Tyson Foods 2011 Annual Report Download - page 46

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Litigation Reserves: There are a variety of legal proceedings pending or threatened against us. Accruals are recorded when it is
probable a liability has been incurred and the amount of the liability can be reasonably estimated based on current law, progress of
each case, opinions and views of legal counsel and other advisers, our experience in similar matters and intended response to the
litigation. These amounts, which are not discounted and are exclusive of claims against third parties, are adjusted periodically as
assessment efforts progress or additional information becomes available. We expense amounts for administering or litigating claims as
incurred. Accruals for legal proceedings are included in Other current liabilities in the Consolidated Balance Sheets.
Freight Expense: Freight expense associated with products shipped to customers is recognized in cost of sales.
Advertising and Promotion Expenses: Advertising and promotion expenses are charged to operations in the period incurred.
Customer incentive and trade promotion activities are recorded as a reduction to sales based on amounts estimated as being due to
customers, based primarily on historical utilization and redemption rates, while other advertising and promotional activities are
recorded as selling, general and administrative expenses. Advertising and promotion expenses for fiscal years 2011, 2010 and 2009
were $552 million, $505 million and $491 million, respectively.
Research and Development: Research and development costs are expensed as incurred. Research and development costs totaled $42
million, $38 million and $33 million in fiscal 2011, 2010 and 2009, respectively.
Use of Estimates: The consolidated financial statements are prepared in conformity with accounting principles generally accepted in
the United States, which require us to make estimates and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those estimates.
Recently Issued Accounting Pronouncements: In May 2011, the Financial Accounting Standards Board (FASB) clarified the
guidance around fair value measurements and disclosures. This guidance is effective for interim and annual periods beginning after
December 15, 2011. We will adopt this guidance in the second quarter of fiscal year 2012. We do not expect the adoption will have a
significant impact on our consolidated financial statements.
In June 2011, the FASB issued guidance regarding the presentation of comprehensive income. This guidance is effective for annual
periods, and interim periods within those years, beginning after December 15, 2011. We anticipate we will adopt this guidance in the
first quarter of fiscal year 2013. Upon adoption, we will be required to present comprehensive income as part of our consolidated
statements of income, or in a separate financial statement. Currently, we present such information in our notes to the consolidated
financial statements. Other than changing the presentation of comprehensive income, we do not expect the adoption will have a
significant impact on our consolidated financial statements.
In September 2011, the FASB issued guidance amending the way companies test for goodwill impairment. This guidance is effective
for interim and annual periods beginning after December 15, 2011, with early adoption permitted. We do not expect the adoption will
have a significant impact on our consolidated financial statements.
NOTE 2: CHANGES IN ACCOUNTING PRINCIPLES
In December 2007, the FASB issued guidance to establish accounting and reporting standards for a noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. This guidance clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity and may be reported as equity in the consolidated financial statements, rather than in the
liability or mezzanine section between liabilities and equity. This guidance also requires consolidated net income be reported at
amounts that include the net income attributable to both Tyson (the parent) and the noncontrolling interest. We adopted the
presentation and disclosure requirements retrospectively at the beginning of fiscal 2010. Accordingly, “attributable to Tyson” refers to
operating results exclusive of any noncontrolling interest. In conjunction with this adoption, we also adopted guidance applicable for
all noncontrolling interests in which we are or may be required to repurchase an interest in a consolidated subsidiary from the
noncontrolling interest holder under a put option or other contractual redemption requirement. Because we had certain redeemable
noncontrolling interests, noncontrolling interests were presented in both the equity section and the mezzanine section of the balance
sheet between liabilities and equity.