Tyson Foods 2015 Annual Report Download - page 11
Download and view the complete annual report
Please find page 11 of the 2015 Tyson Foods annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Our level of indebtedness and the terms of our indebtedness could negatively impact our business and liquidity position.
Ourindebtedness,includingborrowingsunderourrevolvingcreditfacility,mayincreasefromtimetotimeforvariousreasons,includingfluctuationsinoperating
results,workingcapitalneeds,capitalexpendituresandpossibleacquisitions,jointventuresorothersignificantinitiatives.Ourconsolidatedindebtednesslevel
couldadverselyaffectourbusinessbecause:
•itmaylimitorimpairourabilitytoobtainfinancinginthefuture;
•ourcreditratings(oranydecreasetoourcreditratings)couldrestrictorimpedeourabilitytoaccesscapitalmarketsatdesiredinterestratesandincrease
ourborrowingcosts;
•itmayreduceourflexibilitytorespondtochangingbusinessandeconomicconditionsortotakeadvantageofbusinessopportunitiesthatmayarise;
•aportionofourcashflowfromoperationsmustbededicatedtointerestpaymentsonourindebtednessandisnotavailableforotherpurposes;and
•itmayrestrictourabilitytopaydividends.
Ourrevolvingcreditandtermloanfacilitiescontainaffirmativeandnegativecovenantsthat,amongotherthings,maylimitorrestrictourabilityto:createliens
andencumbrances;incurdebt;merge,dissolve,liquidateorconsolidate;makeacquisitionsandinvestments;disposeofortransferassets;changethenatureofour
business;engageincertaintransactionswithaffiliates;andenterintohedgingtransactions,ineachcase,subjecttocertainqualificationsandexceptions.In
addition,wearerequiredtomaintainminimuminterestexpensecoverageandmaximumdebttocapitalizationratios.
Ourseniornotesalsocontainaffirmativeandnegativecovenantsthat,amongotherthings,maylimitorrestrictourabilityto:createliens;engageincertain
sale/leasebacktransactions;andengageincertainconsolidations,mergersandsalesofassets.
An impairment in the carrying value of our goodwill or indefinite life intangible assets could negatively impact our consolidated results of operations and
net worth.
Goodwillandindefinitelifeintangibleassetsareinitiallyrecordedatfairvalueandnotamortized,butarereviewedforimpairmentatleastannuallyormore
frequentlyifimpairmentindicatorsarise.Inassessingthecarryingvalueofgoodwillandindefinitelifeintangibleassets,wemakeestimatesandassumptionsabout
sales,operatingmargins,growthrates,royaltyratesanddiscountratesbasedonbudgets,businessplans,economicprojections,anticipatedfuturecashflowsand
marketplacedata.Thereareinherentuncertaintiesrelatedtothesefactorsandmanagement’sjudgmentinapplyingthesefactors.Goodwillvaluationshavebeen
calculatedprincipallyusinganincomeapproachbasedonthepresentvalueoffuturecashflowsofeachreportingunitandarebelievedtoreflectmarketparticipant
viewswhichwouldexistinanexittransaction.Indefinitelifeintangibleassetvaluationshavebeencalculatedprincipallyusingrelief-from-royaltyandexcess
earningsapproachesandarebelievedtoreflectmarketparticipantviewswhichwouldexistinanexittransaction.Underthesevaluationapproaches,weare
requiredtomakevariousjudgmentalassumptionsaboutappropriatediscountrates.Disruptionsinglobalcreditandotherfinancialmarketsanddeteriorationof
economicconditions,could,amongotherthings,causeustoincreasethediscountrateusedinthevaluations.Wecouldberequiredtoevaluatetherecoverability
ofgoodwillandindefinitelifeintangibleassetspriortotheannualassessmentifweexperiencedisruptionstothebusiness,unexpectedsignificantdeclinesin
operatingresults,divestitureofasignificantcomponentofourbusinessorsustainedmarketcapitalizationdeclines.Thesetypesofeventsandtheresulting
analysescouldresultinimpairmentchargesinthefuture,whichcouldbesubstantial.AsofOctober3,2015,wehad$10.7billionofgoodwillandindefinitelife
intangibleassets,whichrepresentedapproximately47%oftotalassets.
New or more stringent domestic and international government regulations could impose material costs on us and could adversely affect our business.
Ouroperationsaresubjecttoextensivefederal,stateandforeignlawsandregulationsbyauthoritiesthatoverseefoodsafetystandardsandprocessing,packaging,
storage,distribution,advertising,labelingandexportofourproducts.See“EnvironmentalRegulationandFoodSafety”inItem1ofthisAnnualReportonForm
10-K.Changesinlawsorregulationsthatimposeadditionalregulatoryrequirementsonuscouldincreaseourcostofdoingbusinessorrestrictouractions,causing
ourresultsofoperationstobeadverselyaffected.Forexample,increasedgovernmentalinterestinadvertisingpracticesmayresultinregulationsthatcouldrequire
ustochangeorrestrictouradvertisingpractices.
Increasedgovernmentregulationstolimitcarbondioxideandothergreenhousegasemissionsasaresultofconcernoverclimatechangemayresultinincreased
compliancecosts,capitalexpendituresandotherfinancialobligationsforus.Weusenaturalgas,dieselfuelandelectricityinthemanufacturinganddistributionof
ourproducts.Legislationorregulationaffectingtheseinputscouldmateriallyaffectourprofitability.Inaddition,climatechangecouldaffectourabilitytoprocure
neededcommoditiesatcostsandinquantitieswecurrentlyexperienceandmayrequireustomakeadditionalunplannedcapitalexpenditures.
10