<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from___________________to_________________
Commission File Number 0-3400
TYSON FOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware 71-0225165
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2210 West Oaklawn Drive, Springdale, Arkansas 72762-6999
(Address of principal executive offices and zip code)
(501) 290-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding March 29, 1997
- ------------------------------------ --------------------------
Class A Common Stock, $.10 Par Value 113,585,666 Shares
Class B Common Stock, $.10 Par Value 102,670,113 Shares
Page 1
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TYSON FOODS, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
March 29, 1997 and September 28, 1996 3-4
Consolidated Condensed Statements of Income
for the Three Months and Six Months Ended
March 29, 1997 and March 30, 1996 5
Consolidated Condensed Statements of Cash Flows
for the Six Months Ended March 29, 1997
and March 30, 1996 6
Notes to Consolidated Condensed Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13-14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14-15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15-16
SIGNATURES 17
2
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TYSON FOODS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
TYSON FOODS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
(Unaudited)
March 29, September 28,
ASSETS 1997 1996
_______________________________________ ___________ _____________
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 100.4 $ 36.6
Accounts receivable 507.5 547.1
Inventories:
Finished and work-in-process 505.6 481.1
Live poultry and hogs 349.4 362.2
Seafood related products 48.2 51.4
Hatchery eggs and feed 62.2 63.8
Supplies 69.9 68.9
_______ _______
Total inventories 1,035.3 1,027.4
Assets held for sale 17.4 155.5
Other current assets 34.7 43.7
_______ _______
Total Current Assets 1,695.3 1,810.3
Net Property, Plant, and Equipment 1,878.1 1,869.2
Excess of Investments over
Net Assets Acquired 720.0 731.5
Investments and Other Assets 167.9 133.1
________ ________
Total Assets $4,461.3 $4,544.1
======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
TYSON FOODS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions except per share data)
(Unaudited)
March 29, September 28,
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996
_________________________________________ __________ ____________
<S> <C> <C>
Current Liabilities:
Notes payable $ 1.0 $ 39.5
Current portion of long-term debt 37.5 129.2
Trade accounts payable 277.9 269.7
Other accrued liabilities 287.3 247.4
_______ _______
Total Current Liabilities 603.7 685.8
Long-Term Debt 1,751.1 1,806.4
Deferred Income Taxes 491.9 495.6
Other Liabilities 14.4 14.6
Shareholders' Equity:
Common stock ($.10 par value):
Class A-Authorized 900 million shares;
issued 119.5 million shares at
3-29-97 and 9-28-96 12.0 8.0
Class B-Authorized 900 million shares;
issued 102.7 million shares at
3-29-97 and 9-28-96 10.3 6.8
Capital in excess of par value 375.3 375.4
Retained earnings 1,308.2 1,232.4
Currency translation adjustment (2.7) (2.8)
_______ _______
1,703.1 1,619.8
Less treasury stock, at cost-
6.0 million shares at 3-29-97 and
4.8 million shares at 9-28-96 100.3 75.4
Less unamortized deferred compensation 2.6 2.7
________ ________
Total Shareholders' Equity 1,600.2 1,541.7
________ ________
Total Liabilities and Shareholders' Equity $4,461.3 $4,544.1
======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
TYSON FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In millions except per share data)
(Unaudited)
Three Months Ended Six Months Ended
___________________ __________________
March 29, March 30, March 29, March 30,
1997 1996 1997 1996
________ ________ ________ ________
<S> <C> <C> <C> <C>
Sales $1,574.3 $1,587.7 $3,102.2 $3,134.5
Cost of Sales 1,312.1 1,358.4 2,591.6 2,638.1
________ ________ ________ ________
Gross Profit 262.2 229.3 510.6 496.4
Expenses:
Selling 125.2 140.1 250.3 269.3
General and administrative 25.3 27.1 48.8 52.7
Amortization 6.9 6.9 13.7 13.8
________ ________ ________ ________
Operating Income 104.8 55.2 197.8 160.6
Other Expense (Income):
Interest 26.2 33.1 55.1 68.1
Foreign currency exchange (1.7) 9.0
Other 2.1 0.3 (39.4) (2.8)
________ ________ ________ ________
Income Before Taxes on Income
and Minority Interest 76.5 23.5 182.1 86.3
Provision for Income Taxes 28.3 8.7 89.3 31.9
Minority Interest in Net Loss
of Consolidated Subsidiary (0.4) 3.3
________ ________ ________ ________
Net Income $ 48.2 $ 14.4 $ 92.8 $ 57.7
======== ======== ======== ========
Average Shares Outstanding 219.0 218.0 219.2 218.0
===== ===== ===== =====
Earnings Per Share $0.22 $0.07 $0.42 $0.26
===== ===== ===== =====
Cash Dividends Per Share:
Class A $0.0250 $0.0200 $0.0450 $0.0400
======= ======= ======= =======
Class B $0.0225 $0.0180 $0.0405 $0.0360
======= ======= ======= =======
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
TYSON FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six Months Ended
March 29, March 30,
1997 1996
_________ _________
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 92.8 $ 57.7
Adjustments to reconcile net income to cash
provided by (used for) operating activities:
Depreciation 101.5 106.0
Amortization 13.7 13.8
Deferred income taxes (3.7) (6.2)
Foreign currency exchange loss 9.0
Minority interest (3.3)
(Gain)Loss on dispositions of assets (39.0) 1.4
(Increase)decrease in accounts receivable 39.6 (62.6)
Increase in inventories (7.9) (142.4)
Increase(decrease)in trade accounts payable 8.2 (1.8)
Net change in other current assets
and liabilities 47.9 6.2
_____ ______
Cash Provided by (Used for) Operating Activities 253.1 (22.2)
Cash Flows from Investing Activities:
Additions to property, plant and equipment (121.9) (119.1)
Proceeds from sale of property, plant and equipment 189.1 5.5
Net change in other assets and liabilities (36.9) 3.5
_____ ______
Cash Provided by (Used for) Investing Activities 30.3 (110.1)
Cash Flows from Financing Activities:
Net change in notes payable (38.5) (44.0)
Proceeds from long-term debt 79.4 489.3
Repayments of long-term debt (226.4) (305.7)
Purchase of treasury shares (25.8) (1.3)
Other (8.5) (6.4)
_____ ______
Cash Provided by (Used for) Financing Activities (219.8) 131.9
Effect of Exchange Rate Change on Cash 0.2 0.5
_____ ______
Increase in Cash and Cash Equivalents 63.8 0.1
Cash and Cash Equivalents at Beginning of Period 36.6 33.1
______ ______
Cash and Cash Equivalents at End of Period $100.4 $33.2
====== ======
Supplemental Cash Flow Information
Cash paid during the period for:
Interest $64.4 $64.2
Income taxes $72.4 $39.4
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
6
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TYSON FOODS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Accounting Policies
The consolidated condensed financial statements have been prepared by Tyson
Foods, Inc. (the "Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and accounting policies and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations. Although the management of the Company believes that the
disclosures 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 the Company's latest annual report for the fiscal year ended
September 28, 1996. The preparation of consolidated condensed financial
statements requires management to make estimates and assumptions. These
estimates and assumptions affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates. In the opinion of the management of the
Company, the accompanying consolidated condensed financial statements
contain all adjustments, consisting of normal recurring accruals necessary
to present fairly the financial position as of March 29, 1997 and
September 28, 1996 and the results of operations for the three months and
six months ended March 29, 1997 and March 30, 1996, and cash flows for the
six months ended March 29, 1997 and March 30, 1996. The results of
operations for the three months and six months ended March 29, 1997 and
March 30, 1996, and cash flows for the six months ended March 29, 1997 and
March 30, 1996, are not necessarily indicative of the results to be
expected for the full year.
The Notes to Consolidated Financial Statements for the year ended
September 28, 1996, reflect the significant accounting policies, debt
provisions, borrowing arrangements, dividend restrictions, contingencies
and commitments of the Company. There were no material changes in such
items during the six months ended March 29, 1997, except as disclosed in
notes 2 and 3 below.
2. Common Stock Split
On January 10, 1997, the Company's Board of Directors authorized a three-
for-two stock split in the form of a stock dividend effective
February 15, 1997 for shareholders of record on February 1, 1997. All
references to numbers of shares, per share amounts and average shares
outstanding in the Consolidated Condensed Financial Statements have been
restated.
7
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TYSON FOODS, INC.
3. Disposition of Assets
During 1996 the Company announced its intention to sell its beef and pork
further-processing operations in its effort to return to its core business.
On November 25, 1996, the Company sold its beef further-processing
operations, known as Gorges/Quik-to-Fix Foods, resulting in a pre-tax gain
of $41.0 million which has been recorded in other income. The Company is
still in the process of selling its pork further-processing plant in
Holland, Michigan and accordingly these assets have been classified as
current assets in the Consolidated Condensed Balance Sheets.
4. Impact of Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings Per Share, which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all
prior periods. Under the new requirements, primary earnings per share will
be renamed basic earnings per share and will exclude the dilutive effect of
stock options. The impact will not change primary earnings per share for
the second quarter or six months ended March 29, 1997 and March 30, 1996.
8
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TYSON FOODS, INC.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
FINANCIAL CONDITION
For the six months ended March 29, 1997, net cash totaling $253.1 million
was provided by all operating activities. Operations provided
$165.3 million in cash and $87.8 million was provided by net changes in
receivables, inventories, payables and other items. Additionally, the
Company used cash from operations and proceeds from the sale of the beef
division assets to pay down debt by $185.5 million and to fund
$121.9 million of property, plant and equipment additions. The
expenditures for property, plant and equipment were related to acquiring
new equipment and upgrading facilities in order to maintain competitive
standing and position the Company for future opportunities.
At March 29, 1997, working capital was $1,091.6 million compared to
$1,124.5 million at 1996 fiscal year-end, a decrease of $32.9 million. The
current ratio at March 29, 1997 was 2.8 to 1 compared to 2.6 to 1 at
September 28, 1996. Working capital has decreased since year-end primarily
due to decreases in accounts receivable and assets held for sale offset
somewhat by decreases in the current portion of long-term debt and trade
and notes payable. The Company's foreseeable cash needs for operations and
capital expenditures will continue to be met through cash flows from
operations and borrowings supported by existing credit facilities as well
as additional credit facilities which the Company believes are available.
Long-term debt has decreased $55.3 million while total debt has decreased
$185.5 million since September 28, 1996. At March 29, 1997, long-term debt
was 52.3% of total capitalization compared to 54.0% at September 28, 1996.
The Company has two unsecured revolving credit agreements totaling
$1.5 billion which support the Company's commercial paper program. The
$1 billion facility expires in May 2001. At March 29, 1997, $949.4 million
was outstanding under the $1 billion facility consisting of $794.4 million
in commercial paper and $155.0 million drawn under the revolver. The
$500 million facility expires in May 1997. The Company anticipates
extending this debt facility to May 1998. At March 29, 1997, all of the
$500 million facility was available. Additional outstanding long-
term debt at March 29, 1997 consisted of $348.5 million of public
debt, $259.6 million of institutional notes, $138.7 million in leveraged
equipment loans and $54.9 million of other indebtedness.
In January 1997, the Company re-instituted its stock repurchase program
which authorizes the purchase of up to 22.5 million shares (on a post-split
basis) of the Company's Class A common stock in open market or privately
negotiated transactions. The Company intends to utilize shares repurchased
under the program to fund benefit plans and increase treasury stock. No
timetable has been set for completion of the repurchase program. During
the second quarter of fiscal 1997 and to date in the third quarter of
fiscal 1997, the Company purchased approximately 1.225 million and
525 thousand shares, respectively, in the open market under the repurchase
program.
9
<PAGE>
TYSON FOODS, INC.
In 1996, the Company announced it was terminating the Tyson Foods, Inc.
Employee Stock Ownership Plan (the "ESOP") and the Tyson Foods, Inc. Profit
Sharing Plan and Trust (the "Profit Sharing Plan"), each of which holds
shares of the Company's Class A common stock. During the third quarter of
fiscal 1997, in addition to the open market purchases, the Company
purchased 187,038 shares from the ESOP participants (subject to the
election of participants in the ESOP); however, the Company believes, based
on elections made to date by ESOP participants, that the Company will
purchase less than 100,000 additional shares from the ESOP and/or its
participants. The purchase price of these shares has been and will be based
upon their fair market value as quoted on the Nasdaq National Market. In
addition to these possible purchases from the ESOP and/or its participants
and continued open market repurchases, the Company also anticipates
purchasing during the third quarter of fiscal 1997 approximately
2.25 million shares of Class A common stock from the Profit Sharing Plan.
The purchase price of these shares will be based upon their fair market
value as quoted on the Nasdaq National Market.
RESULTS OF OPERATIONS
Sales for the second quarter of fiscal 1997 decreased 0.8% from the same
quarter of fiscal 1996. This decrease is largely attributable to the sale
of the Company's beef and pork further-processing operations during the
first quarter of fiscal 1997 and the discontinuance of consolidation of
Trasgo, the Company's Mexican joint venture, at the end of the second
quarter of fiscal 1996. Excluding sales related to these operations, total
sales for the second quarter of fiscal 1997 increased 6.1% over last year's
comparable sales for the same quarter. The Company has experienced
intermittent disruption in its Russian markets. Disruption of shipments to
or temporary loss of this market could result in inventory accumulations.
Despite these disruptions, consumer poultry sales accounted for an increase
of 3.5% of the total change in sales for the second quarter of fiscal 1997
as compared to the same quarter of fiscal 1996. This increase was mainly
due to a 7.6% increase in average sales prices offset somewhat by a 2.9%
decrease in tonnage.
Mexican Original products and prepared foods sales as a group accounted for
a decrease of 0.4% of the total change in sales for the second quarter of
fiscal 1997 as compared to the same quarter of fiscal 1996. This decrease
was primarily due to a 4.8% decrease in tonnage and a 2.8% decrease in
average sales prices. Seafood sales accounted for a decrease of 0.1% of the
change in total sales for the second quarter of fiscal 1997 as compared to
the same quarter of fiscal 1996. This decrease was due to a 16.7% decrease
in average sales prices mostly offset by a 18.9% increase in tonnage. The
seafood operations continue to be affected by the availability of some
species of fish as well as reduced pricing on some products and other
regulations which limit its source of supply. Sales of live swine, animal
foods, by-products, and other as a group accounted for a decrease of 0.8%
of the change in total sales for the second quarter of fiscal 1997 as
compared to the same quarter of fiscal 1996.
Sales for the first six months of fiscal 1997 decreased 1.0% from the same
period of fiscal 1996. This decrease is largely attributable to the sale of
the Company's beef and pork further-processing operations during the first
10
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TYSON FOODS, INC.
quarter of fiscal 1997 and the discontinuance of consolidation of Trasgo.
Excluding sales related to these operations, total sales for the first six
months of fiscal 1997 increased 6.4% over last year's comparable sales for
the same period. This increase was largely due to consumer poultry sales
which accounted for an increase of 3.4% of the change in total sales for
the first six months of fiscal 1997 as compared to the same period of
fiscal 1996. This increase in consumer poultry sales was primarily due to
an increase in average sales prices of 8.2% offset somewhat by a decrease
in tonnage of 3.6%.
Mexican Original products and prepared foods sales as a group accounted for
a decrease of 0.4% of the change in total sales for the first six months of
fiscal 1997 as compared to the same period of fiscal 1996. This decrease
was primarily due to a 5.0% decrease in tonnage as well as a 2.4% decrease
in average sales prices. Seafood sales accounted for an increase of 0.1% of
the change in total sales for the first six months of fiscal 1997 as
compared to the same period of fiscal 1996. This increase was due to a
16.7% increase in tonnage partially offset by a 13.5% decrease in average
sales prices. Sales of live swine, animal foods, by-products, and other as
a group accounted for a decrease of 0.2% of the change in total sales for
the first six months of fiscal 1997 as compared to the same period of last
year.
Cost of goods sold for the second quarter of fiscal 1997 decreased 3.4%
compared to the same quarter of fiscal 1996, which in part is attributable
to the sale of the Company's beef and pork further-processing operations
and the discontinuance of consolidation of Trasgo. Excluding cost of sales
related to these operations, total cost of sales for the second quarter of
fiscal 1997 increased 3.5% over last year's comparable cost of sales for
the same quarter. The cost of ingredients used in feed for poultry
and swine and the ingredients used in Mexican Original operations
during the second quarter of fiscal 1997 decreased in comparison with the
same quarter of last fiscal year. However, these costs did not moderate as
much as management had anticipated. As a percent of sales, cost of sales
was 83.3% for the second quarter of fiscal 1997 compared to 85.6% in the
second quarter of fiscal 1996.
Cost of goods sold decreased 1.8% for the first six months of fiscal 1997
compared to the same period of fiscal 1996, which in part is attributable
to the sale of the Company's beef and pork further-processing operations
and the discontinuance of consolidation of Trasgo. Excluding cost of sales
related to these operations, total cost of sales for the first six months
of fiscal 1997 increased 5.8% over last year's comparable cost of sales for
the same period. This increase is mainly the result of the increase in
sales and significant increases in the cost of ingredients used in feed
for poultry and swine and the ingredients used in Mexican Original
operations during the first six months of fiscal 1997. As a percent of
sales, cost of sales was 83.5% for the first six months of fiscal 1997
compared to 84.2% in the same period of fiscal 1996.
Operating expenses decreased 9.5% for the second quarter of fiscal 1997
from the same quarter of fiscal 1996. This decrease is mostly due to the
sale of the beef division assets in the first quarter of fiscal 1997 and
the discontinuance of consolidation of Trasgo. Selling expense, as a
percent of sales, decreased to 8.0% for the second quarter of fiscal 1997
11
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TYSON FOODS, INC.
as compared to 8.8% for the second quarter of fiscal 1996. General and
administrative expense, as a percent of sales, was 1.6% in the second
quarter of fiscal 1997 compared to 1.7% in the same period last year.
Amortization expense, as a percent of sales, was 0.4% in the second quarter
of fiscal 1997 and 1996.
Operating expenses decreased 6.8% for the first six months of fiscal 1997
from the same period of fiscal 1996. This decrease in expenses for the
first six months is also mainly due to the sale of the beef division assets
in the first quarter of fiscal 1997 and the discontinuance of
consolidation of Trasgo. Selling expense, as a percent of sales,
decreased to 8.1% for the first six months of fiscal 1997 as compared to
8.6% for the same period of fiscal 1996. General and administrative
expense, as a percent of sales, was 1.6% in the first six months of
fiscal 1997 compared to 1.7% in the same period last year. Amortization
expense was 0.4% of sales in the first six months of fiscal 1997 and 1996.
Interest expense decreased 20.8% for the second quarter of fiscal 1997
compared to the same quarter of fiscal 1996. The Company had a lower level
of borrowing which decreased the Company's average indebtedness by 11.6%
over the same period last year due to paying down debt with funds generated
from operations and proceeds from the sale of the beef division assets.
The weighted average interest rate of all Company debt decreased to 6.7%
compared to 7.2% for the same period last year.
Interest expense decreased 19.1% in the first six months of fiscal 1997
compared to the same period of fiscal 1996. The Company had a lower level
of borrowing which decreased the Company's average indebtedness by 7.2%
from the same period last year. The weighted average interest rate of
all Company debt decreased to 6.7% compared to 7.3% for the same period
last year.
Other income includes the $41.0 million pre-tax gain from the sale of the
beef division assets.
The effective income tax rate for the second quarter and first six months
of fiscal 1997 was 37% and 49%, respectively, compared to 37% for the same
periods of fiscal 1996. The first six months effective tax rate was
impacted by the taxes on the gain from the sale of the beef division
assets. Certain costs were allocated to the beef division which are not
deductible for tax purposes, resulting in a higher effective tax rate. The
1996 effective tax rate included reduced state income taxes, and the tax
rate was impacted by an adjustment to the liability for deferred income
taxes to reflect the Company's current assessment of tax contingencies
provided for in prior years.
ENVIRONMENTAL MATTERS
The Company has a strong financial commitment to environmental matters.
During the first six months of fiscal 1997 the Company invested
approximately $17.2 million in water quality facilities, including capital
outlays to build and upgrade facilities and day-to-day operations of waste-
water facilities.
12
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TYSON FOODS, INC.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE
PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
The Company and its representatives may from time to time make written or
oral forward-looking statements with respect to their current views and
estimates of future economic circumstances, industry conditions, company
performance and financial results. These forward-looking statements are
subject to a number of factors and uncertainties which could cause the
Company's actual results and experiences to differ materially from the
anticipated results and expectations expressed in such forward-looking
statements. The Company wishes to caution readers not to place undue
reliance on any forward-looking statements, which speak only as of the date
made.
Among the factors that may affect the operating results of the Company are
the following: (i) fluctuations in the cost and availability of raw
materials, such as feed grain costs in relation to historical levels; (ii)
changes in the availability and relative costs of labor, including contract
growers; (iii) market conditions for finished products, including the
supply and pricing of alternative proteins, all of which may impact the
Company's pricing power; (iv) effectiveness of advertising and marketing
programs; (v) the ability of the Company to make effective acquisitions and
successfully integrate newly acquired businesses into existing operations;
(vi) risks associated with leverage, including cost increases due to rising
interest rates; (vii) changes in regulations and laws, including changes in
accounting standards, environmental laws, occupational, health and safety
laws, and laws regulating fishing and seafood processing activities; (viii)
access to foreign markets together with foreign economic conditions,
including currency fluctuations; and (ix) the effect of, or changes in,
general economic conditions.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On April 13, 1995, a purported shareholder's derivative action (the
"Action") was filed by a single shareholder on the Company's behalf in the
Court of Chancery of Delaware against the directors and principal
shareholders of the Company. The Action alleged that such persons breached
their fiduciary duties to the Company as a result of their approval and/or
participation in certain transactions in fiscal year 1994 between the
Company and various officers and directors or their affiliates, including
certain lease, poultry supply, poultry grow-out, wastewater treatment and
research and development service arrangements (such transactions being more
fully described under the caption "Certain Transactions" in the Company's
Proxy Statement for its 1995 Annual Meeting). Additionally, the Action
alleged that the compensation and expense reimbursements paid to the
Company's Senior Chairman in fiscal year 1994, and the expense
reimbursements paid to him in fiscal year 1993, were excessive. The Action
sought various remedies, including (i) voiding of the challenged
transactions and an accounting of profits derived therefrom, (ii) damages
resulting from the challenged transactions, and (iii) costs, expenses and
attorney fees. The Company was named as a nominal defendant in the Action,
but no claim was asserted against it.
13
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TYSON FOODS, INC.
On May 10, 1995, the defendants filed a Motion to Dismiss the Action
claiming failure by the plaintiff to (i) make a pre-suit demand for action
by the directors of the Company, (ii) obtain personal jurisdiction over
certain shareholder defendants, and (iii) state a claim upon which relief
can be granted. On July 6, 1995, the Court of Chancery entered a
stipulated order dismissing the Action without prejudice as to certain of
the non-director defendants. The Motion to Dismiss as to the remaining
defendants was held in abeyance while settlement discussions occurred.
These settlement discussions culminated in the parties executing a
Stipulation and Agreement of Compromise, Settlement and Release dated
February 5, 1997 (the "Settlement") which proposed to settle the Action.
The terms of the settlement included, among other things, that the Company
form a committee of outside directors who will review, at least annually,
the terms and fairness of all transactions between the Company, on the one
hand, and its directors, officers or their affiliates, on the other, which
are to be disclosed in the Company's proxy statements pursuant to
Securities and Exchange Commission regulations. The Court of Chancery
approved the Settlement by Order dated April 14, 1997 after the Company's
shareholders had received notice of the Settlement and were given an
opportunity to be heard concerning the Settlement's fairness.
Management does not believe that the Settlement will have a material
adverse effect on the Company's financial position or results of
operations.
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
The following directors were elected at the annual meeting of shareholders
held January 10, 1997:
<TABLE>
DIRECTORS VOTES FOR VOTES WITHHELD
_________ _________ ______________
<S> <C> <C>
Neely Cassady 746,716,651 985,804
Lloyd V. Hackley 746,708,529 993,926
Gerald M. Johnston 745,709,487 1,992,968
Shelby Massey 746,714,722 987,733
Joe F. Starr 746,711,300 991,155
Leland Tollett 746,710,444 992,011
Barbara Tyson 746,637,065 1,065,390
Don Tyson 746,706,874 995,581
John Tyson 746,628,210 1,074,245
Fred S. Vorsanger 746,716,353 986,102
Donald E. Wray 746,709,960 992,495
</TABLE>
14
<PAGE>
TYSON FOODS, INC.
Also, the shareholders voted to approve an amendment to the Company's
Amended and Restated Non-Statutory Stock Option Plan which increased the
Class A Common Stock authorized for issuance thereunder by 4,000,000
shares. There were 731,042,506 votes for this amendment, 3,700,644 votes
against and 414,065 votes abstained.
No other items were voted on at the annual meeting of shareholders or
during the quarter ended March 29, 1997.
Item 5. Other Information
The Board of Directors announced a 3-for-2 stock split in the form of a
stock dividend effective February 15, 1997 for shareholders of record on
February 1, 1997. Additionally, the Board of Directors increased the post-
split quarterly cash dividend to $.025 per share for Class A Common Stock
and $.0225 per share of Class B Common Stock, payable March 15, 1997 to
holders of record on March 1, 1997.
The Board of Directors announced the appointment of Director John Tyson,
son of Senior Chairman Don Tyson, to Vice Chairman of the Board.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
The exhibits filed with this report are listed in the exhibit index at the
end of this Item 6.
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the quarter ended
March 29, 1997.
15
<PAGE>
TYSON FOODS, INC.
EXHIBIT INDEX
The following exhibits are filed with this report.
Exhibit No. Page
_________ ____
3(a) Certificate of Incorporation of the Company as amended
(previously filed as Exhibit 3(a) to the Company's
Registration Statement on Form S-4 filed with the
Commission on July 8, 1992, Commission File No. 33-49368,
and incorporated herein by reference).
3(b) Amended and Restated Bylaws of the Company (previously
filed as Exhibit 3.2 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 28, 1996,
Commission File No. 0-3400, and incorporated herein by
reference).
11 Statement Regarding Computation of Per Share Earnings 18-19
27 Financial Data Schedule
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TYSON FOODS, INC.
Date: May 12, 1997 /s/ Wayne Britt
------------ ------------------------------
Wayne Britt
Executive Vice President and
Chief Financial Officer
Date: May 12, 1997 /s/ James G. Ennis
------------ ------------------------------
James G. Ennis
Vice President, Controller and
Chief Accounting Officer
17
<PAGE>
EXHIBIT 11
TYSON FOODS, INC.
COMPUTATION OF EARNINGS PER SHARE
(In millions except per share data)
Quarter Ended
---------------------------
March 29, March 30,
1997 1996
---------------------------
Primary:
Average common shares outstanding
during the period 216.9 217.4
Net effect of dilutive stock
options based on the treasury
stock method using average
market price 2.1 .6
----- -----
Total common and common equivalent
shares outstanding 219.0 218.0
===== =====
Net income $48.2 $14.4
===== =====
Earnings per share $0.22 $0.07
===== =====
Fully Diluted:
Average common shares outstanding
during the period 216.9 217.4
Net effect of dilutive stock
options based on the treasury
stock method using the quarter-
end market price, if higher
than average market price 2.1 .6
----- -----
Total common and common equivalent
shares outstanding 219.0 218.0
===== =====
Net income $48.2 $14.4
===== =====
Earnings per share $0.22 $0.07
===== =====
18
<PAGE>
EXHIBIT 11
TYSON FOODS, INC.
COMPUTATION OF EARNINGS PER SHARE
(In millions except per share data)
Six Months Ended
---------------------------
March 29, March 30,
1997 1996
---------------------------
Primary:
Average common shares outstanding
during the period 217.2 217.4
Net effect of dilutive stock
options based on the treasury
stock method using average
market price 2.0 .6
----- -----
Total common and common equivalent
shares outstanding 219.2 218.0
===== =====
Net income $92.8 $57.7
===== =====
Earnings per share $0.42 $0.26
===== =====
Fully Diluted:
Average common shares outstanding
during the period 217.2 217.4
Net effect of dilutive stock
options based on the treasury
stock method using the quarter-
end market price, if higher
than average market price 2.3 .6
----- -----
Total common and common equivalent
shares outstanding 219.5 218.0
===== =====
Net income $92.8 $57.7
===== =====
Earnings per share $0.42 $0.26
===== =====
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 29, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000100493
<NAME> TYSON FOODS, INC.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-27-1997
<PERIOD-END> MAR-29-1997
<CASH> 100
<SECURITIES> 0
<RECEIVABLES> 508
<ALLOWANCES> 0
<INVENTORY> 1,035
<CURRENT-ASSETS> 1,695
<PP&E> 3,064
<DEPRECIATION> 1,186
<TOTAL-ASSETS> 4,461
<CURRENT-LIABILITIES> 604
<BONDS> 1,751
0
0
<COMMON> 22
<OTHER-SE> 1,681
<TOTAL-LIABILITY-AND-EQUITY> 4,461
<SALES> 3,102
<TOTAL-REVENUES> 3,102
<CGS> 2,592
<TOTAL-COSTS> 2,592
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55
<INCOME-PRETAX> 182
<INCOME-TAX> 89
<INCOME-CONTINUING> 93
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
