Tyson Foods 2012 Annual Report Download - page 8

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Market supply and demand and the prices we receive for our products may fluctuate due to competition from other food
producers and processors.
We face competition from other food producers and processors. Some of the factors on which we compete and which may drive
demand for our products include:
• price;
• product safety and quality;
• brand identification;
• breadth and depth of product offerings;
• availability of our products and competing products;
• customer service; and
• credit terms.
Demand for our products also is affected by competitors’ promotional spending, the effectiveness of our advertising and marketing
programs, and the availability or price of competing proteins.
We attempt to obtain prices for our products that reflect, in part, the price we must pay for the raw materials that go into our products.
If we are not able to obtain higher prices for our products when the price we pay for raw materials increases, we may be unable to
maintain positive margins.
Outbreaks of livestock diseases can adversely impact our ability to conduct our operations and demand for our products.
Demand for our products can be adversely impacted by outbreaks of livestock diseases, which can have a significant impact on our
financial results. Efforts are taken to control disease risks by adherence to good production practices and extensive precautionary
measures designed to ensure the health of livestock. However, outbreaks of disease and other events, which may be beyond our
control, either in our own livestock or cattle and hogs owned by independent producers who sell livestock to us, could significantly
affect demand for our products, consumer perceptions of certain protein products, the availability of livestock for purchase by us and
our ability to conduct our operations. Moreover, the outbreak of livestock diseases, particularly in our Chicken segment, could have a
significant effect on the livestock we own by requiring us to, among other things, destroy any affected livestock. Furthermore, an
outbreak of disease could result in governmental restrictions on the import and export of our products to or from our suppliers,
facilities or customers. This could also result in negative publicity that may have an adverse effect on our ability to market our
products successfully and on our financial results.
We are subject to risks associated with our international activities, which could negatively affect our sales to customers in
foreign countries, as well as our operations and assets in such countries.
In fiscal 2012, we sold products to approximately 130 countries. Major sales markets include Brazil, Canada, Central America, China,
the European Union, Japan, Mexico, the Middle East, Russia, South Korea, Taiwan, Ukraine and Vietnam. Our sales to customers in
foreign countries for fiscal 2012 totaled $5.5 billion, of which $4.0 billion related to export sales from the United States. In addition,
we had approximately $564 million of long-lived assets located in foreign countries, primarily Brazil, China, Mexico and India, at the
end of fiscal 2012.
As a result, we are subject to various risks and uncertainties relating to international sales and operations, including:
• imposition of tariffs, quotas, trade barriers and other trade protection measures imposed by foreign countries regarding the
importation of poultry, beef and pork products, in addition to import or export licensing requirements imposed by various
foreign countries;
• closing of borders by foreign countries to the import of poultry, beef and pork products due to animal disease or other
perceived health or safety issues;
• impact of currency exchange rate fluctuations between the U.S. dollar and foreign currencies, particularly the Brazilian real,
the British pound sterling, the Canadian dollar, the Chinese renminbi, the European euro, and the Mexican peso;
• political and economic conditions;
• difficulties and costs associated in complying with, and enforcement of remedies under, a wide variety of complex domestic
and international laws, treaties and regulations, including, without limitation, the United States’ Foreign Corrupt Practices Act
and economic and trade sanctions enforced by the United States Department of the Treasury’s Office of Foreign Assets
Control;
• different regulatory structures and unexpected changes in regulatory environments;
• tax rates that may exceed those in the United States and earnings that may be subject to withholding requirements and
incremental taxes upon repatriation;
• potentially negative consequences from changes in tax laws; and
• distribution costs, disruptions in shipping or reduced availability of freight transportation.