What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-27 compared with 2023-02-09 · 464 added, 424 removed, 1578 unchanged (36% of the section changed)

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Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Pilgrim's Pride Corporation and subsidiaries (the Company) as of December 25, 2022 and December 26, 2021, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 25, 2022, and the related notes and financial statement schedule II (collectively, the consolidated financial statements).

We have audited the accompanying consolidated balance sheets of Pilgrim's Pride Corporation and subsidiaries (the Company) as of December 31, 2023 and December 25, 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

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The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of qualitative goodwill impairment assessment

Evaluation of quantitative goodwill impairment assessment

As discussed in Notes 1 and 8 to the consolidated financial statements, the goodwill balance as of December 31, 2023 was $1.3 billion, of which $1.1 billion related to reporting units within the Company’s U.K.

and Europe reportable segment.

The Company performs qualitative or quantitative goodwill impairment assessments at least annually in the fourth quarter of each fiscal year or more frequently whenever circumstances indicate that the fair value of a reporting unit may be less than its carrying value.

When a qualitative assessment is performed, the Company assesses relevant qualitative factors to determine whether it is more likely than not that the fair value of its reporting units are less than their carrying amounts.

We identified the evaluation of the Company’s qualitative goodwill impairment assessment of the goodwill related to the reporting units in the Company’s U.K.

and Europe segment as a critical audit matter.

A higher degree of subjective auditor judgment was required to evaluate the factors utilized by management in the Company’s qualitative goodwill impairment assessment.

For 2023, management elected to bypass the qualitative assessments for certain reporting units and performed quantitative goodwill impairment tests.

The Company determined that no impairment existed as of December 31, 2023.

We identified the evaluation of the quantitative goodwill impairment assessments related to certain reporting units within the Company’s U.K.

and Europe reportable segment as a critical audit matter.

Subjective auditor judgment and specialized skills and knowledge were required to evaluate certain key assumptions used in measuring fair value of the reporting units.

These key assumptions included forecasted revenue growth, forecasted margins, discount rates, and terminal growth rates.

Changes in these assumptions could have an impact on the fair value of the reporting units.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of an internal control related to the Company’s qualitative goodwill impairment assessment, including the identification and assessment of the factors impacting the fair value of the reporting units.

We evaluated the Company’s assessment of qualitative factors by:

• analyzing the reasonableness of macroeconomic, industry, and market conditions identified by the Company by assessing the relevance and reliability of the assumptions and data selected by the Company and comparing them to publicly available economic data

• assessing the reasonableness of forecasted financial performance of the reporting units based on historical results as well as the macroeconomic, industry and market conditions considered by the Company

In addition, we involved a valuation specialist with specialized skills and knowledge, who assisted in evaluating the overall financial performance of the reporting units by comparing current valuation multiples of the Company and the reporting units in the Company’s U.K.

and Europe segment to comparable guideline companies.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s quantitative goodwill impairment assessments for certain reporting units within the Company’s U.K.

and Europe reportable segment.

This included controls over the development of the key assumptions listed above.

We evaluated the Company’s assessments by:

◦ assessing the Company’s forecasted revenue growth and forecasted margins against underlying business strategies and growth plans

◦ comparing historical results to forecasts to assess the Company’s ability to forecast.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

◦ evaluating the discount rates used by comparing the Company’s inputs to the discount rates to publicly available data for comparable companies and assessing the resulting discount rates

◦ comparing the selected terminal growth rates to the Company’s growth expectations using publicly available industry and economic data.

We have served as the Company’s auditor since 2012.

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236,789,927 and 236,469,365 shares outstanding at year-end 2023 and year-end 2022, respectively

Treasury stock, at cost, 25,141,153 shares at year-end 2022 and 17,672,508 shares at year-end 2021

Treasury stock, at cost, 25,141,153 shares at year-end 2023 and year-end 2022.

( 544,687 ) ( 544,687 )

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Foreign currency transaction losses (gains) 20,570 30,817 ( 9,382 )

Reduction in gain on bargain purchase — — 3,746

Miscellaneous, net ( 30,127 ) ( 23,339 ) ( 11,580 )

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year Ended December 25, 2022 Year Ended December 26, 2021 Year Ended December 27, 2020

December 31, 2023 December 25, 2022 December 26, 2021

(In thousands)

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Available-for-sale securities

Gains (losses) arising during the period ( 3 ) — 73

Losses arising during the period ( 166 ) ( 3 ) —

Income tax effect 42 2 —

Reclassification to net earnings for gains realized ( 17 ) — ( 73 )

Reclassification to net earnings for losses (gains) realized 175 ( 17 ) —

Income tax effect ( 42 ) 4 —

Defined benefit plans

Gains (losses) realized during the period 8,505 35,122 ( 38,845 )

Gains realized during the period 6,751 8,505 35,122

Income tax effect ( 1,825 ) ( 2,122 ) ( 7,524 )

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Net income — — — — — 31,000 — 268 31,268

Other comprehensive income, net of tax benefit of $ 6,907

Other comprehensive loss, net of tax expense of $ 8,197

— — — — — — ( 27,377 ) — ( 27,377 )

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Requisite service period recognition — — — — 11,657 — — — 11,657

Common stock purchased under share repurchase program — — ( 6,126 ) ( 110,242 ) — — — — ( 110,242 )

Dissolution of subsidiary — — — — — — — 876 876

Balance at December 26, 2021 261,347 $ 2,614 ( 17,673 ) $ ( 345,134 ) $ 1,964,028 $ 1,003,569 $ ( 47,997 ) $ 11,854 $ 2,588,934

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Requisite service period recognition — — — — 7,400 — — — 7,400

Common stock purchased under share repurchase program — — ( 7,469 ) ( 199,553 ) — — — — ( 199,553 )

Balance at December 25, 2022 261,611 $ 2,617 ( 25,142 ) $ ( 544,687 ) $ 1,969,833 $ 1,749,499 $ ( 336,448 ) $ 12,462 $ 2,853,276

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Net income — — — — — 321,574 — 743 322,317

Other comprehensive loss, net of tax expense of $ 2,478

Other comprehensive income, net of tax expense of $ 2,083

— — — — — — 159,965 — 159,965

Capital distribution under TSA — — — — ( 1,592 ) — — — ( 1,592 )

Capital contribution under TSA — — — — 1,425 — — — 1,425

Stock-based compensation plans:

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Requisite service period recognition — — — — 7,594 — — — 7,594

Common stock purchased under share repurchase program — — ( 7,469 ) ( 199,553 ) — — — — ( 199,553 )

Balance at December 31, 2023 261,931 $ 2,620 ( 25,142 ) $ ( 544,687 ) $ 1,978,849 $ 2,071,073 $ ( 176,483 ) $ 13,205 $ 3,344,577

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Depreciation and amortization 419,900 403,110 380,824

Loss on early extinguishment of debt recognized as a component of interest expense 20,694 — 24,654

Loan cost amortization 7,366 4,753 5,095

Stock-based compensation activity 7,226 6,985 11,655

Deferred income tax expense (benefit) 6,675 21,295 ( 86,391 )

Gain on property disposals ( 6,052 ) ( 18,908 ) ( 1,476 )

Stock-based compensation activity 6,985 11,655 ( 276 )

Loan cost amortization 4,753 5,095 4,848

Asset impairment 4,010 3,559 —

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Loss (gain) on equity method investments 328 ( 2 ) ( 16 )

Loss on early extinguishment of debt recognized as a component of interest expense — 24,654 —

Amortization of bond premium — — ( 167 )

Gain on bargain purchase — — 3,746

Noncash gain on subsidiary dissolution — — 115

Changes in operating assets and liabilities

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Acquisitions of property, plant and equipment ( 543,816 ) ( 487,110 ) ( 381,671 )

Proceeds from property insurance recoveries 20,681 16,034 —

Proceeds from property disposals 19,784 35,516 24,724

Proceeds from insurance recoveries 16,034 — —

Purchase of acquired businesses, net of cash acquired — ( 9,692 ) ( 966,766 )

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Cash flows from financing activities

Payments on revolving line of credit, long-term borrowings and finance lease obligations ( 388,299 ) ( 2,006,195 ) ( 430,988 )

Proceeds from revolving line of credit and long-term borrowings 1,768,236 362,540 2,951,707

Purchase of common stock under share repurchase program ( 199,553 ) — ( 110,242 )

Payments on revolving line of credit, long-term borrowings and finance lease obligations ( 1,616,321 ) ( 388,299 ) ( 2,006,195 )

Payment of capitalized loan costs ( 19,816 ) ( 4,741 ) ( 22,293 )

Distribution of capital under the TSA ( 1,961 ) ( 650 ) —

Payment on early extinguishment of debt ( 13,780 ) — ( 21,258 )

Distribution of capital under the TSA ( 1,592 ) ( 1,961 ) ( 650 )

Purchase of common stock under share repurchase program — ( 199,553 ) —

Cash provided by (used in) financing activities 116,727 ( 232,014 ) 901,311

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The Company’s primary distribution is through retailers, foodservice distributors and restaurants throughout the countries listed above.

Additionally, the Company exports chicken and pork products to over 120 countries.

Our fresh products consist of refrigerated (nonfrozen) whole or cut-up chicken, selected chicken parts that are either marinated or non-marinated, primary pork cuts, added value pork and pork ribs.

Additionally, the Company exports chicken and pork products (from its U.K.

operations) to over 115 countries.

Our fresh products consist of refrigerated whole or cut-up chicken, selected chicken parts that are either marinated or non-marinated, primary pork cuts, added value pork, and pork ribs.

The Company’s prepared products include fully cooked, ready-to-cook and individually frozen chicken parts, strips, nuggets and patties, processed sausages, bacon, smoked meat, gammon joints, pre-packed meats, sandwich and deli counter meats and meat balls.

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Any reference we make to a particular year in the notes to these Consolidated Financial Statements applies to our fiscal year and not the calendar year.

On September 24, 2021, the Company acquired 100.0 % of the equity of the Kerry Consumer Foods’ meats and meals businesses, collectively known as Pilgrim’s Food Masters (or “PFM”), for cash of £ 698.8 million, or $ 958.9 million.

The acquired operations are included in the Company’s U.K.

and Europe reportable segment.

For the periods subsequent to September 24, 2021, the Consolidated Financial Statements include the accounts of the Company and its majority-owned subsidiaries, including PFM.

We eliminate all significant affiliate accounts and transactions upon consolidation.

The Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the U.S.

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Actual results could differ materially from these estimates and judgments.

Significant estimates made by the Company include the allowance for credit losses, reserves related to inventory obsolescence or valuation, useful lives of long-lived assets, goodwill, valuation of deferred tax assets, insurance accruals, valuation of pension and other postretirement benefits obligations, income tax accruals, certain derivative positions and valuations of acquired businesses.

Significant estimates made by the Company include the allowance for credit losses, reserves related to inventory obsolescence or valuation, useful lives of long-lived assets, goodwill, identifiable intangible assets, valuation of deferred tax assets, insurance accruals, valuation of pension and other postretirement benefits obligations, income tax accruals, certain derivative positions and valuations of acquired businesses.

The functional currency of the Company’s U.S.

and Mexico operations and certain holding-company subsidiaries in Luxembourg, the U.K., Malta and the Republic of Ireland is the U.S.

The functional currency of its U.K.

The functional currency of the Company’s U.K.

operations is the British pound.

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Adjustments resulting from translation of these financial records are reflected as a separate component of Accumulated other comprehensive loss in the Consolidated Balance Sheets.

For the Company’s Mexico operations, remeasurement from the Mexican peso to U.S.

dollars is performed for monetary assets and liabilities using the exchange rate in effect as of the balance sheet date.

For the Company’s Mexico operations, remeasurement from the Mexican peso to the U.S.

dollar is performed for monetary assets and liabilities using the exchange rate in effect as of the balance sheet date.

Remeasurement is performed for non-monetary assets using the historical exchange rate in effect on the date of each asset’s acquisition.

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Foreign currency transaction gains or losses are reported in the Consolidated Statements of Income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue Recognition

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While there may be master agreements, the contract is only established when the customer’s order is accepted by the Company.

The Company accounts for a contract, which may be verbal or written, when it is approved and committed by both parties, the rights of the parties are identified along with payment terms, the contract has commercial substance and collectability is probable.

The Company accounts for a contract, which may be verbal or written, when it is approved and committed by both

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

parties, the rights of the parties are identified along with payment terms, the contract has commercial substance and collectability is probable.

The Company evaluates the transaction for distinct performance obligations, which are the sale of its products to customers.

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The following table reconciles cash, cash equivalents, restricted cash and restricted cash equivalents as reported in the Consolidated Balance Sheets to the total of the same amounts shown in the Consolidated Statements of Cash Flows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 December 25, 2022

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Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the Consolidated Statements of Cash Flows $ 731,223 $ 434,759

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s current investments are all highly liquid investments with an original maturity of three months or less when acquired and are, therefore, considered cash equivalents.

The Company’s current investments are comprised of fixed income securities, primarily commercial paper and a money market fund.

The Company’s current investments are comprised of fixed income securities, such as commercial paper.

These investments are classified as available-for-sale.

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This primarily includes leg quarters, wings, tenders and offal, which are carried in inventory at the estimated recovery amounts, with the remaining amount being reflected as its breast meat cost.

The Company allocates meat costs between its various

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

finished pork products based on a by-product costing technique that allocates the cost of the whole pig into the primal cuts by estimated yields and amounts to be recovered for certain by-product parts.

The Company allocates meat costs between its various finished pork products based on a by-product costing technique that allocates the cost of the whole pig into the primal cuts by estimated yields and amounts to be recovered for certain by-product parts.

This primarily includes legs, shoulders, bellies, offal and fifth quarter parts, which are carried in inventory at the estimated recoverable amounts, with the remaining amount being reflected as our loin meat cost.

The Company values its other prepared foods products, raw materials and packaging materials at the lower of weighted average cost and net realizable value.

Work in progress is valued at the latest production cost (raw materials, packaging), finished goods are valued at the lower of the latest actual monthly production cost (raw materials, packaging and direct labor) and attributable overheads and net realizable value, and engineering spares and consumables are valued at cost with an appropriate provision for obsolete engineering spares consistent with historical practice.

Generally, the Company performs an evaluation of whether any lower of cost or market adjustments are required at the country level based on a number of factors, including:

Work in progress is valued at the latest production cost (raw materials, packaging), finished goods are valued at the lower of the latest actual monthly production cost (raw materials, packaging and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

direct labor) and attributable overheads and net realizable value, and engineering spares and consumables are valued at cost with an appropriate provision for obsolete engineering spares consistent with historical practice.

Generally, the Company performs an evaluation of whether any lower of cost or net realizable value adjustments are required at the country level based on a number of factors, including:

(1) pools of related inventory, (2) product continuation or discontinuation, (3) estimated market selling prices and (4) expected distribution channels.

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As most of the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate (“IBR”) based on the information available at commencement date in determining the present value of future payments.

IBR is derived from the Company’s credit facility’s margin as a basis with adjustments to periodically updated LIBOR swap rate and foreign currency curve.

IBR is derived from the Company’s credit facility’s margin as a basis with adjustments to periodically updated SOFR swap rate and foreign currency curve.

The operating lease asset also includes any lease payments made, including upfront costs and prepayments, and excludes lease incentives and initial direct costs incurred.

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At the present time, the Company’s forecasts indicate that it can recover the carrying value of its assets held for use based on the projected undiscounted cash flows of the operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company records impairment charges on long-lived assets held for sale when the carrying amount of those assets exceeds their fair value less appropriate selling costs.

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Under the cost approach, a current cost to replace the asset new is calculated and then the estimated replacement cost is reduced to reflect the applicable decline in value resulting from physical deterioration, functional obsolescence and economic obsolescence.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Appropriate selling costs includes reasonable broker’s commissions, costs to produce title documents, filing fees, legal expenses and the like.

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Management first reviews relevant qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent), that the fair value of a reporting unit is less than the unit’s carrying amount (including goodwill).

If management determines it is more likely than not that the carrying amount of a reporting unit goodwill might be impaired, a quantitative analysis is performed.

Management performed a qualitative analysis noting that is was not more likely than not that there was goodwill impairment in any of its reporting units as of December 25, 2022.

If management determines it is more likely than not that the carrying amount of a reporting unit goodwill might be impaired, a quantitative impairment test is performed.

Management has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative impairment test.

Management would be able to resume performing the qualitative assessment in any subsequent period.

In 2023, the Company experienced (1) an increase in long-term treasury rates that management determined could negatively affect discount rates and (2) continued inflationary pressures impacting primarily our Moy Park and Pilgrim’s Food Masters reporting units that management determined could negatively affect our margins.

Due to these factors in 2023, management elected to bypass the qualitative assessment for all reporting units and performed a quantitative impairment test for each reporting unit with a material amount of goodwill reported as of December 31, 2023 and the results of the quantitative tests are reported below.

As of December 31, 2023, our Moy Park, Pilgrim’s Food Masters, Pilgrim’s Mexico, and Pilgrim’s U.S.

reporting units had reported goodwill of $ 784.8 million, $ 329.4 million, $ 127.8 million, and $ 41.9 million, respectively.

Our Pilgrim’s U.K.

reporting unit had reported goodwill of $ 2.3 million as of December 31, 2023, which was considered immaterial to warrant quantitative goodwill impairment testing.

To perform the quantitative assessments, Management estimated the fair value of our reporting units with material goodwill carrying amounts using an income approach (discounted cash flow method).

The method to estimate the fair value of each reporting unit involves the use of assumptions about revenue growth, margins, industry data, discount rates, and terminal growth values.

These assumptions use data from internally-developed economic projections and external industry data obtained from government authorities, such as the U.S.

Department of Agriculture, and other sources.

The margin assumptions are based on operating performance expectations, historically realized margins within each reporting units’ industries, and general macroeconomic trends.

We use the weighted average cost of capital as a proxy for the discount rates.

We consider reporting units that have a 20 % or less excess fair value over carrying amount to have a heightened risk of future goodwill impairment.

Based on the outcomes of the reporting units’ quantitative assessments, Management determined that no goodwill impairment existed in any of the reporting units’ with material carrying amounts of goodwill.

Our Moy Park reporting unit was determined to have a heightened risk of future goodwill impairment as the excess fair value over the reporting unit’s carrying amount was less than 20 %.

Some of the assumptions used in determining the fair values of the reporting units are outside the control of management and while we believe we have made reasonable estimates and assumptions to calculate these fair values, it is possible a material change could occur.

If actual results of the reporting units are not consistent with the estimates and assumptions used to calculate the fair values, it could result in material impairments of our reported goodwill.

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.

Management first reviews relevant qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that an intangible asset is impaired.

If management determines there is an indication that the carrying amount of the intangible asset might be impaired, and quantitative analysis is performed.

Management performed a qualitative analysis noting that it was not more likely than not that there was impairment for any of its indefinite-lived intangible assets as of December 25, 2022.

Identifiable intangible assets with definite lives, such as customer relationships, non-compete agreements and trade names that the Company expects to use for a limited amount of time, are amortized over their estimated useful lives on a straight-line basis.

The useful lives range from three to 20 years for non-compete agreements and trade names and three to 18 years for customer relationships.

If management determines there is an indication that the carrying amount of the intangible asset might be impaired, a quantitative impairment test is performed.

Management has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test.

For 2023, management elected to bypass qualitative assessments for all indefinite-lived intangible assets and performed quantitative impairment tests and determined that no impairment existed as of December 31, 2023.

The fair value of our indefinite-life intangible assets is calculated principally using a relief-from-royalty valuation approach, which uses significant unobservable inputs as defined by the fair value hierarchy, and is believed to reflect market participant views which would exist in an exit transaction.

Under this valuation approach, we make estimates and assumptions about brand sales growth, royalty rates and discount rates based on specific brand sales projections, general economic projections, anticipated future cash flows and marketplace data.

We consider indefinite-life intangible assets that have 20% or

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

less excess fair value over carrying amount to have a heightened risk of future impairment.

Our 2022 and 2021 indefinite-life intangible assets impairment analyses did not result in an impairment charge.

In 2023, we experienced an increase in long-term treasury rates that management determined could negatively affect discount rates, which are used in estimating the fair value of the reporting units.

Therefore, management elected to bypass qualitative assessments for all indefinite-life intangible assets and performed quantitative impairment tests and determined that no material impairment existed as of December 31, 2023 .

The estimated fair values of two of our indefinite-life intangibles did not exceed their carrying values by more than 20 % at December 31, 2023.

This includes one brand within our U.K.

and Europe reportable segment and one brand in our Mexico reportable segment with carrying amounts $ 36.1 million and $ 0.8 million, respectively, as of December 31, 2023.

We generally assumed brand revenue growth rates in future years would normalize over time as we believe this is consistent with market participant views in an exit transaction.The current year results are not indicative of future market participant expectations in an exit transaction primarily due to the expected temporary impacts of continued inflationary pressures and volatile market conditions.

We do not currently consider any of our other indefinite-life intangible assets, which had aggregate carrying value of $ 543.5 million at December 31, 2023 to be at heightened risk of future impairment.

Identifiable intangible assets with definite lives, such as customer relationships and trade names that the Company expects to use for a limited amount of time, are amortized over their estimated useful lives on a straight-line basis.

The useful lives range from 15 to 20 years for trade names and three to 18 years for customer relationships.

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.

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However, actual expenses could differ from these estimates and could result in adjustments to be recognized.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Asset Retirement Obligations

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Therefore, the Company has not recorded the fair value of any potential liability.

The Company follows provisions under ASC No.

740-10-30-27 in the Expenses-Income Taxes topic with regard to members of a group that file a consolidated tax return but issue separate financial statements.

The Company files its U.S.

federal tax return and certain state unitary returns with JBS USA Food Company Holdings (“JBS USA Holdings”).

The Company follows provisions stated in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 740, Income Taxes , with regard to members of a group that file a consolidated tax return but issue separate financial statements.

The Company files certain state unitary returns with JBS USA Food Company Holdings (“JBS USA Holdings”).

The income tax expense of the Company is computed using the separate return method.

The provision for income taxes has been determined using the asset and liability approach of accounting for income taxes.

The provision for

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

income taxes has been determined using the asset and liability approach of accounting for income taxes.

For the unitary states, we have an obligation to make tax payments to JBS USA Holdings for our share of the unitary taxable income, which is included in taxes payable in our Consolidated Balance Sheets.

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income taxes would be provided.

The Company follows provisions under ASC No.

740-10-25 that provide a recognition threshold and measurement criteria for the financial statement recognition of a tax benefit taken or expected to be taken in a tax return.

The Company follows provisions within ASC Topic 740, Income Taxes , that provide a recognition threshold and measurement criteria for the financial statement recognition of a tax benefit taken or expected to be taken in a tax return.

Tax benefits are recognized only when it is more likely than not, based on the technical merits, that the benefits will be sustained on examination.

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Actual results that differ from our assumptions are accumulated and, if in excess of the lesser of 10% of the projected benefit obligation or the fair market value of plan assets, amortized over either (1) the estimated average future service period of active plan participants if the plan is active or (2) the estimated average future life expectancy of all plan participants if the plan is frozen.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Derivative Financial Instruments

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and Europe reportable segment also attempts to mitigate foreign currency exposure on certain transactions denominated in foreign currencies through the use of derivative financial instruments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Interest Rate Risk - The Company has exposure to variability in cash flows from interest payments due to the use of variable interest rates on certain long-term debt arrangements.

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Derivatives designated for any of the elective accounting treatments must meet specific, restrictive criteria both at the time of designation and on an ongoing basis.

The Company has generally applied the NPNS exception for certain of its forward physical grain purchase contracts.

The Company has generally applied the NPNS exception for certain of its forward physical grain purchase and energy purchase contracts.

NPNS contracts are accounted for using the accrual method of accounting;

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As necessary, Pilgrim’s may engage third-party specialists to assist in the estimation of fair value for certain liabilities.

The Company adjusts the preliminary acquisition accounting, as necessary,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

typically up to one year after the acquisition closing date for those items that existed at the acquisition date and were provisionally accounted for at that time, as it obtains more information regarding asset valuations and liabilities assumed.

The Company adjusts the preliminary acquisition accounting, as necessary, typically up to one year after the acquisition closing date for those items that existed at the acquisition date and were provisionally accounted for at that time, as it obtains more information regarding asset valuations and liabilities assumed.

The Company’s acquisition accounting methodology contains uncertainties because it requires management to make assumptions and to apply judgment to estimate the fair value of acquired assets and liabilities.

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If actual results are materially different than the assumptions used to determine fair value of the assets and liabilities acquired through a business combination, it is possible that adjustments to the carrying values of such assets and liabilities will have an impact on the Company’s net earnings.

Business Acquisitions” to the Consolidated Financial Statements for the acquisition-related information associated with significant acquisitions completed in the last three fiscal years.

Use of Estimates

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valuation of long-lived assets;

valuation of contingent liabilities, liabilities subject to compromise and self-insurance liabilities;

valuation of contingent liabilities and self-insurance liabilities;

and valuation of acquired businesses.

Recent Accounting Pronouncements Adopted in 2023

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In September 2022, the FASB issued Accounting Standards Update (“ASU”) 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations , which requires disclosure of the existence of supplier financing programs.

The guidance requires disclosure about the nature of the supplier financing agreements, including key terms and payment timing and determination of amounts, the accounting treatment for the transactions and the effect of the transactions on the financial statements, as well as any assets pledged or guarantees provided to the providers of the financing programs.

The provisions of the new guidance were effective for years beginning after December 15, 2022 with the requirement to add rollforward disclosures for years beginning after December 15, 2023.

The Company adopted this guidance effective December 26, 2022.

The adoption of this guidance did not have a material impact on our Consolidated Financial Statements.

Additional information regarding supplier finance programs is included in “Note 11.

Supplier Finance Programs.”

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions to the application of current GAAP to existing contracts, hedging relationships and other transactions affected by reference rate reform.

The new guidance will ease the transition to new reference rates by allowing entities to update contracts and hedging relationships without applying many of the contract modification requirements specific to those contracts.

The provisions of the new guidance are effective beginning March 12, 2020, extending through December 31, 2022 with the option to apply the guidance at any point during that time period.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which provides further clarification on the scope of Topic 848 so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions in Topic 848.

Once an entity elects an expedient or exception it must be applied to all eligible contracts or transactions.

The Company adopted this guidance effective December 26, 2022.

The adoption did not have a material impact on our Consolidated Financial Statements.

Recent Accounting Pronouncements Adopted in 2022

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832):

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The guidance is effective for annual periods beginning after December 15, 2021, with early adoption permitted.

The adoption of this guidance did not have a material impact on our Condensed Consolidated Financial Statements.

Recent Accounting Pronouncements Adopted in 2021

The Company adopted no accounting pronouncements in 2021.

The adoption of this guidance did not have a material impact on our Consolidated Financial Statements.

Recent Accounting Pronouncements Not Yet Adopted as of December 31, 2023

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

The provisions of the new guidance are effective beginning March 12, 2020, extending through December 31, 2022 with the option to apply the guidance at any point during that time period.

In March 2021, the U.K.

Financial Conduct Authority announced that the intended cessation date of USD LIBOR would be June 30, 2023.

As a result, in December 2022, the FASB issued ASU 2022-06, Deferral of the Sunset Date of Topic 848 , which extends the sunset date of Reference Rate Reform (Topic 848) from December 31, 2022 to December 31, 2024.

We currently have debt agreements that reference LIBOR and we will apply the new guidance as these contracts are modified to reference other rates.

The Company does not expect implementation to have a material impact on our Condensed Consolidated Financial Statements.

In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations , which requires disclosure of the existence of supplier financing programs.

The provisions of the new guidance will be effective for years beginning after December 15, 2022 with the requirement to add rollforward disclosures for years beginning after December 15, 2023.

The Company plans to adopt this guidance effective December 26, 2022 and is assessing the impacts on our Condensed Consolidated Financial Statements.

BUSINESS ACQUISITIONS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pilgrim’s Food Masters

On September 24, 2021, the Company acquired 100.0 % of the equity of the Kerry Consumer Foods’ meats and meals businesses, collectively known as PFM, for cash of £ 698.8 million, or $ 958.9 million.

The acquisition was funded with the Company’s recent senior notes offering and borrowings under the credit facility.

The acquisition solidifies Pilgrim’s as a leading European food company.

The specialty meats business is a leading manufacturer of branded and private label meats, meat snacks and food-to-go products in the U.K.

and the Republic of Ireland.

The ready meals business is a leading ethnic chilled and frozen ready meals business in the U.K.

The acquired operations are included in the Company’s U.K.

and Europe reportable segment.

Transaction costs incurred in conjunction with this acquisition were approximately $ 19.3 million.

These costs were expensed as incurred and are reflected within SG&A expense in the Company’s Consolidated Statements of Income.

The results of operations of the acquired business since September 24, 2021 are included in the Company’s Consolidated Statements of Income.

Net sales and net income generated by the acquired business during 2022 totaled $ 1.0 billion and $ 8.4 million, respectively.

The assets acquired and liabilities assumed in the acquisition were measured at their estimated fair values as of September 24, 2021 as set forth below.

The excess of the purchase price over the fair value of the identified net assets was recorded as goodwill in the Company’s U.K.

and Europe reportable segment.

The factors contributing to the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the acquisition as well as the assembled workforce.

Benefits include (1) complementary product offerings, (2) an enhanced footprint in the U.K.

and the Republic of Ireland and (3) an enhanced position in the fast-growing plant-based protein, direct-to-consumer and hot food-to-go markets.

The goodwill is not expected to be tax deductible for tax purposes.

The fair values recorded for the assets acquired and liabilities assumed for the acquisition are as follows (in thousands):

Cash and cash equivalents $ 113

Trade accounts and other receivables 7,387

Inventories 60,341

Prepaid expenses and other current assets 1,727

Operating lease assets 14,648

Property, plant and equipment 247,133

Identified intangible assets 415,157

Other assets 335

Total assets acquired 746,841

Accounts payable 4,615

Other current liabilities 407

Operating lease liabilities 18,996

Deferred tax liabilities 114,701

Other long-term liabilities 2,612

Total liabilities assumed 141,331

Identified net assets 605,510

Goodwill 353,397

Total consideration transferred $ 958,907

The valuation of intangible assets of $ 415.2 million consisted of:

1) trade names with indefinite lives of $ 214.0 million;

2) trade names of $ 36.8 million with useful lives ranging from 15 years to 20 years;

and 3) customer and distributor relationships of $ 164.3 million with useful lives ranging from 15 years to 18 years.

The following unaudited pro forma information presents the combined financial results for the Company and PFM for 2022, 2021 and 2020 as if the acquisition had been completed at the beginning of 2020:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2022 2021 2020

(In thousands, except per share amounts)

Net sales $ 17,468,377 $ 15,442,724 $ 13,023,345

Net income attributable to Pilgrim's Pride Corporation 746,599 19,389 92,991

Net income attributable to Pilgrim's Pride Corporation per common share - diluted $ 3.11 $ 0.08 $ 0.38

The above unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what the Company’s results of operations would have been had it completed the acquisition on the date assumed, nor is it necessarily indicative of the results that may be expected in future periods.

Pro forma adjustments include depreciation on the provisional values of acquired property, plant and equipment, amortization on the provisional values of acquired intangible assets, interest expense on debt issued to finance the acquisition, acquisition-related costs incurred by Pilgrim’s and its subsidiaries and the related income tax effect of these adjustments.

Pro forma adjustments exclude cost savings from any synergies resulting from the acquisition.

Randall Parker Foods Limited

On November 12, 2021, the Company acquired 100.0 % of the equity of Randall Parker Foods Limited and its subsidiaries (together “RPF”) from several sellers for £ 10.0 million, or $ 13.4 million.

The acquisition was funded with cash on hand.

Transaction costs were immaterial, these costs were expensed as incurred and are reflected within SG&A expense in the Company’s Consolidated Statements of Income.

The acquired operations include lamb processing and retail packaging operations and will connect the Company’s existing lamb supply chain, bringing its farmers and customers closer together.

The RPF operations are included in the Company’s U.K.

and Europe reportable segment.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires additional disclosures for reportable segments.

The guidance requires disclosures about significant segment expenses that are regularly provided to the chief operating decision maker along with additional measures of segment profit that are regularly used by the chief operating decision maker in assessing segment performance and deciding how to allocate resources.

The provisions of the new guidance will be effective for years beginning after December 15, 2023 and interim periods in fiscal years beginning after December 15, 2024.

The Company plans to adopt this guidance in the next fiscal year and are still assessing the impacts on our Consolidated Financial Statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which requires additional disclosures for income taxes to enhance transparency and usefulness of income tax disclosures.

The guidance requires additional disclosures for the tabular rate reconciliation, income taxes paid, and the disaggregation of domestic, federal and state, and foreign components within income (or loss) from continuing operations before income tax expense (or benefit) and income tax expense (or benefit) from continuing operations.

The provisions of the new guidance will be effective for years beginning after December 15, 2024.

The Company plans to adopt this guidance as it becomes effective and is assessing the impacts on our Consolidated Financial Statements.

REVENUE RECOGNITION

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Since its products are commodity market-priced, the sales price is representative of the observable, standalone selling price.

Each performance obligation is recognized based upon a pattern of recognition that reflects the transfer of control to the customer at a point in time, which is upon destination (customer location or port of destination), which faithfully depicts the transfer of control and recognition of revenue.

Each performance obligation is recognized based upon a pattern of recognition that reflects the transfer of control

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

to the customer at a point in time, which is upon destination (customer location or port of destination), which faithfully depicts the transfer of control and recognition of revenue.

There are instances of customer pick-up at the Company’s facility, in which case control transfers to the customer at that point and the Company recognizes revenue.

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Revenue has been disaggregated into the following categories below to show how economic factors affect the nature, amount, timing and uncertainty of revenue and cash flows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year Ended December 31, 2023

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Mexico 1,587,809 167,589 — 89,891 1,845,289

Total $ 9,931,231 $ 3,241,002 $ 917,959 $ 687,266 $ 14,777,458

Total net sales $ 11,121,112 $ 4,379,670 $ 1,265,508 $ 702,087 $ 17,468,377

Year Ended December 26, 2021

4 unchanged sentences

Mexico 1,515,453 128,208 — 85,856 1,729,517

Total $ 8,942,589 $ 2,018,621 $ 603,892 $ 526,799 $ 12,091,901

Total net sales $ 9,931,231 $ 3,241,002 $ 917,959 $ 687,266 $ 14,777,458

Contract Costs

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Revenue contract liabilities relate to payments received in advance of satisfying the performance under the customer contract.

The revenue contract liabilities relate to customer prepayments and the advanced consideration, such as cash, received from governmental agency contracts for which performance obligations to the end customer have not been satisfied.

The revenue contract liabilities relate to customer prepayments and the advanced

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

consideration, such as cash, received from governmental agency contracts for which performance obligations to the end customer have not been satisfied.

Changes in the revenue contract liability balances for the years ended December 31, 2023 and December 25, 2022 were as follows:

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The Company is party to operating lease agreements for warehouses, office space, vehicle maintenance facilities and livestock growing farms in the U.S., distribution centers, hatcheries and office space in Mexico and farms, processing facilities and office space in the U.K.

Additionally, the Company leases equipment, over-the-road transportation vehicles

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and other assets in all three reportable segments.

Additionally, the Company leases equipment, over-the-road transportation vehicles and other assets in all three reportable segments.

The Company is also party to a limited number of finance lease agreements in the U.S.

The Company’s leases have remaining lease terms of less than one year to 18 years, some of which may include options to extend the lease for up to ten years and some of which may include options to terminate the lease within one year .

The Company’s leases have remaining lease terms of less than one year to 17 years, some of which may include options to extend the lease for up to five years and some of which may include options to terminate the lease within one year .

The exercise of options to extend lease terms is at the Company’s sole discretion.

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December 31, 2023 December 25, 2022

Weighted-average remaining lease term (years):

Operating leases 5.80 6.07

Finance leases 4.52 5.32

Weighted-average remaining lease term:

Operating leases 5.73 years 5.80 years

Finance leases 4.34 years 4.52 years

Weighted-average discount rate:

2 unchanged sentences

Supplemental cash flow information related to leases is as follows (in thousands):

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 December 25, 2022

4 unchanged sentences

Operating lease assets obtained in exchange for operating lease liabilities 36,967 56,988

Finance lease assets obtained in exchange for finance lease liabilities — 3,527

Future minimum lease payments under noncancelable leases as of December 31, 2023 are as follows (in thousands):

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Operating Leases Finance Leases

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Therefore, it has exposure to translational foreign exchange risk when the financial results of those operations are remeasured in U.S.

The Company has purchased foreign currency forward contracts to manage this translational foreign exchange risk.

The Company has exposure to variability in cash flows from interest payments due to the use of variable interest rates on certain long-term debt arrangements in the U.S.

reportable segment.

The Company has purchased an interest rate swap contract to convert the variable interest rate to a fixed interest rate on a portion of its outstanding long-term debt arrangements in order to manage this interest rate risk and add stability to interest expense and cash flows.

There is not an outstanding interest rate swap contract at the end of the reporting year because this interest rate contract expired during the second quarter.

The Company has purchased foreign currency forward contracts to partially manage this translational foreign exchange risk.

The fair value of derivative assets is included in the line item Prepaid expenses and other current assets on the Consolidated Balance Sheets while the fair value of derivative liabilities is included in the line item Accrued expenses and other current liabilities on the same statements.

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This cash collateral is reported in the line item Restricted cash and cash equivalents on the Consolidated Balance Sheets.

Undesignated contracts may include contracts not designated as a hedge or for which the normal purchase normal sales (“NPNS”) exception was not elected, contracts that do not qualify for hedge accounting and derivatives that do not or no longer qualify for the NPNS scope exception.

Undesignated contracts may include contracts not designated as hedges or contracts that do not qualify for hedge accounting.

The fair value of each of these derivatives is recognized in the Consolidated Balance Sheets within Prepaid expenses and other current assets or Accrued expenses and other current liabilities .

Changes in fair value of each derivative are recognized immediately in the Consolidated Statements of Income within Net sales , C ost of sales , SG&A expense , or Foreign currency transaction losses (gains) depending on the risk the derivative is intended to mitigate.

While management believes these instruments help mitigate various market risks, they are not designated and accounted for as hedges as a result of the extensive record keeping requirements.

Changes in fair value of each derivative are

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has elected not to apply the NPNS exemption to a fixed-price product sales contract with a certain customer in order to mitigate various risk exposures and to try to achieve an accounting result that aligns the accounting for the derivative with the economics achieved through the use of the derivative.

Transactions originating from this contact are accounted for as undesignated derivatives and recognized at fair value.

recognized immediately in the Consolidated Statements of Income within Net sales, Cost of sales, Selling, general and administrative expense , or Foreign currency transaction (gains) losses depending on the risk the derivative is intended to mitigate.

While management believes these instruments help mitigate various market risks, they are not designated and accounted for as hedges as a result of the extensive record keeping requirements.

The Company does not apply hedge accounting treatment to certain derivative financial instruments that it has purchased to mitigate commodity purchase exposures in the U.S.

2 unchanged sentences

Gains or losses related to the commodity derivative financial instruments are included in the line item Cost of sales in the Consolidated Statements of Income.

Realized gains and losses related to cash flows are disclosed in the Consolidated Statements of Cash Flows in Cash Provided by Operating Activities.

Unrealized gains and losses related to cash flows are disclosed in the Consolidated Statements of Cash Flows in the line item Other operating assets and liabilities.

Gains or losses related to the foreign currency derivative financial instruments are included in the line item Foreign currency transaction losses (gains) and Cost of sales in the Consolidated Statements of Income.

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Gains or losses related to these derivative financial instruments are included in the line items Net sales and Cost of sales in the Consolidated Statements of Income.

The Company does apply hedge accounting to a derivative financial instrument related to its U.S.

reportable segment that it has purchased to mitigate variable interest rate exposures.

The interest rate swap has monthly settlement dates.

Upon each settlement date, the Company recognizes changes in the fair value of the cash flow hedge into AOCL.

Upon settlement of the derivative instrument, the amount in AOCL is then reclassified to earnings.

Gains or losses related to the interest rate swap derivative financial instrument are included in the line item Interest expense, net of capitalized interest in the Consolidated Statements of Income.

We have generally applied the normal purchase and normal sale scope exception (“NPNS”) to our forward physical grain purchase contracts delivered by truck and to our forward physical natural gas and solar-generated power purchase contracts.

NPNS contracts are accounted for using the accrual method of accounting;

therefore, amounts payable under these contracts are recorded when we take delivery of the contracted product and no amounts were recorded for the fair value of these contracts in the Consolidated Financial Statements at December 31, 2023 and December 25, 2022.

Information regarding the Company’s outstanding derivative instruments and cash collateral posted with brokers is included in the following table:

December 31, 2023 December 25, 2022

(Fair values in thousands)

(In thousands)

Commodity derivative assets $ 1,202 $ 17,922

2 unchanged sentences

Foreign currency derivative liabilities ( 723 ) ( 6,170 )

Interest rate swap derivative liabilities — ( 98 )

Sales contract derivative assets 960 —

Sales contract derivative liabilities — ( 3,705 )

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Period through which stated percent of needs are covered:

Corn December 2023 December 2022

Soybean meal December 2023 December 2022

Corn July 2024 December 2023

Soybean meal March 2024 December 2023

(a) Collateral posted with brokers consists primarily of cash, short term treasury bills, or other cash equivalents.

16 unchanged sentences

Total $ ( 2,579 ) $ 1,817 $ 383

Gain (Loss) Reclassified from AOCL into Income

Gain (Loss) Reclassified from AOCI into Income

December 31, 2023 December 25, 2022

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(b) Amounts represent expenses (income) related to cost of sales and interest expense.

As of December 25, 2022, there were immaterial pre-tax deferred net losses on foreign currency derivatives recorded in AOCL that are expected to be reclassified to the Condensed Consolidated Statements of Income during the next twelve months..

As of December 31, 2023, there were immaterial pre-tax deferred net losses on foreign currency derivatives recorded in AOCL that are expected to be reclassified to the Consolidated Statements of Income during the next twelve months.

This expectation is based on the anticipated settlements on the hedged investments in foreign currencies that will occur over the next twelve months, at which time the Company will recognize the deferred losses to earnings.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Activity in the allowance for credit losses was as follows:

December 31, 2023 December 25, 2022

Allowance for Credit Losses:

(In thousands)

Balance, beginning of period $ ( 9,559 ) $ ( 9,673 )

Provision charged to operating results ( 1,439 ) ( 675 )

Account write-offs and recoveries 2,436 597

Effect of exchange rate ( 779 ) 192

Balance, end of period $ ( 9,341 ) $ ( 9,559 )

In June 2023, the Company and JBS USA Food Company (“JBS USA”) jointly entered into a receivables purchase agreement with a bank for an uncommitted facility with a maximum capacity of $ 415.0 million and no recourse to the Company or JBS USA.

Under the facility, the Company may sell eligible trade receivables in exchange for cash.

Transfers under the agreement are recorded as a sale under ASC 860, Broad Transactions – Transfers and Servicing .

At the transfer date, the Company received cash equal to the face value of the receivables sold less a fee based on the current Secured Overnight Financing Rate (“SOFR”) plus an applicable margin applied over the customer payment term.

The fees are immaterial.

December 31, 2023 December 25, 2022

Allowance for Sales Adjustments (a) :

(In thousands)

Balance, beginning of period $ 6,905 $ 11,472

Charged to operating results 337,546 238,135

Deductions ( 335,253 ) ( 242,702 )

Balance, end of period $ 9,198 $ 6,905

(a) Deductions either written off, rebilled or reclassified as liabilities.

Inventories consisted of the following:

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The following table summarizes our investments in available-for-sale securities:

The following table summarizes our investments in available-for-sale securities accounted for as cash equivalents:

December 31, 2023 December 25, 2022

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Gross realized gains during 2023 and 2022 related to the Company’s available-for-sale securities totaled $ 21.5 million and $ 7.1 million, respectively, while gross realized losses were immaterial .

Net unrealized holding gains and losses on the Company’s available-for-sale securities recognized during 2022 and 2021 that have been included in accumulated other comprehensive loss and the net amount of gains and losses reclassified out of accumulated other comprehensive loss to earnings during 2022 and 2021 are disclosed in “Note 14.

Net unrealized holding gains and losses on the Company’s available-for-sale securities recognized during 2023 and 2022 that have been included in accumulated other comprehensive income (loss) and the net amount of gains and losses reclassified out of accumulated other comprehensive income (loss) to earnings during 2023 and 2022 are disclosed in “Note 14.

Stockholders’ Equity.”

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

GOODWILL AND INTANGIBLE ASSETS

12 unchanged sentences

Total $ 1,337,252 $ 5,401 $ ( 114,709 ) $ 1,227,944

I ntangible assets consisted of the following:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Intangible assets consisted of the following:

December 25, 2022 Amortization Disposals Currency Translation December 31, 2023

4 unchanged sentences

Customer relationships 427,662 — — 14,057 441,719

Non-compete agreements 320 — ( 320 ) — —

Accumulated amortization:

1 unchanged sentence

Customer relationships ( 189,015 ) ( 29,210 ) — ( 4,903 ) ( 223,128 )

Non-compete agreements ( 320 ) — 320 — —

Total $ 846,020 $ ( 33,096 ) $ — $ 41,059 $ 853,983

December 27, 2020 Additions Amortization Currency Translation December 26, 2021

December 26, 2021 Amortization Disposals Currency Translation December 25, 2022

(In thousands)

9 unchanged sentences

Total $ 963,243 $ ( 33,738 ) $ — $ ( 83,485 ) $ 846,020

For additional information regarding the additions in above tables, refer to “Note 2.

Business Acquisitions.”

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Intangible assets are amortized over the estimated useful lives of the assets as follows:

Customer relationships 3 - 18 years

Trade names subject to amortization 15 - 20 years

Customer relationships 3 - 18 years

Non-compete agreements 3 years

The Company recognized amortization expense related to intangible assets of $ 33.7 million in 2022, $ 26.4 million in 2021 and $ 22.7 million in 2020.

The Company expects to recognize amortization expense associated with intangible assets of $ 30.3 million in 2024, $ 30.3 million in 2025, $ 28.3 million in 2026, $ 24.4 million in 2027 and $ 24.4 million in 2028.

As of December 25, 2022, the Company assessed qualitative factors to determine if it was necessary to perform quantitative impairment tests related to the carrying amounts of its goodwill or its intangible assets not subject to amortization.

Based on these assessments, the Company determined that it was not necessary to perform quantitative impairment tests related to the carrying amount of its goodwill nor its intangible assets not subject to amortization at that date.

The Company elected to bypass a qualitative assessment to determine whether it was more likely than not that reporting unit fair value was less than reporting unit carrying amount (including goodwill) for each of its reporting units with a material amount of goodwill reported as of December 31, 2023.

Instead, the Company performed a quantitative impairment test for each reporting unit with a material amount of goodwill reported as of December 31, 2023.

Based on the results of the quantitative impairment tests, there was no goodwill impairment in any of the Company’s reporting units as of December 31, 2023.

The Company elected to bypass a qualitative assessment to determine whether it was more likely than not that indefinite-lived intangible asset fair value was less than indefinite-lived intangible asset carrying amount for each of its intangible assets not subject to amortization as of December 31, 2023.

Instead, the Company performed a quantitative impairment test for each intangible asset not subject to amortization as of December 31, 2023.

Based on the results of the quantitative impairment tests, there was no impairment of any of the Company’s intangible assets not subject to amortization as of December 31, 2023.

As of December 31, 2023, the Company assessed if events or changes in circumstances indicated that the aggregate carrying amount of its intangible assets subject to amortization might not be recoverable.

There were no indicators present that required the Company to test the recoverability of the aggregate carrying amount of its intangible assets subject to amortization at that date.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PROPERTY, PLANT AND EQUIPMENT

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The Company recognized depreciation expense of $ 386.8 million, $ 369.4 million and $ 354.4 million during 2023, 2022 and 2021, respectively.

During 2022, the Company spent $ 487.1 million on capital projects and transferred $ 354.2 million of completed projects from construction-in-progress to depreciable assets.

Capital expenditures were primarily incurred during 2022 to improve operational efficiencies and reduce costs.

During 2023, the Company incurred $ 557.8 million on capital projects and transferred $ 461 million of completed projects from construction-in-progress to depreciable assets.

Capital expenditures during 2023 were primarily incurred for growth projects, such as the Athens, GA expansion and the South Georgia protein conversion plant, and to improve operational efficiencies, system enhancement projects, and to reduce costs.

During 2022, the Company spent $ 487.1 million on capital projects and transferred $ 354.2 million of completed projects from construction-in-progress to depreciable assets.

Capital expenditures in accounts payable and accrued expenses for the years ended December 31, 2023 and December 25, 2022 were $ 85.9 million and $ 72.0 million, respectively.

During 2023, the Company sold certain PP&E for $ 19.8 million and recognized a gain of $ 6.1 million.

1 unchanged sentence

During 2022, the Company sold certain PP&E for $ 35.5 million and recognized a gain of $ 18.9 million.

PP&E sold in 2021 consisted of a broiler farm in Mexico, two processing plants within the U.K.

and other miscellaneous equipment.

PP&E sold in 2022 consisted of a farm in Mexico and other miscellaneous equipment.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has closed or idled various facilities in the U.S.

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As of December 31, 2023, the carrying amount of these idled assets was $ 59.9 million based on depreciable value of $ 217.4 million and accumulated depreciation of $ 157.5 million.

During 2022, the Company recognized an impairment loss on PP&E of $ 3.6 million incurred as a result of planned restructuring activities.

During 2023, the Company recognized an impairment loss on PP&E of $ 4.0 million incurred as a result of planned restructuring activities in the U.K.

and Europe reportable segment.

Additional information regarding restructuring activities is included in “Note 18.

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There were no indicators present that required the Company to test the recoverability of the aggregate carrying amount of its property, plant and equipment held for use at that date.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CURRENT LIABILITIES

13 unchanged sentences

Compensation and benefits 249,474 258,098

Accrued sales rebates 104,390 55,002

Insurance and self-insured claims 76,287 72,453

Litigation settlements 73,330 99,230

Interest and debt-related fees 71,508 32,433

Current maturities of operating lease liabilities (c)

67,440 79,222

Insurance and self-insured claims 72,453 64,697

Accrued sales rebates 55,002 35,613

Taxes 37,635 33,550

Interest and debt-related fees 32,433 31,810

Derivative liabilities (d)

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Derivative Financial Instruments.”

SUPPLIER FINANCE PROGRAMS

The Company maintains supplier finance programs , under which we agree to pay for confirmed invoices from participating suppliers to a financing entity.

Maturity dates are generally between 65 - 180 days and we pay either the supplier or the financing entity depending on the supplier’s election.

We do not have an economic interest in a supplier’s participation in the program or a direct financial relationship with the financial institution funding the program.

As of December 31, 2023 and December 25, 2022, the outstanding balance of confirmed invoices was $ 192.7 million and $ 239.6 million respectively and are included in Accounts payable in the Consolidated Balance Sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income (loss) before income taxes by jurisdiction is as follows:

22 unchanged sentences

State tax rate, net 0.6 3.2 ( 4.5 )

Global intangible low-taxed income — — ( 7.3 )

DOJ agreement — — 14.3

Mexico tax audit — 3.8 —

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Change in valuation allowance 6.9 2.8 ( 0.2 )

Return to provision ( 4.1 ) — —

Other ( 0.2 ) 0.6 ( 0.4 )

Total 11.7 % 27.2 % 66.2 %

Included in the Mexico tax audit is an increase of 3.8 % in the effective tax rate related to the Mexican tax authority’s claim that Avicola Pilgrim’s Pride de Mexico, S.A.

should have considered dividends paid out of its subsidiaries as partially taxable in tax years 2009 and 2010.

Included in the return to provision is a decrease of ( 4.2 )% in the effective tax rate related to a return to provision amount from the 2020 federal income tax return due to deconsolidation.

The amount was recorded during the year ended December 31, 2023.

Included in the change in reserve for unrecognized tax benefits is an increase of 7.0 % in the effective tax rate related to interest deductions in the U.K.

Included in the Mexico tax audit is an increase of 3.8 % in the effective tax rate related to the Mexican tax authority’s claim that Avícola Pilgrim’s Pride de Mexico, S.A.

(“Avícola”) should have considered dividends paid out of its subsidiaries as partially taxable in tax years 2009 and 2010.

The amount was recorded during the year ended December 25, 2022.

Included in the change in reserve for unrecognized tax benefits is an increase of 7.0 % in the effective tax rate related

to interest deductions in the U.K.

for tax years 2017 through 2021.

6 unchanged sentences

Inventories 99,144 99,889

Insurance claims and losses — 33,416

Incentive compensation 8,984 11,138

22 unchanged sentences

As of December 31, 2023, the Company believes it has sufficient positive evidence to conclude that realization of its federal, state and foreign net deferred tax assets are more likely than not to be realized.

As of December 25, 2022, the Company’s valuation allowance is $ 64.4 million, of which $ 3.9 million relates to Moy Park operations, $ 6.9 million relates to PPL operations, $ 0.4 million relates to Mexico operations, $ 30.5 million relates to Onix Investments UK Limited, an indirect subsidiary of Pilgrim’s, $ 10 million relates to Puerto Rico operations, $ 11.8 million relates to U.S.

As of December 31, 2023, the Company’s valuation allowance is $ 88.5 million, of which $ 11.0 million relates to our U.K.

and Europe operations, $ 0.1 million relates to our Mexico operations, $ 53.0 million relates to Onix Investments UK Limited, Sandstone Holdings Sàrl and Arkose Investments ULC, indirect subsidiaries of Pilgrim’s, $ 11.8 million relates to our Puerto Rico operations, $ 11.8 million relates to U.S.

foreign tax credits and $ 0.8 million relates to state net operating losses.

Beginning Balance Additions Deductions Ending Balance

(In thousands)

Valuation allowance:

2023 $ 64,361 $ 25,296 $ ( 1,197 ) $ 88,460

2022 24,261 43,188 ( 3,088 ) 64,361

2021 33,678 — ( 9,417 ) 24,261

As of December 31, 2023, the Company had state net operating loss carry forwards of approximately $ 104.8 million that begin to expire in 2024.

10 unchanged sentences

Unrecognized tax benefits, beginning of year $ 27,585 $ 20,242

Increase as a result of tax positions taken during the current year — 6,472

Increase as a result of tax positions taken during prior years 17,415 13,950

8 unchanged sentences

The Company operates in the U.S.

(including multiple state jurisdictions), Puerto Rico and several foreign locations including Mexico, the U.K.

and the Republic of Ireland.

(including multiple state jurisdictions), Puerto Rico and several foreign locations including Mexico, the U.K., the Republic of Ireland, and continental Europe.

With few exceptions, the Company is no longer subject to examinations by taxing authorities for years prior to 2019 in U.S.

federal, state and local jurisdictions, for years prior to 2010 in Mexico, and for years prior to 2017 in the U.K.

As of July 27, 2020, JBS owns in excess of 80 % of the outstanding common stock of Pilgrim’s.

JBS USA Holdings has a federal tax election to file a consolidated tax return with subsidiaries in which it holds an ownership of at least 80 %.

The Company has a tax sharing agreement with JBS USA Holdings effective for tax years beginning 2010.

The net tax payable for year 2022 of $ 1.6 million was accrued in 2022 as a capital distribution and an account payable to a related party in our Consolidated Balance Sheet.

The tax sharing agreement was updated during 2020 to consider the impact of Pilgrim’s joining the JBS consolidated tax return.

$ 1.4 million net tax receivable was accrued in 2023 as a capital contribution and an account receivable from a related party in our Consolidated Balance Sheet.

The 2023 tax sharing accrual is related to true-ups of prior year tax sharing accruals.

No tax sharing receivable or payable is accrued for the 2023 tax year.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Long-term debt and other borrowing arrangements, including current notes payable to banks, consisted of the following components:

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(In thousands)

Senior notes payable, net of discount, at 6.875 %

2034 $ 490,408 $ —

Senior notes payable, net of discount, at 6.25 %

2033 993,595 —

Senior notes payable at 3.50 %

2032 900,000 900,000

Senior notes payable, net of discount of 4.25 %

Senior notes payable, net of discount, at 4.25 %

2031 992,711 991,692

1 unchanged sentence

2027 — 846,582

Revolving Credit Facility at 6.66 % - 8.75 %

Credit Facility (defined below)

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Revolving note payable at 4.33 %

and Europe Revolving Facility (defined below) with notes payable at SONIA plus 1.25 %

Mexico Credit Facility (defined below) with notes payable at TIIE Rate plus 1.50 %

Secured loans with payables at weighted average of 3.34 %

and Europe Revolver Facility (defined below) with notes payable at SONIA plus 1.25 %

Mexico BBVA Credit Facility (defined below) with notes payable at TIIE plus 1.35 %

Mexico Credit Facility (defined below) with notes payable at TIIE plus 1.70 %

Finance lease obligations Various 2,486 3,624

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Long-term debt, less current maturities, net of capitalized financing costs $ 3,340,841 $ 3,166,432

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Future minimum principal payments as of December 25, 2022 are as follows (in thousands):

For the fiscal years ending December:

2023 $ 24,453

There are no future minimum principal payments due in each of the next five fiscal years subsequent to the year ended December 31, 2023.

Leases” for future minimum payments of finance lease obligations.

Senior Notes Due 2027

On September 29, 2017, the Company completed a sale of $ 600.0 million aggregate principal amount of its 5.875 % senior notes due 2027.

On September 29, 2017, the Company completed a sale of $ 600.0 million aggregate principal amount of its 5.875 % unsecured senior notes due 2027.

On March 7, 2018, the Company completed an add-on offering of $ 250.0 million of these senior notes (together with the senior notes issued in September 2017, the “Senior Notes due 2027”).

The issuance price of this add-on offering was 97.25 %, which created gross proceeds of $ 243.1 million.

The $ 6.9 million discount will be amortized over the remaining life of the Senior Notes due 2027.

The $ 6.9 million discount was amortized over the life of the Senior Notes due 2027 up to the point of redemption on October 12, 2023.

Each issuance of the Senior Notes due 2027 is treated as a single class for all purposes under the 2017 Indenture (defined below) and have the same terms.

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The 2017 Indenture provides, among other things, that the Senior Notes due 2027 bear interest at a rate of 5.875 % per annum from the date of issuance until maturity, payable semiannually in cash in arrears, beginning on March 30, 2018 for the Senior Notes due 2027 that were issued in September 2017 and beginning on March 15, 2018 for the Senior Notes due 2027 that were issued in March 2018.

On October 12, 2023, the outstanding balance for the Senior Notes due 2027 was paid in full with the proceeds from the Senior Notes due 2034, along with cash on hand as outlined below.

Senior Notes Due 2031

On April 8, 2021, the Company completed a sale of $ 1.0 billion aggregate principal amount of its 4.25 % sustainability-linked senior notes due 2031 (“Senior Notes due 2031”).

On April 8, 2021, the Company completed a sale of $ 1.0 billion aggregate principal amount of its 4.25 % sustainability-linked unsecured senior notes due 2031 (“Senior Notes due 2031”).

The Company used the net proceeds, together with cash on hand, to redeem previously issued senior notes.

1 unchanged sentence

The $ 10.1 million discount will be amortized over the remaining life of the Senior Notes due

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Each issuance of the Senior Notes due 2031 is treated as a single class for all purposes under the April 2021 Indenture (defined below) and have the same terms.

The Senior Notes due 2031 are governed by, and were issued pursuant to, an indenture dated as of April 8, 2021 by and among the Company, its guarantor subsidiaries and Regions Bank, as trustee (the “April 2021 Indenture”).

The April 2021 Indenture provides, among other things, that the Senior Notes due 2031 bear interest at a rate of 4.25 % per annum payable semi-annually on April 15 and October 15 of each year, beginning on October 15, 2021.

The April 2021 Indenture provides, among other things, that the Senior Notes due 2031 bear interest at a rate of 4.25 % per annum payable semi-annually on April 15 and October 15 of each year.

From and including October 15, 2026, the interest rate payable on the notes shall be increased to 4.50 % per annum unless the Company has notified the trustee at least 30 days prior to October 15, 2026 that in respect of the year ended December 31, 2025, (1) the Company’s greenhouse gas emissions intensity reduction target of 17.679 % by December 31, 2025 from a 2019 baseline (the “Sustainability Performance Target”) has been satisfied and (2) the satisfaction of the Sustainability Performance Target has been confirmed by a qualified provider of third-party assurance or attestation services appointed by the Company to review the Company’s statement of the greenhouse gas emissions intensity in accordance with its customary procedures.

On September 22, 2022, the Company announced expiration and receipt of requisite consents in its consent solicitation for certain amendments to its Senior Notes due 2031.

The proposed amendments conform certain provisions and restrictive covenants in each indenture to reflect PPC investment grade status.

The proposed amendments permanently eliminated certain covenants for the Company, including limitation on incurrence of additional debt, issuance of capital stock, restricted payments, asset sales, restrictions on distributions, affiliate transactions, guarantees of debt by restricted subsidiaries and provisions related to mergers and consolidation.

In addition, provisions related to limitation on liens, sale and leaseback transactions, substitution of the company and measuring compliance were amended.

Senior Notes Due 2032

On September 2, 2021, the Company completed a sale of $ 900.0 million in aggregate principal amount of its 3.50 % senior notes due 2032 (“Senior Notes due 2032”).

On September 2, 2021, the Company completed a sale of $ 900.0 million in aggregate principal amount of its 3.50 % unsecured senior notes due 2032 (“Senior Notes due 2032”).

The Company used the proceeds, together with borrowings under the delayed draw term loan under its U.S.

1 unchanged sentence

Each issuance of the Senior Notes due 2032 is treated as a single class for all purposes under the September 2021 Indenture (defined below) and have the same terms.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Senior Notes due 2032 are governed by, and were issued pursuant to, an indenture dated as of September 2, 2021 by and among the Company, its guarantor subsidiaries and Regions Bank, as trustee (the “September 2021 Indenture”).

The September 2021 Indenture provides, among other things, that the Senior Notes due 2032 bear interest at a rate of 3.50 % per annum payable semi-annually on March 1 and September 1 of each year, beginning on March 1, 2022.

On September 22, 2022, the Company announced expiration and receipt of requisite consents in its consent solicitation for certain amendments to its Senior Notes due 2032.

The proposed amendments conform certain provisions and restrictive covenants in each indenture to (i) reflect PPC investment grade status and (ii) the corresponding provisions and restrictive covenants set forth in the indenture governing its Senior Notes due 2032.

The September 2021 Indenture provides, among other things, that the Senior Notes due 2032 bear interest at a rate of 3.50 % per annum payable semi-annually on March 1 and September 1 of each year.

On September 22, 2022, the Company announced expiration and receipt of requisite consents in its consent solicitation for certain amendments to its Senior Notes due 2031 and Senior Notes due 2032.

The amendments conform certain provisions and restrictive covenants in each indenture to (1) reflect PPC investment grade status and (2) the corresponding provisions and restrictive covenants set forth in the indenture governing its Senior Notes due 2031 and Senior Notes due 2032.

The amendments permanently eliminated certain covenants for the Company, including limitation on incurrence of additional debt, issuance of capital stock, restricted payments, asset sales, restrictions on distributions, affiliate transactions, guarantees of debt by restricted subsidiaries and provisions related to mergers and consolidation.

In addition, provisions related to limitation on liens, sale and leaseback transactions, substitution of the company and measuring compliance were amended.

The Senior Notes due 2027, the Senior Notes due 2031 and the Senior Notes due 2032 were and are each guaranteed on a senior unsecured basis by the Company’s guarantor subsidiaries.

In addition, any of the Company’s other existing or future domestic restricted subsidiaries that incur or guarantee any other indebtedness (with limited exceptions) must also guarantee the Senior Notes due 2027 and the Senior Notes due 2031.

The Senior Notes due 2027, the Senior Notes due 2031 and the Senior Notes due 2032 and related guarantees were and are unsecured senior obligations of the Company and its guarantor subsidiaries and rank equally with all of the Company’s and its guarantor subsidiaries’ other unsubordinated indebtedness.

The Senior Notes due 2027, the 2017 Indenture, the Senior Notes due 2031, the April 2021 Indenture, the Senior Notes due 2032 and the September 2021 Indenture also contain customary covenants and events of default, including failure to pay principal or interest on the Senior Notes due 2027, the Senior Notes due 2031 and the Senior Notes due 2032, respectively, when due, among others.

Senior Notes Due 2033

On April 19, 2023, the Company completed a sale of $ 1.0 billion aggregate principal amount of its 6.25 % unsecured, registered senior notes due 2033 (“Senior Notes due 2033”).

The Company used the net proceeds to repay the term loans and the outstanding balance under the U.S.

Credit Facility as defined below.

The remaining proceeds will be used for general corporate purposes, including repaying existing debt.

The issuance price of this offering to the public was 99.312 %, which created gross proceeds of $ 993.1 million before transaction costs.

The $ 6.9 million discount will be amortized over the remaining life of the Senior Notes due 2033.

The Senior Notes due 2033 bear interest at a rate of 6.25 % per annum from the date of issuance until maturity, payable semiannually on January 1 and July 1 of each year, commencing on January 1, 2024.

The Senior Notes due 2027, Senior Notes due 2031, Senior Notes due 2032, and Senior Notes due 2033 (together, “Guaranteed Senior Notes”) were and are each guaranteed on a senior unsecured basis by the Company’s guarantor subsidiaries.

On February 16, 2023, the Company exchanged all of its outstanding principal amounts on the Senior Notes due 2031 and the Senior Notes due 2032 for an equal principal amount of new notes in a transaction registered under the Securities Act.

The Senior Notes due 2033 were registered under the Securities Act from the date of sale.

In addition, all of the Company’s other existing or future domestic restricted subsidiaries that incur or guarantee any other indebtedness (with limited exceptions) must also guarantee the Guaranteed Senior Notes.

All the Guaranteed Senior Notes related guarantees were and are unsecured senior obligations of the Company and its guarantor subsidiaries and rank equally with all of the Company’s and its guarantor subsidiaries’ other unsubordinated indebtedness.

The Guaranteed Senior Notes also contain customary covenants and events of default.

Senior Notes Due 2034

On October 12, 2023, the Company completed a sale of $ 500.0 million aggregate principal amount of its 6.875 % unsecured, registered senior notes due 2034 (“Senior Notes due 2034”).

The Company used the net proceeds from the offering

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of the Senior Notes due 2034, together with cash on hand, to repurchase pursuant to a tender offer and redeem all of its outstanding 5.875 % Senior Notes due 2027.

The issuance price of this offering to the public was 98.041 %, which created gross proceeds of $ 490.2 million before transaction costs.

The $ 9.8 million discount will be amortized over the remaining life of the Senior Notes due 2034.

The Senior Notes due 2034 bear interest at a rate of 6.875 % per annum from the date of issuance until maturity, payable semiannually in arrears on May 15 and November 15 of each year, commencing on May 15, 2024.

The Senior Notes due 2034 are the Company’s senior unsecured obligations and will rank equally with all of the Company’s existing and future senior unsecured debt and rank senior to all of the Company’s existing and future subordinated debt.

The Senior Notes due 2034 will be effectively junior to the Company’s existing and future secured debt to the extent of the value of the collateral securing such debt.

The Senior Notes due 2034 are not guaranteed by the Company’s subsidiaries will be structurally subordinated to all existing and future liabilities (including trade payables) of the Company’s subsidiaries.

Credit Facilities

Credit Facility

On August 9, 2021, the Company and certain of the Company’s subsidiaries entered into a Fifth Amended and Restated Credit Agreement (the “2021 U.S.

Credit Facility”) with CoBank, ACB, as administrative agent and collateral agent, and the other lenders party thereto.

The 2021 U.S.

Credit Facility provides for an $ 800.0 million revolving credit commitment and a term loan commitment of up to $ 700.0 million (the “Term Loans”).

Credit Facility includes an incremental commitment and loan feature that allows the Company, subject to certain conditions, to increase the aggregate revolving loan and term loan commitments.

The aggregate amount of incremental commitments and loans shall not exceed the sum of $ 500.0 million plus the maximum amount that would result in a senior secured leverage ratio, on a pro-forma basis, of not more than 3.00 to 1.00.

The revolving loan commitment under the U.S.

Credit Facility matures on August 9, 2026.

All principal on the Term Loans is due at maturity on August 9, 2026.

Installments of principal in amounts predetermined by CoBank, ACB are required to be made on a quarterly basis prior to the maturity date of the Term Loans beginning in January 2022.

As of December 25, 2022, the Company had outstanding borrowings under the term loan commitment of $ 480.1 million.

On April 19, 2023, the outstanding balances for the swingline loans and term loans under the 2021 U.S.

Credit Facility were paid in full with the proceeds from the Senior Notes 2033 as outlined above.

On June 21, 2023, PPC, CoBank and the other lenders entered into a first amendment to the 2021 U.S.

Credit Facility in connection with a benchmark transition event with respect to LIBOR.

With the first amendment the parties agreed to replace LIBOR with Adjusted Term Secured Overnight Financing rate (“SOFR”), corresponding to Term SOFR plus a SOFR adjustment percentage per annum equal to 0.10 %.

The 2021 U.S.

Credit Facility was replaced by the Revolving Syndicated Facility Agreement (“RCF”) on October 4, 2023 as outlined in the details below.

Revolving Syndicated Credit Facility

On October 4, 2023 (the “Effective Date”), the Company and certain of the Company’s subsidiaries entered into an unsecured Revolving Credit Facility (the “RCF”) with CoBank, ACB as administrative agent, and the other lenders party thereto.

The RCF replaced the 2021 U.S.

Credit Facility detailed above.

The RCF increased the Company’s availability under the revolving loan commitment from $ 800.0 million to $ 850.0 million, amended certain covenants, and extended the maturity date of the Company’s revolving loan commitments from August 9, 2026 to October 4, 2028.

As of December 31, 2023, the Company had outstanding letters of credit and available borrowings under the revolving credit commitment of $ 25.1 million and $ 824.9 million, respectively.

Credit Facility includes an $ 80.0 million sub-limit for swingline loans and a $ 125.0 million sub-limit for letters of credit.

Outstanding borrowings under the revolving loan commitment and the Term Loans bear interest at a per annum rate, based on the Company’s senior secured net leverage ratio, equal to (1) in the case of LIBOR loans, between LIBOR plus 1.25 % and LIBOR plus 2.75 % and (2) in the case of base rate loans, between the base rate plus 0.25 % and the base rate plus 1.75 %.

Credit Facility contains customary financial and other various covenants for transactions of this type, including restrictions on the Company’s ability to incur additional indebtedness, incur liens, pay dividends, make certain restricted payments, consummate certain asset sales, enter into certain transactions with the Company’s affiliates, or merge, consolidate and/or sell or dispose of all or substantially all of its assets, among other things.

Credit Facility requires the Company to comply with a minimum net leverage ratio and a minimum interest coverage ratio.

All obligations under the U.S.

Credit Facility continue to be secured by first priority liens on (1) all present and future personal property of the Company and certain of the Company’s subsidiaries and the guarantors, including all material domestic and first-tier direct foreign subsidiaries, (2) all present and future shares of capital stock of the borrowers and guarantors and (3) substantially all of the present and future assets of the Company and the guarantors under the U.S.

Credit Facility.

The Company is currently in compliance with the covenants under the U.S.

Credit Facility.

and Europe Revolving Facility

There were no outstanding borrowings as of December 31, 2023.

Outstanding borrowings under the RCF bear interest at a per annum rate equal to SOFR or the prime rate plus applicable margins based on the Company’s credit ratings.

The RCF also requires compliance with a minimum interest coverage ratio of 3.50:1.00 (the “Financial Maintenance Covenant”).

The Borrowers may give collateral cure notice to the administrative agent, electing to provide full unconditional guarantee perfected by first priority security interest in substantially all U.S.

From and after the collateral cure date the financial maintenance covenant shall no longer be in effect, availability under the RCF shall be limited to collateral coverage, may be subject to a minimum fixed charge coverage ratio if utilization is above 80% and there shall be limitation on 1) liens, 2) indebtedness, 3) sales and other dispositions of assets, 4) dividends, distributions, and other payments in respect of equity interest, 5) investments, acquisitions, loans and advances, and 6) voluntary prepayments, redemptions or repurchases of unsecured subordinated material indebtedness.

In each case, clauses 1 to 6 are subject to certain exceptions which can be material.

The Company is currently in compliance with the covenants under the RCF.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and Europe Revolver Facility

On June 24, 2022, Moy Park Holdings (Europe) Ltd.

4 unchanged sentences

The loan commitment matures on June 24, 2027.

Outstanding borrowings bear interest at the (1) current index interest rate, depending on the currency of the borrowing, plus (2) a margin, ranging from 1.25 % to 2.00 % based on leverage (as defined in the U.K.

Outstanding borrowings bear interest at the current Sterling Overnight Index Average (SONIA) interest rate plus 1.25 % (as defined in the U.K.

and Europe Revolver Facility).

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and Europe Revolver Facility.

Mexico Credit Facilities

Mexico Credit Facility

On December 14, 2018, certain of the Company’s Mexican subsidiaries entered into an unsecured credit agreement (the “Mexico Credit Facility”) with Banco del Bajio, Sociedad Anónima, Institución de Banca Múltiple, as lender.

The loan commitment under the Mexico Credit Facility is $ 1.5 billion Mexican pesos and can be borrowed on a revolving basis.

Outstanding borrowings under the Mexico Credit Facility accrue interest at a rate equal to the 28-Day Interbank Equilibrium Interest Rate plus 1.5 %.

The loan commitment under the Mexico Credit Facility is Mex$ 1.5 billion and can be borrowed on a revolving basis.

Outstanding borrowings under the Mexico Credit Facility accrue interest at a rate equal to the 28-Day Interbank Equilibrium Interest Rate (TIIE) plus 1.7 %.

The Mexico Credit Facility contains covenants and defaults that the Company believes are customary for transactions of this type.

The Mexico Credit Facility will be used for general corporate and working capital purposes.

The Mexico Credit Facility will mature on December 14, 2023.

The Mexico Credit Facility matured on December 14, 2023 and was not renewed.

Mexico BBVA Credit Facility

On August 15, 2023, certain of the Company’s Mexican subsidiaries entered into an unsecured credit agreement (the “Mexico BBVA Credit Facility”) with BBVA México as lender.

The loan commitment under the Mexico BBVA Credit Facility is Mex$ 1.1 billion and can be borrowed on a revolving basis.

Outstanding borrowings under the Mexico BBVA Credit Facility accrue interest at a rate equal to TIIE plus 1.35 %.

The Mexico BBVA Credit Facility contains covenants and defaults that the Company believes are customary for transactions of this type.

The Company is currently in compliance with the covenants under the Mexico BBVA Credit Facility.

The Mexico BBVA Credit Facility will be used for general corporate and working capital purposes.

The Mexico BBVA Credit Facility will mature on August 15, 2026.

As of December 31, 2023, the U.S.

dollar-equivalent of the loan commitment under the Mexico Credit Facility is $ 77.5 million.

As of December 25, 2022, there were no outstanding borrowings under the Mexico Credit Facility.

dollar-equivalent of the loan commitment and borrowing availability was $ 65.4 million.

As of December 31, 2023, there were no outstanding borrowings under the Mexico BBVA Credit Facility.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

STOCKHOLDERS’ EQUITY

Accumulated Other Comprehensive Loss

The following tables provide information regarding the changes in accumulated other comprehensive loss during 2022 and 2021:

Gains (Losses) Related to Foreign Currency Translation Unrealized Losses on Derivative Financial Instruments Classified as Cash Flow Hedges Losses Related to Pension and Other Postretirement Benefits Gains (Losses) on Available-for-Sale Securities Total

The following tables provide information regarding the changes in AOCL during 2023 and 2022:

Losses Related to Foreign Currency Translation Unrealized Losses on Derivative Financial Instruments Classified as Cash Flow Hedges Losses Related to Pension and Other Postretirement Benefits Losses on Available-for-Sale Securities Total

(In thousands)

5 unchanged sentences

Balance, end of year $ ( 114,850 ) $ ( 1,914 ) $ ( 59,714 ) $ ( 5 ) $ ( 176,483 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Gains (Losses) Related to Foreign Currency Translation Unrealized Losses on Derivative Financial Instruments Classified as Cash Flow Hedges Losses Related to Pension and Other Postretirement Benefits Unrealized Holding Gains on Available-for-Sale Securities Total

(In thousands)

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(In thousands)

Realized gain (loss) on settlement of foreign currency derivatives classified as cash flow hedges $ ( 3,193 ) $ 1,359 Net sales

Realized loss on settlement of foreign currency derivatives classified as cash flow hedges $ ( 1,816 ) $ ( 3,193 ) Net sales

Realized gain (loss) on settlement of foreign currency derivatives classified as cash flow hedge 3 ( 851 ) Cost of sales

Realized loss on settlement of interest rate swap derivatives classified as cash flow hedges — ( 98 ) Interest expense, net of capitalized interest

Realized gain on sale of securities 17 — Interest income

Realized gain (loss) on sale of securities ( 175 ) 17 Interest income

Amortization of pension and other postretirement plan actuarial losses (b)

1 unchanged sentence

Total before tax ( 3,053 ) ( 5,506 )

Tax expense 358 695

Tax benefit 300 358

Total reclassification for the period $ ( 2,753 ) $ ( 5,148 )

(a) Positive amounts represent income to the results of operations while amounts in parentheses represent expenses to the results of operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(b) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost.

3 unchanged sentences

The Company has authorized 50,000,000 shares of $ 0.01 par value preferred stock, although no shares have been issued and no shares are outstanding.

Share Repurchase Program and Treasury Stock

On October 31, 2018, the Company’s Board of Directors approved a $ 200.0 million share repurchase authorization.

The Company repurchased shares through open market purchases.

As of December 25, 2022, the Company repurchased approximately 6.3 million shares under this program with a market value of approximately $ 113.4 million.

The Company accounted for the shares repurchased using the cost method.

The Company currently plans to maintain these shares as treasury stock.

This program expired on February 6, 2021.

On March 8, 2022, the Company’s Board of Directors approved a $ 200.0 million share repurchase authorization.

The Company repurchased shares through open market purchases.

As of September 25, 2022, the Company repurchased approximately 7.5 million shares under this plan with a market value of approximately $ 199.6 million.

The Company accounted for the shares repurchased using the cost method.

The Company currently plans to maintain these shares as treasury stock.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restrictions on Dividends

Both the U.S.

Credit Facility and the indentures governing the Company’s senior notes restrict, but do not prohibit, the Company from declaring dividends.

The 2021 U.S.

Credit Facility, the RCF and the indentures governing the Company’s senior notes restrict, but do not prohibit, the Company from declaring dividends.

Additionally, the U.K.

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These retired employees all reached the age of 65 in 2012 and liabilities of the postretirement medical plan then ended.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Defined Benefit Plans Obligations and Assets

The change in benefit obligation, change in fair value of plan assets, funded status and amounts recognized in the Consolidated Balance Sheets for these plans were as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pension Benefits Other Benefits

3 unchanged sentences

Interest cost 11,322 6,777 54 23

Actuarial gains ( 106,909 ) ( 14,535 ) ( 184 ) ( 33 )

Actuarial (gains) losses 238 ( 106,909 ) ( 21 ) ( 184 )

Benefits paid ( 17,072 ) ( 12,867 ) ( 42 ) ( 16 )

Curtailments and settlements — ( 5,053 ) — —

Currency translation gain ( 18,863 ) ( 2,163 ) — —

Currency translation (gain) loss 6,873 ( 18,863 ) — —

Projected benefit obligation, end of year $ 237,508 $ 236,147 $ 1,160 $ 1,169

8 unchanged sentences

Expenses paid from assets ( 327 ) ( 337 ) — —

Currency translation loss ( 18,329 ) ( 2,471 ) — —

Currency translation gain (loss) 6,438 ( 18,329 ) — —

Fair value of plan assets, end of year $ 225,451 $ 210,133 $ — $ —

16 unchanged sentences

As of December 31, 2023, the weighted average duration of our defined benefit obligation is 12.6 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Net Periodic Benefit Costs

Net benefit costs include the following components:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pension Benefits Other Benefits

71 unchanged sentences

The Company develops its expected long-term rate of return assumptions based on the historical rates of returns for equity and fixed income securities of the type in which its plans invest.

The fair value measurements of plan assets fell into the following levels of the fair value hierarchy as of December 25, 2022 and December 26, 2021:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair value measurements of plan assets fell into the following levels of the fair value hierarchy as of December 31, 2023 and December 25, 2022:

Total Level 1 (a)

11 unchanged sentences

— 3,640 — 3,640 — 3,838 — 3,838

Real estate (h)

— 437 — 437 — — — —

PSAs and CCTs for the GK Pension Plan:

124 unchanged sentences

Net cost $ 1,888 $ 1,341 $ 5,837

The Company’s RSU activity is included below:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s RSU activity is included below:

2023 2022 2021

8 unchanged sentences

Vested ( 378 ) 22.25 ( 266 ) 23.25 ( 153 ) 19.48

Forfeited awards reinstated (forfeited) 300 23.52 ( 686 ) 23.44 ( 325 ) 25.95

Awards reinstated (forfeited) ( 28 ) 24.99 300 23.52 ( 686 ) 23.44

Outstanding at end of year 911 $ 22.40 993 $ 22.00 554 $ 20.40

22 unchanged sentences

Assets and liabilities measured at fair value must be categorized into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation:

Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2 Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability;

Level 3 Unobservable inputs, such as discounted cash flow models or valuations.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 25, 2022 and December 26, 2021, the Company held derivative assets and liabilities that were required to be measured at fair value on a recurring basis.

Derivative assets and liabilities consist of long and short positions on exchange-traded commodity futures instruments, commodity options instruments, sales contracts instruments, foreign currency instruments to manage translation and remeasurement risk and interest rate swap instruments.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety.

As of December 31, 2023 and December 25, 2022, the Company held assets and liabilities that were required to be measured at fair value on a recurring basis.

The Company’s assets and liabilities consist of fixed income securities, long and short positions on exchange-traded commodity futures instruments, commodity options instruments, sales contracts instruments, and foreign currency instruments to manage translation and remeasurement risk.

The following items were measured at fair value on a recurring basis:

2 unchanged sentences

(In thousands) (In thousands)

Fixed income securities $ 324,947 $ — $ 324,947 $ 167,430 $ — $ 167,430

Commodity derivative assets 1,202 — 1,202 17,922 — 17,922

Foreign currency derivative assets 175 — 175 555 — 555

Sales contract derivative assets — 960 960 — — —

Commodity derivative liabilities ( 17,118 ) — ( 17,118 ) ( 9,042 ) — ( 9,042 )

Foreign currency derivative liabilities ( 723 ) — ( 723 ) ( 6,170 ) — ( 6,170 )

Interest rate swap derivative liabilities — — — — ( 98 ) ( 98 )

Sales contract derivative liabilities — — — — ( 3,705 ) ( 3,705 )

Derivative Financial Instruments” for additional information.

Derivative Financial Instruments” and “Note 7.

Investments in Securities” for additional information.

The valuation of financial assets and liabilities classified in Level 1 is determined using a market approach, taking into account current interest rates, creditworthiness, and liquidity risks in relation to current market conditions, and is based upon unadjusted quoted prices for identical assets in active markets.

16 unchanged sentences

( 993,595 ) ( 1,029,020 ) — —

Fixed-rate senior notes payable at 6.875 %, at Level 2 inputs

( 490,408 ) ( 540,230 ) — —

Variable-rate term note payable at 8.50 %, at Level 3 inputs

— — ( 480,078 ) ( 489,857 )

Secured loans, at Level 3 inputs — — ( 3 ) ( 3 )

See “Note 13.

Debt” for additional information.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The carrying amounts of our cash and cash equivalents, derivative trading accounts’ margin cash, restricted cash and cash equivalents, accounts receivable, accounts payable and certain other liabilities approximate their fair values due to their relatively short maturities.

Derivative assets were recorded at fair value based on quoted market prices and are included in the line item Prepaid expenses and other current assets on the Consolidated Balance Sheets.

Derivative liabilities were recorded at fair value based on quoted market prices and are included in the line item Accrued expenses and other current liabilities on the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets.

The fair values of the Company’s Level 2 fixed-rate debt obligation was based on the quoted market price at December 25, 2022 or December 26, 2021, as applicable.

The fair value of the Company’s Level 3 variable-rate term note payable was based on discounted cash flow using weighted average cost of debt of 5.0% as of December 25, 2022.

The fair value of the Company’s level 3 variable-rate term not payable approximated the carrying value as of December 26, 2021.

The fair value of the Company’s Level 3 fixed-rate secured loans were based on discounted cash flow using weighted average cost of debt of 0.5 % as of December 25, 2022 and December 26, 2021.

Derivative liabilities were recorded at fair value based on quoted market prices and are included in the line item Accrued expenses and other current liabilities on the Consolidated Balance Sheets.

The fair values of the Company’s Level 2 fixed-rate debt obligations were based on the quoted market price at December 31, 2023 or December 25, 2022, as applicable.

The Company had no Level 3 debt obligations outstanding as of December 31, 2023.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records certain assets and liabilities at fair value on a nonrecurring basis.

1 unchanged sentence

There were no significant fair value measurement losses recognized for such assets and liabilities in the periods reported.

RESTRUCTURING-RELATED ACTIVITIES

In 2022, the Company initiated a restructuring initiative to phase out and reduce processing volumes at multiple production facilities throughout the U.K.

RESTRUCTURING-RELATED ACTIVITIE S

In 2022, the Company began restructuring initiatives to phase out and reduce processing volumes at multiple production facilities throughout the U.K.

and Europe reportable segment.

Implementation of this initiative is expected to result in total pre-tax charges of approxim ately $ 58.0 million, and approximately $ 53.0 million of these charges are estimated to result in cash outlays.

These activities were initiated in the fourth quarter of 2022 and are expected to be substantially completed by the end of the second quarter of 2023.

Implementation of these initiatives is expected to result in total pre-tax charges of approxim ately $ 75.1 million, and approximately $ 49.6 million of these charges are estimated to result in cash outlays.

These activities were initiated in the fourth quarter of 2022 and were substantially completed by the end of 2023.

In 2023, the Company began a restructuring initiative to phase out and reduce processing volumes at a production facility in the U.K.

and Europe reportable segment.

Implementation of this initiative is expected to result in total pre-tax charges of approxim ately $ 3.1 million, and all of these charges are estimated to result in cash outlays.

This activity was initiated in the fourth quarter of 2023 and is expected to be substantially completed by the end of the first quarter of 2024.

The following table provides a summary of our estimates of costs associated with these restructuring initiatives by major type of cost:

Type of Cost Moy Park Pilgrim’s Pride Ltd.

Pilgrim’s Food Masters Total Estimated Amount Expected to be Incurred

Moy Park Pilgrim’s Pride Ltd.

Pilgrim’s Food Masters 2022 Pilgrim’s Food Masters 2023 Total

(In thousands)

Contract termination $ 9,437 $ 833 $ 2,170 $ 12,440

Asset impairment 3,559 — — 3,559

Severance 8,244 6,160 5,303 19,707

Employee retention benefits 1,398 276 — 1,674

Other employee costs 301 181 121 603

Lease termination 458 642 1,808 2,908

Inventory adjustment 470 615 — 1,085

Other charges (a)

Earliest implementation date October 2022 November 2022 December 2022 October 2023

Expected predominant completion date June 2023 July 2023 July 2023 March 2024

Costs incurred and expected to be incurred:

Employee-related costs $ 11,103 $ 20,098 $ 15,156 $ 3,113 $ 49,470

Asset impairment costs 4,709 — 4,224 — 8,933

Contract termination costs 248 — 358 — 606

Other exit and disposal costs (a)

6,245 6,638 6,330 — 19,213

Total estimated costs, net $ 31,410 $ 10,093 $ 16,512 $ 58,015

(a) Comprised of other costs directly related to the restructuring initiatives including Moy Park flock depletion, Pilgrim’s Pride Ltd.

prepayment balances and maintenance contracts exit costs and Pilgrim’s Pride Ltd.

consulting fees.

Total exit and disposal costs $ 22,305 $ 26,736 $ 26,068 $ 3,113 $ 78,222

Costs incurred since earliest implementation date:

Employee-related costs $ 11,103 $ 20,098 $ 14,490 $ 3,027 $ 48,718

Asset impairment costs 3,476 — 4,141 — 7,617

Contract termination costs 248 — — — 248

Other exit and disposal costs (a)

6,245 5,654 6,330 — 18,229

Total exit and disposal costs $ 21,072 $ 25,752 $ 24,961 $ 3,027 $ 74,812

(a) Comprised of other costs directly related to the restructuring initiatives including Moy Park flock depletion, the write-off of Pilgrim’s Pride Ltd.

prepaid maintenance costs and Pilgrim’s Food Masters consulting fees.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During 2023, the Company recognized the following expenses and paid the following cash related to each restructuring initiative:

3 unchanged sentences

Pilgrim’s Pride Ltd.

15,611 21,364

Pilgrim’s Food Masters 2022 23,960 21,350

Pilgrim’s Food Masters 2023 3,027 929

$ 44,345 $ 51,362

These expenses are reported in the line item Restructuring activities on the Consolidated Statements of Income.

The following table reconciles liabilities and reserves associated with each restructuring initiative from initiative inception to December 25, 2022.

The following table reconciles liabilities and reserves associated with each restructuring initiative from its respective inception to December 31, 2023.

Ending liability balances for employee termination benefits and other charges are reported in the line item Accrued expenses and other current liabilities in our Consolidated Balance Sheets.

The ending reserve balance for inventory impairments is reported in the line item Inventories in our Consolidated Balance Sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restructuring charges incurred Cash payments and disposals Currency translation Liability or reserve as of December 25, 2022

The ending reserve balance for inventory adjustments is reported in the line item Inventories in our Consolidated Balance Sheets.

The ending reserve balance for asset impairments is reporting in the line item Property, plant and equipment, net in our Consolidated Balance Sheets.

Liability or reserve as of December 25, 2022 Restructuring charges incurred Cash payments and disposals Currency translation Liability or reserve as of December 31, 2023

(In thousands)

Employee retention benefits $ 9,590 $ ( 9,452 ) $ ( 138 ) $ —

Other employee costs 18 (17) (1) —

Asset impairment $ 2,391 $ ( 83 ) $ ( 2,751 ) $ 443 $ —

Contract termination 122 — — 122

Inventory adjustments 1 47 ( 48 ) — —

Other charges 6,025 162 ( 3,315 ) ( 228 ) 2,644

Other employee costs — 1,495 ( 1,495 ) — —

Contract termination 122 126 ( 110 ) 6 144

Total $ 8,539 $ 1,747 $ ( 7,719 ) $ 221 $ 2,788

Pilgrim’s Pride Ltd.

Restructuring charges incurred Cash payments and disposals Currency translation Liability or reserve as of December 25, 2022

Liability or reserve as of December 25, 2022 Restructuring charges incurred Cash payments and disposals Currency translation Liability or reserve as of December 31, 2023

(In thousands)

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Pilgrim’s Food Masters 2022

Restructuring charges incurred Cash payments and disposals Currency translation Liability or reserve as of December 25, 2022

Liability or reserve as of December 25, 2022 Restructuring charges incurred Cash payments and disposals Currency translation Liability or reserve as of December 31, 2023

(In thousands)

Severance $ 639 $ 13,502 $ ( 12,865 ) $ 5 $ 1,281

Asset impairment — 4,141 ( 4,143 ) 2 —

Inventory adjustments — 793 ( 728 ) — 65

Lease termination — 1,219 — 70 1,289

Other charges — 4,305 ( 3,614 ) ( 6 ) 685

Total $ 639 $ 23,960 $ ( 21,350 ) $ 71 $ 3,320

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pilgrim’s Food Masters 2023

Liability or reserve as of December 25, 2022 Restructuring charges incurred Cash payments and disposals Currency translation Liability or reserve as of December 31, 2023

(In thousands)

Employee retention benefits $ — $ 1,015 $ ( 508 ) $ 15 $ 522

Severance — 2,012 ( 421 ) 45 1,636

Total $ — $ 3,027 $ ( 929 ) $ 60 $ 2,158

RELATED PARTY TRANSACTIONS

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Total cost of goods purchased from related parties $ 240,139 $ 223,570 $ 223,135

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 December 25, 2022 December 26, 2021

15 unchanged sentences

Other related party transactions

Capital distribution under tax sharing agreement (c)

Capital distribution (contribution) under tax sharing agreement (c)

$ ( 1,425 ) $ 1,592 $ 1,961

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 December 25, 2022

25 unchanged sentences

The net tax payable for tax year 2022 was accrued in 2022 and will be paid in 2023.

The net tax receivable for tax year 2023 was recorded in 2023 and will be paid in 2024.

The net tax payable for tax year 2022 was accrued in 2022 and was paid in 2023.

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reportable segment.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We conduct separate operations in the continental U.S.

9 unchanged sentences

The segment’s primary distribution is through retailers, foodservice distributors and restaurants.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additional information regarding reportable segments is as follows:

1 unchanged sentence

December 25, 2022 (b)

December 26, 2021 (c)

(In thousands)

5 unchanged sentences

reportable segment had intercompany sales to the Mexico reportable segment of $ 370.1 million.

These sales consisted of fresh products, prepared products, eggs and grain.

For the year 2022, the U.K.

and Europe reportable segment had intercompany sales of eggs to the U.S.

reportable segment of $ 5.3 million.

These sales consisted of fresh products, prepared products and grain and are eliminated in our consolidation.

(b) For the year 2022, the U.S.

reportable segment had intercompany sales to the Mexico reportable segment of $ 120.9 million.

These sales consisted of fresh products, prepared products and grain.

These sales consisted of fresh products, prepared products, eggs and grain and are eliminated in our consolidation..

For the year 2022, the U.K.

and Europe reportable segment had intercompany sales of eggs to the U.S.

reportable segment of $ 5.3 million, which were eliminated in our consolidation.

reportable segment had intercompany sales to the Mexico reportable segment of $ 296.9 million.

These sales consisted of fresh products, prepared products and grain.

These sales consisted of fresh products, prepared products and grain and are eliminated in our consolidation.

December 31, 2023 December 25, 2022 December 26, 2021

9 unchanged sentences

Foreign currency transaction losses (gains) 20,570 30,817 ( 9,382 )

Gain on bargain purchase — — 3,746

Miscellaneous, net ( 30,127 ) ( 23,339 ) ( 11,580 )

9 unchanged sentences

Total $ 419,900 $ 403,110 $ 380,824

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 December 25, 2022 December 26, 2021

(In thousands)

Capital expenditures

Capital expenditures (a)

$ 417,919 $ 343,825 $ 274,934

2 unchanged sentences

Total $ 557,753 $ 487,110 $ 381,671

(a) Capital expenditures incurred include those that were paid out in cash and those that are still outstanding in accounts payable as of December 31, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 December 25, 2022

32 unchanged sentences

Purchase Obligations

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company will sometimes enter into noncancelable contracts to purchase capital equipment and certain commodities such as corn, soybean meal, wheat and energy.

2 unchanged sentences

Additional information regarding operating leases is included in “Note 3.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Instruments

6 unchanged sentences

however, the ultimate liability for these matters is uncertain, and if significantly different than the amounts accrued, the ultimate outcome could have a material effect on the financial condition or results of operations of the Company.

The Company cannot predict the outcome of the litigation matters or other actions nor when they will be resolved.

The consequences of the pending litigation matters are inherently uncertain, and settlements, adverse actions, or adverse judgments in some or all of these matters, including investigations by the U.S.

Department of Justice (“DOJ”) or the Attorneys General, may result in monetary damages, fines, penalties, or injunctive relief against the Company, which could be material and could adversely affect its financial condition or results of operations.

Any claims or litigation, even if fully indemnified or insured, could damage the Company’s reputation and make it more difficult to compete effectively or to obtain adequate insurance in the future.

In addition, the U.S.

government’s recent focus on market dynamics in the meat processing industry could expose the Company to additional costs and risks.

Tax Claims and Proceedings

During 2014 and 2015, the Mexican Tax Administration Service (“SAT”) opened a review of Avícola Pilgrim’s Pride de Mexico, S.A.

(“Avícola”) with regard to tax years 2009 and 2010.

During 2014 and 2015, the Mexican Tax Administration Service (“SAT”) opened a review of Avícola with regard to tax years 2009 and 2010.

In both instances, the SAT claims that controlled company status did not exist for certain subsidiaries because Avícola did not own 50% of the shares in voting rights of Incubadora Hidalgo, S.

5 unchanged sentences

Avícola appealed the opinion, and on January 31, 2023, the appeal as to tax year 2009 was dismissed by the Mexico Supreme Court.

Accordingly, the Company has accrued $39.2 million with regard to both tax years in connection with the dismissal.

PPC recognized this expense in Income tax expense in the Consolidated Statement of Income statement for year ended December 25, 2022.

Accordingly, the Company has paid $ 25.9 million for tax year 2009.

The opinion for tax year 2010 is still under appeal.

Avícola has recorded a tax reserve of $ 17.2 million in connection therewith.

On May 12, 2022, the Mexican Tax Authorities issued tax assessments against Pilgrim’s Pride, S.

2 unchanged sentences

The tax authorities claim that Provemex Holdings, LLC was a Mexican entity at the time of the acquisition and, as a result, was obligated to pay taxes on the sale.

The Mexican subsidiaries of PPC are currently appealing these assessments.

The Mexican subsidiaries of PPC filed a petition to nullify these assessments, and on June 7, 2023, the tax court granted the petition.

The Mexican Tax Authorities have appealed that decision.

Amounts under appeal are approximately $ 290.9 million for such tax assessments.

6 unchanged sentences

the direct purchasers (“Broiler DPPs”), the commercial and institutional indirect purchasers (“Broiler CIIPPs”), and the end-user consumer indirect purchasers (“Broiler EUCPs”).

Between December 8, 2017 and September 1, 2021, 82 individual direct action complaints were filed with the Illinois Court by individual direct purchaser entities (“Broiler DAPs”) naming PPC as a defendant, the allegations of which largely mirror those in the class action complaints, though some added allegations of price

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

fixing and bid rigging on certain sales.

The Illinois Court issued a revised scheduling order for certain plaintiffs who limited their claims to reduction of output, which sets the first trial date on September 12, 2023.

The schedule for the rest of the plaintiffs is still awaiting an order from the Illinois Court.

On May 27, 2022, the Illinois Court certified each of the three classes.

On June 30, 2023, the Illinois Court issued its summary judgment order that dismissed certain claims against PPC but denied dismissal as to

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the supply reduction claims from 2008-2012.

Thereafter, the Illinois Court issued a revised scheduling order for certain plaintiffs who limited their claims to reduction of output, and the first trial began on September 12, 2023 with Broiler DPPs and certain Broiler DAPs as plaintiffs.

PPC settled with all plaintiffs in the first trial prior to its commencement, so PPC was not a participant in the trial.

On October 25, 2023, the first trial concluded with a jury verdict in favor of the defendant.

PPC has entered into agreements to settle all claims made by the Broiler DPPs, Broiler CIIPPs, and Broiler EUCPs, for an aggregate total of $ 195.5 million, each of which has received final approval from the Illinois Court.

2 unchanged sentences

To date, PPC has recognized an expense of $ 537.4 million to cover settlements with various Broiler Opt Outs.

PPC recognized these settlement expenses in SG&A expense in the Consolidated Statements of Income for the years ended December 25, 2022 and December 26, 2021.

Between August 30, 2019 and October 16, 2019, four purported class action lawsuits were filed in the U.S.

District Court for the District of Maryland (“Maryland Court”) against PPC and a number of other chicken producers, as well as Webber, Meng, Sahl & Company and Agri Stats.

For the twelve months ending December 31, 2023, $ 23.0 million has been recognized by PPC in Selling, general and administrative expense (“SG&A expense”) in the Consolidated Statements of Income.

Trials with the other Broiler Antitrust Litigation plaintiffs are not yet scheduled.

Between August 30, 2019 and October 16, 2019, a series of purported class action lawsuits were filed in the U.S.

District Court for the District of Maryland (“Maryland Court”) against PPC and a number of other chicken producers, as well as Webber, Meng, Sahl & Company and Agri Stats, styled as Jien, et al.

Perdue Farms, Inc., et al., No.19-cv-02521.

The plaintiffs are a putative class of poultry processing plant production and maintenance workers (“Poultry Workers Class”) and allege that the defendants conspired to fix and depress the compensation paid to Poultry Workers Class in violation of the Sherman Antitrust Act.

1 unchanged sentence

On June 14, 2021, PPC entered into an agreement to settle all claims made by the Poultry Workers Class for $ 29.0 million, though the agreement is still subject to final approval by the Maryland Court.

On February 16, 2022, the plaintiffs filed a an amended complaint, which extended the relevant period, added defendants, and included additional workers in the class.

PPC recognizes these settlement expenses within SG&A expenses in the Consolidated Statements of Income.

On February 16, 2022, the plaintiffs filed an amended complaint, which extended the relevant period, added defendants, and included additional workers in the class.

PPC recognizes these settlement expenses within SG&A expense in the Consolidated Statements of Income.

On January 27, 2017, a purported class action on behalf of broiler chicken farmers was brought against PPC and other chicken producers in the U.S.

8 unchanged sentences

The complaint alleges, among other things, that PPC’s SEC filings contained statements that were rendered materially false and misleading by PPC’s failure to disclose that (1) PPC colluded with several of its industry peers to fix prices in the broiler-chicken market as alleged in the Broilers Litigation, (2) its conduct constituted a violation of federal antitrust laws, and (3) PPC’s revenues during the class period were the result of illegal conduct.

On July 31, 2020, defendants filed a motion to dismiss, which the Colorado Court granted on April 19, 2021.

On July 31, 2020, defendants filed a motion to dismiss, which the Colorado Court granted on procedural grounds on April 19, 2021.

On May 17, 2021, the plaintiff filed a motion for amended judgment, which the Colorado Court denied on November 29, 2021.

The plaintiff then filed a notice of appeal on December 28, 2021, and the appeal was opened in the U.S.

Court of Appeals for the Tenth Circuit, which is now fully briefed, including oral argument on January 17, 2023, and is awaiting a decision.

Between March 9, 2017 and April 17, 2017, a series of putative stockholder derivative class actions were brought against all of PPC’s directors and two executives, William Lovette and Fabio Sandri, in the Nineteenth Judicial District Court for the County of Weld in Colorado (“Weld County Court”).

The complaints allege, among other things, that the named defendants breached their fiduciary duties by failing to prevent PPC and its officers from engaging in an antitrust conspiracy as alleged in the Broiler Antitrust Litigation and issuing false and misleading statements as alleged in the Hogan Litigation.

The complaints were amended and consolidated, adding former PPC executives Jayson Penn, Roger Austin, and Jimmie Little as named defendants, and styled as DiSalvio and Brima v.

Tomazoni, et al., 2017 CV 30207.

Following a series of stays in the action, PPC filed a motion to dismiss, which the Weld County Court granted in its entirety and with prejudice on December 12, 2022.

On December 27, 2022, the plaintiffs filed a motion for reconsideration, which PPC plans to oppose in due course.

Court of Appeals for the Tenth Circuit.

On July 13, 2023, the Tenth Circuit reversed the Colorado Court decision and remanded to consider the complaint on the merits.

PPC filed a renewed motion to dismiss the complaint in the Colorado Court which was denied on December 26, 2023.

PPC will therefore litigate against the putative class plaintiffs.

State Matters

4 unchanged sentences

On September 1, 2020, February 22, 2021, and October 28, 2021, the Attorneys General in New Mexico ( State of New Mexico v.

Koch Foods, et al., D-101-CV-2020-01891), Alaska (State of Alaska v.

Agri Stats, Inc., et al., 3AN-21-04632), and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Washington (State of Washington v.

Tyson Foods Inc., et al., 21-2-14174-5), respectively, filed complaints against PPC based on allegations similar to those asserted in the Broiler Antitrust Litigation.

Koch Foods, et al.

, D-101-CV-2020-01891), Alaska ( State of Alaska v.

Agri Stats, Inc., et al.

, 3AN-21-04632), and Washington ( State of Washington v.

Tyson Foods Inc., et al.

, 21-2-14174-5), respectively, filed complaints against PPC and others based on allegations similar to those asserted in the Broiler Antitrust Litigation.

PPC has answered all of the complaints and each case is now in discovery.

On March 9, 2023, PPC entered into an agreement to settle all claims made by the State of Washington for $ 11.0 million.

The State of Washington claim was paid in the second quarter of 2023.

PPC will seek reasonable settlements where they are available.

To date, PPC has recognized an accrual of $ 5.4 million to cover settlements with other Attorneys General.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Federal Matters

On February 9, 2022, the Company lea rned that the DOJ opened a civil investigation into human resources antitrust matters, and on October 6, 2022 the Company learned that the DOJ opened a civil investigation into grower contracts and payment practices.

The Company has begun, and will continue, to cooperate with the DOJ in its investigations.

On February 9, 2022, the Company lea rned that the DOJ opened a civil investigation into human resources antitrust matters, and on October 6, 2022, the Company learned that the DOJ opened a civil investigation into grower contracts and payment practices and on October 2, 2023, received a CID requesting information from the Company.

The Company is cooperating with the DOJ in its investigations and CID.

The DOJ has informed the Company that it is likely to file a civil complaint pursuant to at least one of these investigations.

BUSINESS INTERRUPTION INSURANCE

On December 10, 2021, the Company experienced a tornado in Mayfield, Kentucky that significantly damaged two hatcheries and a feed mill.

The Company experienced business interruptions from the COVID-19 pandemic, a winter storm in Texas and Louisiana during February 2021, and a tornado on December 10, 2021 in Mayfield, Kentucky that significantly damaged two hatcheries and a feed mill.

The Company maintains certain insurance coverage, including business interruption insurance, intended to cover such circumstances.

In the year ended December 25, 2022, the Company received $ 11.0 million in proceeds from business interruption insurance.

In the year ended December 25, 2022, the Company recognized $ 26.4 million in income from business interruption insurance on the Consolidated Statement of Income.

In the year ended December 31, 2023, the Company received $ 60.4 million in proceeds and recognized $ 54.4 million in income from business interruption insurance in Cost of sales on the Consolidated Statement of Income.

Of the total amount recognized in 2023, $ 43.8 million was in the U.S.

reportable segment and $ 10.6 million was in the U.K.

and Europe reportable segment.

In the year ended December 25, 2022, the Company received $ 11.0 million in proceeds and recognized $ 26.4 million in income from business interruption insurance in Cost of sales on the Consolidated Statement of Income.

MARKET RISKS AND CONCENTRATIONS

5 unchanged sentences

The Company does not have a single customer that exceeds the 10% of net sales.

For the year ended December 25, 2022, our largest single customer wa s 7.5 % of net sales.

The Company does not believe it has significant concentrations of credit risk in its trade accounts receivable.

10 unchanged sentences

and Europe reportable segments was $ 1.1 billion and $ 2.8 billion, respectively.

PILGRIM’S PRIDE CORPORATION

VALUATION AND QUALIFYING ACCOUNTS

Balance Charged to

Operating Results Charged to

Accounts Deductions Ending

(In thousands)

Trade Accounts and Other Receivables—

Allowance for Credit Losses

2022 $ 9,673 $ 675 $ ( 192 ) $ 597 (a)

2021 7,173 2,243 51 ( 206 ) (a)

2020 7,467 94 186 574 (a)

Trade Accounts and Other Receivables—

Allowance for Sales Adjustments

2022 $ 11,472 $ 238,135 $ — $ 242,702 (b)

2021 6,002 234,735 — 229,265 (b)

2020 8,380 287,193 — 289,571 (b)

Deferred Tax Assets—

Valuation Allowance

2022 $ 24,261 $ 43,188 $ — $ 3,088 (c)

2021 33,678 ( 9,417 ) — — (c)

2020 33,522 156 — — (c)

(a) Uncollectible accounts written off, net of recoveries.

(b) Deductions either written off, rebilled or reclassified as liabilities for market development fund rebates.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data