Tyson Foods 2001 Annual Report Download - page 49

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TYSON FOODS, INC. 2001 ANNUAL REPORT
The reasons for the difference between the effective income tax
rate and the statutory U.S. federal income tax rate are as follows:
2001 2000 1999
U.S. federal income tax rate
35.0% 35.0% 35.0%
Amortization of goodwill
6.5 4.3 5.3
State income taxes
2.1 1.4 1.6
Foreign sales corporation
benefit
(6.2) (5.2) (6.3)
Other (2.0) 0.1 (0.7)
35.4% 35.6% 34.9%
The Company follows the liability method in accounting
for deferred income taxes which provides that deferred tax
liabilities are recorded at current tax rates based on the differ-
ence between the tax basis of assets and liabilities and their
carrying amounts for financial reporting purposes referred to as
temporary differences.
The tax effects of major items recorded as deferred tax
assets and liabilities are:
in millions
2001 2000
Deferred Tax Deferred Tax
Assets Liabilities Assets Liabilities
Property, plant and
equipment
$ 9 $412 $ 5 $200
Suspended taxes
from conversion
to accrual method
– 114 – 121
Intangible assets
–90 ––
Inventory
967 291
Accrued expenses
146 13 25 9
Acquired net
operating loss
carryforwards
71 – ––
All other 71 109 26 82
$306 $805 $58 $503
Valuation allowance (48) –
Net deferred tax
liability $547 $445
Net deferred tax liabilities are included in other current assets
and deferred income taxes in 2001, and in other current liabili-
ties and deferred income taxes in 2000, on the Consolidated
Balance Sheets.
The suspended taxes from conversion to accrual method
represents the 1987 change from the cash to accrual method of
accounting and is currently being paid down over 20 years
through 2017.
The valuation allowance totaling $48 million consists of $12 mil-
lion state tax carryforwards, which have been fully reserved, and
$36 million for net operating loss carryforwards. The state tax
credit carryforwards expire in the years 2004 through 2008.
At September 29, 2001, after considering utilization restrictions,
the Company’s acquired tax loss carryforwards approximated
$178 million. The net operating loss carryforwards, which are
subject to utilization limitations due to ownership changes, may
be utilized to offset future taxable income. These carryforwards
expire during the years 2002 through 2021.
NOTE 15: EARNINGS PER SHARE
The weighted average common shares used in the computation
of basic and diluted earnings per share were as follows:
in millions, except per share data
2001 2000 1999
Numerator:
Net Income $88 $ 151 $ 230
Denominator:
Denominator for basic
earnings per share –
weighted average shares
221 225 230
Effect of dilutive securities:
Stock options and
restricted stock 1 11
Denominator for diluted
earnings per share –
adjusted weighted
average shares and
assumed conversions 222 226 231
Basic earnings per share $0.40 $0.67 $1.00
Diluted earnings per share $0.40 $0.67 $1.00