Tyson Foods 2014 Annual Report Download - page 4

PART I
ITEM 1. BUSINESS
GENERAL
Founded in 1935, Tyson Foods, Inc. and its subsidiaries (collectively, “Company,” “we,” “us” or “our”)
are one of the world's largest producers
of chicken, beef, pork and prepared foods that include leading brands such as Tyson®, Jimmy Dean®, Hillshire Farm®, Sara Lee® frozen
bakery, Ball Park®, Wright®, Aidells® and State Fair®. Our operations are conducted in five segments: Chicken, Beef, Pork, Prepared Foods
and International. Some of the key factors influencing our business are customer demand for our products; the ability to maintain and grow
relationships with customers and introduce new and innovative products to the marketplace; accessibility of international markets; market
prices for our products; the cost and availability of live cattle and hogs, raw materials, grain and feed ingredients; and operating efficiencies of
our facilities.
We operate a fully vertically integrated chicken production process. Our integrated operations consist of breeding stock, contract growers, feed
production, processing, further-processing, marketing and transportation of chicken and related allied products, including animal and pet food
ingredients. Through our wholly-owned subsidiary, Cobb-Vantress, Inc. (Cobb), we are one of the leading poultry breeding stock suppliers in
the world. Investing in breeding stock research and development allows us to breed into our flocks the characteristics found to be most
desirable.
We also process live fed cattle and hogs and fabricate dressed beef and pork carcasses into primal and sub-primal meat cuts, case ready beef
and pork and fully-cooked meats. In addition, we derive value from allied products such as hides and variety meats sold to further processors
and others.
We produce a wide range of fresh, value-added, frozen and refrigerated food products. Our products are marketed and sold primarily by our
sales staff to grocery retailers, grocery wholesalers, meat distributors, warehouse club stores, military commissaries, industrial food processing
companies, chain restaurants or their distributors, live markets, international export companies and domestic distributors who serve restaurants,
foodservice operations such as plant and school cafeterias, convenience stores, hospitals and other vendors. Additionally, sales to the military
and a portion of sales to international markets are made through independent brokers and trading companies.
On August 28, 2014, we acquired and consolidated The Hillshire Brands Company ("Hillshire Brands"), a manufacturer and marketer of
branded, convenient foods. The fiscal 2014 one month results from operations for Hillshire Brands are included in the Prepared Foods segment
and in this 2014 Annual Report on Form 10-K. For further description of this transaction, refer to Part II, Item 8, Notes to Consolidated
Financial Statements, Note 3: Acquisitions and Dispositions.
FINANCIAL INFORMATION OF SEGMENTS
We operate in five segments: Chicken, Beef, Pork, Prepared Foods and International. During the second quarter of fiscal 2014, we
began reporting our International operation as a separate segment, which was previously included in our Chicken segment. Our International
segment became a separate reportable segment as a result of changes to our internal financial reporting to align with previously announced
executive leadership changes. All periods presented have been reclassified to reflect this change. Beef, Pork,
Prepared Foods and Other results were not impacted by this change. The contribution of each segment to net sales and operating income (loss),
and the identifiable assets attributable to each segment, are set forth in Note 17: Segment Reporting of the Notes to Consolidated Financial
Statements.
DESCRIPTION OF SEGMENTS
Chicken: Chicken includes our domestic operations related to raising and processing live chickens into fresh, frozen and value-added chicken
products, as well as sales from allied products. Products are marketed domestically to food retailers, foodservice distributors, restaurant
operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food
processors, as well as to international export markets. This segment also includes logistics operations to move products through our domestic
supply chain and the global operations of our chicken breeding stock subsidiary.
Beef: Beef includes our operations related to processing live fed cattle and fabricating dressed beef carcasses into primal and sub-primal meat
cuts and case-ready products. Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains
and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to
international export markets. This segment also includes sales from allied products such as hides and variety meats, as well as logistics
operations to move products through the supply chain.
Pork: Pork includes our operations related to processing live market hogs and fabricating pork carcasses into primal and sub-primal cuts and
case-ready products. Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and
noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to
international export markets. This segment also includes our live swine group, related allied product processing activities and logistics
operations to move products through the supply chain.
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