000462 Tyson Reports Second Quarter Results

Springdale, AR - Tyson Foods, Inc. reported $0.16 diluted earnings per share for the second quarter ended April 1, 2000, compared to $0.28 in the same quarter last year. Second quarter earnings were $35.7 million compared to $64.6 million for the same period last year.

Total second quarter sales for fiscal 2000 were $1.79 billion compared to $1.84 billion last year, a decrease of 2.7% with a 2.3% decrease in volume. Comparable sales for the quarter increased 1.5% on a volume decrease of 0.7% versus the previous year. Gross profits for the second quarter of fiscal 2000 were $297.3 million compared to $322.2 million in the same quarter last year with gross margin at 16.6% compared to 17.5% last year.

Diluted earnings per share for the first six months of fiscal 2000 was $0.41 compared to $0.52 in the same period last year. Earnings for the first six months of fiscal 2000 decreased $27.7 million to $92.7 million compared to $120.4 million from the same period last year.

Sales for the first six months of fiscal 2000 were $3.57 billion compared to $3.67 billion last year, a decrease of 2.6%. The decrease in sales is mainly due to the sale of seafood and other non-core businesses during fiscal 1999. Comparable sales for the first six months increased 2.8% on a volume increase of 2.2% versus the previous year.

As the Company previously announced, the results for the quarter and the six months were adversely impacted by a $24.2 million charge for the AmeriServe reorganization filing of February 1, 2000. Excluding that charge, earnings for the quarter and the six months were $51.2 million and $108.2 million, respectively, or $0.23 and $0.48 per diluted share.

John Tyson, Chairman and CEO, said “In the past quarter we made tough decisions which resulted in our three percent cut in live production, improvements in our product mix and expansion of our dominant value added business. We focused on reducing capital expenditures and continued to pay down debt. However, oversupply of chicken continues to depress prices. Lack of production discipline in our industry slowed expected seasonal price rebounds and we are going to be challenged to achieve analyst estimates for the remainder of this year. Going forward, we will focus the best people, products and brand in the industry aggressively on improving product mix and market share, particularly in our value added business.”

The Company identifies segments based on the products offered and the nature of customers. This results in the following reported business segments: Food Service, Consumer Products, International, Swine and Other. The Company measures segment profit as gross profit less selling expenses. Information on segments is as follows:

Food Service second quarter sales were comparable to the same period last year, with a 2.1% increase in volume offset by a 2.1% decrease in average sales prices. Segment profit for Food Service decreased $18.7 million from the same period last year due primarily to low market prices from an oversupply of chicken and product mix changes.

Consumer Products second quarter sales decreased 2.5% from the same period last year, with a 2.7% decrease in volume and a 0.2% increase in average sales prices. Segment profit for Consumer Products decreased $25.7 million from the same period last year due primarily to lower market prices from an oversupply of chicken, which more than offset the improved product mix.

International second quarter sales increased 2.4% over the same period last year, with a 15.9% increase in average sales prices offset by an 11.6% decrease in volume. Segment profit for International increased $7.4 million over the same period last year as price improvements for leg quarters and continued improvements by Tyson de Mexico more than offset the decreased volume that resulted from last year's aggressive inventory reductions.

Swine second quarter sales increased 55.1% over the same period last year, with a 57.4% increase in average sales prices offset slightly by a 1.6% decrease in volume. Segment profit for Swine improved $19.4 million over the same period last year due to the increase in average sales prices.

Other second quarter sales increased 13% over the same period last year mostly due to the prepared foods group and the poultry breeding stock group. Segment profit for Other increased $12.7 million over the same period last year mostly due to the sales increase in prepared foods and the poultry breeding stock group.

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