Tyson Foods 2014 Annual Report Download - page 93

NOTE 20: COMMITMENTS AND CONTINGENCIES
Commitments
We lease equipment, properties and certain farms for which total rentals approximated $161 million , $200 million and $193 million , in fiscal
2014 , 2013 and 2012 , respectively. Most leases have initial terms of 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 27, 2014 , were:
We guarantee obligations of certain outside third parties, consisting primarily of leases and grower loans which are substantially collateralized
by the underlying assets. Terms of the underlying debt cover periods up to 15 years, and the maximum potential amount of future payments as
of September 27, 2014 , was $70 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 13 years. The maximum potential amount of the residual value guarantees is $54 million , of which $48
million could 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 27,
2014 , and September 28, 2013 , 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 27, 2014 , was approximately $330 million . The total receivables under these programs were $4 million and $44 million at
September 27, 2014 , and September 28, 2013 , respectively, and are included, net of allowance for uncollectible amounts, in Accounts
Receivable 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 had no allowance for these programs' estimated uncollectible
receivables at September 27, 2014 and $15 million at September 28, 2013 .
Additionally, we enter into future purchase commitments for various items, such as grains, livestock contracts and fixed grower fees. At
September 27, 2014 , these commitments totaled:
85
in millions
2015
$
107
2016
80
2017
56
2018
39
2019
30
2020 and beyond
104
Total
$
416
in millions
2015
$
2,625
2016
585
2017
259
2018
271
2019
189
2020 and beyond
249
Total
$
4,178