Tyson Foods 2015 Annual Report Download - page 41
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Judgments and Uncertainties
Effect if Actual Results Differ From
Assumptions
Income taxes
Weestimatetotalincometaxexpensebasedon
statutorytaxratesandtaxplanningopportunities
availabletousinvariousjurisdictionsinwhichwe
earnincome.
Federalincometaxincludesanestimatefortaxes
onearningsofforeignsubsidiariesexpectedtobe
taxableuponremittancetotheUnitedStates,
exceptforearningsconsideredtobeindefinitely
investedintheforeignsubsidiary.
Deferredincometaxesarerecognizedforthe
futuretaxeffectsoftemporarydifferencesbetween
financialandincometaxreportingusingtaxrates
ineffectfortheyearsinwhichthedifferencesare
expectedtoreverse.
Valuationallowancesarerecordedwhenitislikely
ataxbenefitwillnotberealizedforadeferredtax
asset.
Werecordunrecognizedtaxbenefitliabilitiesfor
knownoranticipatedtaxissuesbasedonour
analysisofwhether,andtheextenttowhich,
additionaltaxeswillbedue.
Changesintaxlawsandratescouldaffectrecorded
deferredtaxassetsandliabilitiesinthefuture.
Changesinprojectedfutureearningscouldaffectthe
recordedvaluationallowancesinthefuture.
Ourcalculationsrelatedtoincometaxescontain
uncertaintiesduetojudgmentusedtocalculatetax
liabilitiesintheapplicationofcomplextax
regulationsacrossthetaxjurisdictionswherewe
operate.
Ouranalysisofunrecognizedtaxbenefitscontains
uncertaintiesbasedonjudgmentusedtoapplythe
morelikelythannotrecognitionandmeasurement
thresholds.
Wedonotbelievethereisareasonablelikelihood
therewillbeamaterialchangeinthetaxrelated
balancesorvaluationallowances.However,dueto
thecomplexityofsomeoftheseuncertainties,the
ultimateresolutionmayresultinapaymentthatis
materiallydifferentfromthecurrentestimateofthe
taxliabilities.
Totheextentweprevailinmattersforwhich
unrecognizedtaxbenefitliabilitieshavebeen
established,orarerequiredtopayamountsinexcess
ofourrecordedunrecognizedtaxbenefitliabilities,
oureffectivetaxrateinagivenfinancialstatement
periodcouldbemateriallyaffected.Anunfavorable
taxsettlementwouldrequireuseofourcashand
generallyresultinanincreaseinoureffectivetax
rateintheperiodofresolution.Afavorabletax
settlementwouldgenerallyberecognizedasa
reductioninoureffectivetaxrateintheperiodof
resolution.
Impairment of long-lived assets and definite life intangibles
Long-livedassetsanddefinitelifeintangiblesare
evaluatedforimpairmentwhenevereventsor
changesincircumstancesindicatethecarrying
valuemaynotberecoverable.Examplesincludea
significantadversechangeintheextentormanner
inwhichweusetheasset,achangeinitsphysical
condition,oranunexpectedchangeinfinancial
performance.
Whenevaluatinglong-livedassetsanddefinitelife
intangiblesforimpairment,wecomparethe
carryingvalueoftheassettotheasset’sestimated
undiscountedfuturecashflows.Animpairmentis
indicatediftheestimatedfuturecashflowsareless
thanthecarryingvalueoftheasset.Forassetsheld
forsale,wecomparethecarryingvalueofthe
disposalgrouptofairvalue.Theimpairmentisthe
excessofthecarryingvalueoverthefairvalueof
theasset.
Werecordedimpairmentchargesrelatedtolong-
livedassetsanddefinitelifeintangiblesof$262
million,$107millionand$74million,infiscal
2015,2014and2013,respectively.
Ourimpairmentanalysiscontainsuncertaintiesdue
tojudgmentinassumptions,includingusefullivesof
assets,forecastedsales,operatingmargins,growth
rates,royaltyratesanddiscountratesbasedon
budgets,businessplans,economicprojections,
anticipatedfuturecashflowsandmarketplacedata
thatreflectstheriskinherent
infuturecashflowstodeterminefair
value.
Wehavenotmadeanymaterialchangesinthe
accountingmethodologyusedtoevaluatethe
impairmentoflong-livedassetsordefinitelife
intangiblesduringthelastthreefiscalyears.
Wedonotbelievethereisareasonablelikelihood
therewillbeamaterialchangeintheestimatesor
assumptionsusedtocalculateimpairmentsoflong-
livedassetsordefinitelifeintangibles.However,if
actualresultsarenotconsistentwithourestimates
andassumptionsusedtocalculateestimatedfuture
cashflows,wemaybeexposedtoimpairmentlosses
thatcouldbematerial.
Weareconductingaprojectdesignedtooptimize
ournetworkcapacityandtoenhancemanufacturing
efficienciesinthefuture.Additionally,wecontinue
toevaluateourinternationaloperationsand
strategies.Ifwehaveasignificantchangein
strategies,outlook,oramannerinwhichweplanto
usetheseassets,wemaybeexposedtofuture
impairments.
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