Tyson Foods 2008 Annual Report Download - page 62

60 Tyson Foods, Inc.
Notes to Consolidated Financial Statements (continued)
We currently have pending eleven separate wage and hour actions
involving TFM’s plants located in Lexington, Nebraska (Lopez, et al.
v. Tyson Foods, Inc., District of Nebraska, June 30, 2006), Garden City
and Emporia, Kansas (Garcia, et al. v. Tyson Foods, Inc., Tyson Fresh
Meats, Inc., District of Kansas, May 15, 2006), Storm Lake, Iowa (Sharp,
et al. v. Tyson Foods, Inc., N.D. Iowa, February 6, 2007), Columbus
Junction, Iowa (Robinson, et al. v. Tyson Foods, Inc., d/b/a Tyson Fresh
Meats, Inc., S.D. Iowa, September 12, 2007), Joslin, Illinois (Murray,
et al. v. Tyson Foods, Inc., C.D. Illinois, January 2, 2008), Dakota City,
Nebraska (Gomez, et al. v. Tyson Foods, Inc., District of Nebraska,
January 16, 2008), Madison, Nebraska (Acosta, et al. v Tyson Foods, Inc.
d.b.a. Tyson Fresh Meats, Inc., District of Nebraska, February 29, 2008),
Perry and Waterloo, Iowa (Edwards, et al. v. Tyson Foods, Inc. d.b.a.
Tyson Fresh Meats, Inc., S.D. Iowa, March 20, 2008); Council Bluffs,
Iowa (Salazar, et al. v. Tyson Foods, Inc. d.b.a. Tyson Fresh Meats, Inc.,
S.D. Iowa, April 29, 2008); and Logansport, Indiana (Carter, et al. v.
Tyson Foods, Inc. and Tyson Fresh Meats, Inc., N.D. Indiana, April 29,
2008); and Goodlettsville, Tennessee (Cunningham v. Tyson Fresh
Meats, Inc., M.D. Tennessee, May 22, 2008). With the exception of
Cunningham, the actions allege TFM failed to pay employees for
all hours worked, including overtime compensation for the time it
takes to change into protective work uniforms, safety equipment and
other sanitary and protective clothing worn by employees, and for
walking to and from the changing area, work areas and break areas in
violation of the Fair Labor Standards Act and analogous state laws.
The plaintiffs seek back wages, liquidated damages, pre- and post-
judgment interest, attorneys’ fees and costs. Cunningham alleges TFM
failed to pay quality assurance technicians overtime compensation
for all hours worked in excess of forty hours in each work week. TFM
fi led a motion for partial summary judgment in Garcia, based upon
an injunction entered in Reich v. IBP, which outlined the types of
activities at issue here that are compensable. The District Court of
Kansas denied the motion, and TFM appealed to the Tenth Circuit
Court of Appeals, arguing that the District Court’s ruling had the
effect of improperly modifying the injunction. On July 23, 2008,
Tyson fi led a motion to transfer the eleven actions to the District of
Kansas for consolidated pretrial proceedings. On October 9, 2008,
the motion to transfer was denied by the Judicial Panel on Multi-
district Litigation. The effect of this order will be that the stays
previously entered in the individual actions will be lifted and each
case will resume.
On November 21, 2002, 10 current and former hourly employees of
a TFM case-ready facility in Goodlettsville, Tennessee, fi led a puta-
tive class action lawsuit styled Emily D. Jordan, et al. v. IBP, inc. and
Tyson Foods, Inc. in the U.S. District Court for the Middle District of
Tennessee against us claiming violations of the overtime provisions
of the Fair Labor Standards Act by failing to pay employees for all
hours worked. The suit further alleges employees should be paid for
the time it takes to collect, assemble and put on, take off and wash
their health, safety and production gear at the beginning and end of
their shifts and during their meal period. Finally, the suit alleges we
deduct 30 minutes per day from employees’ paychecks regardless of
whether employees use a full 30-minute period for their meal. The
plaintiffs seek a declaration that the defendants did not comply with
the Fair Labor Standards Act, and an award for an unspecifi ed amount
of back pay compensation and benefi ts, unpaid entitlements, liqui-
dated damages, prejudgment and post-judgment interest, attorney
fees and costs. On November 17, 2003, the District Court condition-
ally certifi ed a collective action based on clothes changing and
washing activities and unpaid production work during meal periods,
since the plant operations began in April 2001. Approximately 650
current and former employees have opted into the class. On
August 20, 2007, both parties fi led motions for summary judgment.
The court granted in part and denied in part the parties’ motions
for partial summary judgment on March 13, 2008. A jury trial was set
to begin on September 16, 2008, but the parties resolved the litiga-
tion. On September 25, 2008, the court entered an agreed order of
dismissal with prejudice and approved the confi dential settlement
agreement of the parties.
NOTE 22: SUBSEQUENT EVENTS
In October 2008, Dynamic Fuels received $100 million in Gulf
Opportunity Zone tax-exempt bonds made available by the Federal
government to the regions affected by Hurricanes Katrina and Rita
in 2005. These fl oating rate bonds are due October 1, 2033, and have
an initial interest rate of 1.3%. We issued a letter of credit as a guar-
antee for the entire bond issuance. In exchange for our guarantee,
Syntroleum Corporation, the other 50 percent investor in Dynamic
Fuels, issued to us eight million Syntroleum stock warrants with an
exercise price of $0.01 per share.
In October 2008, we completed the acquisition of three vertically
integrated poultry companies in southern Brazil. The purchase price
was $80 million, as well as up to an additional $15 million of contin-
gent purchase price based on production volumes payable through
fi scal 2010. These transactions include the acquisitions of Macedo
Agroindustrial, Avicola Itaiopolis and Frangobras. Combined, we
expect these companies will have sales of $150 – $175 million in
fi scal 2009.