Welcome to the Tyson Quarterly Investor Earnings Conference. For today’s call, all parties will be on listen-only. (Operator Instructions) Today’s call is being recorded. If you have any objection, please disconnect at this time. I will now turn today’s call over to Mr. Jon Kathol, Vice President of Investor Relations. Thank you, you may begin.

Good morning and thank you for joining us today for Tyson Foods’ conference call for the second quarter of the 2014 fiscal year. On today’s call are Donnie Smith, President and Chief Executive Officer and Dennis Leatherby, Executive Vice President and Chief Financial Officer. I need to remind you, our remarks today include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. I encourage you to read today’s press release and our filings with the Securities and Exchange Commission for a discussion of the risks that can affect our business. (Operator Instructions) I’ll now turn the call over to Donnie Smith.

Thanks, John, good morning everyone and thanks for joining us today. With $0.60 a share, Q2 was a record-setting second quarter and we achieved it despite some significant hurdles. Q2 is typically our most challenging quarter and we expect that that to be the case again, this year. Now that is in the books, I feel like we’re in a really good position for the back half of the year. But before we comment on the balance of the year, let’s look at what went on in Q2. Winter weather affected us in several ways, some positive, some negative. Although we saw a dip in our sales to school cafeterias from weather related closings, we saw an increase in our retail sales, because mom went to the grocery store and stocked up on chicken strips when she heard another round of bad weather was coming. Our multichannel business channel allows us to serve the consumer’s needs wherever they are, which is one of our streams, as a company, because of weather conditions, we had more issues than normal, getting order to our customers and to the members to our plans, cold temperatures affected livestock productivity and our propane shortages that resulted in price hikes of that important fuel sources for our growers. We expect this sort of thing every second quarter at least in some locations, but this season, winter storm started earlier where more large spread and were more frequent. However, if you look at the most recent four-week data for the period ending March 29, total pounds sold were about flat or dollar sales rose a little over 4%, driven by a 4.6% increase in pricing. Fresh meat volume is down nearly 7% on a 7% price increase, Pork volume is down nearly 1% or 5% gone up…

Thank you, Donnie, and good morning. As Donnie said earlier, we had a record setting second quarter. Our top line revenue growth was 7.7% over the prior year, and quarterly sales surpassed $9 billion for the first time in our history. We continue to execute our growth strategy as evidenced by increased sales volumes in Chicken, Prepared Foods, and International. Total company return on sales was 4%, and operating income was $361 million, up 53% from Q2 2013. Our earnings of $0.60 per share is a record for our second quarter and represents the 58% increase over adjusted EPS of $0.38 in Q2 2013. Year-to-date, EPS was $0.32, or a 52% increase compared to last year’s $0.87 adjusted EPS coming from operation – continuing operations. Our rolling four quarter EPS is $2.71 from continuing operations on an adjusted basis. This compares to $1.95 for the same period a year ago. We achieved a 12-month pre-tax return on invested capital of just over 20% compared to 16% for the prior year period. This 20% ROIC goal is an important metric for us and one we’re proud of attaining. Operating cash flow through two quarters was $265 million after funding $367 million in additional working capital as we grew our business. This compares to operating cash flows of $230 million for the first two quarters of fiscal 2013. We spent $153 million on capital expenditures for the second quarter and $293 million for the first six months of fiscal 2014. This outpaced our depreciation and amortization by $39 million as we continued to invest their projects for both our domestic and international operations. These projects will not only result in improved productive capabilities, labor efficiencies, yields and sales mix, but will also increase our ability to innovate and introduce new products to…

Thank you. (Operator Instructions) And I do have today, first question from Ken Zaslow with Bank of Montreal. Your line is open. Kenneth Zaslow – Bank of Montreal: Hey, good morning everyone.

Hi, good morning. Hey, Donnie, your expectation for chicken production levels are up 2% to 3%. It's higher than most of the industry that we're hearing from including future. With lower production in the first half of the year, does that imply a fairly rapid expansion in the back half of the year? And what are you thinking about 2015 on that? Can you just help us out with that?

Sorry, the 2% to 3% is driven mainly on weight continuing to increase of what we think placements will be about flat to maybe up 1% or so in the back half of the year. I don’t see a meaningful change in poultry production until probably the back half of our 2015. So I don’t think there's anything that's going to get away from us. But I also think, Ken, there’s going to be a very strong demand pull for chicken, and the industry is going to try to respond as much as it can. The relative value of chicken at both retail and food service is going to make for a very, very strong chicken back half. So that’s kind of what we’re seeing. I don’t think the 2% to 3% is anything that would change our margin outlook for the back half of the year. Kenneth Zaslow – Bank of Montreal: And my follow-up question is, this is more of a technicality. I just want to – making sure I understand, you're now obviously excluding international from your business, and you said that your chicken outlook is to be above your normalized range. If I net those together, did the net of those to change to the upside, downside or hasn’t changed relative to your initial expectations?

To the upside, if you look at our domestic chicken business for the first half, we’re just under 9% on sales, and there is no reason going into the back half of this year for us not to expect our earnings in chicken to be at least that good or better. So, yes, I think in general, it's the total range if you put the two back together to the upside. Kenneth Zaslow – Bank of Montreal: Great. I appreciate. Thank you.

You bet, Ken. Thanks.

The next question comes from Farha Aslam. Your line is open. Farha Aslam – Stephens Inc.: Good morning.

Good morning, Farha. Farha Aslam – Stephens Inc.: Just continuing on the Chicken discussion, could you just give us a read, your pricing was down in the March quarter. And we’ve seen spot pricing for chicken improve. Kind of your outlook for pricing and profitability and a little bit more detail on the U.S. chicken business for the second half would be helpful?

Yes, certainly over the last, say, 30, 40 days or so the chicken market has responded. If you look at, I think the beef cut out topped out around 240 or so and pork ran up to 130 or so, and that provided a huge Halo for chicken prices to continue and increase, because chicken pricing looks relatively cheap compared to those beef and pork numbers. So we expect to see another strong year of chicken pricing for the summer. And think that the outlook for the back half of our year should be better than – the earning outlook for the back half of the year should be better than the front half. Farha Aslam – Stephens Inc.: Okay, thanks helpful. And then when you look at capital allocation clearly you have significant liquidity available to you, yet you’ve said that your share count should be relatively flat for the rest of the year. Can you share with us your thoughts on M&A and the environment you're currently seeing?

Sure, Farha. Let me take this one by one. First, as far as the share count, that’s where we are as of now, so we’re not projecting where we’re going to go from here. In terms of the M&A environment, it’s a very attractive environment. Over the past 12 months, our EBITDA was about $2.1 billion, and so we can put some pretty good leverage on that. And so – and have the ability to both go after small bolt-on acquisitions or larger more strategic acquisitions. Farha Aslam – Stephens Inc.: And just on transactions, any color on what you're seeing out there right now?

We’re seeing a variety of opportunities and value-added and International or just looking for the right strategic fit right now. Farha Aslam – Stephens Inc.: Great. Thank you so much.

The next question comes from Brett Hundley. Your line is open. Hello, Mr. Hundley, your line is open. Would you like me to move on? Brett M. Hundley – BB&T Capital Markets: Yes, please.

Thank you. Up next is Michael Piken. Your line is open. Michael Leith Piken – Cleveland Research Company LLC: Yes, good morning. Just wanted to shift over to the beef side of the business, and if we can start on the Pork side, I see you've taken your production down 4% to 5%; you mentioned in the prepared remarks that you think the supplies are going to be tightest kind of from June to October. But where's the industry in terms of finding a vaccine or something to stop the spread of PEDV at this point as best you can tell?

I’m not aware of any vaccine that has been developed. I do know in working with our pork suppliers, we have a very close, very good relationship with the farmers from which we purchase hogs. And there has been a noticeable increase in biosecurity throughout the areas where we draw our hogs from, but as far as we know there is no readily available vaccine. Michael Leith Piken – Cleveland Research Company LLC: Okay. So I mean, do you think at this point, I mean, it seems like at least the spread of the disease has been a little bit contained. How much of that is weather versus just the improved biosecurity, and how confident are you now that sort of we may – the down 4% or so is probably what we're going to see now and that it might not get worse?

Let me approach the back half of that question first. Although it’s difficult to be completely confident and I'll explain that in a second, we work very closely with our farmers. And we know in the regions where we operate, when, which farms were affected, and we work closely with them to understand how much they are affected. We also work closely with them to know how much longer they’re trying to hold their hogs to put a little bit more weight on, I mean that kind of thing. So we stay pretty dialed in say, within a three or four-week period of what the hog supply is going to look like coming into our plans. Now, the things we can’t tell is, for example, with the increased biosecurity around PED, how much improvement is that having on PRRS, for example, on these farms. So there is a little bit of movement in that number. But in general, as we just look at the case sections and how they reflected to farmers that we draw hog from. We’re pretty confident that between June and then, probably dipping the deepest in that August set period and then trying to start recovering or so, in October is the right way to plan our business. And we work not only with, of course, our plants in making sure we've got a good plan dialed in as efficient as we can be and move also around where we need to, but we’ve also been working with our customer base to make sure that those products that are sold by the each, for example, ribs or bellies or whatever are that we understand what the dip is going to look like and how we can help them merchandise through that. So we think we’ve got a good plan. We think we're as dialed in as we can be. Michael Leith Piken – Cleveland Research Company LLC: Okay, great. And then just shifting over to beef, it looks like the catalog field numbers are supportive of relatively good supply availability over the next two quarters, but if you think about fiscal 2015, could you talk a little bit about your outlook for beef margins, do you think we can get back to a normalized level, it looks like the cattle supplies might get a little more tight as you head into the early half of fiscal 2015, any thoughts there in terms of how we think about your beef business next year?

Little more comfortable in the back half of 2014 certainly, and we agree with you assessment there that there should be adequate cattle certainly around us, the drought in the South West continues and that tends to push a few more cattle up in the Midwest where the predominance of our processing base is. So we feel good about having adequate cattle around us. As you get out into 2015, I think you can – looking at the calf crop, you can already say that 2015 numbers will be down another 2% to 3% or so. And it looks like that the cattle are going to continue to concentrate in the Midwest creating some of these regional disparity with cattle supply out there. But we feel very comfortable that we’re going to have good cattle around us. And at this point, there is no reason for us, not to think of our beef business at least as good as last year or better this year and now a lot of reason to think about it very differently going into 2015 from where we stand today. Michael Leith Piken – Cleveland Research Company LLC: Okay. Thank you very much.

You bet.

The next question comes from Diane Geissler. Your line is open. Diane R. Geissler – CLSA Americas LLC: Good morning.

Good morning, Diane.

Good morning, Diane. Diane R. Geissler – CLSA Americas LLC: I just wanted to put together a couple of these comments that you’ve made about production into 2015 to get more of a holistic view on total protein production in 2013. It sounds like to me you’re saying that given the constraints of the hen flock you might see a little bit more production in chicken later in 2014, but it won’t really ramp until later in 2015. I don’t know if anybody really has a clear call on hard numbers, because until we get on top of the virus itself, I’m not sure where it’s going to go, so I would look at maybe on the hog side flat to up slightly next year and then it sounds like the cattle supply should be down again because of either drought and/or retentions. If you kind of put that altogether, are you looking for sort of flat to up slightly in terms of total protein supply next year or do you have a view on that at this point?

The big if for us is what’s going to happen with pork. I’d like to think we’re going to see a herd expansion, I’d like to think we’re with biosecurity we'll get on top of PED, but it’s just too early to tell. I think the rest of it, Diane, you’re dialed in very well on what to expect from a supply standpoint. So I don't think I'd change your outlook very much, and if anything flat to up maybe a little bit would be a pretty decent call in May. Now, we’ll know a little bit more as we get down into the fall, but I think you’re dialed in pretty good. Diane R. Geissler – CLSA Americas LLC: Okay. And then maybe just to move to the demand side of the equation, some of the drivers between the DAY STARTS and the light sausage, some of the recent eliminator you’ve done, or sort of the best and better growth in the legacy portfolio.

And so, really we do have some strong businesses in that portfolio that are doing very well, and we’ve got some others that are a bit more immature that we’re investing heavily in and we give the whole segment – we give that whole segment up to its normalized range. and I really think looking forward, what you should expect we pay for that Prepared Foods segment to be in its range next year, as we see these investments come to provision in these next two quarters. Diane R. Geissler – CLSA Americas LLC: Okay, that’s helpful. And maybe, just a follow quick one from me, in the prepared remarks, you alluded some poor operational execution in poultry in Brazil, and you said you had restructured that business, and maybe elaborating a little bit on what’s going on that?

Yes, we had some folks make some poor decisions around how we handle the part of our processing that – what we had was, we had a freezer that made it some repair, our folks down there frankly did not do a very good job in that, it also backed up into the field and infected our law production. And so basically, we changed that out our country manager in Brazil. we changed out the plant manager in that location, and the law production manager and we have a firm grip on the situation from this point forward. so that behind us and we’re looking forward now to – two much better quarters coming ahead. Diane R. Geissler – CLSA Americas LLC: All right. Great. Thanks very much.

And the next question comes from Akshay Jagdale. Your line is open. Akshay S. Jagdale – KeyBanc Capital Markets, Inc.: Good morning.

Thanks. Hi Akshay. Akshay S. Jagdale – KeyBanc Capital Markets, Inc.: Hi. So my question is on chicken, first on fiscal 2015 obviously, chicken being a largest business, you may – you reiterate it 10% EPS growth. But at the same time, you did talk a little bit about production in the sense that you think that the industry is going to respond to the margin that we’re seeing right now, so can you just help us understand in a scenario where the industry is increasing production, which I understand may not happen next year. but in a scenario where that’s happening and you’re coming off a year where you have above normal margins, can how can Tyson still grow earning the 10%, so first Kenneth and what’s the strategy to execute on that?

So, let me take the kind of the part B side of your question, can we grow EPS 10% absolutely, you should see significant improvement in Prepared Foods next year, international off to get better this thing in China is not going to last forever. I can’t tell you today, I’ve been wrong two quarter to put forward and when we though that thing would return, so I can’t tell you today, but I can’t tell you the current situation is not sustainable and that it will and for you – and we’re doubling down on our cost efforts, particularly in China. So, you should see improvement in our international results. We think, Beef ought to be every bid as good next year, it is this year same story on Pork, if we get any kind of production expansion maybe a little bit better. And so then, kind of back in and then the first part of your question, it really pulls back to our buy versus growth strategy, Akshay. We don’t have to necessarily grow the Chicken to expand our business. We’ve got two areas for our current Chicken business. We were just about out of capacity and that’s our case-ready fresh chicken, which we are the number one brand at retail and that’s a very, very important segment to our customer and to the consumer. And so we’ve got to expand our capacity there and they don’t be thinking necessarily production just think capacity. So, it may mean a capacity move from one process type into another to capture a more value-added segment. And then speaking of value-added, we are tapped out on our further process and fully cooked capacity as well. So, we have two lines under construction now and we’re thinking about another two, three lines, because our – the consumers responding to our value-added poultry and as the we’ve grown about 7% I think, so far this year in value-added and see no reason off to believe that we won’t sustain at 6% to 8% growth in fiscal 2015 as we move forward.

And Akshay, this is Dennis, I would add to that. We have a considerable pipeline of projects in the queue around capital spending. We talked about $650 million to $700 million this year. We fully expect next year to be quite a bit more and as we’ve talked about capacity aggregate MIRR our projects over the last four years have been just shy of 25%. We fully expect that to continue to be the case in fiscal 2014 and 2015. So, there is every reason to believe we can add to the margin structure even through CapEx. Akshay S. Jagdale – KeyBanc Capital Markets, Inc.: Thank you. That’s very helpful. Good segue into the next half of my question which is, so what do you expect in terms of supply for the industry next year? So this is live, obviously, the live part of the industry. What are you expecting for supply next year? And do you expect industry margins to sustain themselves on the spot level?

I would expect on the supply 2%, 3% or so driven primarily in the back half as we’ve said earlier. And then yes, I mean with cattle numbers coming down, call pork flat up a little bit. There is no reason not to expect chicken to not have another good year in terms of its demand, if for no other reason than the relative price versus the other proteins. So yes, I think demand for chicken will continue to be strong next year, sure. Akshay S. Jagdale – KeyBanc Capital Markets, Inc.: Okay. And then just the short term – and again, sorry to ask so many questions on chicken, but you’ve clearly proven that in the bottom of the cycle, you can outperform the industry. The question I’ve always had is, when things are good, how good can it get for Tyson? So things are pretty good. They have been for the industry now for over a year. You’ve put up a 9.5% margin last quarter, but you would expect that the next two quarters would be the best environment from a margin perspective for Tyson, is that for the U.S. Tyson business in Chicken. Is that a fair assessment and can you give us some insight into how the quarter is shaping up one-month into it?

No reason to expect the back half of our year, do not be at least as good or better than what the front half was from an earnings perspective. But remember I would say, we don’t respond like pure play commodity guys. Our business model is much more smoothed out through the year. So, we won’t necessarily hit the peeks in the summer time like the commodity players will, but we also won’t see the dips in the lower part of the market to our consistent earnings over time is what our business model is shooting forward, and that’s what you should expect. Akshay S. Jagdale – KeyBanc Capital Markets, Inc.: Okay. And just one last one following up on some of the questions on M&A. What I've been sort of impressed by your discipline on M&A as it relates to the price with your ROIC metric, the 20% return that you talked about. So can you just remind us again about the filter and sort of the priorities of that filter? So I mean, there's obviously the M&A environment is very good right now. But the type of prices being paid I would argue are also pretty rich, especially let's say for Michael Foods to get a 20% ROIC pre-tax would imply I think doubling the EBITDA on that business in five years. So can you just help us with your filter and the discipline and put that into context with the environment you're seeing?

Dennis.

Sure. Akshay, this is Dennis. As far as the filter goes, first and foremost they need to be strategic and fit within our goals to grow in the value-added categories around Chicken and Prepared Foods and for that matter possibly even Beef or Pork to the extent they are available. International’s obviously a priority as well. From a disciplined standpoint, you are right, our goal is to achieve a 20% ROIC with an acquisition. To the extent that the M&A environment requires higher prices to be paid for companies. That means we have to work that much harder to get there and we can – we do that through looking at synergies how we can expand the business within our existing distribution framework, and just be very disciplined and get there. That might mean we have to push it out for three to five years to get that return But we think ultimately, those kind of acquisitions still would be very accretive from an EPS and then ROIC standpoint over time. So really nothing’s changed. Akshay S. Jagdale – KeyBanc Capital Markets, Inc.: Great. I will pass on. Thank you.

And the next question comes from Ken Goldman. Your line is open. Ken B. Goldman – JPMorgan Securities LLC: Hey, can you talk a little bit about what's going on in Mexico with avian influenza at the moment? There's some reports it's worse than what the Mexican government and some companies that operate there have stated publicly. I'm just curious to what degree you might expect Tyson to actually benefit from the virus, you might see some more industry exports of meat or polis to Mexico?

From time to time this is an issue in Mexico. We don’t have any flocks that are affected by right now. You should know we are taking all of the necessary steps and all of the biosecurity measures to ensure, the viability of our supply, pricing has improved in Mexico and we’re reaping the benefit of that. Certainly, as far as eggs moving down there, we don’t have any plans to move any eggs to Mexico. Ken B. Goldman – JPMorgan Securities LLC: And you talked about – separate question – the strength in DAY STARTS beyond your expectations. Can you talk a little bit about to what extent your success in generating your own brand makes you less likely to buy something in Prepared Foods? I guess to put it another way, DAY STARTS has had success, so why buy something if you are finding that you can make it yourself? It’s an old make versus buy conundrum I guess.

It is, as Dennis said on the previous question, what we’re really looking for is strategic fit and the ability to make an acquisition that will be accretive to our earnings. and so we’re always looking for opportunities to be able to use the insights we have about, what’s the consumer needs to find a way to fill that need and grow our business. We feel great about our organic opportunities, we feel great about our opportunity to invest in our current business, but we’re also going to be out there looking for strategic opportunities to fill in the gaps where we need to, or to create a little bit more aggressive headspace in a category where we maybe able to buy, as long as the purchase make sense, and then accelerate growth in that – that particular category whichever category that might be. Ken B. Goldman – JPMorgan Securities LLC: Okay. Thanks very much.

You bet.

And the next question comes from Farha Aslam. Your line is open. Farha Aslam – Stephens, Inc.: Just continuing on that M&A question front, do you feel like you need more chicken capacity? Would you build that with CapEx or via acquisitions? And in terms of M&A, is there a geographic preference or is there a protein preference that you’re looking for?

The answer to your first question is yes, and the answer to our second question is gone with it’s a strategic fit whether it’s an International acquisition, Poultry value added or Prepared Foods, those are the areas of our business where we believe our growth potential loss and where we can have the most value to the consumer and the most value to the shareholder and so our acquisition targets will be focused in those three areas. Farha Aslam – Stephens, Inc.: Okay. And then one just on the base business, when you look at the Texas facility that the lunch meat plant you took down and are ramping back up, could you just give us some color on what that can do for earnings in the second half of the year now that it’s starting back up?

In the second half of this year, marginal improvement, but sequentially in 2015, it ought to make a more meaningful difference, it takes a while to get that backed up frankly, we’ve got to get some more business around us to get the revenue side moving, that’s going to take us at least couple more quarters, but we think certainly as we move into 2015, we’ll see sequential and meaningful improvement in that part of our business. Farha Aslam – Stephens, Inc.: Great. Thank you.

Okay. That concludes the call. thank you for interest in our business. And I hope, you have a great day. Thanks.

And thank you for joining in for today’s conference call. We appreciate your participation. And you may disconnect at this time.