UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended October 3, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________________ to ________________
Commission File No. 0-3400
TYSON FOODS, INC.
(Exact Name of Registrant as specified in its Charter)
Delaware 71-0225165
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2210 West Oaklawn Drive, Springdale, Arkansas 72762-6999
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (501) 290-4000
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
Class A Common Stock, New York Stock Exchange, Inc.
Par Value $.10
Securities Registered Pursuant to Section 12(g) of the Act:
Not Applicable
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
On October 3, 1998, the aggregate market value of the Class A Common and
Class B Common voting stock held by non-affiliates of the registrant was
$2,508,274,106 and $2,146,223,295, respectively.
On October 3, 1998, there were outstanding 128,296,821 shares of the
registrant's Class A Common Stock, $.10 par value, and 102,645,423 shares
of its Class B Common Stock, $.10 par value.
Page 1 of 91 Pages
The Exhibit Index appears on pages 23 through 29
DOCUMENTS INCORPORATED BY REFERENCE
The following documents or the indicated portions thereof are incorporated
herein by reference into the indicated portions of this Annual Report on
Form 10-K: (i) pages 14-44 and back cover of the registrant's Annual Report
to Shareholders for fiscal year ended October 3, 1998 (the "Annual Report")
which are filed as Exhibit 13 to this Form 10-K and (ii) the registrant's
definitive Proxy Statement for the registrant's Annual Meeting of
Shareholders to be held January 8, 1999 (the "Proxy Statement").
PART I
Item 1. Business
Pages 16 through 23 of the Annual Report under the caption
"Management's Discussion and Analysis."
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Pages 14 and 15, 29 and 44 of the Annual Report under the captions
"Eleven-Year Financial Summary", "Capital Stock" and "Closing Price of
Company's Common Stock."
Item 6. Selected Financial Data
Pages 14 and 15 of the Annual Report under the caption "Eleven-Year
Financial Summary."
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Pages 16 through 23 of the Annual Report under the caption
"Management's Discussion and Analysis."
Item 8. Financial Statements and Supplementary Data
Pages 24 through 41 of the Annual Report under the captions
"Consolidated Statements of Income," "Consolidated Balance Sheets,"
"Consolidated Statements of Shareholders' Equity," "Consolidated
Statements of Cash Flows," "Notes to Consolidated Financial Statements" and
"Report of Independent Auditors."
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Part III
Item 10. Directors and Executive Officers of the Registrant
The information set forth under the captions "Election of Directors"
and "Section 16(a) Beneficial Ownership Reporting" in the Proxy Statement.
Item 11. Executive Compensation
The information set forth under the caption "Executive Compensation
and Other Information" in the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information set forth under the captions "Principal Shareholders"
and "Security Ownership of Management" in the Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information set forth under the caption "Certain Transactions" in
the Proxy Statement.
3
PART I
ITEM 1. BUSINESS
General
Tyson Foods, Inc. and its various subsidiaries (collectively, the
"Company") produce, market and distribute a variety of food products
consisting of value-enhanced poultry; fresh and frozen poultry; value-
enhanced seafood products; fresh and frozen seafood products and prepared
foods and other products such as flour and corn tortillas and chips.
Additionally, the Company has live swine, animal feed and pet food
ingredients operations. The Company's integrated operations consist of
breeding and rearing chickens, harvesting seafood, as well as the
processing, further-processing and marketing of these food products. The
Company's products are marketed and sold to national and regional grocery
chains, regional grocery wholesalers, clubs and warehouse stores, military
commissaries, industrial food processing companies, national and regional
chain restaurants or their distributors, international export companies and
domestic distributors who service restaurants, foodservice operations such
as plant and school cafeterias, convenience stores, hospitals and other
vendors. Sales are made by the Company's sales staffs located in
Springdale, Arkansas, in regions throughout the United States and in
several foreign countries. Additionally, sales to the military and a
portion of sales to international markets are made through independent
brokers and trading companies. The Company conducts the major portion of
its business activities on a vertically integrated basis and considers its
business to be one industry segment, that of "food products." The Company
commenced business in 1935, was incorporated in Arkansas in 1947, and was
reincorporated in Delaware in 1986.
Description
Originally, the Company was a producer and distributor of fresh
chicken. The Company developed a strategy to reduce the impact of the
commodity market of the fresh chicken business through value-enhancement.
As the industry leader in value-enhanced poultry products, the Company
utilizes national and regional advertising, special promotions and brand
identification, and meets the varying demands of its customers through
capital expenditures and strategic acquisitions. With further-processed
poultry products, grain costs as a percentage of total product costs are
reduced because of the value added to the products by cutting, deboning,
cooking, packaging and/or freezing the poultry.
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The Company's integrated poultry processes include genetic research,
breeding, hatching, rearing, ingredient procurement, feed milling,
veterinary and other technical services, and related transportation and
delivery services. The Company contracts with independent growers to
maintain the Company's flocks of breeder chicks which, when grown, lay the
eggs which the Company transfers to its hatcheries and hatch into broiler
chicks. Newly hatched broiler chicks are vaccinated and then delivered to
independent contract growers who care for and feed the broiler chicks until
they reach processing weight, usually from the end of the fourth to the
eighth week. During the broiler growout period, the Company provides
growers with feed, vitamins and medication for the broilers, if needed, as
well as supervisory and technical services. The broilers are then
transported by the Company to its nearby processing plants. The Company
processed approximately 6.4 billion pounds of consumer poultry during
fiscal 1998.
The Company's farrow to finish swine operations, which include genetic
and nutritional research, breeding, farrowing and feeder pig finishing and
the marketing of live swine to regional and national packers, are conducted
in Alabama, Arkansas, Missouri, North Carolina and Oklahoma. The Company
sold approximately 2.0 million head of market weight live swine in fiscal
1998.
The Company is the leading manufacturer, marketer and distributor of
branded surimi-based seafood offerings including analog crabmeat, lobster,
shrimp and scallops. Additionally, the Company's seafood operations consist
of one of the largest catching and at-sea processing fleets in the North
Pacific. These vessels harvest a wide range of species of bottomfish and
shellfish year-round off the coasts of Alaska, Washington and Oregon. The
catch is either processed at sea or in shore-based processing facilities
into a variety of product forms.
The Company's prepared foods group, consisting of Mexican Original,
Culinary Foods and Mallard's Food, produce flour and corn tortilla products
and specialty pasta and meat dishes, for restaurants, airlines and other
major customers.
The Company's by-products operations convert inedible poultry by-
products into high-grade pet food and animal feed ingredients.
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Sources of Revenue
The principal revenue sources of the Company include value-enhanced
poultry products, fresh and frozen poultry products, prepared food
products, frozen dinner products, seafood products, live swine operations,
animal foods, by-products, and other products. In the first quarter of
1997, the Company sold its beef further-processing plants and closed its
pork further-processing plant. Revenue for 1996 includes value-enhanced
beef and pork products. The following table sets forth the relative sources
of the Company's revenues for the last three fiscal years.
For Fiscal Year Ended
---------------------
1998 1997 1996
---- ---- ----
Consumer Poultry(1) 82% 83% 78%
Prepared Foods(2) 4 4 5
Seafood (3) 3 4 5
Live Swine and Other 11 9 12
--- --- ---
Total 100% 100% 100%
=== === ===
(1) Includes products such as chicken patties and nuggets, pre-cooked
chicken, individually-quick-frozen chicken segments, pre-packaged and pre-
priced poultry, Cornish game hens and other poultry products to which
certain processes are added to enhance their value to the Company's
customers. Also includes fresh and frozen poultry products sold without
value enhancements.
(2) Includes flour and corn tortillas, corn chips, taco shells and filled
tortilla specialty items; premium frozen dinners and other specialty items.
(3) Includes surimi-based products as well as breaded and battered
seafood, fillets and crab.
Marketing and Distribution
The Company seeks to develop and increase the demand for and market
share of a product or product line through concentrated national and local
advertising and other promotional efforts, stressing product quality and
brand identification and meeting specific customer requirements. The
Company's principal marketing strategy is to identify target markets for
value-enhanced food products consisting primarily of poultry, tortilla
products and seafood. The Company concentrates production, sales and
marketing efforts in order to appeal to and enhance the demand from those
markets. The Company utilizes its national distribution system and customer
support services to achieve a dominant market position for its products and
identifies distinct markets through trade and consumer research.
The Company's nationwide distribution system utilizes a network of
food distributors which is supported by cold storage warehouses owned or
leased by the Company, by public cold storage facilities and by the
Company's transportation system. The Company ships products from two
Company-owned major frozen food distribution centers having a storage
capacity of approximately 58 million pounds, from a network of public cold
storages, from other owned or leased facilities or directly from plants.
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The Company has a total frozen storage capacity in excess of 132.5 million
pounds, excluding public or outside cold storage. The Company's
distribution centers facilitate accumulating frozen products so that it can
fill and consolidate less-than-truckload orders into full truckloads,
thereby decreasing shipping costs while increasing customer service. In
addition, customers are provided with a selection of products that do not
require large volume orders. The Company's distribution system enables it
to supply large or small quantities of products to meet customer
requirements anywhere in the continental United States.
The Company's food products are sold primarily in three broad domestic
markets consisting of foodservice, retail and wholesale clubs. The
foodservice, retail and wholesale club markets may, in some cases, overlap.
The Company's food products are also sold internationally.
In the foodservice market, the Company sells poultry, seafood and
tortilla products. Operators serving these products include commercial
restaurants, business/industry, colleges/universities, national/regional
chains, hotels/lodging, primary/secondary schools, health/elderly care and
other foodservice accounts. The Company's products are sold through
foodservice and specialty distributors who deliver to the above listed
operators.
Foodservice products are sold under the following brands and
registered trademarks: Tyson, Honey Stung, Tyson's Pride, HoneyBest, Wing
Stingers, W.W. Flyers, Signature Specialties, Flavor-Redi, Lady Aster,
Quality Cuisine, Our Finest, Mexican Original, McCarty Foods, Louis Kemp,
Arctic Ice, Enterprise, Crab Delights, Lobster Delights, Ocean Master and
Sure Salad.
Foodservice products include: (a) poultry items such as individually-
quick-frozen segments (IQF), ready-to-cook and fully cooked fried chicken,
fully cooked breaded and glazed wings, cooked and ready-to-cook breaded and
unbreaded tenderloins, breaded and unbreaded patties and chunks (cooked and
ready-to-cook), oven roasted chicken, stuffed breast specialties, Cornish
hens, flavor marinated breasts, fully cooked diced, pulled and shredded
chicken products, breaded breast and thigh pieces, bites and strips; fast
food cut-up chicken and marinated deli-chicken; (b) tortilla items such as
flour and corn tortillas and chips; and (c) seafood items such as surimi,
snow crab, king crab, pollock, cod and several species of flatfish.
In the retail market the Company sells a wide variety of food products
to customers that sell food products for at-home consumption. These
customers include grocery store chains, independent grocery stores and
grocery wholesalers.
Tyson, Weaver, Tyson Holly Farms, Mexican Original, Louis Kemp, Crab
Delights, Lobster Delights, JAC Creative Foods, Captain JAC, SeaFest and
Mallard's are registered trademarks under which the Company sells retail
products.
Retail products include: (a) frozen prepared foods consisting of
separate lines of Tyson breaded chicken patties, chunks, fillets and
tenders; Weaver breaded chicken tenders, nuggets, patties and fillets;
Tyson premium plated dinners; Tyson and Weaver flavored chicken wings;
Tyson complete meal kits; Tyson premium pot pies; Tyson and Mallard's
meals; Tyson individually-quick-frozen chicken parts and breaded chicken
7
patties and chunks; (b) refrigerated prepared foods consisting of separate
lines of Tyson roasted ready-to-eat chicken; Tyson and Weaver sliced lunch
meat; Weaver hot dogs; Tyson and Weaver deli meats; and Mexican Original
tortillas and chips;(c) refrigerated Tyson Holly Farms fresh tray pack
chicken; (d) frozen and refrigerated Tyson Cornish game hens; and (e)
seafood products which are marketed under the Louis Kemp brand of Crab
Delights and Lobster Delights, as well as the JAC Creative Foods brands of
Captain JAC and SeaFest.
In the wholesale club market the Company designs and markets a variety
of products targeted to small foodservice operators and consumers who
frequent club stores. These products are aimed at both foodservice
operators who buy in small quantities and want to cut costs of storage and
final distribution, as well as retail consumers willing to buy larger than
normal quantities to realize cost savings. The Company sells several
categories of products including: IQF chicken, fresh tray pack chicken,
refrigerated roasted ready-to-eat chicken, frozen value-added chicken,
canned chicken and surimi-based seafood products.
The Company's international division markets and sells throughout the
world the full line of Tyson products, including poultry, prepared food
products and seafood. The international division exported to 56 countries
in fiscal 1998. Major markets include Canada, China, Georgia, Guatemala,
Japan, Puerto Rico, Russia and Singapore as well as certain Middle Eastern
countries and countries in the Caribbean.
The Company continues to believe that Asia offers potential in terms
of developing fully-integrated poultry facilities. A memorandum of
understanding has been signed with the Kuok Group to explore development of
poultry production and processing complexes in China. The Company has also
established a joint venture called Fil-Am Foods, Inc. with Aboitiz Equity
Ventures, Inc. and PM Nutrition Company, Inc., a subsidiary of Purina
Mills, Inc., to create a commercial feed and swine operation in the
Philippines. Meanwhile, the Company's joint venture operation in Mexico
continues to grow rapidly under improving economic conditions. Cobb-
Vantress, Inc., a wholly-owned subsidiary, has entered into a joint venture
agreement with a company to build a 180 thousand capacity breeder farm in
China.
Raw Materials and Sources of Supply
The primary raw materials used by the Company in its poultry
operations consist of feed ingredients, cooking ingredients, packaging
materials and cryogenic agents. The Company believes that its sources of
supply for these materials are adequate for its present needs and the
Company does not anticipate any difficulty in acquiring these materials in
the future. While the Company produces substantially all of its inventory
of breeder chickens and live broilers, it has the capability to purchase
live, ice-packed or deboned poultry to meet poultry production
requirements.
In addition, raw material requirements for the Company's seafood
operations are met by either purchasing in the open market or by the
Company's vessels harvesting a wide range of species of bottomfish and
shellfish off the coasts of Alaska, Washington and Oregon. A large supply
of bottomfish, one of the principal groups of fish harvested for human
consumption, is found in the 200-mile U.S. exclusive economic zone off the
8
coast of Alaska. This area also provides a significant quantity of crab for
commercial harvesting; however, crab quotas have been severely limited in
recent years. Following passage of the Magnuson Fishery Conservation and
Management Act of 1976 (the "Magnuson Act"), the United States extended
control over the management of offshore fishing resources from a 12-mile to
a 200-mile exclusive economic zone by, among other things, establishing
annual catch limits and allocating the available resources between U.S. and
foreign catchers and processors. As a result of these government actions,
the Company's ability to harvest seafood is subject to these limitations.
Patents and Trademarks
The Company has registered a number of trademarks relating to its
products which either have been approved or are in the process of
application. Because the Company does a significant amount of brand name
and product line advertising to promote its products, it considers the
protection of such trademarks to be important to its marketing efforts. The
Company has also developed non-public proprietary information regarding its
production processes and other product-related matters. The Company
utilizes internal procedures and safeguards to protect the confidentiality
of such information, and where appropriate, seeks patent protection for the
technology it utilizes.
Seasonal Demand
The demand for the Company's products generally increases during the
spring and summer months and generally decreases during the winter months.
Because of the somewhat seasonal character of the Company's business, the
Company may increase its finished product inventories during the winter
months in anticipation of increased spring and summer demands.
Industry Practices
The Company's agreements with its customers are generally short-term,
verbal agreements due primarily to the nature of its products, industry
practice and the fluctuation in demand and price for such products.
Customer Relations
No single customer of the Company accounts for more than ten percent
of the Company's consolidated revenues, and the loss of any single customer
would not have a material adverse effect on the Company's business.
Although any extended discontinuance of sales to any major customer could,
if not replaced, have an impact on the Company's operations, the Company
does not anticipate any such occurrences due to the demand for its products
and its ability to obtain new customers.
Backlog of Orders
There is no significant backlog of unfilled orders for the Company's
products.
Competition
The Company's food products compete with those of other national and
regional food producers and processors and certain prepared food
manufacturers. Additionally, the Company's food products compete in
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international markets in Europe, South America, Central America and the Far
East. The Company's principal marketing and competitive strategy is to
identify target markets for value-enhanced products, to concentrate
production, sales and marketing efforts in order to appeal to and enhance
the demand from those markets and, utilizing its national distribution
system and customer support services, to achieve a dominant market position
for its products. Past efforts have indicated that customer demand
generally can be increased and sustained through application of the
Company's marketing strategy, as supported by its distribution system.
Research and Development
The Company conducts continuous research and development activities to
improve the strains of primary poultry breeding stock, the genetic
qualities of swine, and finished product development. Additionally, a
separate staff of research and development personnel is maintained to
develop and provide for product needs. The annual cost of such research and
development programs is less than one percent of total consolidated annual
sales.
Regulation
The Company's facilities for processing poultry and for housing live
poultry and swine are subject to a variety of federal, state and local laws
relating to the protection of the environment, including provisions
relating to the discharge of materials into the environment, and to the
health and safety of its employees. The Company's poultry and Mexican
Original processing and distribution facilities are also subject to
extensive inspection and regulation by the United States Department of
Agriculture. Additionally, the Company's poultry processing facilities are
participants in the government's pilot Hazardous Analysis Critical Control
Point (HACCP) program. The cost of compliance with such laws and
regulations has not had a material adverse effect upon the Company's
capital expenditures, earnings or competitive position and it is not
anticipated to have a material adverse effect in the future.
Fishing activities and seafood processing activities of the Company's
seafood operations are closely regulated by the United States Department of
Commerce and various other state and governmental agencies. These
agencies, among other things, establish fishing seasons and resource
depletion restrictions and regulate legal gear types. Violations of the
Magnuson Act and state laws can result in substantial penalties, ranging
from fines to seizure of catch and vessels. In addition, the seafood
operations are subject to various federal, state and local laws relating to
the protection of the environment and the health and safety of its
employees.
To provide consumer reassurance of product integrity and safety, to
create a quality point of difference from the competition, and to assume a
position of measured industry leadership in production standards, the
Company's seafood operation voluntarily complies with certain United States
Department of Commerce regulations which enable it to show the United
States Department of Commerce seal of approval (PUFI) on its primary
products. Three of the Company's seafood manufacturing facilities are
United States Department of Commerce inspected and are participants in the
HACCP program.
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Employees and Labor Relations
As of October 3, 1998, the Company employed approximately 70,500 persons.
The Company believes that its relations with its workforce are good.
Set forth below is a listing of the Company facilities which have employees
subject to a collective bargaining agreement together with the name of the
union party to the collective bargaining agreement, the number of employees
at the facility subject thereto and the expiration date of the collective
bargaining agreement currently in effect.
Location Union No. of People Expiration Date
- -------- ----- ------------- ---------------
Albert Lea, MN UFCW 350 January 24, 1999
Albertville, AL UFCW 900 December 31, 1998
Ashland, AL UFCW 750 February 24, 1999
Berlin, MD UFCW 450 December 31, 2001
Berlin, MD Teamsters 100 December 16, 2001
Buena Vista, GA RWDSU 1,300 November 4, 2000
Carthage, TX UFCW 700 November 11, 2000
Center, TX UFCW 1,025 November 4, 2000
Chicago, IL Truck Drivers 1,100 October 6, 2001
Cleveland, MS RWDSU 475 February 20, 2000
Corydon, IN UFCW 375 December 4, 1998
Corydon, IN Steelworkers 75 October 10, 1999
Dardanelle, AR UFCW 1,000 November 3, 2001
Gadsden/Blountsville, AL Teamsters 23 March 31, 2001
Gadsden, AL RWDSU 1,200 November 8, 2001
Glen Allen, VA UFCW 850 November 3, 2001
Henderson, KY UFCW 1,150 April 21, 2001
Hope, AR UFCW 1,400 March 3, 1999
Jackson, MS UFCW 1,050 December 31, 1999
Jacksonville, FL Teamsters 650 December 31, 1999
Noel, MO UFCW 1,225 April 25, 2000
Pine Bluff, AR UFCW 250 October 10, 1999
Shelbyville, TN RWDSU 950 November 12, 1999
Shelbyville, TN Teamsters 35 July 14, 2001
Social Circle, GA GMPPAW 200 November 30, 1998
Wilkesboro, NC Teamsters 35 November 4, 2001
Wilkesboro, NC Teamsters 25 November 4, 2001
Wilkesboro, NC Teamsters 125 November 4, 2001
The Company has not experienced any strike or work stoppage which had a
material impact on operations.
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CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE
PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
The Company and its representatives may from time to time make written
or oral forward-looking statements with respect to their current views and
estimates of future economic circumstances, industry conditions, company
performance and financial results. These forward-looking statements are
subject to a number of factors and uncertainties which could cause the
Company's actual results and experiences to differ materially from the
anticipated results and expectations expressed in such forward-looking
statements. The Company wishes to caution readers not to place undue
reliance on any forward-looking statements, which speak only as of the date
made.
Among the factors that may affect the operating results of the Company
are the following: (i) fluctuations in the cost and availability of raw
materials, such as feed grain costs; (ii) changes in the availability and
relative costs of labor and contract growers; (iii) market conditions for
finished products, including the supply and pricing of alternative
proteins; (iv) effectiveness of advertising and marketing programs; (v) the
ability of the Company to make effective acquisitions and to successfully
integrate newly acquired businesses into existing operations; (vi) risks
associated with leverage, including cost increases due to rising interest
rates; (vii) changes in regulations and laws, including changes in
accounting standards, environmental laws, occupational, health and safety
laws, and laws regulating fishing and seafood processing activities; (viii)
access to foreign markets together with foreign economic conditions,
including currency fluctuations; and (ix) the effect of, or changes in,
general economic conditions.
ITEM 2. PROPERTIES
The Company currently has production and distribution operations in
the following states: Alabama, Alaska, Arkansas, California, Florida,
Georgia, Illinois, Indiana, Kentucky, Maryland, Minnesota, Mississippi,
Missouri, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina,
Tennessee, Texas, Virginia and Washington. Additionally, the Company,
either directly or through its subsidiaries, has facilities in or
participates in joint venture operations in Argentina, Brazil, Canada,
China, Denmark, France, India, Indonesia, Ireland, Japan, Mexico, the
Philippines, Poland, South Africa, Spain, the United Kingdom and Venezuela.
The principal poultry operations of the Company consist of 58
processing plants. These plants are devoted to various phases of
slaughtering, dressing, cutting, packaging, deboning or further-processing.
The total slaughter capacity is approximately 43 million head per week.
To support the above facilities the Company operates 37 feed mills and
65 broiler hatcheries with sufficient capacity to meet the needs of the
poultry growout operations. In addition, the Company owns poultry cold
storage facilities with a capacity of approximately 126.8 million pounds.
The Company's prepared foods operations consist of eight processing
plants. These operations are supported by five additional freezer storage
facilities.
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The Company's seafood operations consist of 23 catching and at-sea
processing vessels along with two freighters. The at-sea processing is
supported by nine shore-based processing plants, five of which are
dedicated to surimi processing.
The Company's animal feed and pet food processing operations consist
of eleven rendering plants with the capacity to produce 26.6 million pounds
of animal protein products per week supported by three freezer facilities.
Fourteen ground pet food processing operations in connection with poultry
processing plants are capable of producing 7.3 million pounds of product
per week.
The Company's live swine operations consist of 158 swine farrowing and
nursery units and 385 swine finishing units. These swine growout operations
are supported by three dedicated feed mills supplemented by the production
from the poultry operations' feed mills. In addition, the Company operates
a grain drying and two storage facilities in support of its swine feed mill
operations.
The Company owns its major operating facilities and vessels with the
following exceptions: one poultry emulsified operation facility and one
poultry emulsified plant are leased month to month, 355 breeder farms are
leased under agreements expiring at various dates through 1999, 52 swine
farrowing and nursery units and 318 swine finishing units are leased under
one to ten year renewable lease agreements and two seafood processing
plants are leased under agreements expiring in 2000 and 2001.
Management believes that the Company's present facilities are
generally adequate and suitable for its current purposes. In general, the
Company's facilities are fully utilized. However, seasonal fluctuations in
inventories and production may occur as a reaction to market demands for
certain products. The Company regularly engages in construction and other
capital improvement projects intended to expand capacity and improve the
efficiency of its processing and support facilities.
ITEM 3. LEGAL PROCEEDINGS
On December 29, 1997, the Company entered into a plea agreement
resolving the Office of Independent Counsel's (OIC) investigation of the
Company in connection with its investigation of former Secretary of
Agriculture Michael Espy. The Company entered a guilty plea to a single
count of violating the illegal gratuity statute, 18 U.S.C. 201(c)(1).
The Company was sentenced on January 12, 1998 to pay a fine of $4 million,
costs of prosecution of $2 million and was placed on probation for four
years. At the time of its plea, the Company also entered a Compliance
Agreement with OIC and the U.S. Department of Agriculture requiring it to
implement a compliance program.
Following the entry of its guilty plea, the Company and others
were named as defendants in a putative class action suit brought on behalf
of all individuals who sold beef cattle to beef packers for processing
between certain dates in 1993 and 1998. This action, captioned Wayne
Newton, et al. v. Tyson Foods, Inc., et al., U.S. District Court, Northern
District of Iowa, Civil Action No. 98-30, asserts claims under the
Racketeer Influenced and Corrupt Organizations statute as well as a common
- -law claim for intentional interference with prospective economic
13
advantage. Plaintiffs allege that the gratuities which were the subject of
the Company's plea resulted in a competitive advantage for poultry products
vis-a-vis beef products. Plaintiffs request trebled damages in excess of
$3 billion, plus attorney's fees and costs. While management is not able
at the present time to determine the outcome of this matter, based upon
information currently available, management presently does not believe that
this lawsuit has merit and will not have a material adverse effect on the
Company's financial position or its results of operations.
On July 28, 1997, Hudson received notice from the U.S. Department of
Justice (DOJ) that it was prepared to bring an action against Hudson for
the alleged violation of the Clean Water Act at Hudson's Berlin, Md.,
poultry processing facility. The DOJ alleged that over the past five
years, Hudson had repeatedly discharged pollutants in quantities in excess
of its National Pollutant Discharge Elimination System (NPDES) permit
limits, violated monitoring and sampling requirements of its NPDES permit
and failed to provide notice of NPDES violations. On September 19, 1997,
Hudson entered into an agreement in principle with the DOJ for the
settlement of these claims. On May 8, 1998, a Consent Decree between the
United States, Hudson and the Company was filed with the U.S. District
Court together with a Complaint alleging these violations. On October 6,
1998, the U.S. District Court approved and entered the Consent Decree. The
Consent Decree, while stating that Hudson denies the violations alleged in
the Complaint, provides for the payment to the United States of $4 million
and the expenditure of $2 million in supplemental environmental projects
(SEPs).
On or about July 23, 1998, the Maryland Department of the Environment (MDE)
filed a Complaint for Injunctive Relief and Civil Penalty (the Complaint)
against the Company in the Circuit Court of Worcester County, Md. for the
alleged violation of certain Maryland water pollution control laws with
respect to the Company's land application of sludge to Company owned
agricultural land near Berlin, Md. The MDE seeks, in addition to injunctive
and equitable relief, civil penalties of up to $10,000 per day for each day
the Company had allegedly operated in violation of the Maryland water
pollution control laws. The Company has only recently received the
Complaint, is reviewing and researching the factual matters asserted
therein, and intends to vigorously defend against the same. The Company
does not believe any penalties, if imposed, would have a material adverse
effect on the Company's results of operations or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
14
Executive Officers of the Company
Officers of the Company serve one year terms from the date of their
election, or until their successors are appointed and qualified. The name,
title, age and year of initial election to executive office of the
Company's executive officers are listed below:
Year
Name Title Age Elected
- ---- ----- --- -------
Don Tyson Senior Chairman of the 68 1963
Board of Directors
John H. Tyson Chairman of the 45 1984
Board of Directors
Wayne Britt Chief Executive Officer 49 1977
Donald E. Wray President and Chief Operating 61 1979
Officer
Greg Lee Executive Vice President, Sales, 51 1993
Marketing and Technical Services
David Purtle Executive Vice President, 54 1985
Operations, Transportation and
Warehousing
Steven Hankins Executive Vice President and 40 1997
Chief Financial Officer
Dennis Leatherby Senior Vice President, 38 1990
Finance and Treasurer
James G. Ennis Vice President, Controller and 53 1996
Chief Accounting Officer
David L. Van Bebber Vice President and 42 1990
Director of Legal Services
R. Read Hudson Secretary 40 1998
Louis C. Gottsponer, Jr. Assistant Secretary and 34 1998
Director of Investor Relations
15
John H. Tyson is the son of Don Tyson. No other family relationships exist
among the above officers. Mr. Don Tyson was appointed Senior Chairman of
the Board of Directors in 1995 after previously serving as Chairman of the
Board and Chief Executive Officer. Mr. John H. Tyson was appointed Chairman
of the Board of Directors in 1998 after serving as Vice Chairman of the
Board of Directors since 1997 and President, Beef and Pork Division since
1993. Mr. Britt was appointed Chief Executive Officer in 1998 after serving
as Executive Vice President and Chief Financial Officer since 1996, Senior
Vice President, International Sales and Marketing since 1994 and Vice
President, Wholesale Club Division since 1992. Mr. Wray was appointed
President and Chief Operating Officer in 1995 after serving as Chief
Operating Officer since 1991. Mr. Lee was appointed Executive Vice
President, Sales, Marketing and Technical Services in 1995 after serving as
Senior Vice President, Sales and Marketing since 1993. Mr. Purtle was
appointed Executive Vice President, Operations, Transportation and
Warehousing in 1995 after serving as Senior Vice President, Operations
since 1991. Mr. Hankins was appointed Chief Financial Officer in 1998 after
serving as Senior Vice President, Financial Planning and Shared Services
since 1997 and Vice President, Management Information Systems since 1993.
Mr. Leatherby was appointed Senior Vice President, Finance and Treasurer in
1998 after serving as Vice President and Treasurer since 1997, Treasurer
since 1994 and Assistant Treasurer since 1990. Mr. Ennis was appointed Vice
President, Controller and Chief Accounting Officer in 1996 after serving as
Corporate Tax Manager since 1986. Mr. Van Bebber was appointed Vice
President and Director of Legal Services in 1998 after serving as Assistant
Secretary since 1990. Mr. Hudson was appointed Secretary in 1998 after
serving as Corporate Counsel since 1992. Mr. Gottsponer was appointed
Assistant Secretary and Director of Investor Relations in 1998 after
serving as Corporate Finance Manager since 1996 and Cash Manager since
1993.
16
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company currently has issued and outstanding two classes of
capital stock, Class A Common Stock (the "Class A Stock") and Class B
Common Stock (the "Class B Stock"). Information regarding the voting rights
and dividend restrictions are set forth on page 29 of the Annual Report
under the caption "Capital Stock," which information is incorporated herein
by reference.
On October 3, 1998, there were approximately 33,683 holders of record
of the Company's Class A Stock and 17 holders of record of the Company's
Class B Stock, excluding holders in the security position listings held by
nominees. The Class A Stock is traded on the New York Stock Exchange under
the symbol "TSN." No public trading market currently exists for the Class B
Stock. Information regarding the high and low closing prices of the Class A
Stock is set forth on pages 14 and 15 and in the table on page 44 of the
Annual Report under the captions "Eleven-Year Financial Summary" and
"Closing Price of Company's Common Stock," which information is
incorporated herein by reference.
The Company has paid uninterrupted quarterly dividends on its common
stock each year since 1977. On January 10, 1997, the Board of Directors
increased the post-split annual dividend rate on Class A Stock to $.10 per
share and fixed an annual dividend rate of $.09 per share for the Class B
Stock, effective with the quarterly dividend paid on March 15, 1997. The
Company has continued to pay quarterly dividends at the same rates through
fiscal 1998.
ITEM 6. SELECTED FINANCIAL DATA
See the information reflected under the caption "Eleven-Year Financial
Summary" on pages 14 and 15 of the Annual Report, which information is
incorporated herein by reference.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
See the information reflected under the caption "Management's
Discussion and Analysis" on pages 16 through 23 of the Annual Report, which
information is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
Market risks relating to the Company's operations result primarily
from changes in interest rates, foreign exchange rates and commodity
prices, as well as credit risk concentrations. To address these risks the
Company enters into various hedging transactions as described below. The
Company does not use financial instruments for trading purposes and is not
a party to any leveraged derivatives.
17
Commodities Risk
The Company is a purchaser of certain commodities, primarily corn and
soybeans. The Company periodically uses commodity futures and purchased
options for hedging purposes to reduce the effect of changing commodity
prices and as a mechanism to procure the grains. The contracts that
effectively meet risk reductions and correlation criteria are recorded
using hedge accounting. Gains and losses on closed hedge transactions are
recorded as a component of the underlying inventory purchase.
The following table provides information about the Company's corn, soybean
oil and other feed ingredient inventory and futures contracts that are
sensitive to changes in commodity prices. The table presents the carrying
amounts and fair values at October 3, 1998. Additionally, for the futures
contracts, the latest which matures 15 months from the reporting date, the
table presents the notional amounts in units of purchase, the weighted
average contract prices and the total dollar contract amounts. Contract
amounts are used to calculate the contractual payments and quantity of corn
and soybean oil to be exchanged under the futures contracts.
(dollars and volume in millions, except per unit amounts)
- ---------------------------------------------------------------------------
Volume Contract/ Weighted Fair Weighted
Book Value Average Price Value Average
Per Unit Price Per
Unit
- ---------------------------------------------------------------------------
Commodity Inventory - $36.0 $ - $36.0 $ -
Corn Futures Contracts
(volume in bushels)
Long (Buy) Positions 7.5 17.4 2.33 17.0 2.27
Short (Sell) Positions 9.7 20.5 2.11 20.2 2.08
Soybean Oil Futures Contracts
(volume in cwt)
Long (Buy) Positions 0.1 2.1 24.24 2.1 24.05
Short (Sell) Positions 0.1 1.5 24.40 1.5 24.06
===========================================================================
Foreign Currency and Interest Rate Risks
The Company periodically enters into foreign exchange forward
contracts and option contracts to hedge some of its foreign currency
exposure. The Company uses such contracts to hedge exposure to changes in
foreign currency exchange rates, primarily Japanese Yen, associated with
sales denominatedin foreign currency. Gains and losses on these contracts
are recognized as an adjustment of the subsequent transaction when it occurs.
Forward and option contracts generally have maturities not exceeding 12 months.
The Company also hedges exposure to changes in interest rates on
certain of its financial instruments. Under the terms of various leveraged
equipment loans, the Company enters into interest rate swap agreements to
effectively lock in a fixed interest rate for these borrowings. The
maturity dates of these leveraged equipment loans range from 2005 to 2008
with interest rates ranging from 4.7% to 6%.
18
The following table provides information about the Company's derivative
financial instruments and other financial instruments that are sensitive to
changes in interest rates. The table presents for the Company's debt
obligations, principal cash flows, related weighted-average interest rates
by expected maturity dates and fair values. For interest rate swaps, the
table presents notional amounts, weighted-average interest rates or strike
rates by contractual maturity dates and fair values. Notional amounts are
used to calculate the contractual cash flows to be exchanged under the
contract.
Interest Rate Sensitivity
Principal (Notional) Amount by Expected Maturity
Average Interest (Swap) Rate
___________________________________________________________________________
(dollars in millions)1999 2000 2001 2002 2003 There- Total Fair
after Value
10/3/98
___________________________________________________________________________
Liabilities
Long-term Debt,
including
Current Portion
Fixed Rate $73.6 $226.7 $125.2 $31.4 $178.5 $823.3 $1,458.7 $1,533.7
Average Interest
Rate 9.37% 6.39% 8.25% 7.88% 6.20% 6.79% 6.93%
Variable Rate $4.0 $24.6 - $506.9 - $50.0 $585.5 $585.5
Average Interest
Rate 4.15% 7.67% - 5.57% - 3.73% 5.49%
Interest Rate
Derivative Financial
Instruments Related
to Debt
Interest Rate Swaps
Pay Fixed $16.1 $17.2 $18.4 $19.6 $20.2 $50.2 $141.7 ($8.1)
Average Pay Rate 6.71% 6.71% 6.69% 6.73% 6.74% 6.59% 6.67%
Average Receive Rate- USD 6 Month Libor.
===========================================================================
The following table summarizes information on instruments and transactions
that are sensitive to foreign currency exchange rates. The table presents
the notional amounts, weighted-average exchange rates by expected
(contractual) maturity dates and fair values. These notional amounts
generally are used to calculate the contractual payments to be exchanged
under the contract.
19
Exposures Related to Derivative Contracts
with United States Dollar Functional Currency
Principal (Notional) Amount by Expected Maturity
Average Forward Foreign Currency Exchange Rate (USD/Foreign Currency)
(dollars in millions)
___________________________________________________________________________
1999 2000 - 2003 There- Total Fair
after Value
10/3/98
___________________________________________________________________________
Sold Option Contracts
to Sell Foreign
Currencies for US$
Japanese Yen
Notional Amount $6.5 - $6.5 -
Weighted Average
Strike Price Y109.48
Purchased Option
Contracts to Sell
Foreign Currencies
for US$
Japanese Yen
Notional Amount $5.6 - $5.6 $0.4
Weighted Average
Strike Price Y126.69
===========================================================================
Credit Risks
The Company's financial instruments that are exposed to concentrations
of credit risk consist primarily of cash equivalents and trade receivables.
The Company's cash equivalents are in high quality securities placed with
major banks and financial institutions. Concentrations of credit risk with
respect to receivables are limited due to the large number of customers and
their dispersion across geographic areas. The Company performs periodic
credit evaluations of its customers' financial condition and generally does
not require collateral. No single group or customer represents greater than
10% of total accounts receivable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the information on pages 24 through 41 of the Annual Report under
the caption "Consolidated Statements of Income," "Consolidated Balance
Sheets," "Consolidated Statements of Shareholders' Equity," "Consolidated
Statements of Cash Flows," "Notes to Consolidated Financial Statements" and
"Report of Independent Auditors," which information is incorporated herein
by reference. Other financial information is filed under Item 14 of Part IV
of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
20
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
See information set forth under the captions "Election of Directors"
and "Section 16(a) Beneficial Ownership Reporting" in the Proxy Statement,
which information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Pursuant to general instruction G(3) of the instructions to Annual
Report on Form 10-K, certain information concerning the Company's executive
officers is included under the caption "Executive Officers of the Company"
in Part I of this Report. See the information set forth under the captions
"Executive Compensation and Other Information" and "Report of Compensation
Committee" in the Proxy Statement, which information is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See the information included under the captions "Principal
Shareholders" and "Security Ownership of Management" in the Proxy
Statement, which information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See the information included under the caption "Certain Transactions"
in the Proxy Statement, which information is incorporated herein by
reference.
21
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
1. The following consolidated financial statements of the
registrant included on pages 24 through 40 in the
Company's Annual Report for the fiscal year ended
October 3, 1998, and the Report of Independent
Auditors, on page 41 of such Annual Report are
incorporated herein by reference. Page references
set forth in the index below are to page numbers in
Exhibit 13 of this Form 10-K.
Pages
------
Consolidated Statements of Income 62
for the three years ended October 3, 1998
Consolidated Balance Sheets at 63
October 3, 1998 and September 27, 1997
Consolidated Statements of Shareholders' Equity 64
for the three years ended October 3, 1998
Consolidated Statements of Cash Flows 65
for the three years ended October 3, 1998
Notes to Consolidated Financial Statements 66-81
Report of Independent Auditors 83
2. The following additional information for the years 1998,
1997, and 1996 is submitted herewith. Page references are
to the consecutively numbered pages of this Report on
Form 10-K:
Pages
-----
Report of Independent Auditors 32
Schedule VIII Valuation and Qualifying 33
Accounts and Reserves for the three years ended October
3, 1998
All other schedules are omitted because they are neither applicable
nor required.
3. The exhibits filed with this report are listed in the
Exhibit Index at the end of this Item 14.
4. On September 4, 1998, the Company filed a Current Report
on Form 8-K related to the Board of Directors' approval of
a combined financial program.
22
EXHIBIT INDEX
The following exhibits are filed with this report or are incorporated
by reference to previously filed material. Page references are to the
cover page preceding each attached Exhibit.
Exhibit No. Pages
- ----------- -----
2.1 Agreement and Plan of Merger dated September 4, 1997
by and among the Company, HFI Acquisition Sub, Inc.
and Hudson Foods, Inc. (previously filed as Exhibit
2.1 to the Company's Registration Statement on Form
S-4, filed with the Securities and Exchange Commission
on December 10, 1997, Registration No. 333-41887, and
incorporated herein by reference).
3.1 Restated Certificate of Incorporation of the Company 34-43
3.2 Amended and Restated Bylaws of the Company (previously
filed as Exhibit 3.2 to the Company's Annual Report on
Form 10-K for the fiscal year ended
September 28, 1996, Commission File No. 0-3400, and
incorporated herein by reference).
4.1 Form of Indenture between the Company and The Chase
Manhattan Bank, N.A., as Trustee relating to the
issuance of Debt Securities (previously filed as
Exhibit 4 to Amendment No. 1 to Registration Statement
on Form S-3, filed with the Commission on May 8, 1995,
Registration No. 33-58177, and incorporated herein by
reference).
4.2 Form of 6.75% $150 million Note due June 1, 2005
(previously filed as Exhibit 4(b) to the Company's
Quarterly Report on Form 10-Q for the period ended
July 1, 1995, Commission File No. 0-3400, and
incorporated herein by reference).
4.3 Form of Fixed Rate Medium-Term Note (previously filed
as Exhibit 4.2 to the Company's Current Report on Form
8-K, filed with the Commission on July 20, 1995,
Commission File No. 0-3400, and incorporated herein by
reference).
4.4 Form of Floating Rate Medium-Term Note (previously
filed as Exhibit 4.3 to the Company's Current Report
on Form 8-K, filed with the Commission on
July 20, 1995, Commission File No. 0-3400, and
incorporated herein by reference).
4.5 Form of Calculation Agent Agreement (previously filed
as Exhibit 4.4 to the Company's Current Report on Form
8-K, filed with the Commission on July 20, 1995,
Commission File No. 0-3400, and incorporated herein by
reference).
23
4.6 Amended and Restated Note Purchase Agreement, dated
June 30, 1993, by and between the Company and various
Purchasers as listed in the Purchaser Schedule
attached to said agreement, together with the
following documents:
(a) Form of Series A Note
(b) Form of Series D Note
(previously filed as Exhibit 4(a) to the Company's
Quarterly Report on Form 10-Q for the period ended
July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
4.7 Amendment Agreement, dated November 1, 1994, to
Amended and Restated Note Purchase Agreements, dated
June 30, 1993, by and between the Company and various
Purchasers as listed in the Purchaser Schedule
attached to said agreement (previously filed as
Exhibit 10(a) to the Company's Quarterly Report on
Form 10-Q for the period ended December 31, 1994,
Commission File No. 0-3400, and incorporated herein by
reference).
4.8 Second Amendment Agreement, dated as of June 29, 1996,
to Amended and Restated Note Purchase Agreements,
dated June 30, 1993, by and between the Company and
various Purchasers as listed in the Purchaser Schedule
attached to said agreement (previously filed as
Exhibit 4.8 to the Company's Annual Report on Form 10-
K for the fiscal year ended September 28, 1996,
Commission File No. 0-3400, and incorporated herein by
reference).
4.9 Amended and Restated Note Agreement, dated
June 30, 1993, by and between the Company and various
Purchasers as listed in the Purchaser Schedule
attached to said agreement, together with the
following related documents:
(a) Form of Series E Note
(b) Form of Series F Note
(c) Form of Series G Note
(previously filed as Exhibit 4(b) to the Company's
Quarterly Report on Form 10-Q for the period ended
July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
4.10 Amendment Agreement, dated November 1, 1994, to
Amended and Restated Note Agreement, dated
June 30, 1993, by and between the Company and various
Purchasers as listed in the Purchaser Schedule
attached to said agreement (previously filed as
24
Exhibit 10(b) to the Company's Quarterly Report on
Form 10-Q for the period ended December 31, 1994,
Commission File No. 0-3400, and incorporated herein by
reference).
4.11 Second Amendment Agreement, dated as of June 29, 1996,
to Amended and Restated Note Agreement, dated
June 30, 1993, by and between the Company and
Purchasers as listed in the Purchaser Schedule
attached to said agreement (previously filed as
Exhibit 4.11 to the Company's Annual Report on Form
10-K for the fiscal year ended September 28, 1996,
Commission File No. 0-3400, and incorporated herein by
reference).
4.12 Form of $150 million 6% Note due January 15, 2003
(previously filed as Exhibit 4.1 to the Company's
Quarterly Report on Form 10-Q for the period ended
December 27, 1997, Commission File No. 0-3400, and
incorporated herein by reference).
4.13 Form of $150 million 7% Note due January 15, 2028
(previously filed as Exhibit 4.2 to the Company's
Quarterly Report on Form 10-Q for the period ended
December 27, 1997, Commission File No. 0-3400, and
incorporated herein by reference).
4.14 Form of $100 million 6.08% MOPPRS, due February 1,
2010 (previously filed as Exhibit 4.3 to the Company's
Quarterly Report on Form 10-Q for the period ended
December 27, 1997, Commission File No. 0-3400, and
incorporated herein by reference).
4.15 Remarketing Agreement dated January 28, 1998 between
the Company and Merrill Lynch, Pierce, Fenner & Smith,
Incorporated, relating to the 6.08% MOPPRS due
February 1, 2010 (previously filed as Exhibit 4.1 to
the Company's Current Report on Form 8-K, filed with
the Securities and Exchange Commission on February 4,
1998 and incorporated herein by reference).
4.16 Form of $50 million Floating Rate MOPPRS, due February
1, 2010 (previously filed as Exhibit 4.5 to the
Company's Quarterly Report on Form 10-Q for the period
ended December 27, 1997, Commission File No. 0-3400,
and incorporated herein by reference).
4.17 Remarketing Agreement dated January 28, 1998 between
the Company and Merrell Lynch, Pierce, Fenner & Smith,
Incorporated, relating to the Floating Rate MOPPRS due
February 1, 2010 (previously filed as Exhibit 4.2 to
the Company's Current Report on Form 8-K, filed with
the Securities and Exchange Commission on February 4,
1998 and incorporated herein by reference).
4.18 Form of 7.0% $200 million Note due May 1, 2018
(previously filed as Exhibit 4.1 to the Company's
25
Quarterly Report on Form 10-Q for the period ended
March 28, 1998, Commission File No. 0-3400, and
incorporated herein by reference).
4.19 Form of 7.0% $40 million Note due May 1, 2018
(previously filed as Exhibit 4.2 to the Company's
Quarterly Report on Form 10-Q for the period ended
March 28, 1998, Commission File No. 0-3400, and
incorporated herein by reference).
10.1 Fourth Amended and Restated Credit Agreement,
including all exhibits thereto, dated as of
May 26, 1995, by and among the Company, as Borrower,
The Chase Manhattan Bank N.A., Chemical Bank,
Cooperative Centrale Raiffeisen-Boerenleenbank B.A.
(Rabobank Nederland), Morgan Guaranty Trust Company of
New York, National Westminister Bank Plc, Nationsbank
of Texas, N.A., and Societe Generale, as Co-Agents,
and Bank of America National Trust and Savings
Association, as Agent (previously filed as Exhibit
4(f) to the Company's Quarterly Report on Form 10-Q
for the period ended July 1, 1995, Commission File
No. 0-3400, and incorporated herein by reference).
10.2 Amendment No. 1 to Fourth Amended and Restated Credit
Agreement, dated as of May 24, 1996, by and among the
Company, as Borrower, the banks party thereto, The
Chase Manhatten Bank, N.A., Chemical Bank, Cooperative
Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank
Nederland), Morgan Guaranty Trust Company of New York,
National Westminister Bank Plc, Nationsbank of Texas,
N.A., and Societe Generale as Co-Agents and Bank of
America National Trust and Savings Association, as
Agent (previously filed as Exhibit 4(b) to the
Company's Form 10-Q for the quarter ended
June 29, 1996, Commission File No. 0-3400, and
incorporated herein by reference).
10.3 Amendment No. 2 to Fourth Amended and Restated Credit
Agreement, dated as of May 23, 1997, by and among the
Company, as Borrower, the banks party thereto, The
Chase Manhatten Bank, N.A., Chemical Bank, Cooperative
Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank
Nederland), Morgan Guaranty Trust Company of New York,
National Westminister Bank Plc, Nationsbank of Texas,
N.A., and Societe Generale as Co-Agents and Bank of
America National Trust and Savings Association, as
Agent (previously filed as Exhibit 4(b) to the
Company's Form 10-Q for the quarter ended
June 28, 1997, Commission File No. 0-3400, and
incorporated herein by reference).
10.4 Issuing and Paying Agency Agreement dated July 1,
1993, between the Company and Morgan Guaranty Trust
Company of New York, (previously filed as Exhibit
10(d) to the Company's Quarterly Report on Form 10-Q
26
for the period ended July 3, 1993, Commission File No.
0-3400, and incorporated herein by reference).
10.5 Commercial Paper Dealer Agreement dated July 1, 1993,
between the Company and Merrill Lynch Money Markets,
Inc. (previously filed as Exhibit 10(e) to the
Company's Quarterly Report on Form 10-Q for the period
ended July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
10.6 Commercial Paper Dealer Agreement dated July 1, 1993,
between the Company and the First Boston Corporation
(previously filed as Exhibit 10(g) to the Company's
Quarterly Report on Form 10-Q for the period ended
July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
10.7 Commercial Paper Dealer Agreement dated July 1, 1993,
between the Company and J.P. Morgan Securities, Inc.
(previously filed as Exhibit 10(h) to the Company's
Quarterly Report on Form 10-Q for the period ended
July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
10.8 Commercial Paper Dealer Agreement dated July 1, 1993,
between the Company and Bank of America National Trust
and Savings Association (previously filed as Exhibit
10(i) to the Company's Quarterly Report on Form 10-Q
for the period ended July 3, 1993, Commission File
No. 0-3400, and incorporated herein by reference).
10.9 Commercial Paper Dealer Agreement dated
September 1, 1994, between the Company and Chase
Securities, Inc. (previously filed as Exhibit 10(j) to
the Company's Annual Report on Form 10-K for the
fiscal year ended October 1, 1994, Commission File
No. 0-3400, and incorporated herein by reference).
10.10 Tyson Foods, Inc. Senior Executive Performance Bonus
Plan adopted November 18, 1994 (previously filed as
Exhibit 10(k) to the Company's Annual Report on
Form 10-K for the fiscal year ended October 1, 1994,
Commission File No. 0-3400, and incorporated herein by
reference).
10.11 Tyson Foods, Inc. Restricted Stock Bonus Plan,
effective August 21, 1989, as amended and restated on
April 15, 1994; and Amendment to Restricted Stock
Bonus Plan effective November 18, 1994 (previously
filed as Exhibit 10(l) to the Company's Annual Report
on Form 10-K for the fiscal year ended
October 1, 1994, Commission File No. 0-3400, and
incorporated herein by reference).
10.12 Profit Sharing Plan and Trust of Tyson Foods, Inc., as
amended and restated through April 1, 1993; Amendment
No.1 thereto, effective April 1, 1995; and terminating
27
resolution, effective March 31, 1996 (previously filed
as Exhibit 10(b) to the Company's Form 10-Q for the
quarter ended March 30, 1996, Commission File No. 0-
3400, and incorporated herein by reference).
10.13 Tyson Foods, Inc. Employee Stock Purchase Plan, as
amended and restated through April 1, 1993; and
Amendment Nos. 1 and 2 thereto, effective
April 1, 1996 (previously filed as Exhibit 10(d) to
the Company's Form 10-Q for the quarter ended
March 30, 1996, Commission File No. 0-3400, and
incorporated herein by reference).
10.14 Tyson Foods, Inc. Incentive Stock Option Plan of 1982,
as amended and restated on September 5, 1987,
(previously filed as Exhibit 10(c) to the Company's
Annual Report on Form 10-K for the fiscal year ended
October 3, 1987, Commission File No. 0-3400, and
incorporated herein by reference).
10.15 Tyson Foods, Inc. Employee Stock Ownership Plan as
amended and restated through April 1, 1993; and
terminating resolution, effective March 31, 1996
(previously filed as Exhibit 10(c) to the Company's
Form 10-Q for the quarter ended March 30, 1996,
Commission File No. 0-3400, and incorporated herein by
reference).
10.16 Second Amended and Restated Employment Agreement dated
August 1, 1997, between the Company and Don Tyson,
Senior Chairman of the Board of Directors of the
Company (previously filed as Exhibit 10.21 to the
Company's Form 10-K for the fiscal year ended
September 27, 1997, Commission File No. 0-3400, and
incorporated herein by reference).
10.17 Retirement Savings Plan of Tyson Foods, Inc.,
qualified under Section 401(k) of the Internal Revenue
Code of 1986, as amended, originally effective as of
October 3, 1987, as amended and restated through
January 1, 1993; and Amendments Nos. 1-5 thereto
(previously filed as Exhibit 10(a) to the Company's
Form 10-Q for the quarter ended March 30, 1996,
Commission File No. 0-3400, and incorporated herein by
reference).
10.18 Tyson Employee Retirement Income Savings Plan, as
amended and restated effective April 1, 1987,
(previously filed as Exhibit 10(h) to the Company's
Annual Report on Form 10-K for the fiscal year ended
October 3, 1987, Commission File No. 0-3400, and
incorporated herein by reference).
10.19 Form of Indemnity Agreement between Tyson Foods, Inc.
and its directors and certain of its executive
officers (previously filed as Exhibit 10(t) to the
Company's Annual Report on Form 10-K for the fiscal
28
year ended September 30, 1995, Commission File No.
0-3400, and incorporated herein by reference).
10.20 Senior Executive Employment Agreement dated November 44-45
20, 1998 between the Company and Leland E. Tollett.
10.21 Senior Executive Employment Agreement dated November 46-47
20, 1998 between the Company and Donald E. Wray.
12 Ratio of Earnings to Fixed Charges. 48
13 Pages 14-44 and back cover of the Annual Report to 49-88
Shareholders for the fiscal year ended October 3,
1998.
21 Subsidiaries of the Company. 89-90
23 Consent of Independent Auditors. 91
27 Financial Data Schedule.
29
SIGNATURES
Pursuant to requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TYSON FOODS, INC.
By /s/ Steven Hankins December 16, 1998
-------------------
Steven Hankins
Executive Vice President
and Chief Financial Officer
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Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the date indicated.
/s/ Wayne Britt Chief Executive Officer December 16, 1998
- -------------------- and Director
Wayne Britt
/s/ Neely Cassady Director December 16, 1998
- --------------------
Neely Cassady
/s/ James G. Ennis Vice President, Controller December 16, 1998
- -------------------- and Chief Accounting Officer
James G. Ennis
/s/ Lloyd V. Hackley Director December 16, 1998
- --------------------
Lloyd V. Hackley
/s/ Steven Hankins Executive Vice President and December 16, 1998
- -------------------- Chief Financial Officer
Steven Hankins
/s/ Gerald Johnston Director December 16, 1998
- --------------------
Gerald Johnston
/s/ Shelby D. Massey Director December 16, 1998
- --------------------
Shelby D. Massey
/s/ Joe F. Starr Director December 16, 1998
- --------------------
Joe F. Starr
/s/ Leland E. Tollett Director December 16, 1998
- ---------------------
Leland E. Tollett
/s/ Barbara Tyson Vice President and Director December 16, 1998
- ---------------------
Barbara Tyson
/s/ Don Tyson Senior Chairman of the December 16, 1998
- --------------------- Board of Directors
Don Tyson
/s/ John H. Tyson Chairman of the December 16, 1998
- --------------------- Board of Directors
John H. Tyson
/s/ Fred S. Vorsanger Director December 16, 1998
- ---------------------
Fred S. Vorsanger
/s/ Donald E. Wray President, Chief Operating December 16, 1998
- --------------------- Officer and Director
Donald E. Wray
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FINANCIAL STATEMENT SCHEDULE
REPORT OF INDEPENDENT AUDITORS
We have audited the consolidated financial statements of Tyson Foods, Inc.
as of October 3, 1998 and September 27, 1997, and for each of the three
years in the period ended October 3, 1998, and have issued our report
thereon dated November 20, 1998. Our audits also included the financial
statement schedule listed in Item 14(a) in this annual report (Form 10-K).
This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
Tulsa, Oklahoma /s/ERNST & YOUNG LLP
November 20, 1998 --------------------
ERNST & YOUNG LLP
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TYSON FOODS, INC.
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Three Years Ended October 3, 1998
(Dollars in Millions)
Balance at Charged to Charged Balance
Beginning Costs and to Other Additions at End
Description of Period Expenses Accounts (Deductions) of Period
- ----------- ---------- --------- -------- ----------- ---------
Allowance for
Doubtful Accounts
1998 $4.4 $2.2 0 $78.7(1) $85.3
1997 $3.5 $2.0 0 ($1.1) $4.4
1996 $3.6 $1.9 0 ($2.0) $3.5
(1) Includes $48.4 million reserve for international currency devaluation.
33