What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-25 compared with 2016-03-29 · 1315 added, 1335 removed, 371 unchanged (88% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

Report of Independent Registered Public Accounting Firms on Consolidated Financial Statements

Consolidated Statements of Income - for the Year Ended January 3, 2016 and December 28, 2014 (Successor), September 27, 2013 to December 29, 2013 (Successor);

April 29, 2013 to September 26, 2013 (Predecessor) and for the Twelve Months Ended April 28, 2013 (Predecessor)

Consolidated Statements of Comprehensive Income - for the Year Ended January 3, 2016 and December 28, 2014 (Successor), September 27, 2013 to December 29, 2013 (Successor);

April 29, 2013 to September 26, 2013 (Predecessor) and for the Twelve Months Ended April 28, 2013 (Predecessor)

Consolidated Balance Sheets as of January 3, 2016 and December 28, 2014

Consolidated Statements of Cash Flows - for the Year Ended January 3, 2016 and December 28, 2014 (Successor);

September 27, 2013 to December 29, 2013 (Successor);

April 29, 2013 to September 26, 2013 (Predecessor) and for the Twelve Months Ended April 28, 2013 (Predecessor)

Consolidated Statements of Shareholder's Equity - for the Year Ended January 3, 2016 and December 28, 2014 (Successor);

September 27, 2013 to December 29, 2013 (Successor);

April 29, 2013 to September 26, 2013 (Predecessor) and for the Twelve Months Ended April 28, 2013 (Predecessor)

Notes to Consolidated Financial Statements

Schedule II—Valuation and Qualifying Accounts

REPORT OF DELOITTE & TOUCHE LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors and Shareholder of Smithfield Foods, Inc.

Smithfield, Virginia

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Smithfield Foods, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Smithfield Foods, Inc.

and subsidiaries (the "Company") as of January 3, 2016 and December 28, 2014 , and the related consolidated statements of income, comprehensive income, shareholder's equity, and cash flows for the year ended January 3, 2016 and December 28, 2014 and the periods from September 27, 2013 to December 29, 2013 (Successor) and from April 29, 2013 to September 26, 2013 (Predecessor).

Our audits also included the financial statement schedule listed in the Index at Item 15.

These financial statements and financial statement schedule are the responsibility of the Company's management.

Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

and subsidiaries (the Company) as of December 29, 2024 and December 31, 2023, the related consolidated statements of income, comprehensive income, shareholder’s equity and cash flows for each of the three years in the period ended December 29, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 29, 2024 and December 31, 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 29, 2024, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Smithfield Foods Inc.

and subsidiaries as of January 3, 2016 and December 28, 2014 , and the results of their operations and their cash flows for the year ended January 3, 2016 and December 28, 2014 and the periods from September 27, 2013 to December 29, 2013 (Successor) and from April 29, 2013 to September 26, 2013 (Predecessor), in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 2 to the financial statements, on September 26, 2013, WH Group Limited (WH Group), formerly Shuanghui International Holdings Limited, acquired all of the outstanding shares of the Company and WH Group's cost of acquiring the Company has been pushed-down to establish a new accounting basis for the Company.

/s/ D ELOITTE & T OUCHE LLP

March 29, 2016

REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors and Shareholder of Smithfield Foods, Inc.

Smithfield, Virginia

We have audited the accompanying consolidated balance sheets of Smithfield Foods, Inc.

and subsidiaries as of April 28, 2013 and April 29, 2012, and the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended April 28, 2013.

Our audits also included the financial statement schedule listed in the Index at Item 15.

These financial statements and schedule are the responsibility of the Company's management.

Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

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

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

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

We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Smithfield Foods, Inc.

and subsidiaries at April 28, 2013 and April 29, 2012, and the consolidated results of their operations and their cash flows for each of the three years in the period ended April 28, 2013, in conformity with U.S.

generally accepted accounting principles.

Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ E RNST & Y OUNG LLP

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

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

Pension Accounting

Description of the Matter At December 31, 2024, the Company’s defined benefit pension obligation was $1.80 billion, offset by the fair value of plan assets totaling $1.50 billion.

As discussed in Notes 1 and 14 of the consolidated financial statements, the Company, with the assistance of a third-party actuary, measures the defined benefit pension obligation at December 31, or upon a remeasurement event, using actuarial assumptions including discount rates.

Auditing the defined benefit pension obligation was complex due to the significant estimation uncertainty in evaluating the discount rate used in the Company’s measurement process.

How We Addressed the Matter in Our Audit To test the Company's accounting for the defined benefit pension obligation, we performed audit procedures that included, among others, evaluating the discount rate assumption with the assistance of our actuarial specialists.

For example, we compared the discount rate used by management to historical trends, independently calculated an expected range for the discount rate based on the maturity and duration of the projected benefit payments, and compared the projected benefit payments to the historical benefits paid.

Contingent Liabilities

Description of the Matter As described in Note 18 of the consolidated financial statements, the Company is involved in antitrust price-fixing litigation with a number of individual parties.

The Company recognizes a contingent liability, including future defense costs, when an assessment of the risk of loss is probable and can be reasonably estimated.

For the antitrust price-fixing litigation, where a settlement agreement has not yet been reached with the claimant, judgment is required to determine the probability and estimate of the loss.

Auditing management’s measurement and disclosure of the amount of contingent liabilities for antitrust price-fixing litigation was subjective and required more complex auditor judgment.

For instance, auditing management's judgments related to the outcome of litigation with claimants where the matter has not yet been tried in court or where the Company has not otherwise agreed to a settlement with claimants was more complex due to the judgment applied in evaluating the likelihood of the outcomes.

How We Addressed the Matter in Our Audit To test the Company's accounting for and disclosure of ongoing antitrust price-fixing litigation, our audit procedures included, among others, reviewing the initial complaint, testing the Company's evaluation of the probability of outcome through inspection of responses to inquiry letters to both internal and external counsel, evaluating relevant events up to the audit report date, and by obtaining written representations from executives of the Company.

When applicable, we also compared the Company's evaluation of these matters with its relevant history for similar legal contingencies that have been settled or otherwise resolved by obtaining and evaluating settlement agreements.

In addition, we evaluated the adequacy of the Company’s financial statement disclosures.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2017.

Richmond, Virginia

June 18, 2013, except for Note 15, as to which the date is March 25, 2015

March 25, 2025

SMITHFIELD FOODS, INC.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF INCOME

(in millions)

Twelve Months Ended

(in millions, except for share and per share data)

Twelve Months Ended

January 3, 2016

2024 December 31,

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

2023 January 1,

Sales $ 14,142 $ 14,640 $ 16,199

Cost of sales 12,244 13,751 14,704

Gross profit 1,897 889 1,495

Selling, general and administrative expenses 840 1,050 807

Merger related costs

Operating gains

( 60 ) ( 105 ) ( 429 )

Operating profit (loss)

1,118 ( 56 ) 1,117

Interest expense, net

Non-operating gains ( 9 ) ( 3 ) ( 18 )

Income (loss) from continuing operations before income taxes 1,061 ( 129 ) 1,047

Income tax expense (benefit) 271 ( 41 ) 231

(Income) loss from equity method investments ( 8 ) 46 6

Operating profit

Interest expense

Non-operating (gain) loss

Income before income taxes

Income tax expense

Net income (loss) from continuing operations 798 ( 133 ) 811

Net income from continuing operations attributable to noncontrolling interests

Net income (loss) from continuing operations attributable to Smithfield

783 ( 138 ) 800

Income from discontinued operations before income taxes 184 185 97

Income tax expense from discontinued operations

Net income from discontinued operations

Net income from discontinued operations attributable to noncontrolling interests

Net income from discontinued operations attributable to Smithfield

Net income 970 23 881

Net income attributable to noncontrolling interests

Net income attributable to Smithfield $ 953 $ 17 $ 870

Net income (loss) per common share attributable to Smithfield:

Basic and diluted:

Continuing operations $ 2.06 $ ( 0.36 ) $ 2.10

Discontinued operations 0.45 0.41 0.18

Total $ 2.51 $ 0.05 $ 2.29

Weighted average shares outstanding

Basic 380,069,232 380,069,232 380,069,232

Diluted 380,069,232 380,069,232 380,069,232

See Notes to Consolidated Financial Statements

4 unchanged sentences

Twelve Months Ended

January 3, 2016

2024 December 31,

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

Other comprehensive income (loss):

2023 January 1,

Net income $ 970 $ 23 $ 881

Other comprehensive income (loss), net of tax:

Foreign currency translation ( 53 ) 219 ( 59 )

Translation gain (loss)

Translation losses reclassified to non-operating (gain) loss

Tax benefit (expense)

Pension accounting ( 44 ) 16 44

Net actuarial gains (losses)

Prior Service Cost

Reclassification of losses into net income

Tax benefit (expense)

Hedge accounting ( 33 ) ( 1 ) ( 27 )

Net derivative gains (losses)

Reclassification of net (gains) losses into net income

Tax benefit (expense)

Total other comprehensive income (loss)

Total comprehensive income

( 130 ) 234 ( 41 )

Comprehensive income 839 256 839

Comprehensive income (loss) attributable to noncontrolling interest ( 19 ) 31 22

Comprehensive income attributable to Smithfield $ 858 $ 226 $ 818

See Notes to Consolidated Financial Statements

3 unchanged sentences

(in millions, except share data)

2024 December 31,

Current assets:

1 unchanged sentence

Accounts receivable, net 558 577

Inventories, net 2,412 2,536

Current assets of discontinued operations — 958

Prepaid expenses and other current assets 290 163

1 unchanged sentence

Property, plant and equipment, net 3,176 3,347

Goodwill 1,613 1,627

Intangible assets, net 1,266 1,274

LIABILITIES AND SHAREHOLDER'S EQUITY

Operating lease assets 335 381

Equity method investments 202 191

Long-term assets of discontinued operations — 1,347

Other assets 260 230

Total assets $ 11,054 $ 13,317

LIABILITIES AND EQUITY

Current liabilities:

Current portion of long-term debt and capital lease obligations

Accrued expenses and other current liabilities

Accounts payable 777 789

Current portion of long-term debt and finance lease obligations 3 27

Current portion of operating lease obligations 56 63

Current liabilities of discontinued operations — 406

Accrued expenses and other current liabilities 871 1,166

Total current liabilities 1,706 2,450

Long-term debt and capital lease obligations

Long-term debt and finance lease obligations 1,999 2,006

Long-term operating lease obligations 286 325

Deferred income taxes, net 518 474

Net long-term pension liability

Net long-term pension obligation 279 255

Long-term liabilities of discontinued operations — 86

Other liabilities 208 235

Redeemable noncontrolling interests 225 246

Commitments and contingencies

Commitments and contingencies (Note 18)

Shareholder’s equity:

Common stock, no par value, 1,000 authorized shares;

1,000 issued and outstanding

Preferred stock, no par value, 100,000,000 shares authorized, no shares issued and outstanding

Common stock, no par value, 5,000,000,000 shares authorized, 380,069,232 issued and outstanding

Additional paid-in capital 3,102 4,152

3 unchanged sentences

Noncontrolling interests — —

Total liabilities and shareholder's equity

Total equity 5,834 7,241

Total liabilities and equity $ 11,054 $ 13,317

See Notes to Consolidated Financial Statements

4 unchanged sentences

Twelve Months Ended

January 3, 2016

2024 December 31,

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

2023 January 1,

Cash flows from operating activities:

Adjustments to reconcile net cash flows from operating activities:

(Income) loss from equity method investments

Net income $ 970 $ 23 $ 881

Net income from discontinued operations ( 172 ) ( 155 ) ( 70 )

Net income (loss) from continuing operations $ 798 $ ( 133 ) $ 811

Adjustments to reconcile net income from continuing operations to net cash flows from operating activities of continuing operations:

Depreciation and amortization 339 427 440

Impact of inventory fair value step-up on cost of sales

Deferred income taxes 91 ( 130 ) 2

Impairment of assets 1 1 40

Pension expense

Pension contributions

Changes in operating assets and liabilities and other, net:

Accounts receivable

Prepaid expenses and other current assets

Accounts payable

Accrued expenses and other current liabilities

Net cash flows from operating activities

Gain on sale/dilution of equity method investments — — ( 56 )

(Income) loss from equity method investments ( 8 ) 46 6

(Gain) loss on sale of businesses and other assets

15 11 ( 414 )

(Gain) loss on sale of property, plant and equipment

( 35 ) ( 85 ) 1

Change in accounts receivable ( 6 ) 157 ( 33 )

Change in inventories 138 469 ( 307 )

Change in prepaid expenses and other current assets ( 88 ) 57 ( 23 )

Change in accounts payable ( 19 ) ( 215 ) 121

Change in accrued expenses and other current liabilities ( 261 ) 80 ( 24 )

Other ( 49 ) 2 ( 42 )

Net cash flows from operating activities of continuing operations 916 688 521

Cash flows from investing activities:

Acquisition of Smithfield Foods, Inc.

Proceeds from sale of equity interest in CFG

Capital expenditures ( 350 ) ( 353 ) ( 338 )

Business acquisition, net of cash acquired

Net (expenditures) proceeds from breeding stock transactions

Construction of distribution center pending sale-leaseback

Proceeds from sale-leaseback of distribution center

Proceeds from sale of property, plant and equipment

Advance note and other

Net cash flows from investing activities

See Notes to Consolidated Financial Statements

SMITHFIELD FOODS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)

(in millions)

Twelve Months Ended

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

Net expenditures from breeding stock transactions ( 43 ) ( 48 ) ( 1 )

Investments in partnerships and other assets ( 13 ) ( 27 ) ( 22 )

Proceeds from the sale of investments — — 21

Business dispositions — 13 606

Proceeds from sale of property, plant and equipment and other assets 99 219 8

Net cash flows from (used in) investing activities of continuing operations

( 298 ) ( 194 ) 274

Cash flows from financing activities:

Net proceeds from equity contributions

Proceeds from the issuance of long-term debt

Principal payments on long-term debt and capital lease obligations

Proceeds from Securitization Facility

Payments on Securitization Facility

Net borrowings (repayments) on revolving credit facilities and notes payables

Repurchase of common stock

Payment of dividends ( 288 ) ( 323 ) ( 496 )

Debt issuance costs and other

Net cash flows from financing activities

Effect of foreign exchange rate changes on cash

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Repayments to Securitization Facility ( 14 ) ( 226 ) ( 785 )

Proceeds from Securitization Facility 14 226 785

Purchase of redeemable noncontrolling interest — ( 15 ) —

Net repayments to revolving credit facilities ( 8 ) ( 7 ) ( 13 )

Twelve Months Ended

2024 December 31,

2023 January 1,

Principal payments on long-term debt and finance lease obligations ( 24 ) ( 4 ) ( 3 )

Payment of deferred purchase consideration for acquisition

( 2 ) ( 2 ) ( 55 )

Other 1 ( 2 ) —

Net cash flows used in financing activities of continuing operations

( 321 ) ( 353 ) ( 567 )

Effect of foreign exchange rate changes on cash from continuing operations ( 7 ) 3 8

Cash flows from discontinued operations

Net cash flows from (used in) operating activities of discontinued operations

221 346 ( 4 )

Net cash flows from (used in) investing activities of discontinued operations

( 171 ) ( 128 ) ( 81 )

Net cash flows from (used in) financing activities of discontinued operations

( 143 ) ( 180 ) 90

Effect of foreign exchange rate changes on cash from discontinued operations ( 5 ) — 4

Net change in cash and cash equivalents of discontinued operations ( 98 ) 38 8

Net change in cash, cash equivalents and restricted cash 192 181 245

Cash, cash equivalents and restricted cash at beginning of period (including discontinued operations) 751 570 325

Cash, cash equivalents and restricted cash at end of period (including discontinued operations) 943 751 570

Cash, cash equivalents and restricted cash attributable discontinued operations at end of period — ( 64 ) ( 23 )

Cash, cash equivalents and restricted cash at end of period $ 943 $ 687 $ 547

See Notes to Consolidated Financial Statements

3 unchanged sentences

(in millions)

Common Stock (Shares)

Common Stock (Amount)

Additional Paid-in Capital

Stock Held in Trust

Retained Earnings

Accumulated Other Comprehensive Income (Loss)

Total Shareholder's Equity

Noncontrolling Interests

Balance, April 29, 2012

Common stock repurchased

Issuance of common stock

Stock compensation expense

Purchase of stock for trust

Comprehensive income:

Other comprehensive loss, net of tax

Balance, April 28, 2013

Issuance of common stock

Stock compensation expense

Purchase of stock for trust

Comprehensive

Shareholder’s

Non-controlling

Interests Total

Balance, January 2, 2022 $ 4,190 $ 3,521 $ ( 656 ) $ 7,054 $ — $ 7,054

Dividends — ( 496 ) — ( 496 ) — ( 496 )

Adjustment to redeemable noncontrolling interests ( 2 ) — — ( 2 ) — ( 2 )

Comprehensive income:

Net income — 870 — 870 — 870

Other comprehensive loss, net of tax — — ( 52 ) ( 52 ) — ( 52 )

Balance, September 26, 2013

Balance, September 27, 2013

Balance, January 1, 2023 4,188 3,894 ( 708 ) 7,374 — 7,374

Dividends — ( 323 ) — ( 323 ) — ( 323 )

Adjustment to redeemable noncontrolling interests ( 36 ) — — ( 36 ) — ( 36 )

Redemption of redeemable noncontrolling interest — — — — — —

Comprehensive income:

Net income — 17 — 17 — 17

Other comprehensive income, net of tax — — 208 208 — 208

Balance, December 31, 2023 4,152 3,588 ( 500 ) 7,241 — 7,241

See Notes to Consolidated Financial Statements

SMITHFIELD FOODS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY - (Continued)

(in millions)

Additional Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Income (Loss)

Total Shareholder's Equity

Noncontrolling Interests

Balance, December 29, 2013

Stock compensation expense

Dividends — ( 287 ) — ( 287 ) — ( 287 )

Adjustment to redeemable noncontrolling interests ( 1 ) — — ( 1 ) — ( 1 )

European operations carve-out ( 1,125 ) ( 1,071 ) 143 ( 2,054 ) — ( 2,054 )

UGFH merger 77 — — 77 — 77

Other ( 1 ) — — ( 1 ) — ( 1 )

Comprehensive income:

Net income — 953 — 953 — 953

Other comprehensive loss, net of tax — — ( 95 ) ( 95 ) — ( 95 )

Balance, December 29, 2024 $ 3,102 $ 3,184 $ ( 452 ) $ 5,834 $ — $ 5,834

Stock compensation expense

Comprehensive income:

Net income (loss)

Other comprehensive loss, net of tax

Balance, January 3, 2016

See Notes to Consolidated Financial Statements

3 unchanged sentences

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Smithfield Foods, Inc., together with its subsidiaries ("Smithfield," "the Company," "we," "us" or "our"), is the largest hog producer and pork processor in the world.

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

We conduct our operations through five reportable segments:

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

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.

See Note 2 — Merger and Acquisitions for further information on the Merger.

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.”) and markets them both domestically and internationally.

We operate in a cyclical industry and our results are significantly affected by fluctuations in commodity prices for meat, livestock (primarily hogs) and grains.

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

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and with the instructions to Form 10-K and Regulation S-X.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S.

(“GAAP”), which require us to make estimates and use assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

It is possible that actual results could differ materially from those estimates.

The information reflects all normal recurring adjustments which we believe are necessary to present fairly the financial position and results of operations for all periods included.

The Merger was accounted for as a business combination using the acquisition method of accounting.

WH Groups's cost of acquiring the Company has been pushed-down to establish a new accounting basis for the Company.

Accordingly, the consolidated financial statements are presented for two periods, Predecessor and Successor, which represent the accounting periods preceding and succeeding the completion of the Merger.

The Predecessor and Successor periods have been separated by a vertical line on the face of the consolidated financial statements to highlight the fact that the financial information for such periods has been prepared under two different historical-cost bases of accounting.

Certain prior year amounts have been reclassified to conform to current year presentation.

Change in Fiscal Year End

On January 16, 2014, the Company elected to change its fiscal year end 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.

For comparative purposes, the Consolidated Statements of Income for the eight months ended December 29, 2013 and December 30, 2012 are presented as follows:

Eight Months Ended

September 27 - December 29, 2013

April 29 - September 26, 2013

December 30, 2012

(in millions)

Cost of sales

Selling, general and administrative expenses

Merger related costs

Loss (income) from equity method investments

Operating profit

Interest expense

Loss on debt extinguishment

Income before income taxes

Income tax expense

Totals and percentages may be affected by rounding.

Certain prior period amounts have been reclassified to conform to the current period presentation.

Our elected fiscal year is the 52-week or 53-week period which ends on the Sunday nearest to December 31.

Fiscal years 2024, 2023 and 2022 each consisted of 52-weeks.

Principles of Consolidation

The consolidated financial statements include the accounts of all wholly owned subsidiaries, as well as all majority owned subsidiaries and other entities for which we have a controlling interest.

Entities that are 50% owned or less are accounted for under the equity method when we have the ability to exercise significant influence.

We use the cost method of accounting for investments in which our ability to exercise significant influence is limited.

The consolidated financial statements include the accounts of all wholly owned subsidiaries, as well as all majority-owned subsidiaries and other entities for which we have a controlling financial interest.

We evaluate contractual, equity and other variable interests in entities that may be deemed variable interest entities (“VIE”).

We consolidate a VIE if we determine that we are the VIE’s primary beneficiary.

A VIE’s primary beneficiary has both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

All intercompany transactions and accounts have been eliminated.

Consolidating the results of operations and financial position of variable interest entities for which we are the primary beneficiary does not have a material effect on sales, net income, or on our financial position for the fiscal periods presented.

Foreign currency denominated assets and liabilities are translated into U.S.

dollars using the exchange rates in effect at the balance sheet date.

Results of operations and cash flows in foreign currencies are translated into U.S.

dollars using the average exchange rate over the course of the year.

The effect of exchange rate fluctuations on the translation of assets and liabilities is included as a component of shareholder's equity in accumulated other comprehensive income (loss) and included in other comprehensive income (loss) for each period.

Gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in selling, general and administrative expenses as incurred.

We recorded net losses on foreign currency transactions of $3.3 million and $4.0 million in 2015 and 2014 , respectively, and net gains of $0.2 million , $0.3 million and $1.1 million in the three months ended December 29, 2013 , the five months ended September 26, 2013 and the twelve months ended April 28, 2013 , respectively.

Our Polish operations have different fiscal period end dates.

As such, we have elected to consolidate the results of these operations on a one-month lag.

We do not believe the impact of reporting the results of these entities on a one-month lag is material to the consolidated financial statements.

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the U.S., which require us to make estimates and use assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

Actual results could differ from those estimates.

The functional currency of our 66 %-owned subsidiary, Granjas Carroll de Mexico, S.

de C.V., (“Altosano”) is the Mexican Peso.

The assets and liabilities of Altosano are translated into U.S.

dollars using the exchange rates in effect at the balance sheet dates.

The income and cash flows of Altosano are translated into U.S.

dollars using the average exchange rates over the course of the year.

The net effect of translating the accounts of Altosano into U.S.

dollars is included as a component of shareholder’s equity in accumulated other comprehensive loss.

Gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are recognized in earnings as incurred and included in selling, general and administrative expenses (“SG&A”) for operating transactions or non-operating gains for non-operating transactions.

Cash and Cash Equivalents

1 unchanged sentence

The majority of our cash is concentrated in demand deposit accounts or money market funds.

The carrying value of cash equivalents approximates market value.

Accounts Receivable

Accounts receivable are recorded net of the allowance for doubtful accounts.

We regularly evaluate the collectibility of our accounts receivable based on a variety of factors, including the length of time the receivables are past due, the financial health of the customer and historical experience.

Based on our evaluation, we record reserves to reduce the related receivables to amounts we reasonably believe are collectible.

Our reserve for uncollectible accounts receivable was $6.6 million and $7.5 million as of January 3, 2016 and December 28, 2014 , respectively.

Inventories consist of the following:

The carrying value of cash and cash equivalents approximates fair value.

Accounts Receivable, Net

Accounts receivable, net is comprised of both receivables from contracts with customers and other receivables.

We monitor the credit risk associated with our accounts receivable and establish an allowance for credit losses expected

to be incurred over the life of the receivable, which is recorded net of this allowance.

We calculate this allowance based on our history of write-offs, future economic conditions, level of past due accounts, the financial health of our customers and historical experience.

Our allowance for credit losses was not material for the periods presented.

Inventories, Net

Inventories, net consist of the following:

2024 December 31,

(in millions)

Fresh and packaged meats $ 1,006 $ 943

Livestock 949 1,036

Grains 208 307

Manufacturing supplies 115 123

Total inventories

Livestock are valued at the lower of the average cost of production or market and further adjusted for changes in the fair value of livestock that are hedged.

Costs include feed, medications, contract grower fees and other production expenses.

Fresh and packaged meats are valued based on USDA and other market prices and adjusted for the cost of further processing.

Maintenance parts 115 104

Inventories, net

$ 2,412 $ 2,536

Inventories are generally valued at the lower of historical average cost or net realizable value.

The cost of livestock includes feed, medications, contract grower fees and other production expenses.

Fresh pork in the U.S.

is valued based on U.S.

Department of Agriculture (“USDA”) published market prices and adjusted for the cost of further processing.

Costs for fresh and packaged meats include meat, labor, supplies and overhead.

Average costing is primarily utilized to account for fresh and packaged meats and grains.

Manufacturing supplies principally consist of ingredients and packaging materials.

We primarily use batch-specific costing to record the cost of inventories sold, which approximates the first-in, first-out method.

Derivative Financial Instruments and Hedging Activities

See Note 4 — Derivative Financial Instruments for our policy.

We record all derivatives as either assets or liabilities at fair value on the balance sheet, with the exception of contracts that qualify for the normal purchase and normal sale scope exception, which are expected to result in physical delivery.

Accounting for changes in the fair value of a derivative depends on whether it qualifies and has been designated as part of a hedging relationship.

For derivatives that qualify and have been designated as hedging instruments for accounting purposes, changes in fair value have no net impact on earnings, to the extent the derivative is considered perfectly effective in achieving offsetting changes in fair value attributable to the risk being hedged, until the hedged item is recognized in earnings (commonly referred to as the “hedge accounting” method).

For derivatives that do not qualify or are not designated as hedging instruments for accounting purposes, changes in fair value are recorded in current period earnings (commonly referred to as the “mark-to-market” method).

We may elect either method of accounting for our derivative portfolio, assuming all the necessary requirements are met.

We have, in the past, availed ourselves of either acceptable method and expect to do so in the future.

We believe all of our derivative instruments represent economic hedges against changes in prices and rates, regardless of their designation for accounting purposes.

When cash flow hedge accounting is applied, derivative gains or losses are recognized as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings.

The initial fair value of hedge components excluded from the assessment of effectiveness is recognized in earnings on a straight-line basis over the life of the hedging instrument and is presented in the same income statement line item as the hedged item.

Any difference between the change in fair value of the hedge components excluded from the assessment of effectiveness and the amounts recognized in earnings is recorded as a component of other comprehensive income (loss).

When fair value hedge accounting is applied, derivative gains and losses are recognized in earnings concurrently with the change in fair value of the hedged item attributable to the risk being hedged.

A portion of our derivatives are exchange traded futures contracts held with brokers, subject to netting arrangements that are enforceable during the ordinary course of business.

Additionally, we have a portfolio of over-the-counter

derivatives that are held by counterparties under netting arrangements found in typical master netting agreements.

These agreements legally allow for net settlement in the event of bankruptcy.

We offset the fair values of derivative assets and liabilities, along with the related cash collateral, that are executed with the same counterparty under these arrangements in the consolidated balance sheets.

The cash flows associated with derivative instruments are reported in net cash flows from operating activities in the consolidated statements of cash flows.

Property, Plant and Equipment, Net

Property, plant and equipment is generally stated at historical cost and depreciated on a straight-line basis over the estimated useful lives of the assets.

Assets held under capital leases are classified in property, plant and equipment, net and depreciated over the lease term.

The depreciation of assets held under capital leases is included in depreciation expense.

The cost of assets held under capital leases was $30.0 million and $28.5 million at January 3, 2016 and December 28, 2014 , respectively.

The assets held under capital leases had accumulated depreciation of $2.4 million and $1.2 million at January 3, 2016 and December 28, 2014 , respectively.

Depreciation expense is included in either cost of sales or selling, general and administrative (SG&A) expenses, as appropriate.

Depreciation expense totaled $226.8 million , $223.7 million , $53.7 million , $104.8 million and $235.3 million in 2015 , 2014 , the three months ended December 29, 2013 , the five months ended September 26, 2013 and the twelve months ended April 28, 2013 , respectively.

During the construction period of significant assets, the associated interest costs are capitalized.

Total interest capitalized was $0.5 million , $1.1 million , $0.4 million , $0.7 million and $4.8 million in 2015 , 2014 , the three months ended December 29, 2013 , the five months ended September 26, 2013 and the twelve months ended April 28, 2013 , respectively.

Property, plant and equipment, net, consists of the following:

(in millions)

Land and improvements

Buildings and improvements

Property, plant and equipment, net, (“PP&E”) consists of the following:

Useful Life December 29,

2024 December 31,

(in Years) (in millions)

Machinery and equipment 5 - 20

Breeding stock

$ 2,823 $ 2,735

Buildings and improvements 15 - 40

Land and improvements 3 +

Computer hardware and software 3 - 15

Breeding stock 2 159 207

Vehicles 2 - 7

Construction in progress 173 225

Property, plant and equipment, gross 5,651 5,753

Accumulated depreciation ( 2,497 ) ( 2,431 )

Finance leases 22 25

Property, plant and equipment, net

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets of businesses acquired.

Intangible assets with finite lives are amortized over their estimated useful lives.

The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to future cash flows.

Goodwill and indefinite-lived intangible assets are tested for impairment annually in the fourth quarter, or sooner if impairment indicators arise.

In the evaluation of goodwill for impairment, we may perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

$ 3,176 $ 3,347

PP&E is generally stated at historical cost and depreciated on a straight-line basis over the estimated useful lives of the assets.

Assets held under finance leases are classified in property, plant and equipment, net and depreciated over the lease term or, in the instance where title transfers to us at the end of the lease term, the estimated useful lives of the assets.

The depreciation of assets held under finance leases is included in depreciation expense.

Depreciation expense is included in either cost of sales or SG&A, as applicable.

Accelerated depreciation of assets resulting from decisions to dispose of assets prior to the end of their previously estimated useful lives is included in cost of sales.

Depreciation expense totaled $ 327 million, $ 395 million and $ 421 million in fiscal years 2024, 2023 and 2022, respectively.

During the construction period of significant assets, the associated interest costs are capitalized.

Capitalized interest was not material for any of the fiscal years presented.

Goodwill represents the excess of the purchase price of a business over the fair value of identifiable net assets.

The changes in goodwill allocated to each of our reportable segments for fiscal years 2024 and 2023 is presented in the following table.

Packaged Meats Fresh Pork Hog Production Other (1)

(in millions)

Balance, January 1, 2023 $ 1,503 $ 34 $ 4 $ 77 $ 1,617

Foreign currency translation — — — $ 10 10

Balance, December 31, 2023 1,503 34 4 87 1,627

Foreign currency translation — — — ( 14 ) ( 14 )

Balance, December 29, 2024 1,503 34 4 73 1,613

__________________

(1) Includes our Mexico and Bioscience operations.

Goodwill for each reporting unit is tested for impairment annually in the fourth quarter, or sooner if impairment indicators arise.

Goodwill is considered to be impaired if the carrying amount of a reporting unit exceeds its fair value, in which case an impairment loss would be recognized in an amount equal to that excess.

We may perform a qualitative assessment to determine if it is more likely than not that the carrying amount of a reporting unit exceeds its fair value.

If it is not, no further analysis is required.

If it is, a prescribed two-step goodwill impairment test is performed to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized for that reporting unit, if any.

The first step in the two-step impairment test is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill.

If it is, a quantitative goodwill impairment test is performed to estimate the fair value of the reporting unit and measure the amount of goodwill impairment loss to be recognized, if any.

The fair value of a reporting unit is estimated by applying valuation multiples and/or estimating future discounted cash flows.

The selection of multiples is dependent upon assumptions regarding future levels of operating performance as well as business trends and prospects, and industry, market and economic conditions.

The selection of multiples is dependent upon assumptions regarding future operating performance as well as business trends and prospects, and industry, market and economic conditions.

When estimating future discounted cash flows, we consider the assumptions that hypothetical marketplace participants would use in estimating future cash flows.

In addition, where applicable, an appropriate discount rate is used, based on an industry-wide average cost of capital or location-specific economic factors.

If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to have a potential impairment and the second step of the impairment test is not necessary.

However, if the carrying amount of a reporting unit exceeds its fair value, the second step is performed to determine if goodwill is impaired and to measure the amount of impairment loss to recognize, if any.

The second step compares the implied fair value of goodwill with the carrying amount of goodwill.

The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination (i.e., the fair value of the reporting unit is allocated to all the assets and liabilities, including any unrecognized intangible assets, as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit).

If the implied fair value of goodwill exceeds the carrying amount, goodwill is not considered impaired.

However, if the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess.

Based on the results of our annual goodwill impairment tests, as of our testing date, no impairment indicators were noted for all the periods presented.

Intangible assets consist of the following:

(in millions)

We consider all these factors to be level 3 inputs, as defined in “Note 16:

Fair Value Measurements.”

Based on the results of our annual goodwill impairment tests, as of our testing date, we have determined that no impairments existed for any of the fiscal years presented.

Intangible Assets, Net

Intangible assets, net consists of the following:

Useful Life December 29,

2024 December 31,

(in Years) (in millions)

Amortized intangible assets:

Customer relations assets

Patents, rights and leasehold interests

Customer relationships 14 - 20

Contractual relationships 17 - 22

Rights and customer lists 5 - 25

Amortized intangible assets, gross 127 127

Accumulated amortization ( 77 ) ( 70 )

1 unchanged sentence

Non-amortized intangible assets:

Trademarks Indefinite 1,216 1,216

Intangible assets, net $ 1,266 $ 1,274

Intangible assets with finite lives are amortized over their estimated useful lives and tested for recoverability when indicators of impairment are present using estimated future undiscounted cash flows related to those assets.

The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to future cash flows.

Amortization expense for intangible assets was $ 8 million in each of fiscal years 2024, 2023 and 2022.

The estimated amortization expense associated with our intangible assets for each of the next five years is as follows:

Year (in millions)

Indefinite-lived trademarks are tested for impairment annually in the fourth quarter, or sooner if impairment indicators arise.

If the carrying amount of our trademarks exceed their estimated fair value, an impairment loss is recognized in an amount equal to that excess.

The fair values of trademarks are calculated using a royalty rate method.

Assumptions about royalty rates are based on the rates at which similar brands and trademarks are licensed in the marketplace.

If the carrying value of our indefinite-lived intangible assets exceeds their fair value, an impairment loss is recognized in an amount equal to that excess.

Intangible assets with finite lives are reviewed for recoverability when indicators of impairment are present using estimated future undiscounted cash flows related to those assets.

We have determined that no impairments of our intangible assets existed for any of the periods presented.

Amortization expense for intangible assets was $7.0 million , $6.8 million , $1.7 million , $1.7 million and $3.1 million in 2015 , 2014 , the three months ended December 29, 2013 , the five months ended September 26, 2013 and the twelve months ended April 28, 2013 , respectively.

As of January 3, 2016 , the estimated amortization expense associated with our intangible assets for each of the next five years is expected to be $7.0 million .

See Note 5 — Investments for our policy.

We have determined that no impairments of our intangible assets existed for any of the fiscal years presented.

We account for investments in entities that we do not control, but over which we have the ability to exercise significant influence, using the equity accounting method.

These investments are recorded in equity method investments on the consolidated balance sheet.

We record our share of earnings and losses from our equity method investments in (income) loss from equity method investments in the consolidated statements of income.

The majority of our equity method investments are reported on a one-month lag, which does not materially impact our consolidated financial statements.

We account for investments in entities that we do not control and do not have the ability to exercise significant influence at fair value if fair value is readily determinable.

For investments that do not have readily determinable fair values, we account for the investment at cost minus impairment, if any, plus or minus changes resulting from orderly

transactions for the identical or a similar investment of the same issuer.

These investments are recorded in other assets on the consolidated balance sheets.

We consider whether the fair value of an investment has declined below its carrying amount whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable.

If we consider any such decline to be other than temporary (based on various factors, including historical financial results, product development activities and the overall health of the affiliate’s industry), then a write-down of the investment would be recorded to its estimated fair value.

At inception, we determine whether a contract is or contains a lease based on whether we have the right to control the use of an identified asset for a period of time, which includes the right to (1) obtain substantially all of the economic benefits from the use of the identified asset and (2) direct the use of the identified asset.

Our lease assets and obligations are initially measured at the present value of the future lease payments over the term of the lease, adjusted for any prepayments.

The lease term consists of the noncancellable period of the lease, plus any period covered by an option to extend the lease that is either controlled by the lessor or is reasonably certain to be exercised by the Company.

The value of the future lease payments is discounted at the interest rate implicit in our lease contracts, if readily determinable.

Otherwise, we utilize the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term and economic environment to that of the lease.

Our lease assets and obligations do not contain any leases with a term of 12 months or less.

Our lease agreements contain both lease and non-lease components.

We allocate the consideration in our lease agreements to each component based on the standalone values of each component.

The non-lease components are excluded from the measurement of our lease assets and obligations.

Operating lease cost is recognized on a straight-line basis in earnings over the term of the lease.

Finance lease cost is amortized into earnings using the effective interest method over the lease term or, in the instance where title transfers to us at the end of the lease term, the estimated useful lives of the assets.

The interest component of finance lease cost is included in interest expense.

Debt Issuance Costs, Premiums and Discounts

Debt issuance costs, premiums and discounts are amortized into interest expense over the terms of the related loan agreements using the effective interest method or other methods which approximate the effective interest method.

Income taxes are accounted for under the asset and liability method.

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Debt issuance costs, premiums and discounts are amortized into interest expense over the terms of the related loan agreements using the effective interest method.

Debt issuance costs are generally recorded as a reduction of the associated debt instrument and classified in long-term debt and finance lease obligations in the consolidated balance sheets.

Costs to enter into and/or refinance credit facilities are classified in other assets on the consolidated balance sheets and reclassified to current assets as the credit facilities approach expiration.

We estimate total income tax expense, including interest and penalties, based on statutory tax rates and tax planning opportunities available to us in various jurisdictions in which we earn income.

Federal income taxes include an estimate for taxes on earnings of foreign subsidiaries expected to be remitted to the U.S.

and be taxable, but not for earnings considered indefinitely invested in the foreign subsidiary.

We account for the global intangible low-taxed income inclusion from foreign subsidiaries in the period in which it is incurred.

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

3 unchanged sentences

Significant judgment is required in assessing the timing and amounts of deductible and taxable items.

We record unrecognized tax benefit liabilities for known or anticipated tax issues based on our analysis of whether, and the extent to which, additional taxes will be due.

We accrue interest and penalties related to unrecognized tax benefits in other liabilities and recognize the related expense in income tax expense.

We record liabilities for uncertain tax positions based on our analysis of whether, and the extent to which, additional taxes will be due.

We record these liabilities using a two-step process in which (1) we evaluate whether we believe it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the tax authority.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense .

Pension Accounting

We recognize the funded status of our defined benefit pension plans in the consolidated balance sheets.

We measure our pension and other postretirement benefit plan obligations and related plan assets as of the month-end that is closest to our year-end.

We measure our pension and other postretirement benefit plan obligations and related plan assets as of December 31.

The measurement of our pension obligations and related costs is dependent on the use of assumptions and estimates.

1 unchanged sentence

Changes in assumptions and future investment returns could potentially have a material impact on our expenses and related funding requirements.

We also recognize in other comprehensive income (loss), the net of tax results of the gains or losses and prior service costs or credits that arise during the period but are not recognized in net periodic benefit cost.

These amounts are adjusted out of accumulated other comprehensive income (loss) as they are subsequently recognized as components of net periodic benefit cost.

We recognize in other comprehensive income (loss) , the gains or losses and prior service costs or credits that arise during the period.

Prior to the freeze of our qualified pension plans for all non-union participants in the second quarter of 2021, these amounts were amortized into net periodic benefit cost over the average remaining service period of active plan participants.

Subsequent to the plan freeze, these amounts are amortized over the average remaining life expectancy of the plan participants.

Self-Insurance Programs

We are self-insured for certain levels of general and vehicle liability, property, workers’ compensation, product recall and health care coverage.

We are self-insured for certain levels of workers’ compensation claims, health care coverage, product recall, vehicle, property, and general liability.

The cost of these self-insurance programs is accrued based upon estimated settlements for known and anticipated claims.

Any resulting adjustments to previously recorded reserves are reflected in current period earnings.

Asset Retirement Obligations

We record an asset retirement obligation (“ARO”) related to PP&E when a legal obligation is incurred and the fair value of the obligation can be estimated.

AROs are initially recorded as a liability at fair value and capitalized in property, plant and equipment, net on the consolidated balance sheet.

We estimate the fair value of AROs based on the projected discounted future cash outflows required to settle the liability.

Such an estimate requires assumptions and judgments regarding the amount and timing of cash outflows required to settle the liability, which are level 3 inputs, as defined in “Note 16:

Fair Value Measurements.” If the fair value of the recorded ARO changes, a revision is recorded to both the ARO and the related asset.

The cost of the ARO is depreciated into earnings on a straight-line basis over the remaining useful life of the related asset.

Accretion of the liability due to the passage of time is recognized as an expense in current period earnings.

As of December 29, 2024 and December 31, 2023, the balance of our AROs was $ 5 million, and $ 29 million, respectively.

The net reduction in the ARO balance resulted from the sale of land in Utah and Missouri that had related ARO’s in the amount of $ 24 million.

Restructuring” for a discussion of the sale of assets .

Contingent Liabilities

We are subject to lawsuits, investigations and other claims related to the operation of our farms, labor, livestock procurement, securities, environmental, product, taxing authorities and other matters, and are required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses and fees.

We are subject to lawsuits, investigations and other claims related to the operation of our farms and facilities, labor, livestock procurement, securities, environmental, our products, taxes and other matters, and are required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of loss.

A determination of the amount of accruals and disclosures required, if any, for these contingencies is made after considerable analysis of each individual issue.

We accrue for contingent liabilities when an assessment of the risk of loss is probable and can be reasonably estimated.

We disclose contingent liabilities when the risk of material loss is at least reasonably possible or probable.

We accrue for contingent liabilities, including future defense costs, when an assessment of the risk of loss is probable and can be reasonably estimated.

We disclose contingent liabilities when the risk of material loss is at least reasonably possible.

We reevaluate our accruals when facts and circumstances change, which could warrant an adjustment to the amount that is recorded.

Our contingent liabilities contain uncertainties because the eventual outcome will result from future events.

Our determination of accruals and any reasonably possible losses in excess of those accruals require estimates and judgments related to future changes in facts and circumstances, interpretations of the law, the amount of damages or fees, and the effectiveness of strategies or other factors beyond our control.

If actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material.

Our determination of accruals and any reasonably possible losses in excess of those accruals require estimates and judgments related to the possible outcomes, differing interpretations of the law, assessments of the amount of potential damages, settlements or defense costs, and the effectiveness of strategies or other factors beyond our control.

If actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could have a material effect on our future results of operations and cash flows.

Redeemable Noncontrolling Interests

Certain noncontrolling interest holders have the right to exercise a put option that would obligate us to redeem a portion or all of their interest.

These noncontrolling interests are classified as redeemable noncontrolling interests outside of equity in our consolidated balance sheets.

At the end of each period we adjust the value of redeemable noncontrolling interests, if necessary, to the redemption value (as defined in the subsidiary’s operating agreement) through additional paid-in capital.

See “Note 16:

Fair Value Measurements” for a discussion of the assessment of redemption value.

The following table presents the changes in redeemable noncontrolling interests for our continuing operations for the periods presented:

Twelve Months Ended

2024 December 31,

2023 January 1,

(in millions)

Beginning balance $ 246 $ 197 $ 174

Attribution of net income 14 5 11

Attribution of other comprehensive income (loss) ( 35 ) 25 11

Dividends ( 1 ) ( 2 ) ( 1 )

Redemption — ( 15 ) —

Adjustment to redemption value

Ending balance $ 225 $ 246 $ 197

Revenue Recognition

We recognize revenues from product sales upon delivery to customers or when title passes.

Revenue is recorded at the invoice price for each product net of estimated returns and sales incentives provided to customers.

Sales incentives include various rebate and trade allowance programs with our customers, primarily discounts and rebates based on achievement of specified volume or growth in volume levels.

Advertising and Promotional Costs

Advertising and promotional costs are expensed as incurred except for certain production costs, which are expensed upon the first airing of the advertisement.

Promotional sponsorship costs are expensed as the promotional events occur.

Advertising costs totaled $211.4 million , $165.8 million , $48.0 million , $63.5 million and $143.1 million in 2015 , 2014 , the three months ended December 29, 2013 , the five months ended September 26, 2013 and the twelve months ended April 28, 2013 , respectively, and are included in SG&A.

Shipping and Handling Costs

Our revenue (sales) is primarily derived from contracts with customers for the purchase of our products.

Revenue is recognized at a point in time when our performance obligation has been satisfied and control of the promised goods is transferred to the customer, which generally occurs upon shipment or delivery to a customer based on terms of the sale.

The primary performance obligation in our contracts with customers is to provide meat products.

Shipping and handling activities are considered part of the fulfillment of our promise to provide meat products and not a separate performance obligation.

Shipping and handling costs are reported as a component of cost of sales.

Research and Development Costs

Research and development costs are expensed as incurred.

Research and development costs totaled $78.5 million , $75.3 million , $23.2 million , $31.9 million and $80.9 million in 2015 , 2014 , the three months ended December 29, 2013 , the five months ended September 26, 2013 and the twelve months ended April 28, 2013 , respectively.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09).

The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance.

The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The ASU applies to all contracts with customers, except those that are within the scope of other topics in the FASB Accounting Standards Codification.

Compared with current U.S.

GAAP, the ASU also requires significantly expanded disclosures about revenue recognition.

In August 2015, the FASB issued Accounting Standards Update 2015-14, Revenue from Contracts with Customers (Topic 606):

Deferral of the Effective Date (ASU 2015-14) which defers the effective date by one year to fiscal year and interim periods within those years beginning after December 15, 2017.

Early adoption is permitted as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within those annual periods.

The guidance is not currently effective for us and has not been applied in this Form 10-K.

We are currently in the process of evaluating the potential impact of future adoption but at this time do not anticipate it will have a material impact on our consolidated financial statements.

In April 2015, the FASB issued Accounting Standards Update 2015-03, Interest-Imputation of Interest (Subtopic 835-30):

Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03).

The standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction of the carrying amount of that debt liability, consistent with debt discounts.

The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015 with early adoption permitted.

We elected to early adopt this new guidance effective for the first quarter of 2015 and have applied the changes retrospectively to all periods presented.

As a result, debt issuance costs of approximately $11.3 million and $16.1 million are presented in long-term debt and capital lease obligations in the consolidated condensed balance sheets as of January 3, 2016 and December 28, 2014 , respectively.

In April 2015, the FASB issued ASU 2015-04, Compensation – Retirement Benefits (Topic 715) ( ASU 2015-04).

For an entity with a fiscal year-end that does not coincide with a month-end, ASU 2015-4 provides a practical expedient that permits the entity to measure defined benefit plan assets and obligations using the month-end that is closest to the entity’s fiscal year-end.

The practical expedient must be applied consistently from year to year and applied consistently to all plans.

The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015 with early adoption permitted.

We elected to early adopt this new guidance for 2015.

The new guidance does not have a material impact on our consolidated financial statements.

In May 2015, the FASB issued Accounting Standards Update 2015-07, Fair Value Measurement (Topic 820):

Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (ASU 2015-07).

The standard removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient.

The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015 with early adoption permitted.

We elected to early adopt this new guidance for 2015.

The changes resulting from the adoption of ASU 2015-07, including revising the prior year presentation, are reflected within Note 12, Fair Value Measurements .

In July 2015, the FASB issued Accounting Standards Update 2015-11, Inventory (Topic 330):

Simplifying the Measurement of Inventory (ASU 2015-11).

Topic 330 currently requires an entity to measure inventory at the lower of cost or market, with market value represented by replacement cost, net realizable value or net realizable value less a normal profit margin.

ASU 2015-11 requires an entity to measure inventory at the lower of cost or net realizable value.

The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2016 with early adoption permitted.

We elected to early adopt this new guidance for 2015.

The new guidance does not have a material impact on our consolidated financial statements.

In November 2015, the FASB issued Accounting Standards Update 2015-17, Income Taxes (Topic 740):

Balance Sheet Classification of Deferred Taxes (ASU 2015-17).

The standard requires that deferred income tax liabilities and assets be classified as noncurrent in the balance sheet and eliminates prior guidance which required an entity to separate deferred tax liabilities and assets into a current amount and noncurrent amount in the balance sheet based on the classification of the related asset or liability.

The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2016 with early adoption permitted.

We elected to early adopt this new guidance on a prospective basis and have applied the changes to all deferred tax liabilities and assets and to the consolidated condensed balance sheet as of January 3, 2016 .

We did not retrospectively apply the changes to prior periods.

MERGER AND ACQUISITIONS

WH Group Merger

On May 28, 2013, we entered into the Merger Agreement with WH Group and Merger Sub.

The Merger was consummated on the Merger Date, and as a result, Merger Sub merged with and into the Company, with the Company surviving as a wholly owned subsidiary of WH Group.

Upon completion of the Merger, all outstanding shares of Smithfield were cancelled and the Company's shareholders received $34.00 in cash (the Merger Consideration) for each share of common stock held prior to the effective time of the Merger.

Additionally, all outstanding stock-based compensation awards, both vested and unvested, were converted into the right to receive the Merger Consideration, less the exercise price of such awards, if any.

The total consideration paid in connection with the Merger was approximately $4.9 billion .

On July 31, 2013, Merger Sub issued $500.0 million aggregate principal amount of 5.25% senior notes due August 1, 2018 and $400.0 million aggregate principal amount of 5.875% senior notes due August 1, 2021 (together, the Merger Sub Notes).

Merger Sub incurred $20.4 million in transaction fees in connection with issuance of the Merger Sub Notes, which are being amortized over the life of the Merger Sub Notes.

As a result of the Merger and the transactions entered into in connection therewith, we have assumed the liabilities and obligations of Merger Sub, including Merger Sub's obligations under the Merger Sub Notes.

Proceeds from the Merger Sub Notes were held in escrow prior to the Merger Date and used in funding the Merger.

The proceeds were used to fund a portion of the total consideration paid , repay certain outstanding debt of the Company and pay certain transaction fees associated with the Merger.

WH Group is the majority shareholder of Henan Shuanghui Investment & Development Co., which is China's largest meat processing enterprise and China's largest publicly traded meat products company as measured by market capitalization.

WH Group is a pioneer in the Chinese meat processing industry with over 30 years of history.

WH Group's businesses include hog production, meat processing, fresh meat and packaged meats production and distribution.

The merging of WH Group's distribution network with our strong management team, leading brands and vertically integrated model will allow us to provide high-quality, competitively priced and safe U.S.

meat products to consumers in markets around the world.

WH Group's cost of acquiring the Company has been pushed-down to establish a new accounting basis for the Company.

The consolidated balance sheets, as of January 3, 2016 and December 28, 2014 , reflect various fair value estimates and analyses, including work performed by third-party valuation specialists.

This work was finalized during the third quarter of 2014 with no material adjustments.

The following is a summary of the allocation of the total purchase consideration to the estimated fair values of our assets acquired, liabilities assumed and noncontrolling interests by WH Group in the transaction:

Revenue is recorded at the transaction price, which is the amount of consideration we expect to receive in exchange for providing goods to customers.

The transaction price may be adjusted for estimates of known or expected variable consideration, including consumer incentives, trade promotions and other programs.

Our estimates of variable consideration are based on a number of factors including history with the respective customer, current performance, and future projections.

Additionally, in determining whether an estimate of variable consideration is constrained, we consider the likelihood and magnitude of a potential revenue reversal.

We review and update these estimates regularly until the incentives or product returns are realized.

The impact of any adjustment is recognized in the period in which the adjustment is identified.

Payment terms vary per contract.

However, payment is typically received within a few weeks of the invoice date.

The balances for receivables from contracts with customers and deferred revenue are presented in the following table:

2024 December 31,

2023 January 1,

(in millions)

Receivables from contracts with customers $ 494 $ 475 $ 700

Deferred revenue 7 9 13

Advertising and Promotional Expenses

Advertising and promotional expenses are recognized as incurred except for certain production expenses, which are expensed upon the first airing of the advertisement.

Promotional sponsorship expenses are recognized as the promotional events occur.

Advertising expenses totaled $ 97 million, $ 123 million and $ 127 million in fiscal years 2024, 2023 and 2022, respectively, and are included in SG&A in the consolidated statements of income .

Research and Development Expenses

Research and development expenses are recognized as incurred.

Research and development expenses totaled $ 144 million, $ 175 million and $ 157 million in fiscal years 2024, 2023 and 2022, respectively, and are included in cost of sales in the consolidated statements of income.

Government Assistance

We may receive government assistance (government grants) from time to time, primarily in the form of refundable tax credits.

Government grants typically specify conditions that must be met in order for the government grants to be earned.

We recognize government grants when they are reasonably assured of receipt.

Recently Issued Accounting Pronouncements

New Accounting Pronouncements Recently Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The guidance requires, among other things, disclosure of significant segment expenses which are regularly provided to the Chief Operating Decision Maker (“CODM”), the CODM’s title and position within the organization, and how the CODM uses the reported measure to assess segment performance and make resource allocation decisions.

The guidance was adopted and applied in this Annual Report on Form 10-K.

Reportable Segments” for the required disclosures.

New Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The standard requires enhanced rate reconciliation disclosures, including disclosure of specific categories and additional information for reconciling items that meet a quantitative threshold.

The standard also requires companies to disaggregate income taxes paid by federal, state and foreign taxes.

The update is effective for fiscal year 2025, with early adoption permitted.

The standard will not impact our financial position, results of operations or cash flows.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

The new guidance is intended to provide investors more disaggregated information about certain line items presented in the consolidated statement of income.

The update is effective for fiscal year 2027, with early adoption permitted.

The new disclosures are required to be applied prospectively with the option for retrospective application.

The standard will not impact our financial position, results of operations or cash flows.

REPORTABLE SEGMENTS

Our reportable segments are determined on the basis of our organizational structure and information that is regularly reviewed by our CODM for the purpose of making operating and resource allocation decisions and assessing the performance of the operating segments of our business.

Our CODM is our Chief Executive Officer.

Our CODM reviews assets at a consolidated level;

not by reportable segment.

Therefore, we do not disclose assets by reportable segment.

The measure of segment profit reviewed by our CODM is operating profit, which represents the operating results of our operating segments with the exception of certain gains, losses and other expenses which are not allocated to our segments.

Our CODM uses operating profit to assess segment performance, compensate employees and allocate capital, personnel and other resources to each segment.

We recently removed income from equity method investments from the measure of segment profit reviewed by our CODM.

Accordingly, the historical segment results presented herein have been retrospectively adjusted to remove income from equity method investments.

Following the carve-out and distribution of our European operations (see “Note 3:

Discontinued Operations”), we conduct our operations through three reportable segments:

Packaged Meats, Fresh Pork and Hog Production.

Packaged Meats

The Packaged Meats segment consists of our U.S.

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.

The Fresh Pork segment consists of our U.S.

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.

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

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 may sell grains to external customers.

The following table provides certain financial information by reportable segment for the fiscal years presented with a reconciliation to the consolidated totals.

Fiscal Year 2024

Packaged Meats Fresh Pork Hog Production Other (1)

Corporate (2)

Unallocated (3)

Intersegment Consolidated

(in millions)

Sales 8,319 7,873 3,002 471 — — ( 5,524 ) $ 14,142

Cost of sales 6,759 7,419 3,104 412 — 74 ( 5,524 ) 12,244

Selling, general and administrative expenses 394 188 42 24 153 38 — 840

Operating gains ( 2 ) — — — — ( 57 ) — ( 60 )

Operating profit (loss) 1,168 266 ( 144 ) 35 ( 153 ) ( 55 ) — 1,118

Interest expense, net — — — — — 66 — 66

Non-operating gains — — — — — ( 9 ) — ( 9 )

Income from continuing operations before income taxes 1,061

Other segment data:

Depreciation and amortization 123 113 61 30 1 10 — 339

Capital expenditures 144 106 33 13 54 — — 350

Fiscal Year 2023

Packaged Meats Fresh Pork Hog Production Other (1)

Corporate (2)

Unallocated (3)

Intersegment Consolidated

(in millions)

$ 8,280 $ 7,832 $ 3,317 $ 559 — $ — $ ( 5,348 ) $ 14,640

Cost of sales 6,792 7,525 4,024 536 — 222 ( 5,348 ) 13,751

Selling, general and administrative expenses 422 190 50 26 107 254 — 1,050

Operating gains — — — — — ( 105 ) — ( 105 )

Operating profit (loss) 1,066 117 ( 756 ) ( 4 ) ( 107 ) ( 371 ) — ( 56 )

Interest expense, net — — — — — 76 — 76

Non-operating gains

— — — — — ( 3 ) — ( 3 )

Loss from continuing operations before income taxes ( 129 )

Other segment data:

Depreciation and amortization 120 109 72 36 1 89 — 427

Capital expenditures 154 123 40 10 — 26 — 353

Fiscal Year 2022

Packaged Meats Fresh Pork Hog Production Other (1)

Corporate (2)

Unallocated (3)

Intersegment Consolidated

(in millions)

$ 9,262 $ 9,190 $ 4,456 $ 524 — $ — $ ( 7,234 ) $ 16,199

Cost of sales 7,797 8,981 4,536 440 — 183 ( 7,234 ) 14,704

Selling, general and administrative expenses 418 179 54 23 118 16 — 807

Operating gains — — — — — ( 429 ) — ( 429 )

Operating profit (loss) 1,047 30 ( 133 ) 61 ( 118 ) 230 — 1,117

Interest expense, net — — — — — 87 — 87

Non-operating gains

— — — — — ( 18 ) — ( 18 )

Income from continuing operations before income taxes

Other segment data:

Depreciation and amortization 124 111 74 32 1 98 — 440

Capital expenditures 99 148 79 6 — 7 — 338

________________

(1) Includes our Mexico and Bioscience operations.

Our Mexico operations include the raising of hogs and production of pork products that are sold primarily to customers in Mexico.

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

(2) Represents general corporate expenses for management and administration of the business.

(3) Includes certain costs of sales, SG&A and operating gains that we do not allocate to our segments.

The following table disaggregates our sales to customers by reportable segment and by major distribution channel:

Fiscal Year 2024

Foodservice (2)

Industrial (4)

Other / Unallocated (5)

Total External Sales (6)

Intersegment Consolidated (7)

(in millions)

Packaged Meats $ 5,349 $ 2,447 $ 104 $ 403 $ 16 $ 8,319 $ — $ 8,319

Fresh Pork 1,946 232 1,666 1,035 5 4,883 2,990 7,873

Hog Production — — — — 469 469 2,533 3,002

— — — — 470 470 1 471

Intersegment — — — — — — ( 5,524 ) ( 5,524 )

Total $ 7,295 $ 2,679 $ 1,769 $ 1,438 $ 960 $ 14,142 $ — $ 14,142

Fiscal Year 2023

Foodservice (2)

Industrial (4)

Other / Unallocated (5)

Total External Sales (6)

Intersegment Consolidated (7)

(in millions)

Packaged Meats $ 5,265 $ 2,420 $ 126 $ 449 $ 20 $ 8,280 $ — $ 8,280

Fresh Pork 2,007 246 1,731 1,142 12 5,138 2,694 7,832

Hog Production — — — — 671 671 2,646 3,317

— — — — 552 552 7 559

Intersegment — — — — — — ( 5,348 ) ( 5,348 )

Total $ 7,272 $ 2,667 $ 1,857 $ 1,591 $ 1,254 $ 14,640 $ — $ 14,640

Fiscal Year 2022

Foodservice (2)

Industrial (4)

Other / Unallocated (5)

Total External Sales (6)

Intersegment Consolidated (7)

(in millions)

Packaged Meats $ 5,624 $ 2,749 $ 194 $ 516 $ 178 $ 9,261 $ — $ 9,262

Fresh Pork 2,233 322 1,683 1,303 14 5,555 3,635 9,190

Hog Production — — — — 862 862 3,594 4,456

— — — — 520 520 4 524

Intersegment — — — — — — ( 7,234 ) ( 7,234 )

Total $ 7,857 $ 3,071 $ 1,877 $ 1,819 $ 1,575 $ 16,199 $ — $ 16,199

________________

(1) Includes national and regional retailers in the U.S.

such as grocery supermarket chains, independent grocers and club stores.

(2) Includes foodservice distributors, fast food and other restaurant operators, hotel chains and other institutional customers in the U.S.

(3) Includes exports from the U.S.

to international retailers and wholesale distributors primarily in North America, Asia, Latin America and other emerging markets.

(4) Includes sales to industrial customers who use our raw materials in their finished goods production, including prepared meals, pharmaceutical production and pet food.

(5) Includes sales of grain, oilseeds, breeding stock and market hogs, among others, in addition to external sales from our Mexico and Bioscience operations.

(6) Includes external sales from our Mexico operations of $ 431 million, $ 515 million, and $ 444 million in fiscal years 2024, 2023 and 2022, respectively.

All other external sales are sourced from our U.S.

(7) Our largest customer, Walmart Inc.

(“Walmart”), accounted for 13 %, 12 % and 12 % of consolidated sales in fiscal years 2024, 2023 and 2022, respectively.

Sales to Walmart were included in our Packaged Meats and Fresh Pork segments.

Any extended discontinuance of sales to this customer could, if not replaced, have a material impact on our results of operations.

(8) Includes our Mexico and Bioscience operations.

DISCONTINUED OPERATIONS

On August 26, 2024, we completed a carve-out and distribution 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 into separate line items and presented in the consolidated statements of income, the consolidated balance sheets and the consolidated statements of cash flows as discontinued operations and this treatment has been applied retrospectively to all periods presented.

The following table presents the major components of net income from discontinued operations included in the consolidated statements of income.

2024 2023 2022

(in millions)

Sales $ 2,362 $ 3,337 $ 2,872

Cost of sales 2,037 2,980 2,623

Gross profit 325 357 250

Selling, general and administrative expenses 151 164 144

Operating gains

( 15 ) ( 7 ) ( 2 )

Operating profit 188 199 108

Interest expense 4 11 9

Non-operating losses — 3 2

Income from discontinued operations before income taxes 184 185 97

Income tax on discontinued operations (1)

Net income from discontinued operations $ 172 $ 155 $ 70

________________

(1) Income tax on discontinued operations for 2024 includes a $ 22 million income tax benefit recognized as a result of the carve-out of our European operations.

The following tables present the carrying amounts of the major classes of assets and liabilities of the discontinued operations included in the consolidated balance sheets.

2024 December 31,

Current assets:

Cash and cash equivalents $ — $ 61

Accounts receivable

Accounts receivable, net — 412

Inventories, net

Prepaid expenses and other current assets — 25

Property, plant and equipment

Intangible assets

Assets acquired by WH Group

Current portion of long-term debt and capital lease obligations

Total current assets — 958

Property, plant and equipment, net — 911

Goodwill — 253

Intangible assets, net — 114

Other assets — 69

Total long-term assets $ — $ 1,347

2024 December 31,

Current liabilities:

Accounts payable $ — $ 182

Current portion of long-term debt and finance lease obligations — 68

Accrued expenses and other current liabilities — 156

Long-term debt and capital lease obligations

Net long-term pension liability

Total current liabilities — 406

Deferred income taxes, net — 30

Long-term debt and finance lease obligations — 8

Other liabilities — 48

Liabilities assumed by WH Group

Redeemable noncontrolling interests and noncontrolling interests

Total purchase consideration

Accounts receivable and accounts payable, as well as certain other current and non-current assets and liabilities, were valued at their existing carrying values as they approximated fair value of those items at the time of the Merger, based on management's judgments and estimates.

Inventories were valued using a net realizable value approach with the exception of manufacturing supplies and other inventories, which were valued using the replacement cost approach.

Property, plant and equipment have been valued using a combination of the market approach and the indirect cost approach which is based on current replacement and/or reproduction cost of the asset as new, less depreciation attributable to physical, functional and economic factors.

Intangible assets acquired include trademarks, customer relations assets, contractual relationships and rights with fair values of $1.3 billion , $55.0 million , $40.0 million and $3.0 million , resp ectively.

The customer relations assets, contractual relationships and rights will be amortized over useful lives of 14 y ears, 17 years and 12 yea rs, respectively.

The trademarks are not subject to amortization.

Trademarks, including trade names, have been valued using the relief from royalty method.

We utilized a bottoms-up approach to assess the appropriate royalty rates for trade names focused on consideration of the profitability of each trade name, the implied premium margin earned on branded versus private label sales of similar products for each trade name, market studies and third-party comparable licensing agreements.

Customer relations assets were determined using the multi-period excess earnings methodology utilizing our forecasted metrics and/or a market participant distributor model.

Contractual relationships were valued based on the time and associated costs that would be required to recreate the existing relationships in addition to the lost profits over this time period using the avoided costs or lost profits method.

Rights were also valued using an avoided costs or lost profits method.

The benefit obligation for both our qualified and non-qualified defined benefit pension plans was remeasured as of the Merger Date with the assistance of an independent third-party actuary.

Existing long-term debt assumed in the Merger was fair valued based on quoted market prices.

Long-term debt assumed included our outstanding 6.625% senior unsecured notes due August 2022 (the 2022 Notes) and our outstanding 7.75% senior unsecured notes due July 2017 (the 2017 Notes).

Deferred income tax assets and liabilities as of the Merger Date represent the expected future tax consequences of temporary differences between the fair values of the assets acquired and the liabilities assumed as a result of the Merger and their tax basis.

Goodwill reflects the amount of the total consideration paid that exceeded the fair value of the identifiable assets acquired, liabilities assumed and noncontrolling interests.

Goodwill recognized as a result of the Merger and is not deductible for tax purposes.

See Note 15 — Reportable Segments for the allocation of goodwill to our reportable segments.

In connection with the Merger, we incurred $23.9 million and $18.0 million of professional fees during the three months ended December 29, 2013 and the five months ended September 26, 2013 , respectively.

These fees are recognized in merger related costs on the consolidated statements of income.

In addition, Merger Sub deferred $17.3 million of debt issuance costs for a financing arrangement.

We recognized these deferred costs in interest expense during the three months ended December 29, 2013 upon termination of the financing arrangement following the Merger.

All of these charges are reflected in the results of our Corporate segment.

The following unaudited pro forma financial data summarizes the Company's results of operations as if the Merger had occurred as of April 30, 2012.

The pro forma data is for informational purposes only and may not necessarily reflect the actual results of operations had the Merger been consummated on April 30, 2012.

Eight Months Ended

Twelve Months Ended

December 29, 2013

April 28, 2013

(in millions and unaudited)

The most significant pro forma adjustments were to reflect the impact of fair value step-ups of both assets and liabilities (e.g., inventory, property, plant and equipment, long-term debt) and fees and expenses related to the Merger noted above.

Kansas City Sausage, LLC

In May 2013, we acquired a 50% interest in Kansas City Sausage Company, LLC (KCS), for $36.0 million in cash.

Upon closing, in addition to the cash purchase price, we advanced $10.0 million to the seller in exchange for a promissory note, which is secured by the remaining membership interests in KCS held by the seller (the Advance Note).

The Advance Note was recorded in other assets in the consolidated balance.

Additionally, we entered into a revolving loan agreement with KCS, under which we agreed to make loans from time to time up to an aggregate principal amount of $20.0 million .

The aggregate amount of any obligations incurred under the revolving loan agreement is secured by a first priority security interest in all of the assets of KCS.

KCS is a leading U.S.

sausage producer and sow processor with annual revenues exceeding $275.0 million in 2015.

The merging of KCS's low-cost, efficient operations and high-quality products with our strong brands and sales and marketing team should contribute growth to our packaged meats business.

KCS operates in Des Moines, Iowa and Kansas City, Missouri.

In Des Moines, KCS produces premium raw materials for sausage, as well as value-added products, including boneless hams and hides.

KCS is managed by its Board of Directors, which makes decisions that most significantly impact the economic performance of KCS.

We have the right to nominate and elect the majority of the members of the Board of Directors of KCS, and based on the associated voting rights, we have determined that we have a controlling financial interest in KCS.

As a result, the acquisition of our interest in KCS was accounted for in the Fresh Pork and Packaged Meats segments using the acquisition method of accounting, which requires, among other things, that assets acquired, liabilities assumed and noncontrolling interests in the acquiree be recognized at their fair values as of the acquisition date.

The purchase price allocation includes assets acquired, excluding goodwill, of $39.2 million , liabilities assumed of $10.7 million , goodwill of $43.5 million and redeemable noncontrolling interests of $36.0 million .

Our initial estimate of the fair value of the noncontrolling interests was measured based on market multiples for similar companies in our industry and consideration of the terms of the acquisition, which provide the noncontrolling interest holders the right to exercise a put option at any time after the seventh anniversary of the acquisition, which would obligate us to redeem their interest.

The noncontrolling interests are classified in redeemable noncontrolling interests in the consolidated condensed balance sheet.

The redemption amount is the greater of $55.0 million or the result of a computed amount based on a fixed multiple of earnings.

We have elected to accrete changes in the redemption amount of the noncontrolling interest over the seven year period until it becomes redeemable.

If the noncontrolling interests had been redeemable as of January 3, 2016 , the redemption amount would have been $55.0 million .

American Skin Food Group, LLC

In September 2012, we acquired a 70% controlling interest in American Skin Food Group, LLC (American Skin) for $24.2 million in cash.

Located in Burgaw, North Carolina, American Skin manufactures and supplies pork rinds to the snack food industry.

By leveraging our coordinated sales and marketing team, we believe American Skin can expand into new markets both domestically and internationally, which could substantially increase current sales of approximately $25.0 million and net income of approximately $3.0 million annually over the next five to seven years with minimal additional plant investment.

The acquisition of American Skin was accounted for in the Packaged Meats segment using the acquisition method of accounting.

The purchase price allocation includes assets acquired, excluding goodwill, of $18.7 million , liabilities assumed of $0.5 million , goodwill of $16.4 million and noncontrolling interests of $10.4 million .

Goodwill was recognized to reflect the amount of the enterprise fair value that exceeded the fair value of the identifiable assets acquired and liabilities assumed.

The amount of goodwill that is expected to be deductible for tax purposes is $10.5 million .

The fair value of the noncontrolling interests was measured based on market multiples for similar public companies and consideration of the terms of the acquisition, which provide the noncontrolling interests holders the right to exercise a put option, which would obligate us to redeem their interests.

The redemption amount is based on a fixed multiple of earnings, which is consistent with the formula utilized in determining the purchase price for our 70% interest.

DISPOSAL OF ASSETS

In 2015, we sold our product label printing business in Kansas City for $1.65 million cash plus contingent consideration, which we valued at $11.9 million , and recognized a gain of $12.0 million in SG&A, reflected in the Packaged Meats segment.

Total long-term liabilities $ — $ 86

Acquisitions within our Discontinued Operations

Prior to the carve-out and distribution of our European operations, we completed several acquisitions, which are included in discontinued operations.

On February 28, 2023, our former European operations purchased Goodies Meat Production S.R.L.

(“Goodies”), a Romanian producer of private label packaged meats products, for consideration valued at € 29 million ($ 31 million).

The amount paid was € 24 million ($ 26 million) including post-closing adjustments.

The consideration includes contingent payments of € 5 million, payable upon the achievement of certain earnings targets over a two-year period.

Goodies operates a production facility in Ceptura de Jos, Romania and employs 320 people.

Their portfolio of products includes salami, ham, bacon, bologna and other meat specialties.

On May 31, 2023, our former European operations acquired an 80 % interest in DeVeris Polska Sp.

(“DeVeris”), a Polish processor of poultry by-products, for 48 million zł ($ 11 million).

DeVeris operates a production facility in Turek, Poland.

The acquisition of DeVeris expanded the vertically integrated business in Poland by enabling further processing of both pork and poultry by-products.

On March 28, 2024, our former European operations purchased a 50.1 % stake in Argal Alimentacíon, S.A.

(“Argal”), a Spanish producer of packaged meats products with approximately 1,480 employees, for € 91 million ($ 98 million), subject to post-closing adjustments.

The amount paid at closing was € 82 million ($ 88 million) with the remaining balance due upon finalization of the purchase price.

In August 2024, an additional € 8 million ($ 9 million) was paid, which resulted in a final purchase price of € 90 million ($ 97 million).

Continuing Involvement

In connection with the carve-out of our European operations (“Morliny Foods”), we entered into a transition services agreement that governs certain services Smithfield will provide to Morliny Foods for up to a year subsequent to the carve-out.

These services include information technology support, including access and license fees, tax advisory services and financial reporting services, none of which are material to Smithfield.

In addition, Smithfield will continue to purchase certain products from Morliny Foods for distribution in the U.S.

Purchases of these products from Morliny Foods were $ 45 million, $ 33 million and $ 62 million in fiscal years 2024, 2023 and 2022, respectively.

MERGERS, ACQUISITIONS AND DISPOSITIONS

On December 29, 2024, United Global Foods Holdings (US), Inc.

(“UGFH”), our immediate parent company, merged with Smithfield, resulting in Smithfield being the surviving entity.

This transaction represented a common control transfer applied prospectively in the Company’s financial statements.

As a result of the merger, the accounts of UGFH were added to our consolidated balance sheet, which was impacted as follows:

(in millions)

Prepaid expenses and other current assets

Deferred income taxes, net

Additional paid-in capital

American Skin

On December 28, 2023, we acquired the remaining 15 % interest in American Skin Food Group, LLC for $ 15 million.

Dry Sausage Facility

On July 30, 2024, we acquired a dry sausage production facility located in Nashville, Tennessee from Cargill Meat Solutions Corporation for $ 38 million.

The acquisition is part of our strategy to grow our value-added packaged meats business and serve the growing demand for high-quality pepperoni, deli, charcuterie and other dry sausage products.

The total cost of the asset acquisition was allocated based on the relative fair value of the assets acquired.

The allocated fair values of the assets acquired are as follows:

equipment valued at $ 17 million, buildings valued at $ 11 million, inventory valued at $ 5 million and land valued at $ 5 million.

On October 31, 2022 we closed on the sale of our Saratoga Specialty Foods operation (“Saratoga”), which produced spices, seasonings and sauces for sale primarily to the foodservice industry and for use in our internal production of various packaged meats products.

Saratoga continues to be a supplier of ours subsequent to the sale.

Proceeds totaled $ 575 million, resulting in a $ 417 million gain on the disposal.

The gain was recognized in operating gains in the consolidated statement of income in the fourth quarter of 2022.

The carrying amount of assets disposed of included $ 47 million of allocated goodwill.

We received $ 568 million of proceeds at closing.

The remainder was received in the first quarter of fiscal year 2023.

Saratoga was accounted for in the Packaged Meats segment.

Altoona, Iowa Facility Closure

On August 30, 2024, we closed our Altoona, Iowa ham boning facility and consolidated production volume into other locations to improve manufacturing efficiencies.

Costs associated with closing the plant primarily include operating lease assets and equipment that we disposed of prior to the expiration of the lease term or end of the asset’s useful life.

The charges associated with the closing were not material.

Altoona was accounted for in the Fresh Pork segment.

OPERATING GAINS AND NON-OPERATING GAINS

The following table provides details of operating gains and non-operating gains.

2024 2023 2022

(in millions)

Operating gains:

Gain on disposal of assets (1)

$ ( 43 ) $ ( 88 ) $ —

Insurance recoveries

( 9 ) ( 5 ) ( 6 )

Gain on sale of businesses (2)

— ( 1 ) ( 417 )

Other operating gains ( 8 ) ( 11 ) ( 6 )

Total operating gains

$ ( 60 ) $ ( 105 ) $ ( 429 )

Non-operating gains:

(Gain) loss on nonqualified retirement plan assets $ ( 17 ) $ ( 15 ) $ 26

Gain on the sale/dilution of equity method investments (3)

Impairment of investment (4)

Net pension and postretirement benefits cost (benefit) (5)

Other non-operating (gains) losses ( 2 ) 1 1

Total non-operating gains

$ ( 9 ) $ ( 3 ) $ ( 18 )

________________

(1) Fiscal year 2024 includes a $ 32 million gain on the sale of hog farms in Utah and a $ 6 million gain on the sale of assets to Murphy Family Farms LLC (“Murphy Family Farms”).

Fiscal year 2023 includes an $ 86 million gain on the sale of our Vernon, California plant.

Restructuring” for further information.

(2) Fiscal year 2022 includes the $ 417 million gain on the sale of Saratoga.

(3) In February 2022, our interest in Monarch Bioenergy LLC (“Monarch”), was reduced from 50 % to 33 % upon the issuance of additional shares to a new investor.

The transaction was accounted for as a partial sale of our investment, which resulted in a $ 52 million gain.

In addition, in November 2022, we sold our shares in Norson Holding, S.

(“Norson”) to our joint venture partner and recognized a $ 4 million gain on the sale in non-operating gains in the fourth quarter of 2022.

(4) In the first quarter of fiscal year 2022, we wrote down the value of our former investment in Norson by $ 40 million to its estimated fair value.

(5) Includes the components of net pension and postretirement benefits cost other than service cost, which is included in operating profit.

These components consist of interest cost, expected return on plan assets, amortization of actuarial gains/losses and prior service costs/credits, and curtailment gains.

RESTRUCTURING

In May 2022, we announced a decision to close our Vernon, California processing facility, exit farm operations in Arizona and California and reduce our sow herd in Utah.

The decision to permanently close our Vernon facility was based on increasingly difficult business conditions in California, where high taxes, high utility costs and a challenging regulatory environment negatively impact our ability to operate efficiently and profitably.

In December 2023, we made a decision to terminate a number of third-party hog grower contracts and close several company-owned nursery farms in Utah as a result of the Vernon facility closure in early fiscal year 2023.

Additionally, we have taken a number of actions to further 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, by contributing $ 3 million in cash in exchange for a 25 % minority interest.

We additionally sold approximately 150,000 sows and related inventories located on company-owned and contract farms in North Carolina to Murphy Family Farms and recorded a gain of $ 6 million on the sale.

Subsequent to the end of our fiscal year 2024, on December 30, 2024, we sold the commercial hog inventories associated with such sows 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.

We additionally 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.

As a result of these decisions, we incurred various exit costs and disposal charges, which have been recorded in cost of sales in our consolidated statements of income.

The following table details the charges by major type of cost.

2024 2023 2022

(in millions)

Accelerated depreciation (1)

$ 3 $ 85 $ 83 $ 171

Contract termination costs 9 42 6 57

Employee termination benefits 1 3 28 32

Loss on asset disposals (2)

Other exit costs 15 64 31 110

Total $ 31 $ 195 $ 151 $ 377

________________

(1) Accelerated depreciation includes $ 11 million and $ 20 million for AROs in fiscal years 2023 and 2022 , respectively, which were recorded in connection with the decisions to close certain Company-owned farms in accordance with our general permit for concentrated animal feeding operations in the State of Utah.

(2) On November 26, 2024, we sold certain hog farms in Missouri for $ 32 million.

The transaction resulted in a loss of $ 4 million.

The following table reconciles the beginning and ending liability balances associated with these restructuring activities.

Balance, January 1, 2023 Additions Payments Balance, December 31, 2023 Additions Payments Balance, December 29, 2024

(in millions)

Contract termination costs $ 5 $ 42 $ ( 5 ) $ 42 $ 13 $ ( 54 ) $ —

Employee termination benefits 27 3 ( 28 ) 2 2 ( 4 ) —

Other exit costs — 64 ( 56 ) 8 5 ( 12 ) —

Total $ 33 $ 108 $ ( 89 ) $ 52 $ 19 $ ( 70 ) $ 1

Certain of these actions impacted our biogas joint ventures for which we recognized additional costs and losses not included in the table above:

• In the fourth quarter of fiscal year 2023, we incurred $ 14 million in costs associated with biogas assets owned by our joint venture, Monarch, in connection with the farms in Missouri that were closed in fiscal year 2023.

These costs were recognized in (income) loss from equity method investments in the consolidated statement of income.

• Additionally, in the fourth quarter of fiscal year 2023, certain biogas assets owned by our joint venture, Align RNG, LLC (“Align”), were impaired as a result of our decision in December 2023 to terminate hog grower contracts and close farms in Utah.

As a result, we recognized our share of the impairment totaling $ 35 million in (income) loss from equity method investments in the consolidated income statement.

Also, following the restructuring activities outlined above, we sold certain properties and recognized gains, which were not included in the table above:

• In the second quarter of fiscal year 2023, we sold our Vernon, California facility for $ 205 million and recognized a gain of $ 86 million in operating gains in the consolidated statement of income.

• On December 17, 2024, we sold our hog production assets in Utah, excluding the live animals, for $ 58 million.

The transaction resulted in a gain of $ 32 million, which was recognized in operating gains in the consolidated statement of income in the fourth quarter of fiscal year 2024.

As part of the agreement, we leased back certain farm and feed properties that we continue to operate.

The lease can be cancelled during each annual term and is therefore considered short term.

EMPLOYEE RETENTION TAX CREDITS

In 2020, the World Health Organization publicly characterized COVID-19 as a pandemic.

The Company recognized a substantial amount of incremental costs during the pandemic, including costs to compensate employees who were not able to work due to facility closures, reduced work schedules or health related reasons.

The Coronavirus Aid, Relief, and Economic Security Act was signed into law in March 2020, which provided, among other things, an employee retention credit to eligible employers who paid qualified wages to employees during the pandemic.

The employee retention credit represents a government grant.

Our policy is to recognize government grants when they are reasonably assured of receipt.

In the second quarter of 2024, we concluded the recognition threshold had been met and therefore, recognized $ 86 million and $ 1 million of employee retention credits in cost of sales and SG&A, respectively, in the consolidated statement of income.

DERIVATIVE FINANCIAL INSTRUMENTS

Our meat processing and hog production operations use various raw materials, primarily live hogs, corn and soybean meal, which are actively traded on commodity exchanges.

Our pork production operations use various raw materials, primarily live hogs, corn, soybean meal and wheat, which are actively traded on commodity exchanges.

We also use fuel and other energy commodities in our operations.

We hedge these commodities when we determine conditions are appropriate to mitigate price risk.

While this hedging may limit our ability to participate in gains from favorable commodity fluctuations, it also tends to reduce the risk of loss from adverse changes in raw material prices.

While this hedging may limit our ability to participate in gains from favorable commodity fluctuations, it also reduces the risk of loss from adverse changes in raw material prices.

We attempt to closely match the commodity contract terms with the hedged item.

We also periodically enter into interest rate swaps to hedge exposure to changes in interest rates on certain financial instruments and foreign exchange forward contracts to hedge certain exposures to fluctuating foreign currency rates.

We record all derivatives in the balance sheet as either assets or liabilities at fair value.

Accounting for changes in the fair value of a derivative depends on whether it qualifies and has been designated as part of a hedging relationship.

For derivatives that qualify and have been designated as hedges for accounting purposes, changes in fair value have no net impact on earnings, to the extent the derivative is considered perfectly effective in achieving offsetting changes in fair value or cash flows attributable to the risk being hedged, until the hedged item is recognized in earnings (commonly referred to as the “hedge accounting” method).

We may elect either method of accounting for our derivative portfolio, assuming all the necessary requirements are met.

We have in the past availed ourselves of either acceptable method and expect to do so in the future.

We believe all of our derivative instruments represent economic hedges against changes in prices and rates, regardless of their designation for accounting purposes.

Changes in commodity prices could have a significant impact on cash deposit requirements under our broker and counter-party agreements.

Additionally, certain of our derivative contracts contain credit risk related contingent features, which would require us to post additional cash collateral to cover net losses on open derivative instruments if our credit rating was downgraded.

As of January 3, 2016 , the net liability position of our open derivative instruments that are subject to credit risk related contingent features was not material.

We are exposed to losses in the event of nonperformance or nonpayment by counter-parties under financial instruments.

Although our counter-parties primarily consist of financial institutions that are investment grade, there is still a possibility that one or more of these companies could default.

However, a majority of our financial instruments are exchange traded futures contracts held with brokers and counter-parties with whom we maintain margin accounts that are settled on a daily basis, thereby limiting our credit exposure to non-exchange traded derivatives.

Determination of the credit quality of our counter-parties is based upon a number of factors, including credit ratings and our evaluation of their financial condition.

As of January 3, 2016 , we had no significant credit exposure on non-exchange traded derivative contracts.

No significant concentrations of credit risk existed as of January 3, 2016 .

The size and mix of our derivative portfolio varies from time to time based upon our analysis of current and future market conditions.

All derivative contracts are recorded in prepaid expenses and other current assets or accrued expenses and other current liabilities within the consolidated balance sheets, as appropriate.

Changes in commodity prices could have a significant impact on cash deposit requirements under our broker and counterparty agreements.

Additionally, certain of our derivative contracts contain credit risk-related contingent features, which would require us to post additional cash collateral to cover net losses on open derivative instruments if our credit rating were sufficiently downgraded.

As of December 29, 2024, the net liability position of our open derivative instruments that are subject to credit risk-related contingent features was not material.

Although our counterparties primarily consist of financial institutions that are investment grade, we would be exposed to losses in the event of nonperformance or nonpayment by our counterparties.

However, a portion of our

financial instruments are exchange traded derivative contracts held with brokers and counterparties with whom we maintain margin accounts that are settled on a daily basis, thereby limiting our credit exposure to non-exchange traded derivatives.

Determination of the credit quality of our counterparties is based upon a number of factors, including credit ratings and our evaluation of their financial condition.

As of December 29, 2024, we had gross credit exposure of $ 4 million on non-exchange traded derivative contracts.

After taking into account the effect of netting arrangements, we had no credit exposure on non-exchange traded derivative contracts.

The size and mix of our derivative portfolio vary from time to time based upon our analysis of current and future market conditions.

The following table presents the fair values of our open derivative financial instruments on a gross basis.

(in millions)

Assets Liabilities

2024 December 31,

2023 December 29,

2024 December 31,

(in millions) (in millions)

Derivatives using the “hedge accounting” method:

Grain contracts

Livestock contracts

Interest rate swaps

Commodity contracts $ 13 $ 37 $ 37 $ 29

Foreign exchange contracts — 1 — —

Total 13 38 37 29

Derivatives using the “mark-to-market” method:

Grain contracts

Livestock contracts

Energy contracts

Foreign exchange contracts

Commodity contracts 2 13 7 13

Total fair value of derivative instruments $ 15 $ 51 $ 44 $ 42

The majority of our derivatives are exchange traded futures contracts held with brokers, subject to netting arrangements that are enforceable during the ordinary course of business.

Additionally, we have a smaller portfolio of over-the-counter derivatives that are held by counterparties under netting arrangements found in typical master netting agreements.

These agreements legally allow for net settlement in the event of bankruptcy.

The following tables reconcile the gross amounts of derivative assets and liabilities to the net amounts presented in our consolidated balance sheets and the related effects of cash collateral under netting arrangements that provide a legal right of offset of assets and liabilities.

January 3, 2016

Gross Amount of Derivative Assets/ Liabilities

Netting of Derivative Assets/Liabilities

Net Derivative Assets/Liabilities

Netting of Derivative Assets/Liabilities and Cash Collateral

Net Amount Presented in the Consolidated Balance Sheet

December 29, 2024

Gross Amount of Derivative Assets/ Liabilities Netting of Derivative Assets/ Liabilities Net Derivative Assets/Liabilities Netting of Derivative and Cash Collateral Net Amount Presented in the Consolidated Balance Sheet (1)

(in millions)

Foreign exchange contracts

Interest rate swaps

Foreign exchange contracts

Commodities $ 15 $ ( 13 ) $ 2 $ 37 $ 39

Commodities 44 ( 13 ) 31 ( 23 ) 8

________________

(1) Net derivative assets are recorded in prepaid expenses and other current assets.

Net derivative liabilities are recorded in accrued expenses and other current liabilities.

These balances include $ 60 million in cash collateral paid to and held by one of our brokers, $ 37 million of which represents the initial margin and exceeded the related open derivative liability position.

December 31, 2023

Gross Amount of Derivative Assets/ Liabilities

Netting of Derivative Assets/Liabilities

Net Derivative Assets/Liabilities

Netting of Derivative Assets/Liabilities and Cash Collateral

Net Amount Presented in the Consolidated Balance Sheet

(in millions)

Foreign exchange contracts

Interest rate swaps

Commodities $ 50 $ ( 25 ) $ 25 $ ( 1 ) $ 24

Foreign exchange contracts 1 — 1 — 1

See Note 12 — Fair Value Measurements for additional information about the fair value of our derivatives.

Total $ 51 $ ( 25 ) $ 26 $ ( 1 ) $ 26

Commodities 42 ( 25 ) 18 1 19

________________

(1) We recorded $ 25 million of net assets in prepaid expenses and other current assets with the remaining $ 1 million in current assets of discontinued operations.

We recorded $ 14 million of the net liabilities in accrued expenses and other current liabilities with the remaining $ 5 million in other liabilities.

Hedge Accounting Method

Cash Flow Hedges

We enter into derivative instruments, such as futures, swaps and options contracts, to manage our exposure to the variability in expected future cash flows attributable to commodity price risk associated with the forecasted sale of live hogs and fresh pork, and the forecasted purchase of corn, wheat and soybean meal.

In addition, we enter into interest rate swaps to manage our exposure to changes in interest rates associated with our variable interest rate debt, and we enter into foreign exchange contracts to manage our exposure to the variability in expected future cash flows attributable to changes in foreign exchange rates associated with the forecasted purchase or sale of assets denominated in foreign currencies.

As of January 3, 2016 , we had no cash flow hedges for forecasted transactions beyond November 2019 .

The ineffective portion of derivative gains and losses is recognized as part of current period earnings.

Derivative gains and losses, when reclassified into earnings, are recorded in cost of sales for grain contracts, sales for lean hog contracts, interest expense for interest rate swaps and sales and SG&A expenses for foreign exchange contracts.

Gains and losses on derivatives designed to hedge price risk associated with fresh pork sales are recorded in the Hog Production segment.

During 2015 , the range of notional volumes associated with open derivative instruments designated in cash flow hedging relationships was as follows:

1,006,440,000

Interest rate

Foreign currency (1)

We enter into derivative instruments, such as futures, swaps and options contracts, to manage our exposure to the variability in expected future cash flows attributable to commodity price risk associated with the forecasted sale of fresh pork and the forecasted purchase of grains, hogs, and energy.

In addition, we enter into interest rate swaps to manage our exposure to changes in interest rates associated with our variable interest rate debt and the forecasted issuance of fixed rate debt.

Lastly, we enter into foreign exchange contracts to manage our exposure to the variability in expected future cash flows attributable to changes in foreign exchange rates associated with the forecasted purchase or sale of assets denominated in foreign currencies.

As of December 29, 2024, substantially all of our commodity-related cash flow hedges were for transactions forecasted through December 2025.

As of December 29, 2024, the notional volumes associated with open derivative instruments designated in cash flow hedging relationships were as follows:

Volume Metric

Lean hogs 1,006,669,000 Pounds

Corn 41,593,000 Bushels

Soybean meal 719,000 Tons

6,260,000 Million BTU

Diesel 7,560,000 Gallons

The following table presents the effects on our consolidated financial statements of pre-tax gains and losses on derivative instruments designated in cash flow hedging relationships for the periods indicated:

Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Derivative

Gains (Losses) Reclassified from Accumulated Other Comprehensive Loss into Earnings

Fiscal Year Fiscal Year

2024 2023 2022 2024 2023 2022

Amounts represent the U.S.

dollar equivalent of various foreign currency contracts.

The following tables present the effects on our consolidated financial statements of pre-tax gains and losses on derivative instruments designated in cash flow hedging relationships for the periods indicated:

Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivative (Effective Portion)

Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Earnings (Effective Portion)

Gain (Loss) Recognized in Earnings on Derivative (Ineffective Portion)

Twelve Months Ended

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

(in millions)

Commodity contracts:

Grain contracts

Lean hog contracts

Interest rate swaps

Foreign exchange contracts

Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivative (Effective Portion)

Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Earnings (Effective Portion)

Gain (Loss) Recognized in Earnings on Derivative (Ineffective Portion)

Twelve Months Ended

April 29 - September 26, 2013

April 28, 2013

April 29 - September 26, 2013

April 28, 2013

April 29 - September 26, 2013

April 28, 2013

(in millions) (in millions)

Commodity contracts $ ( 56 ) $ 10 $ 58 ( 10 ) 13 97

Grain contracts

Lean hog contracts

Interest rate swaps — — — ( 2 ) ( 2 ) ( 1 )

Foreign exchange contracts 1 2 — 1 1 ( 1 )

For the periods presented, foreign exchange contracts were determined to be highly effective.

We have excluded from the assessment of effectiveness differences between spot and forward rates, which we have determined to be immaterial.

As of January 3, 2016 , there were deferred net losses of $20.4 million , net of tax of $12.4 million , in accumulated other comprehensive income (loss).

We expect to reclassify $10.1 million ( $6.2 million net of tax) of the deferred net losses on closed commodity contracts into earnings in 2016 .

We are unable to estimate the amount of unrealized gains or losses to be reclassified into earnings in 2016 related to open contracts as their values are subject to change.

Total $ ( 55 ) $ 11 $ 58 $ ( 11 ) $ 13 $ 94

In fiscal years 2024 and 2023, we recognized a total of $ 110 million and $ 53 million, respectively, in expenses for option premiums, which are excluded from the assessment of hedge effectiveness.

As of December 29, 2024 and December 31, 2023, accumulated other comprehensive income included $ 2 million of net losses and $ 29 million of net gains, respectively, associated with options for which the underlying hedged transactions had not yet impacted earnings.

This amount represents the difference between the change in the fair value of the options and the amount of option premiums amortized through earnings.

We expect to reclassify $ 5 million ($ 3 million net of tax) of deferred gains on closed commodity and interest rate contracts into earnings within the next twelve months.

We are unable to estimate the amount of deferred gains or losses related to open contracts to be reclassified into earnings within the next twelve months as their values are subject to change.

Fair Value Hedges

We enter into derivative instruments (primarily futures contracts) that are designed to hedge changes in the fair value of live hog inventories and firm commitments to buy grains.

When fair value hedge accounting is applied, derivative gains and losses are recognized in earnings currently along with the change in fair value of the hedged item attributable to the risk being hedged.

The gains or losses on the derivative instruments and the offsetting losses or gains on the related hedged items are recorded in cost of sales for commodity contracts.

During 2015 , the range of notional volumes associated with open derivative instruments designated in fair value hedging relationships was as follows:

The following tables present the effects on our consolidated statements of income of gains and losses on derivative instruments designated in fair value hedging relationships and the related hedged items for the periods indicated:

Gain (Loss) Recognized in Earnings on Derivative

Twelve Months Ended

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

(in millions)

Commodity contracts (1)

We enter into derivative instruments (primarily futures contracts) that are designed to hedge changes in the fair value of firm commitments to buy grains and hogs.

As of December 29, 2024, the notional volumes associated with open derivative instruments designated in fair value hedging relationships were as follows:

Volume Metric

Lean hogs 10,440,000 Pounds

Corn 2,980,000 Bushels

Soybeans 245,000 Bushels

The carrying values of hedged firm commitments designated in fair value hedge relationships as of December 29, 2024 and December 31, 2023 were not material.

When the underlying inventories are acquired, the hedge relationship is discontinued and the fair value hedge adjustment is reclassified to inventories.

The amount of fair value hedge gains remaining in inventories for which hedge accounting has been discontinued was $ 3 million and $ 7 million as of December 29, 2024 and December 31, 2023, respectively.

Mark-to-Market Method

As of December 29, 2024, the notional volumes associated with open derivative instruments using the “mark-to-market” method were as follows:

Volume Metric

Lean hogs 10,240,000 Pounds

Corn 24,231,000 Bushels

Soybean meal 72,000 Tons

Soybeans 445,000 Bushels

Diesel 756,000 Gallons

Foreign currency 2,985,178 U.S.

Derivative Impact on the Consolidated Statements of Income

The following table presents the effect of derivatives on the consolidated statements of income for the periods indicated:

2024 2023 2022

Includes losses of $7.5 million in the twelve months ended April 28, 2013 representing differences between the spot and futures prices for fair value hedges of hog inventory, which are recorded directly into earnings as they occur.

There were no fair value hedges of hog inventory during 2015 , 2014 , the three months ended December 29, 2013 nor the five months ended September 26, 2013 and, therefore, no differences between spot and futures prices were recognized in those periods.

Gain (Loss) Recognized in Earnings on Related Hedged Item

Twelve Months Ended

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

(in millions)

Commodity contracts

We recognized gains of $2.5 million , $2.8 million and $4.1 million in 2015 , 2014 and the five months ended September 26, 2013 and losses of $2.5 million in the twelve months ended April 28, 2013 , respectively, on closed commodity derivative contracts as the underlying cash transactions affected earnings.

Mark-to-Market Method

Derivative instruments that are not designated as a hedge, have been de-designated from a hedging relationship, or do not meet the criteria for hedge accounting are marked-to-market with the unrealized gains and losses together with actual realized gains and losses from closed contracts being recognized in current period earnings.

Under the mark-to-market method, gains and losses are recorded in cost of sales for commodity contracts and SG&A for foreign exchange contracts.

During 2015 , the range of notional volumes associated with open derivative instruments using the “mark-to-market” method was as follows:

Foreign currency (1)

Cash flow hedging - commodity contracts $ 18 $ 12 $ ( 30 )

Mark to market - commodity contracts ( 16 ) 30 ( 35 )

Total derivative gain (loss) recognized sales 2 42 ( 65 )

Cost of Sales

Cash flow hedging - commodity contracts ( 28 ) — 127

Fair value hedging - commodity contracts

Change in fair value of open derivatives 4 17 ( 24 )

Change in fair value of related hedged items ( 5 ) ( 17 ) 24

Gain (loss) on closed derivatives (1)

Mark to market - commodity contracts ( 10 ) ( 14 ) 20

Total derivative gain (loss) recognized in cost of sales ( 28 ) ( 9 ) 119

Selling, general and administrative expenses

Mark to market - foreign exchange contracts

Interest expense

Cash flow hedging - interest rate contracts ( 2 ) ( 2 ) ( 1 )

Discontinued operations

Cash flow hedging - foreign exchange contracts

Mark to market - foreign exchange contracts

Total derivative gain (loss) recognized in discontinued operations

Total derivative gain (loss) $ ( 25 ) $ 36 $ 56

________________

Amounts represent the U.S.

dollar equivalent of various foreign currency contracts.

The following table presents the amount of gains (losses) recognized in the consolidated statements of income on derivative instruments using the “mark-to-market” method by type of derivative contract for the periods indicated:

Twelve Months Ended

January 3, 2016

(1) Represents the amount of fair value hedge adjustment applied to the carrying amount of hedged assets that is recognized in cost of sales as the underlying hedged assets are relieved from inventories and charged to cost of sales.

EQUITY METHOD INVESTMENTS

Equity method investments consist of the following:

Equity Investments % Owned December 29,

2024 December 31,

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

(in millions)

Commodity contracts

Foreign exchange contracts

The table above reflects gains and losses from both open and closed contracts including, among other things, gains and losses related to contracts designed to hedge price movements that occur entirely within the period presented.

The table includes amounts for both realized and unrealized gains and losses.

The table is not, therefore, a simple representation of unrealized gains and losses recognized in the income statement during any period presented.

Investments consist of the following:

Equity Investment

(in millions)

Campofrío Food Group (CFG)

International

Mexican joint ventures

International

Align 50 % $ 83 $ 75

Monarch 33 % 95 93

Murphy Family Farms 25 % 3 —

Viceroy 50 % 1 6

All other equity method investments 50 % 20 18

Total investments $ 202 $ 191

We record our share of earnings and losses from our equity method investments in (income) loss from equity method investments.

Some of these results are reported on a one-month lag which, in our opinion, does not materially impact our consolidated financial statements.

In November 2013, Mexican processed meats producer Sigma Alimentos (Sigma) announced its intention to tender for all of CFG’s outstanding shares (CFG Tender Offer).

In December 2013, we announced our intention to participate in the CFG Tender Offer by retaining our 37% interest in CFG.

In June 2014, we finalized our shareholder agreement with Sigma creating a new entity called Sigma & WH Food Europe, S.L.

(Sigma & WH Europe) to hold all shares of CFG owned by Sigma and the Company.

At the formation of Sigma & WH Europe, both the Company and Sigma contributed all of our shares of CFG to Sigma & WH Europe in exchange for the same number of shares in Sigma & WH Europe.

Effective September 19, 2014, CFG's common stock ceased to trade on the Madrid Exchange.

In June 2015, we sold our entire equity interest in CFG to Alfa S.A.B.

(Alfa) for $354.0 million in cash.

As of the date of the sale, the book value of our investment in CFG was $298.7 million .

Additionally, we had $54.6 million of unrealized currency translation losses on our balance sheet related to our investment in CFG.

(Income) loss from equity method investments consists of the following:

Twelve Months Ended

Equity Investment

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

(in millions)

International

Mexican joint ventures

International

All other equity method investments

(Income) loss from equity method investments

Align, Monarch and Viceroy Bio Energy, LLC (“Viceroy”) operate renewable natural gas facilities, which refine methane gas that is captured from our Company-owned and contract grower hog farms into renewable natural gas.

All significant operating decisions are made jointly between us and our investment partners, and therefore, we do not consolidate these entities.

On January 16, 2025, TPG Rise Climate, one of the other two equal joint venture partners in Monarch, delivered a sale notice under the joint venture agreement, pursuant to which Monarch must pursue a sale of the joint venture.

In the event that a sale of Monarch is not consummated before January 17, 2026, TPG Rise Climate may require that Monarch purchase TPG Rise Climate’s ownership interests in Monarch.

Murphy Family Farms and VisionAg Hog Production

On December 27, 2024, we became a member of a North Carolina-based company, Murphy Family Farms and on February 24, 2025, we became a member of a North Carolina-based company, VisionAg.

Restructuring” for more information.

We expect to account for Murphy Family Farms and Vision Ag under the equity method of accounting.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

December 29, 2024 December 31, 2023

(in millions)

Payroll and related benefits $ 339 $ 361

Customer incentives and marketing

Insurance reserves

Litigation contingencies 141 315

Accrued customer incentives and marketing 132 136

Accrued insurance 53 59

Accrued contract grower services 38 36

Accrued interest 23 23

Accrued pension and other post-employment benefits 24 24

Accrued rent 20 18

Amounts owed to purchasing banks pursuant to the Monetization Facility 14 42

Derivative instruments and broker deposits 10 13

Accrued exit and disposal costs 1 49

Payables to related parties (1)

Total accrued expenses and other current liabilities $ 871 $ 1,166

________________

(1) See “Note 17:

Related Party Transactions” for related party transactions.

Long-term debt consists of the following:

2024 December 31,

(in millions)

6.625% senior unsecured notes, due August 2022, including unamortized premiums of $15.6 million and $19.7 million

7.75% senior unsecured notes, due July 2017, including unamortized premiums of $20.6 million and $38.1 million

5.25% senior unsecured notes, due August 2018, net of debt issuance costs of $5.4 million and $8.3 million

5.875% senior unsecured notes, due August 2021, net of debt issuance costs of $5.7 million and $7.6 million

Floating rate senior unsecured term loan, due May 2020

Various, interest rates from 2.45% to 2.76%, due February 2016 through March 2019

4.25 % senior unsecured notes, due February 2027, net of unamortized debt issuance costs and discounts totaling $ 1 million and $ 2 million as of December 29, 2024 and December 31, 2023, respectively

5.20 % senior unsecured notes, due April 2029, net of unamortized debt issuance costs and discounts totaling $ 3 million and $ 3 million as of December 29, 2024 and December 31, 2023, respectively

3.00 % senior unsecured notes, due October 2030, net of unamortized debt issuance costs and discounts totaling $ 7 million and $ 8 million as of December 29, 2024 and December 31, 2023, respectively

2.625 % senior unsecured notes, due September 2031, net of unamortized debt issuance costs and discounts totaling $ 7 million and $ 8 million as of December 29, 2024 and December 31, 2023, respectively

Bank borrowings — 12

Total debt 1,983 1,991

Current portion — ( 5 )

Total long-term debt $ 1,983 $ 1,986

As noted in Note 2 — Merger and Acquisitions , existing long-term debt assumed by WH Group was adjusted to fair value based on quoted market prices.

Premiums shown above represent the unamortized balance of the fair value adjustment to our 2022 Notes and 2017 Notes.

Scheduled principal payments on long-term debt for the next five years are as follows:

Scheduled principal payments on debt for the next five years are as follows:

Year (in millions)

Credit Facilities

December 29, 2024

Facility Capacity Borrowing Base Adjustment Outstanding Borrowings Commercial Paper Borrowings Outstanding Letters of Credit Amount Available

(in millions)

In August 2012, we issued $1.0 billion aggregate principal amount of ten year, 6.625% senior unsecured notes at a price equal to 99.5% of their face value in a registered public offering (2022 Notes).

We received net proceeds of $981.2 million , after underwriting discounts and commissions and offering expenses, upon settlement of the 2022 Notes in August 2012.

We incurred $18.0 million in transaction fees in connection with issuance of the 2022 Notes, which were being amortized over the ten -year life of the notes.

The unamortized amount of transaction fees incurred in connection with the issuance of the 2022 Notes was written off when we performed the allocation of the total purchase consideration to the assets and liabilities assumed by WH Group in the Merger.

On July 31, 2013, Merger Sub issued the Merger Sub Notes as part of the financing for the acquisition of the Company.

Upon the consummation of the Merger and release of the proceeds from escrow, the Merger Sub Notes became unsecured obligations of the Company ranking equally in right of payment with all of our existing and future senior unsecured indebtedness.

The proceeds were used in part to repay the outstanding $200.0 million due on our Bank of America Term Loan.

See Note 2 — Merger and Acquisitions for further information on the Merger Sub Notes.

Debt Extinguishments

2013 Notes and 2014 Notes

In conjunction with the issuance of the 2022 Notes in July 2012, we commenced a tender offer to purchase any and all of our outstanding 7.75% senior unsecured notes due May 2013 (2013 Notes) and any and all of our outstanding 10% senior secured notes due July 2014 (2014 Notes) (the July 2012 Tender Offer).

The July 2012 Tender Offer expired in August 2012.

As a result of the July 2012 Tender Offer, we paid $649.4 million to repurchase 2013 Notes and 2014 Notes with face values of $105.0 million and $456.6 million , respectively.

Also in August 2012, we exercised the redemption feature available under our 2014 Notes and paid $155.5 million to repurchase the remaining $132.8 million of our 2014 Notes.

Net proceeds from the issuance of the 2022 Notes were used to make all of the repurchases of the 2013 Notes and 2014 Notes.

As a result of these repurchases, we recognized losses on debt extinguishment totaling $120.7 million in the twelve months ended April 28, 2013, including the write-off of related unamortized discounts, premiums and debt issuance costs.

In May 2013, we repaid the remaining outstanding principal amount on 2013 Notes totaling $55.0 million .

2017 Notes and 2022 Notes

During the three months ended December 29, 2013 , we repurchased $15.6 million and $0.4 million of our 2017 Notes and 2022 Notes, respectively, for $18.1 million and recognized losses on debt extinguishment of $1.7 million .

2017 Notes, 2018 Notes, 2021 Notes and 2022 Notes

In January 2015, we commenced a cash tender offer for our 2017 Notes, 5.25% senior unsecured notes due August 2018 (2018 Notes), 5.875% senior unsecured notes due August 2021 (2021 Notes) and 2022 Notes, subject to a maximum aggregate purchase price of up to $275.0 million (2015 Tender Offer).

The 2015 Tender Offer expired in February 2015.

As a result of the 2015 Tender Offer, we paid $275.0 million to repurchase $258.0 million of principal.

As a result of these repurchases, we recognized losses on debt extinguishment of $12.8 million in 2015, including the write-off of related unamortized premiums and debt issuance costs.

Working Capital Facilities

As of January 3, 2016 , we had aggregate credit facilities and credit lines totaling $1.5 billion .

Our unused capacity under these credit facilities and credit lines was $1.4 billion .

These facilities and lines are generally at prevailing market rates.

We pay commitment fees on the unused portion of the facilities.

Average borrowings under credit facilities and credit lines were $80.1 million , $443.2 million , $541.7 million , $349.4 million and $105.4 million at average interest rates of 2.0% , 3.0% , 3.0% , 3.0% and 5.2% during 2015 , 2014 , the three months ended December 29, 2013 , the five months ended September 26, 2013 and the twelve months ended April 28, 2013 , respectively.

Maximum borrowings were $377.8 million , $946.7 million , $759.3 million , $719.3 million and $229.9 million in 2015 , 2014 , the three months ended December 29, 2013 , the five months ended September 26, 2013 and the twelve months ended April 28, 2013 , respectively.

Total outstanding borrowings were $38.8 million as of January 3, 2016 and $50.1 million as of December 28, 2014 with average interest rates of 2.4% and 3.0% , respectively.

In June 2011, we refinanced our asset-based revolving credit agreement totaling $1.0 billion that supported short-term funding needs and letters of credit (the ABL Credit Facility) into two separate facilities:

(1) an inventory-based revolving credit facility totaling $925.0 million , with an option to expand up to $1.225 billion (the Inventory Revolver), and (2) an accounts receivable securitization facility totaling $275.0 million (the Securitization Facility).

We may request working capital loans and letters of credit under both facilities.

In January 2013, we partially exercised the accordion feature of our Second Amended and Restated Credit Agreement and increased the borrowing capacity of the Inventory Revolver from a total of $925.0 million to a total of $1.025 billion .

All other terms and conditions of the Inventory Revolver were unchanged, including the limitation on the actual amount of credit that is available from time to time under the Inventory Revolver as a result of borrowing base valuations of our inventory, accounts receivable and certain cash balances.

In April 2015, we entered into a new $1.025 billion asset-based revolving credit facility agreement (the Inventory Revolver Credit Agreement) which replaced the Inventory Revolver which would have matured in June 2016.

The Inventory Revolver Credit Agreement provides for an option, subject to obtaining additional loan commitments and certain other conditions, to increase the available commitments by up to $375.0 million in the future.

It also includes a multicurrency subfacility for Canadian Dollars, Japanese Yen, Euros, British Pounds Sterling and U.S.

Dollars of up to the foreign currency equivalent of $100.0 million , a subfacility of up to $50.0 million for swingline borrowings and a subfacility of up to $150.0 million for issuances of letters of credit.

Availability under the Inventory Revolver Credit Agreement is based upon borrowing base valuations of our U.S.

inventory, live sows and certain accounts receivable.

The Inventory Revolver Credit Agreement is scheduled to mature on May 1, 2020.

Loans under the Inventory Revolver Credit Agreement bear interest at LIBOR plus a margin ranging from 1.75% to 2.75% per annum, or, at our election, at a base rate plus a margin ranging from 0.75% to 1.75% per annum, with either such margin varying according to the ratio of our consolidated funded debt to consolidated EBITDA.

Letters of credit issued under the Inventory Revolver Credit Agreement accrue fees at a rate equal to the applicable margin for LIBOR loans.

In addition, we are required to pay a commitment fee for the average daily unused commitments under the Inventory Revolver Credit Agreement, at rates ranging from 0.30% to 0.50% per annum depending on the ratio of our consolidated funded debt to consolidated EBITDA.

The obligations under the Inventory Revolver Credit Agreement are guaranteed by substantially all of our U.S.

subsidiaries and are secured by a first-priority lien, subject to permitted liens and exceptions for excluded assets, on substantially all of our and our subsidiary guarantors' personal property, including accounts receivable (other than those sold and financed pursuant to the Securitization Facility), inventory, cash and cash equivalents, deposit accounts, intercompany notes, intellectual property and certain capital stock and interests pledged by us and our subsidiary guarantors, and all proceeds thereof.

The Inventory Revolver Credit Agreement contains affirmative and negative covenants that, among other things, limit or restrict our ability and the ability of our subsidiaries to create liens and encumbrances;

make capital expenditures;

make acquisitions and investments;

dispose of or transfer assets;

and pay dividends or make other payments in respect of our capital stock;

in each case, subject to certain qualifications and exceptions.

In addition, the Inventory Revolver Credit Agreement contains financial covenants requiring us to maintain a total consolidated leverage ratio (ratio of consolidated funded debt to consolidated capitalization) of, subject to certain exceptions, not more than 0.50 to 1.0, a minimum interest coverage ratio (ratio of consolidated EBITDA to consolidated interest expense) of not less than 2.50 to 1.0 and limitations on capital expenditures.

The Inventory Revolver Credit Agreement also includes usual and customary events of default for facilities of this nature, and provides that, upon the occurrence and continuation of an event of default, payment of all amounts payable under the facility may be accelerated, the lenders’ commitments may be terminated and the lenders may foreclose upon the collateral.

In addition, upon the occurrence of certain insolvency or bankruptcy related events of default, all amounts payable under the facility will automatically become due and payable and the lenders’ commitments will automatically terminate.

In December 2014, we amended our Securitization Facility and increased the borrowing capacity from a total of $275.0 million to a total of $325.0 million .

As a result of the amended agreement, our maturity date was extended from May 2016 to December 2017, the interest rate spread was decreased from 1.15% to 1.05% and the unused commitment fee decreased from 0.45% to 0.40% .

As part of the Securitization Facility, all accounts receivable of our major Fresh Pork and Packaged Meats subsidiaries are sold to a wholly owned “bankruptcy remote” special purpose vehicle (SPV).

The SPV pledges the receivables as security for loans and letters of credit.

The SPV is included in our consolidated financial statements and therefore, the accounts receivable owned by it are included in our consolidated balance sheet.

Senior unsecured revolving credit facility $ 2,100 $ — $ — $ — $ — $ 2,100

Accounts receivable securitization facility 225 — — — ( 22 ) 203

Total credit facilities $ 2,325 $ — $ — $ — $ ( 22 ) $ 2,303

Senior Unsecured Revolving Credit Facility

In February 2025, we refinanced our $ 2,100 million senior unsecured revolving credit facility (“Senior Revolving Credit Facility”) extending the maturity date from May 21, 2027 to February 12, 2030, with the option to extend the maturity date for up to two one-year periods, subject to obtaining the lenders’ consent and satisfaction of certain other conditions.

The Senior Revolving Credit Facility capacity remains at $ 2,100 million.

As part of the new agreement, there are no longer any Subsidiary Guarantors under the Senior Revolving Credit Facility which also released the Subsidiary Guarantors from our Senior Unsecured Notes.

The Senior Revolving Credit Facility bears interest at the Secured Overnight Financing Rate plus a margin ranging from 0.875 % to 1.50 % per annum, or, at our election, at a base rate plus a margin ranging from 0.00 % to 0.50 % per annum, in each case depending on our senior unsecured debt ratings.

The Senior Revolving Credit Facility also contains financial maintenance covenants requiring us to maintain a maximum total consolidated leverage ratio (ratio of consolidated funded debt to consolidated capitalization, each as defined in the Senior Revolving Credit Facility) of 0.50 to 1.00 (which we may elect to increase to 0.55 to 1.00 with respect to any fiscal quarter in which a material acquisition is consummated and the immediately following three consecutive fiscal quarters, subject to certain restrictions) and a minimum interest coverage ratio (ratio of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to consolidated interest expense, each as defined in the Senior Revolving Credit Facility) of 3.50 to 1.00.

Our Senior Revolving Credit Facility contains customary covenants, including, but not limited to, restrictions on our ability and that of our subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets subject to their security interest, make acquisitions, loans, advances or investments, pay dividends, sell or otherwise transfer assets, optionally prepay or modify terms of any junior indebtedness or enter into transactions with affiliates, each subject to certain exceptions as set forth therein.

We are currently in compliance with the covenants under our Senior Revolving Credit Facility.

We have a commercial paper program, which is supported by the Senior Revolving Credit Facility, that provides access to a low-cost source of borrowing to fund general corporate purposes, including working capital.

The maximum issuance capacity under our commercial paper program is $ 1,750 million.

The maturity of commercial paper issued under the program varies but does not exceed 397 days from the date of issuance.

Our ability to access the commercial paper market in the future is dependent on maintaining investment grade credit ratings and market conditions.

Accounts Receivable Securitization Facility

In November 2024, we refinanced our accounts receivable securitization facility (“Securitization Facility”), which extended the maturity date to November 22, 2027, and reduced the borrowing capacity to $ 225 million.

As part of the Securitization Facility, certain accounts receivable of our major domestic meat processing subsidiaries are sold to a wholly owned “bankruptcy remote” special purpose vehicle (“SPV”).

The SPV pledges all such accounts receivable not otherwise sold pursuant to the Monetization Facility (as defined below) as security for loans made, and letters of credit issued, by participating lenders under the Securitization Facility.

The SPV is included in our consolidated financial statements and therefore the accounts receivable owned by it are included in our consolidated balance sheets.

However, the accounts receivable owned by the SPV are separate and distinct from our other assets and are not available to our other creditors should we become insolvent.

As of January 3, 2016 , th e SPV held $626.7 million of accounts receivable and we had no outstanding borrowings on the Securitization Facility.

We incurred approximately $1.3 million in transaction fees in connection with the financing of the Securitization Facility in 2011, which were being amortized over its original three-year life.

The unamortized amount of transaction fees incurred in connection with the Securitization Facility was written off when we performed the allocation of the total purchase consideration to the assets and liabilities assumed by WH Group in the Merger.

Rabobank Term Loan

In May 2015, we refinanced our $200.0 million Rabobank Term Loan and extended its maturity date from May 1, 2018 to May 1, 2020.

After the refinancing, the total capacity of the Rabobank term loan was $150.0 million , with $50.0 million outstanding.

We may draw the additional $100.0 million until April 15, 2016.

We may elect to prepay the loan at any time, subject to the payment of certain prepayment fees in respect of any voluntary prepayment prior to April 15, 2017 and other customary breakage costs.

Interest accrues, at our option, at LIBOR plus 3.25%.

Convertible Notes

In July 2008, we issued $400 million aggregate principal amount of 4% convertible senior notes due June 30, 2013 (the Convertible Notes) in a registered offering.

The Convertible Notes were senior unsecured obligations.

In connection with the issuance of the Convertible Notes, we entered into separate convertible note hedge transactions with respect to our common stock to reduce potential economic dilution upon conversion of the Convertible Notes, and separate warrant transactions (collectively referred to as the Call Spread Transactions).

We purchased call options that permitted us to acquire up to approximately 17.6 million shares of our common stock, subject to adjustment, which is the number of shares initially issuable upon conversion of the Convertible Notes.

In addition, we sold warrants permitting the purchasers to acquire up to approximately 17.6 million shares of our common stock, subject to adjustment.

See Note 11 — Equity for more information on the Call Spread Transactions.

In July 2013, we repaid the outstanding principal amount on our Convertible Notes totaling $400.0 million .

In October 2013, we paid $79.4 million to holders of the warrants to unwind the contracts due to the change of control related to the Merger.

As of December 29, 2024, the SPV held $ 374 million of accounts receivable.

We must maintain certain ratios related to the collection of our receivables as a condition of the Securitization Facility agreement.

As of December 29, 2024, we had $ 22 million in letters of credit issued under the Securitization Facility.

None of the letters of credit were drawn upon.

Under the Securitization Facility, we and the SPV, as applicable, are subject to certain customary covenants, including, but not limited to, restrictions on our ability to sell, assign or otherwise dispose of any collateral or assign any right to receive income with respect thereto, use proceeds for any purpose other than those set forth in the Securitization Facility, make certain payments on junior indebtedness, incur debt or merge or consolidate, subject to certain exceptions set forth therein.

The SPV is also prohibited from issuing any LCR Security (as defined in the Securitization Facility agreement).

We are currently in compliance with the covenants under the Securitization Facility.

Monetization Facility

In addition to the Securitization Facility, we maintain an uncommitted $ 250 million accounts receivable monetization facility (“Monetization Facility”).

At Smithfield’s election and subject to the purchasing banks’ approval, certain accounts receivable may be sold by the SPV to purchasing banks, so long as the uncollected outstanding amount of accounts receivable sold pursuant to the Monetization Facility does not exceed $ 250 million in the aggregate at any time, among other limitations.

In the event of a sale, the purchasing banks assume all credit risk related to the receivables while we maintain risk associated with customer disputes.

We account for the sale of receivables to a purchasing bank by derecognizing the receivables from our consolidated balance sheet upon transfer of control to the purchasing bank, and recognizing a discount on the sale in SG&A in the consolidated statement of income.

The proceeds from the sale of receivables are included in net cash flows from operating activities in the consolidated statement of cash flows.

On behalf of the purchasing banks, we continue to service all receivables sold under the Monetization Facility.

As of December 29, 2024, the uncollected balance of receivables that had been sold to purchasing banks was $ 230 million.

We had no servicing asset or liability outstanding as of December 29, 2024.

In the first quarter of fiscal year 2023, we sold $ 227 million of accounts receivable at a discount and received proceeds totaling $ 225 million.

Subsequently, we reinvested $ 4,094 million and $ 3,431 million of cash collections from customers in the revolving sale of accounts receivable to purchasing banks in fiscal years 2024 and 2023, respectively.

We recognized charges totaling $ 15 million and $ 12 million in fiscal years 2024 and 2023, respectively, attributable to the discount on the sale of accounts receivable in SG&A in the consolidated statement of income.

LEASE OBLIGATIONS, COMMITMENTS, AND GUARANTEES

Lease Obligations

We lease facilities and equipment under non-cancelable operating leases.

The terms of each lease agreement vary and may contain renewal or purchase options.

Rental payments under operating leases are charged to expense on the straight-line basis over the period of the lease.

Rental expense under operating leases of real estate, machinery, vehicles and other equipment was $49.2 million , $43.0 million , $11.7 million , $19.2 million and $47.1 million in 2015 , 2014 , the three months ended December 29, 2013 , the five months ended September 26, 2013 and the twelve months ended April 28, 2013 , respectively.

In 2015, we constructed a distribution center and sold it for $43.3 million .

Concurrent with the sale, we entered into an agreement to leaseback the property from the purchaser over a non-cancelable lease term of 20 years, with renewal options.

This lease is accounted for as an operating lease.

Future rental commitments under non-cancelable operating leases as of January 3, 2016 are as follows:

We lease real estate, vehicles, machinery and other equipment.

Additionally, we have contracts with independent farmers to raise our hogs that include a lease component for the use of the farmers’ facilities.

Our leases may include options to extend or terminate the lease, variable lease payments based on usage of the underlying assets and residual value guarantees.

The following table presents the maturities of our lease obligations as of December 29, 2024:

Operating Leases Finance Leases Total

(in millions)

As of January 3, 2016 , future minimum lease payments under capital leases were approximately $25.0 million .

The present value of the future minimum lease payments was $24.5 million .

The long-term portion of capital lease obligations was $23.3 million and $23.7 million as of January 3, 2016 and December 28, 2014 , respectively, and the current portion was $1.2 million and $1.2 million as of January 3, 2016 and December 28, 2014 , respectively.

We have agreements, expiring through 2022 , to use cold storage warehouses owned by partnerships, of which we are 50% partners.

We have agreed to pay prevailing competitive rates for use of the facilities, subject to aggregate guaranteed minimum annual fees.

In 2015 , 2014 , the three months ended December 29, 2013 , the five months ended September 26, 2013 and the twelve months ended April 28, 2013 , we paid $16.3 million , $20.7 million , $4.5 million , $7.4 million and $16.6 million , respectively, in fees for use of the facilities.

We had investments in the partnerships of $5.1 million as of January 3, 2016 and $4.2 million as of December 28, 2014 , respectively.

2025 $ 71 $ 3 $ 73

After 2029 208 9 217

Total lease payments $ 441 $ 19 $ 460

Present value discount ( 99 ) — ( 99 )

Present value of lease obligations $ 341 $ 19 $ 361

The following table presents the weighted-average lease term and discount rate for our finance and operating leases:

2024 December 31,

Weighted-average remaining lease term (years):

Finance leases 9.4 10.2

Operating leases 10.8 10.9

Weighted-average discount rate:

Finance leases 0.8 % 2.7 %

Operating leases 4.8 % 4.7 %

The components of total lease cost included in the consolidated statements of income are presented in the following table:

2024 2023 2022

(in millions)

Operating lease cost $ 83 $ 90 $ 123

Finance lease cost:

Amortization of leased assets 3 23 3

Interest on lease obligations — 1 —

Short-term lease cost (1)

Variable lease cost (2)

Total lease cost $ 204 $ 234 $ 218

________________

(1) Represents the expense for leases with terms of one year or less, which are not included in the lease obligation.

(2) Represents the expense associated with lease payments that vary based on usage or changes in other circumstances, which are not included in the lease obligation.

The following table presents the classification of lease payments associated with our lease obligations in the statements of cash flows, as well as new, or modifications to existing, lease obligations entered into during the periods presented:

2024 2023 2022

(in millions)

Classification of lease payments:

Operating cash flows - finance leases (1)

Operating cash flows - operating leases 82 97 120

Financing cash flows - finance leases 3 4 3

New, or modifications to existing, finance lease obligations — 1 25

New, or modifications to existing, operating lease obligations 24 42 159

________________

(1) Represents the interest component of our payments on finance leases.

We have purchase commitments with certain livestock producers that obligate us to purchase all the livestock that these producers deliver.

Other arrangements obligate us to purchase a fixed amount of livestock.

We also use independent farmers and their facilities to raise hogs produced from our breeding stock in exchange for a performance-based service fee payable upon delivery.

We estimate the future obligations under these commitments based on available commodity livestock futures prices and internal projections about future hog prices, expected quantities delivered and anticipated performance.

Our estimated future obligations under these commitments are as follows:

(in millions)

As of January 3, 2016 , we were also committed to purchase approximately $210.5 million under forward grain contracts payable in 2016 .

We had $57.9 million of committed funds related to approved capital expenditure projects as of January 3, 2016 .

We have purchase commitments under forward grain contracts that obligate us to purchase a fixed amount of grain.

We also have contractual commitments to independent farmers who raise our hogs in exchange for a performance-based service fee payable upon delivery.

We estimate the future obligations under these commitments based on the amounts that are fixed and determinable in the related contracts.

There are additional variable components of these contracts not included in our estimates that are based on quantities delivered and performance.

Our estimated future obligations under these and other commitments are as follows:

Year (in millions)

All minimum purchase commitments under these contracts were fulfilled in each of fiscal years 2024, 2023 and 2022.

In 2019, we announced that we planned to contribute up to $ 250 million to Align through 2028 to fund various projects as approved by Align’s board from time to time.

As of December 29, 2024, we had contributed $ 114 million in capital toward these planned contributions.

Should the board, of which we have 50 % of the voting power, choose not to approve additional projects, the remaining contributions would not be required.

We have committed to contribute up to $ 25 million to the TPG Rise Climate investment fund through July 2027.

As of December 29, 2024, we had contributed $ 17 million in capital toward this commitment.

We had $ 73 million of committed funds related to approved capital expenditure projects as of December 29, 2024.

These projects are expected to be funded with cash flows from operations and/or borrowings under credit facilities.

As part of our business, we are a party to various financial guarantees and other commitments as described below.

These arrangements involve elements of performance and credit risk that are not included in the consolidated balance sheet as of January 3, 2016 .

We could become liable in connection with these obligations depending on the performance of the guaranteed party or the occurrence of future events that we are unable to predict.

If we consider it probable that we will become responsible for an obligation, we will record the liability on our consolidated balance sheet.

As of January 3, 2016 , we continued to guarantee $6.7 million of leases that were transferred to JBS S.A.

in connection with the sale of Smithfield Beef, Inc which closed in October 2008.

This guaranty may remain in place until the leases expire through February 2022.

Income tax expense consists of the following:

Twelve Months Ended

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

Smithfield and certain other joint venture partners in Monarch joint and severally guarantee Monarch’s debt, interest and fees.

As of December 29, 2024, the maximum amount of loans that could be outstanding under Monarch’s debt agreements was $ 61 million and the loans mature in June 2025.

Monarch’s outstanding debt was $ 43 million as of the end of fiscal year 2024.

The guarantee involves elements of performance and credit risk and is not included in the consolidated balance sheets.

We could become liable in connection with Monarch’s obligation depending on the ability of Monarch to perform on its obligation.

If we consider it probable that we will become responsible for the obligation, we would record the liability on our consolidated balance sheet.

Income (loss) from continuing operations before income taxes consists of the following:

2024 2023 2022

(in millions)

$ 1,008 $ ( 134 ) $ 1,059

Foreign 53 5 ( 12 )

Total income (loss) from continuing operations before income taxes

$ 1,061 $ ( 129 ) $ 1,047

Income Tax Expense

Income tax expense (benefit) from continuing operations consists of the following:

2024 2023 2022

(in millions)

Current income tax expense:

Federal $ 161 $ 55 $ 206

State 19 33 23

Foreign — — —

Deferred income tax expense (benefit):

Total income tax expense

A reconciliation of taxes computed at the federal statutory rate to the effective tax rate is as follows:

Twelve Months Ended

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

Federal 72 ( 120 ) ( 6 )

State 8 ( 6 ) 4

Foreign 11 ( 4 ) 4

Total income tax expense (benefit) $ 271 $ ( 41 ) $ 231

Effective Tax Rate Reconciliation

The following table reconciles the federal statutory income tax rate to our effective tax rate:

2024 2023 2022

Federal income taxes at statutory rate 21.0 % 21.0 % 21.0 %

Uncertain tax positions

3.5 ( 13.0 ) 0.4

State income taxes, net of federal tax benefit 1.7 ( 3.5 ) 2.2

Impact of foreign operations 0.5 0.1 ( 1.0 )

Equity method investments (1)

0.2 7.4 ( 0.1 )

Officers’ life insurance

( 0.1 ) 2.9 0.5

Foreign income taxes ( 0.4 ) 4.3 —

Net change in uncertain tax positions

Net change in valuation allowance

Manufacturer's deduction

Foreign restructuring

Tax credits (2)

( 1.3 ) 13.0 ( 1.3 )

Other 0.5 — 0.4

Effective tax rate 25.5 % 32.2 % 22.1 %

We had income taxes receivable of $87.5 million and $64.4 million as of January 3, 2016 and December 28, 2014 , respectively, in prepaid expenses and other current assets.

Additionally, we had current taxes payable of $1.2 million as of December 28, 2014 in other current liabilities.

The tax effects of temporary differences consist of the following:

________________

(1) The results of our equity method investments are excluded from income (loss) from continuing operations before income taxes.

However, to the extent applicable, income taxes on our equity method investments are included in income tax expense (benefit), which can have significant impact on our computed effective tax rate.

(2) We recognized federal tax credits of $ 14 million, $ 17 million and $ 13 million in fiscal years 2024, 2023 and 2022, respectively.

The impact of the reconciling items between the federal statutory rate and our effective tax rate were more pronounced in fiscal year 2023 largely due to the pre-tax loss of $ 129 million in fiscal year 2023 compared to pre-tax income of $ 1,061 million and $ 1,047 million in fiscal years 2024 and 2022, respectively.

Income Taxes Receivable and Payable

Income taxes receivable totaled $ 99 million and $ 27 million as of December 29, 2024 and December 31, 2023, respectively, and were included in prepaid expenses and other current assets on the consolidated balance sheets.

Income taxes payable totaled $ 9 million as of December 29, 2024 and was included in accrued expenses and other current liabilities on the consolidated balance sheet.

We had long-term income taxes receivable of $ 13 million as of December 31, 2023 included in other assets on the consolidated balance sheet.

Deferred Tax Assets and Liabilities

The tax effects of temporary differences between the tax basis and book basis of our assets and liabilities are presented in the table below:

2024 December 31,

(in millions)

Deferred tax assets:

Research and development expenses $ 104 $ 98

Operating lease obligations 79 92

Pension and other retirement liabilities 72 67

Tax credits, carryforwards and net operating losses

Accrued expenses and other current liabilities 46 101

Tax credits, carryforwards and net operating losses (1)

Employee benefits 14 18

Deferred payroll taxes 3 24

Total deferred tax asset before valuation allowance 372 458

Valuation allowance (2)

Total deferred tax assets

Total deferred tax asset $ 364 $ 446

Deferred tax liabilities:

1 unchanged sentence

Intangible assets 307 309

Investments in subsidiaries

Total deferred tax liabilities

The following table presents the classification of deferred taxes in our balance sheets as of January 3, 2016 and December 28, 2014 :

(in millions)

Prepaids and other current assets

Deferred income taxes, net

Management makes an assessment to determine if its deferred tax assets are more likely than not to be realized.

Valuation allowances are established in the event that management believes the related tax benefits will not be realized.

The valuation allowance primarily relates to state credits, state net operating loss carryforwards and losses in foreign jurisdictions for which no tax benefit was recognized.

During 2015 , the valuation allowance decreased $15.7 million which is primarily due to utilization of foreign losses and valuation allowance releases included in foreign restructuring.

During 2014 , the valuation allowance decreased by $7.4 million which is primarily due to foreign valuation allowance releases and expirations.

The tax credits, carryforwards and net operating losses expire from 2016 to 2036.

There were foreign subsidiary net earnings that were considered permanently reinvested of $198.5 million and $110.2 million as of January 3, 2016 and December 28, 2014 , respectively.

It is not reasonably determinable as to the amount of deferred tax liability that would need to be provided if such earnings were not reinvested.

A reconciliation of the beginning and ending liability for unrecognized tax benefits is as follows:

Operating lease assets 78 90

Inventory 38 56

Investments 27 25

Total deferred tax liability $ 882 $ 920

Net deferred tax liability $ 518 $ 474

________________

(1) We have $ 3 million of gross foreign net operating losses that will expire between 2030 and 2032.

We have $ 643 million of gross state net operating losses, $ 37 million of which have no expiration, and $ 606 million that will expire between 2025 and 2043.

We have $ 3 million of state tax credits that will expire between 2025 and 2038.

(2) Valuation allowances are established if the Company’s deferred tax assets are not more likely than not to be realized.

The valuation allowance primarily relates to state credits and state net operating loss carryforwards, which are expected to expire unused.

Unrecognized Tax Benefits

A reconciliation of the beginning and ending liability, excluding interest and penalties, for unrecognized tax benefits is as follows:

(in millions)

Balance, April 28, 2013

Additions for tax positions taken in the current year

Reduction for tax positions taken in prior years

Settlements with taxing authorities

Balance, January 2, 2022 $ 21

Additions for tax positions taken in fiscal year 2022 11

Lapse of statute of limitations ( 3 )

Balance, December 29, 2013

Additions for tax positions taken in the current year

Additions for tax positions taken in prior years

Settlements with taxing authorities

Balance, January 1, 2023 28

Additions for tax positions taken in fiscal year 2023 1

Additions for tax positions taken for prior years 17

Lapse of statute of limitations ( 1 )

Balance, December 31, 2023 45

Additions for tax positions taken in the current year

Reductions for tax positions taken in prior years

Settlements with taxing authorities

Additions for tax positions taken in fiscal year 2024 5

Additions for tax positions taken for prior years 59

Reductions for cash remittances for tax positions taken in prior years ( 17 )

Lapse of statute of limitations ( 5 )

Balance, January 3, 2016

Balance, December 29, 2024 $ 87

During fiscal years 2024, 2023 and 2022, we recognized interest and penalties of $ 2 million, $ 4 million, and $( 2 ) million, respectively, within income tax expense (benefit).

The unrecognized tax benefits, if recognized, would favorably affect income tax expense by $ 29 million, $ 25 million, and $ 13 million in fiscal years 2024, 2023 and 2022, respectively.

It is not practicable at this time to estimate the amount of unrecognized tax benefits that will change in the next twelve months.

We operate in multiple taxing jurisdictions, both within the U.S.

and outside of the U.S., and are subject to examination from various tax authorities.

The liability for unrecognized tax benefits included $3.2 million and $4.9 million of accrued interest as of January 3, 2016 and December 28, 2014 , respectively.

We recognized $1.0 million of net interest income during 2015 , $0.3 million of net interest expense during 2014 , $0.5 million of net interest income during the eight months ended December 29, 2013 and $0.4 million of net interest expense during the twelve months ended April 28, 2013 , respectively, in income tax expense.

The liability for unrecognized tax benefits included $10.2 million as of January 3, 2016 and $13.0 million as of December 28, 2014 , that if recognized, would impact the effective tax rate.

The liability for unrecognized tax benefits included $ 11 million and $ 9 million of accrued interest as of December 29, 2024 and December 31, 2023, respectively.

We are currently being audited in several tax jurisdictions and remain subject to examination until the statute of limitations expires for the respective tax jurisdiction.

Within specific countries, we may be subject to audit by various tax authorities, or subsidiaries operating within the country may be subject to different statute of limitations expiration dates.

Within the U.S.

and Mexico, we may be subject to audit by various tax authorities, and our subsidiaries operating within each country may be subject to different statute of limitations expiration dates.

We have concluded all U.S.

federal income tax matters through the tax year ended December 29, 2013 .

We are currently under U.S federal examination for the tax years ended December 28, 2014 and January 3, 2016 .

Based upon the expiration of statutes of limitations and/or the conclusion of tax examinations in several jurisdictions as of January 3, 2016 , we believe it is reasonably possible that the total amount of previously unrecognized tax benefits may decrease by up to $3.0 million within twelve months of January 3, 2016 .

Beginning with the three months ended December 29, 2013 , the Company, with its respective subsidiaries, is included in its U.S.

parent company's consolidated federal income tax group and consolidated income tax return.

The members of the consolidated group have elected to allocate income taxes among the members of the group by the separate return method, under which the parent company credits the subsidiary for income tax reductions resulting from the subsidiary's inclusion in the consolidated return, or the parent company charges the subsidiary for its allocated share of the consolidated income tax liability.

PENSION AND OTHER RETIREMENT BENEFIT PLANS

federal income tax matters through the tax year ended January 1, 2017.

We are currently under U.S federal examination for all subsequent tax years through December 29, 2024.

We are also subject to examination from tax authorities in Mexico and certain U.S.

states for the tax years ended January 3, 2021 through December 29, 2024.

We consider the earnings of our foreign subsidiaries to be indefinitely reinvested as we intend to use these earnings in our foreign operations.

The amount of foreign subsidiary net earnings that was considered indefinitely reinvested was $ 164 million and $ 141 million as of December 29, 2024 and December 31, 2023, respectively, which is considered previously taxed income.

The determination of any unrecorded deferred tax asset or liability on the remaining excess carrying amount of our investments over their respective tax bases is not practicable due to the uncertainty of how these investments would be recovered and such differences are not expected to be recognized in the foreseeable future.

PENSION AND OTHER RETIREMENT PLANS

Company Sponsored Defined Benefit Pension Plans

We provide the majority of our U.S.

employees with pension benefits.

Salaried employees are provided benefits based on years of service and average salary levels.

Hourly employees are provided benefits of stated amounts for each year of service.

The following table presents a reconciliation of the pension benefit obligation, plan assets and the funded status of these pension plans:

We have several qualified and non-qualified defined benefit pension plans.

Benefits under the qualified plans were frozen in 2021 for all non-union participants.

The following table presents a reconciliation of the pension benefit obligation, plan assets and the funded status of our pension plans:

2024 December 31,

(in millions)

1 unchanged sentence

Benefit obligation at beginning of year $ 1,829 $ 1,815

Service cost 12 13

Interest cost 99 98

Benefits paid ( 116 ) ( 118 )

Actuarial loss

Past service cost

Actuarial (gain) loss ( 24 ) 21

Benefit obligation at end of year 1,799 1,829

6 unchanged sentences

Funded status $ 302 $ 278

Amounts recognized in the consolidated balance sheet:

Amounts recognized in the consolidated balance sheets:

Net long-term pension liability 279 255

3 unchanged sentences

(1) Excludes the assets and related activity of our non-qualified defined benefit pension plans.

The fair value of assets related to our non-qualified plans was $111.4 million and $107.9 million as of January 3, 2016 and December 28, 2014 , respectively.

We made $31.6 million and $6.6 million of cash contributions to our non-qualified plans in 2015 and 2014 , respectively.

Benefits paid for our non-qualified plans were $28.3 million and $26.7 million in 2015 and 2014 , respectively.

The accumulated benefit obligation for all defined benefit pension plans was $1.7 billion and $1.7 billion as of January 3, 2016 and December 28, 2014 , respectively.

The accumulated benefit obligation for all of our defined benefit pension plans exceeded the fair value of plan assets for all periods presented.

The following table shows the pre-tax unrecognized items included as components of accumulated other comprehensive income (loss) related to our defined benefit pension plans as of the dates indicated:

The fair value of assets related to our non-qualified plans was $ 141 million and $ 128 million as of December 29, 2024 and December 31, 2023, respectively.

These assets are recorded in prepaid expenses and other current assets, and other assets within the consolidated balance sheets.

The accumulated benefit obligation for all defined benefit pension plans was $ 1,774 million and $ 1,803 million as of December 29, 2024 and December 31, 2023, respectively.

The accumulated benefit obligation exceeded plan assets for all defined benefit plans as of December 29, 2024 and December 31, 2023, respectively.

The following table presents the pre-tax unrecognized items included as components of accumulated other comprehensive loss related to our defined benefit pension plans as of the dates indicated:

2024 December 31,

(in millions)

Unrecognized actuarial loss $ ( 552 ) $ ( 489 )

Unrecognized prior service credit

We expect to recognize $11.4 million of the actuarial loss and $2.2 million of the prior service credit in net periodic pension cost in 2016 .

The following table presents the components of the net periodic pension cost for the periods indicated:

Twelve Months Ended

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

Unrecognized prior service cost ( 2 ) ( 3 )

The following table presents the components of the net periodic pension cost (benefit) for the periods indicated:

2024 2023 2022

(in millions)

Service cost $ 12 $ 13 $ 23

Interest cost 99 98 77

Expected return on plan assets ( 107 ) ( 107 ) ( 128 )

Net amortization

Settlement loss (1)

Net periodic pension cost

——————————————

A settlement loss was recognized during 2014 as the result of terminated vested participants in our qualified plans electing an early cash payout.

Amortization 18 18 22

Net periodic pension cost (benefit) $ 22 $ 22 $ ( 7 )

The following table shows our weighted average assumptions for the periods indicated:

Twelve Months Ended

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

Discount rate to determine net periodic benefit cost (1)

2024 2023 2022

Discount rate to determine net periodic pension cost (benefit) 5.57 % 5.58 % 3.07 %

Discount rate to determine benefit obligation 5.78 5.57 5.57

1 unchanged sentence

Rate of compensation increase 4.00 4.00 4.00

——————————————

We performed an interim remeasurement of our plan obligations and assets as of June 26, 2015.

The discount rate used to determine net periodic benefit cost was 4.3% for the first half of 2015 and 4.8% for the second half of 2015.

We use an independent third-party actuary to assist in the determination of assumptions used and the measurement of our pension obligation and related costs.

We use a third-party actuary to assist in the determination of assumptions used and the measurement of our pension obligation and related costs.

We review and select the discount rate to be used in connection with our pension obligation annually.

In determining the discount rate, we used a hypothetical model that used the yield on corporate bonds (rated AA or better) that coincides with the cash flows of the plans’ estimated benefit payouts.

The model uses a yield curve approach to discount each cash flow of the liability stream at an interest rate specifically applicable to the timing of each respective cash flow.

Using imputed interest rates, the model sums the present value of each cash flow stream to calculate an equivalent weighted average discount rate.

We use this resulting weighted average discount rate to determine our final discount rate.

In 2014 we began to use a new mortality table that has the flexibility to consider industry specific groups, such as blue collar or white collar.

In determining the discount rate, a hypothetical bond portfolio is constructed based on bonds (with an AA rating or better) whose cash flows from coupons and maturities match the year-by-year projected benefit payments from defined benefit pension plans.

We use the resulting yield of this portfolio to determine the discount rate applicable to our obligation.

A similar methodology is used to develop the discount rate applicable to service cost.

To determine the expected long-term return on plan assets, we consider the current and anticipated asset allocations, as well as historical and estimated returns on various categories of plan assets.

Long-term trends are evaluated relative to market factors such as inflation, interest rates and fiscal and monetary polices in order to assess the capital market assumptions.

Over the 5-year period ended January 3, 2016 and December 28, 2014 , the average rate of return on plan assets was approximately 6.75% and 9.81% , respectively.

Actual results that differ from our assumptions are accumulated and amortized over future periods and, therefore, affect expense in future periods.

Long-term trends are evaluated relative to market factors such as inflation, interest rates and fiscal and monetary policies in order to assess the capital market assumptions.

Actual results that differ from our assumptions are recorded in accumulated other comprehensive loss and amortized over future periods and, therefore, affect expense in future periods.

Pension plan assets may be invested in cash and cash equivalents, equities, commingled funds, debt securities and alternative investments.

Our investment policy for the pension plans is to balance risk and return through a diversified portfolio of high-quality equity and fixed income securities.

Equity targets for the pension plans are as indicated in the following table.

Maturity for fixed income securities is managed such that sufficient liquidity exists to meet near-term benefit payment obligations.

The plans retain outside investment advisors to manage plan investments within parameters established by our plan trustees.

The following table presents the fair value of our qualified pension plan assets by major asset category as of January 3, 2016 and December 28, 2014 .

The following table presents the fair value of our qualified pension plan assets by major asset category.

The allocation of our pension plan assets is based on the target range presented in the following table.

Asset category:

2024 December 31,

2023 Target Range

(in millions)

3 unchanged sentences

Alternative assets 296 302 2 - 25 %

See Note 12 — Fair Value Measurements for additional information about the fair value of our pension assets.

We do not expect to have a funding requirement in 2016 for our qualified pension plans.

See Note 18 — Subsequent Events for additional information about contributions made subsequent to year-end.

Total plan assets $ 1,498 $ 1,551

See “Note 16:

Fair Value Measurements” for additional information about the fair value of our pension assets.

The funding requirement for our qualified pension plans in fiscal year 2025 is expected to be $ 6 million.

We also expect to contribute $ 23 million to our non-qualified pension plans to cover expected benefit payments.

Expected future benefit payments for our defined benefit pension plans are as follows:

(in millions)

Fiscal Year (in millions)

2030 - 2034 659

Multiemployer Defined Benefit Pension Plans

6 unchanged sentences

Each multiemployer plan in which we participate has a certified zone status as currently defined by the Pension Protection Act of 2006.

The zone status is based on information provided to us and other participating employers by each plan and is certified by the plan's actuary.

The zone status is based on information provided by each plan and is certified by the plan's actuary.

The following are descriptions of the zone status types based on criteria established under the Internal Revenue Code (“IRC”):

5 unchanged sentences

• “Green” Zone —Plan has been determined to be neither in “critical status” nor in “endangered status,” and is generally at least 80% funded.

All plans in which we participate were in the "green" zone for the two most recent benefit plan years that have been certified.

The following table summarizes our contributions to multiemployer plans (1) :

Twelve Months Ended

January 3, 2016

December 28, 2014

April 29 - December 29, 2013

April 28, 2013

The IAM National Pension Fund National Pension Plan was in the “red” zone, and all other plans in which we participate were in the “green” zone for the two most recent benefit plan years that have been certified.

The following table summarizes information about the multiemployer plans in which we participate, including our contributions to the plans.

Our contributions to these plans did not exceed 5% of total plan contributions for any plan year presented.

Plan EIN / PN (1)

2024 2023 2022 Expiration Dates of Collective Bargaining Agreements

(in millions)

United Food and Commercial Workers International Union Industry Pension Fund

51-6055922 / 001

Central Pension Fund of the International Union of Operating Engineers and Participating Employers

36-6052390 / 001

IAM National Pension Fund National Pension Plan

51-6031295 / 002

February 2018

United Food and Commercial Workers International Union Industry Pension Fund 51-6055922 / 001 $ 1 $ 1 $ 1 Multiple (2)

Central Pension Fund of the International Union of Operating Engineers and Participating Employers 36-6052390 / 001 — — — October 2028

IAM National Pension Fund National Pension Plan 51-6031295 / 002 — — — February 2026

Total contributions to multiemployer plans $ 1 $ 2 $ 2

________________

Contributions represent the amounts we contributed to the plans during the periods ending in the specified year.

Our contributions to each plan did not exceed 5% of total plan contributions for any plan year presented.

(1) Represents the Employer Identification Number and the three-digit plan number assigned to a plan by the Internal Revenue Service.

(2) We have multiple collective bargaining agreements associated with the United Food and Commercial Workers International Union Industry Pension Fund.

These agreements are currently scheduled to expire in May 2016, January 2018 and December 2018.

Other Employee Benefit Plans

We sponsor defined contribution pension plans (401(k) plans) covering substantially all U.S.

Our contributions vary depending on the plan but are based primarily on each participant’s level of contribution and cannot exceed the maximum allowable for tax purposes.

Total contributions were $21.6 million , $18.2 million , $4.1 million , $8.0 million , and $15.0 million in 2015 , 2014 , the three months ended December 29, 2013 , the five months ended September 26, 2013 and twelve months ended April 28, 2013 , respectively.

These agreements are currently scheduled to expire between January 2026 and May 2028.

Other Post-Employment Benefit Plans

We sponsor defined contribution plans (401(k) plans) covering substantially all U.S.

The amount of employee contributions we match varies depending on the plan or other factors, but is based primarily on each participant’s level of contribution and cannot exceed the maximum allowable for tax purposes.

Total Company contributions were $ 68 million, $ 67 million, and $ 68 million, in fiscal years 2024, 2023 and 2022, respectively.

We also provide health care and life insurance benefits for certain retired employees.

1 unchanged sentence

We retain the right to modify or eliminate these benefits.

We consider disclosures related to these plans immaterial to the consolidated financial statements and related notes.

Upon completion of the Merger, all outstanding shares of Smithfield were cancelled and the Company's shareholders received the Merger Consideration for each share of common stock held prior to the effective time of the Merger.

As a result of the Merger, all of the outstanding shares of Merger Sub were converted into 1,000 shares of common stock of the Company, no par value, and such shares are owned by a wholly owned subsidiary of WH Group.

There are no other shares of stock outstanding in the Company.

See Note 2 — Merger and Acquisitions for further information on the Merger.

Common Stock Repurchases

During the twelve months ended April 28, 2013 , we repurchased 19,068,079 shares of our common stock for $386.4 million , including related fees.

The price of the repurchased shares was allocated among common stock, additional paid-in capital and retained earnings in our consolidated condensed balance sheet in accordance with applicable accounting guidance.

From June 2011 through the Merger Date, we repurchased 28,244,783 shares of our common stock for $575.9 million , including related commissions, at an average price of $20.38 .

Stock-Based Compensation

During 2014, WH Group adopted a share incentive plan to provide incentives to various executives and management of WH Group and its subsidiaries (the WH Group Incentive Plan).

The WH Group stock trades on the Stock Exchange of Hong Kong Limited.

In 2014, 160,500,000 stock options were granted to Smithfield executives and management under the WH Group Incentive Plan.

Stock options granted under the WH Group Incentive Plan are subject to graded vesting over five years and were valued in five separate tranches, according to the expected life of each tranche.

No stock options were granted in 2015.

We recognized $17.6 million and $9.2 million of compensation expense for the stock options in 2015 and 2014 , respectively.

The related income tax benefit recognized was $6.4 million and $3.4 million in 2015 and 2014 , respectively.

There was no compensation expense capitalized as part of inventory or fixed assets in 2015 nor 2014 .

The fair value of each option granted was estimated on the date of grant using a binomial option pricing model.

The expected annual volatility was based on the historical volatility of comparable companies.

The following table summarizes the assumptions made in determining the fair value of stock options granted in 2014 (1) :

Expected annual volatility

Dividend yield

Risk free interest rate

Expected option life (years)

We consider disclosures related to these plans immaterial to the consolidated financial statements.

Stock Split and Initial Public Offering

On January 17, 2025, the Company’s board of directors and shareholder approved a 380,069.232 -for-one stock split of its issued and outstanding shares of common stock, resulting in issued and outstanding shares of common stock of 380,069,232 , which was effected through filing of an amendment to the Company’s articles of incorporation on January 17, 2025.

As part of the amendment, the number of authorized shares of common stock was revised to 5,000,000,000 , the par value of which was not adjusted, and 100,000,000 shares of preferred stock were authorized.

All share and per share amounts for all periods presented in the accompanying financial statements have been adjusted retroactively to reflect this stock split.

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.

In connection with the IPO, we granted to our directors and certain of our employees and certain directors and employees of WH Group:

• options to purchase 9,822,467 shares with an exercise price equal to the IPO price and an aggregate grant date fair value of $ 30 million;

• 1,527,000 restricted stock units (“RSUs”) with an aggregate grant date fair value of $ 31 million.

Both the options and RSUs vest over a five year period, with 20 % vesting each year.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of the following (net of tax):

2024 2023 2022

The options granted in 2014 were valued in separate tranches according to the expected life of each tranche.

The above table reflects the weighted average risk free interest rate and expected option life of each tranche.

The expected dividend yield was the same for all options granted in 2014.

The following table summarizes stock option activity under the WH Group Incentive Plan as of January 3, 2016 , and changes during the year then ended:

Number of Shares

Weighted Average Exercise Price (HKD)

Weighted Average Exercise Price (USD)

Weighted Average Remaining Contractual Term (Years)

Aggregate Intrinsic Value

(in millions)

Outstanding as of December 28, 2014

Outstanding as of January 3, 2016

Exercisable as of January 3, 2016

The weighted average grant-date fair value of options granted during 2014 was $0.42 USD ( $3.22 HKD).

As of January 3, 2016 , there was $23.1 million of total unrecognized compensation cost related to nonvested stock options granted under the WH Group Incentive Plan.

That cost is expected to be recognized over a weighted average period of 2.4 years.

During the twelve months ended May 3, 2009, we adopted the 2008 Incentive Compensation Plan (the Incentive Plan), which replaced the 1998 Stock Incentive Plan and provided for the issuance of non-statutory stock options and other awards to employees, non-employee directors and consultants.

Upon completion of the Merger, all then-outstanding stock-based compensation awards, whether vested or unvested, were converted into the right to receive the Merger Consideration, less the exercise price of such awards, if any.

As a result, we made aggregate cash payments totaling $82.1 million to plan participants following the Merger, which were included as a component of the purchase price consideration.

The Incentive Plan was discontinued as a result of the Merger.

Stock-based compensation expense was $2.0 million and $8.4 million for the five months ended September 26, 2013 and the twelve months ended April 28, 2013 , respectively.

The related income tax benefits recognized were $0.4 million and $1.8 million for the five months ended September 26, 2013 and the twelve months ended April 28, 2013 , respectively.

There was no compensation expense capitalized as part of inventory or fixed assets during the five months ended September 26, 2013 nor the twelve months ended April 28, 2013 .

Call Spread Transactions

In connection with the issuance of the Convertible Notes (see Note 7 — Debt ), we entered into separate convertible note hedge transactions with respect to our common stock to minimize the impact of potential economic dilution upon conversion of the Convertible Notes, and separate warrant transactions.

We purchased call options in private transactions that permitted us to acquire up to approximately 17.6 million shares of our common stock at an initial strike price of $22.68 per share, subject to adjustment, for $88.2 million .

In general, the call options allowed us to acquire a number of shares of our common stock initially equal to the number of shares of common stock issuable to the holders of the Convertible Notes upon conversion.

These call options terminated upon the maturity of the Convertible Notes.

We also sold warrants in private transactions for total proceeds of approximately $36.7 million .

The warrants permitted the purchasers to acquire up to approximately 17.6 million shares of our common stock at an initial exercise price of $30.54 per share, subject to adjustment.

In July 2013, we repaid the outstanding principal amount on our Convertible Notes totaling $400.0 million .

As part of the settlement of the Convertible Notes, we delivered 3,894,476 shares of our common stock to the holders of the notes.

Simultaneously, we exercised a call option, which we entered into in connection with the original issuance of the Convertible Notes, entitling us to receive 3,894,510 shares from the counter-parties.

As a result, we retired 34 net shares of our common stock upon the settlement of the Convertible Notes.

In October 2013, we paid $79.4 million to holders of the warrants to unwind the contracts due to the change of control related to the Merger.

Stock Held in Trust

We maintain a non-qualified defined Supplemental Pension Plan (the Supplemental Plan) the purpose of which is to provide supplemental retirement income benefits for those eligible employees whose benefits under the tax-qualified plans are subject to statutory limitations.

A grantor trust has been established for the purpose of satisfying the obligations under the plan.

The shares of the Company's stock held by the Supplemental Plan were converted to cash as a result of the Merger.

As part of the Incentive Plan director fee deferral program, we purchased shares of our common stock on the open market for the benefit of the plan's participants.

These shares were held in a rabbi trust until transferred to the participants.

The shares held by the rabbi trust were converted to cash as a result of the Merger.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) consists of the following:

(in millions)

Foreign currency translation $ ( 8 ) $ ( 134 ) $ ( 327 )

1 unchanged sentence

Hedge accounting ( 26 ) 8 8

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss $ ( 452 ) $ ( 500 ) $ ( 708 )

Other Comprehensive Income (Loss)

The following tables present changes in the accumulated balances for each component of other comprehensive income (loss) and the related effects on net income of amounts reclassified out of other comprehensive income (loss):

Twelve Months Ended

January 3, 2016

December 28, 2014

The following table presents the details of other comprehensive income (loss).

2024 2023 2022

Before Tax Tax After Tax Before Tax Tax After Tax Before Tax Tax After Tax

(in millions)

Continuing operations:

Foreign currency translation:

Translation loss

Translation losses reclassified to non-operating (gain) loss

Pension accounting:

Actuarial gain (loss)

Prior Service Cost

Amortization of actuarial losses and prior service credits reclassified to cost of sales

Amortization of actuarial losses and prior service credits reclassified to SG&A

Hedge accounting:

Translation gains (losses) (1)

$ ( 130 ) $ — $ ( 130 ) $ 75 $ — $ 75 $ 33 $ — $ 33

Translation losses reclassified to non-operating gains

— — — — — — 16 — 16

Retirement benefits:

Actuarial gains (losses) ( 79 ) 19 ( 60 ) 2 — 1 36 ( 8 ) 27

Amortization of actuarial losses and prior service credits reclassified to non-operating gains

21 ( 5 ) 16 18 ( 4 ) 14 23 ( 6 ) 18

Gains (losses) arising during the period ( 56 ) 14 ( 41 ) 10 ( 2 ) 7 58 ( 15 ) 43

1 unchanged sentence

(Gains) losses reclassified to cost of sales 28 ( 7 ) 21 — — — ( 127 ) 33 ( 95 )

Total other comprehensive income (loss)

Twelve Months Ended

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

(in millions)

Losses reclassified to interest expense 2 — 1 2 — 1 1 — 1

Total other comprehensive income (loss) from continuing operations $ ( 232 ) $ 25 $ ( 207 ) $ 93 $ ( 4 ) $ 88 $ 70 $ ( 4 ) $ 66

Discontinued operations:

Foreign currency translation:

Translation gain (loss)

Pension accounting:

Amortization of actuarial losses and prior service credits reclassified to cost of sales

Amortization of actuarial losses and prior service credits reclassified to SG&A

Hedge accounting:

Gains (losses) arising during the period

Losses reclassified to sales

(Gains) losses reclassified to cost of sales

(Gains) losses reclassified to SG&A

Translation gains (losses) (1)

77 — 77 144 — 144 ( 107 ) ( 1 ) ( 108 )

Retirement benefits:

Amortization of actuarial losses and prior service (credits) reclassified to non-operating gains

— — — 1 — 1 ( 1 ) — ( 1 )

Derivative gains arising during the period 1 — 1 2 — 2 — — —

Derivative (gains) losses reclassified to sales ( 1 ) — ( 1 ) ( 1 ) — ( 1 ) 1 — 1

Total other comprehensive income (loss) from discontinued operations $ 76 $ — $ 76 $ 145 $ — $ 145 $ ( 106 ) $ ( 1 ) $ ( 107 )

Total other comprehensive income (loss)

$ ( 155 ) $ 25 $ ( 130 ) $ 238 $ ( 5 ) $ 234 $ ( 37 ) $ ( 5 ) $ ( 41 )

Other comprehensive income (loss) attributable to noncontrolling interest ( 35 ) — ( 35 ) 25 — 25 11 — 11

Other comprehensive income (loss) attributable to Smithfield $ ( 120 ) $ 25 $ ( 95 ) $ 213 $ ( 5 ) $ 208 $ ( 47 ) $ ( 5 ) $ ( 52 )

________________

(1) We consider the earnings in our non-U.S.

subsidiaries to be indefinitely reinvested, and accordingly, record no deferred income taxes on such amounts.

FAIR VALUE MEASUREMENTS

1 unchanged sentence

We are required to consider and reflect the assumptions of market participants in fair value calculations.

These factors include nonperformance risk (the risk that an obligation will not be fulfilled) and credit risk, both of the reporting entity (for liabilities) and of the counterparty (for assets).

These factors include nonperformance risk (the risk

that an obligation will not be fulfilled) and credit risk, both of the reporting entity (for liabilities) and of the counterparty (for assets).

We use, as appropriate, a market approach (generally, data from market transactions), an income approach (generally, present value techniques), and/or a cost approach (generally, replacement cost) to measure the fair value of an asset or liability.

14 unchanged sentences

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables set forth, by level within the fair value hierarchy, our financial assets and liabilities, including assets held in a rabbi trust used to fund the Supplemental Plan, that were measured at fair value on a recurring basis as of January 3, 2016 and December 28, 2014 :

January 3, 2016

December 28, 2014

(in millions)

The following tables set forth, by level within the fair value hierarchy, our financial assets and liabilities, including assets held in a rabbi trust used to fund our non-qualified defined benefit plan, that were measured at fair value on a recurring basis:

December 29, 2024 December 31, 2023

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

(in millions)

1 unchanged sentence

Foreign exchange contracts — — — — — 1 — 1

Bond securities

Mutual funds (1)

74 — — 84 33 — — 44

Insurance contracts — 104 — 104 — 129 — 129

Total $ 83 $ 110 $ — $ 202 $ 67 $ 146 $ — $ 224

Commodity contracts 32 12 — 44 17 26 — 42

Interest rate swaps

Foreign exchange contracts

Total $ 32 $ 12 $ — $ 44 $ 17 $ 26 $ — $ 42

__________________

(1) Institutional funds that are not publicly traded are estimated at fair value using the net asset value (“NAV”) per share of the investment as a practical expedient and are not categorized in the fair value hierarchy.

Therefore, the sum of the values categorized in the fair value hierarchy above do not agree to the total.

The following are descriptions of the valuation methodologies and key inputs used to measure financial assets and liabilities recorded at fair value on a recurring basis:

2 unchanged sentences

These valuation models make use of market-based observable inputs, including exchange traded prices and rates, yield curves, credit curves and measures of volatility.

Bond securities —Bond securities are valued at quoted market prices and are classified within Level 1.

Insurance contracts— Insurance contracts are valued at their cash surrender value using the daily asset unit value (AUV) which is based on the quoted market price of the underlying securities and classified within Level 2.

Level 3 derivatives are valued based on diesel fuel prices and use both observable and unobservable inputs.

There is a lack of price transparency with respect to forward prices for diesel fuel.

Such unobservable inputs are significant to the diesel fuel derivative contract valuation methodology.

• Mutual funds— Mutual funds consist of publicly traded funds and other institutional funds that are not publicly traded.

Publicly traded mutual funds are measured at fair value using quoted market prices and are categorized in Level 1 within the fair value hierarchy.

• Insurance contracts— Insurance contracts are valued at their cash surrender value using the daily asset unit value which is based on the quoted market price of the underlying securities and classified within Level 2.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

1 unchanged sentence

that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, for example, when there is evidence of impairment.

We had no significant assets or liabilities that were measured and recorded at fair value on a nonrecurring basis during 2015 nor 2014, except for the allocation of the total purchase consideration to the estimated fair values of our assets acquired and liabilities assumed by WH Group as part of the Merger .

We finalized the allocation in the third quarter of 2014 with no material adjustments.

See Note 2 — Merger and Acquisitions for further information on the Merger.

As of December 29, 2024, we had no significant assets or liabilities that were measured and recorded at fair value on a nonrecurring basis after initial recognition.

We recorded charges of $ 1 million, $ 1 million and $ 40 million in fiscal years 2024, 2023 and 2022, respectively, to write down certain assets to their estimated fair values.

Fair value was estimated using a variety of fair value techniques, including an income approach and a market approach based on the relevant information available, which consisted of level 3 inputs.

The charges for fiscal years 2024 and 2023 were recorded in cost of sales in the consolidated statements of income.

The charge for fiscal year 2022 was recorded in non-operating gains and represents the impairment of our investment in Norson.

The fair value of these assets at the time of remeasurement was not material.

Redeemable Noncontrolling Interest

The redemption value for the noncontrolling interest in Altosano is fair value.

We estimate the redemption value of Altosano using an income and a market approach.

Under the income approach, fair value is determined by using the projected discounted cash flows.

Under the market approach, the fair value is determined by reference to guideline companies that are reasonably comparable;

the fair value is estimated based on the valuation multiples of EBITDA.

The significant unobservable inputs used in the determination of the fair value have an inherent measurement uncertainty that if changed could result in higher or lower fair value measurements as of the reporting date.

The following table provides the significant unobservable level 3 inputs used in the valuation:

Unobservable Inputs December 29, 2024 December 31,

Weighted average cost of capital 9 % 11 %

Growth rate 3 % 3 %

EBITDA multiple 10 x 12 x

Control premium 25 % 25 %

Pension Plan Assets

The following table summarizes our qualified pension plan assets measured at fair value on a recurring basis (at least annually) as of January 3, 2016 and December 28, 2014 :

January 3, 2016

December 28, 2014

(in millions)

The following table summarizes our qualified pension plan assets measured at fair value on a recurring basis (at least annually):

December 29, 2024 December 31, 2023

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

(in millions)

2 unchanged sentences

common stock:

Health care 1 — — 1 3 — — 3

Financial services 2 ( 1 ) — 1 9 1 — 10

Retail and consumer products 1 — — 1 6 — — 6

Energy — — — — 1 — — 1

Information technology 1 — — 1 16 — — 16

3 unchanged sentences

Commingled funds:

International (1)

Domestic small cap (1)

Asset-backed securities (1)

Emerging markets securities (1)

Global equity — — — 504 — — — 449

Corporate debt securities — — — 166 — — — 157

Government debt securities (1)

Fixed income:

3 unchanged sentences

Diversified investment funds (1)

— — — 3 — — — 4

Limited partnerships (1)

Insurance contracts

— — — 293 — — — 298

Total fair value $ 513 $ ( 27 ) $ — 1,452 $ 611 $ 49 $ — 1,568

2 unchanged sentences

__________________

(1) Assets that are measured at fair value using net asset value per share as a practical expedient and have not been categorized in the fair value hierarchy.

(1) Assets that are measured at fair value using NAV per share as a practical expedient have not been categorized in the fair value hierarchy.

The following are descriptions of the valuation methodologies and key inputs used to measure pension plan assets recorded at fair value:

2 unchanged sentences

Actively traded money market funds are classified as Level 1 and included in cash and cash equivalents.

Equity securities— The fair value of equity securities are based on quoted prices in active markets and classified as Level 1.

• Equity securities— The fair value of equity securities is based on quoted prices in active markets and classified as Level 1.

Level 1 financial instruments include highly liquid instruments with quoted prices, such as equities and mutual funds traded in active markets.

Commingled Funds— The fair value of commingled funds are measured using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy.

The net asset value per share is based on the fair value of the underlying assets owned by the funds, minus its liabilities then divided by the total number of shares outstanding.

• Commingled funds— The fair value of commingled funds is measured using the NAV per share practical expedient and have not been categorized in the fair value hierarchy.

The NAV per share is based on the fair

value of the underlying assets owned by the funds, minus its liabilities then divided by the total number of shares outstanding.

Underlying assets of commingled funds primarily consist of liquid equity and fixed income securities with quoted prices in active markets.

Fixed income— When available, the fair value of fixed income securities are based on quoted prices in active markets and classified as Level 1.

• Fixed income— When available, the fair value of fixed income securities is based on quoted prices in active markets and classified as Level 1.

Level 1 financial instruments include highly liquid instruments with quoted prices, such as equities and mutual funds traded in active markets.

2 unchanged sentences

Level 2 fixed income instruments include corporate debt securities.

Alternative Investments— The fair value of alternative investments are measured using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy.

The net asset value per share is based on the fair value of the underlying assets owned by the alternative investment funds, minus its liabilities then divided by the total number of shares outstanding.

Limited partnerships— The fair value of limited partnerships are measured using the net asset value practical expedient and have not been categorized in the fair value hierarchy.

The net asset value is based on the fair value of the underlying assets owned by the partnership, minus its liabilities then multiplied by the ownership percentage of the pension plans.

Insurance contracts— The valuation of these guaranteed annuity insurance contracts is primarily based on quoted prices in active markets with adjustments for unobservable inputs caused by the unique nature of applying investment earnings as part of the participation guarantee.

Due to these unobservable inputs and the long-term nature of these investments, the contracts are classified as Level 3.

The following table summarizes the changes in our Level 3 pension plan assets for the twelve months ended January 3, 2016 and December 28, 2014 :

Insurance Contracts

(in millions)

Balance, December 29, 2013

Actual return on plan assets:

Related to assets held at the reporting date

Related to assets sold during the period

Purchases, sales and settlements, net

Balance, December 28, 2014

Actual return on plan assets:

Related to assets held at the reporting date

Related to assets sold during the period

Purchases, sales and settlements, net

Balance, January 3, 2016

• Alternative investments— The fair value of alternative investments is measured using the NAV per share practical expedient and have not been categorized in the fair value hierarchy.

The NAV per share is based on the fair value of the underlying assets owned by the alternative investment funds, minus its liabilities then divided by the total number of shares outstanding.

• Limited partnerships— The fair value of limited partnerships is measured using the NAV practical expedient and has not been categorized in the fair value hierarchy.

The NAV is based on the fair value of the underlying assets owned by the partnership, minus its liabilities then multiplied by the ownership percentage of the pension plans.

Other Financial Instruments

We determine the fair value of public debt using Level 2 inputs based on quoted market prices.

We determine the fair value of fixed-rate debt using Level 2 inputs based on quoted market prices.

The carrying amount of all other debt approximates fair value as those instruments are based on variable interest rates.

The following table presents the fair value and carrying value of total debt as of January 3, 2016 and December 28, 2014 :

January 3, 2016

December 28, 2014

Carrying Value

The following table presents the fair value and carrying value of total debt as of December 29, 2024 and December 31, 2023:

December 29, 2024 December 31, 2023

Fair Value Carrying Value Fair Value Carrying Value

(in millions)

Debt $ 1,821 $ 1,983 $ 1,770 $ 1,991

The carrying amounts of cash and cash equivalents, accounts receivable, notes payable and accounts payable approximate their fair values because of the relatively short-term maturity of these instruments.

RELATED PARTY TRANSACTIONS

The following table presents amounts owed from and to related parties as of January 3, 2016 and December 28, 2014 :

(in millions)

Current receivables from related parties

Total receivables from related parties

Current payables to related parties

Total payables to related parties

We had sales of $315.6 million , $183.2 million and $10.2 million , during 2015 , 2014 and the three months ended December 29, 2013 , respectively, to other subsidiaries of WH Group.

One of our vice presidents of our Hog Production segment holds an ownership interest in JCT LLC (JCT).

JCT owns certain farms that produce hogs under contract with the Hog Production segment.

During 2015 , 2014 , the eight months ended December 29, 2013 and the twelve months ended April 28, 2013 , we paid $1.9 million , $1.7 million , $1.4 million and $6.2 million , respectively, to JCT for the production of hogs.

During 2015 , the eight months ended December 29, 2013 and the twelve months ended April 28, 2013 , we received $0.1 million , $0.2 million and $2.6 million , respectively, from JCT for reimbursement of associated farm and other support costs.

We did not receive any reimbursement of associated farm or other support costs from JCT during 2014 .

Also, multiple other vice presidents of the Hog Production segment hold ownership interests in Seacoast, LLC, Advantage Farms, LLC, Old Oak Farms LLC, Pork Partners, Inc.

and Lisbon 1 Farms Inc.

These companies produce and raise hogs for us under contractual arrangements that are consistent with third party grower contracts.

During 2015 , 2014 , the eight months ended December 29, 2013 and the twelve months ended April 28, 2013 , we paid service fees of $2.4 million , $2.8 million , $1.1 million and $1.5 million , respectively, to these companies.

In 2015 , 2014 and the twelve months ended April 28, 2013 , we received $0.1 million , $0.1 million and $0.2 million , respectively, from these companies for reimbursement of associated farm and other support costs.

We did not receive any reimbursement of associated farm or other support costs during the eight months ended December 29, 2013 .

Wendell Murphy, a former director of the Company, and his immediate family members hold ownership interests in multiple farms that conduct business with us.

These farms either produce hogs for us or produce and sell feed ingredients to us.

In the twelve months ended April 28, 2013 , we paid $51.6 million to these entities for hogs, feed ingredients and reimbursement of associated farm and other support costs.

As a result of the Merger, Mr.

Murphy is no longer a director of the Company.

We believe that the terms of the foregoing arrangements were no less favorable to us than if entered into with unaffiliated companies.

REGULATION AND CONTINGENCIES

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.

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

In some instances, litigation ensues.

In addition, individuals may initiate litigation against us.

North Carolina Nuisance Litigation

In July, August and September 2013, 25 complaints were filed in the Superior Court of Wake County, North Carolina by 479 individual plaintiffs against Smithfield and our wholly owned subsidiary, Murphy-Brown alleging causes of action for nuisance and related claims.

All 25 complaints were dismissed without prejudice in September and October 2014.

In August, September and October 2014, 25 complaints were filed in the Eastern District of North Carolina by 515 individual plaintiffs against our wholly owned subsidiary, Murphy-Brown, alleging causes of action for nuisance and related claims.

The complaints stemmed from the nuisance cases previously filed in the Superior Court of Wake County.

On February 23, 2015, all 25 complaints were amended, one complaint was severed into two separate actions, and several additional plaintiffs were joined, bringing the total number of plaintiffs to 541.

On June 29, 2015, the Court granted Murphy-Brown's motion to strike certain allegations in the complaints, and plaintiffs subsequently amended all 26 complaints pursuant to the Court's order.

Ten plaintiffs dismissed their claims without prejudice.

Murphy-Brown filed its answers and affirmative defenses to all 26 complaints on August 31, 2015, and the parties are engaging in discovery.

During discovery, several additional plaintiffs dismissed their claims.

The 26 currently pending complaints include claims on behalf of 516 plaintiffs and relate to approximately 14 company-owned and 75 contract farms.

All 26 complaints include causes of action for temporary nuisance and negligence and seek recovery of an unspecified amount of compensatory, special and punitive damages.

The Company believes that the claims are unfounded and intends to defend the suits vigorously.

Our policy for establishing accruals and disclosures for contingent liabilities is contained in Note 1-Summary of Significant Accounting Policies.

We established a reserve estimating our expenses to defend against these and similar potential claims on the Successor's opening balance sheet.

Consequently, expenses and other liabilities associated with these claims for subsequent periods will not affect our profits or losses unless our reserve proves to be insufficient or excessive.

However, legal expenses incurred in our and our subsidiaries’ defense of these claims and any payments made to plaintiffs through unfavorable verdicts or otherwise will negatively impact our cash flows and our liquidity position.

Given that these matters are in its very preliminary stages and given the inherent uncertainty of the outcome for these and similar potential claims, we cannot estimate the reasonably possible loss or range of loss for these loss contingencies outside the expenses we will incur to defend against these claims.

We will continue to review whether an additional accrual is necessary and whether we have the ability to estimate the reasonably possible loss or range of loss for these matters.

REPORTABLE SEGMENTS

Our operating segments are determined on the basis of how we internally report and evaluate financial information used to make operating decisions and assess performance.

For external reporting purposes, we aggregate operating segments which have similar economic characteristics, products, production processes, types or classes of customers and distribution methods into reportable segments based on a combination of factors, including products produced and geographic areas of operations.

Our reportable segments are:

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

During all periods presented, our Chief Operating Decision Maker (CODM) has been the Chief Executive Officer of the Company.

Fresh Pork Segment

The Fresh Pork segment consists of our U.S.

fresh pork operations.

The Fresh Pork segment processes live hogs and 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.

Fresh pork products include loins, butts, picnics and ribs, among others.

The Fresh Pork segment processed 30.5 million hogs during 2015 .

Packaged Meats Segment

The Packaged Meats segment consists of our U.S.

packaged meats operations.

The Packaged Meats segment utilizes fresh pork and other raw meat products to produce a wide variety of packaged meats products in the U.S.

and markets them primarily in the U.S.

Packaged meats products include smoked and boiled hams, bacon, sausage, hot dogs (pork, beef and chicken), deli and luncheon meats, speciality products such as pepperoni, dry meat products, and ready-to-eat, prepared foods such as pre-cooked entrees and pre-cooked bacon and sausage.

The Packaged Meats segment sales volume totaled 3.0 billion pounds in 2015 .

Hog Production Segment

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

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

The Hog Production segment produces approximately 47% of the Fresh Pork segment's live hog requirements.

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

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

Internal hog sales

External hog sales

Other products (1)

——————————————

Consists primarily of grains.

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 International segment processed 4.6 million hogs and sold 463.2 million pounds and 826.7 million pounds of packaged meats and fresh meats, respectively, during 2015 .

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

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

Packaged meats

Fresh meats (1)

Hog production (2)

——————————————

Includes feathers, by-products and rendering .

Includes external hog and feed sales .

Corporate Segment

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

Segment Results

The following tables present information about the results of operations and the assets of our reportable segments.

The information contains certain allocations of expenses that we deem reasonable and appropriate for the evaluation of results of operations.

We do not allocate income taxes to segments.

Segment assets exclude intersegment account balances as we believe their inclusion would be misleading or not meaningful.

We believe all intersegment sales are at prices that approximate market.

Twelve Months Ended

January 3, 2016

The following tables present amounts of related party transactions and balances owed from and to related parties:

2024 December 31,

(in millions)

Segment Profit Information

Segment sales—

Fresh Pork (1)

Packaged Meats

Hog Production

International

Total segment sales

Intersegment sales—

Fresh Pork (1)

Packaged Meats

Hog Production

International

Total intersegment sales

Consolidated sales

Depreciation and amortization:

Packaged Meats

Hog Production

International

Consolidated depreciation and amortization

Interest (income) expense:

Packaged Meats

Hog Production

International

Consolidated interest expense

(Income) loss from equity method investments

Packaged Meats

Hog Production

International

Consolidated (income) loss from equity method investments

Operating profit (loss):

Packaged Meats

Hog Production

International

Consolidated operating profit

Receivables from related parties (1)

Payables to and other current liabilities with related parties (2)

________________

We do not reflect transfers of Fresh Pork to Packaged Meats as sales.

In WH Group's segment reporting the Fresh Pork segment includes transfers of fresh pork to the Packaged Meats segment as sales.

As such, Fresh Pork segment information reported by WH Group includes an additional $1.9 billion , $2.4 billion and $0.6 billion of sales for 2015 , 2014 and the three months ended December 29, 2013 , respectively.

Twelve Months Ended

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

(in millions)

Segment Profit Information

Segment sales—

Packaged Meats

Hog Production

International

Total segment sales

Intersegment sales—

Packaged Meats

Hog Production

International

Total intersegment sales

Consolidated sales

Depreciation and amortization:

Packaged Meats

Hog Production

International

Consolidated depreciation and amortization

Interest expense (income):

Packaged Meats

Hog Production

International

Consolidated interest expense

(Income) loss from equity method investments

Packaged Meats

Hog Production

International

Consolidated (income) loss from equity method investments

Operating profit (loss):

Packaged Meats

Hog Production

International

Consolidated operating profit

Segment Asset Information

(in millions)

Total assets:

Fresh Pork and Packaged Meats (1)

Hog Production

International

Corporate (2)

Consolidated total assets

Fresh Pork and Packaged Meats (1)

Hog Production

International

Consolidated investments

(1) Includes receivables from WH Group and its subsidiaries of $ 51 million and $ 34 million as of December 29, 2024 and December 31, 2023, respectively, as well as receivables from Murphy Family Farms of $ 45 million as of December 29, 2024.

These balances are recorded in accounts receivable, net and prepaid expenses and other current assets on the consolidated balance sheets.

(2) Includes amounts due to UGFH of $ 16 million as of December 31, 2023, which includes $ 8 million related to income taxes.

These amounts are included in accrued expenses and other current liabilities on the consolidated balance sheet.

The remaining balances are included in accounts payable.

2024 2023 2022

Given the nature of the Fresh Pork and Packaged Meats operations, many of their assets are shared and not allocated.

Accordingly, we have disclosed the assets on a combined basis, consistent with how they are reported to the CODM.

$1.2 billion of trademarks related to our domestic brands are owned by certain holding companies included within Corporate.

Additionally, $626.7 million and $660.5 million of accounts receivable were held by the SPV and included within Corporate as of January 3, 2016 and December 28, 2014 , respectively (see Note 7 — Debt for further information).

Twelve Months Ended

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

(in millions)

Capital expenditures:

Fresh Pork and Packaged Meats (1)

Hog Production

International

Consolidated capital expenditures

Sales to related parties (1)

$ 447 $ 501 $ 492

Given the nature of the Fresh Pork and Packaged Meats operations, many of their assets are shared and not allocated.

Accordingly, we have disclosed the capital expenditures on a combined basis, consistent with how they are reported to the CODM.

The following table shows the change in the carrying amount of goodwill by reportable segment for the periods noted:

Packaged Meats

International

Hog Production

(in millions)

Balance, December 29, 2013

Purchase accounting adjustments (1)

Other goodwill adjustments (2)

Balance, December 28, 2014

Other goodwill adjustments (2)

Balance, January 3, 2016

Payments to related parties (2)

________________

Purchase accounting adjustments relate to adjustments recognized in connection with the purchase price allocation due to the Merger.

We consider these adjustments immaterial to the Successor opening balance sheet and as such, did not retrospectively apply the adjustments to the Successor opening balance sheet.

Other goodwill adjustments primarily include the effects of foreign currency translation and an immaterial business acquisition during the second quarter of 2014.

The following table presents our consolidated sales attributed to operations by geographic area for the periods noted:

Twelve Months Ended

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

(in millions)

International

The following table presents our long-lived assets attributed to operations by geographic area as of January 3, 2016 and December 28, 2014 :

(in millions)

Long-lived assets:

International

Total long-lived assets

(1) Sales to related parties includes $ 388 million, $ 487 million and $ 471 million in sales to subsidiaries of WH Group, and $ 59 million, $ 4 million and $ 20 million in sales to certain equity method investees in fiscal years 2024, 2023 and 2022, respectively.

(2) Payments to related parties includes $ 494 million, $ 350 million and $ 520 million in payments to UGFH in fiscal years 2024, 2023 and 2022, respectively, which primarily consist of dividends.

Payments also include $ 154 million, $ 183 million and $ 209 million to certain equity method investees in fiscal years 2024, 2023 and 2022, respectively, primarily for raw materials used in our hog production operations and cold storage fees.

REGULATION AND CONTINGENCIES

Like other participants in our industry, we are subject to various laws and regulations administered by federal, state and other government entities, including the U.S.

Environmental Protection Agency and corresponding state agencies, as well as the USDA, the Grain Inspection, Packers and Stockyard Administration, the U.S.

Food and Drug Administration, the U.S.

Occupational Safety and Health Administration, the Commodity and Futures Trading Commission and similar agencies in foreign countries.

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

In some instances, litigation ensues.

In addition, individuals may initiate litigation against us.

Our policy for establishing accruals and disclosures for contingent liabilities is contained in “Note 1:

Summary of Significant Accounting Policies.” As of December 29, 2024 and December 31, 2023, we had recorded $ 141 million and $ 315 million in accrued expenses and other current liabilities on the consolidated balance sheets, respectively, related to litigation matters, including those described below.

We recorded charges of $ 5 million, $ 213 million and $ 12 million in fiscal years 2024, 2023 and 2022, respectively, for litigation matters, including those described below, in SG&A in the consolidated statements of income.

These matters will not affect our profits or losses in future periods unless our accruals prove to be insufficient or excessive.

It is reasonably possible that a change in our estimates may occur in the near term and that our accruals could be insufficient.

We are unable to estimate the amount of possible loss in excess of our accruals, which could be material.

Additionally, legal expenses incurred in our and our subsidiaries’ defense of these claims and any payments made to plaintiffs through unfavorable verdicts or otherwise could negatively impact our cash flows and our liquidity position.

Antitrust Price-Fixing Litigation

The Company has been named as one of 16 defendants in a series of class actions filed in 2018 in the U.S.

District Court for the District of Minnesota alleging antitrust violations in the pork industry.

The class cases were filed by three different groups of plaintiffs.

In all of these cases, the plaintiffs alleged that starting in 2009 and continuing through at least June of 2018, the defendant pork producers agreed to reduce the supply of hogs in the U.S.

in order to raise the price of hogs and all pork products.

The plaintiffs in all of these cases also challenged the defendant pork producers’ use of benchmarking reports from defendant Agri Stats, Inc., alleging that the reports allowed the pork producers to share proprietary information and monitor each producer’s compliance with the supposed agreement to reduce supply.

Payments in the aggregate amount of $ 194 million were made by us to settle all class claims.

In addition to the class actions, the Company has been named as a defendant in similar antitrust lawsuits and related claims brought by a number of individual parties who opted out of the classes.

The plaintiffs in the non-class cases assert the same or similar antitrust claims as the plaintiffs in the class actions.

The Company has entered into negotiations with many of these claimants and has settled certain of these cases.

Currently, 22 of these cases are pending against the Company.

The Attorneys General for the states of New Mexico and Alaska and the Commonwealth of Puerto Rico have filed similar complaints on behalf of their respective states, territories, agencies and citizens.

The Company has settled with Puerto Rico and Alaska.

The Company intends to vigorously defend against the remaining claims.

Antitrust Wage-Fixing Litigation

On November 11, 2022, Smithfield Foods, Inc.

and our wholly owned subsidiary, Smithfield Packaged Meats Corp., were named as two of the numerous defendants in a purported class action complaint filed in the U.S.

District Court for the District of Colorado alleging wage-fixing violations in the red meat industry.

The plaintiffs allege that the defendants, most of whom operate beef or pork processing plants, conspired to suppress wages paid to plant workers in the U.S.

in violation of the antitrust laws.

The plaintiffs sought damages on behalf of all employees of defendants and their subsidiaries from January 1, 2014, to the present.

The plaintiffs also sought treble damages and attorneys’ fees.

The defendants filed motions to dismiss the complaint, which were largely denied by the court on September 27, 2023.

The plaintiffs subsequently amended their complaint adding additional defendants, including our wholly owned subsidiary, Murphy-Brown of Missouri, LLC (which has been dismissed voluntarily), and expanding the class period back to 2000.

Since the case was filed, several defendants have settled.

On April 5, 2024, the remaining defendants moved to dismiss the amended complaint.

We intend to vigorously defend against these claims.

Maxwell Foods Litigation

On August 13, 2020, Maxwell Foods, LLC (“Maxwell”) filed a complaint against Smithfield Foods, Inc.

in the General Court of Justice, Superior Court Division for Wayne County, North Carolina.

The complaint alleged that Smithfield breached the Production Sales Agreement (“PSA”) between the parties (as well as the duty of good faith and fair dealing):

(1) by failing to provide Maxwell with the same pricing as other major hog suppliers in violation of a purported “Most-Favored-Nation Provision” found in a December 6, 1994 letter to Maxwell, (2) by failing to comply with an implicit duty to negotiate the PSA to provide alternative pricing to Maxwell when the Iowa-Southern Minnesota market allegedly ceased to be viable;

and (3) by failing to purchase Maxwell’s entire output of hogs since April 2020.

Smithfield filed a notice of removal to the U.S.

District Court of the Eastern District of North Carolina.

Smithfield also filed a motion to dismiss several of Maxwell’s claims.

On February 22, 2021, the U.S.

District Court granted Maxwell’s motion to remand the case to the Superior Court of Wayne County and left Smithfield’s partial motion to dismiss the complaint for consideration by the state court in Wayne County.

On March 1, 2021, Maxwell filed an amended complaint, which added a claim under the North Carolina Unfair and Deceptive Trade Practices Act (“UDTPA”).

Smithfield filed a notice of designation seeking assignment of the case

to the North Carolina Business Court.

Maxwell objected to such designation, and on April 13, 2021 the Business Court overruled Maxwell’s objection.

The Business Court also dismissed two of Maxwell’s claims:

the implied duty to negotiate claim and the UDTPA claim.

Maxwell subsequently filed another amended complaint adding a fraudulent concealment claim and a new breach of contract claim, as well as a request for punitive damages.

The court dismissed the fraudulent concealment claim and the request for punitive damages.

The three remaining claims, all for breach of contract, are:

(1) the claim under the “Most-Favored-Nation Provision,” (2) the claim that Smithfield failed to purchase Maxwell’s entire output of hogs since April 2020, and (3) the claim that from time to time, Smithfield would calculate Maxwell’s payment for a delivery of hogs using an average of the preceding week’s weight rather than the actual weights of the hogs being delivered.

The parties filed cross-motions for summary judgment and related motions to exclude expert testimony, which were fully briefed on November 17, 2023.

The parties filed cross-motions for summary judgment, and on December 30, 2024, the Business Court entered an order and opinion on the parties’ motions for summary judgment.

The Business Court held that:

(1) Maxwell’s claim for breach of a “Most-Favored-Nation Provision” was dismissed except as it relates to pricing given to one particular supplier;

(2) Smithfield is liable for breaching an output provision in the parties’ contract, with damages to be determined at trial;

and (3) Maxwell’s claim that Smithfield breached the pricing term of the parties’ contract by using live-weight pricing shall proceed to trial based on the allegation that Smithfield did not pay the correct live- weight price for certain deliveries, but not based on the allegation that use of live-weight pricing itself breaches the contract.

The Business Court has set a trial date of June 9, 2025.

We intend to vigorously defend against the remaining claims.

Insurance Claims

A fire at one of our pork processing facilities in North Carolina in 2021 damaged or destroyed assets and disrupted our business.

Additionally, we have claims against certain of our insurance carriers for losses we incurred in connection with nuisance litigation in the State of North Carolina as well as in connection with inventory spoilage at a third party cold storage facility.

We maintain comprehensive general liability and property insurance, including business interruption insurance, with loss limits that we believe will provide substantial and broad coverage for the losses arising from these events.

In connection with our claims associated with these matters, we received insurance proceeds totaling $ 31 million, $ 3 million and $ 6 million in fiscal years 2024, 2023 and 2022, respectively.

We recognized $ 2 million of the proceeds in each of fiscal years 2024, 2023 and 2022 in investing activities in the consolidated statements of cash flows.

All other proceeds were recognized in operating activities in the consolidated statements of cash flows.

The insurance recoveries were recognized in operating gains in the consolidated statements of income.

Any additional insurance recoveries from these claims will be recognized if and when the claims are settled.

SUPPLEMENTAL CASH FLOW INFORMATION

Twelve Months Ended

January 3, 2016

December 28, 2014

September 27 - December 29, 2013

April 29 - September 26, 2013

April 28, 2013

Supplemental disclosures of cash flow information:

(in millions)

Interest paid, including capitalized interest

Income taxes (paid) refunded, net

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

(in millions)

Operating profit

Net income (1)

Operating profit

2024 2023 2022

Net income in the first quarter included loss on debt extinguishment of $12.8 million .

SUBSEQUENT EVENTS

In January 2016, we made a $125.0 million voluntary contribution to fund our qualified pension plans.

In March 2016, we paid a $73.6 million dividend to our parent company, recorded as a reduction to retained earnings.

SMITHFIELD FOODS, INC.

AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

Supplemental disclosures of cash flow information:

(in millions)

Column C Additions

Balance at Beginning of Period

Charged to costs and expenses

Charged to other

Balance at End of Period

Reserve for uncollectible accounts receivable:

Twelve months ended January 3, 2016

Twelve months ended December 28, 2014

Three months ended December 29, 2013

Five months ended September 26, 2013

Twelve months ended April 28, 2013

Lower of cost or market allowance:

Twelve months ended January 3, 2016

Twelve months ended December 28, 2014

Three months ended December 29, 2013

Five months ended September 26, 2013

Twelve months ended April 28, 2013

Deferred tax valuation allowance:

Twelve months ended January 3, 2016

Twelve months ended December 28, 2014

Three months ended December 29, 2013

Five months ended September 26, 2013

Twelve months ended April 28, 2013

——————————————

Activity primarily includes the reserves recorded in connection with the creation of the opening balance sheets of entities acquired and currency translation adjustments.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Interest paid

Income taxes paid

CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data