TSN Investor ion 12072011

8/3/2019 TSN Investor ion 12072011

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Investor PresentationTyson Foods, Inc.

December 7, 2011


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Tyson Foods is one of the worlds largest proteincompanies and the second largest foodproduction company in the Fortune500

We produce approximately one out of every fivepounds of chicken, beef and pork consumed inthe United States

Tyson is one of Americas most recognized

brands

$32 billion in revenue in 2011

61 Chicken Plants

12 Beef Plants (incl. case-ready beef and pork)

9 Pork Plants (incl. case-ready beef and pork)

23 Prepared Foods Plants

115,000 Team Members

Company Overview


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#1 OR #2 MARKET SHARE POSITION

Domestic Market Share

CHICKEN BEEF PORK

Source:Watt Poultry USA, February 2011

Tyson22%

Source:Cattle Buyers WeeklyTop 30 Beef Packers % of Capacity, 2010

Source:National Pork Board, Spring 2009(most recent available)

Smithfield28%Hormel8%


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Tysons Objectives

Be our customers Go-To Supplier Create innovative and insight-driven food solutions Help our customers succeed

Be the Best in Class protein manufacturer Optimize commodity businesses Drive efficiencies; markets do not allow inefficiencies to be passed along

Build a multinational enterprise Mexico, Brazil, China, India Worldwide sales offices

Upgrade raw materials Commercialize opportunities such as renewable energy from fat Develop other technologically-advanced platforms from materials

such as feathers


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Customer Relationships

Food Service Retail
http://www.sysco.com/home.htmlhttp://www.ruthschris.com/


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Sam Fentress / Courtesy HOK

Innovative Food Solutions

19 Kitchens with a total of 20,000square feet of kitchen space

40,000 square foot USDAinspected pilot production plant

40,000 square foot office spaceincluding sensory area, consumerfocus group room and meeting

space

NEED: Foodservice operators need products thatare perceived as a good value for their customers,

but without compromising quality or increasing foodcosts.SOLUTION: Tyson Foodservice launches a valueline of chicken and beef items that help operatorsappeal to the taste buds and pocketbooks of theircustomers.

NEED: Consumers want upscale flavors andrestaurant quality, but time and money are in

tighter supply.SOLUTION: Tyson Consumer Products usesconsumer insights and culinary expertise toenhance the line of Tyson Dinner Meats givingconsumers the most flavor for their dollars.

Solutions in Food Service Solutions in Retail


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Protein & Prepared Foods Capabilities


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U.S. Operations


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International Operations


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Chicken Sales by Distribution ChannelFY2011

International Chicken Sales*FY2011

Normalized operating margin range of 5-7%

Operate in all distribution channels

Vertically integrated (purchase grain, produce feed; see page 12)

Chicken Segment

International21%

Other8%

China27%Other

28%

*Includes exports and in-country production

Total: $11.0 billion Total: $2.3 billion


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Vertical Integration


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Improvements in Chicken Segment

Achieved approximately $800 million in operating efficienciesFY 2008 to FY 2011Yields

Labor and line efficienciesProduct mix changesFreight optimizationReduction in live costs

Anticipate delivering $125 million in incremental savingsin FY2012

Operating improvements generated positive earnings in

FY2011, while most other chicken models did not


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Beef Sales by Distribution Channel*FY2011

International Beef SalesFY2011

Beef Segment

Other4%

China13%

Other25%

Total: $ 13.3 billion Total: $2.1 billion

*Excludes $286 million of intersegment sales

Central& SouthAmerica

10%

Not vertically integrated

Purchase cattle from independent producers and feedlots

ConsumerProducts

28%

FoodService

28%

CaseReady10%


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Pork Sales by Distribution Channel*FY2011

International Pork SalesFY2011

Pork Segment

Other11%

Other8%

Total: $ 4.6 billionTotal: $1.0 billion

*Excludes $816 million of intersegment sales

Not vertically integrated

Purchase hogs from independent producers

ConsumerProducts

39%

FoodService

16%

International22%

CaseReady11%

Other12%


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Beef and Pork Segments

Operating Income & Operating Margin

$ in millions Q4 FY11 Q3 FY11 Q2 FY11 Q1 FY11 Q4FY10 Q3 FY10 Q2 FY10 Q1 FY10

Beef

Income $118 $140 $94 $116 $121 $176 $126 $119

Margin 3.4% 4.0% 2.8% 3.6% 4.0% 5.6% 4.5% 4.4%

Pork

Income $113 $124 $146 $177 $125 $125 $69 $62

Margin 7.9% 8.8% 10.5% 14.3% 9.9% 10.0% 6.3% 6.5%

Operating margin Normalized Ranges*

Previous Current

Beef 1.5 - 3% 2.5 4.5%

Pork 3 - 5% 6 8%*Beef and Pork ranges raised May 2010; Pork raised again August 2011


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USDA Beef Industry Spread

$1,200

$1,250

$1,300

$1,350

$1,400

$1,450

$1,500

$1,550

$1,600

$1,650

DOLLARS

PER

HEAD

USDA BEEF TOTAL REVENUE AND CATTLE COST

USDA TOTAL

USDA CATTLE

Strong correlation between revenue and cost of cattle


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USDA Pork Industry Spread

Strong correlation between revenue and cost of hogs

$120

$140

$160

$180

$200

$220

$240

DOLLARSP

ER

HEAD

USDA PORK TOTAL REVENUE AND HOG COST

USDA TOTAL

USDA HOG


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Prepared Foods Segment

Prepared Foods Sales by Distribution ChannelFY2011

International

2%

Other

2%

Pepperoni

Beef and pork pizza toppings

Pizza crustsHams

Flour and corn tortillas and chips

Bacon

Deli Meats

Hot dogs

Fully-cooked dinner meats

Soups

Sauces

AppetizersTotal: $3.2 billion


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Global Protein Fundamentals

Profitability drives production decisions

Input cost volatility is the primary factor in profit/lossCorn and soybeans are the major input costs

Corn and soy pricing became extremely volatile; led to producer

losses in 2008-2009, 2011

Producers worldwide responded with cutbacks in herd/flockReductions in global supplies

Global demand is strong, and the U.S. is an efficient provider


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U.S. Per Capita Protein Consumption

0

20

40

60

80

100

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013P

2016P

2019P

Chicken Beef Pork Turkey

Source:USDA,February2011


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Protein Production Drivers

Contract grower

Feed conversion1.92 : 1

3.7 bushels of cornto produce 100 lbs. ofboneless skinless meat

Independent producer

Feed conversion3.5 : 1

Approx. 8 bushels of cornto produce 100 lbs. ofboneless skinless meat

Independent feedlot

Feed conversion7-9 : 1

Yearling (750 lbs.) fedbeef (300 lbs.) 11 bushelscorn to produce 100 lbs. of

boneless fed beef


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Protein Supply Chain Timelines

Pullet placed

Birth to breeding

Birth to breeding

Hogs = 20 months

Broilers = 9 months

Cattle = 39 months

Pullet Lay

Hatch

House

Birth to Breeding

Birth to Breeding

Gestation

Gestation

W

eanFinish

Wean FeedlotStocker

5 months 1.5 .75 2

8 months 14 2 4.5

13 months 10 8 3 4.5

Significant lead time to increase production


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U.S. corn Usage for Feed, Ethanol & Export

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

Feed & Residual Ethanol for Fuel ExportsSource: USDA


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Live cost ~ $0.25/lb



Corn Price/Live Cost Structural Shift


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Impact of Higher Feed Cost on Production

In reaction to higher feed costs, U.S. broilerproduction decreased by 3.8% from 2008 to

2009. When feed costs moderated in 2010,production quickly returned to 2008 levels.The rapid response for both cutting andadding supply was enabled by broilers shortproduction timeline.

U.S. pork production also declined inreaction to higher feed costs, but theresponse was slower due to the longerproduction timeline for hogs. Productiondecreased by 3.9% from 2008 to 2010, and it

will take time to rebuild the herd to 2008levels.

Sources: Informa & USDA

Sources: Informa & USDA


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Hedging Overview

Best-Practices Risk Oversight Structure

Commodity Risk Management Policy

Daily monitoring and strict enforcement

Focus hedging activities on margin management

Focus sales efforts on high strategic value / low commodity risk relationships

Use more option strategies

Shortened duration of fixed price sales contracts

Shifted to more physical hedging activities for poultry segment

Removes mark-to-market accounting

No margin money is required

Effectively transfers majority of risk to grain producer

Net Result

Less input exposure

Ability to stay closer to the market with input costs

Significantly reduced earnings volatility

Significantly reduced margin deposits


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Global Protein Consumption

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

449%Growthover50Years

MetricTons

inMillions

Source: USDA FAS and OECD. Includes Beef/Veal, Pork, Broilers, and Turkey


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Global Protein Production

0

20,000

40,000

60,000

80,000

100,000

120,000

20012002200320042005200620072008200920102011

World Pork, Beef and Broiler Production2001-2011E

000 Metric Tons

Pork

Beef

Broiler

Source: Robert A. Brown, Inc.

E


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Protein Exports a Major Factor

0%

5%

10%

15%

20%

25%

30%

35%

40%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

million pounds % of production

Pork

Source: USDA and Robert A. Brown, Inc.November 2011

2011 and 2012 are RAB forecasts

Exports % of ProductionImports Exports

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

-

1,000

2,000

3,000

4,000

5,000

6,000

% of productionmillion pounds

Beef

Chicken

0%

5%

10%

15%

20%

25%

30%

35%

40%

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

% of productionmillion pounds


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U.S. Per Capita Protein Availability & Pricing

Source: Historical Actual Data Source, USDA 2011 and 2012 Forecast by Robert A. Brown, Inc., November 24, 2011.(1) Represents Beef, Pork, Chicken and Turkey. Based on Carcass Weight Equivalent.(2) Annual Composite Average Price is a simple average of monthly USDA retail price for beef, pork and poultry.2011E protein price represents YTD2011, updated November 30, 2011

Lower production coupled with increasing net exports resultingin reduced U.S. protein availability and increased prices

Per Capita Domestic Protein Availability(1) Annual Composite Average Price(2)

251254

261 259

266 265 263 262

270

278 277274

284280

284 283 284 283

276269

266262

255

200

220

240

260

280

300

320

340

200

210

220

230

240

250

260

270

280

290

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 E2012 E

(cents per pound)(pounds per capita)

Combined Beef, Pork, Chicken & Turkey Carcass Weight Equivalent)


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Beef Demand Planes

$90

$100

$110

$120

$130

$140

$150

$160

$170$180

$190

60.0 61.0 62.0 63.0 64.0 65.0 66.0 67.0 68.0 69.0 70.0 71.0 72.0 73.0 74.0 75.0 76.0

$/Cwt.

USA S&H Beef Disappearance Per Cap, Pounds

USA Choice Beef Cutout DemandAnnual, 1996-2012E

02

0304

05

9697

98

99

0001

0607

08

09

10

11E12E

Prepared by Robert A. Brown, Inc.November 30, 2011


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Pork Demand Planes


$50

$55

$60

$65

$70

$75$80

$85

$90

$95

$100

59.00 60.00 61.00 62.00 63.00 64.00 65.00 66.00 67.00 68.00 69.00 70.00

$/Cwt.

USA+Canada Pork Disappearance Per Cap, Pounds

USDA Pork Cutout DemandAnnual, 1996-2012E

02

03

04

0596

97

98

99

00

01060708

10

09

11E12E


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Chicken Demand Planes


$120

$130

$140

$150

$160

$170

$180

$190

$200

100.0 105.0 110.0 115.0 120.0 125.0

B/SC

hickenBreastPrice,

$/cwt.

Per Cap Broiler Production, pounds

B/S Chicken Breast DemandAnnual, 1998-2012E

98

99

00 01 02

03

04

05

06

07

0809

10

11E

12E


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Chicken Market Data

Source: CME Daily Livestock ReportNovember 28, 2011


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Chicken Market Data

175,000

180,000

185,000

190,000

195,000

200,000

205,000

210,000

215,000

USDA Eggs Set

Source: USDA


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Boneless Skinless Breast Prices Chicken Wing Prices

Whole Bird Prices

10

20

30

40

50

60

70(PerPound)

5YrAvg: 43.3

Current: 53.0

60

65

70

75

80

85

90

95

100( PerPound)

5YrAvg: 83.7

Current:

89.5

Source: Bloomberg, as of 11/25/11

Source: Bloomberg, as of 11/25/11Source: Bloomberg, as of 11/25/11

75

95

115

135

155

175

195

215

5-Yr Avg:151.6Current:145.0

( Per Pound )

50

75

100

125

150

175

200( PerPound)

5YrAvg:122.5

Current: 132.0

Chicken Market Data

Chicken Leg Prices

Source: Bloomberg, as of 11/25/11


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Long-term Fundamentals Generally Favorable

U.S. protein availability per capita

Declined 7% in 3 years and will likely continue to decrease

Meat exports have continued to grow and will likely stay on this trend

Global supply and demand for protein

Lower global supplies

Growing worldwide demand fueled by developing economies

Composite protein pricing has trended up

U.S. is a low-cost producer

However, grain cost volatility like to remain

Effect on production decisions and balance sheets


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Financial Benchmarks

Normalized operating margins for each segment:

Chicken 5.0 7.0%

Beef 2.5 4.5%

Pork 6.0 8.0%

Prepared Foods 4.0 6.0%

Target >20% ROIC for Acquisitions and International Joint Ventures

Profit-improvement CapEx should generate MIRR >20%


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Financial Metrics & Accomplishments

Repurchased, redeemed or retired >$1.6 billion in senior notes since Q2 FY2009

Improved capital structure and balance sheet (as of 2011 fiscal year end):

Net Debt = $1.5 billion

Gross Debt = $2.2 billion

Maintained strong liquidity: $1.6 billion (Target is $1.2 - 1.5 billion)

18.5% ROIC

Refinanced former ABL revolver with new cash flow revolver in February 2011

Obtained credit ratings upgrades from all three major rating agencies

Fitch 2/2011: Upgraded from BB+ to BBB- (Investment Grade)

S&P 2/2011: Upgraded from BB+ to BBB- (Investment Grade)

Moodys 3/2011: Upgraded from Ba2 from Ba1 (1 notch below investment grade


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$810 $638 $120 $18

$1,000

$458

2012 2013 2014 2015 2016 2017 2018 2028

Convertible Notes Senior notes Revolver

Capitalization ($ in millions)

Major Debt Maturity Schedule by Calendar Year ($ mm) As of 10/01/11

A s of 10/ 1/ 11

Revolver $1,000

Outstandings 0

Letters of Credit 158

Available Revolver $842

As of 10/1/ 11

$1.0 bn Revolving Credit Facility due 2016 -

10.50% Senior Notes due 2014 810

6.85% Senior Notes due 2016 6387.00% Notes due 2018 120

7.00% Notes due 2028 18

3.25% Convertible Senior Notes due 2013 458

GO Zone Tax-Exempt Bonds due 2033 (0.14%) 100

Discount on Senior Notes (76)

Other 114

Tot al Debt $2,182Less: Cash (716)

Net Debt $1,465

Strong Capital Structure

Liquidity Profile ($ in millions)


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Strong Financial Position Drives Plans

Continue to invest in the business

FY12 CapEx plan = $800 - $850 million

Poultry production and labor efficiencies, yield improvements and sales channel flexibility

Continuing to build out foreign operations

Continue to reduce debt

No major maturities in FY2012 or FY2013

Opportunistic repurchases

Return capital to shareholders

Reactivated share repurchase program FY2011 repurchases totaled 9.7 million shares for $170 million

12.8 million shares remain authorized for repurchase as of October 1, 2011

Sustain investment grade credit metrics

Net Debt/EBITDA, EBITDA/Interest, Liquidity


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Valuation Presents Investment Opportunity

In all market valuation ratio comparisons, Tyson Foods is significantly lowerthan the mean of its peer group, large cap and small/mid cap food companies

See disclosures on page 45

0.28

2.08

1.51

0.64

- 0.50 1.00 1.50 2.00 2.50

Tyson Foods, Inc.

Large Cap Food

Small & Mid Cap Food

AgribusinessEV/Sales

6.16

13.57

15.30

9.80

- 5.00 10.00 15.00 20.00

Tyson Foods, Inc.

Large Cap Food


Agribusiness

EV/EBIT

4.42

11.14

11.76

6.83

- 2.00 4.00 6.00 8.00 10.00 12.00 14.00

Tyson Foods, Inc.

Large Cap Food


Agribusiness

EV/EBITDA

-

5.0

10.0

15.0

20.0

25.0

2011 2012

Calendar P/E

Tyson Foods, Inc. Large Cap FoodSmall & Mid Cap Food Agribusiness

Enterprise Value Multiples LTM, Bloomberg, December 2011


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Strong balance sheet and improved capital structureAs of Q411, liquidity of $1.6 billion and Gross Debt/EBITDA


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Disclosures

12 Months Ended

October 1, 2011 October 2, 2010

Net income $733 $765Less: Interest income (11) (14)

Add: Interest expense 242 347

Add: Income tax expense 341 438

Add: Depreciation 433 416

Add: Amortization (a) 29 35

EBITDA $1,767 $1,987

Total gross debt $2,182 $2,536Less: Cash and cash equivalents (716) (978)

Total net debt $1,466 $1,558

Ratio Calculations:

Gross debt/EBITDA 1.2x 1.3x

Net debt/EBITDA 0.8x 0.8x

Tyson Foods, Inc.

EBITDA Reconciliations(in millions) (unaudited)

(a) Excludes the amortization of debt discount expense of $44 million and $46 million for the 12 months ended October 1, 2011, and October 2, 2010,respectively, as it is included in Interest expense.

EBITDA represents net income, net of interest, income tax and depreciation and amortization. EBITDA is presented as a supplemental financial measurement inthe evaluation of our business. We believe the presentation of this financial measure helps investors to assess our operating performance from period to period andenhances understanding of our financial performance and highlights operational trends. This measure is widely used by investors and rating agencies in thevaluation, comparison, rating and investment recommendations of companies. However, the measurement of EBITDA may not be comparable to those of othercompanies in our industry, which limits its usefulness as a comparative measure. EBITDA is not a measure required by or calculated in accordance with GAAP andshould not be considered as a substitute for net income or any other measure of financial performance reported in accordance with GAAP or as a measure of

operating cash flow or liquidity. EBITDA is a useful tool for assessing, but is not a reliable indicator of, our ability to generate cash to service our debt obligationsbecause certain of the items added to net income to determine EBITDA involve outlays of cash. As a result, actual cash available to service our debt obligations willbe different from EBITDA. Investors should rely primarily on our GAAP results, and use non-GAAP financial measures only supplementally, in making investmentdecisions

TSN Investor ion 12072011

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