RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 27, 2015

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

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

	2015		2014		2013
	(In thousands)
JBS USA Holding:
Letter of credit fees(a)	$	1,268	$	1,339	$	2,156
Equity contribution under tax sharing agreement(b)	3,690		3,849		—
JBS USA Food Company:
Purchases from JBS USA Food Company(c)	103,542		115,337		80,809
Expenditures paid by JBS USA Food Company on behalf of Pilgrim’s(d)	40,611		31,149		55,730
Sales to JBS USA Food Company(c)	21,743		39,682		61,942
Expenditures paid by Pilgrim’s on behalf of JBS USA Food Company(d)	3,998		4,925		1,733
Seara International Ltd.:
Purchases from Seara International Ltd.	2,784		2,091		—
JBS Global (UK) Ltd.:
Sales to JBS Global (UK) Ltd.	305		255		—
JBS Chile Ltda.:
Sales to JBS Chile Ltda.	100		463		—
Macedo Agroindustrial Ltda.
Purchases from Macedo Agroindustrial Ltda.	60		—		—
JBS Aves Ltda.:
Purchases from JBS Aves Ltda.	—		4,072		—

(a) Beginning on October 26, 2011, JBS USA Holdings arranged for letters of credit to be issued on its account in the amount of $56.5 million to an insurance company on our behalf in order to allow that insurance company to return cash it held as collateral against potential liability claims. We agreed to reimburse JBS USA Holdings up to $56.5 million for potential draws upon these letters of credit. We reimburse JBS USA Holdings for the letter of credit costs we would have otherwise incurred under our credit facilities. During 2015, we have paid JBS USA Holdings $1.3 million for letter of credit costs. As of December 27, 2015, the Company has accrued an obligation of $0.1 million to reimburse JBS USA Holdings for letter of credit costs incurred on its behalf.

(b) The Company entered into a tax sharing agreement during 2014 with JBS USA Holdings effective for tax years starting 2010. The net tax receivable for tax year 2015 was accrued in 2015. The net tax receivable for tax years 2010 through 2014 was accrued in 2014.

(c) We routinely execute transactions to both purchase products from JBS USA Food Company (“JBS USA”) and sell products to them. As of December 27, 2015 and December 28, 2014, the outstanding payable to JBS USA was $7.0 million and $4.8 million, respectively. As of December 27, 2015 and December 28, 2014, the outstanding receivable from JBS USA was $2.6 million and $1.4 million, respectively. As of December 27, 2015, approximately $2.5 million of goods from JBS USA. were in transit and not reflected on our Consolidated Balance Sheet.

(d) The Company has an agreement with JBS USA Holdings to allocate costs associated with the procurement by JBS USA Holdings of SAP licenses and maintenance services for both companies. Under this agreement, the fees associated with procuring SAP licenses and maintenance services are allocated between the Company and JBS USA Holdings 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 Holdings 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 Holdings will be reimbursed by JBS USA Holdings. This agreement expires on December 31, 2016.

On June 25, 2015, the Company signed an intercompany revolving note to its indirect wholly-owned subsidiary, Pilgrim's Pride S. de R.L. de C.V., in a principal amount of $100.0 million. The note bears interest based on three-month LIBOR plus a margin of 2.5% and has a maturity date of June 24, 2020.  The proceeds of the note were used to fund a portion of the purchase price of the acquisition of Tyson Mexico (as defined in “Note 2. Business Acquisition”). Interest is payable quarterly and principal is due upon maturity. The outstanding note balance eliminates upon consolidation. As of December 27, 2015, outstanding borrowings totaled $64.5 million.