SPRINGDALE, Ark., July 13 /PRNewswire-FirstCall/ -- Tyson Foods, Inc.
(NYSE: TSN) will implement approximately $200 million in cost reductions as
part of a strategy to return to profitability. The reductions significantly
exceed the $110 million goal set by new CEO Richard L. Bond, and include
the elimination of some positions.
"We've taken an aggressive look at all aspects of our business and also
reviewed suggestions from our Team Members on ways we can more effectively
manage our business," said Bond. "The result is a plan expected to generate
significant savings for the company, principally in fiscal 2007."
Savings will be generated from reductions in such things as staffing,
recruiting, relocation, consulting fees, sales related expenses and
supplies, as well as travel. Virtually all of the savings measures should
be in place by the end of the calendar year.
"This has been a difficult process, especially since it involves the
displacement of some of our Team Members," said Bond. "However, we would
not be doing this unless we believed it was absolutely necessary."
Tyson, which employs 114,000 people worldwide, currently plans to
eliminate approximately 420 positions primarily held by Tyson management
and management support Team Members. In addition, another 430 jobs that are
currently open will not be filled and will be eliminated. All affected Team
Members will be offered severance payments and outplacement assistance.
They will also be given an opportunity to apply for other jobs in the
company.
Severance payments and other costs related to this initiative are
expected to result in a charge to Tyson's fourth quarter earnings in the
range of $10 million to $15 million or $0.02 to $0.03 per share.
The process of notifying Team Members whose positions have currently
been identified begins today and should near completion by Friday, July 14.
Most of the position reductions will take effect by the end of the current
fiscal year, which is September 30.
Jobs being eliminated include approximately 140 positions currently
held by Tyson Team Members in northwest Arkansas and 90 in Dakota Dunes,
South Dakota and Dakota City, Nebraska. The remaining positions are at
various locations throughout the company. The company is also eliminating
the services of 40 outside consultants. Hourly plant production jobs are
not affected by this initiative.
Some steps have already been taken to provide the company with some
immediate savings. Tyson's senior management team recently decided to delay
annual merit increases for qualified management and management support Team
Members from July 2006 to January 2007. The company has also temporarily
suspended the company match on the Stock Purchase Plan for salaried
management Team Members for the remainder of 2006
"We realize we can't save our way back to profitability," Bond said.
"That's why in addition to improved cost management, our team will spend
more time on activities that make money and provide top line growth." He
noted the company's existing long-term strategies provide the company with
a focused long-term perspective for the future. They include creating more
value-added products, improving operational efficiencies and expanding its
international business.
Tyson Foods, Inc., founded in 1935 with headquarters in Springdale,
Arkansas, is the world's largest processor and marketer of chicken, beef,
and pork, the second-largest food company in the Fortune 500 and a member
of the S&P 500. The company produces a wide variety of protein-based and
prepared food products, which are marketed under the "Powered by Tyson(TM)"
strategy. Tyson is the recognized market leader in the retail and
foodservice markets it serves, providing products and service to customers
throughout the United States and more than 80 countries. The company has
approximately 114,000 Team Members employed at more than 300 facilities and
offices in the United States and around the world. Through its Core Values,
Code of Conduct and Team Member Bill of Rights, Tyson strives to operate
with integrity and trust and is committed to creating value for its
shareholders, customers and Team Members. The company also strives to be
faith-friendly, provide a safe work environment and serve as stewards of
the animals, land and environment entrusted to it.
Forward-Looking Statements
Certain information contained in the press release may constitute
forward- looking statements, such as statements relating to expected
savings and position elimination. These forward-looking statements are
subject to a number of factors and uncertainties which could cause the
company's actual results and experiences to differ materially from the
anticipated results and expectations, expressed in such forward-looking
statements. The company wishes to caution readers not to place undue
reliance on any forward-looking statements, which speak only as of the date
made. Among the factors that may cause actual results and experiences to
differ from the 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, or feed grains, and energy; (ii) the company's ability to realize
anticipated savings from its cost reduction initiatives; (iii) market
conditions for finished products, including competition from other global
and domestic food processors, the supply and pricing of alternative
proteins, and the demand for alternative proteins; (iv) risks associated
with effectively evaluating derivatives and hedging activities; (v) access
to foreign markets together with foreign economic conditions, including
currency fluctuations, and import/export restrictions and foreign politics;
(vi) outbreak of a livestock disease (such as avian influenza (AI) or
bovine spongiform encephalopathy (BSE)) which could have an effect on
livestock owned by the company, the availability of livestock for purchase
by the company, consumer perception of certain protein products or the
company's ability to access certain domestic and foreign markets; (vii)
successful rationalization of existing facilities, and the operating
efficiencies of the facilities; (viii) changes in the availability and
relative costs of labor and contract growers, and the ability of the
company to maintain good relationships with employees, labor unions,
contract growers and independent producers providing livestock to the
company; (ix) issues related to food safety, including costs resulting from
product recalls, regulatory compliance and any related claims or
litigation; (x) changes in consumer preference and diets, and the company's
ability to identify and react to consumer trends; (xi) significant
marketing plan changes by large customers, or the loss of one or more large
customers; (xii) adverse results from litigation; (xiii) risks associated
with leverage, including cost increases due to rising interest rates or
changes in debt ratings or outlook; (xiv) changes in regulations and laws
(both domestic and foreign), including changes in accounting standards, tax
laws, environmental laws and occupational, health and safety laws; (xv) the
ability of the company to make effective acquisitions and successfully
integrate newly acquired businesses into existing operations; (xvi)
effectiveness of advertising and marketing programs; and (xvii) the effect
of, or changes in, general economic conditions.
SOURCE Tyson Foods, Inc.
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Related links:
http://www.tyson.com
CONTACT:
media, Gary Mickelson, +1-479-290-6111, or
investors, Ruth Ann Wisner, +1-479-290-4235, both of Tyson Foods,
Inc.
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