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NOTE 1: ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated condensed financial statements have been prepared by Tyson Foods, Inc. ("Tyson," "the Company," "we," "us" or "our"). Certain information and accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. Although we believe the disclosures contained herein are adequate to make the information presented not misleading, these consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our annual report on Form 10-K for the fiscal year ended October 1, 2011. Preparation of consolidated condensed financial statements requires us to make estimates and assumptions. These estimates and assumptions affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
We believe the accompanying consolidated condensed financial statements contain all adjustments, which are of a normal recurring nature, necessary to state fairly our financial position as of December 31, 2011, and the results of operations and cash flows for the three months ended December 31, 2011, and January 1, 2011. Results of operations and cash flows for the periods presented are not necessarily indicative of results to be expected for the full year.
CONSOLIDATION
The consolidated condensed financial statements include the accounts of all wholly-owned subsidiaries, as well as 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 for which we consolidate as we are the primary beneficiary. At December 31, 2011, Dynamic Fuels had $177 million of total assets, of which $142 million was property, plant and equipment, and $126 million of total liabilities, of which $100 million was long-term debt. 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.
SHARE REPURCHASES
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 the three months ended December 31, 2011, we repurchased 1.8 million shares for approximately $35 million under this plan. As of December 31, 2011, 11 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 $15 million and $7 million for the three months ended December 31, 2011, and January 1, 2011, respectively.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In May 2011, the 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 condensed 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 condensed statements of income, or in a separate financial statement. Currently, we present such information in our notes to the consolidated condensed financial statements. Other than changing the presentation of comprehensive income, we do not expect the adoption will have a significant impact on our consolidated condensed 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 condensed financial statements.
In December 2011, the FASB issued guidance enhancing disclosures related to offsetting of certain assets and liabilities. This guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. We do not expect the adoption will have a significant impact on our consolidated condensed financial statements.
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NOTE 2: 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. Total inventory consists of the following (in millions):
| December 31, 2011 | October 1, 2011 | |||||||
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Processed products: |
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Weighted-average method – chicken and prepared foods |
$ | 714 | $ | 715 | ||||
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First-in, first-out method – beef and pork |
611 | 581 | ||||||
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Livestock – first-in, first-out method |
859 | 928 | ||||||
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Supplies and other – weighted-average method |
414 | 363 | ||||||
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Total inventories |
$ | 2,598 | $ | 2,587 | ||||
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NOTE 3: PROPERTY, PLANT AND EQUIPMENT
The major categories of property, plant and equipment and accumulated depreciation are as follows (in millions):
| December 31, 2011 | October 1, 2011 | |||||||
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Land |
$ | 95 | $ | 95 | ||||
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Buildings and leasehold improvements |
2,732 | 2,698 | ||||||
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Machinery and equipment |
4,863 | 4,897 | ||||||
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Land improvements and other |
389 | 386 | ||||||
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Buildings and equipment under construction |
474 | 446 | ||||||
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| 8,553 | 8,522 | |||||||
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Less accumulated depreciation |
4,665 | 4,699 | ||||||
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Net property, plant and equipment |
$ | 3,888 | $ | 3,823 | ||||
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NOTE 4: OTHER CURRENT LIABILITIES
Other current liabilities are as follows (in millions):
| December 31, 2011 | October 1, 2011 | |||||||
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Accrued salaries, wages and benefits |
$ | 275 | $ | 407 | ||||
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Self-insurance reserves |
287 | 298 | ||||||
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Other |
370 | 335 | ||||||
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Total other current liabilities |
$ | 932 | $ | 1,040 | ||||
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NOTE 5: DEBT
The major components of debt are as follows (in millions):
| December 31, 2011 | October 1, 2011 | |||||||
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Revolving credit facility |
$ | 0 | $ | 0 | ||||
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Senior notes: |
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3.25% Convertible senior notes due October 2013 (2013 Notes) |
458 | 458 | ||||||
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10.50% Senior notes due March 2014 (2014 Notes) |
810 | 810 | ||||||
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6.85% Senior notes due April 2016 (2016 Notes) |
638 | 638 | ||||||
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7.00% Notes due May 2018 |
120 | 120 | ||||||
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7.00% Notes due January 2028 |
18 | 18 | ||||||
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Discount on senior notes |
(68 | ) | (76 | ) | ||||
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GO Zone tax-exempt bonds due October 2033 (0.07% at 12/31/2011) |
100 | 100 | ||||||
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Other |
139 | 114 | ||||||
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Total debt |
2,215 | 2,182 | ||||||
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Less current debt |
84 | 70 | ||||||
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Total long-term debt |
$ | 2,131 | $ | 2,112 | ||||
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Revolving Credit Facility
We have a $1.0 billion revolving credit facility that supports short-term funding needs and letters of credit. This facility is fully and unconditionally guaranteed by substantially all of our domestic subsidiaries. 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 Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. (S&P), and Moody's Investors Service, 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 December 31, 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 December 31, 2011, was $855 million. At December 31, 2011, we had outstanding letters of credit issued under this facility totaling $145 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.
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:
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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 |
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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 |
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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 December 31, 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.
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 February 24, 2011, S&P upgraded the credit rating of these notes from "BB+" to "BBB-." On March 29, 2011, Moody's upgraded the credit rating of these notes 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 December 31, 2011.
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NOTE 6: INCOME TAXES
The effective tax rate was 35.8% and 34.0% for the first quarter of fiscal years 2012 and 2011, respectively. The effective tax rate for the first quarter of fiscal 2012 was impacted by such items as the domestic production deduction and state income taxes.
Unrecognized tax benefits were $173 million and $174 million at December 31, 2011, and October 1, 2011, respectively. The amount of unrecognized tax benefits, if recognized, that would impact our effective tax rate was $154 million and $155 million at December 31, 2011, and October 1, 2011, respectively.
We classify interest and penalties on unrecognized tax benefits as income tax expense. At December 31, 2011, and October 1, 2011, before tax benefits, we had $58 million of accrued interest and penalties on unrecognized tax benefits.
We are subject to income tax examinations for U.S. federal income taxes for fiscal years 2003 through 2010, and for foreign, state and local income taxes for fiscal years 2001 through 2010. Within the next twelve months, tax audit resolutions could reduce unrecognized tax benefits by approximately $10 million, either because tax positions are sustained on audit or because we agree to their disallowance.
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NOTE 7: OTHER INCOME AND CHARGES
During the first quarter of fiscal 2012, we recorded $6 million of equity earnings in joint ventures and $5 million in net foreign currency exchange gains, which were recorded in the Consolidated Condensed Statements of Income in Other, net.
During the first quarter of 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 Condensed Statements of Income in Other, net.
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NOTE 9: 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 December 31, 2011.
We recognize all derivative instruments as either assets or liabilities at fair value in the Consolidated Condensed 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 and option contracts as follows:
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Cash Flow Hedges – include certain commodity forward and option contracts of forecasted purchases (i.e., grains) and certain foreign exchange forward contracts. |
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Fair Value Hedges – include certain commodity forward contracts of forecasted purchases (i.e., livestock). |
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Net Investment Hedges – include certain foreign currency forward contracts of permanently invested capital in certain foreign subsidiaries.
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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 for the three months ended December 31, 2011, and January 1, 2011.
We had the following aggregated notionals of outstanding forward and option contracts accounted for as cash flow hedges:
| Metric | December 31, 2011 | October 1, 2011 | ||||||||||
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Commodity: |
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Corn |
Bushels | 7 million | 6 million | |||||||||
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Soy meal |
Tons | 22,200 | 82,300 | |||||||||
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Foreign Currency |
United States dollar | $ | 22 million | $ | 75 million | |||||||
As of December 31, 2011, the net amounts expected to be reclassified into earnings within the next 12 months are pretax losses of $13 million related to grain. Pretax losses expected to be reclassified into earnings within the next 12 months related to foreign currency are not significant as of December 31, 2011. During the three months ended December 31, 2011, and January 1, 2011, 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 Condensed Statements of Income (in millions):
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Gain/(Loss) Recognized in OCI On |
Consolidated Condensed Statements of Income Classification |
Gain/(Loss) Reclassified from OCI to |
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| Three Months Ended | Three Months Ended | |||||||||||||||||||
| December 31, 2011 |
January 1, 2011 |
December 31, 2011 |
January 1, 2011 |
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Cash Flow Hedge – Derivatives designated as hedging instruments: |
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Commodity contracts |
$ | 2 | $ | 25 | Cost of Sales | $ | (6 | ) | $ | 20 | ||||||||||
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Foreign exchange contracts |
(5 | ) | 0 | Other Income/Expense | 5 | 0 | ||||||||||||||
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Total |
$ | (3 | ) | $ | 25 | $ | (1 | ) | $ | 20 | ||||||||||
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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 | December 31, 2011 |
October 1, 2011 |
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Commodity: |
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Live Cattle |
Pounds | 281 million | 318 million | |||||||||
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Lean Hogs |
Pounds | 566 million | 601 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.
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| Consolidated Condensed Statements of Income Classification |
December 31, 2011 | January 1, 2011 | ||||||||||
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Gain/(Loss) on forwards |
Cost of Sales | $ | (8 | ) | $ | (1 | ) | |||||
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Gain/(Loss) on purchase contract |
Cost of Sales | 8 | 1 | |||||||||
Ineffectiveness related to our fair value hedges was not significant for the three months ended December 31, 2011, and January 1, 2011.
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 Condensed Statements of Income during the period of change. Ineffectiveness related to our foreign net investment hedges was not significant for the three months ended December 31, 2011, and January 1, 2011. At both December 31, 2011, and October 1, 2011, we had $35 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 Condensed Statements of Income (in millions):
| Gain/(Loss) Recognized in OCI On Derivatives |
Consolidated Condensed Statements of Income Classification |
Gain/(Loss) Reclassified from OCI to Earnings |
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| Three Months Ended | Three Months Ended | |||||||||||||||||||
| December 31, 2011 |
January 1, 2011 |
December 31, 2011 |
January 1, 2011 |
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Net Investment Hedge – Derivatives designated as hedging instruments: |
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Foreign exchange contracts |
$ | (1 | ) | $ | (1 | ) | Other Income/Expense | $ | 0 | $ | 0 | |||||||||
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 | December 31, 2011 |
October 1, 2011 |
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Commodity: |
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Corn |
Bushels | 13 million | 17 million | |||||||||
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Soy Meal |
Tons | 85,800 | 174,600 | |||||||||
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Soy Oil |
Pounds | 0 | 13 million | |||||||||
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Live Cattle |
Pounds | 46 million | 72 million | |||||||||
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Lean Hogs |
Pounds | 138 million | 19 million | |||||||||
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Foreign Currency |
United States dollars | $ | 132 million | $ | 110 million | |||||||
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Interest Rate |
Average monthly notional debt | $ | 36 million | $ | 39 million | |||||||
The following table sets forth the pretax impact of the undesignated derivative instruments on the Consolidated Condensed Statements of Income (in millions):
| Consolidated Condensed Statements of Income Classification |
Gain/(Loss) Recognized in Earnings |
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| Three Months Ended | ||||||||||||
| December 31, 2011 |
January 1, 2011 |
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Derivatives not designated as hedging instruments: |
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Commodity contracts |
Sales | $ | (3 | ) | $ | 14 | ||||||
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Commodity contracts |
Cost of Sales | 29 | 21 | |||||||||
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Foreign exchange contracts |
Other Income/Expense | 3 | (1 | ) | ||||||||
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Total |
$ | 29 | $ | 34 | ||||||||
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The following table sets forth the fair value of all derivative instruments outstanding in the Consolidated Condensed Balance Sheets (in millions):
| Fair Value | ||||||||
| December 31, 2011 |
October 1, 2011 |
|||||||
|
Derivative Assets: |
||||||||
|
Derivatives designated as hedging instruments: |
||||||||
|
Commodity contracts |
$ | 26 | $ | 3 | ||||
|
Foreign exchange contracts |
1 | 12 | ||||||
|
|
|
|
|
|||||
|
Total derivative assets – designated |
27 | 15 | ||||||
|
Derivatives not designated as hedging instruments: |
||||||||
|
Commodity contracts |
14 | 21 | ||||||
|
Foreign exchange contracts |
1 | 5 | ||||||
|
|
|
|
|
|||||
|
Total derivative assets – not designated |
15 | 26 | ||||||
|
|
|
|
|
|||||
|
Total derivative assets |
$ | 42 | $ | 41 | ||||
|
|
|
|
|
|||||
|
Derivative Liabilities: |
||||||||
|
Derivatives designated as hedging instruments: |
||||||||
|
Commodity contracts |
$ | 8 | $ | 41 | ||||
|
Derivatives not designated as hedging instruments: |
||||||||
|
Commodity contracts |
54 | 121 | ||||||
|
Foreign exchange contracts |
1 | 1 | ||||||
|
Interest rate contracts |
1 | 2 | ||||||
|
|
|
|
|
|||||
|
Total derivative liabilities – not designated |
56 | 124 | ||||||
|
|
|
|
|
|||||
|
Total derivative liabilities |
$ | 64 | $ | 165 | ||||
|
|
|
|
|
|||||
Our derivative assets and liabilities are presented in our Consolidated Condensed 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 10: Fair Value Measurements for a reconciliation to amounts reported in the Consolidated Condensed Balance Sheets in Other current assets and Other current liabilities.
|
|||
NOTE 10: 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):
|
December 31, 2011 |
Level 1 | Level 2 | Level 3 | Netting (a) | Total | |||||||||||||||
|
Assets: |
||||||||||||||||||||
|
Commodity Derivatives |
$ | 0 | $ | 40 | $ | 0 | $ | (30 | ) | $ | 10 | |||||||||
|
Foreign Exchange Forward Contracts |
0 | 2 | 0 | 0 | 2 | |||||||||||||||
|
Available for Sale Securities: |
||||||||||||||||||||
|
Debt securities |
0 | 33 | 84 | 0 | 117 | |||||||||||||||
|
Equity securities |
8 | 0 | 0 | 0 | 8 | |||||||||||||||
|
Deferred Compensation Assets |
28 | 130 | 0 | 0 | 158 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Total Assets |
$ | 36 | $ | 205 | $ | 84 | $ | (30 | ) | $ | 295 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Liabilities: |
||||||||||||||||||||
|
Commodity Derivatives |
$ | 0 | $ | 62 | $ | 0 | $ | (61 | ) | $ | 1 | |||||||||
|
Foreign Exchange Forward Contracts |
0 | 1 | 0 | (1 | ) | 0 | ||||||||||||||
|
Interest Rate Swap |
0 | 1 | 0 | 0 | 1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Total Liabilities |
$ | 0 | $ | 64 | $ | 0 | $ | (62 | ) | $ | 2 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
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 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (a) | Our derivative assets and liabilities are presented in our Consolidated Condensed 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 December 31, 2011, and October 1, 2011, we had posted with various counterparties $32 million and $113 million, respectively, of cash collateral and held no cash collateral. |
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):
| Three months ended | ||||||||
| December 31, 2011 | January 1, 2011 | |||||||
|
Balance at beginning of year |
$ | 83 | $ | 73 | ||||
|
Total realized and unrealized gains (losses): |
||||||||
|
Included in earnings |
1 | 0 | ||||||
|
Included in other comprehensive income (loss) |
(2 | ) | 0 | |||||
|
Purchases |
6 | 2 | ||||||
|
Issuances |
0 | 0 | ||||||
|
Settlements |
(4 | ) | (4 | ) | ||||
|
|
|
|
|
|||||
|
Balance at end of period |
$ | 84 | $ | 71 | ||||
|
|
|
|
|
|||||
|
Total gains (losses) for the three-month period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of period |
$ | 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 contracts and an interest rate swap, primarily include exchange-traded and over-the-counter contracts which are further described in Note 9: 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 Condensed Balance Sheets. These investments, which are generally long-term in nature with maturities ranging up to 36 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 Condensed 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) |
December 31, 2011 | October 1, 2011 | ||||||||||||||||||||||
| Amortized Cost Basis |
Fair Value |
Unrealized Gain/(Loss) |
Amortized Cost Basis |
Fair Value |
Unrealized Gain/(Loss) |
|||||||||||||||||||
|
Available for Sale Securities: |
||||||||||||||||||||||||
|
Debt Securities: |
||||||||||||||||||||||||
|
U.S. Treasury and Agency |
$ | 32 | $ | 33 | $ | 1 | $ | 33 | $ | 34 | $ | 1 | ||||||||||||
|
Corporate and Asset-Backed (a) |
56 | 56 | 0 | 54 | 56 | 2 | ||||||||||||||||||
|
Redeemable Preferred Stock |
28 | 28 | 0 | 27 | 27 | 0 | ||||||||||||||||||
|
Equity Securities: |
||||||||||||||||||||||||
|
Common Stock |
9 | 8 | (1 | ) | 9 | 7 | (2 | ) | ||||||||||||||||
| (a) | At December 31, 2011, and October 1, 2011, the amortized cost basis for Corporate and Asset-Backed debt securities had been reduced by accumulated other than temporary impairments of $2 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. We recognized no other than temporary impairments in earnings for the three month periods ending December 31, 2011, and January 1, 2011. No other than temporary losses were deferred in OCI as of December 31, 2011, and October 1, 2011.
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 Condensed 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. We did not have any significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition during the three months ended December 31, 2011, and January 1, 2011.
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):
| December 31, 2011 | October 1, 2011 | |||||||||||||||
| Fair Value |
Carrying Value |
Fair Value |
Carrying Value |
|||||||||||||
|
Total Debt |
$ | 2,371 | $ | 2,215 | $ | 2,334 | $ | 2,182 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
|||
NOTE 11: COMPREHENSIVE INCOME
The components of comprehensive income are as follows (in millions):
| Three Months Ended | ||||||||
| December 31, 2011 | January 1, 2011 | |||||||
|
Net income |
$ | 156 | $ | 294 | ||||
|
Other comprehensive income (loss), net of tax: |
||||||||
|
Net hedging unrealized (gain) loss reclassified to earnings |
1 | (13 | ) | |||||
|
Net hedging unrealized gain (loss) |
(2 | ) | 12 | |||||
|
Unrealized gain (loss) on investments |
1 | (2 | ) | |||||
|
Currency translation adjustment |
3 | (5 | ) | |||||
|
Postretirement benefits reserve adjustments |
1 | 0 | ||||||
|
|
|
|
|
|||||
|
Total comprehensive income |
160 | 286 | ||||||
|
Comprehensive loss attributable to noncontrolling interest |
0 | (4 | ) | |||||
|
|
|
|
|
|||||
|
Total comprehensive income attributable to Tyson |
$ | 160 | $ | 290 | ||||
|
|
|
|
|
|||||
The related tax effects allocated to the components of comprehensive income are as follows (in millions):
| Three Months Ended | ||||||||
| December 31, 2011 | January 1, 2011 | |||||||
|
Income tax expense (benefit): |
||||||||
|
Net hedging unrealized loss reclassified to earnings |
$ | 0 | $ | (7 | ) | |||
|
Net hedging unrealized gain (loss) |
(1 | ) | 13 | |||||
|
Unrealized gain on investments |
1 | 0 | ||||||
|
|
|
|
|
|||||
|
Total income tax expense |
$ | 0 | $ | 6 | ||||
|
|
|
|
|
|||||
|
|||
NOTE 12: 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.
Information on segments and a reconciliation to income before income taxes are as follows (in millions):
|
|
||||||||
|
|
|
Three Months Ended |
| |||||
|
|
|
December 31, 2011 |
|
|
January 1, 2011 |
| ||
|
Sales: |
|
|
||||||
|
Chicken |
|
$ |
2,762 |
|
|
$ |
2,619 |
|
|
Beef |
|
|
3,467 |
|
|
|
3,185 |
|
|
Pork |
|
|
1,475 |
|
|
|
1,238 |
|
|
Prepared Foods |
|
|
861 |
|
|
|
806 |
|
|
Other |
|
|
54 |
|
|
|
8 |
|
|
Intersegment Sales |
|
|
(290 |
) |
|
|
(241 |
) |
|
|
|
|
|
|
|
|
| |
|
Total Sales |
|
$ |
8,329 |
|
|
$ |
7,615 |
|
|
|
|
|
|
|
|
|
| |
|
Operating Income (Loss): |
|
|
||||||
|
Chicken |
|
$ |
32 |
|
|
$ |
181 |
|
|
Beef |
|
|
31 |
|
|
|
116 |
|
|
Pork |
|
|
165 |
|
|
|
177 |
|
|
Prepared Foods |
|
|
51 |
|
|
|
28 |
|
|
Other |
|
|
(1 |
) |
|
|
(4 |
) |
|
|
|
|
|
|
|
|
| |
|
Total Operating Income |
|
|
278 |
|
|
|
498 |
|
|
Total Other (Income) Expense |
|
|
35 |
|
|
|
53 |
(a) |
|
|
|
|
|
|
|
|
| |
|
Income before Income Taxes |
|
$ |
243 |
|
|
$ |
445 |
|
|
|
|
|
|
|
|
|
| |
|
(a) |
Includes $11 million gain related to a sale of interests in an equity method investment. |
The Beef segment had sales of $64 million and $50 million in the first quarter of fiscal years 2012 and 2011, respectively, from transactions with other operating segments of the Company and Dynamic Fuels. The Pork segment had sales of $226 million and $191 million in the first quarter of fiscal years 2012 and 2011, respectively, from transactions with other operating segments of the Company. The aforementioned sales from intersegment transactions, which were at market prices, were included in the segment sales in the above table.
|
|||
NOTE 13: COMMITMENTS AND CONTINGENCIES
Commitments
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 December 31, 2011, was $73 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 $51 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 December 31, 2011, and October 1, 2011, 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 December 31, 2011, was approximately $220 million. The total receivables under these programs were $25 million and $28 million at December 31, 2011, and October 1, 2011, respectively, and are included, net of allowance for uncollectible amounts, in Other Assets in our Consolidated Condensed 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 $9 million and $10 million at December 31, 2011, and October 1, 2011, respectively.
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 condensed 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 condensed 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 condensed 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, which was approved on January 23, 2012.
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, Maxwell, Acosta, and Gomez cases are scheduled for trials on April 9, 2012, October 22, 2012, January 14, 2013, and March 18, 2013, 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.
|
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NOTE 14: 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 fully guarantee the 2014 Notes. In the event the 2014 Notes are rated equal to or higher than BBB- and Baa3 by S&P and Moody's, respectively, the guarantees will be suspended. Following a suspension of the guarantees, if the 2014 Notes are rated lower than BBB- or Baa3 by S&P or Moody's, respectively, the guarantees will be reinstated. As of December 31, 2011, the 2014 Notes were rated BBB- and Ba1 by S&P and Moody's, respectively; therefore, the condition for suspension of the guarantees had not been met as of December 31, 2011.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 three months ended December 31, 2011 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guarantors | Eliminations | Subtotal | Non-Guarantors | Eliminations | Total | |||||||||||||||||||||||||
|
Sales |
$ | 52 | $ | 4,841 | $ | 3,307 | $ | (283 | ) | $ | 7,865 | $ | 454 | $ | (42 | ) | $ | 8,329 | ||||||||||||||
|
Cost of Sales |
8 | 4,642 | 3,102 | (283 | ) | 7,461 | 409 | (42 | ) | 7,836 | ||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Gross Profit |
44 | 199 | 205 | 0 | 404 | 45 | 0 | 493 | ||||||||||||||||||||||||
|
Selling, General and Administrative |
12 | 50 | 131 | 0 | 181 | 22 | 0 | 215 | ||||||||||||||||||||||||
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|
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|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Operating Income |
32 | 149 | 74 | 0 | 223 | 23 | 0 | 278 | ||||||||||||||||||||||||
|
Other (Income) Expense: |
||||||||||||||||||||||||||||||||
|
Interest expense, net |
(13 | ) | 32 | 31 | 0 | 63 | (3 | ) | 0 | 47 | ||||||||||||||||||||||
|
Other, net |
1 | 0 | (6 | ) | 0 | (6 | ) | (7 | ) | 0 | (12 | ) | ||||||||||||||||||||
|
Equity in net earnings of subsidiaries |
(127 | ) | (26 | ) | (5 | ) | 20 | (11 | ) | (6 | ) | 144 | 0 | |||||||||||||||||||
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|
|
|
|
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|
|||||||||||||||||
|
Total Other (Income) Expense |
(139 | ) | 6 | 20 | 20 | 46 | (16 | ) | 144 | 35 | ||||||||||||||||||||||
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|
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|
Income (Loss) before Income Taxes |
171 | 143 | 54 | (20 | ) | 177 | 39 | (144 | ) | 243 | ||||||||||||||||||||||
|
Income Tax Expense |
15 | 40 | 16 | 0 | 56 | 16 | 0 | 87 | ||||||||||||||||||||||||
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|
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|
|||||||||||||||||
|
Net Income (Loss) |
156 | 103 | 38 | (20 | ) | 121 | 23 | (144 | ) | 156 | ||||||||||||||||||||||
|
Less: Net Loss Attributable to Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
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|
|||||||||||||||||
|
Net Income (Loss) Attributable to Tyson |
$ | 156 | $ | 103 | $ | 38 | $ | (20 | ) | $ | 121 | $ | 23 | $ | (144 | ) | $ | 156 | ||||||||||||||
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|
|||||||||||||||||
| Condensed Consolidating Statement of Income for the three months ended January 1, 2011 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guarantors | Eliminations | Subtotal | Non-Guarantors | Eliminations | Total | |||||||||||||||||||||||||
|
Sales |
$ | 105 | $ | 4,333 | $ | 3,155 | $ | (241 | ) | $ | 7,247 | $ | 358 | $ | (95 | ) | $ | 7,615 | ||||||||||||||
|
Cost of Sales |
(43 | ) | 4,000 | 2,926 | (241 | ) | 6,685 | 324 | (95 | ) | 6,871 | |||||||||||||||||||||
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|
|||||||||||||||||
|
Gross Profit |
148 | 333 | 229 | 0 | 562 | 34 | 0 | 744 | ||||||||||||||||||||||||
|
Selling, General and Administrative |
17 | 56 | 148 | 0 | 204 | 25 | 0 | 246 | ||||||||||||||||||||||||
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|
|||||||||||||||||
|
Operating Income |
131 | 277 | 81 | 0 | 358 | 9 | 0 | 498 | ||||||||||||||||||||||||
|
Other (Income) Expense: |
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|
Interest expense, net |
(54 | ) | 60 | 58 | 0 | 118 | (1 | ) | 0 | 63 | ||||||||||||||||||||||
|
Other, net |
(12 | ) | 0 | (1 | ) | 0 | (1 | ) | 3 | 0 | (10 | ) | ||||||||||||||||||||
|
Equity in net earnings of subsidiaries |
(165 | ) | (22 | ) | (13 | ) | 20 | (15 | ) | (2 | ) | 182 | 0 | |||||||||||||||||||
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|
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|
Total Other (Income) Expense |
(231 | ) | 38 | 44 | 20 | 102 | 0 | 182 | 53 | |||||||||||||||||||||||
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|
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|
Income (Loss) before Income Taxes |
362 | 239 | 37 | (20 | ) | 256 | 9 | (182 | ) | 445 | ||||||||||||||||||||||
|
Income Tax Expense |
64 | 74 | 10 | 0 | 84 | 3 | 0 | 151 | ||||||||||||||||||||||||
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|
|||||||||||||||||
|
Net Income (Loss) |
298 | 165 | 27 | (20 | ) | 172 | 6 | (182 | ) | 294 | ||||||||||||||||||||||
|
Less: Net Loss Attributable to Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | (4 | ) | 0 | (4 | ) | ||||||||||||||||||||||
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|
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|
Net Income (Loss) Attributable to Tyson |
$ | 298 | $ | 165 | $ | 27 | $ | (20 | ) | $ | 172 | $ | 10 | $ | (182 | ) | $ | 298 | ||||||||||||||
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| Condensed Consolidating Balance Sheet as of December 31, 2011 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guarantors | Eliminations | Subtotal | Non-Guarantors | Eliminations | Total | |||||||||||||||||||||||||
|
Assets |
||||||||||||||||||||||||||||||||
|
Current Assets: |
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|
Cash and cash equivalents |
$ | 0 | $ | 2 | $ | 606 | $ | 0 | $ | 608 | $ | 249 | $ | 0 | $ | 857 | ||||||||||||||||
|
Accounts receivable, net |
1 | 473 | 620 | 0 | 1,093 | 199 | (12 | ) | 1,281 | |||||||||||||||||||||||
|
Inventories |
3 | 909 | 1,437 | 0 | 2,346 | 249 | 0 | 2,598 | ||||||||||||||||||||||||
|
Other current assets |
43 | 65 | 81 | (80 | ) | 66 | 54 | (41 | ) | 122 | ||||||||||||||||||||||
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|
Total Current Assets |
47 | 1,449 | 2,744 | (80 | ) | 4,113 | 751 | (53 | ) | 4,858 | ||||||||||||||||||||||
|
Net Property, Plant and Equipment |
35 | 872 | 2,415 | 0 | 3,287 | 566 | 0 | 3,888 | ||||||||||||||||||||||||
|
Goodwill |
0 | 881 | 967 | 0 | 1,848 | 43 | 0 | 1,891 | ||||||||||||||||||||||||
|
Intangible Assets |
0 | 30 | 48 | 0 | 78 | 67 | 0 | 145 | ||||||||||||||||||||||||
|
Other Assets |
1,886 | 174 | 144 | (14 | ) | 304 | 296 | (2,041 | ) | 445 | ||||||||||||||||||||||
|
Investment in Subsidiaries |
11,504 | 1,971 | 842 | (1,779 | ) | 1,034 | 326 | (12,864 | ) | 0 | ||||||||||||||||||||||
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Total Assets |
$ | 13,472 | $ | 5,377 | $ | 7,160 | $ | (1,873 | ) | $ | 10,664 | $ | 2,049 | $ | (14,958 | ) | $ | 11,227 | ||||||||||||||
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|
Liabilities and Shareholders' Equity |
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|
Current Liabilities: |
||||||||||||||||||||||||||||||||
|
Current debt |
$ | 2 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 82 | $ | 0 | $ | 84 | ||||||||||||||||
|
Accounts payable |
6 | 689 | 594 | 0 | 1,283 | 69 | 0 | 1,358 | ||||||||||||||||||||||||
|
Other current liabilities |
5,517 | 130 | 325 | (80 | ) | 375 | 430 | (5,390 | ) | 932 | ||||||||||||||||||||||
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|
Total Current Liabilities |
5,525 | 819 | 919 | (80 | ) | 1,658 | 581 | (5,390 | ) | 2,374 | ||||||||||||||||||||||
|
Long-Term Debt |
1,984 | 1,044 | 780 | 0 | 1,824 | 276 | (1,953 | ) | 2,131 | |||||||||||||||||||||||
|
Deferred Income Taxes |
0 | 113 | 315 | (14 | ) | 414 | 6 | 0 | 420 | |||||||||||||||||||||||
|
Other Liabilities |
182 | 143 | 228 | 0 | 371 | 29 | (89 | ) | 493 | |||||||||||||||||||||||
|
Total Tyson Shareholders' Equity |
5,781 | 3,258 | 4,918 | (1,779 | ) | 6,397 | 1,129 | (7,526 | ) | 5,781 | ||||||||||||||||||||||
|
Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | 28 | 0 | 28 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Total Shareholders' Equity |
5,781 | 3,258 | 4,918 | (1,779 | ) | 6,397 | 1,157 | (7,526 | ) | 5,809 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Total Liabilities and Shareholders' Equity |
$ | 13,472 | $ | 5,377 | $ | 7,160 | $ | (1,873 | ) | $ | 10,664 | $ | 2,049 | $ | (14,958 | ) | $ | 11,227 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Condensed Consolidating Balance Sheet as of October 1, 2011 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guarantors | Eliminations | Subtotal | Non-Guarantors | Eliminations | 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 | |||||||||||||||||||||||
|
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 | ||||||||||||||
|
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|
|
|
|||||||||||||||||
| Condensed Consolidating Statement of Cash Flows for the three months ended December 31, 2011 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guarantors | Eliminations | Subtotal | Non-Guarantors | Eliminations | Total | |||||||||||||||||||||||||
|
Cash Provided by (Used for) Operating Activities |
$ | 59 | $ | 332 | $ | 24 | $ | 0 | $ | 356 | $ | (77 | ) | $ | 0 | $ | 338 | |||||||||||||||
|
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|
|||||||||||||||||
|
Cash Flows from Investing Activities: |
||||||||||||||||||||||||||||||||
|
Additions to property, plant and equipment |
0 | (25 | ) | (117 | ) | 0 | (142 | ) | (40 | ) | 0 | (182 | ) | |||||||||||||||||||
|
(Purchases of)/Proceeds from marketable securities, net |
0 | 2 | 0 | 0 | 2 | 1 | 0 | 3 | ||||||||||||||||||||||||
|
Other, net |
2 | 2 | (1 | ) | 0 | 1 | 0 | 0 | 3 | |||||||||||||||||||||||
|
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|
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|
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|
|
|
|
|
|
|||||||||||||||||
|
Cash Provided by (Used for) Investing Activities |
2 | (21 | ) | (118 | ) | 0 | (139 | ) | (39 | ) | 0 | (176 | ) | |||||||||||||||||||
|
|
|
|
|
|
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|
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|
|
|
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|
|||||||||||||||||
|
Cash Flows from Financing Activities: |
||||||||||||||||||||||||||||||||
|
Net change in debt |
(1 | ) | 0 | 0 | 0 | 0 | 21 | 0 | 20 | |||||||||||||||||||||||
|
Purchases of Tyson Class A common stock |
(50 | ) | 0 | 0 | 0 | 0 | 0 | 0 | (50 | ) | ||||||||||||||||||||||
|
Dividends |
(15 | ) | 0 | 0 | 0 | 0 | 0 | 0 | (15 | ) | ||||||||||||||||||||||
|
Other, net |
22 | 0 | 0 | 0 | 0 | 0 | 0 | 22 | ||||||||||||||||||||||||
|
Net change in intercompany balances |
(18 | ) | (310 | ) | 286 | 0 | (24 | ) | 42 | 0 | 0 | |||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Cash Provided by (Used for) Financing Activities |
(62 | ) | (310 | ) | 286 | 0 | (24 | ) | 63 | 0 | (23 | ) | ||||||||||||||||||||
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Effect of Exchange Rate Change on Cash |
0 | 0 | 0 | 0 | 0 | 2 | 0 | 2 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Increase (Decrease) in Cash and Cash Equivalents |
(1 | ) | 1 | 192 | 0 | 193 | (51 | ) | 0 | 141 | ||||||||||||||||||||||
|
Cash and Cash Equivalents at Beginning of Year |
1 | 1 | 414 | 0 | 415 | 300 | 0 | 716 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Cash and Cash Equivalents at End of Period |
$ | 0 | $ | 2 | $ | 606 | $ | 0 | $ | 608 | $ | 249 | $ | 0 | $ | 857 | ||||||||||||||||
|
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|
|
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|
|
|
|
|
|
|
|||||||||||||||||
| Condensed Consolidating Statement of Cash Flows for the three months ended January 1, 2011 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guarantors | Eliminations | Subtotal | Non-Guarantors | Eliminations | Total | |||||||||||||||||||||||||
|
Cash Provided by (Used for) Operating Activities |
$ | 159 | $ | 275 | $ | (20 | ) | $ | 0 | $ | 255 | $ | (43 | ) | $ | 0 | $ | 371 | ||||||||||||||
|
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|
|||||||||||||||||
|
Cash Flows from Investing Activities: |
||||||||||||||||||||||||||||||||
|
Additions to property, plant and equipment |
0 | (35 | ) | (103 | ) | 0 | (138 | ) | (20 | ) | 0 | (158 | ) | |||||||||||||||||||
|
(Purchases of)/Proceeds from marketable securities, net |
0 | (58 | ) | (21 | ) | 0 | (79 | ) | 0 | 0 | (79 | ) | ||||||||||||||||||||
|
Other, net |
23 | 0 | 0 | 0 | 0 | 0 | 0 | 23 | ||||||||||||||||||||||||
|
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|
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|
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|
|||||||||||||||||
|
Cash Provided by (Used for) Investing Activities |
23 | (93 | ) | (124 | ) | 0 | (217 | ) | (20 | ) | 0 | (214 | ) | |||||||||||||||||||
|
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|
|||||||||||||||||
|
Cash Flows from Financing Activities: |
||||||||||||||||||||||||||||||||
|
Net change in debt |
(35 | ) | (6 | ) | 0 | 0 | (6 | ) | 40 | 0 | (1 | ) | ||||||||||||||||||||
|
Purchases of Tyson Class A common stock |
(7 | ) | 0 | 0 | 0 | 0 | 0 | 0 | (7 | ) | ||||||||||||||||||||||
|
Dividends |
(15 | ) | 0 | 0 | 0 | 0 | 0 | 0 | (15 | ) | ||||||||||||||||||||||
|
Other, net |
4 | 0 | 0 | 0 | 0 | 6 | 0 | 10 | ||||||||||||||||||||||||
|
Net change in intercompany balances |
(128 | ) | (178 | ) | 282 | 0 | 104 | 24 | 0 | 0 | ||||||||||||||||||||||
|
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|
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|
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|
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|
|
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|
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|
|||||||||||||||||
|
Cash Provided by (Used for) Financing Activities |
(181 | ) | (184 | ) | 282 | 0 | 98 | 70 | 0 | (13 | ) | |||||||||||||||||||||
|
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|
|
|
|
|
|
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|
|
|
|
|
|||||||||||||||||
|
Effect of Exchange Rate Change on Cash |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Increase (Decrease) in Cash and Cash Equivalents |
1 | (2 | ) | 138 | 0 | 136 | 7 | 0 | 144 | |||||||||||||||||||||||
|
Cash and Cash Equivalents at Beginning of Year |
2 | 2 | 731 | 0 | 733 | 243 | 0 | 978 | ||||||||||||||||||||||||
|
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|
|||||||||||||||||
|
Cash and Cash Equivalents at End of Period |
$ | 3 | $ | 0 | $ | 869 | $ | 0 | $ | 869 | $ | 250 | $ | 0 | $ | 1,122 | ||||||||||||||||
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|||||||||||||||||
|
|||
BASIS OF PRESENTATION
The consolidated condensed financial statements have been prepared by Tyson Foods, Inc. ("Tyson," "the Company," "we," "us" or "our"). Certain information and accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. Although we believe the disclosures contained herein are adequate to make the information presented not misleading, these consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our annual report on Form 10-K for the fiscal year ended October 1, 2011. Preparation of consolidated condensed financial statements requires us to make estimates and assumptions. These estimates and assumptions affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
We believe the accompanying consolidated condensed financial statements contain all adjustments, which are of a normal recurring nature, necessary to state fairly our financial position as of December 31, 2011, and the results of operations and cash flows for the three months ended December 31, 2011, and January 1, 2011. Results of operations and cash flows for the periods presented are not necessarily indicative of results to be expected for the full year.
CONSOLIDATION
The consolidated condensed financial statements include the accounts of all wholly-owned subsidiaries, as well as 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 for which we consolidate as we are the primary beneficiary. At December 31, 2011, Dynamic Fuels had $177 million of total assets, of which $142 million was property, plant and equipment, and $126 million of total liabilities, of which $100 million was long-term debt. 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.
SHARE REPURCHASES
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 the three months ended December 31, 2011, we repurchased 1.8 million shares for approximately $35 million under this plan. As of December 31, 2011, 11 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 $15 million and $7 million for the three months ended December 31, 2011, and January 1, 2011, respectively.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In May 2011, the 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 condensed 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 condensed statements of income, or in a separate financial statement. Currently, we present such information in our notes to the consolidated condensed financial statements. Other than changing the presentation of comprehensive income, we do not expect the adoption will have a significant impact on our consolidated condensed 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 condensed financial statements.
In December 2011, the FASB issued guidance enhancing disclosures related to offsetting of certain assets and liabilities. This guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. We do not expect the adoption will have a significant impact on our consolidated condensed financial statements.
|
|||
| December 31, 2011 | October 1, 2011 | |||||||
|
Processed products: |
||||||||
|
Weighted-average method – chicken and prepared foods |
$ | 714 | $ | 715 | ||||
|
First-in, first-out method – beef and pork |
611 | 581 | ||||||
|
Livestock – first-in, first-out method |
859 | 928 | ||||||
|
Supplies and other – weighted-average method |
414 | 363 | ||||||
|
|
|
|
|
|||||
|
Total inventories |
$ | 2,598 | $ | 2,587 | ||||
|
|
|
|
|
|||||
|
|||
| December 31, 2011 | October 1, 2011 | |||||||
|
Land |
$ | 95 | $ | 95 | ||||
|
Buildings and leasehold improvements |
2,732 | 2,698 | ||||||
|
Machinery and equipment |
4,863 | 4,897 | ||||||
|
Land improvements and other |
389 | 386 | ||||||
|
Buildings and equipment under construction |
474 | 446 | ||||||
|
|
|
|
|
|||||
| 8,553 | 8,522 | |||||||
|
Less accumulated depreciation |
4,665 | 4,699 | ||||||
|
|
|
|
|
|||||
|
Net property, plant and equipment |
$ | 3,888 | $ | 3,823 | ||||
|
|
|
|
|
|||||
|
|||
| December 31, 2011 | October 1, 2011 | |||||||
|
Accrued salaries, wages and benefits |
$ | 275 | $ | 407 | ||||
|
Self-insurance reserves |
287 | 298 | ||||||
|
Other |
370 | 335 | ||||||
|
|
|
|
|
|||||
|
Total other current liabilities |
$ | 932 | $ | 1,040 | ||||
|
|
|
|
|
|||||
|
|||
| December 31, 2011 | October 1, 2011 | |||||||
|
Revolving credit facility |
$ | 0 | $ | 0 | ||||
|
Senior notes: |
||||||||
|
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 | 638 | ||||||
|
7.00% Notes due May 2018 |
120 | 120 | ||||||
|
7.00% Notes due January 2028 |
18 | 18 | ||||||
|
Discount on senior notes |
(68 | ) | (76 | ) | ||||
|
GO Zone tax-exempt bonds due October 2033 (0.07% at 12/31/2011) |
100 | 100 | ||||||
|
Other |
139 | 114 | ||||||
|
|
|
|
|
|||||
|
Total debt |
2,215 | 2,182 | ||||||
|
Less current debt |
84 | 70 | ||||||
|
|
|
|
|
|||||
|
Total long-term debt |
$ | 2,131 | $ | 2,112 | ||||
|
|
|
|
|
|||||
|
| Fair Value | ||||||||
| December 31, 2011 |
October 1, 2011 |
|||||||
|
Derivative Assets: |
||||||||
|
Derivatives designated as hedging instruments: |
||||||||
|
Commodity contracts |
$ | 26 | $ | 3 | ||||
|
Foreign exchange contracts |
1 | 12 | ||||||
|
|
|
|
|
|||||
|
Total derivative assets – designated |
27 | 15 | ||||||
|
Derivatives not designated as hedging instruments: |
||||||||
|
Commodity contracts |
14 | 21 | ||||||
|
Foreign exchange contracts |
1 | 5 | ||||||
|
|
|
|
|
|||||
|
Total derivative assets – not designated |
15 | 26 | ||||||
|
|
|
|
|
|||||
|
Total derivative assets |
$ | 42 | $ | 41 | ||||
|
|
|
|
|
|||||
|
Derivative Liabilities: |
||||||||
|
Derivatives designated as hedging instruments: |
||||||||
|
Commodity contracts |
$ | 8 | $ | 41 | ||||
|
Derivatives not designated as hedging instruments: |
||||||||
|
Commodity contracts |
54 | 121 | ||||||
|
Foreign exchange contracts |
1 | 1 | ||||||
|
Interest rate contracts |
1 | 2 | ||||||
|
|
|
|
|
|||||
|
Total derivative liabilities – not designated |
56 | 124 | ||||||
|
|
|
|
|
|||||
|
Total derivative liabilities |
$ | 64 | $ | 165 | ||||
|
|
|
|
|
|||||
| Metric | December 31, 2011 | October 1, 2011 | ||||||||||
|
Commodity: |
||||||||||||
|
Corn |
Bushels | 7 million | 6 million | |||||||||
|
Soy meal |
Tons | 22,200 | 82,300 | |||||||||
|
Foreign Currency |
United States dollar | $ | 22 million | $ | 75 million | |||||||
|
Gain/(Loss) Recognized in OCI On |
Consolidated Condensed Statements of Income Classification |
Gain/(Loss) Reclassified from OCI to |
||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||||
| December 31, 2011 |
January 1, 2011 |
December 31, 2011 |
January 1, 2011 |
|||||||||||||||||
|
Cash Flow Hedge – Derivatives designated as hedging instruments: |
||||||||||||||||||||
|
Commodity contracts |
$ | 2 | $ | 25 | Cost of Sales | $ | (6 | ) | $ | 20 | ||||||||||
|
Foreign exchange contracts |
(5 | ) | 0 | Other Income/Expense | 5 | 0 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Total |
$ | (3 | ) | $ | 25 | $ | (1 | ) | $ | 20 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| Metric | December 31, 2011 |
October 1, 2011 |
||||||||||
|
Commodity: |
||||||||||||
|
Live Cattle |
Pounds | 281 million | 318 million | |||||||||
|
Lean Hogs |
Pounds | 566 million | 601 million | |||||||||
| in millions | ||||||||||||
| Consolidated Condensed Statements of Income Classification |
December 31, 2011 | January 1, 2011 | ||||||||||
|
Gain/(Loss) on forwards |
Cost of Sales | $ | (8 | ) | $ | (1 | ) | |||||
|
Gain/(Loss) on purchase contract |
Cost of Sales | 8 | 1 | |||||||||
| Gain/(Loss) Recognized in OCI On Derivatives |
Consolidated Condensed Statements of Income Classification |
Gain/(Loss) Reclassified from OCI to Earnings |
||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||||
| December 31, 2011 |
January 1, 2011 |
December 31, 2011 |
January 1, 2011 |
|||||||||||||||||
|
Net Investment Hedge – Derivatives designated as hedging instruments: |
||||||||||||||||||||
|
Foreign exchange contracts |
$ | (1 | ) | $ | (1 | ) | Other Income/Expense | $ | 0 | $ | 0 | |||||||||
| Metric | December 31, 2011 |
October 1, 2011 |
||||||||||
|
Commodity: |
||||||||||||
|
Corn |
Bushels | 13 million | 17 million | |||||||||
|
Soy Meal |
Tons | 85,800 | 174,600 | |||||||||
|
Soy Oil |
Pounds | 0 | 13 million | |||||||||
|
Live Cattle |
Pounds | 46 million | 72 million | |||||||||
|
Lean Hogs |
Pounds | 138 million | 19 million | |||||||||
|
Foreign Currency |
United States dollars | $ | 132 million | $ | 110 million | |||||||
|
Interest Rate |
Average monthly notional debt | $ | 36 million | $ | 39 million | |||||||
| Consolidated Condensed Statements of Income Classification |
Gain/(Loss) Recognized in Earnings |
|||||||||||
| Three Months Ended | ||||||||||||
| December 31, 2011 |
January 1, 2011 |
|||||||||||
|
Derivatives not designated as hedging instruments: |
||||||||||||
|
Commodity contracts |
Sales | $ | (3 | ) | $ | 14 | ||||||
|
Commodity contracts |
Cost of Sales | 29 | 21 | |||||||||
|
Foreign exchange contracts |
Other Income/Expense | 3 | (1 | ) | ||||||||
|
|
|
|
|
|||||||||
|
Total |
$ | 29 | $ | 34 | ||||||||
|
|
|
|
|
|||||||||
|
|||
|
December 31, 2011 |
Level 1 | Level 2 | Level 3 | Netting (a) | Total | |||||||||||||||
|
Assets: |
||||||||||||||||||||
|
Commodity Derivatives |
$ | 0 | $ | 40 | $ | 0 | $ | (30 | ) | $ | 10 | |||||||||
|
Foreign Exchange Forward Contracts |
0 | 2 | 0 | 0 | 2 | |||||||||||||||
|
Available for Sale Securities: |
||||||||||||||||||||
|
Debt securities |
0 | 33 | 84 | 0 | 117 | |||||||||||||||
|
Equity securities |
8 | 0 | 0 | 0 | 8 | |||||||||||||||
|
Deferred Compensation Assets |
28 | 130 | 0 | 0 | 158 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Total Assets |
$ | 36 | $ | 205 | $ | 84 | $ | (30 | ) | $ | 295 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Liabilities: |
||||||||||||||||||||
|
Commodity Derivatives |
$ | 0 | $ | 62 | $ | 0 | $ | (61 | ) | $ | 1 | |||||||||
|
Foreign Exchange Forward Contracts |
0 | 1 | 0 | (1 | ) | 0 | ||||||||||||||
|
Interest Rate Swap |
0 | 1 | 0 | 0 | 1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Total Liabilities |
$ | 0 | $ | 64 | $ | 0 | $ | (62 | ) | $ | 2 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
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 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (a) | Our derivative assets and liabilities are presented in our Consolidated Condensed 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 December 31, 2011, and October 1, 2011, we had posted with various counterparties $32 million and $113 million, respectively, of cash collateral and held no cash collateral. |
| Three months ended | ||||||||
| December 31, 2011 | January 1, 2011 | |||||||
|
Balance at beginning of year |
$ | 83 | $ | 73 | ||||
|
Total realized and unrealized gains (losses): |
||||||||
|
Included in earnings |
1 | 0 | ||||||
|
Included in other comprehensive income (loss) |
(2 | ) | 0 | |||||
|
Purchases |
6 | 2 | ||||||
|
Issuances |
0 | 0 | ||||||
|
Settlements |
(4 | ) | (4 | ) | ||||
|
|
|
|
|
|||||
|
Balance at end of period |
$ | 84 | $ | 71 | ||||
|
|
|
|
|
|||||
|
Total gains (losses) for the three-month period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of period |
$ | 0 | $ | 0 | ||||
|
|
|
|
|
|||||
|
(in millions) |
December 31, 2011 | October 1, 2011 | ||||||||||||||||||||||
| Amortized Cost Basis |
Fair Value |
Unrealized Gain/(Loss) |
Amortized Cost Basis |
Fair Value |
Unrealized Gain/(Loss) |
|||||||||||||||||||
|
Available for Sale Securities: |
||||||||||||||||||||||||
|
Debt Securities: |
||||||||||||||||||||||||
|
U.S. Treasury and Agency |
$ | 32 | $ | 33 | $ | 1 | $ | 33 | $ | 34 | $ | 1 | ||||||||||||
|
Corporate and Asset-Backed (a) |
56 | 56 | 0 | 54 | 56 | 2 | ||||||||||||||||||
|
Redeemable Preferred Stock |
28 | 28 | 0 | 27 | 27 | 0 | ||||||||||||||||||
|
Equity Securities: |
||||||||||||||||||||||||
|
Common Stock |
9 | 8 | (1 | ) | 9 | 7 | (2 | ) | ||||||||||||||||
| (a) | At December 31, 2011, and October 1, 2011, the amortized cost basis for Corporate and Asset-Backed debt securities had been reduced by accumulated other than temporary impairments of $2 million and $3 million, respectively. |
| December 31, 2011 | October 1, 2011 | |||||||||||||||
| Fair Value |
Carrying Value |
Fair Value |
Carrying Value |
|||||||||||||
|
Total Debt |
$ | 2,371 | $ | 2,215 | $ | 2,334 | $ | 2,182 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
|||
| Three Months Ended | ||||||||
| December 31, 2011 | January 1, 2011 | |||||||
|
Net income |
$ | 156 | $ | 294 | ||||
|
Other comprehensive income (loss), net of tax: |
||||||||
|
Net hedging unrealized (gain) loss reclassified to earnings |
1 | (13 | ) | |||||
|
Net hedging unrealized gain (loss) |
(2 | ) | 12 | |||||
|
Unrealized gain (loss) on investments |
1 | (2 | ) | |||||
|
Currency translation adjustment |
3 | (5 | ) | |||||
|
Postretirement benefits reserve adjustments |
1 | 0 | ||||||
|
|
|
|
|
|||||
|
Total comprehensive income |
160 | 286 | ||||||
|
Comprehensive loss attributable to noncontrolling interest |
0 | (4 | ) | |||||
|
|
|
|
|
|||||
|
Total comprehensive income attributable to Tyson |
$ | 160 | $ | 290 | ||||
|
|
|
|
|
|||||
| Three Months Ended | ||||||||
| December 31, 2011 | January 1, 2011 | |||||||
|
Income tax expense (benefit): |
||||||||
|
Net hedging unrealized loss reclassified to earnings |
$ | 0 | $ | (7 | ) | |||
|
Net hedging unrealized gain (loss) |
(1 | ) | 13 | |||||
|
Unrealized gain on investments |
1 | 0 | ||||||
|
|
|
|
|
|||||
|
Total income tax expense |
$ | 0 | $ | 6 | ||||
|
|
|
|
|
|||||
|
|||
|
|
||||||||
|
|
|
Three Months Ended |
| |||||
|
|
|
December 31, 2011 |
|
|
January 1, 2011 |
| ||
|
Sales: |
|
|
||||||
|
Chicken |
|
$ |
2,762 |
|
|
$ |
2,619 |
|
|
Beef |
|
|
3,467 |
|
|
|
3,185 |
|
|
Pork |
|
|
1,475 |
|
|
|
1,238 |
|
|
Prepared Foods |
|
|
861 |
|
|
|
806 |
|
|
Other |
|
|
54 |
|
|
|
8 |
|
|
Intersegment Sales |
|
|
(290 |
) |
|
|
(241 |
) |
|
|
|
|
|
|
|
|
| |
|
Total Sales |
|
$ |
8,329 |
|
|
$ |
7,615 |
|
|
|
|
|
|
|
|
|
| |
|
Operating Income (Loss): |
|
|
||||||
|
Chicken |
|
$ |
32 |
|
|
$ |
181 |
|
|
Beef |
|
|
31 |
|
|
|
116 |
|
|
Pork |
|
|
165 |
|
|
|
177 |
|
|
Prepared Foods |
|
|
51 |
|
|
|
28 |
|
|
Other |
|
|
(1 |
) |
|
|
(4 |
) |
|
|
|
|
|
|
|
|
| |
|
Total Operating Income |
|
|
278 |
|
|
|
498 |
|
|
Total Other (Income) Expense |
|
|
35 |
|
|
|
53 |
(a) |
|
|
|
|
|
|
|
|
| |
|
Income before Income Taxes |
|
$ |
243 |
|
|
$ |
445 |
|
|
|
|
|
|
|
|
|
| |
|
(a) |
Includes $11 million gain related to a sale of interests in an equity method investment. |
|
| Condensed Consolidating Statement of Income for the three months ended December 31, 2011 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guarantors | Eliminations | Subtotal | Non-Guarantors | Eliminations | Total | |||||||||||||||||||||||||
|
Sales |
$ | 52 | $ | 4,841 | $ | 3,307 | $ | (283 | ) | $ | 7,865 | $ | 454 | $ | (42 | ) | $ | 8,329 | ||||||||||||||
|
Cost of Sales |
8 | 4,642 | 3,102 | (283 | ) | 7,461 | 409 | (42 | ) | 7,836 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Gross Profit |
44 | 199 | 205 | 0 | 404 | 45 | 0 | 493 | ||||||||||||||||||||||||
|
Selling, General and Administrative |
12 | 50 | 131 | 0 | 181 | 22 | 0 | 215 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Operating Income |
32 | 149 | 74 | 0 | 223 | 23 | 0 | 278 | ||||||||||||||||||||||||
|
Other (Income) Expense: |
||||||||||||||||||||||||||||||||
|
Interest expense, net |
(13 | ) | 32 | 31 | 0 | 63 | (3 | ) | 0 | 47 | ||||||||||||||||||||||
|
Other, net |
1 | 0 | (6 | ) | 0 | (6 | ) | (7 | ) | 0 | (12 | ) | ||||||||||||||||||||
|
Equity in net earnings of subsidiaries |
(127 | ) | (26 | ) | (5 | ) | 20 | (11 | ) | (6 | ) | 144 | 0 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Total Other (Income) Expense |
(139 | ) | 6 | 20 | 20 | 46 | (16 | ) | 144 | 35 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Income (Loss) before Income Taxes |
171 | 143 | 54 | (20 | ) | 177 | 39 | (144 | ) | 243 | ||||||||||||||||||||||
|
Income Tax Expense |
15 | 40 | 16 | 0 | 56 | 16 | 0 | 87 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Net Income (Loss) |
156 | 103 | 38 | (20 | ) | 121 | 23 | (144 | ) | 156 | ||||||||||||||||||||||
|
Less: Net Loss Attributable to Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Net Income (Loss) Attributable to Tyson |
$ | 156 | $ | 103 | $ | 38 | $ | (20 | ) | $ | 121 | $ | 23 | $ | (144 | ) | $ | 156 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Condensed Consolidating Statement of Income for the three months ended January 1, 2011 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guarantors | Eliminations | Subtotal | Non-Guarantors | Eliminations | Total | |||||||||||||||||||||||||
|
Sales |
$ | 105 | $ | 4,333 | $ | 3,155 | $ | (241 | ) | $ | 7,247 | $ | 358 | $ | (95 | ) | $ | 7,615 | ||||||||||||||
|
Cost of Sales |
(43 | ) | 4,000 | 2,926 | (241 | ) | 6,685 | 324 | (95 | ) | 6,871 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Gross Profit |
148 | 333 | 229 | 0 | 562 | 34 | 0 | 744 | ||||||||||||||||||||||||
|
Selling, General and Administrative |
17 | 56 | 148 | 0 | 204 | 25 | 0 | 246 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Operating Income |
131 | 277 | 81 | 0 | 358 | 9 | 0 | 498 | ||||||||||||||||||||||||
|
Other (Income) Expense: |
||||||||||||||||||||||||||||||||
|
Interest expense, net |
(54 | ) | 60 | 58 | 0 | 118 | (1 | ) | 0 | 63 | ||||||||||||||||||||||
|
Other, net |
(12 | ) | 0 | (1 | ) | 0 | (1 | ) | 3 | 0 | (10 | ) | ||||||||||||||||||||
|
Equity in net earnings of subsidiaries |
(165 | ) | (22 | ) | (13 | ) | 20 | (15 | ) | (2 | ) | 182 | 0 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Total Other (Income) Expense |
(231 | ) | 38 | 44 | 20 | 102 | 0 | 182 | 53 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Income (Loss) before Income Taxes |
362 | 239 | 37 | (20 | ) | 256 | 9 | (182 | ) | 445 | ||||||||||||||||||||||
|
Income Tax Expense |
64 | 74 | 10 | 0 | 84 | 3 | 0 | 151 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Net Income (Loss) |
298 | 165 | 27 | (20 | ) | 172 | 6 | (182 | ) | 294 | ||||||||||||||||||||||
|
Less: Net Loss Attributable to Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | (4 | ) | 0 | (4 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Net Income (Loss) Attributable to Tyson |
$ | 298 | $ | 165 | $ | 27 | $ | (20 | ) | $ | 172 | $ | 10 | $ | (182 | ) | $ | 298 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Condensed Consolidating Balance Sheet as of December 31, 2011 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guarantors | Eliminations | Subtotal | Non-Guarantors | Eliminations | Total | |||||||||||||||||||||||||
|
Assets |
||||||||||||||||||||||||||||||||
|
Current Assets: |
||||||||||||||||||||||||||||||||
|
Cash and cash equivalents |
$ | 0 | $ | 2 | $ | 606 | $ | 0 | $ | 608 | $ | 249 | $ | 0 | $ | 857 | ||||||||||||||||
|
Accounts receivable, net |
1 | 473 | 620 | 0 | 1,093 | 199 | (12 | ) | 1,281 | |||||||||||||||||||||||
|
Inventories |
3 | 909 | 1,437 | 0 | 2,346 | 249 | 0 | 2,598 | ||||||||||||||||||||||||
|
Other current assets |
43 | 65 | 81 | (80 | ) | 66 | 54 | (41 | ) | 122 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Total Current Assets |
47 | 1,449 | 2,744 | (80 | ) | 4,113 | 751 | (53 | ) | 4,858 | ||||||||||||||||||||||
|
Net Property, Plant and Equipment |
35 | 872 | 2,415 | 0 | 3,287 | 566 | 0 | 3,888 | ||||||||||||||||||||||||
|
Goodwill |
0 | 881 | 967 | 0 | 1,848 | 43 | 0 | 1,891 | ||||||||||||||||||||||||
|
Intangible Assets |
0 | 30 | 48 | 0 | 78 | 67 | 0 | 145 | ||||||||||||||||||||||||
|
Other Assets |
1,886 | 174 | 144 | (14 | ) | 304 | 296 | (2,041 | ) | 445 | ||||||||||||||||||||||
|
Investment in Subsidiaries |
11,504 | 1,971 | 842 | (1,779 | ) | 1,034 | 326 | (12,864 | ) | 0 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Total Assets |
$ | 13,472 | $ | 5,377 | $ | 7,160 | $ | (1,873 | ) | $ | 10,664 | $ | 2,049 | $ | (14,958 | ) | $ | 11,227 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Liabilities and Shareholders' Equity |
||||||||||||||||||||||||||||||||
|
Current Liabilities: |
||||||||||||||||||||||||||||||||
|
Current debt |
$ | 2 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 82 | $ | 0 | $ | 84 | ||||||||||||||||
|
Accounts payable |
6 | 689 | 594 | 0 | 1,283 | 69 | 0 | 1,358 | ||||||||||||||||||||||||
|
Other current liabilities |
5,517 | 130 | 325 | (80 | ) | 375 | 430 | (5,390 | ) | 932 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Total Current Liabilities |
5,525 | 819 | 919 | (80 | ) | 1,658 | 581 | (5,390 | ) | 2,374 | ||||||||||||||||||||||
|
Long-Term Debt |
1,984 | 1,044 | 780 | 0 | 1,824 | 276 | (1,953 | ) | 2,131 | |||||||||||||||||||||||
|
Deferred Income Taxes |
0 | 113 | 315 | (14 | ) | 414 | 6 | 0 | 420 | |||||||||||||||||||||||
|
Other Liabilities |
182 | 143 | 228 | 0 | 371 | 29 | (89 | ) | 493 | |||||||||||||||||||||||
|
Total Tyson Shareholders' Equity |
5,781 | 3,258 | 4,918 | (1,779 | ) | 6,397 | 1,129 | (7,526 | ) | 5,781 | ||||||||||||||||||||||
|
Noncontrolling Interest |
0 | 0 | 0 | 0 | 0 | 28 | 0 | 28 | ||||||||||||||||||||||||
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|
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Total Shareholders' Equity |
5,781 | 3,258 | 4,918 | (1,779 | ) | 6,397 | 1,157 | (7,526 | ) | 5,809 | ||||||||||||||||||||||
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Total Liabilities and Shareholders' Equity |
$ | 13,472 | $ | 5,377 | $ | 7,160 | $ | (1,873 | ) | $ | 10,664 | $ | 2,049 | $ | (14,958 | ) | $ | 11,227 | ||||||||||||||
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| Condensed Consolidating Balance Sheet as of October 1, 2011 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guarantors | Eliminations | Subtotal | Non-Guarantors | Eliminations | 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 | ||||||||||||||||||||||||
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Other current assets |
62 | 95 | 102 | (133 | ) | 64 | 54 | (24 | ) | 156 | ||||||||||||||||||||||
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|
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 | ||||||||||||||||||||||
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|
Total Assets |
$ | 13,678 | $ | 5,418 | $ | 6,912 | $ | (1,908 | ) | $ | 10,422 | $ | 2,001 | $ | (15,030 | ) | $ | 11,071 | ||||||||||||||
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|||||||||||||||||
|
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 | ||||||||||||||||||||||
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|
|||||||||||||||||
|
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 | |||||||||||||||||||||||
|
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 | ||||||||||||||||||||||||
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|
|||||||||||||||||
|
Total Shareholders' Equity |
5,657 | 3,289 | 4,405 | (1,760 | ) | 5,934 | 1,069 | (6,975 | ) | 5,685 | ||||||||||||||||||||||
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|
|||||||||||||||||
|
Total Liabilities and Shareholders' Equity |
$ | 13,678 | $ | 5,418 | $ | 6,912 | $ | (1,908 | ) | $ | 10,422 | $ | 2,001 | $ | (15,030 | ) | $ | 11,071 | ||||||||||||||
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|||||||||||||||||
| Condensed Consolidating Statement of Cash Flows for the three months ended December 31, 2011 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guarantors | Eliminations | Subtotal | Non-Guarantors | Eliminations | Total | |||||||||||||||||||||||||
|
Cash Provided by (Used for) Operating Activities |
$ | 59 | $ | 332 | $ | 24 | $ | 0 | $ | 356 | $ | (77 | ) | $ | 0 | $ | 338 | |||||||||||||||
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Cash Flows from Investing Activities: |
||||||||||||||||||||||||||||||||
|
Additions to property, plant and equipment |
0 | (25 | ) | (117 | ) | 0 | (142 | ) | (40 | ) | 0 | (182 | ) | |||||||||||||||||||
|
(Purchases of)/Proceeds from marketable securities, net |
0 | 2 | 0 | 0 | 2 | 1 | 0 | 3 | ||||||||||||||||||||||||
|
Other, net |
2 | 2 | (1 | ) | 0 | 1 | 0 | 0 | 3 | |||||||||||||||||||||||
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|
Cash Provided by (Used for) Investing Activities |
2 | (21 | ) | (118 | ) | 0 | (139 | ) | (39 | ) | 0 | (176 | ) | |||||||||||||||||||
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Cash Flows from Financing Activities: |
||||||||||||||||||||||||||||||||
|
Net change in debt |
(1 | ) | 0 | 0 | 0 | 0 | 21 | 0 | 20 | |||||||||||||||||||||||
|
Purchases of Tyson Class A common stock |
(50 | ) | 0 | 0 | 0 | 0 | 0 | 0 | (50 | ) | ||||||||||||||||||||||
|
Dividends |
(15 | ) | 0 | 0 | 0 | 0 | 0 | 0 | (15 | ) | ||||||||||||||||||||||
|
Other, net |
22 | 0 | 0 | 0 | 0 | 0 | 0 | 22 | ||||||||||||||||||||||||
|
Net change in intercompany balances |
(18 | ) | (310 | ) | 286 | 0 | (24 | ) | 42 | 0 | 0 | |||||||||||||||||||||
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|
Cash Provided by (Used for) Financing Activities |
(62 | ) | (310 | ) | 286 | 0 | (24 | ) | 63 | 0 | (23 | ) | ||||||||||||||||||||
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|
Effect of Exchange Rate Change on Cash |
0 | 0 | 0 | 0 | 0 | 2 | 0 | 2 | ||||||||||||||||||||||||
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|
Increase (Decrease) in Cash and Cash Equivalents |
(1 | ) | 1 | 192 | 0 | 193 | (51 | ) | 0 | 141 | ||||||||||||||||||||||
|
Cash and Cash Equivalents at Beginning of Year |
1 | 1 | 414 | 0 | 415 | 300 | 0 | 716 | ||||||||||||||||||||||||
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|
Cash and Cash Equivalents at End of Period |
$ | 0 | $ | 2 | $ | 606 | $ | 0 | $ | 608 | $ | 249 | $ | 0 | $ | 857 | ||||||||||||||||
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|||||||||||||||||
| Condensed Consolidating Statement of Cash Flows for the three months ended January 1, 2011 | in millions | |||||||||||||||||||||||||||||||
| 2014 Guarantors | ||||||||||||||||||||||||||||||||
| TFI Parent |
TFM Parent |
Guarantors | Eliminations | Subtotal | Non-Guarantors | Eliminations | Total | |||||||||||||||||||||||||
|
Cash Provided by (Used for) Operating Activities |
$ | 159 | $ | 275 | $ | (20 | ) | $ | 0 | $ | 255 | $ | (43 | ) | $ | 0 | $ | 371 | ||||||||||||||
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|
Cash Flows from Investing Activities: |
||||||||||||||||||||||||||||||||
|
Additions to property, plant and equipment |
0 | (35 | ) | (103 | ) | 0 | (138 | ) | (20 | ) | 0 | (158 | ) | |||||||||||||||||||
|
(Purchases of)/Proceeds from marketable securities, net |
0 | (58 | ) | (21 | ) | 0 | (79 | ) | 0 | 0 | (79 | ) | ||||||||||||||||||||
|
Other, net |
23 | 0 | 0 | 0 | 0 | 0 | 0 | 23 | ||||||||||||||||||||||||
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|||||||||||||||||
|
Cash Provided by (Used for) Investing Activities |
23 | (93 | ) | (124 | ) | 0 | (217 | ) | (20 | ) | 0 | (214 | ) | |||||||||||||||||||
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|||||||||||||||||
|
Cash Flows from Financing Activities: |
||||||||||||||||||||||||||||||||
|
Net change in debt |
(35 | ) | (6 | ) | 0 | 0 | (6 | ) | 40 | 0 | (1 | ) | ||||||||||||||||||||
|
Purchases of Tyson Class A common stock |
(7 | ) | 0 | 0 | 0 | 0 | 0 | 0 | (7 | ) | ||||||||||||||||||||||
|
Dividends |
(15 | ) | 0 | 0 | 0 | 0 | 0 | 0 | (15 | ) | ||||||||||||||||||||||
|
Other, net |
4 | 0 | 0 | 0 | 0 | 6 | 0 | 10 | ||||||||||||||||||||||||
|
Net change in intercompany balances |
(128 | ) | (178 | ) | 282 | 0 | 104 | 24 | 0 | 0 | ||||||||||||||||||||||
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|||||||||||||||||
|
Cash Provided by (Used for) Financing Activities |
(181 | ) | (184 | ) | 282 | 0 | 98 | 70 | 0 | (13 | ) | |||||||||||||||||||||
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|||||||||||||||||
|
Effect of Exchange Rate Change on Cash |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
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|
Increase (Decrease) in Cash and Cash Equivalents |
1 | (2 | ) | 138 | 0 | 136 | 7 | 0 | 144 | |||||||||||||||||||||||
|
Cash and Cash Equivalents at Beginning of Year |
2 | 2 | 731 | 0 | 733 | 243 | 0 | 978 | ||||||||||||||||||||||||
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|||||||||||||||||
|
Cash and Cash Equivalents at End of Period |
$ | 3 | $ | 0 | $ | 869 | $ | 0 | $ | 869 | $ | 250 | $ | 0 | $ | 1,122 | ||||||||||||||||
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