Tyson Foods 2001 Annual Report Download - page 41

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TYSON FOODS, INC. 2001 ANNUAL REPORT
The pro forma unaudited results of operations for the years
ended September 29, 2001, and September 30, 2000, assuming
the purchase of IBP had been consummated as of October 1,
1999, follows. Pro forma adjustments have been made to reflect
additional interest from debt associated with the acquisition and
additional common shares issued.
in millions, except per share data
2001 2000
Sales
$24,975 $24,085
Net income before
extraordinary items
82 314
Net income
82 297
Earnings per share before
extraordinary items:
Basic
0.24 0.89
Diluted
0.24 0.89
Earnings per share:
Basic
0.23 0.84
Diluted 0.23 0.84
The unaudited pro forma results are not necessarily indica-
tive of the actual results of operations that would have occurred
had the purchase actually been made at the beginning of fiscal
2000, or the results that may occur in the future.
In May 2001, the Company increased its ownership in Tyson
de Mexico, S.A. de C.V. (TdM) by acquiring common shares of
TdM from existing minority shareholders for cash and by a non-
cash transaction whereby TdM exchanged minority shareholders’
common stock for $45 million of TdM redeemable preferred
stock with an 8% coupon. In September 2001, the Company
acquired the remaining common shares of TdM held by minor-
ity shareholders. Upon completion of these transactions, the
Company now owns 100% of the common shares of TdM. The
Company has entered into a call agreement with the holders of
converted TdM redeemable preferred stock which allows the
Company to purchase the converted redeemable preferred
stock over five years. Additionally, in May 2001, TdM purchased
the poultry assets of Nochistongo S.P.R. de R.L., a fully inte-
grated broiler production operation that markets products
under the “Kory” brand. The purchase price of both transactions
was allocated based upon the estimated fair market values at
the date of purchase.
NOTE 3: DISPOSITIONS
In July 1999, the Company completed the sale of the assets of
Tyson Seafood Group in two separate transactions. Under the
terms of the agreements, the Company received proceeds of
approximately $165 million, which was used to reduce indebt-
edness, and subsequently collected receivables totaling approx-
imately $16 million. The Company recognized a pretax loss of
approximately $19 million on the sale of the seafood assets.
NOTE 4: IMPAIRMENT AND OTHER CHARGES
In the fourth quarter of fiscal 1999, the Company recorded a
pretax charge totaling $35 million related to the anticipated loss
on the sale and closure of the Pork Group assets. In the first quar-
ter of fiscal 2000, the Company ceased negotiations for the sale
of the Pork Group. Additionally, in the fourth quarter of fiscal
1999, the Company recorded pretax charges totaling $23 million
for impairment of property and equipment and write-down
of related goodwill of Mallard’s Food Products, and also recog-
nized a pretax loss of approximately $19 million on the sale of the
Tyson Seafood Group assets.
NOTE 5: ALLOWANCE FOR
DOUBTFUL ACCOUNTS
In fiscal 2000, AmeriServe Food Distribution, Inc. (AmeriServe),
a significant distributor of products to fast food and casual
dining restaurant chains, filed for reorganization in Delaware
under Chapter 11 of the Federal Bankruptcy Code. The Company
is a major supplier to several AmeriServe customers. In the second
quarter of fiscal 2000, the Company recorded a $24 million bad
debt reserve to fully reserve the AmeriServe receivable. At
September 29, 2001, and September 30, 2000, the allowance
for doubtful accounts, excluding the AmeriServe writeoff, was
$27 million and $17 million, respectively.