Tyson Weathers Second Quarter Challenges; Expects Strong Second Half of Year

Tyson Weathers Second Quarter Challenges; Expects Strong Second Half of Year

SPRINGDALE, Ark., May 6, 2013 (GLOBE NEWSWIRE) -- Tyson Foods, Inc.
(NYSE:TSN), today reported the following results:

                                                         
(in millions, except per share data)   Second Quarter      Six Months
                                      2013      2012      2013      2012
Sales                                  $8,419  $8,268  $16,821 $16,597
Operating Income                       174       302       474       580
                                                                 
Net Income                             106       166       274       322
Less: Net Income Attributable to       11        —         6         —
Noncontrolling Interest
Net Income Attributable to Tyson       $95     $166    $268    $322
                                                                 
Net Income Per Share Attributable to   $0.26   $0.44   $0.74   $0.86
Tyson
Adjusted^1 Net Income Per Share        $0.36   $0.44   $0.84   $0.86
Attributable to Tyson
                                                                 
^1 Adjusted EPS is explained and reconciled to comparable GAAP measure at the
end of this release.

Second Quarter Highlights

  *Reported EPS was $0.26; Adjusted EPS was $0.36 compared to $0.44 last year
  *Overall operating margin was 2.1%
  *Net interest expense was $34 million, down 28% compared to last year
  *Repurchased 2.1 million shares for $50 million
  *Liquidity totaled $1.8 billion at March 30, 2013

"Our second quarter typically is our most challenging, and this quarter was no
exception," said Donnie Smith, Tyson Foods' president and chief executive
officer. "However, our business is structured to withstand adverse conditions,
and we worked through the issues while positioning ourselves for what we
believe will be a strong performance in the second half of the year.

"In our Chicken segment, we continued to emphasize operational efficiencies,
upgrading our product mix and pricing to offset $165 million in additional
feed costs for the quarter. Our Beef segment suffered margin compression as
consumers opted for the relative value of chicken. Our Pork segment faced
periods of supply and demand imbalance after the loss of some export markets,
while soft demand in food service impacted our Prepared Foods segment.

"Our EPS for the quarter wasn't at the level we'd like, but on an adjusted
basis, we're about where we were at this point last year," Smith said. "I'm
still confident our results for 2013 will be better than 2012."

Segment Performance Review (in millions)
                                                                
                                                                
Sales
(for the second quarter and six months ended March 30, 2013 and March 31,
2012)
            Second Quarter                  Six Months
                            Volume Avg.                     Volume Avg.
                                      Price                             Price
            2013     2012     Change Change 2013      2012      Change Change
Chicken      $3,094 $2,911 0.1%   6.2%   $6,050  $5,673  (0.5)% 7.1%
Beef         3,447    3,369    (3.9)% 6.5%   6,932     6,836     (7.0)% 9.1%
Pork         1,311    1,372    (2.2)% (2.2)% 2,674     2,847     (2.2)% (3.9)%
Prepared     803      807      (0.8)% 0.3%   1,644     1,668     0.5%   (2.0)%
Foods
Other        27       46       n/a    n/a    47        100       n/a    n/a
Intersegment (263)    (237)    n/a    n/a    (526)     (527)     n/a    n/a
Sales
Total        $8,419 $8,268 (1.8)% 3.9%   $16,821 $16,597 (2.5)% 4.3%
                                                                
                                                                
Operating Income (Loss)
(for the second quarter and six months ended March 30, 2013 and March 31,
2012)
            Second Quarter                  Six Months
                            Operating                       Operating
                               Margin                            Margin
            2013     2012     2013   2012   2013      2012      2013   2012
Chicken      $78    $145   2.5%   5.0%   $185    $177    3.1%   3.1%
Beef         (26)     (1)      (0.8)% —%     20        30        0.3%   0.4%
Pork         72       115      5.5%   8.4%   197       280       7.4%   9.8%
Prepared     28       44       3.5%   5.5%   61        95        3.7%   5.7%
Foods
Other        22       (1)      n/a    n/a    11        (2)       n/a    n/a
Total        $174   $302   2.1%   3.7%   $474    $580    2.8%   3.5%

Second quarter and six months of fiscal 2013

  *Operating income was reduced by $56 million related to the impairment of
    non-core assets in China, which is included in our Chicken segment.
    
  *Chicken - Despite increased domestic and international production, total
    sales volumes decreased in the six months of fiscal 2013 due to reduced
    open-market meat purchases and mix of rendered product sales. The increase
    in average sales price in the second quarter and six months of fiscal 2013
    was primarily due to mix changes and price increases associated with
    increased input costs. Since many of our sales contracts are formula based
    or shorter-term in nature, we were able to offset rising input costs
    through increased pricing and mix. Operating income was positively
    impacted by increases in average sales price, improved live performance
    and operational improvements, as well as improved performance in our
    foreign-produced operations. These increases were partially offset by
    increased feed costs of $165 million and $335 million for the second
    quarter and six months of fiscal 2013, respectively.
  *Beef - Fed cattle supplies decreased which drove up average sales price
    and livestock cost. Sales volumes decreased due to a reduction in outside
    trim and tallow purchases. Operating income decreased in the second
    quarter and six months of fiscal 2013 as the result of volatile market
    conditions, regional lower availability of live cattle supplies, reduced
    demand for premium beef products and increased operating costs.
  *Pork - Live hog supplies increased which drove down average sales price
    and livestock cost. Sales volumes decreased as a result of balancing our
    supply with customer demand and reduced exports. While reduced compared to
    prior year, operating income remained strong in the six months of fiscal
    2013 despite brief periods of imbalance in industry supply and customer
    demand.
  *Prepared Foods - Although up slightly in the six months of fiscal 2013,
    total sales volumes decreased in the second quarter of fiscal 2013 due to
    reduced demand for certain foodservice products. The decrease in average
    sales price in the six months of fiscal 2013 was due to product mix and
    reduced raw material costs. Operating income decreased in the second
    quarter and six months of fiscal 2013 due to product mix changes related
    to reduced foodservice demand and additional costs incurred as we invested
    in our lunchmeat business.

Outlook

Our capital investment in our businesses will continue to help us to maintain
strong operating results. In fiscal 2013, we expect overall domestic protein
production (chicken, beef, pork and turkey) to increase approximately 1% from
fiscal 2012 levels. The drought conditions in 2012 reduced grain supplies,
which is resulting in higher input costs as well as increased costs for cattle
and hog producers. The following is a summary of the fiscal 2013 outlook for
each of our segments, as well as an outlook on sales, capital expenditures,
net interest expense, debt and liquidity and share repurchases:

  *Chicken – Current USDA data shows U.S. chicken production to increase 2-3%
    in fiscal 2013 compared to fiscal 2012. Based on current futures prices,
    we expect higher feed costs in fiscal 2013 compared to fiscal 2012 of
    approximately $450 million. The capital investment and significant
    operational improvements we have made in our Chicken segment have better
    positioned us to adjust to rising feed costs. Additionally, many of our
    sales contracts are formula based or shorter-term in nature, which allows
    us to offset rising input costs through pricing. However, there may be a
    lag time for price changes to take effect. We anticipate our Chicken
    segment will return to its normalized range of 5.0%-7.0% for the
    second-half of fiscal 2013.
  *Beef – We expect to see a reduction of industry fed cattle supplies of
    2-3% and beef exports to decrease in fiscal 2013 as compared to fiscal
    2012. Although we generally expect adequate supplies in regions we operate
    our plants, there may be periods of imbalance of fed cattle supply and
    demand. For fiscal 2013, we believe our Beef segment will remain
    profitable, but will be below its normalized range of 2.5%-4.5%.
  *Pork – We expect industry hog supplies to be flat and pork exports to
    decrease compared to fiscal 2012. For fiscal 2013, we believe our Pork
    segment will be in its normalized range of 6.0%-8.0%.
  *Prepared Foods – We expect operational improvements and increased pricing
    to offset increased raw material costs. Because many of our sales
    contracts are formula based or shorter-term in nature, we are typically
    able to offset rising input costs through increased pricing. For fiscal
    2013, we believe our Prepared Foods segment may be below its normalized
    range of 4.0%-6.0%.
  *Sales – We expect fiscal 2013 sales to approximate $34.5 billion mostly
    resulting from price increases related to expected decreases in domestic
    availability of certain protein and increased raw material costs.
  *Capital Expenditures – We expect fiscal 2013 capital expenditures will
    approximate $550-$600 million.
  *Net Interest Expense – We expect fiscal 2013 net interest expense will
    approximate $140 million.
  *Debt and Liquidity – Our next significant debt maturity is scheduled for
    October 2013, which we currently plan to use current cash on hand and/or
    cash flows from operations for payment. We may also use additional
    available cash to repurchase notes when available at attractive rates.
    Total liquidity at March30, 2013, was $1.8 billion, well above our goal
    to maintain liquidity in excess of $1.2 billion.
  *Share Repurchases – We expect to continue repurchasing shares under our
    share repurchase program. As of March30, 2013, 28 million shares remain
    authorized for repurchases. The timing and extent to which we repurchase
    shares will depend upon, among other things, our working capital needs,
    market conditions, liquidity targets, our debt obligations and regulatory
    requirements.


TYSON FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
                                                                 
                                                                 
                                      Three Months Ended  Six Months Ended
                                      March30, March31, March30, March31,
                                       2013      2012      2013      2012
                                                                 
Sales                                  $8,419  $8,268  $16,821 $16,597
Cost of Sales                          8,011     7,733     15,876    15,569
Gross Profit                           408       535       945       1,028
                                                                 
Selling, General and Administrative    234       233       471       448
Operating Income                       174       302       474       580
Other (Income) Expense:                                           
Interest income                        (2)       (5)       (3)       (7)
Interest expense                       36        52        73        101
Other, net                             (19)      (2)       (19)      (14)
Total Other (Income) Expense           15        45        51        80
Income before Income Taxes             159       257       423       500
Income Tax Expense                     53        91        149       178
Net Income                             106       166       274       322
Less:Net Income Attributable to       11        —         6         —
Noncontrolling Interest
Net Income Attributable to Tyson       $ 95      $ 166     $ 268     $ 322
                                                                 
Weighted Average Shares Outstanding:                              
Class A Basic                          283       294       284       295
Class B Basic                          70        70        70        70
Diluted                                366       373       364       374
Net Income Per Share Attributable to                              
Tyson:
Class A Basic                          $0.27   $0.47   $0.77   $0.90
Class B Basic                          $0.25   $0.42   $0.70   $0.81
Diluted                                $0.26   $0.44   $0.74   $0.86
Dividends Declared Per Share:                                     
Class A                                $0.050  $0.040  $0.210  $0.080
Class B                                $0.045  $0.036  $0.189  $0.072
                                                                 
Sales Growth                           1.8%               1.3%      
Margins: (Percent of Sales)                                       
Gross Profit                           4.8%      6.5%      5.6%      6.2%
Operating Income                       2.1%      3.7%      2.8%      3.5%
Net Income                             1.3%      2.0%      1.6%      1.9%
Effective Tax Rate                     33.2%     35.3%     35.1%     35.5%


TYSON FOODS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
(Unaudited)
                                                        
                                                        
                                          March30, 2013 September29, 2012
Assets                                                   
Current Assets:                                          
Cash and cash equivalents                  $762         $1,071
Accounts receivable, net                   1,428          1,378
Inventories                                2,921          2,809
Other current assets                       188            145
Total Current Assets                       5,299          5,403
Net Property, Plant and Equipment          4,002          4,022
Goodwill                                   1,892          1,891
Intangible Assets                          115            129
Other Assets                               481            451
Total Assets                               $11,789      $11,896
                                                        
Liabilities and Shareholders' Equity                     
Current Liabilities:                                     
Current debt                               $512         $515
Accounts payable                           1,265          1,372
Other current liabilities                  955            943
Total Current Liabilities                  2,732          2,830
Long-Term Debt                             1,904          1,917
Deferred Income Taxes                      498            558
Other Liabilities                          541            549
                                                        
Total Tyson Shareholders' Equity           6,076          6,012
Noncontrolling Interest                    38             30
Total Shareholders' Equity                 6,114          6,042
                                                        
Total Liabilities and Shareholders' Equity $11,789      $11,896


TYSON FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
                                                              
                                                              
                                                Six Months Ended
                                                March30, 2013 March31, 2012
Cash Flows From Operating Activities:                          
Net income                                       $274         $322
Depreciation and amortization                    259            245
Deferred income taxes                            (24)           53
Other, net                                       57             41
Net change in other current assets and           (336)          (207)
liabilities
Cash Provided by Operating Activities            230            454
                                                              
Cash Flows From Investing Activities:                          
Additions to property, plant and equipment       (290)          (344)
Purchases of marketable securities               (79)           (25)
Proceeds from sale of marketable securities      16             13
Other, net                                       20             17
Cash Used for Investing Activities               (333)          (339)
                                                              
Cash Flows From Financing Activities:                          
Payments on debt                                 (55)           (41)
Net proceeds from borrowings                     37             56
Purchases of Tyson ClassA common stock          (188)          (128)
Dividends                                        (70)           (29)
Other, net                                       71             29
Cash Used for Financing Activities               (205)          (113)
                                                              
Effect of Exchange Rate Change on Cash           (1)            5
                                                              
Increase (Decrease) in Cash and Cash Equivalents (309)          7
Cash and Cash Equivalents at Beginning of Year   1,071          716
Cash and Cash Equivalents at End of Period       $762         $723


TYSON FOODS, INC.
EBITDA Reconciliations
(In millions)
(Unaudited)
                                                            
                                                            
                   Six Months Ended        Fiscal Year Ended   Twelve Months
                                                                Ended
                   March30,   March31,   September29, 2012  March30, 2013
                    2013        2012
                                                            
Net income          $274      $322      $576              $528
Less: Interest      (3)         (7)         (12)                (8)
income
Add: Interest       73          101         356                 328
expense
Add: Income tax     149         178         351                 322
expense
Add: Depreciation   237         217         443                 463
Add: Amortization   8           7           17                  18
(a)
EBITDA              $738      $818      $1,731            $1,651
                                                            
                                                            
Total gross debt                          $2,432            $2,416
Less: Cash and cash                       (1,071)             (762)
equivalents
Less: Short-term                          (3)                 (47)
investments
Total net debt                            $1,358            $1,607
                                                            
Ratio Calculations:                                          
Gross debt/EBITDA                         1.4x                1.5x
Net debt/EBITDA                           0.8x                1.0x
                                                            
(a) Excludes the amortization of debt discount expense of $14 million and $21
million for the six months ended March30, 2013, and March31, 2012,
respectively, and $39 million for the fiscal year ended September29, 2012, as
it is included in Interest expense.

EBITDA represents net income, net of interest, income tax and depreciation and
amortization. EBITDA is presented as a supplemental financial measurement in
the evaluation of our business. We believe the presentation of this financial
measure helps investors to assess our operating performance from period to
period and enhances understanding of our financial performance and highlights
operational trends. This measure is widely used by investors and rating
agencies in the valuation, comparison, rating and investment recommendations
of companies. However, the measurement of EBITDA may not be comparable to
those of other companies in our industry, which limits its usefulness as a
comparative measure. EBITDA is not a measure required by or calculated in
accordance with GAAP and should not be considered as a substitute for net
income or any other measure of financial performance reported in accordance
with GAAP or as a measure of operating cash flow or liquidity. EBITDA is a
useful tool for assessing, but is not a reliable indicator of, our ability to
generate cash to service our debt obligations because certain of the items
added to net income to determine EBITDA involve outlays of cash. As a result,
actual cash available to service our debt obligations will be different from
EBITDA. Investors should rely primarily on our GAAP results, and use non-GAAP
financial measures only supplementally, in making investment decisions.


TYSON FOODS, INC.
EPS Reconciliations
(Unaudited)
                                                                 
                                                                 
                                      Three Months Ended  Six Months Ended
                                      March30, March31, March30, March31,
                                       2013      2012      2013      2012
                                                                 
Reported net income per share          $0.26   $0.44   $0.74   $0.86
attributable to Tyson
                                                                 
Less: $19 million recognized currency  (0.05)    —         (0.05)    —
translation adjustment gain
Add: $56 million impairment of         0.15      —         0.15      —
non-core assets in China
                                                                 
Adjusted net income per share          $0.36   $0.44   $0.84   $0.86
attributable to Tyson

Adjusted net income per share attributable to Tyson (adjusted EPS) is
presented as a supplementary financial measurement in the evaluation of our
business. We believe the presentation of adjusted EPS helps investors to
assess our financial performance from period to period and enhances
understanding of our financial performance. However, adjusted EPS may not be
comparable to those of other companies in our industry, which limits its
usefulness as a comparative measure. Adjusted EPS is not a measure required by
or calculated in accordance with GAAP and should not be considered as a
substitute for any measure of financial performance reported in accordance
with GAAP. Investors should rely primarily on our GAAP results, and use
non-GAAP financial measures only supplementally, in making investment
decisions.

Tyson Foods, Inc., with headquarters in Springdale, Arkansas, is one of the
world's largest processors and marketers of chicken, beef and pork, the
second-largest food production company in the Fortune 500 and a member of the
S&P 500. The company was founded in 1935 by John W. Tyson, whose family has
continued to be involved with son Don Tyson leading the company for many years
and grandson John H. Tyson serving as the current Chairman of the Board of
Directors. Tyson Foods produces a wide variety of protein-based and prepared
food products and is the recognized market leader in the retail and
foodservice markets it serves. The Company provides products and services to
customers throughout the United States and approximately 130 countries. It has
approximately 115,000 Team Members employed at more than 400 facilities and
offices in the United States and around the world.Through its Core Values,
Code of Conduct and Team Member Bill of Rights, Tyson Foods strives to operate
with integrity and trust and is committed to creating value for its
shareholders, customers and Team Members. The Company also strives to be
faith-friendly, provide a safe work environment and serve as stewards of the
animals, land and environment entrusted to it.

A conference call to discuss the Company's financial results will be held at 9
a.m. Eastern Monday, May 6, 2013. To listen live via telephone, call
888-455-8283. International callers dial 210-839-8865. The pass code "Tyson
Foods" will be required to join the call. A telephone replay will be available
until June 7, 2013, at 866-495-2418. International callers may access the
replay at 203-369-1756. The live webcast, as well as the replay, will be
available on the Internet at http://ir.tyson.com. Financial information, such
as this news release, as well as other supplemental data, can be accessed from
the Company's web site at http://ir.tyson.com.

Forward-Looking Statements

Certain information contained in the press release may constitute
forward-looking statements, such as statements relating to expected
performance, and including, but not limited to, statements appearing in the
"Outlook" section. These forward-looking statements are subject to a number of
factors and uncertainties which could cause our actual results and experiences
to differ materially from the anticipated results and expectations expressed
in such forward-looking statements. We wish to caution readers not to place
undue reliance on any forward-looking statements, which speak only as of the
date made. Among the factors that may cause actual results and experiences to
differ from anticipated results and expectations expressed in such
forward-looking statements are the following: (i) the effect of, or changes
in, general economic conditions; (ii) fluctuations in the cost and
availability of inputs and raw materials, such as live cattle, live swine,
feed grains (including corn and soybean meal) and energy; (iii) market
conditions for finished products, including competition from other global and
domestic food processors, supply and pricing of competing products and
alternative proteins and demand for alternative proteins; (iv) successful
rationalization of existing facilities and operating efficiencies of the
facilities; (v) risks associated with our commodity purchasing activities;
(vi) access to foreign markets together with foreign economic conditions,
including currency fluctuations, import/export restrictions and foreign
politics; (vii) outbreak of a livestock disease (such as avian influenza (AI)
or bovine spongiform encephalopathy (BSE)), which could have an adverse effect
on livestock we own, the availability of livestock we purchase, consumer
perception of certain protein products or our ability to access certain
domestic and foreign markets; (viii) changes in availability and relative
costs of labor and contract growers and our ability to maintain good
relationships with employees, labor unions, contract growers and independent
producers providing us livestock; (ix) issues related to food safety,
including costs resulting from product recalls, regulatory compliance and any
related claims or litigation; (x) changes in consumer preference and diets and
our ability to identify and react to consumer trends; (xi) significant
marketing plan changes by large customers or loss of one or more large
customers; (xii) adverse results from litigation; (xiii) risks associated with
leverage, including cost increases due to rising interest rates or changes in
debt ratings or outlook; (xiv) compliance with and changes to regulations and
laws (both domestic and foreign), including changes in accounting standards,
tax laws, environmental laws, agricultural laws and occupational, health and
safety laws; (xv) our ability to make effective acquisitions or joint ventures
and successfully integrate newly acquired businesses into existing operations;
(xvi) effectiveness of advertising and marketing programs; and (xvii) those
factors listed under Item 1A. "Risk Factors" included in our September29,
2012, Annual Report filed on Form 10-K.


CONTACT: Media Contact:  Gary Mickelson, 479-290-6111
         Investor Contact:  Jon Kathol, 479-290-4235

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