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 2, 1999 [ ] 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. [X] On October 2, 1999, the aggregate market value of the Class A Common and Class B Common voting stock held by non-affiliates of the registrant was $1,909,174,285 and $767,382, respectively. On October 2, 1999, there were outstanding 125,933,717 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 170 Pages The Exhibit Index appears on pages 24 through 30
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 24-60 and inside back cover of the registrant's Annual Report to Shareholders for fiscal year ended October 2, 1999 (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 14, 2000 (the "Proxy Statement"). PART I Item 1. Business Pages 26 through 37 of the Annual Report under the caption "Management's Discussion and Analysis." Pages 53 through 55 of the Annual Report under the caption "Notes to Consolidated Financial Statements, Note 16: Segment Reporting." PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Pages 24 and 25, 43 and 60 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 24 and 25 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 26 through 37 of the Annual Report under the caption "Management's Discussion and Analysis." Item 8. Financial Statements and Supplementary Data Pages 38 through 57 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." 2
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 Tyson Foods, Inc. (collectively, with its various subsidiaries, the "Company"), a fully integrated producer, processor and marketer of food products, commenced business in 1935, was incorporated in Arkansas in 1947, and was reincorporated in Delaware in 1986. Financial Information about Segments The Company identifies business segments based on the products offered and the nature of customers. The five reported business segments in fiscal 1999 were Food Service, Consumer Products, International, Swine and Seafood. The information required by Item 1 relating to segments is incorporated herein by reference to Note 16 of the Company's Notes to Consolidated Financial Statements appearing on pages 53, 54 and 55 of the Annual Report and attached as Exhibit 13 to this Report. General Description of Business The Company is a fully integrated producer, processor and marketer of a variety of food products consisting of value-enhanced chicken; fresh and frozen chicken; and prepared foods and other products such as flour and corn tortillas and chips. Additionally, the Company has animal feed and pet food ingredients operations. The Company's integrated operations consist of breeding and rearing chickens, 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, 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, food service operations such as plant and school cafeterias, convenience stores, hospitals and other vendors. Sales are made by the Company's sales staff as well as through independent brokers and trading companies. 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 chicken 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 chicken 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 chicken. 4
The Company's integrated chicken 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 7.2 billion pounds of consumer chicken during fiscal 1999. The Company's chicken business consists of the Food Service, Consumer Products and International segments. Food Service includes fresh, frozen and value-enhanced chicken products sold through food service and specialty distributors who deliver to restaurants, schools and other accounts. Consumer Products include fresh, frozen and value-enhanced chicken products sold through retail markets for at-home consumption and through wholesale club markets targeted to small food service operators, individuals and small businesses. The Company's International segment markets and sells the full line of Tyson chicken products. 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 and processors, are conducted in Alabama, Arkansas, Missouri, North Carolina and Oklahoma. The Company sold approximately 2 million head of feeder pigs and market weight live swine in fiscal 1999. On September 28, 1999, the Company signed a letter of intent to sell its wholly-owned subsidiary, The Pork Group, Inc. to Smithfield Foods, Inc. This transaction was subject to the successful negotiation of a definitive agreement. On December 6, 1999, the Company announced that both parties were unable to reach a definitive agreement and negotiations were mutually terminated. The Company intends to explore all options related to the pork operations, which may include discussions with other potential buyers. Certain assets of The Pork Group with a fair value of approximately $70 million are classified as assets held for sale at Oct. 2, 1999. Additionally, at Oct. 2, 1999, the Company accrued expenses related to the closure of certain assets not part of the Smithfield transaction. The operating results for the fiscal year ended Oct. 2, 1999, include a pretax charge of $35.2 million related to the anticipated loss and closure of these assets. The Company's seafood business, which was sold on July 17, 1999, included branded surimi-based seafood offerings, such as analog crabmeat, lobster, shrimp and scallops marketed both domestically and internationally. Note 2: Dispositions and Assets Held for Sale on pages 43 and 44 of the Notes to Consolidated Financial Statements of the Annual Report describes the sale of the seafood business and is incorporated herein by reference. 5
The Company's other segment includes the Prepared Foods group, consisting of Mexican Original, Culinary Foods and Mallard's Food Products. Mexican Original produces flour and corn tortilla products. Culinary Foods and Mallard's Food Products produce specialty pasta and meat dishes, for restaurants, airlines and other major customers. Additionally, the other segment includes the Company's wholly-owned subsidiaries involved in supplying chicken breeding stock and trading agricultural goods worldwide, the Company's turkey and egg products facilities which were sold on December 31, 1998, as well as the Company's by-products operations which convert inedible chicken by-products into high-grade pet food and animal feed ingredients. Sources of Revenue The information required by Item 1 with respect to the amount or percentage of total revenue contributed by any class of similar products or services which account for 10% or more of consolidated revenue in any of the last three fiscal years is incorporated herein by reference to Note 16 of the Company's Notes to Consolidated Financial Statements appearing on pages 53, 54 and 55 of the Annual Report pursuant to rule 14a-3(b) and attached as Exhibit 13 to this report. 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 chicken and tortilla products. 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 and from other owned or leased facilities or directly from plants. The Company has a total frozen storage capacity in excess of 141.4 million pounds, excluding public or outside cold storage. The Company's distribution centers accumulate frozen products so that they 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. 6
Operators serving chicken products in the food service market include commercial restaurants, business and industry, colleges and universities, national and regional chains, hotels and lodging, primary and secondary schools, health and elderly care and other food service accounts. The Company's products are sold through food service and specialty distributors who deliver to the above listed operators. Food Service products are sold under the following brands and registered trademarks: Tyson, Tastybird, McCarty Foods, Tyson's Pride, Honey Stung, Hot Wings, Wings of Fire, Signature Specialties and Lady Aster. Food Service chicken products include individually-quick-frozen segments (IQ*F), 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. In the consumer products market the Company sells a wide variety of food products to customers that sell food products for at-home consumption. These customers include grocery chains, independent grocery stores, grocery wholesalers, wholesale clubs and military commissaries. Tyson, Weaver, Tyson Holly Farms, Delightful Farms, Gold Leaf and Tastybird are registered trademarks under which the Company sells consumer products. Consumer Products include 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 and Weaver flavored chicken wings, Tyson complete meal kits, individually-quick-frozen chicken parts and breaded chicken patties and chunks, refrigerated prepared foods consisting of separate lines of Tyson roasted ready-to-eat chicken, Weaver deli meats, refrigerated Tyson Holly Farms fresh tray pack chicken and frozen and refrigerated Tyson Cornish game hens. The Company's International division markets and sells the full line of Tyson products, including chicken and prepared food products. The International division exported to 75 countries in fiscal 1999. Major markets include China, Georgia, Guatemala, Japan, Puerto Rico, Russia and Singapore as well as certain Middle Eastern and Caribbean countries. The Company continues to believe that Asia offers potential in terms of developing fully integrated chicken facilities. A memorandum of understanding has been signed with the Kuok Group to explore development of chicken production and processing complexes in China. The Company's joint venture, to create a commercial feed and swine operation in the Philippines, called Fil-Am Foods, Inc., with Aboitiz Equity Ventures, Inc. and PM Nutrition Company, Inc., a subsidiary of Purina Mills, Inc is now operational. Meanwhile, the Company's subsidiary in Mexico continues to grow rapidly under improving economic conditions. Additionally, 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. 7
Raw Materials and Sources of Supply The primary raw materials used by the Company in its chicken 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 chicken to meet production requirements. Intellectual Property 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 growout procedures, 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 develops. 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 due primarily to industry practice and fluctuations in both industry supply and consumer demand 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. However, two customers represent approximately 23% of the Food Service segment's net sales and three customers represent approximately 47% of the Consumer Products segment's net sales. 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. 8
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 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 chicken breeding stock, the genetic qualities of swine, and finished product development, and is continually engaged in experiments to determine the most cost effective means of raising healthy and wholesome chickens. 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 chicken and for housing live chicken 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 chicken 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 chicken processing facilities are participants in the government's 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. Employees and Labor Relations As of October 2, 1999, the Company employed approximately 69,000 persons. The Company believes that its relations with its workforce are generally good. 9
Set forth below is a listing of the Company's 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 - -------- ----- ------------- --------------- Albertville, AL UFCW 900 December 31, 2001 Ashland, AL UFCW 750 February 24, 2002 Berlin, MD UFCW 450 December 21, 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 February 4, 2000 Chicago, IL Truck Drivers 1,100 October 6, 2001 Cleveland, MS RWDSU 475 February 20, 2000 Corydon, IN UFCW 375 January 26, 2002 Corydon, IN Steelworkers 75 October 12, 2002 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 1, 2001 Henderson, KY UFCW 1,150 April 21, 2001 Hope, AR UFCW 1,400 March 3, 2000 Jackson, MS UFCW 1,050 December 31, 1999 Jacksonville, FL Teamsters 650 December 31, 1999 Noel, MO UFCW 1,225 January 25, 2000 Pine Bluff, AR UFCW 250 October 12, 2002 Shelbyville, TN RWDSU 950 November 12, 2002 Shelbyville, TN Teamsters 35 July 14, 2001 Wilkesboro, NC Teamsters 35 November 4, 2001 Wilkesboro, NC Teamsters 25 November 4, 2001 Wilkesboro, NC Teamsters 125 November 4, 2001 United Food and Commercial Workers Union (UFCW) Retail, Wholesale, Department Store Union (RWDSU) The Company has not experienced any strike or work stoppage which had a material impact on operations; however, there can be no assurance that union related activities, including work stoppages or strikes will not occur in the future. 10
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This annual report and other written reports or oral statements made from time to time by the Company and its representatives may contain forward-looking statements, including forward-looking statements made in this report, 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. In light of these risks, uncertainties and assumptions, the Company wishes to caution readers not to place undue reliance on any forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise. 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, and occupational, health and safety laws; (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, Arkansas, California, Florida, Georgia, Illinois, Indiana, Kentucky, Maryland, Mississippi, Missouri, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, and Virginia. 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 chicken 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 47.6 million head per week. To support the above facilities the Company operates 43 feed mills and 68 broiler hatcheries with sufficient capacity to meet the needs of the chicken growout operations. In addition, the Company owns chicken cold storage facilities with a capacity of approximately 135.7 million pounds. 11
The Company's other operations consist of eight processing plants supported by five additional freezer storage facilities. Additionally, other operations include eleven rendering plants with the capacity to produce 26.6 million pounds of animal protein products per week supported by three freezer facilities. Nineteen ground pet food processing operations in connection with chicken processing plants are capable of producing 7.7 million pounds of product per week. The Company's 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 chicken 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 with the following exceptions: two chicken slaughter facilities are leased until 2003, one chicken emulsified plant is leased month to month, two poultry feedmills and two hatcheries are leased until 2003, 355 breeder farms are leased under agreements expiring at various dates, 52 swine farrowing and nursery units and 318 swine finishing units are leased under one to ten year renewable lease agreements, some of which are related parties. 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. Due to the current oversupply of meat proteins and depressed market conditions and to bring our production and market demand in balance, the Company has planned a reduction in the production of live birds beginning in the first quarter of fiscal 2000. 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 June 22, 1999, eleven current and/or former employees of the Company filed the case of M.H. Fox, et al. v. Tyson Foods, Inc. in the United States District Court for the Northern District of Alabama claiming that the Company has violated the requirements of the Fair Labor Standards Act. The suit alleges that the Company has failed to pay employees for all hours worked and/or has improperly paid them for overtime hours. The suit alleges that employees should be paid for the time it takes them to put on and take off certain working supplies at the beginning and end of their shifts and breaks. The suit also alleges that the use of "mastercard" or "line" time fails to pay employees for all time actually worked. Plaintiffs purport to represent themselves and a class of all similarly situated current and former employees of the Company. A total of 159 consents were filed with the complaint on behalf of persons to join the lawsuit and, to date, approximately 3,100 consents have been filed with the court. This case is still in the preliminary stages. The Company believes it has substantial defenses to the claims made in this case and intends to vigorously defend the case. However, neither the likelihood of unfavorable outcome nor the amount of ultimate liability, if any, with respect to this case can be determined at this time. 12
On February 20, 1998, 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 advantage. Plaintiffs allege that the gratuities which were the subject of a prior plea agreement by the Company resulted in a competitive advantage for chicken products vis-a-vis beef products. Plaintiffs request trebled damages in excess of $3 billion, plus attorney's fees and costs. The United States District Court for the Northern District of Iowa granted the Company's Motion to Dismiss on March 26, 1999, holding that plaintiffs lacked standing to sue. Plaintiffs timely appealed to the United States Court of Appeals for the Eighth Circuit. The Company is vigorously contesting this case. Briefing of the appeal was completed in August 1999, but no date has been set for oral argument. 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 does not believe any penalties, if imposed, would have a material adverse effect on the Company's results of operations or financial condition. On December 16, 1998, Hudson Foods, Inc., Michael Gregory, Hudson's former Director of Customer Relations and Quality Control, and Brent Wolke, the former plant manager of Hudson's Columbus, Nebraska facility, were indicted by a federal grand jury in Omaha, Nebraska on two counts - making false statements to the U.S. Department of Agriculture and conspiracy to make such statements - in connection with the August 1997 recall of Hudson beef products suspected of containing E-Coli 0157:H7. The charges arose out of presentations made on behalf of Hudson between Food Safety Inspection Service officials during Hudson's cooperation with the government in attempting to identify potentially contaminated product. The government has conceded that the contamination did not originate in the Hudson plant and it does not appear that any statements at issue in the indictment resulted in or are alleged to have resulted in any illnesses. On November 30, 1999, the Court granted the defendants' motion for acquittal on the conspiracy charges and additionally granted Mr. Wolke's motion for acquittal on his false statement charge. On December 2, 1999, Hudson and Mr. Gregory were acquitted on all remaining charges. 13
The Company has received notice from the Environmental Crimes Section of the Department of Justice and the United States Attorney's Office for the Southern District of Mississippi indicating that McCarty Farms, Inc. (McCarty), a former subsidiary of the Company which has been merged into the Company, may be pursued for alleged violations of the Federal Clean Water Act arising out of its partial ownership of Central Industries, Inc. (Central), which operates a rendering plant in Forest, Mississippi. The allegations arose from the alleged discharge of pollutants from Central's rendering facility in Forest, Mississippi in the summer of 1995, which was prior to the Company's purchase of McCarty in September 1995. Neither the likelihood of unfavorable outcome nor the amount of ultimate liability, if any, with respect to this case can be determined at this time. 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: Executive Name Title Age Officer Since - ---- ----- --- ------------- Don Tyson Senior Chairman of the 69 1963 Board of Directors John H. Tyson Chairman of the 46 1984 Board of Directors Wayne Britt Chief Executive Officer 50 1977 Donald E. Wray President 62 1979 Greg Lee Chief Operating Officer 52 1993 Steven Hankins Executive Vice President and 41 1997 Chief Financial Officer Bill Lovette President, International Group 39 1999 Wayne Butler President, Prepared Foods Group 45 1999 Mike Baker President, Production Service 44 1999 Carl G. Johnson Executive Vice President, 46 1999 Administrative Services Les Baledge Executive Vice President and 42 1999 Associate General Counsel John D. Copeland Executive Vice President, 49 1999 Ethics, Food Safety and Environmental Compliance John S. Lea Executive Vice President and 46 1999 Chief Marketing Officer Donnie Smith Executive Vice President, 40 1999 Supply Chain Management Dennis Leatherby Senior Vice President, 39 1990 Finance and Treasurer James G. Ennis Vice President, Controller and 54 1996 Chief Accounting Officer David L. Van Bebber Vice President and 43 1990 Director of Legal Services R. Read Hudson Secretary 41 1998 Louis C. Assistant Secretary and 35 1998 Gottsponer, Jr. 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 and Senior Vice President, International Sales and Marketing since 1994. Mr. Wray was appointed President in 1999 pending his retirement in 2000, after serving as President and Chief Operating Officer since 1995 and Chief Operating Officer since 1991. Mr. Lee was appointed Chief Operating Officer in 1999 after serving as President of the Food Service Group since 1999, Executive Vice President, Sales, Marketing and Technical Services since 1995 and Senior Vice President, Sales and Marketing since 1993. Mr. Hankins was appointed Executive Vice President and 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. Lovette was appointed President, International Group in 1999 after serving as Vice President, Operations since 1995 and Vice President, Distribution since 1992. Mr. Butler was appointed President, Prepared Foods Group in 1998 after serving as President, Mexican Original since 1997 and Complex Manager since 1994. Mr. Baker was appointed President, Production Services in 1999 after serving as Division Vice President since 1995 and Manager of Pork Operations since 1994. Mr. Johnson was appointed Executive Vice President, Administrative Services in 1999 after serving as Vice President, Assets and Risk Management since 1994. Mr. Baledge was appointed Executive Vice President and Associate General Counsel in 1999 upon joining the Company, prior to which he was engaged in the private practice of law. Mr. Copeland was appointed Executive Vice President, Ethics, Food Safety and Environmental Compliance in 1999 after serving as Director of Corporate Ethics and Compliance since 1998, prior to which he served as a professor of law at the University of Arkansas School of Law. Mr. Lea was appointed Executive Vice President and Chief Marketing Officer in 1999 after serving as Vice President, Retail Sales and Marketing since 1995 and Vice President, Food Service Sales since 1993. Mr. Smith was appointed Executive Vice President, Supply Chain Management in 1999 after serving as Vice President, Purchasing since 1995 and Director of Commodity Purchasing since 1992. Mr. Leatherby was appointed Senior Vice President, Finance and Treasurer in 1998 after serving as Vice President and Treasurer since 1997 and Treasurer since 1994. 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 and has served 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 43 of the Annual Report under the caption "Capital Stock," which information is incorporated herein by reference. On October 2, 1999, there were approximately 34,828 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 24 and 25 and in the table on page 60 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 May 7, 1999, the Board of Directors increased the annual dividend rate on Class A Stock to $0.16 per share and fixed an annual dividend rate of $0.144 per share for the Class B Stock, effective with the quarterly dividend payable on September 15, 1999. ITEM 6. SELECTED FINANCIAL DATA See the information reflected under the caption "Eleven-Year Financial Summary" on pages 24 and 25 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 26 through 37 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 commodity prices, interest rates and foreign exchange rates, as well as credit risk concentrations. To address these risks the Company enters into various hedging transactions as described below. The Company seldom uses financial instruments which do not qualify for hedge accounting. In those situations, in which instruments do not qualify for hedge accounting, the Company marks the instruments to fair value and recognizes the gains or losses currently in earnings. 17
Commodities Risk The Company is a purchaser of certain commodities, primarily corn and soybeans. The Company periodically uses commodity futures and 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 and other feed ingredient inventory and financial instruments that are sensitive to changes in commodity prices. The table presents the carrying amounts and fair values at October 2, 1999 and October 3, 1998. Additionally, for puts and futures contracts, the latest which expires or matures 15 months from the reporting date, the table presents the notional amounts in units of purchase and the weighted average contract prices. (volume and dollars in millions, except per unit amounts) - --------------------------------------------------------------------------- Volume Weighted Fair Average Strike Value Price Per Unit - --------------------------------------------------------------------------- As of October 2, 1999 Recorded Balance Sheet Commodity Position: Commodity Inventory (book value $33.8) - $ - $33.8 Hedging Positions Corn Futures Contracts (volume in bushels) Long (Buy) Positions 84.4 2.21 (7.7) Short (Sell) Positions 1.4 2.32 0.3 Soybean Meal Futures Contracts (volume in tons) Long (Buy) Positions 0.1 143.14 0.4 Trading Positions Corn Puts Sold (volume in bushels) 27.5 2.10 (2.5) As of October 3, 1998 Recorded Balance Sheet Commodity Position: Commodity Inventory (book value $36.0) - $ - $36.0 Hedging Positions: Corn Futures Contracts (volume in bushels) Long (Buy) Positions 7.5 2.33 (0.4) Short (Sell) Positions 9.7 2.11 0.3 Soybean Oil Futures Contracts (volume in cwt) Long (Buy) Positions 0.1 24.24 - Short (Sell) Positions 0.1 24.40 - =========================================================================== 18
Interest Rate and Foreign Currency Risks 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%. The Company also periodically enters into foreign exchange forward contracts and option contracts to hedge some of its foreign currency exposure. In 1999, the Company used such contracts to hedge exposure to changes in foreign currency exchange rates, primarily Mexican Peso, associated with debt denominated in U.S. dollars held by Tyson de Mexico. In 1998, the Company used such contracts to hedge exposure to changes in foreign currency exchange rates, primarily Japanese Yen, associated with sales denominated in 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 or expirations not exceeding 12 months. 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. dollars in millions __________________________________________________________________________ 2000 2001 2002 2003 2004 There- Total Fair after Value 10/2/99 ___________________________________________________________________________ As of October 2, 1999 Liabilities Long-term Debt, including Current Portion Fixed Rate $172.5 $125.7 $30.5 $177.8 $29.2 $794.3 $1,330.0 $1,299.1 Average Interest Rate 6.82% 8.18% 7.83% 6.18% 7.08% 6.78% 6.87% Variable Rate $50.2 $17.2 $290.5 - - $50.0 $407.9 $407.9 Average Interest Rate 5.51% 7.67% 5.85% - - 3.90% 5.65% Interest Rate Derivative Financial Instruments Related to Debt Interest Rate Swaps Pay Fixed $17.2 $18.4 $19.6 $21.6 $21.1 $29.2 $127.1 ($0.7) Average Pay Rate 6.71% 6.69% 6.73% 6.73% 6.71% 6.50% 6.66% Average Receive Rate- USD 6 Month LIBOR. =========================================================================== 19
dollars in millions ___________________________________________________________________________ 1999 2000 2001 2002 2003 There- Total Fair after Value 10/3/98 ___________________________________________________________________________ As of October 3, 1998 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 ($8.1) Average Pay Rate 6.71% 6.71% 6.69% 6.73% 6.74% 6.59% 6.67% Average Receive Rate- USD 6 Month LIBOR. =========================================================================== The following table summarizes information on instruments and transactions that are sensitive to foreign currency exchange rates. The table presents the notional amounts, weighted-average exchange rates by expected (contractual) maturity dates and fair values. These notional amounts generally are used to calculate the contractual payments to be exchanged under the contract. dollars in millions ___________________________________________________________________________ 2000 2001-2004 There- Total Fair after Value 10/2/99 ___________________________________________________________________________ As of October 2, 1999 Forward exchange contracts to sell foreign currencies for US$ Mexican Peso Notional Amount $7.3 - - $7.3 $(0.6) Weighted average strike price 10.13 =========================================================================== 20
dollars in millions ___________________________________________________________________________ 1999 2000-2003 There- Total Fair after Value 10/3/98 ___________________________________________________________________________ As of October 3, 1998 Sold Option Contracts to Sell Foreign Currencies for US$ Japanese Yen Notional Amount $6.5 - - $6.5 - Weighted Average Strike Price 109.48 Purchased Option Contracts to Sell Foreign Currencies for US$ Japanese Yen Notional Amount $5.6 - - $5.6 $0.4 Weighted Average Strike Price 126.69 =========================================================================== 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 38 through 57 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. 21
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 caption "Executive Compensation and Other Information" 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. 22
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 38 through 55 in the Company's Annual Report for the fiscal year ended October 2, 1999, and the Report of Independent Auditors, on page 57 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 136 for the three years ended October 2, 1999 Consolidated Balance Sheets at 137 October 2, 1999 and October 3, 1998 Consolidated Statements of Shareholders' Equity 138-139 for the three years ended October 2, 1999 Consolidated Statements of Cash Flows 140 for the three years ended October 2, 1999 Notes to Consolidated Financial Statements 141-157 Report of Independent Auditors 159 2. The following additional information for the years 1999, 1998 and 1997 is submitted herewith. Page references are to the consecutively numbered pages of this Report on Form 10-K: Pages ----- Report of Independent Auditors 34 Schedule VIII Valuation and Qualifying Accounts and Reserves for the three years ended October 2, 1999 35 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 December 15, 1999, the Company filed a current report on Form 8-K related to the termination of negotiations on the sale of the Pork Group with Smithfield Foods, Inc. 23
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 (previously filed as Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended October 3, 1998, Commission File No. 0-3400, and incorporated herein by reference). 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). 24
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). 25
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 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). 26
4.17 Remarketing Agreement dated January 28, 1998 between the Company and Merrill 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 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 Westminster 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 Manhattan Bank, N.A., Chemical Bank, Cooperative Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank Nederland), Morgan Guaranty Trust Company of New York, National Westminster 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). 27
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 Manhattan Bank, N.A., Chemical Bank, Cooperative Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank Nederland), Morgan Guaranty Trust Company of New York, National Westminster 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 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). 28
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 Tyson Foods, Inc. Amended and Restated Employee Stock 36-47 Purchase Plan dated as of December 13, 1999. 10.13 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). 10.14 Amended and Restated Retirement Savings Plan of Tyson 48-98 Foods, Inc., qualified under Section 401(k) of the Internal Revenue Code of 1986, dated as of December 13, 1999. 10.15 Amended and Restated Executive Savings Plan of Tyson 99-118 Foods, Inc. effective October 1, 1997, and First Amendment to the Amended and Restated Executive Savings Plan of Tyson Foods, Inc. effective December 31, 1998. 10.16 Tyson Foods, Inc. Non-statutory Stock Option Plan, as amended and restated on November 18, 1994, (previously filed as Exhibit 99 to the Company's Registration Statement on Form S-8 filed with the Commission on January 30, 1995, Commission File No. 33-54716, and incorporated herein by reference). 10.17 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 year ended September 30, 1995, Commission File No. 0- 3400, and incorporated herein by reference). 10.18 Senior Executive Employment Agreement dated November 20, 1998 between the Company and Leland E. Tollett (previously filed as Exhibit 10.20 to the Company's Annual Report on Form 10K for the fiscal year ended October 3, 1998, Commission File No. 0-3400, and incorporated herein by reference). 29
10.19 Senior Executive Employment Agreement dated November 20, 1998 between the Company and Donald E. Wray (previously filed as Exhibit 10.21 to the Company's Annual Report on Form 10K for the fiscal year ended October 3, 1998, Commission File No. 0-3400, and incorporated herein by reference). 13 Pages 24-60 and inside back cover of the Annual Report 119-166 to Shareholders for the fiscal year ended October 2, 1999. 21 Subsidiaries of the Company. 167-168 23 Consent of Independent Auditors. 169 27 Financial Data Schedule. 30
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 17, 1999 ------------------- Steven Hankins Executive Vice President and Chief Financial Officer 31
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 17, 1999 - -------------------- and Director Wayne Britt /s/ Neely Cassady Director December 17, 1999 - -------------------- Neely Cassady /s/ James G. Ennis Vice President, Controller December 17, 1999 - -------------------- and Chief Accounting Officer James G. Ennis /s/ Lloyd V. Hackley Director December 17, 1999 - -------------------- Lloyd V. Hackley /s/ Steven Hankins Executive Vice President and December 17, 1999 - -------------------- Chief Financial Officer Steven Hankins /s/ Gerald Johnston Director December 17, 1999 - -------------------- Gerald Johnston /s/ Jim Kever Director December 17, 1999 - -------------------- Jim Kever /s/ Shelby D. Massey Director December 17, 1999 - -------------------- Shelby D. Massey /s/ Joe F. Starr Director December 17, 1999 - -------------------- Joe F. Starr /s/ Leland E. Tollett Director December 17, 1999 - --------------------- Leland E. Tollett /s/ Barbara Tyson Vice President and Director December 17, 1999 - --------------------- Barbara Tyson /s/ Don Tyson Senior Chairman of the December 17, 1999 - --------------------- Board of Directors Don Tyson 32
/s/ John H. Tyson Chairman of the December 17, 1999 - --------------------- Board of Directors John H. Tyson /s/ Fred S. Vorsanger Director December 17, 1999 - --------------------- Fred S. Vorsanger /s/ Donald E. Wray President and Director December 17, 1999 - --------------------- Donald E. Wray 33
FINANCIAL STATEMENT SCHEDULE
REPORT OF INDEPENDENT AUDITORS We have audited the consolidated financial statements of Tyson Foods, Inc. as of October 2, 1999 and October 3, 1998, and for each of the three years in the period ended October 2, 1999, and have issued our report thereon dated November 18, 1999. 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 18, 1999 -------------------- ERNST & YOUNG LLP 34
TYSON FOODS, INC. SCHEDULE VIII VALUATION AND QUALIFYING ACCOUNTS AND RESERVES Three Years Ended October 2, 1999 (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 1999 $85.3 $15.2(1) 0 ($78.7)(2) $21.8 1998 $4.4 $2.2 0 $78.7 (3) $85.3 1997 $3.5 $2.0 0 ($1.1) $4.4 (1) Includes $11.9 million reserve for international operations. (2) Write off of receivables against reserve related to 1998 allowance. (3) Includes $48.4 million reserve for international currency devaluation. 35