UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended January ~~2, 2021~~1, 2022


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

001-14704

(Commission File Number)

TYSON FOODS, INC.

(Exact name of registrant as specified in its charter)

Delaware

71-0225165

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

2200 West Don Tyson Parkway,

Springdale,

Arkansas

72762-6999

(Address of Principal Executive Offices)

(Zip Code)

(479)

290-4000

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Class A Common Stock

Par Value

$0.10

TSN

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of January ~~2, 2021.~~1, 2022.


Class						Outstanding Shares
Class A Common Stock, $0.10 Par Value (Class A stock)						~~294,722,280~~292,455,419
Class B Common Stock, $0.10 Par Value (Class B stock)						70,010,355

Class B stock is not listed for trading on any exchange or market system. However, Class B stock is convertible into Class A stock on a share-for-share basis.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION


		PAGE
Item 1.	Financial Statements

	Consolidated Condensed Statements of Income for the Three Months Ended J ~~January 2, 20~~anuary 21 1 , 202 2 and J ~~December 28~~anuary 2 , ~~2019~~20 21	1

	Consolidated Condensed Statements of Comprehensive Income for the Three Months Ended January 1, 2022, and January 2, ~~2021, and December 28, 2019~~202 1	2

	Consolidated Condensed Balance Sheets as of J ~~January 2, 2021, and~~anuary 1 , 202 2 , and October ~~3, 2020~~2 , 202 1	3

	Consolidated Condensed Statements of Shareholders' Equity for the Three Months Ended J ~~January~~ anuary 1 , 202 2 ~~2021,~~ and ~~December 28, 2019~~J anuary 2 , 202 1	4

	Consolidated Condensed Statements of Cash Flows for the Three Months Ended January 1, 2022 and January 2, 2021 ~~and December 28, 2019~~	5

	Notes to Consolidated Condensed Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2421

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3531

Item 4.	Controls and Procedures	3733

PART II. OTHER INFORMATION


Item 1.	Legal Proceedings	3833

Item 1A.	Risk Factors	3933

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3934

Item 3.	Defaults Upon Senior Securities	3934

Item 4.	Mine Safety Disclosures	3934

Item 5.	Other Information	3934

Item 6.	Exhibits	4035

SIGNATURES		4136

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

TYSON FOODS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)


		Three Months Ended				Three Months Ended
		January 2, 2021		December 28, 2019				January 1, 2022		January 2, 2021
Sales	Sales	$	10,460	$	10,815		Sales	$	12,933	$	10,460
Cost of Sales	Cost of Sales	9,283		9,375			Cost of Sales	10,918		9,283
Gross Profit	Gross Profit	1,177		1,440			Gross Profit	2,015		1,177
Selling, General and Administrative	Selling, General and Administrative	472		682			Selling, General and Administrative	560		472
Operating Income	Operating Income	705		758			Operating Income	1,455		705
Other (Income) Expense:	Other (Income) Expense:						Other (Income) Expense:
Interest income	Interest income	(2)		(3)			Interest income	(3)		(2)
Interest expense	Interest expense	110		120			Interest expense	100		110
Other, net	Other, net	(19)		(16)			Other, net	(52)		(19)
Total Other (Income) Expense	Total Other (Income) Expense	89		101			Total Other (Income) Expense	45		89
Income before Income Taxes	Income before Income Taxes	616		657			Income before Income Taxes	1,410		616
Income Tax Expense	Income Tax Expense	144		148			Income Tax Expense	284		144
Net Income	Net Income	472		509			Net Income	1,126		472
Less: Net Income Attributable to Noncontrolling Interests	Less: Net Income Attributable to Noncontrolling Interests	5		4			Less: Net Income Attributable to Noncontrolling Interests	5		5
Net Income Attributable to Tyson	Net Income Attributable to Tyson	$	467	$	505		Net Income Attributable to Tyson	$	1,121	$	467
Weighted Average Shares Outstanding:	Weighted Average Shares Outstanding:						Weighted Average Shares Outstanding:
Class A Basic	Class A Basic	293		293			Class A Basic	292		293
Class B Basic	Class B Basic	70		70			Class B Basic	70		70
Diluted	Diluted	365		367			Diluted	365		365
Net Income Per Share Attributable to Tyson:	Net Income Per Share Attributable to Tyson:						Net Income Per Share Attributable to Tyson:
Class A Basic	Class A Basic	$	1.31	$	1.42		Class A Basic	$	3.16	$	1.31
Class B Basic	Class B Basic	$	1.18	$	1.27		Class B Basic	$	2.84	$	1.18
Diluted	Diluted	$	1.28	$	1.38		Diluted	$	3.07	$	1.28

See accompanying Notes to Consolidated Condensed Financial Statements.

TYSON FOODS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


		Three Months Ended				Three Months Ended
		January 2, 2021		December 28, 2019				January 1, 2022		January 2, 2021
Net Income	Net Income	$	472	$	509		Net Income	$	1,126	$	472
Other Comprehensive Income (Loss), Net of Taxes:	Other Comprehensive Income (Loss), Net of Taxes:						Other Comprehensive Income (Loss), Net of Taxes:
Derivatives accounted for as cash flow hedges	Derivatives accounted for as cash flow hedges	1		3			Derivatives accounted for as cash flow hedges	—		1
Investments	Investments	0		0			Investments	(1)		—
Currency translation	Currency translation	75		35			Currency translation	(1)		75
Postretirement benefits	Postretirement benefits	1		0			Postretirement benefits	2		1
Total Other Comprehensive Income (Loss), Net of Taxes	Total Other Comprehensive Income (Loss), Net of Taxes	77		38			Total Other Comprehensive Income (Loss), Net of Taxes	—		77
Comprehensive Income	Comprehensive Income	549		547			Comprehensive Income	1,126		549
Less: Comprehensive Income Attributable to Noncontrolling Interests	Less: Comprehensive Income Attributable to Noncontrolling Interests	5		4			Less: Comprehensive Income Attributable to Noncontrolling Interests	5		5
Comprehensive Income Attributable to Tyson	Comprehensive Income Attributable to Tyson	$	544	$	543		Comprehensive Income Attributable to Tyson	$	1,121	$	544

See accompanying Notes to Consolidated Condensed Financial Statements.

TYSON FOODS, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(In millions, except share and per share data)

(Unaudited)


		January 2, 2021		October 3, 2020			January 1, 2022		October 2, 2021
Assets	Assets					Assets
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	2,406	$	1,420	Cash and cash equivalents	$	2,956	$	2,507
Accounts receivable, net	Accounts receivable, net	1,900		1,952		Accounts receivable, net	2,091		2,400
Inventories	Inventories	3,915		3,859		Inventories	4,454		4,382
Other current assets	Other current assets	323		367		Other current assets	635		533
Total Current Assets	Total Current Assets	8,544		7,598		Total Current Assets	10,136		9,822
Net Property, Plant and Equipment	Net Property, Plant and Equipment	7,664		7,596		Net Property, Plant and Equipment	8,012		7,837
Goodwill	Goodwill	10,913		10,899		Goodwill	10,550		10,549
Intangible Assets, net	Intangible Assets, net	6,719		6,774		Intangible Assets, net	6,459		6,519
Other Assets	Other Assets	1,618		1,589		Other Assets	1,667		1,582
Total Assets	Total Assets	$	35,458	$	34,456	Total Assets	$	36,824	$	36,309

Liabilities and Shareholders’ Equity	Liabilities and Shareholders’ Equity					Liabilities and Shareholders’ Equity
Current Liabilities:	Current Liabilities:					Current Liabilities:
Current debt	Current debt	$	566	$	548	Current debt	$	1,090	$	1,067
Accounts payable	Accounts payable	1,997		1,876		Accounts payable	2,115		2,225
Other current liabilities	Other current liabilities	2,286		1,810		Other current liabilities	2,829		3,033
Total Current Liabilities	Total Current Liabilities	4,849		4,234		Total Current Liabilities	6,034		6,325
Long-Term Debt	Long-Term Debt	10,791		10,791		Long-Term Debt	8,274		8,281
Deferred Income Taxes	Deferred Income Taxes	2,331		2,317		Deferred Income Taxes	2,274		2,195
Other Liabilities	Other Liabilities	1,706		1,728		Other Liabilities	1,700		1,654
Commitments and Contingencies (Note 15)		0		0
Commitments and Contingencies (Note 14)						Commitments and Contingencies (Note 14)
Shareholders’ Equity:	Shareholders’ Equity:					Shareholders’ Equity:
Common stock ($0.10 par value):	Common stock ($0.10 par value):					Common stock ($0.10 par value):
Class A-authorized 900 million shares, issued 378 million shares	Class A-authorized 900 million shares, issued 378 million shares	38		38		Class A-authorized 900 million shares, issued 378 million shares	38		38
Convertible Class B-authorized 900 million shares, issued 70 million shares	Convertible Class B-authorized 900 million shares, issued 70 million shares	7		7		Convertible Class B-authorized 900 million shares, issued 70 million shares	7		7
Capital in excess of par value	Capital in excess of par value	4,411		4,433		Capital in excess of par value	4,471		4,486
Retained earnings	Retained earnings	15,399		15,100		Retained earnings	18,453		17,502
Accumulated other comprehensive gain (loss)	Accumulated other comprehensive gain (loss)	(102)		(179)		Accumulated other comprehensive gain (loss)	(172)		(172)
Treasury stock, at cost – 83 million shares at January 2, 2021 and October 3, 2020		(4,115)		(4,145)
Treasury stock, at cost – 85 million shares at January 1, 2022 and 83 million shares at October 2, 2021						Treasury stock, at cost – 85 million shares at January 1, 2022 and 83 million shares at October 2, 2021	(4,394)		(4,138)
Total Tyson Shareholders’ Equity	Total Tyson Shareholders’ Equity	15,638		15,254		Total Tyson Shareholders’ Equity	18,403		17,723
Noncontrolling Interests	Noncontrolling Interests	143		132		Noncontrolling Interests	139		131
Total Shareholders’ Equity	Total Shareholders’ Equity	15,781		15,386		Total Shareholders’ Equity	18,542		17,854
Total Liabilities and Shareholders’ Equity	Total Liabilities and Shareholders’ Equity	$	35,458	$	34,456	Total Liabilities and Shareholders’ Equity	$	36,824	$	36,309

See accompanying Notes to Consolidated Condensed Financial Statements.

TYSON FOODS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In millions)

(Unaudited)


		Three Months Ended						Three Months Ended
		January 2, 2021			December 28, 2019			January 1, 2022	January 2, 2021
		Shares	Amount		Shares	Amount					Shares	Amount		Shares	Amount
Class A Common Stock:	Class A Common Stock:									Class A Common Stock:
Balance at beginning and end of period	Balance at beginning and end of period	378	$	38	378	$	38			Balance at beginning and end of period	378	$	38	378	$	38

Class B Common Stock:	Class B Common Stock:									Class B Common Stock:
Balance at beginning and end of period	Balance at beginning and end of period	70	7		70	7				Balance at beginning and end of period	70	7		70	7

Capital in Excess of Par Value:	Capital in Excess of Par Value:									Capital in Excess of Par Value:
Balance at beginning of period	Balance at beginning of period		4,433			4,378				Balance at beginning of period		4,486			4,433

Stock-based compensation	Stock-based compensation		(22)			(24)				Stock-based compensation		(15)			(22)

Balance at end of period	Balance at end of period		4,411			4,354				Balance at end of period		4,471			4,411

Retained Earnings:	Retained Earnings:									Retained Earnings:
Balance at beginning of period	Balance at beginning of period		15,100			13,655				Balance at beginning of period		17,502			15,100
Net income attributable to Tyson	Net income attributable to Tyson		467			505				Net income attributable to Tyson		1,121			467
Dividends	Dividends		(168)			(166)				Dividends		(170)			(168)
Balance at end of period	Balance at end of period		15,399			13,994				Balance at end of period		18,453			15,399

Accumulated Other Comprehensive Income (Loss), Net of Tax:	Accumulated Other Comprehensive Income (Loss), Net of Tax:									Accumulated Other Comprehensive Income (Loss), Net of Tax:
Balance at beginning of period	Balance at beginning of period		(179)			(117)				Balance at beginning of period		(172)			(179)
Other comprehensive income (loss)	Other comprehensive income (loss)		77			38				Other comprehensive income (loss)		—			77
Balance at end of period	Balance at end of period		(102)			(79)				Balance at end of period		(172)			(102)

Treasury Stock:	Treasury Stock:									Treasury Stock:
Balance at beginning of period	Balance at beginning of period	83	(4,145)		82	(4,011)				Balance at beginning of period	83	(4,138)		83	(4,145)
Purchase of Class A common stock	Purchase of Class A common stock	0	(17)		2	(132)				Purchase of Class A common stock	4	(348)		—	(17)

Stock-based compensation	Stock-based compensation	0	47		(1)	64				Stock-based compensation	(2)	92		—	47
Balance at end of period	Balance at end of period	83	(4,115)		83	(4,079)				Balance at end of period	85	(4,394)		83	(4,115)

Total Shareholders’ Equity Attributable to Tyson	Total Shareholders’ Equity Attributable to Tyson		$	15,638		$	14,235			Total Shareholders’ Equity Attributable to Tyson		$	18,403		$	15,638

Equity Attributable to Noncontrolling Interests:	Equity Attributable to Noncontrolling Interests:									Equity Attributable to Noncontrolling Interests:
Balance at beginning of period	Balance at beginning of period		$	132		$	144			Balance at beginning of period		$	131		$	132
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests		5			4				Net income attributable to noncontrolling interests		5			5
Distributions to noncontrolling interest										Distributions to noncontrolling interest		—			(2)
Other	Other		6			(1)				Other		3			8
Total Equity Attributable to Noncontrolling Interests	Total Equity Attributable to Noncontrolling Interests		$	143		$	147			Total Equity Attributable to Noncontrolling Interests		$	139		$	143

Total Shareholders’ Equity	Total Shareholders’ Equity		$	15,781		$	14,382			Total Shareholders’ Equity		$	18,542		$	15,781

See accompanying Notes to Consolidated Condensed Financial Statements.

TYSON FOODS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


		Three Months Ended					Three Months Ended
		January 2, 2021		December 28, 2019			January 1, 2022		January 2, 2021
Cash Flows From Operating Activities:	Cash Flows From Operating Activities:					Cash Flows From Operating Activities:
Net income	Net income	$	472	$	509	Net income	$	1,126	$	472
Depreciation and amortization	Depreciation and amortization	298		288		Depreciation and amortization	300		298
Deferred income taxes	Deferred income taxes	17		(13)		Deferred income taxes	77		17
Other, net	Other, net	18		27		Other, net	11		18
Net changes in operating assets and liabilities	Net changes in operating assets and liabilities	580		83		Net changes in operating assets and liabilities	(82)		580
Cash Provided by Operating Activities	Cash Provided by Operating Activities	1,385		894		Cash Provided by Operating Activities	1,432		1,385
Cash Flows From Investing Activities:	Cash Flows From Investing Activities:					Cash Flows From Investing Activities:
Additions to property, plant and equipment	Additions to property, plant and equipment	(289)		(312)		Additions to property, plant and equipment	(408)		(289)
Purchases of marketable securities	Purchases of marketable securities	(14)		(35)		Purchases of marketable securities	(7)		(14)
Proceeds from sale of marketable securities	Proceeds from sale of marketable securities	15		19		Proceeds from sale of marketable securities	7		15
Proceeds from sale of business		0		29

Other, net	Other, net	29		(82)		Other, net	(51)		29
Cash Used for Investing Activities	Cash Used for Investing Activities	(259)		(381)		Cash Used for Investing Activities	(459)		(259)
Cash Flows From Financing Activities:	Cash Flows From Financing Activities:					Cash Flows From Financing Activities:
Proceeds from issuance of debt	Proceeds from issuance of debt	29		38		Proceeds from issuance of debt	26		29
Payments on debt	Payments on debt	(29)		(31)		Payments on debt	(43)		(29)
Borrowings on revolving credit facility		0		180
Payments on revolving credit facility		0		(250)
Proceeds from issuance of commercial paper		0		4,675
Repayments of commercial paper		0		(4,855)

Purchases of Tyson Class A common stock	Purchases of Tyson Class A common stock	(17)		(132)		Purchases of Tyson Class A common stock	(348)		(17)
Dividends	Dividends	(159)		(150)		Dividends	(164)		(159)
Stock options exercised	Stock options exercised	4		20		Stock options exercised	46		4
Other, net	Other, net	(1)		(2)		Other, net	(1)		(1)
Cash Used for Financing Activities	Cash Used for Financing Activities	(173)		(507)		Cash Used for Financing Activities	(484)		(173)
Effect of Exchange Rate Changes on Cash	Effect of Exchange Rate Changes on Cash	16		7		Effect of Exchange Rate Changes on Cash	2		16
Increase in Cash and Cash Equivalents and Restricted Cash	Increase in Cash and Cash Equivalents and Restricted Cash	969		13		Increase in Cash and Cash Equivalents and Restricted Cash	491		969
Cash and Cash Equivalents and Restricted Cash at Beginning of Year	Cash and Cash Equivalents and Restricted Cash at Beginning of Year	1,466		484		Cash and Cash Equivalents and Restricted Cash at Beginning of Year	2,637		1,466
Cash and Cash Equivalents and Restricted Cash at End of Period	Cash and Cash Equivalents and Restricted Cash at End of Period	2,435		497		Cash and Cash Equivalents and Restricted Cash at End of Period	3,128		2,435
Less: Restricted Cash at End of Period	Less: Restricted Cash at End of Period	29		0		Less: Restricted Cash at End of Period	172		29
Cash and Cash Equivalents at End of Period	Cash and Cash Equivalents at End of Period	$	2,406	$	497	Cash and Cash Equivalents at End of Period	$	2,956	$	2,406

See accompanying Notes to Consolidated Condensed Financial Statements.

TYSON FOODS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1: ACCOUNTING POLICIES

Basis of Presentation

The consolidated condensed financial statements are unaudited and have been prepared by Tyson Foods, Inc. (“Tyson,” “the Company,” “we,” “us” or “our”). Certain information and accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Although we believe the disclosures contained herein are adequate to make the information presented not misleading, these consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October ~~3, 2020, as amended by Amendment No. 1 on Form 10-K/A filed with the SEC on February 11, 2021 (the “10-K/A”).~~2, 2021. Preparation of consolidated condensed financial statements requires us to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

We believe the accompanying consolidated condensed financial statements contain all adjustments, which are of a normal recurring nature, necessary to state fairly our financial position as of January ~~2, 2021,~~1, 2022, and the results of operations for the three months ended January 1, 2022, and January 2, ~~2021, and December 28, 2019.~~2021. Results of operations and cash flows for the periods presented are not necessarily indicative of results to be expected for the full year.

Consolidation

The consolidated condensed financial statements include the accounts of all wholly-owned subsidiaries, as well as majority-owned subsidiaries over which we exercise control and, when applicable, entities for which we have a controlling financial interest or variable interest entities for which we are the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The consolidated condensed financial statements are prepared in conformity with accounting principles generally accepted in the United States, which require us to make estimates and assumptions that affect the amounts reported in the consolidated condensed financial statements and accompanying notes. Actual results could differ from those estimates.

Risks and Uncertainties

We have considered the impact of the global novel coronavirus pandemic (“COVID-19” or “pandemic”) on our consolidated condensed financial statements. In addition to the COVID-19 impacts already experienced, there likely will be future impacts, the extent of which is uncertain and largely subject to whether the severity worsens or duration lengthens. Consequently, this may subject us to future risk of material goodwill, intangible and long-lived asset impairments, increased reserves for uncollectible accounts, and adjustments for inventory and market volatility for items subject to fair value measurements such as derivatives and investments.

~~Revision~~ There have been no material changes to the summary of ~~Previously Issued Unaudited Consolidated Condensed Financial Statements~~

~~As previously disclosed~~certain accounting estimates and the description of the estimates and the levels of subjectivity and judgment they require found in ~~the 10-K/A~~our Annual Report on Form 10-K for the fiscal year ended October 3, 2020, during the first quarter of fiscal 2021, the Company discovered information that led to an internal investigation relating to one of its cattle suppliers and determined that this supplier made misrepresentations regarding the number of cattle the supplier purchased on behalf of the Company’s Beef segment. Based upon its investigation, the Company determined that the misappropriation of Company funds by the supplier caused the Company to overstate live cattle inventory for fiscal years and interim periods from 2017 through 2020. The resulting loss to the Company and related inventory misstatement was isolated to the Beef segment and was attributable solely to this cattle supplier. Although the Company evaluated the materiality of the misstatements and concluded that the misstatements did not have a material impact on the previously issued annual or interim financial statements, the Company revised its previously issued 2020, 2019 and 2018 annual financial statements to correct for such misstatements as set forth in the 10-K/A. In connection with the filing of this Quarterly Report on Form 10-Q, the Company has revised the accompanying consolidated condensed interim financial statements as of and for the quarter ended December 28, 2019 to correct for the impact of the misstatements. The applicable notes to the accompanying financials have also been corrected to reflect the impact of the revisions of the previously filed consolidated condensed interim financial statements.

~~The following tables represent revisions to our consolidated condensed financial information for the first quarter of fiscal 2020:~~

First Quarter in millions, except per share data
Quarter ended December 28, 2019
As originally reported Adjustments As revised
Consolidated Statement of Income:
Selling, General and Administrative $ 614 $ 68 $ 682
Operating Income 826 (68) 758
Income before Income Taxes 725 (68) 657
Income Tax Expense (Benefit) 164 (16) 148
Net Income 561 (52) 509
Net Income Attributable to Tyson 557 (52) 505
Net Income Per Share Attributable to Tyson
Class A Basic $ 1.56 $ (0.14) $ 1.42
Class B Basic $ 1.40 $ (0.13) $ 1.27
Diluted $ 1.52 $ (0.14) $ 1.38
Consolidated Statement of Comprehensive Income:
Net Income $ 561 $ (52) $ 509
Comprehensive Income 599 (52) 547
Comprehensive Income Attributable to Tyson 595 (52) 543
As of December 28, 2019
As originally reported Adjustments As revised
Consolidated Balance Sheet:
Inventories $ 4,304 $ (247) $ 4,057
Total Current Assets 7,193 (247) 6,946
Total Assets 33,811 (247) 33,564
Deferred Income Taxes 2,369 (63) 2,306
Retained Earnings(a)
14,178 (184) 13,994
Total Tyson Shareholders' Equity 14,419 (184) 14,235
Total Shareholders' Equity 14,566 (184) 14,382
Total Liabilities and Shareholders' Equity 33,811 (247) 33,564
Quarter ended December 28, 2019
As originally reported Adjustments As revised
Consolidated Statement of Cash Flows:
Net Income $ 561 $ (52) $ 509
Deferred income taxes 3 (16) (13)
Net changes in operating assets and liabilities 15 68 83

~~(a) The adjustment to retained earnings includes an impact of $132 million related to misstatements that originated prior to fiscal 2020.~~2, 2021.

Recently Issued Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board ("FASB") issued guidance providing optional expedients and exceptions to account for the effects of reference rate reform to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. The optional guidance, which became effective on March 12, 2020 and can be applied through December 31, 2022, has not impacted our consolidated financial statements. The Company has various contracts that reference LIBOR and is assessing how this standard may be applied to specific contract modifications through December 31, 2022.

Changes in Accounting Principles

In August 2020, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued guidance that simplifies the accounting for debt with conversion options, revises the criteria for applying the derivative scope exception for contracts in an entity’s own equity, and improves the consistency for the calculation of earnings per share. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2021, our fiscal 2023. Early adoption is permitted for annual periods and interim periods within those annual periods beginning after December 15, 2020, our fiscal 2022. We ~~are currently evaluating the impact~~elected to early adopt this guidance ~~will~~beginning in the first quarter of fiscal 2022, and it did not have an impact on our consolidated financial statements.

In March 2020, the FASB issued guidance providing optional expedients and exceptions to account for the effects of reference rate reform to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. The optional guidance, which became effective on March 12, 2020 and can be applied through December 21, 2022, has not impacted our consolidated financial statements. The Company has various contracts that reference LIBOR and is assessing how this standard may be applied to specific contract modifications through December 31, 2022.

In December 2019, the FASB issued guidance that simplifies the accounting for income taxes by removing certain exceptions to general principles in Topic 740 and clarifies other general principles by adding certain requirements to Topic 740. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2020, our fiscal 2022. ~~Early adoption is permitted for~~ ~~periods for which financial statements have not yet been issued, beginning our fiscal 2020.~~ ~~An entity that elects to early ad~~opt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. The application of the guidance requires various transition methods depending on the specific amendment. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

~~Changes in Accounting Principles~~

In June 2016, the FASB issued guidance that provides more decision-useful information about the expected credit losses on financial instruments and changes the loss impairment methodology. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2019, our fiscal 2021. For available-for-sale debt securities previously impaired, the amendments should be applied prospectively; otherwise, the modified-retrospective transition method should be applied. We adopted this guidance in the first quarter of fiscal ~~2021 using the modified retrospective transition method. Prior periods were not adjusted~~2022, and ~~based on our implementation assessment, no cumulative-effect adjustment was made to the opening balance of retained earnings. The adoption of this standard~~it did not have ~~a material~~an impact on our consolidated financial statements. ~~For further description of our policy for available-for-sale debt securities, refer to Note 11: Fair Value Measurements.~~

NOTE 2: ACQUISITIONS AND DISPOSITIONS

Acquisition

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

Disposition

We completed the sale of our pet treats business, which was included in our Prepared Foods segment, on July 6, 2021 for $1.2 billion, subject to certain adjustments. As a result of the sale, we recorded a pretax gain of $784 million, or post tax gain of $510 million, which was reflected in Cost of Sales in our Consolidated Statement of Income in the fourth quarter of fiscal 2021. The business had a net carrying value of approximately $411 million, which included $44 million of working capital consisting of inventory, accounts receivable and accounts payable, $17 million of property, plant and equipment and $350 million of goodwill. The goodwill is not deductible for tax purposes. The Company concluded the business was not a significant disposal and did not represent a strategic shift, and therefore was not classified as a discontinued operation for any of the periods presented.

NOTE 3: INVENTORIES

Processed products, livestock, and supplies and other are valued at the lower of cost or net realizable value. Cost includes purchased raw materials, live purchase costs, growout costs (primarily feed, livestock grower pay and catch and haul costs), labor and manufacturing, and production overhead, which are related to the purchase and production of inventories. At January ~~2, 2021,~~1, 2022, the cost of inventories was determined by either the first-in, first-out (“FIFO”) method or the weighted-average method, which is consistent with the methods used at October ~~3, 2020.~~2, 2021.

The following table reflects the major components of inventory (in millions):


		January 2, 2021		October 3, 2020			January 1, 2022		October 2, 2021
Processed products	Processed products	$	2,142	$	2,223	Processed products	$	2,411	$	2,426
Livestock	Livestock	1,068		977		Livestock	1,264		1,215
Supplies and other	Supplies and other	705		659		Supplies and other	779		741
Total inventory	Total inventory	$	3,915	$	3,859	Total inventory	$	4,454	$	4,382

NOTE 3:4: PROPERTY, PLANT AND EQUIPMENT

The major categories of property, plant and equipment and accumulated depreciation are as follows (in millions):


		January 2, 2021		October 3, 2020			January 1, 2022		October 2, 2021
Land	Land	$	208	$	196	Land	$	218	$	210
Buildings and leasehold improvements	Buildings and leasehold improvements	5,030		4,961		Buildings and leasehold improvements	5,411		5,370
Machinery and equipment	Machinery and equipment	9,112		9,013		Machinery and equipment	9,577		9,507
Land improvements and other	Land improvements and other	424		420		Land improvements and other	466		453
Buildings and equipment under construction	Buildings and equipment under construction	1,079		991		Buildings and equipment under construction	1,204		976
		15,853		15,581			16,876		16,516
Less accumulated depreciation	Less accumulated depreciation	8,189		7,985		Less accumulated depreciation	8,864		8,679
Net Property, Plant and Equipment	Net Property, Plant and Equipment	$	7,664	$	7,596	Net Property, Plant and Equipment	$	8,012	$	7,837

~~NOTE 4: RESTRUCTURING AND RELATED CHARGES~~

In the first quarter of fiscal 2020, the Company approved a restructuring program (the “2020 Program”), which is expected to contribute to the Company’s overall strategy of financial fitness through the elimination of overhead and consolidation of certain enterprise functions. We recognized $60 million of cumulative pretax charges in fiscal 2020 associated with the 2020 Program consisting of severance and employee related costs. As part of the 2020 Program, we are eliminating positions across several areas and job levels, with eliminated positions originating from the corporate offices in Springdale, Arkansas and Chicago, Illinois, as well as certain production facility and supply chain administrative positions. The majority of the positions have already been or are expected to be eliminated by the end of fiscal 2021. We do not anticipate future costs of the 2020 Program to be significant.

For the three months ended January 2, 2021, we did not incur restructuring and related charges. For the three months ended December 28, 2019, we recognized restructuring and related charges of $52 million, primarily consisting of severance and employee related costs, of which $9 million was recorded in Cost of Sales and $43 million was recorded in Selling, General and Administrative in our Consolidated Condensed Statements of Income.

Our restructuring liability was $23 million at January 2, 2021 and $37 million at October 3, 2020. The change in the restructuring liability was due to reductions of $14 million, primarily consisting of payments, during the three months ended January 2, 2021.

NOTE 5: OTHER CURRENT LIABILITIES

Other current liabilities are as follows (in millions):


		January 2, 2021		October 3, 2020			January 1, 2022		October 2, 2021
Accrued salaries, wages and benefits	Accrued salaries, wages and benefits	$	655	$	823	Accrued salaries, wages and benefits	$	664	$	897

Taxes payable	Taxes payable	407		152		Taxes payable	914		729
Accrued current legal contingencies(a)	Accrued current legal contingencies(a)	339		18		Accrued current legal contingencies(a)	390		567
Other	Other	885		817		Other	861		840
Total other current liabilities	Total other current liabilities	$	2,286	$	1,810	Total other current liabilities	$	2,829	$	3,033

(a) $169 million and $127 million of funds held in an escrow account for litigation settlements were included as restricted cash within Other current assets in the Consolidated Condensed Balance Sheets as of January 1, 2022 and October 2, 2021, respectively.

NOTE 6: DEBT

The major components of debt are as follows (in millions):

January 2, 2021 October 3, 2020
Revolving credit facility $ 0 $ 0
Commercial paper 0 0
Senior notes:
2.25% Notes due August 2021 500 500
4.50% Senior notes due June 2022 1,000 1,000
3.90% Senior notes due September 2023 400 400
3.95% Notes due August 2024 1,250 1,250
4.00% Notes due March 2026 (“2026 Notes”) 800 800
3.55% Notes due June 2027 1,350 1,350
7.00% Notes due January 2028 18 18
4.35% Notes due March 2029 (“2029 Notes”) 1,000 1,000
6.13% Notes due November 2032 160 160
4.88% Notes due August 2034 500 500
5.15% Notes due August 2044 500 500
4.55% Notes due June 2047 750 750
5.10% Notes due September 2048 (“2048 Notes”) 1,500 1,500
Discount on senior notes (44) (45)
Term loan:
Term loan facility due March 2022 (1.69% at 1/2/2021) 1,500 1,500
Other 231 216
Unamortized debt issuance costs (58) (60)
Total debt 11,357 11,339
Less current debt 566 548
Total long-term debt $ 10,791 $ 10,791

~~Term Loan Facility due March 2022~~

On March 27, 2020, we executed a new $1.5 billion term loan facility to refinance our short-term promissory notes (“commercial paper program”), repay outstanding balances under our revolving credit facility and for general liquidity purposes. In February 2021, we repaid $750 million of the $1.5 billion outstanding. The term loan facility expires on March 27, 2022 and is subject to prepayment under certain conditions. Additionally, the term loan facility contains covenants that are similar to those contained in the revolving credit facility.


	January 1, 2022		October 2, 2021
Revolving credit facility	$	—	$	—
Commercial paper	—		—
Senior notes:

4.50% Senior notes due June 2022	1,000		1,000
3.90% Senior notes due September 2023	400		400
3.95% Notes due August 2024	1,250		1,250
4.00% Notes due March 2026 (“2026 Notes”)	800		800
3.55% Notes due June 2027	1,350		1,350
7.00% Notes due January 2028	18		18
4.35% Notes due March 2029 (“2029 Notes”)	1,000		1,000
6.13% Notes due November 2032	160		160
4.88% Notes due August 2034	500		500
5.15% Notes due August 2044	500		500
4.55% Notes due June 2047	750		750
5.10% Notes due September 2048 (“2048 Notes”)	1,500		1,500
Discount on senior notes	(41)		(42)







Other	225		212
Unamortized debt issuance costs	(48)		(50)
Total debt	9,364		9,348
Less current debt	1,090		1,067
Total long-term debt	$	8,274	$	8,281

Revolving Credit Facility and Letters of Credit

~~We have a~~In September 2021, we amended our existing credit facility which, among other things, increased our line of credit from $1.75 billion to $2.25 billion with the option to establish incremental commitment increases of up to $500 million if certain conditions are met. The revolving credit facility ~~that~~ supports short-term funding needs and serves as a backstop to our commercial paper program. The facility will mature and the commitments thereunder will terminate in ~~March 2023.~~September 2026 with options for two one-year extensions. At January ~~2, 2021,~~1, 2022, amounts available for borrowing under this facility totaled ~~$1.75~~$2.25 billion and we had 0no borrowings and 0no outstanding letters of credit issued under this facility. At January ~~2, 2021,~~1, 2022, we had ~~$101~~$94 million of bilateral letters of credit issued separately from the revolving credit facility, none of which were drawn upon. Our letters of credit are issued primarily in support of ~~leasing and~~ workers’ compensation insurance programs and other legal obligations. In the future, if any of our subsidiaries shall guarantee any of our material indebtedness, such subsidiary shall be required to guarantee the indebtedness, obligations and liabilities under this facility.

Commercial Paper Program

We have a commercial paper program under which we may issue unsecured short-term promissory ~~notes up~~notes. In December 2021, we amended our existing commercial paper program, which increased our maximum borrowing capacity to ~~an aggregate maximum principal amount of $1~~$1.5 billion. As of January ~~2, 2021,~~1, 2022, we had 0no commercial paper outstanding. Our ability to access commercial paper in the future may be limited or its costs ~~increased, due to market conditions which have been impacted in part by COVID-19.~~increased.

Debt Covenants

Our revolving credit ~~and term loan facilities contain~~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. In addition, we are required to maintain a minimum interest expense coverage ~~and maximum debt-to-capitalization ratios.~~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.

We were in compliance with all debt covenants at January ~~2, 2021.~~1, 2022.

NOTE 7: EQUITY

Share Repurchases

As of January ~~2, 2021, 18.9~~1, 2022, 15.3 million shares remained available for repurchase under our share repurchase program. The share repurchase program has no fixed or scheduled termination date and the timing and extent to which we repurchase shares will depend upon, among other things, our working capital needs, markets, industry conditions, liquidity targets, limitations under our debt obligations and regulatory requirements. In addition to the share repurchase program, we purchase shares on the open market to fund certain obligations under our equity compensation plans. A summary of share repurchases of our Class A stock is as follows (in millions):


		Three Months Ended						Three Months Ended
		January 2, 2021			December 28, 2019				January 1, 2022		January 2, 2021
		Shares	Dollars		Shares	Dollars					Shares	Dollars		Shares	Dollars
Shares repurchased:	Shares repurchased:									Shares repurchased:
Under share repurchase program	Under share repurchase program	0	$	0	1.1	$	100			Under share repurchase program	3.6	$	300	—	$	—
To fund certain obligations under equity compensation plans	To fund certain obligations under equity compensation plans	0.3	17		0.4	32				To fund certain obligations under equity compensation plans	0.6	48		0.3	17
Total share repurchases	Total share repurchases	0.3	$	17	1.5	$	132			Total share repurchases	4.2	$	348	0.3	$	17

NOTE 8: INCOME TAXES

Our effective tax rate was 20.2% and 23.4% for the first quarter of fiscal 2022 and ~~22.5%~~2021, respectively. The effective tax rate for the first quarter of fiscal 2022 includes the impact of state taxes, offset by a $36 million benefit from the remeasurement of deferred income taxes, primarily due to legislation decreasing state tax rates enacted in the first quarter, and various other tax benefits. The effective tax rate for the first quarter of fiscal 2021 ~~and 2020, respectively. The effective tax rates for the first quarter of fiscal 2021 and 2020 were~~was higher than the federal statutory tax rate primarily due to state taxes, partially offset by various tax benefits.

Unrecognized tax benefits were ~~$163 million and $165~~$152 million at January ~~2, 2021~~1, 2022 and October ~~3, 2020, respectively.~~2, 2021. We do not expect material changes to our unrecognized tax benefits during the next twelve months.

In December 2021, we received an assessment from the Mexican tax authorities related to the 2015 sale of our direct and indirect equity interests in subsidiaries which held our Mexico operations. The assessment totaled approximately $380 million (7.8 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. Based on our analysis of this assessment in accordance with FASB guidance related to unrecognized tax benefits, we have not recorded a liability related to the issue.

NOTE 9: EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share data):


		Three Months Ended					Three Months Ended
		January 2, 2021		December 28, 2019			January 1, 2022		January 2, 2021
Numerator:	Numerator:					Numerator:
Net income	Net income	$	472	$	509	Net income	$	1,126	$	472
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	5		4		Less: Net income attributable to noncontrolling interests	5		5
Net income attributable to Tyson	Net income attributable to Tyson	467		505		Net income attributable to Tyson	1,121		467
Less dividends declared:	Less dividends declared:					Less dividends declared:
Class A	Class A	138		137		Class A	140		138
Class B	Class B	30		29		Class B	30		30
Undistributed earnings	Undistributed earnings	$	299	$	339	Undistributed earnings	$	951	$	299

Class A undistributed earnings	Class A undistributed earnings	$	246	$	279	Class A undistributed earnings	$	782	$	246
Class B undistributed earnings	Class B undistributed earnings	53		60		Class B undistributed earnings	169		53
Total undistributed earnings	Total undistributed earnings	$	299	$	339	Total undistributed earnings	$	951	$	299

Denominator:	Denominator:					Denominator:
Denominator for basic earnings per share:	Denominator for basic earnings per share:					Denominator for basic earnings per share:
Class A weighted average shares	Class A weighted average shares	293		293		Class A weighted average shares	292		293
Class B weighted average shares, and shares under the if-converted method for diluted earnings per share	Class B weighted average shares, and shares under the if-converted method for diluted earnings per share	70		70		Class B weighted average shares, and shares under the if-converted method for diluted earnings per share	70		70
Effect of dilutive securities:	Effect of dilutive securities:					Effect of dilutive securities:
Stock options, restricted stock and performance units	Stock options, restricted stock and performance units	2		4		Stock options, restricted stock and performance units	3		2

Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversions	Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversions	365		367		Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversions	365		365

Net income per share attributable to Tyson:	Net income per share attributable to Tyson:					Net income per share attributable to Tyson:
Class A basic	Class A basic	$	1.31	$	1.42	Class A basic	$	3.16	$	1.31
Class B basic	Class B basic	$	1.18	$	1.27	Class B basic	$	2.84	$	1.18
Diluted	Diluted	$	1.28	$	1.38	Diluted	$	3.07	$	1.28
Dividends Declared Per Share:	Dividends Declared Per Share:					Dividends Declared Per Share:
Class A	Class A	$	0.470	$	0.465	Class A	$	0.475	$	0.470
Class B	Class B	$	0.423	$	0.419	Class B	$	0.428	$	0.423

Approximately 62 million and 26 million of our stock-based compensation shares were antidilutive for the three months ended January 1, 2022 and January 2, 2021, ~~and December 28, 2019,~~ respectively. These shares were not included in the diluted earnings per share calculation.

We have 2 classes of capital stock, Class A stock and Class B stock. Cash dividends cannot be paid to holders of Class B stock unless they are simultaneously paid to holders of Class A stock. The per share amount of cash dividends paid to holders of Class B stock cannot exceed 90% of the cash dividends paid to holders of Class A stock.

We allocate undistributed earnings based upon a 1.0 to 0.9 ratio per share to Class A stock and Class B stock, respectively. We allocate undistributed earnings based on this ratio due to historical dividend patterns, voting control of Class B shareholders and contractual limitations of dividends to Class B stock.

1210

NOTE 10: DERIVATIVE FINANCIAL INSTRUMENTS

Our business operations give rise to certain market risk exposures mostly due to changes in commodity prices, foreign currency exchange rates and interest rates. We manage a portion of these risks through the use of derivative financial instruments to reduce our exposure to commodity price risk, foreign currency risk and interest rate risk. Our risk management programs are periodically reviewed by our Board of Directors' Audit Committee. These programs and risks are monitored by senior management and may be revised as market conditions dictate. Our current risk management programs utilize various industry-standard models that take into account the implicit cost of hedging. Credit risks associated with our derivative contracts are not significant as we minimize counterparty exposure by dealing with credit-worthy counterparties and utilizing exchange traded instruments, margin accounts or letters of credit. Additionally, our derivative contracts are mostly short-term in duration and we generally do not make use of credit-risk-related contingent features. No significant concentrations of credit risk related to our derivative financial instruments existed at January ~~2, 2021.~~1, 2022.

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

in millions, except soybean meal tons

Metric

January 2, 2021

October 3, 2020

in millions, except soybean meal tons

Metric

January 1, 2022

October 2, 2021

Commodity:

Corn

Bushels

Corn

Bushels

Soybean Meal

Tons

579,833

428,300

Soybean Meal

Tons

709,200

1,026,733

Live Cattle

Pounds

165

234

Live Cattle

Pounds

295

417

Lean Hogs

Pounds

254

283

Lean Hogs

Pounds

288

413

Foreign Currency

United States dollar

412

536

Foreign Currency

United States dollar

267

130

We recognize all derivative instruments as either assets or liabilities at fair value in the Consolidated Condensed Balance Sheets, with the exception of normal purchases and normal sales expected to result in physical delivery. For those derivative instruments that are designated and qualify as hedging instruments, we designate the hedging instrument based upon the exposure being hedged (e.g., cash flow hedge or fair value hedge). We designate certain forward contracts as follows:

•Cash Flow Hedges – include certain commodity forward and option contracts of forecasted purchases (e.g., grains), interest rate swaps and locks, and certain foreign exchange forward contracts.

•Fair Value Hedges – include certain commodity forward contracts of firm commitments (e.g., livestock).

Cash Flow Hedges

Derivative instruments are designated as hedges against changes in the amount of future cash flows related to procurement of certain commodities utilized in our production processes as well as interest rates related to our variable rate debt. For the derivative instruments we designate and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. As of January ~~2, 2021,~~1, 2022, we ~~have $16~~had $15 million of realized losses related to treasury rate locks in connection with the issuance of the 2026, 2029 and 2048 Notes, which will be reclassified to earnings over the lives of these notes. During the three months ended January 1, 2022 and January 2, 2021, ~~and December 28, 2019,~~ we did not reclassify significant pretax gains or losses into earnings as a result of the discontinuance of cash flow hedges. For the three months ended January 1, 2022 and January 2, 2021, ~~and December 28, 2019,~~ we ~~recognized 0~~had no gains or losses recognized in OCI on derivatives designated as cash flow hedges.

Fair Value Hedges

We designate certain derivative contracts as fair value hedges of firm commitments to purchase livestock for harvest. Our objective of these hedges is to minimize the risk of changes in fair value created by fluctuations in commodity prices associated with fixed price livestock firm commitments. For these derivative instruments we designate and qualify as a fair value hedge, the gain or loss on the derivative, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in earnings in the same period. We include the gain or loss on the hedged items (e.g., livestock purchase firm commitments) in the same line item, Cost of Sales, as the offsetting gain or loss on the related livestock forward position. Ineffectiveness related to fair value hedges was ~~insignificant~~not significant for the three months ended January 1, 2022, and January 2, ~~2021, and December 28, 2019.~~2021. The following table sets forth the carrying amount of fair value hedge (assets) liabilities as of January ~~2, 2021~~1, 2022 and October ~~3, 2020 were as follows~~2, 2021 (in millions):


Consolidated Condensed Balance Sheets Classification	Consolidated Condensed Balance Sheets Classification	January 2, 2021		October 3, 2020		Consolidated Condensed Balance Sheets Classification	January 1, 2022		October 2, 2021
Inventory	Inventory	$	8	$	6	Inventory	$	12	$	(6)

Undesignated Positions

In addition to our designated positions, we also hold derivative contracts for which we do not apply hedge accounting. These include certain derivative instruments related to commodities price risk, including grains, livestock, energy and foreign currency risk. We mark these positions to fair value through earnings at each reporting date.

1311

Reclassification to Earnings

The following table sets forth the total amounts of each income and expense line item presented in the Consolidated Condensed Statements of Income in which the effects of hedges are recorded (in millions):


Consolidated Condensed Statements of Income Classification	Consolidated Condensed Statements of Income Classification	Three Months Ended				Consolidated Condensed Statements of Income Classification	Three Months Ended
		January 2, 2021		December 28, 2019				Consolidated Condensed Statements of Income Classification	January 1, 2022			January 2, 2021
Cost of Sales	Cost of Sales	$	9,283	$	9,375				$	10,918		$	9,283
Interest Expense	Interest Expense	110		120					Interest Expense		100			110
Other, net	Other, net	(19)		(16)					Other, net		(52)			(19)

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


Consolidated Condensed Statements of Income Classification	Consolidated Condensed Statements of Income Classification		Three Months Ended				Consolidated Condensed Statements of Income Classification	Three Months Ended
			January 2, 2021		December 28, 2019			Consolidated Condensed Statements of Income Classification			January 1, 2022			January 2, 2021
Cost of Sales	Cost of Sales	Gain (Loss) on cash flow hedges reclassified from OCI to Earnings:
		Commodity contracts	$	(1)	$	(2)				Commodity contracts		$	—		$	(1)
		Gain (Loss) on fair value hedges:								Gain (Loss) on fair value hedges:
		Commodity contracts (a)	(2)		16					Commodity contracts (a)		(3)			(2)

		Gain (Loss) on derivatives not designated as hedging instruments:								Gain (Loss) on derivatives not designated as hedging instruments:
		Commodity contracts	98		29					Commodity contracts		81			98
Total	Total		$	95	$	43			Total			$	78		$	95

Interest Expense	Interest Expense	Gain (Loss) on cash flow hedges reclassified from OCI to Earnings:							Interest Expense	Gain (Loss) on cash flow hedges reclassified from OCI to Earnings:
		Interest rate contracts	$	0	$	(1)				Interest rate contracts		$	—		$	—

Other, net	Other, net	Gain (Loss) on derivatives not designated as hedging instruments:							Other, net	Gain (Loss) on derivatives not designated as hedging instruments:
		Foreign exchange contracts	$	1	$	4				Foreign exchange contracts		$	—		$	1

(a) Amounts represent gains/(losses) on commodity contracts designated as fair value hedges of firm commitments that were realized during the period presented, which were offset by a corresponding gain/(loss) on the underlying hedged inventory. Gains or losses related to changes in the fair value of unrealized commodity contracts, along with the offsetting gain or loss on the hedged inventory, are also marked-to-market through earnings with no impact on a net basis.

The fair value of all outstanding derivative instruments in the Consolidated Condensed Balance Sheets are included in Note 11: Fair Value Measurements.

NOTE 11: FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels as follows:

Level 1 — Unadjusted quoted prices available in active markets for the identical assets or liabilities at the measurement date.

Level 2 — Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:

•Quoted prices for similar assets or liabilities in active markets;

•Quoted prices for identical or similar assets in non-active markets;

•Inputs other than quoted prices that are observable for the asset or liability; and

•Inputs derived principally from or corroborated by other observable market data.

Level 3 — Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

1412

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The fair value hierarchy requires the use of observable market data when available. In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input significant to the fair value measurement in its entirety. Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.

The following tables set forth by level within the fair value hierarchy our financial assets and liabilities accounted for at fair value on a recurring basis according to the valuation techniques we used to determine their fair values (in millions):


January 2, 2021		Level 1		Level 2		Level 3		Netting (a)		Total
January 1, 2022												January 1, 2022	Level 1		Level 2		Level 3		Netting (a)		Total
Other Current Assets:	Other Current Assets:											Other Current Assets:
Derivative financial instruments:	Derivative financial instruments:											Derivative financial instruments:
Designated as hedges	Designated as hedges	$	0	$	1	$	0	$	0	$	1	Designated as hedges	$	—	$	3	$	—	$	(2)	$	1
Undesignated	Undesignated	0		210		0		(146)		64		Undesignated	—		130		—		(49)		81

Other Assets:	Other Assets:											Other Assets:
Available-for-sale securities:
Non-current		0		57		51		—		108
Available-for-sale securities												Available-for-sale securities	—		62		46		—		108
Deferred compensation assets	Deferred compensation assets	11		373		0		—		384		Deferred compensation assets	12		414		—		—		426
Total assets	Total assets	$	11	$	641	$	51	$	(146)	$	557	Total assets	$	12	$	609	$	46	$	(51)	$	616
Other Current Liabilities:	Other Current Liabilities:											Other Current Liabilities:
Derivative financial instruments:	Derivative financial instruments:											Derivative financial instruments:
Designated as hedges	Designated as hedges	$	0	$	9	$	0	$	(9)	$	0	Designated as hedges	$	—	$	15	$	—	$	(15)	$	—
Undesignated	Undesignated	0		98		0		(82)		16		Undesignated	—		70		—		(59)		11

Total liabilities	Total liabilities	$	0	$	107	$	0	$	(91)	$	16	Total liabilities	$	—	$	85	$	—	$	(74)	$	11


October 3, 2020		Level 1		Level 2		Level 3		Netting (a)		Total
October 2, 2021												October 2, 2021	Level 1		Level 2		Level 3		Netting (a)		Total
Other Current Assets:	Other Current Assets:											Other Current Assets:
Derivative financial instruments:	Derivative financial instruments:											Derivative financial instruments:
Designated as hedges	Designated as hedges	$	0	$	4	$	0	$	(2)	$	2	Designated as hedges	$	—	$	18	$	—	$	(10)	$	8
Undesignated	Undesignated	0		96		0		(51)		45		Undesignated	—		169		—		(89)		80

Other Assets:	Other Assets:											Other Assets:
Available-for-sale securities:
Non-current		0		55		53		—		108
Available-for-sale securities												Available-for-sale securities	—		61		48		—		109
Deferred compensation assets	Deferred compensation assets	19		336		0		—		355		Deferred compensation assets	14		397		—		—		411
Total assets	Total assets	$	19	$	491	$	53	$	(53)	$	510	Total assets	$	14	$	645	$	48	$	(99)	$	608
Other Current Liabilities:	Other Current Liabilities:											Other Current Liabilities:
Derivative financial instruments:	Derivative financial instruments:											Derivative financial instruments:
Designated as hedges	Designated as hedges	$	0	$	10	$	0	$	(10)	$	0	Designated as hedges	$	—	$	12	$	—	$	(12)	$	—
Undesignated	Undesignated	0		74		0		(59)		15		Undesignated	—		159		—		(143)		16

Total liabilities	Total liabilities	$	0	$	84	$	0	$	(69)	$	15	Total liabilities	$	—	$	171	$	—	$	(155)	$	16

(a) Our derivative assets and liabilities are presented in our Consolidated Condensed Balance Sheets on a net basis when a legally enforceable master netting arrangement exists between the counterparty to a derivative contract and us. Additionally, at January 1, 2022, and October 2, 2021, ~~and October 3, 2020,~~ we had ~~$22~~$23 million and ~~$16~~$56 million, respectively, of net cash collateral with various counterparties where master netting arrangements exist and held no cash collateral.

1513

The following table provides a reconciliation between the beginning and ending balance of marketable debt securities measured at fair value on a recurring basis in the table above that used significant unobservable inputs (Level 3) (in millions):


		Three Months Ended					Three Months Ended
		January 2, 2021		December 28, 2019			January 1, 2022		January 2, 2021
Balance at beginning of year	Balance at beginning of year	$	53	$	52	Balance at beginning of year	$	48	$	53
Total realized and unrealized gains (losses):	Total realized and unrealized gains (losses):					Total realized and unrealized gains (losses):
Included in earnings		0		0

Included in other comprehensive income (loss)	Included in other comprehensive income (loss)	0		0		Included in other comprehensive income (loss)	(1)		—
Purchases	Purchases	5		3		Purchases	1		5
Issuances	Issuances	0		0		Issuances	—		—
Settlements	Settlements	(7)		(6)		Settlements	(2)		(7)
Balance at end of period	Balance at end of period	$	51	$	49	Balance at end of period	$	46	$	51
Total gains (losses) for the three month period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of period	Total gains (losses) for the three month period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of period	$	0	$	0	Total gains (losses) for the three month period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of period	$	—	$	—

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Derivative Assets and ~~Liabilities:~~Liabilities

Our derivative financial instruments primarily include exchange-traded and over-the-counter contracts which are further described in Note 10: Derivative Financial Instruments. We record our derivative financial instruments at fair value using quoted market prices, adjusted where necessary for credit and non-performance risk and internal models that use readily observable market inputs as their basis, including current and forward market prices and rates. We classify these instruments in Level 2 when quoted market prices can be corroborated utilizing observable current and forward commodity market prices on active exchanges or observable market transactions.

Available-for-Sale ~~Securities:~~Securities

Our investments in marketable debt securities are classified as available-for-sale and are reported at fair value based on pricing models and quoted market prices adjusted for credit and non-performance risk. Short-term investments with maturities of less than 12 months are included in Other current assets in the Consolidated Condensed Balance Sheets and primarily include certificates of deposit and commercial paper. All other marketable debt securities are included in Other Assets in the Consolidated Condensed Balance Sheets and have maturities generally less than 4050 years.

We classify our investments in U.S. government, U.S. agency, certificates of deposit and commercial paper debt securities as Level 2 as fair value is generally estimated using discounted cash flow models that are primarily industry-standard models that consider various assumptions, including time value and yield curve as well as other readily available relevant economic measures. We classify certain corporate, asset-backed and other debt securities as Level 3 as there is limited activity or less observable inputs into valuation models, including current interest rates and estimated prepayment, default and recovery rates on the underlying portfolio or structured investment vehicle. Significant changes to assumptions or unobservable inputs in the valuation of our Level 3 instruments would not have a significant impact to our consolidated condensed financial statements.

The following table sets forth our available-for-sale securities' amortized cost basis, fair value and unrealized gain (loss) by significant investment category (in millions):


		January 2, 2021						October 3, 2020							January 1, 2022						October 2, 2021
		Amortized Cost Basis		Fair Value		Unrealized Gain (Loss)		Amortized Cost Basis		Fair Value		Unrealized Gain (Loss)			Amortized Cost Basis		Fair Value		Unrealized Gain (Loss)		Amortized Cost Basis		Fair Value		Unrealized Gain (Loss)
Available-for-sale securities:	Available-for-sale securities:													Available-for-sale securities:
Debt securities:	Debt securities:													Debt securities:
U.S. treasury and agency	U.S. treasury and agency	$	57	$	57	$	0	$	55	$	55	$	0	U.S. treasury and agency	$	62	$	62	$	—	$	61	$	61	$	—

Corporate and asset-backed	Corporate and asset-backed	49		51		2		51		53		2		Corporate and asset-backed	46		46		—		47		48		1

Unrealized holding gains (losses), net of tax, are excluded from earnings and reported in OCI until the security is settled or sold. On a quarterly basis, we evaluate whether losses related to our available-for-sale securities are due to credit or non-credit factors. Losses on debt securities where we have the intent, or will more than likely be required, to sell the security prior to recovery, would be recorded as a direct write-off of amortized cost basis through earnings. Losses on debt securities where we do not have the intent, or would not more than likely be required to sell the security prior to recovery, would be further evaluated to determine whether the loss is credit or non-credit related. Credit-related losses would be recorded through an allowance for credit losses in earnings and non-credit related losses in OCI.

1614

We consider many factors in determining whether a loss is credit-related, including the financial condition and near-term prospects of the issuer, borrower repayment characteristics for asset-backed securities, and our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery. We recognized no direct write-offs or allowances for credit losses in earnings for the three months ended January 1, 2022, and January 2, ~~2021, and October 3, 2020.~~2021.

Deferred Compensation ~~Assets:~~Assets

We maintain non-qualified deferred compensation plans for certain executives and other highly compensated employees. Investments are maintained within a trust and include money market funds, mutual funds and life insurance policies. The cash surrender value of the life insurance policies is invested primarily in mutual funds. The investments are recorded at fair value based on quoted market prices and are included in Other Assets in the Consolidated Condensed Balance Sheets. We classify the investments which have observable market prices in active markets in Level 1 as these are generally ~~publicly-traded~~publicly traded mutual funds. The remaining deferred compensation assets are classified in Level 2, as fair value can be corroborated based on observable market data. Realized and unrealized gains (losses) on deferred compensation are included in earnings.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

In addition to assets and liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment ~~charges.~~charges and, with respect to our equity investments without readily determinable fair values, recorded by applying the measurement alternative for which such investments are recorded at cost and adjusted for an observable price change in an orderly transaction for an identical or similar investment of the same issuer.

In the three months ended January 1, 2022, we recognized a gain of $30 million in Other, net in the Consolidated Condensed Statements of Income, based upon an observable price change. Equity investments without readily determinable fair values are measured using Level 3 inputs and are included in Other Assets in the Consolidated Condensed Balance Sheets. We did not have any significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition during the three months ended January 2, ~~2021, and October 3, 2020.~~2021.

Other Financial Instruments

Fair value of our debt is principally estimated using Level 2 inputs based on quoted prices for those or similar instruments. Fair value and carrying value for our debt are as follows (in millions):

January 2, 2021 October 3, 2020
Fair Value Carrying Value Fair Value Carrying Value
Total debt $ 13,332 $ 11,357 $ 12,982 $ 11,339


	January 1, 2022				October 2, 2021
	Fair Value		Carrying Value		Fair Value		Carrying Value
Total debt	$	10,862	$	9,364	$	10,810	$	9,348

NOTE 12: ~~PENSIONS AND OTHER POSTRETIREMENT BENEFIT PLANS~~

~~The components of the net periodic cost for the pension and postretirement benefit plans for the three months ended January 2, 2021 and December 28, 2019 are as follows (in millions):~~

Pension Plans
Three Months Ended
January 2, 2021 December 28, 2019
Service cost $ 0 $ 0
Interest cost 2 10
Expected return on plan assets 0 (9)
Amortization of net actuarial loss 1 1
Net periodic cost (credit) $ 3 $ 2

Postretirement Benefit Plans
Three Months Ended
January 2, 2021 December 28, 2019
Interest cost $ 0 $ 0
Amortization of prior service cost (credit) 0 0
Net periodic cost (credit) $ 0 $ 0

~~Net periodic benefit cost, excluding the service cost component, was recorded in the Consolidated Condensed Statements of Income in Other, net.~~

~~NOTE 13:~~ OTHER COMPREHENSIVE INCOME (LOSS)

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


		Three Months Ended												Three Months Ended
		January 2, 2021						December 28, 2019							January 1, 2022		January 2, 2021
		Before Tax		Tax		After Tax		Before Tax		Tax		After Tax					Before Tax		Tax		After Tax		Before Tax		Tax		After Tax

Derivatives accounted for as cash flow hedges:	Derivatives accounted for as cash flow hedges:															Derivatives accounted for as cash flow hedges:
(Gain) loss reclassified to interest expense		$	0	$	0	$	0	$	1	$	0	$	1

(Gain) loss reclassified to cost of sales	(Gain) loss reclassified to cost of sales	1		0		1		2		0		2				(Gain) loss reclassified to cost of sales	$	—	$	—	$	—	$	1	$	—	$	1

Investments:																Investments:

Unrealized gain (loss)																Unrealized gain (loss)	(1)		—		(1)		—		—		—

Currency translation:	Currency translation:															Currency translation:

Translation adjustment	Translation adjustment	75		0		75		35		0		35				Translation adjustment	(1)		—		(1)		75		—		75

Postretirement benefits:	Postretirement benefits:															Postretirement benefits:
Unrealized gain (loss)	Unrealized gain (loss)	1		0		1		0		0		0				Unrealized gain (loss)	2		—		2		1		—		1

Total other comprehensive income (loss)	Total other comprehensive income (loss)	$	77	$	0	$	77	$	38	$	0	$	38			Total other comprehensive income (loss)	$	—	$	—	$	—	$	77	$	—	$	77

NOTE ~~14:~~13: SEGMENT REPORTING

We operate in 4 reportable segments: Beef, Pork, Chicken, and Prepared Foods. We measure segment profit as operating income (loss). International/Other primarily includes our foreign operations in Australia, China, Malaysia, Mexico, the Netherlands, South Korea and Thailand, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC.

~~Beef:~~Beef

Beef includes our operations related to processing live fed cattle and fabricating dressed beef carcasses into primal and sub-primal cuts and case-ready products. Products are marketed domestically to consumer products and food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international export markets. This segment also includes sales from allied products such as hides and variety meats, as well as logistics operations to move products through the supply chain.

~~Pork:~~ Pork

Pork includes our operations related to processing live market hogs and fabricating pork carcasses into primal and sub-primal cuts and case-ready products. Products are marketed domestically to consumer products and food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international export markets. This segment also includes our live swine group, related allied product processing activities and logistics operations to move products through the supply chain.

~~Chicken:~~Chicken

Chicken includes our domestic operations related to raising and processing live chickens into, and purchasing raw materials for, fresh, frozen and value-added chicken products, as well as sales from allied products. Our value-added chicken products primarily include breaded chicken strips, nuggets, patties, tenders, wings and other ready-to-fix or fully cooked chicken parts. Products are marketed domestically to consumer products and food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, convenience stores, healthcare facilities, the military and other food processors, as well as to international export markets. This segment also includes logistics operations to move products through our domestic supply chain and the global operations of our chicken breeding stock subsidiary.

Prepared ~~Foods:~~Foods

Prepared Foods includes our operations related to manufacturing and marketing frozen and refrigerated food products and logistics operations to move products through the supply chain. This segment includes brands such as Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, State Fair®, as well as artisanal brands Aidells®, and Gallo Salame®. Products primarily include ready-to-eat sandwiches, sandwich components such as flame-grilled hamburgers and Philly steaks, pepperoni, bacon, breakfast sausage, turkey, lunchmeat, hot dogs, flour and corn tortilla products, appetizers, snacks, prepared meals, ethnic foods, side dishes, meat dishes, breadsticks and processed meats. Products are marketed domestically to consumer products and food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, convenience stores, healthcare facilities, the military and other food processors, as well as to international export markets.

We allocate expenses related to corporate activities to the segments, except for third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC, which are included in International/Other. Intersegment transactions, which were at market prices, are included in the segment sales in the table below.

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


		Three Months Ended				Three Months Ended
		January 2, 2021		December 28, 2019				January 1, 2022		January 2, 2021
Sales:	Sales:						Sales:
Beef	Beef	$	3,987	$	3,838		Beef	$	5,002	$	3,987
Pork	Pork	1,439		1,379			Pork	1,626		1,439
Chicken	Chicken	2,831		3,292			Chicken	3,890		2,831
Prepared Foods	Prepared Foods	2,113		2,140			Prepared Foods	2,333		2,113
International/Other	International/Other	469		498			International/Other	550		469
Intersegment	Intersegment	(379)		(332)			Intersegment	(468)		(379)
Total sales	Total sales	$	10,460	$	10,815		Total sales	$	12,933	$	10,460

Three Months Ended
January 2, 2021 December 28, 2019
Operating income (loss):
Beef(a)
$ 528 $ 342
Pork 116 191
Chicken(b)
(216) 57
Prepared Foods 266 158
International/Other 11 10
Total operating income 705 758
Total other expense 89 101
Income before income taxes $ 616 $ 657


	Three Months Ended
	January 1, 2022		January 2, 2021
Operating income (loss):
Beef(a)	$	956	$	528
Pork	164		116
Chicken(b)	140		(216)
Prepared Foods	186		266
International/Other	9		11
Total operating income	1,455		705

Total other expense	45		89

Income before income taxes	$	1,410	$	616

(a) Beef segment results for the three months ended January 2, 2021 included a $55 million gain from the recovery of cattle inventory from a cattle supplier that misappropriated Company ~~funds as compared to a $68 million loss recognized in~~funds.

(b) Chicken segment results for the three months ended ~~December 28, 2019, as further described~~January 1, 2022 included $23 million of insurance proceeds, net of costs incurred, recognized in ~~Note 1: Accounting Policies.~~

~~(b)~~Cost of Sales. Additionally, Chicken segment results for the three months ended January 2, 2021 included a $320 million charge related to the recognition of a legal contingency accrual. The accrual was recorded as a reduction to Sales pursuant to FASB guidance related to accounting for revenue from contracts with customers.

The following tables further disaggregate our sales to customers by major distribution channels (in millions):


		Three months ended January 2, 2021													Three months ended January 1, 2022
		Retail(a)		Foodservice(b)		International(c)		Industrial and Other(d)		Intersegment		Total			Retail(a)		Foodservice(b)		International(c)		Industrial and Other(d)		Intersegment		Total
Beef	Beef	$	2,134	$	821	$	618	$	323	$	91	$	3,987	Beef	$	2,218	$	1,236	$	856	$	562	$	130	$	5,002
Pork	Pork	432		92		293		342		280		1,439		Pork	478		136		304		398		310		1,626
Chicken	Chicken	1,436		1,185		152		50		8		2,831		Chicken	1,633		1,560		221		448		28		3,890
Prepared Foods	Prepared Foods	1,303		740		31		39		0		2,113		Prepared Foods	1,325		929		46		33		—		2,333
International/Other	International/Other	0		0		469		0		0		469		International/Other	—		—		550		—		—		550
Intersegment	Intersegment	—		—		—		—		(379)		(379)		Intersegment	—		—		—		—		(468)		(468)
Total	Total	$	5,305	$	2,838	$	1,563	$	754	$	0	$	10,460	Total	$	5,654	$	3,861	$	1,977	$	1,441	$	—	$	12,933


		Three months ended December 28, 2019													Three months ended January 2, 2021
		Retail(a)		Foodservice(b)		International(c)		Industrial and Other(d)		Intersegment		Total			Retail(a)		Foodservice(b)		International(c)		Industrial and Other(d)		Intersegment		Total
Beef	Beef	$	1,857	$	1,045	$	514	$	326	$	96	$	3,838	Beef	$	2,134	$	821	$	618	$	323	$	91	$	3,987
Pork	Pork	400		117		280		360		222		1,379		Pork	432		92		293		342		280		1,439
Chicken	Chicken	1,389		1,307		161		421		14		3,292		Chicken	1,436		1,185		152		50		8		2,831
Prepared Foods	Prepared Foods	1,211		846		37		46		0		2,140		Prepared Foods	1,303		740		31		39		—		2,113
International/Other	International/Other	0		0		498		0		0		498		International/Other	—		—		469		—		—		469
Intersegment	Intersegment	—		—		—		—		(332)		(332)		Intersegment	—		—		—		—		(379)		(379)
Total	Total	$	4,857	$	3,315	$	1,490	$	1,153	$	0	$	10,815	Total	$	5,305	$	2,838	$	1,563	$	754	$	—	$	10,460

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

(b) Includes sales to foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, convenience stores, healthcare facilities and the military.

(c) Includes sales to international markets for internationally produced products or export sales of domestically produced products.

(d) Includes sales to industrial food processing companies that further process our product to sell to end consumers and any remaining sales not included in the Retail, Foodservice or International categories. For the three months ended January 2, 2021, the Chicken segment included a $320 million reduction in Other due to the recognition of a legal contingency accrual.

NOTE ~~15:~~14: COMMITMENTS AND CONTINGENCIES

Commitments

We guarantee obligations of certain outside third parties, consisting primarily of grower loans, which are substantially collateralized by the underlying assets. The remaining terms of the underlying obligations cover periods up to 10 years, and the maximum potential amount of future payments as of January ~~2, 2021,~~1, 2022, was 0tnot significant. The likelihood of material payments under these guarantees is not considered probable. At January 1, 2022 and October 2, 2021, ~~and October 3, 2020, 0~~no significant liabilities for guarantees were recorded.

We have cash flow assistance programs in which certain livestock suppliers participate. Under these programs, we pay an amount for livestock equivalent to a standard cost to grow such livestock during periods of low market sales prices. The amounts of such payments that are in excess of the market sales price are recorded as receivables and accrue interest. Participating suppliers are obligated to repay these receivables balances when market sales prices exceed this standard cost, or upon termination of the agreement. Our maximum commitment associated with these programs is limited to the fair value of each participating livestock supplier’s net tangible assets. The potential maximum commitment as of January ~~2, 2021~~1, 2022 was approximately ~~$325~~$293 million. The total receivables under these programs were ~~$26 million and $29~~$5 million at January ~~2, 2021~~1, 2022 and October ~~3, 2020, respectively.~~2, 2021. These receivables are included, net of allowance for uncollectible amounts, in Accounts Receivable in our Consolidated Condensed Balance Sheets. Even though these programs are limited to the net tangible assets of the participating livestock suppliers, we also manage a portion of our credit risk associated with these programs by obtaining security interests in livestock suppliers’ assets. After analyzing residual credit risks and general market conditions, we have 0no allowance for these programs’ estimated uncollectible receivables at January ~~2, 2021,~~1, 2022, and October ~~3, 2020.~~2, 2021.

When constructing new facilities or making major enhancements to existing facilities, we will occasionally enter into incentive agreements with local government agencies in order to reduce certain state and local tax expenditures. Certain arrangements may require cash to be deposited into a fund to cover future expenditures. These funds are generally considered restricted cash, which is reported in the Consolidated Condensed Balance Sheets in Other Assets, and totaled ~~$29 million and $46~~$3 million at January ~~2, 2021~~1, 2022 and October ~~3, 2020, respectively.~~2, 2021. Additionally, under certain agreements, we transfer the related assets to various local government entities and receive Industrial Revenue Bonds. We immediately lease the facilities from the local government entities and have an option to re-purchase the facilities for a nominal amount upon tendering the Industrial Revenue Bonds to the local government entities at various predetermined dates. The Industrial Revenue Bonds and the associated obligations for the leases of the facilities offset, and the underlying assets remain in property, plant and equipment. At January ~~2, 2021,~~1, 2022, the total amount under these types of arrangements totaled ~~$786~~$717 million.

Contingencies

WeIn the normal course of business, we are involved in various claims, lawsuits, investigations and legal ~~proceedings.~~proceedings, including those specifically identified below. Each quarter, we ~~assess~~determine whether to accrue for loss contingencies based on our assessment of whether the ~~likelihood of adverse judgments~~potential loss is probable, reasonably possible or ~~outcomes to those matters, as well as ranges of probable losses,~~remote and to the extent ~~losses are~~a loss is probable, whether it is reasonably estimable. We record accruals in the Company's Consolidated Financial Statements for matters ~~to the extent~~ that we conclude ~~a loss is~~are probable and the financial impact ~~should an adverse outcome occur,~~ is reasonably estimable. Additionally, for matters in which losses are reasonably possible, no reasonable estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made because, among other reasons: (i) the proceedings are in preliminary stages; (ii) specific damages have not been sought; (iii) damage claims are unsupported and/or unreasonable; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; or (vi) novel legal issues or unsettled legal theories are being asserted. In our opinion, we have made appropriate and adequate accruals for these matters. Regardless of the manner of resolution, frequently the most significant changes in the status of a matter may occur over a short time period, often following a lengthy period of little substantive activity. While these accruals reflect the Company’s best estimate of the probable loss for those matters as of the dates of those accruals, the recorded amounts may differ materially from the actual amount of the losses for those matters. Listed below are certain claims made against the Company ~~and/or our subsidiaries~~ for which the magnitude of the potential exposure ~~is considered~~could be material to the Company’s Consolidated Financial Statements. ~~We believe we have substantial defenses~~There were no significant changes to our loss contingency accruals reflected in the ~~claims made and intend to vigorously defend these matters.~~Company's Condensed Consolidated Statement of Income for the three months ended January 1, 2022.

Broiler Antitrust Civil Litigation

OnBeginning in September 2, 2016, ~~Maplevale Farms, Inc., acting on its own behalf and on behalf~~a series of ~~a putative class of direct purchasers of poultry products, filed a~~purported federal class action ~~complaint~~lawsuits styled In re Broiler Chicken Antitrust Litigation (the “Broiler Antitrust Civil Litigation”) were filed in the United States District Court for the Northern District of Illinois against us and certain of our poultry subsidiaries, as well as several other poultry processing companies, in the Northern District of Illinois. Subsequent to the filing of this initial complaint, additional lawsuits making similar claims on behalf of putative classes of direct and indirect purchasers were filed in the United States District Court for the Northern District of Illinois. The court consolidated the complaints, for pre-trial purposes, into actions on behalf of three different putative classes: direct purchasers, indirect purchasers/consumers and commercial/institutional indirect purchasers. The consolidated actions are styled ~~In re Broiler Chicken Antitrust Litigation~~ (the “Broiler Antitrust Civil Litigation”). Since the original filing, certain putative class members have opted out of the matter and are proceeding with individual direct actions making similar claims, and others may do so in the future. All opt out complaints have been filed in, or transferred to, the Northern District of Illinois and are proceeding on a coordinated pre-trial basis with the consolidated actions.companies. The operative complaints, which have been amended throughout the litigation, ~~allege,~~contain allegations that, among other things, assert that beginning in January 2008, the defendants conspired and combined to fix, raise, maintain, and stabilize the price of broiler chickens in violation of United States antitrust laws. The complaints on behalf of the putative classes of indirect purchasers also include causes of action under various state unfair competition laws, consumer protection laws, and unjust enrichment common laws. The plaintiffs also allege that defendants “manipulated and artificially inflated a widely used Broiler price index, the Georgia Dock.” The plaintiffs further allege that the defendants concealed this conduct from the plaintiffs and the members of the putative classes. The plaintiffs seek treble damages, injunctive relief, pre- and post-judgment interest, costs, and attorneys’ fees on behalf of the putative classes. ~~Decisions~~In addition, the complaints on behalf of the putative classes of indirect purchasers include causes of action under various state unfair competition laws, consumer protection laws, and unjust enrichment common laws. Since the original filing, certain putative class ~~certification~~members have opted out of the matter and ~~summary judgment motions likely~~are proceeding with individual direct actions making similar claims, and others may do so in the future.

Settlements

On January 19, 2021, we announced that we had reached agreement to ~~be filed~~settle certain class claims related to the Broiler Antitrust Civil Litigation. Settlement terms were reached with the putative Direct Purchaser Plaintiff Class, the putative Commercial and Institutional Indirect Purchaser Plaintiff Class and the putative End-User Plaintiff Class (collectively, the “Classes”). Under the terms of the settlements, we have agreed to pay the Classes an aggregate amount of $221.5 million in settlement of all outstanding claims brought by ~~defendants~~the Classes. On February 23, 2021, March 22, 2021 and October 15, 2021, the Court granted preliminary approval of the settlements with the putative Direct Purchaser Plaintiff Class, the putative End-User Plaintiff Class and the putative Commercial and Institutional Indirect Purchaser Plaintiff Class, respectively. On June 29, 2021 and December 20, 2021, the Court granted final approval to the settlements with the Direct Purchaser Plaintiff Class and the End-User Plaintiff Class, respectively. The settlement with the putative Commercial and Institutional Indirect Purchaser Plaintiff Class remains subject to final court approval. The foregoing settlements do not settle claims made by plaintiffs who opt out of the Classes in the Broiler Antitrust Civil Litigation.

We are currently ~~expected in late calendar year 2020 and 2021. If necessary, trial will occur after rulings on class certification and~~pursuing settlement discussions with the remaining opt-out plaintiffs with respect to the remaining claims. While we do not admit any ~~summary judgment motions in calendar year 2022. On April 26, 2019,~~liability as part of the ~~plaintiffs notified us~~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.

Government Investigations

U.S. Department of Justice (“DOJ”) Antitrust Division ~~issued a grand jury subpoena to them requesting discovery produced by all parties in the civil case.~~. On June 21, 2019, the DOJ filed a motion to intervene and sought a limited stay of discovery in the ~~civil action,~~Broiler Antitrust Civil Litigation, which the court granted in part. Subsequently, we received a grand jury subpoena from the DOJ seeking additional documents and information related to the chicken industry. On June 2, 2020 a grand jury for the District of Colorado returned an indictment ~~against~~charging four individual executives employed by two other poultry processing companies ~~charging a~~with conspiracy to engage in bid-rigging in violation of federal antitrust laws. On June 10, 2020, we announced that we uncovered information in connection with the grand jury subpoena that we had previously self-reported to the DOJ and have been fully cooperating with the DOJ as part of our application for leniency under the DOJ's Corporate Leniency Program. ~~On October 7, 2020,~~Subsequently, the DOJ has announced ~~a superseding indictment adding charges~~indictments against ~~six more~~additional individuals, ~~to charge a total of 10 executives and employees at~~as well as other poultry processing companies, ~~for~~and alleging a conspiracy to fix prices and rig bids for broiler chicken products from at least 2012 until at least early 2019. ~~The partial stay previously~~In August 2021, the Company was granted conditional leniency by the ~~court~~DOJ for the matters we self-reported, which means that provided the Company continues to fully cooperate with the DOJ, neither the Company nor any of our cooperating employees will face prosecution or criminal fines or penalties. We continue to fully cooperate with the DOJ in connection with the civil action was lifted and discovery is continuing. Plaintiffs in the civil action filed complaints expressly referencing the conduct in the DOJ’s indictments or motions arguing that bid-rigging conduct was encompassed by prior complaints. On September 22, 2020, the court ruled that bid-rigging claims will be consolidated into the existing action but bifurcated from the original supply reduction and Georgia Dock claims. The original claims will proceed on their current schedule and the bid-rigging claims, including any related discovery, are stayed until the supply reduction and Georgia Dock claims are resolved.ongoing federal antitrust investigation.

State Matters

We have been vigorously contesting the litigation. In January 2021, as a result of the settlement by a co-defendant in the Broiler Antitrust Civil Litigation, we aggressively pursued settlement discussions with the Classes (as defined below). ~~On January 19, 2021, we announced that we had reached agreement to settle all class claims related to the Broiler Antitrust Civil Litigation. Settlement terms were reached with the putative Direct Purchaser Plaintiff Class, the putative Commercial and Institutional Indirect Purchaser Plaintiff Class and the putative End-User Plaintiff Class (c~~ollectively, the “Classes”). Under the terms of the settlements, we have agreed to pay the Classes an aggregate amount of $221.5 million in settlement of all outstanding claims brought by the Classes. These settlements are subject to the execution of long-form settlement agreements with the respective parties and court approval thereof, and do not settle claims made by plaintiffs who opted out of the Classes in the Broiler Antitrust Civil Litigation. In the first quarter of fiscal 2021, we recorded an aggregate legal contingency accrual of $320 million for the above-referenced settlements and to resolve the remaining claims brought by opt-out plaintiffs. While we do not admit any liability as part of the settlements, we believe that the settlements were in the best interests of the Company and its shareholders in order to avoid the uncertainty, risk, expense and distraction of protracted litigation.

The Commonwealth of Puerto Rico, on behalf of its citizens, has also initiated a civil lawsuit against us, certain of our subsidiaries, and several other poultry processing companies alleging activities in violation of the Puerto Rican antitrust laws. This lawsuit has been transferred to the Northern District of Illinois for coordinated pre-trial proceedings. On July 15, 2020, the court ruled that Puerto Rico could pursue claims based on direct purchases from defendants, but dismissed all claims based on indirect purchases or Puerto Rico’s parens patriae status. On August 26, 2020, Puerto Rico filed a notice of voluntary dismissal without prejudice and withdrew all claims against defendants. On September 1, 2020, the OfficeOffices of the Attorney General ~~of the State of~~in New Mexico, Alaska and Washington have filed ~~a complaint~~complaints against us and certain of our poultry subsidiaries, as well as several other poultry processing companies and Agri Stats, Inc., an information services provider (“Agri Stats”). The complaints are based on allegations similar to those asserted in ~~Santa Fe County, New Mexico. The complaint alleges~~the Broiler Antitrust Civil Litigation and allege violations of ~~New Mexico’s~~state antitrust, unfair trade practice, and unjust enrichment ~~laws based on allegations of conspiracies to manipulate~~laws. The Company has not recorded any liability for the ~~Georgia Dock, exchange information~~foregoing matters as it does not believe a loss is probable or reasonably estimable at this time because the proceedings are in preliminary stages. In addition, we are cooperating with various state governmental agencies and ~~reduce~~officials, including the ~~supply of broiler chickens.~~

~~On March 1, 2017, we received a civil investigative demand (“CID”) from the Office~~Offices of the Attorney General ~~Department~~for Florida and Louisiana, investigating or otherwise seeking information, testimony and/or documents, regarding the conduct alleged in the Broiler Antitrust Civil Litigation and related matters.

Broiler Chicken Grower Litigation

On January 27, 2017 and March 26, 2017, putative class action complaints were filed against us and certain of ~~Legal Affairs,~~our poultry subsidiaries, as well as several other vertically integrated poultry processing companies, in the United States District Court for the Eastern District of the State of Florida. The Florida CID requests information primarily related to possible anticompetitive conduct in connection with the Georgia Dock, a chicken products pricing index formerly published by the Georgia Department of Agriculture. We have been cooperating with the Florida Attorney General’s office. In July 2019, the Attorney General issued a subpoena to theOklahoma styled In re Broiler Chicken ~~Antitrust~~Grower Litigation. The plaintiffs ~~requesting~~allege, among other things, that the defendants colluded not to compete for broiler raising services “with the purpose and effect of fixing, maintaining, and/or stabilizing grower compensation below competitive levels.” The plaintiffs also allege that the defendants “agreed to share detailed data on [g]rower compensation with one another, with the purpose and effect of artificially depressing [g]rower compensation below competitive levels.” The plaintiffs contend these alleged acts constitute violations of the Sherman Antitrust Act and Section 202 of the Grain Inspection, Packers and Stockyards Act of 1921. The plaintiffs are seeking treble damages, pre- and post-judgment interest, costs, and attorneys’ fees on behalf of the putative class. Additional named plaintiffs filed similar class action complaints in federal district courts in North Carolina, Colorado, Kansas and California. All actions were subsequently consolidated in the Eastern District of Oklahoma. In June 2021, we reached an agreement to settle with the putative class of broiler chicken farmers all ~~information provided~~claims raised in this consolidated action on terms not material to the ~~DOJ.~~

Company for which the Company recorded an accrual in its Consolidated Financial Statements as of October 2, 2021. On August 23, 2021, the Court granted preliminary approval of the settlement, and a final fairness hearing is scheduled for February 18, ~~2019, we were advised that the~~ 2022.

~~In re Broiler Chicken~~

Pork Antitrust Litigation ~~plaintiffs had received a CID from the Louisiana Department of Justice Office of the Attorney General Public Protection Division. The Louisiana CID requests all deposition transcripts related to the~~ ~~In re Broiler Chicken Antitrust Litigation~~.

On August 6, 2020, we received a CID from the Office of the Attorney General of the State of Washington. The Washington CID requests information primarily related to possible anticompetitive conduct or violations of state consumer protection laws in connection with the broiler chicken market. We have been cooperating with the Washington's Attorney General’s office.

OnBeginning June 18, 2018, a ~~group~~series of ~~plaintiffs acting on their own behalf and on behalf of a~~ putative class ~~of all persons and entities who indirectly purchased pork,~~action complaints were filed ~~a class action complaint~~ against us and certain of our pork subsidiaries, as well as several other pork processing companies, in the United States District Court for the District of Minnesota. Subsequent to the filing of the initial complaint, additional lawsuits making similar claims on behalf of putative classes of direct and indirect purchasers were also filed in the same court. The court consolidated the complaints, for pre-trial purposes, into actions on behalf of three different putative classes: direct purchasers, indirect purchasers/consumers and commercial/institutional indirect purchasers. The consolidated actions areMinnesota styled In re Pork Antitrust Litigation (the "Pork Antitrust Civil Litigation"). ~~Since the original filing, a putative class member is proceeding with an individual direct action making similar claims, and others may do so in the future.~~ The ~~individual complaint has been filed in the District of Minnesota and is proceeding on a coordinated pre-trial basis with the consolidated actions. The complaints~~plaintiffs allege, among other things, that beginning in January 2009, the defendants conspired and combined to fix, raise, maintain, and stabilize the price of pork and pork products in violation of ~~United States~~federal antitrust laws. The complaints on behalf of the putative classes of indirect purchasers also include causes of action under various state unfair competition laws, consumer protection laws, and unjust enrichment common laws. The plaintiffs seek treble damages, injunctive relief, pre- and post-judgment interest, costs, and attorneys’ fees on behalf of the putative classes. ~~On August 8, 2019,~~Since the original filing, certain putative class members have opted out of the matter and are proceeding with individual direct actions making similar claims, and others may do so in the future. The Company has not recorded any liability for this matter ~~was dismissed without prejudice.~~ as of January 1, 2022 as it does not believe a loss is probable or reasonably estimable because the Company believes that it has valid and meritorious defenses against the allegations and because the classes have not yet been defined or certified by the court.

The plaintiffs filed amended complaints on November 6, 2019, in which the plaintiffs again have alleged that the defendants conspired and combined to fix, raise, maintain, and stabilize the price of pork and pork products in violation of state and federal antitrust, consumer protection, and unjust enrichment common laws, and the plaintiffs again are seeking treble damages, injunctive relief, pre- and post-judgment interest, costs, and attorneys’ fees on behalfOffices of the ~~putative classes. The Commonwealth of Puerto Rico, on behalf of its citizens, has also initiated a civil lawsuit~~Attorney General in New Mexico and Alaska have filed complaints against us and certain of our pork subsidiaries, ~~and~~as well as several other pork processing companies ~~alleging activities~~and Agri Stats. The complaints are based on allegations similar to those asserted in ~~violation~~the Pork Antitrust Civil Litigation and allege violations of state antitrust, unfair trade practice, and unjust enrichment laws based on allegations of conspiracies to exchange information and manipulate the ~~Puerto Rican antitrust laws. This lawsuit was transferred to~~supply of pork. The Company has not recorded any liability for the ~~District of Minnesota and an amended complaint was filed on December 6, 2019. We moved to dismiss~~foregoing matters as it does not believe a loss is probable or reasonably estimable at this time because the amended complaints, and on October 16, 2020, the court granted the motion with respect to certain state law claims but denied the motion with respect to the plaintiffs’ federal antitrust claims. The partiesproceedings are ~~now conducting discovery.~~in preliminary stages.

Beef Antitrust Litigation

On April 23, 2019, a ~~group of plaintiffs, acting on behalf of themselves and on behalf of a~~ putative class of all persons and entities who directly sold to the named defendants any fed cattle for slaughter and all persons who transacted in live cattle futures and/or options traded on the Chicago Mercantile Exchange or another U.S. exchange, filed a class action complaint was filed against us and our beef and pork subsidiary, Tyson Fresh Meats, Inc., as well as other beef packer defendants, in the United States District Court for the Northern District of Illinois. The plaintiffs allege that the defendants engaged in a conspiracy from January 2015 to the present to reduce fed cattle prices in violation of federal antitrust laws, the Grain Inspection, Packers and Stockyards Act of 1921, and the Commodities Exchange Act by periodically reducing their slaughter volumes so as to reduce demand for fed cattle, curtailing their purchases and slaughters of cash-purchased cattle during those same periods, coordinating their procurement practices for fed cattle settled on a cash basis, importing foreign cattle at a loss so as to reduce domestic demand, and closing and idling plants. In addition, the plaintiffs also allege the defendants colluded to manipulate live cattle futures and options traded on the Chicago Mercantile Exchange. The plaintiffs seek, among other things, treble monetary damages, punitive damages, restitution, and pre- and post-judgment interest, as well as declaratory and injunctive relief. ~~This complaint was subsequently voluntarily dismissed and re-filed in the United States District Court for the District of Minnesota.~~ Other similar lawsuits were filed by cattle ranchers in other district ~~courts. All actions seeking relief by ranchers and futures traders have now been~~courts which were then transferred to the United States District Court for the District of Minnesota ~~action~~ and ~~are~~ consolidated ~~for pre-trial proceedings~~and styled as In Re Cattle Antitrust Litigation. ~~Following the filing of defendants’ motion to dismiss this matter, the plaintiffs filed a second amended complaint on October 4, 2019. We~~On February 18, 2021, we moved to dismiss the ~~second~~

amended ~~complaint, which~~complaints, and on September 23, 2021, the court granted ~~on September 28, 2020. On December 28, 2020,~~ the ~~plaintiffs filed an amended complaint.~~motion with respect to certain state law claims but denied the motion with respect to the plaintiffs’ federal antitrust claims. The Company has not recorded any liability for this matter as of January 1, 2022 as it does not believe a loss is probable or reasonably estimable at this time because the Company believes that it has valid and meritorious defenses against the allegations and because the classes have not yet been defined or certified by the court.

On April 26, 2019, a ~~group of plaintiffs, acting on behalf of themselves and on behalf of a~~ putative class of indirect purchasers ~~of beef for personal use~~ filed a class action complaint against us, other beef packers, and Agri Stats ~~Inc., an information services provider,~~ in the United States District Court for the District of Minnesota. The plaintiffs allege that the packer defendants conspired to reduce slaughter capacity by closing or idling plants, limiting their purchases of cash cattle, coordinating their procurement of cash cattle, and reducing their slaughter numbers so as to reduce beef output, all in order to artificially raise prices of beef. The plaintiffs seek, among other things, damages under state antitrust and consumer protection statutes and the common law of approximately 30 states, as well as injunctive relief. The plaintiffs filed a first amended complaint in which the claims against Agri Stats were dismissed and subsequently filed a second amended complaint on November 22, 2019. We moved to dismiss the second amended complaint. The indirect consumer purchaser litigation is styled as Peterson v. JBS USA Food Company Holdings, et al. Additional complaints have been filed on behalf of a putative class of direct purchasers of beef ~~alleging~~containing allegations of violations of Section 1 of the Sherman Act based on an alleged conspiracy to artificially fix, raise, and stabilize the wholesale price for beef, as well as on behalf of a putative class of commercial and institutional indirect purchasers of beef ~~alleging~~containing allegations of violations of Section 1 of the Sherman Act, various state antitrust laws and unjust enrichment based on an alleged conspiracy to artificially inflate the price for beef. On September 28, 2020, the court granted our motion to dismiss the complaint. On December 28, 2020, the plaintiffs filed amended complaints. On February 18, 2021, we moved to dismiss the amended complaints, and on September 23, 2021, the court granted the motion with respect to certain state law claims but denied the motion with respect to the plaintiffs’ federal antitrust claims. Since the original filing, certain putative class members have opted out of the matter and are proceeding with individual direct actions making similar claims, and others may do so in the future. The Company has not recorded any liability for this matter as it does not believe a loss is probable or reasonably estimable at this time because the Company believes that it has valid and meritorious defenses against the allegations and because the classes have not yet been defined or certified by the court.

On May 22, 2020, December 23, 2020 and October 29, 2021, we received civil investigative demands ("CIDs") from DOJ's Antitrust Division. The CIDs request information related to the fed cattle and beef packing markets. We have been cooperating with the DOJ’s Antitrust Division with respect to the CIDs. The Offices of the Attorney General for multiple states are participating in the investigation and coordinating with the DOJ.

Wage Rate Litigation

On August 30, 2019, ~~Judy Jien, Kieo Jibidi and Elaisa Clement, acting on their own behalf and~~ a putative class of non-supervisory production and maintenance employees at chicken processing plants in the continental United States filed a class action ~~complaint~~complaints against us and certain of our subsidiaries, as well as several other poultry processing companies, in the United States District Court for the District of Maryland. ~~An additional complaint making similar allegations was also filed by Emily Earnest.~~ The plaintiffs allege that the defendants directly and through a wage survey and benchmarking service exchanged information regarding labor rates in an effort to depress and fix the rates of wages for non-supervisory production and maintenance workers in violation of federal antitrust laws. The plaintiffs seek, among other things, treble monetary damages, punitive damages, restitution, and pre- and post-judgment interest, as well as declaratory and injunctive relief. ~~The court consolidated the Jien and Earnest cases for coordinated pretrial proceedings. Following the consolidation, two additional~~Additional lawsuits ~~were filed by individuals~~ making similar ~~allegations. The plaintiffs filed~~allegations were consolidated including an amended consolidated complaint containing additional allegations concerning turkey processing plants ~~and named~~naming additional defendants. We moved to dismiss the amended consolidated complaint. On September 16, 2020, the court dismissed claims against ~~Tyson~~us and certain other defendants without prejudice because the complaint improperly grouped together corporate subsidiaries. The court otherwise denied the defendants’ motions to dismiss and sustained claims based on alleged conspiracies to fix wages and exchange information against five other defendants. The ~~court granted~~parties are now conducting discovery. In the ~~plaintiffs leave~~third quarter of fiscal 2021, the Company recorded an accrual for the estimated probable losses that it expects to file an amended complaint to address the impermissible group pleading. On October 16, 2020, the plaintiffs filed a second amended complaint reasserting their claims. On December 18, 2020, defendants moved to dismiss certain claimsincur for this matter in the ~~second amended complaint.~~Company’s Consolidated Financial Statements.

Other Matters

Our subsidiary, The Hillshire Brands Company (formerly named Sara Lee Corporation), is a party to a consolidation of cases filed by individual complainants with the Republic of the Philippines, Department of Labor and Employment and the National Labor Relations Commission (“NLRC”) from 1998 through July 1999. The complaint was filed against Aris Philippines, Inc., Sara Lee Corporation, Sara Lee Philippines, Inc., Fashion Accessories Philippines, Inc., and Attorney Cesar C. Cruz (collectively, the “respondents”). The complaint alleges, among other things, that the respondents engaged in unfair labor practices in connection with the termination of manufacturing operations in the Philippines in 1995 by Aris Philippines, Inc., a former subsidiary of The Hillshire Brands Company. In late 2004, a labor arbiter ruled against the respondents and awarded the complainants ~~PHP3,453,664,710 (approximately U.S. $72 million)~~approximately $68 million in damages and fees. ~~The respondents appealed the labor arbiter's ruling, and it was subsequently set aside by the NLRC in December 2006. Subsequent to the NLRC’s decision,~~From 2004 through 2014, the parties filed numerous appeals, motions for reconsideration and petitions for review, certain of which remained outstanding for several years. While various of those appeals, motions and/or petitions were pending, The Hillshire Brands Company, on June 23, 2014, without admitting liability, filed a settlement motion requesting that the Supreme Court of the Philippines order dismissal with prejudice of all claims against it and certain other respondents in exchange for payments allocated by the court among the complainants in an amount not to exceed PHP342,287,800 (approximately U.S. $7.1 million). Based in part on its finding that the consideration to be paid to the complainants as part of such settlement was insufficient, the Supreme Court of the Philippines denied the respondents’ settlement motion and all motions for reconsideration thereof. The Supreme Court of the Philippines also set aside as premature the NLRC’s December 2006 ruling. As a result, the cases were remanded back before the NLRC to rule on the merits of the case. On December 15, 2016, we learned that the NLRC rendered its decision on November 29, 2016, regarding the respondents’ appeals ~~regarding~~from the labor arbiter’s 2004 ruling in favor of the complainants. The NLRC increased the award for 4,922 of the total 5,984 complainants to ~~PHP14,858,495,937 (approximately U.S. $309 million).~~approximately $292 million. However, the NLRC approved a prior settlement reached with the group comprising approximately 18% of the class of 5,984 complainants, pursuant to which The Hillshire Brands Company agreed to pay each settling complainant ~~PHP68,000 (approximately U.S. $1,400).~~approximately $1,300. The ~~settlement payment was made on December 21, 2016,~~parties filed numerous appeals, motions for reconsideration and petitions for review related to the NLRC which is responsible for distributing the funds to each settling complainant. On December 27, 2016, the respondents filed motions for reconsideration with the NLRC asking that the award be set aside. The NLRC denied respondents' motions for reconsideration in a resolution received on May 5, 2017 and entered a judgment on the award on July 24, 2017. Each of Aris Philippines, Inc., Sara Lee Corporation and Sara Lee Philippines, Inc. appealed this award and sought an injunction to preclude enforcement of the award to the Philippines Court of Appeals. On November 23, 2017, the Court of Appeals granted a writ of preliminary injunction that precluded execution of the NLRC award during the pendency of the appeal.settlement payment. The Court of Appeals subsequently vacated the NLRC’s award on April 12, 2018. Complainants have filed motions for reconsideration with the Court of ~~Appeals. On November 14, 2018, the Court of~~ Appeals ~~denied claimants’ motions for reconsideration and granted defendants’ motion to release and discharge the preliminary injunction bond.~~which were denied. Claimants have since filed petitions for writ of certiorari with the Supreme Court of the ~~Philippines.~~Philippines, which has accepted. The ~~Supreme Court has accepted the case for review. We continue~~Company continues to maintain an accrual for estimated probable losses for this ~~matter.~~matter in the Company’s Consolidated Financial Statements.

Various claims have been asserted against the Company, its subsidiaries, and its officers and agents by, and on behalf of, team members who claim to have contracted COVID-19 in our facilities. The Company has not recorded any liability for these matters as it does not believe a loss is probable or reasonably estimable at this time because it believes the allegations in the claims are without merit.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

OBJECTIVE

The following discussion provides an analysis of the Company’s financial condition, cash flows and results of operations from management's perspective and should be read in conjunction with the consolidated condensed financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and within the Company’s Annual Report on Form 10-K filed for the fiscal year ended October ~~3, 2020, as amended.~~2, 2021. Our objective is to also provide discussion of events and uncertainties known to management that are reasonably likely to cause reported financial information not to be indicative of future operating results or of future financial condition and to offer information that provides understanding of our financial condition, cash flows and results of operations.

RESULTS OF OPERATIONS

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. Tyson and grown under three generations of family leadership, the Company has a broad portfolio of products and brands like Tyson®, Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, Aidells®, ibp® and State Fair®. Some of the key factors influencing our business are customer demand for our products; the ability to maintain and grow relationships with customers and introduce new and innovative products to the marketplace; accessibility of international markets; market prices for our products; the cost and availability of live cattle and hogs, raw materials and feed ingredients; availability of team members to operate our production facilities; and operating efficiencies of our facilities.

We operate in four reportable segments: Beef, Pork, Chicken, and Prepared Foods. We measure segment profit as operating income (loss). International/Other primarily includes our foreign operations in Australia, China, Malaysia, Mexico, the Netherlands, South Korea and Thailand, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC.

Overview

COVID-19

We continue to proactively monitor and respond to the evolving nature of the global novel coronavirus pandemic (“COVID-19” or “pandemic”) and its impact to our global business. ~~In addition to our~~Our ongoing ~~internal~~ COVID-19 task force was formed for the primary purposes of maintaining the health and safety of our team members, ensuring our ability to operate our processing facilities and maintaining the liquidity of our ~~business, we have expanded our medical team with the addition of a chief medical officer.~~business. We have experienced and continue to experience multiple challenges related to the pandemic. ~~These challenges increased~~The most significant challenge we face is the availability of team members to operate our ~~operating costs and negatively impacted~~production facilities as our ~~sales volumes for~~production facilities continue to experience varying levels of absenteeism. In the first quarter of fiscal 2022, we experienced an increase in COVID-19 cases, and this trend has continued into our second quarter, although these cases have been milder. The health and safety of our team members remains our top priority, and we continue to provide a variety of health and safety resources and services to team members and their family members. Additionally, we have experienced some challenges in our supply chain such as volatility of inputs, availability of shipping containers and port congestion. These challenges impacted our operating costs, but generally, we experienced lower direct incremental costs associated with COVID-19 in the first quarter of fiscal 2022 as compared to the same period in fiscal 2021, and ~~are anticipated~~we expect this trend to continue ~~through~~throughout fiscal ~~2021. Each~~2022. In the first quarter of fiscal 2022, demand for our ~~segments has also experienced a shift in~~retail products remained strong and foodservice demand continued to recover from ~~foodservice to retail; however,~~ the ~~volume increases in retail have not been sufficient to offset~~impacts of the ~~decreases in foodservice. As a result,~~pandemic. For fiscal 2022, we expect retail demand to remain elevated as compared to the pre-pandemic levels and foodservice demand to continue to ~~see decreased volumes through fiscal 2021 in our Chicken and Prepared Foods segments. These current trends will likely continue through fiscal 2021, while~~return to more historic levels. However, the long-term ~~impact~~impacts of COVID-19 remains uncertain and will depend on future developments, including the duration and spread of the pandemic, COVID-19 variants and resurgences, and related actions taken by federal, state and local government officials to prevent and manage disease spread, and effectively distribute and administer vaccinations, all of which ~~are uncertain~~contain some level of uncertainty and cannot be easily predicted.

•~~Team Members~~ ~~– The health and safety of our team members is our top priority. To protect our team members, we implement safety measures recommended by the Centers for Disease Control and Prevention (“CDC~~”~~) and the Occupational Safety and Health Administration (“OSHA~~”~~) in our facilities and coordinate with other health officials as appropriate. We have also hired a chief medical officer, added 200 nursing staff and developed an “always-on~~” ~~testing strategy rooted in contact tracing.~~

•~~Customers and Production~~ – Our most significant impacts from COVID-19 relate to channel shifts and lower production. We are committed to doing our best to ensure the continuity of our business and the availability of our products to customers. Our production capabilities, including our large scale and geographic proximities, allow us to adapt some of our facilities to the changing demand by shifting certain amounts of production from foodservice to retail. Not all of our facilities can be adapted and as a result we experienced a net negative impact to our volumes. In addition, our production facilities experienced varying levels of production impacts, including reduced volumes, due to the implementation of additional worker health precautions and worker absenteeism.

•~~Supply Chain~~ – Our supply chain has stayed largely intact as we have built contingency plans for redundant supply for our production facilities as well as our external suppliers. We have been able to leverage our extensive distribution network and large private transportation fleet to help mitigate the impacts of COVID-19. We have experienced and expect to continue to experience volatility in commodity inputs, which has impacted our input costs, in part due to impacts caused by COVID-19. Since we also export globally, container availability and port capacities have been among the challenges in meeting the global demand for our products.

•~~Insurance and CARES Act~~ – Although we maintain insurance policies for various risks, we do not believe most COVID-19 impacts will be covered by our policies. The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), among other things, includes provisions relating to refundable payroll tax credits, deferral of the employer portion of social security payments, and a number of income tax provisions. The provisions related to income tax will not have a significant impact on our financial statements.

•~~Liquidity~~ – We generated $1,385 million of operating cash flows during the three months ended January 2, 2021. At January 2, 2021, we had approximately $4,156 million of liquidity, which included availability under our revolving credit facility and $2,406 million of cash and cash equivalents. We have $566 million of current debt. Combined with the cash expected to be generated from the Company’s operations, we anticipate that we will maintain sufficient liquidity to operate our business, make capital expenditures, pay dividends and address other needs including our ability to meet maturing debt obligations. However, we will continue to monitor the impact of COVID-19 on our liquidity and, if necessary, take action to preserve liquidity and ensure that our business can operate during these uncertain times. This may include temporarily suspending share repurchases, suspending or reducing dividend payments or other cash preservation actions as necessary.

•~~Overall Financial Condition~~ – We continue to proactively manage the Company and its operations through the pandemic. The major challenge we face is the availability of team members to operate our production facilities as our production facilities are experiencing varying levels of absenteeism. We will continue to operate our production facilities with team member health and safety as a top priority. However, we cannot predict the ultimate impact that COVID-19 will have on our short- and long-term demand at this time, as it will depend on, among other things, the severity and duration of the COVID-19 pandemic. Our liquidity is expected to be adequate to continue to run our operations and meet our obligations as they become due.

~~Revision of Previously Issued Financial Statements~~

The accompanying Management’s Discussion and Analysis of Financial Condition and Results of Operations gives effect to the revision of our previously reported consolidated condensed financial statements for the three months ended December 28, 2019. For additional information and a detailed discussion of the revision, refer to Part I, Item 1, Notes to the Consolidated Condensed Financial Statements, Note 1: Accounting Policies.

~~General~~

Sales declined 3% in the first quarter of fiscal 2021 primarily due to reduced sales volumes across each of our segments, other than the Pork segment, as well as a $320 million legal contingency accrual recognized as a reduction to Sales. Our operating income of $705 million was down slightly for the first quarter of fiscal 2021, as strong Beef and Prepared results were offset by a decline in Pork and Chicken results. In the three months ended December 28, 2019, our results were impacted by $52 million of restructuring and related charges and $16 million of costs, net of insurance proceeds, associated with a fire at one of our beef production facilities. During the first quarter of fiscal 2021, we incurred direct incremental expenses related to COVID-19 totaling approximately $120 million, which was recorded in Cost of Sales in our Consolidated Condensed Statements of Income. These COVID-19 direct incremental expenses primarily included team member costs associated with worker health and availability, including direct costs for personal protection equipment, production facility sanitization, COVID-19 testing, donations, product downgrades, rendered product and certain professional fees, which was partially offset by the CARES Act credits. Due to the nature of these direct incremental COVID-19 expenses, our segments were primarily impacted based on their relative number of team members and the degree of production and worker availability disruptions they have experienced, and thus, our Beef segment incurred a greater proportion of the total costs. These direct incremental COVID-19 related costs exclude market related impacts that may have been driven in part by COVID-19, including such items as derivatives, deferred compensation investments, livestock lower-of-cost-or-net-realizable-value (“LCNRV”) adjustments and other market driven impacts to margin and demand. Other indirect costs associated with COVID-19 are not reflected in these amounts, including costs associated with raw materials, distribution and transportation, plant underutilization and reconfiguration, premiums paid to cattle producers, and pricing discounts.

~~Market Environment~~

~~According to the United States Department of Agriculture (“USDA~~”), domestic protein production (beef, pork, chicken and turkey) was relatively flat in the first quarter of fiscal 2021 compared to the same period in fiscal 2020. We continue to monitor recent trade and tariff activity as well as COVID-19 and its potential impact to exports and input costs across all our segments. All segments experienced inflation in operating costs, especially in labor, freight and certain materials, in the three months ended January 2, 2021, and we expect this trend to continue throughout fiscal 2021. We pursue recovery of these increased costs through pricing. The Beef segment experienced strong demand and ample supply of market-ready cattle. The Pork segment experienced strong demand but had lower production throughput associated with the impacts of COVID-19. The Chicken segment experienced increased costs, volatile market conditions and lower production throughput, which included impacts associated with COVID-19. The Prepared Foods segment continued to experience growth in the retail channel, but faced increased costs and lower production throughput associated with COVID-19.

Strategy

Our strategy is to sustainably feed the world with the fastest growing protein brands. 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~~Company and our world for future generations.

~~Margins~~ ~~– Our total operating margin was 6.7%~~Beginning in fiscal 2022, we launched a new productivity program, which is designed to drive a better, faster and more agile organization that is supported by a culture of continuous improvement and faster decision making. The execution of this program will be supported by a program management office that will ensure delivery of key project milestones and report 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 second pillar is the use of new digital solutions like artificial intelligence and predictive analytics to drive efficiency in operations, supply chain planning, logistics and warehousing. The third pillar is automation, which will leverage automation and robotics technologies to automate difficult and higher turnover positions. We are targeting $1 billion in productivity savings by fiscal 2024 and $300 to $400 million in fiscal 2022, relative to a fiscal 2021 cost baseline. We are currently on track to achieve our planned productivity savings for fiscal 2022. At this time, we do not anticipate costs associated with this program to be material.

General

Sales grew 24% in the first quarter of fiscal 2022 largely due to increased average sales prices across each of our segments and a $320 million legal contingency accrual recognized as a reduction to Sales in the first quarter of fiscal 2021. The higher average sales prices were primarily due to the current inflationary environment and recovery of rapidly rising costs, such as labor, transportation, livestock, feed ingredients and other input costs. Operating income of $1,455 million for the first quarter of fiscal 2022 was up 106% due to improved operating income in our Beef, Pork, and Chicken segments. In the three months ended January 1, 2022, our operating income was impacted by $23 million of insurance proceeds, net of costs, related to a fire at one of our Chicken segment production facilities.

Market Environment

According to the United States Department of Agriculture (“USDA”), domestic protein production (beef, pork, chicken and turkey) decreased 1% in the first quarter of fiscal 2022 compared to the same period in fiscal 2021. Each of our segments is experiencing improved foodservice demand. All segments experienced strong demand, challenging labor conditions and inflation in operating costs, especially in labor, freight and certain materials, and we expect these trends to continue through the remainder of fiscal 2022. Additionally, grain and feed ingredient costs have increased substantially, which impacts all of our segments. We pursue recovery of these increased costs through pricing. The Beef segment experienced strong global demand, sufficient supply of market-ready cattle and increased live cattle costs. The Pork segment experienced strong global demand, sufficient hog supplies and increased live hog costs. The Chicken segment experienced strong demand and increased feed ingredient costs. Feed ingredient costs are expected to be higher for fiscal 2022 versus fiscal 2021. The Prepared Foods segment faced increased costs largely due to the impacts of an inflationary environment.

Margins

Our total operating margin was 11.3% in the first quarter of fiscal 2022. Operating margins by segment were as follows:

•Beef – ~~13.2%~~19.1%

•Pork – ~~8.1%~~10.1%

•Chicken – ~~(7.6)%~~3.6%

•Prepared Foods – ~~12.6%~~8.0%


in millions, except per share data	Three Months Ended
	January 1, 2022		January 2, 2021






Net income attributable to Tyson	$	1,121	$	467
Net income attributable to Tyson – per diluted share	3.07		1.28

First quarter – Fiscal 2022 – Net income attributable to Tyson included the following items:

•$45 million pretax, or $0.10 per diluted share, of production facilities fire insurance proceeds net of costs incurred.

in millions, except per share data Three Months Ended
January 2, 2021 December 28, 2019
Net income attributable to Tyson $ 467 $ 505
Net income attributable to Tyson – per diluted share 1.28 1.38
•$36 million post tax, or $0.10 per diluted share, from remeasurement of net deferred tax liabilities at lower enacted state tax rates.

First quarter – Fiscal 2021 – Net income attributable to Tyson included the following items:

•$320 million pretax, or ($0.67) per diluted share, related to the recognition of a legal contingency accrual.

•$6 million pretax, or $0.01 per diluted share, of ~~Beef~~ production facility fire insurance proceeds, net of costs incurred.

~~First quarter – Fiscal 2020 –~~ ~~Net income attributable to Tyson included the following items:~~

•~~$52 million pretax, or ($0.11) per diluted share, of restructuring and related charges.~~

•~~$16 million pretax, or ($0.03) per diluted share, of Beef production facility fire costs, net of insurance proceeds.~~

Summary of Results

Sales


in millions	in millions	Three Months Ended					in millions	Three Months Ended
		January 2, 2021			December 28, 2019					January 1, 2022			January 2, 2021
Sales	Sales	$	10,460		$	10,815			Sales	$	12,933		$	10,460
Change in sales volume	Change in sales volume	(4.4)		%					Change in sales volume	0.3		%
Change in average sales price	Change in average sales price	4.2		%					Change in average sales price	19.6		%
Sales growth	Sales growth	(3.3)		%					Sales growth	23.6		%

First quarter – Fiscal ~~2021~~2022 vs Fiscal ~~2020~~2021

•Sales Volume – Sales were ~~negatively~~positively impacted by ~~a decrease~~an increase in sales volume, which accounted for ~~a decrease~~an increase of ~~$480~~$36 million, driven by ~~decreased volumes~~increased volume in our ~~Pork,~~ Chicken and Pork segments offset by decreases in sales volume in our Beef and Prepared ~~Foods~~ segments ~~primarily due to lower production throughput~~and impacts associated with the impact of COVID-19, partially offset by increased volumes in our Beef segment due to a reduction in production capacity as a result of a fire that caused the temporary closure of a production facility for the majority of the first quarter of fiscal 2020.challenging labor environment.

•Average Sales Price – Sales were positively impacted by higher average sales prices, which accounted for an increase of ~~$445~~$2,117 million. The increase in average sales price was primarily ~~attributable~~due to ~~favorable product mix related to strong demand in~~ the ~~retail channel across all~~current inflationary environment and recovery of ~~our segments.~~rapidly rising costs.

•The above change in average sales price for the ~~three months ended January 2, 2021~~first quarter of fiscal 2022 excludes a $320 million reduction of Sales from the recognition of a legal contingency ~~accrual.~~accrual in the first quarter of fiscal 2021.

Cost of Sales


in millions	in millions	Three Months Ended						in millions	Three Months Ended
		January 2, 2021			December 28, 2019						January 1, 2022			January 2, 2021
Cost of sales	Cost of sales	$	9,283		$	9,375				Cost of sales	$	10,918		$	9,283
Gross profit	Gross profit	$	1,177		$	1,440				Gross profit	$	2,015		$	1,177
Cost of sales as a percentage of sales	Cost of sales as a percentage of sales	88.7		%	86.7		%			Cost of sales as a percentage of sales	84.4		%	88.7		%

First quarter – Fiscal ~~2021~~2022 vs Fiscal ~~2020~~2021

•Cost of sales ~~decreased $92~~increased $1,635 million. ~~Lower~~Higher sales volume ~~decreased~~increased cost of sales ~~$415~~$31 million while higher input cost per pound increased cost of sales ~~$323~~$1,604 million.

•The ~~$323~~$1,604 million impact of higher input cost per pound was impacted by:

•Increase ~~of $120 million of direct incremental expenses related to COVID-19.~~

•~~Increase~~ in live ~~hog~~cattle costs of approximately ~~$50~~$445 million in our ~~Pork~~Beef segment.

•Increase of approximately ~~$45~~$240 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 ~~$35~~$215 million in our Prepared Foods segment.

•~~Decrease~~Increase in live ~~cattle~~hog costs of approximately ~~$150~~$105 million in our ~~Beef~~Pork segment.

•~~Decrease~~Increase of approximately $50 million in frontline bonuses.

•Increase in freight and transportation costs of approximately $155 million.

•Increase due to net derivative gains of $78 million in the first quarter of fiscal 2022, compared to net derivative gains of $95 million in the first quarter of fiscal 2021 ~~compared to net derivative gains of $43 million in the first quarter of fiscal 2020~~ due to our risk management activities. 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 ~~$16~~$23 million in our ~~Beef~~Chicken segment related to insurance proceeds net of costs ~~net of insurance proceeds,~~incurred related to athe fire at aour production ~~facility during the first quarter of fiscal 2020.~~facility.

•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 ~~production inefficiencies due in part to~~ the impact of ~~COVID-19.~~the inflationary environment on our labor and other input costs.

•The ~~$415~~$31 million impact of ~~lower~~higher sales volume was primarily driven by ~~decreased~~increased volumes in our Chicken and Pork segments offset by reduced sales volume in our ~~Pork, Chicken~~Beef and Prepared Foods segments due to lower production throughput associated with the impact of COVID-19, partially offset by increased volumes in our Beef segment due to a the prior year impact of a fire which caused the temporary closure of a production facility for the majority of the first quarter of fiscal 2020.segments.

Selling, General and Administrative


in millions	in millions	Three Months Ended						in millions	Three Months Ended
		January 2, 2021			December 28, 2019						January 1, 2022			January 2, 2021
Selling, general and administrative expense	Selling, general and administrative expense	$	472		$	682				Selling, general and administrative expense	$	560		$	472
As a percentage of sales	As a percentage of sales	4.5		%	6.3		%			As a percentage of sales	4.3		%	4.5		%

First quarter – Fiscal ~~2021~~2022 vs Fiscal ~~2020~~2021

•~~Decrease~~Increase of ~~$210~~$88 million in selling, general and administrative was primarily driven by:

•~~Decrease~~Increase of ~~$123~~$55 million from the change in the impact of a cattle ~~supplier’s~~supplier's misappropriation of Company funds, ~~resulting from~~as the result of a $55 million gain related to the recovery of cattle inventory in the three months ended January 2, 2021, as compared to ~~a $68 million~~no gain or loss recognized in the three months ended ~~December 28, 2019.~~January 1, 2022.

•~~Decrease~~Increase of ~~$48~~$20 million in ~~marketing, advertising and promotion expenses.~~

•~~Decrease of $43 million from restructuring and~~technology related ~~charges.~~

•~~Decrease of $10 million in travel and entertainment expenses.~~

•~~Decrease of $10 million in brokerage and commissions~~ costs.

•Increase of ~~$14~~$15 million in employee ~~costs primarily from incentive-based compensation.~~

•~~Increase of $12 million in professional fees.~~costs.

Interest Expense

in millions Three Months Ended
January 2, 2021 December 28, 2019
Cash interest expense $ 114 $ 123
Non-cash interest expense (4) (3)
Total interest expense $ 110 $ 120


in millions	Three Months Ended
	January 1, 2022		January 2, 2021
Cash interest expense	$	105	$	114


Non-cash interest expense	(5)		(4)
Total interest expense	$	100	$	110

First quarter – Fiscal ~~2021~~2022 vs Fiscal ~~2020~~2021

•Cash interest expense primarily included interest expense related to our senior notes, ~~and term loan,~~ in addition to commitment fees incurred on our revolving credit facility. The decrease in cash interest expense in fiscal ~~2021~~2022 was primarily due to repayments of term loans and the ~~change in outstanding commercial paper as well as the settlement~~redemption of the ~~2020 notes during~~August 2021 Notes in fiscal ~~2020, partially offset by interest expense related to the term loan facility.~~2021.

~~Effective Tax Rate~~Other (Income) Expense, net

Three Months Ended
January 2, 2021 December 28, 2019
23.4 % 22.5 %


in millions	Three Months Ended
	January 1, 2022		January 2, 2021
Total other (income) expense, net	$	(52)	$	(19)

First quarter – Fiscal ~~2021~~2022

•Included $22 million of production facilities fires insurance proceeds and a $30 million gain on an equity investment due to an observable price change.

Effective Tax Rate


Three Months Ended
January 1, 2022		January 2, 2021
20.2	%	23.4	%

First quarter – Fiscal 2022 vs Fiscal ~~2020~~2021

•Our effective income tax rate was ~~23.4%~~20.2% for the first quarter of fiscal ~~2021~~2022 compared to ~~22.5%~~23.4% for the same period of fiscal ~~2020.~~2021. The effective tax rates for the first quarter of fiscal 2022 and 2021 were increased by state taxes and ~~2020 were higher than~~decreased by various tax benefits. Additionally, the ~~federal statutory~~effective tax rate for the first quarter of fiscal 2022 included a $36 million benefit from the remeasurement of deferred income taxes, primarily due to legislation decreasing state ~~taxes, partially offset by various~~ tax ~~benefits.~~rates enacted in the first quarter.

Segment Results

We operate in four segments: Beef, Pork, Chicken, and Prepared Foods. The following table is a summary of sales and operating income (loss), which is how we measure segment profit.


in millions	in millions	Sales				in millions	Sales
		Three Months Ended						Three Months Ended
		January 2, 2021		December 28, 2019						January 1, 2022		January 2, 2021
Beef	Beef	$	3,987	$	3,838				Beef	$	5,002	$	3,987
Pork	Pork	1,439		1,379					Pork	1,626		1,439
Chicken	Chicken	2,831		3,292					Chicken	3,890		2,831
Prepared Foods	Prepared Foods	2,113		2,140					Prepared Foods	2,333		2,113
International/Other	International/Other	469		498					International/Other	550		469
Intersegment sales	Intersegment sales	(379)		(332)					Intersegment sales	(468)		(379)
Total	Total	$	10,460	$	10,815				Total	$	12,933	$	10,460


in millions	in millions	Operating Income (Loss)				in millions	Operating Income (Loss)
		Three Months Ended						Three Months Ended
		January 2, 2021		December 28, 2019						January 1, 2022		January 2, 2021
Beef	Beef	$	528	$	342				Beef	$	956	$	528
Pork	Pork	116		191					Pork	164		116
Chicken	Chicken	(216)		57					Chicken	140		(216)
Prepared Foods	Prepared Foods	266		158					Prepared Foods	186		266
International/Other	International/Other	11		10					International/Other	9		11
Total	Total	$	705	$	758				Total	$	1,455	$	705

Beef Segment Results


in millions	in millions	Three Months Ended									in millions	Three Months Ended
		January 2, 2021			December 28, 2019			Change						January 1, 2022			January 2, 2021			Change
Sales	Sales	$	3,987		$	3,838		$	149				Sales	$	5,002		$	3,987		$	1,015
Sales volume change	Sales volume change							5.6		%			Sales volume change							(6.2)		%
Average sales price change	Average sales price change							(1.7)		%			Average sales price change							31.7		%
Operating income	Operating income	$	528		$	342		$	186				Operating income	$	956		$	528		$	428
Operating margin	Operating margin	13.2		%	8.9		%						Operating margin	19.1		%	13.2		%

First quarter – Fiscal ~~2021~~2022 vs Fiscal ~~2020~~2021

•Sales Volume – Sales volume ~~increased primarily~~decreased due to the impacts associated with a challenging labor environment and increased supply chain constraints, partially offset by strong ~~domestic and export demand as well as the prior year impact of a fire which caused the temporary closure of a production facility for the majority of the first quarter of fiscal 2020.~~global demand.

•Average Sales Price – Average sales price ~~decreased primarily due to~~ increased ~~availability of market-ready~~as input costs such as live ~~cattle.~~cattle, labor, 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 and a reduction in direct incremental expenses related to COVID-19, partially offset by production inefficiencies ~~and direct incremental expenses related~~due to ~~COVID-19.~~the impacts associated with a challenging labor environment. Additionally, operating income in ~~the first quarter of~~ fiscal 2021 was impacted by a $55 million gain from the recovery of cattle inventory related to a cattle supplier's misappropriation of Company ~~funds, which resulted in a $55 million gain related to the recovery of cattle inventory as compared to a $68 million loss recognized in the first quarter of fiscal 2020.~~funds.

Pork Segment Results


in millions	in millions	Three Months Ended									in millions	Three Months Ended
		January 2, 2021			December 28, 2019			Change						January 1, 2022			January 2, 2021			Change
Sales	Sales	$	1,439		$	1,379		$	60				Sales	$	1,626		$	1,439		$	187
Sales volume change	Sales volume change							(3.0)		%			Sales volume change							0.2		%
Average sales price change	Average sales price change							7.4		%			Average sales price change							12.8		%
Operating income	Operating income	$	116		$	191		$	(75)				Operating income	$	164		$	116		$	48
Operating margin	Operating margin	8.1		%	13.9		%						Operating margin	10.1		%	8.1		%

First quarter – Fiscal ~~2021~~2022 vs Fiscal ~~2020~~2021

•Sales Volume – Sales volume ~~decreased due to~~was up slightly as strong global demand was offset by the ~~temporary idling of~~impacts associated with a ~~production facility~~challenging labor environment.

•Average Sales Price – Average sales price increased as input costs such as live hogs, labor, freight and transportation costs increased and demand for ~~a portion of the quarter related to a mechanical malfunction,~~our pork products remained strong, partially offset by unfavorable mix associated with labor shortages.

•Operating Income – Operating income increased due to strong ~~demand.~~demand as we optimized revenues relative to live hog supply and a reduction in direct incremental expenses related to COVID-19, partially offset by the impacts associated with a challenging labor environment.

Chicken Segment Results


in millions	Three Months Ended
	January 1, 2022			January 2, 2021			Change
Sales	$	3,890		$	2,831		$	1,059
Sales volume change							3.6		%
Average sales price change							19.9		%
Operating income (loss)	$	140		$	(216)		$	356
Operating margin	3.6		%	(7.6)		%

First quarter – Fiscal 2022 vs Fiscal 2021

•Sales Volume – Sales volume increased primarily due to increased live production and a strong demand environment.

•Average Sales Price – Average sales price increased due to ~~strong demand.~~the effects of an inflationary cost environment.

•Operating Income (Loss) – Operating income ~~decreased primarily~~increased due to ~~production inefficiencies~~increased sales volume and ~~direct incremental expenses~~higher average sales prices, partially offset by the impacts of inflationary market conditions including $185 million of higher feed ingredient costs, increased supply chain costs and a challenging labor environment. Additionally, operating income in the first quarter of fiscal 2022 was impacted by $23 million of insurance proceeds, net of costs incurred related to ~~COVID-19 as well as periods~~a fire at a production facility and was impacted in the first quarter of ~~compressed pork margins as livestock costs increased faster than sales prices.~~fiscal 2021 by a $320 million loss from the recognition of a legal contingency accrual.

~~Chicken~~

Prepared Foods Segment Results


in millions	in millions	Three Months Ended									in millions	Three Months Ended
		January 2, 2021			December 28, 2019			Change						January 1, 2022			January 2, 2021			Change
Sales	Sales	$	2,831		$	3,292		$	(461)				Sales	$	2,333		$	2,113		$	220
Sales volume change	Sales volume change							(7.0)		%			Sales volume change							(2.6)		%
Average sales price change	Average sales price change							2.7		%			Average sales price change							13.0		%
Operating income/(loss)		$	(216)		$	57		$	(273)
Operating income													Operating income	$	186		$	266		$	(80)
Operating margin	Operating margin	(7.6)		%	1.7		%						Operating margin	8.0		%	12.6		%

First quarter – Fiscal ~~2021~~2022 vs Fiscal ~~2020~~2021

•Sales Volume – Sales volume decreased due to the divestiture of our pet treats business in the fourth quarter of fiscal 2021 as well as lower production throughput ~~including impacts~~primarily associated with ~~COVID-19.~~a challenging labor and supply environment.

•Average Sales Price – Average sales price increased primarily due to the effects of revenue management in an inflationary cost environment.

•Operating Income – Operating income decreased due to the impacts of inflationary market conditions, including $215 million of increased raw materials and other input costs, increased supply chain costs and a challenging labor environment, partially offset by favorable ~~sales~~pricing.

International/Other Results


in millions	Three Months Ended
	January 1, 2022		January 2, 2021		Change
Sales	$	550	$	469	$	81


Operating income (loss)	9		11		(2)

First quarter – Fiscal 2022 vs Fiscal 2021

•Sales – Sales increased due to increased pricing from favorable product mix and ~~overall retail market conditions. The change~~increased volume in ~~average sales price for the three months ended January 2, 2021 excludes a $320 million reduction of Sales from the recognition of a legal contingency accrual.~~China & Korea.

•Operating Income (Loss) – Operating income decreased primarily due to a $320 million loss from the recognition of a legal contingency accrual as well as production inefficiencies and direct incremental expenses related to COVID-19. Additionally, operating income in the first quarter of fiscal 2021 was impacted by $70 million of incremental net derivative gains as compared to the first quarter of fiscal 2020.

~~Prepared Foods Segment Results~~

in millions Three Months Ended
January 2, 2021 December 28, 2019 Change
Sales $ 2,113 $ 2,140 $ (27)
Sales volume change (8.8) %
Average sales price change 7.5 %
Operating income $ 266 $ 158 $ 108
Operating margin 12.6 % 7.4 %

~~First quarter – Fiscal 2021 vs Fiscal 2020~~

•~~Sales Volume~~ – Sales volume decreased as growth in volume across the retail channel was offset by a reduction in the foodservice channel related to reduced demand as well as lower production throughput due to the impact of COVID-19.

•~~Average Sales Price~~ ~~– Average sales price increased in the first quarter due to favorable product mix and the pass through of~~ increased raw ~~material costs.~~

•~~Operating Income~~ ~~– Operating income increased due to lower commercial spend~~materials and ~~favorable product mix partially offset by increased operating costs, including a $35 million increase in raw material~~other input costs as well as ~~production inefficiencies related to COVID-19.~~

~~International/Other Results~~

in millions Three Months Ended
January 2, 2021 December 28, 2019 Change
Sales $ 469 $ 498 $ (29)
Operating income 11 10 1

~~First quarter – Fiscal 2021 vs Fiscal 2020~~

•~~Sales~~ ~~– Sales decreased primarily due to lower production throughput associated with the impact of COVID-19.~~

•~~Operating Income~~ ~~– Operating income was relatively flat due to demand volatility associated with the impact of COVID-19 offset by reduced raw material~~increased advertising and promotional costs.

LIQUIDITY AND CAPITAL RESOURCES

Our cash needs for working capital, capital expenditures, growth opportunities, repurchases of senior notes, repayment of maturing debt, the payment of dividends and share repurchases are expected to be met with current cash on hand, cash flows provided by operating activities or short-term borrowings. Based on our current expectations, we believe our liquidity and capital resources will be sufficient to operate our business. However, we may take advantage of opportunities to generate additional liquidity or refinance existing debt through capital market transactions. The amount, nature and timing of any capital market transactions will depend on our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature and timing of our capital requirements; any limitations imposed by our current credit arrangements; and overall market conditions. In addition, we will continue to monitor the impact of COVID-19 on our liquidity and, if necessary, take action to preserve liquidity and ensure that our business can operate during these uncertain times. This may include temporarily suspending share repurchases, suspending or reducing dividend payments or other cash preservation actions as necessary.

Cash Flows from Operating Activities


in millions	in millions	Three Months Ended				in millions	Three Months Ended
		January 2, 2021		December 28, 2019			January 1, 2022		January 2, 2021
Net income	Net income	$	472	$	509	Net income	$	1,126	$	472
Non-cash items in net income:	Non-cash items in net income:					Non-cash items in net income:
Depreciation and amortization	Depreciation and amortization	298		288		Depreciation and amortization	300		298
Deferred income taxes	Deferred income taxes	17		(13)		Deferred income taxes	77		17
Other, net	Other, net	18		27		Other, net	11		18
Net changes in operating assets and liabilities	Net changes in operating assets and liabilities	580		83		Net changes in operating assets and liabilities	(82)		580
Net cash provided by operating activities	Net cash provided by operating activities	$	1,385	$	894	Net cash provided by operating activities	$	1,432	$	1,385

•~~Cash flows associated with net changes in operating assets and liabilities for the three months ended:~~

•~~January 2, 2021 – Increased primarily from increased taxes payable, accounts payable and legal accrual, partially offset by decreased accrued salaries, wages and benefits~~. The increase in ~~taxes payable is~~net cash provided by operating activities was due primarily ~~due~~ to ~~timing~~higher earnings, as a result of strong operations in fiscal 2022, offset by higher payments ~~partly due~~related to payroll tax deferrals associated with the CARES Act. The increase in accounts payable is largely due to timing of payments. The decrease in accrued salaries, wages and benefits is primarily due to the payment of the annual incentive ~~plan.~~

•~~December 28, 2019 – Increased primarily from decreased accounts receivable~~plan and ~~increased income taxes payable, partially offset~~legal accruals. Comparative changes in working capital balances were also positively impacted by ~~increased inventories. The~~the decrease in accounts receivable ~~is primarily due to~~as a result of timing of sales, ~~and receipts. The increase~~offset by decrease in ~~income taxes~~accounts payable ~~is primarily~~ due to the timing of ~~tax~~ payments. ~~The increase in inventory is primarily due to increased volumes and costs in the Beef segment.~~

Cash Flows from Investing Activities

in millions Three Months Ended
January 2, 2021 December 28, 2019
Additions to property, plant and equipment $ (289) $ (312)
Proceeds from sale of (purchases of) marketable securities, net 1 (16)
Proceeds from sale of business — 29
Other, net 29 (82)
Net cash used for investing activities $ (259) $ (381)


in millions	Three Months Ended
	January 1, 2022		January 2, 2021
Additions to property, plant and equipment	$	(408)	$	(289)
Proceeds from sale of (purchases of) marketable securities, net	—		1



Other, net	(51)		29
Net cash used for investing activities	$	(459)	$	(259)

•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. ~~We expect capital~~

◦Capital spending for fiscal ~~2021~~2022 is expected to approximate ~~$1.3~~$2 billion and will include the spending for capacity expansion and utilization, automation to ~~$1.5 billion.~~alleviate labor challenges and brand and product innovations.

•Other, net for the first three months of fiscal ~~2021~~2022 primarily included additional investment in other investments and changes in deposits for capital expenditures. For the first three months of fiscal ~~2020 primarily included~~2021, Other, net was impacted by changes in deposits for capital expenditures.

Cash Flows from Financing Activities

in millions Three Months Ended
January 2, 2021 December 28, 2019
Proceeds from issuance of debt $ 29 $ 38
Payments on debt (29) (31)
Borrowings on revolving credit facility — 180
Payments on revolving credit facility — (250)
Proceeds from issuance of commercial paper — 4,675
Repayments of commercial paper — (4,855)
Purchases of Tyson Class A common stock (17) (132)
Dividends (159) (150)
Stock options exercised 4 20
Other, net (1) (2)
Net cash used for financing activities $ (173) $ (507)

•~~During the first three months of fiscal 2020, we had net repayments of $180 million in unsecured short-term promissory notes (commercial paper) pursuant to our commercial paper program.~~


in millions	Three Months Ended
	January 1, 2022		January 2, 2021
Proceeds from issuance of debt	$	26	$	29
Payments on debt	(43)		(29)





Purchases of Tyson Class A common stock	(348)		(17)
Dividends	(164)		(159)
Stock options exercised	46		4
Other, net	(1)		(1)
Net cash used for financing activities	$	(484)	$	(173)

•Purchases of Tyson Class A stock ~~included:~~included

•◦$~~100~~300 million of shares repurchased pursuant to our share repurchase program during the three months ended ~~December 28, 2019.~~January 1, 2022.

•◦$1748 million and ~~$32~~$17 million of shares repurchased to fund certain obligations under our equity compensation programs during the three months ended January 1, 2022 and January 2, 2021, ~~and December 28, 2019,~~ respectively.

•Dividends paid during the three months ended January ~~2, 2021~~1, 2022 reflected a 6%3% increase to our fiscal ~~2020~~2021 quarterly dividend rate.

•~~In February 2021, subsequent to the end of the first quarter of fiscal 2021, we repaid $750 million of the $1.5 billion outstanding term loan facility.~~

Liquidity


in millions	in millions										in millions
		Commitments Expiration Date	Facility Amount		Outstanding Letters of Credit (no draw downs)		Amount Borrowed		Amount Available at January 2, 2021			Commitments Expiration Date	Facility Amount		Outstanding Letters of Credit (no draw downs)		Amount Borrowed		Amount Available at January 1, 2022
Cash and cash equivalents	Cash and cash equivalents								$	2,406	Cash and cash equivalents								$	2,956
Short-term investments	Short-term investments								—		Short-term investments								—
Term loan facility		March 2022	$	1,500	$	—	$	1,500	—

Revolving credit facility	Revolving credit facility	March 2023	$	1,750	$	—	$	—	1,750		Revolving credit facility	September 2026	$	2,250	$	—	$	—	2,250
Commercial paper	Commercial paper								—		Commercial paper								—
Total liquidity	Total liquidity								$	4,156	Total liquidity								$	5,206

•Liquidity includes cash and cash equivalents, short-term investments and availability under our revolving credit ~~and term loan facilities,~~facility, less outstanding commercial paper balance.

•At January ~~2, 2021,~~1, 2022, we had current debt and accrued legal contingencies of ~~$566~~$1,090 million and $390 million, respectively, which we intend to ~~refinance or repay~~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. We had no borrowings under the revolving credit facility during the three months ended January ~~2, 2021.~~1, 2022. 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 to approximate ~~$430~~$360 million for fiscal ~~2021.~~2022.

•Our current ratio was ~~1.8~~1.7 to 1 at January 1, 2022 and 1.6 to 1 at October 2, ~~2021 and October 3, 2020.~~

2021.

3228

•At January ~~2, 2021,~~1, 2022, approximately ~~$447~~$459 million of our cash was held in the accounts of our foreign subsidiaries. Generally, we do not rely on the foreign cash as a source of funds to support our ongoing domestic liquidity needs. 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 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 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 ~~and Term Loan Facilities~~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 also have a revolving credit facility, with a committed capacity of ~~$1.75~~$2.25 billion, to provide additional liquidity for working capital needs and to backstop our commercial paper program. Additionally, we have a $1.5 billion committed term loan facility which was fully drawn as of January 2, 2021. In February 2021, subsequent to our first quarter of fiscal 2021, we repaid $750 million of the $1.5 billion outstanding on this facility.

At January ~~2, 2021,~~1, 2022, amounts available for borrowing under our revolving credit ~~and term loan facilities~~facility totaled ~~$1.75~~$2.25 billion. Our revolving credit facility is funded by a syndicate of 20 banks, with commitments ranging from ~~$30~~$35 million to ~~$204~~$175 million per bank. Our term loan facility is funded by a syndicate of 5 banks, with commitments ranging from $200 million to $350 million per bank. The syndicate includes bank holding companies that are required to be adequately capitalized under federal bank regulatory agency requirements.

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$1.5 billion. The maturities of the notes may vary, but may not exceed 397 days from the date of issuance. As of January ~~2, 2021,~~1, 2022, we had no commercial paper outstanding under this program. Our ability to access commercial paper in the future may be limited or its costs ~~increased, due to the current market environment which has been impacted by COVID-19.~~increased.

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. At January ~~2, 2021,~~1, 2022, and October ~~3, 2020,~~2, 2021, the ratio of our net debt to EBITDA was ~~2.1x~~1.0x and ~~2.3x,~~1.2x, respectively. Refer to Part I, Item 3, EBITDA Reconciliations, for an explanation and reconciliation to comparable Generally Accepted Accounting Principles (“GAAP”) measures.

Credit Ratings

~~Term Loan~~Revolving Credit Facility ~~due March 2022~~

Standard & Poor's Rating Services', a Standard & Poor's Financial Services LLC business (“S&P”&P”), applicable rating is “BBB+”. Moody’s Investor Service, Inc.'s (“~~Moody's~~”Moody's”) applicable rating is ~~“Baa2~~”~~. Fitch Ratings', a wholly owned subsidiary of Fimlac, S.A. (“Fitch~~”~~), applicable rating is “BBB~~”~~. The below table outlines the borrowing spread on the outstanding principal balance of our term loan that corresponds to the applicable ratings levels from S&P, Moody's and Fitch.~~

Ratings Level (S&P/Moody's/Fitch) Borrowing Spread through March 25, 2021 Borrowing Spread
March 26, 2021 through March 27, 2022
A-/A3/A- or above 1.250 % 1.500 %
BBB+/Baa1/BBB+ 1.375 % 1.625 %
BBB/Baa2/BBB (current level) 1.500 % 1.750 %
BBB-/Baa3/BBB- 1.750 % 2.000 %
BB+/Ba1/BB+ or lower 2.000 % 2.250 %

~~Revolving Credit Facility~~

~~S&P's applicable rating is “BBB+~~”~~, Moody's applicable rating is “Baa2~~”~~, Fitch's applicable rating is “BBB~~”“Baa2”. The below table outlines the fees paid on the unused portion of the facility (“Facility Fee ~~Rat~~Rate”) and letter of credit fees and borrowings (“~~Undrawn Letter of Credit Fee and~~All-in Borrowing Spread”) that corresponds to the applicable ratings levels from S&P ~~Moody's~~ and ~~Fitch.~~Moody's.


Ratings Level (S&P/Moody's/Fitch)	Facility Fee Rate		All-in Borrowing Spread
A-/A3/A- or above	0.090	%	1.000	%
BBB+/Baa1/BBB+	0.100	%	1.125	%
BBB/Baa2/BBB (current level)	0.125	%	1.250	%
BBB-/Baa3/BBB-	0.175	%	1.375	%
BB+/Ba1/BB+ or lower	0.225	%	1.625	%

In the event the rating levels ~~are split,~~fall within different levels, the applicable ~~fees and spread~~rate will be based upon the ~~rating level in effect for two~~higher of the ~~rating agencies,~~two Levels or, if ~~all three rating agencies have different rating levels,~~there is more than a one-notch split between the ~~applicable fees and spread~~two Levels, then the Applicable Rate will be based upon the ~~rating level~~Level that is ~~between~~one Level below the ~~rating levels of the other two rating agencies.~~higher Level.

Debt Covenants

We were in compliance with all debt covenants at January ~~2, 2021~~1, 2022 and we expect that we will maintain ~~compliance for the foreseeable future.~~compliance.

RECENTLY ISSUED/ADOPTED ACCOUNTING PRONOUNCEMENTS

Refer to the discussion of recently issued/adopted accounting pronouncements under Part I, Item 1, Notes to Consolidated Condensed Financial Statements, Note 1: Accounting Policies.

CRITICAL ACCOUNTING ESTIMATES

We consider accounting policies related to: contingent liabilities; revenue recognition; accrued self-insurance; defined benefit pension plans; impairment of long-lived assets and definite life intangibles; impairment of goodwill and indefinite life intangible assets; business combinations; and income taxes to be critical accounting estimates. These policies are summarized in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended October ~~3, 2020, as amended.~~2, 2021. Refer to Part I, Item 1, Notes to Consolidated Condensed Financial Statements, Note 1: Accounting Policies, for updates to our significant accounting policies during the three months ended January ~~2, 2021.~~1, 2022. These critical accounting policies require us to make estimates and assumptions that affect the amounts reported in the consolidated condensed financial statements and accompanying notes. We have considered the impact of the global COVID-19 pandemic on our consolidated condensed financial statements. In addition to the COVID-19 impacts we have already experienced, and continue to experience, there are likely to be future impacts, the extent of which is uncertain and largely subject to whether the severity worsens or duration lengthens. These impacts could include but may not be limited to risks and uncertainty related to worker availability, our ability to operate production facilities, demand-driven production facility closures, shifts in demand between sales channels and market volatility in our supply chain. Consequently, this may subject us to future risk of material goodwill, intangible and long-lived asset impairments, increased reserves for uncollectible accounts, and adjustments for inventory and market volatility for items subject to fair value measurements such as derivatives and investments.

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain information in this report constitutes forward-looking statements. These statements are intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, current views and estimates of our outlook for fiscal ~~2021,~~2022, 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). Words such as “believe,” “expect,” “anticipate,” “estimate,” “intend,” “project,” “forecast,” “target,” “outlook,” “may,�� “should,” “could,” and similar expressions, as well as statements written in the future tense, identify forward-looking statements. These forward-looking statements are subject to a number of factors and uncertainties that could cause our actual results and experiences to differ materially from anticipated results and expectations expressed in such forward-looking statements. We wish to caution readers not to place undue reliance on any forward-looking statements, which are expressly qualified in their entirety by this cautionary statement and speak only as of the date made. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

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 ~~outbreak of the~~ COVID-19 global pandemic and associated responses ~~has~~thereto have had ~~and is expected to continue to have,~~ an adverse impact on our business and ~~operations;~~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 scope, severity and duration of the pandemic, public adoption rates of COVID-19 vaccines and their effectiveness against emerging variants of COVID-19, including the Delta and Omicron variants, and the speed and effectiveness of new vaccine and treatment developments and their deployment; (ii) ~~our ability to make effective acquisitions or joint ventures and successfully integrate newly acquired businesses into existing operations; (iii)~~ the effectiveness of our financial ~~fitness program; (iv) the implementation of an enterprise resource planning system; (v)~~excellence programs; (iii) access to foreign markets together with foreign economic conditions, including currency fluctuations, import/export restrictions and foreign politics; ~~(vi)~~(iv) cyber incidents, security breaches or other disruptions of our information technology systems; ~~(vii)~~(v) risks associated with our failure to consummate favorable acquisition transactions or integrate certain acquisitions' operations; ~~(viii)~~(vi) the Tyson Limited Partnership’s ability to exercise significant control over the Company; ~~(ix)~~(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; ~~(x)~~(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; ~~(xi)~~(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 access certain domestic and foreign markets; ~~(xii)~~(x) changes in consumer preference and diets and our ability to identify and react to consumer trends; ~~(xiii)~~(xi) effectiveness of advertising and marketing programs; ~~(xiv)~~(xii) significant marketing plan changes by large customers or loss of one or more large customers; ~~(xv)~~(xiii) our ability to leverage brand value propositions; ~~(xvi)~~(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; ~~(xvii)~~(xv) issues related to food safety, including costs resulting from product recalls, regulatory compliance and any related claims or litigation; ~~(xviii)~~(xvi) 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; ~~(xix)~~(xvii) adverse results from litigation; ~~(xx)~~(xviii) risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook; ~~(xxi)~~(xix) impairment in the carrying value of our goodwill or indefinite life intangible assets; ~~(xxii)~~(xx) our participation in a multiemployer pension ~~plans; (xxiii)~~plan; (xxi) volatility in capital markets or interest rates; ~~(xxiv)~~(xxii) risks associated with our commodity purchasing activities; ~~(xxv)~~(xxiii) the effect of, or changes in, general economic conditions; ~~(xxvi)~~(xxiv) impacts on our operations caused by factors and forces beyond our control, such as natural disasters, fire, bioterrorism, pandemics or extreme weather; ~~(xxvii)~~(xxv) failure to maximize or assert our intellectual property rights; ~~(xxviii)~~(xxvi) effects related to changes in tax rates, valuation of deferred tax assets and liabilities, or tax laws and their interpretation; ~~(xxix)~~(xxvii) the effectiveness of our internal control over financial reporting, including identification of ~~additional~~ material weaknesses; and ~~(xxx)~~(xxviii) those factors discussed within Item 1, Item 1A and Item 7 of our Annual Report on Form 10-K for the year ended October ~~3, 2020, as amended,~~2, 2021 and our other periodic filings with the SEC.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

Market risk relating to our operations results primarily from changes in commodity prices, interest rates and foreign exchange rates, as well as credit risk concentrations. To address certain of these risks, we enter into various derivative transactions as described below. If a derivative instrument is accounted for as a hedge, depending on the nature of the hedge, changes in the fair value of the instrument either will be offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings, or be recognized in other comprehensive income (loss) until the hedged item is recognized in earnings. The ineffective portion of an instrument’s change in fair value is recognized immediately.

Further, we hold certain positions, primarily in grain and livestock futures that either do not meet the criteria for hedge accounting or are not designated as hedges. With the exception of normal purchases and normal sales that are expected to result in physical delivery, we record these positions at fair value, and the unrealized gains and losses are reported in earnings at each reporting date.

The sensitivity analyses presented below are the measures of potential ~~losses of~~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. Actual changes in market prices may differ from hypothetical changes.

Commodities Risk

~~Commodities Risk:~~We purchase certain commodities, such as grains and livestock in the course of normal operations. As part of our commodity risk management activities, we use derivative financial instruments, primarily forwards and options, to reduce the effect of changing prices and as a mechanism to procure the underlying commodity. However, as the commodities underlying our derivative financial instruments can experience significant price fluctuations, any requirement to mark-to-market the positions that have not been designated or do not qualify as hedges could result in volatility in our results of operations. Contract terms of a hedge instrument closely mirror those of the hedged item providing a high degree of risk reduction and correlation. Contracts designated and highly effective at meeting this risk reduction and correlation criteria are recorded using hedge accounting. We generally do not hedge anticipated transactions beyond 18 months. The following table presents a sensitivity analysis resulting from a hypothetical change of 10% in market prices as of January ~~2, 2021,~~1, 2022, and October ~~3, 2020,~~2, 2021, on the fair value of open positions. The fair value of such positions is a summation of the fair values calculated for each commodity by valuing each net position at quoted forward and option prices. The market risk exposure analysis included both derivatives designated as hedge instruments and derivatives not designated as hedge instruments.


Effect of 10% change in fair value	Effect of 10% change in fair value			in millions		Effect of 10% change in fair value			in millions
		January 2, 2021		October 3, 2020			January 1, 2022		October 2, 2021
Livestock:	Livestock:					Livestock:
Live Cattle	Live Cattle	$	19	$	24	Live Cattle	$	37	$	42
Lean Hogs	Lean Hogs	19		19		Lean Hogs	26		38
Grain:	Grain:					Grain:
Corn	Corn	16		23		Corn	40		24
Soybean Meal	Soybean Meal	35		28		Soybean Meal	42		26

Interest Rate ~~Risk:~~Risk

At January ~~2, 2021,~~1, 2022, we had variable rate debt of ~~$1,528~~$17 million with a weighted average interest rate of ~~1.8%~~3.0%. A hypothetical 10% increase in interest rates effective at January ~~2, 2021,~~1, 2022, and October ~~3, 2020,~~2, 2021, 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 January ~~2, 2021,~~1, 2022, we had fixed-rate debt of ~~$9,829~~$9,347 million with a weighted average interest rate of ~~4.4%~~4.5%. 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% decrease in interest rates would have increased the fair value of our fixed-rate debt by approximately ~~$133~~$154 million at January 1, 2022 and October 2, ~~2021, and $108 million at October 3, 2020.~~2021. 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. 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 16: Pensions and Other Postretirement Benefits in our Annual Report on Form 10-K ~~and subsequent amendment on Form 10-K/A~~ for the fiscal year ended October ~~3, 2020,~~2, 2021, for additional information.

Foreign Currency ~~Risk:~~Risk

We have foreign exchange exposure from fluctuations in foreign currency exchange rates primarily as a result of certain receivable and payable balances. The primary currencies we have exposure to are 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. We periodically enter into foreign exchange forward and option contracts to hedge some portion of our foreign currency exposure. A hypothetical 10% change in foreign exchange rates related to the foreign exchange forward and option contracts would have had ~~a $44~~an $27 million and ~~$54~~$13 million impact on pretax income at January 1, 2022, and October 2, 2021 ~~and October 3, 2020~~ respectively.

Concentration of Credit ~~Risk:~~Risk

Refer to our market risk disclosures set forth in our Annual Report filed on Form 10-K ~~and subsequent amendment on Form 10-K/A~~ for the fiscal year ended October ~~3, 2020,~~2, 2021, for a detailed discussion of quantitative and qualitative disclosures about concentration of credit ~~risks, as these risk disclosures have not changed significantly from our Annual Report on Form 10-K for the fiscal year ended October 3, 2020.~~

risks.

EBITDA Reconciliations

A reconciliation of net income to EBITDA is as follows (in millions, except ratio data):


		Three Months Ended				Fiscal Year Ended		Twelve Months Ended			Three Months Ended				Fiscal Year Ended		Twelve Months Ended
		January 2, 2021		December 28, 2019		October 3, 2020		January 2, 2021			January 1, 2022		January 2, 2021		October 2, 2021		January 1, 2022

Net income	Net income	$	472	$	509	$	2,071	$	2,034	Net income	$	1,126	$	472	$	3,060	$	3,714
Less: Interest income	Less: Interest income	(2)		(3)		(10)		(9)		Less: Interest income	(3)		(2)		(8)		(9)
Add: Interest expense	Add: Interest expense	110		120		485		475		Add: Interest expense	100		110		428		418
Add: Income tax expense	Add: Income tax expense	144		148		593		589		Add: Income tax expense	284		144		981		1,121
Add: Depreciation	Add: Depreciation	229		217		900		912		Add: Depreciation	236		229		934		941
Add: Amortization (a)	Add: Amortization (a)	66		68		278		276		Add: Amortization (a)	62		66		261		257
EBITDA	EBITDA	$	1,019	$	1,059	$	4,317	$	4,277	EBITDA	$	1,805	$	1,019	$	5,656	$	6,442

Total gross debt	Total gross debt					$	11,339	$	11,357	Total gross debt					$	9,348	$	9,364
Less: Cash and cash equivalents	Less: Cash and cash equivalents					(1,420)		(2,406)		Less: Cash and cash equivalents					(2,507)		(2,956)
Less: Short-term investments	Less: Short-term investments					—		—		Less: Short-term investments					—		—
Total net debt	Total net debt					$	9,919	$	8,951	Total net debt					$	6,841	$	6,408

Ratio Calculations:	Ratio Calculations:									Ratio Calculations:
Gross debt/EBITDA	Gross debt/EBITDA					2.6x		2.7x		Gross debt/EBITDA					1.7x		1.5x
Net debt/EBITDA	Net debt/EBITDA					2.3x		2.1x		Net debt/EBITDA					1.2x		1.0x

(a) Excludes the amortization of debt issuance and debt discount expense of $2 million for the three months ended January 1, 2022, $3 million for the three months ended January 2, 2021, ~~and December 28, 2019 and $14~~$19 million for the fiscal year ended October ~~3, 2020~~2, 2021, and $18 million for the twelve months ended January ~~2, 2021~~1, 2022 as it is included in interest expense.

EBITDA represents net income, net of interest, income tax expense, depreciation and amortization. Net debt to EBITDA represents the ratio of our debt, net of cash and short-term investments, to EBITDA. EBITDA and net debt to EBITDA are presented as supplemental financial measurements in the evaluation of our business. We believe the presentation of these financial measures helps investors to assess our operating performance from period to period, including our ability to generate earnings sufficient to service our debt, and enhances understanding of our financial performance and highlights operational trends. These measures are widely used by investors and rating agencies in the valuation, comparison, rating and investment recommendations of companies; however, the measurements of EBITDA and net debt to EBITDA may not be comparable to those of other companies, which limits their usefulness as comparative measures. EBITDA and net debt to EBITDA are not measures required by or calculated in accordance with GAAP and should not be considered as substitutes for net income or any other measure of financial performance reported in accordance with GAAP or as a measure of operating cash flow or liquidity. EBITDA is a useful tool for assessing, but is not a reliable indicator of, our ability to generate cash to service our debt obligations because certain of the items added to net income to determine EBITDA involve outlays of cash. As a result, actual cash available to service our debt obligations will be different from EBITDA. Investors should rely primarily on our GAAP results, and use non-GAAP financial measures only supplementally, in making investment decisions.

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation was performed, under the supervision and with the participation of management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, the CEO and CFO have concluded that, ~~solely due to the material weakness in our internal control over financial reporting described below,~~as of January 1, 2022, our disclosure controls and procedures were ~~not effective as of January 2, 2021.~~effective.

~~Material Weakness in Internal Control Over Financial Reporting~~

A material weakness (as defined in Rule 12b-2 under the Exchange Act) is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We did not design and maintain effective controls over the existence of live cattle inventory. Specifically, we did not design and maintain effective controls to verify the existence of Company inventory in the custody of third-party live cattle suppliers and appropriately perform the live cattle inventory reconciliation and review at the designed level of precision. These deficiencies resulted in a revision related to the overstatement of inventory by approximately $285 million and $179 million as of October 3, 2020 and September 28, 2019, respectively, which also had the effect of understating selling, general and administrative expenses by approximately $106 million, $57 million, and $63 million for the years ended October 3, 2020, September 28, 2019 and September 29, 2018, respectively. Additionally, these deficiencies could result in a misstatement of the above-referenced account balances or disclosures that would result in a material misstatement to the annual or interim consolidated statements that would not be prevented or detected.

~~Remediation Plan~~

As part of our commitment to strengthening our internal control over financial reporting, we are implementing remedial actions under the oversight of the Audit Committee of our Board of Directors to address these deficiencies, including:

•~~Implementing a control requiring inspection and physical verification of live cattle on third-party feedyards; and~~

•~~Training on the execution of the Company’s key control regarding the reconciliation and review of live cattle inventory, including sufficient review based on defined thresholds.~~

~~We will continue to monitor the design and effectiveness of these and other processes, procedures and controls and make any further changes management determines appropriate.~~

Changes in Internal Control Over Financial Reporting

During fiscal 2019, we implemented the primary phase of a new Enterprise Resource Planning system (“ERP”). The implementation will continue in additional phases through fiscal 2021. We concluded, as part of our evaluation, that the implementation of the ERP has not materially affected our internal control over financial reporting.

~~In the first quarter ended January 2, 2021, there~~There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the 1934 Act) during the quarter ended January 1, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.Legal Proceedings

Refer to the description of the “Broiler Antitrust Civil Litigation,” the Broiler Chicken Grower Litigation, the Pork Antitrust Litigation, the Beef Antitrust Litigation and the Wage Rate Litigation under the heading “~~Contingencies~~”“Commitments and Contingencies” in Part I, Item 1, Notes to Consolidated Condensed Financial Statements, Note ~~15:~~14: Commitments and Contingencies, which discussion is incorporated herein by reference. Other than as set forth below and in our Annual Report on Form 10-K for the fiscal year ended October ~~3, 2020, as amended,~~2, 2021, there are no additional updates to the legal proceedings involving the Company and/or its subsidiaries.

On January 27, 2017, Haff Poultry, Inc., Craig Watts, Johnny Upchurch, Jonathan Walters and Brad Carr, acting on behalf of themselves and a putative class of broiler chicken farmers, filed a class action complaint against us and certain of our poultry subsidiaries, as well as several other vertically-integrated poultry processing companies, in the United States District Court for the Eastern District of Oklahoma. On March 27, 2017, a second class action complaint making similar claims on behalf of a similarly defined putative class was filed in the United States District Court for the Eastern District of Oklahoma. Plaintiffs in the two cases sought to have the matters consolidated, and, on July 10, 2017, filed a consolidated amended complaint styled ~~In re Broiler Chicken Grower Litigation.~~ The plaintiffs allege, among other things, that the defendants colluded not to compete for broiler raising services “with the purpose and effect of fixing, maintaining, and/or stabilizing grower compensation below competitive levels.” The plaintiffs also allege that the defendants “agreed to share detailed data on [g]rower compensation with one another, with the purpose and effect of artificially depressing [g]rower compensation below competitive levels.” The plaintiffs contend these alleged acts constitute violations of the Sherman Antitrust Act and Section 202 of the Grain Inspection, Packers and Stockyards Act of 1921. The plaintiffs are seeking treble damages, pre- and post-judgment interest, costs, and attorneys’ fees on behalf of the putative class. We and the other defendants filed a motion to dismiss on September 8, 2017, and that motion was denied on January 6, 2020. The parties are now conducting discovery in the Oklahoma action. Additional named plaintiffs filed similar class action complaints in federal district courts in North Carolina, Colorado, Kansas and California. On October 6, 2020, the named plaintiffs in the Oklahoma action filed a motion with the United States Judicial Panel on Multidistrict Litigation (JPML) to transfer and consolidate all actions in the Eastern District of Oklahoma. On December 15, 2020, the JPML granted the plaintiffs' motion and consolidated all actions in the Eastern District of Oklahoma.

On December 19, 2019, ~~Olean Wholesale Grocery Cooperative, Inc. and John Gross and Company, Inc., acting on behalf of themselves and~~ a putative class of ~~all persons and entities who purchased turkey directly from a defendant or alleged co-conspirator during the class period of January 1, 2010 to January 1, 2017,~~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. 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. Plaintiffs are seeking treble damages, pre- and post-judgment interest, costs and attorneys’ fees on behalf of the putative class. On April 13, 2020, ~~Sandee's Catering filed~~ a similar complaint was filed in the United States District Court for the Northern District of Illinois on behalf of ~~itself and~~ a putative class of ~~all commercial and institutional~~ indirect purchasers of turkey ~~that purchased directly from a defendant or alleged co-conspirator during the class period of January 1, 2010 to January 1, 2017,~~ alleging claims based on the Sherman Act and various state law causes of action. The plaintiffs are seeking treble damages, pre- and post-judgment interest, costs, and attorneys' fees on behalf of the putative class. ~~We moved~~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. In April 2021, we reached agreement to ~~dismiss~~settle all claims with the ~~complaints,~~putative direct purchaser class for $4.625 million and ~~in decisions~~with the putative commercial and institutional indirect purchaser class for $1.75 million. On May 25, 2021, the Court granted preliminary approval of the settlement with the putative direct purchaser class, and on ~~October 19 and 26, 2020,~~January 10, 2022, the Court granted final approval of the settlement with that class. On July 28, 2021, the court ~~partially denied~~granted preliminary approval of the ~~motions. The parties are now conducting discovery.~~settlement with the putative commercial and institutional indirect purchaser class, and the final approval hearing is scheduled for February 22, 2022. While we do not admit any liability as part of the settlements, we believe that the settlements were in the best interests of the Company and its shareholders to avoid the uncertainty, risk, expense and distraction of protracted litigation.

Other ~~Matters:~~Matters

As of October ~~3, 2020,~~2, 2021, we had approximately ~~139,000~~137,000 team members and, at any time, have various employment practices matters outstanding. In the aggregate, these matters are ~~significant~~important to the Company, and we devote ~~significant~~considerable resources to managing employment issues. Additionally, we are subject to other lawsuits, investigations and claims (some of which involve substantial amounts) arising out of the conduct of our business. While the ultimate results of these matters cannot be determined, they are not expected to have a material adverse effect on our consolidated results of operations or financial ~~position~~.position.

Item 1A.Risk Factors

Our business is subject to a variety of risks and uncertainties. These risks are described elsewhere in our other filings with the SEC, including Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended October ~~3, 2020.~~2, 2021. The risks identified in such reports have not changed in any material respect.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

The table below provides information regarding our purchases of Class A stock during the three months ended January ~~2, 2021.~~1, 2022.

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)
Oct. 4, 2020 to Oct. 31, 2020 35,565 $ 59.13 — 18,851,028
Nov. 1, 2020 to Dec. 5, 2020 189,482 62.32 — 18,851,028
Dec. 6, 2020 to Jan. 2, 2021 44,751 67.46 — 18,851,028
Total 269,798 $ 62.75 — 18,851,028


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)
October 3, 2021 to October 30, 2021	83,352	$	79.51	—	18,851,028
October 31, 2021 to December 4, 2021	1,999,619	82.27		1,535,966	17,315,062
December 5, 2021 to January 1, 2022	2,099,714	84.44		2,054,364	15,260,698
Total	4,182,685	$	83.30	3,590,330	15,260,698

(1)On February 7, 2003, we announced that our Board of Directors had approved a program to repurchase up to 25 million shares of outstanding Class A common stock from time to time in open market or privately negotiated transactions. On May 3, 2012, our Board of Directors approved an additional 35 million shares, on January 30, 2014, our Board of Directors approved an additional 25 million shares and on February 4, 2016, our Board of Directors approved an additional 50 million shares, in each case, authorized for repurchase under our share repurchase program. The program has no fixed or scheduled termination date.

(2)We purchased ~~269,798~~592,355 shares during the three months ended January ~~2, 2021~~1, 2022 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 ~~108,976~~199,698 shares purchased in open market transactions and ~~160,822~~392,657 shares withheld to cover required tax withholdings related to the vesting of restricted stock. Shares withheld to cover required tax withholdings related to the vesting of restricted stock do not reduce our total share repurchase authority.

(3)~~Shares~~We purchased 3.6 million shares during the three months ended January ~~2, 2021~~1, 2022 pursuant to our previously announced stock repurchase program.

Item 3. Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not Applicable.

Item 5.Other Information

None.

3934

Item 6.Exhibits

The Exhibit Index below contains a list of exhibits filed or furnished with this Form 10-Q.


Exhibit No.		Exhibit Description

10.1	* **	~~Form of Stock Options (Contracted) - Stock Incentive Award Agreement pursuant to which stock option awards are granted under the~~ Tyson Foods, Inc. ~~2000 Stock~~Annual Incentive Compensation Plan for Senior Executives adopted February 4, 2005 and amended effective ~~November 20, 2020.~~August 4, 2021.

10.2	* **	Form of ~~Stock Options~~Performance Shares – Return on Invested Capital (5+1) - Stock Incentive Award Agreement pursuant to which ~~stock option awards~~performance shares are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November ~~20, 2020.~~19, 2021.

10.3	* **	Form of Stock Options (Director/Non-Contract) - Stock Incentive Award Agreement pursuant to which stock option awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 20, 2020.

~~10.4~~	* **	~~Form of Stock Options (CEO Special) - Stock Incentive Aware Agreement pursuant to which stock option awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective October 5, 2020.~~

~~10.5~~	* **	~~Form of Restricted Stock~~Performance Shares – Return on Invested Capital (Contracted) - Stock ~~Incentive Award Agreement pursuant to which restricted share awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 20, 2020.~~

~~10.6~~	* **	Form of Restricted Stock (Director/Non-Contract) - Stock Incentive Award Agreement pursuant to which restricted share awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 20, 2020.

~~10.7~~	* **	Form of Restricted Stock (5+1) - Stock Incentive Award Agreement pursuant to which restricted stock awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 20, 2020.

~~10.8~~	* **	~~Form of Performance Shares - Operating Income - Stock~~ Incentive Award Agreement pursuant to which performance shares are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November ~~20, 2020.~~19, 2021.

~~10.9~~10.4	* **	~~Form of Performance Shares - Operating Income (5+1) - Stock Incentive Award Agreement pursuant to which performance shares are granted under the Tyson Foods, Inc. 2000 Stock Incentive~~Executive Severance Plan, as amended and restated effective ~~November 20, 2020.~~

~~10.10~~	* **	Form of Performance Shares - Total Shareholder Return - Stock Incentive Award Agreement pursuant to which performance shares are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 20, 2020.

~~10.11~~	* **	Form of Performance Shares - Total Shareholder Return (5+1) - Stock Incentive Award Agreement pursuant to which performance shares are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 20, 2020.

~~10.12~~	* **	Form of Restricted Stock (5+1 Special) - Stock Incentive Award Agreement pursuant to which restricted stock awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 20, 2020.

~~10.13~~	* **	Form of Restricted Stock (Contracted Special) - Stock Incentive Award Agreement pursuant to which restricted stock awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 20, 2020.

~~10.14~~	* **	~~Form of Restricted Stock (International~~ ~~Non-Contract) - Stock Incentive Award Agreement pursuant to which restricted share awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 20, 2020.~~

~~10.15~~	* **	Form of Restricted Stock (International Contracted) - Stock Incentive Award Agreement pursuant to which restricted share awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective November 20, 2020.

~~10.16~~	* **	Form of Restricted Stock (Chairman and CEO Special) - Stock Incentive Aware Agreement pursuant to which restricted stock awards are granted under the Tyson Foods, Inc. 2000 Stock Incentive Plan effective October 5,February 15, 2020.

31.1	**	Certification of Chief Executive Officer pursuant to SEC Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	**	Certification of Chief Financial Officer pursuant to SEC Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	***	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	***	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following information from our Quarterly Report on Form 10-Q for the quarter ended January ~~2, 2021,~~1, 2022, formatted in iXBRL (inline eXtensible Business Reporting Language): (i) Consolidated Condensed Statements of Income, (ii) Consolidated Condensed Statements of Comprehensive Income, (iii) Consolidated Condensed Balance Sheets, (iv) Consolidated Condensed Statements of Shareholders' Equity, (v) Consolidated Condensed Statements of Cash Flows, and (vi) the Notes to Consolidated Condensed Financial Statements.

104		Cover Page Interactive Data File formatted in iXBRL.

	*	Indicates a management contract or compensatory plan or arrangement.
	**	Filed ~~herewith.~~herewith
	***	Furnished ~~herewith.~~herewith

4035

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	TYSON FOODS, INC.


Date: February ~~11, 2021~~7, 2022		/s/ Stewart Glendinning
		Stewart Glendinning
		Executive Vice President and Chief Financial Officer

Date: February ~~11, 2021~~7, 2022		/s/ Phillip W. Thomas
		Phillip W. Thomas
		Vice President, Controller and Chief Accounting Officer

4136


First Quarter	in millions, except per share data
	Quarter ended December 28, 2019
	As originally reported		Adjustments		As revised
Consolidated Statement of Income:


Selling, General and Administrative	$	614	$	68	$	682
Operating Income	826		(68)		758
Income before Income Taxes	725		(68)		657
Income Tax Expense (Benefit)	164		(16)		148
Net Income	561		(52)		509
Net Income Attributable to Tyson	557		(52)		505

Net Income Per Share Attributable to Tyson
Class A Basic	$	1.56	$	(0.14)	$	1.42
Class B Basic	$	1.40	$	(0.13)	$	1.27
Diluted	$	1.52	$	(0.14)	$	1.38

Consolidated Statement of Comprehensive Income:
Net Income	$	561	$	(52)	$	509
Comprehensive Income	599		(52)		547
Comprehensive Income Attributable to Tyson	595		(52)		543

	As of December 28, 2019
	As originally reported		Adjustments		As revised
Consolidated Balance Sheet:
Inventories	$	4,304	$	(247)	$	4,057
Total Current Assets	7,193		(247)		6,946
Total Assets	33,811		(247)		33,564
Deferred Income Taxes	2,369		(63)		2,306
Retained Earnings(a)	14,178		(184)		13,994
Total Tyson Shareholders' Equity	14,419		(184)		14,235
Total Shareholders' Equity	14,566		(184)		14,382
Total Liabilities and Shareholders' Equity	33,811		(247)		33,564

	Quarter ended December 28, 2019
	As originally reported		Adjustments		As revised
Consolidated Statement of Cash Flows:
Net Income	$	561	$	(52)	$	509
Deferred income taxes	3		(16)		(13)
Net changes in operating assets and liabilities	15		68		83


	Pension Plans
	Three Months Ended
	January 2, 2021		December 28, 2019

Service cost	$	0	$	0
Interest cost	2		10
Expected return on plan assets	0		(9)

Amortization of net actuarial loss	1		1


Net periodic cost (credit)	$	3	$	2


	Postretirement Benefit Plans
	Three Months Ended
	January 2, 2021		December 28, 2019


Interest cost	$	0	$	0



Amortization of prior service cost (credit)	0		0

Net periodic cost (credit)	$	0	$	0


Ratings Level (S&P/Moody's/Fitch)	Borrowing Spread through March 25, 2021		Borrowing Spread March 26, 2021 through March 27, 2022
A-/A3/A- or above	1.250	%	1.500	%
BBB+/Baa1/BBB+	1.375	%	1.625	%
BBB/Baa2/BBB (current level)	1.500	%	1.750	%
BBB-/Baa3/BBB-	1.750	%	2.000	%
BB+/Ba1/BB+ or lower	2.000	%	2.250	%


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)
Oct. 4, 2020 to Oct. 31, 2020	35,565	$	59.13	—	18,851,028
Nov. 1, 2020 to Dec. 5, 2020	189,482	62.32		—	18,851,028
Dec. 6, 2020 to Jan. 2, 2021	44,751	67.46		—	18,851,028
Total	269,798	$	62.75	—	18,851,028