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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 1, 1994
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[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission File No. 0-3400
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TYSON FOODS, INC.
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(Exact Name of Registrant as specified in its Charter)
Delaware 71-0225265
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2210 West Oaklawn, Springdale, Arkansas 72762-6999
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(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code (501) 290-4000
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Securities registered pursuant to Section 12(b) of the Act:
Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, Par Value $.10
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(Title of Class)
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 1, 1994, the aggregate market value of the Class A
Common and Class B Common voting stock held by non-affiliates of the
registrant was $1,671,325,608 and $1,353,552 respectively.
On October 1, 1994, there were outstanding 76,745,002 shares of the
registrants Class A Common Stock, $.10 par value, and 68,455,438
shares of its Class B Common Stock, $.10 par value.
Page 1 of 102 Pages
The Exhibit Index appears on pages 22 through 26
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DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
The following documents or the indicated portions thereof are incorporated
herein by reference into the indicated portions of the Form 10-K: (i) pages
19-44 of registrant's Annual Report to Shareholders for fiscal year ended
October 1, 1994, (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 13, 1995, as
filed with the Commission on December 6, 1994 (the "Proxy Statement").
PART I
Item 1. Business
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Pages 22-26 of registrant's Annual Report under the caption
"Management Discussion and Analysis."
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
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Matters
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Page 42 of the Annual Report under the caption "Price of
Company's Common Stock."
Item 6. Selected Financial Data
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Pages 20-21 of the Annual Report under the caption "Eleven-Year
Financial Summary."
Item 7. Management's Discussion and Analysis of Financial Condition
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and Results of Operations
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Pages 22-26 of the Annual Report under the caption "Management
Discussion and Analysis."
Item 8. Financial Statements and Supplementary Data
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Pages 27-44 of the Annual Report under the captions "Consolidated
Statements of Operations," "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
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The information set forth under the caption "Election of
Directors" and "Compliance with Section 16 (a) of the Securities
Exchange Act of 1934" in the Proxy Statement.
Item 11. Executive Compensation
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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
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Management
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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
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The information set forth under the caption "Certain
Transactions" in the Proxy Statement.
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PART I
ITEM 1. BUSINESS
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General
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Tyson Foods, Inc. and its various subsidiaries (collectively, the
"Company" or "Tyson") produce, market and distribute a variety of food
products consisting of value-enhanced poultry; fresh and frozen poultry;
value-enhanced beef and pork products; fresh and frozen pork products;
value-enhanced seafood products; fresh and frozen seafood products; and
flour and corn tortillas, chips and other Mexican food-based products.
Additionally, the Company has live swine, animal feed and pet food
operations. The Company's integrated operations consists of breeding and
rearing chickens and hogs, harvesting seafood, as well as the processing,
further processing and marketing of these food products. Additionally, the
Company processes and markets beef 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
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Originally, the Company was a producer and distributor of fresh
chicken. The Company developed a strategy to insulate itself from the
commodity nature 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 or freezing the poultry. As a result, management
believes the Company's profitability is more dependent upon product
quality, marketing and service than on grain and broiler prices.
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 hatches into broiler
chicks. Newly hatched broiler chicks are vaccinated and are then delivered
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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 3.9 billion pounds of consumer poultry during
fiscal 1994.
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 884,000 head of market weight live swine in fiscal 1994.
With the addition of pork slaughtering facilities more of the Company's
live swine are being processed. The Company utilizes dedicated processing
facilities to produce a variety of value-enhanced beef, pork and Mexican
food-based products. The Company processed approximately 518 million pounds
of consumer beef and pork during fiscal 1994.
The Company's by-products operations converts inedible poultry by-
products into high-grade pet food and animal feed.
In the first quarter of fiscal 1993, the Company acquired Arctic
Alaska Fisheries Corporation ("Arctic"), a seafood processing company and
certain assets of Oscar Mayer Foods Corporation known as Louis Kemp Seafood
Company ("Louis Kemp"), a seafood further-processing company.
With the acquisition of Arctic, the Company acquired the largest
catching and at-sea processing fleet 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, which are marketed in the Far East, primarily in Japan, and in the
United States under the Arctic Ice trademark. Arctic's primary products are
cleaned whole fish, crab, surimi paste, cod fillets and pollock fillets.
The Company's long-term strategy for seafood products continues to be a
plan of using its marketing and distribution channels to expand sales
opportunities while using its research and development resources to create
additional value-enhanced seafood products. The Company has integrated
Arctic and Louis Kemp by supplying Louis Kemp with Arctic's products as
needed.
Recent Acquisitions
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On January 6, 1994, the Company acquired Gorges Foodservice, Inc.
("Gorges") and certain related assets. Gorges is a beef further-processing
company with annual sales of approximately $55 million. The purchase of
Gorges strengthens the Company's market share in beef by expanding further-
processed categories with particular emphasis on school products.
On April 19, 1994, the Company increased its 18% ownership to 50.1% in
Trasgo, S.A. de C.V.("Trasgo"). With annual sales of approximately
$140 million, Trasgo is the third largest poultry producer and processor in
Mexico, serving both retail and foodservice markets. Trasgo is one of the
most modern poultry operations in Mexico with significant expansion
capabilities.
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Effective July 3, 1994, the Company acquired certain assets of
Culinary Foods, Inc.("Culinary"), a manufacturer and processor of high
quality, value-added specialty frozen foods with annual sales of
approximately $70 million. Its customers include business and industry,
restaurants, hotels, airlines, club stores, hospitals and caterers. The
acquisition of Culinary, and its Lady Aster line of products, gives the
Company capabilities for fully-prepared meat products, entrees, sauces and
gravies to complement its Signature Specialties line.
On August 18, 1994, the Company increased its 50% ownership interest
to 100% in Cobb-Vantress, Inc. ("CVI"), one of the world's leading
suppliers of breeding stock to the broiler industry, with annual sales of
approximately $35 million, excluding sales to Tyson. Ninety percent of CVI
sales, excluding sales to Tyson, are outside the United States and CVI has
a major distribution outlet in the United Kingdom.
Sources of Revenue
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During the past fiscal year the principal revenue sources of the
Company included value-enhanced poultry products, fresh and frozen poultry
products, value-enhanced beef and pork products, Mexican food-based
products, frozen dinner products, seafood products, live swine and related
operations, animal foods, by-products, and other miscellaneous products.
The following table sets forth the relative sources of the Company's
revenues for the last three fiscal years.
<TABLE>
<CAPTION>
For Fiscal Year Ended
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1994 1993 1992
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<S> <C> <C> <C>
Consumer poultry products:
Value-enhanced poultry (1) 65% 67% 73%
Basic poultry (2) 10 8 8
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Total consumer poultry 75 75 81
Beef, pork, Mexican food-based
products, live swine and
other prepared foods (3) 18 17 17
Seafood 5 5 0
Animal foods, by-products
and other 2 3 2
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Total 100% 100% 100%
</TABLE>
(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 its value to the
Company's customers.
(2) Includes fresh and frozen poultry products sold without value
enhancements. The increase in this category for fiscal 1994 results
from the acquisition of a controlling interest in Trasgo, which
currently does not have a significant amount of value-enhanced
products.
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(3) Includes value-enhanced beef and pork products such as portion
controlled steaks, chops and roasts, ground beef, chicken-fried
steaks, meatloaf, hams, bacon and sausages; flour and corn tortillas,
corn chips, taco shells and filled tortilla specialty items; premium
frozen dinners and other specialty items.
Marketing and Distribution
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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, 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, beef, pork, Mexican
food-based 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. The Company 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.
The Company has a total frozen storage capacity in excess of 125 million
pounds, excluding public or outside cold storage. The Company's
distribution centers facilitate accumulating frozen products so that the
Company 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 club. 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, beef, pork,
seafood and tortilla products. Operators serving these products include
full-service restaurants, fast-food restaurants, hotels, motels, retail,
recreation, healthcare, schools, colleges, business and industry 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
trademarks: Tyson, Holly Farms, Weaver, Tastybird, Tastybasted, Honey
Stung, Tyson's Pride, HoneyBest, Wing Stingers, W.W. Flyers,
Signature Specialties, Flavor-Redi, Tyson To Go, Mexican Original,
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Tyson beef, Quick-to-Fix, Tyson pork, Louis Kemp, Arctic Ice,
Enterprise, Crab Delights, Lobster Delights, Ocean Master and Sure Salad.
These products include: (a) poultry items such as individually-quick-
frozen (IQF) segments, ready-to-cook and fully-cooked fried chicken, fully-
cooked, breaded and glazed wings, cooked and ready-to-cook breaded and
unbreaded tenderloins, cooked and ready-to-cook breaded and unbreaded
patties and chunks, oven roasted chicken, stuffed breast specialties, split
broilers, Cornish hens, commodity breast, flavor marinated breasts, fully-
cooked diced chicken products and breaded breast and thigh pieces and
strips; (b) beef items such as chicken-fried steaks, portion controlled
steaks, prime rib and roasts, charbroiled beef patties, ground beef, and
beef specialties such as meatballs, Salisbury steak and meatloaf; (c) pork
items such as hams, ham loaf and ham patties, sausages including polish,
knockwurst and bratwurst, frankfurters, bulk and pre-sliced deli-meats,
fully-cooked pork specialties including rib and loin products, pork chops,
pork roasts and pork ribs; (d) Mexican food-based items such as flour and
corn tortillas and chips; and (e) 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.
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 flavored chicken wings; Tyson complete
meal kits; Tyson premium pot pies; Tyson Healthy Portion meals; Tyson
individually-quick-frozen chicken parts and breaded chicken patties and
chunks; Weaver fried chicken; and Tyson pork rib and beef rib patties;(b)
refrigerated prepared foods consisting of separate lines of Tyson Holly
Farms roasted ready-to-eat chicken; Tyson and Weaver sliced lunch meat;
Tyson, Weaver and Holly Farms hot dogs; Tyson and Weaver deli meats;
Mexican Original tortillas, chips, and taco shells; and Tyson ham and
specialty meats;(c) refrigerated Tyson Holly Farms chill pack poultry; (d)
refrigerated Tyson case-ready pork products; (e) frozen and refrigerated
Tyson Cornish game hens; and (f) seafood products which are marketed under
the Louis Kemp brand of Crab Delights and Lobster Delights.
In the wholesale club market the Company designs and markets a variety
of products targeted to small foodservice operators and large families 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 chicken, refrigerated
roasted ready-to-eat chicken, frozen value-added chicken, canned chicken;
frozen value-added beef and pork products, fresh pork products; surimi,
frozen pollock, cod and crab legs.
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The Company's international division markets and sells the full line
of Tyson products, including beef, pork, seafood and Mexican food-based
products, throughout the world. The international division exported to 43
countries in fiscal 1994. Major markets include Japan, Russia, Hong Kong,
Singapore, and China. The Company also exported to Canada, Mexico, certain
Middle Eastern countries, and many countries in the Caribbean. The
Company's foreign sales for fiscal 1994, 1993, and 1992 totaled
$537.9 million, $352 million and $192.5 million, respectively. The increase
in 1994 foreign sales was due primarily to sales on leg quarter contracts
to Russia, increased sales to national foodservice accounts, primarily
large U.S. chain accounts expanding in foreign markets and sales of chicken
paws or feet to China and Hong Kong. Additionally, approximately 31% of the
increase was due to the acquisition of Trasgo. The majority of the
Company's export sales consists of commodity dark meat and wings.
The Company has targeted China as a potential operational base in
which to develop fully-integrated poultry and pork facilities. These
facilities would not only service the needs of the local markets in China
but will also be an export supplier to other Asian countries in conjunction
with the Company's exports from the United States. CVI recently entered
into a joint venture agreement with a Hong Kong company to build a 180,000
capacity breeder farm in China. The Company also has a seafood processing
joint venture in Shanghai, China. This joint venture is engaged in value-
added processing of seafood items.
Financial Instruments
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The Company has entered into foreign exchange forward contracts to
hedge some of its foreign currency exposure. Foreign exchange forward
contracts are legal agreements between two parties to purchase and sell a
foreign currency, for a price specified at the contract date, with delivery
and settlement in the future. The Company uses such contracts to hedge
exposure to changes in foreign currency exchange rates associated with
certain assets and obligations denominated in foreign currency. Gains and
losses on these contracts are recognized concurrently with the transaction
gains and losses from the associated exposure. At October 1, 1994, the
Company had outstanding forward exchange contracts, maturing on October 31,
1994, to sell $9.1 million of foreign currency (principally Japanese yen).
These forward exchange contracts hedge balance sheet and operating income
currency exposures.
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. At October 1, 1994, the Company does not have
significant credit risk concentrations. No single group or customer
represents greater than 10% of total accounts receivable.
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Raw Materials and Sources of Supply
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The major raw materials used by the Company in its poultry operations
consists 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
the future. While the Company produces substantially all of its inventory
of breeder chickens, live broilers and swine, it has the capability to
purchase live, ice-packed or deboned poultry to meet poultry production
requirements. Raw materials for the Company's beef operations are purchased
through the open market. While a substantial amount of the raw material
requirements for the Company's pork operations are provided by live swine
rearing operations, some requirements may be met by purchasing from other
suppliers.
In addition, raw material requirements for the Company's seafood
operations are met by Arctic's vessels harvesting a wide range of species
of bottomfish and shellfish year-round 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 coast of Alaska. This area also
provides a significant quantity of crab for commercial harvesting.
Following passage of the Magnuson Fishery Conservation and Management Act
of 1976, 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
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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 propriety information regarding its
production processes and other product-related matters. While the Company
utilizes internal procedures and safeguards to protect the confidentiality
of such information, it does not generally seek patent protection for the
technology it utilizes.
Seasonal Demand
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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.
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Industry Practices
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Due primarily to the perishable nature of its products, industry
practice and the fluctuation in demand and price for such products the
Company's agreements with its customers are generally short-term, verbal
agreements.
Customer Relations
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No single customer of the Company accounts for more than 10% 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 which
is not replaced could 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
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There is no significant backlog of unfilled orders for the Company's
products.
Competition
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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
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The Company conducts continuous research and development activities to
improve the strains of primary poultry breeding stock, the genetic
qualities of swine, finished product development and developing further-
processed seafood products. 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 1% of total annual sales.
Regulation
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The Company's facilities for processing poultry and for housing live
poultry and swine are subject to a variety of federal, state and local
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environmental protection laws and regulations, including provisions
relating to the discharge of materials into the environment. The Company's
poultry, beef, pork and Mexican food-based processing facilities are also
subject to extensive inspection and regulation by the United States
Department of Agriculture. 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
establish, among other things, 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 and
seizure of catch and vessels. See "Legal Proceedings" under Item 3. In
addition, the seafood operations are subject to various federal, state and
local laws relating to protection of the environment and the health and
safety of employees.
To provide consumer reassurance of product integrity and safety, to
create a quality point of difference with the competition, and to assume a
position of measured industry leadership in production standards, Louis
Kemp 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. Both Louis Kemp
Seafood manufacturing facilities are United States Department of Commerce
inspected and are participants in the government's pilot Hazard Analysis
Critical Control Point (HACCP) program.
Employees and Labor Relations
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As of October 1, 1994, the Company employed approximately 55,800
persons. The Company believes that its relations with it workforce are
good.
ITEM 2. PROPERTIES
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The Company currently has production and distribution operations in
the following states: Alabama, Alaska, Arkansas, Georgia, Illinois, Iowa,
Maryland, Michigan, Minnesota, Mississippi, Missouri, North Carolina,
Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia
and Washington. Additionally, the Company has facilities or participates in
joint venture operations in Argentina, Brazil, China, Denmark, Hong Kong,
India, Indonesia, Japan, Mexico, Philippines, South Africa, Spain, United
Kingdom and Venezuela. This increase in international operations and joint
ventures is principally due to the Company's increased ownership in Trasgo
and CVI.
The principal poultry operations of the Company consists of 48
processing plants. These plants are devoted to various phases of
slaughtering, dressing, cutting, packaging, deboning or further-processing.
The total slaughter capacity is approximately 30 million head per week.
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To support the above facilities the Company operates 26 feed mills, 56
broiler hatcheries, 466 breeder farms, 38 pullet farms and 372 broiler farms
with sufficient capacity to meet the needs of the poultry operations. In
addition, the Company has poultry cold storage facilities owned or leased
with a capacity of approximately 106.7 million pounds.
The Company's beef and pork operations consist of eight plants with a
capacity to process 15.3 million pounds per week, supported by eight
freezer storage facilities. The Company's swine slaughtering and processing
plant processes approximately 33,000 hogs per week.
The Company's Mexican food-based product and prepared food operations
consist of five processing plants supported by four additional freezer
storage facilities.
The Company's swine operations consists of 101 swine farrowing and
nursery units and 508 swine finishing units. These swine growout operations
are supported by two 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's seafood operations consist of 34 catching and at-sea
processing vessels along with two freighters. The at-sea processing is
supported by six shore-based processing plants, three of which are
dedicated to surimi processing.
The Company's animal feed and pet food processing operations consist
of seven rendering plants with the capacity to produce 15.8 million pounds
of animal protein products per week and ground pet food operations capable
of producing 7.9 million pounds of product per week.
The Company owns its major operating facilities and sea vessels with the
following exceptions: three processing plants are leased under agreements
expiring in 1995, 1996, and 1999, four broiler hatcheries are leased under
month-to-month leases and one is leased under an agreement expiring in 1995,
254 breeder farms are leased under agreements expiring at various dates
through 1999, 38 pullet farms and 21 broiler farms are leased under
year-to-year renewable lease agreements, two freezer storage facilities are
leased under month-to-month leases and two are leased under agreements
expiring in 1996 and 1999, 52 swine farrowing and nursery units and 312 swine
finishing units are leased under one to ten year renewable lease agreements.
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. In January 1994, the
Company announced plans to build four new poultry-processing complexes to
be completed over the next three years. This increase will enable the
Company to meet forthcoming demand over the next three years. The first of
the four complexes is being built and should be ready to start production
in mid-1995. The Company is also constructing another plant for production
of Mexican food-based products. At fiscal year-end, the Company had
construction projects in progress that will require approximately
$151.5 million to complete.
13
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
-----------------
The Company is involved in various lawsuits and claims made by third
parties on an ongoing basis as a result of its day-to-day operations,
including the following two matters relating to Arctic. In April 1994,
after investigations beginning as early as 1990, a Federal Grand Jury in
Seattle, Washington indicted former officers, directors and employees of
Arctic as well as Arctic on criminal charges stemming from the sinking of
the fishing vessel Aleutian Enterprise in 1990 and other matters relating
to the overall operation of Arctic. In September 1994, the Federal Grand
Jury issued superseding indictments against the former officers, directors
and employees as well as Arctic on substantially identical criminal charges
with two prior indictees being dismissed. The factual allegations giving
rise to the fifty-three (53) count multiple indictments now pending in the
United States District Court, Western District of Washington at Seattle,
occurred prior to the Company's acquisition of Arctic on October 5, 1992.
Conviction of the individuals, as well as Arctic, carries penalties and
fines ranging from a maximum fine or penalty per count of $500,000 and 10
years in prison. The Company anticipates that a trial of a portion of the
defendants on the indictments will begin in June of 1995. Also, on
September 8, 1993, the State of Alaska, after conducting investigations,
filed a Complaint for Forfeiture and Damages alleging that certain Arctic
vessels participated in the use of certain fishing gear during 1990, 1991,
and 1992. While management is not able at the present time to determine the
outcome of these matters, based upon information currently available,
management presently does not believe that any of these lawsuits or claims
by third parties will have a material adverse effect on the Company's
financial position.
On or about November 8, 1993, Arctic Fisheries, Inc. ("AFI"), an
indirect wholly owned subsidiary of the Company, agreed to settle a civil
suit filed by the Environmental Protection Agency alleging various
violations of the Clean Water Act from 1987 to 1990, prior to the
Company's acquisition of Arctic. Under the terms of the settlement, which
will be final after the applicable public comment period has expired, AFI
agreed to pay $725,000, conduct additional sampling and monitoring not
otherwise required by AFI's discharge permit, and stop discharging fish
processing wastes in certain areas.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
Not applicable.
14
<PAGE>
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 of the Company's executive
officers are listed below:
<TABLE>
<CAPTION>
Name Title Age Year Elected
- ---- ----- --- ------------
<S> <S> <C> <C>
Don Tyson Chairman of the Board of Directors 64 1963
Leland Tollett Vice Chairman of the Board of 57 1966
Directors, Chief Executive Officer
and President
Wayne Britt Senior Vice President, 45 1977
International Sales and Marketing
Roy Brown Senior Vice President, 42 1993
Seafood Division
Ellis Brunton Group Vice President, 52 1993
Research and Quality Assurance
William Jaycox Group Vice President, 48 1990
Human Resources
Gary Johnson Corporate Controller 50 1982
Gerald Johnston Executive Vice President, Finance 52 1972
Dennis Leatherby Treasurer 34 1994
Greg Lee Senior Vice President, 47 1993
Sales and Marketing
Bill Moeller Group Vice President, 44 1981
Swine Division
David Purtle Senior Vice President, Operations 50 1985
Mary Rush Secretary and 60 1982
Director of Investor Relations
John H. Tyson President, 41 1984
Beef and Pork Division
Donald E. Wray Chief Operating Officer 57 1979
</TABLE>
15
<PAGE>
John H. Tyson is the son of Don Tyson. No other family relationships
exist among the above officers. Messrs. Don Tyson, Johnson, Johnston, and
Moeller have served the Company in essentially the indicated capacities for
more than the past five years. Mr. Tollett was appointed Chief Executive
Officer and President in 1991 and Vice Chairman of the Board of Directors
in 1994 after serving as President and Chief Operating Officer since 1983.
Mr. Britt was appointed Senior Vice President, International Sales and
Marketing in 1994 after serving as Vice President, Wholesale Club Division
since 1992 and Vice President, Secretary/Treasurer since 1982. Mr. Brown
was appointed Senior Vice President, Seafood Division in 1993 after serving
as Vice President, Sales and Marketing, International Division since 1992
and Director of Retail Sales since 1983. Mr. Brunton was appointed Group
Vice President, Research and Quality Assurance in 1993 after serving as
Director of Technical Services since 1989. Mr. Brunton joined the Company
in July 1989 upon the acquisition of Holly for which he served as Vice
President, Technical Services since 1986. Mr. Jaycox was appointed Group
Vice President, Human Resources in 1990 after joining the Company in July
1989 upon the acquisition of Holly for which he served as Vice President of
Personnel for Harker's, Inc. since 1986. Mr. Leatherby was appointed
Treasurer in 1994 after serving as Assistant Treasurer since 1990. Mr. Lee
was appointed Senior Vice President, Sales and Marketing in 1993 after
serving as Division Vice President of Foodservice Sales and Marketing since
1988. Mr. Purtle was appointed Senior Vice President, Operations in 1991
after serving as Group Vice President, Operations since 1985. Ms. Rush was
appointed Secretary and Director of Investor Relations in 1992 after
serving as Assistant Secretary/Treasurer since 1982. Mr. John H. Tyson was
appointed President, Beef and Pork Division in 1993 after serving as Vice
President since 1987. Mr. Wray was appointed Chief Operating Officer in
1991 after serving as Senior Vice President, Sales and Marketing Division
since 1985.
16
<PAGE>
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"). The holders of Class A Stock are
entitled to one vote per share and the holders of Class B Stock are
entitled to ten votes per share on matters submitted to shareholders for
approval. No cash dividend may be paid to the holders of Class B Stock
unless a cash dividend is simultaneously paid to the holders of Class A
Stock, and the per share amount of the dividend paid to the holders of
Class B Stock cannot exceed 90% of the cash dividend simultaneously paid to
the holders of Class A Stock. Transfer of the Class B Stock is restricted
except in limited circumstances. Holders of Class B Stock may convert such
stock into Class A Stock on a share for share basis.
On October 1, 1994, there were approximately 36,030 holders of record
of the Company's Class A Stock and 25 holders of record of the Company's
Class B Stock, excluding holders in the security positions listings held by
nominees. The Company's Class A Stock is traded on the Nasdaq stock
market's National Market under the symbol "TYSNA." No public trading market
currently exists for the Class B Stock. Information regarding the high and
low sales prices of the Company's Class A Stock is set forth in the table
on page 42 of the Annual Report under the caption "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 14, 1994, the Board of Directors
increased the annual dividend rate on Class A Stock to $.08 per share and
fixed an annual dividend rate of $.0666 per share for the Class B Stock,
effective with the quarterly dividend paid on March 15, 1994. Prior to
that, quarterly dividends were paid at an annual rate of $.04 for Class A
Stock and $.0333 for Class B Stock.
During 1994, the Company initiated an open market stock repurchase
program which authorized the purchase of up to 15 million shares of the
Company's Class A common stock. The Company intends to utilize shares
repurchased to fund existing employee benefit plans and increase treasury
stock. No timetable has been set for completion of the repurchase program.
As of October 1, 1994, the Company had purchased approximately 2.5 million
shares under the repurchase program.
17
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
See the information reflected under the caption "Eleven-Year Financial
Summary" on pages 20-21 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 Discussion
and Analysis" on pages 22-26 of the Annual Report, which information is
incorporated herein by reference.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
See the information on pages 27-44 of the Annual Report under the
caption "Consolidated Statements of Operations," "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.
18
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
The information set forth under the captions "Election of Directors"
and "Compliance with Section 16(a) of the Securities Exchange Act of 1934"
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 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" 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 caption "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.
19
<PAGE>
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 27-42 in the Company's Annual
Report for the fiscal year ended October 1, 1994 and the
Report of Independent Auditors, on page 44 of such Annual
Report are incorporated herein by reference. Page references
are to page numbers in the Annual Report.
<TABLE>
<CAPTION>
Pages
<C> <S> <C>
Consolidated Statements of Operations 27
for the three years ended
October 1, 1994
Consolidated Balance Sheets at 28-29
October 1, 1994 And October 2, 1993
Consolidated Statements of Shareholders' 30-31
Equity for the three years ended
October 1, 1994
Consolidated Statements of Cash Flows for 32
the three years ended October 1, 1994
Notes to Consolidated Financial 33-42
Statements
Report of Independent Auditors 44
2. The following additional information for the years
1994, 1993 and 1992 is submitted herewith. Page
references are to the consecutively numbered pages
of this report on Form 10-K:
Pages
Report of Independent Auditors 30
Schedule V - Property, Plant and 31
Equipment for the three years ended
October 1, 1994
Schedule VI - Accumulated Depreciation 32
of Property, Plant and Equipment for the
three years ended October 1, 1994
Schedule VIII - Valuation and Qualifying 33
Accounts and Reserves for the three
years ended October 1, 1994
Schedule IX - Short-Term Borrowings for 34
the three years ended October 1, 1994
Schedule X - Supplementary Income 35
Statement Information for the three
years ended October 1, 1994
</TABLE>
20
<PAGE>
All other schedules are omitted because they are neither applicable nor
required. Separate parent company financial statements have been
omitted since the registrant is primarily an operating company.
3. The exhibits filed with this report are listed in the Exhibit
Index at the end of this Item 14.
4. The Company did not file any reports on Form 8-K during the
quarter ended October 1, 1994.
21
<PAGE>
EXHIBIT INDEX
-------------
The following exhibits are filed with this report or are incorporated
by reference to previously filed material. Page references are to the
consecutively numbered pages of each attached Exhibit.
<TABLE>
<CAPTION>
Exhibit No. Page
- ---------- ----
<C> <S> <C>
3(a) Certificate of Incorporation of the Company as
amended (previously filed as Exhibit 3(a) to the
Company's Registration Statement on Form S-4
filed with the Commission on July 8, 1992,
Commission file No. 33-49368, and incorporated
herein by reference).
3(b) Amended and Restated Bylaws of the Company 36-47
4(a) 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 related documents:
(i) Form of Series A Note
(ii) 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(b) 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:
(i) Form of Series E Note
(ii) Form of Series F Note
(iii) 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).
10(a) Credit Agreement, dated June 30, 1993, by and
among the Company, as Borrower, Banque Nationale
De Paris, The Chase Manhattan Bank, N.A.,
Chemical Bank, Continental Bank, N.A., Credit
Lyonnais, NationsBank of Texas, N.A., Cooperative
Centrale Raiffeisen-Boerenleenbank, B.A.,
(Rabobank Nederland), Societe Generale and
22
<PAGE>
The Toronto-Dominion bank as Co-Agents and Bank
of America National Trust and Savings
Association, as Agent (previously filed as
Exhibit 10(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).
10(b) Amendment No. 1 to Credit Agreement dated
June 8, 1994, by and among the Company, as
Borrower, The Chase Manhattan Bank, N.A.,
Chemical Bank, Continental Bank N.A., 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 10(c) to the Company's Amendment No. 19
to the Tender Offer Statement on Schedule 14D-1
for all outstanding shares of common stock for
WLR Foods, Inc. and Amendment No. 20 to the
Schedule 13D by WLR Acquisition Corp. and Tyson
Foods, Inc. previously filed on June 9, 1994,
Commission File No. 0-3400, and incorporated
herein by reference).
10(c) Third Amended and Restated Credit Agreement,
including all exhibits thereto, dated as of
June 8, 1994, by and among the Company, as
Borrower, The Chase Manhattan Bank, N.A.,
Chemical Bank, Continental Bank N.A., 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 10(b) to the Company's Amendment No. 19
to the Tender Offer Statement on Schedule 14D-1
for all outstanding shares of common stock for
WLR Foods, Inc. and Amendment No. 20 to the
Schedule 13D by WLR Acquisition Corp. and Tyson
Foods, Inc. previously filed on June 9, 1994,
Commission File No. 0-3400, and incorporated
herein by reference).
10(d) 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 Quarterly Report on
Form 10-Q for the period ended July 3, 1993,
Commission File No. 0-3400, and incorporated
herein by reference).
10(e) Commercial Paper Dealer Agreement dated
July 1, 1993, between the Company and Merrill
23
<PAGE>
Lynch Money Markets Inc. (previously filed as
Exhibit 10(e) to the Quarterly Report on
Form 10-Q for the period ended July 3, 1993,
Commission File No. 0-3400, and incorporated
herein by reference).
10(f) Commercial Paper Dealer Agreement dated
July 1, 1993, between the Company and Toronto
Dominion Securities (U.S.A.) Inc. (previously
filed as Exhibit 10(f) to the Quarterly Report on
Form 10-Q for the period ended July 3, 1993,
Commission File No. 0-3400, and incorporated
herein by reference).
10(g) Commercial Paper Dealer Agreement dated
July 1, 1993, between the Company and the First
Boston Corporation (previously filed as Exhibit
10(g)to the Quarterly Report on Form 10-Q for the
period ended July 3, 1993, Commission File No.
0-3400, and incorporated herein by reference).
10(h) 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 Quarterly Report on Form 10-Q for
the period ended July 3, 1993, Commission File
No. 0-3400, and incorporated herein by
reference).
10(i) 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
Quarterly Report on Form 10-Q for the period
ended July 3, 1993, Commission File No. 0-3400,
and incorporated herein by reference).
10(j) Commercial Paper Dealer Agreement dated 48-51
September 1, 1994, between the Company and Chase
Securities, Inc.
10(k) Tyson Foods, Inc. Senior Executive Performance 52-53
Bonus Plan adopted November 18, 1994.
10(l) Tyson Foods, Inc. Restricted Stock Bonus Plan, 54-60
effective August 21, 1989, as amended and
restated on April 15, 1994,; and Amendment No. 2
to Restricted Stock Bonus Plan effective
November 18, 1994.
10(m) Profit Sharing Plan and Trust of Tyson Foods,
Inc., as amended and restated effective
April 1, 1987, (previously filed as Exhibit 10(a)
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).
24
<PAGE>
10(n) Tyson Foods, Inc. Employee Stock Purchase Plan,
effective April 1, 1979, as amended and restated
effective November 1, 1986, (previously filed as
Exhibit 10(b) 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(o) 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(p) Tyson Foods, Inc. Amended and Restated 61-69
Nonstatutory Stock Option Plan, as amended and
restated on November 18, 1994.
10(q) Tyson Foods, Inc. Employee Stock Ownership Plan
as amended and restated on September 5, 1987,
(previously filed as Exhibit 10(e) 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(r) Amended and Restated Employment Agreement dated 70-72
as of July 1, 1994, between the Company and Don
Tyson, Chairman of the Board of Directors of the
Company.
10(s) Retirement Savings Plan of Tyson Foods, Inc.,
qualified under Section 401(k) of the Internal
Revenue Code, effective October 1, 1987, and
Trust Agreement related thereto (previously filed
as Exhibit 10(g) 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(t) 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(u) Indemnity Agreements dated February 27, 1987,
between Tyson Foods, Inc. and certain of its
officers and directors (previously filed as
Exhibit 10(i) 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).
25
<PAGE>
10(v) Plan of Reorganization and Merger, dated as of
June 15, 1992, among Arctic Alaska Fisheries
Corporation, the Company and Tyson Acquisition,
Inc. (previously filed as Appendix I to the
Company's Amendment No. 1 to Registration
Statement on Form S-4 filed with the Commission
on July 27, 1992, Commission File No. 33-49368,
and incorporated herein by reference).
11 Statement Regarding Computation of Earnings Per 73
Share.
13 Pages 19-44 of the Annual Report to Shareholders 74-99
for the fiscal year ended October 1, 1994.
22 Subsidiaries of the Company. 100
23 Consent of Independent Auditors. 101
27 Financial Data Schedule. 102
</TABLE>
26
<PAGE>
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/ Gerald Johnston November 18, 1994
-------------------
Gerald Johnston
Executive Vice President,
Finance
27
<PAGE>
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/Neely Cassady Private Investor and November 18, 1994
- -------------------- Arkansas State Senator
Neely Cassady
/s/ Lloyd V. Hackley Chancellor, Fayetteville November 18, 1994
- -------------------- State University
Lloyd V. Hackley
/s/ Gary Johnson Corporate Controller November 18, 1994
- -------------------- (Principal Accounting
Gary Johnson Officer)
/s/Gerald Johnston Executive Vice President, November 18, 1994
- -------------------- Finance (Principal
Gerald Johnston Financial Officer)
/s/ Shelby D. Massey Private Investor November 18, 1994
- --------------------
Shelby D. Massey
/s/ Joe F. Starr Vice President November 18, 1994
- --------------------
Joe F. Starr
/s/ Leland E. Tollett Vice Chairman of the Board, November 18, 1994
- --------------------- Chief Executive Officer and
Leland E. Tollett President
/s/ Barbara Tyson Vice President November 18, 1994
- ---------------------
Barbara Tyson
/s/ Don Tyson Chairman of the Board November 18, 1994
- ---------------------
Don Tyson
/s/ John H. Tyson President, November 18, 1994
- --------------------- Beef and Pork Division
John H. Tyson
/s/ Fred S. Vorsanger Vice President(Emeritus) November 18, 1994
- --------------------- University of Arkansas
Fred S. Vorsanger and Private Investor
/s/ Donald E. Wray Chief Operating Officer November 18, 1994
- ---------------------
Donald E. Wray
28
<PAGE>
FINANCIAL STATEMENT SCHEDULES
29
<PAGE>
REPORT OF INDEPENDENT AUDITORS
We have audited the consolidated financial statements of Tyson Foods, Inc.
as of October 1, 1994 and October 2, 1993, and for each of the three years
in the period ended October 1, 1994, and have issued our report thereon
dated November 14, 1994. Our audits also included the financial statement
schedules listed in Item 14(a) in this annual report (Form 10-K). These
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
/s/ ERNST & YOUNG LLP
- ---------------------
ERNST & YOUNG LLP
November 14, 1994
Little Rock, Arkansas
30
<PAGE>
<TABLE>
<CAPTION>
TYSON FOODS, INC.
SCHEDULE V
PROPERTY, PLANT AND EQUIPMENT
THREE YEARS ENDED OCTOBER 1, 1994
(Dollars in Thousands)
Balance at (2) Changes Balance at
Beginning Additions Add End
Classification of Period at Cost Retirements (Deduct) of Period
- -------------- ---------- --------- ----------- -------- ---------
1994
- ----
<S> <C> <C> <C> <C> <C>
Land $ 40,144 $ 16,279 $ 295 $ 0 $ 56,128
Buildings & Leasehold
Improvements 562,526 116,133 2,539 0 676,120
Machinery & Equipment 1,277,956 210,292 36,092 0 1,452,156
Vessels 119,654 4,726 12,636 0 111,744
Land Improvements
and Other 62,669 8,033 157 0 70,545
Buildings & Equipment
Under Construction 123,195 19,955 0 0 143,150
--------- ------- ------- ----- ---------
Total $2,186,144 $ 375,418 $ 51,719 $ 0 $2,509,843
1993 ========= ======= ======= ===== =========
- ----
Land $ 38,180 $ 2,006 $ 42 $ 0 $ 40,144
Buildings & Leasehold
Improvements 525,704 39,111 2,289 0 562,526
Machinery & Equipment 1,080,644 214,056 16,744 0 1,277,956
Vessels 0 119,654 0 0 119,654
Land Improvements
and Other 59,949 3,152 432 0 62,669
Buildings & Equipment
Under Construction 53,980 69,215 0 0 123,195
--------- ------- ------ ---- ---------
Total $1,758,457 $ 447,194 $ 19,507 $ 0 $2,186,144
1992 ========= ======= ====== ==== =========
- ----
Land $ 37,519 $ 711 $ 50 $ 0 $ 38,180
Buildings & Leasehold
Improvements 510,382 19,463 203 (3,938)(1) 525,704
Machinery & Equipment 998,310 104,140 25,744 3,938 (1)1,080,644
Land Improvements
and Other 54,594 5,869 513 0 59,949
Buildings & Equipment
Under Construction 76,173 (22,193) 0 0 53,980
--------- -------- ------ ---- ---------
Total $1,676,978 $ 107,990 $ 26,510 $ 0 $1,758,457
========= ======== ====== ==== =========
</TABLE>
(1) Reclassification.
(2) Includes $143.3 million during 1994 for the acquisition of Gorges
Foodservice, Inc., Culinary Foods, Inc., Cobb-Vantress International, and
Trasgo S.A. de C.V. Includes $221.9 million during 1993 for the acquisition
of Arctic Alaska Fisheries Corporation and Brandywine Foods, Inc.
31
<PAGE>
<TABLE>
<CAPTION>
TYSON FOODS, INC.
SCHEDULE VI
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT, AND EQUIPMENT
Three Years Ended October 1, 1994
(Dollars in Thousands)
Additions Other
Balance at Charged Changes Balance at
Beginning of to Costs Add End
Description Period and Expenses Retirements (Deduct) of Period
- ----------- ------------ ------------ ----------- -------- ----------
1994
- ----
<S> <C> <C> <C> <C> <C> <C>
Buildings &
Leasehold
Improvements $ 140,533 $ 19,955 $ 1,663 $4,230 (2) $ 163,055
Machinery &
Equipment 583,682 130,924 17,681 5,635 (2) 702,560
Vessels 4,866 4,925 57 0 9,734
Land
Improvements &
Other 21,765 2,807 93 18 (2) 24,497
------- ------- ------ ----- -------
Total $ 750,846 $ 158,611 $ 19,494 $9,883 $ 899,846
======= ======= ====== ===== =======
1993
- ----
Buildings &
Leasehold
Improvements $ 122,350 $ 18,012 $ 29 $200 (1) $ 140,533
Machinery &
Equipment 474,433 120,412 10,963 (200)(1) 583,682
Vessels 0 4,866 0 0 4,866
Land
Improvements &
and Other 19,487 2,466 188 0 21,765
------- ------- ------ ----- -------
Total $ 616,270 $ 145,756 $ 11,180 $ 0 $ 750,846
======= ======= ====== ===== =======
1992
- ----
Buildings &
Leasehold
Improvements $ 106,169 $ 16,598 $ 129 $(288)(1) $ 122,350
Machinery &
Equipment 391,460 100,410 17,725 288 (1) 474,433
Land
Improvements
and Other 17,397 2,355 265 0 19,487
------- ------- ------ ----- -------
Total $ 515,026 $ 119,363 $ 18,119 $ 0 $ 616,270
======= ======= ====== ===== =======
</TABLE>
(1) Reclassification.
(2) Other Adjustments.
32
<PAGE>
<TABLE>
<CAPTION>
TYSON FOODS, INC.
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Three Years Ended October 1, 1994
(Dollars in Thousands)
Balance at Charged to Charged Balance
Beginning Costs and to Other Additions at End
Description of Period Expenses Accounts (Deductions) of Period
- ----------- ---------- --------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for
Doubtful Accounts
1994 2,597 1,120 0 (453) 3,264
1993 2,512 952 0 (867) 2,597
1992 3,224 1,669 0 (2,381) 2,512
</TABLE>
(1) Uncollectible accounts written-off.
33
<PAGE>
<TABLE>
<CAPTION>
TYSON FOODS, INC.
SCHEDULE IX
SHORT-TERM BORROWINGS
Three Years Ended October 1, 1994
(Dollars in Thousands)
Category of Balance Weighted Maximum Average Weighted
Aggregate End of Average Amount Amount Average
Short-term Period Interest Outstanding Outstanding Interest
Borrowings Rate During the During the During the
Period Period Period
- ----------- ------- -------- ------------ ----------- ----------
1994
<S> <C> <C> <C> <C> <C>
Banks $ 49,360 5.03% $ 212,000 $ 66,970 3.66%
Other - - - - -
All Categories $ 49,360 5.03% $ 212,000 $ 66,970 3.66%
1993
Banks $ 29,800 3.11% $ 140,000 $ 74,637 3.54%
Other - - - - -
All Categories $ 29,800 3.11% $ 140,000 $ 74,637 3.54%
1992
Banks - - $ 92,800 $ 27,270 4.30%
Other - - - - -
All Categories $ 92,800 $ 27,270 4.30%
</TABLE>
(1) The average borrowings were determined based on the daily amounts
outstanding.
(2) The weighted average interest rate during the period was computed
by dividing actual interest expense by weighted average short-term
borrowings.
34
<PAGE>
<TABLE>
<CAPTION>
TYSON FOODS, INC.
SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION
Three Years Ended October 1, 1994
(Dollars in Thousands)
Charged to Costs and Expenses
-----------------------------
Item 1994 1993 1992
- ---- ---- ---- ----
<S> <C> <C> <C>
Advertising Costs and Sales
Promotion Expenses $ 183,564 $ 193,491 $ 155,757
Repairs and Maintenance $ 125,352 $ 115,697 $ 90,984
</TABLE>
Amortization of intangible assets and amounts expended for taxes other than
payroll and income taxes, and royalties were less than 1% of total sales
and revenues and are not presented.
35
<PAGE>
AMENDED AND RESTATED BY-LAWS
OF
TYSON FOODS, INC.
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of Tyson Foods, Inc.
(the "Corporation") shall be at the Corporation Trust Company, 100 West Tenth
Street, in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The Annual Meetings of Stockholders shall be
held on such date and at such time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, at which
meetings the stockholders shall elect a Board of Directors and transact such
other business as may properly be brought before the meeting. Written notice of
the Annual Meeting stating the place, date and hour of the meeting shall be
given to each stockholder entitled to vote at such meeting not less than ten
nor more than sixty days before the date of the meeting.
Section 3. Special Meetings. Unless otherwise prescribed by law or by
the Certificate of Incorporation, Special Meetings of Stockholders, for any
purpose or purposes, may be called by either the Senior Chairman of the Board
of Directors, the Chairman, the Chief Executive Officer, or the President, and
shall be called by any such officer at the request in writing of a majority of
the Board of Directors or at the request in writing of stockholders owning a
majority of the stock of the Corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the proposed
meeting. Written notice of a Special Meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called
shall be given not less than ten nor more than sixty days before the date of
the meeting to each stockholder entitled to vote at such meeting.
Section 4. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
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<PAGE>
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present or represented; provided,
however, that if the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder entitled to vote at
the meeting. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed.
Section 5. Voting. When a quorum is present at any meeting, the
affirmative vote of a majority of the votes cast shall decide any question
brought before such meeting, unless the question is one upon which by express
provision of Delaware law or of the Certificate of Incorporation a different
vote is required, in which case such express provision shall govern and control
the decision of such question. Each holder of the Corporation's Class A Common
Stock ("Class A Stock") represented at a meeting of stockholders shall be
entitled to cast one vote for each share of Class A Stock entitled to vote
thereat held by such stockholder. Each holder of the Corporation's Class B
Common Stock ("Class B Stock") represented at a meeting of stockholders shall
be entitled to cast ten votes for each share of Class B Stock entitled to vote
thereat held by such stockholder. Such votes may be cast in person or by proxy
but no proxy shall be voted on or after three years from its date, unless such
proxy provides for a longer period. The Board of Directors, in its discretion,
or the officer of the Corporation presiding at a meeting of stockholders, in
his discretion, may require that any votes cast at such meeting shall be cast
by written ballot.
At any meeting of the Stockholders, the Senior Chairman of the Board of
Directors shall preside over a proxy committee which shall be composed of one
or more persons as deemed necessary and appropriate by the Senior Chairman, in
the exercise of his or her discretion, to facilitate the voting of shares
underlying proxies solicited from the Stockholders. At such meetings of the
Stockholders, any proxies received in the name of or on behalf of the
Stockholders shall be voted by the Senior Chairman of the Board of Directors
presiding over such proxy committee, and in the event of the absence of such
Senior Chairman, the Board of Directors, in its discretion, may designate one
or more persons to serve on such proxy committee who shall vote any proxies
received in the name of or on behalf of the Stockholders.
Section 6. Consent of Stockholders in Lieu of Meeting. Unless otherwise
provided in the Certificate of Incorporation, any action required or permitted
to be taken at any Annual or Special Meeting of Stockholders of the
Corporation, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have
not consented in writing.
Section 7. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
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<PAGE>
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder of the Corporation who
is present.
Section 8. Stock Ledger. The stock ledger of the Corporation shall be
the only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 7 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
Section 9. Stockholder Nominations for Director. Any stockholder wishing
to nominate a person to serve as a candidate for election to the Board of
Directors must submit the name of such candidate in writing to the current
Board of Directors on or before September 30 of any year.
Section 10. Business to be Conducted. At an annual meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual meeting,
business must (a) be specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (b) be
otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (c) satisfy the notice requirements set forth below in
this Section 10 and otherwise be properly brought before the meeting by a
stockholder.
For business to be brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the secretary
of the Corporation. To be timely, a shareholder's notice must be delivered to
or mailed and received at the principal executive office of the Corporation not
less than 75 days nor more than 100 days prior to the meeting; provided,
however, that in the event that less than 85 days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (b) the name and address,
as they appear on the Corporation's books, of the stockholder proposing such
business, (c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business.
Notwithstanding anything in these By-Laws to the contrary, no business
shall be conducted at an annual meeting except in accordance with the
procedures set forth in this Section 10. The chairman of an annual meeting
shall, if the facts warrant, determine and declare at the meeting that a matter
of business was not properly brought before the meeting in accordance with the
provisions of Section 10 of this Article II or otherwise, and if he should so
determine, he shall so declare at the meeting that any such business not
properly brought before this meeting shall not be transacted.
38
<PAGE>
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The number of persons which
shall constitute the Board of Directors of the Corporation shall be such number
as initially fixed by the Incorporator and thereafter from time to time by
resolution of the Board of Directors. Except as provided in Section 2 of this
Article, directors shall be elected by a majority of the votes cast at Annual
Meetings of Stockholders, and each director so elected shall hold office until
the next Annual Meeting and until his successor is duly elected and qualified,
or until his earlier resignation or removal. Any director may resign at any
time upon written notice to the Corporation. Directors need not be
stockholders.
Section 2. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, and
each of the directors so chosen shall hold office until the next Annual Meeting
of Stockholders and until his successor is elected and qualified or until his
earlier resignation or removal.
Section 3. Duties and Powers. The business of the Corporation shall be
managed by or under the direction of the Board of Directors which may exercise
all such powers of the Corporation and do all such lawful acts and things as
are not by statute or by the Certificate of Incorporation or by these By-Laws
directed or required to be exercised or done by the stockholders.
Section 4. Meetings. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as may from time to time be determined by
the Board of Directors. Special meetings of the Board of Directors may be
called by the Chairman, if there be one, the Chief Executive Officer, the
President, or any two directors. Notice thereof stating the place, date and
hour of the meeting shall be given to each director either by mail not less
than forty-eight (48) hours before the date of the meeting, by telephone or
telegram on twenty-four (24) hours' notice, or on such shorter notice as the
person or persons calling such meeting may deem necessary or appropriate in the
circumstances. The notice need not specify the business to be transacted. In
the event of an emergency which in the judgment of the Chairman, Chief
Executive Officer or President requires immediate action, a special meeting may
be convened without notice, consisting of those directors who are immediately
available in person or by telephone and can be joined in the meeting in person
or by conference telephone. The actions taken at such a meeting shall be valid
if at least a quorum of the directors participates either personally or by
conference telephone.
Section 5. Quorum. Except as may be otherwise specifically provided by
law, the Certificate of Incorporation or these By-Laws, at all meetings of the
Board of Directors one-third of the full number of directors shall constitute a
quorum for the transaction of business, and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors. If a quorum shall not be present at any meeting of the
Board of Directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
39
<PAGE>
Section 6. Actions of Board Without a Meeting. Unless otherwise provided
by the Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
Section 7. Meetings by Means of Conference Telephone. Unless otherwise
provided by the Certificate of Incorporation or these By-Laws, members of the
Board of Directors of the Corporation, or any committee designated by the Board
of Directors, may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section 7 shall
constitute presence in person at such meeting.
Section 8. Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of any such committee. In the absence or disqualification of a member of a
committee, and in the absence of a designation by the Board of Directors of an
alternate member to replace the absent or disqualified member, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any
absent or disqualified member. Any committee, to the extent allowed by law and
provided in the resolution establishing such committee, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation. Each committee
shall keep regular minutes and report to the Board of Directors when required.
Section 9. Executive Committee. The Board of Directors shall establish
an Executive Committee of its members to consist of not less than three
directors, which group shall include the Senior Chairman of the Board of
Directors, and may authorize the delegation to any such committee of any of the
authority of the Board of Directors in the management of the ordinary business
affairs of the Corporation. The Executive Committee shall not, however, be
authorized to amend the Certificate of Incorporation or the By-Laws of the
Corporation; to adopt an agreement of merger or consolidation pursuant to
Sections 251 and 252 of the Delaware Corporation Law; to recommend to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, or to recommend to the stockholders a
dissolution of the Corporation or a revocation of a dissolution. The Executive
Committee may, to the extent authorized by the Board of Directors in a
resolution providing for the issuance of shares of stock, fix the designations
and any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the Corporation or the
conversion into, or the exchange of such shares for shares of any other class
or classes or any other series of the same or any other class or classes of
stock of the Corporation, or fix the number of shares of any series of stock or
authorize the increase or decrease of the shares of any series. The Executive
Committee may, if so authorized by a resolution of the Board of Directors,
declare dividends, authorize the issuance of stock, and adopt a certificate of
ownership and merger pursuant to Section 253 of the Delaware Corporation Law
with respect to the Corporation's 90%-owned subsidiaries. The Executive
40
<PAGE>
Committee shall serve at the pleasure of the Board of Directors and
shall act only in intervals between meetings of the Board of Directors, and
shall in all respects be subject to the control and direction of the Board of
Directors. The Executive Committee may act by a majority of its members at a
meeting or informally without a meeting, provided that all members thereof sign
a writing reflecting such informal action. Any act or authorization of any act
by the Executive Committee, within the authority delegated above, shall be as
effective for all purposes as the act or authorization of the Board of
Directors; provided that the designation of such an Executive Committee and the
delegation of authority thereto shall not operate to relieve the Board of
Directors of any responsibility imposed upon it by law.
Section 10. Compensation. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid a
fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving
the Corporation in any other capacity and receiving compensation therefor.
Members of special or standing committees may be allowed like compensation for
attending committee meetings.
Section 11. Interested Directors. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof
which authorizes the contract or transaction, or solely because his or their
votes are counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of
Directors or committee in good faith authorizes the contract or transaction by
the affirmative votes of a majority of the disinterested directors, even though
the disinterested directors be less than a quorum; or (ii) the material facts
as to his or their relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of the stockholders; or (iii) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or ratified, by the
Board of Directors, a committee thereof or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum at
a meeting of the Board of Directors or of a committee which authorizes the
contract or transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a President, a Secretary and a Treasurer.
The Board of Directors, in its discretion, may also choose a Senior Chairman
and Chairman of the Board of Directors (each of whom must be a director), one
or more Vice Chairmen of the Board of Directors, a Chief Executive Officer, a
Chief Operating Officer, one or more Vice Presidents, Controller, Assistant
Controllers, Assistant Secretaries, Assistant Treasurers, and any other
officers deemed to be necessary. Any number of offices may be held by the same
person, unless otherwise prohibited by law, the Certificate of Incorporation or
these By-Laws. The officers of the Corporation need not be stockholders of the
41
<PAGE>
Corporation nor, except in the case of the Chairman of the Board of Directors,
need such officers be directors of the Corporation.
Section 2. Election. The Board of Directors at its first meeting held
after each Annual Meeting of Stockholders shall elect the executive officers of
the Corporation, who shall be comprised of the President, the Secretary, the
Treasurer and, if there be such, the Chief Executive Officer, the Chief
Operating Officer, and any Executive or Senior Vice Presidents. Such executive
officers shall hold their offices for such terms and shall exercise such powers
and perform such duties as shall be determined from time to time by the Board
of Directors. The President of the Corporation shall have the authority to
appoint such other officers as he may in his discretion deem necessary to carry
out the business of the Corporation, including, but not limited to, Group Vice
Presidents, Vice Presidents, Controller, Assistant Controllers, Assistant
Secretaries, Assistant Treasurers and any other officers. All officers of the
Corporation shall hold office until their successors are chosen and qualified,
or until their earlier resignation or removal. Any officer elected by the Board
of Directors may be removed at any time by the Board of Directors. Any officer
appointed by the President may be removed at any time by the President. Any
vacancy occurring in any executive office of the Corporation shall be filled by
the Board of Directors. Any vacancy occurring in any other office of the
Corporation shall be filled by the President.
Section 3. Voting Securities Owned by the Corporation. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the Chief Executive Officer, the President
and Chief Operating Officer, or any Vice President, and any such officer may,
in the name of and on behalf of the Corporation, take all such action as any
such officer may deem advisable to vote in person or by proxy at any meeting of
security holders of any company in which the Corporation may own securities and
at any such meeting shall possess and may exercise any and all rights and power
incident to the ownership of such securities and which, as the owner thereof,
the Corporation might have exercised and possessed if present. The Board of
Directors may, by resolution, from time to time confer like powers upon any
other person or persons.
Section 4. Chief Executive Officer. The Chief Executive Officer of the
Corporation shall have, subject to the supervision and direction of the Board
of Directors or of the Executive Committee, if any, general supervision of the
business, property, and affairs of the Corporation and the powers vested in
him by the Board of Directors, by law or by these By-Laws or which usually
attach or pertain to such office, including, but not limited to, the authority
to sign documents on behalf of the Corporation the effect of which shall be
legally binding upon the Corporation. During the absence or disability of the
Chairman of the Board of Directors, the Chief Executive Officer shall preside
at meetings of the stockholders and of the Board of Directors. During the
absence or disability of the President, the Chief Executive Officer shall
exercise all the powers and discharge all the duties of the President.
Section 5. President. The President shall, subject to the control of the
Board of Directors and the Chief Executive Officer, have general supervision of
the business of the Corporation and shall see that all orders and resolutions
of the Board of Directors are carried into effect. He shall execute all bonds,
mortgages, contracts and other instruments of the Corporation requiring a seal,
under the seal of the Corporation, except where required or permitted by law to
be otherwise signed and executed and except that the other officers of the
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Corporation may sign and execute documents when so authorized by these By-Laws,
the Board of Directors or the Chief Executive Officer. In the absence or
disability of the Chief Executive Officer, the President shall preside at all
meetings of the stockholders and the Board of Directors. The President shall
also perform such other duties and may exercise such other powers as from time
to time may be assigned to him by these By-Laws, the Board of Directors or by
the Chief Executive Officer.
Section 6. Chief Operating Officer. The Chief Operating Officer shall
answer directly to the President and shall perform any and all acts under the
direction and supervision of the President as the President may require in
connection with the execution of the general business of the Corporation.
Section 7. Vice Presidents. At the request of the President and Chief
Operating Officer or in his absence or in the event of his inability or refusal
to act (and if there be no Chief Executive Officer), the Vice President or the
Vice Presidents if there is more than one (in the order designated by the Board
of Directors) shall perform the duties of the President and Chief Operating
Officer, and when so acting shall have all the powers of and be subject to all
the restrictions upon the President and Chief Operating Officer.
Section 8. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the Board of
Directors, the Chief Executive Officer or the President and Chief Operating
Officer, under whose supervision he shall be. If the Secretary shall be unable
or shall refuse to cause to be given notice of all meetings of the stockholders
and special meetings of the Board of Directors, and if there be no Assistant
Secretary, then either the Board of Directors or the President may choose
another officer to cause such notice to be given. The Secretary shall have
custody of the seal of the Corporation, and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the
signature of the Secretary or by the signature of any such Assistant Secretary.
The Board of Directors may give general authority to any other officer to affix
the seal of the Corporation and to attest the affixing by his signature. The
Secretary shall see that all books, reports, statements, certificates and other
documents and records required by law to be kept or filed are properly kept or
filed, as the case may be.
Section 9. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall give
the Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
43
<PAGE>
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 10. Assistant Secretaries. Except as may be otherwise provided
in these By-Laws, Assistant Secretaries, if there be any, shall perform such
duties and have such powers as from time to time may be assigned to them by the
Board of Directors, the Chief Executive Officer, the President and Chief
Operating Officer, any Vice President, if there be one, or the Secretary, and
in the absence of the Secretary or in the event of his disability or refusal to
act, shall perform the duties of the Secretary, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the Secretary.
Section 11. Assistant Treasurers. Assistant Treasurers, if there be any,
shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the Chief Executive Officer, the
President and Chief Operating Officer, any Vice President, if there be one, or
the Treasurer, and in the absence of the Treasurer or in the event of his
disability or refusal to act, shall perform the duties of the Treasurer, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the Treasurer. If required by the Board of Directors, an
Assistant Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of his office and for the
restoration to the Corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control
belonging to the Corporation.
Section 12. Other Officers. Such other officers as the Board of
Directors or President may choose shall perform such duties and have such
powers as from time to time may be assigned to them. The Board of Directors
may delegate to any other officer of the Corporation the power to choose such
other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, by the Chief
Executive Officer, by the President and Chief Operating Officer, or by a Vice
President and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of the Corporation, certifying the number of shares
owned by him in the Corporation.
Section 2. Signatures. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
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lost, stolen or destroyed. When authorizing such issue of a new certificate,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond
in such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these By-Laws. Transfers of stock shall be
made on the books of the Corporation only by the person named in the
certificate or by his attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, which shall be cancelled before a new
certificate shall be issued.
Section 5. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at his
address as it appears on the records of the Corporation, with postage thereon
prepaid, and such notice shall be deemed to be given at the time when the same
shall be deposited in the United States mail. Written notice may also be given
personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required by law,
the Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, a waiver thereof in writing, signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
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ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, and may
be paid in cash, in property, or in shares of the Corporation's stock. Before
payment of any dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in its absolute discretion, deems proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the Corporation, or for any proper purpose, and
the Board of Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall end on
the Saturday nearest the 30th day of September of each year.
Section 4. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware." The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 1. Indemnification Rights. Every person who was or is a party or
is threatened to be made a party to or is involved in any action, suit, or
proceedings, whether civil, criminal, administrative, or investigative, by
reason of the fact that he is or was a director or officer of the Corporation
or is or was serving at the request of the Corporation as a director or officer
of another corporation, or as its representative in a partnership, joint
venture, trust, or other enterprise, shall be indemnified and held harmless to
the fullest extent legally permissible under and pursuant to any procedure
specified in the General Corporation Law of the State of Delaware, as amended
from time to time, against all expenses, liabilities, and losses (including
attorney's fees, judgments, fines, and amounts paid or to be paid in
settlement) reasonably incurred or suffered by him in connection therewith.
Such right of indemnification shall be a contract right that may be enforced in
any lawful manner by such person. Such right of indemnification shall not be
exclusive of any other right which such directors or officers may have or
hereafter acquire and, without limiting the generality of such statement, they
shall be entitled to their respective rights of indemnification under any
agreement, vote of stockholders, provision of law, or otherwise, as well as
their rights under this paragraph.
Section 2. Insurance. The Board of Directors may cause the Corporation
to purchase and maintain insurance on behalf of any person who is or was a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust, or other enterprise
against any liability asserted against such person and incurred in any such
capacity or arising out of such status, whether or not the Corporation would
have the power to indemnify such person.
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Section 3. Advance Payment of Expenses. Expenses incurred by a director
or officer of the Corporation in defending a civil or criminal action, suit or
proceeding by reason of the fact that he is or was a director or officer of the
Corporation (or was serving at the Corporation's request as a director or
officer of another corporation, or as its representative in a partnership,
joint venture, trust or other enterprise) shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such person to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the Corporation as authorized by relevant sections of the General
Corporation Law of Delaware.
ARTICLE IX
AMENDMENTS
Subject to provisions contained in the Certificate of Incorporation
pertaining to amendment of the Corporation's By-Laws, these By-Laws may be
altered, amended or repealed, in whole or in part, or new By-Laws may be
adopted by the stockholders of the Corporation. The Board of Directors by a
unanimous vote of the whole Board at any meeting may amend these By-Laws,
including By-Laws adopted by the stockholders.
APPROVED this ___ day of November, 1994.
___________________________________
Chairman of the Board of Directors
Attest:
___________________________________
Secretary
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COMMERCIAL PAPER DEALER AGREEMENT
Agreement dated September 1, 1994 between Tyson Foods, Inc. (the
"Issuer") and Chase Securities, Inc. ("CSI") in connection with the offer
and sale of the Commercial Paper Notes referred to in this Agreement and
issued pursuant to an Issuing and Paying Agency Agreement dated July 1,
1993 between the Issuer and Morgan Guaranty Trust Company of New York (the
"Issuing and Paying Agency Agreement").
1. Appointment of CSI. The Issuer hereby requests CSI to act, on the
terms and conditions specified herein, as the Issuer's dealer for the offer
and sale from time to time of short-term promissory notes (the "Commercial
Paper Notes") to be issued by the Issuer and offered and sold in the U. S.
commercial paper market. The Issuer is not obligated to sell and CSI is
not obligated to purchase the Commercial Paper Notes.
2. Sale of Notes. The Commercial Paper Notes will be issued by the
Issuer either (a) as book-entry obligations represented by one or more
master notes and recorded in the electronic book-entry system maintained by
The Depository Trust Company ("DTC") or any other clearing corporation
(each a "Clearing Corporation") within the meaning of Section 8-102(3) of
the New York Uniform Commercial Code in accordance with the terms of the
letter of representations between the Issuer and the Clearing Corporation
(the "Clearing Corporation Letter of Representations") a copy of which is
attached hereto as Exhibit I, or (b) as physical certificated notes
delivered to the purchaser thereof or a person designated by such
purchaser. CSI agrees to offer and sell the Commercial Paper Notes, as the
Issuer's dealer, to institutional investors and other entities and
individuals who normally purchase commercial paper in the U. S. commercial
paper market. It is understood and agreed that the Issuer may appoint one
or more other persons in addition to CSI to act as dealers for the
Commercial Paper Notes. The Commercial Paper Notes will (i) be sold in
minimum denominations of $100,000; (ii) mature not more than 270 days from
the date of issuance; (iii) have no extension, renewal or automatic roll-
over provisions, and (iv) be rated as "prime" quality commercial paper by
at least two nationally recognized statistical rating organizations.
3. Representations and Warranties. The Issuer represents and
warrants to CSI that: (i) the Issuer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to conduct its business
as now being conducted and to own its properties; (ii) the Issuer has all
requisite power and authority to execute and deliver the Commercial Paper
Notes and to execute, deliver and perform this Agreement, the Clearing
Corporation Letter of Representations and the Issuing and Paying Agency
Agreement, a copy of which is attached hereto as Exhibit II; (iii) this
Agreement, the Issuing and Paying Agency Agreement and the Clearing
Corporation Letter of Representations have been duly authorized, executed
and delivered by the Issuer and are valid and binding agreements of the
Issuer enforceable in accordance with their respective terms; (iv) the
issuance of the Commercial Paper Notes has been duly authorized by the
Issuer and, when issued and delivered and authenticated by the Issuing and
Paying Agent in accordance with the terms of the Issuing and Paying Agency
Agreement, will be duly and validly issued and delivered and will
constitute valid and binding obligations of the Issuer enforceable in
accordance with their terms; (v) the execution and delivery of the
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Agreement, the Issuing and Paying Agency Agreement and the Clearing
Corporation Letter of Representations will not violate in any material
respect any law, rule, regulation, order, judgment or decree applicable to
the Issuer or conflict with or result in a breach of or constitute a
default under any material agreement or material instrument to which the
Issuer is a party or by which it or any of its property is bound or violate
its certificate of incorporation or by-laws; (vi) no governmental,
administrative or official consent, approval, authorization, notice or
filing is required for the execution and delivery of the Commercial Paper
Notes or the execution, delivery and performance by the Issuer of this
Agreement, the Issuing and Paying Agency Agreement and the Clearing
Corporation Letter of Representations; (vii) the Issuer is not an
"investment company" or a company "controlled by" an investment company for
purposes of the Investment Company Act of 1940, as amended; and (viii) the
offer and sale of the Commercial Paper Notes will be exempt from the
registration provisions of the Securities Act of 1933, as amended (the
"Securities Act") pursuant to Section 3(a) (3) thereto.
4. Covenants. The Issuer agrees with CSI that:
(a) Prior to the issuance of Commercial Paper Notes, the Issuer
will furnish to CSI opinions of counsel (i) to the effect that the
Commercial Paper Notes are exempt form registration under Section 3(a) (3)
of the Securities Act, (ii) as to each of the other matters set forth in
Section 3 hereof and (iii) as to such other matters as CSI may reasonably
request;
(b) Each issuance of Commercial Paper Notes by the Issuer shall
be deemed a representation and warranty by the Issuer to CSI, as of the
date thereof, that the representations and warranties of the Issuer set
forth in Sections 3 and 5(c) hereof are true and correct as if made on and
as of such date; and
(c) The Issuer shall furnish to CSI such publicly available
information as CSI may reasonably request regarding (i) the Issuer's
operations and financial condition, (ii) the due authorization and
execution of the Commercial Paper Notes and (iii) the Issuer's ability to
pay the Commercial Paper Notes as they mature.
5. Placement Memorandum.
(a) CSI will prepare and distribute to investors and potential
investors in the Commercial Paper Notes a placement memorandum
("Memorandum") containing financial and other information about the Issuer.
Such Memorandum will be updated periodically to reflect material changes in
the Issuer's business or financial condition as to which the Issuer shall
have advised CSI.
(b) The Issuer agrees to furnish CSI with sufficient information
to enable CSI to prepare the original Memorandum and updates thereof,
including (i) not later than the 45 days after the end of each of the first
three quarters in the Issuer's fiscal year, the financial statements of the
Issuer as of the end of such fiscal quarter, (ii) not later than the 90
days after the end of each fiscal year of the Issuer, the annual audited
financial statements of the Issuer and (iii) as soon as practicable, any
information concerning the financial condition or results of operations of
the Issuer that has been generally communicated to the public or that makes
any statement in the Memorandum materially false or misleading or by its
omission would cause the Memorandum to be materially false or misleading.
The Issuer agrees that all financial statements delivered to CSI hereunder
will fairly present the financial condition of the Issuer as of the date
set forth therein and the results of operations for the periods set forth
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therein, all in conformity with generally accepted accounting principles,
it being understood that interim financial statements are subject to fiscal
year-end adjustment.
(c) Before distribution of the Memorandum, or any update
thereof, CSI will provide a copy thereof to the Issuer, and will not
distribute the same without the Issuer's prior written approval. Such
approval shall be deemed to be a representation and warranty by the Issuer
that the Memorandum, or any update thereof being distributed, does not
contain an untrue statement of a material fact.
(d) The issuer will cooperate with CSI in taking all reasonable
action necessary to ensure that each offer and each sale of Commercial
Paper Notes by the Issuer will comply with any applicable state securities
or "Blue Sky" laws.
6. Indemnification.
(a) The Issuer assumes liability for, and will indemnify and
hold CSI or its affiliates harmless from and against, liabilities, claims,
damages, costs and expenses (including reasonable legal fees and expenses)
("Liabilities") arising out of or in connection with the issue and sale of
the Commercial Paper Notes, including without limitation, Liabilities
arising out of or related to an actual or alleged untrue statement of a
material fact contained in the Memorandum or otherwise made in connection
with the issuance and sale of the Commercial Paper Notes or an actual or
alleged omission of a material fact necessary in order to make any
statement contained in the Memorandum or otherwise made in connection with
the issuance and sale of the Commercial Paper Notes, in light of the
circumstances in which such statement was made, not misleading; provided,
however, that the foregoing indemnity shall not extend to any Liabilities
to the extent they arise from (i) an untrue statement by CSI of a material
fact made in connection with CSI's sale of the Commercial Paper Notes or an
omission by CSI of a material fact made in connection with CSI's sale of
the Commercial Paper Notes necessary in order to make any statement, in
light of the circumstances in which such statement was made, not misleading
or (ii) the negligence or willful misconduct of CSI in the performance or
failure to perform its obligations hereunder. This indemnity shall survive
termination of this Agreement.
(b) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in subparagraph (a)
of this Section 6 is for any reason (other than those set forth in the
proviso clause of subparagraph (a) of this Section 6) held to be
unavailable to CSI, the Issuer and CSI shall contribute to the aggregate
Liabilities to which the Issuer and CSI may be subject, in such proportion
that CSI shall be responsible for that percentage of such Liabilities equal
to the percentage that any fees and commissions payable to CSI bears to the
aggregate of the Commercial Paper Notes sold and the balance of such
Liabilities shall be the responsibility of the Issuer; provided that no
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
7. Notices, Addresses. All communications and notices shall be in
writing or confirmed in writing and shall be effective when received at the
address specified below:
(i) if to CSI, to it at 1 Chase Manhattan Plaza, New York, New York
10081, Attention: Mr. Eugene Pickens, Telephone: 212/552-5349;
Telecopy 212/552-4657, or at such other address as may from time to
time be designated by notice to the Issuer in writing; and
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(ii) if to the Issuer, to it at 2210 W. Oaklawn Drive, Springdale,
Arkansas 72765-2020, Attention: Rocky Parsons; Telephone: (501) 290-
4440; Telecopy: (501) 290-4061 or at such other address as may from
time to time be designated by notice to CSI in writing.
8. Assignment. CSI may assign its rights and obligations under this
Agreement to any wholly-owned subsidiary of Chase Securities, Inc.
9. Termination. This Agreement may be terminated at any time by
either party by written notice to the other.
10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed on
their behalf by officers duly authorized thereunto, all as of the day and
year first above written.
CHASE SECURITIES, INC.
By:__________________________________
Name:
Title:
TYSON FOODS, INC.
By:__________________________________
Name:
Title:
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TYSON FOODS, INC.
SENIOR EXECUTIVE PERFORMANCE BONUS PLAN
1. ESTABLISHMENT AND PURPOSE.
Tyson Foods, Inc. (the "Company") hereby establishes the Tyson Foods,
Inc. Senior Executive Performance Bonus Plan (the "Plan"). The purpose of
the Plan is to advance the interests of Tyson Foods Inc. and its stockholders
by conditioning the payment of cash bonuses to certain of the Company's
Senior Executive Officer's upon the attainment of specific performance goals
as established herein by the Committee.
2. ADMINISTRATION.
(a) The Plan shall be administered solely by a special subcommittee
(the "Committee") of the Compensation Committee of the Board of Directors of
the Company, which shall at all times consist of at least two or more
"outside directors" as such term is defined by Section 162(m)
("Section 162(m)") of the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated pursuant thereto.
(b) The Committee shall have the authority, subject to the
limitations set forth in the Plan or otherwise imposed by the Section 162(m),
to interpret the Plan and to adopt, amend and rescind such rules and
regulations as, in its opinion, are necessary for the administration of the
Plan and to make such other determinations deemed necessary or advisable for
the administration of the Plan. All decisions, determinations, and
interpretations of the Committee relating to the Plan shall be final and
conclusive on the Company and all Participants under the Plan.
(c) The Committee may employ such accountants, legal counsel,
consultants and agents as it may deem desirable for the administration of the
Plan and may rely upon any opinion received from any counsel or consultant
and any computation received from any consultant or agent. Expenses incurred
by the Committee in the engagement of such counsel, consultant or agent shall
be paid by the Company. No member or former member of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan.
3. PARTICIPANTS AND ALLOCATION AMOUNTS.
(a) The persons eligible to participate in the Plan shall
be Don Tyson, Chairman of the Company and Leland Tollett, President and Chief
Executive Officer of the Company (the "Participants"). Each Participant
shall be entitled to receive an annual cash bonus equal to his pro rata
percentage of a Bonus Pool (as defined in Section 4 below). For the fiscal
year ended September 30, 1995, the pro rata percentage of the Bonus Pool to
which each Participant is entitled shall be as follows: Don Tyson - 70%;
Leland Tollett - 30%. For subsequent fiscal years, the Committee shall
designate, within 90 days following the commencement of such
fiscal year, the pro rata percentage of the Bonus Pool to which each
Participant is entitled. If no such designation is made by the Committee
within the prescribed time period, then the pro rata percentage of the Bonus
Pool to which each Participant is entitled shall be the same as the prior
fiscal year.
(b) Notwithstanding the provisions of Section 3(a) or 4 hereof, the
Committee shall retain the right, in its sole discretion, to reduce or
eliminate, prior to the Payment Date (as defined herein) thereof, the amount
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of any compensation that would otherwise be due hereunder to a Participant in
any fiscal year, but under no circumstances may the Committee increase the
amount of compensation payable hereunder. Additionally, the Committee may in
the future, in its discretion, designate additional senior executives to
participate in the Plan.
4. DETERMINATION OF BONUS POOL.
Bonuses shall be awarded to Participant's under the Plan for each fiscal
year of the Company, commencing with the fiscal year ended September 30, 1995
in an aggregate amount equal to 1% of the Company's Pre-Tax Income for the
fiscal year, plus an amount equal to .5% of the increase in Pre-Tax income
over the prior fiscal year (the "Bonus Pool").
For purposes of the above computation "Pre-Tax Income" means, for a
fiscal year, the Company's income before federal and state income taxes,
excluding special or nonrecurring charges or items.
5. PAYMENT OF BONUSES.
Each bonus awarded to a Participant hereunder shall be payable to such
Participant no later than the end of the first quarter of the succeeding
fiscal year (the "Payment Date"); provided however, that no payment shall be
made hereunder until the Committee certifies, in the form of approved minutes
by the Committee, that the Company achieved the amount of Pre-Tax Income used
to calculate the Bonus Pool, and that the calculation of the Bonus Pool and
determination of the amount of bonus to be paid to each Participant was
correct.
6. EFFECTIVE DATE, TERM AND AMENDMENT OF PLAN.
(a) Subject to paragraph 6(b) below, the Plan shall be
effective with respect to the Company's fiscal year ended September 30, 1995,
and shall continue in effect for each fiscal year thereafter until terminated
by the Committee. The Committee shall have the power to amend, modify or
terminate the Plan, in its sole discretion; provided however, that the
Committee may not, without approval of the shareholders of the Company, amend
or modify any of the "material terms" (as defined by Section 162(m)) of the
Plan.
(b) The "material terms" (as defined by Section 162(m)) of the Plan
shall be disclosed to and submitted for approval by the shareholders
of the Company at the Annual Meeting of the Company to be held on or about
January 13, 1995. No bonus payments shall be made under the Plan, unless and
until such shareholder approval is obtained.
7. GOVERNING LAW.
The Plan and such rights as may be granted hereunder and all related
matters shall be governed by, and construed and enforced in accordance with,
the laws of the State of Arkansas from time to time obtaining.
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TYSON FOODS, INC.
RESTRICTED STOCK BONUS PLAN
(Amended Effective April 15, 1994)
1. ESTABLISHMENT, PURPOSE AND DEFINITIONS.
(a) The Restricted Stock Bonus Plan (the "Plan") was originally
adopted by the Board of Directors of Tyson Foods, Inc. (the "Company") on
August 21, 1989, and was duly approved by majority vote of the stockholders
of the Company on February 28, 1992. The Plan is now restated to include
amendments adopted by the Board of Directors of the Company effective April
15, 1994.
(b) The purpose of the Plan is to provide a means whereby the
Company can provide incentive compensation in the form of Restricted Shares
of Tyson Foods, Inc. Class A Common Stock (the "Shares") to certain
employees of the Company and its subsidiaries.
2. STOCK SUBJECT TO THE PLAN.
(a) The total number of Shares which may be awarded under the
Plan shall not exceed 1,600,000 shares, in the aggregate (subject to future
adjustment in accordance with paragraph 2(b)). As the Committee (as
hereinafter defined) may determine from time to time, the Shares issued
under the Plan may consist either in whole or in part of shares of
authorized but unissued stock, or shares of authorized and issued stock
reacquired by the Company. If Shares are forfeited for any reason, such
Shares shall be available for award under the Plan.
(b) If there shall be any change in the Shares subject to the
Plan through merger, consolidation, reorganization, recapitalization,
reincorporation, stock split, stock dividend (in excess of 2%), or other
change in the corporate structure of the Company, appropriate adjustment
shall be made by the Committee to the aggregate number of Shares subject to
the Plan in order to preserve but not to increase, the benefits of the
holder.
3. ELIGIBILITY.
Persons who shall be eligible to have granted to them the Shares
provided for by the Plan shall be such bona fide key employees of the
Company or its affiliates (including officers, whether or not they are
directors) as the Committee in its discretion shall designate from time to
time. Members of the Board of Directors of the Company or any affiliate
who are not employed as regular salaried officers or employees of the
Company or any affiliate may not participate in the Plan. Additionally,
participants under the Company's Executive Savings Plan ("ESP") and
Management Savings Plan ("MSP") will be eligible to receive certain limited
grants of Shares as provided in paragraph 5(d) hereof.
4. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Compensation Committee
of the Board of Directors (the "Committee") consisting of not less than
three directors of the Company to be appointed by the Board of Directors.
The Board of Directors may from time to time remove members from, or add
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members to, the Committee with or without cause. Vacancies on the Committee,
howsoever caused, shall be filled by the Board of Directors. Each member
of the Committee shall be a "disinterested person" within the meaning of Rule
16b-3 (or any successor rule or regulation) promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Committee shall select one of its members as chairman and shall hold
meetings at such times and places as it may determine. A majority of the
Committee shall constitute a quorum and acts of the Committee at which a
quorum is present, or acts deducted to or approved in writing by all the
members of the Committee, shall be the valid acts of the Committee.
(b) The Committee shall report to the Board of Directors the
names of employees granted Shares and the number of Shares granted.
(c) Except as provided in paragraph 4(d), the Committee shall
have the sole authority, in its absolute discretion, to adopt, amend and
rescind such rules and regulations as, in its opinion, may be advisable in
the administration of the Plan; and to construe and interpret the Plan, the
rules and regulations, and the instruments evidencing the grants under the
Plan and to make all other determinations deemed necessary or advisable for
the administration of the Plan. All decisions, determinations, and
interpretations of the Committee shall be binding on all participants.
(d) Any or all powers and functions of the Committee may at any
time and from time to time be exercised by the Board of Directors;
provided, however, that, no exercise of this authority shall occur unless
all members of the Board of Directors are "disinterested persons" within
the meaning of Rule 16b-3 (or any successor rule or regulation) promulgated
under the Exchange Act.
(e) The Committee may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may
rely upon any opinion received from any counsel or consultant and any
computation received for any such consultant or agent. Expenses incurred
by the Board of Directors or the Committee in the engagement of such
counsel, consultant or agent shall be paid by the Company. No member or
former member of the Committee or of the Board of Directors shall be liable
for any action or determination made in good faith with respect to the Plan
or any awards granted hereunder.
5. RESTRICTED SHARES.
(a) Administration. Shares of the restricted stock may be
issued either alone, or in addition to or in tandem with other awards
granted under the Plan or other Company plans. Except for Shares granted
pursuant to paragraph 5(d), hereof, the Committee shall determine the
eligible persons to whom, and the time or times at which, grants of Shares
will be made, the number of Shares to be awarded, the price (if any) to be
paid by the recipient of Shares (subject to Section 5(b)), the time or
times within which such awards may be subject to forfeiture, and all other
terms and conditions of the awards.
The Committee may condition the grant of Shares upon the
attainment of specified performance goals or such other factors as the
Committee may determine, in its sole discretion.
The provisions of Share awards need not be the same with respect
to each participant.
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(b) Awards and Certificates. The prospective recipient of a
Share award shall not have any rights with respect to such award, unless
and until such recipient has executed a Restricted Stock Award Agreement (the
"Agreement") evidencing the award and has delivered a fully executed copy
thereof to the Company, and has otherwise complied with the applicable
terms and conditions of such award.
(i) The purchase price for Shares of restricted stock shall
be equal to or less than their par value and may be zero.
(ii) Awards of Shares must be accepted within a period of 60
days (or such shorter period as the Committee may specify at grant)
after the award date, by executing the Agreement and paying whatever
price (if any) is required under Section 5(b)(i).
(iii) Except as permitted in Section 5(b)(v) below, each
participant receiving a Share award shall be issued a stock
certificate in respect of such shares of restricted stock. Such
certificate shall be registered in the name of such participant, and
shall bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such award.
(iv) The Committee shall require that the certificates
evidencing such Shares issued pursuant to Section 5(b)(iii) above be
held in custody by the Company until the restrictions thereon shall
have lapsed, and that, as a condition of any Share award, the
participant shall have delivered a stock power, endorsed in blank,
relating to the Shares covered by such award.
(v) In lieu of having stock certificates issued to any
participant receiving a Share award in the manner described in Section
5(b)(iii) and (iv) above, the Committee, in its sole discretion, may
cause such stock certificates to be issued on an aggregate basis in
the name of the Plan, rather than on a per grantee basis, and held by
the Plan on behalf of the grantees. At such time as such Shares are
required to be delivered to the grantees on an unrestricted basis
under Section 5(c)(iv) below, the Committee shall cause stock
certificates in respect of such Shares to be issued to the appropriate
participants. For all purposes under this Plan, references to
"Shares" shall include any participant's undivided interest in such
Shares as provided in this Section 5(b)(v).
(c) Restrictions and Conditions. The Shares of restricted stock
awarded pursuant to this Section 5 shall be subject to the following
restrictions and conditions:
(i) Subject to the provisions of this Plan and the
Agreement, during a period set by the Committee commencing with the
date of such award (the "Restriction Period"), the participant shall
not be permitted to sell, transfer, pledge or assign Shares of
restricted stock awarded under the Plan. Within these limits, the
Committee, in its sole discretion, may provide for the lapse of such
restrictions in installments and may accelerate or waive such
restrictions in whole or in part, based on service, performance and/or
such other factors or criteria as the Committee may determine, in its
sole discretion.
(ii) Except as provided in this paragraph (ii) and Section
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5(c)(i), the participant shall have, with respect to the Shares of
restricted stock, all of the rights of a shareholder of the Company,
including the right to vote the Shares, and the right to receive any
normal quarterly cash dividends. The Committee, in its sole
discretion, as determined at the time of award, may permit or require
the payment of cash dividends to be deferred and, if the Committee so
determines, reinvested in additional Shares to the extent Shares are
available under Section 2, or otherwise reinvested. Stock dividends
and any extraordinary dividends issued with respect to Shares shall be
treated as additional Shares of Restricted Stock that are subject to
the same restrictions and other terms and conditions that apply to the
Shares with respect to which such dividends are issued.
(iii) Subject to the applicable provisions of the Agreement
and this Section 5, upon termination of a participant's employment
with the Company and any Subsidiary or affiliate for any reason during
the Restriction Period, all Shares still subject to restriction will
vest, or be forfeited, in accordance with the terms and conditions
established by the Committee at or after grant.
(iv) If and when the Restriction Period expires without a
prior forfeiture of the Shares subject to such Restriction Period,
certificates for an appropriate number of unrestricted Shares shall be
delivered to the participant promptly.
(v) All recipients of Shares under this Plan who are
otherwise subject to the requirements of Section 16 of the Exchange
Act, shall be subject to a six-month holding period from the date of
award of Shares under the Plan to the date of sale of the Shares.
(d) Premium Earnings Award. Notwithstanding the Committee's
ability to effect discretionary awards of Shares pursuant to paragraph 5(a)
above, the Committee shall be required to provide for premium earnings
awards of Shares (the "Premium Earnings Shares") to participants under the
ESP and MSP. The Premium Earnings Shares shall be administered pursuant to
the rules, regulations and conditions of this Plan; provided, however, that
the timing, amount, and conditions relating to forfeitability and
transferability of such Premium Earnings Shares shall be as set forth in
the ESP or MSP.
6. ISSUANCE OF CERTIFICATES, LEGENDS AND PAYMENT OF EXPENSES.
(a) A certificate or certificates for the Shares shall be issued
by the Company in the name of the person awarded the Shares and shall be
delivered to or upon the order of such person or persons, as permitted by
state or federal securities law.
(b) The Company may place such legend or legends upon the
certificates Shares issued, and the Committee may issue such "stop
transfer" instructions to its transfer agent in respect of such Shares, as
the Committee, in its discretion, determines to be necessary or appropriate
to (i) prevent a violation of, or to perfect an exemption from, the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or (ii) implement the provisions of any agreement
between the Company and the participant with respect to such Shares.
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(c) The Company shall pay all issue or transfer taxes with
respect to the issuance or transfer of Shares as well as all fees and
expenses necessarily incurred by the Company in connection with such issuance
or transfer, except fees and expenses which may be necessitated by the filing
or amending of a registration statement under the Securities Act, which
fees and expenses shall be borne by the recipient of the Shares unless such
registration statement has been filed by the Company for its own corporate
purposes (and the Company so states) in which event the recipient of the
Shares shall bear only such fees and expenses as are attributable solely to
the inclusion of such Shares in the registration statement.
(d) All Shares issued as provided herein shall be fully paid and
non-assessable to the extent permitted by law.
7. WITHHOLDING TAXES.
(a) The Company may require an employee receiving an award of
Shares granted hereunder to reimburse the corporation which employs such
employee for any taxes required by any government to be withheld or
otherwise deducted and paid by such corporation in respect of the issuance
of Shares. In lieu thereof, the corporation which employs such employee
shall have the right to withhold the amount of such taxes from any other
sums due or to become due from such corporation to the employee upon such
terms and conditions as the Committee shall prescribe.
(b) The Committee may, in its discretion, permit a participant
to satisfy the participant's tax withholding obligations under paragraph
7(a), in whole or in part, by tendering to the Company Shares awarded
having a fair market value equal to the amount which would otherwise be
withheld. Participants wishing to have all or any portion of their tax
obligation satisfied in such manner must notify the Corporate Secretary of
the Company of such fact in writing on or before the award date; provided
that recipients who are otherwise subject to Section 16(a) of the Exchange
Act must give such written notice (i) at least six months prior to the date
the amount of withholding tax due with respect to the option exercise is
calculated (the "Tax Date") or (ii) prior to the Tax Date during any period
beginning on the third business day following the date of release for
publication by the Company of quarterly or annual summary statements of
earnings and profits and ending on the twelfth business day following such
date of release.
8. LISTING OF SHARES AND RELATED MATTERS.
If at any time the Board of Directors shall determine in its
discretion that the listing, registration or qualification of the Shares
covered by the Plan upon any national securities exchange or under any
state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in
connection with, the sale or purchase of Shares under the Plan, no Shares
shall be delivered unless and until such listing, registration,
qualifications, consent or approval shall have been effected or obtained,
or otherwise provided for, free of any conditions not acceptable to the
Board of Directors.
9. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN.
(a) The Board of Directors may at any time suspend or terminate
the Plan, and may amend it from time to time in such respects as the Board
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may deem advisable; provided, however, except as provided in paragraph 2(b)
hereof, the Board of Directors shall not amend the Plan in the following
respects without the consent of stockholders then sufficient to approve the
Plan in the first instance:
(i) To materially increase the maximum number of shares of
stock subject to the Plan; or
(ii) To materially change the designation or class of
employees eligible to receive options or rights under the Plan; or
(iii) In a manner that would otherwise require shareholder
approval to maintain qualification under Rule
16b-3 of the Exchange Act.
(b) Unless the Plan theretofore shall have terminated, the Plan
shall terminate on September 2, 2004. No Shares may be granted under any
suspension or after the termination of the Plan, and no amendment,
suspension or termination of the Plan shall, without the holder's consent,
alter or impair any rights or obligations related to any Shares theretofore
granted to him under the Plan.
10. GOVERNING LAW.
The Plan and such rights as may be granted hereunder and all related
matters shall be governed by, and construed and enforced in accordance
with, the laws of the State of Arkansas from time to time obtaining.
AMENDMENT TO TYSON FOODS, INC.
RESTRICTED STOCK BONUS PLAN
THIS AMENDMENT (the "Amendment") amends and modifies the Tyson Foods,
Inc. Restricted Stock Bonus Plan (the "Plan"), originally adopted by the
Board of Directors of Tyson Foods, Inc. (the "Company") on August 21, 1989,
as amended and restated effective April 15, 1994.
WHEREAS, on November 15, 1994, the Board of Directors of Tyson Foods,
Inc. (the "Company") approved the Amendment to be effective as of June 30,
1994; and
WHEREAS, the purpose of the Amendment is to provide a more efficient
and workable method for satisfying a Plan participant's tax withholding
obligations pursuant to Section 7(b) thereof;
NOW THEREFORE, the Company hereby amends the Plan as follows:
1. Section 7(b) of the Plan is amended and restated in its entirety
to read as follows:
Unless the Committee provides otherwise, in its sole
discretion, by resolution or as part of the Agreement evidencing
an award of Shares under the Plan, a participant may satisfy his
tax withholding obligations relating to the Shares, in whole or
in part, by tendering to the Company Shares awarded under the
Plan having a fair market value (determined on the basis of the
closing sales price for the Shares as reported by the National
Association of Securities Dealers, Inc. Automated Quotation
System on the date such withholding tax due is calculated by the
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Company (the "Tax Date")) equal to the amount which would
otherwise be required to be paid by participant to the Company
pursuant to paragraph 7(a) above. Participants wishing to have
all or any portion of their tax obligations satisfied in such
manner must notify the benefits administration office of the
Company in writing on or before the Tax Date.
The effective date of this Amendment shall be June 30, 1994.
Except as expressly modified by this Amendment, all other terms and
conditions of the Plan shall remain in full force and effect.
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TYSON FOODS, INC.
AMENDED AND RESTATED
NONSTATUTORY STOCK OPTION PLAN
Adopted: December 17, 1982
Amended and Restated: September 5, 1987
Amended and Restated: November 18, 1994
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TYSON FOODS, INC.
AMENDED AND RESTATED
NONSTATUTORY STOCK OPTION PLAN
1. ESTABLISHMENT, PURPOSE AND DEFINITIONS.
(a) The Tyson Foods, Inc. Nonstatutory Stock Option Plan (the
"Plan") was originally adopted by the Board of Directors of Tyson Foods,
Inc. (the "Company") on December 17, 1982 and was originally approved by
majority vote of the stockholders of the Company on February 25, 1983. The
Plan has been subsequently amended by the Board of Directors of the Company
on September 5, 1987 and November 18, 1994 is hereby restated in such
amended form.
(b) The purpose of the Plan is to provide a means whereby key
employees and independent contractors of the Company or its affiliates may
be given an opportunity to purchase shares of the Class A Common Stock of
the Company (the "Stock") pursuant to options which do not qualify as
"incentive stock options" under Section 422A of the Internal Revenue Code.
In addition, key employees may be awarded stock appreciation rights
("Rights") payable in Stock or cash, or any combination thereof, as
provided herein.
(c) The term "key employee" or "key employees" herein shall mean
one or more (i) employees of the Company or its affiliates, and (ii)
officers, directors and consultants, whether employees or independent
contractors, who render those types of services which tend to contribute
materially to the success of the Company or an affiliate or which
reasonably may be anticipated to contribute materially to the future
success of the Company or an affiliate.
(d) The term "affiliates" as used in the Plan means parent or
subsidiary corporations, as defined in Section 425 of the Internal Revenue
Code (but substituting "Company" for "employer corporation"), including
parents or subsidiaries which become such after adoption of the Plan.
2. STOCK SUBJECT TO THE PLAN.
(a) The total number of shares of Stock which either may be
purchased pursuant to the exercise of options granted under the Plan or
acquired pursuant to the exercise of Rights granted under the Plan shall
not exceed, in the aggregate, 5,500,000 shares (which amount reflects all
adjustments through November 18, 1994 and is subject to future adjustment
in accordance with paragraph 2(b)) (the "Total Plan Shares"). Accordingly,
the sum of (i) the number of shares of Stock subject at any time to options
or Rights granted under the Plan and (ii) the number of shares of Stock
then outstanding pursuant to exercises of options or Rights granted under
the Plan shall not exceed the Total Plan Shares. Additionally, the maximum
number of shares of Stock subject to option and Rights granted to an
"executive officer" of the Company (as determined by the Company's Board of
Directors from time to time) shall not exceed 2% of the Total Plan Shares.
As the Committee (as hereinafter defined) may determine from time to time,
the shares of Stock subject to options or Rights granted under the Plan may
consist either in whole or in part of shares of authorized but unissued
Stock, or shares of authorized and issued Stock reacquired by the Company.
If an option or Right is surrendered or for any other reason ceases to be
exercisable in whole or in part, the shares which were subject to such
option or Right but as to which the option or Right had not been exercised
shall continue to be available under the Plan.
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(b) If there shall be any change in the Stock subject to the
Plan or the Stock subject to any option or Right granted hereunder, through
merger, consolidation, reorganization, recapitalization, reincorporation,
stock split, stock dividend (in excess of 2%), or other change in the
corporate structure of the Company, appropriate adjustment shall be made by
the Committee to the Total Plan Shares and the number of shares and price
per share subject to outstanding options or Rights in order to preserve,
but not to increase, the benefits of the holder; provided, however, that
subject to any required action by the stockholders, if the Company shall
not be the surviving corporation in any merger, consolidation, or
reorganization, every option or Right outstanding hereunder shall
terminate, unless the surviving corporation shall (subject to any
applicable provisions of the Internal Revenue Code) assume (with
appropriate changes) the outstanding options or Rights or replace them with
new options or Rights of comparable value. Notwithstanding the preceding
proviso, if such surviving corporation does not so assume or replace the
outstanding options or Rights hereunder, each holder shall have the right
immediately prior to such merger, consolidation or reorganization to
exercise his outstanding option(s) or Right(s).
3. ELIGIBILITY.
Persons who shall be eligible to have granted to them the options
or Rights provided for by the Plan shall be such bona fide key employees of
the Company or its affiliates (including officers, whether or not they are
directors) as the Committee in its discretion shall designate from time to
time.
4. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Compensation Committee
of the Board of Directors, or a Subcommittee thereof (the "Committee"),
consisting of not less than two directors of the Company to be appointed by
the Board of Directors. The Board of Directors may from time to time
remove members from, or add members to, the Committee with or without
cause. Vacancies on the Committee, howsoever caused, shall be filled by
the Board of Directors. Each member of the Committee shall be (i) a
"disinterested person" within the meaning of Rule 16b-3 (or any successor
rule or regulation) promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and (ii) an "outside director" as defined
pursuant to Section 162(m) of the Omnibus Budget Reconciliation Act of
1993, as amended. The Committee shall select one of its members as
chairman and shall hold meetings at such times and places as it may
determine. A majority of the Committee shall constitute a quorum and acts
of the Committee at which a quorum is present, or acts reduced to or
approved in writing by all the members of the Committee, shall be the valid
acts of the Committee.
(b) The Committee may from time to time determine which key
employees of the Company or any affiliates shall be granted options or
Rights under the Plan and the terms thereof, and, subject to the provisions
of paragraph 2 hereof, the number of shares which may be acquired under the
options or Rights.
(c) The Committee shall report to the Board of Directors the
names of persons granted options or Rights, the number of shares covered by
each option or Right, and the terms and conditions of each such option or
Right.
(d) The Committee shall have the sole authority, in its absolute
discretion, to adopt, amend and rescind such rules and regulations as, in
its opinion, may be advisable in the administration of the Plan; and to
construe and interpret the Plan, the rules and regulations, and the
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instruments evidencing options, Rights and loans granted under the Plan and
to make all other determination: deemed necessary or advisable for the
administration of the Plan. All decisions, determinations, and
interpretations of the Committee shall be binding on all holders of options
or Rights.
(e) The Committee may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may
rely upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses incurred
by the Board of Directors or the Committee in the engagement of such
counsel, consultant or agent shall be paid by the Company. No member or
former member of the Committee or of the Board of Directors shall be liable
for any action or determination made in good faith with respect to the Plan
or any option or Right granted hereunder.
5. THE OPTION PRICE.
(a) The option price of the shares of Stock covered by each
option shall not be less than the fair market value of such shares on the
date the option is granted. Such price shall be subject to adjustment as
provided in paragraph 2(b) hereof.
(b) The option price shall become due immediately upon exercise
of the option and shall be payable in full in cash or cash equivalents;
provided, however, that the Committee shall have the authority, exercisable
at its discretion either at the time the option is granted or at the time
it is exercised, to make the option payable in one of the alternative forms
specified below:
(i) full payment in shares of Stock having a fair market
value on the Exercise Date (as such term is defined below) equal
to the option price; or
(ii) a combination of shares of Stock valued at fair market
value on the Exercise Date and cash or cash equivalents, equal in
the aggregate to the option price.
For purposes of this paragraph 5(b), the Exercise Date shall be the date on
which the Company receives written notice of the exercise of the option,
together with payment of the option price in the form authorized by the
Committee.
(c) For purposes of determining the fair market value of Stock
on any relevant date under subparagraph (a) or (b) above, the following
rules shall apply:
(i) If the Stock is not at the time listed or admitted to
trading on a stock exchange or in the over-the-counter market
under the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ"), the fair market value
shall be the mean between the lowest reported bid price and
highest reported asked price of the Stock on the date in question
in the over-the-counter market, as such prices are reported in a
publication of general circulation selected by the Company and
regularly reporting the market price of the Stock in such market;
or
(ii) If the Stock is at the time listed or admitted to
trading in the over-the-counter market under NASDAQ or on any
stock exchange, then the fair market value shall be the reported
closing sale price of the Stock on the date in question on NASDAQ
or on the principal exchange on which the Stock is then listed or
admitted to trading, as the case may be. If no reported sale of
Stock takes place on the date in question, then the reported
closing asked price of the Stock on such date shall be
determinative of fair market value.
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(d) If any portion of the option price is paid by delivery of
shares of Stock, the certificates representing such shares shall be
presented to the Company in proper form for transfer accompanied by all
requisite stock transfer tax stamps or cash in lieu thereof.
6. TERMS AND CONDITIONS OF OPTIONS.
Each option granted pursuant to the Plan shall be evidenced by a
written Stock Option Agreement executed by the Company and the person to
whom such option is granted. The term of each option shall be for such a
period of time, not more than ten years from the date it is granted, as the
Committee may determine. During the lifetime of the optionee, the option
shall be exercisable only by the optionee or by his guardian or legal
representative and shall not be assignable or transferable other than by
will or the laws of descent and distribution. In addition, the Stock
Option Agreement may contain such other terms, provisions and conditions as
may be determined by the Committee including, without limitation,
provisions relating to the effect upon exercisability of the death or
termination of employment of the optionee, the extension of credit to the
optionee by the Company or the guarantee by the Company of any loan to the
optionee from a third party to finance the exercise of the option, and the
terms of any Right granted with respect to the option.
During the term of each option granted pursuant to the Plan, the
Committee, with the consent of the holder of the Option, may modify any or
all of the terms, provisions and conditions of such option so long as such
modified terms, provisions and conditions are otherwise permissible
pursuant to the terms of the Plan as approved by the stockholders of the
Company.
7. STOCK APPRECIATION RIGHTS.
(a) In the discretion of the Committee, a Right may be granted
(i) alone, (ii) simultaneously with the grant of an option and in tandem
therewith or in the alternative thereto or (iii) subsequent to the grant of
an option and in tandem therewith or in the alternative thereto. Any Right
shall be exercisable upon such additional terms and conditions as may from
time to time be prescribed by the Committee; provided that a Right granted
alone shall be deemed exercised on the last day of its term if the Right is
not otherwise exercised by the holder thereof and the fair market value of
the shares of Stock subject to the Right exceeds the exercise price thereof
on such date. During the lifetime of a holder, a Right shall be
exercisable only by the holder or by his guardian or legal representative
and shall not be assignable or transferable other than by will or the laws
of descent and distribution.
(b) The exercise price of a Right granted alone shall be
determined by the Committee, but shall not be less than one hundred percent
(100%) of the fair market value of one share of Stock on the date of grant
of such Right. A Right granted simultaneously with or subsequent to the
grant of an option and in tandem therewith or in the alternative thereto
shall have the same exercise price as the related option, shall be
transferable only upon the same terms and conditions as the related option,
and shall be exercisable only to the same extent as the related option;
provided however, that a Right, by its terms, shall be exercisable only
when the fair market value of the shares of Stock subject to the Right and
related option exceeds the exercise price thereof.
(c) Upon exercise of a Right granted simultaneously with or
subsequent to an option and in the alternative thereto, the number of
shares of Stock for which the related option shall be exercisable shall be
reduced by the number of shares of Stock for which the Right shall have
been exercised. The number of shares of Stock for which a Right granted in
the alternative to an option shall be exercisable shall be reduced upon any
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exercise of the related option by the number of shares of Stock (for which
such option shall have been exercised.
(d) A Right shall entitle the holder to receive from the
Company, upon a written request filed with the Corporate Secretary of the
Company at its principal offices (the "Request"), a number of shares of
Stock as specified in the Request (with or without restrictions as to
substantial risk of forfeiture and transferability, as determined by the
Committee in its sole discretion), an amount of cash, or any combination of
shares of Stock and cash, as set forth in the Request (but subject to the
approval of the Committee, in its sole discretion, at any time up to and
including the time of payment, as to the making of any cash payment),
having an aggregate value equal to the product of (i) the excess of the
fair market value on the day of such Request of one share of Stock over the
exercise price per share of Stock specified in such Right or its related
option, multiplied by (ii) the number of shares of Stock for which such
Right shall be exercised; provided, however, that the Committee, in its
discretion, may impose a maximum limitation on the amount of cash, the fair
market value of shares of Stock, or a combination thereof, which may be
received by a holder upon exercise of a Right.
(e) Any election by a holder of a Right to receive cash in full
or partial settlement of such Right, and any exercise of such Right for
cash, may be made only by a Request filed with the Corporate Secretary of
the Company during the period beginning on the third business day following
the date of release for publication by the Company of quarterly or annual
summary statements of earnings and profits and ending on the twelfth
business day following such date. Within sixty (60) days of the receipt by
the Company of a Request to receive cash in full or partial settlement of a
Right or to exercise such Right for cash, the Committee shall, in its sole
discretion, either consent to or disapprove, in whole or in part, such
Request. If the Committee disapproves in whole or in part any election by
a holder to receive cash in full or partial settlement of a Right or to
exercise such Right for cash, such disapproval shall not affect such
holder's right to exercise such Right at a later date, to the extent that
such Right shall be otherwise exercisable, or to elect the form of payment
at a later date, provided that an election to receive cash upon such later
exercise shall be subject to the approval of the Committee. Additionally,
such disapproval shall not affect such holder's right to exercise any
related option or options granted to such holder under the Plan.
Notwithstanding the foregoing, a holder or a Right shall not receive cash
in full or partial settlement of such Right, or upon the full or partial
exercise of such Right, if such Right or the related option shall have been
exercised during the first six (6) months of its respective term; provided,
however, that such prohibition shall not apply if the holder of such Right
dies or becomes disabled (within the meaning of Section 105(d) (4) of the
Internal Revenue Code) prior to the expiration of such six-month period, or
if such holder is not a director or officer of the Company or a beneficial
owner of the Company who is described in Section 16(a) of the Exchange Act.
(f) The fair market value of shares of Stock subject to Rights
shall be determined in accordance with paragraph 5(c).
8. LOANS OR GUARANTEE OF LOANS.
The Committee may authorize the extension of a loan to an
optionee by the Company (or the guarantee by the Company of a loan obtained
by an optionee from a third party) in order to assist an optionee to
exercise an option granted under the Plan. The terms of any Loans or
guarantees, including the interest rate, if any, and terms of repayment,
will be subject to the discretion of the Committee. Loans and guarantees
may be granted with or without security, the maximum credit available being
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the exercise price of the option sought to be executed plus any tax
liability incurred upon exercise of the option.
9. TERMINATION AND NEW GRANT OF OPTIONS OR RIGHTS.
The Committee shall have the authority to effect, at any time and
from time to time, with the consent of the affected holders, the
termination of any or all outstanding options or Rights under the Plan and
to grant in substitution therefor new options or Rights under the Plan
covering the same or different numbers of shares of Stock. The option
price of substituted options and the exercise price of substituted Rights
shall be determined by the Committee subject to the requirements of
Paragraph 5(a) and Paragraph 7(b), respectively.
10. USE OF PROCEEDS.
Proceeds realized from the exercise of options granted under the
Plan shall constitute general funds of the Company.
11. PURCHASE FOR INVESTMENT.
Except as hereafter provided, the holder of an option or Right
granted hereunder shall, upon any exercise thereof, execute and deliver to
the Company a written statement, in form satisfactory to the Company, in
which such holder represents and warrants that such holder is purchasing or
acquiring all shares of Stock acquired thereunder for such holder's own
account, for investment only and not with a view to the resale or
distribution of any of such shares. Any resale or distribution of such
shares shall he made only pursuant to either (a) a current and effective
registration statement on an appropriate form under the Securities Act of
1933, as amended (the "Securities Act"), or (b) a specific exemption from
the registration requirements of the Securities Act, but in claiming such
exemption the holder shall, prior to any offer of sale or sale of such
shares, obtain a favorable written opinion, in form and substance
satisfactory to the Company, from counsel for or approved by the Company,
as to the application of such exemption thereto. The foregoing restriction
shall not apply to (i) issuances by the Company so long as the shares being
issued are registered under the Securities Act and a prospectus in respect
thereof is current or (ii) reofferings of shares by "affiliates" of the
Company (as such term is defined in Rule 405 or any successor rule or
regulation promulgated under the Securities Act) if the shares being
reoffered are registered under the Securities Act and a prospectus in
respect thereof is current.
12. ISSUANCE OF CERTIFICATES, LEGENDS AND PAYMENT OF EXPENSES.
(a) Upon any exercise of an option or Right which may be granted
hereunder and, in the case of an option, payment of the option price, a
certificate or certificates for the shares of Stock as to which the option
or Right has been exercised shall be issued by the Company in the name of
the person exercising the option or Right and shall be delivered to or upon
the order of such person or persons, as permitted by state or federal
securities law.
(b) The Company may place such legend or legends upon the
certificates for shares of Stock issued upon exercise of an option or Right
granted hereunder, and the Committee may issue such "stop transfer"
instructions to its transfer agent in respect of such shares, as the
Committee, in its discretion, determines to be necessary or appropriate to
(i) prevent a violation of, or to perfect an exemption from the
registration requirements of, the Securities Act, or (ii) implement the
provisions of any agreement between the Company and the Optionee or grantee
with respect to such shares.
(c) The Company shall pay all issue or transfer taxes with
respect to the issuance or transfer of shares of Stock, as well as all fees
and expenses necessarily incurred by the Company in connection with such
67
<PAGE>
issuance or transfer, except fees and expenses which may be necessitated by
the filing or amending of a registration statement under the Securities
Act, which fees and expenses shall be borne by the recipient of the shares
unless such registration statement has been filed by the Company for its
own corporate purposes (and the Company so states) in which event the
recipient of the shares shall bear only such fees and expenses as are
attributable solely to the inclusion of such shares in the registration
statement.
(d) All shares of Stock issued as provided herein shall be fully
paid and non-assessable to the extent permitted by law.
13. WITHHOLDING TAXES.
(a) The Company may require an optionee exercising a Right or
option granted hereunder to reimburse the corporation which employs such
optionee for any taxes required by any government to be withheld or
otherwise deducted and paid by such corporation in respect of the issuance
of shares of Stock. In lieu thereof, the corporation which employs such
optionee shall have the right to withhold the amount of such taxes from any
other sums due or to become due from such corporation to the optionee upon
such terms and conditions as the Committee shall prescribe.
(b) The Committee may, in its discretion, permit an optionee to
satisfy the optionee's tax withholding obligations under Paragraph 13(a),
in whole or in part, by tendering to the Company shares of Stock acquired
in the option exercise having a fair market value, computed in accordance
with paragraph 5(c), equal to the amount which would otherwise be withheld.
Optionees wishing to have all or any portion of their tax obligation
satisfied in such manner must notify the Corporate Secretary of the Company
of such fact in writing on or before the exercise date of the option.
14. LISTING OF SHARES AND RELATED MATTERS.
If at any time the Board of Directors shall determine in its
discretion that the listing, registration or qualification of the shares of
Stock covered by the Plan upon any national securities exchange or under
any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in
connection with, the sale or Purchase of shares under the Plan, no shares
shall be delivered unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained, or
otherwise provided for, free of any conditions not acceptable to the Board
of Directors.
15. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN.
(a) The Board of Directors may at any time suspend or terminate
the Plan, and may amend it from time to time in such respects as the Board
may deem advisable; provided, however, except as provided in paragraph 2(b)
hereof, the Board of Directors shall not amend the Plan in the following
respects without the consent of stockholders then sufficient to approve the
Plan in the first instance:
(i) To increase the maximum number of shares of Stock
subject to the Plan; or
(ii) To change the designation or class of persons eligible
to receive options or Rights under the Plan.
(b) Unless the Plan theretofore shall have been terminated, the
Plan shall terminate on March 31, 2000. No option or Right may be granted
under any suspension or after the termination of the Plan, and no
amendment, suspension or termination of the Plan shall, without the
holder's consent, alter or impair any rights or obligations under any
option or Right theretofore granted to him under the Plan.
68
<PAGE>
16. GOVERNING LAW.
The Plan, such options and Rights as may be granted hereunder and
all related matters shall be governed by, and construed and enforced in
accordance with, the laws of the State of Arkansas from time to time
obtaining.
69
<PAGE>
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the"Agreement") is
made and entered into on this 1st day of July, 1994 by and between Tyson
Foods, Inc., an Arkansas corporation (the "Company"), and Donald J. Tyson,
an individual and resident of Captiva, Florida ("Tyson"). This Agreement
supersedes and replaces an earlier Employment Agreement between said
parties dated December 7, 1990 and any and all oral arrangements related
thereto or arising thereafter.
W I T N E S S E T H:
WHEREAS, during Tyson's employment by the Company he has been
primarily responsible for promoting the overall growth of the Company; and
WHEREAS, the Board of Directors of the Company believes that the
future services of Tyson will be of great value to the Company, and by this
Agreement proposes to ensure his continued employment; and
WHEREAS, Tyson hereby expresses his willingness to continue in the
employment of the Company as is hereby provided;
NOW THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree
as follows:
1. Period of Active Employment. Tyson shall continue in the active
employment of the Company until December 31, 1995 (the "Initial Term"),
which employment shall be automatically extended for successive periods of
one year, commencing on January 1, 1996, and each January 1 thereafter
(the "Anniversary Date") following said Initial Term; provided however,
that said employment may be terminated upon written notice by either party
at least 10 days prior to any Anniversary Date (the "Termination Date").
2. Duties. During the period of this contract, and subject to the
limitations hereinafter expressed, Tyson agrees to serve the Company
faithfully and to the best of his ability, under the direction of the Board
of Directors of the Company, devoting his time, energy and skill
to the management of the Company's business.
70
<PAGE>
3. Compensation. The Company agrees to pay to Tyson during the period
of his active employment, as defined in Section 1 above, as regular salary
for his full time services, the sum of Seven Hundred Twenty Thousand
Dollars ($720,000) per annum, payable in equal monthly installments,
subject to adjustment at any time by mutual agreement of the parties
hereto. Additional annual compensation may be paid Tyson from time to time
by majority vote of the Compensation Committee of the Board of Directors of
the Company, with members of the Tyson family or any other interested
director abstaining.
4. Disability. If, while in the full time employ of the Company, Tyson
becomes disabled to the extent that he is no longer capable of performing
his services fully as herein contemplated, the Company shall pay to him an
annual salary, in equal monthly installments, which is equal to the lessor
of (i) one-half (1/2) of his average total annual compensation
(i.e., regular salary plus bonuses) for the three year period immediately
prior to the date of his disability of (ii) $ 720,000, increased (but not
decreased) annually hereafter by the same percentage as the percentage
increase, if any, in the Consumer Price index; provided, however, that
Tyson shall continue to perform during his disability such advisory and
consultative services as his physical condition and circumstances permit;
further provided, however, that the said disability shall have continued
for a period of six (6) months before the Company may invoke this
provision, said monthly period to begin to run as of the first
day of the month following the month in which his disability occurs. As
used herein, the term "Consumer Price Index" means the Consumer Price Index
for All Urban Consumers (CPI-U), All Items, U.S. Average (1967=100), which
is now compiled with the U.S. Department of Labor, and shall mean and
include such other index or statistics as may succeed it, as adjusted to
account for any change in the standard reference base year.
5. Death. In the event of Tyson's death, while in the full time active
employment of the Company, the Company shall pay to his three surviving
children, John Tyson, Cheryl Tyson, and Carla Tyson, in equal shares, an
annual sum, in equal monthly installments, equal to one-half (1/2) of
Tyson's average annual regular salary for the three (3) year period
immediately prior to his death. These payments shall continue for a period
of ten (10) years from the date of Tyson's death.
In the event of Tyson's death while drawing payments under the
provisions of Paragraph 4, the Company shall pay to the same three
surviving children in equal shares an annual sum, in equal monthly
installments, which sum shall be the same as Tyson was drawing during his
disability period, for a period of time which shall end ten (10) years from
the date of Tyson's disability.
6. Retirement. The Company hereby retains Tyson to perform and Tyson
agrees to perform, during the period beginning with Tyson's retirement from
full time active employment on the Termination Date, and continuing to the
end of his life, such advisory and consultative services on a part time
basis as may be required by the Board of Directors of the Company, subject,
however, to the condition that Tyson shall not be required to render
such services during periods of illness or other incapacity.
71
<PAGE>
The Company shall pay Tyson and Tyson shall accept from the Company
for his services during this period, annual compensation, payable in equal
monthly installments, equal to the lesser of (i) one-half (1/2) of this
average total annual compensation (i.e., regular salary plus any bonuses)
for the three year period immediately prior to his retirement of (ii)
$720,000 increased (but not decreased) annually hereafter by the same
percentage as the percentage increases, if any, in the Consumer Price
Index. If Tyson dies during the consultative period, the Company shall
continue to pay to his same three surviving children the aforesaid monthly
payments for a period of time which shall end ten (10) years from the
date of Tyson's retirement.
7. Restrictive Covenant. Tyson expressly agrees, as a condition to the
performance by the Company of its obligations hereunder, that during the
term of this agreement and during the further period providing for
consultative services, he will not, directly or indirectly, enter
into or in any manner take part in any business competitive with any
business of the Company, without the prior written consent of the Company.
8. Prohibition Against Assignment. Neither Tyson nor his children
shall have the right to commute, encumber, or dispose of the right to
receive payments hereunder, which payments and the right thereto are
expressly declared to be non-assignable and non-transferable, and in the
event of any attempted assignment or transfer, the Company shall
have no further liability hereunder.
9. Reorganization. The Company shall not merge or consolidate with any
other organization or organizations until such organization or
organizations expressly assume the duties of the Company herein set forth.
10. Independence of Other Agreements. This agreement is hereby
declared to be independent of the cumulative of any other retirement or
deferred compensation plans now or hereafter adopted by the Company, and
shall not, unless mutually agreed upon in writing, be supplanted or
replaced by any other such plan or agreement.
IN WITNESS WHEREOF, the parties have executed this agreement in
duplicate original the day and year first above recited.
TYSON FOODS, INC.
BY:/s/ Leland Tollett
---------------------------------------
Leland Tollett, President, CEO and Vice
Chairman
ATTEST:
/s/ Mary Rush
- --------------------
Mary Rush, Secretary /s/ Donald J Tyson
------------------
Donald J Tyson
72
<PAGE>
EXHIBIT 11
<TABLE>
<CAPTION>
TYSON FOODS, INC.
Computation of Earnings (Loss) Per Share
(In Thousands Except Per Share Data)
1994 1993 1992
---------------------------
<S> <C> <C> <C>
Primary:
Average common shares outstanding
during the period 146,962 147,212 137,462
Net effect of dilutive stock
options based on the treasury
stock method using average
market price 816 1,129 930
------- ------- ------
Total common and common equivalent
shares outstanding 147,778 148,341 138,392
======= ======= =======
Net income (loss) ($2,128) $180,334 $160,534
======= ======== =======
Earnings (loss) per share ($.01) $1.22 $1.16
===== ===== =====
Fully Diluted:
Average common shares outstanding
during the period 146,954 147,212 137,462
Net effect of dilutive stock
options based on the treasury
stock method using the quarter-
end market price, if higher
than average market price 1,011 1,129 1,040
------- ------- ------
Total common and common equivalent
shares outstanding 147,965 148,341 138,502
======= ======= =======
Net income (loss) ($2,128) $180,334 $160,534
======= ======== ========
Earnings (loss) per share ($.01) $1.22 $1.16
===== ===== =====
</TABLE>
73
<PAGE>
THE YEAR IN REVIEW
Tyson Foods, Inc.
<TABLE>
<S> <C>
Eleven-Year Financial Summary Page 20
Management Discussion and Analysis Page 22
Consolidated Statements of Operations Page 27
Consolidated Balance Sheets Page 28
Consolidated Statements of Shareholders' Equity Page 30
Consolidated Statements of Cash Flows Page 32
Notes to Consolidated Financial Statements Page 33
Report of Management Page 43
Report of Independent Auditors Page 44
Directors and Officers Page 45
Corporate Information Page 46
Corporate Recognition and Awards Page 47
</TABLE>
74 (19)
<PAGE>
Tyson Foods, Inc.
ELEVEN-YEAR FINANCIAL SUMMARY
(In thousands except per share data)
<TABLE>
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
For Fiscal Year End 1994 1993 1992 1991
- ------------------------------------------------------------------------------
Sales $5,110,270 $4,707,396 $4,168,840 $3,922,054
Cost of Sales 4,149,050 3,796,539 3,390,343 3,147,475
- ------------------------------------------------------------------------------
Gross Margin 961,220 910,857 778,497 774,579
Operating Expenses 766,028 535,315 446,825 441,379
Interest Expense 86,063 72,811 76,887 95,459
Other Expense (Income) (9,488) (6,904) (6,254) (4,782)
- ------------------------------------------------------------------------------
Income Before Taxes on Income 118,617 309,635 261,039 242,523
Provision for Income Taxes 120,745 129,301 100,505 97,025
- ------------------------------------------------------------------------------
Net Income (Loss) $ (2,128) $ 180,334 $ 160,534 $ 145,498
- ------------------------------------------------------------------------------
Earnings Per Share Before
Special Charges $ 1.37 $ 1.22 $ 1.16 $ 1.05
Special Charges Per Share $ (1.38)
Earnings (Loss) Per Share $ (0.01) $ 1.22 $ 1.16 $ 1.05
Dividends Per Share:
Class A $ .0700 $ .0400 $ .0400 $ .0300
Class B $ .0583 $ .0333 $ .0333 $ .0250
- ------------------------------------------------------------------------------
At Fiscal Year End
- ------------------------------------------------------------------------------
Total Assets $3,668,000 $3,253,504 $2,617,679 $2,645,751
Net Property, Plant
and Equipment 1,609,997 1,435,298 1,142,187 1,161,952
Capital Expenditures 232,108 225,305 107,990 213,576
Working Capital 721,484 285,050 214,070 111,930
Long-Term Debt 1,381,481 920,465 726,515 845,914
Shareholders' Equity 1,289,423 1,360,746 980,189 822,491
Book Value Per Share $ 8.88 $ 9.24 $ 7.13 $ 5.99
- ------------------------------------------------------------------------------
Ratios
- ------------------------------------------------------------------------------
Current 233.66% 154.12% 145.96% 120.35%
Long-Term Debt
to Capitalization 51.72% 40.35% 42.57% 50.70%
Gross Margin 18.81% 19.35% 18.67% 19.75%
Return on Sales 3.97%* 3.83% 3.85% 3.71%
Annual Sales Growth 8.56% 12.92% 6.29% 2.53%
Five Year Compounded
Annual Sales Growth 15.02% 19.45% 18.48% 21.13%
Return on Average
Quarterly Equity 14.08%* 14.65% 17.92% 19.76%
Five Year Return on
Average Quarterly Equity 16.73%* 18.60% 21.34% 23.48%
- ------------------------------------------------------------------------------
</TABLE>
* Before special charges.
75 (20)
<PAGE>
<TABLE>
<C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------
1990 1989 1988 1987 1986 1985 1984
- ------------------------------------------------------------------------------
$3,825,274 $2,538,244 $1,935,960 $1,785,969 $1,503,719 $1,135,712 $750,112
3,081,739 2,056,085 1,627,598 1,483,004 1,271,928 954,425 651,901
- ------------------------------------------------------------------------------
743,535 482,159 308,362 302,965 231,791 181,287 98,211
423,422 271,496 183,985 156,773 116,639 92,264 54,954
128,561 45,001 19,490 22,925 20,648 19,446 11,029
(8,517) 2,117 484 59 (3,410) (591) (452)
- ------------------------------------------------------------------------------
200,069 163,545 104,403 123,208 97,914 70,168 32,680
80,054 62,965 22,969 55,444 47,625 35,337 14,516
- ------------------------------------------------------------------------------
$ 120,015 $ 100,580 $ 81,434 $ 67,764 $ 50,289 $ 34,831 $ 18,164
- ------------------------------------------------------------------------------
$ .90 $ .78 $ .64 $ .53 $ .39 $ .29 $ .16
$ .90 $ .78 $ .64 $ .53 $ .39 $ .29 $ .16
$ .0200 $ .0200 $ .0200 $ .0185 $ .0117 $ .0077 $ .0053
$ .0165 $ .0165 $ .0165 $ .0125 N/A N/A N/A
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
$2,501,062 $2,586,080 $ 889,095 $ 806,772 $ 760,675 $ 471,470 $298,172
1,071,116 1,020,756 430,025 415,855 347,910 226,426 129,619
163,846 128,891 86,279 132,855 117,537 56,625 36,377
102,697 279,940 254,262 71,205 66,589 44,370 40,500
950,407 1,319,385 205,831 211,283 211,888 118,564 87,254
662,988 447,720 341,360 269,462 203,631 154,721 84,299
$ 4.85 $ 3.46 $ 2.67 $ 2.10 $ 1.59 $ 1.21 $ .72
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
121.26% 159.60% 240.28% 123.11% 120.08% 123.23% 133.59%
58.91% 74.66% 37.62% 43.95% 50.99% 43.38% 50.86%
19.44% 19.00% 15.93% 16.96% 15.41% 15.96% 13.09%
3.14% 3.96% 4.21% 3.79% 3.34% 3.07% 2.42%
50.71% 31.11% 8.40% 18.77% 32.40% 51.41% 24.29%
27.49% 27.61% 26.25% 26.15% 24.55% 23.81% 14.44%
22.92% 25.95% 26.77% 28.77% 28.27% 30.49% 24.48%
25.64% 27.43% 27.77% 27.22% 25.59% 21.50% 15.18%
- ------------------------------------------------------------------------------
76 (21)
<PAGE>
Management Discussion and Analysis
Tyson Foods, Inc.
ACQUISITIONS
On January 6, 1994, Tyson Foods, Inc. (the Company) acquired Gorges
Foodservice, Inc.(Gorges) and certain related assets. Gorges is a beef
further-processing company with annual sales of approximately $55 million. On
April 19, 1994, the Company increased its 18% ownership interest to 50.1% in
Trasgo, S.A. de C.V.(Trasgo). With annual sales of approximately $140
million, Trasgo is the third largest poultry producer and processor in
Mexico, serving both retail and foodservice markets. Effective July 3, 1994,
the Company acquired certain assets of Culinary Foods, Inc., a manufacturer
and processor of value-added specialty frozen foods with annual sales of
approximately $70 million. On August 18, 1994, the Company increased its 50%
ownership interest to 100% in Cobb-Vantress, Inc., one of the world's leading
suppliers of breeding stock to the broiler industry with annual sales of
approximately $35 million, excluding sales to Tyson. These transactions have
been accounted for as purchases, and the results of operations for these
entities have been included in the Company's consolidated results of
operations since the acquisition dates, but are not included in the results
of operations for fiscal 1993 and prior years. These factors should be
considered when making comparisons to fiscal 1993.
In the first quarter of fiscal 1993, the Company acquired Arctic Alaska
Fisheries Corporation (Arctic), a seafood company; certain assets of Oscar
Mayer Foods Corporation known as Louis Kemp Seafood Company (Louis Kemp), a
seafood further-processing company; a pork processing plant in Marshall,
Missouri; and Brandywine Foods, Inc. (Brandywine), a poultry further-
processing company. The results of operations of these acquisitions and
purchases are included in the Company's results of operations from the
acquisition dates, but are not included in the results of operations for
fiscal 1992 and prior years. These factors should be considered when making
comparisons to fiscal 1992.
SPECIAL CHARGES
During the third quarter of 1994 the Company recorded special charges for the
excess of investments over net assets acquired totaling approximately $191
million plus an additional $23 million for impaired long-lived assets of
Arctic, a wholly-owned subsidiary. The after-tax impact of these special
charges was approximately $205 million or $1.38 per share. Arctic has
consistently performed below pre-acquisition expectations. The Company's
management has attempted to open marketing and distribution channels for this
business, initiated cost reduction and efficiency measures, and explored
global expansion opportunities. Competition for the allowable resource of
fish in the waters of the Pacific Northwest has become very intense in the
past few years. More vessels with greater production capacities are now
competing for the limited quotas set by government regulatory agencies.
Allocations toward onshore processing have created a competitive disadvantage
for Arctic due to its significant at-sea processing capabilities. Global
expansion has failed to materialize in spite of extensive management efforts.
Market prices which had risen significantly during the two years prior to
acquisition have fallen back to more modest levels. These conditions have led
to shorter fishing seasons, less production per vessel, significant excess
production capacity and continuing losses. After continued evaluation of
business opportunities for Arctic, management has concluded that there is
permanent impairment of the carrying value of Arctic's intangible assets and
certain other long-lived assets. See Notes 1 and 2 of Notes to Consolidated
Financial Statements.
77 (22)
<PAGE>
RESULTS OF OPERATIONS
The table of changes in results of operations shows dollar and percent
changes in the components of operating results for the past two fiscal years.
The Company's accounting cycle resulted in a 52 week year for fiscal 1994 and
1993, compared to a 53 week year for fiscal 1992. The following discussion
relates to the table and the graphs presented.
</TABLE>
<TABLE>
<CAPTION>
(In thousands except per share data)
Changes in Results of Operations 1994 vs. 1993 1993 vs. 1992
- -------------------------------------------------------------------------------
$ Increase $ Increase
(Decrease) % Change (Decrease) % Change
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 402,874 8.6 $538,556 12.9
Cost of Sales 352,511 9.3 406,196 12.0
Operating Expenses 230,713 43.1 88,490 19.8
Other Expense (Income) 10,668 16.2 (4,726) (6.7)
Income Before Taxes on Income (191,018) (61.7) 48,596 18.6
Provision for Income Taxes (8,556) (6.6) 28,796 28.7
Net Income (Loss) (182,462) (101.2) 19,800 12.3
Earnings (Loss) Per Share $ (1.23) (100.8) $ 0.06 5.2
- -------------------------------------------------------------------------------
</TABLE>
Sales for fiscal 1994 increased 8.6% over fiscal 1993. Consumer poultry sales
accounted for a 6.6% increase in total sales. The increase in consumer
poultry sales was primarily attributable to a 7.7% increase in tonnage and a
1% increase in average sales prices. Trasgo accounted for 18.4% of the
increase in consumer poultry sales. Beef and pork sales increased fiscal 1994
total sales by 2.9%. The increase in beef and pork sales was due to the
acquisition during the year of a beef further-processing company and
additional production from a new pork processing facility which was not fully-
operational during fiscal 1993. Mexican food, prepared foods, live swine and
other sales as a group decreased sales for fiscal 1994 compared to fiscal
1993 by 0.8%. Seafood sales decreased fiscal 1994 total sales by 0.4% due to
a 5.1% decrease in tonnage and a 2.5% decrease in average sales prices.
Seafood sales volumes and profit margins continue to be adversely affected by
various factors including government fishing regulations, intense industry
competition and fluctuations in market prices. By-product sales to the animal
and pet food industry increased fiscal 1994 total sales by 0.3% compared to
fiscal 1993. Over the past five years total sales have grown at a compounded
annual rate of 15%.
Sales for fiscal 1993 increased 12.9% over fiscal 1992. Consumer poultry
sales accounted for a 4.2% increase in total sales. The increase in consumer
poultry sales was attributable to an 8.1% increase in tonnage partially
offset by a 2.6% decrease in average sales prices. By-product sales to the
animal and pet food industry increased fiscal 1993 total sales by 0.1%
compared to fiscal 1992. Beef, pork, Mexican food products and other
specialty items increased total fiscal 1993 sales by 3.5%. This change was
primarily due to a 40.7% increase in beef and pork sales tonnage compared to
the previous year which primarily resulted from the Company's new pork
processing facility in Marshall, Missouri. Mexican food sales tonnage
increased 25.3% and prices increased 0.8% in fiscal 1993 compared to fiscal
1992. Reduced numbers of live swine sales resulted in a decrease in fiscal
1993 total sales by 1%. This decrease was primarily the result of a portion
of the Company's live swine production being integrated with the Company's
new pork processing facility. Seafood sales increased fiscal 1993 total sales
78 (23)
<PAGE>
by 6.1% due to the acquisitions of Arctic and Louis Kemp.
The increase in cost of goods sold for 1994 over 1993 of 9.3% was mainly the
result of the increase in sales plus a 6% increase in feed ingredient costs
for live poultry. Although grain costs began decreasing during the third
quarter of 1994, past increases affected poultry, swine and Mexican food
production cost. The Company's strategy of adding value to poultry products
through further-processing offsets a portion of the impact of higher grain
cost. As a percent of sales, cost of sales increased to 81.2% in 1994
compared to 80.7% in 1993. The Company monitors and compares costs for
labor, raw material purchases, utilities and other expenses to companies
within the industry as part of its cost control measures and believes such
costs are at least within industry averages.
The increase in cost of goods sold for 1993 over 1992 of 12% was mainly the
result of increased sales volume and the acquisitions of Arctic, Louis Kemp
and Brandywine, partially offset by a 3.9% decrease in feed ingredient costs
for live poultry. While average feed costs for fiscal year 1993 were lower
than the previous year, costs for the fourth quarter increased over the
fourth quarter of 1992. This increase is attributable to the flooding in the
midwest during the summer of 1993 and its impact on the region's agriculture.
As a percent of sales, cost of sales decreased to 80.7% in 1993 compared to
81.3% in 1992.
Operating expenses increased 43.1% for 1994 over 1993. Special charges
related to Arctic accounted for 92.7% of this increase in operating expenses.
As a percent of sales, selling expense decreased to 8.3% in 1994 compared to
8.4% in 1993. Selling expense decreased primarily due to decreased sales
promotional and advertising expenditures offset slightly by increased
expenses related to Trasgo. Costs incurred in connection with the sale of
accounts receivable, which are classified as general and administrative
expense, were $1.4 million in 1994 compared to $9.6 million in 1993. This
decrease was due to the discontinuance of the sale of accounts receivable.
Certain other administrative costs decreased compared to 1993 due to cost
control and administrative initiatives instituted by management. As a percent
of sales, general and administrative expense was 1.9% in 1994 compared to
2.3% in 1993, and amortization expense was 0.6% in 1994 compared to 0.7% in
1993.
Operating expenses increased 19.8% for 1993 over 1992. As a percent of sales,
selling expense increased to 8.4% in 1993 compared to 7.7% in 1992. Selling
expense increased due primarily to increases in promotional, storage and
transportation expenses. Costs incurred in connection with the sale of
accounts receivable, which are classified as general and administrative
expense, were $9.6 million in 1993 compared to $9.3 million in 1992. This
increase was primarily a result of an increase in the amount of accounts
receivable sold which were partially offset by lower program costs. As a
percent of sales, general and administrative expense was 2.3% in both 1993
and 1992, and amortization expense was 0.7% in 1993 and 1992.
Interest expense increased 18.2% in 1994 compared to 1993. Short-term
interest rates were lower compared to 1993, due to market conditions and the
Company's use of less costly borrowing alternatives which lowered the
weighted average interest rate of all Company debt in 1994 compared to 1993.
These lower rates were offset by a higher level of borrowing due to the
discontinuance of the sale of accounts receivable, as the Company's average
indebtedness increased 28.7% compared to 1993. As a percent of sales,
interest expense increased to 1.7% in 1994 compared to 1.5% in 1993. The
average interest rate on the Company's total debt for fiscal year 1994 was
6.6% compared to 7.2% for 1993 fiscal year.
79 (24)
<PAGE>
Interest expense decreased 5.3% in 1993 from 1992 mainly from lower overall
interest rates in 1993 as compared to 1992. This decrease in interest expense
was partially offset by the increase in expense from increased debt as a
result of the existing debt of Arctic. As a percent of sales, interest
expense decreased to 1.5% in 1993 compared to 1.8% in 1992. The average
interest rate on the Company's total debt for 1993 fiscal year was 7.2%
compared to 8.5% for 1992 fiscal year.
The effective tax rate for 1994 was 101.8% due to the non-deductibility of
special charges related to Arctic's excess of investments over net assets
acquired. Without special charges, the effective tax rate would have been 39%
for fiscal 1994 compared to 41.8% for fiscal 1993. The federal income tax
rate increase in 1993 resulted in a one-time increase in deferred income
taxes of $9 million. The effective tax rate for fiscal 1993 compared to
fiscal 1992 also included $1.6 million of additional taxes due to the tax
rate increase. The effective tax rate generally reflects the statutory
federal income tax rate plus the impact of the nondeductibility of
amortization of excess of investments over net assets acquired.
Return on total average assets for 1994 was (0.06%) compared to 5.8% for
1993, with a five year average of 4.2%. The return on total average assets
for 1994 would have been 5.7% without special charges. Because of the
special charges related to Arctic, return on average shareholders' equity for
1994 was (0.16%) compared to 14.7% for 1993. Also due to special charges,
the five-year return on average shareholders' equity has been reduced to
12.8%. Excluding special charges, return on average shareholders' equity
would have been 14.1% for the year and 16.7% for the five years. Return on
shareholders' equity based on year end shareholders' equity excluding special
charges for the year would yield a return of 15.7%.
LIQUIDITY AND CAPITAL RESOURCES
During fiscal 1994, cash flow, working capital, noncurrent assets and long-
term debt were all impacted by various acquisitions. These factors should be
considered when analyzing the Company's financial condition.
In fiscal 1994, net cash of $50.3 million was provided by operating
activities. This was a decrease of $258.1 million from 1993. The decrease in
cash flow from operations was primarily attributable to an increase in
accounts receivable which resulted from management's decision to discontinue
an accounts receivable sale agreement. Finished inventories have increased
from 1993 fiscal year end due to servicing the sales growth base which
includes acquisitions during the fiscal year, as well as increased operations
in pork processing and shifts in product mix. Financing activities provided
net cash of $265.5 million, primarily due to additional long-term debt
incurred from the issuance of commercial paper. The Company used funds
generated from operating and financing activities to fund additions to
property, plant and equipment. In addition to the aforementioned
acquisitions, the expenditures for property, plant and equipment were related
to new equipment and upgrading facilities to take advantage of marketing
opportunities as well as the Company's continuing effort to increase
efficiencies, reduce overall cost and meet or exceed environmental laws and
regulations.
At 1994 fiscal year end, working capital was $721.5 million compared to
$285.1 million at the end of 1993, an increase of $436.4 million. The current
ratio for 1994 is 2.34 to 1 compared to 1.54 to 1 for 1993. Working capital
and the current ratio have increased from 1993 mainly due to management's
decision to discontinue the sale of accounts receivable and increase
commercial paper borrowings to achieve lower financing costs. The Company's
foreseeable cash needs for operations and capital expenditures will continue
to be met through cash flows from operations and borrowings supported by
existing credit facilities and additional credit facilities which are
available to the Company.
80 (25)
<PAGE>
Long-term debt at fiscal year end was $1.4 billion, an increase of
$461 million from fiscal 1993 primarily due to the Company's discontinuance
of the $275 million accounts receivable sale agreement and the financing of
this amount through the sale of commercial paper. The commercial paper
program was initiated in July 1993, following receipt by the Company of an "A-
2" rating from Standard & Poor's Corporation and a "P-2" rating from Moody's
Investors Service. The Company's two unsecured revolving credit facilities
provide up to $1.5 billion of financing which supports the commercial paper
program. At October 1, 1994, $909.2 million was outstanding under or
supported by the $1.5 billion financing facilities consisting of
$852.2 million of commercial paper and $57 million drawn under the revolving
credit facilities. Additional outstanding debt at October 1, 1994, consisted
of $366 million of institutional notes, $30 million of bank notes and
$76.3 million of other indebtedness such as industrial revenue bonds.
Additionally, at October 1, 1994, the Company had $457.9 million in unused,
unsecured lines of credit.
The revolving credit agreements and institutional notes contain various
covenants, the more restrictive of which require maintenance of a minimum net
worth, current ratio, cash flow coverage of interest and fixed charges and a
maximum total debt to capitalization ratio. The Company is in compliance with
these covenants.
Shareholders' equity decreased 5.2% during 1994 but has grown at a compounded
annual rate of 23.6% over the past five years, inclusive of $214 million of
special charges in 1994, $205.2 million of Class A stock issued for Arctic in
1993 and $89.6 million received from the sale of Class A stock during 1990.
During 1994, the Company initiated an open market stock repurchase program
which authorized the purchase of up to 15 million shares of the Company's
Class A common stock. The Company intends to utilize shares repurchased to
fund employee benefit plans and increase treasury stock. No timetable has
been set for completion of the repurchase program. As of October 1, 1994 the
Company had purchased approximately 2.5 million shares under the repurchase
program.
Total assets have increased by $1.1 billion or 41.8% over the past five years
inclusive of acquisitions. Additions, net of dispositions, to total
property, plant and equipment for the last five years were $1.2 billion
including acquisitions, an increase of 85.2% over the last five years. At
fiscal year end, the Company had construction projects in progress that will
require approximately $151.5 million to complete. In January 1994, the
Company announced plans to add four new poultry-processing complexes to be
completed over the next three years. This increase will enable the Company
to meet anticipated demand over the next three years. The Company has
already announced that the first of the four complexes is being built and
should be ready to start production in mid-1995. The Company is also
constructing another plant for production of Mexican food products. Funding
for these expenditures will be provided by cash from operations or additional
borrowings which will be subjected to debt covenants discussed in Note 5 of
Notes to Consolidated Financial Statements.
ENVIRONMENTAL MATTERS
Before environmental issues were at the forefront of the nation's concerns,
the Company had many environmentally responsible practices. Consequently,
management believes that they have no incidence of environmental
contamination or damages requiring material expenditures on the Company's
part. The Company has a strong financial commitment to clean water. During
fiscal 1994, the Company invested approximately $37.7 million in water
quality, including both capital outlays totaling $6.7 million to build and
upgrade facilities and an additional $31 million for day-to-day operations.
81 (26)
<PAGE>
Tyson Foods, Inc.
Consolidated Statements of Operations
Three Years Ended October 1, 1994
<TABLE>
<CAPTION>
(In thousands except per share data)
- -----------------------------------------------------------------------------
1994 1993 1992
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $5,110,270 $4,707,396 $4,168,840
Cost of Sales 4,149,050 3,796,539 3,390,343
- -----------------------------------------------------------------------------
961,220 910,857 778,497
- -----------------------------------------------------------------------------
Operating Expenses:
Selling 426,495 397,361 322,221
General and administrative 95,895 107,201 95,102
Amortization 29,714 30,753 29,502
Special charges 213,924
- -----------------------------------------------------------------------------
766,028 535,315 446,825
- -----------------------------------------------------------------------------
Operating Income 195,192 375,542 331,672
Other Expense (Income):
Interest 86,063 72,811 76,887
Other (9,488) (6,904) (6,254)
- -----------------------------------------------------------------------------
76,575 65,907 70,633
- -----------------------------------------------------------------------------
Income Before Taxes on Income 118,617 309,635 261,039
Provision for Income Taxes 120,745 129,301 100,505
- -----------------------------------------------------------------------------
Net Income (Loss) $ (2,128) $ 180,334 $ 160,534
- -----------------------------------------------------------------------------
Earnings (Loss) Per Share $ (0.01) $ 1.22 $ 1.16
Average Shares Outstanding 147,778 148,341 138,392
- -----------------------------------------------------------------------------
</TABLE>
See accompanying notes.
82 (27)
<PAGE>
Tyson Foods, Inc.
Consolidated Balance Sheets
October 1, 1994 and October 2, 1993
<TABLE>
<CAPTION>
(In thousands except per share data)
<S> <C> <C>
- ----------------------------------------------------------------------------
Assets 1994 1993
- ----------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 27,020 $ 21,547
Accounts receivable 444,216 104,767
Inventories 754,190 675,205
Other current assets 35,841 10,236
- ----------------------------------------------------------------------------
Total Current Assets 1,261,267 811,755
Property, Plant and Equipment, at Cost:
Land 56,128 40,144
Buildings and leasehold improvements 676,120 562,526
Machinery and equipment 1,452,156 1,277,956
Vessels 111,744 119,654
Land improvements and other 70,545 62,669
Buildings and equipment under construction 143,150 123,195
- ----------------------------------------------------------------------------
2,509,843 2,186,144
Less accumulated depreciation 899,846 750,846
- ----------------------------------------------------------------------------
Net Property, Plant and Equipment 1,609,997 1,435,298
Excess of Investments over Net Assets Acquired 741,626 924,432
Investments and Other Assets 55,110 82,019
- ----------------------------------------------------------------------------
Total Assets $3,668,000 $3,253,504
- ----------------------------------------------------------------------------
</TABLE>
83 (28)
<PAGE>
<TABLE>
<CAPTION>
(In thousands except per share data)
<S> <C> <C>
- ------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY 1994 1993
- ------------------------------------------------------------------------------
Current Liabilities:
Notes payable $ 49,360 $ 29,800
Current portion of long-term debt 24,177 73,987
Trade accounts payable 258,589 205,592
Accrued salaries and wages 71,794 80,518
Federal and state income taxes payable 19,735 17,778
Accrued interest payable 4,253 5,744
Other current liabilities 111,875 113,286
- ------------------------------------------------------------------------------
Total Current Liabilities 539,783 526,705
Long-Term Debt 1,381,481 920,465
Deferred Income Taxes 440,546 445,588
Minority Interests in Subsidiaries 16,767
Shareholders' Equity:
Common stock ($.10 par value):
Class A-Authorized 900,000 shares; issued
79,687 shares in 1994 and 79,685 shares in 1993 7,969 7,968
Class B-Authorized 900,000 shares; issued
68,455 shares in 1994 and in 1993 6,846 6,846
Capital in excess of par value 391,358 392,693
Retained earnings 953,840 965,493
Currency translation adjustment 1,180
- ------------------------------------------------------------------------------
1,361,193 1,373,000
Less treasury stock-2,941 shares in 1994
and 872 shares in 1993, at cost 68,700 11,359
Less unamortized deferred compensation 3,070 895
- ------------------------------------------------------------------------------
Total Shareholders' Equity 1,289,423 1,360,746
- ------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $3,668,000 $3,253,504
- ------------------------------------------------------------------------------
</TABLE>
See accompanying notes
84 (29)
<PAGE>
Tyson Foods, Inc.
Consolidated Statements of Shareholders' Equity
Three years ended October 1, 1994
(In thousands except per share data)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common Stock
--------------------------------
Class A Class B Capital in
-------------- -------------- Excess of
Shares Amount Shares Amount Par Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance-September 28, 1991 70,137 $7,014 68,460 $6,846 $186,436
Purchase of treasury shares
Forfeiture of restricted shares
Exercise of stock options 962
Exchange of Class B for Class A 2 (2)
Net income
Amortization of deferred
compensation
Cash dividends paid:
($.04 per share, Class A;
$.033 per share, Class B)
- -------------------------------------------------------------------------------
Balance-October 3, 1992 70,139 7,014 68,458 6,846 187,398
Purchase of treasury shares
Forfeiture of restricted shares
Stock issued:
Exercise of options 1,060
Business acquisitions 9,543 954 204,220
Other 15
Exchange of Class B for Class A 3 (3)
Net income
Amortization of deferred
compensation
Cash dividends paid:
($.04 per share, Class A;
$.033 per share, Class B)
- -------------------------------------------------------------------------------
Balance-October 2, 1993 79,685 7,968 68,455 6,846 392,693
Purchase of treasury shares
Shares awarded for employee
stock plans
Forfeiture of restricted shares
Stock issued:
Exercise of options (1,363)
Other 2 1 28
Net loss
Amortization of deferred
compensation
Currency translation adjustment
Cash dividends paid:
($.07 per share, Class A;
$.0583 per share, Class B)
- -------------------------------------------------------------------------------
Balance-October 1, 1994 79,687 $7,969 68,455 $6,846 $391,358
- -------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
85 (30)
<PAGE>
<TABLE>
<C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
Currency Treasury Stock Unamortized
Retained Translation ------------------- Deferred
Earnings Adjustment Shares Amount Compensation Total
- -----------------------------------------------------------------------------
$635,097 1,217 $ (9,392) $(3,510) $ 822,491
65 (1,231) (1,231)
16 (195) 195
(198) 1,069 2,031
160,534 160,534
1,405 1,405
(5,041) (5,041)
- -----------------------------------------------------------------------------
790,590 1,100 (9,749) (1,910) 980,189
184 (4,140) (4,140)
5 (60) 60
(416) 2,582 3,642
205,174
(1) 8 23
180,334 180,334
955 955
(5,431) (5,431)
- -----------------------------------------------------------------------------
965,493 872 (11,359) (895) 1,360,746
2,797 (66,901) (66,901)
(130) 3,120 (3,120)
2 (25) 25
(600) 6,465 5,102
29
(2,128) (2,128)
920 920
1,180 1,180
(9,525) (9,525)
- -----------------------------------------------------------------------------
$953,840 $1,180 2,941 $(68,700) $(3,070) $1,289,423
- -----------------------------------------------------------------------------
</TABLE>
86 (31)
<PAGE>
Tyson Foods, Inc.
Consolidated Statements of Cash Flows
Three Years Ended October 1, 1994
(In thousands)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (2,128) $180,334 $160,534
Adjustments to reconcile net income (loss)
to cash provided by operating activities:
Depreciation 158,611 145,756 119,363
Amortization 29,714 30,753 29,502
Special charges 213,924
Deferred income taxes (2,370) 5,378 17,883
Loss on dispositions of property
and equipment 2,800 695 218
(Increase) decrease in accounts receivable (307,400) 35,344 (25,259)
(Increase) decrease in inventories (34,000) (66,909) 10,606
Increase (decrease) in trade accounts
payable 35,595 (41,001) 7,414
Net change in other current assets and
liabilities (44,479) 18,052 (54,381)
- -------------------------------------------------------------------------------
Cash Provided by Operating Activities 50,267 308,402 265,880
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash paid for acquisitions (82,893) (43,377)
Additions to property, plant and equipment (232,108) (225,305) (107,990)
Proceeds from sale of property, plant and
equipment 8,502 7,387 6,615
Net change in other assets and liabilities (3,750) (41,393) (3,309)
- -------------------------------------------------------------------------------
Cash Used for Investing Activities (310,249) (302,688) (104,684)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in notes payable 3,462 (29,200) (10,000)
Proceeds from long-term debt 412,267 977,421 131,941
Repayments of long-term debt (81,079) (954,497) (278,694)
Purchase of treasury shares (66,901) (4,140) (1,231)
Dividends and other (2,294) (811) (1,605)
- -------------------------------------------------------------------------------
Cash Provided by (Used for) Financing
Activities 265,455 (11,227) (159,589)
- -------------------------------------------------------------------------------
Increase (Decrease) in Cash 5,473 (5,513) 1,607
Cash and Cash Equivalents at Beginning of 21,547 27,060 25,453
Year
- -------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 27,020 $ 21,547 $ 27,060
- -------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
87 (32)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Tyson Foods, Inc.
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of Tyson Foods, Inc. and its subsidiaries (the Company or
Tyson). All significant intercompany accounts and transactions have been
eliminated.
FISCAL YEAR: The Company utilizes a 52 or 53 week accounting period which
ends on the Saturday closest to September 30.
FOREIGN CURRENCY TRANSLATION: All foreign affiliates have a foreign
functional currency. Assets and liabilities of the Company's foreign
affiliates are translated at current exchange rates, while income and
expenses are translated at average rates for the period. Translation gains
and losses are reported as a component of shareholders' equity.
CASH AND CASH EQUIVALENTS: Cash equivalents consist of investments in short-
term, highly-liquid securities having original maturities of three months or
less made as part of the Company's cash management activity. The carrying
values of these assets approximate their fair values. As a result of the
Company's cash management system, checks issued but not presented to the
banks for payment may create negative cash balances. Checks outstanding in
excess of related cash balances totaling approximately $117.6 million at
October 1, 1994 and $96.9 million at October 2, 1993, are included in trade
accounts payable, accrued salaries and wages and other current liabilities.
INVENTORIES: Inventories, valued at the lower of cost (first-in, first-out)
or market, consist of the following:
<TABLE>
<CAPTION>
(in thousands)
- ---------------------------------------------------------------------------
1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C>
Dressed and further-processed products $346,846 $299,388
Live poultry and hogs 255,904 207,848
Seafood related products 36,494 53,064
Hatchery eggs and feed 44,048 40,110
Supplies 70,898 74,795
- ---------------------------------------------------------------------------
$754,190 $675,205
- ---------------------------------------------------------------------------
</TABLE>
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION: Depreciation is provided
primarily by the straight-line method using estimated lives for buildings and
leasehold improvements of 10 to 39 years; machinery and equipment of 3 to 12
years; vessels of 16 to 30 years; and other of 3 to 20 years. Depreciation
expense in 1994, 1993 and 1992 was $158.6 million, $145.8 million and $119.4
million, respectively.
The Company capitalized interest costs of $2 million in 1994, $1.6 million in
1993 and $895 thousand in 1992 as part of the cost of major asset
construction projects. Approximately $151.5 million will be required to
complete construction projects in progress at October 1, 1994.
88 (33)
<PAGE>
EXCESS OF INVESTMENTS OVER NET ASSETS ACQUIRED: Costs in excess of net
assets of businesses purchased are amortized on a straight-line basis over
periods ranging from 15 to 40 years. The carrying value of excess of
investments over net assets acquired is reviewed at each balance sheet date
to determine if facts and circumstances suggest that it may be impaired. If
this review indicates that the excess of investments over net assets acquired
may not be recoverable, an estimate of the undiscounted cash flows of the
entity acquired is prepared and the Company's carrying value of excess of
investments over net assets acquired will be reduced by the estimated
shortfall of cash flows. At October 1, 1994 and October 2, 1993, the
accumulated amortization of excess of investments over net assets acquired
was $106.7 million and $90.4 million, respectively.
CAPITAL STOCK: Holders of Class B stock may convert such stock into Class A
stock on a share for share basis. The holders of Class B stock are entitled
to ten votes per share while the holders of Class A stock are entitled to one
vote per share on matters submitted to shareholders for approval. Cash
dividends cannot be paid to the holders of Class B stock unless they are
simultaneously paid to the holders of Class A stock, and the per share amount
of the cash dividend paid to the holders of Class B stock cannot exceed 90%
of the cash dividend simultaneously paid to the holders of Class A stock.
During 1994, the Company initiated an open market stock repurchase program
which authorized the purchase of up to 15 million shares of the Company's
Class A common stock. The Company intends to utilize shares repurchased to
fund employee benefit plans and increase treasury stock. No timetable has been
set for completion of the repurchase program. As of October 1, 1994 the Company
had purchased approximately 2.5 million shares under the repurchase program.
EARNINGS PER SHARE: Earnings per share is computed by dividing net income by
the weighted average number of shares and share equivalents outstanding
during each year.
INCOME TAXES: The Company follows the liability method in accounting for
deferred income taxes. The liability method provides that deferred tax
liabilities are recorded at currently enacted tax rates based on the
difference between the tax basis of assets and liabilities and their carrying
amounts for financial reporting purposes, referred to as temporary
differences.
NOTE 2: ACQUISITIONS AND SPECIAL CHARGES
On January 6, 1994, the Company acquired Gorges Foodservice, Inc. (Gorges)
and certain related assets. Gorges is a beef further-processing company with
annual sales of approximately $55 million. On April 19, 1994, the Company
increased its 18% ownership interest to 50.1% in Trasgo, S.A. de
C.V.(Trasgo). With annual sales of approximately $140 million, Trasgo is the
third largest poultry producer and processor in Mexico, serving both retail
and foodservice markets. Effective July 3, 1994, the Company acquired
certain assets of Culinary Foods, Inc., a manufacturer and processor of value-
added specialty frozen foods with annual sales of approximately $70 million.
On August 18, 1994, the Company increased its 50% ownership interest to 100%
in Cobb-Vantress, Inc., one of the world's leading suppliers of breeding
stock to the broiler industry with annual sales of approximately $35 million,
excluding sales to Tyson. These transactions have been accounted for as
purchases, and the results of operations for these acquisitions have been
included in the Company's consolidated results of operations since the
acquisition dates. Pro forma operating results are not presented as they
would not differ materially from actual results for 1994 and 1993.
89 (34)
<PAGE>
On October 5, 1992, the Company acquired Arctic Alaska Fisheries Corporation
(Arctic), a seafood company. Additionally, on December 4, 1992, the Company
acquired Brandywine Foods, Inc. (Brandywine), a poultry further-processing
company. The Company issued stock and paid cash for a total of $248.6 million
for Arctic and Brandywine which were accounted for as purchases. The
Company's consolidated results of operations include the operations of Arctic
and Brandywine since the acquisition dates. The following unaudited pro
forma information shows the results of the Company's operations as though the
purchases of Arctic and Brandywine had been made at the beginning of fiscal
year 1992-sales of $4.4 billion, net income of $155.8 million and earnings
per share of $1.05. The unaudited pro forma results are not necessarily
indicative of the actual results of operations that would have occurred had
the purchases actually been made at the beginning of fiscal year 1992. Pro
forma results for 1993 would be approximately the same as 1993 actual
results, since the acquisitions were made at or near the beginning of fiscal
1993.
During the third quarter of fiscal 1994, the Company recorded special charges
for the excess of investments over net assets acquired totaling approximately
$191 million plus an additional $23 million for impaired long-lived assets of
Arctic. The impact of these special charges after-tax was approximately $205
million or $1.38 per share.
Government restrictions on fishing, intense industry competition and
fluctuations in market prices have continued to adversely affect Arctic.
Based on Arctic's continued performance below pre-acquisition expectations,
the Company made an impairment evaluation and determined that Arctic's
balance of excess of investments over net assets acquired would not be
recovered.
The methodology used to assess the recoverability of Arctic's excess of
investments over net assets acquired involved projecting aggregate cash
flows. The Company's projection assumes that Arctic's sales volumes and
prices will be comparable to the results for 1994. Due to government
restrictions on fishing and the addition into the fishing waters of the North
Pacific of new higher production capacity vessels by competitors, the Company
did not assume any increases in volume for the projected cash flows. The
aggregate undiscounted value of these projected cash flows are sufficient
only to recover a portion of the carrying value of the tangible net assets of
Arctic and would not provide any recovery of the $191 million of excess of
investments over net assets acquired related to Arctic. Additionally, the
Company's projection indicated that approximately $23 million of Arctic's
long-lived assets were impaired. The Company believes that its projection,
based on recent historic trends and current market conditions, is its best
estimate of Arctic's future performance, although there can be no assurances
that such estimates will be indicative of future results, which ultimately
may be less than or greater than these estimates.
NOTE 3: FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATION
Off-Balance Sheet Risk: The Company has entered into foreign exchange forward
contracts to hedge some of its foreign currency exposure. Foreign exchange
forward contracts are legal agreements between two parties to purchase and
sell a foreign currency, for a price specified at the contract date, with
delivery and settlement in the future. The Company uses such contracts to
hedge exposure to changes in foreign currency exchange rates associated with
certain assets and obligations denominated in foreign currency. Gains and
losses on these contracts are recognized concurrently with the transaction
gains and losses from the associated exposures.
90 (35)
<PAGE>
At October 1, 1994, the Company had outstanding forward exchange contracts,
maturing on October 31, 1994, to sell $9.1 million of foreign currency
(principally Japanese yen). These forward exchange contracts hedge balance
sheet and operating income currency exposures.
Concentrations of Credit Risk: 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. At October 1, 1994, the
Company does not have significant credit risk concentrations. No single group
or customer represents greater than 10% of total accounts receivable.
At October 2, 1993, the Company had an asset sale agreement with an unrelated
financial institution which allowed the Company to sell up to $275 million of
accounts receivable. As sold accounts receivable were collected, new
qualifying accounts were substituted such that the outstanding balance
remained at $275 million. In November 1993, the Company discontinued this
asset sale agreement due to lower financing costs available through the sale
of commercial paper, which resulted in an increase in accounts receivable of
$275 million.
NOTE 4: INCOME TAXES
At the beginning of fiscal 1994, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109).
This statement supersedes Statement of Financial Accounting Standards No. 96
(SFAS No. 96), the method previously followed by the Company. Both SFAS No.
109 and SFAS No. 96 require the liability method be used to account for
deferred income taxes. The liability method provides that deferred tax
liabilities are recorded at current tax rates based on the difference between
the tax basis of assets and liabilities and their carrying amounts for
financial reporting purposes referred to as temporary differences. The effect
of adoption of SFAS No. 109 did not affect the Company's financial position
or results of operations.
Detail of the provision for income taxes consists of:
<TABLE>
<S> <C> <C> <C>
(In thousands)
- ----------------------------------------------------------------------------
1994 1993 1992
- ----------------------------------------------------------------------------
Federal $107,413 $114,461 $ 88,838
State 13,332 14,840 11,667
- ----------------------------------------------------------------------------
$120,745 $129,301 $100,505
- ----------------------------------------------------------------------------
Current $123,115 $123,923 $ 82,622
Deferred (2,370) 5,378 17,883
- ----------------------------------------------------------------------------
$120,745 $129,301 $100,505
- ----------------------------------------------------------------------------
</TABLE>
91 (36)
<PAGE>
The reasons for the difference between the effective income tax rate and the
statutory U.S. federal income tax rate are as follows:
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
1994 1993 1992
- ---------------------------------------------------------------------------
U.S. federal income tax rate 35.0% 35.0% 34.0%
Special charges 62.6
Amortization of excess of investments
over net assets acquired 2.8 2.8 2.7
State income taxes 2.8 3.1 3.0
Effect of tax rate increase on deferred
income taxes 2.9
Other differences, net (1.4) (2.0) (1.2)
- ---------------------------------------------------------------------------
Effective income tax rate 101.8% 41.8% 38.5%
- ---------------------------------------------------------------------------
</TABLE>
Significant components of the Company's deferred tax liabilities as of
October 1, 1994 are as follows:
<TABLE>
<S> <C>
(In thousands)
Basis difference in property, plant and equipment $227,431
Suspended taxes from conversion to accrual method 150,162
Other 62,953
-----------
Total deferred tax liabilities $440,546
===========
</TABLE>
The Omnibus Budget Reconciliation Act of 1987 required family-owned farming
businesses to use the accrual method of accounting for tax purposes. Internal
Revenue Code Section 447(i) provides that if any family corporation is
required to change its method of accounting for any taxable year, such
corporation shall establish a suspense account in lieu of taking the
adjustments into taxable income. The suspense account, which represents the
initial catch-up adjustment to change from the cash to accrual method of
accounting, is not currently includable in the Company's taxable income and
any related income taxes are deferred. However, the deferred amount will be
included in taxable income if the business ceases to be family-owned or if
gross receipts from farming activities in future years drop below certain
1987 levels. A corporation is family-owned when at least 50 percent of the
total combined voting power of all classes of stock of the corporation are
owned by family members of the same family. Both of the deferral conditions
relative to ownership and gross receipts continue to be met by the Company.
The Company also believes that these conditions will continue to be met for
the foreseeable future.
92 (37)
<PAGE>
NOTE 5: LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<S> <C> <C> <C>
(In thousands)
- ---------------------------------------------------------------------------
Maturity 1994 1993
- ---------------------------------------------------------------------------
Commercial paper:
(4.91% effective rate at 10/1/94) 1999 $ 852,162 $497,245
Institutional notes:
10.33% notes 1996-1999 135,000 135,000
10.61% notes 1999-2001 125,000 125,000
10.75% notes 1995-1996 26,000 39,000
10.84% notes 2002-2006 50,000 50,000
11.375% notes 1996-2001 30,000 30,000
Revolving credit facility
(5.04% effective rate at 10/1/94) 1999 57,000
Bank loans (6.72%-7.22% effective rates at
10/1/94) 1999 30,000
Other various 76,319 44,220
- ---------------------------------------------------------------------------
$1,381,481 $920,465
- ---------------------------------------------------------------------------
</TABLE>
The Company has two unsecured revolving credit agreements totaling $1.5
billion which expire in June, 1999. These agreements support the Company's
commercial paper program which was initiated in July, 1993. At
October 1, 1994, $909.2 million was outstanding under the $1.5 billion
financing facilities. Additionally, at October 1, 1994, the Company had
$457.9 million in unused, unsecured lines of credit available.
Annual maturities of long-term debt for the five years subsequent to October
1, 1994 are: 1995-$24.2 million; 1996-$65.9 million; 1997-$65 million; 1998-
$51 million and 1999-$972.4 million.
The revolving credit agreements and institutional notes contain various
covenants, the more restrictive of which require maintenance of a minimum net
worth, current ratio, cash flow coverage of interest and fixed charges and a
maximum total debt-to-capitalization ratio.
The fair value of long-term debt is determined based upon quoted market
prices for the same or similar issues or on the Company's incremental
borrowing rate for debt of the same remaining maturities. At October 1, 1994,
the fair value of long-term debt was approximately $1.4 billion.
NOTE 6: RESTRICTED STOCK AND STOCK OPTIONS
In 1994, the Company awarded 130,000 restricted shares of Class A stock to
employees. The restrictions expire over periods ranging from ten to twenty-
six years. The unamortized portion is classified on the balance sheet as
deferred compensation. In 1989, the Company issued 615,912 restricted shares
of Class A stock to employees which are no longer restricted as to
transferability. In 1994, 1993 and 1992, restrictions were removed from
73,119 shares, 82,943 shares and 133,933 shares, respectively, and the
related unamortized deferred compensation was expensed.
93 (38)
<PAGE>
The Company has qualified (6 million shares authorized) and nonqualified (1.5
million shares authorized) stock option plans, both of which provide for the
granting of options for shares of Class A stock at a price not less than the
fair market value at the date of grant. The options generally become
exercisable ratably over five to eight years from the date of grant and must
be exercised within ten years of the grant date. Activity for the plans for
1994, 1993 and 1992 was as follows:
<TABLE>
<CAPTION>
(In thousands except per share data)
- ---------------------------------------------------------------------------
Option Price
Shares --------------------
Under Option Per Share Total
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding, September 28,1991 2,046 $7.50-11.94 $18,596
Exercised (198) 7.50-11.94 (2,031)
Canceled (61) 7.50-11.94 (507)
- ---------------------------------------------------------------------------
Outstanding, October 3, 1992 1,787 7.50-11.94 16,058
Exercised (416) 6.91-11.94 (3,642)
Canceled (85) 6.94-21.63 (928)
Granted 2,247 6.91-21.63 40,995
- ---------------------------------------------------------------------------
Outstanding, October 2, 1993 3,533 6.92-21.63 52,483
Exercised (600) 6.92-11.94 (5,102)
Canceled (156) 6.93-21.63 (3,007)
Granted 791 21.50 16,994
- ---------------------------------------------------------------------------
Outstanding, October 1, 1994 3,568 $7.19-21.63 $61,368
- ---------------------------------------------------------------------------
Exercisable, October 1, 1994 906
- ---------------------------------------------------------------------------
</TABLE>
The remainder of the options are exercisable ratably through April 2003.
NOTE 7: CONTINGENCIES AND COMMITMENTS
CONTINGENCIES: The Company is involved in various lawsuits and claims made by
third parties on an ongoing basis as a result of its day-to-day operations,
including the following two matters relating to Arctic Alaska Fisheries
Corporation (Arctic). In April 1994, after investigations beginning as early
as 1990, a Federal Grand Jury in Seattle, Washington indicted former
officers, directors and employees of Arctic as well as Arctic on criminal
charges stemming from the sinking of the fishing vessel Aleutian Enterprise
in 1990 and other matters relating to overall operation of Arctic. In
September 1994, the Federal Grand Jury issued superseding indictments against
the former officers, directors and employees as well as Arctic on
substantially identical criminal charges with two prior indictees being
dismissed. The factual allegations giving rise to the fifty-three (53) count
multiple indictments now pending in the United States District Court, Western
District of Washington at Seattle, occurred prior to the Company's
acquisition of Arctic on October 5, 1992. Conviction of the individuals, as
well as Arctic, carries penalties and fines ranging from a maximum fine or
penalty per count of $500,000 and 10 years in prison. The Company
anticipates that a trial of a portion of the defendants on the indictments
will begin in June of 1995. Also, on September 8, 1993, the State of Alaska,
after conducting investigations, filed a Complaint for Forfeiture and Damages
94 (39)
<PAGE>
alleging that certain Arctic vessels participated in the use of certain
fishing gear during 1990, 1991 and 1992. While management is not able at the
present time to determine the outcome of these matters, based upon
information currently available, management presently does not believe that
any of these lawsuits or claims by third parties will have a material adverse
effect on the Company's financial position.
OPERATING LEASES: The Company leases certain farms and other properties and
equipment for which the total rentals thereon approximated $29.6 million in
1994, $26.5 million in 1993, and $17.2 million in 1992. Most farm leases are
for a three year term and are renewable for a total of nine additional years.
The most significant obligations assumed under the terms of the leases are
the upkeep of the facilities and payment of insurance and property taxes.
LEASE COMMITMENTS: Minimum lease commitments under noncancelable leases at
October 1, 1994 total $79.3 million composed of $25 million for 1995,
$18.4 million for 1996, $12.4 million for 1997, $9.4 million for 1998,
$6.5 million for 1999 and $7.6 million for later years.
The Company assists certain of its swine and poultry growers in obtaining
financing for growout facilities by providing the growers with extended
growout contracts and conditional operation of the facilities should a grower
default under their growout or loan agreement.
Redeemable Preferred Stock: Trasgo has a class of manditorily redeemable
preferred stock, for which the redemption price is cumulative and determined
based upon "excess profits" in years from 1994 to 1999, as defined in the
shareholders agreement. This price cannot be reasonably estimated at this
time, but cannot exceed $29.5 million. Trasgo cannot pay dividends until all
of this preferred stock is redeemed. This redemption must take place by the
year 2000. This preferred stock is included in "minority interests in
subsidiaries" on the consolidated balance sheets.
NOTE 8: TRANSACTIONS WITH RELATED PARTIES
The Company has operating leases for farms, equipment and other facilities
with the Chairman of the Board of the Company and certain members of his
family, as well as a trust controlled by him, for rentals of $6.8 million in
1994, $6.4 million in 1993 and $5.7 million in 1992. Other facilities,
including a cold storage distribution facility, are also leased from other
officers and directors and the Company's profit sharing plan for rentals
totaling $6.7 million in 1994, $6.2 million in 1993 and $6.1 million in 1992.
The Company sold office facilities to the profit sharing plan for a cost of
$5.1 million in 1992.
Certain officers and directors are engaged in poultry and swine growout
operations with the Company whereby these individuals purchase animals, feed,
housing and other items to raise the animals to market weight. The total
value of these transactions amounted to $11.4 million in 1994, $11.3 million
in 1993 and $8.5 million in 1992.
95 (40)
<PAGE>
NOTE 9: BENEFIT PLANS
The Company has defined contribution retirement and incentive benefit
programs for various groups of Company personnel. Discretionary Company
contributions which are determined by the Board of Directors totaled
$21.7 million, $19.6 million and $17.9 million for the years ending 1994,
1993 and 1992, respectively.
In fiscal year 1992, the Company adopted Statement of Financial Accounting
Standards No. 106 (SFAS No. 106) "Employers' Accounting for Post-retirement
Benefits Other Than Pensions", which requires that the projected future cost
of providing post-retirement benefits be recognized as an expense as
employees render service instead of when the benefits are paid. The effect of
adopting SFAS No. 106 was not material to the Company's financial condition
or results of operations.
NOTE 10: SUPPLEMENTAL INFORMATION
Supplemental cash flow information and noncash investing and financing
activities are as follows:
<TABLE>
<CAPTION>
(In thousands)
- ----------------------------------------------------------------------------
1994 1993 1992
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 89,894 $ 72,348 $103,827
Income Taxes $123,228 $117,589 $ 88,534
- ----------------------------------------------------------------------------
SUPPLEMENTAL NONCASH INVESTING AND
FINANCING ACTIVITIES
Retirement of capital lease
of property $ 1,559
Acquisitions:
Fair value of assets acquired $ 124,023 $537,398
Liabilities assumed (109,209) (288,847)
Fair value of assets exchanged $ (14,814)
Stock issued (205,174)
- ----------------------------------------------------------------------------
Total cash paid $ 43,377
- ----------------------------------------------------------------------------
</TABLE>
SUPPLEMENTAL SALES INFORMATION: The Company sells certain of its products in
foreign markets, primarily Japan, Hong Kong, Singapore and other Far Eastern
and certain Middle Eastern countries, as well as in Canada, Russia and the
Caribbean Islands. The Company's foreign sales for fiscal 1994, 1993 and 1992
totaled $537.9 million, $352 million and $192.5 million, respectively.
Substantially all of the Company's export sales are transacted through
unaffiliated brokers and marketing associations.
96 (41)
<PAGE>
NOTE 11: QUARTERLY FINANCIAL DATA (Unaudited)
<TABLE>
<CAPTION>
(In thousands except per share data)
- ----------------------------------------------------------------------------
Net Earnings
Gross Income (Loss) Per
Quarter Ended Sales Margin (Loss) Share
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
01-01-94 $1,152,790 $217,375 $ 44,379 $ .30
04-02-94 1,261,903 222,520 43,121 .29
07-02-94 1,307,697 256,708 (148,401)* (1.00)*
10-01-94 1,387,880 264,617 58,773 .40
- ----------------------------------------------------------------------------
Fiscal 1994 $5,110,270 $961,220 $ (2,128)* $ (.01)*
- ----------------------------------------------------------------------------
01-02-93 $1,083,312 $204,802 $ 39,396 $ .27
04-03-93 1,170,411 226,903 46,088 .31
07-03-93 1,216,875 239,422 53,711 .36
10-02-93 1,236,798 239,730 41,139 .28
- ----------------------------------------------------------------------------
Fiscal 1993 $4,707,396 $910,857 $180,334 $ 1.22
- ----------------------------------------------------------------------------
</TABLE>
* Includes special charges of $213,924 or $1.38 per share. See Note 2 of
Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>
PRICE OF COMPANY'S COMMON STOCK (Nasdaq stock market)
- ----------------------------------------------------------------------------
Fiscal Year 1994 Fiscal Year 1993
- ----------------------------------------------------------------------------
High Low High Low
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter 24 1/8 21 1/8 24 7/8 19 7/8
- ----------------------------------------------------------------------------
Second Quarter 25 18 3/4 27 1/8 22 1/8
- ----------------------------------------------------------------------------
Third Quarter 23 3/4 18 7/8 24 1/4 20 1/2
- ----------------------------------------------------------------------------
Fourth Quarter 25 22 7/8 22 19 1/4
- ----------------------------------------------------------------------------
</TABLE>
97 (42)
<PAGE>
Report of Management
The management of Tyson Foods, Inc. (the Company) has the responsibility of
preparing the accompanying financial statements and is responsible for their
integrity and objectivity. The statements were prepared in conformity with
generally accepted accounting principles applied on a consistent basis. Such
financial statements are necessarily based, in part, on best estimates and
judgments.
The Company maintains a system of internal accounting controls, and a program
of internal auditing designed to provide reasonable assurance that the
Company's assets are protected and that transactions are executed in
accordance with established authorization, and are properly recorded. This
system of internal accounting controls is continually reviewed and modified
in response to changing business conditions and operations and to
recommendations made by the independent auditors and the internal auditors.
The management of the Company believes that the accounting and control
systems provide reasonable assurance that assets are safeguarded and
financial information is reliable.
The Audit Committee of the Board of Directors meets regularly with the
Company's financial management and counsel, with the Company's internal
auditors, and with the independent auditors engaged by the Company. These
meetings include discussions of internal accounting controls and the quality
of financial reporting. The independent auditors and the Internal Audit
Department have free and independent access to the Audit Committee to discuss
the results of their audits or any other matters relating to the Company's
financial affairs.
The accompanying consolidated financial statements have been audited by Ernst
& Young LLP, independent auditors.
November 14, 1994
/s/Don Tyson
- ------------
Don Tyson
Chairman of the Board
/s/Gerald Johnston
- ------------------
Gerald Johnston
Executive Vice President, Finance
98 (43)
<PAGE>
Report of Independent Auditors
Board of Directors and Shareholders
Tyson Foods, Inc.
We have audited the accompanying consolidated balance sheets of Tyson Foods,
Inc. as of October 1, 1994 and October 2, 1993, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of
the three years in the period ended October 1, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Tyson Foods,
Inc. at October 1, 1994 and October 2, 1993, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended October 1, 1994 in conformity with generally accepted accounting
principles.
/s/Ernst & Young LLP
- --------------------
Little Rock, Arkansas
November 14, 1994
99 (44)
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 22-SUBSIDIARIES OF TYSON FOODS, INC.
Names Under
Where Which Subsidiary
Name Incorporated Does Business
- ------------------- ------------ ----------------
<S> <C> <C>
Tyson Export Sales, Inc. U.S. Virgin Islands Tyson Export Sales, Inc.
Henry House, Inc. Michigan Henry House, Inc.
Tyson Breeders, Inc. Delaware Tyson Breeders, Inc.
Tyson Farms, North Carolina Tyson Farms,
Incorporated Incorporated
Tyson Farms of Texas, Texas Tyson Farms of Texas,
Inc. Inc.
Arctic Alaska Fisheries Washington Arctic Alaska Fisheries
Corporation Corporation
Tyson Holding Company Delaware Tyson Holding Company
We Care Workers Delaware We Care Workers
Compensation, Inc. Compensation, Inc.
Global Employment Delaware Global Employment
Services, Inc. Services, Inc.
Tyson Marketing, Ltd. Ontario Tyson Marketing, Ltd.
Cobb-Vantress, Inc. Delaware Cobb-Vantress, Inc.
Culinary Foods, Inc. Delaware Culinary Foods, Inc.
Gorges Foodservice, Inc. Texas Gorges Foodservice, Inc.
Trasgo, S.A. de C.V. Mexico Trasgo, S.A. de C.V.
Tyson Foods of Alabama, Alabama Tyson Foods of Alabama,
Inc. Inc.
Tyson Int'l Co., Ltd Bermuda Tyson International
Tyson Int'l Holding Company Delaware Tyson Int'l Holding Company
WLR Acquisition Corp. Delaware WLR Acquisition Corp.
The Company considers the foregoing to be its primary operating
subsidiaries. Certain other subsidiaries which do not meet in the aggregate
the definition of a significant subsidiary as defined in Rule 1-02 (v) of
Regulation S-X have been excluded from this exhibit.
AAFC Holdings, Ltd. Yukon corporation
AAFC International, Inc. British Virgin Islands
corporation
Arctic Fisheries Washington corporation
Off Shore Ventures, Inc. Washington corporation
Southeast Health Plan of Arkansas, Inc. Arkansas corporation
</TABLE>
100
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report
(Form 10-K) of Tyson Foods, Inc. of our report dated November 14, 1994,
included in the 1994 Annual Report to Shareholders of Tyson Foods, Inc.
We also consent to the incorporation by reference in the Registration
Statement (Form S-8 Nos. 33-30680; 33-20586; 2-81928; 2-44550; 33-53026)
pertaining to certain employee benefit plans of Tyson Foods, Inc. and the
Registration Statement (Form S-3 No.33-54716) on behalf of certain selling
shareholders of the Company, of our reports dated November 14, 1994, with
respect to the consolidated financial statements and schedules of Tyson
Foods, Inc. included or incorporated by reference in this Annual Report
(Form 10-K) for the year ended October 1, 1994.
/s/ ERNST & YOUNG LLP
- ---------------------
ERNST & YOUNG LLP
December 14, 1994
Little Rock, Arkansas
101
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FISCAL
1994 ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000100493
<NAME> TYSON FOODS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-1-1994
<PERIOD-END> OCT-1-1994
<CASH> 27,020
<SECURITIES> 0
<RECEIVABLES> 444,216
<ALLOWANCES> 3,264
<INVENTORY> 754,190
<CURRENT-ASSETS> 1,261,267
<PP&E> 2,509,843
<DEPRECIATION> 899,846
<TOTAL-ASSETS> 3,668,000
<CURRENT-LIABILITIES> 539,783
<BONDS> 1,381,481
<COMMON> 14,815
0
0
<OTHER-SE> 1,274,608
<TOTAL-LIABILITY-AND-EQUITY> 3,668,000
<SALES> 5,110,270
<TOTAL-REVENUES> 5,110,270
<CGS> 4,149,050
<TOTAL-COSTS> 4,149,050
<OTHER-EXPENSES> 766,028
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 86,063
<INCOME-PRETAX> 118,617
<INCOME-TAX> 120,745
<INCOME-CONTINUING> (2,128)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,128)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
