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Tyson Foods Annual Report (Amendment), Year Ended Feb 8, 2006

Filing Date
Filed February 8, 2006
Period End
February 8, 2006
Security
TSN
In the record · 2016–202610-K1110-Q338-K142

TSN filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 142 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Jun ’17Jun ’17
  2. Leadership change8-K · May ’19May ’19
  3. Material agreement8-K · Oct ’21Oct ’21
  4. FY2025 annual report10-K · Nov ’25Nov ’25

01—Abstract

Summary

Summary of the 10-K/A filed February 8, 2006. Cited figures are marked; the original filing is the authoritative source.

Tyson Foods, Inc. filed this Amendment No. 1 on Form 10-K/A for the fiscal year ended October 1, 2005, to restate its 2005 consolidated financial statements.

The restatement corrects an error in the income tax provision: the company erroneously recorded approximately $19 milliona of non-recurring income tax expense related to a $55 million actuarial gain recognized under the Medicare Prescription Drug, Improvement and Modernization Act of 2003. As restated, net income for fiscal 2005 is $372 million, or $1.04 per diluted share, compared with $353 million, or $0.99 per diluted share, as originally reported. The restatement does not change sales of $26,014 million or operating income of $765 million.

Management concluded that a material weakness in internal control over financial reporting existed related to accounting for income taxes for unusual transactions, and disclosure controls were deemed not effective as of October 1, 2005. Operationally, sales declined 1.6% to $26.0 billionb, with a 2.3% decrease in volume and a 0.7% increase in average sales price. Beef segment operating results were a loss of $12 million, down from operating income of $127 million in fiscal 2004, reflecting lower domestic cattle supplies and restrictions on imports of Canadian cattle.

Chicken operating income rose to $582 million, Pork fell to $47 millionc, and Prepared Foods rose to $78 million. Total debt decreased $367 million to $3.0 billion, and the debt-to-capitalization ratio reached 39% at year end, below the company's 40% goal. Wal-Mart Stores, Inc. accounted for approximately 13% of fiscal 2005 consolidated sales.

The filing also details ongoing litigation, including the Oklahoma Illinois River Watershed poultry litter suit, the Schumacher cattle-producer class action, several Fair Labor Standards Act wage and hour cases, and shareholder derivative suits. The company states that these matters are not expected to have a material adverse effect on its consolidated results or financial position, though outcomes cannot be determined.

02—Key points

Key Highlights

  1. Restatement: Fiscal 2005 net income restated to $372 million ($1.04 diluted EPS), up from $353 million ($0.99 diluted EPS) as originally reported, after reversing approximately $19 million of erroneously recorded income tax expense tied to a $55 million Medicare Part D actuarial gain.
  2. Material weakness: Management identified a material weakness in controls over accounting for income taxes for unusual transactions, and concluded disclosure controls and internal control over financial reporting were not effective as of October 1, 2005.
  3. Sales: Fiscal 2005 sales were $26.0 billion, down $427 million or 1.6%, with volume down 2.3% and average sales price up 0.7%.
  4. Segment results: Chicken operating income increased to $582 million, while Beef swung to an operating loss of $12 million, Pork fell to $47 million, and Prepared Foods rose to $78 million.
  5. Beef pressure: Lower domestic cattle supplies and restrictions on imports of Canadian cattle lowered Beef production volumes and raised operating cost per head.
  6. Balance sheet: Total debt was reduced by $367 million to $3.0 billion, and the debt-to-capitalization ratio was 39% at year end, versus a 40% goal.
  7. Customer concentration: Wal-Mart Stores, Inc. represented approximately 13% of fiscal 2005 consolidated sales.

03—Questions

Frequently Asked Questions

  1. Why did Tyson Foods restate its fiscal 2005 financial statements?

    The company erroneously recorded non-recurring income tax expense of approximately $19 million related to a $55 million actuarial gain from the Medicare Prescription Drug, Improvement and Modernization Act of 2003. FASB Staff Position 106-2 states the subsidy is exempt from federal taxation, so the tax expense should not have been recorded. The error was identified in January 2006.

  2. How did the restatement change Tyson's reported earnings?

    Net income for fiscal 2005 increased from $353 million, or $0.99 per diluted share, as originally reported to $372 million, or $1.04 per diluted share, as restated. The provision for income taxes decreased from $175 million to $156 million.

  3. What drove the decline in Tyson's fiscal 2005 sales and beef results?

    Sales declined $427 million, or 1.6%, primarily due to reduced Beef segment sales from import and export restrictions and one less week of sales. The Beef segment recorded an operating loss of $12 million, mainly due to lower domestic cattle supplies and restrictions on imports of Canadian cattle, which lowered production volumes and raised operating cost per head.

  4. What material weakness did management identify, and what is being done about it?

    Management identified a material weakness in controls over accounting for income taxes for unusual transactions. The error was not identified by existing controls over the manual income tax provision calculation. The company is designing and implementing improvements, including quarterly meetings between tax and accounting team members and more formal communication between the two functions.

04—Continue

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