SMITHFIELD FOODS INC 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 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 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. 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. 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. 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. 87 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 March 25, 2025 88 SMITHFIELD FOODS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in millions, except for share and per share data) Twelve Months Ended December 29, 2024 December 31, 2023 January 1, 2023 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 Operating gains ( 60 ) ( 105 ) ( 429 ) Operating profit (loss) 1,118 ( 56 ) 1,117 Interest expense, net 66 76 87 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 Net income (loss) from continuing operations 798 ( 133 ) 811 Net income from continuing operations attributable to noncontrolling interests 14 5 11 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 13 30 27 Net income from discontinued operations 172 155 70 Net income from discontinued operations attributable to noncontrolling interests 2 — — Net income from discontinued operations attributable to Smithfield 170 155 70 Net income 970 23 881 Net income attributable to noncontrolling interests 17 5 11 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 89 SMITHFIELD FOODS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) Twelve Months Ended December 29, 2024 December 31, 2023 January 1, 2023 Net income $ 970 $ 23 $ 881 Other comprehensive income (loss), net of tax: Foreign currency translation ( 53 ) 219 ( 59 ) Pension accounting ( 44 ) 16 44 Hedge accounting ( 33 ) ( 1 ) ( 27 ) Total other comprehensive income (loss) ( 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 90 SMITHFIELD FOODS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in millions, except share data) December 29, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 943 $ 687 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 Total current assets 4,202 4,921 Property, plant and equipment, net 3,176 3,347 Goodwill 1,613 1,627 Intangible assets, net 1,266 1,274 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: 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 finance lease obligations 1,999 2,006 Long-term operating lease obligations 286 325 Deferred income taxes, net 518 474 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 (Note 18) Equity: Shareholder’s equity: 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 Retained earnings 3,184 3,588 Accumulated other comprehensive loss ( 452 ) ( 500 ) Total shareholder’s equity 5,834 7,241 Noncontrolling interests — — Total equity 5,834 7,241 Total liabilities and equity $ 11,054 $ 13,317 See Notes to Consolidated Financial Statements 91 SMITHFIELD FOODS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Twelve Months Ended December 29, 2024 December 31, 2023 January 1, 2023 Cash flows from operating activities: Net income $ 970 $ 23 $ 881 Less: 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 Deferred income taxes 91 ( 130 ) 2 Impairment of assets 1 1 40 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: Capital expenditures ( 350 ) ( 353 ) ( 338 ) 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 Other 9 3 1 Net cash flows from (used in) investing activities of continuing operations ( 298 ) ( 194 ) 274 Cash flows from financing activities: Payment of dividends ( 288 ) ( 323 ) ( 496 ) 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 ) 92 Twelve Months Ended December 29, 2024 December 31, 2023 January 1, 2023 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 Less: 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 93 SMITHFIELD FOODS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY (in millions) Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholder’s Equity Non-controlling Interests Total Equity 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, 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 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 See Notes to Consolidated Financial Statements 94 SMITHFIELD FOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization 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 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. 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 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. The functional currency of our 66 %-owned subsidiary, Granjas Carroll de Mexico, S. de R.L. 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 We consider all highly liquid investments with original maturities of 90 days or less to be cash equivalents. The majority of our cash is concentrated in demand deposit accounts or money market funds. 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 95 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: December 29, 2024 December 31, 2023 (in millions) Fresh and packaged meats $ 1,006 $ 943 Livestock 949 1,036 Grains 208 307 Manufacturing supplies 115 123 Maintenance parts 115 104 Other 19 23 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. 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 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 96 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, net, (“PP&E”) consists of the following: Useful Life December 29, 2024 December 31, 2023 (in Years) (in millions) Machinery and equipment 5 - 20 $ 2,823 $ 2,735 Buildings and improvements 15 - 40 1,549 1,561 Land and improvements 3 + 573 686 Computer hardware and software 3 - 15 264 229 Breeding stock 2 159 207 Vehicles 2 - 7 110 110 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 $ 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. 97 Goodwill 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) Consolidated (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 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 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. 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. 98 Intangible Assets, Net Intangible assets, net consists of the following: Useful Life December 29, 2024 December 31, 2023 (in Years) (in millions) Amortized intangible assets: Customer relationships 14 - 20 $ 82 $ 82 Contractual relationships 17 - 22 40 40 Rights and customer lists 5 - 25 5 5 Amortized intangible assets, gross 127 127 Accumulated amortization ( 77 ) ( 70 ) Amortized intangible assets, net 50 58 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) 2025 $ 8 2026 8 2027 7 2028 4 2029 4 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. We have determined that no impairments of our intangible assets existed for any of the fiscal years presented. Investments 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 99 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. Leases 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. 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. Income Taxes 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. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to amounts more likely than not to be realized. 100 The determination of our provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items. 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 December 31. The measurement of our pension obligations and related costs is dependent on the use of assumptions and estimates. These assumptions include discount rates, salary growth, mortality rates and expected returns on plan assets. Changes in assumptions and future investment returns could potentially have a material impact on our expenses and related funding requirements. 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 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. See “Note 6: 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 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. 101 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 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 December 29, 2024 December 31, 2023 January 1, 2023 (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 1 36 2 Ending balance $ 225 $ 246 $ 197 Revenue Recognition 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. 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. 102 The balances for receivables from contracts with customers and deferred revenue are presented in the following table: December 29, 2024 December 31, 2023 January 1, 2023 (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. See “Note 2: 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. 103 NOTE 2: 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. Fresh Pork 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. 104 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) Sales $ 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 — 353 105 Fiscal Year 2022 Packaged Meats Fresh Pork Hog Production Other (1) Corporate (2) Unallocated (3) Intersegment Consolidated (in millions) Sales $ 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 1,047 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. 106 The following table disaggregates our sales to customers by reportable segment and by major distribution channel: Fiscal Year 2024 Retail (1) Foodservice (2) Exports (3) 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 Other (8) — — — — 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 Retail (1) Foodservice (2) Exports (3) 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 Other (8) — — — — 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 Retail (1) Foodservice (2) Exports (3) 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 Other (8) — — — — 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. operations. (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. 107 NOTE 3: 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. Fiscal Year 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) 13 30 27 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. Assets December 29, 2024 December 31, 2023 Current assets: Cash and cash equivalents $ — $ 61 Accounts receivable, net — 412 Inventories, net — 460 Prepaid expenses and other current assets — 25 Total current assets — 958 Property, plant and equipment, net — 911 Goodwill — 253 Intangible assets, net — 114 Other assets — 69 Total long-term assets $ — $ 1,347 108 Liabilities December 29, 2024 December 31, 2023 Current liabilities: Accounts payable $ — $ 182 Current portion of long-term debt and finance lease obligations — 68 Accrued expenses and other current liabilities — 156 Total current liabilities — 406 Deferred income taxes, net — 30 Long-term debt and finance lease obligations — 8 Other liabilities — 48 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. Goodies 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. DeVeris On May 31, 2023, our former European operations acquired an 80 % interest in DeVeris Polska Sp. z o.o. (“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. Argal 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. market. Purchases of these products from Morliny Foods were $ 45 million, $ 33 million and $ 62 million in fiscal years 2024, 2023 and 2022, respectively. 109 NOTE 4: MERGERS, ACQUISITIONS AND DISPOSITIONS UGFH Merger 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: December 29, 2024 (in millions) Prepaid expenses and other current assets $ 71 Deferred income taxes, net ( 7 ) Additional paid-in capital $ 77 Acquisitions 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. Dispositions Saratoga 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. 110 NOTE 5: OPERATING GAINS AND NON-OPERATING GAINS The following table provides details of operating gains and non-operating gains. Fiscal Year 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) — — ( 56 ) Impairment of investment (4) — — 40 Net pension and postretirement benefits cost (benefit) (5) 10 10 ( 28 ) 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. See “Note 6: 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. de R.L. de C.V. (“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. NOTE 6: 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. 111 • 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. Fiscal Year Cumulative 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) 4 2 3 9 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 ) $ 1 112 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. NOTE 7: 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. NOTE 8: DERIVATIVE FINANCIAL INSTRUMENTS 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 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. 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 113 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. Assets Liabilities December 29, 2024 December 31, 2023 December 29, 2024 December 31, 2023 (in millions) (in millions) Derivatives using the “hedge accounting” method: Commodity contracts $ 13 $ 37 $ 37 $ 29 Foreign exchange contracts — 1 — — Total 13 38 37 29 Derivatives using the “mark-to-market” method: Commodity contracts 2 13 7 13 Total fair value of derivative instruments $ 15 $ 51 $ 44 $ 42 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. 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) Assets: Commodities $ 15 $ ( 13 ) $ 2 $ 37 $ 39 Liabilities: 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. 114 December 31, 2023 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) Assets: Commodities $ 50 $ ( 25 ) $ 25 $ ( 1 ) $ 24 Foreign exchange contracts 1 — 1 — 1 Total $ 51 $ ( 25 ) $ 26 $ ( 1 ) $ 26 Liabilities: 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 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 Natural Gas 6,260,000 Million BTU Diesel 7,560,000 Gallons 115 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 (in millions) (in millions) Commodity contracts $ ( 56 ) $ 10 $ 58 ( 10 ) 13 97 Interest rate swaps — — — ( 2 ) ( 2 ) ( 1 ) Foreign exchange contracts 1 2 — 1 1 ( 1 ) 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 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. 116 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 Commodities: 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. Dollars 117 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: Fiscal Year 2024 2023 2022 (in millions) Sales 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) 10 5 ( 28 ) 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 ( 2 ) — 1 Interest expense Cash flow hedging - interest rate contracts ( 2 ) ( 2 ) ( 1 ) Discontinued operations Cash flow hedging - foreign exchange contracts 1 1 ( 1 ) Mark to market - foreign exchange contracts 3 2 4 Total derivative gain (loss) recognized in discontinued operations 4 3 3 Total derivative gain (loss) $ ( 25 ) $ 36 $ 56 ________________ (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. 118 NOTE 9: EQUITY METHOD INVESTMENTS Equity method investments consist of the following: Equity Investments % Owned December 29, 2024 December 31, 2023 (in millions) 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 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. See “Note 6: Restructuring” for more information. We expect to account for Murphy Family Farms and Vision Ag under the equity method of accounting. 119 NOTE 10: 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 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) — 16 Other 77 75 Total accrued expenses and other current liabilities $ 871 $ 1,166 ________________ (1) See “Note 17: Related Party Transactions” for related party transactions. NOTE 11: DEBT Long-term debt consists of the following: December 29, 2024 December 31, 2023 (in millions) 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 $ 599 $ 598 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 397 397 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 493 492 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 493 492 Bank borrowings — 12 Total debt 1,983 1,991 Current portion — ( 5 ) Total long-term debt $ 1,983 $ 1,986 120 Scheduled principal payments on debt for the next five years are as follows: Year (in millions) 2025 $ — 2026 — 2027 600 2028 — 2029 400 Credit Facilities December 29, 2024 Facility Capacity Borrowing Base Adjustment Outstanding Borrowings Commercial Paper Borrowings Outstanding Letters of Credit Amount Available (in millions) 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. 121 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 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. NOTE 12: LEASE OBLIGATIONS, COMMITMENTS, AND GUARANTEES Lease Obligations 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. 122 The following table presents the maturities of our lease obligations as of December 29, 2024: Operating Leases Finance Leases Total (in millions) 2025 $ 71 $ 3 $ 73 2026 57 3 59 2027 45 2 47 2028 35 1 36 2029 26 1 27 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: December 29, 2024 December 31, 2023 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: Fiscal Year 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) 95 96 71 Variable lease cost (2) 23 23 21 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. 123 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: Fiscal Year 2024 2023 2022 (in millions) Classification of lease payments: Operating cash flows - finance leases (1) $ — $ 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. Commitments 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 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) 2025 $ 3,002 2026 1,802 2027 1,325 2028 984 2029 966 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. Guarantees 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. 124 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. NOTE 13: INCOME TAXES Income (loss) from continuing operations before income taxes consists of the following: Fiscal Year 2024 2023 2022 (in millions) U.S. $ 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: Fiscal Year 2024 2023 2022 (in millions) Current income tax expense: Federal $ 161 $ 55 $ 206 State 19 33 23 Foreign — — — 180 89 229 Deferred income tax expense (benefit): Federal 72 ( 120 ) ( 6 ) State 8 ( 6 ) 4 Foreign 11 ( 4 ) 4 91 ( 130 ) 2 Total income tax expense (benefit) $ 271 $ ( 41 ) $ 231 125 Effective Tax Rate Reconciliation The following table reconciles the federal statutory income tax rate to our effective tax rate: Fiscal Year 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 — Tax credits (2) ( 1.3 ) 13.0 ( 1.3 ) Other 0.5 — 0.4 Effective tax rate 25.5 % 32.2 % 22.1 % ________________ (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. 126 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: December 29, 2024 December 31, 2023 (in millions) Deferred tax assets: Research and development expenses $ 104 $ 98 Operating lease obligations 79 92 Pension and other retirement liabilities 72 67 Accrued expenses and other current liabilities 46 101 Tax credits, carryforwards and net operating losses (1) 26 38 Employee benefits 14 18 Deferred payroll taxes 3 24 Other 28 21 Total deferred tax asset before valuation allowance 372 458 Valuation allowance (2) ( 8 ) ( 12 ) Total deferred tax asset $ 364 $ 446 Deferred tax liabilities: Property, plant and equipment 412 425 Intangible assets 307 309 Operating lease assets 78 90 Inventory 38 56 Investments 27 25 Other 20 15 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. 127 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, January 2, 2022 $ 21 Additions for tax positions taken in fiscal year 2022 11 Lapse of statute of limitations ( 3 ) 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 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, 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 $ 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 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 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. NOTE 14: PENSION AND OTHER RETIREMENT PLANS Company Sponsored Defined Benefit 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. 128 The following table presents a reconciliation of the pension benefit obligation, plan assets and the funded status of our pension plans: December 29, 2024 December 31, 2023 (in millions) Change in benefit obligation: Benefit obligation at beginning of year $ 1,829 $ 1,815 Service cost 12 13 Interest cost 99 98 Benefits paid ( 116 ) ( 118 ) Actuarial (gain) loss ( 24 ) 21 Benefit obligation at end of year 1,799 1,829 Change in plan assets: (1) Fair value of plan assets at beginning of year 1,551 1,518 Actual return on plan assets 6 129 Employer contributions 56 22 Benefits paid ( 116 ) ( 118 ) Fair value of plan assets at end of year 1,498 1,551 Funded status $ 302 $ 278 Amounts recognized in the consolidated balance sheets: Net long-term pension liability 279 255 Accrued expenses and other current liabilities 23 22 Net amount recognized at end of year $ 302 $ 278 ________________ (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 $ 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: December 29, 2024 December 31, 2023 (in millions) Unrecognized actuarial loss $ ( 552 ) $ ( 489 ) Unrecognized prior service cost ( 2 ) ( 3 ) 129 The following table presents the components of the net periodic pension cost (benefit) for the periods indicated: Fiscal Year 2024 2023 2022 (in millions) Service cost $ 12 $ 13 $ 23 Interest cost 99 98 77 Expected return on plan assets ( 107 ) ( 107 ) ( 128 ) Amortization 18 18 22 Net periodic pension cost (benefit) $ 22 $ 22 $ ( 7 ) The following table shows our weighted average assumptions for the periods indicated: Fiscal Year 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 Expected long-term rate of return on plan assets 7.05 7.25 6.00 Rate of compensation increase 4.00 4.00 4.00 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, 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 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. 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. The allocation of our pension plan assets is based on the target range presented in the following table. Asset category: December 29, 2024 December 31, 2023 Target Range (in millions) Cash and cash equivalents, net of unsettled transactions $ 198 $ 159 0 - 15 % Equity securities 511 508 30 - 50 % Debt securities 493 582 30 - 50 % Alternative assets 296 302 2 - 25 % Total plan assets $ 1,498 $ 1,551 130 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: Fiscal Year (in millions) 2025 $ 122 2026 120 2027 123 2028 126 2029 126 2030 - 2034 659 Multiemployer Defined Benefit Pension Plans In addition to our Company sponsored defined benefit pension plans, we contribute to several multiemployer defined benefit pension plans under collective bargaining agreements that cover certain of our union-represented employees. The risks of participating in such plans are different from the risks of single-employer plans, in the following respects: • Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. • If a participating employer ceases to contribute to a multiemployer plan, the unfunded obligation of the plan may be borne by the remaining participating employers. • If we were to withdraw from a multiemployer plan, we may be required to pay the plan an amount based on the underfunded status of the plan and on the history of our participation in the plan prior to withdrawal. This is referred to as a withdrawal liability. 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 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”): • “Red” Zone —Plan has been determined to be in “critical status” and is generally less than 65% funded. A rehabilitation plan, as required under the IRC, must be adopted by plans in the “red” zone. Plan participants may be responsible for the payment of surcharges, in addition to the contribution rate specified in the applicable collective bargaining agreement, for a plan in “critical status,” in accordance with the requirements of the IRC. • “Yellow” Zone —Plan has been determined to be in “endangered status” and is generally less than 80% funded. A funding improvement plan, as required under the IRC, must be adopted. • “Green” Zone —Plan has been determined to be neither in “critical status” nor in “endangered status,” and is generally at least 80% funded. 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. 131 Fiscal Years 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 $ 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 ________________ (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 between January 2026 and May 2028. Other Post-Employment Benefit Plans We sponsor defined contribution plans (401(k) plans) covering substantially all U.S. employees. 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. These plans are unfunded and generally pay covered costs reduced by retiree premium contributions, co-payments and deductibles. We retain the right to modify or eliminate these benefits. We consider disclosures related to these plans immaterial to the consolidated financial statements. NOTE 15: EQUITY 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; and 132 • 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): Fiscal Year 2024 2023 2022 (in millions) Foreign currency translation $ ( 8 ) $ ( 134 ) $ ( 327 ) Pension accounting ( 418 ) ( 373 ) ( 389 ) Hedge accounting ( 26 ) 8 8 Accumulated other comprehensive loss $ ( 452 ) $ ( 500 ) $ ( 708 ) 133 Other Comprehensive Income (Loss) The following table presents the details of other comprehensive income (loss). Fiscal Year 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 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 Derivatives: Gains (losses) arising during the period ( 56 ) 14 ( 41 ) 10 ( 2 ) 7 58 ( 15 ) 43 (Gains) losses reclassified to sales ( 18 ) 5 ( 13 ) ( 12 ) 3 ( 9 ) 30 ( 8 ) 23 (Gains) losses reclassified to cost of sales 28 ( 7 ) 21 — — — ( 127 ) 33 ( 95 ) 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 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 ) Derivatives: 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. NOTE 16: FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We are required to consider and reflect the assumptions of market participants in fair value calculations. These factors include nonperformance risk (the risk 134 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. These valuation approaches incorporate inputs, such as observable, independent market data, that we believe are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk. The FASB has established a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The fair value hierarchy gives the highest priority to quoted market prices (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of inputs used to measure fair value are as follows: • Level 1 —Quoted prices in active markets for identical assets or liabilities accessible by the reporting entity. • Level 2 —Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3 —Unobservable for an asset or liability. Unobservable inputs should only be used to the extent observable inputs are not available. We have classified assets and liabilities measured at fair value based on the lowest level of input that is significant to the fair value measurement. For the periods presented, we had no transfers of assets or liabilities between levels within the fair value hierarchy. The timing of any such transfers would be determined at the end of each reporting period. 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 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) Assets Derivatives: Commodity contracts $ 9 $ 6 $ — $ 15 $ 34 $ 16 $ — $ 50 Foreign exchange contracts — — — — — 1 — 1 Mutual funds (1) 74 — — 84 33 — — 44 Insurance contracts — 104 — 104 — 129 — 129 Total $ 83 $ 110 $ — $ 202 $ 67 $ 146 $ — $ 224 Liabilities Derivatives: Commodity contracts 32 12 — 44 17 26 — 42 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. 135 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: • Derivatives— Derivatives classified within Level 1 are valued using quoted market prices. In some cases where quoted market prices are not available, we value the derivatives using market-based pricing models that utilize the net present value of estimated future cash flows to calculate fair value, in which case the measurements are classified within Level 2. These valuation models make use of market-based observable inputs, including exchange traded prices and rates, yield curves, credit curves and measures of volatility. 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 Certain assets and liabilities are measured at fair value on a nonrecurring basis after initial recognition; 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. 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, 2023 Weighted average cost of capital 9 % 11 % Growth rate 3 % 3 % EBITDA multiple 10 x 12 x Control premium 25 % 25 % 136 Pension Plan Assets 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) Cash and cash equivalents $ 153 $ — $ — $ 153 $ 176 $ — $ — $ 176 Equity securities: U.S. 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 Manufacturing and industrials 1 — — 1 8 — — 8 Telecommunications — — — — 1 — — 1 International common stock 2 — — 2 14 — — 14 Commingled funds: (1) Global equity — — — 504 — — — 449 Corporate debt securities — — — 166 — — — 157 Fixed income: Corporate debt securities 248 1 — 250 252 2 — 253 Government debt securities 105 ( 27 ) — 77 125 46 — 171 Alternative investments: Diversified investment funds (1) — — — 3 — — — 4 Limited partnerships (1) — — — 293 — — — 298 Total fair value $ 513 $ ( 27 ) $ — 1,452 $ 611 $ 49 $ — 1,568 Unsettled transactions, net 46 ( 17 ) Total plan assets $ 1,498 $ 1,551 __________________ (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: • Cash and cash equivalents— Cash equivalents include highly liquid investments with original maturities of three months or less. Due to their short-term nature, the carrying amount of these instruments approximates the estimated fair value. 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 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 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 137 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 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. If quoted prices are not available, fair values of fixed income instruments are obtained from pricing services, broker quotes or other model-based valuation techniques with observable inputs and classified as Level 2. The nature of these fixed income instruments include instruments for which quoted prices are available but traded less frequently, instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data and securities that are valued using other financial instruments, the parameters of which can be directly observed. Level 2 fixed income instruments include corporate debt securities. • 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 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 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. 138 NOTE 17: RELATED PARTY TRANSACTIONS The following tables present amounts of related party transactions and balances owed from and to related parties: December 29, 2024 December 31, 2023 (in millions) Receivables from related parties (1) $ 106 $ 35 Payables to and other current liabilities with related parties (2) 7 31 ________________ (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. Fiscal Year 2024 2023 2022 (in millions) Sales to related parties (1) $ 447 $ 501 $ 492 Payments to related parties (2) 664 540 732 ________________ (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. NOTE 18: 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. 139 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 140 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. NOTE 19: SUPPLEMENTAL CASH FLOW INFORMATION Fiscal Year 2024 2023 2022 Supplemental disclosures of cash flow information: (in millions) Interest paid 79 81 84 Income taxes paid 130 108 152 ITEM 9. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 141