Tyson Foods, Inc 10-Q for FY2020 Q1

About this 10-Q

Headline figures

Tyson Foods, Inc. (TSN)

10-Q 2020-02-06 For: 2019-12-28

Added on April 12, 2026

Tyson Foods, Inc filed this 10-Q on February 6, 2020, covering the quarter ended December 28, 2019 (FY2020 Q1).

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

Smaller Reporting Company

Emerging Growth Company

Quarter ended December 28, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $10.82B; up 6.1% from $10.19B a year earlier
Net income: $557M; up 1.1% from net income of $551M a year earlier
Diluted EPS: $1.52; up 1.3% from $1.50 a year earlier

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Delaware				71-0225165
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)
2200 West Don Tyson Parkway,	Springdale,	Arkansas		72762-6999
(Address of principal executive offices)				(Zip Code)
(479)			290-4000
(Registrant’s telephone number, including area code)



Title of Each Class			Trading Symbol	Name of Each Exchange on Which Registered
Class A Common Stock	Par Value	$0.10	TSN	New York Stock Exchange



Class		Outstanding Shares
Class A Common Stock, $0.10 Par Value (Class A stock)		295,027,770
Class B Common Stock, $0.10 Par Value (Class B stock)		70,010,355



		PAGE
Item 1.	Financial Statements

	Consolidated Condensed Statements of Income for the Three Months Ended December 28, 2019, and December 29, 2018	3

	Consolidated Condensed Statements of Comprehensive Income for the Three Months Ended December 28, 2019, and December 29, 2018	4

	Consolidated Condensed Balance Sheets as of December 28, 2019, and September 28, 2019	5

	Consolidated Condensed Statements of Shareholders' Equity for the Three Months Ended December 28, 2019, and December 29, 2018	6

	Consolidated Condensed Statements of Cash Flows for the Three Months Ended December 28, 2019, and December 29, 2018	7

	Notes to Consolidated Condensed Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36

Item 4.	Controls and Procedures	38



☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

Item 3.	Defaults Upon Senior Securities	40

Item 4.	Mine Safety Disclosures	40

Item 5.	Other Information	40

Item 6.	Exhibits	40

SIGNATURES		42



	Three Months Ended
	December 28, 2019			December 29, 2018
Sales	$	10,815		$	10,193
Cost of Sales	9,375			8,838
Gross Profit	1,440			1,355
Selling, General and Administrative	614			548
Operating Income	826			807
Other (Income) Expense:
Interest income	(3		)	(2		)
Interest expense	120			99
Other, net	(16		)	(3		)
Total Other (Income) Expense	101			94
Income before Income Taxes	725			713
Income Tax Expense	164			161
Net Income	561			552
Less: Net Income Attributable to Noncontrolling Interests	4			1
Net Income Attributable to Tyson	$	557		$	551
Weighted Average Shares Outstanding:
Class A Basic	293			294
Class B Basic	70			70
Diluted	367			366
Net Income Per Share Attributable to Tyson:
Class A Basic	$	1.56		$	1.54
Class B Basic	$	1.40		$	1.39
Diluted	$	1.52		$	1.50



	December 28, 2019			September 28, 2019
Assets
Current Assets:
Cash and cash equivalents	$	497		$	484
Accounts receivable, net	2,063			2,173
Inventories	4,304			4,108
Other current assets	329			404
Total Current Assets	7,193			7,169
Net Property, Plant and Equipment	7,384			7,282
Goodwill	10,862			10,844
Intangible Assets, net	6,975			7,037
Other Assets	1,397			765
Total Assets	$	33,811		$	33,097

Liabilities and Shareholders’ Equity
Current Liabilities:
Current debt	$	1,947		$	2,102
Accounts payable	1,916			1,926
Other current liabilities	1,673			1,485
Total Current Liabilities	5,536			5,513
Long-Term Debt	9,772			9,830
Deferred Income Taxes	2,369			2,356
Other Liabilities	1,568			1,172
Commitments and Contingencies (Note 18)
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	4,354			4,378
Retained earnings	14,178			13,787
Accumulated other comprehensive gain (loss)	(79		)	(117		)
Treasury stock, at cost – 83 million shares at December 28, 2019 and 82 million shares at September 28, 2019	(4,079		)	(4,011		)
Total Tyson Shareholders’ Equity	14,419			14,082
Noncontrolling Interests	147			144
Total Shareholders’ Equity	14,566			14,226
Total Liabilities and Shareholders’ Equity	$	33,811		$	33,097



	in millions
Cash and cash equivalents		$	186
Accounts receivable		106
Inventories		257
Other current assets		34
Property, Plant and Equipment		676
Goodwill		1,120
Intangible Assets		659
Other Assets		28
Current debt		(73		)
Accounts payable		(208		)
Other current liabilities		(99		)
Long-Term Debt		(113		)
Deferred Income Taxes		(177		)
Other Liabilities		(8		)
Noncontrolling Interests		(122		)
Net assets acquired		$	2,266



	December 28, 2019		September 28, 2019
Processed products	$	2,464	$	2,362
Livestock	1,206		1,150
Supplies and other	634		596
Total inventory	$	4,304	$	4,108



	December 28, 2019		September 28, 2019
Land	$	199	$	198
Buildings and leasehold improvements	4,768		4,747
Machinery and equipment	8,692		8,607
Land improvements and other	392		385
Buildings and equipment under construction	857		713
	14,908		14,650
Less accumulated depreciation	7,524		7,368
Net property, plant and equipment	$	7,384	$	7,282



	Three Months Ended
	December 28, 2019
Operating lease cost ^(a)	$	49
Variable lease cost ^(b)	111
Short-term lease cost	6
Total	$	166



	Three Months Ended
	December 28, 2019
Operating cash outflows from operating leases (in millions)	$	51
ROU assets obtained in exchange for new operating lease liabilities (in millions)	$	26
Weighted-average remaining lease term	5 years
Weighted-average discount rate	3		%



	Three Months Ended
	December 28, 2019			December 29, 2018
Cash Flows From Operating Activities:
Net income	$	561		$	552
Depreciation and amortization	288			250
Deferred income taxes	3			18
Other, net	27			64
Net changes in operating assets and liabilities	15			(16		)
Cash Provided by Operating Activities	894			868
Cash Flows From Investing Activities:
Additions to property, plant and equipment	(312		)	(318		)
Purchases of marketable securities	(35		)	(15		)
Proceeds from sale of marketable securities	19			15
Acquisitions, net of cash acquired	—			(2,141		)
Proceeds from sale of business	29			—
Other, net	(82		)	10
Cash Used for Investing Activities	(381		)	(2,449		)
Cash Flows From Financing Activities:
Proceeds from issuance of debt	38			1,807
Payments on debt	(31		)	(12		)
Borrowings on revolving credit facility	180			—
Payments on revolving credit facility	(250		)	—
Proceeds from issuance of commercial paper	4,675			5,538
Repayments of commercial paper	(4,855		)	(5,406		)
Purchases of Tyson Class A common stock	(132		)	(83		)
Dividends	(150		)	(134		)
Stock options exercised	20			3
Other, net	(2		)	(2		)
Cash (Used for) Provided by Financing Activities	(507		)	1,711
Effect of Exchange Rate Changes on Cash	7			—
Increase in Cash and Cash Equivalents	13			130
Cash and Cash Equivalents at Beginning of Year	484			270
Cash and Cash Equivalents at End of Period	$	497		$	400



	Operating Lease Commitments
2020 (remaining year)	$	135
2021	141
2022	96
2023	64
2024	51
2025 and beyond	73
Total undiscounted operating lease payments	$	560
Less: Imputed interest	32
Present value of total operating lease liabilities	$	528



	Operating Lease Commitments
2020	$	159
2021	113
2022	74
2023	49
2024	40
2025 and beyond	54
Total	$	489



	Livestock Grower Commitments
2020	$	253
2021	131
2022	86
2023	58
2024	49
2025 and beyond	122
Total	$	699



	Three Months Ended		Restructuring and related charges to date
	December 28, 2019		December 28, 2019		Total estimated Restructuring and related charges
Beef	$	5	$	18	$	18
Pork	2		7		7
Chicken	21		128		139
Prepared Foods	22		146		157
Other	2		3		3
Total restructuring and related charges, pretax	$	52	$	302	$	324



	December 28, 2019		September 28, 2019
Accrued salaries, wages and benefits	$	551	$	620
Other	1,122		865
Total other current liabilities	$	1,673	$	1,485



	December 28, 2019			September 28, 2019
Revolving credit facility	$	—		$	70
Commercial paper	819			1,000
Senior notes:
Notes due June 2020 (2.46% at 12/28/2019)	350			350
Notes due August 2020 (2.34% at 12/28/2019)	400			400
4.10% Notes due September 2020	279			280
2.25% Notes due August 2021	500			500
4.50% Senior notes due June 2022	1,000			1,000
3.90% Senior notes due September 2023	400			400
3.95% Notes due August 2024	1,250			1,250
4.00% Notes due March 2026 ("2026 Notes")	800			800
3.55% Notes due June 2027	1,350			1,350
7.00% Notes due January 2028	18			18
4.35% Notes due March 2029 ("2029 Notes")	1,000			1,000
6.13% Notes due November 2032	160			161
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")	1,500			1,500
Discount on senior notes	(47		)	(48		)
Other	253			216
Unamortized debt issuance costs	(63		)	(65		)
Total debt	11,719			11,932
Less current debt	1,947			2,102
Total long-term debt	$	9,772		$	9,830



in millions, except soy meal tons	Metric	December 28, 2019		September 28, 2019
Commodity:
Corn	Bushels	115		111
Soy Meal	Tons	1,281,300		1,078,800
Live Cattle	Pounds	5		14
Lean Hogs	Pounds	199		309
Foreign Currency	United States dollar	$	364	$	148
Interest Rate Swaps	Average monthly debt	$	400	$	400


•	Cash Flow Hedges – include certain commodity forward and option contracts of forecasted purchases (e.g., grains), interest rate swaps and locks, and certain foreign exchange forward contracts.


•	Fair Value Hedges – include certain commodity forward contracts of firm commitments (e.g., livestock).



	Gain (Loss) Recognized in OCI On Derivatives
	Three Months Ended
	December 28, 2019		December 29, 2018
Cash flow hedge – derivatives designated as hedging instruments:
Commodity contracts	$	—	$	(2	)
Interest rate hedges	—		(18		)
Total	$	—	$	(20	)



Consolidated Condensed Balance Sheets Classification	December 28, 2019			September 28, 2019
Inventory	$	(1	)	$	(19	)



Consolidated Condensed Statements of Income Classification	Three Months Ended
Consolidated Condensed Statements of Income Classification	December 28, 2019			December 29, 2018
Cost of Sales	$	9,375		$	8,838
Interest Expense	120			99
Other Income/(Expense)	(16		)	(3		)


•	Quoted prices for similar assets or liabilities in active markets;


•	Quoted prices for identical or similar assets in non-active markets;


•	Inputs other than quoted prices that are observable for the asset or liability; and


•	Inputs derived principally from or corroborated by other observable market data.



December 28, 2019	Level 1		Level 2		Level 3		Netting (a)			Total
Other Current Assets:
Derivative financial instruments:
Designated as hedges	$	—	$	11	$	—	$	(2	)	$	9
Undesignated	—		67		—		(15		)	52
Available-for-sale securities:
Current	—		—		1		—			1
Other Assets:
Available-for-sale securities:
Non-current	—		54		48		—			102
Deferred compensation assets	10		339		—		—			349
Total assets	$	10	$	471	$	49	$	(17	)	$	513
Other Current Liabilities:
Derivative financial instruments:
Designated as hedges	$	—	$	14	$	—	$	(11	)	$	3
Undesignated	—		45		—		(43		)	2
Total liabilities	$	—	$	59	$	—	$	(54	)	$	5



	December 28, 2019						September 28, 2019
	Amortized Cost Basis		Fair Value		Unrealized Gain (Loss)		Amortized Cost Basis		Fair Value		Unrealized Gain (Loss)
Available-for-sale securities:
Debt securities:
U.S. treasury and agency	$	54	$	54	$	—	$	51	$	51	$	—
Corporate and asset-backed	48		49		1		51		52		1



	December 28, 2019				September 28, 2019
	Fair Value		Carrying Value		Fair Value		Carrying Value
Total debt	$	12,869	$	11,719	$	12,978	$	11,932



	Pension Plans
	Three Months Ended
	December 28, 2019			December 29, 2018

Service cost	$	—		$	1
Interest cost	10			16
Expected return on plan assets	(9		)	(14		)
Amortization of:
Net actuarial loss	1			—
Prior service cost	—			—
Settlement loss	—			19
Net periodic cost	$	2		$	22



	Postretirement Benefit Plans
	Three Months Ended
	December 28, 2019		December 29, 2018

Interest cost	$	—	$	—
Amortization of prior service cost (credit)	—		(4		)
Net periodic cost (credit)	$	—	$	(4	)



	Three Months Ended
	December 28, 2019
	Consumer Products^(a)		Foodservice^(b)		International^(c)		Industrial and Other^(d)		Intersegment			Total
Beef	$	1,857	$	1,045	$	514	$	326	$	96		$	3,838
Pork	400		117		280		360		222			1,379
Chicken	1,389		1,307		161		421		14			3,292
Prepared Foods	1,211		846		37		46		—			2,140
International/Other	—		—		498		—		—			498
Intersegment	—		—		—		—		(332		)	(332		)
Total	$	4,857	$	3,315	$	1,490	$	1,153	$	—		$	10,815


•	Margins – Our total operating margin was 7.6% in the first quarter of fiscal 2020. Operating margins by segment were as follows: