What changed in this filing

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Item 1. Financial Statements

2021-05-10 compared with 2021-02-11 · 206 added, 129 removed, 720 unchanged (32% of the section changed)

3 unchanged sentences

(In millions, except per share data)

Three Months Ended

January 2, 2021 December 28, 2019

Three Months Ended Six Months Ended

April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020

Sales $ 11,300 $ 10,888 $ 21,760 $ 21,703

25 unchanged sentences

(In millions)

Three Months Ended

January 2, 2021 December 28, 2019

Three Months Ended Six Months Ended

April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020

Net Income $ 477 $ 379 $ 949 $ 888

1 unchanged sentence

Derivatives accounted for as cash flow hedges

1 ( 5 ) 2 ( 2 )

( 1 ) — ( 1 ) —

Currency translation

( 49 ) ( 104 ) 26 ( 69 )

Postretirement benefits

1 ( 42 ) 2 ( 42 )

Total Other Comprehensive Income (Loss), Net of Taxes ( 48 ) ( 151 ) 29 ( 113 )

6 unchanged sentences

(In millions, except share and per share data)

January 2, 2021 October 3, 2020

April 3, 2021 October 3, 2020

Current Assets:

26 unchanged sentences

Accumulated other comprehensive gain (loss) ( 150 ) ( 179 )

Treasury stock, at cost – 83 million shares at January 2, 2021 and October 3, 2020 ( 4,115 ) ( 4,145 )

Treasury stock, at cost – 83 million shares at April 3, 2021 and October 3, 2020 ( 4,123 ) ( 4,145 )

Total Tyson Shareholders’ Equity 15,931 15,254

6 unchanged sentences

(In millions)

Three Months Ended

January 2, 2021 December 28, 2019

Shares Amount Shares Amount

Three Months Ended Six Months Ended

April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020

Shares Amount Shares Amount Shares Amount Shares Amount

Class A Common Stock:

4 unchanged sentences

Balance at beginning of period

Stock-based compensation

4,411 4,354 4,433 4,378

Stock-based compensation

Balance at end of period 4,443 4,378 4,443 4,378

4 unchanged sentences

476 376 943 881

( 159 ) ( 150 ) ( 327 ) ( 316 )

Balance at end of period 15,716 14,220 15,716 14,220

18 unchanged sentences

Total Equity Attributable to Noncontrolling Interests

$ 139 $ 145 $ 139 $ 145

Total Shareholders’ Equity $ 16,070 $ 14,422 $ 16,070 $ 14,422

3 unchanged sentences

(In millions)

Three Months Ended

January 2, 2021 December 28, 2019

Six Months Ended

April 3, 2021 March 28, 2020

Cash Flows From Operating Activities:

10 unchanged sentences

Proceeds from sale of business — 29

Acquisition of equity investments — ( 184 )

Other, net 49 ( 81 )

13 unchanged sentences

Effect of Exchange Rate Changes on Cash 10 ( 9 )

Increase in Cash and Cash Equivalents and Restricted Cash 969 13

(Decrease)/Increase in Cash and Cash Equivalents and Restricted Cash ( 494 ) 35

Cash and Cash Equivalents and Restricted Cash at Beginning of Year 1,466 484

14 unchanged sentences

Actual results could differ from those estimates.

We believe the accompanying consolidated condensed financial statements contain all adjustments, which are of a normal recurring nature, necessary to state fairly our financial position as of January 2, 2021, and the results of operations for the three months ended January 2, 2021, and December 28, 2019.

We believe the accompanying consolidated condensed financial statements contain all adjustments, which are of a normal recurring nature, necessary to state fairly our financial position as of April 3, 2021, and the results of operations for the three and six months ended April 3, 2021, and March 28, 2020.

Results of operations and cash flows for the periods presented are not necessarily indicative of results to be expected for the full year.

10 unchanged sentences

Revision of Previously Issued Unaudited Consolidated Condensed Financial Statements

As previously disclosed in the 10-K/A for the year ended October 3, 2020, during the first quarter of fiscal 2021, the Company discovered information that led to an internal investigation relating to one of its cattle suppliers and determined that this supplier made misrepresentations regarding the number of cattle the supplier purchased on behalf of the Company’s Beef segment.

As previously disclosed in the 10-K/A, during the first quarter of fiscal 2021, the Company discovered information that led to an internal investigation relating to one of its cattle suppliers and determined that this supplier made misrepresentations regarding the number of cattle the supplier purchased on behalf of the Company’s Beef segment.

Based upon its investigation, the Company determined that the misappropriation of Company funds by the supplier caused the Company to overstate live cattle inventory for fiscal years and interim periods from 2017 through 2020.

1 unchanged sentence

Although the Company evaluated the materiality of the misstatements and concluded that the misstatements did not have a material impact on the previously issued annual or interim financial statements, the Company revised its previously issued 2020, 2019 and 2018 annual financial statements to correct for such misstatements as set forth in the 10-K/A.

In connection with the filing of this Quarterly Report on Form 10-Q, the Company has revised the accompanying consolidated condensed interim financial statements as of and for the quarter ended December 28, 2019 to correct for the impact of the misstatements.

In connection with the filing of this Quarterly Report on Form 10-Q, the Company has revised the accompanying consolidated condensed interim financial statements as of and for the three and six months ended March 28, 2020 to correct for the impact of the misstatements.

The applicable notes to the accompanying financials have also been corrected to reflect the impact of the revisions of the previously filed consolidated condensed interim financial statements.

The following tables represent revisions to our consolidated condensed financial information for the first quarter of fiscal 2020:

First Quarter in millions, except per share data

Quarter ended December 28, 2019

As originally reported Adjustments As revised

Consolidated Statement of Income:

The following tables represent revisions to our consolidated condensed financial information for the periods ended March 28, 2020:

Second Quarter in millions, except per share data

Three months ended March 28, 2020 Six months ended March 28, 2020

As originally reported Adjustments As revised As originally reported Adjustments As revised

Consolidated Statements of Income:

Selling, General and Administrative $ 520 $ ( 14 ) $ 506 $ 1,134 $ 54 $ 1,188

8 unchanged sentences

Diluted $ 1.00 $ 0.03 $ 1.03 $ 2.52 $ ( 0.11 ) $ 2.41

Consolidated Statement of Comprehensive Income:

Consolidated Statements of Comprehensive Income:

Net Income $ 367 $ 12 $ 379 $ 928 $ ( 40 ) $ 888

1 unchanged sentence

Comprehensive Income Attributable to Tyson 213 12 225 808 ( 40 ) 768

As of December 28, 2019

As of March 28, 2020

As originally reported Adjustments As revised

9 unchanged sentences

Total Liabilities and Shareholders' Equity 33,890 ( 233 ) 33,657

Quarter ended December 28, 2019

Six months ended March 28, 2020

As originally reported Adjustments As revised

4 unchanged sentences

(a) The adjustment to retained earnings includes an impact of $ 132 million related to misstatements that originated prior to fiscal 2020.

Asset Held for Sale

In the second quarter of fiscal 2021, we initiated a plan to sell a business included in our Prepared Foods segment.

The business had a net carrying value of approximately $ 410 million at April 3, 2021, which included approximately $ 40 million of working capital consisting of inventory, accounts receivable and accounts payable, $ 20 million of property, plant and equipment and $ 350 million of allocated goodwill.

The net carrying value will change in future periods due to such items as normal business operations, timing of closing of the sale, as well as final negotiated deal terms.

We anticipate we will be able to identify a buyer and close the transaction within the next twelve months and expect to record a pretax gain as a result of the sale of this business.

We have reclassified the assets and liabilities held for sale related to this business to Other current assets and Other current liabilities in our Consolidated Condensed Balance Sheet as of April 3, 2021.

Recently Issued Accounting Pronouncements

24 unchanged sentences

Cost includes purchased raw materials, live purchase costs, growout costs (primarily feed, livestock grower pay and catch and haul costs), labor and manufacturing, and production overhead, which are related to the purchase and production of inventories.

At January 2, 2021, the cost of inventories was determined by either the first-in, first-out (“FIFO”) method or the weighted-average method, which is consistent with the methods used at October 3, 2020.

At April 3, 2021, the cost of inventories was determined by either the first-in, first-out (“FIFO”) method or the weighted-average method, which is consistent with the methods used at October 3, 2020.

The following table reflects the major components of inventory (in millions):

January 2, 2021 October 3, 2020

April 3, 2021 October 3, 2020

Processed products $ 2,234 $ 2,223

4 unchanged sentences

The major categories of property, plant and equipment and accumulated depreciation are as follows (in millions):

January 2, 2021 October 3, 2020

April 3, 2021 October 3, 2020

Land $ 209 $ 196

12 unchanged sentences

We do not anticipate future costs of the 2020 Program to be significant.

For the three months ended January 2, 2021, we did not incur restructuring and related charges.

For the three months ended December 28, 2019, we recognized restructuring and related charges of $ 52 million, primarily consisting of severance and employee related costs, of which $ 9 million was recorded in Cost of Sales and $ 43 million was recorded in Selling, General and Administrative in our Consolidated Condensed Statements of Income.

Our restructuring liability was $ 23 million at January 2, 2021 and $ 37 million at October 3, 2020.

The change in the restructuring liability was due to reductions of $ 14 million, primarily consisting of payments, during the three months ended January 2, 2021.

For the three and six months ended April 3, 2021, we did not incur restructuring and related charges.

For the three months ended March 28, 2020, we did not incur significant restructuring and related charges.

For the six months ended March 28, 2020, we recognized restructuring and related charges of $ 52 million, primarily consisting of severance and employee related costs, of which $ 5 million was recorded in Cost of Sales and $ 47 million was recorded in Selling, General and Administrative in our Consolidated Condensed Statements of Income.

Our restructuring liability was $ 13 million at April 3, 2021 and $ 37 million at October 3, 2020.

The change in the restructuring liability was due to reductions of $ 24 million, primarily consisting of payments, during the six months ended April 3, 2021.

OTHER CURRENT LIABILITIES

Other current liabilities are as follows (in millions):

January 2, 2021 October 3, 2020

April 3, 2021 October 3, 2020

Accrued salaries, wages and benefits $ 746 $ 823

Taxes payable 244 152

Accrued current legal contingencies 339 18

Accrued current legal contingencies (a) 342 18

Other 800 817

Total other current liabilities $ 2,132 $ 1,810

(a) As of April 3, 2021, $ 80 million of funds held in an escrow account for litigation settlements was included as restricted cash within Other current assets in the Consolidated Condensed Balance Sheets.

As of October 3, 2020, no restricted cash was included within Other current assets in the Consolidated Condensed Balance Sheets.

The major components of debt are as follows (in millions):

January 2, 2021 October 3, 2020

April 3, 2021 October 3, 2020

Revolving credit facility $ — $ —

15 unchanged sentences

Discount on senior notes ( 43 ) ( 45 )

Term loan facility due March 2022 — 1,500

Term loan facility due March 2023 (0.91% at 4/3/2021) 500 —

4 unchanged sentences

Total long-term debt $ 9,784 $ 10,791

Term Loan Facility due March 2022

On March 27, 2020, we executed a new $ 1.5 billion term loan facility to refinance our short-term promissory notes (“commercial paper program”), repay outstanding balances under our revolving credit facility and for general liquidity purposes.

In February 2021, we repaid $750 million of the $1.5 billion outstanding.

The term loan facility expires on March 27, 2022 and is subject to prepayment under certain conditions.

Additionally, the term loan facility contains covenants that are similar to those contained in the revolving credit facility.

Revolving Credit Facility and Letters of Credit

1 unchanged sentence

The facility will mature and the commitments thereunder will terminate in March 2023.

At January 2, 2021, amounts available for borrowing under this facility totaled $ 1.75 billion and we had no borrowings and no outstanding letters of credit issued under this facility.

At January 2, 2021, we had $ 101 million of bilateral letters of credit issued separately from the revolving credit facility, none of which were drawn upon.

At April 3, 2021, amounts available for borrowing under this facility totaled $ 1.75 billion and we had no borrowings and no outstanding letters of credit issued under this facility.

At April 3, 2021, we had $ 100 million of bilateral letters of credit issued separately from the revolving credit facility, none of which were drawn upon.

Our letters of credit are issued primarily in support of leasing and workers’ compensation insurance programs and other legal obligations.

2 unchanged sentences

We have a commercial paper program under which we may issue unsecured short-term promissory notes up to an aggregate maximum principal amount of $ 1 billion.

As of January 2, 2021, we had no commercial paper outstanding .

Our ability to access commercial paper in the future may be limited or its costs increased, due to market conditions which have been impacted in part by COVID-19.

As of April 3, 2021, we had no commercial paper outstanding .

Our ability to access commercial paper in the future may be limited or its costs increased.

On March 27, 2020, we executed a $ 1.5 billion term loan facility to refinance our short-term promissory notes (“commercial paper program”), repay outstanding balances under our revolving credit facility and for general liquidity purposes.

In February 2021, we repaid $ 750 million of the $ 1.5 billion outstanding.

On March 22, 2021, we executed a new $ 500 million term loan facility due March 2023.

The Company used the proceeds of the new term loan, together with $ 250 million in cash on hand, to repay in full the remaining $ 750 million outstanding under the Company's existing $ 1.5 billion term loan facility due March 2022.

The new term loan facility expires on March 22, 2023.

Additionally, the term loan facility contains covenants that are similar to those contained in the revolving credit facility.

Debt Covenants

12 unchanged sentences

and engage in certain consolidations, mergers and sales of assets.

We were in compliance with all debt covenants at January 2, 2021.

We were in compliance with all debt covenants at April 3, 2021.

Share Repurchases

As of January 2, 2021, 18.9 million shares remained available for repurchase under our share repurchase program.

As of April 3, 2021, 18.9 million shares remained available for repurchase under our share repurchase program.

The share repurchase program has no fixed or scheduled termination date and the timing and extent to which we repurchase shares will depend upon, among other things, our working capital needs, markets, industry conditions, liquidity targets, limitations under our debt obligations and regulatory requirements.

1 unchanged sentence

A summary of share repurchases of our Class A stock is as follows (in millions):

Three Months Ended

January 2, 2021 December 28, 2019

Shares Dollars Shares Dollars

Three Months Ended Six Months Ended

April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020

Shares Dollars Shares Dollars Shares Dollars Shares Dollars

Shares repurchased:

2 unchanged sentences

Total share repurchases 0.2 $ 17 0.8 $ 64 0.5 $ 34 2.3 $ 196

Our effective tax rate was 23.4 % and 22.5 % for the first quarter of fiscal 2021 and 2020, respectively.

The effective tax rates for the first quarter of fiscal 2021 and 2020 were higher than the federal statutory tax rate primarily due to state taxes, partially offset by various tax benefits.

Unrecognized tax benefits were $ 163 million and $ 165 million at January 2, 2021 and October 3, 2020, respectively.

Our effective tax rate was 23.5 % and 25.1 % for the second quarter of fiscal 2021 and 2020, respectively and 23.5 % and 23.6 % for the first six months of fiscal 2021 and 2020, respectively.

The effective tax rates for the second quarter and first six months of fiscal 2021 and 2020 were higher than the federal statutory tax rate primarily due to state taxes, partially offset by various tax benefits.

Unrecognized tax benefits were $ 168 million and $ 165 million at April 3, 2021 and October 3, 2020, respectively.

We do not expect material changes to our unrecognized tax benefits during the next twelve months.

1 unchanged sentence

The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share data):

Three Months Ended

January 2, 2021 December 28, 2019

Three Months Ended Six Months Ended

April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020

Net income $ 477 $ 379 $ 949 $ 888

21 unchanged sentences

Class B $ 0.401 $ 0.378 $ 0.824 $ 0.797

Approximately 6 million and 2 million of our stock-based compensation shares were antidilutive for the three months ended January 2, 2021 and December 28, 2019, respectively.

Approximately 5 million of our stock-based compensation shares were antidilutive for each of the three and six months ended April 3, 2021.

Approximately 3 million and 2 million of our stock-based compensation shares were antidilutive for the three and six months ended March 28, 2020, respectively.

These shares were not included in the diluted earnings per share calculation.

12 unchanged sentences

Additionally, our derivative contracts are mostly short-term in duration and we generally do not make use of credit-risk-related contingent features.

No significant concentrations of credit risk related to our derivative financial instruments existed at January 2, 2021.

We had the following aggregated outstanding notional amounts related to our derivative financial instruments:

in millions, except soybean meal tons Metric January 2, 2021 October 3, 2020

No significant concentrations of credit risk related to our derivative financial instruments existed at April 3, 2021.

We had the following net aggregated outstanding notional amounts related to our derivative financial instruments:

in millions, except soybean meal tons Metric April 3, 2021 October 3, 2020

Corn Bushels 24 43

11 unchanged sentences

For the derivative instruments we designate and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

As of January 2, 2021, we have $ 16 million of realized losses related to treasury rate locks in connection with the issuance of the 2026, 2029 and 2048 Notes, which will be reclassified to earnings over the lives of these notes.

During the three months ended January 2, 2021 and December 28, 2019, we did not reclassify significant pretax gains or losses into earnings as a result of the discontinuance of cash flow hedges.

For the three months ended January 2, 2021 and December 28, 2019, we recognized no gains or losses in OCI on derivatives designated as cash flow hedges.

As of April 3, 2021, we had $ 15 million of realized losses related to treasury rate locks in connection with the issuance of the 2026, 2029 and 2048 Notes, which will be reclassified to earnings over the lives of these notes.

During the six months ended April 3, 2021 and March 28, 2020, we did not reclassify significant pretax gains or losses into earnings as a result of the discontinuance of cash flow hedges.

The following table sets forth the pretax impact of cash flow hedge and derivative instruments recognized in Other Comprehensive Income (in millions):

Gain (Loss) Recognized in OCI

On Derivatives Three Months Ended Six Months Ended

April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020

Cash flow hedge – derivatives designated as hedging instruments:

Commodity contracts $ — $ ( 11 ) $ — $ ( 11 )

Interest rate hedges — ( 1 ) — ( 1 )

Total $ — $ ( 12 ) $ — $ ( 12 )

Fair Value Hedges

3 unchanged sentences

We include the gain or loss on the hedged items (e.g., livestock purchase firm commitments) in the same line item, Cost of Sales, as the offsetting gain or loss on the related livestock forward position.

Ineffectiveness related to fair value hedges was insignificant for the three months ended January 2, 2021, and December 28, 2019.

The carrying amount of fair value hedge (assets) liabilities as of January 2, 2021 and October 3, 2020 were as follows (in millions):

Consolidated Condensed Balance Sheets Classification January 2, 2021 October 3, 2020

Ineffectiveness related to fair value hedges was insignificant for the three and six months ended April 3, 2021, and March 28, 2020.

The following table sets forth the carrying amount of fair value hedge (assets) liabilities as of April 3, 2021 and October 3, 2020 (in millions):

Consolidated Condensed Balance Sheets Classification April 3, 2021 October 3, 2020

Inventory $ 40 $ 6

6 unchanged sentences

Consolidated Condensed

Statements of Income Classification Three Months Ended

January 2, 2021 December 28, 2019

Statements of Income Classification Three Months Ended Six Months Ended

April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020

Cost of Sales $ 10,047 $ 9,867 $ 19,330 $ 19,242

3 unchanged sentences

Consolidated Condensed

Statements of Income Classification Three Months Ended

January 2, 2021 December 28, 2019

Statements of Income Classification Three Months Ended Six Months Ended

April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020

Cost of Sales Gain (Loss) on cash flow hedges reclassified from OCI to Earnings:

29 unchanged sentences

The following tables set forth by level within the fair value hierarchy our financial assets and liabilities accounted for at fair value on a recurring basis according to the valuation techniques we used to determine their fair values (in millions):

January 2, 2021 Level 1 Level 2 Level 3 Netting (a) Total

April 3, 2021 Level 1 Level 2 Level 3 Netting (a) Total

Other Current Assets:

28 unchanged sentences

(a) Our derivative assets and liabilities are presented in our Consolidated Condensed Balance Sheets on a net basis when a legally enforceable master netting arrangement exists between the counterparty to a derivative contract and us.

Additionally, at January 2, 2021, and October 3, 2020, we had $ 22 million and $ 16 million, respectively, of net cash collateral with various counterparties where master netting arrangements exist and held no cash collateral.

Additionally, at April 3, 2021, and October 3, 2020, we had $ 6 million and $ 16 million, respectively, of net cash collateral with various counterparties where master netting arrangements exist and held no cash collateral.

The following table provides a reconciliation between the beginning and ending balance of marketable debt securities measured at fair value on a recurring basis in the table above that used significant unobservable inputs (Level 3) (in millions):

Three Months Ended

January 2, 2021 December 28, 2019

Six Months Ended

April 3, 2021 March 28, 2020

Balance at beginning of year $ 53 $ 52

6 unchanged sentences

Balance at end of period $ 53 $ 47

Total gains (losses) for the three month period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of period $ — $ —

Total gains (losses) for the six month period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of period $ — $ —

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

14 unchanged sentences

The following table sets forth our available-for-sale securities' amortized cost basis, fair value and unrealized gain (loss) by significant investment category (in millions):

January 2, 2021 October 3, 2020

April 3, 2021 October 3, 2020

Cost Basis Fair

13 unchanged sentences

We consider many factors in determining whether a loss is credit-related, including the financial condition and near-term prospects of the issuer, borrower repayment characteristics for asset-backed securities, and our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery.

We recognized no direct write-offs or allowances for credit losses in earnings for the three months ended January 2, 2021, and October 3, 2020.

We recognized no direct write-offs or allowances for credit losses in earnings for the three and six months ended April 3, 2021, and March 28, 2020.

Deferred Compensation Assets

9 unchanged sentences

Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges.

We did not have any significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition during the three months ended January 2, 2021, and October 3, 2020.

We did not have any significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition during the six months ended April 3, 2021, and March 28, 2020.

Other Financial Instruments

1 unchanged sentence

Fair value and carrying value for our debt are as follows (in millions):

January 2, 2021 October 3, 2020

April 3, 2021 October 3, 2020

Fair Value Carrying Value Fair Value Carrying Value

1 unchanged sentence

PENSIONS AND OTHER POSTRETIREMENT BENEFIT PLANS

The components of the net periodic cost for the pension and postretirement benefit plans for the three months ended January 2, 2021 and December 28, 2019 are as follows (in millions):

The components of the net periodic cost for the pension and postretirement benefit plans for the three and six months ended April 3, 2021 and March 28, 2020 are as follows (in millions):

Pension Plans

Three Months Ended

January 2, 2021 December 28, 2019

Three Months Ended Six Months Ended

April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020

Service cost $ — $ — $ — $ —

1 unchanged sentence

Expected return on plan assets — ( 6 ) — ( 15 )

Amortization of:

Amortization of net actuarial loss 1 1 2 2

Settlement (gain) loss — ( 106 ) — ( 106 )

Net periodic cost (credit) $ 2 $ ( 104 ) $ 5 $ ( 102 )

Postretirement Benefit Plans

Three Months Ended

January 2, 2021 December 28, 2019

Three Months Ended Six Months Ended

April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020

Interest cost $ — $ — $ — $ —

2 unchanged sentences

Net periodic benefit cost, excluding the service cost component, was recorded in the Consolidated Condensed Statements of Income in Other, net.

During the second quarter of fiscal 2020, we recognized a one-time gain of $ 110 million related to the termination of two qualified pension plans and one multi-employer pension plan and recorded the amount in the Consolidated Condensed Statements of Income in Other, net.

The settlements of the two qualified plans through purchased annuities did not require any significant contributions.

The plans have no remaining benefit obligation.

OTHER COMPREHENSIVE INCOME (LOSS)

The before and after-tax changes in the components of other comprehensive income (loss) are as follows (in millions):

Three Months Ended

January 2, 2021 December 28, 2019

Before Tax Tax After Tax Before Tax Tax After Tax

Three Months Ended Six Months Ended

April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020

Before Tax Tax After Tax Before Tax Tax After Tax Before Tax Tax After Tax Before Tax Tax After Tax

Derivatives accounted for as cash flow hedges:

(Gain) loss reclassified to interest expense $ 1 $ — $ 1 $ 1 $ ( 1 ) $ — $ 1 $ — $ 1 $ 2 $ ( 1 ) $ 1

$ — $ — $ — $ 1 $ — $ 1

(Gain) loss reclassified to cost of sales — — — 5 ( 1 ) 4 1 — 1 7 ( 1 ) 6

Unrealized gain (loss) — — — ( 12 ) 3 ( 9 ) — — — ( 12 ) 3 ( 9 )

Unrealized gain (loss) ( 1 ) — ( 1 ) — — — ( 1 ) — ( 1 ) — — —

Currency translation:

Translation adjustment ( 49 ) — ( 49 ) ( 105 ) 1 ( 104 ) 26 — 26 ( 70 ) 1 ( 69 )

75 — 75 35 — 35

Postretirement benefits:

Unrealized gain (loss) 1 — 1 1 — 1 2 — 2 1 — 1

Pension settlement reclassified to other (income) expense — — — ( 58 ) 15 ( 43 ) — — — ( 58 ) 15 ( 43 )

Total other comprehensive income (loss) $ ( 48 ) $ — $ ( 48 ) $ ( 168 ) $ 17 $ ( 151 ) $ 29 $ — $ 29 $ ( 130 ) $ 17 $ ( 113 )

22 unchanged sentences

Information on segments and a reconciliation to income before income taxes are as follows (in millions):

Three Months Ended

January 2, 2021 December 28, 2019

Three Months Ended Six Months Ended

April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020

Beef $ 4,046 $ 3,979 $ 8,033 $ 7,817

5 unchanged sentences

Total sales $ 11,300 $ 10,888 $ 21,760 $ 21,703

Three Months Ended

January 2, 2021 December 28, 2019

Three Months Ended Six Months Ended

April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020

Operating income (loss):

$ 445 $ 123 $ 973 $ 465

Pork 67 93 183 284

6 99 ( 210 ) 156

Prepared Foods 217 191 483 349

International/Other 11 10

International/Other (c)

( 15 ) 9 ( 4 ) 19

Total operating income 720 515 1,425 1,273

1 unchanged sentence

Income before income taxes $ 624 $ 505 $ 1,240 $ 1,162

(a) Beef segment results for the three months ended January 2, 2021, included a $ 55 million gain from the recovery of cattle inventory from a cattle supplier that misappropriated Company funds as compared to a $ 68 million loss recognized in the three months ended December 28, 2019, as further described in Note 1:

(a) Beef segment results for the six months ended April 3, 2021 included a $ 55 million gain from the recovery of cattle inventory from a cattle supplier that misappropriated Company funds as compared to results for the three and six months ended March 28, 2020, which included a $ 14 million gain and $ 54 million loss, respectively, as further described in Note 1:

Accounting Policies.

(b) Chicken segment results for the three months ended January 2, 2021 included a $ 320 million charge related to the recognition of a legal contingency accrual.

(b) Chicken segment results for the six months ended April 3, 2021 included a $ 320 million charge related to the recognition of a legal contingency accrual.

The accrual was recorded as a reduction to Sales pursuant to FASB guidance related to accounting for revenue from contracts with customers.

(c) International/Other results for the three and six months ended April 3, 2021 included a $ 19 million loss related to the relocation of a production facility in China.

The following tables further disaggregate our sales to customers by major distribution channels (in millions):

Three months ended January 2, 2021

Three months ended April 3, 2021

Foodservice (b)

9 unchanged sentences

Total $ 5,328 $ 3,189 $ 1,572 $ 1,211 $ — $ 11,300

Three months ended December 28, 2019

Three months ended March 28, 2020

Foodservice (b)

9 unchanged sentences

Total $ 5,065 $ 3,120 $ 1,545 $ 1,158 $ — $ 10,888

Six months ended April 3, 2021

Foodservice (b)

International (c)

Industrial and Other (d)

Intersegment Total

Beef $ 4,170 $ 1,766 $ 1,211 $ 691 $ 195 $ 8,033

Pork 842 193 589 703 589 2,916

Chicken 3,012 2,541 318 491 22 6,384

Prepared Foods 2,609 1,527 61 80 — 4,277

International/Other — — 956 — — 956

Intersegment — — — — ( 806 ) ( 806 )

Total $ 10,633 $ 6,027 $ 3,135 $ 1,965 $ — $ 21,760

Six months ended March 28, 2020

Foodservice (b)

International (c)

Industrial and Other (d)

Intersegment Total

Beef $ 3,764 $ 2,049 $ 1,119 $ 688 $ 197 $ 7,817

Pork 783 216 554 685 407 2,645

Chicken 2,939 2,546 328 849 27 6,689

Prepared Foods 2,436 1,624 71 89 — 4,220

International/Other — — 963 — — 963

Intersegment — — — — ( 631 ) ( 631 )

Total $ 9,922 $ 6,435 $ 3,035 $ 2,311 $ — $ 21,703

(a) Includes sales to consumer products and food retailers, such as grocery retailers, warehouse club stores and internet-based retailers .

2 unchanged sentences

(d) Includes sales to industrial food processing companies that further process our product to sell to end consumers and any remaining sales not included in the Retail, Foodservice or International categories.

For the three months ended January 2, 2021, the Chicken segment included a $ 320 million reduction in Other due to the recognition of a legal contingency accrual.

For the six months ended April 3, 2021, the Chicken segment included a $ 320 million reduction in Other due to the recognition of a legal contingency accrual.

COMMITMENTS AND CONTINGENCIES

We guarantee obligations of certain outside third parties, consisting primarily of grower loans, which are substantially collateralized by the underlying assets.

The remaining terms of the underlying obligations cover periods up to 10 years, and the maximum potential amount of future payments as of January 2, 2021, was no t significant.

The remaining terms of the underlying obligations cover periods up to 10 years, and the maximum potential amount of future payments as of April 3, 2021, was no t significant.

The likelihood of material payments under these guarantees is not considered probable.

At January 2, 2021 and October 3, 2020, no significant liabilities for guarantees were recorded.

At April 3, 2021 and October 3, 2020, no significant liabilities for guarantees were recorded.

We have cash flow assistance programs in which certain livestock suppliers participate.

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Our maximum commitment associated with these programs is limited to the fair value of each participating livestock supplier’s net tangible assets.

The potential maximum commitment as of January 2, 2021 was approximately $ 325 million.

The total receivables under these programs were $ 26 million and $ 29 million at January 2, 2021 and October 3, 2020, respectively.

The potential maximum commitment as of April 3, 2021 was approximately $ 315 million.

The total receivables under these programs were $ 24 million and $ 29 million at April 3, 2021 and October 3, 2020, respectively.

These receivables are included, net of allowance for uncollectible amounts, in Accounts Receivable in our Consolidated Condensed Balance Sheets.

Even though these programs are limited to the net tangible assets of the participating livestock suppliers, we also manage a portion of our credit risk associated with these programs by obtaining security interests in livestock suppliers’ assets.

After analyzing residual credit risks and general market conditions, we have no allowance for these programs’ estimated uncollectible receivables at January 2, 2021, and October 3, 2020.

After analyzing residual credit risks and general market conditions, we have no allowance for these programs’ estimated uncollectible receivables at April 3, 2021, and October 3, 2020.

When constructing new facilities or making major enhancements to existing facilities, we will occasionally enter into incentive agreements with local government agencies in order to reduce certain state and local tax expenditures.

Certain arrangements may require cash to be deposited into a fund to cover future expenditures.

These funds are generally considered restricted cash, which is reported in the Consolidated Condensed Balance Sheets in Other Assets, and totaled $ 29 million and $ 46 million at January 2, 2021 and October 3, 2020, respectively.

These funds are generally considered restricted cash, which is reported in the Consolidated Condensed Balance Sheets in Other Assets, and totaled $ 15 million and $ 46 million at April 3, 2021 and October 3, 2020, respectively.

Additionally, under certain agreements, we transfer the related assets to various local government entities and receive Industrial Revenue Bonds.

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The Industrial Revenue Bonds and the associated obligations for the leases of the facilities offset, and the underlying assets remain in property, plant and equipment.

At January 2, 2021, the total amount under these types of arrangements totaled $ 786 million.

At April 3, 2021, the total amount under these types of arrangements totaled $ 620 million.

Contingencies

We are involved in various claims and legal proceedings.

In the normal course of business, we are involved in various claims and legal proceedings.

Each quarter, we assess the likelihood of adverse judgments or outcomes to those matters, as well as ranges of probable losses, to the extent losses are reasonably estimable.

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In our opinion, we have made appropriate and adequate accruals for these matters.

Regardless of the manner of resolution, frequently the most significant changes in status of a matter occur over a short time period, often following a lengthy period of little substantive activity.

Regardless of the manner of resolution, frequently the most significant changes in the status of a matter occur over a short time period, often following a lengthy period of little substantive activity.

While these accruals reflect the Company’s best estimate of the probable loss for those matters as of the dates of those accruals, the recorded amounts may differ materially from the actual amount of the losses for those matters.

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The plaintiffs seek treble damages, injunctive relief, pre- and post-judgment interest, costs, and attorneys’ fees on behalf of the putative classes.

Decisions on class certification and summary judgment motions likely to be filed by defendants are currently expected in late calendar year 2020 and 2021.

The parties have briefed the issue of class certification, and the defendants are scheduled to file summary judgment motions in late calendar year 2021.

If necessary, trial will occur after rulings on class certification and any summary judgment motions in calendar year 2022.

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Subsequently, we received a grand jury subpoena from the DOJ seeking additional documents and information related to the chicken industry.

On June 2, 2020 a grand jury for the District of Colorado returned an indictment against four individual executives employed by two other poultry processing companies charging a conspiracy to engage in bid-rigging in violation of federal antitrust laws.

On June 2, 2020 a grand jury for the District of Colorado returned an indictment charging four individual executives employed by two other poultry processing companies with conspiracy to engage in bid-rigging in violation of federal antitrust laws.

On June 10, 2020, we announced that we uncovered information in connection with the grand jury subpoena that we had previously self-reported to the DOJ and have been fully cooperating with the DOJ as part of our application for leniency under the DOJ's Corporate Leniency Program.

On October 7, 2020, the DOJ announced a superseding indictment adding charges against six more individuals to charge a total of 10 executives and employees at poultry processing companies for a conspiracy to fix prices and rig bids for broiler chicken products from at least 2012 until at least early 2019.

The partial stay previously granted by the court in the civil action was lifted and discovery is continuing.

Plaintiffs in the civil action filed complaints expressly referencing the conduct in the DOJ’s indictments or motions arguing that bid-rigging conduct was encompassed by prior complaints.

On September 22, 2020, the court ruled that bid-rigging claims will be consolidated into the existing action but bifurcated from the original supply reduction and Georgia Dock claims.

On October 7, 2020, the DOJ announced a superseding indictment adding charges against six more individuals to charge a total of 10 executives and employees at poultry processing companies in a conspiracy to fix prices and rig bids for broiler chicken products from at least 2012 until at least early 2019.

Plaintiffs in the civil action filed complaints or motions that expressly referenced the conduct in the DOJ’s indictments and argued that bid-rigging conduct was encompassed by prior complaints.

On September 22, 2020, the court ruled that bid-rigging claims would be consolidated into the existing action but bifurcated from the original supply reduction and Georgia Dock claims.

The original claims will proceed on their current schedule and the bid-rigging claims, including any related discovery, are stayed until the supply reduction and Georgia Dock claims are resolved.

We have been vigorously contesting the litigation.

In January 2021, as a result of the settlement by a co-defendant in the Broiler Antitrust Civil Litigation, we aggressively pursued settlement discussions with the Classes (as defined below).

On January 19, 2021, we announced that we had reached agreement to settle all class claims related to the Broiler Antitrust Civil Litigation.

Settlement terms were reached with the putativ e Direct Purchaser Plaintiff Class, the putative Commercial and Institutional Indirect Purchaser Plaintiff Class and the putative End-User Plaintiff Class (c ollectively, the “Classes”).

Settlement terms were reached with the putative Direct Purchaser Plaintiff Class, the putative Commercial and Institutional Indirect Purchaser Plaintiff Class and the putative End-User Plaintiff Class (collectively, the “Classes”).

Under the terms of the settlements, we have agreed to pay the Classes an aggregate amount of $ 221.5 million in settlement of all outstanding claims brought by the Classes.

These settlements are subject to the execution of long-form settlement agreements with the respective parties and court approval thereof, and do not settle claims made by plaintiffs who opted out of the Classes in the Broiler Antitrust Civil Litigation.

In the first quarter of fiscal 2021, we recorded an aggregate legal contingency accrual of $ 320 million for the above-referenced settlements and to resolve the remaining claims brought by opt-out plaintiffs.

On February 23, 2021 and March 22, 2021, the Court granted preliminary approval of the settlements with the putative Direct Purchaser Plaintiff Class and the putative End-User Plaintiff Class, respectively.

The settlement with the putative Commercial and Institutional Indirect Purchaser Plaintiff Class remains subject to court approval.

The foregoing settlements do not settle claims made by plaintiffs who opt out of the Classes in the Broiler Antitrust Civil Litigation.

In the first quarter of fiscal 2021, the Company recorded an aggregate legal contingency accrual of $ 320 million for the above-referenced settlements and to resolve the remaining claims brought by opt-out plaintiffs.

We are currently pursuing settlement discussions with the opt-out plaintiffs with respect to the remaining claims.

While we do not admit any liability as part of the settlements, we believe that the settlements were in the best interests of the Company and its shareholders in order to avoid the uncertainty, risk, expense and distraction of protracted litigation.

The Commonwealth of Puerto Rico, on behalf of its citizens, has also initiated a civil lawsuit against us, certain of our subsidiaries, and several other poultry processing companies alleging activities in violation of the Puerto Rican antitrust laws.

This lawsuit has been transferred to the Northern District of Illinois for coordinated pre-trial proceedings.

On July 15, 2020, the court ruled that Puerto Rico could pursue claims based on direct purchases from defendants, but dismissed all claims based on indirect purchases or Puerto Rico’s parens patriae status.

On August 26, 2020, Puerto Rico filed a notice of voluntary dismissal without prejudice and withdrew all claims against defendants.

On September 1, 2020, the Office of the Attorney General of the State of New Mexico filed a complaint against us and certain of our poultry subsidiaries, as well as several other poultry processing companies and Agri Stats, Inc., in Santa Fe County, New Mexico.

The complaint alleges violations of New Mexico’s antitrust, unfair trade practice, and unjust enrichment laws based on allegations of conspiracies to manipulate the Georgia Dock, exchange information and reduce the supply of broiler chickens.

On February 1, 2021, we and our poultry subsidiaries, as well as the majority of the other defendants, filed answers to this complaint.

We are currently waiting for discovery to commence.

On February 22, 2021, the Office of the Attorney General of the State of Alaska filed a complaint against us and certain of our poultry subsidiaries, as well as several other poultry processing companies and Agri Stats, in Anchorage, Alaska.

The complaint alleges violations of Alaska’s antitrust, consumer protection, and unjust enrichment laws based on allegations of conspiracies to manipulate the Georgia Dock, exchange information and reduce the supply of broiler chickens.

On March 1, 2017, we received a civil investigative demand (“CID”) from the Office of the Attorney General, Department of Legal Affairs, of the State of Florida.

The Florida CID requests information primarily related to possible anticompetitive conduct in connection with the Georgia Dock, a chicken products pricing index formerly published by the Georgia Department of Agriculture.

The Florida CID requests information primarily related to possible anticompetitive conduct in connection with the Georgia Dock.

We have been cooperating with the Florida Attorney General’s office.

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The Louisiana CID requests all deposition transcripts related to the In re Broiler Chicken Antitrust Litigation .

In February 2021, we received a CID from the Office of the Attorney General of the State of Louisiana.

This Louisiana CID requests information primarily related to possible anticompetitive conduct or violations of state consumer protection laws in connection with the broiler chicken market.

We have been cooperating with the Louisiana’s Attorney General’s office.

On August 6, 2020, we received a CID from the Office of the Attorney General of the State of Washington.

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We have been cooperating with the Washington's Attorney General’s office.

On January 27, 2017, Haff Poultry, Inc., Craig Watts, Johnny Upchurch, Jonathan Walters and Brad Carr, acting on behalf of themselves and a putative class of broiler chicken farmers, filed a class action complaint against us and certain of our poultry subsidiaries, as well as several other vertically-integrated poultry processing companies, in the United States District Court for the Eastern District of Oklahoma.

On March 27, 2017, a second class action complaint making similar claims on behalf of a similarly defined putative class was filed in the United States District Court for the Eastern District of Oklahoma.

Plaintiffs in the two cases sought to have the matters consolidated, and, on July 10, 2017, filed a consolidated amended complaint styled In re Broiler Chicken Grower Litigation .

The plaintiffs allege, among other things, that the defendants colluded not to compete for broiler raising services “with the purpose and effect of fixing, maintaining, and/or stabilizing grower compensation below competitive levels.” The plaintiffs also allege that the defendants “agreed to share detailed data on [g]rower compensation with one another, with the purpose and effect of artificially depressing [g]rower compensation below competitive levels.” The plaintiffs contend these alleged acts constitute violations of the Sherman Antitrust Act and Section 202 of the Grain Inspection, Packers and Stockyards Act of 1921.

The plaintiffs are seeking treble damages, pre- and post-judgment interest, costs, and attorneys’ fees on behalf of the putative class.

We and the other defendants filed a motion to dismiss on September 8, 2017, and that motion was denied on January 6, 2020.

Additional named plaintiffs filed similar class action complaints in federal district courts in North Carolina, Colorado, Kansas and California.

On October 6, 2020, the named plaintiffs in the Oklahoma action filed a motion with the United States Judicial Panel on Multidistrict Litigation (the “JPML”) to transfer and consolidate all actions in the Eastern District of Oklahoma.

On December 15, 2020, the JPML granted the plaintiffs’ motion and consolidated all actions in the Eastern District of Oklahoma.

The parties are now conducting discovery.

On June 18, 2018, a group of plaintiffs acting on their own behalf and on behalf of a putative class of all persons and entities who indirectly purchased pork filed a class action complaint against us and certain of our pork subsidiaries, as well as several other pork processing companies, in the United States District Court for the District of Minnesota.

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The consolidated actions are styled In re Pork Antitrust Litigation .

Since the original filing, a putative class member is proceeding with an individual direct action making similar claims, and others may do so in the future.

The individual complaint has been filed in the District of Minnesota and is proceeding on a coordinated pre-trial basis with the consolidated actions.

Since the original filing, putative class members have filed individual direct actions making similar claims, and others may do so in the future.

The complaints allege, among other things, that beginning in January 2009 the defendants conspired and combined to fix, raise, maintain, and stabilize the price of pork and pork products in violation of United States antitrust laws.

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Following the filing of defendants’ motion to dismiss this matter, the plaintiffs filed a second amended complaint on October 4, 2019.

We moved to dismiss the second

amended complaint, which the court granted on September 28, 2020.

We moved to dismiss the second amended complaint, which the court granted on September 28, 2020.

On December 28, 2020, the plaintiffs filed an amended complaint.

On April 26, 2019, a group of plaintiffs, acting on behalf of themselves and on behalf of a putative class of indirect purchasers of beef for personal use filed a class action complaint against us, other beef packers, and Agri Stats, Inc., an information services provider, in the United States District Court for the District of Minnesota.

On February 18, 2021, we filed a motion to dismiss the plaintiffs’ amended complaints.

On April 26, 2019, a group of plaintiffs, acting on behalf of themselves and on behalf of a putative class of indirect purchasers of beef for personal use filed a class action complaint against us, other beef packers, and Agri Stats in the United States District Court for the District of Minnesota.

The plaintiffs allege that the packer defendants conspired to reduce slaughter capacity by closing or idling plants, limiting their purchases of cash cattle, coordinating their procurement of cash cattle, and reducing their slaughter numbers so as to reduce beef output, all in order to artificially raise prices of beef.

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We moved to dismiss the second amended complaint.

The indirect consumer purchaser litigation is styled as Peterson v.

The indirect consumer purchaser litigation is styled Peterson v.

JBS USA Food Company Holdings, et al .

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On December 28, 2020, the plaintiffs filed amended complaints.

On February 18, 2021, we filed a motion to dismiss the plaintiffs’ amended complaints.

On August 30, 2019, Judy Jien, Kieo Jibidi and Elaisa Clement, acting on their own behalf and a putative class of non-supervisory production and maintenance employees at chicken processing plants in the continental United States, filed a class action complaint against us and certain of our subsidiaries, as well as several other poultry processing companies, in the United States District Court for the District of Maryland.

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The court consolidated the Jien and Earnest cases for coordinated pretrial proceedings.

Following the consolidation, two additional lawsuits were filed by individuals making similar allegations.

Following the consolidation, two additional lawsuits were filed by individuals making similar allegations, and others may do so in the future.

The plaintiffs filed an amended consolidated complaint containing additional allegations concerning turkey processing plants and named additional defendants.

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On December 18, 2020, defendants moved to dismiss certain claims in the second amended complaint.

On March 10, 2021, the court denied the defendants’ motion.

On April 7, 2021, we and the other defendants answered the second amended complaint.

The parties are now conducting discovery.

Our subsidiary, The Hillshire Brands Company (formerly named Sara Lee Corporation), is a party to a consolidation of cases filed by individual complainants with the Republic of the Philippines, Department of Labor and Employment and the National Labor Relations Commission (“NLRC”) from 1998 through July 1999.

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

What changed 10-Q

Item 1. Financial Statements