10 unchanged sentences
We measure segment profit as operating income (loss).
−Removed: International/Other primarily includes our foreign operations in Australia, China, Malaysia, Mexico, the Netherlands, South Korea and Thailand, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC.
+Added: International/Other primarily includes our foreign operations in Australia, China, Malaysia, Mexico, the Netherlands, South Korea, Thailand and the Kingdom of Saudi Arabia, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC.
For further description of the business, refer to Part I, Item 1, Business.
−Removed: The Company’s accounting cycle resulted in a 52-week year for fiscal 2022 and fiscal 2021 and a 53-week year for fiscal 2020.
−Removed: Sales grew 13% in fiscal 2022 over fiscal 2021 to $53.3 billion largely due to increased sales growth across each of our segments primarily due to higher average sales prices combined with $545 million in legal contingency accruals recognized as a reduction to sales in fiscal 2021.
−Removed: The higher average sales prices were primarily due to the current inflationary environment and recovery of rapidly rising costs, such as labor, freight and transportation, livestock, feed ingredients and other input costs.
−Removed: Operating income of $4,410 million in fiscal 2022 was up slightly compared to fiscal 2021, as improved Chicken results were offset by a decline in operating income in the Beef, Pork and Prepared Foods segments.
−Removed: In fiscal 2022, our operating income was impacted by $66 million of restructuring and related charges and $62 million of insurance proceeds, net of costs incurred, related to fires at our production facilities.
−Removed: In fiscal 2021, our operating income was impacted by $626 million of charges related to legal contingency accruals, $27 million of charges related to the relocation of a production facility in China, $23 million of production facilities fire costs, net of insurance proceeds and a $784 million gain on the sale of our pet treats business.
+Added: We utilize a 52- or 53-week accounting period ending on the Saturday closest to September 30.
+Added: The Company’s accounting cycle resulted in a 52-week year for fiscal 2023, 2022 and 2021.
+Added: Sales decreased slightly to $52.9 billion in fiscal 2023 as compared to fiscal 2022, largely due to decreased sales volumes in our Beef and Pork segments and lower average sales price in our Chicken and Pork segments, partially offset by increased sales volumes in our Chicken segment.
+Added: We incurred an operating loss of $395 million in fiscal 2023 as compared to operating income of $4,410 million fiscal 2022, as we experienced lower operating income in all our segments other than the Prepared Foods segment.
+Added: In fiscal 2023, our operating income was impacted by $781 million of goodwill impairment charges, $322 million of plant closure charges, $156 million of legal contingency accruals, $124 million of restructuring and related charges, $17 million of product line discontinuation charges, and benefited by $53 million of insurance proceeds, net of costs incurred, related to fires at our production facilities and $19 million related to the relocation of a production facility in China.
+Added: In fiscal 2022, our results were impacted by $66 million of restructuring and related charges and $62 million of insurance proceeds, net of costs incurred related to fires at our production facilities.
Market Environment
−Removed: According to the USDA, domestic protein production (beef, pork, chicken and turkey) was relatively flat in fiscal 2022 compared to fiscal 2021.
−Removed: All segments experienced inflation in operating costs, especially in labor, freight and transportation and certain materials, and we expect these trends to continue through fiscal 2023.
−Removed: Additionally, grain and feed ingredient costs have increased substantially, which impacts all of our segments.
−Removed: We pursue recovery of these increased costs through pricing.
−Removed: The Federal Reserve recently increased interest rates, and it is anticipated that interest rates will continue to rise in the near term.
−Removed: Our direct exposure to rising interest rates is somewhat tempered given our strong liquidity position in addition to our current debt structure in which nearly all of our borrowings have fixed interest rates.
−Removed: At October 1, 2022, we had $3.3 billion of liquidity and our current debt was $459 million.
−Removed: Should we need to issue additional debt or borrow under our existing revolving credit facility, we may be exposed to higher interest rates than our current outstanding borrowings.
−Removed: The Beef segment experienced strong demand, sufficient supply of market-ready cattle and increased live cattle costs.
−Removed: The Pork segment experienced reduced domestic availability of live hogs.
−Removed: The Chicken segment experienced strong demand and increased feed ingredient and other input costs.
−Removed: The Prepared Foods segment experienced increased costs largely due to the impacts of an inflationary environment.
+Added: According to the USDA, domestic protein production (beef, pork, chicken and turkey) decreased slightly in fiscal 2023 compared to fiscal 2022.
+Added: All segments experienced inflation in operating costs, especially in labor and certain materials, however, the rate of inflation started to decrease and protein prices began to level off.
+Added: We continue to pursue recovery of increased input costs through pricing.
Additionally, the conflict between Ukraine and Russia has led to economic sanctions against Russia and certain regions of Ukraine and Belarus.
−Removed: As of October 1, 2022, the impact of this conflict has not had a material direct impact on our consolidated financial performance.
+Added: As of September 30, 2023, the impact of this conflict has not had a material direct impact on our consolidated financial performance.
However, the conflict is still ongoing and there are many risks and uncertainties in relation to the conflict that are outside of our control.
−Removed: If the conflict escalates further or if additional countries join the conflict and additional economic sanctions are imposed, it could have a material impact on our business operations and financial performance.
−Removed: We continue to proactively monitor and respond to the evolving nature of the COVID-19 pandemic and its impact to our global business.
−Removed: Our ongoing COVID-19 task force was formed for the primary purposes of maintaining the health and safety of our team members, ensuring our ability to operate our processing facilities and maintaining the liquidity of our business.
−Removed: We have experienced and continue to experience multiple challenges related to the pandemic.
−Removed: The most significant challenge we face is the availability of team members to operate our production facilities as our production facilities continue to experience varying levels of absenteeism.
−Removed: The health and safety of our team members remains our top priority, and we continue to provide a variety of health and safety resources and services to team members and their family members.
−Removed: Additionally, we have experienced some challenges in our supply chain such as volatility of inputs, availability of shipping containers and port congestion.
−Removed: These challenges impacted our operating costs, but generally, we experienced lower direct incremental costs associated with COVID-19 in fiscal 2022 as compared to fiscal 2021.
−Removed: The long-term impacts of COVID-19 remain uncertain and will depend on future developments, including the duration and spread of the pandemic, COVID-19 variants and resurgences, and related actions taken by federal, state and local government officials to prevent and manage disease spread, and effectively distribute and administer vaccinations, all of which contain some level of uncertainty and cannot be easily predicted.
+Added: Furthermore, the conflict in the Middle East escalated in October 2023 creating economic and political uncertainty within the region.
+Added: If these conflicts escalate further, impact additional regions or countries, or additional economic sanctions are imposed, it could have a material impact on our business operations and financial performance.
+Added: The Beef segment experienced reduced supply of market-ready cattle and increased live cattle costs.
+Added: The Pork segment experienced sufficient supply and reduced live hog costs, but was negatively impacted by softening global demand.
+Added: The Chicken segment experienced increased feed ingredient and other input costs along with excess domestic supply impacts to sales pricing.
+Added: The Prepared Foods segment experienced decreased raw material costs primarily due to lower meat costs.
+Added: The Federal Reserve has increased interest rates, and it is anticipated that interest rates will continue to rise in the near term.
+Added: Our direct exposure to rising interest rates is somewhat tempered given our strong liquidity position in addition to our current debt structure in which most of our borrowings have fixed interest rates.
+Added: At September 30, 2023, we had $3.0 billion of liquidity and our current debt was $1.9 billion.
+Added: Should we need to issue additional debt or borrow under our existing revolving and term loan facilities, we may be exposed to higher interest rates than our current outstanding borrowings.
Our total operating margin was (0.7)% in fiscal 2023.
10 unchanged sentences
and sustain our Company and our world for future generations.
−Removed: • 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.
−Removed: In the third quarter of fiscal 2021, we entered into a definitive agreement to sell the business for $1.2 billion in cash, subject to certain adjustments.
−Removed: The business had a net carrying value of approximately $411 million as of July 6, 2021, which included approximately $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.
−Removed: The transaction closed on July 6, 2021, and we recognized a gain of $784 million from the sale of this business, which is reflected in cost of sales in our Consolidated Statement of Income for fiscal 2021.
−Removed: • Beginning in fiscal 2022, we launched a new productivity program, which is designed to drive a better, faster and more agile organization that is supported by a culture of continuous improvement and faster decision-making.
−Removed: We were targeting $1 billion in productivity savings by the end of fiscal 2024, which included more than $400 million in fiscal 2022, relative to a fiscal 2021 cost baseline.
−Removed: The execution of this program is supported by a program management office that ensures delivery of key project milestones and reports on savings achievements connected with the three pillars of the program.
+Added: We launched a new productivity program in fiscal 2022 to drive a better, faster and more agile organization that is supported by a culture of continuous improvement and faster decision-making.
+Added: The execution of the program is supported by a program management office that ensures delivery of key project milestones and reports on savings achievements connected with the three pillars of the program.
The first pillar is operational and functional excellence, which includes functional efficiency efforts in Finance, HR and Procurement focused on applying best practices to reduce costs.
3 unchanged sentences
At this time, we do not anticipate costs associated with this program to be material and capital expenditures associated with automation and other activities are included in our capital expenditure expectations.
−Removed: We realized more than $700 million of productivity savings in fiscal 2022, which partially offset the impacts of inflationary market conditions, and we now believe we will exceed our $1 billion target in fiscal 2023.
−Removed: • In the fourth quarter of fiscal 2022, the Company approved a restructuring program, the 2022 Program, which is expected to improve business performance, increase collaboration, enhance team member agility, enable faster decision-making and reduce redundancies.
−Removed: In conjunction with the 2022 Program, the Company plans to bring together all its corporate team members from the Chicago, Downers Grove and Dakota Dunes area corporate locations to its world headquarters in Springdale, Arkansas, through a phased relocation commencing in early calendar year 2023.
−Removed: We have recognized $66 million of pretax charges in fiscal 2022 associated with the 2022 Program consisting of severance related costs.
−Removed: The Company currently anticipates the 2022 Program will result in cumulative pretax charges of approximately $293 million, which consists primarily of severance costs, relocation and related costs, accelerated depreciation, contract and lease terminations and professional and other fees.
−Removed: The following tables set forth the pretax impact of restructuring and related charges incurred in fiscal 2022 in the Consolidated Statements of Income and the pretax impact by our reportable segments.
+Added: We were targeting $1 billion in productivity savings by the end of fiscal 2024 relative to a fiscal 2021 cost baseline.
+Added: We realized more than $700 million of productivity savings in fiscal 2022, which partially offset the impacts of inflationary market conditions, and we surpassed our aggregate $1 billion target in fiscal 2023, more than a year ahead of our plan.
+Added: The Company approved a restructuring program in fiscal 2022, the 2022 Program, which is expected to improve business performance, increase collaboration, enhance team member agility, enable faster decision-making and reduce redundancies.
+Added: In conjunction with the 2022 Program, the Company relocated all of its corporate team members from the Chicago, Downers Grove and Dakota Dunes area corporate locations to its world headquarters in Springdale, Arkansas, through a phased relocation commencing in early calendar year 2023.
+Added: In the third quarter of fiscal 2023, the Company approved an extension to the program related to removing additional redundancies in corporate overhead.
+Added: We recognized $124 million and $66 million of pretax charges in fiscal 2023 and 2022, respectively, associated with the 2022 Program consisting of severance related costs, relocation and related costs, accelerated depreciation, contract and lease termination and professional and other fees.
+Added: The Company currently anticipates the 2022 Program will result in cumulative pretax charges of approximately $224 million.
+Added: As the Company continues to evaluate its business strategies and long-term growth targets, additional restructuring activities may occur.
+Added: The following tables set forth the pretax impact of restructuring and related charges in the Consolidated Statements of Income and the pretax impact by our reportable segments for fiscal years ended 2023 and 2022.
For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 7:
−Removed: Restructuring and Related Charges.
+Added: Restructuring and Related Charges (in millions).
Cost of Sales $ 29 $ 18
1 unchanged sentence
Total Restructuring and related charges, pretax $ 124 $ 66
−Removed: Total estimated
−Removed: 2022 charges Estimated future charges 2022 Program charges
+Added: 2022 charges 2023 charges Estimated future charges Total estimated 2022 Program charges
Beef $ 16 $ 33 $ 3 $ 52
+Added: Pork 5 11 1 17
Chicken 6 16 2 24
9 unchanged sentences
Sales growth (0.8) % 13.2 %
+Added: • Sales Volume – Sales were positively impacted by a increase in sales volume, which accounted for an increase of $507 million, driven by increased volumes in our Chicken segment partially offset by decreased volumes in our Beef segment due to the reduced domestic availability of live cattle and our Pork segment as a result of balancing our supply with customer demand.
+Added: • Average Sales Price – Sales were negatively impacted by lower average sales prices, which accounted for a decrease of $752 million, driven by reduced pricing in our Pork and Chicken segments, partially offset by higher average sales prices in our Beef and Prepared Foods segments.
+Added: • The above change in average sales price for fiscal 2023 excludes the impact of a $156 million reduction of Sales from the recognition of legal contingency accruals.
• Sales Volume – Sales were negatively impacted by a decrease in sales volume, which accounted for a decrease of $121 million, driven by decreased volumes in our Pork and Prepared Foods segments and impacts associated with the challenging labor environment and continued supply chain constraints, partially offset by an increase in sales volume in our Chicken segment.
2 unchanged sentences
• The above change in average sales price for fiscal 2022 excludes the impact of a $545 million reduction of Sales from the recognition of legal contingency accruals in fiscal 2021.
−Removed: • Sales Volume – Sales were negatively impacted by a decrease in sales volume across each of our segments, which accounted for a decrease of $1,190 million, due in part to the impacts of a challenging labor environment as well as the impact of an additional week in fiscal 2020.
−Removed: • Average Sales Price – Sales were positively impacted by higher average sales prices, which accounted for an increase of $5,599 million.
−Removed: The increase in average sales price was primarily attributable to favorable product mix and the pass through of increased raw material costs.
−Removed: • The above change in average sales price for fiscal 2021 excludes a $545 million reduction of Sales from the recognition of legal contingency accruals.
Cost of Sales in millions
4 unchanged sentences
• Cost of sales increased $3,636 million.
+Added: Higher sales volume increased cost of sales $444 million while higher input cost per pound increased cost of sales $3,192 million.
+Added: • The $3,192 million impact of higher input cost per pound was impacted by:
+Added: • Increase in live cattle costs of approximately $2,135 million in our Beef segment.
+Added: • Increase due to net derivative losses of $117 million in fiscal 2023, compared to net derivative gains of $225 million in fiscal 2022 due to our risk management activities.
+Added: These amounts exclude offsetting impacts from related physical purchase transactions, which are included in the change in live cattle and hog costs and raw material and feed ingredient costs described herein.
+Added: • Increase of $322 million due to costs associated with plant closures.
+Added: • Increase of $238 million related to inventory lower of cost or net realizable value adjustments.
+Added: • Increase of approximately $36 million in our Chicken segment related to net increases in feed ingredients costs and growout expenses, partially offset by reduced outside meat purchases.
+Added: • Increase of approximately $24 million in our Chicken segment due to $11 million of insurance proceeds, net of costs incurred, in fiscal 2023 compared to $35 million of insurance proceeds, net of costs incurred, in fiscal 2022 related to the fire at our production facility in fiscal 2021.
+Added: • Decrease in live hog costs of approximately $295 million in our Pork segment.
+Added: • Decrease in freight and transportation costs of approximately $175 million.
+Added: • Decrease in raw material and other input costs of approximately $45 million in our Prepared Foods segment.
+Added: • Remaining increase in costs across all of our segments primarily driven by net impacts on average cost per pound from mix changes as well as the impact of the inflationary environment on our labor and other input costs, partially offset by savings from our productivity program.
+Added: • The $444 million impact of increased sales volume was primarily driven by increased volumes in our Chicken segment.
+Added: • Cost of sales increased $6,091 million.
Lower sales volume decreased cost of sales $104 million while higher input cost per pound increased cost of sales $6,195 million.
14 unchanged sentences
• The $104 million impact of lower sales volume was primarily driven by decreased volumes in our Pork and Prepared Foods segments.
−Removed: • Cost of sales increased $2,722 million.
−Removed: Lower sales volume decreased cost of sales $1,041 million while higher input cost per pound increased cost of sales $3,763 million.
−Removed: • The $3,763 million impact of higher input cost per pound was impacted by:
−Removed: • Increase in live hog costs of approximately $980 million in our Pork segment.
−Removed: • Increase of approximately $945 million in our Chicken segment related to net increases in feed ingredient costs, growout expenses and outside meat purchases.
−Removed: • Increase in raw material and other input costs of approximately $520 million in our Prepared Foods segment.
−Removed: • Increase in freight and transportation costs of approximately $315 million.
−Removed: • Increase of approximately $81 million in our Chicken segment related to the recognition of legal contingency accruals.
−Removed: • Increase in live cattle costs of approximately $160 million in our Beef segment.
−Removed: • Decrease due to the recognition of a $784 million gain on the sale of our pet treats business.
−Removed: • Decrease of $165 million due to reduction in direct incremental expenses related to COVID-19, primarily related to the payment of $114 million in thank you bonuses during fiscal 2020.
−Removed: • Remaining increase in costs across all of our segments was primarily driven by net impacts on average cost per pound from mix changes, as well as, production inefficiencies, increased labor costs due in part to the impacts associated with a challenging labor environment and COVID-19 in fiscal 2021 as compared to fiscal 2020.
−Removed: • The $1,041 million impact of lower sales volume was primarily driven by decreased volume in each of our segments in fiscal 2021 due to lower production throughput associated with the impact of COVID-19 and a challenging labor environment as well as the impact of an additional week in fiscal 2020.
Selling, General and Administrative in millions
2 unchanged sentences
As a percentage of sales 4.2 % 4.2 %
+Added: • Decrease of $13 million in selling, general and administrative was primarily driven by:
+Added: • Decrease of $171 million in employee costs primarily from incentive-based compensation.
+Added: • Decrease of $26 million in professional fees.
+Added: • Increase of $71 million from a gain recognized in the fiscal year ended October 1, 2022 from recoveries related to a cattle suppliers misappropriation of Company funds.
+Added: • Increase of $57 million in marketing, advertising and promotion expenses.
+Added: • Increase of $47 million in restructuring and related costs.
• Increase of $128 million in selling, general and administrative was primarily driven by:
8 unchanged sentences
• Decrease of $16 million from the change in the impact of a cattle supplier’s misappropriation of Company funds, resulting from a $71 million gain related to the recovery of cattle inventory in the fiscal year ended October 1, 2022 as compared to a $55 million gain recognized in the fiscal year ended October 2, 2021.
−Removed: • Decrease of $246 million in selling, general and administrative was primarily driven by:
−Removed: • Decrease of $161 million from the change in the impact of a cattle supplier’s misappropriation of Company funds, resulting from a $55 million gain related to the recovery of cattle inventory in the fiscal year ended October 2, 2021 as compared to a $106 million loss recognized in the fiscal year ended October 3, 2020.
−Removed: • Decrease of $60 million from restructuring and related charges incurred in fiscal 2020.
−Removed: • Decrease of $56 million in marketing, advertising and promotion expenses.
−Removed: • Decrease of $27 million in donations.
−Removed: • Decrease of $24 million in commission and brokerage fees.
−Removed: • Decrease of $21 million in depreciation and amortization.
−Removed: • Increase of $81 million in professional fees.
−Removed: • Increase of $30 million in technology related costs.
+Added: Goodwill Impairment
+Added: • During the third quarter of fiscal 2023, we experienced lower than anticipated operating results and changing market fundamentals, as well as a drop in our market capitalization to below our book value.
+Added: Consequently, we performed an interim assessment of goodwill and recorded a $448 million goodwill impairment charge.
+Added: In the fourth quarter of fiscal 2023, long-term treasury rates increased which caused an increase in the discount rates we utilize in determining the fair value of our reporting units.
+Added: The increased discount rates caused the Company to perform goodwill impairment assessments in the fourth quarter of fiscal 2023, which resulted in an additional $333 million goodwill impairment charge.
Interest Expense in millions
2023 / 2022 –
−Removed: • Interest expense primarily included interest expense related to our senior notes and commitment fees incurred on our revolving credit facility less capitalized interest.
−Removed: The decrease in interest expense in fiscal 2022 was primarily due to the redemption of senior notes in fiscal 2022 and repayments of term loans and the redemption of the August 2021 Notes in fiscal 2021.
+Added: • Interest expense primarily included interest expense related to our senior notes, commercial paper, term loans and commitment fees incurred on our revolving credit facility less capitalized interest.
+Added: The decrease in interest expense in fiscal 2023 was primarily due to increased capitalized interest of $25 million and the impact of the redemption of the June 2022 Senior Notes in fiscal 2022, partially offset by increased commercial paper term loan balances.
Other (Income) Expense, net in millions
$ (42) $ (87)
+Added: 2023 – Included $22 million of production facilities fire insurance proceeds, $17 million of foreign exchange gains and $12 million of joint venture earnings.
2022 – Included $58 million of foreign exchange losses, $52 million of production facilities fires insurance proceeds, $45 million of joint venture earnings and $37 million of gains on equity investments due to observable price changes in fiscal 2022.
−Removed: 2021 – Included $34 million from a defined benefit plan gain.
Effective Tax Rate
−Removed: 21.7 % 24.3 %
−Removed: • Our effective income tax rate was 21.7% for fiscal 2022 compared to 24.3% for fiscal 2021.
−Removed: The fiscal 2022 effective tax rate includes a $36 million benefit from the remeasurement of deferred income taxes, primarily due to legislation decreasing state tax rates enacted in fiscal 2022.
−Removed: The non-deductible goodwill associated with the sale of our pet treats business unfavorably impacted the effective tax rate for fiscal 2021 by 1.8%.
−Removed: Net Income Attributable to Tyson in millions, except per share data
−Removed: Net income attributable to Tyson $ 3,238 $ 3,047
−Removed: Net income attributable to Tyson - per diluted share 8.92 8.34
+Added: The percentage impacts on the effective tax rate were greater in fiscal 2023 due to the level of pretax income (loss) in fiscal 2023 compared to fiscal 2022.
+Added: Additionally, tax benefits increased the effective tax rate on a pretax loss in fiscal 2023 and decreased the effective tax rate on pretax income in fiscal 2022.
+Added: 2023 – The effective tax rate is lower than the statutory rate due to a $781 million non-deductible goodwill impairment, partially offset by income tax credits and a $26 million benefit from the remeasurement of deferred income taxes, primarily due to legislation decreasing state tax rates enacted in fiscal 2023.
+Added: 2022 – The effective tax rate includes a $36 million benefit from the remeasurement of deferred income taxes, primarily due to legislation decreasing state tax rates enacted in fiscal 2022.
+Added: Net Income (Loss) Attributable to Tyson in millions, except per share data
+Added: Net income (loss) attributable to Tyson $ (648) $ 3,238
+Added: Net income (loss) attributable to Tyson - per diluted share (1.87) 8.92
2023 – Included the following items:
−Removed: • $114 million pretax, or $0.23 per diluted share, of production facilities fire insurance proceeds, net of costs incurred.
+Added: • $757 million pretax, or ($2.13) per diluted share, of goodwill impairment charges (non-tax deductible) net of $24 million associated with Net Income (Loss) Attributable to Noncontrolling Interests.
+Added: • $322 million pretax, or ($0.67) per diluted share, of charges related to plant closures.
+Added: • $156 million pretax, or ($0.33) per diluted share, related to the recognition of legal contingency accruals.
• $124 million pretax, or ($0.26) per diluted share, of restructuring and related charges.
+Added: • $75 million pretax, or $0.16 per diluted share, of production facilities fire insurance proceeds, net of costs incurred.
• $26 million post tax, or $0.07 per diluted share, from remeasurement of net deferred tax liabilities at lower enacted state tax rates.
+Added: • $17 million pretax, or ($0.04) per diluted share, of product line discontinuation charges.
+Added: • $16 million pretax, or $0.03 per diluted share, related to the relocation of a production facility in China net of $3 million associated with Net Income (Loss) Attributable to Noncontrolling Interests.
2022 – Included the following items:
−Removed: • $626 million pretax, or ($1.31) per diluted share, related to the recognition of legal contingency accruals.
−Removed: • $784 million pretax, or $1.40 per diluted share, related to the gain on the sale of our pet treats business.
−Removed: • $34 million pretax, or $0.07 per diluted share, from a defined benefit plan gain.
−Removed: • $17 million pretax, or ($0.04) per diluted share, of production facilities fire costs, net of insurance proceeds.
−Removed: • $27 million pretax, or ($0.06) per diluted share, related to the relocation of a production facility in China.
+Added: • $114 million pretax, or $0.23 per diluted share, of production facilities fire insurance proceeds, net of costs incurred.
+Added: • $66 million pretax, or ($0.14) per diluted share, of restructuring and related charges.
+Added: • $36 million post tax, or $0.10 per diluted share, from remeasurement of net deferred tax liabilities at lower enacted state tax rates.
SEGMENT RESULTS
1 unchanged sentence
Beef, Pork, Chicken, and Prepared Foods.
−Removed: International/Other primarily includes our foreign operations in Australia, China, Malaysia, Mexico, the Netherlands, South Korea and Thailand, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC.
+Added: International/Other primarily includes our foreign operations in Australia, China, Malaysia, Mexico, the Netherlands, South Korea, Thailand and the Kingdom of Saudi Arabia, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC.
Additional information regarding the geographic areas of our foreign operations is set forth in Part II, Item 8, Notes to Consolidated Financial Statements, Note 17:
Segment Reporting.
−Removed: The following table is a summary of segment sales and operating income (loss), which is how we measure segment income (loss):
+Added: The following table is a summary of segment sales and operating income (loss) for fiscal years ended 2023, 2022 and 2021, which is how we measure segment income (loss):
Sales Operating Income (Loss)
13 unchanged sentences
Average Sales Price Change 0.4 % 10.2 %
−Removed: Operating Income $ 2,502 $ 3,240 $ (738) $ 1,580 $ 1,660
+Added: Operating Income (Loss) $ (91) $ 2,502 $ (2,593) $ 3,240 $ (738)
Operating Margin (0.5) % 12.6 % 18.0 %
+Added: • Sales Volume – Sales volume decreased in fiscal 2023 due to lower availability of live cattle.
+Added: • Average Sales Price – Average sales price increased slightly due to price increases associated with reduced live cattle supply and increased input costs, partially offset by reduced export demand and softening demand.
+Added: • Operating Income (Loss) – Operating income decreased due to unfavorable market conditions, including higher fed cattle costs.
+Added: Additionally, operating income in fiscal 2023 was impacted by a $333 million goodwill impairment charge and benefited from $42 million of insurance proceeds related to a fire at a production facility in fiscal 2019, partially offset by $33 million of restructuring and related charges.
+Added: Operating income in fiscal 2022 was impacted by $27 million of insurance proceeds related to a fire at a production facility in fiscal 2019, and $16 million of restructuring and related charges.
• Sales Volume – Sales volume was relatively flat in fiscal 2022.
3 unchanged sentences
Additionally, operating income in fiscal 2022 benefited from $27 million of insurance proceeds related to a fire at a production facility in the fourth quarter of fiscal 2019, partially offset by $16 million of restructuring and related charges.
−Removed: • Sales Volume – Sales volume was relatively flat due to strong global demand, partially offset by the impacts associated with a challenging labor environment, severe weather in the second quarter of fiscal 2021 and the additional week in fiscal 2020.
−Removed: • Average Sales Price – Average sales price increased as our input costs such as live cattle, labor and freight and transportation costs, increased and demand for our beef products remained strong.
−Removed: • Operating Income – Operating income increased due to strong demand as we continued to optimize revenues relative to live cattle supply, partially offset by production inefficiencies due to labor challenges.
−Removed: Additionally, operating income in fiscal 2021 was impacted by a cattle supplier’s misappropriation of Company funds, which resulted in a $55 million gain related to the recovery of cattle inventory as compared to a $106 million loss recognized in fiscal 2020.
Pork Segment Results in millions
4 unchanged sentences
Average Sales Price Change (7.9) % 4.1 %
−Removed: Operating Income $ 193 $ 328 $ (135) $ 565 $ (237)
+Added: Operating Income (Loss) $ (139) $ 193 $ (332) $ 328 $ (135)
Operating Margin (2.4) % 3.0 % 5.2 %
+Added: • Sales Volume – Sales volume decreased as a result of balancing our supply with customer demand.
+Added: • Average Sales Price – Average sales price decreased due to reduced global demand.
+Added: • Operating Income (Loss) – Operating income decreased due to compressed pork margins, increased operating costs as a result of the inflationary market environment, losses incurred in our live hog operations and impacts from a production facility fire in the third quarter of fiscal 2023.
• Sales Volume – Sales volume decreased due to reduced domestic availability of live hogs.
2 unchanged sentences
Additionally, volatile market conditions resulted in net derivative gains of $10 million in fiscal 2022 and net derivative losses of $90 million in fiscal 2021, which excludes the impacts of related physical purchase transactions.
−Removed: • Sales Volume – Sales volume decreased despite strong global demand in fiscal 2021 primarily due to the impacts of an additional week in fiscal 2020 and the impacts of lower hog supplies and a challenging labor environment in fiscal 2021.
−Removed: • Average Sales Price – Average sales price increased as live hog costs increased and demand for our pork products remained strong.
−Removed: • Operating Income – Operating income decreased primarily due to lower hog supplies relative to industry capacity as well as production inefficiencies related to COVID-19 and a challenging labor environment, partially offset by a reduction in direct incremental expenses related to COVID-19 in fiscal 2021 as compared to fiscal 2020.
−Removed: Additionally, volatile market conditions resulted in net derivative losses of $90 million in fiscal 2021 and net derivative gains of $70 million in fiscal 2020, which were offset by the impacts of related physical purchase transactions.
Chicken Segment Results in millions
6 unchanged sentences
Operating Margin (4.5) % 5.6 % (4.6) %
+Added: • Sales Volume – Sales volume increased primarily due to improved domestic production and the sell-through of inventory, partially offset by strategic initiative mix impacts.
+Added: • Average Sales Price – Average sales price decreased due to the challenging market conditions.
+Added: The change in average sales price for the fiscal 2023 excludes the impact of a $156 million reduction of Sales from the recognition of legal contingency accruals.
+Added: • Operating Income (Loss) – Operating income decreased in fiscal 2023 primarily due to the impacts of inflationary market conditions as well as operational impacts associated with strategic decisions in the first half of fiscal 2023.
+Added: Operating income in fiscal 2023 was impacted by $300 million of higher feed ingredient costs and $80 million of net derivative losses as compared to $195 million of net derivative gains in fiscal 2022.
+Added: Operating income in fiscal 2023 was impacted by $322 million in plant closure charges, $210 million of goodwill impairment charges, $156 million in legal contingency accruals and $16 million in restructuring and related charges, offset by $11 million of insurance proceeds, net of costs incurred associated with a production facility fire in fiscal 2021.
• Sales Volume – Sales volume increased primarily due to improved domestic production partially offset by inventory growth and strategic initiative mix impacts.
4 unchanged sentences
Operating income in fiscal 2021 was impacted by $626 million of losses from the recognition of legal contingency accruals and $23 million of expenses related to a fire at a production facility.
−Removed: • Sales Volume – Sales volume decreased from the impacts associated with a decline in hatch rate, a challenging labor environment, disruptions due to severe weather in the second quarter of fiscal 2021 and an additional week in fiscal 2020.
−Removed: • Average Sales Price – Average sales price increased due to favorable sales mix and inflationary market conditions.
−Removed: The change in average sales price for fiscal 2021 excludes a $545 million reduction of Sales from the recognition of legal contingency accruals.
−Removed: • Operating Income (Loss) – Operating income decreased primarily due to a $626 million loss from the recognition of legal contingency accruals, $735 million of higher feed ingredient costs as compared to fiscal 2020, increased supply chain costs, $23 million of expenses related to a fire at a production facility, decline in hatch rate and disruptions due to severe weather, partially offset by favorable product mix, reduced direct incremental expense associated with COVID-19 and $65 million of net derivative gains in fiscal 2021 as compared to $50 million of net derivative losses in fiscal 2020.
Prepared Foods Segment Results in millions
6 unchanged sentences
Operating Margin 8.4 % 7.7 % 16.4 %
+Added: • Sales Volume – Sales volume increased slightly for fiscal 2023 as increased retail volumes were partially offset by a reduction in foodservice volumes.
+Added: • Average Sales Price – Average sales price increased due to the effects of revenue management in an inflationary cost environment and favorable product mix.
+Added: • Operating Income – Operating income increased in fiscal 2023 driven by higher average sales prices and a $45 million reduction in raw material costs, partially offset by increased marketing, advertising and promotion spend.
+Added: Operating income in fiscal 2023 was impacted by $17 million of product line discontinuation charges and $49 million of restructuring and related charges.
• Sales Volume – Sales volume decreased in fiscal 2022 due to the impacts of uneven foodservice recovery, the divestiture of our pet treats business in the fourth quarter of fiscal 2021, increased pricing and a challenging supply environment impacting the first half of fiscal 2022.
3 unchanged sentences
Additionally, operating income in fiscal 2022 was impacted by $36 million of restructuring and related charges.
−Removed: • Sales Volume – Sales volume decreased driven by lower production throughput primarily associated with a challenging labor and supply environment, reduced foodservice demand in the first half of fiscal 2021 and the impact of an additional week in fiscal 2020.
−Removed: • Average Sales Price – Average sales price increased due to favorable product mix and inflation-justified pricing.
−Removed: • Operating Income – Operating income increased due to the recognition of a $784 million gain on the sale of our pet treats business, lower commercial spend as well as favorable pricing and product mix.
−Removed: These impacts were partially offset by the impact of inflationary market conditions including a $520 million increase in raw material and other input costs during fiscal 2021, increased supply chain costs and a challenging labor environment.
International/Other Results in millions
3 unchanged sentences
Operating Income (Loss) (218) 14 (232) (3) 17
+Added: • Sales – Sales increased due to volume growth and pricing actions to offset the high inflationary cost environment, which was partially offset by foreign exchange rate movements.
+Added: • Operating Loss – Operating income (loss) decreased in fiscal 2023 due to a $238 million goodwill impairment.
• Sales – Sales increased due to volume growth and higher pricing in an inflationary cost environment.
• Operating Loss – Operating income increased primarily due to $27 million of charges incurred in 2021 related to the relocation of a production facility in China which did not recur in fiscal 2022, partially offset by the impacts of global inflationary market conditions.
−Removed: • Sales – Sales increased due to increased pricing from favorable product mix.
−Removed: • Operating Loss – Operating loss increased slightly due to a $27 million charge related to the relocation of a production facility in China, partially offset by improved results in our international operations in fiscal 2021.
LIQUIDITY AND CAPITAL RESOURCES
8 unchanged sentences
Cash Flows from Operating Activities in millions
−Removed: Net income $ 3,249 $ 3,060
−Removed: Non-cash items in net income:
+Added: Net income (loss) $ (649) $ 3,249
+Added: Non-cash items in net income (loss):
Depreciation and amortization 1,339 1,202
Deferred income taxes (183) 264
−Removed: Gain on disposition of business — (784)
−Removed: Impairment of assets 34 60
+Added: Impairment of goodwill 781 —
+Added: Impairments and disposals of assets 101 34
Stock-based compensation expense 61 93
2 unchanged sentences
Net cash provided by operating activities $ 1,752 $ 2,687
−Removed: • Gain on disposition of business related to the sale of our pet treats business in fiscal 2021.
−Removed: For further description, refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3:
−Removed: Acquisitions and Dispositions.
−Removed: • The remaining decrease in net cash provided by operating activities was due to higher payments related to income taxes, legal accruals and deferred payroll tax liabilities under the CARES Act and an increase in inventory primarily due to increased finished inventory, partially offset by a decrease in accounts receivable and higher earnings as a result of strong operations in fiscal 2022.
−Removed: • In fiscal 2023, we anticipate a net cash outflow related to changes in our operating assets and liabilities as we grow our business in addition to inflationary market conditions.
+Added: • The decrease in net cash provided by operating activities was primarily due to lower earnings as a result of operations and a decrease in Accounts Payable, offset by decreases in legal, annual incentive and tax payments, decreases in Accounts Receivable and Inventory, and an increase in insurance proceeds received.
Cash Flows from Investing Activities in millions
1 unchanged sentence
(Purchases of)/Proceeds from marketable securities, net (2) (1)
−Removed: Proceeds from sale of businesses — 1,188
+Added: Acquisitions, net of cash acquired (262) —
Acquisition of equity investments (115) (177)
Other, net 19 130
−Removed: Net cash provided by (used for) investing activities $ (1,935) $ 58
−Removed: • Additions to property, plant and equipment included spending for production growth, safety and animal well-being, acquiring new equipment, infrastructure replacements and upgrades to maintain competitive standing and position us for future opportunities.
−Removed: • Approximately $2.4 billion will be necessary to complete buildings and equipment under construction at October 1, 2022.
−Removed: • Capital spending for fiscal 2023 is expected to approximate $2.5 billion and will include spending for capacity expansion and utilization, automation to alleviate labor challenges and brand and product innovation.
−Removed: • Proceeds from sale of businesses related to the proceeds received from sale of our pet treats business in fiscal 2021.
−Removed: For further description refer to Part II, Item 8, notes to the Consolidated Financial Statements, Note 3:
−Removed: Acquisitions and Dispositions.
−Removed: • Acquisition of equity investments for fiscal 2022 included the purchase of 35% minority interest in a South American-based fully integrated poultry company.
+Added: Net cash used for investing activities $ (2,299) $ (1,935)
+Added: • Additions to property, plant and equipment included spending for production growth, safety and animal well-being, new equipment, infrastructure replacements and upgrades to maintain competitive standing and position us for future opportunities.
+Added: • Approximately $1.3 billion will be necessary to complete buildings and equipment under construction at September 30, 2023.
+Added: • We expect capital expenditures between $1 billion and $1.5 billion for fiscal 2024.
+Added: Capital expenditures include investments in profit improvement projects as well as projects for maintenance and repair.
+Added: This includes completion of capacity expansion projects as well as new equipment, automation technology and processes for product innovation.
+Added: • Acquisitions, net of cash for fiscal 2023 included $223 million, net of cash acquired, for our acquisition of Williams Sausage Company and $39 million for the 60% equity stake in Supreme Foods Processing Company, a producer and distributor of value-added and cooked chicken and beef products.
+Added: • Acquisition of equity investments for fiscal 2023 primarily included:
+Added: the purchase of minority interest in a global insect-based ingredients company;
+Added: the purchase of a minority interest in a fully integrated poultry company in the Middle East that produces broiler chickens and operates hatcheries and feed mills;
+Added: and deferred payments related to prior year equity method investment.
+Added: • Acquisition of equity investments for fiscal 2022 included the purchase of a minority interest in a South American-based fully integrated poultry company.
+Added: • Other, net for fiscal 2023 primarily included insurance proceeds received related to fires at our production facilities.
Other, net for fiscal 2022 primarily included insurance proceeds received related to fires at our production facilities, proceeds from the disposition of assets and changes in deposits for capital expenditures.
−Removed: Other, net for fiscal 2021 primarily included changes in deposits for capital expenditures.
Cash Flows from Financing Activities in millions
1 unchanged sentence
Payments on debt (603) (1,191)
+Added: Proceeds from issuance of commercial paper 7,693 —
+Added: Repayments of commercial paper (7,103) —
Purchases of Tyson Class A common stock (354) (702)
2 unchanged sentences
Other, net (16) (6)
−Removed: Net cash used for financing activities $ (2,323) $ (2,731)
−Removed: • During fiscal 2021, proceeds of $585 million from issuance of debt included $500 million of proceeds from the issuance of a term loan facility due March 2023.
+Added: Net cash provided by (used for) financing activities $ 88 $ (2,323)
+Added: • During fiscal 2023, proceeds from issuance of debt included $1 billion of proceeds from the issuance of a term loan facility due May 2026.
• Payments on debt included:
+Added: • 2023 – In September 2023, we extinguished the $400 million outstanding balance of our senior notes due September 2023.
• 2022 – In March 2022, we extinguished the $1 billion outstanding balance of our senior notes due June 2022.
−Removed: • 2021 – During fiscal 2021, we extinguished the $1.5 billion outstanding balance of our term loan facility using proceeds received from the issuance of debt and cash on hand.
−Removed: On July 23, 2021, we redeemed the $500 million outstanding balance of the Senior Notes due August 2021 using cash on hand.
−Removed: On September 30, 2021, we used cash on hand to repay in full the $500 million term loan facility due March 2023.
• Purchases of Tyson Class A common stock included:
−Removed: • $587 million of cash paid for shares repurchased pursuant to our share repurchase program in fiscal 2022.
+Added: • $300 million and $587 million of cash paid for shares repurchased pursuant to our share repurchase program in fiscal 2023 and 2022, respectively.
• $54 million and $115 million for shares repurchased to fund certain obligations under our equity compensation plans in fiscal 2023 and 2022, respectively.
3 unchanged sentences
Amount Outstanding Letters of Credit (no draw downs) Amount
−Removed: Borrowed Amount Available at October 1, 2022
+Added: Borrowed Amount Available at September 30, 2023
Cash and cash equivalents $ 573
Short-term investments 15
+Added: Term loan facility May 2026 $ 1,000 $ — $ 1,000 —
+Added: Term loan facility May 2028 750 — — 750
Revolving credit facility September 2026 2,250 — — 2,250
1 unchanged sentence
Total liquidity $ 2,996
−Removed: • Liquidity includes cash and cash equivalents, short-term investments, and availability under our revolving credit facility, less outstanding commercial paper balance.
−Removed: • At October 1, 2022, we had current debt of $459 million, which we intend to pay with cash generated from our operating activities and other existing or new liquidity sources.
+Added: • Liquidity includes cash and cash equivalents, short-term investments, and availability under our revolving credit and term loan facilities, less the outstanding commercial paper balance.
+Added: • At September 30, 2023, we had current debt of $1,895 million, which we intend to pay with cash generated from our operating activities and other existing or new liquidity sources.
+Added: • In fiscal 2023, we executed two new term loan facilities totaling $1.75 billion to refinance our short-term promissory notes ("commercial paper program") and for general corporate purposes.
+Added: The first term loan facility totaling $1.0 billion matures on May 3, 2026 and we borrowed the full $1.0 billion available under this loan facility.
+Added: The second term loan facility totaling $750 million matures on May 3, 2028 and at September 30, 2023, we had no outstanding borrowings under this facility.
+Added: In November 2023, we borrowed the full $750 million available under the second term loan facility to refinance the outstanding commercial paper and for general corporate purposes.
• The revolving credit facility supports our short-term funding needs and also serves to backstop our commercial paper program.
2 unchanged sentences
• We expect net interest expense will approximate $400 million for fiscal 2024.
−Removed: • Our ratio of short-term assets to short-term liabilities (“current ratio”) was 1.8 to 1 and 1.6 to 1 at October 1, 2022, and October 2, 2021, respectively.
−Removed: The increase in fiscal 2022 was primarily due to increased accounts receivable and inventories and decreased current debt and legal contingency accruals, partially offset by decreased cash and cash equivalents and increased accounts payable.
−Removed: • At October 1, 2022, $465 million of our cash was held in the international accounts of our foreign subsidiaries.
+Added: • Our ratio of short-term assets to short-term liabilities (“current ratio”) was 1.3 to 1 and 1.8 to 1 at September 30, 2023, and October 1, 2022, respectively.
+Added: The decrease in fiscal 2023 was primarily due to decreased cash and cash equivalents and increased current debt.
+Added: • At September 30, 2023, $539 million of our cash was held in the international accounts of our foreign subsidiaries.
Generally, we do not rely on the foreign cash as a source of funds to support our ongoing domestic liquidity needs.
3 unchanged sentences
Capital Resources
−Removed: Credit Facility
+Added: Credit and Term Loan Facilities
Cash flows from operating activities and cash on hand are our primary sources of liquidity for funding debt service, capital expenditures, dividends and share repurchases.
We also have a revolving credit facility, with a committed capacity of $2.25 billion, to provide additional liquidity for working capital needs and to backstop our commercial paper program.
−Removed: At October 1, 2022, amounts available for borrowing under our revolving credit facility totaled $2.25 billion.
+Added: Additionally, we have $1.75 billion in committed term loan facilities of which $1.0 billion was drawn upon as of September 30, 2023.
+Added: At September 30, 2023, amounts available for borrowing under our revolving credit and term loan facilities totaled $3.0 billion.
Our revolving credit facility is funded by a syndicate of 20 banks, with commitments ranging from $35 million to $175 million per bank.
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The maturities of the notes may vary, but may not exceed 397 days from the date of issuance.
−Removed: As of October 1, 2022, we had no commercial paper outstanding under this program.
+Added: As of September 30, 2023, we had $592 million commercial paper outstanding under this program with maturities less than 20 days.
Our ability to access commercial paper in the future may be limited or its costs increased.
2 unchanged sentences
We monitor the ratio of our net debt to EBITDA as support for our long-term financing decisions.
−Removed: At October 1, 2022, and October 2, 2021, the ratio of our net debt to EBITDA was 1.3x and 1.2x, respectively.
+Added: At September 30, 2023, and October 1, 2022, the ratio of our net debt to EBITDA was 9.1x and 1.3x, respectively.
Refer to Other Key Financial Measures below for an explanation and reconciliation to comparable Generally Accepted Accounting Principles (“GAAP ” ) measures.
+Added: The increase in this ratio at September 30, 2023 is due to an increase in net debt of $1,629 million and a decrease of $4,712 million in EBITDA.
Credit Ratings
+Added: Term Loan Facility due May 2028
+Added: Standard & Poor’s Rating Services’, a Standard & Poor’s Financial Services LLC business (“S&P”), applicable rating is “BBB+”.
+Added: Moody’s Investor Service, Inc.’s (“Moody’s”) applicable rating is “Baa2”.
+Added: The below table outlines the commitment fee on any unused borrowing capacity and the borrowing spread on the outstanding principal balance of our term loan facility due May 2028 that corresponds to the applicable ratings levels from S&P and Moody’s.
+Added: Ratings Level (Moody’s/S&P) Commitment Fee Borrowing Spread
+Added: Baal/BBB+ or above (current level) 0.100 % 1.625 %
+Added: Baa2/BBB 0.125 % 1.750 %
+Added: Baa3/BBB- or lower 0.175 % 1.875 %
+Added: Term Loan Facility due May 2026
+Added: S&P applicable rating is “BBB+” and Moody’s applicable rating is “Baa2”.
+Added: The below table outlines the borrowing spread on the outstanding principal balance of our term loan facility due May 2026 that corresponds to the applicable ratings levels from S&P and Moody’s.
+Added: Ratings Level (Moody’s/S&P) Borrowing Spread
+Added: A2/A or above 0.875 %
+Added: A3/A- 1.000 %
+Added: Baal/BBB+ (current level) 1.125 %
+Added: Baa2/BBB 1.250 %
+Added: Baa3/BBB- or lower 1.375 %
Revolving Credit Facility
8 unchanged sentences
Debt Covenants
−Removed: Our revolving credit facility contains affirmative and negative covenants that, among other things, may limit or restrict our ability to:
+Added: Our revolving credit and term loan facilities contain affirmative and negative covenants that, among other things, may limit or restrict our ability to:
create liens and encumbrances;
10 unchanged sentences
and engage in certain consolidations, mergers and sales of assets.
−Removed: We were in compliance with all debt covenants at October 1, 2022 and expect that we will maintain compliance.
+Added: We were in compliance with all debt covenants at September 30, 2023 and expect that we will maintain compliance.
Pension Plans
11 unchanged sentences
CONTRACTUAL OBLIGATIONS
−Removed: The following table summarizes our contractual obligations as of October 1, 2022 (in millions):
+Added: The following table summarizes our contractual obligations as of September 30, 2023 (in millions):
Payments Due by Period
16 unchanged sentences
(2) Interest payments include interest on all outstanding debt.
−Removed: Payments are estimated for variable rate and variable term debt based on effective interest rates at October 1, 2022, and expected payment dates.
+Added: Payments are estimated for variable rate and variable term debt based on effective interest rates at September 30, 2023, and expected payment dates.
(3) Amounts include guarantees of obligations related to certain outside third parties, which consist of leases, debt and livestock grower loans, all of which are substantially collateralized by the underlying assets, as well as residual value guarantees covering certain operating leases for various types of equipment.
6 unchanged sentences
The purchase obligations amount included items, such as future purchase commitments for grains and livestock purchase contracts, that provide terms that meet the above criteria.
−Removed: For certain grain purchase commitments with a fixed quantity provision, we have assumed the future obligations under the commitment based on available commodity futures prices as published in observable active markets as of October 1, 2022.
+Added: For certain grain purchase commitments with a fixed quantity provision, we have assumed the future obligations under the commitment based on available commodity futures prices as published in observable active markets as of September 30, 2023.
We have excluded future purchase commitments for contracts that do not meet these criteria.
1 unchanged sentence
Contracts for goods or services that contain termination clauses without penalty have also been excluded.
−Removed: (6) Amounts include estimated amounts to complete buildings and equipment under construction as of October 1, 2022.
+Added: (6) Amounts include estimated amounts to complete buildings and equipment under construction as of September 30, 2023.
(7) Other long-term liabilities primarily consist of deferred compensation, deferred income, self-insurance and asset retirement obligations.
4 unchanged sentences
Pensions and Other Postretirement Benefits.
−Removed: In addition to the amounts shown above in the table, we have unrecognized tax benefits of $130 million and related interest and penalties of $47 million at October 1, 2022, recorded in Other long-term liabilities.
−Removed: The potential maximum contractual obligation associated with our cash flow assistance programs at October 1, 2022, based on the estimated fair values of the livestock supplier’s net tangible assets on that date, aggregated to approximately $290 million.
−Removed: After analyzing residual credit risks and general market conditions, we had no allowance for these programs' estimated credit losses at October 1, 2022.
+Added: In addition to the amounts shown above in the table, we have unrecognized tax benefits of $117 million and related interest and penalties of $50 million at September 30, 2023, recorded in Other long-term liabilities.
+Added: The potential maximum contractual obligation associated with our cash flow assistance programs at September 30, 2023, based on the estimated fair values of the livestock supplier’s net tangible assets on that date, aggregated to approximately $295 million.
+Added: After analyzing residual credit risks and general market conditions, we have recorded an $8 million allowance for these programs' estimated credit losses at September 30, 2023.
OTHER KEY FINANCIAL MEASURES
−Removed: The following are other key financial measures used by the Company for the purposes of assessing performance and highlighting operational trends as well as our ability to generate earnings sufficient to service out debt:
+Added: The following are other key financial measures used by the Company for the purposes of assessing performance and highlighting operational trends as well as our ability to generate earnings sufficient to service our debt:
in millions, except ratio data
2023 2022 2021
−Removed: Net income $ 3,249 $ 3,060 $ 2,071
+Added: Net income (loss) $ (649) $ 3,249 $ 3,060
Interest income (30) (17) (8)
Interest expense 355 365 428
−Removed: Income tax expense 900 981 593
+Added: Income tax expense (benefit) (29) 900 981
Depreciation 1,100 945 934
12 unchanged sentences
(a) Excludes the amortization of debt issuance and debt discount expense of $10 million, $11 million, $19 million for fiscal 2023, 2022 and 2021, respectively, as it is included in Interest expense.
−Removed: (b) Return on invested capital is calculated by dividing after-tax operating income, calculated by applying the Company’s effective tax rate to operating income, by the average of beginning and ending total debt and shareholders’ equity less cash and cash equivalents.
+Added: (b) Return on invested capital is calculated by dividing after-tax operating income (loss), calculated by applying the Company’s effective tax rate to operating income (loss), by the average of beginning and ending total debt and shareholders’ equity less cash and cash equivalents.
(c) For the total debt to capitalization calculation, capitalization is defined as total debt plus total shareholders’ equity.
(d) Book value per share is calculated by dividing shareholders’ equity by the sum of Class A and B shares outstanding.
−Removed: EBITDA is defined as net income before interest, income taxes, depreciation and amortization.
+Added: EBITDA is defined as net income (loss) before interest, income taxes, depreciation and amortization.
Net debt to EBITDA represents the ratio of our debt, net of cash and short-term investments, to EBITDA.
27 unchanged sentences
As set forth in Part II, Item 8, Notes to the Consolidated Financial Statements, Note 20:
−Removed: Commitments and Contingencies, we recognized $626 million of charges in fiscal 2021 from legal accruals related to our broiler antitrust civil litigation, broiler chicken grower litigation, and wage rate litigation based on our assessment of the likelihood and amount of probable losses.
+Added: Commitments and Contingencies, we recognized $156 million and $626 million of charges in fiscal 2023 and 2021, respectively, from legal accruals related to our broiler antitrust civil litigation, broiler chicken grower litigation, and wage rate litigation based on our assessment of the likelihood and amount of probable losses.
We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate our contingent liabilities.
29 unchanged sentences
However, if actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material.
−Removed: A 10% change in the actuarial estimate at October 1, 2022, would not have a significant impact on our liability.
+Added: A 10% change in the actuarial estimate at September 30, 2023, would not have a significant impact on our liability.
We estimate total income tax expense based on statutory tax rates and tax planning opportunities available to us in various jurisdictions in which we earn income.
−Removed: Income tax includes an estimate for withholding taxes on earnings of foreign subsidiaries expected to be remitted to the United States but does not include an estimate for taxes on earnings considered to be indefinitely invested in the foreign subsidiary.
+Added: Income tax includes an estimate for withholding taxes on earnings of foreign subsidiaries expected to be remitted but does not include an estimate for taxes on earnings considered to be indefinitely invested in the foreign subsidiary.
Deferred income taxes are recognized for the future tax effects of temporary differences between financial and income tax reporting using tax rates in effect for the years in which the differences are expected to reverse.
44 unchanged sentences
However, if actual results are not consistent with our estimates or assumptions, they are accumulated and amortized over future periods and, therefore generally affect the net periodic benefit cost in future periods.
−Removed: A 1% change in the discount rate at October 1, 2022, would not have a significant impact on the projected benefit obligation or net periodic benefit cost.
−Removed: A 1% change in the return on plan assets at October 1, 2022, would not have a significant impact on net periodic benefit cost.
+Added: A 1% change in the discount rate at September 30, 2023, would not have a significant impact on the projected benefit obligation or net periodic benefit cost.
+Added: A 1% change in the return on plan assets at September 30, 2023, would not have a significant impact on net periodic benefit cost.
The sensitivities reflect the impact of changing one assumption at a time with the remaining assumptions held constant.
1 unchanged sentence
Impairment of goodwill and indefinite life intangible assets
−Removed: Goodwill is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary.
−Removed: If it is determined, based on qualitative factors, the fair value of the reporting unit may be more likely than not less than its carrying amount or if significant changes to macro-economic factors related to the reporting unit have occurred that could materially impact fair value, a quantitative goodwill impairment test would be required.
+Added: Goodwill and indefinite life intangible assets are evaluated for impairment annually or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit or indefinite life intangible asset is less than its carrying amount.
+Added: We have elected to make the first day of the fourth quarter the annual impairment assessment date for goodwill and indefinite life intangible assets.
+Added: However, we could be required to evaluate the recoverability of goodwill and indefinite life intangible assets outside of the required annual assessment if, among other things, we experience disruptions to the business, unexpected significant declines in operating results, divestiture of a significant component of the business, sustained decline in market capitalization or significant changes in macro-economic factors such as increased interest and discount rates.
+Added: We evaluate goodwill for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary.
+Added: If it is determined, based on qualitative factors, the fair value of the reporting unit may more likely than not be less than its carrying amount or if significant changes to macro-economic factors related to the reporting unit have occurred that could materially impact fair value, a quantitative goodwill impairment test would be required.
The quantitative test compares the fair value of a reporting unit with its carrying amount.
4 unchanged sentences
Upon performing the quantitative test, if the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
−Removed: We have elected to make the first day of the fourth quarter the annual impairment assessment date for goodwill and indefinite life intangible assets.
−Removed: However, we could be required to evaluate the recoverability of goodwill and indefinite life intangible assets outside of the required annual assessment if, among other things, we experience disruptions to the business, unexpected significant declines in operating results, divestiture of a significant component of the business or a sustained decline in market capitalization or significant changes in macro-economic factors such as increased interest and discount rates.
Judgments and Uncertainties
1 unchanged sentence
We include assumptions about sales growth, operating margins, discount rates and valuation 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.
−Removed: Assumptions are also made for varying perpetual growth rates for periods beyond the long-term business plan period.
−Removed: Generally, we utilize operating margin assumptions based on future expectations, operating margins historically realized in the reporting units’ industries and industry marketplace valuation multiples.
−Removed: All of our material reporting units' estimated fair values exceeded their carrying values by more than 20% at the date of the most recent estimated fair value determination other than one Chicken segment reporting unit and two International reporting units.
−Removed: One of our Chicken segment reporting units had goodwill at October 1, 2022 of $0.6 billion.
−Removed: The reporting unit's projected operating margins included in the annual impairment test in fiscal 2022 averaged approximately 5%, which was consistent with the reporting unit's fiscal 2022 performance.
−Removed: Additionally, a hypothetical increase in the discount rate of approximately 100 basis points at the date of the 2022 test, with all other assumptions unchanged, would have caused the carrying value of this reporting unit to approximate its fair value.
−Removed: Our International reporting units, which are presented in International/Other for segment presentation, had goodwill at October 1, 2022 of $0.4 billion, which originated from acquisitions in fiscal 2019 and fiscal 2018.
−Removed: We generally assumed operating margins in future years would increase as we continue to integrate recent acquisitions and implement our international growth strategy, as we believe this is consistent with market participant views in an exit transaction.
−Removed: Had we assumed future operating margins consistent with those realized in the current fiscal year, two reporting units with goodwill totaling $0.2 billion at October 1, 2022 would have failed the quantitative step of the annual impairment test, which may have resulted in a goodwill impairment loss.
−Removed: We are still integrating the recent acquisitions and investing in our international and global business strategy, in addition to managing through the temporary impacts of COVID-19.
−Removed: The reporting units' projected long-term operating margins included in the annual impairment test in fiscal 2022 had to exceed an average of 4% to achieve breakeven results in the analysis.
−Removed: A hypothetical increase in the discount rates of approximately 50 basis points, with all other assumptions unchanged, at the date of the test would have caused the carrying values of the International reporting units to approximate their fair values.
+Added: Assumptions are also made for varying growth rates for periods beyond the long-term business plan period.
+Added: Generally, we utilize operating margin assumptions based on future expectations, macro-economic trends, operating margins historically realized in the reporting units’ industries and industry marketplace valuation multiples.
+Added: We consider reporting units that have 20% or less excess fair value over carrying amount to have a heightened risk of impairment.
+Added: Our fiscal 2022 and 2021 goodwill impairment analyses did not result in impairment charges.
+Added: During the third quarter of fiscal 2023, we experienced lower than previously anticipated operating results and changing market fundamentals, as well as a drop in our market capitalization to below book value.
+Added: Consequently, based on our qualitative assessment, we determined it was necessary to perform a quantitative assessment for all of our reporting units.
+Added: Based on this assessment, we determined that all of our reporting units’ estimated fair values exceeded their carrying values other than one of our Chicken segment reporting units and two of our International/Other reporting units.
+Added: For these reporting units, we recognized a $448 million goodwill impairment charge including $210 million to partially impair the goodwill of a Chicken segment reporting unit and $238 million to fully impair the goodwill of two of our International/Other reporting units.
+Added: We performed our annual impairment assessment as of the first day of our fourth quarter of fiscal 2023 and determined it was necessary to perform quantitative assessments for our Beef, Pork and two Chicken segment reporting units, as all of these reporting units were at heightened risk of impairment following the third quarter assessment.
+Added: Based on this assessment, we determined that our Beef, Pork and two Chicken reporting units’ estimated fair values exceeded their carrying value, and thus, it did not result in any additional goodwill impairments.
+Added: However, during the fourth quarter of fiscal 2023, we experienced an increase in long-term treasury rates which caused a net 50 basis point increase in the discount rates used in estimating the fair value of the reporting units.
+Added: Consequently, because of our qualitative assessment, we determined it was necessary to perform a quantitative assessment for our Beef, Pork and two Chicken segment reporting units as of September 30, 2023.
+Added: Based on this quantitative assessment, we determined that our Pork and two Chicken segment reporting units' estimated fair values exceeded their carrying values.
+Added: The fair value of our Beef reporting unit, which had $676 million of goodwill at the time of the assessment, did not exceed its carrying value.
+Added: For the Beef reporting unit, the increased discount rate resulted in a decrease in its estimated fair value to below its carrying value.
+Added: Accordingly, we recognized a $333 million goodwill impairment charge to partially impair its goodwill.
+Added: Following the September 30, 2023 assessment, our Beef, Pork and two Chicken segment reporting units, with total goodwill of approximately $3.8 billion, are at heightened risk of impairment.
+Added: Our Beef segment reporting unit had goodwill of $0.3 billion at September 30, 2023, after the impairment.
+Added: In estimating its fair value, we generally assumed operating margins in future years would normalize over time as we believe this is consistent with market participant views in an exit transaction.
+Added: The current year results are not indicative of future market participant expectations in an exit transaction primarily due to challenging market conditions associated with lower cattle supplies which impacts we expect to be mostly temporary in nature.
+Added: The Beef reporting unit's goodwill was written down to its fair value resulting in no excess fair value over carrying amount as of September 30, 2023.
+Added: Any increase in the discount rate or reduced estimated long-term operating margins to below 2.0%-3.0% (breakeven), with all other assumptions unchanged, would have caused the carrying value of this reporting unit to exceed its fair value, which may have resulted in an additional material goodwill impairment loss.
+Added: Our Pork segment reporting unit had goodwill at September 30, 2023 of $0.4 billion.
+Added: We generally assumed operating margins in future years would normalize over time as we believe this is consistent with market participant views in an exit transaction.
+Added: Had we assumed future operating margins consistent with those in fiscal 2023, we would have failed the impairment quantitative tests, which may have resulted in material goodwill impairment losses.
+Added: The current year results are not indicative of future market participant expectations in an exit transaction primarily due to challenging market conditions associated with higher availability of live hogs supplies during a period of reduced global demand and compressed pork margins which impacts we expect to be mostly temporary in nature.
+Added: To pass the impairment quantitative tests, projected long-term operating margins, utilizing the discounted cash flow method, had to average approximately 4.0%-5.0% (breakeven).
+Added: Additionally, a hypothetical increase in the discount rate of approximately 10-25 basis points at September 30, 2023, with all other assumptions unchanged, would have caused the carrying value of this reporting unit to exceed its fair value, which may have resulted in a material goodwill impairment loss.
+Added: Our Chicken segment reporting units had goodwill at September 30, 2023 of $3.1 billion.
+Added: We generally assumed operating margins in future years would normalize over time as we believe this is consistent with market participant views in an exit transaction.
+Added: Had we assumed future operating margins consistent with those realized in fiscal 2023, we would have failed the impairment quantitative test, which may have resulted in material goodwill impairment losses.
+Added: The current year results are not indicative of future market participant expectations in an exit transaction primarily due to challenging market conditions associated with excess domestic supply impacts, losses incurred associated with derivatives, legal contingencies, and restructuring, which impacts we expect to be mostly temporary in nature.
+Added: To pass the impairment quantitative test, projected long-term operating margins, utilizing the discounted cash flow method, had to average approximately 5.0%-6.0% (breakeven).
+Added: Additionally, a hypothetical increase in the discount rate of approximately 25-50 basis points at September 30, 2023, with all other assumptions unchanged, would have caused the carrying values of the Chicken segment's reporting units to approximate its fair value, which may have resulted in a material goodwill impairment loss.
+Added: Our remaining reporting units had goodwill of $6.0 billion at September 30, 2023, and were not considered at heightened risk of impairment as of the date of its most recent estimated fair value determination which was in the third quarter of fiscal 2023.
+Added: A hypothetical increase in the discount rate of approximately 125-150 basis points as of the date of its most recent estimated fair value determination, with all other assumptions unchanged, would have caused the carrying value of the Prepared Foods reporting unit, with goodwill of $5.9 billion at September 30, 2023, to approximate its fair value.
+Added: Discount rates utilized in the discounted cash flow method have increased approximately 50 basis points since the third quarter of fiscal 2023 assessment through September 30, 2023.
The fair value of our indefinite life intangible assets is calculated principally using multi-period excess earnings and relief-from-royalty valuation approaches, which uses 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.
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.
−Removed: Our impairment analysis contains uncertainties due to uncontrollable events and assumptions, many of which are outside the control of management, which could positively or negatively impact the anticipated future economic and operating conditions.
+Added: We consider indefinite life intangible assets that have 20% or less excess fair value over carrying amount to have a heightened risk of impairment.
+Added: Our fiscal 2023, 2022, and 2021 indefinite life intangible assets impairment analyses did not result in an impairment charge.
+Added: All of our indefinite life intangible assets estimated fair values exceeded their carrying values by more than 20% at the date of the most recent estimated fair value determination, which was in the annual assessment as of the beginning of the fourth quarter of fiscal 2023, other than two of our Prepared Foods brands with carrying values of $0.5 billion and $0.3 billion at September 30, 2023.
+Added: For the brand with a carrying value $0.5 billion, a hypothetical increase in the discount rate of approximately 50 basis points as of the date of the most recent estimated fair value, with all other assumptions unchanged, would have caused the carrying value to approximate its fair value.
+Added: For the brand with a carrying value $0.3 billion, a hypothetical increase in the discount rate of approximately 100 basis points as of the date of the most recent estimated fair value, with all other assumptions unchanged, would have caused the carrying value to approximate its fair value.
+Added: We generally assumed operating margins and growth rates in future years would normalize over time as we believe this is consistent with market participant views in an exit transaction.
+Added: Had we assumed future operating margins and growth rates consistent with those realized in fiscal 2023, we would have failed the impairment quantitative test, which may have resulted in material impairment losses.
+Added: The current year results are not indicative of future market participant expectations in an exit transaction primarily due to the impacts of rapid inflationary pressures and volatile market conditions which impacts we expect to be mostly temporary in nature.
+Added: We do not currently consider any of our other indefinite life intangible assets, which had aggregate carrying value of $3.3 billion at September 30, 2023, to be at heightened risk of impairment.
Effect if Actual Results Differ From Assumptions
We have not made material changes in the accounting methodology used to evaluate impairment of goodwill and intangible assets during the last three years.
−Removed: During fiscal 2022, 2021 and 2020, all of our material reporting units and indefinite life intangible assets passed the impairment analysis.
Our impairment analysis contains inherent estimates and assumptions, many of which are outside the control of management including interest rates, cost of capital, tax rates, market EBITDA comparables and credit ratings, which could positively or negatively impact the anticipated future economic and operating conditions.
The assumptions and estimates used in determining fair value require considerable judgement and are sensitive to changes in underlying assumptions.
−Removed: These assumptions can change in future periods as a result of overall economic conditions, including the impacts of inflationary pressures, increased interest and discount rates and global supply chain constraints, amongst others.
+Added: These assumptions can change in future periods as a result of overall economic conditions, including the impacts of inflationary pressures, increased interest and discount rates, global supply chain constraints and decreased market capitalization, amongst others.
As a result, there can be no assurance that estimates and assumptions made for the purpose of assessing impairments will prove to be an accurate prediction of the future.
−Removed: Potential circumstances that could have a negative effect on the fair value of our reporting units include, but are not limited to, lower than forecasted growth rates or operating margins and changes in discount rates.
−Removed: A reduction in the estimated fair value of the reporting units could trigger an impairment in the future.
−Removed: We cannot predict the occurrence of certain events or changes in circumstances that might adversely affect the carrying value of our goodwill and indefinite lived assets.
−Removed: 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 one Chicken segment reporting unit and two International reporting units.
−Removed: Consequently, we do not currently consider any of our other material reporting units at significant risk of impairment.
−Removed: Our fiscal 2022, 2021, and 2020 indefinite life intangible assets impairment analyses did not result in an impairment charge.
−Removed: All indefinite life intangible assets’ estimated fair value exceeded their carrying value by more than 20% at the date of their most recent estimated fair value determination.
−Removed: Consequently, we do not currently consider any of our material indefinite life intangible assets at significant risk of impairment.
−Removed: We evaluated the changing macro-economic conditions that occurred in the fourth quarter subsequent to the date of our annual impairment assessment, including inflationary pressures, rising interest rates, demand outlook and export markets as well as the Company’s decreased market capitalization.
−Removed: Based on this evaluation, we did not identify additional risk of our goodwill reporting units and indefinite life intangible assets in which estimated fair value did not exceed their carrying value by more than 20% as of October 1, 2022, other than the one Chicken segment reporting unit and two International reporting units previously described.
+Added: Potential circumstances that could have a negative effect on the fair value of our reporting units and indefinite life intangible assets include, but are not limited to, lower than forecasted growth rates or operating margins and changes in discount rates.
+Added: A reduction in the estimated fair value of the reporting units and indefinite life intangible assets could trigger an impairment in the future.
+Added: We cannot predict the occurrence of certain events or changes in circumstances that might adversely affect the carrying value of our goodwill and indefinite life intangible assets.
+Added: We continuously evaluate the changing macro-economic conditions including inflationary pressures, rising interest rates, demand outlook and export markets as well as the Company’s decreased market capitalization.
+Added: Our reporting units with heightened risk of future impairments with $3.8 billion carrying value at September 30, 2023, as well as the brand with $0.5 billion carrying value, as described above, all have less than 10% of excess fair value above carrying value as of the date of the most recent estimated fair value determination.
+Added: Consequently, their estimated fair values remain highly sensitive to future discount rate increases, changing macro-economic conditions and achievement of projected long-term operating margins.
+Added: Discount rates increased by approximately 50 basis points from the date of our annual impairment assessment to September 30, 2023.
+Added: Although the remaining reporting units and indefinite life intangible assets generally had more than 20% excess fair value over carrying amount as of the date of the most recent estimated fair value determination, they are also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.
Impairment of long-lived assets and definite life intangibles
5 unchanged sentences
The impairment is the excess of the carrying value over the fair value of the asset.
−Removed: We recorded impairment charges related to long-lived assets of $34 million, $60 million and $48 million, in fiscal 2022, 2021 and 2020, respectively.
+Added: We recorded charges related to long-lived assets of $101 million, $34 million and $60 million, in fiscal 2023, 2022 and 2021, respectively.
Judgments and Uncertainties
18 unchanged sentences
Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions, which could result in subsequent impairments.
−Removed: We had no material business combinations during fiscal 2022.
+Added: For more information regarding business combinations, refer to Part II, Item 8, Notes to Consolidated Financial Statements, Note 3:
+Added: Acquisitions and Dispositions.
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.