What changed in this filing

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Item 1. Business

2020-11-16 compared with 2019-11-12 · 78 added, 73 removed, 137 unchanged (52% of the section changed)

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Tyson Foods innovates continually to make protein more sustainable, tailor food for everywhere it’s available and raise the world’s expectations for how much good food can do.

Headquartered in Springdale, Arkansas, the Company had approximately 141,000 team members on September 28, 2019 .

Through its Core Values, Tyson Foods is a company of people engaged in the production of food, seeking to pursue trust and integrity, and committed to creating value for our shareholders, our customers, our team members, and our communities.

Headquartered in Springdale, Arkansas, the Company had approximately 139,000 employees ("team members") on October 3, 2020 .

Through our Core Values, Tyson Foods is a company of people engaged in the production of food, seeking to pursue trust and integrity, and committed to creating value for our shareholders, our customers, our team members, and our communities.

We strive to be honorable and operate with integrity, be faith-friendly and inclusive, serve as stewards of the resources entrusted to us, and provide a safe work environment.

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We operate a fully vertically-integrated chicken production process with the majority of our production certified as no antibiotic ever (sometimes referred to as “NAE”).

Our integrated operations consist of breeding stock, contract farmers, feed production, processing, further-processing, marketing and transportation of chicken and related allied products, including animal and pet food ingredients.

Our integrated operations consist of breeding stock, contract farmers, feed production, processing, further-processing, marketing and transportation of chicken and related specialty products, including animal and pet food ingredients.

Through our wholly-owned subsidiary, Cobb-Vantress, Inc., we are one of the leading poultry breeding stock suppliers in the world.

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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.

In addition, we derive value from specialty 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.

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Additionally, sales to the military and a portion of sales to international markets are made through independent brokers and trading companies.

In fiscal 2019, we acquired and consolidated MFG (USA) Holdings, Inc.

and McKey Luxembourg Holdings S.à.r.l.

(“Keystone Foods”), and the Thai and European operations of BRF S.A.

("Thai and European operations"), in furtherance of our growth strategy and expansion of our value-added protein capabilities in domestic and global markets.

Keystone Foods' domestic and international results, subsequent to the acquisition closing, are included in our Chicken segment and International/Other for segment presentation, respectively.

The Thai and European operations' results, subsequent to the acquisition closing, are included in International/Other for segment presentation.

In fiscal 2018, we acquired Original Philly Holdings, Inc.

("Original Philly"), a value-added protein business, and the results from operation of this business are included in the Prepared Foods and Chicken segments.

In fiscal 2018, we also acquired Tecumseh Poultry, LLC ("Tecumseh"), a vertically integrated value-added protein business, and the assets of American Proteins, Inc.

and AMPRO Products, Inc.

("American Proteins"), a poultry rendering and blending operation, as part of our strategic expansion and sustainability initiatives.

The results from operations of these businesses are included in our Chicken segment.

For further description of these transactions, refer to Part II, Item 8, Notes to Consolidated Financial Statements, Note 3:

Acquisitions and Dispositions.

In fiscal 2018, we completed the sale of four non-protein businesses as part of our strategic focus on protein brands.

All of these businesses were part of our Prepared Foods segment and included Sara Lee® Frozen Bakery, Kettle, Van’s®, and TNT Crust and produced items such as frozen desserts, waffles, snack bars, soups, sauces, sides and pizza crusts.

The sales included the Chef Pierre®, Bistro Collection®, Kettle Collection™, and Van’s® brands, a license to use the Sara Lee® brand in various channels, as well as our Tarboro, North Carolina, Fort Worth, Texas, Traverse City, Michigan, and Green Bay, Wisconsin prepared foods facilities.

For further description of these transactions, refer to Part II, Item 8, Notes to Consolidated Financial Statements, Note 3:

Acquisitions and Dispositions.

As part of our commitment to innovation and growth, we have a venture capital fund focused on investing in companies developing breakthrough technologies, business models and products to sustainably feed a growing world population.

The Tyson New Ventures LLC fund is used to broaden our exposure to innovative, new forms of protein and ways of sustainably producing food to complement the Company's continuing investments in innovation in our core Beef, Pork, Chicken and Prepared Foods businesses.

As part of our commitment to innovation and growth, we have a subsidiary focused on investing in companies developing breakthrough technologies, business models and products to sustainably feed a growing world population.

Tyson New Ventures LLC is used to broaden our exposure to innovative, new forms of protein and ways of sustainably producing food to complement the Company's continuing investments in innovation in our core Beef, Pork, Chicken and Prepared Foods businesses.

FINANCIAL INFORMATION OF SEGMENTS

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Beef, Pork, Chicken and Prepared Foods.

International/Other primarily includes our foreign operations in Australia, China, South Korea, Malaysia, Mexico, the Netherlands, Thailand and the United Kingdom, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC.

International/Other primarily includes our foreign operations in Australia, China, Malaysia, Mexico, the Netherlands, South Korea and Thailand, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC.

The contribution of each segment to net sales and operating income (loss), and the identifiable assets attributable to each segment, are set forth in Part II, Item 8, Notes to Consolidated Financial Statements, Note 18:

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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.

This segment also includes sales from specialty products such as hides and variety meats, as well as logistics operations to move products through the supply chain.

Pork includes our operations related to processing live market hogs and fabricating pork carcasses into primal and sub-primal cuts and case-ready products.

This segment also includes our live swine group, related allied product processing activities and logistics operations to move products through the supply chain.

Chicken includes our domestic operations related to raising and processing live chickens into, and purchasing raw materials for fresh, frozen and value-added chicken products, as well as sales from allied products.

This segment also includes our live swine group, related specialty product processing activities and logistics operations to move products through the supply chain.

Our value-added chicken products primarily include breaded chicken strips, nuggets, patties and other ready-to-fix or fully cooked chicken parts.

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Prepared Foods includes our operations related to manufacturing and marketing frozen and refrigerated food products and logistics operations to move products through the supply chain.

This segment includes brands such as Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, State Fair®, as well as artisanal brands Aidells®, Gallo Salame®, and Golden Island®.

This segment includes brands such as Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, State Fair®, as well as artisanal brands Aidells® and Gallo Salame®.

Products primarily include ready-to-eat sandwiches, sandwich components such as flame-grilled hamburgers and Philly steaks, pepperoni, bacon, breakfast sausage, turkey, lunchmeat, hot dogs, flour and corn tortilla products, appetizers, snacks, prepared meals, ethnic foods, side dishes, meat dishes, breadsticks and processed meats.

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The primary raw materials used in our beef operations are live cattle.

We do not have facilities of our own to raise cattle but employ cattle buyers located throughout cattle producing areas who visit independent feed yards and public auctions and buy live cattle on the open spot market.

We do not have facilities of our own to raise cattle but employ cattle buyers located throughout cattle producing areas who visit independent feed yards and public auctions to buy live cattle on the open spot market.

These buyers are trained to select high quality animals, and we continually measure their performance.

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There, contract farmers care for and raise the chicks according to our standards, with advice from our technical service personnel, until the broilers reach the desired processing weight.

Adult chickens are transported to processing plants where they are harvested and converted into finished products, which are then sent to distribution centers and delivered to customers.

Adult chickens are transported to processing facilities where they are harvested and converted into finished products, which are then sent to distribution centers and delivered to customers.

We operate feed mills to produce scientifically-formulated feeds.

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We sold products in approximately 145 countries in fiscal 2020 .

Major sales markets include Australia, Canada, Central America, Chile, China, the European Union, Japan, Mexico, Malaysia, the Middle East, South Korea, Taiwan and Thailand.

Major sales markets include Australia, Canada, Central America, Chile, China, the European Union, the United Kingdom, Japan, Mexico, Malaysia, the Middle East, South Korea, Taiwan and Thailand .

We have the following foreign operations:

Cobb-Vantress, a chicken breeding stock subsidiary, has business interests in Argentina, Brazil, China, Colombia, the Dominican Republic, India, the Netherlands, New Zealand, Peru, the Philippines, Spain, Turkey, and the United Kingdom.

Tyson Asia-Pacific, consists of chicken production operations in Thailand and Malaysia, and a beef production operation in Australia.

Tyson China-Korea, with locations in China and South Korea, consists of vertically-integrated chicken production and chicken further-processing operations.

Tyson Europe, sells chicken products throughout Europe produced from our other global operations and co-packer arrangements, and has chicken further processing operations in the United Kingdom and the Netherlands.

Tyson Asia-Pacific, consists of vertically-integrated chicken production operations in Thailand, further-processing operations in Malaysia and a beef production operation in Australia.

Tyson China-Korea, with locations in China and South Korea, consists of vertically-integrated chicken production and further-processing operations, and a joint venture interest in a non-consolidated chicken processing business.

Tyson Europe, sells chicken products throughout Europe produced from our other global operations and co-packer arrangements, and has a chicken further processing operation in the Netherlands.

Vibra Agroindustrial S.A., a joint venture in Brazil in which we have a minority interest, is a vertically-integrated chicken processing business.

Godrej Tyson Foods, a joint venture in India in which we have a minority interest, is primarily a chicken processing business.

Tyson Mexico Trading Company, a Mexican subsidiary, sells chicken products primarily through our U.S.

Tyson Mexico Trading Company, a Mexican subsidiary, sells chicken products primarily from our U.S.

operations and co-packer arrangements.

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RESEARCH AND DEVELOPMENT

We conduct continuous research and development activities to improve product development, to automate manual processes in our processing plants and grow-out operations, and to improve chicken breeding stock.

With regards to our food products we have two research and development locations, our Discovery Center in Springdale, Arkansas, and an Innovation Center located in Downers Grove, Illinois.

We conduct continuous research and development activities to improve product development, to automate manual processes in our processing facilities and grow-out operations, and to improve chicken breeding stock.

With regards to our food products we have two primary research and development locations, our Discovery Center in Springdale, Arkansas, and an Innovation Center located in Downers Grove, Illinois.

The centers include more than 80,000 square feet of United States Department of Agriculture ("USDA") pilot plant space, two consumer sensory and focus group areas, two packaging labs and 25 research kitchens.

The centers enable us to bring new market-leading retail and foodservice products to the customer quickly and efficiently.

Additionally, in fiscal 2020, we opened the Tyson Manufacturing Automation Center to grow the development of new manufacturing solutions and to enhance team member training on new technology.

ENVIRONMENTAL REGULATION AND FOOD SAFETY

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In addition to our own internal Food Safety and Quality Assurance oversight and review, our beef, pork, chicken, and prepared foods products are subject to inspection prior to distribution, primarily by the USDA and the United States Food and Drug Administration ("FDA").

We are also participants in the USDA's Hazard Analysis and Critical Control Points ("HACCP") program or FDA's Hazard Analysis and Risk-Based Prevention Controls ("HARPC") program as applicable and are subject to the Sanitation Standard Operating Procedures and the Public Health Security and Bioterrorism Preparedness and Response Act of 2002.

We also participate in the USDA's Hazard Analysis and Critical Control Points ("HACCP") program or FDA's Hazard Analysis and Risk-Based Prevention Controls ("HARPC") program as applicable and are subject to the Sanitation Standard Operating Procedures and the Public Health Security and Bioterrorism Preparedness and Response Act of 2002.

Additionally, our foreign operations are subject to various other food safety and quality assurance oversight and review.

EMPLOYEES AND LABOR RELATIONS

As of September 28, 2019 , we employed approximately 141,000 employees.

Approximately 122,000 employees were employed in the United States, and 19,000 employees were employed in foreign countries, primarily in Thailand and China.

Approximately 34,000 employees in the United States were subject to collective bargaining agreements with various labor unions, with approximately 11% of those employees at locations either under negotiation for contract renewal or included under agreements expiring in fiscal 2020 .

As of October 3, 2020 , we employed approximately 139,000 team members.

Approximately 120,000 team members were employed in the United States, of which approximately 114,000 were employed at production facilities, and approximately 19,000 team members were employed in foreign countries, primarily in Thailand and China.

Approximately 31,000 team members in the United States were subject to collective bargaining agreements with various labor unions, with approximately 37% of those team members at locations either under negotiation for contract renewal or included under agreements expiring in fiscal 2021 .

The remaining agreements expire over the next several years.

Approximately 5,000 employees in foreign countries were subject to collective bargaining agreements.

Approximately 5,000 team members in foreign countries were subject to collective bargaining agreements.

We believe our overall relations with our workforce are good.

Health and Safety:

We maintain a safety culture grounded on the premise of eliminating workplace incidents, risks and hazards.

We have created and implemented processes to help eliminate safety events by reducing their frequency and severity.

We also review and monitor our performance closely.

Our goal is to reduce Occupational Safety and Health Administration ("OSHA") recordable incidents by 10% year over year.

During fiscal 2020, our recordable incident rate declined 17% compared to fiscal 2019.

In response to the global novel coronavirus pandemic (“COVID-19” or “pandemic”), we have implemented and continue to implement safety measures in all our facilities.

As an expansion of our We Care workplace safety program and continued efforts to boost the overall health and wellness of our workforce, we are piloting health clinics near our production facilities, giving team members and their families easier access to high-quality healthcare.

Inclusion and Diversity:

We embrace the diversity of our team members, customers, stakeholders and consumers, including their unique backgrounds, experiences, thoughts and talents.

Everyone is valued and appreciated for their distinct contributions to the growth and sustainability of our business.

We strive to cultivate a culture and vision that supports and enhances our ability to recruit, develop and retain diverse talent at every level.

We have a goal to build a highly engaged team by increasing retention year over year.

For fiscal 2020, our domestic workforce realized a 1% increase in retention rate from fiscal 2019.

As of October 3, 2020, our domestic workforce was approximately 40% gender diverse, and of our domestic team members, our workforce was approximately 33% white, approximately 27% Hispanic or Latino, approximately 25% Black or African American, and approximately 11% Asian American.

Talent and Development:

Our talent strategy is focused on attracting the best talent, recognizing and rewarding their performance, while continually developing, engaging and retaining them.

We focus on the team member experience, removing barriers to engagement, further modernizing the human relations process, focusing on hourly team member retention and continually improving equity and effectiveness of all talent practices.

Through our Upward Academy Program, we offer English as a second language and financial literacy training to all team members.

As of October 3, 2020, we have launched the program in 59 Company locations.

We have a goal to be the employer of choice within our markets and peer groups, and strive to grow and develop the different capabilities and skills that we need for the future, while maintaining a robust pipeline of talent throughout the organization.

MARKETING AND DISTRIBUTION

Our principal marketing objective is to be the preferred provider of beef, pork, chicken, and prepared foods products for our customers and consumers.

We build the Tyson®, Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, Aidells®, ibp® and State Fair® brands while supporting strong regional and emerging brands primarily through well-defined, product-specific advertising, marketing, and public relations efforts focused toward key consumer targets with specific needs.

We build the Tyson®, Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, Aidells®, ibp® and State Fair® brands while supporting strong regional and emerging brands primarily through distinctive brand and product advertising, promotion, and public relations efforts focused toward key consumer targets with specific needs.

We identify growth and business opportunities through consumer and customer insights derived via leading research and analytic capabilities.

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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) 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;

(ii) 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;

(iii) outbreak of a livestock disease (such as African swine fever (ASF), 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;

(iv) the effectiveness of our financial fitness program;

(v) the implementation of an enterprise resource planning system;

(vi) access to foreign markets together with foreign economic conditions, including currency fluctuations, import/export restrictions and foreign politics;

(vii) changes in availability and relative costs of labor and contract farmers and our ability to maintain good relationships with employees, labor unions, contract farmers and independent producers providing us livestock;

(viii) issues related to food safety, including costs resulting from product recalls, regulatory compliance and any related claims or litigation;

(ix) changes in consumer preference and diets and our ability to identify and react to consumer trends;

(x) effectiveness of advertising and marketing programs;

(xi) our ability to leverage brand value propositions;

(xii) risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook;

(xiii) impairment in the carrying value of our goodwill or indefinite life intangible assets;

(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) adverse results from litigation;

(xvi) cyber incidents, security breaches or other disruptions of our information technology systems;

(xvii) our ability to make effective acquisitions or joint ventures and successfully integrate newly acquired businesses into existing operations;

(xviii) risks associated with our commodity purchasing activities;

(xix) the effect of, or changes in, general economic conditions;

(xx) significant marketing plan changes by large customers or loss of one or more large customers;

(xxi) impacts on our operations caused by factors and forces beyond our control, such as natural disasters, fire, bioterrorism, pandemics or extreme weather;

(xxii) failure to maximize or assert our intellectual property rights;

(xxiii) our participation in multiemployer pension plans;

(xxiv) the Tyson Limited Partnership’s ability to exercise significant control over the Company;

(xxv) effects related to changes in tax rates, valuation of deferred tax assets and liabilities, or tax laws and their interpretation;

(xxvi) volatility in capital markets or interest rates;

(xxvii) risks associated with our failure to integrate Keystone Foods’ operations or to realize the targeted cost savings, revenues and other benefits of the acquisition;

and (xxviii) those factors listed under Item 1A.

(i) the outbreak of the COVID-19 global pandemic and associated responses has had, and is expected to continue to have, an adverse impact on our business and operations;

(ii) our ability to make effective acquisitions or joint ventures and successfully integrate newly acquired businesses into existing operations;

(iii) the effectiveness of our financial fitness program;

(iv) the implementation of an enterprise resource planning system;

(v) access to foreign markets together with foreign economic conditions, including currency fluctuations, import/export restrictions and foreign politics;

(vi) cyber incidents, security breaches or other disruptions of our information technology systems;

(vii) risks associated with our failure to consummate favorable acquisition transactions or integrate certain acquisitions' operations;

(viii) the Tyson Limited Partnership’s ability to exercise significant control over the Company;

(ix) 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;

(x) 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;

(xi) outbreak of a livestock disease (such as African swine fever (ASF), 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;

(xii) changes in consumer preference and diets and our ability to identify and react to consumer trends;

(xiii) effectiveness of advertising and marketing programs;

(xiv) significant marketing plan changes by large customers or loss of one or more large customers;

(xv) our ability to leverage brand value propositions;

(xvi) changes in availability and relative costs of labor and contract farmers and our ability to maintain good relationships with team members, labor unions, contract farmers and independent producers providing us livestock;

(xvii) issues related to food safety, including costs resulting from product recalls, regulatory compliance and any related claims or litigation;

(xviii) 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;

(xix) adverse results from litigation;

(xx) risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook;

(xxi) impairment in the carrying value of our goodwill or indefinite life intangible assets;

(xxii) our participation in multiemployer pension plans;

(xxiii) volatility in capital markets or interest rates;

(xxiv) risks associated with our commodity purchasing activities;

(xxv) the effect of, or changes in, general economic conditions;

(xxvi) impacts on our operations caused by factors and forces beyond our control, such as natural disasters, fire, bioterrorism, pandemics or extreme weather;

(xxvii) failure to maximize or assert our intellectual property rights;

(xxviii) effects related to changes in tax rates, valuation of deferred tax assets and liabilities, or tax laws and their interpretation;

and (xxix) those factors listed under Item 1A.

Risk Factors.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business