01—Abstract
Summary
Summary of the 10-K filed December 14, 1994. Cited figures are marked; the original filing is the authoritative source.
Tyson Foods, Inc. and its subsidiaries produce, market and distribute value-enhanced and fresh/frozen poultry, beef, pork, seafood, Mexican food-based products, and animal feed and pet food.
The company reported fiscal 1994 (ended October 1, 1994) sales of $5.11 billiona, up from $4.71 billion in fiscal 1993, with gross margin of $961.2 million. Operating expenses rose to $766.0 million, reflecting $213.9 million of special charges related to Arctic Alaska Fisheries Corporation, which produced a net loss of $2.1 million, or $(0.01) per share, compared with net income of $180.3 million, or $1.22 per share, in fiscal 1993. Before special charges, the company's earnings per share were $1.37.
The balance sheet strengthened in working capital, which rose to $721.5 millionb from $285.1 million, mainly because the company discontinued its accounts receivable sale agreement and financed through commercial paper. Long-term debt increased to $1.38 billion from $920.5 million, and shareholders' equity declined to $1.29 billion from $1.36 billion, partly due to $66.9 million in treasury share purchases. Operating cash flow fell sharply to $50.3 million from $308.4 million, as accounts receivable increased $307.4 million.
During the year, Tyson completed several acquisitions, including Trasgo, S.A. de C.V. (raised to 50.1%c ownership), Cobb-Vantress, Inc. (raised to 100%), Gorges Foodservice, and Culinary Foods.
The company also has plans for four new poultry-processing complexes, with the first expected to start production in mid-1995, and $151.5 milliond of construction projects in progress. Pending legal matters include criminal indictments against former officers and employees of Arctic, with a trial of a portion of the defendants expected to begin in June 1995.
02—Key points
Key Highlights
- Net loss of $2.1 million, or $(0.01) per share, in fiscal 1994, versus net income of $180.3 million, or $1.22 per share, in fiscal 1993, after $213.9 million of special charges tied to Arctic Alaska Fisheries Corporation
- Sales rose to $5.11 billion in fiscal 1994 from $4.71 billion in fiscal 1993, with the filing stating an 8.6% increase
- Working capital increased to $721.5 million from $285.1 million, mainly due to discontinuing the accounts receivable sale agreement and using commercial paper borrowings
- Long-term debt increased to $1.38 billion from $920.5 million, and the company's commercial paper program was supported by $1.5 billion in revolving credit facilities
- Net cash provided by operating activities fell to $50.3 million from $308.4 million, primarily due to a $307.4 million increase in accounts receivable
- Acquisitions in fiscal 1994 included Trasgo (50.1% ownership), Cobb-Vantress (100%), Gorges Foodservice, and Culinary Foods, and the company plans four new poultry-processing complexes over three years
- A stock repurchase program authorized up to 15 million Class A shares, with approximately 2.5 million shares purchased as of October 1, 1994
03—Questions
Frequently Asked Questions
Why did Tyson Foods report a net loss in fiscal 1994?
The net loss of $2.1 million resulted from special charges of $213.9 million, or $1.38 per share after tax, recorded in the third quarter. The charges reflected the excess of investments over net assets acquired for Arctic Alaska Fisheries Corporation, which the filing says has consistently performed below pre-acquisition expectations, and an impairment of its long-lived assets.
How did sales and earnings compare with the prior year?
Sales increased to $5.11 billion in fiscal 1994 from $4.71 billion in fiscal 1993. Before special charges, earnings per share were $1.37, compared with $1.22 in fiscal 1993. Operating expenses increased 43.1% to $766.0 million, largely due to the special charges.
How is Tyson Foods funding its operations and expansion?
The company funded operations through cash flow, working capital, and borrowings, primarily commercial paper. At October 1, 1994, $909.2 million was outstanding under or supported by its $1.5 billion financing facilities, and $457.9 million in unused unsecured lines of credit was available. The filing also states that $151.5 million is needed to complete construction projects in progress.
What legal risks does the filing disclose?
A federal grand jury in Seattle indicted former officers, directors and employees of Arctic, along with Arctic itself, on 53 criminal counts, with trial of a portion of the defendants expected to begin in June 1995. The State of Alaska also filed a forfeiture and damages complaint. Management stated it does not believe these matters will have a material adverse effect on the company's financial position.
What is the company's capital structure?
Tyson has two classes of common stock: Class A, with one vote per share and traded on Nasdaq under the symbol TYSNA, and Class B, with ten votes per share and no public market. Class B holders may convert their shares to Class A on a share-for-share basis. The company has paid uninterrupted quarterly dividends since 1977.
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