Tyson Foods 2003 Annual Report Download - page 29

Tyson Foods, Inc. 27
management’s discussion and analysis
TYSON FOODS, INC. 2003 ANNUAL REPORT
progress that will require approximately $175 million to
complete. Capital spending for fiscal 2004 is expected to
be in the range of $450 to $500 million, which includes
spending on plant automation as well as information
systems technology improvements. Additionally, on
December 5, 2003, the Company announced that in order
to further improve long-term manufacturing efficiencies,
it will be closing facilities in Manchester, New Hampshire,
and Augusta, Maine, in early 2004. The Company antici-
pates recording pretax charges related to these closings
of approximately $23 to $27 million or $0.04 to $0.05 per
diluted share in the first half of fiscal 2004.
Total debt at September 27, 2003, was $3,604 million, a
decrease of approximately $383 million from September 28,
2002. The Company has unsecured revolving credit
facilities totaling $1 billion that support the Company’s
commercial paper program. These $1 billion in facilities
consist of $200 million that expire in June 2004, $300 mil-
lion that expire in June 2005 and $500 million that expire in
September 2006. At September 27, 2003, there were no
borrowings outstanding under these facilities. Additional
outstanding debt at September 27, 2003, consisted of
$3.3 billion of debt securities, $32 million of commercial
paper and other indebtedness of $256 million.
The revolving credit facilities, senior notes, notes and
accounts receivable securitization contain various
covenants, the more restrictive of which contain a maxi-
mum allowed leverage ratio and a minimum required
interest coverage ratio. The Company is in compliance
with these covenants at fiscal year end.
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet
arrangements that are material to its financial position
or results of operations. The off-balance sheet arrange-
ments the Company has are guarantees of debt of
outside third parties involving letters of credit, a lease,
grower loans and residual value guarantees covering
certain operating leases for various types of equipment.
See Note 9 to the Consolidated Financial Statements for
further discussions of these guarantees.
RECENTLY ISSUED ACCOUNTING STANDARDS
In January 2003, the Financial Accounting Standards Board
(FASB) issued Interpretation No. 46, “Consolidation of
Variable Interest Entities, an Interpretation of Accounting
Research Bulletin No. 51” (the Interpretation). The
Interpretation requires the consolidation of variable
interest entities in which an enterprise absorbs a majority
of the entity’s expected losses, receives a majority of the
entity’s expected residual returns, or both, as a result of
ownership, contractual or other financial interests in the
entity. Currently, entities are generally consolidated by an
enterprise that has a controlling financial interest through
ownership of a majority voting interest in the entity. The
Interpretation was originally effective immediately for
variable interest entities created after January 31, 2003,
and effective in the fourth quarter of the Company’s fiscal
2003 for those created prior to February 1, 2003. However,
in October 2003, the FASB deferred the effective date for
those variable interest entities created prior to February 1,
2003, until the Company’s first quarter of fiscal 2004. The
Company has substantially completed the process of
evaluating the Interpretation and believes its adoption
will not have a material impact on its financial position
or results of operations.
Cash Provided by Operating Activities
dollars in millions
Total Capitalization
dollars in millions
2003
2002
2001
$ 820
$1,174
$ 511
$3,987
$3,662
2003
2002
2001
Debt Equity
$4,776
$3,954
$3,604
$3,354