Tyson Foods 2000 Annual Report Download - page 29

MANAGEMENT’S DISCUSSION AND ANALYSIS
TYSON FOODS, INC. 2000 ANNUAL REPORT
Concentrations of Credit Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash equivalents and trade receivables. The Company’s cash equivalents are in high quality securi- ties placed with major banks and financial institutions. Concentrations of credit risk with respect to receivables are limited due to the large number of customers and their dispersion across geographic areas. The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. No single group or customer represents greater than 10% of total accounts receivable. RECENTLY ISSUED ACCOUNTING STANDARDS On October 1, 2000, the Company adopted Financial Accounting Standards Board Statement (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS Nos. 137 and 138. This statement establishes accounting and reporting standards, which requires that all derivative instruments be recorded on the balance sheet at fair value. This statement also establishes “special accounting” for fair value hedges, cash flow hedges and hedges of foreign currency expo- sures of net investments in foreign operations. The Company
has determined the business processes related to hedging activ- ities mainly consist of grain procurement and certain financing activities. The adoption on October 1, 2000, resulted in the cumulative effect of an accounting change of approximately $9 million being charged to other comprehensive loss.
In December 1999, the Securities and Exchange
Commission issued Staff Accounting Bulletin (SAB) No. 101, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the Commission. SAB 101A was released on March 24, 2000, and delayed for one fiscal quarter the implementation date of SAB 101 for registrants with fiscal years beginning between December 16, 1999, and March 15, 2000. Since the issuance of SAB 101 and SAB 101A, the staff has continued to receive requests from a number of groups asking for addi- tional time to determine the effect, if any, on registrant’s revenue recognition practices. SAB 101B issued June 26, 2000, further delayed the implementation date of SAB 101 until no later than the fourth fiscal quarter of fiscal years beginning after December 15, 1999. The Company believes the adoption of SAB 101 in fiscal 2001 will not have a mate- rial impact on its financial position or results of operations.
dollars in millions
Fair value
2000 2001 2002 2003 2004 Thereafter Total 10/2/99
As of October 2, 1999 Liabilities Long-term debt, including current portion
Fixed rate $173 $126 $ 30 $178 $29 $794 $1,330 $1,299 Average interest rate 6.82% 8.18% 7.83% 6.18% 7.08% 6.78% 6.87% Variable rate $ 50 $ 17 $291 – – $ 50 $ 408 $ 408
Average interest rate 5.51% 7.67% 5.85% – – 3.90% 5.65%
Interest rate derivative financial
instruments related to debt
Interest rate swaps
Pay fixed $ 17 $ 18 $ 20 $ 22 $21 $ 29 $ 127 $ (1) Average pay rate 6.71% 6.69% 6.73% 6.73% 6.71% 6.50% 6.66%
Average receive rate– USD 6 month LIBOR
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