Tyson Foods 2005 Annual Report Download - page 43

>> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
TYSON FOODS, INC. 2005 ANNUAL REPORT
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Tyson Foods, Inc. >> 41
In December 2004, the Company announced its decision to close
its Portland, Maine, facility. The Portland operation employed
approximately 285 people and produced sliced meats and cooked
roast beef. The plant ceased operations February 4, 2005, and
production from this facility was transferred to other locations.
As a result of the decision, the Company recorded total costs of
$4 million ($3 million and $1 million in the first and second quarters,
respectively, of fiscal 2005) that included $2 million of estimated
impairment charges for assets to be disposed and $2 million of
employee termination benefits. In the fourth quarter of fiscal 2005,
the Company reversed approximately $1 million of closing related
liabilities. These amounts were reflected in the Prepared Foods
segment as a reduction of operating income and included in the
Consolidated Statements of Income in other charges. The Company
accounted for the closing of the Portland operation in accordance
with SFAS No. 146 and SFAS No. 144. As of October 1, 2005, $1 million
of employee termination benefits had been paid. No material
adjustments to the total accrual are anticipated at this time.
In the fourth quarter of fiscal 2004, the Company implemented a
control whereby all plant facilities conduct fixed asset inventories
on a recurring basis. As a result, the Company recorded fixed asset
write-down charges of approximately $21 million in the fourth
quarter of fiscal 2004, of which approximately $13 million was
recorded in the Chicken segment, $5 million in the Prepared Foods
segment, $2 million in the Beef segment and $1 million in the Pork
segment. Additionally, as discussed in Note 1, “Business and Summary
of Significant Accounting Policies” of the Notes to the Consolidated
Financial Statements, the Company recorded $25 million related
to the impairment of various intangible assets in the fourth quarter
of fiscal 2004.
In February 2004, the Company announced its decision to consoli-
date its manufacturing operations in Jackson, Mississippi, into the
former Choctaw Maid Farms Carthage, Mississippi, facility, which
the Company acquired in the fourth quarter of fiscal 2003. The
Jackson location employed approximately 800 people and was
a poultry facility, including processing and deboning operations.
As a result of this decision, the Company recorded total costs of
approximately $9 million in fiscal 2004 that included approxi-
mately $8 million of estimated impairment charges for assets to
be disposed of and $1 million of employee termination benefits.
The Company accounted for the closing of the Jackson operation
in accordance with SFAS No. 146 and SFAS No. 144. This amount
was reflected in the Chicken segment as a reduction of operating
income and included in the Consolidated Statements of Income in
other charges. The Jackson location ceased operations in August
2004. The Company has fully paid its estimated termination bene-
fits of $1 million. No material adjustments were made to the accrual
in fiscal 2005, and none are anticipated.
In April 2003, the Company announced its decision to close its
Berlin, Maryland, poultry operation. The Berlin poultry operation
employed approximately 650 people and included a hatchery, a
feed mill, live production and a processing facility. The facility
ceased processing chickens November 12, 2003. As a result of
this decision, the Company recorded total costs of $29 million
($4 million in fiscal 2004 and $25 million in fiscal 2003) that
included $14 million related to closing the plant and $15 million
of estimated impairment charges for assets to be disposed. These
amounts were reflected in the Chicken segment as a reduction of
operating income and included in the Consolidated Statements
of Income in other charges. The costs related to closing the plant
include $9 million for estimated liabilities for the resolution of the
Company’s obligations under 209 grower contracts, and $5 million
of other related costs associated with closing the operation, includ-
ing plant clean-up costs and employee termination benefits. The
Company accounted for the closing of the Berlin operation in
accordance with SFAS No. 146 and SFAS No. 144. At October 1, 2005,
$9 million of obligations under grower contracts and $3 million of
other closing costs had been paid. Additionally, a $2 million decrease
to the original accrual was recorded in fiscal 2004. No material
adjustments were made to the accrual in fiscal 2005, and the
Company has fully paid its employee termination benefits and
other plant closing related costs.
In December 2003, the Company announced its decision to close
its Manchester, New Hampshire, and Augusta, Maine, Prepared
Foods operations to further improve long-term manufacturing
efficiencies. The production from these facilities was transferred
to other locations. The Manchester operation employed approxi-
mately 550 people and primarily produced sandwich meat for
foodservice customers. The Augusta facility employed approximately
170 people and produced hot dogs, sausages, boneless hams and
deli turkey products. These locations ceased operations during
the second quarter of fiscal 2004. As a result of this decision, the
Company recorded total costs of $24 million in fiscal 2004 that
included $4 million of costs related to closing the plants and
$20 million of estimated impairment charges for assets to be
disposed. These amounts were reflected in the Prepared Foods
segment as a reduction of operating income and included in the
Consolidated Statements of Income in other charges in fiscal 2004.
The costs related to closing the plants included $2 million of
employee termination benefits and $2 million of other plant
closing related costs. The Company accounted for the closing
of the Manchester and Augusta operations in accordance with
SFAS No. 146 and SFAS No. 144. The Company has fully paid its
employee termination benefits of $2 million and other plant
closing related costs of $2 million.