How did Tyson Foods perform financially in fiscal 2002?

Sales were $23.37 billion, up from $10.56 billion, and net income was $383 million, or $1.08 per diluted share, compared with $88 million, or $0.40 per diluted share, in fiscal 2001. The filing attributes the increase largely to the inclusion of IBP's operations for the full year, plus improved chicken performance and reduced operating costs.

What drove the change in the company's debt position?

Total debt was $3.99 billion at September 28, 2002, down from $4.78 billion a year earlier. The company said cash from operations and the $131 million in proceeds from the Specialty Brands sale were used to reduce indebtedness. Operating cash flow was $1.17 billion in 2002 compared with $511 million in 2001.

Which business segments drove profitability?

Chicken generated the largest operating income at $428 million on $7.22 billion of sales. Beef had the largest sales at $10.49 billion but operating income of $220 million. Prepared Foods reported $158 million of operating income and Pork reported $25 million, which the filing says was affected by the negative results of the live swine operation.

What are the main legal and regulatory risks disclosed?

Item 3 describes numerous proceedings, including a Department of Labor civil complaint alleging overtime violations, several wage-and-hour class actions, an indictment of the company and employees on immigration-law charges with trial expected in February 2003, securities litigation related to the terminated IBP merger, and a cattle producer class action in which plaintiffs claim damages in excess of $500 million. The company states that the likelihood and amount of ultimate liability in several of these cases cannot be determined at this time.

Did the company pay dividends and what is its share structure?

The company has paid uninterrupted quarterly dividends since 1977. The annual dividend rate is $0.16 per Class A share and $0.144 per Class B share. Class A stock trades on the New York Stock Exchange under the symbol TSN, while Class B stock has no public trading market and carries 10 votes per share.

TSN 10-K FY2002 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed November 27, 2002. Cited figures are marked; the original filing is the authoritative source.

Tyson Foods, Inc. reported fiscal 2002 (year ended September 28, 2002) sales of $23.37 billion^a, up from $10.56 billion in fiscal 2001, reflecting the inclusion of IBP, inc. for a full 52 weeks after the acquisition completed in fiscal 2001.

Net income was $383 million^b, or $1.08 per diluted share, compared with $88 million, or $0.40 per diluted share, in fiscal 2001. Operating income rose to $887 million from $316 million. Results were helped by the addition of IBP's beef, pork and prepared foods operations, improved chicken segment performance, a $22 million pretax gain on the sale of Specialty Brands, Inc., and a $30 million pretax partial settlement of vitamin antitrust litigation.

Charges included a $27 million^c write-down tied to discontinuing the Thomas E. Wilson brand and a $26 million live swine restructuring charge. Cash provided by operations was $1.17 billion, up from $511 million, and total debt fell to $3.99 billion from $4.78 billion at the prior year end.

Shareholders' equity increased to $3.66 billion^d. Beef was the largest segment by sales at $10.49 billion but earned only $220 million of operating income, while Chicken contributed $428 million of operating income on $7.22 billion of sales.

Investors should note the significant pending litigation disclosed in Item 3, including a Department of Labor Fair Labor Standards Act complaint, multiple wage-and-hour class actions, an immigration-related indictment with trial expected in February 2003, securities litigation tied to the terminated IBP merger, and a cattle producer class action in which plaintiffs claim damages in excess of $500 million. The company states it cannot determine the likelihood or amount of ultimate liability in several of these matters.

02—Key points

Key Highlights

Sales of $23.37 billion in fiscal 2002, versus $10.56 billion in fiscal 2001, driven by the full-year inclusion of IBP, inc.
Net income of $383 million, or $1.08 per diluted share, compared with $88 million, or $0.40 per diluted share, in fiscal 2001.
Operating income of $887 million versus $316 million; Chicken segment operating income was $428 million and Beef segment operating income was $220 million.
Cash provided by operating activities of $1.17 billion, up from $511 million, and total debt reduced to $3.99 billion from $4.78 billion.
One-time items: $22 million pretax gain on the sale of Specialty Brands, $30 million vitamin antitrust settlement, and $27 million Thomas E. Wilson brand write-down plus $26 million live swine restructuring charge.
Shareholders' equity rose to $3.66 billion; Class A dividend rate of $0.16 per share annually.
Significant pending litigation, including wage-and-hour suits, a federal immigration-related indictment with trial expected in February 2003, IBP-related securities litigation, and a cattle producer class action seeking damages in excess of $500 million.

03—Questions

Frequently Asked Questions

How did Tyson Foods perform financially in fiscal 2002?
Sales were $23.37 billion, up from $10.56 billion, and net income was $383 million, or $1.08 per diluted share, compared with $88 million, or $0.40 per diluted share, in fiscal 2001. The filing attributes the increase largely to the inclusion of IBP's operations for the full year, plus improved chicken performance and reduced operating costs.
What drove the change in the company's debt position?
Total debt was $3.99 billion at September 28, 2002, down from $4.78 billion a year earlier. The company said cash from operations and the $131 million in proceeds from the Specialty Brands sale were used to reduce indebtedness. Operating cash flow was $1.17 billion in 2002 compared with $511 million in 2001.
Which business segments drove profitability?
Chicken generated the largest operating income at $428 million on $7.22 billion of sales. Beef had the largest sales at $10.49 billion but operating income of $220 million. Prepared Foods reported $158 million of operating income and Pork reported $25 million, which the filing says was affected by the negative results of the live swine operation.
What are the main legal and regulatory risks disclosed?
Item 3 describes numerous proceedings, including a Department of Labor civil complaint alleging overtime violations, several wage-and-hour class actions, an indictment of the company and employees on immigration-law charges with trial expected in February 2003, securities litigation related to the terminated IBP merger, and a cattle producer class action in which plaintiffs claim damages in excess of $500 million. The company states that the likelihood and amount of ultimate liability in several of these cases cannot be determined at this time.
Did the company pay dividends and what is its share structure?
The company has paid uninterrupted quarterly dividends since 1977. The annual dividend rate is $0.16 per Class A share and $0.144 per Class B share. Class A stock trades on the New York Stock Exchange under the symbol TSN, while Class B stock has no public trading market and carries 10 votes per share.

04—Continue

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