Tyson Foods 2000 Annual Report Download - page 37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TYSON FOODS, INC. 2000 ANNUAL REPORT
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, which is required to be adopted in years beginning after June 15, 2000. This Statement requires the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will be either offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings, or recog- nized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a deriva- tive’s change in fair value will be immediately recognized in earnings.
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. The Company does not believe the adoption of SFAS No. 133 will cause a significant change in normal business practices.
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 additional time to determine the effect, if any, on registrant’s revenue recog- nition 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 material impact on its financial position or results of operations. NOTE 2: ACQUISITIONS On January 9, 1998, the Company completed the acquisition of Hudson Foods, Inc. (Hudson or Hudson Acquisition). At the effective time of the acquisition, the Class A and Class B shareholders of Hudson received approximately 18.4 million shares of the Company’s Class A common stock valued at approximately $364 million and approximately $257 million in cash. The Company borrowed funds under its commercial paper program to finance the cash portion of the Hudson Acquisition and repay approximately $61 million under Hudson’s revolving credit facilities. The Hudson Acquisition has been accounted for as a purchase and the excess of invest- ment over net assets acquired is being amortized straight-line over 40 years. The Company’s consolidated results of operations include the operations of Hudson since the acquisition date. The following unaudited pro forma information shows the results of operations as though the purchase of Hudson had been made at the beginning of fiscal 1997.
in millions, except per share data
1998 1997
Sales $7,831 $8,021 Net income 17 140 Basic earnings per share 0.07 0.60 Diluted earnings per share $ 0.07 $ 0.59
The unaudited pro forma results are not necessarily
indicative of the actual results of operations that would have occurred had the purchase actually been made at the begin- ning of 1997, or the results that may occur in the future.
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