Tyson Foods 2015 Annual Report Download - page 13
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Please find page 13 of the 2015 Tyson Foods annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Market fluctuations could negatively impact our operating results as we hedge certain transactions.
Ourbusinessisexposedtofluctuatingmarketconditions.Weusederivativefinancialinstrumentstoreduceourexposuretovariousmarketrisksincludingchanges
incommodityprices,interestratesandforeignexchangerates.Weholdcertainpositions,primarilyingrainandlivestockfutures,thatdonotqualifyashedgesfor
financialreportingpurposes.Thesepositionsaremarkedtofairvalue,andtheunrealizedgainsandlossesarereportedinearningsateachreportingdate.
Therefore,lossesonthesecontractswilladverselyaffectourreportedoperatingresults.Whilethesecontractsreduceourexposuretochangesinpricesfor
commodityproducts,theuseofsuchinstrumentsmayultimatelylimitourabilitytobenefitfromfavorablecommodityprices.
Deterioration of economic conditions could negatively impact our business.
Ourbusinessmaybeadverselyaffectedbychangesineconomicconditions,includinginflation,interestrates,accesstocapitalmarkets,consumerspendingrates,
energyavailabilityandcosts(includingfuelsurcharges)andtheeffectsofgovernmentalinitiativestomanageeconomicconditions.Anysuchchangescould
adverselyaffectthedemandforourproducts,orthecostandavailabilityofourneededrawmaterials,cookingingredientsandpackagingmaterials,thereby
negativelyaffectingourfinancialresults.
Disruptionsinglobalcreditandotherfinancialmarketsanddeteriorationofeconomicconditionscould,amongotherthings:
• makeitmoredifficultorcostlyforustoobtainfinancingforouroperationsorinvestmentsortorefinanceourdebtinthefuture;
• causeourlenderstodepartfrompriorcreditindustrypracticeandmakemoredifficultorexpensivethegrantingofanyamendmentof,orwaiversunder,
ourcreditagreementstotheextentwemayseektheminthefuture;
• impairthefinancialconditionofsomeofourcustomersandsuppliers,therebyincreasingcustomerbaddebtsornon-performancebysuppliers;
• negativelyimpactglobaldemandforproteinproducts,whichcouldresultinareductionofsales,operatingincomeandcashflows;
• decreasethevalueofourinvestmentsinequityanddebtsecurities,includingourmarketabledebtsecurities,company-ownedlifeinsuranceandpension
andotherpostretirementplanassets;
•negativelyimpactourcommoditypurchasingactivitiesifwearerequiredtorecordlossesrelatedtoderivativefinancialinstruments;or
•impairthefinancialviabilityofourinsurers.
The loss of one or more of our largest customers could negatively impact our business.
Ourbusinesscouldsuffersignificantsetbacksinsalesandoperatingincomeifourcustomers’plansand/ormarketschangesignificantlyorifwelostoneormore
ofourlargestcustomers,including,forexample,Wal-MartStores,Inc.,whichaccountedfor16.8%ofoursalesinfiscal2015.Ourretailcustomerstypicallydo
notenterintowrittencontracts,andiftheydosigncontracts,theygenerallyarelimitedinscopeandduration.Therecanbenoassurancethatsignificantcustomers
willcontinuetopurchaseourproductsinthesamemixorquantitiesoronthesametermsasinthepast.Manyofourcustomers,suchassupermarkets,warehouse
clubsandfooddistributors,haveconsolidatedinrecentyears,andconsolidationisexpectedtocontinuethroughouttheUnitedStatesandinothermajormarkets.
Theseconsolidationshaveproducedlarge,sophisticatedcustomerswithincreasedbuyingpowerwhoaremorecapableofoperatingwithreducedinventories,
opposingpriceincreases,anddemandinglowerpricing,increasedpromotionalprogramsandspecificallytailoredproducts.Thesecustomersalsomayuseshelf
spacecurrentlyusedforourproductsfortheirownprivatelabelproducts.Becauseofthesetrends,ourvolumegrowthcouldsloworwemayneedtolowerprices
orincreasepromotionalspendingforourproducts.Thelossofasignificantcustomeroramaterialreductioninsalesto,oradversechangetotradetermswith,a
significantcustomercouldmateriallyandadverselyaffectourproductsales,financialconditionandresultsofoperations.
Extreme factors or forces beyond our control could negatively impact our business.
Ourabilitytomake,moveandsellproductsiscriticaltooursuccess.Naturaldisasters,fire,bioterrorism,pandemicorextremeweather,includingdroughts,floods,
excessivecoldorheat,hurricanesorotherstorms,couldimpairthehealthorgrowthoflivestockorinterferewithouroperationsduetopoweroutages,fuel
shortages,damagetoourproductionandprocessingfacilitiesordisruptionoftransportationchannels,amongotherthings.Anyofthesefactorscouldhavean
adverseeffectonourfinancialresults.
Failure to maximize or to successfully assert our intellectual property rights could impact our competitiveness.
Weconsiderourintellectualpropertyrights,particularlyandmostnotablyourtrademarks,butalsoourtradesecrets,patentsandcopyrights,tobeasignificantand
valuableaspectofourbusiness.Weattempttoprotectourintellectualpropertyrightsthroughacombinationoftrademark,tradesecret,patentandcopyrightlaws,
aswellaslicensingagreements,third-partynondisclosureandassignmentagreementsandpolicingofthird-partymisusesofourintellectualproperty.Wecannot
besurethattheseintellectualpropertyrightswillbemaximizedorthattheycanbesuccessfullyasserted.Thereisariskthatwewillnotbeabletoobtainand
perfectourownor,whereappropriate,licenseintellectualpropertyrightsnecessarytosupportnewproductintroductions.
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