Tyson Foods 2012 Annual Report Download - page 7

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CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE
HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain information in this report constitutes forward-looking statements. Such forward-looking statements include, but are not limited
to, current views and estimates of our outlook for fiscal 2013, other future economic circumstances, industry conditions in domestic
and international markets, our performance and financial results (e.g., debt levels, return on invested capital, value-added product
growth, capital expenditures, tax rates, access to foreign markets and dividend policy). These forward-looking statements are subject
to a number of factors and uncertainties that could cause our actual results and experiences to differ materially from anticipated results
and expectations expressed in such forward-looking statements. We wish to caution readers not to place undue reliance on any
forward-looking statements, which speak only as of the date made. We undertake no obligation to update any forward-looking
statements, whether as a result of new information, future events or otherwise.
Among the factors that may cause actual results and experiences to differ from anticipated results and expectations expressed in such
forward-looking statements are the following: (i) the effect of, or changes in, general economic conditions; (ii) fluctuations in the cost
and availability of inputs and raw materials, such as live cattle, live swine, feed grains (including corn and soybean meal) and energy;
(iii) market conditions for finished products, including competition from other global and domestic food processors, supply and
pricing of competing products and alternative proteins and demand for alternative proteins; (iv) successful rationalization of existing
facilities and operating efficiencies of the facilities; (v) risks associated with our commodity purchasing activities; (vi) access to
foreign markets together with foreign economic conditions, including currency fluctuations, import/export restrictions and foreign
politics; (vii) outbreak of a livestock disease (such as avian influenza (AI) or bovine spongiform encephalopathy (BSE)), which could
have an adverse effect on livestock we own, the availability of livestock we purchase, consumer perception of certain protein products
or our ability to access certain domestic and foreign markets; (viii) changes in availability and relative costs of labor and contract
growers and our ability to maintain good relationships with employees, labor unions, contract growers and independent producers
providing us livestock; (ix) issues related to food safety, including costs resulting from product recalls, regulatory compliance and any
related claims or litigation; (x) changes in consumer preference and diets and our ability to identify and react to consumer trends;
(xi) significant marketing plan changes by large customers or loss of one or more large customers; (xii) adverse results from litigation;
(xiii) risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook;
(xiv) compliance with and changes to regulations and laws (both domestic and foreign), including changes in accounting standards,
tax laws, environmental laws, agricultural laws and occupational, health and safety laws; (xv) our ability to make effective
acquisitions or joint ventures and successfully integrate newly acquired businesses into existing operations; (xvi) effectiveness of
advertising and marketing programs; and (xvii) those factors listed under Item 1A. “Risk Factors.”
ITEM 1A. RISK FACTORS
These risks, which should be considered carefully with the information provided elsewhere in this report, could materially adversely
affect our business, financial condition or results of operations. Additional risks and uncertainties not currently known to us or that we
currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations.
Fluctuations in commodity prices and in the availability of raw materials, especially feed grains, live cattle, live swine and
other inputs could negatively impact our earnings.
Our results of operations and financial condition are dependent upon the cost and supply of raw materials such as feed grains, live
cattle, live swine, energy and ingredients, as well as the selling prices for our products, many of which are determined by constantly
changing market forces of supply and demand over which we have limited or no control. Corn, soybean meal and other feed
ingredients are major production costs for vertically-integrated poultry processors such as us, representing roughly 69% of our cost of
growing a live chicken in fiscal 2012. As a result, fluctuations in prices for these feed ingredients, which include competing demand
for corn and soybean meal for use in the manufacture of renewable energy, can adversely affect our earnings. Production of feed
ingredients is affected by, among other things, weather patterns throughout the world, the global level of supply inventories and
demand for grains and other feed ingredients, as well as agricultural and energy policies of domestic and foreign governments.
We have cattle under contract at feed yards owned by third parties; however, most of the cattle we process are purchased from
independent producers. We have cattle buyers located throughout cattle producing areas who visit feed yards and buy live cattle on the
open spot market. We also enter into various risk-sharing and procurement arrangements with producers who help secure a supply of
livestock for daily start-up operations at our facilities. The majority of our live swine supply is obtained through procurement
arrangements with independent producers. We also employ buyers who purchase hogs on a daily basis, generally a few days before the
animals are required for processing. In addition, we raise live swine and sell feeder pigs to independent producers for feeding to
processing weight and have contract growers feed a minimal amount of company-owned live swine for our own processing needs.
Any decrease in the supply of cattle or swine on the spot market could increase the price of these raw materials and further increase
per head cost of production due to lower capacity utilization, which could adversely affect our financial results.