Tyson Foods 2015 Annual Report Download - page 8
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Please find page 8 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.WecontinuetoevaluateourestimatesofsynergiestoberealizedfromtheHillshireBrandsacquisitionandrefinethem.Ouractualcost-savingscoulddiffer
materiallyfromourcurrentestimates.Actualcost-savings,thecostsrequiredtorealizethecost-savingsandthesourceofthecost-savingscoulddiffermaterially
fromourestimates,andwecannotassureyouthatwewillachievethefullamountofcost-savingsonthescheduleanticipatedoratallorthatthesecost-savings
programswillnothaveotheradverseeffectsonourbusiness.Inlightoftheseuncertainties,youshouldnotplaceunduerelianceonourestimatedcost-savings.
Finally,wemaynotbeabletoachievethetargetedoperatingorlong-termstrategicbenefitsoftheHillshireBrandsacquisitionorcouldincurhighertransition
costs.Aninabilitytorealizethefullextentof,oranyof,theanticipatedbenefitsoftheHillshireBrandsacquisition,aswellasanydelaysencounteredinthe
integrationprocess,couldhaveanadverseeffectonourbusiness,resultsofoperationsandfinancialcondition.
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.
Ourresultsofoperationsandfinancialcondition,aswellasthesellingpricesforourproducts,aredependentuponthecostandsupplyofcommoditiesandraw
materialssuchaspork,beef,poultry,corn,soybean,packagingmaterialsandenergyand,toalesserextent,cheese,fruit,seasoningblends,flour,cornsyrup,corn
oils,butterandsugar.Corn,soybeanmealandotherfeedingredients,forinstance,representedroughly64%ofourcostofgrowingalivechickeninfiscal2015.
Productionandpricingofthesecommoditiesaredeterminedbyconstantlychangingmarketforcesofsupplyanddemandoverwhichwehavelimitedorno
control.Suchfactorsinclude,amongotherthings,weatherpatternsthroughouttheworld,outbreaksofdisease,thegloballevelofsupplyinventoriesanddemand
forgrainsandotherfeedingredients,aswellasagriculturalandenergypoliciesofdomesticandforeigngovernments.
Volatilityinourcommodityandrawmaterialcostsdirectlyimpactourgrossmarginandprofitability.TheCompany’sobjectiveistooffsetcommodityprice
increaseswithpricingactionsovertime.However,wemaynotbeabletoincreaseourproductpricesenoughtosufficientlyoffsetincreasedrawmaterialcostsdue
toconsumerpricesensitivityorthepricingposturesofourcompetitors.Inaddition,ifweincreasepricestooffsethighercosts,wecouldexperiencelowerdemand
forourproductsandsalesvolumes.Conversely,decreasesinourcommodityandotherinputcostsmaycreatepressureonustodecreaseourprices.Whileweuse
derivativefinancialinstruments,primarilyfuturesandoptions,toreducetheeffectofchangingpricesandasamechanismtoprocuretheunderlyingcommodity,
wedonotfullyhedgeagainstchangesincommoditiesprices.
Overtime,ifweareunabletopriceourproductstocoverincreasedcosts,tooffsetoperatingcostincreaseswithcontinuousimprovementsavingsorarenot
successfulinourcommodityhedgingprogram,thencommodityandrawmaterialpricevolatilityorincreasescouldmateriallyandadverselyaffectour
profitability,financialconditionandresultsofoperations.
The prices we receive for our products may fluctuate due to competition from other food producers and processors.
Thefoodindustryingeneralisintenselycompetitive.Wefacecompetitionfromotherfoodproducersandprocessorsthathavevariousproductrangesand
geographicreach.Someofthefactorsonwhichwecompeteinclude:pricing,productsafetyandquality,brandidentification,innovation,breadthanddepthof
productofferings,availabilityofourproductsandcompetingproducts,customerservice,andcreditterms.
Fromtimetotimeinresponsetothesecompetitivepressuresortomaintainmarketshare,wemayneedtoreducethepricesforsomeofourproductsorincreaseor
reallocatespendingonmarketing,advertisingandpromotionsandnewproductinnovation.Suchpressuresalsomayrestrictourabilitytoincreasepricesin
responsetorawmaterialandothercostincreases.Anyreductioninpricesasaresultofcompetitivepressures,oranyfailuretoincreasepricestooffsetcost
increases,couldharmourprofitmargins.Ifwereducepricesbutwecannotincreasesalesvolumestooffsetthepricechanges,thenourfinancialconditionand
resultsofoperationswillsuffer.Alternatively,ifwedonotreduceourpricesandourcompetitorsseekadvantagethroughpricingorpromotionalchanges,our
revenuesandmarketsharewouldbeadverselyaffected.
Outbreaks of livestock diseases can adversely impact our ability to conduct our operations and demand for our products.
Demandforourproductscanbeadverselyimpactedbyoutbreaksoflivestockdiseases,whichcanhaveasignificantimpactonourfinancialresults.Effortsare
takentocontroldiseaserisksbyadherencetogoodproductionpracticesandextensiveprecautionarymeasuresdesignedtoensurethehealthoflivestock.However,
outbreaksofdiseaseandotherevents,whichmaybebeyondourcontrol,eitherinourownlivestockorcattleandhogsownedbyindependentproducerswhosell
livestocktous,couldsignificantlyaffectdemandforourproducts,consumerperceptionsofcertainproteinproducts,theavailabilityoflivestockforpurchasebyus
andourabilitytoconductouroperations.Moreover,theoutbreakoflivestockdiseases,particularlyinourChickensegment,couldhaveasignificanteffectonthe
livestockweownbyrequiringusto,amongotherthings,destroyanyaffectedlivestock.Furthermore,anoutbreakofdiseasecouldresultingovernmental
restrictionsontheimportandexportofourproductstoorfromoursuppliers,facilitiesorcustomers.Thiscouldalsoresultinnegativepublicitythatmayhavean
adverseeffectonourabilitytomarketourproductssuccessfullyandonourfinancialresults.
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