Jon Kathol - Vice President of Investor Relations and Assistant Secretary Donnie Smith - Chief Executive Officer and President Dennis Leatherby - Chief Financial Officer and Executive Vice President James V. Lochner - Chief Operating Officer

Ryan Oksenhendler - BofA Merrill Lynch, Research Division Heather L. Jones - BB&T Capital Markets, Research Division Timothy S. Ramey - D.A. Davidson & Co., Research Division Christine McCracken - Cleveland Research Company Kenneth Goldman - JP Morgan Chase & Co, Research Division Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division Farha Aslam - Stephens Inc., Research Division Robert Moskow - Crédit Suisse AG, Research Division Akshay S. Jagdale - KeyBanc Capital Markets Inc., Research Division Tim J. Tiberio - Miller Tabak + Co., LLC, Research Division Kenneth B. Zaslow - BMO Capital Markets U.S. Ann H. Gurkin - Davenport & Company, LLC, Research Division

Thank you for standing by, and welcome to the Tyson Quarterly Investor Earnings Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now I'll turn the meeting over to 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 our 2013 Fiscal Year. I need to remind you that some of the things we'll talk about today will include forward-looking statements. Those statements are based on our view of the world as we know it now, which could change. I encourage you to look at today's press release for a discussion of the risks that can affect our business. On today's call is Donnie Smith, President and Chief Executive Officer; Dennis Leatherby, Chief Financial Officer; and Jim Lochner, Chief Operating Officer. [Operator Instructions] I'll now turn the call over to Donnie Smith.

Thanks, Jon. Good morning, everybody, and thanks for joining us today. About a month after our Q1 call, we announced that our second quarter was going to be tougher than we anticipated, and it was. We achieved record sales for the quarter but our earnings fell short of our expectations and will impact -- the reasons for that in a minute. Looking at adjusted earnings for the first half of the year, we're at $0.84 compared to $0.86 last year, off by $0.02. And as you're all aware, we're predicting a strong back half of the year. We are still projecting full year adjusted EPS better than fiscal '12, primarily due to the performance we expect from the Chicken segment. As I said many times, I think our multi-protein, multichannel, multinational model provides for a balanced approach that enables us to take care of our customers and grow over time. Now looking at the macro environment, according to the perishables group, at retail, breast meat dollar sales were up 3.5% for the 52-week period ended March 30 while pounds were flat, indicating higher pricing. In Pork, prices were down 2.6% while pounds were up 3.4%. Total Beef dollars sales increased nearly 2% but pounds declined nearly 4%. Chicken benefited from customers who move away from beef. Pounds sold were up 2%, while dollar sales were up 7.6%. Tyson, the #1 brand of Chicken in the U.S., drove category growth. In the foodservice channel, February sales growth was negative, down 1.2% for the first time in 3 years. NPD reports traffic was flat for Dec, Jan, Feb with QSR up slightly and full service down slightly versus a year ago. NPD's preliminary report on March indicates QSR traffic was down by 1% versus last year. Higher gas prices and payroll taxes, bad weather and economic uncertainty all weighed on consumers. So overall, foodservice traffic is about flat. But people are ordering fewer items when they visit a restaurant, which means volume is contracting by about 0.5%. However, many of our core categories such as Chicken, soup, tacos and wraps have gained annual servings in this flat market. NPD CREST predicts restaurant traffic in 2013 will not be as high as 2012 levels, even in QSR. And given the slow rate of economic recovery, traffic is expected to be relatively flat through '14 as well. So in this environment, how do we grow sales? In addition to the quality and service Tyson is known for, we must continue to provide product innovation to drive traffic and sales for our customers, whether they are QSR, a mid-scale restaurant, a big-box retailer, a small grocery chain, a convenience store, a club store or a school district. Because of the weak demand, operators are more interested than ever in our new product ideas and business building opportunities. Year-to-date, we've grown value-added sales by 3.3% as we started filling up the innovation pipeline. As a reminder, we set an ambitious goal of growing value-added product sales 6% to 8% annually. We believe we'll get there. Our goal is to understand our consumers' needs and provide foods that meet those needs in every day part. Our focus this year has been on 3 categories: handheld or on-the-go, gluten-free and no antibiotics ever. For a couple of quick examples in support of the handheld category, we're extending our current line with new whole-grain items and bold flavors. Also look for gluten-free chicken nuggets and other gluten-free breaded products in response to the growing number of consumers who are following the gluten-free diet. In the no antibiotics ever category, we'll build on the NatureRaised Farms brand of fresh chicken, which is successfully launched in February. We just started shipping frozen, fully cooked items under this new brand that features the attributes of no antibiotics ever, a 100% all natural, vegetarian-fed with independent third-party animal welfare certification. The NatureRaised Farms fully cooked line includes whole-grain and gluten-free offerings to meet the needs of a growing category of consumers who are looking for chicken with no antibiotics ever in their convenience foods. These are a few examples of the 90 new retail products you'll see this year in our aggressive product launch schedule. We're supporting these products through a significant amount of highly targeted MAP spending, and we're already seeing good return on our spend. I'll highlighted some of what we're doing at retail but I don't want to leave you with the impression that innovation is only in one channel. Working alongside our foodservice customers, we play a key role in developing many of the QSR new product features and promotions you've seen and you will see this year. We'll be introducing well over 100 new products in fiscal '13 in the various foodservice channels, including QSR, national accounts, distribution, schools, deli and convenience stores. Speaking of which, as we mentioned previously, we're focused on expanding our presence in deli and c-stores. We recently hosted the c-store foodservice summit here at our Discovery Center. It was a big success. We didn't just highlight our existing product capabilities, we bought in new concepts and products to help c-store chains expand their offerings and drive new and increased sales. Several participants said it was the best industry event they had ever attended. So to wrap up my thoughts on new product innovation, we've got a lot done. We've got a lot going on and we've got a lot planned for the next few years. We're in a very unique position in our industry. We don't just sell our products. We help our customers meet new opportunity in what our products can do for them. In the area of new product innovation, we're excited about what we do, about how we do it and most especially excited that our customers value what we do. I look forward to being able to give you more news in this area in the future as we achieve value-added growth while meeting our customers' needs. Turning to our international business. I'm really pleased with our growth strategy and how that's taken shape. Our international operations have improved significantly compared to a year ago, primarily driven by great results in Mexico and Brazil. Now obviously, the avian influenza outbreak in China is troubling and is detrimental to protein consumption in the short run. But I think long term, this validates our business model in China, which emphasizes biosecurity, supply-chain integrity and food safety. Now you may have noticed in our earnings release this morning that we had a $56 million impairment of noncore assets in China, and I want to explain what this is. Our team in China conducted a thorough assessment of our long-term strategy and concluded that the capital investment needed to upgrade one of our older poultry complexes would be better spent in other ways. As a result of the change in expectations for this facility, we took an impairment this quarter. But I want to be clear that we are still committed to our strategy of company control birds in China, and we're looking into how best to use that capital. My final thoughts are that we got this tough quarter behind us and everybody here is focused on what lies ahead, not just for the rest of the year but the next 3 to 5 years down the road. Whether it's new product launches, new categories, new distribution channels, training our people to perform at their highest level or succession planning to ensure we always have a high performing team in place, Tyson Foods is in a good position. And while our plans are ambitious, they're also realistic and attainable, which is why I'm so excited about our future. Q3 is off to a really good start and I believe we'll finish the back half strong and take a lot of momentum into FY '14. So that concludes my remarks. Dennis will now give the financial update followed by Jim, who will discuss our operating segments. Dennis?

Thank you, Donnie, and good morning, everyone. This morning, we reported Q2 earnings of $0.26 per share or $0.36 after adjusting for the $56 million impairment charge on noncore assets in China and the $19 million currency translation gain. These adjustments had essentially no tax expense or benefit. And as Donnie said, adjusting for these 2 items, year-to-date earnings per share is $0.84, down $0.02 compared to $0.86 last year. Adjusted pretax return on invested capital for the past 12 months was 16%. Capital expenditures were $133 million for the quarter and $290 million through the first 6 months of fiscal '13 as we continue to invest in projects for both our domestic and foreign operations that will not only result in improved productive capabilities, labor efficiencies, yields and sales mix but also increase our ability to innovate and produce new products to our customers. Operating cash flow through 2 quarters was $230 million, down from fiscal '12 due to increased accounts receivable from an uptick in sales at the end of the second quarter. This past quarter, we repurchased 2.1 million shares for $50 million under our share repurchase program. This brings our total repurchases over the past 8 quarters to 29.4 million shares for $550 million under this program. Including cash of $762 million and short-term investments of $47 million, net debt was $1.6 billion. Total liquidity was just under $1.8 billion, remaining well above the upper end of our targeted range of $1.2 billion to $1.5 billion. Gross debt remained at just over $2.4 billion and we still plan to pay off convertible notes due in October with cash on hand. Net debt to EBITDA for the last 12 months was 1x. On a gross debt-to-EBITDA basis, this measure was 1.5x. Through March, debt interest expense is down 26% compared to a year ago at $70 million. Our effective tax rate for Q2 was 33.2% or 27.7% excluding the impairment of the noncore assets in China and the currency translation gain. Our average diluted shares outstanding for the quarter was 366 million. This reflects the dilutive share effect of options and convertible notes of $13 million. The impact of the 2.1 million shares repurchased during the quarter will not be fully realized until subsequent quarters. So now here are some thoughts on fiscal '13 as a whole. We expect revenues of approximately $34.5 billion, down slightly from previous guidance. Net interest expense should approximate $140 million. The effective tax rate should be around 35.5% to 36%, and we've widened our CapEx plan to a range of $550 million to $600 million. Our priorities for excess cash remain first toward additional capital spending to continue innovating, improving and growing our existing businesses, such as the new products Donnie mentioned in his remarks. Second, acquisitions to fulfill our growth strategies around value-added products in our international footprint. As you know, we acquired Don Julio Foods in the second quarter and we continue to look for opportunities that can contribute to our growth goals and finally by continuing to return cash to our shareholders through share repurchases and dividends, as we've demonstrated recently with our share repurchase activity and increased dividend rate. In closing, I would like to reemphasize our confidence that our team will deliver strong results in the second half of the year and that we will carry that momentum with us into fiscal '14 with our sight set on at least 10% EPS growth. I'll now turn it over to Jim for a closer look into our operating segments. James V. Lochner: Thanks, Dennis, and good morning. The Pork segment had 5.5% return on sales and $72 million in operating income in the second fiscal quarter. Our average sales price per pound and volume were both down 2.2% compared to Q2 last year. Pork exports softened during the quarter, which increased domestic availability by about 3.5% versus a year ago, negatively impacted wholesale pricing. In response, we chose to run reduced volumes in an effort to improve margins. We expect industry hog supplies to be flat but sufficient and pork exports are likely to decrease slightly compared to fiscal 2012. However, we expect 2013 will be another strong year for our Pork segment. The Prepared Foods segment had a 3.5% return on sales and $28 million in operating income. Our volume was down 0.8%, while average sales price per pound was up slightly at 0.3% over Q2 of '12. Volume was down due to reduced foodservice demand, although we maintain market share. To offset demand, we're going after other business across the multiple channels we service, which we believe will improve our volume in 2014. Also in Prepared Foods, our lunchmeat plant in Houston is undergoing a renovation project, and it should improve our results in fiscal '14 but it will be a drag on the segment in 2013. Our Chicken segment is performing well and reported a 2.5% return on sales and $78 million in operating income. Volume was essentially flat, while pricing was up 6.2%. Without the impairment from our Chinese assets, the Chicken segment has made $241 million the first half of fiscal '13 compared to $177 million in the first half of fiscal '12. This is despite an increase of $335 million in total feed cost year-over-year, showing how much our Chicken business has improved. We continue to improve through capital investment and significant operational efficiencies. In the second quarter, we drove more than $10 million out of our cost structure through operational efficiencies, bringing the total to $39 million so far this year. We still expect to achieve $100 million in operating efficiencies for the year. We position ourselves to better adjust to rising feed cost by changing many of our sales contracts, which are now formula based or shorter term in nature, allowing us to more readily offset rising input cost through pricing. Our annual fixed price contracts are in the single digits and declined further in Q2 compared to Q1. Additionally, foodservice promotion of chicken throughout 2013 should help drive volume of highly value-added products that are less susceptible to commodity pricing. This, coupled with strong demand at retail for chicken, are positive indicators for the strong back half of the year in the Chicken segment. Although our production has not been directly affected by avian influenza in China, demand has softened for the entire Chinese poultry industry. Concerns over AI, along with an antibiotic residue problem by competitors, have caused Chinese consumers to question their food safety. We believe our modern methods and processes will make our chicken the preferred product, and we'll be in a position to benefit in the long run. Our team in China continues to improve. And apart from this delay in demand, we remain on target with our production goals. Turning to the Beef segment. We had a negative margin of 0.8%, with an operating loss of $26 million. Volume was down 3.9% while price per pound was up 6.5%. We have several issues that contributed both positively and negatively to our results. There is a regional disparity in cattle cost, followed by the closure of the Texas plant. Our Southern plants had an improved relationship between beef prices and cattle cost, which did enhance our margins and improve our utilization. This was positive to our results. However, in some of our Northern plants, we had margin compression from the increased demand for cattle relative to the price of beef, which is negative to margins. We expanded and increased our operating cost compared to Q2 last year. These are driven by labor cost, resulting from product mix changes and higher wages. We also had operational challenges, primarily in 2 plants, and we've taken steps to rectify the underperformance in these operations. Although demand for ground beef was good, overall beef demand was soft, apparently from the higher prices and the resolving consumer movement towards chicken. This was particularly noticeable in our premium beef programs. We were not able to realize optimum revenue for steak and roast cuts because supplies exceeded consumption. To rectify this situation, we have adjusted our cattle procurement strategies to reflect the softer demand and excess supplies from the premium grains. Looking ahead in Beef, we still expect industry-fed cattle supplies to decline by 2% to 3% in fiscal 2013. There should be adequate supplies near our plants, although there could be periods of supply-demand imbalance. The operating environment and our performance have improved and our Beef segment was profitable in both March and April. In conclusion, we come to the toughest part of the year and are nearly equal to last year. We believe Q3 and Q4 will be significantly better than Q2, but they're not in a bank yet, so we can't and won't let up. Our teams know what they need to know. Now we just have to go about the business of day-to-day execution. That is the end of our prepared remarks. We are ready to begin Q&A. Operator, we're ready for Q&A.

[Operator Instructions] We do have our first question, Ryan Oksenhendler, Bank of America Merrill Lynch. Ryan Oksenhendler - BofA Merrill Lynch, Research Division: I just want to ask, regarding the outlook for Chicken, as I look out for the back half of the year, can you see pricing accelerate as you've seen breast meat move here? And I know some of your contracts didn't really get priced until February, March, so we didn't see as much of an increase in the second quarter. And then is there any reason that that can't continue into fiscal '14 given that supply seemed to be disciplined here given the recent pullet placement trends?

Yes. A couple of parts. Let me take the first one. Yes, we do expect to see pricing improve in Q3 versus Q2 and forward into 4. Certainly, market's given us a good bit of help there. Looking on into '14, if you look at the pullet numbers -- and by the way, the amount of eggs that are going to Mexico, really don't see that supply is going to change much until -- timing would tell you sometime around late Oct, Nov and then of course, then you're going into the Thanksgiving and Christmas market slowdown. So it wouldn't make sense for us to do anything on supply going into that period. So really feels like you'll carry a lot of momentum into '14 and on end of -- front half of the calendar part of the year. Ryan Oksenhendler - BofA Merrill Lynch, Research Division: All right. And then just one follow-up on the international regarding bird flu in China, in terms of impacting your business, I know consumption has slowed. You originally had planned to be breakeven, I think, in the fourth quarter -- fiscal fourth quarter of this year. Has that changed? And I guess, kind of can you give us an outlook for fiscal '14 and how that will impact that earnings for next year?

Yes, it sure has, Ryan. I'd say it probably pushes out that breakeven mark for a quarter or 2. Still in our sights, though. In terms of the business operations, we're getting our houses built on time just like we thought we would. By the end of the year, we'll have about half of our production in company-owned housing. That will feel really good going into the plants. So whereas I thought maybe we'd be there in Q4, it's likely to be maybe Q1 or Q2 now '14. But you should expect sequential year-over-year continued improvements in international. This year, our international results minus the impairment in China, so let's call it an adjusted international results number, will be markedly better than last year and then you'll see another improvement, we believe, going into '14.

Next question, Heather Jones, BB&T Capital Markets. Heather L. Jones - BB&T Capital Markets, Research Division: My first question is on Beef. Using Hedgers Edge as a proxy, you guys' sequential and year-on-year performance in Beef deteriorated pretty dramatically. And some of the things that you discussed in your prepared remarks were company specific but some were issues that the whole industry struggled with. So I was wondering if you could give us a sense of magnitude of the company-specific issues you referenced and how soon those will be resolved so we could expect you to get back to your typical spread to the industry.

Let me address that. First of all, the north style does make the Hedgers Edge, which is one number, a little bit more difficult to interpret. But yes, we did have some specific, particularly related to our normal premiums for what we call the premium grades. And we saw the softness in demand, which put pricing pressure on that. And we usually lag how we pay for cattle based on what the lagging premium grades warrant. And we weren't rapid enough to correct that and pushed that premium for the higher-end grades, the Angus approach, as even the prime were all soft. And so we didn't adjust that fast enough and that was particularly as well in the northern tier where the cattle did trade higher. So we really got hit specifically in our northern tier plants with higher price beef relative to what the beef warranted, as well as paying more than we should have for the premium grade. So we've got -- we've had that corrected. And then we're working through getting our operational cost issue that I referenced in a couple of plants. I'm comfortable that we'll get our arms around that and push forward to get ourselves back where we normal are in Beef. Heather L. Jones - BB&T Capital Markets, Research Division: Okay. And as a follow-up, you talked about being in your normalized range for Chicken in the back half. And I understand, given the structure of your business model, that your magnitude of improvements is not going to track like when the industry is improving as quickly as it is now. But given what we're seeing with breast meat, given what we're seeing just with demand, there seems to be an acceleration in demand, should we anticipate you guys being at the high end of normalized in the back half? Or you -- I mean how are you thinking about that?

We're expecting, yes, to be in the high end, and we expect domestic Chicken to do very, very well on this back half of the fiscal year. Again, we're seeing the pricing where we want it, our operational efficiencies were set up very well and understanding our demand and supply, so we're in very good balance -- at least, we anticipate to be in very good balance on what we know today. We're seeing a tremendous amount of features at foodservice on chicken products and we're also seeing the same follow-through so far into early Q3 here with chicken at retail continuing to show a demand shift away from beef. So we're very encouraged with the back half on Chicken in fiscal '13. And I do believe it will carry right on into '14 the way the supply structure is set up currently.

Next question is Tim Ramey, D.A. Davidson. Timothy S. Ramey - D.A. Davidson & Co., Research Division: Just wondering if you could give us any color on Japan and the increasing age and some of the specialty cuts that you might be able to ship into there at greater margins. Is that starting to flow? What -- were we seeing any real impact there?

Well, it is now, actually. And if I think back a mere quarter ago when that was just announced, the enthusiasm was very high. And I fully well know that the lag time to get the supply chain and get the customer base reestablished into Japan would take some time, and it did. So we didn't really see any positive benefit through the Jan, Feb, March period to speak of, although in March it started to heat up on the shipment side and we're starting to see supply chain be reestablished. In fact, the U.S., when I look at March, popped up 28%. Now we got a very high share of that. In fact, when we track our numbers, our Tyson share into Japan was up at -- up 95%. So we feel pretty good, as well as the market for the non-muscle cuts starting to -- the interest is starting to expand there. But it's going to take a little bit more time than what everybody originally thought and markets never move and demand never moves as fast as one wants. But I'm very encouraged with what I see going forward from the Japanese market on beef exports. Timothy S. Ramey - D.A. Davidson & Co., Research Division: Okay. And if I could just follow up on China. You obviously have a great story to tell there, and I just don't know whether you can tell that story. I mean, it's always hard when you have these, maybe an influenza outbreaks, nobody wants to hear about chicken at all. But at the end of the day, your story is one that should be well received. Who's going to lead that charge? Is that kind of the YUM! brands of the world that will do that? Or does everyone just want to be quiet a little bit for a while on chicken?

Tim, I think early, there's just a consumer issue around AI and don't buy chicken, don't buy -- and so demand has really dropped a lot, particularly in the Shanghai area, which is where our operations are. I think that's temporary. We believe that whenever the number of confirmed cases quits growing that, let's call it a time clock, if you will, will begin, and then a few months after that consumer acceptance of poultry will be right back to where it was. The one thing that this unfortunate event has done is absolutely validated our model for extreme biosecurity, the best in food safety. Our supply chain is very, very well protected, and that's getting recognition. And so over time, I believe that will continue to validate our model and we'll see the value from that. It's just, right now, we're a little bit overwhelmed with kind the, don't want to say fear, but folks backing off of chicken. Jim, anything to add? James V. Lochner: Yes. The only thing I'd add is yes, the short term here, we've seen demand but there's some sort of long-term structural changes that appear to be in place, particularly when you think about the wet market eliminating all live bald chicken and other follow other market. And you're seeing that fragmented independent producers that got hurt hard and the antibiotic issues in November, December followed with this, so we expect to see a reduction in that independent fragmented supply chain, which actually will position us on the rebound very well because we haven't backed off anything on our company-owned control production. So actually, the silver lining will be out front yet. So we're comfortable with it.

Next question is Christine McCracken, Cleveland Research. Christine McCracken - Cleveland Research Company: Just on a follow-up to the discussion on Beef. You talked about some of the regional challenges and the pressure on margins there. Do you think there was any impact from the snow in May or the really cold spring we've had, I guess, in terms of the grilling season? And then how big a deal has this trade disruption been with China on the beta agonist? James V. Lochner: The snow in May is a surprise to everybody. But I don't think that's really negatively impacted the cattle supplies, if anything, maybe slowed down the availability slightly. But that will quickly rebound. We'll have those clearly available through the balance of May, June, July, August. So I expect actually Beef to be much like last year with a very, very strong back half and it certainly set that way -- set itself up that way. And I do think the cold weather has hurt consumption until recently when we've seen the cutoffs start to rebound here in the last week or so. So yes, I think the demand and again, we always make money in the slope of change. So when Beef revenues are under pressure and they're declining, the cattle costs have to correct down to it. And vice versa, when the positive revenues are going up, the cattle costs tend to lag it up. So we're in that mode right now with fairly ample supplies coming at us. The ractopamine, any time you lose a market and you create more domestic availability, you put pressure on wholesale prices, and that did have some impact on Beef and it clearly had some impact on the Pork wholesale prices because that domestic availability, as I referenced in Pork, did go up 3.5% on a nominal increase in production pounds. So a loss of markets does influence those wholesale prices, which ultimately influences the value of hogs and cattle. Christine McCracken - Cleveland Research Company: Just as a follow-up, talking about that Pork, that situation doesn't seem like it's going to get a lot better; inventories are growing. How should we be thinking about it as we look forward? And seasonally, I think you'll get a little tighter supplies here over the next couple of months. But then looking into the -- later this year, it seems like that growing inventory of pork and the inability of the U.S. market to take that is going to be a big problem. How should we be thinking about pork long term?

Well, I think the -- from our margin perspective, I'm very positive. Again, once we get through this typical April, May is usually your tighter supply, there may be some pressure on the wholesale prices. But I think that's largely built in that lack of domestic disappearance. Your exports has already adjusted. So I think the balance will be there. And I actually expect us to come through and end the year very strong in Pork margins. But there won't be -- I don't think we'll see the robust pricing that we saw in prior years either.

Next question is Ken Goldman, JPMC. Kenneth Goldman - JP Morgan Chase & Co, Research Division: On Chicken wings, we continue to see frozen stores numbers climb, and there's a theory out there that inventories are rising in preparation for a pretty major national launch by a QSR. But at the same time, prices are soft for wings. So it's not like all these wings going into storage instead of market are driving these -- the price on shelf higher. So can you give us a bit of color as to what's happening there? And specifically, are there enough wings for a QSR to do a major national launch all at once? Or does it kind of have to be piecemeal region by region, in your opinion?

Well, I probably shouldn't comment on what a QSR might do. But let me talk about wing supply. Typically this time of the year, prices are going to fall. You get out of the past March madness, you're going to see prices drop. I'm grateful wings currently trade, what, upper 120s, low 130s, that kind of number. And that's probably $0.25, $0.30 a pound above what the 4-, 5-year average would be for this time of the year. So I still think -- I like where wings prices are. And typically what will happen, Ken, is folks like us, you get into the kind of the latter part of the summer deal and you know you're going to have a big wing season coming up, so you call it -- these through March. Folks will start buying wings and further processing those and putting those in inventory to get ready for big retailer, foodservice features that are going to be coming during the next wing season. Because you're going to sell a whole lot more wings during wing season than what you could produce. So it gets a little soft this time of the year. It firms up. I'm sure if there's a QSR that's working on a promotion that there's going to be plenty of wings to supply that, it may mean that wing prices are firmer next wing season, but we'll deal with that then. James V. Lochner: The only thing I'd add is the strength in the breast meat term prices probably are also long term going to be supportive of the wing because you won't have the ability to go chase a lower meat lock-in in the boneless breast meat contribution to the boneless wings. Kenneth Goldman - JP Morgan Chase & Co, Research Division: Interesting. Urner Barry has jumbo wings at $1.10. You guys are seeing actual prices trade well ahead of that it sounds like?

Yes. Most of what -- well, what I was quoting was probably the medium wing market, which is what we do. Yes, jumbo would be about $1.10. James V. Lochner: It's $1 to $1.10. Kenneth Goldman - JP Morgan Chase & Co, Research Division: Okay. And then on Pork, in the last month or so, we've seen hog and pork prices jump higher. And I realized, of course, part of it is seasonality, right? But the growth rate is higher than we usually see this time of year. So maybe seasonality isn't the only driver, right? We're still seeing -- I guess, I'm curious, right, we're still seeing a very unfavorable dollar-yen translation rate and export debt is not great. So I'm curious in your opinion why we've seen sequentially pork prices rise maybe more than what some of us would have expected lately.

A little bit of that rise, when I look back at it -- because we got hurt in the margins in Feb through March on that decline, and then they start to shore back up and that relationship came back together. But as of late, bellies were running. They corrected back. They were running up fairly sizable on increases as well as those hams, and loins were starting to show kind of a seasonal increase. So I was actually very -- maybe not surprised but, I guess, gratified. I'm seeing the shore up in pricing and the increase suggesting again maybe that the retail consumption and overall demand were starting to show some strength, particularly as we said before because this cold spring I do think has had a very negative influence on just purely the grilling rates. So maybe that's the sign.

Next question is Diane Geissler, CLSA. Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division: I wanted to touch back on the China issue and maybe take it from a different angle. Just the Chinese consumer seems to me has just been beleaguered with bad news about protein between the feed issue, avian flu, dead hogs in the river and now rat meat. I have to believe that the multinationals that are operating there and the government itself is eager to move the professionalism of that industry -- variety of industries that are hogs and poultry a little bit more quickly just because it's been, I think, a little scary for the Chinese consumers. So what is the biggest impediment, in your view, to really ramping up what you have going there in terms of the biosecurity protocols and the vertical integration? And then I guess, can we talk a little bit about the margin structure? Because I know you've said in the past that you're aiming for margins in that business to be in excess of what you experienced in North America. And if you could just talk about -- I think on a normalized basis, if you look at your current revenue base in the U.S. in the poultry business, normalized will be somewhere $600 million, $700 million, $800 million in total operating profit. Do you see China as that kind of opportunity over the next 5 years?

Diane, so let me go over the first part. You're absolutely correct, and I like your term "the beleaguered consumer" there. And remember, a lot of poultry consumers in China are still -- they are readily capable of moving back to a vegetable-based diet, and so that's what's happened. Now I do believe that there's increasing concern on the part of everybody on getting to a more biosecure supply chain, as well there should be. So we think that portends a great future for our business. That industry is very, very, very fragmented. The number of true integrated suppliers is an incredibly small percent of the poultry in that supply chain. There are still white bird versus yellow bird, pretty good disparity between the amount of white bird sold in the market versus yellow bird. So that market is pretty fragmented, and it's going to take several years for that industry to consolidate and integrate, but I believe it will because of the biosecurity concerns. So that portends well for our business. What hinders us is we're building chicken houses as fast as we can, and that frankly is our bottleneck. Our processing plants -- we've got 2 big beautiful processing plants. And our profitability, by the way, will improve dramatically when we are running those with company on birds at a much higher rate than we are today. Now let's talk about our margins. If you look forward, we'll probably be somewhere around $3 million head a week when we look out into the latter part of FY '14 and FY '15 and our plants will be full, and we expect, then, our margins to be above -- in a mature complex, we would expect our margins to be above the normalized range here in the U.S. Beef, think in low-double digits. Now also though, we do intend to grow our China poultry business fairly rapidly. And so you may not see a recognized double-digit margin continuously if we're bringing on new complexes because we're layering in, if you will, some efficiencies building for the future -- inefficiencies as we're building for the future. So -- but we do believe though that on a per bird basis, our customers in that region will pay for the added value and the added biosecurity and food safety and that type of thing that we provide. We are seeing our margins to wholesale in areas that we expect them to be. But I think maybe a lot of people underestimate currently the demand destruction in China. But I do believe, as I said little bit earlier, that will correct itself as soon as the number of cases quits going up. That help? Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division: It does. Can I just ask a follow-up on the chicken house construction?

Sure. Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division: I appreciate that's a fairly specific question. Is the biggest bottleneck there the siting process, in other words, negotiating the rights to use the land? Is it your own construction capabilities? Is it training the people who are going to raise the birds? Or is it all 3 those?

You got really 2 things. Number one, the construction process, we can build the houses. There's plenty of folks over there, plenty of construction companies that can build the house. Obtaining the land use rights is a bit of a bottleneck. And then when we opened up a new farm site, which may have up to 8 to 10 chicken houses on it, we'll double staff that site, and then train the next, if you would, live production crew for the next farm site that will open. So we're handling our training issues. It does impact cost a little bit, not dramatically, but it does impact our cost a little bit. But the land use rights is the most difficult bottleneck.

Next question is Farha Aslam, Stephens. Farha Aslam - Stephens Inc., Research Division: On just, first, continuing on Diane's question on China and Chicken. Could you just share with us, going into the second half of the year, how you think about Mexico versus China? Do you think the improvement year-over-year in Mexico profitability will offset kind of the level of weakness you're seeing in China?

Oh yes, definitely. Our Mexican operation is having a really good year. By the way, Brazil is profitable and doing very well, still pretty small but doing very well. So yes, that's -- what we were expecting to see was the China group being breakeven or profitable at the -- during our fourth quarter. Don't look like that's going to happen now, but we do believe Mexico and Brazil will be more than making up the gap. Farha Aslam - Stephens Inc., Research Division: Okay. And then just turning to Beef in the second half of the year again, do you expect it to reach your normalized margin levels for the second half of 2013? James V. Lochner: Yes. We're clearly headed into that zone right now. And I expect it to be similar and maybe even a bit stronger than the back half last year, just because April started out so much better than a year ago. A year ago, April was a real tough segment in Beef. If you recall, we had some issues relative to the ground beef segment and overall demand. We're not facing that this year. The biggest obstacle we've had is cold weather and consumption. But that -- again, that seems to be turning around now. And we came through March and April in very good shape. That's why I'm very confident back end of the back half of -- or the second half of the year that we'll be very comparable or probably perhaps better. A lot of moving parts, but I certainly don't see any impediments on Beef. And then the strength, I think, I'm a little more encouraged with Japan going forward than I would have been a quarter ago because we were early into that game. So I'm seeing enough positive signs.

Next question, Robert Moskow from Credit Suisse. Robert Moskow - Crédit Suisse AG, Research Division: I went to a conference for the chicken industry a few weeks ago. And I thought that the message there was that the top chicken companies are making money right now, but the majority of the industry is not. I look at spot margins; it doesn't look quite that bad. It actually looks like everyone's doing pretty well. Can you give us a sense about your quarter and whether you think you were like in the top 1/3 of performers or not, and whether you think that there's an increased probability that the bottom 1/3 might be unable to increase production as the year goes on?

Rob, I -- as I look at industry benchmarking data, which we've participated in, I would tell you that the majority of the industry is making money. Probably 80% or so of the industry ought to be profitable, at least at the operating margin level. And we continue, and now for months and months, operate in the top quartile of the industry. Robert Moskow - Crédit Suisse AG, Research Division: And a follow-up on China, maybe the ninth question asked. But you said that you chose not to invest in a noncore asset. Is -- what is a noncore asset in China? It's not your processing facilities. Is it something else?

We have a complex that, as we looked at it, in order to get that complex to, let's call it perform at a level that we would have been happy with, the capital required to do that was going to be better spent in other ways. So our team over there did a thorough analysis of what it was going to take to get this complex to a level that we would have been happy with it long term. And it just -- it felt like to us -- or it didn't feel like to us, the numbers showed us that money would have been better spent put into other areas, so that's what we chose to do. But when we did that, it forced us to take an impairment on that complex. Robert Moskow - Crédit Suisse AG, Research Division: But Donnie, is it -- what kind of complex is it? Is it 1 of these 2 big processing facilities? Or is it something else?

No, it's an older complex. Robert Moskow - Crédit Suisse AG, Research Division: An older complex. Okay, are you going to shut it down? Or are you going to keep operating?

Too early to say. Undetermined at this time. We're working through all of our options.

Next question is Akshay Jagdale, KeyBanc. Akshay S. Jagdale - KeyBanc Capital Markets Inc., Research Division: So Donnie, just looking at where you are today versus 3 months ago, your grain cost guidance is roughly $0.26 to EPS better than before. Boneless, skinless breast prices, if I'm not wrong, are the highest they've been since '04. And Chicken makes up 50% of your business. And so isn't the year shaping up net-net to be better even though you had a weaker quarter? That's the first question. And to elaborate on that, can you just be more specific about this quarter being off to a good start?

Yes. So the answer to your first part of your question is, yes, very much so. If you look at our quarter on an adjusted basis, year-to-date, we've absorbed $335 million in incremental feed ingredient cost. And I think on an adjusted basis, we're probably...

$241 million year-to-date.

$241 million year-to-date. So $64 million better than the runway from a year ago on an adjusted basis. So that's -- in my opinion, that's really, really good. We're taking a lot of momentum into the back half of our year. Pricing feels good now. We're not a commodity player, but we do have features and lots of things that price off higher commodity market. So in a summertime kind of environment, we may not ever get to the high of pure commodity players, but you also won't see the lows during the other parts of the year either. But, yes, Akshay, I think, you've got a good read on it. We've got a great back half lined up. And when I say we're off to a really good start, what I'm talking about is that our margin structure is better than what we planned it would be going into this year. We've been saying since, well, since a month after the -- our last call when we started talking about Q2 being a little tougher than we thought, we've been talking about a strong back half since then, and our margin structures came in a little better than that. So we feel really good. Akshay S. Jagdale - KeyBanc Capital Markets Inc., Research Division: So where is -- and just to follow up on that, where are Chicken margins today?

I can't answer that, but they are better than we planned. Akshay S. Jagdale - KeyBanc Capital Markets Inc., Research Division: Okay. And then just again, on the Chicken business, I mean, it was a good quarter. But what I'm seeing, and maybe I'm just reading this incorrectly, is the revenue per pound sequentially was not as good as it typically is. So one, am I reading that correctly? And two, was -- can you explain what might be going on there? I mean, from the December to the March quarter, typically your revenue per pound goes up a little bit more than it did this quarter.

Yes, you are reading that correctly. And here's the deal. There's been a mix change, with the economy being a little softer, we've seen our mix change more chopped and formed than whole muscle, what we would normally see. And so that mix change, the products sell for cheaper, but don't think that translates necessarily into the cost -- into the margin structure because it doesn't. So while our revenue per pound is down, our margin per pound is not. It's just a mix change to a more chopped and formed basis. And also, too, although we've had significant pricing improvements in our fresh business, our fresh items, which might not carry the same revenue per pound as further process, fully cooked, whole muscle breast item, for example, still, we're running a great business there. And so the revenue per pound might not be up but our margin structure is really good. So I'm very happy there. Akshay S. Jagdale - KeyBanc Capital Markets Inc., Research Division: And one just last one on Beef, if I may for Jim. So you said you are tracking in your normalized range right now for Beef. So should we assume that even if the cutout remains in the 180, mid-180s, high-180s on Beef, you'll still be able to do as good or better than last year? James V. Lochner: In Feb, we thought the back half would track there. And if the cutout corrects because of any demand issues, which I don't anticipate we're going to see that degree of correction. But if it does, you're coming in at the time of the year with the most plentiful supply. So you get the price of Beef to the price of cattle relationship, this is the best time of the year to be doing that with the supply coming at. So the cutout will be, as it always is, really a function of what the consumption is against the weekly supply. And that's why we really pay such close attention to what meat is disappearing and try to keep our offering as -- in balance with what we have within our plants and what we see our cattle supply and what we see the beef supply or beef demand and consumption going forward. But this is the time of the year generally and historically, if you look back, this back half is usually our -- the Beef packing's strongest time frame. So even if the price pressure is on there, I think we'll get back into -- in the back half approach what I said on normalized, or get within normal.

Next question is Tim Tiberio, Miller Tabak. Tim J. Tiberio - Miller Tabak + Co., LLC, Research Division: Just a very quick question on Brazil. You're mentioning that results are performing very well there. Does this give you more confidence to maybe accelerate your investment in that market, especially as feed costs are falling a little bit quicker than even in North America on the soy mill side?

Yes. And one of our emphasis there is growing our value-added sales. So yes, very much. We're happy with our Brazilian assets and are going to grow them. Tim J. Tiberio - Miller Tabak + Co., LLC, Research Division: Okay. And just one last follow-up question. In lunchmeat section, you mentioned that there was some cost pressures because of new ramp in the facility, but are you also seeing any increased competition that would be impacting those results that we should be aware of?

Not so much. Our lunchmeat issues are wholly our own. We're spending a lot of money down in Houston getting that facility to a point that we need it to be. And when you're going to have an extended shutdown to change a lot of equipment out, we're having product co-packed and working through all the supply-chain issues to make sure we take care of our customers and all that. And that adds quite a bit of cost into the supply chain. We'll work through all that over the next 4, 5, 6 months. And we think by the time we get into Q1 of '14, our lunchmeat business is going to be operating where it needs to.

The next question is Ken Zaslow, Bank of Montréal. Kenneth B. Zaslow - BMO Capital Markets U.S.: Let me ask, in terms of 2014, do you think that the back half of 2013 is more representative of what you're going to be able to produce in 2014? Is there any businesses that you don't think will be in the normalized range?

The answer is yes and no. Kenneth B. Zaslow - BMO Capital Markets U.S.: So no, you don't think there'll be any businesses that will not be normalized range in 2014?

That's correct. And I do think that the back half of '13 is indicative of the kind of performance that we should certainly carry into '14 and probably sustain. Now you know, Ken, you know all of the fundamental issues and corn crop and all that stuff. But what we can see, there we go. Kenneth B. Zaslow - BMO Capital Markets U.S.: Great. In Prepared Foods, you kind of gave a little representation of what in Beef is being corrected. You continue to say that there's going to be a drag on Prepared Foods. Can you give a quantification of what that actually is?

Say that again? I missed your question. Kenneth B. Zaslow - BMO Capital Markets U.S.: You said that in Prepared Foods that there is a drag on the earnings in the back half of this year from last quarter to this quarter and continuing on for, we don't how many quarters, but for a period of time. How much is that? And when will that go away?

Well, hard to quantify because our team is busy minimizing that impact as we speak. But I can tell you in the Prepared Foods, there's 2 things that are really impacting that segment. Number one and the biggest majority of it is our lunchmeat business, which we're working on. Number two is we had pretty soft foodservice demand in Q2. And it felt particularly heavy in our Prepared Foods business. Now we've got an -- a lot of new products that we're working on and a lot of things we're doing there. I tend to think that, I would say -- I tend to think that our Prepared Foods group will perform a little bit better in 3 and 4 than it did in 1 and 2. When we went through our quarter, I told them to quit digging a hole, and I think we're there. But it may -- as we start into the quarter, it -- I think they're just now at the point to where they're getting the grip on the rope like we need them to. So I think the worst is over there, but I don't think we're going to fill in the hole very much in the back half. James V. Lochner: Now the big change is in Houston as we modernize that. But the other lunchmeat plants in that group have also added some new modern equipment to improve yields and labor efficiencies. We really just needed to get more equipment, get -- to get our sales more efficient and improve our yield and improve our overall quality. So that also applies to a less dramatic way in the other plants other than Houston. So I expect, like Donnie, to improve into this back half.

Our final question comes from Ann Gurkin, Davenport. Ann H. Gurkin - Davenport & Company, LLC, Research Division: Just wanted to review a question with the outlook now for a 1% increase in domestic protein and from discussion of global demand and domestic demand, maybe a little softer for different protein classes and now looking for Chicken production up 2% to 3% and Pork exports down. Can you just walk through what is the biggest driver giving you the confidence to maintain guidance for '13, look for '13 to grow modestly maybe versus '12? James V. Lochner: Let me start. And that still boils back down to what we've seen in the perishable data and other sets where beef consumption has been dropping, which has put price pressure generally on the wholesale cuts but not necessarily at the retail. So that's been the strength of chicken's demand. And I don't know that I agree with, personally, some of the forecast I saw on the overall because they're all predicated on exports being down. I don't particularly see chicken exports declining going forward. And I think pork decline in exports has already been built in. So -- and I believe we've seen those wholesale prices adjust. So in other words, I think the beef-chickens switch has happened, and that will continue to support the Chicken segment. Ann H. Gurkin - Davenport & Company, LLC, Research Division: So the Chicken -- the outlook for the Chicken segment, what gives you really great confidence for the year? James V. Lochner: Yes, that and the fact that if you look at the infrastructure, the pullet placements and the ability to rebound supply quickly, it isn't in there. And you look at the egg sets to hatch, the egg sets to hatch and you're seeing more aged hens and less productivity as well. So you're seeing enough signs that the supply chain will struggle to keep up. And even though the -- again, the real wildcard has been on the pork exports but I think that's largely built in.

Before we I go, I just want to reemphasize that we're still on track for an adjusted EPS that exceeds last year's. For the first half of the year, we're at $0.84 adjusted versus $0.86 last year, and we've done that with an incremental $335 million in feed costs. Tyson Foods is on pace for another very good year. So I want to thank you all for joining us today, and have a great day.

Thank you. That does conclude today's conference. You may now disconnect at this time.