Tyson Foods 2008 Annual Report Download - page 41

39 2008 Annual Report
Notes to Consolidated Financial Statements (continued)
In January 2008, we announced the decision to restructure opera-
tions at our Emporia, Kansas, beef plant. Beef slaughter operations
ceased during the second quarter of fi scal 2008. However, the facility
will still be used to process certain commodity, specialty cuts and
ground beef, as well as a cold storage and distribution warehouse.
This restructuring resulted in elimination of approximately 1,700 jobs
at the Emporia plant. In fi scal 2008, we recorded charges of $10 mil-
lion for estimated impairment charges and $7 million of other closing
costs, consisting of $6 million for employee termination benefi ts and
$1 million in other plant-closing related liabilities. These amounts
were refl ected in the Beef segment’s Operating Income (Loss) and
included in the Consolidated Statements of Operations in Other
Charges. We have fully paid the employee termination benefi ts and
other plant-closing related liabilities. No material adjustments to the
accrual are anticipated.
In fi scal 2008, management approved plans for implementation of
certain recommendations resulting from the previously announced
FAST initiative, which was focused on process improvement and
effi ciency creation. As a result, in fi scal 2008, we recorded charges
of $6 million related to employee termination benefi ts resulting
from termination of approximately 200 employees. Of these charges,
$2 million, $2 million, $1 million and $1 million, respectively, were
recorded in the Chicken, Beef, Pork and Prepared Foods segments’
Operating Income (Loss) and included in the Consolidated State-
ments of Operations in Other Charges. We have fully paid the
employee termination benefi ts. No material adjustments to
the accrual are anticipated.
In May 2007, we announced the completion of the sale of two of
our Alabama poultry plants and related support facilities. As part
of strategic efforts to reduce the production of commodity chicken,
we sold our processing plants in Ashland and Gadsden, which also
included a nearby feed mill and two hatcheries. These facilities
employed approximately 1,200 employees, of which approximately
800 were hired by the acquiring company, while the remaining
employees were offered the opportunity to transfer to our other
operations in Alabama. We recorded a gain of $10 million on the
sale in fi scal 2007. The gain was recorded in the Chicken segment’s
Operating Income (Loss) and included in the Consolidated State-
ments of Operations in Cost of Sales.
In July 2006, we announced our decision to implement a Cost Man-
agement Initiative as part of a strategy to return to profi tability. The
cost reductions include staffi ng costs, consulting and professional
fees, sales and marketing costs and other expenses. In fi scal 2006, we
recorded charges of approximately $9 million for employee termina-
tion benefi ts resulting from the termination of approximately 400
employees. Of these charges, $4 million, $3 million, $1 million and
$1 million, respectively, were included in the Chicken, Beef, Pork and
Prepared Foods segments’ Operating Income (Loss) and included in
the Consolidated Statements of Operations in Other charges in
the period ending September 30, 2006. In fi scal 2007, there were no
material adjustments to amounts accrued. We have fully paid the
estimated employee termination benefi ts. No material adjustments
to the accrual are anticipated.
In August 2006, we announced our decision to close the Boise, Idaho,
beef slaughter plant and to scale back processing operations at our
Pasco, Washington, complex. This decision resulted in the elimination
of approximately 770 positions. The closure and processing change
occurred in October 2006 and did not result in a signifi cant charge.
In February 2006, we announced our decision to close the Norfolk,
Nebraska, beef processing plant and the West Point, Nebraska, beef
slaughter plant. These facilities closed in February 2006. Production
from these facilities was shifted primarily to our beef complex in
Dakota City, Nebraska. Combined, these two facilities employed
approximately 1,665 employees. We sold the West Point plant in fi scal
2007, while the Norfolk plant and related property are currently
offered for sale. In fi scal 2006, we recorded charges of $38 million
for estimated impairment charges and $9 million of other closing
costs, consisting of $5 million for employee termination benefi ts and
$4 million in other plant closing related liabilities. These amounts
were refl ected in the Beef segment’s Operating Income (Loss) and
included in the Consolidated Statements of Operations in Other
charges. We have fully paid the estimated employee termination
benefi ts and other plant closing related liabilities. No material
adjustments to the accrual are anticipated.
In January 2006, we announced our decision to close two processed
meats facilities in northeast Iowa. The Independence and Oelwein
plants, which produced chopped ham and sliced luncheon meats,
closed in March 2006. Combined, these two facilities employed
approximately 400 employees. Equipment from these facilities was
removed and either sold or transferred to our other locations, while
the plants and related property are currently offered for sale. In fi scal
2006, we recorded charges of $12 million for estimated impairment
charges and $1 million for employee termination benefi ts. These
amounts were refl ected in the Prepared Foods segment’s Operat-
ing Income (Loss) and included in the Consolidated Statements
of Operations in Other charges. We have fully paid the estimated
employee termination benefi ts. No material adjustments to the
accrual are anticipated.
NOTE 5: FINANCIAL INSTRUMENTS
We had derivative related balances of $29 million and $16 million
recorded in other current assets at September 27, 2008, and
September 29, 2007, respectively, and $45 million and $48 million in
other current liabilities at September 27, 2008, and September 29,
2007, respectively.