Tyson Foods Reports 'Unlawful Conduct' By Beef Supplier

Tyson Foods Reports 'Unlawful Conduct' By Beef Supplier
(Tyson Foods)

Tyson Foods Inc. of Springdale said it believes it overreported its beef inventory by about $285 million in fiscal 2020 because of "misrepresentations" by a supplier.

The company, which released its annual report in November, said in a filing with the U.S. Securities & Exchange Commission on Monday that it was performing an internal review. It said the supplier's "misappropriation of company funds" and "unlawful conduct" did not appear to have a material effect on the company's previous financial reports.

Tyson Foods said the supplier misstated how many cattle it had purchased for the company. Tyson Foods does not raise its own cattle but relies on purchasers to buy live cattle from auctions and feed lots.

The supplier, which Tyson Foods does not name, was responsible for about 2% of the company's live cattle supply in the beef segment from 2017 to 2020. Tyson Foods said a final determination on the impact of the supplier's action would come from a completed internal review.

The company said in its filing that operating income for the beef segment in fiscal 2020 was expected to be adjusted to slightly more than $3 billion, down $106 million from the previously reported $3.11 billion; net income for the segment was adjusted to $2.06 billion, down $79 million from $2.14 million. The company said an investigation by outside advisors did not find it benefitted from the supplier's actions nor did any company employee do anything to hide the supplier's actions.

Tyson Foods said it would re-evaluate its internal control over financial reporting in relation to live cattle inventory. Tyson Foods has completed a physical count of its live cattle inventory.