Tyson Foods 2011 Annual Report Download - page 71

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71
NOTE 17: SUPPLEMENTAL CASH FLOW INFORMATION
The following table summarizes cash payments for interest and income taxes:
in millions
2011
2010
2009
Interest
$192
$302
$333
Income taxes, net of refunds
311
470
35
NOTE 18: TRANSACTIONS WITH RELATED PARTIES
We have operating leases for farms, equipment and other facilities with the estate of Don Tyson, a former director of the Company,
John Tyson, Chairman of the Company, certain members of their families and the Randal W. Tyson Testamentary Trust. Total
payments of $2 million in fiscal 2011, $2 million in fiscal 2010 and $3 million in fiscal 2009, were paid to entities in which these
parties had an ownership interest.
NOTE 19: COMMITMENTS AND CONTINGENCIES
Commitments
We lease equipment, properties and certain farms for which total rentals approximated $183 million, $188 million and $175 million,
respectively, in fiscal 2011, 2010 and 2009. Most leases have initial terms up to seven years, some with varying renewal periods. The
most significant obligations assumed under the terms of the leases are the upkeep of the facilities and payments of insurance and
property taxes.
Minimum lease commitments under non-cancelable leases at October 1, 2011, were:
in millions
2012
$95
2013
63
2014
39
2015
19
2016
12
2017 and beyond
54
Total
$282
We guarantee obligations of certain outside third parties, which consists of a lease and grower loans, all of which are substantially
collateralized by the underlying assets. Terms of the underlying debt cover periods up to ten years, and the maximum potential amount
of future payments as of October 1, 2011, was $76 million. We also maintain operating leases for various types of equipment, some of
which contain residual value guarantees for the market value of the underlying leased assets at the end of the term of the lease. The
remaining terms of the lease maturities cover periods over the next seven years. The maximum potential amount of the residual value
guarantees is $50 million, of which $43 million would be recoverable through various recourse provisions and an additional
undeterminable recoverable amount based on the fair value of the underlying leased assets. The likelihood of material payments under
these guarantees is not considered probable. At October 1, 2011, and October 2, 2010, no material liabilities for guarantees were
recorded.
We have cash flow assistance programs in which certain livestock suppliers participate. Under these programs, we pay an amount for
livestock equivalent to a standard cost to grow such livestock during periods of low market sales prices. The amounts of such
payments that are in excess of the market sales price are recorded as receivables and accrue interest. Participating suppliers are
obligated to repay these receivables balances when market sales prices exceed this standard cost, or upon termination of the
agreement. Our maximum obligation associated with these programs is limited to the fair value of each participating livestock
supplier’s net tangible assets. The potential maximum obligation as of October 1, 2011, was approximately $220 million. The total
receivables under these programs were $28 million and $51 million at October 1, 2011, and October 2, 2010, respectively, and are
included, net of allowance for uncollectible amounts, in Other Assets in our Consolidated Balance Sheets. Even though these
programs are limited to the net tangible assets of the participating livestock suppliers, we also manage a portion of our credit risk
associated with these programs by obtaining security interests in livestock suppliers' assets. After analyzing residual credit risks and
general market conditions, we have recorded an allowance for these programs' estimated uncollectible receivables of $10 million and
$15 million at October 1, 2011, and October 2, 2010, respectively.