10q10k10q10k.net

What changed in PILGRIMS PRIDE CORP's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of PILGRIMS PRIDE CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+300 added−305 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-09)

Top changes in PILGRIMS PRIDE CORP's 2023 10-K

300 paragraphs added · 305 removed · 202 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

40 edited+3 added−5 removed23 unchanged
Biggest changeThese audits include auditing the physical state of the plant, policies, safety culture and our occupational health clinics. • Our efforts have resulted in year-over-year reductions in severe injuries and days away restricted or transferred of 42% and 10%, respectively. • As discussed in “Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of COVID-19,” we have implemented and continue to implement numerous health and safety policies and procedures focused on reducing the spread of novel coronavirus (“COVID-19”) and protecting our facility workers from risks of illness while maintaining our business continuity.
Biggest changeThese audits include auditing the physical state of the plant, policies, safety culture and our occupational health clinics. • Our efforts in 2023 have resulted in year-over-year reductions in severe injuries and days away restricted or transferred of 25% and 8%, respectively. Diversity and Inclusion.
Key examples of our focus and commitment include: • We engage with our team members through the use of safety committees and other safety initiatives to improve the overall safety of the workplace and advance a safety first culture. • We train team members on how to identify physical hazards, conduct focused daily, monthly and annual physical hazard assessments at all facilities, ensure that all identified physical hazards are logged and ensure timely remediation. • Leveraging third party experts, we conduct regular ergonomic assessments, ensure that all identified ergonomic issues are logged and ensure timely remediation. • We conduct safety audits of all facilities on an annual basis.
Key examples of our focus and commitment include: • We engage with our team members through the use of safety committees and other safety initiatives to improve the overall safety of the workplace and advance a safety first culture. • We train team members on how to identify physical hazards, conduct focused daily, monthly and annual physical hazard assessments at all facilities, ensure that identified physical hazards are logged and ensure timely remediation. • Leveraging third-party experts, we conduct regular ergonomic assessments, ensure that identified ergonomic issues are logged and ensure timely remediation. • We conduct safety audits of all facilities on an annual basis.
Diversity and Inclusion. We believe that promoting diversity and inclusion among our workforce helps to create a trusting and productive workplace. We encourage the management teams at each facility to hire from the local regions in which they are located.
We believe that promoting diversity and inclusion among our workforce helps to create a trusting and productive workplace. We encourage the management teams at each facility to hire from the local regions in which they are located.
The production of feed ingredients is positively or negatively affected primarily by the global level of supply inventories, demand for feed ingredients, the agricultural policies of the U.S. and foreign governments and weather patterns throughout the world.
The production of feed ingredients is positively or negatively affected primarily by the global level of supply, demand for feed ingredients, the agricultural policies of the U.S. and foreign governments and weather patterns throughout the world.
The EPA, environmental authorities in the U.K., continental Europe and Mexico, and/or other U.S. or Mexican state and local authorities may, from time to time, adopt revisions to environmental rules and regulations, and/or changes in the terms and conditions of our environmental permits, with which we must comply.
The EPA, environmental authorities in the U.K., the Republic of Ireland, continental Europe and Mexico, and/or other U.S. or Mexican state and local authorities may, from time to time, adopt revisions to environmental rules and regulations, and/or changes in the terms and conditions of our environmental permits, with which we must comply.
Information about our Executive Officers Name Age Background and Experience Dates Fabio Sandri 51 President and Chief Executive Officer September 2020 to Present Matthew Galvanoni 50 Chief Financial Officer March 2021 to Present Fabio Sandri was named the Chief Executive Officer in September 2020 and previously served as our Chief Financial Officer from June 2011 to March 2021.
Information about our Executive Officers Name Age Background and Experience Dates Fabio Sandri 52 President and Chief Executive Officer September 2020 to Present Matthew Galvanoni 51 Chief Financial Officer March 2021 to Present Fabio Sandri was named the Chief Executive Officer in September 2020 and previously served as our Chief Financial Officer from June 2011 to March 2021.
Retention and Career Development. We are committed to retaining talented employees at both production and management levels by offering competitive compensation and benefits, as well as leadership training and development opportunities. • We strive to provide competitive pay to our team members and reward top performers.
We are committed to retaining talented employees at both production and management levels by offering competitive compensation and benefits, as well as leadership training and development opportunities. • We strive to provide competitive pay to our team members and reward top performers.
Exported Products Overview. Exported products primarily consist of whole chickens and chicken parts sold either refrigerated for distributors in the U.S. or frozen for distribution to export markets and primary pork cuts, hog heads and trotters frozen for distribution to export markets.
Exported products primarily consist of whole chickens and chicken parts sold either refrigerated for distributors in the U.S. or frozen for distribution to export markets and in the U.K., primary pork cuts, hog heads and trotters frozen for distribution to export markets.
We rely on an adequate number of skilled employees to serve in critical production roles, such as processing workers and operations supervisors. In managing our business, we focus on a number of human capital measures or objectives, which are rooted in our core values and include the following items: 4 Table of Contents Health and Safety.
We rely on an adequate number of skilled employees to serve in critical production roles, such as processing workers and operations supervisors. In managing our business, we focus on a number of human capital measures or objectives, which are rooted in our core values and include the following items: Health and Safety.
We attempt to mitigate the impact of price volatility on our profitability by decreasing the amount of our products that are sold under longer term fixed-price contracts, broadening our product portfolio and expanding the variety of contracts within our book of business. To also manage this risk, we purchase derivative financial instruments.
We attempt to mitigate the impact of price 2 Table of Contents volatility on our profitability by decreasing the amount of our products that are sold under longer term fixed-price contracts, broadening our product portfolio and expanding the variety of contracts within our book of business. To also manage this risk, we purchase derivative financial instruments.
Regulation and Environmental Matters The poultry, pork and prepared foods industries are subject to government regulation, particularly in the health, workplace safety and environmental areas, including provisions relating to the discharge of materials into the environment, treatment and disposal of agricultural and food processing wastes, the use and maintenance of refrigeration systems, ammonia-based chillers, noise, odor and dust management, the operation of mechanized processing equipment and other operations, storm water, air emissions, treatment, storage and disposal of wastes, handling of hazardous substances and remediation of contaminated soil, surface water and groundwater, by the Centers for Disease Control, the United States Department of Agriculture (“USDA”), the Food and Drug Administration (“FDA”), the Environmental Protection Agency (“EPA”), the Occupational Safety and Health Administration and state and local regulatory authorities in the U.S. and by similar governmental agencies in the U.K., continental Europe and Mexico.
Regulation and Environmental Matters The chicken, pork and prepared foods industries are subject to government regulation, particularly in the health, workplace safety and environmental areas, including provisions relating to the discharge of materials into the environment, treatment and disposal of agricultural and food processing wastes, the use and maintenance of refrigeration systems, ammonia-based chillers, noise, odor and dust management, the operation of mechanized processing equipment and other operations, storm water, air emissions, treatment, storage and disposal of wastes, handling of hazardous substances and remediation of contaminated soil, surface water and groundwater, by the Centers for Disease Control, the United States Department of Agriculture (“USDA”), the Food and Drug Administration (“FDA”), the Environmental Protection Agency (“EPA”), the Occupational Safety and Health Administration and state and local regulatory authorities in the U.S. and by similar 3 Table of Contents governmental agencies in the U.K., the Republic of Ireland, continental Europe and Mexico.
Our case-ready chicken includes various combinations of freshly refrigerated, whole chickens, chicken parts in trays, bags or other consumer packs labeled and priced ready for the retail grocer’s fresh meat counter. Additionally, we are an important player in the live market in Mexico.
Our case-ready chicken includes various combinations of freshly refrigerated, whole chickens, chicken parts in trays, bags or other consumer packs labeled and priced ready for the retail grocer’s fresh meat counter. Additionally, we are an 1 Table of Contents important player in the live chicken market in Mexico.
Galvanoni started his career at PricewaterhouseCoopers LLP in 1994 and subsequently held several financial leadership positions at Exelon Corporation, where he most recently served as Assistant Corporate Controller. Mr. Galvanoni graduated from the University of Illinois with a Bachelor of Accounting degree and later received a Master of Business Administration degree from the Kellogg School of Management at Northwestern University.
Galvanoni started his career at PricewaterhouseCoopers LLP in 1994 and subsequently held several financial leadership positions at Exelon Corporation, where he most recently served as Assistant Corporate Controller. Mr. Galvanoni graduated from the University of Illinois with a Bachelor’s of Accounting degree and later received a Master’s of Business Administration degree from the Kellogg School of Management at Northwestern University.
Live pigs sourced from independent farmers make up approximately 64.3% of the total number of pigs processed by the Company each year. Although we generally expect adequate supply of live pigs in the U.K., there may be periods of imbalance in supply and demand. Trademarks We own registered trademarks which are used in connection with our business.
Live pigs sourced from independent farmers make up approximately 65.8% of the total number of pigs processed by the Company each year. Although we generally expect adequate supply of live pigs in the U.K., there may be periods of imbalance in supply and demand. Trademarks We own registered trademarks which are used in connection with our business.
In the U.K., all Moy Park poultry farms which exceed a threshold size of 40,000 birds placed are required to carry out activities in compliance with their environmental permits and they must use Best Available Techniques in order to achieve a high level of environmental protection. PPL’s sites are independently audited and certified by the British Retail Consortium standard.
In the U.K., all poultry farms which exceed a threshold size of 40,000 birds placed are required to carry out activities in compliance with their environmental permits and they must use Best Available Techniques in order to achieve a high level of environmental protection. Our pork sites are independently audited and certified by the British Retail Consortium standard.
Galvanoni served as Vice President, Finance, of Ingredion Incorporated, a leading global ingredients solution company, since 2016. Mr. Galvanoni joined Ingredion in 2012, serving in the role of Global Corporate Controller and Chief Accounting Officer, where he managed the company’s accounting-related and external financial reporting responsibilities. Mr.
Prior to his appointment to the Company, Mr. Galvanoni served as Vice President, Finance, of Ingredion Incorporated, a leading global ingredients solution company, since 2016. Mr. Galvanoni joined Ingredion in 2012, serving in the role of Global Corporate Controller and Chief Accounting Officer, where he managed the company’s accounting-related and external financial reporting responsibilities. Mr.
We have found that recognizing our employees’ efforts through training for continued advancement strengthens their performance and helps with our goals to achieve business results. Our employees completed over 326,000 training hours during 2022 and over 350,000 training hours during 2021. Community Support .
We have found that recognizing our employees’ efforts through training for continued advancement strengthens their performance and helps with our goals to achieve business results. Our employees completed over 332,000 training hours during 2023 and over 326,000 training hours during 2022. Community Support .
The Company’s pork operations maintain a pig production base that makes up approximately 35.7% of the total number of pigs processed by the Company each year. Additionally, the Company’s pork operations procure live pigs for slaughter within a few days of purchase from numerous independent farmers throughout the U.K.
The Company’s pork operations in the U.K. maintain a pig production base that makes up approximately 34.2% of the total number of pigs processed by the Company each year. Additionally, the Company’s pork operations procure live pigs for slaughter within a few days of purchase from numerous independent farmers throughout the U.K.
JBS S.A., through its indirect wholly-owned subsidiaries (together, “JBS”), beneficially owns 82.65% of our outstanding common stock. We market our balanced portfolio of fresh, prepared and value-added meat products to a diverse set of over 51,100 customers across the U.S., the U.K. and Europe, Mexico and in over 120 other countries.
JBS S.A., through its indirect wholly-owned subsidiaries (together, “JBS”), beneficially owns 82.54% of our outstanding common stock. We market our balanced portfolio of fresh, prepared and value-added meat products to a diverse set of customers across the U.S., the U.K. and Europe, Mexico and in over 115 other countries.
Competition The chicken and pork industry in the U.S., the U.K., continental Europe and Mexico is highly competitive. The competitive factors in our business include price, product quality, product development, brand identification, breadth of product line and customer service.
Competition The chicken and pork industries in the U.S., the U.K., continental Europe and Mexico are highly competitive. The competitive factors in our business include price, product quality, product development, brand identification, breadth of product line and customer service.
In 2022, our export product sales accounted for 5.1% and 14.6% of our total U.S. and U.K. and Europe product sales, respectively. Market Overview. Our foodservice market principally consists of chain restaurants, food processors, broad-line distributors and certain other institutions. Our retail market consists primarily of grocery store chains, wholesale clubs and other retail distributors.
In 2023, our export product sales accounted for 5.3% and 9.1% of our total U.S. and U.K. and Europe product sales, respectively. Market Overview. Our foodservice market principally consists of chain restaurants, food processors, broad-line distributors and certain other institutions. Our retail market consists primarily of grocery store chains, wholesale clubs and other retail distributors.
Some of the more significant owned or licensed trademarks used by the Company or 3 Table of Contents its affiliates are Pilgrim’s®, Just BARE®, Gold’n Pump®, Gold Kist®, County Pride®, Pierce Chicken®, Pilgrim’s® Mexico, County Post®, Savoro, To-Ricos, Del Dia®, Moy Park, O’Kane, Richmond, Fridge Raiders and Denny.
Some of the more significant owned or licensed trademarks used by the Company or its affiliates are Pilgrim’s®, Just BARE®, Gold’n Pump®, Gold Kist®, Country Pride®, Pierce Chicken®, Pilgrim’s® Mexico, Savoro, To-Ricos, Del Dia®, Moy Park, O’Kane, Richmond, Fridge Raiders and Denny.
Key Customers Our two largest customers, which operate in the U.S., together accounted for approximately 12.8% and 12.0% of our consolidated net sales in 2022 and 2021, respectively. No single customer accounted for ten percent or more of our consolidated net sales in either 2022 or 2021.
Key Customers Our two largest customers, which operate in the U.S., together accounted for approximately 13.2% and 12.8% of our consolidated net sales in 2023 and 2022, respectively. No single customer accounted for ten percent or more of our consolidated net sales in either 2023 or 2022.
For example, in 2022, women comprised 41%, 39% and 37% of our total workforce in the U.S., the U.K. and Europe, and Mexico, respectively, and 68% of our total workforce in the U.S. were minorities. • Our management team members are expected to attend People First leadership training, which includes a model dedicated to training and awareness on diversity and inclusion. • We provide workshops on diversity and inclusion for our employees and we engage in targeted recruitment at 35 of the nation’s largest historically black colleges and universities.
For example, in 2023, women comprised 41%, 40% and 37% of our total workforce in the U.S., the U.K. and Europe, and Mexico, respectively, and 70% of our total workforce in the U.S. were minorities. • Our management team members are expected to attend People First leadership training, which includes a model dedicated to training and awareness on diversity and inclusion. • We provide workshops on diversity and inclusion for our employees and we engage in targeted recruitment at 35 of the nation’s largest historically black colleges and universities. 4 Table of Contents Retention and Career Development.
He earned his Master of Business Administration degree in 2001 from the Wharton School at the University of Pennsylvania and a degree in electrical engineering in 1993 from Escola Politécnica da Universidade de São Paulo. Matthew Galvanoni was named the Chief Financial Officer in February 2021, effective March 2021. Prior to his appointment to the Company, Mr.
He earned his Master’s of Business Administration degree in 2001 from the Wharton School at the 5 Table of Contents University of Pennsylvania and a degree in electrical engineering in 1993 from Escola Politécnica da Universidade de São Paulo. Matthew Galvanoni was named the Chief Financial Officer in February 2021, effective March 2021.
The Company utilizes various raw materials in its operations, including corn, soybean meal and wheat, along with various other ingredients from which the Company produces its own formulated feeds. In 2022, corn, soybean meal and wheat accounted for approximately 46.1%, 35.2% and 4.6% of our feed costs, respectively.
The Company utilizes various raw materials in its operations, including corn, soybean meal and wheat, along with various other ingredients from which the Company produces its own formulated feeds. In 2023, corn, soybean meal and wheat accounted for approximately 43.9%, 38.1% and 4.1% of our feed costs, respectively.
Many of PPL’s sites are certified by additional and traceability schemes including Royal Society for the Prevention of Cruelty to Animals Assured, Soil Association, Organic Farmers and Growers and Assured Food Standards. Human Capital Resources As of December 25, 2022, we employed over 61,500 persons. Our success is largely dependent on the skills, experience and efforts of our employees.
Many of our pork sites are additionally certified by farm-to-fork traceability schemes including Royal Society for the Prevention of Cruelty to Animals Assured, Soil Association, Organic Farmers and Growers and Assured Food Standards. Human Capital Resources As of December 31, 2023, we employed over 61,200 persons. Our success is largely dependent on the skills, experience and efforts of our employees.
Risk Factors - Our performance depends on favorable labor relations with our employees and our compliance with labor laws. Any deterioration of those relations or increase in labor costs due to our compliance with labor laws could adversely affect our business.” Available Information The Company’s website is www.pilgrims.com.
Any deterioration of those relations or increase in labor costs due to our compliance with labor laws could adversely affect our business.” Available Information The Company’s website is www.pilgrims.com.
In 2022, our fresh product sales accounted for 80.2%, 18.6%, and 86.0% of our total U.S., U.K. and Europe, and Mexico product sales, respectively. Prepared Products Overview. Our prepared products include portion-controlled breast fillets, tenderloins and strips, delicatessen products, salads, formed nuggets and patties and bone-in chicken parts.
In 2023, our fresh product sales accounted for 80.8%, 20.7%, and 84.3% of our total U.S., U.K. and Europe, and Mexico product sales, respectively. Prepared Products Overview. Our prepared products include portion-controlled breast fillets, tenderloins and strips, delicatessen products, salads, formed nuggets and patties and bone-in chicken parts.
We are focused on supporting the communities in which we operate and serve. • Hometown Strong Initiative. During 2020, we launched our Hometown Strong initiative to help the communities in which we operate respond to the unexpected challenges on society, such as the COVID-19 pandemic.
We are focused on supporting the communities in which we operate and serve. • Hometown Strong Initiative. Hometown Strong, which we launched in 2020, is an initiative to help the communities in which we operate respond to the unexpected challenges on society.
Net Sales for Primary Product Lines and Markets The following table sets forth, for the periods beginning with 2020, net sales attributable to each of our primary product lines and markets served with those products.
Net Sales for Primary Product Lines and Markets The following table sets forth, for the periods beginning with 2021, net sales attributable to each of our primary product lines and markets served with those products. We based the table on our internal sales reports and their classification of product types.
With our global network of approximately 4,950 growers, 36 feed mills, 47 hatcheries, 40 processing plants, 33 prepared foods cook plants, 31 distribution centers, nine rendering facilities, four pet food plants and three other facilities, we believe we are well-positioned to supply the growing demand for our products.
With our global network of approximately 4,800 growers, 34 feed mills, 47 hatcheries, 39 processing plants, 30 prepared foods cook plants, 27 distribution centers, ten protein conversion facilities and five pet food plants, we believe we are well-positioned to supply the growing demand for our products.
We based the table on our internal sales reports and their classification of product types. 2 Table of Contents Year Ended December 25, 2022 December 26, 2021 December 27, 2020 (In thousands) U.S. reportable segment: Fresh products $ 8,624,421 $ 7,264,448 $ 6,137,264 Prepared foods 1,107,734 898,614 714,563 Export 552,823 459,371 306,478 Other products 463,372 491,446 337,712 Total U.S. reportable segment 10,748,350 9,113,879 7,496,017 U.K. and Europe reportable segment: Fresh products 908,882 1,151,330 1,594,373 Prepared foods 3,104,347 2,214,180 1,237,486 Export 712,685 458,588 297,414 Other products 148,824 109,964 145,019 Total U.K. and Europe reportable segment 4,874,738 3,934,062 3,274,292 Mexico reportable segment: Fresh products 1,587,809 1,515,453 1,210,952 Prepared foods 167,589 128,208 66,572 Other products 89,891 85,856 44,068 Total Mexico reportable segment 1,845,289 1,729,517 1,321,592 Total net sales $ 17,468,377 $ 14,777,458 $ 12,091,901 Raw Materials Grains .
Years Ended December 31, 2023 December 25, 2022 December 26, 2021 (In thousands) U.S. reportable segment: Fresh products $ 8,105,269 $ 8,624,421 $ 7,264,448 Prepared foods 978,423 1,107,734 898,614 Export 533,205 552,823 459,371 Other products 410,846 463,372 491,446 Total U.S. reportable segment 10,027,743 10,748,350 9,113,879 U.K. and Europe reportable segment: Fresh products 1,074,900 908,882 1,151,330 Prepared foods 3,525,359 3,104,347 2,214,180 Export 472,656 712,685 458,588 Other products 130,406 148,824 109,964 Total U.K. and Europe reportable segment 5,203,321 4,874,738 3,934,062 Mexico reportable segment: Fresh products 1,796,670 1,587,809 1,515,453 Prepared foods 212,651 167,589 128,208 Other products 121,832 89,891 85,856 Total Mexico reportable segment 2,131,153 1,845,289 1,729,517 Total net sales $ 17,362,217 $ 17,468,377 $ 14,777,458 Raw Materials Grains .
Any reference we make to a particular year (for example 2022) in the notes to these Condensed Consolidated Financial Statements applies to our fiscal year and not the calendar year. Fiscal year 2022 was a 52-week fiscal year. Reportable Segments We operate in three reportable segments: U.S., U.K. and Europe, and Mexico.
We operate on the basis of a 52/53-week fiscal year ending on the Sunday falling on or before December 31. Any reference we make to a particular year (for example 2023) in the notes to these Consolidated Financial Statements applies to our fiscal year and not the calendar year. Fiscal year 2023 was a 53-week fiscal year.
Reportable Segments” of our Consolidated Financial Statements included in this annual report for additional information. Products and Markets Fresh Products Overview. Our fresh products consist of refrigerated (nonfrozen) whole or cut-up chicken, either pre-marinated or non-marinated, frozen whole chickens, breast fillets, mini breast fillets and prepackaged case-ready chicken, primary pork cuts, added value pork and pork ribs.
Our fresh products consist of refrigerated whole or cut-up chicken, frozen whole chickens, breast fillets, mini breast fillets and prepackaged case-ready chicken, and in the U.K., primary pork cuts, added value pork and pork ribs.
We either produce or purchase for resale chicken and pork products through our operations in the U.S., the U.K. and continental Europe, and Mexico. We conduct separate operations in the U.S., the U.K., continental Europe, Puerto Rico and Mexico; however, for geographic reporting 1 Table of Contents purposes, we include Puerto Rico with our U.S. operations. See “Note 20.
We conduct separate operations in the U.S., the U.K., the Republic of Ireland, continental Europe, Puerto Rico and Mexico; however, for geographic reporting purposes, we include Puerto Rico with our U.S. operations. See “Note 20. Reportable Segments” of our Consolidated Financial Statements included in this annual report for additional information. Products and Markets Fresh Products Overview.
Our prepared products include processed sausages, bacon, slow cooked, smoked meat, gammon joints, ready-to-cook variety of meat products, pre-packed meats, sandwich and deli counter meats, pulled pork balls, meatballs and coated foods. In 2022, our prepared foods products sales accounted for 10.3%, 63.7%, and 9.1% of our total U.S., U.K. and Europe, and Mexico chicken and pork sales, respectively.
These products are sold either refrigerated or frozen and may be fully cooked, partially cooked or raw. In addition, these products may be breaded and/or marinated. Our prepared products include processed sausages, bacon, slow cooked, smoked meat, gammon joints, ready-to-cook variety of meat products, pre-packed meats, sandwich and deli counter meats, pulled pork balls, meatballs and coated foods.
The Tomorrow Fund awards certain employees scholarships to an eligible university of their choice. • Better Futures. During 2021, we launched Better Futures, the largest privately funded free community college program in rural America, offering free community college to our team members and their dependents.
The Tomorrow Fund, which we launched in 2019, is a scholarship program designed to support the collegiate scholastic pursuits of our employees and their direct dependents. The Tomorrow Fund awards certain employees scholarships to an eligible university of their choice. • Better Futures.
So far, over 1,000 team members or dependents have signed up and 340 have started their selected academic pathway. Employee Relations. We respect our team members’ rights of association, including by joining labor unions and collective bargaining. Approximately 46.4% of our workforce are covered by a collective bargaining agreement. For additional information, see “Item 1A.
We respect our team members’ rights of association, including by joining labor unions and collective bargaining. Approximately 35.2% of our workforce are covered by a collective bargaining agreement. For additional information, see “Item 1A. Risk Factors - Our performance depends on favorable labor relations with our employees and our compliance with labor laws.
We believe the Hometown Strong initiative will provide consequential investment projects and help them prepare for 5 Table of Contents unanticipated challenges and build for the future.
We believe the Hometown Strong initiative has provided consequential investment projects and helped communities prepare for unanticipated challenges and build for the future. Since inception, we have committed to Hometown Strong donations of $20 million. • Tomorrow Fund.
Removed
On September 24, 2021, the Company acquired 100% of the equity of the Kerry Consumer Foods’ meats and meals businesses, collectively known as Pilgrim’s Food Masters (“PFM”), for cash of £698.8 million, or $958.9 million.
Added
Reportable Segments We operate in three reportable segments: U.S., U.K. and Europe, and Mexico. We produce or purchase for resale chicken products through our operations in the U.S., the U.K. and continental Europe, and Mexico and pork products through our operations in the U.K.
Removed
The specialty meats business is a leading manufacturer of branded and private label meats, meat snacks and food-to-go products in the U.K. and the Republic of Ireland. The specialty meats business is a leading manufacturer of branded and private label meats, meat snacks and food-to-go products in the U.K. and the Republic of Ireland.
Added
In 2023, our prepared foods products sales accounted for 9.8%, 67.8%, and 10.0% of our total U.S., U.K. and Europe, and Mexico chicken and pork sales, respectively. Exported Products Overview.
Removed
The ready meals business is a leading ethnic chilled and frozen ready meals business in the U.K. The acquired operations are included in the Company’s U.K. and Europe reportable segment. We operate on the basis of a 52/53-week fiscal year ending on the Sunday falling on or before December 31.
Added
Better Futures, which we launched in 2021, is the largest privately funded free community college program in rural America, offering free community college to our team members and their dependents. So far, over 1,634 team members or dependents have signed up and 390 have started their selected academic pathway. Employee Relations.
Removed
These products are sold either refrigerated or frozen and may be fully cooked, partially cooked or raw. In addition, these products are breaded or non-breaded and either pre-marinated or non-marinated.
Removed
For 2020, we committed to Hometown Strong donations of $20 million and during the year ended December 27, 2020 we recorded $15 million in incremental donations expense relating to this initiative. • Tomorrow Fund. During 2019, we launched the Tomorrow Fund, a scholarship program designed to support the collegiate scholastic pursuits of our employees and their direct dependents.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

59 edited+10 added−39 removed128 unchanged
Biggest changeMoreover, climate change, including the impact of global warming, has resulted in risks that include changes in weather conditions, extreme weather events and adverse impacts on agricultural production, as well as potential regulatory compliance risks, all of which could have a material adverse effect on our results of operations, financial condition and liquidity. 18 Table of Contents The British National Grid recently warned that the U.K., where the Company has significant operations, could face planned power cuts to homes and businesses throughout the winter of 2023 if the country is unable to import electricity from Europe and it struggles to attract enough gas imports to fuel its gas-fired power plants.
Biggest changeMoreover, climate change, including the impact of global warming, has resulted in risks that include changes in weather conditions, extreme weather events and adverse impacts on agricultural production, as well as potential regulatory compliance risks, all of which could have a material adverse effect on our results of operations, financial condition and liquidity.
Historically, we have targeted international markets to generate additional demand for our products. In particular, given the general preference for white chicken meat by U.S. and U.K. consumers, we have targeted international markets for the sale of dark chicken meat and parts, such as chicken paws, which are generally not consumed in the U.S. or U.K.
Historically, we have targeted international markets to generate additional demand for our products. In particular, given the general preference for white chicken meat by U.S. and U.K. consumers, we have targeted international markets for the sale of certain dark chicken meat and parts, such as chicken paws, which are generally not consumed in the U.S. or U.K.
Moreover, our ultimate controlling shareholders may serve as members of our Board of Directors or as members of the board of directors or other senior management positions at any JBS companies. JBS USA may have interests that are different from other shareholders and may vote in a way that may be adverse to our other shareholders’ interests.
Moreover, our ultimate controlling shareholders may serve as members of our Board of Directors or as members of the board of directors or other senior management positions at any JBS companies. JBS USA Holdings may have interests that are different from other shareholders and may vote in a way that may be adverse to our other shareholders’ interests.
To conduct our operations, we regularly move data across national borders (including data related to business, financial, marketing and regulatory matters) and must comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in the U.S. and elsewhere.
Additionally, to conduct our operations, we regularly move data across national borders (including data related to business, financial, marketing and regulatory matters) and must comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in the U.S. and elsewhere.
The continued volatility in the global markets as a result of the war has adversely impacted our costs by driving up prices, raising inflation and increasing pressure on the supply of feed ingredients and energy products throughout the global markets.
The continued volatility in the global markets, in part as a result of the war, has adversely impacted our costs by driving up prices, raising inflation and increasing pressure on the supply of feed ingredients and energy products throughout the global markets.
The effects of climate change and legal or regulatory initiatives to address climate change could have a long-term adverse impact on our business and results of operations. We currently have outstanding Senior Notes that are linked to our achievement of targeted reductions in Scope 1 and 2 greenhouse gas emissions intensity by 2026.
The effects of climate change and legal or regulatory initiatives to address climate change could have a long-term adverse impact on our business and results of operations. We currently have outstanding Senior Notes that are linked to our achievement of targeted reductions in Scope 1 and 2 greenhouse gas emissions intensity by 2025.
Labor shortages and increased turnover rates within the Company and our third-party vendors have led to and could in the future lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees and could negatively affect our ability to efficiently operate our production facilities or otherwise operate at full capacity and could result in downtown of our production facilities.
Labor shortages and increased turnover rates within the Company and our third-party vendors have led to and could in the future lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees and could negatively affect our ability to efficiently operate our production facilities or otherwise operate at full capacity and could result in downtime of our production facilities.
Compliance with such 9 Table of Contents existing, proposed and recently enacted laws and regulations can be costly and may necessitate the review and implementation of policies and processes relating to our collection, security, and use of data; any failure to comply with these regulatory standards could subject us to legal and reputational risks including proceedings against the Company by governmental entities or others, fines and penalties, damage to our reputation and credibility and could have a negative impact on our business and results of operations.
Compliance with such existing, proposed and recently enacted laws and regulations can be costly and may necessitate the review and implementation of policies and processes relating to our collection, security, and use of data; any failure to comply with these regulatory standards could subject us to legal and reputational risks including proceedings against the Company by governmental entities or others, fines and penalties, damage to our reputation and credibility and could have a negative impact on our business and results of operations.
Despite our ongoing efforts to ensure compliance with the FCPA, the UKBA and similar laws, there can be no assurance that our directors, officers, employees, agents, third-party intermediaries and the companies to which we outsource certain of our business operations, have previously complied or will comply with those laws and our anti-corruption policies or 14 Table of Contents that our compliance program will be sufficient to prevent or detect bribery, and we may be ultimately held responsible for any such non-compliance.
Despite our ongoing efforts to ensure compliance with the FCPA, the UKBA and similar laws, there can be no assurance that our directors, officers, employees, agents, third-party intermediaries and the companies to which we outsource certain of our business operations, have previously complied or will comply with those laws and our anti-corruption policies or that our compliance program will be sufficient to prevent or detect bribery, and we may be ultimately held responsible for any such non-compliance.
Our business may be adversely affected by: • weak or volatile national or global economic conditions, including inflation; • unfavorable currency exchange rates and interest rates; • the lack of availability of credit on reasonable terms; 17 Table of Contents • restricted access to capital markets; • changes in consumer spending rates and habits; • unemployment and underemployment; and • a tight energy supply and high energy costs.
Our business may be adversely affected by: • weak or volatile national or global economic conditions, including inflation; • unfavorable currency exchange rates and interest rates; • the lack of availability of credit on reasonable terms; • restricted access to capital markets; • changes in consumer spending rates and habits; • unemployment and underemployment; and • a tight energy supply and high energy costs.
Events and conditions that could result in impairment in the value of our goodwill include changes in the industry in which we operate, particularly the impact of a downturn in the global economy or the economies of geographic regions or countries in which we operate, as well as competition, adverse changes in the regulatory environment, or other factors leading to reduction in expected long-term sales or profitability.
Events and conditions that could result in impairment in the value of our goodwill and other identifiable intangible assets include changes in the industry in which we operate, particularly the impact of a downturn in the global economy or the economies of geographic regions or countries in which we operate, as well as competition, adverse changes in the regulatory environment, or other factors leading to reduction in expected long-term sales or profitability.
If we fail to meet these targeted reductions in 2026, the interest rate applied to these Senior Notes will increase. Finally, from time to time we establish and publicly announce goals and targets to reduce our carbon footprint.
If we fail to meet these targeted reductions in 2025, the interest rate applied to these Senior Notes will increase. Finally, from time to time we establish and publicly announce goals and targets to reduce our carbon footprint.
Increasing concern over climate change also may adversely impact demand for our products due to changes in consumer preferences and result in additional legal or regulatory requirements designed to reduce or mitigate the effects of carbon dioxide and other greenhouse gas emissions on the environment.
Increasing concern over climate change also may adversely impact demand for our products due to changes in 11 Table of Contents consumer preferences and result in additional legal or regulatory requirements designed to reduce or mitigate the effects of carbon dioxide and other greenhouse gas emissions on the environment.
In the absence of an agreement, we may become subject to labor disruption at one or more of these locations, which could have an adverse effect on our financial results. Loss of essential employees or material increase in employee turnover could have a significant negative impact on our business.
In the absence of an agreement, we may become subject to labor disruption at one or more of these locations, which could have an adverse effect on our financial results. 13 Table of Contents Loss of essential employees or material increase in employee turnover could have a significant negative impact on our business.
These pathogens are 8 Table of Contents generally found in the environment and there is a risk that, as a result of food processing, they could be present in our processed poultry products. These pathogens can also be introduced as a result of improper handling at the further processing, foodservice or consumer level.
These pathogens are generally found in the environment and there is a risk that, as a result of food processing, they could be present in our processed poultry products. These pathogens can also be introduced as a result of improper handling at the further processing, foodservice or consumer level.
Exchange rate fluctuations or one or more other risks may have a material adverse effect on our business or operations in the future. Our operations in Mexico, the U.K. and continental Europe are conducted through subsidiaries organized under non-U.S. laws.
Exchange rate fluctuations or one or more other risks may have a material adverse effect on our business or operations in the future. Our operations in Mexico, the U.K., the Republic of Ireland, and continental Europe are conducted through subsidiaries organized under non-U.S. laws.
As a result, subject to restrictions on its voting power and actions in a stockholders agreement between JBS USA and us and our organization documents, JBS USA has and will have the ability to control our management, policies and financing decisions, elect a majority of the members of our Board of Directors at the annual meeting and control the vote on most matters coming before the holders of our common stock.
As a result, subject to restrictions on voting power and actions in the stockholders agreement and our organization documents, JBS USA Holdings has and will have the ability to control our management, policies and financing decisions, elect a majority of the members of our Board of Directors at the annual meeting and control the vote on most matters coming before the holders of our common stock.
This, to a certain extent, is subject to various business factors (including, among others, the 16 Table of Contents commodity prices of feed ingredients, chicken and pork) and general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control.
This, to a certain extent, is subject to various business factors (including, among others, the commodity prices of feed ingredients, chicken and pork) and general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control.
The vulnerability of our systems and our failure to identify or respond timely to cyber incidents could have an adverse effect on our operations and reputation and expose us to liability or regulatory enforcement actions. 11 Table of Contents Our operations are subject to general risks of litigation.
The vulnerability of our systems and our failure to identify or respond timely to cyber incidents could have an adverse effect on our operations and reputation and expose us to liability or regulatory enforcement actions. Our operations are subject to general risks of litigation.
This could also result in the cancellation of orders by our customers and create adverse publicity that may have a material adverse effect on our ability to market our products successfully and on our business, reputation and prospects.
This could also result in the cancellation of orders by our customers and create 6 Table of Contents adverse publicity that may have a material adverse effect on our ability to market our products successfully and on our business, reputation and prospects.
JBS USA Food Company (“JBS USA”) beneficially owns a majority of the shares and voting power of our common stock and is entitled to appoint a majority of the members of our Board of Directors.
JBS USA Food Company Holdings (“JBS USA Holdings”) beneficially owns a majority of the shares and voting power of our common stock and is entitled to appoint a majority of the members of our Board of Directors.
Significant political or regulatory developments in the jurisdictions in which we sell our products, such as those stemming from the presidential administration in the United States, are difficult to predict and may have a material adverse effect on us.
Significant political or regulatory developments in the jurisdictions in which we sell our products, such as those stemming from the presidential administration in the U.S., are difficult to predict and may have a material adverse effect on us.
Under the stockholders agreement between JBS USA and us, JBS USA has the ability to elect up to seven members of our Board of Directors and the other holders of our common stock have the ability to elect up to two members of our Board of Directors.
Under the stockholders agreement, JBS USA Holdings has the ability to elect up to seven members of our Board of Directors and the other holders of our common stock have the ability to elect up to two members of our Board of Directors.
We may not be able to successfully integrate any growth opportunities we may undertake in the future or successfully implement appropriate operational, financial and administrative systems and controls to achieve the benefits that we expect to result therefrom.
We may not be able to successfully integrate any growth opportunities we may undertake in the future or successfully implement appropriate operational, financial and administrative systems and controls to achieve the benefits that we expect to 10 Table of Contents result therefrom.
We have significant operations and assets located in Mexico, the U.K. and continental Europe and may participate in or acquire operations and assets in other foreign countries in the future.
We have significant operations and assets located in Mexico, the U.K., the Republic of Ireland, and continental Europe and may participate in or acquire operations and assets in other foreign countries in the future.
Because of these trends, our volume growth could slow or we may need to lower prices or increase promotional spending for our products, any of which could adversely affect our financial results. Our two largest customers together accounted for approximately 12.8% of our consolidated net sales in 2022.
Because of these trends, our volume growth could slow or we may need to lower prices or increase promotional spending for our products, any of which could adversely affect our financial results. Our two largest customers together accounted for approximately 13.2% of our consolidated net sales in 2023.
Industry cyclicality can affect our earnings, especially due to fluctuations in commodity prices of feed ingredients, chicken and pork. 7 Table of Contents Profitability in the chicken and pork industries is materially affected by the commodity prices of feed ingredients and the market prices of chicken and pork, which are determined by supply and demand factors.
Business and Operational Risk Factors Industry cyclicality can affect our earnings, especially due to fluctuations in commodity prices of feed ingredients, chicken and pork. Profitability in the chicken and pork industries is materially affected by the commodity prices of feed ingredients and the market prices of chicken and pork, which are determined by supply and demand factors.
For example, the implementation of new tariff schemes by various governments, such as those implemented by the United States and China in recent years, could increase the costs of our operations and ultimately increase the cost of products sold from one country into another country.
For example, the implementation of new tariff schemes by various governments, such as those implemented by the U.S. 8 Table of Contents and China in recent years, could increase the costs of our operations and ultimately increase the cost of products sold from one country into another country.
Trends within the food industry change often, and failure to identify and react to changes in these trends could lead to, among other things, reduced demand and price reductions for our products, and could have an adverse effect on our financial results.
The food industry in general is subject to changing consumer trends, demands and preferences. Trends within the food industry change often, and failure to identify and react to changes in these trends could lead to, among other things, reduced demand and price reductions for our products, and could have an adverse effect on our financial results.
An overall or prolonged labor shortage, lack of skilled labor, increased turnover or labor inflation could have a material adverse impact on our operations, results of operations, liquidity or cash flows.
An overall or prolonged labor shortage, lack of skilled labor, increased turnover or labor inflation for any of the foregoing reasons could have a material adverse impact on our operations, results of operations, reputation, liquidity or cash flows.
Competition in the chicken and pork industries with other vertically integrated chicken or pork companies may make us unable to compete successfully in this industry, which could adversely affect our business. Both the chicken and pork industries are highly competitive. In the U.S., Mexico, the U.K. and continental Europe, we primarily compete with other vertically integrated chicken and pork companies.
Competition in the chicken and pork industries with other vertically integrated chicken or pork companies may make us unable to compete successfully in this industry, which could adversely affect our business. Both the chicken and pork industries are highly competitive.
In addition, certain software used by us is licensed from, and certain services related to our information systems are provided by, third parties who could choose to discontinue their relationship with us.
In addition, certain software used by us is licensed from, and certain services related to our information systems are provided by, third parties who could choose to discontinue their relationship with us or could encounter system disruptions or attacks of their own.
The U.K. fresh market is almost exclusively sourced from within the U.K., making vertical integration a prerequisite for operating in that market. The U.K. prepared foods market is less exclusively sourced from within the U.K. so vertical integration is less of a consideration and competition is opened up to other processors, some of whom produce or source from abroad.
The U.K. prepared foods market is less exclusively sourced from within the U.K. so vertical integration is less of a consideration and competition is opened up to other processors, some of whom produce or source from abroad.
Moreover, even though our insurance coverage may be designed to protect us from losses attributable to certain events, it may not adequately protect us from liability and expenses we incur in connection with such events. Our foreign operations and commerce in international markets pose special risks to our business and operations.
Moreover, even though our insurance coverage may be designed to protect us from losses attributable to certain events, it may not adequately protect us from liability and expenses we incur in connection with such events. 7 Table of Contents Our foreign operations and commerce in international markets pose special risks to our business and operations and subject us to additional regulatory frameworks and compliance costs.
Despite our past and continuing efforts to hire only U.S. citizens and/or persons legally authorized to work in the U.S., we may be unable to ensure that all of our employees and contractors are persons legally authorized to work in the U.S.
Immigration Immigration reform continues to attract significant attention in the public arena and the U.S. Congress. Despite our past and continuing efforts to hire only U.S. citizens and/or persons legally authorized to work in the U.S., we may be unable to ensure that all of our employees and contractors are persons legally authorized to work in the U.S.
Disruptions in credit and other financial markets caused by deteriorating or weak national and international economic conditions could, among other things: • make it more difficult for us, our customers or our growers or prospective growers to obtain financing and credit on reasonable terms; • cause lenders to change their practice with respect to the industry generally or our company specifically in terms of granting credit extensions and terms; • impair the financial condition of our customers, suppliers or growers making it difficult for them to meet their obligations and supply raw material; or • impair the financial condition of our insurers, making it difficult or impossible for them to meet their obligations to us.
Deteriorating economic conditions could negatively affect consumer demand for protein generally or our products specifically, consumers’ ability to afford our products, consumer habits with respect to how they spend their food dollars, and the cost and availability of raw materials we need. 15 Table of Contents Disruptions in credit and other financial markets caused by deteriorating or weak national and international economic conditions could, among other things: • make it more difficult for us, our customers or our growers or prospective growers to obtain financing and credit on reasonable terms; • cause lenders to change their practice with respect to the industry generally or our company specifically in terms of granting credit extensions and terms; • impair the financial condition of our customers, suppliers or growers making it difficult for them to meet their obligations and supply raw material; or • impair the financial condition of our insurers, making it difficult or impossible for them to meet their obligations to us.
Our business could suffer significant setbacks in revenues and operating income if we lost one or more of our largest customers, or if our customers’ plans and/or markets should change significantly.
Our business could suffer significant setbacks in revenues and operating income if we lost one or more of our largest customers, or if our customers’ plans and/or markets should change significantly. We depend on contract growers and independent producers to supply us with livestock.
JBS USA’s concentration of ownership could also have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which could cause the market price of our common stock to decline or prevent our shareholders from realizing a premium over the market price for their common stock.
JBS USA Holding’s concentration of ownership could also have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which could cause the market price of our common stock to decline or prevent our shareholders from realizing a premium over the market price for their common stock. 14 Table of Contents Our future financial and operating flexibility may be adversely affected by significant leverage.
We believe our relationship with our employees and union leadership is satisfactory. At any given time, we will likely be in some stage of contract negotiations with various collective bargaining units.
At any given time, we will likely be in some stage of contract negotiations with various collective bargaining units.
In the U.S. retail market, competition is based on product quality, brand awareness, customer service and price. Further, there is some competition with non-vertically integrated further processors in the prepared chicken business. In the Mexico retail and foodservice markets, where product differentiation has traditionally been limited, product quality and price have been the most critical competitive factors.
In the foodservice market, competition is based on consistent quality, product development, service and price. In the U.S. retail market, competition is based on product quality, brand awareness, customer service and price. Further, there is some competition with non-vertically integrated further processors in the prepared chicken business.
Cyber-attacks and other cyber incidents are occurring more frequently and are constantly evolving in nature and sophistication. We have experienced and expect to continue to experience actual or attempted cyber-attacks of our information technology systems or networks. To date, none of these actual or attempted cyber-attacks has had a material effect on our operations or financial condition.
Cyber-attacks and other cyber incidents are occurring more frequently and are constantly evolving in nature and sophistication. 9 Table of Contents We have experienced and expect to continue to experience actual or attempted cyber-attacks of our information technology systems or networks.
If we do not attract and maintain contracts with growers or maintain marketing and purchasing relationships with independent producers, our production operations could be negatively affected. Changes in consumer preference could negatively impact our business. The food industry in general is subject to changing consumer trends, demands and preferences.
We contract primarily with independent contract growers to raise the live chickens and pigs processed in our operations. If we do not attract and maintain contracts with growers or maintain marketing and purchasing relationships with independent producers, our production operations could be negatively affected. Changes in consumer preference could negatively impact our business.
While our industry generally operates with high employee turnover, any material increases in employee turnover rates (including turnover due to any potential government-mandated COVID-19 vaccinations) or any widespread employee dissatisfaction could also have a material adverse effect on our business, financial condition and results of operations.
While our industry generally operates with high employee turnover, any material increases in employee turnover rates or any widespread employee dissatisfaction could also have a material adverse effect on our business, financial condition and results of operations. Labor shortages and increased turnover or increases in employee and employee-related costs could have adverse effects on our profitability.
While we believe we have identified and discussed below all risk factors affecting our business that we believe are material, there may be additional risks and uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect our business, operations, industry, financial position and financial performance in the future. 6 Table of Contents Business and Operational Risk Factors The COVID-19 pandemic and its impact on business and economic conditions have negatively affected, and could continue to negatively affect our business, results of operations, financial condition and the trading value of our securities.
While we believe we have identified and discussed below all risk factors affecting our business that we believe are material, there may be additional risks and uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect our business, operations, industry, financial position and financial performance in the future.
We also depend on our information technology infrastructure for digital marketing activities and for electronic communications among our locations, personnel, customers, and suppliers. Although our information systems are protected with robust backup systems, including physical and software safeguards and remote processing capabilities, information systems are still vulnerable to cyber-attacks, natural disasters, power losses, unauthorized access, telecommunication failures, and other problems.
Although our information systems are protected with robust backup systems, including physical and software safeguards and remote processing capabilities, information systems by their nature are still vulnerable to cyber-attacks, natural disasters, power losses, unauthorized access, telecommunication failures, and other problems.
For example, we determined on May 30, 2021 that we were the target of an organized cybersecurity attack (the “Cyberattack”) affecting some of the servers supporting our global IT systems.
To date, none of these actual or attempted cyber-attacks has had a material effect on our operations or financial condition. For example, we determined on May 30, 2021 that we were the target of an organized cybersecurity attack (the “Cyberattack”) affecting some of the servers supporting our global IT systems.
We may need to refinance all or a portion of their debt on or before maturity. There can be no assurance that we will be able to refinance any of their debt on commercially reasonable terms or at all. The interest rates of our credit facilities are priced using a spread over LIBOR.
We may need to refinance all or a portion of their debt on or before maturity. There can be no assurance that we will be able to refinance any of their debt on commercially reasonable terms or at all. Impairment in the carrying value of goodwill or other identifiable intangible assets could negatively affect our operating results.
Brand value could diminish significantly due to a number of factors, including consumer perception that we have acted in an irresponsible manner, adverse publicity about our products (whether or not valid), our failure to maintain the quality of our products, the failure of our products to deliver consistently positive consumer experiences or the products becoming unavailable to consumers. 10 Table of Contents Media campaigns related to food production; regulatory and customer focus on environmental, social and governance responsibility; and recent increased focus and attention by the U.S. government on market dynamics in the meat processing industry could expose us to additional costs or risks.
Brand value could diminish significantly due to a number of factors, including consumer perception that we have acted in an irresponsible manner, adverse publicity about our products (whether or not valid), our failure to maintain the quality of our products, the failure of our products to deliver consistently positive consumer experiences or the products becoming unavailable to consumers.
Impairment in the carrying value of goodwill or other identifiable intangible assets could negatively affect our operating results. We have a significant amount of goodwill and identifiable intangible assets on our Consolidated Balance Sheets. Under the accounting principles generally accepted in the U.S. (“U.S.
We have a significant amount of goodwill and identifiable intangible assets on our Consolidated Balance Sheets. Under the accounting principles generally accepted in the U.S. (“U.S. GAAP”), goodwill and other identifiable intangible assets with indefinite lives must be evaluated for impairment annually or more frequently if events indicate it is warranted.
Labor shortages and increased turnover or increases in employee and employee-related costs could have adverse effects on our profitability. 15 Table of Contents We and our third-party vendors have experienced increased labor shortages at some of our production facilities and other locations.
We and our third-party vendors have experienced increased labor shortages at some of our production facilities and other locations.
In the past, we have acquired businesses with operations such as pesticide and fertilizer production that involved greater use of hazardous materials and generation of more hazardous wastes than our current operations.
For example, the EPA has proposed Meat and Poultry Products Effluent Guidelines and Standards, which may increase requirements and necessitate further upgrades to existing facilities. 12 Table of Contents In the past, we have acquired businesses with operations such as pesticide and fertilizer production that involved greater use of hazardous materials and generation of more hazardous wastes than our current operations.
Also, no assurance can be given that further enforcement efforts by governmental authorities will not result in the assessment of fines that could adversely affect our financial position, operating results or cash flows. 13 Table of Contents Environmental, Health and Safety Our operations are subject to extensive and increasingly stringent federal, state, local and foreign laws and regulations pertaining to the protection of the environment, including those relating to the discharge of materials into the environment, the handling, treatment and disposal of wastes, and the remediation of soil and groundwater contamination.
Environmental, Health and Safety Our operations are subject to extensive and increasingly stringent federal, state, local and foreign laws and regulations pertaining to the protection of the environment, including those relating to the discharge of materials into the environment, the handling, treatment and disposal of wastes, and the remediation of soil and groundwater contamination.
In the U.K. and continental Europe retail and food service markets, key competitive factors include price, delivering consistent levels of the highest quality, service level and delivering strong innovation. The fresh U.K. and continental Europe market is almost exclusively retailer private label.
In the Mexico retail and foodservice markets, where product differentiation has traditionally been limited, product quality and price have been the most critical competitive factors. In the U.K., the Republic of Ireland, and continental Europe retail and food service markets, key competitive factors include price, delivering consistent levels of the highest quality, service level and delivering strong innovation.
As of December 25, 2022, we employed approximately 61,500 persons. Approximately 46.4% of our workforce are covered by a collective bargaining agreement. Substantially all employees covered under collective bargaining agreements are covered under agreements that expire in 2023 or later. We have not experienced any labor-related work stoppage at any location in over ten years.
Substantially all employees covered under collective bargaining agreements are covered under agreements that expire in 2024 or later. We have not experienced any labor-related work stoppage at any location in over ten years. We believe our relationship with our employees and union leadership is satisfactory.
The potential consequences of a material cyber-security incident include reputational damage, litigation with third parties, regulatory actions, disruption of plant operations, and increased cyber-security protection and remediation costs. There can be no assurance that we will be able to prevent all of the rapidly evolving forms of increasingly sophisticated and frequent cyber-attacks.
There can be no assurance that we will be able to prevent all of the rapidly evolving forms of increasingly sophisticated and frequent cyber-attacks.
In general, the competitive factors in these industries include price, product quality, product development, brand identification, breadth of product line and customer service. Competitive factors vary by major market. In the foodservice market, competition is based on consistent quality, product development, service and price.
In the U.S., Mexico, the U.K., the Republic of Ireland, and continental Europe, we primarily compete with other vertically integrated chicken and pork companies. In general, the competitive factors in these industries include price, product quality, product development, brand identification, breadth of product line and customer service. Competitive factors vary by major market.
Significant amounts of cash flow will be necessary to make payments of interest and repay the principal amount of such indebtedness.
On a consolidated basis, as of December 31, 2023, we had approximately $3.4 billion of unsecured indebtedness and had the ability to borrow approximately $1.1 billion under our credit agreements. Significant amounts of cash flow will be necessary to make payments of interest and repay the principal amount of such indebtedness.
In addition, unknown matters, new laws and regulations, or stricter interpretations of existing laws or regulations may also materially affect our business or operations in the future. Immigration Immigration reform continues to attract significant attention in the public arena and the U.S. Congress.
In addition, unknown matters, new laws and regulations, or stricter interpretations of existing laws or regulations may also materially affect our business or operations in the future. For example, the USDA amended the Packers and Stockyards Act to require new disclosures that live poultry dealers must provide to contract growers.
Any actual or alleged violations of such laws could also harm our reputation or have an adverse impact on our business, financial condition, results of operations and prospects. Our operations may be adversely impacted by Brexit. On January 31, 2020, the U.K. withdrew from the E.U., which is commonly referred to as Brexit.
Any actual or alleged violations of such laws could also harm our reputation or have an adverse impact on our business, financial condition, results of operations and prospects. Labor and Employment Risk Factors Our performance depends on favorable labor relations with our employees and our compliance with labor laws.
Removed
We face risks related to outbreaks of public health crises, including epidemics and infectious diseases such as the ongoing COVID-19 pandemic.
Added
Our operations in foreign jurisdictions also subject us to additional regulatory frameworks, which can increase costs of compliance and subject us to possible fines and penalties, some of which could be significant. In some cases, foreign regulatory frameworks are more stringent or complex than similar regimes in the United States.
Removed
The spread of COVID-19 and the emergence of new variants of the virus across the globe could continue to impact economic activity worldwide by causing disruption and volatility in the global capital markets, as well as a sustained economic slowdown.
Added
For example, the European Union’s Deforestation Regulation (the “EUDR”), which generally becomes effective on December 30, 2024, will require companies trading in cattle, cocoa, coffee, oil palm, rubber, soya, and wood, as well as products derived from these commodities, to conduct extensive diligence on the value chain to ensure the goods do not result from recent deforestation, forest degradation, or breaches of local laws in order to sell such products in the European Union market.
Removed
National and local governments in the United States and around the world could re-implement measures to prevent the spread of COVID-19 and its variants, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, quarantines, curfews, and recommendations to practice physical distancing.
Added
The EUDR, and other current or proposed regulations in the European Union and elsewhere, are likely to increase our compliance costs, could depress sales in such markets if our products are not in compliance by applicable effective dates, and could result in fines and penalties or reputational harm if we do not fully comply.
Removed
These preventative measures could restrict individuals’ daily activities and curtail or cease many businesses’ normal operations.
Added
The fresh U.K. and continental Europe market is almost exclusively retailer private label. The U.K. fresh market is almost exclusively sourced from within the U.K., making vertical integration a prerequisite for operating in that market.
Removed
We continue to monitor and work to comply with the COVID-19 guidelines from public health and governmental authorities concerning the prevention and spread of COVID-19 and its variants, as well as the protection of the health and safety of our personnel, including the April 28, 2020 executive order that designated meat and poultry processing plants as critical infrastructure.
Added
Media campaigns related to food production; regulatory and customer focus on environmental, social and governance responsibility; and recent increased focus and attention by the U.S. government on market dynamics in the meat processing industry could expose us to additional costs or risks.
Removed
Implementing these measures, as well as the global economic impact of the COVID-19 pandemic generally, resulted in the adverse effects to our results of operations, financial condition and liquidity, including reduced activity at our businesses and limited availability and productivity among our workforce and suppliers, as noted below.
Added
We also depend on our information technology infrastructure for digital marketing activities and for electronic communications among our locations, personnel, customers, and suppliers.
Removed
The COVID-19 outbreak had, and further out breaks or future similar outbreaks are likely to have, numerous adverse effects on our business and operations .
Added
The rapid evolution and increased adoption of new technologies, such as artificial intelligence, may intensify our cybersecurity risks. The potential consequences of a material cyber-security incident include reputational damage, litigation with third parties, regulatory actions, disruption of plant operations, and increased cyber-security protection and remediation costs.
Removed
As o f February 9, 2023, all of our production facilities are o perating, although some facilities have reduced production levels and outputs due to increased health and safety measures and current labor shortages experienced throughout both the U.S. and the U.K.
Added
Also, no assurance can be given that further enforcement efforts by governmental authorities will not result in the assessment of fines that could adversely affect our financial position, operating results or cash flows.
Removed
There can be no assurance that the health and safety measures we have taken (which include adding temperature and symptom screening stations for employees prior to entering our facilities an d increasing physical distancing of our employees) will eradicate the risks associated with working in a critical infrastructure industry, including but not limited to, infection of our employees or the temporary closure of a facility, which could, in turn, have a material adverse impact on our reputation, business, results of operations and financial condition.
Added
Any deterioration of those relations or increase in labor costs due to our compliance with labor laws could adversely affect our business. As of December 31, 2023, we employed approximately 61,200 persons. Approximately 35.2% of our workforce are covered by a collective bargaining agreement.
Removed
We have and may continue to experience decreased production and sales due to the changing demand for food product s. COVID-19 and the implementation of restricted living led to a shift in demand from restaurants to retail grocery stores, with consumers eating more at home due to stay-at-home orders during the pandemic.
Added
Moreover, Russia’s suspension of the Black Sea Grain Initiative in June 2023 may further pressure on trade flows in the region.
Removed
In our U.S. and Mexico businesses, demand for parts and whole-birds (typically bound for restaurants) and prepared foods (distributed, in part, to schools) declined, while our U.K. and European business, which is more retail focused, saw less of an impact.

… 28 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−1 removed0 unchanged
Biggest changeProperties Operating Facilities Our main operating facilities are as follows: Number of Facilities (a) Owned Leased Total Capacity (b) Unit of Measure Average Capacity Utilization Chicken Operations: Fresh processing facilities 35 1 36 8.7 million Birds per day 88.4 % Prepared foods facilities 12 2 14 37.3 million Tons per year 95.9 % Hatcheries 45 2 47 3.2 billion Eggs per year 90.9 % Other operation facilities (c) 47 2 49 16.0 million Tons per year 72.0 % Grain elevator 1 — 1 8.6 million Bushels per year 17.8 % Pork Operations: Fresh processing facilities 3 — 3 10,913 Pigs per day 88.6 % Prepared foods facilities 9 — 9 269,488 Tons per year 70.8 % Other operation facilities (d) 2 — 2 11,023 Pigs per day 100.0 % Lamb Operations (e) : Fresh processing facilities 1 — 1 4,960 Lambs per day 64.4 % Prepared foods facilities 1 — 1 8,530 Tons per year 46.6 % Prepared Meals Operations: Prepared foods facilities 5 4 9 288,350 Tons per year 68.1 % Distribution Centers and Other 11 20 31 NA NA (a) Substantially all of our U.S. property, plant and equipment is used as collateral for our secured U.S. credit facility.
Biggest changeProperties Operating Facilities Our main operating facilities are as follows: Number of Facilities Owned Leased Total Capacity (a) Unit of Measure Average Capacity Utilization Chicken Operations: Fresh processing facilities 35 1 36 8.4 million Birds per day 92.2 % Prepared foods facilities 12 2 14 562,257 Tons per year 80.0 % Hatcheries 45 2 47 3.1 billion Eggs per year 92.6 % Other operation facilities (b) 48 1 49 16.0 million Tons per year 73.3 % Grain elevator 1 — 1 8.6 million Bushels per year 24.8 % Pork Operations: Fresh processing facilities 2 — 2 7,425 Pigs per day 90.8 % Prepared foods facilities 7 — 7 250,319 Tons per year 69.0 % Other operation facilities (c) 2 — 2 9,583 Pigs per year 100.0 % Lamb Operations (d) : Fresh processing facilities 1 — 1 3,625 Lambs per day 74.9 % Prepared foods facilities 1 — 1 487,077 Tons per year 82.2 % Prepared Meals Operations: Prepared foods facilities 5 3 8 276,373 Tons per year 73.3 % Distribution Centers and Other 10 17 27 N/A N/A (a) Capacity and utilization numbers do not include idled facilities.
See Part II, Item 8, Notes to Consolidated Financial Statements, “Note 13. Debt.” (b) Capacity and utilization numbers do not include idled facilities. (c) Other facilities in the chicken operations include feed mills, protein conversion and rendering facilities, and pet food facilities in the U.S. (d) Other facilities in the pork operations include company-owned pig farms in the U.K.
(b) Other facilities in the chicken operations include feed mills, protein conversion and rendering facilities, and pet food facilities in the U.S. (c) Other facilities in the pork operations include company-owned pig farms in the U.K. (d) Facilities in lamb operations are from the acquisition of Randall Parker Foods and are in the U.K. 18 Table of Contents
Removed
(e) Facilities in lamb operations are from the acquisition of Randall Parker Foods and are in the U.K. 20 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−0 removed2 unchanged
Biggest changeThe stock price performance represented by this graph is not necessarily indicative of future stock performance. 22 Table of Contents 12/31/17 06/30/18 12/30/18 06/30/19 12/29/19 06/30/20 12/27/20 06/30/21 12/26/21 06/30/22 12/25/22 PPC $ 100.00 $ 64.18 $ 50.19 $ 81.75 $ 106.15 $ 54.38 $ 62.30 $ 71.41 $ 88.70 $ 100.55 $ 76.63 Russell 2000 100.00 107.66 88.99 104.10 111.70 97.20 134.00 157.49 153.85 117.81 122.41 Peer Group 100.00 92.60 86.69 107.30 121.92 101.96 105.86 114.89 125.43 126.90 106.20
Biggest changeThe stock price performance represented by this graph is not necessarily indicative of future stock performance. 20 Table of Contents 12/30/18 06/30/19 12/29/19 06/30/20 12/27/20 06/30/21 12/26/21 06/30/22 12/25/22 06/30/23 12/31/23 PPC $ 100.00 $ 162.86 $ 211.48 $ 108.34 $ 124.12 $ 142.27 $ 176.72 $ 200.32 $ 152.66 $ 137.84 $ 177.42 Russell 2000 100.00 116.98 125.52 109.23 150.58 176.99 172.90 132.39 137.56 148.68 160.85 Peer Group 100.00 123.76 140.63 117.61 122.11 132.53 144.69 146.38 122.50 106.73 99.22
Credit Facility and the indentures governing the Company’s senior notes restrict, but do not prohibit, the Company from declaring dividends.
Revolving Syndicated Facility and the indentures governing the Company’s senior notes restrict, but do not prohibit, the Company from declaring dividends.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “PPC.” Holders The Company estimates that there were approximately 59,300 holders (including individual participants in security position listings) of the Company’s common stock as of February 9, 2023.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “PPC.” Holders As of February 27, 2024, the Company estimates that there were approximately 30,100 holders (including individual participants in security position listings) of the Company’s common stock.
Performance Graph The graph below shows a comparison from December 31, 2017 through December 25, 2022 of the cumulative 5-year total stockholder return of holders of the Company’s common stock with the cumulative total returns of the Russell 2000 index and a customized peer group of three companies: Hormel Foods Corp, Sanderson Farms Inc.
Performance Graph The graph below shows a comparison from December 30, 2018 through December 31, 2023 of the cumulative 5-year total stockholder return of holders of the Company’s common stock with the cumulative total returns of the Russell 2000 index and a customized peer group of two companies: Tyson Foods Inc and Hormel Foods Corp.
In addition, the terms of the Moy Park Multicurrency Revolving Facility Agreement restrict Moy Park’s ability and the ability of certain of Moy Park’s subsidiaries to, among other things, make payments and distributions to us, which could in turn impair our ability to pay dividends to our stockholders. See “Note 13.
In addition, the terms of the U.K. and Europe Revolver Facility Agreement restrict the U.K. and Europe’s ability and the ability of certain of the U.K. and Europe’s subsidiaries to, among other things, make payments and distributions to us, which could in turn impair our ability to pay dividends to our stockholders. See “Note 13.
The graph covers the period from December 31, 2017 to December 25, 2022, and reflects the performance of the Company’s single class of common stock.
The graph covers the period from December 30, 2018 to December 31, 2023, and reflects the performance of the Company’s single class of common stock.
(through July 2022) and Tyson Foods Inc. The graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on December 31, 2017 and tracks it through December 25, 2022.
The graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on December 30, 2018 and tracks it through December 31, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

81 edited+85 added−57 removed44 unchanged
Biggest change(Unaudited) Year Ended December 25, 2022 December 26, 2021 (In thousands) Net income $ 746,538 $ 31,268 Add: Interest expense, net 143,644 139,736 Income tax expense 278,935 61,122 Depreciation and amortization 403,110 380,824 EBITDA 1,572,227 612,950 Add: Foreign currency transaction losses (gains) 30,817 (9,382) Transaction costs related to acquisitions 948 18,858 Expenses related to the DOJ agreement and litigation settlements 34,086 656,225 Restructuring activities losses 30,466 5,802 Hometown Strong commitment expenses — 1,000 Consumption of Pilgrim’s Food Masters inventory fair value step-up increment — 4,974 Minus: Property insurance recoveries on Mayfield tornado losses 19,580 — Gain recognized on deconsolidation of subsidiary — 1,131 Net income attributable to noncontrolling interest 608 268 Adjusted EBITDA $ 1,648,356 $ 1,289,028 36 Table of Contents Reconciliation of Adjusted Net Income (Unaudited) Year Ended December 25, 2022 December 26, 2021 (In thousands, except per share data) Net income attributable to Pilgrim's $ 745,930 $ 31,000 Adjustments: Foreign currency transaction losses (gains) 30,817 (9,382) Restructuring activities losses 30,466 5,802 Transaction costs related to acquisitions 948 18,858 DOJ agreement and litigation settlements 34,086 656,225 Hometown Strong commitment expenses — 1,000 Consumption of Pilgrim’s Food Masters inventory fair value step-up increment — 4,974 Loss on early extinguishment of debt recognized as a component of interest expense — 24,654 Negative adjustment to the gain recognized on the bargain purchase of PPL (19,580) — Gain recognized on deconsolidation of subsidiary — (1,131) Net tax expense (benefit) of adjustments (a) (19,115) (174,619) Adjusted net income attributable to Pilgrim's $ 803,552 $ 557,381 Weighted average diluted shares of common stock outstanding 240,394 244,129 Adjusted net income attributable to Pilgrim's per common diluted share $ 3.34 $ 2.28 (a) Net tax impact of adjustments represents the tax impact of all adjustments shown above with the exclusion of the DOJ agreement as this item is non-deductible for tax purposes.
Biggest change(Unaudited) Year Ended December 31, 2023 December 25, 2022 Net income $ 322,317 $ 746,538 Add: Interest expense, net 166,621 143,644 Income tax expense 42,905 278,935 Depreciation and amortization 419,900 403,110 EBITDA 951,743 1,572,227 Add: Foreign currency transaction losses 20,570 30,817 Transaction costs related to acquisitions — 948 Litigation settlements expense 39,400 34,086 Restructuring activities losses 44,345 30,466 Minus: Property insurance recoveries 21,124 19,580 Net income attributable to noncontrolling interest 743 608 Adjusted EBITDA $ 1,034,191 $ 1,648,356 36 Table of Contents Reconciliation of Adjusted Net Income (Unaudited) Year Ended December 31, 2023 December 25, 2022 Net income attributable to Pilgrim’s $ 321,574 $ 745,930 Add: Foreign currency transaction losses 20,570 30,817 Restructuring activities losses 44,345 30,466 Transaction costs related to acquisitions — 948 Litigation settlements 39,400 34,086 Loss on early extinguishment of debt recognized as a component of interest expense (a) 20,694 — Minus: Property insurance recoveries 21,124 19,580 Adjusted net income attributable to Pilgrim’s before tax impact of adjustments 425,459 822,667 Net tax benefit of adjustments (b) (25,140) (19,115) Adjusted net income attributable to Pilgrim ’ s $ 400,319 $ 803,552 Weighted average diluted shares of common stock outstanding 237,297 240,394 Adjusted net income attributable to Pilgrim ’ s per common diluted share $ 1.69 $ 3.34 (a) The loss on early extinguishment of debt recognized as a component of interest expense was due to the repurchase of the Senior Notes due 2027.
Some of the limitations of these measures are: • They do not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments; 35 Table of Contents • They do not reflect changes in, or cash requirements for, our working capital needs; • They do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt; • Although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; • They are not adjusted for all noncash income or expense items that are reflected in our statements of cash flows; • EBITDA does not reflect the impact of earnings or charges attributable to noncontrolling interests; • They do not reflect the impact of earnings or charges resulting from matters we consider to not be indicative of our ongoing operations; and • They do not reflect limitations on or costs related to transferring earnings from our subsidiaries to us.
Some of the limitations of these measures are: • They do not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments; • They do not reflect changes in, or cash requirements for, our working capital needs; 35 Table of Contents • They do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt; • Although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; • They are not adjusted for all noncash income or expense items that are reflected in our statements of cash flows; • EBITDA does not reflect the impact of earnings or charges attributable to noncontrolling interests; • They do not reflect the impact of earnings or charges resulting from matters we consider to not be indicative of our ongoing operations; and • They do not reflect limitations on or costs related to transferring earnings from our subsidiaries to us.
To support the communities where our team members live and work, we invested more than $20 million in local projects focused on alleviating food insecurity, strengthening long-term community infrastructure and well-being and aiding COVID-19 emergency response and relief efforts through our Hometown Strong initiative. Finally, ensuring the well-being of animals under our care is an uncompromising commitment at Pilgrims.
To support the communities where our team members live and work, we invested more than $20 million in local projects focused on alleviating food insecurity, strengthening long-term community infrastructure and well-being, and aiding COVID-19 emergency response and relief efforts through our Hometown Strong initiative. Finally, ensuring the well-being of animals under our care is an uncompromising commitment at Pilgrim’s.
The provision for income taxes has been determined using the asset and liability approach of accounting for income taxes. For the unitary states, we have an obligation to make tax payments to JBS USA Holdings for our share of the unitary taxable income, which is included in taxes payable in our Consolidated Balance Sheets.
The provision for income taxes has been determined using the asset and liability approach of accounting for income taxes. For the unitary states, we have an obligation to make tax payments to JBS USA Food Company Holdings for our share of the unitary taxable income, which is included in taxes payable in our Consolidated Balance Sheets.
In support of this initiative, in April 2021, we 26 Table of Contents issued $1.0 billion of sustainability-linked bonds, which require us to reduce our Scope 1 and 2 global greenhouse gas emissions intensity by 30% by 2030. Social Responsibility . Safety of our team members is a condition at Pilgrim’s.
In support of this initiative, in April 2021, we issued $1.0 billion of sustainability-linked bonds, which require us to reduce our Scope 1 and 2 global greenhouse gas emissions intensity by 30% by 2030. Social Responsibility . Safety of our team members is a condition at Pilgrim’s.
Generally, we perform an evaluation of whether any lower of cost or market adjustments are required at the country level based on a number of factors, including: (1) pools of related inventory, (2) product continuation or discontinuation, (3) estimated market selling prices and (4) expected distribution channels.
Generally, we perform an evaluation of whether any lower of cost or net realizable value adjustments are required at the country level based on a number of factors, including: (1) pools of related inventory, (2) product continuation or discontinuation, (3) estimated market selling prices and (4) expected distribution channels.
The change in income taxes, which includes income taxes receivables, income taxes payable, deferred tax assets, deferred tax liabilities, reserves for uncertain tax positions and the tax components within accumulated other comprehensive loss, represented a $142.5 million use of cash in 2022. This change resulted primarily from the timing of estimated tax payments and higher profitability in 2022.
This change resulted primarily from the timing of estimated tax payments and lower profitability in 2023. The change in income taxes, which includes income taxes receivables, income taxes payable, deferred tax assets, deferred tax liabilities, reserves for uncertain tax positions and the tax components within accumulated other comprehensive loss, represented a $142.5 million use of cash in 2022.
Goodwill represents the excess of the aggregate purchase price over the fair value of the net identifiable assets acquired in a business combination. Identified intangible assets represent trade names, customer relationships and non-compete agreements arising from acquisitions that are recorded at fair value as of the date acquired less accumulated amortization, if any.
Goodwill represents the excess of the aggregate purchase price over the fair value of the net identifiable assets acquired in a business combination. Identified intangible assets represent trade names and customer relationships arising from acquisitions that are recorded at fair value as of the date acquired less accumulated amortization, if any.
(d) Includes agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. W e expect cash flows from operations, combined with availability under the U.S.
(c) Includes agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. 30 Table of Contents W e expect cash flows from operations, combined with availability under the U.S.
The health of our workforce was our top priority throughout the COVID-19 pandemic, and we implemented hundreds of safety measures within our facilities, constantly evolving our operations as needed.
The health of our workforce was our top priority throughout the COVID-19 pandemic, and we implemented hundreds of safety measures within our facilities, constantly 23 Table of Contents evolving our operations as needed.
Contractual Obligations In addition to our debt commitments at December 25, 2022, we had other commitments and contractual obligations that require us to make specified payments in the future. The following table summarizes the total amounts due as of December 25, 2022 under all debt agreements, commitments and other contractual obligations.
Contractual Obligations In addition to our debt commitments at December 31, 2023, we had other commitments and contractual obligations that require us to make specified payments in the future. The following table summarizes the total amounts due as of December 31, 2023 under all debt agreements, commitments and other contractual obligations.
This primarily 33 Table of Contents includes leg quarters, wings, tenders and offal, which are carried in inventory at the estimated recovery amounts, with the remaining amount being reflected as our breast meat cost.
This primarily includes leg quarters, wings, tenders and offal, which are carried in inventory at the estimated recovery amounts, with the remaining amount being reflected as our breast meat cost.
Management assessed if events or changes in circumstances indicated that the aggregate carrying amount of its identified intangible assets with definite lives might not be recoverable and determined that there were no impairment indicators during the year ended December 25, 2022 and year ended December 26, 2021. Litigation and Contingent Liabilities.
Management assessed if events or changes in circumstances indicated that the aggregate carrying amount of its identified intangible assets with definite lives might not be recoverable and determined that there were no impairment indicators during the years ended December 31, 2023 and December 25, 2022. Litigation and Contingent Liabilities.
Identifiable intangible assets with definite lives, such as customer relationships, non-compete agreements and trade names that we expect to use for a limited amount of time, are amortized over their estimated useful lives on a straight-line basis. The useful lives range from three to 20 years for non-compete agreements and trade names and three to 16 years for customer relationships.
Identifiable intangible assets with definite lives, such as customer relationships and trade names that we expect to use for a limited amount of time, are amortized over their estimated useful lives on a straight-line basis. The useful lives range from 15 to 20 years for trade names and three to 18 years for customer relationships.
Accounts payable and accrued expenses, including accounts payable to related parties, represented a $359.6 million source of cash in 2021. This change resulted primarily from the timing of payments as well as increased prices for feed ingredients, transportation and packaging materials.
Accounts payable and accrued expenses, including accounts payable to related parties, represented a $263.3 million source of cash in 2022. This change resulted primarily from the timing of payments as well as increased prices for feed ingredients, transportation and packaging materials.
As a percent of net sales, interest expense in 2022 and 2021 was 0.9% and 1.0%, respectively. Income taxes. Our consolidated income tax expense in 2022 was $278.9 million, compared to income tax expense of $61.1 million in 2021.
As a percent of net sales, interest expense in 2023 and 2022 was 1.0% and 0.8%, respectively. Income taxes. Our consolidated income tax expense in 2023 was $42.9 million, compared to income tax expense of $278.9 million in 2022.
Other items affecting net noncash expenses were individually immaterial. Changes in Operating Assets and Liabilities The change in trade accounts and other receivables, including accounts receivable from related parties, represented a $149.6 million use of cash in 2022. The change in cash was primarily due to the timing of customer payments and the increase in sales prices.
Other items affecting net noncash expenses were individually immaterial. Changes in Operating Assets and Liabilities The change in trade accounts and other receivables, including accounts receivable from related parties, represented a $19.0 million use of cash in 2023. The change in cash was primarily due to the timing of customer payments.
We use various market valuation techniques to determine the fair value of its identified intangible assets. Goodwill and other intangible assets with indefinite lives are not amortized but are tested for impairment on an annual basis in the fourth quarter of each fiscal year or more frequently if impairment indicators arise.
We use various market valuation techniques to determine the fair value of our identified intangible assets. Goodwill is not amortized but is tested for impairment on an annual basis in the fourth quarter of each fiscal year or more frequently if impairment indicators arise.
If actual results are materially different than the assumptions used to determine fair value of the assets and liabilities acquired through a business combination, it is possible that adjustments to the carrying values of such assets and liabilities will have an impact on our net earnings. See Part II. Item 8. Notes to Consolidated Financial Statements, “2.
If actual results are materially different than the assumptions used to determine fair value of the assets and liabilities acquired through a business combination, it is possible that adjustments to the carrying values of such assets and liabilities will have an impact on our net earnings.
The change in cash resulted from an increase in our raw materials and work-in-process inventory values due to higher input costs. The change in inventories represented a $177.9 million use of cash in 2021. The change in cash resulted from an increase in our raw materials and work-in-process inventory.
The change in cash resulted from an decrease in our raw materials and work-in-process inventory values. The change in inventories represented a $472.2 million use of cash in 2022. The change in cash resulted from an increase in our raw materials and work-in-process inventory values due to higher input costs.
Proceeds from property disposals were primarily for the sale of farms in Mexico. Proceeds from insurance recoveries reflects cash received on property insurance recoveries related to the Mayfield, Kentucky tornado that occurred in December 2021.
Proceeds from insurance recoveries reflects cash received on property insurance recoveries related to the Mayfield, Kentucky tornado that occurred in December 2021. Proceeds from property disposals were primarily for the sale of a farm in Mexico and other miscellaneous equipment.
The impact of the ongoing war and sanctions is not limited to businesses that operate in Russia and Ukraine and is negatively impacting other global economic markets including where we operate.
The impact of the ongoing war and sanctions has not been limited to businesses that operate in Russia and Ukraine and has negatively impacted and will likely continue to negatively impact other global economic markets including where we operate.
We eliminate all significant affiliate accounts and transactions upon consolidation. U.S. Reportable Segment. Cost of sales incurred by our U.S. operations in 2022 increased $1.1 billion, or 13.7%, from cost of sales incurred by our U.S. operations in 2021.
We eliminate all significant affiliate accounts and transactions upon consolidation. U.S. Reportable Segment. Cost of sales incurred by our U.S. operations in 2023 increased $192.8 million, or 2.1%, from cost of sales incurred by our U.S. operations in 2022.
The change in trade accounts and other receivables, including accounts receivable from related parties, represented a $259.4 million use of cash in 2021. The change in cash was primarily due to the timing of customer payments. The change in inventories represented a $472.2 million use of cash in 2022.
The change in trade accounts and other receivables, including accounts receivable from related parties, represented a $149.6 million use of cash in 2022. The change in cash was primarily due to the timing of customer payments. The change in inventories represented a $12.6 million source of cash in 2023.
Sustainability We believe sustainability involves continuously improving social responsibility, economic viability and environmental stewardship. We are committed to helping society meet the global challenge of feeding a growing population in a responsible matter. Environmental Stewardship .
We continue to focus on partnering with our Key Customers and increasing operational efficiency. Sustainability We believe sustainability involves continuously improving social responsibility, economic viability and environmental stewardship. We are committed to helping society meet the global challenge of feeding a growing population in a responsible matter. Environmental Stewardship .
Mexico sales generated in 2022 increased $115.8 million, or 6.7%, from Mexico sales generated in 2021 primarily because of an increase in net sales per pound and the favorable impact of foreign currency remeasurement, partially offset by a decrease in sales volume.
Mexico sales generated in 2023 increased $285.9 million, or 15.5%, from sales generated in 2022 primarily because of the favorable impact of foreign currency remeasurement and an increase in sales volume, partially offset by a decrease in net sales price per pound.
We estimate the amount of reserves required for these contingencies when losses are determined to be probable and after considerable analysis of each individual issue. We expense legal costs related to such loss contingencies as they are incurred.
We estimate the amount of reserves required for these contingencies when losses are determined to be probable and after considerable analysis of each individual issue. We expense legal costs related to such loss contingencies as they are incurred. With respect to our environmental remediation obligations, the accrual for environmental remediation liabilities is measured on an undiscounted basis.
We follow provisions under ASC No. 740-10-30-27 in the Expenses-Income Taxes topic with regard to members of a group that file a consolidated tax return but issue separate financial statements. We file our U.S. federal tax return and certain state unitary returns with JBS USA Holdings. Our income tax expense is computed using the separate return method.
We follow provisions under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 740, Income Taxes , with regard to members of a group that file a consolidated tax return but issue separate financial statements. We file certain state unitary returns with JBS USA Food Company Holdings. Our income tax expense is computed using the separate return method.
“Adjusted EBITDA” is calculated by adding to EBITDA certain items of expense and deducting from EBITDA certain items of income that we believe are not indicative of our ongoing operating performance consisting of: (1) foreign currency transaction losses (gains), (2) transaction costs related to business acquisitions, (3) expenses recognized for the DOJ agreement and litigation settlements, (4) restructuring activities losses, (5) Hometown Strong initiative expenses, (6) consumption of the PFM inventory fair value step-up increment, (7) property insurance recoveries on Mayfield tornado losses, (8) gain recognized on deconsolidation of a subsidiary and (9) net income attributable to noncontrolling interest.
“Adjusted EBITDA” is calculated by adding to EBITDA certain items of expense and deducting from EBITDA certain items of income that we believe are not indicative of our ongoing operating performance consisting of: (1) foreign currency transaction losses (gains), (2) transaction costs related to business acquisitions, (3) costs related to litigation settlements, (4) restructuring activities losses, (5) property insurance recoveries, and (6) net income attributable to noncontrolling interest.
These operating results included gross profit of $1.8 billion and generated $669.9 million of cash from operations. We generated operating margins of 6.7% with operating margins of 10.2% and 4.5% in our U.S. and Mexico reportable segments, respectively, and break-even in our U.K. and Europe reportable segment.
These operating results included gross profit of $1.1 billion and generated $677.9 million of cash from operations. We generated consolidated operating margins of 3.0% with operating margins of 2.4%, 2.5%, and 7.3% in our U.S., U.K. and Europe, and Mexico reportable segments, respectively. During 2023, we generated EBITDA and Adjusted EBITDA of $951.7 million and $1,034.2 million, respectively.
U.S. net sales generated in 2022 increased $1.6 billion, or 17.9%, from U.S. net sales generated in 2021 primarily because of an increase in net sales per pound, contributing $1.7 billion, or 18.2 percentage points, to the increase in net sales.
U.S. net sales generated in 2023 decreased $720.6 million, or 6.7%, from U.S. net sales generated in 2022 primarily because of a decrease in net sales per pound, contributing $1.2 billion, or 10.9 percentage points, to the decrease in net sales.
The change in prepaid expenses and other current assets represented a $18.3 million source of cash in 2022. This change resulted primarily from a net decrease in value-added tax receivables and prepaid property insurance. The change in prepaid expenses and other current assets represented a $53.8 million use of cash in 2021.
The change in prepaid expenses and other current assets represented a $17.8 million source of cash in 2023. This change resulted primarily from a net decrease in the commodity derivatives assets. The change in prepaid expenses and other current assets represented a $18.3 million source of cash in 2022.
Year Ended Cash Flows from Investing Activities December 25, 2022 December 26, 2021 (In millions) Acquisitions of property, plant and equipment $ (487.1) $ (381.7) Proceeds from property disposals 35.5 24.7 Proceeds from insurance recoveries 16.0 — Purchase of acquired businesses, net of cash acquired (9.7) (966.8) Cash used in investing activities $ (445.3) $ (1,323.7) Capital expenditures were primarily incurred to improve operational efficiencies and reduce costs for the years ended December 25, 2022 and December 26, 2021.
Year Ended Cash Flows from Investing Activities December 31, 2023 December 25, 2022 (In millions) Acquisitions of property, plant and equipment $ (543.8) $ (487.1) Proceeds from insurance recoveries 20.7 16.0 Proceeds from property disposals 19.8 35.5 Purchase of acquired businesses, net of cash acquired — (9.7) Cash used in investing activities $ (503.4) $ (445.3) Capital expenditures were incurred for growth projects, such as the Athens, GA expansion and the South Georgia protein conversion plant, and to improve operational efficiencies, system enhancement projects, and to reduce costs for the years ended December 31, 2023 and December 25, 2022.
We also continue to focus on operational initiatives that aim to deliver labor efficiencies, better agricultural performance and improved yields. Russia-Ukraine War Impacts The Russia-Ukraine war began in February 2022.
We have responded to these challenges by continuing negotiations with customers to mitigate the impact of extraordinary costs we have experienced. We also continue to focus on operational initiatives that aim to deliver labor efficiencies, better agricultural performance and improved yields. Russia-Ukraine War Impacts The Russia-Ukraine war began in February 2022.
Despite inflationary headwinds and softening consumer demand throughout the U.K. and E.U., we have and will continue to invest in our people, implement supply chain solutions, and conduct customer negotiations for cost recovery.
Despite inflationary headwinds and subdued consumer demand throughout the U.K. and E.U., we have and will continue to invest in our people, implement supply chain solutions, and conduct customer negotiations for cost recovery. Mexico remains a volatile market given inflationary pressures, an evolving global protein industry, and overall business seasonality.
Credit Facility, the Mexico Credit Facility and the U.K. and Europe Credit Facility to provide sufficient liquidity to fund current obligations, projected working capital requirements, maturities of long-term debt and capital spending for at least the next twelve months. Recent Accounting Pronouncements Refer to Part II, Item 8, Notes to Consolidated Financial Statements, “Note 1.
Revolving Syndicated Facility, the Mexico BBVA Credit Facility and the U.K. and Europe Revolver Facility to provide sufficient liquidity to fund current obligations, projected working capital requirements, maturities of long-term debt and capital spending for at least the next twelve months.
Purchase of acquired businesses, net of cash acquired primarily represents a payment for a working capital adjustment related to the acquisitions of PFM and Randall Parker Foods. 31 Table of Contents Year Ended Cash Flows from Financing Activities December 25, 2022 December 26, 2021 (In millions) Payments on revolving line of credit and long-term borrowings $ (388.3) $ (2,006.2) Proceeds from revolving line of credit and long-term borrowings 362.5 2,951.7 Purchase of common stock under share repurchase program (199.6) — Payment of capitalized loan costs (4.7) (22.3) Distribution of equity under Tax Sharing Agreement between JBS USA Food Company Holdings and Pilgrim’s Pride Corporation (2.0) (0.7) Payment on early extinguishment of debt — (21.3) Cash provided by (used in) financing activities $ (232.0) $ 901.3 Proceeds from revolving line of credit and long-term borrowings and payments on revolving line of credit and long-term borrowings are mainly due to borrowings and payments on our U.S.
Year Ended Cash Flows from Financing Activities December 31, 2023 December 25, 2022 (In millions) Proceeds from revolving line of credit and long-term borrowings $ 1,768.2 $ 362.5 Payments on revolving line of credit, long-term borrowings, and finance lease obligations (1,616.3) (388.3) Payment of capitalized loan costs (19.8) (4.7) Payment on early extinguishment of debt (13.8) — Distribution of equity under Tax Sharing Agreement between JBS USA Food Company Holdings and Pilgrim’s Pride Corporation (1.6) (2.0) Purchase of common stock under share repurchase program — (199.6) Cash provided by (used in) financing activities $ 116.7 $ (232.0) Proceeds from revolving line of credit and long-term borrowings are primarily from the offerings of our 2033 and 2034 Senior Notes, as well as borrowings on our 2021 U.S.
We continually strive to improve our welfare efforts through the use of new technologies and the implementation of standards that meet and exceed regulatory requirements and industry guidelines. Governance . To cultivate discipline and drive accountability for Sustainability related matters, a series of key performance indicators have been established to evaluate and monitor progress.
We continually strive to improve our welfare efforts through the use of new technologies and the implementation of standards that meet and exceed regulatory requirements and industry guidelines. Governance . To cultivate discipline and drive accountability for Sustainability related matters, we use our annual budgeting process to establish strategies, plans, and risk mitigation tactics.
The change in income taxes, which includes income taxes receivables, income taxes payable, deferred tax assets, deferred tax liabilities, reserves for uncertain tax positions and the tax components within accumulated other comprehensive loss, represented a $115.2 million source of cash in 2021. This change resulted primarily from the timing of estimated tax payments.
The change in income taxes, which includes income taxes receivables, income taxes payable, deferred tax assets, deferred tax liabilities, reserves for uncertain tax positions and the tax components within accumulated other comprehensive 28 Table of Contents loss, represented a $8.9 million use of cash in 2023.
For indefinite-lived intangible assets, an impairment loss is recognized if the carrying amount of an indefinite-lived intangible asset exceeds the estimated fair value of that intangible asset. Management first reviews relevant qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that an intangible asset is impaired.
Management first reviews relevant qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that an intangible asset is impaired. If management determines there is an indication that the carrying amount of the intangible asset might be impaired, a quantitative impairment test is performed.
This change resulted primarily from a net increase in value-added tax receivables and prepaid property insurance. Accounts payable and accrued expenses, including accounts payable to related parties, represented a $263.3 million source of cash in 2022. This change resulted primarily from the timing of payments as well as increased prices for feed ingredients, transportation and packaging materials.
This change resulted primarily from a net decrease in value-added tax receivables and prepaid property insurance. Accounts payable and accrued expenses, including accounts payable to related parties, represented a $68.7 million use of cash in 2023. This change resulted primarily from the timing of payments.
While there may be master agreements, the contract is only established when the customer’s order is accepted by us. We account for a contract, which may be verbal or written, when it is approved and committed by both parties, the rights of the parties are identified along with payment terms, the contract has commercial substance and collectability is probable.
We account for a contract, which may be verbal or written, when it is approved and committed by both parties, the rights of the parties are identified along with payment terms, the contract has commercial substance and collectability is probable. 31 Table of Contents We evaluate the transaction for distinct performance obligations, which are the sale of our products to customers.
We evaluate the transaction for distinct performance obligations, which are the sale of our products to customers. Since our products are commodity market-priced, the sales price is representative of the observable, standalone selling price.
Since our products are commodity market-priced, the sales price is representative of the observable, standalone selling price.
Other items affecting net noncash expenses were individually immaterial. 30 Table of Contents Items necessary to reconcile from net income to cash flow provided by operating activities included net noncash expenses of $335.8 million for the year ended December 26, 2021.
Partially offsetting the net noncash expenses was an $6.1 million gain on property disposals. Other items affecting net noncash expenses were individually immaterial. Items necessary to reconcile from net income to cash flow provided by operating activities included net noncash expenses of $422.6 million for the year ended December 25, 2022.
Historical Flow of Funds Year Ended Cash Flows from Operating Activities December 25, 2022 December 26, 2021 (In millions) Net income $ 746.5 $ 31.3 Net noncash expenses 422.5 335.8 Changes in operating assets and liabilities: Trade accounts and other receivables (149.6) (259.4) Inventories (472.2) (177.9) Prepaid expenses and other current assets 18.3 (53.8) Accounts payable and accrued expenses 263.3 359.6 Income taxes (142.5) 115.2 Long-term pension and other postretirement obligations (4.1) (18.5) Other operating assets and liabilities (12.3) (5.8) Cash provided by operating activities $ 669.9 $ 326.5 Net Noncash Expenses Items necessary to reconcile from net income to cash flow provided by operating activities included net noncash expenses of $422.5 million for the year ended December 25, 2022.
We expect cash flows from operations, combined with availability under our credit facilities, to provide sufficient liquidity to fund current obligations, projected working capital requirements, maturities of long-term debt and capital spending for at least the next twelve months. 27 Table of Contents Historical Flow of Funds Year Ended Cash Flows from Operating Activities December 31, 2023 December 25, 2022 (In millions) Net income $ 322.3 $ 746.5 Net noncash expenses 462.4 422.6 Changes in operating assets and liabilities: Trade accounts and other receivables (19.0) (149.6) Inventories 12.6 (472.2) Prepaid expenses and other current assets 17.8 18.3 Accounts payable and accrued expenses (68.7) 263.3 Income taxes (8.9) (142.5) Long-term pension and other postretirement obligations (10.0) (4.1) Other operating assets and liabilities (30.7) (12.3) Cash provided by operating activities $ 677.9 $ 669.9 Net Noncash Expenses Items necessary to reconcile from net income to cash flow provided by operating activities included net noncash expenses of $462.4 million for the year ended December 31, 2023.
Cost of sales incurred by the U.K. and Europe operations during 2022 increased $864.2 million, or 22.9%, from cost of sales incurred by the U.K. and Europe operations during 2021 primarily because of increases in cost per pound sold and sales volume of $845.7 million, or 22.5 percentage points, and $548.8 million, or 16.0% percentage points.
Cost of sales incurred by the U.K. and Europe operations during 2023 increased $194.6 million, or 4.2%, from cost of sales incurred by the U.K. and Europe operations during 2022 primarily because of increases in cost per pound sold and the unfavorable impact of foreign currency translation of $257.6 million, or 5.6 percentage points, and $31.1 million, or 0.7 percentage points, respectively.
With respect to our environmental remediation obligations, 34 Table of Contents the accrual for environmental remediation liabilities is measured on an undiscounted basis. These reserves may change in the future due to changes in our assumptions, the effectiveness of strategies, or other factors beyond our control. Income Taxes.
These reserves may change in the future due to changes in our assumptions, the effectiveness of strategies, or other factors beyond our control. Income Taxes.
In addition, the U.S. government and other governments in jurisdictions in which we operate have imposed sanctions and export controls against Russia, Belarus and interests therein and threatened additional sanctions and controls. Our U.K. and 24 Table of Contents Europe business may be impacted by the increase in energy prices and the availability of energy during the winter months.
The U.S. government and other governments in jurisdictions in which we operate have imposed sanctions and export controls against Russia, Belarus and interests therein and threatened additional sanctions and controls.
Cost of sales incurred by the Mexico operations during 2022 increased $256.2 million, or 17.6%, from cost of sales incurred by the Mexico operations during 2021 primarily because of an increase in cost per pound sold and the unfavorable impact of foreign currency remeasurement of $328.8 million, or 22.6 percentage points, and $12.2 million, or 0.8 percentage points, respectively.
Cost of sales incurred by the Mexico operations during 2023 increased $199.6 million, or 11.7%, from cost of sales incurred by the Mexico operations during 2022 primarily because of the unfavorable impact of foreign currency remeasurement and an increase in sales volume which contributed $223.1 million, or 13.0 percentage points, and $79.9 million, or 4.7 percentage points, to the increase in cost of sales, respectively.
Liquidity and Capital Resources Our principal sources of liquidity are cash generated from operations, funds from borrowings, and existing cash on hand. The following table presents our available sources of liquidity as of December 25, 2022: Sources of Liquidity (a) Facility Amount Amount Outstanding Available (In millions) Cash and cash equivalents $ — $ — $ 434.8 Borrowing arrangements: U.S.
The following table presents our available sources of liquidity as of December 31, 2023: Sources of Liquidity Facility Amount Amount Outstanding Available (In millions) Cash and cash equivalents $ 731.2 Borrowing arrangements: U.S.
If management determines it is more likely than not that the carrying amount of a reporting unit goodwill might be impaired, a quantitative analysis is performed. Management performed a qualitative analysis noting that is was not more likely than not that there was goodwill impairment in any of its reporting units as of December 25, 2022.
If management determines it is more 32 Table of Contents likely than not that the carrying amount of a reporting unit goodwill might be impaired, a quantitative impairment test is performed. Management has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative impairment test.
(d) As of December 25, 2022, the U.S. dollar-equivalent of the amount available under the U.K. and Europe Revolver Facility was $124.5 million (£150.0 million).
(b) As of December 31, 2023, the U.S. dollar-equivalent of the amount available under the Mexico BBVA Credit Facility was $65.4 million ($1.1 billion Mexican pesos). (c) As of December 31, 2023, the U.S. dollar-equivalent of the amount available under the U.K. and Europe Revolver Facility was $191.1 million (£150.0 million).
Business Acquisitions” in this annual report for the acquisition-related information associated with significant acquisitions completed in the last three fiscal years. Reconciliation of Net Income to EBITDA and Adjusted EBITDA “EBITDA” is defined as the sum of net income (loss) plus interest, taxes, depreciation and amortization.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA “EBITDA” is defined as the sum of net income (loss) plus interest, taxes, depreciation and amortization.
SG&A expense incurred by the Mexico operations during 2022 increased $4.9 million, or 10.4%, from SG&A expense incurred by the Mexico operations during 2021. SG&A expense increased primarily from increased marketing costs and payroll-related costs. Factors affecting SG&A expense were individually immaterial. Interest expense .
SG&A expense incurred by the Mexico operations during 2023 increased $14.3 million, or 27.6%, from SG&A expense incurred by the Mexico operations during 2022. SG&A expense increased primarily from increased payroll and employee-related costs due to labor reform law changes and the unfavorable impact of foreign currency remeasurement. Other factors affecting SG&A expense were individually immaterial. Interest expense .
During 2022, we generated EBITDA and Adjusted EBITDA of $1.57 billion and $1.65 billion, respectively. A reconciliation of net income to EBITDA and Adjusted EBITDA is included later in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this annual report.
A reconciliation of net income to EBITDA and Adjusted EBITDA is included later in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this annual report. We operate on the basis of a 52/53-week fiscal year that ends on the Sunday falling on or before December 31.
The increase in cost per pound was driven by increased feed ingredients, labor, utilities and other operating costs. The increase in sales volume is primarily from the prior year acquisition of our PFM operations. Partially offsetting these increases was the favorable impact of foreign currency translation of $529.4 million, or 14.0 percentage points.
The increase in cost per pound was driven by increased feed ingredients, labor, utilities and other operating costs. Partially offsetting these increases was the impact of a decrease in sales volume of $94.1 million, or 2.1 percentage points. Other factors affecting cost of sales were individually immaterial. Mexico Reportable Segment.
The increase in income tax expense in 2022 resulted from an increase in pre-tax income during 2022. 2021 Compared to 2020 For discussion of 2021 results of operations in comparison to 2020 results of operations, see the 2021 annual report on Form 10-K filed on February 18, 2022.
The decrease in income tax expense in 2023 resulted from a decrease in pre-tax income during 2023. 26 Table of Contents 2022 Compared to 2021 For discussion of 2022 results of operations in comparison to 2021 results of operations, see Item 7.
Credit Facility Revolving Note Payable (a) 800.0 — 765.0 U.S. Credit Facility Term Loans (b) 700.0 480.1 — Mexico Credit Facility (c) 77.5 — 77.5 U.K. and Europe Revolver Facility (d) 124.5 — 124.5 (a) Availability under the U.S. Credit Facility is also reduced by our outstanding standby letters of credit.
Revolving Syndicated Facility (a) $ 850.0 $ — 824.9 Mexico BBVA Credit Facility (b) 65.4 — 65.4 U.K. and Europe Revolver Facility (c) 191.1 — 191.1 (a) Availability under the U.S. Revolving Syndicated Facility is also reduced by our outstanding standby letters of credit. Standby letters of credit outstanding at December 31, 2023 totaled $25.1 million.
Capital expenditures will primarily be incurred to grow our operations, improve efficiencies and to reduce costs. We expect to fund these capital expenditures with cash flow from operations and proceeds from the revolving lines of credit under our various debt facilities.
Capital Expenditures We anticipate spending between $475 million and $525 million on the acquisition of property, plant and equipment in 2024. Capital expenditures will primarily be incurred to grow our operations, improve efficiencies, to reduce costs, and for system enhancement projects. We expect to fund these capital expenditures with cash flow from operations.
The increases in net sales per pound and sales volumes were partially offset by the unfavorable impact of foreign currency translation of $556.8 million, or 14.2 percentage points, and a decrease in sales volume of $89.7 million, or 2.2 percentage points from the legacy businesses. Mexico Reportable Segment.
The increase in net sales per pound was driven by price increases necessary to recover increased feed ingredients, labor, utilities and other operating costs. The increases in net sales per pound and favorable impact of foreign currency translation were partially offset by a decrease in sales volume of $102.3 million, or 2.1 percentage points. Mexico Reportable Segment.
Through our current customer models and additional negotiations we were able to offset the majority of these cost increases throughout the year. We continue to focus on managing costs, including labor and yield efficiencies, agricultural performance and increasing operational efficiency through investments in capital projects.
We continue to focus on managing costs, including labor and yield efficiencies, agricultural performance and increasing operational efficiencies through investments in capital projects. Commodity prices for chicken in Mexico ended 2023 below prior-year prices despite incremental increases throughout the year. Mexico grain prices were also below prior year levels.
U.K. and Europe Reportable Segment. U.K. and Europe sales generated in 2022 increased $940.7 million, or 23.9%, from U.K. and Europe sales generated in 2021, primarily from an increase in net sales per pound and an increase in sales volume of $867.9 million, or 22.1 percentage points, and $629.6 million, or 16.0 percentage points, respectively.
U.K. and Europe sales generated in 2023 increased $328.6 million, or 6.7%, from sales generated in 2022 primarily from an increase in net sales per pound and the favorable impact of foreign currency translation of $397.3 million, or 8.2 percentage points, and $33.5 million, or 0.7 percentage points, respectively.
Safety and financing concerns in the region are restricting export execution, which is in turn forcing grain and oil demand to find alternative supply. The duration of the war and related volatility makes global markets extremely sensitive to growing-season weather in other global grain producing regions and has led to a large risk premium in futures prices.
Safety and financing concerns in the region are restricting export execution, which is in turn forcing grain and oil demand to find alternative supply.
Reportable Segments We operate in three reportable segments: the U.S., the U.K. and Europe, and Mexico. We measure segment profit as operating income. Corporate expenses are allocated to the Mexico and U.K. and Europe reportable segments based upon various apportionment methods for specific expenditures incurred related thereto with the remaining amounts allocated to the U.S.
Certain corporate expenses are allocated to the Mexico and U.K. and Europe reportable segments based upon various apportionment methods for specific expenditures incurred related thereto with the remaining amounts allocated to the U.S. For additional information, see “Note 20. Reportable Segments” of our Consolidated Financial Statements included in this annual report. Results of Operations 2023 Compared to 2022 Net sales.
These performance indicators are linked with compensation for both senior executive and plant level personnel. As part of our business management processes, progress against these metrics are reviewed at least monthly. In addition, the Board of Directors has formed a Sustainability Committee to provide oversight and counsel on strategies, policies, and investments to reduce the impact of climate change.
This process is further reinforced by a series of key performance indicators to evaluate and monitor progress. These performance indicators are linked with compensation for both senior executive and plant level personnel. As part of our business management processes, progress against these metrics is reviewed at least monthly and evaluated by external agencies to assess progress against industry peers.
Our U.S. and Mexico reportable segments use corn and soybean meal as the main ingredients for feed production, while our U.K. and Europe reportable segment uses wheat, soybean meal and barley as the main ingredients for feed production.
The impact of these measures, now and in the future, along with further escalation of the conflict could adversely affect our business, supply chain or customers. 22 Table of Contents Raw Materials and Input Costs Our U.S. and Mexico segments use corn and soybean meal as the main ingredients for feed production, while our U.K. and Europe segment uses wheat, soybean meal and barley as the main ingredients for feed production.
This gives us the opportunity to continue to create growth and development opportunities, further increasing our position as a leading domestic and global protein company.
This gives us the opportunity to continue to create growth and development opportunities, further increasing our position as a leading domestic and global protein company. We reported net income attributable to Pilgrim’s Pride Corporation of $322.3 million, or $1.36 per diluted common share, and profit before tax totaling $365.2 million, for 2023.
Reportable Segment. Selling, general and administrative (“SG&A”) expense incurred by the U.S. operations during 2022 decreased $601.1 million, or 63.7%, from SG&A expense incurred by the U.S. operations during 2021 primarily from a net decrease in the recognition of legal settlements of $622.1 million.
Selling, general and administrative (“SG&A”) expense incurred by the U.S. operations during 2023 decreased $58.3 million, or 17.0%, from SG&A expense incurred by the U.S. operations during 2022 primarily from decreases in legal defense costs, incentive compensation costs, and employee relation costs. Other factors affecting SG&A expense were individually immaterial. U.K. and Europe Reportable Segment.
Net noncash expense items included $380.8 million of depreciation and amortization, a $24.7 million loss on early extinguishment of debt, $11.7 million of stock-based compensation expense and loan cost amortization of $5.1 million. Partially offsetting the net noncash expenses was $86.4 million of deferred income tax benefit and a $1.5 million gain on property disposals.
Net noncash expense items included $419.9 million of depreciation and amortization, loss on early extinguishment of debt recognized as a component of interest expense of $20.7 million, loan cost amortization of $7.4 million, stock-based compensation expense of $7.2 million, deferred income tax expense of $6.7 million, asset impairment of $4.0 million, and accretion of bond discount of $2.3 million.
The following table provides additional information regarding net sales: Change from 2021 Sources of net sales 2022 Amount Percent (In thousands, except percent data) U.S. $ 10,748,350 $ 1,634,471 17.9 % U.K. and Europe 4,874,738 940,676 23.9 % Mexico 1,845,289 115,772 6.7 % Total net sales $ 17,468,377 $ 2,690,919 18.2 % U.S. Reportable Segment.
The following table provides additional information regarding net sales: Change from 2022 Sources of net sales 2023 Amount Percent (In thousands, except percent data) U.S. $ 10,027,742 $ (720,608) (6.7) % U.K. and Europe 5,203,322 328,584 6.7 % Mexico 2,131,153 285,864 15.5 % Total net sales $ 17,362,217 $ (106,160) (0.6) % U.S. Reportable Segment.
Stockholders’ Equity.” Long-Term Debt and Other Borrowing Arrangements Our long-term debt and other borrowing arrangements consist of senior notes, revolving credit facilities and other term loan agreements. For a description, refer to Part II, Item 8, Notes to Consolidated Financial Statements, “Note 13.
For a description, refer to Part II, Item 8, Notes to Consolidated Financial Statements, “Note 13.
Cost of sales increased primarily because of increased cost per pound sold of $1.1 billion, or 14.0 percentage points, partially offset by a slight decrease in sales volume of $19.5 million, or 0.2 percentage points.
Cost of sales increased primarily because of increased sales volume of $392.9 million, or 4.2 percentage points, partially offset by a decrease in cost per pound sold of $203.9 million, or 2.2 percentage points. The increase in our sales volume was primarily driven by our fresh products divisions. Other factors affecting U.S. cost of sales were individually immaterial.
Global Economic Conditions During 2022, we continued to experience solid recoveries in volume throughout the business from prior year levels as COVID-19 restrictions eased, but were confronted with significant challenges from inflation in commodity, labor and other operating costs across all our businesses.
Any reference we make to a particular year applies to our fiscal year and not the calendar year. Fiscal 2023 was a 53-week accounting cycle and 2022 was a 52-week accounting cycle. Global Economic Conditions During 2023, we continued to experience challenges from inflation in commodity, labor and other operating costs across all our businesses.
The increase in net sales per pound and the impact of the favorable impact of foreign currency remeasurement contributed $203.9 million, or 11.8 percentage points, and $12.6 million, 27 Table of Contents or 0.7 percentage points, respectively, to the increase in net sales. The increase in net sales per pound was primarily due to demand driving up commodity chicken prices.
The favorable impact of foreign currency remeasurement and increase in sales volume contributed $249.0 million, or 13.5 percentage points, and $86.2 million, or 4.7 percentage points, respectively, to the increase in net sales. The favorable impact of foreign currency remeasurement was due to a strengthening of the Mexican peso against the U.S. dollar.
The increase in SG&A expense in our legacy U.K. and Europe was mainly due to increased advertising costs, increased payroll costs, and an increase in contract labor services. Other factors affecting SG&A expense were individually immaterial. Mexico Reportable Segment.
SG&A expense incurred by the U.K. and Europe operations during 2023 decreased $8.9 million, or 4.2%, from SG&A expense incurred by the U.K. and Europe operations during 2022 primarily due to decreased labor and employee-related costs, decreased advertising costs, and the unfavorable impact of foreign currency translation. Other factors affecting SG&A expense were individually immaterial. Mexico Reportable Segment.
Consolidated interest expense increased 4.7% to $152.7 million in 2022 from $145.8 million in 2021, primarily due to an increase in interest expense on outstanding borrowings of $27.3 million.
Consolidated interest expense increased 16.0% to $166.6 million in 2023 from $143.6 million in 2022, primarily from an increase of $34.3 million in interest expense on outstanding borrowings and a loss on early extinguishment of debt recognized as a component of interest expense of $20.7 million, partially offset by an increase in interest income of $26.6 million.
(b) Long-term debt is presented at face value and excludes $35.0 million in letters of credit outstanding related to normal business transactions. 32 Table of Contents (c) Interest expense in the table above assumes the continuation of interest rates and outstanding borrowings as of December 25, 2022.
(b) Interest expense in the table above assumes the continuation of interest rates and outstanding borrowings as of December 31, 2023.
The following tables provide gross profit information: Change from 2021 Percent of Net Sales Components of gross profit 2022 Amount Percent 2022 2021 (In thousands, except percent data) Net sales $ 17,468,377 $ 2,690,919 18.2 % 100.0 % 100.0 % Cost of sales 15,656,574 2,244,943 16.7 % 89.6 % 90.8 % Gross profit $ 1,811,803 $ 445,976 32.7 % 10.4 % 9.2 % Sources of gross profit 2022 Change from 2021 Amount Percent (In thousands, except percent data) U.S. $ 1,435,905 $ 509,985 55.1 % U.K. and Europe 240,672 76,448 46.6 % Mexico 135,172 (140,457) (51.0) % Elimination 54 — — % Total gross profit $ 1,811,803 $ 445,976 32.7 % Sources of cost of sales 2022 Change from 2021 Amount Percent (In thousands, except percent data) U.S. $ 9,312,445 $ 1,124,486 13.7 % U.K. and Europe 4,634,066 864,228 22.9 % Mexico 1,710,117 256,229 17.6 % Elimination (a) (54) — — % Total cost of sales $ 15,656,574 $ 2,244,943 16.7 % (a) Our Consolidated Financial Statements include the accounts of our company and our majority owned subsidiaries.
The following tables provide gross profit information: Change from 2022 Percent of Net Sales Components of gross profit 2023 Amount Percent 2023 2022 (In thousands, except percent data) Net sales $ 17,362,217 $ (106,160) (0.6) % 100.0 % 100.0 % Cost of sales 16,243,816 587,242 3.8 % 93.6 % 89.6 % Gross profit $ 1,118,401 $ (693,402) (38.3) % 6.4 % 10.4 % Sources of gross profit 2023 Change from 2022 Amount Percent (In thousands, except percent data) U.S. $ 522,484 $ (913,421) (63.6) % U.K. and Europe 374,699 134,027 55.7 % Mexico 221,432 86,260 63.8 % Elimination (a) (214) (268) (496.3) % Total gross profit $ 1,118,401 $ (693,402) (38.3) % Sources of cost of sales 2023 Change from 2022 Amount Percent (In thousands, except percent data) U.S. $ 9,505,258 $ 192,813 2.1 % U.K. and Europe 4,828,623 194,557 4.2 % Mexico 1,909,721 199,604 11.7 % Elimination (a) 214 268 (496.3) % Total cost of sales $ 16,243,816 $ 587,242 3.8 % (a) Our Consolidated Financial Statements include the accounts of our company and our majority owned subsidiaries.
Partially offsetting these increases in cost of sales was a 28 Table of Contents decrease in sales volume of $84.8 million, or 5.8 percentage points. Other factors affecting cost of sales were individually immaterial. Operating income. Operating income increased $965.4 million, or 457.2%, from $211.2 million generated for 2021 to $1.2 billion generated for 2022.
Other factors affecting cost of sales were individually immaterial. Operating income. Operating income decreased $654.3 million, or 55.6%, from $1,176.6 million generated for 2022 to $522.3 million generated for 2023.
We recognize potential interest and penalties related to income tax positions as a part of the income tax provision. Business Combination Accounting . We allocate the consideration of an acquired business to its identifiable assets and liabilities based on estimated fair values.
It is reasonable to expect that changes in external factors will result in changes to the assumptions noted above that are used to measure pension obligations and net periodic benefit cost in future periods. Business Combination Accounting . We allocate the consideration of an acquired business to its identifiable assets and liabilities based on estimated fair values.

… 143 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

13 edited+0 added−1 removed12 unchanged
Biggest changeYear Ended December 25, 2022 Amount Impact of 10% Increase in Feed Ingredient Prices (In thousands) Feed ingredient purchases (a) $ 4,536,861 $ 453,686 Feed ingredient inventory (b) 240,151 24,015 (a) Based on our feed consumption, a 10% increase in the price of our feed ingredient purchases will have increased cost of sales for the year ended December 25, 2022. 37 Table of Contents (b) A 10% increase in ending feed ingredient prices would have increased inventories as of December 25, 2022.
Biggest changeYear Ended December 31, 2023 Amount Impact of 10% Increase in Feed Ingredient Prices (In thousands) Feed ingredient purchases (a) $ 4,298,504 $ 429,850 Feed ingredient inventory (b) 206,198 20,620 (a) Based on our feed consumption, a 10% increase in the price of our feed ingredient purchases will have increased cost of sales for the year ended December 31, 2023.
We anticipate inflation in 2023 will be moderate compared to 2022 based on the monetary policy measures implemented in the jurisdictions in which we operate. 39 Table of Contents
We anticipate inflation in 2024 will be moderate compared to 2023 based on the monetary policy measures implemented in the jurisdictions in which we operate. 39 Table of Contents
We periodically enter into foreign currency forward contracts, which are designated and qualify as cash flow hedges, to hedge foreign currency risk on a portion of sales generated and purchases made by our U.K. 38 Table of Contents and Europe subsidiaries.
We periodically enter into foreign currency forward contracts, which are designated and qualify as cash flow hedges, to hedge foreign currency risk on a portion of sales generated and purchases made by our U.K. and Europe subsidiaries.
The Mexican peso exchange rate can directly and indirectly impact our financial condition and results of operations. For this sensitivity analysis, market risk is estimated as a hypothetical 10% change in the current exchange rate used to convert Mexican pesos to U.S. dollars as of December 25, 2022. However, fluctuations greater than 10% could occur.
The Mexican peso exchange rate can directly and indirectly impact our financial condition and results of operations. For this sensitivity analysis, market risk is estimated as a hypothetical 10% change in the current exchange rate used to convert Mexican pesos to U.S. dollars as of December 31, 2023. However, fluctuations greater than 10% could occur.
A 10% increase in corn, soybean meal, soybean oil and wheat prices would have resulted in an increase in the fair value of our net commodity derivative asset position, including margin cash, as of December 25, 2022. Interest Rates Fixed-rate debt .
A 10% increase in corn, soybean meal, soybean oil and wheat prices would have resulted in an increase in the fair value of our net commodity derivative asset position, including margin cash, as of December 31, 2023. Interest Rates Fixed-rate debt .
Certain postretirement funds in which we participate hold significant amounts of mortgage-backed securities. However, none of the mortgages collateralizing these securities are considered subprime. Impact of Inflation Our global operations were significantly impacted by inflation during 2022.
Certain postretirement funds in which we participate hold significant amounts of mortgage-backed securities. However, none of the mortgages collateralizing these securities are considered subprime. Impact of Inflation Our global operations were impacted by inflation during 2023, but less significantly than in 2022.
A 10% strengthening in the British pound against the U.S. dollar exchange rate would cause an increase in the net assets of our U.K. and Europe subsidiaries by $294.4 million. Cash flow hedging transactions.
A 10% strengthening in the British pound against the U.S. dollar exchange rate would cause an increase in the net assets of our U.K. and Europe subsidiaries by $457.6 million. Cash flow hedging transactions.
Market risk for fixed-rate debt is estimated as the potential decrease in fair value resulting from a hypothetical increase in interest rates of 10%. Using a discounted cash flow analysis, a hypothetical 10% increase in interest rates would have decreased the fair value of our fixed-rate debt by $73.5 million as of December 25, 2022. Variable-rate debt .
Market risk for fixed-rate debt is estimated as the potential decrease in fair value resulting from a hypothetical increase in interest rates of 10%. Using a discounted cash flow analysis, a hypothetical 10% increase in interest rates would have decreased the fair value of our fixed-rate debt by $131.1 million as of December 31, 2023.
As of December 25, 2022, our U.K. and Europe subsidiaries that are denominated in the British pound had net assets of $2.6 billion. A 10% weakening in the British pound against the U.S. dollar exchange rate would cause a decrease in the net assets of our U.K. and Europe subsidiaries by $240.9 million.
As of December 31, 2023, our U.K. and Europe subsidiaries that are denominated in the British pound had net assets of $4.1 billion. A 10% weakening in the British pound against the U.S. dollar exchange rate would cause a decrease in the net assets of our U.K. and Europe subsidiaries by $374.4 million.
Year Ended December 25, 2022 Impact of 10% Deterioration in Exchange Rate (a) Impact of 10% Appreciation in Exchange Rate (b) (In thousands, except for exchange rate data) Foreign currency remeasurement gain (loss) $ (4,672) $ 5,710 Exchange rate of Mexican pesos to the U.S. dollar: As reported 19.37 19.37 Hypothetical 10% change 21.30 17.43 U.K. and Europe Subsidiaries We are exposed to foreign exchange-related variability of investments and earnings from our U.K. and Europe subsidiaries.
Year Ended December 31, 2023 Impact of 10% Deterioration in Exchange Rate (a) Impact of 10% Appreciation in Exchange Rate (b) (In thousands, except for exchange rate data) Foreign currency remeasurement gain (loss) $ (18,310) $ 22,379 Exchange rate of Mexican pesos to the U.S. dollar: As reported 16.97 16.97 Hypothetical 10% change 18.67 15.28 U.K. and Europe Subsidiaries We are exposed to foreign exchange-related variability of investments and earnings from our U.K. and Europe subsidiaries.
December 25, 2022 Amount Impact of 10% Increase to the Fair Value of Commodity Derivative Assets (In thousands) Commodity derivative assets (a) $ 42,651 $ 4,265 (a) We purchase commodity derivative financial instruments, specifically exchange-traded futures and options, in an attempt to mitigate price risk related to our anticipated consumption of commodity inputs for the next 12 months.
(b) A 10% increase in ending feed ingredient prices would have increased inventories as of December 31, 2023. 37 Table of Contents December 31, 2023 Amount Impact of 10% Increase to the Fair Value of Commodity Derivative Assets (In thousands) Commodity derivative assets (a) $ 35,812 $ 3,581 (a) We purchase commodity derivative financial instruments, specifically exchange-traded futures and options, in an attempt to mitigate price risk related to our anticipated consumption of commodity inputs for the next 12 months.
A 10% weakening or strengthening of the U.S. dollar against the British pound and U.S. dollar against the euro would result in immaterial changes in the fair values of these derivative instruments. No assurance can be given as to how future movements in currency rates could affect our future financial condition or results of operations.
A 10% weakening or strengthening of the U.S. dollar against the British pound and U.S. dollar against the euro would result in immaterial changes in the fair values of these derivative instruments.
Quality of Investments Certain retirement plans that we sponsor invest in a variety of financial instruments.
No assurance can be given as to how future movements in currency rates could affect our future financial condition or results of operations. 38 Table of Contents Quality of Investments Certain retirement plans that we sponsor invest in a variety of financial instruments.
Removed
Our variable-rate debt instruments represent approximately 15.2% of our total debt as of December 25, 2022. Holding other variables constant, including levels of indebtedness, an increase in interest rates of 100 basis points would have increased our interest expense by an $7.2 million for the year ended December 25, 2022.

Other PPC 10-K year-over-year comparisons