Tyson Foods 2015 Annual Report Download - page 52
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Please find page 52 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.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TYSON FOODS, INC.
NOTE 1: BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business: TysonFoods,Inc.(collectively,“Company,”“we,”“us”or“our”),foundedin1935withworldheadquartersinSpringdale,Arkansas,is
oneoftheworld'slargestfoodcompanieswithleadingbrandssuchasTyson®,JimmyDean®,HillshireFarm®,SaraLee®,BallPark®,Wright®,Aidells®and
StateFair®.Wearearecognizedmarketleaderinchicken,beefandporkaswellaspreparedfoods,includingbacon,breakfastsausage,turkey,lunchmeat,hot
dogs,pizzacrustsandtoppings,tortillasanddesserts.
Consolidation: Theconsolidatedfinancialstatementsincludetheaccountsofallwholly-ownedsubsidiaries,aswellasmajority-ownedsubsidiariesoverwhichwe
exercisecontroland,whenapplicable,entitiesforwhichwehaveacontrollingfinancialinterestorvariableinterestentitiesforwhichwearetheprimary
beneficiary.Allsignificantintercompanyaccountsandtransactionshavebeeneliminatedinconsolidation.
Fiscal Year: Weutilizea52-or53-weekaccountingperiodendingontheSaturdayclosesttoSeptember30.TheCompany’saccountingcycleresultedina53-
weekyearforfiscal2015anda52-weekyearforfiscal2014and2013.
Cash and Cash Equivalents: Cashequivalentsconsistofinvestmentsinshort-term,highlyliquidsecuritieshavingoriginalmaturitiesofthreemonthsorless,
whicharemadeaspartofourcashmanagementactivity.Thecarryingvaluesoftheseassetsapproximatetheirfairvalues.Weprimarilyutilizeacashmanagement
systemwithaseriesofseparateaccountsconsistingoflockboxaccountsforreceivingcash,concentrationaccountswherefundsaremovedto,andseveralzero-
balancedisbursementaccountsforfundingpayroll,accountspayable,livestockprocurement,growerpayments,etc.Asaresultofourcashmanagementsystem,
checksissued,butnotpresentedtothebanksforpayment,mayresultinnegativebookcashbalances.Thesenegativebookcashbalancesareincludedinaccounts
payableandothercurrentliabilities.AtOctober3,2015,andSeptember27,2014,checksoutstandinginexcessofrelatedbookcashbalancestotaled
approximately$257millionand$298million,respectively.
Accounts Receivable: Werecordaccountsreceivableatnetrealizablevalue.Thisvalueincludesanappropriateallowanceforestimateduncollectibleaccountsto
reflectanylossanticipatedontheaccountsreceivablebalancesandchargedtotheprovisionfordoubtfulaccounts.Wecalculatethisallowancebasedonour
historyofwrite-offs,levelofpastdueaccountsandrelationshipswithandeconomicstatusofourcustomers.AtOctober3,2015,andSeptember27,2014,our
allowanceforuncollectibleaccountswas$27millionand$34million,respectively.Wegenerallydonothavecollateralforourreceivables,butwedoperiodically
evaluatethecreditworthinessofourcustomers.
Inventories: Processedproducts,livestockandsuppliesandotherarevaluedatthelowerofcostormarket.Costincludespurchasedrawmaterials,livepurchase
costs,growoutcosts(primarilyfeed,growerpayandcatchandhaulcosts),laborandmanufacturingandproductionoverhead,whicharerelatedtothepurchase
andproductionofinventories.
Infiscal2015,63%ofthecostofinventorieswasdeterminedbythefirst-in,first-out("FIFO")methodascomparedto66%infiscal2014.Theremainingcostof
inventoriesforbothyearsisdeterminedbytheweighted-averagemethod.
ThefollowingtablereflectsthemajorcomponentsofinventoryatOctober3,2015,andSeptember27,2014:
inmillions
2015
2014
Processedproducts $ 1,631
$ 1,794
Livestock 831
1,066
Suppliesandother 416
414
Totalinventory $ 2,878
$ 3,274
Property, Plant and Equipment: Property,plantandequipmentarestatedatcostandgenerallydepreciatedonastraight-linemethodovertheestimatedlivesfor
buildingsandleaseholdimprovementsof10to33years,machineryandequipmentofthreeto12yearsandlandimprovementsandotherofthreeto20years.
Majorrepairsandmaintenancecoststhatsignificantlyextendtheusefullifeoftherelatedassetsarecapitalized.Normalrepairsandmaintenancecostsarecharged
tooperations.
Wereviewthecarryingvalueoflong-livedassetsateachbalancesheetdateifindicationofimpairmentexists.Recoverabilityisassessedusingundiscountedcash
flowsbasedonhistoricalresultsandcurrentprojectionsofearningsbeforeinterest,taxes,depreciationandamortization.Wemeasureimpairmentastheexcessof
carryingvalueoverthefairvalueofanasset.Thefairvalueofanassetismeasuredusingdiscountedcashflowsincludingmarketparticipantassumptionsoffuture
operatingresultsanddiscountrates.
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