Tyson Foods 2010 Annual Report Download - page 46

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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 June 2009, the Financial Accounting Standards Board (FASB) issued guidance
removing the concept of a qualifying special-purpose entity (QSPE). This guidance also clarifies the requirements for isolation and
limitations on portions of financial assets eligible for sale accounting. This guidance is effective for fiscal years beginning after
November 15, 2009. Accordingly, we will adopt this guidance at the beginning of fiscal year 2011 and do not expect the adoption will
have a material impact.
In June 2009 and December 2009, the FASB issued guidance requiring an analysis to determine whether a variable interest gives the
entity a controlling financial interest in a variable interest entity. This guidance requires an ongoing assessment and eliminates the
quantitative approach previously required for determining whether an entity is the primary beneficiary. This guidance is effective for
fiscal years beginning after November 15, 2009. Accordingly, we will adopt this guidance at the beginning of fiscal year 2011 and do
not expect the adoption will have a material impact.
NOTE 2: CHANGE IN ACCOUNTING PRINCIPLES
In December 2007, the FASB issued guidance establishing principles and requirements for how an acquirer in a business combination:
1) recognizes and measures in its financial statements identifiable assets acquired, liabilities assumed, and any noncontrolling interest
in the acquiree; 2) recognizes and measures goodwill acquired in a business combination or a gain from a bargain purchase; and 3)
determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of a
business combination. This guidance is effective for business combinations for which the acquisition date is on or after the beginning
of the first annual reporting period beginning on or after December 15, 2008; therefore, we adopted this guidance at the beginning of
fiscal 2010. The initial adoption did not have a significant impact on our consolidated financial statements.
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 have certain redeemable
noncontrolling interests, noncontrolling interests are presented in both the equity section and the mezzanine section of the balance
sheet between liabilities and equity.
In May 2008, the FASB issued guidance which specifies issuers of convertible debt instruments that may be settled in cash upon
conversion (including partial cash settlement) should separately account for the liability and equity components in a manner that will
reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. The amount allocated to
the equity component represents a discount to the debt, which is amortized into interest expense using the effective interest method
over the life of the debt. We adopted this guidance in the first quarter of fiscal 2010 and applied it retrospectively. Upon retrospective
adoption, our effective interest rate on our 3.25% Convertible Senior Notes due 2013 issued in September 2008 was determined to be
8.26%, which resulted in the recognition of a $92 million discount to these notes with the offsetting after tax amount of $56 million
recorded to capital in excess of par value. This discount will be accreted over the five-year term of the convertible notes at the
effective interest rate. The impact to our previously reported fiscal 2008 interest expense was not significant, while the impact
increased fiscal 2009 non-cash interest expense by $17 million.
In December 2008, the FASB issued guidance requiring additional disclosures about assets held in an employer’s defined benefit
pension or other postretirement plan. This guidance is effective for fiscal years ending after December 15, 2009, with early adoption
permitted. We adopted the disclosure requirements in fiscal 2010. See Note 15: Pensions and Other Postretirement Benefits for
required disclosures.