TYSON FOODS, INC. 10-Q

Item 1. Financial Statements TYSON FOODS, INC. CONSOLIDATED CONDENSED STATEMENTS OF INCOME (In millions, except per share data) (Unaudited) 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 Cost of Sales 10,047 9,867 19,330 19,242 Gross Profit 1,253 1,021 2,430 2,461 Selling, General and Administrative 533 506 1,005 1,188 Operating Income 720 515 1,425 1,273 Other (Income) Expense: Interest income ( 2 ) ( 3 ) ( 4 ) ( 6 ) Interest expense 110 119 220 239 Other, net ( 12 ) ( 106 ) ( 31 ) ( 122 ) Total Other (Income) Expense 96 10 185 111 Income before Income Taxes 624 505 1,240 1,162 Income Tax Expense 147 126 291 274 Net Income 477 379 949 888 Less: Net Income Attributable to Noncontrolling Interests 1 3 6 7 Net Income Attributable to Tyson $ 476 $ 376 $ 943 $ 881 Weighted Average Shares Outstanding: Class A Basic 293 293 293 293 Class B Basic 70 70 70 70 Diluted 365 365 365 366 Net Income Per Share Attributable to Tyson: Class A Basic $ 1.34 $ 1.06 $ 2.65 $ 2.48 Class B Basic $ 1.20 $ 0.95 $ 2.38 $ 2.22 Diluted $ 1.30 $ 1.03 $ 2.58 $ 2.41 See accompanying Notes to Consolidated Condensed Financial Statements. 1 TYSON FOODS, INC. CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (In millions) (Unaudited) Three Months Ended Six Months Ended April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020 Net Income $ 477 $ 379 $ 949 $ 888 Other Comprehensive Income (Loss), Net of Taxes: Derivatives accounted for as cash flow hedges 1 ( 5 ) 2 ( 2 ) Investments ( 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 ) Comprehensive Income 429 228 978 775 Less: Comprehensive Income Attributable to Noncontrolling Interests 1 3 6 7 Comprehensive Income Attributable to Tyson $ 428 $ 225 $ 972 $ 768 See accompanying Notes to Consolidated Condensed Financial Statements. 2 TYSON FOODS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In millions, except share and per share data) (Unaudited) April 3, 2021 October 3, 2020 Assets Current Assets: Cash and cash equivalents $ 877 $ 1,420 Accounts receivable, net 2,113 1,952 Inventories 4,128 3,859 Other current assets 896 367 Total Current Assets 8,014 7,598 Net Property, Plant and Equipment 7,661 7,596 Goodwill 10,555 10,899 Intangible Assets, net 6,649 6,774 Other Assets 1,595 1,589 Total Assets $ 34,474 $ 34,456 Liabilities and Shareholders’ Equity Current Liabilities: Current debt $ 580 $ 548 Accounts payable 1,900 1,876 Other current liabilities 2,132 1,810 Total Current Liabilities 4,612 4,234 Long-Term Debt 9,784 10,791 Deferred Income Taxes 2,340 2,317 Other Liabilities 1,668 1,728 Commitments and Contingencies (Note 15) Shareholders’ Equity: Common stock ($0.10 par value): Class A-authorized 900 million shares, issued 378 million shares 38 38 Convertible Class B-authorized 900 million shares, issued 70 million shares 7 7 Capital in excess of par value 4,443 4,433 Retained earnings 15,716 15,100 Accumulated other comprehensive gain (loss) ( 150 ) ( 179 ) 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 Noncontrolling Interests 139 132 Total Shareholders’ Equity 16,070 15,386 Total Liabilities and Shareholders’ Equity $ 34,474 $ 34,456 See accompanying Notes to Consolidated Condensed Financial Statements. 3 TYSON FOODS, INC. CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY (In millions) (Unaudited) 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: Balance at beginning and end of period 378 $ 38 378 $ 38 378 $ 38 378 $ 38 Class B Common Stock: Balance at beginning and end of period 70 7 70 7 70 7 70 7 Capital in Excess of Par Value: Balance at beginning of period 4,411 4,354 4,433 4,378 Stock-based compensation 32 24 10 — Balance at end of period 4,443 4,378 4,443 4,378 Retained Earnings: Balance at beginning of period 15,399 13,994 15,100 13,655 Net income attributable to Tyson 476 376 943 881 Dividends ( 159 ) ( 150 ) ( 327 ) ( 316 ) Balance at end of period 15,716 14,220 15,716 14,220 Accumulated Other Comprehensive Income (Loss), Net of Tax: Balance at beginning of period ( 102 ) ( 79 ) ( 179 ) ( 117 ) Other comprehensive income (loss) ( 48 ) ( 151 ) 29 ( 113 ) Balance at end of period ( 150 ) ( 230 ) ( 150 ) ( 230 ) Treasury Stock: Balance at beginning of period 83 ( 4,115 ) 83 ( 4,079 ) 83 ( 4,145 ) 82 ( 4,011 ) Purchase of Class A common stock — ( 17 ) — ( 64 ) — ( 34 ) 2 ( 196 ) Stock-based compensation — 9 — 7 — 56 ( 1 ) 71 Balance at end of period 83 ( 4,123 ) 83 ( 4,136 ) 83 ( 4,123 ) 83 ( 4,136 ) Total Shareholders’ Equity Attributable to Tyson $ 15,931 $ 14,277 $ 15,931 $ 14,277 Equity Attributable to Noncontrolling Interests: Balance at beginning of period $ 143 $ 147 $ 132 $ 144 Net income attributable to noncontrolling interests 1 3 6 7 Other ( 5 ) ( 5 ) 1 ( 6 ) Total Equity Attributable to Noncontrolling Interests $ 139 $ 145 $ 139 $ 145 Total Shareholders’ Equity $ 16,070 $ 14,422 $ 16,070 $ 14,422 See accompanying Notes to Consolidated Condensed Financial Statements. 4 TYSON FOODS, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) Six Months Ended April 3, 2021 March 28, 2020 Cash Flows From Operating Activities: Net income $ 949 $ 888 Depreciation and amortization 604 581 Deferred income taxes 27 32 Other, net 46 ( 35 ) Net changes in operating assets and liabilities ( 277 ) ( 206 ) Cash Provided by Operating Activities 1,349 1,260 Cash Flows From Investing Activities: Additions to property, plant and equipment ( 557 ) ( 624 ) Purchases of marketable securities ( 41 ) ( 48 ) Proceeds from sale of marketable securities 41 31 Proceeds from sale of business — 29 Acquisition of equity investments — ( 184 ) Other, net 49 ( 81 ) Cash Used for Investing Activities ( 508 ) ( 877 ) Cash Flows From Financing Activities: Proceeds from issuance of debt 557 68 Payments on debt ( 1,570 ) ( 62 ) Borrowings on revolving credit facility — 1,210 Payments on revolving credit facility — ( 1,080 ) Proceeds from issuance of commercial paper — 12,886 Repayments of commercial paper — ( 12,885 ) Purchases of Tyson Class A common stock ( 34 ) ( 196 ) Dividends ( 318 ) ( 301 ) Stock options exercised 22 28 Other, net ( 2 ) ( 7 ) Cash Used for Financing Activities ( 1,345 ) ( 339 ) Effect of Exchange Rate Changes on Cash 10 ( 9 ) (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 Cash and Cash Equivalents and Restricted Cash at End of Period 972 519 Less: Restricted Cash at End of Period 95 82 Cash and Cash Equivalents at End of Period $ 877 $ 437 See accompanying Notes to Consolidated Condensed Financial Statements. 5 TYSON FOODS, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) NOTE 1: ACCOUNTING POLICIES Basis of Presentation The consolidated condensed financial statements are unaudited and have been prepared by Tyson Foods, Inc. (“Tyson,” “the Company,” “we,” “us” or “our”). Certain information and accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Although we believe the disclosures contained herein are adequate to make the information presented not misleading, these consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October 3, 2020, as amended by Amendment No. 1 on Form 10-K/A filed with the SEC on February 11, 2021 (the “10-K/A”). Preparation of consolidated condensed financial statements requires us to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated condensed financial statements and the reported amounts of revenues and expenses during the reporting period. 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 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. Consolidation The consolidated condensed financial statements include the accounts of all wholly-owned subsidiaries, as well as majority-owned subsidiaries over which we exercise control and, when applicable, entities for which we have a controlling financial interest or variable interest entities for which we are the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The consolidated condensed financial statements are prepared in conformity with accounting principles generally accepted in the United States, which require us to make estimates and assumptions that affect the amounts reported in the consolidated condensed financial statements and accompanying notes. Actual results could differ from those estimates. Risks and Uncertainties We have considered the impact of the global novel coronavirus pandemic (“COVID-19” or “pandemic”) on our consolidated condensed financial statements. In addition to the COVID-19 impacts already experienced, there likely will be future impacts, the extent of which is uncertain and largely subject to whether the severity worsens or duration lengthens. Consequently, this may subject us to future risk of material goodwill, intangible and long-lived asset impairments, increased reserves for uncollectible accounts, and adjustments for inventory and market volatility for items subject to fair value measurements such as derivatives and investments. Revision of Previously Issued Unaudited Consolidated Condensed Financial Statements 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. The resulting loss to the Company and related inventory misstatement was isolated to the Beef segment and was attributable solely to this cattle supplier. 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 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. 6 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 Operating Income 501 14 $ 515 1,327 ( 54 ) 1,273 Income before Income Taxes 491 14 $ 505 1,216 ( 54 ) 1,162 Income Tax Expense (Benefit) 124 2 $ 126 288 ( 14 ) 274 Net Income 367 12 $ 379 928 ( 40 ) 888 Net Income Attributable to Tyson 364 12 $ 376 921 ( 40 ) 881 Net Income Per Share Attributable to Tyson Class A Basic $ 1.03 $ 0.03 $ 1.06 $ 2.59 $ ( 0.11 ) $ 2.48 Class B Basic $ 0.92 $ 0.03 $ 0.95 $ 2.32 $ ( 0.10 ) $ 2.22 Diluted $ 1.00 $ 0.03 $ 1.03 $ 2.52 $ ( 0.11 ) $ 2.41 Consolidated Statements of Comprehensive Income: Net Income $ 367 $ 12 $ 379 $ 928 $ ( 40 ) $ 888 Comprehensive Income 216 12 228 815 ( 40 ) 775 Comprehensive Income Attributable to Tyson 213 12 225 808 ( 40 ) 768 As of March 28, 2020 As originally reported Adjustments As revised Consolidated Balance Sheet: Inventories $ 4,025 $ ( 233 ) $ 3,792 Total Current Assets 7,099 ( 233 ) 6,866 Total Assets 33,890 ( 233 ) 33,657 Deferred Income Taxes 2,384 ( 61 ) 2,323 Retained Earnings (a) 14,392 ( 172 ) 14,220 Total Tyson Shareholders' Equity 14,449 ( 172 ) 14,277 Total Shareholders' Equity 14,594 ( 172 ) 14,422 Total Liabilities and Shareholders' Equity 33,890 ( 233 ) 33,657 Six months ended March 28, 2020 As originally reported Adjustments As revised Consolidated Statement of Cash Flows: Net Income $ 928 $ ( 40 ) $ 888 Deferred income taxes 46 ( 14 ) 32 Net changes in operating assets and liabilities ( 260 ) 54 ( 206 ) (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. 7 Recently Issued Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued guidance that simplifies the accounting for debt with conversion options, revises the criteria for applying the derivative scope exception for contracts in an entity’s own equity, and improves the consistency for the calculation of earnings per share. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2021, our fiscal 2023. Early adoption is permitted for annual periods and interim periods within those annual periods beginning after December 15, 2020, our fiscal 2022. We are currently evaluating the impact this guidance will have on our consolidated financial statements. In March 2020, the FASB issued guidance providing optional expedients and exceptions to account for the effects of reference rate reform to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. The optional guidance, which became effective on March 12, 2020 and can be applied through December 21, 2022, has not impacted our consolidated financial statements. The Company has various contracts that reference LIBOR and is assessing how this standard may be applied to specific contract modifications through December 31, 2022. In December 2019, the FASB issued guidance that simplifies the accounting for income taxes by removing certain exceptions to general principles in Topic 740 and clarifies other general principles by adding certain requirements to Topic 740. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2020, our fiscal 2022. Early adoption is permitted for periods for which financial statements have not yet been issued , beginning our fiscal 2020. An entity that elects to early ad opt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. The application of the guidance requires various transition methods depending on the specific amendment. We are currently evaluating the impact this guidance will have on our consolidated financial statements. Changes in Accounting Principles In June 2016, the FASB issued guidance that provides more decision-useful information about the expected credit losses on financial instruments and changes the loss impairment methodology. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2019, our fiscal 2021. For available-for-sale debt securities previously impaired, the amendments should be applied prospectively; otherwise, the modified-retrospective transition method should be applied. We adopted this guidance in the first quarter of fiscal 2021 using the modified retrospective transition method. Prior periods were not adjusted and, based on our implementation assessment, no cumulative-effect adjustment was made to the opening balance of retained earnings. The adoption of this standard did not have a material impact on our consolidated financial statements. For further description of our policy for available-for-sale debt securities, refer to Note 11: Fair Value Measurements. NOTE 2: INVENTORIES Processed products, livestock, and supplies and other are valued at the lower of cost or net realizable value. 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 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): April 3, 2021 October 3, 2020 Processed products $ 2,234 $ 2,223 Livestock 1,170 977 Supplies and other 724 659 Total inventory $ 4,128 $ 3,859 8 NOTE 3: PROPERTY, PLANT AND EQUIPMENT The major categories of property, plant and equipment and accumulated depreciation are as follows (in millions): April 3, 2021 October 3, 2020 Land $ 209 $ 196 Buildings and leasehold improvements 5,072 4,961 Machinery and equipment 9,220 9,013 Land improvements and other 425 420 Buildings and equipment under construction 1,092 991 16,018 15,581 Less accumulated depreciation 8,357 7,985 Net Property, Plant and Equipment $ 7,661 $ 7,596 NOTE 4: RESTRUCTURING AND RELATED CHARGES In the first quarter of fiscal 2020, the Company approved a restructuring program (the “2020 Program”), which is expected to contribute to the Company’s overall strategy of financial fitness through the elimination of overhead and consolidation of certain enterprise functions. We recognized $ 60 million of cumulative pretax charges in fiscal 2020 associated with the 2020 Program consisting of severance and employee related costs. As part of the 2020 Program, we are eliminating positions across several areas and job levels, with eliminated positions originating from the corporate offices in Springdale, Arkansas, and Chicago, Illinois, as well as certain production facility and supply chain administrative positions. The majority of the positions have already been or are expected to be eliminated by the end of fiscal 2021. We do not anticipate future costs of the 2020 Program to be significant. 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. NOTE 5: OTHER CURRENT LIABILITIES Other current liabilities are as follows (in millions): April 3, 2021 October 3, 2020 Accrued salaries, wages and benefits $ 746 $ 823 Taxes payable 244 152 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. 9 NOTE 6: DEBT The major components of debt are as follows (in millions): April 3, 2021 October 3, 2020 Revolving credit facility $ — $ — Commercial paper — — Senior notes: 2.25% Notes due August 2021 500 500 4.50% Senior notes due June 2022 1,000 1,000 3.90% Senior notes due September 2023 400 400 3.95% Notes due August 2024 1,250 1,250 4.00% Notes due March 2026 (“2026 Notes”) 800 800 3.55% Notes due June 2027 1,350 1,350 7.00% Notes due January 2028 18 18 4.35% Notes due March 2029 (“2029 Notes”) 1,000 1,000 6.13% Notes due November 2032 160 160 4.88% Notes due August 2034 500 500 5.15% Notes due August 2044 500 500 4.55% Notes due June 2047 750 750 5.10% Notes due September 2048 (“2048 Notes”) 1,500 1,500 Discount on senior notes ( 43 ) ( 45 ) Term loans: Term loan facility due March 2022 — 1,500 Term loan facility due March 2023 (0.91% at 4/3/2021) 500 — Other 232 216 Unamortized debt issuance costs ( 53 ) ( 60 ) Total debt 10,364 11,339 Less current debt 580 548 Total long-term debt $ 9,784 $ 10,791 Revolving Credit Facility and Letters of Credit We have a $ 1.75 billion revolving credit facility that supports short-term funding needs and serves as a backstop to our commercial paper program. The facility will mature and the commitments thereunder will terminate in March 2023. 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. In the future, if any of our subsidiaries shall guarantee any of our material indebtedness, such subsidiary shall be required to guarantee the indebtedness, obligations and liabilities under this facility. Commercial Paper Program 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 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. Term Loans 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. 10 Debt Covenants Our revolving credit and term loan facilities contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens and encumbrances; incur debt; merge, dissolve, liquidate or consolidate; make acquisitions and investments; dispose of or transfer assets; change the nature of our business; engage in certain transactions with affiliates; and enter into hedging transactions, in each case, subject to certain qualifications and exceptions. In addition, we are required to maintain minimum interest expense coverage and maximum debt-to-capitalization ratios. Our senior notes also contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens; engage in certain sale/leaseback transactions; and engage in certain consolidations, mergers and sales of assets. We were in compliance with all debt covenants at April 3, 2021. NOTE 7: EQUITY Share Repurchases 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. In addition to the share repurchase program, we purchase shares on the open market to fund certain obligations under our equity compensation plans. A summary of share repurchases of our Class A stock is as follows (in millions): 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: Under share repurchase program — $ — 0.7 $ 50 — $ — 1.8 $ 150 To fund certain obligations under equity compensation plans 0.2 17 0.1 14 0.5 34 0.5 46 Total share repurchases 0.2 $ 17 0.8 $ 64 0.5 $ 34 2.3 $ 196 NOTE 8: INCOME TAXES 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. 11 NOTE 9: EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share data): Three Months Ended Six Months Ended April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020 Numerator: Net income $ 477 $ 379 $ 949 $ 888 Less: Net income attributable to noncontrolling interests 1 3 6 7 Net income attributable to Tyson 476 376 943 881 Less dividends declared: Class A 131 124 269 261 Class B 28 26 58 55 Undistributed earnings $ 317 $ 226 $ 616 $ 565 Class A undistributed earnings $ 261 $ 186 $ 507 $ 465 Class B undistributed earnings 56 40 109 100 Total undistributed earnings $ 317 $ 226 $ 616 $ 565 Denominator: Denominator for basic earnings per share: Class A weighted average shares 293 293 293 293 Class B weighted average shares, and shares under the if-converted method for diluted earnings per share 70 70 70 70 Effect of dilutive securities: Stock options, restricted stock and performance units 2 2 2 3 Warrants Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversions 365 365 365 366 Net income per share attributable to Tyson: Class A basic $ 1.34 $ 1.06 $ 2.65 $ 2.48 Class B basic $ 1.20 $ 0.95 $ 2.38 $ 2.22 Diluted $ 1.30 $ 1.03 $ 2.58 $ 2.41 Dividends Declared Per Share: Class A $ 0.445 $ 0.420 $ 0.915 $ 0.885 Class B $ 0.401 $ 0.378 $ 0.824 $ 0.797 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. We have two classes of capital stock, Class A stock and Class B stock. Cash dividends cannot be paid to holders of Class B stock unless they are simultaneously paid to holders of Class A stock. The per share amount of cash dividends paid to holders of Class B stock cannot exceed 90 % of the cash dividends paid to holders of Class A stock. We allocate undistributed earnings based upon a 1.0 to 0.9 ratio per share to Class A stock and Class B stock, respectively. We allocate undistributed earnings based on this ratio due to historical dividend patterns, voting control of Class B shareholders and contractual limitations of dividends to Class B stock. 12 NOTE 10: DERIVATIVE FINANCIAL INSTRUMENTS Our business operations give rise to certain market risk exposures mostly due to changes in commodity prices, foreign currency exchange rates and interest rates. We manage a portion of these risks through the use of derivative financial instruments to reduce our exposure to commodity price risk, foreign currency risk and interest rate risk. Our risk management programs are periodically reviewed by our Board of Directors' Audit Committee. These programs and risks are monitored by senior management and may be revised as market conditions dictate. Our current risk management programs utilize various industry-standard models that take into account the implicit cost of hedging. Credit risks associated with our derivative contracts are not significant as we minimize counterparty exposure by dealing with credit-worthy counterparties and utilizing exchange traded instruments, margin accounts or letters of credit. 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 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 Commodity: Corn Bushels 24 43 Soybean Meal Tons 866,033 428,300 Live Cattle Pounds 455 234 Lean Hogs Pounds 394 283 Foreign Currency United States dollar $ 111 $ 536 We recognize all derivative instruments as either assets or liabilities at fair value in the Consolidated Condensed Balance Sheets, with the exception of normal purchases and normal sales expected to result in physical delivery. For those derivative instruments that are designated and qualify as hedging instruments, we designate the hedging instrument based upon the exposure being hedged (e.g., cash flow hedge or fair value hedge). We designate certain forward contracts as follows: • Cash Flow Hedges – include certain commodity forward and option contracts of forecasted purchases (e.g., grains), interest rate swaps and locks, and certain foreign exchange forward contracts. • Fair Value Hedges – include certain commodity forward contracts of firm commitments (e.g., livestock). Cash Flow Hedges Derivative instruments are designated as hedges against changes in the amount of future cash flows related to procurement of certain commodities utilized in our production processes as well as interest rates related to our variable rate debt. 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 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 ) 13 Fair Value Hedges We designate certain derivative contracts as fair value hedges of firm commitments to purchase livestock for harvest. Our objective of these hedges is to minimize the risk of changes in fair value created by fluctuations in commodity prices associated with fixed price livestock firm commitments. For these derivative instruments we designate and qualify as a fair value hedge, the gain or loss on the derivative, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in earnings in the same period. 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 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 Undesignated Positions In addition to our designated positions, we also hold derivative contracts for which we do not apply hedge accounting. These include certain derivative instruments related to commodities price risk, including grains, livestock, energy and foreign currency risk. We mark these positions to fair value through earnings at each reporting date. Reclassification to Earnings The following table sets forth the total amounts of each income and expense line item presented in the Consolidated Condensed Statements of Income in which the effects of hedges are recorded (in millions): Consolidated Condensed 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 Interest Expense 110 119 220 239 Other, net ( 12 ) ( 106 ) ( 31 ) ( 122 ) The following table sets forth the pretax impact of the cash flow, fair value and undesignated derivative instruments in the Consolidated Condensed Statements of Income (in millions): Consolidated Condensed 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: Commodity contracts $ — $ ( 5 ) $ ( 1 ) $ ( 7 ) Gain (Loss) on fair value hedges: Commodity contracts (a) ( 13 ) 31 ( 15 ) 47 Gain (Loss) on derivatives not designated as hedging instruments: Commodity contracts ( 2 ) ( 126 ) 96 ( 97 ) Total $ ( 15 ) $ ( 100 ) $ 80 $ ( 57 ) Interest Expense Gain (Loss) on cash flow hedges reclassified from OCI to Earnings: Interest rate contracts $ ( 1 ) $ ( 1 ) $ ( 1 ) $ ( 2 ) Other, net Gain (Loss) on derivatives not designated as hedging instruments: Foreign exchange contracts $ — $ ( 3 ) $ 1 $ 1 (a) Amounts represent gains/(losses) on commodity contracts designated as fair value hedges of firm commitments that were realized during the period presented, which were offset by a corresponding gain/(loss) on the underlying hedged inventory. Gains or losses related to changes in the fair value of unrealized commodity contracts, along with the offsetting gain or loss on the hedged inventory, are also marked-to-market through earnings with no impact on a net basis. The fair value of all outstanding derivative instruments in the Consolidated Condensed Balance Sheets are included in Note 11: Fair Value Measurements. 14 NOTE 11: FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels as follows: Level 1 — Unadjusted quoted prices available in active markets for the identical assets or liabilities at the measurement date. Level 2 — Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including: • Quoted prices for similar assets or liabilities in active markets; • Quoted prices for identical or similar assets in non-active markets; • Inputs other than quoted prices that are observable for the asset or liability; and • Inputs derived principally from or corroborated by other observable market data. Level 3 — Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. Assets and Liabilities Measured at Fair Value on a Recurring Basis The fair value hierarchy requires the use of observable market data when available. In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input significant to the fair value measurement in its entirety. Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. 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): April 3, 2021 Level 1 Level 2 Level 3 Netting (a) Total Other Current Assets: Derivative financial instruments: Designated as hedges $ — $ 3 $ — $ ( 2 ) $ 1 Undesignated — 256 — ( 161 ) 95 Other Assets: Available-for-sale securities: Non-current — 55 53 — 108 Deferred compensation assets 12 385 — — 397 Total assets $ 12 $ 699 $ 53 $ ( 163 ) $ 601 Other Current Liabilities: Derivative financial instruments: Designated as hedges $ — $ 43 $ — $ ( 43 ) $ — Undesignated — 159 — ( 126 ) 33 Total liabilities $ — $ 202 $ — $ ( 169 ) $ 33 15 October 3, 2020 Level 1 Level 2 Level 3 Netting (a) Total Other Current Assets: Derivative financial instruments: Designated as hedges $ — $ 4 $ — $ ( 2 ) $ 2 Undesignated — 96 — ( 51 ) 45 Other Assets: Available-for-sale securities: Non-current — 55 53 — 108 Deferred compensation assets 19 336 — — 355 Total assets $ 19 $ 491 $ 53 $ ( 53 ) $ 510 Other Current Liabilities: Derivative financial instruments: Designated as hedges $ — $ 10 $ — $ ( 10 ) $ — Undesignated — 74 — ( 59 ) 15 Total liabilities $ — $ 84 $ — $ ( 69 ) $ 15 (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 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): Six Months Ended April 3, 2021 March 28, 2020 Balance at beginning of year $ 53 $ 52 Total realized and unrealized gains (losses): Included in earnings — — Included in other comprehensive income (loss) ( 1 ) ( 1 ) Purchases 14 5 Issuances — — Settlements ( 13 ) ( 9 ) Balance at end of period $ 53 $ 47 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: Derivative Assets and Liabilities Our derivative financial instruments primarily include exchange-traded and over-the-counter contracts which are further described in Note 10: Derivative Financial Instruments. We record our derivative financial instruments at fair value using quoted market prices, adjusted where necessary for credit and non-performance risk and internal models that use readily observable market inputs as their basis, including current and forward market prices and rates. We classify these instruments in Level 2 when quoted market prices can be corroborated utilizing observable current and forward commodity market prices on active exchanges or observable market transactions. Available-for-Sale Securities Our investments in marketable debt securities are classified as available-for-sale and are reported at fair value based on pricing models and quoted market prices adjusted for credit and non-performance risk. Short-term investments with maturities of less than 12 months are included in Other current assets in the Consolidated Condensed Balance Sheets and primarily include certificates of deposit and commercial paper. All other marketable debt securities are included in Other Assets in the Consolidated Condensed Balance Sheets and have maturities generally less than 40 years. 16 We classify our investments in U.S. government, U.S. agency, certificates of deposit and commercial paper debt securities as Level 2 as fair value is generally estimated using discounted cash flow models that are primarily industry-standard models that consider various assumptions, including time value and yield curve as well as other readily available relevant economic measures. We classify certain corporate, asset-backed and other debt securities as Level 3 as there is limited activity or less observable inputs into valuation models, including current interest rates and estimated prepayment, default and recovery rates on the underlying portfolio or structured investment vehicle. Significant changes to assumptions or unobservable inputs in the valuation of our Level 3 instruments would not have a significant impact to our consolidated condensed financial statements. 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): April 3, 2021 October 3, 2020 Amortized Cost Basis Fair Value Unrealized Gain (Loss) Amortized Cost Basis Fair Value Unrealized Gain (Loss) Available-for-sale securities: Debt securities: U.S. treasury and agency $ 55 $ 55 $ — $ 55 $ 55 $ — Corporate and asset-backed 52 53 1 51 53 2 Unrealized holding gains (losses), net of tax, are excluded from earnings and reported in OCI until the security is settled or sold. On a quarterly basis, we evaluate whether losses related to our available-for-sale securities are due to credit or non-credit factors. Losses on debt securities where we have the intent, or will more than likely be required, to sell the security prior to recovery, would be recorded as a direct write-off of amortized cost basis through earnings. Losses on debt securities where we do not have the intent, or would not more than likely be required to sell the security prior to recovery, would be further evaluated to determine whether the loss is credit or non-credit related. Credit-related losses would be recorded through an allowance for credit losses in earnings and non-credit related losses in OCI. 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 and six months ended April 3, 2021, and March 28, 2020. Deferred Compensation Assets We maintain non-qualified deferred compensation plans for certain executives and other highly compensated employees. Investments are maintained within a trust and include money market funds, mutual funds and life insurance policies. The cash surrender value of the life insurance policies is invested primarily in mutual funds. The investments are recorded at fair value based on quoted market prices and are included in Other Assets in the Consolidated Condensed Balance Sheets. We classify the investments which have observable market prices in active markets in Level 1 as these are generally publicly traded mutual funds. The remaining deferred compensation assets are classified in Level 2, as fair value can be corroborated based on observable market data. Realized and unrealized gains (losses) on deferred compensation are included in earnings. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis In addition to assets and liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis. 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 six months ended April 3, 2021, and March 28, 2020. Other Financial Instruments Fair value of our debt is principally estimated using Level 2 inputs based on quoted prices for those or similar instruments. Fair value and carrying value for our debt are as follows (in millions): April 3, 2021 October 3, 2020 Fair Value Carrying Value Fair Value Carrying Value Total debt $ 11,665 $ 10,364 $ 12,982 $ 11,339 17 NOTE 12: PENSIONS AND OTHER POSTRETIREMENT BENEFIT PLANS 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 Six Months Ended April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020 Service cost $ — $ — $ — $ — Interest cost 1 7 3 17 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 Six Months Ended April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020 Interest cost $ — $ — $ — $ — Amortization of prior service cost (credit) ( 1 ) ( 1 ) ( 1 ) ( 1 ) Net periodic cost (credit) $ ( 1 ) $ ( 1 ) $ ( 1 ) $ ( 1 ) 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. NOTE 13: 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 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 (Gain) loss reclassified to cost of sales — — — 5 ( 1 ) 4 1 — 1 7 ( 1 ) 6 Unrealized gain (loss) — — — ( 12 ) 3 ( 9 ) — — — ( 12 ) 3 ( 9 ) Investments: Unrealized gain (loss) ( 1 ) — ( 1 ) — — — ( 1 ) — ( 1 ) — — — Currency translation: Translation adjustment ( 49 ) — ( 49 ) ( 105 ) 1 ( 104 ) 26 — 26 ( 70 ) 1 ( 69 ) 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 ) 18 NOTE 14: SEGMENT REPORTING We operate in four reportable segments: Beef, Pork, Chicken, and Prepared Foods. We measure segment profit as operating income (loss). International/Other primarily includes our foreign operations in Australia, China, Malaysia, Mexico, the Netherlands, South Korea and Thailand, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC. Beef Beef includes our operations related to processing live fed cattle and fabricating dressed beef carcasses into primal and sub-primal cuts and case-ready products. Products are marketed domestically to consumer products and food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international export markets. This segment also includes sales from allied products such as hides and variety meats, as well as logistics operations to move products through the supply chain. Pork Pork includes our operations related to processing live market hogs and fabricating pork carcasses into primal and sub-primal cuts and case-ready products. Products are marketed domestically to consumer products and food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international export markets. This segment also includes our live swine group, related allied product processing activities and logistics operations to move products through the supply chain. Chicken Chicken includes our domestic operations related to raising and processing live chickens into, and purchasing raw materials for, fresh, frozen and value-added chicken products, as well as sales from allied products. Our value-added chicken products primarily include breaded chicken strips, nuggets, patties, tenders, wings and other ready-to-fix or fully cooked chicken parts. Products are marketed domestically to consumer products and food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, convenience stores, healthcare facilities, the military and other food processors, as well as to international export markets. This segment also includes logistics operations to move products through our domestic supply chain and the global operations of our chicken breeding stock subsidiary. Prepared Foods Prepared Foods includes our operations related to manufacturing and marketing frozen and refrigerated food products and logistics operations to move products through the supply chain. This segment includes brands such as Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, State Fair®, as well as artisanal brands Aidells®, and Gallo Salame®. Products primarily include ready-to-eat sandwiches, sandwich components such as flame-grilled hamburgers and Philly steaks, pepperoni, bacon, breakfast sausage, turkey, lunchmeat, hot dogs, flour and corn tortilla products, appetizers, snacks, prepared meals, ethnic foods, side dishes, meat dishes, breadsticks and processed meats. Products are marketed domestically to consumer products and food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, convenience stores, healthcare facilities, the military and other food processors, as well as to international export markets. We allocate expenses related to corporate activities to the segments, except for third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC, which are included in International/Other. Intersegment transactions, which were at market prices, are included in the segment sales in the table below. Information on segments and a reconciliation to income before income taxes are as follows (in millions): Three Months Ended Six Months Ended April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020 Sales: Beef $ 4,046 $ 3,979 $ 8,033 $ 7,817 Pork 1,477 1,266 2,916 2,645 Chicken 3,553 3,397 6,384 6,689 Prepared Foods 2,164 2,080 4,277 4,220 International/Other 487 465 956 963 Intersegment ( 427 ) ( 299 ) ( 806 ) ( 631 ) Total sales $ 11,300 $ 10,888 $ 21,760 $ 21,703 19 Three Months Ended Six Months Ended April 3, 2021 March 28, 2020 April 3, 2021 March 28, 2020 Operating income (loss): Beef (a) $ 445 $ 123 $ 973 $ 465 Pork 67 93 183 284 Chicken (b) 6 99 ( 210 ) 156 Prepared Foods 217 191 483 349 International/Other (c) ( 15 ) 9 ( 4 ) 19 Total operating income 720 515 1,425 1,273 Total other expense 96 10 185 111 Income before income taxes $ 624 $ 505 $ 1,240 $ 1,162 (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 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 April 3, 2021 Retail (a) Foodservice (b) International (c) Industrial and Other (d) Intersegment Total Beef $ 2,036 $ 945 $ 593 $ 368 $ 104 $ 4,046 Pork 410 101 296 361 309 1,477 Chicken 1,576 1,356 166 441 14 3,553 Prepared Foods 1,306 787 30 41 — 2,164 International/Other — — 487 — — 487 Intersegment — — — — ( 427 ) ( 427 ) Total $ 5,328 $ 3,189 $ 1,572 $ 1,211 $ — $ 11,300 Three months ended March 28, 2020 Retail (a) Foodservice (b) International (c) Industrial and Other (d) Intersegment Total Beef $ 1,907 $ 1,004 $ 605 $ 362 $ 101 $ 3,979 Pork 383 99 274 325 185 1,266 Chicken 1,550 1,239 167 428 13 3,397 Prepared Foods 1,225 778 34 43 — 2,080 International/Other — — 465 — — 465 Intersegment — — — — ( 299 ) ( 299 ) Total $ 5,065 $ 3,120 $ 1,545 $ 1,158 $ — $ 10,888 20 Six months ended April 3, 2021 Retail (a) 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 Retail (a) 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 . (b) Includes sales to foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, convenience stores, healthcare facilities and the military. (c) Includes sales to international markets for internationally produced products or export sales of domestically produced products. (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 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. NOTE 15: COMMITMENTS AND CONTINGENCIES Commitments 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 April 3, 2021, was no t significant. The likelihood of material payments under these guarantees is not considered probable. 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. Under these programs, we pay an amount for livestock equivalent to a standard cost to grow such livestock during periods of low market sales prices. The amounts of such payments that are in excess of the market sales price are recorded as receivables and accrue interest. Participating suppliers are obligated to repay these receivables balances when market sales prices exceed this standard cost, or upon termination of the agreement. 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 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 April 3, 2021, and October 3, 2020. 21 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 $ 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. We immediately lease the facilities from the local government entities and have an option to re-purchase the facilities for a nominal amount upon tendering the Industrial Revenue Bonds to the local government entities at various predetermined dates. 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 April 3, 2021, the total amount under these types of arrangements totaled $ 620 million. Contingencies 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. We record accruals in the Company's Consolidated Financial Statements for matters to the extent that we conclude a loss is probable and the financial impact, should an adverse outcome occur, is reasonably estimable. Additionally, for matters in which losses are reasonably possible, no reasonable estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made because, among other reasons: (i) the proceedings are in preliminary stages; (ii) specific damages have not been sought; (iii) damage claims are unsupported and/or unreasonable; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; or (vi) novel legal issues or unsettled legal theories are being asserted. 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 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. Listed below are certain claims made against the Company and/or our subsidiaries for which the potential exposure is considered material to the Company’s Consolidated Financial Statements. We believe we have substantial defenses to the claims made and intend to vigorously defend these matters. On September 2, 2016, Maplevale Farms, Inc., acting on its own behalf and on behalf of a putative class of direct purchasers of poultry products, filed a class action complaint against us and certain of our poultry subsidiaries, as well as several other poultry processing companies, in the Northern District of Illinois. Subsequent to the filing of this initial complaint, additional lawsuits making similar claims on behalf of putative classes of direct and indirect purchasers were filed in the United States District Court for the Northern District of Illinois. The court consolidated the complaints, for pre-trial purposes, into actions on behalf of three different putative classes: direct purchasers, indirect purchasers/consumers and commercial/institutional indirect purchasers. The consolidated actions are styled In re Broiler Chicken Antitrust Litigation (the “Broiler Antitrust Civil Litigation”). Since the original filing, certain putative class members have opted out of the matter and are proceeding with individual direct actions making similar claims, and others may do so in the future. All opt out complaints have been filed in, or transferred to, the Northern District of Illinois and are proceeding on a coordinated pre-trial basis with the consolidated actions. The operative complaints, which have been amended throughout the litigation, allege, among other things, that beginning in January 2008 the defendants conspired and combined to fix, raise, maintain, and stabilize the price of broiler chickens in violation of United States antitrust laws. The complaints on behalf of the putative classes of indirect purchasers also include causes of action under various state unfair competition laws, consumer protection laws, and unjust enrichment common laws. The plaintiffs also allege that defendants “manipulated and artificially inflated a widely used Broiler price index, the Georgia Dock.” The plaintiffs further allege that the defendants concealed this conduct from the plaintiffs and the members of the putative classes. The plaintiffs seek treble damages, injunctive relief, pre- and post-judgment interest, costs, and attorneys’ fees on behalf of the putative classes. 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. On April 26, 2019, the plaintiffs notified us that the U.S. Department of Justice (“DOJ”) Antitrust Division issued a grand jury subpoena to them requesting discovery produced by all parties in the civil case. On June 21, 2019, the DOJ filed a motion to intervene and sought a limited stay of discovery in the civil action, which the court granted in part. 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 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 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. 22 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 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. 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. 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., an information services provider (“Agri Stats”), 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. We have been cooperating with the Florida Attorney General’s office. In July 2019, the Attorney General issued a subpoena to the In re Broiler Chicken Antitrust Litigation plaintiffs requesting all information provided to the DOJ. On August 18, 2019, we were advised that the In re Broiler Chicken Antitrust Litigation plaintiffs had received a CID from the Louisiana Department of Justice Office of the Attorney General Public Protection Division. 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. The Washington 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 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. 23 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. Subsequent to the filing of the initial complaint, additional lawsuits making similar claims on behalf of putative classes of direct and indirect purchasers were also filed in the same court. The court consolidated the complaints, for pre-trial purposes, into actions on behalf of three different putative classes: direct purchasers, indirect purchasers/consumers and commercial/institutional indirect purchasers. The consolidated actions are styled In re Pork Antitrust Litigation . 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. The complaints on behalf of the putative classes of indirect purchasers also include causes of action under various state unfair competition laws, consumer protection laws, and unjust enrichment common laws. The plaintiffs seek treble damages, injunctive relief, pre- and post-judgment interest, costs, and attorneys’ fees on behalf of the putative classes. On August 8, 2019, this matter was dismissed without prejudice. The plaintiffs filed amended complaints on November 6, 2019, in which the plaintiffs again have alleged that the defendants conspired and combined to fix, raise, maintain, and stabilize the price of pork and pork products in violation of state and federal antitrust, consumer protection, and unjust enrichment common laws, and the plaintiffs again are seeking treble damages, injunctive relief, pre- and post-judgment interest, costs, and attorneys’ fees on behalf of the putative classes. 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 pork processing companies alleging activities in violation of the Puerto Rican antitrust laws. This lawsuit was transferred to the District of Minnesota and an amended complaint was filed on December 6, 2019. We moved to dismiss the amended complaints, and on October 16, 2020, the court granted the motion with respect to certain state law claims but denied the motion with respect to the plaintiffs’ federal antitrust claims. The parties are now conducting discovery. On April 23, 2019, a group of plaintiffs, acting on behalf of themselves and on behalf of a putative class of all persons and entities who directly sold to the named defendants any fed cattle for slaughter and all persons who transacted in live cattle futures and/or options traded on the Chicago Mercantile Exchange or another U.S. exchange, filed a class action complaint against us and our beef and pork subsidiary, Tyson Fresh Meats, Inc., as well as other beef packer defendants, in the United States District Court for the Northern District of Illinois. The plaintiffs allege that the defendants engaged in a conspiracy from January 2015 to the present to reduce fed cattle prices in violation of federal antitrust laws, the Grain Inspection, Packers and Stockyards Act of 1921, and the Commodities Exchange Act by periodically reducing their slaughter volumes so as to reduce demand for fed cattle, curtailing their purchases and slaughters of cash-purchased cattle during those same periods, coordinating their procurement practices for fed cattle settled on a cash basis, importing foreign cattle at a loss so as to reduce domestic demand, and closing and idling plants. In addition, the plaintiffs also allege the defendants colluded to manipulate live cattle futures and options traded on the Chicago Mercantile Exchange. The plaintiffs seek, among other things, treble monetary damages, punitive damages, restitution, and pre- and post-judgment interest, as well as declaratory and injunctive relief. This complaint was subsequently voluntarily dismissed and re-filed in the United States District Court for the District of Minnesota. Other similar lawsuits were filed by ranchers in other district courts. All actions seeking relief by ranchers and futures traders have now been transferred to the United States District Court for the District of Minnesota action and are consolidated for pre-trial proceedings as In Re Cattle Antitrust Litigation . 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. On December 28, 2020, the plaintiffs filed an amended complaint. 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. The plaintiffs seek, among other things, damages under state antitrust and consumer protection statutes and the common law of approximately 30 states, as well as injunctive relief. The plaintiffs filed a first amended complaint in which the claims against Agri Stats were dismissed and subsequently filed a second amended complaint on November 22, 2019. We moved to dismiss the second amended complaint. The indirect consumer purchaser litigation is styled Peterson v. JBS USA Food Company Holdings, et al . Additional complaints have been filed on behalf of a putative class of direct purchasers of beef alleging violations of Section 1 of the Sherman Act based on an alleged conspiracy to artificially fix, raise, and stabilize the wholesale price for beef, as well as on behalf of a putative class of commercial and institutional indirect purchasers of beef alleging violations of Section 1 of the Sherman Act, various state antitrust laws and unjust enrichment based on an alleged conspiracy to artificially inflate the price for beef. On September 28, 2020, the court granted our motion to dismiss the complaint. On December 28, 2020, the plaintiffs filed amended complaints. On February 18, 2021, we filed a motion to dismiss the plaintiffs’ amended complaints. 24 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. An additional complaint making similar allegations was also filed by Emily Earnest. The plaintiffs allege that the defendants directly and through a wage survey and benchmarking service exchanged information regarding labor rates in an effort to depress and fix the rates of wages for non-supervisory production and maintenance workers in violation of federal antitrust laws. The plaintiffs seek, among other things, treble monetary damages, punitive damages, restitution, and pre- and post-judgment interest, as well as declaratory and injunctive relief. 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, 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. We moved to dismiss the amended consolidated complaint. On September 16, 2020, the court dismissed claims against Tyson and certain other defendants without prejudice because the complaint improperly grouped together corporate subsidiaries. The court otherwise denied the defendants’ motions to dismiss and sustained claims based on alleged conspiracies to fix wages and exchange information against five other defendants. The court granted the plaintiffs leave to file an amended complaint to address the impermissible group pleading. On October 16, 2020, the plaintiffs filed a second amended complaint reasserting their claims. 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. The complaint was filed against Aris Philippines, Inc., Sara Lee Corporation, Sara Lee Philippines, Inc., Fashion Accessories Philippines, Inc., and Attorney Cesar C. Cruz (collectively, the “respondents”). The complaint alleges, among other things, that the respondents engaged in unfair labor practices in connection with the termination of manufacturing operations in the Philippines in 1995 by Aris Philippines, Inc., a former subsidiary of The Hillshire Brands Company. In late 2004, a labor arbiter ruled against the respondents and awarded the complainants PHP 3,453,664,710 (approximately U.S. $ 71 million) in damages and fees. The respondents appealed the labor arbiter's ruling, and it was subsequently set aside by the NLRC in December 2006. Subsequent to the NLRC’s decision, the parties filed numerous appeals, motions for reconsideration and petitions for review, certain of which remained outstanding for several years. While various of those appeals, motions and/or petitions were pending, The Hillshire Brands Company, on June 23, 2014, without admitting liability, filed a settlement motion requesting that the Supreme Court of the Philippines order dismissal with prejudice of all claims against it and certain other respondents in exchange for payments allocated by the court among the complainants in an amount not to exceed PHP 342,287,800 (approximately U.S. $ 7 million). Based in part on its finding that the consideration to be paid to the complainants as part of such settlement was insufficient, the Supreme Court of the Philippines denied the respondents’ settlement motion and all motions for reconsideration thereof. The Supreme Court of the Philippines also set aside as premature the NLRC’s December 2006 ruling. As a result, the cases were remanded back before the NLRC to rule on the merits of the case. On December 15, 2016, we learned that the NLRC rendered its decision on November 29, 2016, regarding the respondents’ appeals regarding the labor arbiter’s 2004 ruling in favor of the complainants. The NLRC increased the award for 4,922 of the total 5,984 complainants to PHP 14,858,495,937 (approximately U.S. $ 306 million). However, the NLRC approved a prior settlement reached with the group comprising approximately 18 % of the class of 5,984 complainants, pursuant to which The Hillshire Brands Company agreed to pay each settling complainant PHP 68,000 (approximately U.S. $ 1,400 ). The settlement payment was made on December 21, 2016, to the NLRC, which is responsible for distributing the funds to each settling complainant. On December 27, 2016, the respondents filed motions for reconsideration with the NLRC asking that the award be set aside. The NLRC denied respondents' motions for reconsideration in a resolution received on May 5, 2017 and entered a judgment on the award on July 24, 2017. Each of Aris Philippines, Inc., Sara Lee Corporation and Sara Lee Philippines, Inc. appealed this award and sought an injunction to preclude enforcement of the award to the Philippines Court of Appeals. On November 23, 2017, the Court of Appeals granted a writ of preliminary injunction that precluded execution of the NLRC award during the pendency of the appeal. The Court of Appeals subsequently vacated the NLRC’s award on April 12, 2018. Complainants have filed motions for reconsideration with the Court of Appeals. On November 14, 2018, the Court of Appeals denied claimants’ motions for reconsideration and granted defendants’ motion to release and discharge the preliminary injunction bond. Claimants have since filed petitions for writ of certiorari with the Supreme Court of the Philippines. The Supreme Court has accepted the case for review. We continue to maintain an accrual for this matter. Various claims have been asserted against the Company, its subsidiaries, and its officers and agents by, and on behalf of, team members who claim to have contracted COVID-19 in our facilities. 25