Tyson Foods 2015 Annual Report Download - page 85
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Please find page 85 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.Weguaranteeobligationsofcertainoutsidethirdparties,consistingprimarilyofleases,debtandgrowerloans,whicharesubstantiallycollateralizedbythe
underlyingassets.Termsoftheunderlyingdebtcoverperiodsupto10years,andthemaximumpotentialamountoffuturepaymentsasofOctober3,2015,was
$38million.Wealsomaintainoperatingleasesforvarioustypesofequipment,someofwhichcontainresidualvalueguaranteesforthemarketvalueofthe
underlyingleasedassetsattheendofthetermofthelease.Theremainingtermsoftheleasematuritiescoverperiodsoverthenext12years.Themaximum
potentialamountoftheresidualvalueguaranteesis$81million,ofwhich$74millioncouldberecoverablethroughvariousrecourseprovisionsandanadditional
undeterminablerecoverableamountbasedonthefairvalueoftheunderlyingleasedassets.Thelikelihoodofmaterialpaymentsundertheseguaranteesisnot
consideredprobable.AtOctober3,2015,andSeptember27,2014,nomaterialliabilitiesforguaranteeswererecorded.
Wehavecashflowassistanceprogramsinwhichcertainlivestocksuppliersparticipate.Undertheseprograms,wepayanamountforlivestockequivalenttoa
standardcosttogrowsuchlivestockduringperiodsoflowmarketsalesprices.Theamountsofsuchpaymentsthatareinexcessofthemarketsalespriceare
recordedasreceivablesandaccrueinterest.Participatingsuppliersareobligatedtorepaythesereceivablesbalanceswhenmarketsalespricesexceedthisstandard
cost,oruponterminationoftheagreement.Ourmaximumobligationassociatedwiththeseprogramsislimitedtothefairvalueofeachparticipatinglivestock
supplier’snettangibleassets.ThepotentialmaximumobligationasofOctober3,2015,wasapproximately$310million.Therewerenoreceivablesunderthis
programatOctober3,2015and$4millionatSeptember27,2014.Thesereceivablesareincluded,netofallowanceforuncollectibleamounts,inAccounts
ReceivableinourConsolidatedBalanceSheets.Eventhoughtheseprogramsarelimitedtothenettangibleassetsoftheparticipatinglivestocksuppliers,wealso
manageaportionofourcreditriskassociatedwiththeseprogramsbyobtainingsecurityinterestsinlivestocksuppliers’assets.Afteranalyzingresidualcreditrisks
andgeneralmarketconditions,wehadnoallowancefortheseprograms'estimateduncollectiblereceivablesatOctober3,2015,andSeptember27,2014.
Additionally,weenterintofuturepurchasecommitmentsforvariousitems,suchasgrains,livestockcontractsandfixedgrowerfees.AtOctober3,2015,these
commitmentstotaled:
inmillions
2016 $ 1,655
2017 434
2018 278
2019 117
2020 92
2021andbeyond 185
Total $ 2,761
Contingencies
Weareinvolvedinvariousclaimsandlegalproceedings.Weroutinelyassessthelikelihoodofadversejudgmentsoroutcomestothosematters,aswellasranges
ofprobablelosses,totheextentlossesarereasonablyestimable.Werecordaccrualsforsuchmatterstotheextentthatweconcludealossisprobableandthe
financialimpact,shouldanadverseoutcomeoccur,isreasonablyestimable.SuchaccrualsarereflectedintheCompany’sconsolidatedfinancialstatements.Inour
opinion,wehavemadeappropriateandadequateaccrualsforthesemattersandbelievetheprobabilityofamateriallossbeyondtheamountsaccruedtoberemote;
however,theultimateliabilityforthesemattersisuncertain,andifaccrualsarenotadequate,anadverseoutcomecouldhaveamaterialeffectontheconsolidated
financialconditionorresultsofoperations.ListedbelowarecertainclaimsmadeagainsttheCompanyand/oroursubsidiariesforwhichthepotentialexposureis
consideredmaterialtotheCompany’sconsolidatedfinancialstatements.Webelievewehavesubstantialdefensestotheclaimsmadeandintendtovigorously
defendthesematters.
Belowarethedetailsofsevenlawsuitsinvolvingourbeef,porkandpreparedfoodsplantsinwhichcertainpresentandpastemployeesallegethatwefailedto
compensatethemforthetimeittakestoengageinpre-andpost-shiftactivities,suchaschangingintoandoutofprotectiveandsanitaryclothingandwalkingto
andfromthechangingarea,workareasandbreakareasinviolationoftheFairLaborStandardsActandvariousstatelaws.Theplaintiffsseekbackwages,
liquidateddamages,pre-andpost-judgmentinterest,attorneys’feesandcosts.Eachcaseisproceedinginitsjurisdiction.
• Bouaphakeo(f/k/aSharp),etal.v.TysonFoods,Inc.,N.D.Iowa,February6,2007-AjurytrialwasheldinvolvingourStormLake,Iowaporkplant
whichresultedinajuryverdictinfavoroftheplaintiffsforviolationsoffederalandstatelawsforpre-andpost-shiftworkactivities.Thetrialcourtalso
awardedtheplaintiffsliquidateddamages,resultingintotaldamagesawardedintheamountof$5,784,758.Theplaintiffs'counselhasalsofiledan
applicationforattorneys'feesandexpensesintheamountof$2,692,145.Weappealedthejury'sverdictandtrialcourt'sawardtotheEighthCircuit
CourtofAppeals.TheappellatecourtaffirmedthejuryverdictandjudgmentonAugust25,2014,andwefiledapetitionforrehearingonSeptember22,
2014,whichwasdenied.WefiledapetitionforawritofcertiorariwiththeUnitedStatesSupremeCourt,whichwasgrantedonJune8,2015.Oral
argumentsbeforetheSupremeCourtoccurredonNovember10,2015.
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