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Tyson Foods reduces net debt to $2.2 billion, ends quarter with liquidity of $1.6 billion
By Lisa Kerner
Charlotte, N.C., May 10 - Tyson Foods, Inc. ended the second quarter of fiscal 2010 on April 3 with total liquidity, including cash, of $1.6 billion.
The company repurchased or retired over $450 million of debt in the quarter, reflecting Tyson's commitment to further reduce debt, said chief financial officer Dennis Leatherby during the company's earnings call on Monday.
Tyson had net debt, after cash outstanding of more than $800 million, of under $2.2 billion, up $277 million from the fiscal first quarter.
The increase was attributed to higher working capital needs resulting from a nearly 4% increase in sales, the timing of semiannual interest payments made in the fiscal second quarter and estimated tax payments, Leatherby said.
Tyson did not pay down more debt in the quarter with its cash because it was too expensive. Leatherby said the company wants to make sure it has a "decent enough" rate of return and payback.
Total debt to capitalization at the end of the quarter fell to approximately 39%.
Company-wide, Tyson reported net income of $156 million on $6.9 billion of sales. The figures compared with a net loss of $119 million on sales of $6.3 billion in the year-ago period.
President and chief executive officer Donnie Smith is pleased with the results, given that typically the fiscal second quarter is not the company's best, according to a Tyson news release.
"We are very pleased with how our third quarter is going, and the summer grilling season is just getting started," said Smith.
Tyson Foods is a Springdale, Ark.-based processor and marketer of chicken, beef and pork.
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