XML 38 R21.htm IDEA: XBRL DOCUMENT v3.25.1
Lease Obligations, Commitments, and Guarantees
 12 Months Ended
Dec. 29, 2024
Leases [Abstract]  
Lease Obligations, Commitments, and Guarantees LEASE OBLIGATIONS, COMMITMENTS, AND GUARANTEES
Lease Obligations
We lease real estate, vehicles, machinery and other equipment. Additionally, we have contracts with independent farmers to raise our hogs that include a lease component for the use of the farmers’ facilities. Our leases may include options to extend or terminate the lease, variable lease payments based on usage of the underlying assets and residual value guarantees.
The following table presents the maturities of our lease obligations as of December 29, 2024:
Operating LeasesFinance LeasesTotal
(in millions)
2025$71 $3 $73 
202657 3 59 
202745 2 47 
202835 1 36 
202926 1 27 
After 2029208 9 217 
Total lease payments$441 $19 $460 
Present value discount(99)— (99)
Present value of lease obligations$341 $19 $361 
The following table presents the weighted-average lease term and discount rate for our finance and operating leases:
December 29,
2024		December 31,
2023
Weighted-average remaining lease term (years):
Finance leases9.410.2
Operating leases10.810.9
Weighted-average discount rate:
Finance leases0.8 %2.7 %
Operating leases4.8 %4.7 %
The components of total lease cost included in the consolidated statements of income are presented in the following table:
Fiscal Year
202420232022
(in millions)
Operating lease cost$83 $90 $123 
Finance lease cost:
Amortization of leased assets3 23 3 
Interest on lease obligations— 1 — 
Short-term lease cost (1)
9596 71 
Variable lease cost (2)
2323 21 
Total lease cost$204 $234 $218 
________________
(1)Represents the expense for leases with terms of one year or less, which are not included in the lease obligation.
(2)Represents the expense associated with lease payments that vary based on usage or changes in other circumstances, which are not included in the lease obligation.
The following table presents the classification of lease payments associated with our lease obligations in the statements of cash flows, as well as new, or modifications to existing, lease obligations entered into during the periods presented:
Fiscal Year
202420232022
(in millions)
Classification of lease payments:
Operating cash flows - finance leases (1)
$— $1 $— 
Operating cash flows - operating leases82 97 120 
Financing cash flows - finance leases3 4 3 
New, or modifications to existing, finance lease obligations— 1 25 
New, or modifications to existing, operating lease obligations24 42 159 
________________
(1)Represents the interest component of our payments on finance leases.
Commitments
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 have purchase commitments under forward grain contracts that obligate us to purchase a fixed amount of grain. We also have contractual commitments to independent farmers who raise our hogs in exchange for a performance-based service fee payable upon delivery. We estimate the future obligations under these commitments based on the amounts that are fixed and determinable in the related contracts. There are additional variable components of these contracts not included in our estimates that are based on quantities delivered and performance. Our estimated future obligations under these and other commitments are as follows:
Year(in millions)
2025$3,002 
20261,802 
20271,325 
2028984 
2029966 
All minimum purchase commitments under these contracts were fulfilled in each of fiscal years 2024, 2023 and 2022.
In 2019, we announced that we planned to contribute up to $250 million to Align through 2028 to fund various projects as approved by Align’s board from time to time. As of December 29, 2024, we had contributed $114 million in capital toward these planned contributions. Should the board, of which we have 50% of the voting power, choose not to approve additional projects, the remaining contributions would not be required.
We have committed to contribute up to $25 million to the TPG Rise Climate investment fund through July 2027. As of December 29, 2024, we had contributed $17 million in capital toward this commitment.
We had $73 million of committed funds related to approved capital expenditure projects as of December 29, 2024. These projects are expected to be funded with cash flows from operations and/or borrowings under credit facilities.
Guarantees
Smithfield and certain other joint venture partners in Monarch joint and severally guarantee Monarch’s debt, interest and fees. As of December 29, 2024, the maximum amount of loans that could be outstanding under Monarch’s debt agreements was $61 million and the loans mature in June 2025. Monarch’s outstanding debt was $43 million as of the end of fiscal year 2024.
The guarantee involves elements of performance and credit risk and is not included in the consolidated balance sheets. We could become liable in connection with Monarch’s obligation depending on the ability of Monarch to perform on its obligation. If we consider it probable that we will become responsible for the obligation, we would record the liability on our consolidated balance sheet.
Lease Obligations, Commitments, and Guarantees LEASE OBLIGATIONS, COMMITMENTS, AND GUARANTEES
Lease Obligations
We lease real estate, vehicles, machinery and other equipment. Additionally, we have contracts with independent farmers to raise our hogs that include a lease component for the use of the farmers’ facilities. Our leases may include options to extend or terminate the lease, variable lease payments based on usage of the underlying assets and residual value guarantees.
The following table presents the maturities of our lease obligations as of December 29, 2024:
Operating LeasesFinance LeasesTotal
(in millions)
2025$71 $3 $73 
202657 3 59 
202745 2 47 
202835 1 36 
202926 1 27 
After 2029208 9 217 
Total lease payments$441 $19 $460 
Present value discount(99)— (99)
Present value of lease obligations$341 $19 $361 
The following table presents the weighted-average lease term and discount rate for our finance and operating leases:
December 29,
2024		December 31,
2023
Weighted-average remaining lease term (years):
Finance leases9.410.2
Operating leases10.810.9
Weighted-average discount rate:
Finance leases0.8 %2.7 %
Operating leases4.8 %4.7 %
The components of total lease cost included in the consolidated statements of income are presented in the following table:
Fiscal Year
202420232022
(in millions)
Operating lease cost$83 $90 $123 
Finance lease cost:
Amortization of leased assets3 23 3 
Interest on lease obligations— 1 — 
Short-term lease cost (1)
9596 71 
Variable lease cost (2)
2323 21 
Total lease cost$204 $234 $218 
________________
(1)Represents the expense for leases with terms of one year or less, which are not included in the lease obligation.
(2)Represents the expense associated with lease payments that vary based on usage or changes in other circumstances, which are not included in the lease obligation.
The following table presents the classification of lease payments associated with our lease obligations in the statements of cash flows, as well as new, or modifications to existing, lease obligations entered into during the periods presented:
Fiscal Year
202420232022
(in millions)
Classification of lease payments:
Operating cash flows - finance leases (1)
$— $1 $— 
Operating cash flows - operating leases82 97 120 
Financing cash flows - finance leases3 4 3 
New, or modifications to existing, finance lease obligations— 1 25 
New, or modifications to existing, operating lease obligations24 42 159 
________________
(1)Represents the interest component of our payments on finance leases.
Commitments
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 have purchase commitments under forward grain contracts that obligate us to purchase a fixed amount of grain. We also have contractual commitments to independent farmers who raise our hogs in exchange for a performance-based service fee payable upon delivery. We estimate the future obligations under these commitments based on the amounts that are fixed and determinable in the related contracts. There are additional variable components of these contracts not included in our estimates that are based on quantities delivered and performance. Our estimated future obligations under these and other commitments are as follows:
Year(in millions)
2025$3,002 
20261,802 
20271,325 
2028984 
2029966 
All minimum purchase commitments under these contracts were fulfilled in each of fiscal years 2024, 2023 and 2022.
In 2019, we announced that we planned to contribute up to $250 million to Align through 2028 to fund various projects as approved by Align’s board from time to time. As of December 29, 2024, we had contributed $114 million in capital toward these planned contributions. Should the board, of which we have 50% of the voting power, choose not to approve additional projects, the remaining contributions would not be required.
We have committed to contribute up to $25 million to the TPG Rise Climate investment fund through July 2027. As of December 29, 2024, we had contributed $17 million in capital toward this commitment.
We had $73 million of committed funds related to approved capital expenditure projects as of December 29, 2024. These projects are expected to be funded with cash flows from operations and/or borrowings under credit facilities.
Guarantees
Smithfield and certain other joint venture partners in Monarch joint and severally guarantee Monarch’s debt, interest and fees. As of December 29, 2024, the maximum amount of loans that could be outstanding under Monarch’s debt agreements was $61 million and the loans mature in June 2025. Monarch’s outstanding debt was $43 million as of the end of fiscal year 2024.
The guarantee involves elements of performance and credit risk and is not included in the consolidated balance sheets. We could become liable in connection with Monarch’s obligation depending on the ability of Monarch to perform on its obligation. If we consider it probable that we will become responsible for the obligation, we would record the liability on our consolidated balance sheet.