What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-11-15 compared with 2020-11-16 · 461 added, 474 removed, 1035 unchanged (47% of the section changed)

4 unchanged sentences

in millions, except per share data

2021 2020 2019

Sales $ 47,049 $ 43,185 $ 42,405

Cost of Sales 40,523 37,801 37,383

Gross Profit 6,526 5,384 5,022

Selling, General and Administrative 2,130 2,376 2,252

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Interest expense 428 485 462

Other, net ( 65 ) ( 131 ) ( 55 )

Total Other (Income) Expense 355 344 396

Income before Income Taxes 4,041 2,664 2,374

Income Tax Expense (Benefit)

Income Tax Expense 981 593 381

Net Income 3,060 2,071 1,993

Net Income Attributable to Noncontrolling Interests 13 10 13

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Class B Basic 70 70 70

Diluted 365 365 366

Net Income Per Share Attributable to Tyson:

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Class B Basic $ 7.70 $ 5.21 $ 4.99

See accompanying notes.

Diluted $ 8.34 $ 5.64 $ 5.40

See accompanying Notes to Consolidated Financial Statements.

TYSON FOODS, INC.

1 unchanged sentence

Three years ended October 2, 2021

2021 2020 2019

Net Income $ 3,060 $ 2,071 $ 1,993

Other Comprehensive Income (Loss), Net of Taxes:

Derivatives accounted for as cash flow hedges

Investments ( 1 ) 1 2

Currency translation

17 ( 29 ) ( 23 )

Postretirement benefits ( 11 ) ( 43 ) ( 66 )

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Comprehensive Income Attributable to Tyson $ 3,054 $ 1,999 $ 1,878

See accompanying notes.

See accompanying Notes to Consolidated Financial Statements.

TYSON FOODS, INC.

CONSOLIDATED BALANCE SHEETS

October 3, 2020, and September 28, 2019

October 2, 2021, and October 3, 2020

in millions, except share and per share data

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Accounts receivable, net 2,400 1,952

Inventories 4,382 3,859

Other current assets 533 367

1 unchanged sentence

Net Property, Plant and Equipment 7,837 7,596

Goodwill 10,549 10,899

Intangible Assets, net 6,519 6,774

Other Assets 1,582 1,589

Total Assets $ 36,309 $ 34,456

Liabilities and Shareholders’ Equity

Current Liabilities:

Current debt $ 1,067 $ 548

Accounts payable 2,225 1,876

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Accumulated other comprehensive gain (loss) ( 172 ) ( 179 )

Treasury stock, at cost – 83 million shares at October 3, 2020 and 82 million shares at September 28, 2019

Treasury stock, at cost – 83 million shares at October 2, 2021 and October 3, 2020 ( 4,138 ) ( 4,145 )

Total Tyson Shareholders’ Equity 17,723 15,254

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Total Liabilities and Shareholders’ Equity $ 36,309 $ 34,456

See accompanying notes.

See accompanying Notes to Consolidated Financial Statements.

TYSON FOODS, INC.

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Three years ended October 2, 2021

2021 2020 2019

Shares Amount Shares Amount Shares Amount

Class A Common Stock:

Balance at beginning of year

Issuance of Class A common stock

Balance at end of year

Balance at beginning and end of year 378 $ 38 378 $ 38 378 $ 38

Class B Common Stock:

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Net income attributable to Tyson 3,047 2,061 1,980

Reclass from Accumulated Other Comprehensive Income (Loss), Net of Tax (1)

Dividends ( 645 ) ( 616 ) ( 564 )

Balance at end of year 17,502 15,100 13,655

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Other Comprehensive Income (Loss) 7 ( 62 ) ( 102 )

Reclass to Retained Earnings (1)

Balance at end of year ( 172 ) ( 179 ) ( 117 )

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Total Shareholders’ Equity $ 17,854 $ 15,386 $ 14,094

(1) Reclass from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act ("Tax Act"), following adoption of the applicable new accounting standard for the fiscal year ended September 29, 2018.

See accompanying notes.

See accompanying Notes to Consolidated Financial Statements.

TYSON FOODS, INC.

1 unchanged sentence

Three years ended October 2, 2021

2021 2020 2019

Cash Flows From Operating Activities:

Net income $ 3,060 $ 2,071 $ 1,993

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation 934 900 819

Amortization 280 292 279

Deferred income taxes ( 125 ) 18 77

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Stock-based compensation expense 91 89 77

Other, net ( 57 ) ( 124 ) ( 20 )

(Increase) decrease in accounts receivable ( 508 ) 191 ( 226 )

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Acquisition of equity investments ( 44 ) ( 183 ) —

Cash Used for Investing Activities

Other, net 125 ( 52 ) 88

Cash Provided by (Used for) Investing Activities 58 ( 1,423 ) ( 3,464 )

Cash Flows From Financing Activities:

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Purchases of Tyson Class A common stock ( 67 ) ( 207 ) ( 252 )

Dividends ( 636 ) ( 601 ) ( 537 )

Stock options exercised 41 30 99

Other, net ( 22 ) ( 18 ) ( 30 )

Cash Provided by (Used for) Financing Activities ( 2,731 ) ( 1,468 ) 1,171

Effect of Exchange Rate Change on Cash 4 ( 1 ) ( 6 )

Increase (decrease) in Cash and Cash Equivalents and Restricted Cash

Increase in Cash and Cash Equivalents and Restricted Cash 1,171 982 214

Cash and Cash Equivalents and Restricted Cash at Beginning of Year 1,466 484 270

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Cash and Cash Equivalents at End of Year $ 2,507 $ 1,420 $ 484

See accompanying notes.

See accompanying Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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We utilize a 52- or 53-week accounting period ending on the Saturday closest to September 30.

The Company’s accounting cycle resulted in a 53-week year for fiscal 2020 and a 52-week year for fiscal 2019 and fiscal 2018 .

The Company’s accounting cycle resulted in a 52-week year for fiscal 2021 and fiscal 2019 and a 53-week year for fiscal 2020.

Cash and Cash Equivalents

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These negative book cash balances are included in accounts payable and other current liabilities.

At October 3, 2020 , and September 28, 2019 , checks outstanding in excess of related book cash balances totaled approximately $ 200 million .

Checks outstanding in excess of related book cash balances totaled approximately $ 120 million and $ 200 million at October 2, 2021, and October 3, 2020, respectively.

Accounts Receivable

We record accounts receivable at net realizable value.

This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the accounts receivable balances and charged to the provision for doubtful accounts.

We calculate this allowance based on our history of write-offs, level of past due accounts and relationships with and economic status of our customers.

At October 3, 2020 , and September 28, 2019 , our allowance for uncollectible accounts was $ 26 million and $ 21 million , respectively.

This value includes an appropriate allowance for estimated credit losses to reflect any loss anticipated on the accounts receivable balances and charged to the allowance for credit losses.

We calculate this allowance based on our history of write-offs, future economic conditions, level of past due accounts, and relationships with and economic status of our customers.

At October 2, 2021, and October 3, 2020, our allowance for credit losses was $ 25 million and $ 26 million, respectively.

We generally do not have collateral for our receivables, but we do periodically evaluate the credit worthiness of our customers.

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In fiscal 2021 and fiscal 2020, the cost of inventories was determined by either the first-in, first-out (“FIFO”) method or the weighted-average method .

The following table reflects the major components of inventory at October 3, 2020 , and September 28, 2019 (in millions):

The following table reflects the major components of inventory at October 2, 2021, and October 3, 2020 (in millions):

Processed products $ 2,426 $ 2,223

Livestock 1,215 977

Supplies and other 741 659

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We use various valuation techniques to estimate fair value, with the primary techniques being discounted cash flows, relief-from-royalty and multi-period excess earnings valuation approaches, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.

Under these valuation approaches, we are required to make estimates and assumptions about sales, operating margins, growth rates, royalty rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data.

Under these valuation approaches, we are required to make estimates and assumptions about sales growth, operating margins, royalty rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data.

Goodwill and indefinite life intangible assets are initially recorded at fair value and not amortized, but are reviewed for impairment at least annually or more frequently if impairment indicators arise.

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We estimate the fair value of our reporting units considering the use of various valuation techniques, with the primary technique being an income approach (discounted cash flow method), with another technique being a market approach (guideline public company method), which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.

We include assumptions about sales, operating margins, growth rates, discount rates and valuations multiples which consider our budgets, business plans, economic projections and marketplace data, and are believed to reflect market participant views which would exist in an exit transaction.

We include assumptions about sales growth, operating margins, discount rates and valuations multiples which consider our budgets, business plans, economic projections and marketplace data, and are believed to reflect market participant views which would exist in an exit transaction.

Assumptions are also made for varying perpetual growth rates for periods beyond the long-term business plan period.

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During fiscal 2021, 2020 and 2019, we determined none of our material reporting units' fair values were below its carrying value.

All of our material reporting units’ estimated fair value exceeded their carrying value by more than 20 % at the date of their most recent estimated fair value determination, other than the Domestic Chicken reporting unit, which had $ 3,266 million of goodwill at October 3, 2020.

All of our material reporting units’ estimated fair value exceeded their carrying value by more than 20 % at the date of their most recent estimated fair value determination, other than our Chicken segment reporting units and International reporting units with goodwill totaling $ 3.3 billion and $ 0.2 billion, respectively, at October 2, 2021.

For our indefinite life intangible assets, a qualitative assessment can also be performed to determine whether the existence of events and circumstances indicates it is more likely than not an intangible asset is impaired.

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The fair value of our indefinite life intangible assets is calculated principally using multi-period excess earnings and relief-from-royalty valuation approaches, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy, and is believed to reflect market participant views which would exist in an exit transaction.

During fiscal 2021, 2020 and 2019, we determined the fair value of each of our indefinite life intangible assets exceeded its carrying value.

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Interest expense on finance lease obligations is recorded over the lease term and is presented in Interest expense, based on the effective interest method.

All operating lease cash payments and interest on finance leases are presented within Net cash provided by operating activities and all finance lease principal payments are presented within Net cash used in financing activities in our Consolidated Statements of Cash Flows.

All operating lease cash payments and interest on finance leases are presented within Cash flows from operating activities and all finance lease principal payments are presented within cash flows from financing activities in our Consolidated Statements of Cash Flows.

We have investments in joint ventures and other entities.

The equity method of accounting is used for entities in which we exercise significant influence but do not have a controlling interest or a variable interest in which we are the primary beneficiary.

Under the equity method of accounting, the initial investment is recorded at cost and the investment is subsequently adjusted for its proportionate share of earnings or losses and dividends, including consideration of basis differences resulting from the difference between the initial carrying amount of the investment and the underlying equity in net assets, as applicable.

Equity method investments totaled $ 350 million and $ 287 million at October 2, 2021 and October 3, 2020, respectively.

Investments not accounted for using the equity method do not have readily determinable fair values and do not qualify for the practical expedient to measure the investment using a net asset value per share.

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The cost of securities sold is based on the specific identification method.

Realized gains and losses on the sale of debt securities and declines in value judged to be other than temporary are recorded on a net basis in other income.

Realized gains and losses on the sale of debt securities and declines in value due to credit-related factors are recorded on a net basis in other income.

Interest and dividends on securities classified as available-for-sale are recorded in interest income.

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Other Current Liabilities

Other current liabilities at October 3, 2020 , and September 28, 2019 , include (in millions):

Other current liabilities at October 2, 2021, and October 3, 2020, include (in millions):

Accrued salaries, wages and benefits $ 897 $ 823

Taxes payable 729 152

Accrued current legal contingencies (a) 567 18

Other 840 817

Total other current liabilities $ 3,033 $ 1,810

(a) As of October 2, 2021, $ 127 million of funds held in an escrow account for litigation settlements was included as restricted cash within Other current assets in the Consolidated Balance Sheets.

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

Defined Benefit Plans

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We generally do not hedge anticipated transactions beyond 18 months.

Litigation Reserves:

Litigation Accruals

There are a variety of legal proceedings pending or threatened against us.

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Research and development costs are expensed as incurred.

Research and development costs totaled $ 98 million , $ 97 million and $ 114 million in fiscal 2020 , 2019 and 2018 , respectively.

Research and development costs totaled $ 114 million, $ 98 million, $ 97 million in fiscal 2021, 2020 and 2019, respectively.

Business Combinations

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We use various models to determine the value of assets acquired such as net realizable value to value inventory, cost method and market approach to value property, relief-from-royalty and multi-period excess earnings to value intangibles, and discounted cash flow to value goodwill.

We make estimates and assumptions about projected future cash flows including sales, operating margins, attrition rates, growth rates, and discount rates based on historical results, business plans, expected synergies, perceived risk, and market place data considering the perspective of marketplace participants.

We make estimates and assumptions about projected future cash flows including sales growth, operating margins, attrition rates, and discount rates based on historical results, business plans, expected synergies, perceived risk, and market place data considering the perspective of marketplace participants.

Determining the useful life of an intangible asset also requires judgment as different types of intangible assets will have different useful lives and certain assets may be considered to have indefinite useful lives.

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These impacts could include but may not be limited to risks and uncertainty related to worker availability, our ability to operate production facilities, demand-driven production facility idling, shifts in demand between sales channels and market volatility in our supply chain.

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.

Consequently, this may subject us to future risk of material goodwill, intangible and long-lived asset impairments, increased allowance for credit losses, and adjustments for inventory and market volatility for items subject to fair value measurements such as derivatives and investments.

Recently Issued Accounting Pronouncements

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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.

We early adopted this guidance as of the beginning of the first quarter of fiscal 2022 and it did not have an impact 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.

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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.

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.

We will adopt this guidance using the modified retrospective and prospective transition methods beginning in the first quarter of fiscal 2021.

We do not expect the adoption of this guidance will have a material impact on our consolidated financial statements.

We adopted this guidance as of the beginning of the first quarter of fiscal 2022, and it did not have an impact on our consolidated financial statements.

CHANGES IN ACCOUNTING PRINCIPLES

In August 2017, the FASB issued guidance that eases certain documentation and assessment requirements of hedge effectiveness and modifies the accounting for components excluded from the assessment.

Some of the modifications included the ineffectiveness of derivative gain/loss in highly effective cash flow hedges to be recorded in Other Comprehensive Income, alignment of the recognition and presentation of the effects related to the hedging instrument and hedged item in the financial statements, and additional disclosures required on the cumulative basis adjustment in fair value hedges and the effect of hedging on financial statement lines for components excluded from the assessment.

The amendment also simplified the application of hedge accounting in certain situations to permit new hedging strategies to be eligible for hedge accounting.

The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2018, our fiscal 2020.

We adopted this guidance in the first quarter of fiscal 2020 using the modified retrospective transition approach, and it did not have a material impact on our consolidated financial statements.

In February 2016, the FASB issued guidance that created new accounting and reporting guidelines for leasing arrangements.

The guidance requires lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months.

Recognition, measurement and presentation of expenses and cash flows arising from a lease will depend on classification as a finance or operating lease.

The guidance also requires qualitative and quantitative disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases.

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.

We adopted this guidance in the first quarter of fiscal 2020 using the optional transition method that allows for a cumulative-effect adjustment in the period of adoption with no restatement of prior periods.

We have elected the package of practical expedients available under the transition guidance which allows us to not reassess prior conclusions related to lease classifications, existing contracts containing leases, and initial direct costs, as well as the practical expedient that allows the continued historical treatment of land easements.

We did not elect the practical expedient for the use of hindsight in evaluating the expected lease term of existing leases.

The adoption resulted in the recording of operating lease assets and operating lease liabilities of $ 549 million and $ 546 million , respectively, as of September 29, 2019, with no changes to our finance leases.

The difference between the additional lease assets and lease liabilities, represents existing deferred rent and prepaid lease balances that were reclassified on the balance sheet.

The adoption did not have a material impact on our Consolidated Statements of Income or our Consolidated Statements of Cash Flows.

For further description of our lease policy refer to Note 1:

Business and Summary of Significant Accounting Policies, and for quantitative lease information refer to Note 6:

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 policies for accounts receivable and investments refer to Note 1:

Business and Summary of Significant Accounting Policies and to Note 14:

Fair Value Measurements for available-for-sale debt securities.

ACQUISITIONS AND DISPOSITIONS

In the third quarter of fiscal 2021, we acquired a 49 % minority interest in a Malaysian producer of feed and poultry products for $ 44 million in addition to future contingent payments of up to approximately $ 65 million.

We are accounting for the investment under the equity method.

On January 15, 2020, we acquired a 40 % minority interest in a vertically-integrated Brazilian poultry producer for $ 122 million.

On February 7, 2020, we acquired a 50 % interest in a joint venture serving the worldwide fats and oils market for $ 61 million.

We are accounting for both of these investments under the equity method.

On June 3, 2019, we acquired the Thai and European operations of BRF S.A.

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Accounts receivable 106

Inventories 257

Other current assets 34

Property, Plant and Equipment 676

Goodwill 1,120

Intangible Assets 659

Other Assets 28

Current debt ( 73 )

Accounts payable ( 208 )

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We used various valuation techniques to determine fair value, with the primary techniques being discounted cash flow, relief-from-royalty, market pricing multiple and multi-period excess earnings valuation approaches, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.

Under these valuation approaches, we are required to make estimates and assumptions about sales, operating margins, growth rates, attrition rates, royalty rates, EBITDA multiples, and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data.

On August 20, 2018, we acquired the assets of American Proteins, Inc.

and AMPRO Products, Inc.

("American Proteins"), a poultry rendering and blending operation for $ 864 million , as part of our strategic expansion and sustainability initiatives.

Its results, subsequent to the acquisition closing, are included in our Chicken segment.

The purchase price allocation included $ 56 million of net working capital, $ 152 million of Property, Plant and Equipment, $ 361 million of Intangible Assets, $ 308 million of Goodwill, and $ 13 million of Other liabilities.

Intangible Assets primarily included $ 310 million assigned to supply network which will be amortized over 14 years and $ 51 million assigned to customer relationships which will be amortized over a weighted average of 12 years.

All of the goodwill acquired is amortizable for tax purposes.

During fiscal 2019, we settled the net-working capital purchase price adjustment reducing the purchase price by $ 2 million and recorded measurement period adjustments which increased goodwill by $ 66 million , including a reduction to net working capital of $ 15 million , a reduction to Property, Plant and Equipment of $ 3 million , and a reduction to intangible assets of $ 50 million .

On June 4, 2018, we acquired Tecumseh Poultry, LLC ("Tecumseh"), a vertically integrated value-added protein business for $ 382 million , net of cash acquired, as part of our strategy to grow in the high quality, branded poultry market.

Its results, subsequent to the acquisition closing, are included in our Chicken segment.

The purchase price allocation included $ 13 million of net working capital, including $ 1 million of cash acquired, $ 49 million of Property, Plant and Equipment, $ 227 million of Intangible Assets and $ 94 million of Goodwill.

Intangible Assets included $ 193 million assigned to brands and trademarks which will be amortized over 20 years.

All of the goodwill acquired is amortizable for tax purposes.

On November 10, 2017, we acquired Original Philly Holdings, Inc.

("Original Philly"), a value-added protein business, for $ 226 million , net of cash acquired, as part of our strategic expansion initiative.

Its results, subsequent to the acquisition closing, are included in our Prepared Foods and Chicken segments.

The purchase price allocation included $ 21 million of net working capital, including $ 10 million of cash acquired, $ 13 million of Property, Plant and Equipment, $ 90 million of Intangible Assets and $ 111 million of Goodwill.

We allocated $ 82 million and $ 29 million of goodwill to our Prepared Foods and Chicken segments, respectively, using the acquisition method approach.

All of the goodwill acquired is amortizable for tax purposes.

On January 15, 2020, we acquired a 40 % minority interest in a vertically-integrated Brazilian poultry producer for $ 122 million .

On February 7, 2020, we acquired a 50 % interest in a joint venture serving the worldwide fats and oils market for $ 61 million .

We are accounting for both of these investments under the equity method.

On April 24, 2017, we announced our intent to sell three non-protein businesses as part of our strategic focus on protein brands.

These businesses, which were all part of our Prepared Foods segment, included Sara Lee® Frozen Bakery, Kettle and Van’s® and produce items such as frozen desserts, waffles, snack bars, and soups, sauces and sides.

The sale also included the Chef Pierre®, Bistro Collection®, Kettle Collection™, and Van’s® brands, a license to use the Sara Lee® brand in various channels, as well as our Tarboro, North Carolina, Fort Worth, Texas, and Traverse City, Michigan, prepared foods facilities.

We completed the sale of our Kettle business on December 30, 2017, and received net proceeds of $ 125 million including a working capital adjustment.

As a result of the sale, we recorded a pretax gain of $ 22 million , which is reflected in Cost of Sales in our Consolidated Statement of Income for our fiscal 2018.

We utilized the net proceeds to pay down term loan debt.

We completed the sale of our Sara Lee® Frozen Bakery and Van’s® businesses on July 30, 2018 for $ 623 million including a working capital adjustment.

As a result of the sale, we recorded a pretax gain of $ 11 million , which is reflected in Cost of Sales in our Consolidated Statement of Income for our fiscal 2018.

We utilized the net proceeds to repay commercial paper.

Previously in fiscal 2018, we recorded a pretax impairment charge for these businesses of $ 101 million due to revised estimates of the businesses' fair value based on expected net sales proceeds at the time of the impairment.

This charge was recorded in Cost of Sales in our Consolidated Statement of Income, and primarily consisted of goodwill previously classified within assets held for sale.

In the first quarter of fiscal 2018, we made the decision to sell TNT Crust, our pizza crust business, which was also included in our Prepared Foods segment, as part of our strategic focus on protein brands.

We completed the sale of this business on September 2, 2018, for $ 57 million net of adjustments.

As a result of the sale, we recorded a pretax gain of $ 9 million , which is reflected in Cost of Sales in our Consolidated Statement of Income for our fiscal 2018.

We utilized the net proceeds to repay commercial paper.

Under these valuation approaches, we are required to make estimates and assumptions about sales growth, operating margins, attrition rates, royalty rates, EBITDA multiples, and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data.

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

We completed the sale of this business on July 6, 2021 for $ 1.2 billion, subject to certain adjustments.

As a result of the sale, we recorded a pretax gain of $ 784 million, or post tax gain of $ 510 million, which is reflected in Cost of Sales in our Consolidated Statement of Income for our fiscal 2021.

The business had a net carrying value of $ 411 million which included $ 44 million of working capital consisting of inventory, accounts receivable and accounts payable, $ 17 million of property, plant and equipment and $ 350 million of goodwill.

The goodwill is not deductible for tax purposes.

The Company concluded the business was not a significant disposal and did not represent a strategic shift, and therefore was not classified as a discontinued operation for any of the periods presented .

We completed the sale of a chicken further processing facility acquired during the Keystone Foods acquisition on August 31, 2019 for $ 170 million net proceeds, which did not result in a significant gain or loss.

PROPERTY, PLANT AND EQUIPMENT

The following table reflects major categories of property, plant and equipment and accumulated depreciation at October 3, 2020 , and September 28, 2019 (in millions):

The following table reflects major categories of property, plant and equipment and accumulated depreciation at October 2, 2021, and October 3, 2020 (in millions):

Land $ 210 $ 196

Building and leasehold improvements 5,370 4,961

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Buildings and equipment under construction 976 991

16,516 15,581

Less accumulated depreciation 8,679 7,985

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The following table reflects goodwill activity for fiscal 2021 and 2020 (in millions):

International/Other

Beef Pork Chicken Prepared

Foods International/Other Unallocated Consolidated

Balance at September 28, 2019

Goodwill $ 1,236 $ 423 $ 3,274 $ 6,134 $ 394 $ — $ 11,461

Accumulated impairment losses ( 560 ) — — — ( 57 ) — ( 617 )

$ 676 $ 423 $ 3,274 $ 6,134 $ 337 $ — $ 10,844

Fiscal 2020 Activity:

Measurement period adjustments $ — $ — $ — $ — $ 46 $ — $ 46

Reclass to assets held for sale

Currency translation and other — — — — 9 — 9

Balance at September 28, 2019

Balance at October 03, 2020

Goodwill 1,236 423 3,274 6,134 449 — 11,516

Accumulated impairment losses ( 560 ) — — — ( 57 ) — ( 617 )

$ 676 $ 423 $ 3,274 $ 6,134 $ 392 $ — $ 10,899

Fiscal 2021 Activity:

Measurement period adjustments

Currency translation and other

Sale of pet treats business $ — $ — $ — $ ( 350 ) $ — $ — $ ( 350 )

Balance at October 02, 2021

Goodwill 1,236 423 3,274 5,784 449 — 11,166

Accumulated impairment losses ( 560 ) — — — ( 57 ) — ( 617 )

The following table reflects intangible assets by type at October 3, 2020 , and September 28, 2019 (in millions):

$ 676 $ 423 $ 3,274 $ 5,784 $ 392 $ — $ 10,549

The following table reflects intangible assets by type at October 2, 2021, and October 3, 2020 (in millions):

Amortizable intangible assets:

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Operating lease ROU assets and liabilities presented in our Consolidated Balance Sheets were as follows (in millions):

October 3, 2020

October 2, 2021 October 3, 2020

Other Assets $ 531 $ 532

Other current liabilities 155 161

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Twelve Months Ended

October 3, 2020

October 2, 2021 October 3, 2020

Operating lease cost (a)

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Short-term lease cost 33 38

Total $ 689 $ 688

(a) Sublease income is immaterial and not deducted from operating lease cost.

(b) Variable lease costs are determined based on volume of output received, flocks placed or other performance metrics.

Prior to the adoption of ASC 842, total rentals approximated $ 220 million in fiscal 2019.

Other operating lease information includes the following:

Twelve months ended October 3, 2020

Twelve Months Ended

October 2, 2021 October 3, 2020

Operating cash outflows from operating leases (in millions) $ 204 $ 211

ROU assets obtained in exchange for new operating lease liabilities (in millions) $ 197 $ 167

Weighted-average remaining lease term

Weighted-average remaining lease term 5 years 5 years

Weighted-average discount rate 2 % 3 %

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At October 2, 2021, our leases that had not yet commenced were not significant.

Prior Year Lease Disclosures

The following pertains to previously disclosed information set forth in the Company's 2019 Form 10-K, Part II, Item 8, Notes to the Consolidated Financial Statements, Note 20:

Commitments and Contingencies.

We lease equipment, properties and certain farms for which total rentals approximated $ 220 million and $ 200 million , in fiscal 2019 and 2018, respectively.

Most leases have initial terms of up to seven years, some with varying renewal periods.

Minimum lease commitments under non-cancelable leases at September 28, 2019 were (in millions):

Operating Lease Commitments

2025 and beyond

We enter into agreements with livestock growers that can have fixed and variable payment structures, but are generally cancelable and based on flocks placed with growers.

Livestock grower fixed or estimable non-cancelable commitments at September 28, 2019 were (in millions):

Livestock Grower Commitments

2025 and beyond

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.

In the fourth quarter of fiscal 2020, the Company extended the 2020 Program as it identified additional opportunities to eliminate overhead by optimizing organizational structures and other activities.

We have 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 recognized $ 60 million of cumulative pretax charges in fiscal 2020 associated with the 2020 Program consisting of severance and employee related costs.

In the fourth quarter of fiscal 2017, our Board of Directors approved a multi-year restructuring program (the “2017 Program”), which contributed to the Company’s overall strategy of financial fitness through increased operational effectiveness and overhead reduction.

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The 2017 Program concluded in fiscal 2020.

We recognized restructuring and related charges of $ 77 million during fiscal 2020, consisting of $ 60 million of severance and team member related costs from the 2020 Program and $ 17 million of incremental costs to implement new technology from the 2017 Program.

For fiscal 2020, we recorded $ 17 million in Cost of Sales from the 2020 Program, and we recorded $ 60 million in Selling, General and Administrative in our Consolidated Statements of Income, of which $ 43 million is related to the 2020 Program and $ 17 million is related to the 2017 Program.

For fiscal 2019 and 2018 the restructuring and related charges related to the 2017 Program consisted of $ 41 million and $ 59 million , respectively, of incremental costs to implement new technology and accelerated depreciation of technology assets.

We recognized no restructuring and related charges in fiscal 2021.

During fiscal 2020 we recognized restructuring and related charges of $ 77 million, consisting of $ 60 million of severance and team member related costs from the 2020 Program and $ 17 million of incremental costs to implement new technology from the 2017 Program.

For fiscal 2020, we recorded $ 17 million in Cost of Sales from the 2020 Program, and we recorded $ 60 million in Selling, General and Administrative in our Consolidated Statements of Income, of which $ 43 million was related to the 2020 Program and $ 17 million was related to the 2017 Program.

For fiscal 2019 the restructuring and related charges related to the 2017 Program consisted of $ 41 million of incremental costs to implement new technology and accelerated depreciation of technology assets.

These costs were recorded in Selling, General and Administrative in our Consolidated Statements of Income.

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2021 2020 2019 Total charges to date

Beef $ — $ 9 $ 1 $ 22

Chicken — 34 21 141

Prepared Foods — 28 18 152

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Total restructuring and related charges, pretax $ — $ 77 $ 41 $ 327

We do not anticipate future costs of the 2020 Program to be significant, however, as the Company continues to evaluate its business strategies and long-term growth targets, additional restructuring activities may occur.

Our restructuring liability was $ 37 million at October 3, 2020 and we had no restructuring liability at September 28, 2019 .

The change in the restructuring liability was due to additional charges of $ 77 million , net of $ 40 million primarily consisting of payments, during fiscal 2020.

The following table reflects major components of debt as of October 3, 2020 , and September 28, 2019 (in millions):

As the Company continues to evaluate its business strategies and long-term growth targets, additional restructuring activities may occur.

Our restructuring liability was $ 5 million at October 2, 2021 and $ 37 million at October 3, 2020.

The change in the restructuring liability was primarily due to payments of $ 32 million during fiscal 2021.

The following table reflects major components of debt as of October 2, 2021, and October 3, 2020 (in millions):

Revolving credit facility $ — $ —

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Senior notes:

Notes due June 2020 ("2020 Notes")

Notes due August 2020 ("2020 Notes")

4.10% Notes due September 2020 ("2020 Notes")

2.25% Notes due August 2021 — 500

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Discount on senior notes ( 42 ) ( 45 )

Term loan facility due March 2022 (1.69% at October 3, 2020)

Term Loan facilities — 1,500

Other 212 216

Unamortized debt issuance costs ( 50 ) ( 60 )

Total debt 9,348 11,339

Less current debt 1,067 548

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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.

In September 2021, we amended our existing credit facility which, among other things, increased our line of credit from $ 1.75 billion to $ 2.25 billion with the option to establish incremental commitment increases of up to $ 500 million if certain conditions are met.

This revolving credit facility 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 September 2026 with options for two one-year extensions.

Amounts available for borrowing under this facility totaled $ 2.25 billion at October 2, 2021.

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Commercial Paper Program

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

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 October 2, 2021, we had no commercial paper outstanding .

On April 1, 2020, we repaid the outstanding balance of the commercial paper using proceeds from the Term Loan Facility due March 2022.

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.

During fiscal 2020, we extinguished the $ 350 million outstanding balance of the senior notes due June 2020, the $ 400 million outstanding balance of the senior notes due August 2020 and the $ 278 million outstanding balance of the senior notes due September 2020 using cash on hand and other liquidity sources.

Term Loan Facility due March 2022

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

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.

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

Term Loan Facilities

On March 27, 2020, we executed a $ 1.5 billion term loan facility to refinance our commercial paper, 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.

On September 30, 2021, the Company used cash on hand to repay in full the $ 500 million term loan facility due March 2023.

August 2021 Notes

On July 23, 2021, we redeemed the $ 500 million outstanding balance of the Senior Notes due August 2021 using cash on hand.

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:

Our revolving credit facility contains affirmative and negative covenants that, among other things, may limit or restrict our ability to:

create liens and encumbrances;

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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.

In addition, we are required to maintain a minimum interest expense coverage ratio.

Our senior notes also contain affirmative and negative covenants that, among other things, may limit or restrict our ability to:

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A summary of cumulative share repurchases of our Class A stock for fiscal 2021, 2020 and 2019 is as follows (in millions):

October 3, 2020

September 28, 2019

September 29, 2018

October 2, 2021 October 3, 2020 September 28, 2019

Shares Dollars Shares Dollars Shares Dollars

Shares repurchased:

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Total share repurchases 0.9 $ 67 2.5 $ 207 3.7 $ 252

Detail of the provision (benefit) for income taxes from continuing operations consists of the following (in millions):

Detail of the provision for income taxes from continuing operations consists of the following (in millions):

2021 2020 2019

Federal $ 791 $ 477 $ 314

State 163 98 38

Foreign 27 18 29

$ 981 $ 593 $ 381

Current $ 1,106 $ 575 $ 304

Deferred ( 125 ) 18 77

$ 981 $ 593 $ 381

The reasons for the difference between the statutory federal income tax rate and our effective income tax rate from continuing operations are as follows:

2021 2020 2019

Federal income tax rate 21.0 % 21.0 % 21.0 %

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Unrecognized tax benefits, net ( 0.4 ) ( 0.1 ) ( 6.7 )

Impact of the Tax Act

Domestic production deduction

Impairment and sale of non-protein businesses

Foreign-derived intangible income deduction ( 1.1 ) ( 0.6 ) ( 0.3 )

Goodwill 1.8 — —

Other ( 0.3 ) ( 0.9 ) ( 0.7 )

24.3 % 22.3 % 16.1 %

During fiscal 2021, state tax expense, net of federal benefit, was $ 135 million, and the tax benefit from foreign-derived intangible income deduction was $ 44 million.

Non-deductible goodwill associated with the sale of our pet treats business increased the effective tax rate by 1.8 %.

During fiscal 2020, state tax expense, net of federal benefit, was $ 78 million.

During fiscal 2019, changes in unrecognized tax benefits decreased tax expense by $ 160 million, and state tax expense, excluding changes in unrecognized tax benefits and net of federal tax benefit, was $ 66 million.

During fiscal 2018, the domestic production deduction decreased tax expense by $ 46 million , and state tax expense, net of federal tax benefit, was $ 90 million .

The change in federal tax rate from the Tax Act resulted in a tax benefit of $ 1,004 million related to deferred tax remeasurement.

Additionally, favorable timing differences deductible in fiscal 2018 at the 24.5 % blended tax rate but reversing in future years at 21 % resulted in a $ 35 million tax benefit.

The impacts of the non-deductible impairment and sale of certain assets in our non-protein businesses increased the effective tax rate by 3.1 % .

Approximately $ 3,963 million, $ 2,605 million and $ 2,275 million of income from continuing operations before income taxes for fiscal 2021, 2020 and 2019, respectively, were from our operations based in the United States.

On December 22, 2017, President Trump signed into law the Tax Act.

The Tax Act made significant changes to the U.S.

tax code including, but not limited to, (1) reducing the corporate federal income tax rate from 35% to 21% effective January 1, 2018, (2) a general elimination of U.S.

federal income taxes on dividends from foreign subsidiaries, (3) the repeal of the domestic production activity deduction beginning with our fiscal 2019, and (4) new provisions designed to tax global intangible low-taxed income and to allow a deduction for foreign-derived intangible income beginning with our fiscal 2019.

Under generally accepted accounting principles ("U.S.

GAAP"), specifically ASC Topic 740, Income Taxes, the tax effects of changes in tax laws must be recognized in the period in which the law is enacted, or December 22, 2017, for the Tax Act.

ASC 740 also requires deferred tax assets and liabilities to be measured at the enacted tax rate expected to apply when temporary differences are to be realized or settled.

Thus, at the date of enactment, the Company’s deferred taxes were remeasured based upon the new tax rates.

The change in deferred taxes was recorded as an adjustment to our fiscal 2018 deferred tax provision.

We recognize deferred income taxes for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The tax effects of major items recorded as deferred tax assets and liabilities as of October 3, 2020 , and September 28, 2019 , are as follows (in millions):

The tax effects of major items recorded as deferred tax assets and liabilities as of October 2, 2021, and October 3, 2020, are as follows (in millions):

Assets Liabilities Assets Liabilities

Property, plant and equipment $ — $ 990 $ — $ 923

Intangible assets — 1,564 — 1,591

ROU assets — 158 — 154

Accrued expenses 558 — 341 —

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Net operating loss and other carryforwards 167 — 137 —

Other 79 251 149 265

$ 937 $ 2,963 $ 756 $ 2,933

Valuation allowance $ ( 151 ) $ ( 127 )

Net deferred tax liability $ 2,177 $ 2,304

At October 3, 2020 , our gross state tax net operating loss carryforwards approximated $ 799 million , of which $ 747 million expire in fiscal years 2021 through 2039 , and the remainder has no expiration.

At October 2, 2021, our gross state net operating loss carryforwards approximated $ 1,118 million, of which $ 1,020 million expire in fiscal years 2022 through 2042, and the remainder has no expiration.

Gross foreign net operating loss carryforwards approximated $ 307 million, of which $ 122 million expire in fiscal years 2022 through 2033, and the remainder has no expiration.

We also have tax credit carryforwards of approximately $ 48 million , of which $ 46 million expire in fiscal years 2021 through 2034 , and the remainder has no expiration.

We have accumulated undistributed earnings of foreign subsidiaries aggregating approximately $ 318 million and $ 252 million at October 3, 2020 , and September 28, 2019 , respectively.

The Tax Act generally eliminates U.S.

federal income taxes on dividends from foreign subsidiaries after December 31, 2017.

We also have tax credit carryforwards of approximately $ 40 million which expire in fiscal years 2022 through 2035.

We have accumulated undistributed earnings of foreign subsidiaries aggregating approximately $ 419 million and $ 318 million at October 2, 2021, and October 3, 2020, respectively.

Dividends after December 31, 2017 from foreign subsidiaries are generally not subject to U.S.

federal income taxes.

As a result, our intention is that excess cash held by our foreign subsidiaries that is not subject to regulatory restrictions will be repatriated net of applicable withholding taxes which are expected to be immaterial.

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however, we do not expect any tax due to be material.

The following table summarizes the activity related to our gross unrecognized tax benefits at October 3, 2020 , September 28, 2019 , and September 29, 2018 (in millions):

The following table summarizes the activity related to our gross unrecognized tax benefits at October 2, 2021, October 3, 2020, and September 28, 2019 (in millions):

2021 2020 2019

Balance as of the beginning of the year $ 165 $ 169 $ 308

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Balance as of the end of the year $ 152 $ 165 $ 169

The amount of unrecognized tax benefits, if recognized, that would impact our effective tax rate was $ 118 million at October 3, 2020 and $ 116 million at September 28, 2019 .

The amount of unrecognized tax benefits, if recognized, that would impact our effective tax rate was $ 111 million at October 2, 2021 and $ 118 million at October 3, 2020.

We classify interest and penalties on unrecognized tax benefits as income tax expense.

At October 3, 2020 , and September 28, 2019 , before tax benefits, we had $ 51 million and $ 46 million , respectively, of accrued interest and penalties on unrecognized tax benefits.

At October 2, 2021, and October 3, 2020, before tax benefits, we had $ 49 million and $ 51 million, respectively, of accrued interest and penalties on unrecognized tax benefits.

As of October 2, 2021, certain United States federal income tax returns are subject to examination for fiscal years 2013 through 2020.

We are also subject to income tax examinations by major state and foreign jurisdictions for fiscal years 2015 through 2019 .

We are also subject to income tax examinations by major state and foreign jurisdictions for fiscal years 2015 through 2020 and 2016 through 2020, respectively.

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

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Additionally, we sold an investment for $ 79 million in net proceeds resulting in a pretax gain of $ 55 million, which was recorded in the Consolidated Statements of Income in Other, net.

During fiscal 2018, we recognized a one-time cash bonus to our hourly frontline team members of $ 109 million using incremental cash savings from the Tax Act, which was predominantly recorded in the Consolidated Statements of Income in Cost of Sales.

Additionally, we recorded $ 11 million of insurance proceeds, $ 21 million of equity earnings in joint ventures and $ 1 million in net foreign currency exchange gains, which were recognized in the Consolidated Statements of Income in Other, net.

Additionally, in accordance with recently adopted accounting guidance, we have retrospectively recognized $ 23 million of net periodic pension and postretirement benefit credit, excluding the service cost component for fiscal 2018, and recorded the amount in the Consolidated Statements of Income in Other, net.

EARNINGS PER SHARE

The earnings and weighted average common shares used in the computation of basic and diluted earnings per share are as follows:

in millions, except per share data

The earnings and weighted average common shares used in the computation of basic and diluted earnings per share are as follows (in millions, except per share data):

2021 2020 2019

Net income $ 3,060 $ 2,071 $ 1,993

Net income attributable to noncontrolling interests 13 10 13

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Less dividends declared:

Class A 532 508 465

Class B 113 108 99

Undistributed earnings $ 2,402 $ 1,445 $ 1,416

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Class B Basic $ 7.70 $ 5.21 $ 4.99

$ 8.34 $ 5.64 $ 5.40

Dividends Declared Per Share:

Approximately 2 million of our stock-based compensation shares were antidilutive for fiscal 2020 and approximately 1 million for fiscal 2019 and 2018 .

Class A $ 1.805 $ 1.725 $ 1.575

Class B $ 1.625 $ 1.553 $ 1.418

Approximately 4 million, 2 million, and 1 million of our stock-based compensation shares were antidilutive for fiscal 2021, 2020, and 2019.

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

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No significant concentrations of credit risk existed at October 2, 2021.

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

in millions, except soybean meal tons

October 3, 2020

September 28, 2019

Foreign Currency

United States dollar

Interest Rate Swaps

Average monthly debt

We had the following aggregated outstanding notional amounts related to our derivative financial instruments (in millions, except soybean meal tons):

Metric October 2, 2021 October 3, 2020

Corn Bushels 37 43

Soybean Meal Tons 1,026,733 428,300

Live Cattle Pounds 417 234

Lean Hogs Pounds 413 283

Foreign Currency United States dollar $ 130 $ 536

We recognize all derivative instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets, with the exception of normal purchases and normal sales expected to result in physical delivery.

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Ineffectiveness related to our cash flow hedges was not significant during fiscal 2021, 2020 and 2019.

As of October 3, 2020 , we have net pretax losses of $ 1 million for our commodity contracts, which are expected to be reclassified into earnings within the next 12 months.

Additionally, 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.

As of October 2, 2021, we have $ 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 fiscal 2021, 2020 and 2019, we did not reclassify significant pretax gains or losses into earnings as a result of the discontinuance of cash flow hedges.

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Interest rate hedges — — ( 24 )

Total $ — $ ( 17 ) $ ( 39 )

Fair Value Hedges

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Consolidated Balance Sheets Classification 2021 2020 2019

Inventory $ ( 6 ) $ 6 $ ( 19 )

Undesignated Positions

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Interest Expense 428 485 462

Other, net ( 65 ) ( 131 ) ( 55 )

The following table sets forth the pretax impact of the cash flow, fair value and undesignated derivative instruments in the Consolidated Statements of Income (in millions):

Consolidated Statements of Income Classification 2021 2020 2019

Gain (Loss) on derivatives not designated as hedging instruments:

Sales Gain (Loss) on derivatives not designated as hedging instruments:

Commodity contracts $ — $ — $ ( 23 )

Cost of Sales

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

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

Commodity contracts $ ( 1 ) $ ( 24 ) $ ( 18 )

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Commodity contracts 70 ( 103 ) 2

Interest Expense

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

Total $ 14 $ 8 $ 26

Interest Expense Gain (Loss) on cash flow hedges reclassified from OCI to Earnings:

Interest rate contracts $ ( 1 ) $ ( 6 ) $ ( 1 )

Gain (Loss) on derivatives not designated as hedging instruments:

Other, net Gain (Loss) on derivatives not designated as hedging instruments:

Foreign exchange contracts $ ( 5 ) $ ( 5 ) $ 8

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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):

October 3, 2020

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

Other Current Assets:

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Designated as hedges $ — $ 18 $ — $ ( 10 ) $ 8

Undesignated — 169 — ( 89 ) 80

Available for sale securities:

Current — — — — —

Other assets:

Available for sale securities:

Non-current — 61 48 — 109

Deferred compensation assets 14 397 — — 411

Total assets $ 14 $ 645 $ 48 $ ( 99 ) $ 608

Other Current Liabilities:

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Designated as hedges $ — $ 12 $ — $ ( 12 ) $ —

Undesignated — 159 — ( 143 ) 16

Total liabilities $ — $ 171 $ — $ ( 155 ) $ 16

September 28, 2019

October 3, 2020 Level 1 Level 2 Level 3 Netting (a) Total

Other Current Assets:

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Designated as hedges $ — $ 4 $ — $ ( 2 ) $ 2

Undesignated — 96 — ( 51 ) 45

Available for sale securities:

Current — — — — —

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:

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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 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 October 3, 2020 , and September 28, 2019 , we had $ 16 million and $ 95 million , respectively, of net cash collateral posted with various counterparties where master netting arrangements exist and held no cash collateral.

Additionally, at October 2, 2021, and October 3, 2020, we had $ 56 million and $ 16 million respectively, of net cash collateral posted 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):

October 3, 2020

September 28, 2019

October 2, 2021 October 3, 2020

Balance at beginning of year $ 53 $ 52

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Included in other comprehensive income (loss) ( 1 ) 1

Purchases 20 17

Issuances — —

Settlements ( 24 ) ( 17 )

Balance at end of year $ 48 $ 53

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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):

October 3, 2020

September 28, 2019

October 2, 2021 October 3, 2020

Cost Basis Fair

Value Unrealized

Gain/(Loss) Amortized

Cost Basis Fair

Value Unrealized

Available for Sale Securities:

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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 temporary in nature.

Losses on equity securities are recognized in earnings if the decline in value is judged to be other than temporary.

If losses related to our debt securities are determined to be other than temporary, the loss would be recognized in earnings if we intend, or more likely than not will be required, to sell the security prior to recovery.

For debt securities in which we have the intent and ability to hold until maturity, losses determined to be other than temporary would remain in OCI, other than expected credit losses which are recognized in earnings.

We consider many factors in determining whether a loss is temporary, including the length of time and extent to which the fair value has been below cost, the financial condition and near-term prospects of the issuer and our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery.

We recognized no other than temporary impairment in earnings for fiscal 2020 and fiscal 2019.

No other than temporary losses were deferred in OCI as of October 3, 2020 , and September 28, 2019 .

On a quarterly basis, we evaluate whether losses related to our available-for-sale securities are due to credit or noncredit 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 through earnings and non-credit related losses through 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 in fiscal 2021 and fiscal 2020.

Deferred Compensation Assets

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Our valuation included unobservable Level 3 inputs and was based on expected sales proceeds from a competitive bidding process and ongoing discussions with potential buyers.

In fiscal 2018, we recorded $ 101 million of impairment charges related to the expected sale of non-protein businesses held for sale, due to revised estimates of the businesses' fair value based on current expected net sales proceeds at the time of the impairment.

These charges were recorded in Cost of Sales in our Consolidated Statement of Income, and primarily consisted of Goodwill previously classified within Assets held for sale.

Our valuation included unobservable Level 3 inputs and was based on expected sales proceeds from a competitive bidding process and ongoing discussions with potential buyers.

Other Financial Instruments

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

October 3, 2020

September 28, 2019

October 2, 2021 October 3, 2020

Value Carrying

Total Debt $ 10,810 $ 9,348 $ 12,982 $ 11,339

Concentrations of Credit Risk

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We perform periodic credit evaluations of our customers’ financial condition and generally do not require collateral.

At October 3, 2020 , and September 28, 2019 , 16.5 % and 16.2 % , respectively, of our net accounts receivable balance was due from Walmart Inc.

At October 2, 2021, and October 3, 2020, 16.3 % and 16.5 %, respectively, of our net accounts receivable balance was due from Walmart Inc.

No other single customer or customer group represented greater than 10 % of net accounts receivable.

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Forfeitures are recognized as they occur.

Option Weighted

Average Exercise

Price Per Share

Weighted Average Remaining Contractual Life (in Years)

Price Per Share Weighted Average Remaining Contractual Life (in Years) Aggregate

Intrinsic Value

(in millions)

Outstanding, September 28, 2019

Outstanding, October 3, 2020 5,951,473 $ 62.86

Exercised ( 830,493 ) 50.27

Forfeited or expired ( 536,634 ) 71.01

Granted 2,622,680 63.17

Outstanding, October 2, 2021 7,207,026 $ 63.82 7.0 $ 121

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Assumptions used in the fair value calculation are as of the grant dates and are outlined in the following table.

2021 2020 2019

Expected life (in years) 4.3 4.3 4.3

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Unearned compensation is recognized over the vesting period for the particular grant using a straight-line method.

Number of Shares

Number of Shares Weighted

Average Grant-

Date Fair Value

Weighted Average

Per Share Weighted Average

Contractual Life

(in Years) Aggregate

Intrinsic Value

(in millions)

Nonvested, September 28, 2019

Nonvested, October 3, 2020 1,662,409 $ 74.79

Granted 1,001,876 63.11

Dividends 16,777 62.03

Vested ( 481,648 ) 77.04

Forfeited ( 225,279 ) 68.90

Nonvested, October 2, 2021 1,974,135 $ 68.88 1.3 $ 155

As of October 2, 2021, we had $ 46 million of total unrecognized compensation cost related to restricted stock awards that will be recognized over a weighted average period of 1.8 years.

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Actual shares that will vest depend on the level of attainment of the performance-based criteria.

Number of Shares

Number of Shares Weighted

Average Grant-

Date Fair Value

Weighted Average

Per Share Weighted Average

Contractual Life

(in Years) Aggregate

Intrinsic Value

(in millions)

Nonvested, September 28, 2019

Nonvested, October 3, 2020 1,963,137 $ 57.62

Granted 976,210 45.78

Vested ( 167,546 ) 78.28

Forfeited ( 716,233 ) 53.84

Nonvested, October 2, 2021 2,055,568 $ 51.63 1.2 $ 161

We recognized stock-based compensation expense related to performance shares, net of income taxes, of $ 19 million, $ 18 million and $ 16 million for fiscal 2021, 2020 and 2019, respectively.

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PENSIONS AND OTHER POSTRETIREMENT BENEFITS

At October 3, 2020 , we had six defined benefit pension plans consisting of two frozen and noncontributory funded qualified plans and four unfunded non-qualified plans.

Additionally, we have two plans that were terminated during fiscal 2020, which have residual plan assets of $ 27 million and no benefit obligations as of October 3, 2020 .

At October 2, 2021, we had four defined benefit pension plans consisting of one frozen and noncontributory funded qualified plan and three unfunded non-qualified plans.

The benefits provided under these plans are based on a formula using years of service and either a specified benefit rate or compensation level.

The non-qualified defined benefit plans are for certain contracted officers and use a formula based on years of service and final average salary.

The non-qualified defined benefit plans are for certain officers and use a formula based on years of service and final average salary.

We also have other postretirement benefit plans for which substantially all of our team members may receive benefits if they satisfy applicable eligibility criteria.

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Other postretirement benefits include postretirement medical costs and life insurance.

During fiscal 2017, we issued a notice of intent to terminate two of our qualified pension plans with a termination date of April 30, 2017.

The settlements of the terminated plans occurred during fiscal 2019, through purchased annuities, and we incurred a $ 19 million settlement charge at final liquidation.

During fiscal 2019, we issued a notice of intent to terminate three other qualified pension plans.

The settlements of the terminated plans occurred during fiscal 2020, through purchased annuities, and we incurred settlement gains of approximately $ 112 million related to the plan terminations.

During fiscal 2019, we issued a notice of intent to terminate three qualified pension plans.

The settlements of the terminated plans occurred during fiscal 2020, through purchased annuities, and we incurred settlement gains of approximately $ 112 million related to the plan terminations, recorded in Other, net in our Consolidated Statements of Income.

No significant contributions to purchase annuities at the time of settlement were necessary.

Due to favorable annuity pricing at the time of settlement, approximately $ 52 million in residual plan assets remained in the plan following the annuity purchase.

A portion of these funds have been transferred to a qualified replacement plan during fiscal 2020, with the remaining funds to be transferred in fiscal 2021.

A portion of these funds were transferred to a qualified replacement plan during fiscal 2020, with the remaining funds transferred in the first quarter of fiscal 2021.

During fiscal 2021, we amended one of the Company's other postretirement benefit plans, which resulted in the recognition of a gain of $ 34 million, recorded in Other, net in our Consolidated Statements of Income

Benefit Obligations and Funded Status

The following table provides a reconciliation of the changes in the plans’ benefit obligations, assets and funded status at October 3, 2020 , and September 28, 2019 (in millions):

Pension Benefits

Other Postretirement

Non-Qualified

The following table provides a reconciliation of the changes in the plans’ benefit obligations, assets and funded status at October 2, 2021, and October 3, 2020 (in millions):

Pension Benefits Other Postretirement

Qualified Non-Qualified Benefits

2021 2020 2021 2020 2021 2020

Change in benefit obligation

Benefit obligation at beginning of year $ 31 $ 1,478 $ 238 $ 239 $ 74 $ 77

Service cost — — — — 2 2

Interest cost — 14 6 8 1 1

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Benefits paid ( 1 ) ( 38 ) ( 12 ) ( 14 ) ( 3 ) ( 4 )

Business Acquisition

Benefits Paid Due to Settlement — — ( 2 ) — — —

Plan Terminations ( 2 ) ( 1,423 ) ( 6 ) — — —

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Benefits paid ( 1 ) ( 38 ) ( 12 ) ( 12 ) ( 3 ) ( 4 )

Business Acquisition

Benefits Paid Due to Settlement — — ( 2 ) — — —

Plan Terminations ( 3 ) ( 1,397 ) — — — —

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Amounts recognized in the Consolidated Balance Sheets consist of (in millions):

Pension Benefits

Other Postretirement

Non-Qualified

Pension Benefits Other Postretirement

Qualified Non-Qualified Benefits

2021 2020 2021 2020 2021 2020

Other assets $ 5 $ 4 $ — $ — $ — $ —

Other current liabilities — — ( 13 ) ( 12 ) ( 3 ) ( 3 )

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Amounts recognized in Accumulated Other Comprehensive Income consist of (in millions):

Pension Benefits

Other Postretirement

Non-Qualified

Pension Benefits Other Postretirement

Qualified Non-Qualified Benefits

2021 2020 2021 2020 2021 2020

Accumulated other comprehensive (income)/loss:

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Total accumulated other comprehensive (income)/loss:

We had four pension plans at October 3, 2020 and five pension plans at September 28, 2019 , that had an accumulated benefit obligation in excess of plan assets.

$ 4 $ 4 $ 38 $ 48 $ 13 $ ( 13 )

We had three pension plans at October 2, 2021 and four pension plans at October 3, 2020, that had an accumulated benefit obligation in excess of plan assets.

Plans with accumulated benefit obligations in excess of plan assets are as follows (in millions):

Pension Benefits

Non-Qualified

Qualified Non-Qualified

2021 2020 2021 2020

Projected benefit obligation $ — $ — $ 220 $ 238

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Fair value of plan assets — — — —

The accumulated benefit obligation for all qualified pension plans was $ 31 million and $ 1,478 million at October 3, 2020 , and September 28, 2019 , respectively.

The accumulated benefit obligation for all qualified pension plans was $ 28 million and $ 31 million at October 2, 2021, and October 3, 2020, respectively.

Net Periodic Benefit Cost (Credit)

Components of net periodic benefit cost (credit) for pension and postretirement benefit plans recognized in the Consolidated Statements of Income are as follows (in millions):

Pension Benefits

Other Postretirement

Non-Qualified

Pension Benefits Other Postretirement

Qualified Non-Qualified Benefits

2021 2020 2019 2021 2020 2019 2021 2020 2019

Service cost $ — $ — $ — $ — $ — $ 1 $ 2 $ 2 $ 2

Interest cost — 14 56 6 8 9 1 1 1

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Amortization of prior service cost

— — — 1 1 1 ( 2 ) ( 6 ) ( 2 )

Recognized actuarial loss (gain), net — — ( 1 ) 4 3 2 — 4 5

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Each of the components other than the service cost component were recorded in the Consolidated Statements of Income in Other, net.

As of October 3, 2020 , we expect no amounts to be reclassified into earnings within the next 12 months related to net periodic benefit cost (credit) for the qualified pension plans, excluding pending settlements.

As of October 2, 2021, we expect no amounts to be reclassified into earnings within the next 12 months related to net periodic benefit cost (credit) for the qualified pension plans.

As of October 2, 2021, the amounts expected to be reclassified into earnings within the next 12 months related to net periodic benefit cost (credit) for the non-qualified pension plans and the other postretirement benefit plans are not significant.

Weighted average assumptions are as follows:

Pension Benefits

Other Postretirement

Non-Qualified

Pension Benefits Other Postretirement

Qualified Non-Qualified Benefits

2021 2020 2019 2021 2020 2019 2021 2020 2019

Discount rate to determine net periodic benefit cost 1.70 % 3.23 % 4.26 % 2.63 % 3.19 % 4.31 % 1.95 % 2.68 % 3.99 %

Discount rate to determine benefit obligations 2.00 % 1.70 % 3.23 % 2.83 % 2.63 % 3.16 % 2.07 % 1.95 % 2.68 %

Rate of compensation increase

Expected return on plan assets

Rate of compensation increase n/a n/a n/a n/a n/a n/a n/a n/a n/a

Expected return on plan assets 1.70 % 3.50 % 3.50 % n/a n/a n/a n/a n/a n/a

To determine the expected return on plan assets assumption, we first examined historical rates of return for the various asset classes within the plans.

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The discount rates for our other plans were determined using a cash flow matching technique whereby the rates of a yield curve, developed from high-quality debt securities, were applied to the benefit obligations to determine the appropriate discount rate.

For all periods presented, all pension and other postretirement benefit plans used the RP-2014 mortality tables.

We have eight other postretirement benefit plans, of which five are healthcare and life insurance related.

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The remaining two plans, with benefit obligations totaling $ 1 million and $ 4 million, at October 2, 2021, utilized assumed healthcare cost trend rates of 6.6 % and 6.3 %, respectively.

The healthcare cost trend rates will be grading down to an ultimate rate of 4.5 % and 5.0 % , respectively in 2027.

A one-percentage-point change in assumed health-care cost trend rates would not have a significant effect on the postretirement benefit obligation.

The asset allocation for domestic pension plan assets at October 3, 2020 was 100 % cash due to the intent to terminate the remaining domestic qualified pension plan in the next year.

Additionally, one of our foreign subsidiary pension plans had $ 32 million in plan assets held in an insurance trust at October 3, 2020 .

At October 3, 2020 , 7 % of plan assets were held in cash and cash equivalents (Level 1) and 93 % were held in an insurance trust (Level 3).

At September 28, 2019 , 36 % of plan assets were held in cash and cash equivalents (Level 1), 61 % in corporate and municipal bonds (Level 2) and 3 % were held in an insurance trust (Level 3).

The healthcare cost trend rates for the two plans will be grading down to an ultimate rate of 4.5 % in 2027 and 2029, respectively.

Plan assets at October 2, 2021 were not significant.

Contributions

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The following benefit payments are expected to be paid (in millions):

Pension Benefits

Other Postretirement

Non-Qualified

Pension Benefits Other Postretirement

Qualified Non-Qualified Benefits

2022 $ 1 $ 13 $ 3

2027-2031 4 62 7

The above benefit payments for other postretirement benefit plans are not expected to be offset by Medicare Part D subsidies in fiscal 2022.

Multi-Employer Plans

Additionally, we participate in three multi-employer plans that provide defined benefits to certain team members covered by collective bargaining agreements.

Multi-Employer Plan

Additionally, we participate in one multi-employer plan that provides defined benefits to certain team members covered by collective bargaining agreements.

Such plans are usually administered by a board of trustees composed of the management of the participating companies and labor representatives.

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If we stop participating in a plan, we may be required to pay that plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The net pension cost of the plans is equal to the annual contributions determined in accordance with the provisions of negotiated labor contracts.

Contributions to the plans were $ 1 million in fiscal 2020 and $ 2 million in fiscal 2019 .

The net pension cost of the plan is equal to the annual contributions determined in accordance with the provisions of negotiated labor contracts.

Contributions to the plan were $ 1 million in fiscal 2021 and fiscal 2020.

Assets contributed to such plans are not segregated or otherwise restricted to provide benefits only to our team members.

The future cost of the plans is dependent on a number of factors including the funded status of the plans and the ability of the other participating companies to meet ongoing funding obligations.

Our participation in these multi-employer plans for fiscal 2020 is outlined below.

Our participation in the multi-employer plan for fiscal 2021 is outlined below.

The EIN/Pension Plan Number column provides the Employer Identification Number ("EIN") and the three-digit plan number.

Unless otherwise noted, the most recent Pension Protection Act ("PPA") zone status available in fiscal 2020 and fiscal 2019 is for the plan's year beginning January 1, 2020 , and 2019 , respectively.

The most recent Pension Protection Act ("PPA") zone status available in fiscal 2021 and fiscal 2020 is for the plan's year beginning January 1, 2021, and 2020, respectively.

The zone status is based on information that we have received from the plan and is certified by the plan's actuaries.

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The FIP/RP Status column indicates plans for which a financial improvement plan ("FIP") or rehabilitation plan ("RP") is either pending or has been implemented.

The last column lists the expiration date of the collective-bargaining agreements to which the plan is subject.

During fiscal 2019 , as part of our acquisition of Keystone Foods, we acquired an interest in four multi-employer plans.

Our interest in two of these plans was subsequently disposed of in conjunction with the divestiture of a chicken further processing facility acquired during the Keystone Foods acquisition.

Acquisitions and Divestitures for additional information on these transactions.

Additionally, during fiscal 2019, we initiated our withdrawal from the Retail, Wholesale and Department Store International Union and Industry Pension Fund ("RWDSU Fund").

As a result of our withdrawal from the RWDSU Fund, we recorded a $ 15 million termination liability.

We received the withdrawal letter from the RWDSU fund during fiscal 2020 and reduced the termination liability accordingly to $ 10 million .

Subsequently during fiscal 2020, we initiated our withdrawal from the Pension Fund of Local 227.

The last column lists the expiration date of the collective-bargaining agreement to which the plan is subject.

During fiscal 2020, we initiated our withdrawal from the Pension Fund of Local 227, which was acquired in conjunction with our acquisition of Keystone Foods.

As a result of our withdrawal from the Pension Fund of Local 227, we recorded a $ 1 million termination liability.

In addition to regular contributions, we could be obligated to pay additional contributions (known as complete or partial withdrawal liabilities) if it has unfunded vested benefits.

PPA Zone Status

FIP/RP Status

Contributions

(in millions)

Surcharge Imposed

Pension Fund Plan Name

EIN/Pension Plan Number

Expiration Date of Collective Bargaining Agreement (a)

Bakery and Confectionery Union and Industry International Pension Fund

52-6118572/001

Pension Fund of Local 227

61-6054018/001

Retail, Wholesale and Department Store International Union and Industry Pension Fund

63-0708442/001

Renewal negotiations for the Bakery and Confectionery Union and Industry International Pension Fund are in progress.

PPA Zone Status FIP/RP Status Contributions

(in millions) Surcharge Imposed

Pension Fund Plan Name EIN/Pension Plan Number 2021 2020 Implemented 2021 2020 2019 2021 Expiration Date of Collective Bargaining Agreement

Bakery and Confectionery Union and Industry International Pension Fund 52-6118572/001 Red Red Nov 2012 $ 1 $ 1 $ 1 10 % 2024-08-02

COMPREHENSIVE INCOME (LOSS)

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

2021 2020 2019

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

Derivatives accounted for as cash flow hedges:

1 unchanged sentence

(Gain) loss reclassified to cost of sales

1 — 1 24 ( 7 ) 17 18 ( 5 ) 13

Unrealized gain (loss) — — — ( 17 ) 5 ( 12 ) ( 39 ) 10 ( 29 )

Unrealized gain (loss)

( 1 ) — ( 1 ) 1 — 1 3 ( 1 ) 2

Currency translation:

Translation adjustment 17 — 17 ( 29 ) — ( 29 ) ( 23 ) — ( 23 )

Translation loss reclassified to cost of sales

Postretirement benefits:

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Products are marketed domestically to 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 of $ 5 million , $ 36 million , and $ 26 million in fiscal 2020 , 2019 and 2018 , respectively, which are included in International/Other.

We allocate expenses related to corporate activities to the segments, except for third-party merger and integration costs of $ 2 million, $ 5 million and $ 36 million in fiscal 2021, 2020 and 2019, respectively, and corporate overhead related to Tyson New Ventures, LLC, which are included in International/Other.

Intersegment sales transactions, which were at market price, are included in the segment sales in the table below.

Assets and additions to property, plant and equipment relating to corporate activities remain in International/Other.

Additionally, as of September 28, 2019, we allocated approximately $ 342 million of goodwill to International/Other as a result of our Keystone Foods and Thai and European operations acquisitions.

Refer to Note 5:

Goodwill and Intangible Assets for further description.

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

International/Other

Beef Pork Chicken Prepared

Foods International/Other Intersegment

Sales Consolidated

Sales $ 17,999 $ 6,277 $ 13,733 $ 8,853 $ 1,990 $ ( 1,803 ) $ 47,049

Operating Income (Loss) 3,240 328 ( 625 ) 1,456 ( 3 ) 4,396

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Depreciation and amortization 108 61 564 385 77 1,195

Total Assets 3,678 1,583 11,373 14,630 5,045 36,309

Additions to property, plant and equipment 246 100 518 237 108 1,209

Sales $ 15,742 $ 5,128 $ 13,234 $ 8,532 $ 1,856 $ ( 1,307 ) $ 43,185

Operating Income (Loss) 1,580 565 122 743 ( 2 ) 3,008

2 unchanged sentences

Depreciation and amortization 106 56 553 398 65 1,178

Total Assets 3,223 1,516 11,028 14,883 3,806 34,456

Additions to property, plant and equipment

219 117 577 211 75 1,199

Sales $ 15,828 $ 4,932 $ 13,300 $ 8,418 $ 1,289 $ ( 1,362 ) $ 42,405

Operating Income (Loss) 1,050 263 621 843 ( 7 ) 2,770

2 unchanged sentences

Depreciation and amortization 97 47 513 397 32 1,086

Total Assets 2,958 1,372 10,807 15,138 2,643 32,918

Additions to property, plant and equipment 133 128 637 246 115 1,259

The Beef segment had sales of $ 390 million , $ 411 million and $ 420 million for fiscal 2020 , 2019 and 2018 , respectively, from transactions with other operating segments.

The Pork segment had sales of $ 865 million , $ 893 million and $ 817 million for fiscal 2020 , 2019 and 2018 , respectively, from transactions with other operating segments.

The Chicken segment had sales of $ 52 million , $ 58 million and $ 80 million for fiscal 2020 , 2019 and 2018 , respectively, from transactions with other operating segments.

The aforementioned sales from intersegment transactions, which were at market prices, were included in the segment sales in the above table.

Our largest customer, Walmart Inc., accounted for 18.3 %, 18.7 % and 16.9 % of consolidated sales in fiscal 2021, 2020 and 2019, respectively.

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Approximately 95 %, 95 % and 96 % of sales to external customers for fiscal 2021, 2020 and 2019, respectively, were sourced from the United States.

Approximately $ 25.6 billion and $ 24.8 billion of long-lived assets were located in the United States at October 3, 2020 , and September 28, 2019 , respectively.

Excluding goodwill and intangible assets, long-lived assets located in the United States totaled approximately $ 8.5 billion and $ 7.5 billion at October 3, 2020 , and September 28, 2019 , respectively.

Approximately $ 1,287 million and $ 1,107 million of long-lived assets were located in foreign locations, primarily Brazil, China, the European Union, New Zealand and Thailand at October 3, 2020 , and September 28, 2019 , respectively.

Excluding goodwill and intangible assets, long-lived assets in foreign countries totaled approximately $ 648 million and $ 506 million at October 3, 2020 , and September 28, 2019 , respectively.

Approximately $ 25.1 billion and $ 25.6 billion of long-lived assets were located in the United States at October 2, 2021, and October 3, 2020, respectively.

Excluding goodwill and intangible assets, long-lived assets located in the United States totaled approximately $ 8.7 billion and $ 8.5 billion at October 2, 2021, and October 3, 2020, respectively.

Approximately $ 1,369 million and $ 1,287 million of long-lived assets were located in foreign locations, primarily Brazil, China, the European Union, New Zealand and Thailand at October 2, 2021, and October 3, 2020, respectively.

Excluding goodwill and intangible assets, long-lived assets in foreign countries totaled approximately $ 745 million and $ 648 million at October 2, 2021, and October 3, 2020, respectively.

We sell certain products in foreign markets, primarily Australia, Canada, Central America, Chile, China, the European Union, the United Kingdom, Japan, Mexico, Malaysia, the Middle East, South Korea, Taiwan and Thailand.

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Industrial and Other (d)

Intersegment Total

Beef $ 8,779 $ 4,326 $ 2,720 $ 1,719 $ 455 $ 17,999

Pork 1,787 474 1,173 1,563 1,280 6,277

Chicken 6,112 5,566 770 1,217 68 13,733

Prepared Foods 5,231 3,311 140 171 — 8,853

International/Other — — 1,990 — — 1,990

Intersegment — — — — ( 1,803 ) ( 1,803 )

Total $ 21,909 $ 13,677 $ 6,793 $ 4,670 $ — $ 47,049

Twelve months ended October 3, 2020

Foodservice (b)

International (c)

Industrial and Other (d)

Intersegment Total

Beef $ 8,155 $ 3,669 $ 2,183 $ 1,345 $ 390 $ 15,742

Pork 1,590 403 1,026 1,244 865 5,128

Chicken 5,935 4,892 642 1,713 52 13,234

Prepared Foods 5,137 3,090 126 179 — 8,532

International/Other — — 1,856 — — 1,856

Intersegment — — — — ( 1,307 ) ( 1,307 )

Total $ 20,817 $ 12,054 $ 5,833 $ 4,481 $ — $ 43,185

Twelve months ended September 28, 2019

2 unchanged sentences

Industrial and Other (d)

Intersegment Total

Beef $ 7,420 $ 4,151 $ 2,426 $ 1,420 $ 411 $ 15,828

Pork 1,415 400 890 1,334 893 4,932

Chicken 5,637 5,138 690 1,777 58 13,300

Prepared Foods 4,793 3,270 104 251 — 8,418

International/Other — — 1,289 — — 1,289

Intersegment — — — — ( 1,362 ) ( 1,362 )

Total $ 19,265 $ 12,959 $ 5,399 $ 4,782 $ — $ 42,405

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

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(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 fiscal 2021, the Chicken segment included a $ 545 million reduction in Other due to the recognition of legal contingency accruals.

SUPPLEMENTAL CASH FLOWS INFORMATION

The following table summarizes cash payments for interest and income taxes (in millions):

2021 2020 2019

Interest, net of amounts capitalized $ 444 $ 536 $ 419

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John Tyson, Chairman of the Company, is a trustee), Berry Street Waste Water Treatment Plant, LP ( 90 % of which is owned by the Tyson Limited Partnership), and the sisters of Mr.

Prior to the third quarter of fiscal 2020, these leases were both classified as short-term operating leases.

Based on the assessment of the renewal of these leases, as of October 3, 2020, one lease was classified as a finance lease with a debt balance of $ 7 million which is primarily recognized as Long-term debt in our Consolidated Balance Sheet.

As of October 2, 2021 and October 3, 2020, one lease was classified as a finance lease with a debt balance of $ 7 million which is primarily recognized as Long-term debt in our Consolidated Balance Sheet.

The other lease was classified as an operating lease with a lease liability balance of $ 3 million and no balance as of October 2, 2021 and October 3, 2020, respectively, which is primarily recognized within Other Liabilities in our Consolidated Balance Sheet.

Total payments of approximately $ 1 million in each of fiscal 2021, 2020 and 2019 were paid to lease the facilities.

As of October 2, 2021, the TLP, of which John Tyson and director Barbara Tyson are general partners, owned 70 million shares, or 99.985 % of our outstanding Class B stock and, along with the members of the Tyson family, owned 6.7 million shares of Class A stock, giving it control of approximately 71.04 % of the total voting power of our outstanding voting stock.

In August 2017, the Company committed to invest $ 5 million for a 17.5 % equity interest in Buchan Ltd., a Mauritian private holding company of poultry operations in sub-Saharan Africa.

Acacia Foods, B.V.

is committed to invest $ 9 million in Buchan Ltd.

Donnie Smith, who during the first quarter of fiscal year 2017 was Chief Executive Officer of the Company, serves as the Chairman of Acacia Foods, B.V.

and as a director of Buchan Ltd.

John Randal Tyson (son of John Tyson and Chief Sustainability Officer) serves as a director of Buchan Ltd.

for the Company.

We completed our funding commitment in fiscal 2018.

In fiscal 2020, 2019 and 2018, the Company provided administrative services to the Tyson Limited Partnership, the beneficial owner of 70 million shares of Class B stock, and the Tyson Limited Partnership, through TLP Investment, L.P., reimbursed the Company $ 0.2 million in fiscal 2020 and $ 0.3 million in both fiscal 2019 and fiscal 2018.

In fiscal 2021, 2020 and 2019, the Company provided administrative services to the Tyson Limited Partnership, the beneficial owner of 70 million shares of Class B stock, and the Tyson Limited Partnership, through TLP Investment, L.P., reimbursed the Company $ 0.2 million in fiscal 2021 and fiscal 2020 and $ 0.3 million in fiscal 2019 .

COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

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

At October 3, 2020 , and September 28, 2019 , no significant liabilities for guarantees were recorded.

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

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

4 unchanged sentences

The potential maximum obligation as of October 2, 2021, was approximately $ 305 million.

The total receivables under these programs were $ 29 million and $ 5 million at October 3, 2020 and September 28, 2019 , respectively.

The total receivables under these programs were $ 5 million and $ 29 million at October 2, 2021 and October 3, 2020, respectively.

These receivables are included, net of allowance for uncollectible amounts, in Accounts Receivable in our Consolidated 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 had no allowance for these programs' estimated uncollectible receivables at October 3, 2020 , and September 28, 2019 .

After analyzing residual credit risks and general market conditions, we had no allowance for these programs' estimated uncollectible receivables at October 2, 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.

These funds are generally considered restricted cash, which is reported in the Consolidated Balance Sheets in Other Assets, and totaled $ 46 million and $ 0 at October 3, 2020 and September 28, 2019 , respectively.

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

5 unchanged sentences

2027 and beyond 124

Total $ 3,235

Contingencies

We are involved in various claims and legal proceedings.

We routinely 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.

In the normal course of business, we are involved in various claims, lawsuits, investigations and legal proceedings, including those specifically identified below.

Each quarter, we determine whether to accrue for loss contingencies based on our assessment of whether the potential loss is probable, reasonably possible or remote and to the extent a loss is probable, whether it is reasonably estimable.

We record accruals in the Company's Consolidated Financial Statements for matters that we conclude are probable and the financial impact is reasonably estimable.

Regardless of the manner of resolution, frequently the most significant changes in the status of a matter may 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 .

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.

Listed below are certain claims made against the Company for which the magnitude of the potential exposure could be material to the Company’s Consolidated Financial Statements.

Broiler Antitrust Civil Litigation

Beginning in September 2016, a series of purported federal class action lawsuits styled In re Broiler Chicken Antitrust Litigation (the “Broiler Antitrust Civil Litigation”) were filed in the United States District Court for the Northern District of Illinois against us and certain of our poultry subsidiaries, as well as several other poultry processing companies.

The operative complaints, which have been amended throughout the litigation, contain allegations that, among other things, assert 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 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.

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

In addition, the complaints on behalf of the putative classes of indirect purchasers include causes of action under various state unfair competition laws, consumer protection laws, and unjust enrichment common laws.

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.

On January 19, 2021, we announced that we had reached agreement to settle certain 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, March 22, 2021 and October 15, 2021, the Court granted preliminary approval of the settlements with the putative Direct Purchaser Plaintiff Class, the putative End-User Plaintiff Class and the putative Commercial and Institutional Indirect Purchaser Plaintiff Class, respectively.

On June 29, 2021, the Court granted final approval to the settlement with the Direct Purchaser Plaintiff Class.

The settlements with the putative Commercial and Institutional Indirect Purchaser Plaintiff Class and the End-User Plaintiff Class remain subject to final 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.

In the third quarter of fiscal 2021, the Company accrued an additional $ 225 million for the estimated costs to resolve the remaining claims brought by opt-out plaintiffs, bringing the total recorded legal contingency accrual for claims related to this matter to $ 545 million, which amount includes our existing settlements.

This amount reflects an estimate of the probable losses with respect to claims in the Broiler Antitrust Civil Litigation and bid-rigging claims of potentially affected parties identified by the DOJ in the indictments noted below.

We are currently pursuing settlement discussions with the remaining 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 to avoid the uncertainty, risk, expense and distraction of protracted litigation.

In the fourth quarter of fiscal 2021, the Company reduced its total recorded legal contingency accrual by $ 80 million for amounts it had paid related to this matter in connection with the Court’s granting of the final approval to the settlement with the Direct Purchaser Plaintiff Class noted above.

Accordingly, at October 2, 2021, the legal contingency accrual for claims related to this matter was $ 465 million.

Government Investigations

Department of Justice (“DOJ”) Antitrust Division .

On June 21, 2019, the DOJ filed a motion to intervene and sought a limited stay of discovery in the Broiler Antitrust Civil Litigation, 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 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.

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.

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 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.

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 .

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 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, 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.

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.

Subsequently, the DOJ has announced indictments against additional individuals, as well as other poultry processing companies, and alleging a conspiracy to fix prices and rig bids for broiler chicken products from at least 2012 until at least early 2019.

In August 2021, the Company was granted conditional leniency by the DOJ for the matters we self-reported, which means that provided the Company continues to fully cooperate with the DOJ, neither the Company nor any of our cooperating employees will face prosecution or criminal fines or penalties.

We continue to fully cooperate with the DOJ in connection with the ongoing federal antitrust investigation.

State Matters .

The Offices of the Attorney General in New Mexico, Alaska and Washington have filed complaints 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”).

The complaints are based on allegations similar to those asserted in the Broiler Antitrust Civil Litigation and allege violations of state antitrust, unfair trade practice, and unjust enrichment laws.

The Company has not recorded any liability for the foregoing matters as of October 2, 2021 as it does not believe a loss is probable or reasonably estimable at this time because the proceedings are in preliminary stages.

In addition, we are cooperating with various state governmental agencies and officials, including the Offices of the Attorney General for Florida and Louisiana, investigating or otherwise seeking information, testimony and/or documents, regarding the conduct alleged in the Broiler Antitrust Civil Litigation and related matters.

Broiler Chicken Grower Litigation

On January 27, 2017 and March 26, 2017, putative class action complaints were filed 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 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.

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

All actions were subsequently consolidated in the Eastern District of Oklahoma.

In June 2021, we reached an agreement to settle with the putative class of broiler chicken farmers all claims raised in this consolidated action on terms not material to the Company for which the Company recorded an accrual in its Consolidated Financial Statements as of October 2, 2021.

On August 23, 2021, the Court granted preliminary approval of the settlement, and a final fairness hearing is scheduled for February 18, 2022.

Pork Antitrust Litigation

Beginning June 18, 2018, a series of putative class action complaints were filed 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 styled In re Pork Antitrust Litigation (the "Pork Antitrust Civil Litigation") .

The plaintiffs 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 federal antitrust 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.

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.

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.

The Company has not recorded any liability for this matter as of October 2, 2021 as it does not believe a loss is probable or reasonably estimable because t he Company believes that it has valid and meritorious defenses against the allegations and because the classes have not yet been defined or certified by the court.

The Offices of the Attorney General in New Mexico and Alaska have filed complaints against us and certain of our pork subsidiaries, as well as several other pork processing companies and Agri Stats.

The complaints are based on allegations similar to those asserted in the Pork Antitrust Civil Litigation and allege violations of state antitrust, unfair trade practice, and unjust enrichment laws based on allegations of conspiracies to exchange information and manipulate the supply of pork.

Beef Antitrust Litigation

On April 23, 2019, a putative class action complaint was filed 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.

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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.

The dismissal is without prejudice, and the plaintiffs are permitted to amend their complaint by December 28, 2020.

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.

Other similar lawsuits were filed by cattle ranchers in other district courts which were then transferred to the United States District Court for the District of Minnesota and consolidated and styled as In Re Cattle Antitrust Litigation.

On February 18, 2021, we moved to dismiss the amended complaints, and on September 23, 2021, 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 Company has not recorded any liability for this matter as of October 2, 2021 as it does not believe a loss is probable or reasonably estimable at this time because the Company believes that it has valid and meritorious defenses against the allegations and because the classes have not yet been defined or certified by the court.

On April 26, 2019, a putative class of indirect purchasers 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 as Peterson v.

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 second amended complaint.

The dismissal is without prejudice, and the plaintiffs are permitted to amend their complaint by December 28, 2020.

On May 22, 2020, we received a CID from DOJ's Antitrust Division.

The CID requests information related to the fed cattle and beef packing markets.

We have been cooperating with the DOJ's Antitrust Division with respect to the CID.

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.

Additional complaints have been filed on behalf of a putative class of direct purchasers of beef containing allegations of 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 containing allegations of 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.

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.

On May 22, 2020, December 23, 2020 and October 29, 2021, we received civil investigative demands ("CIDs") from DOJ's Antitrust Division.

The CIDs request information related to the fed cattle and beef packing markets.

We have been cooperating with the DOJ's Antitrust Division with respect to the CIDs.

The Offices of the Attorney General for multiple states are participating in the investigation and coordinating with the DOJ.

Wage Rate Litigation

On August 30, 2019, a putative class of non-supervisory production and maintenance employees at chicken processing plants in the continental United States filed class action complaints 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.

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.

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

Additional lawsuits s making similar allegations were consolidated including an amended consolidated complaint containing additional allegations concerning turkey processing plants naming 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.

On September 16, 2020, the court dismissed claims against us 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.

The parties are now conducting discovery.

In the third quarter of fiscal 2021, the Company recorded an accrual for the estimated probable losses that it expects to incur for this matter in the Company’s Consolidated Financial Statements.

Other Matters

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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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.

In late 2004, a labor arbiter ruled against the respondents and awarded the complainants approximately $ 68 million in damages and fees.

From 2004 through 2014, the parties filed numerous appeals, motions for reconsideration and petitions for review, certain of which remained outstanding for several years.

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.

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 NLRC increased the award for 4,922 of the total 5,984 complainants to approximately $ 292 million.

The parties filed numerous appeals, motions for reconsideration and petitions for review related to the NLRC award and settlement payment.

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.

Complainants have filed motions for reconsideration with the Court of Appeals which were denied.

Claimants have since filed petitions for writ of certiorari with the Supreme Court of the Philippines, which has accepted.

The Company continues to maintain an accrual for estimated probable losses for this matter in the Company’s Consolidated Financial Statements.

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.

QUARTERLY FINANCIAL DATA (UNAUDITED)

in millions, except per share data

Operating income

Net income attributable to Tyson

Net income per share attributable to Tyson:

Class A Basic

Class B Basic

Operating income

Net income attributable to Tyson

Net income per share attributable to Tyson:

Class A Basic

Class B Basic

First quarter fiscal 2020 net income included $ 52 million pretax restructuring and related charges and $ 16 million pretax Beef production facility fire costs, net of insurance proceeds.

Second quarter fiscal 2020 net income included $ 110 million pretax gain from pension plan terminations.

Third quarter fiscal 2020 net income included $ 15 million pretax Beef production facility fire insurance proceeds, net of costs and $ 6 million pretax gain from pension plan terminations.

Fourth quarter fiscal 2020 net income included $ 23 million pretax restructuring and related charges and $ 65 million pretax income related to our accounting cycle resulting in a 53-week year in fiscal 2020.

First quarter fiscal 2019 net income included $ 26 million pretax Keystone Foods purchase accounting and acquisition related costs, which included an $ 11 million purchase accounting adjustment for the amortization of the fair value step-up of inventory and $ 15 million of acquisition related costs, and $ 8 million pretax restructuring and related charges.

Second quarter fiscal 2019 net income included $ 11 million pretax Keystone Foods acquisition related costs and $ 8 million pretax restructuring and related charges.

Third quarter fiscal 2019 net income included $ 105 million post tax recognition of previously unrecognized tax benefit, $ 55 million pretax gain on sale of an investment and $ 15 million pretax restructuring and related charges.

Fourth quarter fiscal 2019 net income included $ 31 million pretax Beef production facility fire costs, a $ 41 million pretax impairment charge related to the divestiture of a business, $ 15 million pretax pension plan termination charge and $ 10 million pretax restructuring and related charges.

The Company has not recorded any liability for these matters as of October 2, 2021 as it does not believe a loss is probable or reasonably estimable at this time because it believes the allegations in the claims are without merit.

Report of Independent Registered Public Accounting Firm

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

and its subsidiaries (the “Company”) as of October 3, 2020 and September 28, 2019, and the related consolidated statements of income, of comprehensive income, of shareholders' equity and of cash flows for each of the three years in the period ended October 3, 2020, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended October 3, 2020 appearing under Item 15 (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of October 2, 2021 and October 3, 2020, and the related consolidated statements of income, of comprehensive income, of shareholders' equity and of cash flows for each of the three years in the period ended October 2, 2021, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended October 2, 2021 appearing under Item 15 (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of October 2, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 3, 2020 and September 28, 2019, and the results of its operations and its cash flows for each of the three years in the period ended October 3, 2020 in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 2, 2021 and October 3, 2020, and the results of its operations and its cash flows for each of the three years in the period ended October 2, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 2, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases as of September 29, 2019.

Basis for Opinions

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

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

Goodwill Impairment Assessments - Domestic Chicken and International Reporting Units

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s consolidated goodwill balance was $10,899 million as of October 3, 2020, which included $3,266 million and $392 million for the Domestic Chicken and International reporting units, respectively.

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

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

Goodwill Impairment Assessment - Chicken Segment Reporting Units

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s consolidated goodwill balance was $10.5 billion as of October 2, 2021, which included $3.3 billion for the Chicken segment reporting units.

As disclosed by management, a goodwill impairment test is conducted as of the first day of the fourth quarter each year, or more frequently if impairment indicators arise.

Management estimates the fair value of reporting units considering the use of various valuation techniques, with the primary technique being an income approach (discounted cash flow method) and another technique being a market approach (guideline public company method).

The determination of fair value using these techniques includes assumptions about sales, operating margins, growth rates, discount rates and valuation multiples based on budgets, business plans, economic projections and marketplace data.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the Domestic Chicken and International reporting units is a critical audit matter are (i) the significant judgment by management when developing the fair value measurements of the reporting units, (ii) the high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s anticipated future cash flows and significant assumptions related to sales, operating margins, growth rates, discount rates and valuation multiples, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

The determination of fair value using these techniques includes assumptions about sales growth, operating margins, discount rates and valuation multiples based on budgets, business plans, economic projections and marketplace data.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the Chicken segment reporting units is a critical audit matter are (i) the significant judgment by management when developing the fair value measurements of the reporting units, (ii) the high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s anticipated future cash flows and significant assumptions related to sales growth, operating margins, discount rates and valuation multiples, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s Domestic Chicken and International reporting units.

These procedures also included, among others, testing management’s process for developing the fair value estimates of the Domestic Chicken and International reporting units;

These procedures also included, among others, testing management’s process for developing the fair value estimates of the Chicken segment reporting units;

evaluating the appropriateness of the income and market valuation approaches;

testing the completeness and accuracy of underlying data used in the fair value estimates;

and evaluating management’s cash flow projections and significant assumptions related to sales, operating margins, growth rates, discount rates and valuation multiples.

Evaluating management’s assumptions related to sales, operating margins, growth rates, discount rates and valuation multiples involved evaluating whether the assumptions used were reasonable considering (i) the current and past performance associated with the related reporting units, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s valuation methods and the sales, operating margins, growth rates, discount rates and valuation multiples significant assumptions.

testing the completeness and accuracy of underlying data used in the valuation approaches;

and evaluating the reasonableness of management’s anticipated future cash flows and significant assumptions related to sales growth, operating margins, discount rates and valuation multiples.

Evaluating management’s assumptions related to sales growth, operating margins, discount rates and valuation multiples involved evaluating whether the assumptions used were reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s valuation approaches and the sales growth, operating margins, discount rates and valuation multiples significant assumptions.

/s/ PricewaterhouseCoopers LLP

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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-K

Item 8. Financial Statements and Supplementary Data