LEASE OBLIGATIONS, COMMITMENTS AND GUARANTEES

Lease Obligations

We lease facilities and equipment under non-cancelable operating leases. The terms of each lease agreement vary and may contain renewal or purchase options. Rental payments under operating leases are charged to expense on the straight-line basis over the period of the lease. Rental expense under operating leases of real estate, machinery, vehicles and other equipment was $49.2 million, $43.0 million, $11.7 million, $19.2 million and $47.1 million in 2015, 2014, the three months ended December 29, 2013, the five months ended September 26, 2013 and the twelve months ended April 28, 2013, respectively.

In 2015, we constructed a distribution center and sold it for $43.3 million. Concurrent with the sale, we entered into an agreement to leaseback the property from the purchaser over a non-cancelable lease term of 20 years, with renewal options. This lease is accounted for as an operating lease.

Future rental commitments under non-cancelable operating leases as of January 3, 2016 are as follows:



Year	(in millions)
2016	$	49.0
2017	43.0
2018	36.1
2019	30.3
2020	22.8
Thereafter	78.8
Total	$	260.0

As of January 3, 2016, future minimum lease payments under capital leases were approximately $25.0 million. The present value of the future minimum lease payments was $24.5 million. The long-term portion of capital lease obligations was $23.3 million and $23.7 million as of January 3, 2016 and December 28, 2014, respectively, and the current portion was $1.2 million and $1.2 million as of January 3, 2016 and December 28, 2014, respectively.

Commitments

We have agreements, expiring through 2022, to use cold storage warehouses owned by partnerships, of which we are 50% partners. We have agreed to pay prevailing competitive rates for use of the facilities, subject to aggregate guaranteed minimum annual fees. In 2015, 2014, the three months ended December 29, 2013, the five months ended September 26, 2013 and the twelve months ended April 28, 2013, we paid $16.3 million, $20.7 million, $4.5 million, $7.4 million and $16.6 million, respectively, in fees for use of the facilities. We had investments in the partnerships of $5.1 million as of January 3, 2016 and $4.2 million as of December 28, 2014, respectively.

We have purchase commitments with certain livestock producers that obligate us to purchase all the livestock that these producers deliver. Other arrangements obligate us to purchase a fixed amount of livestock. We also use independent farmers and their facilities to raise hogs produced from our breeding stock in exchange for a performance-based service fee payable upon delivery. We estimate the future obligations under these commitments based on available commodity livestock futures prices and internal projections about future hog prices, expected quantities delivered and anticipated performance. Our estimated future obligations under these commitments are as follows:



Year	(in millions)
2016	$	2,006.3
2017	1,559.5
2018	1,179.3
2019	830.9
2020	745.2

As of January 3, 2016, we were also committed to purchase approximately $210.5 million under forward grain contracts payable in 2016.

We had $57.9 million of committed funds related to approved capital expenditure projects as of January 3, 2016. These projects are expected to be funded with cash flows from operations and/or borrowings under credit facilities.

Guarantees

As part of our business, we are a party to various financial guarantees and other commitments as described below. These arrangements involve elements of performance and credit risk that are not included in the consolidated balance sheet as of January 3, 2016. We could become liable in connection with these obligations depending on the performance of the guaranteed party or the occurrence of future events that we are unable to predict. If we consider it probable that we will become responsible for an obligation, we will record the liability on our consolidated balance sheet.

As of January 3, 2016, we continued to guarantee $6.7 million of leases that were transferred to JBS S.A. in connection with the sale of Smithfield Beef, Inc which closed in October 2008. This guaranty may remain in place until the leases expire through February 2022.