Tyson Foods 2002 Annual Report Download

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TYSON FOODS, INC. 2002 ANNUAL REPORT
the
table
is set ...
2002
annual
report
Tyson Foods, Inc.
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
www.tysonfoodsinc.com

Table of contents

  • Page 1
    2002 annual report T Y S O N F O O D S , I N C . 2 0 0 2 A N N UA L R E P O R T the table is set ... Tyson Foods, Inc. 2210 West Oaklawn Drive Springdale, Arkansas 72762-6999 www.tysonfoodsinc.com

  • Page 2
    ... with headquarters in Springdale, Arkansas, is the world's largest processor and marketer of beef, chicken and pork. Tyson Foods produces a wide variety of brand name protein-based and prepared food products marketed in the United States and more than 80 countries around the world. Tyson Foods is...

  • Page 3
    ...beef, chicken, pork and prepared food products to meet their needs. ...with the experience, strength and flexibility to lead the industry With more than 28,000 products, no other producer has the ability to meet customers' needs as Tyson Foods can. ...with a deep dedication Tyson team members not...

  • Page 4
    2002 Financial Highlights Tyson Foods, Inc. 2002 Annual Report in millions, except per share data p 2 2002 2001 2000 Sales* Gross profit* Operating income Income before income taxes and minority interest Provision for income taxes Net income Diluted earnings per share Shareholders' equity Book...

  • Page 5
    ... progress integrating IBP, inc., and we have moved forward as one company. We are the world's largest processor and marketer of beef, chicken and pork and the second largest public food company in the United States. Reported diluted earnings per share were $1.08 compared to $0.40 last year. Of that...

  • Page 6
    ... the new line extension of family-sized hams and cooked pork tenderloins is gaining acceptance quickly. Tyson Foods' strong presence is not limited to the United States. We have a two-pronged international strategy - to market domestically produced commodity and value-added products to international...

  • Page 7
    ... that our vision at Tyson Foods is to be the world's first choice for protein-based food products while maximizing shareholder value. Our strengths are our people, our scale, market share, value-added products, strong customer relationships, a large portfolio of brands, supply chain capability and...

  • Page 8
    ... find Tyson Foods' beef, chicken, pork and prepared food products anyplace they eat or shop for food - quick service restaurants, casual restaurants, fine dining restaurants, grocery stores, club stores, convenience stores, college food courts, military commissaries, even school cafeterias. In fact...

  • Page 9
    p 7 Tyson chicken stir fry meal kit fits today's families' busy lives. It is a great way to serve a nutritious, flavorful meal in a hurry.

  • Page 10
    ... and product categories. The decision to expand the Tyson brand is supported by research showing the overwhelming majority of consumers say it makes sense for the Tyson brand to be used on fully-cooked roasts and other further processed beef and pork items as well as fresh pork. The Company has...

  • Page 11
    ... complement the Tyson brand. Tyson Foods also will maintain strong brands in specific channels such as Bonici in foodservice. In May, Tyson Foods introduced a new package design for its entire line of Tyson branded products. The new packages were created to further strengthen the Tyson brand and are...

  • Page 12
    p 10 Tyson team member John Krezanosky from Atlanta, Georgia, shows a restaurant operator how she can increase sales by adding Tyson pizza toppings, prime rib, deli meats and boneless hot wings to her menu.

  • Page 13
    ... and give customers the information they need to manage the protein category for their businesses. Another way Tyson Foods brings "value beyond the box" is through its Made to Order web site (http://madetoorder.tyson.com). Foodservice operators can go online to find additional menu opportunities for...

  • Page 14
    ... has allowed national grocery chains and foodservice distributors to be more demanding of their suppliers, and Tyson Foods is able to meet those challenges with national distribution capabilities, new products and 67 years of experience serving these customers and markets. With more than 28...

  • Page 15
    ... Japan, Mexico, Puerto Rico, Russia, Singapore, South Korea, Taiwan, the United Arab Emirates and the United Kingdom support customer relationships. Tyson de Mexico is the largest producer of value-added chicken in Mexico, serving retail and foodservice customers. Tyson has increased internationally...

  • Page 16
    ... factor in creating value for shareholders. In fact, many Tyson team members are shareholders themselves, so they look after the Company's money as if it were their own. Jamey Daugherty and Larry Menser, maintenance technicians from the Robards, Kentucky, processing plant, earned the grand prize in...

  • Page 17
    ..., Dakota Dunes, South Dakota; Ana Leland Hart, Springdale, Arkansas; Tiffany Smith, Goodlettsville, Tennessee; Lola Hithon, Gadsden, Alabama; Sonemany Hanesana, Van Buren, Arkansas; Nick Sippel, Council Bluffs, Iowa; and Jose Espinoza, Dallas, Texas, representing the 120,000 Tyson team members.

  • Page 18
    p 16 the table is set ...for you.

  • Page 19
    ...30 Consolidated Statements of Cash Flows p 31 Notes to Consolidated Financial Statements p 56 Report of Independent Auditors p 56 Report of Management p 57 Eleven-Year Financial Summary p 58 Corporate Information p 59 Board of Directors p 60 Corporate and Executive Officers financial...

  • Page 20
    ...IBP) beef, pork and prepared foods operations, improved performance of the chicken segment, a continued growth in value-added businesses and reduced operating costs. Additionally, the Company recognized a gain from the sale of its Specialty Brands subsidiary and received a partial settlement related...

  • Page 21
    ... slaughter and fabrication operations, case-ready products and related allied product processing activities. The pork segment markets its products to food retailers, distributors, wholesalers, restaurants and hotel chains and other food processors in domestic and international markets. It also sells...

  • Page 22
    ... 129 million shares of Class A stock, with a fair value of approximately $1.2 billion, to acquire the remaining IBP shares, and assumed approximately $1.7 billion of IBP debt. The total acquisition cost of approximately $4.6 billion was accounted for as a purchase in accordance with Statement of...

  • Page 23
    Tyson Foods, Inc. 2002 annual report management's discussion and analysis Disposition In September 2002, the Company completed the sale of its Specialty Brands, Inc. subsidiary. The subsidiary had been acquired with the IBP acquisition and its results of operations were included in the Company's ...

  • Page 24
    Tyson Foods, Inc. 2002 annual report management's discussion and analysis in millions p 22 Operating Income (Loss) by Segment Beef Chicken Pork Prepared Foods Other Total 2001 2000 Change $ 32 250 27 15 (8) $316 $ - 316 23 7 3 $349 $ 32 (66) 4 8 (11) $(33) Beef segment sales, which ...

  • Page 25
    Tyson Foods, Inc. 2002 annual report management's discussion and analysis Total debt at September 28, 2002, was $3,987 million, a decrease of approximately $789 million from September 29, 2001. The Company has unsecured revolving credit agreements totaling $1 billion that support the Company's ...

  • Page 26
    Tyson Foods, Inc. 2002 annual report management's discussion and analysis Commodities Risk The Company is a purchaser of certain commodities, primarily corn, soybeans and livestock. The Company periodically uses commodity futures and options for hedging purposes to reduce the effect of changing ...

  • Page 27
    Tyson Foods, Inc. 2002 annual report management's discussion and analysis Recently Issued Accounting Standards In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). Under SFAS 142...

  • Page 28
    ... as economic hedges for which hedge accounting is not applied. See Market Risk. Contingent Liabilities The Company is subject to lawsuits, investigations and other claims related to wage and hour/labor, cattle procurement, securities, environmental, product and other matters, and is required...

  • Page 29
    Tyson Foods, Inc. 2002 annual report consolidated statements of income Three years ended September 28, 2002 in millions, except per share data p 27 2002 2001 2000 Sales Cost of Sales Operating Expenses: Selling, general and administrative Other charges Operating Income Other Expense (Income):...

  • Page 30
    Tyson Foods, Inc. 2002 annual report consolidated balance sheets September 28, 2002 and September 29, 2001 in millions, except per share data p 28 2002 2001 Assets Current Assets: Cash and cash equivalents Accounts receivable, net Inventories Other current assets Total Current Assets Net ...

  • Page 31
    Tyson Foods, Inc. 2002 annual report consolidated statements of shareholders' equity Three years ended September 28, 2002 in millions p 29 Common Stock Class A Class B Shares Amount Shares Amount Accumulated Capital Other Total Treasury Stock Unamortized in Excess of Retained Deferred ...

  • Page 32
    Tyson Foods, Inc. 2002 annual report consolidated statements of cash flows Three years ended September 28, 2002 in millions p 30 2002 2001 2000 Cash Flows From Operating Activities: Net income Adjustments to reconcile net income to cash provided by operating activities: Depreciation ...

  • Page 33
    ...Description of Business: Tyson Foods, Inc., founded in 1935 with headquarters in Springdale, Arkansas, is the world's largest processor and marketer of beef, chicken and pork. Tyson Foods produces a wide variety of brand name protein-based and prepared food products marketed in the United States and...

  • Page 34
    ... the assets of Millard Processing Services. Goodwill has been allocated to reporting units based on fair value of identifiable assets. This goodwill is not deductible for income tax purposes. Accrued Self Insurance: Insurance expense for casualty claims and employee-related health care benefits are...

  • Page 35
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements Use of Estimates: The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States which require management to make estimates and assumptions that ...

  • Page 36
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements Note 2: Acquisition In August 2001, the Company acquired 50.1% of IBP by paying $1.7 billion in cash. In September 2001, the Company issued 129 million shares of Class A common stock, with a fair value of $1.2 billion,...

  • Page 37
    ... market values at the date of purchase. As of September 28, 2002, the Company had purchased $11 million of the convertible redeemable preferred stock. In May 2002, the Company acquired Millard Processing Services, a bacon processing operation, for approximately $73 million in cash. The acquisition...

  • Page 38
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements Note 4: Other Charges In August 2002, the Company announced its decision to restructure the live swine operation. The restructuring will result in the closure of company-owned and leased feeder pig finishing farms in ...

  • Page 39
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements The effective portion of the cumulative gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) in shareholders' equity and recognized into earnings in the same period ...

  • Page 40
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements Note 7: Property, Plant and Equipment The major categories of property, plant and equipment and accumulated depreciation, at cost, are as follows: in millions 2002 2001 p 38 Land Buildings and leasehold improvements...

  • Page 41
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements Note 10: Long-Term Debt The Company has unsecured revolving credit agreements totaling $1 billion that support the Company's commercial paper program, letters of credit and other short-term funding needs. These ...

  • Page 42
    ... as interest expense related to the IBP acquisition are included in the Tyson amounts. Condensed Consolidating Statement of Income for the year ended September 28, 2002 in millions Tyson IBP Adjustments Consolidated p 40 Sales Cost of Sales Operating Expenses: Selling, general and administrative...

  • Page 43
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements Condensed Consolidating Balance Sheet as of September 28, 2002 in millions Tyson IBP Adjustments Consolidated p 41 Assets Current Assets: Cash and cash equivalents Accounts receivable, net Inventories Other current ...

  • Page 44
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements Condensed Consolidating Balance Sheet as of September 29, 2001 in millions Tyson IBP Adjustments Consolidated p 42 Assets Current Assets: Cash and cash equivalents Accounts receivable, net Inventories Other current ...

  • Page 45
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements Condensed Consolidating Statement of Cash Flows for year ended September 28, 2002 in millions Tyson IBP Adjustments Consolidated p 43 Cash Flows From Operating Activities: Net income Net changes in working capital ...

  • Page 46
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements Condensed Consolidating Statement of Cash Flows for year ended September 29, 2001 in millions Tyson IBP Adjustments Consolidated p 44 Cash Flows From Operating Activities: Net income Net changes in working capital ...

  • Page 47
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements In May 2000, the Company cancelled approximately four million option shares and granted approximately one million restricted shares of Class A stock. The restriction expires over periods through December 1, 2003. At ...

  • Page 48
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements 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 ...

  • Page 49
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements The reasons for the difference between the effective income tax rate and the statutory U.S. federal income tax rate are as follows: 2002 2001 2000 p 47 U.S. federal income tax rate Amortization of goodwill State ...

  • Page 50
    ... slaughter and fabrication operations, case-ready products and related allied product processing activities. The pork segment markets its products to food retailers, distributors, wholesalers, restaurants and hotel chains and other food processors in domestic and international markets. It also sells...

  • Page 51
    ... foreign countries, primarily Mexico and Canada, at fiscal years ended 2002, 2001 and 2000, respectively. The Company sells certain of its products in foreign markets, primarily Canada, China, European Union, Japan, Mexico, Puerto Rico, Russia, Taiwan and South Korea. The Company's export sales for...

  • Page 52
    ... Act at the Company's chickenprocessing facility in Blountsville, Alabama. The complaint does not contain a definite statement of what acts constituted alleged violations of the statute. The Secretary seeks back wages for all employees at the Blountsville facility for a period of two years prior to...

  • Page 53
    ... 5, 2001, a lawsuit entitled Maria Chavez, et al. vs. IBP , Lasso Acquisition Corporation and Tyson Foods, Inc. was filed in the U.S. District Court for the Eastern District of Washington against IBP and Tyson by several employees of IBP's Pasco, Washington, beef slaughter and processing facility...

  • Page 54
    ... and March 2001, a number of lawsuits were filed by certain stockholders in the U.S. District Court for the District of South Dakota and one suit filed in the U.S. District Court for the Southern District of New York seeking to certify a class of all persons who purchased IBP stock between February...

  • Page 55
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements Following expedited discovery, the Delaware Court conducted a nine day trial, beginning on May 14, 2001, on IBP's and the plaintiffs' claims for specific performance with respect to the terminated cash tender offer and...

  • Page 56
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements In December 2001, a stockholder derivative lawsuit was filed in the Court of Chancery of the state of Delaware against the Company's Board of Directors and nominally, the Company. The complaint concerns the alleged ...

  • Page 57
    Tyson Foods, Inc. 2002 annual report notes to consolidated financial statements interference with contract. As of this date, the Company has moved to dismiss this action, with briefing to be completed during December 2002. The Company intends to vigorously defend these claims; however, neither the...

  • Page 58
    ... for each of the three years in the period ended September 28, 2002, in conformity with accounting principles generally accepted in the United States. p 56 Little Rock, Arkansas November 11, 2002 report of management The management of Tyson Foods, Inc., (the Company) has the responsibility of...

  • Page 59
    ... charge related to Tyson de Mexico losses. 5. The results for 1999 include a $77 million pretax charge for loss on sale of assets and impairment write-downs. 6. Significant business combinations accounted for as purchases: IBP , inc., Hudson Foods, Inc. and Arctic Alaska Fisheries Corporation in...

  • Page 60
    ... of Investor Relations Tyson Foods, Inc. P .O. Box 2020 Springdale, Arkansas 72765-2020 Telephone (479) 290-4826 Fax (479) 290-6577 E-mail: [email protected] Change of Address If your Tyson stock is registered in your own name(s), send change of address information to the Company's transfer agent...

  • Page 61
    ...and previously as President of the Company's Beef and Pork division. Mr. Tyson has been a member of the Board since 1984.1 Joe F. Starr, 69, a private investor, served as a Vice President of the Company until 1996. Mr. Starr has been a member of the Board since 1969. Leland E. Tollett, 65, a private...

  • Page 62
    Tyson Foods, Inc. 2002 annual report corporate and executive officers Les R. Baledge Executive Vice President and General Counsel Jean Mrha Beach Senior Vice President, Commodity and Trading Risk Management Richard L. Bond Co-Chief Operating Officer and Group President, Fresh Meats and Retail ...

  • Page 63
    ... phone or by mail. Media Relations Members of the news media seeking information about Tyson Foods should contact: Ed Nicholson Director of Media & Community Relations Tyson Foods, Inc. P .O. Box 2020 Springdale, AR 72765-2020 Telephone (479) 290- 4591 Fax (479) 290-7984 E-mail: ed.nicholson@tyson...