What changed in this filing

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Item 1. Business

2025-03-25 compared with 2016-03-29 · 484 added, 303 removed, 13 unchanged (98% of the section changed)

GENERAL DEVELOPMENT OF BUSINESS

Smithfield Foods, Inc., together with its subsidiaries (the “Company,” "Smithfield," “we,” “us” or “our”), began as a pork processing operation called The Smithfield Packing Company, founded in 1936 by Joseph W.

Luter and his son, Joseph W.

Through a series of acquisitions starting in 1981, we have become the largest pork processor and hog producer in the world.

We produce and market a wide variety of fresh meat and packaged meats products both domestically and internationally.

We operate in a cyclical industry and our results are affected by fluctuations in commodity prices.

Additionally, some of the key factors influencing our business are customer preferences and demand for our products;

our ability to maintain and grow relationships with customers;

the introduction of new and innovative products to the marketplace;

accessibility to international markets for our products including the effects of any trade barriers;

and operating efficiencies of our facilities.

We conduct our operations through five reportable segments:

Fresh Pork, Packaged Meats, Hog Production, International and Corporate.

The Fresh Pork segment consists of our U.S.

fresh pork operations.

Headquartered in Smithfield, Virginia, since 1936, Smithfield Foods, Inc., together with its subsidiaries (“Smithfield,” “the Company,” “we,” “us” or “our”), produces a wide variety of packaged meats and fresh pork products primarily in the United States (“U.S.”).

Smithfield is an American food company that employs approximately 34,000 people in the U.S.

and 2,500 people in Mexico.

Smithfield’s portfolio includes high-quality iconic brands, such as Smithfield®, Eckrich® and Nathan’s Famous®, among many others.

Smithfield is a majority owned subsidiary of Hong Kong-based WH Group Limited (“WH Group”).

® At Smithfield, we are helping to feed a world of nearly eight billion people.

Our products are found on tables everywhere.

We provide families with wholesome, safe and affordable food while finding new and innovative ways to care for our people, communities, animals and planet.

It is our responsibility and our promise.

We make more than good food.

Good is what we do.

Our Operations

We conduct our operations through three reportable segments:

Packaged Meats, Fresh Pork, and Hog Production.

We also conduct operations through two other operating segments, Mexico and Bioscience, which are aggregated and reported as “Other.”

Packaged Meats Segment

The Packaged Meats segment consists of our U.S.

packaged meats operations.

The Hog Production segment consists of our U.S.

hog production operations.

The International segment is comprised mainly of our meat processing and distribution operations in Poland, Romania and the United Kingdom, our interests in meat processing operations in Mexico, our hog production operations located in Poland and Romania, our interests in hog production operations in Mexico and our former investment in Campofrío Food Group (CFG).

The Corporate segment provides management and administrative services to support our other segments.

On September 26, 2013 (the Merger Date), pursuant to the Agreement and Plan of Merger dated May 28, 2013 (the Merger Agreement) with WH Group Limited, formerly Shuanghui International Holdings Limited, a corporation formed under the laws of the Cayman Islands hereinafter referred to as WH Group, the Company merged with Sun Merger Sub, Inc., a Virginia corporation and wholly owned subsidiary of WH Group (Merger Sub), in a transaction hereinafter referred to as the Merger.

As a result of the Merger, the Company survived as a wholly owned subsidiary of WH Group.

The Merger has enabled Smithfield to continue to execute on its strategic priorities while maintaining brand excellence and its commitment to environmental stewardship and animal welfare.

We have established Smithfield as the world's leading vertically integrated pork processor and hog producer with best-in-class operations and outstanding food safety practices.

Operationally, we have become part of an enterprise that shares our belief in global opportunities and our commitment to the highest standards of product safety and quality.

With our shared expertise and leadership, we expect to continue to work on accelerating a global expansion strategy as part of WH Group.

On January 16, 2014, the Company elected to change its fiscal year from the 52 or 53 week period which previously ended on the Sunday nearest to April 30 to the 52 or 53 week period which ends on the Sunday nearest to December 31.

The change became effective at the end of the period ended December 29, 2013.

Unless otherwise noted, all references to "2015" and "2014" in this report are to the 53 week period ended January 3, 2016 and the 52 week period ended December 28, 2014 , respectively.

DESCRIPTION OF SEGMENTS

operations that process fresh meat into a wide variety of packaged meats products, including bacon, sausage, hot dogs, deli and lunch meats, dry sausage products (such as pepperoni and genoa), ham products, ready-to-eat products and prepared foods (such as pre-cooked entrees, bacon and sausage).

Approximately 80% of the Packaged Meats segment’s raw materials are sourced from our Fresh Pork segment.

We market our domestic packaged meats products under a strategic set of core brands, which include:

Smithfield, Eckrich, Nathan’s Famous, Farmland, Armour, Farmer John, Kretschmar, Krakus, John Morrell, Cook’s, Gwaltney, Carando, Margherita, Curly’s and Smithfield Culinary.

We also sell a sizeable portion of our packaged meats products as private label products.

The majority of the Packaged Meats segment’s products are sold to retail and foodservice customers in the U.S.

Fresh Pork Segment

The Fresh Pork segment consists of our U.S.

fresh pork operations.

The Fresh Pork segment produces a wide variety of fresh pork products in the U.S.

and markets them nationwide and to numerous foreign markets, including China, Japan, Mexico, Russia and Canada.

We process hogs at nine plants (six in the Midwest and three in the Southeast), with an aggregate slaughter capacity of approximately 117,800 hogs per day.

In 2015 , the Fresh Pork segment processed 30.5 million hogs.

The Fresh Pork segment sold approximately 4.4 billion pounds of fresh pork in 2015 .

A substantial portion of our fresh pork is sold to retail customers as unprocessed, trimmed cuts such as butts, loins (including roasts and chops), picnics and ribs.

Our product lines also include leaner fresh pork products.

In 2015 , export sales comprised approximately 25% of the Fresh Pork segment’s volumes and approximately 27% of the segment’s revenues.

Packaged Meats Segment

The Packaged Meats segment consists of our U.S.

packaged meats operations.

The Packaged Meats segment produces a wide variety of packaged meat products in the U.S.

and markets them primarily in the U.S.

The Packaged Meats segment currently operates approximately 33 processing plants.

The Packaged Meats segment sold approximately 3.0 billion pounds of packaged meats products in 2015 .

We produce a wide variety of packaged meats, including smoked and boiled hams, bacon, sausage, hot dogs (pork, beef and chicken), deli and luncheon meats, specialty products such as pepperoni, dry meat products, and ready-to-eat, prepared foods such as pre-cooked entrees and pre-cooked bacon and sausage.

We market our domestic packaged meats products under a number of labels including the following core brand names:

Smithfield, Farmland, John Morrell, Gwaltney, Armour, Eckrich, Margherita, Carando, Kretschmar, Cook’s, Curly's, Healthy Ones and Nathan's Famous.

We also sell a substantial quantity of packaged meats as private-label products.

Our product lines also include lower-fat and lower-salt packaged meats.

We also market a line of lower-fat, value-priced luncheon meats, smoked sausage and hot dogs, as well as fat-free deli hams and 40% lower-fat bacon.

In 2015 , export sales comprised approximately 3.0% of the Packaged Meats segment’s volumes and approximately 3.1% of the segment’s revenues.

operations that process live hogs into a wide variety of primal, sub-primal and offal products, such as bellies, butts, hams, loins, picnics and ribs.

In fiscal year 2024, the Fresh Pork segment sourced approximately half of its raw materials from our Hog Production segment and half from independent farmers with whom we partner across the U.S.

In fiscal year 2025, we expect that approximately 40% of the hogs processed by the Fresh Pork segment will be sourced from the Hog Production segment as a result of our new partnerships in Murphy Family Farms and VisionAg, which are described under “Recent Developments—Hog Production Reform” below.

Approximately one-third of our fresh pork products, including the majority of hams, bellies and trimmings, is transferred to our Packaged Meats segment.

Externally, we sell our fresh pork products to domestic retail, foodservice and industrial customers, as well as to export markets, including, among others, China, Mexico, Japan, South Korea and Canada.

Hog Production Segment

As a complement to our Fresh Pork and Packaged Meats segments, we are the world’s largest hog producer.

The Hog Production segment consists of our hog production operations located in the U.S.

The Hog Production segment operates numerous hog production facilities with approximately 897,000 sows, which produced 15.9 million market hogs in 2015 .

The profitability of hog production is directly related to the market price of live hogs and the cost of feed grains such as corn and soybean meal.

The Hog Production segment generates higher profits when hog prices are high and feed grain prices are low, and lower profits (or losses) when hog prices are low and feed grain prices are high.

In addition, with the importance of food safety to the consumer, our vertically integrated system provides increased traceability from conception of livestock to consumption of the pork product.

The following table shows the percentages of Hog Production segment revenues derived from hogs sold internally and externally and other products for the periods indicated:

Twelve Months Ended

The Transition Period

Twelve Months Ended

January 3, 2016

December 28, 2014

April 29 - December 29, 2013

April 28, 2013

Internal hog sales

External hog sales

Other products (1)

——————————————

Consists primarily of grains.

We own certain genetic lines of breeding stock, under the name Smithfield Premium Genetics (SPG).

The Hog Production segment makes extensive use of these genetic lines.

In addition, we have sublicensed some of these rights to some of our strategic hog production partners.

Hog production operations

We use advanced management techniques to produce premium quality hogs on a large scale at a low cost.

We develop breeding stock, optimize diets for our hogs at each stage of the growth process, process feed for our hogs and design hog containment facilities.

We believe our economies of scale and production methods, together with our use of the advanced SPG genetics, make us a low cost producer of premium quality hogs.

We also utilize independent farmers and their facilities to raise hogs produced from our breeding stock.

Under multi-year contracts, a farmer provides the initial facility investment, labor and front line management in exchange for a service fee.

In 2015 , approximately 81% of our market hogs were finished on contract farms.

Hog production competitiveness

Our Hog Production segment competes in a highly competitive marketplace in which only the best and most competitive firms can expect to make a reasonable and regular profit.

We consider our hog production business a leader in this field.

Therefore, we expect it to consistently outperform the overall industry.

Feed makes up more than 65% of the production cost of hogs.

In many cases, our hogs are produced in regions having higher cost grains.

This location disadvantage could, in the absence of extra efforts, result in our hog production business being inherently disadvantaged as compared to other producers.

To that end, we take an active role in the physical markets for grain and other feed ingredients throughout the world.

These efforts range from buying lower cost corn from local farmers around any of our feed mills to importing grain or soybean meal from South America.

In doing so, we work to procure and deliver the highest quality grains and ingredients at the lowest possible cost.

These activities provide significant benefit to the overall cost competitiveness of our hogs.

These benefits show as lower feed cost and improved animal performance.

We consider this effort and our capabilities in this area to be a competitive advantage.

We regularly and consistently use the futures market to lock the value associated with ongoing purchase arrangements of lower cost or higher value alternative ingredients and grains.

These derivatives are used effectively to keep our grains and feed ingredients appropriately indexed to market prices.

International Segment

The International segment includes our meat processing and distribution operations in Poland, Romania and the United Kingdom, our interests in meat processing operations in Mexico, our hog production operations located in Poland and Romania, our interests in hog production operations in Mexico, and our former investment in CFG.

Our international meat processing operations produce a wide variety of fresh pork, poultry and packaged meats products, including cooked hams, sausages, hot dogs, bacon and canned meats.

The following table shows the percentages of International segment revenues derived from packaged meats, fresh meats and hog production for the periods indicated:

Twelve Months Ended

The Transition Period

Twelve Months Ended

January 3, 2016

December 28, 2014

April 29 - December 29, 2013

April 28, 2013

The Hog Production segment consists of our hog production operations in the U.S., which produce and raise our hogs on numerous company-owned farms and farms that are owned and operated by third-party contract farmers.

Nearly all of the hogs produced by this segment are processed by our Fresh Pork segment.

The Hog Production segment also sells grains to external customers.

Other Segments

In Mexico, we own a 66% interest in Granjas Carroll de Mexico, S.

(“Altosano”), which raises hogs and produces fresh pork products that are sold primarily to customers in Mexico.

Our Bioscience operations use raw materials from hogs that we process to manufacture heparin products, including an active pharmaceutical ingredient that mitigates the risk of blood clots.

These intermediate products are sold to the healthcare industry for use in pharmaceutical drugs and medical devices.

Recent Developments

Initial Public Offering

On January 29, 2025, we completed our initial public offering (“IPO”) of 26,086,958 shares of common stock, which represents 7% of the total outstanding shares, at a price of $20.00 per share.

We issued 13,043,479 shares of common stock bringing the total number of outstanding shares to 393,112,711.

The remaining 13,043,479 shares of common stock were sold by our existing shareholder.

Our existing shareholder granted the underwriters a 30-day option to purchase up to 3,913,042 additional shares of our common stock.

On February 20, 2025, the underwriters partially exercised such option and purchased 2,506,936 additional shares of common stock from our existing shareholder.

We received net proceeds from the IPO of approximately $236 million after deducting underwriting discounts, commissions and fees.

As a result of the IPO, our common stock is listed on the Nasdaq Global Select Market under the ticker “SFD.”

European Carve-Out

On August 26, 2024, we completed a carve-out and transfer of our European operations to WH Group.

The European carve-out represents a strategic shift in our geographical footprint.

Accordingly, the results of operations, assets and liabilities, and cash flows of the European operations have been condensed and reported as discontinued operations in the consolidated financial statements for all periods presented.

Hog Production Reform

We have taken a number of actions over the last couple of years to restructure and optimize the size of our hog production operations, including:

• In May 2023, we made a decision to cease operations on a number of sow farms in Missouri.

The decision was driven by persistent livestock disease issues, underperforming operations and shifting industry supply and demand dynamics.

• In fiscal years 2023 and 2024, we terminated certain agreements with underperforming contract farmers and closed certain farms in the eastern U.S.

• On December 27, 2024, we became a member of a North Carolina-based company, Murphy Family Farms LLC (“Murphy Family Farms”), by contributing $3 million in cash in exchange for a 25% minority interest.

In connection with the transaction, we sold approximately 150,000 sows and the associated commercial hog inventories located on company-owned and contract farms in North Carolina to Murphy Family Farms.

Murphy Family Farms is now a hog supplier to us and will supply approximately 3.2 million hogs annually.

We will supply animal feed and other supplies and provide certain support services to Murphy Family Farms.

• On February 24, 2025, we became a member of a North Carolina-based company, VisionAg Hog Production, LLC (“VisionAg”), by contributing $450,000 in cash in exchange for a 9% minority interest.

In connection with the transaction, we sold approximately 28,000 sows and the associated commercial hog inventories located on certain company-owned and contract farms in North Carolina to VisionAg.

VisionAg is now a hog supplier to us and will supply approximately 600,000 hogs annually.

In addition, we will supply animal feed and provide certain support services to VisionAg.

Our Growth Strategies

The strategic initiatives we are executing across our segments are complemented and enabled by our strong balance sheet and ongoing operational investments, positioning us for future growth.

Drive Growth of Packaged Meats

Our Packaged Meats segment is core to our growth strategy and has been a major driver in transforming our business since 2014.

We have methodically shifted our business mix to focus on this higher-margin segment over time.

The segment contributed 59% of our sales and 105% of our overall operating profit in fiscal year 2024.

We plan to accelerate the growth of our Packaged Meats segment through several strategic initiatives, including:

• continuing to shift our portfolio toward a higher mix of value-added and premium products, such as:

• converting one-time seasonal commodity bone-in ham purchase occasions to increased unit sales of everyday, convenient products such as quarter-weight ham, Anytime Favorites ham and Prime Fresh sliced lunch meat;

• increasing penetration of higher-margin dry sausage products through expanding distribution points and manufacturing capacity;

• harnessing our powerful brands to continue to expand product offerings and drive awareness, loyalty and increased market share;

• leveraging the breadth of our platform and national and specialty brands to further penetrate dayparts and households;

• expanding in under-indexed geographical locations and moving into new categories;

• attracting new consumers, particularly younger demographics, through product and packaging innovation and effective and appealing marketing strategies while maintaining our promise to consumers to offer high-quality products for every budget;

• deepening our presence across our distribution channels through our integrated sales force, which leverages our scale and breadth to provide a unified, reliable and consistent customer experience.

We believe that these proven strategies will drive profitable organic growth in our Packaged Meats segment.

As an example, we see significant potential for our Packaged Meats segment to generate continued growth through our distribution expansion opportunities across brands to expand unit count within our existing product portfolio.

Further Enhance Fresh Pork

We continually seek greater efficiencies as we manufacture and market fresh pork products.

Our capabilities and supply chain allow us to provide differentiated products and high service levels to our customers.

We deliver a high-quality, consistently available supply to our Packaged Meats segment and maximize the value of our raw materials.

We will seek to enhance the profitability of our Fresh Pork segment by:

• maximizing the value of each hog and expanding use of raw materials, including unprocessed fresh and value-added pork, snacks, pharmaceuticals and pet food treats and ingredients;

• capitalizing on export markets as an outlet for increasing the value of raw materials through whole-hog utilization, and appealing to differentiated, global tastes and preferences;

• leveraging our relationship with WH Group to inform product development opportunities for the Asian market and to benefit from WH Group’s distribution network;

• appealing to ever-changing consumer preferences and demand for flavor enhancements through ongoing product innovation.

As we seek to grow our fresh pork business profitably, we remain committed to demonstrating that profitability can go hand-in-hand with sustainable operations.

We will further our mission of producing good food the right way by seeking new and unique ways to use our raw materials.

Continue Investing in Innovation

We will continue to invest in product, packaging and operational innovations in our Packaged Meats and Fresh Pork segments to drive growth, enhance our profitability and expand our total addressable market.

We are focused on strengthening relationships with customers and consumers by being first-to-market with new products and solutions.

Within our branded packaged meats portfolio, we are introducing more value-added and premium innovations.

We see a significant opportunity to increase distribution of our innovative Smithfield Prime Fresh packaged lunch meat offering.

Smithfield Prime Fresh embodies the quality of bulk deli meat but is displayed in the packaged lunch meat section of the retail wall.

This enables our retail partners to increase average revenue per pound and reduce in-store labor costs while providing a convenient lunch meat option for consumers.

In addition, our Smithfield Double Thick/Double Smoked bacon and Smithfield Maple Thick Cut bacon demonstrate our ability to introduce premium, higher-margin offerings with new cut and flavor characteristics.

These products sell at a higher velocity than the category average.

In the Fresh Pork segment, we are investing in value-added products and adding new cuts and flavors, such as Sweet & Smokey BBQ, Chipotle and Lemon & Garlic marinated fresh pork loin filet.

Innovation does not stop with our products.

In our plants, we are committed to advancing automation and strategically redeploying labor.

On our farms, innovative approaches to animal nutrition are increasing feed conversion and lowering our cost basis.

Byproducts that were once considered waste are now used to create renewable natural gas through our biogas joint ventures and lifesaving pharmaceuticals through our bioscience business.

Our culture of responsibility, operational excellence and innovation serves as a catalyst for our ongoing business transformation.

We conduct company-wide competitions and recognition events for grassroots projects that drive innovation throughout our organization.

By fostering this entrepreneurial spirit, we will seek to drive growth in our top- and bottom-line results and build on Smithfield’s competitive advantage.

Optimize Our Operations and Supply Chain to Decrease Our Cost Basis

We have implemented many initiatives over the past several years to reduce costs and realize operational efficiencies.

These initiatives have enabled us to offset inflation and enhance margins across our entire business.

We continue to optimize the size of our company-owned hog production operations and procure a greater mix of hogs from independent suppliers with market-based supply agreements.

Additionally, we continue to implement cost-saving initiatives in our retained hog production operations to improve our cost structure.

We employ automation in all of our plants to redeploy labor to higher value tasks, improve yields and drive efficiency by reducing complexity to lower our cost basis and help offset inflationary pressures.

In our logistics and distribution network, we have reduced transportation and warehousing costs through transportation efficiencies, maximizing utilization of our storage and trucking assets, improving supply and demand

planning and optimizing inventory levels.

These actions increase profitability and improve customer service levels, which we believe is essential to being a supplier of choice.

We remain committed to optimizing our operations and supply chain through a series of targeted actions, which in the past have supported meaningful margin improvement:

Hog Production Packaged Meats & Fresh Pork Logistics

“Reform and Rationalize” “Best-In-Class Lean

Manufacturing” “Improve Service at

Optimal Cost”

• Optimize number of company-owned hogs

• Improve herd health

• Transform genetics

• Drive procurement and nutrition savings

• Offset inflation with cost savings programs

• Employ automation

• Improve yields and maximize raw material usage

• Reduce complexity

• Be the supplier of choice

• Maximize assets (reduce transport miles, warehouse utilization)

• Improve supply and demand planning

• Optimize inventory levels

Implementation of our growth strategies requires us, in particular, to continue to grow our Packaged Meats segment and to reduce our exposure to commodity price volatility through optimization and continued reduction of the size of our company-owned hog production operations.

For information about challenges that we face in implementing this strategy and our other growth strategies, please see “Item 1A.

Risk Factors—Risks Relating to Our Business and Operations—Our results of operations are cyclical and could be adversely affected by fluctuations in the commodity prices for meat, livestock (primarily hogs) and feed ingredients,” and “Item 1A.

Risk Factors—Risks Relating to Our Business and Operations—Disruption of our supply chain could adversely affect our business, financial condition and results of operations.”

Execute Synergistic Mergers and Acquisitions in North America

We intend to execute opportunistic, complementary mergers and acquisitions to bolster our value-added product portfolio and production capacity in North America.

While acquisitions are not a primary growth driver for us, our team is experienced in identifying strategic acquisition targets and integrating them successfully into our business.

We believe our integration expertise allows us to capture both cost synergies and incremental revenue opportunities.

We will remain disciplined in our acquisition approach and maintaining our investment grade ratings, while pursuing opportunities that we believe will prove accretive to earnings and enhance our operational profile.

Trends in Market Demand

We operate in the large and growing global packaged and fresh meats market, which includes value-added fresh, refrigerated and frozen proteins.

Our business operations are primarily concentrated in North America, but, as a leading exporter to major international markets, we also benefit from significant global demand for our products.

packaged meats market is supported by long-term secular tailwinds, including consumer demand for high-protein diets, high-quality nutrition, product versatility and convenience.

We expect these tailwinds to continue to drive increases in overall meat consumption.

Nevertheless, changes in market trends, consumer preferences and the impact of macroeconomic factors on consumer spend could adversely affect our results of operations.

For more information, see “Item 1A.

Risk Factors—Risks Relating to Our Business and Operations—Changes in consumer preferences and failure to maintain favorable consumer perception of our brands and products could negatively impact our business.”

Global demand for pork and pork products supports strong U.S.

pork exports.

According to the U.S.

Department of Agriculture (“USDA”), the U.S.

share of the global pork export market increased to 26% in 2022 from 2% in 1990.

While the European Union is currently the world’s largest pork exporter, the U.S., at number two, is emerging as a more cost-effective alternative due to lower feed and labor costs, according to the Agriculture and Horticulture Development Board.

According to the USDA, total U.S.

pork product export volume was 3.2 million tons in 2024.

Sales and Marketing

Our goal is to provide quality and value to the ultimate consumers of our packaged meats and fresh pork products.

We sell our branded and private label packaged meats and fresh pork products through a variety of channels, including:

• national and regional retailers (primarily grocery supermarket chains, independent grocers and club stores);

• the foodservice industry, including foodservice distributors, fast food and other restaurants, hotel chains and other institutional customers;

• industrial customers who use our products as raw materials in their finished goods production, including prepared meals, byproducts for pharmaceutical production and pet food treats and ingredients;

• export sales to international retailers and wholesale distributors, primarily in North American, Asian, Latin American and other emerging markets.

We use a variety of consumer advertising and trade promotion programs designed to build awareness and increase sales distribution and penetration.

We also provide sales incentives to certain of our customers through rebates, such as those based on achievement of specified volume and/or growth in volume levels.

We primarily use company-employed salespersons to sell our products, and we also engage independent brokers who work on a commission basis.

In fiscal year 2024, we sold our products to approximately 5,600 customers.

(“Walmart”) is a customer of our Packaged Meats and Fresh Pork segments and accounted for approximately 13%, 12% and 12% of our consolidated sales in fiscal years 2024, 2023 and 2022, respectively.

Walmart has been our customer for multiple decades.

No other customer accounted for 10% or more of our consolidated sales during fiscal years 2024, 2023 and 2022.

Cumulatively, our top ten customers accounted for 38%, 37% and 36% of our consolidated sales in fiscal years 2024, 2023 and 2022.

Manufacturing Facilities

We manufacture packaged meats, fresh pork and value-added items at 39 processing plants across 19 different states:

• Packaged meats .

Fresh meats (1)

Hog production (2)

——————————————

Includes feathers, by-products and rendering

Includes external hog and feed sales

The International segment has sales denominated in foreign currencies and, as a result, is subject to certain currency exchange risk.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Derivative Financial Instruments” for a discussion of our foreign currency hedging activities.

SEGMENTS IN GENERAL

Sources and Availability of Raw Materials

Feed grains, including corn, soybean meal and wheat, are the primary raw materials of our hog production operations.

These grains are readily available from numerous sources at competitive prices.

We generally purchase corn and soybean meal through forward purchase contracts.

Historically, grain prices have been subject to significant fluctuations, particularly in recent years.

Live hogs are the primary raw materials of the Fresh Pork segment.

Historically, hog prices have been subject to substantial fluctuations.

Hog supplies, and consequently prices, are affected by factors such as corn and soybean meal prices, weather and farmers’ access to capital.

Hog prices tend to rise seasonally as hog supplies decrease during the hot summer months and tend to decline as supplies increase during the fall.

This tendency is due to lower farrowing performance during the winter months and slower animal growth rates during the hot summer months.

The Fresh Pork segment purchased approximately 47% of its U.S.

live hog requirements from the Hog Production segment in 2015 .

In addition, we have established multi-year agreements with several suppliers, which provide us with a stable supply of high-quality hogs at market-indexed prices.

We also purchase hogs on a daily basis at our Southeastern and Midwestern processing plants and our company-owned buying stations in the Southeast and Midwest.

Like the Fresh Pork segment, live hogs are the primary raw material of our meat processing operations in the International segment with the primary source of hogs being our hog production operations located in Poland and Romania.

Our meat processing operations in the International segment purchased approximately 60% of its live hog requirements from our hog production operations located in Poland and Romania in 2015 .

A substantial portion of the fresh meat processed by the Packaged Meats segment is transferred from the Fresh Pork segment.

We also purchase fresh pork from other meat processors to supplement our processing requirements.

Additional purchases include raw beef, poultry and other meat products that are added to sausages, hot dogs and luncheon meats.

Those meat products and other materials and supplies, including seasonings, smoking and curing agents, sausage casings and packaging materials, are readily available from numerous sources at competitive prices.

Nutrient Management and Other Environmental Issues

Our hog production facilities have been designed to meet or exceed all applicable zoning and other government regulations.

These regulations require, among other things, maintenance of separation distances between farms and nearby residences, schools, churches, public use areas, businesses, rivers, streams and wells and adherence to required construction standards.

Hog production facilities generate significant quantities of manure, which must be managed properly to protect public health and the environment.

We believe that we use the best technologies currently available and economically feasible for the management of swine manure, which require permits under state, and in some instances, federal law.

The permits impose standards and conditions on the design and operation of the systems to protect public health and the environment, and can also impose nutrient management planning requirements depending on the type of system utilized.

The most common system of swine manure management employed by our hog production facilities is the lagoon and spray field system, in which lined earthen lagoons are utilized to treat the manure before it is applied to agricultural fields by spray application.

The nitrogen and phosphorus in the treated manure serve as a crop fertilizer.

We follow a number of other policies and protocols to reduce the impact of our hog production operations on the environment, including:

the employment of environmental management systems;

ongoing employee training regarding environmental controls;

walk-around inspections at all sites by trained personnel;

formal emergency response plans that are regularly updated;

and collaboration with manufacturers regarding testing and developing new equipment.

For further information see “Regulation” below.

Customers and Marketing

Our fundamental marketing strategy is to provide quality and value to the ultimate consumers of meat products.

We have a variety of consumer advertising and trade promotion programs designed to build awareness and increase sales distribution and penetration.

We also provide sales incentives for our customers through rebates based on achievement of specified volume and/or growth in volume levels.

We have significant market presence, both domestically and internationally, where we sell our meat products to national and regional supermarket chains, wholesale distributors, the foodservice industry (fast food, restaurant and hotel chains, hospitals and other institutional customers), export markets and other further processors.

We use both in-house salespersons as well as independent commission brokers to sell our products.

In 2015 , we sold our products to more than 3,800 customers, none of whom accounted for as much as 10% of consolidated revenues.

We have no significant or seasonally variable backlog because most customers prefer to order products shortly before shipment and, therefore, do not enter into formal long-term contracts.

Methods of Distribution

We use a combination of private fleets of leased tractor trailers and independent common carriers and owner operators to distribute live hogs and meat products to our customers, as well as to move raw materials between plants for further processing.

We produce packaged meats products across 31 processing plants in 18 states.

• Fresh pork .

We process hogs at eight processing plants in six states, with the aggregate processing capacity of our collective processing plants of approximately 108,000 hogs per day.

• Value-added items.

We operate six additional processing plants that use our fresh pork products to produce value-added items, such as case-ready products, pork skins for snacking and pet food and treats.

Our processing plants are strategically located to access raw materials in a cost-effective manner and to service our diverse customer base.

Six of our fresh pork processing plants also include packaged meats operations, which improves our overall cost structure by reducing the cost of transporting fresh raw materials and leveraging shared fixed overheads.

We continue to optimize our operations by reconfiguring our manufacturing footprint, closing high-cost operating lines and creating greater agility across our facilities.

Our facilities utilize modern, highly automated equipment to process and package our packaged meats and fresh pork products, aiding us in redeploying our team members to higher-value tasks.

We believe that these expenditures have enhanced product quality, improved customer satisfaction and increased sales potential.

Our economies of scale and network afford us significant supply chain transparency and substantial availability of high-quality raw material supply to our growing Packaged Meats segment.

Our portfolio of production facilities requires routine capital investment for repairs and maintenance.

believe that annual total capital expenditures in the near term are likely to be in the range of $400 million to $500 million inclusive of both repairs and maintenance and profit improvement projects.

Capital expenditures could be more in certain years to ensure continuity of production in our older assets.

Our facilities are also designed to promote regulatory compliance and worker safety, as well as reduced waste and emissions, while seeking to comply with applicable environmental standards.

Our Mexico operations produce 1.8 million hogs annually at 115 company-owned farms and processes 1.5 million hogs at one manufacturing plant.

Our Bioscience manufacturing location in Ohio processes raw materials from hogs that we process to manufacture heparin products, including Heparin Sodium, an active pharmaceutical ingredient, which mitigates the risk of blood clots.

Distribution and Transportation

We have integrated, centralized teams that coordinate supply and demand planning, customer service and logistics to service our packaged meats and fresh pork customer base.

We use a combination of third-party shipping companies and our leased and owned fleet of tractor trailers to distribute meat products to our customers, as well as to move products between facilities.

In the U.S., we distribute products directly from some of our plants and from owned and leased distribution centers in Indiana, Kansas, Maryland, Nebraska and North Carolina.

We use these distribution centers to consolidate products that are manufactured at different plants across our network to fulfill our customer orders efficiently.

One of these distribution centers is operated by third-party logistics providers.

Due in part to the different demands of distribution for frozen and refrigerated products, as well as the seasonality of certain of our products, we use a network of over 45 third-party cold storage locations for storage, handling and other value-added services.

These arrangements are generally contracted on an annual basis with either fixed or variable usage requirements.

Access to these locations provides capacity to sell frozen and chilled product offerings to our export customer base.

For export sales to overseas geographies, we contract with third-party international container shipping carriers to ship our products cost effectively to the destination ports of our customers.

Our distribution network enables us to enhance our customer reach and sell our products efficiently and cost effectively throughout the U.S.

and the world.

We continue to seek innovative solutions to accomplish this mission.

We use automation in our distribution centers to pick and fulfill orders and thereby reduce labor costs.

We coordinate deliveries and use backhauling to reduce overall transportation costs.

In the U.S., we distribute products directly from some of our plants and from leased distribution centers primarily in Missouri, Pennsylvania, North Carolina, Virginia, Kansas, Wisconsin, Indiana, Illinois, California, Iowa, Nebraska and Texas.

We also operate distribution centers adjacent to our plants in Bladen County, North Carolina, Sioux Falls, South Dakota and Crete, Nebraska.

Internationally, we distribute our products through a combination of leased and owned warehouse facilities.

We own and use numerous marks, which are registered trademarks or are otherwise subject to protection under applicable intellectual property laws.

We consider these marks and the accompanying goodwill and customer recognition valuable and material to our business.

We believe that registered trademarks have been important to the success of our branded fresh pork and packaged meats products.

In a number of markets, our brands are among the leaders in select product categories.

The meat processing business is somewhat seasonal in that, traditionally, the periods of higher sales for hams are the holiday seasons such as Christmas, Easter and Thanksgiving, and the periods of higher sales for smoked sausages, hot dogs and luncheon meats are the summer months.

We typically build substantial inventories of hams in anticipation of our seasonal holiday business.

In addition, the Hog Production segment experiences lower farrowing performance during the winter months and slower animal growth rates during the hot summer months resulting in a decrease in hog supplies in the summer and an increase in hog supplies in the fall.

Raw Materials

Feed for Internally Sourced Hogs

The primary raw materials for hog production are corn, soybean meal and wheat.

Hogs consume grain during the grow-out period from wean to finish, which takes six months on average.

Feed costs account for approximately 60% to 65% of our Hog Production raising cost.

We have over 50 locations used for feed production and feed storage in the U.S., which are located near our farms, where we convert purchased grain into feed for our animals.

Feed grains are readily available from numerous sources at competitive prices, and we believe such raw materials to be in adequate supply.

We take an active role in the physical markets for grain and other feed ingredients throughout the world.

These efforts range from buying lower-cost corn from local farmers near our feed mills to importing grain or soybean meal from South America from time to time.

We seek to mitigate higher input costs through productivity initiatives to improve feed conversion, procurement initiatives and the use of derivative instruments to hedge a portion of forecasted future consumption economically.

We seek to stabilize pricing generally by purchasing grains through forward purchase contracts.

Raw Materials for Fresh Pork Segment

Internally Sourced Hogs

In fiscal year 2024, we sourced approximately half of the hogs processed in our Fresh Pork segment’s facilities from our Hog Production segment.

In fiscal year 2025, we expect that approximately 40% of the hogs processed by our Fresh Pork segment will be sourced from our Hog Production segment as a result of the new partnerships in Murphy Family Farms and VisionAg.

Our Hog Production segment consists of more than 250 company-owned farms and more than 1,300 contract farms in the U.S.

that raise our hogs for processing.

Contract farmers provide the initial facility investment, labor and front-line management through a pre-determined economic and commercial arrangement, and we provide the animals and the feed.

In fiscal year 2024, we produced 14.6 million hogs from approximately 750,000 sows.

We expect to produce 11.5 million hogs in fiscal year 2025 from approximately 570,000 sows.

Nearly all of the Hog Production segment’s hogs are sold to the Fresh Pork segment.

We develop breeding stock, optimize diets for our hogs at each stage of the growth process, feed our hogs and design hog containment facilities.

From the process’s origin at the grain farms to the ultimate step of delivering hogs to our processing plants, we monitor the vertically integrated process at every juncture to ensure a premium level of product, assurance of supply and control of input costs.

Whether our animals are raised on company-owned or contract farms, we seek to have a supply chain that meets our standards for quality and animal welfare practices.

At our company-owned and contract farms, we have ongoing initiatives to improve profitability, including genetic transformation, herd health improvements and procurement and nutrition savings.

These ongoing initiatives are intended to improve the livability of our animals while reducing costs.

We utilize our fleet of leased and owned tractor trailers to transport hogs between farm and production facilities.

Externally Sourced Hogs

We procure hogs that we process in our Fresh Pork segment through multi-year, market-based supply agreements with independent suppliers, which provide us with a stable supply of high-quality hogs at market-indexed prices.

The loss of any one supplier would not materially impact our business or operations.

Raw Materials for Packaged Meats Segment

We source approximately 80% of the raw materials used in our Packaged Meats segment from our Fresh Pork segment.

We purchase beef and poultry from other meat processors to supplement our processing requirements.

Our third-party pork and beef purchases are made on a spot basis, while our third-party poultry purchases are booked through annual volume commitments.

Although the price of our raw materials fluctuates due to market dynamics, we believe that our supply of raw materials is adequate and generally available from numerous sources.

We seek to mitigate higher input costs through productivity improvements in our operations, various procurement strategies and the use of derivative instruments to economically hedge a portion of forecasted future consumption.

Packaging Materials and Ingredients for Fresh Pork and Packaged Meats Segments

We have a centralized procurement function responsible for competitively sourcing packaging and ingredient raw materials from third-party suppliers.

We purchase raw materials, including seasonings, sweeteners, cheese and antimicrobials from ingredient suppliers, commodity processors and other food companies located primarily in the U.S.

We also purchase packaging materials, including flexible resin-based packaging, corrugated boxes and folding cartons, foam trays and pads, labels and casings, from packaging manufacturers located primarily in the U.S.

We purchase the majority of our packaging materials under contracts with pricing formulas based on published raw material indices for the primary components of our packaging, which are typically resin and paperboard.

We purchase most of the seasonings for our Packaged Meats segment from Saratoga Food Specialties, LLC (“Saratoga”).

We owned Saratoga until October 2022 when we sold it to Solina Group Holding.

Shortly thereafter,

we entered into a strategic sourcing purchase agreement with Saratoga pursuant to which we agreed to purchase certain seasonings exclusively from Saratoga.

The sourcing agreement expires on October 31, 2025.

The prices at which we purchase seasonings are adjusted annually by agreement between us and Saratoga based on market information and operations data.

Saratoga has a right of first refusal to supply us with any new seasoning or sauce products we need.

We may terminate the exclusivity arrangement or terminate the sourcing agreement entirely if Saratoga does not satisfy certain key performance indicators.

We believe that we carry sufficient inventory of finished product and seasonings to overcome an interruption in the supply of seasonings from Saratoga.

Our business is somewhat seasonal in that, traditionally, the periods of higher sales for hams are the holiday seasons such as Easter, Thanksgiving and Christmas, and the periods of higher sales for ribs, smoked sausages and hot dogs are the summer months.

We typically build inventories of certain products in anticipation of seasonal demand fluctuations.

In addition, hog prices tend to rise as hog supplies decrease during the summer, and hog prices tend to decline as hog supplies increase during the fall and winter.

This tendency is due to lower farrowing performance during the winter and slower animal growth rates during the summer.

In our business, we participate across the value chain—from farm to finished products.

We believe our diverse branded and private label product offerings allow us to compete effectively across channels and customer price points.

Our ability to compete effectively depends on our capacity to execute across the following primary competitive factors:

• product quality;

• nutritional profile and dietary attributes;

• product availability;

• convenience;

• brand recognition and loyalty;

• the ability to identify and satisfy emerging consumer preferences.

The protein industry is highly competitive.

Our products compete with a large number of other protein sources, including chicken, beef and seafood, but our principal competition comes from other pork processors.

We believe that the principal competitive factors in the pork processing industry are price, product quality and innovation, product distribution and brand loyalty.

Some of our competitors are more diversified than us, especially now that we have sold our beef and turkey operations.

To the extent that their other operations generate profits, these more diversified competitors may be able to support their meat processing operations during periods of low or negative profitability.

Competing large, multi-brand consumer packaged food companies include Tyson Foods, Hormel Foods, Kraft Heinz, Pilgrims Pride, Maple Leaf Foods, Premium Brands and Conagra.

These competitors are scaled, multinational corporations with substantial financial, marketing, research and development and other resources.

Private, category-focused companies that we compete with include Boar’s Head and Johnsonville.

These private competitors may be more innovative and able to bring new products to market faster and more quickly exploit and serve niche markets or new or burgeoning consumer preferences.

Pork processing companies with which we compete include Tyson Foods, Triumph Foods, JBS USA, Prestage Farms and Seaboard.

Although pork is relatively inexpensive in comparison to other protein sources, we also compete indirectly with the producers of chicken, beef, seafood and meat alternatives since changes in the relative prices of these proteins may alter consumer buying patterns.

Additionally, we face competition for export sales from both domestic and international suppliers.

As a leading food company, we believe that we effectively compete through our high-quality products, leading brands, expansive channel reach, scaled distribution network, our significant focus on controlling our input costs

(including through internally sourced hogs) and our strong financial profile.

Based on the strength of our longstanding relationships and proven, execution-oriented management team, we believe that we are a trusted partner to farmers, suppliers, customers and ultimate consumers across the value chain.

Research and Development

We conduct continuous research and development activities to develop new products and to improve existing products and processes.

We incurred expenses on company-sponsored research and development activities of $78.5 million , $75.3 million , $55.1 million and $80.9 million in 2015 , 2014 , the eight months ended December 29, 2013 and the twelve months ended April 28, 2013 , respectively.

FINANCIAL INFORMATION ABOUT SEGMENTS

Financial information for each reportable segment, including revenues and operating profit, is disclosed in Note 15 — Reportable Segments in “Item 8.

Financial Statements and Supplementary Data.”

RISK MANAGEMENT AND HEDGING

We are exposed to market risks primarily from changes in commodity prices, as well as interest rates and foreign exchange rates.

To mitigate these risks, we utilize derivative instruments to hedge our exposure to changing prices and rates.

For further information see “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Derivative Financial Instruments.”

Regulation in General

Like other participants in the industry, we are subject to various laws and regulations administered by federal, state and other government entities, including the United States Environmental Protection Agency (EPA) and corresponding state agencies, as well as the United States Department of Agriculture, the Grain Inspection, Packers and Stockyard Administration, the United States Food and Drug Administration, the United States Occupational Safety and Health Administration, the Commodities and Futures Trading Commission and similar agencies in foreign countries.

From time to time, we receive notices and inquiries from regulatory authorities and others asserting that we are not in compliance with particular laws and regulations.

In some instances, litigation ensues.

In addition, individuals may initiate litigation against us.

Many of our facilities are subject to environmental permits and other regulatory requirements, violations of which are subject to civil and criminal sanction.

In some cases, third parties may also have the right to sue to enforce compliance.

We use internationally recognized management systems to manage many of our regulatory programs.

For example, we use the International Organization for Standardization (ISO) 14001:2004 standard to manage and optimize environmental performance, and we were the first in the industry to achieve ISO 14001:2004 certification for our hog production and processing facilities.

ISO guidelines require a long-term management plan integrating regular third-party audits, goal setting, corrective action, documentation, and executive review.

Our Environmental Management System (EMS), which conforms to the ISO 14001:2004 standard, addresses the significant environmental aspects of our operations, provides employee training programs and facilitates engagement with local communities and regulators.

Most importantly, the EMS allows the collection, analysis and reporting of relevant environmental data to facilitate our compliance with applicable environmental laws and regulations.

In March 2011, the U.S.

Court of Appeals for the Fifth Circuit overturned EPA's November 2008 rule requiring that confined animal feeding operations (CAFOs) that “discharge or propose to discharge” apply for permit coverage under the Clean Water Act's National Pollutant Discharge Elimination System (NPDES).

The Fifth Circuit's decision (which held that only discharging CAFOs have a duty to apply for NPDES permit coverage) has clarified the extent of our obligations under the NPDES permit program.

EPA has not yet proposed or finalized a rule in response to the Fifth Circuit's decision, and it is not clear whether any such action may attempt to impose additional obligations on our hog production operations.

During calendar year 2002, the National Academy of Sciences (the Academy) undertook a study at EPA's request to assist EPA in considering possible future regulation of air emissions from animal feeding operations.

The Academy's study identified a need for more research and better information, but also recommended implementing without delay technically and economically feasible management practices to decrease emissions.

Further, our hog production subsidiaries have accepted EPA's offer to enter into an administrative consent agreement and order with owners and operators of hog farms and other animal production operations.

Under the terms of the consent agreement and order, participating owners and operators agreed to pay a penalty, contribute towards the cost of an air emissions monitoring study and make their farms available for monitoring.

In return, participating farms have been given immunity from federal civil enforcement actions alleging violations of air emissions requirements under certain federal statutes, including the Clean Air Act.

Pursuant to our consent agreement and order, we paid a $100,000 penalty to EPA.

Premium Standard Farm, Inc.'s (PSF's) (now Murphy-Brown of Missouri LLC's ) Texas farms and company-owned farms in North Carolina also agreed to participate in this program.

The National Pork Board, of which we are a member and financial contributor, paid the costs of the air emissions monitoring study on behalf of all hog producers, including us, out of funds collected from its members in previous years.

The cost of the study for all hog producers was approximately $6.0 million.

Monitoring under the study began in the spring 2007 and ended in the winter 2010.

In March 2012, EPA made available draft emission estimation methodologies for broilers and swine and dairy feeding operations for public comment.

Soon thereafter, EPA also submitted the draft emission estimation methodologies to EPA’s Science Advisory Board (“SAB”) for review and comment.

In its April 19, 2013 report to EPA, the SAB found significant problems with data used in the study and the EPA’s approach to developing the draft methodologies and recommended that EPA develop a process-based modeling approach to predict air emissions from broiler confinement facilities and swine and dairy lagoons and basins.

EPA has not announced when or how it will respond to the SAB’s findings and recommendations or when it expects to finalize the methodologies.

New regulations governing air emissions from animal agriculture operations are likely to emerge from the monitoring program undertaken pursuant to the consent agreement and order.

There can be no assurance that any new regulations that may be proposed to address air emissions from animal feeding operations will not have a material adverse effect on our financial position or results of operations.

Greenhouse Gases (GHGs) and Climate Change

In calendar year 2009, EPA finalized its Mandatory Reporting of Greenhouse Gases (GHGs) rule, which requires owners or operators of certain facilities (including facilities that contain a manure management system) that emit at least 25,000 metric tons or more of GHGs per year to report their emissions.

Although EPA has not been implementing the rule as it applies to manure management systems due to a congressional restriction prohibiting the expenditure of funds for this purpose, there is no assurance that this prohibition will not be lifted in the future.

Should that occur, the rule would impose additional costs on our hog production operations;

however, it is not expected that such costs would have a material adverse effect on our hog production operations.

The EPA finalized regulations in calendar year 2010 under the Clean Air Act, which may trigger new source review and permitting requirements for certain sources of GHG emissions.

Beginning in early 2011, when GHG emissions standards for light-duty vehicles took effect, permits issued under the Clean Air Act permitting programs for large stationary sources of air pollution, the Prevention of Significant Deterioration (PSD) and the Title V Operating Permit Programs, must address GHGs.

In April 2012, EPA issued the GHG Tailoring Rule to ensure that only the largest sources of GHGs, those responsible for 70% of the GHG pollution from stationary sources, would require air permits.

As in virtually every industry, GHG emissions occur at several points across our operations, including production, transportation and processing.

Compliance with future legislation, if any, and compliance with currently evolving regulation of GHGs by EPA and the states may result in increased compliance costs, capital expenditures, and operating costs.

In the event that any future compliance requirements at any of our facilities require more than the sustainability measures that we are currently undertaking to monitor emissions and improve our energy efficiency, we may experience significant increases in our costs of operation.

Such costs may include the cost to purchase offsets or allowances and costs to reduce GHG emissions if such reductions are required.

These regulatory changes may also lead to higher cost of goods and services which may be passed on to us by suppliers.

As an agriculture-based company, changes to the climate and weather patterns could also affect key inputs to our business as the result of shifts in temperatures, water availability, precipitation, and other factors.

Both the cost and availability of corn and other feed crops, for example, could be affected.

The regulation or taxation of carbon emissions could also affect the prices of commodities, energy, and other inputs to our business.

We believe there could also be opportunities for us as a result of heightened interest in alternative energy sources, including those derived from manure, and participation in carbon markets.

However, it is not possible at this time to predict the complete structure or outcome of any future legislative efforts to address GHG emissions and climate change, whether EPA's regulatory efforts will survive court challenge, or the eventual cost to us of compliance.

There can be no assurance that GHG regulation will not have a material adverse effect on our financial position or results of operations.

Regulatory and Other Proceedings

From time to time we receive notices from regulatory authorities and others asserting that we are not in compliance with certain environmental laws and regulations.

In some instances, litigation ensues.

In March 2006, we entered into a consent decree that settled two citizen lawsuits alleging among other things violations of certain environmental laws.

The consent decree provides, among other things, that our subsidiary, Murphy-Brown LLC, will undertake a series of measures designed to enhance the performance of the swine waste management systems on approximately 244 company-owned farms in North Carolina and thereby reduce the potential for surface water or ground water contamination from these farms.

Murphy-Brown has successfully completed a number of the measures called for in the consent decree and expects to fulfill its remaining consent decree obligations over the next 12 to 24 months, at which time it will move for termination of the decree.

Prior to our acquisition of PSF, it had entered into a consent judgment with the State of Missouri and a consent decree with the federal government and a citizens group.

The judgment and decree generally required that PSF pay penalties to settle past alleged regulatory violations, utilize new technologies to reduce nitrogen in the material that it applies to farm fields and research, and develop and implement “Next Generation Technology” for environmental controls at certain of its Missouri farm operations.

PSF successfully completed the measures called for in the state judgment and the state court terminated the judgment in the fall of 2012.

PSF has also completed a number of the measures called for in the federal consent decree, but is unable to predict at this time when it will complete the remaining consent decree obligations or when the consent decree will be terminated.

Environmental Stewardship

In July 2000, in furtherance of our continued commitment to responsible environmental stewardship, we and our North Carolina-based hog production subsidiaries voluntarily entered into an agreement with the Attorney General of North Carolina (the Agreement) designed to enhance water quality in the State of North Carolina through a series of initiatives to be undertaken by us and our subsidiaries while protecting access to swine operations in North Carolina.

One of the features of the Agreement reflects our commitment to preserving and enhancing the environment of eastern North Carolina by providing a total of $50.0 million to assist in the preservation of wetlands and other natural areas in eastern North Carolina and to promote similar environmental enhancement activities.

We began annual contributions of $2.0 million in fiscal 2001, deferred annual payments in fiscal 2011 and fiscal 2012 and re-started our annual $2.0 million payment in fiscal 2013.

More than a decade ago, Smithfield developed and implemented a comprehensive, systematic animal care management program to monitor and measure the well-being of pigs on company-owned and contract farms.

Developed in consultation with two of the world's foremost experts in animal behavior and handling, this system continues to guide our operations today.

Our animal care management program guides the proper and humane care of our animals at every stage of their lives, from gestation to transport to processing plant.

All farm employees and contract hog producers must employ the methods and techniques of the management system and take steps to verify their compliance.

Adherence to proper animal welfare management is a condition of our agreements with contract producers.

Our Animal Care Policy underscores the company's Commitments to providing the following:

We conduct research and development activities to develop new and improved products for our customers, incorporate innovative ingredients, develop advanced pork processing equipment and methods and enhance the survival, health, growth and well-being of our animals.

Our in-house food science research and development team consists of approximately 35 professionals focused on developing new and improved products and enhancing plant productivity.

In 2011, we opened Smithfield’s Innovation Center near our headquarters in Smithfield, Virginia.

This technologically advanced facility is dedicated to developing new products, enhancing food safety and quality, exploring consumer insights and preferences and evaluating both our products and those of our competitors.

Our animal scientists conduct research at farms across the country to improve the performance and well-being of our animals.

In addition, we conduct genetic and genomic research to advance the proprietary genetics of our animals and foster specific traits that improve their overall performance.

Human Capital

As of March 13, 2025, we employed approximately 34,000 individuals in the U.S.

and approximately 2,500 in Mexico.

Approximately 46% of our employees are covered by collective bargaining agreements or are members of labor unions, and approximately 8,000 of our employees are covered by collective bargaining agreements that will expire in 2025.

Our corporate culture emphasizes responsibility, operational excellence and innovation at all levels, and consequently encourages input, initiative and new ideas.

To attract and retain employees committed to these values, we recognize the importance of training and development, competitive compensation, and an uncompromising commitment to safety.

• We value every person who contributes to our mission, regardless of age, color, disability, family or marital status, gender, national origin, veteran status or any other characteristic protected by applicable laws.

We strictly prohibit discrimination, retaliation, all forms of harassment and bullying, and communicate this through our Code of Business Conduct and Ethics, our employee handbooks, standalone corporate policies and annual training on each of these issues.

Hotline and our internal dispute resolution process allow us to quickly respond to employee concerns to support our efforts to maintain a harmonious workplace.

We have zero tolerance for human rights abuses, including the use of child, forced or compulsory labor.

• We respect our employees’ rights of association and strive to work cooperatively with the unions that represent our workforce.

• We gather and integrate feedback from team members by deploying surveys, suggestion boxes, roundtable meetings, brainstorming sessions and an open-door policy that encourages team members to freely share ideas.

We encourage our team members to participate in the problem-solving process through a framework referred to as worker participation and consultation.

More than half of our team members offer feedback voluntarily each month through this formal program.

Our second annual employee engagement survey, conducted in 2024, yielded a 61% response rate and provided us with important insights into how we can enhance the employee experience.

• We strive to provide competitive compensation packages and to reward high performers.

Our annual incentive plan provides an additional payment to our exempt employees based on achievement of company metrics and individual performance.

We reward innovation among our employees through an annual competition in which team members who have been the impetus for improvements that led to cost savings or greater efficiency receive cash awards.

• We offer our team members and their families a range of benefits, including medical, dental and vision insurance, prescription drug plans, retirement savings, paid vacation and sick time, paid leave, wellness and mental health programs, employee assistance services and other resources to support their health and wellness.

Our employee discount program offers discounts and savings in more than 25 categories, including electronics, food and entertainment.

Benefits are available to all full-time team members but may vary because of geographic location or collective bargaining agreements.

• We emphasize our team members’ professional development.

Tuition assistance and reimbursement is available to team members for a wide range of educational needs, from undergraduate and graduate degrees to GEDs and English language learning.

We offer instructor-led training programs on our industry and our business to promote and support the development of the next generation of supervisors and managers.

All team members have access to a digital learning platform, offering hundreds of courses with topics ranging from food safety to leadership development.

We also extend educational opportunities to team members’ dependents:

in 2024, the Smithfield Scholarship Program awarded nearly $800,000 in college scholarships to 126 dependents of team members at 15 schools across eight states.

• Our apprenticeship program, now in its fifth year, provides apprenticeship opportunities to internal and external candidates, high school graduates and military veterans, with the goal of developing the next generation of experienced tradespeople in our industry.

Apprentices receive mentorship, classroom learning and mechanics training while earning an associate degree and journeyman certification.

Participants are offered free college tuition, salary, certifications and benefits.

Currently, 91 U.S.

team members across 22 production facilities are active in the program.

• We want our team members to be proud of their part in combating food insecurity and provide opportunities for them to participate in community events benefiting those who are un-housed or at-risk, as well as veterans and their families and first responders.

Workplace Safety

The safety of our team members is paramount, and safety is embedded into our culture.

Safety training starts on Day 1 and continues throughout employment.

We require strict adherence to our rigorous health and safety policies from every team member and visitor at our facilities.

We practice a “stop work authority” policy, which empowers all our team members to halt production, without fear of retribution, if they believe something is unsafe.

We have implemented our Smithfield Injury Prevention System (“SIPS”), a comprehensive management system that outlines our safety and health policy requirements and includes rigorous validation of the management process.

This validation process promotes compliance with SIPS, safeguarding team members and visitors at our facilities.

This comprehensive safety program has enabled Smithfield to obtain an International Standards Organization (“ISO”) certification.

Adherence to local, state and federal regulatory compliance is critical for protecting our team, visitors and assets.

SIPS is designed to provide the guidance needed to comply with regulatory standards, prevent injuries, manage risks and promote continuous improvement throughout our business.

Performance is measured through various metrics, including internal improvement goals and external benchmarks, such as the annual U.S.

Bureau of Labor Statistics Report.

Intellectual Property

We rely on a combination of intellectual property laws, internal procedures and policies and contractual provisions to protect our intellectual property and proprietary rights.

We own and use numerous retail and foodservice brands, which are registered trademarks or are otherwise protected under applicable intellectual property laws, including, for example:

Smithfield, Eckrich, Farmland, Armour, Farmer John, Kretschmar, John Morrell, Cook’s, Gwaltney, Carando, Margherita, Curly’s and Smithfield Culinary.

Altosano sells branded products in Mexico under the Altosano brand.

We pursue the registration of certain of our trademarks in the U.S.

and in certain locations outside the U.S.

to protect our brand names, products, and services around the world.

Trademark registrations can generally be renewed as long as the trademarks are in use.

In December 2012, we entered into a license agreement with Nathan’s Famous.

The agreement expires in March 2032.

The agreement provides us with the exclusive right to:

(1) manufacture, distribute, market and sell “Nathan’s Famous” branded hot dogs, sausages and corned beef and certain other products within the U.S., Canada and Sam’s Clubs in Mexico;

and (2) manufacture and distribute “Nathan’s Famous” branded hot dog and sausage products in bulk for use in the food service industry.

We believe that registered and licensed trademarks have been important to the success of our branded fresh pork and packaged meats products.

We consider these marks and the accompanying goodwill and customer recognition valuable and material to our business.

Our brands are among the leaders across several of the largest packaged meats product categories in the U.S.

In our hog production operations, we use genetic lines of breeding stock that we own, which are considered trade secrets, as well as genetic lines that we license from third parties.

We also sublicense rights to some of our strategic hog production partners.

Sustainability

Smithfield was an early mover in sustainability.

Over two decades ago, we published our first sustainability report and announced a sustainability framework.

Our sustainability strategy continues to evolve.

The overarching objective is to show that we are making food responsibly – that we manage and reduce our environmental impacts, that we care for our animals, that we maintain a safe work environment, and that we make good, safe, nutritious and affordable food.

We look at sustainability in relation to the value it creates for our company and key stakeholders such as our shareholders and customers.

That value ranges from financial benefits like cost savings and innovation to goodwill created with our customers, team members and communities.

Most recently, we emphasized the enhancement of our governance principles and management practices as well as the transition of many of our targets and commitments to better reflect optimizations in our operational footprint, performance calculation methodologies and business objectives.

We continue to reference standards and best practices outlined by globally recognized reporting frameworks including the Global Reporting Initiative, the Sustainability Accounting Standards Board Standards under the International Financial Reporting Standards and the United Nations Sustainable Development Goals to inform our strategy, and are guided by the sustainability priorities identified with input from key stakeholders as well as internal monitoring and analysis of sustainability trends, research and regulations.

We focus on measurable progress year after year, guided by authentic practices and a culture of continuous improvement.

Respect for our animals, people, the environment and communities is at the core of how we operate.

Since our inception, we have been committed to providing good food and dedicated to animal care, community support, employee safety, environmental stewardship and food safety and quality programs.

More than 20 years ago, we started to develop a comprehensive animal care management system on our farms.

We were also an early industry mover in group housing for confirmed pregnant sows on company-owned farms.

To reduce our impact on the environment, we have invested in biogas joint ventures that capture and utilize methane produced on certain company-owned and contract farms as a renewable source of energy.

We hold a one-third interest in Monarch Bio Energy, LLC (“Monarch”), a joint venture that currently operates renewable natural gas (“RNG”), projects at nine of our company-owned farms in Missouri.

In 2022, TPG Rise Climate invested in Monarch, helping us to further scale the business.

We also hold a 50% interest in Align RNG, LLC (“Align”), a joint venture that is developing RNG projects on six of our company-owned farms and contract farms in North Carolina and Virginia.

The development and support of the communities where our employees live and work is a core value and component of our sustainability program.

Over the last ten years, we have contributed more than $320 million in cash and in-kind donations to fight hunger, advance education and support the vitality of our local communities.

Quality Assurance and Food Safety

Producing safe, wholesome products for our customers and ultimate consumers is our focus, and we operate under programs and policies that promote regulatory compliance and food safety and quality at every step of our value chain.

We are subject to extensive food safety regulation, including the Federal Meat Inspection Act of 1906, the U.S.

Packers and Stockyards Act of 1921, the Food, Drug and Cosmetic Act of 1938, the Nutrition Labeling and Education Act of 1990, the USDA Pathogen Reduction:

Hazard Analysis and Critical Control Point Systems Rule of 1996, the Public Health Security and Bioterrorism Preparedness & Response Act of 2002, the Food Safety Modernization Act of 2011 and other rules and regulations promulgated by the U.S.

Food and Drug Administration (“FDA”), the USDA and the sub-branches of these regulatory bodies relating to the production and introduction of human foods to commerce.

These comprehensive and evolving regulatory programs govern, among other things, the manufacturing, composition, ingredients, labeling, packaging and safety of food, including compliance with specific current good manufacturing practice regulations.

Our processing plants are subject to on-site examination, inspection and regulation by the USDA.

The FDA inspects various of our processing plants that produce snacking foods, heparin products, and pet food and treats in the U.S., as well as the production of our feed mills.

We are subject to recalls of our meat products in the event of suspected contamination or adulteration that could constitute a food safety hazard.

We maintain a rigorous program of interventions, inspections and testing to reduce the likelihood of food safety hazards.

Compliance with federal, state and local regulation is costly and time-consuming but remains one of our top priorities.

Regulatory enforcement actions for violations of federal, state and local regulations may include seizure and condemnation of products, product recalls, cease and desist orders, injunctions and monetary, civil or criminal penalties.

Policies and Procedures

Our plants, as well as those of our hog suppliers, have all developed quality programs following the standards set in the USDA’s Process Verified Program (“PVP”).

Our PVP programs monitor aspects of traceability, country of origin and Transport Quality Assurance status of drivers.

In addition, all of our applicable U.S.

facilities are certified to a Global Food Safety Initiative (“GFSI”) benchmarked standard, and all of our food safety plans and policies meet the requirements of a GFSI benchmarked standard.

We also require our ingredient suppliers to undergo annual food safety audits, the majority of which, to our knowledge, meet the requirements of a GFSI benchmarked standard.

To drive adherence to these programs and policies, we employ data analytics to monitor food safety indicators and take corrective action if necessary.

As part of our quality and food safety program, our professionals continuously work with the applicable regulatory agencies, including the USDA’s Food Safety and Inspection Service, the FDA and industry associations on projects aimed at improving food safety and increasing consumer protection to stay informed of emerging issues and improve our quality and food safety program.

We are committed to proper animal care and have a moral and ethical obligation to the humane treatment of animals.

We believe our hogs can and should be raised, transported and processed using procedures that are safe and free from cruelty and neglect.

We are subject to regulations relating to animal treatment, including the Humane Methods of Slaughter Act of 1978 governing our processing plants.

Our processing facilities are subject to regular on-site examination, inspection and regulation by the USDA, and regular internal and third-party audits are conducted throughout the year.

We are also subject to state laws governing the care of livestock that is used in certain meat products sold within those states, including California Proposition 12 and Massachusetts Question 3.

We believe that we are in substantial compliance with all applicable laws and regulations relating to the operations of our facilities.

In addition to complying with federal laws and regulations pertaining to hog production, we are also required to comply with local municipality (city and county), as well as state regulations, including the registration

and licensing of our facilities, enforcement by state health agencies of various state standards and inspection of our facilities.

Policies and Procedures

Our comprehensive, systematic animal care management program to monitor and measure the well-being of our hogs on company-owned and contract farms was developed in consultation with experts in animal behavior and handling.

The program guides the proper and humane care of our animals at every stage of their lives, from gestation to transport to our processing plants.

All farm employees and contract farmers are required to employ the methods and techniques of the management system and verify their compliance.

Our Animal Care Policy underscores our commitments to provide:

• shelter that is designed, maintained and operated to meet the animals’ needs;

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• use of humane methods to euthanize sick or injured animals not responding to care and treatment.

Several years ago, we volunteered to provide input and recommendations to help the National Pork Board enhance its animal care management program for all pork producers.

That program, which includes many of the tenets of our own guidelines, became the National Pork Board's Pork Quality Assurance Plus (PQA Plus®) program.

A pork producer becomes PQA Plus certified only after staff attend training sessions on good production practices (which includes topics such as responsible animal handling, disease prevention, biosecurity, responsible antibiotic use, and appropriate feeding).

Farms entered into the program undergo on-farm site assessments and are subject to random third-party audits.

We obtained certification of all company-owned and contract farms under the PQA Plus program by the end of calendar year 2009.

Smithfield was also one of the founding adopters of the National Pork Board's “We Care” program, which demonstrates that pork producers are accountable to established ethical principles and animal well-being practices.

At all of our slaughter facilities, we also use a systematic approach that includes the following:

an animal welfare and humane handling manual;

a comprehensive training program;

an auditing system with internal verification and third-party audits.

Our plants all have developed quality programs following the standards set in the U.S.

Department of Agriculture's Process Verified Program (PVP), as described elsewhere in this report.

Our PVP programs monitor aspects of traceability, country of origin, PQA Plus® adherence on farms, and Transport Quality Assurance status of drivers.

In January 2007, we announced a voluntary, ten-year program to phase out individual gestation stalls at our company-owned sow farms and replace the gestation stalls with group pens.

We currently estimate the total cost of our transition to group pens to be approximately $360.0 million, including associated maintenance and repairs.

This program represents a significant financial commitment and reflects our desire to be more animal friendly, as well as to address the concerns and needs of our customers.

As of the end of 2015, we had completed conversions to group housing for over 82% of our sows on company-owned farms.

We remain on track to finish conversion to group housing for all sows on company-owned farms by the end of 2017.

Worldwide, we have pledged to convert all company sow farms by 2022.

Our hog production operations in Poland and Romania completed their conversions to group housing facilities a number of years ago, and our joint ventures in Mexico are currently working toward the 2022 goal.

In January 2014, we announced the recommendation that all of our contract sow growers join with us in converting their facilities to group housing systems for pregnant sows.

We asked contract sow growers to convert by 2022 and offered a sliding scale of incentives to accelerate that timetable.

Growers who commit to convert to group housing will receive contract extensions upon completion of the conversion.

The following table shows the approximate number of our employees and the approximate number of employees covered by collective bargaining agreements or that are members of labor unions in each segment, as of January 3, 2016 :

Employees Covered by Collective Bargaining Agreements (1)

Fresh Pork and Packaged Meats (2)

International

Hog Production

——————————————

Includes employees that are members of labor unions.

Employees are shared across both segments.

Approximately 2,000 employees are covered by collective bargaining agreements that expire in 2016 .

Collective bargaining agreements covering other employees expire over periods throughout the next several years.

We believe that our relationship with our employees is satisfactory.

FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS

See Note 15 — Reportable Segments in “Item 8.

Financial Statements and Supplementary Data” for financial information about geographic areas.

See “Item 1A.

Risk Factors” for a discussion of the risks associated with our international sales and operations.

AVAILABLE INFORMATION

Our website address is www.smithfieldfoods.com .

The information on our website is not part of this annual report.

Our annual report on Form 10-K, transition report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports are available free of charge through our website as soon as reasonably practicable after filing or furnishing the material to the SEC.

You may read and copy documents we file at the SEC’s Public Reference Room at 100 F Street, N.E., Washington D.C.

Please call the SEC at 1-800-SEC-0330 for information on the public reference room.

The SEC maintains a website that contains transition, annual, quarterly and current reports and other information that issuers and voluntary reporting companies, like us, file electronically with the SEC.

The SEC’s website is www.sec.gov.

Biosecurity, or procedures to prevent the spread of disease to our farms, is a critical element of our program to safeguard the health and well-being of our animals.

Our standard operating procedure covers the animal production process at individual farms, as well as the movement of vehicles, animals, personnel and equipment between farms.

For example, employees and visitors must “shower in” and change into clean clothing before entering all sow farms and must also “shower out” prior to leaving.

In addition, equipment and supplies delivered to sow farms, as well as vehicles, must be disinfected prior to being allowed inside the farm complex.

Since 2009, all company-owned and contract farms have been certified by the National Pork Board’s Pork Quality Assurance Plus (“PQA Plus®”) program that are conducted every three years.

Our company-owned and contract farms undergo on-farm site assessments every other year and are subject to random third-party audits.

In December 2017, we completed a 10-year program to phase out individual gestation stalls at our company-owned sow farms and replace the gestation stalls with group pens for all pregnant sows at our U.S.

company-owned farms.

We offered incentives to contract sow growers to convert to group housing and Altosano has also completed its conversion to group housing facilities for our Mexican hog production operations.

Other Regulation

In addition to the various laws and regulations described above related to quality and food safety and animal care, we are subject to various laws and regulations administered by federal, state and other government entities in the U.S.

and internationally, governing, among other things, environmental protection, worker safety, and storage and transportation of our products, including governmental regulations issued by the U.S.

Environmental Protection Agency (“EPA”), U.S.

Occupational Safety and Health Administration (“OSHA”), the Center for Disease Control and the state and local regulatory authorities relating to handling and discharge of waste water, storm water, air emissions, treatment, storage and disposal of agricultural and food processing wastes, handling of hazardous substances, remediation of contaminated soil, surface water and groundwater, the use and maintenance of refrigeration systems, including ammonia-based chillers, noise, odor and dust management, the operation of mechanized processing equipment and other operations.

Hog production facilities generate significant quantities of manure, which must be managed properly to protect public health and the environment.

We track the best technologies available and economically feasible for the management of swine manure, which require permits under state law and, in some instances, federal law.

These permits impose standards and conditions on the design and operation of the systems to protect public health and the

environment and can also impose nutrient management planning requirements depending on the type of system utilized.

In addition, our hog production facilities have been designed to meet or exceed all applicable zoning and other government regulations.

New or more stringent environmental laws or regulations that impose additional requirements on our operations or on us could increase the cost of doing business for us.

For more information regarding environmental regulation of our operations, see “Risk Factors—Risks Relating to Government Regulations—Governmental authorities may take further action restricting our ability to produce and/or sell livestock or adopt new regulations impacting our production or processing operations, which could adversely affect our business.”

We follow a number of other policies and protocols to reduce the impact of our hog production operations on the environment, including:

• the employment of environmental management systems;

• ongoing employee training regarding environmental controls;

• walk-around inspections at all sites by trained personnel;

• formal emergency response plans that are regularly updated;

• collaboration with manufacturers regarding testing and developing new equipment.

Our Mexican operations also are subject to regulation by Mexican environmental authorities.

The Mexican federal, state and local authorities may, from time to time, adopt revisions to environmental rules and regulations, and/or changes in the terms and conditions of our environmental permits, with which we must comply.

Our Mexican processing plants are also subject to on-site examination, inspection and regulation by Mexican governmental agencies that perform functions similar to those performed by the USDA and the FDA.

We believe that we are in substantial compliance with all applicable laws and regulations relating to the operations of our facilities.

For more information regarding our Mexican operations, see “Item 1A.

Risk Factors—Risks Relating to Our Business and Operations—We are subject to risks associated with our international sales, including disruptions to the worldwide economy due to changes in U.S.

trade policy.”

It is our policy to comply with all applicable law in the jurisdictions in which we do business.

We believe that we are in substantial compliance with applicable laws and regulations.

We use internationally recognized management systems to manage many of our regulatory and compliance programs including, but not limited to, the ISO, 14001:2004 standard to manage and optimize environmental performance.

We were the first U.S.

livestock and major international meat processor in industry to achieve ISO 14001:2004 certification for our hog production and processing facilities.

Availability of Securities and Exchange Commission (“SEC”) and Corporate Governance Documents

The Company makes available its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 on its website at investors.smithfieldfoods.com.

These reports are accessible under the caption, “Investors – SEC Filings” on the Company’s website and are available as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

These filings are also available on the SEC’s website at www.sec.gov.

The documents are available in print, free of charge, to any shareholder who requests them.

Cautionary Statements Relevant to Forward-Looking Information

This Annual Report on Form 10-K and our other publicly available documents contain forward-looking statements within the meaning of the safe harbor provisions of the U.S.

Private Securities Litigation Reform Act of 1995 about us and our industry that involve substantial risks and uncertainties.

All statements other than statements of historical facts contained in this Annual Report on Form 10-K, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management, and expected market

growth, are forward-looking statements.

In some cases, you can identify forward-looking statements because they contain words, such as “may,” “might,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “goal,” “objective,” “seeks,” “likely” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions.

Forward-looking statements contained in this Annual Report on Form 10-K include, but are not limited to, statements about:

• our ability to capture synergies between our Packaged Meats and Fresh Pork segments;

• our ability to execute on our strategy to optimize the size of our hog production operations;

• our ability to anticipate and meet consumer trends and interests through product innovation;

• the size of our addressable markets, market share and market trends, including our ability to drive organic growth in our business through our Packaged Meats and Fresh Pork segments;

• anticipated trends, developments and challenges in our industry, business and the highly competitive markets in which we operate;

• our ability to mitigate higher input costs through productivity improvements in our operations (including analytics and task automation), various procurement strategies and the use of derivative instruments;

• our dependence on third-party suppliers and our ability to mitigate any disruption or inefficiency in our supply chain and/or operations;

• our expectations regarding our hog production transformation strategy and our ability to achieve segment production targets;

• fluctuations in our quarterly results of operations due to the seasonal nature of our business;

• our ability to attract and retain employees and maintain our corporate culture;

• our ability to prevent cyberattacks, other cyber-incidents, security breaches or other disruptions of our information technology systems;

• our ability to defend litigation brought against us successfully and the sufficiency of our accruals for related contingent losses;

• compliance with laws and regulations, including environmental, cybersecurity and tax laws and regulations, that currently apply or may become applicable to our business both in the United States and Mexico and our expectations regarding various laws and restrictions that relate to our business;

• our ability to capitalize on export markets;

• our ability to execute on acquisitions, joint ventures and divestitures;

• legal, regulatory, or market measures to address climate change and our ability to achieve our climate-related goals and strategies;

• future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements;

• the sufficiency of our cash and cash equivalents and the availability of our committed credit facilities to meet our liquidity needs;

• our ability to achieve our financial and operational targets;

• our ability to maintain our investment grade ratings;

• our expectations regarding expenses, such as stock-based compensation expenses;

• fluctuations in the values of our open derivative contracts and pension obligations and related assets;

• impairment in the carrying value of our goodwill or intangible assets;

• our ability to achieve or maintain our targeted Ratio of Net Debt to Adjusted EBITDA and minimum liquidity levels;

• our dividend policy and our ability to pay dividends.

We cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all.

The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors, including those described in the section titled “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

Moreover, new risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report on Form 10-K.

The forward-looking statements made in this Annual Report on Form 10-K relate only to events as of the date on which the statements are made.

We undertake no obligation to update any forward-looking statements made in this Annual Report on Form 10-K to reflect events or circumstances after the date of this Annual Report on Form 10-K or to reflect new information or the occurrence of unanticipated events, except as required by law.

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 1. Business