Tyson Foods 2000 Annual Report Download - page 24

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MANAGEMENT’S DISCUSSION AND ANALYSIS
TYSON FOODS, INC. 2000 ANNUAL REPORT
ACQUISITIONS On January 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 $364 million and
approximately $257 million in cash. The Company borrowed
funds under its commercial paper program to finance the cash
portion of the Hudson Acquisition and to repay approxi-
mately $61 million under Hudson’s revolving credit facilities.
The Hudson Acquisition was 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 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 million on the sale of the seafood assets.
Effective December 31, 1998, the Company sold Willow
Brook Foods, its integrated turkey production and process-
ing business, and its Albert Lea, Minn., processing facility
which primarily produced sausages, lunch and deli meats.
In addition, on December 31, 1998, the Company sold its
National Egg Products Company operations in Social Circle,
Ga. These facilities were sold for amounts that approxi-
mated their carrying values. These operations were acquired
as part of the Hudson Acquisition.
IMPAIRMENT AND OTHER CHARGES In the fourth
quarter of fiscal 1999, the Company recorded a pretax charge
totaling $35 million related to the anticipated loss on the sale
and closure of the Pork Group assets. In the first quarter of
fiscal 2000, the Company ceased negotiations for the sale
of the Pork Group. Additionally, in the fourth quarter of
fiscal 1999, the Company recorded pretax charges totaling
$23 million for impairment of property and equipment and
write-down of related excess of investments over net assets
acquired of Mallard’s Food Products.
In the fourth quarter of fiscal 1998, as a result of the
Company’s restructuring plan, pretax charges totaling
$215 million were recorded. These charges were classified in
the Consolidated Statements of Income as $142 million asset
impairment and other charges, $48 million in selling expenses,
$21 million in cost of sales and $4 million in other expense.
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, partially offset by the volume
gained from the Hudson Acquisition and the inclusion of
Tyson de Mexico on a consolidated basis.
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