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During 1993, Country-Fed entered into separate agreements
(collectively, master leases)2 with World Omni Leasing, Inc.
(World Omni), McCullagh Leasing, Inc. (McCullagh), and Automotive
Rentals, Inc. (ARI) (collectively, the lessors) covering
approximately 565 trucks, with attached refrigeration units,
(trucks) for the following duration: 9 trucks for 50 months, 1
truck for 40 months, 10 trucks for 36 months, 321 trucks for 30
months, 72 trucks for 24 months, 114 trucks for 18 months, and 38
trucks for 12 months (collectively, lease transactions). Each of
the trucks has a useful life that extends beyond its respective
lease term. Country-Fed provides the trucks to direct sellers
who use the trucks daily to distribute Country-Fed's products.
The master leases were negotiated at arm's length and
contain the general provisions for individual lease transactions
covering each of the trucks. Country-Fed and the lessors adhered
to the contractual terms of their respective master lease
agreements. Country-Fed is not required to make a downpayment in
conjunction with any of the lease transactions.
The lessors realized a more than de minimis pretax economic
benefit from each of the lease transactions. As a part of each
2 The master leases are similar to one another in both form
and substance. To the extent that there are any important
differences in the master leases, we will refer to the master
leases separately.
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Last modified: May 25, 2011