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Tyson Foods Inc Class A TSN
Q4 2011 Earnings Call Transcript

Transcript Call Date 11/21/2011

Operator: I'd like to thank all participants for holding. All lines will be on listen-only until the question-and-answer portion of today's conference. I'd also like to inform participants today's call is being recorded.

I'd now like to turn the call over to Jon Kathol. Thank you. You may begin.

Jon Kathol - VP, IR and Assistant Secretary: Good morning and thank you for joining us today for Tyson Foods Conference Call for the Fourth Quarter and 2011 Fiscal Year. I need to remind you that some of the things we'll talk about today will include forward-looking statements. Those statements are based on our view of the world as we know it now, which could change. I encourage you to look at today's press release for a discussion of the risks that can affect our business.

On today's call is Donnie Smith, President and Chief Executive Officer; Jim Lochner, Chief Operating Officer; and Dennis Leatherby, Chief Financial Officer.

To ensure we get to as many of your questions as possible, please limit yourself to only one question and one follow-up.

I'll now turn the call over to Donnie Smith.

Donnie Smith - President and CEO: Thanks, John. Good morning, everyone, and thanks for joining us today. I'd like to welcome John to his first earnings call as our new Vice President of Investor Relations.

Our fourth quarter earnings were $0.26 a share compared to $0.57 last year on record sales of $8.4 billion. Operating income was down $219 million versus Q4 of FY '10 driven by the $223 million change year-over-year in the Chicken segment.

Now as you quickly add that our chicken business absorbed $315 million in additional input costs during Q4 versus the same quarter last year and when it does settled, the Chicken segment finished the quarter with a loss of $82 million or a negative 2.9% return on sales.

The Beef segment was in the middle of this normalized range for the quarter at 3.4% return on sales. Pork was at the top end of its range with 7.9% and Prepared Foods had a 3.4% return on sales for Q4, which is just under its normalized range.

Let's come back to the Chicken segment for a minute. We told you last quarter that we would lose money in Q4 and unfortunately that was the case, but I'd like to give you some perspective on our performance. July and August were possibly the worst months than the chicken industry has experienced in one of the worst years in industry history.

As for us here at Tyson, we dug a hole for our sales in July. August improved, but was still negative. September was better yet and we were profitable as we started Q1 and we've been positive every week since.

So, now let's review our overall results for the year. For fiscal '11, our adjusted EPS was $1.89 or $1.97 on a GAAP basis which is the second best in company history. We have record sales of $32.3 billion reflecting increased volume of 1.7%, price increases of near 12% and operating cash flows of about $1 billion. Even though these results were below last year, I'm very pleased with our results, especially considering the business environment. Demand was flat as unemployment hovered around 9% mark and of course, you are familiar with the input headwinds we faced all the year.

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