Tyson Foods 2003 Annual Report Download - page 59

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Tyson Foods, Inc. 57
notes to consolidated financial statements
TYSON FOODS, INC. 2003 ANNUAL REPORT
Third quarter 2002 gross profit includes $30 million
received in connection with vitamin antitrust litigation.
Fourth quarter 2002 operating income includes a
$22 million gain related to the sale of Specialty Brands
and charges of $27 million and $26 million related to the
Thomas E. Wilson brand write-down and live swine
restructuring, respectively.
note 19:
contingencies
Listed below are certain claims made against the
Company and its subsidiaries. In the Company’s opinion,
it has made appropriate and adequate reserves and
accruals where necessary and the Company believes
the probability of a material loss beyond the amounts
accrued to be remote; however, the ultimate liability for
these matters is uncertain, and if accruals and reserves
are not adequate, an adverse outcome could have a
material effect on the consolidated financial condition or
results of operations of the Company. The Company
believes it has substantial defenses to the claims made
and intends to vigorously defend these cases.
Wage and Hour/Labor Matters In 2000, the Wage and
Hour Division of the U.S. Department of Labor (DOL)
conducted an industry-wide investigation of poultry pro-
ducers, 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. On May 9, 2002, the Secretary of
Labor filed a civil complaint against the Company in the
U.S. District Court for the Northern District of Alabama.
The complaint alleges that the Company violated the
overtime provisions of the federal Fair Labor Standards
Act (FLSA) at the Company’s chicken-processing facility
in Blountsville, Alabama. The complaint does not con-
tain a definite statement of what acts constituted alleged
violations of the statute. The Secretary of Labor seeks
19
unspecified back wages for all employees at the
Blountsville facility for a period of two years prior to the
date of the filing of the Complaint, an additional amount
in unspecified liquidated damages, and an injunction
against future violations at that facility and all other facil-
ities operated by the Company. The Company has filed
its initial answer and discovery has commenced.
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 FLSA. The suit alleges the
Company failed to pay employees for all hours worked
and/or improperly paid them for overtime hours. The suit
specifically alleges that (1) employees should be paid for
time taken to put on and take off certain working supplies
at the beginning and end of their shifts and breaks and
(2) 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, and plaintiffs
seek reimbursement for an unspecified amount of
unpaid wages, liquidated damages, attorney fees and
costs. At filing, 159 current and/or former employees
consented to join the lawsuit and, to date, approximately
5,000 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.
On August 22, 2000, seven employees of the Company
filed the case of De Asencio v. Tyson Foods, Inc. in the
U.S. District Court for the Eastern District of Pennsylvania.
This lawsuit is similar to Fox v. Tyson in that the employ-
ees claim violations of the FLSA for allegedly failing to
pay for time taken to put on, take off and sanitize certain
working supplies, and violations of the Pennsylvania
Wage Payment and Collection Law. Plaintiffs seek to rep-
resent themselves and all similarly situated current and