Tyson Foods 2009 Annual Report Download - page 11

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11
permits and registrations could delay or prevent us from meeting current product demand, introducing new products, building new
facilities or acquiring new businesses and could adversely affect operating results. Additionally, we are routinely subject to new or
modified laws, regulations and accounting standards, such as country of origin labeling (COOL) requirements. If we are found to be
out of compliance with applicable laws and regulations in these or other areas, we could be subject to civil remedies, including fines,
injunctions, recalls or asset seizures, as well as potential criminal sanctions, any of which could have an adverse effect on our
financial results.
A material acquisition, joint venture or other significant initiative could affect our operations and financial condition.
We have recently completed acquisitions and entered into joint venture agreements and periodically evaluate potential acquisitions,
joint ventures and other initiatives (collectively, “transactions”), and we may seek to expand our business through the acquisition of
companies, processing plants, technologies, products and services, which could include material transactions. A material transaction
may involve a number of risks, including:
●
failure to realize the anticipated benefits of the transaction;
●
difficulty integrating acquired businesses, technologies, operations and personnel with our existing business;
●
diversion of management attention in connection with negotiating transactions and integrating the businesses acquired;
●
exposure to unforeseen or undisclosed liabilities of acquired companies; and
●
the need to obtain additional debt or equity financing for any transaction.
We may not be able to address these risks and successfully develop these acquired companies or businesses into profitable units. If we
are unable to do this, such expansion could adversely affect our financial results.
Market fluctuations could negatively impact our operating results as we hedge certain transactions.
Our business is exposed to fluctuating market conditions. We use derivative financial instruments to reduce our exposure to various
market risks including changes in commodity prices, interest rates and foreign exchange rates. We hold certain positions, primarily in
grain and livestock futures, that do not qualify as hedges for financial reporting purposes. These positions are marked to fair value,
and the unrealized gains and losses are reported in earnings at each reporting date. Therefore, losses on these contracts will adversely
affect our reported operating results. While these contracts reduce our exposure to changes in prices for commodity products, the use
of such instruments may ultimately limit our ability to benefit from favorable commodity prices.
Deterioration of economic conditions could negatively impact our business.
Our business may be adversely affected by changes in national or global economic conditions, including inflation, interest rates,
availability of capital markets, consumer spending rates, energy availability and costs (including fuel surcharges) and the effects of
governmental initiatives to manage economic conditions. Any such changes could adversely affect the demand for our products, or
the cost and availability of our needed raw materials, cooking ingredients and packaging materials, thereby negatively affecting our
financial results.
The recent disruptions in global credit and other financial markets and deterioration of economic conditions, could, among other
things:
●
make it more difficult or costly for us to obtain financing for our operations or investments or to refinance our debt in the
future;
●
cause our lenders to depart from prior credit industry practice and make more difficult or expensive the granting of any
amendment of, or waivers under, our credit agreement to the extent we may seek them in the future;
●
impair the financial condition of some of our customers and suppliers thereby increasing customer bad debts or
non-performance by suppliers;
●
negatively impact global demand for protein products, which could result in a reduction of sales, operating income and cash
flows;
●
decrease the value of our investments in equity and debt securities, including our marketable debt securities,
company-owned life insurance and pension and other postretirement plan assets;
●
negatively impact our commodity risk management activities if we are required to record additional losses related to
derivative financial instruments; or
●
impair the financial viability of our insurers.
Changes in consumer preference could negatively impact our business.
The food industry in general is subject to changing consumer trends, demands and preferences. Trends within the food industry
change often, and failure to identify and react to changes in these trends could lead to, among other things, reduced demand and price
reductions for our products, and could have an adverse effect on our financial results.