Tyson Foods 2002 Annual Report Download - page 36

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notes to
consolidated
financial
statements
p 34
Note 2: Acquisition
In August 2001, the Company acquired 50.1% of IBP by paying $1.7 billion in cash. In September 2001, the Company issued 129 million
shares of Class A common stock, with a fair value of $1.2 billion, to acquire the remaining IBP shares, and assumed $1.7 billion of IBP
debt. The total acquisition cost of $4.6 billion was accounted for as a purchase in accordance with Statement of Financial Accounting
Standards (SFAS) No.141, “Business Combinations.” Accordingly, the tangible and identifiable intangible assets and liabilities have
been adjusted to fair values with the remainder of the purchase price recorded as goodwill.
The transaction was accounted for using the purchase method of accounting required by SFAS 141. Goodwill and identifiable
intangible assets recorded in the acquisition will be tested periodically for impairment as required by SFAS 142. The allocation of the
purchase price to specific assets and liabilities was based, in part, upon an outside appraisal of IBP’s long-lived assets. The allocation
of the purchase price has been completed.
Fair value of assets acquired and liabilities assumed at August 3, 2001:
in millions
Cash and cash equivalents $37
Accounts receivable 641
Inventories 937
Other current assets 112
Property, plant and equipment 1,968
Goodwill 1,692
Other assets 385
Total Assets $5,772
Accounts payable and accruals $ 836
Other liabilities 227
Long-term debt 1,651
Deferred income taxes 221
Shareholders’ Equity 2,837
Total Liabilities and Shareholders’ Equity $5,772
Identifiable intangible assets of $242 million consist of trademarks of $138 million, patents of $87 million and $17 million of supply
contracts (all of which are included in other assets). The amounts associated with trademarks are not subject to amortization
as management believes their useful lives to be indefinite. The amounts associated with patents and supply contracts are being
amortized over 15 and five years, respectively.
In August 2001, the Company completed the financing for the acquisition of IBP by entering into two bridge revolving credit facilities
consisting of a senior unsecured bridge credit agreement which provided for aggregate borrowings up to $2.5 billion (the Bridge
Facility) and a senior unsecured receivables bridge credit agreement which provided for aggregate borrowings up to $350 million
(the Receivables Bridge Facility). Subsequent to September 29, 2001, the Company refinanced both facilities.
Tyson Foods, Inc. 2002 annual report