01—Abstract
Summary
Summary of the 10-K filed November 21, 2011. Cited figures are marked; the original filing is the authoritative source.
Tyson Foods, Inc. reported fiscal 2011 (52 weeks ended October 1, 2011) sales of $32.27 billiona, up from $28.43 billion in fiscal 2010, with operating income of $1.29 billion versus $1.56 billion a year earlier.
Net income attributable to Tyson was $750 millionb, or $1.97 per diluted share, compared with $780 million, or $2.06 per diluted share, in fiscal 2010. Management attributed the sales increase mainly to higher average sales prices tied to rising input costs, which rose by about $3.7 billion, with the Beef and Pork segments driving most of the improvement. The Chicken segment was the weak point, with operating margin falling to 1.5% from 5.2% as grain and feed ingredient costs rose $675 million.
The balance sheet strengthened over the year. Total debt declined $350 million to $2.2 billionc, the lowest level since the IBP acquisition, and cash and equivalents were $716 million. Operating cash flow was $1.0 billion, and the company repurchased 9.7 million Class A shares for about $170 million.
Liquidity totaled $1.6 billiond at year end. For fiscal 2012, Tyson guided to sales above $34 billion, capital expenditures of $800 to $850 million, and net interest expense of about $185 million, and it expects a profitable Chicken segment that strengthens through the year. Key risks include exposure to volatile grain, cattle and hog costs, Wal-Mart's 13.3% share of sales, a $560 million goodwill impairment recorded in fiscal 2009 and the 2011 Domestic Chicken goodwill of $900 million, pending wage-and-hour and environmental litigation, and control of roughly 70.74% of voting power held by the Tyson Limited Partnership and family members.
02—Key points
Key Highlights
- Sales rose to $32.27 billion in fiscal 2011 from $28.43 billion, driven mainly by higher average sales prices.
- Net income attributable to Tyson was $750 million, or $1.97 per diluted share, versus $2.06 per share in fiscal 2010.
- Operating margin was 4.0% in fiscal 2011, with Pork at 10.3%, Beef at 3.5%, Prepared Foods at 3.6% and Chicken at 1.5%.
- Total debt fell $350 million to $2.2 billion, and liquidity was $1.6 billion, including $716 million of cash.
- The company repurchased 9.7 million Class A shares for about $170 million and 12.8 million shares remain authorized.
- Fiscal 2012 guidance calls for sales above $34 billion, capital expenditures of $800 to $850 million and net interest expense of about $185 million.
- Wal-Mart Stores accounted for 13.3% of fiscal 2011 consolidated sales, and the Tyson family controls about 70.74% of voting power.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Tyson Foods kept $0.02.
- Revenue$32.03B100.0%
- Cost of revenue−$29.84B93.1%
- Gross profit$2.19B6.9%
- Operating costs−$906.0M2.8%
- Operating income$1.29B4.0%
- Interest, other & tax−$539.0M1.7%
- Net income$750.0M2.3%
Where FY2011 revenue went
$32.03B- Cost of revenue: $29.84B, 93% of revenue
- Net income: $750.0M, 2.3% of revenue
- R&D: $42.0M, 0.1% of revenue
- SG&A: $906.0M, 2.8% of revenue
- Interest, other & tax: $539.0M, 1.7% of revenue
Kept 2.3% as net incomeNet income $750.0M · 2.3%R&D $42.0M · 0.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed November 21, 2011Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $32.03B$28.43B | +12.7% |
| Cost of Revenue | $29.84B$25.92B | +15.1% |
| Gross Profit | $2.19B$2.51B | −12.7% |
| R&D Expenses | $42.00M$38.00M | +10.5% |
| SG&A Expenses | $906.00M$929.00M | −2.5% |
| Operating Income | $1.29B$1.56B | −17.2% |
| Net Income | $750.00M$780.00M | −3.8% |
| EPS (Diluted) | $1.97$2.06 | −4.4% |
| Shares Outstanding (Diluted) | 380.00M379.00M | +0.3% |
05—Questions
Frequently Asked Questions
What drove the increase in Tyson's fiscal 2011 sales?
Sales increased $3.8 billion, or 13.5%, to $32.27 billion. Average sales prices contributed about $3.4 billion of the increase, mostly due to price increases tied to rising raw material costs, with the Beef and Pork segments providing most of the gain. Sales volume added $484 million, mainly from the Chicken and Pork segments.
Why did Tyson's Chicken segment profitability decline?
Chicken operating income fell to $164 million from $519 million, and operating margin dropped to 1.5% from 5.2%. The company cited $675 million of higher grain and feed ingredient costs, along with excess industry supplies that made it difficult to pass along input cost increases. Approximately $200 million of operational improvements partly offset these pressures.
How much debt does Tyson have and how is its liquidity?
Total debt was $2.18 billion at October 1, 2011, down from $2.54 billion a year earlier. The company had $716 million of cash and cash equivalents and $1.56 billion of total liquidity, including $842 million available under its $1.0 billion revolving credit facility. The company stated it was in compliance with all debt covenants.
What is Tyson's outlook for fiscal 2012?
Tyson expects 2012 sales to exceed $34 billion, primarily from price increases tied to lower domestic protein availability and higher raw material costs. It expects industry chicken production to decline about 4%, anticipates a profitable Chicken segment that strengthens through the year, and plans capital expenditures of $800 to $850 million.
What are the main risks highlighted in the filing?
Key risks include volatile prices for feed grains, live cattle and hogs; livestock disease outbreaks; reliance on Wal-Mart, which accounted for 13.3% of sales; and the possibility of goodwill impairments, with $1.9 billion of goodwill representing about 17.1% of total assets. The filing also notes that the Tyson Limited Partnership and family members control about 70.74% of voting power, and it describes several pending wage-and-hour, environmental and product-related lawsuits.
06—Continue