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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended October 2, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________________ to ________________
Commission File No. 0-3400
TYSON FOODS, INC.
(Exact Name of Registrant as specified in its Charter)
Delaware 71-0225165
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2210 West Oaklawn Drive, Springdale, Arkansas 72762-6999
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (501) 290-4000
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
Class A Common Stock, New York Stock Exchange, Inc.
Par Value $.10
Securities Registered Pursuant to Section 12(g) of the Act:
Not Applicable
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-K or any
amendment to this Form 10-K. [X]
On October 2, 1999, the aggregate market value of the Class A Common and
Class B Common voting stock held by non-affiliates of the registrant was
$1,909,174,285 and $767,382, respectively.
On October 2, 1999, there were outstanding 125,933,717 shares of the
registrant's Class A Common Stock, $.10 par value, and 102,645,423 shares
of its Class B Common Stock, $.10 par value.
Page 1 of 170 Pages
The Exhibit Index appears on pages 24 through 30
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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 this Annual Report on
Form 10-K: (i) pages 24-60 and inside back cover of the registrant's Annual
Report to Shareholders for fiscal year ended October 2, 1999 (the "Annual
Report") which are filed as Exhibit 13 to this Form 10-K and (ii) the
registrant's definitive Proxy Statement for the registrant's Annual Meeting
of Shareholders to be held January 14, 2000 (the "Proxy Statement").
PART I
Item 1. Business
Pages 26 through 37 of the Annual Report under the caption
"Management's Discussion and Analysis."
Pages 53 through 55 of the Annual Report under the caption "Notes to
Consolidated Financial Statements, Note 16: Segment Reporting."
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Pages 24 and 25, 43 and 60 of the Annual Report under the captions
"Eleven-Year Financial Summary," "Capital Stock" and "Closing Price of
Company's Common Stock."
Item 6. Selected Financial Data
Pages 24 and 25 of the Annual Report under the caption "Eleven-Year
Financial Summary."
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Pages 26 through 37 of the Annual Report under the caption
"Management's Discussion and Analysis."
Item 8. Financial Statements and Supplementary Data
Pages 38 through 57 of the Annual Report under the captions
"Consolidated Statements of Income," "Consolidated Balance Sheets,"
"Consolidated Statements of Shareholders' Equity," "Consolidated
Statements of Cash Flows," "Notes to Consolidated Financial Statements" and
"Report of Independent Auditors."
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Part III
Item 10. Directors and Executive Officers of the Registrant
The information set forth under the captions "Election of Directors"
and "Section 16(a) Beneficial Ownership Reporting" in the Proxy Statement.
Item 11. Executive Compensation
The information set forth under the caption "Executive Compensation
and Other Information" in the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information set forth under the captions "Principal Shareholders"
and "Security Ownership of Management" in the Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information set forth under the caption "Certain Transactions" in
the Proxy Statement.
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PART I
ITEM 1. BUSINESS
Tyson Foods, Inc. (collectively, with its various subsidiaries, the
"Company"), a fully integrated producer, processor and marketer of food
products, commenced business in 1935, was incorporated in Arkansas in 1947,
and was reincorporated in Delaware in 1986.
Financial Information about Segments
The Company identifies business segments based on the products offered
and the nature of customers. The five reported business segments in fiscal
1999 were Food Service, Consumer Products, International, Swine and
Seafood. The information required by Item 1 relating to segments is
incorporated herein by reference to Note 16 of the Company's Notes to
Consolidated Financial Statements appearing on pages 53, 54 and 55 of the
Annual Report and attached as Exhibit 13 to this Report.
General Description of Business
The Company is a fully integrated producer, processor and marketer of
a variety of food products consisting of value-enhanced chicken; fresh and
frozen chicken; and prepared foods and other products such as flour and
corn tortillas and chips. Additionally, the Company has animal feed and pet
food ingredients operations. The Company's integrated operations consist of
breeding and rearing chickens, as well as the processing, further
processing and marketing of these food products. The Company's products are
marketed and sold to national and regional grocery chains, regional grocery
wholesalers, warehouse stores, military commissaries, industrial food
processing companies, national and regional chain restaurants or their
distributors, international export companies and domestic distributors who
service restaurants, food service operations such as plant and school
cafeterias, convenience stores, hospitals and other vendors. Sales are made
by the Company's sales staff as well as through independent brokers and
trading companies.
Originally, the Company was a producer and distributor of fresh
chicken. The Company developed a strategy to reduce the impact of the
commodity market of the fresh chicken business through value-enhancement.
As the industry leader in value-enhanced chicken products, the Company
utilizes national and regional advertising, special promotions and brand
identification, and meets the varying demands of its customers through
capital expenditures and strategic acquisitions. With further-processed
chicken products, grain costs as a percentage of total product costs are
reduced because of the value added to the products by cutting, deboning,
cooking, packaging and/or freezing the chicken.
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The Company's integrated chicken processes include genetic research,
breeding, hatching, rearing, ingredient procurement, feed milling,
veterinary and other technical services, and related transportation and
delivery services. The Company contracts with independent growers to
maintain the Company's flocks of breeder chicks which, when grown, lay the
eggs which the Company transfers to its hatcheries and hatch into broiler
chicks. Newly hatched broiler chicks are vaccinated and then delivered to
independent contract growers who care for and feed the broiler chicks until
they reach processing weight, usually from the end of the fourth to the
eighth week. During the broiler growout period, the Company provides
growers with feed, vitamins and medication for the broilers, if needed, as
well as supervisory and technical services. The broilers are then
transported by the Company to its nearby processing plants. The Company
processed approximately 7.2 billion pounds of consumer chicken during
fiscal 1999.
The Company's chicken business consists of the Food Service, Consumer
Products and International segments. Food Service includes fresh, frozen
and value-enhanced chicken products sold through food service and specialty
distributors who deliver to restaurants, schools and other accounts.
Consumer Products include fresh, frozen and value-enhanced chicken products
sold through retail markets for at-home consumption and through wholesale
club markets targeted to small food service operators, individuals and
small businesses. The Company's International segment markets and sells
the full line of Tyson chicken products.
The Company's farrow to finish swine operations, which include genetic
and nutritional research, breeding, farrowing and feeder pig finishing and
the marketing of live swine to regional and national packers and
processors, are conducted in Alabama, Arkansas, Missouri, North Carolina
and Oklahoma. The Company sold approximately 2 million head of feeder pigs
and market weight live swine in fiscal 1999.
On September 28, 1999, the Company signed a letter of intent to sell
its wholly-owned subsidiary, The Pork Group, Inc. to Smithfield Foods, Inc.
This transaction was subject to the successful negotiation of a definitive
agreement. On December 6, 1999, the Company announced that both parties
were unable to reach a definitive agreement and negotiations were mutually
terminated. The Company intends to explore all options related to the pork
operations, which may include discussions with other potential buyers.
Certain assets of The Pork Group with a fair value of approximately $70
million are classified as assets held for sale at Oct. 2, 1999.
Additionally, at Oct. 2, 1999, the Company accrued expenses related to the
closure of certain assets not part of the Smithfield transaction. The
operating results for the fiscal year ended Oct. 2, 1999, include a pretax
charge of $35.2 million related to the anticipated loss and closure of
these assets.
The Company's seafood business, which was sold on July 17, 1999,
included branded surimi-based seafood offerings, such as analog crabmeat,
lobster, shrimp and scallops marketed both domestically and
internationally. Note 2: Dispositions and Assets Held for Sale on pages 43
and 44 of the Notes to Consolidated Financial Statements of the Annual
Report describes the sale of the seafood business and is incorporated
herein by reference.
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The Company's other segment includes the Prepared Foods group,
consisting of Mexican Original, Culinary Foods and Mallard's Food Products.
Mexican Original produces flour and corn tortilla products. Culinary Foods
and Mallard's Food Products produce specialty pasta and meat dishes, for
restaurants, airlines and other major customers. Additionally, the other
segment includes the Company's wholly-owned subsidiaries involved in
supplying chicken breeding stock and trading agricultural goods worldwide,
the Company's turkey and egg products facilities which were sold on
December 31, 1998, as well as the Company's by-products operations which
convert inedible chicken by-products into high-grade pet food and animal
feed ingredients.
Sources of Revenue
The information required by Item 1 with respect to the amount or
percentage of total revenue contributed by any class of similar products or
services which account for 10% or more of consolidated revenue in any of
the last three fiscal years is incorporated herein by reference to Note 16
of the Company's Notes to Consolidated Financial Statements appearing on
pages 53, 54 and 55 of the Annual Report pursuant to rule 14a-3(b) and
attached as Exhibit 13 to this report.
Marketing and Distribution
The Company seeks to develop and increase the demand for and market
share of a product or product line through concentrated national and local
advertising and other promotional efforts, stressing product quality and
brand identification and meeting specific customer requirements. The
Company's principal marketing strategy is to identify target markets for
value-enhanced food products consisting primarily of chicken and tortilla
products. The Company concentrates production, sales and marketing efforts
in order to appeal to and enhance the demand from those markets. The
Company utilizes its national distribution system and customer support
services to achieve a dominant market position for its products and
identifies distinct markets through trade and consumer research.
The Company's nationwide distribution system utilizes a network of
food distributors which is supported by cold storage warehouses owned or
leased by the Company, by public cold storage facilities and by the
Company's transportation system. The Company ships products from two
Company-owned major frozen food distribution centers having a storage
capacity of approximately 58 million pounds, from a network of public cold
storages and from other owned or leased facilities or directly from plants.
The Company has a total frozen storage capacity in excess of 141.4
million pounds, excluding public or outside cold storage. The Company's
distribution centers accumulate frozen products so that they can fill and
consolidate less-than-truckload orders into full truckloads, thereby
decreasing shipping costs while increasing customer service. In addition,
customers are provided with a selection of products that do not require
large volume orders. The Company's distribution system enables it to supply
large or small quantities of products to meet customer requirements
anywhere in the continental United States.
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Operators serving chicken products in the food service market include
commercial restaurants, business and industry, colleges and universities,
national and regional chains, hotels and lodging, primary and secondary
schools, health and elderly care and other food service accounts. The
Company's products are sold through food service and specialty distributors
who deliver to the above listed operators.
Food Service products are sold under the following brands and
registered trademarks: Tyson, Tastybird, McCarty Foods, Tyson's Pride,
Honey Stung, Hot Wings, Wings of Fire, Signature Specialties and Lady
Aster.
Food Service chicken products include individually-quick-frozen
segments (IQ*F), ready-to-cook and fully cooked fried chicken, fully cooked
breaded and glazed wings, cooked and ready-to-cook breaded and unbreaded
tenderloins, breaded and unbreaded patties and chunks (cooked and ready-to-
cook), oven roasted chicken, stuffed breast specialties, Cornish hens,
flavor marinated breasts, fully cooked, diced, pulled and shredded chicken
products, breaded breast and thigh pieces, bites and strips, fast food cut-
up chicken and marinated deli-chicken.
In the consumer products market the Company sells a wide variety of
food products to customers that sell food products for at-home consumption.
These customers include grocery chains, independent grocery stores, grocery
wholesalers, wholesale clubs and military commissaries. Tyson, Weaver,
Tyson Holly Farms, Delightful Farms, Gold Leaf and Tastybird are registered
trademarks under which the Company sells consumer products.
Consumer Products include frozen prepared foods consisting of separate
lines of Tyson breaded chicken patties, chunks, fillets and tenders, Weaver
breaded chicken tenders, nuggets, patties and fillets, Tyson and Weaver
flavored chicken wings, Tyson complete meal kits, individually-quick-frozen
chicken parts and breaded chicken patties and chunks, refrigerated prepared
foods consisting of separate lines of Tyson roasted ready-to-eat chicken,
Weaver deli meats, refrigerated Tyson Holly Farms fresh tray pack chicken
and frozen and refrigerated Tyson Cornish game hens.
The Company's International division markets and sells the full line
of Tyson products, including chicken and prepared food products. The
International division exported to 75 countries in fiscal 1999. Major
markets include China, Georgia, Guatemala, Japan, Puerto Rico, Russia and
Singapore as well as certain Middle Eastern and Caribbean countries.
The Company continues to believe that Asia offers potential in terms
of developing fully integrated chicken facilities. A memorandum of
understanding has been signed with the Kuok Group to explore development of
chicken production and processing complexes in China. The Company's joint
venture, to create a commercial feed and swine operation in the
Philippines, called Fil-Am Foods, Inc., with Aboitiz Equity Ventures,
Inc. and PM Nutrition Company, Inc., a subsidiary of Purina Mills, Inc is
now operational. Meanwhile, the Company's subsidiary in Mexico continues to
grow rapidly under improving economic conditions. Additionally, Cobb-
Vantress, Inc., a wholly-owned subsidiary, has entered into a joint venture
agreement with a company to build a 180 thousand capacity breeder farm in
China.
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Raw Materials and Sources of Supply
The primary raw materials used by the Company in its chicken
operations consist of feed ingredients, cooking ingredients, packaging
materials and cryogenic agents. The Company believes that its sources of
supply for these materials are adequate for its present needs and the
Company does not anticipate any difficulty in acquiring these materials in
the future. While the Company produces substantially all of its inventory
of breeder chickens and live broilers, it has the capability to purchase
live, ice-packed or deboned chicken to meet production requirements.
Intellectual Property
The Company has registered a number of trademarks relating to its
products which either have been approved or are in the process of
application. Because the Company does a significant amount of brand name
and product line advertising to promote its products, it considers the
protection of such trademarks to be important to its marketing efforts. The
Company has also developed non-public proprietary information regarding its
growout procedures, production processes and other product-related matters.
The Company utilizes internal procedures and safeguards to protect the
confidentiality of such information, and where appropriate, seeks patent
protection for the technology it develops.
Seasonal Demand
The demand for the Company's products generally increases during the
spring and summer months and generally decreases during the winter months.
Because of the somewhat seasonal character of the Company's business, the
Company may increase its finished product inventories during the winter
months in anticipation of increased spring and summer demands.
Industry Practices
The Company's agreements with its customers are generally short-term
due primarily to industry practice and fluctuations in both industry supply
and consumer demand for such products.
Customer Relations
No single customer of the Company accounts for more than ten percent
of the Company's consolidated revenues, and the loss of any single customer
would not have a material adverse effect on the Company's business.
However, two customers represent approximately 23% of the Food Service
segment's net sales and three customers represent approximately 47% of the
Consumer Products segment's net sales. Although any extended
discontinuance of sales to any major customer could, if not replaced, have
an impact on the Company's operations, the Company does not anticipate any
such occurrences due to the demand for its products and its ability to
obtain new customers.
Backlog of Orders
There is no significant backlog of unfilled orders for the Company's
products.
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Competition
The Company's food products compete with those of other national and
regional food producers and processors and certain prepared food
manufacturers. Additionally, the Company's food products compete in
international markets in Europe, South America, Central America and the Far
East. The Company's principal marketing and competitive strategy is to
identify target markets for value-enhanced products, to concentrate
production, sales and marketing efforts in order to appeal to and enhance
the demand from those markets and, utilizing its national distribution
system and customer support services, to achieve a dominant market position
for its products. Past efforts have indicated that customer demand
generally can be increased and sustained through application of the
Company's marketing strategy, as supported by its distribution system.
Research and Development
The Company conducts continuous research and development activities to
improve the strains of primary chicken breeding stock, the genetic
qualities of swine, and finished product development, and is continually
engaged in experiments to determine the most cost effective means of
raising healthy and wholesome chickens. The annual cost of such research
and development programs is less than one percent of total consolidated
annual sales.
Regulation
The Company's facilities for processing chicken and for housing live
chicken and swine are subject to a variety of federal, state and local laws
relating to the protection of the environment, including provisions
relating to the discharge of materials into the environment, and to the
health and safety of its employees. The Company's chicken and Mexican
Original processing and distribution facilities are also subject to
extensive inspection and regulation by the United States Department of
Agriculture. Additionally, the Company's chicken processing facilities are
participants in the government's Hazardous Analysis Critical Control Point
(HACCP) program. The cost of compliance with such laws and regulations has
not had a material adverse effect upon the Company's capital expenditures,
earnings or competitive position and it is not anticipated to have a
material adverse effect in the future.
Employees and Labor Relations
As of October 2, 1999, the Company employed approximately 69,000
persons. The Company believes that its relations with its workforce are
generally good.
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Set forth below is a listing of the Company's facilities which have
employees subject to a collective bargaining agreement together with the
name of the union party to the collective bargaining agreement, the number
of employees at the facility subject thereto and the expiration date of the
collective bargaining agreement currently in effect.
Location Union No. of People Expiration Date
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Albertville, AL UFCW 900 December 31, 2001
Ashland, AL UFCW 750 February 24, 2002
Berlin, MD UFCW 450 December 21, 2001
Berlin, MD Teamsters 100 December 16, 2001
Buena Vista, GA RWDSU 1,300 November 4, 2000
Carthage, TX UFCW 700 November 11, 2000
Center, TX UFCW 1,025 February 4, 2000
Chicago, IL Truck Drivers 1,100 October 6, 2001
Cleveland, MS RWDSU 475 February 20, 2000
Corydon, IN UFCW 375 January 26, 2002
Corydon, IN Steelworkers 75 October 12, 2002
Dardanelle, AR UFCW 1,000 November 3, 2001
Gadsden/Blountsville, AL Teamsters 23 March 31, 2001
Gadsden, AL RWDSU 1,200 November 8, 2001
Glen Allen, VA UFCW 850 November 1, 2001
Henderson, KY UFCW 1,150 April 21, 2001
Hope, AR UFCW 1,400 March 3, 2000
Jackson, MS UFCW 1,050 December 31, 1999
Jacksonville, FL Teamsters 650 December 31, 1999
Noel, MO UFCW 1,225 January 25, 2000
Pine Bluff, AR UFCW 250 October 12, 2002
Shelbyville, TN RWDSU 950 November 12, 2002
Shelbyville, TN Teamsters 35 July 14, 2001
Wilkesboro, NC Teamsters 35 November 4, 2001
Wilkesboro, NC Teamsters 25 November 4, 2001
Wilkesboro, NC Teamsters 125 November 4, 2001
United Food and Commercial Workers Union (UFCW)
Retail, Wholesale, Department Store Union (RWDSU)
The Company has not experienced any strike or work stoppage which had
a material impact on operations; however, there can be no assurance that
union related activities, including work stoppages or strikes will not
occur in the future.
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CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE
PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
This annual report and other written reports or oral statements made
from time to time by the Company and its representatives may contain
forward-looking statements, including forward-looking statements made in
this report, with respect to their current views and estimates of future
economic circumstances, industry conditions, company performance and
financial results. These forward-looking statements are subject to a
number of factors and uncertainties which could cause the Company's
actual results and experiences to differ materially from the anticipated
results and expectations, expressed in such forward-looking statements. In
light of these risks, uncertainties and assumptions, the Company wishes to
caution readers not to place undue reliance on any forward-looking
statements. The Company undertakes no obligation to publicly update or
revise any forward-looking statements based on the occurrence of future
events, the receipt of new information or otherwise.
Among the factors that may affect the operating results of the Company
are the following: (i) fluctuations in the cost and availability of raw
materials, such as feed grain costs; (ii) changes in the availability and
relative costs of labor and contract growers; (iii) market conditions for
finished products, including the supply and pricing of alternative
proteins; (iv) effectiveness of advertising and marketing programs; (v) the
ability of the Company to make effective acquisitions and to successfully
integrate newly acquired businesses into existing operations; (vi) risks
associated with leverage, including cost increases due to rising interest
rates; (vii) changes in regulations and laws, including changes in
accounting standards, environmental laws, and occupational, health and
safety laws; (viii) access to foreign markets together with foreign
economic conditions, including currency fluctuations; and (ix) the effect
of, or changes in, general economic conditions.
ITEM 2. PROPERTIES
The Company currently has production and distribution operations in
the following states: Alabama, Arkansas, California, Florida, Georgia,
Illinois, Indiana, Kentucky, Maryland, Mississippi, Missouri, North
Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, and
Virginia. Additionally, the Company, either directly or through its
subsidiaries, has facilities in or participates in joint venture operations
in Argentina, Brazil, Canada, China, Denmark, France, India, Indonesia,
Ireland, Japan, Mexico, the Philippines, Poland, South Africa, Spain, the
United Kingdom and Venezuela.
The principal chicken operations of the Company consist of 58
processing plants. These plants are devoted to various phases of
slaughtering, dressing, cutting, packaging, deboning or further-processing.
The total slaughter capacity is approximately 47.6 million head per week.
To support the above facilities the Company operates 43 feed mills and
68 broiler hatcheries with sufficient capacity to meet the needs of the
chicken growout operations. In addition, the Company owns chicken cold
storage facilities with a capacity of approximately 135.7 million pounds.
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The Company's other operations consist of eight processing plants
supported by five additional freezer storage facilities. Additionally,
other operations include eleven rendering plants with the capacity to
produce 26.6 million pounds of animal protein products per week supported
by three freezer facilities. Nineteen ground pet food processing
operations in connection with chicken processing plants are capable of
producing 7.7 million pounds of product per week.
The Company's swine operations consist of 158 swine farrowing and
nursery units and 385 swine finishing units. These swine growout operations
are supported by three dedicated feed mills supplemented by the production
from the chicken operations' feed mills. In addition, the Company operates
a grain drying and two storage facilities in support of its swine feed mill
operations.
The Company owns its major operating facilities with the following
exceptions: two chicken slaughter facilities are leased until 2003, one
chicken emulsified plant is leased month to month, two poultry feedmills
and two hatcheries are leased until 2003, 355 breeder farms are leased
under agreements expiring at various dates, 52 swine farrowing and nursery
units and 318 swine finishing units are leased under one to ten year
renewable lease agreements, some of which are related parties.
Management believes that the Company's present facilities are
generally adequate and suitable for its current purposes. In general, the
Company's facilities are fully utilized. However, seasonal fluctuations in
inventories and production may occur as a reaction to market demands for
certain products. Due to the current oversupply of meat proteins and
depressed market conditions and to bring our production and market demand
in balance, the Company has planned a reduction in the production of live
birds beginning in the first quarter of fiscal 2000. The Company regularly
engages in construction and other capital improvement projects intended to
expand capacity and improve the efficiency of its processing and support
facilities.
ITEM 3. LEGAL PROCEEDINGS
On June 22, 1999, eleven current and/or former employees of the
Company filed the case of M.H. Fox, et al. v. Tyson Foods, Inc. in the
United States District Court for the Northern District of Alabama claiming
that the Company has violated the requirements of the Fair Labor Standards
Act. The suit alleges that the Company has failed to pay employees for all
hours worked and/or has improperly paid them for overtime hours. The suit
alleges that employees should be paid for the time it takes them to put on
and take off certain working supplies at the beginning and end of their
shifts and breaks. The suit also alleges that the use of "mastercard" or
"line" time fails to pay employees for all time actually worked.
Plaintiffs purport to represent themselves and a class of all similarly
situated current and former employees of the Company. A total of 159
consents were filed with the complaint on behalf of persons to join the
lawsuit and, to date, approximately 3,100 consents have been filed with the
court. This case is still in the preliminary stages. The Company believes
it has substantial defenses to the claims made in this case and intends to
vigorously defend the case. However, neither the likelihood of unfavorable
outcome nor the amount of ultimate liability, if any, with respect to this
case can be determined at this time.
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On February 20, 1998, the Company and others were named as defendants
in a putative class action suit brought on behalf of all individuals who
sold beef cattle to beef packers for processing between certain dates in
1993 and 1998. This action, captioned Wayne Newton, et al. v. Tyson Foods,
Inc., et al., U.S. District Court, Northern District of Iowa, Civil
Action No. 98-30, asserts claims under the Racketeer Influenced and Corrupt
Organizations statute as well as a common-law claim for intentional
interference with prospective economic advantage. Plaintiffs allege that
the gratuities which were the subject of a prior plea agreement by the
Company resulted in a competitive advantage for chicken products vis-a-vis
beef products. Plaintiffs request trebled damages in excess of $3 billion,
plus attorney's fees and costs. The United States District Court for the
Northern District of Iowa granted the Company's Motion to Dismiss on March
26, 1999, holding that plaintiffs lacked standing to sue. Plaintiffs
timely appealed to the United States Court of Appeals for the Eighth
Circuit. The Company is vigorously contesting this case. Briefing of the
appeal was completed in August 1999, but no date has been set for oral
argument.
On or about July 23, 1998, the Maryland Department of the Environment
(MDE) filed a Complaint for Injunctive Relief and Civil Penalty (the
Complaint) against the Company in the Circuit Court of Worcester County,
Md. for the alleged violation of certain Maryland water pollution control
laws with respect to the Company's land application of sludge to Company
owned agricultural land near Berlin, Md. The MDE seeks, in addition to
injunctive and equitable relief, civil penalties of up to $10,000 per day
for each day the Company had allegedly operated in violation of the
Maryland water pollution control laws. The Company does not believe any
penalties, if imposed, would have a material adverse effect on the
Company's results of operations or financial condition.
On December 16, 1998, Hudson Foods, Inc., Michael Gregory, Hudson's
former Director of Customer Relations and Quality Control, and Brent Wolke,
the former plant manager of Hudson's Columbus, Nebraska facility, were
indicted by a federal grand jury in Omaha, Nebraska on two counts - making
false statements to the U.S. Department of Agriculture and conspiracy to
make such statements - in connection with the August 1997 recall of Hudson
beef products suspected of containing E-Coli 0157:H7. The charges arose
out of presentations made on behalf of Hudson between Food Safety
Inspection Service officials during Hudson's cooperation with the
government in attempting to identify potentially contaminated product. The
government has conceded that the contamination did not originate in the
Hudson plant and it does not appear that any statements at issue in the
indictment resulted in or are alleged to have resulted in any illnesses.
On November 30, 1999, the Court granted the defendants' motion for
acquittal on the conspiracy charges and additionally granted Mr. Wolke's
motion for acquittal on his false statement charge. On December 2, 1999,
Hudson and Mr. Gregory were acquitted on all remaining charges.
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The Company has received notice from the Environmental Crimes Section
of the Department of Justice and the United States Attorney's Office for
the Southern District of Mississippi indicating that McCarty Farms, Inc.
(McCarty), a former subsidiary of the Company which has been merged into
the Company, may be pursued for alleged violations of the Federal Clean
Water Act arising out of its partial ownership of Central Industries, Inc.
(Central), which operates a rendering plant in Forest, Mississippi. The
allegations arose from the alleged discharge of pollutants from Central's
rendering facility in Forest, Mississippi in the summer of 1995, which was
prior to the Company's purchase of McCarty in September 1995. Neither the
likelihood of unfavorable outcome nor the amount of ultimate liability, if
any, with respect to this case can be determined at this time.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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Executive Officers of the Company
Officers of the Company serve one year terms from the date of their
election, or until their successors are appointed and qualified. The name,
title, age and year of initial election to executive office of the
Company's executive officers are listed below:
Executive
Name Title Age Officer Since
- ---- ----- --- -------------
Don Tyson Senior Chairman of the 69 1963
Board of Directors
John H. Tyson Chairman of the 46 1984
Board of Directors
Wayne Britt Chief Executive Officer 50 1977
Donald E. Wray President 62 1979
Greg Lee Chief Operating Officer 52 1993
Steven Hankins Executive Vice President and 41 1997
Chief Financial Officer
Bill Lovette President, International Group 39 1999
Wayne Butler President, Prepared Foods Group 45 1999
Mike Baker President, Production Service 44 1999
Carl G. Johnson Executive Vice President, 46 1999
Administrative Services
Les Baledge Executive Vice President and 42 1999
Associate General Counsel
John D. Copeland Executive Vice President, 49 1999
Ethics, Food Safety and
Environmental Compliance
John S. Lea Executive Vice President and 46 1999
Chief Marketing Officer
Donnie Smith Executive Vice President, 40 1999
Supply Chain Management
Dennis Leatherby Senior Vice President, 39 1990
Finance and Treasurer
James G. Ennis Vice President, Controller and 54 1996
Chief Accounting Officer
David L. Van Bebber Vice President and 43 1990
Director of Legal Services
R. Read Hudson Secretary 41 1998
Louis C. Assistant Secretary and 35 1998
Gottsponer, Jr. Director of Investor Relations
15
<PAGE>
John H. Tyson is the son of Don Tyson. No other family relationships exist
among the above officers. Mr. Don Tyson was appointed Senior Chairman of
the Board of Directors in 1995 after previously serving as Chairman of the
Board and Chief Executive Officer. Mr. John H. Tyson was appointed Chairman
of the Board of Directors in 1998 after serving as Vice Chairman of the
Board of Directors since 1997 and President, Beef and Pork Division since
1993. Mr. Britt was appointed Chief Executive Officer in 1998 after serving
as Executive Vice President and Chief Financial Officer since 1996 and
Senior Vice President, International Sales and Marketing since 1994. Mr.
Wray was appointed President in 1999 pending his retirement in 2000, after
serving as President and Chief Operating Officer since 1995 and Chief
Operating Officer since 1991. Mr. Lee was appointed Chief Operating
Officer in 1999 after serving as President of the Food Service Group since
1999, Executive Vice President, Sales, Marketing and Technical Services
since 1995 and Senior Vice President, Sales and Marketing since 1993. Mr.
Hankins was appointed Executive Vice President and Chief Financial Officer
in 1998 after serving as Senior Vice President, Financial Planning and
Shared Services since 1997 and Vice President, Management Information
Systems since 1993. Mr. Lovette was appointed President, International
Group in 1999 after serving as Vice President, Operations since 1995 and
Vice President, Distribution since 1992. Mr. Butler was appointed
President, Prepared Foods Group in 1998 after serving as President, Mexican
Original since 1997 and Complex Manager since 1994. Mr. Baker was
appointed President, Production Services in 1999 after serving as Division
Vice President since 1995 and Manager of Pork Operations since 1994. Mr.
Johnson was appointed Executive Vice President, Administrative Services in
1999 after serving as Vice President, Assets and Risk Management since
1994. Mr. Baledge was appointed Executive Vice President and Associate
General Counsel in 1999 upon joining the Company, prior to which he was
engaged in the private practice of law. Mr. Copeland was appointed
Executive Vice President, Ethics, Food Safety and Environmental Compliance
in 1999 after serving as Director of Corporate Ethics and Compliance since
1998, prior to which he served as a professor of law at the University of
Arkansas School of Law. Mr. Lea was appointed Executive Vice President and
Chief Marketing Officer in 1999 after serving as Vice President, Retail
Sales and Marketing since 1995 and Vice President, Food Service Sales since
1993. Mr. Smith was appointed Executive Vice President, Supply Chain
Management in 1999 after serving as Vice President, Purchasing since 1995
and Director of Commodity Purchasing since 1992. Mr. Leatherby was
appointed Senior Vice President, Finance and Treasurer in 1998 after
serving as Vice President and Treasurer since 1997 and Treasurer since
1994. Mr. Ennis was appointed Vice President, Controller and Chief
Accounting Officer in 1996 after serving as Corporate Tax Manager since
1986. Mr. Van Bebber was appointed Vice President and Director of Legal
Services in 1998 after serving as Assistant Secretary since 1990. Mr.
Hudson was appointed Secretary in 1998 and has served as Corporate Counsel
since 1992. Mr. Gottsponer was appointed Assistant Secretary and Director
of Investor Relations in 1998 after serving as Corporate Finance Manager
since 1996 and Cash Manager since 1993.
16
<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 43 of the Annual Report
under the caption "Capital Stock," which information is incorporated herein
by reference.
On October 2, 1999, there were approximately 34,828 holders of record
of the Company's Class A Stock and 17 holders of record of the Company's
Class B Stock, excluding holders in the security position listings held by
nominees. The Class A Stock is traded on the New York Stock Exchange under
the symbol "TSN." No public trading market currently exists for the Class B
Stock. Information regarding the high and low closing prices of the Class A
Stock is set forth on pages 24 and 25 and in the table on page 60 of the
Annual Report under the captions "Eleven-Year Financial Summary" and
"Closing Price of Company's Common Stock," which information is
incorporated herein by reference.
The Company has paid uninterrupted quarterly dividends on its common
stock each year since 1977. On May 7, 1999, the Board of Directors
increased the annual dividend rate on Class A Stock to $0.16 per share and
fixed an annual dividend rate of $0.144 per share for the Class B Stock,
effective with the quarterly dividend payable on September 15, 1999.
ITEM 6. SELECTED FINANCIAL DATA
See the information reflected under the caption "Eleven-Year Financial
Summary" on pages 24 and 25 of the Annual Report, which information is
incorporated herein by reference.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
See the information reflected under the caption "Management's
Discussion and Analysis" on pages 26 through 37 of the Annual Report, which
information is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
Market risks relating to the Company's operations result primarily
from changes in commodity prices, interest rates and foreign exchange
rates, as well as credit risk concentrations. To address these risks the
Company enters into various hedging transactions as described below. The
Company seldom uses financial instruments which do not qualify for hedge
accounting. In those situations, in which instruments do not qualify for
hedge accounting, the Company marks the instruments to fair value and
recognizes the gains or losses currently in earnings.
17
<PAGE>
Commodities Risk
The Company is a purchaser of certain commodities, primarily corn and
soybeans. The Company periodically uses commodity futures and options for
hedging purposes to reduce the effect of changing commodity prices and as a
mechanism to procure the grains. The contracts that effectively meet risk
reductions and correlation criteria are recorded using hedge accounting.
Gains and losses on closed hedge transactions are recorded as a component
of the underlying inventory purchase.
The following table provides information about the Company's corn, soybean
and other feed ingredient inventory and financial instruments that are
sensitive to changes in commodity prices. The table presents the carrying
amounts and fair values at October 2, 1999 and October 3, 1998.
Additionally, for puts and futures contracts, the latest which expires or
matures 15 months from the reporting date, the table presents the notional
amounts in units of purchase and the weighted average contract prices.
(volume and dollars in millions, except per unit amounts)
- ---------------------------------------------------------------------------
Volume Weighted Fair
Average Strike Value
Price Per Unit
- ---------------------------------------------------------------------------
As of October 2, 1999
Recorded Balance Sheet Commodity Position:
Commodity Inventory (book value $33.8) - $ - $33.8
Hedging Positions
Corn Futures Contracts
(volume in bushels)
Long (Buy) Positions 84.4 2.21 (7.7)
Short (Sell) Positions 1.4 2.32 0.3
Soybean Meal Futures Contracts
(volume in tons)
Long (Buy) Positions 0.1 143.14 0.4
Trading Positions
Corn Puts Sold (volume in bushels) 27.5 2.10 (2.5)
As of October 3, 1998
Recorded Balance Sheet Commodity Position:
Commodity Inventory (book value $36.0) - $ - $36.0
Hedging Positions:
Corn Futures Contracts
(volume in bushels)
Long (Buy) Positions 7.5 2.33 (0.4)
Short (Sell) Positions 9.7 2.11 0.3
Soybean Oil Futures Contracts
(volume in cwt)
Long (Buy) Positions 0.1 24.24 -
Short (Sell) Positions 0.1 24.40 -
===========================================================================
18
<PAGE>
Interest Rate and Foreign Currency Risks
The Company also hedges exposure to changes in interest rates on
certain of its financial instruments. Under the terms of various leveraged
equipment loans, the Company enters into interest rate swap agreements to
effectively lock in a fixed interest rate for these borrowings. The
maturity dates of these leveraged equipment loans range from 2005 to 2008
with interest rates ranging from 4.7% to 6%.
The Company also periodically enters into foreign exchange forward
contracts and option contracts to hedge some of its foreign currency
exposure. In 1999, the Company used such contracts to hedge exposure to
changes in foreign currency exchange rates, primarily Mexican Peso,
associated with debt denominated in U.S. dollars held by Tyson de Mexico.
In 1998, the Company used such contracts to hedge exposure to changes in
foreign currency exchange rates, primarily Japanese Yen, associated with
sales denominated in foreign currency. Gains and losses on these contracts
are recognized as an adjustment of the subsequent transaction when it
occurs. Forward and option contracts generally have maturities or
expirations not exceeding 12 months.
The following table provides information about the Company's
derivative financial instruments and other financial instruments that are
sensitive to changes in interest rates. The table presents for the
Company's debt obligations, principal cash flows, related weighted-average
interest rates by expected maturity dates and fair values. For interest
rate swaps, the table presents notional amounts, weighted-average interest
rates or strike rates by contractual maturity dates and fair values.
Notional amounts are used to calculate the contractual cash flows to be
exchanged under the contract.
dollars in millions
__________________________________________________________________________
2000 2001 2002 2003 2004 There- Total Fair
after Value
10/2/99
___________________________________________________________________________
As of October 2, 1999
Liabilities
Long-term Debt,
including
Current Portion
Fixed Rate $172.5 $125.7 $30.5 $177.8 $29.2 $794.3 $1,330.0 $1,299.1
Average Interest
Rate 6.82% 8.18% 7.83% 6.18% 7.08% 6.78% 6.87%
Variable Rate $50.2 $17.2 $290.5 - - $50.0 $407.9 $407.9
Average Interest
Rate 5.51% 7.67% 5.85% - - 3.90% 5.65%
Interest Rate
Derivative Financial
Instruments Related
to Debt
Interest Rate Swaps
Pay Fixed $17.2 $18.4 $19.6 $21.6 $21.1 $29.2 $127.1 ($0.7)
Average Pay Rate 6.71% 6.69% 6.73% 6.73% 6.71% 6.50% 6.66%
Average Receive Rate- USD 6 Month LIBOR.
===========================================================================
19
<PAGE>
dollars in millions
___________________________________________________________________________
1999 2000 2001 2002 2003 There- Total Fair
after Value
10/3/98
___________________________________________________________________________
As of October 3, 1998
Liabilities
Long-term Debt,
including
Current Portion
Fixed Rate $73.6 $226.7 $125.2 $31.4 $178.5 $823.3 $1,458.7 $1,533.7
Average Interest
Rate 9.37% 6.39% 8.25% 7.88% 6.20% 6.79% 6.93%
Variable Rate $4.0 $24.6 - $506.9 - $50.0 $585.5 $585.5
Average Interest
Rate 4.15% 7.67% - 5.57% - 3.73% 5.49%
Interest Rate
Derivative Financial
Instruments Related
to Debt
Interest Rate Swaps
Pay Fixed $16.1 $17.2 $18.4 $19.6 $20.2 $50.2 $141.7 ($8.1)
Average Pay Rate 6.71% 6.71% 6.69% 6.73% 6.74% 6.59% 6.67%
Average Receive Rate- USD 6 Month LIBOR.
===========================================================================
The following table summarizes information on instruments and
transactions that are sensitive to foreign currency exchange rates. The
table presents the notional amounts, weighted-average exchange rates by
expected (contractual) maturity dates and fair values. These notional
amounts generally are used to calculate the contractual payments to be
exchanged under the contract.
dollars in millions
___________________________________________________________________________
2000 2001-2004 There- Total Fair
after Value
10/2/99
___________________________________________________________________________
As of October 2, 1999
Forward exchange contracts to sell
foreign currencies for US$
Mexican Peso
Notional Amount $7.3 - - $7.3 $(0.6)
Weighted average strike price 10.13
===========================================================================
20
<PAGE>
dollars in millions
___________________________________________________________________________
1999 2000-2003 There- Total Fair
after Value
10/3/98
___________________________________________________________________________
As of October 3, 1998
Sold Option Contracts
to Sell Foreign
Currencies for US$
Japanese Yen
Notional Amount $6.5 - - $6.5 -
Weighted Average
Strike Price 109.48
Purchased Option
Contracts to Sell
Foreign Currencies
for US$
Japanese Yen
Notional Amount $5.6 - - $5.6 $0.4
Weighted Average
Strike Price 126.69
===========================================================================
Credit Risks
The Company's financial instruments that are exposed to concentrations
of credit risk consist primarily of cash equivalents and trade receivables.
The Company's cash equivalents are in high quality securities placed with
major banks and financial institutions. Concentrations of credit risk with
respect to receivables are limited due to the large number of customers and
their dispersion across geographic areas. The Company performs periodic
credit evaluations of its customers' financial condition and generally does
not require collateral. No single group or customer represents greater than
10% of total accounts receivable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the information on pages 38 through 57 of the Annual Report under
the caption "Consolidated Statements of Income," "Consolidated Balance
Sheets," "Consolidated Statements of Shareholders' Equity," "Consolidated
Statements of Cash Flows," "Notes to Consolidated Financial Statements" and
"Report of Independent Auditors," which information is incorporated herein
by reference. Other financial information is filed under Item 14 of Part IV
of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
21
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
See information set forth under the captions "Election of Directors"
and "Section 16(a) Beneficial Ownership Reporting" in the Proxy Statement,
which information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Pursuant to general instruction G(3) of the instructions to Annual
Report on Form 10-K, certain information concerning the Company's executive
officers is included under the caption "Executive Officers of the Company"
in Part I of this Report. See the information set forth under the caption
"Executive Compensation and Other Information" in the Proxy Statement,
which information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See the information included under the captions "Principal
Shareholders" and "Security Ownership of Management" in the Proxy
Statement, which information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See the information included under the caption "Certain Transactions"
in the Proxy Statement, which information is incorporated herein by
reference.
22
<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 38 through 55 in the
Company's Annual Report for the fiscal year ended
October 2, 1999, and the Report of Independent
Auditors, on page 57 of such Annual Report are
incorporated herein by reference. Page references
set forth in the index below are to page numbers in
Exhibit 13 of this Form 10-K.
Pages
------
Consolidated Statements of Income 136
for the three years ended October 2, 1999
Consolidated Balance Sheets at 137
October 2, 1999 and October 3, 1998
Consolidated Statements of Shareholders' Equity 138-139
for the three years ended October 2, 1999
Consolidated Statements of Cash Flows 140
for the three years ended October 2, 1999
Notes to Consolidated Financial Statements 141-157
Report of Independent Auditors 159
2. The following additional information for the years 1999,
1998 and 1997 is submitted herewith. Page references are
to the consecutively numbered pages of this Report on
Form 10-K:
Pages
-----
Report of Independent Auditors 34
Schedule VIII Valuation and Qualifying
Accounts and Reserves for the three years ended
October 2, 1999 35
All other schedules are omitted because they are neither applicable
nor required.
3. The exhibits filed with this report are listed in the
Exhibit Index at the end of this Item 14.
4. On December 15, 1999, the Company filed a current report on
Form 8-K related to the termination of negotiations on the
sale of the Pork Group with Smithfield Foods, Inc.
23
<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.
Exhibit No. Pages
- ----------- -----
2.1 Agreement and Plan of Merger dated September 4, 1997
by and among the Company, HFI Acquisition Sub, Inc.
and Hudson Foods, Inc. (previously filed as Exhibit
2.1 to the Company's Registration Statement on Form
S-4, filed with the Securities and Exchange Commission
on December 10, 1997, Registration No. 333-41887, and
incorporated herein by reference).
3.1 Restated Certificate of Incorporation of the Company
(previously filed as Exhibit 3.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended
October 3, 1998, Commission File No. 0-3400, and
incorporated herein by reference).
3.2 Amended and Restated Bylaws of the Company (previously
filed as Exhibit 3.2 to the Company's Annual Report on
Form 10-K for the fiscal year ended
September 28, 1996, Commission File No. 0-3400, and
incorporated herein by reference).
4.1 Form of Indenture between the Company and The Chase
Manhattan Bank, N.A., as Trustee relating to the
issuance of Debt Securities (previously filed as
Exhibit 4 to Amendment No. 1 to Registration Statement
on Form S-3, filed with the Commission on May 8, 1995,
Registration No. 33-58177, and incorporated herein by
reference).
4.2 Form of 6.75% $150 million Note due June 1, 2005
(previously filed as Exhibit 4(b) to the Company's
Quarterly Report on Form 10-Q for the period ended
July 1, 1995, Commission File No. 0-3400, and
incorporated herein by reference).
4.3 Form of Fixed Rate Medium-Term Note (previously filed
as Exhibit 4.2 to the Company's Current Report on Form
8-K, filed with the Commission on July 20, 1995,
Commission File No. 0-3400, and incorporated herein by
reference).
4.4 Form of Floating Rate Medium-Term Note (previously
filed as Exhibit 4.3 to the Company's Current Report
on Form 8-K, filed with the Commission on
July 20, 1995, Commission File No. 0-3400, and
incorporated herein by reference).
4.5 Form of Calculation Agent Agreement (previously filed
as Exhibit 4.4 to the Company's Current Report on Form
8-K, filed with the Commission on July 20, 1995,
Commission File No. 0-3400, and incorporated herein by
reference).
24
<PAGE>
4.6 Amended and Restated Note Purchase Agreement, dated
June 30, 1993, by and between the Company and various
Purchasers as listed in the Purchaser Schedule
attached to said agreement, together with the
following documents:
(a) Form of Series A Note
(b) Form of Series D Note
(previously filed as Exhibit 4(a) to the Company's
Quarterly Report on Form 10-Q for the period ended
July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
4.7 Amendment Agreement, dated November 1, 1994, to
Amended and Restated Note Purchase Agreements, dated
June 30, 1993, by and between the Company and various
Purchasers as listed in the Purchaser Schedule
attached to said agreement (previously filed as
Exhibit 10(a) to the Company's Quarterly Report on
Form 10-Q for the period ended December 31, 1994,
Commission File No. 0-3400, and incorporated herein by
reference).
4.8 Second Amendment Agreement, dated as of June 29, 1996,
to Amended and Restated Note Purchase Agreements,
dated June 30, 1993, by and between the Company and
various Purchasers as listed in the Purchaser Schedule
attached to said agreement (previously filed as
Exhibit 4.8 to the Company's Annual Report on Form 10-
K for the fiscal year ended September 28, 1996,
Commission File No. 0-3400, and incorporated herein by
reference).
4.9 Amended and Restated Note Agreement, dated
June 30, 1993, by and between the Company and various
Purchasers as listed in the Purchaser Schedule
attached to said agreement, together with the
following related documents:
(a) Form of Series E Note
(b) Form of Series F Note
(c) Form of Series G Note
(previously filed as Exhibit 4(b) to the Company's
Quarterly Report on Form 10-Q for the period ended
July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
25
<PAGE>
4.10 Amendment Agreement, dated November 1, 1994, to
Amended and Restated Note Agreement, dated
June 30, 1993, by and between the Company and various
Purchasers as listed in the Purchaser Schedule
attached to said agreement (previously filed as
Exhibit 10(b) to the Company's Quarterly Report on
Form 10-Q for the period ended December 31, 1994,
Commission File No. 0-3400, and incorporated herein by
reference).
4.11 Second Amendment Agreement, dated as of June 29, 1996,
to Amended and Restated Note Agreement, dated
June 30, 1993, by and between the Company and
Purchasers as listed in the Purchaser Schedule
attached to said agreement (previously filed as
Exhibit 4.11 to the Company's Annual Report on Form
10-K for the fiscal year ended September 28, 1996,
Commission File No. 0-3400, and incorporated herein by
reference).
4.12 Form of $150 million 6% Note due January 15, 2003
(previously filed as Exhibit 4.1 to the Company's
Quarterly Report on Form 10-Q for the period ended
December 27, 1997, Commission File No. 0-3400, and
incorporated herein by reference).
4.13 Form of $150 million 7% Note due January 15, 2028
(previously filed as Exhibit 4.2 to the Company's
Quarterly Report on Form 10-Q for the period ended
December 27, 1997, Commission File No. 0-3400, and
incorporated herein by reference).
4.14 Form of $100 million 6.08% MOPPRS, due February 1,
2010 (previously filed as Exhibit 4.3 to the Company's
Quarterly Report on Form 10-Q for the period ended
December 27, 1997, Commission File No. 0-3400, and
incorporated herein by reference).
4.15 Remarketing Agreement dated January 28, 1998 between
the Company and Merrill Lynch, Pierce, Fenner & Smith,
Incorporated, relating to the 6.08% MOPPRS due
February 1, 2010 (previously filed as Exhibit 4.1 to
the Company's Current Report on Form 8-K, filed with
the Securities and Exchange Commission on February 4,
1998 and incorporated herein by reference).
4.16 Form of $50 million Floating Rate MOPPRS, due February
1, 2010 (previously filed as Exhibit 4.5 to the
Company's Quarterly Report on Form 10-Q for the period
ended December 27, 1997, Commission File No. 0-3400,
and incorporated herein by reference).
26
<PAGE>
4.17 Remarketing Agreement dated January 28, 1998 between
the Company and Merrill Lynch, Pierce, Fenner & Smith,
Incorporated, relating to the Floating Rate MOPPRS due
February 1, 2010 (previously filed as Exhibit 4.2 to
the Company's Current Report on Form 8-K, filed with
the Securities and Exchange Commission on February 4,
1998 and incorporated herein by reference).
4.18 Form of 7.0% $200 million Note due May 1, 2018
(previously filed as Exhibit 4.1 to the Company's
Quarterly Report on Form 10-Q for the period ended
March 28, 1998, Commission File No. 0-3400, and
incorporated herein by reference).
4.19 Form of 7.0% $40 million Note due May 1, 2018
(previously filed as Exhibit 4.2 to the Company's
Quarterly Report on Form 10-Q for the period ended
March 28, 1998, Commission File No. 0-3400, and
incorporated herein by reference).
10.1 Fourth Amended and Restated Credit Agreement,
including all exhibits thereto, dated as of
May 26, 1995, by and among the Company, as Borrower,
The Chase Manhattan Bank N.A., Chemical Bank,
Cooperative Centrale Raiffeisen-Boerenleenbank B.A.
(Rabobank Nederland), Morgan Guaranty Trust Company of
New York, National Westminster Bank Plc, NationsBank
of Texas, N.A., and Societe Generale, as Co-Agents,
and Bank of America National Trust and Savings
Association, as Agent (previously filed as Exhibit
4(f) to the Company's Quarterly Report on Form 10-Q
for the period ended July 1, 1995, Commission File
No. 0-3400, and incorporated herein by reference).
10.2 Amendment No. 1 to Fourth Amended and Restated Credit
Agreement, dated as of May 24, 1996, by and among the
Company, as Borrower, the banks party thereto, The
Chase Manhattan Bank, N.A., Chemical Bank, Cooperative
Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank
Nederland), Morgan Guaranty Trust Company of New York,
National Westminster Bank Plc, NationsBank of Texas,
N.A., and Societe Generale as Co-Agents and Bank of
America National Trust and Savings Association, as
Agent (previously filed as Exhibit 4(b) to the
Company's Form 10-Q for the quarter ended
June 29, 1996, Commission File No. 0-3400, and
incorporated herein by reference).
27
<PAGE>
10.3 Amendment No. 2 to Fourth Amended and Restated Credit
Agreement, dated as of May 23, 1997, by and among the
Company, as Borrower, the banks party thereto, The
Chase Manhattan Bank, N.A., Chemical Bank, Cooperative
Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank
Nederland), Morgan Guaranty Trust Company of New York,
National Westminster Bank Plc, NationsBank of Texas,
N.A., and Societe Generale as Co-Agents and Bank of
America National Trust and Savings Association, as
Agent (previously filed as Exhibit 4(b) to the
Company's Form 10-Q for the quarter ended
June 28, 1997, Commission File No. 0-3400, and
incorporated herein by reference).
10.4 Issuing and Paying Agency Agreement dated July 1,
1993, between the Company and Morgan Guaranty Trust
Company of New York, (previously filed as Exhibit
10(d) to the Company's Quarterly Report on Form 10-Q
for the period ended July 3, 1993, Commission File No.
0-3400, and incorporated herein by reference).
10.5 Commercial Paper Dealer Agreement dated July 1, 1993,
between the Company and Merrill Lynch Money Markets,
Inc. (previously filed as Exhibit 10(e) to the
Company's Quarterly Report on Form 10-Q for the period
ended July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
10.6 Commercial Paper Dealer Agreement dated July 1, 1993,
between the Company and the First Boston Corporation
(previously filed as Exhibit 10(g) to the Company's
Quarterly Report on Form 10-Q for the period ended
July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
10.7 Commercial Paper Dealer Agreement dated July 1, 1993,
between the Company and J.P. Morgan Securities, Inc.
(previously filed as Exhibit 10(h) to the Company's
Quarterly Report on Form 10-Q for the period ended
July 3, 1993, Commission File No. 0-3400, and
incorporated herein by reference).
10.8 Commercial Paper Dealer Agreement dated July 1, 1993,
between the Company and Bank of America National Trust
and Savings Association (previously filed as Exhibit
10(i) to the Company's Quarterly Report on Form 10-Q
for the period ended July 3, 1993, Commission File
No. 0-3400, and incorporated herein by reference).
10.9 Commercial Paper Dealer Agreement dated
September 1, 1994, between the Company and Chase
Securities, Inc. (previously filed as Exhibit 10(j) to
the Company's Annual Report on Form 10-K for the
fiscal year ended October 1, 1994, Commission File
No. 0-3400, and incorporated herein by reference).
28
<PAGE>
10.10 Tyson Foods, Inc. Senior Executive Performance Bonus
Plan adopted November 18, 1994 (previously filed as
Exhibit 10(k) to the Company's Annual Report on
Form 10-K for the fiscal year ended October 1, 1994,
Commission File No. 0-3400, and incorporated herein by
reference).
10.11 Tyson Foods, Inc. Restricted Stock Bonus Plan,
effective August 21, 1989, as amended and restated on
April 15, 1994; and Amendment to Restricted Stock
Bonus Plan effective November 18, 1994 (previously
filed as Exhibit 10(l) to the Company's Annual Report
on Form 10-K for the fiscal year ended
October 1, 1994, Commission File No. 0-3400, and
incorporated herein by reference).
10.12 Tyson Foods, Inc. Amended and Restated Employee Stock 36-47
Purchase Plan dated as of December 13, 1999.
10.13 Second Amended and Restated Employment Agreement dated
August 1, 1997, between the Company and Don Tyson,
Senior Chairman of the Board of Directors of the
Company (previously filed as Exhibit 10.21 to the
Company's Form 10-K for the fiscal year ended
September 27, 1997, Commission File No. 0-3400, and
incorporated herein by reference).
10.14 Amended and Restated Retirement Savings Plan of Tyson 48-98
Foods, Inc., qualified under Section 401(k) of the
Internal Revenue Code of 1986, dated as of December
13, 1999.
10.15 Amended and Restated Executive Savings Plan of Tyson 99-118
Foods, Inc. effective October 1, 1997, and First
Amendment to the Amended and Restated Executive
Savings Plan of Tyson Foods, Inc. effective December
31, 1998.
10.16 Tyson Foods, Inc. Non-statutory Stock Option Plan, as
amended and restated on November 18, 1994, (previously
filed as Exhibit 99 to the Company's Registration
Statement on Form S-8 filed with the Commission on
January 30, 1995, Commission File No. 33-54716, and
incorporated herein by reference).
10.17 Form of Indemnity Agreement between Tyson Foods, Inc.
and its directors and certain of its executive
officers (previously filed as Exhibit 10(t) to the
Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1995, Commission File No. 0-
3400, and incorporated herein by reference).
10.18 Senior Executive Employment Agreement dated November
20, 1998 between the Company and Leland E. Tollett
(previously filed as Exhibit 10.20 to the Company's
Annual Report on Form 10K for the fiscal year ended
October 3, 1998, Commission File No. 0-3400, and
incorporated herein by reference).
29
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10.19 Senior Executive Employment Agreement dated November
20, 1998 between the Company and Donald E. Wray
(previously filed as Exhibit 10.21 to the Company's
Annual Report on Form 10K for the fiscal year ended
October 3, 1998, Commission File No. 0-3400, and
incorporated herein by reference).
13 Pages 24-60 and inside back cover of the Annual Report 119-166
to Shareholders for the fiscal year ended October 2,
1999.
21 Subsidiaries of the Company. 167-168
23 Consent of Independent Auditors. 169
27 Financial Data Schedule.
30
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SIGNATURES
Pursuant to requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TYSON FOODS, INC.
By /s/ Steven Hankins December 17, 1999
-------------------
Steven Hankins
Executive Vice President
and Chief Financial Officer
31
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
/s/ Wayne Britt Chief Executive Officer December 17, 1999
- -------------------- and Director
Wayne Britt
/s/ Neely Cassady Director December 17, 1999
- --------------------
Neely Cassady
/s/ James G. Ennis Vice President, Controller December 17, 1999
- -------------------- and Chief Accounting Officer
James G. Ennis
/s/ Lloyd V. Hackley Director December 17, 1999
- --------------------
Lloyd V. Hackley
/s/ Steven Hankins Executive Vice President and December 17, 1999
- -------------------- Chief Financial Officer
Steven Hankins
/s/ Gerald Johnston Director December 17, 1999
- --------------------
Gerald Johnston
/s/ Jim Kever Director December 17, 1999
- --------------------
Jim Kever
/s/ Shelby D. Massey Director December 17, 1999
- --------------------
Shelby D. Massey
/s/ Joe F. Starr Director December 17, 1999
- --------------------
Joe F. Starr
/s/ Leland E. Tollett Director December 17, 1999
- ---------------------
Leland E. Tollett
/s/ Barbara Tyson Vice President and Director December 17, 1999
- ---------------------
Barbara Tyson
/s/ Don Tyson Senior Chairman of the December 17, 1999
- --------------------- Board of Directors
Don Tyson
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/s/ John H. Tyson Chairman of the December 17, 1999
- --------------------- Board of Directors
John H. Tyson
/s/ Fred S. Vorsanger Director December 17, 1999
- ---------------------
Fred S. Vorsanger
/s/ Donald E. Wray President and Director December 17, 1999
- ---------------------
Donald E. Wray
33
<PAGE>
FINANCIAL STATEMENT SCHEDULE
<PAGE>
REPORT OF INDEPENDENT AUDITORS
We have audited the consolidated financial statements of Tyson Foods, Inc.
as of October 2, 1999 and October 3, 1998, and for each of the three years
in the period ended October 2, 1999, and have issued our report thereon
dated November 18, 1999. Our audits also included the financial statement
schedule listed in Item 14(a) in this annual report (Form 10-K). This
schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
Tulsa, Oklahoma /s/ERNST & YOUNG LLP
November 18, 1999 --------------------
ERNST & YOUNG LLP
34
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TYSON FOODS, INC.
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Three Years Ended October 2, 1999
(Dollars in Millions)
Balance at Charged to Charged Balance
Beginning Costs and to Other Additions at End
Description of Period Expenses Accounts (Deductions) of Period
- ----------- ---------- --------- -------- ----------- ---------
Allowance for
Doubtful Accounts
1999 $85.3 $15.2(1) 0 ($78.7)(2) $21.8
1998 $4.4 $2.2 0 $78.7 (3) $85.3
1997 $3.5 $2.0 0 ($1.1) $4.4
(1) Includes $11.9 million reserve for international operations.
(2) Write off of receivables against reserve related to 1998 allowance.
(3) Includes $48.4 million reserve for international currency devaluation.
35
<PAGE>
TYSON FOODS, INC.
EMPLOYEE STOCK PURCHASE PLAN
TABLE OF CONTENTS
PURPOSE OF THE PLAN 1
ARTICLE I Definitions 1
1.1 Affiliate 1
1.2 Base Earnings 1
1.3 Committee 1
1.4 Effective Date 1
1.5 Eligible Employee 1
1.6 Employer 1
1.7 Leave of Absence 1
1.8 Pay Period, Payday 2
1.9 Participant 2
1.10 Participating Affiliate 2
1.11 Payroll Deduction Authorization 2
1.12 Plan Administrator 2
1.13 Prevailing Market Price 2
1.14 Service 3
1.15 Stock 3
1.16 Termination of Service 3
ARTICLE II Eligibility to Participate 3
ARTICLE III Employee Participation and Contributions 3
3.1 Voluntary, Non-Discriminatory Plan 3
3.2 How an Employee Elects to Participate 3
3.3 Limits on Contribution 3
3.4 Voluntary Withdrawal from the Plan 4
3.5 Termination of Service Means Withdrawal from Plan 4
3.6 Effect of Participant's Withdrawal from Plan 4
3.7 Bookkeeping Accounts 4
3.8 Distributions from Plan Upon Termination of Service 4
ARTICLE IV Employer Contributions 5
4.1 Employer Matching Contributions 5
4.2 Employer Discretionary Non-matching Contributions 5
ARTICLE V Administration of the Plan 6
5.1 Administrative Committee 6
5.2 Employer Contributions of Cash and Dividends 6
5.3 Investment in Tyson Stock 6
5.4 No Interest to be Paid 6
5.5 Dividends to be Used to Purchase Additional Shares 7
5.6 Not Transferable 7
5.7 Voting Rights 7
5.8 Costs of the Plan 7
5.9 Brokerage Costs 7
5.10 Indemnification 7
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<PAGE>
ARTICLE VI Reports and Delivery of Share Certificates 7
6.1 Quarterly Reports 7
6.2 Delivery of Share Certificates 8
ARTICLE VII Amendment and Termination of the Plan 8
ARTICLE VIII Adjustments Upon Changes in Stock 9
ARTICLE IX Miscellaneous Provisions 9
9.1 No Contract of Employment Intended 9
9.2 Information Available 10
9.3 Securities Laws Restrictions 10
9.4 Waiver 10
9.5 Notices 10
9.6 Severability 10
9.7 Governing Law 10
9.8 Rules of Construction 10
9.9 Plan Year 10
9.10 Designation of Beneficiary 11
9.11 Lost Participants 11
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<PAGE>
PURPOSE OF THE PLAN
The purpose of the Tyson Foods, Inc. Employee Stock Purchase Plan (the
"Plan") is to provide the employees of Tyson Foods, Inc. ("Tyson") and its
Participating Affiliates a convenient way to acquire shares of Tyson's
Class A Common Stock through periodic investment and thus maintain and
stimulate employee interest in the growth and profitability of Tyson by
means of an opportunity to share in a proprietary interest in Tyson.
ARTICLE I
Definitions
1.1 Affiliate. "Affiliate" shall include all wholly-owned subsidiaries of
Tyson and any other entity which may be designated from time to time as
such by the Board of Directors of Tyson.
1.2 Base Earnings. "Base Earnings" means the amount of regular salary or
wages, including overtime payments and commission payments, but does not
include discretionary and non-discretionary bonuses or other irregular
payments made by an Employer to a Participant.
1.3 Committee. "Committee" shall mean the administrative committee
appointed by the Board of Directors of Tyson to carry out the purposes of
the Plan as set forth in Section 5.1 below.
1.4 Effective Date. The "Effective Date" of this Plan is January 1, 2000.
1.5 Eligible Employee. "Eligible Employee" means any person (including a
corporate officer) who is employed as a common law employee and classified
as working full-time in the regular service of Tyson or a Participating
Affiliate; provided, however, such term shall not include any person who is
a member of a collective bargaining unit and who is covered by a collective
bargaining agreement which does not provide for coverage of such person
under this Plan.
1.6 Employer. "Employer" means Tyson and all Participating Affiliates.
1.7 Leave of Absence. "Leave of Absence" means absence from the active
service with Tyson or an Affiliate, with the permission of the Employer, by
reason of illness, military service, or for any other reason as approved or
allowed by the Employer's personnel policies. Such Leave of Absence will
not terminate an Eligible Employee's Service, provided he returns to active
employment at the expiration of his leave in accordance with his Employer's
policy with respect to permitted absences. An Eligible Employee whose
Service is terminated and who is subsequently re-employed by Tyson or an
Affiliate will, for all purposes of the Plan, be considered a new employee
as of the effective date of his reemployment.
1.8 Pay Period, Payday. "Pay Period" means the interval of a time for
which an Eligible Employee regularly receives his compensation, and
"Payday" means the day on which the Eligible Employee regularly receives
his compensation for the Pay Period.
1.9 Participant. "Participant" means an Eligible Employee who has elected
to participate in the Plan in accordance with Article II until the
Participant withdraws from the Plan and receives a complete distribution of
Stock and cash credited to his Plan account.
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1.10 Participating Affiliate. "Participating Affiliate" means an Affiliate
that has adopted the Plan with the consent of the Board of Directors of
Tyson. If an organization which is or has become an Affiliate ceases to be
an Affiliate, such organization shall be deemed to have withdrawn from
participation in the Plan.
1.11 Payroll Deduction Authorization. The "Payroll Deduction
Authorization" shall be in a form specified by the Plan Administrator and
shall direct the Employer to withhold from a Participant's paycheck a
specified dollar amount or a specified percentage of his Base Earnings to
be used for the purchase of Stock under this Plan.
1.12 Plan Administrator. The "Plan Administrator" shall be responsible for
the administration of the Plan and, in lieu of any designation by the Board
of Directors of Tyson to the contrary, Tyson shall serve as the Plan
Administrator and shall act through the Committee as its representative.
1.13 Prevailing Market Price. The term "Prevailing Market Price" shall
mean:
(a) the actual purchase price if purchased in the open market;
or
(b) if treasury shares are purchased:
(i) if the Stock is not at the time listed or admitted to
trading on a stock exchange or in the over-the-counter market
under the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ"), the Prevailing Market
Price shall be the mean between the lowest reported bid price and
highest reported asked price of the Stock on the date in question
in the over-the-counter market, as such prices are reported in a
publication of general circulation selected by Tyson and
regularly reporting the market price of the Stock in such market;
or
(ii) if the Stock is at the time listed or admitted to
trading in the over-the-counter market under NASDAQ or on any
stock exchange, then the Prevailing Market Price shall be the
reported closing sale price of the Stock on the date in question
on the principal exchange on which the Stock is then listed or
admitted to trading. If no reported sale of Stock takes place on
the date in question, then the reported closing asked price of
the Stock on such date shall be determinative of Prevailing
Market Price.
1.14 Service. "Service" means that period of continuous uninterrupted
employment with Tyson or any one or more of its Affiliates from an Eligible
Employee's first day of employment until his date of termination of
employment with all Affiliates. However, in the case of an Affiliate which
has been acquired by Tyson through the acquisition of substantially all of
the assets or all of the stock of the Affiliate, Service shall include
employment prior to the date on which such Affiliate is designated as a
Participating Affiliate on such terms as the Board of Directors of Tyson
may expressly provide. Service with two or more Affiliates during
consecutive periods shall be considered continuous service with one
Affiliate.
39
<PAGE>
1.15 Stock. All references herein to "Stock" shall mean shares of Class A
Common Stock of Tyson.
1.16 Termination of Service. "Termination of Service" means any absence
from the employment of Tyson or any Affiliate (including, but not limited
to, absences by reason of discharge or resignation) which is not deemed a
Leave of Absence as defined herein.
ARTICLE II
Eligibility to Participate
Except as provided below, each Eligible Employee of Tyson or of a
Participating Affiliate who has completed two full calendar months of
Service shall be eligible to participate in the Plan commencing on the
first Payday that falls on or after the first day of the immediately
succeeding month.
ARTICLE III
Employee Participation and Contributions
3.1 Voluntary, Non-Discriminatory Plan. Participation in this Plan shall
be voluntary and all Participants shall have the same rights and privileges
under the Plan, except to the extent the terms of the Plan otherwise
provide.
3.2 How an Employee Elects to Participate. Except as provided in Sections
3.9 and 4.2 below, an Eligible Employee may elect to participate in the
Plan by executing or otherwise authorizing a "Payroll Deduction
Authorization" (within the time period prescribed by the Plan
Administrator) prior to the Payday on which the Eligible Employee will
begin participation. By confirming a Payroll Deduction Authorization, an
Eligible Employee also affirms his acceptance of the terms of this Plan.
3.3 Limits on Contribution. The minimum payroll deduction shall be one
dollar ($1.00) per week and the maximum shall be twenty-five dollars
($25.00) per week, as the Participant shall elect, or, in the alternative,
the minimum payroll deduction shall be one percent (1%) of Base Earnings
and the maximum shall be ten percent (10%) of Base Earnings. At such times
as permitted by the Plan Administrator, a Participant may increase or
decrease his contribution under the Plan by any multiple of one dollar or
one percent (1%); however, no Eligible Employee may contribute, in any one
year, more than ten percent (10%) of his Base Earnings or, if he elects a
payroll deduction of a specific dollar amount, twenty-five dollars $25.00
per week.
3.4 Voluntary Withdrawal from the Plan. A Participant who remains
employed by an Employer may withdraw from the Plan by submitting a notice
of cancellation of his Payroll Deduction Authorization in the manner and to
the person determined by the Plan Administrator from time to time, but no
later than prior to the Payday for which the cancellation is to be
effective. Any Participant who so withdraws from the Plan may renew his
participation in the Plan as soon as administratively practicable and will
be entitled to withdraw his Stock from the Plan only in accordance with
Section 6.2.
40
<PAGE>
3.5 Termination of Service Means Withdrawal from Plan. Upon a
Participant's Termination of Service, the Participant will be deemed to
have withdrawn from the Plan as of his last regular Payday.
3.6 Effect of Participant's Withdrawal from Plan. On and after the
effective date of a Participant's withdrawal from the Plan, no further
contribution under the Plan shall be permitted by or made for the
Participant, except as may be provided pursuant to this Section 3 and
Section 4.2 below.
3.7 Bookkeeping Accounts. All payroll deductions made for a Participant
shall be credited to the Participant's Plan account. Such payroll
deductions shall be commingled with the general assets of Tyson and no
separate fund shall be established. Participant accounts are kept solely
for bookkeeping purposes.
3.8 Distributions from Plan Upon Termination of Service. Upon a
Participant's Termination of Service for any reason, the Committee shall
obtain a share certificate representing the number of shares of Stock to
which the Participant is entitled and shall send the share certificate and
a check for the sum of uninvested funds held to the credit of such
Participant, by ordinary mail, to the Participant's mailing address last
known to his Employer. Upon the death of a Participant and upon receipt by
the Employer of proof of identity and existence at the Participant's death
of a beneficiary validly designated by him under the Plan, the Committee
shall obtain and forward the share certificate and check for uninvested
funds in the manner provided above to such beneficiary. In the event of
the death of a Participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such death, any
Stock and cash credited to the Participant under the Plan shall be payable
to the spouse to whom the Participant was legally married at the time of
his death and, if the deceased Participant is not survived by a spouse to
whom he was legally married at the time of his death, any such Stock and
cash shall be payable to the executor or administrator of the estate of the
Participant. No beneficiary shall, prior to the death of the Participant
by whom he has been designated, acquire any interest in the Stock or cash
credited to the Participant under the Plan.
ARTICLE IV
Employer Contributions
4.1 Employer Matching Contributions.
(a) Each Participant who has completed at least one year of
Service (as defined above) with Tyson or a Participating
Affiliate shall be entitled to Employer matching contributions on
that Participant's contributions, if any, made following
completion of the first year of Service in the amount and manner
as determined in Subsections (b) and (c) of this Section.
(b) Contributions made pursuant to this Section 4.1 shall
match only the Participant contributions made pursuant to Section
3.2 above. Such matching contributions shall be equal to fifty
percent (50%) of all amounts deferred by such Participants under
Section 3.2 of the Plan.
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(c) Participants determined to be (x) "eligible employees"
on January 1 of each calendar year under the provisions of the
"Executive Savings Plan of Tyson Foods, Inc."; (y) "executive
officers" as defined by Rule 16a-1 of the Securities Exchange Act
of 1934, as amended; or (z) non-resident aliens and who otherwise
are entitled to matching contributions under this Plan shall have
such contributions made to a matching account under the Plan.
Matching contributions made on behalf of all other Participants
hereunder who are entitled to Employer matching contributions
shall be made directly to the "Stock Match Accounts" established
for such Participants under the "Retirement Savings Plan of Tyson
Foods, Inc.," with such amounts to be administered and
distributed pursuant to the related terms of such plan.
(d) Matching contributions generally will be made at or
about the same time as the payroll deductions for the Participant
contributions to which they relate.
4.2 Employer Discretionary Non-matching Contributions. In addition to
Employer matching contributions made pursuant to Section 4.1, Tyson, in the
sole discretion of its Board of Directors, or any other Employer may from
time to time make non-matching contributions of cash or shares of Stock to
the Plan for allocation to certain Participants in the Plan or to certain
other Eligible Employees who are not enrolled in the Plan. Such
contributed shares shall be held for the account of the Participant (or
combined with any existing account of the Participant) and administered
pursuant to all provisions of the Plan. If directed by the Plan
Administrator, the Committee shall cause shares of Stock purchased with
such discretionary contributions to bear appropriate legends referring to
the terms, conditions and restrictions, if any, applicable to such
contributions or necessary to permit the Employer to comply with all
applicable state and federal securities laws. All of such contributed
shares at all times shall remain the property of the Participant and shall
remain subject to any legal or contractual restrictions to which the shares
may have been subject at the time of the contribution.
ARTICLE V
Administration of the Plan
5.1 Administrative Committee. To carry out the purposes of the Plan, the
Plan Administrator exercises its authority through the Committee, which
shall consist of not less than three members who may be officers and/or
directors of Tyson. The Plan Administrator may remove members from or add
members to the Committee at any time, within its discretion, and may fill
vacancies on the Committee. An individual member of the Committee may not
participate in any decision exclusively affecting his own participation in
the Plan. The Committee shall select one of its members as Chairman, and
shall hold meetings at such times and places as it may determine. Acts of
a majority of the Committee at which a quorum is present, or acts reduced
to or approved in writing by a majority of the members of the Committee,
shall be valid acts of the Committee. The Committee shall have the sole
authority, in its absolute discretion, to adopt, amend and rescind such
rules and regulations as, in its opinion, may be advisable in the
administration of the Plan; to construe and interpret the Plan, the rules
and regulations; and to make all other determinations deemed necessary or
advisable for the administration of the Plan. All decisions,
determinations, and interpretations of the Committee shall be binding on
42
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all Participants. The Committee may employ such legal counsel, consultants
and agents as it may deem desirable for the administration of the Plan and
may rely upon any opinion received from any such counsel or consultant and
any computation received for any such consultant or agent. Expenses
incurred by the Plan Administrator or the Committee in the engagement of
such counsel, consultant or agent shall be paid by Tyson. No member or
former member of the Committee or of the Board of Directors of Tyson shall
be liable for any action or determination made in good faith with respect
to the Plan or any awards granted hereunder. The Committee, in its sole
discretion, may delegate all or any portion of its duties hereunder to
other individuals or entities.
5.2 Employer Contributions of Cash and Dividends. Each Employer shall
remit the funds deducted from payrolls under this Plan, plus any Employer
contributions of cash and dividends received on Stock held by the Plan, to
the brokerage firm or firms designated by the Committee.
5.3 Investment in Tyson Stock. As soon as practicable after receipt of
funds remitted under the Plan, the Committee or its designated
representative shall purchase on behalf of Participants shares of Stock
either directly from Tyson or in the open market at Prevailing Market
Prices. The Committee shall purchase the maximum number of shares
purchasable with such funds. Such shares shall be purchased on an
aggregate basis rather than on a per Participant basis. The number of
shares to be purchased is to be determined by the aggregate amount of funds
available to buy a whole share or multiple thereof. While no fractional
shares will be acquired or distributed, a Participant's interest in the
Plan will be accounted for to include, and will reflect, the factional
share, if any, which could have been acquired with the funds allocable to
him if fractional shares were purchased.
5.4 No Interest to be Paid. No interest shall be credited to Plan
accounts for any reason.
5.5 Dividends to be Used to Purchase Additional Shares. All cash
dividends received with respect to shares of Stock registered in the name
of the brokerage firm shall be used by it to purchase additional shares for
Participants in proportion to their specified interest in the shares upon
which the dividends were paid. Stock dividends, warrants and rights of any
kind received with respect to such shares shall be held and distributed in
the manner provided in Sections 3.8 or 6.2, herein, as applicable;
provided, however, that the Committee, in its sole discretion, may elect to
pay dividends received which are attributable to Stock allocable to
Participants who have withdrawn from the Plan (pursuant to Section 3.4
above) directly to such Participants on an annual basis.
5.6 Not Transferable. Neither payroll deductions credited to a
Participant's Plan account nor a Participant's rights to acquire shares of
Stock or his undivided interest in the shares of Stock registered in the
name of the broker may be assigned, sold, pledged, or alienated except by
testate or intestate succession, and any attempt to do so shall be void.
In addition, such credits, rights and undivided interests may not be
encumbered by lien or security interest of any kind and shall not be liable
for the debts of a Participant or subject to attachment, or to any judgment
rendered against the Participant or to the process of any court in aid or
execution of any judgment so rendered.
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5.7 Voting Rights. Unless the Committee determines otherwise from time to
time, Participants shall have the power to vote all shares held in the name
of the broker in any and all matters which shall be the subject of the vote
for the shareholders.
5.8 Costs of the Plan. The costs of maintaining records and executing
transfers under the Plan shall be paid by Tyson or allocated to and paid by
Participating Affiliates, as the Board of Directors of Tyson may direct.
5.9 Brokerage Costs. Brokerage expenses incurred in the purchase of
shares shall be included as part of the cost of shares of Stock to
Participants.
5.10 Indemnification. Neither Tyson, the Committee and its delegates, nor
any broker through whom purchase orders are executed pursuant to this Plan
shall have any responsibility or liability for any action or determination
in good faith including, without limiting the generality of the foregoing,
any action with respect to price, time, quantity or other conditions and
circumstances of the purchase of shares of Stock under the terms of the
Plan. Tyson shall indemnify and hold harmless any officer, employee, agent,
delegee or representative who incurs damage or loss, including the expense
of defense thereof, in connection with the performance of the duties
specified herein.
ARTICLE VI
Reports and Delivery of Share Certificates
6.1 Quarterly Reports. The Committee shall make quarterly reports to each
Participant, specifying the status of his interest in the Plan through the
last day of each calendar quarter.
6.2 Delivery of Share Certificates.
All shares of Stock purchased under the Plan from contributions made
by Participants, contributions made by an Employer or dividends received by
the Plan, will be issued to Participants pursuant to the following rules:
(a) Only in increments of ten (10) shares from any account.
(b) Only upon receipt by the Committee of a request from the
Participant setting forth the amount of shares requested to be issued.
(c) Distributions of Stock will be limited to twice monthly and
will be made as soon as administratively feasible following the date
the request was made.
(d) Distributions of Stock purchased from contributions made by
Participants may not exceed the amount of such Stock set forth on
their last quarterly statement.
(e) Distributions of Stock purchased from Employer contributions
may not exceed the amount of such Stock set forth on their last report
from the immediately preceding calendar year.
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(f) Distributions of dividends shall be available on the same
basis as the contributions to which they relate, except to the extent
the Plan Administrator determines otherwise.
(g) The order in which shares of Stock are withdrawn from a
Participant's accounts shall be determined pursuant to rules and
regulations to be adopted by the Committee.
ARTICLE VII
Amendment and Termination of the Plan
The Board of Directors of Tyson or its delegate may, at any time and
in its discretion, alter, amend, suspend or terminate the Plan or any part
thereof. The cash balances and shares of Stock credited to Participants'
accounts shall be delivered to Participants as soon as administratively
practicable after the Plan's termination, except to the extent the Board of
Directors of Tyson expressly determines otherwise. Notice of any material
amendment, suspension or termination of the Plan, in whole or in part,
shall be given to each Participant as soon as practicable after such action
is taken.
ARTICLE VIII
Adjustments Upon Changes in Stock
The maximum number of shares of Stock to be sold to Participants under
the Plan shall be 11,500,000, subject to adjustment upon changes in the
capitalization of Tyson as provided herein.
If any change is made in the stock subject to the Plan (through
merger, consolidation, reorganization, recapitalization, stock dividend,
dividend in property other than cash, stock split, liquidating dividend,
combination of shares, exchange of shares, change in corporate structure or
otherwise), the maximum number of shares subject to the Plan and the number
of shares and price per share of Stock subject to outstanding rights under
the Plan shall be adjusted automatically to reflect such change.
In the event of (1) a dissolution or liquidation of Tyson, (2) a
merger or a consolidation in which Tyson is not the surviving corporation,
or a reverse merger in which Tyson is the surviving corporation but the
shares of Stock by virtue of the merger are converted into other property,
whether in the form of securities, cash or otherwise, or (3) any other
capital reorganization in which more than fifty percent (50%) of the shares
of Tyson entitled to vote are exchanged, the Plan shall terminate, unless
another corporation assumes the responsibility of continuing the operation
of the Plan or the Plan Administrator determines in its discretion that the
Plan shall nevertheless continue in full force and effect. If the Plan
Administrator elects to terminate the Plan, the Committee shall send to
each Participant a stock certificate representing the number of whole
shares of Stock to which the Participant is entitled. In addition, the
Committee shall send checks drawn on the Plan's account to each Participant
in an amount equal to the sum of the uninvested funds held to the credit of
each Participant in the manner provided in Section 3.8 above.
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Any issue by Tyson of any class of preferred stock, or securities
convertible into shares of common stock or preferred stock of any class,
shall not affect, and no adjustment by reason thereof shall be made with
respect to the number or price of shares of Stock subject to any grant
except as specifically provided otherwise in this Article VIII.
The grant of any right to a person pursuant to the Plan shall not
affect in any way the right or power of Tyson to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell,
or transfer all or any part of its business or assets.
ARTICLE IX
Miscellaneous Provisions
9.1 No Contract of Employment Intended. The granting of any right to a
person pursuant to this Plan shall not constitute an agreement or
understanding, express or implied, on the part of Tyson or any Affiliate to
employ such person for any specified period.
9.2 Information Available. If required by law, the offered shares of
Tyson shall be registered under the Securities Act of 1933 on Form S-8, or
such other form as shall be specified by the Securities and Exchange
Commission, and Tyson shall deliver to each Participant a copy of the
prospectus or such other information as may be required from time to time
as required.
9.3 Securities Laws Restrictions. The Plan Administrator reserves the
right to place an appropriate legend on any certificate representing shares
of Stock issuable under the Plan with any such legend reflecting
restrictions on the transfer of the shares as may be necessary to assure
the availability of any applicable exemptions under federal and state
securities laws to which Tyson or the Plan Administrator deem appropriate.
9.4 Waiver. No liability whatever shall attach to or be incurred by any
past, present or future shareholders, officers or directors, as such, of
Tyson or any Participating Affiliates, under or by reason of any of the
terms, conditions or agreements contained in this Plan or implied
thereform, and any and all liabilities of, and any and all rights and
claims against, Tyson or any Participating Affiliate, or any shareholder,
officer or director as such, whether arising at common law or in equity or
created by statute or constitution or otherwise, pertaining to this Plan,
are hereby expressly waived and released by each Participant as a part of
the consideration for any benefits provided by an Employer under this Plan.
9.5 Notices. All notices or other communications by a Participant to the
Plan Administrator under or in connection with the Plan shall be deemed to
have been duly given when received by the Secretary of Tyson or when
received in the form specified by the Plan Administrator at the location,
or by the person, designated by the Plan Administrator for the receipt
thereof.
9.6 Severability. Each of the Sections included in the Plan is separate,
distinct and severable from the other and remaining Sections of the Plan,
and the invalidity or unenforceability of any Section shall not affect the
validity and enforceability of any other Section or Sections of the Plan.
Further, if any Section of this Plan is ruled invalid or unenforceable by a
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court of competent jurisdiction because of a conflict between such Section
and any applicable law or public policy, such Section shall be valid and
enforceable to the extent such Section is consistent with such law or
public policy.
9.7 Governing Law. The construction, validity and operation of this Plan
shall be governed by the laws of the State of Delaware.
9.8 Rules of Construction. Throughout this Plan, the masculine includes
the feminine, and the singular includes the plural, and vice versa, where
applicable.
9.9 Plan Year. The Plan's plan year and the fiscal year shall end on
December 31 of each year.
9.10 Designation of Beneficiary. A Participant may file a written
designation of a beneficiary who is to receive any Stock and/or cash. Such
designation of a beneficiary may be changed by the Participant at any time
in writing delivered to his Employer.
9.11 Lost Participants. In the event the Committee or its designee, after
reasonable inquiry, determines that it is unable to locate a Participant or
beneficiary whose account is otherwise payable, the Committee (or such
designee) may direct that such account shall be forfeited; provided,
however, that the amount so forfeited shall be reinstated through a special
Employer contribution if and in the event the Participant or beneficiary
thereafter shall make a valid claim therefor upon presentation of proper
identification.
IN WITNESS WHEREOF, Tyson has caused this indenture to be made as of
the 13th day of December, 1999.
TYSON FOODS, INC.
By: /s/ Carl Johnson
---------------------------
Title: Executive Vice President,
Administrative Services
ATTEST:
/s/ R. Read Hudson
- ------------------
Title: Secretary
[CORPORATE SEAL]
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RETIREMENT SAVINGS PLAN
OF
TYSON FOODS, INC.
THIS INDENTURE is made as of the 13th day of December, 1999, by TYSON
FOODS, INC, a corporation duly organized and existing under the laws of the
State of Delaware.
W I T N E S S E T H:
WHEREAS, the Primary Sponsor established by indenture originally
effective as of October 1, 1987, the Retirement Savings Plan of Tyson
Foods, Inc. (the "Plan"), which was last amended by indenture dated January
1, 1993; and
WHEREAS, the Primary Sponsor now wishes to amend and restate the Plan
primarily to comply with and make changes permitted by the provisions of
the Small Business Job Protection Act of 1996 and the Taxpayer Relief Act
of 1997; and
WHEREAS, the Plan is intended to be a profit sharing plan within the
meaning of Treasury Regulations Section 1.401-1(b)(1)(ii) and also contains
a cash or deferred arrangement as described in Section 401(k) of the
Internal Revenue Code of 1986; and
WHEREAS, the provisions of the Plan, as amended and restated herein,
shall apply to Plan Years beginning after January 1, 1997, except to the
extent the provisions are required to apply at an earlier date or to any
other members to comply with applicable law;
NOW, THEREFORE, the Primary Sponsor does hereby amend and restate the
Plan in its entirety, generally effective as of January 1, 1997, except as
otherwise provided herein, to read as follows:
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RETIREMENT SAVINGS PLAN
OF
TYSON FOODS, INC.
Page
SECTION 1 DEFINITIONS 1
SECTION 2 ELIGIBILITY 10
SECTION 3 CONTRIBUTIONS 10
SECTION 4 ALLOCATIONS 12
SECTION 5 PLAN LOANS 13
SECTION 6 IN-SERVICE WITHDRAWALS 15
SECTION 7 PAYMENT OF BENEFITS ON TERMINATION OF EMPLOYMENT 17
SECTION 8 PAYMENT OF BENEFITS OF RETIREMENT 18
SECTION 9 DEATH BENEFITS 19
SECTION 10 GENERAL RULES ON DISTRIBUTIONS 19
SECTION 11 ADMINISTRATION OF THE PLAN 21
SECTION 12 CLAIM REVIEW PROCEDURE 24
SECTION 13 INCOMPETENT DISTRIBUTEE AND UNCLAIMED PAYMENTS 25
SECTION 14 PROHIBITION AGAINST DIVERSION 27
SECTION 15 LIMITATION OF RIGHTS 27
SECTION 16 AMENDMENT TO OR TERMINATION OF THE PLAN AND THE TRUST 27
SECTION 17 ADOPTION OF PLAN BY AFFILIATES 29
SECTION 18 QUALIFICATION AND RETURN OF CONTRIBUTIONS 29
SECTION 19 SECTION 16 OF SECURITIES EXCHANGE ACT OF 1934 30
SECTION 20 INCORPORATION OF SPECIAL LIMITATIONS 30
APPENDIX A LIMITATION ON ALLOCATIONS 1
APPENDIX B TOP-HEAVY PROVISIONS 1
APPENDIX C SPECIAL NONDISCRIMINATION RULES 1
APPENDIX D FROZEN BENEFIT DISTRIBUTION RULES 1
49
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SECTION 1
DEFINITIONS
Wherever used herein, the masculine pronoun shall be deemed to include
the feminine, and the singular to include the plural, unless the context
clearly indicates otherwise and the following words and phrases shall, when
used herein, have the meanings set forth below:
1.1 "Account" means a Participant's aggregate balance in the following
accounts, as adjusted pursuant to the Plan as of any given date:
(a) "Salary Deferral Contribution Account" which shall reflect a
Participant's interest in contributions made by a Plan Sponsor under Plan
Section 3. 1.
(b) "Employer Contribution Account" which shall reflect a Participant's
interest in matching contributions made by a Plan Sponsor under Plan
Section 3.2.
(c) "Stock Match Account" which shall reflect a Participant's interest in
contributions made by a Plan Sponsor under Plan Section 3.3.
(d) "After-Tax Contribution Account" which shall reflect a Participant's
interest in after-tax contributions previously made by a Participant to the
Fund or transferred to the Plan in a trust-to-trust transfer.
(e) "Rollover Account" which shall reflect a Participant's interest in
Rollover Amounts.
The Plan Administrator shall also maintain such additional subaccounts as
it determines necessary or desirable to reflect trust-to-trust transfers
(other than Rollover Amounts), including, but not limited to, the mergers
of other tax-qualified retirement plans with and into the Plan. In
addition, the Plan Administrator may allocate the interest of a Participant
in any funds transferred to the Plan in any trust-to-trust transfer (other
than Rollover Amounts) among the above accounts as the Plan Administrator
determines best reflects the interest of the Participant.
1.2 "Affiliate" means (a) any corporation which is a member of the same
controlled group of corporations (within the meaning of Code Section
414(b)) as is a Plan Sponsor, (b) any other trade or business (whether or
not incorporated) under common control (within the meaning of Code Section
414(c)) with a Plan Sponsor, (c) any other corporation, partnership or
other organization which is a member of an affiliated service group (within
the meaning of Code Section 414(m)) with a Plan Sponsor, and (d) any other
entity required to be aggregated with a Plan Sponsor pursuant to
regulations under Code Section 414(o). Notwithstanding the foregoing, for
purposes of applying the limitations set forth in Appendix A and for
purposes of determining Annual Compensation under Appendix A, the
references to Code Sections 414(b) and (c) above shall be as modified by
Code Section 415(h).
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1.3 "Annual Compensation" means wages within the meaning of Code Section
3401(a) (for purposes of income tax withholding at the source) and all
other payments of compensation to an Employee by a Plan Sponsor and
Affiliates (in the course of the entity's trade or business) during a Plan
Year for which the Plan Sponsor or Affiliate, as applicable, is required to
furnish the Employee a written statement as required to be reported under
Code Sections 6041(d), 6051(a)(3) and 6052 (but without regard to any rules
that limit the remuneration included in wages based on the nature or
location of the employment or the services performed, such as the exception
for agricultural labor in Code Section 3401(a)(2)). Annual Compensation in
excess of the Annual Compensation Limit shall be disregarded for all
purposes under the Plan except for purposes of determining who are Highly
Compensated Employees. Notwithstanding the above, Annual Compensation
shall be determined as follows:
(a) (1) for purposes of determining, with respect to each Plan Sponsor,
the amount of contributions made by or on behalf of an Employee under Plan
Section 3 and allocations under Plan Section 4, and
(2) for purposes of applying the provisions of Appendix C hereto for such
Plan Years as the Secretary of the Treasury may allow, Annual Compensation
shall only include amounts received for the portion of the Plan Year during
which the Employee was a Participant;
(b) for all purposes under the Plan, Annual Compensation shall not include
reimbursements or other expense allowances, cash and noncash fringe
benefits, moving expense allowances, deferred compensation, and welfare
benefits;
(c) in determining the amount of contributions under Plan Section 3 and
allocations under Plan Section 4 made by or on behalf of an Employee,
Annual Compensation shall not include bonus compensation and amounts
realized from the exercise of non-qualified stock options or when
restricted stock (or property) held by an employee either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture;
(d) (1) for all purposes under the Plan, except as provided in Subsection
(d)(2) of this Section, Annual Compensation shall include any amount which
would have been paid during a Plan Year, but was contributed by a Plan
Sponsor on behalf of an Employee pursuant to a salary reduction agreement
which is not includable in the gross income of the Employee under Section
125, 402(g)(3) or 457 of the Code; and
(2) effective until December 31, 1997, for purposes of
applying the annual addition limits in Appendix A, Annual
Compensation shall not include the amounts described in
Subsection (d)(1); and
(e) Notwithstanding the provisions of Subsection (c), if for any Plan Year
the compensation percentage for Highly Compensated Employees exceeds by
more than a de minimis amount the compensation percentage for Participants
who are not Highly Compensated Employees, then the items of Annual
Compensation described in Subsection (c) above shall be included as part of
Annual Compensation for purposes of determining Plan Sponsor contributions
made to Stock Match Accounts.
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1.4 "Annual Compensation Limit" means $150,000, which amount may be
adjusted in subsequent Plan Years based on changes in the cost of living as
announced by the Secretary of the Treasury. If a determination period
consists of fewer than twelve months, the Annual Compensation Limit shall
be multiplied by a fraction, the numerator of which is the number of months
in the determination period and the denominator of which is twelve.
1.5 "Beneficiary" means the person or trust that a Participant designated
most recently in writing to the Plan Administrator; provided, however, that
if the Participant has failed to make a designation, no person designated
is alive, no trust has been established, or no successor Beneficiary has
been designated who is alive, the term "Beneficiary" means (a) the
Participant's spouse or (b) if no spouse is alive, the deceased
Participant's estate. Notwithstanding the preceding sentence, the spouse
of a married Participant shall be his Beneficiary unless that spouse has
consented in writing to the designation by the Participant of some other
person or trust and the spouse's consent acknowledges the effect of the
designation and is witnessed by a notary public or a Plan representative.
A Participant may change his designation at any time. However, a
Participant may not change his designation without further consent of his
spouse under the terms of the preceding sentence unless the spouse's
consent permits designation of another person or trust without further
spousal consent and acknowledges that the spouse has the right to limit
consent to a specific beneficiary and that the spouse voluntarily
relinquishes this right. Notwithstanding the above, the spouse's consent
shall not be required if the Participant establishes to the satisfaction of
the Plan Administrator that the spouse cannot be located, if the
Participant has a court order indicating that he is legally separated or
has been abandoned (within the meaning of local law) unless a "qualified
domestic relations order" (as defined in Code Section 414(p)) provides
otherwise, or if there are other circumstances as the Secretary of the
Treasury prescribes. If the spouse is legally incompetent to give consent,
consent by the spouse's legal guardian shall be deemed to be consent by the
spouse. If, subsequent to the death of a Participant, the Participant's
Beneficiary dies while entitled to receive benefits under the Plan, the
successor Beneficiary, if any, or the Beneficiary listed under Subsection
(a) or, if no spouse is alive, Subsection (b) shall be the Beneficiary.
1.6 "Board of Directors" means the Board of Directors of the Primary
Sponsor.
1.7 "Break in Service" means the failure of an Employee, in connection
with a Termination of Employment, to complete a twelve-consecutive-month
period beginning on a Severance Date or anniversary thereof during which
the Employee fails to perform an Hour of Service. Notwithstanding the
foregoing, the absence from employment at anytime during a Plan Year by
reason of service in the armed forces of the United States shall not cause
a Break in Service during a Plan Year if such Employee is reemployed by the
Plan Sponsor within four months after his discharge or release from such
service in the armed forces.
1.8 "Code" means the Internal Revenue Code of 1986, as amended.
1.9 "Deferral Amount" means a contribution of a Plan Sponsor on behalf of
a Participant pursuant to Plan Section 3.1.
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<PAGE>
1.10 "Direct Rollover" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
1.11 "Disability" means a disability of a Participant which, in the opinion
of the Plan Administrator, causes a Participant to be totally and
permanently disabled due to sickness or injury so as to be completely
unable to perform any and every duty pertaining to his occupation from a
cause other than as specified below:
(a) excessive and habitual use by the Participant of drugs,
intoxicants or narcotics;
(b) injury or disease sustained by the Participant while
willfully and illegally participating in fights, riots, civil
insurrections or while committing a felony;
(c) injury or disease sustained by the Participant while serving
in any armed forces;
(d) injury or disease sustained by the Participant diagnosed or
discovered subsequent to the date of his termination of employment;
(e) injury or disease sustained by the Participant while working
for anyone other than the Plan Sponsor or any Affiliate and arising
out of such employment; and
(f) injury or disease sustained by the Participant as a result
of an act of war, whether or not such act arises from a formally
declared state of war.
The determination of whether or not a Disability exists shall be determined
by the Plan Administrator and shall be substantiated by competent medical
evidence.
1.12 "Distributee" means an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the alternate payee under
a qualified domestic relations order (as defined in Code Section 414(p)),
are Distributees with regard to the interest of the spouse or former
spouse.
1.13 "Elective Deferrals" means, with respect to any taxable year of the
Participant, the sum of
(a) any Deferral Amounts;
(b) any contributions made by or on behalf of a Participant under any
other qualified cash or deferred arrangement as defined in Code Section
401(k), whether or not maintained by a Plan Sponsor, to the extent such
contributions are not or would not, but for Code Section 402(g)(1), be
included in the Participant's gross income for the taxable year; and
(c) any other contributions made by or on behalf of a Participant
pursuant to Code Section 402(g)(3).
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1.14 "Eligibility Service" means the completion of a twelve-consecutive-
month period beginning on the date on which the Employee first performs an
Hour of Service upon his employment or reemployment or any anniversary
thereof without reaching a Severance Date; provided, however, if an
Employee quits, retires or is discharged and then performs an Hour of
Service within twelve months of his Severance Date, then such period of
severance shall be taken into account in calculating Eligibility Service.
1.15 "Eligible Employee" means any Employee of a Plan Sponsor other than an
Employee who is (a) covered by a collective bargaining agreement between a
union and a Plan Sponsor, provided that retirement benefits were the
subject of good faith bargaining, unless the collective bargaining
agreement provides for participation in the Plan, (b) a leased employee
within the meaning of Code Section 414(n)(2), (c) deemed to be an Employee
of a Plan Sponsor pursuant to regulations under Code Section 414(o), or (d)
a non-resident alien. In addition, no person who is initially classified
by a Plan Sponsor as an independent contractor for federal income tax
purposes shall be regarded as an Eligible Employee for that period,
regardless of any subsequent determination that any such person should have
been characterized as a common law employee of the Plan Sponsor for the
period in question.
1.16 "Eligible Retirement Plan" means an individual retirement account
described in Code Section 408(a), an individual retirement annuity
described in Code Section 408(b), an annuity plan described in Code Section
403(a) or a qualified trust described in Code Section 401(a) that accepts
the Distributee's Eligible Rollover Distribution. However, in the case of
an Eligible Rollover Distribution to the surviving spouse, an Eligible
Retirement Plan is an individual retirement account or individual
retirement annuity.
1.17 "Eligible Rollover Distribution" means any distribution of all or any
portion of the Distributee's Account, except that an Eligible Rollover
Distribution does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the Distributee or the joint
lives (or joint life expectancies) of the Distributee and the Distributee's
designated Beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Code Section
401(a)(9); the portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities); and, effective for
distributions made after December 31, 1999, any distribution made under
Section 6.1 of the Plan.
1.18 "Employee" means any person who is (a) a common law employee of a Plan
Sponsor or an Affiliate, (b) a leased employee within the meaning of Code
Section 414(n)(2) with respect to a Plan Sponsor, or (c) deemed to be an
employee of a Plan Sponsor pursuant to regulations under Code Section
414(o).
1.19 "Entry Date" means the first day of each payroll period.
1.20 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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1.21 "Fiduciary" means each Named Fiduciary and any other person who
exercises or has any discretionary authority or control regarding
management or administration of the Plan, any other person who renders
investment advice for a fee or has any authority or responsibility to do so
with respect to any assets of the Plan, or any other person who exercises
or has any authority or control respecting management or disposition of
assets of the Plan.
1.22 "Fund" means the amount at any given time of cash and other property
held by the Trustee pursuant to the Plan.
1.23 "Highly Compensated Employee" means, with respect to a Plan Year, each
Employee who:
(a) was at any time during the Plan Year or the immediately
preceding Plan Year an owner of more than five percent (5%) of the
outstanding stock of a Plan Sponsor or Affiliate or more than five
percent (5%) of the total combined voting power of all stock of a Plan
Sponsor or Affiliate;
(b) received Annual Compensation in excess of $80,000 (for the
Plan Year beginning in 1997) during the immediately preceding Plan
Year; or
(c) is a former Employee who met the requirements of Subsection
(a)(1) or (a)(2) at the time the former Employee separated from
service with the Plan Sponsor or an Affiliate or at any time after the
former Employee attained age 55.
1.24 "Hour of Service" means:
(a) Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for a Plan Sponsor or any Affiliate
during the applicable computation period, and such hours shall be
credited to the computation period in which the duties are performed;
(b) Each hour for which an Employee is paid, or entitled to payment,
by a Plan Sponsor or any Affiliate on account of a period of time
during which no duties are performed (irrespective of whether
the employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence;
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by a Plan Sponsor or any
Affiliate, and such hours shall be credited to the computation period
or periods to which the award or agreement for back pay pertains
rather than to the computation period in which the award, agreement
or payment is made; provided, that the crediting of Hours of
Service for back pay awarded or agreed to with respect to periods
described in Subsection (b) of this Section shall be subject to the
limitations set forth in Subsection (f);
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(d) Solely for purposes of determining whether a Break in Service has
occurred, each hour during any period that the Employee is absent from work
(1) by reason of the pregnancy of the Employee, (2) by reason of the birth
of a child of the Employee, (3) by reason of the placement of a child with
the Employee in connection with the adoption of the child by the Employee,
or (4) for purposes of caring for such child for a period immediately
following its birth or placement. The hours described in this Subsection
(d) shall be credited (A) only in the computation period in which the
absence from work begins, if the Employee would be prevented from incurring
a Break in Service in that year solely because of that credit, or (B), in
any other case, in the next following computation period;
(e) Without duplication of the Hours of Service counted pursuant to
Subsection (d) hereof and solely for such purposes as required pursuant to
the Family and Medical Leave Act of 1993 and the regulations thereunder
(the "Act"), each hour (as determined pursuant to the Act) for which an
Employee is granted leave under the Act (1) for the birth of a child, (2)
for placement with the Employee of a child for adoption or foster care, (3)
to care for the Employee's spouse, child or parent with a serious health
condition, or (4) for a serious health condition that makes the Employee
unable to perform the functions of the Employee's job;
(f) The Plan Administrator shall credit Hours of Service in
accordance with the provisions of Section 2530.200b-2(b) and (c) of
the U.S. Department of Labor Regulations or such other federal
regulations as may from time to time be applicable and determine Hours
of Service from the employment records of a Plan Sponsor or in any other
manner consistent with regulations promulgated by the Secretary of
Labor, and shall construe any ambiguities in favor of crediting
Employees with Hours of Service. Notwithstanding any other provision
of this Section, in no event shall an Employee be credited with more
than 501 Hours of Service during any single continuous period during
which he performs no duties for the Plan Sponsor or Affiliate; and
(g) In the event that a Plan Sponsor or an Affiliate acquires
substantially all of the assets of another corporation or entity or a
controlling interest of the stock of another corporation or merges with
another corporation or entity and is the surviving entity, then service of
an Employee who was employed by the prior corporation or entity and who is
employed by the Plan Sponsor or an Affiliate at the time of the acquisition
or merger shall be counted in the manner provided, with the consent of the
Primary Sponsor, in resolutions adopted by the Plan Sponsor which
authorizes the counting of such service.
1.25 "Individual Fund" means individual subfunds of the Fund as may be
established by the Plan Administrator from time to time for the investment
of the Fund.
1.26 "Investment Committee" means a committee, which may be established to
direct the Trustee with respect to investments of the Fund.
1.27 "Investment Manager" means a Fiduciary, other than the Trustee, the
Plan Administrator, or a Plan Sponsor, who may be appointed by the Primary
Sponsor:
(a) who has the power to manage, acquire, or dispose of any assets
of the Fund or a portion thereof; and
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<PAGE>
(b) who
(1) is registered as an investment adviser under the Investment Advisers
Act of 1940;
(2) is a bank as defined in that Act; or
(3) is an insurance company qualified to perform services described in
Subsection (a) above under the laws of more than one state; and
(c) who has acknowledged in writing that he is a Fiduciary with respect to
the Plan.
1.28 "Named Fiduciary" means only the following:
(a) the Plan Administrator;
(b) the Trustee;
(c) the Investment Committee; and
(d) the Investment Manager.
1.29 "Normal Retirement Age" means age 65.
1.30 "Participant" means any Employee or former Employee who has become a
participant in the Plan for so long as his Account has not been fully
distributed pursuant to the Plan.
1.31 "Plan Administrator" means the organization or person designated to
administer the Plan by the Primary Sponsor and, in lieu of any such
designation, means the Primary Sponsor.
1.32 "Plan Sponsor" means individually the Primary Sponsor and any
Affiliate or other entity which has adopted the Plan and Trust; provided,
however, if the Plan is adopted on behalf of Employees of one or more, but
less than all, divisions or facilities of any Affiliate, then the term
"Plan Sponsor", as applied to that Affiliate, shall only apply to the
divisions or facilities on behalf of whose Employees the Plan has been
adopted.
1.33 "Plan Year" means the calendar year.
1.34 "Primary Sponsor" means Tyson Foods, Inc. and each successor thereto.
1.35 "Retirement Date" means the date on which the Participant
(a) experiences a termination of employment on or after attaining Normal
Retirement Age, or (b) becomes subject to a Disability.
1.36 "Rollover Amount" means any amount transferred to the Fund by a
Participant, which amount qualifies as an eligible rollover distribution
under Code Section 402(c)(4), or for rollover treatment under Code Sections
403(a)(4) or 408(d)(3)(A)(ii), and any regulations issued thereunder.
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1.37 "Severance Date" means the earlier of (a) the date on which an
Employee quits, is discharged, retires or dies, and (b) the first
anniversary of the first date of a period in which an Employee remains
absent from work (with or without pay) with the Plan Sponsor or any
Affiliate for any reason. Notwithstanding the foregoing, the Severance
Date of an Employee who is absent from work beyond the first anniversary of
the first date of absence (1) by reason of the pregnancy of the Employee,
(2) by reason of the birth of a child of the Employee, (3) by reason of the
placement of a child with the Employee, or (4) for purposes of caring for
the child for a period immediately following its birth or placement, means
the second anniversary of the first date of absence from work. The Plan
Administrator may require an Employee to provide to it timely information
to establish the reason for any such absence hereunder and the number of
days for which there was such an absence.
1.38 "Termination of Employment" means the termination of employment of an
Employee from all Plan Sponsors and Affiliates for any reason other than
death or attainment of a Retirement Date. Any absence from active
employment of the Plan Sponsor and Affiliates by reason of an approved
leave of absence shall not be deemed for any purpose under the Plan to be a
Termination of Employment. Transfer from an Employee from one Plan Sponsor
to another Plan Sponsor or to an Affiliate shall not be deemed for any
purpose under the Plan to be a Termination of Employment. In addition,
transfer of an Employee to another employer in connection with a corporate
transaction involving a sale of assets, merger or sale of stock, shall not
be deemed to be a Termination of Employment, for purposes of the timing of
distributions under Plan Section 7.1, if the employer to which such
Employee is transferred agrees with the Plan Sponsor to accept a transfer
of assets from the Plan to its tax-qualified plan in a trust-to-trust
transfer meeting the requirements of Code Section 414(l). If the employer
to which such Employee is transferred does not agree to accept a transfer
of assets from the Plan to its tax-qualified Plan, Plan Section 7.5 is
applicable in the event that such Termination of Employment is not a
distributable event under Code Section 401(k)(10)(A).
1.39 "Trust" means the trust established under an agreement between the
Primary Sponsor and the Trustee to hold the Fund or any successor
agreement.
1.40 "Trustee" means the trustee under the Trust.
1.41 "Valuation Date" means each regular business day.
SECTION 2
ELIGIBILITY
2.1 Each Eligible Employee shall become a Participant as of the Entry Date
coinciding with or next following the date he completes his Eligibility
Service.
2.2 Except as provided in Section 2.4, each former Participant who is
reemployed by a Plan Sponsor shall become a Participant as of the date of
his reemployment as an Eligible Employee.
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2.3 Except as provided in Section 2.4, each former Employee who completes
his Eligibility Service but terminates employment with a Plan Sponsor
before becoming a Participant shall become a Participant as of the latest
of the date he (a) is reemployed, (b) would have become a Participant if he
had not incurred a termination of employment, or (c) becomes an Eligible
Employee.
2.4 If a former Employee incurs a Break in Service, he shall become a
Participant as of the Entry Date coinciding with or next following the date
he completes a period of Eligibility Service following the date of his
reemployment, regardless of whether the former Employee previously was a
Participant.
2.5 Effective January 1, 2000, solely for the purpose of contributing
Deferral Amounts to the Plan, an Eligible Employee who has not yet
completed his Eligibility Service may become a Participant as of the first
day of the month following the completion of two full calendar months of
service.
2.6 Solely for the purpose of contributing a Rollover Amount to the Plan,
an Eligible Employee who has not yet become a Participant pursuant to any
other provision of this Section 2 shall become a Participant as of the date
on which the Rollover Amount is contributed to the Plan only with respect
to that Rollover Amount.
SECTION 3
CONTRIBUTIONS
3.1 (a) Deferral Amounts. The Plan Sponsor shall make a contribution to
the Fund on behalf of each Participant who is an Eligible Employee and has
elected to defer a portion of Annual Compensation otherwise payable to him
for the Plan Year and to have such portion contributed to the Fund. The
election must be made before the Annual Compensation is payable and may
only be made pursuant to an agreement between the Participant and the Plan
Sponsor which shall be in such form and subject to such rules and
limitations as the Plan Administrator may prescribe and shall specify the
percentage of Annual Compensation that the Participant desires to defer and
to have contributed to the Fund. Once a Participant has made an election
for a Plan Year, the Participant may revoke or modify his election to
increase or reduce the rate of future deferrals, as provided in the
administrative procedures provided by the Plan Administrator. The
contribution made by a Plan Sponsor on behalf of a Participant under this
Section 3.1 shall be in an amount equal to the amount specified in the
Participant's deferral agreement, but not less than two percent (2%) and
not greater than fifteen percent (15%) of the Participant's Annual
Compensation. Pursuant to Section 4 of Appendix C, the Plan Administrator
may restrict the amount which Highly Compensated Employees, or any subgroup
thereof, may defer under this Section 3.1.
(b) Limits of Deferral Amounts. Elective Deferrals shall in no event
exceed $10,000 (for 1999) in any one taxable year of the Participant, which
amount shall be adjusted for changes in the cost of living as provided by
the Secretary of the Treasury. In the event the amount of Elective
Deferrals exceeds $10,000 (for 1999) as adjusted, in any one taxable year
then, (1) not later than the immediately following March 1, the Participant
may designate to the Plan the portion of the Participant's Deferral Amount
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which consists of excess Elective Deferrals, and (2) not later than the
immediately following April 15, the Plan may distribute the amount
designated to it under Paragraph (1) above, as adjusted to reflect income,
gain, or loss attributable to it through the end of the Plan Year, and
reduced by any "Excess Deferral Amounts," as defined in Appendix C hereto,
previously distributed or recharacterized with respect to the Participant
for the Plan Year beginning with or within that taxable year. The payment
of the excess Elective Deferrals, as adjusted and reduced, from the Plan
shall be made to the Participant without regard to any other provision in
the Plan. In the event that a Participant's Elective Deferrals exceed
$10,000, as adjusted, in any one taxable year under the Plan and other
plans of the Plan Sponsor and its Affiliates, the Participant shall be
deemed to have designated for distribution under the Plan the amount of
excess Elective Deferrals, as adjusted and reduced, by taking into account
only Elective Deferral amounts under the Plan and other plans of the Plan
Sponsor and its Affiliates.
3.2 Matching Contributions. The Plan Sponsor shall make contributions to
the Fund with respect to each Plan Year on behalf of each Participant who
is an Eligible Employee and who has completed his Eligibility Service in an
amount equal to (a) one hundred percent (100%) of the Participant's Annual
Compensation deferred by the Participant pursuant to Section 3.1, to the
extent the contribution under Section 3.1 does not exceed three percent
(3%) of his Annual Compensation, and (b) fifty percent (50%) of the
Participant's Annual Compensation deferred by the Participant pursuant to
Section 3.1, to the extent the contribution under Section 3.1 exceeds three
percent (3%) of his Annual Compensation but does not exceed five percent
(5%) of his Annual Compensation.
3.3 Stock Match Contributions. The Plan Sponsor proposes to make
contributions to the Fund on behalf of those Participants who are entitled
to matching contributions pursuant to the terms of Section 4.1(d) of the
"Tyson Foods, Inc. Employee Stock Purchase Plan" (or any successor
provisions) (the "Stock Match Provisions") in the amounts and at such times
as required thereby. Effective April 1, 1998, any contributions mistakenly
made pursuant to this Section 3.3 on behalf of a Participant who is a
Highly Compensated Employee shall be returned to the Plan Sponsor;
provided, such amount is returned no later than one year after the date of
its contribution.
3.4 Rollover Contributions. Any Eligible Employee may, with the consent
of the Plan Administrator and subject to such rules and conditions as the
Plan Administrator may prescribe, transfer a Rollover Amount to the Fund;
provided, however, that the Plan Administrator shall not administer this
provision in a manner which is discriminatory in favor of Highly
Compensated Employees.
3.5 Forfeitures. Forfeitures contemplated by Section 13.5 shall be used
to reduce Plan expenses and not to increase benefits.
3.6 Form of Contributions. Contributions may be made only in cash or
other property which is acceptable to the Trustee. In no event will the
sum of contributions under Sections 3.1, 3.2 and 3.3 exceed the deductible
limits under Code Section 404.
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3.7 Contributions Related to Military Service. Effective December 12,
1994, notwithstanding any provision of the Plan to the contrary,
contributions, benefits and service credit with respect to qualified
military service will be provided in accordance with Section 414(u) of the
Code.
3.8 Corrective Contributions. Notwithstanding any provision of the Plan
to the contrary, the Plan Sponsor may make corrective distributions or
allocations as required to comply with any program provided pursuant to
Revenue Procedure 98-22 or any successor guidance.
SECTION 4
ALLOCATIONS
4.1 (a) As soon as reasonably practicable following the date of
withholding by the Plan Sponsor, if applicable, and receipt by the Trustee,
Plan Sponsor contributions made on behalf of each Participant under
Sections 3.1 and 3.2, and Rollover Amounts contributed by the Participant,
shall be allocated to the Salary Deferral Contribution Account, Employer
Contribution Account and Rollover Account, respectively, of the Participant
on behalf of whom the contributions were made.
(b) As soon as reasonably practicable after the date indicated
by the Stock Match Provisions, Plan Sponsor contributions made under
Section 3.3 shall be allocated to the Stock Match Account of each
eligible Participant.
4.2 As of each Valuation Date, the Trustee shall allocate the net income
or net loss of each Individual Fund to each Account in the proportion that
the value of the Account as of the Valuation Date bears to the value of all
Accounts invested in that Individual Fund as of the Valuation Date.
SECTION 5
PLAN LOANS
5.1 Subject to the provisions of the Plan and the Trust, each Participant
who is an Employee shall have the right, subject to prior approval by the
Plan Administrator, to borrow from the Fund. In addition, each "party in
interest," as defined in ERISA Section 3(14), who is (a) a Participant but
no longer an Employee, (b) the Beneficiary of a deceased Participant, or
(c) an alternate payee of a Participant pursuant to the provisions of a
"qualified domestic relations order," as defined in Code Section 414(p),
shall also have the right, subject to prior approval by the Plan
Administrator, to borrow from the Fund; provided, however, that loans to
such parties in interest may not discriminate in favor of Highly
Compensated Employees.
5.2 In order to apply for a loan, a borrower must complete and submit to
the Plan Administrator documents or information required by the Plan
Administrator for this purpose.
5.3 Loans shall be available to all eligible borrowers on a reasonably
equivalent basis which may take into account the borrower's
creditworthiness, ability to repay and ability to provide adequate
security. Loans shall not be made available to Highly Compensated
Employees, officers or shareholders of a Plan Sponsor in an amount greater
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than the amount made available to other borrowers. This provision shall be
deemed to be satisfied if all borrowers have the right to borrow the same
percentage of their interest in the Participant's vested Account,
notwithstanding that the dollar amount of such loans may differ as a result
of differing values of Participants' vested Accounts.
5.4 Each loan shall bear a "reasonable rate of interest" and provide that
the loan be amortized in substantially level payments, made no less
frequently than quarterly, over a specified period of time. A "reasonable
rate of interest" shall be that rate that provides the Plan with a return
commensurate with the interest rates charged by persons in the business of
lending money for loans which would be made under similar circumstances.
5.5 Each loan shall be adequately secured, with the security for the
outstanding balance of all loans to the borrower to consist of one-half (1/2)
of the borrower's interest in the Participant's vested Account, or such
other security as the Plan Administrator deems acceptable. No portion of
the Participant's Salary Deferral Contribution Account shall be used as
security for any loan hereunder unless and until such time as the loan
amount exceeds the value of the borrower's interest in the Participant's
vested amounts in all other Accounts.
5.6 Each loan, when added to the outstanding balance of all other loans to
the borrower from all retirement plans of the Plan Sponsor and its
Affiliates which are qualified under Section 401 of the Code, shall not
exceed the lesser of:
(a) $50,000, reduced by the excess, if any, of
(1) the highest outstanding balance of loans made to the borrower from all
retirement plans qualified under Code Section 401 of the Plan Sponsor and
its Affiliates during the one (1) year period immediately preceding the day
prior to the date on which such loan was made, over
(2) the outstanding balance of loans made to the borrower from all
retirement plans qualified under Code Section 401 of the Plan Sponsor and
its Affiliates on the date on which such loan was made, or
(b) one-half (1/2) of the value of the borrower's interest in the vested
Account attributable to the Participant's Account.
For purposes of this Section, the value of the vested Account attributable
to a Participant's Account shall be established as of the latest preceding
Valuation Date, or any later date on which an available valuation was made,
and shall be adjusted for any distributions or contributions made through
the date of the origination of the loan.
5.7 Each loan, by its terms, shall be repaid within five (5) years.
5.8 Each loan shall be made in an amount of no less than $1,000.
5.9 A borrower is permitted to have only two loans existing under this
Plan at any one time.
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5.10 The entire unpaid principal sum and accrued interest shall, at the
option of the Plan Administrator, become due and payable if (a) a borrower
fails to make any loan payment when due (including the expiration of any
applicable grace period), (b) a borrower ceases to be a "party in
interest", as defined in ERISA Section 3(14), (c) the vested Account held
as security under the Plan for the borrower will, as a result of an
impending distribution or withdrawal, be reduced to an amount less than the
amount of all unpaid principal and accrued interest then outstanding under
the loan, or (d) a borrower makes any untrue representations or warranties
in connection with the obtaining of the loan. In that event, the Plan
Administrator may take such steps as it deems necessary to preserve the
assets of the Plan, including, but not limited to, the following: (1)
direct the Trustee to deduct the unpaid principal sum, accrued interest,
and any other applicable charge under the note evidencing the loan from any
benefits that may become payable out of the Plan to the borrower, (2)
direct the Plan Sponsor to deduct and transfer to the Trustee the unpaid
principal balance, accrued interest, and any other applicable charge under
the note evidencing the loan from any amounts owed by the Plan Sponsor to
the borrower, or (3) liquidate the security given by the borrower, other
than amounts attributable to a Participant's Salary Deferral Contribution
Account, and deduct from the proceeds the unpaid principal balance, accrued
interest, and any other applicable charge under the note evidencing the
loan. If any part of the indebtedness under the note evidencing the loan
is collected by law or through an attorney, the borrower shall be liable
for attorneys' fees in an amount equal to ten percent of the amount then
due and all costs of collection. Notwithstanding the foregoing, a loan may
be satisfied upon a Participant's termination of employment by distributing
the note evidencing the debt as part of an Eligible Rollover Distribution;
provided, however, that the trustee, custodian or administrator for the
Eligible Retirement Plan indicates its willingness to accept such property.
5.11 Each loan shall be made only in accordance with regulations and
rulings of the Internal Revenue Service and the Department of Labor. The
Plan Administrator shall be authorized to administer the loan program of
this Section and shall act in his sole discretion to ascertain whether the
requirements of such regulations and rulings and this Section have been
met. Any loan shall be funded from a Participant's Account pursuant to
uniform procedures prescribed by the Plan Administrator.
5.12 Effective September 1, 1999, Spousal consent for a loan shall be
obtained if, at the time any portion of the Participant's Account is to be
used as security for any such loan, the Participant has elected an annuity
form of payment under Appendix D. Notwithstanding the foregoing, spousal
consent need not be obtained if, at the time the Participant's Account is
used as security for any such loan, the Participant's Account has a value
of $5,000 or less.
SECTION 6
IN-SERVICE WITHDRAWALS
6.1 Hardship Distributions.
(a) The Trustee shall, upon the direction of the Plan
Administrator, withdraw all or a portion of a Participant's Salary
Deferral Contribution Account consisting of Deferral Amounts (but not
earnings thereon credited after December 31, 1988) plus, to the extent
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applicable, that portion of the Employer Contribution Account (as
described in Appendix D) attributable to Thrift Plan (as defined in
Appendix D) participation and that portion of the Rollover Account
attributable to Thrift Plan participation prior to the time such
account(s) are otherwise distributable in accordance with the other
provisions of the Plan; provided, however, that any such withdrawal
shall be made only if the Participant is an Employee and demonstrates
that he is suffering from "hardship" as determined herein. For
purposes of this Section, a withdrawal will be deemed to be an account
of hardship if the withdrawal is on account of:
(1) expenses for medical care described in Section 213(d)
of the Code incurred by the Participant, his spouse, or any
dependents of the Participant (as defined in Section 152 of the
Code) or necessary for these persons to obtain medical care
described in Code Section 213(d);
(2) purchase (excluding mortgage payments) of a principal
residence for the Participant;
(3) payment of tuition and related educational fees for the
next twelve (12) months of post-secondary education for the
Participant, his spouse, children, or dependents;
(4) the need to prevent the eviction of the Participant
from his principal residence or foreclosure on the mortgage of
the Participant's principal residence; or
(5) any other contingency determined by the Internal
Revenue Service to constitute an "immediate and heavy financial
need" within the meaning of Treasury Regulations Section 1.401(k)-
l(d).
(b) In addition to the requirements set forth in Subsection
6.1(a) above, any withdrawal pursuant to Section 6.1 shall not be in
excess of the amount necessary to satisfy the need determined under
Section 6.1 and shall also be subject to the requirements of this
Subsection (b).
(1) The Participant shall first obtain all withdrawals,
other than hardship withdrawals, and all nontaxable loans
currently available under all plans maintained by the Plan
Sponsor;
(2) the Plan Sponsor shall not permit Elective Deferrals or
after-tax employee contributions to be made to the Plan or any
other plan maintained by the Plan Sponsor, for a period of twelve
(12) months after the Participant receives the withdrawal
pursuant to this Section; and
(3) the Plan Sponsor shall not permit Elective Deferrals to
be made to the Plan or any other plan maintained by the Plan
Sponsor for the Participant's taxable year immediately following
the taxable year of the hardship withdrawal in excess of the
limit under Section 3.1 (b) for the taxable year, less the amount
of the Elective Deferrals made to the Plan or any other plan
maintained by the Plan Sponsor for the taxable year in which the
withdrawal under this Section occurs.
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Any determination of the existence of hardship and the amount to be
withdrawn on account thereof shall be made by the Plan Administrator
(or such other person as may be required to make such decisions) in
accordance with the foregoing rules as applied in a uniform and
nondiscriminatory manner; provided that, unless the Participant
requests otherwise, any such withdrawal shall include the amount
necessary to pay any federal, state and local income taxes and
penalties reasonably anticipated to result from the withdrawal.
(c) Any hardship withdrawal amounts originally credited to a
Participant under the Culinary Plan (as defined in Appendix D) or the
Prior Retirement Account (as described in Appendix D) under the Hudson
Plan (as defined in Appendix D) will be distributed only with the
consent of the Participant's spouse.
6.2 Age 59 1/2. Effective April 1, 1998, a Member who has attained at
least age 59 1/2 may elect to receive a distribution of all or any portion of
his Account; provided, however, any such amounts to be withdrawn originally
credited to a Participant under the Culinary Plan or the Prior Retirement
Account under the Hudson Plan will be distributed only with the consent of
the Participant's spouse.
6.3 After-Tax and Rollover Amounts. Effective April 1, 1998, a
Member may elect to receive a distribution of all or any portion of his
After-Tax Contribution Account or Rollover Account; provided, however, any
such amounts to be withdrawn originally credited to a Participant under the
Culinary Plan or the Prior Retirement Account under the Hudson Plan will be
distributed only with the consent of the Participant's spouse.
6.4 Disability. A Member who becomes subject to a Disability may
elect to receive a distribution of all or any portion of his Account;
provided, however, any such amounts to be withdrawn originally credited to
a Participant under the Culinary Plan or the Prior Retirement Account under
the Hudson Plan will be distributed only with the consent of the
Participant's spouse.
6.5 Corporate Transactions. Elective Deferrals may be withdrawn by a
Participant in any one of the following events: (a) the sale or other
disposition by a corporation of at least eighty-five percent (85%) of all
of the assets of the trade or business of the Plan Sponsor; (b) the sale or
other disposition by a corporation of its interests in a subsidiary to an
unrelated entity but only with respect to a Participant who continues in
the employ of the subsidiary; or (c) the termination of the Plan without
the establishment or maintenance of a successor defined contribution plan
within one year of the Plan termination date; all as contemplated by Code
Section 401(k)(10).
6.6 General In-Service Distribution Rules. Any withdrawal under this
Section shall be made in a lump sum and all such withdrawals shall be made
only in accordance with such other rules, policies, procedures,
restrictions and conditions as the Plan Administrator may from time to time
adopt.
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SECTION 7
PAYMENT OF BENEFITS ON TERMINATION OF EMPLOYMENT
7.1 (a) In the event of Termination of Employment, a Participant whose
vested Account exceeds $5,000, effective April 1, 1998, may request that
payment of his vested Account be made. Payment of a Participant's Account
shall be in the form elected by such Participant under Section 7.1(b). All
payments will be made (or commence) as soon as administratively feasible
following a Participant's request. No distribution of the Participant's
Account will be made without his request prior to the first to occur of the
following: (1) April 1 of the calendar year following the calendar year in
which the Participant attains age 70 1/2, or (2) becoming subject to a
Disability.
(b) Payment of a Participant's Account may be made in the form of:
(1) a lump sum payment in cash of the entire Account, except in kind to
the extent of amounts allocated to the Stock Match Account;
(2) payment in annual installments over a period to be determined by the
Participant or his Beneficiary but not to exceed the life expectancy of the
Participant or the joint lives of the Participant and his Beneficiary; or
(3) any combination of the foregoing.
In addition, to the extent applicable, a Participant or
Beneficiary may elect such additional forms of distribution with
respect to certain portions of the Participant's Account in the
manner, and to the extent, provided in Appendix D.
(c) In the event of Termination of Employment, a Participant whose vested
Account is $5,000, effective April 1, 1998, or less shall be paid in a lump
sum payment in cash as soon as administratively feasible after the
Participant's Termination of Employment.
(d) If a Participant who has a Termination of Employment has not
previously received a distribution of his Account under Subsection (a) or
(b), payment of his Account will be made (or commence) in any event as of
April 1 of the calendar year following the calendar year in which the
Participant attains age 70 1/2 or the date the Participant becomes subject to
a Disability, whichever is the first to occur.
7.2 A Participant shall be fully vested in all portions of his Account at
all times.
7.3 If a Plan amendment directly or indirectly changes the vesting
schedule, the vesting percentage for each Participant in his Account
accumulated to the date when the amendment is adopted shall not be reduced
as a result of the amendment. In addition, any Participant with at least
three (3) years of vesting service may irrevocably elect to remain under
the pre-amendment vesting schedule with respect to all of his benefits
accrued both before and after the amendment.
7.4 If a Participant has a Termination of Employment and is subsequently
reemployed by a Plan Sponsor or an Affiliate prior to receiving a
distribution of his Account under the Plan, such Participant shall not be
entitled to a distribution under this Section while he is an Employee.
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7.5 If a Participant has a Termination of Employment which is not a
distributable event as provided under Code Section 401(k)(10)(A), the Plan
Sponsor is not required to distribute such Participant's Account to the
Participant prior to the time for distribution as otherwise provided under
the Plan.
SECTION 8
PAYMENT OF BENEFITS ON RETIREMENT
8.1 A retired Participant whose Account exceeds $5,000, effective
April 1, 1998, shall be paid (or payment shall commence), with the consent
of the Participant, as soon as administratively feasible following the
Participant's Retirement Date. If a Participant who has retired has not
previously received a distribution of his Account under this Section,
payment of his Account will be made (or commence) in any event as of April
1 of the calendar year following the calendar year in which the Participant
attains age 70 1/2 or the date the Participant becomes subject to a
Disability, whichever is the first to occur
8.2 Payment of a Participant's Account pursuant to this Section 8 may
be made in one of the forms as described in Section 7.1(b) elected by such
Participant.
8.3 A retired Participant whose Account is $5,000, effective April 1,
1998, or less shall be paid in a lump sum payment as soon as
administratively feasible following the date the Participant attains a
Retirement Date.
SECTION 9
DEATH BENEFITS
If a Participant dies before receiving a distribution of his vested
Account, his Beneficiary shall receive the Participant's vested Account in
any one of the forms described in Section 7.1(b) as soon as
administratively feasible following the death of the Participant or, if the
Beneficiary so elects, at any later date permitted under Section 10.3(b).
If a Participant dies after beginning to receive a distribution of his
vested Account, his Beneficiary shall continue to receive the undistributed
portion of his vested Account in the form selected by the Participant
before his death, except as may be provided in Appendix D.
SECTION 10
GENERAL RULES ON DISTRIBUTIONS
10.1 Except for installment distributions, Accounts shall not be adjusted
for earnings or losses incurred after the Valuation Date with respect to
which the Account is valued for imminent payout purposes. Prior to
distribution of an Account, the Account shall be reduced by the amount
necessary to satisfy the unpaid principal, accrued interest and penalties
on any loan made to the Participant.
10.2 Notwithstanding any provisions of the Plan to the contrary that would
otherwise limit a Distributee's election under this Section 10, a
Distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of a distribution pursuant to this
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Section which is an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct Rollover
so long as all Eligible Rollover Distributions to a Distributee for a
calendar year total or are expected to total at least $200 and, in the case
of a Distributee who elects to directly receive a portion of an Eligible
Rollover Distribution and directly roll the balance over to an Eligible
Retirement Plan, the portion that is to be directly rolled over totals at
least $500. If the Eligible Rollover Distribution is one to which Code
Sections 401(a)(11) and 417 do not apply, such Eligible Rollover
Distribution may commence less than thirty (30) days after the notice
required under Treasury Regulations section 1.411(a)-11(c) is given,
provided that:
(a) the Plan Administrator clearly informs the Distributee that the
Distributee has a right to a period of at least thirty (30) days after
receiving the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution option), and
(b) the Distributee, after receiving the notice, affirmatively elects a
distribution.
10.3 Notwithstanding any other provisions of the Plan,
(a) Prior to the death of a Participant, all retirement payments hereunder
shall
(1) be distributed to the Participant not later than the required
beginning date (as defined below) or,
(2) be distributed, commencing not later than the required beginning date
(as defined below) -
(A) in accordance with regulations prescribed by the Secretary of the
Treasury, over the life of the Participant or over the lives of the
Participant and his designated individual Beneficiary, if any, or
(B) in accordance with regulations prescribed by the Secretary of the
Treasury, over a period not extending beyond the life expectancy of
the Participant or the joint life and last survivor expectancy of
the Participant and his designated individual Beneficiary, if any.
(b) (1) If -
(A) the distribution of a Participant's retirement payments have begun in
accordance with Subsection (a)(2) of this Section, and
(B) the Participant dies before his entire vested Account has been
distributed to him,
then the remaining portion of his vested Account shall be
distributed at least as rapidly as under the method of
distribution being used under Subsection (a)(2) of this Section
as of the date of his death.
(2) If a Participant dies before the commencement of retirement payments
hereunder, the entire interest of the Participant shall be distributed
within five (5) years after his death.
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(3) If -
(A) any portion of a Participant's vested Account is
payable to or for the benefit of the Participant's
designated individual Beneficiary, if any,
(B) that portion is to be distributed, in accordance
with regulations prescribed by the Secretary of the
Treasury, over the life of the designated individual
Beneficiary or over a period not extending beyond the life
expectancy of the designated individual Beneficiary, and
(C) the distributions begin not later than one (1)
year after the date of the Participant's death or such later
date as the Secretary of the Treasury may by regulations
prescribe,
then, for purposes of Paragraph (2) of this Subsection (b), the
portion referred to in Subparagraph (A) of this Paragraph (3)
shall be treated as distributed on the date on which the
distributions to the designated individual Beneficiary begin.
(4) If the designated individual Beneficiary referred to in Paragraph
(3)(A) of this Subsection (b) is the surviving spouse of the Participant,
then -
(A) the date on which the distributions are required
to begin under Paragraph (3)(C) of this Subsection (b) shall
not be earlier than the date on which the Participant would
have attained age 65, and
(B) if the surviving spouse dies before the
distributions to such spouse begin, this Subsection (b)
shall be applied as if the surviving spouse were the
Participant.
(c) For purposes of this Section, the term "required beginning date" means
April 1 of the calendar year following the later of the calendar year in
which the Participant attains age 70 1/2 or the calendar year in which the
Participant retires, except that in the case of a person described in
Section l(b)(3) of Appendix B the "required beginning date" shall be
April 1 of the calendar year following the calendar year in which the
Participant attains age 70 1/2. Notwithstanding the foregoing, with
respect to a Participant who attains age 70 1/2 prior to January 1, 1999,
such Participant may elect to receive minimum required distributions as
a form of distribution under the withdrawal provisions of Section 6.2.
(d) Distributions will be made in accordance with the regulations under
Code Section 401(a)(9), including the minimum distribution incidental
benefit requirement of Treas. Reg. Section 1.401(a)(9)-2.
SECTION 11
ADMINISTRATION OF THE PLAN
11.1 Trust Agreement. The Primary Sponsor shall establish a Trust with the
Trustee designated by the Board of Directors for the management of the
Fund, which Trust shall form a part of the Plan and is incorporated herein
by reference.
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11.2 Operation of the Plan Administrator. The Primary Sponsor shall
appoint a Plan Administrator. If an organization is appointed to serve as
the Plan Administrator, then the Plan Administrator may designate in
writing one or more persons who may act on behalf of the Plan
Administrator. If more than one person is so designated with respect to
the same administrative function, a majority of such persons shall
constitute a quorum for the transaction of business and shall have the full
power to act on behalf of the Plan Administrator. The Primary Sponsor
shall have the right to remove the Plan Administrator at any time by notice
in writing. The Plan Administrator may resign at any time by written
notice of resignation to the Trustee and the Primary Sponsor. Upon removal
or resignation of the Plan Administrator, or in the event of the
dissolution of the Plan Administrator, the Primary Sponsor shall appoint a
successor. An organization serving as Plan Administrator shall have the
right to remove any person designated to act on behalf of the Plan
Administrator at any time by notice in writing. Any such designee may
resign at any time by written notice of resignation to the Plan
Administrator. Upon removal or resignation of any such designee, the Plan
Administrator may appoint a successor.
11.3 Fiduciary Responsibility.
(a) The Plan Administrator, as a Named Fiduciary, may allocate its
fiduciary responsibilities among Fiduciaries other than the Trustee,
designated in writing by the Plan Administrator and may designate in
writing persons other than the Trustee to carry out its fiduciary
responsibilities under the Plan. The Plan Administrator may remove any
person designated to carry out its fiduciary responsibilities under the
Plan by notice in writing to such person.
(b) The Plan Administrator and each other Fiduciary may employ persons to
perform services and to render advice with regard to any of the Fiduciary's
responsibilities under the Plan. Charges for all such services performed
and advice rendered may be paid by the Fund to the extent permitted by
ERISA.
(c) Each Plan Sponsor shall indemnify and hold harmless each person
constituting the Plan Administrator or the Investment Committee, except
those individuals who are not a Plan Sponsor or an employee of a Plan
Sponsor, if any, from and against any and all claims, losses, costs,
expenses (including, without limitation, attorney's fees and court costs),
damages, actions or causes of action arising from, on account of or in
connection with the performance by such person of his duties in such
capacity, other than such of the foregoing arising from, on account of or
in connection with the willful neglect or willful misconduct of such
person.
11.4 Duties of the Plan Administrator.
(a) The Plan Administrator shall advise the Trustee with respect to all
payments under the terms of the Plan and shall direct the Trustee in
writing to make such payments from the Fund; provided, however, in no event
shall the Trustee be required to make such payments if the Trustee has
actual knowledge that such payments are contrary to the terms of the Plan
and the Trust.
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(b) The Plan Administrator shall from time to time establish rules, not
contrary to the provisions of the Plan and the Trust, for the
administration of the Plan and the transaction of its business. All
elections and designations under the Plan by a Participant or Beneficiary
shall be made on forms prescribed by the Plan Administrator. The Plan
Administrator shall have discretionary authority to construe the terms of
the Plan and shall determine all questions arising in the administration,
interpretation and application of the Plan, including, but not limited to,
those concerning eligibility for benefits and it shall not act so as to
discriminate in favor of any person. All determinations of the Plan
Administrator shall be conclusive and binding on all Employees,
Participants, Beneficiaries and Fiduciaries, subject to the provisions of
the Plan and the Trust and subject to applicable law.
(c) The Plan Administrator shall furnish Participants and Beneficiaries
with all disclosures now or hereafter required by ERISA or the Code. The
Plan Administrator shall file, as required, the various reports and
disclosures concerning the Plan and its operations as required by ERISA and
by the Code, and shall be solely responsible for establishing and
maintaining all records of the Plan and the Trust.
(d) The statement of specific duties for a Plan Administrator in this
Section is not in derogation of any other duties which a Plan Administrator
has under the provisions of the Plan or the Trust or under applicable law.
11.5 Investment Manager. The Primary Sponsor may, by action in writing
certified by notice to the Trustee, appoint an Investment Manager. Any
Investment Manager may be removed in the same manner in which appointed,
and in the event of any removal, the Investment Manager shall, as soon as
possible, but in no event more than thirty (30) days after notice of
removal, turn over all assets managed by it to the Trustee or to any
successor Investment Manager appointed, and shall make a full accounting to
the Primary Sponsor with respect to all assets managed by it since its
appointment as an Investment Manager.
11.6 Investment Committee. The Primary Sponsor may, by action in writing
certified by notice to the Trustee, appoint an Investment Committee. The
Primary Sponsor shall have the right to remove any person on the Investment
Committee at any time by notice in writing to such person. A person on the
Investment Committee may resign at any time by written notice of
resignation to the Primary Sponsor. Upon such removal or resignation, or
in the event of the death of a person on the Investment Committee, the
Primary Sponsor may appoint a successor. Until a successor has been
appointed, the remaining persons on the Investment Committee may continue
to act as the Investment Committee.
11.7 Action by a Plan Sponsor. Any action to be taken by a Plan Sponsor
shall be taken by resolution or written direction duly adopted by its board
of directors or appropriate governing body, as the case may be; provided,
however, that by such resolution or written direction, the board of
directors or appropriate governing body, as the case may be, may delegate
to any officer or other appropriate person of a Plan Sponsor the authority
to take any such actions as may be specified in such resolution or written
direction, other than the power to amend, modify or terminate the Plan or
the Trust or to determine the basis of any Plan Sponsor contributions.
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SECTION 12
CLAIM REVIEW PROCEDURE
12.1 If a Participant or Beneficiary is denied a claim for benefits under a
Plan, the Plan Administrator shall provide to the claimant written notice
of the denial within ninety (90) days after the Plan Administrator receives
the claim, unless special circumstances require an extension of time for
processing the claim. If such an extension of time for processing is
required, written notice of the extension shall be furnished to the
claimant prior to the termination of the initial ninety (90) day period.
In no event shall the extension exceed a period of ninety (90) days from
the end of such initial period. The extension notice shall indicate the
special circumstances requiring an extension of time and the date by which
the Plan Administrator expects to render the final decision.
12.2 If the claimant is denied a claim for benefits, the Plan Administrator
shall provide, within the time frame set forth in Plan Section 12.1,
written notice of the denial which shall set forth:
(a) the specific reasons for the denial;
(b) specific references to the pertinent provisions of the Plan on which
the denial is based;
(c) a description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why the material or
information is necessary; and
(d) an explanation of the Plan's claim review procedure.
12.3 After receiving written notice of the denial of a claim or that a
domestic relations order is a qualified domestic relations order, a
claimant or his representative may:
(a) request a full and fair review of the denial or determination that a
domestic relations order is a qualified domestic relations order by written
application to the Plan Administrator;
(b) review pertinent documents; and
(c) submit issues and comments in writing to the Plan Administrator.
12.4 If the claimant wishes a review of the decision denying his claim to
benefits under the Plan or if a claimant wishes to appeal a decision that a
domestic relations order is a qualified domestic relations order, the
claimant must deliver the written application to the Plan Administrator
within sixty (60) days after receiving written notice of the denial or
notice that the domestic relations order is a qualified domestic relations
order. Delivery shall be considered effected only upon actual receipt by
the Plan Administrator.
12.5 Upon receiving the written application for review, the Plan
Administrator may schedule a hearing for purposes of reviewing the
claimant's claim, which hearing shall take place not more than thirty (30)
days from the date on which the Plan Administrator received the written
application for review.
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12.6 At least ten (10) days prior to the scheduled hearing, the claimant
and his representative designated in writing by him, if any, shall receive
written notice of the date, time, and place of the scheduled hearing. The
claimant or his representative may request that the hearing be rescheduled
for his convenience on another reasonable date or at another reasonable
time or place.
12.7 All claimants requesting a review of the decision denying their claim
for benefits may employ counsel for purposes of the hearing.
12.8 No later than sixty (60) days following the receipt of the written
application for review, the Plan Administrator shall submit its decision on
the review in writing to the claimant involved and to his representative,
if any; provided, however, a decision on the written application for review
may be extended, in the event special circumstances such as the need to
hold a hearing require an extension of time, to a day no later than one
hundred twenty (120) days after the date of receipt of the written
application for review. The decision shall include specific reasons for
the decision and specific references to the pertinent provisions of the
Plan on which the decision is based.
SECTION 13
INCOMPETENT DISTRIBUTEE AND UNCLAIMED PAYMENTS
13.1 No benefit which shall be payable under the Plan to any person shall
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge the same shall
be void; and no such benefit shall in any manner be liable for, or subject
to, the debts, contracts, liabilities, engagements or torts of any person,
nor shall it be subject to attachment or legal process for, or against,
such person, and the same shall not be recognized under the Plan, except to
such extent as may be required by law. Notwithstanding the above, this
Section shall not apply to a "qualified domestic relations order" (as
defined in Code Section 414(p)), and benefits may be paid pursuant to the
provisions of such an order. The Plan Administrator shall develop
procedures (in accordance with applicable federal regulations) to determine
whether a domestic relations order is qualified, and, if so, the method and
the procedures for complying therewith. In addition, a distribution to an
"alternate payee" (as defined in Code Section 414(p)) shall be permitted if
such distribution is authorized by a qualified domestic relations order,
even if the affected Participant has not yet separated from service and has
not yet reached the "earliest retirement age" (as defined in Code Section
414(p)).
13.2 Notwithstanding any other provision of the Plan, effective August 5,
1997, the benefit of a Participant shall be subject to legal process and
may be assigned, alienated or attached pursuant to a court judgment or
settlement provided:
(a) such Participant is ordered or required to pay the Plan in accordance
with the following:
(1) a judgment or conviction for a crime involving the Plan;
(2) a civil judgment entered by a court in an action brought in connection
with a violation of part 4 of subtitle B of Title I of ERISA; or
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(3) a settlement agreement between such Participant and the Secretary of
Labor, in connection with a violation (or alleged violation) of part 4 of
subtitle B of Title I of ERISA by a fiduciary or any other person; and
(b) the judgment, order, decree, or settlement agreement shall expressly
provide for the offset of all or part of the amount ordered or required to
be paid to the Plan against such Participant's benefits under the Plan.
13.3 If any person who shall be entitled to any benefit under the Plan
shall become bankrupt or shall attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge such benefit under the Plan,
then the payment of any such benefit in the event a Participant or
Beneficiary is entitled to payment shall, in the discretion of the Plan
Administrator, cease and terminate and in that event the Trustee shall hold
or apply the same for the benefit of such person, his spouse, children,
other dependents or any of them in such manner and in such proportion as
the Plan Administrator shall determine.
13.4 Whenever any benefit which shall be payable under the Plan is to be
paid to or for the benefit of any person who is then a minor or determined
to be incompetent by qualified medical advice, the Plan Administrator need
not require the appointment of a guardian or custodian, but shall be
authorized to cause the same to be paid over to the person having custody
of such minor or incompetent, or to cause the same to be paid to such minor
or incompetent without the intervention of a guardian or custodian, or to
cause the same to be paid to a legal guardian or custodian of such minor or
incompetent if one has been appointed or to cause the same to be used for
the benefit of such minor or incompetent.
13.5 If the Plan Administrator cannot ascertain the whereabouts of any
Participant to whom a payment is due under the Plan, the Plan Administrator
may direct that the payment and all remaining payments otherwise due to the
Participant be cancelled on the records of the Plan and the amount thereof
applied as a forfeiture in accordance with Section 3.5, except that, in the
event the Participant later notifies the Plan Administrator of his
whereabouts and requests the payments due to him under the Plan, the
forfeited amount shall be restored either from Trust income or by a special
contribution by the Plan Sponsor to the Plan, as determined by the Plan
Administrator, in an amount equal to the payment to be paid to the
Participant.
SECTION 14
PROHIBITION AGAINST DIVERSION
At no time shall any part of the Fund be used for or diverted to
purposes other than the exclusive benefit of the Participants or their
Beneficiaries, subject, however, to the payment of all taxes and
administrative expenses and subject to the provisions of the Plan with
respect to returns of contributions. Expenses incurred in the
administration of the Plan shall be paid from the Trust, to the extent
permitted by ERISA, unless such expenses are paid by a Plan Sponsor;
provided, further, that a Plan Sponsor may be reimbursed by the Fund, to
the extent permitted by ERISA, for Plan expenses originally paid by the
Plan Sponsor.
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SECTION 15
LIMITATION OF RIGHTS
Participation in the Plan shall not give any Employee any right or
claim except to the extent that such right is specifically fixed under the
terms of the Plan. The adoption of the Plan and the Trust by any Plan
Sponsor shall not be construed to give any Employee a right to be continued
in the employ of a Plan Sponsor or as interfering with the right of a Plan
Sponsor to terminate the employment of any Employee at any time.
SECTION 16
AMENDMENT TO OR TERMINATION OF THE
PLAN AND THE TRUST
16.1 The Primary Sponsor reserves the right at any time to modify or amend
or terminate the Plan or the Trust in whole or in part; provided, however,
that the Primary Sponsor shall have no power to modify or amend the Plan in
such manner as would cause or permit any portion of the funds held under a
Plan to be used for, or diverted to, purposes other than for the exclusive
benefit of Participants or their Beneficiaries, or as would cause or permit
any portion of a fund held under the Plan to become the property of a Plan
Sponsor; and provided further, that the duties or liabilities of the
Trustee shall not be increased without its written consent. No such
modifications or amendments shall have the effect of retroactively changing
or depriving Participants or Beneficiaries of rights already accrued under
the Plan. No Plan Sponsor other than the Primary Sponsor shall have the
right to so modify, amend or terminate the Plan or the Trust.
Notwithstanding the foregoing, each Plan Sponsor may terminate its own
participation in the Plan and Trust pursuant to the Plan.
16.2 Each Plan Sponsor other than the Primary Sponsor shall have the right
to terminate its participation in the Plan and Trust by resolution of its
board of directors or other appropriate governing body and notice in
writing to the Primary Sponsor and the Trustee unless such termination
would result in the disqualification of the Plan or the Trust or would
adversely affect the exempt status of the Plan or the Trust as to any other
Plan Sponsor. If contributions by or on behalf of a Plan Sponsor are
completely terminated, the Plan and Trust shall be deemed terminated as to
such Plan Sponsor. Any termination by a Plan Sponsor, shall not be a
termination as to any other Plan Sponsor. The Primary Sponsor may, in its
absolute discretion, terminate the participation of any other Plan Sponsor
at any time.
16.3 (a) If the Plan is terminated by the Primary Sponsor or if
contributions to the Trust should be permanently discontinued, it shall
terminate as to all Plan Sponsors and the Fund shall be used, subject to
the payment of expenses and taxes, for the benefit of Participants and
Beneficiaries, and for no other purposes, and the Account of each affected
Participant shall be fully vested and nonforfeitable, notwithstanding the
provisions of the Section of the Plan which sets forth the vesting
schedule.
(b) In the event of the partial termination of the Plan, each
affected Participant's Account shall be fully vested and
nonforfeitable.
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16.4 In the event of the termination of the Plan or the Trust with respect
to a Plan Sponsor, the Accounts of the Participants with respect to the
Plan as adopted by such Plan Sponsor shall be distributed in accordance
with the applicable distribution provisions of the Plan pursuant to the
instructions of the Plan Administrator; provided that the Trustee shall not
be required to make any distribution until it receives a copy of an
Internal Revenue Service determination letter to the effect that the
termination does not affect the qualified status of the Plan or the exempt
status of the Trust or, in the event that such letter is applied for and is
not issued, until the Trustee is reasonably satisfied that adequate
provision has been made for the payment of all taxes which may be due and
owing by the Trust.
16.5 In the case of any merger or consolidation of the Plan with, or any
transfer of the assets or liabilities of the Plan to, any other plan
qualified under Code Section 401, the terms of the merger, consolidation or
transfer shall be such that each Participant would receive (in the event of
termination of the Plan or its successor immediately thereafter) a benefit
which is no less than the benefit which the Participant would have received
in the event of termination of the Plan immediately before the merger,
consolidation or transfer.
16.6 Notwithstanding any other provision of the Plan, an amendment to the
Plan -
(a) which eliminates or reduces an early retirement benefit, if any, or
which eliminates or reduces a retirement-type subsidy (as defined in
regulations issued by the Department of the Treasury), if any, or
(b) which eliminates an optional form of benefit
shall not be effective with respect to benefits attributable to service
before the amendment is adopted. In the case of a retirement-type subsidy
described in Subsection (a) above, this Section shall be applicable only to
a Participant who satisfies, either before or after the amendment, the
preamendment conditions for the subsidy.
SECTION 17
ADOPTION OF PLAN BY AFFILIATES
Any corporation or other business entity related to the Primary
Sponsor by function or operation and any Affiliate, if the corporation,
business entity or Affiliate is authorized to do so by written direction
adopted by the Board of Directors, may adopt the Plan and the related Trust
by action of the board of directors or other appropriate governing body of
such corporation, business entity or Affiliate. Any adoption shall be
evidenced by certified copies of the resolutions of the foregoing board of
directors or governing body indicating the adoption and by the execution of
the Trust by the adopting corporation, or business entity or Affiliate.
The resolution shall state and define the effective date of the adoption of
the Plan by the Plan Sponsor and, for the purpose of Code Section 415, the
"limitation year" as to such Plan Sponsor. Notwithstanding the foregoing,
however, if the Plan and Trust as adopted by an Affiliate or other
corporation or business entity under the foregoing provisions shall fail to
receive the initial approval of the Internal Revenue Service as a qualified
Plan and Trust under Code Sections 401(a) and 501(a), any contributions by
the Affiliate or other corporation or business entity after payment of all
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expenses will be returned to such Plan Sponsor free of any trust, and the
Plan and Trust shall terminate, as to the adopting Affiliate or other
corporation or business entity.
SECTION 18
QUALIFICATION AND RETURN OF CONTRIBUTIONS
18.1 If the Plan and the related Trust fail to receive the initial approval
of the Internal Revenue Service as a qualified plan and trust within one
(1) year after the date of denial of qualification (a) the contribution of
a Plan Sponsor after payment of all expenses will be returned to a Plan
Sponsor free of the Plan and Trust, (b) contributions made by a Participant
shall be returned to the Participant who made the contributions, and (c)
the Plan and Trust shall thereupon terminate.
18.2 All Plan Sponsor contributions to the Plan are contingent upon
deductibility. To the extent permitted by the Code and other applicable
laws and regulations thereunder, upon a Plan Sponsor's request, a
contribution which was made by reason of a mistake of fact or which was
nondeductible under Code Section 404, shall be returned to a Plan Sponsor
within one (1) year after the payment of the contribution, or the
disallowance of the deduction (to the extent disallowed), whichever is
applicable.
In the event of a contribution which was made by reason of a mistake
of fact or which was nondeductible, the amount to be returned to the Plan
Sponsor shall be the excess of the contribution above the amount that would
have been contributed had the mistake of fact or the mistake in determining
the deduction not occurred, less any net loss attributable to the excess.
Any net income attributable to the excess shall not be returned to the Plan
Sponsor. No return of any portion of the excess shall be made to the Plan
Sponsor if the return would cause the balance in a Participant's Account to
be less than the balance would have been had the mistaken contribution not
been made.
SECTION 19
SECTION 16 OF SECURITIES EXCHANGE ACT OF 1934
Notwithstanding any other provision of this Plan, the provisions of
this Plan set forth the formula or formulas that determine the amount,
price or timing of awards to persons subject to the reporting requirements
of Section 16 of the Securities Exchange Act of 1934 (the "Act") and any
other provisions of the Plan of the type referred to in Section 16b-
3(c)(2)(ii) of the Act shall not be amended more than once every six
months, other than to comport with changes in the Code, ERISA or the rules
thereunder. Further, to the extent required, the persons described in the
preceding sentence shall be subject to such withdrawal, investment and
other restrictions necessary to satisfy Rule 16b-3 under the Act. This
Section 19 is intended to comply with Rule 16b-3 under the Act and shall be
effective only to the extent required by such rule and shall be interpreted
and administered in accordance with such rule.
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SECTION 20
INCORPORATION OF SPECIAL LIMITATIONS
Appendices A, B, C and D to the Plan, attached hereto, are
incorporated by reference and the provisions of the same shall apply
notwithstanding anything to the contrary contained herein.
IN WITNESS WHEREOF, the Primary Sponsor has caused this indenture to
be executed as of the date first above written.
TYSON FOODS, INC.
By: /s/ Carl Johnson
---------------------------
Title: Executive Vice President,
Administrative Services
ATTEST:
/s/ R. Read Hudson
- ------------------
Title: Secretary
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APPENDIX A
LIMITATION ON ALLOCATIONS
SECTION 1
The "annual addition" for any Participant for any one limitation year
may not exceed the lesser of:
(a) $30,000, as adjusted for changes in the cost of living as
provided in regulations issued by the Secretary of the Treasury; or
(b) 25% of the Participant's Annual Compensation.
SECTION 2
For the purposes of this Appendix A, the term "annual addition" for
any Participant means for any limitation year, the sum of certain Plan
Sponsor, Affiliate, and Participant contributions, forfeitures, and other
amounts as determined in Code Section 415(c)(2) in effect for that
limitation year.
SECTION 3
Effective until December 31, 1999, in the event that a Plan Sponsor or
an Affiliate maintains a defined benefit plan under which a Participant
also participates, the sum of the defined benefit plan fraction and the
defined contribution plan fraction for any limitation year for any
Participant may not exceed 1.0.
(a) The defined benefit plan fraction for any limitation year is a
fraction:
(1) the numerator of which is the projected annual benefit of the
Participant under the defined benefit plan (determined as of the close of
such year); and
(2) the denominator of which is the lesser of
(A) the product of 1.25, multiplied by the maximum annual benefit
allowable under Code Section 415(b)(1)(A), or
(B) the product of
(i) 1.4, multiplied by
(ii) the maximum amount which may be taken into account under Section
415(b)(1)(B) of the Code with respect to the Participant under
the defined benefit plan for the limitation year (determined as
of the close of the limitation year).
(b) The defined contribution plan fraction for any limitation year
is a fraction:
(1) the numerator of which is the sum of a Participant's
annual additions as of the close of the year; and
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(2) the denominator of which is the sum of the lesser of
the following amounts determined for the year and for all prior
limitation years during which the Participant was employed by a
Plan Sponsor or an Affiliate:
(A) the product of 1.25, multiplied by the dollar
limitation in effect under Code Section 415(c)(1)(A) for the
limitation year (determined without regard to Section
415(c)(6) of the Code); or
(B) the product of
(i) 1.4, multiplied by
(ii) the amount which may be taken into account
under Code Section 415(c)(1)(B) (or Code Section
415(c)(7), if applicable) with respect to the
Participant for the limitation year.
SECTION 4
For purposes of this Appendix A, the term "limitation year" shall mean
a Plan Year unless a Plan Sponsor elects, by adoption of a written
resolution, to use any other twelve month period adopted in accordance with
regulations issued by the Secretary of the Treasury.
SECTION 5
For purposes of applying the limitations of this Appendix A, all
defined contribution plans maintained or deemed to be maintained by a Plan
Sponsor shall be treated as one defined contribution plan, and all defined
benefit plans now or previously maintained or deemed to be maintained by a
Plan Sponsor shall be treated as one defined benefit plan. In the event
any of the actions to be taken pursuant to Section 6 of this Appendix A or
pursuant to any language of similar import in another defined contribution
plan are required to be taken as a result of the annual additions of a
Participant exceeding the limitations set forth in Section 1 of this
Appendix A, because of the Participant's participation in more than one
defined contribution plan, the actions shall be taken first with regard to
this Plan.
SECTION 6
In the event that as a result of the allocation of forfeitures to the
Account of a Participant, a reasonable error in estimating the
Participant's Annual Compensation or other similar circumstances, the
annual addition allocated to the Account of a Participant exceeds the
limitations set forth in Section 1 of this Appendix A or in the event that
the aggregate contributions made on behalf of a Participant under both a
defined benefit plan and a defined contribution plan, subject to the
reduction of allocations in other defined contribution plans required by
Section 5 of this Appendix A, cause the aggregate limitation fraction set
forth in Section 3 of this Appendix A to be exceeded, effective April 1,
1998, the Plan Administrator shall, in writing, direct the Trustee to take
such of the following actions as the Plan Administrator shall deem
appropriate, specifying in each case the amount or amounts of contributions
involved:
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(a) Contributions made by the Plan Sponsor on behalf of the
Participant pursuant to Plan Section 3.1 shall be reduced in the
amount of the excess, together with any gains attributable thereto,
and distributed to the Participant.
(b) If further reduction is necessary, to the extent necessary,
all other contributions made by the Plan Sponsor on behalf of the
Participant pursuant to Plan Section 3 for the Plan Year shall be held
in an unallocated suspense. While the suspense account is maintained,
(1) no Plan Sponsor contributions under the Plan shall be made which
would be precluded by this Appendix A, (2) income, gains and loses of
the Fund shall not be allocated to such suspense account and (3)
amounts in the suspense account shall be allocated in subsequent
limitation years as Plan Sponsor contributions for each such
limitation year until the suspense account is exhausted. In the event
of the termination of the Plan, the amounts in the suspense account
shall be returned to the Plan Sponsor to the extent that such amounts
may not then be allocated to Participants' Accounts.
APPENDIX B
TOP-HEAVY PROVISIONS
SECTION 1
As used in this Appendix B, the following words shall have the
following meanings:
(a) "Determination Date" means, with respect to any Plan Year,
the last day of the preceding Plan Year, or, in the case of the first
Plan Year, means the last day of the first Plan Year.
(b) "Key Employee" means an Employee or former Employee
(including a Beneficiary of a Key Employee or former Key Employee) who
at any time during the Plan Year containing the Determination Date or
any of the four (4) preceding Plan Years is:
(1) Was at any time an officer of the Plan Sponsor or of
any Affiliate whose Annual Compensation was greater than fifty
percent (50%) of the amount in effect under Code Section
415(b)(1)(A) for the calendar year in which the Plan Year ends,
where the term "officer" means an administrative executive in
regular and continual service to the Plan Sponsor or Affiliate;
provided, however, that in no event shall the number of officers
exceed the lesser of Clause (A) or (B) of this Subparagraph (1),
where:
(A) equals fifty (50) Employees; and
(B) equals the greater of (I) three (3) Employees or
(II) ten percent (10%) of the number of Employees during the
Plan Year, with any non-integer being increased to the next
integer.
If for any year no officer of the Plan Sponsor meets the
requirements of this Subparagraph (b), the highest paid officer
of the Plan Sponsor for the Plan Year shall be considered an
officer for purposes of this Subparagraph (b)(1);
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(2) One of the ten (10) Employees owning both (A) more than
one-half percent (1/2%) of the outstanding stock of the Plan
Sponsor or an Affiliate, more than one-half percent (1/2%) of the
total combined voting power of all stock of the Plan Sponsor or
an Affiliate, or more than one-half percent (1/2%) of the capital
or profits interest in the Plan Sponsor or an Affiliate, and (B)
the largest percentage ownership interests in the Plan Sponsor or
any of its Affiliates, and whose Annual Compensation is equal to
or greater than the amount in effect under Section l(a) of
Appendix A to the Plan for the calendar year in which the
Determination Date falls; or
(3) An owner of more than five percent (5%) of the
outstanding stock of the Plan Sponsor or an Affiliate or more
than five percent (5%) of the total combined voting power of all
stock of the Plan Sponsor or an Affiliate; or
(4) An owner of more than one percent (1%) of the
outstanding stock of the Plan Sponsor or an Affiliate or more
than one percent (1%) of the total combined voting power of all
stock of the Plan Sponsor or an Affiliate, and who in such Plan
Year had Annual Compensation from the Plan Sponsor and all of its
Affiliates of more than $150,000.
Employees other than Key Employees are sometimes referred to in this
Appendix B, as "non-key employees."
(c) "Required Aggregation Group" means:
(1) each plan of the Plan Sponsor and its Affiliates which
qualifies under Code Section 401 (a) in which a Key Employee is a
participant, and
(2) each other plan of the Plan Sponsor and its Affiliates
which qualifies under Code Section 401 (a) and which enables any
plan described in Subsection (a) of this Section to meet the
requirements of Section 401(a)(4) or 410 of the Code.
(d) (1) "Top-Heavy" means:
(A) if the Plan is not included in a Required
Aggregation Group, the Plan's condition in a Plan Year for
which, as of the Determination Date:
(i) the present value of the cumulative Accounts
under the Plan for all Key Employees exceeds sixty
percent (60%) of the present value of the cumulative
Accounts under the Plan for all Participants; and
(ii) the Plan, when included in every potential
combination, if any, with any or all of:
(I) any Required Aggregation Group, and
(II) any plan of the Plan Sponsor which is
not part of any Required Aggregation Group and
which qualifies under Code Section 401 (a)
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is part of a Top-Heavy Group (as defined in Paragraph
(2) of this Subsection); and
(B) if the Plan is included in a Required Aggregation
Group, the Plan's condition in a Plan Year for which, as of
the Determination Date:
(i) the Required Aggregation Group is a Top-Heavy
Group (as defined in Paragraph (2) of this Subsection);
and
(ii) the Required Aggregation Group, when included
in every potential combination, if any, with any or all
of the plans of the Plan Sponsor and its Affiliates
which are not part of the Required Aggregation Group
and which qualify under Code Section 401(a), is part of
a Top-Heavy Group (as defined in Paragraph (2) of this
Subsection).
(C) For purposes of Subparagraphs (A)(ii) and (B)(ii)
of this Paragraph (1), any combination of plans must satisfy
the requirements of Sections 401(a)(4) and 410 of the Code.
(2) A group shall be deemed to be a Top-Heavy Group if:
(A) the sum, as of the Determination Date, of the
present value of the cumulative accrued benefits for all Key
Employees under all plans included in such group exceeds
(B) sixty percent (60%) of a similar sum determined
for all participants in such plans.
(3) (A) For purposes of this Section, the present value of
the accrued benefit for any participant in a defined
contribution plan as of any Determination Date or last day
of a plan year shall be the sum of:
(i) as to any defined contribution plan other
than a simplified employee pension, the account balance
as of the most recent valuation date occurring within
the plan year ending on the Determination Date or last
day of a plan year, and
(ii) as to any simplified employee pension, the
aggregate employer contributions, and
(iii) an adjustment for contributions due as
of the Determination Date or last day of a plan year.
In the case of a plan that is not subject to the minimum
funding requirements of Code Section 412, the adjustment in
Clause (iii) of this Subparagraph (A) shall be the amount of
any contributions actually made after the valuation date but
on or before the Determination Date or last day of the plan
year to the extent not included under Clause (i) or (ii) of
this Subparagraph (A); provided, however, that in the first
plan year of the plan, the adjustment in Clause (iii) of
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this Subparagraph (A) shall also reflect the amount of any
contributions made thereafter that are allocated as of a
date in such first plan year. In the case of a plan that is
subject to the minimum funding requirements, the account
balance in Clause (i) and the aggregate contributions in
Clause (ii) of this Subparagraph (A) shall include
contributions that would be allocated as of a date not later
than the Determination Date or last day of a plan year, even
though those amounts are not yet required to be contributed,
and the adjustment in Clause (iii) of this Subparagraph (A)
shall be the amount of any contribution actually made (or
due to be made) after the valuation date but before the
expiration of the extended payment period in Code Section
412(c)(10) to the extent not included under Clause (i) or
(ii) of this Subparagraph (A).
(B) For purposes of this Subsection, the present value
of the accrued benefit for any participant in a defined
benefit plan as of any Determination Date or last day of a
plan year must be determined as of the most recent valuation
date which is within a twelve (12) month period ending on
the Determination Date or last day of a plan year as if such
participant terminated as of such valuation date; provided,
however, that in the first plan year of a plan, the present
value of the accrued benefit for a current participant must
be determined either (i) as if the participant terminated
service as of the Determination Date or last day of a plan
year or (ii) as if the participant terminated service as of
such valuation date, but taking into account the estimated
accrued benefit as of the Determination Date or last day of
a plan year. For purposes of this Subparagraph (B), the
valuation date must be the same valuation date used for
computing plan costs for minimum funding, regardless of
whether a valuation is performed that year. The actuarial
assumptions utilized in calculating the present value of the
accrued benefit for any participant in a defined benefit
plan for purposes of this Subparagraph (B) shall be
established by the Plan Administrator after consultation
with the actuary for the plan, and shall be reasonable in
the aggregate and shall comport with the requirements set
forth by the Internal Revenue Service in Q&A T-26 and T-27
of Regulation Section 1.416-1.
(C) For purposes of determining the present value of
the cumulative accrued benefit under a plan for any
participant in accordance with this Subsection, the present
value shall be increased by the aggregate distributions made
with respect to the participant (including distributions
paid on account of death to the extent they do not exceed
the present value of the cumulative accrued benefit existing
immediately prior to death) under each plan being
considered, and under any terminated plan which if it had
not been terminated would have been in a Required
Aggregation Group with the Plan, during the five (5) year
period ending on the Determination Date or last day of the
plan year that falls within the calendar year in which the
Determination Date falls.
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(D) For purposes of this Paragraph (3), participant
contributions which are deductible as "qualified retirement
contributions" within the meaning of Code Section 219 or any
successor, as adjusted to reflect income, gains, losses, and
other credits or charges attributable thereto, shall not be
considered to be part of the accrued benefits under any
plan.
(E) For purposes of this Paragraph (3), if any
employee is not a Key Employee with respect to any plan for
any plan year, but such employee was a Key Employee with
respect to such plan for any prior plan year, any accrued
benefit for such employee shall not be taken into account.
(F) For purposes of this Paragraph (3), if any
employee has not performed any service for any Plan Sponsor
or Affiliate maintaining the plan during the five-year
period ending on the Determination Date, any accrued benefit
for that employee shall not be taken into account.
(G) (i) In the case of an "unrelated rollover" (as
defined below) between plans which qualify under Code
Section 401(a), (a) the plan providing the distribution
shall count the distribution as a distribution under
Subparagraph (C) of this Paragraph (3), and (b) the
plan accepting the distribution shall not consider the
distribution part of the accrued benefit under this
Section; and
(ii) in the case of a "related rollover" (as
defined below) between plans which qualify under Code
Section 401(a), (a) the plan providing the distribution
shall not count the distribution as a distribution
under Subparagraph (C) of this Paragraph (3), and
(b) the plan accepting the distribution shall consider
the distribution part of the accrued benefit under this
Section.
For purposes of this Subparagraph (G), an "unrelated
rollover" is a rollover as defined in Code Section
402(c)(4) or 408(d)(3) or a plan-to-plan transfer which
is both initiated by the participant and made from a
plan maintained by one employer to a plan maintained by
another employer where the employers are not
Affiliates. For purposes of this Subparagraph (G), a
"related rollover" is a rollover as defined in Code
Section 402(c)(4) or 408(d)(3) or a plan-to-plan
transfer which is either not initiated by the
participant or made to a plan maintained by the
employer or an Affiliate.
SECTION 2
(a) Notwithstanding anything contained in the Plan to the
contrary, except as otherwise provided in Subsection (b) of this
Section, in any Plan Year during which the Plan is Top-Heavy,
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allocations of Plan Sponsor contributions and forfeitures for the Plan
Year for the Account of each Participant who is not a Key Employee and
who has not separated from service with the Plan Sponsor prior to the
end of the Plan Year shall not be less than three percent (3%) percent
of the Participant's Annual Compensation. For purposes of this
Subsection, an allocation to a Participant's Account resulting from
any Plan Sponsor contribution attributable to a salary reduction or
similar arrangement shall not be taken into account.
(b) (1) The percentage referred to in Subsection (a) of this
Section for any Plan Year shall not exceed the percentage at
which allocations are made or required to be made under the Plan
for the Plan Year for the Key Employee for whom the percentage is
highest for the Plan Year. For purposes of this Paragraph, an
allocation to the Account of a Key Employee resulting from any
Plan Sponsor contribution attributable to a salary reduction or
similar agreement shall be taken into account.
(2) For purposes of this Subsection (b), all defined
contribution plans which are members of a Required Aggregation
Group shall be treated as part of the Plan.
(3) This Subsection (b) shall not apply to any plan which
is a member of a Required Aggregation Group if the plan enables a
defined benefit plan which is a member of the Required
Aggregation Group to meet the requirements of Code Section
401(a)(4) or 410.
SECTION 3
Effective until December 31, 1999, in any limitation year (as defined
in Section 4 of Appendix A to the Plan) which contains any portion of a
Plan Year in which the Plan is Top-Heavy, the number "1.0" shall be
substituted for the number "1.25" in Section 3 of Appendix A to the Plan.
SECTION 4
Notwithstanding anything contained in the Plan to the contrary, in any
Plan Year during which the Plan is Top-Heavy, a Participant's interest in
his Account shall not vest at any rate which is slower than the following
schedule, effective as of the first day of that Plan Year:
Full Years of Percentage
Vesting Service Vested
Less than 2 years 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 years 100%
The Schedule set forth above in this Section 4 shall be inapplicable to a
Participant who has failed to perform an Hour of Service after the
Determination Date on which the Plan has become Top-Heavy. When the Plan
ceases to be Top-Heavy, the Schedule set forth above in this Section 4
shall cease to apply; provided however, that the provisions of the Plan
Section dealing with changes in the vesting schedule shall apply.
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APPENDIX C
SPECIAL NONDISCRIMINATION RULES
SECTION 1
As used in this Appendix, the following words shall have the following
meanings:
(a) "Eligible Participant" means a Participant who is an
Employee during any particular Plan Year.
(b) "Highly Compensated Eligible Participant" means any Eligible
Participant who is a Highly Compensated Employee.
(c) "Matching Contribution" means any contribution made by a
Plan Sponsor to a Matching Account and any other contribution made to
a plan by a Plan Sponsor or an Affiliate on behalf of an Employee on
account of a contribution made by an Employee or on account of an
Elective Deferral.
(d) "Qualified Matching Contributions" means Matching
Contributions which are immediately nonforfeitable when made, and
which would be nonforfeitable, regardless of the age or service of the
Employee or whether the Employee is employed on a certain date, and
which may not be distributed, except upon one of the events described
under Section 401(k)(2)(B) of the Code and the regulations thereunder.
(e) "Qualified Nonelective Contributions" means contributions of
the Plan Sponsor or an Affiliate, other than Matching Contributions or
Elective Deferrals, which are nonforfeitable when made, and which
would be nonforfeitable regardless of the age or service of the
Employee or whether the Employee is employed on a certain date, and
which may not be distributed, except upon one of the events described
under Code Section 401(k)(2)(B) and the regulations thereunder.
SECTION 2
In addition to any other limitations set forth in the Plan, for each
Plan Year one of the following tests must be satisfied:
(a) the actual deferral percentage for the Highly Compensated
Eligible Participants for the Plan Year must not be more than the
actual deferral percentage of all other Eligible Participants for the
Plan Year multiplied by 1.25; or
(b) the excess of the actual deferral percentage for the Highly
Compensated Eligible Participants for the Plan Year over that of all
other Eligible Participants for the preceding Plan Year must not be
more than two (2) percentage points, and the actual deferral
percentage for the Highly Compensated Eligible Participants for the
Plan Year must not be more than the actual deferral percentage of all
other Eligible Participants for the Plan Year multiplied by two (2).
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The "actual deferral percentage" for the Highly Compensated Eligible
Participants and all other Eligible Participants for a Plan Year is the
average in each group of the ratios, calculated separately for each
Employee, of the Deferral Amounts contributed by the Plan Sponsor on behalf
of an Employee for the Plan Year to the Annual Compensation of the Employee
in the Plan Year. In addition, for purposes of calculating the "actual
deferral percentage" as described above, Deferral Amounts of Employees who
are not Highly Compensated Employees which are prohibited by Code Section
401(a)(30) shall not be taken into consideration. Except to the extent
limited by Treasury Regulation section 1.401(k)-l(b)(5) and any other
applicable regulations promulgated by the Secretary of the Treasury, all or
part of the Qualified Matching Contributions and Qualified Nonelective
Contributions made pursuant to the Plan may be treated as Deferral Amounts
for purposes of determining the "actual deferral percentage."
SECTION 3
If the Deferral Amounts contributed on behalf of any Highly
Compensated Eligible Participant exceeds the amount permitted under the
"actual deferral percentage" test described in Section 2 of this Appendix C
for any given Plan Year, then before the end of the Plan Year following the
Plan Year for which the Excess Deferral Amount was contributed, the portion
of the Excess Deferral Amount for the Plan Year attributable to a Highly
Compensated Participant, as adjusted to reflect income, gain, or loss
attributable to it through the date the end of the Plan Year for which the
test is being performed and reduced by any excess Elective Deferrals as
determined pursuant to Plan Section 3.1 previously distributed to a
Participant for the Participant's taxable year ending with or within the
Plan Year, may be distributed to the Highly Compensated Eligible
Participant. The income allocable to such Excess Deferral Amount shall be
determined in a similar manner as described in Section 4.2 of the Plan.
The Excess Deferral Amount to be distributed shall be reduced by Deferral
Amounts previously distributed for the taxable year ending in the same Plan
Year, and shall also be reduced by Deferral Amounts previously distributed
for the Plan Year beginning in such taxable year. In the event the
multiple use of limitations contained in Sections 2(b) and 5(b) of this
Appendix C, pursuant to Treasury Regulations section 1.401(m)-2 as
promulgated by the Secretary of the Treasury, requires a corrective
distribution, such distribution shall be made pursuant to this Section 3,
and not Section 6 of Appendix C. The portion of the Matching Contribution
on which such Excess Deferral Amount was based shall be forfeited upon the
distribution of such Excess Deferral Amount.
(a) For purposes of this Section 3, "Excess Deferral Amount"
means, with respect to a Plan Year, the excess of:
(1) the aggregate amount of Deferral Amounts
contributed by a Plan Sponsor on behalf of Highly Compensated
Eligible Participants for the Plan Year, over
(2) the maximum amount of Deferral Amounts permitted
under Section 2 of this Appendix C for the Plan Year, which shall
be determined by reducing the Deferral Amounts contributed on
behalf of Highly Compensated Eligible Participants in order of
the actual deferral percentages beginning with the highest of
such percentages.
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(b) Distribution of the Excess Deferral Amount for any Plan Year
shall be made to Highly Compensated Eligible Participants on the basis
of the dollar amount of Deferral Amounts attributable to each Highly
Compensated Eligible Participant. The Plan Sponsor shall determine
the amount of Excess Deferral Amounts which shall be distributed to
each Highly Compensated Eligible Participant as follows.
(1) The Deferral Amounts allocated to the Highly
Compensated Eligible Participant with the highest dollar amount
of Deferral Amounts for the Plan Year shall be reduced by the
amount required to cause that Highly Compensated Eligible
Participant's remaining Deferral Amounts for the Plan Year to be
equal to the dollar amount of the Deferral Amounts allocated to
the Highly Compensated Eligible Participant with the next highest
dollar amount of Deferral Amounts for the Plan Year. This amount
is then distributed to the Highly Compensated Eligible
Participant with the highest dollar amount of Deferral Amounts,
unless a smaller reduction, when added to the total dollar amount
already distributed pursuant to this Paragraph (1), equals the
total Excess Deferral Amounts.
(2) If the total amount distributed under Paragraph
(1) of this Section 3(b) is less than the total Excess Deferral
Amounts, the procedure in Paragraph (1) shall be successively
repeated until the total dollar amount distributed is equal to
the total Excess Deferral Amounts attributable to Highly
Compensated Eligible Participants.
If a distribution of the Excess Deferral Amounts attributable to
the Highly Compensated Eligible Participants is made in accordance
with Paragraphs (1) and (2) of this Section 3(b), the limitations in
Section 2 of this Appendix C shall be treated as being met regardless
of whether the actual deferral percentage, if recalculated after such
distributions, would have satisfied the requirements of Section 2.
SECTION 4
The Plan Administrator shall have the responsibility of monitoring the
Plan's compliance with the limitations of this Appendix C and shall have
the power to take all steps it deems necessary or appropriate to ensure
compliance, including, without limitation, restricting the amount which
Highly Compensated Eligible Participants can elect to have contributed
pursuant to Plan Section 3.1. Any actions taken by the Plan Administrator
pursuant to this Section 4 shall be pursuant to non-discriminatory
procedures consistently applied.
SECTION 5
In addition to any other limitations set forth in the Plan, Matching
Contributions under the Plan and the amount of nondeductible employee
contributions under the Plan, for each Plan Year must satisfy one of the
following tests:
(a) The contribution percentage for Highly Compensated Eligible
Participants for the Plan Year must not exceed 125% of the
contribution percentage for all other Eligible Participants for the
Plan Year; or
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(b) The contribution percentage for Highly Compensated Eligible
Participants for the Plan Year must not exceed the lesser of (1) 200 %
of the contribution percentage for all other Eligible Participants for
the Plan Year, and (2) the contribution percentage for all other
Eligible Participants for the Plan Year plus two (2) percentage
points.
Notwithstanding the foregoing, for purposes of this Section 5, the terms
Highly Compensated Eligible Participant and Eligible Participant shall not
include any Participant who is not eligible to receive a Matching
Contribution under the provisions of the Plan, other than as a result of
the Participant failing to contribute to the Plan or failing to have an
Elective Deferral contributed to the Plan on the Participant's behalf.
Notwithstanding the foregoing, if Qualified Matching Contributions are
taken into account for purposes of applying the test contained in Section 2
of this Appendix C, they shall not be taken into account under this Section
5. In applying the above tests, the Plan Administrator shall comply with
any regulations promulgated by the Secretary of the Treasury which prevent
or restrict the use of the test contained in Section 2(b) of this Appendix
C and the test contained in Section 5(b) of this Appendix C. The
"contribution percentage" for Highly Compensated Eligible Participants and
for all other Eligible Participants for a Plan Year shall be the average of
the ratios, calculated separately for each Participant, of (A) to (B),
where (A) is the amount of Matching Contributions under the Plan (excluding
Qualified Matching Contributions which are used to apply the test set forth
in Section 2 of this Appendix C or Matching Contributions which are used to
satisfy the minimum required contributions to the Accounts of Eligible
Participants who are not Key Employees pursuant to Section 2 of Appendix B
to the Plan) and nondeductible employee contributions made under the Plan
for the Eligible Participant for the Plan Year, and where (B) is the Annual
Compensation of the Eligible Participant for the Plan Year. Except to the
extent limited by Treasury Regulation Section 1.401(m)-l(b)(5) and any
other applicable regulations promulgated by the Secretary of the Treasury,
a Plan Sponsor may elect to treat Deferral Amounts and Qualified
Nonelective Contributions as Matching Contributions for purpose of
determining the "contribution percentage," provided the Deferral Amounts,
excluding those treated as Matching Contributions, satisfy the test set
forth in Section 2 of Appendix C.
SECTION 6
If either (a) the Matching Contributions and, if taken into account
under Section 5 of this Appendix C, the Deferral Amounts, Qualified
Nonelective Contributions and/or Qualified Matching Contributions made on
behalf of Highly Compensated Eligible Participants, or (b) the
nondeductible employee contributions made by Highly Compensated Eligible
Participants exceed the amount permitted under the "contribution percentage
test" for any given Plan Year, then, before the close of the Plan Year
following the Plan Year for which the Excess Aggregate Contributions were
made, the amount of the Excess Aggregate Contributions attributable to the
Plan for the Plan Year under either Section (6)(a)(1) or (2), or both, as
adjusted to reflect any income, gain or loss attributable to such
contributions through the date the Excess Aggregate Contributions are
distributed shall be distributed or, if the Excess Aggregate Contributions
are forfeitable, forfeited. The income allocable to such contributions
shall be determined in a similar manner as described in Section 4.2 of the
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Plan. As to any Highly Compensated Employee, any distribution or
forfeiture of his allocable portion of the Excess Aggregate Contributions
for a Plan Year shall first be attributed to any nondeductible employee
contributions made by the Participant during the Plan Year for which no
corresponding Plan Sponsor contribution is made and then to any remaining
nondeductible employee contributions made by the Participant during the
Plan Year and any Matching Contributions thereon. As between the Plan and
any other plan or plans maintained by the Plan Sponsor in which Excess
Aggregate Contributions for a Plan Year are held, each such plan shall
distribute or forfeit a pro-rata share of each class of contribution based
on the respective amounts of a class of contribution made to each plan
during the Plan Year. The payment of the Excess Aggregate Contributions
shall be made without regard to any other provision in the Plan. In the
event the multiple use of limitations contained in Sections 2(b) and 5(b)
of this Appendix C, pursuant to Treasury Regulation section 1.401(m)-2 as
promulgated by the Secretary of the Treasury, requires a corrective
distribution, such distribution shall be made pursuant to Section 3 of
Appendix C, and not this Section 6.
For purposes of this Section 6, with respect to any Plan Year, "Excess
Aggregate Contributions" means the excess of:
(a) the aggregate amount of the Matching Contributions and
nondeductible employee contributions (and any Qualified Nonelective
Contributions or Qualified Matching Contributions) and, it taken into
account under Section 5 of this Appendix C, the Deferral Amounts
actually made on behalf of Highly Compensated Eligible Participants
for the Plan Year, over
(b) the maximum amount of contributions permitted under the
limitations of Section 5 of this Appendix C, determined by reducing
contributions made on behalf of Highly Compensated Eligible
Participants in order of their contribution percentages beginning with
the highest of such percentages.
The determination of the amount of Excess Aggregate Contributions
under this Section 6 shall be made after (1) first determining the
excess Elective Deferrals under Section 3.1(b) of the Plan and (2)
then determining the Excess Deferral Amounts under Section 3 of this
Appendix C.
(c) Distribution or forfeiture of nondeductible employee
contributions or Matching Contributions in the amount of the Excess
Aggregate Contributions for any Plan Year shall be made with respect
to Highly Compensated Eligible Participants on the basis of the dollar
amount of the Excess Aggregate Contributions attributable to each
Highly Compensated Eligible Participant. Forfeitures of Excess
Aggregate Contributions may not be allocated to Participants whose
contributions are reduced under this Section 6. The Plan Sponsor
shall determine the amount of Excess Aggregate Contributions which
shall be distributed to each Highly Compensated Eligible Participant
as follows.
(1) The Matching Contributions and nondeductible
contributions allocated to the Highly Compensated Eligible
Participant with the highest dollar amount of such contributions
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for the Plan Year shall be reduced by the amount required to
cause that Highly Compensated Eligible Participant's remaining
Matching Contributions and nondeductible contributions for the
Plan Year to be equal to the dollar amount of such contributions
allocated to the Highly Compensated Eligible Participant with the
next highest dollar amount of Matching contributions and
nondeductible contributions for the Plan Year. This amount is
then distributed to the Highly Compensated Eligible Participant
with the highest dollar amount of Matching Contributions and
nondeductible contributions, unless a smaller reduction, when
added to the total dollar amount already distributed pursuant to
this Paragraph (1), equals the total Excess Aggregate
Contributions.
(2) If the total amount distributed under Paragraph (1) is
less than the total Excess Aggregate Contributions, the procedure
in Paragraph (1) shall be repeated until the total dollar amount
of Matching Contributions and nondeductible contributions
distributed is equal to the total Excess Aggregate Contributions
attributable to Highly Compensated Eligible Participants.
If a distribution of the total Excess Aggregate Contributions is made
in accordance with Paragraphs (1) and (2) of this Section 6(c), the
limitations in Section 5 of this Appendix C shall be treated as being met
regardless of whether the actual contribution percentage, if recalculated
after such distributions, would have satisfied the requirements of Section
5.
SECTION 7
Except to the extent limited by rules promulgated by the Secretary of
the Treasury, if a Highly Compensated Eligible Participant is a participant
in any other plan of the Plan Sponsor or any Affiliate which includes
Matching Contributions, deferrals under a cash or deferred arrangement
pursuant to Code Section 401(k), or nondeductible employee contributions,
any contributions made by or on behalf of the Participant to the other plan
shall be allocated with the same class of contributions under the Plan for
purposes of determining the "actual deferral percentage" and "contribution
percentage" under the Plan; provided, however, contributions that are made
under an "employee stock ownership plan" (within the meaning of Code
Section 4975(e)(7)) shall not be combined with contributions under any plan
which is not an employee stock ownership plan (within the meaning of Code
Section 4975(e)(7)).
Except to the extent limited by rules promulgated by the Secretary of
the Treasury, if the Plan and any other plans which include Matching
Contributions, deferrals under a cash or deferred arrangement pursuant to
Code Section 401(k), or nondeductible employee contributions are considered
as one plan for purposes of Code Section 401(a)(4) and 410(b)(1), any
contributions under the other plans shall be allocated with the same class
of contributions under the Plan for purposes of determining the
"contribution percentage" and "actual deferral percentage" under the Plan;
provided, however, contributions that are made under an "employee stock
ownership plan" (within the meaning of Code Section 4975(e)(7)) shall not
be combined with contributions under any plan which is not an employee
stock ownership plan (within the meaning of Code Section 4975(e)(7)).
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SECTION 8
Effective January 1, 1999, notwithstanding any other provision in this
Appendix C to the contrary, the Primary Sponsor intends to satisfy the
requirements of Code Section 401(k)(12) with respect to contributions made
pursuant to Section 3.1 by those Participants who have completed their
Eligibility Service and the requirements of Code Section 401(m)(11) with
respect to those matching contributions made pursuant to Section 3.2.
APPENDIX D
FROZEN BENEFIT DISTRIBUTION RULES
SECTION 1
DEFINITIONS
For purposes of this Appendix D, the following terms shall have the
following meanings:
(a) "Annuity Starting Date" means the date on which a
distribution is deemed to commence for purposes of calculating the
benefit to be distributed.
(b) "Qualified Joint and Survivor Annuity" means an annuity for
the life of the Participant with a survivor annuity for the life of
his/her spouse which is one-half of the amount of the annuity payable
during the joint lives of the Participant and his/her spouse and which
is the actuarial equivalent of a single life annuity for the life of
the Participant.
(c) "Preretirement Survivor Annuity" means an annuity for the
life of the surviving spouse of a deceased Participant that has an
actuarial present value that is equal to 100% of the balance in the
Participant's account as of the date of the Participant's death.
For purposes of this Appendix D, the following election rules shall
apply:
The Plan Administrator shall furnish to the Participant a written
explanation of:
(a) the terms and conditions of a Qualified Joint and Survivor
Annuity and a Qualified Preretirement Survivor Annuity;
(b) the Participant's right to make, and the effect of, an
election not to receive the Qualified Joint and Survivor Annuity or
the Qualified Preretirement Survivor Annuity;
(c) the rights of the Participant's spouse as described below;
and
(d) the right to make and the effect of such an election.
In the case of a Qualified Joint and Survivor Annuity, the
written explanation shall be provided to the Participant no less than
thirty (30) days and no more than ninety (90) days prior to the first
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date on which he is entitled to commencement of payments from the
Fund. Notwithstanding the foregoing, a Participant may elect to waive
the requirement that the written explanation be provided at least
thirty (30) days prior to commencement of payments, provided that the
first payment from the Fund occurs more than seven (7) days from the
date the explanation is received by the Participant. In the case of
the Qualified Preretirement Survivor Annuity, the written explanation
shall be provided to the Participant in whichever of the following
periods ends last:
(i) the period beginning with the first day of the Plan
Year in which the Participant attains age 32 and ending with the
close of the Plan Year preceding the Plan Year in which the
Participant attains age 35;
(ii) the period beginning one year before and ending one
year after the Employee first becomes a Participant;
(iii) the period beginning one year before and ending
one year after these rules apply to the Participant; or
(iv) a reasonable period of time after separation from
service in the case of a Participant who separates from service
before attaining age 35.
The Participant may elect during the "applicable election period"
not to Qualified Joint and Survivor Annuity or Qualified Preretirement
Survivor Annuity by execution and delivery to the Plan Administrator
of a form that purpose by the Plan Administrator. The term
"applicable election period" shall mean, with respect to a Qualified
Joint and Survivor Annuity, the 90-day period ending on the first date
on which the Participant is entitled to commencement of payment from
the Fund. In the event the Participant waives the minimum thirty (30)
day requirement for the written explanation, the "applicable election
period" shall not end before the period ending thirty (30)-days after
the Participant receives the written explanation. Notwithstanding the
foregoing, if the Participant receives the written explanation of the
Qualified Joint and Survivor Annuity and affirmatively elects a form
of distribution, the payments from the Fund may commence less than
thirty (30) days after the Participant receives the written
explanation provided that the Participant may revoke the affirmative
distribution election until the later of the time payments from the
Fund are to begin or the expiration of the seven (7) day period which
begins on the day after the Participant receives the written
explanation. With respect to a Qualified Preretirement Survivor
Annuity, the "applicable election period" shall mean the period which
begins on the first day of the Plan Year in which the Participant
attains age 35 and ends on the date of the Participant's death.
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In the case of a married Participant, no election shall be
effective unless:
(A) the spouse of the Participant consents in writing to
the election and the consent acknowledges the effect of the
election (including, if applicable, the identity of any
Beneficiary other than the Participant's spouse and the alternate
form of payment) and is witnessed by a notary public, or
(B) it is established to the satisfaction of the Plan
Administrator that the consent required pursuant to subparagraph
(A) above may not be obtained because there is no spouse, the
spouse cannot be located, the Participant has a court order
indicating that he is legally separated or has been abandoned
(within the meaning of local law) unless a qualified domestic
relations order provides otherwise, or of any other circumstances
as permitted by regulations promulgated by the Department of the
Treasury. If the spouse is legally incompetent to give consent,
consent by the spouse's legal guardian shall be deemed to be
consent by the spouse.
Any consent by a spouse (or establishment that the consent of a
spouse may not be obtained) shall be effective only with respect to
that spouse. If an election is made, the Participant's Account may be
paid in any alternate form of payment permitted by the Plan. Any
waiver of a Qualified Preretirement Survivor Annuity made prior to the
first day of the Plan Year in which the Participant attains age 35
shall become invalid as of the first day of the Plan Year in which the
Participant attains age 35 and a Qualified Preretirement Annuity shall
be provided, unless a new waiver is obtained. The Participant may
revoke any election not to receive payment in the form of a Qualified
Joint and Survivor Annuity at any time prior to commencement of
payments from the Fund, and may make a new election at any time prior
to the commencement of payments from the Fund
If a Participant is married and has in effect an annuity form of
payment for the payment of his Account and the Participant wishes to
obtain a loan from the Plan in accordance with Plan Section 5, the
Participant's spouse must, within the ninety (90) day period preceding
the date the loan is made, consent to the loan and the possibility of
a reduction in the Participant's Account resulting in its nonpayment.
SECTION 2
ARCTIC PLAN
Except as may be required or permitted by Plan Sections 7 through 10,
effective December 30, 1994, all distributions made to a Participant or
beneficiaries attributable to amounts transferred to this Plan from the
Alaska Fisheries Corporation Profit Sharing/Savings Plan (the "Arctic
Plan") shall be made by the Trustee in one of the three following methods:
(a) Automatic Qualified Joint and Survivor Annuity (or Life
Annuity). A Participant who is married and begins to receive payments
under the Plan shall receive payments in the form of a Qualified Joint
and Survivor Annuity, unless the Participant, with the consent of his
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spouse, has properly elected otherwise. An unmarried Participant
shall receive his benefits in the form of a life annuity, with monthly
payments payable for 120 months certain and thereafter during his
lifetime, unless the Participant properly elects otherwise.
(b) Automatic Preretirement Survivor Annuity. If a Participant
who is married and at least partially vested dies before the date upon
which his retirement benefits were to commence, the Participant's
surviving spouse shall receive payments in the form of a Preretirement
Survivor Annuity, unless the Participant, with the consent of his
spouse has properly elected otherwise. The surviving spouse may elect
to have such annuity distributed immediately or at a later date not
later than the date the Participant would have attained his Normal
Retirement Age.
(c) In the event a Participant (or surviving spouse) elects
pursuant to Subsections (a) or (b) above not to receive retirement or
death benefits in the forms described therein, such distributions may
be made by the Trustee as an immediate or deferred nontransferable
annuity providing fixed or variable income (i) for the life of the
Participant, with or without a specified period certain, or (ii) over
the lives of the Participant and his designated beneficiary, with or
without a specified period certain.
SECTION 3
CULINARY PLAN
Except as may be required or permitted by Plan Sections 7 through 10,
effective April 1, 1996, all distributions made to a Participant or his
beneficiaries attributable to amounts transferred to this Plan from the
Savings Plan for Employees of Culinary Foods, Inc. (the "Culinary Plan")
shall be made by the Trustee in one of the following methods:
(a) Qualified-Joint and Survivor Annuity or Life Annuity. A
Participant who is married and begins to receive payments under the
Plan shall receive payments in the form of a Qualified Joint and
Survivor Annuity, unless the Participant, with the consent of his
spouse, has properly elected otherwise. An unmarried Participant
shall receive his benefits in the form of a single life annuity,
unless the Participant properly elects otherwise.
(b) Preretirement Survivor Annuity. If a Participant who is
married dies before the date upon which benefit payments are to
commence, the Participant's surviving spouse shall receive payments,
commencing immediately, in the form of a Preretirement Survivor
Annuity, unless the Participant, with the consent of his spouse has
properly elected otherwise.
(c) Optional Forms. In the event a Participant elects not to
receive benefits in the form described in Subsection (a) above, the
distribution of benefits may be made by the Trustee in one of the
methods elected by the Participant described below:
(i) an actuarially equivalent life annuity, with or without
payments guaranteed for a period of no less than 120 monthly
payment; or
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(ii) if the Participant is married, an actuarially
equivalent life annuity with a survivor annuity payable to the
Participant's spouse equal to 100% or 66 and 2/3 % of the
payments made to the Participant during his life.
SECTION 4
HUDSON PLAN
Except as may be required or permitted by Plan Sections 7 through 10,
effective April 1, 1998, all distributions made to a Participant or his
beneficiaries attributable to amounts transferred to this Plan from the
Prior Retirement Account under the Hudson Foods, Inc. 401(k) Retirement
Plan (the "Hudson Plan") shall be made by the Trustee in one of the
following methods:
(a) Qualified Joint and Survivor Annuity or Life Annuity. A
Participant who is married and begins to receive payments under the
Plan shall receive payments in the form of a Qualified Joint and
Survivor Annuity, unless the Participant, with the consent of his
spouse, has properly elected otherwise. An unmarried Participant
shall receive his benefits in the form of a single life annuity,
unless the Participant elects properly otherwise.
(b) Preretirement Survivor Annuity. If a Participant who is
married dies before the date upon which benefit payments are to
commence, the Participant's surviving spouse shall receive payments,
commencing immediately, in the form of a Preretirement Survivor
Annuity, unless the Participant, with the consent of his spouse has
properly elected otherwise.
(c) Optional Forms. In the event a Participant elects not to
receive benefits in the form described in Subsection (a) above, the
distribution of benefits may be made by the Trustee in one of the
methods elected by the Participant described below:
(i) single life annuity, a single life annuity with a five-
or ten-year certain term, or
(ii) an actuarially equivalent life annuity with a survivor
annuity payable to the Participant's spouse equal to 100%, 66 and
2/3% or 50% of the payments made to the Participant during his
life.
SECTION 5
COBB PLAN
Except as may be required or permitted by Plan Sections 7 through 10,
all distributions attributable to amounts transferred to this Plan from the
Member Contribution Account and that corresponding portion of his Employer
Matching Contribution Account under the Retirement Savings Plan of Cobb-
Vantress, Inc. (the "Cobb Plan") may be made by the Trustee in one of the
following methods:
(a) Qualified Joint and Survivor Annuity or Life Annuity. A
Participant who is married and elects to receive payments from the
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Member Contribution Account and that corresponding portion of his
Employer Matching Contribution Account under the Cobb Plan in the form
of an annuity shall receive payment in the form of a Qualified Joint
and Survivor Annuity, unless the Participant, with the consent of his
spouse, has properly elected otherwise. An unmarried Participant
shall receive his benefits in the form of a single life annuity,
unless the Participant properly elects otherwise.
(b) Preretirement Survivor Annuity. If a Participant who is
married dies before the date upon which benefit payments are to
commence, the Participant's surviving spouse shall receive payments,
commencing immediately, in the form of a Preretirement Survivor
Annuity, unless the surviving spouse elects to have payments commence
at a later date (but not later than the date the Participant would
have attained Normal Retirement Age).
SECTION 6
THRIFT PLAN
Except as may be required or permitted by Plan Sections 7 through 10,
effective December 30, 1994, all distributions of any amounts from a
Participant's After-Tax Contribution Account and Employer Contribution
Account attributable to such accounts transferred from the Tyson Foods,
Inc. Employee Retirement Income Savings Plan (the "Thrift Plan") shall be
made by the Trustee in one of the following methods:
(a) Annuity Option. A Participant shall have the right to elect
to receive payment from such account in the form of a life annuity
(or, if married, in the form of a Qualified Joint and Survivor
Annuity). The Participant (and, if married, with the consent of his
spouse) also may elect during the election period to receive payments
from such account in the form of a straight life annuity or a straight
life annuity with a ten-year guarantee.
(b) Preretirement Survivor Annuity. If a Participant who is
married dies before the date upon which his retirement benefits were
to commence, such Participant's surviving, spouse shall have the right
to elect to receive payment from such account in the form of a
Preretirement Survivor Annuity. The spouse also may properly elect to
receive payments from such account in the form of a straight life
annuity or a straight life annuity with a ten-year guarantee. The
surviving spouse may elect to have such annuity distributed
immediately or at a later date not later than the date the Participant
would have attained Normal Retirement Age.
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EXECUTIVE SAVINGS PLAN
OF
TYSON FOODS, INC.
(Restated As Of October 1, 1997)
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TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS 2
1.1 ACCOUNT 2
1.2 BENEFICIARY 2
1.3 CODE 2
1.4 COMPENSATION 2
1.5 DISABILITY 3
1.6 EFFECTIVE DATE 3
1.7 ELECTIVE DEFERRALS 3
1.8 ELIGIBLE EMPLOYEE 3
1.9 EMPLOYEE 3
1.10 EMPLOYER 3
1.11 EMPLOYER MATCH 4
1.12 EMPLOYMENT COMMENCEMENT DATE 4
1.13 ENROLLMENT PERIOD 4
1.14 ENTRY DATE 4
1.15 HOUR OF SERVICE 4
1.16 MEMBER 4
1.17 NORMAL RETIREMENT AGE 5
1.18 PLAN 5
1.19 PLAN YEAR 5
1.20 SALARY REDUCTION AGREEMENT 5
1.21 VALUATION DATE 5
1.22 YEARS OF SERVICE 5
ARTICLE II ELIGIBILITY FOR PARTICIPATION 5
2.1 REQUIREMENTS FOR PARTICIPATION 5
2.2 PARTICIPATION FOLLOWING RE-EMPLOYMENT 6
2.3 DESIGNATION OF BENEFICIARY 6
ARTICLE III CREDITS TO ACCOUNTS 6
3.1 MEMBERS' ELECTIVE DEFERRALS 6
3.2 EMPLOYER MATCH 7
ARTICLE IV ACCOUNTS AND EARNINGS CREDITED 8
4.1 ACCOUNTS OF MEMBERS 8
4.2 RATES OF RETURN CREDITED 8
ARTICLE V VESTING 9
ARTICLE VI DISTRIBUTIONS 9
6.1 ELECTIVE DEFERRAL EMPLOYER MATCH AND FLOOR ACCOUNTS 9
6.2 BENEFITS PAYABLE TO MINORS AND INCOMPETENTS 11
6.3 WITHHOLDING TAXES 12
ARTICLE VII ADMINISTRATION OF THE PLAN 12
7.1 ADMINISTRATIVE COMMITTEE 12
7.2 ACCOUNTS NOT TRANSFERABLE 12
7.3 COSTS OF THE PLAN 12
7.4 INDEMNIFICATION 13
ARTICLE VIII AMENDMENT AND TERMINATION OF THE PLAN 13
ARTICLE IX MISCELLANEOUS PROVISIONS 13
9.1 NO CONTRACT OF EMPLOYMENT INTENDED 13
9.2 CLAIMS REVIEW PROCEDURE 13
9.3 GOVERNING LAW 13
9.4 RULES OF CONSTRUCTION 14
9.5 PAYMENT PROVIDED UNDER THE PLAN 14
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EXECUTIVE SAVINGS PLAN
OF
TYSON FOODS, INC.
This Plan, adopted effective April 1, 1991 by Tyson Foods,
Inc., as amended and restated herein as of October 1, 1997, is an
unfunded, non-qualified deferred compensation plan designed to
provide solely for a select group of management and highly
compensated employees of Tyson Foods, Inc. and its affiliates, an
opportunity to provide for retirement income. All amounts
credited on the books of Tyson Foods, Inc. for the accounts of
members under this Plan at all times shall remain as unfunded,
general obligations of Tyson Foods, Inc. to such members, it
being the intention that such obligations to members under the
Plan be paid, when due, solely out of the general assets of Tyson
Foods, Inc. available at such time. The Plan shall be
administered in the manner set forth in the following Plan,
to-wit:
ARTICLE I
Definitions
The following definitions shall be used in this Plan unless
the context of the Plan clearly indicates another meaning:
1.1 Account. "Account" means the bookkeeping accounts
established and maintained by the Employer to reflect the
interest of a Member under the Plan and shall include the
following:
(a) Elective Deferral Account. Each "Elective
Deferral Account" reflects credits to a Member's Account
made on his behalf pursuant to Section 3.1, as adjusted to
reflect designated rates of return and other credits or
charges.
(b) Employer Match Account. Each "Employer Match
Account" reflects credits to a Member's Account made on his
behalf pursuant to Section 3.2, as adjusted to reflect
designated rates of return and other credits or charges.
1.2 Beneficiary. "Beneficiary" means such person or
persons or legal entity as may be designated by a Member to
receive benefits hereunder after his death, or the personal or
legal representative of the Member as hereinafter provided in
Section 2.3.
1.3 Code. "Code" means the Internal Revenue Code of 1986,
as now in effect or as amended from time to time. A reference to
a specific provision of the Code shall include such provision and
any applicable regulation pertaining thereto.
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1.4 Compensation. "Compensation" means an Employee's
earned income, wages, salaries, and fees for professional
services and other amounts received for personal services
actually rendered in the course of employment with the Employer
maintaining the Plan (including, but not limited to, commissions
paid salesmen, compensation for services on the basis of a
percentage of profits and bonuses). Any amounts that would have
been includable in the Employee's Compensation as described above
if they had not received special tax treatment because they were
deferred by the Employer through a Salary Reduction Agreement
shall be added to the amount described above and included in the
Employee's Compensation for purposes of the Plan. However,
Compensation shall not include the following:
(a) other Employer contributions to a plan of deferred
compensation which are not includable in the Employee's
gross income for a taxable year in which contributed, or
Employer contributions under simplified employee pension
plans to the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred
compensation;
(b) amounts realized from the exercise of
non-qualified stock options, or when restricted stock (or
property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk
of forfeiture;
(c) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option;
(d) other amounts which received special tax benefits,
or contributions made by the Employer (whether or not under
a Salary Reduction Agreement) towards the purchase of an
annuity described in Section 403(b) of the Code (whether or
not the amounts are actually excludable from the gross
income of the Employee); and
(e) amounts received as automobile and office
allowances.
1.5 Disability. "Disability" means the total incapacity of
a Member when so declared by the Employer in its judgment and
discretion, supported by the written opinion of at least two
disinterested physicians, after the expiration of at least thirty
(30) days from the date of the inception of such incapacity.
1.6 Effective Date. The effective date of the Plan shall
be April 1, 1991.
1.7 Elective Deferrals. "Elective Deferrals" means
reductions pursuant to a Member's Salary Reduction Agreement, in
the whole percentages (permitted below in Section 3.1) of the
Member's Compensation, which amounts are credited by the Employer
to the Member's Elective Deferral Account under the Plan, as
provided below.
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1.8 Eligible Employee. "Eligible Employee" shall mean
either (a) with respect to an Employee other than an Employee of
Culinary Foods, Inc., or a Maritime Employee (as defined in the
Retirement Savings Plan of Tyson Foods, Inc.), an Employee whose
regular rate of pay then in effect equals or exceeds $80,000, or
(b) in the case of any Employee of Culinary Foods, Inc., or a
Maritime Employee, an Employee who is determined to be a "Highly
Compensated Employee," within the meaning of Section
1.1(A)(17)(B) of the Retirement Savings Plan of Tyson Foods,
Inc., as of any December 31.
1.9 Employee. "Employee" means any person employed by
Employer.
1.10 Employer. "Employer" means Tyson Foods, Inc., or any
corporation into which it may be merged or consolidated, or any
affiliate that may hereafter accept and adopt the terms of this
indenture with approval of the Board of Directors of Tyson Foods,
Inc. For determining an Employee's length of service for
purposes of determining eligibility, Employer also includes any
corporation which is a member of a controlled group of
corporations (as defined in 414(b) of the Code) and all trades
or businesses (whether or not incorporated) which are under
common control (as defined in 414(c) of the Code).
1.11 Employer Match. "Employer Match" shall mean the
credit, if any, made to the Member's Employer Match Account by
the Employer pursuant to Section 3.2 below.
1.12 Employment Commencement Date. "Employment Commencement
Date" means the first date on which an Employee completes an
"Hour of Service".
1.13 Enrollment Period. "Enrollment Period" means each
period designated by the Employer with respect to the Plan Year
during which new Members may establish, and current Members may
amend, their rates of Elective Deferrals under their Salary
Reduction Agreements.
1.14 Entry Date. "Entry Date" shall mean any business day
during the Plan Year.
1.15 Hour of Service. An "Hour of Service" means:
(a) Each hour for which an Employee is paid, or
entitled to payment, for the performance of duties for the
Employer. These hours shall be credited to the Employee for
the computation period in which the duties are performed;
and
(b) Each hour for which an Employee is paid, or
entitled to payment, by the Employer on account of a period
of time during which no duties are performed (irrespective
of whether the employment relationship has terminated) due
to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of
absence. Hours under this subparagraph (b) shall be
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calculated and credited pursuant to Section 2530.200(b)-2 of
the Department of Labor Regulations which are incorporated
herein by this reference; and
(c) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the
Employer. The same hours of service shall not be credited
both under subparagraph (a) or (b), as the case may be, and
under this subparagraph (c). These hours shall be credited
to the Employee for the computation period or periods to
which the award or agreement pertains rather than the
computation period in which the award, agreement or payment
is made; and
(d) Hours of Service credited to Employees whose
compensation is not determined on the basis of certain
amounts for each hour worked during a given period and whose
hours are not required to be counted and recorded by a
separate federal statute such as the Fair Labor Standards
Act shall be at the rate of 45 Hours of Service for each
week that the employee is entitled to be credited with at
least one "Hour of Service" under the provisions of this
section.
1.16 Member. "Member" means any Employee who has qualified
for participation as provided in Article II of the Plan.
1.17 Normal Retirement Age. "Normal Retirement Age" shall
mean the 65th birthday of a Member.
1.18 Plan. "Plan" means the savings and profit sharing plan
set forth in this document and all subsequent amendments thereto
which in the aggregate are intended by the Employer to constitute
a non-qualified savings and profit sharing retirement plan. The
name of the Plan shall be the "Executive Savings Plan of Tyson
Foods, Inc."
1.19 Plan Year. "Plan Year" means, prior to April 1, 1996,
each twelve-month period commending April 1, the period from
April 1, 1996 to December 31, 1996 and, thereafter, the calendar
year.
1.20 Salary Reduction Agreement. "Salary Reduction
Agreement" means an agreement entered into between the Member and
the Employer during the Enrollment Period by which the Member
agrees to accept a reduction in his Compensation from the
Employer equal to any whole percentage, per payroll period, not
to exceed the percentages permitted under Section 3.1(A) below.
The Salary Reduction Agreement shall be irrevocable by the Member
until the next Enrollment Period and shall apply to each payroll
period during such time in which the Member receives Compensation
from the Employer.
1.21 Valuation Date. "Valuation Date" under the plan shall
mean the last day of each calendar month.
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1.22 Years of Service. A "Year of Service" means each
twelve consecutive month period during which an Employee has at
least one thousand (1,000) Hours of Service. For determining an
Employee's eligibility under the Plan, his "eligibility
computation period" shall begin on the Employment Commencement
Date for such Employee.
ARTICLE II
Eligibility for Participation
2.1 Requirements for Participation. Eligible Employees
shall be eligible to participate under the Plan as follows:
(a) Eligible Employees shall be eligible to make
Elective Deferrals and receive Employer Matches as of the
first Enrollment Period immediately following completion of
one (1) Year of Service.
(b) An Eligible Employee who was a Member immediately
prior to January 1, 1997 or who subsequently becomes a
Member may continue to make Elective Deferrals for so long
as the Member remains an Eligible Employee.
2.2 Participation Following Re-Employment. Each Employee
whose service is terminated and who subsequently is re-employed
by the Employer shall be treated under the Plan upon such re
employment as though he then first entered the employment of the
Employer; except that, the Employee shall be credited as of his
date of reemployment with any past Hours of Service earned for
purposes of Section 2.1 hereof regarding the service requirements
for participation in the Plan; provided, however, that the
application of this Section shall not entitle such re-employed
former Member to any Employer Match under Article III below
attributable to the period of time between his date of
termination of service and his date of re-employment.
2.3 Designation of Beneficiary. The provisions of this
Plan shall apply to all Members uniformly. Each Employee on
becoming a Member shall:
(a) Agree in writing to be bound by the terms and
conditions of this Plan.
(b) Designate in writing one or more Beneficiaries to
receive his benefits in the event of his death. If no such
designation be made, or if such Beneficiary be deceased
without a successor Beneficiary being designated in writing,
then the death benefits shall be paid in a lump sum to the
surviving spouse of said Member, if any, otherwise to the
Member's surviving children, in equal shares, per stirpes,
otherwise to the personal representative or estate of the
deceased Member. Should a Beneficiary of a deceased Member
die after he has started receiving payment under the Plan
and if there is no living successor Beneficiary named by the
deceased Member, then the remaining benefits shall be paid
in a lump sum to the surviving spouse of said Beneficiary,
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if any, otherwise to the personal representative or estate
of the beneficiary receiving payment at the time of his
death. Each Member shall be entitled to change his
designated Beneficiaries from time to time by filing with
the Committee (as defined in Section 7.1 below) a new
designation of Beneficiary form, and each change so made
shall revoke all prior designations by the Member.
ARTICLE III
Credits to Accounts
3.1 Members' Elective Deferrals.
(A) Amount of Elective Deferrals. Each Eligible Employee
may elect, pursuant to a Salary Reduction Agreement, to direct
the Employer to reduce his Compensation, and in lieu thereof,
credit to the Elective Deferral Account of such Eligible Employee
an amount equal to such reduction, with such reduction amounts to
be in integral percentages, determined as follows:
(i) From one percent (1%) to twenty percent (20%) of
his Compensation, excluding bonuses, if any; and
(ii) One percent (1%) to fifty percent (50%) of the
amount of any bonus included in his Compensation.
Eligible Employees may elect to have Elective Deferrals applied
either to Compensation excluding bonuses, to bonuses, or both.
(B) Initial Authorization for Elective Deferrals. All
Salary Reduction Agreements shall be in writing or in such other
form permitted by the Committee and shall be filed with the
Employer in advance of the date they are to become effective in
accordance with the normal administrative procedures established
by the Committee. Any such Salary Reduction Agreement shall
continue in effect for as long as the Member remains an Eligible
Employee or until he elects to suspend or change his rate of
Elective Deferrals under the Plan as provided in Section 3.1(C)
below.
(C) Right of Member to Suspend or Change His Rate of
Elective Deferrals. Except as set forth below, a Member may
suspend or change his rate of Elective Deferrals consisting of
Compensation exclusive of bonuses effective as soon as
administratively practicable as of the end of any subsequent
payroll period; while suspension or change of a Member's rate of
Elective Deferrals consisting of bonuses may be made only
annually in accordance with the normal administrative procedures
established by the Committee. The provisions of this Section
3.1(C) are subject to the further rules of Section 3.1(E) below
with respect to certain required suspensions. Any such change of
rate, suspension or resumption of Elective Deferrals must be made
by the Member in writing filed with the Employer or in such other
form permitted by the Committee.
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A Member whose Elective Deferrals are suspended during a
period of leave of absence or who is reemployed following a
termination of service may elect, upon his return to active
employment with the Employer, assuming the Member is otherwise
then eligible to participate under Article III, to have the
Employer resume Elective Deferrals on his behalf to the Plan. Any
such election shall be in writing filed with the Employer and
shall specify the percentage of Elective Deferrals to be deducted
from his Compensation.
(D) Crediting Elective Deferrals. Elective Deferrals under
the Plan shall be credited by the Employer to the Member's
Elective Deferral Account as of the end of the month in which the
deferral amounts were deducted from the Member's Compensation.
(E) Mandatory Suspension of Elective Deferrals. If the
Member obtains an in-service hardship withdrawal under the
Retirement Savings Plan of Tyson Foods, Inc., then any suspension
of deferrals required by Section 8.10(4)(b) thereof shall include
the making of Elective Deferrals hereunder.
3.2 Employer Match.
(A) Amount of Employer Match. The Employer shall credit to
the Employer Match Account of each Member who has elected to make
an Elective Deferral pursuant to Section 3.1 (or a salary
deferral election pursuant to the Retirement Savings Plan of
Tyson Foods, Inc.) above an amount determined in accordance with
the following formula:
(i) an amount determined by applying the matching
contribution provisions of the Retirement Savings Plan of
Tyson Foods, Inc. (but without regard to any of the
restrictive provisions applicable to that plan as a tax-
qualified retirement plan, including, without limitation,
Sections 401(a)(17), 401(k), 401(m) and 402(g) of the Code)
to the sum of the aggregate elective deferrals made under
the Retirement Savings Plan of Tyson Foods, Inc. and the
Elective Deferrals made under the Plan for the period,
(ii) reduced by the amount of matching contributions
allocated under the Retirement Savings Plan of Tyson Foods,
Inc. on behalf of the Member for the same period.
(B) Crediting the Employer Match. The Employer Match shall
be credited by the Employer to the Member's Employer Match
Account as of the end of the month in which the corresponding
credit to the Member's Elective Deferral Account is made pursuant
to Section 3.1(D) above.
ARTICLE IV
Accounts and Earnings Credited
4.1 Accounts of Members. The Employer shall establish and
maintain for each Member separate Accounts, to be called,
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<PAGE>
respectively, the "Elective Deferral Account" and "Employer Match
Account". "Floor Accounts" and subaccounts shall be maintained as
necessary to reflect the terms of the Plan in effect prior to
January 1, 1997. Each Account and subaccount shall be credited
as required in Article III above and Section 4.2 below.
4.2 Rates of Return Credited. As of each Valuation Date,
each Member's Account (other than any Member who has received a
distribution of his Account prior to that Valuation Date) or
portions thereof shall be credited with a designated rate or
rates of return, as applicable, as selected by the Member, based
upon the amount credited to the Member's Account as of the
immediately preceding Valuation Date. A Member's Account may be
credited with such rate or rates of return in accordance with the
most recent investment election properly and timely filed by the
Member with the Committee in accordance with such rules and
procedures designated by the Committee. If no election has been
properly or timely filed with the Committee or if the Employer
suspends the election of rates of return by a Member, the
Member's Account shall be credited with a designated rate of
return selected by the Employer.
ARTICLE V
Vesting
As of January 1, 1997 and thereafter, all Account and
subaccount balances shall be fully vested.
ARTICLE VI
Distributions
6.1 Elective Deferral, Employer Match and Floor Accounts.
Amounts credited to a Member's Elective Deferral Account,
Employer Match Account and Floor Account shall be distributed to
the Member or his Beneficiaries in such form and at such times as
set forth below:
(A) Normal Distribution Rules. The following
distribution rules provide for a distribution from Accounts
only following a termination of service and apply to all
Eligible Employees who first became Members on or after
January 1, 1997 and to each Eligible Employee who was a
Member of the Plan prior thereto, unless such Member timely
filed a written election with the Committee choosing to
remain subject to the rules set forth in subparagraph (B)
below.
(i) if the aggregate sum of a Member's
Accounts total $50,000 or less, the Accounts shall be
distributed to the Member in cash in a lump sum as soon
as practicable following termination of service;
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<PAGE>
(ii) if the aggregate sum of a Member's
Accounts total more than $50,000, the Accounts will be
paid as follows:
(1) if the Member (x) is age 50 or
older and the sum of the Member's age and Years of
Service is equal to or greater than 70 (the "Rule
of 70"), or (y) terminates service due to a
Disability, the Accounts shall be paid in annual
installments commencing as soon as practicable or,
if later, at age 60 over a period equal to the
number of years of the Member's then projected
life expectancy (or, if the Member is married,
over the projected life expectancy of the Member
and the Member's spouse: provided, however, that
any such Member may elect to be paid over a
shorter installment period if the election is
delivered to the Committee in writing at least one
(1) year before the termination of service; or
(2) if, at the time of a
termination of service, the Member does not
qualify for the Rule of 70 and is not subject to a
Disability, the Accounts shall be paid in five
annual installments commencing as soon as
practicable.
(3) If the Member's termination of
service is due to death, the Accounts shall be
paid to the Member's designated Beneficiary in
five annual installments commencing as soon as
practicable.
(4) A Member or Beneficiary who is
not entitled to either the immediate commencement
of the payment of Accounts or a lump sum payment,
or both, upon a showing of financial hardship, may
petition the Committee for the immediate payment
of all or a portion of the Member's Accounts. The
Committee shall have the sole and absolute
discretion in making any determination with
respect to a financial hardship application.
For purposes of this subparagraph (A), life
expectancies shall be determined in accordance with the
Regulations issued by the Secretary of the Treasury pursuant
to Section 401(a)(9) of the Code.
(B) Grandfathered Distribution Rules. The following
distribution rules apply only to Eligible Employees who were
Members of the Plan prior to January 1, 1997 who timely
filed a written election with the Committee choosing to
remain subject to these rules.
(i) Prior to Termination of Service. A
Member's subaccount for any Plan Year under his
Elective Deferral, Employer Match and Floor Accounts
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<PAGE>
shall be distributed in one cash lump sum not later
than 60 days following the end of the tenth Plan Year
immediately following the Plan Year for which such
subaccount was established. (By way of example,
subaccounts established for the Plan Year ending March
31, 1992 for Elective Deferral, Employer Match and
Floor Account credits, together with all earnings
credited for all Plan Years in which such subaccounts
remain in effect, shall be distributed not later than
60 days following March 31, 2002.)
(ii) Following Termination of Service.
Except as provided below in subparagraphs (iii) and
(iv), if a Member terminates service with the Employer,
the Member's Accounts hereunder shall be distributed to
him in one cash lump sum not later than 60 days
following the end of the Plan Year in which the Member
terminates service.
(iii) Termination of Service Due to
Death. If a Member dies before all of the Accounts
established under this Plan have been distributed to
him, the remaining balances credited to all of his
Accounts hereunder shall be distributed in one cash
lump sum to his Beneficiaries in accordance with
Section 2.3 above not later than 60 days following the
end of the Plan Year in which the Member died.
(iv) Termination of Service on or After
Attaining Age 55, etc. If a Member retires from
employment with the Employer (x) on or after attaining
age 55 or (y) on or after attaining age 50 and the sum
of the Member's age and Years of Service equal or
exceed 75, or terminates service due to Disability, the
Member's Accounts shall be distributed to the Member as
follows:
(1) All amounts which, following
the distribution rules set forth above in Section
6.1(B)(i), would have been distributed to the
Member not later than the 60-day period following
the end of the fifth Plan Year following the Plan
Year in which the Member terminates service shall
continue to be distributed pursuant to the rules
set forth above in Section 6.1(B)(i); and
(2) To the extent that the amounts
credited to any subaccounts would not be
distributed within the time period described in
subparagraph (1) of this Section 6.1(B)(iv), such
subaccounts shall be aggregated and exactly twenty
percent (20%) of such aggregate amount shall be
paid to the Member within 60 days after the end of
each of the five Plan Years immediately following
the Plan Year in which the Member terminated
employment, together with earnings credited on the
undistributed balance as determined under Article
IV above.
110
<PAGE>
6.2 Benefits Payable to Minors and Incompetents.
(A) Whenever any person entitled to payments under the
Plan shall be a minor or under other legal disability or in
the sole judgment of the Employer otherwise shall be unable
to apply such payments to his own best interest and
advantage (as in the case of illness, whether mental or
physical or where the person not under legal disability is
unable to preserve his estate for his own best interest),
the Employer may in the exercise of its discretion direct
all or any portion of such payments to be made in any one or
more of the following ways unless claim shall have been made
therefor by an existing and duly appointed guardian, tutor,
conservator, committee or other duly appointed legal
representative, in which event payment shall be made to such
representative:
(i) directly to such person unless such
person shall be an infant or shall have been legally
adjudicated incompetent at the time of the payment;
(ii) to the spouse, child, parent or other
blood relative to be expended on behalf of the person
entitled or on behalf of those dependents as to whom
the person entitled has the duty of support; or
(iii) to a recognized charity or
governmental institution to be expended for the benefit
of a person entitled or for the benefit of those
dependents as to whom the person entitled has the duty
of support.
(B) The decision of the Employer will, in each case,
be final and binding upon all persons and the Employer shall
not be obliged to see to the proper application or
expenditure of any payments so made. Any payment made
pursuant to the power herein conferred upon the Employer
shall operate as a complete discharge of the obligation of
the Employer.
6.3 Withholding Taxes. The Employer shall have the right
to withhold from any amounts due or to become due from the
Employer pursuant to this Plan to a Member or his Beneficiary any
taxes required by any government to be withheld or otherwise
deducted and paid by the Employer in respect of such amounts paid
or to be paid.
ARTICLE VII
Administration of the Plan
7.1 Administrative Committee. To carry out the purposes of
the Plan, the Board of Directors of Tyson Foods, Inc. shall
appoint a Committee (the "Committee") consisting of not less than
three members who may be officers and/or directors of Tyson
Foods, Inc. The Board of Directors may remove members from or
111
<PAGE>
add members to the Committee at any time, within its discretion,
and may fill vacancies on the Committee. An individual member of
the Committee may not participate in any decision exclusively
affecting his own participation in the Plan. The Committee shall
select one of its members as Chairman, and shall hold meetings at
such times and places as it may determine. Acts of a majority of
the Committee at which a quorum is present, or acts reduced to or
approved in writing by a majority of the members of the
Committee, shall be valid acts of the Committee. The Committee
shall have the sole authority, in its absolute discretion, to
adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan; and
to construe and interpret the Plan, the rules and regulations,
and to make all other determinations deemed necessary or
advisable for the administration of the Plan. All decisions,
determinations, and interpretations of the Committee shall be
binding on all Members. The Committee may employ such legal
counsel, consultants and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion received
from any such counsel or consultant and any computation received
for any such consultant or agent. Expenses incurred by the Board
of Directors or the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Employer. No member or
former member of the Committee or of the Board of Directors shall
be liable for any action or determination made in good faith with
respect to the Plan or any awards granted hereunder.
7.2 Accounts Not Transferable. A Member's undivided
interest in the amounts credited to his Accounts under the Plan
may not be assigned, sold, pledged or alienated except by testate
or intestate succession. In addition, such undivided interest
may not be encumbered by lien or security interest of any kind
and shall not be liable for the debts of the Member or subject to
attachment, or to any judgment rendered against the Member or to
the process of any court in aid or execution of any judgment so
rendered.
7.3 Costs of the Plan. The costs of maintaining records
and executing transfers under the Plan shall be paid by Tyson
Foods, Inc.
7.4 Indemnification. Tyson Foods, Inc. shall indemnify and
hold harmless any officer, employee, agent, or representative who
incurs damage or loss, including the expense of defense thereof,
in connection with the performance of the duties specified
herein, other than losses resulting from any such person's fraud
or willful misconduct.
ARTICLE VIII
Amendment and Termination of the Plan
The Board of Directors of Tyson Foods, Inc. or its delegate
may, at any time and in its discretion, alter, amend, suspend or
terminate the Plan or any part thereof. Notice of any amendment,
suspension or termination of the Plan, in whole or in part, shall
be given to each Member as soon as practicable after such action
is taken.
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<PAGE>
ARTICLE IX
Miscellaneous Provisions
9.1 No Contract of Employment Intended. The granting of
any right to an Employee, pursuant to this Plan, shall not
constitute an agreement or understanding, express or implied, on
the part of Tyson Foods, Inc. or any affiliate, to employ such
employee for any specified period.
9.2 Claims Review Procedure. In the event a Member or
Beneficiary is denied a claim for benefits under the Plan, the
Committee shall provide to such claimant written notice of the
denial which shall set forth the specific reasons for the denial;
specific references to the pertinent provisions of the Plan on
which the denial is based; a description of any additional
materials or information necessary for the claimant to perfect
the claim and an explanation of why such material or information
is necessary; and an explanation of the Plan's claim review
procedure. After receiving the notice of denial of a claim, a
claimant or his representative may request a review of the denial
by making written application to the Committee within 60 days
after receiving notice of the denial; may review pertinent Plan
documents; and may submit issues and comments to the Committee in
writing. No later than 60 days following receipt of the written
application for review, the Committee shall submit its decision
on the review in writing to the claimant and to his
representative, if any; provided, however, a decision on the
written application for review may be extended, in the event of
special circumstances such as the need to hold a hearing require
an extension of time, to a day no later than 120 days after the
date of receipt of the written application for review. The
decision shall include specific reasons for the decision and
specific references to the pertinent provisions of the Plan on
which the decision is based.
9.3 Governing Law. The construction, validity, and
operation of this Plan shall be governed by the laws of the State
of Arkansas, to the extent not preempted by applicable federal
law.
9.4 Rules of Construction. Throughout this Plan, the
masculine includes the feminine, and the singular and the plural,
and vice versa, where applicable.
9.5 Payment provided under the Plan. All payments provided
under the Plan shall be paid from the general assets of the
Employer and no separate fund shall be established to secure
payment. Notwithstanding the foregoing, the Employer may
establish a grantor trust to assist it and any affiliate in
funding Plan obligations, and any payment made to a Member or a
Beneficiary from such trust shall relieve the Employer and
affiliate from any further obligations under the Plan only to the
extent of such payment.
113
<PAGE>
IN WITNESS WHEREOF, Tyson Foods, Inc. has caused this
indenture to be executed on the date set forth below.
TYSON FOODS, INC.
By:
Date:
114
<PAGE>
FIRST AMENDMENT TO THE
EXECUTIVE SAVINGS PLAN
OF TYSON FOODS, INC.
THIS FIRST AMENDMENT is made as of this 31st day of December
1998, by TYSON FOODS, INC., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company").
W I T N E S S E T H:
WHEREAS, the Company established by indenture originally
effective April 1, 1991, the Executive Savings Plan of Tyson
Foods, Inc. (the "Plan"), which was last amended and restated by
indenture generally effective as of October 1, 1997; and
WHEREAS, the Company desires to amend the Plan primarily to
coordinate its provisions more effectively with the current
operation of the Retirement Savings Plan of Tyson Foods, Inc. and
to reflect the merger of the Hudson Foods, Inc. Executive Salary
Deferral Plan (the "Hudson Plan") with and into the Plan
effective as of January 1, 1999;
NOW, THEREFORE, the Company does hereby amend the Plan,
effective as of January 1, 1999, as follows:
1. By adding a new final paragraph to the preamble on page 1,
as follows:
"The Plan, as amended herein, reflects the merger of
the Hudson Plan with and into the Plan as of January 1,
1999. The amounts referred to as `Annual Deferral Amounts'
under the Hudson Plan shall be credited to Elective Deferral
Accounts and amounts referred to as `Annual Company Matching
Amounts' under the Hudson Plan shall be credited to Employer
Match Accounts. The distribution of Accounts of Members who
participated in the Hudson Plan prior to January 1, 1999
shall be governed by the provisions of Article VI hereof;
provided, however, that any such Member whose Account was in
pay status prior to January 1, 1999 (or any later date
determined by Tyson Foods, Inc.) shall have his or her
Account distributed in accordance with the provisions of the
Hudson Plan as in effect on December 31, 1998, except to the
extent any such Member requests a modification to the form
of payment pursuant to Section 6.1(A)(ii)(4) hereof."
2. By deleting Section 1.2 and by substituting therefor the
following:
"1.2 Beneficiary. `Beneficiary' means such person or
persons or legal entity as may be designated by a Member to
receive benefits hereunder after his death, or, if none is
so designated, the person or entity hereinafter provided in
Section 2.4."
3. By deleting Section 1.17 and by substituting therefor the
following:
115
<PAGE>
"1.17 Employment Commencement Date. `Employment
Commencement Date' means the first date on which an Employee
reports for active service with an Employer."
4. By deleting Section 1.15 and by substituting therefor the
following:
1.15 "[Reserved.]"
5. By deleting Section 1.16 and by substituting therefor the
following:
"1.16 Member. `Member' means any Employee who has
been designated for participation as provided in Article II
of the Plan; provided, however, that any Employee who ceases
to be eligible for continued participation in the Plan shall
remain an inactive Member until his benefits are paid
pursuant to Article VI."
6. By deleting Section 1.29 and by substituting therefor the
following:
"1.29 Year of Service. A `Year of Service' means a
twelve consecutive-month period during which an Employee has
been continuously employed by an Employer; provided,
however, that any period during which an Employee is on an
approved leave of absence shall not be deemed to interrupt
any period of continuous employment. In determining an
Employee's eligibility under the Plan, his `eligibility
computation period' shall begin on the Employment
Commencement Date for such Employee."
7. By deleting Article II and by substituting therefor the
following:
"ARTICLE II
Eligibility for Participation
2.1 Requirements for Participation. An Eligible
Employee who has completed a Year of Service may be
designated for Plan membership by the Committee. Any such
Eligible Employee so designated may participate in the Plan
commencing as of the Entry Date with respect to which his
Plan membership is approved by the Committee.
2.2 Cessation of Active Participation. A Member shall
cease to be eligible for active participation in the Plan as
of any date communicated to the Member by the Committee.
2.3 Participation Following Re-Employment. Each
Employee whose service is terminated and who subsequently is
re-employed by the Employer shall be treated under the Plan
upon such re-employment as though he then first entered the
employment of the Employer.
2.4 Designation of Beneficiary. Each Eligible
Employee on becoming a Member shall:
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<PAGE>
(a) agree to be bound by the terms and conditions
of this Plan; and
(b) designate in writing one or more
Beneficiaries to receive his benefits in the event of
his death. If no such designation be made, or if such
Beneficiary be deceased without a successor Beneficiary
being designated in writing, then the death benefits
shall be paid in a lump sum to the surviving spouse of
said Member, if any, otherwise to the Member's estate.
Should a Beneficiary of a deceased Member die after he
has started receiving payment under the Plan and if
there is no living successor Beneficiary named by the
deceased Member, then the remaining benefits shall be
paid in a lump sum to the surviving spouse of said
Beneficiary, if any, otherwise to the estate of the
Beneficiary receiving payment at the time of his death.
Each Member shall be entitled to change his designated
Beneficiaries from time to time by filing with the
Committee (as defined in Section 7.1 below) a new
designation of Beneficiary form, and each change so
made shall revoke all prior designations by the
Member."
8. By deleting the head language of Section 3.1(A) and by
substituting therefor the following:
"(A) Amount of Elective Deferrals. During any
Enrollment Period, each Member may elect, pursuant to a
Salary Reduction Agreement, to direct the Employer to reduce
his Compensation, and in lieu thereof, credit to the
Elective Deferral Account of such Member an amount equal to
such reduction, with such reduction amounts to be integral
percentages, determined as follows:".
9. By deleting the last sentence of Section 3.1(A) and by
substituting therefor the following:
"Members may elect to have Elective Deferrals applied either
to Compensation excluding bonuses, to bonuses, or both,
subject to such rules as may be promulgated from time to
time by the Committee."
10. By adding a new final sentence to Section 3.1(B), as
follows:
"No Salary Reduction Agreement made pursuant to Section
3.1(A)(i) above shall be given effect unless, at that time,
the Member has in effect an election for the maximum before-
tax contribution permissible pursuant to the terms of the
tax-qualified cash or deferred arrangement then maintained
by the Employer."
11. By adding the phrase "no later than" to Section 3.1(D)
immediately after the phrase "Elective Deferral Account" therein.
12. By deleting Section 3.1(E) and by substituting therefor the
following:
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<PAGE>
"(E) Mandatory Suspension of Elective Deferrals. If
the Member obtains an in-service hardship withdrawal under
any Employer-sponsored tax-qualified cash or deferred
arrangement, then any suspension of deferrals required by
such plan shall include the making of Elective Deferrals
hereunder."
13. By replacing the phrase "Retirement Savings Plan of Tyson
Foods, Inc." with the phrase "tax-qualified cash or deferred
arrangement of the Employer" the first, third and fourth time the
former phrase appears in Section 3.2(A).
14. By adding the phrase "no later than" to Section 3.2(B)
immediately after the phrase "Employer Match Account" therein.
15. By replacing the first clause of the first sentence of
Section 4.2 with the following: "No later than as of the last
day of each calendar month,".
Except as amended hereby, the Plan shall remain in full
force and effect as prior to this First Amendment.
IN WITNESS WHEREOF, the Company has caused this First
Amendment to be executed as of the day and year first above
written.
TYSON FOODS, INC.
By:
Title:
ATTEST:
By:
Title:
[CORPORATE SEAL]
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<PAGE>
ELEVEN-YEAR FINANCIAL SUMMARY
TYSON FOODS, INC.
(In millions except per share data)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
OPERATING RESULTS FOR FISCAL YEAR 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $7,362.9 $7,414.1 $6,355.7 $6,453.8
Cost of Sales 6,054.1 6,260.1 5,318.0 5,505.7
Gross Profit 1,308.8 1,154.0 1,037.7 948.1
Operating Expenses 821.9 950.4 637.8 678.5
Interest Expense 124.0 139.1 110.4 132.9
Provision for Taxes 129.4 45.9 143.9 49.0
Net Income (Loss) 230.1 25.1 185.8 86.9
Diluted Earnings (Loss) Per Share 1.00 0.11 0.85 0.40
Basic Earnings (Loss) Per Share 1.00 0.11 0.86 0.40
Dividends Per Share:
Class A 0.115 0.100 0.095 0.080
Class B $ 0.104 $ 0.090 $ 0.086 0.072
- --------------------------------------------------------------------------------------------
Capital Expenditures $363.3 $ 310.4 $ 291.2 $ 214.0
Depreciation and Amortization 291.1 276.4 230.4 239.3
Total Assets 5,082.7 5,242.5 4,411.0 4,544.1
Net Property, Plant and Equipment 2,184.5 2,256.5 1,924.8 1,869.2
Total Debt 1,803.8 2,128.9 1,690.1 1,975.1
Shareholders' Equity $2,128.0 1,970.4 1,621.5 1,541.7
Year End Shares Outstanding 228.6 230.9 213.4 217.4
Diluted Average Shares Outstanding 231.0 227.9 218.2 218.0
Book Value Per Share 9.31 $ 8.53 $ 7.60 $ 7.09
Total Debt to Capitalization 45.9% 51.9% 51.0% 56.2%
- --------------------------------------------------------------------------------------------
Return on Sales 3.1% 0.3% 2.9% 1.4%
Annual Sales Growth (Decline) (0.7)% 16.7% (1.5)% 17.1%
Five-Year Compounded Annual Sales Growth 7.6% 9.5% 8.8% 10.5%
Gross Margin 17.8% 15.6% 16.3% 14.7%
Return on Beginning Assets 4.4% 0.6% 4.1% 2.0%
Return on Beginning Shareholders' Equity 11.7% 1.5% 12.1% 5.9%
Five-Year Return on Beginning
Shareholders' Equity 9.6% 7.1% 10.1% 10.9%
Effective Tax Rate 34.9% 64.7% 43.6% 37.0%
Closing Stock Price High $25.38 $ 24.44 $ 23.63 $ 18.58
Closing Stock Price Low 15.00 16.50 17.75 13.83
</TABLE>
119
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$5,511.2 $5,110.3 $4,707.4 $4,168.8 $3,922.1 $3,825.3 $2,538.2
4,423.1 4,149.1 3,796.5 3,390.3 3,147.5 3,081.7 2,056.1
1,088.1 961.2 910.9 778.5 774.6 743.6 482.1
616.4 766.0 535.4 446.8 441.4 423.4 271.5
114.9 86.1 72.8 76.9 95.5 128.6 45.0
131.0 120.7 129.3 100.5 97.0 80.1 62.9
219.2 (2.1) 180.3 160.5 145.5 120.0 100.6
1.01 (0.01) 0.81 0.77 0.70 0.60 0.52
1.01 (0.01) 0.82 0.78 0.71 0.61 0.52
0.053 0.047 0.027 0.027 0.020 0.013 0.013
$ 0.044 $ 0.039 $ 0.022 $ 0.022 $ 0.017 $ 0.011 $ 0.011
- -------------------------------------------------------------------------------------
$ 347.2 $ 232.1 $ 225.3 $ 108.0 $ 213.6 $ 163.8 $ 128.9
204.9 188.3 176.6 148.9 135.8 123.4 84.8
4,444.3 3,668.0 3,253.5 2,617.7 2,645.8 2,501.1 2,586.1
2,013.5 1,610.0 1,435.3 1,142.2 1,162.0 1,071.1 1,020.8
1,984.7 1,455.1 1,024.3 825.6 984.0 1,020.5 1,374.4
1,467.7 1,289.4 1,360.7 980.2 822.5 663.0 447.7
217.2 217.8 220.9 206.2 206.1 204.9 194.0
217.7 221.7 222.5 207.6 207.1 199.3 194.6
$ 6.76 $ 5.92 $ 6.16 $ 4.75 $ 3.99 $ 3.24 $ 2.31
57.5% 53.0% 42.9% 45.7% 54.5% 60.6% 75.4%
- ------------------------------------------------------------------------------------
4.0% 0.0% 3.8% 3.9% 3.7% 3.1% 4.0%
7.9% 8.6% 12.9% 6.3% 2.5% 50.7% 31.1%
7.6% 15.0% 19.5% 18.5% 21.1% 27.5% 27.6%
19.7% 18.8% 19.4% 18.7% 19.8% 19.4% 19.0%
6.0% (0.1)% 6.9% 6.1% 5.8% 4.6% 11.3%
17.0% (0.2)% 18.4% 19.5% 22.0% 26.8% 29.5%
13.8% 14.1% 21.7% 23.9% 26.8% 29.7% 31.8%
38.1% 101.8% 41.8% 38.5% 40.0% 40.0% 38.5%
$ 18.17 $ 16.67 $ 18.08 $ 15.08 $ 15.58 $ 11.79 $ 8.63
13.83 12.50 12.83 10.17 8.46 7.17 4.92
<FN>
1. The results for 1999 include $19.2 million pre-tax charge for loss on sale
of seafood assets, $35.2 million pre-tax impairment charge for loss on the
anticipated sale of The Pork Group and a $22.5 million pre-tax charge for
write-down of impaired assets of Mallard's Food Products.
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<PAGE>
2. Significant business combinations accounted for as purchases: Hudson
Foods, Inc., Arctic Alaska Fisheries Corporation and Holly Farms Corporation
on Jan. 9, 1998, Oct. 5, 1992 and July 19, 1989, respectively. See Footnote 3
to the Consolidated Financial Statements for acquisitions during the three-
year period ended Oct. 2, 1999.
3. The results for 1998 include a $214.6 million pre-tax charge for asset
impairment and other charges.
4. The results for 1997 include a $41 million pre-tax gain ($4 million after-
tax) from the sale of the beef division assets.
5. The results for 1994 include a $205 million after-tax charge due to the
write-down of certain long-lived assets of Arctic Alaska Fisheries
Corporation.
</FN>
</TABLE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS
TYSON FOODS, INC.
ACQUISITIONS
On Jan. 9, 1998, the Company completed the acquisition of Hudson Foods, Inc.
(Hudson or Hudson Acquisition). At the effective time of the acquisition, the
Class A and Class B shareholders of Hudson received approximately 18.4
million shares of the Company's Class A common stock valued at approximately
$363.5 million and approximately $257.4 million in cash. The Company borrowed
funds under its commercial paper program to finance the cash portion of the
Hudson Acquisition and to repay approximately $61 million under Hudson's
revolving credit facilities. The Hudson Acquisition has been accounted for as
a purchase and the excess of investment over net assets acquired is being
amortized straight-line over 40 years. The Company's consolidated results of
operations include the operations of Hudson since the acquisition date.
DISPOSITIONS
During fiscal 1999, management completed the following transactions in
furtherance of the Company's previously stated objective to focus on its core
business, chicken.
Effective Sept. 28, 1999, the Company signed a letter of intent to sell
its wholly-owned subsidiary The Pork Group, Inc. (The Pork Group) to
Smithfield Foods, Inc. (Smithfield). The Company will receive approximately
three million shares of Smithfield common stock, subject to certain
restrictions. Certain assets of The Pork Group with a fair value of
approximately $70 million are classified as assets held for sale at Oct. 2,
1999. Additionally, the Company has accrued expenses related to the closure
of certain assets not purchased by Smithfield. The Company's operating
results for the fiscal year ended Oct. 2, 1999, include a pretax charge of
$35.2 million related to the anticipated loss on the sale and closure of
these assets. The transaction is subject to the successful negotiation of a
definitive agreement and is expected to close by the second quarter of fiscal
2000.
On July 17, 1999, the Company completed the sale of the assets of Tyson
Seafood Group in two separate transactions. Under the terms of the
agreements, the Company received net proceeds of approximately $165 million,
which was used to reduce indebtedness, and subsequently collected receivables
totaling approximately $16 million. The Company recognized a pretax loss of
approximately $19.2 million on the sale of the seafood assets.
Effective Dec. 31, 1998, the Company sold Willow Brook Foods, its
integrated turkey production and processing business, and its Albert Lea,
Minn., processing facility which primarily produced sausages, lunch and deli
meats. In addition, on Dec. 31, 1998, the Company sold its National Egg
Products Company operations in Social Circle, Ga. These facilities were sold
for amounts that approximated their carrying values. These operations, which
were reflected in assets held for sale at Oct. 3, 1998, were acquired as part
of the Hudson Acquisition.
IMPAIRMENT AND OTHER CHARGES
In July 1999, the Company signed a letter of intent to sell Mallard's
Food Products (Mallard's) for an amount less than net book value. The sale
of Mallard's was not consummated. However, based upon these negotiations and
the Company's cash flow projections, management believes that certain long-
lived assets and related excess of investments over net assets acquired are
impaired. The Company recorded in the fourth quarter of 1999 pretax charges
totaling $22.5 million ($0.10 per share) for impairment of property and
equipment and write-down of related excess of investments over net assets
acquired of Mallard's. Management expects that Mallard's will continue to be
a part of the Prepared Foods Group.
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<PAGE>
In Aug. 28, 1998, the Company's Board of Directors approved management's
proposed restructure plan. The restructuring, which resulted in asset
impairment and related charges described below, was in furtherance of the
Company's previously stated objective to focus on its core business, chicken.
The acquisition of Hudson and the assimilation of Hudson's facilities and
operations into the Company's business permitted the Company to review and
rationalize the productive capabilities and cost structure of its core
business. The restructuring included, among other things, the closure of
eight plants and feedmills resulting in work force reductions, the write-down
of excess of investments over net assets acquired allocated to closed
facilities, the reconfiguration of various production facilities and the
write-down to estimated net realizable value of certain seafood assets which
were sold in fiscal 1999.
In 1998, as a result of the restructuring, the Company recorded pretax
charges totaling $214.6 million ($0.68 per share) consisting of $142.2
million for asset impairment of property, plant and equipment, write-down of
related excess of investments over net assets acquired and severance costs,
$48.4 million for losses in the Company's export business to Russia, which
had been adversely affected by the continuing economic problems in Russia,
and $24 million for other charges related primarily to workers compensation
and employment practice liabilities. These charges were classified in the
Consolidated Statements of Income as $142.2 million asset impairment and
other charges, $48.4 million in selling expenses, $20.5 million in cost of
sales and $3.5 million in other expense. During the fourth quarter of 1998,
the Russian Ruble devalued resulting in the losses described above. The
Company recognizes that conducting business in or selling products into
foreign countries, including Russia, entails inherent risks. The Company,
however, is continually monitoring its international business practices and,
whenever possible, will attempt to minimize the Company's financial exposure
to these risks.
RESULTS OF OPERATIONS
The Company's accounting cycle resulted in a 52-week year for both 1999 and
1997 compared to a 53-week year for 1998.
1999 vs. 1998
Sales for 1999 decreased 0.7% from sales for 1998. The operating results for
1999 were affected negatively by the excess supply of chicken and other meats
during the last six months of the fiscal year, offset somewhat by the volume
gained from the Hudson Acquisition and the inclusion of Tyson de Mexico on a
consolidated basis. Management anticipates this excess supply of all meats
will continue through the first six months of fiscal 2000.
The following is an analysis of net sales by segment:
dollars in millions
- -------------------------------------------------------------------------
1999 1998 change % change % change
of total
- -------------------------------------------------------------------------
Food Service $3,353.9 $3,329.4 $ 24.5 0.7 0.3
Consumer Products 2,251.9 2,074.0 177.9 8.6 2.4
International 645.2 592.5 52.7 8.9 0.7
Swine 109.5 160.4 (50.9) (31.7) (0.7)
Seafood 189.2 214.1 (24.9) (11.6) (0.3)
Other 813.2 1,043.7 (230.5) (22.1) (3.1)
- -------------------------------------------------------------------------
$7,362.9 $7,414.1 $ (51.2) (0.7) (0.7)
=========================================================================
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<PAGE>
Food Service sales accounted for an increase of 0.3% of the total change in
sales for 1999 as compared to 1998. This increase was mainly due to a 2.6%
increase in tonnage offset mostly by a 1.8% decrease in average sales prices.
Consumer Products sales accounted for an increase of 2.4% of the total change
in sales for 1999 as compared to 1998. This increase was mainly due to a
10.5% increase in tonnage largely offset by a 1.8% decrease in average sales
prices. International sales accounted for an increase of 0.7% of the change
in total sales in 1999. This increase is mostly the result of a 29.6%
increase in tonnage offset by a 15.9% decrease in average sales prices. The
increase in tonnage for the international segment is mainly due to the
consolidation of Tyson de Mexico. Swine sales accounted for a decrease of
0.7% of the change in total sales for 1999 as compared to last year. The
swine business experienced a significant decrease in market prices during
fiscal 1999 compared to fiscal 1998, resulting in a swine group net loss of
$0.18 per share for fiscal 1999. Seafood sales accounted for a decrease of
0.3% of the change in total sales for 1999 as compared to 1998. This
decrease mostly was due to the sale of the seafood business at the beginning
of the fourth quarter of fiscal 1999. Other miscellaneous sales as a group
accounted for a decrease of 3.1% of the change in total sales for 1999 as
compared to 1998, mostly due to the sale of non-core businesses at the end of
the first quarter.
[GRAPH]
Expenses as a Percent of Sales
1997 1998 1999
Selling 8.1% 8.0%* 7.8%
General and Administrative 1.6% 1.8% 1.8%
*Excludes $48.4 million loss
Cost of goods sold decreased 3.3% for 1999 as compared to 1998. This
decrease is mainly the result of decreased sales and lower grain costs. As a
percent of sales, cost of sales was 82.2% for 1999 compared to 84.4% for 1998
primarily due to lower grain costs.
Operating expenses for 1999 decreased 13.5% from 1998, mostly due to
impairment and other charges of $76.9 million in 1999 compared to $142.2
million in 1998. As a percent of sales, selling expense decreased to 7.8% in
1999 compared to 8.7% in 1998, mainly due to the $48.4 million charge in 1998
for losses in the Company's export business to Russia. General and
administrative expense, as a percent of sales, was 1.8% in 1999 and 1998.
Amortization expense, as a percent of sales, was 0.5% in 1999 compared to
0.4% in 1998.
The following is an analysis of segment profit defined as gross profit
less selling expenses:
dollars in millions
- ----------------------------------------------------------------------
1999 1998 change
- ----------------------------------------------------------------------
Food Service $311.0 $232.0 $ 79.0
Consumer Products 241.7 179.3 62.4
International 67.5 8.4 59.1
Swine (63.0) (20.7) (42.3)
Seafood 22.2 3.2 19.0
Other 154.8 109.6 45.2
- ----------------------------------------------------------------------
$734.2 $511.8 $222.4
======================================================================
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<PAGE>
Food Service segment profit increased 34.1% to $311 million mostly due
to lower grain prices, a 2.6% increase in tonnage and a change in product
mix. Consumer Products segment profits increased 34.8% to $241.7 million
also due to lower grain prices and a 10.5% increase in tonnage. International
segment profits increased $59.1 million to $67.5 million due to the
consolidation of Tyson de Mexico in 1999 resulting in a 29.6% increase in
tonnage. Swine segment loss increased $42.3 million to a loss of $63 million
due to depressed market conditions. Swine average sales prices decreased
23.2% compared to the same period last year. Seafood segment profits
increased $19 million to $22.2 million largely due to a 4.9% increase in
average sales prices offset somewhat by decreased tonnage due to the sale of
the seafood business at the end of the third quarter.
Interest expense decreased 10.9% in 1999 compared to 1998. As a percent
of sales, interest expense was 1.7% in 1999 compared to 1.9% in 1998. The
Company had a lower level of borrowing in 1999, which decreased the Company's
average indebtedness by 6.4% over the same period last year. The Company's
short-term interest rates were slightly lower than the same period last year,
and the net average effective interest rate on total debt for 1999 was 6.2%
compared to 6.6% for 1998.
The effective tax rate for 1999 was 34.9% compared to 64.7% for 1998.
The effective tax rate for 1999 has decreased due in part to Tyson de Mexico
earnings being taxed at the applicable foreign rate. The 1998 effective tax
rate was affected by certain costs related to asset impairment and foreign
losses not deductible for tax purposes.
Return on beginning assets for 1999 was 4.4% compared to 0.6% for 1998.
Excluding the $76.9 million charge for asset impairment and other charges,
the return on beginning assets for 1999 was 5.3%. Excluding the $214.6
million charge for asset impairment and other charges the return for 1998 was
4.1%. The five-year average return on beginning assets is 3.3%. Return on
beginning shareholders' equity for 1999 was 11.7% compared to 1.5% for 1998,
with a five-year average of 9.6%.
[GRAPH]
Return on Beginning Assets
1997 4.1%
1998 4.1%*
1999 5.3%*
*Excluding asset impairment and other charges.
1998 vs. 1997
Sales for 1998 increased 16.7% over sales for 1997. A significant portion of
the increase in total sales for 1998 compared to 1997 is due to the Hudson
Acquisition. The operating results for 1998 were affected negatively by the
excess supply of poultry during the first six months of the fiscal year,
excess supply of other proteins for the entire fiscal year and the more
commodity-based Hudson sales mix. Additionally, the collapse of the Russian
economy and the devaluation of the Ruble weakened leg quarter prices and
slowed volume.
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<PAGE>
The following is an analysis of net sales by segment:
dollars in millions
- ------------------------------------------------------------------------
1998 1997 change % change % change
of total
- -------------------------------------------------------------------------
Food Service $3,329.4 $2,793.3 $ 536.1 19.2 8.4
Consumer Products 2,074.0 1,829.6 244.4 13.4 3.9
International 592.5 664.1 (71.6) (10.8) (1.1)
Swine 160.4 217.6 (57.2) (26.3) (0.9)
Seafood 214.1 266.0 (51.9) (19.5) (0.8)
Other 1,043.7 585.1 458.6 78.4 7.2
- -------------------------------------------------------------------------
$7,414.1 $6,355.7 $1,058.4 16.7 16.7
=========================================================================
Food Service sales accounted for an increase of 8.4% of the total change
in sales for 1998 as compared to 1997. This increase was mainly due to a
34.9% increase in tonnage offset slightly by an 11.6% decrease in average
sales prices. Consumer Products sales accounted for an increase of 3.9% of
the total change in sales for 1999 as compared to 1998. This was mainly due
to a 13.5% increase in tonnage. International sales accounted for a decrease
of 1.1% of the change in total sales for 1998 compared to 1997. This was
mainly the result of a 19% decrease in average sales prices somewhat offset
by a 10.1% increase in tonnage. Swine sales accounted for a decrease of 0.9%
of the change in total sales for 1998 as compared 1997. This decrease was
due to a 25.6% decrease in average sales prices and a 0.9% decrease in
tonnage. The swine business experienced a significant decrease in market
prices in 1998, resulting in a swine group net loss of $0.06 per share for
fiscal 1998. Seafood sales accounted for a decrease of 0.8% of the change in
total sales for 1998 as compared to 1997. This decrease was due to a 25.9%
decrease in tonnage partially offset by an 8.6% increase in average sales
prices. Decreased seafood volume was mainly due to weakness in the surimi
business caused in large part by the Asian economic crisis. However, this was
partially offset by improvements in the analog business. Other miscellaneous
sales as a group accounted for an increase of 7.2% of the change in total
sales for 1998 as compared to 1997, mostly due to non-core businesses
obtained with the Hudson Acquisition.
Cost of goods sold increased 17.7% for 1998 as compared to 1997. This
increase is mainly the result of the Hudson Acquisition. As a percent of
sales, cost of sales was 84.4% for 1998 compared to 83.7% for 1997.
Operating expenses for 1998 increased 49% from 1997, mostly due to the
asset impairment and other charges. As a percent of sales, selling expense
increased to 8.7% in 1998 compared to 8.1% in 1997 mainly due to a $48.4
million charge for losses in the Company's export business to Russia. Selling
expense, as a percent of sales, excluding the $48.4 million loss in 1998, was
8%. General and administrative expense, as a percent of sales, increased to
1.8% in 1998 compared to 1.6% in 1997, partly due to penalties and costs
associated with the plea agreement by the Company with respect to the
investigation by the Office of Independent Counsel in connection with former
Secretary of Agriculture Michael Espy. Amortization expense, as a percent of
sales, was 0.4% in 1998 and 1997.
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<PAGE>
The following is an analysis of segment profit defined as gross profit
less selling expenses:
dollars in millions
- --------------------------------------------------------------------
1998 1997 change
- --------------------------------------------------------------------
Food Service $232.0 $187.9 $ 44.1
Consumer Products 179.3 108.3 71.0
International 8.4 28.5 (20.1)
Swine (20.7) 22.8 (43.5)
Seafood 3.2 24.3 (21.1)
Other 109.6 152.6 (43.0)
- --------------------------------------------------------------------
$511.8 $524.4 $(12.6)
====================================================================
Food Service segment profit increased 23.5% to $232 million mostly due
to lower grain prices, a 34.9% increase in tonnage and a change in product
mix. Consumer Products segment profits increased 65.6% to $179.3 million
also due to lower grain prices and a 13.5% increase in tonnage. International
segment profits decreased $20.1 million to $8.4 million due to a 19% decrease
in sales prices. Swine segment loss increased $43.5 million to a loss of
$20.7 million due to depressed market conditions. Swine average sales prices
decreased 25.6% compared to the same period last year. Seafood segment
profits decreased $21.1 million to $3.2 million largely due to a 25.9%
decrease in tonnage offset somewhat by an 8.6% increase in average sales
prices.
Interest expense increased 26% in 1998 compared to 1997. As a percent of
sales, interest expense was 1.9% in 1998 compared to 1.7% in 1997. The
Company had a higher level of borrowing in 1998, which increased the
Company's average indebtedness by 18% over the same period last year mainly
due to the Hudson Acquisition. The Company's short-term interest rates were
slightly higher than the same period last year, and the net average effective
interest rate on total debt for 1998 was 6.6% compared to 6.2% for 1997.
The effective tax rate for 1998 was 64.7% compared to 43.6% for 1997.
The 1998 effective tax rate was affected by certain costs related to asset
impairment and foreign losses not deductible for tax purposes. The 1997
effective tax rate was affected by the taxes on the gain from the sale of the
beef division assets. Certain costs were allocated to the beef division
which were not deductible for tax purposes, resulting in a higher effective
tax rate.
Return on beginning assets for 1998 was 0.6% compared to 4.1% for 1997,
with a five-year average of 2.5%. Return on beginning assets for 1998,
excluding the $214.6 million for asset impairment and other charges, was
4.1%. Return on beginning shareholders' equity for 1998 was 1.5% compared to
12.1% for 1997, with a five-year average of 7.1%. Return on beginning
shareholders' equity for 1998, excluding the $214.6 million for asset
impairment and other charges, was 11.1%.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations continues to be the Company's primary source of
funds to finance operating needs and capital expenditures. In 1999, net cash
of $546.7 million was provided by operating activities, an increase of $50.3
million from 1998. The Company used cash from operations to pay down debt and
to fund additions to property, plant and equipment. The expenditures for
property, plant and equipment were related to acquiring new equipment,
upgrading facilities to maintain competitive standing and to position the
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<PAGE>
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, which requires investments.
[GRAPH]
Cash Provided by Operating Activities
Dollars in Millions
1997 $541.0
1998 $496.4
1999 $546.7
The Company's foreseeable cash needs for operations and capital
expenditures will continue to be met through cash flows from operations and
borrowings supported by existing credit facilities, as well as additional
credit facilities which the Company believes are available.
At 1999 fiscal year end, working capital was $739.9 million compared to
$934.1 million at the end of 1998, a decrease of $194.2 million mostly due to
an increase in the current portion of long-term debt. The current ratio for
1999 was 1.75 to 1 compared to 2.12 to 1 for 1998. Working capital levels are
adequate to meet the operating needs of the Company. Total assets have
increased by $1.4 billion or 38.6% over the past five years inclusive of
acquisitions.
Additions, net of dispositions, to total property, plant and equipment
for the last five years were $1.1 billion including acquisitions, an increase
of 43.7% over the last five years. At 1999 fiscal year end, the Company had
construction projects in progress that will require approximately $134.2
million to complete. Cash from operations or additional borrowings will
provide funding for these expenditures.
Total debt at 1999 fiscal year end was $1.8 billion, a decrease of
$325.1 million from fiscal 1998 year end. The Company has an unsecured
revolving credit agreement totaling $1 billion that supports the Company's
commercial paper program. This $1 billion facility expires in May 2002. At
Oct. 2, 1999, $290.5 million in commercial paper was outstanding under this
$1 billion facility. Additional outstanding long-term debt at Oct. 2, 1999,
consisted of $879.8 million of public debt, $111.6 million of institutional
notes, $154.5 million of leveraged equipment loans and $78.8 million of other
indebtedness. The Company may use funds borrowed under its revolving credit
facility, commercial paper program or through the issuance of additional debt
securities from time to time in the future to finance acquisitions as
opportunities may arise, to refinance other indebtedness or capital leases of
the Company, and for other general corporate purposes.
[GRAPH]
Total Capitalization
Dollars in Billions
1997 1998 1999
Equity $1.6 $2.0 $2.1
Debt $1.7 $2.1 $1.8
The revolving credit agreement and notes contain various covenants, the
more restrictive of which require maintenance of a minimum net worth, current
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<PAGE>
ratio, cash flow coverage of interest and a maximum total debt-to-
capitalization ratio. The Company is in compliance with these covenants at
fiscal year end.
The Company prefers to maintain a mix of fixed and floating debt.
Management believes that, over the long-term, variable-rate debt may provide
more cost-effective financing than fixed-rate debt; however, the Company
issues fixed-rate debt when advantageous market opportunities arise.
Shareholders' equity increased 8% during 1999 and has grown at a
compounded annual rate of 10.5% over the past five years, inclusive of $76.9
million loss on the sale of assets and asset impairment in 1999, $214.6
million in asset impairment and other charges in 1998 and $363.5 million for
the purchase of Hudson in 1998.
IMPACT OF YEAR 2000
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the
Company's computer programs that have date-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including among other things, a temporary inability to process transactions,
send invoices or engage in similar normal business activities.
Because of the nature of the Year 2000 issue, older software is more
likely to have issues with Year 2000 readiness, while newer software is more
likely to be Year 2000 compliant. The Company has replaced its entire
computer software applications portfolio since 1990. Nonetheless, the Company
has been working on testing and ensuring application readiness since 1996.
Many of the applications that are used to support core business processes
have been taken to offsite computer testing facilities to ensure their Year
2000 readiness. This includes core application functionality as well as
interfaces to other applications and outside partners.
In addition to the testing that has been done, the Company has been in
contact with the providers of packaged software applications to ensure that
these packages are also Year 2000 ready. To this point, all suppliers of
software have provided some approach for the Company to ensure readiness,
either through upgrades or new products. Most of these solutions already have
been implemented.
In certain instances, software has been purchased to provide new
functionality for the Company replacing software that was not compliant.
These purchases were not predicated by the Year 2000 issue; however, the
result is that the new systems are compliant and non-compliant systems were
ultimately retired. Two examples of this are the implementation of new
accounting software from SAP that the Company installed at the beginning of
the 1999 fiscal year, and the new payroll and human resource software also
from SAP installed at the beginning of the 2000 fiscal year.
Because many of the systems were already compliant, did not require
significant modifications to make them compliant, or were replaced for other
business reasons, the costs incurred specifically to address Year 2000
readiness are not material to the Company. Since 1996, the expenses that
resulted from Year 2000 readiness activities have been absorbed through the
annual Management Information Systems operational budget and funded from
internally generated funds. These specifically identifiable costs can be
described primarily as personnel costs and have increased each year since
1996 because of increased activity from testing. Identifiable costs incurred
in fiscal 1999 totaled approximately $0.4 million and since 1996 are
approximately $1.9 million. No projects under consideration by the Company
have been deferred because of Year 2000 efforts.
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<PAGE>
Because of the rapid pace of change in technology, especially in the
area of hardware, the Company regularly upgrades and replaces hardware
platforms such as database and application servers. Consequently, all of the
servers are Year 2000 ready. In addition, all personal computers in use by
the Company are currently Year 2000 ready.
The telephone systems in use by the Company have also been surveyed.
There are more than 170 of these systems currently in use. All systems are
currently Year 2000 ready.
The embedded technology in the production environment, such as
programmable logic controllers, computer-controlled valves and other
equipment, has been inventoried, and the Company has contacted the vendors
who supplied this technology with respect to their Year 2000 readiness. The
Company is confident that all production related technology is Year 2000 ready.
The Company has initiated formal communications with all of its
significant suppliers and large customers to determine the extent to which
the Company's interface systems are vulnerable to those third parties'
failure to remediate their own Year 2000 issues. Through written and verbal
communications with all suppliers and vendors, all of the issues that have
previously been identified with Year 2000 readiness have been addressed.
The Company's total Year 2000 project cost, which is not expected to
have a material effect on the Company's results of operations, includes the
estimated costs and time associated with the impact of third party Year 2000
issues based upon presently available information. However, there can be no
guarantee that the systems of other companies on which the Company's systems
rely will be converted in a timely manner or would not have an adverse effect
on the Company's systems.
Because the Company's year 2000 compliance is dependent upon key third
parties also being Year 2000 compliant on a timely basis, there can be no
guarantee that the Company's efforts will prevent a material adverse impact
on its results of operations, financial condition and cash flows. The
possible consequences to the Company due to its business partners not being
fully Year 2000 compliant include temporary plant closings, delays in the
delivery of finished products, delays in the receipt of key ingredients,
containers and packaging supplies, invoice and collection errors, and
inventory and supply obsolescence. These consequences could have a material
adverse impact on the Company's results of operations, financial condition
and cash flows if the Company is unable to conduct its business in the
ordinary course. The Company believes that its readiness program should
significantly reduce the adverse effect any such disruptions may have.
To date, the Company has completed 100 percent of the assessment and
remediation phases. The Company will continue to test various components of
the software portfolio until Dec. 31, 1999. The Company has not established a
contingency plan for possible Year 2000 issues. However, all information
systems personnel will be available over the New Year's holiday should any
unforeseen problem arise. The information systems group has also implemented
a technology "quiet period" for the last eight weeks of the year during which
changes to the current technology architecture and portfolio will be limited.
MARKET RISK
Market risks relating to the Company's operations result primarily from
changes in commodity prices, interest rates and foreign exchange rates as
well as credit risk concentrations. To address these risks the Company enters
into various hedging transactions as described below. The Company seldom use
financial instruments which do not qualify for hedge accounting. In those
situations in which instruments do not qualify for hedge accounting, the
Company marks the instrument to fair value and recognizes the gains or losses
currently in earnings.
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<PAGE>
Commodities Risk
The Company is a purchaser of certain commodities, primarily corn and
soybeans. The Company periodically uses commodity futures and options for
hedging purposes to reduce the effect of changing commodity prices and as a
mechanism to procure the grains. The contracts that effectively meet risk
reductions and correlation criteria are recorded using hedge accounting.
Gains and losses on closed hedge transactions are recorded as a component of
the underlying inventory purchase.
The following table provides information about the Company's corn,
soybean and other feed ingredient inventory and financial instruments that
are sensitive to changes in commodity prices. The table presents the carrying
amounts and fair values at Oct. 2, 1999 and Oct. 3, 1998. Additionally, for
puts and futures contracts, the latest of which expires or matures 15 months
from the reporting date, the table presents the notional amounts in units of
purchase and the weighted average contract prices.
volume and dollars in millions, except per unit amounts
- -----------------------------------------------------------------------------
Weighted
Ave. strike Fair
Volume Price Per Unit Value
- -----------------------------------------------------------------------------
As of October 2, 1999
Recorded Balance Sheet Commodity Position:
Commodity Inventory (book value of $33.8) - $ - $33.8
Hedging Positions
Corn Futures Contracts
(volume in bushels)
Long (Buy) Positions 84.4 2.21 (7.7)
Short (Sell) Positions 1.4 2.32 0.3
Soybean Meal Futures Contracts
(volume in cwt)
Long (Buy) Positions 0.1 143.14 0.4
Trading Positions
Corn Puts 27.5 2.10 (2.5)
As of October 3, 1998
Recorded Balance Sheet Commodity Position:
Commodity Inventory (book value of $36.0) - $ - $36.0
Hedging Positions
Corn Futures Contracts
(volume in bushels)
Long (Buy) Positions 7.5 2.33 (0.4)
Short (Sell) Positions 9.7 2.11 0.3
Soybean Oil Futures Contracts
(volume in cwt)
Long (Buy) Positions 0.1 24.24 -
Short (Sell) Positions 0.1 24.40 -
=============================================================================
Interest Rate and Foreign Currency Risks
The Company hedges exposure to changes in interest rates on certain of
its financial instruments. Under the terms of various leveraged equipment
loans, the Company enters into interest rate swap agreements to effectively
lock in a fixed interest rate for these borrowings. The maturity dates of
these leveraged equipment loans range from 2005 to 2008 with interest rates
ranging from 4.7% to 6%.
131
<PAGE>
The Company also periodically enters into foreign exchange forward
contracts and option contracts to hedge some of its foreign currency
exposure. In 1999, the Company used such contracts to hedge exposure to
changes in foreign currency exchange rates, primarily Mexican Peso,
associated with debt denominated in U.S. dollars held by Tyson de Mexico. In
1998, the Company used such contracts to hedge exposure to changes in foreign
currency exchange rates, primarily Japanese Yen, associated with sales
denominated in foreign currency. Gains and losses on these contracts are
recognized as an adjustment of the subsequent transaction when it occurs.
Forward and option contracts generally have maturities or expirations not
exceeding 12 months.
The following tables provide information about the Company's derivative
financial instruments and other financial instruments that are sensitive to
changes in interest rates. The tables present the Company's debt obligations,
principal cash flows, related weighted-average interest rates by expected
maturity dates and fair values. For interest rate swaps, the tables present
notional amounts, weighted-average interest rates or strike rates by
contractual maturity dates and fair values. Notional amounts are used to
calculate the contractual cash flows to be exchanged under the contract.
dollars in millions
_____________________________________________________________________________
There- Fair
2000 2001 2002 2003 2004 after Total Value
10/2/99
_____________________________________________________________________________
As of October 2, 1999
Liabilities
Long-term Debt,
including Current Portion
Fixed Rate $172.5 $125.7 $30.5 $177.8 $29.2 $794.3 $1,330.0 $1,299.1
Average Interest
Rate 6.82% 8.18% 7.83% 6.18% 7.08% 6.78% 6.87%
Variable Rate $50.2 $17.2 $290.5 - - $50.0 $407.9 $407.9
Average Interest
Rate 5.51% 7.67% 5.85% - - 3.90% 5.65%
Interest Rate Derivative
Financial Instruments
Related to Debt
Interest Rate Swaps
Pay Fixed $17.2 $18.4 $19.6 $21.6 $21.1 $29.2 $127.1 $(0.7)
Avg Pay Rate 6.71% 6.69% 6.73% 6.73% 6.71% 6.50% 6.66%
Average Receive Rate- USD 6 Month LIBOR
=============================================================================
132
<PAGE>
_____________________________________________________________________________
There- Fair
1999 2000 2001 2002 2003 after Total Value
10/3/98
_____________________________________________________________________________
As of October 3, 1998
Liabilities
Long-term Debt,
including Current Portion
Fixed Rate $73.6 $226.7 $125.2 $31.4 $178.5 $823.3 $1,458.7 $1,533.7
Average Interest
Rate 9.37% 6.39% 8.25% 7.88% 6.20% 6.79% 6.93%
Variable Rate $4.0 $24.6 - $506.9 - $50.0 $585.5 $585.5
Average Interest
Rate 4.15% 7.67% - 5.57% - 3.73% 5.49%
Interest Rate Derivative
Financial Instruments
Related to Debt
Interest Rate Swaps
Pay Fixed $16.1 $17.2 $18.4 $19.6 $20.2 $50.2 $141.7 ($8.1)
Avg Pay Rate 6.71% 6.71% 6.69% 6.73% 6.74% 6.59% 6.67%
Average Receive Rate- USD 6 Month LIBOR
=============================================================================
The following tables summarize information on instruments and transactions
that are sensitive to foreign currency exchange rates. The tables present the
notional amounts, weighted-average exchange rates by expected (contractual)
maturity dates and fair values. These notional amounts generally are used to
calculate the contractual payments to be exchanged under the contract.
dollars in millions
_____________________________________________________________________________
2000 2001-2004 There- Total Fair
after Value
10/2/99
_____________________________________________________________________________
As of October 2, 1999
Sold Option Contracts to Sell
Foreign Currencies for US$
Mexican Peso
Notional Amount $7.3 - - $7.3 $(0.6)
Weighted Average Strike Price 10.13
=============================================================================
133
<PAGE>
dollars in millions
____________________________________________________________________________
1999 2000-2003 There- Total Fair
after Value
10/03/98
____________________________________________________________________________
Sold Option Contracts to Sell
Foreign Currencies for US$
Japanese Yen
Notional Amount $6.5 - - $6.5 -
Weighted Average
Strike Price 109.48
Purchased Option Contracts to Sell
Foreign Currencies for US$
Japanese Yen
Notional Amount $5.6 - - $5.6 $0.4
Weighted Average
Strike Price 126.69
============================================================================
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, Accounting for Derivative Instruments and Hedging Activities, which
requires adoption in the first quarter of fiscal 2001. The statement
establishes accounting and reporting standards which require that all
derivative instruments be recorded on the balance sheet at fair value. This
statement also establishes "special accounting" for fair value hedges, cash
flow hedges, and hedges of foreign currency exposures of net investments in
foreign operations. Derivatives that are not hedges must be adjusted to fair
value through income. If the derivative is a hedge, depending on the nature
of the hedge, changes in the fair value of derivatives will either be offset
against the change in fair value of the hedged item through earnings or
recognized in other comprehensive income until the hedged item is recognized
in earnings. The ineffective portion of a derivative's change in fair value
will be immediately recognized in earnings. The effect on the Company's
financial position and results of operations has not yet been determined.
In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position 98-1, Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use (SOP 98-1). This
statement provides guidance on the capitalization of certain costs incurred
in developing or acquiring internal-use computer software. The Company
believes the adoption of SOP 98-1 in the first quarter of fiscal 2000 will
not have a material impact on its financial position or results of
operations.
In April 1998, the AICPA issued Statement of Position 98-5, Reporting on
the Costs of Start-up Activities. This statement requires that the costs of
start-up activities be expensed as incurred. Start-up activities are defined
as one-time activities related to opening a new facility, introducing a new
product or service, conducting business in a new territory, conducting
business with a new class of customer, initiating a new process in an
existing facility or beginning some new operation. This statement is
effective beginning in the first quarter of fiscal 2000. Upon adoption any
capitalized start-up costs are to be written off and reported as a cumulative
effect of an accounting change. At Oct. 2, 1999, the Company has no
capitalized start-up costs.
134
<PAGE>
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION
This annual report and other written reports and oral statements made from
time to time by the Company and its representatives may contain forward-
looking statements, including forward-looking statements made in this report,
with respect to their current views and estimates of future economic
circumstances, industry conditions, company performance and financial
results. These forward-looking statements are subject to a number of factors
and uncertainties which could cause the Company's actual results and
experiences to differ materially from the anticipated results and
expectations, expressed in such forward-looking statements. In light of these
risks, uncertainties and assumptions, the Company wishes to caution readers
not to place undue reliance on any forward-looking statements. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements based on the occurrence of future events, the receipt of new
information or otherwise.
Among the factors that may affect the operating results of the Company
are the following: (i) fluctuations in the cost and availability of raw
materials, such as feed grain costs; (ii) changes in the availability and
relative costs of labor and contract growers; (iii) market conditions for
finished products, including the supply and pricing of alternative proteins;
(iv) effectiveness of advertising and marketing programs; (v) the ability of
the Company to make effective acquisitions and to successfully integrate
newly acquired businesses into existing operations; (vi) risks associated
with leverage, including cost increases due to rising interest rates; (vii)
changes in regulations and laws, including changes in accounting standards,
environmental laws, 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.
135
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
TYSON FOODS, INC.
THREE YEARS ENDED OCTOBER 2, 1999
(IN MILLIONS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $7,362.9 $7,414.1 $6,355.7
Cost of Sales 6,054.1 6,260.1 5,318.0
- --------------------------------------------------------------------------------
1,308.8 1,154.0 1,037.7
- --------------------------------------------------------------------------------
Operating Expenses:
Selling 574.6 642.2 513.3
General and administrative 134.5 132.7 96.9
Amortization 35.9 33.3 27.6
Asset impairment and other charges 76.9 142.2
impairment
- -------------------------------------------------------------------------------
821.9 950.4 637.8
- --------------------------------------------------------------------------------
Operating Income 486.9 203.6 399.9
Other Expense (Income):
Interest 124.0 139.1 110.4
Foreign currency exchange (2.7)
Other (5.4) (6.5) (40.2)
- --------------------------------------------------------------------------------
115.9 132.6 70.2
- --------------------------------------------------------------------------------
Income Before Taxes on Income and
Minority Interest 371.0 71.0 329.7
Provision for Income Taxes 129.4 45.9 143.9
Minority Interest in Net Loss of
Consolidated Subsidiary 11.5
- --------------------------------------------------------------------------------
Net Income $ 230.1 $ 25.1 $ 185.8
================================================================================
Basic Earnings Per Share $ 1.00 $ 0.11 $ 0.86
Diluted Earnings Per Share $ 1.00 $ 0.11 $ 0.85
================================================================================
SEE ACCOMPANYING NOTES.
</TABLE>
136
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
TYSON FOODS, INC.
OCT. 2, 1999 AND OCT. 3, 1998 (IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C>
ASSETS 1999 1998
Current Assets:
Cash and cash equivalents $ 30.3 $ 46.5
Accounts receivable 602.5 631.0
Inventories 989.4 984.1
Assets held for sale 74.5 65.2
Other current assets 30.2 38.3
- ---------------------------------------------------------------------------
Total Current Assets 1,726.9 1,765.1
Net Property, Plant and Equipment 2,184.5 2,256.5
Excess of Investments Over Net Assets Acquired 962.5 1,035.8
Other Assets 208.8 185.1
- ---------------------------------------------------------------------------
Total Assets $5,082.7 $5,242.5
===========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 65.9 $ 84.7
Current portion of long-term debt 222.7 77.6
Trade accounts payable 351.9 330.6
Accrued salaries and wages 102.0 98.4
Federal and state income taxes payable 13.0 0.9
Accrued interest payable 22.9 22.3
Other current liabilities 208.6 216.5
- ---------------------------------------------------------------------------
Total Current Liabilities 987.0 831.0
Long-Term Debt 1,515.2 1,966.6
Deferred Income Taxes 398.0 434.4
Other Liabilities 54.5 40.1
Shareholders' Equity:
Common stock ($.10 par value):
Class A-authorized 900 million shares:
Issued 137.9 million shares in 1999 and 1998 13.8 13.8
Class B-authorized 900 million shares:
Issued 102.7 million shares in 1999 and 1998 10.3 10.3
Capital in excess of par value 740.0 740.5
Retained earnings 1,599.0 1,394.2
Other accumulated comprehensive income (1.5) (1.0)
2,361.6 2,157.8
Less treasury stock, at cost-
12 million shares in 1999 and
9.7 million shares in 1998 232.0 185.1
Less unamortized deferred compensation 1.6 2.3
- ---------------------------------------------------------------------------
Total Shareholders' Equity 2,128.0 1,970.4
- ---------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $5,082.7 $5,242.5
===========================================================================
SEE ACCOMPANYING NOTES.
</TABLE>
137
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
TYSON FOODS, INC.
THREE YEARS ENDED OCT. 2, 1999
(IN MILLIONS, EXCEPT PER SHARE DATA)
----------------------------------------------------------
1999 1998 1997
-----------------------------------------------------------
Shares Amount Shares Amount Shares Amount
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A COMMON STOCK
Beginning Balance 137.9 $ 13.8 119.5 $ 11.9 79.7 $ 8.0
Three-for-two stock split 39.8 3.9
Acquisition 18.4 1.9
-----------------------------------------------------------
Ending Balance 137.9 13.8 137.9 13.8 119.5 11.9
CLASS B COMMON STOCK
Beginning Balance 102.7 10.3 102.7 10.3 68.5 6.8
Three-for-two stock split 34.2 3.5
-----------------------------------------------------------
Ending Balance 102.7 10.3 102.7 10.3 102.7 10.3
CAPITAL IN EXCESS OF PAR VALUE
Beginning Balance 740.5 379.1 375.4
Exercise of Options (0.5) (0.2) (0.3)
Acquisitions 361.6 4.0
-----------------------------------------------------------
Ending Balance 740.0 740.5 379.1
RETAINED EARNINGS
Beginning Balance 1,394.2 1,390.8 1,232.4
Net income 230.1 25.1 185.8
Three-for-two stock split (7.4)
Dividends (25.3) (21.7) (20.0)
-----------------------------------------------------------
Ending Balance 1,599.0 1,394.2 1,390.8
OTHER ACCUMULATED COMPREHENSIVE
INCOME
Beginning Balance (1.0) (2.5) (2.8)
Currency translation adjustment (0.5) 1.5 0.3
-----------------------------------------------------------
Ending Balance (1.5) (1.0) (2.5)
TREASURY STOCK
Beginning Balance 9.7 (185.1) 8.8 (165.6) 3.2 (75.4)
Purchases 2.7 (52.1) 1.1 (22.3) 5.2 (109.6)
Exercise of options (0.4) 5.7 (0.2) 2.8 (0.2) 2.6
Acquisition (1.0) 16.8
Three-for-two stock split 1.6
Restricted shares cancelled (0.5)
-----------------------------------------------------------
Ending Balance 12.0 (232.0) 9.7 (185.1) 8.8 (165.6)
138
<PAGE>
UNAMORTIZED DEFERRED COMPENSATION
Beginning Balance (2.3) (2.5) (2.7)
Amortization of deferred
compensation 0.2 0.2 0.2
Cancellation of shares 0.5
-----------------------------------------------------------
Ending Balance (1.6) (2.3) (2.5)
-----------------------------------------------------------
Total Shareholders' Equity 228.6 $2,128.0 $1,970.4 $1,621.5
===========================================================
Total Comprehensive Income $ 229.6 $ 26.6 $ 186.1
===========================================================
SEE ACCOMPANYING NOTES.
</TABLE>
139
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
TYSON FOODS, INC.
THREE YEARS ENDED OCT. 2, 1999 (IN MILLIONS)
- ----------------------------------------------------------------------------------------------
1999 1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 230.1 $ 25.1 $185.8
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation 255.2 243.1 202.8
Amortization 35.9 33.3 27.6
Asset impairment and other charges 76.9 214.6
Deferred income taxes (13.5) (144.5) 10.5
Minority interest 11.5
Foreign currency exchange loss (2.7)
Gain on dispositions of property, plant and equipment (0.5) (2.3) (34.8)
Decrease (increase) in accounts receivable 24.8 32.8 (68.4)
(Increase) decrease) in inventories (98.8) 79.8 143.6
Increase (decrease) in trade accounts payable 20.4 (6.6) 19.2
Net change in other current assets and liabilities 7.4 21.1 54.7
- ----------------------------------------------------------------------------------------------
Cash Provided by Operating Activities 546.7 496.4 541.0
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash paid for acquisitions - (258.5) (4.3)
Additions to property, plant and equipment (363.3) (310.4) (291.2)
Proceeds from sale of assets 233.8 136.0 223.4
Net change in other assets and liabilities (36.4) (13.3) (63.8)
- ----------------------------------------------------------------------------------------------
Cash Used for Investing Activities (165.9) (446.2) (135.9)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in notes payable (18.8) (74.4) (2.2)
Proceeds from long-term debt 76.1 1,027.1 131.4
Repayments of long-term debt (382.4) (954.7) (420.8)
Purchase of treasury shares (52.1) (22.3) (109.6)
Other (17.6) (2.9) (17.2)
- ----------------------------------------------------------------------------------------------
Cash Used for Financing Activities (394.8) (27.2) (418.4)
Effect of Exchange Rate Change on Cash (2.2) (0.1) 0.3
- ----------------------------------------------------------------------------------------------
(Decrease) Increase in Cash (16.2) 22.9 (13.0)
Cash and Cash Equivalents at Beginning of Year 46.5 23.6 36.6
- ----------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 30.3 $ 46.5 $23.6
- ----------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES.
</TABLE>
140
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TYSON FOODS, INC.
NOTE 1: BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business: The Company is a fully integrated producer,
processor and marketer of chicken and chicken-based food products. The
Company is a comprehensive supplier of value-added chicken products through
food service, retail grocery stores, club stores and international
distribution channels. Although its core business is chicken, in the United
States the Company is also the second largest maker of corn and flour
tortillas under the Mexican Original brand and through its subsidiary Cobb
Vantress, a leading chicken breeding stock supplier.
Consolidation: The consolidated financial statements include the accounts of
subsidiaries including the Company's majority ownership in Tyson de Mexico.
All significant intercompany accounts and transactions have been eliminated
in consolidation.
Fiscal Year: The Company utilizes a 52- or 53- week accounting period which
ends on the Saturday closest to Sept. 30.
Cash and Cash Equivalents: Cash equivalents consist of investments in short-
term, highly liquid securities having original maturities of three months or
less, which are made as part of the Company's cash management activity. The
carrying values of these assets approximate their fair market 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 $135.4
million at Oct. 2, 1999, and $158.8 million at Oct. 3, 1998, are included in
trade accounts payable, accrued salaries and wages and other current
liabilities.
Inventories: Live poultry consists of broilers and breeders. Broilers are
stated at the lower of cost (first-in, first-out) or market and breeders are
stated at cost less amortization. Breeder costs are accumulated up to the
production stage and amortized into broiler costs over the estimated
production lives based on historical egg production. Live hogs consist of
breeding stock and finishing hogs which are carried at lower of cost (first-
in, first-out) or market. The cost of live hogs is included in cost of sales
when the hogs are sold. Broilers, live hogs, dressed and further-processed
products, seafood-related products, hatchery eggs and feed and supplies are
valued at the lower of cost (first-in, first-out) or market. At Oct. 2,
1999, live hog inventory is classified on the Consolidated Balance Sheets as
assets held for sale.
(IN MILLIONS)
- ---------------------------------------------------------------------------
1999 1998
- ---------------------------------------------------------------------------
Dressed and further-processed products $ 549.2 $ 410.4
Live poultry 290.8 286.9
Seafood and swine - 136.5
Hatchery eggs and feed 67.4 71.5
Supplies 82.0 78.8
- ---------------------------------------------------------------------------
$ 989.4 $ 984.1
- ---------------------------------------------------------------------------
141
<PAGE>
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 three to 12 years, vessels of 16 to 30
years and other of three to 20 years.
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 Company reviews the carrying value of excess
of investments over net assets acquired at each balance sheet date to assess
recoverability from future operations using undiscounted cash flows.
Impairments are recognized in operating results to the extent that carrying
value exceeds fair value. At Oct. 2, 1999 and Oct. 3, 1998, the accumulated
amortization of excess of investments over net assets acquired was $225.4
million and $196.4 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 10 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. The Company pays quarterly cash dividends to
Class A and Class B shareholders. The Company paid Class A dividends per
share of $0.115, $0.10 and $0.095 and Class B dividends per share of $0.104,
$0.09 and $0.086 in 1999, 1998 and 1997, respectively.
On Jan. 10, 1997, the Company's Board of Directors authorized a three-
for-two stock split in the form of a stock dividend, effective Feb. 15, 1997,
for shareholders of record on Feb. 1, 1997.
Stock-Based Compensation: Stock-based compensation is recognized using the
intrinsic value method. For disclosure purposes, pro forma net income and
earnings per share impacts are provided as if the fair value method had been
applied.
Financial Instruments: Periodically, the Company uses derivative financial
instruments to reduce its exposure to various market risks. The Company does
not regularly engage in speculative transactions, nor does the Company
regularly hold or issue financial instruments for trading purposes. Contracts
that effectively meet risk reduction and correlation criteria are recorded
using hedge accounting. Financial instruments which do not meet the criteria
for hedge accounting are marked-to-market with gains or losses reported
currently in earnings. Interest rate swaps are used to hedge exposure to
changes in interest rates under various leveraged equipment loans.
Settlements of interest rate swaps are accounted for as an adjustment to
interest expense. Commodity futures and options are used to hedge a portion
of the Company's purchases of certain commodities for future processing
requirements. Such contracts are accounted for as hedges, with gains and
losses recognized as part of cost of goods sold, and generally have terms of
less than 15 months. Foreign currency forwards and option contracts are used
to hedge sale and debt transactions denominated in foreign currencies to
reduce the currency risk associated with fluctuating exchange rates. Such
contracts generally have terms of less than one year. Unrealized gains and
losses are deferred as part of the basis of the underlying transaction.
142
<PAGE>
Advertising and Promotion Expenses: Advertising and promotion expenses are
charged to operations in the period incurred. Advertising and promotion
expenses for 1999, 1998 and 1997 were $300.6 million, $294.2 million and
$233.2 million, respectively.
Use of Estimates: The consolidated financial statements are prepared in
conformity with generally accepted accounting principles which require
management to make estimates and assumptions that affect the amounts reported
in the consolidated financial statements and accompanying notes. Actual
results could differ from those estimates.
NOTE 2: DISPOSITIONS AND ASSETS HELD FOR SALE
Effective Sept. 28, 1999, the Company signed a letter of intent to sell its
wholly-owned subsidiary, The Pork Group, Inc. (The Pork Group) to Smithfield
Foods, Inc. (Smithfield). The Company will receive approximately three
million shares of Smithfield common stock, subject to certain restrictions.
Certain assets of The Pork Group with a fair value of approximately $70
million are classified as assets held for sale at Oct. 2, 1999.
Additionally, the Company has accrued expenses related to the closure of
certain assets not purchased by Smithfield. The Company's operating results
for the fiscal year ended Oct. 2, 1999 include a pre-tax charge of $35.2
million related to the anticipated loss on the sale and closure of these
assets. The transaction is subject to the successful negotiation of a
definitive agreement and is expected to close by the second quarter of fiscal
2000.
On July 17, 1999, the Company completed the sale of the assets of Tyson
Seafood Group in two separate transactions. Under the terms of the
agreements, the Company received proceeds of approximately $165 million,
which was used to reduce indebtedness, and subsequently collected receivables
totaling approximately $16 million. The Company recognized a pretax loss of
approximately $19.2 million on the sale of the seafood assets.
Effective Dec. 31, 1998, the Company sold Willow Brook Foods, its
integrated turkey production and processing business, and its Albert Lea,
Minn., processing facility which primarily produced sausages, lunch and deli
meats. In addition, on Dec. 31, 1998, the Company sold its National Egg
Products Company operations in Social Circle, Ga. These facilities were sold
for amounts that approximated their carrying values. These operations, which
were reflected in assets held for sale at Oct. 3, 1998, were acquired as part
of the acquisition of Hudson Foods, Inc. (Hudson or Hudson Acquisition) in
January 1998. The remaining balance of assets held for sale at Oct. 3, 1998,
relates to facilities identified for closing under the Company's
restructuring program which are expected to be disposed of within the next 12
months.
Effective Nov. 25, 1996, the Company sold its beef further-processing
operations, known as Gorges/Quik-to-Fix Foods, resulting in a pretax gain of
$41 million which was recorded in other income for fiscal 1997 in the
Consolidated Statements of Income. The operating results of this facility
were not material to the Company in 1997.
NOTE 3: ACQUISITIONS
On Jan. 9, 1998, the Company completed the acquisition of Hudson Foods, Inc.
At the effective time of the acquisition, the Class A and Class B
shareholders of Hudson received approximately 18.4 million shares of the
Company's Class A common stock valued at approximately $363.5 million and
approximately $257.4 million in cash. The Company borrowed funds under its
commercial paper program to finance the cash portion of the Hudson
143
<PAGE>
Acquisition and repay approximately $61 million under Hudson's revolving
credit facilities. The Hudson Acquisition has been accounted for as a
purchase and the excess of investment over net assets acquired is being
amortized straight-line over 40 years. The Company's consolidated results of
operations include the operations of Hudson since the acquisition date. The
following unaudited pro forma information shows the results of operations as
though the purchase of Hudson had been made at the beginning of fiscal 1997.
(In millions, except per share data)
-----------------------
1998 1997
-----------------------
Net sales $7,831.0 $8,020.8
Net income 16.8 140.3
Basic Earnings Per Share 0.07 0.60
Diluted Earnings Per Share $ 0.07 $ 0.59
========================
The unaudited pro forma results are not necessarily indicative of the actual
results of operations that would have occurred had the purchase actually been
made at the beginning of 1997, or the results that may occur in the future.
NOTE 4: IMPAIRMENT AND OTHER CHARGES
In July 1999, the Company signed a letter of intent to sell Mallard's Food
Products (Mallard's) for an amount less than net book value. The sale of
Mallard's was not consummated. However, based upon these negotiations and
the Company's cash flow projections, management believes that certain long-
lived assets and related excess of investments over net assets acquired are
impaired. The Company recorded in the fourth quarter of 1999 pretax charges
totaling $22.5 million ($0.10 per share) for impairment of property and
equipment and write-down of related excess of investments over net assets
acquired of Mallard's. Management expects that Mallard's will continue to be
a part of the Prepared Foods Group.
On Aug. 28, 1998, the Company's Board of Directors approved management's
proposed restructure plan. The restructuring, which resulted in asset
impairment and other charges described below, was in furtherance of the
Company's previously stated objective to focus on its core business, chicken.
The acquisition of Hudson in 1998, and the assimilation of Hudson's
facilities and operations into the Company's business permitted the Company
to review and rationalize the productive capabilities and cost structure of
its core business. The restructuring included, among other things, the
closure of eight plants and feedmills resulting in work force reductions, the
writedown of excess of investments over net assets acquired allocated to
closed facilities, the reconfiguration of various production facilities and
the writedown to estimated net realizable value of certain seafood assets
which were sold in fiscal 1999.
In 1998, as a result of the restructuring, the Company recorded pretax
charges totaling $214.6 ($0.68 per share) consisting of $142.2 million for
asset impairment of property, plant and equipment, writedown of related
excess of investments over net assets acquired and severance costs, $48.4
million for losses in the Company's export business to Russia which had been
adversely affected by the continuing economic problems in Russia and $24
million for other charges related primarily to workers compensation and
employment practice liabilities. These charges were classified in the
Consolidated Statements of Income as $142.2 million in asset impairment and
other charges, $48.4 million in selling expenses, $20.5 million in cost of
sales and $3.5 million in other expense. Additionally, the foreign losses
were netted with accounts receivable on the Consolidated Balance Sheets.
144
<PAGE>
During the fourth quarter of fiscal 1998, the Russian Ruble was devalued
from 6.3 to 16.0. This event and other related economic factors in Russia
resulted in the Company recognizing losses of $48.4 million.
The majority of the $24 million charge noted above relates primarily to
revisions to the Company's estimated liabilities for workers compensation and
employment practice related matters. This charge is based upon two separate
actuarial studies completed during the fourth quarter of fiscal 1998.
The major components of the asset impairment and related charges
consisted of the following:
(IN MILLIONS)
- -----------------------------------------------------------------------------
1999 1998
- -----------------------------------------------------------------------------
Impairment of property, plant and equipment $36.2 $120.7
Writedown of related excess of investments
over net assets acquired 21.5 19.3
Loss on sale of seafood assets 19.2 -
Severance and other related costs - 2.2
- -----------------------------------------------------------------------------
$76.9 $142.2
=============================================================================
The impairment charge represents the excess of the carrying value of
those assets discussed above over their fair value less cost to sell.
Impaired assets that are expected to be disposed of within the next 12 months
are included in assets held for sale.
The writedown of excess of investments over net assets acquired is
related to plant closings and related book value impairments, which
originated from prior business acquisitions. Substantially, all of the
severance and related costs were paid in fiscal 1999.
NOTE 5: FINANCIAL INSTRUMENTS
Interest Rate Instruments: The Company uses interest rate swap contracts on
certain borrowing transactions. Interest rate swaps with notional amounts of
$127.1 million and $141.7 million were in effect at Oct. 2, 1999, and Oct. 3,
1998, respectively. Fair values of these swaps were ($0.7)million and ($8.1)
million at Oct. 2, 1999, and Oct. 3, 1998, respectively. Fair values of
interest rate instruments are estimated amounts the Company would receive or
pay to terminate the agreements at the reporting dates. These swaps mature
from 2005 to 2008.
Commodity and Foreign Currency Contracts: At Oct. 2, 1999, and Oct. 3, 1998,
the Company held the following commodity and foreign currency contracts:
145
<PAGE>
<TABLE>
<CAPTION>
NOTIONAL AMOUNTS AND FAIR VALUES IN MILLIONS
---------------------------------------------------------------
NOTIONAL WEIGHTED AVERAGE
AMOUNTS CONTRACT/STRIKE PRICE FAIR VALUE
---------------------------------------------------------------
UNITS 1999 1998 1999 1998 1999 1998
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hedging Positions:
Long position in corn bushels 84.4 7.5 $2.21 $2.33 $(7.7) $(0.4)
Short position in corn bushels 1.4 9.7 $2.32 2.11 0.3 (0.3)
Long positions in soybean oil cwt - 0.1 - 24.24 - -
Short positions in soybean oil cwt - 0.1 - 24.40 - -
Long position in soybean meal tons 0.1 - 143.14 - 0.4 -
Sold option contracts to sell
Japanese Yen for US$ dollars - $6.5 - 109.48 - -
Purchased option contracts to
sell Japanese Yen for US$ dollars - $5.6 - 126.69 - 0.4
Foreign forward exchange
contracts dollars $7.3 - $10.13 - 7.9 -
Trading Positions:
Short positions in corn puts bushels 27.5 - 2.10 - (2.5) -
</TABLE>
Fair Value of Financial Instruments: The Company's significant financial
instruments include cash and cash equivalents, investments and debt. In
evaluating the fair value of significant financial instruments, the Company
generally uses quoted market prices of the same or similar instruments or
calculates an estimated fair value on a discounted cash flow basis using the
rates available for instruments with the same remaining maturities. As of
Oct. 2, 1999, and Oct. 3, 1998, the fair value of financial instruments held
by the Company approximated the recorded value except for long-term debt.
Fair value of long-term debt including current portion was $1.7 billion and
$2.1 billion at Oct. 2, 1999, and Oct. 3, 1998, respectively.
Concentrations of Credit Risk: The Company's financial instruments that are
exposed to concentrations of credit risk consist primarily of cash
equivalents and trade receivables. The Company's cash equivalents are in high
quality securities placed with major banks and financial institutions.
Concentrations of credit risk with respect to receivables are limited due to
the large number of customers and their dispersion across geographic areas.
The Company performs periodic credit evaluations of its customers' financial
condition and generally does not require collateral. No single group or
customer represents greater than 10% of total accounts receivable. Allowance
for doubtful accounts was $21.8 million and $85.3 million at Oct. 2, 1999 and
Oct. 3, 1998, respectively.
146
<PAGE>
NOTE 6: PROPERTY, PLANT AND EQUIPMENT
The major categories of property, plant and equipment and accumulated
depreciation, at cost, are as follows:
(IN MILLIONS)
- ----------------------------------------------------------------------------
1999 1998
- ----------------------------------------------------------------------------
Land $ 56.8 $ 57.8
Buildings and leasehold improvements 1,179.7 1,163.0
Machinery and equipment 2,033.5 2,004.6
Vessels - 83.8
Land improvements and other 111.7 112.6
Buildings and equipment under construction 223.8 262.6
- ----------------------------------------------------------------------------
3,605.5 3,684.4
Less accumulated depreciation 1,421.0 1,427.9
- ----------------------------------------------------------------------------
$2,184.5 $2,256.5
- ----------------------------------------------------------------------------
The Company capitalized interest costs of $5.2 million in 1999, $1.8
million in 1998 and $3.4 million in 1997 as part of the cost of major asset
construction projects. Approximately $134.2 million will be required to
complete construction projects in progress at Oct. 2, 1999.
NOTE 7: CONTINGENCIES
The Company is involved in various lawsuits and claims made by third parties
on an ongoing basis as a result of its day-to-day operations. Although the
outcome of such items cannot be determined with certainty, the Company's
general counsel and management are of the opinion that the final outcome
should not have a material effect on the Company's results of operations or
financial position.
On June 22, 1999, 11 current and/or former employees of the Company
filed the case of "M.H. Fox, et al. v. Tyson Foods, Inc." in the U.S.
District Court for the Northern District of Alabama claiming that the Company
has violated the requirements of the Fair Labor Standards Act. The suit
alleges that the Company has failed to pay employees for all hours worked
and/or has improperly paid them for overtime hours. The suit alleges that
employees should be paid for the time it takes them to put on and take off
certain working supplies at the beginning and end of their shifts and breaks.
The suit also alleges that the use of "mastercard" or "line" time fails to
pay employees for all time actually worked. Plaintiffs purport to represent
themselves and a class of all similarly situated current and former employees
of the Company. A total of 159 consents were filed with the complaint on
behalf of persons to join the lawsuit and, to date, approximately 3,100
consents have been filed with the court. The Company believes it has
substantial defenses to the claims made in this case and intends to
vigorously defend the case. However, neither the likelihood of unfavorable
outcome nor the amount of ultimate liability, if any, with respect to this
case can be determined at this time.
On Feb. 20, 1998, the Company and others were named as defendants in a
putative class action suit brought on behalf of all individuals who sold beef
cattle to beef packers for processing between certain dates in 1993 and 1998.
147
<PAGE>
This action, captioned "Wayne Newton, et al. v. Tyson Foods, Inc., et al.,"
U.S. District Court, Northern District of Iowa, Civil Action No. 98-30,
asserts claims under the Racketeer Influenced and Corrupt Organizations
statute as well as a common-law claim for intentional interference with
prospective economic advantage. Plaintiffs allege that the gratuities which
were the subject of a prior plea agreement by the Company resulted in a
competitive advantage for poultry products vis-a-vis beef products.
Plaintiffs' request trebled damages in excess of $3 billion, plus attorney's
fees and costs. The U.S. District Court for the Northern District of Iowa
granted the Company's Motion to Dismiss on March 26, 1999, holding that
plaintiffs lacked standing to sue. Plaintiffs timely appealed to the U.S.
Court of Appeals for the Eighth circuit. The Company is vigorously
contesting the case. Briefing of the appeal was completed in August 1999,
but no date has been set for oral argument. Based on the current status of
the matter, the Company does not believe any significant exposure exists.
On or about July 23, 1998, the Maryland Department of the Environment
(MDE) filed a Complaint for Injunctive Relief and Civil Penalty (the
Complaint) against the Company in the Circuit Court of Worcester County, Md.,
for the alleged violation of certain Maryland water pollution control laws
with respect to the Company's land application of sludge to Company owned
agricultural land near Berlin, Md. The MDE seeks, in addition to injunctive
and equitable relief, civil penalties of up to $10,000 per day for each day
the Company had allegedly operated in violation of the Maryland water
pollution control laws. The Company does not believe any penalties, if
imposed, would have a material adverse effect on the Company's results of
operations or financial condition.
On Dec. 16, 1998, Hudson Foods, Inc., Michael Gregory, Hudson's former
Director of Customer Relations and Quality Control, and Brent Wolke, the
former plant manager of Hudson's Columbus, Nebraska facility, were indicted
by a federal grand jury in Omaha, Nebraska on two counts - making false
statements to the U.S. Department of Agriculture and conspiracy to make such
statements - in connection with the August 1997 recall of Hudson beef
products suspected of containing E-Coli 0157:H7. The charges arise out of
presentations made on behalf of Hudson between Food Safety Inspection Service
officials during Hudson's cooperation with the government in attempting to
identify potentially contaminated product. The government has conceded that
the contamination did not originate in the Hudson plant and it does not
appear that any statements at issue in the indictment resulted in or are
alleged to have resulted in any illnesses. All defendants have entered not
guilty pleas and intend to vigorously defend the case at a trial which will
be held in the federal courthouse in Lincoln, Neb. According to the
government, the potential penalty for Hudson is a fine of up to $500,000 and
the individual defendants each face the possibility of up to 5 years
imprisonment and fines of up to $250,000.
The Company received notice from the Environmental Crimes Section of the
Department of Justice and the U.S. Attorney's Office for the Southern
District of Mississippi indicating that McCarty Farms, Inc. (McCarty), a
former subsidiary of the Company which has been merged into the Company, may
be pursued for alleged violations of the Federal Clean Water Act arising out
of its partial ownership of Central Industries, Inc. (Central), which
operates a rendering plant in Forest, Miss. The allegations arise from the
alleged discharge of pollutants from Central's rendering facility in Forest,
Miss. in the summer of 1995, which was prior to the Company's purchase of
McCarty in September 1995. Neither the likelyhood of unfavorable outcome nor
the amount of ultimate liability, if any, with respect to this case can be
determined at this time.
148
<PAGE>
NOTE 8: COMMITMENTS
The Company leases certain farms and other properties and equipment for which
the total rentals thereon approximated $64.2 million in 1999, $46.7 million
in 1998 and $34 million in 1997. Most farm leases have terms ranging from one
to 10 years with various renewal periods. 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 Oct. 2, 1999,
total $133.8 million composed of $45.2 million for 2000, $33.8 million for
2001, $25.3 million for 2002, $16.4 million for 2003, $8 million for 2004 and
$5.1 million for later years. These future commitments are expected to be
offset by future minimum lease payments to be received under subleases of
approximately $15.5 million.
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. The Company also
guarantees debt of outside third parties of $64.8 million.
NOTE 9: LONG-TERM DEBT
The Company has an unsecured revolving credit agreement totaling $1 billion
that supports the Company's commercial paper program. This $1 billion
facility expires in May 2002. At Oct. 2, 1999, $290.5 million in commercial
paper was outstanding under this facility.
At Oct. 2, 1999, the Company had outstanding letters of credit totaling
approximately $112.6 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 $47 million which is included in other
assets at Oct. 2, 1999. Under these leveraged loan agreements, the Company
entered into interest rate swap agreements to effectively lock in a fixed
interest rate for these borrowings.
Annual maturities of long-term debt for the five years subsequent to
Oct. 2, 1999 are: 2000-$222.7 million; 2001-$142.9 million; 2002-$321.1; 2003-
177.8 million and 2004-$29.2 million.
The revolving credit agreement 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 at fiscal year end.
Industrial revenue bonds are secured by facilities with a net book value
of $69.5 million at Oct. 2, 1999. The weighted average interest rate on all
outstanding short-term borrowing was 5.5% at Oct. 2, 1999, and Oct. 3, 1998.
149
<PAGE>
Long-term debt consists of the following:
- -------------------------------------------------------------------------------
(in millions) Maturity 1999 1998
- -------------------------------------------------------------------------------
Commercial paper
(5.9% effective rate at 10/2/99) 2002 $ 290.5 $ 506.9
Debt securities:
6.75% notes 2005 149.5 149.3
6.625% notes 2005 149.6 149.5
6.39-6.41% notes 2000 50.0 50.0
6% notes 2003 147.7 146.8
7% notes 2028 146.3 145.9
7% notes 2018 236.5 236.3
Institutional notes:
10.61% notes 1999-2001 53.1 106.3
10.84% notes 2002-2006 50.0 50.0
11.375% notes 1999-2002 8.5 12.8
Mandatory Par Put Remarketed
Securities (5.5% effective rate at 10/2/99) 2010 0.1 50.2
6.08% notes 2010 0.1 100.4
Leveraged equipment loans
(rates ranging from 4.7% to 6.0%) 2005-2008 154.5 170.5
Other various 78.8 91.7
- ------------------------------------------------------------------------------
$1,515.2 $1,966.6
==============================================================================
NOTE 10: RESTRICTED STOCK AND STOCK OPTIONS
The Company has outstanding 141,750 restricted shares of Class A stock. The
restriction expires over periods ranging from 10 to 26 years. The unamortized
portion of the restricted stock is classified on the Consolidated Balance
Sheets as deferred compensation in shareholders' equity.
The Company has a nonqualified stock option plan that provides for
granting 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 three to eight years from the date of grant and must
be exercised within 10 years of the grant date.
150
<PAGE>
A summary of the Company's stock option activity for the plan is as follows:
- -------------------------------------------------------------------------------
Shares Weighted Average
Under Exercise Price
Option Per Share
- -------------------------------------------------------------------------------
Outstanding, Sept. 28, 1996 5,468,261 $14.55
Exercised (163,906) 13.83
Canceled (560,296) 15.06
Granted 3,598,275 17.92
- -------------------------------------------------------------------------------
Outstanding, Sept. 27, 1997 8,342,334 15.99
Exercised (178,467) 14.18
Canceled (313,019) 15.84
Granted 504,700 18.00
- -------------------------------------------------------------------------------
Outstanding, Oct. 3, 1998 8,355,548 16.15
Exercised (359,999) 14.23
Canceled (631,717) 16.35
Granted 4,722,500 15.00
- -------------------------------------------------------------------------------
Outstanding, Oct. 2, 1999 12,086,332 $15.74
===============================================================================
The number of options exercisable was as follows: Oct. 2, 1999-1,870,893,
Oct. 3, 1998- 1,202,498 and Sept. 27, 1997- 806,837. The remainder of the
options outstanding at Oct. 2, 1999, are exercisable ratably through November
2007. The number of shares available for future grants was 2,368,619 and
6,459,402 at Oct. 2, 1999 and Oct. 3, 1998, respectively.
The following table summarizes information about stock options
outstanding at Oct. 2, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------- -------------------
Range of Shares Weighted Weighted Shares Weighted
Exercise Outstanding Average Average Exercisable Average
Prices Remaining Exercise Exercise
Contractual Price Price
Life(in years)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 4.82- 6.58 7,902 3.3 $ 6.43 7,902 $ 6.43
14.33-14.50 2,265,105 5.0 14.40 1,485,741 14.40
14.58-15.17 6,291,350 7.0 15.01 327,750 15.04
17.92-18.00 3,521,975 7.1 17.93 49,500 17.93
- ----------------------------------------------------------------------------------------
12,086,332 1,870,893
</TABLE>
The weighted average fair value of options granted during 1999 and 1998
is approximately $5.06 and $7.10, respectively. The fair value of each option
grant is established on the date of grant using the Black-Scholes option-
pricing model. Assumptions include an expected life of 5.5 years in 1999 and
eight years in 1998 and prior years, risk-free interest rates ranging from
5.5% to 6.4%, expected volatility of 0.2% and dividend yield of 0.5% in both
1999 and 1998.
151
<PAGE>
The Company applies Accounting Principles Board Opinion No. 25 and
related Interpretations in accounting for its employee stock option plans.
Accordingly, no compensation expense was recognized for its stock option
plans. Had compensation cost for the employee stock option plans been
determined based on the fair value method of accounting for the Company's
stock option plans, the tax-effected impact would be as follows:
(In millions, except per share data)
_____________________________________________________________________________
1999 1998 1997
_____________________________________________________________________________
Net Income
As reported $230.1 $25.1 $185.8
Pro forma 226.3 21.0 182.0
Earnings Per Share
As reported
Basic 1.00 0.11 0.86
Diluted 1.00 0.11 0.85
Pro forma
Basic 0.98 0.09 0.84
Diluted 0.98 0.09 0.83
_____________________________________________________________________________
Pro forma net income reflects only options granted in 1999, 1998 and
1997. Additionally, the pro forma disclosures are not likely to be
representative of the effects on reported net income for future years.
NOTE 11: 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 $33.1
million, $31.8 million and $26.8 million in 1999, 1998 and 1997,
respectively.
NOTE 12: 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
$7.4 million in 1999, $5.4 million in 1998 and $5.6 million in 1997. Other
facilities have been leased from the Company's profit sharing plan and other
officers and directors for rentals totaling $3.3 million in 1999, $3.4
million in 1998 and $5.3 million in 1997.
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 $10.4 million in 1999, $11.5 million
in 1998 and $12.3 million in 1997.
152
<PAGE>
NOTE 13: INCOME TAXES
Detail of the provision for income taxes consists of:
(IN MILLIONS)
- ----------------------------------------------------------------------------
1999 1998 1997
- ----------------------------------------------------------------------------
Federal $121.2 $ 50.1 $129.7
State 8.2 (4.2) 14.2
- ----------------------------------------------------------------------------
$129.4 $ 45.9 $143.9
============================================================================
Current $142.9 $ 80.6 $133.4
Deferred (13.5) (34.7) 10.5
- ----------------------------------------------------------------------------
$129.4 $ 45.9 $143.9
============================================================================
The reasons for the difference between the effective income tax rate and
the statutory U.S. federal income tax rate are as follows:
- ---------------------------------------------------------------------------
1999 1998 1997
- ---------------------------------------------------------------------------
U.S. federal income tax rate 35.0% 35.0% 35.0%
Amortization of excess of investments
Over net assets acquired 5.3 23.6 8.6
State income taxes (benefit) 1.6 (3.8) 2.8
Foreign losses (benefit) (6.3) 10.9 -
Other (0.7) (1.0) (2.8)
- ---------------------------------------------------------------------------
34.9% 64.7% 43.6%
===========================================================================
The Company follows the liability method in accounting 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. Significant components of the
Company's deferred tax liabilities as of Oct. 2, 1999, and Oct. 3, 1998, are
as follows:
- ----------------------------------------------------------------------------
(IN MILLIONS) 1999 1998
- ----------------------------------------------------------------------------
Basis difference in property, plant and equipment $236.8 $289.9
Suspended taxes from conversion to accrual method 127.6 135.1
Other 33.6 9.4
- ----------------------------------------------------------------------------
$398.0 $434.4
============================================================================
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, legislation was enacted in
1997 that now requires the Company to pay down the suspense account over 20
years.
153
<PAGE>
NOTE 14: EARNINGS PER SHARE
The Company adopted Financial Accounting Standards Board (FASB) Statement No.
128, "Earnings Per Share," effective for the year ending Oct. 3, 1998. All
prior-period earnings per share data have been restated. This Statement
requires dual presentation of basic and diluted earnings per share on the
face of the income statement. Stock options issued pursuant to Company
compensation plans are the only dilutive securities in all periods presented.
The following table sets forth the computation of basic and diluted
earnings per share:
(In millions, except per share data)
1999 1998 1997
---- ---- ----
Numerator:
Net Income $230.1 $ 25.1 $185.8
====== ====== ======
Denominator:
Denominator for basic
earnings per share-
weighted average shares 229.9 226.7 216.3
Effect of dilutive securities:
Employee stock options 1.1 1.2 1.9
------ ------ ------
Denominator for diluted
earnings per share-
adjusted weighted average
shares and assumed conversions 231.0 227.9 218.2
====== ====== ======
Basic earnings per share $ 1.00 $ 0.11 $ 0.86
====== ====== ======
Diluted earnings per share $ 1.00 $ 0.11 $ 0.85
====== ====== ======
NOTE 15: COMPREHENSIVE INCOME
Effective at the beginning of fiscal 1999, the Company adopted the provisions
of FASB Statement No. 130, Reporting Comprehensive Income, which modifies the
financial statement presentation of comprehensive income and its components.
This statement requires companies to classify items of comprehensive income
by their nature in a financial statement and display the accumulated balance
of other comprehensive income separately from retained earnings and capital
in excess of par value in the consolidated financial statements. The
Company's comprehensive income item consists of foreign currency translation
adjustments.
NOTE 16: SEGMENT REPORTING
In 1999, the Company adopted FASB Statement No. 131, Disclosures about
Segments of an Enterprise and Related Information. Under the provisions of
Statement No. 131, public business enterprises must report financial and
descriptive information about its reportable segments.
The Company is a fully integrated producer, processor and marketer of
a variety of food products. The Company identifies segments based on the
products offered and the nature of customers which results in five
reported business segments: Food Service, Consumer Products,
International, Swine and Seafood. Food service includes fresh, frozen and
value-enhanced poultry products sold through food service and specialty
154
<PAGE>
distributors who deliver to restaurants, schools and other accounts.
Consumer products include fresh, frozen and value-enhanced poultry
products sold through retail markets for at-home consumption and through
wholesale club markets targeted to small foodservice operators,
individuals and small businesses. The Company's international segment
markets and sells the full line of Tyson chicken products throughout the
world. The Company's swine segment includes feeder pig finishing, and
marketing of swine to regional and national packers. The Company has
signed a letter of intent to sell the swine business which is expected to
close in the second quarter of fiscal 2000. Seafood, which was sold on
July 17, 1999, includes branded surimi-based seafood offerings, such as
analog crabmeat, lobster, shrimp and scallops marketed both domestically
and internationally. The Company measures segment profit as gross profit
less selling expenses. The majority of revenue included in the other
category is derived from the Company's Specialty Products and Prepared
Foods groups, the Company's wholly-owned subsidiaries involved in
supplying poultry breeding stock and trading agricultural goods worldwide
as well as the Company's turkey and egg products facilities which were
sold on Dec. 31, 1998. Sales between reportable segments are recorded at
cost. The majority of identifiable assets in the other category includes
excess of investments over net assets acquired, investments and other
assets and other corporate unallocated assets.
Information on segments and a reconciliation to income before taxes
and minority interest are as follows:
<TABLE>
<CAPTION> in millions
Food Consumer
Service Products International Swine Seafood Other Consolidated
<S> <C> <C> <C> <C> <C> <C> <C>
Fiscal year ended October 2, 1999
Sales $3,353.9 $2,251.9 $645.2 $109.5 $189.2 $ 813.2 $7,362.9
Gross profit less selling expenses 311.0 241.7 67.5 (63.0) 22.2 154.8 734.2
Other operating expenses 247.3
Other expense 115.9
Income before taxes on
Income and Minority Interest 371.0
Depreciation 114.2 57.6 0.7 3.8 28.7 50.2 255.2
Asset impairment and other charges - - - 35.2 19.2 22.5 76.9
Identifiable Assets 1,924.8 1,161.4 194.0 70.0 - 1,732.5 5,082.7
Additions to Property,
Plant and Equipment 153.2 129.8 15.5 4.5 6.1 54.2 363.3
Fiscal year ended October 3, 1998
Sales $3,329.4 $2,074.0 $592.5 $160.4 $214.1 $1,043.7 $7,414.1
Gross profit less selling expenses 232.0 179.3 8.4 (20.7) 3.2 109.6 511.8
Other operating expenses 308.2
Other expense 132.6
Income Before Taxes on
Income and Minority Interest 71.0
Depreciation 108.1 62.1 1.2 3.7 22.8 45.2 243.1
Asset impairment and other charges 50.7 38.6 48.3 - 47.0 30.0 214.6
Identifiable Assets 1,822.2 1,037.7 188.4 128.2 221.0 1,845.0 5,242.5
Additions to Property,
Plant and Equipment 154.6 69.0 0.1 5.0 26.9 54.8 310.4
155
<PAGE>
Fiscal year ended September 27, 1997
Sales $2,793.3 $1,829.6 $664.1 $217.6 $266.0 $585.1 $6,355.7
Gross profit less selling expenses 187.9 108.3 28.5 22.8 24.3 152.6 524.4
Other operating expenses 124.5
Other expense 70.2
Income Before Taxes on
Income and Minority Interest 329.7
Depreciation 84.6 49.6 1.1 3.5 20.8 43.2 202.8
Identifiable Assets 1,538.3 824.2 179.9 134.6 288.1 1,445.9 4,411.0
Additions to Property,
Plant and Equipment 168.8 49.3 0.4 3.6 21.7 47.4 291.2
</TABLE>
The majority of the Company's operations are domiciled in the United
States. More than 97% of sales to external customers for the fiscal years
ended 1999, 1998 and 1997 were sourced from the United States. Approximately
$3 billion of long-lived assets were located in the United States at fiscal
years ended 1999, 1998, and 1997. Approximately $74 million, $64 million, and
$9 million of long-lived assets were located in foreign countries, primarily
Mexico, at fiscal years ended 1999, 1998, and 1997, respectively.
The Company sells certain of its products in foreign markets, primarily
Canada, China, Georgia, Guatemala, Japan, Puerto Rico, Russia and Singapore
as well as certain Middle Eastern countries and Caribbean countries. The
Company's export sales for 1999, 1998 and 1997 totaled $546 million, $687
million and $762.5 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 1999, 1998 and 1997, respectively.
NOTE 17: SUPPLEMENTAL INFORMATION
(IN MILLIONS)
- ----------------------------------------------------------------------------
1999 1998 1997
- ----------------------------------------------------------------------------
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest $128.3 $159.9 $123.4
Income Taxes 125.4 196.9 124.1
- ----------------------------------------------------------------------------
156
<PAGE>
NOTE 18: QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION
(IN MILLIONS EXCEPT PER SHARE DATA)
- ------------------------------------------------------------------------------------
1999 First Second Third Fourth
Quarter Quarter Quarter Quarter
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $1,824.7 $1,841.3 $1,881.3 $1,815.6
Gross Margin 305.3 322.2 350.2 331.1
Net Income 55.8 64.6 68.4 41.3
Basic Earnings Per Share 0.24 0.28 0.30 0.18
Diluted Earnings Per Share 0.24 0.28 0.30 0.18
====================================================================================
1998
- ------------------------------------------------------------------------------------
Sales $1,520.8 $1,870.8 $1,953.6 $2,068.9
Gross Margin 260.7 268.8 308.4 316.1
Net Income (Loss) 44.9 23.3 46.6 (89.7)
Basic Earnings (Loss) Per Share 0.21 0.10 0.20 (0.39)
Diluted Earnings (Loss) Per Share 0.21 0.10 0.20 (0.39)
====================================================================================
</TABLE>
157
<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 proper 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.
During 1999, certain of these controls were reviewed and strengthened.
Additionally, the Company has adopted a code of conduct and has hired an
experienced full-time compliance officer. 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.
Ernst & Young LLP, independent auditors, have audited the accompanying
consolidated financial statements.
November 18, 1999
/s/Wayne Britt /s/Steven Hankins
- ----------------------- ----------------------------
Wayne Britt Steven Hankins
Chief Executive Officer Executive Vice President and
Chief Financial Officer
158
<PAGE>
REPORT OF INDEPENDENT AUDITORS
BOARD OF DIRECTORS AND SHAREHOLDERS
Tyson Foods, Inc.
We have audited the accompanying consolidated balance sheets of Tyson Foods,
Inc., as of October 2, 1999, and October 3, 1998, and the related
consolidated statements of income, shareholders' equity, and cash flows for
each of the three years in the period ended October 2, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Tyson Foods, Inc., at October 2, 1999, and October 3, 1998, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended October 2, 1999, in conformity with generally
accepted accounting principles.
Ernst & Young
Tulsa, Oklahoma /s/Ernst & Young LLP
November 18, 1999 --------------------
Ernst & Young LLP
159
<PAGE>
BOARD OF DIRECTORS
TYSON FOODS, INC.
DON TYSON, 69, senior chairman of the board of directors, served as chairman
of the board until April 1995 when he was named senior chairman. Mr. Tyson
served as chief executive officer until March 1991 and has been a member of
the board since 1952. (1)
JOE STARR, 66, a private investor, served as a vice president of Tyson until
1996. Mr. Starr has been a member of the board since 1969.
NEELY CASSADY, 71, is chairman of the board of Cassady Investments, Inc. and
served as a senator in the Arkansas General Assembly from 1983 to 1996. Mr.
Cassady has been a member of the board since 1974. (2,3,4)
FRED VORSANGER, 71, is a private business consultant, manager of Bud Walton
Arena and vice president emeritus of finance and administration at the
University of Arkansas. He is a director of McIlroy Bank & Trust Co. of
Fayetteville, Ark. Mr. Vorsanger was a city director and mayor of
Fayetteville and was a vice president at the U of A from 1968 until 1988. He
has been a member of the board since 1977. (2,3,4)
LELAND TOLLETT, 62, retired as chairman and chief executive officer Oct. 1,
1998. He had been chairman of the board since April 1995. He had served as
vice chairman, president and chief executive officer since March 1991 and as
president and chief operating officer from 1983 until 1991. Mr. Tollett has
been a member of the board since 1984. (1)
JOHN TYSON, 46, was named chairman of the board of directors effective Oct.
1, 1998. He had served as vice chairman since 1997. Previously he was
president of the beef and pork division and director of governmental, media
and public relations. He also has served as vice president and director of
engineering/environmental/capital spending, as vice president of
marketing/corporate accounts and as special projects manager. Mr. Tyson has
been a member of the board since 1984. (1)
SHELBY MASSEY, 66, is a farmer and a private investor. He served as senior
vice chairman of the board of directors from 1985 to 1988 and has been a
member of the board since 1985. (3,4)
BARBARA TYSON, 50, is vice president of the company. Ms. Tyson has served in
related capacities for the past eight years and was previously a regional
sales manager in the food service division. Ms. Tyson has been a member of
the board since 1988.
LLOYD HACKLEY, 58, is president and chief executive officer of Lloyd V.
Hackley and Associates, Inc. He was president of the North Carolina Community
College System from 1995 to 1997 and was chancellor and a tenured professor
of political science at Fayetteville State University, Fayetteville, N.C.,
from 1988 to 1995. Mr. Hackley has been a member of the board since 1992. (2,4)
DONALD WRAY, 62, is president of Tyson Foods. He was named president and
chief operating officer in April 1995 after serving as COO since 1991 and as
senior vice president of the sales and marketing division since 1985. Mr.
Wray has been a member of the board since 1994. Although he plans to retire
in March 2000, Mr. Wray will remain a member of the board. (1)
160
<PAGE>
GERALD JOHNSTON, 56, a private investor, was executive vice president of
finance for Tyson from 1981 to 1996 when he stepped down and became a
consultant to the company. Mr. Johnston has been a member of the board since
1996.
WAYNE BRITT, 50, was named chief executive officer and was elected to the
board of directors of Tyson effective Oct. 1, 1998. In his 27 years with
Tyson, Mr. Britt has served as executive vice president and chief financial
officer; senior vice president, international division; vice president,
wholesale club sales and marketing; secretary-treasurer; controller; cost and
budget manager; and complex controller. (1)
JIM KEVER, 46, founder of ENVOY Corporation of Nashville, Tenn., was elected
to the Tyson Board of Directors in May 1999. ENVOY Corporation, an innovator
in electronic claims processing, merged with Quintiles Transnational, a multi-
national clinical research organization. Mr. Kever serves as head of the
ENVOY division of Quintiles and serves on the Quintiles Board of Directors. (2)
(1) Executive Committee
(2) Audit Committee
(3) Compensation Committee
(4) Special Committee
161
<PAGE>
CORPORATE AND EXECUTIVE OFFICERS
TYSON FOODS, INC.
Mike Baker
President, Production Services
Les R. Baledge
Executive Vice President and Associate General Counsel
James Bell
President, Cobb-Vantress, Inc.
Wayne Britt
Chief Executive Officer
Roy D. Brister
Vice President, Poultry Research and Nutrition
Ellis Brunton
Vice President, Research and Quality Assurance
Wayne Butler
President, Prepared Foods Group
Jim Cate
President, Specialty Products Group
Gary D. Cooper
Vice President and Chief Information Officer
John D. Copeland
Executive Vice President, Ethics, Food Safety and Environmental Compliance
James G. Ennis
Vice President, Controller and Chief Accounting Officer
Louis C. Gottsponer, Jr.
Assistant Secretary and Director of Investor Relations
Steven Hankins
Executive Vice President and Chief Financial Officer
R. Read Hudson
Secretary
Greg Huett
Senior Vice President and General Manager, Wholesale Club Division
Clark Irwin
Senior Vice President and General Manager, Food Service Distribution and
Chain Accounts
Carl G. Johnson
Executive Vice President, Administrative Services
162
<PAGE>
John S. Lea
Executive Vice President and
Chief Marketing Officer
Dennis Leatherby
Senior Vice President, Finance and Treasurer
Greg W. Lee
Chief Operating Officer
Bernard Leonard
Senior Vice President and General Manager, QSR Chain Division
Bob E. Love
Vice President, Research and Development
Bill Lovette
President, International Group
Joe Moran
Senior Vice President and General Manager, Food Service Refrigerated
and Deli Divisions
Cary Richardson
Senior Vice President and General Manager, Retail Division
Donnie Smith
Executive Vice President, Supply Chain Management
Randy Smith
Senior Vice President and General Manager, QSR Chain Division
John Thomas
President, The Pork Group, Inc.
John H. Tyson
Chairman of the Board of Directors
David L. Van Bebber
Vice President and Director of Legal Services
William E. Whitfield III
Senior Vice President and General Manager of Accounting, Poultry Operations
Donald E. Wray
President, Tyson Foods, Inc.
163
<PAGE>
CORPORATE INFORMATION
TYSON FOODS, INC.
Closing Price of Company's Common Stock
________________________________________________________________________________
Fiscal Year 1999 Fiscal Year 1998
________________________________________________________________________________
High Low High Low
________________________________________________________________________________
First Quarter $25.38 $19.56 $23.88 $17.88
- -------------------------------------------------------------------------------
Second Quarter 21.75 18.56 20.81 18.06
- --------------------------------------------------------------------------------
Third Quarter 23.56 19.19 24.13 18.94
- --------------------------------------------------------------------------------
Fourth Quarter 23.31 15.00 24.44 16.50
- --------------------------------------------------------------------------------
As of Oct. 2, 1999, the Company had 34,828 Class A common shareholders of record
and 17 Class B common shareholders of record.
DirectService Shareholder Investment Program
Tyson has authorized First Chicago Trust Company to implement its program for
dividend reinvestment and direct purchase of shares for current as well as
new investors of Tyson Class A Common Stock. This program provides
alternatives to traditional retail brokerage methods of purchasing, holding
and selling Tyson stock. All inquiries concerning this program should be
directed to:
DirectSERVICE Program for Shareholders of Tyson Foods, Inc.
c/o First Chicago Trust Company
P.O. Box 2598
Jersey City, New Jersey 07303-2598
1-800-317-4445 (current shareholders)
1-800-822-7096 (non-shareholders)
Change of Address
If your Tyson stock is registered in your own name(s), send change of address
information to First Chicago Trust Company.
Multiple Dividend Checks and Duplicate Mailings
If your Tyson stock is registered in similar but different names (e.g. Jane
A. Doe and J.A. Doe) we are required to create separate accounts and mail
dividend checks and proxy materials separately, even if the mailing addresses
are the same. To consolidate accounts, contact First Chicago Trust Company.
Lost or Stolen Stock Certificates or Legal Transfers
If your stock certificates are lost, stolen, or in some way destroyed, or if
you wish to transfer registration, notify First Chicago Trust Company in
writing. Include the exact name(s) and Social Security or tax identification
number(s) in which the stock is registered and, if possible, the numbers and
issue dates of the certificates.
164
<PAGE>
Corporate Data
Tyson Foods, Inc., which employs approximately 69,000 people, is the world's
largest fully integrated producer, processor and marketer of chicken and
chicken-based food products. Tyson is a comprehensive supplier of value-added
chicken products through food service, retail grocery stores, club stores and
international distribution channels. Although its core business is chicken,
in the United States, Tyson is also the second largest maker of corn and
flour tortillas under the Mexican Originalr brand and, through its
subsidiary, Cobb Vantress, a leading chicken breeding stock supplier.
Stock Exchange Listings
The Class A common stock of the Company is traded on the New York Stock
Exchange under the symbol TSN.
Corporate Headquarters
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
Telephone (501) 290-4000
Availability of Form 10-K
A copy of the Company's Form 10-K, as filed with the Securities and Exchange
Commission for fiscal 1999, may be obtained by Tyson shareholders by writing
to:
Director of Investor Relations
Tyson Foods, Inc.
P.O. Box 2020
Springdale, Arkansas 72765-2020
Telephone (501) 290-4826
Fax (501) 290-6577
E-mail:[email protected]
Annual Meeting
The Annual Meeting of Shareholders will be held at 10 a.m. Friday, January
14, 2000, at the Walton Arts Center, Fayetteville, Arkansas. Shareholders who
cannot attend the meeting are urged to exercise their right to vote by proxy.
General Counsel
James B. Blair, Esq.
5200 S. Thompson
Springdale, Arkansas 72764
Independent Auditors
Ernst & Young LLP
3900 One Williams Center
Tulsa, Oklahoma 74101
Telephone (918)560-3600
Transfer Agent
First Chicago Trust Company of New York,
a division of EquiServe
P.O. Box 2500
Jersey City, New Jersey 07303
Telephone (800) 317-4445
Hearing Impaired Telephone TDD(201)222-4955
165
<PAGE>
Shareholders also may contact First Chicago Trust Company via the Internet at
www.equiserve.com.
Investor Relations
Financial analysts and others seeking investor-related information should
contact:
Director of Investor Relations
Tyson Foods, Inc.
P.O. Box 2020
Springdale, AR 72765-2020
Telephone (501)290-4826
Fax (501) 290-6577
E-mail:[email protected]
News Releases
News releases and other information concerning Tyson Foods can be faxed by
calling PR Newswire at (800)758-5804, ext. 113769.
Tyson on the Internet
Information about Tyson Foods is available on the Internet at www.tyson.com.
Legal Notice
The term "Tyson" and such terms as "the company," "our," "we" and "us" may
refer to Tyson Foods, Inc., to one or more of its consolidated 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.
166
<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
Hudson Foods, Inc. Delaware Hudson Foods, Inc.
The Pork Group, Inc. Delaware The Pork Group, Inc.
Tyson Breeders, Inc. Delaware Tyson Breeders, Inc.
Tyson Farms, Inc. North Carolina Tyson Farms, Inc.
Tyson Farms of Texas, Texas Tyson Farms of Texas,
Inc. Inc.
Tyson Foreign Sales, Inc. Barbados
Tyson International Bermuda Tyson International
Company, Ltd. Company, Ltd.
Tyson International Delaware Tyson International
Holding Company Holding Company
Tyson Mexican Original, Inc. Delaware Tyson Mexican Original,
Inc.
Tyson Poultry, Inc. Delaware Tyson Poultry, Inc.
Tyson Shared Services, Inc. Delaware Tyson Shared Services,
Inc.
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 are as follows:
AAFC International, Inc. U.S. Virgin Islands
Benton Sales, Ltd. British Virgin Islands
Cobb Denmark A/S Denmark
Cobb-Espanola, S.A. Spain
Cobb France E.U.R.L. France
Cobb-Poland B.V. Poland
Cobb (Straffon)Ireland, Ltd Ireland
Global Employment Delaware
Services Inc.
Gorges Foodservice, Texas
Inc.
Hudson Development Company Arkansas
Hudson Foods Foreign
Sales, Inc. US Virgin Islands
Hudson Midwest Foods, Inc. Nebraska
Meat Products Exports, Inc. US Virgin Islands
National Comp Care, Inc. Delaware
Oaklawn Capital Corporation Delaware
Oaklawn Capital-Mississippi, Mississippi
LLC
167
<PAGE>
Oaklawn Sales, Ltd. British Virgin Islands
TPM Holding Company Delaware
TyNet Corporation Delaware
Tyson Export Sales, U.S. Virgin
Inc. Islands
Tyson Foreign Sales, Inc. Barbados
Tyson Marketing, Ltd. Ontario, Canada
Tyson Seafood Group- Japan
Japan, Inc.
Universal Plan Hong Kong
Investments, Ltd.
168
<PAGE>
Exhibit 23
Consent of Ernst & Young LLP, 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 18, 1999, included in the 1999 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; 333-02135;
2-81928; 2-44550; 33-53028; 333-22883; 333-22881; 33-54716;
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. 333-53171) and the
related prospectus of our reports dated November 18, 1999,
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 October 2, 1999.
December 15, 1999 /s/ Ernst & Young LLP
Tulsa, Oklahoma ---------------------
Ernst & Young LLP
169
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FISCAL
1999 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> OCT-02-1999
<PERIOD-END> OCT-02-1999
<CASH> 30
<SECURITIES> 0
<RECEIVABLES> 603
<ALLOWANCES> 0
<INVENTORY> 989
<CURRENT-ASSETS> 1,727
<PP&E> 2,185
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<TOTAL-ASSETS> 5,083
<CURRENT-LIABILITIES> 987
<BONDS> 1,515
0
0
<COMMON> 24
<OTHER-SE> 2,104
<TOTAL-LIABILITY-AND-EQUITY> 5,083
<SALES> 7,363
<TOTAL-REVENUES> 7,363
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</TABLE>
