What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-02-18 compared with 2021-02-11 · 131 added, 65 removed, 268 unchanged (42% of the section changed)

4 unchanged sentences

The COVID-19 pandemic and its impact on business and economic conditions have negatively affected, and could continue to negatively affect our business, results of operations, financial condition and the trading value of our securities.

The outbreak of COVID-19, which surfaced in Wuhan, China in December 2019, has since been declared a global pandemic.

The impact of this pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world.

In an effort to halt the outbreak of COVID-19, a number of countries, states, counties and other

jurisdictions have imposed a number of measures, including but not limited to, voluntary and mandatory quarantines, stay-at-home orders, travel restrictions, limitations on gatherings of people, reduced operations and extended closures of businesses.

On April 28, 2020, an executive order designated meat and poultry processing plants as critical infrastructure.

We face risks related to outbreaks of public health crises, including epidemics and infectious diseases such as the ongoing COVID-19 pandemic.

The continued spread of COVID-19 and the emergence of new variants of the virus across the globe continues to impact economic activity worldwide by causing disruption and volatility in the global capital markets, as well as a sustained economic slowdown.

National and local governments in the United States and around the world continue to implement measures to prevent the spread of COVID-19 and its variants, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, quarantines, curfews, and recommendations to practice physical distancing.

These preventative measures which have restricted and continue to restrict individuals’ daily activities and curtail or cease many businesses’ normal operations.

We continue to monitor and work to comply with the COVID-19 guidelines from public health and governmental authorities concerning the prevention and spread of COVID-19 and its variants, as well as the protection of the health and safety of our personnel, including the April 28, 2020 executive order that designated meat and poultry processing plants as critical infrastructure.

Implementing these measures, as well as the global economic impact of the COVID-19 pandemic generally, has resulted in the adverse effects to our results of operations, financial condition and liquidity, including reduced activity at our businesses and limited availability and productivity among our workforce and suppliers, as noted below.

The COVID-19 outbreak has had, and a continuing out break or future outbreaks are likely to have, numerous adverse effects on our business and operations .

As o f February 10, 2021, all of our 60 production facilities are o perating, although some facilities have reduced production levels and outputs due to increased health and safety measures and the decline in demand by restaurants and other foodservice businesses .

There can be no assurance that the health and safety measures we have taken (which include adding temperature and symptom screening stations for employees prior to entering our facilities and increasing physical distancing of our employees) will eradicate the risks associated with working in a critical infrastructure industry, including but not limited to, infection of our employees or the temporary closure of a facility, which could, in turn, have a material adverse impact on our reputation, business, results of operations and financial condition.

We have and may continue to experience decreased production and sales due to the changing demand for food products.

COVID-19 and the implementation of restricted living have led to a shift in demand from restaurants to retail grocery stores, with consumers eating more at home due to stay-at-home orders.

and Mexico businesses, demand for parts and whole-birds (typically bound for restaurants) and prepared foods (distributed, in part, to schools) has declined, while our U.K.

and European business, which is more retail focused, has generally seen less of an impact.

Although we have taken and continue to take steps to shift our production and meet this changing demand, we may be unable to effectively implement our plans to adjust our supply of products, which could materially adversely impact our business and results of operations.

As o f February 18, 2022, all of our production facilities are o perating, although some facilities have reduced production levels and outputs due to increased health and safety measures and current labor shortages experienced throughout both the U.S.

There can be no assurance that the health and safety measures we have taken (which include adding temperature and symptom screening stations for employees prior to entering our facilities an d increasing physical distancing of our employees) will eradicate the risks associated with working in a critical infrastructure industry, including but not limited to, infection of our employees or the temporary closure of a facility, which could, in turn, have a material adverse impact on our reputation, business, results of operations and financial condition.

We have and may continue to experience decreased production and sales due to the changing demand for food product s.

COVID-19 and the implementation of restricted living led to a shift in demand from restaurants to retail grocery stores, with consumers eating more at home due to stay-at-home orders during the pandemic.

and Mexico businesses, demand for parts and whole-birds (typically bound for restaurants) and prepared foods (distributed, in part, to schools) declined, while our U.K.

and European business, which is more retail focused, saw less of an impact.

Although we were able to take steps to shift our production and meet the changing demand, we may be unable to effectively implement our plans in the future to adjust our supply of products, which could materially adversely impact our business and results of operations.

Our brand or reputation could be negatively impacted.

15 unchanged sentences

A significant change in weather patterns could affect supplies of feed ingredients, as well as both the industry’s and our ability to obtain feed ingredients, grow chickens and pigs or deliver products.

We have recently benefited from low market prices for feed ingredients, but market prices for feed ingredients remain volatile.

Consequently, there can be no assurance that the price of grains will not rise as a result of, among other things, increasing demand for these products around the world and alternative uses of these products, such as ethanol and biodiesel production.

Volatility in feed ingredient prices has had, and may continue to have, a materially adverse effect on our operating results, which has resulted in, and may continue to result in, additional noncash expenses due to impairment of the carrying amounts of certain of our assets.

We periodically seek, to the extent available, to enter into advance purchase commitments or

financial derivative contracts for the purchase of feed ingredients in an effort to manage our feed ingredient costs.

We periodically seek, to the extent available, to enter into advance purchase commitments or financial derivative contracts for the purchase of feed ingredients in an effort to manage our feed ingredient costs.

The use of these instruments may not be successful.

8 unchanged sentences

This could also result in the cancellation of orders by our customers and create adverse publicity that may have a material adverse effect on our ability to market our products successfully and on our business, reputation and prospects.

There have been recent outbreaks of both high- and low-pathogenic strains of avian influenza in the U.S., and in Mexico outbreaks of both high and low-pathogenic strains of avian influenza are a fairly common occurrence.

There have been recent outbreaks of both high- and low-pathogenic strains of avian influenza in the U.S.

and the U.K., and in Mexico outbreaks of both high and low-pathogenic strains of avian influenza are a fairly common occurrence.

Historically, the outbreaks of low pathogenic strains of avian influenza have not generated the same level of concern, or received the same level of publicity or been accompanied by the same reduction in demand for poultry products in certain countries as that associated with highly pathogenic strains such as HPAI H5 and H7N3 or highly infectious strains such as H7N9.

2 unchanged sentences

or Mexico, there can be no assurance that it would not significantly affect our ability to conduct our operations and/or demand for our products, in each case in a manner having a material adverse effect on our business, reputation and/or prospects.

The outbreak of African swine fever in China and its spread across the world has had a significant effect on both the global supply of pork and on pork prices.

The outbreak of African swine fever in China during 2018 and 2019 and its subsequent spread across the world has had a significant effect on both the global supply of pork and on pork prices.

Given its island status, the U.K.

39 unchanged sentences

and elsewhere.

For example, in 2018, the European Union (the “EU”) recently commenced enforcement of the General Data Protection Regulation (the “GDPR”).

For example, in 2018, the European Union (the “E.U.”) recently commenced enforcement of the General Data Protection Regulation (the “GDPR”).

The GDPR imposes significant additional compliance obligations on companies regarding the handling of personal data and provides certain individual privacy rights to persons whose data is stored.

The GDPR grants enforcement powers to certain EU regulators including extra-territorial powers in some cases.

The GDPR grants enforcement powers to certain E.U.

regulators including extra-territorial powers in some cases.

These enforcement powers enable regulators to conduct investigations and dawn raids, to issue penalties up to the greater of €20 million or 4% of worldwide turnover for the most serious violations, and to require changes to the way that organizations (including the Company) use personal data.

Due to the geographic scope of our operations, the GDPR may increase our responsibility and liability in relation to personal data that we process, and we may be required to put in place additional mechanisms to minimize the risk of non-compliance with applicable privacy laws and regulations.

Compliance with existing, proposed and recently enacted laws and regulations can be costly;

Privacy laws such as the GDPR and similar laws and regulations are increasing in complexity and number, change frequently and sometimes conflict.

In particular, as the E.U.

states reframe their national legislation to harmonize with the GDPR, we will need

to monitor compliance with all relevant E.U.

member states’ laws and regulations, including where permitted derivations from the GDPR are introduced.

Additional laws may be enacted in U.S.

states or at the U.S.

federal level.

Compliance with such existing, proposed and recently enacted laws and regulations can be costly and may necessitate the review and implementation of policies and processes relating to our collection, security, and use of data;

any failure to comply with these regulatory standards could subject us to legal and reputational risks including proceedings against the Company by governmental entities or others, fines and penalties, damage to our reputation and credibility and could have a negative impact on our business and results of operations.

7 unchanged sentences

Significant political or regulatory developments in the jurisdictions in which we sell our products, such as those stemming from the presidential administration in the United States, are difficult to predict and may have a material adverse effect on us.

example, the implementation of new tariff schemes by various governments, such as those implemented by the United States and China in recent years, could increase the costs of our operations and ultimately increase the cost of products sold from one country into another country.

For example, the implementation of new tariff schemes by various governments, such as those implemented by the United States and China in recent years, could increase the costs of our operations and ultimately increase the cost of products sold from one country into another country.

In addition, disruptions may be caused by outbreaks of diseases, either in our flocks and herds or elsewhere in the world, and resulting changes in consumer preferences.

17 unchanged sentences

Our success depends in part on our ability to manage costs and be efficient in the highly competitive poultry and pork industries, and our failure to manage costs and be efficient could materially and adversely affect our business, financial condition and results of operations.

Media campaigns related to food production and regulatory and customer focus on environmental, social and governance responsibility could expose us to additional costs or risks.

Changes in consumer preference and failure to maintain favorable consumer perception of our branded products could negatively impact our U.S.

Prepared Foods and Pilgrim’s Food Masters businesses.

Trends within the food industry change often, and failure to identify and react to changes in these trends could lead to, among other things, reduced demand and price reductions for our branded products.

We strive to respond to consumer preferences and expectations, but we may not be successful in our efforts.

We could be adversely affected if consumers lose confidence in quality of certain food products or ingredients.

Prolonged negative perceptions certain food products or ingredients could influence consumer preferences and acceptance of some of our products and marketing programs.

Continued negative perceptions and failure to satisfy consumer preferences could materially and adversely affect our product sales, financial condition and results of operations.

Our Pilgrim’s Food Masters business has a number of iconic brands with significant value;

while we have recently increased the market share of our Just Bare® and Pilgrim’s® brands in the U.S.

Maintaining and continually enhancing the value of these brands is critical to the success of our business.

Brand value is based in large part on consumer perceptions.

Success in promoting and enhancing brand value depends in large part on our ability to provide high-quality products.

Brand value could diminish significantly due to a number of factors, including consumer perception that we have acted in an irresponsible manner, adverse

publicity about our products (whether or not valid), our failure to maintain the quality of our products, the failure of our products to deliver consistently positive consumer experiences or the products becoming unavailable to consumers.

Media campaigns related to food production;

regulatory and customer focus on environmental, social and governance responsibility;

and recent increased focus and attention by the U.S.

government on market dynamics in the meat processing industry could expose us to additional costs or risks.

Individuals or organizations can use social media platforms to publicize inappropriate or inaccurate stories or perceptions about the food production industry or our company.

4 unchanged sentences

Our customers or other interested parties may also require us to implement certain environmental, social or governance procedures or standards before doing or continuing to do business with us.

Also, the U.S.

government has increased its focus on market dynamics within the meat industry.

government has inquired with the meat processing industry on matters such as market pricing to end consumers and market dynamics associated with the relationship between meat processors and the farming community.

This increased attention on environmental, social and governance practices could cause us to incur additional compliance costs, divert management attention from operating our business, impair our access to capital among certain investors and subject us to litigation risk for disclosures we make and practices we adopt regarding these issues.

9 unchanged sentences

We have experienced and expect to continue to experience actual or attempted cyber-attacks of our information technology systems or networks.

However, none of these actual or attempted cyber-attacks has had a material effect on our operations or financial condition.

Our failure to maintain our cyber-security measures and keep abreast of new and

evolving threats may make our systems vulnerable.

To date, none of these actual or attempted cyber-attacks has had a material effect on our operations or financial condition.

For example, we determined on May 30, 2021 that we were the target of an organized cybersecurity attack (the “Cyberattack”) affecting some of the servers supporting our global IT systems.

Upon learning of the intrusion, we contacted federal officials and activated our cybersecurity protocols, including voluntarily shutting down all affected systems to isolate the intrusion, limit the potential infection and preserve core systems.

Restoring systems critical to production was prioritized.

In addition, the encrypted backup servers, which were not affected by the Cyberattack, allowed for a return to full operations within two days.

We incurred a loss of approximately $10.0 million related to the Cyberattack during the second quarter of 2021, which included an allocation of $2.4 million of the total $11.0 million ransom paid by our parent company.

Our response, IT systems and encrypted backup servers allowed for a rapid recovery from the Cyberattack.

As a result, the loss of food produced was limited to less than one day of production.

We continue to cooperate with government officials regarding this incident.

We are not aware of any evidence that any customer, supplier, employee or financial data has been compromised or misused as a result of the Cyberattack.

Our failure to maintain our cyber-security measures and keep abreast of new and evolving threats may make our systems vulnerable.

The potential consequences of a material cyber-security incident include reputational damage, litigation with third parties, regulatory actions, disruption of plant operations, and increased cyber-security protection and remediation costs.

6 unchanged sentences

Litigation trends and the outcome of litigation cannot be predicted with certainty, and adverse litigation trends and outcomes could result in material damages, which could adversely affect our financial condition and results of operations.

For example, between September 2, 2016 and October 13, 2016, a series of purported class action lawsuits were brought against PPC and 19 other defendants by and on behalf of direct and indirect purchasers of broiler chickens alleging violations of federal and state antitrust and unfair competition laws.

For example, between September 2, 2016 and October 13, 2016, a series of purported class action lawsuits were brought against PPC and other defendants by and on behalf of direct and indirect purchasers of broiler chickens alleging violations of antitrust and unfair competition laws.

The complaints seek, among other relief, treble damages for an alleged conspiracy among defendants to reduce output and increase prices of broiler chickens from the period of January 2008 to the present.

The class plaintiffs have filed three consolidated amended complaints:

one on behalf of direct purchasers (“the Direct Purchaser Plaintiff Class”) and two on behalf of distinct groups of indirect purchasers.

On January 11, 2021, PPC announced that it had entered into an agreement to settle all claims made by the putative Direct Purchaser Plaintiff Class, which is subject to court approval.

Pursuant to this agreement, PPC agreed to pay the Direct Purchaser Plaintiff Class $75.0 million, which PPC recognized as an expense during the fourth quarter of fiscal 2020.

In addition, on October 13, 2020, the Company announced that it had entered into a plea agreement with the U.S.

Department of Justice (the “DOJ”) pursuant to which the Company agreed to (1) plead guilty to one count of conspiracy in restraint of competition involving sales of broiler chicken products in the U.S.

in violation of the Sherman Antitrust Act, 15 U.S.C.

§ 1, and (2) pay a fine of $110,524,140.

For additional information, see Part II, Item 8, Notes to Consolidated Financial Statements, “Note 20.

Department of Justice (the “DOJ”) pursuant to which it (1) pled guilty to one count of conspiracy in restraint of competition involving sales of broiler chicken products in the U.S.

in violation of the Section 1 of the Sherman Antitrust Act, and (2) paid an amended fine of $107.9 million.

For additional information on these and other litigation matters, see Part II, Item 8, Notes to Consolidated Financial Statements, “Note 20.

Commitments and Contingencies” in this annual report.

2 unchanged sentences

We may not be able to successfully integrate the operations of companies we acquire or benefit from growth opportunities.

We continue to pursue selective acquisitions of complementary businesses, such as PPL, which we acquired in 2019.

We continue to pursue selective acquisitions of complementary businesses, such as PPL, which we acquired in 2019, and Pilgrim’s Food Masters, which we acquired in 2021.

Inherent in any future acquisitions are certain risks such as increasing leverage and debt service requirements and combining company cultures and facilities, which could have a material adverse effect on our operating results, particularly during the period immediately following such acquisitions.

25 unchanged sentences

Because we primarily produce chicken and pork products, we may be limited in our ability to respond to changes in consumer preferences towards other animal-based proteins or away from animal-based proteins entirely.

Climate change may have a long-term adverse impact on our business and results of operations.

Global average temperatures are gradually increasing due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere, which may contribute to significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters.

Decreased agricultural productivity in certain regions of the world as a result of changing weather patterns may limit the availability or increase the cost of key agricultural commodities and natural resources, as well as raw materials such as corn, soybean meal and other feed ingredients, which are important sources of ingredients for our products, and could impact the food security of communities around the world.

Increased frequency or duration of extreme weather conditions could also impair production capabilities, disrupt our supply chain or impact demand for our products.

Increasing concern over climate change also may adversely impact demand for our products due to changes in consumer preferences and result in additional legal or regulatory requirements designed to reduce or mitigate the effects of carbon dioxide and other greenhouse gas emissions on the environment.

In addition, climate change could affect our ability to procure needed commodities at costs and in quantities we currently experience and may require us to make additional unplanned capital expenditures.

Increased energy or compliance costs and expenses due to increased legal or regulatory requirements could be prohibitively costly and may cause disruptions in, or an increase in the costs associated with, the running of our production facilities.

Furthermore, compliance with any such legal or regulatory requirements may require us to make significant changes to our business operations and strategy, which will likely incur substantial time, attention and costs.

Even if we make changes to align ourselves with such legal or regulatory requirements, we may still be subject to significant fines if such laws and regulations are interpreted and applied in a manner inconsistent with our practices.

The effects of climate change and legal or regulatory initiatives to address climate change could have a long-term adverse impact on our business and results of operations.

We currently have outstanding Senior Notes that are linked to our achievement of targeted reductions in greenhouse gas emissions intensity by 2026.

If we fail to meet these targeted reductions in 2026, the interest rate applied to these Senior Notes will increase.

Finally, from time to time we establish and publicly announce goals and commitments to reduce our carbon footprint.

If we fail to achieve or improperly report on our progress toward achieving our carbon emissions reduction goals and commitments, the resulting negative publicity could adversely affect consumer preference for our products.

Legal and Regulatory Risk Factors

2 unchanged sentences

Changes in laws or regulations or the application thereof regarding areas such as wage and hour and environmental compliance may lead to government enforcement actions and resulting litigation by private litigants.

In addition, unknown matters, new laws and regulations, or stricter interpretations of existing laws or regulations may also materially affect our business or operations in the future.

In addition, unknown matters, new laws and regulations, or stricter interpretations of existing laws or regulations may also materially affect our business or operations in the future, including potential COVID-19 vaccine mandates.

Immigration reform continues to attract significant attention in the public arena and the U.S.

8 unchanged sentences

Compliance with existing or changing environmental requirements, including more stringent limitations imposed or expected to be imposed in recently-renewed or soon-to be renewed environmental permits, will require capital expenditures for installation of new or upgraded pollution control equipment at some of our facilities.

Operations at many of our facilities require the treatment and disposal of wastewater, stormwater and agricultural and food processing wastes, the use and maintenance of refrigeration systems, including ammonia-based chillers, noise, odor and dust management, the operation of mechanized processing equipment, and other operations that potentially could affect the

environment, health and safety.

Some of our facilities have been operating for many years, and were built before current environmental standards were imposed, and/or in areas that recently have become subject to residential and commercial development pressures.

11 unchanged sentences

We are subject to a number of anti-corruption laws, including the U.S.

Foreign Corrupt Practices Act (“FCPA”) and the UK Bribery Act.

Foreign Corrupt Practices Act (“FCPA”) and the U.K.

Bribery Act (“UKBA”).

The FCPA and similar anti-bribery laws generally prohibit companies and their intermediaries from making improper payments or improperly providing anything of value to foreign officials, directly or indirectly, for the purpose of obtaining or keeping business and/or other benefits.

1 unchanged sentence

The FCPA also requires maintenance of adequate record-keeping and internal accounting practices to accurately reflect transactions.

Under the FCPA, companies operating in the United States may be held liable for actions taken by their strategic or local partners or representatives.

The UK Bribery Act is broader in scope than the FCPA in that it directly prohibits commercial bribery (i.e.

Under the FCPA, companies operating in the U.S.

may be held liable for actions taken by their strategic or local partners or representatives.

The UKBA is broader in scope than the FCPA in that it directly prohibits commercial bribery (i.e.

bribing others than government officials) in addition to bribery of government officials and it does not recognize certain exceptions, notably for facilitation payments, that are permitted by the FCPA.

The UK Bribery Act also has wide jurisdiction.

It covers any offense committed in the United Kingdom, but proceedings can also be brought if a person who has a close connection with the United Kingdom commits the relevant acts or omissions outside the United Kingdom.

The UK Bribery Act defines a person with a close connection to include British citizens, individuals ordinarily resident in the United Kingdom and bodies incorporated in the United Kingdom.

The UK Bribery Act also provides that any organization that conducts part of its business in the United Kingdom, even if it is not incorporated in the United Kingdom, can be prosecuted for the corporate offense of failing to prevent bribery by an associated person, even if the bribery took place entirely outside the United Kingdom and the associated person had no connection with the United Kingdom.

The UKBA also has wide jurisdiction.

It covers any offense committed in the U.K., but proceedings can also be brought if a person who has a close connection with the U.K.

commits the relevant acts or omissions outside the U.K.

It defines a person with a close connection to include British citizens, individuals ordinarily resident in the U.K.

and bodies incorporated in the U.K.

The UKBA also provides that any organization that conducts part of its business in the U.K., even if it is not incorporated in the U.K., can be prosecuted for the corporate offense of failing to prevent bribery by an associated person, even if the bribery took place entirely outside the U.K.

and the associated person had no connection with the U.K.

Other jurisdictions in which we operate have adopted similar anti-corruption, anti-bribery and anti-kickback laws to which we are subject.

Civil and criminal penalties may be imposed for violations of these laws.

Despite our ongoing efforts to ensure compliance with the FCPA, the UK Bribery Act and similar laws, there can be no assurance that our directors, officers, employees, agents, third-party intermediaries and the companies to which we outsource certain of our business operations, have previously complied or will comply with those laws and our anti-corruption policies or that our compliance program will be sufficient to prevent or detect bribery, and we may be ultimately held responsible for any such non-compliance.

If we or our directors or officers violate anti-corruption laws or other laws governing the conduct of business with government entities (including local laws), we or our directors or officers may be subject to criminal and civil penalties or other remedial measures, which could harm our reputation and have a material adverse impact on our business, financial condition, results of operations and prospects.

Despite our ongoing efforts to ensure compliance with the FCPA, the UKBA and similar laws, there can be no assurance that our directors, officers, employees, agents, third-party intermediaries and the companies to which we outsource certain of our business operations, have previously complied or will comply with those laws and our anti-corruption policies or that our compliance program will be sufficient to prevent or detect bribery, and we may be ultimately held responsible for any such non-compliance.

If we or our directors or officers violate anti-corruption laws or other laws governing the conduct of

business with government entities (including local laws), we or our directors or officers may be subject to criminal and civil penalties or other remedial measures, which could harm our reputation and have a material adverse impact on our business, financial condition, results of operations and prospects.

Any actual or alleged violations of such laws could also harm our reputation or have an adverse impact on our business, financial condition, results of operations and prospects.

Our operations may be adversely impacted by the U.K.’s recent exit from the European Union.

Our operations may be adversely impacted by Brexit.

On January 31, 2020, the U.K.

withdrew from the European Union, which is commonly referred to as Brexit.

withdrew from the E.U., which is commonly referred to as Brexit.

A transition period ended on December 31, 2020, during which the U.K.

and European Union negotiated the terms of the U.K.’s relationship with the European Union going forward.

Despite the implementation of the EU-U.K.

negotiated the terms of the relationship between the U.K.

going forward.

Despite the implementation of the E.U.-U.K.

Trade and Cooperation Agreement beginning on January 1, 2021, it is still unclear how Brexit will ultimately impact relationships within the U.K.

2 unchanged sentences

The effects of and the perceptions as to the impact from the withdrawal of the U.K.

from the European Union has and may continue to adversely affect business activity and economic and market conditions in the U.K., Europe and globally, and could contribute

to instability in global financial and foreign exchange markets, including volatility in the value of the pound sterling and the euro.

In addition, Brexit could lead to additional political, legal and economic instability in the European Union.

from the E.U.

has and may continue to adversely affect business activity and economic and market conditions in the U.K., Europe and globally, and could contribute to instability in global financial and foreign exchange markets, including volatility in the value of the pound sterling and the euro.

In addition, Brexit could lead to additional political, legal and economic instability in the E.U.

Any of these effects of Brexit, and others we cannot anticipate, could adversely affect our business in the U.K., as well as our financial condition, results of operations and cash flows .

It is also unclear what long-term economic, financial, trade and legal implications the withdrawal of the U.K.

from the EU will have and how such withdrawal will affect our customers and our operations in the U.K.

from the E.U.

will have and how such withdrawal will affect our customers and our operations in the U.K.

were to significantly alter its regulations affecting the food industry, we could face significant new costs.

Any of the effects of Brexit could adversely affect our business, business opportunities, results of operations, financial condition and cash flows.

In addition, the U.K.’s withdrawal from the European Union will result in changes to the interactions that the Company has with regulators, as the U.K.’s domestic regulators will no longer participate in the EU’s regulatory enforcement structure.

In addition, Brexit.

will result in changes to the interactions that the Company has with regulators, as domestic regulators in the U.K.

will no longer participate in the regulatory enforcement structure of the E.U.

This may affect relationships that the Company has developed with its regulators to date.

2 unchanged sentences

Any deterioration of those relations or increase in labor costs due to our compliance with labor laws could adversely affect our business.

As of December 27, 2020, we employed approximately 30,900 persons in the U.S., approximately 10,500 persons in Mexico and approximately 15,000 persons in the U.K.

As of December 26, 2021, we employed approximately 59,400 persons.

Approximately 45.4 % of our workforce are covered by a collective bargaining agreement.

11 unchanged sentences

We cannot predict whether we will be able to attract, motivate and maintain an adequate skilled workforce necessary to operate our existing and future facilities efficiently, or that labor expenses will not increase as a result of a shortage in the supply of skilled personnel, thereby adversely impacting our financial performance.

While our industry generally operates with high employee turnover, any material increases in employee turnover rates or any widespread employee dissatisfaction could also have a material adverse effect on our business, financial condition and results of operations.

While our industry generally operates with high employee turnover, any material increases in employee turnover rates (including turnover due to any potential government-mandated COVID-19 vaccinations) or any widespread employee dissatisfaction could also have a material adverse effect on our business, financial condition and results of operations.

Stock Ownership and Financial Risk Factors

6 unchanged sentences

Our future financial and operating flexibility may be adversely affected by significant leverage.

On a consolidated basis, as of December 27, 2020, we had approximately $451.7 million in secured indebtedness, $1.8 billion of unsecured indebtedness and had the ability to borrow approximately $933.6 million under our credit agreements.

On a consolidated basis, as of December 26, 2021, we had approximately $510.8 million in secured indebtedness, $2.7 billion of unsecured indebtedness and had the ability to borrow approximately $1.2 billion under our credit agreements.

Significant amounts of cash flow will be necessary to make payments of interest and repay the principal amount of such indebtedness.

10 unchanged sentences

Some of our term loan agreements and revolving credit facilities contain a stated minimum value for LIBOR, and as of December 27, 2020, the Company had $450.0 million in outstanding indebtedness tied to LIBOR.

In 2017, the U.K.’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021.

It is unclear if at that time whether or not LIBOR will cease to exist, or if new methods of calculating LIBOR will be established such that it continues to exist after 2021 or if replacement conventions will be developed.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

In 2017, the U.K.’s Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021.

Subsequently, on March 5, 2021, the FCA and LIBOR’s administrator, ICE Benchmark Administration, Limited, announced that the publication of the most common tenors (overnight, one-month, three-month, six-month and 12-month U.S.

dollar LIBOR) would cease immediately following publication of such interest rates on June 30, 2023, and moreover, that publication of all other currency and tenor variants would cease immediately after December 31, 2021.

The FCA and other regulators and have stated that they welcome the LIBOR administrator’s action, and issued supervisory guidance emphasizing that, despite any continued publication of U.S.

dollar LIBOR through June 30, 2023, on new contracts using U.S.

dollar LIBOR should be entered into after December 31, 2021.

An extended cessation date for most U.S.

dollar LIBOR tenors would mean that many legacy U.S.

dollar LIBOR contracts would terminate before related LIBOR rates cease to be published and will allow for more time for existing contracts to mature and provide additional time to continue to prepare for the transition from LIBOR.

Although this extension provides some sense of timing, it is unclear whether or not LIBOR will cease to exist at that time, or if new methods of calculating LIBOR will be established such that it continues to exist after 2021 or if replacement conventions will be developed.

Federal Reserve, in conjunction with the Alternative

Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions, is considering replacing U.S.

7 unchanged sentences

Additionally, these changes may have an adverse impact on the value of or interest earned on any LIBOR-based marketable securities, loans and derivatives that are included in our financial assets and liabilities.

Impairment in the carrying value of goodwill could negatively affect our operating results.

We have a significant amount of goodwill on our Consolidated Balance Sheets.

Impairment in the carrying value of goodwill or other identifiable intangible assets could negatively affect our operating results.

We have a significant amount of goodwill and identifiable intangible assets on our Consolidated Balance Sheets.

Under the accounting principles generally accepted in the U.S.

GAAP”), goodwill must be evaluated for impairment annually or more frequently if events indicate it is warranted.

GAAP”), goodwill and other identifiable intangible assets with indefinite lives must be evaluated for impairment annually or more frequently if events indicate it is warranted.

If the carrying value of our reporting units exceeds their current fair value as determined based on the discounted future cash flows of the related business, the goodwill is considered impaired and is reduced to fair value by a non-cash charge to earnings.

Events and conditions that could result in impairment in the value of our goodwill include changes in the industry in which we operate, particularly the impact of a downturn in the global economy or the economies of geographic regions or countries in which we operate, as well as competition, adverse changes in the regulatory environment, or other factors leading to reduction in expected long-term sales or profitability.

For indefinite-lived intangible assets, an impairment loss is recognized if the carrying amount of an indefinite-lived intangible asset exceeds the estimated fair value of that intangible asset.

Identified intangible assets with definite lives are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

General Risk Factors

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors