Tyson Foods 2011 Annual Report Download - page 11

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Disruptions in global credit and other financial markets and deterioration of economic conditions, could, among other things:
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make it more difficult or costly for us to obtain financing for our operations or investments or to refinance our debt in the
future;
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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;
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impair the financial condition of some of our customers and suppliers thereby increasing customer bad debts or non-
performance by suppliers;
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negatively impact global demand for protein products, which could result in a reduction of sales, operating income and
cash flows;
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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;
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negatively impact our commodity purchasing activities if we are required to record losses related to derivative financial
instruments; or
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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.
The loss of one or more of our largest customers could negatively impact our business.
Our business could suffer significant setbacks in sales and operating income if our customers’ plans and/or markets change
significantly or if we lost one or more of our largest customers, including, for example, Wal-Mart Stores, Inc., which accounted for
13.3% of our sales in fiscal 2011. Many of our agreements with our customers are short-term, primarily due to the nature of our
products, industry practice and the fluctuation in demand and price for our products.
The consolidation of customers could negatively impact our business.
Our customers, such as supermarkets, warehouse clubs and food distributors, have consolidated in recent years, and consolidation is
expected to continue throughout the United States and in other major markets. These consolidations have produced large,
sophisticated customers with increased buying power who are more capable of operating with reduced inventories, opposing price
increases, and demanding lower pricing, increased promotional programs and specifically tailored products. These customers also may
use shelf space currently used for our products for their own private label products. Because of these trends, our volume growth could
slow or we may need to lower prices or increase promotional spending for our products, any of which would adversely affect our
financial results.
Extreme factors or forces beyond our control could negatively impact our business.
Natural disasters, fire, bioterrorism, pandemic or extreme weather, including droughts, floods, excessive cold or heat, hurricanes or
other storms, could impair the health or growth of livestock or interfere with our operations due to power outages, fuel shortages,
damage to our production and processing facilities or disruption of transportation channels, among other things. Any of these factors,
as well as disruptions in our information systems, could have an adverse effect on our financial results.
Our renewable energy ventures and other initiatives might not be successful.
We have been exploring ways to convert animal fats and other by-products from our operations into value-added products. For
example, in fiscal 2007, we announced the formation of Dynamic Fuels, a joint venture with Syntroleum Corporation. We will
continue to explore other ways to commercialize opportunities outside our core business, such as renewable energy and other
technologically-advanced platforms. These initiatives might not be as financially successful as we initially announced or might expect
due to factors that include, but are not limited to, possible discontinuance of tax credits, competing energy prices, failure to operate at
the volumes anticipated, abilities of our joint venture partners and our limited experience in some of these new areas.
Tyson Limited Partnership can exercise significant control.
As of October 1, 2011, Tyson Limited Partnership (the TLP) owns 99.97% of the outstanding shares of Class B Common Stock, $0.10
par value (Class B stock) and the TLP and members of the Tyson family own, in the aggregate, 2.45% of the outstanding shares of
Class A Common Stock, $0.10 par value (Class A stock), giving them, collectively, control of approximately 70.74% of the total
voting power of the outstanding voting stock. At this time, the TLP does not have a managing general partner, and, as such, the
management rights of the managing general partner may be exercised by a majority of the percentage interests of the general partners.
As of October 1, 2011, Mr. John Tyson, Chairman of the Board of Directors, has 33.33% of the general partner percentage interests,
and Ms. Barbara Tyson, a director of the Company, has 11.115% general partner percentage interests (the remaining general
partnership interests are held by the Tyson Partnership Interest Trust (44.44%) and Harry C. Erwin, III (11.115%)). As a result of
these holdings, positions and directorships, the partners in the TLP have the ability to exert substantial influence or actual control over
our management and affairs and over substantially all matters requiring action by our stockholders, including amendments to our
restated certificate of incorporation and by-laws, the election and removal of directors, any proposed merger, consolidation or sale of