<PAGE>
Filed by Tyson Foods, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12(b)
under the Securities Act of 1934
Subject Company: IBP, inc.
Commission File No. 1-6085
January 3, 2001
Tyson Conference call dated January 2, 2001
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Exhibit (a) (15)
Media Contact: Ed Nicholson
(501) 290-4591
Investor Contact: Louis Gottsponer
(501) 290-4826
TYSON FOODS
January 2, 2001
10:00 a.m. CST
(Conference in progress)
Moderator Thank you for standing by. Welcome to the Tyson
Foods' conference call. At this time all
participants are in a listen-only mode. Later, we
will conduct a question and answer session.
Instructions will be given at that time. If you
should require assistance during the call, please
depress zero, then *. As a reminder, this
conference is being recorded.
I would now like to turn the conference over to
our host, Director of Investor Relations, Mr.
Louis Gottsponer. Please go ahead.
L. Gottsponer Thank you. Well good morning everyone, and thank
you for joining us this morning to talk about our
agreement to acquire IBP. With me this morning
are John Tyson, our Chairman, President and CEO,
Greg Lee, our Chief Operating Officer, and Steve
Hankins, our Chief Financial Officer. In just a
few minutes, we're going to hear some prepared
remarks from both John and Steven, and then we'll
take questions.
Before we get started though, I want to remind you
that some of the things we are going to talk about
today are going to be forward-looking statements.
That means those statements are subject to risks
and uncertainties which could cause actual results
to differ materially. So, I want to encourage you
to review that lists of those risks and
uncertainties in yesterday's press release. So,
with that I'll turn it over to John Tyson.
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J. Tyson Well, good morning. I can tell you there's a
group of folks here at Tyson Foods that are very
excited about the opportunity to work with the
great management team up there at IBP, and the
things they put in place. Very simply, when we
started to look at the IBP opportunity, the vision
that we saw here at Tyson Foods was the
opportunity to create the largest marketer of
beef, pork and chicken, to take the strengths that
we've demonstrated in the chicken business, match
it with the strengths that the folks at IBP have
demonstrated in the beef and pork industry and put
them together.
Sometimes in your business life you come to a
point-in-time opportunity, to look at a unique
opportunity, and that is the opportunity of the
Tyson/IBP combination. You know, at Tyson we have
the ability to develop innovative and branded food
products, and market them successfully through all
the distribution channels that are out there. IBP
is the historical leader and innovator in the beef
and pork sector. You put those two together, and
you can see a lot of the opportunities downstream
to drive growth, to drive earnings-per-share
growth, and to drive cash flow growth. We are
uniquely positioned to capture the significant
potential that's in the marketplace today through
each of the channels we distribute through. We're
in the food service channel. We're in the retail
channel. We're in the club score channels. We
have strong penetration of all of those channels,
with branded convenience items. The things that
IBP has put in place, we can help accelerate those
moves into those channels.
Our food service leadership gives us the chance to
then take advantage of the IBP Food Brands Unit.
They have put together some products that we can
use, and that we can take to the food service
market. There are two strong management teams,
between our management team and between the
management team at IBP. There will be and there
are substantial synergies. We have tried to look
at our synergies in a conservative manner. Each
time we visit and talk, we discover more
opportunities and synergies. We will use those
synergies: one, to pay down debt, and two to grow
our business.
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This deal is significantly accretive to earnings
per share, and it gives us an attractive use of
free cash flow on a go forward basis. In the end,
you've got to look at why Tyson was maybe the
preferred choice for the folks at IBP. I think it
comes down to our branded marketing experience
that Tyson has, the strategic fit of food brands
in the Tyson's Food Service Group. The
complimentary management teams that will allow us
to retain focus on the individual segments, which
means basically operations and managements will
basically be uninterrupted.
We will have the ability to take advantage of our
strengths, to service the consolidating customer
marketplace. Five of the top retailers have a
little bit less than 50% of that market share.
There are a limited number of players in the Club
Store arena, and in the Food Service arena there
is consolidation going on there. We can take and
match our efficiencies and our service to meet a
changing landscape. I think the other thing is,
is that the transaction with Tyson and IBP ensures
that this transaction will come to a close. A lot
of us out there, when we get into situations of
uncertainty, it becomes uncomfortable. For the
folks at IBP this brings closure, and this brings
certainty to it. They can do what they do best,
they can go out there and keep growing their
business and keep growing their market share with
what they're doing and branding the beef and pork
segment.
Then we can learn and take opportunity of the
things that they bring to the table. They have a
tremendous refrigerated distribution network. We
at Tyson Foods know we need to be in that segment.
We can now go into their distribution network and
we can put a range of Tyson products and use their
plants, and use their people, and use their
distribution network to grow a segment of the
business that we want to grow in. They in turn,
can use some of our networks to grow their
business, and I truly believe in the end, you've
got a chance of putting one plus one, not to get
three, but maybe get a four or five on a go-
forward basis.
I'm going to let Steve Hankins, our Chief
Financial Officer, speak to you on the offer and
the next steps that we have in place. Then from
there, I think we'll move into question and
answers, and go from there, Steve.
S. Hankins Thank you John, good morning. The offer, of
course, is $30 per share of IBP stock. It remains
a 50% cash, 50% stock offer, transaction value of
$4.7 billion, including the assumption of
approximately $1.5 billion in debt.
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A bit about the next steps that will take place.
Our cash tender that is on-going, is being amended
today. We plan on closing that cash tender on
January 16th, of course this is subject to HSR
approval. If HSR approval were to occur after the
16th, we would close the cash tender shortly after
that approval. We will be commencing our exchange
offer. We expect that to close by mid-February.
So, it is our expectation that by Valentine's Day,
all the shareholders of IBP should have both their
cash and their stock and that the transaction will
be closed.
Again, the deal is very accretive, 15% plus on gap
earnings per share the first full year, and over
20% in cash earnings per share over that first
full year.
A bit about our projections. We've taken a very
conservative view. Again, I would refer you to
the base case that was provided to the management
proxy related to the buy-out proposal that has
since been canceled. Also, would note that that
information in the proxy is a more conservative
case than many of the street estimates that are in
place today from the street analysts. With our
due diligence process, we have also reviewed with
management both their fourth quarter anticipated
performance, which I know has been commented on
publicly. We've discussed the effect of both the
cattle cycle and the pork cycle, and on-goings in
the pork industry. On their performance, I want
you to know, we've taken that into account in our
models. As I say we've taken a conservative
approach looking into the future and have based
our accretive statement on those conservative
approaches.
Some information that will be helpful, as
different analysts work on their models, combined
amortization expense for the two companies should
be in the neighborhood of $100 million annually,
for the first year. Combined depreciation expense
will be in the neighborhood of $425 million
annually, during that first year. We expect
annual capital expenditures to be in a range of
between $550 and $600 million. New debt, interest
rates, as stated before, we expect to be in a
range between 7.75 and 8.25 on new debt. The
interest rate for the combined company, based on
the current interest rate environment, we are
estimating at approximately 7.50%.
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While I have this opportunity, I want to comment
just a bit on the outlook for Tyson. For our
first quarter of fiscal `02, which ended December
30th, we had previously announced an earnings per
share range of between $0.08 and $0.12. Our
current expectations are that we will be at the
top-end of that range when we announced earnings.
Our outlook for the second quarter of fiscal '02
remains unchanged from that stated before. We
still expect an EPS range of between $0.08 and
$0.12 per share.
With that I will open it up for questions.
Moderator Ladies and gentlemen, one moment please for the
first question.
Our first question comes from the line of
Christina Brodrick at the American Stock Exchange.
Please go ahead.
J. Schuster Hello, my name if Jeff Schuster. I have a
question about the way the stock and cash portion
is going to be distributed. Would the shareholder
of IBP stock get to choose whether they want stock
and cash or cash and stock? How would the
breakdown be?
S. Hankins Well, the shareholder of IBP has an option. They
certainly can tender, as part of the cash tender
process, or they could wait and tender as part of
the stock exchange process. Of course, within the
cash tender process, if more than 50% of the
shares are tendered then there will be a prorated
payment of the cash, up to the point of 50% of
cash in the total transaction.
J. Schuster Okay, thank you.
Moderator There are no further questions in queue, please
continue.
J. Tyson Well, if there are no further questions from the
individuals out there in the marketplace, the
folks at Tyson foods are comfortable with what has
been shared with you today. It's a great
opportunity, it's a unique opportunity. It was
the best deal for the IBP shareholders, and the
opportunity for these two great companies to come
together and to go forward to service the
marketplace is something that is a wonderful,
wonderful opportunity.
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For the folks that are listening out there, that
are part of the IBP team, I want to say welcome.
I look forward to not only working with you, but I
look forward to learning from you, and together we
will have some great opportunities to go out and
service our customers, grow our business, be the
leaders that we are, take the innovations of
branded products, the innovations of convenience
products, the products that meet our customer's
changing needs, and then from there we will do
what our shareholder's have asked us to do, is to
grow our business and to grow our earnings per
share. So, with that, Mike, are you still there,
operator?
Moderator Yes sir, I'm here.
S. Hankins Do we have any other questions at this time?
Moderator It will be just one moment, for the first
question.
L. Gottsponer Mike, this is Louis Gottsponer again. I know we
have some people trying to get to the Q&A line
because they're calling back into here, indicating
that they're not able to get through. So, let's
give them just a minute and see if we can get this
thing worked out from a technical standpoint.
Moderator Yes, one moment. We do have a question from the
line of Erica Long at J.P. Morgan. Miss Long,
your line is open.
J. Tyson Hi, Erica. How are you?
J. Tyson Hello.
J. Tyson It didn't come through, Louis.
L. Gottsponer Mike, we didn't get the question from Erica.
E. Long Can you hear me now?
J. Tyson Yes, Erica, there you are. How are you?
E. Long Good, thank you. How are you?
J. Tyson Well, technology sometimes throws us a curve ball.
E. Long Absolutely. I just have a couple questions. The
first one is, do you have any firm commitments
from team members of the IBP management team that
they will stay on with the combined entity? How
is that structured?
J. Tyson The structure of the commitment to stay with us,
or the structure of the on-going organization?
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E. Long The structure for them to stay with you, and then
if you'd like to discuss the structure of the on-
going organization, that would be helpful too.
J. Tyson I have had numerous conversations with both Bob
and Dick, and I have assurances from Bob, and I
have assurances from Dick that we are going to
work together, and they get as excited as I do
about the potential combination.
E. Long Will there be anything contractual or in writing
for a certain period of time, do you think?
J. Tyson Those technical details are being worked on as we
speak, and I would hope that they come to
conclusion by the end of this week.
E. Long Great. With regards to some financial numbers,
perhaps Steve could help me out with this. Could
you tell us what you're estimated debt to EBIT DA
ratio would be following the closure of this
transaction?
S. Hankins Estimated debt to EBIT DA. Give me just a minute
on that Erica.
E. Long Okay, and maybe I can just ask a follow-up then,
while you look for that. Your earnings view,
would it be using the assumptions listed in that
management proxy, or is it more conservative than
that?
S. Hankins I would say Erica, that's a good place to start.
We have applied some knowledge beyond that, based
on our due-diligence, and have been perhaps a bit
more conservative than that.
E. Long Finally, can you go into a little bit more detail
on the refrigerated distribution opportunities?
J. Tyson Erica, Johnny here and Greg may pitch in. One of
the things that we've recognized at Tyson Foods is
that's a part of the arena that we don't
participate in very well. We get fresh chicken
out there, and we do that greatly. but when you go
to the refrigerated meats, be it at the deli
level, be it at the retail level, be it at the
food service level, we don't have, one, don't have
plans to produce those products. We have tried to
be in the refrigerated distribution business a
little bit, where we ask somebody to co-pack our
brand and do that, but those are some hurdles to
do. I'll let Greg expand on the opportunity that
he sees there.
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G. Lee Let me just make two additional comments. I think
Johnny has framed it well. Let's back up to fresh
for just a moment. Erica as you know, we're the
largest player in the pre-package, tray-pack
chicken industry. Our primary modus operandi of
distribution there is plant directs. We ship from
the plant to a retailers warehouse or to a third
party retail distributor's warehouse. We also
take some of the products that we do campaign, and
let's say are fully prepared refrigerated
products. The easiest example would be our
roasted chicken. Often times what we do there is
we actually distribute that roasted chicken from
our manufacturing plant to our chill pack plants
which are disbursed across about 60% of the
country, then they in turn ride with the tray-pack
poultry to the warehouse. What we foresee in the
future is that since IBP has a significant array
of fully prepared refrigerated products, as well
as have built capabilities in the throws of
launching even more fully prepared center of the
plate entree meat items, we believe that we can
take that refrigerated distribution system that
they have in place and marry some of our fully
prepared refrigerated poultry items there and
really take them a better economic model to
distribute that products, plus just make them
easier for the retail customer to get and give us
a better chance to enhance our sales.
E. Long Would it be direct store delivery then?
G. Lee No, we don't anticipate that at this juncture. I
guess you could envision in the future that we
might be in an opportunity to give consideration
for that, but I think that would be an incremental
step, if it made sense and if it made financial
and service sense to the customer in the future.
I might also, just quickly let me say this about
fresh. IBP is set out and has constructed and is
using four forward distribution warehouses for
fresh meats.
I can envision in the future that we might well
have a system whereby you took case-ready beef and
pork and case-ready raw chicken product and
potentially marry them, and ship them to the
retailer. You could even perhaps reach beyond
that and say that at some point you might combine
both fully prepared refrigerated and fresh and
have a real easy situation for your retail
customer, or to the extent it makes sense for a
food service application the same way. So, we
think it's really going to be a benefit to us.
E. Long At this point, nobody like at ConAgra who also has
the capability of offering all three proteins,
distributes in that fashion.
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G. Less I'm not a ware of anybody that is consolidating
exactly in the manner that we just discussed.
E. Long Great. That's terrific.
S. Hankins Erica, in regards to your debt to EBIT DA
question, in making that calculation, you should
use a debt level of approximately $4.8 billion.
E. Long Okay. Great, thank you very much.
S. Hankins Thank you.
J. Tyson Thank you, Erica.
L. Gottsponer Mike, are you still there? Is the operator still
on the line?
Moderator Yes, sir, I'm here. I'm sorry. Mr. Nelson, your
line is open.
D. Nelson Thank you. Congratulations.
L. Gottsponer Good morning, Dave.
J. Tyson Good morning, Dave.
D. Nelson First of all, on capital expenditures, you talked
about $550 to $600 million, I think before Tyson
was looking at like $250, IBP I think in the proxy
was close to $500, what's the nature of the
difference between the $550 to $600 and the two
non-combined numbers?
S. Hankins Dave, I think the Tyson number is still in that
range, between $200 to $250.
D. Nelson Yes.
J. Tyson I believe that the IBP number as we have talked to
Bob and Dick, some of that money has already been
spent in this year.
D. Nelson Yes.
J. Tyson So, it's just a function of where the flows were,
and as they anticipate the management of their cap
ex on a go-forward basis.
D. Nelson So, that's going to get a lot better.
J. Tyson Yes.
D. Nelson All right. Food brands, any potential changes in
who or how that's going to be run, given Tyson's
capabilities?
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J. Tyson I think that's the opportunity that I'll get to
visit with Dick and Bob and his team, and we'll
discuss about those opportunities, and Greg and
the folks that run our food service group. We get
excited about the potential, and of course we all
have got top-line thoughts, but we'll need to
visit with the food brands management team, they
have some things in place in some of the things
they were getting ready to do. We'll have to
visit with them about our strengths and some of
the things we see. Out of that, in the next 90 to
180 days, we can see where we'll take advantage of
each other's strengths to make the right decisions
and do it very methodically, but still very
efficiently.
D. Nelson Okay. IBP has been pursuing forward warehousing,
that's in fact one of the places where they've
been spending a lot of money, I guess $110
million. Do you see any opportunities there for
Tyson to take advantage of?
G. Lee Dave, this is Greg Lee. Yes, sir, we do. In
fact, maybe the answer to Erica's question wasn't
one that could be heard by everybody, but let's
talk a little bit about that. The Forward
Warehousing, the refrigerator program they put in
place, they put four warehouses and that was to
try to bring some economy and service improvement
to their basic fresh meat business. We think that
that is a well thought out program and we think
it's one that can be extendable, that could move
over into case-ready products, and ultimately
maybe could move over to a combination of case
ready as well as some fully prepared refrigerated
products. But we think that is a good program and
one that we could learn from potentially on our
basic fresh chicken distribution.
J. Tyson And Dave, you speak of warehousing, the folks at
IBP are getting ready to bring on a 400,000 square
foot plus facility in Aletha, Kansas that is going
to service their food branch group, which is a
pick and service type of facility. We've got two
of those in our systems. We understand how to do
those type of operations and I think that's
another opportunity for us to work with the idea
that they have in place and accelerate the
learning curve, because they're headed in the
right direction and maybe some of the mistakes we
made we can help them eliminate some of those and
build off that distribution network that they're
increasing.
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G. Lee We think we have a very, very strong warehouse
management system that could perhaps come into
play in this new warehouse. And I might also add,
this new warehouse has John has referred to it has
extensive capabilities in refrigerated. So it is
both a refrigerated and a frozen distribution
point, so we think there's some good synergistic
opportunity there.
D. Nelson If I could ask one last question, I suspect you've
been in contact with major retail customers since
all this came out. What's been the feedback from
a Safeway, a Kroger, a Wal-mart to your potential
acquisition of IBP?
G. Lee I think from our view it's been positive in this
regard. They recognize that we're a company that
has tried very hard to take large key retailers
and try to work directly with them. Everybody's
got a different kind of modus operandi that they
operate about and we've been all about trying to
align ourselves with our customers and put our
sales, marketing and support programs in alignment
with that retailers' direction. We think that we
enjoy a good reputation with the retail community
and we can take advantage of that. They also are
very pleased with the progress that IBP has made
to date on case ready. Feel that it is a very
viable product and a very viable operating
principle and that we can take advantage of it.
I might also say that we've had lots of
conversations with key people in the food service
arena. As I think you well know, IBP, both from a
basic fresh meats perspective as well as through
food brands has extensive amount of volume that
travels through the major food service community,
both at the street distributor, the SYSCO's of the
world, as well as the chain restaurant people
where they make a lot of proprietary products for
the food service industry, that's certainly two
key focuses of our business. We enjoy good
relationships there and the playback's been very
favorable.
D. Nelson You haven't heard any market concentration issues
from them?
G. Lee No sir, we have not.
D. Nelson Fantastic. Thank you.
Moderator Our next question comes from Christine McCracken
at Midwest Research.
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C. McCracken Hi. Congratulations. Wondering if you have any
comment on the anti-trust proceedings, what you're
doing to kind of satisfy the concerns or if you
are not able to comment possibly in more detail
and when we could expect some kind of resolution?
J. Tyson I would think that based on what we've heard from
Washington, we're in the first stage of sending
back their first request. I'll answer it in two
parts. One is, our request went into Washington
right in the middle of the holiday season and
right in the middle of a transition between
administrations. There is no doubt that that
slowed it down some.
Secondly, based on the preliminary reads of the
second request, it's more a [perfunctory] type
request with a very, very narrow focus to
understanding our live swine business, and
understanding where our animals move to which
markets. We have started to fill out that
information. Our live animals, we have two
markets for the product that comes out of our live
swine group, the finished animals are under
contract to Cargil for two years. We do sell some
feeder pigs up into the Midwest, but once we sell
the feeder pig, the farmer is at his discretion to
sell to whatever packer he wants to, and that's
basically where the focus is.
C. McCracken So it doesn't have anything to do with total
percentage of the meat case or ..
J. Tyson None at all.
C. McCracken Great. Also wanted to ask, regarding synergies,
you'd mentioned that there were considerable
synergies, have you changed your assumptions in
that regard at all relative to the first
conference call?
S. Hankins No, we haven't changed our assumptions to any
measurable extent. We continue to talk about $100
million and a half of that achievable in the first
year. I will say that through the due diligence
process and discussions with management, we've
become more optimistic about synergies. The $100
million was chosen out of a range, in somewhat of
a low point of a range that we've been looking at,
but that's all we're prepared to still talk about
at this point. But we're very optimistic about
the synergy opportunities we see.
<PAGE>
C. McCracken One final question. You've spent a lot of time
and money developing the Tyson brand. Obviously
these new initiatives at IBP to develop case ready
in the Thomas C. Wilson line are in the
preliminary stages of being launched. Is there
any thought as to whether or not you'll continue
to pursue the Thomas C. Wilson line, if you'll try
to leverage your Tyson brand that is already well
established into beef and pork? Any comment?
J. Tyson I think the think you have to compliment the IBP
folks on first of all is that they took the steps
to move from just USDA beef or USDA pork into
establishing a brand. And the Thomas C. Wilson
brand is a solid brand that basically captures the
heritage of the IBP and the history of IBP. At
this time, I see no reason to change the course
because that is a good brand, it's a developing
brand out there in the marketplace.
From a market perspective, I could guess we like
the aggressive plans that IBP has in place and I
would encourage them to stay the course and I
think most folks who know me, go a little bit
faster.
C. McCracken So no plans to change the progress there?
J. Tyson No.
C. McCracken Fantastic. Congratulations again.
Moderator Our next question comes from Jeff Kanter,
Prudential Securities.
J. Kanter Any intention to address the collar, being that
your stock is below the minimum point?
J. Tyson No, we have a deal. It's only in the first hour
of trading, Jeff. I think all of you that have
watched enough deals go across Wall Street, be it
food deals, be it other general business deals,
understand the dynamics that happen in the first
couple of hours. I would assume that as people
visit with us and as people visit with the IBP,
they'll start to really understand the unique
value of this opportunity and they'll understand
the value of our stock today and realize that
they've got a great potential and a great
opportunity to participate in a wonderful combined
company on a go-forward basis.
J. Kanter Second question, you're assuming $1.5 billion in
debt. I thought the number originally was $1.4
billion. That extra $100 million came from what?
<PAGE>
S. Hankins Jeff, there's always a rounding involved in those
statements and we've done further due diligence
and work with the management team there at IBP,
and so we made a slight rounding change in the
number or slight change in our view to the number
and just for rounding purposes rounded it to $1.5
billion now.
J. Tyson And I think when you go back to it, on a previous
question on cap ex, some of the cap ex was pushed
back into the fourth quarter and spent ahead and
that effected the number some.
J. Kanter That's what I figured. As far as the accretion, I
see the numbers that's in your press release, but
most of us are concerned about year two and three
when cattle fundamentals go the other way. Can
you address what you expect as far as accretion in
looking out over the next 12 months?
S. Hankins The accretion numbers we've given, Jeff, are
really kind of a view to the first full year of
operations. We understand the effect of the
cattle cycle and what's going on with pork and the
view to the numbers, and as I've said, we've been
conservative over the next couple of years. As
you get out beyond that one-year point, you
actually see the accretion percentages pick up in
our models. So what we've given you from the
first year basis are actually the low point in the
accretion in all the models that we ran.
J. Kanter Okay, so even if the cattle supplies get
significantly lower, you still expect an
acceleration of the accretion going into year two?
S. Hankins Yes, we've factored in a view certainly to cattle
supplies over the next couple of years in the way
we've ran our models.
J. Tyson And when Steve ran his models, Jeff, I mean he
took the last 10 or 15 year history of IBP and
they've always managed to make good money as the
cattle cycle moves. And so we took that
historical perspective and used that in our
judgment of putting the models together on a go
forward basis.
J. Kanter Steve, can you just review the timeline one more
time for us? January 16th is when the cash tender
offer expires, but the consideration for the stock
part begins today. Is that correct?
<PAGE>
S. Hankins The consideration for the stock, the exchange
tender will be put in place shortly. That will
take just a few days to get through the paperwork
and such to have that out there. We're factoring
that timeframe in and saying that in that second
week in February the exchange tender from stock
would also close. So our expectation is that by
mid-February the cash tender certainly will have
closed. The date on that remains January 16th.
It will close on that day or shortly following
Hart-Scott. The exchange tender will be closed by
the end of that second week in February, based on
the timeframe that we have laid out.
J. Kanter So essentially if you don't get Hart-Scott, the
cash tender offer will stay open until you get HSR
clearance?
S. Hankins That is correct. And just in a very short period
of time, could be as little as two or three days
following Hart-Scott, the cash tender would go
ahead and close.
J. Kanter Thank you very much.
Moderator Our next question comes from Jane Meery from
Salomon Smith Barney.
J. Meery I just want to follow up on a statement that you
just made to Jeff. You said that no matter how
the cattle cycle moves, IBP always manages to make
good money. I seem to remember a year where they
made a penny. Did I misunderstand what you were
saying?
J. Tyson I don't understand your question. You're trying
to pick one year out of 15. I think it comes back
to the quality of management at IBP and I
appreciate the question. It shows that as things
move and change, these folks are able to manage
their business and manage their cash. The other
thing that they've done is that they've distanced
themselves from the commodity market cycle with
what they're doing in case ready meats and what
they're doing in prepared meats and what they're
doing in convenience items. So they have in
effect distanced themselves.
If you'll go to their margins for the last two or
three years, you can see the steps that they have
put in place to even move themselves from the
historical perspective. I made that statement in
a context to how we viewed our models and I
believe your question was taken out of context to
how I viewed our models.
<PAGE>
S. Hankins Jane, I think if you look back over the past ten
years, and I don't have that laying directly in
front of me, but you almost referenced back to the
last point in the cattle cycle, which is an eight
to ten year cycle, as you look at today and look
going forward, you certainly see a different IBP.
J. Meery I'm aware of how the profile of IBP has changed
dramatically, both through more exposure to pork
and then the food brand side of the business. But
the question that Jeff had asked was I think
specifically about deteriorating cattle
fundamentals and I guess I thought I heard you
said they make good money. I think you were
saying they make really good money in cattle no
matter what happens in the cattle cycle, or so I
misunderstood you.
Following up on the HSR, are you under the
impression at all that there might be any state
senators or attorney's generals who kind of have
something to prove that they may try and delay
this through senate hearings come February and
March?
J. Tyson No. We have had no indication. I think if you
look at the public comments from the farmer groups
out there, they have basically viewed their
pleasure with the Tyson/IBP combination, because
that means there's more markets available, there
are more places for the farmers to sell their pork
and to sell their beef out there in the
marketplace versus a Tyson/Smithfield combination.
And the farmer groups that we've talked to and
shared with are comfortable with it. Not only
from that perspective, but they know what we've
done with the poultry industry in trying to sell
more product out there with a branded concept.
J. Meery Okay. But this deal is not immune from, again, I
don't think that there's a basis to stop the deal,
but as you know, this is something that could
become fairly politicized and you don't see that
as a risk at all to Valentine's Day?
J. Tyson No, we do not.
J. Meery Thank you.
Moderator Our next question comes from Mike Rogers.
M. Rogers Good morning. Not to belabor the point, but what
would you tell consumers this morning, and even
producers for that matter, and I know we just
talked about farmers and the response you've had
from ag groups around the country, gentlemen, but
what would you tell consumers this morning who
might have concerns over concentration issues on
this acquisition?
<PAGE>
S. Hankins First of all, I think we're overplaying that.
This doesn't change concentration at all. Tyson
has approximately 25% of the chicken business.
You know what the percentages are on the red meat.
I think what I would be telling consumers is that
this is a great day because we're going to have a
high level of service, a high level of quality, a
lot of effort towards developing convenience foods
for the future, and there's certainly no reason to
believe that there's any economic consequence
that's not favorable.
M. Rogers Gentlemen, have you talked, as I say with farm
groups, we've had concern and heard from groups in
Illinois and Indiana this morning asking how this
might effect producers who currently have working
agreements and arrangements with IBP. Is it just
too early to say?
J. Tyson Mike, I guess I don't know which groups you've
talked to, but as we've stated, we have no plans -
and as I've stated in public comments, and this is
John Tyson here - in my business lifetime there
are no plans to vertically integrate the IBP
group. We want to help the farmers out there sell
more pork and sell more beef, take the things that
we have done in the poultry industry in terms of
creating convenience items, creating products that
fit the changing customer marketplace out there,
and then take those products out there and put
them in the grocery store so that farmer out there
knows that the pork that he grows or the cattle
that he grows is being put in a form that the end
customer wants it, be it a fully cooked pork loin
or fully cooked beef type item, and those are the
things we're going to bring to the marketplace.
Our job is just to sell more beef and pork. If we
sell more beef and pork, we're going to need more
cattle and hogs.
Moderator Our next question comes from John McMillan.
J. McMillan Listen, this is a good deal for IBP shareholders,
but I still have some question as to how good of a
deal it is for Tyson shareholders. This stock is
getting annihilated today, and more so than other
deals that are announced, John. I've actually
seen deals where they're announced and the
acquiring stock goes up. Clearly, the percentage
of them go down, but the magnitude here is a
little bit high. In the proxy there were two
separate earnings forecasts. One was as low as
$1.90. Your question in terms of which earnings
forecast you're using, as far as I remember,
management had an earnings forecast in the $2.40
range and there was one down in the $1.90 range,
if my numbers are right. You're using the higher
end, is that right? Or lower then the higher end
but not as low as the $1.90 that was used?
<PAGE>
S. Hankins I think the word "conservative" is the operative
word in the $1.90 and then take a conservative
view.
J. McMillan That's not answering, are you using a number as
low as $1.90 for that first full year? Because
that was used in the proxy by the Rawhide Group.
S. Hankins Yes. We're using the $1.90.
S. Hankins The lower estimate, John, is the one we worked off
as the base case, yes.
J. McMillan And that gets you the 30% accretion with the cost
savings?
S. Hankins The numbers in the press release in the first full
year are over 15% on a GAAP basis and well over
20% on a cash basis. But yes, we've used the most
conservative view in that proxy and then augmented
it with our view from the processes we've gone
through.
J. Tyson And John, in appreciation to your question about
the Tyson shareholders, our responsibility is to
figure out what our company's going to look like
not only in the six month window, but what our
company's going to look like year two, year three,
year five from now. And occasionally in your
business life you get an opportunity to look at a
unique opportunity that, you know, I wasn't
worried about our stock price going up in the
short-term, six months, twelve months, because the
fundamentals of our poultry business are in good
shape, the fundamentals of how our people are
running our business is in good shape. But three
to four to five years from now, John, you're going
to be asking the question about what are you going
to do next, what is Tyson Foods going to be doing
next to grow their business. And we were in a
place and in an opportunity to put two great
companies together at a unique point in time
history that when you look at years three, four
and five, and you appreciate the value of the
combined companies, I think that's the
appreciation as we view the deal on a go-forward
basis, not looking backwards.
J. McMillan Can I just ask Greg, in terms of the development
of the Thomas Wilson brand in case ready, is that
still the game plan or do you think the Tyson
brand could be used in some aspects beyond chicken
into the beef and pork area?
<PAGE>
G. Lee I'm only going to say, John, we're going to be
very, very careful about that. They started down
a good road. The Thomas C. Wilson is gaining good
reception in the marketplaces where it's being
campaigned and I think we would want to be very,
very cautious about making any changes. But our
ears and eyes will be opened to what makes sense
in the long-term.
J. McMillan Just to follow up what Erica said in terms of a
bond in the management team, you basically don't
have any set agreements. The extra $100 million
in debt was not the lock in Bond/Peterson, I hope.
J. Tyson I don't believe so, but I'll tell you what, Bob
Peterson's a wonderful guy and Dick Bond's a
wonderful guy and I'm looking forward to both Bob
and Dick teaching me the beef and pork industry,
us sharing with their great folks on how to grow
these great businesses together.
J. McMillan Well they're certainly solid executives and things
have worked out for the benefit of IBP
shareholders, perhaps by accident, but they've
worked out. Have a good day.
Moderator Our next question comes from Marcella Fava of
Alpine Associates.
M. Fava I have a couple of mechanical questions. The
tender offer I know is slated to expire January
16th. But technically, I think if you get hung up
on HSR at all it could extend it to February. Is
there any requirement that the tender offer close
before the exchange offer? Or theoretically,
could they both be closing around the same time?
S. Hankins There is no requirement there, as you referenced.
Theoretically, they both could be closing at the
same time. Our view to the HSR process is that
should be wrapped up certainly by the end of
January. So, we expect hopefully by the 16th but
certainly by the end of January that we'll have
HSR wrapped up.
M. Fava I wish you well on that. Second question is the
trading range for the exchange offer. Is it the
same as it was earlier?
S. Hankins Yes.
M. Fava Thank you.
Moderator Our next question comes from Aaron Hara at Spear
Leeds Kellogg.
<PAGE>
G. Gulani This is Greg Gulani. With the exchange offer,
could you describe the pricing period and how it
works - number of days and whether it would be
using the Tyson closing price or volume weighted
average price?
L. Baledge This is Les Baledge. I'm General Counsel at Tyson
Foods. What we have is a 15 business day pricing
period prior to the close.
G. Gulani And it's based on Tyson's closing price?
L. Baledge Yes.
G. Gulani I know you answered the question indirectly
earlier, but just for clarification, does the
merger agreement contain any provisions pertaining
to Tyson's stock price, if its stock trades
outside the collar?
L. Baledge The collar is established at the original level
and has not been changed.
G. Gulani And there's no rights given to IBP if it trades
outside the collar?
L. Baledge That is correct.
G. Gulani Thank you very much.
Moderator Our next question comes from Dana Chandler at Cafe
Financial.
D. Chandler I wanted to revisit the cash portion of the deal.
Is it possible that the cash portion could go
beyond the 50.1% if shareholders decide to go that
way?
S. Hankins No, it's not. If there are more shares tendered
then would account for 50.1%, then there's a
prorated factor given so that the total cash
portion cannot exceed over 50.1%.
D. Chandler Thank you.
Moderator Ladies and Gentlemen, that does conclude our
question and answer session for today.
J. Tyson We thank everybody for your time and effort. You
have Louis' phone number. If you have follow up
contact questions, you have Steve's number. We
look forward to answering any and all new
questions.
This is an exciting time for us at Tyson Foods, an
exciting time to join the folks at IBP and we're
going to have some fun. You all have a good day.
<PAGE>
Moderator Ladies and Gentlemen, this conference will be
available for replay after 2:00 p.m. today through
Friday, February 2nd at 11:59 p.m. You may access
the AT&T Teleconference Replay System at any time
by dialing 1-800-475-6701 and entering the access
code 561913. International participants dial 320-
365-3844. That does conclude our conference for
today. Thank you for your participation and
choosing AT&T Executive Teleconference. You may
now disconnect.
About Tyson Foods, Inc.
Tyson Foods, Inc., headquartered in Springdale, Ark., is the
world's largest fully integrated producer, processor and marketer
of chicken and chicken-based convenience foods, with 68,000 team
members and 7,400 contract growers in 100 communities. Tyson has
operations in 18 states and 15 countries and exports to 73
countries worldwide. Tyson is the recognized market leader in
almost every retail and foodservice market it serves. Through its
Cobb-Vantress subsidiary, Tyson is also a leading chicken
breeding stock supplier. In addition, Tyson is the nation's
second largest maker of corn and flour tortillas under the
Mexican Originalr brand, as well as a leading provider of live
swine.
Forward Looking Statements.
Certain statements contained in this communication are "forward-
looking statements", such as statements relating to future events
and financial performance and the proposed Tyson acquisition of
IBP. These forward-looking statements are subject to risks,
uncertainties and other factors which could cause actual results
to differ materially from historical experience or from future
results expressed or implied by such forward-looking statements.
Among the factors that may cause actual results to differ
materially from those expressed in, or implied by, the statements
are the following: (i) the risk that Tyson and IBP will not
successfully integrate their combined operations; (ii) the risk
that Tyson and IBP will not realize estimated synergies; (iii)
unknown costs relating to the proposed transaction; (iv) risks
associated with the availability and costs of financing,
including cost increases due to rising interest rates; (v)
fluctuations in the cost and availability of raw materials, such
as feed grain costs; (vi) changes in the availability and
relative costs of labor and contract growers; (vii) market
conditions for finished products, including the supply and
pricing of alternative proteins; (viii) effectiveness of
advertising and marketing programs; (ix) changes in regulations
and laws, including changes in accounting standards,
environmental laws, and occupational, health and safety laws; (x)
access to foreign markets together with foreign economic
conditions, including currency fluctuations; (xi) the effect of,
or changes in, general economic conditions; and (xii) adverse
results from on-going litigation. Tyson undertakes no obligation
to publicly update any forward-looking statements, whether as a
result of new information, future events or otherwise.
<PAGE>
IMPORTANT INFORMATION
LASSO ACQUISITION CORPORATION ("LASSO"), A WHOLLY OWNED
SUBSIDIARY OF TYSON FOODS, INC. ("TYSON") IS COMMENCING AN OFFER
FOR UP TO 50.1% OF THE OUTSTANDING SHARES OF COMMON STOCK, OF
IBP, INC ("IBP") AT $30.00 NET PER SHARE TO SELLER IN CASH. THE
OFFER CURRENTLY IS SCHEDULED TO EXPIRE AT 12:00 MIDNIGHT, EASTERN
STANDARD TIME, ON TUESDAY, JANUARY 16, 2001, UNLESS EXTENDED BY
LASSO IN ITS DISCRETION. TYSON'S OFFER IS BEING MADE ONLY BY WAY
OF AN OFFER TO PURCHASE AND RELATED LETTER OF TRANSMITTAL AND ANY
AMENDMENTS OR SUPPLEMENTS THERETO AND IS BEING MADE TO ALL
HOLDERS OF IBP'S SHARES. MORE DETAILED INFORMATION PERTAINING TO
TYSON'S OFFER AND THE PROPOSED MERGER WILL BE SET FORTH IN
APPROPRIATE FILINGS TO BE MADE WITH THE SEC, IF AND WHEN MADE.
SHAREHOLDERS ARE URGED TO READ ANY RELEVANT DOCUMENTS THAT MAY BE
FILED WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. SHAREHOLDERS WILL BE ABLE TO OBTAIN A FREE COPY OF
ANY FILINGS CONTAINING INFORMATION ABOUT TYSON, LASSO AND IBP,
WITHOUT CHARGE, AT THE SEC'S INTERNET SITE (HTTP://WWW.SEC.GOV).
COPIES OF ANY FILINGS CONTAINING INFORMATION ABOUT TYSON CAN ALSO
BE OBTAINED, WITHOUT CHARGE, BY DIRECTING A REQUEST TO TYSON
FOODS, INC., 2210 WEST OAKLAWN DRIVE, SPRINGDALE, ARKANSAS 72762-
6999, ATTENTION: OFFICE OF THE CORPORATE SECRETARY (501) 290-
4000.
Tyson and certain other persons named below may be deemed to be
participants in the solicitation of proxies. The participants in
this solicitation may include the directors and executive
officers of Tyson. A detailed list of the names of Tyson's
directors and officers is contained in Tyson's proxy statement
for its 2001 annual meeting, which may be obtained without charge
at the SEC's Internet site (http://www.sec.gov) or by directing a
request to Tyson at the address provided above.
As of the date of this communication, none of the foregoing
participants, individually beneficially owns in excess of 5% of
IBP's common stock. Except as disclosed above and in Tyson's
proxy statement for its 2001 annual meeting and other documents
filed with the SEC, to the knowledge of Tyson, none of the
directors or executive officers of Tyson has any material
interest, direct or indirect, by security holdings or otherwise,
in Tyson or IBP.
This communication is not an offer to purchase shares of IBP, nor
is it an offer to sell shares of Tyson Class A common stock which
may be issued in any proposed merger with IBP or exchange offer
for IBP shares. Any issuance of Tyson Class A common stock in any
proposed merger with IBP or exchange offer for IBP shares would
have to be registered under the Securities Act of 1933, as
amended, and such Tyson stock would be offered only by means of a
prospectus complying with the Act.
