Tyson Foods 2000 Annual Report Download - page 40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TYSON FOODS, INC. 2000 ANNUAL REPORT NOTE 7: PROPERTY, PLANT AND EQUIPMENT The major categories of property, plant and equipment and accumulated depreciation, at cost, are as follows:
in millions
2000 1999
Land $61 $57
Buildings and leasehold improvements 1,291 1,180
Machinery and equipment 2,219 2,033
Land improvements and other 110 112
Buildings and equipment under
construction 103 224
3,784 3,606
Less accumulated depreciation 1,643 1,421 Net property, plant and equipment $2,141 $2,185
The Company capitalized interest costs of $2 million in
2000, $5 million in 1999 and $2 million in 1998 as part of the cost of major asset construction projects. Approximately $121 million will be required to complete construction proj- ects in progress at September 30, 2000.
In fiscal 2000, the Company adopted American Institute
of Certified Public Accountants Statement of Position 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.” This statement provides guidance on the capitalization of certain costs incurred in developing or acquiring internal-use computer software. At September 30, 2000, the Company has capitalized $25 million in software costs and recorded $3 million of related software depreciation. NOTE 8: 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 former employees of
the Company filed the case of M.H. Fox, et al. v. Tyson Foods, Inc. (Fox v. Tyson) in the U.S. District Court for the Northern District of Alabama claiming the Company violated requirements of the Fair Labor Standards Act. The suit alleges the Company failed to pay employees for all hours worked and/or improperly paid them for overtime
hours. The suit generally alleges that (i) employees should be paid for time taken to put on and take off certain work- ing supplies at the beginning and end of their shifts and breaks and (ii) the use of “mastercard” or “line” time fails to pay employees for all time actually worked. Plaintiffs seek to represent themselves and all similarly situated current and former employees of the Company. At filing 159 current and/or former employees consented to join the lawsuit and, to date, approximately 4,900 consents have been filed with the court. Discovery in this case is ongoing. A hearing was held on March 6, 2000, to consider the plaintiff’s request for collective action certification and court-supervised notice. No decision has been rendered. The Company believes it has substantial defenses to the claims made 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.
Substantially similar suits have been filed against other
integrated poultry companies. In addition, organizing activity conducted by representatives or affiliates of the United Food and Commercial Workers Union against the poultry industry has encouraged worker participation in Fox v. Tyson and the
other lawsuits.
On February 9, 2000, the Wage and Hour Division of the
U.S. Department of Labor (DOL) began an industry-wide investigation of poultry producers, including the Company, to ascertain compliance with various wage and hour issues. As part of this investigation, the DOL inspected 14 of the Company’s processing facilities. The Company has begun preliminary discussions with the DOL regarding its investi- gation to discuss a resolution of potential claims that might be asserted by the DOL.
The Company has been advised of an investigation by the
Immigration and Naturalization Service (INS) and the U.S. Attorney’s Office for the Eastern District of Tennessee into possible violations of the Immigration and Naturalization Act at several of the Company’s locations. On October 5, 2000, the Company was advised that, in addition to a number of its employees, the Company itself is a subject of the investigation. The outcome of the investigation and any potential liability on the part of the Company cannot be determined at this time.
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