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NOTE 1: BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business: Tyson Foods, Inc. (collectively, "Company," "we," "us" or "our"), founded in 1935 with world headquarters in Springdale, Arkansas, is one of the world's largest meat protein companies and the second-largest food production company in the Fortune 500. We produce a wide variety of brand name protein-based and prepared food products marketed in the United States and approximately 130 countries around the world.
Consolidation: The consolidated financial statements include the accounts of all majority-owned subsidiaries over which we exercise control and, when applicable, entities for which we have a controlling financial interest or are the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation.
We have an investment in a joint venture, Dynamic Fuels LLC (Dynamic Fuels), in which we have a 50 percent ownership interest. Dynamic Fuels qualifies as a variable interest entity. We consolidate Dynamic Fuels since we are the primary beneficiary. At October 1, 2011, Dynamic Fuels had $170 million of total assets, of which $144 million was property, plant and equipment, and $116 million of total liabilities, of which $100 million was long-term debt. At October 2, 2010, Dynamic Fuels had $154 million of total assets, of which $145 million was property, plant and equipment, and $107 million of total liabilities, of which $100 million was long-term debt.
Fiscal Year: We utilize a 52- or 53-week accounting period ending on the Saturday closest to September 30. The Company's accounting cycle resulted in a 52-week year for fiscal years 2011 and 2010 and a 53-week year for fiscal year 2009.
Discontinued Operation: On March 13, 2009, we completed the sale of the beef processing, cattle feed yard and fertilizer assets of three of our Alberta, Canada subsidiaries (collectively, Lakeside), which were part of our Beef segment, and related inventories. The financial statements report Lakeside as a discontinued operation. See Note 3: Acquisitions and Discontinued Operation in the Notes to Consolidated Financial Statements for further information.
Cash and Cash Equivalents: Cash equivalents consist of investments in short-term, highly liquid securities having original maturities of three months or less, which are made as part of our cash management activity. The carrying values of these assets approximate their fair values. We primarily utilize a cash management system with a series of separate accounts consisting of lockbox accounts for receiving cash, concentration accounts where funds are moved to, and several zero-balance disbursement accounts for funding payroll, accounts payable, livestock procurement, grower payments, etc. As a result of our cash management system, checks issued, but not presented to the banks for payment, may result in negative book cash balances. These negative book cash balances are included in accounts payable and other current liabilities. At October 1, 2011, and October 2, 2010, checks outstanding in excess of related book cash balances totaled approximately $281 million and $267 million, respectively.
Accounts Receivable: We record accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the accounts receivable balances and charged to the provision for doubtful accounts. We calculate this allowance based on our history of write-offs, level of past due accounts and relationships with and economic status of our customers. At October 1, 2011, and October 2, 2010, our allowance for uncollectible accounts was $31 million and $32 million, respectively. We generally do not have collateral for our receivables, but we do periodically evaluate the credit worthiness of our customers.
Inventories: Processed products, livestock and supplies and other are valued at the lower of cost or market. Cost includes purchased raw materials, live purchase costs, growout costs (primarily feed, contract grower pay and catch and haul costs), labor and manufacturing and production overhead, which are related to the purchase and production of inventories.
| in millions | ||||||||
| 2011 | 2010 | |||||||
|
Processed products: |
||||||||
|
Weighted-average method – chicken and prepared foods |
$715 | $721 | ||||||
|
First-in, first-out method – beef and pork |
581 | 462 | ||||||
|
Livestock – first-in, first-out method |
928 | 759 | ||||||
|
Supplies and other – weighted-average method |
363 | 332 | ||||||
|
Total inventory |
$2,587 | $2,274 | ||||||
Property, Plant and Equipment: Property, plant and equipment are stated at cost and depreciated on a straight-line method, using estimated lives for buildings and leasehold improvements of 10 to 33 years, machinery and equipment of three to 12 years and land improvements and other of three to 20 years. Major repairs and maintenance costs that significantly extend the useful life of the related assets are capitalized. Normal repairs and maintenance costs are charged to operations.
We review the carrying value of long-lived assets at each balance sheet date if indication of impairment exists. Recoverability is assessed using undiscounted cash flows based on historical results and current projections of earnings before interest and taxes. We measure impairment as the excess of carrying cost over the fair value of an asset. The fair value of an asset is measured using discounted cash flows including market participant assumptions of future operating results and discount rates.
Goodwill and Other Intangible Assets: Goodwill and indefinite life intangible assets are initially recorded at fair value and not amortized, but are reviewed for impairment at least annually or more frequently if impairment indicators arise. Our goodwill is allocated by reporting unit, and we follow a two-step process to evaluate if a potential impairment exists. The first step is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to have a potential impairment and the second step of the impairment test is not necessary. However, if the carrying amount of a reporting unit exceeds its fair value, the second step is performed to determine if goodwill is impaired and to measure the amount of impairment loss to recognize, if any. The second step compares the implied fair value of goodwill with the carrying amount of goodwill. If the implied fair value of goodwill exceeds the carrying amount, then goodwill is not considered impaired. However, if the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination (i.e., the fair value of the reporting unit is allocated to all the assets and liabilities, including any unrecognized intangible assets, as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was determined as the exit price a market participant would pay for the same business). We have elected to make the first day of the fourth quarter the annual impairment assessment date for goodwill and other indefinite life intangible assets.
We have estimated the fair value of our reporting units using a discounted cash flow analysis, which uses significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. This analysis requires us to make various judgmental estimates and assumptions about sales, operating margins, growth rates and discount factors and is believed to reflect market participant views which would exist in an exit transaction. Generally, we utilize normalized operating margin assumptions based on future expectations and operating margins historically realized in the reporting units' industries. For the fiscal 2011 impairment test of material reporting units, only our Domestic Chicken reporting unit, which had goodwill at October 1, 2011 totaling $900 million, utilized operating margins in future years in excess of the operating margins realized in the most recent year. The current year Domestic Chicken reporting unit results were not indicative of future market participant expectations in an exit transaction. We assumed operating margins in future years would return to our normalized range, as we believe this is consistent with market participant views in an exit transaction. Some of the inherent estimates and assumptions used in determining fair value of the reporting units are outside the control of management, including interest rates, cost of capital, tax rates, and credit ratings. While we believe we have made reasonable estimates and assumptions to calculate the fair value of the reporting units, it is possible a material change could occur. If our actual results are not consistent with our estimates and assumptions used to calculate fair value, we may be required to perform the second step in future years, which could result in material impairments of our goodwill.
During fiscal 2011, 2010 and 2009, all of our reporting units passed the first step of the goodwill impairment analysis, with the exception of an immaterial Chicken segment reporting unit in fiscal 2010 and the Beef reporting unit in fiscal 2009. In fiscal 2010, we recorded a $29 million full impairment of an immaterial Chicken segment reporting unit's goodwill. In fiscal 2009, we recorded a $560 million partial impairment of our Beef reporting unit's goodwill, which was driven by an increase in our discount rate used in the 2009 annual goodwill impairment analysis as a result of disruptions in global credit and other financial markets and deterioration of economic conditions.
For our other indefinite life intangible assets, if the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The fair value of trademarks is determined using a royalty rate method based on expected revenues by trademark.
Investments: We have investments in joint ventures and other entities. We use the cost method of accounting when our voting interests are less than 20 percent. We use the equity method of accounting when our voting interests are in excess of 20 percent and we do not have a controlling interest or a variable interest in which we are the primary beneficiary. Investments in joint ventures and other entities are reported in the Consolidated Balance Sheets in Other Assets.
We also have investments in marketable debt securities. We have determined all of our marketable debt securities are available-for-sale investments. These investments are reported at fair value based on quoted market prices as of the balance sheet date, with unrealized gains and losses, net of tax, recorded in other comprehensive income. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is recorded in interest income. The cost of securities sold is based on the specific identification method. Realized gains and losses on the sale of debt securities and declines in value judged to be other than temporary are recorded on a net basis in other income. Interest and dividends on securities classified as available-for-sale are recorded in interest income.
Accrued Self Insurance: We use a combination of insurance and self-insurance mechanisms in an effort to mitigate the potential liabilities for health and welfare, workers' compensation, auto liability and general liability risks. Liabilities associated with our risks retained are estimated, in part, by considering claims experience, demographic factors, severity factors and other actuarial assumptions.
Capital Stock: We have two classes of capital stock, Class A Common Stock, $0.10 par value (Class A stock) and Class B Common Stock, $0.10 par value (Class B stock). Holders of Class B stock may convert such stock into Class A stock on a share-for-share basis. Holders of Class B stock are entitled to 10 votes per share, while holders of Class A stock are entitled to one vote per share on matters submitted to shareholders for approval. As of October 1, 2011, Tyson Limited Partnership (the TLP) owned 99.97% of the outstanding shares of Class B stock and the TLP and members of the Tyson family owned, in the aggregate, 2.45% of the outstanding shares of Class A stock, giving them, collectively, control of approximately 70.74% of the total voting power of the outstanding voting stock. Cash dividends cannot be paid to holders of Class B stock unless they are simultaneously paid to holders of Class A stock. The per share amount of the cash dividend paid to holders of Class B stock cannot exceed 90% of the cash dividend simultaneously paid to holders of Class A stock. We pay quarterly cash dividends to Class A and Class B shareholders. We paid Class A dividends per share of $0.16 and Class B dividends per share of $0.144 in each of fiscal years 2011, 2010 and 2009.
The Class B stock is considered a participating security requiring the use of the two-class method for the computation of basic earnings per share. The two-class computation method for each period reflects the cash dividends paid for each class of stock, plus the amount of allocated undistributed earnings (losses) computed using the participation percentage, which reflects the dividend rights of each class of stock. Basic earnings per share were computed using the two-class method for all periods presented. The shares of Class B stock are considered to be participating convertible securities since the shares of Class B stock are convertible on a share-for-share basis into shares of Class A stock. Diluted earnings per share were computed assuming the conversion of the Class B shares into Class A shares as of the beginning of each period.
On May 11, 2011, we announced our Board of Directors reactivated a share repurchase program, which had no activity since fiscal 2005, to repurchase up to the remaining available 22.5 million shares of Class A common stock under the program. The share repurchase program has no fixed or scheduled termination date. During fiscal 2011, we repurchased 9.7 million shares for approximately $170 million under this plan. As of October 1, 2011, 12.8 million shares remain authorized for repurchase. The timing and extent to which we repurchase shares will depend upon, among other things, market conditions, liquidity targets, limitations under our debt obligations and regulatory requirements. In addition to the share repurchase program, we purchase shares on the open market to fund certain obligations under our equity compensation plans. These repurchases totaled $37 million and $48 million during fiscal 2011 and 2010, respectively.
Financial Instruments: We purchase certain commodities, such as grains and livestock in the course of normal operations. As part of our commodity risk management activities, we use derivative financial instruments, primarily futures and options, to reduce our exposure to various market risks related to these purchases, as well as to changes in foreign currency exchange rates. Contract terms of a financial instrument qualifying as a hedge instrument closely mirror those of the hedged item, providing a high degree of risk reduction and correlation. Contracts designated and highly effective at meeting risk reduction and correlation criteria are recorded using hedge accounting. If a derivative instrument is accounted for as a hedge, changes in the fair value of the instrument will be offset either against the change in fair value of the hedged assets, liabilities or firm commitments through earnings or recognized in other comprehensive income (loss) until the hedged item is recognized in earnings. The ineffective portion of an instrument's change in fair value is immediately recognized in earnings as a component of cost of sales. Instruments we hold as part of our risk management activities that do not meet the criteria for hedge accounting are marked to fair value with unrealized gains or losses reported currently in earnings. Changes in market value of derivatives used in our risk management activities relating to forward sales contracts are recorded in sales, while changes surrounding inventories on hand or anticipated purchases of inventories or supplies are recorded in cost of sales. We generally do not hedge anticipated transactions beyond 18 months.
Revenue Recognition: We recognize revenue when title and risk of loss are transferred to customers, which is generally on delivery based on terms of sale. Revenue is recognized as the net amount estimated to be received after deducting estimated amounts for discounts, trade allowances and product terms.
Litigation Reserves: There are a variety of legal proceedings pending or threatened against us. Accruals are recorded when it is probable a liability has been incurred and the amount of the liability can be reasonably estimated based on current law, progress of each case, opinions and views of legal counsel and other advisers, our experience in similar matters and intended response to the litigation. These amounts, which are not discounted and are exclusive of claims against third parties, are adjusted periodically as assessment efforts progress or additional information becomes available. We expense amounts for administering or litigating claims as incurred. Accruals for legal proceedings are included in Other current liabilities in the Consolidated Balance Sheets.
Freight Expense: Freight expense associated with products shipped to customers is recognized in cost of sales.
Advertising and Promotion Expenses: Advertising and promotion expenses are charged to operations in the period incurred. Customer incentive and trade promotion activities are recorded as a reduction to sales based on amounts estimated as being due to customers, based primarily on historical utilization and redemption rates, while other advertising and promotional activities are recorded as selling, general and administrative expenses. Advertising and promotion expenses for fiscal years 2011, 2010 and 2009 were $552 million, $505 million and $491 million, respectively.
Research and Development: Research and development costs are expensed as incurred. Research and development costs totaled $42 million, $38 million and $33 million in fiscal 2011, 2010 and 2009, respectively.
Use of Estimates: The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States, which require us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Recently Issued Accounting Pronouncements: In May 2011, the Financial Accounting Standards Board (FASB) clarified the guidance around fair value measurements and disclosures. This guidance is effective for interim and annual periods beginning after December 15, 2011. We will adopt this guidance in the second quarter of fiscal year 2012. We do not expect the adoption will have a significant impact on our consolidated financial statements.
In June 2011, the FASB issued guidance regarding the presentation of comprehensive income. This guidance is effective for annual periods, and interim periods within those years, beginning after December 15, 2011. We anticipate we will adopt this guidance in the first quarter of fiscal year 2013. Upon adoption, we will be required to present comprehensive income as part of our consolidated statements of income, or in a separate financial statement. Currently, we present such information in our notes to the consolidated financial statements. Other than changing the presentation of comprehensive income, we do not expect the adoption will have a significant impact on our consolidated financial statements.
In September 2011, the FASB issued guidance amending the way companies test for goodwill impairment. This guidance is effective for interim and annual periods beginning after December 15, 2011, with early adoption permitted. We do not expect the adoption will have a significant impact on our consolidated financial statements.
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NOTE 2: CHANGES IN ACCOUNTING PRINCIPLES
In December 2007, the FASB issued guidance to establish accounting and reporting standards for a noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This guidance clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity and may be reported as equity in the consolidated financial statements, rather than in the liability or mezzanine section between liabilities and equity. This guidance also requires consolidated net income be reported at amounts that include the net income attributable to both Tyson (the parent) and the noncontrolling interest. We adopted the presentation and disclosure requirements retrospectively at the beginning of fiscal 2010. Accordingly, "attributable to Tyson" refers to operating results exclusive of any noncontrolling interest. In conjunction with this adoption, we also adopted guidance applicable for all noncontrolling interests in which we are or may be required to repurchase an interest in a consolidated subsidiary from the noncontrolling interest holder under a put option or other contractual redemption requirement. Because we had certain redeemable noncontrolling interests, noncontrolling interests were presented in both the equity section and the mezzanine section of the balance sheet between liabilities and equity.
In May 2008, the FASB issued guidance which specifies issuers of convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) should separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. The amount allocated to the equity component represents a discount to the debt, which is amortized into interest expense using the effective interest method over the life of the debt. We adopted this guidance in the first quarter of fiscal 2010 and applied it retrospectively. Upon retrospective adoption, our effective interest rate on our 3.25% Convertible Senior Notes due 2013 issued in September 2008 was determined to be 8.26%, which resulted in the recognition of a $92 million discount to these notes with the offsetting after tax amount of $56 million recorded to capital in excess of par value. This discount is being accreted over the five-year term of the convertible notes at the effective interest rate.
The following table presents the effects of the retrospective application of new accounting guidance on our consolidated financial statements (in millions, except per share data):
| Previously Reported |
Adjustments: Convertible Debt |
Adjustments: Noncontrolling Interest |
As Adjusted |
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October 3, 2009 – Income Statement: |
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Interest Expense |
$310 | $17 | $0 | $327 | ||||||||||||
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Income (Loss) from Continuing Operations before Income Taxes |
(526) | (17) | 0 | (543) | ||||||||||||
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Income Tax Expense |
14 | (7) | 0 | 7 | ||||||||||||
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Income (Loss) from Continuing Operations |
(540) | (10) | 0 | (550) | ||||||||||||
|
Minority Interest |
(4) | 0 | 4 | 0 | ||||||||||||
|
Net Income (Loss) |
(537) | (10) | (4) | (551) | ||||||||||||
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Less: Net Loss Attributable to Noncontrolling Interest |
0 | 0 | (4) | (4) | ||||||||||||
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Net Income (Loss) Attributable to Tyson |
0 | 0 | 0 | (547) | ||||||||||||
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Net Income (Loss) Per Share from Continuing Operations Attributable to Tyson: |
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Class A Basic |
$(1.47) | $(0.02) | $0.00 | $(1.49) | ||||||||||||
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Class B Basic |
$(1.32) | $(0.03) | $0.00 | $(1.35) | ||||||||||||
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Diluted |
$(1.44) | $(0.03) | $0.00 | $(1.47) | ||||||||||||
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Net Income (Loss) Per Share Attributable to Tyson: |
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Class A Basic |
$(1.47) | $(0.02) | $0.00 | $(1.49) | ||||||||||||
|
Class B Basic |
$(1.32) | $(0.03) | $0.00 | $(1.35) | ||||||||||||
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Diluted |
$(1.44) | $(0.03) | $0.00 | $(1.47) | ||||||||||||
In December 2008, the FASB issued guidance requiring additional disclosures about assets held in an employer's defined benefit pension or other postretirement plan. This guidance is effective for fiscal years ending after December 15, 2009, with early adoption permitted. We adopted the disclosure requirements in fiscal 2010. See Note 14: Pensions and Other Postretirement Benefits for required disclosures.
In June 2009, the FASB issued guidance removing the concept of a qualifying special-purpose entity. This guidance also clarifies the requirements for isolation and limitations on portions of financial assets eligible for sale accounting. This guidance is effective for fiscal years beginning after November 15, 2009. We adopted this guidance at the beginning of fiscal year 2011. The adoption did not have a significant impact on our consolidated financial statements.
In June 2009 and December 2009, the FASB issued guidance requiring an analysis to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity. This guidance requires an ongoing assessment and eliminates the quantitative approach previously required for determining whether an entity is the primary beneficiary. This guidance is effective for fiscal years beginning after November 15, 2009. We adopted this guidance at the beginning of fiscal year 2011. The adoption did not have a significant impact on our consolidated financial statements.
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NOTE 3: ACQUISITIONS AND DISCONTINUED OPERATION
Acquisitions
In August 2009, we completed the establishment of related joint ventures in China referred to as Shandong Tyson Xinchang Foods. The aggregate purchase price for our 60% equity interest was $21 million, which excludes $93 million of cash transferred to the joint venture for future capital needs. The purchase price included $29 million allocated to Intangible Assets and $19 million allocated to Goodwill, as well as the assumption of $76 million of Current and Long-Term Debt.
In May 2011, the minority partner exercised put options requiring us to purchase its entire 40% equity interest. In August 2011, the transaction closed for $66 million.
In October 2008, we acquired three vertically integrated poultry companies in southern Brazil: Macedo Agroindustrial, Avicola Itaiopolis and Frangobras. The aggregate purchase price was $67 million. In addition, we had $15 million of contingent purchase price based on production volumes. The purchase price included $23 million allocated to Goodwill and $19 million allocated to Intangible Assets. Through fiscal 2011, we have paid $11 million of the contingent purchase price.
Discontinued Operation
On March 13, 2009, we completed the sale of the beef processing, cattle feed yard and fertilizer assets of three of our Alberta, Canada subsidiaries (collectively, Lakeside), which were part of our Beef segment, and related inventories for total consideration of $145 million, based on exchange rates then in effect. This included (a) cash received at closing of $43 million, (b) $78 million of collateralized notes receivable from either XL Foods or an affiliated entity to be collected throughout the two years following closing, and (c) $24 million of XL Foods Preferred Stock to be redeemed over five years.
We recorded a pretax loss on sale of Lakeside of $10 million in fiscal 2009, which included an allocation of beef reporting unit goodwill of $59 million and cumulative currency translation adjustment gains of $41 million.
The following is a summary of Lakeside's operating results prior to its disposition (in millions):
| 2009 | ||||
|
Sales |
$461 | |||
|
Pretax income from discontinued operation |
$20 | |||
|
Loss on sale of discontinued operation |
(10) | |||
|
Income tax expense |
11 | |||
|
Loss from discontinued operation |
$(1) | |||
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NOTE 4: PROPERTY, PLANT AND EQUIPMENT
Major categories of property, plant and equipment and accumulated depreciation at October 1, 2011, and October 2, 2010:
| in millions | ||||||||
| 2011 | 2010 | |||||||
|
Land |
$95 | $97 | ||||||
|
Building and leasehold improvements |
2,698 | 2,617 | ||||||
|
Machinery and equipment |
4,897 | 4,694 | ||||||
|
Land improvements and other |
386 | 232 | ||||||
|
Buildings and equipment under construction |
446 | 513 | ||||||
| 8,522 | 8,153 | |||||||
|
Less accumulated depreciation |
4,699 | 4,479 | ||||||
|
Net property, plant and equipment |
$3,823 | $3,674 | ||||||
Approximately $427 million will be required to complete buildings and equipment under construction at October 1, 2011.
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NOTE 5: GOODWILL AND OTHER INTANGIBLE ASSETS
The following table reflects goodwill activity for fiscal years 2011 and 2010:
| in millions | ||||||||||||||||||||
| Chicken | Beef | Pork | Prepared Foods |
Consolidated | ||||||||||||||||
|
Balances at October 3, 2009: |
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|
Goodwill |
$973 | $1,123 | $317 | $64 | $2,477 | |||||||||||||||
|
Accumulated impairment losses |
0 | (560) | 0 | 0 | (560) | |||||||||||||||
| 973 | 563 | 317 | 64 | 1,917 | ||||||||||||||||
|
Fiscal 2010 Activity: |
||||||||||||||||||||
|
Impairment losses |
(29) | 0 | 0 | 0 | (29) | |||||||||||||||
|
Currency translation and other |
6 | 0 | 0 | (1) | 5 | |||||||||||||||
|
Balances at October 2, 2010: |
||||||||||||||||||||
|
Goodwill |
$979 | $1,123 | $317 | $63 | $2,482 | |||||||||||||||
|
Accumulated impairment losses |
(29) | (560) | 0 | 0 | (589) | |||||||||||||||
| $950 | $563 | $317 | $63 | $1,893 | ||||||||||||||||
|
Fiscal 2011 Activity: |
||||||||||||||||||||
|
Impairment losses |
0 | 0 | 0 | 0 | 0 | |||||||||||||||
|
Currency translation and other |
(1) | 0 | 0 | 0 | (1) | |||||||||||||||
|
Balances at October 1, 2011: |
||||||||||||||||||||
|
Goodwill |
978 | 1,123 | 317 | 63 | 2,481 | |||||||||||||||
|
Accumulated impairment losses |
(29) | (560) | 0 | 0 | (589) | |||||||||||||||
| $949 | $563 | $317 | $63 | $1,892 | ||||||||||||||||
Other intangible assets by type at October 1, 2011, and October 2, 2010:
| in millions | ||||||||
| 2011 | 2010 | |||||||
|
Gross Carrying Value: |
||||||||
|
Trademarks |
$56 | $56 | ||||||
|
Patents, intellectual property and other |
143 | 144 | ||||||
|
Land use rights |
25 | 23 | ||||||
|
Less Accumulated Amortization |
75 | 57 | ||||||
|
Total Intangible Assets |
$149 | $166 | ||||||
Beginning with the date benefits are realized, other intangible assets are amortized using the straight-line method over their estimated period of benefit of three to 30 years. Amortization expense of $18 million, $19 million and $10 million was recognized during fiscal 2011, 2010 and 2009, respectively. We estimate amortization expense on intangible assets for the next five fiscal years subsequent to October 1, 2011 will be: 2012 - $16 million; 2013 - $16 million; 2014 - $15 million; 2015 - $15 million; 2016 - $14 million.
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NOTE 6: OTHER CURRENT LIABILITIES
Other current liabilities at October 1, 2011, and October 2, 2010, include:
| in millions | ||||||||
| 2011 | 2010 | |||||||
|
Accrued salaries, wages and benefits |
$407 | $444 | ||||||
|
Self-insurance reserves |
298 | 256 | ||||||
|
Other |
335 | 334 | ||||||
|
Total other current liabilities |
$1,040 | $1,034 | ||||||
|
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NOTE 7: DEBT
The major components of debt are as follows (in millions):
| 2011 | 2010 | |||||||
|
Revolving credit facility |
$0 | $0 | ||||||
|
Senior notes: |
||||||||
|
8.25% Notes due October 2011 (2011 Notes) |
0 | 315 | ||||||
|
3.25% Convertible senior notes due October 2013 (2013 Notes) |
458 | 458 | ||||||
|
10.50% Senior notes due March 2014 (2014 Notes) |
810 | 810 | ||||||
|
6.85% Senior notes due April 2016 (2016 Notes) |
638 | 701 | ||||||
|
7.00% Notes due May 2018 |
120 | 122 | ||||||
|
7.00% Notes due January 2028 |
18 | 18 | ||||||
|
Discount on senior notes |
(76) | (105) | ||||||
|
GO Zone tax-exempt bonds due October 2033 (0.14% at 10/1/2011) |
100 | 100 | ||||||
|
Other |
114 | 117 | ||||||
|
Total debt |
2,182 | 2,536 | ||||||
|
Less current debt |
70 | 401 | ||||||
|
Total long-term debt |
$2,112 | $2,135 | ||||||
Annual maturities of debt for the five fiscal years subsequent to October 1, 2011, are: 2012 - $70 million; 2013 - $17 million; 2014 - $1,279 million; 2015 - $7 million; 2016 - $643 million.
Revolving Credit Facility
In February 2011, we amended and extended our $1.0 billion revolving credit facility that supports short-term funding needs and letters of credit. The facility will mature and the commitments thereunder will terminate in February 2016, provided that (a) at any time during the six-month period ending November 29, 2013, we have corporate credit ratings not lower than BBB- and Baa3 from Standard & Poor's (S&P) and Moody's Investor Services, Inc. (Moody's), respectively, in each case with stable outlook or better, (b) on or prior to November 29, 2013, we have refinanced, purchased, or defeased the 2014 Notes, or (c) we have irrevocably deposited cash in an amount not less than the aggregate principal amount of the outstanding 2014 Notes on or prior to November 29, 2013, in a blocked cash collateral account. In the event none of the foregoing events have occurred, the loans made under this facility will mature and the commitments thereunder will terminate on November 29, 2013. As of October 1, 2011, none of the foregoing events have occurred.
After reducing the amount available by outstanding letters of credit issued under this facility, the amount available for borrowing under this facility at October 1, 2011, was $842 million. At October 1, 2011, we had outstanding letters of credit issued under this facility totaling $158 million, none of which were drawn upon. Our letters of credit are issued primarily in support of workers' compensation insurance programs, derivative activities and Dynamic Fuels' Gulf Opportunity Zone tax-exempt bonds. We had an additional $50 million of bilateral letters of credit not issued under this facility, none of which were drawn upon.
This facility is fully and unconditionally guaranteed by substantially all of our domestic subsidiaries. The guarantors' cash, accounts receivable, inventory and proceeds received related to these items previously secured our obligations under this facility. Because we satisfied certain credit rating requirements provided for in the facility, we requested the release of the liens securing the facility. As of October 1, 2011, all liens securing our obligations under this facility were released, while the facility remains fully and unconditionally guaranteed by substantially all of our domestic subsidiaries.
2013 Notes
In September 2008, we issued $458 million principal amount 3.25% convertible senior unsecured notes due October 15, 2013, with interest payable semi-annually in arrears on April 15 and October 15. The conversion rate initially is 59.1935 shares of Class A stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of $16.89 per share of Class A stock. The 2013 Notes may be converted before the close of business on July 12, 2013, only under the following circumstances:
| — |
during any fiscal quarter after December 27, 2008, if the last reported sale price of our Class A stock for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is at least 130% of the applicable conversion price on each applicable trading day (which would currently require our shares to trade at or above $21.96); or |
| — |
during the five business days after any 10 consecutive trading days (measurement period) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A stock and the applicable conversion rate on each such day; or |
| — |
upon the occurrence of specified corporate events as defined in the supplemental indenture. |
On and after July 15, 2013, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their notes at any time, regardless of the foregoing circumstances. Upon conversion, we will deliver cash up to the aggregate principal amount of the 2013 Notes to be converted and shares of our Class A stock in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the 2013 Notes being converted. As of October 1, 2011, none of the conditions permitting conversion of the 2013 Notes had been satisfied.
The 2013 Notes were originally accounted for as a combined instrument because the conversion feature did not meet the requirements to be accounted for separately as a derivative financial instrument. However, we adopted new accounting guidance in the first quarter of fiscal 2010 and applied it retrospectively to all periods presented. This new accounting guidance required us to separately account for the liability and equity conversion features. Upon retrospective adoption, our effective interest rate on the 2013 Notes was determined to be 8.26%, which resulted in the recognition of a $92 million discount to these notes with the offsetting after tax amount of $56 million recorded to capital in excess of par value. This discount is being accreted over the five-year term of the convertible notes at the effective interest rate.
In connection with the issuance of the 2013 Notes, we entered into separate convertible note hedge transactions with respect to our Class A stock to minimize the potential economic dilution upon conversion of the 2013 Notes. We also entered into separate warrant transactions. We recorded the purchase of the note hedge transactions as a reduction to capital in excess of par value, net of $36 million pertaining to the related deferred tax asset, and we recorded the proceeds of the warrant transactions as an increase to capital in excess of par value. Subsequent changes in fair value of these instruments are not recognized in the financial statements as long as the instruments continue to meet the criteria for equity classification.
We purchased call options in private transactions for $94 million that permit us to acquire up to approximately 27 million shares of our Class A stock at an initial strike price of $16.89 per share, subject to adjustment. The call options allow us to acquire a number of shares of our Class A stock initially equal to the number of shares of Class A stock issuable to the holders of the 2013 Notes upon conversion. These call options will terminate upon the maturity of the 2013 Notes.
We sold warrants in private transactions for total proceeds of $44 million. The warrants permit the purchasers to acquire up to approximately 27 million shares of our Class A stock at an initial exercise price of $22.31 per share, subject to adjustment. The warrants are exercisable on various dates from January 2014 through March 2014.
The maximum amount of shares that may be issued to satisfy the conversion of the 2013 Notes is limited to 35.9 million shares. However, the convertible note hedge and warrant transactions, in effect, increase the initial conversion price of the 2013 Notes from $16.89 per share to $22.31 per share, thus reducing the potential future economic dilution associated with conversion of the 2013 Notes. If our share price is below $22.31 upon conversion of the 2013 Notes, there is no economic net share impact. Upon conversion, a 10% increase in our share price above the $22.31 conversion price would result in the issuance of 2.5 million incremental shares. The 2013 Notes and the warrants could have a dilutive effect on our earnings per share to the extent the price of our Class A stock during a given measurement period exceeds the respective exercise prices of those instruments. The call options are excluded from the calculation of diluted earnings per share as their impact is anti-dilutive.
2014 Notes
In March 2009, we issued $810 million of senior unsecured notes, which will mature in March 2014. The 2014 Notes carry a 10.50% interest rate, with interest payments due semi-annually on March 1 and September 1. These were issued at an original issue discount of $59 million, based on an issue price of 92.756% of face value. The 2014 Notes are fully and unconditionally guaranteed by substantially all of our domestic subsidiaries.
2016 Notes
The 2016 Notes carried an interest rate at issuance of 6.60%, with an interest step up feature dependent on their credit rating. On November 13, 2008, Moody's downgraded the credit rating from "Ba1" to "Ba3." This downgrade increased the interest rate from 7.35% to 7.85%, effective beginning with the six-month interest payment due April 1, 2009.
On August 19, 2010, S&P upgraded the credit rating of these notes from "BB" to "BB+." On September 2, 2010, Moody's upgraded our credit rating from "Ba3" to "Ba2." These upgrades decreased the interest rate on the 2016 Notes from 7.85% to 7.35%, effective beginning with the six-month interest payment due October 1, 2010.
On February 24, 2011, S&P upgraded the credit rating of these notes from "BB+" to "BBB-." On March 29, 2011, Moody's upgraded our credit rating from "Ba2" to "Ba1". These upgrades decreased the interest rate on the 2016 Notes from 7.35% to 6.85%, effective beginning with the six-month interest payment due April 1, 2011.
GO Zone Tax-Exempt Bonds
In October 2008, Dynamic Fuels received $100 million in proceeds from the sale of Gulf Opportunity Zone tax-exempt bonds made available by the federal government to the regions affected by Hurricanes Katrina and Rita in 2005. These floating rate bonds are due October 1, 2033. In November 2008, we entered into an interest rate swap related to these bonds to mitigate our interest rate risk on a portion of the bonds for five years. We also issued a letter of credit as a guarantee for the entire bond issuance.
Debt Covenants
Our revolving credit facility contains affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens and encumbrances; incur debt; merge, dissolve, liquidate or consolidate; make acquisitions and investments; dispose of or transfer assets; pay dividends or make other payments in respect of our capital stock; amend material documents; change the nature of our business; make certain payments of debt; engage in certain transactions with affiliates; and enter into sale/leaseback or hedging transactions, in each case, subject to certain qualifications and exceptions. In addition, we are required to maintain minimum interest expense coverage and maximum leverage ratios.
Our 2014 Notes also contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: incur additional debt and issue preferred stock; make certain investments and restricted payments; create liens; create restrictions on distributions from subsidiaries; engage in specified sales of assets and subsidiary stock; enter into transactions with affiliates; enter new lines of business; engage in consolidation, mergers and acquisitions; and engage in certain sale/leaseback transactions.
We were in compliance with all debt covenants at October 1, 2011.
|
|||
NOTE 8: INCOME TAXES
Detail of the provision for income taxes from continuing operations consists of the following:
| in millions | ||||||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
Federal |
$320 | $374 | $7 | |||||||||
|
State |
21 | 44 | (4) | |||||||||
|
Foreign |
0 | 20 | 4 | |||||||||
| $341 | $438 | $7 | ||||||||||
|
Current |
$255 | $420 | $40 | |||||||||
|
Deferred |
86 | 18 | (33) | |||||||||
| $341 | $438 | $7 | ||||||||||
The reasons for the difference between the statutory federal income tax rate and our effective income tax rate from continuing operations are as follows:
| 2011 | 2010 | 2009 | ||||||||||
|
Federal income tax rate |
35.0% | 35.0% | 35.0% | |||||||||
|
State income taxes |
1.6 | 2.4 | 0.1 | |||||||||
|
Unrecognized tax benefits, net |
(1.7) | (1.4) | (0.3) | |||||||||
|
Goodwill impairment |
0.0 | 0.9 | (36.1) | |||||||||
|
General business credits |
(0.9) | (0.7) | 2.2 | |||||||||
|
Domestic production deduction |
(2.3) | (2.0) | 0.5 | |||||||||
|
Change in foreign valuation allowance |
0.3 | 0.8 | (3.8) | |||||||||
|
Tax planning in foreign jurisdictions |
0.0 | 0.0 | 1.7 | |||||||||
|
Other |
(0.2) | 1.4 | (0.8) | |||||||||
| 31.8% | 36.4% | (1.5)% | ||||||||||
During fiscal 2011, tax expense was impacted by the domestic production deduction, adjustments to reserves for uncertain tax positions due to domestic and foreign tax audit activities, and estimated general business credits, which decreased tax expense by $25 million, $19 million, and $9 million, respectively.
During fiscal 2010, tax expense was impacted by the domestic production deduction and reductions in unrecognized tax benefits, which decreased tax expense by $24 million and $16 million, respectively.
The fiscal 2009 goodwill impairment is not deductible for income tax purposes and negatively impacted our effective income tax rate by 36.1%. During fiscal 2009, our tax expense was impacted by an increase in foreign valuation allowance which increased tax expense by $21 million, estimated general business credits, which decreased tax expense by $12 million, and tax planning in foreign jurisdictions which decreased tax expense by $9 million.
We recognize deferred income taxes for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The tax effects of major items recorded as deferred tax assets and liabilities are as follows:
| in millions | ||||||||||||||||
| 2011 | 2010 | |||||||||||||||
| Deferred Tax | Deferred Tax | |||||||||||||||
| Assets | Liabilities | Assets | Liabilities | |||||||||||||
|
Property, plant and equipment |
$0 | $401 | $0 | $347 | ||||||||||||
|
Suspended taxes from conversion to accrual method |
0 | 81 | 0 | 86 | ||||||||||||
|
Intangible assets |
0 | 35 | 0 | 34 | ||||||||||||
|
Inventory |
9 | 113 | 9 | 85 | ||||||||||||
|
Accrued expenses |
196 | 0 | 202 | 0 | ||||||||||||
|
Net operating loss and other carryforwards |
97 | 0 | 97 | 0 | ||||||||||||
|
Insurance reserves |
23 | 0 | 20 | 0 | ||||||||||||
|
Other |
80 | 68 | 108 | 90 | ||||||||||||
| $405 | $698 | $436 | $642 | |||||||||||||
|
Valuation allowance |
$(92) | $(96) | ||||||||||||||
|
Net deferred tax liability |
$385 | $302 | ||||||||||||||
We record deferred tax amounts in Other Current Assets and in Deferred Income Taxes on the Consolidated Balance Sheets.
The deferred tax liability for suspended taxes from conversion to accrual method represents the 1987 change from the cash to accrual method of accounting and will be recognized by 2027.
At October 1, 2011, our gross state tax net operating loss carryforwards approximated $635 million and expire in fiscal years 2012 through 2029. Gross foreign net operating loss carryforwards approximated $160 million, of which $63 million expire in fiscal years 2012 through 2020, and the remainder has no expiration. We also have tax credit carryforwards of approximately $19 million that expire in fiscal years 2012 through 2025.
We have accumulated undistributed earnings of foreign subsidiaries aggregating approximately $339 million and $260 million at October 1, 2011, and October 2, 2010, respectively. These earnings are expected to be indefinitely reinvested outside of the United States. If those earnings were distributed in the form of dividends or otherwise, we would be subject to federal income taxes (subject to an adjustment for foreign tax credits), state income taxes and withholding taxes payable to the various foreign countries. It is not currently practicable to estimate the tax liability that might be payable on the repatriation of these foreign earnings.
The following table summarizes the activity related to our gross unrecognized tax benefits at October 1, 2011, October 2, 2010, and October 3, 2009:
| in millions | ||||||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
Balance as of the beginning of the year |
$184 | $233 | $220 | |||||||||
|
Increases related to current year tax positions |
4 | 4 | 7 | |||||||||
|
Increases related to prior year tax positions |
21 | 11 | 60 | |||||||||
|
Reductions related to prior year tax positions |
(24) | (35) | (21) | |||||||||
|
Reductions related to settlements |
(9) | (25) | (25) | |||||||||
|
Reductions related to expirations of statute of limitations |
(2) | (4) | (8) | |||||||||
|
Balance as of the end of the year |
$174 | $184 | $233 | |||||||||
The amount of unrecognized tax benefits, if recognized, that would impact our effective tax rate was $155 million and $150 million at October 1, 2011, and October 2, 2010, respectively. We classify interest and penalties on unrecognized tax benefits as income tax expense. At October 1, 2011, and October 2, 2010, before tax benefits, we had $58 million and $64 million, respectively, of accrued interest and penalties on unrecognized tax benefits.
As of October 1, 2011, we are subject to income tax examinations for U.S. federal income taxes for fiscal years 2003 through 2010. We are also subject to income tax examinations for state and foreign income taxes for fiscal years 2001 through 2010. During fiscal 2012, tax audit resolutions could potentially reduce our unrecognized tax benefits by approximately $10 million, either because tax positions are sustained on audit or because we agree to their disallowance.
|
|||
NOTE 9: OTHER INCOME AND CHARGES
During fiscal 2011, we recorded an $11 million gain related to a sale of interests in an equity method investment. This gain was recorded in the Consolidated Statements of Income in Other, net.
During fiscal 2010, we recognized $38 million of insurance proceeds received related to losses incurred from Hurricane Katrina in 2005. These proceeds are reflected in the Chicken segment's Operating Income and included in the Consolidated Statements of Income in Cost of Sales. Also in fiscal 2010, we recorded a $12 million impairment charge related to an equity method investment. This charge is included in the Consolidated Statements of Income in Other, net.
On March 27, 2009, we announced the decision to close our Ponca City, Oklahoma, processed meats plant. The plant ceased operation in August 2009. The closing resulted in the elimination of approximately 600 jobs. During fiscal 2009, we recorded charges of $15 million, which included $14 million for estimated impairment charges and $1 million of employee termination benefits. The charges are reflected in the Prepared Foods segment's Operating Income and included in the Consolidated Statements of Income in Other Charges.
|
|||
NOTE 11: DERIVATIVE FINANCIAL INSTRUMENTS
Our business operations give rise to certain market risk exposures mostly due to changes in commodity prices, foreign currency exchange rates and interest rates. We manage a portion of these risks through the use of derivative financial instruments, primarily futures and options, to reduce our exposure to commodity price risk, foreign currency risk and interest rate risk. Forward contracts on various commodities, including grains, livestock and energy, are primarily entered into to manage the price risk associated with forecasted purchases of these inputs used in our production processes. Foreign exchange forward contracts are entered into to manage the fluctuations in foreign currency exchange rates, primarily as a result of certain receivable and payable balances. We also periodically utilize interest rate swaps to manage interest rate risk associated with our variable-rate borrowings.
Our risk management programs are periodically reviewed by our Board of Directors' Audit Committee. These programs are monitored by senior management and may be revised as market conditions dictate. Our current risk management programs utilize industry-standard models that take into account the implicit cost of hedging. Risks associated with our market risks and those created by derivative instruments and the fair values are strictly monitored at all times, using Value-at-Risk and stress tests. Credit risks associated with our derivative contracts are not significant as we minimize counterparty concentrations, utilize margin accounts or letters of credit, and deal with credit-worthy counterparties. Additionally, our derivative contracts are mostly short-term in duration and we generally do not make use of credit-risk-related contingent features. No significant concentrations of credit risk existed at October 1, 2011.
We recognize all derivative instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets, with the exception of normal purchases and normal sales expected to result in physical delivery. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, we designate the hedging instrument based upon the exposure being hedged (i.e., fair value hedge, cash flow hedge, or hedge of a net investment in a foreign operation). We qualify, or designate, a derivative financial instrument as a hedge when contract terms closely mirror those of the hedged item, providing a high degree of risk reduction and correlation. If a derivative instrument is accounted for as a hedge, depending on the nature of the hedge, changes in the fair value of the instrument either will be offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings, or be recognized in other comprehensive income (loss) (OCI) until the hedged item is recognized in earnings. The ineffective portion of an instrument's change in fair value is recognized in earnings immediately. We designate certain forward contracts as follows:
| — |
Cash Flow Hedges – include certain commodity forward and option contracts of forecasted purchases (i.e., grains) and certain foreign exchange forward contracts. |
| — |
Fair Value Hedges – include certain commodity forward contracts of forecasted purchases (i.e., livestock). |
| — |
Net Investment Hedges – include certain foreign currency forward contracts of permanently invested capital in certain foreign subsidiaries. |
Cash flow hedges
Derivative instruments, such as futures and options, are designated as hedges against changes in the amount of future cash flows related to procurement of certain commodities utilized in our production processes. We do not purchase forward and option commodity contracts in excess of our physical consumption requirements and generally do not hedge forecasted transactions beyond 18 months. The objective of these hedges is to reduce the variability of cash flows associated with the forecasted purchase of those commodities. For the derivative instruments we designate and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of OCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses representing hedge ineffectiveness are recognized in earnings in the current period. Ineffectiveness related to our cash flow hedges was not significant during fiscal 2011, 2010 and 2009.
We had the following aggregated notionals of outstanding forward and option contracts accounted for as cash flow hedges:
| Metric | October 1, 2011 | October 2, 2010 | ||||||||||
|
Commodity: |
||||||||||||
|
Corn |
Bushels | 6 million | 16 million | |||||||||
|
Soy Meal |
Tons | 82,300 | 101,500 | |||||||||
|
Foreign Currency |
United States dollar | $75 million | $0 | |||||||||
As of October 1, 2011, the net amounts expected to be reclassified into earnings within the next 12 months are pretax losses of $21 million related to grain and pretax gains of $9 million related to foreign currency. During fiscal 2011, 2010 and 2009, we did not reclassify significant pretax gains/losses into earnings as a result of the discontinuance of cash flow hedges due to the probability the original forecasted transaction would not occur by the end of the originally specified time period or within the additional period of time allowed by generally accepted accounting principles.
The following table sets forth the pretax impact of cash flow hedge derivative instruments on the Consolidated Statements of Income (in millions):
|
Gain/(Loss) on Derivatives |
Consolidated Statements of Income Classification |
Gain/(Loss) OCI to Earnings |
||||||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||||||
|
Cash Flow Hedge – Derivatives designated |
||||||||||||||||||||||||||||
|
as hedging instruments: |
||||||||||||||||||||||||||||
|
Commodity contracts |
$(5) | $6 | $(61) | Cost of Sales | $25 | $(6) | $(67) | |||||||||||||||||||||
|
Foreign exchange contracts |
9 | 1 | 8 | Other Income/Expense | 0 | 1 | 6 | |||||||||||||||||||||
|
Total |
$4 | $7 | $(53) | $25 | $(5) | $(61) | ||||||||||||||||||||||
Fair value hedges
We designate certain futures contracts as fair value hedges of firm commitments to purchase livestock for slaughter. Our objective of these hedges is to minimize the risk of changes in fair value created by fluctuations in commodity prices associated with fixed price livestock firm commitments. We had the following aggregated notionals of outstanding forward contracts entered into to hedge forecasted commodity purchases which are accounted for as a fair value hedge:
| Metric | October 1, 2011 | October 2, 2010 | ||||||||||
|
Commodity: |
||||||||||||
|
Live Cattle |
Pounds | 318 million | 361 million | |||||||||
|
Lean Hogs |
Pounds | 601 million | 508 million | |||||||||
For these derivative instruments we designate and qualify as a fair value hedge, the gain or loss on the derivative, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in earnings in the same period. We include the gain or loss on the hedged items (i.e., livestock purchase firm commitments) in the same line item, Cost of Sales, as the offsetting gain or loss on the related livestock forward position.
| in millions | ||||||||||||||||
| Consolidated Statements of Income Classification |
2011 | 2010 | 2009 | |||||||||||||
|
Gain/(Loss) on forwards |
Cost of Sales | $ | (78) | $ | (58) | $ | 152 | |||||||||
|
Gain/(Loss) on purchase contract |
Cost of Sales | 78 | 58 | (152) | ||||||||||||
Ineffectiveness related to our fair value hedges was not significant during fiscal 2011, 2010 and 2009.
Foreign net investment hedges
We utilize forward foreign exchange contracts to protect the value of our net investments in certain foreign subsidiaries. For derivative instruments that are designated and qualify as a hedge of a net investment in a foreign currency, the gain or loss is reported in OCI as part of the cumulative translation adjustment to the extent it is effective, with the related amounts due to or from counterparties included in other liabilities or other assets. We utilize the forward-rate method of assessing hedge effectiveness. Any ineffective portions of net investment hedges are recognized in the Consolidated Statements of Income during the period of change. Ineffectiveness related to our foreign net investment hedges was not significant during fiscal 2011, 2010 and 2009. At October 1, 2011, and October 2, 2010, we had $35 million and $49 million aggregate outstanding notionals related to our forward foreign currency contracts accounted for as foreign net investment hedges.
The following table sets forth the pretax impact of these derivative instruments on the Consolidated Statements of Income (in millions):
|
Gain/(Loss) on Derivatives |
Consolidated Statements of Income Classification |
Gain/(Loss) OCI to Earnings |
||||||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||||||
| Net Investment Hedge – Derivatives designated as | ||||||||||||||||||||||||||||
| hedging instruments: | ||||||||||||||||||||||||||||
|
Foreign exchange contracts |
$(2) | $(1) | $(5) | Other Income/Expense | $0 | $0 | $(2) | |||||||||||||||||||||
Undesignated positions
In addition to our designated positions, we also hold forward and option contracts for which we do not apply hedge accounting. These include certain derivative instruments related to commodities price risk, including grains, livestock and energy, foreign currency risk and interest rate risk. We mark these positions to fair value through earnings at each reporting date. We generally do not enter into undesignated positions beyond 18 months.
The objective of our undesignated grains, energy and livestock commodity positions is to reduce the variability of cash flows associated with the forecasted purchase of certain grains, energy and livestock inputs to our production processes. We also enter into certain forward sales of boxed beef and boxed pork and forward purchases of cattle and hogs at fixed prices. The fixed price sales contracts lock in the proceeds from a sale in the future and the fixed cattle and hog purchases lock in the cost. However, the cost of the livestock and the related boxed beef and boxed pork market prices at the time of the sale or purchase could vary from this fixed price. As we enter into fixed forward sales of boxed beef and boxed pork and forward purchases of cattle and hogs, we also enter into the appropriate number of livestock futures positions to mitigate a portion of this risk. Changes in market value of the open livestock futures positions are marked to market and reported in earnings at each reporting date, even though the economic impact of our fixed prices being above or below the market price is only realized at the time of sale or purchase. These positions generally do not qualify for hedge treatment due to location basis differences between the commodity exchanges and the actual locations when we purchase the commodities.
We have a foreign currency cash flow hedging program to hedge portions of forecasted transactions denominated in foreign currencies, primarily with forward and option contracts, to protect against the reduction in value of forecasted foreign currency cash flows. Our undesignated foreign currency positions generally would qualify for cash flow hedge accounting. However, to reduce earnings volatility, we normally will not elect hedge accounting treatment when the position provides an offset to the underlying related transaction that currently impacts earnings.
The objective of our undesignated interest rate swap is to manage interest rate risk exposure on a floating-rate bond. Our interest rate swap agreement effectively modifies our exposure to interest rate risk by converting a portion of the floating-rate bond to a fixed rate basis for the first five years, thus reducing the impact of the interest-rate changes on future interest expense. This interest rate swap does not qualify for hedge treatment due to differences in the underlying bond and swap contract interest-rate indices.
We had the following aggregate outstanding notionals related to our undesignated positions:
| Metric | October 1, 2011 | October 2, 2010 | ||||||||||
|
Commodity: |
||||||||||||
|
Corn |
Bushels | 17 million | 38 million | |||||||||
|
Soy Meal |
Tons | 174,600 | 367,000 | |||||||||
|
Soy Oil |
Pounds | 13 million | 2 million | |||||||||
|
Live Cattle |
Pounds | 72 million | 73 million | |||||||||
|
Lean Hogs |
Pounds | 19 million | 134 million | |||||||||
|
Natural Gas |
British thermal units | 0 | 450 billion | |||||||||
|
Foreign Currency |
United States dollars | $110 million | $146 million | |||||||||
|
Interest Rate |
Average monthly notional debt | $39 million | $53 million | |||||||||
The following table sets forth the pretax impact of the undesignated derivative instruments on the Consolidated Statements of Income (in millions):
| Consolidated Statements of Income Classification |
Gain/(Loss) Recognized in Earnings |
|||||||||||||||
| 2011 | 2010 | 2009 | ||||||||||||||
|
Derivatives not designated as hedging instruments: |
||||||||||||||||
|
Commodity contracts |
Sales | $20 | $27 | $(34) | ||||||||||||
|
Commodity contracts |
Cost of Sales | (2) | (20) | (151) | ||||||||||||
|
Foreign exchange contracts |
Other Income/Expense | (3) | (5) | 0 | ||||||||||||
|
Interest rate contracts |
Interest Expense | 0 | 1 | (4) | ||||||||||||
|
Total |
$15 | $3 | $(189) | |||||||||||||
The following table sets forth the fair value of all derivative instruments outstanding in the Consolidated Balance Sheets (in millions):
| Fair Value | ||||||||
| 2011 | 2010 | |||||||
|
Derivative Assets: |
||||||||
|
Derivatives designated as hedging instruments: |
||||||||
|
Commodity contracts |
$3 | $20 | ||||||
|
Foreign exchange contracts |
12 | 0 | ||||||
|
Total derivative assets – designated |
15 | 20 | ||||||
|
Derivatives not designated as hedging instruments: |
||||||||
|
Commodity contracts |
21 | 10 | ||||||
|
Foreign exchange contracts |
5 | 1 | ||||||
|
Total derivative assets – not designated |
26 | 11 | ||||||
|
Total derivative assets |
$41 | $31 | ||||||
|
Derivative Liabilities: |
||||||||
|
Derivatives designated as hedging instruments: |
||||||||
|
Commodity contracts |
$41 | $16 | ||||||
|
Derivatives not designated as hedging instruments: |
||||||||
|
Commodity contracts |
121 | 34 | ||||||
|
Foreign exchange contracts |
1 | 6 | ||||||
|
Interest rate contracts |
2 | 3 | ||||||
|
Total derivative liabilities – not designated |
124 | 43 | ||||||
|
Total derivative liabilities |
$165 | $59 | ||||||
Our derivative assets and liabilities are presented in our Consolidated Balance Sheets on a net basis. We net derivative assets and liabilities, including cash collateral when a legally enforceable master netting arrangement exists between the counterparty to a derivative contract and us. See Note 12: Fair Value Measurements for a reconciliation to amounts reported in the Consolidated Balance Sheets in Other current assets and Other current liabilities.
|
|||
NOTE 12: FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels as follows:
Level 1 — Unadjusted quoted prices available in active markets for the identical assets or liabilities at the measurement date.
Level 2 — Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:
| — |
Quoted prices for similar assets or liabilities in active markets; |
| — |
Quoted prices for identical or similar assets in non-active markets; |
| — |
Inputs other than quoted prices that are observable for the asset or liability; and |
| — |
Inputs derived principally from or corroborated by other observable market data. |
Level 3 — Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management's estimates of market participant assumptions.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The fair value hierarchy requires the use of observable market data when available. In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input significant to the fair value measurement in its entirety. Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following tables set forth by level within the fair value hierarchy our financial assets and liabilities accounted for at fair value on a recurring basis according to the valuation techniques we used to determine their fair values (in millions):
| October 1, 2011 | Level 1 | Level 2 | Level 3 | Netting (a) | Total | |||||||||||||||
|
Assets: |
||||||||||||||||||||
|
Commodity Derivatives |
$0 | $24 | $0 | $(21) | $3 | |||||||||||||||
|
Foreign Exchange Forward Contracts |
0 | 17 | 0 | (2) | 15 | |||||||||||||||
|
Available for Sale Securities: |
||||||||||||||||||||
|
Debt securities |
0 | 34 | 83 | 0 | 117 | |||||||||||||||
|
Equity securities |
7 | 0 | 0 | 0 | 7 | |||||||||||||||
|
Deferred Compensation Assets |
28 | 122 | 0 | 0 | 150 | |||||||||||||||
|
Total Assets |
$35 | $197 | $83 | $(23) | $292 | |||||||||||||||
|
Liabilities: |
||||||||||||||||||||
|
Commodity Derivatives |
$0 | $162 | $0 | $(135) | $27 | |||||||||||||||
|
Foreign Exchange Forward Contracts |
0 | 1 | 0 | (1) | 0 | |||||||||||||||
|
Interest Rate Swap |
0 | 2 | 0 | 0 | 2 | |||||||||||||||
|
Total Liabilities |
$0 | $165 | $0 | $(136) | $29 | |||||||||||||||
| October 2, 2010 | Level 1 | Level 2 | Level 3 | Netting (a) | Total | |||||||||||||||
|
Assets: |
||||||||||||||||||||
|
Commodity Derivatives |
$0 | $30 | $0 | $(18) | $12 | |||||||||||||||
|
Foreign Exchange Forward Contracts |
0 | 1 | 0 | (1) | 0 | |||||||||||||||
|
Available for Sale Securities: |
||||||||||||||||||||
|
Debt securities |
0 | 42 | 73 | 0 | 115 | |||||||||||||||
|
Equity securities |
15 | 3 | 0 | 0 | 18 | |||||||||||||||
|
Deferred Compensation Assets |
0 | 86 | 0 | 0 | 86 | |||||||||||||||
|
Total Assets |
$15 | $162 | $73 | $(19) | $231 | |||||||||||||||
|
Liabilities: |
||||||||||||||||||||
|
Commodity Derivatives |
$0 | $50 | $0 | $(50) | $0 | |||||||||||||||
|
Foreign Exchange Forward Contracts |
0 | 6 | 0 | (1) | 5 | |||||||||||||||
|
Interest Rate Swap |
0 | 3 | 0 | (1) | 2 | |||||||||||||||
|
Total Liabilities |
$0 | $59 | $0 | $(52) | $7 |
| ||||||||||||||
|
(a)
|
Our derivative assets and liabilities are presented in our Consolidated Balance Sheets on a net basis. We net derivative assets and liabilities, including cash collateral, when a legally enforceable master netting arrangement exists between the counterparty to a derivative contract and us. At October 1, 2011, and October 2, 2010, we had posted $113 million and $35 million of cash collateral and held $0 and $3 million cash collateral with various counterparties, respectively. |
The following table provides a reconciliation between the beginning and ending balance of debt securities measured at fair value on a recurring basis in the table above that used significant unobservable inputs (Level 3) (in millions):
| October 1, 2011 | October 2, 2010 | |||||||
|
Balance at beginning of year |
$73 | $72 | ||||||
|
Total realized and unrealized gains (losses): |
0 | 1 | ||||||
|
Included in other comprehensive income (loss) |
(1) | 1 | ||||||
|
Purchases, issuances and settlements, net |
11 | (1) | ||||||
|
Balance at end of year |
$83 | $73 | ||||||
|
Total gains (losses) for the periods included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of year |
$0 | $0 | ||||||
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
Derivative Assets and Liabilities: Our derivatives, including commodities, foreign exchange forward contracts and an interest rate swap, primarily include exchange-traded and over-the-counter contracts which are further described in Note 11: Derivative Financial Instruments. We record our commodity derivatives at fair value using quoted market prices adjusted for credit and non-performance risk and internal models that use as their basis readily observable market inputs including current and forward commodity market prices. Our foreign exchange forward contracts are recorded at fair value based on quoted prices and spot and forward currency prices adjusted for credit and non-performance risk. Our interest rate swap is recorded at fair value based on quoted LIBOR swap rates adjusted for credit and non-performance risk. We classify these instruments in Level 2 when quoted market prices can be corroborated utilizing observable current and forward commodity market prices on active exchanges, observable market transactions of spot currency rates and forward currency prices or observable benchmark market rates at commonly quoted intervals.
Available for Sale Securities: Our investments in marketable debt securities are classified as available-for-sale and are included in Other Assets in the Consolidated Balance Sheets. These investments, which are generally long-term in nature with maturities ranging up to 45 years, are reported at fair value based on pricing models and quoted market prices adjusted for credit and non-performance risk. We classify our investments in U.S. government and agency debt securities as Level 2 as fair value is generally estimated using discounted cash flow models that are primarily industry-standard models that consider various assumptions, including time value and yield curve as well as other readily available relevant economic measures. We classify certain corporate, asset-backed and other debt securities as Level 3 as there is limited activity or less observable inputs into proprietary valuation models, including estimated prepayment, default and recovery rates on the underlying portfolio or structured investment vehicle.
Additionally, we have eight million shares of Syntroleum Corporation common stock and 4.25 million warrants, which expire in early fiscal 2014, to purchase an equivalent amount of Syntroleum Corporation common stock at an average price of $2.87. We record the shares and warrants in Other Assets in the Consolidated Balance Sheets at fair value based on quoted market prices. We classify the shares as Level 1 as the fair value is based on unadjusted quoted prices available in active markets. We classify the warrants as Level 2 as fair value can be corroborated based on observable market data.
| (in millions) | October 1, 2011 | October 2, 2010 | ||||||||||||||||||||||
| Amortized Cost Basis |
Fair Value |
Unrealized Gain/(Loss) |
Amortized Cost Basis |
Fair Value |
Unrealized Gain |
|||||||||||||||||||
|
Available for Sale Securities: |
||||||||||||||||||||||||
|
Debt Securities: |
||||||||||||||||||||||||
|
U.S. Treasury and Agency |
$33 | $34 | $1 | $41 | $42 | $1 | ||||||||||||||||||
|
Corporate and Asset-Backed (a) |
54 | 56 | 2 | 43 | 46 | 3 | ||||||||||||||||||
|
Redeemable Preferred Stock |
27 | 27 | 0 | 27 | 27 | 0 | ||||||||||||||||||
|
Equity Securities: |
||||||||||||||||||||||||
|
Common Stock |
9 | 7 | (2 | ) | 9 | 15 | 6 | |||||||||||||||||
|
Stock Warrants |
0 | 0 | 0 | 0 | 3 | 3 | ||||||||||||||||||
| (a) | At October 1, 2011, and October 2, 2010, the amortized cost basis for Corporate and Asset-Backed debt securities had been reduced by accumulated other than temporary impairments of $3 million and $3 million, respectively. |
Unrealized holding gains (losses), net of tax, are excluded from earnings and reported in OCI until the security is settled or sold. On a quarterly basis, we evaluate whether losses related to our available-for-sale securities are temporary in nature. Losses on equity securities are recognized in earnings if the decline in value is judged to be other than temporary. If losses related to our debt securities are determined to be other than temporary, the loss would be recognized in earnings if we intend, or more likely than not will be required, to sell the security prior to recovery. For debt securities in which we have the intent and ability to hold until maturity, losses determined to be other than temporary would remain in OCI, other than expected credit losses which are recognized in earnings. We consider many factors in determining whether a loss is temporary, including the length of time and extent to which the fair value has been below cost, the financial condition and near-term prospects of the issuer and our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery. During fiscal 2011 and 2010, we recognized no other than temporary impairments in earnings, while we recognized $4 million of other than temporary impairments during fiscal 2009. No other than temporary losses were deferred in OCI as of October 1, 2011, and October 2, 2010.
Deferred Compensation Assets: We maintain non-qualified deferred compensation plans for certain executives and other highly compensated employees. Investments are maintained within a trust and include money market funds, mutual funds and life insurance policies. The cash surrender value of the life insurance policies is invested primarily in mutual funds. The investments are recorded at fair value based on quoted market prices and are included in Other Assets in the Consolidated Balance Sheets. We classify the investments which have observable market prices in active markets in Level 1 as these are generally publicly-traded mutual funds. The remaining deferred compensation assets are classified in Level 2, as fair value can be corroborated based on observable market data. Realized and unrealized gains (losses) on deferred compensation are included in earnings.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
In addition to assets and liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. During fiscal 2010, we recorded a $29 million charge to fully impair an immaterial Chicken segment reporting unit's goodwill. We utilized a discounted cash flow analysis that incorporated unobservable Level 3 inputs. We did not have any other significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.
Other Financial Instruments
Fair values for debt are based on quoted market prices or published forward interest rate curves. Fair value and carrying value for our debt were as follows (in millions):
| October 1, 2011 | October 2, 2010 | |||||||||||||||
|
|
Fair Value |
|
|
Carrying Value |
|
|
Fair Value |
|
|
Carrying Value |
| |||||
|
Total Debt |
$ | 2,334 | $ | 2,182 | $ | 2,770 | $ | 2,536 | ||||||||
For all of our other financial instruments, the estimated fair value approximated the carrying value at October 1, 2011, and October 2, 2010. The carrying value of our other financial instruments, not otherwise disclosed herein, included notes receivable, which approximated fair value at October 1, 2011, and October 2, 2010. Notes receivable were recorded in Other Current Assets in the Consolidated Balance Sheets and totaled $0 and $49 million at October 1, 2011, and October 2, 2010, respectively. The fair values were determined using pricing models for which the assumptions utilize management's estimates of market participant assumptions.
Concentrations of Credit Risk
Our financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Our cash equivalents are in high quality securities placed with major banks and financial institutions. Concentrations of credit risk with respect to receivables are limited due to the large number of customers and their dispersion across geographic areas. We perform periodic credit evaluations of our customers' financial condition and generally do not require collateral. At October 1, 2011, and October 2, 2010, 16.5% and 15.3%, respectively, of our net accounts receivable balance was due from Wal-Mart Stores, Inc. No other single customer or customer group represented greater than 10% of net accounts receivable.
|
|||
NOTE 13: STOCK-BASED COMPENSATION
We issue shares under our stock-based compensation plans by issuing Class A stock from treasury. The total number of shares available for future grant under the Tyson Foods, Inc. 2000 Stock Incentive Plan (Incentive Plan) was 15,102,409 at October 1, 2011.
Stock Options
Shareholders approved the Incentive Plan in January 2001. The Incentive Plan is administered by the Compensation Committee of the Board of Directors (Compensation Committee). The Incentive Plan includes provisions for granting incentive stock options for shares of Class A stock at a price not less than the fair value at the date of grant. Nonqualified stock options may be granted at a price equal to, less than or more than the fair value of Class A stock on the date the option is granted. Stock options under the Incentive Plan generally become exercisable ratably over two to five years from the date of grant and must be exercised within 10 years from the date of grant. Our policy is to recognize compensation expense on a straight-line basis over the requisite service period for the entire award.
| Shares Under Option |
Weighted Average Exercise Price Per Share |
Weighted Average Remaining Contractual Life (in Years) |
Aggregate Intrinsic Value (in millions) |
|||||||||||||
|
Outstanding, October 2, 2010 |
19,373,912 | $12.69 | ||||||||||||||
|
Exercised |
(4,127,763) | 12.26 | ||||||||||||||
|
Canceled |
(498,920) | 12.78 | ||||||||||||||
|
Granted |
3,507,992 | 16.19 | ||||||||||||||
|
Outstanding, October 1, 2011 |
18,255,221 | 13.46 | 6.1 | $246 | ||||||||||||
|
Exercisable, October 1, 2011 |
9,465,184 | $13.93 | 4.3 | $132 | ||||||||||||
We generally grant stock options once a year; however, we granted stock options twice during fiscal 2010. The weighted average grant-date fair value of options granted in fiscal 2011, 2010 and 2009 was $6.19, $4.76 and $1.29, respectively. The fair value of each option grant is established on the date of grant using a binomial lattice method. We use historical volatility for a period of time comparable to the expected life of the option to determine volatility assumptions. Expected life is calculated based on the contractual term of each grant and takes into account the historical exercise and termination behavior of participants. Risk-free interest rates are based on the five-year Treasury bond rate. Assumptions as of the grant date used in the fair value calculation of each year's grants are outlined in the following table.
| 2011 | 2010 | 2009 | ||||||||||
|
Expected life |
6.7 years | 6.5 years | 5.3 years | |||||||||
|
Risk-free interest rate |
1.5% | 1.2% | 2.3% | |||||||||
|
Expected volatility |
38.8% | 40.4% | 34.6% | |||||||||
|
Expected dividend yield |
1.0% | 1.3% | 3.3% | |||||||||
We recognized stock-based compensation expense related to stock options, net of income taxes, of $12 million, $11 million and $9 million, respectively, during fiscal years 2011, 2010 and 2009, with a $7 million, $7 million and $6 million related tax benefit. We had 6.8 million, 2.2 million and 2.4 million options vest in fiscal years 2011, 2010 and 2009, respectively, with a grant date fair value of $16 million, $13 million and $15 million, respectively.
In fiscal years 2011, 2010 and 2009, we received cash of $51 million, $31 million and $1 million, respectively, for the exercise of stock options. Shares are issued from treasury for stock option exercises. The related tax benefit realized from stock options exercised during fiscal years 2011, 2010 and 2009, was $10 million, $5 million and $0, respectively. The total intrinsic value of options exercised in fiscal years 2011, 2010 and 2009, was $26 million, $12 million and $0, respectively. Cash flows resulting from tax deductions in excess of the compensation cost of those options (excess tax deductions) are classified as financing cash flows. We realized $5 million, $3 million and $0, respectively, in excess tax deductions during fiscal years 2011, 2010 and 2009, respectively. As of October 1, 2011, we had $26 million of total unrecognized compensation cost related to stock option plans that will be recognized over a weighted average period of 1.4 years.
Restricted Stock
We issue restricted stock at the market value as of the date of grant, with restrictions expiring over periods through 2014. Unearned compensation is recognized over the vesting period for the particular grant using a straight-line method.
| Number of Shares | Weighted Average Grant- Date Fair Value Per Share |
Weighted Average Remaining Contractual Life (in Years) |
Aggregate Intrinsic Value (in millions) |
|||||||||||||
|
Nonvested, October 2, 2010 |
3,601,614 | $14.55 | ||||||||||||||
|
Granted |
377,423 | 17.38 | ||||||||||||||
|
Dividends |
28,000 | 17.92 | ||||||||||||||
|
Vested |
(913,954) | 15.12 | ||||||||||||||
|
Forfeited |
(122,781) | 14.74 | ||||||||||||||
|
Nonvested, October 1, 2011 |
2,970,302 | $14.70 | 1.2 | $52 | ||||||||||||
As of October 1, 2011, we had $14 million of total unrecognized compensation cost related to restricted stock awards that will be recognized over a weighted average period of 1.2 years.
We recognized stock-based compensation expense related to restricted stock, net of income taxes, of $7 million, $8 million and $10 million for years 2011, 2010 and 2009, respectively. The related tax benefit for fiscal years 2011, 2010 and 2009 was $5 million, $5 million and $7 million, respectively. We had 0.9 million, 1.8 million and 0.7 million, respectively, restricted stock awards vest in fiscal years 2011, 2010 and 2009, with a grant date fair value of $14 million, $30 million and $11 million.
Performance-Based Shares
In July 2003, our Compensation Committee began authorizing us to award performance-based shares of our Class A stock to certain senior executives. These awards are typically granted on the first business day of our fiscal year. The vesting of the performance-based shares is generally over three years and each award is subject to the attainment of goals determined by the Compensation Committee prior to the date of the award. We review progress toward the attainment of goals each quarter during the vesting period. However, the attainment of goals can be determined only at the end of the vesting period. If the shares vest, the ultimate cost will be equal to the Class A stock price on the date the shares vest multiplied by the number of shares awarded for all performance grants with other than market criteria. For grants with market performance criteria, the ultimate expense will be the fair value of the probable shares to vest regardless if the shares actually vest. Total expense recorded related to performance-based shares was not material for fiscal 2011, 2010 and 2009.
|
|||
NOTE 14: PENSIONS AND OTHER POSTRETIREMENT BENEFITS
At October 1, 2011, we had four noncontributory defined benefit pension plans consisting of three funded qualified plans and one unfunded non-qualified plan. All three of our qualified plans are frozen and provide benefits based on a formula using years of service and a specified benefit rate. Effective January 1, 2004, we implemented a non-qualified defined benefit plan for certain contracted officers that uses a formula based on years of service and final average salary. We also have other postretirement benefit plans for which substantially all of our employees may receive benefits if they satisfy applicable eligibility criteria. The postretirement healthcare plans are contributory with participants' contributions adjusted when deemed necessary.
We have defined contribution retirement and incentive benefit programs for various groups of employees. We recognized expenses of $45 million, $48 million and $49 million in fiscal 2011, 2010 and 2009, respectively.
We use a fiscal year end measurement date for our defined benefit plans and other postretirement plans. We generally recognize the effect of actuarial gains and losses into earnings immediately for other postretirement plans rather than amortizing the effect over future periods.
Other postretirement benefits include postretirement medical costs and life insurance.
Benefit Obligations And Funded Status
The following table provides a reconciliation of the changes in the plans' benefit obligations, assets and funded status at October 1, 2011, and October 2, 2010:
| in millions | ||||||||||||||||||||||||
| Pension Benefits | Other Postretirement | |||||||||||||||||||||||
| Qualified | Non-Qualified | Benefits | ||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
|
Change in benefit obligation |
||||||||||||||||||||||||
|
Benefit obligation at beginning of year |
$97 | $89 | $42 | $38 | $45 | $46 | ||||||||||||||||||
|
Service cost |
0 | 0 | 3 | 3 | 0 | 1 | ||||||||||||||||||
|
Interest cost |
5 | 5 | 2 | 2 | 2 | 2 | ||||||||||||||||||
|
Plan participants' contributions |
0 | 0 | 0 | 0 | 1 | 1 | ||||||||||||||||||
|
Actuarial loss |
3 | 9 | 17 | 0 | 4 | 1 | ||||||||||||||||||
|
Benefits paid |
(6) | (6) | (2) | (1) | (8) | (6) | ||||||||||||||||||
|
Benefit obligation at end of year |
99 | 97 | 62 | 42 | 44 | 45 | ||||||||||||||||||
|
Change in plan assets |
||||||||||||||||||||||||
|
Fair value of plan assets at beginning of year |
74 | 68 | 0 | 0 | 0 | 0 | ||||||||||||||||||
|
Actual return on plan assets |
1 | 9 | 0 | 0 | 0 | 0 | ||||||||||||||||||
|
Employer contributions |
5 | 3 | 2 | 1 | 7 | 5 | ||||||||||||||||||
|
Plan participants' contributions |
0 | 0 | 0 | 0 | 1 | 1 | ||||||||||||||||||
|
Benefits paid |
(6) | (6) | (2) | (1) | (8) | (6) | ||||||||||||||||||
|
Fair value of plan assets at end of year |
74 | 74 | 0 | 0 | 0 | 0 | ||||||||||||||||||
|
Funded status |
$(25) | $(23) | $(62) | $(42) | $(44) | $(45) | ||||||||||||||||||
Amounts recognized in the Consolidated Balance Sheets consist of:
| in millions | ||||||||||||||||||||||||
| Pension Benefits | Other Postretirement Benefits |
|||||||||||||||||||||||
| Qualified | Non-Qualified | |||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
|
Accrued benefit liability |
$(25) | $(23) | $(62) | $(42) | $(44) | $(45) | ||||||||||||||||||
|
Accumulated other comprehensive (income)/loss: |
||||||||||||||||||||||||
|
Unrecognized actuarial loss |
45 | 40 | 17 | 1 | 0 | 0 | ||||||||||||||||||
|
Unrecognized prior service (cost)/credit |
0 | 0 | 2 | 3 | (5) | (6) | ||||||||||||||||||
|
Net amount recognized |
$20 | $17 | $(43) | $(38) | $(49) | $(51) | ||||||||||||||||||
At October 1, 2011, and October 2, 2010, all pension plans had an accumulated benefit obligation in excess of plan assets. The accumulated benefit obligation for all qualified pension plans was $99 million and $97 million at October 1, 2011, and October 2, 2010, respectively. Plans with accumulated benefit obligations in excess of plan assets are as follows:
| in millions | ||||||||||||||||
| Pension Benefits | ||||||||||||||||
| Qualified | Non-Qualified | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
|
Projected benefit obligation |
$ | 99 | $ | 97 | $ | 62 | $ | 42 | ||||||||
|
Accumulated benefit obligation |
99 | 97 | 55 | 41 | ||||||||||||
|
Fair value of plan assets |
74 | 74 | 0 | 0 | ||||||||||||
Net Periodic Benefit Cost
Components of net periodic benefit cost for pension and postretirement benefit plans recognized in the Consolidated Statements of Income are as follows:
| in millions | ||||||||||||||||||||||||||||||||||||
| Pension Benefits | Other Postretirement | |||||||||||||||||||||||||||||||||||
| Qualified | Non-Qualified | Benefits | ||||||||||||||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | ||||||||||||||||||||||||||||
|
Service cost |
$0 | $0 | $0 | $3 | $3 | $4 | $0 | $1 | $0 | |||||||||||||||||||||||||||
|
Interest cost |
5 | 5 | 6 | 2 | 2 | 2 | 2 | 2 | 3 | |||||||||||||||||||||||||||
|
Expected return on plan assets |
(6) | (6) | (7) | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
|
Amortization of prior service cost |
0 | 0 | 0 | 1 | 1 | 1 | (1) | (1) | 0 | |||||||||||||||||||||||||||
|
Recognized actuarial loss, net |
3 | 1 | 1 | 0 | 0 | 0 | 1 | 0 | 1 | |||||||||||||||||||||||||||
|
Net periodic benefit cost |
$2 | $0 | $0 | $6 | $6 | $7 | $2 | $2 | $4 | |||||||||||||||||||||||||||
Assumptions
Weighted average assumptions are as follows:
| Pension Benefits | Other Postretirement | |||||||||||||||||||||||||||||||||||
| Qualified | Non-Qualified | Benefits | ||||||||||||||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | ||||||||||||||||||||||||||||
|
Discount rate to determine net periodic benefit cost |
5.06% | 6.00% | 6.33% | 5.50% | 6.00% | 6.50% | 4.50% | 5.71% | 6.50% | |||||||||||||||||||||||||||
|
Discount rate to determine benefit obligations |
4.53% | 5.06% | 6.00% | 4.75% | 5.50% | 6.00% | 4.09% | 4.50% | 5.71% | |||||||||||||||||||||||||||
|
Rate of compensation increase |
N/A | N/A | N/A | 3.50% | 3.50% | 3.50% | N/A | N/A | N/A | |||||||||||||||||||||||||||
|
Expected return on plan assets |
7.79% | 7.80% | 8.00% | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||
To determine the rate-of-return on assets assumption, we first examined historical rates of return for the various asset classes. We then determined a long-term projected rate-of-return based on expected returns over the next five to 10 years.
Our discount rate assumptions used to account for pension and other postretirement benefit plans reflect the rates at which the benefit obligations could be effectively settled. These were determined using a cash flow matching technique whereby the rates of a yield curve, developed from high-quality debt securities, were applied to the benefit obligations to determine the appropriate discount rate.
We have three postretirement health plans. Two of these consist of fixed, annual payments and account for $28 million of the postretirement medical obligation at October 1, 2011. A healthcare cost trend is not required to determine this obligation. The remaining plan accounts for $16 million of the postretirement medical obligation at October 1, 2011. The plan covers retirees who do not yet qualify for Medicare and uses a healthcare cost trend of 6% in the current year. A one-percentage point change in assumed healthcare cost trend rate would have an immaterial impact on the postretirement benefit obligation and total service and interest cost.
Plan Assets
The fair value of plan assets for domestic pension benefit plans was $59 million as of October 1, 2011, and October 2, 2010. The following table sets forth the actual and target asset allocation for pension plan assets:
| 2011 | 2010 | |
Target Asset Allocation |
| ||||||||
|
Cash |
1.9% | 0.3% | 1.0% | |||||||||
|
Fixed income securities |
24.2 | 18.5 | 19.0 | |||||||||
|
US Stock Funds |
41.4 | 44.6 | 45.0 | |||||||||
|
International Stock Funds |
17.7 | 19.9 | 20.0 | |||||||||
|
Real Estate |
4.7 | 5.0 | 5.0 | |||||||||
|
Alternatives |
10.1 | 11.7 | 10.0 | |||||||||
|
Total |
100.0% | 100.0% | 100.0% |
A foreign subsidiary pension plan had $15 million in plan assets at October 1, 2011 and October 2, 2010. All of this plan's assets are held in an insurance contract consistent with its target asset allocation.
The Plan Trustees have established a set of investment objectives related to the assets of the pension plans and regularly monitor the performance of the funds and portfolio managers. Objectives for the pension assets are (1) to provide growth of capital and income, (2) to achieve a target weighted average annual rate of return competitive with other funds with similar investment objectives and (3) to diversify to reduce risk. The investment objectives and target asset allocation were adopted in January 2004 and amended in November 2008. Alternative investments may include, but not limited to, hedge funds, private equity funds and fixed income funds.
The following table shows the categories of pension plan assets and the level under which fair values were determined in the fair value hierarchy, which is described in Note 12: Fair Value Measurements.
| in millions | ||||||||||||||||
| October 1, 2011 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
|
Cash and cash equivalents |
$1 | $0 | $0 | $1 | ||||||||||||
|
Fixed Income Securities Bond Fund (a) |
14 | 0 | 0 | 14 | ||||||||||||
|
Equity Securities: |
||||||||||||||||
|
U.S. stock funds (a) |
25 | 0 | 0 | 25 | ||||||||||||
|
International stock funds (a) |
10 | 0 | 0 | 10 | ||||||||||||
|
Global real estate funds (a) |
3 | 0 | 0 | 3 | ||||||||||||
|
Total equity securities |
38 | 0 | 0 | 38 | ||||||||||||
|
Other Investments - Alternatives (b) |
0 | 0 | 6 | 6 | ||||||||||||
|
Total fair value |
53 | 0 | 6 | 59 | ||||||||||||
|
Insurance Contract at Contract Value |
0 | 0 | 15 | 15 | ||||||||||||
|
Total plan assets |
$53 | $0 | $21 | $74 | ||||||||||||
| (a) | Valued using quoted market prices in active markets. |
| (b) | Valued using plan's own assumptions about the assumptions market participants would use in pricing the assets based on the best information available, such as investment manager pricing. |
A reconciliation of the change in the fair value measurement of the defined benefit plans' consolidated assets using significant unobservable inputs (Level 3) is as follows (in millions):
| Alternative funds | Insurance contract | Total | ||||||||||
|
Balance at October 2, 2010 |
$7 | $15 | $22 | |||||||||
|
Actual return on plan assets: |
||||||||||||
|
Assets still held at reporting date |
(1) | 0 | (1) | |||||||||
|
Assets sold during the period |
0 | 0 | 0 | |||||||||
|
Purchases, sales and settlements, net |
0 | 0 | 0 | |||||||||
|
Transfers in and/or out of Level 3 |
0 | 0 | 0 | |||||||||
|
Balance at October 1, 2011 |
$6 | $15 | $21 |
We believe there are no significant concentrations of risk within our plan assets as of October 1, 2011.
Contributions
Our policy is to fund at least the minimum contribution required to meet applicable federal employee benefit and local tax laws. In our sole discretion, we may from time to time fund additional amounts. Expected contributions to pension plans for fiscal 2012 are approximately $7 million. For fiscal 2011, 2010 and 2009, we funded $7 million, $4 million and $2 million, respectively, to defined benefit plans.
Estimated Future Benefit Payments
The following benefit payments are expected to be paid:
| in millions | ||||||||||||
| Pension Benefits | Other Postretirement | |||||||||||
| Qualified | Non-Qualified | Benefits | ||||||||||
|
2012 |
$8 | $2 | $7 | |||||||||
|
2013 |
7 | 2 | 4 | |||||||||
|
2014 |
7 | 2 | 4 | |||||||||
|
2015 |
7 | 3 | 4 | |||||||||
|
2016 |
6 | 3 | 4 | |||||||||
|
2017-2021 |
29 | 18 | 17 | |||||||||
The above benefit payments for other postretirement benefit plans are not expected to be offset by Medicare Part D subsidies in 2011 or thereafter.
|
|||
NOTE 15: COMPREHENSIVE INCOME (LOSS)
The components of accumulated other comprehensive income (loss) are as follows:
| in millions | ||||||||
| 2011 | 2010 | |||||||
|
Accumulated other comprehensive income (loss): |
||||||||
|
Unrealized net hedging gains (losses), net of taxes |
$(7) | $10 | ||||||
|
Unrealized net gain on investments, net of taxes |
1 | 9 | ||||||
|
Currency translation adjustment |
(35) | 6 | ||||||
|
Postretirement benefits reserve adjustments |
(38) | (25) | ||||||
|
Total accumulated other comprehensive income (loss) |
$(79) | $0 | ||||||
The components of other comprehensive income (loss) are as follows:
| in millions | ||||||||||||
| Before Tax | Income Tax | After Tax | ||||||||||
|
Fiscal 2011: |
||||||||||||
|
Net hedging gain reclassified to earnings |
$(25) | $10 | $(15) | |||||||||
|
Net hedging unrealized gain (loss) |
4 | (6) | (2) | |||||||||
|
Unrealized loss on investments |
(12) | 4 | (8) | |||||||||
|
Currency translation adjustment |
(42) | 1 | (41) | |||||||||
|
Net change in postretirement liabilities |
(21) | 8 | (13) | |||||||||
|
Other comprehensive income (loss) – 2011 |
$ | (96 | ) | $ | 17 | $ | (79 | ) | ||||
|
Fiscal 2010: |
||||||||||||
|
Net hedging loss reclassified to earnings |
$7 | $(1) | $6 | |||||||||
|
Net hedging unrealized gain |
7 | (1) | 6 | |||||||||
|
Currency translation adjustment |
27 | 0 | 27 | |||||||||
|
Net change in postretirement liabilities |
(6) | 1 | (5) | |||||||||
|
Other comprehensive income (loss) – 2010 |
$35 | $(1) | $34 | |||||||||
|
Fiscal 2009: |
||||||||||||
|
Net hedging loss reclassified to earnings |
$61 | $(25) | $36 | |||||||||
|
Net hedging unrealized loss |
(53) | 23 | (30) | |||||||||
|
Loss on investments reclassified to other income |
4 | (1) | 3 | |||||||||
|
Unrealized gain on investments |
12 | (5) | 7 | |||||||||
|
Currency translation adjustment gain reclassified to loss from discontinued operation |
(41) | 0 | (41) | |||||||||
|
Currency translation adjustment |
(43) | 3 | (40) | |||||||||
|
Net change in postretirement liabilities |
(11) | 1 | (10) | |||||||||
|
Other comprehensive income (loss) – 2009 |
$(71) | $(4) | $(75) | |||||||||
|
|||
NOTE 16: SEGMENT REPORTING
We operate in four segments: Chicken, Beef, Pork and Prepared Foods. We measure segment profit as operating income (loss).
Chicken: Chicken operations include breeding and raising chickens, as well as processing live chickens into fresh, frozen and value-added chicken products and logistics operations to move products through the supply chain. Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international markets. It also includes sales from allied products and our chicken breeding stock subsidiary.
Beef: Beef operations include processing live fed cattle and fabricating dressed beef carcasses into primal and sub-primal meat cuts and case-ready products. This segment also includes sales from allied products such as hides and variety meats, as well as logistics operations to move products through the supply chain. Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international markets. Allied products are marketed to manufacturers of pharmaceuticals and technical products.
Pork: Pork operations include processing live market hogs and fabricating pork carcasses into primal and sub-primal cuts and case-ready products. This segment also includes our live swine group, related allied product processing activities and logistics operations to move products through the supply chain. Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international markets. We sell allied products to pharmaceutical and technical products manufacturers, as well as a limited number of live swine to pork processors.
Prepared Foods: Prepared Foods operations include manufacturing and marketing frozen and refrigerated food products and logistics operations to move products through the supply chain. Products include pepperoni, bacon, beef and pork pizza toppings, pizza crusts, flour and corn tortilla products, appetizers, prepared meals, ethnic foods, soups, sauces, side dishes, meat dishes and processed meats. Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international markets.
The results from Dynamic Fuels are included in Other.
| in millions | ||||||||||||||||||||||||||||
| Chicken | Beef | Pork | Prepared Foods |
Other | Intersegment Sales |
Consolidated | ||||||||||||||||||||||
|
Fiscal year ended October 1, 2011 |
||||||||||||||||||||||||||||
|
Sales |
$11,017 | $13,549 | $5,460 | $3,215 | $127 | $(1,102) | $32,266 | |||||||||||||||||||||
|
Operating Income (Loss) |
164 | 468 | 560 | 117 | (24) | 1,285 | ||||||||||||||||||||||
|
Total Other (Income) Expense |
211 | |||||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations |
1,074 | |||||||||||||||||||||||||||
|
before Income Taxes |
||||||||||||||||||||||||||||
|
Depreciation |
259 | 84 | 28 | 58 | 4 | 433 | ||||||||||||||||||||||
|
Total Assets |
5,412 | 2,610 | 960 | 943 | 1,146 | 11,071 | ||||||||||||||||||||||
|
Additions to property, plant and equipment |
464 | 88 | 27 | 58 | 6 | 643 | ||||||||||||||||||||||
|
Fiscal year ended October 2, 2010 |
||||||||||||||||||||||||||||
|
Sales |
$10,062 | $11,707 | $4,552 | $2,999 | $0 | $(890) | $28,430 | |||||||||||||||||||||
|
Operating Income (Loss) |
519 | 542 | 381 | 124 | (10) | 1,556 | ||||||||||||||||||||||
|
Total Other (Income) Expense |
353 | |||||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations before Income Taxes |
1,203 | |||||||||||||||||||||||||||
|
Depreciation |
251 | 82 | 27 | 56 | 0 | 416 | ||||||||||||||||||||||
|
Total Assets |
5,031 | 2,468 | 845 | 940 | 1,468 | 10,752 | ||||||||||||||||||||||
|
Additions to property, plant and equipment |
320 | 61 | 27 | 42 | 100 | 550 | ||||||||||||||||||||||
|
Fiscal year ended October 3, 2009 |
||||||||||||||||||||||||||||
|
Sales |
$9,660 | $10,937 | $3,875 | $2,836 | $0 | $(604) | $26,704 | |||||||||||||||||||||
|
Operating Income (Loss) |
(157) | (346) | 160 | 133 | (5) | (215) | ||||||||||||||||||||||
|
Total Other (Income) Expense |
328 | |||||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations before Income Taxes |
(543) | |||||||||||||||||||||||||||
|
Depreciation |
252 | 103 | 36 | 54 | 0 | 445 | ||||||||||||||||||||||
|
Total Assets |
4,927 | 2,277 | 840 | 905 | 1,646 | 10,595 | ||||||||||||||||||||||
|
Additions to property, plant and equipment |
174 | 39 | 18 | 58 | 79 | 368 | ||||||||||||||||||||||
We allocate expenses related to corporate activities to the segments, while the related assets and additions to property, plant and equipment remain in Other.
The Pork segment had sales of $816 million, $718 million and $449 million for fiscal 2011, 2010 and 2009, respectively, from transactions with other operating segments. The Beef segment had sales of $286 million, $172 million and $155 million for fiscal 2011, 2010 and 2009, respectively, from transactions with other operating segments.
Our largest customer, Wal-Mart Stores, Inc., accounted for 13.3%, 13.4% and 13.8% of consolidated sales in fiscal 2011, 2010 and 2009, respectively. Sales to Wal-Mart Stores, Inc. were included in the Chicken, Beef, Pork and Prepared Foods segments. Any extended discontinuance of sales to this customer could, if not replaced, have a material impact on our operations.
The majority of our operations are domiciled in the United States. Approximately 96%, 96% and 97% of sales to external customers for fiscal 2011, 2010 and 2009, respectively, were sourced from the United States. Approximately $5.8 billion and $5.6 billion, respectively, of long-lived assets were located in the United States at October 1, 2011, and October 2, 2010. Approximately $539 million and $511 million of long-lived assets were located in foreign countries, primarily Brazil, China, Mexico and India, at fiscal years ended 2011 and 2010, respectively.
We sell certain products in foreign markets, primarily Canada, Central America, China, the European Union, Japan, Mexico, the Middle East, Russia, South Korea, Taiwan and Vietnam. Our export sales from the United States totaled $4.1 billion, $3.2 billion and $2.7 billion for fiscal 2011, 2010 and 2009, respectively. Substantially all of our export sales are facilitated through unaffiliated brokers, marketing associations and foreign sales staffs. Sales of products produced in a country other than the United States were less than 10% of consolidated sales for each of fiscal 2011, 2010 and 2009. Approximately $57 million of income, $11 million of loss and $14 million of loss from continuing operations before income taxes for fiscal 2011, 2010 and 2009, respectively, was from operations based in a country other than the United States, all of which was included in the Chicken segment.
|
|||
NOTE 17: SUPPLEMENTAL CASH FLOW INFORMATION
The following table summarizes cash payments for interest and income taxes:
| in millions | ||||||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
Interest |
$192 | $302 | $333 | |||||||||
|
Income taxes, net of refunds |
311 | 470 | 35 | |||||||||
|
|||
NOTE 18: TRANSACTIONS WITH RELATED PARTIES
We have operating leases for farms, equipment and other facilities with the estate of Don Tyson, a former director of the Company, John Tyson, Chairman of the Company, certain members of their families and the Randal W. Tyson Testamentary Trust. Total payments of $2 million in fiscal 2011, $2 million in fiscal 2010 and $3 million in fiscal 2009, were paid to entities in which these parties had an ownership interest.
|
|||
NOTE 19: COMMITMENTS AND CONTINGENCIES
Commitments
We lease equipment, properties and certain farms for which total rentals approximated $183 million, $188 million and $175 million, respectively, in fiscal 2011, 2010 and 2009. Most leases have initial terms up to seven years, some with varying renewal periods. The most significant obligations assumed under the terms of the leases are the upkeep of the facilities and payments of insurance and property taxes.
Minimum lease commitments under non-cancelable leases at October 1, 2011, were:
| in millions | ||||
|
2012 |
$95 | |||
|
2013 |
63 | |||
|
2014 |
39 | |||
|
2015 |
19 | |||
|
2016 |
12 | |||
|
2017 and beyond |
54 | |||
|
Total |
$282 | |||
We guarantee obligations of certain outside third parties, which consists of a lease and grower loans, all of which are substantially collateralized by the underlying assets. Terms of the underlying debt cover periods up to ten years, and the maximum potential amount of future payments as of October 1, 2011, was $76 million. We also maintain operating leases for various types of equipment, some of which contain residual value guarantees for the market value of the underlying leased assets at the end of the term of the lease. The remaining terms of the lease maturities cover periods over the next seven years. The maximum potential amount of the residual value guarantees is $50 million, of which $43 million would be recoverable through various recourse provisions and an additional undeterminable recoverable amount based on the fair value of the underlying leased assets. The likelihood of material payments under these guarantees is not considered probable. At October 1, 2011, and October 2, 2010, no material liabilities for guarantees were recorded.
We have cash flow assistance programs in which certain livestock suppliers participate. Under these programs, we pay an amount for livestock equivalent to a standard cost to grow such livestock during periods of low market sales prices. The amounts of such payments that are in excess of the market sales price are recorded as receivables and accrue interest. Participating suppliers are obligated to repay these receivables balances when market sales prices exceed this standard cost, or upon termination of the agreement. Our maximum obligation associated with these programs is limited to the fair value of each participating livestock supplier's net tangible assets. The potential maximum obligation as of October 1, 2011, was approximately $220 million. The total receivables under these programs were $28 million and $51 million at October 1, 2011, and October 2, 2010, respectively, and are included, net of allowance for uncollectible amounts, in Other Assets in our Consolidated Balance Sheets. Even though these programs are limited to the net tangible assets of the participating livestock suppliers, we also manage a portion of our credit risk associated with these programs by obtaining security interests in livestock suppliers' assets. After analyzing residual credit risks and general market conditions, we have recorded an allowance for these programs' estimated uncollectible receivables of $10 million and $15 million at October 1, 2011, and October 2, 2010, respectively.
Additionally, we enter into future purchase commitments for various items, such as grains, livestock contracts and fixed grower fees. At October 1, 2011, these commitments totaled:
| in millions | ||||
|
2012 |
$886 | |||
|
2013 |
63 | |||
|
2014 |
18 | |||
|
2015 |
16 | |||
|
2016 |
15 | |||
|
2017 and beyond |
61 | |||
|
Total |
$1,059 | |||
Contingencies
We are involved in various claims and legal proceedings. We routinely assess the likelihood of adverse judgments or outcomes to those matters, as well as ranges of probable losses, to the extent losses are reasonably estimable. We record accruals for such matters to the extent that we conclude a loss is probable and the financial impact, should an adverse outcome occur, is reasonably estimable. Such accruals are reflected in the Company's Consolidated Financial Statements. In our opinion, we have made appropriate and adequate accruals for these matters and believe the probability of a material loss beyond the amounts accrued to be remote; however, the ultimate liability for these matters is uncertain, and if accruals are not adequate, an adverse outcome could have a material effect on the consolidated financial condition or results of operations. Listed below are certain claims made against the Company and/or our subsidiaries for which the potential exposure is considered material to the Company's Consolidated Financial Statements. We believe we have substantial defenses to the claims made and intend to vigorously defend these matters.
Several private lawsuits are pending against us alleging that we failed to compensate poultry plant employees for all hours worked, including overtime compensation, in violation of the Federal Labor Standards Act (FLSA). These lawsuits include DeAsencio v. Tyson Foods, Inc. (DeAsencio), filed on August 22, 2000, in the U.S. District Court for the Eastern District of Pennsylvania. This matter involves similar allegations that employees should be paid for the time it takes to engage in pre- and post-shift activities such as changing into and out of protective and sanitary clothing, obtaining clothing and walking to and from the changing area, work areas and break areas. They seek back wages, liquidated damages, pre- and post-judgment interest, and attorneys' fees. Plaintiffs appealed a jury verdict and final judgment entered in our favor on June 22, 2006, in the U.S. District Court for the Eastern District of Pennsylvania. On September 7, 2007, the U.S. Court of Appeals for the Third Circuit reversed the jury verdict and remanded the case to the District Court for further proceedings. We sought rehearing en banc, which was denied by the Court of Appeals on October 5, 2007. The United States Supreme Court denied our petition for a writ of certiorari on June 9, 2008. The new trial date has not been set.
The other private lawsuits referred to above are Sheila Ackles, et al. v. Tyson Foods, Inc. (N. Dist. Alabama, October 23, 2006); McCluster, et al. v. Tyson Foods, Inc. (M. Dist. Georgia, December 11, 2006); Dobbins, et al. v. Tyson Chicken, Inc., et al. (N.D. Alabama, December 21, 2006); Buchanan, et al. v. Tyson Chicken, Inc., et al. and Potter, et al. v. Tyson Chicken, Inc., et al. (N.D. Alabama, December 22, 2006); Jones, et al. v. Tyson Foods, Inc., et al., Walton, et al. v. Tyson Foods, Inc., et al. and Williams, et al. v. Tyson Foods, Inc., et al. (S.D. Mississippi, February 9, 2007); Balch, et al. v. Tyson Foods, Inc. (E.D. Oklahoma, March 1, 2007); Adams, et al. v. Tyson Foods, Inc. (W.D. Arkansas, March 2, 2007); Atkins, et al. v. Tyson Foods, Inc. (M.D. Georgia, March 5, 2007); Laney, et al. v. Tyson Foods, Inc. and Williams, et al. v. Tyson Foods, Inc. (M.D. Georgia, May 23, 2007) (the Williams Case). Similar to DeAsencio, each of these matters involves allegations that employees should be paid for the time it takes to engage in pre- and post-shift activities such as changing into and out of protective and sanitary clothing, obtaining clothing and walking to and from the changing area, work areas and break areas. The plaintiffs in each of these lawsuits seek or have sought to act as class representatives on behalf of all current and former employees who were allegedly not paid for time worked and seek back wages, liquidated damages, pre- and post-judgment interest, and attorneys' fees. On April 6, 2007, we filed a motion for transfer of the above named actions for coordinated pretrial proceedings before the Judicial Panel on Multidistrict Litigation, which was granted on August 17, 2007. These cases and five other cases subsequently filed involving the same allegations (i.e., Armstrong, et al. v. Tyson Foods, Inc. (W.D. Tennessee, January 30, 2008); Maldonado, et al. v. Tyson Foods, Inc. (E.D. Tennessee, January 31, 2008); White, et al. v. Tyson Foods, Inc. (E.D. Texas, February 1, 2008); Meyer, et al. v. Tyson Foods, Inc. (W.D. Missouri, February 2, 2008); and Leak, et al. v. Tyson Foods, Inc. (W.D. North Carolina, February 6, 2008)), were transferred to the U.S. District Court in the Middle District of Georgia, In re: Tyson Foods, Inc., Fair Labor Standards Act Litigation (MDL Proceedings). On September 2, 2011, the parties executed a settlement agreement and filed a joint motion with the court seeking its approval of the settlement. The court approved the settlement on September 15, 2011, and Tyson will pay at least $12.25 million but no more than $17.5 million in back pay and damages to eligible class members. The settlement agreement provides a process for identifying and certifying eligible class members, which includes a 75-day notice period for certain class members to become eligible for payment under the settlement. In addition, the settlement agreement provides that plaintiffs' attorneys must file an application for fees with the court but that no more than $14.5 million in attorneys' fees and costs will be paid. Plaintiffs' attorneys filed their fee application on October 11, 2011.
We have pending twelve separate wage and hour actions involving Tyson Fresh Meats Inc.'s plants located in Lexington, Nebraska (Lopez, et al. v. Tyson Foods, Inc., D. Nebraska, June 30, 2006), Garden City and Emporia, Kansas (Garcia, et al. v. Tyson Foods, Inc., Tyson Fresh Meats, Inc., D. Kansas, May 15, 2006), Storm Lake, Iowa (Bouaphakeo (f/k/a Sharp), et al. v. Tyson Foods, Inc., N.D. Iowa, February 6, 2007), Columbus Junction, Iowa (Guyton (f/k/a Robinson), et al. v. Tyson Foods, Inc., d.b.a Tyson Fresh Meats, Inc., S.D. Iowa, September 12, 2007), Joslin, Illinois (Murray, et al. v. Tyson Foods, Inc., C.D. Illinois, January 2, 2008; and DeVoss v. Tyson Foods, Inc. d.b.a. Tyson Fresh Meats, C.D. Illinois, March 2, 2011), Dakota City, Nebraska (Gomez, et al. v. Tyson Foods, Inc., D. Nebraska, January 16, 2008), Madison, Nebraska (Acosta, et al. v Tyson Foods, Inc. d.b.a Tyson Fresh Meats, Inc., D. Nebraska, February 29, 2008), Perry and Waterloo, Iowa (Edwards, et al. v. Tyson Foods, Inc. d.b.a Tyson Fresh Meats, Inc., S.D. Iowa, March 20, 2008); Council Bluffs, Iowa (Maxwell (f/k/a Salazar), et al. v. Tyson Foods, Inc. d.b.a. Tyson Fresh Meats, Inc., S.D. Iowa, April 29, 2008); Logansport, Indiana (Carter, et al. v. Tyson Foods, Inc. and Tyson Fresh Meats, Inc., N.D. Indiana, April 29, 2008); and Goodlettsville, Tennessee (Abadeer v. Tyson Foods, Inc., and Tyson Fresh Meats, Inc., M.D. Tennessee, February 6, 2009). The actions allege we failed to pay employees for all hours worked, including overtime compensation for the time it takes to change into protective work uniforms, safety equipment and other sanitary and protective clothing worn by employees, and for walking to and from the changing area, work areas and break areas in violation of the FLSA and analogous state laws. The plaintiffs seek back wages, liquidated damages, pre- and post-judgment interest, attorneys' fees and costs. Each case is proceeding in its jurisdiction.
| — | After a trial in the Garcia case, a jury verdict in favor of the plaintiffs was entered on March 17, 2011, with respect to the Garden City, Kansas facility. Exclusive of pre- and post-judgment interest, attorneys' fees and costs, the jury found violations of federal and state laws for pre- and post-shift work activities and awarded damages in the amount of $503,011, respectively. Plaintiffs' counsel has filed an application for attorneys' fees and expenses in the amount of $3,475,422. We contested the application and are currently evaluating our appeal options. |
| — | A jury trial was held in the Lopez case, which involved the Lexington, NE beef plant, and resulted in a jury verdict in favor of Tyson. Judgment was entered and the complaint was dismissed with prejudice, on May 26, 2011. Plaintiffs filed an appeal with the Eighth Circuit Court of Appeals on June 16, 2011. |
| — | A jury trial was held in the Bouaphakeo case, which involved the Storm Lake, Iowa pork plant and resulted in a jury verdict in favor of the plaintiffs on September 26, 2011. Exclusive of pre- and post-judgment interest, attorneys' fees and costs, the jury found violations of federal and state laws for pre- and post-shift work activities and awarded damages in the amount of $2,892,379. On October 24, 2011, we renewed our motion for judgment as a matter of law due to a failure of class-wide proof and, in the alternative, for a new trial on damages. |
| — | The Guyton, Gomez and Acosta cases are scheduled for trials on April 9, 2012, October 15, 2012, and November 13, 2012, respectively. |
We have pending one wage and hour action involving our Tyson Prepared Foods plant located in Jefferson, Wisconsin (Weissman, et al. v. Tyson Prepared Foods, Inc., Jefferson County (Wisconsin) Circuit Court, October 20, 2010). The plaintiffs allege that employees should be paid for the time it takes to engage in pre- and post-shift activities such as changing into and out of protective and sanitary clothing and the associated time it takes to walk to and from their workstations post-donning and pre-doffing of protective and sanitary clothing. Six named plaintiffs seek to act as state law class representatives on behalf of all current and former employees who were allegedly not paid for time worked and seek back wages, liquidated damages, pre- and post-judgment interest, and attorneys' fees and costs. On May 16, 2011, Plaintiffs filed a motion to certify a state law class of all hourly employees who have worked at the Jefferson plant from October 20, 2008, to the present. We have filed motions for summary judgment seeking dismissal of the claims, or, in the alternative, to limit the claims made for non-compensable clothes changing activities.
On June 19, 2005, the Attorney General and the Secretary of the Environment of the State of Oklahoma filed a complaint in the U.S. District Court for the Northern District of Oklahoma against us, three of our subsidiaries and six other poultry integrators. This complaint was subsequently amended. As amended, the complaint asserts a number of state and federal causes of action including, but not limited to, counts under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), Resource Conservation and Recovery Act (RCRA), and state-law public nuisance theories. The amended complaint asserts that defendants and certain contract growers who are not named in the amended complaint polluted the surface waters, groundwater and associated drinking water supplies of the Illinois River Watershed (IRW) through the land application of poultry litter. Oklahoma asserts that this alleged pollution has also caused extensive injury to the environment (including soils and sediments) of the IRW and that the defendants have been unjustly enriched. Oklahoma's claims cover the entire IRW, which encompasses more than one million acres of land and the natural resources (including lakes and waterways) contained therein. Oklahoma seeks wide-ranging relief, including injunctive relief, compensatory damages in excess of $800 million, an unspecified amount in punitive damages and attorneys' fees.
We and the other defendants have denied liability, asserted various defenses, and filed a third-party complaint that asserts claims against other persons and entities whose activities may have contributed to the pollution alleged in the amended complaint. The district court has stayed proceedings on the third party complaint pending resolution of Oklahoma's claims against the defendants. On October 31, 2008, the defendants filed a motion to dismiss for failure to join the Cherokee Nation as a required party or, in the alternative, for judgment as a matter of law based on the plaintiffs' lack of standing. This motion was granted in part and denied in part on July 22, 2009. In its ruling, the district court dismissed Oklahoma's claims for cost recovery and for natural resources damages under CERCLA and for unjust enrichment under Oklahoma common law. This ruling also narrowed the scope of Oklahoma's remaining claims by dismissing all damage claims under its causes of action for Oklahoma common law nuisance, federal common law nuisance, and Oklahoma common law trespass, leaving only its claims for injunctive relief for trial. On August 18, 2009, the Court granted partial summary judgment in favor of the defendants on Oklahoma's claims for violations of the Oklahoma Registered Poultry Feeding Operations Act. Oklahoma later voluntarily dismissed the remainder of this claim. On September 2, 2009, the Cherokee Nation filed a motion to intervene in the lawsuit. Its motion to intervene was denied on September 15, 2009, and the Cherokee Nation filed a notice of appeal of that ruling in the Tenth Circuit Court of Appeals on September 17, 2009. A non-jury trial of the case began on September 24, 2009. At the close of Oklahoma's case-in-chief, the Court granted the defendants' motions to dismiss claims based on RCRA, nuisance per se, and health risks related to bacteria. The defense rested its case on January 13, 2010, and closing arguments were held on February 11, 2010. On September 21, 2010, the Court of Appeals affirmed the district court's denial of the Cherokee Nation's motion to intervene. On October 6, 2010 the Cherokee Nation and the State of Oklahoma filed a petition for rehearing or en banc review seeking reconsideration of this ruling. The Court of Appeals denied this petition.
On May 8, 2008, a lawsuit was filed against the Company and two of our employees in the District Court of McCurtain County, Oklahoma styled Armstrong, et al. v. Tyson Foods, Inc., et al. (the Armstrong Case). The lawsuit was brought by a group of 52 poultry growers who allege that certain of our live production practices in Oklahoma constitute fraudulent inducement, fraud, unjust enrichment, negligence, gross negligence, unconscionability, violations of the Oklahoma Business Sales Act, Deceptive Trade Practice violations, violations of the Consumer Protection Act, and conversion, as well as other theories of recovery. The plaintiffs sought damages in an unspecified amount. On October 30, 2009, 20 additional growers represented by the same attorney filed a lawsuit against us in the same court asserting the same or similar claims, which is styled Clardy, et al. v. Tyson Foods, Inc., et al. (the Clardy Case). In both of these cases we have denied all allegations of wrongdoing. In June 2009, the plaintiffs in the Armstrong case requested an expedited trial date for a smaller group of plaintiffs they claimed were facing imminent financial peril. The Court ultimately severed a group of 10 plaintiffs from the Armstrong Case, and a trial began on March 15, 2010. There were numerous irregularities and rulings during the trial which we believe to have been legally erroneous and highly prejudicial to our right to a fair trial. On April 1, 2010, the jury returned a verdict against us and one of our employees, and on April 2, 2010, the jury returned a punitive damages verdict against us. After a dispute caused by inconsistencies between the multiple verdict forms completed by the jury and apparent confusion by the jury as to how to complete those verdict forms, the Court entered a final judgment in the amount of $8,655,735. Subsequent to the trial, the presiding judge disqualified from the cases and the Oklahoma Supreme Court appointed a new judge to the cases. The Company filed post-trial motions challenging the verdict. Those motions were denied. The Company has appealed the verdict to the Oklahoma Supreme Court. We filed a motion with the trial court to change venue from McCurtain County on the grounds that the numerous irregularities that occurred during the trial, coupled with the attendant publicity, resulted in community bias which would prevent the Company from receiving a fair trial in McCurtain County. The trial court granted this motion and the case will be transferred to Choctaw County, Oklahoma. We filed another motion, which the trial court also granted, to stay all future trials of the claims of the plaintiffs in the Armstrong Case and the Clardy Case pending the outcome of the appeal of the first trial. We also filed a motion to sever all of the plaintiffs' claims into individual cases, which was heard on January 25, 2010. This motion was denied, but the Court took under advisement the sizes and groupings of plaintiffs in future trials. We believe numerous and substantial legal errors were made by the Court during the trial and that a review of and guidance on these issues by the appellate court could have a substantial impact on the outcome of future trials in the Armstrong Case and the Clardy Case.
|
|||
NOTE 20: QUARTERLY FINANCIAL DATA (UNAUDITED)
| in millions, except per share data | ||||||||||||||||
|
|
First Quarter |
|
|
Second Quarter |
|
|
Third Quarter |
|
|
Fourth Quarter |
| |||||
|
2011 |
||||||||||||||||
|
Sales |
$7,615 | $8,000 | $8,247 | $8,404 | ||||||||||||
|
Gross profit |
744 | 533 | 531 | 391 | ||||||||||||
|
Operating income |
498 | 303 | 312 | 172 | ||||||||||||
|
Net income |
294 | 156 | 188 | 95 | ||||||||||||
|
Net income attributable to Tyson |
298 | 159 | 196 | 97 | ||||||||||||
|
Net income per share attributable to Tyson: |
||||||||||||||||
|
Class A Basic |
$0.81 | $0.43 | $0.53 | $0.27 | ||||||||||||
|
Class B Basic |
$0.73 | $0.39 | $0.48 | $0.24 | ||||||||||||
|
Diluted |
$0.78 | $0.42 | $0.51 | $0.26 | ||||||||||||
|
2010 |
||||||||||||||||
|
Sales |
$6,635 | $6,916 | $7,438 | $7,441 | ||||||||||||
|
Gross profit |
529 | 564 | 752 | 669 | ||||||||||||
|
Operating income |
314 | 344 | 507 | 391 | ||||||||||||
|
Net income |
159 | 156 | 242 | 208 | ||||||||||||
|
Net income attributable to Tyson |
160 | 159 | 248 | 213 | ||||||||||||
|
Net income per share attributable to Tyson: |
||||||||||||||||
|
Class A Basic |
$0.44 | $0.43 | $0.68 | $0.58 | ||||||||||||
|
Class B Basic |
$0.39 | $0.39 | $0.61 | $0.52 | ||||||||||||
|
Diluted |
$0.42 | $0.42 | $0.65 | $0.57 | ||||||||||||
First quarter fiscal 2011 net income included $11 million gain related to a sale of interests in an equity method investment. Third quarter fiscal 2011 net income included $21 million reduction to income tax expense related to a reversal of reserves for foreign uncertain tax positions.
Second quarter fiscal 2010 net income included $24 million of pretax charges related to losses on notes repurchased during the quarter. Third quarter fiscal 2010 operating income included $38 million of insurance proceeds received during the quarter and net income included $34 million of pretax charges related to losses on notes repurchased during the quarter and a $12 million charge related to an equity method investment impairment. Fourth quarter fiscal 2010 operating income included a $29 million non-cash charge related to the full impairment of an immaterial Chicken segment reporting unit's goodwill.
|
|||
NOTE 21: CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Tyson Fresh Meats, Inc. (TFM Parent), our wholly-owned subsidiary, has fully and unconditionally guaranteed the 2016 Notes. TFM Parent and substantially all of our wholly-owned domestic subsidiaries have fully and unconditionally guaranteed the 2014 Notes. The following financial information presents condensed consolidating financial statements, which include Tyson Foods, Inc. (TFI Parent); TFM Parent; the other 2014 Notes' guarantor subsidiaries (Guarantors) on a combined basis; the elimination entries necessary to reflect TFM Parent and the Guarantors, which collectively represent the 2014 Notes' total guarantor subsidiaries (2014 Guarantors), on a combined basis; the 2014 Notes' non-guarantor subsidiaries (Non-Guarantors) on a combined basis; the elimination entries necessary to consolidate TFI Parent, the 2014 Guarantors and the Non-Guarantors; and Tyson Foods, Inc. on a consolidated basis, and is provided as an alternative to providing separate financial statements for the guarantor(s).
|
Condensed Consolidating Statement of Income for the year ended October 1, 2011 |
|
in millions | ||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Sales |
$157 | $18,636 | $13,159 | $(1,227) | $30,568 | $1,542 | $(1) | $32,266 | ||||||||||||||||||||||||
|
Cost of Sales |
29 | 17,461 | 12,364 | (1,226) | 28,599 | 1,440 | (1) | 30,067 | ||||||||||||||||||||||||
|
Gross Profit (Loss) |
128 | 1,175 | 795 | (1) | 1,969 | 102 | 0 | 2,199 | ||||||||||||||||||||||||
|
Operating Expenses: |
||||||||||||||||||||||||||||||||
|
Selling, general and administrative |
52 | 215 | 561 | (1) | 775 | 87 | 0 | 914 | ||||||||||||||||||||||||
|
Goodwill impairment |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Other charges |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Operating Income |
76 | 960 | 234 | 0 | 1,194 | 15 | 0 | 1,285 | ||||||||||||||||||||||||
|
Other (Income) Expense: |
||||||||||||||||||||||||||||||||
|
Interest expense, net |
(26) | 148 | 117 | 0 | 265 | (8) | 0 | 231 | ||||||||||||||||||||||||
|
Other, net |
(9) | 0 | (12) | 0 | (12) | 1 | 0 | (20) | ||||||||||||||||||||||||
|
Equity in net earnings of subsidiaries |
(673) | (115) | (59) | 102 | (72) | (13) | 758 | 0 | ||||||||||||||||||||||||
|
Total Other (Income) Expense |
(708) | 33 | 46 | 102 | 181 | (20) | 758 | 211 | ||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations before Income Taxes |
784 | 927 | 188 | (102) | 1,013 | 35 | (758) | 1,074 | ||||||||||||||||||||||||
|
Income Tax Expense (Benefit) |
34 | 272 | 38 | 0 | 310 | (3) | 0 | 341 | ||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations |
750 | 655 | 150 | (102) | 703 | 38 | (758) | 733 | ||||||||||||||||||||||||
|
Loss from Discontinued Operation, net of tax |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Net Income (Loss) |
750 | 655 | 150 | (102) | 703 | 38 | (758) | 733 | ||||||||||||||||||||||||
|
Less: Net Loss Attributable to Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | (17) | 0 | (17) | ||||||||||||||||||||||||
|
Net Income (Loss) Attributable to Tyson |
$750 | $655 | $150 | $(102) | $703 | $55 | $(758) | $750 | ||||||||||||||||||||||||
|
Condensed Consolidating Statement of Income for the year ended October 2, 2010 |
|
in millions | ||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Sales |
$454 | $15,950 | $12,248 | $(966) | $27,232 | $1,167 | $(423) | $28,430 | ||||||||||||||||||||||||
|
Cost of Sales |
16 | 14,867 | 11,343 | (966) | 25,244 | 1,079 | (423) | 25,916 | ||||||||||||||||||||||||
|
Gross Profit |
438 | 1,083 | 905 | 0 | 1,988 | 88 | 0 | 2,514 | ||||||||||||||||||||||||
|
Operating Expenses: |
||||||||||||||||||||||||||||||||
|
Selling, general and administrative |
93 | 199 | 550 | 0 | 749 | 87 | 0 | 929 | ||||||||||||||||||||||||
|
Goodwill impairment |
0 | 0 | 0 | 0 | 0 | 29 | 0 | 29 | ||||||||||||||||||||||||
|
Other charges |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Operating Income (Loss) |
345 | 884 | 355 | 0 | 1,239 | (28) | 0 | 1,556 | ||||||||||||||||||||||||
|
Other (Income) Expense: |
||||||||||||||||||||||||||||||||
|
Interest expense, net |
328 | 2 | 17 | 0 | 19 | (14) | 0 | 333 | ||||||||||||||||||||||||
|
Other, net |
25 | 1 | (7) | 0 | (6) | 1 | 0 | 20 | ||||||||||||||||||||||||
|
Equity in net earnings of subsidiaries |
(782) | (51) | 25 | 37 | 11 | (14) | 785 | 0 | ||||||||||||||||||||||||
|
Total Other (Income) Expense |
(429) | (48) | 35 | 37 | 24 | (27) | 785 | 353 | ||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations before Income Taxes |
774 | 932 | 320 | (37) | 1,215 | (1) | (785) | 1,203 | ||||||||||||||||||||||||
|
Income Tax Expense (Benefit) |
(6) | 304 | 116 | 0 | 420 | 24 | 0 | 438 | ||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations |
780 | 628 | 204 | (37) | 795 | (25) | (785) | 765 | ||||||||||||||||||||||||
|
Loss from Discontinued Operation, net of tax |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Net Income (Loss) |
780 | 628 | 204 | (37) | 795 | (25) | (785) | 765 | ||||||||||||||||||||||||
|
Less: Net Loss Attributable to Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | (15) | 0 | (15) | ||||||||||||||||||||||||
|
Net Income (Loss) Attributable to Tyson |
$780 | $628 | $204 | $(37) | $795 | $(10) | $(785) | $780 | ||||||||||||||||||||||||
|
Condensed Consolidating Statement of Income for the year ended October 3, 2009 |
|
in millions | ||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Sales |
$11 | $14,504 | $12,245 | $(725) | $26,024 | $709 | $(40) | $26,704 | ||||||||||||||||||||||||
|
Cost of Sales |
132 | 13,970 | 11,526 | (725) | 24,771 | 638 | (40) | 25,501 | ||||||||||||||||||||||||
|
Gross Profit (Loss) |
(121) | 534 | 719 | 0 | 1,253 | 71 | 0 | 1,203 | ||||||||||||||||||||||||
|
Operating Expenses: |
||||||||||||||||||||||||||||||||
|
Selling, general and administrative |
132 | 187 | 450 | 0 | 637 | 72 | 0 | 841 | ||||||||||||||||||||||||
|
Goodwill impairment |
0 | 560 | 0 | 0 | 560 | 0 | 0 | 560 | ||||||||||||||||||||||||
|
Other charges |
0 | 0 | 17 | 0 | 17 | 0 | 0 | 17 | ||||||||||||||||||||||||
|
Operating Income (Loss) |
(253) | (213) | 252 | 0 | 39 | (1) | 0 | (215) | ||||||||||||||||||||||||
|
Other (Income) Expense: |
||||||||||||||||||||||||||||||||
|
Interest expense, net |
285 | 13 | 20 | 0 | 33 | (8) | 0 | 310 | ||||||||||||||||||||||||
|
Other, net |
11 | (3) | (6) | 0 | (9) | 16 | 0 | 18 | ||||||||||||||||||||||||
|
Equity in net earnings of subsidiaries |
157 | (32) | 44 | 13 | 25 | (17) | (165) | 0 | ||||||||||||||||||||||||
|
Total Other (Income) Expense |
453 | (22) | 58 | 13 | 49 | (9) | (165) | 328 | ||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations before Income Taxes |
(706) | (191) | 194 | (13) | (10) | 8 | 165 | (543) | ||||||||||||||||||||||||
|
Income Tax Expense (Benefit) |
(138) | 111 | 34 | 0 | 145 | 0 | 0 | 7 | ||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations |
(568) | (302) | 160 | (13) | (155) | 8 | 165 | (550) | ||||||||||||||||||||||||
|
Income (Loss) from Discontinued Operation, net of tax |
21 | 5 | 0 | 0 | 5 | (27) | 0 | (1) | ||||||||||||||||||||||||
|
Net Income (Loss) |
(547) | (297) | 160 | (13) | (150) | (19) | 165 | (551) | ||||||||||||||||||||||||
|
Less: Net Loss Attributable to Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | (4) | 0 | (4) | ||||||||||||||||||||||||
|
Net Income (Loss) Attributable to Tyson |
$(547) | $(297) | $160 | $(13) | $(150) | $(15) | $165 | $(547) | ||||||||||||||||||||||||
|
Condensed Consolidating Balance Sheet as of October 1, 2011 |
|
in millions | ||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- antors |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Assets |
||||||||||||||||||||||||||||||||
|
Current Assets: |
||||||||||||||||||||||||||||||||
|
Cash and cash equivalents |
$1 | $1 | $414 | $0 | $415 | $300 | $0 | $716 | ||||||||||||||||||||||||
|
Accounts receivable, net |
1 | 506 | 656 | 0 | 1,162 | 157 | 1 | 1,321 | ||||||||||||||||||||||||
|
Inventories |
2 | 926 | 1,440 | 0 | 2,366 | 219 | 0 | 2,587 | ||||||||||||||||||||||||
|
Other current assets |
62 | 95 | 102 | (133) | 64 | 54 | (24) | 156 | ||||||||||||||||||||||||
|
Total Current Assets |
66 | 1,528 | 2,612 | (133) | 4,007 | 730 | (23) | 4,780 | ||||||||||||||||||||||||
|
Net Property, Plant and Equipment |
37 | 875 | 2,369 | 0 | 3,244 | 542 | 0 | 3,823 | ||||||||||||||||||||||||
|
Goodwill |
0 | 881 | 966 | 0 | 1,847 | 45 | 0 | 1,892 | ||||||||||||||||||||||||
|
Intangible Assets |
0 | 31 | 49 | 0 | 80 | 69 | 0 | 149 | ||||||||||||||||||||||||
|
Other Assets |
2,179 | 180 | 147 | (15) | 312 | 296 | (2,360) | 427 | ||||||||||||||||||||||||
|
Investment in Subsidiaries |
11,396 | 1,923 | 769 | (1,760) | 932 | 319 | (12,647) | 0 | ||||||||||||||||||||||||
|
Total Assets |
$13,678 | $5,418 | $6,912 | $(1,908) | $10,422 | $2,001 | $(15,030) | $11,071 | ||||||||||||||||||||||||
|
Liabilities and Shareholders' Equity |
||||||||||||||||||||||||||||||||
|
Current Liabilities: |
||||||||||||||||||||||||||||||||
|
Current debt |
$2 | $0 | $0 | $0 | $0 | $68 | $0 | $70 | ||||||||||||||||||||||||
|
Accounts payable |
8 | 525 | 648 | 0 | 1,173 | 83 | 0 | 1,264 | ||||||||||||||||||||||||
|
Other current liabilities |
5,808 | 144 | 442 | (133) | 453 | 474 | (5,695) | 1,040 | ||||||||||||||||||||||||
|
Total Current Liabilities |
5,818 | 669 | 1,090 | (133) | 1,626 | 625 | (5,695) | 2,374 | ||||||||||||||||||||||||
|
Long-Term Debt |
1,972 | 1,198 | 916 | 0 | 2,114 | 269 | (2,243) | 2,112 | ||||||||||||||||||||||||
|
Deferred Income Taxes |
0 | 120 | 310 | (15) | 415 | 9 | 0 | 424 | ||||||||||||||||||||||||
|
Other Liabilities |
231 | 142 | 191 | 0 | 333 | 29 | (117) | 476 | ||||||||||||||||||||||||
|
Redeemable Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Total Tyson Shareholders' Equity |
5,657 | 3,289 | 4,405 | (1,760) | 5,934 | 1,041 | (6,975) | 5,657 | ||||||||||||||||||||||||
|
Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | 28 | 0 | 28 | ||||||||||||||||||||||||
|
Total Shareholders' Equity |
5,657 | 3,289 | 4,405 | (1,760) | 5,934 | 1,069 | (6,975) | 5,685 | ||||||||||||||||||||||||
|
Total Liabilities and Shareholders' Equity |
$13,678 | $5,418 | $6,912 | ($1,908) | $10,422 | $2,001 | ($15,030) | $11,071 | ||||||||||||||||||||||||
| Condensed Consolidating Balance Sheet as of October 2, 2010 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- antors |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Assets |
||||||||||||||||||||||||||||||||
|
Current Assets: |
||||||||||||||||||||||||||||||||
|
Cash and cash equivalents |
$2 | $2 | $731 | $0 | $733 | $243 | $0 | $978 | ||||||||||||||||||||||||
|
Accounts receivable, net |
0 | 2,389 | 4,670 | 0 | 7,059 | 132 | (5,993) | 1,198 | ||||||||||||||||||||||||
|
Inventories |
0 | 734 | 1,361 | 0 | 2,095 | 179 | 0 | 2,274 | ||||||||||||||||||||||||
|
Other current assets |
43 | 49 | 27 | (9) | 67 | 95 | (37) | 168 | ||||||||||||||||||||||||
|
Total Current Assets |
45 | 3,174 | 6,789 | (9) | 9,954 | 649 | (6,030) | 4,618 | ||||||||||||||||||||||||
|
Net Property, Plant and Equipment |
39 | 870 | 2,257 | 0 | 3,127 | 508 | 0 | 3,674 | ||||||||||||||||||||||||
|
Goodwill |
0 | 880 | 967 | 0 | 1,847 | 46 | 0 | 1,893 | ||||||||||||||||||||||||
|
Intangible Assets |
0 | 37 | 53 | 0 | 90 | 76 | 0 | 166 | ||||||||||||||||||||||||
|
Other Assets |
2,804 | 101 | 61 | 0 | 162 | 295 | (2,860) | 401 | ||||||||||||||||||||||||
|
Investment in Subsidiaries |
10,776 | 1,785 | 631 | (1,607) | 809 | 307 | (11,892) | 0 | ||||||||||||||||||||||||
|
Total Assets |
$13,664 | $6,847 | $10,758 | $(1,616) | $15,989 | $1,881 | $(20,782) | $10,752 | ||||||||||||||||||||||||
|
Liabilities and Shareholders' Equity |
||||||||||||||||||||||||||||||||
|
Current Liabilities: |
||||||||||||||||||||||||||||||||
|
Current debt |
$317 | $0 | $0 | $0 | $0 | $84 | $0 | $401 | ||||||||||||||||||||||||
|
Accounts payable |
16 | 421 | 608 | 0 | 1,029 | 65 | 0 | 1,110 | ||||||||||||||||||||||||
|
Other current liabilities |
6,044 | 168 | 335 | (9) | 494 | 526 | (6,030) | 1,034 | ||||||||||||||||||||||||
|
Total Current Liabilities |
6,377 | 589 | 943 | (9) | 1,523 | 675 | (6,030) | 2,545 | ||||||||||||||||||||||||
|
Long-Term Debt |
2,011 | 1,638 | 1,228 | 0 | 2,866 | 118 | (2,860) | 2,135 | ||||||||||||||||||||||||
|
Deferred Income Taxes |
0 | 105 | 204 | 0 | 309 | 12 | 0 | 321 | ||||||||||||||||||||||||
|
Other Liabilities |
110 | 148 | 179 | 0 | 327 | 49 | 0 | 486 | ||||||||||||||||||||||||
|
Redeemable Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | 64 | 0 | 64 | ||||||||||||||||||||||||
|
Total Tyson Shareholders' Equity |
5,166 | 4,367 | 8,204 | (1,607) | 10,964 | 928 | (11,892) | 5,166 | ||||||||||||||||||||||||
|
Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | 35 | 0 | 35 | ||||||||||||||||||||||||
|
Total Shareholders' Equity |
5,166 | 4,367 | 8,204 | (1,607) | 10,964 | 963 | (11,892) | 5,201 | ||||||||||||||||||||||||
|
Total Liabilities and Shareholders' Equity |
$13,664 | $6,847 | $10,758 | $(1,616) | $15,989 | $1,881 | $(20,782) | $10,752 | ||||||||||||||||||||||||
| Condensed Consolidating Statement of Cash Flows for the year ended October 1, 2011 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
|
TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Cash Provided by (Used for) Operating Activities |
$31 | $564 | $468 | $0 | $1,032 | $3 | $(20) | $1,046 | ||||||||||||||||||||||||
|
Cash Flows From Investing Activities: |
||||||||||||||||||||||||||||||||
|
Additions to property, plant and equipment |
(1) | (107) | (443) | 0 | (550) | (92) | 0 | (643) | ||||||||||||||||||||||||
|
Purchases of marketable securities, net |
0 | (57) | (21) | 0 | (78) | (2) | 0 | (80) | ||||||||||||||||||||||||
|
Proceeds from notes receivable |
0 | 0 | 0 | 0 | 0 | 51 | 0 | 51 | ||||||||||||||||||||||||
|
Proceeds from sale of discontinued operation |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Change in restricted cash-investing |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Acquisitions, net of cash acquired |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Other, net |
23 | 0 | 8 | 0 | 8 | (3) | 0 | 28 | ||||||||||||||||||||||||
|
Cash Provided by (Used for) Investing Activities |
22 | (164) | (456) | 0 | (620) | (46) | 0 | (644) | ||||||||||||||||||||||||
|
Cash Flows from Financing Activities: |
||||||||||||||||||||||||||||||||
|
Net change in debt |
(391) | (6) | 0 | 0 | (6) | 12 | 0 | (385) | ||||||||||||||||||||||||
|
Debt issuance costs |
(9) | 0 | 0 | 0 | 0 | 0 | 0 | (9) | ||||||||||||||||||||||||
|
Purchase of redeemable noncontrolling interest |
0 | 0 | 0 | 0 | 0 | (66) | 0 | (66) | ||||||||||||||||||||||||
|
Purchases of Tyson Class A common stock |
(207) | 0 | 0 | 0 | 0 | 0 | 0 | (207) | ||||||||||||||||||||||||
|
Dividends |
(59) | 0 | 0 | 0 | 0 | (20) | 20 | (59) | ||||||||||||||||||||||||
|
Change in restricted cash-financing |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Other, net |
58 | 0 | 0 | 0 | 0 | 10 | 0 | 68 | ||||||||||||||||||||||||
|
Net change in intercompany balances |
554 | (395) | (329) | 0 | (724) | 170 | 0 | 0 | ||||||||||||||||||||||||
|
Cash Provided by (Used for) Financing Activities |
(54) | (401) | (329) | 0 | (730) | 106 | 20 | (658) | ||||||||||||||||||||||||
|
Effect of Exchange Rate Change on Cash |
0 | 0 | 0 | 0 | 0 | (6) | 0 | (6) | ||||||||||||||||||||||||
|
Increase (Decrease) in Cash and Cash Equivalents |
(1) | (1) | (317) | 0 | (318) | 57 | 0 | (262) | ||||||||||||||||||||||||
|
Cash and Cash Equivalents at Beginning of Year |
2 | 2 | 731 | 0 | 733 | 243 | 0 | 978 | ||||||||||||||||||||||||
|
Cash and Cash Equivalents at End of Year |
$1 | $1 | $414 | $0 | $415 | $300 | $0 | $716 | ||||||||||||||||||||||||
| Condensed Consolidating Statement of Cash Flows for the year ended October 2, 2010 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- antors |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Cash Provided by Operating Activities |
$386 | $499 | $462 | $0 | $961 | $85 | $0 | $1,432 | ||||||||||||||||||||||||
|
Cash Flows From Investing Activities: |
||||||||||||||||||||||||||||||||
|
Additions to property, plant and equipment |
(3) | (85) | (323) | 0 | (408) | (139) | 0 | (550) | ||||||||||||||||||||||||
|
Purchases of marketable securities, net |
0 | 0 | 0 | 0 | 0 | (4) | 0 | (4) | ||||||||||||||||||||||||
|
Proceeds from notes receivable |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Proceeds from sale of discontinued operation |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Change in restricted cash-investing |
0 | 0 | 0 | 0 | 0 | 43 | 0 | 43 | ||||||||||||||||||||||||
|
Acquisitions, net of cash acquired |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Other, net |
(1) | (1) | 15 | 0 | 14 | (2) | 0 | 11 | ||||||||||||||||||||||||
|
Cash Used for Investing Activities |
(4) | (86) | (308) | 0 | (394) | (102) | 0 | (500) | ||||||||||||||||||||||||
|
Cash Flows from Financing Activities: |
||||||||||||||||||||||||||||||||
|
Net change in debt |
(874) | (149) | 0 | 0 | (149) | (11) | 0 | (1,034) | ||||||||||||||||||||||||
|
Debt issuance costs |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Purchase of redeemable noncontrolling interest |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Purchases of Tyson Class A common stock |
(48) | 0 | 0 | 0 | 0 | 0 | 0 | (48) | ||||||||||||||||||||||||
|
Dividends |
(59) | 0 | 0 | 0 | 0 | 0 | 0 | (59) | ||||||||||||||||||||||||
|
Change in restricted cash-financing |
0 | 0 | 140 | 0 | 140 | 0 | 0 | 140 | ||||||||||||||||||||||||
|
Other, net |
32 | 0 | 0 | 0 | 0 | 10 | 0 | 42 | ||||||||||||||||||||||||
|
Net change in intercompany balances |
569 | (262) | (351) | 0 | (613) | 44 | 0 | 0 | ||||||||||||||||||||||||
|
Cash Provided by (Used for) Financing Activities |
(380) | (411) | (211) | 0 | (622) | 43 | 0 | (959) | ||||||||||||||||||||||||
|
Effect of Exchange Rate Change on Cash |
0 | 0 | 0 | 0 | 0 | 1 | 0 | 1 | ||||||||||||||||||||||||
|
Increase (Decrease) in Cash and Cash Equivalents |
2 | 2 | (57) | 0 | (55) | 27 | 0 | (26) | ||||||||||||||||||||||||
|
Cash and Cash Equivalents at Beginning of Year |
0 | 0 | 788 | 0 | 788 | 216 | 0 | 1,004 | ||||||||||||||||||||||||
|
Cash and Cash Equivalents at End of Year |
$2 | $2 | $731 | $0 | $733 | $243 | $0 | $978 | ||||||||||||||||||||||||
| Condensed Consolidating Statement of Cash Flows for the year ended October 3, 2009 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Cash Provided by (Used for) Operating Activities |
$(617) | $507 | $982 | $0 | $1,489 | $113 | $(25) | $960 | ||||||||||||||||||||||||
|
Cash Flows From Investing Activities: |
||||||||||||||||||||||||||||||||
|
Additions to property, plant and equipment |
0 | (56) | (211) | 0 | (267) | (101) | 0 | (368) | ||||||||||||||||||||||||
|
Proceeds from sale of marketable securities, net |
0 | 0 | 0 | 0 | 0 | 19 | 0 | 19 | ||||||||||||||||||||||||
|
Proceeds from notes receivable |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Proceeds from sale of discontinued operation |
0 | 0 | 0 | 0 | 0 | 75 | 0 | 75 | ||||||||||||||||||||||||
|
Change in restricted cash-investing |
0 | 0 | 0 | 0 | 0 | (43) | 0 | (43) | ||||||||||||||||||||||||
|
Acquisitions, net of cash acquired |
0 | 0 | (13) | 0 | (13) | (80) | 0 | (93) | ||||||||||||||||||||||||
|
Other, net |
(37) | 1 | 12 | 0 | 13 | 7 | 0 | (17) | ||||||||||||||||||||||||
|
Cash Used for Investing Activities |
(37) | (55) | (212) | 0 | (267) | (123) | 0 | (427) | ||||||||||||||||||||||||
|
Cash Flows from Financing Activities: |
||||||||||||||||||||||||||||||||
|
Net change in debt |
545 | (94) | 0 | 0 | (94) | 36 | 0 | 487 | ||||||||||||||||||||||||
|
Debt issuance costs |
(58) | 0 | 0 | 0 | 0 | (1) | 0 | (59) | ||||||||||||||||||||||||
|
Purchase of redeemable noncontrolling interest |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Purchases of Tyson Class A common stock |
(19) | 0 | 0 | 0 | 0 | 0 | 0 | (19) | ||||||||||||||||||||||||
|
Dividends |
(60) | 0 | 0 | 0 | 0 | (25) | 25 | (60) | ||||||||||||||||||||||||
|
Change in restricted cash-financing |
0 | 0 | (140) | 0 | (140) | 0 | 0 | (140) | ||||||||||||||||||||||||
|
Other, net |
0 | 0 | 0 | 0 | 0 | 6 | 0 | 6 | ||||||||||||||||||||||||
|
Net change in intercompany balances |
106 | (358) | 123 | 0 | (235) | 129 | 0 | 0 | ||||||||||||||||||||||||
|
Cash Provided by (Used for) Financing Activities |
514 | (452) | (17) | 0 | (469) | 145 | 25 | 215 | ||||||||||||||||||||||||
|
Effect of Exchange Rate Change on Cash |
0 | 0 | 0 | 0 | 0 | 6 | 0 | 6 | ||||||||||||||||||||||||
|
Increase (Decrease) in Cash and Cash Equivalents |
(140) | 0 | 753 | 0 | 753 | 141 | 0 | 754 | ||||||||||||||||||||||||
|
Cash and Cash Equivalents at Beginning of Year |
140 | 0 | 35 | 0 | 35 | 75 | 0 | 250 | ||||||||||||||||||||||||
|
Cash and Cash Equivalents at End of Year |
$0 | $0 | $788 | $0 | $788 | $216 | $0 | $1,004 | ||||||||||||||||||||||||
|
|||
FINANCIAL STATEMENT SCHEDULE
TYSON FOODS, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Three Years Ended October 1, 2011
| in millions | ||||||||||||||||||||
| Additions | ||||||||||||||||||||
| Balance at Beginning of Period |
Charged to Costs and Expenses |
Charged to Other Accounts |
(Deductions) | Balance at End of Period |
||||||||||||||||
|
Allowance for Doubtful Accounts: |
||||||||||||||||||||
|
2011 |
$32 | $3 | $0 | $(4) | $31 | |||||||||||||||
|
2010 |
33 | 0 | 0 | (1) | 32 | |||||||||||||||
|
2009 |
12 | 22 | 0 | (1) | 33 | |||||||||||||||
|
Inventory Lower of Cost or Market Allowance: |
||||||||||||||||||||
|
2011 |
$2 | $12 | $0 | $(8) | $6 | |||||||||||||||
|
2010 |
22 | 7 | 0 | (27) | 2 | |||||||||||||||
|
2009 |
13 | 57 | 0 | (48) | 22 | |||||||||||||||
|
|||
Description of Business: Tyson Foods, Inc. (collectively, "Company," "we," "us" or "our"), founded in 1935 with world headquarters in Springdale, Arkansas, is one of the world's largest meat protein companies and the second-largest food production company in the Fortune 500. We produce a wide variety of brand name protein-based and prepared food products marketed in the United States and approximately 130 countries around the world.
Consolidation: The consolidated financial statements include the accounts of all majority-owned subsidiaries over which we exercise control and, when applicable, entities for which we have a controlling financial interest or are the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation.
We have an investment in a joint venture, Dynamic Fuels LLC (Dynamic Fuels), in which we have a 50 percent ownership interest. Dynamic Fuels qualifies as a variable interest entity. We consolidate Dynamic Fuels since we are the primary beneficiary. At October 1, 2011, Dynamic Fuels had $170 million of total assets, of which $144 million was property, plant and equipment, and $116 million of total liabilities, of which $100 million was long-term debt. At October 2, 2010, Dynamic Fuels had $154 million of total assets, of which $145 million was property, plant and equipment, and $107 million of total liabilities, of which $100 million was long-term debt.
Fiscal Year: We utilize a 52- or 53-week accounting period ending on the Saturday closest to September 30. The Company's accounting cycle resulted in a 52-week year for fiscal years 2011 and 2010 and a 53-week year for fiscal year 2009.
Discontinued Operation: On March 13, 2009, we completed the sale of the beef processing, cattle feed yard and fertilizer assets of three of our Alberta, Canada subsidiaries (collectively, Lakeside), which were part of our Beef segment, and related inventories. The financial statements report Lakeside as a discontinued operation. See Note 3: Acquisitions and Discontinued Operation in the Notes to Consolidated Financial Statements for further information.
Cash and Cash Equivalents: Cash equivalents consist of investments in short-term, highly liquid securities having original maturities of three months or less, which are made as part of our cash management activity. The carrying values of these assets approximate their fair values. We primarily utilize a cash management system with a series of separate accounts consisting of lockbox accounts for receiving cash, concentration accounts where funds are moved to, and several zero-balance disbursement accounts for funding payroll, accounts payable, livestock procurement, grower payments, etc. As a result of our cash management system, checks issued, but not presented to the banks for payment, may result in negative book cash balances. These negative book cash balances are included in accounts payable and other current liabilities. At October 1, 2011, and October 2, 2010, checks outstanding in excess of related book cash balances totaled approximately $281 million and $267 million, respectively.
Accounts Receivable: We record accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the accounts receivable balances and charged to the provision for doubtful accounts. We calculate this allowance based on our history of write-offs, level of past due accounts and relationships with and economic status of our customers. At October 1, 2011, and October 2, 2010, our allowance for uncollectible accounts was $31 million and $32 million, respectively. We generally do not have collateral for our receivables, but we do periodically evaluate the credit worthiness of our customers.
Inventories: Processed products, livestock and supplies and other are valued at the lower of cost or market. Cost includes purchased raw materials, live purchase costs, growout costs (primarily feed, contract grower pay and catch and haul costs), labor and manufacturing and production overhead, which are related to the purchase and production of inventories.
| in millions | ||||||||
| 2011 | 2010 | |||||||
|
Processed products: |
||||||||
|
Weighted-average method – chicken and prepared foods |
$715 | $721 | ||||||
|
First-in, first-out method – beef and pork |
581 | 462 | ||||||
|
Livestock – first-in, first-out method |
928 | 759 | ||||||
|
Supplies and other – weighted-average method |
363 | 332 | ||||||
|
Total inventory |
$2,587 | $2,274 | ||||||
Property, Plant and Equipment: Property, plant and equipment are stated at cost and depreciated on a straight-line method, using estimated lives for buildings and leasehold improvements of 10 to 33 years, machinery and equipment of three to 12 years and land improvements and other of three to 20 years. Major repairs and maintenance costs that significantly extend the useful life of the related assets are capitalized. Normal repairs and maintenance costs are charged to operations.
We review the carrying value of long-lived assets at each balance sheet date if indication of impairment exists. Recoverability is assessed using undiscounted cash flows based on historical results and current projections of earnings before interest and taxes. We measure impairment as the excess of carrying cost over the fair value of an asset. The fair value of an asset is measured using discounted cash flows including market participant assumptions of future operating results and discount rates.
Goodwill and Other Intangible Assets: Goodwill and indefinite life intangible assets are initially recorded at fair value and not amortized, but are reviewed for impairment at least annually or more frequently if impairment indicators arise. Our goodwill is allocated by reporting unit, and we follow a two-step process to evaluate if a potential impairment exists. The first step is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to have a potential impairment and the second step of the impairment test is not necessary. However, if the carrying amount of a reporting unit exceeds its fair value, the second step is performed to determine if goodwill is impaired and to measure the amount of impairment loss to recognize, if any. The second step compares the implied fair value of goodwill with the carrying amount of goodwill. If the implied fair value of goodwill exceeds the carrying amount, then goodwill is not considered impaired. However, if the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination (i.e., the fair value of the reporting unit is allocated to all the assets and liabilities, including any unrecognized intangible assets, as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was determined as the exit price a market participant would pay for the same business). We have elected to make the first day of the fourth quarter the annual impairment assessment date for goodwill and other indefinite life intangible assets.
We have estimated the fair value of our reporting units using a discounted cash flow analysis, which uses significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. This analysis requires us to make various judgmental estimates and assumptions about sales, operating margins, growth rates and discount factors and is believed to reflect market participant views which would exist in an exit transaction. Generally, we utilize normalized operating margin assumptions based on future expectations and operating margins historically realized in the reporting units' industries. For the fiscal 2011 impairment test of material reporting units, only our Domestic Chicken reporting unit, which had goodwill at October 1, 2011 totaling $900 million, utilized operating margins in future years in excess of the operating margins realized in the most recent year. The current year Domestic Chicken reporting unit results were not indicative of future market participant expectations in an exit transaction. We assumed operating margins in future years would return to our normalized range, as we believe this is consistent with market participant views in an exit transaction. Some of the inherent estimates and assumptions used in determining fair value of the reporting units are outside the control of management, including interest rates, cost of capital, tax rates, and credit ratings. While we believe we have made reasonable estimates and assumptions to calculate the fair value of the reporting units, it is possible a material change could occur. If our actual results are not consistent with our estimates and assumptions used to calculate fair value, we may be required to perform the second step in future years, which could result in material impairments of our goodwill.
During fiscal 2011, 2010 and 2009, all of our reporting units passed the first step of the goodwill impairment analysis, with the exception of an immaterial Chicken segment reporting unit in fiscal 2010 and the Beef reporting unit in fiscal 2009. In fiscal 2010, we recorded a $29 million full impairment of an immaterial Chicken segment reporting unit's goodwill. In fiscal 2009, we recorded a $560 million partial impairment of our Beef reporting unit's goodwill, which was driven by an increase in our discount rate used in the 2009 annual goodwill impairment analysis as a result of disruptions in global credit and other financial markets and deterioration of economic conditions.
For our other indefinite life intangible assets, if the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The fair value of trademarks is determined using a royalty rate method based on expected revenues by trademark.
Investments: We have investments in joint ventures and other entities. We use the cost method of accounting when our voting interests are less than 20 percent. We use the equity method of accounting when our voting interests are in excess of 20 percent and we do not have a controlling interest or a variable interest in which we are the primary beneficiary. Investments in joint ventures and other entities are reported in the Consolidated Balance Sheets in Other Assets.
We also have investments in marketable debt securities. We have determined all of our marketable debt securities are available-for-sale investments. These investments are reported at fair value based on quoted market prices as of the balance sheet date, with unrealized gains and losses, net of tax, recorded in other comprehensive income. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is recorded in interest income. The cost of securities sold is based on the specific identification method. Realized gains and losses on the sale of debt securities and declines in value judged to be other than temporary are recorded on a net basis in other income. Interest and dividends on securities classified as available-for-sale are recorded in interest income.
Accrued Self Insurance: We use a combination of insurance and self-insurance mechanisms in an effort to mitigate the potential liabilities for health and welfare, workers' compensation, auto liability and general liability risks. Liabilities associated with our risks retained are estimated, in part, by considering claims experience, demographic factors, severity factors and other actuarial assumptions.
Capital Stock: We have two classes of capital stock, Class A Common Stock, $0.10 par value (Class A stock) and Class B Common Stock, $0.10 par value (Class B stock). Holders of Class B stock may convert such stock into Class A stock on a share-for-share basis. Holders of Class B stock are entitled to 10 votes per share, while holders of Class A stock are entitled to one vote per share on matters submitted to shareholders for approval. As of October 1, 2011, Tyson Limited Partnership (the TLP) owned 99.97% of the outstanding shares of Class B stock and the TLP and members of the Tyson family owned, in the aggregate, 2.45% of the outstanding shares of Class A stock, giving them, collectively, control of approximately 70.74% of the total voting power of the outstanding voting stock. Cash dividends cannot be paid to holders of Class B stock unless they are simultaneously paid to holders of Class A stock. The per share amount of the cash dividend paid to holders of Class B stock cannot exceed 90% of the cash dividend simultaneously paid to holders of Class A stock. We pay quarterly cash dividends to Class A and Class B shareholders. We paid Class A dividends per share of $0.16 and Class B dividends per share of $0.144 in each of fiscal years 2011, 2010 and 2009.
The Class B stock is considered a participating security requiring the use of the two-class method for the computation of basic earnings per share. The two-class computation method for each period reflects the cash dividends paid for each class of stock, plus the amount of allocated undistributed earnings (losses) computed using the participation percentage, which reflects the dividend rights of each class of stock. Basic earnings per share were computed using the two-class method for all periods presented. The shares of Class B stock are considered to be participating convertible securities since the shares of Class B stock are convertible on a share-for-share basis into shares of Class A stock. Diluted earnings per share were computed assuming the conversion of the Class B shares into Class A shares as of the beginning of each period.
On May 11, 2011, we announced our Board of Directors reactivated a share repurchase program, which had no activity since fiscal 2005, to repurchase up to the remaining available 22.5 million shares of Class A common stock under the program. The share repurchase program has no fixed or scheduled termination date. During fiscal 2011, we repurchased 9.7 million shares for approximately $170 million under this plan. As of October 1, 2011, 12.8 million shares remain authorized for repurchase. The timing and extent to which we repurchase shares will depend upon, among other things, market conditions, liquidity targets, limitations under our debt obligations and regulatory requirements. In addition to the share repurchase program, we purchase shares on the open market to fund certain obligations under our equity compensation plans. These repurchases totaled $37 million and $48 million during fiscal 2011 and 2010, respectively.
Financial Instruments: We purchase certain commodities, such as grains and livestock in the course of normal operations. As part of our commodity risk management activities, we use derivative financial instruments, primarily futures and options, to reduce our exposure to various market risks related to these purchases, as well as to changes in foreign currency exchange rates. Contract terms of a financial instrument qualifying as a hedge instrument closely mirror those of the hedged item, providing a high degree of risk reduction and correlation. Contracts designated and highly effective at meeting risk reduction and correlation criteria are recorded using hedge accounting. If a derivative instrument is accounted for as a hedge, changes in the fair value of the instrument will be offset either against the change in fair value of the hedged assets, liabilities or firm commitments through earnings or recognized in other comprehensive income (loss) until the hedged item is recognized in earnings. The ineffective portion of an instrument's change in fair value is immediately recognized in earnings as a component of cost of sales. Instruments we hold as part of our risk management activities that do not meet the criteria for hedge accounting are marked to fair value with unrealized gains or losses reported currently in earnings. Changes in market value of derivatives used in our risk management activities relating to forward sales contracts are recorded in sales, while changes surrounding inventories on hand or anticipated purchases of inventories or supplies are recorded in cost of sales. We generally do not hedge anticipated transactions beyond 18 months.
Revenue Recognition: We recognize revenue when title and risk of loss are transferred to customers, which is generally on delivery based on terms of sale. Revenue is recognized as the net amount estimated to be received after deducting estimated amounts for discounts, trade allowances and product terms.
Litigation Reserves: There are a variety of legal proceedings pending or threatened against us. Accruals are recorded when it is probable a liability has been incurred and the amount of the liability can be reasonably estimated based on current law, progress of each case, opinions and views of legal counsel and other advisers, our experience in similar matters and intended response to the litigation. These amounts, which are not discounted and are exclusive of claims against third parties, are adjusted periodically as assessment efforts progress or additional information becomes available. We expense amounts for administering or litigating claims as incurred. Accruals for legal proceedings are included in Other current liabilities in the Consolidated Balance Sheets.
Freight Expense: Freight expense associated with products shipped to customers is recognized in cost of sales.
Advertising and Promotion Expenses: Advertising and promotion expenses are charged to operations in the period incurred. Customer incentive and trade promotion activities are recorded as a reduction to sales based on amounts estimated as being due to customers, based primarily on historical utilization and redemption rates, while other advertising and promotional activities are recorded as selling, general and administrative expenses. Advertising and promotion expenses for fiscal years 2011, 2010 and 2009 were $552 million, $505 million and $491 million, respectively.
Research and Development: Research and development costs are expensed as incurred. Research and development costs totaled $42 million, $38 million and $33 million in fiscal 2011, 2010 and 2009, respectively.
Use of Estimates: The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States, which require us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Recently Issued Accounting Pronouncements: In May 2011, the Financial Accounting Standards Board (FASB) clarified the guidance around fair value measurements and disclosures. This guidance is effective for interim and annual periods beginning after December 15, 2011. We will adopt this guidance in the second quarter of fiscal year 2012. We do not expect the adoption will have a significant impact on our consolidated financial statements.
In June 2011, the FASB issued guidance regarding the presentation of comprehensive income. This guidance is effective for annual periods, and interim periods within those years, beginning after December 15, 2011. We anticipate we will adopt this guidance in the first quarter of fiscal year 2013. Upon adoption, we will be required to present comprehensive income as part of our consolidated statements of income, or in a separate financial statement. Currently, we present such information in our notes to the consolidated financial statements. Other than changing the presentation of comprehensive income, we do not expect the adoption will have a significant impact on our consolidated financial statements.
In September 2011, the FASB issued guidance amending the way companies test for goodwill impairment. This guidance is effective for interim and annual periods beginning after December 15, 2011, with early adoption permitted. We do not expect the adoption will have a significant impact on our consolidated financial statements.
|
|||
| in millions | ||||||||
| 2011 | 2010 | |||||||
|
Processed products: |
||||||||
|
Weighted-average method – chicken and prepared foods |
$715 | $721 | ||||||
|
First-in, first-out method – beef and pork |
581 | 462 | ||||||
|
Livestock – first-in, first-out method |
928 | 759 | ||||||
|
Supplies and other – weighted-average method |
363 | 332 | ||||||
|
Total inventory |
$2,587 | $2,274 | ||||||
|
|||
| Previously Reported |
Adjustments: Convertible Debt |
Adjustments: Noncontrolling Interest |
As Adjusted |
|||||||||||||
|
October 3, 2009 – Income Statement: |
||||||||||||||||
|
Interest Expense |
$310 | $17 | $0 | $327 | ||||||||||||
|
Income (Loss) from Continuing Operations before Income Taxes |
(526) | (17) | 0 | (543) | ||||||||||||
|
Income Tax Expense |
14 | (7) | 0 | 7 | ||||||||||||
|
Income (Loss) from Continuing Operations |
(540) | (10) | 0 | (550) | ||||||||||||
|
Minority Interest |
(4) | 0 | 4 | 0 | ||||||||||||
|
Net Income (Loss) |
(537) | (10) | (4) | (551) | ||||||||||||
|
Less: Net Loss Attributable to Noncontrolling Interest |
0 | 0 | (4) | (4) | ||||||||||||
|
Net Income (Loss) Attributable to Tyson |
0 | 0 | 0 | (547) | ||||||||||||
|
Net Income (Loss) Per Share from Continuing Operations Attributable to Tyson: |
||||||||||||||||
|
Class A Basic |
$(1.47) | $(0.02) | $0.00 | $(1.49) | ||||||||||||
|
Class B Basic |
$(1.32) | $(0.03) | $0.00 | $(1.35) | ||||||||||||
|
Diluted |
$(1.44) | $(0.03) | $0.00 | $(1.47) | ||||||||||||
|
Net Income (Loss) Per Share Attributable to Tyson: |
||||||||||||||||
|
Class A Basic |
$(1.47) | $(0.02) | $0.00 | $(1.49) | ||||||||||||
|
Class B Basic |
$(1.32) | $(0.03) | $0.00 | $(1.35) | ||||||||||||
|
Diluted |
$(1.44) | $(0.03) | $0.00 | $(1.47) | ||||||||||||
|
|||
| 2009 | ||||
|
Sales |
$461 | |||
|
Pretax income from discontinued operation |
$20 | |||
|
Loss on sale of discontinued operation |
(10) | |||
|
Income tax expense |
11 | |||
|
Loss from discontinued operation |
$(1) | |||
|
|||
| in millions | ||||||||
| 2011 | 2010 | |||||||
|
Land |
$95 | $97 | ||||||
|
Building and leasehold improvements |
2,698 | 2,617 | ||||||
|
Machinery and equipment |
4,897 | 4,694 | ||||||
|
Land improvements and other |
386 | 232 | ||||||
|
Buildings and equipment under construction |
446 | 513 | ||||||
| 8,522 | 8,153 | |||||||
|
Less accumulated depreciation |
4,699 | 4,479 | ||||||
|
Net property, plant and equipment |
$3,823 | $3,674 | ||||||
|
|||
| in millions | ||||||||||||||||||||
| Chicken | Beef | Pork | Prepared Foods |
Consolidated | ||||||||||||||||
|
Balances at October 3, 2009: |
||||||||||||||||||||
|
Goodwill |
$973 | $1,123 | $317 | $64 | $2,477 | |||||||||||||||
|
Accumulated impairment losses |
0 | (560) | 0 | 0 | (560) | |||||||||||||||
| 973 | 563 | 317 | 64 | 1,917 | ||||||||||||||||
|
Fiscal 2010 Activity: |
||||||||||||||||||||
|
Impairment losses |
(29) | 0 | 0 | 0 | (29) | |||||||||||||||
|
Currency translation and other |
6 | 0 | 0 | (1) | 5 | |||||||||||||||
|
Balances at October 2, 2010: |
||||||||||||||||||||
|
Goodwill |
$979 | $1,123 | $317 | $63 | $2,482 | |||||||||||||||
|
Accumulated impairment losses |
(29) | (560) | 0 | 0 | (589) | |||||||||||||||
| $950 | $563 | $317 | $63 | $1,893 | ||||||||||||||||
|
Fiscal 2011 Activity: |
||||||||||||||||||||
|
Impairment losses |
0 | 0 | 0 | 0 | 0 | |||||||||||||||
|
Currency translation and other |
(1) | 0 | 0 | 0 | (1) | |||||||||||||||
|
Balances at October 1, 2011: |
||||||||||||||||||||
|
Goodwill |
978 | 1,123 | 317 | 63 | 2,481 | |||||||||||||||
|
Accumulated impairment losses |
(29) | (560) | 0 | 0 | (589) | |||||||||||||||
| $949 | $563 | $317 | $63 | $1,892 | ||||||||||||||||
| in millions | ||||||||
| 2011 | 2010 | |||||||
|
Gross Carrying Value: |
||||||||
|
Trademarks |
$56 | $56 | ||||||
|
Patents, intellectual property and other |
143 | 144 | ||||||
|
Land use rights |
25 | 23 | ||||||
|
Less Accumulated Amortization |
75 | 57 | ||||||
|
Total Intangible Assets |
$149 | $166 | ||||||
|
|||
| in millions | ||||||||
| 2011 | 2010 | |||||||
|
Accrued salaries, wages and benefits |
$407 | $444 | ||||||
|
Self-insurance reserves |
298 | 256 | ||||||
|
Other |
335 | 334 | ||||||
|
Total other current liabilities |
$1,040 | $1,034 | ||||||
|
|||
| 2011 | 2010 | |||||||
|
Revolving credit facility |
$0 | $0 | ||||||
|
Senior notes: |
||||||||
|
8.25% Notes due October 2011 (2011 Notes) |
0 | 315 | ||||||
|
3.25% Convertible senior notes due October 2013 (2013 Notes) |
458 | 458 | ||||||
|
10.50% Senior notes due March 2014 (2014 Notes) |
810 | 810 | ||||||
|
6.85% Senior notes due April 2016 (2016 Notes) |
638 | 701 | ||||||
|
7.00% Notes due May 2018 |
120 | 122 | ||||||
|
7.00% Notes due January 2028 |
18 | 18 | ||||||
|
Discount on senior notes |
(76) | (105) | ||||||
|
GO Zone tax-exempt bonds due October 2033 (0.14% at 10/1/2011) |
100 | 100 | ||||||
|
Other |
114 | 117 | ||||||
|
Total debt |
2,182 | 2,536 | ||||||
|
Less current debt |
70 | 401 | ||||||
|
Total long-term debt |
$2,112 | $2,135 | ||||||
|
|||
| in millions | ||||||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
Federal |
$320 | $374 | $7 | |||||||||
|
State |
21 | 44 | (4) | |||||||||
|
Foreign |
0 | 20 | 4 | |||||||||
| $341 | $438 | $7 | ||||||||||
|
Current |
$255 | $420 | $40 | |||||||||
|
Deferred |
86 | 18 | (33) | |||||||||
| $341 | $438 | $7 | ||||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
Federal income tax rate |
35.0% | 35.0% | 35.0% | |||||||||
|
State income taxes |
1.6 | 2.4 | 0.1 | |||||||||
|
Unrecognized tax benefits, net |
(1.7) | (1.4) | (0.3) | |||||||||
|
Goodwill impairment |
0.0 | 0.9 | (36.1) | |||||||||
|
General business credits |
(0.9) | (0.7) | 2.2 | |||||||||
|
Domestic production deduction |
(2.3) | (2.0) | 0.5 | |||||||||
|
Change in foreign valuation allowance |
0.3 | 0.8 | (3.8) | |||||||||
|
Tax planning in foreign jurisdictions |
0.0 | 0.0 | 1.7 | |||||||||
|
Other |
(0.2) | 1.4 | (0.8) | |||||||||
| 31.8% | 36.4% | (1.5)% | ||||||||||
| in millions | ||||||||||||||||
| 2011 | 2010 | |||||||||||||||
| Deferred Tax | Deferred Tax | |||||||||||||||
| Assets | Liabilities | Assets | Liabilities | |||||||||||||
|
Property, plant and equipment |
$0 | $401 | $0 | $347 | ||||||||||||
|
Suspended taxes from conversion to accrual method |
0 | 81 | 0 | 86 | ||||||||||||
|
Intangible assets |
0 | 35 | 0 | 34 | ||||||||||||
|
Inventory |
9 | 113 | 9 | 85 | ||||||||||||
|
Accrued expenses |
196 | 0 | 202 | 0 | ||||||||||||
|
Net operating loss and other carryforwards |
97 | 0 | 97 | 0 | ||||||||||||
|
Insurance reserves |
23 | 0 | 20 | 0 | ||||||||||||
|
Other |
80 | 68 | 108 | 90 | ||||||||||||
| $405 | $698 | $436 | $642 | |||||||||||||
|
Valuation allowance |
$(92) | $(96) | ||||||||||||||
|
Net deferred tax liability |
$385 | $302 | ||||||||||||||
| in millions | ||||||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
Balance as of the beginning of the year |
$184 | $233 | $220 | |||||||||
|
Increases related to current year tax positions |
4 | 4 | 7 | |||||||||
|
Increases related to prior year tax positions |
21 | 11 | 60 | |||||||||
|
Reductions related to prior year tax positions |
(24) | (35) | (21) | |||||||||
|
Reductions related to settlements |
(9) | (25) | (25) | |||||||||
|
Reductions related to expirations of statute of limitations |
(2) | (4) | (8) | |||||||||
|
Balance as of the end of the year |
$174 | $184 | $233 | |||||||||
|
| Fair Value | ||||||||
| 2011 | 2010 | |||||||
|
Derivative Assets: |
||||||||
|
Derivatives designated as hedging instruments: |
||||||||
|
Commodity contracts |
$3 | $20 | ||||||
|
Foreign exchange contracts |
12 | 0 | ||||||
|
Total derivative assets – designated |
15 | 20 | ||||||
|
Derivatives not designated as hedging instruments: |
||||||||
|
Commodity contracts |
21 | 10 | ||||||
|
Foreign exchange contracts |
5 | 1 | ||||||
|
Total derivative assets – not designated |
26 | 11 | ||||||
|
Total derivative assets |
$41 | $31 | ||||||
|
Derivative Liabilities: |
||||||||
|
Derivatives designated as hedging instruments: |
||||||||
|
Commodity contracts |
$41 | $16 | ||||||
|
Derivatives not designated as hedging instruments: |
||||||||
|
Commodity contracts |
121 | 34 | ||||||
|
Foreign exchange contracts |
1 | 6 | ||||||
|
Interest rate contracts |
2 | 3 | ||||||
|
Total derivative liabilities – not designated |
124 | 43 | ||||||
|
Total derivative liabilities |
$165 | $59 | ||||||
| Metric | October 1, 2011 | October 2, 2010 | ||||||||||
|
Commodity: |
||||||||||||
|
Corn |
Bushels | 6 million | 16 million | |||||||||
|
Soy Meal |
Tons | 82,300 | 101,500 | |||||||||
|
Foreign Currency |
United States dollar | $75 million | $0 | |||||||||
|
Gain/(Loss) on Derivatives |
Consolidated Statements of Income Classification |
Gain/(Loss) OCI to Earnings |
||||||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||||||
|
Cash Flow Hedge – Derivatives designated |
||||||||||||||||||||||||||||
|
as hedging instruments: |
||||||||||||||||||||||||||||
|
Commodity contracts |
$(5) | $6 | $(61) | Cost of Sales | $25 | $(6) | $(67) | |||||||||||||||||||||
|
Foreign exchange contracts |
9 | 1 | 8 | Other Income/Expense | 0 | 1 | 6 | |||||||||||||||||||||
|
Total |
$4 | $7 | $(53) | $25 | $(5) | $(61) | ||||||||||||||||||||||
| Metric | October 1, 2011 | October 2, 2010 | ||||||||||
|
Commodity: |
||||||||||||
|
Live Cattle |
Pounds | 318 million | 361 million | |||||||||
|
Lean Hogs |
Pounds | 601 million | 508 million | |||||||||
| in millions | ||||||||||||||||
| Consolidated Statements of Income Classification |
2011 | 2010 | 2009 | |||||||||||||
|
Gain/(Loss) on forwards |
Cost of Sales | $ | (78) | $ | (58) | $ | 152 | |||||||||
|
Gain/(Loss) on purchase contract |
Cost of Sales | 78 | 58 | (152) | ||||||||||||
|
Gain/(Loss) on Derivatives |
Consolidated Statements of Income Classification |
Gain/(Loss) OCI to Earnings |
||||||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||||||
| Net Investment Hedge – Derivatives designated as | ||||||||||||||||||||||||||||
| hedging instruments: | ||||||||||||||||||||||||||||
|
Foreign exchange contracts |
$(2) | $(1) | $(5) | Other Income/Expense | $0 | $0 | $(2) | |||||||||||||||||||||
| Metric | October 1, 2011 | October 2, 2010 | ||||||||||
|
Commodity: |
||||||||||||
|
Corn |
Bushels | 17 million | 38 million | |||||||||
|
Soy Meal |
Tons | 174,600 | 367,000 | |||||||||
|
Soy Oil |
Pounds | 13 million | 2 million | |||||||||
|
Live Cattle |
Pounds | 72 million | 73 million | |||||||||
|
Lean Hogs |
Pounds | 19 million | 134 million | |||||||||
|
Natural Gas |
British thermal units | 0 | 450 billion | |||||||||
|
Foreign Currency |
United States dollars | $110 million | $146 million | |||||||||
|
Interest Rate |
Average monthly notional debt | $39 million | $53 million | |||||||||
| Consolidated Statements of Income Classification |
Gain/(Loss) Recognized in Earnings |
|||||||||||||||
| 2011 | 2010 | 2009 | ||||||||||||||
|
Derivatives not designated as hedging instruments: |
||||||||||||||||
|
Commodity contracts |
Sales | $20 | $27 | $(34) | ||||||||||||
|
Commodity contracts |
Cost of Sales | (2) | (20) | (151) | ||||||||||||
|
Foreign exchange contracts |
Other Income/Expense | (3) | (5) | 0 | ||||||||||||
|
Interest rate contracts |
Interest Expense | 0 | 1 | (4) | ||||||||||||
|
Total |
$15 | $3 | $(189) | |||||||||||||
|
|||
| October 1, 2011 | Level 1 | Level 2 | Level 3 | Netting (a) | Total | |||||||||||||||
|
Assets: |
||||||||||||||||||||
|
Commodity Derivatives |
$0 | $24 | $0 | $(21) | $3 | |||||||||||||||
|
Foreign Exchange Forward Contracts |
0 | 17 | 0 | (2) | 15 | |||||||||||||||
|
Available for Sale Securities: |
||||||||||||||||||||
|
Debt securities |
0 | 34 | 83 | 0 | 117 | |||||||||||||||
|
Equity securities |
7 | 0 | 0 | 0 | 7 | |||||||||||||||
|
Deferred Compensation Assets |
28 | 122 | 0 | 0 | 150 | |||||||||||||||
|
Total Assets |
$35 | $197 | $83 | $(23) | $292 | |||||||||||||||
|
Liabilities: |
||||||||||||||||||||
|
Commodity Derivatives |
$0 | $162 | $0 | $(135) | $27 | |||||||||||||||
|
Foreign Exchange Forward Contracts |
0 | 1 | 0 | (1) | 0 | |||||||||||||||
|
Interest Rate Swap |
0 | 2 | 0 | 0 | 2 | |||||||||||||||
|
Total Liabilities |
$0 | $165 | $0 | $(136) | $29 | |||||||||||||||
| October 2, 2010 | Level 1 | Level 2 | Level 3 | Netting (a) | Total | |||||||||||||||
|
Assets: |
||||||||||||||||||||
|
Commodity Derivatives |
$0 | $30 | $0 | $(18) | $12 | |||||||||||||||
|
Foreign Exchange Forward Contracts |
0 | 1 | 0 | (1) | 0 | |||||||||||||||
|
Available for Sale Securities: |
||||||||||||||||||||
|
Debt securities |
0 | 42 | 73 | 0 | 115 | |||||||||||||||
|
Equity securities |
15 | 3 | 0 | 0 | 18 | |||||||||||||||
|
Deferred Compensation Assets |
0 | 86 | 0 | 0 | 86 | |||||||||||||||
|
Total Assets |
$15 | $162 | $73 | $(19) | $231 | |||||||||||||||
|
Liabilities: |
||||||||||||||||||||
|
Commodity Derivatives |
$0 | $50 | $0 | $(50) | $0 | |||||||||||||||
|
Foreign Exchange Forward Contracts |
0 | 6 | 0 | (1) | 5 | |||||||||||||||
|
Interest Rate Swap |
0 | 3 | 0 | (1) | 2 | |||||||||||||||
|
Total Liabilities |
$0 | $59 | $0 | $(52) | $7 |
| ||||||||||||||
|
(a)
|
Our derivative assets and liabilities are presented in our Consolidated Balance Sheets on a net basis. We net derivative assets and liabilities, including cash collateral, when a legally enforceable master netting arrangement exists between the counterparty to a derivative contract and us. At October 1, 2011, and October 2, 2010, we had posted $113 million and $35 million of cash collateral and held $0 and $3 million cash collateral with various counterparties, respectively. |
| October 1, 2011 | October 2, 2010 | |||||||
|
Balance at beginning of year |
$73 | $72 | ||||||
|
Total realized and unrealized gains (losses): |
0 | 1 | ||||||
|
Included in other comprehensive income (loss) |
(1) | 1 | ||||||
|
Purchases, issuances and settlements, net |
11 | (1) | ||||||
|
Balance at end of year |
$83 | $73 | ||||||
|
Total gains (losses) for the periods included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of year |
$0 | $0 | ||||||
| (in millions) | October 1, 2011 | October 2, 2010 | ||||||||||||||||||||||
| Amortized Cost Basis |
Fair Value |
Unrealized Gain/(Loss) |
Amortized Cost Basis |
Fair Value |
Unrealized Gain |
|||||||||||||||||||
|
Available for Sale Securities: |
||||||||||||||||||||||||
|
Debt Securities: |
||||||||||||||||||||||||
|
U.S. Treasury and Agency |
$33 | $34 | $1 | $41 | $42 | $1 | ||||||||||||||||||
|
Corporate and Asset-Backed (a) |
54 | 56 | 2 | 43 | 46 | 3 | ||||||||||||||||||
|
Redeemable Preferred Stock |
27 | 27 | 0 | 27 | 27 | 0 | ||||||||||||||||||
|
Equity Securities: |
||||||||||||||||||||||||
|
Common Stock |
9 | 7 | (2 | ) | 9 | 15 | 6 | |||||||||||||||||
|
Stock Warrants |
0 | 0 | 0 | 0 | 3 | 3 | ||||||||||||||||||
| (a) | At October 1, 2011, and October 2, 2010, the amortized cost basis for Corporate and Asset-Backed debt securities had been reduced by accumulated other than temporary impairments of $3 million and $3 million, respectively. |
| October 1, 2011 | October 2, 2010 | |||||||||||||||
|
|
Fair Value |
|
|
Carrying Value |
|
|
Fair Value |
|
|
Carrying Value |
| |||||
|
Total Debt |
$ | 2,334 | $ | 2,182 | $ | 2,770 | $ | 2,536 | ||||||||
|
|||
| Shares Under Option |
Weighted Average Exercise Price Per Share |
Weighted Average Remaining Contractual Life (in Years) |
Aggregate Intrinsic Value (in millions) |
|||||||||||||
|
Outstanding, October 2, 2010 |
19,373,912 | $12.69 | ||||||||||||||
|
Exercised |
(4,127,763) | 12.26 | ||||||||||||||
|
Canceled |
(498,920) | 12.78 | ||||||||||||||
|
Granted |
3,507,992 | 16.19 | ||||||||||||||
|
Outstanding, October 1, 2011 |
18,255,221 | 13.46 | 6.1 | $246 | ||||||||||||
|
Exercisable, October 1, 2011 |
9,465,184 | $13.93 | 4.3 | $132 | ||||||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
Expected life |
6.7 years | 6.5 years | 5.3 years | |||||||||
|
Risk-free interest rate |
1.5% | 1.2% | 2.3% | |||||||||
|
Expected volatility |
38.8% | 40.4% | 34.6% | |||||||||
|
Expected dividend yield |
1.0% | 1.3% | 3.3% | |||||||||
| Number of Shares | Weighted Average Grant- Date Fair Value Per Share |
Weighted Average Remaining Contractual Life (in Years) |
Aggregate Intrinsic Value (in millions) |
|||||||||||||
|
Nonvested, October 2, 2010 |
3,601,614 | $14.55 | ||||||||||||||
|
Granted |
377,423 | 17.38 | ||||||||||||||
|
Dividends |
28,000 | 17.92 | ||||||||||||||
|
Vested |
(913,954) | 15.12 | ||||||||||||||
|
Forfeited |
(122,781) | 14.74 | ||||||||||||||
|
Nonvested, October 1, 2011 |
2,970,302 | $14.70 | 1.2 | $52 | ||||||||||||
|
|||
| in millions | ||||||||||||||||||||||||
| Pension Benefits | Other Postretirement | |||||||||||||||||||||||
| Qualified | Non-Qualified | Benefits | ||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
|
Change in benefit obligation |
||||||||||||||||||||||||
|
Benefit obligation at beginning of year |
$97 | $89 | $42 | $38 | $45 | $46 | ||||||||||||||||||
|
Service cost |
0 | 0 | 3 | 3 | 0 | 1 | ||||||||||||||||||
|
Interest cost |
5 | 5 | 2 | 2 | 2 | 2 | ||||||||||||||||||
|
Plan participants' contributions |
0 | 0 | 0 | 0 | 1 | 1 | ||||||||||||||||||
|
Actuarial loss |
3 | 9 | 17 | 0 | 4 | 1 | ||||||||||||||||||
|
Benefits paid |
(6) | (6) | (2) | (1) | (8) | (6) | ||||||||||||||||||
|
Benefit obligation at end of year |
99 | 97 | 62 | 42 | 44 | 45 | ||||||||||||||||||
|
Change in plan assets |
||||||||||||||||||||||||
|
Fair value of plan assets at beginning of year |
74 | 68 | 0 | 0 | 0 | 0 | ||||||||||||||||||
|
Actual return on plan assets |
1 | 9 | 0 | 0 | 0 | 0 | ||||||||||||||||||
|
Employer contributions |
5 | 3 | 2 | 1 | 7 | 5 | ||||||||||||||||||
|
Plan participants' contributions |
0 | 0 | 0 | 0 | 1 | 1 | ||||||||||||||||||
|
Benefits paid |
(6) | (6) | (2) | (1) | (8) | (6) | ||||||||||||||||||
|
Fair value of plan assets at end of year |
74 | 74 | 0 | 0 | 0 | 0 | ||||||||||||||||||
|
Funded status |
$(25) | $(23) | $(62) | $(42) | $(44) | $(45) | ||||||||||||||||||
| in millions | ||||||||||||||||||||||||
| Pension Benefits | Other Postretirement Benefits |
|||||||||||||||||||||||
| Qualified | Non-Qualified | |||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
|
Accrued benefit liability |
$(25) | $(23) | $(62) | $(42) | $(44) | $(45) | ||||||||||||||||||
|
Accumulated other comprehensive (income)/loss: |
||||||||||||||||||||||||
|
Unrecognized actuarial loss |
45 | 40 | 17 | 1 | 0 | 0 | ||||||||||||||||||
|
Unrecognized prior service (cost)/credit |
0 | 0 | 2 | 3 | (5) | (6) | ||||||||||||||||||
|
Net amount recognized |
$20 | $17 | $(43) | $(38) | $(49) | $(51) | ||||||||||||||||||
| in millions | ||||||||||||||||
| Pension Benefits | ||||||||||||||||
| Qualified | Non-Qualified | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
|
Projected benefit obligation |
$ | 99 | $ | 97 | $ | 62 | $ | 42 | ||||||||
|
Accumulated benefit obligation |
99 | 97 | 55 | 41 | ||||||||||||
|
Fair value of plan assets |
74 | 74 | 0 | 0 | ||||||||||||
| in millions | ||||||||||||||||||||||||||||||||||||
| Pension Benefits | Other Postretirement | |||||||||||||||||||||||||||||||||||
| Qualified | Non-Qualified | Benefits | ||||||||||||||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | ||||||||||||||||||||||||||||
|
Service cost |
$0 | $0 | $0 | $3 | $3 | $4 | $0 | $1 | $0 | |||||||||||||||||||||||||||
|
Interest cost |
5 | 5 | 6 | 2 | 2 | 2 | 2 | 2 | 3 | |||||||||||||||||||||||||||
|
Expected return on plan assets |
(6) | (6) | (7) | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
|
Amortization of prior service cost |
0 | 0 | 0 | 1 | 1 | 1 | (1) | (1) | 0 | |||||||||||||||||||||||||||
|
Recognized actuarial loss, net |
3 | 1 | 1 | 0 | 0 | 0 | 1 | 0 | 1 | |||||||||||||||||||||||||||
|
Net periodic benefit cost |
$2 | $0 | $0 | $6 | $6 | $7 | $2 | $2 | $4 | |||||||||||||||||||||||||||
| Pension Benefits | Other Postretirement | |||||||||||||||||||||||||||||||||||
| Qualified | Non-Qualified | Benefits | ||||||||||||||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | ||||||||||||||||||||||||||||
|
Discount rate to determine net periodic benefit cost |
5.06% | 6.00% | 6.33% | 5.50% | 6.00% | 6.50% | 4.50% | 5.71% | 6.50% | |||||||||||||||||||||||||||
|
Discount rate to determine benefit obligations |
4.53% | 5.06% | 6.00% | 4.75% | 5.50% | 6.00% | 4.09% | 4.50% | 5.71% | |||||||||||||||||||||||||||
|
Rate of compensation increase |
N/A | N/A | N/A | 3.50% | 3.50% | 3.50% | N/A | N/A | N/A | |||||||||||||||||||||||||||
|
Expected return on plan assets |
7.79% | 7.80% | 8.00% | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||
| 2011 | 2010 | |
Target Asset Allocation |
| ||||||||
|
Cash |
1.9% | 0.3% | 1.0% | |||||||||
|
Fixed income securities |
24.2 | 18.5 | 19.0 | |||||||||
|
US Stock Funds |
41.4 | 44.6 | 45.0 | |||||||||
|
International Stock Funds |
17.7 | 19.9 | 20.0 | |||||||||
|
Real Estate |
4.7 | 5.0 | 5.0 | |||||||||
|
Alternatives |
10.1 | 11.7 | 10.0 | |||||||||
|
Total |
100.0% | 100.0% | 100.0% |
| in millions | ||||||||||||||||
| October 1, 2011 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
|
Cash and cash equivalents |
$1 | $0 | $0 | $1 | ||||||||||||
|
Fixed Income Securities Bond Fund (a) |
14 | 0 | 0 | 14 | ||||||||||||
|
Equity Securities: |
||||||||||||||||
|
U.S. stock funds (a) |
25 | 0 | 0 | 25 | ||||||||||||
|
International stock funds (a) |
10 | 0 | 0 | 10 | ||||||||||||
|
Global real estate funds (a) |
3 | 0 | 0 | 3 | ||||||||||||
|
Total equity securities |
38 | 0 | 0 | 38 | ||||||||||||
|
Other Investments - Alternatives (b) |
0 | 0 | 6 | 6 | ||||||||||||
|
Total fair value |
53 | 0 | 6 | 59 | ||||||||||||
|
Insurance Contract at Contract Value |
0 | 0 | 15 | 15 | ||||||||||||
|
Total plan assets |
$53 | $0 | $21 | $74 | ||||||||||||
| (a) | Valued using quoted market prices in active markets. |
| (b) | Valued using plan's own assumptions about the assumptions market participants would use in pricing the assets based on the best information available, such as investment manager pricing. |
| Alternative funds | Insurance contract | Total | ||||||||||
|
Balance at October 2, 2010 |
$7 | $15 | $22 | |||||||||
|
Actual return on plan assets: |
||||||||||||
|
Assets still held at reporting date |
(1) | 0 | (1) | |||||||||
|
Assets sold during the period |
0 | 0 | 0 | |||||||||
|
Purchases, sales and settlements, net |
0 | 0 | 0 | |||||||||
|
Transfers in and/or out of Level 3 |
0 | 0 | 0 | |||||||||
|
Balance at October 1, 2011 |
$6 | $15 | $21 |
| in millions | ||||||||||||
| Pension Benefits | Other Postretirement | |||||||||||
| Qualified | Non-Qualified | Benefits | ||||||||||
|
2012 |
$8 | $2 | $7 | |||||||||
|
2013 |
7 | 2 | 4 | |||||||||
|
2014 |
7 | 2 | 4 | |||||||||
|
2015 |
7 | 3 | 4 | |||||||||
|
2016 |
6 | 3 | 4 | |||||||||
|
2017-2021 |
29 | 18 | 17 | |||||||||
|
|||
| in millions | ||||||||
| 2011 | 2010 | |||||||
|
Accumulated other comprehensive income (loss): |
||||||||
|
Unrealized net hedging gains (losses), net of taxes |
$(7) | $10 | ||||||
|
Unrealized net gain on investments, net of taxes |
1 | 9 | ||||||
|
Currency translation adjustment |
(35) | 6 | ||||||
|
Postretirement benefits reserve adjustments |
(38) | (25) | ||||||
|
Total accumulated other comprehensive income (loss) |
$(79) | $0 | ||||||
| in millions | ||||||||||||
| Before Tax | Income Tax | After Tax | ||||||||||
|
Fiscal 2011: |
||||||||||||
|
Net hedging gain reclassified to earnings |
$(25) | $10 | $(15) | |||||||||
|
Net hedging unrealized gain (loss) |
4 | (6) | (2) | |||||||||
|
Unrealized loss on investments |
(12) | 4 | (8) | |||||||||
|
Currency translation adjustment |
(42) | 1 | (41) | |||||||||
|
Net change in postretirement liabilities |
(21) | 8 | (13) | |||||||||
|
Other comprehensive income (loss) – 2011 |
$ | (96 | ) | $ | 17 | $ | (79 | ) | ||||
|
Fiscal 2010: |
||||||||||||
|
Net hedging loss reclassified to earnings |
$7 | $(1) | $6 | |||||||||
|
Net hedging unrealized gain |
7 | (1) | 6 | |||||||||
|
Currency translation adjustment |
27 | 0 | 27 | |||||||||
|
Net change in postretirement liabilities |
(6) | 1 | (5) | |||||||||
|
Other comprehensive income (loss) – 2010 |
$35 | $(1) | $34 | |||||||||
|
Fiscal 2009: |
||||||||||||
|
Net hedging loss reclassified to earnings |
$61 | $(25) | $36 | |||||||||
|
Net hedging unrealized loss |
(53) | 23 | (30) | |||||||||
|
Loss on investments reclassified to other income |
4 | (1) | 3 | |||||||||
|
Unrealized gain on investments |
12 | (5) | 7 | |||||||||
|
Currency translation adjustment gain reclassified to loss from discontinued operation |
(41) | 0 | (41) | |||||||||
|
Currency translation adjustment |
(43) | 3 | (40) | |||||||||
|
Net change in postretirement liabilities |
(11) | 1 | (10) | |||||||||
|
Other comprehensive income (loss) – 2009 |
$(71) | $(4) | $(75) | |||||||||
|
|||
| in millions | ||||||||||||||||||||||||||||
| Chicken | Beef | Pork | Prepared Foods |
Other | Intersegment Sales |
Consolidated | ||||||||||||||||||||||
|
Fiscal year ended October 1, 2011 |
||||||||||||||||||||||||||||
|
Sales |
$11,017 | $13,549 | $5,460 | $3,215 | $127 | $(1,102) | $32,266 | |||||||||||||||||||||
|
Operating Income (Loss) |
164 | 468 | 560 | 117 | (24) | 1,285 | ||||||||||||||||||||||
|
Total Other (Income) Expense |
211 | |||||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations |
1,074 | |||||||||||||||||||||||||||
|
before Income Taxes |
||||||||||||||||||||||||||||
|
Depreciation |
259 | 84 | 28 | 58 | 4 | 433 | ||||||||||||||||||||||
|
Total Assets |
5,412 | 2,610 | 960 | 943 | 1,146 | 11,071 | ||||||||||||||||||||||
|
Additions to property, plant and equipment |
464 | 88 | 27 | 58 | 6 | 643 | ||||||||||||||||||||||
|
Fiscal year ended October 2, 2010 |
||||||||||||||||||||||||||||
|
Sales |
$10,062 | $11,707 | $4,552 | $2,999 | $0 | $(890) | $28,430 | |||||||||||||||||||||
|
Operating Income (Loss) |
519 | 542 | 381 | 124 | (10) | 1,556 | ||||||||||||||||||||||
|
Total Other (Income) Expense |
353 | |||||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations before Income Taxes |
1,203 | |||||||||||||||||||||||||||
|
Depreciation |
251 | 82 | 27 | 56 | 0 | 416 | ||||||||||||||||||||||
|
Total Assets |
5,031 | 2,468 | 845 | 940 | 1,468 | 10,752 | ||||||||||||||||||||||
|
Additions to property, plant and equipment |
320 | 61 | 27 | 42 | 100 | 550 | ||||||||||||||||||||||
|
Fiscal year ended October 3, 2009 |
||||||||||||||||||||||||||||
|
Sales |
$9,660 | $10,937 | $3,875 | $2,836 | $0 | $(604) | $26,704 | |||||||||||||||||||||
|
Operating Income (Loss) |
(157) | (346) | 160 | 133 | (5) | (215) | ||||||||||||||||||||||
|
Total Other (Income) Expense |
328 | |||||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations before Income Taxes |
(543) | |||||||||||||||||||||||||||
|
Depreciation |
252 | 103 | 36 | 54 | 0 | 445 | ||||||||||||||||||||||
|
Total Assets |
4,927 | 2,277 | 840 | 905 | 1,646 | 10,595 | ||||||||||||||||||||||
|
Additions to property, plant and equipment |
174 | 39 | 18 | 58 | 79 | 368 | ||||||||||||||||||||||
|
|||
| in millions | ||||||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
Interest |
$192 | $302 | $333 | |||||||||
|
Income taxes, net of refunds |
311 | 470 | 35 | |||||||||
|
|||
| in millions | ||||
|
2012 |
$95 | |||
|
2013 |
63 | |||
|
2014 |
39 | |||
|
2015 |
19 | |||
|
2016 |
12 | |||
|
2017 and beyond |
54 | |||
|
Total |
$282 | |||
| in millions | ||||
|
2012 |
$886 | |||
|
2013 |
63 | |||
|
2014 |
18 | |||
|
2015 |
16 | |||
|
2016 |
15 | |||
|
2017 and beyond |
61 | |||
|
Total |
$1,059 | |||
|
|||
| in millions, except per share data | ||||||||||||||||
|
|
First Quarter |
|
|
Second Quarter |
|
|
Third Quarter |
|
|
Fourth Quarter |
| |||||
|
2011 |
||||||||||||||||
|
Sales |
$7,615 | $8,000 | $8,247 | $8,404 | ||||||||||||
|
Gross profit |
744 | 533 | 531 | 391 | ||||||||||||
|
Operating income |
498 | 303 | 312 | 172 | ||||||||||||
|
Net income |
294 | 156 | 188 | 95 | ||||||||||||
|
Net income attributable to Tyson |
298 | 159 | 196 | 97 | ||||||||||||
|
Net income per share attributable to Tyson: |
||||||||||||||||
|
Class A Basic |
$0.81 | $0.43 | $0.53 | $0.27 | ||||||||||||
|
Class B Basic |
$0.73 | $0.39 | $0.48 | $0.24 | ||||||||||||
|
Diluted |
$0.78 | $0.42 | $0.51 | $0.26 | ||||||||||||
|
2010 |
||||||||||||||||
|
Sales |
$6,635 | $6,916 | $7,438 | $7,441 | ||||||||||||
|
Gross profit |
529 | 564 | 752 | 669 | ||||||||||||
|
Operating income |
314 | 344 | 507 | 391 | ||||||||||||
|
Net income |
159 | 156 | 242 | 208 | ||||||||||||
|
Net income attributable to Tyson |
160 | 159 | 248 | 213 | ||||||||||||
|
Net income per share attributable to Tyson: |
||||||||||||||||
|
Class A Basic |
$0.44 | $0.43 | $0.68 | $0.58 | ||||||||||||
|
Class B Basic |
$0.39 | $0.39 | $0.61 | $0.52 | ||||||||||||
|
Diluted |
$0.42 | $0.42 | $0.65 | $0.57 | ||||||||||||
|
|
Condensed Consolidating Statement of Income for the year ended October 1, 2011 |
|
in millions | ||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Sales |
$157 | $18,636 | $13,159 | $(1,227) | $30,568 | $1,542 | $(1) | $32,266 | ||||||||||||||||||||||||
|
Cost of Sales |
29 | 17,461 | 12,364 | (1,226) | 28,599 | 1,440 | (1) | 30,067 | ||||||||||||||||||||||||
|
Gross Profit (Loss) |
128 | 1,175 | 795 | (1) | 1,969 | 102 | 0 | 2,199 | ||||||||||||||||||||||||
|
Operating Expenses: |
||||||||||||||||||||||||||||||||
|
Selling, general and administrative |
52 | 215 | 561 | (1) | 775 | 87 | 0 | 914 | ||||||||||||||||||||||||
|
Goodwill impairment |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Other charges |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Operating Income |
76 | 960 | 234 | 0 | 1,194 | 15 | 0 | 1,285 | ||||||||||||||||||||||||
|
Other (Income) Expense: |
||||||||||||||||||||||||||||||||
|
Interest expense, net |
(26) | 148 | 117 | 0 | 265 | (8) | 0 | 231 | ||||||||||||||||||||||||
|
Other, net |
(9) | 0 | (12) | 0 | (12) | 1 | 0 | (20) | ||||||||||||||||||||||||
|
Equity in net earnings of subsidiaries |
(673) | (115) | (59) | 102 | (72) | (13) | 758 | 0 | ||||||||||||||||||||||||
|
Total Other (Income) Expense |
(708) | 33 | 46 | 102 | 181 | (20) | 758 | 211 | ||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations before Income Taxes |
784 | 927 | 188 | (102) | 1,013 | 35 | (758) | 1,074 | ||||||||||||||||||||||||
|
Income Tax Expense (Benefit) |
34 | 272 | 38 | 0 | 310 | (3) | 0 | 341 | ||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations |
750 | 655 | 150 | (102) | 703 | 38 | (758) | 733 | ||||||||||||||||||||||||
|
Loss from Discontinued Operation, net of tax |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Net Income (Loss) |
750 | 655 | 150 | (102) | 703 | 38 | (758) | 733 | ||||||||||||||||||||||||
|
Less: Net Loss Attributable to Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | (17) | 0 | (17) | ||||||||||||||||||||||||
|
Net Income (Loss) Attributable to Tyson |
$750 | $655 | $150 | $(102) | $703 | $55 | $(758) | $750 | ||||||||||||||||||||||||
|
Condensed Consolidating Statement of Income for the year ended October 2, 2010 |
|
in millions | ||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Sales |
$454 | $15,950 | $12,248 | $(966) | $27,232 | $1,167 | $(423) | $28,430 | ||||||||||||||||||||||||
|
Cost of Sales |
16 | 14,867 | 11,343 | (966) | 25,244 | 1,079 | (423) | 25,916 | ||||||||||||||||||||||||
|
Gross Profit |
438 | 1,083 | 905 | 0 | 1,988 | 88 | 0 | 2,514 | ||||||||||||||||||||||||
|
Operating Expenses: |
||||||||||||||||||||||||||||||||
|
Selling, general and administrative |
93 | 199 | 550 | 0 | 749 | 87 | 0 | 929 | ||||||||||||||||||||||||
|
Goodwill impairment |
0 | 0 | 0 | 0 | 0 | 29 | 0 | 29 | ||||||||||||||||||||||||
|
Other charges |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Operating Income (Loss) |
345 | 884 | 355 | 0 | 1,239 | (28) | 0 | 1,556 | ||||||||||||||||||||||||
|
Other (Income) Expense: |
||||||||||||||||||||||||||||||||
|
Interest expense, net |
328 | 2 | 17 | 0 | 19 | (14) | 0 | 333 | ||||||||||||||||||||||||
|
Other, net |
25 | 1 | (7) | 0 | (6) | 1 | 0 | 20 | ||||||||||||||||||||||||
|
Equity in net earnings of subsidiaries |
(782) | (51) | 25 | 37 | 11 | (14) | 785 | 0 | ||||||||||||||||||||||||
|
Total Other (Income) Expense |
(429) | (48) | 35 | 37 | 24 | (27) | 785 | 353 | ||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations before Income Taxes |
774 | 932 | 320 | (37) | 1,215 | (1) | (785) | 1,203 | ||||||||||||||||||||||||
|
Income Tax Expense (Benefit) |
(6) | 304 | 116 | 0 | 420 | 24 | 0 | 438 | ||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations |
780 | 628 | 204 | (37) | 795 | (25) | (785) | 765 | ||||||||||||||||||||||||
|
Loss from Discontinued Operation, net of tax |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Net Income (Loss) |
780 | 628 | 204 | (37) | 795 | (25) | (785) | 765 | ||||||||||||||||||||||||
|
Less: Net Loss Attributable to Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | (15) | 0 | (15) | ||||||||||||||||||||||||
|
Net Income (Loss) Attributable to Tyson |
$780 | $628 | $204 | $(37) | $795 | $(10) | $(785) | $780 | ||||||||||||||||||||||||
|
Condensed Consolidating Statement of Income for the year ended October 3, 2009 |
|
in millions | ||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Sales |
$11 | $14,504 | $12,245 | $(725) | $26,024 | $709 | $(40) | $26,704 | ||||||||||||||||||||||||
|
Cost of Sales |
132 | 13,970 | 11,526 | (725) | 24,771 | 638 | (40) | 25,501 | ||||||||||||||||||||||||
|
Gross Profit (Loss) |
(121) | 534 | 719 | 0 | 1,253 | 71 | 0 | 1,203 | ||||||||||||||||||||||||
|
Operating Expenses: |
||||||||||||||||||||||||||||||||
|
Selling, general and administrative |
132 | 187 | 450 | 0 | 637 | 72 | 0 | 841 | ||||||||||||||||||||||||
|
Goodwill impairment |
0 | 560 | 0 | 0 | 560 | 0 | 0 | 560 | ||||||||||||||||||||||||
|
Other charges |
0 | 0 | 17 | 0 | 17 | 0 | 0 | 17 | ||||||||||||||||||||||||
|
Operating Income (Loss) |
(253) | (213) | 252 | 0 | 39 | (1) | 0 | (215) | ||||||||||||||||||||||||
|
Other (Income) Expense: |
||||||||||||||||||||||||||||||||
|
Interest expense, net |
285 | 13 | 20 | 0 | 33 | (8) | 0 | 310 | ||||||||||||||||||||||||
|
Other, net |
11 | (3) | (6) | 0 | (9) | 16 | 0 | 18 | ||||||||||||||||||||||||
|
Equity in net earnings of subsidiaries |
157 | (32) | 44 | 13 | 25 | (17) | (165) | 0 | ||||||||||||||||||||||||
|
Total Other (Income) Expense |
453 | (22) | 58 | 13 | 49 | (9) | (165) | 328 | ||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations before Income Taxes |
(706) | (191) | 194 | (13) | (10) | 8 | 165 | (543) | ||||||||||||||||||||||||
|
Income Tax Expense (Benefit) |
(138) | 111 | 34 | 0 | 145 | 0 | 0 | 7 | ||||||||||||||||||||||||
|
Income (Loss) from Continuing Operations |
(568) | (302) | 160 | (13) | (155) | 8 | 165 | (550) | ||||||||||||||||||||||||
|
Income (Loss) from Discontinued Operation, net of tax |
21 | 5 | 0 | 0 | 5 | (27) | 0 | (1) | ||||||||||||||||||||||||
|
Net Income (Loss) |
(547) | (297) | 160 | (13) | (150) | (19) | 165 | (551) | ||||||||||||||||||||||||
|
Less: Net Loss Attributable to Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | (4) | 0 | (4) | ||||||||||||||||||||||||
|
Net Income (Loss) Attributable to Tyson |
$(547) | $(297) | $160 | $(13) | $(150) | $(15) | $165 | $(547) | ||||||||||||||||||||||||
|
Condensed Consolidating Balance Sheet as of October 1, 2011 |
|
in millions | ||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- antors |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Assets |
||||||||||||||||||||||||||||||||
|
Current Assets: |
||||||||||||||||||||||||||||||||
|
Cash and cash equivalents |
$1 | $1 | $414 | $0 | $415 | $300 | $0 | $716 | ||||||||||||||||||||||||
|
Accounts receivable, net |
1 | 506 | 656 | 0 | 1,162 | 157 | 1 | 1,321 | ||||||||||||||||||||||||
|
Inventories |
2 | 926 | 1,440 | 0 | 2,366 | 219 | 0 | 2,587 | ||||||||||||||||||||||||
|
Other current assets |
62 | 95 | 102 | (133) | 64 | 54 | (24) | 156 | ||||||||||||||||||||||||
|
Total Current Assets |
66 | 1,528 | 2,612 | (133) | 4,007 | 730 | (23) | 4,780 | ||||||||||||||||||||||||
|
Net Property, Plant and Equipment |
37 | 875 | 2,369 | 0 | 3,244 | 542 | 0 | 3,823 | ||||||||||||||||||||||||
|
Goodwill |
0 | 881 | 966 | 0 | 1,847 | 45 | 0 | 1,892 | ||||||||||||||||||||||||
|
Intangible Assets |
0 | 31 | 49 | 0 | 80 | 69 | 0 | 149 | ||||||||||||||||||||||||
|
Other Assets |
2,179 | 180 | 147 | (15) | 312 | 296 | (2,360) | 427 | ||||||||||||||||||||||||
|
Investment in Subsidiaries |
11,396 | 1,923 | 769 | (1,760) | 932 | 319 | (12,647) | 0 | ||||||||||||||||||||||||
|
Total Assets |
$13,678 | $5,418 | $6,912 | $(1,908) | $10,422 | $2,001 | $(15,030) | $11,071 | ||||||||||||||||||||||||
|
Liabilities and Shareholders' Equity |
||||||||||||||||||||||||||||||||
|
Current Liabilities: |
||||||||||||||||||||||||||||||||
|
Current debt |
$2 | $0 | $0 | $0 | $0 | $68 | $0 | $70 | ||||||||||||||||||||||||
|
Accounts payable |
8 | 525 | 648 | 0 | 1,173 | 83 | 0 | 1,264 | ||||||||||||||||||||||||
|
Other current liabilities |
5,808 | 144 | 442 | (133) | 453 | 474 | (5,695) | 1,040 | ||||||||||||||||||||||||
|
Total Current Liabilities |
5,818 | 669 | 1,090 | (133) | 1,626 | 625 | (5,695) | 2,374 | ||||||||||||||||||||||||
|
Long-Term Debt |
1,972 | 1,198 | 916 | 0 | 2,114 | 269 | (2,243) | 2,112 | ||||||||||||||||||||||||
|
Deferred Income Taxes |
0 | 120 | 310 | (15) | 415 | 9 | 0 | 424 | ||||||||||||||||||||||||
|
Other Liabilities |
231 | 142 | 191 | 0 | 333 | 29 | (117) | 476 | ||||||||||||||||||||||||
|
Redeemable Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Total Tyson Shareholders' Equity |
5,657 | 3,289 | 4,405 | (1,760) | 5,934 | 1,041 | (6,975) | 5,657 | ||||||||||||||||||||||||
|
Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | 28 | 0 | 28 | ||||||||||||||||||||||||
|
Total Shareholders' Equity |
5,657 | 3,289 | 4,405 | (1,760) | 5,934 | 1,069 | (6,975) | 5,685 | ||||||||||||||||||||||||
|
Total Liabilities and Shareholders' Equity |
$13,678 | $5,418 | $6,912 | ($1,908) | $10,422 | $2,001 | ($15,030) | $11,071 | ||||||||||||||||||||||||
| Condensed Consolidating Balance Sheet as of October 2, 2010 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- antors |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Assets |
||||||||||||||||||||||||||||||||
|
Current Assets: |
||||||||||||||||||||||||||||||||
|
Cash and cash equivalents |
$2 | $2 | $731 | $0 | $733 | $243 | $0 | $978 | ||||||||||||||||||||||||
|
Accounts receivable, net |
0 | 2,389 | 4,670 | 0 | 7,059 | 132 | (5,993) | 1,198 | ||||||||||||||||||||||||
|
Inventories |
0 | 734 | 1,361 | 0 | 2,095 | 179 | 0 | 2,274 | ||||||||||||||||||||||||
|
Other current assets |
43 | 49 | 27 | (9) | 67 | 95 | (37) | 168 | ||||||||||||||||||||||||
|
Total Current Assets |
45 | 3,174 | 6,789 | (9) | 9,954 | 649 | (6,030) | 4,618 | ||||||||||||||||||||||||
|
Net Property, Plant and Equipment |
39 | 870 | 2,257 | 0 | 3,127 | 508 | 0 | 3,674 | ||||||||||||||||||||||||
|
Goodwill |
0 | 880 | 967 | 0 | 1,847 | 46 | 0 | 1,893 | ||||||||||||||||||||||||
|
Intangible Assets |
0 | 37 | 53 | 0 | 90 | 76 | 0 | 166 | ||||||||||||||||||||||||
|
Other Assets |
2,804 | 101 | 61 | 0 | 162 | 295 | (2,860) | 401 | ||||||||||||||||||||||||
|
Investment in Subsidiaries |
10,776 | 1,785 | 631 | (1,607) | 809 | 307 | (11,892) | 0 | ||||||||||||||||||||||||
|
Total Assets |
$13,664 | $6,847 | $10,758 | $(1,616) | $15,989 | $1,881 | $(20,782) | $10,752 | ||||||||||||||||||||||||
|
Liabilities and Shareholders' Equity |
||||||||||||||||||||||||||||||||
|
Current Liabilities: |
||||||||||||||||||||||||||||||||
|
Current debt |
$317 | $0 | $0 | $0 | $0 | $84 | $0 | $401 | ||||||||||||||||||||||||
|
Accounts payable |
16 | 421 | 608 | 0 | 1,029 | 65 | 0 | 1,110 | ||||||||||||||||||||||||
|
Other current liabilities |
6,044 | 168 | 335 | (9) | 494 | 526 | (6,030) | 1,034 | ||||||||||||||||||||||||
|
Total Current Liabilities |
6,377 | 589 | 943 | (9) | 1,523 | 675 | (6,030) | 2,545 | ||||||||||||||||||||||||
|
Long-Term Debt |
2,011 | 1,638 | 1,228 | 0 | 2,866 | 118 | (2,860) | 2,135 | ||||||||||||||||||||||||
|
Deferred Income Taxes |
0 | 105 | 204 | 0 | 309 | 12 | 0 | 321 | ||||||||||||||||||||||||
|
Other Liabilities |
110 | 148 | 179 | 0 | 327 | 49 | 0 | 486 | ||||||||||||||||||||||||
|
Redeemable Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | 64 | 0 | 64 | ||||||||||||||||||||||||
|
Total Tyson Shareholders' Equity |
5,166 | 4,367 | 8,204 | (1,607) | 10,964 | 928 | (11,892) | 5,166 | ||||||||||||||||||||||||
|
Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | 35 | 0 | 35 | ||||||||||||||||||||||||
|
Total Shareholders' Equity |
5,166 | 4,367 | 8,204 | (1,607) | 10,964 | 963 | (11,892) | 5,201 | ||||||||||||||||||||||||
|
Total Liabilities and Shareholders' Equity |
$13,664 | $6,847 | $10,758 | $(1,616) | $15,989 | $1,881 | $(20,782) | $10,752 | ||||||||||||||||||||||||
| Condensed Consolidating Statement of Cash Flows for the year ended October 1, 2011 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
|
TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Cash Provided by (Used for) Operating Activities |
$31 | $564 | $468 | $0 | $1,032 | $3 | $(20) | $1,046 | ||||||||||||||||||||||||
|
Cash Flows From Investing Activities: |
||||||||||||||||||||||||||||||||
|
Additions to property, plant and equipment |
(1) | (107) | (443) | 0 | (550) | (92) | 0 | (643) | ||||||||||||||||||||||||
|
Purchases of marketable securities, net |
0 | (57) | (21) | 0 | (78) | (2) | 0 | (80) | ||||||||||||||||||||||||
|
Proceeds from notes receivable |
0 | 0 | 0 | 0 | 0 | 51 | 0 | 51 | ||||||||||||||||||||||||
|
Proceeds from sale of discontinued operation |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Change in restricted cash-investing |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Acquisitions, net of cash acquired |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Other, net |
23 | 0 | 8 | 0 | 8 | (3) | 0 | 28 | ||||||||||||||||||||||||
|
Cash Provided by (Used for) Investing Activities |
22 | (164) | (456) | 0 | (620) | (46) | 0 | (644) | ||||||||||||||||||||||||
|
Cash Flows from Financing Activities: |
||||||||||||||||||||||||||||||||
|
Net change in debt |
(391) | (6) | 0 | 0 | (6) | 12 | 0 | (385) | ||||||||||||||||||||||||
|
Debt issuance costs |
(9) | 0 | 0 | 0 | 0 | 0 | 0 | (9) | ||||||||||||||||||||||||
|
Purchase of redeemable noncontrolling interest |
0 | 0 | 0 | 0 | 0 | (66) | 0 | (66) | ||||||||||||||||||||||||
|
Purchases of Tyson Class A common stock |
(207) | 0 | 0 | 0 | 0 | 0 | 0 | (207) | ||||||||||||||||||||||||
|
Dividends |
(59) | 0 | 0 | 0 | 0 | (20) | 20 | (59) | ||||||||||||||||||||||||
|
Change in restricted cash-financing |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Other, net |
58 | 0 | 0 | 0 | 0 | 10 | 0 | 68 | ||||||||||||||||||||||||
|
Net change in intercompany balances |
554 | (395) | (329) | 0 | (724) | 170 | 0 | 0 | ||||||||||||||||||||||||
|
Cash Provided by (Used for) Financing Activities |
(54) | (401) | (329) | 0 | (730) | 106 | 20 | (658) | ||||||||||||||||||||||||
|
Effect of Exchange Rate Change on Cash |
0 | 0 | 0 | 0 | 0 | (6) | 0 | (6) | ||||||||||||||||||||||||
|
Increase (Decrease) in Cash and Cash Equivalents |
(1) | (1) | (317) | 0 | (318) | 57 | 0 | (262) | ||||||||||||||||||||||||
|
Cash and Cash Equivalents at Beginning of Year |
2 | 2 | 731 | 0 | 733 | 243 | 0 | 978 | ||||||||||||||||||||||||
|
Cash and Cash Equivalents at End of Year |
$1 | $1 | $414 | $0 | $415 | $300 | $0 | $716 | ||||||||||||||||||||||||
| Condensed Consolidating Statement of Cash Flows for the year ended October 2, 2010 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- antors |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Cash Provided by Operating Activities |
$386 | $499 | $462 | $0 | $961 | $85 | $0 | $1,432 | ||||||||||||||||||||||||
|
Cash Flows From Investing Activities: |
||||||||||||||||||||||||||||||||
|
Additions to property, plant and equipment |
(3) | (85) | (323) | 0 | (408) | (139) | 0 | (550) | ||||||||||||||||||||||||
|
Purchases of marketable securities, net |
0 | 0 | 0 | 0 | 0 | (4) | 0 | (4) | ||||||||||||||||||||||||
|
Proceeds from notes receivable |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Proceeds from sale of discontinued operation |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Change in restricted cash-investing |
0 | 0 | 0 | 0 | 0 | 43 | 0 | 43 | ||||||||||||||||||||||||
|
Acquisitions, net of cash acquired |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Other, net |
(1) | (1) | 15 | 0 | 14 | (2) | 0 | 11 | ||||||||||||||||||||||||
|
Cash Used for Investing Activities |
(4) | (86) | (308) | 0 | (394) | (102) | 0 | (500) | ||||||||||||||||||||||||
|
Cash Flows from Financing Activities: |
||||||||||||||||||||||||||||||||
|
Net change in debt |
(874) | (149) | 0 | 0 | (149) | (11) | 0 | (1,034) | ||||||||||||||||||||||||
|
Debt issuance costs |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Purchase of redeemable noncontrolling interest |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Purchases of Tyson Class A common stock |
(48) | 0 | 0 | 0 | 0 | 0 | 0 | (48) | ||||||||||||||||||||||||
|
Dividends |
(59) | 0 | 0 | 0 | 0 | 0 | 0 | (59) | ||||||||||||||||||||||||
|
Change in restricted cash-financing |
0 | 0 | 140 | 0 | 140 | 0 | 0 | 140 | ||||||||||||||||||||||||
|
Other, net |
32 | 0 | 0 | 0 | 0 | 10 | 0 | 42 | ||||||||||||||||||||||||
|
Net change in intercompany balances |
569 | (262) | (351) | 0 | (613) | 44 | 0 | 0 | ||||||||||||||||||||||||
|
Cash Provided by (Used for) Financing Activities |
(380) | (411) | (211) | 0 | (622) | 43 | 0 | (959) | ||||||||||||||||||||||||
|
Effect of Exchange Rate Change on Cash |
0 | 0 | 0 | 0 | 0 | 1 | 0 | 1 | ||||||||||||||||||||||||
|
Increase (Decrease) in Cash and Cash Equivalents |
2 | 2 | (57) | 0 | (55) | 27 | 0 | (26) | ||||||||||||||||||||||||
|
Cash and Cash Equivalents at Beginning of Year |
0 | 0 | 788 | 0 | 788 | 216 | 0 | 1,004 | ||||||||||||||||||||||||
|
Cash and Cash Equivalents at End of Year |
$2 | $2 | $731 | $0 | $733 | $243 | $0 | $978 | ||||||||||||||||||||||||
| Condensed Consolidating Statement of Cash Flows for the year ended October 3, 2009 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guar- antors |
Elimin- ations |
Subtotal |
Non- Guar- |
Elimin- ations |
Total | |||||||||||||||||||||||||
|
Cash Provided by (Used for) Operating Activities |
$(617) | $507 | $982 | $0 | $1,489 | $113 | $(25) | $960 | ||||||||||||||||||||||||
|
Cash Flows From Investing Activities: |
||||||||||||||||||||||||||||||||
|
Additions to property, plant and equipment |
0 | (56) | (211) | 0 | (267) | (101) | 0 | (368) | ||||||||||||||||||||||||
|
Proceeds from sale of marketable securities, net |
0 | 0 | 0 | 0 | 0 | 19 | 0 | 19 | ||||||||||||||||||||||||
|
Proceeds from notes receivable |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Proceeds from sale of discontinued operation |
0 | 0 | 0 | 0 | 0 | 75 | 0 | 75 | ||||||||||||||||||||||||
|
Change in restricted cash-investing |
0 | 0 | 0 | 0 | 0 | (43) | 0 | (43) | ||||||||||||||||||||||||
|
Acquisitions, net of cash acquired |
0 | 0 | (13) | 0 | (13) | (80) | 0 | (93) | ||||||||||||||||||||||||
|
Other, net |
(37) | 1 | 12 | 0 | 13 | 7 | 0 | (17) | ||||||||||||||||||||||||
|
Cash Used for Investing Activities |
(37) | (55) | (212) | 0 | (267) | (123) | 0 | (427) | ||||||||||||||||||||||||
|
Cash Flows from Financing Activities: |
||||||||||||||||||||||||||||||||
|
Net change in debt |
545 | (94) | 0 | 0 | (94) | 36 | 0 | 487 | ||||||||||||||||||||||||
|
Debt issuance costs |
(58) | 0 | 0 | 0 | 0 | (1) | 0 | (59) | ||||||||||||||||||||||||
|
Purchase of redeemable noncontrolling interest |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
Purchases of Tyson Class A common stock |
(19) | 0 | 0 | 0 | 0 | 0 | 0 | (19) | ||||||||||||||||||||||||
|
Dividends |
(60) | 0 | 0 | 0 | 0 | (25) | 25 | (60) | ||||||||||||||||||||||||
|
Change in restricted cash-financing |
0 | 0 | (140) | 0 | (140) | 0 | 0 | (140) | ||||||||||||||||||||||||
|
Other, net |
0 | 0 | 0 | 0 | 0 | 6 | 0 | 6 | ||||||||||||||||||||||||
|
Net change in intercompany balances |
106 | (358) | 123 | 0 | (235) | 129 | 0 | 0 | ||||||||||||||||||||||||
|
Cash Provided by (Used for) Financing Activities |
514 | (452) | (17) | 0 | (469) | 145 | 25 | 215 | ||||||||||||||||||||||||
|
Effect of Exchange Rate Change on Cash |
0 | 0 | 0 | 0 | 0 | 6 | 0 | 6 | ||||||||||||||||||||||||
|
Increase (Decrease) in Cash and Cash Equivalents |
(140) | 0 | 753 | 0 | 753 | 141 | 0 | 754 | ||||||||||||||||||||||||
|
Cash and Cash Equivalents at Beginning of Year |
140 | 0 | 35 | 0 | 35 | 75 | 0 | 250 | ||||||||||||||||||||||||
|
Cash and Cash Equivalents at End of Year |
$0 | $0 | $788 | $0 | $788 | $216 | $0 | $1,004 | ||||||||||||||||||||||||
|
|||
| in millions | ||||||||||||||||||||
| Additions | ||||||||||||||||||||
| Balance at Beginning of Period |
Charged to Costs and Expenses |
Charged to Other Accounts |
(Deductions) | Balance at End of Period |
||||||||||||||||
|
Allowance for Doubtful Accounts: |
||||||||||||||||||||
|
2011 |
$32 | $3 | $0 | $(4) | $31 | |||||||||||||||
|
2010 |
33 | 0 | 0 | (1) | 32 | |||||||||||||||
|
2009 |
12 | 22 | 0 | (1) | 33 | |||||||||||||||
|
Inventory Lower of Cost or Market Allowance: |
||||||||||||||||||||
|
2011 |
$2 | $12 | $0 | $(8) | $6 | |||||||||||||||
|
2010 |
22 | 7 | 0 | (27) | 2 | |||||||||||||||
|
2009 |
13 | 57 | 0 | (48) | 22 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
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