Tyson Foods 2006 Annual Report Download - page 52

NOTE 14 TRANSACTIONS WITH RELATED PARTIES
The Company has operating leases for farms, equipment and other
facilities with Don Tyson, a director of the Company, certain members
of his family and the Randal W. Tyson Testamentary Trust. Total pay-
ments of $7 million in fiscal 2006, and $8 million in fiscal 2005 and
2004, were paid to entities in which these parties had an ownership
interest. Additionally, other facilities have been leased from other
officers and directors. Rentals paid to entities in which these parties
had an ownership interest totaled $1 million in each of fiscal years
2006, 2005 and 2004.
In fiscal 2006, 2005 and 2004, the Company paid approximately
$1.3 million, $1.3 million and $1.5 million, respectively, to Alltel Corpo-
ration for cellular phone services. Scott T. Ford, who became a
director of the Company in November 2005, is the President
and Chief Executive Officer of Alltel Corporation.
In fiscal 2005, the Company purchased a parcel of land adjacent to
the Company’s Corporate Center for approximately $600,000 from
JHT, LLC, a limited liability company of which Don Tyson and the
Randal W. Tyson Testamentary Trust are members. The land is to
be used for expansion of corporate offices.
In fiscal 2005, the Company received approximately $4 million
from entities owned by Don Tyson and John Tyson, Chairman
of the Company, as payment for the purchase of certain properties
owned by the Company.
In fiscal 2004, the Company purchased a parcel of land adjacent to
the Company’s Corporate Center for approximately $356,000 from
JHT, LLC. The land is to be used for expansion of corporate offices.
In fiscal 2004, the Company purchased 1,028,577 shares of Class A
stock in a private transaction with Don Tyson, a director and man-
aging partner of the Tyson Limited Partnership, a principal shareholder
of the Company. The purchase of those shares from Mr. Tyson was
based on the closing price of the Class A stock on the New York
Stock Exchange on the date of purchase.
In fiscal 2004, the Company received cash payments from Don
Tyson totaling $1.5 million as reimbursement for certain perquisites
and personal benefits received during fiscal 1997 through 2003.
NOTE 15 INCOME TAXES
Detail of the provision (benefit) for income taxes consists of:
in millions 2006 2005 2004
Federal $ (79) $118 $183
State (12) 16 12
Foreign (11) 22 37
$(102) $156 $232
Current $ 24 $249 $224
Deferred (126) (93) 8
$(102) $156 $232
The reasons for the difference between the statutory U.S. federal
income tax rate and the effective income tax rate are as follows:
2006 2005 2004
U.S. federal income tax rate 35.0% 35.0% 35.0%
State income taxes 3.3 1.8 1.8
Extraterritorial income exclusion –(2.6) (0.5)
Reduction of tax reserves –(4.1) –
Medicare Part D (1.8) (3.6) –
Repatriation of foreign earnings –4.2 –
Adjustment for tax review (5.1) – –
General business credits 2.6 (1.8) (1.2)
Other 0.8 0.6 1.5
34.8% 29.5% 36.6%
During 2006, the Company completed a review of its tax account
balances, and as a result, reduced its income tax benefit by $15 million
of which $12 million is related to additional tax reserves for the
Company’s foreign operations and $3 million is related to a cumulative
adjustment to its recorded tax balances attributable to book to tax
differences associated with property, plant and equipment (including
synthetic leases) and certain acquired deferred tax liabilities. Addi-
tional adjustments resulted in an increase to goodwill of $12 million,
deferred tax liabilities of $3 million and a reduction of property, plant
and equipment of $9 million.
50 Ty s o n F o o d s , I n c . 2 0 0 6 A n n u a l R e p o r t
Notes to Consolidated Financial Statements continued