~~(c) Additional information regarding the DOJ antitrust fine is included in "Note 20. Commitments and Contingencies."~~

1918

~~12.~~\10. INCOME TAXES

The Company recorded income tax expense of ~~$57.9~~$25.5 million, a ~~37.9%~~(63.1)% effective tax rate, for the ~~nine~~six months ended ~~September~~June 27, ~~2020~~2021 compared to income tax expense of ~~$142.3~~$35.6 million, a ~~28.1%~~36.8% effective tax rate, for the ~~nine~~six months ended ~~September 29, 2019.~~June 28, 2020. The decrease in income tax expense in ~~2020~~2021 resulted primarily from a decrease in pre-tax income ~~and the effects of foreign currency fluctuations,~~ partially offset by the recognition of ~~a non-deductible fine of $110.5 million accrued during the year, refer to “Note 20. Commitments and Contingencies” for more information. In addition, the Company recognized~~ deferred tax expense of ~~$10.6~~$32.2 million related to ~~the repeal of the previously enacted reduction~~enactment of the U.K. ~~corporate~~ tax rate change to ~~17.0%. Therefore, the current corporate tax rate in the U.K. is maintained at 19.0%.~~25% effective April 1, 2023.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carry back and carry forward periods), projected future taxable income and tax-planning strategies in making this assessment. As of ~~September~~June 27, ~~2020,~~2021, the Company did not believe it had sufficient positive evidence to conclude that realization of a portion of its foreign net deferred tax assets are more likely than not to be realized.

For the ~~nine~~six months ended ~~September~~June 27, ~~2020~~2021 and ~~September 29, 2019,~~June 28, 2020, there is a tax effect of ~~$(1.0)~~$(10.2) million and ~~$2.0~~$9.0 million, respectively, reflected in other comprehensive income.

For the ~~nine~~six months ended ~~September~~June 27, ~~2020~~2021 and ~~September 29, 2019,~~June 28, 2020, there are immaterial tax effects reflected in income tax expense due to excess tax benefits and shortfalls related to ~~share-based~~stock-based compensation.

The Company and its subsidiaries file a variety of consolidated and standalone income tax returns in various jurisdictions. In the normal course of business, our income tax filings are subject to review by various taxing authorities. In general, tax returns filed by the Company and its subsidiaries for years prior to 2011 are no longer subject to examination by tax authorities.

As of July 27, 2020, JBS ~~own~~owns in excess of 80% of ~~Pilgrim's.~~Pilgrim’s. JBS has a federal tax election to file a consolidated tax return with subsidiaries in which it holds an ownership of at least 80%. The Company is currently analyzing the related impacts to our federal and state tax return filings.

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~~13.~~11. DEBT

Long-term debt and other borrowing arrangements, including current notes payable to banks, consisted of the following components:


	Maturity	June 27, 2021		December 27, 2020
		(In thousands)
Senior notes payable, net of discount at 4.25%	2031	$	990,190	$	0
Senior notes payable, net of discount at 5.875%	2027	845,508		845,149
Senior notes payable, net of premium and discount at 5.75%	2025	0		1,001,693
U.S. Credit Facility (defined below):
Term note payable at 1.34%	2023	437,500		450,000
Revolving note payable at 3.50%	2023	40,500		0
Moy Park Bank of Ireland Revolving Facility with notes payable at LIBOR or EURIBOR plus 1.25% to 2.00%	2023	0		0
Mexico Credit Facility (defined below) with notes payable at TIIE plus 1.50%	2023	0		0
Secured loans with payables at weighted average of 3.34%	2022	23		38
Finance lease obligations	Various	1,456		1,664

Long-term debt		2,315,177		2,298,544
Less: Current maturities of long-term debt		(25,453)		(25,455)
Long-term debt, less current maturities		2,289,724		2,273,089
Less: Capitalized financing costs		(19,426)		(17,543)
Long-term debt, less current maturities, net of capitalized financing costs		$	2,270,298	$	2,255,546

Maturity September 27, 2020 December 29, 2019
(In thousands)
Senior notes payable, net of premium and discount at 5.75% 2025 $ 1,001,793 $ 1,002,095
Senior notes payable, net of discount at 5.875% 2027 844,972 844,433
U.S. Credit Facility (defined below):
Term note payable at 1.42% 2023 456,250 475,000
Revolving note payable at 1.44% 2023 350,000 0
Moy Park Bank of Ireland Revolving Facility with notes payable at
LIBOR or EURIBOR plus 1.25% to 2.00%
2023 0 0
Mexico Credit Facility (defined below) with notes payable at
TIIE plus 1.50%
2023 0 0
Secured loans with payables at weighted average of 3.34% Various 64 948
Finance lease obligations Various 1,783 2,150
Long-term debt 2,654,862 2,324,626
Less: Current maturities of long-term debt (25,485) (26,392)
Long-term debt, less current maturities 2,629,377 2,298,234
Less: Capitalized financing costs (18,709) (22,205)
Long-term debt, less current maturities, net of capitalized
financing costs $ 2,610,668 $ 2,276,029
19

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U.S. Senior Notes

On March 11, 2015, the Company completed a sale of $500.0 million aggregate principal amount of its 5.75% senior notes due 2025. On September 29, 2017, the Company completed an add-on offering of $250.0 million of these senior notes. The issuance price of this add-on offering was 102.0%, which created gross proceeds of $255.0 million. The additional $5.0 million will be amortized over the remaining life of the senior notes. On March 7, 2018, the Company completed another add-on offering of $250.0 million of these senior notes (together with the senior notes issued in March 2015 and September 2017, the “Senior Notes due 2025”). The issuance price of this add-on offering was 99.25%, which created gross proceeds of $248.1 million. The $1.9 million discount will be amortized over the remaining life of the senior notes. Each issuance of the Senior Notes due 2025 is treated as a single class for all purposes under the 2015 Indenture (defined below) and have the same terms.

The Senior Notes due 2025 are governed by, and were issued pursuant to, an indenture dated as of March 11, 2015 by and among the Company, its guarantor subsidiaries and ~~U.S.~~Regions Bank, ~~National Association,~~ as trustee (the “2015 Indenture”). The 2015 Indenture provides, among other things, that the Senior Notes due 2025 bear interest at a rate of 5.75% per annum from the date of issuance until maturity, payable semi-annually in cash in arrears, beginning on September 15, 2015 for the Senior Notes due 2025 that were issued in March 2015 and beginning on March 15, 2018 for the Senior Notes due 2025 that were issued in September 2017 and March 2018.

On April 8, 2021, the Company announced the early tender results in connection with its previously announced offer to purchase for cash any and all of the $1.0 billion aggregate principal amount of the Senior Notes due 2025. Outstanding principal totaling $896.1 million, representing 89.6% of the Senior Notes due 2025, was validly tendered. On April 14, 2021, the Company redeemed $103.9 million, which represented the remaining outstanding principal balance of the Senior Notes due 2025. Tender and call premium of $21.3 million, capitalized financing costs of $4.6 million, remaining original issue premium of $2.6 million from the add-on offering in September 2017 and remaining original issue discount of $1.1 million from the add-on offering in March 2018 were recognized in earnings during the second quarter of 2021.

On September 29, 2017, the Company completed a sale of $600.0 million aggregate principal amount of its 5.875% senior notes due 2027. On March 7, 2018, the Company completed an add-on offering of $250.0 million of these senior notes (together with the senior notes issued in September 2017, the “Senior Notes due 2027”). The issuance price of this add-on offering was 97.25%, which created gross proceeds of $243.1 million. The $6.9 million discount will be amortized over the remaining life of the Senior Notes due 2027. Each issuance of the Senior Notes due 2027 is treated as a single class for all purposes under the 2017 Indenture (defined below) and have the same terms.

The Senior Notes due 2027 are governed by, and were issued pursuant to, an indenture dated as of September 29, 2017 by and among the Company, its guarantor subsidiaries and ~~U.S.~~Regions Bank, ~~National Association,~~ as trustee (the “2017 Indenture”). The 2017 Indenture provides, among other things, that the Senior Notes due 2027 bear interest at a rate of 5.875% per annum from the date of issuance until maturity, payable semi-annually in cash in arrears, beginning on March 30, 2018 for the Senior Notes due 2027 that were issued in September 2017 and beginning on March 15, 2018 for the Senior Notes due 2027 that were issued in March 2018.

On April 8, 2021, the Company completed a sale of $1.0 billion aggregate principal amount of its 4.25% sustainability-linked senior notes due 2031 (“Senior Notes due 2031”). The Company used the net proceeds, together with cash on hand, to redeem the Senior Notes due 2025. The issuance price of this offering was 98.994%, which created gross proceeds of $989.9 million. The $10.1 million discount will be amortized over the remaining life of the Senior Notes due 2031. Each issuance of the Senior Notes due 2031 is treated as a single class for all purposes under the 2021 Indenture (defined below) and have the same terms.

The Senior Notes due 2031 are governed by, and were issued pursuant to, an indenture dated as of April 8, 2021 by and among the Company, its guarantor subsidiaries and Regions Bank, as trustee (the “2021 Indenture”). The 2021 Indenture provides, among other things, that the Senior Notes due 2031 bear interest at a rate of 4.25% per annum payable semi-annually on April 15 and October 15 of each year, beginning on October 15, 2021. From and including October 15, 2026, the interest rate payable on the notes shall be increased to 4.50% per annum unless the Company has notified the trustee at least 30 days prior to October 15, 2026 that in respect of the year ended December 31, 2025, (1) the Company’s greenhouse gas emissions intensity reduction target of 17.679% by December 31, 2025 from a 2019 baseline (the “Sustainability Performance Target”) has been satisfied and (2) the satisfaction of the Sustainability Performance Target has been confirmed by a qualified provider of third-party assurance or attestation services appointed by the Company to review the Company’s statement of the greenhouse gas emissions intensity in accordance with its customary procedures.

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The Senior Notes due 2025, the Senior Notes due 2027 and the Senior Notes due ~~2027~~2031 were and are each guaranteed on a senior unsecured basis by the Company’s guarantor subsidiaries. In addition, any of the Company’s other existing or future domestic restricted subsidiaries that incur or guarantee any other indebtedness (with limited exceptions) must also guarantee the Senior Notes due ~~2025~~2027 and the Senior Notes due ~~2027.~~2031. The Senior Notes due 2025, ~~and~~ the Senior Notes due 2027 and the Senior Notes due 2031 and related guarantees were and are unsecured senior obligations of the Company and its guarantor subsidiaries and rank equally with all of the Company’s and its guarantor subsidiaries’ other unsubordinated indebtedness. The Senior Notes due ~~2025,~~2027, the ~~2015~~2017 Indenture, the Senior Notes due ~~2027~~2031 and the ~~2017~~2021 Indenture also contain customary covenants and events of default, including failure to pay principal or interest on the Senior Notes due ~~2025~~2027 and the Senior Notes due ~~2027,~~2031, respectively, when due, among others.

U.S. Credit Facility

On July 20, 2018, the Company, and certain of the Company’s subsidiaries entered into a Fourth Amended and Restated Credit Agreement (the “U.S. Credit Facility”) with CoBank, ACB, as administrative agent and collateral agent, and the other lenders party thereto. The U.S. Credit Facility provides for a $750.0 million revolving credit commitment and a term loan commitment of up to $500.0 million (the “Term Loans”). The Company used the proceeds from the term loan commitment under the U.S. Credit Facility, together with cash on hand, to repay the outstanding loans under the Company’s previous credit agreement with Coöperatieve Rabobank U.A., New York Branch, as administrative agent, and the other lenders and financial institutions party thereto.

The U.S. Credit Facility includes an accordion feature that allows the Company, at any time, to increase the aggregate revolving loan and term loan commitments by up to an additional $1.25 billion, subject to the satisfaction of certain conditions, including obtaining the lenders’ agreement to participate in the increase.

The revolving loan commitment under the U.S. Credit Facility matures on July 20, 2023. All principal on the Term Loans is due at maturity on July 20, 2023. Installments of principal are required to be made, in an amount equal to 1.25% of the original principal amount of the Term Loans, on a quarterly basis prior to the maturity date of the Term Loans. Covenants in the U.S. Credit Facility also require the Company to use the proceeds it receives from certain asset sales and specified debt or equity issuances and upon the occurrence of other events to repay outstanding borrowings under the U.S. Credit Facility. As of ~~September~~June 27, ~~2020,~~2021, the Company had outstanding borrowings under the term loan commitment of ~~$456.3~~$437.5 million. As of ~~September~~June 27, ~~2020,~~2021, the Company had outstanding borrowings, outstanding letters of credit and available borrowings under the revolving credit commitment of ~~$350.0~~$40.5 million, ~~$40.4~~$38.5 million and ~~$359.6~~$671.0 million, respectively.

The U.S. Credit Facility includes a $75.0 million sub-limit for swingline loans and a $125.0 million sub-limit for letters of credit. Outstanding borrowings under the revolving loan commitment and the Term Loans bear interest at a per annum rate equal to (1) in the case of LIBOR loans, LIBOR plus 1.25% through August 2, 2018 and, thereafter, based on the Company’s net senior secured leverage ratio, between LIBOR plus 1.25% and LIBOR plus 2.75% and (2) in the case of alternate base rate loans, the base rate plus 0.25% through August 2, 2018 and, based on the Company’s net senior secured leverage ratio, between the base rate plus 0.25% and base rate plus 1.75% thereafter.

The U.S. Credit Facility contains customary financial and other various covenants for transactions of this type, including restrictions on the ~~Company's~~Company’s ability to incur additional indebtedness, incur liens, pay dividends, make certain restricted payments, consummate certain asset sales, enter into certain transactions with the Company’s affiliates, or merge, consolidate and/or sell or dispose of all or substantially all of its assets, among other things. The U.S. Credit Facility requires the Company to comply with a minimum level of tangible net worth covenant. The U.S. Credit Facility also provides that the Company may not incur capital expenditures in excess of $500.0 million in any fiscal year.

All obligations under the U.S. Credit Facility continue to be unconditionally guaranteed by certain of the Company’s subsidiaries and continue to be secured by a first priority lien on (1) the accounts receivable and inventory of the Company and its ~~non-Mexico~~domestic subsidiaries, To-Ricos, Ltd and To-Ricos Distribution, Ltd, (2) 100% of the equity interests in the ~~Company's~~Company’s domestic subsidiaries, To-Ricos, Ltd. and To-Ricos Distribution, Ltd., and 65% of the equity interests in its direct foreign subsidiaries and (3) substantially all of the assets of the Company and the guarantors under the U.S. Credit Facility. The Company is currently in compliance with the covenants under the U.S. Credit Facility.

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Moy Park Bank of Ireland Revolving Facility Agreement

On June 2, 2018, Moy Park Holdings (Europe) Ltd. and its subsidiaries entered into an unsecured multicurrency revolving facility agreement (the “Bank of Ireland Facility Agreement”) with the Governor and Company of the Bank of Ireland, as agent, and the other lenders party thereto. The Bank of Ireland Facility Agreement provides for a multicurrency revolving loan commitment of up to £100.0 million. The multicurrency revolving loan commitments under the Bank of Ireland Facility Agreement mature on June 2, 2023. Outstanding borrowings under the Bank of Ireland Facility Agreement bear interest at a rate per annum equal to the sum of (1) LIBOR or, in relation to any loan in euros, EURIBOR, plus (2) a margin, ranging

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from 1.25% to 2.00% based on Leverage (as defined in the Bank of Ireland Facility Agreement). All obligations under the Bank of Ireland Facility Agreement are guaranteed by certain of Moy ~~Park's~~Park’s subsidiaries. As of ~~September~~June 27, ~~2020,~~2021, the U.S. dollar-equivalent loan commitment and borrowing availability were both ~~$127.5~~$138.8 million. As of ~~September~~June 27, ~~2020,~~2021, there were 0 outstanding borrowings under the Bank of Ireland Facility Agreement.

The Bank of Ireland Facility Agreement contains representations and warranties, covenants, indemnities and conditions that the Company believes are customary for transactions of this type. Pursuant to the terms of the Bank of Ireland Facility Agreement, Moy Park is required to meet certain financial and other restrictive covenants. Additionally, Moy Park is prohibited from taking certain actions without consent of the lenders, including, without limitation, incurring additional indebtedness, entering into certain mergers or other business combination transactions, permitting liens or other encumbrances on its assets and making restricted payments, including dividends, in each case except as expressly permitted under the Bank of Ireland Facility Agreement. The Bank of Ireland Facility Agreement contains events of default that the Company believes are customary for transactions of this type. If a default occurs, any outstanding obligations under the Bank of Ireland Facility Agreement may be accelerated.

Mexico Credit Facility

On December 14, 2018, certain of the ~~Company's~~Company’s Mexican subsidiaries entered into an unsecured credit agreement (the “Mexico Credit Facility”) with Banco del Bajio, Sociedad Anónima, Institución de Banca Múltiple, as lender. The loan commitment under the Mexico Credit Facility is $1.5 billion Mexican pesos and can be borrowed on a revolving basis. Outstanding borrowings under the Mexico Credit Facility accrue interest at a rate equal to the 28-Day Interbank Equilibrium Interest Rate plus 1.5%. The Mexico Credit Facility contains covenants and defaults that the Company believes are customary for transactions of this type. The Mexico Credit Facility will be used for general corporate and working capital purposes. The Mexico Credit Facility will mature on December 14, 2023. As of ~~September~~June 27, ~~2020,~~2021, the U.S. dollar-equivalent of the loan commitment and borrowing availability ~~were both $67.2~~was $75.7 million. As of ~~September~~June 27, ~~2020,~~2021, there were 0 outstanding borrowings under the Mexico Credit Facility.

~~14. STOCKHOLDERS'~~12. STOCKHOLDERS’ EQUITY

Accumulated Other Comprehensive ~~Loss~~Income

The following tables provide information regarding the changes in accumulated other comprehensive ~~loss:~~

Nine Months Ended September 27, 2020(a)
Losses Related to Foreign Currency Translation Unrealized Losses on Derivative Financial Instruments Classified as Cash Flow Hedges Losses Related to Pension and Other Postretirement Benefits Unrealized Holding Losses on Available-for-Sale Securities Total
(In thousands)
Balance, beginning of period $ (1,108) $ (2,406) $ (71,615) $ 0 $ (75,129)
Other comprehensive income (loss) before
reclassifications (48,921) 3,403 (44,641) 2 (90,157)
Amounts reclassified from accumulated other
comprehensive loss to net income 0 (1,039) 846 (14) (207)
Currency translation 0 (27) 0 0 (27)
Net current period other comprehensive income
(loss) (48,921) 2,337 (43,795) (12) (90,391)
Balance, end of period $ (50,029) $ (69) $ (115,410) $ (12) $ (165,520)
income:


	Six Months Ended June 27, 2021(a)
	Gains Related to Foreign Currency Translation		Losses on Derivative Financial Instruments Classified as Cash Flow Hedges		Losses Related to Pension and Other Postretirement Benefits		Gains (losses) on Available-for-Sale Securities		Total
	(In thousands)
Balance, beginning of period	$	82,782	$	(1,191)	$	(102,211)	$	0	$	(20,620)

Other comprehensive income before reclassifications	49,138		2,214		29,185		0		80,537
Amounts reclassified from accumulated other comprehensive income to net income	0		(1,320)		730		0		(590)
Currency translation	0		27		0		0		27
Net current period other comprehensive income	49,138		921		29,915		0		79,974
Balance, end of period	$	131,920	$	(270)	$	(72,296)	$	0	$	59,354

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Nine Months Ended September 29, 2019(a)
Losses Related to Foreign Currency Translation Unrealized Losses on Derivative Financial Instruments Classified as Cash Flow Hedges Losses Related to Pension and Other Postretirement Benefits Unrealized Holding Gains on Available-for-Sale Securities Total
(In thousands)
Balance, beginning of period $ (55,770) $ (683) $ (71,463) $ 82 $ (127,834)
Other comprehensive income (loss) before
reclassifications (50,824) (1,257) (6,962) 383 (58,660)
Amounts reclassified from accumulated other
comprehensive loss to net income 0 74 745 (353) 466
Currency translation 0 (12) 0 0 (12)
Net current period other comprehensive income
(loss) (50,824) (1,195) (6,217) 30 (58,206)
Balance, end of period $ (106,594) $ (1,878) $ (77,680) $ 112 $ (186,040)

(a) All amounts are net of tax. Amounts in parentheses represent income (expenses) related to results of operations.


	Six Months Ended June 28, 2020(a)
	Losses Related to Foreign Currency Translation		Gains on Derivative Financial Instruments Classified as Cash Flow Hedges		Losses Related to Pension and Other Postretirement Benefits		Gains on Available-for-Sale Securities		Total
	(In thousands)
Balance, beginning of period	$	(1,108)	$	(2,406)	$	(71,615)	$	0	$	(75,129)

Other comprehensive income (loss) before reclassifications	(115,547)		2,003		(35,797)		10		(149,331)
Amounts reclassified from accumulated other comprehensive loss to net income	0		580		564		(9)		1,135
Currency translation	0		(102)		0		0		(102)
Net current period other comprehensive income (loss)	(115,547)		2,481		(35,233)		1		(148,298)
Balance, end of period	$	(116,655)	$	75	$	(106,848)	$	1	$	(223,427)

Amount Reclassified from Accumulated Other Comprehensive Loss(a)
Details about Accumulated Other Comprehensive Loss Components Nine Months Ended September 27, 2020 Nine Months Ended September 29, 2019 Affected Line Item in the Condensed Consolidated Statements of Income
(In thousands)
Realized gain on settlement of foreign
currency derivatives classified as cash flow
hedges $ 1,452 $ 0 Net sales
Realized loss on settlement of foreign
currency derivatives classified as cash flow
hedges (314) (74) Cost of sales
Realized gain on settlement of interest rate swap
derivatives classified as cash flow hedges (99) 0 Interest expense, net of capitalized interest
Realized gain on sale of securities 18 466 Interest income
Amortization of pension and other postretirement
plan actuarial losses:
Union Plan(b)
(72) (54) Miscellaneous, net
Legacy Gold Kist Plans(b)(c)
(1,055) (930) Miscellaneous, net
Total before tax (70) (592)
Tax benefit 277 126
Total reclassification for the period $ 207 $ (466)

(a) All amounts are net of tax. Amounts in parentheses represent income (expenses) related to results of operations.


	Amount Reclassified from Accumulated Other Comprehensive Income(a)
Details about Accumulated Other Comprehensive Income Components	Six Months Ended June 27, 2021		Six Months Ended June 28, 2020		Affected Line Item in the Condensed Consolidated Statements of Income
	(In thousands)
Realized gain (loss) on settlement of foreign currency derivatives classified as cash flow hedges	$	1,282	$	(582)	Net sales
Realized gain on settlement of foreign currency derivatives classified as cash flow hedges	255		0		Cost of sales
Realized loss on settlement of interest rate swap derivatives classified as cash flow hedges	(289)		2		Interest expense, net of capitalized interest
Realized gain on sale of securities	0		12		Interest income
Amortization of pension and other postretirement plan actuarial losses(b)	(955)		(751)		Miscellaneous, net
Total before tax	293		(1,319)
Tax expense	297		184
Total reclassification for the period	$	590	$	(1,135)

(a) Positive amounts represent income to the results of operations while amounts in parentheses represent expenses to the results of operations.

(b) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See “Note ~~15.~~13. Pension and Other Postretirement ~~Benefits” to the Condensed Consolidated Financial Statements.~~

~~(c) The Company sponsors the GK Pension Plan, the SERP Plan, the Directors' Emeriti Plan and the Retiree Life Plan (collectively, the “Legacy Gold Kist Plans”).~~Benefits.”

Share Repurchase Program and Treasury Stock

On October 31, 2018, the Company’s Board of Directors approved a $200.0 million share repurchase authorization. The Company ~~plans to repurchase~~repurchased shares through ~~various means, which may include but are not limited to~~ open market ~~purchases, privately negotiated transactions, the use~~purchases. As of ~~derivative instruments and/or accelerated share repurchase programs. The extent to which~~June 27, 2021, the Company repurchases its shares and the timing of such repurchases will vary and depend upon market conditions and other corporate considerations, as determined by the Company’s management team. The Company reserves the right to limit or terminate the repurchase program at any time without notice. As of September 27, 2020, the Company had repurchased approximately ~~6.1~~6.3 million shares under this program with a market value of approximately ~~$110.9~~$113.4 million. The Company accounted for the shares repurchased using the cost method. The Company currently plans to maintain these shares as treasury stock.

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This program expired on February 16, 2021.

Restrictions on Dividends

Both the U.S. Credit Facility and the indentures governing the Company’s senior notes restrict, but do not prohibit, the Company from declaring dividends. Additionally, the Moy Park Multicurrency Revolving Facility Agreement restricts Moy Park’s ability and the ability of certain of Moy Park’s subsidiaries to, among other things, make payments and distributions to the Company.

~~15.~~22

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13. PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company sponsors programs that provide retirement benefits to most of its employees. These programs include qualified defined benefit pension plans such as the ~~Pilgrim's~~Pilgrim’s Pride Retirement Plan for Union Employees (the “Union Plan”) the ~~Pilgrim's~~Pilgrim’s Pride Pension Plan for Legacy Gold Kist Employees (the “GK Pension Plan”), the Tulip Limited Pension Plan and the Geo Adams Group Pension Fund (together, the “U.K. Plans”), nonqualified defined benefit retirement plans, a defined benefit postretirement life insurance plan and defined contribution retirement savings plan. Expenses recognized under all retirement plans totaled ~~$6.2~~$4.0 million and ~~$5.0~~$3.5 million in the three months ended ~~September~~June 27, ~~2020~~2021 and ~~September 29, 2019,~~June 28, 2020, respectively, and ~~$13.3~~$9.3 million and ~~$14.6~~$7.1 million in the ~~nine~~six months ended ~~September~~June 27, ~~2020~~2021 and ~~September 29, 2019,~~June 28, 2020, respectively.

Defined Benefit Plans Obligations and Assets

The change in benefit obligation, change in fair value of plan assets, funded status and amounts recognized in the Condensed Consolidated Balance Sheets for the defined benefit plans were as follows:


	Six Months Ended
	June 27, 2021				June 28, 2020
	Pension Benefits		Other Benefits		Pension Benefits		Other Benefits
	(In thousands)
Change in projected benefit obligation
Projected benefit obligation, beginning of period	$	404,194	$	1,593	$	369,066	$	1,527
Interest cost	2,437		8		4,050		18
Actuarial loss (gain)	(28,552)		(35)		28,806		64
Benefits paid	(5,978)		(70)		(9,965)		(80)
Curtailments and settlements	(2,689)		0		0		0
Prior service cost	0		0		11		0
Currency translation loss (gain)	10,196		0		(11,001)		0
Projected benefit obligation, end of period	$	379,608	$	1,496	$	380,967	$	1,529

Nine Months Ended September 27, 2020 Nine Months Ended September 29, 2019
Pension Benefits Other Benefits Pension Benefits Other Benefits
Change in projected benefit obligation: (In thousands)
Projected benefit obligation, beginning of period $ 369,066 $ 1,527 $ 157,619 $ 1,462
Interest cost 6,047 27 4,402 39
Actuarial losses 30,650 75 20,726 130
Benefits paid (9,763) (120) (4,564) (111)
Curtailments and settlements (7,083) 0 (8,783) 0
Other 22 0 0 0
Currency translation gain (4,071) 0 0 0
Projected benefit obligation, end of period $ 384,868 $ 1,509 $ 169,400 $ 1,520


	Six Months Ended
	June 27, 2021				June 28, 2020
	Pension Benefits		Other Benefits		Pension Benefits		Other Benefits
	(In thousands)
Change in plan assets
Fair value of plan assets, beginning of period	$	305,983	$	0	$	294,589	$	0
Actual return on plan assets	14,564		0		(9,948)		0
Contributions by employer	6,832		70		5,173		80
Benefits paid	(5,978)		(70)		(9,965)		(80)
Curtailments and settlements	(2,689)		0		0		0
Expenses paid from assets	(169)		0		(526)		0
Currency translation gain (loss)	8,764		0		(9,849)		0
Fair value of plan assets, end of period	$	327,307	$	0	$	269,474	$	0


	June 27, 2021				December 27, 2020
	Pension Benefits		Other Benefits		Pension Benefits		Other Benefits
	(In thousands)
Funded status
Unfunded benefit obligation, end of period	$	(52,301)	$	(1,496)	$	(98,211)	$	(1,593)

Nine Months Ended September 27, 2020 Nine Months Ended September 29, 2019
Pension Benefits Other Benefits Pension Benefits Other Benefits
Change in plan assets: (In thousands)
Fair value of plan assets, beginning of period $ 294,589 $ 0 $ 102,414 $ 0
Actual return on plan assets (5,343) 0 12,637 0
Contributions by employer 11,801 120 6,096 111
Benefits paid (9,763) (120) (4,564) (111)
Curtailments and settlements (7,083) 0 (8,783) 0
Other (603) 0 0 0
Currency translation loss (4,337) 0 0 0
Fair value of plan assets, end of period $ 279,261 $ 0 $ 107,800 $ 0

September 27, 2020 December 29, 2019
Pension Benefits Other Benefits Pension Benefits Other Benefits
Funded status: (In thousands)
Unfunded benefit obligation, end of period $ (105,607) $ (1,509) $ (74,477) $ (1,527)

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	June 27, 2021				December 27, 2020
	Pension Benefits		Other Benefits		Pension Benefits		Other Benefits
	(In thousands)
Amounts recognized in the Condensed Consolidated Balance Sheets at end of period
Current liability	$	(819)	$	(167)	$	(7,510)	$	(169)
Long-term liability	(51,482)		(1,329)		(90,701)		(1,424)
Recognized liability	$	(52,301)	$	(1,496)	$	(98,211)	$	(1,593)

September 27, 2020 December 29, 2019
Pension Benefits Other Benefits Pension Benefits Other Benefits
Amounts recognized in the Condensed Consolidated Balance Sheets at end of period: (In thousands)
Current liability $ (3,605) $ (156) $ (14,967) $ (158)
Long-term liability (102,002) (1,353) (59,510) (1,369)
Recognized liability $ (105,607) $ (1,509) $ (74,477) $ (1,527)


	June 27, 2021				December 27, 2020
	Pension Benefits		Other Benefits		Pension Benefits		Other Benefits
	(In thousands)
Amounts recognized in accumulated other comprehensive loss at end of period
Net actuarial loss	$	55,846	$	138	$	95,522	$	174

September 27, 2020 December 29, 2019
Pension Benefits Other Benefits Pension Benefits Other Benefits
Amounts recognized in accumulated other
comprehensive loss at end of period: (In thousands)
Net actuarial loss $ 100,579 $ 166 $ 58,239 $ 91

The accumulated benefit obligation for the ~~Company's~~Company’s defined benefit pension plans was ~~$384.9~~$379.6 million and ~~$369.1~~$404.2 million at ~~September~~June 27, ~~2020~~2021 and December ~~29, 2019,~~27, 2020, respectively. Each of the ~~Company's~~Company’s defined benefit pension plans had accumulated benefit obligations that exceeded the fair value of plan assets at both ~~September~~June 27, ~~2020~~2021 and December ~~29, 2019.~~27, 2020. As of ~~September~~June 27, ~~2020,~~2021, the weighted average duration of the ~~Company's~~Company’s defined benefit pension obligation is ~~27.73~~19.67 years.

Net Periodic Benefit Costs

Net defined benefit pension and other postretirement costs included the following components:


	Three Months Ended June 27, 2021				Three Months Ended June 28, 2020				Six Months Ended June 27, 2021				Six Months Ended June 28, 2020
	Pension Benefits		Other Benefits		Pension Benefits		Other Benefits		Pension Benefits		Other Benefits		Pension Benefits		Other Benefits
	(In thousands)
Interest cost	$	987	$	3	$	2,011	$	9	$	2,437	$	8	$	4,050	$	18
Estimated return on plan assets	(1,815)		0		(3,215)		0		(4,456)		0		(6,498)		0
Settlement loss	837		0		0		0		837		0		0		0
Expenses paid from assets	91		0		93		0		169		0		537		0
Amortization of net loss	381		0		375		0		946		1		751		0
Amortization of past service cost	3		0		0		0		8		0		0		0
Net costs(a)	$	484	$	3	$	(736)	$	9	$	(59)	$	9	$	(1,160)	$	18

Three Months Ended September 27, 2020 Three Months Ended September 29, 2019 Nine Months Ended September 27, 2020 Nine Months Ended September 29, 2019
Pension Benefits Other Benefits Pension Benefits Other Benefits Pension Benefits Other Benefits Pension Benefits Other Benefits
(In thousands)
Interest cost $ 1,997 $ 9 $ 1,468 $ 13 $ 6,047 $ 27 $ 4,402 $ 39
Estimated return on plan assets (3,256) 0 (1,349) 0 (9,754) 0 (4,047) 0
Settlement loss 2,941 0 1,134 0 2,941 0 3,064 0
Other 87 0 0 0 624 0 0 0
Amortization of net loss 376 0 328 0 1,127 0 984 0
Net costs $ 2,145 $ 9 $ 1,581 $ 13 $ 985 $ 27 $ 4,403 $ 39
(a) Net costs are included in the line item Miscellaneous, net on the Condensed Consolidated Statements of Income.

Economic Assumptions

The weighted average assumptions used in determining pension and other postretirement plan information were as follows:


	June 27, 2021				December 27, 2020
	Pension Benefits		Other Benefits		Pension Benefits		Other Benefits
Assumptions used to measure benefit obligation at end of period
Discount rate	2.31	%	2.20	%	1.83	%	1.80	%


		September 27, 2020				December 29, 2019					Six Months Ended
		Pension Benefits		Other Benefits		Pension Benefits		Other Benefits			June 27, 2021				June 28, 2020
Assumptions used to measure benefit obligation at end of period:
											Pension Benefits		Other Benefits		Pension Benefits		Other Benefits
Assumptions used to measure net pension and other postretirement cost										Assumptions used to measure net pension and other postretirement cost
Discount rate	Discount rate	1.97	%	2.05	%	2.56	%	2.77	%	Discount rate	1.86	%	1.80	%	2.57	%	2.77	%

Expected return on plan assets										Expected return on plan assets	3.53	%	NA		4.67	%	NA

Nine Months Ended September 27, 2020 Nine Months Ended September 29, 2019
Pension Benefits Other Benefits Pension Benefits Other Benefits
Assumptions used to measure net pension and other
postretirement cost:
Discount rate 2.51 % 2.77 % 4.40 % 4.07 %
Expected return on plan assets 4.67 % NA 5.50 % NA

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The discount rate represents the interest rate used to determine the present value of future cash flows currently expected to be required to settle the ~~Company's~~Company’s pension and other benefit obligations. The ~~weighted average~~ discount rate assumptions used to determine future pension obligations at June 27, 2021 and December 27, 2020 were based on Prudential Financial, Inc.’s (“Prudential”) Pru Above Mean yield curve, which was designed by Prudential to provide a means for ~~each~~ plan ~~was established~~sponsors to value the liabilities of their postretirement benefit plans. The Pru Above Mean yield curve represents a series of annual discount rates from bonds with an AA minimum average credit quality rating as rated by ~~comparing the projection of expected benefit payments to the AA Above Median yield curve.~~Moody’s Investor Service, Standard & Poor’s and Fitch Ratings. The expected benefit payments were discounted by each corresponding discount rate on the yield curve. For payments beyond 30 years, the Company extended the curve assuming the discount rate derived in year 30 is extended to the end of the ~~plan's~~plan’s payment expectations. Once the present value of the string of benefit payments was established, the Company determined the single rate on the yield curve, that when applied to all obligations of the plan, would exactly match the previously determined present value. The discount rate assumptions used to determine future pension obligations for the U.K. pension plans at June 27, 2021 and December 27, 2020 were based on corporate bond spot yield curves provided by Merrill Lynch. Merrill Lynch bases this calculation entirely on AA1-AA3 rated bonds. As part of the evaluation of pension and other postretirement assumptions, the Company applied assumptions for mortality that incorporate generational white and blue collar mortality trends. In determining its benefit obligations, the Company used generational tables that take into consideration increases in plan participant longevity. As of ~~September~~June 27, 2021 and December 27, 2020, ~~and December 29, 2019, all~~the U.S. pension and other postretirement benefit plans used variations of the ~~RP2014~~Pri-2012 mortality table and the ~~MP2015~~MP2020 mortality improvement scale. As of ~~September~~June 27, 2021 and December 27, 2020, ~~and December 29, 2019,~~ the U.K. ~~Plans~~pension plans used variations of the AxC00 mortality table in combination with the ~~CMI_2018~~CMI_2019 Sk=7.5 mortality improvement scale for pre-retirement employees and the ~~S3PxA~~S3PMA mortality table in combination with the ~~CMI_2018~~CMI_2019 Sk=7.5 mortality improvement scale for postretirement employees.

The sensitivity of the projected benefit obligation for pension benefits to changes in the discount rate is set out below. The impact of a change in the discount rate of 0.25% on the projected benefit obligation for other benefits is less than $1,000. This sensitivity analysis is based on changing one assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to variations in significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as for calculating the liability recognized in the Condensed Consolidated Balance Sheets.


	Increase in Discount Rate of 0.25%		Decrease in Discount Rate of 0.25%
	(In thousands)
Impact on projected benefit obligation for pension benefits	$	(10,162)	$	10,698

Increase in Discount Rate of 0.25% Decrease in Discount Rate of 0.25%
(In thousands)
Impact on projected benefit obligation for pension benefits $ (10,302) $ 10,846

The expected rate of return on plan assets was primarily based on the determination of an expected return and ~~behaviors~~ for each ~~plan's~~plan’s current asset portfolio that the Company believes are likely to prevail over long periods. This determination was made using assumptions for return and volatility of the portfolio. Asset class assumptions were set using a combination of empirical and forward-looking analysis. To the extent historical results were affected by unsustainable trends or events, the effects of those trends or events were quantified and removed. The Company also considered anticipated asset allocations, investment strategies and the views of various investment professionals when developing this rate.

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Plan Assets

The following table reflects the pension plans’ actual asset allocations:


		September 27, 2020		December 29, 2019			June 27, 2021		December 27, 2020
Cash and cash equivalents	Cash and cash equivalents	2	%	4	%	Cash and cash equivalents	2	%	1	%
Pooled separate accounts for the Union Plan(a):	Pooled separate accounts for the Union Plan(a):					Pooled separate accounts for the Union Plan(a):
Equity securities	Equity securities	2	%	2	%	Equity securities	2	%	2	%
Fixed income securities	Fixed income securities	2	%	2	%	Fixed income securities	2	%	2	%
Pooled separate accounts and common collective trust funds for the GK Pension Plan(a):	Pooled separate accounts and common collective trust funds for the GK Pension Plan(a):					Pooled separate accounts and common collective trust funds for the GK Pension Plan(a):
Equity securities	Equity securities	19	%	20	%	Equity securities	20	%	20	%
Fixed income securities	Fixed income securities	13	%	12	%	Fixed income securities	12	%	13	%
Real estate	Real estate	2	%	2	%	Real estate	1	%	1	%
Pooled separate accounts for the UK Plans(a):
Pooled separate accounts for the U.K. Plans(a):						Pooled separate accounts for the U.K. Plans(a):
Equity securities	Equity securities	33	%	40	%	Equity securities	36	%	35	%
Fixed income securities	Fixed income securities	20	%	18	%	Fixed income securities	19	%	20	%
Real estate	Real estate	7	%	0	%	Real estate	6	%	6	%
Total assets	Total assets	100	%	100	%	Total assets	100	%	100	%

(a) Pooled separate accounts (“PSAs”) and common collective trust funds (“CCTs”) are two of the most common types of alternative vehicles in which benefit plans invest. These investments are pooled funds that look like mutual funds, but they are not registered with the SEC. Often times, they will

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be invested in mutual funds or other marketable securities, but the unit price generally will be different from the value of the underlying securities because the fund may also hold cash for liquidity purposes, and the fees imposed by the fund are deducted from the fund value rather than charged separately to investors. Some PSAs and CCTs have no restrictions as to their investment strategy and can invest in riskier investments, such as derivatives, hedge funds, private equity funds, or similar investments.

Absent regulatory or statutory limitations, the target asset allocation for the investment of pension assets in the PSAs for the Union Plan is 50% in each of fixed income securities and equity securities, the target asset allocation for the investment of pension assets in the PSAs and/or CCTs for the GK Pension Plan is 35% in fixed income securities, 60% in equity securities and 5% in real estate and investment of pension assets in the PSAs for the U.K. Plans is 28% in fixed income securities, 62% in equity securities and 10% in real estate. The plans only invest in fixed income and equity instruments for which there is a readily available public market. The Company develops its expected long-term rate of return assumptions based on the historical rates of returns for equity and fixed income securities of the type in which its plans invest.

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The fair value measurements of plan assets fell into the following levels of the fair value hierarchy as of ~~September~~June 27, ~~2020~~2021 and December ~~29, 2019:~~27, 2020:


		September 27, 2020								December 29, 2019									June 27, 2021								December 27, 2020
		Level 1(a)		Level 2(b)		Level 3(c)		Total		Level 1(a)		Level 2(b)		Level 3(c)		Total			Level 1(a)		Level 2(b)		Level 3(c)		Total		Level 1(a)		Level 2(b)		Level 3(c)		Total
		(In thousands)																	(In thousands)
Cash and cash equivalents	Cash and cash equivalents	$	6,819	$	0	$	0	$	6,819	$	11,582	$	0	$	0	$	11,582	Cash and cash equivalents	$	6,170	$	0	$	0	$	6,170	$	1,487	$	0	$	0	$	1,487
PSAs for the Union Plan:	PSAs for the Union Plan:																	PSAs for the Union Plan:
Large U.S. equity funds(d)	Large U.S. equity funds(d)	0		2,962		0		2,962		0		3,071		0		3,071		Large U.S. equity funds(d)	0		2,776		0		2,776		0		3,100		0		3,100
Small/Mid U.S. equity funds(e)	Small/Mid U.S. equity funds(e)	0		368		0		368		0		372		0		372		Small/Mid U.S. equity funds(e)	0		1,116		0		1,116		0		392		0		392
International equity funds(f)	International equity funds(f)	0		1,772		0		1,772		0		1,878		0		1,878		International equity funds(f)	0		2,175		0		2,175		0		1,874		0		1,874
Fixed income funds(g)	Fixed income funds(g)	0		5,037		0		5,037		0		4,452		0		4,452		Fixed income funds(g)	0		5,042		0		5,042		0		5,365		0		5,365
PSAs and CCTs for the GK Pension Plan:	PSAs and CCTs for the GK Pension Plan:																	PSAs and CCTs for the GK Pension Plan:
Large U.S. equity funds(d)	Large U.S. equity funds(d)	0		26,324		0		26,324		0		20,378		0		20,378		Large U.S. equity funds(d)	0		32,409		0		32,409		0		29,602		0		29,602
Small/Mid U.S. equity funds(e)	Small/Mid U.S. equity funds(e)	0		13,763		0		13,763		0		12,495		0		12,495		Small/Mid U.S. equity funds(e)	0		16,636		0		16,636		0		17,569		0		17,569
International equity funds(f)	International equity funds(f)	0		14,105		0		14,105		0		25,149		0		25,149		International equity funds(f)	0		16,600		0		16,600		0		16,320		0		16,320
Fixed income funds(g)	Fixed income funds(g)	0		37,365		0		37,365		0		35,627		0		35,627		Fixed income funds(g)	0		39,229		0		39,229		0		38,944		0		38,944
Real estate(h)	Real estate(h)	0		5,664		0		5,664		0		5,613		0		5,613		Real estate(h)	0		4,852		0		4,852		0		5,677		0		5,677
PSAs for the UK Plans:
PSAs for the U.K. Plans:																		PSAs for the U.K. Plans:
Large U.S. equity funds(d)	Large U.S. equity funds(d)	0		35,091		0		35,091		0		17,756		0		17,756		Large U.S. equity funds(d)	0		46,814		0		46,814		0		39,002		0		39,002
International equity funds(f)	International equity funds(f)	0		56,792		0		56,792		0		102,494		0		102,494		International equity funds(f)	0		73,672		0		73,672		0		69,251		0		69,251
Fixed income funds(g)	Fixed income funds(g)	0		57,223		0		57,223		0		53,722		0		53,722		Fixed income funds(g)	0		61,276		0		61,276		0		60,212		0		60,212
Real estate(h)	Real estate(h)	0		15,976		0		15,976		0		0		0		0		Real estate(h)	0		18,540		0		18,540		0		17,188		0		17,188
Total assets	Total assets	$	6,819	$	272,442	$	0	$	279,261	$	11,582	$	283,007	$	0	$	294,589	Total assets	$	6,170	$	321,137	$	0	$	327,307	$	1,487	$	304,496	$	0	$	305,983

(a) Unadjusted quoted prices in active markets for identical assets are used to determine fair value.

(b) Quoted prices in active markets for similar assets and inputs that are observable for the asset are used to determine fair value.

(d) This category is comprised of investment options that invest in stocks, or shares of ownership, in large, well-established U.S. companies. These investment options typically carry more risk than fixed income options but have the potential for higher returns over longer time periods.

(e) This category is generally comprised of investment options that invest in stocks, or shares of ownership, in small to medium-sized U.S. companies. These investment options typically carry more risk than larger U.S. equity investment options but have the potential for higher returns.

(f) This category is comprised of investment options that invest in stocks, or shares of ownership, in companies with their principal place of business or office outside of the U.S.

(g) This category is comprised of investment options that invest in bonds, or debt of a company or government entity (including U.S. and non-U.S. entities). These investment options typically carry more risk than short-term fixed income investment options, but less overall risk than equities.

(h) This category is comprised of investment options that invest in real estate investment trusts or private equity pools that own real estate. These long-term investments are primarily in office buildings, industrial parks, apartments or retail complexes. These investment options typically carry more risk, including liquidity risk, than fixed income investment options.

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Benefit Payments

The following table reflects the benefits as of ~~September~~June 27, ~~2020~~2021 expected to be paid through ~~2029~~2030 from the ~~Company's~~Company’s pension and other postretirement plans. The Company’s pension plans are primarily funded plans. Therefore, anticipated benefits with respect to these plans will come primarily from the trusts established for these plans. The ~~Company's~~Company’s other postretirement plans are unfunded. Therefore, anticipated benefits with respect to these plans will come from the Company’s own assets.


	Pension Benefits		Other Benefits
	(In thousands)
2021	$	17,363	$	99
2022	16,792		163
2023	16,348		156
2024	15,962		149
2025	15,607		140
2026-2030	71,821		555
Total	$	153,893	$	1,262

Pension Benefits Other Benefits
(In thousands)
2020 $ 11,551 $ 40
2021 16,430 155
2022 16,403 150
2023 16,472 144
2024 16,452 137
2025-2029 81,067 565
Total $ 158,375 $ 1,191

As required by funding regulations or laws, the Company anticipates contributing ~~$3.7~~$4.8 million and $0.2 million to its pension plans and other postretirement plans, respectively, during the remainder of ~~2020.~~2021.

Unrecognized Benefit Amounts in Accumulated Other Comprehensive ~~Loss~~Income

The amounts in accumulated other comprehensive ~~loss~~income that were not recognized as components of net periodic benefits cost and the changes in those amounts are as follows:


		Nine Months Ended September 27, 2020				Nine Months Ended September 29, 2019					Six Months Ended
		Pension Benefits		Other Benefits		Pension Benefits		Other Benefits			June 27, 2021				June 28, 2020
		(In thousands)									Pension Benefits		Other Benefits		Pension Benefits		Other Benefits
Net actuarial loss (gain), beginning of period		$	58,239	$	91	$	54,343	$	(34)
											(In thousands)
Net actuarial loss, beginning of period										Net actuarial loss, beginning of period	$	95,522	$	174	$	58,239	$	91
Amortization	Amortization	(1,127)		0		(984)		0		Amortization	(954)		(1)		(751)		0
Curtailment and settlement adjustments	Curtailment and settlement adjustments	(2,941)		0		(3,064)		0		Curtailment and settlement adjustments	(837)		0		0		0
Actuarial loss		30,650		75		20,726		129
Actuarial loss (gain)										Actuarial loss (gain)	(28,552)		(35)		28,806		64
Asset loss (gain)	Asset loss (gain)	15,089		0		(8,590)		0		Asset loss (gain)	(10,109)		0		16,438		0
Currency translation loss		669		0		0		0
Currency translation loss (gain)										Currency translation loss (gain)	776		0		(202)		0
Net actuarial loss, end of period	Net actuarial loss, end of period	$	100,579	$	166	$	62,431	$	95	Net actuarial loss, end of period	$	55,846	$	138	$	102,530	$	155

Risk Management

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:

Asset volatility. The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if plan assets under perform this yield, this will create a deficit. The pension plans hold a significant proportion of equities, which are expected to outperform corporate bonds in the long-term while contributing volatility and risk in the short-term. The Company monitors the level of investment risk but has no current plan to significantly modify the mixture of investments. The investment position is discussed more below.

Changes in bond yields. A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings.

The investment position is managed and monitored by a committee of individuals from various departments. This group actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the pension obligations. The group has not changed the processes used to manage its risks from previous periods. The group does not use derivatives to manage its risk. Investments are well diversified, such that the failure of any single

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investment would not have a material impact on the overall level of assets. The majority of equities are in U.S. large and small cap companies with some global diversification into international entities.

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Remeasurement

The Company remeasures both plan assets and obligations on a quarterly basis.

Defined Contribution Plans

The Company sponsors 2 defined contribution retirement savings plans in the U.S. reportable segment for eligible U.S. and Puerto Rico employees. The Company maintains 3 postretirement plans for eligible employees in the Mexico reportable segment, as required by Mexico law, which primarily cover termination benefits. The Company maintains 2 defined contribution retirement savings plans in the U.K. and Europe reportable segment for eligible U.K. and Europe employees, as required by U.K. and Europe law. The Company’s expenses related to its defined contribution plans totaled ~~$3.3~~$3.5 million in the three months ended ~~September~~June 27, ~~2020~~2021 and ~~$10.4~~$8.1 million ~~and~~ in the ~~nine~~six months ended ~~September~~June 27, ~~2020.~~2021.

~~16.~~14. STOCK-BASED COMPENSATION

For the three months ended ~~September~~June 27, ~~2020~~2021 and ~~September 29, 2019,~~June 28, 2020, we recognized total stock-based compensation ~~gain~~expense of ~~$1.7~~$3.2 million and ~~expense $2.1~~$3.2 million, respectively. For the three months ended ~~September~~June 27, ~~2020~~2021 and ~~September 29, 2019, the total income tax expense and benefit recognized for stock-based compensation arrangements was $0.4 million and $0.5 million, respectively.~~

~~For the~~ ~~nine months ended September 27,~~June 28, 2020, ~~and September 29, 2019, we recognized total stock-based compensation expense of $2.2 million and $7.3 million, respectively. For the nine months ended September 27, 2020 and September 29, 2019,~~ the total income tax benefit recognized for stock-based compensation arrangements was ~~$0.6~~$0.8 million and ~~$1.8~~$0.8 million, respectively.

For the six months ended June 27, 2021 and June 28, 2020, we recognized total stock-based compensation expense of $5.2 million and $3.9 million, respectively. For the six months ended June 27, 2021 and June 28, 2020, the total income tax benefit recognized for stock-based compensation arrangements was $1.3 million and $1.0 million, respectively.

During the ~~nine~~six months ended ~~September~~June 27, ~~2020,~~2021, we granted ~~316,460~~145,000 time-vesting restricted stock units at a grant date price of $19.73 per unit. Theses awards will vest equally on July 1, 2022, July 1, 2023 and July 1, 2024. We also granted 561,236 performance-based restricted stock units at a grant date price of ~~$30.94~~$22.39 per unit. These awards will convert to time-vesting restricted stock units in the first quarter of ~~2021~~2022 if or when the Compensation Committee of the ~~Company's~~Company’s Board of Directors certifies the achievement of ~~2020~~2021 performance targets. Once converted to time-vesting restricted stock units, the awards will vest ~~ratably~~equally on December 31, ~~2021,~~2022, December 31, ~~2022,~~2023 and December 31, ~~2023. We~~2024. During the same period we also granted ~~13,630 event-based~~400,000 performance-based restricted stock units at a grant date price of ~~$22.01~~$19.73 per unit. These awards will convert to time-vesting restricted stock units in the first quarter of 2024 if or when the Compensation Committee of the Company’s Board of Directors certifies the achievement of performance targets over a three-year period of January 1, 2021 through December 31, 2023. Once converted to time-vesting restricted stock units, the awards will vest equally on July 1, 2024, July 1, 2025 and July 1, 2026. We also granted 63,000 time-vesting restricted stock units on May 3, 2021 at a grant date price of $23.81 per unit ~~to the nonemployee members~~and 2,951 restricted stock units on April 6, 2021 at a grant date price of ~~the Company's Board of Directors. The awards granted to each director will vest in full upon the director's termination of service with the Board of Directors.~~$24.16.

~~17.~~15. FAIR VALUE MEASUREMENTS

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Assets and liabilities measured at fair value must be categorized into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation:


Level 1						Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2						Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability; or

Level 3						Unobservable inputs, such as discounted cash flow models or valuations.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety.

As of ~~September~~June 27, ~~2020~~2021 and December ~~29, 2019,~~27, 2020, the Company held derivative assets and liabilities that were required to be measured at fair value on a recurring basis. Derivative assets and liabilities consist of long and short positions on exchange-traded commodity futures instruments, commodity options instruments, sales contracts instruments, foreign currency instruments to manage translation and remeasurement risk and interest rate swap instruments.

~~The following items were measured at fair value on a recurring basis:~~

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September 27, 2020 December 29, 2019
Level 1 Total Level 1 Total
(In thousands)
Assets:
Commodity futures instruments $ 5,327 $ 5,327 $ 4,147 $ 4,147
Commodity options instruments 7,312 7,312 906 906
Foreign currency instruments 7,919 7,919 426 426
Liabilities:
Commodity futures instruments (2,957) (2,957) (4,797) (4,797)
Commodity options instruments (3,122) (3,122) (633) (633)
Foreign currency instruments (316) (316) (5,400) (5,400)
Interest rate swap instrument (780) (780) 0 0
The following items were measured at fair value on a recurring basis:


	June 27, 2021					December 27, 2020
	Level 1		Level 2	Total		Level 1		Level 2	Total
	(In thousands)
Assets:
Commodity derivative assets	$	28,838	—	$	28,838	$	24,059	—	$	24,059
Foreign currency derivative assets	2,957		—	2,957		2,204		—	2,204
Liabilities:
Commodity derivative liabilities	(86,806)		—	(86,806)		(6,531)		—	(6,531)
Foreign currency derivative liabilities	(135)		—	(135)		(428)		—	(428)
Interest rate swap derivative liabilities	0		(478)	(478)		0		(640)	(640)
Sales contract derivative liabilities	0		5,133	5,133		—		—	—

—

See “Note 5.3. Derivative Financial Instruments” for additional information.

The valuation of financial assets and liabilities classified in Level 1 is determined using a market approach, taking into account current interest rates, creditworthiness, and liquidity risks in relation to current market conditions, and is based upon unadjusted quoted prices for identical assets in active markets. The valuation of financial assets and liabilities in Level 2 is determined using a market approach based upon quoted prices for similar assets and liabilities in active markets or other inputs that are observable for substantially the full term of the financial instrument. The valuation of financial assets in Level 3 is determined using an income approach based on unobservable inputs such as discounted cash flow models or valuations. For each class of assets and liabilities not measured at fair value in the Condensed Consolidated Balance Sheets but for which fair value is disclosed, the Company is not required to provide the quantitative disclosure about significant unobservable inputs used in fair value measurements categorized within Level 3 of the fair value hierarchy.

In addition to the fair value disclosure requirements related to financial instruments carried at fair value, accounting standards require interim disclosures regarding the fair value of all of the Company’s financial instruments. The methods and significant assumptions used to estimate the fair value of financial instruments and any changes in methods or significant assumptions from prior periods are also required to be disclosed.

The carrying amounts and estimated fair values of our fixed-rate debt obligation recorded in the Condensed Consolidated Balance Sheets consisted of the following:

September 27, 2020 December 29, 2019
Carrying Amount Fair
Value Carrying Amount Fair
Value
(In thousands)
Fixed-rate senior notes payable at 5.75%, at Level 1 inputs $ (1,001,793) $ (1,018,880) $ (1,002,095) $ (1,034,200)
Fixed-rate senior notes payable at 5.875%, at Level 1 inputs (844,972) (875,500) (844,433) (919,505)
Secured loans, at Level 3 inputs (64) (64) (948) (939)


	June 27, 2021				December 27, 2020
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In thousands)
Fixed-rate senior notes payable at 5.75%, at Level 2 inputs	$	0	$	0	$	(1,001,693)	$	(1,024,510)
Fixed-rate senior notes payable at 5.875%, at Level 2 inputs	(845,508)		(907,732)		(845,149)		(911,957)
Fixed-rate senior notes payable at 4.25%, at Level 2 inputs	(990,190)		(1,036,250)		0		0
Secured loans, at Level 3 inputs	(23)		(23)		(38)		(38)

See “Note ~~13.~~11. Debt” for additional information.

The carrying amounts of our cash and cash equivalents, derivative trading ~~accounts'~~accounts’ margin cash, restricted cash and cash equivalents, accounts receivable, accounts payable and certain other liabilities approximate their fair values due to their relatively short maturities. Derivative assets were recorded at fair value based on quoted market prices and are included in the line item Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. Derivative liabilities were recorded at fair value based on quoted market prices and are included in the line item Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets. The fair value of the Company’s Level 12 fixed-rate debt obligations was based on the quoted market price at ~~September~~June 27, ~~2020~~2021 or December ~~29, 2019,~~27, 2020, as applicable. The fair value of the Company’s Level 3 fixed-rate debt obligation was based on discounted cash ~~flow~~flows using weighted average cost of ~~capital ranging from~~debt of 0.5% ~~to 3.6% as of September~~for the periods ending June 27, ~~2020~~2021 and December ~~29, 2019.~~27, 2020.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records certain 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 when required by U.S. GAAP. There were no significant fair value measurement losses recognized for such assets and liabilities in the periods reported.

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~~18.~~16. RELATED PARTY TRANSACTIONS

Pilgrim’s has been and, in some cases, continues to be a party to certain transactions with affiliated companies.


	Three Months Ended				Six Months Ended
	June 27, 2021		June 28, 2020		June 27, 2021		June 28, 2020
	(In thousands)
Sales to related parties
JBS USA Food Company(a)	$	4,017	$	3,094	$	7,082	$	6,547
JBS Australia Pty. Ltd.	939		495		1,822		1,281
Combo, Mercado de Congelados	326		414		777		487
JBS Chile Ltda.	(1)		(44)		87		(44)

Total sales to related parties	$	5,281	$	3,959	$	9,768	$	8,271

Three Months Ended Nine Months Ended
September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019
(In thousands)
Sales to related parties:
JBS USA Food Company(a)
$ 3,768 $ 3,799 $ 10,315 $ 10,968
JBS Global (U.K.) Ltd. 0 32 0 118
JBS Chile Ltda. 114 0 70 132
Combo, Mercado De Congelados 293 118 780 146
JBS Australia Pty. Ltd. 660 0 1,941 0
Total sales to related parties $ 4,835 $ 3,949 $ 13,106 $ 11,364
Three Months Ended Nine Months Ended
September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019
(In thousands)
Cost of goods purchased from related parties:
JBS USA Food Company(a)
$ 27,657 $ 31,270 $ 100,467 $ 94,511
Seara Meats B.V. 2,637 7,297 6,360 16,187
JBS Toledo NV 0 64 156 272
JBS Global (U.K.) Ltd. 224 0 669 0
Total cost of goods purchased from related parties $ 30,518 $ 38,631 $ 107,652 $ 110,970
Three Months Ended Nine Months Ended
September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019
(In thousands)
Expenditures paid by related parties:
JBS USA Food Company(b)
$ 6,429 $ 7,919 $ 28,402 $ 26,028
Seara Food Europe Holdings 3 0 5 0
JBS Chile Ltda. 0 0 0 6
Seara Alimentos 0 0 0 7
Total expenditures paid by related parties $ 6,432 $ 7,919 $ 28,407 $ 26,041
Three Months Ended Nine Months Ended
September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019
(In thousands)
Expenditures paid on behalf of related parties:
JBS USA Food Company(b)
$ 6,689 $ 1,675 $ 13,315 $ 5,654
Total expenditures paid on behalf of related parties $ 6,689 $ 1,675 $ 13,315 $ 5,654


	Three Months Ended				Six Months Ended
	June 27, 2021		June 28, 2020		June 27, 2021		June 28, 2020
	(In thousands)
Cost of goods purchased from related parties
JBS USA Food Company(a)	$	49,547	$	35,913	$	105,796	$	72,810
Penasul UK LTD	2,838		0		5,156		0
Seara Meats B.V.	643		1,080		2,344		3,723
Planterra Food Company	150		0		150		0
JBS Global (U.K.) Ltd.	126		219		495		445
JBS Food Trading (Shanghai) Limited	42		0		42		0

JBS Toledo NV	0		93		0		156
JBS Asia Co Limited	0		0		5		0

Total cost of goods purchased from related parties	$	53,346	$	37,305	$	113,988	$	77,134


	Three Months Ended				Six Months Ended
	June 27, 2021		June 28, 2020		June 27, 2021		June 28, 2020
	(In thousands)
Expenditures paid by related parties
JBS USA Food Company(b)	$	16,987	$	13,892	$	40,732	$	21,973
Seara Food Europe Holdings	2		2		12		2





Total expenditures paid by related parties	$	16,989	$	13,894	$	40,744	$	21,975


	Three Months Ended				Six Months Ended
	June 27, 2021		June 28, 2020		June 27, 2021		June 28, 2020
	(In thousands)
Expenditures paid on behalf of related parties
JBS USA Food Company(b)	$	11,072	$	4,206	$	27,446	$	6,626


	June 27, 2021		December 27, 2020
	(In thousands)
Accounts receivable from related parties
JBS USA Food Company(a)	$	803	$	714
Combo, Mercado de Congelados	35		0
JBS Australia Pty. Ltd.	29		370
Seara International Ltd.	1		0


Total accounts receivable from related parties	$	868	$	1,084

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		September 27, 2020		December 29, 2019			June 27, 2021		December 27, 2020
		(In thousands)					(In thousands)
Accounts receivable from related parties:
Accounts payable to related parties						Accounts payable to related parties
JBS USA Food Company(a)	JBS USA Food Company(a)	$	531	$	643	JBS USA Food Company(a)	$	6,844	$	8,562
Penasul UK LTD						Penasul UK LTD	1,144		0
Seara Meats B.V.						Seara Meats B.V.	429		1,075
JBS Global (U.K.) Ltd.						JBS Global (U.K.) Ltd.	125		5
JBS Food Trading (Shanghai) Limited						JBS Food Trading (Shanghai) Limited	42		0

JBS Chile Ltda.	JBS Chile Ltda.	33		301		JBS Chile Ltda.	11		8
Combo, Mercado de Congelados		10		0

JBS Australia Pty. Ltd.		42		0
Total accounts receivable from related parties		$	616	$	944

		September 27, 2020		December 29, 2019
		(In thousands)
Accounts payable to related parties:
JBS USA Food Company(a)		$	4,778	$	2,826
JBS Global (U.K.) Ltd.		0		5
Seara Meats B.V.		974		988

Total accounts payable to related parties	Total accounts payable to related parties	$	5,752	$	3,819	Total accounts payable to related parties	$	8,595	$	9,650

(a) The Company routinely executes transactions to both purchase products from JBS USA Food Company (“JBS USA”) and sell products to them. As of ~~September~~June 27, ~~2020,~~2021, approximately ~~$1.3~~$1.4 million of goods purchased from JBS USA were in transit and not reflected on our Condensed Consolidated Balance Sheet.

(b) The Company has an agreement with JBS USA to allocate costs associated with JBS USA’s procurement of SAP licenses and maintenance services for its combined companies. Under this agreement, the fees associated with procuring SAP licenses and maintenance services are allocated between the Company and JBS USA in proportion to the percentage of licenses used by each company. The agreement expires on the date of expiration, or earlier termination, of the underlying SAP license agreement. The Company also has an agreement with JBS USA to allocate the costs of supporting the business operations by one consolidated corporate team, which have historically been supported by their respective corporate teams. Expenditures paid by JBS USA on behalf of the Company will be reimbursed by the Company and expenditures paid by the Company on behalf of JBS USA will be reimbursed by JBS USA. This agreement expires on December 31, ~~2020.~~

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~~19.~~17. REPORTABLE SEGMENTS

The Company operates in 3 reportable segments: U.S., U.K. and Europe, and Mexico. The Company measures segment profit as operating income. Corporate expenses are allocated to the Mexico and U.K. and Europe reportable segments based upon various apportionment methods for specific expenditures incurred related thereto with the remaining amounts allocated to the U.S. reportable segment.

~~U.S. Reportable Segment~~

We conduct separate operations in the continental U.S. and in Puerto Rico. For segment reporting purposes, the Puerto Rico operations are included in the U.S. reportable segment. The chicken products processed by the U.S. reportable segment are sold to foodservice, retail and frozen entrée customers. The segment’s primary distribution is through retailers, foodservice distributors and restaurants.

~~U.K. and Europe Reportable Segment~~

The U.K. and Europe reportable segment processes primarily chicken and pork products that are sold to foodservice, retail and frozen entrée customers. The segment’s primary distribution is through retailers, foodservice distributors and restaurants.

~~Mexico Reportable Segment~~

The chicken products processed by the Mexico reportable segment are sold to foodservice, retail and frozen entrée customers. The segment’s primary distribution is through retailers, foodservice distributors and restaurants.

Additional information regarding reportable segments is as follows:

Three Months Ended Nine Months Ended
September 27, 2020(a)
September 29, 2019(b)
September 27, 2020(c)
September 29, 2019(d)
(In thousands)
Net sales:
U.S. $ 1,894,222 $ 1,931,657 $ 5,619,791 $ 5,732,201
U.K. and Europe 845,677 517,531 2,425,140 1,568,396
Mexico 335,222 328,782 929,141 1,045,133
Total $ 3,075,121 $ 2,777,970 $ 8,974,072 $ 8,345,730


	Three Months Ended				Six Months Ended
	June 27, 2021(a)		June 28, 2020(b)		June 27, 2021(c)		June 28, 2020(d)
	(In thousands)
Net sales
U.S.	$	2,248,470	$	1,798,689	$	4,248,029	$	3,725,569
U.K. and Europe	935,845		757,201		1,790,579		1,579,463
Mexico	453,383		268,133		872,515		593,919
Total	$	3,637,698	$	2,824,023	$	6,911,123	$	5,898,951

(a)For the three months ended ~~September~~June 27, ~~2020,~~2021, the U.S. reportable segment had intercompany sales to the Mexico reportable segment of ~~$46.2~~$82.8 million. These sales consisted of fresh products, prepared products and grain.

(b)For the three months ended ~~September 29, 2019,~~June 28, 2020, the U.S. reportable segment had intercompany sales to the Mexico reportable segment of ~~$56.9~~$57.1 million. These sales consisted of fresh products, prepared products and grain.

(c)For the ~~nine~~six months ended ~~September~~June 27, ~~2020,~~2021, the U.S. reportable segment had intercompany sales to the Mexico reportable segment of ~~$159.9~~$150.8 million. These sales consisted of fresh products, prepared products and grain.

(d)For the ~~nine~~six months ended ~~September 29, 2019,~~June 28, 2020, the U.S. reportable segment had intercompany sales to the Mexico reportable segment of ~~$122.9~~$113.7 million. These sales consisted of fresh products, prepared products and grain.

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		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 27, 2020		September 29, 2019		September 27, 2020		September 29, 2019			June 27, 2021		June 28, 2020		June 27, 2021		June 28, 2020
		(In thousands)									(In thousands)
Reportable segment profit:
Reportable segment profit (loss)										Reportable segment profit (loss)
U.S.	U.S.	$	2,451	$	125,169	$	126,951	$	426,968	U.S.	$	(224,171)	$	39,448	$	(156,046)	$	124,500
U.K. and Europe	U.K. and Europe	29,949		25,325		76,324		62,233		U.K. and Europe	21,831		23,185		32,326		46,375
Mexico	Mexico	61,653		37,667		2,229		115,503		Mexico	79,195		(35,544)		159,025		(59,424)
Eliminations	Eliminations	235		24		459		72		Eliminations	14		200		28		224
Total operating income		94,288		188,185		205,963		604,776
Total operating income (loss)										Total operating income (loss)	(123,131)		27,289		35,333		111,675
Interest expense, net of capitalized interest	Interest expense, net of capitalized interest	30,564		32,028		95,575		99,184		Interest expense, net of capitalized interest	50,651		32,323		80,985		65,011
Interest income	Interest income	(1,763)		(4,698)		(4,611)		(11,481)		Interest income	(842)		(1,158)		(3,208)		(2,848)
Foreign currency transaction loss (gain)	Foreign currency transaction loss (gain)	9,092		3,027		(3,768)		7,923		Foreign currency transaction loss (gain)	4,145		5,525		6,659		(12,860)
Miscellaneous, net	Miscellaneous, net	360		1,367		(33,873)		2,521		Miscellaneous, net	(770)		(45)		(8,614)		(34,233)

Income before income taxes		56,035		156,461		152,640		506,629
Income tax expense		22,344		46,365		57,900		142,328
Net income		$	33,691	$	110,096	$	94,740	$	364,301
Income (loss) before income taxes										Income (loss) before income taxes	(176,315)		(9,356)		(40,489)		96,605
Income tax expense (benefit)										Income tax expense (benefit)	(9,812)		(2,956)		25,546		35,556
Net income (loss)										Net income (loss)	$	(166,503)	$	(6,400)	$	(66,035)	$	61,049


	June 27, 2021		December 27, 2020
	(In thousands)
Total assets
U.S.	$	5,502,300	$	5,189,021
U.K. and Europe	3,108,881		3,034,219
Mexico	1,099,050		1,212,428
Eliminations	(1,961,386)		(1,961,171)
Total assets	$	7,748,845	$	7,474,497

September 27, 2020 December 29, 2019
(In thousands)
Total assets:
U.S. $ 5,570,836 $ 5,207,282
U.K. and Europe 2,824,974 2,824,382
Mexico 1,033,958 1,020,331
Eliminations (1,960,269) (1,949,631)
Total assets $ 7,469,499 $ 7,102,364


		September 27, 2020		December 29, 2019			June 27, 2021		December 27, 2020
		(In thousands)					(In thousands)
Long-lived assets(a):
Long-lived assets(a)						Long-lived assets(a)
U.S.	U.S.	$	1,799,455	$	1,789,530	U.S.	$	1,843,412	$	1,815,460
U.K. and Europe	U.K. and Europe	782,952		801,887		U.K. and Europe	852,059		842,049
Mexico	Mexico	292,028		306,413		Mexico	281,063		292,651
Eliminations	Eliminations	(3,797)		(4,256)		Eliminations	(3,756)		(3,783)
Total long-lived assets	Total long-lived assets	$	2,870,638	$	2,893,574	Total long-lived assets	$	2,972,778	$	2,946,377

(a)For this disclosure, we exclude financial instruments, deferred tax assets and intangible assets in accordance with ASC 280-10-50-41, Segment Reporting. Long-lived assets, as used in ASC 280-10-50-41, implies hard assets that cannot be readily removed.

~~20.~~18. COMMITMENTS AND CONTINGENCIES

General

The Company is a party to many routine contracts in which it provides general indemnities in the normal course of business to third parties for various risks. Among other considerations, the Company has not recorded a liability for any of these indemnities because, based upon the likelihood of payment, the fair value of such indemnities would not have a material impact on its financial condition, results of operations and cash flows.

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Financial Instruments

The Company’s loan agreements generally obligate the Company to reimburse the applicable lender for incremental increased costs due to a change in law that imposes (1) any reserve or special deposit requirement against assets of, deposits with or credit extended by such lender related to the loan, (2) any tax, duty or other charge with respect to the loan (except standard income tax) or (3) capital adequacy requirements. In addition, some of the Company’s loan agreements contain a withholding tax provision that requires the Company to pay additional amounts to the applicable lender or other financing

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party, generally if withholding taxes are imposed on such lender or other financing party as a result of a change in the applicable tax law. These increased cost and withholding tax provisions continue for the entire term of the applicable transaction, and there is no limitation on the maximum additional amounts the Company could be obligated to pay under such provisions. Any failure to pay amounts due under such provisions generally would trigger an event of default, and, in a secured financing transaction, would entitle the lender to foreclose upon the collateral to realize the amount due.

Litigation

The Company is subject to various legal proceedings and claims which arise in the ordinary course of business. In the Company’s opinion, it has made appropriate and adequate accruals for claims where necessary; however, the ultimate liability for these matters is uncertain, and if significantly different than the amounts accrued, the ultimate outcome could have a material effect on the financial condition or results of operations of the Company. For a discussion of material legal proceedings and claims, see Part II, Item 1. “Legal Proceedings.” The Company believes it has substantial defenses to the claims made in the pending litigations described below and intends to vigorously defend these cases.

Tax Claims and Proceedings

During 2014 and 2015 the Mexican Tax Authorities opened a review of Avícola Pilgrim’s Pride de Mexico, S.A. de C.V. (“APPM”) in regards to tax years 2009 and 2010, respectively. In both instances, the Mexican Tax Authorities claim that controlled company status did not exist for certain subsidiaries because APPM did not own 50% of the shares in voting rights of Incubadora Hidalgo, S. de R.L de C.V. and Commercializadora de Carnes de México S. de R.L de C.V. (both in 2009) and Pilgrim’s Pride, S. de R. L. de C.V. (in 2010). As a result, APPM should have considered dividends paid out of these subsidiaries partially taxable since a portion of the dividend amount was not paid from the net tax profit account (CUFIN). APPM is currently appealing. Amounts under appeal are ~~$24.3~~$30.8 million and ~~$16.1~~$18.6 million for tax years 2009 and 2010, respectively. No loss has been recorded for these amounts at this time.

In re Broiler Chicken Antitrust Litigation

Between September 2, 2016 and October 13, 2016, a series of purported federal class action lawsuits styled as In re Broiler Chicken Antitrust Litigation, Case No. 1:16-cv-08637 were filed with the U.S. District Court for the Northern District of Illinois (the “Illinois Court”) against PPC and 1319 other producers by and on behalf of direct and indirect purchasers of broiler chickens alleging violations of federal and state antitrust and unfair competition laws. The complaints seek, among other relief, treble damages for an alleged conspiracy among defendants to reduce output and increase prices of broiler chickens from the period of January 2008 to the present. The class plaintiffs have filed 3 consolidated amended complaints: one on behalf of direct purchasers (“the Direct Purchaser Plaintiff Class”) and two on behalf of distinct groups of indirect purchasers. Between December 8, 2017 and ~~October 14, 2020, 44~~July 9, 2021, 77 individual direct action complaints were filed with the Illinois Court by individual direct purchaser entities (“DAPs”) naming PPC as a defendant, the allegations of which largely mirror those in the class action complaints. Subsequent amendments to certain complaints ~~with four complaints including additional~~added allegations of price fixing ~~prices~~ and bid rigging ~~bids~~ on ~~small birds sold to quick service restaurants. On August 26, 2020, the Commonwealth of Puerto Rico,~~ ~~one of the plaintiffs,~~ ~~filed a notice dismissing its case. On September 22, 2020,~~certain sales, which have been stayed by the Illinois Court ~~required direct action plaintiffs to file a consolidated complaint by October 23, 2020 and stayed bid-rigging claims until the~~pending resolution of ~~plaintiffs’~~the original supply reduction and other conspiracy claims are resolved. The Illinois Court has ordered the parties to coordinate scheduling of the direct action complaints with the class complaints with any necessary modifications to reflect time of filing. Discovery will be consolidated.

conspiracy. On June ~~21, 2019, the U.S. Department of Justice (the “DOJ”) filed a motion to intervene and stay discovery in the~~ ~~In re Broiler Chicken Antitrust Litigation~~ for a period of six months. Following a hearing on June 27, 2019, on June 28, 2019, the Illinois Court granted the government’s motion to intervene, ordering a limited stay, which was subsequently reset, until March 31, 2020. The stay was lifted on March 31, 2020. See “~~DOJ Antitrust Matter” below for a discussion of developments related to the DOJ.~~

~~On August 28, 2020,~~17, 2021, the Illinois Court issued a revised scheduling order through trial, which contemplates ~~class certification briefing and related expert reports proceeding from October 30, 2020 to May 6, 2021,~~ the close of ~~all~~ merits fact discovery for defendants and most plaintiffs on ~~June 11,~~July 31, 2021, ~~and~~with additional discovery of subsequent DAPs proceeding in six month increments following consolidation of each DAP complaint. Expert discovery will proceed from August 31, 2021 through May 13, 2022 with summary judgment briefing beginning on June 10, 2022 and ~~related expert reports proceeding from July 2, 2021 to February 22,~~concluding on November 21, 2022. The ~~Illinois~~ Court has not yet set a trial ~~date~~date.

On January 11, 2021, PPC announced that it had entered into an agreement to settle all claims made by the putative Direct Purchaser Plaintiff Class (“DPPs”), which the Illinois Court preliminarily approved February 25, 2021. As a result of ~~October 17, 2022.~~this agreement, PPC recognized an expense of $75.0 million within Selling, general and administrative expense in the Consolidated Statements of Income for the year ended December 27, 2020. Pursuant to this agreement, PPC paid the DPPs this amount during the first quarter of 2021.

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On July 16, 2021, PPC and the putative End-User Consumer Indirect Purchaser Plaintiff Class (“EUCPs”) jointly informed the Court that they had reached an agreement to settle all claims, subject to Court approval under Rule 23.The EUCPs will file a motion for preliminary, and ultimately final, approval of the proposed settlement in the near future. In addition, PPC has agreed in principle to settle all claims made by the putative Commercial and Institutional Indirect Purchaser Plaintiff Class (“CIIPPs”). PPC and CIIPPs are negotiating a long-form settlement agreement, which the Illinois Court will need to approve. Under the terms of these settlements, PPC has agreed to pay the EUCPs and CIIPPs an aggregate amount of $120.5 million to release all outstanding claims brought by such Classes. These settlements are subject to the execution of long-form settlement agreements with the respective parties and Illinois Court approval thereafter. As a result of these agreements, PPC recognized this expense within Selling, general and administrative expense in the Consolidated Statements of Income for the three and six months ended June 27, 2021.

The settlements with the DPPs, EUCPs and CIIPPs do not cover the claims of the DAPs or other parties who have or will opt out of such settlements (collectively, the “Opt Outs”). PPC will therefore continue to litigate against such Opt Outs and will seek reasonable settlements where they are available. PPC has recognized an expense of $251.4 million to cover potential settlements with various Opt Outs. The amount accrued is an estimate that is subject to change. PPC recognized this expense within Selling, general and administrative expense in the Consolidated Statements of Income for the three and six months ended June 27, 2021.

On February 21, 2017, the Attorney General of Florida (“Florida AG”) issued a civil investigative demand (“CID”) regarding the broiler chicken market. The CID requests, among other things, data and information related to the acquisition and processing of broiler chickens and the sale of chicken products. PPC is cooperating with the Florida AG in producing documents pursuant to the CID.

On August 6, 2020, the Attorney General of Washington (“Washington AG”) issued a CID regarding similar broiler chicken matters that are the subject of the Florida CID. The CID requests, among other things, data and information related to the acquisition and processing of broiler chickens and the sale of chicken products. PPC is cooperating with the Washington AG in producing documents pursuant to the CID.

On each of February 24, 2021 and May 4, 2021, the Attorney General of Louisiana (“Louisiana AG”) issued a CID regarding similar broiler chicken matters that are the subject of Florida CID. The CID requests, among other things, data and information related to the acquisition and processing of broiler chickens and the sale of chicken products. PPC is cooperating with the Louisiana AG in producing documents pursuant to the CID.

On September 1, 2020, the Attorney General of New Mexico filed a complaint ~~raising similar allegations as the class action and direct action complaints before the Illinois Court. The case is styled as~~ ~~State of New Mexico ex rel. Hector Balderas v. Koch Foods, et al., No. D-101-CV-2020-0891 and is pending before~~in the First Judicial District Court in the County of Santa ~~Fe.~~Fe, New Mexico. The complaint alleges the same claims as those made in the In re Broiler Chicken Antitrust Litigation under New Mexico state law. PPC ~~has not been served with~~filed its answer to the ~~complaint.~~complaint on February 1, 2021.

~~Table~~On February 22, 2021, the Attorney General of ~~Contents~~Alaska filed a complaint in Superior Court in the Third Judicial District in Anchorage, Alaska. The complaint alleges the same claims as those made in the In re Broiler Chicken Antitrust Litigation

under Alaska state law. PPC answered the complaint on June 14, 2021.

Other Claims and Proceedings

On October 10, 2016, Patrick Hogan, acting on behalf of himself and a putative class of persons who purchased shares of PPC’s stock between February 21, 2014 and October 6, 2016, filed a class action complaint in the U.S. District Court for the District of Colorado (the “Colorado Court”) against PPC and its named executive ~~officers.~~officers (the “Hogan Litigation”). The complaint alleges, among other things, that PPC’s SEC filings contained statements that were rendered materially false and misleading by PPC’s failure to disclose that (1) PPC colluded with several of its industry peers to fix prices in the broiler-chicken market as alleged in the In re Broiler Chicken Antitrust Litigation, (2) its conduct constituted a violation of federal antitrust laws, (3) PPC’s revenues during the class period were the result of illegal conduct and (4) that PPC lacked effective internal control over financial reporting. The complaint also states that PPC’s industry was anticompetitive and seeks compensatory damages. On April 4, 2017, the Colorado Court appointed another stockholder, George James Fuller, as lead plaintiff. On May 11, 2017, the plaintiff filed an amended complaint, which extended the end date of the putative class period to November 17, 2017. PPC and the other defendants moved to dismiss on June 12, 2017, and the plaintiff filed its opposition on July 12, 2017. PPC and the other defendants filed their reply on August 1, 2017. On March 14, 2018, the Colorado Court dismissed the plaintiff’s complaint without prejudice and issued final judgment in favor of PPC and the other defendants. On April 11, 2018, the plaintiff moved for reconsideration of the Colorado Court’s decision and for permission to file a Second Amended Complaint. PPC and the other defendants filed a response to the plaintiff’s motion on April 25, 2018. On November 19, 2018, the Colorado Court denied the plaintiff’s motion for reconsideration and granted plaintiff leave to file a Second Amended Complaint. On June 8, 2020, the plaintiff filed a Second Amended Complaint against the same defendants,

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based in part on the Indictment (defined below). On July 31, 2020, defendants filed a motion to dismiss the Second Amended Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. ~~Plaintiffs filed an opposition to~~The Colorado Court granted the motion to dismiss on ~~August 31, 2020,~~April 19, 2021 and issued judgment in favor of defendants. On May 17, 2021, the plaintiff filed a motion for amended judgment. PPC and the other defendants filed their ~~reply~~opposition to the motion for amended judgment on ~~September 20, 2020.~~June 7, 2021. The ~~Court's~~Colorado Court’s decision on the motion ~~to dismiss~~for the amended judgment is currently pending.

On January 27, 2017, a purported class action on behalf of broiler chicken farmers was brought against PPC and 4 other producers in the U.S. District Court for the Eastern District of Oklahoma (the “Oklahoma Court”) alleging, among other things, a conspiracy to reduce competition for grower services and depress the price paid to growers. Plaintiffs allege violations of the Sherman Antitrust Act and the Packers and Stockyards Act and seek, among other relief, treble damages. The complaint was consolidated with a subsequently filed consolidated amended class action complaint styled as In re Broiler Chicken Grower Litigation, Case No. CIV-17-033-RJS (the “~~Grower Litigation~~”“Grower Litigation”). The defendants (including PPC) jointly moved to dismiss the consolidated amended complaint on September 9, 2017 for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The Oklahoma Court granted only certain other defendants’ motions challenging jurisdiction. ~~In addition, on March 12, 2018, the U.S. District Court for the Northern District of Texas, Fort Worth Division (the “Bankruptcy Court”) enjoined the Oklahoma Court plaintiffs from litigating the~~ ~~Grower Litigation~~ complaint as pled against PPC because allegations in the consolidated complaint violate the confirmation order relating to PPC’s bankruptcy proceedings in 2008 and 2009. Specifically, the 2009 bankruptcy confirmation order bars any claims against PPC based on conduct occurring before December 28, 2009. On January 6, 2020, the Oklahoma Court denied the ~~defendants'~~pending Rule 12 motion, ~~to dismiss the consolidated amended complaint~~ and lifted the stay on discovery. ~~On February 21, 2020, the Oklahoma Court plaintiffs filed a Second Amended Complaint~~The case is currently in li~~ght of the Bankruptcy Court’s injunction. On April 13, 2020, the Oklahoma Court entered a case management order setting a September 24, 2021 deadline for the close of fact~~ discovery. In September 2020, similar class action complaints were filed in the Colorado Court and the U.S. District Court for the District of Kansas (the “Kansas Court”) alleging claims that mirror those before the Oklahoma Court. On October 6, 2020, the Oklahoma ~~Court~~ plaintiffs filed a motion with the U.S. Judicial Panel on Multidistrict Litigation (the “JPML”) seeking consolidation of ~~the various cases, including any tag-along cases,~~a series of copycat complaints filed in September and ~~transfer of them to the Oklahoma Court. On~~ October 8, 2020 ~~another similar class action complaint was filed~~ in the U.S. District ~~Court~~Courts for the District of Colorado, the District of Kansas, and the Northern District of California. ~~Defendants, on October 13,~~On December 15, 2020, ~~in the Kansas Court case and, on October 14, 2020, in the Colorado Court case, filed motions seeking dismissal of those complaints under the first-to-file rule. The motions before~~ the JPML ~~Colorado Court, and Kansas Court are pending. Discovery in~~ordered the transfer of all cases to the Oklahoma Court for consolidated or coordinated pretrial proceedings. On February 12, 2020, the Oklahoma Court entered a case ~~is ongoing.~~management order in the multi-district litigation setting a February 1, 2022 deadline for the close of fact discovery. That order also set a deadline of September 15, 2022 for the filing of class certification motions, with deadlines of October 27, 2022 for opposition briefing and December 1, 2022 for reply briefing. Under the order, motions for summary judgment are to be filed on February 1, 2023, with oppositions and replies due March 22, 2023, and April 12, 2023, respectively.

On March 9, 2017, a stockholder derivative action, DiSalvio v. Lovette, et al., No. 2017 cv. 30207, was brought against all of PPC’s directors and its Chief Financial Officer, Fabio Sandri, in the Nineteenth Judicial District Court for the County of Weld in Colorado (the “Weld County Court”). The complaint alleges, among other things, that the named defendants breached their fiduciary duties by failing to prevent PPC and its officers from engaging in an antitrust conspiracy as alleged in the In re Broiler Chicken Antitrust Litigation, and issuing false and misleading statements as alleged in the Hogan class action litigation. On April 17, 2017, a related stockholder derivative action, Brima v. Lovette, et al., No. 2017 cv. 30308, was brought against all of ~~PPC’s~~PPC��s directors and its Chief Financial Officer in the Weld County Court. The Brima complaint contains largely the same allegations as the DiSalvio complaint. ~~On May 4, 2017,~~ The DiSalvio and Brima litigations (“the ~~plaintiffs in both the DiSalvio~~Derivative Litigation”) have been consolidated, and ~~Brima litigations moved to (1) consolidate the two stockholder~~on October 14, 2020, an amended shareholder derivative cases, (2) stay the consolidated action until the resolution of the motion to dismiss in the Hogan putative securities class action, and (3) appoint co-lead counsel. The Weld County Court granted the motion on May 8, 2017, staying the proceedings pending resolution of the motion to dismiss in the Hogan litigation.

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~~On January 24, 2018, a stockholder derivative action styled as~~ ~~Sciabacucchi v. JBS S.A. et al.~~ complaint was brought against all of PPC’s directors, JBS S.A., JBS USA Holdings and several members of the Batista family, in the Court of Chancery of the State of Delaware (the “Chancery Court”). The complaintfiled which alleges, among other things, that the named defendants breached their fiduciary duties ~~arising out~~by failing to prevent PPC from engaging in an antitrust conspiracy as alleged in the Broiler litigation, the Indictment (as defined below), and other related proceedings; and by failing to prevent the issuance of ~~PPC’s acquisition of Moy Park. On May 24, 2018, Employees Retirement System~~false and misleading statements as alleged in the Hogan securities litigation and the UFCW securities litigation (as defined below). The consolidated case was stayed, pending the resolution of the ~~City of St. Louis filed a derivative complaint, which was virtually identical~~motion to the Sciabacucchi complaint. Both complaints sought compensatory damages. On July 2, 2018, the Chancery Court granted a stipulation consolidating the cases and making the first complaint (Sciabacucchi) the operative complaint. Also by stipulation, various defendants have been voluntarily dismissed from the case without prejudice. The remaining defendants are JBS S.A., JBS USA Holding, and directors Lovette, Nogueira de Souza, Tomazoni, and Molina. PPC also remainsdismiss in the ~~case as a nominal defendant. On March 15, 2019,~~Hogan Litigation described above. Following the ~~Chancery~~Colorado Court ~~denied the non-PPC~~granting defendants’ motion to dismiss. As a result, the case proceeded to discovery, and trial was scheduled to commence in November 2020. On October 3, 2019, the parties entered into a stipulation agreeing to settle the dispute for (1) a cash payment to PPC by the non-PPC defendants of $42.5 million less any fees and expenses awarded to the plaintiffs’ counsel, as well as any applicable taxes (the “Settlement Amount”), and (2) corporate governance changes to be implemented by PPC. No portion of the Settlement Amount will be paid by PPC to the non-PPC defendants. The settlement was approved by the Chancery Court on January 28, 2020. On March 2, 2020, the Settlement Amount was transferred to PPC, and as a result, PPC recognized income, net of legal fees, of $34.6 million, which is included in ~~Miscellaneous, net~~ dismiss in the ~~Condensed Consolidated Statement of Income~~Hogan litigation, the stay was lifted. The parties then filed a joint motion to continue the stay pending the Colorado Court’s decision on the motion for amended judgment. The Weld County Court granted the ~~nine months ended September 27, 2020.~~motion to continue the stay on June 22, 2021.

Between August 30, 2019 and October 16, 2019, 4 purported class action lawsuits were filed in the U.S. District Court for the District of Maryland (the “Maryland Court”) against PPC and a number of other chicken producers, as well as WMS ~~(Webber,~~Webber, Meng, Sahl and ~~Company)~~Company and Agri Stats. The plaintiffs seek to represent a nationwide class of processing plant production and maintenance workers (“Plant Workers”). They allege that the defendants conspired to fix and depress the compensation paid to Plant Workers in violation of the Sherman Act and seek damages from January 1, 2009 to the present. On November 12, 2019, the Maryland Court ordered the consolidation of the ~~four~~4 cases for pretrial purposes. The defendants (including PPC) jointly moved to dismiss the consolidated complaint on November 22, 2019. Shortly thereafter, the plaintiffs informed the defendants and the Maryland Court that they would be amending their complaint, which they did on December 20, 2019. The consolidated amended complaint asserts largely similar allegations to the pleadings in the consolidated complaint, but was extended to include more class members and turkey processors as well as chicken processors. The defendants filed motions to dismiss the consolidated amended complaint on March 2, ~~2020, with oppositions originally due on April 24, 2020 and replies on May 21,~~ 2020. The Maryland Court ~~has issued~~dismissed PPC and a ~~series~~number of Standing Orders related to the exigent circumstances created by COVID-19, which extended filing deadlines by 84 days, including the deadlines for the response briefings related to defendants' motions to dismiss. The Company filed its motion to dismiss, andother defendants on September 16, 2020 without prejudice. The plaintiffs subsequently filed amended complaints on November 2, 2020 re-naming PPC and the other dismissed defendants. On June 14, 2021, PPC entered into a binding Settlement Agreement to settle all claims with the putative class for $29.0 million. As a result of this agreement, PPC recognized this expense within Selling, general and administrative expense in the Consolidated Statements of Income for the three and six months ended June 27, 2021. A motion for preliminary approval of the settlement was filed on July 16, 2021, which the Maryland Court granted on July 20, 2021. The settlement is still subject to final approval by the ~~motion without prejudice. The~~ Maryland ~~Court did allow, however, the plaintiffs to amend their Complaint, which they are expected to do.~~Court.

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On July 6, 2020, United Food and Commercial Workers International Union Local 464A (“UFCW”), acting on behalf of itself and a putative class of persons who purchased shares of PPC stock between February 9, 2017 and June 3, 2020, filed a class action complaint in the Colorado Court against PPC, and Messrs. Lovette, Penn, and Sandri. The complaint alleges, among other things, that PPC’s public statements regarding its business and the drivers behind its financial results were false and misleading due to the defendants’ purported failure to disclose its participation in an antitrust conspiracy as alleged in the Broiler litigation and the Indictment (defined below). On September 4, 2020, UFCW and the New Mexico State Investment Council (“NMSIC”) filed competing motions to be appointed lead plaintiff under the Private Litigation Securities Reform Act. ~~A decision~~On March 17, 2021, the court appointed NMSIC as lead plaintiff. On May 26, 2021, NMSIC filed an amended complaint, which shortened the end date of the putative class period to June 3, 2020. PPC and the other defendants moved to dismiss the amended complaint on July 19, 2021. NMSIC’s opposition to the ~~lead plaintiff~~ motions to dismiss is ~~currently pending.~~due on September 1, 2021.

~~PPC believes it has strong defenses in the pending litigations described above and intends to contest them vigorously.~~ PPC cannot predict the outcome of these pending litigations nor when they will be resolved. The consequences of the pending litigation matters are inherently uncertain, and adverse actions, judgments or settlements in some or all of these matters may result in materially adverse monetary damages, fines, penalties or injunctive relief against PPC. Any claims or litigation, even if fully indemnified or insured, could damage PPC’s reputation and make it more difficult to compete effectively or to obtain adequate insurance in the future.

DOJ Antitrust Matter

On July 1, 2019, the ~~DOJ~~U.S. Department of Justice (the “DOJ”) issued a subpoena to PPC in connection with its investigation arising from the In re Broiler Chicken Antitrust Litigation. The Company has been cooperating with the DOJ investigation.

On June 3, 2020, PPC learned of an indictment by a Grand Jury in the Colorado Court against Jayson Penn, the chief executive officer and president of PPC at that time, in addition to two former employees of PPC and a former employee of a different company (the “Indictment”). The Indictment alleges that the defendants entered into and engaged in a conspiracy to suppress and eliminate competition by rigging bids and fixing prices and other price-related terms for broiler chicken products

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sold in the U.S., in violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. Section 1. On June 4, 2020, PPC learned that Mr. Penn pleaded not guilty to the charges. Effective June 15, 2020, Mr. Penn began a paid leave of absence from PPC. In connection with Mr. Penn’s leave of absence, PPC’s Board of Directors appointed the chief financial officer of PPC, Fabio Sandri, to serve in the additional role of PPC’s interim president and chief executive officer. On September 22, 2020, ~~PPC's~~PPC’s Board of Directors appointed Fabio Sandri as ~~PPC's~~PPC’s President and Chief Executive Officer in addition to his role as Chief Financial Officer. On September 22, 2020, PPC disclosed that Mr. Penn was no longer with the Company. On February 10, 2021, the Company appointed Matthew Galvanoni as its new Chief Financial Officer, effective March 15, 2021.

On October 6, 2020, PPC learned of a superseding indictment by a Grand Jury in the Colorado Court against former Chief Executive Officer of PPC, William Lovette, one additional former employee of PPC, and four employees of different companies. The ~~Company has initiated a search process~~superseding indictment alleges similar claims to ~~identify a new chief financial officer.~~the Indictment.

On October 13, 2020, the Company announced that it had entered into a plea agreement (the “Plea Agreement”) with the DOJ pursuant to which the Company agreed to (1) plead guilty to one count of conspiracy in restraint of competition involving sales of broiler chicken products in the U.S. in violation of the Sherman Antitrust Act, 15 U.S.C. § 1, and (2) pay a fine of ~~$110,524,140.~~$110.5 million. The Company recognized the fine as expense which is included in Selling, general and administrative expense in the Condensed Consolidated Statements of Income for the three ~~and nine~~ months ended September 27, 2020. Under the Plea Agreement, ~~which is subject to the approval of the Colorado Court,~~ the DOJ agreed not to bring further charges against the Company for any antitrust violation involving the sale of broiler chicken products in the U.S. occurring prior to the date of the Plea Agreement. On February 23, 2021, the Colorado Court approved the Plea Agreement and assessed a fine of $107.9 million. The Company continues to cooperate with the DOJ in connection with the ongoing federal antitrust investigation into alleged price fixing and other anticompetitive conduct in the broiler chicken industry.

~~J&F Investigation~~

On May 3, 2017, certain officers of J&F Investimentos S.A. (“J&F,” and together with the companies controlled by J&F, the “J&F Group”), a company organized in Brazil and an indirect controlling stockholder of the Company, including a former senior executive and former board members of the Company, entered into cooperation agreements (~~acordos de colaboração) (collectively, the “Cooperation Agreements”) with the Brazilian Office of the Prosecutor General (Procuradoria-Geral da República~~) in connection with certain illicit conduct by J&F and such individuals acting in their capacity as J&F executives. The details of such illicit conduct are set forth in separate annexes to the Cooperation Agreements, and include admissions of improper payments to politicians and political parties in Brazil during a ten-year period in exchange for receiving, or attempting to receive, favorable treatment for certain J&F Group companies in Brazil.

On June 5, 2017, J&F, for itself and as the controlling shareholder of the J&F Group companies, entered into a leniency agreement (the “Leniency Agreement”) with the Brazilian Federal Prosecutor (Ministério Público Federal) whereby J&F assumed responsibility for the conduct that was described in the annexes to the Cooperation Agreements. In connection with the Leniency Agreement, J&F has agreed to pay a fine of 10.3 billion Brazilian ~~reais~~, adjusted for inflation, over a 25-year period. Various proceedings by Brazilian governmental authorities remain pending against J&F and certain of its former or current officers seeking to invalidate the Cooperation Agreements and impose more severe penalties for additional alleged illicit conduct that was not disclosed in the annexes to the Cooperation Agreements.

On October 14, 2020, certain affiliates of the Company – J&F Investimentos, S.A., JBS S.A., Joesley Batista and Wesley Batista – entered into a settlement agreement (the “Settlement”) with the SEC. The Company was not a party to the Settlement, was not a respondent in the related proceedings, and is not required to make any related payment. Under the Settlement, the SEC issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934 (the “SEC Order”) finding securities law violations by such affiliates that resulted in the Company, an indirect subsidiary, failing to maintain accurate books and records and internal accounting controls. According to the SEC Order, the violations, which related to certain intercompany transactions from 2009 to 2015, were unbeknownst to the Company’s management, and the SEC Order will have no impact on the Company’s previously filed financial statements or its prior assessments of internal control over financial reporting.

On October 14, 2020, J&F reached an agreement (the “J&F Plea Agreement”) with the DOJ regarding violations stemming from the same facts and conduct that were the subject of the Leniency Agreement and the Cooperation Agreements (described above). Pursuant to the J&F Plea Agreement, J&F pled guilty to one count of conspiracy to violate the U.S. Foreign Corrupt Practices Act. The J&F Plea Agreement imposed a fine of $256,497,026, and J&F was required to make a payment of $128,248,513 under the J&F Plea Agreement (due to J&F receiving a 50% credit for amounts paid to Brazilian authorities). JBS and PPC are not parties to the J&F Plea Agreement and will not bear any liabilities arising from it. The J&F Plea Agreement resolved the U.S. criminal legal exposure of J&F and all its affiliates related to the conduct that was the subject of the Leniency Agreement and the Cooperation Agreements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Summary

Overview

We are one of the largest chicken producers in the world, and as a vertically integrated company, we are able to control every phase of the production process, which helps us manage food safety and quality, control margins and improve customer service. This gives us the opportunity to continue to create growth and development opportunities, further increasing our position as a leading domestic and global protein company. With the acquisition of Pilgrim’s Pride Limited (“PPL”) and Moy Park in 2019 and 2017, respectively, we solidified ourselves as a leading European food company while diversifying our product mix with introduction into the pork market. With the acquisition of GNP in 2017, we further solidified ourselves as a leading poultry company within the U.S.

We reported a net ~~income~~loss attributable to Pilgrim’s of ~~$33.4~~$66.5 million, or ~~$0.14~~$0.27 per diluted common share, and ~~net income~~loss before tax totaling ~~$56.0~~$40.5 million, for the ~~three~~six months ended ~~September~~June 27, ~~2020.~~2021. These operating results included net sales of ~~$3.1~~$6.9 billion, gross profit of ~~$313.8~~$641.5 million and ~~$367.6~~$115.0 million of cash ~~generated from operations.~~used in operating activities. We generated a consolidated operating margin of ~~3.1%~~0.5% with operating margins of ~~0.1%~~(3.7)%, ~~3.5%~~1.8% and ~~18.4% in our United States (“U.S.”), United Kingdom (“U.K.”) and Europe, and Mexico reportable segments, respectively.~~

We reported net income attributable to Pilgrim’s of $94.7 million, or $0.38 per diluted common share, and profit before tax totaling $152.6 million, for the nine months ended September 27, 2020. These operating results included net sales of $9.0 billion, gross profit of $610.8 million and $508.3 million of cash generated from operations. We generated a consolidated operating margin of 2.3% with operating margins of 2.3%, 3.1% and 0.2%18.2% in our U.S., U.K. and Europe, and Mexico reportable segments, respectively. For the six months ended June 27, 2021, we generated EBITDA and Adjusted EBITDA of $219.5 million and $625.5 million, respectively. A reconciliation of net income to EBITDA and Adjusted EBITDA is included below.

~~As discussed in “Note 20. Commitments and Contingencies”, on October 13, 2020,~~Cybersecurity Attack

On May 30, 2021, we ~~announced~~determined that we ~~have entered into~~were the target of an organized cybersecurity attack (the “Cyberattack”) affecting some of the servers supporting our global IT systems. Upon learning of the intrusion, we contacted federal officials and activated our cybersecurity protocols, including voluntarily shutting down all affected systems to isolate the intrusion, limit the potential infection and preserve core systems. Restoring systems critical to production was prioritized. In addition, encrypted backup servers, which were not affected by the Cyberattack, allowed for a ~~plea agreement (the “Plea Agreement”)~~return to full operations within two days. We incurred a loss of approximately $10.0 million related to the Cyberattack, which included an allocation of $2.4 million of the total $11.0 million ransom paid by our parent company.

Our response, IT systems and encrypted backup servers allowed for a rapid recovery from the Cyberattack. As a result, the loss of food produced was limited to less than one day of production. We continue to cooperate with ~~the~~ ~~U.S. Department~~government officials regarding this incident. We are not aware of ~~Justice (the “DOJ”). As~~any evidence that any customer, supplier, employee or financial data has been compromised or misused as a result of the ~~Plea Agreement, we recognized a fine of $110,524,140 as expense, which is included in~~ ~~Selling, general and administrative expense~~ ~~in the Condensed Consolidated Statements of Income for the three and nine months ended September 27, 2020. In addition, as discussed below under~~ “Hometown Strong Initiative”, we launched an initiative during the third quarter to support the communities in which we operate with unexpected challenges, such as the COVID-19 pandemic, and as a result, we recorded $14.5 million in incremental donation expense related to this initiative during the third quarter. Adjusted net income for the three and nine months ended September 27, 2020, which excludes the DOJ antitrust fine, increase in donation expense and other items shown in the “Reconciliation of Adjusted Net Income” table below, was $161.7 million and $206.9 million, respectively. See “Reconciliation of Adjusted Net Income” section below for a reconciliation of Net income attributable to Pilgrim's to Adjusted net income attributable to Pilgrim's.Cyberattack.

Impact of COVID-19

The extensive impact of the pandemic caused by the novel coronavirus (“COVID-19”) has resulted and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world. In an effort to halt the outbreak of COVID-19, a number of countries, states, counties and other jurisdictions have imposed various measures, including but not limited to, voluntary and mandatory quarantines, stay-at-home orders, travel restrictions, limitations on gatherings of people, reduced operations and extended closures of businesses. On April 28, 2020, former President Trump signed an executive order directing the Department of Agriculture to ensure meat and poultry processors in the U.S. continue operations uninterrupted to the maximum extent possible and designating meat and poultry processing plants as critical infrastructure.

As the global spread of the virus began to accelerate late in March of 2020, we began to experience adverse impacts to our business and financial results. The impact of the COVID-19 pandemic included disruptions in supply chain, an increase in both broiler and chick costs and an increase in payroll and benefits costs. ~~During~~With the ~~three months ended September 27, 2020, the impact of the~~uncertainty surrounding COVID-19, pandemic on our financial results decreased because of increased demand for our products at retail grocery stores and quick service restaurants and our ability to meet this demand through our transitioned business operations, as further discussed below. Wewe believe that we will continue to experience certain disruptions to our business ~~due to the COVID-19 pandemic~~ for the remainder of ~~2020~~2021.

During 2021, COVID-19 vaccinations have increased while daily COVID-19 case rates decreased, leading to gradual relaxations of COVID-19 restrictions, such as those directly affecting restaurants’ indoor dining capacities and ~~into 2021.~~increased consumer mobility. The delivery of the second and third COVID-19 direct relief packages to taxpayers, in addition to extended unemployment benefits, were supportive of consumer income. These same relief packages have been a factor in labor shortages and higher absenteeism at our facilities, which has caused a reduction in chicken production.

The impact of COVID-19 and measures to prevent its spread have affected and continue to affect our business in a number of ways.

•Our workforce. Employee health and safety is our priority. As an essential business in a critical infrastructure industry, we continue to produce chicken and pork products, while coordinating with and implementing guidance from the U.S. Centers for Disease Control and Prevention, the National Institute of Occupational Safety and Health, and local and regional Departments of Health in an effort to keep our employees safe and healthy. Measures we have implemented include, but are not limited to: increasing physical distancing of our employees, where possible, by staggering start and shift breaks, placing on-site tents to create more space for employees at break and at meal times, and installing physical barriers to distance employees while working on production lines; adding temperature and symptom screening stations for employees prior to entering our facilities; increasing personal hygiene practices and providing our employees additional personal protective equipment and sanitation stations; and increasing sanitation

of our facilities. In the U.S., we provided appreciation bonuses to eligible employees in April and May of 2020 and expanded certain sick leave policies to provide more flexibility. In addition, we implemented global travel restrictions and work-from-home policies for employees who have the ability to work remotely.

•Our operations. All of our 60 production facilities are operating, although some facilities have reduced production levels and outputs due to increased health and safety measures, employee absenteeism and as a consequence of the decline in demand by restaurants and other foodservice businesses.. To date, we have not experienced a material impact from a plant closure and our facilities have largely been exempt from government closure orders.

•Demand for our products. COVID-19 and the implementation of restricted living have led to a shift in demand from restaurants to retail grocery stores, with consumers eating more at home due to ~~stay-at-home orders.~~pandemic restrictions. In our U.S. and Mexico businesses, demand for parts and whole-birds (typically bound for restaurants) and prepared foods (distributed, in part, to schools) has declined, while our U.K. and Europe business, which is more retail focused, has generally seen less of an impact. However, two PPL plants had their export licenses to China suspended due to pandemic issues. In an effort to counter the adverse effects of COVID-19, we have transitioned, where commercially reasonable and possible to do so, our business operations to be in the best position to supply COVID-19 market demands. These efforts have included transferring live supply to case ready, shifting production form and mix from foodservice to retail, increasing capacity utilization of retail packaging equipment, and analyzing export positions.

•~~Liquidity.~~Our liquidity position is strong and we have taken additional measures to increase liquidity to prepare for the challenging environment ahead. On March 20, 2020 and March 25, 2020, we elected to borrow $200.0 million and $150.0 million, respectively, under the U.S. Credit Facility as a precautionary measure in order to increase our cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 outbreak. The draw-down proceeds are expected to be held on our balance sheet and may be used for general corporate purposes.

•Foreign currency exchange rates and commodity prices. During the ~~nine~~six months ended ~~September~~June 27, ~~2020,~~2021, we experienced increased volatility in foreign currency exchange rates and commodity prices, in part related to the uncertainty from COVID-19, as well as actions taken by governments and central banks in response to COVID-19. We expect continued volatility in foreign currency exchange rates and commodity prices during ~~2020,~~2021, though we cannot reasonably estimate the duration, extent or impact of that volatility.

•CARES Act. On March 27, 2020, the U.S. government enacted the CARES Act, which includes modifications to the limitation on business interest expense and net operating loss provisions, and provides a payment delay of employer payroll taxes during 2020 after the date of enactment. ~~We estimate~~As of the ~~payment of~~June 27, 2021, we have delayed approximately ~~$51~~$52.3 million of employer payroll taxes ~~otherwise due in 2020 will be delayed~~ with 50% due by December 31, 2021 and the remaining 50% by December 31, 2022.

Senior Notes due 2031

On April 8, 2021, we completed a sale of $1.0 billion aggregate principal amount of 4.25% sustainability-linked senior notes due 2031 (“Senior Notes due 2031”). We used the net proceeds of the sale, together with cash on hand, to redeem our 5.75% senior notes due 2025 (“Senior Notes due 2025”). From and including October 15, 2026, the interest rate payable on the notes will increase to 4.50% per annum unless we timely notify the related indenture trustee that our greenhouse gas emissions intensity reduction target has been satisfied and that the satisfaction of the target has been confirmed by a qualified provider of third-party assurance or attestation services appointed by us to review our statement of the greenhouse gas emissions intensity in accordance with its customary procedures.

Additional information regarding the Senior Notes due 2031 is included in “Note 11. Debt.”

Announced Acquisition

On June 17, 2021, the Company announced that it has executed an acquisition agreement to acquire the Meats and Meals business of Kerry Consumer Foods in the United Kingdom and Ireland (the “Acquisition”). The Acquisition, which was unanimously approved by Pilgrim’s Board of Directors, values the acquired businesses at a £680 million (or approximately $952 million based on a 1.40 USD/GBP exchange rate as of June 16, 2021) enterprise value.

Kerry Meats is a leading manufacturer of branded and private label meats, meat snacks and food-to-go products in the United Kingdom and Ireland. Kerry Meals is a leading ethnic chilled and frozen ready meals business in the United Kingdom. The combined businesses produced over £725 million in annual sales during the year ended December 31, 2020 and have more than 4,500 team members.

The Acquisition is expected to close in the fourth quarter of 2021 and is subject to routine closing purchase price adjustments (including working capital and net debt adjustments), customer closing conditions and regulatory approvals.

Raw Materials and Pricing

Our U.S. and Mexico segments use corn and soybean meal as the main ingredients for feed production, while our U.K. and Europe segment uses wheat, soybean meal and barley as the main ingredients for feed production.

The spread of COVID-19 and the resulting consumer reaction early in the second quarter triggered an unexpected shift in demand from foodservice to retail markets. While the industry redirected supply from foodservice to retail, not all foodservice items could be quickly reworked toward retail. This drove a sudden supply and demand imbalanceMarket prices for chicken products during the second quarter, with increased amounts of excess products on the market and a decline in unit pricing temporarily below cost. The industry adjusted through reductions of egg sets and chick placements which continued throughout the three months ended ~~September~~June 27, ~~2020, resulting in lower~~2021 began the period slightly above the 5-year average and maintained levels well above historical norms throughout the period. During the second quarter of 2021, the industry saw higher levels of ~~broiler production. Retail demand remained robust as consumers predominantly favored food at home consumption.~~

~~During~~egg sets, chick placements and production than second quarter of 2020 due to the ~~third quarter, foodservice demand, while not yet at pre-COVID-19 levels, has improved since~~reductions in prior year resulting from the onset of the COVID-19 ~~pandemic~~pandemic. The result of these increases drove an increase in broiler production relative to levels in the prior year. The continued easing of COVID-19 restrictions and increased vaccinations against COVID-19 throughout the ~~low point~~U.S. drove a significantly improved foodservice demand environment for chicken. The retail environment maintained consistent levels as consumers continue to utilize chicken as a staple in their at-home meal preparation. Increased chicken demand coincided with mild production growth and already pressured cold storage inventory levels, which entered the quarter well below the 5-year average, resulting in the continued strength of ~~demand experienced April 2020. As a result, the~~ market prices for chicken products in the three months ended ~~September~~June 27, ~~2020~~2021.

While market prices for chicken products have ~~become relatively more stable and settled at a level within the five-year range, moving with seasonal norms. While chicken prices have reverted to more normal seasonal levels and movements,~~improved thus far in 2021, prices for the remainder of ~~2020 and into 2021~~the year will depend on the ~~continued~~ recovery of the foodservice industry ~~together with~~and the evolution of retail meat demand, influenced by factors such as the ~~evolution of the~~ COVID-19 ~~crisis, how governments impose~~pandemic, government regulation and ~~ease restrictions,~~ uncertainty surrounding both the general economy and ~~unemployment rates, total~~ protein ~~supply and how these elements affect consumers’ chicken consumption domestically and globally.~~

~~Hometown Strong Initiative~~

The Hometown Strong initiative was developed in order to help the communities in which we operate respond to the unexpected challenges on society, such as the COVID-19 pandemic. We believe the Hometown Strong initiative will provide consequential investment projects for a lasting impact on these communities and help them prepare for unanticipated challenges and build for the future. For 2020, we committed to Hometown Strong donations of $20.0 million, and during the three months and nine months ended September 27, 2020, we recorded $14.5 million in incremental donations expense relating to this initiative.supply.

Reportable Segments

We operate in three reportable segments: U.S., U.K. and Europe, and Mexico. We measure segment profit as operating income. Corporate expenses are allocated to the Mexico and U.K. and Europe reportable segments based upon various apportionment methods for specific expenditures incurred related thereto with the remaining amounts allocated to the U.S. For additional information, see “Note ~~19.~~17. Reportable Segments” of our Condensed Consolidated Financial Statements included in this quarterly report.

Results of Operations

Three Months Ended ~~September~~June 27, ~~2020~~2021 Compared to the Three Months Ended ~~September 29, 2019~~June 28, 2020

Net sales. Net sales generated in the three months ended ~~September~~June 27, ~~2020~~2021 increased ~~$297.2~~$813.7 million, or ~~10.7%~~28.8%, from net sales generated in the three months ended ~~September 29, 2019.~~June 28, 2020. The following table provides net sales information:


Sources of net sales	Sources of net sales	Three Months Ended September 27, 2020		Change from Three Months Ended September 29, 2019				Sources of net sales	Three Months Ended June 27, 2021		Change from Three Months Ended June 28, 2020
				Amount		Percent					Amount		Percent
		(In thousands, except percent data)							(In thousands, except percent data)
U.S.	U.S.	$	1,894,222	$	(37,435)	(1.9)	%	U.S.	$	2,248,470	$	449,781	25.0	%
U.K. and Europe	U.K. and Europe	845,677		328,146		63.4	%	U.K. and Europe	935,845		178,644		23.6	%
Mexico	Mexico	335,222		6,440		2.0	%	Mexico	453,383		185,250		69.1	%
Total net sales	Total net sales	$	3,075,121	$	297,151	10.7	%	Total net sales	$	3,637,698	$	813,675	28.8	%

U.S. Reportable Segment. U.S. net sales generated in the three months ended ~~September~~June 27, ~~2020 decreased $37.4~~2021 increased $449.8 million, or ~~1.9%~~25.0%, from U.S. net sales generated in the three months ended ~~September 29, 2019~~June 28, 2020 primarily ~~because of a decrease~~due to an increase in net sales per pound ~~partially offset by an~~which contributed $447.7 million, or 24.9 percentage points, to the increase in ~~sales volume.~~net sales. The ~~decrease~~increase in net sales per pound ~~contributed $57.2 million, or 2.9 percentage points, to the decrease~~was driven primarily from higher than average chicken commodity prices in ~~net sales, and resulted from reduced demand for foodservice products and commodity pricing volatility due to the COVID-19 pandemic. The sales volume increase experienced by~~ the U.S. ~~segment partially offset the decrease in net sales per pound by $19.8 million, or 1.0 percentage points. When compared with~~during the three months ended June ~~28, 2020, however, U.S.~~27, 2021. Also contributing to the increase in net sales ~~generated in the three months ended September 27, 2020 increased $95.5~~was an increase from sales volume of $2.1 million, or ~~5.3~~0.1 percentage ~~points, as a result of increasing demand for foodservice products and the stabilizing of commodity pricing due to recent developments in the COVID-19 pandemic.~~points.

U.K. and Europe Reportable Segment. U.K. and Europe net sales generated in the three months ended ~~September~~June 27, ~~2020~~2021 increased ~~$328.1~~$178.6 million, or ~~63.4%~~23.6%, from U.K. and Europe net sales generated in the three months ended ~~September 29, 2019~~June 28, 2020 primarily ~~because~~due to a favorable impact of ~~the acquired Pilgrim's Pride Ltd. (“PPL”) operations, which were acquired in October 2019, partially offset by a decrease~~foreign currency translation, an increase in net sales ~~generated by our existing U.K.~~per pound and ~~Europe operations.~~an increase in sales volume. The favorable impact of ~~the acquired PPL operations~~foreign currency translation contributed ~~$341.8~~$103.6 million, or ~~66.0~~13.7 percentage points, to the increase in net sales. The ~~decrease~~increase in sales volume contributed $61.5 million, or 8.1 percentage points, to the increase in net sales and was primarily driven by ~~our existing U.K. and Europe operations offset~~market recoveries in foodservice from the ~~favorable impact~~lessening of restrictions due to the ~~PPL operations on net sales by $13.6 million, or 2.6 percentage points.~~COVID-19 pandemic from prior year. The decrease in net sales by our existing U.K. and Europe operations primarily resulted from a decrease in sales volume of $38.0 million. This decrease in sales volume was partially offset by the favorable impact of foreign currency translation and an increase in net sales per pound ~~of $21.3~~contributed $13.5 million, ~~and $3.1 million, respectively. The decrease~~or 1.8 percentage points, to the increase in net sales ~~in our existing U.K~~ and ~~Europe operations is a result of reduced demand for foodservice products due~~was primarily driven by changes to ~~the COVID-19 pandemic.~~feed and other production input costs.

Mexico Reportable Segment. Mexico net sales generated in the three months ended ~~September~~June 27, ~~2020~~2021 increased ~~$6.4~~$185.3 million, or ~~2.0%~~69.1%, from Mexico net sales generated in the three months ended ~~September 29, 2019~~June 28, 2020 primarily ~~because of~~due to an increase in net sales per pound of $119.9 million, or 44.7 percentage points, and ~~an increase in sales volume. These increases in net sales were partially offset by the unfavorable~~a favorable impact of foreign currency ~~remeasurement. The~~remeasurement of $63.6 million, or 23.7 percentage points. This increase in net sales per pound ~~and sales volume contributed $47.5 million, or 14.5 percentage points, and $5.2 million, or 1.6 percentage points, respectively,~~was driven primarily by higher live chicken commodity prices in Mexico during the three months ended June 27, 2021 in comparison to the three months ended June 28, 2020. Also contributing to the increase in net ~~sales. The unfavorable impact~~sales was an increase from sales volume of ~~foreign currency remeasurement partially offset these increases with a decrease to net sales of $46.3~~$1.8 million, or ~~14.1~~0.7 percentage points.

Gross profit. Gross profit increased by ~~$31.6~~$260.4 million, or ~~11.2%~~217.2%, from ~~$282.2~~$119.9 million generated in the three months ended ~~September 29, 2019~~June 28, 2020 to ~~$313.8~~$380.2 million generated in the three months ended ~~September~~June 27, ~~2020.~~2021. The following tables provide information regarding gross profit and cost of sales information:


Components of gross profit	Three Months Ended June 27, 2021		Change from Three Months Ended June 28, 2020				Percent of Net Sales
							Three Months Ended
			Amount		Percent		June 27, 2021		June 28, 2020
	(In thousands, except percent data)
Net sales	$	3,637,698	$	813,675	28.8	%	100.0	%	100.0	%
Cost of sales	3,257,457		553,293		20.5	%	89.5	%	95.8	%
Gross profit	$	380,241	$	260,382	217.2	%	10.5	%	4.2	%

Components of gross profit Three Months Ended September 27, 2020 Change from Three Months Ended September 29, 2019 Percent of Net Sales
Three Months Ended
Amount Percent September 27, 2020 September 29, 2019
(In thousands, except percent data)
Net sales $ 3,075,121 $ 297,151 10.7 % 100.0 % 100.0 %
Cost of sales 2,761,279 265,506 10.6 % 89.8 % 89.8 %
Gross profit $ 313,842 $ 31,645 11.2 % 10.2 % 10.2 %


Sources of gross profit	Three Months Ended June 27, 2021		Change from Three Months Ended June 28, 2020
			Amount		Percent
	(In thousands, except percent data)
U.S.	$	240,348	$	152,327	173.1	%
U.K. and Europe	50,045		(6,603)		(11.7)	%
Mexico	89,834		114,844		459.2	%
Elimination	14		(186)		(93.0)	%
Total gross profit	$	380,241	$	260,382	217.2	%


Sources of cost of sales	Three Months Ended June 27, 2021		Change from Three Months Ended June 28, 2020
			Amount		Percent
	(In thousands, except percent data)
U.S.	$	2,008,122	$	297,454	17.4	%
U.K. and Europe	885,800		185,247		26.4	%
Mexico	363,549		70,406		24.0	%
Elimination	(14)		186		93.0	%
Total cost of sales	$	3,257,457	$	553,293	20.5	%

Sources of gross profit Three Months Ended September 27, 2020 Change from Three Months Ended September 29, 2019
Amount Percent
(In thousands, except percent data)
U.S. $ 183,133 $ (9,050) (4.7) %
U.K. and Europe 60,330 17,289 40.2 %
Mexico 70,144 23,195 49.4 %
Elimination 235 211 879.2 %
Total gross profit $ 313,842 $ 31,645 11.2 %

Sources of cost of sales Three Months Ended September 27, 2020 Change from Three Months Ended September 29, 2019
Amount Percent
(In thousands, except percent data)
U.S. $ 1,711,089 $ (28,385) (1.6) %
U.K. and Europe 785,347 310,857 65.5 %
Mexico 265,078 (16,755) (5.9) %
Elimination (235) (211) 879.2 %
Total cost of sales $ 2,761,279 $ 265,506 10.6 %

U.S. Reportable Segment. Cost of sales incurred by our U.S. operations during the three months ended ~~September~~June 27, ~~2020 decreased $28.4~~2021 increased $297.5 million, or ~~1.6%~~17.4%, from cost of sales incurred by our U.S. segment during the three months ended ~~September~~March 29, ~~2019.~~2020. Cost of sales ~~decreased~~increased primarily because of the impact of ~~decreased~~increased cost per pound sold of ~~$46.3~~$281.0 million, or ~~2.6~~16.4 percentage points, ~~partially offset by~~and increased cost from sales volume of ~~$17.9~~$16.5 million, or 1.0 percentage ~~points.~~point. Included in the ~~decrease~~increased cost of sales was an $248.9 million increase in ~~cost per pound sold was~~live operations costs and a ~~decrease~~$14.0 million increase in payroll expenses. The increase in live operations costs includes an increase in feed costs of ~~$39.3~~$216.0 million driven primarily ~~due to a $44.5 million decrease~~from higher corn and soy commodity prices, one of our main ingredients in feed, ~~ingredient costs. Also included~~an increase of $20.6 million in the decrease in cost per pound sold was a decrease in derivative expense of $31.8 million resulting from higher realized losses in commodity derivatives in the three months ended September 29, 2019. Partially offsetting these decreases in cost per pound sold were increases in other live costs, benefitchick costs and outside services of $19.8 million, $15.7 million and $4.4 million, respectively. Benefits increased mainly because of increases related to the COVID-19 pandemic and the increased live costs were mainly a result of an increase of $17.1 million in contract grower ~~costs due to higher contract rates. The increase in outside services resulted from an increase in outside processing labor.~~costs. Other factors affecting cost of sales were individually immaterial.

U.K. and Europe Reportable Segment. Cost of sales incurred by our U.K. and Europe operations during the three months ended ~~September~~June 27, ~~2020~~2021 increased ~~$310.9~~$185.2 million, or ~~65.5%~~26.4%, from cost of sales incurred by our U.K. and Europe segment during the three months ended ~~September 29, 2019, primarily because of costs incurred by the acquired PPL operations, partially offset by a decrease~~June 28, 2020. The increase in cost of sales ~~incurred by our existing U.K.~~was primarily from the unfavorable impact of foreign currency translation, increased sales volume and ~~Europe operations. Cost of sales incurred by the acquired PPL operations contributed $325.6~~increased cost per pound sold, contributing $98.0 million, or ~~68.6~~14.0 percentage points, $56.9 million, or 8.1 percentage points, and $30.3 million, or 4.3 percentage points, respectively, to the increase in cost of sales. ~~Cost of sales related to the existing U.K. and Europe operations decreased $14.8 million, or 3.1 percentage points, primarily from a decrease~~The increase in sales volume is primarily from market recoveries in foodservice from the lessening of ~~$34.8 million, partially offset by~~restrictions due to the ~~unfavorable impact of foreign currency translation and an~~COVID-19 pandemic from prior year. The increase in ~~cost~~net sales per pound ~~sold of $19.4 million~~is primarily from changes to feed and $0.6 million, respectively. Included in the increased cost per pound sold in our existing U.K. and Europe operations was a $4.0 million increase in payroll costs from increased pay rates and bonuses during the COVID-19 pandemic.other input costs. Other factors affecting cost of sales were individually immaterial.

Mexico Reportable Segment. Cost of sales incurred by our Mexico operations during the three months ended ~~September 27, 2020 decreased $16.8~~March 28, 2021 increased $70.4 million, or ~~5.9%~~24.0%, from cost of sales incurred by our Mexico segment during the three months ended ~~September 29, 2019.~~June 28, 2020. This ~~decrease~~increase was ~~primarily because of the favorable~~driven by an unfavorable impact of foreign currency remeasurement, increased cost per pound sold and an increase in sales volume of ~~$36.6~~$51.0 million, or ~~13.0~~17.3 percentage ~~points.~~points, $17.5 million, or 6.0 percentage points, and $1.9 million, or 0.7 percentage points, respectively. The ~~favorable impact of foreign currency remeasurement was partially offset by increases~~increase in cost per pound sold was primarily driven by increases in corn and ~~sales volume of $15.3 million, or 5.5 percentage points, and $4.5 million, or 1.6 percentage points, respectively. Included in the increased cost per pound sold was a $6.5 million increase in utility~~soy costs, ~~due to increased natural gas costs from increased rates and a $3.2 million increase in contracted grower pay due to increased pay rates.~~which are used as feed. Other factors affecting cost of sales were individually immaterial.

Operating income. Operating income decreased by ~~$93.9~~$150.4 million, or ~~49.9%~~551.2%, from ~~$188.2~~$27.3 million generated in the three months ended ~~September 29, 2019~~June 28, 2020 to ~~$94.3~~$123.1 million generated in the three months ended ~~September~~June 27, ~~2020.~~2021. The following tables provide information regarding operating income and selling, general and administrative (“SG&A”) expense:


Components of operating income	Three Months Ended June 27, 2021		Change from Three Months Ended June 28, 2020				Percent of Net Sales
							Three Months Ended
			Amount		Percent		June 27, 2021		June 28, 2020
	(In thousands, except percent data)
Gross profit	$	380,241	$	260,382	217.2	%	10.5	%	4.2	%
SG&A expense	503,372		410,802		443.8	%	13.8	%	3.3	%

Operating income	$	(123,131)	$	(150,420)	(551.2)	%	(3.4)	%	1.0	%

Components of operating income Three Months Ended September 27, 2020 Change from Three Months Ended September 29, 2019 Percent of Net Sales
Three Months Ended
Amount Percent September 27, 2020 September 29, 2019
(In thousands, except percent data)
Gross profit $ 313,842 $ 31,645 11.2 % 10.2 % 10.2 %
SG&A expense 219,554 125,522 133.5 % 7.1 % 3.4 %
Administrative restructuring activity — 20 (100.0) % — % — %
Operating income $ 94,288 $ (93,897) (49.9) % 3.1 % 6.8 %


Sources of operating income	Three Months Ended June 27, 2021		Change from Three Months Ended June 28, 2020
			Amount		Percent
	(In thousands, except percent data)
U.S.	$	(224,171)	$	(263,619)	(668.3)	%
U.K. and Europe	21,831		(1,354)		(5.8)	%
Mexico	79,195		114,739		322.8	%
Eliminations	14		(186)		(93.0)	%
Total operating income	$	(123,131)	$	(150,420)	(551.2)	%

Sources of SG&A expense	Three Months Ended June 27, 2021		Change from Three Months Ended June 28, 2020
			Amount		Percent
	(In thousands, except percent data)
U.S.	$	464,519	$	415,946	856.3	%
U.K. and Europe	28,214		(5,249)		(15.7)	%
Mexico	10,639		105		1.0	%
Total SG&A expense	$	503,372	$	410,802	443.8	%

Sources of operating income Three Months Ended September 27, 2020 Change from Three Months Ended September 29, 2019
Amount Percent
(In thousands, except percent data)
U.S. $ 2,451 $ (122,718) (98.0) %
U.K. and Europe 29,949 4,625 18.3 %
Mexico 61,653 23,985 63.7 %
Eliminations 235 211 879.2 %
Total operating income $ 94,288 $ (93,897) (49.9) %
Sources of SG&A expense Three Months Ended September 27, 2020 Change from Three Months Ended September 29, 2019
Amount Percent
(In thousands, except percent data)
U.S. $ 180,682 $ 113,648 169.5 %
U.K. and Europe 30,381 12,664 71.5 %
Mexico 8,491 (790) (8.5) %
Total SG&A expense $ 219,554 $ 125,522 133.5 %

U.S. Reportable Segment. SG&A expense incurred by our U.S. reportable segment during the three months ended ~~September~~June 27, ~~2020~~2021 increased ~~$113.6~~$415.9 million, or ~~169.5%~~856.3%, from SG&A expense incurred by our U.S. reportable segment during the three months ended ~~September 29, 2019.~~June 28, 2020. This increase in SG&A expense ~~incurred~~ resulted primarily from ~~the $110.5 million DOJ antitrust fine, $14.5 million in incremental donations expense related to the Hometown Strong initiative and a $7.3 million~~an increase in ~~professional~~legal fees ~~due to increased legal fees. Partially offsetting these increases~~of $12.0 million and $395.9 million recognized in SG&A expense was a $7.8 million decrease in benefit expenses primarily from decreased incentive compensation, a $3.7 million decrease in payroll expenses primarily from decreased stock-based compensation and a $3.7 million decrease in marketing costs mainly due to decreased internet media expenses.anticipation of probable settlements of ongoing litigation. Other factors affecting SG&A expense were individually immaterial.

U.K. and Europe Reportable Segment. SG&A expense incurred by our U.K. and Europe reportable segment during the three months ended ~~September~~June 27, ~~2020 increased $12.7~~2021 decreased $5.2 million, or ~~71.5%~~15.7%, from SG&A expense incurred by our U.K. and Europe segment during the three months ended September 29, 2019. SG&A expenses recognized by our U.K. and Europe reportable segment increased primarily due to expenses of $11.7 million incurred by the acquired PPL operations. Our existing U.K. and Europe operation'sJune 28, 2020. The decrease in SG&A expense ~~increased $1.0 million.~~was driven primarily by a reduction of $2.8 million in third-party hardware and software support expenses. FO~~actors~~ther factors affecting SG&A expense ~~in our existing U.K. and Europe operations~~ were individually immaterial.

Mexico Reportable Segment. SG&A expense incurred by our Mexico reportable segment during the three months ended ~~September~~June 27, ~~2020 decreased~~2021 increased approximately ~~$0.8 million,~~$105,000, or ~~8.5%~~1.0%, from SG&A expense incurred by our Mexico segment during the three months ended ~~September 29, 2019.~~June 28, 2020. Factors affecting our Mexico ~~segment's~~segment’s SG&A expense were individually immaterial.

Net interest expense. Net interest expense increased to ~~$28.8~~$49.8 million recognized in the three months ended ~~September~~June 27, ~~2020~~2021 from ~~$27.3~~$31.2 million recognized in the three months ended ~~September 29, 2019.~~June 28, 2020. The increase in net interest expense resulted primarily from a loss on early extinguishment of debt recognized as a component of interest expense of $24.3 million, partially offset by a decrease in interest expense on outstanding borrowings of $5.7 million. Average borrowings ~~increased~~decreased by ~~$323.5~~$337.8 million from ~~$2.3~~$2.66 billion during the three months ended ~~September 29, 2019~~June 28, 2020 to ~~$2.7~~$2.33 billion during the three months ended ~~September~~June 27, ~~2020.~~2021. As a percent of net sales, interest expense in the three months ended ~~September~~June 27, 2021 and June 28, 2020 was 1.4% and ~~September 29, 2019 was 1.0% and 1.2%~~1.1%, respectively.

Income taxes. Income tax ~~expense decreased~~benefit increased to ~~$22.3~~$9.8 million, a ~~39.9%~~5.6% effective tax rate, for the three months ended ~~September~~June 27, ~~2020~~2021 compared to an income tax ~~expense~~benefit of ~~$46.4~~$3.0 million, a ~~29.6%~~31.6% effective tax rate, for the three months ended ~~September 29, 2019.~~June 28, 2020. The ~~decrease~~increase in income tax ~~expense~~benefit resulted primarily from the recognition of deferred tax expense of $32.2 million related to enactment of the U.K. tax rate change to 25% effective April 1, 2023, partially offset by a decrease in pre-tax income and the effects of foreign currency fluctuations partially offset by the recognition of the non-deductible DOJ antitrust fine of $110.5 million, refer to “Note 20. Commitments and Contingencies” for more information. In addition, we recognized deferred tax expense of $10.6 million related to the repeal of the previously enacted reduction of the U.K corporate tax rate to 17.0%. Therefore, the current corporate tax rate is maintained at 19.0%.income.

~~Nine~~Six Months Ended ~~September~~June 27, ~~2020~~2021 Compared to the ~~Nine~~Six Months Ended ~~September 29, 2019~~June 28, 2020

Net sales. Net sales generated in the ~~nine~~six months ended ~~September~~June 27, ~~2020~~2021 increased ~~$628.3 million,~~$1.0 billion, or ~~7.5%~~17.2%, from net sales generated in the ~~nine~~six months ended ~~September 29, 2019.~~June 28, 2020. The following table provides net sales information:


Sources of net sales	Sources of net sales	Nine Months Ended September 27, 2020		Change from Nine Months Ended September 29, 2019				Sources of net sales	Six Months Ended June 27, 2021		Change from Six Months Ended June 28, 2020
				Amount		Percent					Amount		Percent
		(In thousands, except percent data)							(In thousands, except percent data)
U.S.	U.S.	$	5,619,791	$	(112,410)	(2.0)	%	U.S.	$	4,248,029	$	522,460	14.0	%
U.K. and Europe	U.K. and Europe	2,425,140		856,744		54.6	%	U.K. and Europe	1,790,579		211,116		13.4	%
Mexico	Mexico	929,141		(115,992)		(11.1)	%	Mexico	872,515		278,596		46.9	%
Total net sales	Total net sales	$	8,974,072	$	628,342	7.5	%	Total net sales	$	6,911,123	$	1,012,172	17.2	%

U.S. Reportable Segment. U.S. net sales generated in the ~~nine~~six months ended ~~September~~June 27, ~~2020 decreased $112.4~~2021 increased $522.5 million, or ~~2.0%~~14.0%, from U.S. net sales generated in the ~~nine~~six months ended ~~September 29, 2019~~June 28, 2020 primarily because of ~~a decrease~~an increase in net sales per pound ~~partially offset by~~and an increase in sales volume. The ~~decrease~~increase in net sales per pound contributed ~~$161.3~~$511.3 million, or ~~2.9~~13.7 percentage points, to the ~~decrease~~increase in net s~~ales, and resulted from a decrease~~sales. This increase in net sales per pound was driven primarily from higher than average chicken commodity prices in ~~both our fresh and prepared foods lines of business.~~the U.S. during the six months ended June 27, 2021. The increase in sales volume ~~increase experienced by~~contributed $11.2 million, or 0.3 percentage points to the ~~U.S. segment partially offset the decrease~~increase in net ~~sales per pound by $48.9 million, or 0.9 percentage points.~~sales.

U.K. and Europe Reportable Segment. U.K. and Europe net sales generated in the ~~nine~~six months ended ~~September~~June 27, ~~2020~~2021 increased ~~$856.7~~$211.1 million, or ~~54.6%~~13.4%, from U.K. and Europe net sales generated in the ~~nine~~six months ended ~~September 29, 2019~~June 28, 2020 primarily because of ~~the recently acquired PPL operations, partially offset by~~ a decrease in net sales by our existing U.K. and Europe operations. The impact of the acquired PPL operations contributed $999.1 million, or 63.7 percentage points, to the increase in net sales. The decrease in net sales by our existing U.K. and Europe operations offset the favorable impact of the PPL operations on net sales by $142.4 million, or 9.1 percentage points. The decrease in net sales by our existing U.K. and Europe operations resulted from a decrease in sales volume, a decrease in net sales per pound and the unfavorable impact of foreign currency translation of ~~$88.2~~$163.6 million, ~~$50.4~~or 10.4 percentage points, an increase in sales volume of $41.0 million, or 2.6 percentage points, and ~~$3.8 million, respectively. The decrease~~an increase in net sales per pound of $6.5 million, or 0.4 percentage points. The increase in ~~our existing U.K and Europe operations is a result~~sales volume was primarily driven by market recoveries in foodservice from the lessening of ~~reduced demand for foodservice products~~restrictions due to the COVID-19 ~~pandemic.~~pandemic from prior year.

Mexico Reportable Segment. Mexico net sales generated in the ~~nine~~six months ended ~~September~~June 27, ~~2020 decreased $116.0~~2021 increased $278.6 million, or ~~11.1%~~46.9%, from Mexico net sales generated in the ~~nine~~six months ended ~~September 29, 2019~~June 28, 2020 primarily because of ~~the unfavorable impact of foreign currency remeasurement, offset by~~ an increase in net sales per pound of $260.7 million, or 43.9 percentage points, and ~~an increase in sales volume. The unfavorable~~the favorable impact of foreign currency remeasurement ~~contributed $122.7~~of $58.8 million, or ~~11.7~~9.9 percentage ~~points, to the decrease~~points. The increase in ~~net sales. This decrease in net sales was partially offset by the increase~~ net sales per pound was driven primarily by higher live chicken commodity prices in Mexico during the six months ended June 27, 2021 in comparison to the six months ended June 28, 2020. The increases from foreign currency remeasurement and net sales per pound were partially offset by a decrease in sales volume of ~~$3.6~~$40.9 million, or ~~0.3~~6.9 percentage ~~points, and $3.1 million, or 0.3 percentage points, respectively.~~points.

Gross profit. Gross profit ~~decreased~~increased by ~~$258.2~~$344.5 million, or ~~29.7%~~116.0%, from ~~$869.0~~$297.0 million generated in the ~~nine~~six months ended ~~September 29, 2019~~June 28, 2020 to ~~$610.8~~$641.5 million generated in the ~~nine~~six months ended ~~September~~June 27, ~~2020.~~2021. The following tables provide information regarding gross profit and cost of sales information:


Components of gross profit	Six Months Ended June 27, 2021		Change from Six Months Ended June 28, 2020				Percent of Net Sales
							Six Months Ended
			Amount		Percent		June 27, 2021		June 28, 2020
	(In thousands, except percent data)
Net sales	$	6,911,123	$	1,012,172	17.2	%	100.0	%	100.0	%
Cost of sales	6,269,639		667,646		11.9	%	90.7	%	95.0	%
Gross profit	$	641,484	$	344,526	116.0	%	9.3	%	5.0	%


Sources of gross profit	Six Months Ended June 27, 2021		Change from Six Months Ended June 28, 2020
			Amount		Percent
	(In thousands, except percent data)
U.S.	$	373,207	$	147,083	65.0	%
U.K. and Europe	87,853		(20,923)		(19.2)	%
Mexico	180,396		218,562		572.7	%
Elimination	28		(196)		(87.5)	%
Total gross profit	$	641,484	$	344,526	116.0	%

Components of gross profit Nine Months Ended September 27, 2020 Change from Nine Months Ended September 29, 2019 Percent of Net Sales
Nine Months Ended
Amount Percent September 27, 2020 September 29, 2019
(In thousands, except percent data)
Net sales $ 8,974,072 $ 628,342 7.5 % 100.0 % 100.0 %
Cost of sales 8,363,272 886,541 11.9 % 93.2 % 89.6 %
Gross profit $ 610,800 $ (258,199) (29.7) % 6.8 % 10.4 %

Sources of gross profit Nine Months Ended September 27, 2020 Change from Nine Months Ended September 29, 2019
Amount Percent
(In thousands, except percent data)
U.S. $ 409,257 $ (199,666) (32.8) %
U.K. and Europe 169,106 52,964 45.6 %
Mexico 31,978 (111,884) (77.8) %
Elimination 459 387 537.5 %
Total gross profit $ 610,800 $ (258,199) (29.7) %


Sources of cost of sales	Sources of cost of sales	Nine Months Ended September 27, 2020		Change from Nine Months Ended September 29, 2019				Sources of cost of sales	Six Months Ended June 27, 2021		Change from Six Months Ended June 28, 2020
				Amount		Percent					Amount		Percent
		(In thousands, except percent data)							(In thousands, except percent data)
U.S.	U.S.	$	5,210,534	$	87,256	1.7	%	U.S.	$	3,874,822	$	375,377	10.7	%
U.K. and Europe	U.K. and Europe	2,256,034		803,780		55.3	%	U.K. and Europe	1,702,726		232,039		15.8	%
Mexico	Mexico	897,163		(4,108)		(0.5)	%	Mexico	692,119		60,034		9.5	%
Elimination	Elimination	(459)		(387)		537.5	%	Elimination	(28)		196		87.5	%
Total cost of sales	Total cost of sales	$	8,363,272	$	886,541	11.9	%	Total cost of sales	$	6,269,639	$	667,646	11.9	%

U.S. Reportable Segment. Cost of sales incurred by our U.S. operations during the ~~nine~~six months ended ~~September~~June 27, ~~2020~~2021 increased ~~$87.3~~$375.4 million, or ~~1.7%~~10.7%, from cost of sales incurred by our U.S. segment during the ~~nine~~six months ended ~~September 29, 2019.~~June 28, 2020. Cost of sales increased primarily because of the impact of increased ~~sales volume and increased~~ cost per pound sold ~~resulting in increases~~ of ~~$43.7~~$364.9 million, or ~~0.9~~10.4 percentage points, and ~~$43.5~~increased cost from sales volume of $10.5 million, or ~~0.8~~0.3 percentage ~~points, respectively.~~points. Included in increased cost per pound sold was an increase in live input costs of $53.8 million, which resulted from increased grower pay costs due to higher contract rates. An increase in payroll costs, mainly due to increased pay rates, contributed $19.0 million to the ~~increase in cost of sales. There were also increases in contract services costs, mainly due to outsourced processing labor, and~~ increased ~~benefit costs, mainly due to the COVID-19 pandemic, contributing $15.2 million and $11.0 million, respectively. These increases in~~ cost of sales were ~~partially offset by~~ a ~~$20.4~~$296.7 million ~~decrease~~increase in ~~derivative losses compared to the nine months ended September 29, 2019.~~feed costs, $30.2 million in chick costs and an increase in contract grower costs of $21.2 million. The increase in feed costs is driven primarily from higher corn and soy commodity prices, our main ingredients in feed. Other factors affecting cost of sales were individually immaterial.

U.K. and Europe Reportable Segment. Cost of sales incurred by our U.K. and Europe operations during the ~~nine~~six months ended ~~September~~June 27, ~~2020~~2021 increased ~~$803.8~~$232.0 million, or ~~55.3%~~15.8%, from cost of sales incurred by our U.K. and Europe segment during the ~~nine~~six months ended ~~September 29, 2019, primarily because of costs incurred by the acquired PPL operations, partially offset by a decrease~~June 28, 2020. The increase in cost of sales ~~incurred by our existing U.K. and Europe operations. Cost of sales incurred~~was driven by the ~~acquired PPL operations contributed $959.0~~unfavorable impact of foreign currency translation, increased cost per pound sold and increased sales volume contributing $155.6 million, or ~~66.0~~10.6 percentage points, $38.3 million, or 2.6 percentage points, and $38.1 million, or 2.6 percentage points, respectively, to the increase in cost of sales. Cost of sales related to the existing U.K. and Europe operations decreased $155.2 million, or 10.7 percentage points, primarily from a decrease in sales volume, a decrease in cost per pound sold and the favorable impact of foreign currency translation contributing $81.6 million, $70.2 million and $3.4 million, respectively. Included in the decrease in cost per pound in our existing U.K. and Europe operations was a $9.9 million decrease in freight costs resulting from decreased sales and increased efficiency in third party warehouse management. Other factors affecting cost of sales were individually immaterial.

Mexico Reportable Segment. Cost of sales incurred by our Mexico operations during the ~~nine~~six months ended ~~September~~June 27, ~~2020 decreased $4.1~~2021 increased $60.0 million, or ~~0.5%~~9.5%, from cost of sales incurred by our Mexico segment during the ~~nine~~six months ended ~~September 29, 2019.~~June 28, 2020. This ~~decrease in cost of sales~~increase was primarily because of ~~the favorable impact of foreign currency remeasurement of $118.4 million, or 13.2 percentage points. Partially offsetting the favorable impact of foreign~~

~~currency remeasurement was~~ an increase in cost per pound sold and ~~sales volume~~the unfavorable impact of ~~$111.7~~foreign currency remeasurement of $57.0 million, or ~~12.4~~9.0 percentage points, and ~~$2.6~~$46.6 million, or ~~0.3~~7.4 percentage points, respectively. ~~Included~~The increase in ~~the increased~~ cost per pound sold was primarily driven by the cost of grains used as feed. These increases were partially offset by a ~~$17.3~~decrease in sales volume of $43.6 million, increase in payroll costs resulting from increased direct labor costs, a $15.4 million increase in contracted grower pay due to higher rates, a $6.1 million increase in utilities due to higher natural gas rates and a $5.9 million increase in warehouse costs.or 6.9 percentage points. Other factors affecting cost of sales were individually immaterial.

Operating income. Operating income decreased by ~~$398.8~~$76.3 million, or ~~65.9%~~68.4%, from ~~$604.8~~$111.7 million generated in the ~~nine~~six months ended ~~September 29, 2019~~June 28, 2020 to ~~$206.0~~$35.3 million generated in the ~~nine~~six months ended ~~September~~June 27, ~~2020.~~2021. The following tables provide information regarding operating income and selling, general and administrative (“SG&A&A”) expense:


Components of operating income	Six Months Ended June 27, 2021		Change from Six Months Ended June 28, 2020				Percent of Net Sales
							Six Months Ended
			Amount		Percent		June 27, 2021		June 28, 2020
	(In thousands, except percent data)
Gross profit	$	641,484	$	344,526	116.0	%	9.3	%	5.0	%
SG&A expense	606,151		420,868		227.1	%	8.8	%	3.1	%

Operating income	$	35,333	$	(76,342)	(68.4)	%	0.5	%	1.9	%

Components of operating income Nine Months Ended September 27, 2020 Change from Nine Months Ended September 29, 2019 Percent of Net Sales
Nine Months Ended
Amount Percent September 27, 2020 September 29, 2019
(In thousands, except percent data)
Gross profit $ 610,800 $ (258,199) (29.7) % 6.8 % 10.4 %
SG&A expense 404,837 140,524 53.2 % 4.5 % 3.2 %
Administrative restructuring activity — 90 (100.0) % — % — %
Operating income $ 205,963 $ (398,813) (65.9) % 2.3 % 7.2 %


Sources of operating income	Sources of operating income	Nine Months Ended September 27, 2020		Change from Nine Months Ended September 29, 2019				Sources of operating income	Six Months Ended June 27, 2021		Change from Six Months Ended June 28, 2020
				Amount		Percent					Amount		Percent
		(In thousands, except percent data)							(In thousands, except percent data)
U.S.	U.S.	$	126,951	$	(300,017)	(70.3)	%	U.S.	$	(156,046)	$	(280,546)	(225.3)	%
U.K. and Europe	U.K. and Europe	76,324		14,091		22.6	%	U.K. and Europe	32,326		(14,049)		(30.3)	%
Mexico	Mexico	2,229		(113,274)		(98.1)	%	Mexico	159,025		218,449		367.6	%
Eliminations	Eliminations	459		387		537.5	%	Eliminations	28		(196)		(87.5)	%
Total operating income	Total operating income	$	205,963	$	(398,813)	(65.9)	%	Total operating income	$	35,333	$	(76,342)	(68.4)	%

Sources of SG&A expense	Sources of SG&A expense	Nine Months Ended September 27, 2020		Change from Nine Months Ended September 29, 2019				Sources of SG&A expense	Six Months Ended June 27, 2021		Change from Six Months Ended June 28, 2020
				Amount		Percent					Amount		Percent
		(In thousands, except percent data)							(In thousands, except percent data)
U.S.	U.S.	$	282,306	$	100,261	55.1	%	U.S.	$	529,253	$	427,629	420.8	%
U.K. and Europe	U.K. and Europe	92,782		38,873		72.1	%	U.K. and Europe	55,527		(6,874)		(11.0)	%
Mexico	Mexico	29,749		1,390		4.9	%	Mexico	21,371		113		0.5	%
Total SG&A expense	Total SG&A expense	$	404,837	$	140,524	53.2	%	Total SG&A expense	$	606,151	$	420,868	227.1	%

U.S. Reportable Segment. SG&A expense incurred by our U.S. reportable segment during the ~~nine~~six months ended ~~September~~June 27, ~~2020~~2021 increased ~~$100.3~~$427.6 million, or ~~55.1%~~420.8%, from SG&A expense incurred by our U.S. reportable segment during the ~~nine~~six months ended ~~September 29, 2019.~~June 28, 2020. This increase in SG&A expense ~~incurred~~ resulted primarily from ~~the $110.5~~an increase of $18.1 million ~~DOJ antitrust fine, a $14.5~~in legal fees and $398.3 million ~~increase~~recognized in ~~donations expense resulting primarily from the Hometown Strong initiative and a $10.3 million increase~~anticipation of probable settlements in professional fees due to increased legal fees. These increases in SG&A expense were partially offset by a $13.5 million decrease in benefit expenses resulting from lower incentive compensation, a $7.0 million decrease in marketing costs mainly due to reduced internet media expenses, a $6.0 million decrease in payroll costs resulting from reduced stock-based compensation expenses and a $3.9 million decrease in travel and entertainment expenses due to less travel during the COVID-19 pandemic.ongoing litigation. Other factors affecting SG&A expense were individually immaterial.

U.K. and Europe Reportable Segment. SG&A expense incurred by our U.K. and Europe reportable segment during the ~~nine~~six months ended ~~September~~June 27, ~~2020 increased $38.9~~2021 decreased $6.9 million, or ~~72.1%~~11.0%, from SG&A expense incurred by our U.K. and Europe segment during the ~~nine~~six months ended ~~September 29, 2019.~~June 28, 2020. The decrease in SG&A ~~expenses~~expense was driven primarily by ~~our U.K.~~a reduction of $3.4 million in third-party hardware and ~~Europe reportable segment increased primarily due to expenses incurred by the acquired PPL operations and our existing U.K. and Europe operations by $36.4 million and $1.7 million, respectively.~~ F~~actors~~software support expenses. Other factors affecting SG&A expense in our ~~existing~~ U.K. and Europe operations were individually ~~immaterial~~immaterial.

Mexico Reportable Segment. SG&A expense incurred by our Mexico reportable segment during the ~~nine~~six months ended ~~September~~June 27, ~~2020~~2021 increased approximately ~~$1.4 million,~~$113,000, or ~~4.9%~~0.5%, from SG&A expense incurred by our Mexico segment during the ~~nine~~six months ended ~~September 29, 2019, mainly from an increase in employee relations expenses of $1.6 million. Other factors~~June 28, 2020. Factors affecting our Mexico ~~segment's~~segment’s SG&A expense were individually immaterial.

Net interest expense. Net interest expense increased to ~~$91.0~~$77.8 million recognized in the ~~nine~~six months ended ~~September~~June 27, ~~2020~~2021 from ~~$87.7~~$62.2 million recognized in the ~~nine~~six months ended ~~September 29, 2019.~~June 28, 2020. The increase in net interest expense resulted primarily from a loss on early extinguishment of debt recognized as a component of interest expense of $24.3 million, partially offset by a decrease in interest expense on average outstanding borrowings of $8.7 million. Average borrowings ~~increased~~decreased by ~~$242.0~~$206.7 million from $2.5 billion during the six months ended June 28, 2020 to $2.3 billion during the ~~nine~~six months ended ~~September 29, 2019 to $2.6 billion during the nine months ended September~~June 27, ~~2020.~~2021. As a percent of net sales, interest expense in the ~~nine~~six months ended ~~September~~June 27, 2021 and June 28, 2020 was 1.2% and ~~September 29, 2019 was~~ 1.1% ~~and 1.2%~~, respectively.

Income taxes. Income tax expense decreased to ~~$57.9~~$25.5 million, a ~~37.9%~~(63.1)% effective tax rate, for the ~~nine~~six months ended ~~September~~June 27, ~~2020~~2021 compared to income tax expense of ~~$142.3~~$35.6 million, a ~~28.1%~~36.8% effective tax rate, for the ~~nine~~six months ended ~~September 29, 2019.~~June 28, 2020. The decrease in income tax expense resulted primarily from a decrease in pre-tax income ~~and the effects of foreign currency fluctuation,~~ partially offset by the recognition of ~~the non-deductible DOJ antitrust fine of $110.5 million, refer to “Note 20. Commitments and Contingencies” for more information. In addition, we recognized~~ deferred tax expense of ~~$10.6~~$32.2 million related to ~~the repeal~~enactment of the ~~previously enacted reduction of the U.K corporate~~U.K. tax rate change to ~~17.0%. Therefore, the current corporate tax rate is maintained at 19.0%.~~25% effective April 1, 2023.

Liquidity and Capital Resources

The following table presents our available sources of liquidity as of ~~September~~June 27, ~~2020:~~2021:


Sources of Liquidity	Sources of Liquidity	Facility Amount		Amount Outstanding		Amount Available		Sources of Liquidity	Facility Amount		Amount Outstanding		Amount Available
		(In millions)							(In millions)
Cash and cash equivalents	Cash and cash equivalents	$	—	$	—	$	768.0	Cash and cash equivalents	$	—	$	—	$	391.8
Borrowing arrangements:	Borrowing arrangements:							Borrowing arrangements:
U.S. Credit Facility(a)	U.S. Credit Facility(a)	750.0		350.0		359.6		U.S. Credit Facility(a)	750.0		40.5		671.0
Mexico Credit Facility(b)	Mexico Credit Facility(b)	67.2		—		67.2		Mexico Credit Facility(b)	75.7		—		75.7
U.K. and Europe Credit Facilities(c)	U.K. and Europe Credit Facilities(c)	139.1		—		139.1		U.K. and Europe Credit Facilities(c)	138.8		—		138.8

(a)Availability under the U.S. Credit Facility is also reduced by our outstanding standby letters of credit. Standby letters of credit outstanding at ~~September~~June 27, ~~2020~~2021 totaled ~~$40.4~~$38.5 million.

(b)The U.S. dollar-equivalent of the facility amount under the Mexico Credit Facility is ~~$67.2~~$75.7 million ($(MX$1.5 ~~billion Mexican pesos)~~billion).

(c)The U.S. dollar-equivalent of the facility ~~amounts~~amount under the ~~U.K. and~~ Europe Credit Facilities ~~are $127.5~~is $138.8 million (£100.0 million) ~~and $11.6 million (€10.0 million)~~.

We expect cash flows from operations, combined with availability under our credit facilities, to provide sufficient liquidity to fund current obligations, projected working capital requirements, maturities of long-term debt and capital spending for at least the next twelve months.

~~Historical Flow~~Additionally, we have executed an agreement to acquire the meats and meals businesses of ~~Funds~~Kerry Consumer Foods in the U.K. and Ireland (the “Acquisition”). The Acquisition has valued the acquired businesses at a £680 million (or approximately $952 million based on a 1.40 USD/GBP exchange rate as of June 16, 2021) enterprise value. The Acquisition is expected to close in the fourth quarter of 2021 and is subject to routine closing purchase price adjustments, customer closing conditions and regulatory approvals. We intend to fund the acquisition through a mix of cash on hand, existing credit facilities and debt issuance.

Cash Flows from Operating Activities Nine Months Ended
September 27, 2020 September 29, 2019
(In millions)
Net income $ 94.7 $ 364.3
Net noncash expenses 285.0 215.6
Changes in operating assets and liabilities:
Trade accounts and other receivables 44.6 (46.6)
Inventories 41.3 (108.1)
Prepaid expenses and other current assets (29.3) 3.5
Accounts payable, accrued expenses and other current liabilities 93.1 67.3
Income taxes (30.9) 40.5
Long-term pension and other postretirement obligations (0.8) (1.5)
Other operating assets and liabilities 10.6 0.5
Cash provided by operating activities $ 508.3 $ 535.5

~~Net Noncash Expenses~~In July 2021, one of our Mexican subsidiaries received an observation letter from the Mexican Tax Authority asserting a withholding tax liability due in connection with our 2015 acquisition of Provemex Holding LLC and its subsidiaries. Although we do not expect any claims or assessments set forth in the observation letter to result in future cash outlays, we are currently evaluating the claims and assessments as set forth in the observation letter.

Historical Flow of Funds


Cash Flows from Operating Activities	Six Months Ended
	June 27, 2021		June 28, 2020
	(In millions)
Net income (loss)	$	(66.0)	$	61.0
Net noncash expenses	176.6		196.1
Changes in operating assets and liabilities:
Trade accounts and other receivables	(117.6)		29.9
Inventories	(173.9)		16.4
Prepaid expenses and other current assets	(6.0)		(22.1)
Accounts payable, accrued expenses and other current liabilities	266.5		(122.2)
Income taxes	46.6		(27.4)
Long-term pension and other postretirement obligations	(9.5)		(1.9)
Other operating assets and liabilities	(1.7)		10.8
Cash provided by operating activities	$	115.0	$	140.6

Net Noncash Expenses

Items necessary to reconcile from net income to cash flow provided by operating activities included net noncash expenses of ~~$285.0~~$176.6 million for the ~~nine~~six months ended ~~September~~June 27, ~~2020.~~2021. Net noncash expense items included depreciation and amortization of ~~$248.6~~$182.3 million, ~~deferred income tax expense~~loss on early extinguishment of ~~$37.7~~debt of $24.3 million, ~~an adjustment to a previously recognized gain on a bargain purchase~~stock-based compensation of ~~$3.7~~$5.2 million, loan cost amortization of ~~$3.6~~$2.3 million and accretion of discounts related to Senior Notes ~~and a loss in equity-method investments and~~ of $0.7 ~~million and $0.3 million, respectively.~~million. These expense items were partially offset by deferred income tax benefit of $32.8 million, gains on property disposals ~~stock-based compensation~~of $5.1 million and amortization of premiums related to Senior Notes of ~~$8.0 million, $1.3 million and $0.5 million, respectively.~~$0.2 million.

Items necessary to reconcile from net income to cash flow provided by operating activities included net noncash expenses of ~~$215.6~~$196.1 million for the ~~nine~~six months ended ~~September 29, 2019.~~June 28, 2020. Net noncash expense items included depreciation and amortization of ~~$210.4 million, share based compensation of $7.3 million, loan cost amortization of $3.6~~$164.4 million, deferred income tax expense of $25.3 million, stock-based compensation expense of $3.5 million, loan cost amortization of $2.4 million, ~~foreign currency transaction loss related~~an adjustment to ~~borrowing arrangements~~a previously recognized gain on a bargain purchase of ~~$1.3~~$1.7 million, ~~and~~ accretion of ~~discount~~discounts related to Senior Notes and a loss in equity-method investments and of ~~$0.7 million.~~$0.5 million and $0.3 million, respectively. These expense items were partially offset by ~~a gain~~gains on property disposals ~~of $9.5 million~~ and amortization of ~~premium~~premiums related to Senior Notes of ~~$0.5 million.~~$1.6 million and $0.3 million, respectively.

Changes in Operating Assets and Liabilities

The change in trade accounts and other receivables, including accounts receivable from related parties, represented a ~~$44.6~~$117.6 million ~~source~~use of cash related to operating activities for the ~~nine~~six months ended ~~September~~June 27, ~~2020.~~2021. This change primarily resulted from an increase in trade accounts receivable due to customer payment timing and increased sales. The change in trade accounts and other receivables, including accounts receivable from related parties, represented a ~~$46.6~~$29.9 million source of cash related to operating activities for the six months ended June 28, 2020.

The change in inventories represented a $173.9 million use of cash related to operating activities for the ~~nine~~six months ended ~~September 29, 2019. These changes are~~June 27, 2021. This change resulted primarily from an increase in our raw materials and work-in-process inventories due to ~~customer payment timing.~~

increased feed and chick costs. The change in inventories represented a ~~$41.3~~$16.4 million source of cash related to operating activities for the ~~nine~~six months ended ~~September 27,~~June 28, 2020. This change resulted primarily from a decrease in our semi-processed and work-in-process ~~inventories. The change in~~ inventories, ~~represented a $108.1 million use of cash related to operating activities for the nine months ended September 29, 2019. This change resulted primarily from an increase~~partially offset by foreign currency fluctuations in our ~~finished products inventory.~~U.K. and Europe reporting segment.

The change in prepaid expenses and other current assets represented a ~~$29.3~~$6.0 million use of cash related to operating activities for the ~~nine~~six months ended ~~September~~June 27, ~~2020.~~2021. This change resulted primarily from ana net increase in ~~prepaid inventory in our Mexico reporting segment.~~commodity derivative assets. The change in prepaid expenses and other current assets represented a ~~$3.5~~$22.1 million ~~source~~use of cash related to operating activities for the ~~nine~~six months ended ~~September 29, 2019.~~June 28, 2020. This change resulted primarily from a net increase in currency rate derivative assets and an increase in prepaid inventory in our Mexico reporting segment, partially offset by a decrease in value-added tax receivables.

The change in accounts payable, revenue contract liabilities, accrued expenses and other current liabilities, including accounts payable to related parties, represented a ~~$93.1~~$266.5 million source of cash related to operating activities for the ~~nine~~six months ended ~~September~~June 27, ~~2020.~~2021. This change resulted primarily from an accrual for probable settlement of ongoing litigation and a net increase in the ~~timing~~liability position of ~~receipt~~commodity derivatives, partially offset by the payments of ~~invoicing~~the previously accrued DOJ agreement and ~~payments~~a $75.0 million legal settlement, as well as ~~the accrual~~payment of ~~the $110.5 million DOJ antitrust fine.~~incentive compensation and revenue recognized on contract liabilities. The change in accounts payable, revenue contract liabilities, accrued expenses and other current liabilities, including accounts payable to related parties, represented a ~~$67.3~~$122.2 million ~~source~~use of cash related to operating activities for the ~~nine~~six months ended ~~September 29, 2019.~~June 28, 2020. This change resulted primarily from the timing of ~~payments.~~receipt of invoicing and payments, and cash payment of incentive compensation, partially offset by an increase in commodity derivative liabilities.

The change in income taxes, which includes income taxes receivable, income taxes payable, deferred tax assets, deferred tax liabilities, reserves for uncertain tax positions, and the tax components within accumulated other comprehensive loss, represented a ~~$30.9~~$46.6 million source of cash related to operating activities for the six months ended June 27, 2021. The change in income taxes, which includes income taxes receivable, income taxes payable, deferred tax assets, deferred tax liabilities, reserves for uncertain tax positions, and the tax components within accumulated other comprehensive loss, represented a $27.4 million use of cash related to operating activities for the ~~nine~~six months ended ~~September 27,~~June 28, 2020. ~~This change resulted primarily from~~These changes were both a result of the timing of estimated tax payments. The change in income taxes represented a $40.5 million source of cash related to operating activities for the nine months ended September 29, 2019. This change resulted primarily from the timing of estimated tax payments.


Cash Flows from Investing Activities	Six Months Ended
	June 27, 2021		June 28, 2020
	(In millions)
Acquisitions of property, plant and equipment	$	(183.8)	$	(148.2)
Proceeds from property disposals	21.4		9.9
Business acquisition	—		(4.2)
Cash used in investing activities	$	(162.4)	$	(142.5)

Cash Flows from Investing Activities Nine Months Ended
September 27, 2020 September 29, 2019
(In millions)
Acquisitions of property, plant and equipment $ (242.6) $ (258.7)
Proceeds from property disposals 21.7 15.1
Business acquisition (4.2) —
Cash used in investing activities $ (225.1) $ (243.6)

Capital expenditures were primarily incurred to improve operational efficiencies and reduce costs for the ~~nine~~six months ended ~~September~~June 27, ~~2020~~2021 and ~~September 29, 2019.~~

June 28, 2020. Proceeds from property disposals were primarily from sales of two processing plants in our U.K. and Europe reportable segment and a broiler farm in our Mexico reportable segment during the six months ended June 27, 2021.


Cash Flows from Financing Activities	Cash Flows from Financing Activities		Nine Months Ended				Cash Flows from Financing Activities	Six Months Ended
			September 27, 2020		September 29, 2019			June 27, 2021		June 28, 2020
		(In millions)						(In millions)
Proceeds from revolving line of credit and long-term borrowings	Proceeds from revolving line of credit and long-term borrowings		$	386.7	$	99.6	Proceeds from revolving line of credit and long-term borrowings	$	1,540.3	$	356.5
Payments on revolving line of credit, long-term borrowings and finance lease obligations							Payments on revolving line of credit, long-term borrowings and finance lease obligations	(1,522.4)		(20.1)
Payment on early extinguishment of debt							Payment on early extinguishment of debt	(21.3)		—
Payment of capitalized loan costs							Payment of capitalized loan costs	(8.7)		—
Distribution from Tax Sharing Agreement with JBS USA Food Company Holdings							Distribution from Tax Sharing Agreement with JBS USA Food Company Holdings	(0.7)		—
Purchase of common stock under share repurchase program	Purchase of common stock under share repurchase program		(107.8)		(2.9)		Purchase of common stock under share repurchase program	—		(77.9)
Payments on revolving line of credit, long-term borrowings and finance lease obligations			(56.8)		(123.3)
Payment of capitalized loan costs			—		(0.6)
Distributions from Tax Sharing Agreement with JBS USA Food Company Holdings			—		(0.5)
Cash provided by (used in) financing activities	Cash provided by (used in) financing activities		$	222.1	$	(27.7)	Cash provided by (used in) financing activities	$	(12.8)	$	258.5


Delaware		75-1285071
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1770 Promontory Circle		80634-9038
Greeley	CO
(Address of principal executive offices)		(Zip code)


PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	12
	Condensed Consolidated Balance Sheets ~~September~~June 27, ~~2020~~2021 and December ~~29, 2019~~27, 2020	12
	Condensed Consolidated Statements of Income Three and ~~Nine~~Six Months Ended ~~September~~June 27, ~~2020~~2021 and ~~September 29, 2019~~June 28, 2020	23
	Condensed Consolidated Statements of Comprehensive Income Three and ~~Nine~~Six Months Ended ~~September~~June 27, ~~2020~~2021 and ~~September 29, 2019~~June 28, 2020	34
	Condensed Consolidated Statements of Stockholders’ Equity Three and ~~Nine~~Six Months Ended ~~September~~June 27, ~~2020~~2021 and ~~September 29, 2019~~June 28, 2020	45
	Condensed Consolidated Statements of Cash Flows ~~Nine~~Six Months Ended ~~September~~June 27, ~~2020~~2021 and ~~September 29, 2019~~June 28, 2020	67
	Notes to Condensed Consolidated Financial Statements ~~as of September 27, 2020~~	78
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4039
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	52
Item 4.	Controls and Procedures	56
PART II. OTHER INFORMATION		57
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	6057
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6159

Item 6.	Exhibits	6259
SIGNATURES		6360


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

	September 27, 2020		December 29, 2019

	(In thousands)
Cash and cash equivalents	$	768,031	$	260,568
Restricted cash and cash equivalents	17,105		20,009

Trade accounts and other receivables, less allowance for doubtful accounts	706,123		741,281
Accounts receivable from related parties	616		944
Inventories	1,328,704		1,383,535
Income taxes receivable	77,651		60,204
Prepaid expenses and other current assets	159,643		131,695

Total current assets	3,057,873		2,598,236
Deferred tax assets	4,126		4,426
Other long-lived assets	15,079		36,325
Operating lease assets, net	284,820		301,513
Identified intangible assets, net	566,696		596,053
Goodwill	955,087		973,750
Property, plant and equipment, net	2,585,818		2,592,061
Total assets	$	7,469,499	$	7,102,364


Accounts payable	$	915,661	$	993,780
Accounts payable to related parties	5,752		3,819
Revenue contract liability	57,221		41,770
Accrued expenses and other current liabilities	691,329		575,319
Income taxes payable	0		7,075
Current maturities of long-term debt	25,485		26,392
Total current liabilities	1,695,448		1,648,155
Noncurrent operating lease liability, less current maturities	215,924		235,382
Long-term debt, less current maturities	2,610,668		2,276,029
Noncurrent income taxes payable	7,731		7,731
Deferred tax liabilities	339,051		301,907
Other long-term liabilities	169,365		97,100
Total liabilities	5,038,187		4,566,304
Common stock	2,612		2,611
Treasury stock	(342,698)		(234,892)
Additional paid-in capital	1,953,969		1,955,261
Retained earnings	972,490		877,812
Accumulated other comprehensive loss	(165,520)		(75,129)
Total Pilgrim’s Pride Corporation stockholders’ equity	2,420,853		2,525,663
Noncontrolling interest	10,459		10,397
Total stockholders’ equity	2,431,312		2,536,060
Total liabilities and stockholders’ equity	$	7,469,499	$	7,102,364


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	June 27, 2021		December 27, 2020
	(In thousands)
Cash and cash equivalents	$	391,805	$	547,624
Restricted cash and cash equivalents	98,212		782

Trade accounts and other receivables, less allowance for doubtful accounts	866,476		741,992
Accounts receivable from related parties	868		1,084
Inventories	1,530,014		1,358,793
Income taxes receivable	51,351		69,397
Prepaid expenses and other current assets	190,574		183,039

Total current assets	3,129,300		2,902,711
Deferred tax assets	5,494		5,471
Other long-lived assets	26,837		24,780
Operating lease assets, net	295,391		288,886
Identified intangible assets, net	589,536		589,913
Goodwill	1,024,900		1,005,245
Property, plant and equipment, net	2,677,387		2,657,491
Total assets	$	7,748,845	$	7,474,497


Accounts payable	$	1,092,164	$	1,028,710
Accounts payable to related parties	8,595		9,650
Revenue contract liabilities	36,275		65,918
Accrued expenses and other current liabilities	1,051,546		807,847
Income taxes payable	30,681		0
Current maturities of long-term debt	25,453		25,455
Total current liabilities	2,244,714		1,937,580
Noncurrent operating lease liability, less current maturities	221,345		217,432
Long-term debt, less current maturities	2,270,298		2,255,546

Deferred tax liabilities	318,159		339,831
Other long-term liabilities	99,817		148,761
Total liabilities	5,154,333		4,899,150
Common stock	2,614		2,612
Treasury stock	(345,134)		(345,134)
Additional paid-in capital	1,959,558		1,954,334
Retained earnings	906,090		972,569
Accumulated other comprehensive income (loss)	59,354		(20,620)
Total Pilgrim’s Pride Corporation stockholders’ equity	2,582,482		2,563,761
Noncontrolling interest	12,030		11,586
Total stockholders’ equity	2,594,512		2,575,347
Total liabilities and stockholders’ equity	$	7,748,845	$	7,474,497


PILGRIM’S PRIDE CORPORATION	PILGRIM’S PRIDE CORPORATION									PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)										CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)	(Unaudited)									(Unaudited)

		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 27, 2020		September 29, 2019		September 27, 2020		September 29, 2019			June 27, 2021		June 28, 2020		June 27, 2021		June 28, 2020
		(In thousands)									(In thousands)
Net income		$	33,691	$	110,096	$	94,740	$	364,301
Other comprehensive income:
Net income (loss)										Net income (loss)	$	(166,503)	$	(6,400)	$	(66,035)	$	61,049
Other comprehensive income (loss):										Other comprehensive income (loss):
Foreign currency translation adjustment:	Foreign currency translation adjustment:									Foreign currency translation adjustment:
Gains (losses) arising during the period	Gains (losses) arising during the period	66,626		(50,213)		(48,921)		(50,824)		Gains (losses) arising during the period	15,847		(18,782)		49,138		(115,547)

Derivative financial instruments designated as cash flow hedges:	Derivative financial instruments designated as cash flow hedges:									Derivative financial instruments designated as cash flow hedges:
Gains (losses) arising during the period	Gains (losses) arising during the period	1,281		(1,669)		3,182		(1,269)		Gains (losses) arising during the period	741		(2,147)		2,209		1,901
Income tax effect	Income tax effect	194		0		194		0		Income tax effect	25		0		32		0
Reclassification to net earnings for losses (gains) realized	Reclassification to net earnings for losses (gains) realized	(1,619)		247		(1,039)		74		Reclassification to net earnings for losses (gains) realized	(1,080)		(162)		(1,248)		580
Income tax effect										Income tax effect	(40)		0		(72)		0
Available-for-sale securities:	Available-for-sale securities:									Available-for-sale securities:
Gains (losses) arising during the period		(8)		312		6		506
Gains arising during the period										Gains arising during the period	0		2		0		14
Income tax effect	Income tax effect	0		(76)		(4)		(123)		Income tax effect	0		(1)		0		(4)
Reclassification to net earnings for gains realized	Reclassification to net earnings for gains realized	(6)		(159)		(18)		(466)		Reclassification to net earnings for gains realized	0		(12)		0		(12)
Income tax effect	Income tax effect	1		37		4		113		Income tax effect	0		3		0		3
Defined benefit plans:	Defined benefit plans:									Defined benefit plans:
Losses arising during the period		1,250		(5,231)		(43,711)		(9,202)
Gains (losses) arising during the period										Gains (losses) arising during the period	9,876		(34,151)		39,103		(44,961)
Income tax effect	Income tax effect	(10,094)		1,142		(930)		2,240		Income tax effect	(3,588)		6,459		(9,918)		9,164
Reclassification to net earnings of losses realized	Reclassification to net earnings of losses realized	376		328		1,127		984		Reclassification to net earnings of losses realized	384		375		955		751
Income tax effect	Income tax effect	(94)		(79)		(281)		(239)		Income tax effect	(90)		(94)		(225)		(187)
Total other comprehensive income (loss), net of tax	Total other comprehensive income (loss), net of tax	57,907		(55,361)		(90,391)		(58,206)		Total other comprehensive income (loss), net of tax	22,075		(48,510)		79,974		(148,298)
Comprehensive income		91,598		54,735		4,349		306,095
Less: Comprehensive income attributable to noncontrolling interests		245		331		62		457
Comprehensive income attributable to Pilgrim's Pride Corporation		$	91,353	$	54,404	$	4,287	$	305,638
Comprehensive income (loss)										Comprehensive income (loss)	(144,428)		(54,910)		13,939		(87,249)
Less: Comprehensive income (loss) attributable to noncontrolling interests										Less: Comprehensive income (loss) attributable to noncontrolling interests	184		(364)		444		(183)
Comprehensive income (loss) attributable to Pilgrim’s Pride Corporation										Comprehensive income (loss) attributable to Pilgrim’s Pride Corporation	$	(144,612)	$	(54,546)	$	13,495	$	(87,066)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


~~Cash and cash equivalents~~	$	~~6,854~~
~~Trade accounts and other receivables~~	~~146,423~~
~~Inventories~~	~~104,211~~
~~Prepaid expenses and other current assets~~	~~6,579~~
~~Operating lease assets~~	~~5,613~~
~~Property, plant and equipment~~	~~329,711~~
~~Identified intangible assets~~	~~40,418~~
~~Other assets~~	~~14,647~~
~~Total assets acquired~~	~~654,456~~
~~Accounts payable~~	~~110,296~~
~~Other current liabilities~~	~~55,830~~
~~Operating lease liabilities~~	~~5,613~~
~~Deferred tax liabilities~~	~~16,804~~
~~Pension obligations~~	~~18,435~~
~~Other long-term liabilities~~	~~1,056~~
~~Total liabilities assumed~~	~~208,034~~
~~Total identifiable net assets~~	~~446,422~~
~~Gain on bargain purchase~~	~~(53,134)~~
~~Total consideration transferred~~	$	~~393,288~~


	Three Months Ended September 27, 2020						Nine Months Ended September 27, 2020
	Domestic		Export		Net Sales		Domestic		Export		Net Sales
	(In thousands)
U.S.	$	1,835,351	$	58,871	$	1,894,222	$	5,404,597	$	215,194	$	5,619,791
U.K. and Europe	764,516		81,161		845,677		2,207,962		217,178		2,425,140
Mexico	335,222		0		335,222		929,141		0		929,141
Net sales	$	2,935,089	$	140,032	$	3,075,121	$	8,541,700	$	432,372	$	8,974,072


	Three Months Ended June 27, 2021
	(In thousands)
	Fresh		Prepared		Export		Other		Total
U.S. chicken	$	1,807,640	$	207,309	$	115,844	$	117,676	$	2,248,469
U.K. and Europe chicken	218,002		245,397		76,167		22,126		561,692
Mexico chicken	402,295		29,738		0		21,350		453,383
Total chicken	2,427,937		482,444		192,011		161,152		3,263,544
U.K. and Europe pork	61,966		280,372		18,646		13,170		374,154
Total net sales	$	2,489,903	$	762,816	$	210,657	$	174,322	$	3,637,698


	Three Months Ended September 29, 2019						Nine Months Ended September 29, 2019
	Domestic		Export		Net Sales		Domestic		Export		Net Sales
	(In thousands)
U.S.	$	1,857,859	$	73,798	$	1,931,657	$	5,523,497	$	208,704	$	5,732,201
U.K. and Europe	451,347		66,184		517,531		1,372,028		196,368		1,568,396
Mexico	328,782		0		328,782		1,045,133		0		1,045,133
Net sales	$	2,637,988	$	139,982	$	2,777,970	$	7,940,658	$	405,072	$	8,345,730


	September 27, 2020	September 29, 2019
Weighted-average remaining lease term (years):
Operating leases	5.62	5.82
Finance leases	3.90	4.54
Weighted-average discount rate:
Operating leases	4.56%	4.86%
Finance leases	5.05%	5.31%


	Three Months Ended				Six Months Ended
Gains (Losses) by Type of Contract	June 27, 2021		June 28, 2020		June 27, 2021		June 28, 2020		Affected Line Item in the Condensed Consolidated Statements of Income
	(In thousands)
Foreign currency derivatives gain (loss)	$	(8,822)	$	(5,475)	$	(3,482)	$	27,556	Foreign currency transaction loss (gain)
Commodity derivative gain (loss)	1,420		(5,154)		18,798		(10,425)		Cost of sales
Sales contract derivative gain	23,237		0		5,133		0		Net sales
Total	$	15,835	$	(10,629)	$	20,449	$	17,131


	Gain (Loss) Recognized in Other Comprehensive Income on Derivative
	Three Months Ended				Six Months Ended
	June 27, 2021		June 28, 2020		June 27, 2021		June 28, 2020
	(In thousands)
Foreign currency derivatives	$	824	$	(1,423)	$	2,309	$	2,700
Interest rate swap derivatives	(98)		(929)		(127)		(929)
Total	$	726	$	(2,352)	$	2,182	$	1,771


	June 27, 2021				December 27, 2020
	Cost		Fair Value		Cost		Fair Value
	(In thousands)
Cash equivalents:
Fixed income securities	$	34,123	$	34,123	$	178,677	$	178,677


FORM			10-Q


	Operating Leases		Finance Leases
	(In thousands)
Future minimum lease payments:
Year 1	$	78,963	$	513
Year 2	65,771		494
Year 3	54,493		494
Year 4	42,446		440
Year 5	29,175		29
Thereafter	50,445		0
Total future minimum lease payments	321,293		1,970
Less: imputed interest	(37,873)		(187)
Present value of lease liabilities	$	283,420	$	1,783


	December 29, 2019		Additions		Currency Translation		September 27, 2020
	(In thousands)
U.S.	$	41,936	$	0	$	0	$	41,936
U.K. and Europe	806,207		0		(20,860)		785,347
Mexico	125,607		2,197		0		127,804
Total	$	973,750	$	2,197	$	(20,860)	$	955,087


Customer relationships			~~5-16~~3-16 years
Trade names			~~3-20~~20 years
Non-compete agreements			3 years


	Nine Months Ended September 27, 2020(a)
	Losses Related to Foreign Currency Translation		Unrealized Losses on Derivative Financial Instruments Classified as Cash Flow Hedges		Losses Related to Pension and Other Postretirement Benefits		Unrealized Holding Losses on Available-for-Sale Securities		Total
	(In thousands)
Balance, beginning of period	$	(1,108)	$	(2,406)	$	(71,615)	$	0	$	(75,129)

Other comprehensive income (loss) before reclassifications	(48,921)		3,403		(44,641)		2		(90,157)
Amounts reclassified from accumulated other comprehensive loss to net income	0		(1,039)		846		(14)		(207)
Currency translation	0		(27)		0		0		(27)
Net current period other comprehensive income (loss)	(48,921)		2,337		(43,795)		(12)		(90,391)
Balance, end of period	$	(50,029)	$	(69)	$	(115,410)	$	(12)	$	(165,520)


	Nine Months Ended September 29, 2019(a)
	Losses Related to Foreign Currency Translation		Unrealized Losses on Derivative Financial Instruments Classified as Cash Flow Hedges		Losses Related to Pension and Other Postretirement Benefits		Unrealized Holding Gains on Available-for-Sale Securities		Total
	(In thousands)
Balance, beginning of period	$	(55,770)	$	(683)	$	(71,463)	$	82	$	(127,834)

Other comprehensive income (loss) before reclassifications	(50,824)		(1,257)		(6,962)		383		(58,660)
Amounts reclassified from accumulated other comprehensive loss to net income	0		74		745		(353)		466
Currency translation	0		(12)		0		0		(12)
Net current period other comprehensive income (loss)	(50,824)		(1,195)		(6,217)		30		(58,206)
Balance, end of period	$	(106,594)	$	(1,878)	$	(77,680)	$	112	$	(186,040)


	Three Months Ended				Nine Months Ended
	September 27, 2020(a)		September 29, 2019(b)		September 27, 2020(c)		September 29, 2019(d)
	(In thousands)
Net sales:
U.S.	$	1,894,222	$	1,931,657	$	5,619,791	$	5,732,201
U.K. and Europe	845,677		517,531		2,425,140		1,568,396
Mexico	335,222		328,782		929,141		1,045,133
Total	$	3,075,121	$	2,777,970	$	8,974,072	$	8,345,730


Contractual Obligations(a)	Total		Less than One Year		One to Three Years		Three to Five Years		Greater than Five Years
	(In thousands)
Long-term debt(b)	$	2,656,314	$	25,052	$	781,262	$	1,000,000	$	850,000
Interest(c)	664,162		118,666		234,527		186,125		124,844
Finance leases	1,970		513		988		469		—
Operating leases	321,293		78,963		120,264		71,621		50,445
Derivative liabilities	7,175		7,175		—		—		—
DOJ antitrust fine	110,524		110,524		—		—		—
Purchase obligations(d)	219,074		216,820		2,254		—		—
Total	$	3,980,512	$	557,713	$	1,139,295	$	1,258,215	$	1,025,289


PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted Net Income
(Unaudited)

	Three Months Ended				Nine Months Ended
	September 27, 2020		September 29, 2019		September 27, 2020		September 29, 2019
	(In thousands)
Net income attributable to Pilgrim's	$	33,446	$	109,765	$	94,678	$	363,844
Adjustments:

Acquisition charges and restructuring activity	—		43		134		(26)
DOJ agreement	110,524		—		110,524		—
Hometown Strong commitment	14,506		—		14,506		—
Foreign currency transaction losses (gains)	9,092		3,027		(3,768)		7,923
Net tax benefit of adjustments(a)	(5,916)		(747)		(9,158)		(1,923)
Adjusted net income attributable to Pilgrim's	$	161,652	$	112,088	$	206,916	$	369,818


	Three Months Ended June 27, 2021
	Amount		Impact of 10% Increase in Feed Ingredient Prices
	(In thousands)
Feed purchases(a)	$	1,067,773	$	106,777
Feed inventory(b)	200,320		20,032


	September 27, 2020
	Amount		Impact of 10% Increase to the Fair Value of Commodity Derivative Assets
	(In thousands)
Commodity derivative assets(a)	$	30,489	$	3,049


	June 27, 2021
	Amount		Impact of 10% Increase in Commodity Prices
	(In thousands)
Net commodity derivative assets(a)	$	40,242	$	4,024


	Three Months Ended September 27, 2020
	Impact of 10% Deterioration in Exchange Rate(a)		Impact of 10% Appreciation in Exchange Rate(b)
	(In thousands, except for exchange rate data)
Foreign currency remeasurement gain (loss)	$	(14,849)	$	18,149
Exchange rate of Mexican peso to the U.S. dollar:
As reported	22.34		22.34
Hypothetical 10% change	24.57		20.11


Issuer Purchases of Equity Securities	Issuer Purchases of Equity Securities							Issuer Purchases of Equity Securities
Period	Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of the Shares That May Yet Be Purchased Under the Plans or Programs (a)		Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of the Shares That May Yet Be Purchased Under the Plans or Programs (a)
June 29, 2020 through July 26, 2020		1,467,987	$	16.3515	5,720,767	$	94,983,270
July 27, 2020 through August 30, 2020		82,750	15.4028		5,803,517	93,708,689
August 31, 2020 through September 27, 2020		301,927	15.3965		6,105,444	89,060,082
March 29, 2021 through April 25, 2021								March 29, 2021 through April 25, 2021	—	$	—	6,105,444	$	89,060,082
April 26, 2021 through May 30, 2021								April 26, 2021 through May 30, 2021	—	—		6,105,444	89,060,082
May 31, 2021 through June 27, 2021								May 31, 2021 through June 27, 2021	—	—		6,105,444	89,060,082
Total	Total	1,852,664	$	16.1535	6,105,444	$	89,060,082	Total	—	$	—	6,105,444	$	89,060,082


3.1						Amended and Restated Certificate of Incorporation of the Company (incorporated by reference from Exhibit 3.1 of the Company’s Form 8-A (No. 001-09273) filed on December 27, 2012).

3.2						Amended and Restated Corporate Bylaws of Pilgrim’s Pride Corporation, as amended (incorporated by reference from Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q (No. 001-09273) filed on November 8, 2017).

4.1						Indenture dated as of April 8, 2021 among the Company, Pilgrim’s Pride Corporation of West Virginia, Inc., Gold’n Plump Poultry, LLC, Gold’n Plump Farms, LLC, JFC LLC and Regions Bank, as Trustee (incorporated by reference from Exhibit 4.1 of the Company’s Current Report on Form 8-K (No. 001-09273) filed on April 9, 2021).

10.1						Share Purchase Agreement, dated as of June 17, 2021, by and among Kerry Group PLC, Pilgrim's Pride Corporation, Onix Investments UK Limited and Arkose Investments ULC.*

31.1						Certification of Principal Executive Officer ~~and~~pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2						Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*



32.1						Certification of Principal Executive ~~Officer and Principal Financial~~ Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

32.2						Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

101.INS						Inline XBRL Instance Document

101.SCH						Inline XBRL Taxonomy Extension Schema

101.CAL						Inline XBRL Taxonomy Extension Calculation

101.DEF						Inline XBRL Taxonomy Extension Definition

101.LAB						Inline XBRL Taxonomy Extension Label

101.PRE						Inline XBRL Taxonomy Extension Presentation

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


*						Filed herewith.
**						Furnished herewith.
†						Represents a management contract or compensation plan arrangement.


						PILGRIM’S PRIDE CORPORATION

Date: ~~October~~July 28, ~~2020~~2021						/s/ ~~Fabio Sandri~~Matthew Galvanoni
						~~Fabio Sandri~~Matthew Galvanoni
						~~President and Chief Executive Officer,~~ Chief Financial Officer and Chief Accounting Officer
						(Principal ~~Executive Officer, Principal~~ Financial Officer, Chief Accounting Officer and Duly Authorized Officer)