Tyson Foods 2002 Annual Report Download - page 54

notes to
consolidated
financial
statements
p 52
The Company has been advised by the U.S. Attorney’s office for the Western District of Missouri that the government intends
to seek indictment of the Company for alleged violations of the Clean Water Act related to activities at its Sedalia, Missouri, facility.
The Company is presently in negotiations for a possible resolution of this matter. Although the amount of ultimate liability with
respect to this matter cannot be determined at this time, the Company does not expect any material adverse effect on its
consolidated financial position or results of operations.
On October 23, 2001, a putative class action lawsuit was filed in the District Court for Mayes County, Oklahoma, against the
Company by R. Lynn Thompson and Deborah S. Thompson on behalf of all owners of Grand Lake O’ the Cherokee’s littoral (lake
front) property. The suit alleges that the Company “or entities over which it has operational control” conduct operations in such
a way as to interfere with the putative class action plaintiffs’ use and enjoyment of their property, allegedly caused by diminished
water quality in the lake. The Company believes the complaint allegations are unfounded and intends to vigorously defend the case.
On December 10, 2001, the City of Tulsa, Oklahoma, and the Tulsa Metropolitan Utility Authority filed in the U.S. District Court
for the Northern District of Oklahoma the case styled The City of Tulsa and the Tulsa Municipal Utility Authority v. Tyson Foods, Inc.,
et al. against the Company, Cobb-Vantress, Inc., a wholly-owned subsidiary of the Company, four other fully integrated poultry
companies and the City of Decatur, Arkansas. With respect to the Company and Cobb-Vantress, Inc., the suit alleges that
degradation of the Tulsa water supply is attributable, in whole or in part, to the non-point source run-off from the land application
of poultry litter in the watershed feeding the lakes that act as the City of Tulsa’s water supply, and that the Company and
Cobb-Vantress, Inc. are, together with the other defendants named in the lawsuit, jointly and severally responsible for the alleged
over application of poultry litter in the watershed. The Company believes that the allegations in the complaint are unfounded and
intends to vigorously defend the case.
Securities Matters Between January 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 7, 2000, and January 25, 2001. The plaintiff in the
New York action has voluntarily dismissed and refiled its complaint in South Dakota, where the suits have been consolidated under
the name In re IBP, inc. Securities Litigation. The complaints, seeking unspecified damages, allege that IBP and certain members of
management violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and claims IBP
issued materially false statements about IBP’s financial results in order to inflate its stock price. IBP filed a Motion to Dismiss on
December 21, 2001, which is now fully briefed and pending before the Court. IBP intends to vigorously contest these claims.
On or about June 6, 2001, IBP was advised the SEC had commenced a formal investigation related to the restatement of earnings
made by IBP in March 2001, including matters relating to certain improprieties in the financial statements of DFG, a wholly-owned
subsidiary. The Company has been informed that three former employees of DFG received a so-called “Wells” notice advising them
that the SEC had determined to recommend the initiation of an enforcement action and providing them an opportunity to provide
their arguments against such an enforcement action. IBP is cooperating with this investigation.
IBP Stockholder and Merger Agreement Related Litigation Between October 2 and November 1, 2000, 14 class actions were
filed in the Delaware Court of Chancery (the Delaware Court) against IBP, inc. and the members of the IBP Board of Directors. On
November 13, 2000, these actions were consolidated as In re IBP, inc. Shareholders Litigation, C.A. No. 18373 (the Consolidated Action).
On March 29, 2001, the Company filed an action in the Chancery Court of Washington County, Arkansas, entitled Tyson Foods,
Inc., et al. v. IBP, inc., Case No. E 2001-749-4, alleging that the Company had been inappropriately induced to enter into a Merger
Agreement with IBP dated January 1, 2001 (the Merger Agreement), and that IBP was in breach of various representations and
warranties made in the Merger Agreement.
On March 30, 2001, IBP filed an answer to the amended consolidated complaint and a cross-claim (amended on April 2, 2001)
against the Company in the Consolidated Action. As amended, IBP’s cross-claim sought a declaration that the Company could
not rescind or terminate the Merger Agreement, specific enforcement of the Merger Agreement and damages for breach of a
Confidentiality Agreement.
Tyson Foods, Inc. 2002 annual report