[X]
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Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the fiscal year ended
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September 29, 2018
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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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For the transition period from
to
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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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Registrant’s telephone number, including area code:
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(479) 290-4000
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Title of Each Class
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Name of Each Exchange on Which Registered
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Class A Common Stock, Par Value $0.10
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New York Stock Exchange
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Emerging growth company
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o
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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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295,101,105
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Class B Common Stock, $0.10 Par Value (Class B stock)
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70,010,355
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TABLE OF CONTENTS
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PAGE
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Item 1.
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Item 1A.
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Item 1B.
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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 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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•
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identifying target markets for value-added products;
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•
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concentrating production, sales and marketing efforts to appeal to and enhance demand from those markets; and
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•
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utilizing our national distribution systems and customer support services.
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•
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Cobb-Vantress, a chicken breeding stock subsidiary, has business interests in Argentina, Brazil, China, Colombia, the Dominican Republic, India, the Netherlands, New Zealand, the Philippines, Spain, Turkey, and the United Kingdom.
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•
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Tyson Rizhao, located in Rizhao, China, is a vertically-integrated chicken production operation.
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Tyson Dalong, a joint venture in China in which we have a majority interest, is a chicken further-processing facility.
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Tyson Nantong, located in Nantong, China, is a vertically-integrated chicken production operation.
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Godrej Tyson Foods, a joint venture in India in which we have a minority interest, is primarily a chicken processing business.
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Tyson Mexico Trading Company, a Mexican subsidiary, sells chicken products primarily through our U.S. operations and co-packer arrangements.
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imposition of tariffs, quotas, trade barriers and other trade protection measures imposed by foreign countries regarding the importation of beef, pork, poultry, and prepared foods products, in addition to import or export licensing requirements imposed by various foreign countries;
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closing of borders by foreign countries to the import of beef, pork, and poultry products due to animal disease or other perceived health or safety issues;
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impact of currency exchange rate fluctuations between the United States dollar and foreign currencies, particularly the Brazilian real, the British pound sterling, the Canadian dollar, the Chinese renminbi, the European euro, the Japanese yen and the Mexican peso;
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political and economic conditions;
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difficulties and costs to comply with, and enforcement of remedies under, a wide variety of complex domestic and international laws, treaties and regulations, including, without limitation, the United States Foreign Corrupt Practices Act and economic and trade sanctions enforced by the United States Department of the Treasury’s Office of Foreign Assets Control;
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different regulatory structures and unexpected changes in regulatory environments;
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tax rates that may exceed those in the United States and earnings that may be subject to withholding requirements and incremental taxes upon repatriation;
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potentially negative consequences from changes in tax laws; and
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distribution costs, disruptions in shipping or reduced availability of freight transportation.
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it may limit or impair our ability to obtain financing in the future;
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our credit ratings (or any decrease to our credit ratings) could restrict or impede our ability to access capital markets at desired interest rates and increase our borrowing costs;
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it may reduce our flexibility to respond to changing business and economic conditions or to take advantage of business opportunities that may arise;
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a portion of our cash flow from operations must be dedicated to interest payments on our indebtedness and is not available for other purposes; and
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•
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it may restrict our ability to pay dividends.
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challenges in realizing the anticipated benefits of the transaction;
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difficulty integrating acquired businesses, technologies, operations and personnel with our existing business;
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diversion of management attention in connection with negotiating transactions and integrating the businesses acquired;
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difficulty identifying suitable candidates or consummating a transaction on terms that are favorable to us;
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challenges in retaining the acquired businesses' customers and key employees;
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inability to implement and maintain consistent standards, controls, procedures and information systems;
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exposure to unforeseen or undisclosed liabilities of acquired companies; and
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the availability and terms of additional debt or equity financing for any transaction.
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make it more difficult or costly for us to obtain financing for our operations or investments or to refinance our debt in the future;
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cause our lenders to depart from prior credit industry practice and make more difficult or expensive the granting of any amendment of, or waivers under, our credit agreements to the extent we may seek them in the future;
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impair the financial condition of some of our customers and suppliers, thereby increasing customer bad debts or non-performance by suppliers;
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negatively impact global demand for protein products, which could result in a reduction of sales, operating income and cash flows;
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decrease the value of our investments in equity and debt securities, including our marketable debt securities, company-owned life insurance and pension and other postretirement plan assets;
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negatively impact our commodity purchasing activities if we are required to record losses related to derivative financial instruments; or
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impair the financial viability of our insurers.
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our and Keystone’s current and prospective customers and suppliers may experience uncertainty associated with the Keystone Acquisition, including with respect to current or future business relationships with us, Keystone or the combined business and may attempt to negotiate changes in existing business;
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our and Keystone’s employees may experience uncertainty about their future roles with us, which may adversely affect our and Keystone’s ability to retain and hire key employees;
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if the Keystone Acquisition is completed, the accelerated vesting of equity-based awards and payment of “change in control” benefits to some members of Keystone’s management on completion of the Keystone Acquisition could result in increased difficulty or cost in retaining Keystone’s officers and employees; and
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the attention of our management and that of Keystone may be directed toward the completion and implementation of the Keystone Acquisition and transaction-related considerations and may be diverted from the day-to-day business operations of the respective companies.
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Number of Facilities at September 29, 2018
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Owned
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Leased
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Total
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Beef Segment Production Facilities
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12
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—
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12
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Pork Segment Production Facilities
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9
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—
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9
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Chicken Segment:
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Processing plants
(1) (2)
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48
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2
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50
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Rendering plants
(3)
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13
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—
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13
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Blending mills
(3)
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7
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5
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12
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Feed mills
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33
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—
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33
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Grain elevators
(2) (4)
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5
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1
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6
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Broiler hatcheries
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56
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2
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58
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Breeder houses
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494
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44
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538
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Broiler farm houses
(2)
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52
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—
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52
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Pet treats plant
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1
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—
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1
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Prepared Foods Segment:
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Processing plants
(1) (5)
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34
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3
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37
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Turkey operation facilities
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6
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—
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6
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Distribution Centers
(6)
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14
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3
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17
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Cold Storage Facilities
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51
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1
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52
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Research and Development Facilities
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1
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1
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2
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Capacity
(7)
per week at September 29, 2018 |
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Fiscal 2018
Average Capacity
Utilization
(7)
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Beef Production Facilities
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156,000 head
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85
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%
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Pork Production Facilities
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458,000 head
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89
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%
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Chicken Production Facilities
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42 million head
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89
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%
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Prepared Foods Processing Facilities
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77 million pounds
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86
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%
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(1)
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Certain facilities produce products that are reported in both the Chicken and Prepared Foods segments. For presentation purposes, facilities are reflected in the segment that had the majority of the facility’s production. The Prepared Foods segment includes two owned facilities acquired in the Original Philly acquisition.
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(2)
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The Tecumseh Poultry, LLC. acquisition included two owned processing plants, a leased grain elevator and two broiler farm houses.
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(3)
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The American Proteins, Inc. acquisition included four rendering plants and five owned and five leased blending mills.
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(4)
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Includes five grain elevators purchased in fiscal 2018.
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(5)
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Excludes five owned and a leased facility related to divestitures during fiscal 2018.
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(6)
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Includes two owned Distribution Centers and a leased Distribution Center acquired in the American Proteins, Inc. acquisition.
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(7)
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Capacity per week based on the following: Beef and Pork (six day week) and Chicken and Prepared Foods (five day week). Capacity per week at year end is also impacted by the sale of non-protein businesses, net of acquisitions, during fiscal 2018. Average capacity utilization is based on capacity available throughout the year.
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Name
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Title
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Age
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Year Elected
Executive Officer
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John Tyson
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Chairman of the Board of Directors
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65
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2011
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Curt T. Calaway
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Senior Vice President Finance, Treasurer and Chief Accounting Officer
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45
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2012
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Stewart Glendinning
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Executive Vice President and Chief Financial Officer
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53
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2017
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Sally Grimes
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Group President Prepared Foods
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47
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2014
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Mary Oleksiuk
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Executive Vice President and Chief Human Resources Officer
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56
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2014
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Doug Ramsey
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Group President Poultry
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49
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2017
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Scott Rouse
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Executive Vice President and Chief Customer Officer
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55
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2017
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Scott Spradley
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Executive Vice President and Chief Technology Officer
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53
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2017
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Stephen Stouffer
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Group President Fresh Meats
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58
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2013
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Amy Tu
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Executive Vice President and General Counsel
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51
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2017
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Noel White
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President and Chief Executive Officer
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60
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2009
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Justin Whitmore
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Executive Vice President Continuous Improvement and Chief Sustainability Officer
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36
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2017
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Period
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Total
Number of
Shares
Purchased
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Average
Price Paid
per Share
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Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
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Maximum Number of
Shares that May Yet Be
Purchased Under the Plans
or Programs
(1)
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Jul. 1, 2018 to Jul. 28, 2018
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93,944
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$
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66.00
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—
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23,744,585
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Jul. 29, 2018 to Sept. 1, 2018
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687,720
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62.66
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637,424
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23,107,161
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Sept. 2, 2018 to Sept. 29, 2018
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181,909
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62.20
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160,988
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22,946,173
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Total
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963,573
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(2)
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$
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62.90
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798,412
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(3)
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22,946,173
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(1)
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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 under the program. The program has no fixed or scheduled termination date.
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(2)
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We purchased 165,161 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 112,066 shares purchased in open market transactions and 53,095 shares withheld to cover required tax withholdings on the vesting of restricted stock.
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(3)
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These shares were purchased during the period pursuant to our previously announced stock repurchase program.
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Fiscal Years Ended
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||||||||||||||||||||||
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9/28/13
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9/27/14
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10/3/15
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10/1/16
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9/30/17
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9/29/18
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||||||
Tyson Foods, Inc.
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$
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100.00
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$
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133.03
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$
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157.97
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$
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268.27
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$
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256.90
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$
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220.78
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S&P 500 Index
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100.00
|
|
|
119.73
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119.00
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|
137.36
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162.92
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192.10
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Previous Peer Group
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100.00
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114.65
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121.89
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138.71
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|
138.27
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139.24
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Current Peer Group
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100.00
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114.98
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121.92
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138.54
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138.08
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138.36
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in millions, except per share, percentage and ratio data
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2018
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2017
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2016
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2015
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2014
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Summary of Operations
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Sales
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$
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40,052
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$
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38,260
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$
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36,881
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$
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41,373
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$
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37,580
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Operating income
|
3,055
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|
|
2,931
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|
2,833
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2,169
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1,430
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Net interest expense
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343
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272
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|
|
243
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|
|
284
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|
|
125
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Net income
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3,027
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1,778
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1,772
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1,224
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|
|
856
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Net income attributable to Tyson
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3,024
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1,774
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1,768
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1,220
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|
|
864
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Diluted net income per share attributable to Tyson:
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Net income
|
8.19
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|
|
4.79
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|
|
4.53
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|
|
2.95
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|
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2.37
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Dividends declared per share:
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||||||||||
Class A
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1.275
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0.975
|
|
|
0.650
|
|
|
0.425
|
|
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0.325
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Class B
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1.148
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0.878
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|
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0.585
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|
|
0.383
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|
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0.294
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Balance Sheet Data
|
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||||||||||
Cash and cash equivalents
|
$
|
270
|
|
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$
|
318
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|
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$
|
349
|
|
|
$
|
688
|
|
|
$
|
438
|
|
Total assets
|
29,109
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|
|
28,066
|
|
|
22,373
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|
|
22,969
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|
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23,906
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|||||
Total gross debt
|
9,873
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|
|
10,203
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|
|
6,279
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|
|
6,690
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|
|
8,128
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|||||
Shareholders’ equity
|
12,811
|
|
|
10,559
|
|
|
9,624
|
|
|
9,706
|
|
|
8,904
|
|
|||||
Other Key Financial Measures
|
|
|
|
|
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|
|
|
|
||||||||||
Depreciation and amortization
|
$
|
943
|
|
|
$
|
761
|
|
|
$
|
705
|
|
|
$
|
711
|
|
|
$
|
530
|
|
Capital expenditures
|
1,200
|
|
|
1,069
|
|
|
695
|
|
|
854
|
|
|
632
|
|
|||||
EBITDA
|
4,021
|
|
|
3,648
|
|
|
3,538
|
|
|
2,906
|
|
|
1,897
|
|
|||||
Return on invested capital
|
14.3
|
%
|
|
16.3
|
%
|
|
18.1
|
%
|
|
13.4
|
%
|
|
11.9
|
%
|
|||||
Effective tax rate
|
(10.3
|
)%
|
|
32.3
|
%
|
|
31.8
|
%
|
|
36.3
|
%
|
|
31.6
|
%
|
|||||
Total debt to capitalization
|
43.5
|
%
|
|
49.1
|
%
|
|
39.5
|
%
|
|
40.8
|
%
|
|
47.7
|
%
|
|||||
Book value per share
|
$
|
35.09
|
|
|
$
|
28.72
|
|
|
$
|
25.67
|
|
|
$
|
24.25
|
|
|
$
|
21.86
|
|
a.
|
Fiscal 2018 net income included $1,003 million post-tax recognition of tax benefit from remeasurement of net deferred tax liabilities at lower enacted tax rates, $109 million pretax one-time cash bonus to our hourly frontline employees, $68 million pretax impairment charge net of a realized gain related to the divestiture of non-protein businesses and $59 million pretax restructuring and related charges.
|
b.
|
Fiscal 2017 net income included $103 million pretax expense of AdvancePierre purchase accounting and acquisition related costs, pretax impairment charges of $52 million related to our San Diego Prepared Foods operation and $45 million related to the expected sale of a non-protein business and pretax restructuring and related charges of $150 million.
|
c.
|
Fiscal 2016 net income included $53 million related to the recognition of previously unrecognized tax benefits and audit settlements. In fiscal 2016, we adopted new accounting guidance, retrospectively, requiring classification of debt issuance costs as a reduction of the carrying value of the debt. In doing so, $29 million, $35 million, $50 million and $10 million of deferred issuance costs have been reclassified from Other Assets to Long-Term Debt in our Consolidated Balance Sheets for fiscal 2016, 2015, 2014 and 2013 respectively. This change is reflected above in total assets, total debt, total debt to capitalization and return on invested capital ratios.
|
d.
|
Fiscal 2015 was a 53-week year, while the other years presented were 52-week years. Fiscal 2015 included a $169 million pretax impairment charge related to our China operation, $57 million pretax expense related to merger and integration costs, $59 million pretax impairment charges related to our Prepared Foods network optimization, $12 million pretax charges related to Denison impairment and plant closure costs, $8 million pretax gain related to net insurance proceeds (net of costs) related to a legacy Hillshire Brands plant fire, $21 million pretax gain on the sale of equity securities, $161 million pretax gain on the sale of the Mexico operation, $39 million pretax gain related to the impact of the additional week in fiscal 2015 and $26 million unrecognized tax benefit gain.
|
e.
|
Fiscal 2014 included a $42 million pretax impairment charge and other costs related to the sale of our Brazil operation and Mexico's undistributed earnings tax, $197 million pretax expense related to the Hillshire Brands acquisition, integration and costs associated with our Prepared Foods improvement plan, $40 million pretax expense related to the Hillshire Brands post-closing results, purchase price accounting, and costs related to a legacy Hillshire Brands plant fire, $27 million pretax expense related to the Hillshire Brands acquisition financing incremental interest cost and $52 million unrecognized tax benefit gain.
|
f.
|
Return on invested capital is calculated by dividing operating income by the sum of the average of beginning and ending total debt and shareholders’ equity less cash and cash equivalents.
|
g.
|
For the total debt to capitalization calculation, capitalization is defined as total debt plus total shareholders’ equity.
|
h.
|
Book value per share is calculated by dividing shareholders’ equity by the sum of Class A and B shares outstanding and the remaining minimum shares that were to be issued from our tangible equity units for each period.
|
i.
|
"EBITDA" is a Non-GAAP measure and defined as net income less interest income, plus interest, taxes, depreciation and amortization. A reconciliation of net income to EBITDA immediately follows.
|
in millions, except ratio data
|
|
||||||||||||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
$
|
3,027
|
|
|
$
|
1,778
|
|
|
$
|
1,772
|
|
|
$
|
1,224
|
|
|
$
|
856
|
|
Less: Interest income
|
(7
|
)
|
|
(7
|
)
|
|
(6
|
)
|
|
(9
|
)
|
|
(7
|
)
|
|||||
Add: Interest expense
|
350
|
|
|
279
|
|
|
249
|
|
|
293
|
|
|
132
|
|
|||||
Add: Income tax expense (benefit)
|
(282
|
)
|
|
850
|
|
|
826
|
|
|
697
|
|
|
396
|
|
|||||
Add: Depreciation
|
723
|
|
|
642
|
|
|
617
|
|
|
609
|
|
|
494
|
|
|||||
Add: Amortization (a)
|
210
|
|
|
106
|
|
|
80
|
|
|
92
|
|
|
26
|
|
|||||
EBITDA
|
$
|
4,021
|
|
|
$
|
3,648
|
|
|
$
|
3,538
|
|
|
$
|
2,906
|
|
|
$
|
1,897
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total gross debt
|
$
|
9,873
|
|
|
$
|
10,203
|
|
|
$
|
6,279
|
|
|
$
|
6,690
|
|
|
$
|
8,128
|
|
Less: Cash and cash equivalents
|
(270
|
)
|
|
(318
|
)
|
|
(349
|
)
|
|
(688
|
)
|
|
(438
|
)
|
|||||
Less: Short-term investments
|
(1
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|||||
Total net debt
|
$
|
9,602
|
|
|
$
|
9,882
|
|
|
$
|
5,926
|
|
|
$
|
6,000
|
|
|
$
|
7,689
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio Calculations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross debt/EBITDA
|
2.5x
|
|
|
2.8x
|
|
|
1.8x
|
|
|
2.3x
|
|
|
4.3x
|
|
|||||
Net debt/EBITDA
|
2.4x
|
|
|
2.7x
|
|
|
1.7x
|
|
|
2.1x
|
|
|
4.1x
|
|
(a)
|
Excludes the amortization of debt issuance and debt discount expense of
$10 million
,
$13 million
, $8 million, $10 million and $10 million for fiscal 2018, 2017, 2016, 2015 and 2014, respectively, as it is included in Interest expense.
|
•
|
Fiscal year – Our accounting cycle resulted in a 52-week year for fiscal 2018, 2017 and 2016.
|
•
|
General – Our fiscal
2018
operating income increased compared to fiscal
2017
, as record Beef and Prepared Foods segment results were partially offset by a decline in Chicken and Pork segment margins. In fiscal 2018, our results were impacted by $109 million of one-time cash bonus to frontline employees, as we continued to make investments in our talent, $68 million impairment, net of realized gains, associated with the divestitures of non-protein businesses, and $59 million of restructuring and related charges. Sales increased 5% in fiscal
2018
over fiscal
2017
, primarily due to increased sales volumes and average sales prices in Beef, Chicken and Prepared Foods.
|
•
|
Market Environment – According to the United States Department of Agriculture (USDA), domestic protein production (beef, pork, chicken and turkey) increased approximately 2% in fiscal
2018
compared to fiscal
2017
. We continue to monitor recent trade and tariff activity and its potential impact to exports and inputs costs across all of our segments. Currently, we are experiencing impacts to domestic and export prices, primarily chicken and pork, resulting from uncertainty in trade policies and increased tariffs. Additionally, all segments experienced increased freight and labor costs. We will pursue recovery of increased costs related to tariffs, freight and labor through pricing. The Beef segment experienced strong export demand and more favorable domestic market conditions associated with an increase in cattle supply. With excess domestic availability of pork products, the Pork segment experienced periods of challenging market conditions despite decreased input costs. Our Chicken segment also faced challenging market conditions associated with increased domestic availability of supply, sluggish demand, reduced export prices and higher feed ingredient costs. Our Prepared Foods segment continued its strong performance despite experiencing reduced volumes as we divested of certain non-protein businesses.
|
•
|
Margins – Our total operating margin was
7.6%
in fiscal
2018
. Operating margins by segment were as follows:
|
•
|
Beef –
6.5%
|
•
|
Pork –
7.4%
|
•
|
Chicken –
7.2%
|
•
|
Prepared Foods –
10.0%
|
•
|
Liquidity – We generated approximately
$3 billion
of operating cash flows during fiscal 2018. At
September 29, 2018
, we had
$1.4 billion
of liquidity, which included
$270 million
of cash and cash equivalents and the availability under our revolving credit facility after deducting amounts outstanding under our commercial paper program.
|
•
|
Strategy - Our strategy is to sustainably feed the world with the fastest growing protein brands. We intend to achieve our strategy as we: grow our business through differentiated capabilities; deliver ongoing financial fitness through continuous improvement; and sustain our company and our world for future generations.
|
•
|
During fiscal 2018, we acquired three operations for a total of approximately $1.5 billion, net of cash acquired. These operations, which consisted of American Proteins Inc., a poultry rendering and blending operation, Tecumseh Poultry, LLC, a vertically integrated valued-added business, and Original Philly Holdings, Inc., a value-added protein business, were acquired as part of our growth and sustainability initiatives and our acquisition strategy of new brands, new capabilities, scale and synergy, and new geographies and markets.
For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3: Acquisition and Dispositions.
|
•
|
During fiscal 2017, we acquired AdvancePierre, a producer and distributor of value-added, convenient, ready-to-eat sandwiches, sandwich components and other entrées and snacks, as part of our overall strategy. The purchase price was equal to $40.25 per share in cash for AdvancePierre's outstanding common stock, or approximately $3.2 billion. For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3: Acquisition and Dispositions.
|
•
|
In August 2018, we reached a definitive agreement to buy the Keystone Foods business (“Keystone”) from Marfrig Global Foods for $2.16 billion in cash. The anticipated acquisition of Keystone, a major supplier to the growing global foodservice industry, is our latest investment in the furtherance of our growth strategy and expansion of our value-added protein capabilities. The transaction is expected to close in the first quarter or early second quarter of fiscal 2019 and is subject to customary closing conditions, including regulatory approvals, however, there can be no assurance that the acquisition will close at such time.
We expect the majority of Keystone’s domestic results to be included in the Chicken segment and its international results to be in included in Other for segment presentation.
|
•
|
During fiscal 2018, we sold four non-protein operations for net proceeds of $805 million, as part of our strategic focus on protein brands. These operations, which were all part of our Prepared Foods segment, included Sara Lee® Frozen Bakery, Van’s®, Kettle and TNT Crust.
For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3: Acquisitions and Dispositions.
|
•
|
In the fourth quarter of fiscal 2017, our Board of Directors approved a multi-year restructuring program (the “Financial Fitness Program”), which is expected to contribute to the Company’s overall strategy of financial fitness through increased operational effectiveness and overhead reduction. Through a combination of synergies from the integration of business acquisitions and additional elimination of non-valued added costs, the program is focused on supply chain, procurement and overhead improvements, and net savings are expected to be realized in the Prepared Foods and Chicken segments.
|
in millions
|
|
|||||
|
2018
|
|
2017
|
|
||
Cost of Sales
|
$
|
—
|
|
$
|
35
|
|
Selling, general and administrative expenses
|
59
|
|
115
|
|
||
Total restructuring and related charges, pretax
|
$
|
59
|
|
$
|
150
|
|
|
in millions
|
|
||||||||||
|
2017 charges
|
|
2018 charges
|
|
Estimated future charges
|
|
Total estimated Financial Fitness Program charges
|
|
||||
Beef
|
$
|
8
|
|
$
|
4
|
|
$
|
6
|
|
$
|
18
|
|
Pork
|
3
|
|
1
|
|
3
|
|
7
|
|
||||
Chicken
|
56
|
|
30
|
|
16
|
|
102
|
|
||||
Prepared Foods
|
82
|
|
24
|
|
19
|
|
125
|
|
||||
Other
|
1
|
|
—
|
|
—
|
|
1
|
|
||||
Total restructuring and related charges, pretax
|
$
|
150
|
|
$
|
59
|
|
$
|
44
|
|
$
|
253
|
|
|
in millions, except per share data
|
|
|||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Net income attributable to Tyson
|
$
|
3,024
|
|
|
$
|
1,774
|
|
|
$
|
1,768
|
|
Net income attributable to Tyson - per diluted share
|
8.19
|
|
|
4.79
|
|
|
4.53
|
|
•
|
$1,003 million post tax, or $2.71 per diluted share, tax benefit from remeasurement of net deferred tax liabilities at lower enacted tax rates.
|
•
|
$109 million pretax, or ($0.22) per diluted share, related to one-time cash bonus to frontline employees.
|
•
|
$68 million pretax, or ($0.34) per diluted share, impairments net of realized gains associated with the divestitures of non-protein businesses.
|
•
|
$59 million pretax, or ($0.12) per diluted share, of restructuring and related charges.
|
•
|
$103 million pretax, or ($0.18) per diluted share, of AdvancePierre purchase accounting and acquisition related costs, which included a $36 million purchase accounting adjustment for the amortization of the fair value step-up of inventory, $49 million of acquisition related costs and $18 million of acquisition bridge financing fees.
|
•
|
$150 million pretax, or ($0.15) per diluted share, of restructuring and related charges.
|
•
|
$52 million pretax, or ($0.09) per diluted share, impairment charge related to our San Diego Prepared Foods operation.
|
•
|
$45 million pretax, or $0.01 per diluted share, impairment net of tax benefit related to the expected sale of a non-protein business.
|
•
|
$53 million post tax, or $0.14 per diluted share, related to recognition of previously unrecognized tax benefits and audit settlements.
|
Sales
|
in millions
|
|
|||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Sales
|
$
|
40,052
|
|
|
$
|
38,260
|
|
|
$
|
36,881
|
|
Change in sales volume
|
2.5
|
%
|
|
1.0
|
%
|
|
|
||||
Change in average sales price
|
2.1
|
%
|
|
2.7
|
%
|
|
|
||||
Sales growth
|
4.7
|
%
|
|
3.7
|
%
|
|
|
•
|
Sales Volume
– Sales were positively impacted by an increase in sales volume, which accounted for an increase of $1,041 million. The Beef, Chicken and Prepared Foods segments had an increase in sales volume driven by strong demand for our beef products and incremental volumes from business acquisitions in the Chicken and Prepared Foods segments net of business divestitures in the Prepared Foods segment.
|
•
|
Average Sales Price
– Sales were positively impacted by higher average sales prices, which accounted for an increase of $751 million. All segments had an increase in average sales price, other than the Pork segment. The Beef segment experienced strong demand, while the Chicken and Prepared Foods segments were positively impacted by improved mix and business acquisitions net of business divestitures in the Prepared Foods segment.
|
•
|
The above amounts included an incremental impact of $1,060 million related to the inclusion of the AdvancePierre results post acquisition through the first anniversary of the acquisition on June 7, 2018.
|
•
|
Sales Volume
– Sales were positively impacted by an increase in sales volume, which accounted for an increase of $477 million. Each segment had an increase in sales volume with the Beef and Prepared Foods segments contributing to the majority of the increase driven by better demand for our beef products and incremental volumes from the acquisition of AdvancePierre.
|
•
|
Average Sales Price
– Sales were positively impacted by higher average sales prices, which accounted for an increase of $902 million. Each segment had an increase in average sales price with the Pork, Chicken and Prepared Foods segments contributing to the majority of the increase due to strong demand for our pork products, improved mix and higher chicken pricing in our Chicken segment and better product mix in our Prepared Foods segment which was positively impacted by the acquisition of AdvancePierre.
|
•
|
The above amounts include a net increase of $508 million related to the inclusion of AdvancePierre results post acquisition.
|
Cost of Sales
|
in millions
|
|
|||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Cost of sales
|
$
|
34,926
|
|
|
$
|
33,177
|
|
|
$
|
32,184
|
|
Gross profit
|
5,126
|
|
|
5,083
|
|
|
4,697
|
|
|||
Cost of sales as a percentage of sales
|
87.2
|
%
|
|
86.7
|
%
|
|
87.3
|
%
|
•
|
Cost of sales increased $1,749 million. Higher input cost per pound increased cost of sales $918 million while higher sales volume increased cost of sales $831 million. These amounts include an incremental impact of $797 million related to the inclusion of AdvancePierre results post acquisition through the first anniversary of the acquisition on June 7, 2018.
|
•
|
The $918 million impact of higher input cost per pound was primarily driven by:
|
•
|
Increase in freight of approximately $270 million incurred across all our segments.
|
•
|
Increase from one-time cash bonus to frontline employees of $108 million.
|
•
|
Increase due to impairment charges of $101 million associated with the divestiture of a non-protein business in fiscal 2018, partially offset by $33 million of realized gains related to the sale of non-protein businesses in fiscal 2018 and impairment charges of $44 million related to our San Diego Prepared Foods operation in fiscal 2017.
|
•
|
Increase of approximately $52 million in our Chicken segment related to net increases in feed ingredient costs, growout expenses and outside meat purchases.
|
•
|
Decrease in live cattle costs of approximately $25 million in our Beef segment.
|
•
|
Decrease in live hog costs of approximately $90 million in our Pork segment.
|
•
|
Decrease due to net realized derivative losses of $30 million for fiscal 2018, compared to net realized derivative loss of $79 million for fiscal 2017 due to our risk management activities. These amounts exclude offsetting impacts from related physical purchase transactions, which are included in the change in live cattle and hog costs and raw material and feed costs described above. Additionally, cost of sales decreased due to net unrealized losses of $3 million for fiscal 2018, compared to net unrealized losses of $40 million for fiscal 2017, primarily due to our Beef segment commodity risk management activities.
|
•
|
Remaining net change across all of our segments was primarily driven by increased operating costs and impacts on average input cost per pound from mix changes as well as from business acquisitions and divestitures.
|
•
|
The $831 million impact of higher sales volume was driven by increases in sales volume in our Beef, Chicken and Prepared Foods segments, partially offset by a decrease in sales volume in our Pork segment.
|
•
|
Cost of sales increased $993 million. Higher input cost per pound increased cost of sales $588 million while higher sales volume increased cost of sales $405 million. These amounts include a net increase of $425 million related to the inclusion of AdvancePierre results post acquisition, which included $36 million from the fair value step-up of inventory as part of purchase accounting.
|
•
|
The $588 million impact of higher input cost per pound was primarily driven by:
|
•
|
Increase of approximately $170 million in our Chicken segment related to increase in freight, growout expenses and outside meat purchases, partially offset by a decrease in feed costs of $80 million.
|
•
|
Increase due to impairment charges of $44 million related to our San Diego Prepared Foods operation and $45 million related to the expected sale of a non-protein business, in addition to an increase of $17 million related to net costs associated with fires at two chicken plants.
|
•
|
Increase in raw material and other input costs of approximately $50 million in our Prepared Foods segment.
|
•
|
Increase in live hog costs of approximately $40 million in our Pork segment.
|
•
|
Increase of $35 million related to restructuring and related charges.
|
•
|
Increase in input cost per pound related to the acquisition of AdvancePierre on June 7, 2017.
|
•
|
Increase due to net realized derivative losses of $79 million for fiscal 2017, compared to net realized derivative gains of $96 million for fiscal 2016 due to our risk management activities. These amounts exclude offsetting impacts from related physical purchase transactions, which are included in the change in live cattle and hog costs and raw material and feed costs described above. Additionally, cost of sales increased due to net unrealized losses of $40 million for fiscal 2017, compared to net unrealized gains of $11 million for fiscal 2016, primarily due to our Beef segment commodity risk management activities.
|
•
|
Decrease in live cattle costs of approximately $600 million in our Beef segment.
|
•
|
Remainder of net change is mostly due to increased cost per pound from a mix upgrade in the Chicken segment as we increased sales volume in value-added products as well as increased operating costs, freight, and plant variances across all segments, which also included $71 million of compensation and benefit integration expense.
|
•
|
The $405 million impact of higher sales volume was driven by increases in sales volume in all segments, with the majority of the increase in the Beef and Prepared Foods segment.
|
Selling, General and Administrative
|
in millions
|
|
|||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Selling, general and administrative
|
$
|
2,071
|
|
|
$
|
2,152
|
|
|
$
|
1,864
|
|
As a percentage of sales
|
5.2
|
%
|
|
5.6
|
%
|
|
5.1
|
%
|
•
|
Decrease of $81 million in selling, general and administrative was primarily driven by:
|
•
|
Decrease of $92 million in employee costs primarily from stock-based and incentive-based compensation, which also included a reduction of $24 million compensation and benefit integration expense incurred in fiscal 2017 that did not recur in fiscal 2018.
|
•
|
Decrease of $56 million from restructuring and related charges.
|
•
|
Decrease of $49 million in AdvancePierre acquisition related fees incurred as part of the acquisition in fiscal 2017 that did not recur in fiscal 2018.
|
•
|
Decrease of $18 million in commission and brokerage fees.
|
•
|
Decrease of $14 million in non-restructuring severance related expenses.
|
•
|
Decrease of $10 million in marketing, advertising, and promotion expense.
|
•
|
Increase of $153 million related to the AdvancePierre acquisition through the first anniversary of the acquisition on June 7, 2018, which included $91 million in incremental amortization and $62 million from the inclusion of AdvancePierre results post-acquisition.
|
•
|
Increase of $15 million from technology related costs.
|
•
|
Remainder of net change was primarily related to reduction in professional fees.
|
•
|
Increase of $288 million in selling, general and administrative was primarily driven by:
|
•
|
Increase of $124 million related to the AdvancePierre acquisition, which was composed of $49 million in acquisition related costs, $37 million in incremental amortization and $38 million from the inclusion of AdvancePierre results post-acquisition.
|
•
|
Increase of $115 million from restructuring and related charges.
|
•
|
Increase of $53 million in employee costs including $34 million in non-restructuring severance related expenses and $24 million compensation and benefit integration expense, which was partially offset by reduced incentive-based compensation.
|
•
|
Increase of $8 million due to an impairment related to our San Diego Prepared Foods operation.
|
•
|
Remainder of net change was primarily related to professional fees.
|
Interest Income
|
in millions
|
|
|||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
|
$
|
(7
|
)
|
|
$
|
(7
|
)
|
|
$
|
(6
|
)
|
Interest Expense
|
in millions
|
|
|||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Cash interest expense
|
$
|
357
|
|
|
$
|
278
|
|
|
$
|
248
|
|
Non-cash interest (expense) income
|
(7
|
)
|
|
1
|
|
|
1
|
|
|||
Total Interest Expense
|
$
|
350
|
|
|
$
|
279
|
|
|
$
|
249
|
|
•
|
Cash interest expense primarily included interest expense related to our senior notes, term loans and commercial paper. The increase in cash interest expense in fiscal 2018 and fiscal 2017 was primarily due to debt issued in connection with business acquisitions and higher interest rates.
|
•
|
Non-cash interest expense primarily included amounts related to the amortization of debt issuance costs and discounts/premiums on note issuances, offset by interest capitalized.
|
Other (Income) Expense, net
|
in millions
|
|
|||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
|
$
|
(33
|
)
|
|
$
|
31
|
|
|
$
|
(8
|
)
|
Effective Tax Rate
|
|
|||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
(10.3
|
)%
|
|
32.3
|
%
|
|
31.8
|
%
|
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||||||||
|
Sales
|
|
Operating Income (Loss)
|
||||||||||||||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
||||||
Beef
|
$
|
15,473
|
|
|
$
|
14,823
|
|
|
$
|
14,513
|
|
|
$
|
1,013
|
|
|
$
|
877
|
|
|
$
|
347
|
|
Pork
|
4,879
|
|
|
5,238
|
|
|
4,909
|
|
|
361
|
|
|
645
|
|
|
528
|
|
||||||
Chicken
|
12,044
|
|
|
11,409
|
|
|
10,927
|
|
|
866
|
|
|
1,053
|
|
|
1,305
|
|
||||||
Prepared Foods
|
8,668
|
|
|
7,853
|
|
|
7,346
|
|
|
868
|
|
|
462
|
|
|
734
|
|
||||||
Other
|
305
|
|
|
349
|
|
|
380
|
|
|
(53
|
)
|
|
(106
|
)
|
|
(81
|
)
|
||||||
Intersegment Sales
|
(1,317
|
)
|
|
(1,412
|
)
|
|
(1,194
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
40,052
|
|
|
$
|
38,260
|
|
|
$
|
36,881
|
|
|
$
|
3,055
|
|
|
$
|
2,931
|
|
|
$
|
2,833
|
|
Beef Segment Results
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||||
|
2018
|
|
|
2017
|
|
|
Change 2018 vs. 2017
|
|
|
2016
|
|
|
Change 2017
vs. 2016 |
|
|||||
Sales
|
$
|
15,473
|
|
|
$
|
14,823
|
|
|
$
|
650
|
|
|
$
|
14,513
|
|
|
$
|
310
|
|
Sales Volume Change
|
|
|
|
|
3.1
|
%
|
|
|
|
1.8
|
%
|
||||||||
Average Sales Price Change
|
|
|
|
|
1.2
|
%
|
|
|
|
0.4
|
%
|
||||||||
Operating Income (Loss)
|
$
|
1,013
|
|
|
$
|
877
|
|
|
$
|
136
|
|
|
$
|
347
|
|
|
$
|
530
|
|
Operating Margin
|
6.5
|
%
|
|
5.9
|
%
|
|
|
|
2.4
|
%
|
|
|
•
|
Sales Volume
–
Sales volume increased due to improved availability of cattle supply, stronger demand for our beef products and increased exports.
|
•
|
Average Sales Price
–
Average sales price increased as demand for our beef products and strong exports outpaced the increase in live cattle supplies.
|
•
|
Operating Income
– Operating income increased as we continued to maximize our revenues relative to live fed cattle costs, partially offset by increased labor and freight costs and one-time cash bonus to frontline employees of $27 million.
|
•
|
Sales Volume
– Sales volume increased due to improved availability of cattle supply, stronger domestic demand for our beef products and increased exports.
|
•
|
Average Sales Price
–
Average sales price increased as demand for our beef products and strong exports outpaced the increase in live cattle supplies.
|
•
|
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.
|
Pork Segment Results
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||||
|
2018
|
|
|
2017
|
|
|
Change 2018 vs. 2017
|
|
|
2016
|
|
|
Change 2017 vs. 2016
|
|
|||||
Sales
|
$
|
4,879
|
|
|
$
|
5,238
|
|
|
$
|
(359
|
)
|
|
$
|
4,909
|
|
|
$
|
329
|
|
Sales Volume Change
|
|
|
|
|
(2.1
|
)%
|
|
|
|
0.6
|
%
|
||||||||
Average Sales Price Change
|
|
|
|
|
(4.8
|
)%
|
|
|
|
6.1
|
%
|
||||||||
Operating Income
|
$
|
361
|
|
|
$
|
645
|
|
|
$
|
(284
|
)
|
|
$
|
528
|
|
|
$
|
117
|
|
Operating Margin
|
7.4
|
%
|
|
12.3
|
%
|
|
|
|
10.8
|
%
|
|
|
•
|
Sales Volume
–
Sales volume decreased as a result of balancing our supply with customer demand during a period of margin compression.
|
•
|
Average Sales Price
–
The average sales price decrease was associated with lower livestock costs.
|
•
|
Operating Income
– Operating income decreased from prior year record results due to periods of compressed pork margins caused by excess domestic availability of pork, higher labor and freight costs, and one-time cash bonus to frontline employees of $12 million.
|
•
|
Sales Volume
– Sales volume increased due to strong demand for our pork products and increased exports.
|
•
|
Average Sales Price
–
Average sales price increased as demand for our pork products and strong exports outpaced the increase in live hog supplies.
|
•
|
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.
|
Chicken Segment Results
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||||
|
2018
|
|
|
2017
|
|
|
Change 2018
vs. 2017
|
|
|
2016
|
|
|
Change 2017
vs. 2016 |
|
|||||
Sales
|
$
|
12,044
|
|
|
$
|
11,409
|
|
|
$
|
635
|
|
|
$
|
10,927
|
|
|
$
|
482
|
|
Sales Volume Change
|
|
|
|
|
4.9
|
%
|
|
|
|
1.2
|
%
|
||||||||
Average Sales Price Change
|
|
|
|
|
0.7
|
%
|
|
|
|
3.1
|
%
|
||||||||
Operating Income
|
$
|
866
|
|
|
$
|
1,053
|
|
|
$
|
(187
|
)
|
|
$
|
1,305
|
|
|
$
|
(252
|
)
|
Operating Margin
|
7.2
|
%
|
|
9.2
|
%
|
|
|
|
11.9
|
%
|
|
|
•
|
Sales Volume
–
Sales volume increased primarily due to incremental volume from business acquisitions.
|
•
|
Average Sales Price
–
Average sales price increased due to sales mix changes and price increases associated with cost inflation.
|
•
|
Operating Income
– Operating income decreased due to increased labor, freight and growout expenses, in addition to $103 million of higher feed ingredient costs and net realized and mark-to-market derivative losses, and one-time cash bonus to frontline employees of $51 million.
|
•
|
Sales Volume
– Sales volume was up due to better demand for our chicken products along with the incremental volume from the AdvancePierre acquisition.
|
•
|
Average Sales Price
– Average sales price increased due to sales mix changes.
|
•
|
Operating Income
– Operating income for fiscal 2017 was below prior year record results due to higher operating costs, which included increased compensation and benefit integration expense of $41 million, $17 million of incremental net costs attributable to two plant fires, in addition to restructuring and related charges of $56 million, partially offset with lower feed ingredient costs of approximately $80 million.
|
Prepared Foods Segment Results
|
|
|
|
|
|
|
in millions
|
|
|||||||||||
|
2018
|
|
|
2017
|
|
|
Change 2018 vs. 2017
|
|
|
2016
|
|
|
Change 2017
vs. 2016
|
|
|||||
Sales
|
$
|
8,668
|
|
|
$
|
7,853
|
|
|
$
|
815
|
|
|
$
|
7,346
|
|
|
$
|
507
|
|
Sales Volume Change
|
|
|
|
|
4.1
|
%
|
|
|
|
3.2
|
%
|
||||||||
Average Sales Price Change
|
|
|
|
|
6.1
|
%
|
|
|
|
3.6
|
%
|
||||||||
Operating Income
|
$
|
868
|
|
|
$
|
462
|
|
|
$
|
406
|
|
|
$
|
734
|
|
|
$
|
(272
|
)
|
Operating Margin
|
10.0
|
%
|
|
5.9
|
%
|
|
|
|
10.0
|
%
|
|
|
•
|
Sales Volume
– Sales volume increased primarily due to incremental volume from business acquisitions net of business divestitures. Excluding the impact of the business divestitures, sales volumes in fiscal 2018 increased by 9.8%.
|
•
|
Average Sales Price
–
Average sales price increased due to product mix which was positively impacted by business acquisitions and divestitures.
|
•
|
Operating Income
– Operating income increased due to improved mix and net incremental results from business acquisitions, net of divestitures, partially offset by higher input and freight costs and one-time cash bonus to frontline employees of $19 million. Additionally, operating income was impacted in fiscal 2018 by $68 million of impairments, net of realized gains, related to the divestitures of non-protein businesses. For fiscal 2017, operating income was impacted from $34 million of AdvancePierre purchase accounting and acquisition related costs, $97 million of impairments related to our San Diego Prepared Foods operation and the expected sale of a non-protein business, $30 million of compensation and benefits integration expense and $82 million of restructuring and related charges.
|
•
|
Sales Volume
– Sales volume increased due to improved demand for our retail products and incremental volumes from the AdvancePierre acquisition, partially offset by declines in foodservice.
|
•
|
Average Sales Price
–
Average sales price increased due to better product mix which was positively impacted by the acquisition of AdvancePierre as well as higher input costs of $50 million.
|
•
|
Operating Income
–
Operating income decreased due to impairments of $52 million related to our San Diego operation and of $45 million related to the expected sale of a non-protein business, $30 million of compensation and benefit integration expense, $34 million related to AdvancePierre purchase accounting and acquisition related costs, $82 million of restructuring and related charges, in addition to higher operating costs at some of our facilities.
Additionally, Prepared Foods operating income was positively impacted by $538 million in cost savings, of which $97 million was incremental savings in fiscal 2017 above the $156 million of savings realized in fiscal 2016 and $285 million realized in fiscal 2015. The positive impact of these savings to operating income was partially offset with investments in innovation, new product launches and supporting the growth of our brands.
|
Other Results
|
|
|
|
|
|
|
in millions
|
|
|||||||||||
|
2018
|
|
|
2017
|
|
|
Change 2018
vs. 2017 |
|
|
2016
|
|
|
Change 2017
vs. 2016
|
|
|||||
Sales
|
$
|
305
|
|
|
$
|
349
|
|
|
$
|
(44
|
)
|
|
$
|
380
|
|
|
$
|
(31
|
)
|
Operating Loss
|
(53
|
)
|
|
(106
|
)
|
|
53
|
|
|
(81
|
)
|
|
(25
|
)
|
•
|
Sales
– Sales decreased due to a decline in sales volume in our foreign chicken production operations.
|
•
|
Operating loss
– Operating loss improved primarily from lower third-party merger and integration costs.
|
•
|
Sales
–
Sales decreased due to a decline in average sales price and foreign produced sales volume.
|
•
|
Operating loss
– Operating loss increased primarily from $43 million of AdvancePierre third-party acquisition related costs, partially offset by better performance at our China operation and reduced other merger and integration costs outside of AdvancePierre.
|
Cash Flows from Operating Activities
|
|
|
in millions
|
|
|||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Net income
|
$
|
3,027
|
|
|
$
|
1,778
|
|
|
$
|
1,772
|
|
Non-cash items in net income:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
943
|
|
|
761
|
|
|
705
|
|
|||
Deferred income taxes
|
(865
|
)
|
|
(39
|
)
|
|
84
|
|
|||
Gain on dispositions of businesses
|
(42
|
)
|
|
—
|
|
|
—
|
|
|||
Impairment of assets
|
175
|
|
|
214
|
|
|
45
|
|
|||
Stock-based compensation expense
|
69
|
|
|
92
|
|
|
81
|
|
|||
Other, net
|
(58
|
)
|
|
(57
|
)
|
|
(34
|
)
|
|||
Net changes in operating assets and liabilities
|
(286
|
)
|
|
(150
|
)
|
|
63
|
|
|||
Net cash provided by operating activities
|
$
|
2,963
|
|
|
$
|
2,599
|
|
|
$
|
2,716
|
|
•
|
Deferred income taxes for fiscal 2018 included a $1,004 million benefit related to remeasurement of net deferred income tax liabilities at newly enacted tax rates.
|
•
|
Gain on dispositions of businesses in fiscal 2018 primarily relates to the sale of the Sara Lee® Frozen Bakery, Kettle, Van’s® and TNT Crust businesses.
|
•
|
Impairment of assets included the following:
|
•
|
2018
–
$101 million impairment related to the expected sale of a non-protein business. For further description regarding this charge refer to Part II, Item 8, Notes to Consolidated Financial Statements, Note 3: Acquisitions and Dispositions.
|
•
|
2017 –
Included a $73 million impairment of assets associated with restructuring and related charges, $45 million impairment related to the expected sale of a non-protein business and an impairment of $51 million related to our San Diego Prepared Foods operation. For further description regarding these charges refer to Part II, Item 8, Notes to Consolidated Financial Statements, Note 3: Acquisitions and Dispositions, Note 6: Restructuring and Related Charges and Note 10: Other Income and Charges.
|
•
|
Cash flows associated with changes in operating assets and liabilities:
|
•
|
2018 –
Decreased primarily due to increased inventory and decreased accrued employee costs, partially offset by increased income taxes payable. The increase in inventory is primarily due to livestock inventories. The decrease in accrued salaries and wages are primarily due to reduced restructuring and incentive-based compensation accruals. Increased taxes payable is due to timing of payments related to the sale of non-protein businesses in the fourth quarter.
|
•
|
2017 –
Decreased primarily due to higher accounts receivable and inventory, partially offset by increased accounts payable and increased accrued salaries and wages. The higher accounts receivable, inventory and accounts payable balances are primarily attributable to price increases associated with higher input costs and the timing of sales and payments. The increase in accrued salaries and wages is primarily attributable to the restructuring accrual. For further description regarding this accrual refer to Part II, Item 8, Notes to Consolidated Financial Statements, Note 6: Restructuring and Related Charges.
|
•
|
2016 –
Increased primarily due to decreased inventory and accounts receivable balances and increased accrual for incentive compensation, which were partially offset by decreased accounts payable, increased tax receivable and contributions to pension plans. The decreased inventory, accounts receivable and accounts payable balances were largely due to decreased raw material costs and timing of sales and payments.
|
•
|
Incremental tax reform cash flow in fiscal 2018 was $274 million which we invested in our frontline team members to sustainably grow our businesses. As part of this, we recognized expense of $109 million in one-time cash bonuses to our frontline employees.
|
Cash Flows from Investing Activities
|
|
|
|
in millions
|
|
||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Additions to property, plant and equipment
|
$
|
(1,200
|
)
|
|
$
|
(1,069
|
)
|
|
$
|
(695
|
)
|
(Purchases of)/Proceeds from marketable securities, net
|
(5
|
)
|
|
(18
|
)
|
|
(9
|
)
|
|||
Acquisitions, net of cash acquired
|
(1,474
|
)
|
|
(3,081
|
)
|
|
—
|
|
|||
Proceeds from sale of businesses
|
797
|
|
|
—
|
|
|
—
|
|
|||
Other, net
|
(24
|
)
|
|
4
|
|
|
20
|
|
|||
Net cash used for investing activities
|
$
|
(1,906
|
)
|
|
$
|
(4,164
|
)
|
|
$
|
(684
|
)
|
•
|
Additions to property, plant and equipment included spending for production growth, safety and animal well-being, in addition to acquiring new equipment, infrastructure replacements and upgrades to maintain competitive standing and position us for future opportunities.
|
•
|
Capital spending for fiscal
2019
is expected to approximate $1.5 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.
|
•
|
Purchases of marketable securities included funding for our deferred compensation plans.
|
•
|
Acquisitions, net of cash acquired, included:
|
•
|
2018 - We acquired three valued-added protein businesses in fiscal 2018. For further description regarding these acquisitions refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3: Acquisitions and Dispositions.
|
•
|
2017 - We acquired AdvancePierre in the third quarter of fiscal 2017. For further description of this acquisition refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3: Acquisitions and Dispositions.
|
•
|
Proceeds from sale of businesses related to the proceeds received from sale of our non-protein businesses during fiscal 2018. For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3: Acquisitions and Dispositions.
|
•
|
In August 2018, the Company announced it had reached a definitive agreement to buy the Keystone business from Marfrig Global Foods for $2.16 billion in cash. Refer to further description regarding this transaction under Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3: Acquisitions and Dispositions.
|
Cash Flows from Financing Activities
|
|
|
|
in millions
|
|
||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Payments on debt
|
$
|
(1,307
|
)
|
|
$
|
(3,159
|
)
|
|
$
|
(714
|
)
|
Proceeds from issuance of long-term debt
|
1,148
|
|
|
5,444
|
|
|
1
|
|
|||
Borrowings on revolving credit facility
|
1,755
|
|
|
1,810
|
|
|
1,065
|
|
|||
Payments on revolving credit facility
|
(1,755
|
)
|
|
(2,110
|
)
|
|
(765
|
)
|
|||
Proceeds from issuance of commercial paper
|
21,024
|
|
|
8,138
|
|
|
—
|
|
|||
Repayments of commercial paper
|
(21,197
|
)
|
|
(7,360
|
)
|
|
—
|
|
|||
Payment of AdvancePierre TRA liability
|
—
|
|
|
(223
|
)
|
|
—
|
|
|||
Purchases of Tyson Class A common stock
|
(427
|
)
|
|
(860
|
)
|
|
(1,944
|
)
|
|||
Dividends
|
(431
|
)
|
|
(319
|
)
|
|
(216
|
)
|
|||
Stock options exercised
|
102
|
|
|
154
|
|
|
128
|
|
|||
Other, net
|
(14
|
)
|
|
15
|
|
|
68
|
|
|||
Net cash provided by (used for) financing activities
|
$
|
(1,102
|
)
|
|
$
|
1,530
|
|
|
$
|
(2,377
|
)
|
•
|
Payments on debt included:
|
•
|
2018 – We extinguished the $750 million outstanding balance of the Term Loan Tranche B due August 2020, which was increased during fiscal 2018 by $250 million, using cash on hand and proceeds from the issuance of Senior Notes due 2023 and 2048. We extinguished the $427 million outstanding balance of the Term Loan Tranche B due August 2019 using cash on hand and proceeds received from the sale of our Kettle business. We extinguished the $120 million outstanding balance of the Senior Notes due May 2018 using cash on hand.
|
•
|
2017 – We extinguished $1,146 million of AdvancePierre's debt, which we assumed in the acquisition, and fully retired the $1,800 million term loan tranche due June 2020, which was issued as part of the AdvancePierre acquisition financing.
|
•
|
2016 – We fully retired the $638 million outstanding balance of our 6.60% senior notes due April 2016.
|
•
|
Proceeds from issuance of long-term debt and borrowings/payments on revolving credit facility:
|
•
|
2018 – Proceeds from issuance of long-term debt included a $250 million increase in our Term Loan Tranche B due August 2020, primarily to fund an acquisition. Subsequently, proceeds from issuance of long-term debt included $400 million Senior Notes due 2023 and $500 million Senior Notes due 2048, which were primarily used to extinguish our Term Loan Tranche B due August 2020 and to repay commercial paper obligations.
|
•
|
2017 – Proceeds from issuance of long-term debt included a $1,800 million term loan and $2,743 million from senior unsecured notes after original issue discounts of $7 million, to fund the AdvancePierre acquisition. In addition, proceeds from issuance of long-term debt included $899 million of senior unsecured notes after original issue discounts of $1 million that was used to repay amounts outstanding under the term loan tranche due June 2020. We had net payments on our revolving credit facility of $300 million in fiscal 2017, which was used for general corporate purposes.
|
•
|
2016 – We had borrowings of $1,065 million and payments of $765 million on our revolving credit facility for fiscal 2016. We utilized our revolving credit facility to balance our cash position with the retirement of the 2016 Notes and changes in working capital. Additionally, total debt of our foreign subsidiaries was $7 million at October 1, 2016, $6 million of which is classified as long-term in our Consolidated Balance Sheets.
|
•
|
Proceeds from issuance and repayment of short-term debt in the form of commercial paper:
|
•
|
2018 – We had net repayments of $173 million to our unsecured short-term promissory notes (commercial paper) pursuant to our commercial paper program.
|
•
|
2017 – We had net issuances of $778 million in unsecured short-term promissory notes pursuant to our commercial paper program. We used the net proceeds from the commercial paper program as partial financing for the AdvancePierre acquisition and for general corporate purposes.
|
•
|
Payments on TRA obligation in the acquisition of AdvancePierre:
|
•
|
2017 – AdvancePierre Tax Receivable Agreement (TRA) liability of $223 million was paid to its former shareholders as a result of our assumption of this obligation in the acquisition of AdvancePierre.
|
•
|
Purchases of Tyson Class A common stock included:
|
•
|
$350 million
, $797 million, and $1,868 million for shares repurchased pursuant to our share repurchase program in fiscal 2018, 2017 and 2016, respectively.
|
•
|
$77 million
, $63 million and $76 million for shares repurchased to fund certain obligations under our equity compensation plans in fiscal 2018, 2017 and 2016, respectively.
|
•
|
Dividends paid during fiscal 2018 included a 33% increase to our fiscal 2017 quarterly dividend rate.
|
•
|
Other, net in fiscal 2016 includes tax benefits associated with stock option exercises.
|
•
|
Keystone acquisition financing - In August 2018, the Company announced it had reached a definitive agreement to buy the Keystone business from Marfrig Global Foods for $2.16 billion in cash. The transaction is expected to close in the first quarter or early second quarter of fiscal 2019 and is subject to customary closing conditions, including regulatory approvals, however, there can be no assurance that the acquisition will close at such time. Permanent financing for the Keystone acquisition is expected to include a mix of senior notes, term loans, commercial paper and cash on hand.
|
Liquidity
|
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||
|
|
Commitments
Expiration Date
|
|
Facility
Amount
|
|
|
Outstanding Letters of
Credit (no draw downs)
|
|
|
Outstanding Amount
Borrowed
|
|
|
Amount
Available
|
|
||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
$
|
270
|
|
||||||
Short-term investments
|
|
|
|
|
|
|
|
|
|
1
|
|
|||||||
Revolving credit facility
|
|
March 2023
|
|
$
|
1,750
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
1,750
|
|
|
Commercial Paper
|
|
|
|
|
|
|
|
|
|
(605
|
)
|
|||||||
Total liquidity
|
|
|
|
|
|
|
|
|
|
$
|
1,416
|
|
•
|
Liquidity includes cash and cash equivalents, short-term investments, and availability under our revolving credit facility, less outstanding commercial paper balance.
|
•
|
At
September 29, 2018
, we had current debt of
$1,911 million
, which we intend to repay with cash generated from our operating activities and other liquidity sources.
|
•
|
The revolving credit facility supports our short-term funding needs and also serves to backstop our commercial paper program. Our maximum borrowing under the revolving credit facility during fiscal
2018
was $325 million.
|
•
|
We expect net interest expense will approximate $350 million for fiscal
2019
.
|
•
|
At
September 29, 2018
, $256 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. 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. We intend to repatriate excess cash (net of applicable withholding taxes) not subject to regulatory requirements and to indefinitely reinvest outside of the United States the remainder of cash held by foreign subsidiaries. We do not expect the regulatory restrictions or taxes on repatriation to have a material effect on our overall liquidity, financial condition or the results of operations for the foreseeable future.
|
•
|
Our ratio of short-term assets to short-term liabilities ("current ratio") was
1.13
to 1 and
1.55
to 1 at
September 29, 2018
, and
September 30, 2017
, respectively. The decrease in fiscal 2018 was due to increased balance of current debt.
|
Ratings Level (S&P/Moody's/Fitch)
|
Facility Fee
Rate
|
|
All-in
Borrowing Spread
|
|
A-/A3/A- or above
|
0.090
|
%
|
1.000
|
%
|
BBB+/Baa1/BBB+
|
0.100
|
%
|
1.125
|
%
|
BBB/Baa2/BBB (current level)
|
0.125
|
%
|
1.250
|
%
|
BBB-/Baa3/BBB-
|
0.175
|
%
|
1.375
|
%
|
BB+/Ba1/BB+ or lower
|
0.225
|
%
|
1.625
|
%
|
|
|
in millions
|
|
||||||||||||||||
|
Payments Due by Period
|
||||||||||||||||||
|
2019
|
|
|
2020-2021
|
|
|
2022-2023
|
|
|
2024 and thereafter
|
|
|
Total
|
|
|||||
Debt and capital lease obligations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Principal payments
(1)
|
$
|
1,911
|
|
|
$
|
1,548
|
|
|
$
|
1,412
|
|
|
$
|
5,056
|
|
|
$
|
9,927
|
|
Interest payments
(2)
|
360
|
|
|
617
|
|
|
517
|
|
|
2,606
|
|
|
4,100
|
|
|||||
Guarantees
(3)
|
20
|
|
|
46
|
|
|
38
|
|
|
15
|
|
|
119
|
|
|||||
Operating lease obligations
(4)
|
128
|
|
|
160
|
|
|
69
|
|
|
61
|
|
|
418
|
|
|||||
Purchase obligations
(5)
|
1,422
|
|
|
1,083
|
|
|
172
|
|
|
111
|
|
|
2,788
|
|
|||||
Capital expenditures
(6)
|
1,071
|
|
|
761
|
|
|
—
|
|
|
—
|
|
|
1,832
|
|
|||||
Other long-term liabilities
(7)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
604
|
|
|||||
Total contractual commitments
|
$
|
4,912
|
|
|
$
|
4,215
|
|
|
$
|
2,208
|
|
|
$
|
7,849
|
|
|
$
|
19,788
|
|
(1)
|
In the event of a default on payment, acceleration of the principal payments could occur.
|
(2)
|
Interest payments include interest on all outstanding debt. Payments are estimated for variable rate and variable term debt based on effective interest rates at
September 29, 2018
, and expected payment dates.
|
(3)
|
Amounts include guarantees of debt of outside third parties, which consist of leases and grower loans, all of which are substantially collateralized by the underlying assets, as well as residual value guarantees covering certain operating leases for various types of equipment. The amounts included are the maximum potential amount of future payments.
|
(4)
|
Amounts include minimum lease payments under lease agreements.
|
(5)
|
Amounts include agreements to purchase goods or services that are enforceable and legally binding and specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. The purchase obligations amount included items, such as future purchase commitments for grains, livestock contracts and grower fees, that provide terms that meet the above criteria. For certain grain purchase commitments with a fixed quantity provision, we have assumed the future obligations under the commitment based on available commodity futures prices as published in observable active markets as of
September 29, 2018
. We have excluded future purchase commitments for contracts that do not meet these criteria. Purchase orders are not included in the table, as a purchase order is an authorization to purchase and is cancelable. Contracts for goods or services that contain termination clauses without penalty have also been excluded.
|
(6)
|
Amounts include estimated amounts to complete buildings and equipment under construction as of
September 29, 2018
.
|
(7)
|
Other long-term liabilities primarily consist of deferred compensation, deferred income, self-insurance, and asset retirement obligations. We are unable to reliably estimate the amount of these payments beyond fiscal 2018; therefore, we have only included the total liability in the table above. We also have employee benefit obligations consisting of pensions and other postretirement benefits of $233 million that are excluded from the table above. A discussion of the Company's pension and postretirement plans, including funding matters, is included in Part II, Item 8, Notes to Consolidated Financial Statements, Note 15: Pensions and Other Postretirement Benefits.
|
Description
|
|
Judgments and Uncertainties
|
|
Effect if Actual Results Differ From
Assumptions
|
Contingent liabilities
|
|
|
|
|
We are subject to lawsuits, investigations and other claims related to wage and hour/labor, environmental, product, taxing authorities and other matters, and are required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses.
A determination of the amount of reserves and disclosures required, if any, for these contingencies is made after considerable analysis of each individual issue. We accrue for contingent liabilities when an assessment of the risk of loss is probable and can be reasonably estimated. We disclose contingent liabilities when the risk of loss is reasonably possible or probable.
|
|
Our contingent liabilities contain uncertainties because the eventual outcome will result from future events, and determination of current reserves requires estimates and judgments related to future changes in facts and circumstances, differing interpretations of the law and assessments of the amount of damages, and the effectiveness of strategies or other factors beyond our control.
|
|
We have not made any material changes in the accounting methodology used to establish our contingent liabilities during the past three fiscal years.
We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate our contingent liabilities. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material.
|
|
|
|
|
|
Marketing, advertising and promotion costs
|
|
|
|
|
We promote our products with marketing, advertising, trade promotions, and consumer incentives. These programs include, but are not limited to, coupons, discounts, rebates, volume-based incentives, cooperative advertising, and other programs.
Marketing, advertising, and promotion costs are charged to operations in the period incurred. We accrue costs based on the estimated performance, historical utilization and redemption rates of each program.
Cash consideration given to customers is considered a reduction in the price of our products, thus recorded as a reduction to sales. The remainder of marketing, advertising and promotion costs is recorded as a selling, general and administrative expense.
|
|
Recognition of the costs related to these programs contains uncertainties due to judgment required in estimating the potential performance, utilization and redemption rates of each program.
These estimates are based on many factors, including experience of similar promotional programs.
|
|
We have not made any material changes in the accounting methodology used to establish our marketing, advertising, and promotion accruals during the past three fiscal years.
We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate our marketing, advertising, and promotion accruals. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material.
A 10% change in our marketing, advertising, and promotion accruals at September 29, 2018, would impact pretax earnings by approximately $22 million.
|
|
|
|
|
|
Accrued self-insurance
|
|
|
|
|
We are self-insured for certain losses related to health and welfare, workers’ compensation, auto liability and general liability claims.
We use an independent third-party actuary to assist in determining our self-insurance liability. We and the actuary consider a number of factors when estimating our self-insurance liability, including claims experience, demographic factors, severity factors and other actuarial assumptions.
We periodically review our estimates and assumptions with our third-party actuary to assist us in determining the adequacy of our self-insurance liability. Our policy is to maintain an accrual at the actuarial estimated median.
|
|
Our self-insurance liability contains uncertainties due to assumptions required and judgment used.
Costs to settle our obligations, including legal and healthcare costs, could increase or decrease causing estimates of our self-insurance liability to change.
Incident rates, including frequency and severity, could increase or decrease causing estimates in our self-insurance liability to change.
|
|
We have not made any material changes in the accounting methodology used to establish our self-insurance liability during the past three fiscal years.
We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate our self-insurance liability. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material.
A 10% change in the actuarial estimate at September 29, 2018, would impact our self-insurance liability by approximately $30 million.
|
Description
|
|
Judgments and Uncertainties
|
|
Effect if Actual Results Differ From
Assumptions
|
Defined benefit pension plans
|
|
|
|
|
We sponsor nine defined benefit pension plans that provide retirement benefits to certain employees. Currently we are in the process of liquidating five of our nine defined benefit pension plans. We also participate in a multi-employer plan that provides defined benefits to certain employees covered by collective bargaining agreements. Such plans are usually administered by a board of trustees composed of the management of the participating companies and labor representatives.
We use independent third-party actuaries to assist us in determining our pension obligations and net periodic benefit cost. We and the actuaries review assumptions that include estimates of the present value of the projected future pension payment to all plan participants, taking into consideration the likelihood of potential future events such as salary increases and demographic experience. We accumulate and amortize the effect of actuarial gains and losses over future periods.
Net periodic benefit cost for the defined benefit pension plans was $13 million in fiscal 2018. The projected benefit obligation was $1,612 million at the end of fiscal 2018. Unrecognized actuarial gain was $65 million at the end of fiscal 2018. We currently expect net periodic benefit cost for fiscal 2019 to be approximately $11 million, excluding the pending settlement as described in Note 15: Pension and Other Postretirement Benefits.
Plan assets are currently comprised of approximately 99% fixed income securities. Fixed income securities can include, but are not limited to, direct bond investments and pooled or indirect bond investments.
We expect to contribute approximately $15 million of cash to our pension plans in fiscal 2019. The exact amount of cash contributions made to pension plans in any year is dependent upon a number of factors, including minimum funding requirements.
|
|
Our defined benefit pension plans contain uncertainties due to assumptions required and judgments used.
The key assumptions used in developing the required estimates include such factors as discount rates, expected returns on plan assets, retirement rates, and mortality. These assumptions can have a material impact upon the funded status and the net periodic benefit cost. The expected liquidation of certain plans has been considered along with these assumptions.
The discount rates were determined using a cash flow matching technique whereby the rates of a yield curve, developed from high-quality debt securities, were applied to the benefit obligations to determine the appropriate discount rate. In determining the long-term rate of return on plan assets, we first examined historical rates of return for the various asset classes within the plans. We then determined a long-term projected rate-of-return based on expected returns. Investment, management and other fees paid out of plan assets are factored into the determination of asset return assumptions. Retirement rates are based primarily on actual plan experience, while standard actuarial tables are used to estimate mortality.
It is reasonably likely that changes in external factors will result in changes to the assumptions used to measure pension obligations and net periodic benefit cost in future periods.
The risks of participating in multi-employer plans are different from single-employer plans. The net pension cost of the multi-employer plans is equal to the annual contribution determined in accordance with the provisions of negotiated labor contracts. Assets contributed to such plans are not segregated or otherwise restricted to provide benefits only to our employees. The future cost of these plans is dependent on a number of factors including the funded status of the plans and the ability of the other participating companies to meet ongoing funding obligations.
|
|
We have not made any material changes in the accounting methodology used to establish our pension obligations and net periodic benefit cost during the past three fiscal years.
We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate our pension obligations and net periodic benefit cost. However, if actual results are not consistent with our estimates or assumptions, they are accumulated and amortized over future periods and, therefore generally affect the net periodic benefit cost in future periods.
A 1% increase in the discount rate at September 29, 2018, would result in a decrease in the projected benefit obligation and net periodic benefit cost of approximately $167 million and $19 million, respectively. A 1% decrease in the discount rate at September 29, 2018, would result in an increase in the projected benefit obligation and net periodic benefit cost of approximately $204 million and $1 million, respectively.
A 1% change in the return on plan assets at September 29, 2018, would impact the net periodic benefit cost by approximately $14 million.
The sensitivities reflect the impact of changing one assumption at a time with the remaining assumptions held constant. Economic factors and conditions often affect multiple assumptions simultaneously and that the effect of changes in assumptions are not necessarily linear.
|
Description
|
|
Judgments and Uncertainties
|
|
Effect if Actual Results Differ From
Assumptions
|
Income taxes
|
|
|
|
|
We estimate total income tax expense based on statutory tax rates and tax planning opportunities available to us in various jurisdictions in which we earn income.
Income tax includes an estimate for withholding taxes on earnings of foreign subsidiaries expected to be remitted to the United States but does not include an estimate for taxes on earnings considered to be indefinitely invested in the foreign subsidiary.
Deferred income taxes are recognized for the future tax effects of temporary differences between financial and income tax reporting using tax rates in effect for the years in which the differences are expected to reverse.
Valuation allowances are recorded when it is likely a tax benefit will not be realized for a deferred tax asset.
We record unrecognized tax benefit liabilities for known or anticipated tax issues based on our analysis of whether, and the extent to which, additional taxes will be due.
|
|
Changes in tax laws and rates could affect recorded deferred tax assets and liabilities in the future.
Changes in projected future earnings could affect the recorded valuation allowances in the future.
Our calculations related to income taxes contain uncertainties due to judgment used to calculate tax liabilities in the application of complex tax regulations across the tax jurisdictions where we operate.
Our analysis of unrecognized tax benefits contains uncertainties based on judgment used to apply the more likely than not recognition and measurement thresholds.
|
|
We do not believe there is a reasonable likelihood there will be a material change in the tax related balances or valuation allowances. However, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities.
To the extent we prevail in matters for which unrecognized tax benefit liabilities have been established, or are required to pay amounts in excess of our recorded unrecognized tax benefit liabilities, our effective tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement would require use of our cash and generally result in an increase in our effective tax rate in the period of resolution. A favorable tax settlement would generally be recognized as a reduction in our effective tax rate in the period of resolution.
|
Description
|
|
Judgments and Uncertainties
|
|
Effect if Actual Results Differ From
Assumptions
|
Impairment of goodwill and indefinite life intangible assets
|
|
|
||
Goodwill is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, the fair value of the reporting unit may be more likely than not less than its carrying amount or if significant changes to macro-economic factors related to the reporting unit have occurred that could materially impact fair value, a quantitative goodwill impairment test would be required. The quantitative test compares the fair value of a reporting unit with its carrying amount. Additionally, we can elect to forgo the qualitative assessment and perform the quantitative test. Upon performing the quantitative test, if the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of goodwill.
For indefinite life intangible assets, a qualitative assessment can also be performed to determine whether the existence of events and circumstances indicates it is more likely than not an intangible asset is impaired. Similar to goodwill, we can also elect to forgo the qualitative test for indefinite life intangible assets and perform the quantitative test. Upon performing the quantitative test, if the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. We elected to forgo the qualitative assessment on our indefinite life intangible assets for the fiscal 2018 impairment test.
We have elected to make the first day of the fourth quarter the annual impairment assessment date for goodwill and indefinite life intangible assets. However, we could be required to evaluate the recoverability of goodwill and indefinite life intangible assets prior to the required annual assessment if, among other things, we experience disruptions to the business, unexpected significant declines in operating results, divestiture of a significant component of the business or a sustained decline in market capitalization.
|
|
We estimate the fair value of our reporting units considering the use of various valuation techniques, with the primary technique being an income approach (discounted cash flow analysis), which uses significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy and requires us to make various judgmental assumptions about sales, operating margins, growth rates and discount rates.
We include assumptions about sales, operating margins and growth rates which consider our budgets, business plans and economic projections, and are believed to reflect market participant views which would exist in an exit transaction. Assumptions are also made for varying perpetual growth rates for periods beyond the long-term business plan period. Generally, we utilize operating margin assumptions based on future expectations and operating margins historically realized in the reporting units' industries.
The fair value of our indefinite life intangible assets is calculated principally using relief-from-royalty and multi-period excess earnings valuation approaches, which uses significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy, and is believed to reflect market participant views which would exist in an exit transaction. Under these valuation approaches, we are required to make estimates and assumptions about sales, operating margins, growth rates, royalty rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data.
Our impairment analysis contains uncertainties due to uncontrollable events that could positively or negatively impact the anticipated future economic and operating conditions.
|
|
We have not made any material changes in the accounting methodology used to evaluate impairment of goodwill and intangible assets during the last three years.
During fiscal 2018, 2017 and 2016, all of our material reporting units that underwent a quantitative test passed the goodwill impairment analysis.
Some of the inherent estimates and assumptions used in determining fair value of the reporting units and indefinite life intangible assets are outside the control of management, including interest rates, cost of capital, tax rates, market EBITDA comparables and credit ratings. While we believe we have made reasonable estimates and assumptions to calculate the fair value of the reporting units and indefinite life intangibles, it is possible a material change could occur. If our actual results are not consistent with our estimates and assumptions used to calculate fair value, it could result in additional material impairments of our goodwill.
All of our material reporting units' estimated fair value exceeded their carrying value by more than 20% at the date of their most recent estimated fair value determination. Consequently, we do not currently consider any of our material reporting units at significant risk of impairment.
The discount rate used in our annual goodwill impairment test increased to 6.9% in fiscal 2018 from 6.7% in fiscal 2017. Discount rates continue to be low compared to historical levels. A 40% increase in the discount rate would have caused the carrying value of one of our reporting units, with $6,141 million of goodwill at September 29, 2018 and the least headroom during the fiscal 2018 test, to exceed its discounted cash flows' fair value.
Our fiscal 2018, 2017, and 2016 indefinite life intangible assets impairment analysis did not result in an impairment charge. All indefinite life intangible assets’ estimated fair value exceeded their carrying value by more than 20% at the date of their most recent estimated fair value determination. Consequently, we do not currently consider any of our material indefinite life intangible assets at significant risk of impairment.
The discount rate used in our annual indefinite life intangible assets impairment test was 8.2% in fiscal 2018. A 20% increase in the discount rate would have caused the carrying value of one intangible asset, which has a carrying value of $301 million, to exceed fair value.
|
Effect of 10% change in fair value
|
in millions
|
|
|||||
|
2018
|
|
|
2017
|
|
||
Livestock:
|
|
|
|
||||
Live Cattle
|
$
|
12
|
|
|
$
|
23
|
|
Lean Hogs
|
4
|
|
|
16
|
|
||
Grain:
|
|
|
|
||||
Corn
|
26
|
|
|
17
|
|
||
Soy Meal
|
26
|
|
|
13
|
|
|
Three years ended September 29, 2018
|
|
|||||||||
|
in millions, except per share data
|
|
|||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Sales
|
$
|
40,052
|
|
|
$
|
38,260
|
|
|
$
|
36,881
|
|
Cost of Sales
|
34,926
|
|
|
33,177
|
|
|
32,184
|
|
|||
Gross Profit
|
5,126
|
|
|
5,083
|
|
|
4,697
|
|
|||
Selling, General and Administrative
|
2,071
|
|
|
2,152
|
|
|
1,864
|
|
|||
Operating Income
|
3,055
|
|
|
2,931
|
|
|
2,833
|
|
|||
Other (Income) Expense:
|
|
|
|
|
|
||||||
Interest income
|
(7
|
)
|
|
(7
|
)
|
|
(6
|
)
|
|||
Interest expense
|
350
|
|
|
279
|
|
|
249
|
|
|||
Other, net
|
(33
|
)
|
|
31
|
|
|
(8
|
)
|
|||
Total Other (Income) Expense
|
310
|
|
|
303
|
|
|
235
|
|
|||
Income before Income Taxes
|
2,745
|
|
|
2,628
|
|
|
2,598
|
|
|||
Income Tax Expense (Benefit)
|
(282
|
)
|
|
850
|
|
|
826
|
|
|||
Net Income
|
3,027
|
|
|
1,778
|
|
|
1,772
|
|
|||
Less: Net Income Attributable to Noncontrolling Interests
|
3
|
|
|
4
|
|
|
4
|
|
|||
Net Income Attributable to Tyson
|
$
|
3,024
|
|
|
$
|
1,774
|
|
|
$
|
1,768
|
|
Weighted Average Shares Outstanding:
|
|
|
|
|
|
||||||
Class A Basic
|
295
|
|
|
296
|
|
|
315
|
|
|||
Class B Basic
|
70
|
|
|
70
|
|
|
70
|
|
|||
Diluted
|
369
|
|
|
370
|
|
|
390
|
|
|||
Net Income Per Share Attributable to Tyson:
|
|
|
|
|
|
||||||
Class A Basic
|
$
|
8.44
|
|
|
$
|
4.94
|
|
|
$
|
4.67
|
|
Class B Basic
|
$
|
7.59
|
|
|
$
|
4.45
|
|
|
$
|
4.24
|
|
Diluted
|
$
|
8.19
|
|
|
$
|
4.79
|
|
|
$
|
4.53
|
|
|
Three years ended September 29, 2018
|
|
|||||||||
|
in millions
|
|
|||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Net Income
|
$
|
3,027
|
|
|
$
|
1,778
|
|
|
$
|
1,772
|
|
Other Comprehensive Income (Loss), Net of Taxes:
|
|
|
|
|
|
||||||
Derivatives accounted for as cash flow hedges
|
(7
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Investments
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|||
Currency translation
|
(29
|
)
|
|
6
|
|
|
4
|
|
|||
Postretirement benefits
|
(7
|
)
|
|
56
|
|
|
42
|
|
|||
Total Other Comprehensive Income (Loss), Net of Taxes
|
(44
|
)
|
|
61
|
|
|
45
|
|
|||
Comprehensive Income
|
2,983
|
|
|
1,839
|
|
|
1,817
|
|
|||
Less: Comprehensive Income Attributable to Noncontrolling Interests
|
3
|
|
|
4
|
|
|
4
|
|
|||
Comprehensive Income Attributable to Tyson
|
$
|
2,980
|
|
|
$
|
1,835
|
|
|
$
|
1,813
|
|
September 29, 2018, and September 30, 2017
|
|
||||||
in millions, except share and per share data
|
|
||||||
|
2018
|
|
|
2017
|
|
||
Assets
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
270
|
|
|
$
|
318
|
|
Accounts receivable, net
|
1,723
|
|
|
1,675
|
|
||
Inventories
|
3,513
|
|
|
3,239
|
|
||
Other current assets
|
182
|
|
|
219
|
|
||
Assets held for sale
|
—
|
|
|
807
|
|
||
Total Current Assets
|
5,688
|
|
|
6,258
|
|
||
Net Property, Plant and Equipment
|
6,169
|
|
|
5,568
|
|
||
Goodwill
|
9,739
|
|
|
9,324
|
|
||
Intangible Assets, net
|
6,759
|
|
|
6,243
|
|
||
Other Assets
|
754
|
|
|
673
|
|
||
Total Assets
|
$
|
29,109
|
|
|
$
|
28,066
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Current debt
|
$
|
1,911
|
|
|
$
|
906
|
|
Accounts payable
|
1,694
|
|
|
1,698
|
|
||
Other current liabilities
|
1,426
|
|
|
1,424
|
|
||
Liabilities held for sale
|
—
|
|
|
4
|
|
||
Total Current Liabilities
|
5,031
|
|
|
4,032
|
|
||
Long-Term Debt
|
7,962
|
|
|
9,297
|
|
||
Deferred Income Taxes
|
2,107
|
|
|
2,979
|
|
||
Other Liabilities
|
1,198
|
|
|
1,199
|
|
||
Commitments and Contingencies (Note 20)
|
|
|
|
|
|||
Shareholders’ Equity:
|
|
|
|
||||
Common stock ($0.10 par value):
|
|
|
|
||||
Class A-authorized 900 million shares, issued 378 million shares
|
38
|
|
|
38
|
|
||
Convertible Class B-authorized 900 million shares, issued 70 million shares
|
7
|
|
|
7
|
|
||
Capital in excess of par value
|
4,387
|
|
|
4,378
|
|
||
Retained earnings
|
12,329
|
|
|
9,776
|
|
||
Accumulated other comprehensive gain (loss)
|
(15
|
)
|
|
16
|
|
||
Treasury stock, at cost – 82 million shares at September 29, 2018 and 80 million shares at September 30, 2017
|
(3,943
|
)
|
|
(3,674
|
)
|
||
Total Tyson Shareholders’ Equity
|
12,803
|
|
|
10,541
|
|
||
Noncontrolling Interests
|
8
|
|
|
18
|
|
||
Total Shareholders’ Equity
|
12,811
|
|
|
10,559
|
|
||
Total Liabilities and Shareholders’ Equity
|
$
|
29,109
|
|
|
$
|
28,066
|
|
|
|
|
|
|
Three years ended September 29, 2018
|
|
||||||||||||||
|
|
|
|
|
|
|
in millions
|
|
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|||
Class A Common Stock:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
378
|
|
|
$
|
38
|
|
|
364
|
|
|
$
|
36
|
|
|
346
|
|
|
$
|
35
|
|
Issuance of Class A common stock
|
—
|
|
|
—
|
|
|
14
|
|
|
2
|
|
|
18
|
|
|
1
|
|
|||
Balance at end of year
|
378
|
|
|
38
|
|
|
378
|
|
|
38
|
|
|
364
|
|
|
36
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Class B Common Stock:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning and end of year
|
70
|
|
|
7
|
|
|
70
|
|
|
7
|
|
|
70
|
|
|
7
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Capital in Excess of Par Value:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
4,378
|
|
|
|
|
4,355
|
|
|
|
|
4,307
|
|
||||||
Stock-based compensation
|
|
|
9
|
|
|
|
|
23
|
|
|
|
|
48
|
|
||||||
Balance at end of year
|
|
|
4,387
|
|
|
|
|
4,378
|
|
|
|
|
4,355
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Retained Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
9,776
|
|
|
|
|
8,348
|
|
|
|
|
6,813
|
|
||||||
Net income attributable to Tyson
|
|
|
3,024
|
|
|
|
|
1,774
|
|
|
|
|
1,768
|
|
||||||
Dividends
|
|
|
(458
|
)
|
|
|
|
(346
|
)
|
|
|
|
(233
|
)
|
||||||
Reclass from Accumulated Other Comprehensive Income (Loss), Net of Tax
(1)
|
|
|
(13
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||
Balance at end of year
|
|
|
12,329
|
|
|
|
|
9,776
|
|
|
|
|
8,348
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
16
|
|
|
|
|
(45
|
)
|
|
|
|
(90
|
)
|
||||||
Other Comprehensive Income (Loss)
|
|
|
(44
|
)
|
|
|
|
61
|
|
|
|
|
45
|
|
||||||
Reclass to Retained Earnings
(1)
|
|
|
13
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||
Balance at end of year
|
|
|
(15
|
)
|
|
|
|
16
|
|
|
|
|
(45
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Treasury Stock:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
80
|
|
|
(3,674
|
)
|
|
73
|
|
|
(3,093
|
)
|
|
47
|
|
|
(1,381
|
)
|
|||
Purchase of Class A common stock
|
6
|
|
|
(427
|
)
|
|
14
|
|
|
(860
|
)
|
|
32
|
|
|
(1,944
|
)
|
|||
Stock-based compensation
|
(4
|
)
|
|
158
|
|
|
(7
|
)
|
|
279
|
|
|
(6
|
)
|
|
232
|
|
|||
Balance at end of year
|
82
|
|
|
(3,943
|
)
|
|
80
|
|
|
(3,674
|
)
|
|
73
|
|
|
(3,093
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total Shareholders’ Equity Attributable to Tyson
|
|
|
$
|
12,803
|
|
|
|
|
$
|
10,541
|
|
|
|
|
$
|
9,608
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Equity Attributable to Noncontrolling Interests:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
$
|
18
|
|
|
|
|
$
|
16
|
|
|
|
|
$
|
15
|
|
|||
Net income attributable to noncontrolling interests
|
|
|
3
|
|
|
|
|
4
|
|
|
|
|
4
|
|
||||||
Distributions to noncontrolling interest
|
|
|
(3
|
)
|
|
|
|
(2
|
)
|
|
|
|
(3
|
)
|
||||||
Net foreign currency translation adjustment and other
|
|
|
(10
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||
Total Equity Attributable to Noncontrolling Interests
|
|
|
$
|
8
|
|
|
|
|
$
|
18
|
|
|
|
|
$
|
16
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total Shareholders’ Equity
|
|
|
$
|
12,811
|
|
|
|
|
$
|
10,559
|
|
|
|
|
$
|
9,624
|
|
|
Three years ended September 29, 2018
|
|
|||||||||
|
in millions
|
|
|||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Cash Flows From Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
3,027
|
|
|
$
|
1,778
|
|
|
$
|
1,772
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
723
|
|
|
642
|
|
|
617
|
|
|||
Amortization
|
220
|
|
|
119
|
|
|
88
|
|
|||
Deferred income taxes
|
(865
|
)
|
|
(39
|
)
|
|
84
|
|
|||
Gain on dispositions of businesses
|
(42
|
)
|
|
—
|
|
|
—
|
|
|||
Impairment of assets
|
175
|
|
|
214
|
|
|
45
|
|
|||
Share-based compensation expense
|
69
|
|
|
92
|
|
|
81
|
|
|||
Other, net
|
(58
|
)
|
|
(57
|
)
|
|
(34
|
)
|
|||
(Increase) decrease in accounts receivable
|
(2
|
)
|
|
(55
|
)
|
|
73
|
|
|||
(Increase) decrease in inventories
|
(207
|
)
|
|
(246
|
)
|
|
148
|
|
|||
Increase (decrease) in accounts payable
|
(44
|
)
|
|
61
|
|
|
(130
|
)
|
|||
Increase (decrease) in income taxes payable/receivable
|
111
|
|
|
55
|
|
|
(19
|
)
|
|||
Increase (decrease) in interest payable
|
(3
|
)
|
|
16
|
|
|
(1
|
)
|
|||
Net changes in other operating assets and liabilities
|
(141
|
)
|
|
19
|
|
|
(8
|
)
|
|||
Cash Provided by Operating Activities
|
2,963
|
|
|
2,599
|
|
|
2,716
|
|
|||
Cash Flows From Investing Activities:
|
|
|
|
|
|
||||||
Additions to property, plant and equipment
|
(1,200
|
)
|
|
(1,069
|
)
|
|
(695
|
)
|
|||
Purchases of marketable securities
|
(42
|
)
|
|
(79
|
)
|
|
(46
|
)
|
|||
Proceeds from sale of marketable securities
|
37
|
|
|
61
|
|
|
37
|
|
|||
Acquisitions, net of cash acquired
|
(1,474
|
)
|
|
(3,081
|
)
|
|
—
|
|
|||
Proceeds from sale of businesses
|
797
|
|
|
—
|
|
|
—
|
|
|||
Other, net
|
(24
|
)
|
|
4
|
|
|
20
|
|
|||
Cash Used for Investing Activities
|
(1,906
|
)
|
|
(4,164
|
)
|
|
(684
|
)
|
|||
Cash Flows From Financing Activities:
|
|
|
|
|
|
||||||
Payments on debt
|
(1,307
|
)
|
|
(3,159
|
)
|
|
(714
|
)
|
|||
Proceeds from issuance of long-term debt
|
1,148
|
|
|
5,444
|
|
|
1
|
|
|||
Borrowings on revolving credit facility
|
1,755
|
|
|
1,810
|
|
|
1,065
|
|
|||
Payments on revolving credit facility
|
(1,755
|
)
|
|
(2,110
|
)
|
|
(765
|
)
|
|||
Proceeds from issuance of commercial paper
|
21,024
|
|
|
8,138
|
|
|
—
|
|
|||
Repayments of commercial paper
|
(21,197
|
)
|
|
(7,360
|
)
|
|
—
|
|
|||
Payment of AdvancePierre TRA liability
|
—
|
|
|
(223
|
)
|
|
—
|
|
|||
Purchases of Tyson Class A common stock
|
(427
|
)
|
|
(860
|
)
|
|
(1,944
|
)
|
|||
Dividends
|
(431
|
)
|
|
(319
|
)
|
|
(216
|
)
|
|||
Stock options exercised
|
102
|
|
|
154
|
|
|
128
|
|
|||
Other, net
|
(14
|
)
|
|
15
|
|
|
68
|
|
|||
Cash (Used for) Provided by Financing Activities
|
(1,102
|
)
|
|
1,530
|
|
|
(2,377
|
)
|
|||
Effect of Exchange Rate Change on Cash
|
(3
|
)
|
|
4
|
|
|
6
|
|
|||
Decrease in Cash and Cash Equivalents
|
(48
|
)
|
|
(31
|
)
|
|
(339
|
)
|
|||
Cash and Cash Equivalents at Beginning of Year
|
318
|
|
|
349
|
|
|
688
|
|
|||
Cash and Cash Equivalents at End of Year
|
$
|
270
|
|
|
$
|
318
|
|
|
$
|
349
|
|
|
|
|
in millions
|
|
|||
|
2018
|
|
|
2017
|
|
||
Processed products
|
$
|
1,981
|
|
|
$
|
1,947
|
|
Livestock
|
1,006
|
|
|
874
|
|
||
Supplies and other
|
526
|
|
|
418
|
|
||
Total inventory
|
$
|
3,513
|
|
|
$
|
3,239
|
|
|
in millions
|
|
|||||
|
2018
|
|
|
2017
|
|
||
Accrued salaries, wages and benefits
|
$
|
549
|
|
|
$
|
673
|
|
Other
|
877
|
|
|
751
|
|
||
Total other current liabilities
|
$
|
1,426
|
|
|
$
|
1,424
|
|
|
in millions
|
|
||
Cash and cash equivalents
|
|
$
|
126
|
|
Accounts receivable
|
|
80
|
|
|
Inventories
|
|
272
|
|
|
Other current assets
|
|
5
|
|
|
Property, Plant and Equipment
|
|
302
|
|
|
Goodwill
|
|
2,980
|
|
|
Intangible Assets
|
|
1,515
|
|
|
Current debt
|
|
(1,148
|
)
|
|
Accounts payable
|
|
(114
|
)
|
|
Other current liabilities
|
|
(97
|
)
|
|
Tax receivable agreement (TRA) due to former shareholders
|
|
(223
|
)
|
|
Long-Term Debt
|
|
(33
|
)
|
|
Deferred Income Taxes
|
|
(455
|
)
|
|
Other Liabilities
|
|
(3
|
)
|
|
Net assets acquired
|
|
$
|
3,207
|
|
|
|
|
|
|
|
in millions
|
|
|
Intangible Asset Category
|
|
Type
|
|
Life in Years
|
|
Fair Value
|
||
Brands & Trademarks
|
|
Amortizable
|
|
Weighted Average of 15 years
|
|
$
|
390
|
|
Customer Relationships
|
|
Amortizable
|
|
Weighted Average of 15 years
|
|
1,125
|
|
|
Total identifiable intangible assets
|
|
|
|
|
|
$
|
1,515
|
|
|
|
in millions (unaudited)
|
|
|||||
|
|
2017
|
|
|
2016
|
|
||
Pro forma sales
|
|
$
|
39,330
|
|
|
$
|
38,406
|
|
Pro forma net income attributable to Tyson
|
|
1,837
|
|
|
1,686
|
|
||
Pro forma net income per diluted share attributable to Tyson
|
|
$
|
4.97
|
|
|
$
|
4.32
|
|
|
in millions
|
|
|
|
September 30, 2017
|
||
Assets held for sale:
|
|
||
Accounts receivable, net
|
$
|
2
|
|
Inventories
|
109
|
|
|
Net Property, Plant and Equipment
|
192
|
|
|
Other current assets
|
1
|
|
|
Goodwill
|
312
|
|
|
Intangible Assets, net
|
191
|
|
|
Total assets held for sale
|
$
|
807
|
|
Liabilities held for sale:
|
|
||
Accounts payable
|
$
|
1
|
|
Other current liabilities
|
3
|
|
|
Total liabilities held for sale
|
$
|
4
|
|
|
in millions
|
|
|||||
|
2018
|
|
|
2017
|
|
||
Land
|
$
|
154
|
|
|
$
|
138
|
|
Building and leasehold improvements
|
4,115
|
|
|
3,878
|
|
||
Machinery and equipment
|
7,720
|
|
|
7,111
|
|
||
Land improvements and other
|
357
|
|
|
323
|
|
||
Buildings and equipment under construction
|
689
|
|
|
492
|
|
||
|
13,035
|
|
|
11,942
|
|
||
Less accumulated depreciation
|
6,866
|
|
|
6,374
|
|
||
Net property, plant and equipment
|
$
|
6,169
|
|
|
$
|
5,568
|
|
in millions
|
|
||||||||||||||||||||||||||
|
Beef
|
|
|
Pork
|
|
|
Chicken
|
|
|
Prepared
Foods
|
|
|
Other
(a)
|
|
|
Unallocated
|
|
|
Consolidated
|
|
|||||||
Balance at October 1, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Goodwill
|
$
|
1,236
|
|
|
$
|
423
|
|
|
$
|
1,565
|
|
|
$
|
4,005
|
|
|
$
|
57
|
|
|
$
|
—
|
|
|
$
|
7,286
|
|
Accumulated impairment losses
|
(560
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57
|
)
|
|
—
|
|
|
(617
|
)
|
|||||||
|
$
|
676
|
|
|
$
|
423
|
|
|
$
|
1,565
|
|
|
$
|
4,005
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fiscal 2017 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Acquisition
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,982
|
|
|
$
|
2,982
|
|
Reclass to assets held for sale
|
—
|
|
|
—
|
|
|
—
|
|
|
(327
|
)
|
|
—
|
|
|
—
|
|
|
(327
|
)
|
|||||||
Balance at September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Goodwill
|
1,236
|
|
|
423
|
|
|
1,565
|
|
|
3,678
|
|
|
57
|
|
|
2,982
|
|
|
9,941
|
|
|||||||
Accumulated impairment losses
|
(560
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57
|
)
|
|
—
|
|
|
(617
|
)
|
|||||||
|
$
|
676
|
|
|
$
|
423
|
|
|
$
|
1,565
|
|
|
$
|
3,678
|
|
|
$
|
—
|
|
|
$
|
2,982
|
|
|
$
|
9,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fiscal 2018 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Acquisition
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
365
|
|
|
$
|
82
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
447
|
|
Measurement period adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||||||
Allocation of acquired goodwill
|
—
|
|
|
—
|
|
|
568
|
|
|
2,412
|
|
|
—
|
|
|
(2,980
|
)
|
|
—
|
|
|||||||
Reclass to assets held for sale
|
—
|
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|||||||
Balance at September 29, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Goodwill
|
1,236
|
|
|
423
|
|
|
2,498
|
|
|
6,142
|
|
|
57
|
|
|
—
|
|
|
10,356
|
|
|||||||
Accumulated impairment losses
|
(560
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57
|
)
|
|
—
|
|
|
(617
|
)
|
|||||||
|
$
|
676
|
|
|
$
|
423
|
|
|
$
|
2,498
|
|
|
$
|
6,142
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,739
|
|
in millions
|
|
||||||
|
2018
|
|
|
2017
|
|
||
Amortizable intangible assets:
|
|
|
|
||||
Brands and trademarks
|
$
|
950
|
|
|
$
|
738
|
|
Customer relationships
|
1,793
|
|
|
1,639
|
|
||
Supply Arrangements
|
358
|
|
|
—
|
|
||
Patents, intellectual property and other
|
107
|
|
|
114
|
|
||
Land use rights
|
9
|
|
|
9
|
|
||
Total gross amortizable intangible assets
|
$
|
3,217
|
|
|
$
|
2,500
|
|
Less accumulated amortization
|
536
|
|
|
335
|
|
||
Total net amortizable intangible assets
|
$
|
2,681
|
|
|
$
|
2,165
|
|
Brands and trademarks not subject to amortization
|
4,078
|
|
|
4,078
|
|
||
Total intangible assets
|
$
|
6,759
|
|
|
$
|
6,243
|
|
in millions
|
|
|||||
|
2018
|
|
2017
|
|
||
Cost of Sales
|
$
|
—
|
|
$
|
35
|
|
Selling, General and Administrative expenses
|
59
|
|
115
|
|
||
Total restructuring and related charges, pretax
|
$
|
59
|
|
$
|
150
|
|
|
in millions
|
|
||||||||||
|
2017 charges
|
|
2018 charges
|
|
Estimated future charges
|
|
Total estimated Financial Fitness Program charges
|
|
||||
Beef
|
$
|
8
|
|
$
|
4
|
|
$
|
6
|
|
$
|
18
|
|
Pork
|
3
|
|
1
|
|
3
|
|
7
|
|
||||
Chicken
|
56
|
|
30
|
|
16
|
|
102
|
|
||||
Prepared Foods
|
82
|
|
24
|
|
19
|
|
125
|
|
||||
Other
|
1
|
|
—
|
|
—
|
|
1
|
|
||||
Total restructuring and related charges, pretax
|
$
|
150
|
|
$
|
59
|
|
$
|
44
|
|
$
|
253
|
|
in millions
|
|
||||||||||||||
|
Liability as of September 30, 2017
|
Restructuring charges
|
Payments
|
Other
|
Liability as of September 29, 2018
|
||||||||||
Severance and employee related costs
|
$
|
47
|
|
$
|
—
|
|
$
|
37
|
|
$
|
—
|
|
$
|
10
|
|
Contract termination
|
22
|
|
—
|
|
21
|
|
1
|
|
—
|
|
|||||
Total
|
$
|
69
|
|
$
|
—
|
|
$
|
58
|
|
$
|
1
|
|
$
|
10
|
|
|
|
|
in millions
|
|
|||
|
2018
|
|
|
2017
|
|
||
Revolving credit facility
|
$
|
—
|
|
|
$
|
—
|
|
Commercial Paper
|
605
|
|
|
778
|
|
||
Senior notes:
|
|
|
|
||||
7.00% Notes due May 2018
|
—
|
|
|
120
|
|
||
Notes due May 2019 (2.76% at 09/29/2018)
|
300
|
|
|
300
|
|
||
2.65% Notes due August 2019
|
1,000
|
|
|
1,000
|
|
||
Notes due June 2020 (2.87% at 09/29/2018)
|
350
|
|
|
350
|
|
||
Notes due August 2020 (2.76% at 09/29/2018)
|
400
|
|
|
400
|
|
||
4.10% Notes due September 2020
|
281
|
|
|
282
|
|
||
2.25% Notes due August 2021
|
500
|
|
|
500
|
|
||
4.50% Senior notes due June 2022
|
1,000
|
|
|
1,000
|
|
||
3.90% Notes due September 2023 (2023 Notes)
|
400
|
|
|
—
|
|
||
3.95% Notes due August 2024
|
1,250
|
|
|
1,250
|
|
||
3.55% Notes due June 2027
|
1,350
|
|
|
1,350
|
|
||
7.00% Notes due January 2028
|
18
|
|
|
18
|
|
||
6.13% Notes due November 2032
|
161
|
|
|
162
|
|
||
4.88% Notes due August 2034
|
500
|
|
|
500
|
|
||
5.15% Notes due August 2044
|
500
|
|
|
500
|
|
||
4.55% Notes due June 2047
|
750
|
|
|
750
|
|
||
5.10% Notes due September 2048 (2048 Notes)
|
500
|
|
|
—
|
|
||
Discount on senior notes
|
(15
|
)
|
|
(15
|
)
|
||
Term loans:
|
|
|
|
||||
Tranche B due August 2019
|
—
|
|
|
427
|
|
||
Tranche B due August 2020
|
—
|
|
|
500
|
|
||
Other
|
73
|
|
|
81
|
|
||
Unamortized debt issuance costs
|
(50
|
)
|
|
(50
|
)
|
||
Total debt
|
9,873
|
|
|
10,203
|
|
||
Less current debt
|
1,911
|
|
|
906
|
|
||
Total long-term debt
|
$
|
7,962
|
|
|
$
|
9,297
|
|
|
|
|
|
|
|
|
|
|
|
in millions
|
|
||||||||||
|
|
September 29, 2018
|
|
September 30, 2017
|
|
October 1, 2016
|
|||||||||||||||
|
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|||||||||
Shares repurchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Under share repurchase program
|
|
4.9
|
|
|
$
|
350
|
|
|
12.5
|
|
|
$
|
797
|
|
|
30.8
|
|
|
$
|
1,868
|
|
To fund certain obligations under equity compensation plans
|
|
1.0
|
|
|
77
|
|
|
1.0
|
|
|
63
|
|
|
1.3
|
|
|
76
|
|
|||
Total share repurchases
|
|
5.9
|
|
|
$
|
427
|
|
|
13.5
|
|
|
$
|
860
|
|
|
32.1
|
|
|
$
|
1,944
|
|
|
|
|
|
|
in millions
|
|
|||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Federal
|
$
|
(426
|
)
|
|
$
|
755
|
|
|
$
|
710
|
|
State
|
118
|
|
|
81
|
|
|
118
|
|
|||
Foreign
|
26
|
|
|
14
|
|
|
(2
|
)
|
|||
|
$
|
(282
|
)
|
|
$
|
850
|
|
|
$
|
826
|
|
|
|
|
|
|
|
||||||
Current
|
$
|
583
|
|
|
$
|
889
|
|
|
$
|
742
|
|
Deferred
|
(865
|
)
|
|
(39
|
)
|
|
84
|
|
|||
|
$
|
(282
|
)
|
|
$
|
850
|
|
|
$
|
826
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||
|
2018
|
|
2017
|
||||||||||||
|
Deferred Tax
|
|
Deferred Tax
|
||||||||||||
|
Assets
|
|
|
Liabilities
|
|
|
Assets
|
|
|
Liabilities
|
|
||||
Property, plant and equipment
|
$
|
—
|
|
|
$
|
714
|
|
|
$
|
—
|
|
|
$
|
900
|
|
Intangible assets
|
—
|
|
|
1,533
|
|
|
—
|
|
|
2,424
|
|
||||
Accrued expenses
|
230
|
|
|
—
|
|
|
400
|
|
|
—
|
|
||||
Net operating loss and other carryforwards
|
92
|
|
|
—
|
|
|
97
|
|
|
—
|
|
||||
Other
|
98
|
|
|
193
|
|
|
204
|
|
|
273
|
|
||||
|
$
|
420
|
|
|
$
|
2,440
|
|
|
$
|
701
|
|
|
$
|
3,597
|
|
Valuation allowance
|
$
|
(79
|
)
|
|
|
|
$
|
(75
|
)
|
|
|
||||
Net deferred tax liability
|
|
|
$
|
2,099
|
|
|
|
|
$
|
2,971
|
|
|
|
|
|
|
in millions
|
|
|||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Balance as of the beginning of the year
|
$
|
316
|
|
|
$
|
305
|
|
|
$
|
306
|
|
Increases related to current year tax positions
|
19
|
|
|
38
|
|
|
35
|
|
|||
Increases related to prior year tax positions
|
8
|
|
|
5
|
|
|
31
|
|
|||
Increase related to AdvancePierre acquisition
|
—
|
|
|
9
|
|
|
—
|
|
|||
Reductions related to prior year tax positions
|
(18
|
)
|
|
(27
|
)
|
|
(48
|
)
|
|||
Reductions related to settlements
|
(8
|
)
|
|
(4
|
)
|
|
(7
|
)
|
|||
Reductions related to expirations of statutes of limitations
|
(9
|
)
|
|
(10
|
)
|
|
(12
|
)
|
|||
Balance as of the end of the year
|
$
|
308
|
|
|
$
|
316
|
|
|
$
|
305
|
|
|
in millions, except per share data
|
|
|||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Numerator:
|
|
|
|
|
|
||||||
Net income
|
$
|
3,027
|
|
|
$
|
1,778
|
|
|
$
|
1,772
|
|
Less: Net income (loss) attributable to noncontrolling interests
|
3
|
|
|
4
|
|
|
4
|
|
|||
Net income attributable to Tyson
|
3,024
|
|
|
1,774
|
|
|
1,768
|
|
|||
Less dividends declared:
|
|
|
|
|
|
||||||
Class A
|
378
|
|
|
285
|
|
|
192
|
|
|||
Class B
|
80
|
|
|
61
|
|
|
41
|
|
|||
Undistributed earnings
|
$
|
2,566
|
|
|
$
|
1,428
|
|
|
$
|
1,535
|
|
|
|
|
|
|
|
||||||
Class A undistributed earnings
|
$
|
2,115
|
|
|
$
|
1,177
|
|
|
$
|
1,279
|
|
Class B undistributed earnings
|
451
|
|
|
251
|
|
|
256
|
|
|||
Total undistributed earnings
|
$
|
2,566
|
|
|
$
|
1,428
|
|
|
$
|
1,535
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Denominator for basic earnings per share:
|
|
|
|
|
|
||||||
Class A weighted average shares
|
295
|
|
|
296
|
|
|
315
|
|
|||
Class B weighted average shares, and shares under if-converted method for diluted earnings per share
|
70
|
|
|
70
|
|
|
70
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Stock options and restricted stock
|
4
|
|
|
4
|
|
|
5
|
|
|||
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversions
|
369
|
|
|
370
|
|
|
390
|
|
|||
|
|
|
|
|
|
||||||
Net Income Per Share Attributable to Tyson:
|
|
|
|
|
|
||||||
Class A Basic
|
$
|
8.44
|
|
|
$
|
4.94
|
|
|
$
|
4.67
|
|
Class B Basic
|
$
|
7.59
|
|
|
$
|
4.45
|
|
|
$
|
4.24
|
|
Diluted
|
$
|
8.19
|
|
|
$
|
4.79
|
|
|
$
|
4.53
|
|
Dividends Declared Per Share:
|
|
|
|
|
|
||||||
Class A
|
$
|
1.275
|
|
|
$
|
0.975
|
|
|
$
|
0.650
|
|
Class B
|
$
|
1.148
|
|
|
$
|
0.878
|
|
|
$
|
0.585
|
|
|
|
|
|
in millions, except soy meal tons
|
|
|||||
|
|
Metric
|
|
September 29, 2018
|
|
|
September 30, 2017
|
|
||
Commodity:
|
|
|
|
|
|
|
||||
Corn
|
|
Bushels
|
|
112
|
|
|
55
|
|
||
Soy Meal
|
|
Tons
|
|
651,700
|
|
|
475,200
|
|
||
Live Cattle
|
|
Pounds
|
|
105
|
|
|
211
|
|
||
Lean Hogs
|
|
Pounds
|
|
39
|
|
|
240
|
|
||
Foreign Currency
|
|
United States dollar
|
|
$
|
89
|
|
|
$
|
58
|
|
Interest rate swap
|
|
Average monthly debt
|
|
$
|
400
|
|
|
$
|
—
|
|
•
|
Cash Flow Hedges – include certain commodity forward and option contracts of forecasted purchases (i.e., grains), interest rate swaps, and certain foreign exchange forward contracts.
|
•
|
Fair Value Hedges – include certain commodity forward contracts of firm commitments (i.e., livestock).
|
|
|
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||||||||
|
Gain (Loss)
Recognized in OCI
on Derivatives
|
|
|
Consolidated
Statements of Income
Classification
|
|
Gain (Loss)
Reclassified from
OCI to Earnings
|
|
||||||||||||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
||||||
Cash Flow Hedge – Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity contracts
|
$
|
(21
|
)
|
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
Cost of Sales
|
|
$
|
(12
|
)
|
|
$
|
(4
|
)
|
|
$
|
1
|
|
Interest rate swaps
|
1
|
|
|
—
|
|
|
—
|
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
(20
|
)
|
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
|
|
$
|
(12
|
)
|
|
$
|
(4
|
)
|
|
$
|
1
|
|
|
|
in millions
|
|
|||||||||||
|
|
Consolidated
Statements of Income
Classification
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Gain (Loss) on forwards
|
|
Cost of Sales
|
|
$
|
12
|
|
|
$
|
(20
|
)
|
|
$
|
89
|
|
Gain (Loss) on purchase contract
|
|
Cost of Sales
|
|
(12
|
)
|
|
20
|
|
|
(89
|
)
|
|
|
|
|
|
|
in millions
|
|
|||||||
|
|
Consolidated
Statements of Income
Classification
|
|
Gain (Loss)
Recognized
in Earnings
|
|
|||||||||
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
||||||
Commodity contracts
|
|
Sales
|
|
$
|
18
|
|
|
$
|
111
|
|
|
$
|
(73
|
)
|
Commodity contracts
|
|
Cost of Sales
|
|
(33
|
)
|
|
(95
|
)
|
|
17
|
|
|||
Foreign exchange contracts
|
|
Other Income/Expense
|
|
(3
|
)
|
|
—
|
|
|
2
|
|
|||
Total
|
|
|
|
$
|
(18
|
)
|
|
$
|
16
|
|
|
$
|
(54
|
)
|
•
|
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.
|
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||||
September 29, 2018
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Netting (a)
|
|
|
Total
|
|
|||||
Other Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Designated as hedges
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
1
|
|
Undesignated
|
—
|
|
|
44
|
|
|
—
|
|
|
(19
|
)
|
|
25
|
|
|||||
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Other assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-current
|
—
|
|
|
46
|
|
|
51
|
|
|
—
|
|
|
97
|
|
|||||
Deferred compensation assets
|
21
|
|
|
295
|
|
|
—
|
|
|
—
|
|
|
316
|
|
|||||
Total assets
|
$
|
21
|
|
|
$
|
388
|
|
|
$
|
51
|
|
|
$
|
(20
|
)
|
|
$
|
440
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Designated as hedges
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
—
|
|
Undesignated
|
—
|
|
|
35
|
|
|
—
|
|
|
(30
|
)
|
|
5
|
|
|||||
Total liabilities
|
$
|
—
|
|
|
$
|
43
|
|
|
$
|
—
|
|
|
$
|
(38
|
)
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
September 30, 2017
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Netting (a)
|
|
|
Total
|
|
|||||
Other Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Designated as hedges
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
9
|
|
Undesignated
|
—
|
|
|
24
|
|
|
—
|
|
|
(3
|
)
|
|
21
|
|
|||||
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current
|
—
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
3
|
|
|||||
Other Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-current
|
—
|
|
|
45
|
|
|
50
|
|
|
—
|
|
|
95
|
|
|||||
Deferred Compensation assets
|
23
|
|
|
272
|
|
|
—
|
|
|
—
|
|
|
295
|
|
|||||
Total assets
|
$
|
23
|
|
|
$
|
353
|
|
|
$
|
51
|
|
|
$
|
(4
|
)
|
|
$
|
423
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Designated as hedges
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
(9
|
)
|
|
$
|
—
|
|
Undesignated
|
—
|
|
|
21
|
|
|
—
|
|
|
(17
|
)
|
|
4
|
|
|||||
Total liabilities
|
$
|
—
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
(26
|
)
|
|
$
|
4
|
|
(a)
|
Our derivative assets and liabilities are presented in our Consolidated Balance Sheets on a net basis when a legally enforceable master netting arrangement exists between the counterparty to a derivative contract and us. Additionally, at
September 29, 2018
, and
September 30, 2017
, we had
$18 million
and
$22 million
, respectively, of cash collateral posted with various counterparties where master netting arrangements exist and held no cash collateral.
|
|
|
|
in millions
|
|
|||
|
September 29, 2018
|
|
|
September 30, 2017
|
|
||
Balance at beginning of year
|
$
|
51
|
|
|
$
|
57
|
|
Total realized and unrealized gains (losses):
|
|
|
|
||||
Included in earnings
|
—
|
|
|
—
|
|
||
Included in other comprehensive income (loss)
|
(1
|
)
|
|
(1
|
)
|
||
Purchases
|
20
|
|
|
13
|
|
||
Issuances
|
—
|
|
|
—
|
|
||
Settlements
|
(19
|
)
|
|
(18
|
)
|
||
Balance at end of year
|
$
|
51
|
|
|
$
|
51
|
|
Total gains (losses) for the periods included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of year
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||||||||
|
September 29, 2018
|
|
September 30, 2017
|
||||||||||||||||||||
|
Amortized
Cost Basis
|
|
|
Fair
Value
|
|
|
Unrealized
Gain/(Loss)
|
|
|
Amortized
Cost Basis
|
|
|
Fair
Value
|
|
|
Unrealized
Gain/(Loss)
|
|
||||||
Available for Sale Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Treasury and Agency
|
$
|
48
|
|
|
$
|
47
|
|
|
$
|
(1
|
)
|
|
$
|
47
|
|
|
$
|
47
|
|
|
$
|
—
|
|
Corporate and Asset-Backed
|
52
|
|
|
51
|
|
|
(1
|
)
|
|
51
|
|
|
51
|
|
|
—
|
|
|
|
|
|
|
in millions
|
|
|||||||||
|
September 29, 2018
|
|
September 30, 2017
|
||||||||||||
|
Fair
Value
|
|
|
Carrying
Value
|
|
|
Fair
Value
|
|
|
Carrying
Value
|
|
||||
Total Debt
|
$
|
9,775
|
|
|
$
|
9,873
|
|
|
$
|
10,591
|
|
|
$
|
10,203
|
|
|
Shares Under
Option
|
|
|
Weighted
Average Exercise
Price Per Share
|
|
|
Weighted Average
Remaining
Contractual Life
(in Years)
|
|
Aggregate
Intrinsic Value
(in millions)
|
|
||
Outstanding, September 30, 2017
|
7,547,518
|
|
|
$
|
40.54
|
|
|
|
|
|
||
Exercised
|
(2,615,963
|
)
|
|
38.67
|
|
|
|
|
|
|||
Forfeited or expired
|
(120,897
|
)
|
|
60.80
|
|
|
|
|
|
|||
Granted
|
1,183,490
|
|
|
78.16
|
|
|
|
|
|
|||
Outstanding, September 29, 2018
|
5,994,148
|
|
|
48.37
|
|
|
6.7
|
|
$
|
88
|
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable, September 29, 2018
|
3,793,715
|
|
|
$
|
37.63
|
|
|
5.6
|
|
$
|
84
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Expected life (in years)
|
5.9
|
|
|
5.4
|
|
|
6.4
|
|
Risk-free interest rate
|
2.1
|
%
|
|
1.8
|
%
|
|
1.6
|
%
|
Expected volatility
|
23.5
|
%
|
|
24.7
|
%
|
|
24.8
|
%
|
Expected dividend yield
|
1.5
|
%
|
|
1.3% - 1.4%
|
|
|
1.2% - 2.6%
|
|
|
Number of Shares
|
|
|
Weighted
Average Grant-
Date Fair Value
Per Share
|
|
|
Weighted Average
Remaining
Contractual Life
(in Years)
|
|
Aggregate
Intrinsic Value
(in millions)
|
|
||
Nonvested, September 30, 2017
|
1,715,100
|
|
|
$
|
51.21
|
|
|
|
|
|
||
Granted
|
545,015
|
|
|
77.25
|
|
|
|
|
|
|||
Dividends
|
27,033
|
|
|
61.37
|
|
|
|
|
|
|||
Vested
|
(608,371
|
)
|
|
45.02
|
|
|
|
|
|
|||
Forfeited
|
(178,801
|
)
|
|
56.94
|
|
|
|
|
|
|||
Nonvested, September 29, 2018
|
1,499,976
|
|
|
$
|
62.68
|
|
|
1.3
|
|
$
|
89
|
|
|
Number of Shares
|
|
|
Weighted
Average Grant-
Date Fair Value
Per Share
|
|
|
Weighted Average
Remaining
Contractual Life
(in Years)
|
|
Aggregate
Intrinsic Value
(in millions)
|
|
||
Nonvested, September 30, 2017
|
2,157,115
|
|
|
$
|
38.92
|
|
|
|
|
|
||
Granted
|
668,246
|
|
|
62.92
|
|
|
|
|
|
|||
Vested
|
(396,468
|
)
|
|
27.95
|
|
|
|
|
|
|||
Forfeited
|
(232,594
|
)
|
|
46.40
|
|
|
|
|
|
|||
Nonvested, September 29, 2018
|
2,196,299
|
|
|
$
|
47.41
|
|
|
1.0
|
|
$
|
131
|
|
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||||||||
|
Pension Benefits
|
|
Other Postretirement
|
||||||||||||||||||||
|
Qualified
|
|
Non-Qualified
|
|
Benefits
|
||||||||||||||||||
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||||
Change in benefit obligation
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Benefit obligation at beginning of year
|
$
|
1,477
|
|
|
$
|
1,554
|
|
|
$
|
230
|
|
|
$
|
222
|
|
|
$
|
33
|
|
|
$
|
36
|
|
Service cost
|
—
|
|
|
2
|
|
|
7
|
|
|
11
|
|
|
1
|
|
|
1
|
|
||||||
Interest cost
|
55
|
|
|
57
|
|
|
8
|
|
|
8
|
|
|
1
|
|
|
1
|
|
||||||
Curtailment
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Plan amendments
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Actuarial (gain)/loss
|
(60
|
)
|
|
(52
|
)
|
|
(10
|
)
|
|
1
|
|
|
(5
|
)
|
|
(1
|
)
|
||||||
Benefits paid
|
(80
|
)
|
|
(84
|
)
|
|
(15
|
)
|
|
(12
|
)
|
|
(2
|
)
|
|
(4
|
)
|
||||||
Benefit obligation at end of year
|
1,392
|
|
|
1,477
|
|
|
220
|
|
|
230
|
|
|
28
|
|
|
33
|
|
||||||
Change in plan assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fair value of plan assets at beginning of year
|
1,512
|
|
|
1,440
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Actual return on plan assets
|
4
|
|
|
115
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Employer contributions
|
14
|
|
|
41
|
|
|
15
|
|
|
12
|
|
|
2
|
|
|
4
|
|
||||||
Benefits paid
|
(80
|
)
|
|
(84
|
)
|
|
(15
|
)
|
|
(12
|
)
|
|
(2
|
)
|
|
(4
|
)
|
||||||
Fair value of plan assets at end of year
|
1,450
|
|
|
1,512
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Funded status
|
$
|
58
|
|
|
$
|
35
|
|
|
$
|
(220
|
)
|
|
$
|
(230
|
)
|
|
$
|
(28
|
)
|
|
$
|
(33
|
)
|
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||||||||
|
Pension Benefits
|
|
Other Postretirement
|
||||||||||||||||||||
|
Qualified
|
|
Non-Qualified
|
|
Benefits
|
||||||||||||||||||
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||||
Other assets
|
$
|
61
|
|
|
$
|
44
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other current liabilities
|
(3
|
)
|
|
—
|
|
|
(12
|
)
|
|
(11
|
)
|
|
(3
|
)
|
|
(3
|
)
|
||||||
Other liabilities
|
—
|
|
|
(9
|
)
|
|
(208
|
)
|
|
(219
|
)
|
|
(25
|
)
|
|
(30
|
)
|
||||||
Total assets (liabilities)
|
$
|
58
|
|
|
$
|
35
|
|
|
$
|
(220
|
)
|
|
$
|
(230
|
)
|
|
$
|
(28
|
)
|
|
$
|
(33
|
)
|
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||||||||
|
Pension Benefits
|
|
Other Postretirement
|
||||||||||||||||||||
|
Qualified
|
|
Non-Qualified
|
|
Benefits
|
||||||||||||||||||
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||||
Accumulated other comprehensive (income)/loss:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Actuarial (gain) loss
|
$
|
(96
|
)
|
|
$
|
(94
|
)
|
|
$
|
31
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Prior service (credit) cost (a)
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
(49
|
)
|
|
(73
|
)
|
||||||
Total accumulated other comprehensive (income)/loss:
|
$
|
(96
|
)
|
|
$
|
(94
|
)
|
|
$
|
36
|
|
|
$
|
50
|
|
|
$
|
(49
|
)
|
|
$
|
(73
|
)
|
(a)
|
The change in prior service credit is primarily attributed to the plan amendments to the other postretirement benefits as noted within the change in benefit obligation with remainder of the change being immaterial.
|
|
|
|
|
|
in millions
|
|
|||||||||
|
Pension Benefits
|
||||||||||||||
|
Qualified
|
|
Non-Qualified
|
||||||||||||
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||
Projected benefit obligation
|
$
|
49
|
|
|
$
|
361
|
|
|
$
|
220
|
|
|
$
|
230
|
|
Accumulated benefit obligation
|
49
|
|
|
361
|
|
|
219
|
|
|
220
|
|
||||
Fair value of plan assets
|
45
|
|
|
352
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||||||||||||||
|
Pension Benefits
|
|
Other Postretirement
|
||||||||||||||||||||||||||||||||
|
Qualified
|
|
Non-Qualified
|
|
Benefits
|
||||||||||||||||||||||||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||||||||
Service cost
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
8
|
|
|
$
|
7
|
|
|
$
|
11
|
|
|
$
|
6
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
55
|
|
|
57
|
|
|
65
|
|
|
8
|
|
|
8
|
|
|
9
|
|
|
1
|
|
|
1
|
|
|
3
|
|
|||||||||
Expected return on plan assets
|
(62
|
)
|
|
(59
|
)
|
|
(65
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Amortization of prior service cost
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(25
|
)
|
|
(25
|
)
|
|
(20
|
)
|
|||||||||
Recognized actuarial loss (gain), net
|
—
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|
6
|
|
|
5
|
|
|
(5
|
)
|
|
(1
|
)
|
|
(15
|
)
|
|||||||||
Recognized settlement loss (gain)
|
—
|
|
|
2
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Net periodic benefit cost (credit)
|
$
|
(6
|
)
|
|
$
|
3
|
|
|
$
|
(2
|
)
|
|
$
|
19
|
|
|
$
|
25
|
|
|
$
|
20
|
|
|
$
|
(28
|
)
|
|
$
|
(24
|
)
|
|
$
|
(31
|
)
|
|
Pension Benefits
|
|
Other Postretirement
|
|||||||||||||||||||||||
|
Qualified
|
|
Non-Qualified
|
|
Benefits
|
|||||||||||||||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Discount rate to determine net periodic benefit cost
|
3.85
|
%
|
|
3.72
|
%
|
|
4.47
|
%
|
|
3.88
|
%
|
|
3.77
|
%
|
|
4.41
|
%
|
|
3.39
|
%
|
|
3.09
|
%
|
|
3.54
|
%
|
Discount rate to determine benefit obligations
|
4.26
|
%
|
|
3.85
|
%
|
|
3.72
|
%
|
|
4.31
|
%
|
|
3.88
|
%
|
|
3.77
|
%
|
|
4.11
|
%
|
|
3.39
|
%
|
|
3.09
|
%
|
Rate of compensation increase
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
2.53
|
%
|
|
2.44
|
%
|
|
2.46
|
%
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
Expected return on plan assets
|
4.20
|
%
|
|
4.21
|
%
|
|
4.15
|
%
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
|
|
in millions
|
|
|||
|
One Percentage Point Increase
|
|
One Percentage Point Decrease
|
||||
Effect on postretirement benefit obligation
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
2018
|
|
|
2017
|
|
|
Target Asset
Allocation
|
|
Cash
|
0.9
|
%
|
|
1.1
|
%
|
|
—
|
%
|
Fixed income securities
|
99.1
|
|
|
87.4
|
|
|
100.0
|
|
United States stock funds
|
—
|
|
|
3.5
|
|
|
—
|
|
International stock funds
|
—
|
|
|
5.6
|
|
|
—
|
|
Real estate
|
—
|
|
|
2.4
|
|
|
—
|
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
in millions
|
|
|||||||||||||
September 29, 2018
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
||||
Cash and cash equivalents
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12
|
|
Insurance contract at contract value (a)
|
—
|
|
|
—
|
|
|
30
|
|
|
30
|
|
||||
Total assets in fair value hierarchy
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
30
|
|
|
$
|
42
|
|
Investments measured at net asset value:
|
|
|
|
|
|
|
|
||||||||
Common collective trusts (b)
|
|
|
|
|
|
|
1,408
|
|
|||||||
Total plan assets
|
|
|
|
|
|
|
$
|
1,450
|
|
|
in millions
|
|
|||||||||||||
September 30, 2017
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
||||
Cash and cash equivalents
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15
|
|
Insurance contract at contract value (a)
|
—
|
|
|
—
|
|
|
28
|
|
|
28
|
|
||||
Total assets in fair value hierarchy
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
28
|
|
|
$
|
43
|
|
Investments measured at net asset value:
|
|
|
|
|
|
|
|
||||||||
Common collective trusts (b)
|
|
|
|
|
|
|
1,469
|
|
|||||||
Total plan assets
|
|
|
|
|
|
|
$
|
1,512
|
|
(a)
|
We classify insurance contracts as Level 3 as there is limited activity or less observable inputs into valuation models, including current interest rates and estimated prepayment, default and recovery rates on the underlying portfolio or structured investment vehicle. The insurance contracts are valued using the plan’s own assumptions about the assumptions market participants would use in pricing the assets based on the best information available, such as investment manager pricing. Significant changes to assumptions or unobservable inputs in the valuation of our Level 3 instruments would not have a significant impact to our consolidated financial statements.
|
(b)
|
Funds that are measured at fair value using the net asset value (NAV) per share practical expedient have not been categorized in the fair value hierarchy. The amounts presented above are intended to permit reconciliation of the fair value hierarchy to the fair value of total plan assets in order to determine the amounts included in Other Assets and Other Liabilities in the Consolidated Balance Sheets.
|
|
|
|
|
in millions
|
|
|||
|
|
Insurance contract
|
|
|
Total
|
|
||
September 30, 2017
|
|
$
|
28
|
|
|
$
|
28
|
|
Actual return on plan assets:
|
|
|
|
|
|
|||
Assets still held at reporting date
|
|
2
|
|
|
2
|
|
||
Assets sold during the period
|
|
—
|
|
|
—
|
|
||
Purchases, sales and settlements, net
|
|
—
|
|
|
—
|
|
||
Transfers in and/or out of Level 3
|
|
—
|
|
|
—
|
|
||
September 29, 2018
|
|
$
|
30
|
|
|
$
|
30
|
|
|
|
|
|
|
in millions
|
|
|||||
|
Pension Benefits
|
|
Other Postretirement
|
||||||||
|
Qualified
|
|
Non-Qualified
|
|
Benefits
|
||||||
2019
|
$
|
122
|
|
|
$
|
12
|
|
|
$
|
3
|
|
2020
|
79
|
|
|
12
|
|
|
3
|
|
|||
2021
|
80
|
|
|
13
|
|
|
3
|
|
|||
2022
|
81
|
|
|
13
|
|
|
3
|
|
|||
2023
|
82
|
|
|
14
|
|
|
2
|
|
|||
2024-2028
|
417
|
|
|
69
|
|
|
11
|
|
|
|
|
PPA Zone Status
|
|
FIP/RP Status
|
Contributions (in millions)
|
|
Surcharge Imposed
|
|
|
|||||
Pension Fund Plan Name
|
EIN/Pension Plan Number
|
|
2018
|
|
2017
|
|
Implemented
|
2018
|
2017
|
2016
|
|
2018
|
|
Expiration Date of Collective Bargaining Agreement
(a)
|
|
Bakery and Confectionery Union and Industry International Pension Fund
|
52-6118572/001
|
|
Red
|
|
Red
|
|
Nov 2012
|
|
$2
|
$2
|
$1
|
|
10%
|
|
October 2015
|
|
|
|
in millions
|
|
|||
|
2018
(1)
|
|
|
2017
|
|
||
Accumulated other comprehensive income (loss), net of taxes:
|
|
|
|
||||
Unrealized net hedging loss
|
$
|
(9
|
)
|
|
$
|
(2
|
)
|
Unrealized net loss on investments
|
(1
|
)
|
|
—
|
|
||
Currency translation adjustment
|
(84
|
)
|
|
(53
|
)
|
||
Postretirement benefits reserve adjustments
|
79
|
|
|
71
|
|
||
Total accumulated other comprehensive income (loss)
|
$
|
(15
|
)
|
|
$
|
16
|
|
|
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||||||||
|
|
Before Tax
|
Tax
|
After Tax
|
|
Before Tax
|
Tax
|
After Tax
|
|
Before Tax
|
Tax
|
After Tax
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Derivatives accounted for as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
(Gain) loss reclassified to interest expense
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
(Gain) loss reclassified to cost of sales
|
|
12
|
|
(4
|
)
|
8
|
|
|
4
|
|
(2
|
)
|
2
|
|
|
(1
|
)
|
1
|
|
—
|
|
|||||||||
Unrealized gain (loss)
|
|
(20
|
)
|
5
|
|
(15
|
)
|
|
(3
|
)
|
1
|
|
(2
|
)
|
|
(1
|
)
|
—
|
|
(1
|
)
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Unrealized gain (loss)
|
|
(2
|
)
|
1
|
|
(1
|
)
|
|
(1
|
)
|
—
|
|
(1
|
)
|
|
(1
|
)
|
1
|
|
—
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Currency translation:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Translation adjustment
|
|
(38
|
)
|
2
|
|
(36
|
)
|
|
6
|
|
—
|
|
6
|
|
|
5
|
|
(1
|
)
|
4
|
|
|||||||||
Translation loss reclassified to cost of sales
|
|
7
|
|
—
|
|
7
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Postretirement benefits
|
|
(8
|
)
|
1
|
|
(7
|
)
|
|
91
|
|
(35
|
)
|
56
|
|
|
67
|
|
(25
|
)
|
42
|
|
|||||||||
Total other comprehensive income (loss)
|
|
$
|
(49
|
)
|
$
|
5
|
|
$
|
(44
|
)
|
|
$
|
97
|
|
$
|
(36
|
)
|
$
|
61
|
|
|
$
|
69
|
|
$
|
(24
|
)
|
$
|
45
|
|
|
in millions
|
|
|||||||||||||||||||||||||
|
Beef
|
|
|
Pork
|
|
|
Chicken
|
|
|
Prepared
Foods
|
|
|
Other
|
|
|
Intersegment
Sales
|
|
|
Consolidated
|
|
|||||||
Fiscal 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Sales
|
$
|
15,473
|
|
|
$
|
4,879
|
|
|
$
|
12,044
|
|
|
$
|
8,668
|
|
|
$
|
305
|
|
|
$
|
(1,317
|
)
|
|
$
|
40,052
|
|
Operating Income (Loss)
|
1,013
|
|
|
361
|
|
|
866
|
|
|
868
|
|
|
(53
|
)
|
|
|
|
3,055
|
|
||||||||
Total Other (Income) Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
310
|
|
|||||||||||||
Income before Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
2,745
|
|
|||||||||||||
Depreciation and amortization
|
103
|
|
|
42
|
|
|
368
|
|
|
410
|
|
|
10
|
|
|
|
|
933
|
|
||||||||
Total Assets
|
3,061
|
|
|
1,265
|
|
|
8,794
|
|
|
15,063
|
|
|
926
|
|
|
|
|
29,109
|
|
||||||||
Additions to property, plant and equipment
|
107
|
|
|
150
|
|
|
570
|
|
|
228
|
|
|
145
|
|
|
|
|
1,200
|
|
||||||||
Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Sales
|
$
|
14,823
|
|
|
$
|
5,238
|
|
|
$
|
11,409
|
|
|
$
|
7,853
|
|
|
$
|
349
|
|
|
$
|
(1,412
|
)
|
|
$
|
38,260
|
|
Operating Income (Loss)
|
877
|
|
|
645
|
|
|
1,053
|
|
|
462
|
|
|
(106
|
)
|
|
|
|
2,931
|
|
||||||||
Total Other (Income) Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
303
|
|
|||||||||||||
Income before Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
2,628
|
|
|||||||||||||
Depreciation and amortization
|
92
|
|
|
36
|
|
|
296
|
|
|
315
|
|
|
9
|
|
|
|
|
748
|
|
||||||||
Total Assets
|
2,938
|
|
|
1,132
|
|
|
6,630
|
|
|
13,466
|
|
|
3,900
|
|
|
|
|
28,066
|
|
||||||||
Additions to property, plant and equipment
|
118
|
|
|
101
|
|
|
492
|
|
|
229
|
|
|
129
|
|
|
|
|
1,069
|
|
||||||||
Fiscal 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Sales
|
$
|
14,513
|
|
|
$
|
4,909
|
|
|
$
|
10,927
|
|
|
$
|
7,346
|
|
|
$
|
380
|
|
|
(1,194
|
)
|
|
$
|
36,881
|
|
|
Operating Income (Loss)
|
347
|
|
|
528
|
|
|
1,305
|
|
|
734
|
|
|
(81
|
)
|
|
|
|
2,833
|
|
||||||||
Total Other (Income) Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
235
|
|
|||||||||||||
Income before Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
2,598
|
|
|||||||||||||
Depreciation and amortization
|
94
|
|
|
33
|
|
|
274
|
|
|
286
|
|
|
10
|
|
|
|
|
697
|
|
||||||||
Total Assets
|
2,764
|
|
|
1,039
|
|
|
5,836
|
|
|
11,814
|
|
|
920
|
|
|
|
|
22,373
|
|
||||||||
Additions to property, plant and equipment
|
99
|
|
|
68
|
|
|
281
|
|
|
178
|
|
|
69
|
|
|
|
|
695
|
|
|
|
|
|
|
in millions
|
|
|||||
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Interest, net of amounts capitalized
|
$
|
368
|
|
|
$
|
249
|
|
|
$
|
242
|
|
Income taxes, net of refunds
|
470
|
|
|
779
|
|
|
686
|
|
|
in millions
|
|
|
2019
|
$
|
128
|
|
2020
|
98
|
|
|
2021
|
62
|
|
|
2022
|
40
|
|
|
2023
|
29
|
|
|
2024 and beyond
|
61
|
|
|
Total
|
$
|
418
|
|
|
in millions
|
|
|
|
Grower Commitments
|
|
|
2019
|
$
|
198
|
|
2020
|
99
|
|
|
2021
|
93
|
|
|
2022
|
54
|
|
|
2023
|
38
|
|
|
2024 and beyond
|
98
|
|
|
Total
|
$
|
580
|
|
|
|
|
in millions, except per share data
|
|
|||||||||||
|
First
Quarter
|
|
|
Second
Quarter
|
|
|
Third
Quarter
|
|
|
Fourth
Quarter
|
|
||||
2018
|
|
|
|
|
|
|
|
||||||||
Sales
|
$
|
10,229
|
|
|
$
|
9,773
|
|
|
$
|
10,051
|
|
|
$
|
9,999
|
|
Gross profit
|
1,451
|
|
|
1,020
|
|
|
1,306
|
|
|
1,349
|
|
||||
Operating income
|
927
|
|
|
498
|
|
|
802
|
|
|
828
|
|
||||
Net income
|
1,632
|
|
|
316
|
|
|
542
|
|
|
537
|
|
||||
Net income attributable to Tyson
|
1,631
|
|
|
315
|
|
|
541
|
|
|
537
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income per share attributable to Tyson:
|
|
|
|
|
|
|
|
||||||||
Class A Basic
|
$
|
4.54
|
|
|
$
|
0.88
|
|
|
$
|
1.52
|
|
|
$
|
1.50
|
|
Class B Basic
|
$
|
4.09
|
|
|
$
|
0.78
|
|
|
$
|
1.37
|
|
|
$
|
1.35
|
|
Diluted
|
$
|
4.40
|
|
|
$
|
0.85
|
|
|
$
|
1.47
|
|
|
$
|
1.47
|
|
2017
|
|
|
|
|
|
|
|
||||||||
Sales
|
$
|
9,182
|
|
|
$
|
9,083
|
|
|
$
|
9,850
|
|
|
$
|
10,145
|
|
Gross profit
|
1,483
|
|
|
1,047
|
|
|
1,202
|
|
|
1,351
|
|
||||
Operating income
|
982
|
|
|
571
|
|
|
697
|
|
|
681
|
|
||||
Net income
|
594
|
|
|
341
|
|
|
448
|
|
|
395
|
|
||||
Net income attributable to Tyson
|
593
|
|
|
340
|
|
|
447
|
|
|
394
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income per share attributable to Tyson:
|
|
|
|
|
|
|
|
||||||||
Class A Basic
|
$
|
1.64
|
|
|
$
|
0.95
|
|
|
$
|
1.24
|
|
|
$
|
1.10
|
|
Class B Basic
|
$
|
1.49
|
|
|
$
|
0.86
|
|
|
$
|
1.12
|
|
|
$
|
0.98
|
|
Diluted
|
$
|
1.59
|
|
|
$
|
0.92
|
|
|
$
|
1.21
|
|
|
$
|
1.07
|
|
|
Equity Compensation Plan Information
|
||||||||
|
Number of
Securities to be
issued upon
exercise of
outstanding
options
|
|
|
Weighted
average
exercise price
of outstanding
options
|
|
|
Number of Securities remaining available for
future issuance under
equity compensation plans
(excluding Securities reflected
in the first column (a) (b))
|
|
|
Equity compensation plans approved by security holders
|
5,994,148
|
|
|
$
|
48.37
|
|
|
37,466,064
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
5,994,148
|
|
|
$
|
48.37
|
|
|
37,466,064
|
|
(a)
|
Shares available for future issuance as of September 29, 2018, under the Stock Incentive Plan (16,150,273), the Employee Stock Purchase Plan (13,668,183) and the Retirement Savings Plan (7,647,608)
|
(b)
|
"Securities" and "shares" refer to the Company's Class A common stock.
|
(a)
|
The following documents are filed as a part of this report:
|
2.1
|
|
|
|
|
|
2.2
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
4.8
|
|
|
|
|
|
4.9
|
|
|
|
|
|
4.10
|
|
|
|
|
|
4.11
|
|
|
|
|
|
4.12
|
|
|
|
|
|
4.13
|
|
Indenture dated October 2, 1990, between Sara Lee Corporation and Continental Bank, N.A., as Trustee (the “Sara Lee Indenture”) (previously filed as Exhibit 4.1 to Amendment No. 1 to Registration Statement No. 33-33603 on Form S-3 by Sara Lee Corporation, predecessor in interest to The Hillshire Brands Company, filed with the Commission on October 5, 1990, Commission File No. 001-03344, and incorporated herein by reference).
|
|
|
|
4.14
|
|
|
|
|
|
4.15
|
|
|
|
|
|
4.16
|
|
|
|
|
|
4.17
|
|
|
|
|
|
4.18
|
|
|
|
|
|
4.19
|
|
|
|
|
|
4.20
|
|
|
|
|
|
4.21
|
|
|
|
|
|
4.22
|
|
|
|
|
|
4.23
|
|
|
|
|
|
4.24
|
|
|
|
|
|
4.25
|
|
|
|
|
|
4.26
|
|
|
|
|
|
4.27
|
|
|
|
|
|
4.28
|
|
|
|
|
|
4.29
|
|
|
|
|
|
10.17
|
*
|
|
|
|
|
10.18
|
*
|
|
|
|
|
10.19
|
*
|
|
|
|
|
10.20
|
*
|
|
|
|
|
10.21
|
*
|
|
|
|
|
10.22
|
*
|
|
|
|
|
10.23
|
*
|
|
|
|
|
10.24
|
*
|
|
|
|
|
10.25
|
*
|
|
|
|
|
10.26
|
*
|
|
|
|
|
10.27
|
*
|
|
|
|
|
10.28
|
*
|
|
|
|
|
10.29
|
*
|
|
|
|
|
10.30
|
*
|
|
|
|
|
10.31
|
*
|
|
|
|
|
10.32
|
*
|
|
|
|
|
10.33
|
*
|
|
|
|
|
10.34
|
*
|
|
|
|
|
10.35
|
*
|
|
|
|
|
10.36
|
*
|
|
|
|
|
10.37
|
*
|
|
|
|
|
10.38
|
*
|
|
|
|
|
10.39
|
*
|
|
|
|
|
10.40
|
*
|
|
|
|
|
10.41
|
*
|
|
|
|
|
10.42
|
*
|
|
|
|
|
10.43
|
*
|
|
|
|
|
10.44
|
*
|
|
|
|
|
10.45
|
*
|
|
|
|
|
10.46
|
*
|
|
|
|
|
10.47
|
*
|
|
|
|
|
10.48
|
*
|
|
|
|
|
10.49
|
*
|
|
|
|
|
10.50
|
*
|
|
|
|
|
10.51
|
*
|
|
|
|
|
10.52
|
*
|
|
|
|
|
10.53
|
*
|
|
|
|
|
10.54
|
*
|
|
|
|
|
10.55
|
*
|
|
|
|
|
10.56
|
*
|
|
|
|
|
10.57
|
*
|
|
|
|
|
10.58
|
*
|
|
|
|
|
10.59
|
*
|
|
|
|
|
10.60
|
*
|
|
|
|
|
10.61
|
*
|
|
|
|
|
101
|
|
The following financial information from our Annual Report on Form 10-K for the year ended September 29, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Shareholders' Equity, (v) Consolidated Statements of Cash Flows, (vi) the Notes to Consolidated Financial Statements, and (vii) Financial Statement Schedule.
|
|
|
|
*
|
|
Indicates a management contract or compensatory plan or arrangement.
|
**
|
|
Filed herewith
|
***
|
|
Furnished herewith
|
|
|
|
|
|
|
|
|
|
|
in millions
|
|
|||||||||
|
|
|
|
Additions
|
|
|
|
|
||||||||||||
|
|
Balance at
Beginning
of Period
|
|
|
Charged to
Costs and
Expenses
|
|
|
Charged to
Other Accounts
|
|
|
(Deductions)
|
|
|
Balance at End
of Period
|
|
|||||
Allowance for Doubtful Accounts:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2018
|
|
$
|
34
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
(18
|
)
|
|
$
|
19
|
|
2017
|
|
33
|
|
|
10
|
|
|
—
|
|
|
(9
|
)
|
|
34
|
|
|||||
2016
|
|
27
|
|
|
10
|
|
|
—
|
|
|
(4
|
)
|
|
33
|
|
|||||
Inventory Lower of Cost or Net Realizable Value Allowance:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2018
|
|
$
|
3
|
|
|
$
|
68
|
|
|
$
|
—
|
|
|
$
|
(46
|
)
|
|
$
|
25
|
|
2017
|
|
39
|
|
|
5
|
|
|
—
|
|
|
(41
|
)
|
|
3
|
|
|||||
2016
|
|
58
|
|
|
70
|
|
|
—
|
|
|
(89
|
)
|
|
39
|
|
|||||
Valuation Allowance on Deferred Tax Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2018
|
|
$
|
75
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
79
|
|
2017
|
|
72
|
|
|
4
|
|
|
—
|
|
|
(1
|
)
|
|
75
|
|
|||||
2016
|
|
68
|
|
|
10
|
|
|
—
|
|
|
(6
|
)
|
|
72
|
|
|
TYSON FOODS, INC.
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Stewart Glendinning
|
|
November 13, 2018
|
|
|
Stewart Glendinning
|
|
|
|
|
Executive Vice President and Chief
Financial Officer (Principal Financial Officer)
|
|
|
/s/ Gaurdie E. Banister Jr.
|
|
Director
|
|
November 13, 2018
|
Gaurdie E. Banister Jr.
|
|
|
|
|
|
|
|
|
|
/s/ Dean Banks
|
|
Director
|
|
November 13, 2018
|
Dean Banks
|
|
|
|
|
|
|
|
|
|
/s/ Mike Beebe
|
|
Director
|
|
November 13, 2018
|
Mike Beebe
|
|
|
|
|
|
|
|
|
|
/s/ Curt T. Calaway
|
|
Senior Vice President Finance, Treasurer and Chief
|
|
November 13, 2018
|
Curt T. Calaway
|
|
Accounting Officer
|
|
|
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Mikel A. Durham
|
|
Director
|
|
November 13, 2018
|
Mikel A. Durham
|
|
|
|
|
|
|
|
|
|
/s/ Stewart Glendinning
|
|
Executive Vice President and Chief Financial Officer
|
|
November 13, 2018
|
Stewart Glendinning
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Kevin M. McNamara
|
|
Director
|
|
November 13, 2018
|
Kevin M. McNamara
|
|
|
|
|
|
|
|
|
|
/s/ Cheryl S. Miller
|
|
Director
|
|
November 13, 2018
|
Cheryl S. Miller
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey K. Schomburger
|
|
Director
|
|
November 13, 2018
|
Jeffrey K. Schomburger
|
|
|
|
|
|
|
|
|
|
/s/ Robert C. Thurber
|
|
Director
|
|
November 13, 2018
|
Robert C. Thurber
|
|
|
|
|
|
|
|
|
|
/s/ Barbara A. Tyson
|
|
Director
|
|
November 13, 2018
|
Barbara A. Tyson
|
|
|
|
|
|
|
|
|
|
/s/ John Tyson
|
|
Chairman of the Board of Directors
|
|
November 13, 2018
|
John Tyson
|
|
|
|
|
|
|
|
|
|
/s/ Noel White
|
|
President and Chief Executive Officer
|
|
November 13, 2018
|
Noel White
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
(a)
|
The Eligible Team Member’s employment is involuntarily terminated by the Participating Employer without Cause due to Job Elimination or the Eligible Team Member resigns from his or her employment with the Participating Employer on account of Good Reason, as described in Article II of this document; or
|
(b)
|
The Eligible Team Member voluntarily elects to terminate his or her employment with the Participating Employer on or after January 1, 2019 in accordance with the provisions of the “5+1” Officer Separation Program, as described in Article III of this document.
|
(a)
|
Job-related misconduct or non-performance of duties;
|
(b)
|
Violation of the policies of Tyson Foods or any Affiliate (including a violation of any then-applicable code of conduct);
|
(c)
|
Any willful and wrongful conduct or omission that injures Tyson Foods or any Affiliate;
|
(d)
|
Any act of intentional misrepresentation or embezzlement, misappropriation or conversion of assets of Tyson Foods or any Affiliate;
|
(e)
|
Conviction of, confession to, pleading no contest to, or becoming the subject of proceedings that provide a reasonable basis for the Participating Employer to believe the team member has engaged in a felony, serious crime, job-related misdemeanor, or similar offense; or
|
(f)
|
Intentional or willful violation of any restrictive covenant or other agreement to which the team member is a party with Tyson Foods or any Affiliate.
|
(a)
|
A material diminution in authority, duties or responsibilities (not merely a change in job title alone);
|
(b)
|
Greater than a 15% decrease in the team member’s then-current Total Direct Compensation;
|
(c)
|
Transfer of the team member’s primary employment location beyond fifty (50) miles;
|
(d)
|
The failure by the Participating Employer to obtain a satisfactory agreement from any successor to assume and agree to perform the obligations under the Plan for at least twenty-four (24) months following a Change in Control; or
|
(e)
|
Any action or event described in the above clauses (a)-(c) taken by the Participating Employer prior to a Change in Control at the request of the other party to the Change in Control transaction or otherwise in contemplation of the closing of a Change in Control transaction.
|
(a)
|
Duplicative or unnecessary positions;
|
(b)
|
Reduction in force or reorganization; or
|
(c)
|
Closure or sale of a facility or operation of the Participating Employer.
|
(a)
|
Base salary;
|
(b)
|
Target annual cash award opportunity under the Annual Incentive Plan, as determined by Tyson Foods in its sole discretion; and
|
(c)
|
Target grant date value of the annual long-term incentive award under the Stock Incentive Plan, as determined by Tyson Foods in its sole discretion.
|
(a)
|
Involuntarily terminated by the Participating Employer due to Job Elimination; or
|
(b)
|
Terminated by the team member on account of Good Reason.
|
(a)
|
The team member does not timely submit to the Participating Employer (or timely submits and effectively revokes) a signed and dated waiver and release agreement in the form and manner acceptable to the Participating Employer, as described in Section 4.1 of this document titled “Waiver and Release Agreement”;
|
(b)
|
The team member’s employment with the Participating Employer terminates by reason of death, disability, discharge for Cause, job abandonment or failure to report for work, or resignation or voluntary termination of employment by the team member without Good Reason, as determined by Tyson Foods in its sole discretion;
|
(c)
|
The team member’s employment with the Participating Employer terminates, or is scheduled to be terminated, through participation in the Officer Separation Program (as described in Article III of this document), as determined by Tyson Foods in its sole discretion;
|
(d)
|
Employment with the Participating Employer is involuntarily terminated after the team member refuses a position at the same location or another location of the Participating Employer within fifty (50) miles from the team member’s then-current primary employment location, provided that the new position offers at least eighty-five percent (85%) of the Total Direct Compensation of his or her then-current position;
|
(e)
|
The team member either (a) is offered a position with a Successor Employer at the same location or another location within fifty (50) miles from the team member’s then-current primary employment location, provided that the position offers at least eighty-five percent (85%) of the Total Direct Compensation of his or her current position, or (b) is hired by or renders services to a Successor Employer, regardless of the location or level of compensation, unless such employment or other arrangement results from the team member’s (or former team member’s) response to a general advertisement or solicitation, unrelated to any transaction between the Successor Employer and Tyson Foods or any Affiliate; or
|
(f)
|
The team member leaves employment with the Participating Employer prior to the date authorized by the Participating Employer.
|
Mgmt. Level(s)
|
Regular Severance Pay
|
Lump Sum Amount
|
Subsidized COBRA
|
COBRA Reimbursements
|
Outplacement Assistance
|
96 and above
|
104 weeks
|
Yes, if eligible
|
Up to 4 weeks
|
Up to 100 weeks
|
12 months
|
95
|
78 weeks
|
Yes, if eligible
|
Up to 4 weeks
|
Up to 74 weeks
|
12 months
|
93 and 94
|
52 weeks
|
Yes, if eligible
|
Up to 4 weeks
|
Up to 48 weeks
|
9 months
|
(a)
|
If the Eligible Team Member’s Date of Termination occurs in the first, second or third quarter of the then-current fiscal year of Tyson Foods, he or she will receive an amount based on target performance under the provisions of the Annual Incentive Plan for such fiscal year.
|
(b)
|
If the Eligible Team Member’s Date of Termination occurs on or after the start of the fourth quarter of the fiscal year, he or she will receive an amount determined under the provisions of the Annual Incentive Plan for such fiscal year, adjusted for corporate performance results and any allocation adjustments for business unit or enabling function (but not for any differentiation based on individual contribution and performance), as applicable, in accordance with the provisions of the Annual Incentive Plan.
|
(c)
|
All lump sum cash payment amounts under Section 2.5(a) or (b) above will be prorated by multiplying the amount of such award by a fraction, the numerator of which is the number of calendar days the Eligible Team Member was employed by the Participating Employer during the respective fiscal year and the denominator of which is the total number of calendar days in such fiscal year.
|
(a)
|
Be receiving regular severance pay under the Plan;
|
(b)
|
Qualify for COBRA continuation coverage under the Health Plan;
|
(c)
|
Properly enroll him or herself and any eligible family members in coverage in accordance with the procedures of the Health Plan (enrollment is not automatic); and
|
(d)
|
Timely pay the required premium due for such coverage.
|
(a)
|
Has completed at least five (5) consecutive Years of Service with Tyson Foods or an Affiliate prior to providing a Notice of Separation, subject to the special rule applicable to acquired team members as described in Section 3.2 of this document titled “Special Rules for Team Members Who Join a Participating Employer Following an Acquisition or Merger”;
|
(b)
|
Is not on a performance improvement plan or leave of absence, whether approved or unapproved, and, if applicable, has provided services for a minimum of four (4) weeks following a return from a leave of
|
(c)
|
Successfully completes the Working Notice Period.
|
(a)
|
The team member does not timely submit to the Participating Employer (or timely submits and effectively revokes) a signed and dated waiver and release agreement in the form and manner acceptable to the Participating Employer, as described in Section 4.1 of this document titled “Waiver and Release Agreement”;
|
(b)
|
Prior to the provision of a Notice of Separation by the team member, the team member’s employment with the Participating Employer terminates for any reason whatsoever;
|
(c)
|
Prior to the provision of a Notice of Separation by the team member, the Participating Employer notifies the team member of an impending Job Elimination or the team member provides Notice of Good Reason to the Participating Employer, as determined by Tyson Foods in its sole discretion;
|
(d)
|
At any time during the Working Notice Period, the team member is placed on a performance improvement plan, as determined by Tyson Foods in its sole discretion;
|
(e)
|
At any time during the Working Notice Period, the team member’s employment with the Participating Employer terminates by reason of death, disability, discharge for Cause, job abandonment or failure to report for work, or resignation or voluntary termination of employment by the team member without Good Reason, as determined by Tyson Foods in its sole discretion; or
|
(f)
|
The team member leaves employment with the Participating Employer prior to the date authorized by the Participating Employer.
|
Management Level(s)
|
Regular Severance Pay
|
Lump Sum Amount
|
Subsidized COBRA
|
COBRA Reimbursements
|
93 and above
|
52 weeks
|
Yes, if eligible
|
Up to 4 weeks
|
Up to 48 weeks
|
3.5
|
Regular Severance Pay, Lump Sum Amount and COBRA Subsidy and Taxable Reimbursements for COBRA
|
(a)
|
A single lump sum cash payment amount, under the same terms and conditions described in Section 2.5 of this document titled “Lump Sum Amount”; and
|
(b)
|
A premium subsidy and taxable reimbursements for COBRA continuation coverage, under the same terms and conditions described in Section 2.6 of this document titled “COBRA Subsidy and Taxable Reimbursements for COBRA”.
|
4.4
|
No Duplication of Severance Pay or Benefits
|
(a)
|
No such amendment or termination shall affect the rights of any Eligible Team Member who is receiving severance pay or benefits under the Plan, or has provided a Notice of Separation, as of the effective date of the amendment or termination;
|
(b)
|
The Plan cannot be amended or terminated within twenty-four (24) months following a Change in Control; and
|
(c)
|
Any action to amend or terminate the Plan that was, in whole or in part, taken within twelve (12) months prior to a Change in Control at the request of the other party to the Change in Control transaction or otherwise in contemplation of the closing of a Change in Control transaction shall be rendered null and void.
|
4.7
|
Withholding
|
4.8
|
No Vesting or Plan Funding
|
(a)
|
Either accept or deny the claim completely or partially; and
|
(b)
|
Notify the claimant of acceptance or denial of his or her claim.
|
(a)
|
The specific reasons for the denial;
|
(b)
|
Specific references to the Plan provisions on which any denial is based;
|
(c)
|
A description of any additional material or information that must be furnished by the claimant to support the claim; and
|
(d)
|
An explanation of the appeal procedures of the Plan.
|
(a)
|
Request an appeal by written request to the Plan Administrator no later than sixty (60) calendar days after receipt of notice from the Plan Administrator denying the claimant’s claim;
|
(b)
|
Upon request and free of charge, review or receive copies of any documents, records or other information relevant to the claimant’s claim; and
|
(c)
|
Submit written comments, documents, records and other information relating to the claimant’s claim in writing to the Plan Administrator.
|
(a)
|
The specific reasons for the decision;
|
(b)
|
The specific reference to Plan provisions upon which the decision on the appeal is based;
|
(c)
|
A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records or other information relevant to his or her claim; and
|
(d)
|
A statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following a denial of his or her appeal for Plan benefits.
|
(a)
|
The Participating Employer may elect to cancel all severance pay and benefits otherwise due to the team member, but not yet paid or delivered, under the Plan; and
|
(b)
|
Upon the written request of the Participating Employer, the team member must refund to the Participating Employer any severance pay previously paid by the Participating Employer to the team member, as well as the total amount of any COBRA premium subsidies and taxable reimbursements paid by the Participating Employer with respect to the team member, except for the first one thousand dollars ($1,000) of such severance pay.
|
(a)
|
Examine without charge at the Plan Administrator’s office (and at other specified locations) all plan documents and copies of all documents filed by the Plan Administrator with the U.S. Department of Labor, such as detailed annual reports and plan descriptions;
|
(b)
|
Obtain copies of all plan documents and other information about the Plan upon written request to the Plan Administrator. The Plan Administrator may make a reasonable charge for the copies; and
|
(c)
|
Receive a copy of the financial report for the Plan, if any. The Plan Administrator may be required by law to furnish you with a copy of the summary annual report.
|
SUBSIDIARIES
|
PLACE OF INCORPORATION
|
Advance Food Company, LLC
|
Oklahoma
|
AdvancePierre Foods Holdings, Inc.
|
Delaware
|
AdvancePierre Foods, Inc.
|
Delaware
|
Aidells Sausage Company, Inc.
|
Delaware
|
Allied Specialty Foods, Inc.
|
Pennsylvania
|
APF Legacy Subs, LLC
|
Ohio
|
Artisan Bread Co., LLC
|
North Carolina
|
Barber Foods, LLC
|
Maine
|
Bryan Foods, Inc.
|
Delaware
|
C.V. Holdings, Inc.
|
Philippines
|
CBFA Management Corp.
|
Delaware
|
Central Industries, Inc.
|
Mississippi
|
Chefs Pantry, LLC
|
Ohio
|
Clovervale Farms, LLC
|
Ohio
|
Cobb (Shanghai) Enterprise Management Consulting Co., Ltd.
|
China
|
Cobb Ana Damizlik Tavukculuk Sanayi Ve Ticaret Limited Sirketi
|
Turkey
|
Cobb Europe B.V.
|
Netherlands
|
Cobb Europe Limited
|
United Kingdom
|
Cobb-Heritage, LLC
|
Delaware
|
Cobb-Vantress Brasil, Ltda
|
Brazil
|
Cobb-Vantress New Zealand Limited
|
New Zealand
|
Cobb-Vantress Philippines, Inc.
|
Tanay, Rizal
|
Cobb-Vantress, Inc.
|
Delaware
|
DFG Foods, Inc.
|
Delaware
|
DFG Foods, L.L.C.
|
Oklahoma
|
Egbert LLC
|
Delaware
|
Flavor Corp.
|
Delaware
|
Flavor Holdings, Inc.
|
Delaware
|
Foodbrands America, Inc.
|
Delaware
|
Foodbrands Supply Chain Services, Inc.
|
Delaware
|
Gallo Salame, Inc.
|
California
|
Global Employment Services, Inc.
|
Delaware
|
Golden Island Jerky Company, Inc.
|
California
|
Haimen Tyson Poultry Development Co., Ltd
|
China
|
Hillshire Brands (Australia) Pty Ltd.
|
Australia
|
Hubei Tongxing Cobb Breeding Company, Ltd.
|
China
|
Hudson Midwest Foods, Inc.
|
Nebraska
|
Hybro Genetics Brasil Ltda
|
Brazil
|
IBP Caribbean, Inc.
|
Cayman Islands
|
IBP Foodservice, L.L.C.
|
Delaware
|
IBP Redevelopment Corporation
|
Missouri
|
International Affiliates & Investment LLC
|
Delaware
|
Jiangsu Tyson Foods Co., Ltd
|
China
|
Madison Foods, Inc.
|
Delaware
|
National Comp Care, Inc.
|
Delaware
|
New Canada Holdings, Inc.
|
Delaware
|
Oaklawn Capital Corporation
|
Delaware
|
Original Philly Holdings, Inc.
|
Pennsylvania
|
PBX, inc.
|
Delaware
|
Philadelphia Cheesesteak Company
|
Pennsylvania
|
Philadelphia Pre-Cooked Steak, Inc.
|
Pennsylvania
|
Pierre Holdco, Inc.
|
Delaware
|
River Valley Ingredients, LLC
|
Delaware
|
Rizhao Tyson Foods Co., Ltd
|
China
|
Rizhao Tyson Poultry Co., Ltd
|
China
|
Rural Energy Systems, Inc.
|
Delaware
|
Sara Lee Diversified, LLC
|
Delaware
|
Sara Lee Foods, LLC
|
Delaware
|
Sara Lee Household & Body Care Malawi Ltd.
|
Malawi
|
Sara Lee International LLC
|
Delaware
|
Sara Lee International TM Holdings LLC
|
Delaware
|
Sara Lee Mexicana Holdings Investment, L.L.C.
|
Delaware
|
Sara Lee TM Holdings LLC
|
Delaware
|
Sara Lee Trademark Holdings Australasia LLC
|
Delaware
|
Sara Lee-Kiwi Holdings, LLC
|
Delaware
|
Saramar, L.L.C.
|
Delaware
|
Shandong Tyson-Da Long Food Company Limited
|
China
|
Southern Family Foods, L.L.C.
|
Delaware
|
Southwest Products, LLC
|
Delaware
|
Tecumseh Poultry LLC
|
Nebraska
|
Texas Transfer, Inc.
|
Texas
|
The Bruss Company
|
Illinois
|
The Hillshire Brands Company
|
Maryland
|
The IBP Foods Co.
|
Delaware
|
The Pork Group, Inc.
|
Delaware
|
TyNet Corporation
|
Delaware
|
Tyson (Shanghai) Enterprise Management Consulting Co. Ltd.
|
China
|
Tyson Americas Holding Sárl
|
Luxembourg
|
Tyson Breeders, Inc.
|
Delaware
|
Tyson Chicken, Inc.
|
Delaware
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Tyson China Holding 2 Limited
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Hong Kong
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Tyson China Holding 3 Limited
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Hong Kong
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Tyson China Holding Limited
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Hong Kong
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Tyson Deli, Inc.
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Delaware
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Tyson Europe Holding Company
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Nova Scotia
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Tyson Farms, Inc.
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North Carolina
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Tyson Foods Canada Inc. (Les Aliments Tyson Canada Inc.)
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Ontario
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Tyson Foods East China Development Co., Ltd
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China
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Tyson Fresh Meats, Inc.
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Delaware
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Tyson Global Holding Sárl
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Luxembourg
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Tyson Hog Markets, Inc.
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Delaware
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/s/ Noel White
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Noel White
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President and Chief Executive Officer
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/s/ Stewart Glendinning
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Stewart Glendinning
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Executive Vice President and Chief Financial Officer
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/s/ Noel White
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Noel White
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President and Chief Executive Officer
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November 13, 2018
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/s/ Stewart Glendinning
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Stewart Glendinning
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Executive Vice President and Chief Financial Officer
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November 13, 2018
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