Tyson Foods Hit With $380 Million Tax Bill & Four New Antitrust Complaints

Meat producer is not recording reserves despite newly disclosed scrutiny from Mexican tax authorities and Attorneys General in multiple states.

February 7, 2022

Shares of Tyson Foods (TSN), a meat and prepared foods company, popped 10% on earnings results that beat consensus expectations. But buried in a footnote is a potential liability that could cost the company a significant portion of the quarter’s operating income. In its latest 10-Q, Tyson disclosed it had:

“...received an assessment from the Mexican tax authorities related to the 2015 sale of our direct and indirect equity interests in subsidiaries which held our Mexico operations. The assessment totaled approximately $380 million (7.8 billion Mexican pesos), which includes tax, inflation adjustment, interest and penalties.”

If Tyson isn’t successful defending itself through the Mexican administrative appeal process, the company suggested it would pursue litigation. The tax bill is the equivalent of 26.1% of the latest quarter’s operating income:

“Based on our analysis of this assessment in accordance with FASB guidance related to unrecognized tax benefits, we have not recorded a liability related to the issue.”

It’s not uncommon for Tyson to drag its feet when it comes to creating reserves. Though it settled civil antitrust litigation related to collusion and price fixing allegations for $221 million last year, the company has not recorded reserves for similar new antitrust inquiries from Attorneys General in Alaska, Washington, Florida, and Louisiana.

The Department of Justice (DOJ) is also investigating Tyson over similar antitrust concerns. The latest filing includes new language indicating Tyson has been granted conditional leniency for certain self-reported matters:

“...which means that provided the Company continues to fully cooperate with the DOJ, neither the Company nor any of our cooperating employees will face prosecution or criminal fines or penalties. We continue to fully cooperate with the DOJ in connection with the ongoing federal antitrust investigation.”
Tyson is also facing beef and pork antitrust litigation but has not established liabilities related to the matters.

Related: SAFM, PPC, HRL

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