Tyson Foods 2008 Annual Report Download - page 16

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14 Tyson Foods, Inc.
Management’s Discussion and Analysis (continued)
Interest Income
in millions 2008 2007 2006
$9 $8 $30
2006
Included $20 million of interest earned on the $750 million short-
term investment held on deposit with a trustee used for the repay-
ment of the 7.25% Notes maturing on October 1, 2006.
Interest Expense
in millions 2008 2007 2006
Interest expense $ 215 $ 232 $268
Average borrowing rate 7.0% 7.4% 7.4%
Change in average weekly debt (1.7)% (15.9)%
2007 vs. 2006
The decrease in interest expense primarily was due to the $1.0 bil-
lion senior unsecured notes borrowing at the end of the second
quarter of fi scal 2006. We used $750 million of the proceeds from
the borrowing for the repayment of the 7.25% Notes maturing on
October 1, 2006.
Other Income, net
in millions 2008 2007 2006
$29 $21 $20
2008
• Included $18 million non-operating gain related to the sale of
an investment.
2007
• Included $14 million in foreign currency exchange gain.
2006
• Included $7 million gain recorded on the write-off of a capital
lease obligation related to a legal settlement.
• Included $5 million in foreign currency exchange gain.
Effective Tax Rate
2008 2007 2006
44.6% 34.6% 35.0%
2008
• Increased the effective tax rate 5.0% due to increase in state valua-
tion allowances.
• Increased the effective tax rate 4.4% due to increase in FIN 48
unrecognized tax benefi ts.
• Increased the effective tax rate 3.8% due to net negative returns on
company-owned life insurance policies, which is not deductible for
federal income tax purposes.
• Reduced the effective tax rate 3.8% due to general business credits.
2007
• Increased the effective tax rate 4.2% due to a fi xed asset tax
cost correction, primarily related to a fi xed asset system conver-
sion in 1999.
• Increased the effective tax rate 3.2% due to the federal income tax
effect of the reductions in estimated Medicare Part D subsidy in fi scal
2007, which is not deductible for federal income tax purposes.
• Reduced the effective tax rate 4.6% due to the reduction of income
tax reserves based on favorable settlement of disputed matters.
2006
• Reduced the effective tax rate 5.1% due to expense recorded in
fi scal 2006 as a result of the tax account balance review.
• Reduced the effective tax rate 1.8% due to the federal income tax
effect of the reductions in estimated Medicare Part D subsidy in
fi scal 2006, which is not deductible for federal income tax purposes.