Tyson Foods 2013 Annual Report Download - page 26

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FISCAL 2014 OUTLOOK
In fiscal 2014, we expect overall domestic protein production (chicken, beef, pork and turkey) to increase approximately 1% from
fiscal 2013 levels. Grain supplies are expected to increase in fiscal 2014, which should result in lower input costs. The following is a
summary of the fiscal 2014 outlook for each of our segments, as well as an outlook on sales, capital expenditures, net interest expense,
debt and liquidity, share repurchases and dividends:
• Chicken – We expect domestic chicken production to increase 3-4% in fiscal 2014 compared to fiscal 2013. Based on current
futures prices, we expect lower feed costs in fiscal 2014 compared to fiscal 2013 of approximately $500 million. Many of our
sales contracts are formula based or shorter-term in nature, which allows us to adjust pricing when input costs fluctuate.
However, there may be a lag time for price changes to take effect. For fiscal 2014, we believe our Chicken segment will be in
or above its normalized range of 5.0%-7.0%.
• Beef – We expect to see a reduction of industry fed cattle supplies of 2-3% in fiscal 2014 as compared to fiscal 2013. Although
we generally expect adequate supplies in regions we operate our plants, there may be periods of imbalance of fed cattle supply
and demand. For fiscal 2014, we believe our Beef segment's profitability will be similar to fiscal 2013, but could be below its
normalized range of 2.5%-4.5%.
• Pork – We expect industry hog supplies to increase 1-2% in fiscal 2014 and exports to improve compared to fiscal 2013. For
fiscal 2014, we believe our Pork segment will be in its normalized range of 6.0%-8.0%.
• Prepared Foods – We expect operational improvements and pricing to offset increased raw material costs. Because many of
our sales contracts are formula based or shorter-term in nature, we are typically able to offset rising input costs through
increased pricing. As we continue to invest heavily in our growth platforms, we believe our Prepared Foods segment could be
slightly below its normalized range of 4.0%-6.0% for fiscal 2014.
• Sales – We expect fiscal 2014 sales to approximate $36 billion as we continue to execute our strategy of accelerating growth in
domestic value-added chicken sales, prepared food sales and international chicken production.
• Capital Expenditures – We expect fiscal 2014 capital expenditures to approximate $700 million.
• Net Interest Expense – We expect net interest expense will approximate $100 million for fiscal 2014.
• Debt and Liquidity – Total liquidity at September 28, 2013, was $2.1 billion, well above our goal to maintain liquidity in
excess of $1.2 billion. In October 2013, our 2013 notes, with a principal amount of $458 million, matured and we paid them
off using cash on hand.
• Share Repurchases – We expect to continue repurchasing shares under our share repurchase program. As of September 28,
2013, 14.2 million shares remain authorized for repurchases. The timing and extent to which we repurchase shares will depend
upon, among other things, our working capital needs, market conditions, liquidity targets, our debt obligations and regulatory
requirements.
• Dividends – On November 14, 2013, the Board of Directors increased the quarterly dividend previously declared on August 1,
2013, to $0.075 per share on our Class A common stock and $0.0675 per share on our Class B common stock. The increased
quarterly dividend is payable on December 13, 2013, to shareholders of record at the close of business on November 29, 2013.
The Board also declared a quarterly dividend of $0.075 per share on our Class A common stock and $0.0675 per share on our
Class B common stock, payable on March 14, 2014, to shareholders of record at the close of business on February 28, 2014.