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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 September 28, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________________ to ________________
Commission File No. 0-3400
TYSON FOODS, INC.
(Exact Name of Registrant as specified in its Charter)
Delaware 71-0225165
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2210 West Oaklawn Drive, Springdale, Arkansas 72762-6999
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (501) 290-4000
Securities registered pursuant to Section 12(b) of the Act:
Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, Par Value $.10
(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 September 28, 1996, the aggregate market value of the Class A
Common and Class B Common voting stock held by non-affiliates of the
registrant was $1,884,943,737 and $1,287,954 respectively.
On September 28, 1996, there were outstanding 76,505,849 shares of the
registrants Class A Common Stock, $.10 par value, and 68,446,742 shares of
its Class B Common Stock, $.10 par value.
Page 1 of 88 Pages
The Exhibit Index appears on pages 19 through 24
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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
26-48 of registrant's Annual Report to Shareholders for fiscal year ended
September 28, 1996 (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 10, 1997
(the "Proxy Statement").
PART I
Item 1. Business
Pages 29, 30, 33 and 35 of registrant's Annual Report under the
caption "Management's Discussion and Analysis."
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Pages 37 and 48 of the Annual Report under the caption
"Capital Stock" and "Price of Company's Common Stock."
Item 6. Selected Financial Data
Pages 26-27 of the Annual Report under the caption "Eleven-Year
Financial Summary."
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Pages 29, 30, 33 and 35 of the Annual Report under the caption
"Management's Discussion and Analysis."
Item 8. Financial Statements and Supplementary Data
Pages 28, 31, 32, 34, 36-44 and 46 of the Annual Report under the
captions "Consolidated Statements of Operations," "Consolidated
Statements of Shareholders' Equity," "Consolidated Balance Sheets,"
"Consolidated Statements of Cash Flows," "Notes to Consolidated
Financial Statements," and "Report of Independent Auditors."
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Part III
Item 10. Directors and Executive Officers of the Registrant
The information set forth under the 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
The information set forth under the caption "Executive
Compensation and Other Information" in the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information set forth under the captions "Principal
Shareholders" and "Security Ownership of Management" in the
Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information set forth under the caption "Certain
Transactions" in the Proxy Statement.
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PART I
ITEM 1. BUSINESS
General
Tyson Foods, Inc. and its various subsidiaries (collectively, the
"Company") produce, market and distribute a variety of food products
consisting of value-enhanced poultry; fresh and frozen poultry; value-
enhanced seafood products; fresh and frozen seafood products and Mexican
Original products such as flour and corn tortillas and chips. Additionally,
the Company has live swine, animal feed and pet food operations. The
Company's integrated operations consist of breeding and rearing chickens,
harvesting seafood, as well as the processing, further-processing and
marketing of these food products. The Company's products are marketed and
sold to national and regional grocery chains, regional grocery wholesalers,
clubs and warehouse stores, military commissaries, industrial food
processing companies, national and regional chain restaurants or their
distributors, international export companies and domestic distributors who
service restaurants, foodservice operations such as plant and school
cafeterias, convenience stores, hospitals and other vendors. Sales are made
by the Company's sales staffs located in Springdale, Arkansas, in regions
throughout the United States and in several foreign countries.
Additionally, sales to the military and a portion of sales to international
markets are made through independent brokers and trading companies. The
Company conducts the major portion of its business activities on a
vertically integrated basis and considers its business to be one industry
segment, that of "food products." The Company commenced business in 1935,
was incorporated in Arkansas in 1947, and was reincorporated in Delaware in
1986.
Description
Originally, the Company was a producer and distributor of fresh
chicken. The Company developed a strategy to reduce the impact of the
commodity market of the fresh chicken business through value-enhancement.
As the industry leader in value-enhanced poultry products, the Company
utilizes national and regional advertising, special promotions and brand
identification, and meets the varying demands of its customers through
capital expenditures and strategic acquisitions. With further-processed
poultry products, grain costs as a percentage of total product costs are
reduced because of the value added to the products by cutting, deboning,
cooking, packaging or freezing the poultry.
The Company's integrated poultry processes include genetic research,
breeding, hatching, rearing, ingredient procurement, feed milling,
veterinary and other technical services, and related transportation and
delivery services. The Company contracts with independent growers to
maintain the Company's flocks of breeder chicks which, when grown, lay the
eggs which the Company transfers to its hatcheries and hatch into broiler
chicks. Newly hatched broiler chicks are vaccinated and are then delivered
to independent contract growers who care for and feed the broiler chicks
until they reach processing weight, usually from the end of the fourth to
the eighth week. During the broiler growout period, the Company provides
growers with feed, vitamins and medication for the broilers, if needed, as
well as supervisory and technical services. The broilers are then
transported by the Company to its nearby processing plants. The Company
processed approximately 5.5 billion pounds of consumer poultry during
fiscal 1996.
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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 Arkansas, North Carolina, Oklahoma, Missouri and Alabama. The Company
sold approximately 1.6 million head of market weight live swine in fiscal
1996. In addition to its live swine operations, the Company historically
was engaged in the further-processing of beef and pork. The Company
processed approximately 233 million pounds of consumer beef and pork during
fiscal 1996. On April 24, 1996, the Company announced plans to sell its
beef and pork further-processing operations. The beef further-processing
operations included plants located in Harlingen, Texas; Garland, Texas;
Sioux Center and Orange City, Iowa. The pork further-processing operations
consisted of one plant located in Holland, Michigan. On November 25, 1996,
the Company sold its beef further-processing operations. Additionally, on
December 13, 1996 the Company closed its pork further-processing plant and
anticipates that it will be sold in 1997. Accordingly, the assets of these
operations have been classified as a current asset at September 28, 1996.
The net proceeds from the dispositions will collectively exceed the current
carrying values. The Company intends to use net proceeds from the sale of
these operations primarily to fund capital expenditures and reduce debt.
The Company is the leading manufacturer, marketer and distributor of
branded surimi-based seafood offerings including analog crabmeat, lobster,
shrimp and scallops. Additionally, the Company's seafood operations consist
of 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. 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's Mexican Original operations produce flour and corn tortilla
products for Mexican restaurants and other major customers.
The Company's by-products operations convert inedible poultry by-products
into high-grade pet food and animal feed.
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Sources of Revenue
The principal revenue sources of the Company included value-enhanced
poultry products, fresh and frozen poultry products, value-enhanced beef
and pork products, Mexican Original 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
---------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C> <C>
Consumer poultry products:
Value-enhanced poultry (1) 63% 64% 65%
Basic poultry (2) 15 11 10
--- --- ---
Total consumer poultry 78 75 75
Beef and pork (3) 5 9 11
Mexican Original products
and other prepared foods (4) 5 7 5
Seafood (5) 5 5 5
Animal foods, by-products,
live swine and other 7 4 4
--- --- ---
Total 100% 100% 100%
<FN>
(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 1996 results
from the acquisition of the U.S. broiler business of Cargill,
Incorporated and McCarty Farms, Inc., in September 1995.
(3) Included value-enhanced beef and pork products such as portion
controlled steaks, chops and roasts, ground beef, chicken-fried
steaks, meatloaf, hams, bacon and sausages. The previously described
sale of the beef further-processing operations and closure of the pork
further-processing operations will result in a discontinuance of these
products during the first quarter of fiscal 1997.
(4) Includes flour and corn tortillas, corn chips, taco shells and filled
tortilla specialty items; premium frozen dinners and other specialty
items.
(5) Includes surimi-based products as well as breaded and battered
seafood, fillets and crab.
</FN>
</TABLE>
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Marketing and Distribution
The Company seeks to develop and increase the demand for and market
share of a product or product line through concentrated national and local
advertising and other promotional efforts stressing product quality and
brand identification and meeting specific customer requirements. The
Company's principal marketing strategy is to identify target markets for
value-enhanced food products consisting primarily of poultry, Mexican
Original and seafood. The Company concentrates production, sales and
marketing efforts in order to appeal to and enhance the demand from those
markets. The Company utilizes its national distribution system and customer
support services to achieve a dominant market position for its products and
identifies distinct markets through trade and consumer research.
The Company's nationwide distribution system utilizes a network of
food distributors which is supported by cold storage warehouses owned or
leased by the Company, by public cold storage facilities and by the
Company's transportation system. The Company ships products from two
Company-owned major frozen food distribution centers having a storage
capacity of approximately 58 million pounds, from a network of public cold
storages, from other owned or leased facilities or directly from plants.
The Company has a total frozen storage capacity in excess of 126 million
pounds, excluding public or outside cold storage. The Company's
distribution centers facilitate accumulating frozen products so that it can
fill and consolidate less-than-truckload orders into full truckloads,
thereby decreasing shipping costs while increasing customer service. In
addition, customers are provided with a selection of products that do not
require large volume orders. The Company's distribution system enables it
to supply large or small quantities of products to meet customer
requirements anywhere in the continental United States.
The Company's food products are sold primarily in three broad domestic
markets consisting of foodservice, retail and wholesale clubs. The
foodservice, retail and wholesale club markets may, in some cases, overlap.
The Company's food products are also sold internationally.
In the foodservice market, the Company sells poultry, seafood and
tortilla products. Operators serving these products include commercial
restaurants, business/industry, colleges/universities, national/regional
chains, hotels/lodging, primary/secondary schools, health/elderly care and
other foodservice accounts. The Company's products are sold through
foodservice and specialty distributors who deliver to the above listed
operators.
Foodservice products are sold under the following brands and
registered trademarks: Tyson, Holly Farms, Weaver, Tastybird Tastybasted,
Honey Stung, Tyson's Pride, HoneyBest, Wing Stingers, W.W. Flyers,
Signature Specialties, Flavor-Redi, Mexican Original, Louis Kemp, Arctic
Ice, Enterprise, Crab Delights, Lobster Delights, Ocean Master and Sure
Salad.
Foodservice products include: (a) poultry items such as individually-
quick-frozen segments (IQF), ready-to-cook and fully cooked fried chicken,
fully cooked breaded and glazed wings, cooked and ready-to-cook breaded and
unbreaded tenderloins, breaded and unbreaded patties and chunks (cooked and
ready-to-cook), oven roasted chicken, stuffed breast specialties, split
broilers, Cornish hens, commodity breast, flavor marinated breasts, fully
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cooked diced chicken products, breaded breast and thigh pieces and
strips; (b) tortilla items such as flour and corn tortillas and chips; and
(c) seafood items such as surimi, snow crab, king crab, pollock, cod and
several species of flatfish.
In the retail market the Company sells a wide variety of food products
to customers that sell food products for at-home consumption. These
customers include grocery store chains, independent grocery stores and
grocery wholesalers.
Tyson, Weaver, Healthy Portion, Tyson Holly Farms, Mexican Original,
Louis Kemp, Crab Delights, Lobster Delights, JAC Creative Foods, Captain
JAC and SeaFest are registered trademarks under which the Company sells
retail products.
Retail products include: (a) frozen prepared foods consisting of
separate lines of Tyson breaded chicken patties, chunks, fillets and
tenders; Weaver breaded chicken tenders, nuggets, patties and fillets;
Tyson premium plated dinners; Tyson 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; and Weaver fried chicken; (b) refrigerated prepared foods
consisting of separate lines of Tyson Holly Farms roasted and rotisserie
ready-to-eat chicken; Tyson and Weaver sliced lunch meat; Tyson, Weaver and
Holly Farms hot dogs; Tyson and Weaver deli meats; and Mexican Original
tortillas, chips, and taco shells;(c) refrigerated Tyson Holly Farms chill
pack poultry; (d) frozen and refrigerated Tyson Cornish game hens; and (e)
seafood products which are marketed under the Louis Kemp brand of Crab
Delights and Lobster Delights, as well as the JAC Creative Foods brands of
Captain JAC and SeaFest.
In the wholesale club market the Company designs and markets a variety
of products targeted to small foodservice operators and consumers who
frequent club stores. These products are aimed at both foodservice
operators who buy in small quantities and want to cut costs of storage and
final distribution, as well as retail consumers willing to buy larger than
normal quantities to realize cost savings. The Company sells several
categories of products including: IQF chicken, fresh chicken, refrigerated
roasted ready-to-eat chicken, frozen value-added chicken and canned
chicken; surimi-based seafood products, frozen pollock, cod and crab legs.
The Company's international division markets and sells the full line
of Tyson products, including poultry, Mexican Original products and
seafood, throughout the world. The international division exported to 71
countries in fiscal 1996. 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 continues to believe that Southeast Asia offers tremendous
potential in terms of developing fully-integrated poultry facilities.
Several existing Chinese, Indonesian and Philippine operations are
currently being researched to determine feasibility. Meanwhile, the
Company's joint venture operation in Mexico has grown under the
economically difficult period caused by the sudden devaluation of the peso.
The Company has also entered into a joint venture in Russia and opened an
office in Moscow allowing the Company to develop more direct contact with
its customers. Cobb-Vantress, Inc., a wholly-owned subsidiary, has entered
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into a joint venture agreement with a Hong Kong company to build a 180
thousand capacity breeder farm in China. The Company also has a seafood
processing joint venture in Shanghai, China. This joint venture is engaged
in the value-added processing of seafood items.
A new venture was undertaken in 1995 with the creation of a wholly-
owned subsidiary of the Company's International Division called "World
Resource, Inc." This venture is a trading company which handles the
acquisition, certification and transportation of primarily agricultural
goods worldwide.
Raw Materials and Sources of Supply
The primary 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 future. While the Company produces substantially all of its inventory
of breeder chickens and live broilers, it has the capability to purchase
live, ice-packed or deboned poultry to meet poultry production
requirements.
In addition, raw material requirements for the Company's seafood
operations are met by either purchasing in the open market or by the
Company's vessels harvesting a wide range of species of bottomfish and
shellfish 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; however, crab quotas have been
severely limited in recent years. Following passage of the Magnuson
Fishery Conservation and Management Act of 1976 (the "Magnuson Act"), the
United States extended control over the management of offshore fishing
resources from a 12-mile to a 200-mile exclusive economic zone by, among
other things, establishing annual catch limits and allocating the available
resources between U.S. and foreign catchers and processors. As a result of
these government actions, the Company's ability to harvest seafood is
subject to these limitations.
Patents and Trademarks
The Company has registered a number of trademarks relating to its
products which either have been approved or are in the process of
application. Because the Company does a significant amount of brand name
and product line advertising to promote its products, it considers the
protection of such trademarks to be important to its marketing efforts. The
Company has also developed non-public proprietary information regarding its
production processes and other product-related matters. The Company
utilizes internal procedures and safeguards to protect the confidentiality
of such information, and where appropriate, seeks patent protection for the
technology it utilizes.
Seasonal Demand
The demand for the Company's products generally increases during the
spring and summer months and generally decreases during the winter months.
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Because of the somewhat seasonal character of the Company's business, the
Company may increase its finished product inventories during the winter
months in anticipation of increased spring and summer demands.
Industry Practices
The Company's agreements with its customers are generally short-term,
verbal agreements due primarily to the nature of its products, industry
practice and the fluctuation in demand and price for such products.
Customer Relations
No single customer of the Company accounts for more than ten percent
of the Company's consolidated revenues, and the loss of any single customer
would not have a material adverse effect on the Company's business.
Although any extended discontinuance of sales to any major customer could,
if not replaced, have an impact on the Company's operations, the Company
does not anticipate any such occurrences due to the demand for its products
and its ability to obtain new customers.
Backlog of Orders
There is no significant backlog of unfilled orders for the Company's
products.
Competition
The Company's food products compete with those of other national and
regional food producers and processors and certain prepared food
manufacturers. Additionally, the Company's food products compete in
international markets in Europe, South America, Central America and the Far
East. The Company's principal marketing and competitive strategy is to
identify target markets for value-enhanced products, to concentrate
production, sales and marketing efforts in order to appeal to and enhance
the demand from those markets and, utilizing its national distribution
system and customer support services, to achieve a dominant market position
for its products. Past efforts have indicated that customer demand
generally can be increased and sustained through application of the
Company's marketing strategy, as supported by its distribution system.
Research and Development
The Company conducts continuous research and development activities to
improve the strains of primary poultry breeding stock, the genetic
qualities of swine, and finished product development. Additionally, a
separate staff of research and development personnel is maintained to
develop and provide for product needs. The annual cost of such research and
development programs is less than one percent of total consolidated annual
sales.
Regulation
The Company's facilities for processing poultry and for housing live
poultry and swine are subject to a variety of federal, state and local laws
relating to the protection of the environment, including provisions
relating to the discharge of materials into the environment, and to the
health and safety of its employees. The Company's poultry and Mexican
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Original 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, among other things, establish fishing seasons and resource
depletion restrictions and regulate legal gear types. Violations of the
Magnuson Act and state laws can result in substantial penalties, ranging
from fines to seizure of catch and vessels. In addition, the seafood
operations are subject to various federal, state and local laws relating to
the protection of the environment and the health and safety of its
employees.
To provide consumer reassurance of product integrity and safety, to
create a quality point of difference with the competition, and to assume a
position of measured industry leadership in production standards, the
Company's seafood operation voluntarily complies with certain United States
Department of Commerce regulations which enable it to show the United
States Department of Commerce seal of approval (PUFI) on its primary
products. Three of the Company's seafood manufacturing facilities are
United States Department of Commerce inspected and are participants in the
government's pilot Hazard Analysis Critical Control Point (HACCP) program.
Employees and Labor Relations
As of September 28, 1996, the Company employed approximately 58,300
persons. The Company believes that its relations with its workforce are
good.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION
FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company and its representatives may from time to time make written
or oral forward-looking statements with respect to their current views and
estimates of future economic circumstances, industry conditions, company
performance and financial results. These forward-looking statements are
subject to a number of factors and uncertainties which could cause the
Company's actual results and experiences to differ materially from the
anticipated results and expectations expressed in such forward-looking
statements. The Company wishes to caution readers not to place undue
reliance on any forward-looking statements, which speak only as of the date
made.
Among the factors that may affect the operating results of the Company
are the following: (i) fluctuations in the cost and availability of raw
materials, such as feed grain costs in relation to historical levels; (ii)
changes in the availability and relative costs of labor, including contract
growers; (iii) market conditions for finished products, including the
supply and pricing of alternative proteins, all of which may impact the
Company's pricing power; (iv) effectiveness of advertising and marketing
programs; (v) the ability of the Company to make effective acquisitions and
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to successfully integrate newly acquired businesses into existing
operations; (vi) risks associated with leverage, including cost increases
due to rising interest rates; (vii) changes in regulations and laws,
including changes in accounting standards, environmental laws,
occupational, health and safety laws, and laws regulating fishing and
seafood processing activities; (viii) access to foreign markets together
with foreign economic conditions, including currency fluctuations; and (ix)
the effect of, or changes in, general economic conditions.
ITEM 2. PROPERTIES
The Company currently has production and distribution operations in
the following states: Alabama, Alaska, Arkansas, Florida, Georgia,
Illinois, Indiana, Maryland, Michigan, Minnesota, Mississippi, Missouri,
North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee,
Texas, Virginia and Washington. Additionally, the Company, either directly
or through its subsidiaries, has facilities in or participates in joint
venture operations in Argentina, Brazil, Canada, China, Denmark, Hong Kong,
India, Indonesia, Japan, Mexico, the Philippines, Russia, South Africa,
Spain, the United Kingdom and Venezuela.
The principal poultry operations of the Company consist of 57
processing plants. These plants are devoted to various phases of
slaughtering, dressing, cutting, packaging, deboning or further-processing.
The total slaughter capacity is approximately 36 million head per week.
To support the above facilities the Company operates 31 feed mills and
58 broiler hatcheries with sufficient capacity to meet the needs of the
poultry growout operations. In addition, the Company has poultry cold
storage facilities owned or leased with a capacity of approximately 109.3
million pounds.
The Company's Mexican Original products and prepared foods operations
consist of four processing plants supported by three additional freezer
storage facilities.
The Company's seafood operations consist of 30 catching and at-sea
processing vessels along with two freighters. The at-sea processing is
supported by nine shore-based processing plants, four of which are
dedicated to surimi processing.
The Company's animal feed and pet food processing operations consist
of six rendering plants with the capacity to produce 18.5 million pounds of
animal protein products per week. Thirteen ground pet food processing
operations in connection with poultry processing plants are capable of
producing 7.4 million pounds of product per week.
The Company's live swine operations consist of 163 swine farrowing and
nursery units and 383 swine finishing units. These swine growout operations
are supported by three dedicated feed mills supplemented by the production
from the poultry operations' feed mills. In addition, the Company operates
a grain drying and two storage facilities in support of its swine feed mill
operations.
The Company owns its major operating facilities and vessels with the
following exceptions: two poultry processing plants are leased under
agreements expiring in 1997 and 2002 and one poultry emulsified operation
facility is leased month to month, four broiler hatcheries are leased under
agreements expiring in 1998, 290 breeder farms are leased under agreements
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expiring at various dates through 1999, two freezer storage facilities are
leased under agreements expiring in 1997 and 1998, 64 swine farrowing and
nursery units and 316 swine finishing units are leased under one to ten
year renewable lease agreements and two seafood processing plants are
leased under agreements expiring in 1996 and 1998.
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. In 1996, management initiated a seven percent cut in
production in response to market conditions. The Company regularly engages
in construction and other capital improvement projects intended to expand
capacity and improve the efficiency of its processing and support
facilities.
ITEM 3. LEGAL PROCEEDINGS
On April 13, 1995, a purported shareholder's derivative action (the
"Action") was filed by a single shareholder on the Company's behalf in the
Court of Chancery of Delaware against the directors and principal
shareholders of the Company. The Action alleges that such persons breached
their fiduciary duties to the Company as a result of their approval and/or
participation in certain transactions in fiscal year 1994 between the
Company and various officers and directors or their affiliates, including
certain lease, poultry supply, poultry grow-out, wastewater treatment and
research and development service arrangements (such transactions being more
fully described under the caption "Certain Transactions" in the Company's
Proxy Statement for its 1995 Annual Meeting). Additionally, the Action
alleges that the compensation and expense reimbursements paid to the
Company's Senior Chairman in fiscal year 1994, and the expense
reimbursements paid to him in fiscal year 1993, were excessive. The Action
seeks various remedies, including (i) voiding of the challenged
transactions and an accounting of profits derived therefrom, (ii) damages
resulting from the challenged transactions, and (iii) costs, expenses and
attorney fees. The Company is named as a nominal defendant in the Action,
but no claim has been asserted against it.
On May 10, 1995, the defendants filed a Motion to Dismiss the Action
claiming failure by the plaintiff to (i) make a pre-suit demand for action
by the directors of the Company, (ii) obtain personal jurisdiction over
certain shareholder defendants, and (iii) state a claim upon which relief
can be granted. On July 6, 1995, the Court of Chancery entered a stipulated
order dismissing the Action without prejudice as to certain of the non-
director defendants. The Motion to Dismiss as to the remaining defendants
is currently pending before the Court of Chancery. By Stipulation Order of
said Court dated October 18, 1995, and pursuant to agreement of the
parties, said Motion to Dismiss is being held in abeyance while settlement
discussions occur.
Since the Action purports to be a shareholder's derivative suit, any
recovery (except attorneys fees or other costs and expenses, if allowed)
would not be paid to the plaintiff, but rather would be paid directly to
the Company. The Company has undertaken to advance certain expenses of the
director defendants and, if applicable, may be required to satisfy certain
indemnification obligations with respect to such individuals. However,
Management does not believe that the Action or such indemnification
obligations will have a material adverse effect on the Company's financial
position or results of operations.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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>
Year
Name Title Age Elected
- ------- ----- --- -----
<S> <C> <C> <C>
Don Tyson Senior Chairman of the Board of Directors 66 1963
Leland E. Tollett Chairman of the Board of Directors and 59 1966
Chief Executive Officer
Donald E. Wray President and Chief Operating Officer 59 1979
John H. Tyson President, Beef and Pork Division 43 1984
Wayne Britt Executive Vice President and 47 1977
Chief Financial Officer
Greg Lee Executive Vice President, Sales, 49 1993
Marketing and Technical Services
David Purtle Executive Vice President, Operations, 52 1985
Transportation and Warehousing
Roy Brown Senior Vice President, 44 1993
Seafood Division
William Jaycox Senior Vice President, 50 1990
Human Resources
William Kuckuck Senior Vice President, International 42 1996
Sales, Marketing and Operations
James Ennis Vice President, Controller and 51 1996
Chief Accounting Officer
Dennis Leatherby Treasurer 36 1994
Mary Rush Secretary and Director of Investor 62 1982
Relations
</TABLE>
14
<PAGE>
John H. Tyson is the son of Don Tyson. No other family relationships
exist among the above officers. Mr. Tyson was appointed Senior Chairman of
the Board of Directors in 1995 after serving as Chairman of the Board. Mr.
Tollett was appointed Chief Executive Officer and Chairman of the Board of
Directors in 1995 after serving as Chief Executive Officer and President
since 1991, Vice Chairman of the Board of Directors since 1994, and
President and Chief Operating Officer since 1983. Mr. Wray was appointed
President and Chief Operating Officer in 1995 after serving as Chief
Operating Officer since 1991. Mr. John H. Tyson was appointed President,
Beef and Pork Division in 1993 after serving as Vice President since 1987.
Mr. Britt was appointed Executive Vice President and Chief Financial
Officer in 1996 after serving as Senior Vice President, International Sales
and Marketing since 1994, Vice President, Wholesale Club Division since
1992 and Vice President, Secretary/Treasurer since 1982. Mr. Lee was
appointed Executive Vice President, Sales, Marketing and Technical Services
in 1995 after serving as Senior Vice President, Sales and Marketing since
1993 and Division Vice President of Foodservice Sales and Marketing since
1988. Mr. Purtle was appointed Executive Vice President, Operations,
Transportation and Warehousing in 1995 after serving as Senior Vice
President, Operations since 1991. Mr. Brown was appointed Senior Vice
President, Seafood Division in 1993 after serving as Vice President, Sales
and Marketing, International Division since 1992. Mr. Jaycox was appointed
Senior Vice President, Human Resources in 1995 after serving as Group Vice
President, Human Resources since 1990. Mr. Kuckuck was appointed Senior
Vice President, International Sales, Marketing and Operations in 1996 after
serving as Vice President and Managing Director of Southeast Asia since he
joined the Company in 1995. Prior to joining the Company, Mr. Kuckuck was
Vice President and Chief Operations Officer for Ralston-Purina's International
Division since 1991. Mr. Ennis was appointed Vice President, Controller and
Chief Accounting Officer in 1996 after serving as Corporate Tax Manager
since 1986. Mr. Leatherby was appointed Treasurer in 1994 after serving as
Assistant Treasurer since 1990. Ms. Rush was appointed Secretary and
Director of Investor Relations in 1992 after serving as Assistant
Secretary/Treasurer since 1982.
15
<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"). Information regarding the voting rights
and dividend restrictions are set forth on page 37 of the Annual Report
under the caption "Capital Stock," which information is incorporated herein
by reference.
On September 28, 1996, there were approximately 36,857 holders of
record of the Company's Class A Stock and 22 holders of record of the
Company's Class B Stock, excluding holders in the security position
listings held by nominees. The Company's Class A Stock is traded on the
Nasdaq stock market's National Market System 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 48 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 November 20, 1995, the Board of Directors
increased the annual dividend rate on Class A Stock to $.12 per share and
fixed an annual dividend rate of $.108 per share for the Class B Stock,
effective with the quarterly dividend paid on December 15, 1995. The
Company has continued to pay quarterly dividends at the same rates through
fiscal 1996.
ITEM 6. SELECTED FINANCIAL DATA
See the information reflected under the caption "Eleven-Year Financial
Summary" on pages 26-27 of the Annual Report, which information is
incorporated herein by reference.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
See the information reflected under the caption "Management's
Discussion and Analysis" on pages 29, 30, 33 and 35 of the Annual Report,
which information is incorporated herein by reference.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the information on pages 28, 31, 32, 34, 36-44 and 46 of the
Annual Report under the caption "Consolidated Statements of Operations,"
"Consolidated Statements of Shareholders' Equity," "Consolidated Balance
Sheets," "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.
16
<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 and Other Information" in the Proxy Statement, which
information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See the information included under the 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.
17
<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 28, 31, 32, 34 and 36-44 in
the Company's Annual Report for the fiscal year ended
September 28, 1996, and the Report of Independent Auditors,
on page 46 of such Annual Report are incorporated herein by
reference. Page references set forth in the index below are
to page numbers in Exhibit 13 of this Form 10-K.
<TABLE> Pages
-----
<S> <C>
Consolidated Statements of Operations 59
for the three years ended September 28, 1996
Consolidated Statements of Shareholders' Equity for 63
the three years ended September 28, 1996
Consolidated Balance Sheets at 64
September 28, 1996 and September 30, 1995
Consolidated Statements of Cash Flows 67
for the three years ended September 28, 1996
Notes to Consolidated Financial Statements 70-80
Report of Independent Auditors 82
</TABLE>
2. The following additional information for the years 1996,
1995 and 1994 is submitted herewith. Page references are
to the consecutively numbered pages of this Report on
Form 10-K:
<TABLE> Pages
-----
<S> <C>
Report of Independent Auditors 27
Schedule VIII - Valuation and Qualifying 28
Accounts and Reserves for the three years ended
September 28, 1996
</TABLE>
All other schedules are omitted because they are neither applicable
nor required.
3. The exhibits filed with this report are listed in the
Exhibit Index at the end of this Item 14.
4. The Company did not file any reports on Form 8-K during the
fiscal year ended September 28, 1996.
18
<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
cover page preceding each attached Exhibit.
<TABLE>
<CAPTION>
Exhibit No. Page
- ----------- ----
<S> <C> <C>
3.1 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).
3.2 Amended and Restated Bylaws of the Company 29-41
4.1 Form of Indenture between the Company and The Chase
Manhattan Bank, N.A., as Trustee relating to the
issuance of up to $500 million of Debt Securities
(previously filed as Exhibit 4 to Amendment No. 1 to
Registration Statement on Form S-3, filed with the
Commission on May 8, 1995, Registration No. 33-58177,
and incorporated herein by reference).
4.2 Form of 6.75% $150 million Note due June 1, 2005
(previously filed as Exhibit 4(b) to the Company's
Quarterly Report on Form 10-Q for the period ended
July 1, 1995, Commission File No. 0-3400, and
incorporated herein by reference).
4.3 Form of Fixed Rate Medium-Term Note (previously filed
as Exhibit 4.2 to the Company's Current Report on Form
8-K, filed with the Commission on July 20, 1995,
Commission File No. 0-3400, and incorporated herein by
reference).
4.4 Form of Floating Rate Medium-Term Note (previously
filed as Exhibit 4.3 to the Company's Current
Report on Form 8-K, filed with the Commission on
July 20, 1995, Commission File No. 0-3400, and
incorporated herein by reference).
4.5 Form of Calculation Agent Agreement (previously filed
as Exhibit 4.4 to the Company's Current Report on Form
8-K, filed with the Commission on July 20, 1995,
Commission File No. 0-3400, and incorporated herein by
reference).
4.6 Amended and Restated Note Purchase Agreement, dated
June 30, 1993, by and between the Company and various
Purchasers as listed in the Purchaser Schedule
attached to said agreement, together with the
following documents:
(a) Form of Series A Note
(b) Form of Series D Note
19
<PAGE>
(previously filed as Exhibit 4(a) to the Company's
Quarterly Report on Form 10-Q for the period ended
July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
4.7 Amendment Agreement, dated November 1, 1994, to
Amended and Restated Note Purchase Agreements, dated
June 30, 1993, by and between the Company
and various Purchasers as listed in the Purchaser
Schedule attached to said agreement (previously filed
as Exhibit 10(a) to the Company's Quarterly Report on
Form 10-Q for the period ended December 31, 1994,
Commission File No. 0-3400, and incorporated herein by
reference).
4.8 Second Amendment Agreement, dated as of June 29, 1996, 42-48
to Amended and Restated Note Purchase Agreements,
dated June 30, 1993, by and between the Company and
various Purchasers as listed in the Purchaser Schedule
attached to said agreement.
4.9 Amended and Restated Note Agreement, dated
June 30, 1993, by and between the Company and
various Purchasers as listed in the Purchaser
Schedule attached to said agreement, together
with the following related documents:
(a) Form of Series E Note
(b) Form of Series F Note
(c) Form of Series G Note
(previously filed as Exhibit 4(b) to the Company's
Quarterly Report on Form 10-Q for the period ended
July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
4.10 Amendment Agreement, dated November 1, 1994, to
Amended and Restated Note Agreement, dated
June 30, 1993, by and between the Company and
various Purchasers as listed in the Purchaser
Schedule attached to said agreement (previously
filed as Exhibit 10(b) to the Company's Quarterly
Report on Form 10-Q for the period ended
December 31, 1994, Commission File No. 0-3400, and
incorporated herein by reference).
4.11 Second Amendment Agreement, dated as of June 29, 1996, 49-55
to Amended and Restated Note Agreement, dated
June 30, 1993, by and between the Company and
various Purchasers as listed in the Purchaser
Schedule attached to said agreement.
10.1 Master Shelf Agreement dated January 13, 1995, between
the Company and the Prudential Insurance Company of
America (previously filed as Exhibit 10(c) to the
20
<PAGE>
Company's Quarterly Report on Form 10-Q for the period
ended December 31, 1994, Commission File No. 0-3400,
and incorporated herein by reference).
10.2 First Amended and Restated Credit Agreement, dated
May 26, 1995, by and among the Company, as Borrower,
The Chase Manhattan Bank N.A., Chemical Bank,
Cooperative Centrale Raiffeisen Boerenleenbank
B.A.(Rabobank Nederland), Morgan Guaranty Trust
Company of New York, National Westminister Bank Plc,
Nationsbank of Texas, N.A., and Societe Generale, as
Co-Agents, and Bank of America National Trust and
Savings Association, as Agent (previously filed as
Exhibit 4(g) to the Company's Quarterly Report on
Form 10-Q for the period ended July 1, 1995,
Commission File No. 0-3400, and incorporated herein by
reference).
10.3 Amendment No. 1 to First Amended and Restated Credit
Agreement, dated as of May 24, 1996, by and among the
Company, as Borrower, the banks party thereto, The
Chase Manhatten Bank, N.A., Chemical Bank, Cooperative
Centrale Raiffeisen-Boerenleenbank, B.A. (Rabobank
Nederland), Morgan Guaranty Trust Company of New York,
National Westminister Bank Plc, Nationsbank of Texas,
N.A., and Societe Generale as Co-Agents and Bank of
America National Trust and Savings Association, as
Agent (previously filed as Exhibit 4(a) to the
Company's Form 10-Q for the quarter ended
June 29, 1996, Commission File No. 0-3400, and
incorporated herein by reference).
10.4 Fourth Amended and Restated Credit Agreement,
including all exhibits thereto, dated as of
May 26, 1995, by and among the Company, as Borrower,
The Chase Manhattan Bank N.A., Chemical Bank,
Cooperative Centrale Raiffeisen-Boerenleenbank B.A.
(Rabobank Nederland), Morgan Guaranty Trust Company of
New York, National Westminister Bank Plc, Nationsbank
of Texas, N.A., and Societe Generale, as Co-Agents,
and Bank of America National Trust and Savings
Association, as Agent (previously filed as Exhibit
4(f) to the Company's Quarterly Report on Form 10-Q
for the period ended July 1, 1995, Commission File
No. 0-3400, and incorporated herein by reference).
10.5 Amendment No. 1 to Fourth Amended and Restated Credit
Agreement, dated as of May 24, 1996, by and among the
Company, as Borrower, the banks party thereto, The
Chase Manhatten Bank, N.A., Chemical Bank, Cooperative
Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank
Nederland), Morgan Guaranty Trust Company of New York,
National Westminister Bank Plc, Nationsbank of Texas,
N.A., and Societe Generale as Co-Agents and Bank of
America National Trust and Savings Association, as
Agent (previously filed as Exhibit 4(b) to the
Company's Form 10-Q for the quarter ended
21
<PAGE>
June 29, 1996, Commission File No. 0-3400, and
incorporated herein by reference).
10.6 Issuing and Paying Agency Agreement dated
July 1, 1993, between the Company and Morgan
Guaranty Trust Company of New York, (previously
filed as Exhibit 10(d) to the Company's Quarterly
Report on Form 10-Q for the period ended
July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
10.7 Commercial Paper Dealer Agreement dated July 1, 1993,
between the Company and Merrill Lynch Money Markets,
Inc. (previously filed as Exhibit 10(e) to the
Company's Quarterly Report on Form 10-Q for the period
ended July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
10.8 Commercial Paper Dealer Agreement dated July 1, 1993,
between the Company and the First Boston Corporation
(previously filed as Exhibit 10(g) to the Company's
Quarterly Report on Form 10-Q for the period ended
July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
10.9 Commercial Paper Dealer Agreement dated July 1, 1993,
between the Company and J.P. Morgan Securities, Inc.
(previously filed as Exhibit 10(h) to the Company's
Quarterly Report on Form 10-Q for the period ended
July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
10.10 Commercial Paper Dealer Agreement dated July 1, 1993,
between the Company and Bank of America National Trust
and Savings Association (previously filed as Exhibit
10(i) to the Company's Quarterly Report on Form 10-Q
for the period ended July 3, 1993, Commission File
No. 0-3400, and incorporated herein by reference).
10.11 Commercial Paper Dealer Agreement dated
September 1, 1994, between the Company and Chase
Securities, Inc. (previously filed as Exhibit 10(j) to
the Company's Annual Report on Form 10-K for the
fiscal year ended October 1, 1994, Commission File
No. 0-3400, and incorporated herein by reference).
10.12 Tyson Foods, Inc. Senior Executive Performance Bonus
Plan adopted November 18, 1994 (previously filed as
Exhibit 10(k) to the Company's Annual Report on
Form 10-K for the fiscal year ended October 1, 1994,
Commission File No. 0-3400, and incorporated herein by
reference).
10.13 Tyson Foods, Inc. Restricted Stock Bonus Plan,
effective August 21, 1989, as amended and restated on
April 15, 1994; and Amendment to Restricted Stock
22
<PAGE>
Bonus Plan effective November 18, 1994 (previously
filed as Exhibit 10(l) to the Company's Annual
Report on Form 10-K for the fiscal year ended
October 1, 1994, Commission File No. 0-3400, and
incorporated herein by reference).
10.14 Profit Sharing Plan and Trust of Tyson Foods, Inc., as
amended and restated through April 1, 1993;
Amendment No.1 thereto, effective April 1, 1995; and
terminating resolution, effective March 31, 1996
(previously filed as Exhibit 10(b) to the Company's
Form 10-Q for the quarter ended March 30, 1996,
Commission File No. 0-3400, and incorporated herein by
reference).
10.15 Tyson Foods, Inc. Employee Stock Purchase Plan, as
amended and restated through April 1, 1993; and
Amendment Nos. 1 and 2 thereto, effective
April 1, 1996 (previously filed as Exhibit 10(d) to
the Company's Form 10-Q for the quarter ended
March 30, 1996, Commission File No. 0-3400, and
incorporated herein by reference).
10.16 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).
10.17 Tyson Foods, Inc. Nonstatutory Stock Option Plan, as
amended and restated on November 18, 1994, (previously
filed as Exhibit 99 to the Company's Registration
Statement on Form S-8 filed with the Commission on
January 30, 1995, Commission File No. 33-54716, and
incorporated herein by reference).
10.18 Tyson Foods, Inc. Employee Stock Ownership Plan as
amended and restated through April 1, 1993; and
terminating resolution, effective March 31, 1996
(previously filed as Exhibit 10(c) to the Company's
Form 10-Q for the quarter ended March 30, 1996,
Commission File No. 0-3400, and incorporated herein by
reference).
10.19 Amended and Restated Employment Agreement dated
July 1, 1994, between the Company and Don Tyson,
Senior Chairman of the Board of Directors of the
Company (previously filed as Exhibit 10(r) to the
Company's Annual Report on Form 10-K for the fiscal
year ended October 1, 1994, Commission File
No. 0-3400, and incorporated herein by reference).
10.20 Retirement Savings Plan of Tyson Foods, Inc.,
qualified under Section 401(k) of the Internal Revenue
Code of 1986, as amended, originally effective as of
October 3, 1987, as amended and restated through
23
<PAGE>
January 1, 1993; and Amendments Nos. 1-5 thereto
(previously filed as Exhibit 10(a) to the Company's
Form 10-Q for the quarter ended March 30, 1996,
Commission File No. 0-3400, and incorporated herein by
reference).
10.21 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).
10.22 Executive Savings Plan of Tyson Foods, Inc. effective
April 1, 1991; and Amendment No.1 thereto, effective
April 1, 1996 (previously filed and exhibit 10(e) to
the Company's Form 10-Q for the quarter ended
March 30, 1996, Commission File No. 0-3400, and
incorporated herein by reference).
10.23 Form of Indemnity Agreement between Tyson Foods, Inc.
and its directors and certain of its executive
officers.
11 Statement Regarding Computation of Earnings Per Share. 56
13 Pages 26-48 of the Annual Report to Shareholders for 57-85
the fiscal year ended September 28, 1996.
21 Subsidiaries of the Company. 86-87
23 Consent of Independent Auditors. 88
27 Financial Data Schedule. 89
</TABLE>
24
<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/ Wayne Britt December 13, 1996
-------------------
Wayne Britt
Executive Vice President
and Chief Financial Officer
25
<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.
<TABLE>
<S> <C> <C>
/s/ Wayne Britt Executive Vice President and December 13, 1996
- -------------------- Chief Financial Officer
Wayne Britt
/s/ Neely Cassady Private Investor and December 13, 1996
- -------------------- Arkansas State Senator
Neely Cassady
/s/ James G. Ennis Vice President, Controller December 13, 1996
- -------------------- and Chief Accounting Officer
James G. Ennis
/s/ Lloyd V. Hackley President, North Carolina December 13, 1996
- -------------------- Community College System
Lloyd V. Hackley
/s/ Gerald Johnston Private Investor December 13, 1996
- --------------------
Gerald Johnston
/s/ Shelby D. Massey Private Investor December 13, 1996
- --------------------
Shelby D. Massey
/s/ Joe F. Starr Private Investor December 13, 1996
- --------------------
Joe F. Starr
/s/ Leland E. Tollett Chairman of the Board of December 13, 1996
- --------------------- Directors and Chief
Leland E. Tollett Executive Officer
/s/ Barbara Tyson Vice President December 13, 1996
- ---------------------
Barbara Tyson
/s/ Don Tyson Senior Chairman of the December 13, 1996
- --------------------- Board of Directors
Don Tyson
/s/ John H. Tyson President, December 13, 1996
- --------------------- Beef and Pork Division
John H. Tyson
/s/ Fred S. Vorsanger Vice President (Emeritus), December 13, 1996
- --------------------- University of Arkansas
Fred S. Vorsanger and Private Investor
/s/ Donald E. Wray President and Chief December 13, 1996
- --------------------- Operating Officer
Donald E. Wray
</TABLE>
26
<PAGE>
FINANCIAL STATEMENT SCHEDULES
<PAGE>
REPORT OF INDEPENDENT AUDITORS
We have audited the consolidated financial statements of Tyson Foods, Inc.
as of September 28, 1996 and September 30, 1995, and for each of the three
years in the period ended September 28, 1996, and have issued our report
thereon dated November 15, 1996. Our audits also included the financial
statement schedule listed in Item 14(a) in this annual report (Form 10-K).
This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ERNST & YOUNG LLP
- --------------------
ERNST & YOUNG LLP
Little Rock, Arkansas
November 15, 1996
27
<PAGE>
<TABLE>
<CAPTION>
TYSON FOODS, INC.
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Three Years Ended September 28, 1996
(Dollars in Millions)
Balance at Charged to Charged Balance
Beginning Costs and to Other Additions at End
Description of Period Expenses Accounts (Deductions) of Period
- ----------- ---------- --------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for
Doubtful Accounts
1996 $3.6 $1.9 0 ($2.0) $3.5
1995 $3.3 $1.1 0 ($0.8) $3.6
1994 $2.6 $1.1 0 ($0.4) $3.3
</TABLE>
28
<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
oard 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
29
<PAGE>
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 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.
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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 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.
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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.
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.
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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.
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
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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 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.
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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. In
addition to any powers expressly provided by these By-laws, the Senior
Chairman of the Board of Directors shall, without limitation, have all
powers of a vice chairman of a board of directors under Delaware General
Corporate Law. 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 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.
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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 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
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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 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.
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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 Senior Chairman or 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 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
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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.
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.
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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.
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.
40
<PAGE>
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, 1996.
-----------------------------------
Senior Chairman of the Board of Directors
Attest:
- -----------------------
Secretary
41
<PAGE>
TYSON FOODS, INC.
___________________________________
SECOND AMENDMENT AGREEMENT
___________________________________
Dated as of July 29, 1996
to
AMENDED AND RESTATED NOTE PURCHASE AGREEMENTS
Dated as of June 30, 1993
42
<PAGE>
TABLE OF CONTENTS
(Not Part of Amendment Agreement)
Page
1. AMENDMENT OF THE NOTE AGREEMENTS..........................1
2. EFFECTIVENESS.............................................1
3. RATIFICATION..............................................2
4. GOVERNING LAW.............................................2
5. COUNTERPARTS..............................................2
SCHEDULE OF HOLDERS
EXHIBIT A -- AMENDED PROVISION
43
<PAGE>
TYSON FOODS, INC.
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
SECOND AMENDMENT AGREEMENT
As of July 29, 1996
To Each of the Holders Listed
in the Attached Schedule of Holders
Gentlemen:
Reference is made to the separate Amended and Restated Note Purchase
Agreements, each dated as of June 30, 1993, as amended by the separate
Amendment Agreements dated as of November 1, 1994 (the "Note Agreements"),
between Tyson Foods, Inc., a Delaware corporation (the "Company"), and the
respective institutional investors listed in the Purchaser Schedule and
Schedule of Holders respectively attached thereto, which amended and
restated the separate Note Purchase Agreements dated as of August 15, 1986,
as amended, pursuant to which the Company has issued 8.90% Notes, Series A,
due October 15, 1996, in the original aggregate principal amount of
$85,000,000 (as amended pursuant to the Amendment Agreement dated as of
September 29, 1989, the "Series A Notes"), 8.75% Notes, Series B, due
October 15, 1991, in the original aggregate principal amount of $10,000,000
(the "Series B Notes"), 8.75% Notes, Series C, due October 15, 1992, in the
original aggregate principal amount of $45,000,000 (the "Series C Notes"),
and 9.50% Notes, Series D, due October 15, 2001, in the original aggregate
principal amount of $35,000,000 (as amended pursuant to the Amendment
Agreement dated as of September 29, 1989, the "Series D Notes"). The
institutional investors named in the attached Schedule of Holders (the
"Holders") are the holders of all Series A Notes and Series D Notes. As of
the date hereof, an aggregate principal amount of $13,000,000 of the Series
A Notes and $25,700,000 of the Series D Notes is outstanding. No Series B
Notes or Series C Notes are outstanding. Capitalized terms used in this
Second Amendment Agreement (the "Second Amendment Agreement") without
definition have the meanings specified in the Note Agreements, as amended
hereby.
The Company agrees with you as follows:
1. Amendment of the Note Agreements. The Company hereby requests
and the Holders hereby agree to the amendment of the Note Agreements, and
the same is hereby amended, as set forth in Exhibit A attached hereto.
2. Effectiveness. The provisions of this Second Amendment Agreement
shall not become effective until completion of (a) the execution and
delivery of this Second Amendment Agreement by the Required Holders, (b)
the execution and delivery of a second amendment agreement in substantially
the same form by the Required Holders under the New Note Agreements, and
44
<PAGE>
(c) the payment to the Holders of the fees described in the separate
Fee Letter of even date herewith from the Company to the Holders. Upon
completion of the foregoing, this Second Amendment Agreement shall be
considered effective as of June 29, 1996.
3. Ratification. The Note Agreements, amended as hereinabove set
forth, are in all respects ratified and confirmed, and the terms and
conditions thereof, amended as hereinabove set forth, shall be and remain
in full force and effect.
4. GOVERNING LAW. THIS SECOND AMENDMENT AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES
SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
5. Counterparts. This Second Amendment Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed
an original, and it shall not be necessary in making proof of this Second
Amendment Agreement to produce or account for more than one such
counterpart.
TYSON FOODS, INC.
By____________________________________
Title:
The foregoing Second Amendment Agreement
is hereby accepted as of the
date first above written.
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By________________________________________
Title:
AETNA LIFE INSURANCE COMPANY
By________________________________________
Title:
45
<PAGE>
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By________________________________________
Title:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By________________________________________
Title:
ALLSTATE LIFE INSURANCE COMPANY
By_________________________________________
Title:
By_________________________________________
Title:
THE AETNA CASUALTY AND
SURETY COMPANY
By_________________________________________
Title:
46
<PAGE>
SCHEDULE OF HOLDERS
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
AETNA LIFE INSURANCE COMPANY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
ALLSTATE LIFE INSURANCE COMPANY
THE AETNA CASUALTY AND SURETY COMPANY
47
<PAGE>
EXHIBIT A
AMENDED PROVISION
Paragraph 6A(3) of the Note Agreements is hereby amended to read, in
its entirety, as follows:
"6A(3). Interest Coverage Ratio. The Company shall not permit,
at any time during any Measurement Period, the ratio of (i) EBIT
plus rental expenses of the Company and its consolidated
Subsidiaries to (ii) Interest Expense plus rental expenses of the
Company and its consolidated Subsidiaries to be less than 1.75 to
1."
48
<PAGE>
TYSON FOODS, INC.
___________________________________
SECOND AMENDMENT AGREEMENT
___________________________________
Dated as of July 29, 1996
to
AMENDED AND RESTATED NOTE AGREEMENTS
Dated as of June 30, 1993
49
<PAGE>
TABLE OF CONTENTS
(Not Part of Amendment Agreement)
Page
1. AMENDMENT OF THE NOTE AGREEMENTS..........................1
2. EFFECTIVENESS.............................................1
3. RATIFICATION..............................................2
4. GOVERNING LAW.............................................2
5. COUNTERPARTS..............................................2
SCHEDULE OF HOLDERS
EXHIBIT A -- AMENDED PROVISION
50
<PAGE>
TYSON FOODS, INC.
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
SECOND AMENDMENT AGREEMENT
As of July 29, 1996
To Each of the Holders Listed
in the Attached Schedule of Holders
Gentlemen:
Reference is made to the separate Amended and Restated Note Agreements,
each dated as of June 30, 1993, as amended by the separate Amendment
Agreements dated as of November 1, 1994 (the "Note Agreements"), between
Tyson Foods, Inc., a Delaware corporation (the "Company"), and the
respective institutional investors listed in the Purchaser Schedule and
Schedule of Holders respectively attached thereto, which amended and
restated the separate Note Agreements dated as of September 29, 1989, as
amended, pursuant to which the Company has issued Series E 10.33% Senior
Secured Notes due September 29, 1999 in the original aggregate principal
amount of $135,000,000 (the "Series E Notes"), Series F 10.61% Senior
Secured Notes due September 29, 2001 in the original aggregate principal
amount of $125,000,000 (the "Series F Notes"), and Series G 10.84% Senior
Secured Notes due September 29, 2006 in the original aggregate principal
amount of $50,000,000 (the "Series G Notes"). The institutional investors
named in the attached Schedule of Holders (the "Holders") are the holders
of all Series E Notes, Series F Notes and Series G Notes. As of the date
hereof, an aggregate principal amount of $135,000,000 of Series E Notes,
$125,000,000 of Series F Notes and $50,000,000 of Series G Notes is
outstanding. Capitalized terms used herein without definition have the
meanings specified in the Note Agreements, as amended by this Second
Amendment Agreement.
The Company agrees with you as follows:
1. Amendment of the Note Agreements. The Company hereby requests
and the Holders hereby agree to the amendment of the Note Agreements, and
the same is hereby amended, as set forth in Exhibit A attached hereto.
2. Effectiveness. The provisions of this Second Amendment Agreement
shall not become effective until completion of (a) the execution and
delivery of this Second Amendment Agreement by the Required Holders, (b)
the execution and delivery of a second amendment agreement in substantially
the same form by the Required Holders under the Existing Note Agreements
relating to the Series A Notes and the Series D Notes, and (c) the payment
to the Holders of the fees described in the separate Fee Letter of even
date herewith from the Company to the Holders. Upon completion of the
foregoing, this Second Amendment Agreement shall be considered effective as
of June 29, 1996.
51
<PAGE>
3. Ratification. The Note Agreements, amended as hereinabove set
forth, are in all respects ratified and confirmed, and the terms and
conditions thereof, amended as hereinabove set forth, shall be and remain
in full force and effect.
4. GOVERNING LAW. THIS SECOND AMENDMENT AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES
SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
5. Counterparts. This Second Amendment Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed
an original, and it shall not be necessary in making proof of this Second
Amendment Agreement to produce or account for more than one such
counterpart.
TYSON FOODS, INC.
By____________________________________
Title:
The foregoing Second Amendment Agreement
is hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By________________________________________
Title:
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By________________________________________
Title:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By________________________________________
Title:
52
<PAGE>
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By________________________________________
Title:
THE GREAT-WEST LIFE & ANNUITY INSURANCE CO.
By_________________________________________
Title:
NATIONWIDE LIFE INSURANCE CO.
By_________________________________________
Title:
ALLSTATE LIFE INSURANCE COMPANY
By_________________________________________
Title:
By_________________________________________
Title:
THE CANADA LIFE ASSURANCE COMPANY
By_________________________________________
Title:
53
<PAGE>
SCHEDULE OF HOLDERS
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
THE GREAT-WEST LIFE & ANNUITY INSURANCE CO.
NATIONWIDE LIFE INSURANCE CO.
ALLSTATE LIFE INSURANCE COMPANY
THE CANADA LIFE ASSURANCE COMPANY
54
<PAGE>
EXHIBIT A
AMENDED PROVISION
Paragraph 6A(3) of the Note Agreements is hereby amended to read, in
its entirety, as follows:
"6A(3). Interest Coverage Ratio. The Company shall not permit,
at any time during any Measurement Period, the ratio of (i) EBIT
plus rental expenses of the Company and its consolidated
Subsidiaries to (ii) Interest Expense plus rental expenses of the
Company and its consolidated Subsidiaries to be less than 1.75 to
1."
55
<PAGE>
EXHIBIT 11
<TABLE>
<CAPTION>
TYSON FOODS, INC.
COMPUTATION OF EARNINGS PER SHARE
(In millions except per share data)
1996 1995 1994
-----------------------------
<S> <C> <C> <C>
Primary:
Average common shares outstanding
during the period 144.9 144.5 147.0
Net effect of dilutive stock
options based on the treasury
stock method using average
market price .5 .6 .8
----- ------ -----
Total common and common equivalent
shares outstanding 145.4 145.1 147.8
===== ===== =====
Net income (loss) $86.9 $219.2 ($2.1)
===== ====== =====
Earnings (loss) per share $0.60 $1.51 ($0.01)
===== ===== =====
Fully Diluted:
Average common shares outstanding
during the period 144.9 144.5 147.0
Net effect of dilutive stock
options based on the treasury
stock method using the quarter-
end market price, if higher
than average market price .7 .7 1.0
----- ----- -----
Total common and common equivalent
shares outstanding 145.6 145.2 148.0
===== ===== =====
Net income (loss) $86.9 $219.2 ($2.1)
===== ====== =====
Earnings (loss) per share $0.60 $1.51 ($0.01)
===== ===== =====
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
ELEVEN-YEAR FINANCIAL SUMMARY
TYSON FOODS,INC.
(IN MILLIONS EXCEPT PER SHARE DATA)
- ------------------------------------------------------------------------------------------
OPERATING RESULTS FOR FISCAL YEAR: 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $6,453.8 $5,511.2 $5,110.3 $4,707.4
Cost of Sales 5,505.7 4,423.1 4,149.1 3,796.5
- ------------------------------------------------------------------------------------------
Gross Profit 948.1 1,088.1 961.2 910.9
Operating Expenses 678.5 616.4 766.0 535.4
Interest Expense 132.9 114.9 86.1 72.8
Foreign Currency Exchange 9.0 15.6
Other Expense (Income) (4.9) (2.4) (9.5) (6.9)
- ------------------------------------------------------------------------------------------
Income Before Taxes on Income and
Minority Interest 132.6 343.6 118.6 309.6
Provision for Income Taxes 49.0 131.0 120.7 129.3
Minority Interest in Net Loss of
Consolidated Subsidiary 3.3 6.6
- ------------------------------------------------------------------------------------------
Net Income (Loss) $ 86.9 $ 219.2 $(2.1) $ 180.3
- ------------------------------------------------------------------------------------------
Earnings (Loss) Per Share $ 0.60 $ 1.51 $(0.01) $ 1.22
Dividends Per Share:
Class A 0.1200 0.0800 0.0700 0.0400
Class B 0.1080 0.0667 0.0583 0.0333
Capital Expenditures 214.0 347.2 232.1 225.3
Depreciation and Amortization 239.3 204.9 188.3 176.6
Return on Sales 1.35% 3.98% (0.04)% 3.83%
Annual Sales Growth 17.10% 7.85% 8.56 % 12.92%
Five Year Compounded Annual Sales Growth 10.47% 7.58% 15.02 % 19.45%
Gross Margin 14.69% 19.74% 18.81 % 19.35%
Return on Beginning Assets 1.95% 5.98% (0.07)% 6.89%
Return on Beginning Shareholders' Equity 5.92% 17.00% (0.16)% 18.40%
Five-Year Return on Beginning
Shareholders' Equity 10.89% 13.75% 14.14% 21.72%
Effective Tax Rate 37.0 % 38.1 % 101.8 % 41.8 %
- ------------------------------------------------------------------------------------------
FINANCIAL CONDITION AT FISCAL YEAR END:
- ------------------------------------------------------------------------------------------
Total Assets $4,544.1 $4,444.3 $3,668.0 $3,253.5
Net Property, Plant and Equipment 1,869.2 2,013.5 1,610.0 1,435.3
Long-Term Debt 1,806.4 1,620.5 1,381.5 920.5
Shareholders' Equity 1,541.7 1,467.7 1,289.4 1,360.7
Book Value Per Share $ 10.63 $ 10.14 $ 8.88 $ 9.24
Long-Term Debt to Capitalization 53.95% 52.47% 51.72% 40.35%
Shares Outstanding 145.0 144.8 145.2 147.3
Average Shares Outstanding 145.4 145.1 147.8 148.3
- ------------------------------------------------------------------------------------------
</TABLE>
57 (26)
<PAGE>
<TABLE>
<CAPTION>
1992 1991 1990 1989 1988 1987 1986
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$4,168.8 $3,922.1 $3,825.3 $2,538.2 $1,936.0 $1,786.0 $1,503.7
3,390.3 3,147.5 3,081.7 2,056.1 1,627.6 1,483.0 1,271.9
- --------------------------------------------------------------------------------------
778.5 774.6 743.6 482.1 308.4 303.0 231.8
446.8 441.4 423.4 271.5 184.0 156.8 116.7
76.9 95.5 128.6 45.0 19.5 22.9 20.6
(6.2) (4.8) (8.5) 2.1 0.5 0.1 (3.4)
- --------------------------------------------------------------------------------------
261.0 242.5 200.1 163.5 104.4 123.2 97.9
100.5 97.0 80.1 62.9 23.0 55.4 47.6
- --------------------------------------------------------------------------------------
$ 160.5 $ 145.5 $ 120.0 $ 100.6 $ 81.4 $ 67.8 $ 50.3
- --------------------------------------------------------------------------------------
$ 1.16 $ 1.05 $ 0.90 $ 0.78 $ 0.64 $ 0.53 $ 0.39
0.0400 0.0300 0.0200 0.0200 0.0200 0.0185 0.0117
0.0333 0.0250 0.0165 0.0165 0.0165 0.0125 N/A
108.0 213.6 163.8 128.9 86.3 132.9 117.5
148.9 135.8 123.4 84.8 70.3 60.4 42.2
3.85% 3.71% 3.14% 3.96% 4.21% 3.79% 3.34%
6.29% 2.53% 50.71% 31.11% 8.40% 18.77% 32.40%
18.48% 21.13% 27.49% 27.61% 26.25% 26.15% 24.55%
18.67% 19.75% 19.44% 19.00% 15.93% 16.96% 15.41%
6.07% 5.82% 4.64% 11.31% 10.09% 8.91% 10.67%
19.52% 21.95% 26.81% 29.46% 30.22% 33.28% 32.50%
23.90% 26.77% 29.65% 31.79% 32.42% 32.22% 30.32%
38.5 % 40.0 % 40.0 % 38.5 % 22.0 % 45.0 % 48.6 %
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
$2,617.7 $2,645.8 $2,501.1 $2,586.1 $ 889.1 $ 806.8 $ 760.7
1,142.2 1,162.0 1,071.1 1,020.8 430.0 415.9 347.9
726.5 845.9 950.4 1,319.4 205.8 211.3 211.9
980.2 822.5 663.0 447.7 341.4 269.5 203.6
$ 7.13 $ 5.99 $ 4.85 $ 3.46 $ 2.67 $ 2.10 $ 1.59
42.57% 50.70% 58.91% 74.66% 37.62% 43.95% 50.99%
137.5 137.4 136.6 129.3 127.6 128.2 127.8
138.4 138.0 132.9 129.8 128.0 128.0 127.7
- --------------------------------------------------------------------------------------
</TABLE>
58 (27)
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
TYSON FOODS, INC.
THREE YEARS ENDED SEPTEMBER 28, 1996
(IN MILLIONS EXCEPT PER SHARE DATA)
- -----------------------------------------------------------------------------
1996 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $6,453.8 $5,511.2 $5,110.3
Cost of Sales 5,505.7 4,423.1 4,149.1
- -----------------------------------------------------------------------------
948.1 1,088.1 961.2
- -----------------------------------------------------------------------------
Operating Expenses:
Selling 550.0 478.8 426.5
General and administrative 100.9 111.7 95.9
Amortization 27.6 25.9 29.7
Write-down of excess of
investments over net assets acquired
and certain long-lived assets 213.9
- -----------------------------------------------------------------------------
678.5 616.4 766.0
- -----------------------------------------------------------------------------
Operating Income 269.6 471.7 195.2
Other Expense (Income):
Interest 132.9 114.9 86.1
Foreign currency exchange 9.0 15.6
Other (4.9) (2.4) (9.5)
- -----------------------------------------------------------------------------
137.0 128.1 76.6
- -----------------------------------------------------------------------------
Income Before Taxes on Income and
Minority Interest 132.6 343.6 118.6
Provision for Income Taxes 49.0 131.0 120.7
Minority Interest in Net Loss of
Consolidated Subsidiary 3.3 6.6
- -----------------------------------------------------------------------------
Net Income (Loss) $86.9 $219.2 $(2.1)
=============================================================================
Earnings (Loss) Per Share $0.60 $1.51 $(0.01)
Average Shares Outs 145.4 145.1 147.8
=============================================================================
SEE ACCOMPANYING NOTES.
</TABLE>
59 (28)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - RESULTS OF OPERATIONS
TYSON FOODS, INC.
Sales for 1996 increased 17.1% over sales for 1995. This increase was mainly
due to an increase in consumer poultry sales which increased 1996 sales by
16.0%. The increase in consumer poultry sales was primarily attributable to a
24.3% increase in tonnage partially offset by a 2.5% decrease in average
sales price. The increase in tonnage and the decrease in average sales price
for consumer poultry are mainly due to the acquisitions in September 1995 of
two poultry operations which changed the overall product mix toward lower
priced products.
Beef and pork sales decreased 1996 total sales by 3.5%. The decrease in beef
and pork sales was due to a 51.2% decrease in tonnage partially offset by a
27.6% increase in average sales price. The decrease in tonnage is mainly due
to the sale in the fourth quarter of 1995 of a swine slaughter facility.
In addition, the sale of this swine slaughter facility eliminated lower
priced fresh pork from the product mix which accounts for the significant
increase in average sales price. On April 24, 1996, Tyson Foods, Inc. (the
Company) announced its intention to sell its beef and pork further-
processing operations. The beef further-processing operations include plants
located in Iowa and Texas. The pork further-processing operation consists
of a plant located in Michigan. The Company has signed a definitive purchase
agreement to sell the beef further-processing plants and anticipates that
the pork processing plant will be sold in 1997.
Sales of Mexican Original products and prepared foods as a group decreased
sales by 0.3% for 1996. This decrease was largely due to a 2.4% decrease
in average sales price as well as a change in product mix and a 1.5% decrease
in tonnage. Seafood sales increased 1996 total sales by 0.9% due to a 23.5%
increase in tonnage slightly offset by a 3.3% decrease in average sales price.
The increase in seafood tonnage is mainly due to acquisitions at the end of
the third quarter of 1995. Sales of live swine, animal foods and by-products
as a group increased 1996 total sales by 4.0%. Over the past five years total
sales have grown at a compounded annual rate of 10.5%.
Sales for 1995 increased 7.8% over 1994. This increase was mainly due to an
increase in consumer poultry sales which increased 1995 sales by 6.1%. The
increase in consumer poultry sales was primarily attributable to a 13.6%
increase in tonnage partially offset by a 4.7% decrease in average sales
price. Lower average sales price for consumer poultry primarily resulted from
an increased supply of poultry and alternative red meats in the marketplace.
Trasgo S.A. de C.V. (Trasgo), acquired in the third quarter of 1994,
accounted for 13.5% of the increase in consumer poultry sales. Beef and pork
sales decreased 1995 total sales by 1.5%. The decrease in beef and pork sales
was due to a 7.7% decrease in tonnage and a 6.0% decrease in average sales
price. Sales of Mexican Original products and prepared foods as a group
increased sales for 1995 compared to 1994 by 1.9%. Culinary Foods, Inc.,
acquired in the fourth quarter of 1994, accounted for 76.1% of the increase
in prepared foods. Seafood sales increased 1995 total sales by 0.3% due to an
8.6% increase in average sales price partially offset by a 1.1% decrease in
tonnage. Sales of live swine, animal foods and by-products as a group
increased 1995 total sales by 1.0%.
60 (29)
<PAGE>
The increase in cost of goods sold for 1996 over 1995 of 24.5% was mainly the
result of the increase in sales volume and a significant increase in the cost
of grain used in the Company's operations. Increases in the cost of
ingredients used in feed for poultry and swine and the ingredients used in
the Mexican Original operations are estimated to have increased cost of sales
by $445 million in 1996 compared to 1995. Above-average ingredient costs are
anticipated to continue for a period of time and the effect on the Company's
cost of sales will continue to be significant as these costs pass through
inventories. The impact of high ingredient costs on the Company's operations
is difficult to predict and is dependent upon various factors in the
commodity grain market as well as the market for finished products. The
Company's strategy of adding value to its products through further-processing
helps to offset a portion of the impact of increased ingredient costs.
Furthermore, the Company is making an effort to recover a portion of
increased grain costs through increased sales prices. However, because of the
current excess supply of poultry and alternative red meats in the marketplace
there can be no assurance that such costs can be passed on to the consumer in
the near future through higher sales prices. As a percent of sales, cost of
sales increased to 85.3% in 1996 compared to 80.3% in 1995.
The increase in cost of goods sold for 1995 over 1994 of 6.6% was mainly the
result of the increase in sales volume partially offset by a 10.5% decrease
in the cost of feed for live poultry and swine. As a percent of sales, cost
of sales decreased to 80.3% in 1995 compared to 81.2% in 1994.
Operating expenses for 1996 increased 10.1% from 1995. As a percent of sales,
selling expense decreased to 8.5% in 1996 compared to 8.7% in 1995. As a
percent of sales, general and administrative expense was 1.6% in 1996
compared to 2.0% in 1995, due to a decrease in legal costs and cost
reduction initiatives. Amortization expense, as a percent of sales, was 0.4%
in 1996 compared to 0.5% in 1995.
Operating expenses for 1995 decreased 19.5% from 1994. Excluding the write-
down of excess of investments over net assets acquired and certain long-lived
assets related to Arctic Alaska Fisheries Corporation (Arctic), which
occurred in the third quarter of 1994, operating expenses increased 11.6%
when compared to 1994. As a percent of sales, selling expense increased to
8.7% in 1995 compared to 8.3% in 1994. Selling expense increased primarily
due to increased storage and distribution costs, a portion of which was
related to international sales and acquisitions, as well as increased
commission and promotional expenses. As a percent of sales, general and
administrative expense was 2.0% in 1995 compared to 1.9% in 1994 and
amortization expense was 0.5% in 1995 compared to 0.6% in 1994.
Interest expense increased 15.7% in 1996 compared to 1995. The Company had a
higher level of borrowing, which increased the Company's average indebtedness
by 35.2% over the same period last year. The Company's short-term interest
rates were approximately 5.1% lower than the same period last year, which
lowered the weighted average interest rate of all Company debt in 1996
compared to 1995. As a percent of sales, interest expense was 2.1% in 1996
and 1995. The average interest rate on the Company's total debt for 1996 was
6.7% compared to 7.7% for 1995.
Interest expense increased 33.4% in 1995 compared to 1994 with Trasgo
accounting for 17.8% of the increase. The Company's short-term interest
rates were approximately 54.1% higher in 1995 compared to 1994 which raised
the weighted average interest rate of all Company debt in 1995 compared to
61 (29)
<PAGE>
1994. In addition, the Company had a higher level of borrowings as a result
of acquisitions which increased the Company's average indebtedness by 13.4%
in 1995 compared to 1994. As a percent of sales, interest expense increased
to 2.1% in 1995 compared to 1.7% in 1994. The average interest rate on the
Company's total debt for 1995 was 7.7% compared to 6.6% for 1994.
The effective tax rate for 1996 was 37.0% compared to 38.1% in 1995. The rate
for 1994 was 101.8%, which was unusually high due to the nondeductibility of
the write-down of Arctic's excess of investments over net assets acquired.
Excluding the write-down in 1994, the rate would have been 39.0%. In addition
to reduced state income taxes, the tax rate was impacted by an adjustment to
the liability for deferred income taxes to reflect the Company's current
assessment of tax contingencies provided for in prior years.
Return on beginning assets for 1996 was 2.0% compared to 6.0% for 1995, with
a five-year average of 3.9%. Return on beginning shareholders' equity for
1996 was 5.9% compared to 17.0% for 1995. The five-year return on beginning
shareholders' equity was 10.9%.
ACQUISITIONS
On January 19, 1995, the Company completed the purchase of the Star of
Kodiak, a fish processing facility in Kodiak, Alaska. On June 26, 1995, the
Company completed the purchase of Multifoods Seafood, Inc. and JAC Creative
Foods, Inc., with combined annual sales of approximately $65 million. On
September 1, 1995, the Company acquired the U.S. broiler division of Cargill,
Incorporated, with operations in Georgia and Florida and 1994 sales of
approximately $268 million. On September 5, 1995, the Company acquired all
of the outstanding stock of McCarty Farms, Inc., an integrated poultry
company with all of its operations in Mississippi and 1994 sales of
approximately $320 million. The total cost of all of these acquisitions was
approximately $368.7 million including cash paid and assets exchanged.
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 prior years. These factors should
be considered when making comparisons to 1995 and 1994.
62 (30)
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
TYSON FOODS, INC.
THREE YEARS ENDED SEPTEMBER 28, 1996
(IN MILLIONS EXCEPT PER SHARE DATA)
----------------------------------------------------------
1996 1995 1994
-----------------------------------------------------------
Shares Amount Shares Amount Shares Amount
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A COMMON STOCK 79.7 $8.0 79.7 $8.0 79.7 $8.0
-----------------------------------------------------------
CLASS B COMMON STOCK 68.5 6.8 68.5 6.8 68.5 6.8
-----------------------------------------------------------
CAPITAL IN EXCESS OF PAR VALUE
Beginning Balance 377.9 391.4 392.7
Exercise of Options (2.5) (13.5) (1.3)
-----------------------------------------------------------
Ending Balance 375.4 377.9 391.4
RETAINED EARNINGS
Beginning Balance 1,162.3 953.8 965.5
Net income(loss) 86.9 219.2 (2.1)
Dividends (16.8) (10.7) (9.6)
Class A per share (1996-$.12;
1995-$.08; 1994-$.07)
Class B per share (1996-$.1080;
1995-$.0667; 1994-$.0583)
-----------------------------------------------------------
Ending Balance 1,232.4 1,162.3 953.8
CURRENCY TRANSLATION ADJUSTMENT
Beginning Balance (5.2) 1.2 0.0
Currency Translation Adjustment 2.4 (6.4) 1.2
-----------------------------------------------------------
Ending Balance (2.8) (5.2) 1.2
TREASURY STOCK
Beginning Balance 3.4 (79.2) 2.9 (68.7) 0.9 (11.4)
Shares purchased 0.1 (1.3) 1.4 (32.0) 2.8 (66.9)
Shares issued for exercise of (0.3) 5.1 (0.9) 21.5 (0.6) 6.5
options
Shares Awarded for stock plans (0.2) 3.1
-----------------------------------------------------------
Ending Balance 3.2 (75.4) 3.4 (79.2) 2.9 (68.7)
UNAMORTIZED DEFERRED COMPENSATION
Beginning Balance (2.9) (3.1) (0.9)
Amortization of deferred 0.2 0.2 0.9
compensation
Shares Issued for exercise (3.1)
of options
-----------------------------------------------------------
Ending Balance (2.7) (2.9) (3.1)
Total Shareholders' Equity $1,541.7 $1,467.7 $1,289.4
==============================================================================================
SEE ACCOMPANYING NOTES.
</TABLE>
63 (31)
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
TYSON FOODS, INC.
SEPTEMBER 28, 1996 AND SEPTEMBER 30, 1995 (IN MILLIONS EXCEPT PER SHARE DATA)
<S> <C> <C>
ASSETS 1996 1995
Current Assets:
Cash and cash equivalents $36.6 $33.1
Accounts receivable 547.1 494.7
Inventories 1,027.4 949.4
Assets held for sale 155.5
Other current assets 43.7 42.6
- ---------------------------------------------------------------------------
Total Current Assets 1,810.3 1,519.8
Net Property, Plant and Equipment 1,869.2 2,013.5
Excess of Investments Over Net Assets Acquired 731.5 808.1
Investments and Other Assets 133.1 102.9
- ---------------------------------------------------------------------------
Total Assets $4,544.1 $4,444.3
===========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 39.5 $ 95.2
Current portion of long-term debt 129.2 269.0
Trade accounts payable 269.7 274.7
Accrued salaries and wages 65.6 74.6
Federal and state income taxes payable 17.4 14.6
Accrued interest payable 29.4 7.9
Other current liabilities 135.0 129.8
- ---------------------------------------------------------------------------
Total Current Liabilities 685.8 865.8
Long-Term Debt 1,806.4 1,620.5
Deferred Income Taxes 495.6 479.7
Other Liabilities 14.6 10.6
Shareholders' Equity:
Common stock ($.10 par value):
Class A-authorized 900 shares: 8.0 8.0
issued 79.7 shares in 1996 and 1995
Class B-authorized 900 shares:
issued 68.5 shares in 1996 and 1995 6.8 6.8
Capital in excess of par value 375.4 377.9
Retained earnings 1,232.4 1,162.3
Currency translation adjustment (2.8) (5.2)
- ---------------------------------------------------------------------------
1,619.8 1,549.8
Less treasury stock, at cost-
3.2 shares in 1996 and 3.4 shares in 1995 75.4 79.2
Less unamortized deferred compensation 2.7 2.9
- ---------------------------------------------------------------------------
Total Shareholders' Equity 1,541.7 1,467.7
Total Liabilities and Shareholders' Equity $4,544.1 $4,444.3
===========================================================================
SEE ACCOMPANYING NOTES.
</TABLE>
64 (32)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL CONDITION
TYSON FOODS, INC.
On April 24, 1996, the Company announced plans to sell its beef and pork
further-processing operations. The beef further-processing operations
include plants located in Harlingen, Texas; Garland, Texas; Sioux Center,
Iowa and Orange City, Iowa. The pork further-processing operations consist
of one plant located in Holland, Michigan. On October 17, 1996, the Company
signed a definitive purchase agreement to sell the beef further-processing
plants. Additionally, the Company anticipates that the pork further-
processing plant will be sold in 1997. Accordingly, the assets of these
operations have been classified as a current asset at September 28, 1996.
The net proceeds from these dispositions are expected to exceed the
current carrying value. The Company intends to use net proceeds from
the sale of these operations primarily to fund capital expenditures and
reduce debt. The assets of these operations total $155.5 million and
consist of inventories, net property, plant and equipment and excess of
investments over net assets acquired.
At 1996 year end, working capital was $1,124.5 million compared to $654
million at the end of 1995, an increase of $470.5 million. The current ratio
for 1996 was 2.64 to 1 compared to 1.76 to 1 for 1995. Working capital and
the current ratio have increased from 1995 mainly due to assets held for
sale and increases in accounts receivable and inventories as well as a
decrease in the current portion of long-term debt. Total assets have
increased by $1.9 billion or 71.7% over the past five years inclusive of
acquisitions. Additions, net of dispositions, to total property, plant and
equipment for the last five years were $1.3 billion including acquisitions,
an increase of 77.6% over the last five years. At 1996 year end, the Company
had construction projects in progress that will require approximately
$121.8 million to complete. Funding for these expenditures will be provided
by cash from operations, additional borrowings or proceeds from dispositions
of the beef and pork further-processing facilities.
Long-term debt at 1996 year end was $1.8 billion, an increase of $185.9
million from the end of 1995. Total debt at 1996 year end was comparable
to that of 1995. The Company has unsecured revolving credit facilities
totaling $1.5 billion which support the Company's commercial paper program.
In May 1996, the maturity date of the $1 billion facility was extended to
May 2001 and the maturity date of the $500 million facility was extended to
May 1997. At September 28, 1996, all of the $1 billion facility was
outstanding and consisted of $835 million of commercial paper and
$165 million drawn under the revolver. At September 28, 1996, the Company
had $435.5 million available under the $500 million facility. Additional
outstanding long-term debt at September 28, 1996, consisted of
$348.5 million of public debt, $297.6 million of institutional notes,
$127.1 million of leveraged equipment loans and $33.2 million of other
indebtedness.
The revolving credit agreements and notes contain various covenants, the more
restrictive of which require maintenance of a minimum net worth, current
ratio, cash flow coverage of interest and a maximum total debt-to-
capitalization ratio. The Company is in compliance with these covenants.
The Company prefers maintaining a 50/50 fixed-to-floating debt ratio.
Management believes that, over the long-term, variable-rate debt may provide
more cost-effective financing than fixed-rate debt; however, the Company will
issue fixed-rate debt if advantageous market opportunities arise.
65 (33)
<PAGE>
Shareholders' equity increased 5.0% during 1996 and has grown at a compounded
annual rate of 13.4% over the past five years, inclusive of a $213.9 million
write-down of assets in 1994 and $205.2 million of Class A stock issued in
October 1992.
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. Through
September 28, 1996, the Company had purchased approximately 3.7 million
shares under this repurchase program.
66 (33)
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
TYSON FOODS, INC.
THREE YEARS ENDED SEPTEMBER 28, 1996 (IN MILLIONS)
- ----------------------------------------------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $86.9 $219.2 $(2.1)
Adjustments to reconcile net income (loss)
to cash provided by operating activities:
Depreciation 211.7 179.0 158.6
Amortization 27.6 25.9 29.7
Write-down of excess of investments over
net assets acquired and certain long-lived assets 213.9
Deferred income taxes 15.9 10.9 (2.4)
Minority interest (3.3) (6.6)
Foreign currency exchange loss 9.0 15.6
Loss on dispositions of property and equipment 2.2 3.6 2.8
Increase in accounts receivable (66.9) (29.6) (307.4)
Increase in inventories (126.7) (140.5) (34.0)
Increase (decrease) in trade accounts payable (4.7) 12.8 35.6
Net change in other current assets and liabilities 21.6 1.0 (44.5)
- ----------------------------------------------------------------------------------------------
Cash Provided by Operating Activities 173.3 291.3 50.2
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash paid for acquisitions (350.1) (82.9)
Additions to property, plant and equipment (214.0) (347.2) (232.1)
Proceeds from sale of property, plant and equipment 21.1 20.1 8.5
Net change in other assets and liabilities (29.5) (53.8) (3.7)
- ----------------------------------------------------------------------------------------------
Cash Used for Investing Activities (222.4) (731.0) (310.2)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in notes payable (55.7) 45.9 3.5
Proceeds from long-term debt 475.6 628.1 412.3
Repayments of long-term debt (351.5) (189.5) (81.1)
Purchase of treasury shares (1.3) (32.0) (66.9)
Other (15.0) (1.1) (2.3)
- ----------------------------------------------------------------------------------------------
Cash Provided by Financing Activities 52.1 451.4 265.5
Effect of Exchange Rate Change on Cash 0.5 (5.6)
- ----------------------------------------------------------------------------------------------
Increase in Cash 3.5 6.1 5.5
Cash and Cash Equivalents at Beginning of Year 33.1 27.0 21.5
- ----------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $36.6 $33.1 $27.0
- ----------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES.
</TABLE>
67 (34)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - CASH FLOWS
TYSON FOODS, INC.
In 1996, net cash of $173.3 million was provided by operating activities.
This was a decrease of $118.0 million from 1995. Finished inventories have
increased in 1996 compared to 1995 due to increased grain costs, more volume
from recent acquisitions and other general inventory increases. Comparability
between 1995 and 1994 was affected by a substantial increase in accounts
receivable in 1994, resulting from management's decision to discontinue an
accounts receivable sale agreement. Financing activities provided net cash
of $52.1 million, primarily due to increased long-term debt. The Company used
funds generated from operating and financing activities to fund additions to
property, plant and equipment and cash payments for grain purchases. The
expenditures for property, plant and equipment were related to acquiring new
equipment and building and upgrading facilities in order to maintain
competitive standing and position the Company for future opportunities.
Additionally, the Company makes a continuing effort to increase efficiencies,
reduce overall cost and meet or exceed environmental laws and regulations.
Approximately $121.8 million will be required to complete construction
projects in progress at 1996 year-end.
The Company's foreseeable cash needs for operations and capital expenditures
will continue to be met through cash flows from operations and additional
borrowings which are available to the Company. On June 7, 1995, the Company
issued $150 million of debt securities in the form of 6.75% notes due
June 1, 2005. The net proceeds of the 6.75% notes were used to repay a portion
of the Company's borrowings under its commercial paper program. On
October 10, 1995, the Company issued $50 million of debt securities in the
form of 6.39-6.41% medium-term notes due October 10, 2000, and on
October 17, 1995, issued $150 million of debt securities in the form of
6.625% medium-term notes due October 17, 2005. The net proceeds from the
sale of the medium-term notes or other forms of debt securities were used by
the Company to refinance existing indebtedness.
WRITE-DOWN OF ASSETS
During the third quarter of 1994, the Company wrote down $191 million of the
excess of investments over net assets acquired, plus an additional
$23 million for impaired long-lived assets of Arctic. The after-tax
impact of this write-down was approximately $205 million or $1.38 per
share. Arctic consistently performed below pre-acquisition expectations.
The Company's management 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 became
very intense in the years prior to the write-down. More vessels with greater
production capacities were competing for the limited quotas set by
government regulatory agencies. Allocations toward onshore processing created
a competitive disadvantage for Arctic due to its significant at-sea
processing capabilities. Global expansion failed to materialize in spite
of extensive management efforts. Market prices which rose significantly
during the two years prior to acquisition declined to more modest levels.
These conditions 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
concluded that there was permanent impairment of the carrying value of
Arctic's intangible assets and certain other long-lived assets.
68 (35)
<PAGE>
ENVIRONMENTAL MATTERS
The Company has a strong financial commitment to clean water and has many
environmentally responsible practices. Consequently, management believes
that they have no incidence of environmental contamination or damages
requiring material expenditures. During 1996, the Company invested
approximately $42.9 million in water quality, including both capital outlays
totaling $4.6 million to build and upgrade facilities and an additional
$38.3 million for day-to-day operations.
69 (35)
<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. All significant
intercompany accounts and transactions have been eliminated.
Description of Business: The Company is a fully integrated producer,
processor and marketer of poultry-based food products as well as
a significant producer and marketer of other center-of-the-plate
and convenience food items. The Company's food products are sold in the
domestic foodservice, retail and wholesale club markets as well as
internationally.
Fiscal Year: The Company utilizes a 52 or 53 week accounting period which
ends on the Saturday closest to September 30.
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 $131.2 million
at September 28, 1996, and $129.9 million at September 30, 1995, are included
in trade accounts payable, accrued salaries and wages and other current
liabilities.
<TABLE>
<CAPTION>
Inventories: Inventories, valued at the lower of cost (first-in, first-out)
or market, consist of the following: (IN MILLIONS)
- ---------------------------------------------------------------------------
1996 1995
- ---------------------------------------------------------------------------
<S> <C> <C>
Dressed and further-processed products $ 481.1 $417.6
Live poultry and hogs 362.2 321.0
Seafood related products 51.4 75.1
Hatchery eggs and feed 63.8 58.6
Supplies 68.9 77.1
- ---------------------------------------------------------------------------
$1,027.4 $949.4
- ---------------------------------------------------------------------------
</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.
The Company capitalized interest costs of $3.8 million in 1996, $3.1
million in 1995 and $2 million in 1994 as part of the cost of major
asset construction projects. Approximately $121.8 million will be
required to complete construction projects in progress at
September 28, 1996.
70 (36)
<PAGE>
<TABLE>
<CAPTION>
The major categories of property, plant and equipment and
accumulated depreciation, at cost are as follows: (IN MILLIONS)
- ----------------------------------------------------------------------------
1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
Land $ 51.9 $ 56.7
Buildings and leasehold improvements 847.1 866.4
Machinery and equipment 1,764.6 1,725.9
Vessels 111.3 110.0
Land improvements and other 89.6 86.9
Buildings and equipment under construction 113.6 200.7
- ----------------------------------------------------------------------------
2,978.1 3,046.6
Less accumulated depreciation 1,108.9 1,033.1
- ----------------------------------------------------------------------------
$1,869.2 $2,013.5
- ----------------------------------------------------------------------------
</TABLE>
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 September 28, 1996 and September 30, 1995, the
accumulated amortization of excess of investments over net assets acquired
was $142.6 million and $128.9 million, respectively.
Capital Stock: Holders of Class B Common Stock (Class B stock) may
convert such stock into Class A Common Stock (Class A stock) on a
share-for-share basis. Holders of Class B stock are entitled to ten votes
per share while 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 holders of Class B stock unless they are simultaneously
paid to holders of Class A stock, and the per share amount of the cash
dividend paid to holders of Class B stock cannot exceed 90% of the cash
dividend simultaneously paid to 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 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. Through September 28, 1996,
the Company had purchased approximately 3.7 million shares under this
repurchase program.
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.
71 (37)
<PAGE>
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.
Advertising and Promotion Expenses: Advertising and promotion expenses
are charged to operations in the period incurred. Advertising and
promotion expenses for 1996, 1995 and 1994 were $228.0 million,
$193.3 million and $183.6 million, respectively.
Use of estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from those estimates.
Change in Accounting Principle: Effective October 1, 1995, the Company
adopted Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" (SFAS No. 121). Under the provisions of SFAS No. 121,
impairment losses are recognized when information indicates the carrying
amount of long-lived assets, identifiable intangibles and goodwill related
to those assets will not be recovered through future operations or sale.
Impairment losses for assets to be held or used in operations are based
on the excess of the carrying amount of the asset over the asset's fair
value. Assets held for sale, except for discontinued operations, are
carried at the lower of carrying amount, or fair value less cost to sell.
The effect of adopting SFAS No. 121 was not material.
Stock-Based Compensation: In October 1995, the FASB issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123). Under the provisions of SFAS No. 123,
companies can elect to account for stock-based compensation plans using
a fair value based method or continue measuring compensation expense for
those plans using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
SFAS No. 123 requires that companies electing to continue using the intrinsic
value method must make pro forma disclosures of net income and earnings per
share as if the fair value based method of accounting had been applied. SFAS
No. 123 will be effective for the Company's year ending September 1997.
The Company currently accounts for its stock-based compensation plans and
intends to continue to account for stock-based compensation using the intrinsic
value method, and accordingly, this pronouncement will not have an effect on
the Company's financial position or results of operations.
NOTE 2: ASSETS HELD FOR SALE
On April 24, 1996, the Company announced its intention to sell its beef and
pork further-processing operations in its effort to return to its core
business. The beef further-processing operations include plants located in
Harlingen, Texas; Garland, Texas; Sioux Center, Iowa and Orange City, Iowa.
72 (38)
<PAGE>
The pork further-processing operations consist of one plant located in
Holland, Michigan. On October 17, 1996, the Company signed a definitive
purchase agreement to sell the beef further-processing plants. Additionally,
the Company anticipates that the pork further-processing plant will be sold
in 1997. Accordingly, the assets of these operations have been classified as
a current asset at September 28, 1996. The net proceeds from the disposition
are expected to exceed the current carrying value. The Company intends to use
net proceeds from the sale of these operations primarily to fund capital
expenditures and reduce debt. The assets of these operations total $155.5
million and consist of inventories, net property, plant and equipment and
excess of investment over net assets acquired.
NOTE 3: ACQUISITIONS AND WRITE-DOWN OF ASSETS
On January 19, 1995, the Company acquired the Star of Kodiak, a fish
processing facility in Kodiak, Alaska. On June 26, 1995, the Company acquired
Multifoods Seafood, Inc. and JAC Creative Foods, Inc., with combined annual
sales of $65 million. On September 1, 1995, the Company acquired the U.S.
broiler division of Cargill, Incorporated with operations in Georgia and
Florida and had 1994 sales of approximately $268 million. On September 5,
1995, the Company acquired all of the outstanding stock of McCarty Farms,
Inc., an integrated poultry company with all of its operations in Mississippi
and 1994 sales of approximately $320 million. The total cost of all of these
acquisitions was approximately $368.7 million including cash paid and assets
exchanged.
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 1995 and 1994.
Government restrictions on fishing, intense industry competition and
fluctuations in market prices continued to adversely affect Arctic Alaska
Fisheries Corporation (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 assumed that Arctic's sales volumes and
prices would 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 were 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 historic trends and market conditions, was 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.
73 (39)
<PAGE>
NOTE 4: FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATION
The Company periodically enters 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. The Company
also hedges exposure to changes in interest rates on certain of its financial
instruments.
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 September 28, 1996, the Company did not have
significant credit risk concentrations. No single group or customer
represents greater than 10% of total accounts receivable.
NOTE 5: CONTINGENCIES AND COMMITMENTS
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.
The Company leases certain farms and other properties and equipment for which
the total rentals thereon approximated $35.7 million in 1996, $37.9 million
in 1995 and $29.6 million in 1994. 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 payments of insurance and property taxes.
Minimum lease commitments under noncancelable leases at September 28, 1996
total $87.3 million composed of $30.2 million for 1997, $22.3 million for
1998, $13.2 million for 1999, $9.2 million for 2000, $5.2 million for 2001
and $7.2 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.
74 (39)
<PAGE>
NOTE 6: LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt consists of the following:
(IN MILLIONS)
- -------------------------------------------------------------------------------
Maturity 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial paper
(5.5% effective rate at 9/28/96) 2001 $835.0 $955.3
Debt securities:
6.75% notes 2005 149.1 148.8
6.625% notes 2005 149.3
6.39-6.41% notes 2000 50.1
Institutional notes:
10.33% notes 1996-1999 101.2 135.0
10.61% notes 1999-2001 125.0 125.0
10.75% notes 1996 13.0
10.84% notes 2002-2006 50.0 50.0
11.375% notes 1996-2000 21.4 25.7
Revolving credit facility
(5.5% effective rate at 9/28/96) 2001 165.0 44.7
Leveraged equipment loans 2005-2007 127.1 38.9
(rates ranging from 4.9% to 6.0%)
Bank loans 35.0
Other various 33.2 49.1
- -------------------------------------------------------------------------------
$1,806.4 $1,620.5
- -------------------------------------------------------------------------------
</TABLE>
The Company has unsecured revolving credit agreements totaling $1.5 billion
which support the Company's commercial paper program. The $1 billion
facility expires in May 2001. At September 28, 1996, $1 billion was
outstanding under this facility consisting of $835 million in commercial
paper and $165 million drawn under the revolver. The $500 million facility
expires in May 1997. At September 28, 1996, the Company had $435.5 million
available under this revolving credit facility.
At September 28, 1996, the Company had outstanding letters of credit totaling
approximately $41 million issued primarily in support of workers'
compensation insurance programs, industrial revenue bonds and the leveraged
equipment loans.
Under the terms of the leveraged equipment loans, the Company had restricted
cash totaling approximately $28 million which is included in Investments and
Other Assets at September 28, 1996. Under these leveraged loan agreements,
the Company entered into interest rate swap agreements to effectively lock in
a fixed interest rate for these borrowings. At September 28, 1996, the
notional amounts of these swap agreements totaled approximately
$113.7 million.
75 (40)
<PAGE>
Annual maturities of long-term debt for the five years subsequent to
September 28, 1996 are: 1997-$129.2 million; 1998-$91.0 million; 1999-$71.3
million; 2000-$72.6 million and 2001-$1,121.5 million.
The revolving credit agreements and 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.
The fair value of long-term debt, at September 28, 1996, 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, was approximately
$1.9 billion.
The weighted average interest rate on all outstanding short-term borrowings
was 5.0% at September 28, 1996 and 6.7% at September 30, 1995.
NOTE 7: INCOME TAXES
The Company accounts for income taxes using the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
No. 109). SFAS No. 109 requires that 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 at the beginning of 1994
did not affect the Company's financial position or results of operations.
<TABLE>
<CAPTION>
Detail of the provision for income taxes consists of:
(IN MILLIONS)
- ----------------------------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Federal $49.9 $117.2 $107.4
State (0.9) 13.8 13.3
- ----------------------------------------------------------------------------
$49.0 $131.0 $120.7
- ----------------------------------------------------------------------------
Current $33.1 $120.1 $123.1
Deferred 15.9 10.9 (2.4)
- ----------------------------------------------------------------------------
$49.0 $131.0 $120.7
- ----------------------------------------------------------------------------
</TABLE>
76 (41)
<PAGE>
<TABLE>
<CAPTION>
The reasons for the difference between the effective income tax rate and the
statutory U.S. federal income tax rate are as follows:
- ---------------------------------------------------------------------------
1996 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. federal income tax rate 35.0% 35.0% 35.0%
Write-down of excess of investments over
net assets acquired 62.6
Amortization of excess of investments
over net assets acquired 5.9 2.1 2.8
State income taxes (benefit) (0.4) 2.6 2.8
Other differences, net (3.5) (1.6) (1.4)
- ---------------------------------------------------------------------------
37.0% 38.1% 101.8%
- ---------------------------------------------------------------------------
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax liabilities as of September 28, 1996
and September 30, 1995 are as follows:
<TABLE>
<CAPTION>
(IN MILLIONS)
- ----------------------------------------------------------------------------
1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
Basis difference in property, plant and equipment $268.1 $255.7
Suspended taxes from conversion to accrual method 150.2 150.2
Other 77.3 73.8
- ----------------------------------------------------------------------------
$495.6 $479.7
- ----------------------------------------------------------------------------
</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 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.
77 (42)
<PAGE>
NOTE 8: 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 consolidated balance
sheet as deferred compensation in shareholders' equity. 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, restrictions were removed
from 73,119 shares and the related unamortized deferred compensation was
expensed.
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
1996, 1995 and 1994 was as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
Shares Under Option Price
Option Per Share
- ---------------------------------------------------------------
<S> <C> <C>
Outstanding, October 2, 1993 3,533,029 6.92-21.63
Exercised (599,804) 6.92-11.94
Canceled (156,073) 6.93-21.63
Granted 790,400 21.50
- ---------------------------------------------------------------
Outstanding, October 1, 1994 3,567,552 7.19-21.63
Exercised (963,510) 7.19-11.94
Canceled (156,445) 7.25-21.63
Granted 297,850 21.75
- ---------------------------------------------------------------
Outstanding, September 30, 1995 2,745,447 7.24-21.75
Exercised (213,690) 7.25-21.75
Canceled (306,100) 11.94-22.75
Granted 1,419,850 21.88-22.75
- ---------------------------------------------------------------
Outstanding, September 28, 1996 3,645,507 $7.24-22.75
Exercisable, September 28, 1996 295,077
- ---------------------------------------------------------------
</TABLE>
The remainder of the options are exercisable ratably through March, 2006.
NOTE 9: TRANSACTIONS WITH RELATED PARTIES
The Company has operating leases for farms, equipment and other facilities
with the Senior Chairman of the Board of Directors of the Company and certain
members of his family, as well as a trust controlled by him, for rentals of
$7.0 million in 1996, $7.0 million in 1995 and $6.8 million in 1994. Other
facilities, including a cold storage distribution facility, are also leased
from the Company's profit sharing plan and other officers and directors for
rentals totaling $6.6 million in 1996, $7.1 million in 1995 and $6.7 million
in 1994.
78 (42)
<PAGE>
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 $11.7 million in 1996, $11.2 million
in 1995 and $11.4 million in 1994.
NOTE 10: BENEFIT PLANS
The Company has defined contribution retirement and incentive benefit
programs for various groups of Company personnel. Company discretionary
contributions, which are determined by the Board of Directors, totaled $24.0
million, $25.1 million and $21.7 million for 1996, 1995 and 1994,
respectively.
NOTE 11: SUPPLEMENTAL INFORMATION
Supplemental cash flow information and noncash investing and financing
activities are as follows:
<TABLE>
<CAPTION>
(IN MILLIONS)
- ----------------------------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest $114.1 $115.0 $ 89.9
Income Taxes $ 40.5 $124.4 $123.2
- ----------------------------------------------------------------------------
SUPPLEMENTAL NONCASH INVESTING AND
FINANCING ACTIVITIES
Acquisitions:
Fair value of assets acquired $124.0
Liabilities assumed (109.2)
Fair value of assets exchanged $ 18.6 $(14.8)
____________________________________________________________________________
</TABLE>
SUPPLEMENTAL SALES INFORMATION: The Company sells certain of its products in
foreign markets, primarily Russia, Japan, Hong Kong/China and Singapore as
well as Canada, Mexico, certain Middle Eastern countries and countries in
the Caribbean. The Company's export sales for 1996, 1995 and 1994 totaled
$790.9 million, $606.1 million and $472.7 million, respectively.
Substantially all of the Company's export sales are transacted through
unaffiliated brokers, marketing associations and foreign sales staffs.
Foreign sales were less than 10% of total consolidated sales for 1996, 1995
and 1994, respectively.
79 (43)
<PAGE>
NOTE 12: QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
(IN MILLIONS EXCEPT PER SHARE DATA)
- ----------------------------------------------------------------------------
Earnings
Gross Net Per
Quarter Ended Sales Margin Income Share
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12-30-95 $1,546.8 $ 267.1 $ 43.3 $ .30
03-30-96 $1,587.7 $ 229.3 $ 14.4 $ .10
06-29-96 $1,628.2 $ 229.3 $ 14.6 $ .10
09-28-96 $1,691.1 $ 222.4 $ 14.6 $ .10
- ----------------------------------------------------------------------------
Fiscal 1996 $6,453.8 $ 948.1 $ 86.9 $ .60
============================================================================
12-31-94 $1,326.3 $ 268.9 $ 52.2 $ .36
04-01-95 1,343.1 270.1 50.5 .35
07-01-95 1,362.3 267.8 57.7 .40
09-30-95 1,479.5 281.3 58.8 .40
- ----------------------------------------------------------------------------
Fiscal 1995 $5,511.2 $1,088.1 $219.2 $1.51
============================================================================
</TABLE>
80 (44)
<PAGE>
REPORT OF MANAGEMENT
TYSON FOODS, INC.
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.
/s/Leland Tollett
- -----------------
Leland Tollett
Chairman of the Board and
Chief Executive Officer
/s/Wayne Britt
- --------------
Wayne Britt
Executive Vice President and
Chief Financial Officer
November 15, 1996
81 (45)
<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 September 28, 1996 and September 30, 1995, and the related
consolidated statements of operations, shareholders' equity, and cash flows
for each of the three years in the period ended September 28, 1996. 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 September 28, 1996 and September 30, 1995, and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended September 28, 1996, in conformity with generally accepted
accounting principles.
Little Rock, Arkansas /s/Ernst & Young LLP
November 15, 1996 --------------------
Ernst & Young LLP
82 (46)
<PAGE>
<TABLE>
<CAPTION>
DIRECTORS AND OFFICERS
BOARD OF DIRECTORS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Neely Cassady Shelby D. Massey Barbara Tyson Fred S. Vorsanger
Private Investor and Private Investor Vice President, Vice President (Emeritus)
Arkansas State Senator Tyson Foods, Inc. University of Arkansas
Joe F. Starr and Private Investor
Lloyd V. Hackley Private Investor Don Tyson
President, Senior Chairman Donald E. Wray
North Carolina of the Board, President and
Community College System Leland E. Tollett Tyson Foods, Inc. Chief Operating Officer,
Chairman of the Board and Tyson Foods, Inc.
Chief Executive Officer, John H. Tyson
Gerald Johnston Tyson Foods, Inc. President,
Private Investor Beef and Pork Division,
Tyson Foods, Inc.
</TABLE>
<TABLE>
<CAPTION>
CORPORATE AND OPERATIONAL OFFICERS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Wayne Britt Steven Hankins Greg Lee John H. Tyson
Executive Vice President, Senior Vice President, Executive Vice President,
Finance Financial Planning Sales, Marketing and Beef and Pork Division
and Shared Services Technical Services
Roy Brown David L. Van Bebber
Senior Vice President, William P. Jaycox David S. Purtle Assistant Secretary
Seafood Division Senior Vice President, Executive Vice
Human Resources Operations,Transportation
Gerard Dowd and Warehousing William Whitfield
Senior Vice President, William Kuckuck Vice President,
Foodservice Sales and Senior Vice President, Mary Rush Business Development
Marketing International Sales, Secretary and Director of and Analysis
Marketing and Operations Investor Relations
James G. Ennis Donald E. Wray
Vice President, Dennis Leatherby Leland E. Tollett President and
Controller and Treasurer Chairman of the Board and Chief Operating Officer
Chief Accounting Officer Chief Executive Officer
</TABLE>
83 (47)
<PAGE>
CORPORATE INFORMATION
TYSON FOODS, INC.
<TABLE>
<CAPTION>
Price of Company's Common Stock (Nasdaq stock market)
___________________________________________________________________________________
Fiscal Year 1996 Fiscal Year 1995
___________________________________________________________________________________
High Low High Low
___________________________________________________________________________________
<S> <C> <C> <C> <C>
First Quarter 27 1/8 22 3/4 24 1/8 20 7/8
- -----------------------------------------------------------------------------------
Second Quarter 26 5/8 20 3/4 25 20 3/4
- -----------------------------------------------------------------------------------
Third Quarter 27 5/8 21 7/8 24 7/8 21 3/4
- -----------------------------------------------------------------------------------
Fourth Quarter 27 7/8 23 3/4 27 1/4 22 3/4
- -----------------------------------------------------------------------------------
</TABLE>
DIRECTSERVICE
SHAREHOLDER INVESTMENT PROGRAM MULTIPLE DIVIDEND CHECKS AND
Tyson Foods has authorized First Chicago DUPLICATE MAILINGS
Trust Company to implement its program If your Tyson Foods stock is
for dividend reinvestment and direct registered in similar but different
purchase of shares for current as well as names, e.g. Jane A. Doe & J.A. Doe,
new investors of Tyson Class "A" Common we are required to create separate
Stock. This program provides alternatives accounts and mail dividend checks and
to traditional retail brokerage methods proxy materials separately even if
of purchasing, holding and selling the mailing addresses are the same.
Tyson stock. All inquiries concerning To consolidate accounts, please
this program should be directed to: contact First Chicago Trust Company.
DirectSERVICE Program LOST OR STOLEN STOCK CERTIFICATES
for Shareholders of Tyson Foods, Inc. OR LEGAL TRANSFERS
c/o First Chicago Trust Company If your stock certificates are lost,
P.O. Box 2598 stolen, or in some way destroyed, or
Jersey City, NJ 07303-2598 if you wish to transfer registration,
please notify First Chicago Trust
CHANGE OF ADDRESS Company in writing. Please include the
If your Tyson Foods stock is registered exact name(s) and Social Security or
in your own name(s), please send change tax identification number(s) in which
of address information to First Chicago the stock is registered and, if
Trust Company. possible, the numbers and issue dates
of the certificates.
84 (48)
<PAGE>
CORPORATE INFORMATION
CORPORATE DATA INDEPENDENT AUDITORS
Tyson Foods, Inc. is the world's largest Ernst & Young LLP
fully integrated producer, processor and 425 West Capitol, Suite 3600
marketer of poultry-based food products Little Rock, Arkansas 72201
as well as a significant producer and
marketer of other center-of-the-plate TRANSFER AGENT & DIVIDEND
and convenience food items. DISBURSING AGENT
First Chicago Trust Company
STOCK EXCHANGE LISTINGS of New York
The common stock of the Company is traded P.O. Box 2506
on the Nasdaq stock market's National Jersey City, New Jersey 07303- 2506
Market under the symbol "TYSNA."
INVESTOR RELATIONS
CORPORATE HEADQUARTERS Financial analysts and others
2210 West Oaklawn Drive seeking investor-related
Springdale, Arkansas 72762-6999 information should contact:
Telephone (501) 290-4000 Director of Investor Relations
Fax (501) 290-4061 Tyson Foods, Inc.
P.O. Box 2020
AVAILABILITY OF FORM 10-K Springdale, Arkansas 72765-2020
A copy of the Company's Form 10-K Telephone (501) 290-4351
Report, as filed with the Securities and
Exchange Commission for 1996, may be NEWS AND PRESS RELEASES
obtained by Tyson shareholders by Press Releases and other
writing to: information concerning Tyson Foods
Corporate Secretary can be delivered direct via
Tyson Foods, Inc. fax by calling PR Newswire
P.O. Box 2020 at (800) 758-5804, ext. 113769.
Springdale, Arkansas 72765-2020
TYSON ON THE INTERNET
ANNUAL MEETING Shareholders and others can access
The Annual Meeting of Shareholders will various information about Tyson
be held at 10 a.m., January 10, 1997, at Foods via the Internet. Tyson
the Walton Arts Center, Fayetteville, Foods' Internet address is
Arkansas. Shareholders who cannot attend http://www.tyson.com/
the meeting are urged to exercise their
right to vote by proxy. LEGAL NOTICE
The term "Tyson" and such terms as
GENERAL COUNSEL "the Company","our","we" and "us"
James B. Blair, Esquire may refer to Tyson Foods, Inc., to
3422 North College, Suite 3 one or more of its consolidated
Fayetteville, Arkansas 72703 subsidiaries or to all of them
taken as a whole. These terms are
used for convenience only and are
not intended as a precise
description of any of the separate
companies, each of which manages
its own affairs.
85 (49)
<PAGE>
EXHIBIT 21 - SUBSIDIARIES OF TYSON FOODS, INC.
Names Under
Jurisdiction of Which Subsidiary
Name Incorporation Does Business
- ----------------- --------------- ----------------
Cobb-Vantress, Inc. Delaware Cobb-Vantress, Inc.
Cobb Breeding Company United Kingdom Cobb Breeding Company
Limited Limited
Cobb Denmark A/S Denmark Cobb Denmark A/S
Cobb France E.U.R.L. France Cobb France E.U.R.L.
Cobb-Poland B.V. Poland Cobb-Poland B.V.
Culinary Foods, Inc. Delaware Culinary Foods, Inc.
Global Employment Delaware Global Employment
Services Inc. Services Inc.
Gorges Foodservice, Texas Gorges Foodservice,
Inc. Inc.
Henry House, Inc. Michigan Henry House, Inc.
JAC Creative Foods, California JAC Creative Foods,
Inc. Inc.
JAC Creative Foods (Canada) Ontario JAC Creative Foods,
Inc. Inc.
JAC Creative Foods of Delaware JAC Creative Foods Of,
Minnesota, Inc. Minnesota, Inc.
McCarty Farms, Inc. Mississippi McCarty Farms, Inc.
McCarty Foods, Inc. Mississippi McCarty Foods, Inc.
National Comp Care Inc. Delaware National Comp Care Inc.
Oaklawn Capital Corporation Delaware Oaklawn Capital
Oaklawn Capital-Mississippi, Mississippi Oaklawn Capital-Mississippi
LLC
TyNet Corporation Delaware Tynet Corporation
Tyson Breeders, Inc. Delaware Tyson Breeders, Inc.
Tyson Enterprise Alaska Tyson Enterprise
Seafood, Inc. Seafood, Inc.
Tyson Enterprise Alaska Tyson Enterprise
Protein, Inc. Protein, Inc.
Tyson Export Sales, U.S. Virgin Tyson Export Sales,
Inc. Islands Inc.
Tyson Farms, Inc. North Carolina Tyson Farms, Inc.
Tyson Farms of Texas, Texas Tyson Farms of Texas,
Inc. Inc.
Tyson Foods of Alabama Alabama Tyson Foods of Alabama
Inc. Inc.
Tyson Holding Company Delaware Tyson Holding Company
Tyson International Bermuda Tyson International
Company, Ltd. Company, Ltd.
Tyson International Delaware Tyson International
Holding Company Holding Company
86
<PAGE>
Tyson Marketing, Ltd. Ontario Tyson Marketing, Ltd.
Tyson Seafood Group, Inc. Washington Tyson Seafood Group, Inc.
Tyson Seafood Group-Japan, Japan Tyson Seafood Group-Japan
Inc.
We Care Workers Delaware We Care Workers
Compensation, Inc. Compensation, Inc.
WLR Acquisition Corp. Delaware WLR Acquisition Corp.
World Resource, Inc. Delaware World Resource, Inc.
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. U.S. Virgin Islands corporation
Arctic Fisheries Washington corporation
OffShore Ventures, Inc. Washington corporation
Oaklawn Sales, Ltd. British Virgin Islands
87
<PAGE>
EXHIBIT 23
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 15, 1996,
included in the 1996 Annual Report to Shareholders of Tyson Foods, Inc.
We also consent to the incorporation by reference in the Registration
Statements (Form S-8 Nos. 33-30680; 33-02135; 2-81928; 2-44550; 33-53028;
and 33-53026, as amended by 33-57515) pertaining to certain employee
benefit plans of Tyson Foods, Inc. and the Registration Statement (Form S-3
No. 33-58177) and the related Prospectus of our reports dated
November 15, 1996, with respect to the consolidated financial statements
and schedule of Tyson Foods, Inc. included or incorporated by reference in
this Annual Report (Form 10-K) for the year ended September 28, 1996.
/s/ ERNST & YOUNG LLP
- ---------------------
ERNST & YOUNG LLP
December 16, 1996
Little Rock, Arkansas
88
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FISCAL 1996 ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000100493
<NAME> TYSON FOODS, INC.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-END> SEP-28-1996
<CASH> 37
<SECURITIES> 0
<RECEIVABLES> 547
<ALLOWANCES> 0
<INVENTORY> 1027
<CURRENT-ASSETS> 1810
<PP&E> 2978
<DEPRECIATION> 1109
<TOTAL-ASSETS> 4544
<CURRENT-LIABILITIES> 686
<BONDS> 1806
0
0
<COMMON> 15
<OTHER-SE> 1527
<TOTAL-LIABILITY-AND-EQUITY> 4544
<SALES> 6454
<TOTAL-REVENUES> 6454
<CGS> 5506
<TOTAL-COSTS> 5506
<OTHER-EXPENSES> 4
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 133
<INCOME-PRETAX> 133
<INCOME-TAX> 49
<INCOME-CONTINUING> 87
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 87
<EPS-PRIMARY> 0.60
<EPS-DILUTED> 0.60
</TABLE>
