01—Abstract
Summary
Summary of the 10-K filed November 17, 2014. Cited figures are marked; the original filing is the authoritative source.
Tyson Foods, Inc. reported fiscal 2014 (52 weeks ended September 27, 2014) record sales of $37.58 billiona, up from $34.37 billion in fiscal 2013, driven by price and mix improvements that offset a $2.3 billion increase in input costs.
Operating income rose to $1.43 billionb from $1.38 billion, and net income attributable to Tyson was $864 million, or $2.37 per diluted share, versus $2.12 in fiscal 2013. The Chicken segment delivered record operating income of $883 million, while Beef ($347 million) and Pork ($455 million) were strong; Prepared Foods swung to an operating loss of $60 million and International posted a $121 million loss. The defining event of the year was the August 28, 2014 acquisition of The Hillshire Brands Company for $63.00 per share, or $8,081 million, plus $163 million in breakage costs.
Funding came from $2.3 billionc of term loans, $3.25 billion of senior notes, $1.5 billion of tangible equity units and $873 million of Class A stock issuance. Total debt rose to $8.18 billion from $2.41 billion, net debt to EBITDA climbed to 4.1x from 0.7x, and goodwill and intangibles reached roughly $12 billion of total assets of $23.96 billion. The company also agreed to sell its Brazil and Mexico operations to JBS SA for $575 million in cash, with the Brazil sale expected in the first quarter of fiscal 2015.
Investors should weigh the higher leverage and integration risk against the stronger scale in prepared foods. The Tyson Limited Partnership controls about 70.14% of total voting power, and Wal-Mart Stores, Inc. accounted for 14.6% of fiscal 2014 consolidated sales. The board increased the quarterly dividend to $0.10d per Class A share on November 13, 2014.
02—Key points
Key Highlights
- Record fiscal 2014 sales of $37.58 billion, up from $34.37 billion, with sales volume up 2.4% and average sales price up 6.9%.
- Net income attributable to Tyson of $864 million, or $2.37 per diluted share, compared with $778 million, or $2.12 per diluted share, in fiscal 2013.
- Acquisition of The Hillshire Brands Company on August 28, 2014 for $8,081 million in equity value, with $4,804 million of goodwill and $5,141 million of identifiable intangible assets recorded.
- Total debt increased to $8.18 billion from $2.41 billion, and net debt to EBITDA rose to 4.1x from 0.7x.
- Chicken segment set a record with $883 million operating income (7.9% margin); Prepared Foods posted a $60 million operating loss, and International a $121 million loss.
- Planned sale of Brazil and Mexico operations to JBS SA for $575 million in cash; Brazil expected to close in the first quarter of fiscal 2015 and Mexico in the first half.
- Tyson Limited Partnership controls about 70.14% of voting power, and Wal-Mart Stores, Inc. accounted for 14.6% of consolidated sales.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Tyson Foods kept $0.02.
- Revenue$37.58B100.0%
- Cost of revenue−$34.90B92.9%
- Gross profit$2.69B7.1%
- Operating costs−$1.25B3.3%
- Operating income$1.43B3.8%
- Interest, other & tax−$566.0M1.5%
- Net income$864.0M2.3%
Where FY2014 revenue went
$37.58B- Cost of revenue: $34.90B, 93% of revenue
- Net income: $864.0M, 2.3% of revenue
- R&D: $52.0M, 0.1% of revenue
- SG&A: $1.25B, 3.3% of revenue
- Interest, other & tax: $566.0M, 1.5% of revenue
Kept 2.3% as net incomeNet income $864.0M · 2.3%R&D $52.0M · 0.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed November 17, 2014Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $37.58B$34.37B | +9.3% |
| Cost of Revenue | $34.90B$32.02B | +9.0% |
| Gross Profit | $2.69B$2.36B | +13.9% |
| R&D Expenses | $52.00M$50.00M | +4.0% |
| SG&A Expenses | $1.25B$983.00M | +27.7% |
| Operating Income | $1.43B$1.38B | +4.0% |
| Net Income | $864.00M$778.00M | +11.1% |
| EPS (Diluted) | $2.37$2.12 | +11.8% |
| Shares Outstanding (Diluted) | 364.00M367.00M | −0.8% |
05—Questions
Frequently Asked Questions
How did the Hillshire Brands acquisition change Tyson's balance sheet?
Total assets rose to $23.96 billion from $12.18 billion. Goodwill increased to $6.71 billion and intangible assets to $5.28 billion, and total debt rose to $8.18 billion. Shareholders' equity increased to $8.90 billion from $6.23 billion, partly from $873 million of Class A stock issuance and $1,454 million of net TEU proceeds.
What drove the increase in sales in fiscal 2014?
Sales increased $3.21 billion, with average sales price contributing about $2.5 billion, largely from tight domestic protein supply, rising live and raw material costs, and improved mix, concentrated in the Beef and Pork segments. Sales volume added $679 million, mostly from Prepared Foods, which included one month of Hillshire Brands.
What is the outlook for fiscal 2015 capital spending and interest expense?
Capital spending for fiscal 2015 is expected to be approximately $900 million. Net interest expense is expected to be approximately $290 million for fiscal 2015, which will be a 53-week year.
What legal matters could affect Tyson?
The Missouri attorney general filed a civil suit over a May 2014 discharge at the Monett plant, and the EPA has begun a criminal investigation. Multiple wage-and-hour cases involving beef and pork plants are pending, including Acosta, where the trial court entered a judgment of $18,774,989. The Oklahoma poultry litter case remains undecided after trial.
06—Continue