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What changed in Tyson Foods's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Tyson Foods'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.

+345 added−331 removedSource: 10-K (2023-11-13) vs 10-K (2022-11-14)

Top changes in Tyson Foods's 2023 10-K

345 paragraphs added · 331 removed · 259 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

46 edited+6 added−9 removed46 unchanged
Biggest changeWe undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. 7 Among the factors that may cause actual results and experiences to differ from anticipated results and expectations expressed in such forward-looking statements are the following: (i) the COVID-19 pandemic and associated responses thereto have had an adverse impact on our business and operations, and the extent that the COVID-19 pandemic continues to impact us will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the COVID-19 related impacts on the market, including production delays, labor shortages and increases in costs and inflation; (ii) the effectiveness of our financial excellence programs; (iii) access to foreign markets together with foreign economic conditions, including currency fluctuations, import/export restrictions and foreign politics; (iv) cyber attacks, other cyber incidents, security breaches or other disruptions of our information technology systems; (v) risks associated with our failure to consummate favorable acquisition transactions or integrate certain acquisitions’ operations; (vi) the Tyson Limited Partnership’s ability to exercise significant control over the Company; (vii) fluctuations in the cost and availability of inputs and raw materials, such as live cattle, live swine, feed grains (including corn and soybean meal) and energy; (viii) market conditions for finished products, including competition from other global and domestic food processors, supply and pricing of competing products and alternative proteins and demand for alternative proteins; (ix) outbreak of a livestock disease (such as African swine fever (ASF), avian influenza (AI) or bovine spongiform encephalopathy (BSE)), which could have an adverse effect on livestock we own, the availability of livestock we purchase, consumer perception of certain protein products or our ability to conduct our operations; (x) changes in consumer preference and diets and our ability to identify and react to consumer trends; (xi) effectiveness of advertising and marketing programs; (xii) significant marketing plan changes by large customers or loss of one or more large customers; (xiii) our ability to leverage brand value propositions; (xiv) changes in availability and relative costs of labor and contract farmers and our ability to maintain good relationships with team members, labor unions, contract farmers and independent producers providing us livestock, including as a result of our plan to relocate certain corporate team members to our world headquarters in Springdale, Arkansas; (xv) issues related to food safety, including costs resulting from product recalls, regulatory compliance and any related claims or litigation; (xvi) the effect of climate change and any legal or regulatory response thereto; (xvii) compliance with and changes to regulations and laws (both domestic and foreign), including changes in accounting standards, tax laws, environmental laws, agricultural laws and occupational, health and safety laws; (xviii) adverse results from litigation; (xix) risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook; (xx) impairment in the carrying value of our goodwill or indefinite life intangible assets; (xxi) our participation in a multiemployer pension plan; (xxii) volatility in capital markets or interest rates; (xxiii) risks associated with our commodity purchasing activities; (xxiv) the effect of, or changes in, general economic conditions; (xxv) impacts on our operations caused by factors and forces beyond our control, such as natural disasters, fire, bioterrorism, pandemics, armed conflicts or extreme weather; (xxvi) failure to maximize or assert our intellectual property rights; (xxvii) effects related to changes in tax rates, valuation of deferred tax assets and liabilities, or tax laws and their interpretation; and (xxviii) those factors listed under Item 1A.
Biggest changeWe undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. 8 Among the factors that may cause actual results and experiences to differ from anticipated results and expectations expressed in such forward-looking statements are the following: (i) global pandemics have had, and may in the future have, an adverse impact on our business and operations; (ii) the effectiveness of our financial excellence programs; (iii) access to foreign markets together with foreign economic conditions, including currency fluctuations, import/export restrictions and foreign politics; (iv) cyber attacks, other cyber incidents, security breaches or other disruptions of our information technology systems; (v) risks associated with our failure to consummate favorable acquisition transactions or integrate certain acquisitions’ operations; (vi) the Tyson Limited Partnership’s ability to exercise significant control over the Company; (vii) fluctuations in the cost and availability of inputs and raw materials, such as live cattle, live swine, feed grains (including corn and soybean meal) and energy; (viii) market conditions for finished products, including competition from other global and domestic food processors, supply and pricing of competing products and alternative proteins and demand for alternative proteins; (ix) outbreak of a livestock disease (such as African swine fever (ASF), avian influenza (AI) or bovine spongiform encephalopathy (BSE)), which could have an adverse effect on livestock we own, the availability of livestock we purchase, consumer perception of certain protein products or our ability to conduct our operations; (x) changes in consumer preference and diets and our ability to identify and react to consumer trends; (xi) effectiveness of advertising and marketing programs; (xii) significant marketing plan changes by large customers or loss of one or more large customers; (xiii) our ability to leverage brand value propositions; (xiv) changes in availability and relative costs of labor and contract farmers and our ability to maintain good relationships with team members, labor unions, contract farmers and independent producers providing us livestock, including as a result of our plan to relocate certain corporate team members to our world headquarters in Springdale, Arkansas; (xv) issues related to food safety, including costs resulting from product recalls, regulatory compliance and any related claims or litigation; (xvi) the effect of climate change and any legal or regulatory response thereto; (xvii) compliance with and changes to regulations and laws (both domestic and foreign), including changes in accounting standards, tax laws, environmental laws, agricultural laws and occupational, health and safety laws; (xviii) adverse results from litigation; (xix) risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook; (xx) impairment in the carrying value of our goodwill or indefinite life intangible assets; (xxi) our participation in a multiemployer pension plan; (xxii) volatility in capital markets or interest rates; (xxiii) risks associated with our commodity purchasing activities; (xxiv) the effect of, or changes in, general economic conditions; (xxv) impacts on our operations caused by factors and forces beyond our control, such as natural disasters, fire, bioterrorism, pandemics, armed conflicts or extreme weather; (xxvi) failure to maximize or assert our intellectual property rights; (xxvii) effects related to changes in tax rates, valuation of deferred tax assets and liabilities, or tax laws and their interpretation; and (xxviii) those factors listed under Item 1A.
We identify growth and business opportunities through consumer and customer insights derived via leading research and analytic capabilities. We utilize our national distribution system and customer support services to achieve the leading market position for our products and brands. We have the ability to produce and ship fresh, frozen and refrigerated products worldwide.
We identify growth and business opportunities through consumer and customer insights derived via leading research and analytic capabilities. We utilize our national distribution system and customer support services to achieve the leading market position for our products and brands. 7 We have the ability to produce and ship fresh, frozen and refrigerated products worldwide.
This segment also includes sales from specialty products such as hides and variety meats, as well as logistics operations to move products through the supply chain. Pork Pork includes our operations related to processing live market hogs and fabricating pork carcasses into primal and sub-primal cuts and case-ready products.
This segment also includes sales from specialty products such as hides and variety meats, as well as logistics operations to move products through the supply chain. 3 Pork Pork includes our operations related to processing live market hogs and fabricating pork carcasses into primal and sub-primal cuts and case-ready products.
Such forward-looking statements include, but are not limited to, current views and estimates of our outlook for fiscal 2023, other future economic circumstances, industry conditions in domestic and international markets, our performance and financial results (e.g., debt levels, return on invested capital, value-added product growth, capital expenditures, tax rates, access to foreign markets and dividend policy).
Such forward-looking statements include, but are not limited to, current views and estimates of our outlook for fiscal 2024, other future economic circumstances, industry conditions in domestic and international markets, our performance and financial results (e.g., debt levels, return on invested capital, value-added product growth, capital expenditures, tax rates, access to foreign markets and dividend policy).
Approximately 7,000 team members in other countries were subject to collective bargaining agreements. We believe our overall relations with our workforce in both unionized and non-union settings are healthy. Health, Safety, and Wellbeing We maintain a safety culture grounded on the premise of eliminating workplace incidents, risks and identified hazards.
Approximately 6,000 team members in other countries were subject to collective bargaining agreements. We believe our overall relations with our workforce in both unionized and non-union settings are healthy. Health, Safety and Wellbeing We maintain a safety culture grounded on the premise of eliminating workplace incidents, risks and identified hazards.
Sales to Walmart Inc. were included in all of our segments. Any extended discontinuance of sales to this customer could, if not replaced, have a material impact on our operations. No other single customer or customer group represented more than 10% of fiscal 2022 consolidated sales.
Sales to Walmart Inc. were included in all of our segments. Any extended discontinuance of sales to this customer could, if not replaced, have a material impact on our operations. No other single customer or customer group represented more than 10% of fiscal 2023 consolidated sales.
FOREIGN OPERATIONS We sold products in approximately 140 countries and regions in fiscal 2022. Major sales markets include Australia, Canada, Central America, Chile, China, the European Union, the United Kingdom, Japan, Mexico, Malaysia, the Middle East, Singapore, South Korea, Taiwan and Thailand.
FOREIGN OPERATIONS We sold products in approximately 140 countries and regions in fiscal 2023. Major sales markets include Australia, Canada, Central America, Chile, China, the European Union, the United Kingdom, Japan, Mexico, Malaysia, the Middle East, Singapore, South Korea, Taiwan and Thailand.
Consistent with this focus, we conducted our third OneTyson engagement survey, that included corporate and frontline team members for the purpose of evaluating our team member experience, internal performance and how we compared to other companies in multiple areas.
Consistent with this focus, we conducted our fourth OneTyson engagement survey, that included corporate and frontline team members for the purpose of evaluating our team member experience, internal performance and how we compared to other companies in multiple areas.
Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international export markets.
Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, convenience stores, healthcare facilities, the military and other food processors, as well as to international export markets.
Our Company is diverse and consists of team members with a variety of experiences, backgrounds, beliefs, and lifestyles. Our workforce consists of approximately 40% women and over 60% minority groups.
Our Company is diverse and consists of team members with a variety of experiences, backgrounds, beliefs and lifestyles. Our workforce consists of approximately 39% women and over 60% minority groups.
We created and implemented processes to help identify and eliminate safety events by reducing their frequency and severity. We also review and monitor our safety performance closely. Our goal is to reduce Occupational Safety and Health Administration (“OSHA”) recordable incidents year over year. During fiscal 2022, our recordable incident rate declined 5% compared to fiscal 2021.
We created and implemented processes to help identify and eliminate safety events by reducing their frequency and severity. We also review and monitor our safety performance closely. Our goal is to reduce Occupational Safety and Health Administration (“OSHA”) recordable incidents year over year. During fiscal 2023, our recordable incident rate declined 1% compared to fiscal 2022.
We measure segment profit as operating income (loss). International/Other primarily includes our foreign operations in Australia, China, Malaysia, Mexico, the Netherlands, South Korea and Thailand, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC.
We measure segment profit as operating income (loss). International/Other primarily includes our foreign operations in Australia, China, Malaysia, Mexico, the Netherlands, South Korea, Thailand and the Kingdom of Saudi Arabia, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC.
In fiscal 2022, corn, soybean meal and other feed ingredients were major production costs, representing roughly 62% of our cost of growing a live chicken domestically. In addition to feed ingredients to grow the chickens, we use cooking ingredients, packaging materials and cryogenic agents.
In fiscal 2023, corn, soybean meal and other feed ingredients were major production costs, representing roughly 61% of our cost of growing a live chicken domestically. In addition to feed ingredients to grow the chickens, we use cooking ingredients, packaging materials and cryogenic agents.
Because we do a significant amount of brand name and product line advertising to promote our products, we consider the protection of our trademarks to be important to our marketing efforts and have registered and applied for the registration of a number of trademarks. We also have developed non-public proprietary information regarding our production processes and other product-related matters.
Because we do a significant amount of brand name and product line advertising to promote our products, we consider the protection of our trademarks to be important to our marketing efforts and we regularly register and apply for the registration of a number of trademarks. We also have developed non-public proprietary information regarding our production processes and other product-related matters.
These buyers are trained to select high quality animals, and we continually measure their performance. We believe the supply of live hogs is adequate for our present needs. Additionally, we raise a small number of weanling swine to sell to independent finishers and supply a minimal amount of market hogs and live swine for our own processing needs.
These buyers are trained to select high quality animals, and we continually measure their performance. Additionally, we raise a small number of weanling swine to sell to independent finishers and to supply a minimal amount of market hogs and live swine for our own processing needs.
We have the following foreign operations: • Cobb-Vantress, a chicken breeding stock subsidiary, has business interests in Argentina, Brazil, China, Colombia, the Dominican Republic, India, the Netherlands, New Zealand, Peru, the Philippines, Spain, Turkey, and the United Kingdom. • Tyson Asia-Pacific consists of vertically-integrated chicken production operations in Thailand, multi-protein further-processing operations in Malaysia, a beef production operation in Australia, and joint venture interests in two non-consolidated poultry businesses in Malaysia. • Tyson China-Korea, with locations in China and South Korea, consists of vertically-integrated chicken production operations, multi-protein further-processing operations, and a joint venture interest in a non-consolidated chicken processing business.
We have the following foreign operations: • Cobb-Vantress, a chicken breeding stock subsidiary, has business interests in Argentina, Brazil, China, Colombia, the Dominican Republic, India, the Netherlands, New Zealand, Peru, the Philippines, Spain, Turkey, and the United Kingdom. • Tyson Asia-Pacific consists of vertically-integrated chicken production operations in Thailand, multi-protein further-processing operations in Malaysia, a beef production operation in Australia, a producer and distributor of value-added and cooked chicken and beef products in the Kingdom of Saudi Arabia, and joint venture interests in two non-consolidated poultry businesses in Malaysia and one in the Kingdom of Saudi Arabia. • Tyson China-Korea, with locations in China and South Korea, consists of vertically-integrated chicken production operations, multi-protein further-processing operations, and a joint venture interest in a non-consolidated chicken processing business.
Approximately 35,000 team members in the United States were subject to collective bargaining agreements with various labor unions, with approximately 2% of those team members at locations either under negotiation for contract renewal or included under agreements expiring in fiscal 2023. The remaining agreements expire over the next several years.
Approximately 33,000 team members in the United States were subject to collective bargaining agreements with various labor unions, with approximately 13% of those team members at locations either under negotiation for contract renewal or included under agreements expiring in fiscal 2024. The remaining agreements expire over the next several years.
For fiscal 2022, our domestic workforce experienced a 1% decrease in retention rate from fiscal 2021 primarily driven by macro trends associated with a challenging labor environment.
For fiscal 2023, our domestic workforce experienced a 2% decrease in retention rate from fiscal 2022 primarily driven by macro trends associated with a challenging labor environment.
Approximately 124,000 team members were employed in the United States, of whom approximately 118,000 were employed at non-corporate sites such as production facilities, warehouses, truck shops, hatcheries and feed mills. Approximately 18,000 team members were employed in other countries, primarily in Thailand and China.
Approximately 120,000 team members were employed in the United States, of whom approximately 114,000 were employed at non-corporate sites such as production facilities, warehouses, truck shops, hatcheries and feed mills. Approximately 19,000 team members were employed in other countries, primarily in Thailand and China.
Pork and certain other prepared foods products, such as prepared meals, meat dishes, appetizers and breakfast sausage, generally experience increased demand during the winter months, primarily due to the holiday season, while demand generally decreases during the spring and summer months. CUSTOMERS Walmart Inc. accounted for 17.7% of our fiscal 2022 consolidated sales.
Other prepared foods products, such as prepared meals, meat dishes, appetizers, bacon, and breakfast sausage, generally experience increased demand during the winter months, primarily due to the holiday season, while demand generally decreases during the spring and summer months. CUSTOMERS Walmart Inc. accounted for 18.6% of our fiscal 2023 consolidated sales.
In addition, through our Upward Academy Onsite Program, we offer English as a second language, high-school equivalency, citizenship, financial literacy and digital literacy training to all team members. As of October 1, 2022, the onsite program was operating at 36 Company locations.
In addition, through our Upward Academy Onsite Program, we offer English as a second language, high-school equivalency, citizenship, financial literacy and digital literacy training to all team members. As of September 30, 2023, the onsite program was operating at 58 Company locations.
It also oversees the Company’s key programs and oversees and reviews, at least annually, the Company’s integration of sustainability principles into our business strategy and decision-making. 5 HUMAN CAPITAL MANAGEMENT Employees and Labor Relations As of October 1, 2022, we employed approximately 142,000 team members globally.
It also oversees the Company’s key programs and oversees and reviews, at least annually, the Company’s integration of sustainability principles into our business strategy and decision-making. 6 HUMAN CAPITAL MANAGEMENT Employees and Labor Relations As of September 30, 2023, we employed approximately 139,000 team members globally.
Additionally, we have a Manufacturing Automation Center in Springdale, Arkansas, designed to grow the development of new manufacturing solutions and to enhance team member training on new technology.
Additionally, we have a Manufacturing Automation Center in Springdale, Arkansas, designed to grow the development of new manufacturing solutions and to enhance team member training on new technology. Further, we have research and development capabilities located in several international locations where we operate.
With the help of the USDA grant, we plan to execute a five-year program that implements trainings, incentives and verifications to improve farmer and rancher livelihoods, increase carbon sequestration and work to reduce greenhouse gas emissions in our supply chain and beyond.
With the help of the USDA grant, we plan to execute a five-year program that incentivizes farmer and rancher adoption of agricultural practices that have the potential to increase carbon sequestration and work to reduce greenhouse gas emissions in our supply chain and beyond.
As an expansion of our wellbeing culture and efforts to boost the overall health and wellness of our workforce, we continue to pilot health clinics near our production facilities, giving team members and their families easier access to high-quality healthcare.
As an expansion of our wellbeing culture and efforts to boost the overall health and wellness of our workforce, we continue to operate health clinics near our production facilities, giving team members and their families easier access to high-quality healthcare. Diversity, Equity and Inclusion (DE&I) We believe that diversity, equity and inclusion (“DE&I”) is our strength.
Headquartered in Springdale, Arkansas, the Company had approximately 142,000 employees (“team members”) on October 1, 2022. Through our Core Values, Tyson Foods is a company of people engaged in the production of food, seeking to pursue trust and integrity, and committed to creating value for our shareholders, our customers, our team members and our communities.
Through our Core Values, Tyson Foods is a company of people engaged in the production of food, seeking to pursue trust and integrity, and committed to creating value for our shareholders, our customers, our team members and our communities.
Further, we have research and development capabilities located in several international locations where we operate. 4 ENVIRONMENTAL REGULATION AND FOOD SAFETY Environmental Regulation Our facilities for processing beef, pork, chicken, turkey and prepared foods, milling feed and housing live chickens and swine are subject to a variety of international, federal, state and local environmental laws and regulations, which include provisions relating to the discharge of materials into the environment and generally provide for protection of the environment.
ENVIRONMENTAL REGULATION AND FOOD SAFETY Environmental Regulation Our facilities for processing beef, pork, chicken, turkey and prepared foods, milling feed and housing live chickens and swine are subject to a variety of international, federal, state and local environmental laws and regulations, which include provisions relating to all environmental media - air, land and water, and generally provide for protection of the environment.
The centers include more than 80,000 square feet of United States Department of Agriculture (“USDA”) pilot plant space, two consumer sensory and focus group areas, two packaging labs and 25 research kitchens. The centers enable us to bring new market-leading retail and foodservice products to the customer quickly and efficiently.
Our Discovery Center in Springdale, Arkansas, includes more than 40,000 square feet of United States Department of Agriculture (“USDA”) and United States Food and Drug Administration (“FDA”) pilot plant space, consumer sensory and focus group areas, packaging labs and 19 research kitchens. The center enables us to bring new market-leading retail and foodservice products to the customer quickly and efficiently.
Tyson closely monitors developments in this area, and voluntarily sets goals to reduce greenhouse gas emissions in accordance with the Science Based Targets initiative (SBTi) criteria, including our ambition to reach net-zero greenhouse gas emissions by 2050. We continue to evaluate the plans and associated costs of achieving our greenhouse gas emission reduction goals.
Tyson closely monitors developments in this area and strives to mitigate risks related to greenhouse gas emissions through sustainability initiatives. For example, we have voluntarily sets goals to reduce greenhouse gas emissions in accordance with the Science Based Targets initiative (SBTi) criteria, including our ambition to reach net-zero greenhouse gas emissions by 2050.
We believe the sources of supply of raw materials are adequate for our present needs. 3 SEASONAL DEMAND Demand for beef, chicken and certain prepared foods products, such as hot dogs and smoked sausage, generally increases during the spring and summer months and generally decreases during the winter months.
SEASONAL DEMAND Demand for beef, chicken, pork and certain prepared foods products, such as hot dogs and smoked sausage, generally increases during the spring and summer months and generally decreases during the winter months.
Additionally, our foreign operations are subject to various other food safety and quality assurance oversight and review. Greenhouse Gas Emissions Congress, the United States Environmental Protection Agency, some states and non-U.S. governments continue to consider various options to control greenhouse gas emissions.
Additionally, our foreign operations are subject to various other food safety and quality assurance oversight and review. Greenhouse Gas Emissions Various federal, state, regulatory agencies, and non-U.S. governments continue to consider and adopt programs to regulate, report, and control greenhouse gas emissions.
Tyson and grown under four generations of family leadership, the Company has a broad portfolio of products and brands including Tyson®, Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, Aidells®, ibp® and State Fair®. Tyson Foods innovates continually to make protein more sustainable, tailor food for everywhere it’s available and raise the world’s expectations for how much good food can do.
Tyson and grown under four generations of family leadership, the Company has a broad portfolio of products and brands including Tyson®, Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, Aidells®, ibp® and State Fair®.
The Company has eight employee-led business resource groups that support our team members and assist with efforts to build a culture of inclusion to ensure that everyone feels respected and valued. These groups are also strategically engaged to support DE&I initiatives as they are developed and implemented at the enterprise level.
The Company has eight employee-led business resource groups that support our team members and assist with efforts to build a culture of inclusion to ensure that everyone feels respected and valued. Some of our functional teams have also engaged formal DE&I councils to inform special projects and initiatives and many production facilities routinely host local diversity committees.
We continue to evaluate growth opportunities in foreign locations. Additional information regarding export sales and long-lived assets located in foreign locations is set forth in Part II, Item 8, Notes to Consolidated Financial Statements, Note 17: Segment Reporting.
Additional information regarding export sales and long-lived assets located in foreign locations is set forth in Part II, Item 8, Notes to Consolidated Financial Statements, Note 17: Segment Reporting. 5 RESEARCH AND DEVELOPMENT We conduct continuous research and development activities to improve product development, to automate manual processes in our processing facilities and grow-out operations, and to improve chicken breeding stock.
We strive to grow and develop the different capabilities and skills that we need for the future, while maintaining a robust pipeline of talent throughout the organization. 6 MARKETING AND DISTRIBUTION Our principal marketing objective is to be the preferred provider of beef, pork, chicken and prepared foods products for our customers and consumers.
MARKETING AND DISTRIBUTION Our principal marketing objective is to be the preferred provider of beef, pork, chicken and prepared foods products for our customers and consumers.
We believe our sources of supply for these materials are adequate for our present needs, and we do not anticipate any difficulty in acquiring these materials in the future. While we produce nearly all our inventory of breeder chickens and live broilers, we also purchase ice-packed or deboned chicken to meet production and sales requirements.
We believe our sources of supply for these materials are adequate for our present needs, and we do not anticipate any difficulty in acquiring these materials in the future.
Some of our functional teams have also engaged formal DE&I councils to inform special projects and initiatives and many production facilities routinely host local diversity committees. Talent and Development Our talent strategy and philosophy “Grow With Us” is focused on attracting the best talent, recognizing and rewarding performance, while continually developing, engaging and retaining our team members.
Talent and Development Our talent strategy and philosophy “Grow With Us” is focused on attracting the best talent, recognizing and rewarding performance, while continually developing, engaging and retaining our team members.
This segment also includes our live swine group, related specialty product processing activities and logistics operations to move products through the supply chain. 2 Chicken Chicken includes our domestic operations related to raising and processing live chickens into, and purchasing raw materials for fresh, frozen and value-added chicken products, as well as sales from specialty products.
Chicken Chicken includes our domestic operations related to raising and processing live chickens into, and purchasing raw materials for fresh, frozen and value-added chicken products, as well as sales from specialty products. Our value-added chicken products primarily include breaded chicken strips, nuggets, patties and other ready-to-fix or fully cooked chicken parts.
We have a goal to be the most sought after company within our markets and peer groups.
We have a goal to be the most sought after company within our markets and peer groups. We strive to grow and develop the different capabilities and skills that we need for the future, while maintaining a robust pipeline of talent throughout the organization.
We produce a wide range of fresh, value-added, frozen and refrigerated food products.
In addition, we derive value from specialty products such as hides and variety meats sold to further processors and others. We produce a wide range of fresh, value-added, frozen and refrigerated food products.
We operate a fully vertically-integrated chicken production process with the majority of our production certified as no antibiotic ever (sometimes referred to as “NAE”). Our integrated operations consist of breeding stock, contract farmers, feed production, processing, further-processing, marketing and transportation of chicken and related specialty products, including animal and pet food ingredients.
Our integrated operations consist of breeding stock, contract farmers, feed production, processing, further-processing, marketing and transportation of chicken and related specialty products, including animal and pet food ingredients. Through our wholly-owned subsidiary, Cobb-Vantress, we are one of the leading poultry breeding stock suppliers in the world.
We aim to drive product responsibility from farm to table by delivering value to consumers with high-quality, sustainable, nutritious protein through leading portfolio of products. Additionally, we are working toward sustaining natural resources and achieving net zero by driving practices in our own operations and supply chains to more sustainably produce protein for a growing population within planetary boundaries.
Additionally, we are working toward sustaining natural resources and achieving net zero by driving practices in our own operations and supply chains to more sustainably produce protein for a growing population within planetary boundaries. We were selected as a potential grant recipient in fiscal 2022 under the USDA's Partnerships for Climate-Smart Commodities grant program.
Our value-added chicken products primarily include breaded chicken strips, nuggets, patties and other ready-to-fix or fully cooked chicken parts. Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, convenience stores, healthcare facilities, the military and other food processors, as well as to international export markets.
Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international export markets. This segment also includes our live swine group, related specialty product processing activities and logistics operations to move products through the supply chain.
Prepared Foods The primary raw materials used in our prepared foods operations are commodity-based raw materials, including beef, pork, chicken, turkey, flour, vegetables, cheese, eggs, seasonings and other cooking ingredients. Some of these raw materials are provided by our other segments, while others may be purchased from numerous suppliers and manufacturers.
While we produce nearly all our inventory of breeder chickens and live broilers, we also purchase ice-packed or deboned chicken to meet production and sales requirements. 4 Prepared Foods The primary raw materials used in our prepared foods operations are commodity-based raw materials, including beef, pork, chicken, turkey, flour, vegetables, cheese, eggs, seasonings and other cooking ingredients.
We also process live fed cattle and hogs and fabricate dressed beef and pork carcasses into primal and sub-primal meat cuts, case-ready beef and pork and fully-cooked meats. In addition, we derive value from specialty products such as hides and variety meats sold to further processors and others.
Investing in breeding stock research and development allows us to breed into our flocks the characteristics found to be most desirable. We also process live fed cattle and hogs and fabricate dressed beef and pork carcasses into primal and sub-primal meat cuts, case-ready beef and pork and fully-cooked meats.
Sustainability We have aligned our business priorities with our sustainability strategy by reimagining our people and community impact, driving product responsibility from farm to table and working toward sustaining natural resources and achieving net-zero greenhouse gas emissions. We are reimagining our people and community impact by enabling workers to succeed while supporting the growth of our communities.
We are reimagining our people and community impact by enabling workers to succeed while supporting the growth of our communities. We aim to drive product responsibility from farm to table by delivering value to consumers with high-quality, sustainable, nutritious protein through our leading portfolio of products.
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Through our wholly-owned subsidiary, Cobb-Vantress, we are one of the leading poultry breeding stock suppliers in the world. Investing in breeding stock research and development allows us to breed into our flocks the characteristics found to be most desirable.
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The Company’s purpose is to raise the world’s expectations for how much good food can do by winning with our team members, winning with customers and consumers and winning with execution. Headquartered in Springdale, Arkansas, the Company had approximately 139,000 employees (“team members”) on September 30, 2023.
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RESEARCH AND DEVELOPMENT We conduct continuous research and development activities to improve product development, to automate manual processes in our processing facilities and grow-out operations, and to improve chicken breeding stock.
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We operate a fully vertically-integrated chicken production process with the majority of our production in recent years certified as no antibiotics ever (sometimes referred to as "NAE"); however, during fiscal 2023, we began transitioning the majority of our production to no antibiotics important to human medicine (sometimes referred to as "NAIHM").
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With regards to our domestic food products we have two primary research and development locations, our Discovery Center in Springdale, Arkansas, and an Innovation Center located in Downers Grove, Illinois.
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Some of these raw materials are provided by our other segments, while others may be purchased from numerous suppliers and manufacturers. We believe the sources of supply of raw materials are adequate for our present needs.
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It is unclear at this time what options, if any, will be finalized, and whether such options would have a direct impact on the Company.
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We continue to evaluate growth opportunities in foreign locations.
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In fiscal 2022, we announced our partnership with the USDA through a Partnerships for Climate-Smart Commodities grant to support the adoption of sustainable agriculture practices.
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We continue to evaluate the plans and associated costs of achieving our greenhouse gas emission reduction goals.
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Approximately 75% of the USDA grant funding for the project will go directly to farmers and ranchers, providing incentive payments and technical assistance to those adopting climate-smart practices, with the remaining 25% supporting program measurement, monitoring, reporting and validating.
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Sustainability Through our Formula to Feed the Future, we aim to bring together a diverse set of expertise and the scalable resources needed to reimagine our people and community impact, drive product responsibility from farm to table, and work toward sustaining natural resources and achieving net-zero greenhouse gas emissions.
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In response to the COVID-19 global pandemic ("COVID-19 pandemic", "COVID-19", "pandemic") and its related variants, we implemented and continue to implement various health, safety, and sanitation measures in all of our facilities.
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In addition to our Chief Medical Officer, we have approximately 600 occupational health nurses and administrative support staff to assist in our ongoing efforts to protect frontline team members during the COVID-19 pandemic while also enhancing our culture of health, safety and wellbeing.
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We continue to educate our U.S. team members about COVID-19 vaccines and boosters, provide our U.S. team members, their families and members of their household access to COVID-19 vaccines, boosters and case assessment of team members affected by the COVID-19 pandemic. Diversity, Equity and Inclusion (DE&I) We believe that diversity, equity, and inclusion (“DE&I”) is our strength.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur consolidated indebtedness level could adversely affect our business because: • it may limit or impair our ability to obtain financing in the future; • our credit ratings (or any decrease to our credit ratings) could restrict or impede our ability to access capital markets at desired interest rates and increase our borrowing costs; • it may reduce our flexibility to respond to changing business and economic conditions or to take advantage of business opportunities that may arise; • a portion of our cash flow from operations must be dedicated to interest payments on our indebtedness and is not available for other purposes; and • it may restrict our ability to pay dividends. 16 Our revolving credit facility contains affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens and encumbrances; incur debt; merge, dissolve, liquidate or consolidate; make acquisitions and investments; dispose of or transfer assets; change the nature of our business; engage in certain transactions with affiliates; and enter into hedging transactions, in each case, subject to certain qualifications and exceptions.
Biggest changeOur consolidated indebtedness level could adversely affect our business because: • it may limit or impair our ability to obtain financing in the future; • our credit ratings (or any decrease to our credit ratings) could restrict or impede our ability to access capital markets at desired interest rates and increase our borrowing costs; • it may reduce our flexibility to respond to changing business and economic conditions or to take advantage of business opportunities that may arise; • a portion of our cash flow from operations must be dedicated to interest payments on our indebtedness and is not available for other purposes; and • it may restrict our ability to pay dividends.
Increased government regulations to limit carbon dioxide and other greenhouse gas emissions as a result of concern over climate change, as well as alternative energy policies and sustainability initiatives (including those related to single use plastics), may result in increased compliance costs, capital expenditures and other financial obligations for us.
Increased government regulations to limit carbon dioxide, methane and other greenhouse gas emissions as a result of concern over climate change, as well as alternative energy policies and sustainability initiatives (including those related to single use plastics), may result in increased compliance costs, capital expenditures and other financial obligations for us.
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. Finally, we currently provide certain climate-related disclosures, and from time to time, we establish and publicly announce goals and commitments to reduce our carbon footprint.
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. 16 Finally, we currently provide certain climate-related disclosures, and from time to time, we establish and publicly announce goals and commitments to reduce our carbon footprint.
While these contracts reduce our exposure to changes in prices for commodity products, the use of such instruments may ultimately limit our ability to benefit from favorable commodity prices. GENERAL RISK FACTORS Deterioration of economic conditions, including recession, financial instability or inflation, could negatively impact our business.
While these contracts reduce our exposure to changes in prices for commodity products, the use of such instruments may ultimately limit our ability to benefit from favorable commodity prices. 18 GENERAL RISK FACTORS Deterioration of economic conditions, including recession, financial instability or inflation, could negatively impact our business.
We also face other risks associated with the COVID-19 pandemic, including: • additional increase in input cost may not be adequately captured through pricing; • adverse changes to the global economy may subject us to risk of material intangible and long-lived asset impairments, adjustments for inventory and market volatility for items subject to fair value measurements such as derivatives and investments; • an increase in working capital needs and/or an increase in trade accounts receivable write-offs (and associated reserves) as a result of increased financial pressures on our suppliers or customers who are not able to pay in a timely manner or at all; • a shift in consumer spending as a result of an economic downturn, which could result in consumers moving to private label or lower price products; and • litigation.
We also face other risks associated with or potentially originated from the COVID-19 pandemic, including: • additional increase in input cost may not be adequately captured through pricing; • adverse changes to the global economy may subject us to risk of material intangible and long-lived asset impairments, adjustments for inventory and market volatility for items subject to fair value measurements such as derivatives and investments; • an increase in working capital needs and/or an increase in trade accounts receivable write-offs (and associated reserves) as a result of increased financial pressures on our suppliers or customers who are not able to pay in a timely manner or at all; • a shift in consumer spending as a result of an economic downturn, which could result in consumers moving to private label or lower price products; and • litigation.
Additionally, as a result of the TLP’s significant ownership of our outstanding voting stock, we are eligible for “controlled company” exemptions from certain corporate governance requirements of the New York Stock Exchange. 11 INDUSTRY RISK FACTORS Fluctuations in commodity prices and in the availability of raw materials, especially feed grains, live cattle, live swine and other inputs could negatively impact our earnings.
Additionally, as a result of the TLP’s significant ownership of our outstanding voting stock, we are eligible for “controlled company” exemptions from certain corporate governance requirements of the New York Stock Exchange. 12 INDUSTRY RISK FACTORS Fluctuations in commodity prices and in the availability of raw materials, especially feed grains, live cattle, live swine and other inputs could negatively impact our earnings.
As a result, we are subject to various risks and uncertainties relating to international sales and operations, including: • closing of borders by foreign countries to the import of beef, pork and poultry products due to animal disease or other perceived health or safety issues; • impact of currency exchange rate fluctuations between the United States dollar and foreign currencies, particularly the Australian dollar, the Brazilian real, the British pound sterling, the Canadian dollar, the Chinese renminbi, the European euro, the Malaysian ringgit, the Mexican peso, and the Thai baht; • political and economic conditions, including the ongoing conflicts between Ukraine and Russia; • difficulties and costs to comply with, and enforcement of remedies under, a wide variety of complex domestic and international laws, treaties and regulations, including, without limitation, the United States Foreign Corrupt Practices Act and economic and trade sanctions enforced by the United States Department of the Treasury’s Office of Foreign Assets Control; • different regulatory structures and unexpected changes in regulatory environments; • tax rates that may exceed those in the United States and earnings that may be subject to withholding requirements and incremental taxes upon repatriation; • potentially negative consequences from changes in tax laws; • distribution costs, disruptions in shipping or reduced availability of freight transportation; and • the ongoing impact of COVID-19, including any resurgence and new or existing variants, on the global economy and on consumer demand worldwide; imposition of tariffs, quotas, trade barriers and other trade protection measures imposed by foreign countries regarding the importation of beef, pork, poultry and prepared foods products, in addition to import or export licensing requirements imposed by various foreign countries.
As a result, we are subject to various risks and uncertainties relating to international sales and operations, including: • closing of borders by foreign countries to the import of beef, pork and poultry products due to animal disease or other perceived health or safety issues; • impact of currency exchange rate fluctuations between the United States dollar and foreign currencies, particularly the Australian dollar, the Brazilian real, the British pound sterling, the Canadian dollar, the Chinese renminbi, the European euro, the Malaysian ringgit, the Mexican peso, and the Thai baht; • political and economic conditions, including the ongoing conflicts between Ukraine and Russia, as well as political tension and conflict in the Middle East and elsewhere; • difficulties and costs to comply with, and enforcement of remedies under, a wide variety of complex domestic and international laws, treaties and regulations, including, without limitation, the United States Foreign Corrupt Practices Act and economic and trade sanctions enforced by the United States Department of the Treasury’s Office of Foreign Assets Control; • different regulatory structures and unexpected changes in regulatory environments; • tax rates that may exceed those in the United States and earnings that may be subject to withholding requirements and incremental taxes upon repatriation; • potentially negative consequences from changes in tax laws; • distribution costs, disruptions in shipping or reduced availability of freight transportation; and • the impact of COVID-19 pandemic, including any resurgence and new or existing variants, on the global economy and on consumer demand worldwide; imposition of tariffs, quotas, trade barriers and other trade protection measures imposed by foreign countries regarding the importation of beef, pork, poultry and prepared foods products, in addition to import or export licensing requirements imposed by various foreign countries.
Alternative retail channels, such as convenience stores, dollar stores, drug stores, club stores and Internet-based retailers have increased their market share. 13 This trend towards alternative channels is expected to continue in the future. If we are not successful in expanding sales in alternative retail channels, our business or financial results may be adversely impacted.
Alternative retail channels, such as convenience stores, dollar stores, drug stores, club stores and Internet-based retailers have increased their market share. 14 This trend towards alternative channels is expected to continue in the future. If we are not successful in expanding sales in alternative retail channels, our business or financial results may be adversely impacted.
Our failure to perfect or successfully assert our intellectual property rights could make us less competitive and could have an adverse effect on our business, operating results and financial condition. 18 We may incur additional tax expense or become subject to additional tax liabilities. We are subject to taxes in the United States and numerous foreign jurisdictions.
Our failure to perfect or successfully assert our intellectual property rights could make us less competitive and could have an adverse effect on our business, operating results and financial condition. 19 We may incur additional tax expense or become subject to additional tax liabilities. We are subject to taxes in the United States and numerous foreign jurisdictions.
We contract primarily with independent contract farmers to raise the live chickens and turkeys processed in our poultry operations. A majority of our cattle and hogs are purchased from independent producers who sell livestock to us under marketing contracts or on the open market.
We depend on contract farmers and independent producers to supply us with livestock. We contract primarily with independent contract farmers to raise the live chickens and turkeys processed in our poultry operations. A majority of our cattle and hogs are purchased from independent producers who sell livestock to us under marketing contracts or on the open market.
We strive to respond to consumer preferences and social expectations, but we may not be successful in our efforts. 12 We could be adversely affected if consumers lose confidence in the safety and quality of certain food products or ingredients, or the food safety system generally.
We strive to respond to consumer preferences and social expectations, but we may not be successful in our efforts. 13 We could be adversely affected if consumers lose confidence in the safety and quality of certain food products or ingredients, or the food safety system generally.
As a result of school and in-restaurant dining shutdowns during the COVID-19 pandemic, each of our segments previously experienced a shift in demand from foodservice to retail.
As a result of academic and in-restaurant dining shutdowns during the COVID-19 pandemic, each of our segments previously experienced a shift in demand from foodservice to retail.
Other supply chain risks associated with the COVID-19 pandemic include but are not limited to shutdowns or reduced operations at our suppliers’ facilities, the continued inability of some of our contract producers to manage their livestock, supply chain disruptions for feed grains, changes in consumer orders due to shifting consumer patterns, changes in livestock and protein market prices, and additional disruptions in logistics or the distribution chain for our products, the occurrence of any of which may result in a reduction in our fill rates to our customers.
Other supply chain risks associated with a global pandemic include but are not limited to shutdowns or reduced operations at our suppliers’ facilities, the continued inability of some of our contract producers to manage their livestock, supply chain disruptions for feed grains, changes in consumer orders due to shifting consumer patterns, changes in livestock and protein market prices, and additional disruptions in logistics or the distribution chain for our products, the occurrence of any of which have and may in the future result in a reduction in our fill rates to our customers.
Corn, soybean meal and other feed ingredients, for instance, represented roughly 62% of our cost of growing a live chicken in fiscal 2022. Production and pricing of these commodities are determined by constantly changing market forces of supply and demand over which we have limited or no control.
Corn, soybean meal and other feed ingredients, for instance, represented roughly 61% of our cost of growing a live chicken in fiscal 2023. Production and pricing of these commodities are determined by constantly changing market forces of supply and demand over which we have limited or no control.
Our indebtedness, including borrowings under our revolving credit facility and commercial paper program, may increase from time to time for various reasons, including fluctuations in operating results, working capital needs, capital expenditures and possible acquisitions, joint ventures or other significant initiatives.
Our indebtedness, including borrowings under our revolving credit and term loan facilities and commercial paper program, may increase from time to time for various reasons, including fluctuations in operating results, working capital needs, capital expenditures and possible acquisitions, joint ventures or other significant initiatives.
Climate change and rising global temperatures may contribute to changing weather patterns, heavier or more frequent storms and wildfires, and increased frequency and severity of natural disasters.
Climate change and rising global temperatures may contribute to changing weather patterns, elongated drought periods, heavier or more frequent storms and wildfires, and increased frequency and severity of natural disasters.
We have approximately 142,000 team members, approximately 42,000 of whom are covered by collective bargaining agreements or are members of labor unions. Our operations depend on the availability and relative costs of labor and maintaining good relations with team members and the labor unions.
We have approximately 139,000 team members, approximately 39,000 of whom are covered by collective bargaining agreements or are members of labor unions. Our operations depend on the availability and relative costs of labor and maintaining good relations with team members and the labor unions.
Our business could suffer significant setbacks in sales and operating income if our customers’ plans and/or markets change significantly or if we lost one or more of our largest customers, including, for example, Walmart Inc., which accounted for 17.7% of our sales in fiscal 2022.
Our business could suffer significant setbacks in sales and operating income if our customers’ plans and/or markets change significantly or if we lost one or more of our largest customers, including, for example, Walmart Inc., which accounted for 18.6% of our sales in fiscal 2023.
There can be no assurance that the health and safety measures we have taken with respect to COVID-19 will eradicate the risks associated with working in a critical infrastructure industry, including but not limited to, infection of our employees or a temporary reduction in the operating capacity of a facility.
There can be no assurance that the health and safety measures we have taken with respect to new COVID-19 variants or widespread illnesses, should a new global pandemic occur, will eradicate the risks associated with working in a critical infrastructure industry, including but not limited to, infection of our employees or a temporary reduction in the operating capacity of a facility.
In the fourth quarter of fiscal 2022, the Company approved a restructuring program (the “2022 Program”), which is expected to improve business performance, increase collaboration, enhance team member agility, enable faster decision-making and reduce redundancies.
The Company approved a restructuring program in fiscal 2022 (the “2022 Program”) to improve business performance, increase collaboration, enhance team member agility, enable faster decision-making and reduce redundancies.
In addition, in the event of a protracted period of economic downturn, demand for our foodservice products may remain below expectations or decrease further, and demand for our retail consumption products may also decrease, which could have an adverse impact on our results of operations.
In addition, in the event of a protracted period of economic downturn either in the near term or as a result of a future global pandemic, demand for our foodservice products may remain below expectations or decrease further, and demand for our retail consumption products may also decrease, which could have an adverse impact on our results of operations.
In the event a withdrawal or partial withdrawal were to occur with respect to the multiemployer plan, the impact to our consolidated financial statements could be material. Volatility in the capital markets or interest rates could adversely impact our pension costs and the funded status of our pension plans.
In the event a withdrawal or partial withdrawal were to occur with respect to the multiemployer plan, the impact to our consolidated financial statements could be material. Volatility in the capital markets or interest rates could adversely impact our pension costs and the funded status of our pension plans. We sponsor a number of defined benefit plans for team members.
As of October 1, 2022, Tyson Limited Partnership (the “TLP”) owns 99.985% of the outstanding shares of the Company’s Class B Common Stock, $0.10 par value (“Class B stock”), and the TLP and members of the Tyson family own, in the aggregate, 2.27% of the outstanding shares of the Company’s Class A Common Stock, $0.10 par value (“Class A stock”), giving them, collectively, control of approximately 71.15% of the total voting power of the Company’s outstanding voting stock.
As of September 30, 2023, Tyson Limited Partnership (the “TLP”) owns 99.985% of the outstanding shares of the Company’s Class B Common Stock, $0.10 par value (“Class B stock”), and the TLP and members of the Tyson family own, in the aggregate, 2.44% of the outstanding shares of the Company’s Class A Common Stock, $0.10 par value (“Class A stock”), giving them, collectively, control of approximately 71.74% of the total voting power of the Company’s outstanding voting stock.
At October 1, 2022, the assessment totaled approximately $411 million (8.3 billion Mexican pesos), which includes tax, inflation adjustment, interest and penalties. We believe the assertions made in the assessment letter have no merit and will defend our positions through the Mexican administrative appeal process and litigation, if necessary.
At September 30, 2023, the assessment totaled approximately $488 million (8.6 billion Mexican pesos), which includes tax, inflation adjustment, interest and penalties. We believe the assertions made in the assessment letter have no merit and will defend our positions through the Mexican administrative appeal process and litigation, if necessary.
Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations. BUSINESS & OPERATIONAL RISK FACTORS The COVID-19 pandemic and associated responses has had, and may to continue to have, an adverse impact on our business and operations.
Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations. BUSINESS & OPERATIONAL RISK FACTORS Global pandemics have had, and may in the future have, an adverse impact on our business and operations.
In addition, certain of our team members who claim to have tested positive for COVID-19, or their family members, have filed lawsuits seeking compensatory and punitive damages for wrongful death and personal injury claims in several states, and additional team members or family members of team members may assert similar claims as the COVID-19 pandemic continues.
For example, certain of our team members who claim to have tested positive for COVID-19, or their family members, have filed lawsuits seeking compensatory and punitive damages for wrongful death and personal injury claims in several states, and additional team members or family members of team members may assert similar claims as new COVID-19 variants, other contagions or if a new global pandemic arises.
We sponsor a number of defined benefit plans for team members in the United States. The difference between plan obligations and assets, which signifies the funded status of the plans, is a significant factor in determining the net periodic benefit costs of the pension plans and our ongoing funding requirements.
The difference between plan obligations and assets, which signifies the funded status of the plans, is a significant factor in determining the net periodic benefit costs of the pension plans and our ongoing funding requirements.
These types of events and the resulting analyses could result in impairment charges in the future, which could be substantial. As of October 1, 2022, we had $14.6 billion of goodwill and indefinite life intangible assets, which represented approximately 39.6% of total assets. Participation in a Multiemployer Pension Plan could adversely affect our business.
These types of events and the resulting analyses could result in impairment charges in the future, which could be substantial. At September 30, 2023, we had $14.0 billion of goodwill and indefinite life intangible assets, which represented approximately 38.5% of total assets. Participation in a Multiemployer Pension Plan could adversely affect our business.
We may not realize any or all of the anticipated benefits of our financial excellence programs, which may prove to be more difficult, costly or time consuming than expected.
Any such disruption could adversely impact our business and results of operations. We may not realize any or all of the anticipated benefits of our financial excellence programs, which may prove to be more difficult, costly or time consuming than expected.
As of October 1, 2022, the funded status of our defined benefit pension plans was an underfunded position of $159 million, as compared to an underfunded position of $215 million at the end of fiscal 2021.
At September 30, 2023, the funded status of our defined benefit pension plans was an underfunded position of $149 million, as compared to an underfunded position of $159 million at the end of fiscal 2022.
LABOR & EMPLOYMENT RISK FACTORS Labor shortages and increased turnover or increases in employee and employee-related costs could have adverse effects on our profitability. We have experienced increased labor shortages at some of our production facilities and other locations.
LABOR & EMPLOYMENT RISK FACTORS Labor shortages and increased turnover or increases in employee and employee-related costs could have adverse effects on our profitability.
These positions are marked to fair value, and the unrealized gains and losses are reported in earnings at each reporting date. Therefore, losses on these contracts will adversely affect our reported operating results.
We hold certain positions, primarily in grain and livestock futures, that are not hedges for financial reporting purposes. These positions are marked to fair value, and the unrealized gains and losses are reported in earnings at each reporting date. Therefore, losses on these contracts will adversely affect our reported operating results.
Any significant failure of our systems, including failures that prevent our systems from functioning as intended or our failure to timely identify or appropriately respond to cyber attacks or other cyber incidents, could cause transaction errors, processing inefficiencies, loss of customers and sales, have negative consequences on our team members and our business partners, have a negative impact on our operations or business reputation and expose us to liability, litigation and regulatory enforcement actions.
Therefore, we may be unable to anticipate these techniques, react in a timely manner, or implement adequate preventive measures, and we may face delays in our detection or remediation of, or other responses to, security breaches and other security-related incidents or vulnerabilities. 11 Any significant failure of our systems, including failures that prevent our systems from functioning as intended or our failure to timely identify or appropriately respond to cyber attacks or other cyber incidents, could cause transaction errors, processing inefficiencies, loss of customers and sales, have negative consequences on our team members and our business partners, have a negative impact on our operations or business reputation and expose us to liability, litigation and regulatory enforcement actions.
In addition, such incidents could result in unauthorized or accidental disclosure of material confidential information or regulated individual personal data. 10 We have in the past experienced, and may in the future face, cyber attacks, other cyber incidents or security breaches, and there can be no assurance that we will always be able to sufficiently mitigate the impacts to our business and operations.
We have in the past experienced, and may in the future face, cyber attacks, other cyber incidents or security breaches, and there can be no assurance that we will always be able to sufficiently mitigate the impacts to our business and operations.
Barbara Tyson, a director of the Company, has 11.115% general partner percentage interests (the remaining general partnership interests are held by the Donald J. Tyson Revocable Trust (44.44%) and Harry C. Erwin, III (11.115%)).
John Tyson, Chairman of the Board of Directors, controls 44.445% of the general partner percentage interests, and Ms. Barbara Tyson, a director of the Company, controls 11.115% of the general partner percentage interests (the remaining general partnership interests are held by the Donald J. Tyson Revocable Trust (44.44%)).
An impairment in the carrying value of our goodwill or indefinite life intangible assets could negatively impact our consolidated results of operations and net worth. Goodwill and indefinite life intangible assets are initially recorded at fair value and not amortized, but are reviewed for impairment at least annually or more frequently if impairment indicators arise.
Goodwill and indefinite life intangible assets are initially recorded at fair value and not amortized but are reviewed for impairment at least annually or more frequently if impairment indicators arise.
We have experienced, and expect to continue to experience, an increase in operating costs in connection with higher costs associated with ensuring the continued health and safety of team members, including team member costs associated with worker health and availability such as COVID-19 testing and vaccinations.
We have experienced, and expect to continue to experience, an increase in operating costs in connection with higher costs associated with protecting the health and safety of team members.
In addition, climate change could affect our ability to procure needed commodities at costs and in quantities we currently experience and may require us to make additional unplanned capital expenditures. 15 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 manage greenhouse gas emissions, climate risks, and resulting environmental impacts.
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 manage greenhouse gas emissions, climate risks, and resulting environmental impacts.
In addition, we had approximately $1.5 billion of long-lived assets located in foreign locations, primarily Brazil, China, the European Union, New Zealand and Thailand, at the end of fiscal 2022.
Our sales to customers in foreign countries for fiscal 2023 totaled $7.9 billion, of which $5.1 billion related to export sales from the United States. In addition, we had approximately $1.4 billion of long-lived assets located in foreign locations, primarily Brazil, China, the European Union, New Zealand and Thailand, at the end of fiscal 2023.
Changes in interest rates and the market value of plan assets can impact the funded status of the plans and cause volatility in the net periodic benefit cost and our future funding requirements.
Changes in interest rates and the market value of plan assets can impact the funded status of the plans and cause volatility in the net periodic benefit cost and our future funding requirements. The exact amount of cash contributions made to pension plans in any year is dependent upon a number of factors, including minimum funding requirements.
Major sales markets include Australia, Canada, Central America, Chile, China, the European Union, the United Kingdom, Japan, Mexico, Malaysia, the Middle East, Singapore, South Korea, Taiwan and Thailand. Our sales to customers in foreign countries for fiscal 2022 totaled $8.3 billion of which $5.8 billion related to export sales from the United States.
In fiscal 2023, we sold products to customers in approximately 140 countries. Major sales markets include Australia, Canada, Central America, Chile, China, the European Union, the United Kingdom, Japan, Mexico, Malaysia, the Middle East, Singapore, South Korea, Taiwan and Thailand.
At this time, the TLP does not have a managing general partner, as such, the management rights of the managing general partner may be exercised by a majority of the percentage interests of the general partners. As of October 1, 2022, Mr. John Tyson, Chairman of the Board of Directors, has 33.33% of the general partner percentage interests, and Ms.
At this time, the TLP does not have a managing general partner, as such, the management rights of the managing general partner may be exercised by a majority of the percentage interests of the general partners. As of September 30, 2023, through a series of trusts, Mr.
If we are unable to successfully manage the negative consequences of the financial excellence programs, our business, results of operations and financial condition for future periods could be adversely affected.
If we are unable to successfully manage the negative consequences of the financial excellence programs, our business, results of operations and financial condition for future periods could be adversely affected. 10 We are subject to risks associated with our international activities, which could negatively affect our sales to customers in foreign locations, as well as our operations and assets in such locations.
If we are unsuccessful in defending against such claims, we may experience significant losses and expenses in connection with these lawsuits, which could adversely affect our liquidity, results of operations and financial condition.
If we are unsuccessful in defending against such claims, we may experience significant losses and expenses in connection with these lawsuits, which could adversely affect our liquidity, results of operations and financial condition. 9 We have also experienced, and expect to continue to experience, disruption and volatility in our supply chain, which has resulted, and may continue to result, in increased costs for certain raw materials, packaging materials and transportation costs.
If we do not attract and maintain contracts with farmers or maintain marketing and purchasing relationships with independent producers, our production operations could be negatively affected. Certain of our competitors may also negotiate more favorable contract terms that could provide them with competitive advantages and affect our supply.
If we do not attract and maintain contracts with farmers or maintain marketing and purchasing relationships with independent producers, our production operations could be negatively affected.
In addition, we depend on information technology for digital marketing and electronic communications between our facilities, personnel, customers and suppliers.
In addition, we depend on information technology for digital marketing and electronic communications between our facilities, personnel, customers and suppliers, including ordering and managing raw materials and inputs, receiving and processing purchase orders, shipping products to customers and processing other transactions.
These organisms and pathogens are found generally in the environment and there is a risk that one or more, as a result of food processing, could be present in our products. These organisms and pathogens also can be introduced to our products as a result of improper handling at the further-processing, foodservice or consumer level.
Our products may be subject to contamination by foreign materials or disease-producing organisms or pathogens, such as Listeria monocytogenes, Salmonella and E. coli. These organisms and pathogens are found generally in the environment and there is a risk that one or more, as a result of food processing, could be present in our products.
In addition, we are required to maintain a minimum interest expense coverage ratio. Our senior notes also contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens; engage in certain sale/leaseback transactions; and engage in certain consolidations, mergers and sales of assets.
Our senior notes also contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens; engage in certain sale/leaseback transactions; and engage in certain consolidations, mergers and sales of assets. 17 An impairment in the carrying value of our goodwill or indefinite life intangible assets could negatively impact our consolidated results of operations and net worth.
In fiscal 2022, we approved a plan to bring together all of our corporate team members from our Chicago, Downers Grove and Dakota Dunes area corporate locations to our world headquarters in Springdale, Arkansas.
In conjunction with the 2022 Program, the Company relocated all of its corporate team members from its former Chicago, Downers Grove and Dakota Dunes area corporate locations to its world headquarters in Springdale, Arkansas. We anticipate the remaining workstreams of the 2022 Program and associated expenses will be complete in our fiscal 2025.
Further, there can be no assurance that we will not incur additional direct incremental expenses related to COVID-19 going forward, and that such amounts will not be material or have a material impact on our business, cash flows or results of operations. 8 Our team members who have tested positive for COVID-19, and in some cases, those working in close contact with diagnosed persons, are required to be quarantined, which has led to a decrease in our available workforce in various locations.
Further, there can be no assurance that we will not incur additional direct incremental expenses related to new variants or widespread illnesses going forward, and that such amounts will not be material or have a material impact on our business, cash flows or results of operations.
Additionally, in fiscal 2022 we launched a new productivity program, which is designed to drive a better, faster and more agile organization that is supported by a culture of continuous improvement and faster decision-making. 9 The success of the financial excellence programs, or future financial excellence programs, including the realization of the anticipated benefits, will depend in part on our ability to successfully implement the programs in an efficient and effective manner.
The success of the financial excellence programs, or future financial excellence programs, including the realization of the anticipated benefits, will depend in part on our ability to successfully implement the programs in an efficient and effective manner.
We anticipate the 2022 Program and associated expenses will be substantially complete in our fiscal 2025. For more information regarding this program, refer to Part II, Item 8. Notes to the Consolidated Financial Statements, Note 7: Restructuring and Related Charges.
For more information regarding this program, refer to Part II, Item 8. Notes to the Consolidated Financial Statements, Note 7: Restructuring and Related Charges. Additionally, in fiscal 2022, we launched a new productivity program to drive a better, faster and more agile organization that is supported by a culture of continuous improvement and faster decision-making.
These risks may be controlled, but may not be eliminated, by adherence to good manufacturing practices and finished product testing. We have little, if any, control over handling procedures once our products have been shipped for distribution.
We have little, if any, control over handling procedures once our products have been shipped for distribution.
We use derivative financial instruments to reduce our exposure to various market risks including changes in commodity prices, interest rates and foreign exchange rates. We hold certain positions, primarily in grain and livestock futures, that are not hedges for financial reporting purposes.
Market fluctuations could negatively impact our operating results as we hedge certain transactions. Our business is exposed to fluctuating market conditions. We use derivative financial instruments to reduce our exposure to various market risks including changes in commodity prices, interest rates and foreign exchange rates.
The severity and duration of the current COVID-19 pandemic and actions taken by governmental authorities and other third parties in response are unknown and are impossible to predict with certainty. Any of these disruptions could adversely impact our business and results of operations.
Actions taken by governmental authorities and other third parties in response to risks associated with COVID-19, or if in the event of a new global pandemic, are unknown and are impossible to predict with certainty. Nor can the Company predict whether or when a COVID-19 variant or widespread illness will or can disrupt our business in the future.
LEGAL & REGULATORY RISK FACTORS If our products become contaminated, we may be subject to product liability claims and product recalls, which could adversely affect our financial results and damage our reputation. Our products may be subject to contamination by foreign materials or disease-producing organisms or pathogens, such as Listeria monocytogenes, Salmonella and E. coli.
Certain of our competitors may also negotiate more favorable contract terms that could provide them with competitive advantages and affect our supply. 15 LEGAL & REGULATORY RISK FACTORS If our products become contaminated, we may be subject to product liability claims and product recalls, which could adversely affect our financial results and damage our reputation.
The extent that the COVID-19 pandemic continues to impact general economic conditions and our business, operations and results of operations will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration and spread of the pandemic and additional variants, its severity, the actions to contain the virus or treat its impact, including the distribution and efficacy of vaccines against new variants and the speed of critical mass adoption of available vaccines, and how quickly and to what extent normal economic and operating conditions can resume.
Specifically, the COVID-19 pandemic negatively affected many parts of our business and operations, and the sustained, continuing impacts of the COVID-19 pandemic (including indirect effects from the immediate impacts of the pandemic) remain difficult to predict, including, but not limited to, the duration and spread of additional variants, the efficacy of vaccines against new variants and the speed at which normal economic and operating conditions can resume.
For example, increased governmental interest in advertising practices may result in regulations that could require us to change or restrict our advertising practices.
For example, increased governmental interest in advertising practices may result in regulations that could require us to change or restrict our advertising practices. Additionally, new laws in the European Union requiring traceability of commodities from source of origin and verification that commodities are deforestation free could impact commodity sourcing, pricing and our ability to place products in certain markets.
Removed
The COVID-19 pandemic has negatively affected many parts of our business and operations.
Added
Our business relies on the health and wellbeing of our employees who run the day-to-day operations of the Company. Global pandemics, or localized epidemics, have had and may in the future have a significant adverse impact on our business and operations.
Removed
During the pandemic, we experienced slowdowns at certain of our production facilities, primarily due to a decrease in our available workforce, and we anticipate that we may in the future experience additional volatility in our ability to operate our facilities at full utilization rates, depending on a number of factors including team member absenteeism, labor shortages and other workforce disruptions.
Added
Any future disruptions within our supply chain from a global pandemic will depend on a variety of factors and circumstances that remain difficult to predict.
Removed
Any additional extended period of operating at a reduced capacity or more significant reductions in our operations at our facilities could have a material adverse impact on our ability to operate our business and on our results of operations.
Added
Communications between our facilities, personnel, customers and suppliers may include and is not limited to personal confidential information and payment card industry data, confidential and propriety intellectual property, trade secrets and other information and business and financial information.
Removed
In late fiscal 2021, we implemented a requirement for our team members in the U.S. to be fully vaccinated against COVID-19 by November 1, 2021. We lifted this requirement effective October 31, 2022.
Added
In addition, such incidents could result in unauthorized or accidental disclosure of material confidential information or regulated individual personal data.
Removed
Although while it was in effect this requirement generally improved our ability to operate our business effectively in fiscal 2022, the decrease in our available workforce during the COVID-19 pandemic has at times adversely impacted this ability.
Added
Techniques used to obtain unauthorized access to, or to sabotage, systems or networks, are constantly evolving and generally are not recognized until launched against a target.
Removed
We have also experienced, and expect to continue to experience, disruption and volatility in our supply chain, which has resulted, and may continue to result, in increased costs for certain raw materials, packaging materials and transportation costs.
Added
If there is wide scale disruption to our systems, we may need to shut parts or all of our systems down to run tests and repairs.
Removed
The spread of COVID-19 and other related supply chain issues have also disrupted and may continue to disrupt logistics necessary to import, export and deliver products to us and our customers.
Added
Any such downtime could have significant impacts on our ability to continue our business operations, including our ability to operate our facilities, manage and track inventory, manage and track incoming new orders and statuses of existing orders, and to continue to comply with regulatory, legal and tax requirements.
Removed
Many ports and other channels of entry are operating at only a portion of capacity as a result of congestion due to labor and equipment shortages, and means of transporting products within regions or countries may be limited for the same reason.
Added
In the event any significant failure of our systems requires us to upgrade or set up new systems, oversight and implementation of the new system and training personnel could be costly, there may be further disruptions from potential instability in the new system, and there may be heightened cybersecurity risks in connection with the migration of data to the new system.
Removed
In conjunction with the 2022 Program, the Company plans to bring together all its corporate team members from the Chicago, Downers Grove and Dakota Dunes area corporate locations to its world headquarters in Springdale, Arkansas, through a phased relocation commencing in early calendar year 2023.
Added
These organisms and pathogens also can be introduced to our products as a result of improper handling at the further-processing, foodservice or consumer level. These risks may be controlled, but may not be eliminated, by adherence to good manufacturing practices and finished product testing.
Removed
We are subject to risks associated with our international activities, which could negatively affect our sales to customers in foreign locations, as well as our operations and assets in such locations. In fiscal 2022, we sold products to customers in approximately 140 countries.
Added
In addition, climate change could affect our ability to procure needed commodities at costs and in quantities we currently experience and may require us to make additional unplanned capital expenditures.
Removed
While we have historically experienced some level of ordinary course turnover of employees, the impact of the COVID-19 pandemic and resulting actions have exacerbated labor shortages and increased turnover.
Added
Our revolving credit and term loan facilities contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens and encumbrances; incur debt; merge, dissolve, liquidate or consolidate; make acquisitions and investments; dispose of or transfer assets; change the nature of our business; engage in certain transactions with affiliates; and enter into hedging transactions, in each case, subject to certain qualifications and exceptions.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeBeef Beef facilities include various phases of harvesting live cattle and fabricating beef products and specialty products. We also have various facilities which have rendering operations along with tanneries and hide treatment operations. The Beef segment includes five case-ready operations that share facilities with the Pork segment. One of the beef facilities contains a tallow refinery.
Biggest changeThe Beef segment includes five case-ready operations that share facilities with the Pork segment. One of the beef facilities contains a tallow refinery. Pork Pork facilities include various phases of harvesting live hogs and fabricating pork products and specialty products.
We own and lease domestic distribution and cold storage facilities that support the supply chains of all our segment operations and are not specifically dedicated to individual segments. 19 Our International/Other foreign production operations in Asia-Pacific and China-Korea include one beef facility, 20 chicken processing facilities, four feed mills and one broiler hatchery.
We own and lease domestic distribution and cold storage facilities that support the supply chains of all our segment operations and are not specifically dedicated to individual segments. 20 Our International/Other foreign production operations in Asia-Pacific and China-Korea include one beef facility, 21 chicken processing facilities, three feed mills and one broiler hatchery.
The Prepared Foods segment includes one processing facility that is shared with and is included in the Chicken segment in the table above.
The Chicken segment includes one processing facility that shares a facility with and is included in the Prepared Foods segment in the table above.
The Chicken processing facilities include various phases of harvesting, dressing, cutting, packaging, deboning and further-processing. We also have animal nutrition operations, which are associated with the Chicken rendering facilities or within various Chicken processing facilities. The blending mills, feed mills, grain elevators and broiler hatcheries have sufficient capacity to meet the needs of the chicken growout operations.
We also have animal nutrition operations, which are associated with the Chicken rendering facilities or within various Chicken processing facilities. The blending mills, feed mills, grain elevators and broiler hatcheries have sufficient capacity to meet the needs of the chicken growout operations.
For presentation purposes, facilities are reflected in the segment that had the majority of the facility’s production. Additionally, livestock grower farms are excluded. (2) Capacity per week is based on the following: Beef and Pork (six day week) and Chicken and Prepared Foods (five day week). Average capacity utilization is based on capacity available throughout the year.
For presentation purposes, facilities are reflected in the segment that had the majority of the facility’s production. Additionally, livestock grower farms are excluded. (2) Capacity per week is not an indication of production rates. Capacity per week is based on the following: Beef and Pork (six day week) and Chicken and Prepared Foods (five day week).
Pork Pork facilities include various phases of harvesting live hogs and fabricating pork products and specialty products. The Pork segment includes five case-ready operations that share facilities with and are included in the Beef segment in the table above. Chicken Our vertically-integrated Chicken operations facilities include processing facilities, rendering facilities, blending mills, feed mills, grain elevators and broiler hatcheries.
The Pork segment includes five case-ready operations that share facilities with and are included in the Beef segment in the table above. Chicken Our vertically-integrated Chicken operations facilities include processing facilities, rendering facilities, blending mills, feed mills, grain elevators and broiler hatcheries. The Chicken processing facilities include various phases of harvesting, dressing, cutting, packaging, deboning and further-processing.
The processing facilities include various phases of harvesting, dressing, cutting, packaging, deboning and further-processing. We also have a foreign production operation in Europe which includes a chicken further-processing facility.
The processing facilities include various phases of harvesting, dressing, cutting, packaging, deboning and further-processing. We also have a foreign production operation in Europe which includes a chicken further-processing facility. We believe our present facilities are generally adequate and suitable, have sufficient capacity and are appropriately utilized for our current purposes.
PROPERTIES The following table summarizes our domestic properties as of October 1, 2022: Number of Facilities (1) Owned Leased Total Capacity (2) Average Capacity Utilization Beef Segment Production Facilities 14 — 14 155,000 head 79 % Pork Segment Production Facilities 7 — 7 471,000 head 84 % Chicken Segment Operation Facilities 178 7 185 47 million head 83 % Prepared Foods Segment Operation Facilities 34 — 34 73 million pounds 77 % (1) Certain facilities produce products that are reported in multiple segments.
PROPERTIES The following table summarizes our domestic properties as of September 30, 2023: Number of Facilities (1) Owned Leased Total Capacity (2) Beef Segment Facilities 14 — 14 155,000 head Pork Segment Facilities 7 — 7 471,000 head Chicken Segment Facilities 176 7 183 45 million head Prepared Foods Segment Facilities 36 — 36 71 million pounds (1) Certain facilities produce products that are reported in multiple segments.
We believe our present facilities are generally adequate and suitable for our current purposes; however, seasonal fluctuations in inventories and production may occur as a reaction to market demands for certain products. We regularly engage in construction and other capital improvement projects intended to expand capacity and improve the efficiency of our processing and support facilities.
Fluctuations in inventories, production and utilization may occur based upon seasonal or other changes in demand for our products. We regularly engage in construction and other capital improvement projects intended to expand capacity and improve the efficiency of our processing and support facilities.
The Chicken segment includes two processing facilities that share facilities with and are included in the Prepared Foods segment in the table above. Prepared Foods Our Prepared Foods segment includes processing facilities and a vertically-integrated turkey operation.
Prepared Foods Our Prepared Foods segment includes processing facilities and a vertically-integrated turkey operation.
Added
Utilization of capacity varies by facility based on the type of products assigned and the level of demand for those products. Beef Beef facilities include various phases of harvesting live cattle and fabricating beef products and specialty products. We also have various facilities which have rendering operations along with tanneries and hide treatment operations.
Added
As described in Part II, Item 8, Notes to Consolidated Financial Statements, Note 7: Restructuring and Related Charges, we announced the closures of six Chicken segment facilities of which two have closed as of September 30, 2023 and four are expected to close in the first half of fiscal 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile we do not admit any liability as part of the settlements, we believe that the settlements were in the best interests of the Company and its shareholders to avoid the uncertainty, risk, expense and distraction of protracted litigation. 20 On June 19, 2005, the Attorney General and the Secretary of the Environment of the State of Oklahoma filed a complaint in the United States District Court for the Northern District of Oklahoma against Tyson Foods, Inc., three subsidiaries and six other poultry integrators.
Biggest changeO n June 19, 2005, the Attorney General and the Secretary of the Environment of the State of Oklahoma filed a complaint in the United States District Court for the Northern District of Oklahoma against Tyson Foods, Inc., three subsidiaries and six other poultry integrators.
Other Matters As of October 1, 2022, we had approximately 142,000 te am members and, at any time, have various employment practices matters outstanding. In the aggregate, these matters are important to the Company, and we devote considerable resources to managing employment issues.
Other Matters As of September 30, 2023, we had approximately 139,000 te am members and, at any time, have various employment practices matters outstanding. In the aggregate, these matters are important to the Company, and we devote considerable resources to managing employment issues.
A non-jury trial of the remaining claims including Oklahoma’s request for injunctive relief began on September 24, 2009. Closing arguments were held on February 11, 2010. The district court has not yet rendered its decision from the trial.
A non-jury trial of the remaining claims including Oklahoma’s request for injunctive relief began on September 24, 2009. Closing arguments were held on February 11, 2010.
Removed
On June 6, 2019, our poultry rendering facility in Hanceville, Alabama, acquired from American Proteins, Inc. in 2018, experienced a release of partially treated wastewater that reached a nearby river and resulted in a fish kill. We took remediation efforts following the release to mitigate the impact.
Added
On January 18, 2023, the district court entered Findings of Fact and Conclusions of Law in favor of the State of Oklahoma and directed the parties to confer in an attempt to reach an agreement on appropriate remedies by March 17, 2023.
Removed
The State of Alabama filed suit against Tyson Farms, Inc. on April 29, 2020 for the June 6, 2019 release, as well as a prior release.
Added
On March 17, 2023, the parties received a 90-day extension from the district court and continued to confer on appropriate remedies. On June 12, 2023, the Court ordered the parties to mediation. The parties attended an in-person mediation on October 12, 2023, but were unable to reach a resolution. Defendants subsequently filed a post-trial motion to dismiss, which remains pending.
Removed
Related civil suits have also been filed, which include individual and collective claims for compensatory and punitive damages against us and other defendants for alleged contamination of the local water supply, personal injury, property damage, diminution in property values, loss of recreational waterway use, lost non-profit revenue and business damages.
Removed
Certain plaintiffs also allege that the facility’s historical and ongoing operations constitute a nuisance under Alabama law and are also seeking injunctive relief. On August 13, 2021, the court approved a settlement of all claims with the State of Alabama related to this action on terms not material to the Company.
Removed
While we do not admit any liability as part of the settlement, we believe that the settlement was in the best interests of the Company and its shareholders to avoid the uncertainty, risk, expense and distraction of protracted litigation.
Removed
On July 8, 2022, Barber Foods, LLC (“Barber Foods”), an indirect wholly owned subsidiary of the Company, received correspondence from the Environmental Protection Agency (“EPA”) extending an opportunity to confer and negotiate a Consent Agreement and Final Order (“CAFO”) for each of two Barber Foods frozen poultry storage facilities located in Portland, Maine (the “Maine Facilities”).
Removed
Included in the correspondence was a proposed CAFO for each facility. Each proposed CAFO alleges violations of the Clean Air Act resulting from EPA compliance inspections conducted in June 2019 at the Maine Facilities.
Removed
The alleged violations include the failure to comply with process safety information requirements, failure to comply with mechanical integrity requirements and failure to adequately identify, evaluate, and control hazards. The proposed CAFOs set forth a proposed aggregate civil penalty of $541,243 for the alleged violations at the Maine Facilities.
Removed
Barber Foods is currently in negotiations with the EPA with respect to the matter. On December 19, 2019, a putative class of direct purchasers filed a class action against us, other turkey suppliers, and Agri Stats, Inc. in the United States District Court for the Northern District of Illinois.
Removed
The plaintiffs allege, among other things, that the defendants entered into an agreement to exchange competitively sensitive information regarding turkey supply, production and pricing plans, all with the intent to artificially inflate the price of turkey, in violation of the Sherman Act.
Removed
Plaintiffs are seeking treble damages, pre- and post-judgment interest, costs and attorneys’ fees on behalf of the putative class.
Removed
On April 13, 2020, a similar complaint was filed in the United States District Court for the Northern District of Illinois on behalf of a putative class of indirect purchasers of turkey alleging claims based on the Sherman Act and various state law causes of action.
Removed
The plaintiffs are seeking treble damages, pre- and post-judgment interest, costs, and attorneys’ fees on behalf of the putative class. Since the original filing, certain putative class members have opted out of the matter and are proceeding with individual direct actions making similar claims, and others may do so in the future.
Removed
In April 2021, we reached agreement to settle all claims with the putative direct purchaser class for $4.625 million and with the putative commercial and institutional indirect purchaser class for $1.75 million.
Removed
On May 25, 2021, the Court granted preliminary approval of the settlement with the putative direct purchaser class, and on January 10, 2022, the Court granted final approval of the settlement with that class.
Removed
On July 28, 2021, the Court granted preliminary approval of the settlement with the putative commercial and institutional indirect purchaser class, and on February 10, 2022, the Court granted final approval of the settlement with that class.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeTyson Chairman of the Board of Directors 69 2011 David Bray Group President Poultry 53 2021 Stewart Glendinning Executive Vice President and Chief Financial Officer 57 2017 Donnie King President and Chief Executive Officer 60 2019 Shane Miller Group President Fresh Meats 53 2021 Jason Nichol Chief Customer Officer 50 2021 Johanna Söderström Executive Vice President and Chief People Officer 51 2020 Scott Spradley Executive Vice President and Chief Technology and Automation Officer 57 2017 Phillip Thomas Vice President, Controller and Chief Accounting Officer 47 2020 Amy Tu Executive Vice President, Chief Legal Officer and Secretary, Global Governance and Corporate Affairs 55 2017 John R.
Biggest changeTyson Chairman of the Board of Directors 70 2011 Adam Deckinger General Counsel and Secretary 47 2023 Melanie Boulden Group President, Prepared Foods and Chief Growth Officer 51 2023 Donnie King President and Chief Executive Officer 61 2019 Wes Morris Group President, Poultry 58 2023 Jason Nichol Chief Customer Officer 51 2021 Johanna Söderström Executive Vice President and Chief People Officer 52 2020 Brady Stewart Group President, Beef, Pork and Chief Supply Chain Officer 44 2023 Phillip Thomas Vice President, Controller and Chief Accounting Officer 48 2020 Amy Tu President, International 56 2017 John R.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Each of our executive officers serve one-year terms from the date of their election, or until their successors are appointed and qualified. Chairman of the Board of Directors John Tyson is the father of Chief Sustainability Officer John R. Tyson and nephew of Director Barbara A. Tyson.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 21 INFORMATION ABOUT OUR EXECUTIVE OFFICERS Each of our executive officers serve one-year terms from the date of their election, or until their successors are appointed and qualified. Chairman of the Board of Directors John Tyson is the father of Chief Financial Officer John R. Tyson and nephew of Director Barbara A. Tyson.
Tyson Executive Vice President, Strategy and Chief Sustainability Officer 32 2019 John H. Tyson has served as Chairman of the Board of Directors since 1998 and was previously Chief Executive Officer of the Company from 2000 until 2006. Mr. Tyson was initially employed by the Company in 1973.
Tyson Executive Vice President and Chief Financial Officer 33 2019 John H. Tyson has served as Chairman of the Board of Directors since 1998 and was previously Chief Executive Officer of the Company from 2000 until 2006. Mr. Tyson was initially employed by the Company in 1973.
Phillip Thomas was appointed Vice President, Controller and Chief Accounting Officer in July 2020 after serving as Vice President and Assistant Controller since March 2014, prior to which he served as Senior Director Financial Reporting since his initial employment with the Company in July 2008.
Phillip Thomas was appointed Vice President, Controller and Chief Accounting Officer in July 2020 after serving as Vice President and Assistant Controller since March 2014, prior to which he served as Senior Director Financial Reporting since his initial employment with the Company in July 2008. Amy Tu was appointed President, International in October 2022. Ms.
No other family relationships exist among these officers. The name, title, age (as of October 1, 2022) and calendar year of initial election to executive office of our executive officers are listed below: Name Title Age Year Elected Executive Officer John H.
No other family relationships exist among these officers. The name, title, age (as of September 30, 2023) and calendar year of initial election to executive office of our executive officers are listed below: Name Title Age Year Elected Executive Officer John H.
King served as Group President, International and Chief Administration Officer from February 2019 to September 2020 in addition to the role of Group President, International from January 2019 to February 2020. Mr. King previously served as President, North American Operations from 2015 to 2016 and President, North American Operations and Foodservice in 2014. Mr.
King served as Chief Administration Officer from February 2019 to September 2020 in addition to the role of Group President, International from January 2019 to February 2020. Mr. King previously served as President, North American Operations from 2015 to 2016 and President, North American Operations and Foodservice in 2014. Mr. King was initially employed by Valmac Industries in 1982.
Nichol was employed by Nabisco, Cott Beverages and Scotts Miracle-Gro prior to joining the Company. Johanna Söderström was appointed Executive Vice President and Chief People Officer in October 2021 after serving as Executive Vice President and Chief Human Resources Officer since July 2020. Ms. Söderström was employed by Dow Chemical Company prior to joining the Company.
Johanna Söderström was appointed Executive Vice President and Chief People Officer in October 2021 after serving as Executive Vice President and Chief Human Resources Officer since her initial employment with the Company in July 2020. Ms. Söderström was employed by Dow Chemical Company prior to joining the Company.
Miller has held numerous other management and leadership roles since joining the Company in 2002. Jason Nichol was appointed Chief Customer Officer in February 2021 after serving as Senior Vice President, Walmart since March 2016 and as Vice President, Walmart from his initial employment by the Company in April 2015 to February 2016. Mr.
Jason Nichol was appointed Chief Customer Officer in February 2021 after serving as Senior Vice President, Walmart since March 2016 and as Vice President, Walmart since his initial employment with the Company in April 2015. Mr. Nichol was employed by Nabisco, Cott Beverages and Scotts Miracle-Gro prior to joining the Company.
King was initially employed by Valmac Industries in 1982. Valmac Industries was acquired by the Company in 1984. Mr. King was self-employed from 2016 to February 2019 before returning to the Company. 21 Shane Miller was appointed Group President, Fresh Meats in February 2021 after serving as Chief Operating Officer, Fresh Meats since October 2020. Mr.
Valmac Industries was acquired by the Company in 1984. Mr. King was self-employed from 2016 to February 2019 before returning to the Company. Wes Morris was appointed Group President, Poultry in January 2023 after serving as a consultant to the Company since October 2020. Mr.
Amy Tu was appointed Executive Vice President and Chief Legal Officer and Secretary, Global Governance and Corporate Affairs in October 2021 after serving as Executive Vice President, General Counsel and Secretary since November 2020 and Executive Vice President and General Counsel since December 2017. Ms. Tu was employed by The Boeing Company prior to joining the Company.
Tu served as Executive Vice President and Chief Legal Officer and Secretary from October 2021 to January 2023, as Executive Vice President, General Counsel and Secretary from November 2020 to October 2021 and as Executive Vice President and General Counsel since her initial employment with the Company in December 2017. Ms.
Tyson was appointed Executive Vice President, Strategy and Chief Sustainability Officer in October 2021 after serving as Chief Sustainability Officer since September 2019, and Director, Office of the Chief Executive Officer since May 2019. Mr. Tyson has been an observer at the Company’s board of directors’ meetings since 2014. He was employed by J.P.
Tyson was appointed Executive Vice President and Chief Financial Officer in October 2022 after serving as Executive Vice President, Strategy and Chief Sustainability Officer since October 2021, as Chief Sustainability Officer from September 2019 to October 2021, and as Director, Office of the Chief Executive Officer since his initial employment with the Company in May 2019. Mr.
Glendinning stepped down from his duties as Executive Vice President and Chief Financial Officer to transition to the role of Group President Prepared Foods. Donnie King was appointed President and Chief Executive Officer in June 2021 after serving as Chief Operating Officer since February 2021 and Group President Poultry since September 2020. Mr.
Boulden was employed by The Coca-Cola Company from 2019 to 2022, Reebok International from 2018 to 2019, and Crayola and Kraft Foods prior to that. Donnie King was appointed President and Chief Executive Officer in June 2021 after serving as Chief Operating Officer since February 2021 and Group President Poultry since September 2020. Mr.
Stewart Glendinning was appointed Executive Vice President and Chief Financial Officer in February 2018 after serving as Executive Vice President since his initial employment by the Company in December 2017. Mr. Glendinning was employed at Molson Coors Brewing Company prior to joining the Company. Effective October 2, 2022, Mr.
Brady Stewart was appointed Group President, Beef, Pork and Chief Supply Chain Officer in August 2023 after serving as Group President, Fresh Meats since his initial employment with the Company in January 2023. Prior to joining the Company, Mr. Stewart was employed by Smithfield Foods from 2017 to 2022 and the Kansas City Sausage Company prior to that.
Scott Spradley was appointed Executive Vice President and Chief Technology and Automation Officer in October 2021 after serving as Executive Vice President and Chief Technology Officer since 2017. Mr. Spradley was employed by Hewlett Packard Enterprise prior to joining the Company.
Deckinger was employed by The Boeing Company prior to joining the Company. Melanie Boulden was appointed Group President, Prepared Foods in September 2023 after serving as Chief Growth Officer since her initial employment with the Company in February 2023. Prior to joining the Company, Ms.
Removed
David Bray was appointed Group President Poultry in June 2021 after serving as Senior Vice President, Retail Poultry and Case Ready Meats since August 2020 and as Senior Vice President, Grocery from April 2017 to July 2020. Mr.
Added
Adam Deckinger was appointed as General Counsel and Secretary in January 2023 after serving as Senior Vice President and Head of Law and Compliance since November 2022. Prior to that role, Mr. Deckinger served as Vice President and Associate General Counsel since his initial employment with the Company in April 2018. Mr.
Removed
Bray previously served as Vice President, Grocery Sales from September 2014 to April 2017 and as Vice President, Consumer Product Customer Development from March 2011 to September 2014. Mr. Bray was employed at Kraft Foods Group prior to joining the Company.
Added
Morris was previously employed by the Company from 1999 until 2017, and has served in many leadership roles including President, Prepared Foods Operations. Mr. Morris was employed by Simmons Foods before his return to the Company.
Removed
Miller previously served as Senior Vice President and General Manager, Beef Enterprise from January 2019 to October 2020, Senior Vice President, General Manager, Value Added & Case Ready from February 2018 to January 2019, Senior Vice President, Pork from July 2015 to February 2018 and Senior Vice President, Pork Margin Management from May 2013 to July 2015. Mr.
Added
Tu also held the role of Chief Administrative Officer from October 2022 to August 2023. Prior to that role, Ms.
Removed
Effective October 2, 2022, Ms. Tu was named President, International and Chief Administrative Officer, expanding her enterprise leadership role of Chief Legal Officer and Secretary, Global Governance and Corporate Affairs. John R.
Added
Tu was employed by The Boeing Company prior to joining the Company. 22 John R.
Removed
Morgan and as a private equity and venture capital investor prior to joining the Company. Effective October 2, 2022, Mr. Tyson was appointed Executive Vice President and Chief Financial Officer to succeed Mr. Glendinning. Mr. Tyson maintains his responsibilities for corporate development, strategy and sustainability concurrently with his appointment to Chief Financial Officer. PART II
Added
Tyson has been an observer at the Company’s board of directors’ meetings since 2014. He was employed by J.P. Morgan and as a private equity and venture capital investor prior to joining the Company. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePERFORMANCE GRAPH The following graph shows a five-year comparison of cumulative total returns for our Class A stock, the Standard & Poor’s (“S&P”) 500 Index and our peer group of companies described below. 23 Fiscal Years Ended 9/30/17 9/29/18 9/28/19 10/3/20 10/2/21 10/1/22 Tyson Foods, Inc. $ 100.00 $ 85.94 $ 125.67 $ 89.62 $ 121.28 $ 104.37 S&P 500 Index 100.00 117.90 121.61 140.13 185.04 154.59 Peer Group 100.00 101.31 118.72 122.02 136.50 151.97 The total cumulative return on investment (change in the year-end stock price plus reinvested dividends), which is based on the stock price or composite index at the end of fiscal 2017, is presented for each of the periods for the Company, the S&P 500 Index and our peer group.
Biggest changePERFORMANCE GRAPH The following graph shows a five-year comparison of cumulative total returns for our Class A stock, the Standard & Poor’s (“S&P”) 500 Index, our old peer group and our new peer group of companies described below. 23 Fiscal Years Ended 9/29/18 9/28/19 10/3/20 10/2/21 10/1/22 9/30/23 Tyson Foods, Inc. $ 100.00 $ 146.23 $ 104.29 $ 141.12 $ 121.45 $ 96.20 S&P 500 Index 100.00 103.72 119.51 157.80 131.85 160.31 Old Peer Group 100.00 115.97 119.31 131.90 146.85 152.76 New Peer Group 100.00 129.98 143.64 159.24 158.38 186.28 The total cumulative return on investment (change in the year-end stock price plus reinvested dividends), which is based on the stock price or composite index at the end of fiscal 2018, is presented for each of the periods for the Company, the S&P 500 Index and our old and new peer groups.
The complete list of our peer group includes: Archer-Daniels-Midland Company, Bunge Limited, Campbell Soup Company, ConAgra Foods, Inc., General Mills, Inc., Hormel Foods Corp., Kellogg Co., Kraft Heinz Company, Mondelez International Inc., PepsiCo, Inc., Pilgrim’s Pride Corporation, The Coca-Cola Company, The Hershey Company and The J.M. Smucker Company.
The complete list of our old peer group includes: Archer-Daniels-Midland Company, Bunge Limited, Campbell Soup Company, ConAgra Foods, Inc., General Mills, Inc., Hormel Foods Corp., Kellogg Co., Kraft Heinz Company, Mondelez International Inc., PepsiCo, Inc., Pilgrim’s Pride Corporation, The Coca-Cola Company, The Hershey Company and The J.M. Smucker Company.
The information in this “Performance Graph” section shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Securities Exchange Act of 1934. ITEM 6. SELECTED FINANCIAL DATA Not applicable.
The information in this “Performance Graph” section shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Securities Exchange Act of 1934. ITEM 6. SELECTED FINANCIAL DATA Not applicable. 24
The increased quarterly dividend is payable on December 15, 2022, to shareholders of record at the close of business on December 1, 2022.
The increased quarterly dividend is payable on December 15, 2023, to shareholders of record at the close of business on December 1, 2023.
The graph compares the performance of the Company’s Class A common stock with that of the S&P 500 Index and our peer group, with the return of each company in the peer group weighted on market capitalization.
The graph compares the performance of the Company’s Class A common stock with that of the S&P 500 Index and our old and new peer groups, with the return of each company in the peer groups weighted on market capitalization.
Holders of Class B stock are entitled to 10 votes per share and holders of Class A stock are entitled to one vote per share on matters submitted to shareholders for approval. As of October 29, 2022, there were approximately 24,000 holders of record of our Class A stock and six holders of record of our Class B stock.
Holders of Class B stock are entitled to 10 votes per share and holders of Class A stock are entitled to one vote per share on matters submitted to shareholders for approval. As of October 28, 2023, there were approximately 25,000 holders of record of our Class A stock and six holders of record of our Class B stock.
The Board also declared a quarterly dividend of $0.48 per share on our Class A common stock and $0.432 per share on our Class B common stock, payable on March 15, 2023, to shareholders of record at the close of business on March 1, 2023.
The Board also declared a quarterly dividend of $0.49 per share on our Class A common stock and $0.441 per share on our Class B common stock, payable on March 15, 2024, to shareholders of record at the close of business on March 1, 2024.
(2) We purchased 114,442 shares during the period that were not made pursuant to our previously announced stock repurchase program but were purchased to fund certain Company obligations under our equity compensation plans. These transactions included 110,604 shares purchased in open market transactions and 3,838 shares withheld to cover required tax withholdings on the vesting of restricted stock.
(2) We purchased 193,429 shares during the period that were not made pursuant to our previously announced stock repurchase program but were purchased to fund certain Company obligations under our equity compensation plans. These transactions included 165,441 shares purchased in open market transactions and 27,988 shares withheld to cover required tax withholdings on the vesting of restricted stock.
Effective November 11, 2022, the Board of Directors increased the quarterly dividend previously declared on August 11, 2022, to $0.48 per share on our Class A common stock and $0.432 per share on our Class B common stock.
Effective November 10, 2023, the Board of Directors increased the quarterly dividend previously declared on August 10, 2023, to $0.49 per share on our Class A common stock and $0.441 per share on our Class B common stock.
We anticipate the remaining quarterly dividends in fiscal 2023 will be $0.48 and $0.432 per share of our Class A and Class B stock, respectively. This results in an annual dividend rate in fiscal 2023 of $1.92 for Class A shares and $1.728 for Class B shares, or a 4% increase compared to the fiscal 2022 annual dividend rate.
We anticipate the remaining quarterly dividends in fiscal 2024 will be $0.49 and $0.441 per share of our Class A and Class B stock, respectively. This results in an annual dividend rate in fiscal 2024 of $1.96 for Class A shares and $1.764 for Class B shares, or a 2% increase compared to the fiscal 2023 annual dividend rate.
In fiscal 2022, the annual dividend rate for Class A stock was $1.84 per share and the annual dividend rate for Class B stock was $1.656 per share.
In fiscal 2023, the annual dividend rate for Class A stock was $1.92 per share and the annual dividend rate for Class B stock was $1.728 per share.
Period Total Number of Shares Purchased (2) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) Jul. 3, 2022 to Jul. 30, 2022 45,951 $ 84.05 — 11,957,990 Jul. 31, 2022 to Sept. 3, 2022 49,180 82.91 — 11,957,990 Sept. 4, 2022 to Oct. 1, 2022 19,311 73.57 — 11,957,990 Total 114,442 $ 81.79 — 11,957,990 (1) On February 7, 2003, our Board of Directors approved a program to repurchase up to 25 million shares of Class A common stock from time to time in open market or privately negotiated transactions.
Period Total Number of Shares Purchased (2) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) Jul. 2, 2023 to Jul. 29, 2023 73,856 $ 52.72 — 7,301,400 Jul. 30, 2023 to Sept. 2, 2023 86,157 54.69 — 7,301,400 Sept. 3, 2023 to Sept. 30, 2023 33,416 52.57 — 7,301,400 Total 193,429 $ 53.57 — 7,301,400 (1) On February 7, 2003, our Board of Directors approved a program to repurchase up to 25 million shares of Class A common stock from time to time in open market or privately negotiated transactions.
MARKET INFORMATION Our Class A stock is traded on the New York Stock Exchange under the symbol “TSN.” No public trading market currently exists for our Class B stock. 22 ISSUER PURCHASES OF EQUITY SECURITIES The table below provides information regarding our purchases of Class A stock during the periods indicated.
We have paid uninterrupted quarterly dividends on common stock each year since 1977. MARKET INFORMATION Our Class A stock is traded on the New York Stock Exchange under the symbol “TSN.” No public trading market currently exists for our Class B stock.
The stock price performance of the Company’s Class A common stock shown in the above graph is not necessarily indicative of future stock price performance.
The stock price performance of the Company’s Class A common stock shown in the above graph is not necessarily indicative of future stock price performance. During fiscal 2023, we changed our peer group to include geographically relevant peers in addition to those operating in the manufacturing, food and CPG industries.
Removed
We have paid uninterrupted quarterly dividends on common stock each year since 1977.
Added
ISSUER PURCHASES OF EQUITY SECURITIES The table below provides information regarding our purchases of Class A stock during the periods indicated.
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Our new peer group includes: Albertsons Companies, Archer Daniels Midland Co., Bunge Ltd., Caterpillar Inc., Coca-Cola Co., Deere & Co., J.B. Hunt Transport Services, Kraft Heinz Co., Mondelez International, Inc., PepsiCo Inc., Performance Food Group, Sysco Corp., United Natural Foods, U.S. Foods Holding, Proctor & Gamble and Walmart Inc.

Item 7. Management's Discussion & Analysis

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

104 edited+57 added−28 removed75 unchanged
Biggest changeLower sales volume decreased cost of sales $1,041 million while higher input cost per pound increased cost of sales $3,763 million. • The $3,763 million impact of higher input cost per pound was impacted by: • Increase in live hog costs of approximately $980 million in our Pork segment. • Increase of approximately $945 million in our Chicken segment related to net increases in feed ingredient costs, growout expenses and outside meat purchases. • Increase in raw material and other input costs of approximately $520 million in our Prepared Foods segment. • Increase in freight and transportation costs of approximately $315 million. • Increase of approximately $81 million in our Chicken segment related to the recognition of legal contingency accruals. • Increase in live cattle costs of approximately $160 million in our Beef segment. • Decrease due to the recognition of a $784 million gain on the sale of our pet treats business. • Decrease of $165 million due to reduction in direct incremental expenses related to COVID-19, primarily related to the payment of $114 million in thank you bonuses during fiscal 2020. • Remaining increase in costs across all of our segments was primarily driven by net impacts on average cost per pound from mix changes, as well as, production inefficiencies, increased labor costs due in part to the impacts associated with a challenging labor environment and COVID-19 in fiscal 2021 as compared to fiscal 2020. • The $1,041 million impact of lower sales volume was primarily driven by decreased volume in each of our segments in fiscal 2021 due to lower production throughput associated with the impact of COVID-19 and a challenging labor environment as well as the impact of an additional week in fiscal 2020.
Biggest changeThese amounts exclude offsetting impacts from related physical purchase transactions, which are included in the change in live cattle and hog costs and raw material and feed ingredient costs described herein. • Increase of $322 million due to costs associated with plant closures. • Increase of $238 million related to inventory lower of cost or net realizable value adjustments. • Increase of approximately $36 million in our Chicken segment related to net increases in feed ingredients costs and growout expenses, partially offset by reduced outside meat purchases. • Increase of approximately $24 million in our Chicken segment due to $11 million of insurance proceeds, net of costs incurred, in fiscal 2023 compared to $35 million of insurance proceeds, net of costs incurred, in fiscal 2022 related to the fire at our production facility in fiscal 2021. • Decrease in live hog costs of approximately $295 million in our Pork segment. • Decrease in freight and transportation costs of approximately $175 million. • Decrease in raw material and other input costs of approximately $45 million in our Prepared Foods segment. 27 • Remaining increase in costs across all of our segments primarily driven by net impacts on average cost per pound from mix changes as well as the impact of the inflationary environment on our labor and other input costs, partially offset by savings from our productivity program. • The $444 million impact of increased sales volume was primarily driven by increased volumes in our Chicken segment. 2022 vs. 2021 – • Cost of sales increased $6,091 million.
If it is determined, based on qualitative factors, the fair value of the reporting unit may be more likely than not less than its carrying amount or if significant changes to macro-economic factors related to the reporting unit have occurred that could materially impact fair value, a quantitative goodwill impairment test would be required.
If it is determined, based on qualitative factors, the fair value of the reporting unit may more likely than not be less than its carrying amount or if significant changes to macro-economic factors related to the reporting unit have occurred that could materially impact fair value, a quantitative goodwill impairment test would be required.
However, we could be required to evaluate the recoverability of goodwill and indefinite life intangible assets outside of the required annual assessment if, among other things, we experience disruptions to the business, unexpected significant declines in operating results, divestiture of a significant component of the business or a sustained decline in market capitalization or significant changes in macro-economic factors such as increased interest and discount rates.
However, we could be required to evaluate the recoverability of goodwill and indefinite life intangible assets outside of the required annual assessment if, among other things, we experience disruptions to the business, unexpected significant declines in operating results, divestiture of a significant component of the business, sustained decline in market capitalization or significant changes in macro-economic factors such as increased interest and discount rates.
We include assumptions about sales growth, operating margins, discount rates and valuation multiples which consider our budgets, business plans, economic projections and marketplace data, and are believed to reflect market participant views which would exist in an exit transaction. Assumptions are also made for varying perpetual growth rates for periods beyond the long-term business plan period.
We include assumptions about sales growth, operating margins, discount rates and valuation multiples which consider our budgets, business plans, economic projections and marketplace data, and are believed to reflect market participant views which would exist in an exit transaction. Assumptions are also made for varying growth rates for periods beyond the long-term business plan period.
The execution of this program is supported by a program management office that ensures delivery of key project milestones and reports on savings achievements connected with the three pillars of the program. The first pillar is operational and functional excellence, which includes functional efficiency efforts in Finance, HR and Procurement focused on applying best practices to reduce costs.
The execution of the program is supported by a program management office that ensures delivery of key project milestones and reports on savings achievements connected with the three pillars of the program. The first pillar is operational and functional excellence, which includes functional efficiency efforts in Finance, HR and Procurement focused on applying best practices to reduce costs.
Determining the useful life of an intangible asset also requires judgment as different types of intangible assets will have different useful lives and certain assets may be considered to have indefinite useful lives. Effect if Actual Results Differ From Assumptions While management believes those expectations and assumptions are reasonable, they are inherently uncertain.
Determining the useful life of an intangible asset also requires judgment as different types of intangible assets will have different useful lives and certain assets may be considered to have indefinite useful lives. 44 Effect if Actual Results Differ From Assumptions While management believes those expectations and assumptions are reasonable, they are inherently uncertain.
(d) Book value per share is calculated by dividing shareholders’ equity by the sum of Class A and B shares outstanding. EBITDA is defined as net income before interest, income taxes, depreciation and amortization. Net debt to EBITDA represents the ratio of our debt, net of cash and short-term investments, to EBITDA.
(d) Book value per share is calculated by dividing shareholders’ equity by the sum of Class A and B shares outstanding. EBITDA is defined as net income (loss) before interest, income taxes, depreciation and amortization. Net debt to EBITDA represents the ratio of our debt, net of cash and short-term investments, to EBITDA.
(b) Return on invested capital is calculated by dividing after-tax operating income, calculated by applying the Company’s effective tax rate to operating income, by the average of beginning and ending total debt and shareholders’ equity less cash and cash equivalents. (c) For the total debt to capitalization calculation, capitalization is defined as total debt plus total shareholders’ equity.
(b) Return on invested capital is calculated by dividing after-tax operating income (loss), calculated by applying the Company’s effective tax rate to operating income (loss), by the average of beginning and ending total debt and shareholders’ equity less cash and cash equivalents. (c) For the total debt to capitalization calculation, capitalization is defined as total debt plus total shareholders’ equity.
The exact amount of cash contributions made to pension plans in any year is dependent upon a number of factors, including minimum funding requirements. As a result, the actual funding in fiscal 2023 may be different from the estimate. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements material to our financial position or results of operations.
The exact amount of cash contributions made to pension plans in any year is dependent upon a number of factors, including minimum funding requirements. As a result, the actual funding in fiscal 2024 may be different from the estimate. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements material to our financial position or results of operations.
We also have employee benefit obligations consisting of pensions and other postretirement benefits of $205 million that are excluded from the table above. A discussion of the Company's pension and postretirement plans, including funding matters, is included in Part II, Item 8, Notes to Consolidated Financial Statements, Note 15: Pensions and Other Postretirement Benefits.
We also have employee benefit obligations consisting of pensions and other postretirement benefits of $193 million that are excluded from the table above. A discussion of the Company's pension and postretirement plans, including funding matters, is included in Part II, Item 8, Notes to Consolidated Financial Statements, Note 15: Pensions and Other Postretirement Benefits.
(7) Other long-term liabilities primarily consist of deferred compensation, deferred income, self-insurance and asset retirement obligations. We are unable to reliably estimate the amount and timing of the remaining payments beyond fiscal 2022; therefore, we have only included the total liability in the table above.
(7) Other long-term liabilities primarily consist of deferred compensation, deferred income, self-insurance and asset retirement obligations. We are unable to reliably estimate the amount and timing of the remaining payments beyond fiscal 2023; therefore, we have only included the total liability in the table above.
These amounts exclude offsetting impacts from related physical purchase transactions, which are included in the change in live cattle and hog costs and raw material and feed ingredient costs described herein. • Decrease of approximately $81 million in our Chicken segment related to the recognition of legal contingency accruals in fiscal 2021. • Decrease of approximately $58 million in our Chicken segment related to insurance proceeds, net of costs incurred, related to the fire at our production facility in the fourth quarter of fiscal 2021. • Decrease of approximately $27 million in our Beef segment related to insurance proceeds related to the fire at our production facility in the fourth quarter of fiscal 2019. • Remaining increase in costs across all of our segments primarily driven by net impacts on average cost per pound from mix changes, the impact of the inflationary environment on our labor and other input costs and restructuring and related charges, partially offset by savings from our productivity program. • The $104 million impact of lower sales volume was primarily driven by decreased volumes in our Pork and Prepared Foods segments. 27 2021 vs. 2020 – • Cost of sales increased $2,722 million.
These amounts exclude offsetting impacts from related physical purchase transactions, which are included in the change in live cattle and hog costs and raw material and feed ingredient costs described herein. • Decrease of approximately $81 million in our Chicken segment related to the recognition of legal contingency accruals in fiscal 2021. • Decrease of approximately $58 million in our Chicken segment related to insurance proceeds, net of costs incurred, related to the fire at our production facility in the fourth quarter of fiscal 2021. • Decrease of approximately $27 million in our Beef segment related to insurance proceeds related to the fire at our production facility in the fourth quarter of fiscal 2019. • Remaining increase in costs across all of our segments primarily driven by net impacts on average cost per pound from mix changes, the impact of the inflationary environment on our labor and other input costs and restructuring and related charges, partially offset by savings from our productivity program. • The $104 million impact of lower sales volume was primarily driven by decreased volumes in our Pork and Prepared Foods segments.
RECENTLY ISSUED/ADOPTED ACCOUNTING PRONOUNCEMENTS Refer to the discussion under Part II, Item 8, Notes to Consolidated Financial Statements, Note 1: Business and Summary of Significant Accounting Policies and Note 2: Changes in Accounting Principles. 37 CRITICAL ACCOUNTING ESTIMATES The preparation of consolidated financial statements requires us to make estimates and assumptions.
RECENTLY ISSUED/ADOPTED ACCOUNTING PRONOUNCEMENTS Refer to the discussion under Part II, Item 8, Notes to Consolidated Financial Statements, Note 1: Business and Summary of Significant Accounting Policies and Note 2: Changes in Accounting Principles. 38 CRITICAL ACCOUNTING ESTIMATES The preparation of consolidated financial statements requires us to make estimates and assumptions.
Our policy is to maintain an accrual at the actuarial estimated median. 38 Judgments and Uncertainties Our self-insurance liability contains uncertainties due to assumptions required and judgments used. Costs to settle our obligations, including legal and healthcare costs, could increase or decrease causing estimates of our self-insurance liability to change.
Our policy is to maintain an accrual at the actuarial estimated median. 39 Judgments and Uncertainties Our self-insurance liability contains uncertainties due to assumptions required and judgments used. Costs to settle our obligations, including legal and healthcare costs, could increase or decrease causing estimates of our self-insurance liability to change.
The exact amount of cash contributions made to pension plans in any year is dependent upon a number of factors, including minimum funding requirements. 39 Judgments and Uncertainties Our defined benefit pension plans contain uncertainties due to assumptions required and judgments used.
The exact amount of cash contributions made to pension plans in any year is dependent upon a number of factors, including minimum funding requirements. 40 Judgments and Uncertainties Our defined benefit pension plans contain uncertainties due to assumptions required and judgments used.
As set forth in Part II, Item 8, Notes to the Consolidated Financial Statements, Note 20: Commitments and Contingencies, we recognized $626 million of charges in fiscal 2021 from legal accruals related to our broiler antitrust civil litigation, broiler chicken grower litigation, and wage rate litigation based on our assessment of the likelihood and amount of probable losses.
As set forth in Part II, Item 8, Notes to the Consolidated Financial Statements, Note 20: Commitments and Contingencies, we recognized $156 million and $626 million of charges in fiscal 2023 and 2021, respectively, from legal accruals related to our broiler antitrust civil litigation, broiler chicken grower litigation, and wage rate litigation based on our assessment of the likelihood and amount of probable losses.
The assumptions and estimates used in determining fair value require considerable judgement and are sensitive to changes in underlying assumptions. These assumptions can change in future periods as a result of overall economic conditions, including the impacts of inflationary pressures, increased interest and discount rates and global supply chain constraints, amongst others.
The assumptions and estimates used in determining fair value require considerable judgement and are sensitive to changes in underlying assumptions. These assumptions can change in future periods as a result of overall economic conditions, including the impacts of inflationary pressures, increased interest and discount rates, global supply chain constraints and decreased market capitalization, amongst others.
International/Other primarily includes our foreign operations in Australia, China, Malaysia, Mexico, the Netherlands, South Korea and Thailand, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC. For further description of the business, refer to Part I, Item 1, Business.
International/Other primarily includes our foreign operations in Australia, China, Malaysia, Mexico, the Netherlands, South Korea, Thailand and the Kingdom of Saudi Arabia, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC. For further description of the business, refer to Part I, Item 1, Business.
Income tax includes an estimate for withholding taxes on earnings of foreign subsidiaries expected to be remitted to the United States but does not include an estimate for taxes on earnings considered to be indefinitely invested in the foreign subsidiary.
Income tax includes an estimate for withholding taxes on earnings of foreign subsidiaries expected to be remitted but does not include an estimate for taxes on earnings considered to be indefinitely invested in the foreign subsidiary.
Refer to the Company's Annual Report on Form 10-K for the fiscal year ended October 3, 2020 for additional information related to fiscal 2020. DESCRIPTION OF THE COMPANY We are one of the world’s largest food companies and a recognized leader in protein. Founded in 1935 by John W.
Refer to the Company's Annual Report on Form 10-K for the fiscal year ended October 2, 2021 for additional information related to fiscal 2021. DESCRIPTION OF THE COMPANY We are one of the world’s largest food companies and a recognized leader in protein. Founded in 1935 by John W.
Debt Covenants Our revolving credit facility contains affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens and encumbrances; incur debt; merge, dissolve, liquidate or consolidate; make acquisitions and investments; dispose of or transfer assets; change the nature of our business; engage in certain transactions with affiliates; and enter into hedging transactions, in each case, subject to certain qualifications and exceptions.
Debt Covenants Our revolving credit and term loan facilities contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens and encumbrances; incur debt; merge, dissolve, liquidate or consolidate; make acquisitions and investments; dispose of or transfer assets; change the nature of our business; engage in certain transactions with affiliates; and enter into hedging transactions, in each case, subject to certain qualifications and exceptions.
However, if actual results are not consistent with our estimates or assumptions, they are accumulated and amortized over future periods and, therefore generally affect the net periodic benefit cost in future periods. A 1% change in the discount rate at October 1, 2022, would not have a significant impact on the projected benefit obligation or net periodic benefit cost.
However, if actual results are not consistent with our estimates or assumptions, they are accumulated and amortized over future periods and, therefore generally affect the net periodic benefit cost in future periods. A 1% change in the discount rate at September 30, 2023, would not have a significant impact on the projected benefit obligation or net periodic benefit cost.
In conjunction with the 2022 Program, the Company plans to bring together all its corporate team members from the Chicago, Downers Grove and Dakota Dunes area corporate locations to its world headquarters in Springdale, Arkansas, through a phased relocation commencing in early calendar year 2023.
In conjunction with the 2022 Program, the Company relocated all of its corporate team members from the Chicago, Downers Grove and Dakota Dunes area corporate locations to its world headquarters in Springdale, Arkansas, through a phased relocation commencing in early calendar year 2023.
Purchase orders are not included in the table, as a purchase order is an authorization to purchase and is cancellable. Contracts for goods or services that contain termination clauses without penalty have also been excluded. (6) Amounts include estimated amounts to complete buildings and equipment under construction as of October 1, 2022.
Purchase orders are not included in the table, as a purchase order is an authorization to purchase and is cancellable. Contracts for goods or services that contain termination clauses without penalty have also been excluded. (6) Amounts include estimated amounts to complete buildings and equipment under construction as of September 30, 2023.
For certain grain purchase commitments with a fixed quantity provision, we have assumed the future obligations under the commitment based on available commodity futures prices as published in observable active markets as of October 1, 2022. We have excluded future purchase commitments for contracts that do not meet these criteria.
For certain grain purchase commitments with a fixed quantity provision, we have assumed the future obligations under the commitment based on available commodity futures prices as published in observable active markets as of September 30, 2023. We have excluded future purchase commitments for contracts that do not meet these criteria.
A 1% change in the return on plan assets at October 1, 2022, would not have a significant impact on net periodic benefit cost. The sensitivities reflect the impact of changing one assumption at a time with the remaining assumptions held constant.
A 1% change in the return on plan assets at September 30, 2023, would not have a significant impact on net periodic benefit cost. The sensitivities reflect the impact of changing one assumption at a time with the remaining assumptions held constant.
The funded status of the plans is an underfunded position of $159 million at the end of fiscal 2022 as compared to an underfunded position of $215 million at the end of fiscal 2021. We contributed $13 million in fiscal 2022 and expect to contribute approximately $13 million of cash to our pension plans in fiscal 2023.
The funded status of the plans is an underfunded position of $149 million at the end of fiscal 2023 as compared to an underfunded position of $159 million at the end of fiscal 2022. We contributed $13 million in fiscal 2023 and expect to contribute approximately $15 million of cash to our pension plans in fiscal 2024.
A 10% change in the actuarial estimate at October 1, 2022, would not have a significant impact on our liability. Income taxes Description We estimate total income tax expense based on statutory tax rates and tax planning opportunities available to us in various jurisdictions in which we earn income.
A 10% change in the actuarial estimate at September 30, 2023, would not have a significant impact on our liability. Income taxes Description We estimate total income tax expense based on statutory tax rates and tax planning opportunities available to us in various jurisdictions in which we earn income.
Under the terms of the facility, we have the option to establish incremental commitment increases of up to $500 million if certain conditions are met. • We expect net interest expense will approximate $320 million for fiscal 2023. • Our ratio of short-term assets to short-term liabilities (“current ratio”) was 1.8 to 1 and 1.6 to 1 at October 1, 2022, and October 2, 2021, respectively.
Under the terms of the facility, we have the option to establish incremental commitment increases of up to $500 million if certain conditions are met. • We expect net interest expense will approximate $400 million for fiscal 2024. • Our ratio of short-term assets to short-term liabilities (“current ratio”) was 1.3 to 1 and 1.8 to 1 at September 30, 2023, and October 1, 2022, respectively.
The potential maximum contractual obligation associated with our cash flow assistance programs at October 1, 2022, based on the estimated fair values of the livestock supplier’s net tangible assets on that date, aggregated to approximately $290 million.
The potential maximum contractual obligation associated with our cash flow assistance programs at September 30, 2023, based on the estimated fair values of the livestock supplier’s net tangible assets on that date, aggregated to approximately $295 million.
(2) Interest payments include interest on all outstanding debt. Payments are estimated for variable rate and variable term debt based on effective interest rates at October 1, 2022, and expected payment dates.
(2) Interest payments include interest on all outstanding debt. Payments are estimated for variable rate and variable term debt based on effective interest rates at September 30, 2023, and expected payment dates.
Net periodic benefit cost for the defined benefit pension plans was $10 million in fiscal 2022. The projected benefit obligation was $183 million at the end of fiscal 2022. Unrecognized actuarial gain was $13 million at the end of fiscal 2022.
Net periodic benefit cost for the defined benefit pension plans was $6 million in fiscal 2023. The projected benefit obligation was $176 million at the end of fiscal 2023. Unrecognized actuarial gain was $13 million at the end of fiscal 2023.
We recorded impairment charges related to long-lived assets of $34 million, $60 million and $48 million, in fiscal 2022, 2021 and 2020, respectively.
We recorded charges related to long-lived assets of $101 million, $34 million and $60 million, in fiscal 2023, 2022 and 2021, respectively.
After analyzing residual credit risks and general market conditions, we had no allowance for these programs' estimated credit losses at October 1, 2022. 36 OTHER KEY FINANCIAL MEASURES The following are other key financial measures used by the Company for the purposes of assessing performance and highlighting operational trends as well as our ability to generate earnings sufficient to service out debt: in millions, except ratio data 2022 2021 2020 Net income $ 3,249 $ 3,060 $ 2,071 Less: Interest income (17) (8) (10) Add: Interest expense 365 428 485 Add: Income tax expense 900 981 593 Add: Depreciation 945 934 900 Add: Amortization (a) 246 261 278 EBITDA $ 5,688 $ 5,656 $ 4,317 Total gross debt $ 8,321 $ 9,348 $ 11,339 Less: Cash and cash equivalents (1,031) (2,507) (1,420) Less: Short-term investments (1) — — Total net debt $ 7,289 $ 6,841 $ 9,919 Ratio Calculations: Gross debt/EBITDA 1.5x 1.7x 2.6x Net debt/EBITDA 1.3x 1.2x 2.3x Return on invested capital (b) 13.4 % 13.3 % 9.2 % Total debt to capitalization (c) 29.6 % 34.4 % 42.4 % Book value per share (d) $ 55.04 $ 48.95 $ 42.25 (a) Excludes the amortization of debt issuance and debt discount expense of $11 million, $19 million, $14 million for fiscal 2022, 2021 and 2020, respectively, as it is included in Interest expense.
After analyzing residual credit risks and general market conditions, we have recorded an $8 million allowance for these programs' estimated credit losses at September 30, 2023. 37 OTHER KEY FINANCIAL MEASURES The following are other key financial measures used by the Company for the purposes of assessing performance and highlighting operational trends as well as our ability to generate earnings sufficient to service our debt: in millions, except ratio data 2023 2022 2021 Net income (loss) $ (649) $ 3,249 $ 3,060 Less: Interest income (30) (17) (8) Add: Interest expense 355 365 428 Add/(Less): Income tax expense (benefit) (29) 900 981 Add: Depreciation 1,100 945 934 Add: Amortization (a) 229 246 261 EBITDA $ 976 $ 5,688 $ 5,656 Total gross debt $ 9,506 $ 8,321 $ 9,348 Less: Cash and cash equivalents (573) (1,031) (2,507) Less: Short-term investments (15) (1) — Total net debt $ 8,918 $ 7,289 $ 6,841 Ratio Calculations: Gross debt/EBITDA 9.7x 1.5x 1.7x Net debt/EBITDA 9.1x 1.3x 1.2x Return on invested capital (b) (1.4 %) 13.4 % 13.3 % Total debt to capitalization (c) 34.2 % 29.6 % 34.4 % Book value per share (d) $ 51.37 $ 55.04 $ 48.95 (a) Excludes the amortization of debt issuance and debt discount expense of $10 million, $11 million, $19 million for fiscal 2023, 2022 and 2021, respectively, as it is included in Interest expense.
We currently expect net periodic benefit cost associated with our pension plans to be approximately $6 million in fiscal 2023. We expect to contribute approximately $13 million of cash to our pension plans in fiscal 2023.
We currently expect net periodic benefit cost associated with our pension plans to be approximately $7 million in fiscal 2024. We expect to contribute approximately $15 million of cash to our pension plans in fiscal 2024.
Higher average sales prices were offset by the impacts of inflationary market conditions, including $615 million of increased raw materials and other input costs in fiscal 2022 in addition to increased supply chain and labor costs.
Higher average sales prices were offset by the impacts of inflationary market conditions, including $615 million of increased raw materials and other input costs in fiscal 2022 in addition to increased supply chain and labor costs. Additionally, operating income in fiscal 2022 was impacted by $36 million of restructuring and related charges.
Potential circumstances that could have a negative effect on the fair value of our reporting units include, but are not limited to, lower than forecasted growth rates or operating margins and changes in discount rates. A reduction in the estimated fair value of the reporting units could trigger an impairment in the future.
Potential circumstances that could have a negative effect on the fair value of our reporting units and indefinite life intangible assets include, but are not limited to, lower than forecasted growth rates or operating margins and changes in discount rates.
We have recognized $66 million of pretax charges in fiscal 2022 associated with the 2022 Program consisting of severance related costs. The Company currently anticipates the 2022 Program will result in cumulative pretax charges of approximately $293 million, which consists primarily of severance costs, relocation and related costs, accelerated depreciation, contract and lease terminations and professional and other fees.
We recognized $124 million and $66 million of pretax charges in fiscal 2023 and 2022, respectively, associated with the 2022 Program consisting of severance related costs, relocation and related costs, accelerated depreciation, contract and lease termination and professional and other fees. The Company currently anticipates the 2022 Program will result in cumulative pretax charges of approximately $224 million.
Selling, General and Administrative in millions 2022 2021 2020 Selling, general and administrative $ 2,258 $ 2,130 $ 2,376 As a percentage of sales 4.2 % 4.5 % 2022 vs. 2021 – • Increase of $128 million in selling, general and administrative was primarily driven by: • Increase of $48 million in restructuring and related costs. • Increase of $47 million in marketing, advertising and promotion expenses. • Increase of $38 million in technology related costs. • Increase of $34 million in employee costs. • Increase of $24 million in donations. • Increase of $15 million in travel and entertainment costs. • Decrease of $33 million in commission and brokerage fees. • Decrease of $27 million in depreciation and amortization. • Decrease of $16 million from the change in the impact of a cattle supplier’s misappropriation of Company funds, resulting from a $71 million gain related to the recovery of cattle inventory in the fiscal year ended October 1, 2022 as compared to a $55 million gain recognized in the fiscal year ended October 2, 2021. 2021 vs. 2020 – • Decrease of $246 million in selling, general and administrative was primarily driven by: • Decrease of $161 million from the change in the impact of a cattle supplier’s misappropriation of Company funds, resulting from a $55 million gain related to the recovery of cattle inventory in the fiscal year ended October 2, 2021 as compared to a $106 million loss recognized in the fiscal year ended October 3, 2020. • Decrease of $60 million from restructuring and related charges incurred in fiscal 2020. • Decrease of $56 million in marketing, advertising and promotion expenses. • Decrease of $27 million in donations. • Decrease of $24 million in commission and brokerage fees. • Decrease of $21 million in depreciation and amortization. • Increase of $81 million in professional fees. 28 • Increase of $30 million in technology related costs.
Selling, General and Administrative in millions 2023 2022 2021 Selling, general and administrative $ 2,245 $ 2,258 $ 2,130 As a percentage of sales 4.2 % 4.2 % 2023 vs. 2022 – • Decrease of $13 million in selling, general and administrative was primarily driven by: • Decrease of $171 million in employee costs primarily from incentive-based compensation. • Decrease of $26 million in professional fees. • Increase of $71 million from a gain recognized in the fiscal year ended October 1, 2022 from recoveries related to a cattle suppliers misappropriation of Company funds. • Increase of $57 million in marketing, advertising and promotion expenses. • Increase of $47 million in restructuring and related costs. 2022 vs. 2021 – • Increase of $128 million in selling, general and administrative was primarily driven by: • Increase of $48 million in restructuring and related costs. • Increase of $47 million in marketing, advertising and promotion expenses. • Increase of $38 million in technology related costs. • Increase of $34 million in employee costs. • Increase of $24 million in donations. 28 • Increase of $15 million in travel and entertainment costs. • Decrease of $33 million in commission and brokerage fees. • Decrease of $27 million in depreciation and amortization. • Decrease of $16 million from the change in the impact of a cattle supplier’s misappropriation of Company funds, resulting from a $71 million gain related to the recovery of cattle inventory in the fiscal year ended October 1, 2022 as compared to a $55 million gain recognized in the fiscal year ended October 2, 2021.
Interest Expense in millions 2022 2021 $ 365 $ 428 2022 / 2021 – • Interest expense primarily included interest expense related to our senior notes and commitment fees incurred on our revolving credit facility less capitalized interest.
Interest Expense in millions 2023 2022 $ 355 $ 365 2023 / 2022 – • Interest expense primarily included interest expense related to our senior notes, commercial paper, term loans and commitment fees incurred on our revolving credit facility less capitalized interest.
Additionally, volatile market conditions resulted in net derivative losses of $90 million in fiscal 2021 and net derivative gains of $70 million in fiscal 2020, which were offset by the impacts of related physical purchase transactions.
Additionally, volatile market conditions resulted in net derivative gains of $10 million in fiscal 2022 and net derivative losses of $90 million in fiscal 2021, which excludes the impacts of related physical purchase transactions.
We were targeting $1 billion in productivity savings by the end of fiscal 2024, which included more than $400 million in fiscal 2022, relative to a fiscal 2021 cost baseline.
We were targeting $1 billion in productivity savings by the end of fiscal 2024 relative to a fiscal 2021 cost baseline.
In addition to the amounts shown above in the table, we have unrecognized tax benefits of $130 million and related interest and penalties of $47 million at October 1, 2022, recorded in Other long-term liabilities.
In addition to the amounts shown above in the table, we have unrecognized tax benefits of $117 million and related interest and penalties of $50 million at September 30, 2023, recorded in Other long-term liabilities.
Effect if Actual Results Differ From Assumptions We have not made material changes in the accounting methodology used to evaluate impairment of goodwill and intangible assets during the last three years. During fiscal 2022, 2021 and 2020, all of our material reporting units and indefinite life intangible assets passed the impairment analysis.
Effect if Actual Results Differ From Assumptions We have not made material changes in the accounting methodology used to evaluate impairment of goodwill and intangible assets during the last three years.
Other (Income) Expense, net in millions 2022 2021 $ (87) $ (65) 2022 – Included $58 million of foreign exchange losses, $52 million of production facilities fires insurance proceeds, $45 million of joint venture earnings and $37 million of gains on equity investments due to observable price changes in fiscal 2022. 2021 – Included $34 million from a defined benefit plan gain.
Other (Income) Expense, net in millions 2023 2022 $ (42) $ (87) 2023 – Included $22 million of production facilities fire insurance proceeds, $17 million of foreign exchange gains and $12 million of joint venture earnings. 2022 – Included $58 million of foreign exchange losses, $52 million of production facilities fires insurance proceeds, $45 million of joint venture earnings and $37 million of gains on equity investments due to observable price changes in fiscal 2022.
Margins Our total operating margin was 8.3% in fiscal 2022. Operating margins by segment were as follows: • Beef – 12.6% • Pork – 3.0% • Chicken – 5.6% • Prepared Foods – 7.7% Strategy Our strategy is to sustainably feed the world with the fastest growing protein brands.
Operating margins by segment were as follows: • Beef – (0.5)% • Pork – (2.4)% • Chicken – (4.5)% • Prepared Foods – 8.4% Strategy Our strategy is to sustainably feed the world with the fastest growing protein brands.
We were in compliance with all debt covenants at October 1, 2022 and expect that we will maintain compliance.
We were in compliance with all debt covenants at September 30, 2023 and expect that we will maintain compliance.
Judgments and Uncertainties We estimate the fair value of our reporting units considering the use of various valuation techniques, with the primary technique being an income approach (discounted cash flow method) and another technique being a market approach (guideline public company method), which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.
Upon performing the quantitative test, if the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. 41 Judgments and Uncertainties We estimate the fair value of our reporting units considering the use of various valuation techniques, with the primary technique being an income approach (discounted cash flow method) and another technique being a market approach (guideline public company method), which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.
Pork Segment Results in millions 2022 2021 Change 2022 vs. 2021 2020 Change 2021 vs. 2020 Sales $ 6,414 $ 6,277 $ 137 $ 5,128 $ 1,149 Sales Volume Change (1.9) % (2.7) % Average Sales Price Change 4.1 % 25.1 % Operating Income $ 193 $ 328 $ (135) $ 565 $ (237) Operating Margin 3.0 % 5.2 % 11.0 % 30 2022 vs. 2021 – • Sales Volume – Sales volume decreased due to reduced domestic availability of live hogs. • Average Sales Price – Average sales price increased as input costs such as live hogs, labor, freight and transportation costs increased, partially offset by unfavorable mix associated with labor shortages. • Operating Income – Operating income decreased due to periods of compressed pork margins and increased operating costs as a result of the inflationary market environment.
Pork Segment Results in millions 2023 2022 Change 2023 vs. 2022 2021 Change 2022 vs. 2021 Sales $ 5,768 $ 6,414 $ (646) $ 6,277 $ 137 Sales Volume Change (2.2) % (1.9) % Average Sales Price Change (7.9) % 4.1 % Operating Income (Loss) $ (139) $ 193 $ (332) $ 328 $ (135) Operating Margin (2.4) % 3.0 % 5.2 % 2023 vs. 2022 – • Sales Volume – Sales volume decreased as a result of balancing our supply with customer demand. • Average Sales Price – Average sales price decreased due to reduced global demand. • Operating Income (Loss) – Operating income decreased due to compressed pork margins, increased operating costs as a result of the inflationary market environment, losses incurred in our live hog operations and impacts from a production facility fire in the third quarter of fiscal 2023. 2022 vs. 2021 – • Sales Volume – Sales volume decreased due to reduced domestic availability of live hogs. • Average Sales Price – Average sales price increased as input costs such as live hogs, labor, freight and transportation costs increased, partially offset by unfavorable mix associated with labor shortages. • Operating Income – Operating income decreased due to periods of compressed pork margins and increased operating costs as a result of the inflationary market environment.
At October 1, 2022, and October 2, 2021, the ratio of our net debt to EBITDA was 1.3x and 1.2x, respectively. Refer to Other Key Financial Measures below for an explanation and reconciliation to comparable Generally Accepted Accounting Principles (“GAAP ” ) measures.
We monitor the ratio of our net debt to EBITDA as support for our long-term financing decisions. At September 30, 2023, and October 1, 2022, the ratio of our net debt to EBITDA was 9.1x and 1.3x, respectively. Refer to Other Key Financial Measures below for an explanation and reconciliation to comparable Generally Accepted Accounting Principles (“GAAP ” ) measures.
We intend to repatriate any excess cash (net of applicable withholding taxes) not subject to regulatory requirements and to indefinitely reinvest outside of the United States the remainder of cash held by foreign subsidiaries.
We manage our worldwide cash requirements by reviewing available funds among our foreign subsidiaries and the cost effectiveness with which those funds can be accessed. We intend to repatriate any excess cash (net of applicable withholding taxes) not subject to regulatory requirements and to indefinitely reinvest outside of the United States the remainder of cash held by foreign subsidiaries.
Credit Ratings Revolving Credit Facility S&P's applicable rating is “BBB+.” Moody's applicable rating is “Baa2.” The below table outlines the fees paid on the unused portion of the facility (“Facility Fee Rate”) and letter of credit fees and borrowings (“All-in Borrowing Spread”) that corresponds to the applicable ratings levels from S&P and Moody's.
Ratings Level (Moody’s/S&P) Borrowing Spread A2/A or above 0.875 % A3/A- 1.000 % Baal/BBB+ (current level) 1.125 % Baa2/BBB 1.250 % Baa3/BBB- or lower 1.375 % 35 Revolving Credit Facility S&P's applicable rating is “BBB+.” Moody's applicable rating is “Baa2.” The below table outlines the fees paid on the unused portion of the facility (“Facility Fee Rate”) and letter of credit fees and borrowings (“All-in Borrowing Spread”) that corresponds to the applicable ratings levels from S&P and Moody's.
For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 7: Restructuring and Related Charges. in millions 2022 Cost of Sales $ 18 Selling, General and Administrative 48 Total Restructuring and related charges, pretax $ 66 in millions Total estimated 2022 charges Estimated future charges 2022 Program charges Beef $ 16 $ 58 $ 74 Pork 5 25 30 Chicken 6 2 8 Prepared Foods 36 135 171 International/Other 3 7 10 Total Restructuring and related charges, pretax $ 66 $ 227 $ 293 SUMMARY OF RESULTS Sales in millions 2022 2021 2020 Sales $ 53,282 $ 47,049 $ 43,185 Change in sales volume (0.3) % (2.8) % Change in average sales price 12.3 % 13.0 % Sales growth 13.2 % 8.9 % 26 2022 vs. 2021 – • Sales Volume – Sales were negatively impacted by a decrease in sales volume, which accounted for a decrease of $121 million, driven by decreased volumes in our Pork and Prepared Foods segments and impacts associated with the challenging labor environment and continued supply chain constraints, partially offset by an increase in sales volume in our Chicken segment. • Average Sales Price – Sales were positively impacted by higher average sales prices, which accounted for an increase of $5,809 million.
For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 7: Restructuring and Related Charges (in millions). 2023 2022 Cost of Sales $ 29 $ 18 Selling, General and Administrative 95 48 Total Restructuring and related charges, pretax $ 124 $ 66 2022 charges 2023 charges Estimated future charges Total estimated 2022 Program charges Beef $ 16 $ 33 $ 3 $ 52 Pork 5 11 1 17 Chicken 6 16 2 24 Prepared Foods 36 49 24 109 International/Other 3 15 4 22 Total Restructuring and related charges, pretax $ 66 $ 124 $ 34 $ 224 26 SUMMARY OF RESULTS Sales in millions 2023 2022 2021 Sales $ 52,881 $ 53,282 $ 47,049 Change in sales volume 1.0 % (0.3) % Change in average sales price (1.5) % 12.3 % Sales growth (0.8) % 13.2 % 2023 vs. 2022 – • Sales Volume – Sales were positively impacted by a increase in sales volume, which accounted for an increase of $507 million, driven by increased volumes in our Chicken segment partially offset by decreased volumes in our Beef segment due to the reduced domestic availability of live cattle and our Pork segment as a result of balancing our supply with customer demand. • Average Sales Price – Sales were negatively impacted by lower average sales prices, which accounted for a decrease of $752 million, driven by reduced pricing in our Pork and Chicken segments, partially offset by higher average sales prices in our Beef and Prepared Foods segments. • The above change in average sales price for fiscal 2023 excludes the impact of a $156 million reduction of Sales from the recognition of legal contingency accruals. 2022 vs. 2021 – • Sales Volume – Sales were negatively impacted by a decrease in sales volume, which accounted for a decrease of $121 million, driven by decreased volumes in our Pork and Prepared Foods segments and impacts associated with the challenging labor environment and continued supply chain constraints, partially offset by an increase in sales volume in our Chicken segment. • Average Sales Price – Sales were positively impacted by higher average sales prices, which accounted for an increase of $5,809 million.
Additionally, a hypothetical increase in the discount rate of approximately 100 basis points at the date of the 2022 test, with all other assumptions unchanged, would have caused the carrying value of this reporting unit to approximate its fair value.
For the brand with a carrying value $0.3 billion, a hypothetical increase in the discount rate of approximately 100 basis points as of the date of the most recent estimated fair value, with all other assumptions unchanged, would have caused the carrying value to approximate its fair value.
We generally assumed operating margins in future years would increase as we continue to integrate recent acquisitions and implement our international growth strategy, as we believe this is consistent with market participant views in an exit transaction.
We generally assumed operating margins and growth rates in future years would normalize over time as we believe this is consistent with market participant views in an exit transaction.
Chicken Segment Results in millions 2022 2021 Change 2022 vs. 2021 2020 Change 2021 vs. 2020 Sales $ 16,961 $ 13,733 $ 3,228 $ 13,234 $ 499 Sales Volume Change 0.7 % (3.3) % Average Sales Price Change 18.1 % 11.2 % Operating Income (Loss) $ 955 $ (625) $ 1,580 $ 122 $ (747) Operating Margin 5.6 % (4.6) % 0.9 % 2022 vs. 2021 – • Sales Volume – Sales volume increased primarily due to improved domestic production partially offset by inventory growth and strategic initiative mix impacts. • Average Sales Price – Average sales price increased primarily due to the effects of pricing initiatives in an inflationary cost environment. • Operating Income (Loss) – Operating income increased in fiscal 2022 primarily due to higher average sales prices and increased sales volume, partially offset by the impacts of inflationary market conditions including increased supply chain and labor costs.
Chicken Segment Results in millions 2023 2022 Change 2023 vs. 2022 2021 Change 2022 vs. 2021 Sales $ 17,060 $ 16,961 $ 99 $ 13,733 $ 3,228 Sales Volume Change 3.4 % 0.7 % Average Sales Price Change (1.9) % 18.1 % Operating Income (Loss) $ (770) $ 955 $ (1,725) $ (625) $ 1,580 Operating Margin (4.5) % 5.6 % (4.6) % 2023 vs. 2022 – • Sales Volume – Sales volume increased primarily due to improved domestic production and the sell-through of inventory, partially offset by strategic initiative mix impacts. • Average Sales Price – Average sales price decreased due to the challenging market conditions.
We intend to achieve our strategy as we: grow our business by delivering superior value to consumers and customers; deliver fuel for growth and returns through commercial, operational and financial excellence; and sustain our Company and our world for future generations. • In the second quarter of fiscal 2021, we initiated a plan to sell our pet treats business, which was included in our Prepared Foods segment.
We intend to achieve our strategy as we: grow our business by delivering superior value to consumers and customers; deliver fuel for growth and returns through commercial, operational and financial excellence; and sustain our Company and our world for future generations.
Liquidity in millions Commitments Expiration Date Facility Amount Outstanding Letters of Credit (no draw downs) Amount Borrowed Amount Available at October 1, 2022 Cash and cash equivalents $ 1,031 Short-term investments 1 Revolving credit facility September 2026 $ 2,250 $ — $ — 2,250 Commercial Paper — Total liquidity $ 3,282 • Liquidity includes cash and cash equivalents, short-term investments, and availability under our revolving credit facility, less outstanding commercial paper balance. • At October 1, 2022, we had current debt of $459 million, which we intend to pay with cash generated from our operating activities and other existing or new liquidity sources. • The revolving credit facility supports our short-term funding needs and also serves to backstop our commercial paper program.
Liquidity in millions Commitments Expiration Date Facility Amount Outstanding Letters of Credit (no draw downs) Amount Borrowed Amount Available at September 30, 2023 Cash and cash equivalents $ 573 Short-term investments 15 Term loan facility May 2026 $ 1,000 $ — $ 1,000 — Term loan facility May 2028 750 — — 750 Revolving credit facility September 2026 2,250 — — 2,250 Commercial Paper (592) Total liquidity $ 2,996 • Liquidity includes cash and cash equivalents, short-term investments, and availability under our revolving credit and term loan facilities, less the outstanding commercial paper balance. • At September 30, 2023, we had current debt of $1,895 million, which we intend to pay with cash generated from our operating activities and other existing or new liquidity sources. • In fiscal 2023, we executed two new term loan facilities totaling $1.75 billion to refinance our short-term promissory notes ("commercial paper program") and for general corporate purposes.
Under these valuation approaches, we are required to make estimates and assumptions about sales growth, operating margins, royalty rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data.
Under these valuation approaches, we are required to make estimates and assumptions about sales growth, operating margins, royalty rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data. We consider indefinite life intangible assets that have 20% or less excess fair value over carrying amount to have a heightened risk of impairment.
The increase in average sales price was primarily attributable to favorable product mix and the pass through of increased raw material costs. • The above change in average sales price for fiscal 2021 excludes a $545 million reduction of Sales from the recognition of legal contingency accruals.
The increase in average sales price was primarily due to the current inflationary environment and recovery of rapidly rising costs. • The above change in average sales price for fiscal 2022 excludes the impact of a $545 million reduction of Sales from the recognition of legal contingency accruals in fiscal 2021.
Our ability to access commercial paper in the future may be limited or its costs increased. 34 Capitalization To monitor our credit ratings and our capacity for long-term financing, we consider various qualitative and quantitative factors. We monitor the ratio of our net debt to EBITDA as support for our long-term financing decisions.
As of September 30, 2023, we had $592 million commercial paper outstanding under this program with maturities less than 20 days. Our ability to access commercial paper in the future may be limited or its costs increased. Capitalization To monitor our credit ratings and our capacity for long-term financing, we consider various qualitative and quantitative factors.
Cost of Sales in millions 2022 2021 2020 Cost of sales $ 46,614 $ 40,523 $ 37,801 Gross profit 6,668 6,526 Cost of sales as a percentage of sales 87.5 % 86.1 % 2022 vs. 2021 – • Cost of sales increased $6,091 million.
Cost of Sales in millions 2023 2022 2021 Cost of sales $ 50,250 $ 46,614 $ 40,523 Gross profit 2,631 6,668 Cost of sales as a percentage of sales 95.0 % 87.5 % 2023 vs. 2022 – • Cost of sales increased $3,636 million.
Additionally, operating income in fiscal 2022 benefited from $27 million of insurance proceeds related to a fire at a production facility in the fourth quarter of fiscal 2019, partially offset by $16 million of restructuring and related charges. 2021 vs. 2020 – • Sales Volume – Sales volume was relatively flat due to strong global demand, partially offset by the impacts associated with a challenging labor environment, severe weather in the second quarter of fiscal 2021 and the additional week in fiscal 2020. • Average Sales Price – Average sales price increased as our input costs such as live cattle, labor and freight and transportation costs, increased and demand for our beef products remained strong. • Operating Income – Operating income increased due to strong demand as we continued to optimize revenues relative to live cattle supply, partially offset by production inefficiencies due to labor challenges.
Operating income in fiscal 2022 was impacted by $27 million of insurance proceeds related to a fire at a production facility in fiscal 2019, and $16 million of restructuring and related charges. 2022 vs. 2021 – • Sales Volume – Sales volume was relatively flat in fiscal 2022. • Average Sales Price – Average sales price increased as input costs such as live cattle, labor and freight and transportation costs increased and demand for our beef products remained strong in the first half of the fiscal year. 30 • Operating Income – Operating income decreased as margins compressed from historically high levels, paired with continued increased operating costs as a result of inflationary market environment.
Cash Flows from Investing Activities in millions 2022 2021 Additions to property, plant and equipment $ (1,887) $ (1,209) (Purchases of)/Proceeds from marketable securities, net (1) (2) Proceeds from sale of businesses — 1,188 Acquisition of equity investments (177) (44) Other, net 130 125 Net cash provided by (used for) investing activities $ (1,935) $ 58 • Additions to property, plant and equipment included spending for production growth, safety and animal well-being, acquiring new equipment, infrastructure replacements and upgrades to maintain competitive standing and position us for future opportunities. • Approximately $2.4 billion will be necessary to complete buildings and equipment under construction at October 1, 2022. • Capital spending for fiscal 2023 is expected to approximate $2.5 billion and will include spending for capacity expansion and utilization, automation to alleviate labor challenges and brand and product innovation. • Proceeds from sale of businesses related to the proceeds received from sale of our pet treats business in fiscal 2021.
Cash Flows from Investing Activities in millions 2023 2022 Additions to property, plant and equipment $ (1,939) $ (1,887) (Purchases of)/Proceeds from marketable securities, net (2) (1) Acquisitions, net of cash acquired (262) — Acquisition of equity investments (115) (177) Other, net 19 130 Net cash used for investing activities $ (2,299) $ (1,935) • Additions to property, plant and equipment included spending for production growth, safety and animal well-being, new equipment, infrastructure replacements and upgrades to maintain competitive standing and position us for future opportunities. • Approximately $1.3 billion will be necessary to complete buildings and equipment under construction at September 30, 2023. • We expect capital expenditures between $1 billion and $1.5 billion for fiscal 2024.
OVERVIEW Fiscal year The Company’s accounting cycle resulted in a 52-week year for fiscal 2022 and fiscal 2021 and a 53-week year for fiscal 2020.
OVERVIEW Fiscal year We utilize a 52- or 53-week accounting period ending on the Saturday closest to September 30. The Company’s accounting cycle resulted in a 52-week year for fiscal 2023, 2022 and 2021.
We do not expect the regulatory restrictions or taxes on repatriation to have a material effect on our overall liquidity, financial condition or the results of operations for the foreseeable future. Capital Resources Credit Facility Cash flows from operating activities and cash on hand are our primary sources of liquidity for funding debt service, capital expenditures, dividends and share repurchases.
We do not expect the regulatory restrictions or taxes on repatriation to have a material effect on our overall liquidity, financial condition or the results of operations for the foreseeable future.
We also have a revolving credit facility, with a committed capacity of $2.25 billion, to provide additional liquidity for working capital needs and to backstop our commercial paper program. At October 1, 2022, amounts available for borrowing under our revolving credit facility totaled $2.25 billion.
We also have a revolving credit facility, with a committed capacity of $2.25 billion, to provide additional liquidity for working capital needs and to backstop our commercial paper program. Additionally, we have $1.75 billion in committed term loan facilities of which $1.0 billion was drawn upon as of September 30, 2023.
A hypothetical increase in the discount rates of approximately 50 basis points, with all other assumptions unchanged, at the date of the test would have caused the carrying values of the International reporting units to approximate their fair values.
Additionally, a hypothetical increase in the discount rate of approximately 25-50 basis points at September 30, 2023, with all other assumptions unchanged, would have caused the carrying values of the Chicken segment's reporting units to approximate its fair value, which may have resulted in a material goodwill impairment loss.
In fiscal 2022, our operating income was impacted by $66 million of restructuring and related charges and $62 million of insurance proceeds, net of costs incurred, related to fires at our production facilities.
In fiscal 2022, our results were impacted by $66 million of restructuring and related charges and $62 million of insurance proceeds, net of costs incurred related to fires at our production facilities. Market Environment According to the USDA, domestic protein production (beef, pork, chicken and turkey) decreased slightly in fiscal 2023 compared to fiscal 2022.
The following table is a summary of segment sales and operating income (loss), which is how we measure segment income (loss): in millions Sales Operating Income (Loss) 2022 2021 2020 2022 2021 2020 Beef $ 19,854 $ 17,999 $ 15,742 $ 2,502 $ 3,240 $ 1,580 Pork 6,414 6,277 5,128 193 328 565 Chicken 16,961 13,733 13,234 955 (625) 122 Prepared Foods 9,689 8,853 8,532 746 1,456 743 International/Other 2,355 1,990 1,856 14 (3) (2) Intersegment Sales (1,991) (1,803) (1,307) — — — Total $ 53,282 $ 47,049 $ 43,185 $ 4,410 $ 4,396 $ 3,008 Beef Segment Results in millions 2022 2021 Change 2022 vs. 2021 2020 Change 2021 vs. 2020 Sales $ 19,854 $ 17,999 $ 1,855 $ 15,742 $ 2,257 Sales Volume Change 0.1 % 0.3 % Average Sales Price Change 10.2 % 14.0 % Operating Income $ 2,502 $ 3,240 $ (738) $ 1,580 $ 1,660 Operating Margin 12.6 % 18.0 % 10.0 % 2022 vs. 2021 – • Sales Volume – Sales volume was relatively flat in fiscal 2022. • Average Sales Price – Average sales price increased as input costs such as live cattle, labor and freight and transportation costs increased and demand for our beef products remained strong in the first half of the fiscal year. • Operating Income – Operating income decreased as margins compressed from historically high levels, paired with continued increased operating costs as a result of inflationary market environment.
The following table is a summary of segment sales and operating income (loss) for fiscal years ended 2023, 2022 and 2021, which is how we measure segment income (loss): in millions Sales Operating Income (Loss) 2023 2022 2021 2023 2022 2021 Beef $ 19,325 $ 19,854 $ 17,999 $ (91) $ 2,502 $ 3,240 Pork 5,768 6,414 6,277 (139) 193 328 Chicken 17,060 16,961 13,733 (770) 955 (625) Prepared Foods 9,845 9,689 8,853 823 746 1,456 International/Other 2,515 2,355 1,990 (218) 14 (3) Intersegment Sales (1,632) (1,991) (1,803) — — — Total $ 52,881 $ 53,282 $ 47,049 $ (395) $ 4,410 $ 4,396 Beef Segment Results in millions 2023 2022 Change 2023 vs. 2022 2021 Change 2022 vs. 2021 Sales $ 19,325 $ 19,854 $ (529) $ 17,999 $ 1,855 Sales Volume Change (3.1) % 0.1 % Average Sales Price Change 0.4 % 10.2 % Operating Income (Loss) $ (91) $ 2,502 $ (2,593) $ 3,240 $ (738) Operating Margin (0.5) % 12.6 % 18.0 % 2023 vs. 2022 – • Sales Volume – Sales volume decreased in fiscal 2023 due to lower availability of live cattle. • Average Sales Price – Average sales price increased slightly due to price increases associated with reduced live cattle supply and increased input costs, partially offset by reduced export demand and softening demand. • Operating Income (Loss) – Operating income decreased due to unfavorable market conditions, including higher fed cattle costs.
We realized more than $700 million of productivity savings in fiscal 2022, which partially offset the impacts of inflationary market conditions, and we now believe we will exceed our $1 billion target in fiscal 2023. • In the fourth quarter of fiscal 2022, the Company approved a restructuring program, the 2022 Program, which is expected to improve business performance, increase collaboration, enhance team member agility, enable faster decision-making and reduce redundancies.
The Company approved a restructuring program in fiscal 2022, the 2022 Program, which is expected to improve business performance, increase collaboration, enhance team member agility, enable faster decision-making and reduce redundancies.
Upon performing the quantitative test, if the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. We have elected to make the first day of the fourth quarter the annual impairment assessment date for goodwill and indefinite life intangible assets.
We have elected to make the first day of the fourth quarter the annual impairment assessment date for goodwill and indefinite life intangible assets.
Net Income Attributable to Tyson in millions, except per share data 2022 2021 Net income attributable to Tyson $ 3,238 $ 3,047 Net income attributable to Tyson - per diluted share 8.92 8.34 2022 – Included the following items: • $114 million pretax, or $0.23 per diluted share, of production facilities fire insurance proceeds, net of costs incurred. • $66 million pretax, or ($0.14) per diluted share, of restructuring and related charges. • $36 million post tax, or $0.10 per diluted share, from remeasurement of net deferred tax liabilities at lower enacted state tax rates. 2021 – Included the following items: • $626 million pretax, or ($1.31) per diluted share, related to the recognition of legal contingency accruals. • $784 million pretax, or $1.40 per diluted share, related to the gain on the sale of our pet treats business. • $34 million pretax, or $0.07 per diluted share, from a defined benefit plan gain. • $17 million pretax, or ($0.04) per diluted share, of production facilities fire costs, net of insurance proceeds. • $27 million pretax, or ($0.06) per diluted share, related to the relocation of a production facility in China. 29 SEGMENT RESULTS We operate in four reportable segments: Beef, Pork, Chicken, and Prepared Foods.
Net Income (Loss) Attributable to Tyson in millions, except per share data 2023 2022 Net income (loss) attributable to Tyson $ (648) $ 3,238 Net income (loss) attributable to Tyson - per diluted share (1.87) 8.92 2023 – Included the following items: • $757 million pretax, or ($2.13) per diluted share, of goodwill impairment charges (non-tax deductible) net of $24 million associated with Net Income (Loss) Attributable to Noncontrolling Interests. • $322 million pretax, or ($0.67) per diluted share, of charges related to plant closures. • $156 million pretax, or ($0.33) per diluted share, related to the recognition of legal contingency accruals. • $124 million pretax, or ($0.26) per diluted share, of restructuring and related charges. 29 • $75 million pretax, or $0.16 per diluted share, of production facilities fire insurance proceeds, net of costs incurred. • $26 million post tax, or $0.07 per diluted share, from remeasurement of net deferred tax liabilities at lower enacted state tax rates. • $17 million pretax, or ($0.04) per diluted share, of product line discontinuation charges. • $16 million pretax, or $0.03 per diluted share, related to the relocation of a production facility in China net of $3 million associated with Net Income (Loss) Attributable to Noncontrolling Interests. 2022 – Included the following items: • $114 million pretax, or $0.23 per diluted share, of production facilities fire insurance proceeds, net of costs incurred. • $66 million pretax, or ($0.14) per diluted share, of restructuring and related charges. • $36 million post tax, or $0.10 per diluted share, from remeasurement of net deferred tax liabilities at lower enacted state tax rates.
The Beef segment experienced strong demand, sufficient supply of market-ready cattle and increased live cattle costs. The Pork segment experienced reduced domestic availability of live hogs. The Chicken segment experienced strong demand and increased feed ingredient and other input costs. The Prepared Foods segment experienced increased costs largely due to the impacts of an inflationary environment.
The Beef segment experienced reduced supply of market-ready cattle and increased live cattle costs. The Pork segment experienced sufficient supply and reduced live hog costs, but was negatively impacted by softening global demand. The Chicken segment experienced increased feed ingredient and other input costs along with excess domestic supply impacts to sales pricing.
International/Other primarily includes our foreign operations in Australia, China, Malaysia, Mexico, the Netherlands, South Korea and Thailand, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC. Additional information regarding the geographic areas of our foreign operations is set forth in Part II, Item 8, Notes to Consolidated Financial Statements, Note 17: Segment Reporting.
Additional information regarding the geographic areas of our foreign operations is set forth in Part II, Item 8, Notes to Consolidated Financial Statements, Note 17: Segment Reporting.
Our revolving credit facility is funded by a syndicate of 20 banks, with commitments ranging from $35 million to $175 million per bank. Commercial Paper Program Our commercial paper program provides a low-cost source of borrowing to fund general corporate purposes including working capital requirements. The maximum borrowing capacity under the commercial paper program is $1.5 billion.
Commercial Paper Program Our commercial paper program provides a low-cost source of borrowing to fund general corporate purposes including working capital requirements. The maximum borrowing capacity under the commercial paper program is $1.5 billion. The maturities of the notes may vary, but may not exceed 397 days from the date of issuance.
Additionally, operating income in fiscal 2022 was impacted by $36 million of restructuring and related charges. 2021 vs. 2020 – • Sales Volume – Sales volume decreased driven by lower production throughput primarily associated with a challenging labor and supply environment, reduced foodservice demand in the first half of fiscal 2021 and the impact of an additional week in fiscal 2020. • Average Sales Price – Average sales price increased due to favorable product mix and inflation-justified pricing. • Operating Income – Operating income increased due to the recognition of a $784 million gain on the sale of our pet treats business, lower commercial spend as well as favorable pricing and product mix.
Operating income in fiscal 2023 was impacted by $17 million of product line discontinuation charges and $49 million of restructuring and related charges. 2022 vs. 2021 – • Sales Volume – Sales volume decreased in fiscal 2022 due to the impacts of uneven foodservice recovery, the divestiture of our pet treats business in the fourth quarter of fiscal 2021, increased pricing and a challenging supply environment impacting the first half of fiscal 2022. • Average Sales Price – Average sales price increased due to the effects of revenue management in an inflationary cost environment. • Operating Income – Operating income decreased in fiscal 2022 due to the recognition of a $784 million gain on the sale of our pet treats business in the fourth quarter of fiscal 2021.
The following tables set forth the pretax impact of restructuring and related charges incurred in fiscal 2022 in the Consolidated Statements of Income and the pretax impact by our reportable segments.
As the Company continues to evaluate its business strategies and long-term growth targets, additional restructuring activities may occur. The following tables set forth the pretax impact of restructuring and related charges in the Consolidated Statements of Income and the pretax impact by our reportable segments for fiscal years ended 2023 and 2022.
Generally, we utilize operating margin assumptions based on future expectations, operating margins historically realized in the reporting units’ industries and industry marketplace valuation multiples.
Generally, we utilize operating margin assumptions based on future expectations, macro-economic trends, operating margins historically realized in the reporting units’ industries and industry marketplace valuation multiples. We consider reporting units that have 20% or less excess fair value over carrying amount to have a heightened risk of impairment.
However, the conflict is still ongoing and there are many risks and uncertainties in relation to the conflict that are outside of our control. If the conflict escalates further or if additional countries join the conflict and additional economic sanctions are imposed, it could have a material impact on our business operations and financial performance.
As of September 30, 2023, the impact of this conflict has not had a material direct impact on our consolidated financial performance. However, the conflict is still ongoing and there are many risks and uncertainties in relation to the conflict that are outside of our control.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeSee Part II, Item 8, Notes to Consolidated Financial Statements, Note 15: Pensions and Other Postretirement Benefits for additional information. 43 FOREIGN CURRENCY RISK We have foreign exchange exposure from fluctuations in foreign currency exchange rates primarily as a result of certain receivable and payable balances.
Biggest changeFOREIGN CURRENCY RISK We have foreign exchange exposure from fluctuations in foreign currency exchange rates primarily as a result of certain receivable and payable balances.
The fair values of our debt were estimated based on quoted market prices and/or published interest rates. We are subject to interest rate risk associated with our pension and post-retirement benefit obligations. Changes in interest rates impact the liabilities associated with these benefit plans as well as the amount of income or expense recognized for these plans.
The fair values of our debt were estimated based on quoted market prices and/or published interest rates. 45 We are subject to interest rate risk associated with our pension and post-retirement benefit obligations. Changes in interest rates impact the liabilities associated with these benefit plans as well as the amount of income or expense recognized for these plans.
The sensitivity analyses presented below are the measures of potential losses of fair value resulting from hypothetical changes in market prices related to commodities. Sensitivity analyses do not consider the actions we may take to mitigate our exposure to changes, nor do they consider the effects such hypothetical adverse changes may have on overall economic activity.
The sensitivity analyses presented below are the measures of potential changes in fair value resulting from hypothetical changes in market prices related to commodities. Sensitivity analyses do not consider the actions we may take to mitigate our exposure to changes, nor do they consider the effects such hypothetical adverse changes may have on overall economic activity.
Market risk for fixed-rate debt is estimated as the potential increase in fair value, resulting from a hypothetical 10% decrease in interest rates. A hypothetical 10% change in interest rates would have changed the fair value of our fixed-rate debt by approximately $215 million at October 1, 2022, and $154 million at October 2, 2021.
Market risk for fixed-rate debt is estimated as the potential increase in fair value, resulting from a hypothetical 10% decrease in interest rates. A hypothetical 10% change in interest rates would have changed the fair value of our fixed-rate debt by approximately $215 million at September 30, 2023 and October 1, 2022.
A hypothetical 10% change in foreign exchange rates related to the foreign exchange forward and option contracts would have had a $25 million and $13 million impact on pretax income at October 1, 2022 and October 2, 2021, respectively. CONCENTRATIONS OF CREDIT RISK Our financial instruments exposed to concentrations of credit risk consist primarily of cash equivalents and trade receivables.
A hypothetical 10% change in foreign exchange rates related to the foreign exchange forward and option contracts would have had a $17 million and $25 million impact on pretax income at September 30, 2023 and October 1, 2022, respectively. CONCENTRATIONS OF CREDIT RISK Our financial instruments exposed to concentrations of credit risk consist primarily of cash equivalents and trade receivables.
The following table presents a sensitivity analysis resulting from a hypothetical change of 10% in market prices as of October 1, 2022 and October 2, 2021, on the fair value of open positions.
The following table presents a sensitivity analysis resulting from a hypothetical change of 10% in market prices as of September 30, 2023 and October 1, 2022, on the fair value of open positions.
A hypothetical 10% increase in interest rates effective at October 1, 2022, and October 2, 2021, would have a minimal effect on interest expense. Additionally, changes in interest rates impact the fair value of our fixed-rate debt. At October 1, 2022, we had fixed-rate debt of $8,319 million with a weighted average interest rate of 4.5%.
A hypothetical 10% increase in interest rates effective at September 30, 2023, and October 1, 2022, would not have a significant effect on variable interest expense. Additionally, changes in interest rates impact the fair value of our fixed-rate debt. At September 30, 2023, we had fixed-rate debt of $7,898 million with a weighted average interest rate of 4.5%.
At October 1, 2022 and October 2, 2021, 16.4% and 16.3%, respectively, of our net accounts receivable balance was due from Walmart Inc. No other single customer or customer group represented 10% or greater of net accounts receivable. 44
At September 30, 2023 and October 1, 2022, 15.9% and 16.4%, respectively, of our net accounts receivable balance was due from Walmart Inc. No other single customer or customer group represented 10% or greater of net accounts receivable. 46
Effect of 10% change in fair value in millions 2022 2021 Livestock: Live Cattle $ 14 $ 42 Lean Hogs 30 38 Grain: Corn 40 24 Soybean Meal 25 26 INTEREST RATE RISK At October 1, 2022, we had variable rate debt of $2 million with a weighted average interest rate of 3.0%.
Effect of 10% change in fair value in millions 2023 2022 Livestock: Live Cattle $ 68 $ 14 Lean Hogs 10 30 Grain: Corn 23 40 Soybean Meal 22 25 INTEREST RATE RISK At September 30, 2023, we had variable rate debt of $1,608 million with a weighted average interest rate of 6.2%.
Declines in the value of the plan assets could diminish the funded status of the pension plans and potentially increase the requirements to make cash contributions to these plans.
Declines in the value of the plan assets could diminish the funded status of the pension plans and potentially increase the requirements to make cash contributions to these plans. See Part II, Item 8, Notes to Consolidated Financial Statements, Note 15: Pensions and Other Postretirement Benefits for additional information.

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