|
|
|
|
|
|
|
$
|
1,554
|
|
•
|
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 leasing obligations and workers’ compensation insurance programs. Our maximum borrowing under the revolving credit facility during the first
three
months of fiscal 2017 was $300 million.
|
•
|
We expect net interest expense will approximate $230 million for fiscal
2017
.
|
•
|
At
December 31, 2016
, approximately $270 million 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 foreign 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. United States income taxes, net of applicable foreign tax credits, have not been provided on undistributed earnings of foreign subsidiaries. Our intention is to reinvest the cash held by foreign subsidiaries permanently or to repatriate the cash only when it is tax efficient to do so.
|
•
|
Our current ratio was
1.60
to 1 and
1.77
to 1 at
December 31, 2016
, and
October 1, 2016
, respectively.
|
Ratings Level (S&P/Moody's/Fitch)
|
Tranche B due April 2019 Borrowing Spread
|
|
Tranche B due August 2019 Borrowing Spread
|
|
BBB+/Baa1/BBB+
|
1.000
|
%
|
1.250
|
%
|
BBB/Baa2/BBB (current level)
|
1.125
|
%
|
1.500
|
%
|
BBB-/Baa3/BBB-
|
1.375
|
%
|
1.750
|
%
|
BB+/Ba1/BB+
|
1.625
|
%
|
2.000
|
%
|
BB/Ba2/BB or lower
|
1.875
|
%
|
2.500
|
%
|
Ratings Level (S&P/Moody's/Fitch)
|
Facility Fee
Rate
|
|
Undrawn Letter of
Credit Fee and
Borrowing Spread
|
|
A-/A3/A- or above
|
0.100
|
%
|
1.000
|
%
|
BBB+/Baa1/BBB+
|
0.125
|
%
|
1.125
|
%
|
BBB/Baa2/BBB (current level)
|
0.150
|
%
|
1.250
|
%
|
BBB-/Baa3/BBB-
|
0.200
|
%
|
1.500
|
%
|
BB+/Ba1/BB+ or lower
|
0.250
|
%
|
1.750
|
%
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Effect of 10% change in fair value
|
|
|
in millions
|
|
|||
|
December 31, 2016
|
|
October 1, 2016
|
||||
Livestock:
|
|
|
|
||||
Live Cattle
|
$
|
3
|
|
|
$
|
5
|
|
Lean Hogs
|
13
|
|
|
7
|
|
||
Grain:
|
|
|
|
||||
Corn
|
13
|
|
|
26
|
|
||
Soy Meal
|
11
|
|
|
8
|
|
|
Three Months Ended
|
|
Fiscal Year Ended
|
Twelve Months Ended
|
||||||||||
|
December 31, 2016
|
|
January 2, 2016
|
|
October 1, 2016
|
December 31, 2016
|
||||||||
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
594
|
|
|
$
|
461
|
|
|
$
|
1,772
|
|
$
|
1,905
|
|
Less: Interest income
|
(2
|
)
|
|
(2
|
)
|
|
(6
|
)
|
(6
|
)
|
||||
Add: Interest expense
|
58
|
|
|
67
|
|
|
249
|
|
240
|
|
||||
Add: Income tax expense
|
318
|
|
|
251
|
|
|
826
|
|
893
|
|
||||
Add: Depreciation
|
156
|
|
|
151
|
|
|
617
|
|
622
|
|
||||
Add: Amortization (a)
|
19
|
|
|
19
|
|
|
80
|
|
80
|
|
||||
EBITDA
|
$
|
1,143
|
|
|
$
|
947
|
|
|
$
|
3,538
|
|
$
|
3,734
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
||||||||
Total gross debt
|
|
|
|
|
$
|
6,279
|
|
$
|
5,967
|
|
||||
Less: Cash and cash equivalents
|
|
|
|
|
(349
|
)
|
(307
|
)
|
||||||
Less: Short-term investments
|
|
|
|
|
(4
|
)
|
(4
|
)
|
||||||
Total net debt
|
|
|
|
|
$
|
5,926
|
|
$
|
5,656
|
|
||||
|
|
|
|
|
|
|
||||||||
Ratio Calculations:
|
|
|
|
|
|
|
||||||||
Gross debt/EBITDA
|
|
|
|
|
1.8x
|
|
1.6x
|
|
||||||
Net debt/EBITDA
|
|
|
|
|
1.7x
|
|
1.5x
|
|
(a)
|
Excludes the amortization of debt discount expense of
$2 million
for the
three
months ended
December 31, 2016
, and
January 2, 2016
, and $8 million for the fiscal year ended October 1, 2016, and for the twelve months ended
December 31, 2016
, as it is included in interest expense.
|
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)
|
|
|
Oct. 2, 2016 to Oct. 29, 2016
|
2,752,346
|
|
|
$
|
70.80
|
|
2,712,661
|
|
|
37,627,193
|
|
Oct. 30, 2016 to Dec. 3, 2016
|
5,088,237
|
|
|
60.88
|
|
4,752,478
|
|
|
32,874,715
|
|
|
Dec 4, 2016 to Dec 31, 2016
|
1,184,352
|
|
|
60.11
|
|
1,165,867
|
|
|
31,708,848
|
|
|
Total
|
9,024,935
|
|
(2)
|
$
|
63.80
|
|
8,631,006
|
|
(3)
|
31,708,848
|
|
(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, on January 30, 2014, our Board of Directors approved an increase of 25 million shares and, on February 4, 2016, our Board of Directors approved an increase of 50 million shares, authorized for repurchase under our share repurchase program. The program has no fixed or scheduled termination date.
|
(2)
|
We purchased 393,929 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 86,181 shares purchased in open market transactions and 307,748 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 Description
|
|
|
|
|
|
|
10.1*
|
|
Form of Performance Shares Relative Total Shareholder Return Stock Incentive Award Agreement pursuant to which performance stock awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 28, 2016.
|
|
|
|
|
|
10.2*
|
|
Form of Performance Shares EBIT Stock Incentive Award Agreement pursuant to which performance stock awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 28, 2016.
|
|
|
|
|
|
10.3*
|
|
Form of Restricted Stock Subject to Performance Criteria Stock Incentive Award Agreement pursuant to which restricted stock awards subject to performance criteria are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 28, 2016.
|
|
|
|
|
|
10.4*
|
|
Form of Restricted Stock Incentive Award Agreement with contracted employees pursuant to which restricted stock awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 28, 2016.
|
|
|
|
|
|
10.5*
|
|
Form of Restricted Stock Incentive Award Agreement with non-contracted employees pursuant to which restricted stock awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 28, 2016.
|
|
|
|
|
|
10.6*
|
|
Form of Stock Options Incentive Award Agreement with contracted employees pursuant to which stock options awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 28, 2016.
|
|
|
|
|
|
10.7*
|
|
Form of Stock Options Incentive Award Agreement with non-contracted employees pursuant to which stock options awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 28, 2016.
|
|
|
|
|
|
10.8*
|
|
Amended and Restated Tyson Foods, Inc. Supplemental Executive Retirement and Life Insurance Premium Plan effective January 1, 2017 (previously filed as Exhibit 10.68 to the Company's Annual Report on Form 10-K for the fiscal year ended October 1, 2016, Commission File No. 001-14704, and incorporated herein by reference).
|
|
|
|
|
|
10.9*
|
|
Amended and Restated Employment Agreement dated as of November 17, 2016, entered into between the Company and Thomas P. Hayes (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 22, 2016, Commission File No. 001-14704, and incorporated herein by reference).
|
|
|
|
|
|
10.10*
|
|
Transition, Non-Compete, and Consulting Agreement dated as of November 17, 2016, between the Company and Donald J. Smith (previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed November 22, 2016, Commission File No. 001-14704, and incorporated herein by reference).
|
|
|
|
|
|
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 December 31, 2016, 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.
|
|
*
|
|
Indicates a management contract or compensatory plan or arrangement.
|
|
|
TYSON FOODS, INC.
|
|
|
|
|
|
Date: February 6, 2017
|
|
|
/s/ Dennis Leatherby
|
|
|
|
Dennis Leatherby
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
Date: February 6, 2017
|
|
|
/s/ Curt T. Calaway
|
|
|
|
Curt T. Calaway
|
|
|
|
Senior Vice President, Controller and Chief Accounting Officer
|
Team Member:
|
«Name»
|
Personnel Number:
|
[ ]
|
Award:
|
[Target Quantity Granted] Performance Shares
|
Grant Date
|
November 28, 2016
|
Initial Measurement Date:
|
October 2, 2016
|
Final Measurement Date:
|
September 28, 2019
|
Vesting Date:
|
November 18, 2019
|
|
|
1.
|
Terms and Conditions.
The Award (as provided on the cover page) is subject to all the terms and conditions of the Tyson Foods, Inc. 2000 Stock Incentive Plan (the “Plan”). Unless otherwise defined herein, all capitalized terms in this Performance Shares Relative Total Shareholder Return Stock Incentive Award Agreement (the “Award Agreement”) shall have the meaning stated in the Plan. Please see the Plan document for more information on these terms and conditions. A copy of the Plan is available upon request.
|
2.
|
Definitions
.
|
2.1.
|
"Cause," "Disability," “Good Reason,” and "Release" shall have the same meanings as set forth in your employment agreement with Tyson in effect at the time of this Award (the “Employment Agreement”).
|
2.2.
|
"Final Measurement Date" shall mean the date identified as such on the cover page.
|
2.3.
|
“Grant Date” shall mean the date as provided on the cover page.
|
2.4.
|
"Initial Measurement Date" shall mean the date as provided on the cover page.
|
2.5.
|
"Measurement Period" shall mean the three fiscal year period from the Initial Measurement Date to the Final Measurement Date.
|
2.6.
|
"Peer Group" shall mean that group of publicly traded companies most recently determined by the Compensation and Leadership Development Committee of Tyson's Board of Directors ("Compensation Committee"), which at the Initial Measurement Date is comprised of the following companies: Archer Daniels Midland Co., Bunge Ltd., Campbell Soup Co., Coca-Cola Co., ConAgra Foods, Inc., Dean Foods Co., General Mills, Inc., The Hershey Company, Hormel Foods Corp., J.M. Smucker Co., Kellogg Co., Kraft Heinz Co., McCormick & Co., Inc., Mondelez International, Inc., PepsiCo Inc., and Pilgrim's Pride Corp. If one or more members of the Peer Group ceases to be the surviving entity in a corporate transaction, the successor entity shall replace the entity which has ceased to exist provided that the primary business of the successor entity and its affiliates is in substantially the same lines of business as Tyson. If a member of the Peer Group (a) ceases to have any class of securities registered under the Securities Exchange Act of 1934; (b) ceases to exist in circumstances where there is no successor entity or where the primary business of the successor entity and its affiliates is not in substantially the same lines of business as Tyson; or (c) becomes bankrupt, that member of the Peer Group shall be deleted as a member of the Peer Group and shall not be counted for purposes of measuring satisfaction of the Relative Total Shareholder Return Goals and said Relative Total Shareholder Return Goals shall be reduced accordingly.
|
2.7.
|
"Performance Shares" shall mean the shares of Tyson's Class A common stock subject to this Award Agreement.
|
2.8.
|
“Relative Total Shareholder Return” shall mean the comparison during the Measurement Period of the total shareholder return of Tyson as compared to members of the Peer Group. Total shareholder return of Tyson and of the Peer Group shall be calculated as the sum of (a) Share Price at Final Measurement Date, less (b) Share Price at the Initial Measurement Date, plus (c) cumulative dividends per share paid during the Measurement Period based on the ex-dividend date for which the resulting sum of (a), (b) and (c) is divided by the Share Price at the Initial Measurement Date.
|
2.9.
|
“Relative Total Shareholder Return Goals” shall mean the performance measures specified in Section 4.
|
2.10.
|
"Share Price" shall mean the average ending closing price of Tyson's Class A common stock in the case of Tyson, or the publicly traded stock in the case of a Peer Group company, for the twenty trading days preceding the Initial Measurement Date and the Final Measurement Date.
|
2.11.
|
“Vesting Date” shall mean the date as provided on the cover page.
|
2.12.
|
“Vesting Period” shall mean the period beginning on the Grant Date and ending on the Vesting Date.
|
3.
|
Vesting
.
|
3.1.
|
Vesting and Forfeiture.
Any Award which has become payable pursuant to the performance measure and benchmarks set forth below shall be considered as fully earned by you, subject to the further provisions of this Section 3. Any Award which does not become payable in accordance with the performance measure and benchmarks or the provisions of this Section 3 on account of: (i) your Termination of Employment with Tyson and/or its affiliates before the Vesting Date or (ii) the failure to satisfy the performance measure and benchmarks provided below, will be forfeited back to Tyson.
|
3.2.
|
Death, Disability or Retirement.
In the event your Termination of Employment is due to death, Disability or, subject to your timely execution and non-revocation of a Release, Retirement before the Vesting Date, you will be entitled to a pro rata portion of your Award if the applicable performance measure is satisfied. The pro rata portion of your Award shall equal the percentage of the total Vesting Period, measured in days, in which you remained employed by Tyson and/or its affiliates multiplied by the percentage of the Award that you would have received had you remained employed until the Vesting Date. For purposes of this Agreement, “Retirement” shall mean your voluntary Termination of Employment without Cause from Tyson and/or its affiliates on or after the date you attain age 62.
|
3.3.
|
Termination by Tyson without Cause or by you for Good Reason.
In the event of your Termination of Employment by Tyson for reasons other than death, Disability, Retirement, or Cause, or by you for Good Reason, and subject to your timely execution and non-revocation of a Release, you will become entitled to a pro rata portion of your Award if the applicable performance measure is satisfied. The pro rata portion of your Award shall equal the percentage of the total Vesting Period, measured in days, in which you remained employed by Tyson and/or its affiliates multiplied by the percentage of the Award that you would have received had you remained employed until the Vesting Date.
|
3.4.
|
Change in Control
. Following a Change in Control, and on the earlier of: (i) the date you are involuntarily terminated without Cause (as defined in your Employment Agreement) or (ii) sixty (60) days after the Change in Control, you shall become entitled to a payment of Tyson’s Class A common stock equal to 200% of the Award. For purposes of this Award Agreement, the term “Change in Control” shall not include any event as a result of which one or more of the following persons or entities possess or continues to possess, immediately after such event, over fifty percent (50%) of the combined voting power of the Company or, if applicable, a successor entity: (a) Tyson Limited Partnership, or any successor entity; (b) individuals related to the late Donald John Tyson by blood, marriage or adoption, or the estate of any such individual (including Donald John Tyson’s); or (c) any entity (including, but not limited to, a partnership, corporation, trust or limited liability company) in which one or more of the entities, individuals or estates described in clauses (a) and (b) hereof possess over fifty percent (50%) of the combined voting power or beneficial interests of such entity.
|
4.
|
Performance Measure.
The extent, if any, to which you shall have the right to payment, respectively, of the Award shall depend upon your continuous employment throughout the Vesting Period and the extent to which the applicable performance measure or benchmark has been satisfied as of the Final Measurement Date, as specified below:
|
5.
|
Payment of Award.
The Performance Shares that may become payable pursuant to this Award Agreement shall be determined based upon the highest benchmark attained in the respective category. In other words, the attainment of multiple benchmarks under this Award Agreement will not result in the payment of a cumulative number of Performance Shares for each benchmark achieved. Your Award, if any, will be earned on the Vesting Date and delivered thereafter. Payment shall be made in shares of Tyson’s Class A common stock.
|
6.
|
Withholding Taxes.
By accepting the Award, you acknowledge and agree that you are responsible for all applicable income and other taxes from any Award, including federal, FICA, state and local taxes applicable in your country of residence or employment. Tyson shall withhold taxes by any manner acceptable under the terms of the Plan, but not to exceed the required minimum statutory withholding.
|
7.
|
Right of the Committee.
The Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, all of which shall be binding.
|
8.
|
Severability.
In the event that any one or more of the provisions or a portion thereof contained in this Award Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Award Agreement, and this Award Agreement shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.
|
9.
|
Entire Agreement.
Subject to the terms and conditions of the Plan, and the applicable provisions of the Employment Agreement, this Award Agreement expresses the entire understanding and agreement of Tyson and you with respect to the subject matter. In the event of any conflict between the provisions of the Plan and the terms of this Award Agreement, the provisions of the Plan will control unless this Award Agreement explicitly states that an exception to the Plan is being made. The Award has been made pursuant to the Plan and an administrative record is maintained by the Committee.
|
10.
|
Restrictions on Transfer of Award.
You shall not dispose of the Award prior to the date unrestricted, vested shares in your name are delivered to you by Tyson pursuant to Section 5. Any disposition of the Award or any portion thereof shall be a violation of the terms of this Award Agreement and shall be void and without effect; provided, however, that this provision shall not preclude a transfer as otherwise permitted by the Plan.
|
11.
|
Headings.
Paragraph headings used herein are for convenience of reference only and shall not be considered in construing this Award Agreement.
|
12.
|
Specific Performance.
In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Award Agreement, the party or parties who are thereby aggrieved shall have the right to specific performance and an injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.
|
13.
|
No Vested Right in Future Awards.
You acknowledge and agree that the granting of the Award under this Award Agreement is made on a fully discretionary basis by Tyson and that this Award Agreement does not confer a vested right to further Awards in the future. Further, the Award set forth in this Award Agreement constitutes a non-recurrent benefit and the terms of this Award Agreement are applicable only to the Award granted pursuant to this Award Agreement.
|
14.
|
No Right to Continued Employment.
You acknowledge and agree (through electronic acknowledgment and acceptance of this Award Agreement) that neither the adoption of the Plan nor the granting of any Award shall confer any right to continued employment with Tyson, nor shall it interfere in any way with Tyson’s right to terminate your employment at any time for any reason in accordance with the terms of your Employment Agreement.
|
15.
|
Governing Law.
The Plan, this Award Agreement and all determinations made and actions taken pursuant to the Plan or Award Agreement shall be governed by the laws of the State of Arkansas, without giving effect to the conflict of laws principles thereof.
|
16.
|
Successors and Assigns
. This Award Agreement shall inure to the benefit of and be binding upon each successor and assign of Tyson. All obligations imposed upon you, and all rights granted to Tyson hereunder, shall be binding upon your heirs, successors and administrators.
|
TYSON FOODS, INC.
By:
/s/ Donnie Smith_
|
|
Title: CEO
|
|
Team Member:
|
«Name»
|
Personnel Number:
|
[ ]
|
Award:
|
[Target Quantity Granted] Performance Shares
|
Grant Date
|
November 28, 2016
|
Initial Measurement Date:
|
October 2, 2016
|
Final Measurement Date:
|
September 28, 2019
|
Vesting Date:
|
November 18, 2019
|
|
|
1.
|
Terms and Conditions.
The Award (as provided on the cover page) is subject to all the terms and conditions of the Tyson Foods, Inc. 2000 Stock Incentive Plan (the “Plan”). Unless otherwise defined herein, all capitalized terms in this Performance Shares EBIT Stock Incentive Award Agreement (the “Award Agreement”) shall have the meaning stated in the Plan. Please see the Plan document for more information on these terms and conditions. A copy of the Plan is available upon request.
|
2.
|
Definitions
.
|
2.1.
|
"Cause," "Disability," “Good Reason,” and "Release" shall have the same meanings as set forth in your employment agreement with Tyson in effect at the time of this Award (the “Employment Agreement”).
|
2.2.
|
"EBIT" shall mean Tyson's operating earnings, as adjusted for unusual or unique items, such as one-time gains or losses, in the reasonable discretion of the Compensation and Leadership Development Committee.
|
2.3.
|
"EBIT Goal" for the Measurement Period shall be a cumulative EBIT of
___
.
|
2.4.
|
"Final Measurement Date" shall mean the date identified as such on the cover page.
|
2.5.
|
“Grant Date” shall mean the date identified as such on the cover page.
|
2.6.
|
"Initial Measurement Date" shall mean the date identified as such on the cover page.
|
2.7.
|
"Measurement Period" shall mean the three fiscal year period from the Initial Measurement Date to the Final Measurement Date.
|
2.8.
|
“Performance Shares” shall mean the shares of Tyson's Class A common stock subject to this Award Agreement.
|
2.9.
|
“Vesting Date” shall mean the date on the cover page.
|
2.10.
|
“Vesting Period” shall mean the period beginning on the Grant Date and ending on the Vesting Date.
|
3.
|
Vesting
.
|
3.1.
|
Vesting and Forfeiture.
The Award which has become payable pursuant to the performance measure and benchmarks set forth below shall be considered as fully earned by you, subject to the further provisions of this Section 3. Any Award which does not become payable in accordance with the performance measure and benchmarks or the provisions of this Section 3 on account of: (i) your Termination of Employment with Tyson and/or its affiliates before the Vesting Date or (ii) the failure to satisfy the performance measure or benchmarks provided below, will be forfeited back to Tyson.
|
3.2.
|
Death, Disability or Retirement.
In the event your Termination of Employment is due to death, Disability or, subject to your timely execution and non-revocation of a Release, Retirement before the Vesting Date, you will be entitled to a pro rata portion of your Award if the applicable performance measure is satisfied. The pro rata portion of your Award shall equal the percentage of the total Vesting Period, measured in days, in which you remained employed by Tyson and/or its affiliates multiplied by the percentage of the Award that you would have received had you remained employed until the Vesting Date. For purposes of this Agreement, “Retirement” shall mean your voluntary Termination of Employment without Cause from Tyson and/or its affiliates on or after the date you attain age 62.
|
3.3.
|
Termination by Tyson without Cause or by you for Good Reason.
In the event that your employment is terminated by Tyson for reasons other than death, Disability, Retirement, or Cause, or by you for Good Reason, and subject to your timely execution and non-revocation of a Release, you will become entitled to a pro rata portion of your Award if the applicable performance measure is satisfied. The pro rata portion of your Award shall equal the percentage of the total Vesting Period, measured in days, in which you remained employed by Tyson and/or its affiliates multiplied by the percentage of the Award that you would have received had you remained employed until the Vesting Date.
|
3.4.
|
Change in Control
. Following a Change in Control, and on the earlier of: (i) the date you are involuntarily terminated without Cause (as defined in your Employment Agreement) or (ii) sixty (60) days after the Change in Control, you shall become entitled to payment of Tyson’s Class A common stock equal to 200% of the Award. For purposes of this Award Agreement, the term “Change in Control” shall not include any event as a result of which one or more of the following persons or entities possess or continues to possess, immediately after such event, over fifty percent (50%) of the combined voting power of the Company or, if applicable, a successor entity: (a) Tyson Limited Partnership, or any successor entity; (b) individuals related to the late Donald John Tyson by blood, marriage or adoption, or the estate of any such individual (including Donald John Tyson’s); or (c) any entity (including, but not limited to, a partnership, corporation, trust or
|
4.
|
Performance Measure.
The extent, if any, to which you shall have the right to payment of the Award shall depend upon your continuous employment throughout the Vesting Period and the extent to which the applicable performance measure or benchmark has been satisfied as of the Final Measurement Date, as specified below:
|
5.
|
Payment of Award.
The Performance Shares that may become payable pursuant to this Award Agreement shall be determined based upon the highest benchmark attained in the respective category. In other words, the attainment of multiple benchmarks under this Award Agreement will not result in the payment of a cumulative number of Performance Shares for each benchmark achieved. Your Award, if any, will be earned on the Vesting Date and delivered thereafter. Payment shall be made in shares of Tyson’s Class A common stock.
|
6.
|
Withholding Taxes.
By accepting the Award, you acknowledge and agree that you are responsible for all applicable income and other taxes from this Award, including federal, FICA, state and local taxes applicable in your country of residence or employment. Tyson shall withhold taxes by any manner acceptable under the terms of the Plan, but not to exceed the required minimum statutory withholding.
|
7.
|
Right of the Committee.
The Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, all of which shall be binding.
|
8.
|
Severability.
In the event that any one or more of the provisions or a portion thereof contained in this Award Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provision of this Award Agreement, and this Award Agreement shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.
|
9.
|
Entire Agreement.
Subject to the terms and conditions of the Plan, and the applicable provisions of the Employment Agreement, this Award Agreement expresses the entire understanding and agreement of Tyson and you with respect to the subject matter. In the event of any conflict between the provisions of the Plan and the terms of this Award Agreement, the provisions of the Plan will control unless this Award Agreement explicitly states that an exception to the Plan is being made. The Award has been made pursuant to the Plan and an administrative record is maintained by the Committee.
|
10.
|
Restrictions on Transfer of Award.
You shall not dispose of the Award prior to the date unrestricted, vested shares in your name are delivered to you by Tyson pursuant to Section 5. Any disposition of the Award or any portion thereof shall be a violation of the terms of this Award Agreement and shall be void and without effect; provided, however, that this provision shall not preclude a transfer as otherwise permitted by the Plan.
|
11.
|
Headings.
Paragraph headings used herein are for convenience of reference only and shall not be considered in construing this Award Agreement.
|
12.
|
Specific Performance.
In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Award Agreement, the party or parties who are thereby aggrieved shall have the right to specific performance and an injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.
|
13.
|
No Vested Right in Future Awards.
You acknowledge and agree that the granting of the Award under this Award Agreement is made on a fully discretionary basis by Tyson and that this Award Agreement does not confer a vested right to further Awards in the future. Further, the Award set forth in this Award Agreement constitutes a non-recurrent benefit and the terms of this Award Agreement are applicable only to the Award granted pursuant to this Award Agreement.
|
14.
|
No Right to Continued Employment.
You acknowledge and agree (through electronic acknowledgment and acceptance of this Award Agreement) that neither the adoption of the Plan nor the granting of any Award shall confer any right to continued employment with Tyson, nor shall it interfere in any way with Tyson’s right to terminate your employment at any time for any reason in accordance with the terms of your Employment Agreement.
|
15.
|
Governing Law.
The Plan, this Award Agreement and all determinations made and actions taken pursuant to the Plan or Award Agreement shall be governed by the laws of the State of Arkansas, without giving effect to the conflict of laws principles thereof.
|
16.
|
Successors and Assigns
. This Award Agreement shall inure to the benefit of and be binding upon each successor and assign of Tyson. All obligations imposed upon you, and all rights granted to Tyson hereunder, shall be binding upon your heirs, successors and administrators.
|
TYSON FOODS, INC.
By:
/s/ Donnie Smith_
|
|
Title: CEO
|
|
Team Member:
|
«name»
|
Personnel Number:
|
«PERS_»
|
Award:
|
«Shares_Granted» Shares of Restricted Stock
|
Grant Date
|
November 28, 2016
|
Initial Measurement Date:
|
October 2, 2016
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Final Measurement Date:
|
September 28, 2019
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Vesting Date:
|
November 18, 2019
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1.
|
Terms and Conditions.
The Award (as provided on the cover page) is subject to all the terms and conditions of the Tyson Foods, Inc. 2000 Stock Incentive Plan (the “Plan”). Unless otherwise defined herein, all capitalized terms in this Restricted Stock Subject to Performance Criteria Stock Incentive Award Agreement (the “Award Agreement”) shall have the meaning stated in the Plan. Please see the Plan document for more information on these terms and conditions. A copy of the Plan is available upon request.
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2.
|
Definitions
.
|
2.1.
|
"Cause," "Disability," “Good Reason,” and "Release" shall have the same meanings as set forth in your Employment Agreement.
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2.2.
|
"EBIT" shall mean Tyson's operating earnings, as adjusted for unusual or unique items, such as one-time gains or losses, in the reasonable discretion of the Compensation and Leadership Development Committee.
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2.3.
|
"EBIT Goal" for the Measurement Period shall be a cumulative EBIT of
$___
.
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2.4.
|
"Final Measurement Date" shall mean the date on the cover page.
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2.5.
|
“Grant Date” shall mean the date identified as such on the cover page.
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2.6.
|
"Initial Measurement Date" shall mean the date on the cover page.
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2.7.
|
"Measurement Period" shall mean the three fiscal year period from the Initial Measurement Date to (i) the Final Measurement Date or (ii) the date of your Termination of Employment pursuant to Section 3.2 or 3.3.
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2.8.
|
"Restricted Stock" means the shares of Tyson's Class A common stock subject to this Award Agreement.
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2.9.
|
“Vesting Date” shall mean the date on the cover page.
|
2.10.
|
“Vesting Period” shall mean the period beginning on the Grant Date and ending on the Vesting Date.
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3.
|
Vesting
.
|
3.1.
|
Vesting and Forfeiture.
The Award which becomes vested pursuant to the performance measure set forth below shall be considered as fully earned by you, subject to the further provisions of this Section 3. Any Award which does not become vested in accordance with the performance measure or the provisions of this Section 3 on account of: (i) your Termination of Employment with Tyson and/or its affiliates before the Vesting Date or (ii) the failure to satisfy the performance measure provided below, will be forfeited back to Tyson.
|
3.2.
|
Death, Disability or Retirement.
In the event your employment is terminated due to death, Disability or, subject to your timely execution and non-revocation of a Release, Retirement before the Vesting Date, the Measurement Period will end on the date your employment is terminated and you will be entitled to your Award if the performance measure is on track to be satisfied (e.g., on a run rate basis) as of the date of your termination. For purposes of this Agreement, “Retirement” shall mean your voluntary termination of employment without Cause from Tyson and/or its affiliates on or after the later of the first anniversary of the Grant Date or the date you attain age 62.
|
3.3.
|
Termination by Tyson without Cause or by you for Good Reason.
In the event that your employment is terminated by Tyson for reasons other than death, Disability, Retirement, or Cause, or by you for Good Reason before the Vesting Date, and subject to your timely execution and non-revocation of a Release, the Measurement Period will end on the date your employment is terminated, and you will become entitled to a pro rata portion of your Award if the performance measure is on track to be satisfied (e.g., on a run rate basis) as of the date of your termination. The pro rata portion of your Award shall equal the percentage of the total Vesting Period, measured in days, in which you remained employed by Tyson and/or its affiliates over the percentage of the Award that you would have received had you remained employed until the Vesting Date. If your employment is terminated pursuant to this paragraph and your termination of employment occurs on or after the later of the first anniversary of the Grant Date or the date you attain age 62, subject to your timely execution and non-revocation of a Release, you will be fully vested in your Award if the performance measure is on track to be satisfied (e.g. on a run rate basis).
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3.4.
|
Change in Control
. Following a Change in Control, and on the earlier of: (i) the date you are involuntarily terminated without Cause (as defined in your Employment Agreement) or (ii) sixty (60) days after the Change in Control, you shall become entitled to payment of Tyson’s Class A Common Stock equal to the Award that you would have received had you remained employed until the Vesting Date and the performance measure had been satisfied. For purposes of this Award Agreement, the term “Change in Control” shall not include any event as a result of which one or more of the following persons or entities possess or continues to
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4.
|
Performance Measure.
The extent, if any, to which you shall have the right to become vested in this Award Agreement shall depend upon your continuous employment throughout the Vesting Period and the extent to which the performance measure has been satisfied as of the Final Measurement Date or the date of your Termination of Employment, as applicable, as specified below:
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5.
|
Delivery of Shares.
To the extent your Award becomes vested, the shares subject to your Award, if any, will be delivered thereafter.
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6.
|
Withholding Taxes.
By accepting the Award, you acknowledge and agree that you are responsible for all applicable income and other taxes from any Award, including federal, FICA, state and local taxes applicable in your country of residence or employment. Tyson shall withhold taxes by any manner acceptable under the terms of the Plan, but not to exceed the required minimum statutory withholding.
|
7.
|
Right of the Committee.
The Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, all of which shall be binding.
|
8.
|
Severability.
In the event that any one or more of the provisions or a portion thereof contained in this Award Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Award Agreement, and this Award Agreement shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.
|
9.
|
Entire Agreement.
Subject to the terms and conditions of the Plan, and the applicable provisions of the Employment Agreement, this Award Agreement expresses the entire understanding and agreement of Tyson and you with respect to the subject matter. In the event of any conflict between the provisions of the Plan and the terms of this Award Agreement, the provisions of the Plan will control unless this Award Agreement explicitly states that an exception to the Plan is being made. The Award has been made pursuant to the Plan and an administrative record is maintained by the Committee.
|
10.
|
Restrictions on Transfer of Award.
You shall not dispose of the Award prior to the date unrestricted, vested shares in your name are delivered to you by Tyson pursuant to Section 5. Any disposition of the Award or any portion thereof shall be a violation of the terms of this Award Agreement and shall be void and without effect; provided, however, that this provision shall not preclude a transfer as otherwise permitted by the Plan.
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11.
|
Headings.
Paragraph headings used herein are for convenience of reference only and shall not be considered in construing this Award Agreement.
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12.
|
Specific Performance.
In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Award Agreement, the party or parties who are thereby aggrieved shall have the right to specific performance and an injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.
|
13.
|
No Vested Right in Future Awards.
You acknowledge and agree that the granting of the Award under this Award Agreement is made on a fully discretionary basis by Tyson and that this Award Agreement does not lead to a vested right to further Awards in the future. Further, the Award set forth in this Award Agreement constitutes a non-recurrent benefit and the terms of this Award Agreement are applicable only to the Award granted pursuant to this Award Agreement.
|
14.
|
No Right to Continued Employment.
You acknowledge and agree (through electronic acknowledgment and acceptance of this Award Agreement) that neither the adoption of the Plan nor the granting of any Award shall confer any right to continued employment with Tyson, nor shall it interfere in any way with Tyson’s right to terminate your employment at any time for any reason in accordance with the terms of your Employment Agreement.
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15.
|
Governing Law.
The Plan, this Award Agreement and all determinations made and actions taken pursuant to the Plan or Award Agreement shall be governed by the laws of the State of Arkansas, without giving effect to the conflict of laws principles thereof.
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16.
|
Successors and Assigns
. This Award Agreement shall inure to the benefit of and be binding upon each successor and assign of Tyson. All obligations imposed upon you, and all rights granted to Tyson hereunder, shall be binding upon your heirs, successors and administrators.
|
TYSON FOODS, INC.
By:
/s/ Donnie Smith_
|
|
Title: CEO
|
|
Team Member:
|
Name
|
Personnel Number:
|
___________
|
Award:
|
___________Shares of Restricted Stock
|
Grant Date:
|
November 28, 2016
|
Vesting Schedule:
|
|
Vesting Date
|
Percent of Award Vested
|
11-28-2019
|
100%
|
1.
|
Terms and Conditions.
The Award (as provided on the cover page) is subject to all the terms and conditions of the Tyson Foods, Inc. 2000 Stock Incentive Plan (the “Plan”). Unless otherwise defined herein, all capitalized terms in this Restricted Stock Incentive Award Agreement (the “Award Agreement”) shall have the meaning stated in the Plan. Please see the Plan document for more information on these terms and conditions. A copy of the Plan is available upon request.
|
2.
|
Vesting
.
|
2.1
|
Vesting Schedule and Forfeiture.
The Award which becomes vested pursuant to the Vesting Schedule shall be considered as fully earned by you, subject to the further provisions of this Section 2. Any Awards which do not become vested in accordance with the Vesting Schedule as of your Termination of Employment with Tyson and/or its affiliates or the provisions of this Section 2 will be forfeited back to Tyson.
|
2.2
|
Death, Disability or Retirement
. In the event your employment is terminated due to death, Disability or, subject to your timely execution and non-revocation of a Release, Retirement, you will be fully vested in your Award. For purposes of this Agreement, “Retirement” shall mean your voluntary termination of employment without Cause from Tyson and/or its affiliates on or after the
later of the first anniversary of the Grant Date or the date you attain age 62.
|
2.3
|
Termination by Tyson without Cause or by you for Good Reason.
In the event that your employment is terminated by Tyson for reasons other than death, Disability, Retirement, or Cause, or by you for Good Reason before the Vesting Date, and
subject to your timely execution and non-revocation of a Release, you will become vested in a pro rata portion of your Award. The pro rata portion of your Award shall equal 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. If your employment is terminated pursuant to this paragraph and your termination of employment occurs on or after the later of the first anniversary of the Grant Date or the date you attain age 62, subject to your timely execution and non-revocation of a Release, you will be fully vested in your Award.
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2.4
|
Change in Control
. Upon a Change in Control, all unvested shares shall become fully vested on the earlier of: (i) the date you are involuntarily terminated without Cause (as defined in your Employment Agreement) or (ii) sixty (60) days after the Change in Control. For purposes of this Award Agreement, the term “Change in Control” shall not include any event as a result of which one or more of the following persons or entities possess or continues to possess, immediately after such event, over fifty percent (50%) of the combined voting power of the Company or, if applicable, a successor entity: (a) Tyson Limited Partnership, or any successor entity; (b) individuals related to the late Donald John Tyson by blood, marriage or adoption, or the estate of any such individual (including Donald John Tyson’s); or (c) any entity (including, but not limited to, a partnership, corporation, trust or limited liability company) in which one or more of the entities, individuals or estates described in clauses (a) and (b) hereof possess over fifty percent (50%) of the combined voting power or beneficial interests of such entity.
|
2.5
|
Definitions
. For purposes of this Agreement, “Cause,” “Disability,” “Good Reason,” and “Release” shall have the same meanings as set forth in your Employment Agreement.
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3.
|
Payment of Award.
Vested shares subject to your Award will be delivered to you as soon as administratively practicable following the Vesting Dates set forth in Section 2.
|
4.
|
Withholding Taxes.
By executing this Award Agreement and accepting the Award, you acknowledge and agree that you are responsible for all applicable income and other taxes from any Award, including federal, FICA, state and local taxes applicable in your country of residence or employment. Tyson shall withhold taxes by any manner acceptable under the terms of the Plan, but not to exceed the required minimum statutory withholding.
|
5.
|
Right of the Committee.
The Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, all of which shall be binding.
|
6.
|
Severability.
In the event that any one or more of the provisions or a portion thereof contained in this Award Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Award Agreement, and this Award Agreement shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.
|
7.
|
Entire Agreement.
Subject to the terms and conditions of the Plan, and the applicable provisions of the Employment Agreement, this Award Agreement expresses the entire understanding and agreement of Tyson and you with respect to the subject matter. In the event of any conflict between the provisions of the Plan and the terms of this Award Agreement, the provisions of the Plan will control unless this Award Agreement explicitly states that an exception to the Plan is being made. The Award has been made pursuant to the Plan and an administrative record is maintained by the Committee.
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8.
|
Restrictions on Transfer of Award.
You shall not dispose of the Award prior to the date unrestricted, vested shares in your name are delivered to you by Tyson pursuant to Section 3. Any disposition of the Award or any portion thereof shall be a violation of the terms of this Award Agreement and shall be void and without effect; provided, however, that this provision shall not preclude a transfer as otherwise permitted by the Plan.
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9.
|
Headings.
Paragraph headings used herein are for convenience of reference only and shall not be considered in construing this Award Agreement.
|
10.
|
Specific Performance.
In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Award Agreement, the party or parties who are thereby aggrieved shall have the right to specific performance and an injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.
|
11.
|
No Vested Right in Future Awards.
You acknowledge and agree that the granting of the Award under this Award Agreement is made on a fully discretionary basis by Tyson and that this Award Agreement does not lead to a vested right to further Awards in the future. Further, the Award set forth in this Award Agreement constitutes a non-recurrent benefit and the terms of this Award Agreement are applicable only to the Award granted pursuant to this Award Agreement.
|
12.
|
No Right to Continued Employment.
You acknowledge and agree (through electronic acknowledgment and acceptance of this Award Agreement) that neither the adoption of the Plan nor the granting of any Award shall confer any right to continued employment with Tyson, nor shall it interfere in any way with Tyson’s right to terminate your employment at any time for any reason in accordance with the terms of your Employment Agreement.
|
13.
|
Governing Law.
The Plan, this Award Agreement and all determinations made and actions taken pursuant to the Plan or Award Agreement shall be governed by the laws of the State of Arkansas, without giving effect to the conflict of laws principles thereof.
|
14.
|
Successors and Assigns
. This Award Agreement shall inure to the benefit of and be binding upon each successor and assign of Tyson. All obligations imposed upon you, and all rights granted to Tyson hereunder, shall be binding upon your heirs, successors and administrators.
|
TYSON FOODS, INC.
By:
/s/ Donnie Smith
________________________
|
|
Title: CEO
|
|
Team Member:
|
Name
|
Personnel Number:
|
___________
|
Award:
|
___________Shares of Restricted Stock
|
Grant Date:
|
November 28, 2016
|
Vesting Schedule:
|
|
Vesting Date
|
Percent of Award Vested
|
11-28-2019
|
100%
|
1.
|
Terms and Conditions.
The Award (as provided on the cover page) is subject to all the terms and conditions of the Tyson Foods, Inc. 2000 Stock Incentive Plan (the “Plan”). Unless otherwise defined herein, all capitalized terms in this Restricted Stock Incentive Award Agreement (the “Award Agreement”) shall have the meaning stated in the Plan. Please see the Plan document for more information on these terms and conditions. A copy of the Plan is available upon request.
|
2.
|
Vesting
.
|
2.1
|
Vesting Schedule and Forfeiture.
The Award which becomes vested pursuant to the Vesting Schedule shall be considered as fully earned by you, subject to the further provisions of this Section 2. Any Awards which do not become vested in accordance with the Vesting Schedule as of your Termination of Employment with Tyson and/or its affiliates or the provisions of this Section 2 will be forfeited back to Tyson.
|
2.2
|
Death, Disability or Retirement
. In the event your employment is terminated is due to death, Disability or, subject to your timely execution and non-revocation of a Release, Retirement, you will be fully vested in your Award. For purposes of this Agreement, “Retirement” shall mean your voluntary Termination of Employment without Cause from Tyson and/or its affiliates on or after the
later of the first anniversary of the Grant Date or the date you attain age 62.
|
2.3
|
Termination by Tyson without Cause.
In the event that your employment is terminated for reasons other than death, Disability, Retirement, or Cause, and
subject to your timely execution and non-revocation of a Release, you will become vested in a pro rata portion of your Award. The pro rata portion of your Award shall equal 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. If your employment is terminated pursuant to this paragraph and your termination of employment occurs on or after the later of the first anniversary of the Grant Date or the date you attain age 62, subject to your timely execution and non-revocation of a Release, you will be fully vested in your Award.
|
2.4
|
Change in Control
. Upon a Change in Control, all unvested shares shall become fully vested on the earlier of: (i) the date you are involuntarily terminated without Cause or (ii) sixty (60) days after the Change in Control. For purposes of this Award Agreement, the term “Change in Control” shall not include any event as a result of which one or more of the following persons or entities possess or continues to possess, immediately after such event, over fifty percent (50%) of the combined voting power of the Company or, if applicable, a successor entity: (a) Tyson Limited Partnership, or any successor entity; (b) individuals related to the late Donald John Tyson by blood, marriage or adoption, or the estate of any such individual (including Donald John Tyson’s); or (c) any entity (including, but not limited to, a partnership, corporation, trust or limited liability company) in which one or more of the entities, individuals or estates described in clauses (a) and (b) hereof possess over fifty percent (50%) of the combined voting power or beneficial interests of such entity.
|
2.5
|
Definitions
. For purposes of this Award Agreement, “Cause,” “Disability,” and “Release” shall have the meanings as set forth below:
|
3.
|
Payment of Award.
Vested shares subject to your Award will be delivered to you as soon as administratively practicable following the Vesting Dates set forth in Section 2.
|
4.
|
Withholding Taxes.
By executing this Award Agreement and accepting the Award, you acknowledge and agree that you are responsible for all applicable income and other taxes from any Award, including federal, FICA, state and local taxes applicable in your country of residence or employment. Tyson shall withhold taxes by any manner acceptable under the terms of the Plan, but not to exceed the required minimum statutory withholding.
|
5.
|
Right of the Committee.
The Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, all of which shall be binding.
|
6.
|
Severability.
In the event that any one or more of the provisions or a portion thereof contained in this Award Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Award Agreement, and this Award Agreement shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.
|
7.
|
Entire Agreement.
Subject to the terms and conditions of the Plan, this Award Agreement expresses the entire understanding and agreement of Tyson and you with respect to the subject matter. In the event of any conflict between the provisions of the Plan and the terms of this Award Agreement, the provisions of the Plan will control unless this Award Agreement explicitly states that an exception to the Plan is being made. The Award has been made pursuant to the Plan and an administrative record is maintained by the Committee.
|
8.
|
Restrictions on Transfer of Award.
You shall not dispose of the Award prior to the date unrestricted, vested shares in your name are delivered to you by Tyson pursuant to Section 3. Any disposition of the Award or any portion thereof shall be a violation of the terms of this Award Agreement and shall be void and without effect; provided, however, that this provision shall not preclude a transfer as otherwise permitted by the Plan.
|
9.
|
Headings.
Paragraph headings used herein are for convenience of reference only and shall not be considered in construing this Award Agreement.
|
10.
|
Specific Performance.
In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Award Agreement, the party or parties who are thereby aggrieved shall have the right to specific performance and an injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.
|
11.
|
No Vested Right in Future Awards.
You acknowledge and agree that the granting of the Award under this Award Agreement is made on a fully discretionary basis by Tyson and that this Award Agreement does not lead to a vested right to further Awards in the future. Further, the Award set forth in this Award Agreement constitutes a non-recurrent benefit and the terms of this Award Agreement are applicable only to the Award granted pursuant to this Award Agreement.
|
12.
|
No Right to Continued Employment.
You acknowledge and agree (through electronic acknowledgment and acceptance of this Award Agreement) that neither the adoption of the Plan nor the granting of any Award shall confer any right to continued employment with Tyson, nor shall it interfere in any way with Tyson’s right to terminate your employment at any time for any reason.
|
13.
|
Governing Law.
The Plan, this Award Agreement and all determinations made and actions taken pursuant to the Plan or Award Agreement shall be governed by the laws of the State of Arkansas, without giving effect to the conflict of laws principles thereof.
|
14.
|
Successors and Assigns
. This Award Agreement shall inure to the benefit of and be binding upon each successor and assign of Tyson. All obligations imposed upon you, and all rights granted to Tyson hereunder, shall be binding upon your heirs, successors and administrators.
|
TYSON FOODS, INC.
By:/s/ Donnie Smith
|
|
Title: CEO
|
|
Vesting Date
|
Percent of Award Vested
|
11-28-2017
11-28-2018
11-28-2019
|
33 1/3 %
33 1/3 %
33 1/3 %
|
1.
|
Terms and Conditions.
The Award (as provided on the cover page) is subject to all the terms and conditions of the Tyson Foods, Inc. 2000 Stock Incentive Plan (the “Plan”). Unless otherwise defined herein, all capitalized terms in this Stock Options Incentive Award Agreement (the “Award Agreement”) shall have the meaning stated in the Plan. Please see the Plan document for more information on these terms and conditions. A copy of the Plan is available upon request.
|
2.
|
Vesting
.
|
2.1.
|
Vesting Schedule and Forfeiture.
The Award which becomes vested pursuant to the Vesting Schedule shall be considered as fully earned and exercisable by you, subject to the further provisions of this Section 2. Any Awards which do not become vested in accordance with the Vesting Schedule as of your Termination of Employment with Tyson and/or its affiliates or the provisions of this Section 2 will be forfeited back to Tyson.
|
2.2.
|
Death, Disability or Retirement
. In the event your employment with Tyson is terminated due to death, Disability or, subject to your timely execution and non-revocation of a Release, Retirement, you will be fully vested in your Award. For purposes of this Award Agreement, “Retirement” shall mean your voluntary Termination of Employment without Cause from Tyson and/or its affiliates on or after the later of the first anniversary of the Grant Date or the date you attain age 62.
|
2.3.
|
Termination by Tyson without Cause or by you for Good Reason
. In the event that your employment is terminated by Tyson for reasons other than death, Disability, Retirement, or Cause, or by you for Good Reason, and subject to your timely execution and non-revocation of a Release, you will become fully vested in your Award.
|
2.4.
|
Change in Control.
Upon a Change in Control, all unvested options shall become fully vested on the earlier of: (i) the date you are involuntarily terminated without Cause (as defined in your Employment Agreement) or (ii) sixty (60) days after the Change in Control. For purposes of this Award Agreement, the term “Change in Control” shall not include any event as a result of which one or more of the following persons or entities possess or continues to possess, immediately after such event, over fifty percent (50%) of the combined voting power of the Company or, if applicable, a successor entity: (a) Tyson Limited Partnership, or any successor entity; (b) individuals related to the late Donald John Tyson by blood, marriage or adoption, or the estate of any such individual (including Donald John Tyson’s); or (c) any entity (including, but not limited to, a partnership, corporation, trust or limited liability company) in which one or more of the entities, individuals or estates described in clauses (a) and (b) hereof possess over fifty percent (50%) of the combined voting power or beneficial interests of such entity.
|
2.5.
|
Definitions
. For purposes of this Award Agreement, “Cause,” “Disability,” “Good Reason” and “Release” shall have the same meanings as set forth in your Employment Agreement.
|
3.
|
Time of Exercise of Award.
Your Award will be exercisable upon the Vesting Dates set forth in Section 2. In the event of your Termination of Employment, your vested options shall no longer remain exercisable, except as follows:
|
3.1.
|
Termination of Employment
. Except as provided in Section 3.2, in the event of your Termination of Employment, your vested Award will remain exercisable for a period of three months from the Termination of Employment, but not longer than 10 years from the Grant Date.
|
3.2.
|
Death, Disability, Retirement or Termination by Tyson without Cause or by you for Good Reason
. In the event your Termination of Employment is due to death, Disability, Retirement, termination by Tyson without Cause or by you for Good Reason, your vested Award will remain exercisable by you, or your Beneficiary in the case of your death, for a period of 12 months, but not longer than 10 years from the Grant Date.
|
4.
|
Manner of Exercise of Award.
Your Award may be exercised through any of the following methods as provided under the Plan:
|
4.1.
|
Cash of not less than the product of the Exercise Price multiplied by the number of shares to be purchased on exercise, plus the amount of any required tax withholding;
|
4.2.
|
Delivery to Tyson of the number of shares owned at least six (6) months at the time of exercise having a fair market value of not less than the product of the Exercise Price multiplied by the number of shares to be purchased on exercise, plus the amount of any required tax withholding;
|
4.3.
|
Cashless exercise through a broker designated by Tyson, which shall account for, and include, any required tax withholding but not to exceed the required minimum statutory withholding;
|
4.4.
|
Withholding of the number of shares having a fair market value of not less than the product of the Exercise Price multiplied by the number of shares to be purchased on exercise, plus the amount of any required tax withholding but not to exceed the required minimum statutory withholding; or
|
4.5.
|
Unless your Award is no longer exercisable under the terms of Section 3 above, by accepting the terms herein you consent to have the options automatically exercise, using any of the above methods at Tyson’s sole discretion, either at the end of the period defined in Section 3.1 or Section 3.2, as applicable, or on the 10th anniversary of the Grant Date (or, if the 10
th
anniversary of the Grant Date is not a business day, the business day immediately preceding the 10
th
anniversary of the Grant Date), if the price per share of Tyson stock at the time of exercise is greater than the Exercise Price.
|
5.
|
Withholding Taxes.
By executing this Award Agreement and accepting this Award, you acknowledge and agree that you are responsible for all applicable income and other taxes from any Award, including federal, FICA, state and local taxes applicable in your country of residence or employment. Tyson shall withhold taxes by any manner acceptable under the terms of the Plan, but not to exceed the required minimum statutory withholding.
|
6.
|
Beneficiary Designation.
In accordance with the terms of the Plan, you may name a Beneficiary who may exercise your Award under this Award Agreement in case of your death before you receive any or all of your Award. Each Beneficiary designation shall revoke all prior designations, shall be in a form prescribed by the Committee, and shall be effective only when filed in writing with the Committee during your lifetime.
|
7.
|
Right of the Committee.
The Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which shall be binding.
|
8.
|
Severability.
In the event that any one or more of the provisions or a portion thereof contained in this Award Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Award Agreement, and this Award Agreement shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.
|
9.
|
Entire Agreement.
Subject to the terms and conditions of the Plan, and the applicable provisions of the Employment Agreement, this Award Agreement expresses the entire understanding and agreement of Tyson and you with respect to the subject matter. In the event of any conflict between the provisions of the Plan and the terms of this Award Agreement, the provisions of the Plan will control unless this Award Agreement explicitly states that an exception to the Plan is being made. The Award has been made pursuant to the Plan and an administrative record is maintained by the Committee.
|
10.
|
Restrictions on Transfer of Award.
Any disposition of the Award or any portion thereof shall be a violation of the terms of this Award Agreement and shall be void and without effect; provided, however, that this provision shall not preclude a transfer as otherwise permitted by the Plan.
|
11.
|
Headings.
Paragraph headings used herein are for convenience of reference only and shall not be considered in construing this Award Agreement.
|
12.
|
Specific Performance.
In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Award Agreement, the party or parties who are thereby aggrieved shall have the right to specific performance and an injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.
|
13.
|
No Vested Right in Future Awards.
You acknowledge and agree by executing this Award Agreement that the granting of the Award under this Award Agreement is made on a fully discretionary basis by Tyson and that this Award Agreement does not lead to a vested right to further Awards in the future. Further, the Award set forth in this Award Agreement constitutes a non-recurrent benefit and the terms of this Award Agreement are applicable only to the Award granted pursuant to this Award Agreement.
|
14.
|
No Right to Continued Employment.
You acknowledge and agree (through electronic acknowledgment and acceptance of this Award Agreement) that neither the adoption of the Plan nor the granting of any Award shall confer any right to continued employment with Tyson, nor shall it interfere in any way with Tyson’s right to terminate your employment at any time for any reason in accordance with the terms of your Employment Agreement.
|
15.
|
Governing Law.
The Plan, this Award Agreement and all determinations made and actions taken pursuant to the Plan or Award Agreement shall be governed by the laws of the State of Arkansas, without giving effect to the conflict of laws principles thereof.
|
16.
|
Successors and Assigns
. This Award Agreement shall inure to the benefit of and be binding upon each successor and assign of Tyson. All obligations imposed upon you, and all rights granted to Tyson hereunder, shall be binding upon your heirs, successors and administrators.
|
TYSON FOODS, INC.
By: /s/ Donnie Smith
|
|
Title: CEO
|
|
|
|
Vesting Date
|
Percent of Award Vested
|
11-28-2017
11-28-2018
11-28-2019
|
33 1/3 %
33 1/3 %
33 1/3 %
|
1.
|
Terms and Conditions.
The Award (as provided on the cover page) is subject to all the terms and conditions of the Tyson Foods, Inc. 2000 Stock Incentive Plan (the “Plan”). Unless otherwise defined herein, all capitalized terms in this Stock Options Incentive Award Agreement (the “Award Agreement”) shall have the meaning stated in the Plan. Please see the Plan document for more information on these terms and conditions. A copy of the Plan is available upon request.
|
2.
|
Vesting
.
|
2.1.
|
Vesting Schedule and Forfeiture.
The Award which becomes vested pursuant to the Vesting Schedule shall be considered as fully earned and exercisable by you, subject to the further provisions of this Section 2. Any Awards which do not become vested in accordance with the Vesting Schedule as of your Termination of Employment with Tyson and/or its affiliates or the provisions of this Section 2 will be forfeited back to Tyson.
|
2.2.
|
Death, Disability or Retirement
. In the event your employment is terminated due to death, Disability or, subject to your timely execution and non-revocation of a Release, Retirement, you will be fully vested in your Award. For purposes of this Award Agreement, “Retirement” shall mean your voluntary Termination of Employment without Cause from Tyson and/or its affiliates on or after the later of the first anniversary of the Grant Date or the date you attain age 62.
|
2.3.
|
Termination by Tyson without Cause
. In the event your employment is terminated by Tyson for reasons other than death, Disability, Retirement, or Cause, subject to your timely execution and non-revocation of a Release, you will receive the percentage of your Award relative to the date your employment is terminated, as provided in the Vesting Schedule on the cover page. If your employment is terminated pursuant to this paragraph and your termination of employment occurs on or after the later of the first anniversary of the Grant Date or the date you attain age 62, subject to your timely execution and non-revocation of a Release, you will be fully vested in your Award.
|
2.4.
|
Change in Control.
Upon a Change in Control, all unvested options shall become fully vested on the earlier of: (i) the date you are involuntarily terminated without cause or (ii) sixty (60) days after the Change in Control. For purposes of this Award Agreement, the term “Change in Control” shall not include any event as a result of which one or more of the following persons or entities possess or continues to possess, immediately after such event, over fifty percent (50%) of the combined voting power of the Company or, if applicable, a successor entity: (a) Tyson Limited Partnership, or any successor entity; (b) individuals related to the late Donald John Tyson by blood, marriage or adoption, or the estate of any such individual (including Donald John Tyson’s); or (c) any entity (including, but not limited to, a partnership, corporation, trust or limited liability company) in which one or more of the entities, individuals or estates described in clauses (a) and (b) hereof possess over fifty percent (50%) of the combined voting power or beneficial interests of such entity.
|
2.5.
|
Definitions
. For purposes of this Award Agreement, “Cause,” “Disability,” and “Release” shall have the meanings as set forth below:
|
3.
|
Time of Exercise of Award.
Your Award will be exercisable upon the Vesting Dates set forth in Section 2. In the event of your Termination of Employment, your vested options shall no longer remain exercisable, except as follows:
|
3.1.
|
Termination of Employment
. Except as provided in Section 3.2, in the event of your Termination of Employment, your vested Award will remain exercisable for a period of three months from the Termination of Employment, but not longer than 10 years from the Grant Date.
|
3.2.
|
Death, Disability or Retirement
. In the event your Termination of Employment is due to death, Disability or Retirement, your vested Award will remain exercisable by you, or your Beneficiary in the case of your death, for a period of 12 months, but not longer than 10 years from the Grant Date.
|
4.
|
Manner of Exercise of Award.
Your Award may be exercised through any of the following methods as provided under the Plan:
|
4.1.
|
Cash of not less than the product of the Exercise Price multiplied by the number of shares to be purchased on exercise, plus the amount of any required tax withholding;
|
4.2.
|
Delivery to Tyson of the number of shares owned at least six (6) months at the time of exercise having a fair market value of not less than the product of the Exercise Price multiplied by the number of shares to be purchased on exercise, plus the amount of any required tax withholding;
|
4.3.
|
Cashless exercise through a broker designated by Tyson, which shall account for, and include, any required tax withholding but not to exceed the required minimum statutory withholding;
|
4.4.
|
Withholding of the number of shares having a fair market value of not less than the product of the Exercise Price multiplied by the number of shares to be purchased on exercise, plus the amount of any required tax withholding but not to exceed the required minimum statutory withholding; or
|
4.5.
|
Unless your Award is no longer exercisable under the terms of Section 3 above, by accepting the terms herein you consent to have the options automatically exercise, using any of the above methods at Tyson’s sole discretion, either at the end of the period defined in Section 3.1 or Section 3.2, as applicable, or on the 10th anniversary of the Grant Date (or, if the 10
th
anniversary of the Grant Date is not a business day, the business day immediately preceding the 10
th
anniversary of the Grant Date), if the price per share of Tyson stock at the time of exercise is greater than the Exercise Price.
|
5.
|
Withholding Taxes.
By accepting this Award, you acknowledge and agree that you are responsible for all applicable income and other taxes from any Award, including federal, FICA, state and local taxes applicable in your country of residence or employment. Tyson shall withhold taxes by any manner acceptable under the terms of the Plan, but not to exceed the required minimum statutory withholding.
|
6.
|
Beneficiary Designation.
In accordance with the terms of the Plan, you may name a Beneficiary who may exercise your Award under this Award Agreement in case of your death before you receive any or all of your Award. Each Beneficiary designation shall revoke all prior designations, shall be in a form prescribed by the Committee, and shall be effective only when filed in writing with the Committee during your lifetime.
|
7.
|
Right of the Committee.
The Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, all of which shall be binding.
|
8.
|
Severability.
In the event that any one or more of the provisions or a portion thereof contained in this Award Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Award Agreement, and this Award Agreement shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.
|
9.
|
Entire Agreement.
Subject to the terms and conditions of the Plan, this Award Agreement expresses the entire understanding and agreement of Tyson and you with respect to the subject matter. In the event of any conflict between the provisions of the Plan and the terms of this Award Agreement, the provisions of the Plan will control unless this Award Agreement explicitly states that an exception to the Plan is being made. The Award has been made pursuant to the Plan and an administrative record is maintained by the Committee.
|
10.
|
Restrictions on Transfer of Award.
Any disposition of the Award or any portion thereof shall be a violation of the terms of this Award Agreement and shall be void and without effect; provided, however, that this provision shall not preclude a transfer as otherwise permitted by the Plan.
|
11.
|
Headings.
Paragraph headings used herein are for convenience of reference only and shall not be considered in construing this Award Agreement.
|
12.
|
Specific Performance.
In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Award Agreement, the party or parties who are thereby aggrieved shall have the right to specific performance and an injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.
|
13.
|
No Vested Right in Future Awards.
You acknowledge and agree that the granting of the Award under this Award Agreement is made on a fully discretionary basis by Tyson and that this Award Agreement does not lead to a vested right to further Awards in the future. Further, the Award set forth in this Award Agreement constitutes a non-recurrent benefit and the terms of this Award Agreement are applicable only to the Award granted pursuant to this Award Agreement.
|
14.
|
No Right to Continued Employment.
You acknowledge and agree (through electronic acknowledgment and acceptance of this Award Agreement) that neither the adoption of the Plan nor the granting of any Award shall confer any right to continued employment with Tyson, nor shall it interfere in any way with Tyson’s right to terminate your employment at any time for any reason.
|
15.
|
Governing Law.
The Plan, this Award Agreement and all determinations made and actions taken pursuant to the Plan or Award Agreement shall be governed by the laws of the State of Arkansas, without giving effect to the conflict of laws principles thereof.
|
16.
|
Successors and Assigns
. This Award Agreement shall inure to the benefit of and be binding upon each successor and assign of Tyson. All obligations imposed upon you, and all rights granted to Tyson hereunder, shall be binding upon your heirs, successors and administrators.
|
TYSON FOODS, INC.
By:
/s/ Donnie Smith
________________________
|
|
Title: CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
(dollars in millions)
|
|||||||||||||
|
3 Months Ending
|
|
Fiscal Years
|
|||||||||||||||||
|
December 31, 2016
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes and equity method investment earnings
|
$
|
909
|
|
|
$
|
2,586
|
|
|
$
|
1,908
|
|
|
$
|
1,241
|
|
|
$
|
1,254
|
|
|
Add: Fixed charges
|
74
|
|
|
313
|
|
|
358
|
|
|
194
|
|
|
219
|
|
|
|||||
Add: Amortization of capitalized interest
|
2
|
|
|
7
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
|||||
Less: Capitalized interest
|
(2
|
)
|
|
(7
|
)
|
|
(10
|
)
|
|
(8
|
)
|
|
(8
|
)
|
|
|||||
Total adjusted earnings
|
983
|
|
|
2,899
|
|
|
2,261
|
|
|
1,432
|
|
|
1,470
|
|
|
|||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest
|
56
|
|
|
241
|
|
|
283
|
|
|
122
|
|
|
116
|
|
|
|||||
Capitalized interest
|
2
|
|
|
7
|
|
|
10
|
|
|
8
|
|
|
8
|
|
|
|||||
Amortization of debt discount expense
|
2
|
|
|
8
|
|
|
10
|
|
|
10
|
|
|
28
|
|
|
|||||
Rentals at computed interest factor
(1)
|
14
|
|
|
57
|
|
|
55
|
|
|
54
|
|
|
67
|
|
|
|||||
Total fixed charges
|
$
|
74
|
|
|
$
|
313
|
|
|
$
|
358
|
|
|
$
|
194
|
|
|
$
|
219
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of Earnings to Fixed Charges
|
13.28
|
|
|
9.26
|
|
|
6.32
|
|
|
7.38
|
|
|
6.71
|
|
|
(1)
|
Amounts represent those portions of rent expense (one-third) that are reasonable approximations of interest costs.
|
/s/ Thomas P. Hayes
|
|
Thomas P. Hayes
|
|
President and Chief Executive Officer
|
|
/s/ Dennis Leatherby
|
|
Dennis Leatherby
|
|
Executive Vice President and Chief Financial Officer
|
|
/s/ Thomas P. Hayes
|
|
Thomas P. Hayes
|
|
President and Chief Executive Officer
|
|
|
|
February 6, 2017
|
|
/s/ Dennis Leatherby
|
|
Dennis Leatherby
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
February 6, 2017
|
|