RELATED PARTY TRANSACTIONS

Pilgrim’s has been and, in some cases, continues to be a party to certain transactions with affiliated companies.



	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	June 25, 2017		June 26, 2016		June 25, 2017		June 26, 2016
	(In thousands)
JBS USA Food Company Holdings:
Letter of credit fees^(a)	$	—	$	—	$	—	$	202
JBS USA Food Company:
Purchases from JBS USA Food Company^(b)	24,994		26,377		52,283		46,888
Expenditures paid by JBS USA Food Company on behalf of Pilgrim’s Pride Corporation^(c)	7,349		8,722		18,298		16,326
Sales to JBS USA Food Company^(b)	4,833		4,114		9,396		7,416
Expenditures paid by Pilgrim’s Pride Corporation on behalf of JBS USA Food Company^(c)	1,595		1,725		2,460		8,688
JBS Chile Ltda.:
Sales to JBS Chile Ltda.	—		107		—		312
JBS Global (UK) Ltd.:
Sales to JBS Global (UK) Ltd.	—		—		19		122
JBS Five Rivers:
Sales to JBS Five Rivers^(d)	9,394		—		16,516		—
J&F Investimentos Ltd.:
Sales to J&F Investimentos Ltd.	—		—		104		—
JBS Seara:
Sales to JBS Seara	80		—		80		—

(a)

JBS USA Food Company Holdings (“JBS USA Holdings”) arranged for letters of credit to be issued on its account in the aggregate amount of $56.5 million to an insurance company on behalf of the Company in order to allow that insurance company to return cash it held as collateral against potential workers’ compensation, auto liability and general liability claims. In return for providing this letter of credit, the Company has agreed to reimburse JBS USA Holdings for the letter of credit fees the Company would otherwise incur under its U.S. Credit Facility. The letter of credit arrangements for $40.0 million and $16.5 million were terminated on March 7, 2016 and April 1, 2016, respectively. For the twenty-six weeks ended June 26, 2016, the Company paid JBS USA Holdings $0.2 million for letter of credit fees.

(b)

We routinely execute transactions to both purchase products from JBS USA Food Company (“JBS USA”) and sell products to them. As of June 25, 2017 and December 25, 2016, the outstanding payable to JBS USA was $3.6 million and $1.4 million, respectively. As of June 25, 2017 and December 25, 2016, the outstanding receivable from JBS USA was $2.1 million and $3.8 million, respectively. As of June 25, 2017, approximately $1.1 million of goods from JBS USA were in transit and not reflected on our Condensed Consolidated Balance Sheet.

(c)

The Company has an agreement with JBS USA to allocate costs associated with JBS USA’s procurement of SAP licenses and maintenance services for its combined companies. Under this agreement, the fees associated with procuring SAP licenses and maintenance services are allocated between the Company and JBS USA in proportion to the percentage of licenses used by each company. The agreement expires on the date of expiration, or earlier termination, of the underlying SAP license agreement. The Company also has an agreement with JBS USA to allocate the costs of supporting the business operations by one consolidated corporate team, which have historically been supported by their respective corporate teams. Expenditures paid by JBS USA on behalf of the Company will be reimbursed by the Company and expenditures paid by the Company on behalf of JBS USA will be reimbursed by JBS USA. This agreement expires on December 31, 2019.


(d)	The outstanding receivable from JBS Five Rivers at June 25, 2017 was $1.9 million. There was no outstanding receivable from JBS Five Rivers at December 25, 2016.

The Company entered into a tax sharing agreement during 2014 with JBS USA Holdings effective for tax years starting in 2010. The net tax receivable of $5.0 million for tax year 2016 was accrued in 2016 and paid in February 2017. The net tax receivable of $3.7 million for tax year 2015 was accrued in 2015 and paid in January 2016.