What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2023-11-13 compared with 2022-11-14 · 43 added, 47 removed, 321 unchanged (22% of the section changed)

2 unchanged sentences

BUSINESS & OPERATIONAL RISK FACTORS

The COVID-19 pandemic and associated responses has had, and may to continue to have, an adverse impact on our business and operations.

The COVID-19 pandemic has negatively affected many parts of our business and operations.

The extent that the COVID-19 pandemic continues to impact general economic conditions and our business, operations and results of operations will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration and spread of the pandemic and additional variants, its severity, the actions to contain the virus or treat its impact, including the distribution and efficacy of vaccines against new variants and the speed of critical mass adoption of available vaccines, and how quickly and to what extent normal economic and operating conditions can resume.

During the pandemic, we experienced slowdowns at certain of our production facilities, primarily due to a decrease in our available workforce, and we anticipate that we may in the future experience additional volatility in our ability to operate our facilities at full utilization rates, depending on a number of factors including team member absenteeism, labor shortages and other workforce disruptions.

Any additional extended period of operating at a reduced capacity or more significant reductions in our operations at our facilities could have a material adverse impact on our ability to operate our business and on our results of operations.

We have experienced, and expect to continue to experience, an increase in operating costs in connection with higher costs associated with ensuring the continued health and safety of team members, including team member costs associated with worker health and availability such as COVID-19 testing and vaccinations.

There can be no assurance that the health and safety measures we have taken with respect to COVID-19 will eradicate the risks associated with working in a critical infrastructure industry, including but not limited to, infection of our employees or a temporary reduction in the operating capacity of a facility.

Further, there can be no assurance that we will not incur additional direct incremental expenses related to COVID-19 going forward, and that such amounts will not be material or have a material impact on our business, cash flows or results of operations.

Our team members who have tested positive for COVID-19, and in some cases, those working in close contact with diagnosed persons, are required to be quarantined, which has led to a decrease in our available workforce in various locations.

In late fiscal 2021, we implemented a requirement for our team members in the U.S.

to be fully vaccinated against COVID-19 by November 1, 2021.

We lifted this requirement effective October 31, 2022.

Although while it was in effect this requirement generally improved our ability to operate our business effectively in fiscal 2022, the decrease in our available workforce during the COVID-19 pandemic has at times adversely impacted this ability.

Global pandemics have had, and may in the future have, an adverse impact on our business and operations.

Our business relies on the health and wellbeing of our employees who run the day-to-day operations of the Company.

Global pandemics, or localized epidemics, have had and may in the future have a significant adverse impact on our business and operations.

Specifically, the COVID-19 pandemic negatively affected many parts of our business and operations, and the sustained, continuing impacts of the COVID-19 pandemic (including indirect effects from the immediate impacts of the pandemic) remain difficult to predict, including, but not limited to, the duration and spread of additional variants, the efficacy of vaccines against new variants and the speed at which normal economic and operating conditions can resume.

We have experienced, and expect to continue to experience, an increase in operating costs in connection with higher costs associated with protecting the health and safety of team members.

There can be no assurance that the health and safety measures we have taken with respect to new COVID-19 variants or widespread illnesses, should a new global pandemic occur, will eradicate the risks associated with working in a critical infrastructure industry, including but not limited to, infection of our employees or a temporary reduction in the operating capacity of a facility.

Further, there can be no assurance that we will not incur additional direct incremental expenses related to new variants or widespread illnesses going forward, and that such amounts will not be material or have a material impact on our business, cash flows or results of operations.

If a significant percentage of our workforce is unable to work, including because of illness, this could have an adverse effect on our operations and results of operations.

In addition, certain of our team members who claim to have tested positive for COVID-19, or their family members, have filed lawsuits seeking compensatory and punitive damages for wrongful death and personal injury claims in several states, and additional team members or family members of team members may assert similar claims as the COVID-19 pandemic continues.

For example, certain of our team members who claim to have tested positive for COVID-19, or their family members, have filed lawsuits seeking compensatory and punitive damages for wrongful death and personal injury claims in several states, and additional team members or family members of team members may assert similar claims as new COVID-19 variants, other contagions or if a new global pandemic arises.

If we are unsuccessful in defending against such claims, we may experience significant losses and expenses in connection with these lawsuits, which could adversely affect our liquidity, results of operations and financial condition.

We have also experienced, and expect to continue to experience, disruption and volatility in our supply chain, which has resulted, and may continue to result, in increased costs for certain raw materials, packaging materials and transportation costs.

The spread of COVID-19 and other related supply chain issues have also disrupted and may continue to disrupt logistics necessary to import, export and deliver products to us and our customers.

Many ports and other channels of entry are operating at only a portion of capacity as a result of congestion due to labor and equipment shortages, and means of transporting products within regions or countries may be limited for the same reason.

Other supply chain risks associated with the COVID-19 pandemic include but are not limited to shutdowns or reduced operations at our suppliers’ facilities, the continued inability of some of our contract producers to manage their livestock, supply chain disruptions for feed grains, changes in consumer orders due to shifting consumer patterns, changes in livestock and protein market prices, and additional disruptions in logistics or the distribution chain for our products, the occurrence of any of which may result in a reduction in our fill rates to our customers.

Any future disruptions within our supply chain from a global pandemic will depend on a variety of factors and circumstances that remain difficult to predict.

Other supply chain risks associated with a global pandemic include but are not limited to shutdowns or reduced operations at our suppliers’ facilities, the continued inability of some of our contract producers to manage their livestock, supply chain disruptions for feed grains, changes in consumer orders due to shifting consumer patterns, changes in livestock and protein market prices, and additional disruptions in logistics or the distribution chain for our products, the occurrence of any of which have and may in the future result in a reduction in our fill rates to our customers.

In addition, our operations, or those of independent contract poultry producers and producers who provide the live animals to our production operations, may become more limited in their ability to procure, deliver, or produce our food products because of labor shortages.

As a result of school and in-restaurant dining shutdowns during the COVID-19 pandemic, each of our segments previously experienced a shift in demand from foodservice to retail.

As a result of academic and in-restaurant dining shutdowns during the COVID-19 pandemic, each of our segments previously experienced a shift in demand from foodservice to retail.

While each of our segments has subsequently experienced varying levels of foodservice recovery, the long-term impact of COVID-19 remains uncertain and will depend on a number of future developments, which are uncertain and cannot be predicted at this time.

In addition, in the event of a protracted period of economic downturn, demand for our foodservice products may remain below expectations or decrease further, and demand for our retail consumption products may also decrease, which could have an adverse impact on our results of operations.

We also face other risks associated with the COVID-19 pandemic, including:

In addition, in the event of a protracted period of economic downturn either in the near term or as a result of a future global pandemic, demand for our foodservice products may remain below expectations or decrease further, and demand for our retail consumption products may also decrease, which could have an adverse impact on our results of operations.

We also face other risks associated with or potentially originated from the COVID-19 pandemic, including:

• additional increase in input cost may not be adequately captured through pricing;

3 unchanged sentences

• litigation.

The severity and duration of the current COVID-19 pandemic and actions taken by governmental authorities and other third parties in response are unknown and are impossible to predict with certainty.

Any of these disruptions could adversely impact our business and results of operations.

Actions taken by governmental authorities and other third parties in response to risks associated with COVID-19, or if in the event of a new global pandemic, are unknown and are impossible to predict with certainty.

Nor can the Company predict whether or when a COVID-19 variant or widespread illness will or can disrupt our business in the future.

Any such disruption could adversely impact our business and results of operations.

We may not realize any or all of the anticipated benefits of our financial excellence programs, which may prove to be more difficult, costly or time consuming than expected.

In the fourth quarter of fiscal 2022, the Company approved a restructuring program (the “2022 Program”), which is expected to improve business performance, increase collaboration, enhance team member agility, enable faster decision-making and reduce redundancies.

In conjunction with the 2022 Program, the Company plans to bring together all its corporate team members from the Chicago, Downers Grove and Dakota Dunes area corporate locations to its world headquarters in Springdale, Arkansas, through a phased relocation commencing in early calendar year 2023.

We anticipate the 2022 Program and associated expenses will be substantially complete in our fiscal 2025.

The Company approved a restructuring program in fiscal 2022 (the “2022 Program”) to improve business performance, increase collaboration, enhance team member agility, enable faster decision-making and reduce redundancies.

In conjunction with the 2022 Program, the Company relocated all of its corporate team members from its former Chicago, Downers Grove and Dakota Dunes area corporate locations to its world headquarters in Springdale, Arkansas.

We anticipate the remaining workstreams of the 2022 Program and associated expenses will be complete in our fiscal 2025.

For more information regarding this program, refer to Part II, Item 8.

1 unchanged sentence

Restructuring and Related Charges.

Additionally, in fiscal 2022 we launched a new productivity program, which is designed to drive a better, faster and more agile organization that is supported by a culture of continuous improvement and faster decision-making.

Additionally, in fiscal 2022, we launched a new productivity program to drive a better, faster and more agile organization that is supported by a culture of continuous improvement and faster decision-making.

The success of the financial excellence programs, or future financial excellence programs, including the realization of the anticipated benefits, will depend in part on our ability to successfully implement the programs in an efficient and effective manner.

15 unchanged sentences

• impact of currency exchange rate fluctuations between the United States dollar and foreign currencies, particularly the Australian dollar, the Brazilian real, the British pound sterling, the Canadian dollar, the Chinese renminbi, the European euro, the Malaysian ringgit, the Mexican peso, and the Thai baht;

• political and economic conditions, including the ongoing conflicts between Ukraine and Russia;

• political and economic conditions, including the ongoing conflicts between Ukraine and Russia, as well as political tension and conflict in the Middle East and elsewhere;

• difficulties and costs to comply 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;

3 unchanged sentences

• distribution costs, disruptions in shipping or reduced availability of freight transportation;

• the ongoing impact of COVID-19, including any resurgence and new or existing variants, on the global economy and on consumer demand worldwide;

• the impact of COVID-19 pandemic, including any resurgence and new or existing variants, on the global economy and on consumer demand worldwide;

imposition of tariffs, quotas, trade barriers and other trade protection measures imposed by foreign countries regarding the importation of beef, pork, poultry and prepared foods products, in addition to import or export licensing requirements imposed by various foreign countries.

3 unchanged sentences

We also use information technology to process financial information and results of operations for internal reporting purposes and to comply with regulatory, legal and tax requirements.

In addition, we depend on information technology for digital marketing and electronic communications between our facilities, personnel, customers and suppliers.

In addition, we depend on information technology for digital marketing and electronic communications between our facilities, personnel, customers and suppliers, including ordering and managing raw materials and inputs, receiving and processing purchase orders, shipping products to customers and processing other transactions.

Communications between our facilities, personnel, customers and suppliers may include and is not limited to personal confidential information and payment card industry data, confidential and propriety intellectual property, trade secrets and other information and business and financial information.

Like other companies, our information technology systems may be vulnerable to a variety of disruptions, including but not limited to the process of upgrading or replacing software, databases or components thereof, user errors, natural disasters, terrorist attacks, telecommunications failures, computer viruses, cyber attacks, hackers, unauthorized access attempts and other security issues.

3 unchanged sentences

Attempted cyber attacks and other cyber incidents are occurring more frequently, are constantly evolving in nature, are becoming more sophisticated and are being made by groups and individuals with a wide range of motives and expertise.

Techniques used to obtain unauthorized access to, or to sabotage, systems or networks, are constantly evolving and generally are not recognized until launched against a target.

Therefore, we may be unable to anticipate these techniques, react in a timely manner, or implement adequate preventive measures, and we may face delays in our detection or remediation of, or other responses to, security breaches and other security-related incidents or vulnerabilities.

Any significant failure of our systems, including failures that prevent our systems from functioning as intended or our failure to timely identify or appropriately respond to cyber attacks or other cyber incidents, could cause transaction errors, processing inefficiencies, loss of customers and sales, have negative consequences on our team members and our business partners, have a negative impact on our operations or business reputation and expose us to liability, litigation and regulatory enforcement actions.

If there is wide scale disruption to our systems, we may need to shut parts or all of our systems down to run tests and repairs.

Any such downtime could have significant impacts on our ability to continue our business operations, including our ability to operate our facilities, manage and track inventory, manage and track incoming new orders and statuses of existing orders, and to continue to comply with regulatory, legal and tax requirements.

In the event any significant failure of our systems requires us to upgrade or set up new systems, oversight and implementation of the new system and training personnel could be costly, there may be further disruptions from potential instability in the new system, and there may be heightened cybersecurity risks in connection with the migration of data to the new system.

In addition, we may suffer financial and reputational damage or penalties because of the unauthorized disclosure of confidential information belonging to us or to our business partners, customers, consumers or suppliers.

24 unchanged sentences

Tyson Limited Partnership can exercise significant control.

As of October 1, 2022, Tyson Limited Partnership (the “TLP”) owns 99.985% of the outstanding shares of the Company’s Class B Common Stock, $0.10 par value (“Class B stock”), and the TLP and members of the Tyson family own, in the aggregate, 2.27% of the outstanding shares of the Company’s Class A Common Stock, $0.10 par value (“Class A stock”), giving them, collectively, control of approximately 71.15% of the total voting power of the Company’s outstanding voting stock.

As of September 30, 2023, Tyson Limited Partnership (the “TLP”) owns 99.985% of the outstanding shares of the Company’s Class B Common Stock, $0.10 par value (“Class B stock”), and the TLP and members of the Tyson family own, in the aggregate, 2.44% of the outstanding shares of the Company’s Class A Common Stock, $0.10 par value (“Class A stock”), giving them, collectively, control of approximately 71.74% of the total voting power of the Company’s outstanding voting stock.

At this time, the TLP does not have a managing general partner, as such, the management rights of the managing general partner may be exercised by a majority of the percentage interests of the general partners.

As of October 1, 2022, Mr.

John Tyson, Chairman of the Board of Directors, has 33.33% of the general partner percentage interests, and Ms.

Barbara Tyson, a director of the Company, has 11.115% general partner percentage interests (the remaining general partnership interests are held by the Donald J.

Tyson Revocable Trust (44.44%) and Harry C.

Erwin, III (11.115%)).

As of September 30, 2023, through a series of trusts, Mr.

John Tyson, Chairman of the Board of Directors, controls 44.445% of the general partner percentage interests, and Ms.

Barbara Tyson, a director of the Company, controls 11.115% of the general partner percentage interests (the remaining general partnership interests are held by the Donald J.

Tyson Revocable Trust (44.44%)).

As a result of these holdings, positions and directorships, the partners in the TLP have the ability to exert substantial influence or actual control over our management and affairs and over substantially all matters requiring action by our stockholders, including amendments to our restated certificate of incorporation and by-laws, the election and removal of directors, any proposed merger, consolidation or sale of all or substantially all of our assets and other corporate transactions.

82 unchanged sentences

Labor shortages and increased turnover or increases in employee and employee-related costs could have adverse effects on our profitability.

We have experienced increased labor shortages at some of our production facilities and other locations.

While we have historically experienced some level of ordinary course turnover of employees, the impact of the COVID-19 pandemic and resulting actions have exacerbated labor shortages and increased turnover.

A number of factors have had and may continue to have adverse effects on the labor force available to us, including government regulations, which include laws and regulations related to workers’ health and safety, wage and hour practices and immigration.

10 unchanged sentences

In addition, our compensation arrangements may not always be successful in attracting new employees or retaining our existing team members.

In fiscal 2022, we approved a plan to bring together all of our corporate team members from our Chicago, Downers Grove and Dakota Dunes area corporate locations to our world headquarters in Springdale, Arkansas.

While this move is intended to foster closer collaboration, enhance team member agility and enable faster decision-making, thereby improving our ability to execute our business strategy, there can be no assurance that affected team members will agree to relocate on existing compensation arrangements or at all, or that we will not lose skilled members of our workforce, including certain senior management or other key employees, as a result of this consolidation.

We depend on contract farmers and independent producers to supply us with livestock.

21 unchanged sentences

For example, increased governmental interest in advertising practices may result in regulations that could require us to change or restrict our advertising practices.

Increased government regulations to limit carbon dioxide and other greenhouse gas emissions as a result of concern over climate change, as well as alternative energy policies and sustainability initiatives (including those related to single use plastics), may result in increased compliance costs, capital expenditures and other financial obligations for us.

Additionally, new laws in the European Union requiring traceability of commodities from source of origin and verification that commodities are deforestation free could impact commodity sourcing, pricing and our ability to place products in certain markets.

Increased government regulations to limit carbon dioxide, methane and other greenhouse gas emissions as a result of concern over climate change, as well as alternative energy policies and sustainability initiatives (including those related to single use plastics), may result in increased compliance costs, capital expenditures and other financial obligations for us.

We use natural gas, diesel fuel and electricity in the manufacturing and distribution of our products.

1 unchanged sentence

Climate change and any legal or regulatory responses may have a long-term adverse impact on our business and results of operations.

Climate change and rising global temperatures may contribute to changing weather patterns, heavier or more frequent storms and wildfires, and increased frequency and severity of natural disasters.

Climate change and rising global temperatures may contribute to changing weather patterns, elongated drought periods, heavier or more frequent storms and wildfires, and increased frequency and severity of natural disasters.

Decreased agricultural productivity in certain regions of the world caused by changing weather patterns has limited and may continue to limit the availability, or may increase the cost, of key agricultural commodities and natural resource ingredients and manufacturing inputs, as well as raw materials such as beef, pork, poultry, corn, soybean meal and other feed ingredients.

29 unchanged sentences

Our level of indebtedness and the terms of our indebtedness could negatively impact our business and liquidity position.

Our indebtedness, including borrowings under our revolving credit facility and commercial paper program, may increase from time to time for various reasons, including fluctuations in operating results, working capital needs, capital expenditures and possible acquisitions, joint ventures or other significant initiatives.

Our indebtedness, including borrowings under our revolving credit and term loan facilities and commercial paper program, may increase from time to time for various reasons, including fluctuations in operating results, working capital needs, capital expenditures and possible acquisitions, joint ventures or other significant initiatives.

Our consolidated indebtedness level could adversely affect our business because:

4 unchanged sentences

• it may restrict our ability to pay dividends.

Our revolving credit facility contains affirmative and negative covenants that, among other things, may limit or restrict our ability to:

Our revolving credit and term loan facilities contain affirmative and negative covenants that, among other things, may limit or restrict our ability to:

create liens and encumbrances;

22 unchanged sentences

These types of events and the resulting analyses could result in impairment charges in the future, which could be substantial.

As of October 1, 2022, we had $14.6 billion of goodwill and indefinite life intangible assets, which represented approximately 39.6% of total assets.

At September 30, 2023, we had $14.0 billion of goodwill and indefinite life intangible assets, which represented approximately 38.5% of total assets.

Participation in a Multiemployer Pension Plan could adversely affect our business.

9 unchanged sentences

Volatility in the capital markets or interest rates could adversely impact our pension costs and the funded status of our pension plans.

We sponsor a number of defined benefit plans for team members in the United States.

We sponsor a number of defined benefit plans for team members.

The difference between plan obligations and assets, which signifies the funded status of the plans, is a significant factor in determining the net periodic benefit costs of the pension plans and our ongoing funding requirements.

As of October 1, 2022, the funded status of our defined benefit pension plans was an underfunded position of $159 million, as compared to an underfunded position of $215 million at the end of fiscal 2021.

At September 30, 2023, the funded status of our defined benefit pension plans was an underfunded position of $149 million, as compared to an underfunded position of $159 million at the end of fiscal 2022.

Changes in interest rates and the market value of plan assets can impact the funded status of the plans and cause volatility in the net periodic benefit cost and our future funding requirements.

44 unchanged sentences

In December 2021, we received an assessment from the Mexican tax authorities related to the 2015 sale of our direct and indirect equity interests in subsidiaries which held our Mexico operations.

At October 1, 2022, the assessment totaled approximately $411 million (8.3 billion Mexican pesos), which includes tax, inflation adjustment, interest and penalties.

At September 30, 2023, the assessment totaled approximately $488 million (8.6 billion Mexican pesos), which includes tax, inflation adjustment, interest and penalties.

We believe the assertions made in the assessment letter have no merit and will defend our positions through the Mexican administrative appeal process and litigation, if necessary.

2 unchanged sentences

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 1A. Risk Factors