Meat + Poultry - August 2005 - 6

Red meat slows Tyson's third quarter results
SPRINGDALE, Ark. - Tyson Foods,
Inc. reported a $30 million decline in
net income for the third quarter of ﬁscal 2005. Net income for the quarter was
$131 million, equal to 39
cents per share of common
stock, which compared with
$161 million, or 48 cents per
share, the previous year. Sales for the
quarter were $6.7 billion compared with
$6.6 billion for the same period the previous year.
For the ﬁrst nine months of ﬁscal
2005, the company's net income was
$255 million, or 76 cents per share,
which compared with $337 million, or
$1 per share, for the same period this
past year. Sales were $19.5 billion this
year compared with $19.3 billion.
Tyson Foods' red meat divisions were
the primary reasons behind the decline
in net income. Beef segment operating
income decreased $82 million and $86
million in the third quarter and nine
months of ﬁscal 2005, respectively, as
compared with the same periods a year
ago. The segment's operating income
decreased $157 million. The decrease
was primarily due to lower domestic
cattle supplies and restrictions on imports of Canadian cattle resulting in
lower plant utilization levels, according
to the company.
Pork segment sales decreased 2.1 percent and increased 8.2 percent for the
third quarter and nine months of ﬁscal
2005, respectively, compared with the
same periods this past year. The sales
decrease for the quarter was due to decreased sales volumes and lower average domestic sales prices.
Tyson's chicken segment was the top

performer during the quarter. Operating
income for the quarter increased $62
million, excluding plant closing related accruals of $10
million. Operating income was positively impacted by decreased grain
costs of $113 million compared with the previous year.
Chicken sales decreased 1.2 percent
and increased 2.5 percent in the third
quarter and nine months, respectively, compared with the same period this
past year. The decrease in the third quarter was primarily due to lower average
sales prices.
"The chicken segment performed
well, and beef and prepared foods improved compared to the ﬁrst half of the
year, but our pork results were disappointing," said John Tyson, chairman
and chief executive ofﬁcer.
The prepared foods segment's operating income increased $21 million in
the third quarter compared with the previous year. The increase was primarily
due to an increase in average sales prices offset partially by higher raw material
prices, according to the company.
In other news, Tyson announced
that it will be added to the S&P 500
upon completion of the Unocal acquisition by Chevron. "We are pleased to
be added to the S&P 500," said John
Tyson. "Tyson has come a long way
since it was ﬁrst included in the S&P
MidCap 400. We've grown from being a leading chicken producer to the
world's leading producer and marketer
of chicken, beef and pork. As such, we
believe we are a strong representative
for the protein industry in the Packaged Foods & Meats category."

Swift & Co. closes
Idaho plant
GREELEY, Colo. - Market conditions
and the inability to secure enough cattle to support continued operations have
forced Swift & Co. to shutter its beef
processing plant in Nampa, Idaho. The
plant had already been closed the previous two weeks for these same reasons.
"This is a very sad day for Swift &
Co. and for more than 400 employees
and their families in and around Nampa," said Dennis Henley, C.O.O. of Swift
& Co. "We've worked very hard over the
past two years to sustain operations at
Nampa without adequate cattle supplies,
but we can't afford to any longer."
The Nampa plant most recently employed 408 workers, down from 560
in May 2003 when the U.S. border was
closed to live Canadian cattle after a single case of bovine spongiform encephalopathy was ﬁrst discovered in Canada.
This past month, the U.S. Dept. of
Agriculture succeeded in opening the
U.S. border to live Canadian cattle
under 30 months of age; however, the
Nampa plant processes older animals.
The combined effect of over 30-month
cattle from Canada being cut off along
with a lingering drought in the Northwest that has pushed domestic herds
toward the Midwest-the plant has
been forced to gradually reduce operating hours and stafﬁng over the past
two years.
Other beef plant closures since Dec.
2003, when the ﬁrst case of B.S.E. was
identiﬁed in a Washington state dairy
cow include: Packerland Packing,
Gering, Neb.; ConAgra Foods, Montgomery, Ala.; and Iowa Quality Beef,
Tama, Iowa.

P.S.F. revenues increase in ﬁrst quarter after going public
KANSAS CITY, Mo. - In its ﬁrst quarter as a publicly traded company, Premium Standard Farms, Inc. reported a
net income of $15.4 million, or 49 cents per diluted share. This was an increase over the $9.4 million in net income
during the same period last year. Net sales for the quarter totaled $245.3 million, up 15.7 percent from $212.1 million in the comparable period last year.
The results for the ﬁrst quarter, which ended June 25, included a $21.7 million charge from the early extinguishment of debt,
representing an after tax charge of 43 cents per diluted share. P.S.F. retired, through a tender offer, $173 million of 9.25 percent
senior notes previously outstanding, with a combination of cash and $156.9 million of bank revolving loans.
"In the hog production segment, we had a signiﬁcant increase in the number of hogs and total pounds produced, from improving health and operational performance" said John Meyer, C.E.O. "In the pork processing segment, we continue to make progress in expanding our export sales, enhancing our customer base, and improving margins in our North Carolina operations."
6

MEAT&POULTRY

August 2005

www.MEATPOULTRY.com

http://www.MEATPOULTRY.com

Meat + Poultry - August 2005

Table of Contents for the Digital Edition of Meat + Poultry - August 2005