Item 6. SELECTED FINANCIAL DATA

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Item 6. SELECTED FINANCIAL DATA

FIVE-YEAR FINANCIAL SUMMARY



in millions, except per share, percentage and ratio data
	2019			2018			2017			2016			2015
Summary of Operations
Sales	$	42,405		$	40,052		$	38,260		$	36,881		$	41,373
Operating income	2,827			3,032			2,921			2,805			2,180
Net interest expense	451			343			272			243			284
Net income	2,035			3,027			1,778			1,772			1,224
Net income attributable to Tyson	2,022			3,024			1,774			1,768			1,220
Diluted net income per share attributable to Tyson:
Net income	5.52			8.19			4.79			4.53			2.95
Dividends declared per share:
Class A	1.575			1.275			0.975			0.650			0.425
Class B	1.418			1.148			0.878			0.585			0.383
Balance Sheet Data
Cash and cash equivalents	$	484		$	270		$	318		$	349		$	688
Total assets	33,097			29,109			28,066			22,373			22,969
Total gross debt	11,932			9,873			10,203			6,279			6,690
Shareholders’ equity	14,226			12,811			10,559			9,624			9,706
Other Key Financial Measures
Depreciation and amortization	$	1,098		$	943		$	761		$	705		$	711
Capital expenditures	1,259			1,200			1,069			695			854
EBITDA	3,968			4,021			3,648			3,538			2,906
Return on invested capital	11.8		%	14.1		%	16.2		%	17.9		%	13.5		%
Effective tax rate	16.3		%	(10.3		)%	32.3		%	31.8		%	36.3		%
Total debt to capitalization	45.6		%	43.5		%	49.1		%	39.5		%	40.8		%
Book value per share	$	38.95		$	35.09		$	28.72		$	25.67		$	24.25

Notes to Five-Year Financial Summary


a.	Fiscal 2019 net income included $105 million post tax income related to the recognition of previously unrecognized tax benefit, $55 million pretax gain on sale of an investment, $37 million pretax Keystone Foods purchase accounting and acquisition related costs, $41 million pretax impairment charge related to the planned divestiture of a business, $31 million pretax Beef production plant fire costs, $15 million pretax pension plan termination charge and $41 million pretax restructuring and related charges. Additionally, in fiscal 2019, we have retrospectively recognized adjustment of prior periods in accordance with recently adopted accounting guidance related to net periodic pension and postretirement benefits. Accordingly, operating income was reduced by $23 million, $10 million, $28 million, and increased by $11 million for fiscal years 2018, 2017, 2016 and 2015, respectively. For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 2: Changes in Accounting Principles.

Fiscal 2019 net income included $105 million post tax income related to the recognition of previously unrecognized tax benefit, $55 million pretax gain on sale of an investment, $37 million pretax Keystone Foods purchase accounting and acquisition related costs, $41 million pretax impairment charge related to the planned divestiture of a business, $31 million pretax Beef production plant fire costs, $15 million pretax pension plan termination charge and $41 million pretax restructuring and related charges. Additionally, in fiscal 2019, we have retrospectively recognized adjustment of prior periods in accordance with recently adopted accounting guidance related to net periodic pension and postretirement benefits. Accordingly, operating income was reduced by $23 million, $10 million, $28 million, and increased by $11 million for fiscal years 2018, 2017, 2016 and 2015, respectively. For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 2: Changes in Accounting Principles.


b.	Fiscal 2018 net income included $1,003 million post-tax recognition of tax benefit from remeasurement of net deferred tax liabilities at lower enacted tax rates, $109 million pretax one-time cash bonus to our hourly frontline employees, $68 million pretax impairment charge net of a realized gain related to the divestiture of non-protein businesses and $59 million pretax restructuring and related charges.

Fiscal 2018 net income included $1,003 million post-tax recognition of tax benefit from remeasurement of net deferred tax liabilities at lower enacted tax rates, $109 million pretax one-time cash bonus to our hourly frontline employees, $68 million pretax impairment charge net of a realized gain related to the divestiture of non-protein businesses and $59 million pretax restructuring and related charges.


c.	Fiscal 2017 net income included $103 million pretax expense of AdvancePierre purchase accounting and acquisition related costs, pretax impairment charges of $52 million related to our San Diego Prepared Foods operation, $45 million related to the expected sale of a non-protein business and pretax restructuring and related charges of $150 million.


d.	Fiscal 2016 net income included $53 million post tax related to the recognition of previously unrecognized tax benefits and audit settlements. In fiscal 2016, we adopted new accounting guidance, retrospectively, requiring classification of debt issuance costs as a reduction of the carrying value of the debt. In doing so, $29 million and $35 million of deferred issuance costs were reclassified from Other Assets to Long-Term Debt in our Consolidated Balance Sheets for fiscal 2016 and 2015, respectively. This change is reflected above in total assets, total debt, total debt to capitalization and return on invested capital ratios.

Fiscal 2016 net income included $53 million post tax related to the recognition of previously unrecognized tax benefits and audit settlements. In fiscal 2016, we adopted new accounting guidance, retrospectively, requiring classification of debt issuance costs as a reduction of the carrying value of the debt. In doing so, $29 million and $35 million of deferred issuance costs were reclassified from Other Assets to Long-Term Debt in our Consolidated Balance Sheets for fiscal 2016 and 2015, respectively. This change is reflected above in total assets, total debt, total debt to capitalization and return on invested capital ratios.


e.	Fiscal 2015 was a 53-week year, while the other years presented were 52-week years. Fiscal 2015 included a $169 million pretax impairment charge related to our China operation, $57 million pretax expense related to merger and integration costs, $59 million pretax impairment charges related to our Prepared Foods network optimization, $12 million pretax charges related to Denison impairment and plant closure costs, $8 million pretax gain related to net insurance proceeds (net of costs) related to a legacy Hillshire Brands plant fire, $21 million pretax gain on the sale of equity securities, $161 million pretax gain on the sale of the Mexico operation, $39 million pretax gain related to the impact of the additional week in fiscal 2015 and $26 million post tax from unrecognized tax benefit gain.

Fiscal 2015 was a 53-week year, while the other years presented were 52-week years. Fiscal 2015 included a $169 million pretax impairment charge related to our China operation, $57 million pretax expense related to merger and integration costs, $59 million pretax impairment charges related to our Prepared Foods network optimization, $12 million pretax charges related to Denison impairment and plant closure costs, $8 million pretax gain related to net insurance proceeds (net of costs) related to a legacy Hillshire Brands plant fire, $21 million pretax gain on the sale of equity securities, $161 million pretax gain on the sale of the Mexico operation, $39 million pretax gain related to the impact of the additional week in fiscal 2015 and $26 million post tax from unrecognized tax benefit gain.


f.	Return on invested capital is calculated by dividing operating income by the sum of the average of beginning and ending total debt and shareholders’ equity less cash and cash equivalents.


g.	For the total debt to capitalization calculation, capitalization is defined as total debt plus total shareholders’ equity.


h.	Book value per share is calculated by dividing shareholders’ equity by the sum of Class A and B shares outstanding and for fiscal 2016 and 2015, the remaining minimum shares that were to be issued from our tangible equity units each period.


i.	"EBITDA" is a Non-GAAP measure and defined as net income less interest income, plus interest, taxes, depreciation and amortization. A reconciliation of net income to EBITDA immediately follows.

EBITDA RECONCILIATIONS

A reconciliation of net income to EBITDA is as follows:



in millions, except ratio data
	2019			2018			2017			2016			2015

Net income	$	2,035		$	3,027		$	1,778		$	1,772		$	1,224
Less: Interest income	(11		)	(7		)	(7		)	(6		)	(9		)
Add: Interest expense	462			350			279			249			293
Add: Income tax expense (benefit)	396			(282		)	850			826			697
Add: Depreciation	819			723			642			617			609
Add: Amortization (a)	267			210			106			80			92
EBITDA	$	3,968		$	4,021		$	3,648		$	3,538		$	2,906


Total gross debt	$	11,932		$	9,873		$	10,203		$	6,279		$	6,690
Less: Cash and cash equivalents	(484		)	(270		)	(318		)	(349		)	(688		)
Less: Short-term investments	(1		)	(1		)	(3		)	(4		)	(2		)
Total net debt	$	11,447		$	9,602		$	9,882		$	5,926		$	6,000

Ratio Calculations:
Gross debt/EBITDA	3.0x			2.5x			2.8x			1.8x			2.3x
Net debt/EBITDA	2.9x			2.4x			2.7x			1.7x			2.1x


(a)	Excludes the amortization of debt issuance and debt discount expense of $12 million, $10 million, $13 million, $8 million and $10 million for fiscal 2019, 2018, 2017, 2016 and 2015, respectively, as it is included in Interest expense.

EBITDA is defined as net income before interest, income taxes, depreciation and amortization. Net debt to EBITDA represents the ratio of our debt, net of cash and short-term investments, to EBITDA. EBITDA and net debt to EBITDA are presented as supplemental financial measurements in the evaluation of our business. We believe the presentation of these financial measures helps investors to assess our operating performance from period to period, including our ability to generate earnings sufficient to service our debt, enhances understanding of our financial performance and highlights operational trends. These measures are widely used by investors and rating agencies in the valuation, comparison, rating and investment recommendations of companies; however, the measurements of EBITDA and net debt to EBITDA may not be comparable to those of other companies, which limits their usefulness as comparative measures. EBITDA and net debt to EBITDA are not measures required by or calculated in accordance with generally accepted accounting principles ("GAAP") and should not be considered as substitutes 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 obligations because 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 will be different from EBITDA. Investors should rely primarily on our GAAP results, and use non-GAAP financial measures only supplementally, in making investment decisions.

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