Tyson Foods 2015 Annual Report Download - page 24
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Please find page 24 of the 2015 Tyson Foods annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
DESCRIPTION OF THE COMPANY
Weareoneoftheworld'slargestfoodcompanieswithleadingbrandssuchasTyson®,JimmyDean®,HillshireFarm®,SaraLee®,BallPark®,Wright®,
Aidells®andStateFair®.Wearearecognizedmarketleaderinchicken,beefandporkaswellaspreparedfoods,includingbacon,breakfastsausage,turkey,
lunchmeat,hotdogs,pizzacrustsandtoppings,tortillasanddesserts.Someofthekeyfactorsinfluencingourbusinessarecustomerdemandforourproducts;the
abilitytomaintainandgrowrelationshipswithcustomersandintroducenewandinnovativeproductstothemarketplace;accessibilityofinternationalmarkets;
marketpricesforourproducts;thecostandavailabilityoflivecattleandhogs,rawmaterials,andfeedingredients;andoperatingefficienciesofourfacilities.
Weoperateinfourreportablesegments:Chicken,Beef,PorkandPreparedFoods.FollowingthesaleofourMexicoandBraziloperationsinfiscal2015,webegan
reportingourinternationaloperation,whichwaspreviouslyreportedastheInternationalsegment,inOther.Othernowincludesourforeignchickenproduction
operationsinChinaandIndiaandthird-partymergerandintegrationcosts.Allperiodspresentedhavebeenreclassifiedtoreflectthischange.Chicken,Beef,Pork
andPreparedFoodsresultswerenotimpactedbythischange.
OnAugust28,2014,weacquiredandconsolidatedTheHillshireBrandsCompany("HillshireBrands"),amanufacturerandmarketerofbranded,convenient
foods.HillshireBrandsresultsfromoperationssubsequenttotheacquisitionclosingareincludedinthePreparedFoodssegment.
OVERVIEW
•Fiscalyear–Ouraccountingcycleresultedina53-weekyearforfiscal2015anda52-weekyearfor2014and2013.
• General–Operatingincomegrew52%infiscal2015overfiscal2014,whichwasledbyrecordearningsinourChickenandPreparedFoodssegments.
Salesincreased10%toarecord$41.4billion,drivenbypriceandmiximprovements,theincrementalimpactofHillshireBrandsandthepositiveimpact
of53weeksinfiscal2015.Wecontinuedtoexecuteourstrategyofacceleratinggrowthindomesticvalue-addedchickensales,preparedfoodsales,
innovatingproducts,servicesandcustomerinsightsandcultivatingourtalentdevelopmenttosupportTyson'sgrowthforthefuture.
• HillshireIntegration–WecontinuetomaintainfocusontheintegrationofHillshireBrandsandsynergycapture.AsweexecuteourPreparedFoods
strategy,weestimatetheimpactoftheHillshireBrandssynergies,alongwiththeprofitimprovementplanrelatedtoourlegacyPreparedFoodsbusiness,
willhaveapositiveimpactofmorethan$500millioninfiscal2016andmorethan$700millionbyfiscal2017.Themajorityofthesebenefitsareexpected
toberealizedinthePreparedFoodssegment.Wewillinvestaportionofthesynergiesininnovation,newproductlaunchesandstrengtheningourbrands.
Infiscal2015,wecaptured$322millionofsynergiesandprofitimprovementinitiatives,ofwhich$285millionimpactedthePreparedFoodssegment.
• Marketenvironment–OurChickensegmentdeliveredrecordresultsinfiscal2015drivenbystrongdemandandfavorabledomesticmarketconditions,
partiallyoffsetbydisruptionscausedbyexportbans.ThePorksegmentresultsremainedinitsnormalizedoperatingmarginrange,butweredownfrom
lastyearduetounfavorablemarketconditionsfromadeclineinexportsandperiodsofincreaseddomesticavailabilityofporkproducts.OurPrepared
FoodssegmentdeliveredrecordoperatingincomeandoperatingmarginsaswecontinuedtoexecuteourprofitimprovementplanandintegrateHillshire
Brands.TheBeefsegmentexperiencedalossdrivenbyloweravailabilityoffedcattlesupplies,higherfedcattlecosts,exportmarketdisruptions,and
reduceddemandforpremiumbeefproductsduetotherelativevalueofcompetingproteins.
• Mexico–Werecordeda$161millionpre-taxgainasaresultofthesaleofourMexicooperationinthefourthquarteroffiscal2015.Thegainisreflected
inOtherforsegmentreportingandincludedinCostofSalesintheConsolidatedStatementsofIncome.
• Chinaimpairment–FollowingthesaleofourMexicoandBrazilchickenproductionoperations,wehavecontinuedtoreviewourstrategiesandoutlook
fortheremaininginternationalbusinesses,whichoperationsincludeourchickenproductionoperationsinChina.Despiteourbeliefinthepotentialforthis
business,ourChineseoperationshavenotachievedprofitability.Giventheongoinglossesbeinggeneratedinthisbusiness,recentchangesinthestrategy
andmanagementofthebusiness,andthedepressedeconomicoutlookforChina,weassessedourChineseoperationsforpotentialimpairmentinthefourth
quarteroffiscal2015.Asaresultofthisevaluation,duringthefourthquarteroffiscal2015,werecordeda$169millionimpairmentcharge.The
impairmentwascomprisedof$126millionofproperty,plantandequipment,$23millionofgoodwilland$20millionofotherassets.TheChinaoperation
isincludedinOtherforsegmentreportingandtheimpairmentisincludedinCostofSalesintheConsolidatedStatementsofIncome.
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