Tyson Foods 2002 Annual Report Download - page 49

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notes to
consolidated
financial
statements
p 47
The reasons for the difference between the effective income tax rate and the statutory U.S. federal income tax rate are as follows:
2002 2001 2000
U.S. federal income tax rate 35.0% 35.0% 35.0%
Amortization of goodwill –6.5 4.3
State income taxes 3.0 2.1 1.4
Foreign sales corporation benefit (1.4) (6.2) (5.2)
Other (1.1) (2.0) 0.1
35.5% 35.4% 35.6%
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 difference 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
2002 2001
Deferred Tax Deferred Tax
Assets Liabilities Assets Liabilities
Property, plant and equipment $ 5 $417 $ 9 $412
Suspended taxes from conversion to accrual method – 114 –114
Intangible assets 164 –90
Inventory 578 967
Accrued expenses 122 2 146 13
Acquired net operating loss 69 – 71 –
All other 137 179 71 109
$339 $854 $306 $805
Valuation allowance (49) (48)
Net deferred tax liability $564 $547
Net deferred tax liabilities are included in other current liabilities and deferred income taxes 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 will be paid down by 2017.
The valuation allowance totaling $49 million consists of $13 million 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 28, 2002, after considering utilization restrictions, the Company’s acquired tax loss carryforwards approximated
$173 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 2003 through 2021.
Tyson Foods, Inc. 2002 annual report