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, 20211, 2022
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from             to            
tsn-20220101_g1.jpg
001-14704
(Commission File Number)

TYSON FOODS, INC.
(Exact name of registrant as specified in its charter)

Delaware71-0225165
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
2200 West Don Tyson Parkway,
Springdale,Arkansas72762-6999
(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 ClassTrading SymbolName of Each Exchange on Which Registered
Class A Common StockPar Value$0.10TSNNew 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 FilerAccelerated Filer
Non-Accelerated FilerSmaller 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.
ClassOutstanding Shares
Class A Common Stock, $0.10 Par Value (Class A stock)294,722,280292,455,419
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.
Item 2.
Item 3.
Item 4.

PART II. OTHER INFORMATION

Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.




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, 2021December 28, 2019 January 1, 2022January 2, 2021
SalesSales$10,460 $10,815 Sales$12,933 $10,460 
Cost of SalesCost of Sales9,283 9,375 Cost of Sales10,918 9,283 
Gross ProfitGross Profit1,177 1,440 Gross Profit2,015 1,177 
Selling, General and AdministrativeSelling, General and Administrative472 682 Selling, General and Administrative560 472 
Operating IncomeOperating Income705 758 Operating Income1,455 705 
Other (Income) Expense:Other (Income) Expense:Other (Income) Expense:
Interest incomeInterest income(2)(3)Interest income(3)(2)
Interest expenseInterest expense110 120 Interest expense100 110 
Other, netOther, net(19)(16)Other, net(52)(19)
Total Other (Income) ExpenseTotal Other (Income) Expense89 101 Total Other (Income) Expense45 89 
Income before Income TaxesIncome before Income Taxes616 657 Income before Income Taxes1,410 616 
Income Tax ExpenseIncome Tax Expense144 148 Income Tax Expense284 144 
Net IncomeNet Income472 509 Net Income1,126 472 
Less: Net Income Attributable to Noncontrolling InterestsLess: Net Income Attributable to Noncontrolling InterestsLess: Net Income Attributable to Noncontrolling Interests
Net Income Attributable to TysonNet 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 BasicClass A Basic293 293 Class A Basic292 293 
Class B BasicClass B Basic70 70 Class B Basic70 70 
DilutedDiluted365 367 Diluted365 365 
Net Income Per Share Attributable to Tyson:Net Income Per Share Attributable to Tyson:Net Income Per Share Attributable to Tyson:
Class A BasicClass A Basic$1.31 $1.42 Class A Basic$3.16 $1.31 
Class B BasicClass B Basic$1.18 $1.27 Class B Basic$2.84 $1.18 
DilutedDiluted$1.28 $1.38 Diluted$3.07 $1.28 
See accompanying Notes to Consolidated Condensed Financial Statements.
1


TYSON FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)

Three Months EndedThree Months Ended
January 2, 2021December 28, 2019January 1, 2022January 2, 2021
Net IncomeNet 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 hedgesDerivatives accounted for as cash flow hedgesDerivatives accounted for as cash flow hedges— 
InvestmentsInvestmentsInvestments(1)— 
Currency translationCurrency translation75 35 Currency translation(1)75 
Postretirement benefitsPostretirement benefitsPostretirement benefits
Total Other Comprehensive Income (Loss), Net of TaxesTotal Other Comprehensive Income (Loss), Net of Taxes77 38 Total Other Comprehensive Income (Loss), Net of Taxes— 77 
Comprehensive IncomeComprehensive Income549 547 Comprehensive Income1,126 549 
Less: Comprehensive Income Attributable to Noncontrolling InterestsLess: Comprehensive Income Attributable to Noncontrolling InterestsLess: Comprehensive Income Attributable to Noncontrolling Interests
Comprehensive Income Attributable to TysonComprehensive Income Attributable to Tyson$544 $543 Comprehensive Income Attributable to Tyson$1,121 $544 
See accompanying Notes to Consolidated Condensed Financial Statements.

2


TYSON FOODS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions, except share and per share data)
(Unaudited)
January 2, 2021October 3, 2020January 1, 2022October 2, 2021
AssetsAssetsAssets
Current Assets:Current Assets:Current Assets:
Cash and cash equivalentsCash and cash equivalents$2,406 $1,420 Cash and cash equivalents$2,956 $2,507 
Accounts receivable, netAccounts receivable, net1,900 1,952 Accounts receivable, net2,091 2,400 
InventoriesInventories3,915 3,859 Inventories4,454 4,382 
Other current assetsOther current assets323 367 Other current assets635 533 
Total Current AssetsTotal Current Assets8,544 7,598 Total Current Assets10,136 9,822 
Net Property, Plant and EquipmentNet Property, Plant and Equipment7,664 7,596 Net Property, Plant and Equipment8,012 7,837 
GoodwillGoodwill10,913 10,899 Goodwill10,550 10,549 
Intangible Assets, netIntangible Assets, net6,719 6,774 Intangible Assets, net6,459 6,519 
Other AssetsOther Assets1,618 1,589 Other Assets1,667 1,582 
Total AssetsTotal Assets$35,458 $34,456 Total Assets$36,824 $36,309 
Liabilities and Shareholders’ EquityLiabilities and Shareholders’ EquityLiabilities and Shareholders’ Equity
Current Liabilities:Current Liabilities:Current Liabilities:
Current debtCurrent debt$566 $548 Current debt$1,090 $1,067 
Accounts payableAccounts payable1,997 1,876 Accounts payable2,115 2,225 
Other current liabilitiesOther current liabilities2,286 1,810 Other current liabilities2,829 3,033 
Total Current LiabilitiesTotal Current Liabilities4,849 4,234 Total Current Liabilities6,034 6,325 
Long-Term DebtLong-Term Debt10,791 10,791 Long-Term Debt8,274 8,281 
Deferred Income TaxesDeferred Income Taxes2,331 2,317 Deferred Income Taxes2,274 2,195 
Other LiabilitiesOther Liabilities1,706 1,728 Other Liabilities1,700 1,654 
Commitments and Contingencies (Note 15)00
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 sharesClass A-authorized 900 million shares, issued 378 million shares38 38 Class A-authorized 900 million shares, issued 378 million shares38 38 
Convertible Class B-authorized 900 million shares, issued 70 million sharesConvertible Class B-authorized 900 million shares, issued 70 million sharesConvertible Class B-authorized 900 million shares, issued 70 million shares
Capital in excess of par valueCapital in excess of par value4,411 4,433 Capital in excess of par value4,471 4,486 
Retained earningsRetained earnings15,399 15,100 Retained earnings18,453 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, 2021Treasury 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’ EquityTotal Tyson Shareholders’ Equity15,638 15,254 Total Tyson Shareholders’ Equity18,403 17,723 
Noncontrolling InterestsNoncontrolling Interests143 132 Noncontrolling Interests139 131 
Total Shareholders’ EquityTotal Shareholders’ Equity15,781 15,386 Total Shareholders’ Equity18,542 17,854 
Total Liabilities and Shareholders’ EquityTotal 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.
3


TYSON FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions)
(Unaudited)
Three Months EndedThree Months Ended
January 2, 2021December 28, 2019January 1, 2022January 2, 2021
SharesAmountSharesAmountSharesAmountSharesAmount
Class A Common Stock:Class A Common Stock:Class A Common Stock:
Balance at beginning and end of periodBalance at beginning and end of period378 $38 378 $38 Balance at beginning and end of period378 $38 378 $38 
Class B Common Stock:Class B Common Stock:Class B Common Stock:
Balance at beginning and end of periodBalance at beginning and end of period70 70 Balance at beginning and end of period70 70 
Capital in Excess of Par Value:Capital in Excess of Par Value:Capital in Excess of Par Value:
Balance at beginning of periodBalance at beginning of period4,433 4,378 Balance at beginning of period4,486 4,433 
Stock-based compensationStock-based compensation(22)(24)Stock-based compensation(15)(22)
Balance at end of periodBalance at end of period4,411 4,354 Balance at end of period4,471 4,411 
Retained Earnings:Retained Earnings:Retained Earnings:
Balance at beginning of periodBalance at beginning of period15,100 13,655 Balance at beginning of period17,502 15,100 
Net income attributable to TysonNet income attributable to Tyson467 505 Net income attributable to Tyson1,121 467 
DividendsDividends(168)(166)Dividends(170)(168)
Balance at end of periodBalance at end of period15,399 13,994 Balance at end of period18,453 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 periodBalance 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 periodBalance at end of period(102)(79)Balance at end of period(172)(102)
Treasury Stock:Treasury Stock:Treasury Stock:
Balance at beginning of periodBalance at beginning of period83 (4,145)82 (4,011)Balance at beginning of period83 (4,138)83 (4,145)
Purchase of Class A common stockPurchase of Class A common stock(17)(132)Purchase of Class A common stock(348)— (17)
Stock-based compensationStock-based compensation47 (1)64 Stock-based compensation(2)92 — 47 
Balance at end of periodBalance at end of period83 (4,115)83 (4,079)Balance at end of period85 (4,394)83 (4,115)
Total Shareholders’ Equity Attributable to TysonTotal 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 periodBalance at beginning of period$132 $144 Balance at beginning of period$131 $132 
Net income attributable to noncontrolling interestsNet income attributable to noncontrolling interestsNet income attributable to noncontrolling interests
Distributions to noncontrolling interestDistributions to noncontrolling interest— (2)
OtherOther(1)Other
Total Equity Attributable to Noncontrolling InterestsTotal Equity Attributable to Noncontrolling Interests$143 $147 Total Equity Attributable to Noncontrolling Interests$139 $143 
Total Shareholders’ EquityTotal Shareholders’ Equity$15,781 $14,382 Total Shareholders’ Equity$18,542 $15,781 
See accompanying Notes to Consolidated Condensed Financial Statements.


4


TYSON FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended Three Months Ended
January 2, 2021December 28, 2019 January 1, 2022January 2, 2021
Cash Flows From Operating Activities:Cash Flows From Operating Activities:Cash Flows From Operating Activities:
Net incomeNet income$472 $509 Net income$1,126 $472 
Depreciation and amortizationDepreciation and amortization298 288 Depreciation and amortization300 298 
Deferred income taxesDeferred income taxes17 (13)Deferred income taxes77 17 
Other, netOther, net18 27 Other, net11 18 
Net changes in operating assets and liabilitiesNet changes in operating assets and liabilities580 83 Net changes in operating assets and liabilities(82)580 
Cash Provided by Operating ActivitiesCash Provided by Operating Activities1,385 894 Cash Provided by Operating Activities1,432 1,385 
Cash Flows From Investing Activities:Cash Flows From Investing Activities:Cash Flows From Investing Activities:
Additions to property, plant and equipmentAdditions to property, plant and equipment(289)(312)Additions to property, plant and equipment(408)(289)
Purchases of marketable securitiesPurchases of marketable securities(14)(35)Purchases of marketable securities(7)(14)
Proceeds from sale of marketable securitiesProceeds from sale of marketable securities15 19 Proceeds from sale of marketable securities15 
Proceeds from sale of business29 
Other, netOther, net29 (82)Other, net(51)29 
Cash Used for Investing ActivitiesCash 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 debtProceeds from issuance of debt29 38 Proceeds from issuance of debt26 29 
Payments on debtPayments on debt(29)(31)Payments on debt(43)(29)
Borrowings on revolving credit facility180 
Payments on revolving credit facility(250)
Proceeds from issuance of commercial paper4,675 
Repayments of commercial paper(4,855)
Purchases of Tyson Class A common stockPurchases of Tyson Class A common stock(17)(132)Purchases of Tyson Class A common stock(348)(17)
DividendsDividends(159)(150)Dividends(164)(159)
Stock options exercisedStock options exercised20 Stock options exercised46 
Other, netOther, net(1)(2)Other, net(1)(1)
Cash Used for Financing ActivitiesCash Used for Financing Activities(173)(507)Cash Used for Financing Activities(484)(173)
Effect of Exchange Rate Changes on CashEffect of Exchange Rate Changes on Cash16 Effect of Exchange Rate Changes on Cash16 
Increase in Cash and Cash Equivalents and Restricted CashIncrease in Cash and Cash Equivalents and Restricted Cash969 13 Increase in Cash and Cash Equivalents and Restricted Cash491 969 
Cash and Cash Equivalents and Restricted Cash at Beginning of YearCash and Cash Equivalents and Restricted Cash at Beginning of Year1,466 484 Cash and Cash Equivalents and Restricted Cash at Beginning of Year2,637 1,466 
Cash and Cash Equivalents and Restricted Cash at End of PeriodCash and Cash Equivalents and Restricted Cash at End of Period2,435 497 Cash and Cash Equivalents and Restricted Cash at End of Period3,128 2,435 
Less: Restricted Cash at End of PeriodLess: Restricted Cash at End of Period29 Less: Restricted Cash at End of Period172 29 
Cash and Cash Equivalents at End of PeriodCash 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.
5


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 disclosedcertain accounting estimates and the description of the estimates and the levels of subjectivity and judgment they require found in the 10-K/Aour 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.
6


The following tables represent revisions to our consolidated condensed financial information for the first quarter of fiscal 2020:
First Quarterin millions, except per share data
Quarter ended December 28, 2019
As originally reportedAdjustmentsAs revised
Consolidated Statement of Income:
Selling, General and Administrative$614 $68 $682 
Operating Income826 (68)758 
Income before Income Taxes725 (68)657 
Income Tax Expense (Benefit)164 (16)148 
Net Income561 (52)509 
Net Income Attributable to Tyson557 (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 Income599 (52)547 
Comprehensive Income Attributable to Tyson595 (52)543 
As of December 28, 2019
As originally reportedAdjustmentsAs revised
Consolidated Balance Sheet:
Inventories$4,304 $(247)$4,057 
Total Current Assets7,193 (247)6,946 
Total Assets33,811 (247)33,564 
Deferred Income Taxes2,369 (63)2,306 
Retained Earnings(a)
14,178 (184)13,994 
Total Tyson Shareholders' Equity14,419 (184)14,235 
Total Shareholders' Equity14,566 (184)14,382 
Total Liabilities and Shareholders' Equity33,811 (247)33,564 
Quarter ended December 28, 2019
As originally reportedAdjustmentsAs revised
Consolidated Statement of Cash Flows:
Net Income$561 $(52)$509 
Deferred income taxes(16)(13)
Net changes in operating assets and liabilities15 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 impactelected to early adopt this guidance willbeginning in the first quarter of fiscal 2022, and it did not have an impact on our consolidated financial statements.
76


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 adopt 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 adjusted2022, and based on our implementation assessment, no cumulative-effect adjustment was made to the opening balance of retained earnings. The adoption of this standardit did not have a materialan 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, 2021October 3, 2020January 1, 2022October 2, 2021
Processed productsProcessed products$2,142 $2,223 Processed products$2,411 $2,426 
LivestockLivestock1,068 977 Livestock1,264 1,215 
Supplies and otherSupplies and other705 659 Supplies and other779 741 
Total inventoryTotal 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, 2021October 3, 2020January 1, 2022October 2, 2021
LandLand$208 $196 Land$218 $210 
Buildings and leasehold improvementsBuildings and leasehold improvements5,030 4,961 Buildings and leasehold improvements5,411 5,370 
Machinery and equipmentMachinery and equipment9,112 9,013 Machinery and equipment9,577 9,507 
Land improvements and otherLand improvements and other424 420 Land improvements and other466 453 
Buildings and equipment under constructionBuildings and equipment under construction1,079 991 Buildings and equipment under construction1,204 976 
15,853 15,581 16,876 16,516 
Less accumulated depreciationLess accumulated depreciation8,189 7,985 Less accumulated depreciation8,864 8,679 
Net Property, Plant and EquipmentNet Property, Plant and Equipment$7,664 $7,596 Net Property, Plant and Equipment$8,012 $7,837 


87


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, 2021October 3, 2020January 1, 2022October 2, 2021
Accrued salaries, wages and benefitsAccrued salaries, wages and benefits$655 $823 Accrued salaries, wages and benefits$664 $897 
Taxes payableTaxes payable407 152 Taxes payable914 729 
Accrued current legal contingencies(a)Accrued current legal contingencies(a)339 18 Accrued current legal contingencies(a)390 567 
OtherOther885 817 Other861 840 
Total other current liabilitiesTotal 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.

9


NOTE 6: DEBT
The major components of debt are as follows (in millions):
January 2, 2021October 3, 2020
Revolving credit facility$$
Commercial paper
Senior notes:
2.25% Notes due August 2021500 500 
4.50% Senior notes due June 20221,000 1,000 
3.90% Senior notes due September 2023400 400 
3.95% Notes due August 20241,250 1,250 
4.00% Notes due March 2026 (“2026 Notes”)800 800 
3.55% Notes due June 20271,350 1,350 
7.00% Notes due January 202818 18 
4.35% Notes due March 2029 (“2029 Notes”)1,000 1,000 
6.13% Notes due November 2032160 160 
4.88% Notes due August 2034500 500 
5.15% Notes due August 2044500 500 
4.55% Notes due June 2047750 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 
Other231 216 
Unamortized debt issuance costs(58)(60)
Total debt11,357 11,339 
Less current debt566 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 $1.5 billion outstanding. The term loan facility expires on March 27, 2022 and is subject to prepayment under certain conditions. Additionally, the term loan facility contains covenants that are similar to those contained in the revolving credit facility.
January 1, 2022October 2, 2021
Revolving credit facility$— $— 
Commercial paper— — 
Senior notes:
4.50% Senior notes due June 20221,000 1,000 
3.90% Senior notes due September 2023400 400 
3.95% Notes due August 20241,250 1,250 
4.00% Notes due March 2026 (“2026 Notes”)800 800 
3.55% Notes due June 20271,350 1,350 
7.00% Notes due January 202818 18 
4.35% Notes due March 2029 (“2029 Notes”)1,000 1,000 
6.13% Notes due November 2032160 160 
4.88% Notes due August 2034500 500 
5.15% Notes due August 2044500 500 
4.55% Notes due June 2047750 750 
5.10% Notes due September 2048 (“2048 Notes”)1,500 1,500 
Discount on senior notes(41)(42)
Other225 212 
Unamortized debt issuance costs(48)(50)
Total debt9,364 9,348 
Less current debt1,090 1,067 
Total long-term debt$8,274 $8,281 
Revolving Credit Facility and Letters of Credit
We have aIn 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.
8


Commercial Paper Program
We have a commercial paper program under which we may issue unsecured short-term promissory notes upnotes. 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.

10


Debt Covenants
Our revolving credit and term loan facilities containfacility 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, 18.91, 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 EndedThree Months Ended
January 2, 2021December 28, 2019January 1, 2022January 2, 2021
SharesDollarsSharesDollarsSharesDollarsSharesDollars
Shares repurchased:Shares repurchased:Shares repurchased:
Under share repurchase programUnder share repurchase program$1.1 $100 Under share repurchase program3.6 $300 — $— 
To fund certain obligations under equity compensation plansTo fund certain obligations under equity compensation plans0.3 17 0.4 32 To fund certain obligations under equity compensation plans0.6 48 0.3 17 
Total share repurchasesTotal share repurchases0.3 $17 1.5 $132 Total share repurchases4.2 $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 werewas 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, 20211, 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.
11
9


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 EndedThree Months Ended
January 2, 2021December 28, 2019January 1, 2022January 2, 2021
Numerator:Numerator:Numerator:
Net incomeNet income$472 $509 Net income$1,126 $472 
Less: Net income attributable to noncontrolling interestsLess: Net income attributable to noncontrolling interestsLess: Net income attributable to noncontrolling interests
Net income attributable to TysonNet income attributable to Tyson467 505 Net income attributable to Tyson1,121 467 
Less dividends declared:Less dividends declared:Less dividends declared:
Class AClass A138 137 Class A140 138 
Class BClass B30 29 Class B30 30 
Undistributed earningsUndistributed earnings$299 $339 Undistributed earnings$951 $299 
Class A undistributed earningsClass A undistributed earnings$246 $279 Class A undistributed earnings$782 $246 
Class B undistributed earningsClass B undistributed earnings53 60 Class B undistributed earnings169 53 
Total undistributed earningsTotal 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 sharesClass A weighted average shares293 293 Class A weighted average shares292 293 
Class B weighted average shares, and shares under the if-converted method for diluted earnings per shareClass B weighted average shares, and shares under the if-converted method for diluted earnings per share70 70 Class B weighted average shares, and shares under the if-converted method for diluted earnings per share70 70 
Effect of dilutive securities:Effect of dilutive securities:Effect of dilutive securities:
Stock options, restricted stock and performance unitsStock options, restricted stock and performance unitsStock options, restricted stock and performance units
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversionsDenominator for diluted earnings per share – adjusted weighted average shares and assumed conversions365 367 Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversions365 365 
Net income per share attributable to Tyson:Net income per share attributable to Tyson:Net income per share attributable to Tyson:
Class A basicClass A basic$1.31 $1.42 Class A basic$3.16 $1.31 
Class B basicClass B basic$1.18 $1.27 Class B basic$2.84 $1.18 
DilutedDiluted$1.28 $1.38 Diluted$3.07 $1.28 
Dividends Declared Per Share:Dividends Declared Per Share:Dividends Declared Per Share:
Class AClass A$0.470 $0.465 Class A$0.475 $0.470 
Class BClass 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 tonsin millions, except soybean meal tonsMetricJanuary 2, 2021October 3, 2020in millions, except soybean meal tonsMetricJanuary 1, 2022October 2, 2021
Commodity:Commodity:Commodity:
CornCornBushels43 CornBushels58 37 
Soybean MealSoybean MealTons579,833 428,300 Soybean MealTons709,200 1,026,733 
Live CattleLive CattlePounds165 234 Live CattlePounds295 417 
Lean HogsLean HogsPounds254283Lean HogsPounds288 413 
Foreign CurrencyForeign CurrencyUnited States dollar$412 $536 Foreign CurrencyUnited 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 $16had $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 0had 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 insignificantnot 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, 20211, 2022 and October 3, 2020 were as follows2, 2021 (in millions):
Consolidated Condensed Balance Sheets ClassificationConsolidated Condensed Balance Sheets ClassificationJanuary 2, 2021October 3, 2020Consolidated Condensed Balance Sheets ClassificationJanuary 1, 2022October 2, 2021
InventoryInventory$$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 EndedConsolidated Condensed
Statements of Income Classification
Three Months Ended
January 2, 2021December 28, 2019Consolidated Condensed
Statements of Income Classification
January 1, 2022January 2, 2021
Cost of SalesCost of Sales$9,283 $9,375 $10,918 $9,283 
Interest ExpenseInterest Expense110 120 Interest Expense100 110 
Other, netOther, net(19)(16)Other, net(52)(19)
The following table sets forth the pretax impact of the cash flow, fair value and undesignated derivative instruments in the Consolidated Condensed Statements of Income (in millions):
Consolidated Condensed
Statements of Income Classification
Consolidated Condensed
Statements of Income Classification
Three Months EndedConsolidated Condensed Statements of Income ClassificationThree Months Ended
January 2, 2021December 28, 2019Consolidated Condensed Statements of Income ClassificationJanuary 1, 2022January 2, 2021
Cost of SalesCost of SalesGain (Loss) on cash flow hedges reclassified from OCI to Earnings:
Commodity contracts$(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 contracts98 29 Commodity contracts81 98 
TotalTotal$95 $43 Total$78 $95 
Interest ExpenseInterest ExpenseGain (Loss) on cash flow hedges reclassified from OCI to Earnings:Interest ExpenseGain (Loss) on cash flow hedges reclassified from OCI to Earnings:
Interest rate contracts$$(1)Interest rate contracts$— $— 
Other, netOther, netGain (Loss) on derivatives not designated as hedging instruments:Other, netGain (Loss) on derivatives not designated as hedging instruments:
Foreign exchange contracts$$Foreign exchange contracts$— $
(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, 2021Level 1Level 2Level 3Netting (a)Total
January 1, 2022January 1, 2022Level 1Level 2Level 3Netting (a)Total
Other Current Assets:Other Current Assets:Other Current Assets:
Derivative financial instruments:Derivative financial instruments:Derivative financial instruments:
Designated as hedgesDesignated as hedges$$$$$Designated as hedges$— $$— $(2)$
UndesignatedUndesignated210 (146)64 Undesignated— 130 — (49)81 
Other Assets:Other Assets:Other Assets:
Available-for-sale securities:
Non-current57 51 — 108 
Available-for-sale securitiesAvailable-for-sale securities— 62 46 — 108 
Deferred compensation assetsDeferred compensation assets11 373 — 384 Deferred compensation assets12 414 — — 426 
Total assetsTotal 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 hedgesDesignated as hedges$$$$(9)$Designated as hedges$— $15 $— $(15)$— 
UndesignatedUndesignated98 (82)16 Undesignated— 70 — (59)11 
Total liabilitiesTotal liabilities$$107 $$(91)$16 Total liabilities$— $85 $— $(74)$11 
October 3, 2020Level 1Level 2Level 3Netting (a)Total
October 2, 2021October 2, 2021Level 1Level 2Level 3Netting (a)Total
Other Current Assets:Other Current Assets:Other Current Assets:
Derivative financial instruments:Derivative financial instruments:Derivative financial instruments:
Designated as hedgesDesignated as hedges$$$$(2)$Designated as hedges$— $18 $— $(10)$
UndesignatedUndesignated96 (51)45 Undesignated— 169 — (89)80 
Other Assets:Other Assets:Other Assets:
Available-for-sale securities:
Non-current55 53 — 108 
Available-for-sale securitiesAvailable-for-sale securities— 61 48 — 109 
Deferred compensation assetsDeferred compensation assets19 336 — 355 Deferred compensation assets14 397 — — 411 
Total assetsTotal assets$19 $491 $53 $(53)$510 Total assets$14 $645 $48 $(99)$608 
Other Current Liabilities:Other Current Liabilities:Other Current Liabilities:
Derivative financial instruments:Derivative financial instruments:Derivative financial instruments:
Designated as hedgesDesignated as hedges$$10 $$(10)$Designated as hedges$— $12 $— $(12)$— 
UndesignatedUndesignated74 (59)15 Undesignated— 159 — (143)16 
Total liabilitiesTotal liabilities$$84 $$(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 EndedThree Months Ended
January 2, 2021December 28, 2019January 1, 2022January 2, 2021
Balance at beginning of yearBalance 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
Included in other comprehensive income (loss)Included in other comprehensive income (loss)Included in other comprehensive income (loss)(1)— 
PurchasesPurchasesPurchases
IssuancesIssuancesIssuances— — 
SettlementsSettlements(7)(6)Settlements(2)(7)
Balance at end of periodBalance 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 periodTotal 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$— $— 
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, 2021October 3, 2020January 1, 2022October 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 agencyU.S. treasury and agency$57 $57 $$55 $55 $U.S. treasury and agency$62 $62 $— $61 $61 $— 
Corporate and asset-backedCorporate and asset-backed49 51 51 53 Corporate and asset-backed46 46 — 47 48 
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-tradedpublicly 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, 2021October 3, 2020
Fair ValueCarrying ValueFair ValueCarrying Value
Total debt$13,332 $11,357 $12,982 $11,339 
January 1, 2022October 2, 2021
Fair ValueCarrying ValueFair ValueCarrying 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, 2021December 28, 2019
Service cost$$
Interest cost10 
Expected return on plan assets(9)
Amortization of net actuarial loss
Net periodic cost (credit)$$
Postretirement Benefit Plans
Three Months Ended
January 2, 2021December 28, 2019
Interest cost$$
Amortization of prior service cost (credit)
Net periodic cost (credit)$$
Net periodic benefit cost, excluding the service cost component, was recorded in the Consolidated Condensed Statements of Income in Other, net.
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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 EndedThree Months Ended
January 2, 2021December 28, 2019January 1, 2022January 2, 2021
Before TaxTaxAfter TaxBefore TaxTaxAfter TaxBefore TaxTaxAfter TaxBefore TaxTaxAfter 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$$$$$$
(Gain) loss reclassified to cost of sales(Gain) loss reclassified to cost of sales(Gain) loss reclassified to cost of sales$— $— $— $$— $
Investments:Investments:
Unrealized gain (loss)Unrealized gain (loss)(1)— (1)— — — 
Currency translation:Currency translation:Currency translation:
Translation adjustmentTranslation adjustment75 75 35 35 Translation adjustment(1)— (1)75 — 75 
Postretirement benefits:Postretirement benefits:Postretirement benefits:
Unrealized gain (loss)Unrealized gain (loss)Unrealized gain (loss)— — 
Total other comprehensive income (loss)Total other comprehensive income (loss)$77 $$77 $38 $$38 Total other comprehensive income (loss)$— $— $— $77 $— $77 
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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.

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Information on segments and a reconciliation to income before income taxes are as follows (in millions): 
Three Months EndedThree Months Ended
January 2, 2021December 28, 2019January 1, 2022January 2, 2021
Sales:Sales:Sales:
BeefBeef$3,987 $3,838 Beef$5,002 $3,987 
PorkPork1,439 1,379 Pork1,626 1,439 
ChickenChicken2,831 3,292 Chicken3,890 2,831 
Prepared FoodsPrepared Foods2,113 2,140 Prepared Foods2,333 2,113 
International/OtherInternational/Other469 498 International/Other550 469 
IntersegmentIntersegment(379)(332)Intersegment(468)(379)
Total salesTotal sales$10,460 $10,815 Total sales$12,933 $10,460 
Three Months Ended
January 2, 2021December 28, 2019
Operating income (loss):
Beef(a)
$528 $342 
Pork116 191 
Chicken(b)
(216)57 
Prepared Foods266 158 
International/Other11 10 
Total operating income705 758 
Total other expense89 101 
Income before income taxes$616 $657 
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Three Months Ended
January 1, 2022January 2, 2021
Operating income (loss):
Beef(a)
$956 $528 
Pork164 116 
Chicken(b)
140 (216)
Prepared Foods186 266 
International/Other11 
Total operating income1,455 705 
Total other expense45 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 infunds.
(b) Chicken segment results for the three months ended December 28, 2019, as further describedJanuary 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, 2021Three months ended January 1, 2022
Retail(a)
Foodservice(b)
International(c)
Industrial and Other(d)
IntersegmentTotal
Retail(a)
Foodservice(b)
International(c)
Industrial and Other(d)
IntersegmentTotal
BeefBeef$2,134 $821 $618 $323 $91 $3,987 Beef$2,218 $1,236 $856 $562 $130 $5,002 
PorkPork432 92 293 342 280 1,439 Pork478 136 304 398 310 1,626 
ChickenChicken1,436 1,185 152 50 2,831 Chicken1,633 1,560 221 448 28 3,890 
Prepared FoodsPrepared Foods1,303 740 31 39 2,113 Prepared Foods1,325 929 46 33 — 2,333 
International/OtherInternational/Other469 469 International/Other— — 550 — — 550 
IntersegmentIntersegment— — — — (379)(379)Intersegment— — — — (468)(468)
TotalTotal$5,305 $2,838 $1,563 $754 $$10,460 Total$5,654 $3,861 $1,977 $1,441 $— $12,933 
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Three months ended December 28, 2019Three months ended January 2, 2021
Retail(a)
Foodservice(b)
International(c)
Industrial and Other(d)
IntersegmentTotal
Retail(a)
Foodservice(b)
International(c)
Industrial and Other(d)
IntersegmentTotal
BeefBeef$1,857 $1,045 $514 $326 $96 $3,838 Beef$2,134 $821 $618 $323 $91 $3,987 
PorkPork400 117 280 360 222 1,379 Pork432 92 293 342 280 1,439 
ChickenChicken1,389 1,307 161 421 14 3,292 Chicken1,436 1,185 152 50 2,831 
Prepared FoodsPrepared Foods1,211 846 37 46 2,140 Prepared Foods1,303 740 31 39 — 2,113 
International/OtherInternational/Other498 498 International/Other— — 469 — — 469 
IntersegmentIntersegment— — — — (332)(332)Intersegment— — — — (379)(379)
TotalTotal$4,857 $3,315 $1,490 $1,153 $$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.

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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, 0no 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, 20211, 2022 was approximately $325$293 million. The total receivables under these programs were $26 million and $29$5 million at January 2, 20211, 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, 20211, 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.

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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 assessdetermine whether to accrue for loss contingencies based on our assessment of whether the likelihood of adverse judgmentspotential loss is probable, reasonably possible or outcomes to those matters, as well as ranges of probable losses,remote and to the extent losses area 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 isare 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 consideredcould be material to the Company’s Consolidated Financial Statements. We believe we have substantial defensesThere 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 behalfa series of a putative class of direct purchasers of poultry products, filed apurported federal class action complaintlawsuits 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. DecisionsIn 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 certificationmembers have opted out of the matter and summary judgment motions likelyare proceeding with individual direct actions making similar claims, and others may do so in the future.
18


Settlements
On January 19, 2021, we announced that we had reached agreement to be filedsettle 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 defendantsthe 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 andpursuing 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 ussettlements, 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 againstcharging four individual executives employed by two other poultry processing companies charging awith 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 chargesindictments against six moreadditional individuals, to charge a total of 10 executives and employees atas well as other poultry processing companies, forand 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 previouslyIn August 2021, the Company was granted conditional leniency by the courtDOJ 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

21


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 (collectively, the “Classes”). Under the terms of the settlements, we have agreed to pay the Classes an aggregate amount of $221.5 million in settlement of all outstanding claims brought by the Classes. 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 ofin New Mexico, Alaska and Washington have filed a complaintcomplaints 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 allegesthe Broiler Antitrust Civil Litigation and allege violations of New Mexico’sstate antitrust, unfair trade practice, and unjust enrichment laws based on allegations of conspiracies to manipulatelaws. The Company has not recorded any liability for the Georgia Dock, exchange informationforegoing 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 reduceofficials, including the supply of broiler chickens.
On March 1, 2017, we received a civil investigative demand (“CID”) from the OfficeOffices of the Attorney General Departmentfor 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 AntitrustGrower Litigation. The plaintiffs requestingallege, 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 providedclaims 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.
19

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 groupseries 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 complaintsplaintiffs 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 Statesfederal 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 lawsuitAttorney General in New Mexico and Alaska have filed complaints against us and certain of our pork subsidiaries, andas well as several other pork processing companies alleging activitiesand Agri Stats. The complaints are based on allegations similar to those asserted in violationthe 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 tosupply 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 dismissforegoing 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.

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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 beencourts which were then transferred to the United States District Court for the District of Minnesota action and are consolidated for pre-trial proceedingsand 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. WeOn February 18, 2021, we moved to dismiss the second
amended complaint, whichcomplaints, 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 allegingcontaining 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 allegingcontaining 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.
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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 complaintcomplaints 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 additionalAdditional lawsuits were filed by individuals making similar allegations. The plaintiffs filedallegations were consolidated including an amended consolidated complaint containing additional allegations concerning turkey processing plants and namednaming additional defendants. We moved to dismiss the amended consolidated complaint. On September 16, 2020, the court dismissed claims against Tysonus 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 grantedparties are now conducting discovery. In the plaintiffs leavethird 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.
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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 regardingfrom 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 continueCompany 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.
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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.

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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 ourOur 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 increasedThe most significant challenge we face is the availability of team members to operate our operating costs and negatively impactedproduction facilities as our sales volumes forproduction 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 anticipatedwe expect this trend to continue throughthroughout fiscal 2021. Each2022. In the first quarter of fiscal 2022, demand for our segments has also experienced a shift inretail products remained strong and foodservice demand continued to recover from foodservice to retail; however, the volume increases in retail have not been sufficient to offsetimpacts 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, whilereturn to more historic levels. However, the long-term impactimpacts 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 uncertaincontain 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.
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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 companyCompany 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.
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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 dataThree Months Ended
January 1, 2022January 2, 2021
Net income attributable to Tyson$1,121 $467 
Net income attributable to Tyson – per diluted share3.07 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 dataThree Months Ended
January 2, 2021December 28, 2019
Net income attributable to Tyson$467 $505 
Net income attributable to Tyson – per diluted share1.28 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.

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Summary of Results
Sales
in millionsin millionsThree Months Endedin millionsThree Months Ended
January 2, 2021December 28, 2019January 1, 2022January 2, 2021
SalesSales$10,460 $10,815 Sales$12,933 $10,460 
Change in sales volumeChange in sales volume(4.4)%Change in sales volume0.3 %
Change in average sales priceChange in average sales price4.2 %Change in average sales price19.6 %
Sales growthSales growth(3.3)%Sales growth23.6 %
First quarter – Fiscal 20212022 vs Fiscal 20202021
Sales Volume – Sales were negativelypositively impacted by a decreasean increase in sales volume, which accounted for a decreasean increase of $480$36 million, driven by decreased volumesincreased 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 throughputand 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 attributabledue to favorable product mix related to strong demand in the retail channel across allcurrent inflationary environment and recovery of our segments.rapidly rising costs.
The above change in average sales price for the three months ended January 2, 2021first 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 millionsin millionsThree Months Endedin millionsThree Months Ended
January 2, 2021December 28, 2019January 1, 2022January 2, 2021
Cost of salesCost of sales$9,283 $9,375 Cost of sales$10,918 $9,283 
Gross profitGross profit$1,177 $1,440 Gross profit$2,015 $1,177 
Cost of sales as a percentage of salesCost of sales as a percentage of sales88.7 %86.7 %Cost of sales as a percentage of sales84.4 %88.7 %
First quarter – Fiscal 20212022 vs Fiscal 20202021
Cost of sales decreased $92increased $1,635 million. LowerHigher sales volume decreasedincreased 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 hogcattle costs of approximately $50$445 million in our PorkBeef segment.
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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.
DecreaseIncrease in live cattlehog costs of approximately $150$105 million in our BeefPork segment.
DecreaseIncrease 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 BeefChicken 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 lowerhigher sales volume was primarily driven by decreasedincreased volumes in our Chicken and Pork segments offset by reduced sales volume in our Pork, ChickenBeef 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.

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Selling, General and Administrative 
in millionsin millionsThree Months Endedin millionsThree Months Ended
January 2, 2021December 28, 2019January 1, 2022January 2, 2021
Selling, general and administrative expenseSelling, general and administrative expense$472 $682 Selling, general and administrative expense$560 $472 
As a percentage of salesAs a percentage of sales4.5 %6.3 %As a percentage of sales4.3 %4.5 %
First quarter – Fiscal 20212022 vs Fiscal 20202021
DecreaseIncrease of $210$88 million in selling, general and administrative was primarily driven by:
DecreaseIncrease of $123$55 million from the change in the impact of a cattle supplier’ssupplier's misappropriation of Company funds, resulting fromas 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 millionno gain or loss recognized in the three months ended December 28, 2019.January 1, 2022.
DecreaseIncrease of $48$20 million in marketing, advertising and promotion expenses.
Decrease of $43 million from restructuring andtechnology 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 millionsThree Months Ended
January 2, 2021December 28, 2019
Cash interest expense$114 $123 
Non-cash interest expense(4)(3)
Total interest expense$110 $120 

in millionsThree Months Ended
January 1, 2022January 2, 2021
Cash interest expense$105 $114 
Non-cash interest expense(5)(4)
Total interest expense$100 $110 
First quarter – Fiscal 20212022 vs Fiscal 20202021
Cash interest expense primarily included interest expense related to our senior notes, and term loan, in addition to commitment fees incurred on our revolving credit facility. The decrease in cash interest expense in fiscal 20212022 was primarily due to repayments of term loans and the change in outstanding commercial paper as well as the settlementredemption of the 2020 notes duringAugust 2021 Notes in fiscal 2020, partially offset by interest expense related to the term loan facility.2021.
Effective Tax RateOther (Income) Expense, net
Three Months Ended
January 2, 2021December 28, 2019
23.4 %22.5 %
in millionsThree Months Ended
January 1, 2022January 2, 2021
Total other (income) expense, net$(52)$(19)
First quarter – Fiscal 20212022
Included $22 million of production facilities fires insurance proceeds and a $30 million gain on an equity investment due to an observable price change.
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Effective Tax Rate
Three Months Ended
January 1, 2022January 2, 2021
20.2 %23.4 %
First quarter – Fiscal 2022 vs Fiscal 20202021
Our effective income tax rate was 23.4%20.2% for the first quarter of fiscal 20212022 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 thandecreased by various tax benefits. Additionally, the federal statutoryeffective 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.

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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 millionsin millionsSalesin millionsSales
Three Months EndedThree Months Ended
January 2, 2021December 28, 2019January 1, 2022January 2, 2021
BeefBeef$3,987 $3,838 Beef$5,002 $3,987 
PorkPork1,439 1,379 Pork1,626 1,439 
ChickenChicken2,831 3,292 Chicken3,890 2,831 
Prepared FoodsPrepared Foods2,113 2,140 Prepared Foods2,333 2,113 
International/OtherInternational/Other469 498 International/Other550 469 
Intersegment salesIntersegment sales(379)(332)Intersegment sales(468)(379)
TotalTotal$10,460 $10,815 Total$12,933 $10,460 
in millionsin millionsOperating Income (Loss)in millionsOperating Income (Loss)
Three Months EndedThree Months Ended
January 2, 2021December 28, 2019January 1, 2022January 2, 2021
BeefBeef$528 $342 Beef$956 $528 
PorkPork116 191 Pork164 116 
ChickenChicken(216)57 Chicken140 (216)
Prepared FoodsPrepared Foods266 158 Prepared Foods186 266 
International/OtherInternational/Other11 10 International/Other11 
TotalTotal$705 $758 Total$1,455 $705 
Beef Segment Results
in millionsin millionsThree Months Endedin millionsThree Months Ended
January 2, 2021December 28, 2019ChangeJanuary 1, 2022January 2, 2021Change
SalesSales$3,987 $3,838 $149 Sales$5,002 $3,987 $1,015 
Sales volume changeSales volume change5.6 %Sales volume change(6.2)%
Average sales price changeAverage sales price change(1.7)%Average sales price change31.7 %
Operating incomeOperating income$528 $342 $186 Operating income$956 $528 $428 
Operating marginOperating margin13.2 %8.9 %Operating margin19.1 %13.2 %
First quarter – Fiscal 20212022 vs Fiscal 20202021
Sales Volume – Sales volume increased primarilydecreased 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-readyas input costs such as live cattle.cattle, labor, freight and transportation costs increased and demand for our beef products remained strong.
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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 relateddue 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.
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Pork Segment Results
in millionsin millionsThree Months Endedin millionsThree Months Ended
January 2, 2021December 28, 2019ChangeJanuary 1, 2022January 2, 2021Change
SalesSales$1,439 $1,379 $60 Sales$1,626 $1,439 $187 
Sales volume changeSales volume change(3.0)%Sales volume change0.2 %
Average sales price changeAverage sales price change7.4 %Average sales price change12.8 %
Operating incomeOperating income$116 $191 $(75)Operating income$164 $116 $48 
Operating marginOperating margin8.1 %13.9 %Operating margin10.1 %8.1 %
First quarter – Fiscal 20212022 vs Fiscal 20202021
Sales Volume – Sales volume decreased due towas up slightly as strong global demand was offset by the temporary idling ofimpacts associated with a production facilitychallenging 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 millionsThree Months Ended
January 1, 2022January 2, 2021Change
Sales$3,890 $2,831 $1,059 
Sales volume change3.6 %
Average sales price change19.9 %
Operating income (loss)$140 $(216)$356 
Operating margin3.6 %(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 primarilyincreased due to production inefficienciesincreased sales volume and direct incremental expenseshigher 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 periodsa 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
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Prepared Foods Segment Results
in millionsin millionsThree Months Endedin millionsThree Months Ended
January 2, 2021December 28, 2019ChangeJanuary 1, 2022January 2, 2021Change
SalesSales$2,831 $3,292 $(461)Sales$2,333 $2,113 $220 
Sales volume changeSales volume change(7.0)%Sales volume change(2.6)%
Average sales price changeAverage sales price change2.7 %Average sales price change13.0 %
Operating income/(loss)$(216)$57 $(273)
Operating incomeOperating income$186 $266 $(80)
Operating marginOperating margin(7.6)%1.7 %Operating margin8.0 %12.6 %
First quarter – Fiscal 20212022 vs Fiscal 20202021
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 impactsprimarily 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 salespricing.
International/Other Results
in millionsThree Months Ended
January 1, 2022January 2, 2021Change
Sales$550 $469 $81 
Operating income (loss)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 changeincreased 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 millionsThree Months Ended
January 2, 2021December 28, 2019Change
Sales$2,113 $2,140 $(27)
Sales volume change(8.8)%
Average sales price change7.5 %
Operating income$266 $158 $108 
Operating margin12.6 %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 spendmaterials and favorable product mix partially offset by increased operating costs, including a $35 million increase in raw materialother input costs as well as production inefficiencies related to COVID-19.
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International/Other Results
in millionsThree Months Ended
January 2, 2021December 28, 2019Change
Sales$469 $498 $(29)
Operating income11 10 
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 materialincreased 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 millionsin millionsThree Months Endedin millionsThree Months Ended
January 2, 2021December 28, 2019January 1, 2022January 2, 2021
Net incomeNet 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 amortizationDepreciation and amortization298 288 Depreciation and amortization300 298 
Deferred income taxesDeferred income taxes17 (13)Deferred income taxes77 17 
Other, netOther, net18 27 Other, net11 18 
Net changes in operating assets and liabilitiesNet changes in operating assets and liabilities580 83 Net changes in operating assets and liabilities(82)580 
Net cash provided by operating activitiesNet cash provided by operating activities$1,385 $894 Net cash provided by operating activities$1,432 $1,385 
Cash flows associated with net changes in operating assets and liabilities for the three months ended:
January 2, 2021 – Increased primarily from increased taxes payable, accounts payable and legal accrual, partially offset by decreased accrued salaries, wages and benefits. The increase in taxes payable isnet cash provided by operating activities was due primarily due to timinghigher earnings, as a result of strong operations in fiscal 2022, offset by higher payments partly duerelated to payroll tax deferrals associated with the CARES Act. The increase in accounts payable is largely due to timing of payments. The decrease in accrued salaries, wages and benefits is primarily due to the payment of the annual incentive plan.
December 28, 2019 – Increased primarily from decreased accounts receivableplan and increased income taxes payable, partially offsetlegal accruals. Comparative changes in working capital balances were also positively impacted by increased inventories. Thethe decrease in accounts receivable is primarily due toas a result of timing of sales, and receipts. The increaseoffset by decrease in income taxesaccounts payable is primarily due to the timing of tax payments. The increase in inventory is primarily due to increased volumes and costs in the Beef segment.
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Cash Flows from Investing Activities
in millionsThree Months Ended
January 2, 2021December 28, 2019
Additions to property, plant and equipment$(289)$(312)
Proceeds from sale of (purchases of) marketable securities, net(16)
Proceeds from sale of business— 29 
Other, net29 (82)
Net cash used for investing activities$(259)$(381)
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in millionsThree Months Ended
January 1, 2022January 2, 2021
Additions to property, plant and equipment$(408)$(289)
Proceeds from sale of (purchases of) marketable securities, net— 
Other, net(51)29 
Net cash used for investing activities$(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 20212022 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 20212022 primarily included additional investment in other investments and changes in deposits for capital expenditures. For the first three months of fiscal 2020 primarily included2021, Other, net was impacted by changes in deposits for capital expenditures.
Cash Flows from Financing Activities
in millionsThree Months Ended
January 2, 2021December 28, 2019
Proceeds from issuance of debt$29 $38 
Payments on debt(29)(31)
Borrowings on revolving credit facility— 180 
Payments on revolving credit facility— (250)
Proceeds from issuance of commercial paper— 4,675 
Repayments of commercial paper— (4,855)
Purchases of Tyson Class A common stock(17)(132)
Dividends(159)(150)
Stock options exercised20 
Other, net(1)(2)
Net cash used for financing activities$(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 millionsThree Months Ended
January 1, 2022January 2, 2021
Proceeds from issuance of debt$26 $29 
Payments on debt(43)(29)
Purchases of Tyson Class A common stock(348)(17)
Dividends(164)(159)
Stock options exercised46 
Other, net(1)(1)
Net cash used for financing activities$(484)$(173)
Purchases of Tyson Class A stock included:included
$100300 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, 20211, 2022 reflected a 6%3% increase to our fiscal 20202021 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 millionsin millionsin 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 equivalentsCash and cash equivalents$2,406 Cash and cash equivalents$2,956 
Short-term investmentsShort-term investments— Short-term investments— 
Term loan facilityMarch 2022$1,500 $— $1,500 — 
Revolving credit facilityRevolving credit facilityMarch 2023$1,750 $— $— 1,750 Revolving credit facilitySeptember 2026$2,250 $— $— 2,250 
Commercial paperCommercial paper— Commercial paper— 
Total liquidityTotal 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 repaypay 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 1.81.7 to 1 at January 1, 2022 and 1.6 to 1 at October 2, 2021 and October 3, 2020.

2021.
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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 FacilitiesFacility
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 facilitiesfacility 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 2.1x1.0x 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 LoanRevolving 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'sMoody'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, 2021Borrowing Spread
March 26, 2021 through March 27, 2022
A-/A3/A- or above1.250 %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 lower2.000 %2.250 %

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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 RatRate) and letter of credit fees and borrowings (“Undrawn Letter of Credit Fee andAll-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 RateAll-in Borrowing Spread
A-/A3/A- or above0.090 %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 lower0.225 %1.625 %
In the event the rating levels are split,fall within different levels, the applicable fees and spreadrate will be based upon the rating level in effect for twohigher 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 spreadtwo Levels, then the Applicable Rate will be based upon the rating levelLevel that is betweenone Level below the rating levels of the other two rating agencies.higher Level.
Debt Covenants
Our revolving credit and term loan facilities containfacility 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, 20211, 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.
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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.
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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 hasthereto 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.
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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 ofchanges 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
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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 valueEffect of 10% change in fair valuein millionsEffect of 10% change in fair valuein millions
January 2, 2021October 3, 2020January 1, 2022October 2, 2021
Livestock:Livestock:Livestock:
Live CattleLive Cattle$19 $24 Live Cattle$37 $42 
Lean HogsLean Hogs19 19 Lean Hogs26 38 
Grain:Grain:Grain:
Corn Corn16 23 Corn40 24 
Soybean Meal Soybean Meal35 28 Soybean Meal42 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.
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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 $44an $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.

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risks.
EBITDA Reconciliations
A reconciliation of net income to EBITDA is as follows (in millions, except ratio data):
Three Months EndedFiscal Year EndedTwelve Months EndedThree Months EndedFiscal Year EndedTwelve Months Ended
January 2, 2021December 28, 2019October 3, 2020January 2, 2021January 1, 2022January 2, 2021October 2, 2021January 1, 2022
Net incomeNet income$472 $509 $2,071 $2,034 Net income$1,126 $472 $3,060 $3,714 
Less: Interest incomeLess: Interest income(2)(3)(10)(9)Less: Interest income(3)(2)(8)(9)
Add: Interest expenseAdd: Interest expense110 120 485 475 Add: Interest expense100 110 428 418 
Add: Income tax expenseAdd: Income tax expense144 148 593 589 Add: Income tax expense284 144 981 1,121 
Add: DepreciationAdd: Depreciation229 217 900 912 Add: Depreciation236 229 934 941 
Add: Amortization (a)Add: Amortization (a)66 68 278 276 Add: Amortization (a)62 66 261 257 
EBITDAEBITDA$1,019 $1,059 $4,317 $4,277 EBITDA$1,805 $1,019 $5,656 $6,442 
Total gross debtTotal gross debt$11,339 $11,357 Total gross debt$9,348 $9,364 
Less: Cash and cash equivalentsLess: Cash and cash equivalents(1,420)(2,406)Less: Cash and cash equivalents(2,507)(2,956)
Less: Short-term investmentsLess: Short-term investments— — Less: Short-term investments— — 
Total net debtTotal net debt$9,919 $8,951 Total net debt$6,841 $6,408 
Ratio Calculations:Ratio Calculations:Ratio Calculations:
Gross debt/EBITDAGross debt/EBITDA2.6x2.7xGross debt/EBITDA1.7x1.5x
Net debt/EBITDANet debt/EBITDA2.3x2.1xNet debt/EBITDA1.2x1.0x
(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, 20202, 2021, and $18 million for the twelve months ended January 2, 20211, 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.
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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.

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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, thereThere 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.

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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 movedSince 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 dismisssettle all claims with the complaints,putative direct purchaser class for $4.625 million and in decisionswith 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 deniedgranted 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 139,000137,000 team members and, at any time, have various employment practices matters outstanding. In the aggregate, these matters are significantimportant to the Company, and we devote significantconsiderable 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.
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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, 202035,565 $59.13 — 18,851,028 
Nov. 1, 2020 to Dec. 5, 2020189,482 62.32 — 18,851,028 
Dec. 6, 2020 to Jan. 2, 202144,751 67.46 — 18,851,028 
Total269,798 $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, 202183,352 $79.51 — 18,851,028 
October 31, 2021 to December 4, 20211,999,619 82.27 1,535,966 17,315,062 
December 5, 2021 to January 1, 20222,099,714 84.44 2,054,364 15,260,698 
Total4,182,685 $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 269,798592,355 shares during the three months ended January 2, 20211, 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 108,976199,698 shares purchased in open market transactions and 160,822392,657 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)SharesWe purchased 3.6 million shares during the three months ended January 2, 20211, 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.
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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*
**
10.2*
**
10.3*
**
10.4*
**
10.5*
**
10.6*
**
10.7*
**
10.8*
**
10.910.4*
**
10.10*
**
10.11*
**
10.12*
**
10.13*
**
10.14*
**
10.15*
**
10.16*
**
31.1**
31.2**
32.1***
32.2***
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.
104Cover 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, 20217, 2022/s/ Stewart Glendinning
Stewart Glendinning
Executive Vice President and Chief Financial Officer
Date: February 11, 20217, 2022/s/ Phillip W. Thomas
Phillip W. Thomas
Vice President, Controller and Chief Accounting Officer


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