Tyson Foods, Inc. and its subsidiaries, with world headquarters in Springdale,
Arkansas, produce, distribute and market chicken, beef, pork, prepared foods and
related allied products. The Company commenced business in 1935, was incorporated
in Arkansas in 1947, and was reincorporated in Delaware in 1986. The Company has
engaged in a number of acquisitions, including the acquisition of IBP, inc. (now
called Tyson Fresh Meats, Inc. (TFM)) in 2001. In addition to being the worlds
largest processor and marketer of chicken, beef and pork products, the Company
is also the second largest publicly traded food company in the Fortune 500 with
one of the most recognized brand names in the food industry.
The Company operates a totally integrated poultry production process. Through
its wholly-owned subsidiary, Cobb-Vantress, Tyson is the number one breeding
stock supplier in the world. Tyson invests in breeding stock research and development
which allows the Company to breed into its flocks the natural characteristics
found to be most desirable. The Companys integrated operations consist of breeding
and raising chickens, as well as the processing, further-processing and marketing
of these food products and related allied products, including animal and pet
food ingredients.
The Company is also involved in the processing of live fed cattle and hogs
and fabrication of dressed beef and pork carcasses into primal and sub-primal
meat cuts, case-ready products and fully-cooked beef and pork products. In addition,
the Company derives value from allied products such as hides and variety meats
for sale to further processors.
The Company produces a wide range of fresh, value-added, frozen and refrigerated
food products. The Companys products are marketed and sold to national and
regional grocery retailers, regional grocery wholesalers, meat distributors,
clubs and warehouse stores, military commissaries, industrial food processing
companies, national and regional chain restaurants or their distributors, international
export companies and domestic distributors who service restaurants, foodservice
operations such as plant and school cafeterias, convenience stores, hospitals
and other vendors. Sales are made by the Companys sales staff primarily located
in Springdale, Arkansas, and Dakota Dunes, South Dakota. Additionally, sales
to the military and a portion of sales to international markets are made through
independent brokers and trading companies.
MARKETING AND DISTRIBUTION
Our principal marketing objective is to be the primary provider of chicken,
beef, pork and prepared foods products for our customers and consumers. As such,
we utilize our national distribution system and customer support services to
achieve the leading market position for our products. On an ongoing basis, we
identify distinct markets and business opportunities through continuous consumer
and market research. In addition to supporting strong regional brands across
multiple protein lines, we build the Tyson brand and Tyson owned brands primarily
through well-defined product-specific advertising and public relations efforts
focused toward key consumer targets with specific needs. These efforts are designed
to present key Tyson products as everyday solutions to relevant consumer problems
thereby becoming part of regular eating routines.
Our agreements with customers are generally short-term, primarily due to the
nature of our products, industry practices and fluctuations in supply, demand
and price for such products. In certain instances where we are selling further
processed products to large customers, we may enter into written agreements
whereby we will act as the exclusive or preferred supplier to the customer,
with pricing terms that are either fixed or variable.
We have the ability to produce and ship fresh, frozen and refrigerated products
worldwide. Domestically, our distribution system extends to a broad network
of food distributors and is supported by our owned or leased cold storage warehouses,
public cold storage facilities and our transportation system. Our distribution
centers accumulate fresh and frozen products so we can fill and consolidate
partial-truckload orders into full truckloads, thereby decreasing shipping costs
while increasing customer service. In addition, we provide our customers a wide
selection of products that do not require large volume orders. Our distribution
system enables us to supply large or small quantities of products to meet customer
requirements anywhere in the continental United States. Internationally, we
utilize both rail and truck refrigerated transportation to domestic ports, where
consolidations take place to transport to foreign destinations.
INTERNATIONAL
Major sales markets include Brazil, Canada, Central America, China, the European
Union, Japan, Mexico, the Middle East, South Korea, Taiwan, and Vietnam.
We have the following international operations:
• Tyson de Mexico, a Mexican subsidiary, is a vertically-integrated poultry
production company;
• Cobb-Vantress, a chicken breeding stock subsidiary, has business interests
in Argentina, Brazil, China, the Dominican Republic, India, Japan, the Netherlands,
Peru, the Philippines, Russia, Spain, Sri Lanka, Thailand, Turkey, the United
Kingdom and Venezuela;
• Tyson do Brazil, a Brazilian subsidiary, is a vertically-integrated
poultry production operation;
• Tyson Rizhao, located in Rizhao, China, is a vertically-integrated poultry
production operation;
• Tyson Dalong, a joint venture in China in which we have a majority interest,
is a chicken further processing facility;
• Tyson Nantong, located in Nantong, China, is a vertically-integrated
poultry production operation; and
• Godrej Tyson Foods, a joint venture in India in which we have a majority
interest, is a poultry processing business.
Our Tyson Rizhao and Tyson Nantong subsidiaries are currently in start-up phase.
We continue to evaluate growth opportunities in foreign countries.
CUSTOMERS
Wal-Mart Stores, Inc. accounted for approximately 13% of the Company's consolidated
sales. Sales to Wal-Mart Stores, Inc. were included in the Chicken, Beef, Pork
and Prepared Foods segments. Any extended discontinuance of sales to this customer
could, if not replaced, have a material impact on the Companys operations;
however, the Company does not anticipate any such occurrences due to the demand
for its products.
COMPETITION
The Companys food products compete with those of other national and regional
food producers and processors and certain prepared food manufacturers, including
Cargill Incorporated, Foster Farms, Gold Kist, Inc., Hormel Foods Corporation,
Kraft Foods, Inc., National Beef Packing Company LLC, Perdue Farms Inc., Pilgrim's
Pride Corp., Sanderson Farms, Inc., Sara Lee Corporation, Smithfield Foods,
Inc. and Swift and Company. Additionally, the Companys food products compete
in international markets around the world. The Companys principal marketing
and competitive strategy is to identify target markets for value-added products,
to concentrate production, sales and marketing efforts in order to appeal to
and enhance the demand from those markets and, utilizing its national distribution
systems and customer support services, seek to achieve a leading market position
for its products. Past efforts have indicated that customer demand generally
can be increased and sustained through application of the Companys marketing
strategy, as supported by its distribution systems. The principal competitive
elements are brand identification, breadth and depth of the product offering,
product quality, customer service and price.