Tyson to Implement Approximately $200 Million in Cost Reductions; Plan exceeds $110 million goal; some positions to be eliminated
July 13, 2006 / Springdale, Ark. / 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. [NYSE: TSN], 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™” 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.
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.
- Contact Information
- Gary Mickelson
- Media Contact
- Tyson Foods, Inc.
- Contact via E-mail
This news content was configured by WebWire editorial staff. Linking is permitted.
News Release Distribution and Press Release Distribution Services Provided by WebWire.