Tyson Foods 2012 Annual Report Download - page 71

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NOTE 17: SUPPLEMENTAL CASH FLOW INFORMATION
The following table summarizes cash payments for interest and income taxes:
in millions
2012 2011 2010
Interest, net of amounts capitalized $ 274 $ 174 $ 302
Income taxes, net of refunds 187 311 470
NOTE 18: TRANSACTIONS WITH RELATED PARTIES
We have operating leases for an airplane and two wastewater facilities with John Tyson, Chairman of the Company, certain members
of the Tyson family, the Donald J. Tyson Revocable Trust and the Randal W. Tyson Testamentary Trust. Total payments of $2 million
in each of fiscal 2012, 2011 and 2010, 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 $193 million, $183 million and $188 million,
respectively, in fiscal 2012, 2011 and 2010. 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 September 29, 2012, were:
in millions
2013 $ 101
2014 72
2015 47
2016 32
2017 21
2018 and beyond 55
Total $ 328
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 September 29, 2012, was $75 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 $58 million, of which $52 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 September 29, 2012, and October 1, 2011, 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 September 29, 2012, was approximately $275 million. The total
receivables under these programs were $25 million and $28 million at September 29, 2012, and October 1, 2011, respectively, and are
included, net of allowance for uncollectible amounts, in Accounts Receivable and 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 at both September 29, 2012, and October 1, 2011.